NOTE

- STOCKHOLDERS' EQUITY

Common Stock

-- The Company has

25,000,000

authorized shares of common stock,

$0.001

par value. As of

June 30, 2019,

and

December 31, 2018,

respectively, there were

20,547,668

(after the

-to-

reverse stock split effective on

April 8, 2019)

and

18,228,887

common shares issued and outstanding.

Voting

-- Holders of the common stock are entitled to

one

vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do

not

have any right to cumulate votes in the election of directors.

Dividends

Subject to the rights and preferences of the holders of any series of preferred stock, if any, which

may

at the time be outstanding, holders of the common stock are entitled to receive ratably such dividends as our Board of Directors from time to time

may

declare out of funds legally available.

Liquidation Rights

In the event of any liquidation, dissolution or winding-up of affairs of the Company, after payment of all of our debts and liabilities and subject to the rights and preferences of the holders of any outstanding shares of any series of our preferred stock, the holders of the common stock will be entitled to share ratably in the distribution of any of our remaining assets.

Other Matters

Holders of the common stock have

conversion, preemptive or other subscription rights, and there are

redemption rights or sinking fund provisions with respect to our common stock. All of the issued and outstanding shares of common stock on the date of this report are validly issued, fully paid and non-assessable.

Preferred Stock

Our Board of Directors has the authority to issue preferred stock in

one

or more classes or series and to fix the designations, powers, preferences and rights, the qualifications, limitations or restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders. The issuance of preferred stock

may

have the effect of delaying, deferring or preventing a change in control without further action by the stockholders and

may

adversely affect the voting and other rights of the holders of common stock.

The Company has

2,500,000

authorized shares of preferred stock,

$0.001

par value. As of

June 30, 2019

and

December 31, 2018,

respectively, there were

mandatory convertible preferred shares issued and outstanding.

Stock Issuances

Since

January 1, 2019,

the Company has made the following issuances of common stock (adjusted to account for the

-to-

reverse stock-split on

April 8, 2019):

March 5, 2019,

the Company issued an additional

24,827

shares of restricted stock valued at

$112,500

for services provided by the Board of Directors. The shares vested immediately.

January 24,

January 28,

February 6

and

March 1, 2019,

the Company issued a total of

45,000

shares in connection with employees exercising shares in relation to the stock option plan entered in

2015.

The shares were issued at a share price of

$2.96

and generated net proceeds of

$133,200.

May 22, 2019,

the Company completed a registered public offering of its common stock. At closing, the Company issued

2,215,862

shares of common stock at a per share price of

$7.25

and generated net proceeds of

$14,674,738

including cost of

$1,390,262

for underwrites fee, lawyer fee, auditor fee and other cost related to the capital raise.

June 6, 2019

the Company issued an additional

28,887

shares in connection with a cashless exercise of warrant’s issued in

2014.

For the

six

months ended

June 30, 2019

and

2018,

the Company has recorded non-cash compensation expense of

$39,111

and

$27,434

relating to the awards, respectively.

Common Stock Purchase Warrants

June 6, 2019

the remaining warrants issued in

2014

were exercised on a cashless basis.

June 30, 2019

and

2018,

the Company had

non-vested warrants. We have recorded non-cash compensation expense of

for the period’s ended

June 30, 2019

and

2018

related to the warrants issued.

Stock Options

August 2011,

the Company’s Board of Directors adopted a Stock Option Plan (the “Plan”). Under the terms and conditions of the Plan, the Board of Directors is empowered to grant stock options to employees, officers, and directors of the Company. At

June 30, 2019,

25,000

options were granted and outstanding under the Plan.

The Company recognizes compensation costs for stock option awards to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model.

The Company recognized stock-based compensation expense related to the options of

and

$27,434

for

six

months ended

June 30, 2019

and

2018,

respectively. At

June 30, 2019,

the Company had

of unrecognized compensation cost related to non-vested options.

A summary of the status of the options outstanding under the Company’s stock option plans at

June 30, 2019

is presented below:

		Options Outstanding						Options Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	2.96		25,000		1.12	$	2.96		25,000	$	2.96
Total			25,000		1.12	$	2.96		25,000	$	2.96

A summary of the status of the options at

June 30, 2019,

and changes during the period is presented below:

	Shares			Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value

Outstanding at beginning of period		70,000		$	2.96		1.62	$	-
Granted		-			-		-		-
Exercised		(45,000	)		-		-		-
Forfeited		-			-		-		-
Expired		-			-		-		-
Outstanding at end of period		25,000		$	2.96		1.12	$	-
Vested and expected to vest		25,000		$	2.96		1.12	$	-
Exercisable end of period		25,000		$	2.96		1.12	$	-