Annual report pursuant to Section 13 and 15(d)

Note 11 - Stockholders' Deficit

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Note 11 - Stockholders' Deficit
12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
Stockholders' Deficit

Note 11. Stockholders’ Deficit

 

Common Stock

 

For the year ended December 31, 2016, the Company had the following transactions related to its common stock including restricted stock awards (in thousands, except share and per share data):

Transaction Type   Quantity (Shares)    

Valuation

($)

   

Range of

Value per Share

 
Shares issued to employees, executives and directors   572,154     $ 1,367     $ 1.89-2.95  
Shares issued related to sale of subsidiary   200,000       640     $ 3.20  
Cancellation and forfeiture of restricted stock   (449,085 )     (456 )   $ 2.72-13.00  
Total   323,069     $ 1,551     $ 1.89-13.00  

 

 

For the year ended December 31, 2015, the Company issued common stock including restricted stock awards, as follows (in thousands, except share and per share data):

Transaction Type  

Quantity

(Shares)

 

Valuation

($)

  Range of Value per Share
Stock issued to employees, executives and directors, net of cancellations     214,394     $ 766     $ 3.82-8.60  
Stock issued for product line expansion     150,000       1,198     $ 7.99  
Stock issued for MusclePharm apparel rights acquisition     170,000       1,394     $ 8.20  
Stock issued for financing agreement     50,000       325     $ 6.49  
Stock issued for consulting/endorsement agreement     55,189       320     $ 5.30-5.85  
Stock issued for individual guaranty of debt     28,571       80     $ 2.80  
Total     668,154     $ 4,083     $ 2.80-8.60  

 

The fair value of all stock issuances above is based upon the quoted closing trading price on the date of issuance.

 

Common stock outstanding as of December 31, 2016 and 2015 includes shares legally outstanding even if subject to future vesting.

 

Warrants

 

In November 2016, the Company issued a warrant to purchase 1,289,378 shares of its common stock to the parent company of Capstone related to the dispute settlement. See Note 6 for additional information. The exercise price of this warrant was $1.83 per share, with a contractual term of four years. The Company has valued this warrant by utilizing the Black Scholes model at approximately $1.8 million with the following assumptions: contractual life of four years, risk free interest rate of 1.27%, dividend yield of 0%, and expected volatility of 118.4%.

 

In July 2014, the Company issued a warrant to purchase 100,000 shares of its common stock related to an endorsement agreement. See Note 15 for additional information. The exercise price of this warrant was $11.90 per share, with a contractual term of five years. This warrant was fully vested as of December 31, 2016. The Company used the Black-Scholes model to determine the estimated fair value of the warrants, with the following assumptions: contractual life of five years, risk free interest rate of 1.7%, dividend yield of 0%, and expected volatility of 55%.

 

Treasury Stock

 

During the years ended December 31, 2016 and 2015, the Company did not repurchase any shares of its common stock and held 875,621 shares in treasury as of December 31, 2016 and 2015. As of December 31, 2015, 860,900 of the Company’s shares held in treasury were subject to a pledge with a lender in connection with a term loan which was cancelled when the term loan was paid off in January 2016.