Quarterly report pursuant to Section 13 or 15(d)

Capitalization and Equity Structure

v3.7.0.1
Capitalization and Equity Structure
 3 Months Ended
Mar. 31, 2017
Stockholders' Equity Note [Abstract]  
Capitalization and Equity Structure
11. Capitalization and Equity Structure
 
Reverse Stock Split:
 
After the close of the stock market on May 4, 2016, the Company effected a 1-for-7 reverse split of its common stock. As a result, all common stock share amounts included in this filing have been retroactively reduced by a factor of seven, and all common stock per share amounts have been increased by a factor of seven, with the exception of our common stock par value. Common stock outstanding, including the issuance of new shares of common stock as a result of the conversion of preferred stock and the exercise of stock options and warrants, was affected by the 1-for-7 reverse split.
 
Summary:
 
The Company’s authorized capital stock at March 31, 2017 consisted of 71,429 shares of common stock and 10,000 shares of convertible preferred stock. At March 31, 2017, 21,902 shares of common stock were issued and outstanding and no shares of convertible preferred stock were issued and outstanding.
 
Warrants:
 
Warrant shares outstanding as of December 31, 2016 and March 31, 2017 is as follows:
 
Source
 
Exercise
Price
 
Term
(Years)
 
At December 31,
2016
 
Issued
 
Exercised
 
Expired
 
At March 31,
2017
 
Warrants issued in conjunction with 2015 Series A Preferred financing
 
$
3.74
 
5
 
 
1,634
 
 
 
 
 
 
 
 
 
 
 
1,634
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
9-10
 
 
88
 
 
 
 
 
 
 
 
 
 
 
88
 
 
 
 
 
 
 
 
 
3,597
 
 
-
 
 
-
 
 
(371)
 
 
3,226
 
 
In January 2014, the Company issued various warrants with a three year life to investors who participated in the Company’s November 2013 private placement of senior subordinated secured convertible notes, of which warrant representing 371 shares of common stock expired in January 2017 without having been exercised.
 
The December 2015 warrants contain a put-option provision. Under this provision, while the warrants are outstanding, if the Company enters into a Fundamental Transaction, defined as a merger, consolidation or similar transaction, the Company or any successor entity will, at the option of each warrant holder, exercisable at any time within 30 days after the consummation of the Fundamental Transaction, purchase the warrant from the holder exercising such option by paying to the holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such holder’s warrant on the date of the consummation of the Fundamental Transaction. As a result of this put-option provision, these warrants are classified as a liability and are marked to market at each reporting date.
 
The warrant liability is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the valuation hierarchy. The following assumptions were used in the Black Scholes Option Pricing Model to measure the fair value of the warrants as of March 31, 2017:
 
Current share price
 
$
4.10
 
Conversion price
 
$
3.74
 
Risk-free interest rate
 
 
1.66
%
Term (years)
 
 
3.73
 
Volatility of stock
 
 
70
%
 
At December 31, 2016, the warrants were valued at $3,546. Due to an increase in the Company’s common stock price from December 31, 2016 to March 31, 2017, the fair value of the warrants, and associated liability, increased by $69. This amount was recorded as a non-cash expense in the Company’s condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2017.