Note 6 - Stockholders’ Equity

Stock Options

The Company has one incentive stock plan, the Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”), and has granted stock options to employees, non-employee directors and consultants from the 2011 Plan. Options granted under the 2011 Plan may be Incentive Stock Options or Non-statutory Stock Options, as determined by the Administrator at the time of grant. In January 2016, the Company issued a warrant to purchase 125,000 shares of the Company’s common stock to an investor relations firm as partial compensation for consulting services it will provide to the Company over a two year period. Pursuant to applicable policies of the TSX-V, the shares issuable under the warrant will be counted against the limit of shares authorized for issuance under the 2011 Plan, notwithstanding that the warrant was not issued under the 2011 Plan. After giving effect to this limitation there are 1,665,572 shares remaining available for issuance under the 2011 Plan at June 30, 2016.

During the six months ended June 30, 2016, the Company granted stock options to employees to purchase 1,696,000 shares of the Company’s common stock. The stock options have exercise prices that range from $1.10 to $1.55 per share, are subject to vesting over four years, have terms of ten years and have an aggregate grant date fair value of approximately $1,418,000.

During the six months ended June 30, 2016, 10,000 stock options were exercised for cash proceeds of $2,600.

The Company recorded $209,655 and $70,691 of stock based compensation in the three months ended June 30, 2016 and 2015, respectively. The Company recorded $333,301 and $216,205 of stock-based compensation in the six months ended June 30, 2016 and 2015, respectively.

The following table represents stock option activity for the six months ended June 30, 2016:

The table above includes (i) 260,218 options granted to agents that took part in the IPO in the outstanding and exercisable balances at June 30, 2016 and (ii) 470,930 options exercised by agents that took part in the IPO in exercised balance. All other balances are for employees and consultants.

Agent’s Compensation Options

In connection with the closing of its Initial Public Offering (“IPO”) in January 2015 the Company issued 786,696 compensation options (“Compensation Options”) to the agents that took part in the offering. Each Compensation Option was exercisable for a unit consisting of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.00 per unit. The Compensation Options expired on July 6, 2016. Each whole warrant issuable upon exercise of Compensation Options is exercisable to acquire one share of common stock at an exercise price of $2.00 per share at any time up to January 6, 2017, subject to the Company’s right to accelerate the expiration time of the warrants if at any time the volume-weighted average trading price of its common stock is equal to or exceeds $3.00 per share for twenty (20) consecutive trading days. Because the Compensation Options are considered a cost of the IPO, the resulting value is recognized as both an increase and decrease to the equity section of the accompanying condensed balance sheets.

During the six months ended June 30, 2016, the agents that took part in the Company’s IPO exercised a total of 470,930 Compensation Options into shares of common stock for cash proceeds of $470,930. An additional 25,431 Compensation Options were exercised during the six months ended June 30, 2016 for cash proceeds of $25,431. The common shares were subsequently issued in July 2016. The proceeds from the 25,431 Compensation Option exercise are included in Additional Paid-in Capital in the accompanying condensed balance sheet. As of June 30, 2016, 234,787 Compensation Options were outstanding.

The following table summarizes information on stock options outstanding and exercisable as of June 30, 2016:

Warrants

In January 2016, the Company issued a warrant to purchase 125,000 shares of the Company’s common stock to an investor relations firm as partial compensation for consulting services it will provide to us over a two-year period.  The warrant is exercisable at $1.15 per share, has a term of three years and is subject to vesting over the two-year service period.

During the three months ended June 30, 2016, the Company issued 232,140 common stock purchase warrants to agents that exercised their Compensation Options. During the six months ended June 30, 2016, the Company issued 235,465 common stock purchase warrants to agents that exercised their Compensation Options.

During the three and six months ended June 30, 2016, a total of 356,123 common stock purchase warrants were exercised into shares of common stock for cash proceeds of $712,246.

As of June 30, 2016, the Company has 7,940,733 warrants outstanding and exercisable to purchase common stock. Such warrants have a weighted average exercise price of $1.78, a weighted average remaining contractual life of 1.3 years and an aggregate intrinsic value of $2,508,405.