a) Warrants

2017

The following table summarizes the changes in warrants outstanding of the Company during the year ended December 31, 2017:

During 2017, 392,651 warrants were exercised for net cash proceeds to the Company of $998,493. Refer to Note 7 for the details of the exercises.

During 2017, 38,307 warrants expired.

On February 14, 2017, as a result of a modification of a warrant agreement, the Company re-measured warrants held by an employee, to purchase 25,000 shares of common stock at an exercise price of $2.47 per share. These warrants vest on achievement of certain business objectives and expire 3 years from the date of vesting. The Company has calculated the estimated fair market value of these warrants using the Black-Scholes model and the following assumptions: term: 0.5 years, stock price: $4.52, exercise price: $2.47, 55.65% volatility, 0.66% risk free rate.

On August 22, 2017, the Company amended the expiry period of 24,000 warrants, originally granted on September 26, 2014. The expiration period was extended from three to four years for all 24,000 warrants, with their new expiration date being September 26, 2018. The Company recalculated the estimated fair market value of these warrants using the Black-Scholes model, but the result was deemed to be immaterially different to the original calculation and the financial statements were not adjusted.

On August 22, 2017, the Company amended the expiry period of 19,000 warrants, originally granted on November 17, 2014. The expiration period was extended from three to four years for all 19,000 warrants, with their new expiration date being November 17, 2018. The Company recalculated the estimated fair market value of these warrants using the Black-Scholes model, but the result was deemed to be immaterially different to the original calculation and the financial statements were not adjusted.

2016

During 2016, 490,101 warrants were exercised for net cash proceeds to the Company of $399,263. Refer to Note 7 for the details of the exercises.

On May 4, 2016, the Company amended the expiry period of warrants to purchase 341,458 shares, originally granted on May 11, 2012, with an exercise price of $2.60. The expiration period was extended from May 10, 2016 to May 10, 2017.

On July 11, 2016, the Company amended the expiry period of warrants to purchase 45,000 shares, originally granted on August 7, 2013, with an exercise price of $2.40. The expiration period was extended from August 7, 2016 to August 7, 2017.

On November 14, 2016, the Company granted warrants to purchase 40,000 shares of common stock at an exercise price of $4.53 per share. These warrants vested on the date of grant and expire four years from the date of vesting.

Below is a table summarizing the warrants issued and outstanding as of December 31, 2017, which have a weighted average exercise price of $2.36 per share and a weighted average remaining contractual life of 1.43 years.

Warrant option expense of $54,510 and $164,173 was recorded in the years ended December 31, 2017 and December 31, 2016, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is approximately $25,590 and is expected to be recognized over a period of 3.0 years. As of December 31, 2017, the total intrinsic value of warrants was $1,081,382.

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 Stock Incentive Plan (as amended, the “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. 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 year ended December 31, 2017:

2017

During 2017, 4,166 stock options were exercised to purchase shares of common stock at $3.00 per share in a cashless exercise that resulted in the issuance of 694 shares of common stock.

During 2017, stock options to purchase 312,000 shares of common stock expired unexercised.

On January 1, 2017, the Company granted options to purchase 50,000 shares. These options vest on January 1, 2018 and expire 5 years after the vesting date, with an exercise price of $4.80 per share. The Company has calculated the estimated fair market value of these options at $157,890, using the Black-Scholes model and the following assumptions: term 6 years, stock price $4.57, exercise price $4.80, 80.70% volatility, 2.26% risk free rate.

On February 13, 2017, the Company granted options to purchase 25,000 shares. These options vest on February 13, 2018 and expire 5 years after the vesting date, with an exercise price of $5.00 per share. The Company has calculated the estimated fair market value of these options at $76,773, using the Black-Scholes model and the following assumptions: term 6 years, stock price $4.52, exercise price $5.00, 80.17% volatility, 2.24% risk free rate.

On March 30, 2017, the Company granted stock options to purchase 686,000 shares of common stock. These options vest on March 30, 2018 and expire five years after their vesting date, with an exercise price of $5.00 per share. The Company has calculated the estimated fair market value of these options at $1,898,322, using the Black-Scholes model and the following assumptions: term of 6 years, stock price $4.18, exercise price $5.00, 79.41% volatility, 2.25% risk free rate.

On April 10, 2017, the Company granted stock options to purchase 100,000 shares of common stock. These options vest on April 10, 2018 and expire 5 years after the vesting date, with an exercise price of $5.00 per share. The Company has calculated the estimated fair market value of these options at $258,077, using the Black-Scholes model and the following assumptions: term 6 years, stock price $3.96, exercise price $5.00, 79.33% volatility, 2.18% risk free rate.

On July 13, 2017, the Company granted stock options to purchase 10,000 shares of common stock. These options vest on July 13, 2018 and expire 5 years after the vesting date, with an exercise price of $5.00 per share. The Company has calculated the estimated fair market value of these options at $19,068, using the Black-Scholes model and the following assumptions: term 6 years, stock price $3.15, exercise price $5.00, 78.41% volatility, 2.16% risk free rate.

On August 14, 2017, the Company amended the expiry period of stock options to purchase 37,000 shares of common stock, which options were originally granted on March 20, 2013 and amended on June 27, 2016. The expiration period was extended from four to six years, with the outside expiration date of March 20, 2022, after vesting for all 37,000 stock options. The Company recalculated the estimated fair market value of these options using the Black-Scholes model, but the result was deemed to be immaterially different to the original calculation and the financial statements were not adjusted.

On August 14, 2017, the Company amended the expiry period of stock options to purchase 16,300 shares of common stock, which options were originally granted on September 2, 2013 and amended on June 27, 2016. The expiration period was extended from four to six years, with the outside expiration date of September 2, 2022, after vesting for all 16,300 stock options. The Company recalculated the estimated fair market value of these options using the Black-Scholes model, but the result was deemed to be immaterially different to the original calculation and the financial statements were not adjusted.

2016

During 2016, stock options to purchase 36,000 shares of common stock expired unexercised.

During 2016, 235,000 stock options were exercised to purchase shares of our common stock at $2.50 to $3.00 per share in cashless exercises that resulted in the issuance of 53,657 shares of common stock.

On April 15, 2016, the Company granted options to purchase 775,000 shares, at an exercise price of $4.00 per share. These options vest in full twelve months from the date of grant and expire five years from the date of vesting.

On June 23, 2016, the Company granted options to purchase 15,000 shares, at an exercise price of $4.00 per share. The options will vest in full twelve months from the date of grant and will expire five years from the date of vesting.

On June 27, 2016, the Company amended the expiry period of 37,000 options, originally granted pursuant to Stock Option Agreements dated March 20, 2013, with an exercise price of $2.35 to $4.35 per share. The expiration period was extended from three to four years from the date of vesting for all 37,000 stock options.

On June 27, 2016, the Company amended the expiry period of 16,300 options, originally granted on pursuant to Stock Option Agreements dated September 2, 2013, with an exercise price of $2.35 to $4.35 per share. The expiration period was extended from three to four years from the date of vesting for all 16,300 stock options.

On September 13, 2016, the Company granted options to purchase 25,000 shares, at an exercise price of $4.65 per share. The options will vest in full twelve months from the date of grant and will expire five years from the date of vesting.

On November 11, 2016, the Company granted options to purchase 10,000 shares, at an exercise price of $5.00 per share. These options vest immediately and expire six years from the date of vesting.

Below is a table summarizing the options issued and outstanding as of December 31, 2017, 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) which have a weighted average exercise price of $4.09 per share and a weighted average remaining contractual life of 3.43 years.

Stock option expense of $2,435,088 and $1,678,748 was recorded in the years ended December 31, 2017 and December 31, 2016, respectively. Total remaining unrecognized compensation cost related to non-vested stock options is approximately $553,407 and is expected to be recognized over a period of 0.5 year. As of December 31, 2017, the total intrinsic value of stock options was $152,382.