Annual report pursuant to Section 13 and 15(d)

Equity

v3.8.0.1
Equity
12 Months Ended
Dec. 31, 2017
Equity [Abstract]  
Equity

Note 13 - Equity

 

The holders of common shares are entitled to one vote per share at meetings of the Company. Holders of Series B convertible preferred shares have no voting rights 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 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. $21,103 and $30,153 was recorded during the years ended December 31, 2017 and 2016 as administrative expense on the Consolidated Statement of Operations and Comprehensive Loss and the remaining $3,469 is reported as deferred compensation, a contra equity account, on the Condensed Consolidated Balance Sheet as of December 31, 2017.

 

On January 13, 2017, the Company completed a public offering of 1,789,500 common shares, raising net proceeds of $1,652,994. Below is a summary of the gross proceeds to net proceeds calculation.

 

    Shares     $     $
Common Shares                
Base Offering     1,667,000       2,000,400      
Over-Allotment     122,500       147,000      
Gross Proceeds                   2,147,400
Underwriter/Gunnar Expenses                    
Discount             150,318      
Legal Fees             60,000      
Roadshow             1,783      
Miscellaneous             34,005      
Total                   246,106
Akers Biosciences Expenses                    
Legal & Accounting             197,813      
Registration/Regulatory             50,487      
Total                   248,300
Net Proceeds                   1,652,994

 

In addition to the common shares issued, the Company also issued 894,750 warrants with an exercise price of $1.50 per common share. All of the warrants issued have a five-year term.

  

On March 30, 2017, the Company completed a private placement of 1,448,400 unregistered shares of common stock, raising net proceeds of $1,760,317. The unregistered shares were admitted to trading on September 30, 2017 upon notification from the Securities and Exchange Commission that the Registration Statement, filed April 19, 2017, had been deemed effective. Below is a summary of the gross proceeds to net proceeds calculation.

 

    Shares     $     $  
Common Shares                        
Base Offering     1,448,400       2,027,760          
Gross Proceeds                     2,027,760  
Underwriter/Gunnar Expenses                        
Discount             141,943          
Legal Fees             50,000          
Total                     191,943  
Akers Biosciences Expenses                        
Legal & Accounting             75,000          
Filing Fees             500          
Total                     75,500  
Net Proceeds                     1,760,317  

 

In addition to the common shares issued, the Company also issued 796,620 warrants with an exercise price of $1.96 per common share with a five-year term.

 

On April 11, 2017, the Company issued 10,000 restricted shares to a consultant for services to be rendered during the year ending December 31, 2017. These shares vested on the date of the grant. The fair value of these shares was $18,000 and was based on the share price on the date of the grant. The company recorded $5,455 during the year ended December 31, 2017 as sales and marketing expenses on the Consolidated Statement of Operations and Comprehensive Loss. The Company will recognize the remaining expense of $12,545 during the year ending December 31, 2018.

 

On October 12, 2017, the Company entered into Warrant Exercise Agreements with the existing holders of 724,200 warrants from the March 2017 private placement with an original exercise price of $1.96 per share to exercise their current warrants at $1.00 per share and receive a new warrant which would be convertible into the same number of common shares as the original warrant. The new warrant has an exercise price of $1.26 and expire five years from the date of issuance. The increase in fair value of the reduction in the exercise price of the warrants from $1.96 to $1.00 was $93,386. The Company used the Black-Scholes option pricing model to calculate the increase in fair value with the following assumptions for the decrease in exercise price: no dividend yield, expected volatility of 97.16%, risk free interest rate of 1.95%, and expected warrant life of 4.47 years. The fair value of the new warrants issued of 724,200 was $671,546. The Company used the Black-Scholes option pricing model to calculate the fair value with the following assumptions for the issuance of the new warrants: no dividend yield, expected volatility of 97.16%, risk free interest rate of 1.95%, and expected warrant life of 5 years. In accordance with FASB ASC 718-20-35, expenses related to the modification and re-issue of the warrants totaled $764,932 which are included as warrant modification expenses on the Consolidated Statement of Operations and Comprehensive Loss. The Company received net proceeds of $680,748 net of a solicitation fee of $43,452 from the exercise of 724,200 warrants.

 

On October 17, 2017, the Board of Directors issued 295,107 restricted shares of common stock to key employees and officers of the Company as part of the 2017 Equity Incentive Plan. The restricted stock vested immediately and were valued at the closing stock price of $0.88 per share. The fair value of the restricted shares totaled $259,694 and were expensed immediately. The expense is included in the Consolidated Statement of Operations and Comprehensive Loss for the year ending December 31, 2017 as follows:

 

Expense Category   2017     2016  
General & Administrative   $ 163,924        
Sales & Marketing     95,770        
    $ 259,694     $  

 

On December 21, 2017, the Company completed a public offering of 21,500,000 common shares and 3,675 Series B convertible preferred shares, raising net proceeds of $6,065,586. Below is a summary of the gross proceeds to net proceeds calculation.

    Public Offering - December 21, 2017
    Shares   $   $
Common Shares            
Base Offering     15,500,000       2,325,000          
Over-Allotment     6,000,000       900,000          
Series B Preferred Shares                        
Base Offering     3,675       3,675,000          
Gross Proceeds                     6,900,000  
Underwriter/Gunnar Expenses                        
Discount             483,000          
Non-Accountable Allowance             60,000          
Legal Fees             75,000          
Roadshow             2,558          
Miscellaneous             36,500          
Total                     657,058  
Akers Biosciences Expenses                        
Legal & Accounting             160,000          
Registration/Regulatory             17,356          
Total                     177,356  
Net Proceeds                     6,065,586  

 

In addition to the common shares issued, the Company also issued 46,000,001 warrants with an exercise price of $0.1875 per common share in support of the base offering. All the warrants issued have a five-year term.

 

During the year ended December 31, 2017, warrant holders from the January 13, 2017 public offering executed 200,800 warrants with an exercise price of $1.50 per common share, raising net proceeds of $301,200.