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COMMON STOCK WARRANTS

12 Months Ended

Dec. 31, 2017

In connection with the October 23, 2017 public offering of 2,910,000 shares of Class B common stock the Company issued to underwriters warrants to purchase 218,250 shares of Class B common stock, which was equal to 7.5% of the aggregate number of shares of Class B common stock sold in the Offering. The Warrants are exercisable at a per share price of $6.325, which was equal to 115% of the Offering price per share of the shares sold in the Offering. The Warrants are exercisable at any time and from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the registration statement related to the Offering. The Company has classified the warrants as equity in accordance with ASC 815. The fair value of the warrants were valued at issuance using the Black-Scholes option pricing model with the following assumptions:

Warrants exercise price	$	6.325
Fair value price per share of common stock	$	5.50
Warrants outstanding		218,250
Volatility		62.0	%
Expected term remaining (years)		5.0
Risk-free interest rate		1.31	%
Dividend yield		—

The dividend yield assumption of zero is based upon the fact that we have never paid cash dividends and presently have no intention to do so. The risk-free interest rate used for each warrant classified as a derivative is equal to the U.S. Treasury rate. The expected term is based on the remaining contractual lives of the warrants at the valuation date. Since the Company’s stock was not traded frequently in the years before the valuation date the volatility may not reasonably reflect the Company’s true volatility. Therefore, we relied on the average volatility of selected comparable companies. There were no warrants exercised or forfeited for the year ended December 31, 2017. There was no aggregate intrinsic value in the warrants at December 31, 2017.

The fair value of the warrants at the initial valuation date was $505,273.