Stockholders' equity | Stockholders’ Equity: Common Stock On August 6, 2014, the Company entered into an underwritten offering with an underwriter whereby the Company issued: (i) 2,650,000 shares of its common stock, (ii) three -year warrants to purchase up to 2,829,732 shares of its common stock and (iii) five -year warrants to purchase an additional 112,538 to the underwriters with an exercise price of $1.89 per share and net proceeds of $3,269,275 . The Company continues to use the net proceeds of the offering for working capital purposes in connection with development and installation of current and new energy systems. On September 19, 2014, the Board of Directors of the Company approved a common stock repurchase program that shall not exceed 1,000,000 shares of common stock and shall not exceed $1,100,000 of cost. The approval allows for purchases over a 24 -month period at prices not to exceed $1.30 per share. During the year ended December 31, 2016, the Company purchased no shares. During the year ended December 31, 2015, the Company repurchased 235,906 shares of common stock at an average price of $0.55 . During the year ended December 31, 2014, the Company repurchased 588,073 shares of common stock at an average price of $0.80 . On January 29, 2015, the Company entered into an exchange agreement, (or the "Exchange Agreement"), with IN Holdings Corp., (or "IN Holdings"), a holder of more than 5% percent of the Company’s common stock. In connection with the Exchange Agreement, IN Holdings transferred to the Company 1,320,000 shares of the Company’s common stock that it owned, and in exchange, the Company transferred to IN Holdings 1,320,000 shares of the common stock of EuroSite Power Inc. that it owned. The exchange was accounted for as an acquisition and retirement of treasury shares and a disposal of partial ownership of a consolidated subsidiary. As the Company retained a controlling financial interest following the exchange, no gain or loss was recognized on the disposal in accordance with ASC 810-10-45-23. In accordance with ASC 845-10-05-4, nonmonetary transactions, the impact of the share exchange was a credit to the par value of the common stock of $1,320 and the net impact on non-controlling interest was $16,570 . In conjunction with the ADGNY Reorganization (see Note 5 "ADGNY Reorganization"), in the second quarter of 2015 the Company issued 100,000 shares with a fair value of $63,000 . The holders of common stock have the right to vote their interest on a per share basis. At December 31, 2016 , there were 50,684,095 shares of common stock outstanding. Warrants The three year warrants to purchase up to 2,829,732 shares of common stock issued in August 2014 are exercisable for an initial exercise price of $1.8875 per share (subject to adjustment in the event of a stock dividend or distribution, or a subdivision or combination of the Company’s common stock) or pursuant to cashless exercise in the event our common stock is no longer registered under the Exchange Act. If the Company declares or makes a dividend or distribution of its assets by way of return of capital or otherwise, a warrant holder will be entitled to participate in such distribution as if the holder held the number of shares of common stock acquirable upon exercise of the warrant. Also, in the event of certain transactions referred to in the warrant agreement as a Fundamental Transaction, the holder of the warrant will have the right to receive, upon exercise of the warrant, the same amount and kind of securities as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior thereto, the holder of the number of shares then issuable upon exercise in full of the warrant without regard to any limitations on exercise contained in the warrant. The Company is required to provide prior notice to holders of the warrants of any record date in connection with a Fundamental Transaction and any closing of a Fundamental Transaction. The Company shall not affect any such Fundamental Transaction unless prior to or simultaneously with the consummation thereof, any successor to the Company, surviving entity or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or person shall assume the Warrant and the obligation to deliver to the registered holder may be entitled to receive, and the other obligations under the Warrant. A Fundamental Transaction includes; the merger or consolidation of the Company or any subsidiary (collectively, the “Company”) with another person; the sale, lease, license, assignment, transfer, conveyance or other disposition of substantially all of the Company’s assets; a purchase, tender or exchange offer accepted by 50% or more of the Company’s outstanding voting shares; the consummation of a stock or share purchase agreement or other combination with another person with regard to 50% of the Company’s voting shares; the reorganization, recapitalization or reclassification of the Company’s shares; a stock combination, reverse stock split or similar transaction involving the Company’s common stock or a public announcement with regard thereto; or any person becomes the beneficial owner of 50% of the voting power represented by outstanding voting shares. The Company’s five-year warrants to purchase an additional 112,538 shares (subject to adjustment) of common stock issued to the underwriters in connection with the August 2014 underwritten offering have an exercise price of $1.89 per share in cash or pursuant to cashless exercise provisions, are exercisable in whole or in part at any time until July 2019, and have demand and piggy-back registration rights. In addition, in the event of a reclassification, reorganization or other transfers, the holder shall have the right to receive, upon exercise, the kind and amount of shares receivable upon such reclassification, reorganization or other transfer and to receive a substitute warrant. In addition the holders are entitled to 15 days advance notice of any record date established in connection with an exchange of securities. Warrant activity for the years ended December 31, 2016 and 2015 was as follows: Number of Warrants Weighted Average Exercise Price Balance, December 31, 2014 3,449,770 $ 2.09 Granted — — Exercised — — Expired (500,000 ) 3.25 Balance, December 31, 2015 2,949,770 $ 1.89 Granted — — Exercised — — Expired (7,500 ) 2.69 Balance, December 31, 2016 2,942,270 $ 1.89 Stock Based Compensation American DG has adopted the 2005 Stock Incentive Plan, or the Plan, under which the board of directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of American DG. The maximum number of shares of stock allowable for issuance under the Amended Plan is 8,000,000 shares of common stock. Stock options vest based upon the terms within the individual option grants, usually over a four - or ten -year period with an acceleration of the unvested portion of such options upon a liquidity event, as defined in American DG’s stock option agreement. The options are not transferable except by will or domestic relations order. The option price per share under the Amended Plan is not less than the fair market value of the shares on the date of the grant. In 2015 , American DG granted 200,000 nonqualified options to purchase shares of its common stock to two officers of the Company at prices ranging between $0.29 and $0.52 per share. Those options have a vesting schedule of 4 years and expire in 10 years . The fair value of all options issued in 2015 was $53,195 , with a weighted average grant date fair value of $0.27 per option. In 2016 , American DG granted 300,000 nonqualified options to purchase shares of its common stock to three directors and 105,000 to two employees at prices ranging between $0.32 and $0.38 per share. Those options have a vesting schedule of 4 years and expire in 10 years. The fair value of the options issued in 2016 was $98,764 , with a weighted average grant date fair value of $0.24 per option. The weighted average assumptions used in the Black-Scholes option pricing model are as follows: 2016 2015 Stock options and restricted stock awards Expected life 6.25 years 6.25 years Risk-free interest rate 1.82 % 2.09 % Expected volatility 85.00 % 72.90 % Stock option activity for the year ended December 31, 2016 was as follows: Common Stock Options Number of Options Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Outstanding, December 31, 2015 2,478,000 $ 1.06 4.93 years $ 4,000 Granted 405,000 $ 0.41 Exercised — — Canceled (216,000 ) $ 0.66 Expired (50,000 ) $ 1.12 Outstanding, December 31, 2016 2,617,000 $ 0.98 4.53 years $ — Exercisable, December 31, 2016 1,625,500 $ 1.23 $ — Vested and expected to vest, December 31, 2016 2,617,000 $ 0.98 $ — The aggregate intrinsic value of options outstanding as of December 31, 2016 is calculated as the difference between the exercise price of the underlying options and the price of American DG’s common stock for options that were in-the-money as of that date. Options that were not in-the-money as of that date, and therefore have a negative intrinsic value, have been excluded from this amount. During the years ended December 31, 2016 and 2015 , the consolidated Company recognized employee non-cash compensation expense of $193,502 and $222,130 , respectively, related to the issuance of stock options by the Company and EuroSite Power. At December 31, 2016 and 2015 , the total compensation cost related to unvested stock option awards, for American DG Energy, not yet recognized was $152,332 and $212,575 , respectively. Noncontrolling interests The following schedule discloses the effects of changes in the Company's ownership interest in its consolidated subsidiaries on the Company's equity for the years ended December 31, 2016 and 2015 . 2016 2015 Net loss attributable to American DG Energy Inc. $ (758,447 ) $ (5,430,403 ) Transfers (to) from noncontrolling interest: Decrease in additional paid-in capital for exchange of 1,320,000 EuroSite Power common shares for current and future interest related to the Company's convertible debentures (see "Note 7 - Convertible Debentures and Other Debt") (15,250 ) Reorganization of subsidiary ownership (732,116 ) Increase in American DG Energy Inc.'s additional-paid-in-capital for exchange of convertible debentures for common stock of subsidiary 7,903,292 Increase in American DG Energy Inc.'s additional paid-in-capital for sale by EuroSite Power of 12,608,696 common shares 7,246,091 Increase in American DG Energy Inc.'s additional paid-in-capital for conversion of EuroSite Power convertible debentures into 3,909,260 common shares of EuroSite Power 2,420,046 Noncontrolling interest share of transactions affecting subsidiary ownership (8,580,847 ) 426,980 Subtotal transfers (to) from noncontrolling interest 8,988,582 (320,386 ) Change from net loss attributable to American DG Energy Inc. and transfers (to) from noncontrolling interest $ 8,230,135 $ (5,750,789 ) |