16. Equity Incentive Plan

On July 12, 2013, the Company’s stockholders approved the Company’s 2013 Equity Incentive Plan (the “2013 Plan”) and the reservation of 2,500,000 shares of the Company’s common stock for issuance under the 2013 Plan. The 2013 Plan is intended to promote the interests of the Company and its stockholders by providing the Company’s employees, directors and consultants with incentives and rewards to encourage them to continue in the Company’s service and with a proprietary interest in pursuing the Company’s long-term growth, profitability and financial success. Equity awards available under the 2013 Plan include stock options, stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units, share-denominated performance units and cash awards. The 2013 Plan is administered by the compensation committee of the board of directors of the Company, which has the authority to designate the employees, consultants and members of the board of directors who will be granted awards under the 2013 Plan, to designate the amount, type and other terms and conditions of such awards and to interpret any and all provisions of the 2013 Plan and the terms of any awards under the 2013 Plan. The 2013 Plan will terminate on the tenth anniversary of its effective date.

In August 2013 the Company awarded 1,660,000 options to its employees. These options have an exercise price of $8.10 and vest over a three-year period. The expense recognized for these options for the years ended December 31, 2014 and 2013 was $1,810,954 and $1,325,455, respectively. The unamortized cost of these options at December 31, 2014 was $1,891,441 to be recognized over a weighted-average life of 1.62 years. The unamortized cost of these options at December 31, 2013 was $5,414,145 to be recognized over a weighted-average life of 2.3 years. At December 31, 2014 and 2013, 565,000 and zero of these options were exercisable, respectively. There was no intrinsic value associated with these options as of December 31, 2014 and December 31, 2013. The weighted-average remaining contractual life of the options outstanding is 8.8 years.

On August 13, 2013 the Company granted its Chief Executive Officer 350,000 shares of common stock under the 2013 Plan. The shares had a three-year vesting period beginning in April 2014. The calculated fair value of shares was $8.00 per share, equal to the share price on the date of the grant. On July 22, 2014 the CEO resigned. In connection with his resignation, the CEO became vested in 100,000 shares of common stock and the remaining unvested restricted stock grant was forfeited. The total expense recognized for these shares was $249,333 and $500,667 for the years ended December 31, 2014 and 2013, respectively.

On July 22, 2014, the Company awarded 500,000 options to its new CEO under the 2013 Plan. These options have an exercise price of $2.45 and vest over a 3.5 year period. The cost associated with these options for the year ended December 31, 2014 was $70,238. The unamortized cost of these options at December 31, 2014 was $519,762 to be recognized over a weighted-average life of 2.56 years. At December 31, 2014, none of these options were exercisable and there was no intrinsic value associated with these options. The weighted-average remaining contractual life of the options outstanding is 9.8 years.

In connection with the resignation of the Company's CFO during 2014, the Company's Board of Directors accelerated the vesting of 66,666 shares of unvested stock options for a total of 100,000.  The Company recognized no incremental costs during the year ended December 31, 2014 related to the modification.

A summary of the changes in outstanding stock options under all equity incentive plans is as follows:

Following is a summary of compensation expense recognized for the issuance of stock options and restricted stock grants for the year ended December 31, 2014 and period from April 20 through December 31, 2013:

The Company computed the estimated fair values of stock options using the Black-Scholes model. These values were calculated using the following assumptions:

EXPECTED TERM:  The  Company  does  not  have  sufficient   historical information to develop  reasonable  expectations  about future exercise patterns  and  post-vesting  employment  behavior,  so we estimate  the expected  term of awards  granted by taking the  average of the vesting  term  and  the  contractual  term  of the  awards,  referred  to as the simplified method.

VOLATILITY:  The expected volatility being used is based on a blend of comparable small- to mid-size public companies serving similar markets.

RISK FREE INTEREST RATE:  The risk free interest rate is based on the U.S.  Treasury's zero coupon issues with remaining terms similar to the expected term on the award.

DIVIDEND YIELD:  The  Company  has  never  declared  or paid  any cash dividends  and does not plan to pay cash  dividends in the  foreseeable future, and, therefore,  used an expected dividend yield of zero in the valuation model.

FORFEITURES: As we do not have sufficient historical information to develop reasonable expectations about forfeitures, we currently apply actual forfeitures.