Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Stock-based Compensation

v3.19.2
Note 10 - Stock-based Compensation
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
Note
10:
Stock-Based Compensation
 
Stock Options
 
During the
six
months ended
June 30, 2019,
the Company granted
62,944
stock options to employees with an exercise price of
$12.02.
 
The Company’s stock trading price on the date of grant is the basis of fair value of its common stock used in determining the value of share-based awards. To the extent the value of the Company’s share-based awards involves a measure of volatility, the Company relied on the volatilities from publicly traded companies with similar business models as its common stock lacked enough trading history for it to utilize its own historical volatility. For future grants, the Company plans to use historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term. The Company uses the simplified method to calculate the expected term of stock option grants to employees as the Company does
not
have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees. Accordingly, the expected life of the options granted is based on the average of the vesting term, which is generally
four
years and the contractual term, which is generally
ten
years. The Company will continue to evaluate the appropriateness of utilizing such method. The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term.
 
The Company has computed the fair value of all options granted during the
six
months ended
June 30, 2019
and
2018,
using the following assumptions:
 
    Six Months Ended June 30,
    2019   2018
Expected volatility    
35%
   
42%
-
43%
Expected dividends    
None
   
 
None
 
Expected term (years)    
7
   
 
7
 
Risk-free rate    
2.61%
   
2.53%
to
2.63%
Forfeiture rate    
20%
   
 
20%
 
 
The information below summarizes the stock options activity:
 
                Weighted
   
 
 
Weighted
 
Weighted
 
Average
   
 
 
Average
 
Average
 
Remaining
   
Number of
 
Exercise
 
Fair
 
Contractual Life
   
Shares
 
Price
 
Value
 
(Years)
Outstanding at December 31, 2017    
1,003,916
 
  $
4.18
 
  $
1.87
 
   
8.1
 
Granted    
145,792
 
   
7.00
 
   
 
 
   
 
 
Exercised    
(95,162
)
   
3.48
 
   
 
 
   
 
 
Cancelled    
(67,855
)
   
3.37
 
   
 
 
   
 
 
Outstanding at December 31, 2018    
986,691
 
  $
4.72
 
  $
2.09
 
   
6.8
 
Granted    
62,944
 
   
12.02
 
   
 
 
   
 
 
Exercised    
(47,804
)
   
5.01
 
   
 
 
   
 
 
Cancelled    
 
   
 
   
 
 
   
 
 
Outstanding at June 30, 2019    
1,001,831
 
  $
5.17
 
  $
2.25
 
   
6.2
 
Exercisable at June 30, 2019    
541,238
 
  $
4.61
 
  $
2.01
 
   
6.2
 
 
The aggregate intrinsic value of the Company’s stock options outstanding and expected to vest was
$11,894,226
at
June 30, 2019.
 
The aggregate intrinsic value of the Company’s stock options exercisable was
$7,354,410
at
June 30, 2019.
 
For the
three
and
six
months ended
June 30, 2019,
stock-based compensation expense for stock options was
$99,846
and
$196,650,
respectively.  For the
three
and
six
months ended
June 30, 2018,
stock-based compensation expense for stock options was
$69,640
and
$208,813,
respectively. Unrecognized stock-based compensation expense for stock options as of
June 30, 2019
was
$920,988,
which is expected to be recognized ratably over the next
2.8
years.
 
Restricted Stock
 
Restricted stocks granted to employees generally vest in
four
equal annual installments. Restricted stocks granted to non-employee directors typically vest in full
one
year after the date of grant.
 
The information below summaries the restricted stock activity:
 
Restricted Stock Awards   Shares
Non-vested at December 31, 2018    
51,134
 
Granted    
26,131
 
Vested    
(33,012
)
Cancelled    
 
Non-vested at June 30, 2019    
44,253
 
 
For the
three
and
six
months ended
June 30, 2019,
stock-based compensation expense for restricted stock was
$79,106
and
$154,074,
respectively. For the
three
and
six
months ended
June 30, 2018,
stock-based compensation expense for restricted stock was
$69,347
and
$137,816,
respectively.
 
Unrecognized stock-based compensation expense for restricted stock awards as of
June 30, 2019
was
$469,307,
which is expected to be recognized ratably over the next
2.2
years.