. Share-based payments

Stock options

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted average of the applicable assumption used to value stock options at their grant date. The Company calculates expected volatility based on historical volatility of the Company's common shares. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on historical exercise experience. The Company evaluated historical exercise behavior when determining the expected term assumptions. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the market price of Tucows Inc. common shares at the date of grant.

Details of stock option transactions for the

three

months ended

March 31, 2018

and

March 31, 2017

are as follows:

	Three months ended March 31,					Three months ended March 31,
	2018					2017
	Number of shares			Weighted average exercise price per share		Number of shares			Weighted average exercise price per share

Outstanding, beginning of period		653,571		$	36.69		474,501		$	12.67
Granted		11,000			58.52		32,875			40.56
Exercised		(12,563	)		7.79		(68,876	)		7.83
Forfeited		(17,125	)		42.54		(7,889	)		18.46
Expired		-			-		-			-
Outstanding, end of period		634,883			37.48		430,611			15.46
Options exercisable, end of period		245,933		$	16.62		264,753		$	10.72

As of

March 31, 2018,

the exercise prices, weighted average remaining contractual life and intrinsic values of outstanding options were as follows:

			Options outstanding								Options exercisable
Exercise price			Number outstanding		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value		Number exercisable		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value

$ 2.92	-	$ 8.92		81,695	$	6.81		0.7	$	4,018,538		81,695	$	6.81		0.7	$	4,018,538
$10.16	-	$19.95		117,013		16.31		2.5		4,644,246		90,613		15.93		2.3		3,631,248
$21.10	-	$27.53		75,000		23.67		3.1		2,424,562		55,000		24.61		2.8		1,726,562
$35.25	-	$37.35		14,375		35.89		4.4		289,094		10,625		36.11		4.2		211,281
$43.15	-	$47.00		18,500		44.19		5.1		218,475		8,000		43.75		5.1		97,988
$53.20	-	$58.65		328,300		55.51		5.4		188,055		-		-		-		-
				634,883	$	37.48		4.0	$	11,782,970		245,933	$	16.62		2.0	$	9,685,617

Total unrecognized compensation cost relating to unvested stock options at

March 31, 2018,

prior to the consideration of expected forfeitures, is approximately

$5.8

million and is expected to be recognized over a weighted average period of

2.8

years.

The Company recorded stock-based compensation of

$0.6

million for the

three

months ended

March 31, 2018

and

$0.3

million for the

three

months ended

March 31, 2017,

respectively.

The Company has

not

capitalized any stock-based compensation expense as part of the cost of an asset.