STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

STOCKHOLDERS' EQUITY

Note 7 — Stockholders’ Equity

The Company has authorized 50,000,000 shares of common stock, of which 13,527,168 and 13,546,171 shares were issued and outstanding as of March 31, 2017 and December 31, 2016, respectively.

Stock Issuances

On January 1, 2016, Sensus Healthcare, LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Sensus Healthcare, Inc. As a result of the corporate conversion, the holders of the different classes of units of Sensus Healthcare, LLC became holders of common stock of Sensus Healthcare, Inc. Holders of warrants and options, respectively, to purchase membership interests of Sensus Healthcare, LLC became holders of warrants and options to purchase common stock of Sensus Healthcare, Inc., respectively. Each membership interest converted to one share of common stock.

During 2011, the Company offered to a limited number of investors (the “investor members”) preferred membership interests (the “interests”) consisting of (i) cumulative, non-compounded, 8% per annum preferential return, payable annually, if and when such distributions are made by the Company’s board of directors and (ii) participation in the Company’s net profits, net losses and distributions of the Company’s assets pursuant to the operating agreement. The offering raised approximately $6.4 million in gross proceeds ($6.0 million net of offering costs), utilizing a private placement memorandum. As of December 31, 2015, accumulated unpaid preferential distributions were approximately $2,674,000 ($0.87 per share). Preferential distributions no longer accrued after December 31, 2015. In June 2016, after the completion of the IPO, the accumulated unpaid distribution as of December 31, 2015 was payable in cash or shares, at the option of each stockholder with a preferential distribution. On July 15, 2016, the Company paid the accrued dividends in the amount of approximately $2,553,000 representing the amount for which former holders of membership units with a preferred return elected to receive dividends in cash. In addition, 23,138 shares valued at approximately $122,000 of common stock were issued to those that elected to receive the dividends in shares.

Warrants 

In April 2013, the closing date of the second common offering, the Company’s placement agent received investor rights to 5 year warrants to purchase 86,376 common shares of the Company at an exercise price of $4.55 per unit, which was equal to 110% of the offering price.

In June 2016, from the IPO, the investors received three-year warrants to purchase 2,300,000 shares of common stock at an exercise price of $6.75 per share; the warrants are exercisable through June 2, 2019. Following the first anniversary of the date of issuance, if certain conditions are met, the Company may redeem any and all of the outstanding warrants at a price equal to $0.01 per warrant.

In addition, the underwriter’s representatives received four-year warrants to purchase up to 138,000 units, consisting of one share of common stock and one warrant to purchase one share of common stock. The warrants for the units are exercisable between June 2, 2017 and June 2, 2021 at an exercise price of $6.75 per unit. 

The following table summarizes the Company’s warrant activity:

	Common Unit Warrants
	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)
Outstanding – December 31, 2016		2,524,376	$	6.67		2.50
Granted		—		—		—
Exercised		—		—		—
Cancelled (forfeited)		—		—		—
Outstanding – March 31, 2017		2,524,376	$	6.67		2.26
Exercisable –  March 31, 2017		2,386,376	$	6.67		2.26

The intrinsic value of the common stock warrants was approximately $19,000 as of March 31, 2017, and $114,000 as of December 31, 2016.

2016 equity incentive Plan

The Company has limited the aggregate number of shares of common stock to be awarded under the 2016 Equity Incentive Plan to 397,473 shares and no more than 397,473 shares of common stock in the aggregate may be granted in connection with incentive stock options. In addition, unless the Compensation Committee specifically determines otherwise, the maximum number of shares available under the 2016 Plan and the awards granted under the 2016 Plan will be subject to appropriate adjustment in the case of any stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, exchanges or other changes in capitalization affecting our common stock. Any shares granted in connection with options and stock appreciation rights shall be counted against this limit as one share for every one share allotted in connection with the awarded option or stock appreciation right. Any shares granted in connection with awards other than options and stock appreciation rights shall be counted against this limit as two shares for every one share granted in connection with such award or by which the award is valued by reference. 

On June 2, 2016, 307,666 shares of restricted stock were issued to employees and were recorded at the fair value of $5.25 as per the initial offering price. In addition, on January 20, 2017, 10,000 shares of restricted stock were issued to one employee and were recorded at the fair value of $4.99 per share. The shares vest 25% per year over a four-year vesting period and are being recognized as expense on a straight-line basis over the vesting period of the awards. Stock compensation expense of approximately $104,000 and $0 was recognized for the three months ended March 31, 2017 and 2016, respectively. Unrecognized stock compensation expense was approximately $1,327,000 as of March 31, 2017, which will be recognized over the remaining vesting period. As of March 31, 2017, 79,807 shares were available to be granted under the 2016 Plan.

A summary of the restricted stock activity for the three months ended March 31, 2017 is presented as follows:

	Shares			Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2016		412,914			5.04
Granted		10,000			4.99
Vested		(105,284	)		4.42
Forfeited		-			-
Unvested balance at March 31, 2017		317,666			5.24