Quarterly report pursuant to Section 13 or 15(d)

Capitalization and Equity Structure

v3.4.0.3
Capitalization and Equity Structure
 3 Months Ended
Mar. 31, 2016
Stockholders' Equity Note [Abstract]  
Capitalization and Equity Structure
9. Capitalization and Equity Structure
 
Refer to Note 15, Subsequent Event, for a discussion of the Company’s May 4, 2016 reverse stock split.
 
Summary:
 
The Company’s authorized capital stock at March 31, 2016 consisted of 71,429 shares of common stock and 10,000 shares of preferred stock. At March 31, 2016, 15,604 shares of common stock were issued and outstanding and 9 shares of preferred stock were issued and outstanding.
 
Convertible Preferred Stock:
 
In December 2015, the Company issued 15 shares of Series A Convertible Preferred Stock (the “Preferred Shares”) and warrants to purchase 2,122 shares of the Company’s common stock for which the Company received gross proceeds of $15,000. Each Preferred Share is convertible into Common Stock at any time at the election of the investor. At December 31, 2015, 13 Preferred Shares remained outstanding. During the three-months ended March 31, 2016, 4 Preferred Shares were converted to 566 shares of common stock at the Series A Conversion Price of $7.07 per share. The conversion resulted in the amortization of the discount related to the issuance of warrants in the December 2015 transaction of $3,124, which has been accounted for as a preferred deemed dividend in the condensed consolidated statement of operations. As of March 31, 2016, $7,221 of non-cash warrant discounts remain unamortized, and will be recognized as preferred deemed dividend on the conversion of outstanding shares of convertible preferred stock.
 
Warrants
 
Warrant share activity for the three-month period ended March 31, 2016 is as follows:
 
Source
 
Exercise
Price
 
Term
(Years)
 
At December 31,
2015
 
At March 31,
2016
 
2015 Series A Preferred warrants
 
$
8.75
 
 
5
 
 
2,122
 
 
2,122
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 PPO and Merger
 
 
 
 
 
 
 
 
 
 
 
 
 
Placement agent warrants
 
$
7.00
 
 
5
 
 
426
 
 
426
 
Bridge warrants
 
$
7.00
 
 
3
 
 
371
 
 
371
 
PPO warrants
 
$
14.00
 
 
5
 
 
1,078
 
 
1,078
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre 2014 warrants
 
$
9.66
 
 
various
 
 
88
 
 
88
 
 
 
 
 
 
 
 
 
 
4,085
 
 
4,085
 
 
In connection with the December 2015 issuance of convertible preferred stock mentioned above, the Company issued warrants to purchase up to an aggregate of 2,122 shares of common stock. The warrants have a 5 year term and an exercise price of $8.75 per share. The Company estimates the fair value of the warrant liability by using a Binomial Lattice Option Pricing Model. The warrant liability is measured at fair value using certain estimated inputs, which are classified within Level 3 of the valuation hierarchy. The following assumptions were used in the Binomial Lattice Option Pricing Model to measure the fair value of the embedded anti-dilution feature in the warrants as of March 31, 2016:
 
Current share price
 
$
5.25
 
Conversion price
 
$
8.75
 
Risk-free interest rate
 
 
1.16
%
Periodic rate
 
 
0.55
%
Term (years)
 
 
4.73
 
Volatility of stock
 
 
75
%
 
The warrants were valued at $9,195 at December 31, 2015. Due to a decrease in the Company’s common stock price from December 31, 2015 to March 31, 2016, the fair value of the warrants decreased by $2,985, which was recorded as a gain in the Company’s consolidated statements of operations for the three month period ended March 31, 2016.