Stockholders' Equity | 12 Months Ended |
Dec. 31, 2014 |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity |
Authorized Shares |
At December 31, 2014, our authorized shares of capital stock consisted of the following: (i) 50,000,000 shares of common stock, $0.02 par value, and (ii) 20,000,000 shares of preferred stock, $0.001 par value. |
Common Stock |
Holders of our common stock are entitled to one vote for each share on all matters voted on by stockholders. Holders of common stock do not have cumulative voting rights in the election of directors and have no subscription, redemption or conversion privileges. Subject to the preferences or other rights of any preferred stock that may be issued from time to time, holders of common stock will be entitled to participate ratably in dividends of our common stock as declared by the board of directors. Holders of common stock will be entitled to share ratably in all assets available for distribution to stockholders in the event of our liquidation or dissolution, subject to distribution of the preferential amount, if any, to be distributed to holders of preferred stock. No holder of our capital stock authorized at any such distribution date will have any preemptive right to subscribe for or purchase any of our securities of any class or kind. |
Preferred Stock |
Our charter authorizes the board of directors, without any vote or action by the holders of our common stock, to issue up to 20,000,000 shares of preferred stock from time to time in one or more series. Our board of directors are authorized to determine the number of shares and designation of any series of preferred stock and the dividend rights, dividend rate, conversion rights and terms, voting rights (full or limited, if any), redemption rights and terms, liquidation preferences and sinking fund terms of any series of preferred stock. Issuances of preferred stock would be subject to the applicable rules of the NASDAQ Capital Market or other organizations on whose systems our stock may then be quoted or listed. Depending upon the terms of preferred stock established by our board of directors, any or all series of preferred stock could have preference over our common stock with respect to dividends and other distribution upon our potential liquidation. Issuance of any such shares with voting powers, or issuance of additional shares of our common stock, would dilute the voting power of our outstanding common stock. We have no present plans to issue any preferred stock. |
Common Stock Issuances and Additional Paid-in Capital |
In December 2012 and August 2013, we entered into two separate At The Market Offering Agreements (ATM) with a sales agent. Under the ATMs, we had the right to offer and sell, from time to time, shares of our common stock through the sales agent. During the period from the inception of the ATMs to the termination of the arrangements in May and September 2013, respectively, total proceeds from the sale of 1,959,078 shares common stock under the ATMs, net of sales agent commissions and other transaction costs, were $4,228,981. Sales agent commissions of 3.0% and other transaction costs during 2013 amounted to $277,926 in connection with the transactions. |
In May 2013, we completed a registered direct offering that yielded gross proceeds of $3,000,000 from the sale of 1,229,508 shares of our common stock at a price of $2.44 per share. The investor also received a warrant (the May 2013 Warrant) in connection with the transaction. As required by GAAP, we allocated $1,604,000 of the proceeds from the transaction to the May 2013 Warrant that we classified as a derivative instrument as of the transaction date. The net amount received by us, after deducting placement agent fees and transaction expenses, was $2,695,005. In August 2013, the investor exercised the May 2013 Warrant under a cashless exchange provision pursuant to which we issued 751,780 registered shares of common stock to the investor with a fair value of $1,796,754 in full settlement of the May 2013 warrant, which was reclassified from a derivative liability to equity on the exercise date (Note 9). |
In September 2013, we completed a private placement transaction in which we received gross proceeds of $11,000,000 from the sale of convertible notes and warrants. We recorded the fair value of the warrants and beneficial conversion feature, net of transaction costs, as equity in the amount of $2,946,876 and $2,601,654,respectively, with an equal combined amount recognized as a debt discount on the Convertible Notes. |
During 2014 and 2013, we received cash proceeds of $5,122,285 and $5,965,762, respectively, from the exercise of outstanding warrants. |
On February 20, 2014, we completed an underwritten public offering and received proceeds, net of underwriter discounts and other offering costs, of $15,259,620 from the sale and issuance of 2,357,500 shares of common stock. |
On February 18, 2015, we completed an underwritten offering and received proceeds, net of underwriter discounts and other estimated offering costs, of approximately $10,500,000 from the sale and issuance of 4,600,000 shares of common stock (Note 17). |
|
Warrants |
Warrant activity and warrants outstanding, reportable in the equivalent number of shares of our common stock that can be purchased upon exercise of the warrants, is as follows: |
| | | | | | | |
| | | | | | | | | | |
Warrants outstanding at January 1, 2013 | | 9,583,097 | | | | | | | | |
| | | | | | |
Issued - original number | | 4,560,189 | | | | | | | | |
| | | | | | |
Issued - additional number (1) | | 1,016,366 | | | | | | | | |
| | | | | | |
Exercised (2) | | (4,053,005 | ) | | | | | | | |
Expired | | (253,900 | ) | | | | | | | |
Warrants outstanding at December 31, 2013 | | 10,852,747 | | | | | | | | |
| | | | | | |
Exercised (2) | | (1,828,232 | ) | | | | | | | |
Expired | | (697,110 | ) | | | | | | | |
Warrants outstanding at December 31, 2014 | | 8,327,405 | | | | | | | | |
| | | | | | |
|
| | | | | | | | | | |
-1 | Associated with reset provisions contained within the October 27, 2006 warrant contracts. | | | | | | | | | |
|
| | | | | | | | | | |
-2 | Includes cash and cashless warrant exercises. | | | | | | | | | |
|
|
January 2013 Warrants |
On January 24, 2013, in connection with the issuance of the January 2013 Bridge Notes (see Note 10), each investor received a warrant entitling the investor to purchase shares of our common stock equal in number to 100% of the purchase price for such investor's bridge note divided by $4.00. The aggregate number of shares underlying the warrants is 375,000. Each warrant has a term of 5.5 years, cannot be exercised for a period of six months following the date of issuance and entitled the investor to purchase one share of our common stock at an exercise price of $4.00 per share (the Initial Exercise Price), subject to customary anti-dilution adjustments. |
If the January 2013 Bridge Notes had not been repaid in full by July 2, 2013, then a full-ratchet anti-dilution provision (price only) applied for the remaining term of the warrants, subject, however, to a floor price of $2.84 (the Floor Price). If the January 2013 Bridge Notes were repaid in full before July 2, 2013 and on the date of such repayment the closing price for a share of our common stock was less than the Initial Exercise Price, then the exercise price was to be adjusted to the greater of (i) the Floor Price and (ii) $0.01 above the consolidated closing bid price on the date the January 2013 Bridge Notes were repaid in full. The warrants permit a cashless exercise if at the time of exercise the underlying shares are not covered by an effective registration statement. |
On July 1, 2013, we repaid in full the remaining outstanding balance under the January 2013 Bridge Notes. The early repayment allowed us to avoid issuing an additional 125,000 warrants that would have been contractually required if the notes were not repaid in full on or before July 1, 2013. As a result of the repayment, the exercise price of such Warrants was adjusted from $4.00 per share to $2.84 per share. No further adjustments to the exercise price of the Warrants are required to be made in the future other than adjustments pursuant to customary anti-dilution provisions. The 375,000 warrants held by the investors were exercised in full during the second half of 2013. |
We also issued our placement agent a warrant to purchase 11,250 shares of our common stock, with terms substantially the same as the investor warrants described above, in partial consideration for the placement agent's services in connection with the transaction. |
The investors and the placement agent had piggyback registration rights and accordingly, a resale registration statement was filed in June 2013 that was declared effective on July 5, 2013. |
As a result of the contractual provisions that could potentially require us to net-cash settle the value of the remaining outstanding warrants in the event of a change in control or other fundamental change, we account for the remaining January 2013 warrant contracts as derivative instruments (see Note 9). |
May 2013 Registered Direct Offering Warrants |
In connection with the registered direct offering we completed on May 16, 2013, the investor received a five-year warrant entitling the investor to initially purchase up to 737,704 shares of our common stock at an exercise price of $2.684 per share, subject to customary anti-dilution adjustments. |
As an alternative to exercising the warrant in whole or in part, the investor had the right, subject to certain conditions being satisfied, to exchange all or part of the warrant for an amount equal to a prescribed Black-Scholes value of the warrant at any time after 30 days following the date of issuance if our share price was trading below the current exercise price of the warrant. The prescribed Black-Scholes value was determined at closing to be approximately $1.56 million. |
We, at our option, had the right to settle an exchange in cash, shares of our common stock (provided certain conditions were satisfied), or any combination thereof. If the investor exercised its exchange right and we elected to settle the exchange using shares of our common stock, the number of shares we would be obligated to issue was to be determined by dividing the prescribed Black-Scholes value of the warrant (or portion thereof so exchanged) by the closing bid price for a share of our common stock as of two business days prior to the date of the exchange. In the event that the aggregate number of shares originally issued to the investor plus the number of shares of common stock required to settle the exchange would have exceeded 19.99% of the issued and outstanding shares immediately preceding the closing of the offering, then, with respect to the portion of the prescribed Black-Scholes value that we could not have settled using shares of common stock we could have, at our option, settled in cash or by delivery of a one-year 10% unsecured promissory note. |
The warrant also provided that, under certain circumstances, we would have had the ability to cause the holder to exercise the warrant for cash. The warrant also provided that if our common stock was delisted from the NASDAQ Capital Market, then the number of shares underlying the warrant at the time of such delisting would have automatically been adjusted upward by multiplying the number of warrant shares at the time of the delisting by 116.667%. |
On August 2, 2013, the investor exercised its exchange right under the warrant provisions. We settled the cashless exchange by issuing to the investor 751,780 registered shares of common stock. As a result of the investor's warrant exchange, we have no further obligation to issue additional shares to the investor under any circumstances, including (i) any shares associated with contingent additional warrants that would have been applicable if we were unable to remain listed on the NASDAQ Capital Market and (ii) any additional shares that could have been required to satisfy the Exchange Right if our share price declined in the future. |
Based on the aforementioned contractual provisions, we considered the May 2013 Warrants to be a derivative instrument classified as a current liability, recorded at fair value and marked to market, with the changes in fair values being recognized in the respective period's statement of operations. On August 2, 2013, the fair value of the May 2013 Warrants was reclassified to additional paid-in-capital upon the exercise and settlement of the cashless exchange (Note 9). |
May 2013 Line of Credit Warrants |
In connection with the Loan and Security Modification Agreement on the Line of Credit executed on May 20, 2013, we issued warrants to our lender to purchase up to 25,000 shares of our common stock at a fixed exercise price of $2.48 per share, which were fully exercised in December 2013. |
September 2013 Warrants |
On September 18, 2013, in connection with the private placement of the Convertible Notes (see Note 8), the independent investors and Related Parties received warrants to purchase 3,279,440 and 131,795 shares, respectively. The warrants were not exercisable for six months following the date of issuance, have a term of 5.5 years and a fixed exercise price of $2.30 per share, subject to customary anti-dilution provisions. |
|
Warrant Classification |
We evaluate the warrants we issue in accordance with applicable accounting guidance and we have concluded that liability classification is appropriate for the warrants issued on October 27, 2006, June 22, 2007, August 25, 2008, August 3, 2009, September 4, 2009, February 18, 2011 (Series “B”) and January 24, 2013 as further discussed below. Although we mark to market all the warrants classified as liabilities each period (see Note 9), all of these warrants had either expired, been fully exercised, or the fair values of the warrants of the remaining warrants were nominal as of the most recent reported balance sheet date. We have further concluded that equity classification is appropriate for all other warrants that were outstanding during the periods presented due to the fact that these warrants are considered to be indexed to our own stock, are required to be physically settled in shares of our common stock and there are no provisions that could require net-cash settlement. |
The proceeds we received from the transactions that gave rise to the issuance of the warrants have been allocated to the common stock or debt issued, as applicable, and the warrants based on their relative fair values. For those transactions in which proceeds were received in connection with the sale of common stock, we aggregate the values of those warrants that we do not classify as liabilities with the fair value of the stock issued as both of these types of instruments have been classified as permanent equity. |
The classification as equity for certain of the warrants could change as a result of either future modifications to the existing terms of settlement or the issuance of new financial instruments by us that could be converted into an increased or unlimited number of shares. If a change in classification of certain warrants is required in the future, the warrants would be treated as derivatives, reclassified as liabilities on the balance sheet at their fair value, and marked to market each period, with the changes in fair values being recognized in the respective period’s statement of operations. |
|
|
|
|
A summary of our outstanding warrants as of December 31, 2014 is as follows: |
|
| | | | | | | | | | |
Issue Date | Expiration Date | | Shares Subject to Outstanding Warrants | | Exercise Price at End of Period | | Reference |
25-Aug-08 | 25-Aug-15 | | 349,741 | | | $ | 154.4 | | | (a) |
|
April 30, 2010 through July 1, 2010 | April 30, 2015 through July 1, 2015 | | 55,473 | | | $ | 72.8 | | | |
|
October 13, 2010 and October 19, 2010 | October 13, 2015 and October 19, 2015 | | 9,037 | | | $ | 53.6 | | | |
|
18-Feb-11 | 18-Feb-16 | | 189,836 | | | $ | 26.28 | | | |
|
February 18, 2011; Series "B" | 18-Feb-16 | | 98,481 | | | $ | 24 | | | (a) |
|
15-Jun-11 | 15-Jun-16 | | 361,458 | | | $ | 15.4 | | | |
|
15-Jun-11 | 15-Jun-18 | | 11,250 | | | $ | 12.48 | | | |
|
15-Jun-11 | 15-Jun-18 | | 30,064 | | | $ | 15.4 | | | |
|
20-Jun-11 | 20-Jun-16 | | 14,269 | | | $ | 15.6 | | | |
|
20-Jun-11 | 20-Jun-18 | | 31 | | | $ | 15.6 | | | |
|
6-Jul-11 | 6-Jul-16 | | 104,929 | | | $ | 15.4 | | | |
|
23-Aug-11 | 23-Aug-16 | | 28,750 | | | $ | 15.4 | | | |
|
29-Sep-11 | 29-Sep-16 | | 4,782 | | | $ | 3.32 | | | |
|
12-Oct-11 | 12-Oct-16 | | 115,314 | | | $ | 3.32 | | | |
|
October 17, 2011 through October 21, 2011 | October 17, 2016 through October 21, 2016 | | 19,138 | | | $ | 10.56 | | | |
|
21-Dec-11 | 21-Dec-16 | | 819,851 | | | $ | 4.88 | | | |
|
19-Jan-12 | 19-Jan-17 | | 33,187 | | | $ | 4.88 | | | |
|
March 20, 2012; Series "B" | 20-Mar-17 | | 1,311,000 | | | $ | 4.08 | | | |
|
March 21, 2012; Series "B" | 21-Mar-17 | | 735,900 | | | $ | 4.08 | | | |
|
May 3, 2012; Series "B" | 3-May-17 | | 27,612 | | | $ | 4.08 | | | |
|
7-May-12 | 7-May-19 | | 50,000 | | | $ | 3.6 | | | |
|
June 14, 2012; Series "B" | 14-Jun-17 | | 51,112 | | | $ | 4.08 | | | |
|
22-Jun-12 | 22-Jun-17 | | 516,178 | | | $ | 3.4 | | | |
|
28-Jun-12 | 28-Jun-17 | | 56,682 | | | $ | 3.4 | | | |
|
25-Jul-12 | 25-Jul-17 | | 34,888 | | | $ | 3.56 | | | |
|
24-Jan-13 | 25-Jul-18 | | 11,250 | | | $ | 2.84 | | | (a) |
|
18-Sep-13 | 18-Mar-19 | | 3,287,192 | | | $ | 2.3 | | | |
|
| | 8,327,405 | | | | | |
|
None of the outstanding warrant contracts contain exercise price reset provisions. |
| | | | | | | | | | |
(a) | These warrants contain contractual provisions that could potentially require us to net-cash settle the value of the remaining outstanding warrants in the event of a change in control or other fundamental change. Since the contractual provisions that could require us to net-cash settle the warrants are deemed not to be within our control under applicable accounting guidance, equity classification is precluded. As such, we consider these warrants to be derivative instruments that are classified as current derivative liabilities at fair value on the dates of the consolidated balance sheets presented. A summary of the changes in the fair values marked to market during the periods presented on the condensed consolidated statements of operations are disclosed in Note 9. | | | | | | | | | |
|
|
|
|
Shares Available |
The number of undesignated shares available as of December 31, 2014 is as follows: |
| | | | |
| | | | | | | | | | |
| | Common Stock | | Preferred Stock | | | | |
Shares Authorized | | 50,000,000 | | | 20,000,000 | | | | | |
| | | |
Less shares issued and outstanding at December 31, 2014 | | (23,276,264 | ) | | — | | | | | |
| | | |
Less shares designated as of December 31, 2014 for issuance under: | | | | | | | | |
Stock options (1) | | (658,152 | ) | | — | | | | | |
| | | |
Warrants outstanding | | (8,327,405 | ) | | — | | | | | |
| | | |
Conversion of principal under convertible notes (2) | | (4,396,823 | ) | | — | | | | | |
| | | |
Undesignated shares available | | 13,341,356 | | | 20,000,000 | | | | | |
| | | |
|
(1) Includes all of the options outstanding plus 202,300 shares remaining that are available for issuance under the 2011 Plan. |
|
(2) Represents the number of shares issuable upon conversion of $10,475,000 of principal maturing on September 18, 2018 under the Convertible Notes at a fixed conversion price of $2.3824 per share. |