NOTE 11 – EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK AWARD PLAN

In June 2020, officers and directors of the Company voluntarily returned stock options that had previously been granted to them.  In total, 2,265,000 options with an average exercise price of $6.87 per share were returned to and cancelled by the Company.No grants, cash payments or other consideration has been or will be made to replace the options or otherwise in connection with the return. As a result of the return and cancellation of the options, the Company incurred additional compensation expense of $768,379.

Compensation expense charged against income for share-based awards during the three and nine months ended September 30, 2020, was $565,819 and $2,557,156, respectively, as compared to $792,836 and $2,436,035, respectively, for the three and nine months ended September 30, 2019.  These amounts are included in general and administrative expense in the accompanying financial statements.

In 2011, the board of directors and stockholders approved and adopted a long-term incentive plan which allowed for the issuance of up to 2,500,000 shares of common stock through the grant of qualified stock options, non-qualified stock options and restricted stock. In 2013, the Company’s board of directors and stockholders approved an amendment to the long-term incentive plan, increasing the number of shares eligible under the plan to 5,000,000 shares. As of September 30, 2020, there were 2,303,155 shares remaining eligible for issuance under the plan.

Stock Options

A summary of the stock option activity as of September 30, 2019 and 2020, respectively, and changes during the nine months then ended is as follows:

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The intrinsic values were calculated using the closing price on September 30, 2019 of $1.64 and the closing price on September 30, 2020 of $0.68. As of September 30, 2020, there was $42,106 of unrecognized compensation cost related to stock options that is expected be recognized over a weighted-average period of 0.7 years.

Restricted Stock

A summary of the restricted stock activity as of September 30, 2019 and 2020, and changes during the nine months then ended is as follows:

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As of September 30, 2020, there was $2,799,763 of unrecognized compensation cost related to restricted stock grants that will be recognized over a weighted average period of 1.6 years.