a) Warrants

 

The following table summarizes the changes in warrants outstanding of the Company during the years ended December 31, 2020 and December 31, 2019:

 

						Weighted Average
		Number of				Exercise Price
		Warrants				($)
Outstanding at December 31, 2018			6,107,617				2.88
Granted			-				-
Exercised			(5,783,867	)			2.86
Expired			(133,750	)			2.20
Outstanding at December 31, 2019			190,000				2.90
Granted			50,000				3.45
Exercised			(25,000	)			2.47
Expired			(40,000	)			4.53
Outstanding at December 31, 2020			175,000				2.75
Exercisable at December 31, 2020			125,000				2.47

    

2020

 

Effective February 26, 2020, the vesting criteria of the remaining installment of a warrant originally granted March 20, 2013 to an officer of the Company, and previously amended, was deemed met pursuant to the approval of the Compensation Committee, resulting in the vesting of the Warrant as to 125,000 shares effective February 26, 2020, with an expiration date of February 26, 2023.

 

Effective March 1, 2020, the Company granted warrants to purchase 50,000 shares of common stock to a Company employee for services to the Company. These warrants vest on September 1, 2021 (subject to continued employment through such date) and expire on March 1, 2026, with an exercise price of $3.45 per share. The Company has calculated the estimated fair market value of these warrants at $86,771, using the Black-Scholes model and the following assumptions: term 3.75 years, stock price $3.44, exercise price $3.45, 69.03% volatility, 0.95% risk free rate, and no forfeiture rate.

 

2019

 

Effective March 5, 2019, the Company entered into an amendment to an outstanding warrant to purchase up to an aggregate of 5.0 million shares of our common stock, originally issued to Cotterford, a significant stockholder, in connection with an equity financing completed on or about August 10, 2018. The amendment temporarily reduced the exercise price of such warrant from $3.00 per share to $2.90 per share through the close of business on March 8, 2019. As a result of this amendment, $196,957 of financing costs were recorded in other expenses.

 

On March 8, 2019, Cotterford partially exercised its warrant and purchased 1,724,138 shares of our common stock at $2.90 per share resulting in gross proceeds to the Company of $5.0 million.

 

On May 3, 2019, Cotterford partially exercised its warrant and purchased 1,666,667 shares of our common stock at $3.00 per share resulting in gross proceeds of $5.0 million to the Company.

 

On July 1, 2019, the Company modified the performance criteria for certain vesting milestones on a warrant agreement held by an officer of the Company and as a result the Company re-measured warrants held by the officer, to purchase 125,000 shares of common stock at an exercise price of $2.47 per share, resulting in $11,829 of additional warrant expense to be recorded over the vesting period. These warrants vest on achievement of certain business objectives and expire 3 years from the date of vesting.

   

On July 24, 2019, Cotterford exercised the remainder of its warrant and purchased 1,609,195 shares of our common stock at $3.00 per share resulting in gross proceeds of $4.8 million to the Company.

 

During the year 2019, warrants to purchase an aggregate of 5,783,067 shares of our common stock were exercised (including the exercises by Cotterford referenced above) for gross cash proceeds to the Company of approximately of $16.6 million.

          

Below is a table summarizing the warrants issued and outstanding as of December 31, 2020, which have a weighted average exercise price of $2.47 per share and an aggregate weighted average remaining contractual life of 3.01 years.

 

												Weighted Average				Proceeds to
								Exercise				Remaining				Company if
Number				Number				Price				Contractual				Exercised
Outstanding				Exercisable				($)				Life (Years)				($)
125,000					125,000				2.47				2.15				308,750
50,000					0				3.45				5.17				172,500
175,000					125,000												481,250

   

Stock-based compensation expense related to warrants of $68,541 and $8,506 was recorded for the years ended December 31, 2020, and December 31, 2019, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is approximately $38,565 and is expected to be recognized over a period of 0.67 years. As of December 31, 2020, the total intrinsic value of warrants was $199,500.

 

b) Options

 

The Company currently has options outstanding under both its 2011 Equity Incentive Plan (the “2011 Plan”) (for option issuances prior to 2016) and its 2015 Plan (for option issuances commencing in 2016). Effective as of January 1, 2016, no additional awards were or may be made under the 2011 Plan.

 

The 2015 Plan was adopted by the Board of Directors on August 18, 2015 and approved by the stockholders at an annual meeting held on October 30, 2015. On August 5, 2016, the Board of Directors adopted an amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 1,750,000 shares, which amendment was approved by the stockholders at an annual meeting held on October 7, 2016. On June 13, 2017, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 2,500,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 8, 2017. On June 15, 2018, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 3,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 7, 2018.

 

On March 27, 2019, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of common stock available for issuance under the Plan by 1,000,000 shares to an aggregate maximum of 4,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 14, 2019.

 

The 2015 Plan permits the grant of incentive stock options, non-statutory stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units and performance awards. The primary purpose of the 2015 Plan is to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company that is tied to the Company’s performance, thereby giving them an interest in the success and increased value of the Company. The 2015 Plan is administered by the Compensation Committee comprised solely of members of the Board of Directors or by the Board of Directors as a whole.

               

The following table summarizes the changes in options outstanding of the Company during the years ended December 31, 2020 and December 31, 2019:

 

						Weighted Average
		Number of				Exercise Price
		Options				($)
Outstanding at December 31, 2018			3,498,801				4.00
Granted			730,000				3.25
Exercised			(10,333	)			3.42
Expired/Cancelled			(49,167	)			3.31
Outstanding at December 31, 2019			4,169,301				3.88
Granted			845,000				3.60
Exercised			(691,599	)			2.81
Expired/Cancelled			(44,083	)			4.21
Outstanding at December 31, 2020			4,278,619				4.00
Exercisable at December 31, 2020			3,448,619				4.10

  

2020

 

Effective April 13, 2020, the Company granted stock options to purchase 835,000 shares of common stock to various Company personnel (including directors, executives, members of management and employees) in exchange for services provided to the Company. These options vest on April 13, 2021 and expire 5 years after the vesting date, with an exercise price of $3.60 per share. The Company has calculated the estimated fair market value of these options at $1,481,709, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $3.52, exercise price $3.60, 72.94% volatility, 0.54% risk free rate, and no forfeiture rate.

 

Effective December 1, 2020, the Company granted stock options to purchase 10,000 shares of common stock to a Company employee for services to the Company. These options vest on December 1, 2021 and expire 5 years after the vesting date, with an exercise price of $3.40 per share. The Company has calculated the estimated fair market value of these options at $16,315 using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $3.30, exercise price $3.40, 71.60% volatility, 0.55% risk free rate, and no forfeiture rate.

 

2019

 

Effective February 11, 2019, the Company granted stock options to purchase 730,000 shares of our common stock to various Company personnel (including directors, executives, members of management and employees) for services to the Company. These options vested on February 11, 2020 and expire 5 years after the vesting date, with an exercise price of $3.25 per share. The Company has calculated the estimated fair market value of these options at $1,569,816, using the Black-Scholes model and the following assumptions: term 6 years, stock price $3.16, exercise price $3.25, 77.86% volatility, 2.52% risk free rate, and no forfeiture rate. Subsequent to the February 2019 grant, stock options to purchase 45,000 shares of common stock subject to the grant were forfeited.

                 

Below is a table summarizing the options issued and outstanding as of December 31, 2020, all of which were issued pursuant to the 2011 Plan (for option issuances prior to 2016) or the 2015 Plan (for option issuances commencing in 2016)and which have a weighted average exercise price of $4.00 per share and an aggregate weighted average remaining contractual life of 2.98 years.

 

As of December 31, 2020, an aggregate of 251,867 shares of common stock remained available for future issuance under the 2015 Plan.

 

											Weighted Average				Proceeds to
							Exercise				Remaining				Company if
Number			Number				Price				Contractual Life				Exercised
Outstanding			Exercisable				($)				(Years)				($)
685,000				685,000				3.25				4.12				2,226,250
10,351				10,351				3.35				0.33				34,676
10,000				-				3.40				5.92				34,000
820,000				-				3.60				5.28				2,952,000
20,000				20,000				3.80				0.38				76,000
1,782,837				1,782,837				4.00				1.81				7,131,348
15,268				15,268				4.35				1.15				66,416
89,163				89,163				4.38				3.06				390,534
50,000				50,000				4.80				2.00				240,000
796,000				796,000				5.00				2.24				3,980,000
4,278,619				3,448,619												17,131,224

   

Stock-based compensation expense related to stock options of $1,220,165 and $1,458,607 were recorded for the years ended December 31, 2020 and December 31, 2019 respectively. Total remaining unrecognized compensation cost related to non-vested stock options is approximately $416,706 and is expected to be recognized over a period of 0.92 years. As of December 31, 2020, the total intrinsic value of stock options was $688,489.

 

c) Restricted Stock Units (RSUs)

 

Below is a table summarizing the RSUs issued and outstanding as of December 31, 2020, all of which were issued pursuant to the 2015 Stock Incentive Plan.

 

Effective April 13, 2020, the Company granted RSUs of 52,500 shares of common stock to various Company personnel (including a director and an employee) in exchange for services provided to the Company. These RSUs vest over 2 years, with 50% vesting on each of April 13, 2021 and April 13, 2022 and will result in total compensation expense of $184,800.

              

Effective December 1, 2020, the Company granted RSUs of 15,000 shares of common stock to a non-executive director of the Company in exchange for services provided to the Company. These RSUs vest over 2 years, with 50% vesting on each of December 1, 2021 and December 1, 2022 and will result in total compensation expense of $49,500.

 

						Weighted Average
		Number of				Exercise Price
		RSUs				($)
Outstanding at December 31, 2019			-				-
Granted			67,500				3.47
Vested			-				-
Cancelled			-				-
Outstanding at December 31, 2020			67,500				3.47

   

Below is a table summarizing the RSUs issued and outstanding as of December 31, 2020 and which have an aggregate weighted average remaining contractual life of 0.92 years.

 

				Weighted Average
				Remaining
Number		Share Price		Contractual Life
Outstanding		($)		(Years)
15,000		3.30		1.42
52,500		3.52		0.78
67,500				0.92

   

Stock-based compensation expense related to RSUs of $102,786 and $nil was recorded in the year ended December 31, 2020, and December 31, 2019, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $131,514. As of December 31, 2020, the total intrinsic value of RSUs was $262,575.