Annual report pursuant to Section 13 and 15(d)

Equity

v3.6.0.2
Equity
12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
Equity

Note 8 – Equity

 

On December 9, 2013, the Company entered into an engagement agreement with its placement agent for the 2013 Common Stock Offering. The 2013 Offering was completed in two tranches, on December 9, 2013 and January 10, 2014.

 

In January 2014, the Company completed the final tranche of the 2013 Offering and received approximately $3.3 million total gross proceeds from accredited investors (“2014 Closing”). The Company paid its placement agent total cash fees of approximately $0.4 million and paid attorney fees of $40,000 for their services resulting in net proceeds of $2.9 million. In the 2014 Closing, the Company sold 551,810 shares of common stock at $6.00 per share and granted 137,952 units of five-year warrants with an exercise price of $9.00 per share. The warrants are exercisable for a period of five years from the date of issuance. The transaction date fair value of the warrants of $0.6 million was determined utilizing the Black-Scholes option pricing model utilizing the following assumptions: risk free interest rate - 1.64%, expected volatility - 88%, expected dividend yield - 0%, and a contractual life of 5 years.

 

During January 2014, in connection with the 2014 Closing, the Company issued the Placement Agent warrants to purchase an aggregate of 68,976 shares of common stock with an exercise price of $9.00 per share. The transaction date fair value of the warrants of $0.3 million was determined utilizing the Black-Scholes option pricing model utilizing the following assumptions: risk free interest rate – 1.64%, expected volatility - 88%, expected dividend yield - 0%, and a contractual life of 5 years.

 

On March 24, 2014, the Company filed a shelf registration statement on Form S-3 (the “Registration Statement”) which was effective on April 17, 2014. This Registration Statement contained two prospectuses: (i) a base prospectus which covers the offering, issuance and sale by the Company of up to $200 million of its common stock, preferred stock, warrants and/or units; and (ii) a sales agreement prospectus covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $75,000,000 of its common stock that may be issued and sold under a sales agreement (the “ Sales Agreement ” ) with MLV & Co. LLC ( “ MLV ” ) dated March 24, 2014. The Company will pay MLV in cash, upon the sale of common stock pursuant to the Sales Agreement, an amount equal to 3.0% of the gross proceeds from the sale of common stock. On April 28, 2014, the Company issued 500 shares and received net proceeds of $6,000 under the Sales Agreement with MLV. During the year ended December 31, 2015, the Company issued 5,626,119 common shares with an average price of $2.52 per share. The Company received $15.1 million gross proceeds (net proceeds of $14.7 million) from the issuances. During the year ended December 31, 2016, the Company issued 3,504,427 common shares with an average price of $1.96 per share. The Company received gross proceeds of $7.0 million (net proceeds of $6.8 million) from the issuances.

 

On June 30, 2014, the Company received gross proceeds of $12.5 million from a public offering of 1,670,000 shares of the Company’s common stock, $0.001 par value, at a price to the public of $7.50 per share less underwriting discounts. The Company paid an underwriting discount of $0.9 million, paid other offering expenses of $0.1 million, and paid attorney and auditor fees of $0.1 million resulting in net proceeds of $11.5 million. Under the terms of the underwriting agreement, the Company also granted the underwriters a 30-day option to purchase up to an additional 250,000 shares of common stock to cover over-allotments, if any, at the offering price.

 

On July 10, 2014, the underwriter exercised their over-allotment option to purchase an additional 157,123 shares from the Company for $7.50 per share. Including the exercise of the over-allotment option of $1.2 million, in gross proceeds, the Company’s June offering totaled 1,827,123 shares, representing gross proceeds of approximately $13.7 million and $12.6 million net after deducting the underwriting discount and other offering expenses.

 

On February 11, 2015, the Company completed an underwritten offering of 4,444,444 shares of its common stock and warrants to purchase an aggregate of 3,333,333 shares of its common stock at a price to the public of $4.50 per share. The warrants will be exercisable for a period of 4 years at an exercise price of $6.50 per share and have a relative fair value of $3,540,659 on the issuance date. The Company received net proceeds of approximately $18.5 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and excluding the underwriters’ over-allotment option.

 

On June 9, 2015, the Company closed a financing with certain investors in which it raised approximately $5,000,000 in gross proceeds or $4,480,000 in net proceeds, after deducting placement agent’s fees and other offering expenses. Investors purchased 1,923,078 shares of the Company’s common stock, at a price per share of $2.60.

 

On October 4, 2016, the Company sold 8,000,000 shares of its common stock at a price of $1.25 per share to the public through an underwritten public offering.

 

During the year ended December 31, 2016, the Company issued 125,862 common shares for the cashless exercise of warrants. During the year ended December 31, 2016, the Company also issued 23,212 common shares for $18,105 cash received from the exercise of options.

 

During the year ended December 31, 2015, the Company issued 1,532,124 common shares for the cashless exercise of warrants. During the year ended December 31, 2015, the Company also issued 224,153 common shares for $173,620 cash received from the exercise of options and warrants.

 

During the year ended December 31, 2014, the Company issued 2,162,181 common shares for the cashless exercise of warrants. During the year ended December 31, 2014, the Company also issued 484,877 common shares for $435,147 cash received from the exercise of options and warrants.

 

Approval of the 2013 Amended and Restated Stock Plan

 

In September 2013, the Board of Directors of the Company approved the Company’s 2013 Stock Plan. The expiration date of the plan is September 9, 2023 and the total number of underlying shares of the Company’s common stock available for grant to employees, directors and consultants of the Company under the plan is 2,750,000 shares. In December 2015, the shareholders of the Company approved the second amendment to the plan and increased the number of shares authorized under the plan to 9,250,000 shares. In December 2016, the shareholders of the Company approved the fifth amendment to the plan and increased the number of shares authorized under the plan to 12,750,000 shares.

 

Approval of the Equity Incentive Plan

 

In September 2013, the Board approved the Company’s 2013 Equity Incentive Plan. The expiration date of the plan is September 9, 2023 and the total number of shares of the Company’s common stock available for grant to employees, directors and consultants of the Company under the plan is 450,000 shares. In December 2013, the shareholders of the Company approved the plan and increased the number of shares authorized under the plan to 1,000,000 shares.

 

Restricted Stock

 

During the year ended December 31, 2014, the Company granted 633,041 shares of restricted stock and cancelled 50,000 shares of restricted stock. Of the total shares of restricted stock granted, 20,000 shares vest 3 months from the grant date, 30,374 shares vest 1 year from the grant date, 30,000 shares have a vesting period of 2 years, 202,497 shares have a vesting period of 4 years and 350,000 shares vest at the date of grant. The shares granted during the year ended December 31, 2014 were valued at $4.9 million based on the stock price on the grant dates. 

 

During the year ended December 31, 2015, the Company granted 479,651 shares of restricted common stock to consultants with a fair value of $2.3 million based on the stock price on the grant dates. Of the 479,651 restricted share awards granted in 2015, 329,651 shares vested at the date of grant and 150,000 shares vest over a six-month period.

 

During the year ended December 31, 2015, the Company cancelled 126,265 shares of restricted stock originally granted to employees and issued a total of 152,499 options (see below). As a result of the cancellation of the 126,265 restricted shares, the Company recorded an expense of $0.8 million for the grant-date fair value of the restricted stock for which the requisite service is expected to be rendered.

 

During the year ended December 31, 2016, the Company granted 250,700 shares of restricted common stock to consultants with a fair value of $0.4 million based on the stock price on the grant dates. Of the 250,700 restricted share awards granted in 2016, 60,700 shares vested at the date of grant, 150,000 shares vest over a six-month period and 40,000 shares vest over 2 years.

  

During the year ended December 31, 2016, the Company issued common shares totaling 21,000 for restricted shares granted in 2015 and prior years and 60,700 for restricted shares granted in 2016.

 

During the year ended December 31, 2016, 2015 and 2014, the Company recorded approximately $0.6 million, $3.4 million and $3.7 million, respectively, in stock-based compensation for all of the restricted shares granted. 

 

Stock Options

 

Following is a summary of option activities for the years ended December 31, 2016, 2015 and 2014:

 

    Number of Units     Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term
(in years)
    Aggregate
Intrinsic
Value
 
Outstanding, December 31, 2013     1,985,384       3.23       8.34       5,908,696  
Issued     1,338,100       8.86                  
Exercised     (310,400 )     0.95                  
Outstanding, December 31, 2014     3,013,084       5.98       8.35       4,728,842  
Issued     1,554,499       2.78                  
Cancelled     (576,000 )     8.70                  
Exercised     (20,000 )     0.78                  
Outstanding, December 31, 2015     3,971,583       4.34       8.01       2,964,146  
Issued     2,225,000       1.92                  
Cancelled     (266,485 )     2.51                  
Exercised     (23,212 )     0.78                  
Outstanding, December 31, 2016     5,906,886       3.52       7.90       51,704  
                                 
Exercisable, December 31, 2016     2,601,947     $ 4.67       6.31     $ 51,704  

 

During the year ended December 31, 2014, the Company granted employees, consultants, and its board members 1,338,100 options to purchase the Company’s common stock with exercise prices ranging from $0.78 to $11.95 with a 10 year term vesting over a 4-year period.  The options have an aggregated fair value of $8.7 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.77% - 2.07% (2) expected life of 6 years, (3) expected volatility of 82.47% - 87.76%, and (4) zero expected dividends.

 

During the year ended December 31, 2015, the Company granted employees, consultants, and its board members 1,554,499 options to purchase the Company’s common stock with exercise prices ranging from $1.79 to $3.58 and a 10 year with vesting ranging from 1 to 4.17 years.  The options have an aggregated fair value of $3.2 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.56% - 1.91% (2) expected life of 6 years, (3) expected volatility of 85.01% - 94.89%, and (4) zero expected dividends.

 

During the year ended December 31, 2016, the Company granted employees, consultants, and its board members 2,225,000 options to purchase the Company’s common stock with exercise prices ranging from $0.95 to $2.25 with a 10 year term vesting over a 4 year period.  The options have an aggregated fair value of $3.1 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.28% - 1.97% (2) expected life of 6 years, (3) expected volatility of 81.45% - 87.95%, and (4) zero expected dividends.

  

During the years ended December 31, 2016, 2015 and 2014, the Company received gross proceeds of $18,105, $15,680 and $0.3 million for exercise of options for 23,212 shares, 20,000 shares and 310,400 shares, respectively, of the Company’s common stock.

 

All options issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at December 31, 2016 and 2015 was $6.7 million and $7.2 million, respectively. During the years ended December 31, 2016, 2015 and 2014, the Company recorded option expense of $3.6 million, $3.4 million and $2.4 million, respectively.

 

Warrants

 

Following is a summary of warrant activities for the years ended December 31, 2016, 2015 and 2014:

 

    Number of Units     Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term
(in years)
    Aggregate
Intrinsic
Value
 
                         
Outstanding, December 31, 2013     9,737,729     $ 1.06       4.89     $ 47,396,307  
Granted     491,928       8.33                  
Exercised     (2,501,993 )     0.67                  
Forfeited     (29,167 )     6.70                  
Outstanding, December 31, 2014     7,698,497       1.64       3.97       34,317,224  
Granted     3,333,333       6.50                  
Exercised     (2,013,360 )     0.41                  
Outstanding, December 31, 2015     9,018,470       3.73       2.93       10,199,230  
Granted     130,000       0.96                  
Exercised     (183,718 )     0.90                  
Outstanding, December 31, 2016     8,964,752       3.72       1.95       1,445,786  
                                 
Exercisable, December 31, 2016     8,612,252       3.66       1.79       1,445,786  

 

During the year ended December 31, 2014, the Company granted warrants to purchase 137,952 shares of the Company’s common stock to investors and warrants to purchase 68,976 shares of the Company’s common stock to its placement agent in connection with the January 2014 closing.

 

During the year ended December 31, 2014, the Company also granted three consultants warrants to purchase 285,000 shares of the Company’s common stock with exercise prices ranging from $5.55 to $11.66 per share and a term of 10 years. These warrants vest when certain milestones are met. The fair value of the warrants was $2.1 million on the grant date and was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate of 1.56% - 1.66%, (2) expected term of 5 years, (3) expected volatility of 82.47-87.76%, and (4) zero expected dividends. As of December 31, 2014, unrecognized compensation expense related to the warrants was $1.5 million. 

 

During the year ended December 31, 2014, 2,501,993 warrants were exercised by the warrant holders. The Company issued 2,336,658 shares of common stock and received gross proceeds of $0.2 million.

 

On February 11, 2015, the Company completed an underwritten offering of 4,444,444 shares of its common stock and warrants to purchase an aggregate of 3,333,333 shares of its common stock at a price of $4.50 per share. The warrants are exercisable for a period of 4 years at an exercise price of $6.50 per share. The transaction date relative fair value of the warrants of $3.5 million was determined utilizing the Black-Scholes option pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate of 1.26%, (2) expected term of 4 years, (3) expected volatility of 72%, and (4) zero expected dividends.

  

During the year ended December 31, 2015, 2,013,360 warrants were exercised by warrant holders. The Company issued 1,736,277 shares of common stock and received gross proceeds of $0.2 million.

 

During the year ended December 31, 2016, the Company granted 130,000 warrants to consultants. The warrants are exercisable for periods ranging from 5 to 10 years at exercise prices ranging from $0.98 to $1.77 per share. The fair value of the warrants was approximately $116,000 at the grant date and was determined utilizing the Black-Scholes option pricing model. Variables used in the Black-Scholes option-pricing model include (1) discount rate range of 1.13% to 1.20%, (2) expected term of 5-10 years, (3) expected volatility range of 79.79% to 84.84%, and (4) zero expected dividends.

 

During the year ended December 31, 2016, 183,718 warrants were exercised by warrant holders and the Company issued 125,862 shares of common stock.

 

During the years ended December 31, 2016, 2015 and 2014, the Company recorded stock-based compensation related to the warrants of $0.1 million, $0.2 million and $0.1 million, respectively.