Note 11 - Equity

The holders of common shares are entitled to one vote per share at meetings of the Company. Holders of Series A convertible preferred shares are entitled to five votes per share at meetings of the Company.

A restricted stock award is an award of common shares that are subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares on non-vested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon and are considered to be currently issued and outstanding. The Company’s restricted stock awards vest of a period of one to three years. The Company expenses the cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, straight-line over the period during which the restrictions lapse. For these purposes, the fair market value of the restricted stock is determined based on the closing price of the Company’s common stock on the grant date.

On June 8, 2016, the Company issued 27,500 restricted common shares to an officer in connection with his employment agreement. These shares vest 1/3 immediately on the date of the grant and the remaining 2/3 vests equally on March 1, 2017 and March 1, 2018. The fair value of these shares was $54,725 and was based on the share price on the date of the grant. $5,204 was recorded during the three months ended March 31, 2017 as administrative expense on the Condensed Consolidated Statement of Operations and Comprehensive Loss and the remaining $19,369 is reported as deferred compensation, a contra equity account, on the Condensed Consolidated Balance Sheet as of March 31, 2017.

On January 13, 2017, the Company completed a public offering of 1,789,500 common shares, raising net proceeds of $1,692,044. Below is a summary of the gross proceeds to net proceeds calculation.

In addition to the common shares issued, the Company also issued 833,500 warrants with an exercise price of $1.50 per common share in support of the base offering and 61,250 warrants with an exercise price of $1.20 per common share. All of the warrants issued have a five-year term.

On March 27, 2017, two warrant holders from the January 13, 2017 public offering executed 160,000 warrants with an exercise price of $1.50 per common share, raising net proceeds of $240,000.

On March 28, 2017, two warrant holders from the January 13, 2017 public offering executed 3,300 warrants with an exercise price of $1.50 per common share, raising net proceeds of $4,950.

On March 30, 2017, the Company completed a private placement of 1,448,400 unregistered shares of common stock, raising net proceeds of $1,760,817. The unregistered shares will be admitted to trading once a Registration Statement, which will be filed with the Securities and Exchange Commission within 20 days, has been deemed effective. Below is a summary of the gross proceeds to net proceeds calculation.

In addition to the common shares issued, the Company also issued 724,200 warrants with an exercise price of $1.96 per common share with a five-year term. 

The following is a reconcilement of the movement of shares of Series A Convertible Preferred stock (“preferred stock”) and common stock: