Defined Contribution Plan

The Company sponsors a

401

(k) defined contribution plan (“DC Plan”) that provides for a dollar-for-dollar employer matching contribution of the

first

of each employee’s pay that is deferred by the employee. Employees become fully vested in employer matching contributions after

one

year of employment.

The Company also makes discretionary contributions to each employee's account based on a "pay-to-pay" safe-harbor formula that qualifies the

401

(k) Plan under current IRS regulations. For the year ending

December 31, 2019,

the Company’s Board of Directors authorized discretionary contributions in the amount of

$145,000

to be allocated among all eligible employees. For the year ended

December 31, 2018,

the Company’s Board of Directors authorized

$175,000

to be allocated among all eligible employees, before being subsequently reduced to

$145,000.

Employees become vested in the discretionary contributions as follows:

20%

after

two

years of employment, and

20%

for each year of employment thereafter until the employee becomes fully vested after

six

years of employment.

For the

three

-month periods ended

June 30, 2019

and

2018,

the Company accrued for discretionary contributions to the DC Plan in the amount of

$37,500

and

$35,417,

respectively. For the

six

-month periods ended

June 30, 2019

and

2018,

the Company accrued for discretionary contributions to the DC Plan in the amount of

$75,000

and

$79,167,

respectively. In the

first

half of

2019

and

2018,

the Company did

not

make any discretionary contribution payments to the DC Plan.