Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Common Stock

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Note 8 - Common Stock
9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
8
.        Common Stock
 
On
May 19, 2017,
the Company issued
35,000
restricted shares of its common stock at a value of
$7.42
a share, or an aggregate value of approximately
$260,000.
 
On
March 22, 2017,
in connection with the closing of the
March 2017
Offering, we issued an aggregate of
8,625,000
shares of common stock, including the exercise of the underwriters
’ overallotment option, at a public offering price of
$4.00
per share for gross proceeds of approximately
$34,500,000.
The net proceeds to the Company, after the deduction of underwriting discounts, commissions and other offering expenses, were approximately
$31,440,000.
 
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
$13,886,000.
 
 
Warrants for Common Stock
 
As of
September 30, 2017,
outstanding warrants to purchase shares of common stock were as follows: 
 
           
 
 
 
 
Number of
 
           
 
 
 
 
Shares
 
           
 
 
 
 
Outstanding
 
   
Exercisable
 
Expiration
 
Exercise
   
Under
 
Issuance Date
 
for
 
Date
 
Price
   
Warrants
 
                         
September 2014
 
Common Shares
 
September 23, 2019
  $
4.24
     
86,831
 
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 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
 
May 2017
 
Common Shares
 
May 25, 2027
  $
9.50
     
222,049
 
   
 
 
 
   
 
     
642,622
 
 
In connection with the Loan and Security Agreement entered into on
September 30, 2014,
as amended on
February 19, 2015,
May 14, 2015,
November 30, 2015
and
March 18, 2016 (
collectively, the
“2014
Loan Agreement”), with Pacific Western Bank (as succes
sor in interest by merger to Square
1
Bank), 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
nine
months ended
September 30, 2016,
the Company recorded
zero
and
$387,000,
respectively, of interest expense relating to the debt issuance costs. The warrant was exercised on a cashless basis in
August 2016
and
17,295
net shares were issued.
 
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. The debt issuance costs for this warrant were fully amortized as of
September 30, 2015.
The warrant was exercised on a cashless basis in
July 2016
and
885
net shares of common stock were issued.
 
In connection with the
2016
Loan Agreement, 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 Company determined the fair value of the warrant on the date of issuance to be
$350,000.
The fair value along with legal fees totaling
$90,000,
was recorded as debt issuance costs and was amortized to interest expense over the loan term. The debt issuance costs were presented in the condensed consolidated balance sheet as a deduction from the carrying amount of the note payable. The outstanding indebtedness was repaid in
May 2017
from the proceeds of the term loan made in connection with the
2017
Loan Agreement and the remaining unamortized balance of debt issuance costs was recorded to interest expense for the
three
months ended
June 30, 2017.
During the
three
and
nine
months ended
September 30, 2017,
the Company recorded
zero
and
$371,000
respectively, of interest expense relating to the debt issuance costs. During the
three
and
nine
months ended
September 30, 2016,
the Company recorded
$35,000
interest expense relating to the debt issuance costs. As of
September 30, 2017,
the unamortized debt discount related to the
2016
Loan Agreement was
zero
.
 
In connection with the
2017
Loan Agreement, the Company issued warrants to purchase a total of
222,049,
shares of common stock at an exercise price of
$9.50
per share. The warrants have a contractual life of
ten
years and are exercisable immediately
 in whole or in part. The Company determined the fair value of the warrants on the date of issuance to be
$940,000
using the Black-Scholes option pricing model. Assumptions used were dividend yield of
0%,
volatility of
55.1%,
risk free interest rate of
2.25%
and a contractual life of
ten
years. The fair value of the warrants along with financing and legal fees totaling
$786,000,
are recorded as debt issuance costs and presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable. The debt issuance costs will be amortized to interest expense over the loan term. During the
three
and
nine
months ended
September 30, 2017,
the Company recorded
$68,000
and
$106,000
of interest expense relating to the debt issuance costs using the effective interest method. As of
September 30, 2017,
the unamortized debt discount was
$1,620,000.
 
A total of
4,701
and
25,268
shares, issuable pursuant to warrants issued in connection with a private offering on
September 30, 2014,
were issued in connection with the exercise of warrants during the
nine
months ended
September 30, 2017
and
2016,
respectively.
 
 
No
shares issuable pursuant to warrants have been cancelled during the
nine
months ended
September 30, 2017.
A total of
1,094
shares issuable pursuant to warrants issued to
two
vendors in
October 2014
were cancelled during the
nine
months ended
September 30, 2016
as the milestones related to these shares were
not
achieved.   
 
The stock-based compensation expense related to warrants issued was
zero
for
both the
three
months ended
September 30, 2017
and
2016.
The stock-based compensation expense related to warrants issued was
zero
and
$162,000
for the
nine
months ended
September 30, 2017
and
2016,
respectively.