|3 Months Ended
Mar. 31, 2017
12. STOCKHOLDERS’ EQUITY
Amended and Restated Certification of Designation
On February 28, 2017, the Company filed an Amended and Restated Certificate of Designation with the Secretary of State of the state of Delaware, decreasing the number of shares of the Company’s preferred stock designated as Series A Convertible Preferred Stock to 10,097,330 shares.
Series B Preferred Stock
On February 28, 2017, the Company filed a Certificate of Designation with the Secretary of State of the state of Delaware, designating 902,670 shares of the Company’s preferred stock as Series B Convertible Redeemable Preferred Stock (“Series B”) at a par value of $0.01 per share.
The Series B stockholders are entitled to cumulative cash dividends at an annual rate of 8% of the Series B liquidation value, as defined, payable when, as and if declared by the Board of Directors. Each share of Series B is entitled the number of votes determined by dividing $10 by the fair market value of the Company’s common stock on the date that the Series B shares were issued, up to a maximum of ten votes per share of Series B. Cumulative dividends in arrears related to the Series B totaled $3,053 as of March 31, 2017, and have not been declared by Board of Directors.
Each Series B share is convertible at the option of the holder into 10 shares of the Company’s common stock and is automatically converted into common stock upon the uplisting of the Company’s common stock to a national securities exchange. On the second anniversary of the termination of the Series B offering, the Company will redeem all then-outstanding shares of Series B shares at a price equal to the liquidation value per share, plus all unpaid accrued and accumulated dividends. As a result of this redemption feature, the Series B are classified as temporary equity.
During the quarter ended March 31, 2017, the Company sold 28,500 shares of Series B at $10.00 per share for gross proceeds of $285,000 and issued 126,700 of Series B in connection with the conversion of certain convertible promissory notes (see Note 9 – Debt Obligations).
During the three months ended March 31, 2017, the Company issued 22,500 shares of common stock at $2.00 per share for gross proceeds of $45,000, and paid $4,500 of placement agent fees related to this transaction.
Accumulated Other Comprehensive Loss
For three months ended March 31, 2017 and 2016, the Company recorded $200,259 and $(405,723), respectively, of foreign currency translation adjustment as accumulated other comprehensive income (loss).
During the three months ended March 31, 2017 and 2016, in connection with the sale of its equity securities, the Company issued five-year warrants for the purchase of 2,250 shares of its common stock at $2.00 per share, and 98,378 shares of its common stock at $2.50 per share, respectively. CAP, in turn, awarded such warrants to its registered representatives and recorded $1,105 and $84,105, of stock-based compensation expense for three months ended March 31, 2017 and 2016, respectively, which is recorded within discontinued operations in the accompanying statements of operations (see Note 4 – Discontinued Operations).
A summary of warrants activity during the three months ended March 31, 2017 is presented below:
A summary of outstanding and exercisable warrants as of March 31, 2017 is presented below:
Warrants granted during the three months ended March 31, 2017 and 2016 had a weighted average grant date value of $0.52 and $1.03 per warrant share, respectively, and were valued using the Black-Scholes pricing model, with the following assumptions:
The expected term of warrants represents the contractual term of the warrant. Given that the Company’s shares were not publicly traded through September 30, 2016, the Company developed an expected volatility based on a review of the historical volatilities, over a period of time equivalent to the contractual term of the warrant, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the contractual term of the warrants.
The Company has computed the fair value of options granted using the Black-Scholes option pricing model. Until September 23, 2016, there was no public trading market for the shares of AWLD common stock underlying the Company’s 2001 Plan and 2008 Plan and 2016 Plan. Accordingly, the fair value of the AWLD common stock used to compute the fair value of options granted prior to September 2016 was estimated by management based on observations of the cash sales prices of AWLD equity securities. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate will be adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate, when it is material. The expected term of options granted to consultants represents the contractual term, whereas the expected term of options granted to employees and directors was estimated based upon the “simplified” method for “plain-vanilla” options. Given that the Company’s shares are not publicly traded, the Company developed an expected volatility figure based on a review of the historical volatilities, over a period of time, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the options. The Company estimated forfeitures related to options at an annual rate of 5% for options outstanding at March 31, 2017.There were no stock options granted during the three months ended March 31, 2017 and 2016.
During the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense of $163,424 and $149,987, respectively, related to stock option grants, which is reflected as general and administrative expenses in the condensed consolidated statements of operations. As of March 31, 2017, there was $1,424,705 of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of 2.0 years, of which $380,667 of unrecognized expense is subject to non-employee mark-to-market adjustments.
A summary of options activity during the three months ended March 31, 2017 is presented below:
The following table presents information related to stock options at March 31, 2017: