|12 Months Ended|
Dec. 31, 2015
September 2015 Offering
In September 2015, the Company entered into a Securities Purchase Agreement whereby it issued to certain investors 874,891 shares of common stock at a price of $5.72 per share for gross proceeds of $5.0 million before deducting placement agent fees and related offering expenses of $663,000. Pursuant to the terms of the Securities Purchase Agreement the company also issued to the investors 874,891 each of Series A warrants, Series B warrants and Series C warrants.
Shareholder approval was required for the issuance of the common shares underlying the Series B and Series C warrants. On November 3, 2015, the stockholders approved the proposal to allow the Company to issue the underlying shares upon exercise of the Series B and Series C warrants. In November 2015, the automatic exercise provision of the Series B warrants triggered and the Company received gross proceeds of $5.0 million and issued 3,324,192 shares of common stock in exchange for all 874,891 of the Series B warrants. Furthermore, pursuant to the terms of the warrant agreement, the number of Series A warrants increased by 3,324,192 to 4,199,082 and the exercise price of the Series A warrant was adjusted from $7.05 to $1.50. In December 2015, the Company amended the Series A and Series C warrants, whereby the exercise prices of the Series A and Series C warrants were fixed at $1.50 and the number of Series C warrants was fixed at 1,093,613. The Company received gross proceeds of $1.4 million and issued 962,969 shares of common stock upon exercise of 962,969 Series C warrants. The remaining 130,644 Series C warrants expired on December 30, 2015. Furthermore, pursuant to the terms of the warrant agreement, the number of Series A warrants increased by 962,969. During the year ended December 31, 2015, the Company issued 1,315,781 shares of common stock upon the cashless exercise of 3,924,687 Series A warrants. There were 1,237,365 outstanding Series A warrants at December 31, 2015 that terminate on December 11, 2020. The Company paid $585,000 in offering costs in connection with the proceeds received from the exercise of the Series B and C warrants.
The Series A warrants, Series B warrants and Series C warrants were initially considered to be liabilities and were marked to market at each reporting period until they were exercised, terminated or were no longer classified as liabilities. At December 31, 2015, the remaining Series A warrants were no longer considered liabilities. The Company estimated the fair value of these warrants to be $14.4 million at issuance. The Company recorded $4.9 million of the $5.0 million gross proceeds from the offering to derivative liabilities and $131,000 to equity and recorded a loss of $9.5 million, which was included in the change in fair value of derivative liabilities per the Condensed Consolidated Statements of Operations and Comprehensive Loss. Furthermore, all of the $821,000 of the September 2015 offering costs were expensed since the value of the warrants exceeded the gross proceeds.
The Company entered into a placement agent agreement in connection with the September 2015 Offering. As part of the placement agent agreement, the Company issued a warrant to the placement agent to purchase 43,745 shares of common stock at an exercise price of $7.05. The warrant was determined to be a liability at issuance and the estimated fair value of $157,000 was included in offering costs.
November 2014 Secondary Offering
On November 26, 2014, the Company completed a secondary offering, in which the Company sold and issued 762,777 units. Each unit was issued at a price of $17.10 and consisted of one share of common stock and one common stock warrant (Secondary Offering Warrant). The Company issued an additional 114,417 Secondary Offering Warrants pursuant to the underwriters over-allotment option. The Company received proceeds of approximately $11.3 million, net of approximately $1.7 million in cash underwriting and other offering costs, from the secondary offering.
The Secondary Offering Warrants were immediately exercisable after issuance into common shares at an exercise price of $22.20 and terminate on November 26, 2019. The Secondary Offering Warrants contain a cashless exercise provision whereby the holders may exercise warrants by paying the exercise price in cash or, in lieu of payment of the exercise price in cash, at any time 120 days after issuance, by electing to receive a cash payment from the Company equal to the Black Scholes Value (as defined below) of the number of shares the holder elects to exercise (the Black Scholes Payment); provided that we have discretion as to whether to deliver the Black Scholes Payment or, subject to meeting certain conditions, to deliver a number of shares of our common stock according to the following formula (the Cashless Exercise):
Total Shares = (A x B) / C
As defined in the Secondary Offering Warrants, Black Scholes Value means the Black Scholes value of an option for one share of our common stock at the date of the applicable Black Scholes Payment or Cashless Exercise, which is calculated using the Black Scholes Option Pricing Model obtained from the OV function on Bloomberg utilizing (i) an underlying price per share equal to the closing bid price of the common stock as of trading day immediately preceding the date of issuance of the warrant, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the warrant as of the applicable Black Scholes Payment or Cashless Exercise, (iii) a strike price equal to the exercise price in effect at the time of the applicable Black Scholes Payment or Cashless Exercise, (iv) an expected volatility equal to 135% and (v) a remaining term of such option equal to five years (regardless of the actual remaining term of the warrant).
The Secondary Offering Warrants are considered to be liabilities and are marked to market at each reporting period. During the year ended December 31, 2015, 869,825 of the Secondary Offering Warrants had been exercised via the cashless exercise provision resulting in the issuance of 2,546,856 shares of common stock. Had the cashless exercise provision been exercised by all the holders of the remaining 7,368 Secondary Offering Warrants at December 31, 2015, the Company would have had to either pay $88,000 in cash or issue an additional 58,000 shares of common stock. The number of shares of common stock that would be required to satisfy the cashless exercise provision increases as the price of the Companys common stock decreases and decreases as the price of the Companys common stock increases.
Initial Public Offering
On February 12, 2014, the Company completed an IPO of its common stock, in which the Company sold and issued 245,527 shares of common stock, including 12,194 shares sold pursuant to the exercise by the underwriters of their over-allotment option, at an issuance price of $86.25 per share, less underwriting discounts and commissions. The Company received proceeds of approximately $15.4 million, net of approximately $5.8 million in underwriting and other offering costs from the IPO.
On February 11, 2014, the holders of a majority of the outstanding shares of the Companys Series F convertible preferred stock agreed to waive the conversion adjustment under the Companys Restated Certificate of Incorporation such that in no event would the denominator used to calculate the conversion ratio be less than $120.00, provided that the Company completed its IPO on or before June 30, 2014. Upon completion of the IPO in February 2014, all 80,910,394 outstanding shares of preferred stock converted into 535,319 shares of common stock and the value of the convertible preferred stock of $161.5 million was reclassified to stockholders equity. Furthermore, upon completion of the IPO, 2,344,731 warrants representing all outstanding warrants exercisable for shares of preferred stock converted into warrants exercisable for 10,656 shares of common stock and the convertible preferred stock warrant liability was reclassified to stockholders equity. Following the completion of the IPO, there were no shares of preferred stock or warrants exercisable for shares of preferred stock outstanding.
During the year ended December 31, 2015, the Company issued 18,000 shares of common stock to a service provider as consideration for services to be rendered under a consulting agreement. Furthermore, 56,891 shares of common stock were issued upon the conversion of restricted stock units into common stock, of which 13,789 shares of common stock were withheld to satisfy the employees tax withholding obligations associated with the conversion of the restricted stock units into common stock. The withheld shares were included in treasury stock at a total value of $120,000, which was based on the market price of the common stock on the date the shares were issued. During June 2015, these treasury shares were issued upon the conversion of restricted stock units into common stock. Additionally, during the year ended December 31, 2015, 17 shares of common stock were issued upon the exercise of other warrants.
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/presentationRef