Stock-Based Compensation
9 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement, Disclosure [Abstract]  
Stock-Based Compensation

Note 5 – Stock-Based Compensation

 

Stock Incentive Plans

 

The Co-Diagnostics, Inc. 2015 Long Term Incentive Plan (the “Incentive Plan”) reserves an aggregate of 6,000,000 shares of common stock issuable upon the grant of awards under the Incentive Plan. The number of awards available for issuance under the Incentive Plan was 3,828,183 at September 30, 2020.

 

Stock Options

 

The following table summarizes option activity during the nine months ended September 30, 2020:

 

    Number of Options     Weighted Average Exercise Price     Weighted Average Fair Value     Weighted Average Remaining Contractual Life (Years)  
Outstanding at December 31, 2019     2,021,817     $ 1.69     $ 0.83          
Granted     150,000       8.14       4.75          
Expired     -       -       -          
Forfeited/Cancelled     -       -       -          
Exercised     (528,623 )     1.74       0.88          
Outstanding at September 30, 2020     1,643,194     $ 2.26     $ 1.21       8.50  

 

The total intrinsic value of options exercised during the nine months ended September 30, 2020 was approximately $8.3 million. The aggregate intrinsic value of outstanding options at September 30, 2020 was $15,476,739. There were 296,667 of unvested options as of September 30, 2020.

 

Stock-based compensation cost is measured at the grant date based on the fair value of the award granted and recognized as expense over the vesting period using the straight-line method. The Company uses the Black-Scholes model to value options granted. The following weighted average assumptions were used in estimating the grant date fair value of options:

 

    Nine months ended
September 30,
 
    2020     2019  
Risk-free interest rate     1.05 %     1.56 %
Expected life (years)     7.3       10.0  
Expected volatility     62.82 %     63.65 %
Expected dividend yield     None       None  

 

As of September 30, 2020, there were 296,667 of unvested options and $339,951 of unrecognized stock-based compensation expense. The unrecognized stock-based compensation expense is expected to be recognized over 2.5 years.

 

Warrants

 

The Company has issued warrants related to past financings and as compensation to third parties for services provided. The Company estimates the fair value of issued warrants on the date of issuance as determined using a Black-Scholes pricing model. The Company amortizes the fair value of issued warrants using a vesting schedule based on the terms and conditions of each warrant if granted for services.

 

The following table summarizes warrant activity during nine months ended September 30, 2020

 

    Number of Warrants     Weighted Average Exercise Price     Weighted Average Fair Value    

Weighted

Average Remaining Contractual Life (Years)

 
Outstanding at December 31, 2019     983,535     $ 1.44     $ 1.03          
Granted     20,000       16.49       15.19          
Expired     -       -       -          
Forfeited/Cancelled     -       -       -          
Exercised     (894,445 )     1.37       1.05          
Outstanding at September 30, 2020     109,090     $ 2.06     $ 1.17       3.37  

 

The intrinsic value of warrants exercised during the nine months ended September 30, 2020 was approximately $9.4 million. The aggregate intrinsic value of outstanding options warrants at September 30, 2020 was approximately $1.3 million. All outstanding warrants are exercisable at September 30, 2020 and there was no unrecognized stock-based compensation expense related to warrants.

 

Stock Issued for Services

 

The Company has issued restricted stock to third parties for services provided. The grant date fair value of the restricted stock granted is determined using the closing market price of the Company’s common stock on the grant date with the associated compensation expense amortized over the vesting period of the stock awards. The Company has issued 83,935 of restricted stock for services during the nine months ended September 30, 2020.

 

Stock-Based Compensation Expense

 

The Company recognized stock-based compensation expense related to the types of awards discussed above as follows:

 

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
Options   $ 158,344     $ 253,798     $ 831,541     $ 468,076  
Warrants     -       -       303,802       -  
Stock     914,790       22,135       1,032,033       102,556  
Total stock-based compensation expense   $ 1,073,134     $ 275,933     $ 2,167,376     $ 570,632