|3 Months Ended|
Mar. 31, 2019
NOTE 13 – EQUITY
In January 2018, all 500,000 shares of subscribed Series A convertible preferred stock were converted into 970,988 shares of common stock at a conversion price of $0.55 per share. The Company recorded a non-cash loss on conversion of approximately $34,000 based on the market value of the common stock on the conversion date.
The Series A convertible preferred stock accrues an annual dividend of 6% until conversion. The preferred stock is convertible, along with any accrued dividends, into common stock at a twenty-five percent discount to the selling price of the common stock in a qualified offering, as defined in the subscription agreement. In addition, the Company has the ability to force the conversion of preferred stock at such time the Company has a market capitalization in excess of $50 million for ten consecutive trading days. In such event, the conversion price shall be a 25% discount to the average closing price of the Company’s common stock over the ten trading days prior to the Company’s notice of its intent to convert.
During the three months ended March 31, 2019, the Company sold 799,995 shares of common stock at a price of $3.25 per share, resulting in total proceeds of $2.6 million. During the same period in 2017, the Company sold 1,200,000 shares of common stock, at a price of $0.50 per share, resulting in total proceeds of $600,000.
During the three months ended March 31, 2019, the Company issued 97,136 common shares associated with previously issued subscriptions on common stock with a value of approximately $169,000. No such issuances occurred during the same period in 2018.
During the three months ended March 31, 2018, the Company issued 295,000 shares, in exchange for services rendered by third-parties or to otherwise settle outstanding obligations. Based on the market value of the common stock on the dates of issuance, the Company recorded non-cash losses on these settlements of approximately $204,000. No such issuances were made in 2019.
As previously disclosed in Note 12 – Debentures Payable, in January 2019, the Holder of the $10M Debentures converted $600,000 of principal and approximately $97,000 of accrued interest into 233,194 shares of common stock.
As further disclosed in Note 14 – Stock Options, during the three months ended March 31, 2019 and 2018, 260,015 and 300,000 shares of common stock, respectively, were issued in connection with the exercise of stock options.
As further disclosed in Note 15 – Warrants, during the three months ended March 31, 2019 and 2018, warrants to purchase 22,000 and 89,614 shares of common stock were exercised.
Common Stock Subscribed But Not Issued
At December 31, 2018, there were outstanding subscriptions on 79,136 shares of common stock related to the settlement of a previously issued promissory note with a principal balance of $50,000 and accrued interest of $1,454. These subscriptions had a value of approximately $95,000 based on the market value of the common stock on the settlement date. Also outstanding on such date were subscriptions on 18,000 shares of common stock, equivalent to an aggregate amount of approximately$74,000, for the payment of rent for the months of September 2018 through January 2019 for a leased property in Massachusetts. The shares of common stock associated with all outstanding subscriptions at December 31, 2018 were issued in March 2019.
During the three months ended March 31, 2018, the Company issued subscriptions on 1,319,432 shares of common stock, at prices of $0.65 and $0.95 per share, resulting in total proceeds of $875,000. No subscriptions on common stock were issued during the same period in 2019.
In February 2018, two promissory notes totaling $975,000 were converted into subscriptions on 1,346,153 shares of common stock. Based on the market value of the common stock on the conversion dates, the Company recorded a non-cash loss on these conversions of approximately $652,000. No such conversions occurred in 2019.
During the three months ended March 31, 2018, the Company issued subscriptions on 738,462 shares of common stock to settle an outstanding obligation. The Company recorded a non-cash loss of approximately $459,000 based on the market value of the common stock on the settlement date. No such settlements were made in 2018.
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef