STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

Stockholders Equity Note Disclosure [Text Block]

NOTE 5 – STOCKHOLDERS’ EQUITY

Preferred Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common stock, issuable in one or more series. Upon issuance, the Company can determine the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock.

There were 413,388 shares of preferred stock outstanding as of December 31, 2011. In connection with the Exchange Transaction with TG Therapeutics, Inc., on December 29, 2011, the Company filed a Certificate of Designation with respect to its Series A Preferred Stock with the Secretary of State of the State of Delaware.  The Company Preferred Stock ranks senior to the Company Common Stock with regard to dividend rights, and has a liquidation preference of $20 per share over the Company Common Stock and any other junior securities. The Company Preferred Stock is automatically convertible into 500 shares of Company Common Stock provided that prior to conversion, the Company has sufficient authorized Company Common Stock to effect such conversion.  In conjunction with the reverse split effected on April 30, 2012 (as discussed in Note 1), all outstanding Company Preferred Stock automatically converted to 9,857,596 shares of Common Stock as of that date.

Common Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 500,000,000 shares of $0.001 par value common stock.

On December 30, 2011, we completed the first closing of the private placement of our securities, issuing 4,929,523 shares of Common Stock at a price per share of $2.25 for total gross proceeds, before placement commissions and expenses, of $11,091,425 (the “2011 Equity PIPE”). Investors also received warrants to purchase 1,232,381 shares of Common Stock. The warrants have an exercise price of $2.25 per share and are exercisable for five years.

In 2012, we completed two additional closings of the 2011 Equity PIPE. These closings were held on January 31, 2012, and February 24, 2012. In these closings, the Company issued 695,428 shares of our Company Preferred Stock at a price per share of $20.00 for total gross proceeds, before placement commissions and expenses, of $13,908,560. Each share of Company Preferred Stock was convertible into 8.89 shares of Common Stock; provided that such conversion rights were subject to sufficient available authorized shares of Common Stock.In connection with the reverse stock split effected by the Company on April 30, 2012, all shares of Preferred Stock issued in the 2011 Equity PIPE were converted to Common Stock. Investors also received warrants to purchase 1,545,396 shares of Common Stock. The warrants have an exercise price of $2.25 per share and are exercisable for five years. The shares of Company Preferred Stock and warrants sold in these closings were offered and sold to accredited investors, including members of management, without registration under the Securities Act, or state securities laws, in reliance on the exemptions provided by Section 4(2) of the Securities Act, and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, the securities issued in the offering have not been registered under the Securities Act, and until so registered, these securities may not be offered or sold in the United States absent registration or availability of an applicable exemption from registration. The placement agent received cash commissions equal to 10% of the gross proceeds of the offering, five-year warrants to purchase shares of the Company’s stock equal to 10% of shares sold in the offering, and a non-accountable expense allowance equal to two percent of the gross proceeds of the offering for their expenses.    

Treasury Stock

On May 17, 2012, our Chief Financial Officer surrendered to the Company 13,526 shares of common stock in order to satisfy his tax withholding obligation upon the vesting of 37,500 shares of restricted stock. The 13,526 shares of common stock are being held by the Company in Treasury, at a cost of approximately $85,000, representing the fair market value on the date the shares were surrendered.

Equity Incentive Plans

We have in effect the following stock option and incentive plans.

a. In July 1995, the Company established the 1995 Stock Option Plan (the “1995 Plan”), which provided for the granting of options to purchase up to 2,600 shares of the Company’s common stock to officers, directors, employees and consultants. The 1995 Plan was amended several times to increase the number of shares reserved for stock option grants. In June 2005, the 1995 Plan expired and no further options can be granted. At December 31, 2012, options to purchase 313 shares were outstanding and no shares were reserved for future stock option grants under the 1995 Plan.

b. The Company has shareholder-approved incentive stock option plans for employees under which it has granted non-qualified and incentive stock options. At December 31, 2012, 5,333 shares were authorized for issuance. The options have a maximum term of 10 years and vest over a period determined by the Company’s Board of Directors (generally 3 years) and are issued at an exercise price equal to or greater than the fair market value of the shares at the date of grant. At December 31, 2012, options to purchase 591 shares were outstanding, 10 shares of common stock were issued and there were 4,732 shares reserved for future grants under the Plan.

 
                c. In May 2012, the Company established the TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (“2012 Incentive Plan”). Under the 2012 Incentive Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to directors, consultants, employees and officers. The 2012 Incentive Plan authorizes grants to purchase up to 6,000,000 shares of authorized but unissued common stock. As of December 31, 2012, options to purchase 46,000 shares were outstanding and up to an additional 2,052,257 shares may be issued under the 2012 Incentive Plan.

Stock Options

The following table summarizes stock option activity for the years ended December 31, 2012 and 2011:

	Number of shares			Weighted- average exercise price		Weighted- average Contractual Term		Aggregate Intrinsic Value
						(in years)
Outstanding at January 1, 2011		--			--
Assumed in Exchange Transaction		4,143		$	1,375.18		5.60
Granted		--			--
Exercised		--			--
Forfeited		(364	)		197.34
Expired		(400	)		2,951.12
Outstanding at December 31, 2011		3,379			1,315.62		6.39	$	--
Granted		46,000			4.40
Exercised		--			--
Forfeited		(2,475	)		720.45
Expired		--			--
Outstanding at December 31, 2012		46,904		$	61.08		9.44	$	--
Vested and expected to vest at December 31, 2012		904		$	2,945.09		1.73	$	--
Exercisable at December 31, 2012		898		$	2,963.46		1.70	$	--

As of December 31, 2012, the total compensation cost related to unvested time-based option awards not yet recognized is less than $1,000. The weighted average period over which it is expected to be recognized is approximately 3 months. This amount does not include, as of December 31, 2012, 46,000 non-employee options outstanding which are milestone-based and vest upon certain corporate milestones. Stock-based compensation will be measured and recorded if and when a milestone occurs.

Restricted Stock- Preferred

Certain employees had been awarded restricted preferred stock. The restricted stock vesting consisted of milestone and time-based vesting. The following table summarizes restricted share activity for the years ended December 31, 2012 and 2011:

	Number of Shares Restricted Series A Preferred Stock(1)			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2011		--		$	--
Granted		129,375			20.00
Vested		--			--
Forfeited		--			--
Outstanding at December 31, 2011		129,375			20.00
Granted		--			--
Vested		--			--
Forfeited		--			--
Conversion to restricted common stock		(129,375	)		20.00
Outstanding at December 31, 2012		--		$	--

⁽¹⁾ The restricted preferred stock listed in the table above was granted in connection with the Exchange Transaction to certain executives as discussed above. Each share of preferred stock was convertible into 8.89 shares of the Company’s Common Stock. In conjunction with the reverse split effected on April 30, 2012 (as discussed in Note 1), all outstanding restricted Preferred Stock automatically converted to 1,150,000 shares of restricted Common Stock as of that date.

Restricted Stock- Common

Certain employees, directors and consultants have been awarded restricted Company Common Stock. The restricted stock vesting consists of milestone and time-based vesting. The following table summarizes restricted share activity for the years ended December 31, 2012 and 2011:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2011		--		$	--
Granted		--			--
Vested		--			--
Forfeited		--			--
Outstanding at December 31, 2011		--			--
Converted preferred stock		1,150,000			2.25
Granted		5,901,743			4.77
Vested		(437,500	)		2.25
Forfeited		--			--
Outstanding at December 31, 2012		6,614,243		$	4.49

Total expense associated with restricted stock grants (both common and preferred) was $3,422,182 and $86,494 during the years ended December 31, 2012 and 2011, respectively. As of December 31, 2012, there was approximately $8,941,000 of total unrecognized compensation cost related to non-vested time based restricted stock, which is expected to be recognized over a weighted-average period of 2.8 years. This amount does not include, as of December 31, 2012, 2,092,500 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones; and 2,580,000 shares of restricted stock outstanding issued to non-employees (see Note 10 – Related Party Transactions for additional information). Milestone based non-cash compensation expense will be measured and recorded if and when a milestone occurs.

Warrants

The following table summarizes warrant activity for the years ended December 31, 2012 and 2011:

	Warrants			Weighted- average exercise price		Aggregate Intrinsic Value
Outstanding at January 1, 2011		--		$	--
Assumed in Exchange Transaction		393,437			14.74
Issued		1,232,474			2.25
Exercised		--			--
Expired		--			--
Outstanding at December 31, 2011		1,625,911			5.27	$	--
Issued		5,156,599			1.21
Exercised		--			--
Expired		(1,503	)		2,739.75
Outstanding at December 31, 2012		6,781,007		$	1.58	$	14,563,539

As discussed above, as part of the 2011 Equity PIPE, we issued warrants to purchase up to 2,777,962 shares of our common stock, none of which have been exercised as of December 31, 2012. The warrants have an exercise price of $2.25 per warrant share. In addition, we issued to the placement agent in the transaction warrants to purchase up to 1,111,111 shares of our common stock at an exercise price of $2.48 per warrant share, none of which have been exercised as of December 31, 2012.

In connection with the Securities Exchange Agreement between the Company and LFB Group as discussed in Note 8 – License Agreements, we issued LFB Group a warrant to purchase an aggregate of 2,500,000 shares of Company Common Stock at a purchase price of $0.001 per share.

Stock-Based Compensation

The fair value of stock options granted is estimated at the date of grant using the Black-Scholes pricing model. The expected term of options granted is derived from historical data and the expected vesting period. Expected volatility is based on the historical volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. We have assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the foreseeable future. The Company did not grant any stock options during the year-ended December 31, 2011.

The following table summarizes stock-based compensation expense information about stock options and restricted stock for the years ended December 31, 2012 and 2011:

	2012		2011
Stock-based compensation expense associated with restricted stock	$	3,422,182	$	86,494
Stock-based compensation expense associated with option grants		--		--
	$	3,422,182	$	86,494

Non-controlling Interest

On November 9, 2012, LFB Group exercised their right to exchange their TG Bio common stock for Company Common Stock. The Company and LFB Group entered into a Securities Exchange Agreement pursuant to which, LFB Group agreed to exchange its 7,500,000 shares of the common stock of TG Bio, for 5,000,000 shares of Company Common Stock, and a warrant to purchase an aggregate of 2,500,000 shares of Company Common Stock at a purchase price of $0.001 per share. Refer to Note 8 – License Agreements for further information.

Accordingly, in connection with the aforementioned Securities Exchange Agreement, TG Bio became a wholly owned subsidiary of the Company. Prior to the execution of the Securities Exchange Agreement LFB Group owned approximately 42.9% of TG Bio. The non-controlling interest in subsidiary balance was approximately $8,479,000 immediately prior to LFB Group exercising their option, which was transferred to equity in connection with the transaction.