Note 7 - Equity

On October 18, 2018, the Company and Lincoln Park Capital Fund, LLC (“Lincoln Park”) entered into a purchase agreement and a registration rights agreement, pursuant to which the Company has the right to sell to Lincoln Park shares of the Company’s common stock having an aggregate value of up to $32,500,000, subject to certain limitations and conditions set forth in the agreement. As consideration for entering into the purchase agreement, the Company issued to Lincoln Park 852,537 shares of common stock, determined to be offering costs as part of the financing. These shares had a fair value of $0.6 million based on the market price on the issuance date.

Pursuant to the purchase agreement, Lincoln Park initially purchased 3,376,554 shares of common stock, at a price of $0.74 per share, for a total gross purchase price of $2,500,000. As often as every business day from and after one business day following the date of the initial purchase and over the 30-month term of the agreement, and up to an aggregate amount of an additional $30,000,000 (subject to certain limitations) of shares of common stock, the Company has the right, from time to time, at its sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 400,000 shares of common stock, with such amount increasing as the closing sale price of the common stock increases; provided Lincoln Park’s obligation under any single such purchase will not exceed $1,500,000, unless the Company and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a “Regular Purchase”). If the Company directs Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the agreement, the Company may direct Lincoln Park in an “accelerated purchase” to purchase an additional amount of common stock that may not exceed the lesser of (i) 300% the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30% of the total number of shares of the Company’s common stock traded during a specified period on the applicable purchase date as set forth in the agreement. Under certain circumstances and in accordance with the agreement, the Company may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day.

The Company controls the timing and amount of any sales of its common stock to Lincoln Park. There is no upper limit on the price per share that Lincoln Park must pay for its common stock under the agreement, but in no event will shares be sold to Lincoln Park on a day the closing price is less than the floor price specified in the agreement. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the purchase agreement if it would result in Lincoln Park beneficially owning more than 9.99% of its common stock.

The agreement does not limit the Company’s ability to raise capital from other sources at the Company’s sole discretion, except that (subject to certain exceptions) the Company may not enter into any variable rate transaction (as defined in the agreement, including the issuance of any floating conversion rate or variable priced equity-like securities) during the 30 months after the date of the Purchase Agreement. The Company has the right to terminate the agreement at any time, at no cost to the Company.

Through December 31, 2018, the Company elected to sell to Lincoln Park an additional 1.0 million shares and received $0.7 million.

In March 2018, the Company sold an aggregate of 30,237,894 units consisting of an aggregate of 30,237,894 shares of common stock, 7,559,445 series A warrants and 22,678,393 series B warrants, with each series A warrant exercisable for one share of common stock at an exercise price of $0.60 per share and each series B warrant exercisable for one share of common stock at an exercise price of $0.70 per share, resulting in gross proceeds to Actinium of approximately $15.1 million (each unit was sold at $0.50 per unit), and net proceeds of approximately $13.8 million after deducting expenses relating to dealer-manager fees and other offering expenses.

During the year ended December 31, 2017, the Company issued 2,672,973 shares of common stock for gross proceeds of approximately $4.0 million as part of its At-The-Market sales agreement with an investment bank. The Company paid expenses of approximately $0.2 million resulting in net proceeds of $3.8 million.

On August 2, 2017, the Company completed an underwritten public offering of 21,500,000 shares of its common stock and warrants to purchase 18,275,000 shares of the Company’s common stock at an offering price to the public of $0.75 per share and related warrant. The warrants have an exercise price of $1.05 per share and have a term of five years. The gross proceeds from this offering were approximately $16.1 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company resulting in net proceeds of approximately $15.0 million.

During the year ended December 31, 2017, the Company issued 67,385 common shares for consulting services. The shares have a total value of $99 thousand based on the Company’s stock price on the grant date at $1.47 per share. During the year ended December 31, 2017, the Company also issued 4,234 common shares for the cashless exercise of warrants.

On October 4, 2016, the Company sold 8,000,000 shares of its common stock at a price of $1.25 per share to the public through an underwritten public offering, for net proceeds of $9.3 million.

During 2016, the Company also issued 3,500,000 shares of common stock for net proceeds of $6.8 million as part of an at-the-market (ATM) sales agreement with an investment bank.

During the year ended December 31, 2016, the Company issued 125,862 common shares for the cashless exercise of warrants.

2013 Amended and Restated Stock Plan

In September 2013, the Board of Directors of the Company approved the Company’s 2013 Stock Plan. The expiration date of the plan is September 9, 2023 and the total number of underlying shares of the Company’s common stock available for grant to employees, directors and consultants of the Company under the plan was 2,750,000 shares. In December 2015, shareholders of the Company approved the second amendment to the plan and increased the number of shares authorized under the plan to 9,250,000 shares. In December 2016, shareholders of the Company approved the fifth amendment to the plan and increased the number of shares authorized under the plan to 12,750,000 shares. In December 2017, shareholders of the Company approved the sixth amendment to the plan and increased the number of shares authorized under the plan to 17,750,000 shares. In December 2018, shareholders of the Company approved the seventh amendment to the plan and increased the number of shares authorized under the plan to 22,750,000 shares.

2013 Equity Incentive Plan

In September 2013, the Board approved the Company’s 2013 Equity Incentive Plan. The expiration date of the plan is September 9, 2023 and the total number of shares of the Company’s common stock available for grant to employees, directors and consultants of the Company under the plan was 450,000 shares. In December 2013, the shareholders of the Company approved the plan and increased the number of shares authorized under the plan to 1,000,000 shares.

Restricted Stock

 During 2018, the Company granted 107,911 restricted common shares for consulting services, which all vested during 2018. The shares had a total value of $72,825. During the year ended December 31, 2018, the Company issued 156,393 common shares for restricted shares that became fully vested, of which 81,393 shares were granted prior to 2018.

As of December 31, 2018, the Company has yet to issue 254,819 common shares for restricted shares that have vested. As of December 31, 2018, all restricted shares granted were vested with no unamortized compensation expenses.

During the year ended December 31, 2017, the Company issued 26,000 common shares for restricted shares that became fully vested. The Company also granted 59,393 common shares for consulting services. The shares have a total value of $65,813 based on the services provided.

During the year ended December 31, 2016, the Company granted 250,700 shares of restricted common stock to consultants with a fair value of $0.4 million based on the stock price on the grant dates. The Company issued common shares totaling 21,000 for restricted shares granted in 2015 and prior years and 60,700 for restricted shares granted in 2016.

During the years ended December 31, 2018, 2017 and 2016, the Company recorded stock-based compensation expense of $0.1 million, $0.2 million and $0.6 million, respectively, for the restricted shares granted.

Stock Options

Following is a summary of option activities for the years ended December 31, 2018, 2017 and 2016:

During the year ended December 31, 2018, the Company granted its employees and members of the Board of Directors 3,577,159 options to purchase Company common stock with an exercise price ranging from $0.344 to $0.7829 per share, a term of 10 years, and a vesting period from 4 to 4.2 years. The options have an aggregated fair value of $1.7 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate range from 2.34% to 2.99% (2) expected life of 6 years, (3) expected volatility range from 78.8% to 80.4%, and (4) zero expected dividends.

During the year ended December 31, 2017, the Company granted its employees and members of the Board of Directors 2,597,500 options to purchase Company common stock with an exercise price ranging from $0.57 to $1.58 per share, a term of 10 years, and a vesting period from 4 to 4.2 years. The options have an aggregated fair value of $2.4 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate range from 1.84% to 2.28% (2) expected life of 6 years, (3) expected volatility range from 80.83% to 82.37%, and (4) zero expected dividends.

On June 6, 2017, a director, resigned from the Company and the Company entered into an agreement with the director. Pursuant to the agreement, all the outstanding vested options, (which originally were to expire 90 days from termination date), as well as 68,200 unvested options granted prior to December 31, 2016, shall be exercisable until the end of the term of each option grant agreement. As a result of the modification, the Company recorded an additional expense of approximately $174,000 for the incremental fair value of the options, calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate range from 0.97% to 1.39% (2) expected life of 3 months to 8.9 years, (3) expected volatility range from 45.72% to 79.81%, and (4) zero expected dividends.

During the year ended December 31, 2016, the Company granted employees, consultants, and its board members 2,225,000 options to purchase the Company’s common stock with exercise prices ranging from $0.95 to $2.25 with a 10-year term vesting over a 4-year period.  The options have an aggregated fair value of $3.1 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.28% - 1.97% (2) expected life of 6 years, (3) expected volatility of 81.45% - 87.95%, and (4) zero expected dividends.

During the years ended December 31, 2018, 2017 and 2016, options to purchase 1,515,650, 3,329,794 and 266,485 common shares were cancelled, respectively, upon the termination of employment.

There were no exercises of options during the years ended December 31, 2018 and 2017. During the year ended December 31, 2016, the Company received gross proceeds of $18,105 for the exercise of stock options for 23,212 shares.

The fair values of all options issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at December 31, 2018 was approximately $2.6 million. During each of the years ended December 31, 2018, 2017 and 2016, the Company recorded total option expense of approximately $1.7 million, $3.1 million and $3.6 million, respectively.

Warrants

Following is a summary of warrant activities for the years ended December 31, 2018, 2017 and 2016, respectively:

On November 8, 2018, the Company amended certain warrants, originally dated December 17, 2012, that had been issued to three entities affiliated with the family of the Mr. Sandesh Seth, Chairman and CEO, Amrosan LLC, Carnegie Hill Partners, and Bioche Asset Management, LCC, in the amount of 375,556, 353,023 and 721,068 shares, respectively and extended their date of expiration from December 17, 2019 to February 21, 2022. The warrants had originally been issued in 2012 as part of investment banking and advisory services provided by Mr. Seth. The incremental fair value for the warrants due to the amendment was immaterial.

In March 2018, the Company sold an aggregate of 30,237,894 units consisting of an aggregate of 30,237,894 shares of common stock, 7,559,445 series A warrants and 22,678,393 series B warrants, with each series A warrant exercisable for one share of common stock at an exercise price of $0.60 per share and each series B warrant exercisable for one share of common stock at an exercise price of $0.70 per share.

During the year ended December 31, 2018, the Company granted 122,628 warrants to consultants. The warrants are exercisable for periods ranging from 4 to 5 years at exercise prices ranging from $0.36 to $0.80 per share. The fair value of the warrants was approximately $27 thousand at the grant date and was determined utilizing the Black-Scholes option pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate range of 2.34% to 2.99%, (2) expected term of 4-5 years, (3) expected volatility range of 77.01% to 79.00%, and (4) zero expected dividends.

On August 2, 2017, the Company completed an underwritten offering of 21,500,000 shares of its common stock and warrants to purchase an aggregate of 18,275,000 shares of its common stock at a price of $0.75 per share and related warrant. The warrants are exercisable for a period of 5 years at an exercise price of $1.05 per share. The transaction date relative fair value of the warrants of $4.9 million was determined utilizing the Black-Scholes option pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate of 1.83%, (2) expected term of 5 years, (3) expected volatility of 82%, and (4) zero expected dividends.

Certain warrants were issued to the Company’s Executive Chairman (now Chairman and CEO) as part of investment banking and advisory services either prior to and outside of his role as a Board Member and subsequently Chairman and CEO. On March 14, 2017, the Company canceled a warrant to purchase 57,212 shares of common stock of the Company, dated December 19, 2012 and issued a new warrant to its Chairman and CEO to purchase 57,212 common shares with the term of the warrant expiring on February 11, 2022. The new warrant has the same exercise price in effect as the exercise price as the old warrant, but the expiration date was modified from December 19, 2017 to February 11, 2022. The Company also amended the warrant to purchase common stock of the Company, dated January 31, 2012, issued to its Chairman and CEO and an entity affiliated with its Chairman and CEO to purchase 64,746 and 99,617 common shares, respectively. Pursuant to the terms of the warrant amendments, the term of the warrants was extended to February 11, 2022 from January 31, 2019. As a result of the replacement and modification, the Company recorded an additional non-cash expense of $64 thousand for the incremental fair value of the new warrants.

During the year ended December 31, 2016, the Company granted 130,000 warrants to consultants. The warrants are exercisable for periods ranging from 5 to 10 years at exercise prices ranging from $0.98 to $1.77 per share. The fair value of the warrants was approximately $116,000 at the grant date and was determined utilizing the Black-Scholes option pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate range of 1.13% to 1.20%, (2) expected term of 5-10 years, (3) expected volatility range of 79.79% to 84.84%, and (4) zero expected dividends.

During the years ended December 31, 2018, 2017 and 2016, the Company recorded stock-based compensation expense related to warrants of $33 thousand, $0.1 million and $0.1 million respectively.