Annual report pursuant to Section 13 and 15(d)

NOTE 8 - EQUITY

v3.8.0.1
NOTE 8 - EQUITY
12 Months Ended
Dec. 31, 2017
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 8 – EQUITY

Equity

On January 11, 2016, the Company announced the payment of a $0.06 special cash dividend per share of Common Stock. The dividend payments were paid out on January 20, 2016 for an aggregate amount of $264,699, which reduced additional paid in capital.

On July 28, 2016 (the “Effective Date”), the Company entered into a Series B Preferred Stock Purchase Agreement (the “Preferred Stock Purchase Agreement”) with the Company’s Chief Executive Officer, Mr. Mark Meller, pursuant to which Mr. Meller was issued the only share of the Company’s authorized but unissued Series B Preferred Stock.  Mr. Meller was issued one (1) share of Series B Preferred Stock for (i) $100 in cash and (ii) as partial consideration for Mr. Meller’s personal guarantee of the Revolving Demand Note. Each one (1) share of the Series B Preferred Stock shall have voting rights equal to (x) the total issued and outstanding Common Stock eligible to vote at the time of the respective vote divided by (y) forty-nine one-hundredths (0.49) minus (z) the total issued and outstanding Common Stock eligible to vote at the time of the respective vote.  For the avoidance of doubt, if the total issued and outstanding Common Stock eligible to vote at the time of the respective vote is 5,000,000, the voting rights of the Series B Preferred Stock shall be equal to 5,204,082 (e.g. (5,000,000 / 0.49) – 5,000,000 = 5,204,082). The Series B Preferred Stock has the rights, privileges, preferences and restrictions set for in the Certificate of Designation (the “Certificate of Designation”) filed by the Corporation with the Secretary of State of the State of Delaware (“Delaware Secretary of State”) on September 23, 2011.

On January 23, 2017, the Company announced the payment of a $0.02 special cash dividend per share of Common Stock. The dividend payments were paid out on January 31, 2017 for an aggregate amount of $89,566, which was applied against additional paid in capital.

On January 27, 2017 the Company issued 100 shares of stock each to 125 non-executive employees of SWK valued at $47,500 based on the current market price at issue date.

On April 24, 2017, the Company announced the payment of a $0.02 special cash dividend per share of Common Stock. The dividend payments were paid out on May 10, 2017 for an aggregate amount of $89,816, which was applied against additional paid in capital.

On November 15, 2017, the Company announced the payment of a $0.04 special cash dividend per share of Common Stock. The dividend payments were paid out on December 4, 2017 for an aggregate amount of $179,632, which was applied against additional paid in capital.

Options

Total stock compensation recognized for the year ended December 31, 2017 and 2016 was $34,265 and $42,795, respectively. 

A summary of the status of the Company’s stock option plans for the fiscal years ended December 31, 2017 and 2016 and changes during the years are presented below (in number of options):

 
 
Number
of Options
   
Average
Exercise Price
 
Average Remaining
Contractual Term
 
Aggregate
Intrinsic Value
 
 
           
 
     
Outstanding options at January 1, 2016
   
183,576
   
$
4.49
 
2.7 years
 
$
-0-
 
Options granted
   
-
     
-
 
 
       
Options canceled/forfeited
   
(40,000
)
 
$
4.50
 
 
       
 
               
 
       
Outstanding options at December 31, 2016
   
143,576
   
$
3.76
 
1.6 years
 
$
-0-
 
Options granted
   
-
   
$
-
 
 
       
Options canceled/forfeited
   
(81,296
)
 
$
4.80
 
 
       
 
               
 
       
Outstanding options at December 31, 2017
   
62,280
   
$
3.78
 
2.0 years
 
$
-0-
 
 
               
 
       
Vested Options:
               
 
       
December 31, 2017:
   
34,640
   
$
3.61
 
1.8 years
 
$
-0-
 
December 31, 2016:
   
103,575
   
$
4.47
 
1.0 years
 
$
-0-
 

As of December 31, 2017 the unamortized compensation expense for stock options was $70,535.  Unamortized compensation expense is expected to be recognized over a weighted-average period of 2.4 years.

Warrants

On March 27, 2017 the Company granted 4,988 warrants with a fair value of approximately $19,923, which immediately vested, to John Schachtel as part of his compensation for agreeing to join the Board of Directors. The estimated fair value of the warrant has been calculated based on a Black-Scholes pricing model using the following assumptions: a) fair market value of stock of $4.00; b) exercise price of $4.01; c) Dividend yield of 0%; d) Risk free interest rate of 1.42%; e) expected volatility of 284.28%; f) Expected life of 5 years. 

The following table summarizes the warrants transactions:

 
 
Warrants
Outstanding
   
Weighted Average
Exercise Price
 
 
           
Balance, January 1, 2016
   
203,253
   
$
5.29
 
Granted
   
-
   
$
-
 
Exercised
   
-
   
$
-
 
Canceled
   
-
   
$
-
 
Outstanding and Exercisable December 31, 2016
   
203,253
   
$
5.29
 
 
               
Granted
   
4,988
   
$
4.01
 
Exercised
   
-
   
$
-
 
Canceled
   
-
   
$
-
 
Outstanding and Exercisable December 31, 2017
   
208,241
   
$
5.26