Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Common Stock

v3.20.1
Note 10 - Common Stock
3 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
10.
Common Stock
 
In
November 2019,
the Company closed an underwritten public offering of units (the
“November 2019
Offering”) for gross proceeds of approximately
$11,500,000,
which included the full exercise of the underwriter's overallotment option to purchase additional shares and warrants. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses and payable by the Company, were approximately
$9,922,000.
 
 
The offering comprised of: (
1
) Class A Units, priced at a public offering price of
$1.55
per unit, with each unit consisting of
one
share of common stock, a Series A warrant to purchase
one
share of common stock at an exercise price of
$1.55
per share that expires on the
first
anniversary of the date of issuance and a Series B warrant to purchase
one
share of common stock at an exercise price of
$1.55
per share that expires on the
fifth
anniversary of the issuance; and (
2
) Class B Units, priced at a public offering price of
$1.55
per unit, with each unit consisting of
one
share of Series A preferred stock, convertible into
one
share of common stock, a Series A warrant to purchase
one
share of common stock at an exercise price of
$1.55
per share that expires on the
first
anniversary of the date of issuance and a Series B warrant to purchase
one
share of common stock at an exercise price of
$1.55
per share that expires on the
fifth
anniversary of the issuance.
 
The securities comprising the units were immediately separable and were issued separately.
 
A total of
1,945,943
shares of common stock,
5,473,410
shares of Series A preferred stock, Series A warrants to purchase up to
7,419,353
shares of common stock, and Series B warrants to purchase up to
7,419,353
shares of common stock were issued in the offering, including the full exercise of the over-allotment option.
 
In
November
and
December 2019,
the holders of Series A convertible preferred stock converted
600,000
shares and
3,021,237
shares into common stock, respectively. In
January
and
February 2020,
the holders of Series A convertible preferred stock converted
1,183,151
shares and
669,022
shares into common stock, respectively.
 
In
February 2020,
a total of
1,026,240
shares of common stock were issued in connection with the exercise of Series A warrants for gross proceeds of approximately
$1,591,000.
 
In
February 2020,
a total of
45,473
shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately
$70,000.
 
ATM Equity Offerings
 
Through the
August 2019
ATM Facility, the Company
may
offer and sell, from time-to-time, up to
$6,760,000
aggregate offering price of shares of its common stock”). The Company’s offering of
$6,760,000
of its common stock under the
August 2019
ATM Facility was completed in late
September 2019.
During the
three
months ended
September 30, 2019,
the Company sold
1,004,171
shares of common stock under the
August 2019
ATM Facility for net proceeds, after deducting sales commissions and other offering costs, of approximately
$6,322,000.
 
Restricted Common Shares
 
In
March 2020,
the Company issued
28,313
restricted shares of its common stock at an aggregate value of approximately
$24,000.
 
In
December 2019,
the Company issued
30,675
restricted shares of its common stock at an aggregate value of approximately
$25,000.
 
In
October 2019,
the Company issued
7,740
restricted shares of its common stock at an aggregate value of approximately
$25,000.
 
In
March 2019,
the Company issued
274
restricted shares of its common stock at an aggregate value of approximately
$25,000.
 
 
Warrants for Common Stock
 
As of
March 31, 2020,
outstanding warrants to purchase shares of common stock were as follows: 
 
   
Exercisable
 
Expiration
 
Exercise
   
Under
 
Issuance Date
 
for
 
Date
 
Price
   
Warrants
 
                         
February 2015
 
Common Shares
 
February 17, 2025
  $
400.00
     
754
 
March 2015
 
Common Shares
 
March 26, 2025
  $
272.00
     
14
 
May 2015
 
Common Shares
 
May 12, 2025
  $
424.00
     
362
 
May 2015
 
Common Shares
 
May 17, 2020
  $
424.00
     
215
 
December 2015
 
Common Shares
 
December 16, 2025
  $
560.00
     
267
 
April 2016
 
Common Shares
 
April 1, 2026
  $
608.00
     
250
 
May 2016
 
Common Shares
 
May 11, 2021
  $
774.00
     
50
 
June 2016
 
Common Shares
 
June 20, 2026
  $
498.00
     
1,004
 
May 2017
 
Common Shares
 
May 25, 2027
  $
950.00
     
2,220
 
November 2019
 
Common Shares
 
November 26, 2020
  $
1.55
     
6,393,113
 
November 2019
 
Common Shares
 
November 26, 2024
  $
1.55
     
7,373,880
 
November 2019
 
Common Shares
 
November 26, 2024
  $
1.84
     
9,893,776
 
   
 
 
 
   
 
     
23,665,905
 
 
In connection with the
November 2019
Offering, Series A warrants to purchase up to
7,419,353
shares of common stock, and Series B warrants to purchase up to
7,419,353
shares of common stock were issued in the offering. A Series A warrant to purchase
one
share of common stock at an exercise price of
$1.55
per share that expires on the
first
anniversary of the date of issuance and a Series B warrant to purchase
one
share of common stock at an exercise price of
$1.55
per share that expires on the
fifth
anniversary of the issuance. The Series A warrants to purchase
one
share of common stock have a contractual term of
one
year and an exercise price of
$1.55
per share. The Series B warrants to purchase
one
share of common stock have a contractual term of
five
years and an exercise price of
$1.55
per share. The Company determined the fair value of the Series A warrants on the date of issuance to be approximately
$1,210,000
using the Black-Scholes option pricing model. Assumptions used were dividend yield of
0%,
volatility of
91.1%,
risk free interest rate of
1.59%
and a contractual life of
one
year. The Company determined the fair value of the Series B warrants on the date of issuance to be approximately
$2,871,000
using the Black-Scholes option pricing model. Assumptions used were dividend yield of
0%,
volatility of
68.8%,
risk free interest rate of
1.58%
and a contractual life of
five
years. The fair value of the Series A and B warrants totaling approximately
$4,081,000
is recorded as issuance costs relating to
November 2019
Offering.
 
In
February 2020,
a total of
1,026,240
shares of common stock were issued in connection with the exercise of Series A warrants for gross proceeds of approximately
$1,591,000.
In
February 2020,
a total of
45,473
shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately
$70,000.
As of
March 31, 2020,
there are Series A warrants to purchase a total of
6,393,113
shares of common stock and Series B warrants to purchase a total of
7,373,800
shares of common stock still remaining and outstanding.
 
In connection with the CRG Debt Conversion, CRG received warrants exercisable for
9,893,776
shares of common stock, an amount equal to
15%
of our common stock on a fully diluted basis after taking the
November 2019
Offering into account (the “CRG Warrants”). The CRG Warrants have a contractual term of
five
years and an exercise price equal to
120%
of the Series B convertible preferred stock conversion price of
$1.53
or
$1.836
per share. The Company determined the fair value of the warrants on the date of issuance to be approximately
$3,502,000
using the Black-Scholes option pricing model. Assumptions used were dividend yield of
0%,
volatility of
68.8%,
risk free interest rate of
1.58%
and a contractual life of
five
years. The fair value of the CRG warrants is recorded as additional paid-in capital as part of the accounting for the debt conversion. 
 
In connection with the
2017
Loan Agreement, the Company issued warrants to purchase a total of
2,220,
shares of common stock at an exercise price of
$950.00
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
$790,000,
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 are amortized to interest expense over the loan term. During the
three
months ended
March 31, 2020
and
2019,
the Company recorded
$1,000
and
$83,000,
respectively, of interest expense relating to the debt issuance costs using the effective interest method. As of
March 31, 2020,
the unamortized debt discount was
$11,000.
 
No
shares issuable pursuant to warrants have been cancelled during the
three
months ended
March 31, 2020
and
2019.
     
No
shares issuable pursuant to warrants expired during the
three
months ended
March 31, 2020
and
2019.
 
The stock-based compensation expense related to warrants issued was
zero
for the
three
months ended
March 31, 2020
and
2019,
respectively, as
no
warrants were issued during those periods.