9. STOCKHOLDERS’ EQUITY

Dividends

Dividend charges recorded during the three months ended March 31, 2017 and 2016 are as follows:

Accrued dividends payable at March 31, 2017 and December 31, 2016 are comprised of the following:

Warrants and Derivative Warrant Liability

The Company accounts for common stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Stock warrants are accounted for as derivative liabilities if the warrants allow for cash settlement or provide for modification of the warrant exercise price in the event subsequent sales of common stock by the Company are at a lower price per share than the then-current warrant exercise price. The Company classifies derivative warrant liabilities on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet date subsequent to the initial issuance of the stock warrant. As of March 31, 2017, the following warrants were outstanding:

A summary of the warrant activity during the three months ended March 31, 2017 is presented below:

The Company has assessed its outstanding equity-linked financial instruments issued with the term loans cited in Footnote 6 and has concluded that the warrants are subject to derivative accounting as a result of certain anti-dilution provisions contained in the warrants. The fair value of these warrants at issuance are classified as a loan fee and are being amortized over the life of the loan. The fair value of these warrants is classified as a liability in the financial statements, with the change in fair value during the future periods being recorded in the statement of operations.

The following table summarizes the calculated aggregate fair values for the warrant derivative liabilities using the Lattice Model method based on the following assumptions:

These warrants are Level 3 valuation which were issued and measured on March 31, 2017. 

The following table summarizes the change in fair value of the warrants from December 31, 2016 through March 31, 2017.

Subscription Receivable

During the three months ended March 31, 2017 the Company issued 3,083,017 shares of common stock that were subject to certain vesting requirements, with a fair value of $3,043,642. As of March 31, 2017, 2,768,867 shares of such shares that were issued to employees with a fair value of $2,829,492 remain unvested. Because these common shares are subject to forfeiture if the employees are no longer employed with the company at the end of their employment agreements, their unvested value is carried in subscriptions receivable within stockholders equity.

Equity Transactions

During the three months ended March 31, 2017, the Company issued 20,892 shares of its common stock with a fair value of $12,535 for settlement of a legal matter.

During the three months ended March 31, 2017, the Company issued 44,166 shares of its common stock to individual investors, which resulted in net proceeds to the Company of $19,000.

 During the three months ended March 31, 2017, the Company issued 726,119 shares of its common stock with a fair value of $331,619 pursuant to consulting agreements.

During the three months ended March 31, 2017, the company received $615,000 of proceeds subject to the issuance of shares.

During the three months ended March 31, 2017, the Company issued 6,420,020 shares of its common stock with a fair value of $2,568,008 to its senior lender in conjunction with the refinancing of the senior debt on April 20, 2017 in conjunction with the Benchmark acquisition.

During the three months ended March 31, 2017, the Company issued 88,283 shares of its common stock with a fair value of $38,639 to settle debt.