Annual report pursuant to Section 13 and 15(d)

Stockholders' Deficit

v3.6.0.2
Stockholders' Deficit
12 Months Ended
Dec. 31, 2016
Stockholders' Deficit [Abstract]  
STOCKHOLDERS' DEFICIT
16. STOCKHOLDERS’ DEFICIT

 

Common Stock:

 

Public Offering

 

On November 5, 2013, the Company completed an offering of its common stock in which the Company sold 1,250,000 shares of common stock at a price of $4.00 per share. In connection with the offering, 625,000 warrants to purchase 625,000 shares of common stock were also sold at $0.01 per warrant. The net proceeds to the Company from the offering after underwriting discounts and expenses was $4,550. Of the 625,000 warrants sold, 111,095 were exercised as of December 31, 2016.

 

Basis for determining fair value of shares issued

 

The Company determines the value at which to record common stock issued in connection with acquisitions, debt conversions and settlements, loan modifications and employee and non-employee compensation arrangements, using the market price of the common stock on the date of issuance.

  

Issuance of shares of common stock to non-employees for services

 

During January, February and March 2015, the Company issued an aggregate of 147,586 shares of its common stock to non-employees for services rendered. The shares were valued between $2.16 and $2.87 per share and were immediately vested. The Company recorded $374 to salaries and wages expense. 

 

During April 2015, the Company issued an aggregate of 30,000 shares of common stock to non-employees for services rendered. These shares were valued at $1.98 per share and were immediately vested. The Company recorded $59 to salaries and wages expense.

 

During February 2016, the Company issued 180,852 shares of its common stock to consultants in exchange for consulting services relating to corporate matters. The shares were valued at fair value at $0.52 per share and were immediately vested. The Company recorded $9 to salaries and wages expense as $85 was accrued as of December 31, 2015.

 

During March 2016, the Company issued 90,909 shares of its common stock to consultants in exchange for consulting services relating to corporate matters. The shares were valued at fair value at $0.68 per share and were immediately vested. The Company recorded $62 to salaries and wages expense.

 

During July 2016, the Company issued 282,142 shares of common stock to consultants in exchange for consulting services relating to corporate matters. Of the shares issued, 57,142 were immediately vested and valued at fair value of $0.58. The Company recorded $33 to salaries and wages expense. The remaining 225,000 shares vest on varying schedules through December 31, 2017.

 

Issuance of shares of common stock pursuant to conversion of related-party debt

  

During May 2015, the Company issued 243,443 shares of its common stock to related parties pursuant to the conversion of $540 principal amount of notes payable and related accrued interest. The shares were issued at $3.38 per share, for a total fair value of $823 and resulted in a loss of debt conversion of $283.

 

Issuance of shares pursuant to convertible notes payable

 

During April and May 2015, the Company issued 1,262,803 shares of its common stock to a third party pursuant to the conversion of $1,000 principal amount of notes payable and $68 of related accrued interest. The shares were issued between $1.66 and $3.53 per share, for a total fair value of $2,289 that was recorded as a loss on exchange of shares.

 

On May 14, 2015, the Company issued 348,164 shares of its common stock to a third party pursuant to the conversion of $1,000 principal amount of notes payable and $68 of related accrued interest and accelerated the remaining deferred loan costs associated with the principal converted. The shares were issued at $3.74 per share, for a total fair value of $1,302 and resulted in a loss of debt conversion of $264. Prepaid loan costs of $30 were accelerated and recorded as a loss on conversion of debt as of June 30, 2015.

 

Issuance of shares of common stock pursuant to conversion of the 12% Convertible Debentures 

 

During April, May and June 2015, the Company issued 621,831 shares of its common stock to third parties for the amortization of the Convertible Debentures. The shares were issued between $1.85 and $4.15 per share, for a total fair value of $527 that was recorded as a loss on debt conversion.

 

During May 2015, the Company issued 16,801 shares of its common stock to third parties for the amortization of the Convertible Debentures. The shares were issued between $3.74 and $4.15 per share, for a total fair value of $67 and resulted in a loss of debt conversion of $25.

  

Issuance of shares of common stock pursuant to conversion of the bridge financing agreement

 

During October 2015, GPB Life Science Holdings, LLC converted $200 of outstanding principal at a conversion price of $1.29 per share of common stock into 154,715 shares of common stock.

 

During November 2015, GPB Life Science Holdings, LLC converted $500 of outstanding principal at conversion prices between $1.60 and $1.42 per share of common stock into 412,222 shares of the Company’s common stock.

 

Issuance of shares of common stock pursuant to conversion of Mark Munro 1996 Charitable Remainder UniTrust

 

During February 2015, the Company issued 42,553 shares of its common stock to the Mark Munro 1996 Charitable Remainder UniTrust pursuant to the conversion of $100 principal amount of notes payable. The shares were issued at $2.76 per share, for a total fair value of $117 and resulted in a loss of debt conversion of $17.

 

During June 2015, the Company issued 8,306 shares of its common stock to the Mark Munro 1996 Charitable Remainder UniTrust pursuant to the conversion of $25 principal amount of notes payable and related accrued interest. The shares were issued at $2.55 per share, for a total fair value of $21 and resulted in a gain on debt conversion of $4. 

 

During July 2015, the Company issued 219,820 shares of its common stock to the Mark Munro 1996 Charitable Remainder UniTrust pursuant to the conversion of $450 principal amount of notes payable and related accrued interest. The shares were issued at $2.23 per share, for a total fair value of $490 and resulted in a loss on debt conversion of $35.

 

Issuance of shares of common stock upon settlement of the bridge financing agreement

 

On December 29, 2015, the Company entered into a conversion agreement with GPB Life Science Holdings, LLC (refer to Note 11, Term Loans, for additional detail) pursuant to which, among other things, GPB Life Science Holdings, LLC converted the remaining $1,500 principal balance into 1,918,649 shares of the Company’s common stock.

 

Issuance of shares of common stock upon redemption of debt

 

During November 2015, the holders of promissory notes converted $141 of outstanding principal at conversion prices between $1.37 and $1.31 per share into 187,810 shares of the Company’s common stock.

 

During December 2015, the holders of promissory notes converted $485 of outstanding principal at conversion prices between $1.37 and $1.00 per share into 387,811 shares of the Company’s common stock.

 

Issuance of shares for payment of related-party interest

 

During January and March 2015, the Company issued an aggregate of 144,508 shares of common stock to eight related parties for payment of accrued interest aggregating to $343. The shares were issued at $2.53 and $2.16 per share in January and March, respectively.

 

Issuance of shares pursuant to acquisition of assets of SDN Essentials, LLC

 

In January 2016, the Company issued 1,000,000 shares of common stock valued at $1.00 per share in connection with the acquisition of assets of SDNE. In addition to the shares, the Company paid $50 in cash and an earn out provision of $515, subject to SDNE meeting certain revenue targets.

 

During July 2016, the Company issued a pool of 50,000 shares of the Company’s common stock, which was allocated among employees of SDNE.

 

Issuance of shares pursuant to private placement

 

During August 2015, the Company completed two private placements of debt securities and issued to two lenders an aggregate of 25,000 shares of its common stock, at a price of $2.01 and $1.94 per share of common stock, for a fair value of $50. The shares of common stock were recorded as a debt discount on the consolidated balance sheet as of December 31, 2015.

 

Issuance of shares of common stock pursuant to extinguishment of debt

 

On March 3, 2015, the Company issued an aggregate of 500,700 shares of its common stock to five related-party lenders pursuant to the extinguishment of notes payable. The shares were issued with a fair value of $2.45 per share, for a total fair value of $1,227, which was recorded as loss on extinguishment of debt on the consolidated statement of operations.

 

On March 25, 2015, the Company issued 22,222 shares of its common stock to a related party lender pursuant to the restructuring of notes payable. The shares were issued at a fair value of $2.16 per share, for a total fair value of $48, which was recorded as a loss on extinguishment of debt on the consolidated statement of operations. 

  

Issuance of shares of common stock pursuant to modification of debt

 

On March 3, 2015, the Company issued an aggregate of 298,390 shares of its common stock to five related-party lenders pursuant to the restructuring of various notes payable. The shares were issued with a fair value of $2.45 per share, for a total fair value of $731, which was recorded as a debt discount on the consolidated balance sheet as of December 31, 2015.

 

Issuance of shares pursuant to incentives earned

 

During March 2015, the Company issued an aggregate of 128,205 shares to employees in settlement of incentives earned. The shares were issued at $2.16 per share.

 

Issuance of shares upon restructuring of debt

 

During January 2015, the Company issued 100,000 shares of common stock to a related party for the restructuring of notes payable. The shares were issued at $2.92 per share and were valued at $292.

 

Issuance of shares upon settlement of accounts payable

 

During March 2015, the Company issued 300,000 shares of common stock to a third party for settlement of accounts payable. The shares were issued at $2.16 per share and were valued at $648. On April 1, 2015, the 300,000 shares of common stock were cancelled and returned to the Company in the form of treasury stock.

 

Issuance of shares upon conversion of warrants

 

During October 2015, the Company issued 192,096 shares of common stock to a third party upon the exercise of warrants at exercise prices of between $1.81 and $1.54 per share for a total fair value of $324.

 

During November 2015, the Company issued 94,905 shares of common stock to a third party upon the exercise of warrants at exercise prices of between $1.63 and $1.42 per share for a total fair value of $144.

 

Issuance of shares pursuant to the payment of contingent consideration

 

During January 2015, the Company issued 79,853 shares of common stock to the former owner of Highwire for the payment of contingent consideration owed per the purchase agreement. The shares were issued at $3.83 per share for a fair value of $306. 

 

During April 2015, the Company issued 252,525 shares of common stock to the former owners of AWS for the payment of contingent consideration owed per the purchase agreement. The shares were issued at $1.98 per share for a fair value of $500.

 

During June 2015, the Company issued 223,031 shares of common stock to the former owners of VaultLogix for the payment of contingent consideration owed per the purchase agreement. The shares were issued at $2.92 per share for a fair value of $651.

 

Issuance of shares pursuant to Dominion Capital LLC promissory notes

 

In January 2016, the Company issued an aggregate of 466,669 shares of common stock to a third-party lender in satisfaction of notes payable aggregating $583. The shares were issued at $1.25 per share, per the terms of the notes payable.

 

In February 2016, the Company issued an aggregate of 649,098 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $590. The shares were issued at $1.25 per share, per the terms of the notes payable.

 

In March 2016, the Company issued an aggregate of 402,520 shares of common stock to a third-party lender in satisfaction of notes payable aggregating $289. The shares were issued at $1.25 per share, per the terms of the notes payable.

 

In June 2016, the Company issued an aggregate of 284,406 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $156. The shares were issued at $0.55 per share, per the terms of the notes payable.

 

In July 2016, the Company issued an aggregate of 588,611 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $283. The shares were issued at average fair value of $0.46 per share, per the terms of the agreements.

 

In August 2016, the Company issued an aggregate of 603,340 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $207. The shares were issued at average fair value of $0.35 per share, per the terms of the agreements.

 

In September 2016, the Company issued an aggregate of 2,064,448 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $287. The shares were issued at average fair value of $0.15 per share, per the terms of the agreements.

 

In October 2016, the Company issued an aggregate of 3,102,298 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $196. The shares were issued at average fair value of $0.06 per share, per the terms of the agreements.

 

In November 2016, the Company issued an aggregate of 6,667,765 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $224. The shares were issued at average fair value of $0.03 per share, per the terms of the agreements.

 

In December 2016, the Company issued an aggregate of 16,496,044 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $268. The shares were issued at average fair value of $0.02 per share, per the terms of the agreements.

 

Issuance of shares pursuant to Smithline Senior Convertible Note

 

In February 2016, the Company issued an aggregate of 199,573 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $75. The shares were issued at $0.38 per share, per the terms of the note payable.

  

In March 2016, the Company issued an aggregate of 105,835 shares of common stock to a third-party lender in satisfaction of notes payable aggregating $49. The shares were issued at $0.46 per share, per the terms of the note payable.

 

In April 2016, the Company issued an aggregate of 73,996 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $48. The shares were issued at $0.65 per share, per the terms of the note payable.

 

In May 2016, the Company issued an aggregate of 88,532 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $48. The shares were issued at $0.54 per share, per the terms of the note payable.

 

In June 2016, the Company issued an aggregate of 68,254 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $47. The shares were issued at $0.69 per share, per the terms of the note payable.

 

In July 2016, the Company issued an aggregate of 98,386 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $47. The shares were issued at $0.48 per share, per the terms of the note payable.

 

In August 2016, the Company issued an aggregate of 150,521 shares of common stock to a third-party lender in satisfaction of notes payable and accrued interest aggregating $57. The shares were issued at $0.38 per share, per the terms of the note payable.

 

Issuance of shares pursuant to Bridge Financing Provision

 

In January 2016, the Company issued an aggregate of 500,000 shares of common stock to a third-party lender in satisfaction of notes payable aggregating $320. The shares were valued at fair value at $0.64 per share.

 

Issuance of shares pursuant to acquisition of assets of 8760 Enterprises, Inc.

 

In September 2016, the Company issued 900,000 shares of common stock valued at $0.15 per share in connection with the acquisition of assets of 8760 Enterprises. In addition to the shares, the Company issued a warrant to purchase 750,000 shares of common stock, at an exercise price of $2.00 per share, with a term of four years. The Company determined that the fair value of the warrants was $36, which is included in common stock warrants within the stockholders’ deficit section on the condensed consolidated balance sheet as of September 30, 2016. In addition to the shares, the Company recorded contingent common stock of $16 along with contingent consideration of $334, subject to 8760 Enterprises meeting certain targets.

 

Issuance of shares to JGB Concord and JGB Waltham

 

In June 2016, the Company issued 900,000 shares of common stock valued at $0.92 per share as a concession for restructuring certain debt agreements. The Company recorded these shares as a loss on fair value of debt extinguishment of $828 on the consolidated statement of operations for the year ended December 31, 2016.

 

In September 2016, the Company issued an aggregate of 4,592,940 shares of common stock to JGB Concord and JGB Waltham in satisfaction of notes payable and accrued interest aggregating $586. The shares were issued at average fair value of $0.13 per share, per the terms of the agreements.

 

In October 2016, the Company issued an aggregate of 3,605,440 shares of common stock to JGB Concord and JGB Waltham in satisfaction of notes payable and accrued interest aggregating $226. The shares were issued at average fair value of $0.06 per share, per the terms of the agreements.

  

In November 2016, the Company issued an aggregate of 7,550,872 shares of common stock to JGB Concord and JGB Waltham in satisfaction of notes payable and accrued interest aggregating $301. The shares were issued at average fair value of $0.04 per share, per the terms of the agreements. 

 

In December 2016, the Company issued an aggregate of 5,759,782 shares of common stock to JGB Concord and JGB Waltham in satisfaction of notes payable and accrued interest aggregating $191. The shares were issued at average fair value of $0.03 per share, per the terms of the agreements. 

 

Issuance of shares to Forward Investments, LLC

 

In July 2016, the Company issued an aggregate of 793,519 shares of common stock to a related-party lender in satisfaction of notes payable aggregating $446. The shares were issued at average fair value of $0.55 per share, per the terms of the agreements.

 

In August 2016, the Company issued an aggregate of 926,998 shares of common stock to a related-party lender in satisfaction of notes payable aggregating $396. The shares were issued at average fair value of $0.44 per share, per the terms of the agreements.

 

In September 2016, the Company issued an aggregate of 3,964,061 shares of common stock to a related-party lender in satisfaction of notes payable aggregating $620. The shares were issued at average fair value of $0.15 per share, per the terms of the agreements.

 

In October 2016, the Company issued an aggregate of 2,253,000 shares of common stock to a related-party lender in satisfaction of notes payable aggregating $156. The shares were issued at average fair value of $0.07 per share, per the terms of the agreements.

 

In November 2016, the Company issued an aggregate of 3,989,000 shares of common stock to a related-party lender in satisfaction of notes payable aggregating $182. The shares were issued at average fair value of $0.05 per share, per the terms of the agreements.

 

In December 2016, the Company issued an aggregate of 12,723,340 shares of common stock to a related-party lender in satisfaction of notes payable aggregating $439. The shares were issued at average fair value of $0.03 per share, per the terms of the agreements.

 

Issuance of shares to related parties

 

During July 2016, the Company issued an aggregate of 250,000 shares of common stock to related party lenders in satisfaction of notes payables aggregating to $200. The shares were valued at fair value at $0.80 per share, per the terms of the notes payables.

 

Issuance of shares to third party

 

During January 2015, the Company issued 1,961 shares of common stock to the Ian Gist Cancer Research Fund. The shares were issued at $2.53 per share for a fair value of $5.

 

Purchase of Treasury Shares

 

During April, May and June 2015, the Company repurchased 112,995 shares at par value of $0.0001 per share, from ten employees who terminated employment. A service provider also returned 300,000 shares issued to a service provider originally issued for the settlement of accounts payable.

 

During September 2015, the Company repurchased 14,910 shares at par value of $0.0001 per share from ten employees who terminated employment. 

 

During March 2016, the Company repurchased 1,961 shares from the Ian Gist Cancer Research Fund. The shares were valued at fair value at $0.54 per share.

 

During March 2016, the Company repurchased 141,322 shares at par value of $0.0001 per share from twenty employees who terminated employment.

 

During June 2016, the Company repurchased 55,167 shares at par value of $0.0001 per share from twelve employees who terminated employment.

 

During November 2016, the Company repurchased 100,000 shares at par value of $.0001 per share from a third party who terminated their consulting agreement.

 

During December 2016, the Company repurchased 500,000 shares at par value of $.0001 per share from an employee who terminated employment.