NOTE 11 — STOCK INCENTIVE PLANS:

Effective June 3, 2008, the Company’s stockholders voted to approve the 2008 Stock Incentive Plan (“SIP”), with 625,000 shares of common stock available to be issued. At the Annual Stockholder Meeting on September 22, 2011 the Company’s stockholders voted to approve an increase to the shares of common stock issuable under the SIP by 125,000 to 750,000. Under the terms of the SIP, which expired during 2018, the Board of Directors or its Compensation Committee had the discretion to select the persons to whom awards were to be granted. Awards could be stock options, restricted stock and/or restricted stock units ("Equity Award Units"). The awards became vested at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through December 31, 2018, there were 508,889 options exercised, and at December 31, 2018, 99,132 options were outstanding and no Equity Award Units were available to be issued under the SIP.

Effective June 19, 2014, the Company’s stockholders voted to approve the 2014 Stock Incentive Plan (“SIP14”), with 800,000 shares of common stock available to be issued. Under the terms of the SIP14, the Board or its Compensation Committee has the discretion to select the persons to whom awards are to be granted. Awards can be in the form of Equity Award Units. The awards become vested at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through December 31, 2018, there were 85,407 options exercised, and at December 31, 2018, 405,968 options were outstanding and 21,061 Equity Award Units were still available to be issued under the SIP14. During 2018, 266,839 shares of restricted stock and 20,725 restricted stock units were awarded under SIP14.

The Company's results for the years ended December 31, 2018 and 2017 include stock-based compensation expense totaling $632,805 and $384,897, respectively. Such amounts have been included in the Consolidated Statements of Operations within cost of goods sold ($25,615 and $47,000, respectively), research and development ($78,831 and $89,400, respectively) and selling, general and administrative expenses ($528,360 and $248,497, respectively).

Stock option compensation expense in the years ended December 31, 2018 and 2017 represents the estimated fair value of options outstanding which is being amortized on a straight-line basis over the requisite vesting period of the entire award.

The weighted average estimated fair value of stock options granted in the years ended December 31, 2018 and 2017 were $3.76 and $2.77 per share, respectively. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon historical volatility of the Company’s stock and other contributing factors. The expected term is based on the Company’s historical experience with similar type options.

The weighted-average assumptions made in calculating the fair values of options are as follows for the respective years ended:

	December 31, 2018			December 31, 2017
Expected term (in years)		4.96			5.48
Expected volatility		39.91	%		43.31	%
Expected dividend yield		n/a			n/a
Risk-free interest rate		2.70	%		1.78	%

The Company granted 93,750 new options during the year ended December 31, 2018.

The following table provides stock option activity for the years ended December 31, 2018 and 2017:

	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2016		600,549		4.55	3.43 years	$	1,463,052

Granted		267,875		6.40
Exercised		56,969		4.19			100,018
Forfeited/expired/cancelled		785		5.56
Outstanding at December 31, 2017		810,670		5.18	3.69 years	$	2,477,853

Exercisable at December 31, 2017		371,295		4.44	2.62 years	$	1,409,440

Outstanding at December 31, 2017		810,670	$	5.18	3.69 years	$	2,477,853

Granted		93,750	$	9.80			352,220
Exercised		144,947	$	4.83			523,327
Forfeited/expired/cancelled		47,505	$	8.82			154,583
Outstanding at December 31, 2018		711,968	$	5.62	3.33 years	$	687,364

Exercisable at December 31, 2018		396,799	$	4.70	2.66 years	$	568,956

The following table summarizes information about stock options outstanding at December 31, 2018:

	Stock Options Outstanding								Stock Options Exercisable
Range of Exercise Prices	Shares Outstanding		Average Remaining Contract Life (Year)		Weighted Average Exercise Price		Aggregate Intrinsic Value		Shares Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value
1 to 2.79999		-		-	$	-	$	-		-	$	-	$	-
2.8 to 4.59999		304,343		1.90		3.45		672,896		254,343		3.46		560,711
4.6 to 6.39999		152,875		3.43		5.85		14,468		58,020		5.80		8,245
6.4 to 8.19999		207,875		5.05		7.31		-		75,041		7.21		-
8.2 to 12		46,875		4.60		11.45		-		9,375		11.45		-
Total		711,968		3.33	$	5.62	$	687,364		396,779	$	4.70	$	568,956

As of December 31, 2018, there was $710,376 of net unrecognized compensation cost related to stock options that are not vested, which is expected to be recognized over a weighted average period of approximately 2.45 years. The total fair value of shares vested during the year ended December 31, 2018, was $553,000.

The following table summarizes information about restricted stock and restricted stock units outstanding as of December 31, 2018:

	Number of Shares & Units		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017		-	$	-

Granted		287,564		9.65
Exercised		-		-
Forfeited/expired/cancelled		-		-
Outstanding at December 31, 2018		287,564		9.65

Exercisable at December 31, 2018		-	$	-

As of December 31, 2018, there was $1,688,746 of net unrecognized compensation cost related to restricted stock and restricted stock units that are not vested, which is expected to be recognized over a weighted average period of approximately 2.5 years. Stock based compensation cost related to restricted stock and restricted stock units recognized during the years ended December 31, 2018 and 2017 was $281,249 and $0, respectively.