16. Stockholder’s Equity

Common Stock

The number of shares of common stock increased from 890,837 shares as of December 31, 2012 to 18,391,193 shares as of June 30, 2014:

	Number of
	Common Shares
Balance at December 31, 2012	890,837

Conversion of Series E to common stock	1,575,000
Shares issued for acquisition of Canterbury and Hygeia	1,150,116
Conversion of warrants to common stock	1,023,264
Conversion of debt to common stock	576,331
Issuance of shares for advisory agreements	243,250
Issuance of shares to third party for assumption of liabilities	200,000
Issuance of common stock for cash	142,501
Other	12,486
Balance at December 31, 2013	5,813,785

Shares issued in private placement	8,845,685
Shares issued for acquisition of Paloma	2,500,000
Issuance of shares upon conversion of convertible promissory notes	552,738
Shares issued creditors in settlement of debt	408,317
Shares issued for acquisition of VasculoMedics	220,000
Issuance of shares for assumption of liabilities	150,000
Shares surrendered by ASC	(99,332	)
Balance at June 30, 2014 (Unaudited)	18,391,193

During the six months ended June 30, 2014, the Company issued an aggregate of 12,676,740 shares of common stock, including 2,720,000 shares of common stock in connection with the acquisitions of Paloma and VasculoMedics (see note 3 to the consolidated financial statements), 552,738 shares of common stock to the Company’s Chairman of the Board upon conversion of convertible promissory notes (see note 13 to the consolidated financial statements), an aggregate of 408,317 shares of common stock to creditors in settlement of outstanding debt, 150,000 shares of common stock for assumption of liabilities and an aggregate of 8,845,685 shares of common stock in connection with a private placement, as described below. During the six months ended June 30, 2014, ASC surrendered 99,332 shares of common stock to the Company (see note 12 to the consolidated financial statements).

On April 29, 2014, the Company issued to various institutional and individual accredited investors an aggregate of 2,776,500 shares of common stock and four-year warrants to purchase an aggregate of 832,950 shares of common stock. The price of each unit, which consisted of one share of common stock plus a warrant to purchase 0.3 share of common stock was $4.00. The exercise price of the warrant is $4.80 per share. In addition, on April 29, 2014, the Company issued to its placement agent as part of its compensation warrants to purchase 277,650 shares of common stock, on substantially the same terms as the warrants issued to investors.

On May 6, 2014, the Company issued to various institutional and individual accredited investors an aggregate of 3,418,125 shares of common stock and four-year warrants to purchase an aggregate of 1,025,438 shares of common stock. The price of each unit, which consisted of one share of common stock plus a warrant to purchase 0.3 share of common stock was $4.00. The exercise price of the warrant is $4.80 per share. In addition, on May 6, 2014, the Company issued to its placement agent as part of its compensation warrants to purchase 341,813 shares of common stock, on substantially the same terms as the warrants issued to investors.

On May 21, 2014, the Company issued to various institutional and individual accredited investors an aggregate of 872,310 shares of common stock and four-year warrants to purchase an aggregate of 254,193 shares of common stock. The price of each unit, which consisted of one share of common stock plus a warrant to purchase 0.3 share of common stock was $4.00. The exercise price of the warrant is $4.80 per share. In addition, on May 21, 2014, the Company issued to its placement agent as part of its compensation warrants to purchase 87,231 shares of common stock, on substantially the same terms as the warrants issued to investors.

On June 13, 2014, the Company issued to various institutional and individual accredited investors an aggregate of 1,778,750 shares of common stock and four-year warrants to purchase an aggregate of 533,625 shares of common stock. The price of each unit, which consisted of one share of common stock plus a warrant to purchase 0.3 share of common stock was $4.00. The exercise price of the warrant is $4.80 per share. In addition, on June 13, 2014, the Company issued to its placement agent as part of its compensation warrants to purchase 177,875 shares of common stock, on substantially the same terms as the warrants issued to investors.

Subsequent to the end of the second quarter of 2014, on July 10, 2014, the Company issued to various institutional and individual accredited investors an aggregate of 50,000 shares of common stock and four-year warrants to purchase an aggregate of 15,000 shares of common stock. The price of each unit, which consisted of one share of common stock plus a warrant to purchase 0.3 share of common stock was $4.00. The exercise price of the warrant is $4.80 per share. In addition, on June 13, 2014, the Company issued to its placement agent as part of its compensation warrants to purchase 5,000 shares of common stock, on substantially the same terms as the warrants issued to investors.

Gross proceeds of the private placement to the Company were approximately $35.6 million and net proceeds approximately $31.3 million, after paying $3.6 million of placement agent fees, $0.2 million of estimated offering expenses and $0.5 million of certain accounts payable. The Company filed a registration statement on Form S-1 with the SEC on July 14, 2014 registering the offering and resale of 11,633,885 shares of our common stock, including the outstanding shares of common stock and shares of common stock issuable upon exercise of the warrants issued in the private placement. This registration statement was declared effective by the SEC on July 31, 2014.

On May 21, 2014, the Company issued 259,236 shares of common stock to a creditor upon conversion of a promissory note in the principal amount of $500,000 and an aggregate of 164,392 shares of common stock to four creditors pursuant to settlements of outstanding liabilities then owed to such creditors, including 59,250 shares to the Company’s former Chief Financial Officer. The Company recorded a loss on this settlement in the amount of $32,608.

On June 6, 2014, the Company issued to its Chairman of the Board 552,738 shares of common stock and warrants to purchase 355,699 shares of common stock at an exercise price of $2.00 per share upon conversion of four convertible promissory notes in the aggregate principal amount of $1,050,000 issued by the Company. The Company recorded a loss on this conversion in the amount $1,829,561.

On June 18, 2014, the Company issued to a law firm 53,457 shares of common stock and warrants to purchase 16,037 as part of a settlement of outstanding amounts due to the law firm.

Stock Options

During the six months ended June 30, 2014, the Company issued three-year options to purchase an aggregate of 100,856 shares of common stock to five members of the Company’s Board of Directors at an exercise price of $3.00 per share, which was the closing sale price of the common stock on the date of grant. These options vest in equal quarterly installments over three years.

On March 5, 2014, the Company issued three-year options to its Chief Executive Officer to purchase 500,000 shares of common stock at an exercise price of $2.50 per share, which was the closing sale price of the common stock on the date of grant. On May 27, 2014, the Company issued three-year options to its Chief Financial Officer to purchase 250,000 shares at an exercise price of $4.00 per share, which was the closing sale price of the common stock on the date of grant. These two employee options vest in equal quarterly installments over three years. On June 4, 2014, the Company granted additional options to purchase an aggregate of 364,777 shares of common stock at an exercise price of $4.20 per share, which was the closing sale price of the common stock on the date of grant, to other employees of the Company. These employee options also vest in equal quarterly installments over three years.

All of these options were valued using the Black-Scholes model and resulted in total stock-based compensation expense of $3,706,072, of which $141,315 and $291,200 was recognized in the three and six months ended June 30, 2014, respectively, and the remaining $3,414,872 will be recognized ratably over the next three years. The assumptions used to value the options granted during the first six months of 2014 was:

Estimated fair value of underlying common stock		$ 2.50 - $4.20
Remaining life		2.0 - 3.0
Risk-free interest rate		0.88% - 1.72%
Expected volatility		153% - 176%
Dividend yield		—

Warrants

During the six months ended June 30, 2014, the Company issued to investors in its private placement four-year warrants to purchase an aggregate of 2,653,706 shares of common stock at an exercise price of $4.80 per share.

In addition, during the six months ended June 30, 2014, the Company issued to the placement agent in its private placement as partial consideration for its services in connection with the private placement four-year warrants to purchase an aggregate of 884,569 shares of common stock at an exercise price of $4.80 per share.

In addition, during the six months ended June 30, 2014, four-year warrants to purchase an aggregate of 355,699 shares of common stock at an exercise price of $2.00 per share to the Company’s Chairman of the Board in addition to an aggregate of 552,738 shares of common stock upon conversion of four convertible promissory notes of the Company in the aggregate principal amount of $1,050,000. See note 10 to the consolidated financial statements.

In addition, during the six months ended June 30, 2014, the Company issued to a law firm four-year warrants to purchase 16,037 shares of common stock as part of a settlement of outstanding amounts due to the law firm.

During the six months ended June 30, 2013, the Company issued to three financial advisors warrants to purchase an aggregate of 173,917 shares of common stock at an exercise price of $3.00 per share. These warrants have a five-year term and were immediately vested and exercisable as of the date of grant, resulting in Black-Scholes warrant expense of $462,618 during the six months ended June 30, 2013. The Black-Scholes expense for these warrants was calculated using the following assumptions. The fair value of the underlying common stock was based on the sale by the Company of 139,167 shares of common stock at a purchase price of $3.00 per share during the three months ended June 30, 2013.

Estimated fair value of underlying common stock	$	3.00
Remaining life	5.0
Risk-free interest rate	0.35		%
Expected volatility	141		%
Dividend yield	—

During the six months ended June 30, 2013, the Series E warrants, along with related warrants with similar terms, were exchanged for 1,023,264 shares of common stock and these warrants were extinguished, thereby removing the “overhang” created by the full-ratchet provisions of these warrants that would have increased the number of warrants outstanding and reduced the exercise price of these warrants to the price of any subsequent financing done at a lower price. This exchange of common stock for the Series E warrants resulted in a fair value charge of $3,069,792 during the six months ended June 30, 2013. These 1,023,264 shares of common stock were valued at $3.00 per share, which was the price at which the Company sold 139,167 shares during the three months ended June 30, 2013, resulting in the fair value charge of $3,069,792.