NOTE 7 - SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2017

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 7 – SHAREHOLDERS’ EQUITY

Common Stock

The Company has been authorized to issue 150,000,000 shares of common stock, $.001 par value.  Each share of issued and outstanding common stock shall entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the corporation upon liquidation or dissolution.

During the three months ended March 31, 2017, the Company issued 347,646 shares of its restricted common stock as follows:

1) 10,000 shares to each director for services rendered for fiscal year 2016 and 10,000 shares for services to be rendered for fiscal year 2017, total 60,000 shares, valued at $99,000;

2) 17,646 shares to a consultant for investors relations services, valued at $30,000;

3) 50,000 shares to the Company’s SEC legal counsel for services performed, valued at $82,500;

4) 10,000 shares to an employee for services performed, valued at $12,800;

5) 110,000 shares to an investor and its affiliate as offering costs, valued at $184,800; and

6) 50,000 shares to a director as broker commission for the convertible note and equity purchase agreement transactions.

7) 100,000 shares issued as debt issuance cost to CEO for related party advances, valued at $182,000.

Warrants and Options

At March 31, 2017, 75,000 options were outstanding and no warrants were outstanding. The Company did not issue any common stock purchase warrants or options during the three months ended March 31, 2017 and 2016.

Equity Purchase Agreement

During the three months ended March 31, 2017, the Company entered into an equity purchase agreement (“agreement”) with an investor whereby the investor will purchase up to $5,000,000 of the Company’s common stock over a period of 24 months from the effective date of the Company’s proposed Registration Statement. The investor will purchase the Company’s common stock at a 10% discount. The Company was required to issue to the investor, and its affiliate, 110,000 shares of its common stock as commitment fee. These shares are valued at $184,800 at the commitment date and are recorded as deferred offering costs on the Company’s consolidated balance sheets. These costs will offset any proceeds to be received in the future from the expected sale of common stock.

The Company’s board of directors approved issuance of 50,000 shares of the Company’s common stock to a director for his service as a broker of the transaction. The Company determined that 34,000 shares of the total number of shares approved for issuance represent non-cash offering costs directly related the sale of the Company’s common stock to this investor. These shares are valued at $56,100 on commitment date are recorded as deferred offering costs on the Company’s consolidated balance sheets. These costs will offset any proceeds to be received in the future from the expected sale of common stock.

Restricted Stock Awards to Key Employees

During the three months ended March 31, 2017, the board of directors approved issuance of 100,000 shares of the Company’s restricted common stock to each of its three key employees. As of the date of the issuance of the financial statements, only one key employee accepted the award. The award for this employee is effective retroactively on January 1, 2017 and is subject to a four-year vesting requirement. The shares are issued as the vesting restriction lapses. The Company valued these shares at fair value on commitment date which is the date on which the employee accepted the award and recorded stock based compensation expense over the requisite service period which is four years. Expense for this award for the three months ended March 31, 2017 was $11,733.