STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

STOCKHOLDERS' EQUITY

Note 8 — Stockholders’ Equity

The Company has authorized 50,000,000 shares of common stock, of which 13,601,456 were issued and 13,568,002 outstanding at March 31, 2018; 13,522,168 shares were issued and 13,488,714 were outstanding as of December 31, 2017.

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.

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. During the three months ended March 31, 2018, 73,309 of the warrants were exercised, and 13,067 warrants expired.

In June 2016, from the Company’s 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 for the IPO 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, 2017		2,524,376		$	6.67	1.50
Granted		—			—	—
Exercised		(73,309	)		4.55	—
Expired		(13,067	)		4.55	—
Outstanding – March 31, 2018		2,438,000		$	6.75	1.30
Exercisable – March 31, 2018		2,438,000		$	6.75	1.30

The intrinsic value of the common stock warrants was approximately $0 and $19,000 as of March 31, 2018, and December 31, 2017, respectively.

2016 and 2017 equity incentive Plans

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. The Company has limited the aggregate number of shares of common stock to be awarded under the 2017 Equity Incentive Plan to 500,000 shares and no more than 500,000 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 and 2017 Plans and the awards granted under those plans 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.

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 restricted 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.

On January 25, 2018, 80,000 fully vested shares were granted to the nonemployee directors, and 229,334 stock options with a four year vesting period were granted to employees. The shares were recorded at the fair value of $5.55 per share for a total of $444,000 and the stock options were valued using a Black Scholes model at $3.52 per option using the assumptions noted in the following table.

	2018
Expected volatility	67.8	%
Risk-free interest rate	2.5	%
Expected life	6.25	years
Dividend yield	0.0	%

The Company recognizes forfeitures as they occur rather than estimating a forfeiture rate. The reduction of stock compensation expense related to the 30,000 shares forfeited for the three months ended in March 31, 2018 was approximately $39,000.

A summary of the restricted stock activity is presented as follows:

	Shares			Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2017		237,000		$	5.24
Granted		—			—
Vested		(2,500	)		4.99
Forfeited		(30,000	)		5.25
Unvested balance at March 31, 2018		204,500		$	5.24

The following table summarizes the Company’s stock option activity:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)
Outstanding – December 31, 2017	—		$	—	—
Granted		229,334		3.52		4.00
Exercised		—		—		—
Expired		—		—		—
Outstanding – March 31, 2018		229.334	$	3.52		3.83
Exercisable – March 31, 2018		—		—		—

The intrinsic value of the stock options was approximately $21,000 and $0 as of March 31, 2018, and December 31, 2017, respectively.

Stock compensation expense of approximately $541,000 and $104,000 was recognized for the three months ended March 31, 2018 and 2017, respectively. Unrecognized stock compensation expense was approximately $1,584,000 as of March 31, 2018, which will be recognized over the remaining vesting period. As of March 31, 2018, no shares were available to be granted under the 2016 Plan and 305,473 shares were available to be granted under the 2017 Plan.

Treasury Stock

The Company accounts for purchases of treasury stock under the cost method with the cost of such share purchases reflected in treasury stock in the accompanying condensed balance sheet. As of March 31, 2018, the Company had 33,454 treasury shares.