12. STOCK OPTIONS AND WARRANTS

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

STOCK OPTIONS AND WARRANTS

12. STOCK OPTIONS AND WARRANTS

Stock Options

In the nine months ended September 30, 2019, an option was granted on July 23, 2019 to the Company’s Chief Financial Officer to purchase up to 49,104 shares of the Company’s common stock. These options will vest over 4 years and have an exercise price of $5.78 per share. The Company estimated the fair value of these options at $210,489 utilizing the Black-Scholes pricing model. The assumptions used in the valuation of these options include volatility of 82.26% based on historical volatility, expected dividends of 0.0%, a discount rate of 1.92% and expected term of 7.0 years based on the simplified method.

During the nine months ended September 30, 2019 and 2018, the Company recorded non-cash stock-based compensation of $12,092 and $13,026, respectively. As of September 30, 2019, there is $201,719 of unrecognized stock option-based compensation expense that will be recognized over the next four years.

The number of options to purchase capital stock that were outstanding at September 30, 2019 was 288,662. During the nine months ended September 30, 2019, 29,650 options were forfeited due to terminations and 27,198 expired.

Warrants

As part of the Company’s public offering (see Note 11), the Company issued 2,300,000 warrants during the three months ended June 30, 2019 to the Underwriters. These warrants are exercisable for five years at an exercise price of $6.30 per share. In April 2019, pursuant to the Underwriting Agreement, the Company issued as a fee to the Underwriters warrants to purchase up to a total of 110,000 shares of common stock (5% of the shares of common stock sold). The warrants are exercisable at $6.60 per share and have a term of five years. There was no financial statement accounting effect for the issuance of these warrants.

During the nine months ended September 30, 2019, 5,370 warrants expired. Total warrants outstanding at September 30, 2019 is shown in the table below:

	Number of Warrants
Outstanding December 31, 2018		134,359
Public Offering		2,300,000
Underwriter Warrants		100,001
Over-Allotment Warrants for Underwriters		10,000
Expired		(5,370	)
Outstanding September 30, 2019		2,538,990