|6 Months Ended|
Jun. 30, 2019
Note 4 - Equity
In April 2019, the Company sold 42.9 million shares of common stock at an offering price of $0.385 per share and warrants to purchase up to 42.9 million shares of common stock at an exercise price of $0.50 per share and with a term of 5 years, resulting in gross proceeds of $16.5 million and net proceeds of $15.1 million after deducting underwriting and other offering expenses.
In January 2019, the Company sold 924,500 common shares through its at-the-market program, resulting in net proceeds of $0.4 million.
In March 2018, the Company sold an aggregate of 30,237,894 units consisting of an aggregate of 30,237,894 shares of common stock, 7,559,445 series A warrants and 22,678,393 series B warrants, with each series A warrant exercisable for one share of Common Stock at an exercise price of $0.60 per share and each series B warrant exercisable for one share of Common Stock at an exercise price of $0.70 per share, resulting in gross proceeds to of approximately $15.1 million (each unit was sold at $0.50 per unit), and net proceeds of approximately $13.8 million after deducting expenses relating to dealer-manager fees and other offering expenses.
During the six months ended June 30, 2019, holders of March 2018 series A warrants exercised 2.5 million shares, resulting in the Company receiving $1.5 million. The remaining March 2018 series A warrants expired in March 2019.
During the six months ended June 30, 2019, the Company granted its employees options to purchase 1.0 million shares of the Company’s common stock with an exercise price ranging from $0.26 to $0.58 per share, a term of 10 years, and a vesting period of 4 years. The options have an aggregated fair value of $0.3 million 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 1.81% to 2.60% (2) expected life of 6 years, (3) expected volatility range from 78.5% to 80.4%, and (4) no expected dividends. During the six months ended June 30, 2019, options to purchase 0.3 million shares were cancelled upon the termination of employment for several employees.
The fair values of all options issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at June 30, 2019 was $2.3 million. During the six months ended June 30, 2019 and 2018, the Company recorded total option expense of $0.3 million and $0.9 million, respectively.
As of June 30, 2019, the Company had options to purchase 7.9 million common shares outstanding with a weighted average exercise price of $1.61 per share and a weighted average remaining contractual term of 7.8 years.
Following is a summary of warrant activity for the six months ended June 30, 2019:
In April 2019, the Company sold 42.9 million shares of common stock at an offering price of $0.385 per share and warrants to purchase up to 42.9 million shares of common stock at an exercise price of $0.50 per share and with a term of 5 years. The transaction date relative fair value of the April 2019 warrants of $5.3 million was determined utilizing the Black-Scholes option pricing model and variables of (1) a discount rate of 2.35%, (2) expected term of 5 years, (3) expected volatility of 78% and (4) zero expected dividends.
The Company has outstanding warrants to purchase 57,212 shares that include down-round protection. For warrants with down-round protection, a deemed dividend is recorded for the change in fair value of the warrants when the down-round provision is triggered. As result of the April 2019 offering, the exercise price of the warrant was reset from $1.25 per share to $0.88 per share. The down-round protection provision in the above warrants created a deemed dividend to common stockholders of $1,269, which is reflected in the accompanying condensed consolidated statement of operations and consolidated statement of changes in stockholders’ equity.
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://fasb.org/us-gaap/role/ref/legacyRef