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 six months ended June 30, 2020, was $1,317,542 and $1,991,337, respectively, as compared to $808,734 and $1,643,199, respectively, for the three and six months ended June 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 June 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 June 30, 2019 and 2020, respectively, and changes during the six months then ended is as follows:

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The intrinsic values were calculated using the closing price on June 28, 2019 of $3.25 and the closing price on June 30, 2020 of $1.16. As of June 30, 2020, there was $58,023 of unrecognized compensation cost related to stock options that is expected be recognized over a weighted-average period of 0.8 years.

Restricted Stock

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

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As of June 30, 2020, there was $3,349,665 of unrecognized compensation cost related to restricted stock grants that will be recognized over a weighted average period of 1.6 years.