Stockholders' Equity | 12 Months Ended |
Dec. 31, 2013 |
Equity [Abstract] | ' |
Stockholders' Equity | ' |
Note 10—Stockholders’ Equity |
Common Stock |
Cardium was incorporated in Delaware on December 22, 2003. On December 31, 2003, we sold 85,000 shares of our common stock to our founders and executives for $17,000. On April 1, 2005, we issued an additional 190,000 shares of our common stock (of which 182,500 shares were issued to our co-founders and the remainder was issued to another employee of Cardium), in exchange for services and reimbursement of expenses valued at $38,000. |
On May 19, 2005, our Board of Directors and stockholders approved an increase in our authorized shares of common stock from 5,500,000 shares to 100,000,000 shares and a change in the par value of our shares of common stock from $0.001 to $0.0001. |
On May 20, 2005, we issued 17,500 shares of our common stock to our co-founders in exchange for services and reimbursement of expenses valued at $3,500. On July 1, 2005, we sold 100,000 shares of our common stock for $20,000 to one of our founders. |
On October 20, 2005, we completed a reverse merger with Aries Ventures Inc., a publicly-traded “shell” company, whereby a newly formed and wholly-owned subsidiary of Aries was merged with and into Cardium. At the time of the reverse merger, Cardium had 392,500 shares of its common stock outstanding and Aries had 101,611 shares of its common stock outstanding. |
In connection with the reverse merger, a three year warrant to purchase 20,000 shares of our common stock at an exercise price of $35.00 per share was issued to an Aries stockholder who held of record or beneficially more than 45% of the outstanding common stock of Aries before the reverse merger, as consideration for such stockholder’s agreement not to sell any of such stockholder’s shares for a specified period of time. These warrants expired in October 2008. |
Concurrently with the reverse merger, we closed a private placement of 966,282 shares of common stock at a purchase price of $30.00 per share and received net proceeds of $25,542,389. Investors who invested at least $1,000,000 in shares of common stock received a three-year warrant to buy 10% of the number of shares of common stock purchased in the private placement, at an exercise price of $35.00 per share. Warrants to purchase 21,213 shares of common stock, in the aggregate, were issued to such investors. These warrants expired in October 2008. |
On March 8, 2006, as described in Note 3 above, we acquired substantially all of the assets of Innercool Therapies, Inc. As partial consideration, we issued to the seller 125,000 shares of our common stock. |
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On March 9, 2007, we closed a private placement of 431,800 shares of common stock at a purchase price of $50.00 per share and received net proceeds of approximately $20 million. Investors received five-year warrants to buy up to 35% of the number of shares of common stock purchased in the private placement, at an exercise price of $75.00 per share. Warrants to purchase approximately 151,130 shares of common stock, in the aggregate, were issued to such investors. These warrants had a price protection provision which was triggered on January 31, 2008 and therefore were reduced to an exercise price of $40.00. |
In connection with the private placement, we incurred selling commissions, and expenses payable to the placement agent, totaling approximately $1,480,300, and legal, accounting and other fees and expenses totaling approximately $100,000 In addition, a five-year warrant to purchase 25,908 shares of our common stock was issued to the placement agent at an exercise price of $75.60 per share. |
In November 2007, we entered into a Loan and Security Agreement with Life Sciences Capital, LLC whereby we obtained debt financing in the principal amount of $5 million to be used for general working capital purposes. The proceeds were immediately made available to us under this credit agreement. In connection with this financing, we issued a warrant to Life Sciences Capital, LLC to purchase 4,666 shares of our common stock at an exercise price of $75.00. We also recorded deferred financing costs in the amount of $108,500 in connection with this debt financing. |
On January 31, 2008, we completed a registered direct offering of our common stock that resulted in the sale of 132,750 shares, in the aggregate, of our common stock at a purchase price of $40.00 per share. We received gross proceeds of approximately $5,300,000, before placement agent fees and offering expenses of approximately $400,000. At December 31, 2012 warrants to purchase 51,428 shares of our common stock remain outstanding. The warrants had an exercise price of $40.00 and expired in January of 2013. |
On June 27, 2008, we completed a follow-on registered direct offering of our common stock that resulted in the sale of 81,250 shares, in the aggregate, of our common stock at a purchase price of $40.00 per share. We received gross proceeds of approximately $3,250,000, before placement agent fees and offering expenses of approximately $224,000. Warrants to purchase 118,575 shares of our common stock were issued with this transaction. 113,750 of these warrants had an exercise price of $10.00 and 4,825 had an exercise price of $45.80. The warrants expired in June of 2013. |
On July 18, 2008, we completed a second follow-on registered direct offering of our common stock that resulted in the sale of 83,500 shares, in the aggregate, of our common stock at a purchase price of $40.00 per share. We received gross proceeds of approximately $3,340,000, before placement agent fees, offering expenses and expense reimbursements of approximately $330,000. Warrants to purchase 121,450 shares of our common stock were issued with this transaction. 116,900 had an exercise price of $10.00 and 4,550 had an exercise price of $44.00. The warrants expired in June of 2013. |
On November 5, 2008, we completed a secured debt financing pursuant to the terms of a Note and Warrant Purchase Agreement entered into with certain accredited investors. Under the terms of the purchase agreement we issued notes in the aggregate principal amount of $6 million to the investors, and five year warrants to purchase an additional 469,331 shares of our common stock, in the aggregate, at an exercise price of $40.00 per share. These warrants expired in November of 2013. |
On March 5, 2009 we completed a $3.5 million financing in the form of senior subordinated secured debt with accompanying warrants to purchase 75,250 shares of our common stock. The warrants were fully exercisable when issued, have a five year term and an exercise price of $40.00. We received gross proceeds of approximately $3.5 million, less placement agent fees and offering expenses of approximately $252,000. In addition, we issued warrants to purchase 4,515 shares of common stock to the placement agent on the same terms as the warrants issued to the lenders. At December 31, 2013 all warrants issued in this transaction remain outstanding. |
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On June 23, 2009 we completed a $750,000 unsecured debt financing with accompanying warrants to purchase 25,125 shares of our common stock. The warrants were fully exercisable when issued, have a five year term and an exercise price of $40.00. These warrants have subsequently been repriced to $10.00. We received aggregate gross proceeds of approximately $750,000 before placement agent fees and offering expenses of approximately $50,000. In addition, we issued warrants to purchase 603 shares of common stock to the placement agent on the same terms as the warrants issued to the lenders. At December 31, 2013 all warrants issued in this transaction remain outstanding. |
In September 16, 2009, we sold an aggregate of 150,000 at a price of $30.00 per share of our common stock and 112,500 warrants to common stock to certain institutional investors in exchange for gross proceeds of $4.2 million, net of issuance costs. Each investor received warrants to purchase a number of shares equal to 75% of the number of shares of common stock purchased by the investor in the offering. The exercise price of the warrants is $35.40. In addition, the placement agent for the September financing received 7,500 warrants to purchase common stock at an exercise price of $37.40 on substantially identical terms; provided, however that the warrants to the placement agent expired on December 19, 2012. At December 31, 2013, 112,500 of the warrants issued in this transaction remain outstanding. |
On October 15, 2009, we sold an aggregate of 230,769 shares of our common stock and 150,000 warrants to common stock to certain institutional investors in exchange for gross proceeds of $5.6 million, net of issuance costs. Each investor received warrants to purchase a number of shares equal to 75% of the number of shares of common stock purchased by the investor in the offering. The units were sold at a price of $26.00 per unit. The exercise price of the warrants is $28.00. In addition, the placement agent for the October financing received 11,538 warrants to purchase common stock at an exercise price of $32.60 on substantially identical terms; provided, however that the warrants to the placement agent expired on December 19, 2012. At December 31, 2013, 150,000 of the warrants issued in this transaction remain outstanding. |
On March 12, 2010, we completed a registered direct offering of 2,266,998 units, which were sold to institutional and retail investors, at a price of $5.00 per unit. The offering resulted in gross proceeds to us of $11.3 million and net proceeds of approximately $10.4 million after payment of offering fees and expenses. Each unit consisted of .5 share of common stock and a warrant to purchase .25 share of common stock. In the aggregate 1,133,500 shares of common stock and warrants to purchase an additional 566,750 shares of common stock were issued in the offering. Dawson James received placement agent fees of $793,449 and a warrant to purchase an aggregate of 56,675 shares of common stock, exercisable at $12.80 per share. The placement agent’s warrants expired on December 9, 2012. At December 31, 2013, 566,750 of the warrants issued in this transaction remain outstanding. |
On August 9, 2010 we filed a Form S-3 Registration Statement (declared effective by the securities and Exchange Commission on August 27, 2010) putting in place a universal shelf registration statement covering up to $50 million of any combination of common stock, preferred stock, debt securities, warrants, or units we may offer through August 9, 2013, at which time we will provide the specific term of any offering in one or more supplements to the prospectus. This registration statement is intended to allow us to capitalize on strategic opportunities that may arise; we do not have any current commitments for shares to be registered under the registration. The registration statement replaced an existing universal shelf registration statement that expired. |
On September 28, 2010, we entered into a Sales Agreement (“Sales Agreement”) with Brinson Patrick Securities Corporation to enable us to use Brinson Patrick as a sales manager to sell shares of our common stock from time to time in “at-the-market” transactions pursuant to our shelf registration statement on a best efforts basis. For the year ended December 31, 2011 we sold 524,393 shares under this agreement for net proceeds of $4,530,129. |
On November 17, 2010 we entered into a custom technology access and product license agreement with BioZone Laboratories, Inc. (“BioZone’) for the co-development and strategic licensing of a portfolio of up to 20 aesthetics, advanced skin care formulations and other products for our MedPodiumTM product line. The agreement grants us a royalty-free license of BioZone technology to develop a portfolio of 20 products, customized to our product specifications. and exclusive rights to the products developed to its specifications. The license is for a term of 10 years plus a one year automatic renewal. In exchange for the technology access license we paid BioZone a fee of $1.0 million. The license fee was paid with 100,000 shares of our unregistered common stock at a fair value $10.00 per share. |
On December 2, 2010 we filed a Tender Offer Statement to exchange (the “Warrant Exchange”) certain outstanding warrants dated March 9, 2007, November 5, 2008 and November 10, 2008 that contain unlimited “down round” price protection (the “Eligible Warrants”). The Eligible Warrants were exchanged for shares of our common stock, par value $0.0001. The Warrant Exchange expired at 9:00 p.m., Pacific Time, on December 30, 2010. Pursuant to the Warrant Exchange, an aggregate of 346,590 Eligible Warrants to purchase common stock were tendered and accepted for cancellation, representing approximately 67.49% of the total Eligible Warrants outstanding and eligible for exchange in the Warrant Exchange. On December 31, 2010, we issued an aggregate of 115,530 shares of our common stock in exchange for the eligible warrants surrendered in the Warrant Exchange. The gain on sale was calculated by taking the current fair value of the warrants, $1,419,761 and reducing this by the current market value of the shares issued of $901,139, resulting in a gain of $518,622. This gain was then reduced by a facilitation fee paid to Empire Asset Management in the amount of $44,750. |
On December 20, 2011 we made a $0.75 million equity investment in the form of unregistered, restricted Cardium shares to acquire rights to a 15% ownership interest in SourceOne Global Partners. Our ownership interest was acquired through the issuance into escrow of 75,000, shares of our common stock based on a $10.00 per share value representing a 70% premium above the closing price of our stock on December 19, 2011. We also have certain rights to maintain our proportionate ownership interest in SourceOne, and a right of first refusal to acquire SourceOne on the terms that SourceOne were to offer a third-party acquirer. |
In parallel with the cross-equity investment and acquisition of an ownership interest in SourceOne, we also received a license for a portfolio of nutraceutical, pharmaceutical and medical food product opportunities for a licensing fee of $0.75 million, which SourceOne applied to the purchase of 75,000 restricted shares of our common stock at $10.00 per share. |
During 2012, we raised net proceeds of $6.4 million through the completion of a registered direct equity financing with three institutional and accredited investors of 895,000 shares of Cardium common stock priced at $5.60 per share with no warrant coverage for net proceeds of approximately $4.5 million and through the sale of 260,000 shares of common stock under at-the-market transactions for net proceeds of $1.9 million. |
During the first quarter of 2013, we raised net proceeds of $65,743 through the sale of 17,187 shares of common stock under at-the-market transactions under our sales agreement with Brinson Patrick Securities Corporation. |
Preferred Stock |
In April 2013, we entered into a securities purchase agreement with one of our institutional investors pursuant to which we agreed to sell to the investor an aggregate of 4,012 shares of our newly authorized Series A Convertible Preferred Stock, for a total purchase price of $4.0 million. No warrants were issued in connection with this offering, other than 44,087 placement agent warrants with an exercise price of $2.275 per share and an expiration date of August 27, 2015. The securities purchase agreement provided for the sale of Series A Convertible Preferred Stock in two closings. The initial closing under the securities purchase agreement took place in April 2013, at which we sold 2,356 shares of Series A Convertible Preferred Stock for aggregate net proceeds of $2,160,000. A second closing for the remaining 1,656 shares of Series A Convertible Preferred Stock for aggregate net proceeds of $1,532,000 took place promptly after shareholder approval of the offering of the Series A Convertible Preferred Stock and the 1 for 20 reverse stock split of our outstanding common stock. That closing took place on July 18, 2013. Prior to December 31, 2013 the investor had converted 2,512 shares of Series A Convertible Preferred Stock into 2,332,851 shares of common stock. As a result of the conversion, 1,500 shares of Series A Convertible Preferred Stock were outstanding at December 31, 2013. |
The holders of our Series A Convertible Preferred Stock are entitled, on an as-converted basis, to dividends equal to and in the same form as any dividends declared and issued on our common stock. Except as required by law, holders of Series A Convertible Preferred Stock are not entitled to voting rights. Upon any liquidation, dissolution or winding up, holders of the Series A Convertible Preferred Stock will be entitled to a liquidation preference above the holders of common stock or any other junior stock in an amount equal to the original purchase price of $1,000, plus any fees, damages or dividends arising. The Series A Convertible Preferred Stock is convertible into shares of our common stock at the option of the holder, subject to a beneficial ownership limitation of 9.99%. The initial conversion price was $1.82 per share after giving effect to the reverse stock split, but was subsequently reset to $1.02 per share; the conversion price is subject to downward adjustment if we issue common stock or common stock equivalents at a price less than the then effective conversion price. We have the right to force conversion if the volume weighted average price for our common stock exceeds $12.00 per share for 25 trading days during a 30 consecutive trading day period and certain other equity conditions are met. |
As long as any shares of Series A Convertible Preferred Stock are outstanding, we have agreed that we will not, without the consent of the holders of two-thirds of the Series A Convertible Preferred Stock, incur indebtedness other than specified “Permitted Indebtedness”, incur any liens other than specified “Permitted Liens”, amend our Certificate of Incorporation in any manner that adversely affects the Series A Convertible Preferred Stock, repurchase or redeem any common stock or common stock equivalents, pay dividends on our common stock, or enter into any related party transactions. |
In connection with the convertible preferred stock, the Company determined the instrument contained a beneficial conversion feature at the date of issuance. This beneficial conversion feature amounted to $233,011 for the April transaction and was recorded as a deemed preferred dividend in April 2013. The beneficial conversion feature on the July transaction amounted to $172,861 and was recorded as a deemed preferred dividend in July 2013. |
Stockholder Rights Plan |
On July 10, 2006, our Board of Directors approved the adoption of a Stockholder Rights Plan (“Rights Plan”). Pursuant to the Rights Plan, we issued a dividend of one right for each share of our common stock held by stockholders of record as of the close of business on July 21, 2006. The rights are not immediately exercisable and will become exercisable only upon the occurrence of certain events. In general, if a person or group acquires, or announces a tender or exchange offer that would result in the acquisition of, 15% or more of our common stock while the Rights Plan remains in place, then, unless our Board of Directors elects to redeem the rights for $0.001 per right, the rights will become exercisable by all rights holders except the acquiring person or group, for 0.001 of a share of newly created Series A Junior Participating Preferred Stock at an exercise price of $40.00. Until the rights become exercisable, the rights are represented by, and automatically trade with, our common stock certificates. |
The Rights Plan was reviewed in 2012 and will be evaluated every three years by a committee of independent directors of our Board of Directors to consider whether the plan continues to be in the best interests of Cardium and its stockholders. The Rights Plan may be amended or revoked by our Board of Directors at any time and unless earlier terminated or amended, the rights will expire on July 10, 2016. |
Stock Options and Other Equity Compensation Plans |
We have an equity incentive plan that was established in 2005 under which 283,292 shares of our common stock have been reserved for issuance to employees, non-employee directors and consultants of the Company. |
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At December 31, 2013 the following shares were outstanding and available for future issuance: |
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Plan | | Shares Outstanding | | | Shares Available | | | | | | | | | | | | | | | | | | | | | | | | | |
for Issuance | | | | | | | | | | | | | | | | | | | | | | | | |
2005 Equity Incentive Plan | | | 144,000 | | | | 139,058 | | | | | | | | | | | | | | | | | | | | | | | | | |
There were no new grants during the year ended December 31, 2013. The following table summarizes the stock options and warrants that we granted during the year ended December 31, 2012: |
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Grant | | Quantity | | | Expected | | | Strike Price | | | Volatility | | | Dividend | | | Risk-Free | | | Grant Date | | | Aggregate | |
Date | Issued | Life (Years) | Yield | Interest | Fair Value | Fair Value |
| | | | Rate | Per Option | |
3/12/12 | | | 2,500 | | | | 4.58 | | | $ | 14.8 | | | | 99 | % | | | 0 | % | | | 0.85 | % | | $ | 0.16 | | | $ | 8,000 | |
11/5/12 | | | 2,500 | | | | 4.4 | | | $ | 14.8 | | | | 98 | % | | | 0 | % | | | 0.64 | % | | $ | 0.09 | | | $ | 4,500 | |
As of December 31, 2013, we had no unvested stock-based compensation at fair value remaining to be expensed. During the year ended December 31, 2013 we recognized $40,750 of stock option compensation expense. |
We calculate the fair value of stock options using the Black-Scholes option-pricing model. In determining the expected term, we separate groups of employees that have historically exhibited similar behavior with regard to option exercises and post-vesting cancellations. The option-pricing model requires the input of subjective assumptions, such as those included in the table above. The volatility rates are based principally on our historical stock prices and expectations of the future volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The total expense to be recorded in future periods will depend on several variables, including the number of share-based awards and expected vesting. |
The following is a summary of stock option and warrant activity under our equity incentive plan and warrants issued outside of the plan to employees and consultants, during the years ended December 31, 2013 and 2012: |
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| | Number of | | | Weighted | | | Weighted | | | | | | | | | | | | | | | | | | | | | |
Options or | Average | Average | | | | | | | | | | | | | | | | | | | | |
Warrants | Exercise | Remaining | | | | | | | | | | | | | | | | | | | | |
| Price | Contractual | | | | | | | | | | | | | | | | | | | | |
| | Life | | | | | | | | | | | | | | | | | | | | |
| | (in years) | | | | | | | | | | | | | | | | | | | | |
Balance outstanding, December 31, 2011 | | | 179,234 | | | $ | 33.4 | | | | 3.8 | | | | | | | | | | | | | | | | | | | | | |
Granted | | | 5,000 | | | $ | 14.8 | | | | 4.5 | | | | | | | | | | | | | | | | | | | | | |
Exercised | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cancelled | | | (2,500 | ) | | $ | 14.8 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Cancelled (unvested) | | | (3,984 | ) | | $ | 18.8 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Expired (vested) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Balance outstanding, December 31, 2012 | | | 177,750 | | | $ | 33.4 | | | | 2.8 | | | | | | | | | | | | | | | | | | | | | |
Granted | | | 0 | | | $ | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Exercised | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cancelled (unvested) | | | (2,844 | ) | | $ | 14.8 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
Expired (vested) | | | (30,906 | ) | | $ | 41.7 | | | | 0 | | | | | | | | | | | | | | | | | | | | | |
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Balance outstanding, December 31, 2013 | | | 144,000 | | | $ | 31.74 | | | | 2.1 | | | | | | | | | | | | | | | | | | | | | |
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Balance exercisable, December 31, 2013 | | | 144,000 | | | $ | 31.8 | | | | 2.1 | | | | | | | | | | | | | | | | | | | | | |
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As of December 31, 2013 there was no intrinsic value to the outstanding and exercisable options. |
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Warrants |
The following table summarizes warrant activity for the years ended December 31, 2013 and 2012: |
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| | Number of | | | Weighted | | | Weighted | | | | | | | | | | | | | | | | | | | | | |
Warrants | Average | Average | | | | | | | | | | | | | | | | | | | | |
| Exercise | Remaining | | | | | | | | | | | | | | | | | | | | |
| Price | Contractual | | | | | | | | | | | | | | | | | | | | |
| | Life | | | | | | | | | | | | | | | | | | | | |
| | (in years) | | | | | | | | | | | | | | | | | | | | |
Balance outstanding, December 31, 2011 | | | 1,582,492 | | | $ | 20.4 | | | | 3.8 | | | | | | | | | | | | | | | | | | | | | |
Warrants issued | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrants exercised | | | (137 | ) | | $ | 5.6 | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrants expired | | | (213,034 | ) | | $ | 19.8 | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrants cancelled | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Balance outstanding, December 31, 2012 | | | 1,369,321 | | | $ | 19 | | | | 2.1 | | | | | | | | | | | | | | | | | | | | | |
Warrants issued | | | 44,088 | | | | 2.28 | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrants exercised | | | (0 | ) | | $ | 0 | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrants expired | | | (434,579 | ) | | $ | 15.72 | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrants cancelled | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Balance outstanding, December 31, 2013 | | | 978,830 | | | $ | 19.82 | | | | 1.9 | | | | | | | | | | | | | | | | | | | | | |
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Warrants exercisable at December 31, 2013 | | | 978,830 | | | $ | 19.82 | | | | 1.9 | | | | | | | | | | | | | | | | | | | | | |
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As of December 31, 2013 there was no intrinsic value to the outstanding and exercisable options. |