(10)	Stockholders’ Equity

Reverse Stock Split

On February 24, 2014, shareholders of the Company approved, through a shareholder vote, an amendment to the Company’s Amended and Restated Certificate of Incorporation authorizing the Board of Directors to effect a reverse stock split of Delcath’s common stock. The reverse stock split became effective on April 8, 2014 at which time Delcath’s common stock began trading on the NASDAQ Stock Exchange on a one-for-sixteen (1:16) split-adjusted basis. All owners of record as of the close of the NASDAQ market on April 8, 2014 received one issued and outstanding share of Delcath common stock in exchange for sixteen issued and outstanding shares of Delcath common stock. No fractional shares were issued in connection with the reverse stock split. All fractional shares created by the one-for-sixteen exchange were rounded up to the next whole share. The reverse stock split had no impact on the number of common shares authorized or the par value per share of Delcath common stock, which remain 170,000,000 and $0.01, respectively. All current and prior period amounts related to shares, share prices and earnings per share, presented in these Consolidated Financial Statements and the accompanying Notes have been restated to give retrospective presentation for the reverse stock split.

Stock Issuances

In July 2015, the Company completed the sale of 9.4 million Units consisting of 9.4 million shares of its common stock, Series A Warrants to purchase up to 7.0 million common shares (“July 2015 Series A Warrants”) and Series B Warrants to purchase Units consisting of up to 9.4 million common shares (“July 2015 Series B Warrants”) and 7.0 million July 2015 Series A Warrants pursuant to an underwriting agreement. The Company received proceeds of $7.0 million, with net cash proceeds after related expenses from this transaction of $6.0 million. Of those proceeds the Company allocated an estimated fair value of $3.4 million to the July 2015 Series A and Series B Warrants. The exercise price of both series of warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and is subject to anti-dilution adjustments for any issuance of common stock or rights to acquire common stock for consideration per share less than the exercise price of the warrants. At December 31, 2015, the July 2015 Series A Warrants were exercisable at $0.87 with approximately 7.0 million warrants outstanding and the July 2015 Series B Warrants were exercisable at $0.75 with approximately 9.4 million outstanding. The July 2015 Series A Warrants have a five-year term. July 2015 Series B Warrants expired January 29, 2016.

In February 2015, the Company completed the sale of 2.5 million shares of its common stock and the issuance of warrants to purchase 1.1 million common shares (the “February 2015 Warrants”) pursuant to an underwriting agreement. The Company received proceeds of $2.6 million, with net cash proceeds after related expenses from this transaction of $2.5 million. Of those proceeds, the Company allocated an estimated fair value of $0.8 million to the February 2015 Warrants. The exercise price is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock. The exercise price of the warrants is subject to anti-dilution adjustments for any issuance of common stock or rights to acquire common stock for consideration per share less than the exercise price of the warrants. At December 31, 2015, the February 2015 Warrants were exercisable at $0.74 per share with approximately 1.1 million warrants outstanding. The February 2015 Warrants have a five-year term.

In October 2013, the Company completed the sale of 1.3 million shares of its common stock and the issuance of warrants to purchase 0.6 million common shares (the “2013 Warrants”) pursuant to a placement agency agreement. The Company received proceeds of $7.5 million, with net cash proceeds after related expenses from this transaction of approximately $6.9 million. Of those proceeds, the Company allocated an estimated fair value of $1.9 million to the 2013 Warrants. The exercise price is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock. At December 31, 2015, the 2013 Warrants were exercisable at $7.04 per share with approximately 0.6 million warrants outstanding. The 2013 Warrants have a five-year term.

As of December 31, 2015, the Company had two active registration statements. Pursuant to SEC regulations, so long as the Company’s public float remains below $75 million, we cannot sell securities from the shelf registration statement which represent more than one third of the market value of our non-affiliated public float during any 12-month period.

In October 2015, the Company filed a registration statement on Form S-3 with the SEC, which was declared effective on October 20, 2015 and allows the Company to offer and sell, from time to time in one or more offerings, up to $77.4 million of common stock, preferred stock, warrants, debt securities and stock purchase contracts as it deems prudent or necessary to raise capital at a later date. This registration statement replaces the shelf registration filed in October 2012. As of December 31, 2015, the Company had approximately $77.4 million available subject to market conditions and certain SEC limitations discussed above.

At-the-Market (“ATM”) Program

In March 2013, the Company entered into a new agreement with Cowen to sell shares of the Company’s common stock, par value $.01 per share, from time to time, through an ATM equity offering program having aggregate sales proceeds of $50.0 million, under which Cowen will act as sales agent. During the year ended December 31, 2013, the Company sold approximately 1.0 million shares of its common stock under this ATM program for proceeds of approximately $5.0 million, with net cash proceeds after related expenses of approximately $4.8 million. During the year ended December 31, 2015 the Company sold an additional 1.0 million shares of its common stock under this ATM program for proceeds of approximately $4.8 million, with net cash proceeds after related expenses of approximately $4.7 million. The shares were issued pursuant to an effective registration statement on Form S-3 (333-187230). The net proceeds will be used for general corporate purposes, including, but not limited to, commercialization of its products, obtaining regulatory approvals, funding of clinical trials, capital expenditures and working capital. As of December 31, 2015, the Company has approximately $39.9 million available under the program subject to market conditions and certain SEC limitations.

Stock Incentive Plans

The Company established the 2004 Stock Incentive Plan and the 2009 Stock Incentive Plan (collectively, the “Plans”) under which 187,500, and 1,506,250 shares, respectively, were reserved for the issuance of stock options, stock appreciation rights, restricted stock, stock grants and other equity awards. In June 2015, the total number of shares of Delcath common stock reserved for issuance under the 2009 Stock Incentive Plan was increased by 1,100,000 shares, from 406,250 to 1,506,250 shares, upon a favorable vote by the Company’s stockholders. A stock option grant allows the holder of the option to purchase a share of the Company’s common stock in the future at a stated price. The Plans are administered by the Compensation and Stock Option Committee of the board of directors which determines the individuals to whom awards shall be granted as well as the type, terms and conditions of each award, the option price and the duration of each award. As of December 31, 2015, there were 185,450 shares available to grant under the 2009 Stock Incentive Plan.

Stock option activity for 2015, 2014, and 2013 is as follows:

	Stock Option Activity under the Plans
	Stock Options			Exercise Price per Share	Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding at December 31, 2012		299,242		$19.68 - 248.64	$	76.66		6.88
Granted		130,328		4.80 - 34.08		17.41
Forfeited		(160,538	)	19.68 - 29.92		24.47
Expired		(16,874	)	6.08 - 197.44		63.50
Outstanding at December 31, 2013		252,158		$4.80 - 248.64	$	57.90		7.36
Granted		165,000		1.24 - 2.42		1.78
Forfeited		(89,757	)	4.80 - 248.64		67.58
Expired		(45,666	)	4.80 - 110.40		47.54
Outstanding at December 31, 2014		281,735		$1.24 - $245.12	$	23.63		8.83
Granted		524,250		1.19		1.19
Forfeited		(49,934	)	1.19 - 169.60		30.01
Outstanding at December 31, 2015		756,051		$1.24 - $245.12	$	7.65		8.95

Exercisable at December 31, 2015		188,249		$1.24 - $245.12	$	26.45		7.67

For the years ended December 31, 2015, 2014 and 2013 the Company recognized compensation expense related to stock option grants of approximately $0.3 million, $0.4 million and $0.2 million, respectively.

The estimated fair value of each option award granted was determined on the date of grant using an option pricing model with the following assumptions for option grants during the years ended December 31, 2015, 2014 and 2013:

	Year ended December 31,
	2015			2014			2013
Weighted average risk-free interest rates		1.82	%		1.53	%		1.30	%
Weighted average expected volatility		97.70	%		96.68	%		92.31	%
Expected volatility		97.70	%	95.47% - 98.14%			86.16% - 97.21%
Dividend yield		—			—			—
Weighted average expected option term (in years)		5.15			4.50			5.66
Weighted average grant date fair value	$	0.89		$	1.78		$	17.41

No dividend yield was assumed because the Company has never paid a cash dividend on its common stock and does not expect to pay dividends in the foreseeable future. Volatilities were developed using the Company’s historical volatility. The risk-free interest rate was developed using the U.S. Treasury yield for periods equal to the expected life of the stock options on the grant date. The expected option term for grants made during 2015, 2014, 2013 and the second half of 2012 is based on actual historical results. The expected option term for grants made prior to that was developed based on the mid-point between the vesting date and the expiration date of each respective grant as permitted under ASC 718. This method of determining the expected holding period was utilized because the Company did not have sufficient historical experience from which to estimate the period.

A summary of the Company’s non-vested options to purchase shares as of December 31, 2015 and changes during the year ended December 31, 2015 and December 31, 2014 are presented below:

	Non-Vested Options
	Number of Options			Weighted Average Exercise Price
Non-vested at January 1, 2014		118,610		$	20.76
Granted		165,000			1.78
Vested		(46,737	)		26.35
Forfeited		(10,772	)		35.92
Non-vested at December 31, 2014		226,101		$	5.03
Granted		524,250			1.19
Vested		(159,901	)		5.36
Forfeited		(22,648	)		4.38
Non-vested at December 31, 2015		567,802		$	1.42

Additional compensation expense of $0.2 million, relating to the unvested portion of stock options granted, is expected to be recognized over a remaining average period of 1.14 years.

The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2015 is $0. The aggregate intrinsic value represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing stock price of $0.50 as of December 31, 2015, which would have been received by the option holders had those option holders exercised their options as of that date.

A summary of the Company’s restricted stock activity as of December 31, 2015 and changes during the year ended December 31, 2015 and December 31, 2014 are presented below:

	Restricted Stock Activity
	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2014		20,347		$	16.84
Granted		62,504			2.60
Vested		(18,815	)		13.60
Forfeited		(34,237	)		3.40
Non-vested at December 31, 2014		29,799		$	4.46
Granted		576,000			1.19
Vested		(29,666	)		4.38
Forfeited		(133	)		21.58
Non-vested at December 31, 2015		576,000		$	1.19

For the years ended December 31, 2015, 2014 and 2013 the Company recognized compensation expense related to restricted stock grants of approximately $0.3 million, $0.1 million and $0.1 million, respectively. Additional compensation expense of $0.4 million relating to the unvested portion of restricted stock granted is expected to be recognized over a remaining average period of 1.45 years.

Warrants

The Company issued warrants as part of its offerings in 2012, 2013, and 2015. A summary of warrant activity is as follows:

	Warrants			Exercise Price per Share		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding at January 1, 2013		352,664		$	19.20	$	19.20		2.24
Issued		589,500					7.04
Exercised		(12,669	)				19.20
Expired		—					—
Outstanding at December 31, 2013		929,495		$2.56 – 7.04		$	5.40		3.51
Issued		—					—
Exercised		(49,139	)				2.56
Expired		(30,218	)				2.56
Outstanding at December 31, 2014		850,138		$1.75 – 7.04		$	5.42		2.78
Issued		17,469,500					0.80
Exercised		(215,318	)				0.82
Expired		(45,320	)				0.82
Outstanding at December 31, 2015		18,059,000		$0.74 – 7.04		$	1.00		2.16