11. Capitalization and Equity Structure

 

The Company’s authorized capital stock at March 31, 2018 consisted of 141,429 shares of common stock and 10,000 shares of preferred stock. At March 31, 2018, 60,355 shares of common stock were issued and outstanding and no shares of preferred stock were issued and outstanding.

 

On October 30, 2017, the Board approved an amendment to the Company’s Articles of Incorporation to increase the number of shares of our common stock by 70,000 shares to 141,429 shares (the “Authorized Capital Amendment”), subject to the approval of such amendment by the stockholders. On December 21, 2017, a special meeting of the stockholders was convened (the “December Special Meeting”). In the definitive proxy statement dated November 24, 2017 filed by the Company with the SEC in respect of the December Special Meeting (the “November Proxy Statement”), the Board solicited the vote of the stockholders in favor of the Authorized Capital Amendment. The November Proxy Statement stated that broker non-votes in respect of the Authorized Capital Amendment would be counted as votes against the amendment. However, under relevant stock exchange rules, brokers had the discretionary authority to vote any shares held in their name on behalf of a beneficial owner (“Broker Shares”), and in respect of which the broker did not receive voting instruction from the beneficial owner, in favor of the Authorized Capital Amendment. As such, brokers voted approximately 17,628 Broker Shares, in respect of which the brokers had not received voting instructions from the beneficial owners of such shares, in favor of the Authorized Capital Amendment at the December Special Meeting. Accordingly, after taking into account such Broker Shares, the Authorized Capital Amendment was approved by the stockholders at the December Special Meeting. However, as disclosed in more detail under Item 3 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, some stockholders of the Company have claimed that the disclosure in the November Proxy Statement in connection with the effect on the Authorized Capital Amendment of beneficial owners not providing voting instructions in respect of their Broker Shares was incorrect. Accordingly, management has solicited stockholders to ratify the Authorized Capital Amendment at our 2018 Annual Meeting of Shareholders, which will be held on June 7, 2018 (the “2018 Annual Meeting”). Further information about such vote was provided in the Company’s Definitive Proxy Statement relating to its 2018 Annual Meeting of Shareholders, which was filed with the SEC on April 30, 2018 (the “2018 Proxy Statement”).

 

 

Warrant shares outstanding as of December 31, 2017 and March 31, 2018 were as follows:

  

Source		Exercise Price			Term (Years)			December 31, 2017			Issued			Expired			March 31, 2018
Information Agent Warrants		$	1.50			3			200			-			-			200
2015 Warrants		$	3.74			5			1,604			-			-			1,604
2014 PPO and Merger
Placement agent warrants		$	7.00			5			426			-			-			426
PPO warrants		$	14.00			5			1,078			-			-			1,078
Pre-2014 warrants		$	9.66			9-10			88			-			-			88
									3,396			-			-			3,396

 

 

The warrant liability related to the 2015 Warrants is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black Scholes Option Pricing Model to measure the fair value of the 2015 warrants as of March 31, 2018:

 

Current share price		$	1.58
Conversion price		$	3.74
Risk-free interest rate			2.36	%
Term (years)			2.75
Volatility of stock			90	%