|9 Months Ended|
Sep. 30, 2018
NOTE 8 – EQUITY
In January 2017, the Company increased the number of authorized shares of preferred stock from 5 million to 50 million shares.
During the nine months ended September 30, 2017, the Company issued subscriptions on 200,000 shares of Series A convertible preferred stock at $1.00 per share. No subscriptions were issued during the same period in 2018.
Series A convertible preferred stock accrues an annual dividend of six percent until conversion, and 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 shall have 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.
In January 2018, all 500,000 shares of subscribed Series A convertible preferred stock were converted into 970,989 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. No shares were converted during the same period in 2017.
In January 2017, the Company increased the number of authorized shares of common stock from 100 million to 500 million shares.
In June 2017, the Company issued 75 million shares of common stock to acquire the remaining 49% interest in its subsidiary MariMed Advisors Inc.
During the nine months ended September 30, 2018, the Company sold 14,189,738 shares of common stock at prices ranging from $0.50 to $2.70 per share, resulting in total proceeds of $16,896,000. During the same period in 2017, the Company sold 22,178,888 shares of common stock at prices of $0.18 and $0.25 per share, resulting in total proceeds of $5,150,000.
During the nine months ended September 30, 2018 and 2017, the Company issued 3,350,934 and 531,597 shares of common stock, respectively for services rendered by third parties. The Company recorded non-cash losses of approximately $1,015,000 in 2018 and $31,000 in 2017, based on the market value of the common stock on the issuance dates.
Subscribed Common Stock
In September 2017, options to purchase 4.8 million shares of common stock were exercised at prices ranging from $0.010 to $0.025, as discussed in Note 9 below. Of this amount, 4.5 million shares were exercised by the former CEO of the Company, who is currently a board member, and 300,000 shares were exercised by the former CFO of the Company. The shares of common stock were issued to these individuals in October 2017.
In October 2017, the Company issued subscriptions on 1,000,000 shares of common stock as part of the purchase price of the Betty’s Eddies™ acquired assets, as disclosed in Note 3. These subscriptions, valued at $370,000 based on the price of the common stock on the issuance date, were classified under Common Stock Subscribed But Not Issued within the equity section of the Company’s balance sheet at December 31, 2017. The shares of common stock associated with these subscriptions were issued in June 2018.
During the nine months ended September 30, 2018, the Company issued (i) subscriptions on 264,317 shares of common stock to acquire iRollie LLC, valued at $600,000 based on the price of the common stock on the issuance date, as disclosed in Note 3, (ii) subscriptions on 2,894 shares of common stock, equivalent to an aggregate amount of $10,000, for the payment of rent for the month of September 2018 for a leased property in Massachusetts, and (iii) subscriptions on 1,231,060 shares of common stock to convert previously issued promissory notes with principal balances of $3,250,000 at a conversion price of $2.64 per share, as disclosed in Note 7. These subscriptions on common stock were classified under Common Stock Subscriptions within the current liabilities section of the Company’s balance sheet.
During the nine months ended September 30, 2018, an individual member of Mari Holdings MD LLC, a majority owned subsidiary of the Company, exchanged his membership interest in such subsidiary for 222,222 shares of the Company’s common stock. During the nine months ended September 30, 2017, the Company issued 1,667 Class A membership units of Mari-MD for $150,000, representing 0.33% ownership of this subsidiary on the transaction date.
In September 2018, a receivable balance of $25,000, related to previously issued membership interests in a majority-owned subsidiary, was settled by way of the membership interest holder providing consulting services to the Company at a value equivalent to the outstanding balance.
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