NOTE 18:

SUBSEQUENT EVENTS

On January 1, 2015, the number of shares reserved for the issuance of stock awards covered by the 2009 Equity Incentive Plan (Note 15) increased to an aggregate of 3,395,217, after adding 532,597 shares.

Between January 5 and January 12, 2015, the Company issued 22,232 shares of common stock upon the exercise of warrants originally issued in the June 2013 private placement financing. The exercise price was $3.40 and the Company received $75,589 in proceeds.

On January 8, 2015, the Company issued common stock upon exercise of an investor warrant. The investor utilized a cashless net exercise (based on a price of $6.81 per share) of 72,150 warrants with an exercise price of $3.40 and received 36,132 shares of common stock.

On January 12, 2015, the Company issued 2,300,000 shares of common stock in an underwritten public offering at a public offering price of $5.00 per share. The total gross proceeds from the offering were approximately $11,500,000, before the approximately $800,000 in underwriting discounts and commissions and other offering expenses and before any use of the proceeds by the Company.

From January 22 to March 13, 2015, a total of 317,468 shares of the company issued Series A Convertible Preferred Stocks held by the investors in the August 2014 private placement transaction were converted to 317,468 shares of common stock. The Series A Preferred is convertible into shares of common stock at an initial conversion rate of 1-for-1 (subject to stock splits, reverse stock splits and similar events) at any time at the discretion of the investor.

On January 23, 2015, the Company issued options to purchase 613,163 shares of common stock to the officers and employees of the Company under the 2009 Equity Incentive Plan with an exercise price of $5.99 per share. The options were granted based on a guideline and not for performance during the year ended December 31, 2014 and will vest over a period of three years. These options were valued using the Black-Scholes option pricing model, the expected volatility was approximately 99% and the risk-free interest rate was approximately 2%, which resulted in a calculated fair value of $2,881,866. The Board of Directors also approved a total of $411,500 in cash bonus to the Company’s officers and employees with respect to performance during the period ended December 31, 2014. The amount of bonus was paid in January 2015 but was accrued and expensed during the period ended December 31, 2014.

On February 2, 2015, the Company issued 3,666 shares of common stock to a third party pursuant to an agreement in consideration for business advisory services covering February 1 to April 30, 2015.