Note 12 - Share-based Payments

On January 23, 2014, upon effectiveness of the registration statement filed with the SEC, the Company adopted the 2013 Stock Incentive Plan (the “Plan”) which will provide for the issuance of up to 400,000 shares. The purpose of the Plan is to provide additional incentive to those officers, employees, consultants and non-employee directors of the Company and its parents, subsidiaries and affiliates whose contributions are essential to the growth and success of the Company’s business.

On January 9, 2015, the Board of Directors of the Company approved, upon recommendation from the Compensation Committee of the Board, by unanimous written consent the Amended and Restated 2013 Incentive Stock and Award Plan (the “Amended Plan”), which increases the number of authorized shares of common stock subject to the Plan to 800,000 shares.

On September 30, 2016, the Board of Directors increased the number of authorized shares of common stock subject to the Amended Plan to 830,000 shares. As of December 31, 2017, under the 2013 Amended Plan, grants of restricted stock and options to purchase 264,166 shares of common stock have been issued and are unvested or unexercised and 7,292 shares of common stock remain available for grants.

On August 7, 2017, the Shareholders approved and the Company adopted the 2017 Equity Incentive Plan (the “Plan”) which will provide for the issuance of up to 1,350,000 shares. The purpose of the Plan is to provide additional incentive to those officers, employees, consultants and non-employee directors of the Company and its parents, subsidiaries and affiliates whose contributions are essential to the growth and success of the Company’s business. As of December 31, 2017, under the 2017 Plan, grants totaling 295,107 shares of restricted common stock have been issued and 1,054,893 shares of common stock remain available for grants.

The Plan may be administered by the board or a board-appointed committee. Eligible recipients of option awards are employees, officers, consultants or directors (including non-employee directors) of the Company or of any parent, subsidiary or affiliate of the Company. The board has the authority to grant to any eligible recipient any options, restricted stock or other awards valued in whole or in part by reference to, or otherwise based on, the Company’s common stock.

Qualified option holders may exercise their options at their discretion. Each option granted may be exchanged for a prescribed number of shares of common stock.

On January 1, 2016, the Company approved the issuance of 12,500 options to purchase common shares to a key consultant for services at an exercise price of $3.70 per common share with vesting over one year. The options carry a five-year expiration.

On August 9, 2016 the Company approved the issuance of 26,000 options to purchase common shares to two key employees at an exercise price of $3.25 per common share with vesting over two years. The options carry a five-year expiration.

The options issued under the above plan were valued using a Black Scholes option pricing model. The assumptions utilized in calculating the value of the issued options under Black Scholes are as follows:

The Company did not issue any options or warrants under the above plan during the year ended December 31, 2017.

The following table summarizes the option activities for the years ended December 31, 2017 and 2016:

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $0.13 and $1.90 for our common shares on December 31, 2017 and 2016.

A summary of the Company’s non-vested shares as of December 31, 2017 and the changes during the period then ended are as follows:

Unrecognized compensation cost related to non-vested employee stock options totaled $6,930 as of December 31, 2017. The cost is to be recognized over a weighted average period of 0.62 years.

During the years ended December 31, 2017 and 2016, the Company incurred stock option expenses totaling $19,457 and $51,653.

During the year ended December 31, 2017, the Company issued 50,415,571 warrants in conjunction with two public offerings and a private placement of the Company’s common shares. All warrants carry a five-year expiration term. The table below summarizes the warrant activity for the year ended December 31, 2017: