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14. Shareholders' Deficit | 3 Months Ended
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Mar. 31, 2014
Shareholders' equity |
NOTE 14 - Shareholders' Deficit | Common Stock The number of shares of common stock has increased from 890,837 shares as of December 31, 2012 to 8,683,785 shares as of March 31, 2014:
|  | Number of |
|  | Common Shares |
Balance at December 31, 2012 |  |  | 890,837 |
Conversion of Series E Preferred to common stock |  |  | 1,575,000 |
Shares issued for acquisition of Canterbury and Hygeia |  |  | 1,150,116 |
Conversion of warrants to common stock |  |  | 1,023,264 |
Conversion of debt to common stock |  |  | 576,331 |
Issuance of shares for advisory agreements |  |  | 243,250 |
Issuance of shares to third party for assumption of liabilities |  |  | 200,000 |
Issuance of common stock for cash |  |  | 142,501 |
Other |  |  | 12,486 |
Balance at December 31, 2013 |  |  | 5,813,785 |
Issuance of shares to third party for assumption of liabilities |  |  | 150,000 |
Shares issued for acquisition of Paloma |  |  | 2,500,000 |
Shares issued for acquisition of VasculoMedics |  |  | 220,000 |
Balance at March 31, 2014 (unaudited) |  |  | 8,683,785 |
Stock Options During the three months ended March 31, 2013, the Company issued five-year options to purchase a total of 116,627 to five members of the Company’s Board of Directors at a strike price of $3.00, which was the closing market price on the date of the grants. These options vested 25% at time of grant with the remainder vesting ratably over three years. On March 5, 2014, the Company issued five-year options to its Chief Executive Officer to purchase 500,000 shares at a strike price of $2.50, which was the closing market price on the date of the grant. This option vests ratably over three years. These options were valued using the Black Scholes model and resulted in a total expense of $1,468,100, of which $128,000 was recognized in the three months ended March 31, 2014 and the remaining $1,340,100 will be recognized ratably over the coming three years. The assumptions used to value the options granted during the first three months of 2014 was:
Estimated fair value of underlying common stock |  |  | $2.50 - $3.00 |
Remaining life |  |  | 5.0 |
Risk-free interest rate |  |  | 1.50% - 1.72% |
Expected volatility |  |  | 153% - 155% |
Dividend yield |  |  | – |
The following table sets forth the activity of our stock options to purchase common stock:
|  | Options Outstanding |  |  | Options Exercisable |
|  |  |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  | Weighted |  |  |  |
|  |  |  |  |  |  |  | Average |  |  | Weighted |  |  |  |  |  | Average |  |  | Weighted |
|  |  |  |  | Range of |  |  | Remaining |  |  | Average |  |  |  |  |  | Remaining |  |  | Average |
|  | Options |  |  | Exercise |  |  | Life in |  |  | Exercise |  |  | Options |  |  | Life in |  |  | Exercise |
|  | Outstanding |  |  | Prices |  |  | Years |  |  | Price |  |  | Exercisable |  |  | Years |  |  | Price |
As of December 31, 2012 |  |  | 79,436 |  |  |  | $35.00 -$54.00 |  |  |  | 3.0 |  |  | $ | 46.00 |  |  |  | 57,310 |  |  |  | 2.6 |  |  | $ | 48.00 |
Canceled |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Exercised |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Granted |  |  | 310,000 |  |  |  | $3.00 |  |  |  | 4.2 |  |  | $ | 3.00 |  |  |  | 310,000 |  |  |  | 4.2 |  |  | $ | 3.00 |
As of December 31, 2013 |  |  | 389,436 |  |  |  | $3.00 -$54.00 |  |  |  | 3.9 |  |  | $ | 11.77 |  |  |  | 367,310 |  |  |  | 3.9 |  |  | $ | 11.10 |
Canceled |  |  | 3,585 |  |  |  | – |  |  |  | – |  |  |  | 43.27 |  |  |  | 3,585 |  |  |  | – |  |  |  | 43.27 |
Exercised |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Granted |  |  | 600,586 |  |  |  | $2.50 - $3.00 |  |  |  | 4.9 |  |  | $ | 3.00 |  |  |  | 91,128 |  |  |  | 4.9 |  |  | $ | 3.00 |
As of March 31, 2014 |  |  | 986,437 |  |  |  | $3.00 -$54.00 |  |  |  | 4.4 |  |  | $ | 6.74 |  |  |  | 454,853 |  |  |  | 3.8 |  |  | $ | 11.11 |
Warrants During 2013 the Board approved warrants to three financial advisors to purchase 173,917 shares of common stock at $3.00. These warrants have a five-year life and vested immediately, resulting in Black Scholes warrant expense of $462,618. The Black Scholes expense for these March 27, 2013 warrants was calculated using the following assumptions. The fair value of the underlying common stock was based on the sale of 139,167 shares of common stock at $3.00 by the Company during the three months ended June 30, 2013.
Estimated fair value of underlying common stock |  |  | $3.00 |
Remaining life |  |  | 5.0 |
Risk-free interest rate |  |  | 0.35% |
Expected volatility |  |  | 141% |
Dividend yield |  |  | – |
In May 2013 Series E warrants, along with related warrants with similar terms, were exchanged for 1,023,264 shares of common stock and these warrants were extinguished, thereby removing the “overhang” created by the full-ratchet provisions of these warrants that would have increased the number of warrants outstanding and reduced the strike price of these warrants to the price of any subsequent financing done at a lower price. This exchange of common stock for the Series E warrants resulted in a fair value charge of $3,069,792 in 2013. These 1,023,264 shares of common stock were valued at $3.00 per share, which was the price at which the Company sold 139,167 shares during 2013, resulting in the fair value charge for $3,069,792. A summary of the warrants:
|  | Warrants Outstanding |  |  | Warrants Exercisable |
|  |  |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  | Weighted |  |  |  |
|  |  |  |  |  |  |  | Average |  |  | Weighted |  |  |  |  |  | Average |  |  | Weighted |
|  |  |  |  | Range of |  |  | Remaining |  |  | Average |  |  |  |  |  | Remaining |  |  | Average |
|  | Warrants |  |  | Exercise |  |  | Life in |  |  | Exercise |  |  | Warrants |  |  | Life in |  |  | Exercise |
|  | Outstanding |  |  | Prices |  |  | Years |  |  | Price |  |  | Exercisable |  |  | Years |  |  | Price |
As of December 31, 2012 |  |  | 1,322,852 |  |  |  | $30.00 - $200.00 |  |  |  | 3.2 |  |  | $ | 40.00 |  |  |  | 1,269,102 |  |  |  | 3.2 |  |  | $ | 38.00 |
Canceled |  |  | (978,700 | ) |  |  | $30.00 |  |  |  | – |  |  | $ | 30.00 |  |  |  | (939,950 | ) |  |  | – |  |  | $ | 30.00 |
Exercised |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Granted |  |  | 173,917 |  |  |  | $3.00 |  |  |  | 4.2 |  |  | $ | 3.00 |  |  |  | 173,917 |  |  |  | 4.2 |  |  | $ | 3.00 |
As of December 31, 2013 |  |  | 518,069 |  |  |  | $3.00 - $200.00 |  |  |  | 3.3 |  |  | $ | 44.07 |  |  |  | 503,069 |  |  |  | 3.3 |  |  | $ | 44.07 |
Canceled |  |  | 198 |  |  |  | – |  |  |  | – |  |  | $ | 200.00 |  |  |  | 198 |  |  |  | – |  |  | $ | 200.00 |
Exercised |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Granted |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
As of March 31, 2014 |  |  | 517,871 |  |  |  | $3.00 - $200.00 |  |  |  | 3.0 |  |  | $ | 44.01 |  |  |  | 502,871 |  |  |  | 3.0 |  |  | $ | 44.01 |

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph d -Article 4 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 + Details
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