Quarterly report pursuant to Section 13 or 15(d)

Note 7 - Common Stock

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Note 7 - Common Stock
6 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
7.        Common Stock
 
On June 17, 2016, in connection with the closing of the June 2016 Offering, we issued an aggregate of 3,105,000 shares of common stock, including the exercise of the underwriters’ overallotment option, at a public offering price of $5.00 per share for gross proceeds of approximately $15,525,000. The net proceeds to the Company, after the deduction of underwriting discounts, commissions and other offering expenses, were approximately $13,857,000.
 
Warrants for Common Stock
 
As of June 30, 2016, outstanding warrants to purchase shares of common stock were as follows:
 
Issuance Date
 
Exercisable
for
 
Expiration
Date
 
Exercise
Price
 
 
Number of
Shares
Outstanding
Under
Warrants
 
                         
September 2014
 
Common Shares
 
September 23, 2019
  $ 4.24       110,550  
September 2014
 
Common Shares
 
September 30, 2024
  $ 4.24       58,962  
October 2014
 
Common Shares
 
October 13, 2019
  $ 4.24       29,000  
November 2014
 
Common Shares
 
November 12, 2019
  $ 4.24       12,500  
February 2015
 
Common Shares
 
February 17, 2025
  $ 4.00       75,697  
March 2015
 
Common Shares
 
March 26, 2025
  $ 2.72       1,454  
May 2015
 
Common Shares
 
May 12, 2025
  $ 4.24       36,229  
May 2015
 
Common Shares
 
May 14, 2025
  $ 2.96       3,125  
May 2015
 
Common Shares
 
May 17, 2020
  $ 4.24       21,585  
December 2015
 
Common Shares
 
December 16, 2025
  $ 5.60       26,875  
April 2016
 
Common Shares
 
April 1, 2026
  $ 6.08       25,000  
May 2016
 
Common Shares
 
May 11, 2021
  $ 7.74       5,000  
June 2016
 
Common Shares
 
June 20, 2026
  $ 4.98       100,402  
                      506,379  
 
In connection with the 2014 Loan Agreement entered into on September 30, 2014, the Company issued a warrant to purchase a total of 58,962 shares of common stock at an exercise price of $4.24 per share. The fair value of the warrant was recorded as debt issuance costs, presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable, and was being amortized to interest expense over the loan term. The outstanding indebtedness was repaid in June 2016 from the proceeds of the new term loan in connection with the 2016 Loan Agreement and the remaining unamortized balance of debt issuance costs was recorded to interest expense for the quarter ended June 30, 2016. During the three and six months ended June 30, 2016, the Company recorded $342,000 and $387,000, respectively, of interest expense relating to the debt issuance costs. During the three and six months ended June 30, 2015, the Company recorded $55,000 and $102,000, respectively, of interest expense relating to the debt issuance costs.
 
In conjunction with the second amendment to the 2014 Loan Agreement in May 2015, the Company issued a warrant to the lender to purchase a total of 3,125 shares of common stock at an exercise price of $2.96 per share. During the three and six months ended June 30 2015, the Company recorded $8,000 of interest expense relating to the debt issuance costs for this warrant. The debt issuance costs for this warrant were fully amortized as of September 30, 2015.
 
In April 2016, the Company issued a common stock warrant to a distributor to purchase a total of 25,000 shares of common stock at an exercise price of $6.08 per share. The warrant has a contractual life of ten years and is exercisable immediately in whole or in part, on or before ten years from the issuance date. The Company determined the fair value of the warrant using the Black-Scholes option pricing model. Assumptions used were dividend yield of 0%, volatility of 72.1%, risk free interest rate of 1.78% and a contractual life of ten years. The fair value of the warrant was recorded as sales costs, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations.
 
In May 2016, the Company issued common stock warrants to nonemployee contractors to purchase a total of 5,000 shares of common stock at an exercise price of $7.74 per share. The warrants have a contractual life of five years and are exercisable immediately in whole or in part, on or before five years from the issuance date. The Company determined the fair value of the warrants using the Black-Scholes option pricing model. Assumptions used were dividend yield of 0%, volatility of 61.6%, risk free interest rate of 1.20% and a contractual life of five years. The fair value of the warrants were recorded as clinical consulting costs, which are included in research and development expenses in the condensed consolidated statements of operations.
 
In connection with the 2016 Loan Agreement entered into on June 20, 2016, the Company issued a warrant to purchase a total of 100,402 shares of common stock at an exercise price of $4.98 per share. The warrant has a contractual life of ten years and is exercisable immediately in whole or in part, on or before ten years from the issuance date. The Company determined the fair value of the warrant on the date of issuance to be $350,000 using the Black-Scholes option pricing model. Assumptions used were dividend yield of 0%, volatility of 63.0%, risk free interest rate of 1.67% and a contractual life of ten years. The fair value of the warrant, along with other legal fees totaling $90,000, were recorded as debt issuance costs, presented in the condensed consolidated balance sheet as of June 30, 2016 as a deduction from the carrying amount of the note payable, and will be amortized to interest expense over the loan term. During the three and six months ended June 30, 2016, the Company recorded no interest expense relating to the debt issuance costs because it was immaterial for the financial reporting period. As of June 30, 2016, the unamortized debt issuance cost was $440,000.
 
A total of 735 and 6,250 shares issuable pursuant to warrants issued in connection with the private offering on September 30, 2014 were exercised in 2015 and 2016, respectively.
 
A total of 5,157 and 1,094 shares issuable pursuant to warrants issued to two vendors in October 2014 were cancelled in 2015 and 2016, respectively, as the milestones related to these shares were not achieved.   
 
The stock-based compensation expense related to warrants issued was $20,000 and $162,000 for the three and six months ended June 30, 2016, respectively. The stock-based compensation expense related to warrants issued was $118,000 and $380,000 for the three and six months ended June 30, 2015, respectively.