Warrants And Options

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Note 8 - Warrants and Options

a) Warrants

The following table summarizes the changes in warrants outstanding of the Company during the nine-month period ended September 30, 2018:

	Number of Warrants			Weighted Average Exercise Price ($)
Outstanding at December 31, 2017		1,731,680			2.36
Granted		5,000,000			3.00
Exercised		(29,375	)		2.00
Expired		(24,375	)		2.98
Outstanding at September 30, 2018		6,677,930			2.84
Exercisable at September 30, 2018		1,552,930			2.35

On August 10, 2018, in conjunction with the PIPE transaction (see Note 7), the Company issued to Cotterford Company Limited a warrant to purchase up to 5.0 million shares of common stock at an exercise price of $3.00 per share payable in cash (subject to adjustment pursuant to the terms of the warrant). The warrant has an expiration date of August 10, 2019 and is exercisable for a period of 6 months commencing on February 10, 2019.

Below is a table summarizing the warrants issued and outstanding as of September 30, 2018, which have a weighted average exercise price of $2.84 per share and an aggregate weighted average remaining contractual life of 0.82 years.

						Weighted
						Average
						Remaining
						Contractual		Proceeds to
Number		Number		Exercise		Life		Company if
Outstanding		Exercisable		Price ($)		(Years)		Exercised ($)
	948,475		948,475		2.20		0.41		2,086,645
	520,455		520,455		2.40		0.19		1,249,092
	150,000		25,000		2.47		3.93		370,500
	5,000,000		-		3.00		0.86		15,000,000
	19,000		19,000		3.75		0.13		71,250
	40,000		40,000		4.53		2.13		181,200
	6,677,930		1,552,930						18,958,687

Warrant expense of $6,453 and $38,806 was recorded in the nine-months ended September 30, 2018 and September 30, 2017, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is approximately $19,137 and is expected to be recognized over a period of 2.3 years. As of September 30, 2018, the total intrinsic value of warrants was $486,792.

b) Options

The following table summarizes the changes in options outstanding of the Company during the nine-month period ended September 30, 2018:

				Weighted Average
	Number of Options			Exercise Price ($)
Outstanding at December 31, 2017		2,939,134			4.09
Granted		805,000			4.00
Exercised		-			-
Expired/Cancelled		(130,167	)		5.00
Outstanding at September 30, 2018		3,613,967			4.03
Exercisable at September 30, 2018		2,813,967			4.04

Effective January 23, 2018, the Company granted stock options to purchase a total of 780,000 shares of common stock to various Company personnel (including directors, executives, members of management and employees) for services to the Company. These options vest on January 23, 2019 and expire 5 years after the vesting date, with an exercise price of $4.00 per share. The Company has calculated the estimated fair market value of these options at $1,930,265, using the Black-Scholes model and the following assumptions: term 6 years, stock price $3.75, exercise price $4.00, 75.4% volatility, 2.55% risk free rate, and no forfeiture rate.

Effective September 28, 2018, the Company granted stock options to purchase 25,000 shares of common stock to the Company controller for services to the Company. These options vest on September 28, 2019 and expire 5 years after the vesting date, with an exercise price of $4.00 per share. The Company has calculated the estimated fair market value of these options at $39,733, using the Black-Scholes model and the following assumptions: term 6 years, stock price $2.59, exercise price $4.00, 77.59% volatility, 3.01% risk free rate, and no forfeiture rate.

Below is a table summarizing the options issued and outstanding as of September 30, 2018, 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 $4.03 per share and an aggregate weighted average remaining contractual life of 3.36 years. As of September 30, 2018, an aggregate of 789,000 shares of common stock remained available for future issuance under the 2015 Stock Incentive Plan.

						Weighted
						Average
						Remaining		Proceeds to
Number		Number		Exercise		Contractual		Company if
Outstanding		Exercisable		Price ($)		Life (Years)		Exercised ($)
	17,766		17,766		2.35		1.45		41,750
	322,500		322,500		2.50		0.39		806,250
	322,500		322,500		3.00		1.39		967,500
	17,767		17,767		3.35		2.45		59,519
	20,000		20,000		3.80		1.13		76,000
	1,915,333		1,115,333		4.00		4.60		7,661,332
	17,767		17,767		4.35		3.45		77,286
	50,000		50,000		4.80		4.26		240,000
	930,334		930,334		5.00		3.01		4,651,670
	3,613,967		2,813,967						14,581,307

Stock option expense of $1,875,507 and $1,827,604 was recorded in the nine-months ended September 30, 2018 and September 30, 2017, respectively. Total remaining unrecognized compensation cost related to non-vested stock options is approximately $647,899 and is expected to be recognized over a period of 0.99 years. As of September 30, 2018, the total intrinsic value of stock options was $33,289.