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16. Stockholders' Equity
 12 Months Ended
Dec. 31, 2014
Stockholders' Equity Note [Abstract]  
Stockholders' Equity

Capital Stock

 

Preferred Stock

 

The Company is authorized to issue up to 10,000,000 shares of preferred stock, $.0001 par value per share. The board of directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of preferred stock in series, and by filing a certificate pursuant to the applicable law of the state of Florida, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. No shares of preferred stock were issued or outstanding at December 31, 2014 and December 31, 2013, respectively.

 

Common Stock

 

At December 31, 2014 and December 31, 2013, the Company was authorized to issue up to 750,000,000 shares of common stock, $.0001 par value per share.

 

At December 31, 2014 and December 31, 2013, the Company had 531,815,115 and 452,960,490 shares issued and outstanding, respectively. Holders are entitled to one vote for each share of common stock (or its equivalent).

 

Retained Earnings

 

Under Florida law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Florida statutes, or if there is no such surplus, out of our net profits for the year in which the dividend is declared and/or the preceding year. If, however, the capital of our Company computed in accordance with the relevant Florida statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits any dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired. We have no present intention to pay any cash dividends in the foreseeable future.

 

Share Issuances

 

On April 16, 2014, the Company issued an aggregate of 7,113,375 shares of common stock to the seller of Seen On TV, LLC, in accordance with the anti-dilution protection provisions contained in the June 28, 2012 Seen On TV, LLC asset purchase agreement.

 

Warrants

 

A summary of warrants outstanding at December 31, 2014, is as follows:

 

Warrant Description   Number of Warrants (A)   Exercise Prices   Expiration Dates
2011 Bridge Warrant   8,789,064 (D) $0.64   September 1, 2016
2011 Bridge Warrant Placement Agent   1,165,875 (D) $0.64   September 1, 2016
2011 Unit Offering   33,277,837 (B) $0.59   October 28, 2016
2011 Unit Offering Placement Agent   4,726,891 (B) $0.59   October 28, 2016
2011 Other Placements   300,000   $0.64-$1.00   June 22, 2015 - June 22, 2017
2012 Bridge Warrant   1,137,735 (B)(E) $0.77   September 30, 2016
2012 Bridge Warrant Placement Agent   227,546 (B)(E) $0.77   September 30, 2016
2012 Unit Offering   6,300,213 (B)(E) $0.80   September 30, 2016
2012 Unit Offering Placement Agent   1,561,544 (B) $0.70-$0.80   November 14, 2017
2012 Talent Compensation   4,875,000   $0.01-$2.00   November 19, 2015
2013 Merger related notes converted   494,328 (B) $0.80   November 14, 2015
2013 eDiets Warrants   427,987   $1.40-$4.74   July 15, 2019 - September 11, 2019
2014 MIG7 Offering   34,293,224 (C)(F) $0.001   April 3, 2015(G)
    97,577,244        

 

———————
(A) All warrants reflect post anti-dilution and repricing provisions applied.
(B) Subject to potential further anti-dilution and repricing adjustment (See Note 10).
(C) Subject to variable share settlement and potential extension in connection with Secured Promissory Note (See Note 12)
(D) Expiration date was extended from November 30, 2014 to September 1, 2016
(E) Subsequent to December 31, 2014, the expiration date was extended to September 30, 2016. See Note 19.
(F) Number of warrants increased due to the August 20, 2014 restricted stock grant in order to maintain 4.99% of fully diluted shares
(G) Per a March 31, 2015 Note Amendment, the warrants expiration was extended until a recapitalization event takes place. See Note 19.

 

Equity Compensation Plans

 

In May 2010, ASTV adopted its 2010 Executive Equity Incentive Plan and 2010 Non Executive Equity Incentive Plan (collectively, the “2010 Plans”).

 

On September 24, 2012, ASTV’s board of directors adopted the 2013 Equity Compensation Plan (the “2013 Plan” and, together with the 2010 Plans, the “Plans”) with terms similar to the previously adopted 2010 Plans. The 2013 Plan authorized the issuance of up to 3,000,000 options to purchase common stock. The 2013 Plan was modified in March 2013 authorizing the issuance of up to 6,000,000 options. On May 6, 2013, the 2013 Plan was further modified, increasing the shares of common stock reserved for issuance under such plan to 9,000,000. Shares available for future grant under all Plans totaled 9,577,500 at December 31, 2014.

 

The fair value of an option is estimated on the date of grant using the Black Scholes options pricing model using the assumptions established at that time.

 

Stock based compensation for the year ended December 31, 2014 and December 31, 2013 was approximately $576,000 and $677,000, respectively. Stock based compensation for all periods presented is included in general and administration expenses, in the accompanying condensed consolidated statements of operations.

 

Of the stock based compensation recognized for the year ended December 31, 2014, approximately $182,000 is attributable to IBI stock based awards granted to Infusion’s employees and recognized as a capital contribution. The remaining stock based compensation recognized is attributable to the options acquired in connection with the April 2, 2014 reverse merger. All of the stock based compensation recognized for the year ended December 30, 2013 is attributable to IBI stock based awards granted to Infusion’s employees.

  

Mr. Ronald C. Pruett Jr. (former Chief Executive Officer) elected to terminate his employment effective May 1, 2014. The termination agreement modified certain terms of his employment agreement and provided that Mr. Pruett was entitled to receive the balance of additional salary due him totaling approximately $72,000, which was paid over a period of approximately three months beginning May 1, 2014. As part of the termination agreement, Mr. Pruett forfeited his 3,050,000 options.

 

Mr. Henrik Sandell’s (former Chief Operating Officer) employment terminated effective June 1, 2014. Accordingly, Mr. Sandell’s vested options of 250,000 remained exercisable for 90 days following termination. Mr. Sandell never exercised the vested options; and, therefore, the options were returned to the option plan for potential future grants.

 

On August 20, 2014, Mr. Mark Ethier, Chief Operating Officer, was granted 25,174,888 restricted shares of common stock. The shares shall vest in 25% increments each of the initial two years following the initial effective date of the agreement and the final 50% vesting three years following the initial effective date of the agreement. The grant date fair value was $0.06 per share. Stock compensation expense with respect to this grant was approximately $297,000 for the year ended December 31, 2014. The unrecognized stock compensation as of December 31, 2014 was approximately $1,213,000.

 

On January 8, 2015, Mark Ethier resigned as an employee and officer of the Company, but remained as a director. The Company agreed to vest and issue to Mr. Ethier 6,000,000 shares of restricted common stock of the Company and the remainder of his restricted common stock grants were forfeited at that time. See Note 19.

 

Options

 

Information related to options granted under our option plans at December 31, 2014 and activity for the nine months then ended is as follows:

 

   Shares   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual
Life (Years)		   Aggregate
Intrinsic
Value		 
Outstanding at December 31, 2013   –   $–    –   $– 
April 2, 2014 Acquisition (A)   7,148,836    1.06    7.46    – 
Granted   –    –    –    – 
Exercised   –    –    –    – 
Forfeited   (4,185,000)   0.68    –    – 
Expired   (281,842)   1.51    –    – 
Outstanding at December 31, 2014   2,681,994   $1.57   $5.36   $– 
Exercisable at December 31, 2014   2,561,994   $1.75   $5.14   $– 

 

(A) Options acquired in connection with reverse merger

 

The unamortized grant date fair value of unvested options at December 31, 2014, was approximately $85,000 and will be expensed over a weighted average period of 1.94 years.

 

No tax benefits are attributable to our share based compensation expense recorded in the accompanying financial statements because we are in a net operating loss position and a full valuation allowance is maintained for all net deferred tax assets. For stock options, the amount of the tax deductions is generally the excess of the fair market value of our shares of common stock over the exercise price of the stock options at the date of exercise.

 

In the event of any stock split of our outstanding shares of common stock, the board of directors in its discretion may elect to maintain the stated amount of shares reserved under the Plans without giving effect to such stock split. Subject to the limitation on the aggregate number of shares issuable under the Plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. Grants under the Plans may either be (i) ISOs, (ii) NSOs (iii) awards of our common stock or (iv) rights to make direct purchases of our common stock which may be subject to certain restrictions. Any option granted under the Plans must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The Plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The term of each plan option and the manner in which it may be exercised is determined by the board of directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant.