Annual report pursuant to Section 13 and 15(d)

Equity

v2.4.0.8
Equity
12 Months Ended
Dec. 31, 2013
Equity [Abstract]  
Equity
Note 8 – Equity
 
During 2012, the Company raised approximately $0.8 million by selling 968,759 shares of the Company’s common stock and warrants to purchase 242,190 shares of the Company’s common stock under an offering (“Stock Offering”).  A net amount of approximately $0.7 million was received by the Company in 2012. The Company paid Laidlaw & Company (UK) Ltd. (“Laidlaw & Co.”) total cash fees of $91,116, which consisted of placement agent commissions of $75,930 and expense reimbursements of $15,186. The Company also issued Laidlaw & Co. warrants to purchase an aggregate of 121,095 shares of the Company’s common stock, with an exercise price of $0.78 per share and a term of 7 years. These placement agent warrants were valued at their grant date fair value of $0.2 million. In addition, the Company paid Laidlaw & Co.’s outside counsel, McCormick & O’Brien PLLC, $8,020 for its services as the placement agent’s legal counsel. 
 
In 2012, the Company also raised approximately $5.2 million through an offering of 3,118,988 shares of its common stock and “A Warrants” to purchase 3,118,988 shares of the Company’s common stock, exercisable at a price of $1.65 per share for a period of 120 days from the day of the final closing of the offering, and “B Warrants” to purchase 1,559,505 shares of the Company’s common stock, exercisable at a price of $2.48 per share for a period of 5 years from the date of the final closing of the offering. (“2012 Common Stock Offering”)  A net amount of approximately $4.5 million was received by the Company. Pursuant to the 2012 Common Stock Offering agreement, the Company paid Laidlaw & Co. total cash fees of approximately $0.7 million, which consisted of placement agent commissions of $515,145 and expense reimbursements of approximately $0.2 million. The Company also issued the placement agent warrants to purchase an aggregate of 467,845 shares of the Company’s common stock, with an exercise price of $0.78 per share and a term of 5 years. These placement agent warrants were valued at $499,707 and recorded as derivative liabilities.  In addition, the Company paid Laidlaw & Co.’s outside counsel, Richardson & Patel, LLP, $60,000 for its services as Laidlaw & Co.’s legal counsel and Signature Bank $3,500 for the bank escrow fee.
 
During 2012, the Company’s convertible notes, plus accrued interest, were converted to 1,252,550 shares of the Company’s common stock as a result of the 2012 Common Stock Offering.
 
As a result of the Share Exchange described in Note 1, the Company issued 400,000 shares to the original shareholders of the Company and 1,986,566 shares to the former shareholders of Actinium.
 
During 2013, the Company amended its Articles of Incorporation to change the par value of its common stock from $0.01 to $0.001. The consolidated financial statements have been retroactively adjusted to reflect this change.
 
In December 2013, the Company completed the sale of units pursuant the Unit Purchase Agreement, dated December 27, 2013 (the “Purchase Agreement”), and Subscription Agreement, dated December 27, 2013 (the “Subscription Agreement”), among the Company and certain accredited investors. The securities sold in the offering consisted of an aggregate of (i) 554,310 shares of its common stock, and (ii) warrants to purchase 138,577 shares of its Common Stock at an in exercise price of $9.00 per share, subject to adjustment (“2013 Common Stock Offering”). The warrants are exercisable for a period of five years from the date of issuance. The Company received gross proceeds of approximately $3.3 million from the sale of securities under the Purchase Agreement. The transaction date fair value of the warrants of $0.4 million was determined utilizing the Black-Scholes option pricing model utilizing the following assumptions: risk free interest rate – 0.07%, expected volatility - 84%, expected dividend yield - 0%, and a contractual life of 5 years. As of December 31, 2013, all the warrants were outstanding.
 
As required by the Purchase Agreement, at the closing, the investors also became parties to the Registration Rights Agreement dated as of December 27, 2013 pursuant to which the Company will be required to register with the United States Securities and Exchange Commission such Shares and the shares of Common Stock underlying the Warrants (the “Warrant Shares”).  If the registration statement is not filed or declared effective within the timeframe set forth in the Registration Rights Agreement, the Company is obligated to pay the investors an amount equal to of 1% of the total purchase price of the securities per month (up to a maximum of 6% in the aggregate) until such failure is cured.  Officers and directors of the Company also entered into a lock-up agreements pursuant to which they agreed not to sell or otherwise transfer any shares of Common Stock or other securities of the Company owned by them until the date that is 6 months following the effective date of the registration statement to be filed in connection with the offering.
 
During 2013, the Company also issued 265,834 shares to certain service providers valued at $0.2 million.
 
Placement Agent – In connection with the money raised in 2011, the Company issued Laidlaw & Co. warrants to purchase an aggregate of 1,129,925 shares of common stock, with an exercise price of $0.78 per share.  With the money raised in 2012, the Company issued Laidlaw & Co. warrants to purchase an aggregate of 588,940 shares of common stock, with an exercise price of $0.78 per share.
 
During December 2013, in connection with the 2013 Common Stock Offering, the Company issued Laidlaw & Co. warrants to purchase an aggregate of 69,289 shares of common stock with an exercise price of $9.00 per share. The transaction date fair value of the warrants of $0.2 million was determined utilizing the Black-Scholes option pricing model utilizing the following assumptions: risk free interest rate – 0.07%, expected volatility - 84%, expected dividend yield - 0%, and a contractual life of 5 years.
 
Management Firm – In 2011, the Company entered into a management agreement with Jamess Capital Group, LLC (formerly, AmerAsia Inc., “Jamess”) for Jamess to provide consulting services related to funding and Actinium becoming a publicly traded entity. A director of the Company is the principal of Jamess. In 2011, the Company incurred $96,744 in management fees. In addition, Actinium issued Jamess warrants to purchase an aggregate of 1,974,774 shares of common stock, with an exercise price of $0.01 per share. The warrants have a fair value of approximately $2.2 million and included a cashless exercise provision.  In 2012, the Company issued Jamess warrants to purchase 1,716,340 shares of common stock with an exercise price of $0.01 per share. The warrants have a fair value of approximately $2.0 million and included a cashless exercise provision.
 
Approval of the 2013 Stock Plan
 
In September 2013, the Board 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 is 2,750,000 shares. In December 2013, the shareholders of the Company approved the plan and increased the number of shares authorized under the plan to 5,750,000 shares.
 
Approval of the 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 is 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.
 
During 2013, the Company granted employees, consultant and board members 312,500 shares of restricted stock. 80,000 shares of restricted stock vest 1 year from the grant date, 100,000 shares have a vesting period of 24 months. The remaining restricted shares granted are performance based and vest over time. As of December 31, 2013, 265,834 shares of the 312,500 that have vested were considered issued and outstanding.
 
Options
 
Following is a summary of option activities for the two years ended December 31, 2013:
 
         
Weighted
     
         
Average
     
     
Weighted
 
Remaining
 
Aggregate
 
 
Number of
 
Average
 
Contractual
 
Intrinsic
 
 
Units
 
Exercise Price
 
Term (in years)
 
Value
 
                 
Outstanding, December 31, 2011
   
273,859
     
1.29
     
5.51
     
-
 
Granted
   
2,056,275
     
0.96
     
8.89
         
Outstanding, December 31, 2012
   
2,330,134
   
$
0.96
     
8.91
   
$
685,800
 
Granted
   
787,450
     
6.62
     
10.00
         
Cancellation
   
(1,115,550)
                         
Exercised
   
(16,650)
     
0.78
                 
Outstanding, December 31, 2013
   
1,985,384
   
$
3.23
     
8.34
   
$
5,908,696
 
 
In February 2012, the Company re-priced 273,859 units of employee stock options to reflect the current per share fair market value of the Company’s common stock. The exercise prices of all of the current outstanding stock options were reduced to $1.28 per share. The Company recorded an incremental compensation cost of $34,879 as a result of the re-pricing of options.
 
During 2012, options to purchase 2,056,275 shares of common stock were issued to several employees and consultants at an exercise price ranging from $0.78 to $1.5 per share.  These options have a term of 10 years and vest over a 4-year period. The fair value of approximately $1.5 million was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.8% (2) expected life of 7 years, (3) expected volatility of 160.44% ~ 162.49%, and (4) zero expected dividends.
 
During 2013, the Company granted employees and board members 787,450 options to purchase the Company’s common stock with exercise prices ranging from $3.60 to $6.70 and a term of 10 years and vest over a 4-year period.  The fair value of $3.7 million was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.36% - 1.55% (2) expected life of 6 years, (3) expected volatility of 83.32%~98.45%, and (4) zero expected dividends.
 
During 2013, the Company received gross proceeds of $13,053 for exercise of options for 16,650 shares of the Company’s common stock.
 
All options issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at December 31, 2013 and 2012 was $4.0 million and $2.0 million, respectively. During the years ended December 31, 2013 and 2012, the Company recorded option expense of $0.3 million and $0.2 million, respectively.
 
Warrants
 
Following is a summary of warrant activities for the two years ended December 31, 2013:
 
               
Weighted
       
               
Average
       
         
Weighted
   
Remaining
   
Aggregate
 
   
Number of
   
Average
   
Contractual
   
Intrinsic
 
   
Units
   
Exercise Price
   
Term (in years)
   
Value
 
                         
Outstanding, December 31, 2011
   
5,364,557
   
$
0.51
     
6.76
   
$
3,261,367
 
  Granted
   
7,406,079
     
1.32
     
3.76
         
Outstanding, December 31, 2012
   
12,770,636
     
0.97
     
4.48
     
  6,114,768
 
  Granted
   
329,866
     
7.47
        6.40          
  Exercised
   
(2,403,429
)
   
1.58
                 
  Forfeited
   
(1,023,784
)
                       
Outstanding, December 31, 2013
   
9,673,290
   
$
1.06
     
4.89
   
$
47,396,307
 
 
During the year ended December 31, 2012, warrants to purchase an aggregate of 1,716,340 shares of common stock were granted to the Management Firm at an exercise price of $0.01 per share. These warrants have a term of 7 years and vest immediately. Fair value of approximately $2.00 million was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate of 1.82%, (2) warrant life of 7 years, (3) expected volatility of 60.64%, and (4) zero expected dividends.  Since these warrants vest immediately, the Company recorded the entire fair value of approximately $2.0 million as stock-based compensation expense during the year on these warrants issued by the Company.
 
During the year ended December 31, 2012, the Company also issued the following warrants:
 
Warrants issued to investors with Stock Offering
   
242,189
 
Warrants issued to investors with 2012 Common Stock Offering
   
4,678,491
 
Placement agent warrants related to issuance of:
       
    Stock Offering
   
121,094
 
    2012 Common Stock Offering
   
467,845
 
Warrants issued to investors with stock – accrued dividend
   
180,120
 
Total
   
5,689,739
 
 
During the year ended December 31, 2013, warrants to purchase 122,000 shares of common stock were granted to service providers at exercise prices ranging from $3.60 to $6.70 per share. These warrants have a term of 7~10 years. Warrants to purchase 72,000 shares of common stock vested immediately and were valued at $177,313 on the grant date. Warrants to purchase 50,000 shares of common stock vest over a year and were valued at $235,737 on the grant date. The fair value on the grant date was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate of 1.55%~1.36%, (2) expected term of 5 years, (3) expected volatility of 91.56%, and (4) zero expected dividends.  As of December 31, 2013, unrecognized compensation expense related to the warrants was $226,049.
 
During the year ended December 31, 2013, the Company also issued warrants to purchase 138,577 shares of the Company’s common stock to investors and warrants to purchase 69,289 shares of the Company’s common stock to its placement agent in connection with the 2013 Common Stock Offering.
 
During the year ended December 31, 2013, 2,403,429 warrants were exercised by the warrant holders. The Company issued 2,336,988 shares of common stock and received gross proceeds of approximately $3.5 million.
 
During the years ended December 31, 2013 and 2012, the Company recorded stock-based compensation related to the warrants of approximately $0.2 million and $2.0 million, respectively.