|3 Months Ended|
Mar. 31, 2017
Note 7 - Equity
During the three months ended March 31, 2017, the Company issued 1,341,357 shares of common stock for gross proceeds of approximately $2.0 million as part of its At-The-Market (“ATM”) sales agreement with an investment bank.
During the three months ended March 31, 2017, the Company issued 4,234 common shares for the cashless exercise of warrants.
During the three months ended March 31, 2017 and 2016, the Company recorded approximately $45,000 and $0.1 million, respectively, in stock-based compensation for all of the restricted shares outstanding.
During the three months ended March 31, 2017, the Company issued 5,000 common shares for restricted shares grant that became fully vested. As of March 31, 2017, the Company has yet to issue 148,408 common shares for restricted shares grant that has vested.
Following is a summary of option activities for the three months ended March 31, 2017:
During the three months ended March 31, 2017, the Company granted 2,260,500 options to purchase the Company’s common stock with an exercise price ranging from $1.03 to $1.58 per share, a term of 10 years, and a vesting period from 1 to 4 years. The options have an aggregated fair value of $2,149,845 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate range from 1.99% to 2.28% (2) expected life of 6 years, (3) expected volatility range from 80.27% to 81.74%, and (4) zero expected dividends. The estimate of expected option life was determined based on the “simplified method,” giving consideration to the overall vesting period and the contractual terms of the award. This method was used because the Company does not have sufficient historical option exercise data.
During the three months ended March 31, 2017, options to purchase 523,000 common shares were cancelled upon the termination of four employees.
The fair value of all options issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at March 31, 2016 was approximately $7.1 million. During the three months ended March 31, 2017 and 2016, the Company recorded total option expense of $0.9 million and $0.8 million respectively.
Following is a summary of warrant activities for the three months ended March 31, 2017:
Certain warrants were issued to the Company’s Executive Chairman as part of investment banking and advisory services either prior to and outside of his role as a Board Member and subsequently Executive Chairman. The Executive Chairman has refrained from exercising such warrants that are or have been in the money for most of their existing life in order to align with the long-term interests of the Company. On March 14, 2017, the Company canceled warrant to purchase 57,212 shares of Common Stock of the Company, dated December 19, 2012, issued to its Executive Chairman and issued a new warrant to its Executive Chairman to purchase 57,212 common shares with the term of the warrant expiring on February 11, 2022. The new warrant has the same exercise price in effect as the exercise price as the old warrant but the expiration date was modified from December 19, 2017 to February 11, 2022. The Company also amended the warrant to purchase Common Stock of the Company, dated January 31, 2012, issued to its Executive Chairman and an entity affiliated with its Executive Chairman to purchase 64,746 and 99,617 common shares, respectively. Pursuant to the terms of the warrant amendments, the term of the warrants was extended to February 11, 2022 from January 31, 2019. As a result of the replacement and modification, the Company recorded an additional expense of $64,091 for the incremental fair value of the new warrants.
During the three months ended March 31, 2017, 9,364 warrants were exercised by the warrant holders. The Company issued 4,234 shares of common stock as a result of these cashless exercises.
During the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to the warrants of $18,984 (excluding the $64,091 addition expense due to the replacement and modification) and $57,144, respectively.
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/presentationRef