Stockholders' Equity | 3 Months Ended |
Sep. 30, 2013 |
Notes | ' |
Stockholders' Equity | ' |
6 - Stockholders’ Equity |
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Common Stock |
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The Company is authorized to issue up to 100,000,000 shares of Common Stock. As of September 30, 2013, there are 22,498,527 shares of Common Stock issued and outstanding. All shares of Common Stock are entitled to participate in any distributions or dividends that may be declared by the Board of Directors, subject to any preferential dividend rights of outstanding shares of our Preferred Stock, if any. Subject to prior rights of creditors, all shares of Common Stock are entitled, in the event of our liquidation, dissolution or winding up, to participate ratably in the distribution of all our remaining assets. Our Common Stock has no preemptive or conversion rights or other subscription rights. |
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Preferred Stock |
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There are 10,000,000 shares of Preferred Stock authorized for issuance. As of September 30, 2013, there are no shares of Preferred Stock issued and outstanding. |
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Series M Preferred Stock |
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In connection with the ADVN merger and pursuant to the filing of a Certificate of Designation with the Nevada Secretary of State on August 28, 2012, the Board of Directors of the Company authorized the issuance of Class M Preferred Stock. Pursuant to the Merger Agreement, the Company agreed to issue shares of its Class M Preferred to the ADVN Owners in exchange for the shares of ADVN common stock and preferred stock (and to issue new options for shares of ADVN common stock underlying ADVN options). |
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Holders of the Class M Preferred were entitled, on a post-Automatic Conversion basis, to the same rights and privileges, including voting rights, as holders of our common stock. The holders of our Class M Preferred Stock were entitled to 100 votes per share and one vote per common share on a post-Automatic Conversion and post-Reverse Stock Split basis on all matters to be voted on by the stockholders. Pursuant to the Merger Agreement, the Company increased the number of shares of common stock that the Company is authorized to issue from 25,000,000 shares to 100,000,000 shares (the “Authorized Share Increase”). The Authorized Share Increase was affected by the Company filing an amendment to its Articles of Incorporation pursuant to a special meeting of shareholders on March 4, 2013. Upon the effectiveness of the Authorized Share Increase on March 4, 2013, all of the issued and outstanding shares of Class M Preferred automatically converted into shares of the Company’s common stock at the Exchange Ratio of 100:1. |
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Warrants and Options |
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As of September 30, 2013, we have the following warrants and options outstanding: |
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Common Stock Warrants |
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Warrant summary | Number | Exercise | Maximum | Expiration | | |
of warrants | price | proceeds | Date | |
outstanding | | | | |
Warrants issued in the preferred stock private placement | 184,625 | $12.00 | 2,215,500 | 2/28/14 | | |
Warrants issued upon conversion of preferred stock | 869,750 | $ 8.50 | 7,392,875 | 2/28/14 | | |
Warrants issued our initial public offering | 881,901 | $10.00 | 8,819,010 | 2/28/14 | | |
Warrants issued to our underwriters | 95,000 | $14.00 | 1,330,000 | 2/28/14 | | |
Warrants issued with 10% convertible notes | 100,000 | $ 6.50 | 650,000 | 11/5/14 | |
Warrants issued with 8% convertible notes | 1,294,557 | $ 4.00 | 5,178,228 | 7/31/14 | |
Warrants issued with 8% convertible notes | 1,294,557 | $ 6.00 | 7,767,342 | 7/31/14 | |
Warrants issued with 10% convertible notes | 5,000 | $ 4.00 | 20,000 | 9/16/14 | |
Warrants issued with 12% convertible notes | 60,000 | $ 4.00 | 240,000 | 9/17/14 | |
Total | 4,785,390 | various | 33,612,955 | various | |
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Options |
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We assumed the option plan of Ad-Vantage, under which options for the purchase of 3,729,916 shares of ADVN common stock were outstanding at the closing of the Merger (the “Outstanding ADVN Options”). The Outstanding ADVN Options were converted into options to purchase 3,729,916 shares of the Company’s Common Stock after giving effect to the Automatic Conversion of the Class M Preferred stock and expire in 2021 and 2022. At the closing of the Merger, there were 42,500 options outstanding to purchase the Company’s Common Stock which were exercised in October, 2012. Following the Merger, a total of 390,000 incentive stock options to purchase common stock were granted in October, 2012. As of September 30, 2013, there were 5,645,416 options outstanding to purchase the Company’s Common Stock. |
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The ADVN Board of Directors adopted the ADVN Plan in September 2010. The ADVN Plan provided long-term incentives to employees, members of the Board, and advisers and consultants of the Company who were able to contribute towards the creation of or have created stockholder value by providing them stock options and other stock and cash incentives. Provisions such as vesting, repurchase and exercise conditions and limitations were determined by the ADVN Board of Directors on the grant date. The total number of shares that could be issued pursuant to the ADVN Plan could not exceed 1,250,000 shares, subject to adjustment in the event of certain recapitalizations, reorganizations, and similar transactions. |
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As of December 31, 2012, 1,115,521 options had been granted under the ADVN Plan, and 929,917 remained outstanding at the time of the Merger, at which time they were converted into options to purchase 929,917 shares of the Company’s Common Stock for after giving effect to the Automatic Conversion of the Class M Preferred stock. No options will be granted under the ADVN Plan following the Merger. |
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The Mediashift Board of Directors adopted the 2013 Stock Incentive Plan in July 2013. The 2013 Stock Incentive Plan provides long-term incentives to employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and to provide additional incentives to such persons to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company. Provisions such as vesting, repurchase and exercise conditions and limitations were determined by the Mediashift Board of Directors on the adoption date. The total number of shares that could be issued pursuant to the 2013 Stock Incentive Plan could not exceed 2,000,000 shares, subject to adjustment in the event of certain recapitalizations, reorganizations, and similar transactions. |
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The following summaries information concerning outstanding and exercisable common stock options: |
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| Number of | | Weighted | Weighted- | | |
Options | average | Average | | |
| exercise | Remaining | | |
| price per | Contractual | | |
| share | Life | | |
Outstanding at December 31, 2012 | 390,000 | $ | 7.96 | 6.79 years | | |
Exercised | -- | | -- | | | |
Granted | -- | | -- | | | |
Outstanding at September 30, 2013 | 1,925,500 | $ | 4.27 | 9.84 years | | |
Exercisable at September 30, 2013 | - | | - | - | | |
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Class M Preferred Stock options |
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Upon the merger, all issued and outstanding options, warrants and other rights to acquire shares of ADVN common stock (collectively, “ADVN Options”) were converted into options, warrants or other rights to acquire shares of Class M Preferred (collectively, “Parent Class M Preferred Stock Options”) at the Exchange Ratio, with such Class M Preferred Stock Options having the same terms and being subject to the same conditions as the ADVN Options, provided, however, that upon the consummation of the Authorized Share Increase and the Reverse Stock Split all of the Class M Preferred Stock Options shall, without the requirement of any further action, convert into options for shares of MediaShift common stock, with such conversion occurring at the Conversion Ratio. No ADVN Option has accelerated vesting in connection with the Merger. |
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During the year ended December 31, 2012, ADVN granted 518,837 (5,188.37 of Class M Preferred) stock options under the ADVN Plan to certain employees, directors, and advisers, respectively. A total of 150,000 (1,500 of Class M Preferred) options vest monthly over a 24 month period and 368,837 (3,688.37 Class M Preferred) options vest one quarter (1/4) after one year and the balance over a 36 month period. ADVN also issued 2,799,999 non-qualified stock options outside the ADVN Plan to be allocated among senior management, fully vesting at the closing of the Merger with JMG and exercisable at $1.14 per share. These stock options were converted into options to purchase 2,799,999 shares of the Company’s common stock (27,999.99 shares of Class M Preferred). Upon the consummation of the Authorized Share Increase and the Reverse Stock Split on March 12, 2013, all 37,299 Class M Preferred Stock options were converted to 3,729,916 common stock options. |
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A summary of ADVN Class M Preferred stock option activity from December 2012 through September 30, 2013 is as follows: |
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| Number of | Weighted | Weighted- |
Options | Average | Average |
| exercise | Remaining |
| price per | Contractual |
| share | Life |
Outstanding at December 31, 2012, Class M Preferred | | 37,299 | $ | 1.0493 | | 6.47 years |
Conversion of Class M Preferred options to common stock options | | 3,682,617 | | | | |
Outstanding at September 30, 2013, common stock | | 3,719,916 | | 1.049 | | 5.73 years |
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The exercise price and vesting period of each stock option is specified by the Board of Directors at the time of grant. The stock options expire seven years after the grant date, except for the stock options vesting upon the Merger, which expire six years after the vesting date. |
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The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The expected life assumption is based on the expected life assumptions of similar entities. Expected volatility is based on actual share price volatility of similar companies of the preceding twelve months. The risk-free interest rate is the yield currently available on U.S. Treasury zero-coupon issues with an expected term ranging from 2.5 to 5 years used as the input to the Black-Scholes model. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods as options vest, if actual forfeitures differ from those estimates. During the years ended December 31, 2012 and 2011, the Company experienced no forfeitures. 1,960,500 options were granted in 2013, and experienced 35,000 in forfeitures leaving an outstanding balance of 1,925,500 as of September 30, 2013. |
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The weighted average grant date fair value of options granted during 2012 amounted to $0.654 per option using the Black Scholes pricing model using the following assumptions: |
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Weighted average risk-free interest rate | 0.90% | | | | | |
Expected life in years | 7 | | | | | |
Expected volatility | 78% | | | | | |
Expected dividends | 0 | | | | | |
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As of September 30, 2013 there was $7,136,601 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately 3.36 years. |