Warrants | 9. Warrants The following table summarizes the Company’s outstanding warrants to purchase common stock as of March 31, 2020 and December 31, 2019: Number of Warrants: Warrant Issuance March 31, 2020 December 31, 2019 Exercise Price Expiration Date Liability-classified Warrants November 2015 Investors 104,168 104,168 $ 63.60 May 2021 November 2015 Placement Agent 279 279 $ 63.60 Nov. 2020 March 2016 Investors 50,651 50,651 $ 50.40 Sept. 2021 September 2016 Investors 67,084 67,084 $ 36.00 Mar. 2022 June 2017 Investors 126,264 126,264 $ 48.00 Dec. 2022 June 2017 Placement Agent 15,153 15,153 $ 49.50 June 2022 October 2017 Investors 136,058 136,058 $ 34.20 Apr. 2023 October 2017 Placement Agent 16,327 16,327 $ 36.72 Oct. 2022 Total liability classified warrants 515,984 515,984 Equity-classified Warrants October 2018 Investors 480,771 480,771 $ 20.04 Apr. 2024 October 2018 Placement Agent 28,848 28,848 $ 19.50 Oct. 2023 January 2019 Investors 895,886 895,886 $ 9.60 Jan. 2024 Total equity-classified warrants 1,405,505 1,405,505 Total outstanding warrants 1,921,489 1,921,489 The following table summarizes the Company’s warrant activity for the three months ended March 31, 2020: Number of Warrants Liability-classified Equity- classified Total Weighted average exercise price Balance, January 1, 2020 515,984 1,405,505 1,921,489 $ 22.10 Issued during the period - - - $ - Exercised during the period - - - $ - Expired during the period - - $ - Balance, March 31, 2020 515,984 1,405,505 1,921,489 $ 22.10 At March 31, 2020, the weighted average remaining contractual life of the outstanding warrants was 3.4 years. The following table summarizes the fair value of the liability-classified warrants as of the respective balance sheet dates: Fair Value as of: Warrant Issuance: March 31, 2020 December 31, 2019 November 2015 Investors $ 971 $ 55 November 2015 Placement Agent - - March 2016 Investor 1,240 439 September 2016 Investors 14,639 3,196 June 2017 Investors 30,364 11,736 June 2017 Placement Agent 2,574 845 October 2017 Investors 46,178 23,772 October 2017 Placement Agent 4,143 1,674 Total: $ 100,109 $ 41,717 The assumptions used in calculating the fair values of the liability-classified warrants are as follows: March 31, 2020 December 31, 2019 Trading market prices $ 1.80 $ 1.91 Estimated future volatility 100 % 102 % Dividend - - Estimated future risk-free rate 0.20 - 0.41 % 1.57 -1.72 % Equivalent volatility 113-129 % 85-94 % Equivalent risk-free rate 0.13 -0.19 % 1.57 -1.59 % Fundamental transaction likelihood 50 % 50 % Fundamental transaction timing July 2020 April 2020 . Changes in the fair value of the warrant liabilities, carried at fair value, reported as “unrealized (loss) gain on fair value of warrants” in the statement of operations: For the Three Months Ended March 31, 2020 2019 November 2015 Investors $ (916) $ 197,084 November 2015 Placement Agent - 380 March 2016 Investors (801) 114,799 September 2016 Investors (11,443) 217,869 June 2017 Investors (18,628) 388,391 June 2017 Placement Agent (1,729) 41,911 October 2017 Investors (22,406) 496,501 October 2017 Placement Agent (2,469) 56,436 Total: $ (58,392) $ 1,513,371 | 12. Warrants The following table summarizes the Company’s outstanding warrants to purchase common stock as of December 31, 2019 and 2018 Number of Warrants: Warrant Issuance December 31, 2019 December 31, 2018 Exercise Price Expiration Date Liability-classified Warrants January 2014 Investors - 39,683 $ 153.60 Jan. 2019 November 2015 Investors 104,168 104,168 $ 63.60 May 2021 November 2015 Placement Agent 279 279 $ 63.60 Nov. 2020 March 2016 Investors 50,651 50,651 $ 50.40 Sept. 2021 September 2016 Investors 67,084 67,084 $ 36.00 Mar. 2022 June 2017 Investors 126,264 126,264 $ 48.00 Dec. 2022 June 2017 Placement Agent 15,153 15,153 $ 49.50 June 2022 October 2017 Investors 136,058 136,058 $ 34.20 Apr. 2023 October 2017 Placement Agent 16,327 16,327 $ 36.72 Oct. 2022 Total liability classified warrants 515,984 555,667 Equity-classified Warrants October 2018 Investors 480,771 480,771 $ 20.04 Apr. 2024 October 2018 Placement Agent 28,848 28,848 $ 19.50 Oct. 2023 January 2019 Investors 895,886 - $ 9.60 Jan. 2024 Total equity-classified warrants 1,405,505 509,619 Total outstanding warrants 1,921,489 1,065,286 The following table summarizes the Company’s warrant activity for the year ended December 31, 2019: Number of Warrants Liability-classified Equity- classified Total Weighted average exercise price Balance, January 1, 2019 555,667 509,619 1,065,286 $ 37.52 Issued during the period - 895,886 895,886 $ 9.60 Exercised during the period - - - $ - Expired during the period (39,683) - (39,683) $ 153.60 Balance, December 31, 2019 515,984 1,405,505 1,921,489 $ 22.10 At December 31, 2019, the weighted average remaining contractual life of the outstanding warrants was 3.7 years. Accounting for Liability-classified Warrants The warrants issued to investors in the November 2015, March 2016 and September 2016 offerings contain a provision for net cash settlement in the event of a fundamental transaction (contractually defined to include a merger, sale of substantially all assets, tender offer or share exchange). The warrant holder would have the option to receive cash equal to the fair value of the remaining unexercised portion of the warrant. In addition, the warrants from these three and the June 2017 and October 2017 offerings contain a cashless exercise provision that is exercisable only in the event that a registration statement is not effective. That provision may not be operative if an effective registration statement is not available because an exemption under the U.S. securities laws may not be available to issue unregistered shares. As a result, net cash settlement may be required, and these warrants require liability classification. ASC 820 provides requirements for disclosure of liabilities that are measured at fair value on a recurring basis in periods subsequent to the initial recognition. Fair values for warrants were determined using the Binomial Lattice (“Lattice”) valuation technique. The Lattice model provides for dynamic assumptions regarding volatility and risk-free interest rates within the total period to maturity. Accordingly, within the contractual term, the Company provided multiple date intervals over which multiple volatilities and risk-free interest rates were used. These intervals allow the Lattice model to project outcomes along specific paths that consider volatilities and risk-free rates that would be more likely in an early exercise scenario. Significant assumptions are determined as follows: Trading market values —Published trading market values; Exercise price —Stated exercise price; Term —Remaining contractual term of the warrant; Volatility —Historical trading volatility for periods consistent with the remaining terms; and Risk-free rate —Yields on zero coupon government securities with remaining terms consistent with the remaining terms of the warrants. Due to the fundamental transaction provision, which could provide for early redemption of the warrants, the model also considered the probability the Company would enter into a fundamental transaction during the remaining term of the warrant. Historically, the Company has considered the probability of a fundamental transaction occurring to be remote, however, in September 2019, the Company commenced a process to explore and evaluate strategic alternatives to enhance shareholder value, which could result in a fundamental transaction as defined by the warrant agreements. Therefore, the Company adjusted the likelihood and timing of its fundamental transaction assumptions when calculating the fair values of the liability-classified warrants as of December 31, 2019. The significant unobservable inputs used in the fair value measurement of the warrants include management’s estimate of the probability that a fundamental transaction may occur in the future. Significant increases (decreases) in the probability of occurrence would result in a significantly higher (lower) fair value measurement. The following table summarizes the fair value of the warrants as of the respective balance sheet dates: Fair Value as of: Warrant Issuance: December 31, 2019 December 31, 2018 November 2015 Investors $ 55 $ 234,918 November 2015 Placement Agent - 435 March 2016 Investor 439 160,099 September 2016 Investors 3,196 333,834 June 2017 Investors 11,736 623,324 June 2017 Placement Agent 845 65,149 October 2017 Investors 23,772 801,551 October 2017 Placement Agent 1,674 88,276 Total: $ 41,717 $ 2,307,586 The assumptions used in calculating the fair values of the warrants are as follows: December 31, 2019 December 31, 2018 Trading market prices $ 1.91 $ 11.16 Estimated future volatility 102 % 105 % Dividend - - Estimated future risk-free rate 1.57 -1.72 % 2.35 -2.53 % Equivalent volatility 85-94 % 99-104 % Equivalent risk-free rate 1.57 -1.59 % 2.51 -2.55 % Fundamental transaction likelihood 50 % 5 % Fundamental transaction timing April 2020 End of warrant term Changes in the fair value of the warrant liabilities, carried at fair value, as reported as “unrealized gain on fair value of warrants” in the statement of operations: For the Year Ended December 31, 2019 2018 Expired Warrants $ - $ 64,307 November 2015 Investors 234,863 1,025,132 November 2015 Placement Agent 435 2,501 March 2016 Investors 159,660 537,455 September 2016 Investors 330,638 720,249 June 2017 Investors 611,588 1,358,540 June 2017 Placement Agent 64,304 156,442 October 2017 Investors 777,779 1,504,001 October 2017 Placement Agent 86,602 177,422 Total: $ 2,265,869 $ 5,546,049 |