XML 61 R19.htm IDEA: XBRL DOCUMENT v2.4.0.8
14. Shareholders' Deficit
 3 Months Ended
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