Note 15. Share-Based Payments

As of September 30, 2019, the Company had 14,971,431 options, 55,586 restricted shares and 3,709,240 warrants outstanding.

The Company awards common stock and stock options to employees and directors as compensation for their services, and accounts for its stock option awards to employees and directors pursuant to the provisions of ASC 718, Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

Effective as of December 3, 2010 and amended on August 3, 2018, our Board of Directors approved the 2010 Stock Incentive Plan (“the 2010 Plan”) pursuant to which options or other similar securities may be granted. As of September 30, 2019, the maximum aggregate number of shares of our common stock that may be issued under the 2010 Plan is 31,500,000 shares. As of September 30, 2019, options and restricted shares available for issuance are 14,160,326 shares.

The company recorded share-based payments expense of $2,547,107 and $11,530 for the three months ended September 30, 2019 and 2018 and $6,474,227 and $3,372,447 for the nine months ended September 30, 2019 and 2018, respectively.

(a)Stock Options

Stock option activity for the nine months ended September 30, 2019 is summarized as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregated
	Options	Exercise		Contractual	Intrinsic
	Outstanding	Price		Life (Years)	Value
Outstanding at January 1, 2019	1,706,431	$	3.28	4.08	$	—
Granted	14,325,000		1.98	8.75		—
Exercised	—		—	—		—
Expired	(83,333)		1.98	—		—
Forfeited	(976,667)		1.98	—		—
Outstanding at September 30, 2019	14,971,431	$	2.13	8.72	$	—
Vested and expected to be vested as of September 30, 2019	14,971,431	$	2.13	8.72	$	—
Options exercisable at September 30, 2019 (vested)	5,529,977	$	2.38	7.55	$	—

As of September 30, 2019, approximately $14,255,266 of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of approximately 1.4 years. The total fair value of shares vested for the nine months ended September 30, 2019 and 2018 was $6,010,085 and $319,001, respectively. Cash received from options exercised during the nine months ended September 30, 2019 and 2018 was approximately $0 and $2,632, respectively.

(b)Warrants

In connection with the Company’s financings, the Warner Brother Agreement and the service agreements, the Company issued warrants to service providers to purchase common stock of the Company. The warrants issued to Warner Brother were expired without exercise on January 31, 2019. The Company issued warrants to IDV in connection with senior secured convertible notes (See Note 12) and the weighted average exercise price was $1.84 and the weighted average remaining life was approximately 4.73 years.


	September 30, 2019	December 31, 2018
	Number of	Number of
	Warrants	Warrants
	Outstanding and	Outstanding and	Exercise		Expiration
Warrants Outstanding	Exercisable	Exercisable	Price		Date
2014 Broker Warrants (Series E Financing)	—	60,000	$	1.75	1/31/19
$2.05 million IDV Senior Secured Convertible Debenture	1,671,196	—	$	1.84	2/22/2024
$2.5 million IDV Senior Secured Convertible Debenture	2,038,044	—		1.84	9/27/2024
	3,709,240	60,000

On September 24, 2018, the Company entered into employment agreements with three executives. As part of their employment agreements, they are entitled to warrants for an aggregate of 8,000,000 shares at an exercise price of $5.375 per share (the “Exercise Price”), which is a 25% premium to the $4.30 per share closing market price of the Company’s common stock on September 7, 2018, the date upon which the terms of the employment agreements were mutually agreed. In February 2019, the rights to receive warrants were terminated due to the resignation of three executives.

(c)Restricted Shares

In January 2019, the Company granted 129,840 restricted shares to the two independent directors under the “2010 Plan” which was approved as part of the 2018 independent board compensation plan by the Board of Directors. The restricted shares were all vested immediately since commencement date. The aggregated grant date fair value of all those restricted shares was $161,001.

A summary of the unvested restricted shares is as follows:


		Weighted-average
	Shares	fair value
Non-vested restricted shares outstanding at January 1, 2019	87,586	$	2.46
Granted	129,840	$	1.24
Forfeited	(3,000)	$	2.60
Vested	(158,840)	$	1.49
Non-vested restricted shares outstanding at September 30, 2019	55,586	$	2.37

As of September 30, 2019, there was $33,800 of unrecognized compensation cost related to unvested restricted shares. This amount is expected to be recognized over a weighted-average period of 0.51 years.