XML 25 R13.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Common Stock | 3 Months Ended
--- | ---
Mar. 31, 2018
Equity [Abstract] |
Common Stock | 8. COMMON STOCK
[a] | Authorized
75,000,000 authorized common shares, par value of $0.001, and 5,000,000 preferred shares, par value of $0.001.
[b] | Issued and outstanding shares
Purchase Agreement and Financing with Lincoln Park Capital On September 14, 2017 we and Lincoln Park Capital Fund, LLC, or LPC, entered into a share and unit purchase agreement, or Purchase Agreement, pursuant to which we have the right to sell to LPC up to $11.0 million in shares of our common stock, par value $0.001 per share, subject to certain limitations and conditions set forth in the Purchase Agreement. Pursuant to the Purchase Agreement, LPC initially purchased 328,947 of our units, or the Units, at a purchase price of $3.04 per unit, with each Unit consisting of (a) one share of our Common Stock and (b) one warrant to purchase one-quarter of a share of Common Stock at an exercise price of $3.496 per share, or Warrant. Each Warrant is exercisable six months following the issuance date until the date that is five years and six months after the issuance date and is subject to customary adjustments. The Warrants were issued only as part of the Units in the initial purchase of $1.0 million and no warrants shall be issued in connection with any other purchases of common stock under the Purchase Agreement. After the initial purchase, if our stock price is above $1.00, as often as every other business day over the 30-month term of the Purchase Agreement, and up to an aggregate amount of an additional $10.0 million (subject to certain limitations) of shares of common stock, we have the right, from time to time, in our sole discretion and subject to certain conditions to direct LPC to purchase up to 80,000 shares of common stock with such amounts increasing as the closing sale price of our common stock as reported on The Nasdaq Capital Market increases. The purchase price of shares of common stock pursuant to the Purchase Agreement will be based on prevailing market prices of common stock at the time of sales without any fixed discount, and we will control the timing and amount of any sales of common stock to LPC. In addition, we may direct LPC to purchase additional amounts as accelerated purchases if on the date of a regular purchase the closing sale price of the common stock is not below $2.00 per share. As consideration for entering into the Purchase Agreement, we issued to LPC 123,516 shares of common stock; no cash proceeds were received from the issuance of these shares. From September 14, 2017 through March 31, 2018, we offered and sold 1,673,778 shares of our common stock pursuant to our Purchase Agreement with LPC, including the 328,947 shares that were part of the initial purchase of Units. These sales resulted in gross proceeds to us of approximately $3.4 million and offering expenses of $0.5 million. As of March 31, 2018 shares of our common stock having an aggregate value of approximately $7.6 million remained available for sale under this offering program. Equity Award Issuances and Settlements During the three months ended March 31, 2018 and 2017, we issued no shares of common stock to satisfy stock options exercises and no shares of common stock to satisfy restricted stock unit settlements.
[c] | Stock options
2017 Equity Incentive Plan As of March 31, 2018, we had reserved, pursuant to the 2017 Equity Incentive Plan, or the 2017 Plan, 1,049,100 common shares for issuance upon exercise of stock options, currently outstanding, by employees, directors and officers of ours. Under the 2017 Plan, we may grant options to purchase common shares or restricted stock units to our employees, directors, officers and consultants. The exercise price of the options is determined by our board of directors but will be at least equal to the fair value of the common shares at the grant date. The options vest in accordance with terms as determined by our board of directors, typically over three to four years for options issued to employees and consultants, and over one to three years for members of our board of directors. The expiry date for each option is set by our board of directors with a maximum expiry date of ten years from the date of grant. In addition, the 2017 Plan allows for accelerated vesting of outstanding equity awards in the event of a change in control. The terms for accelerated vesting, in the event of a change in control, is determined at our discretion and defined under the employment agreements for our officers and certain of our employees. 2010 Performance Incentive Plan As of March 31, 2018, we had reserved, pursuant to the 2010 Performance Incentive Plan, or the 2010 Plan, 264,876 common shares for issuance upon exercise of stock options and settlement of restricted stock units by employees, directors, officers and consultants of ours, of which 59,772 were reserved for options currently outstanding and 205,104 were reserved for restricted stock units currently outstanding. Under the 2010 Plan we granted options to purchase common shares and restricted stock units to our employees, directors, officers and consultants. The exercise price of the options was determined by our board of directors and was at least equal to the fair value of the common shares at the grant date. The options vest in accordance with terms as determined by our board of directors, typically over three to four years for options issued to employees and consultants, and over one to three years for members of our board of directors. The expiry date for each option is set by our board of directors with a maximum expiry date of ten years from the date of grant. In addition, the 2010 Plan allows for accelerated vesting of outstanding equity awards in the event of a change in control. The terms for accelerated vesting, in the event of a change in control, is determined at our discretion and defined under the employment agreements for our officers and certain of our employees. Stock Option Summary We grant stock options that vest over time in accordance with terms as determined by our Board of Directors, or the Board, which terms are typically four years for employee and consultant grants and one to three years for Board option grants. We also grant stock option awards that vest in conjunction with certain performance conditions to executive officers, employees and consultants. At each reporting date, we are required to evaluate whether achievement of the performance conditions is probable. Compensation expense is recorded over the appropriate service period based upon our assessment of accomplishing each performance condition. The expiry date for each option is set by the Board, which is typically seven to ten years. The exercise price of the options is determined by the Board. Stock option transactions and the number of stock options outstanding are summarized below:
|  | Number of |  |  | Weighted |
|  | Optioned |  |  | Average |
|  | Common |  |  | Exercise |
|  | Shares |  |  | Price |
Balance, December 31, 2017 |  |  | 1,115,647 |  |  | $ | 7.99 |
Forfeited |  |  | (3,241 | ) |  |  | 3.89 |
Balance, March 31, 2018 |  |  | 1,112,406 |  |  | $ | 8.00 |
The fair value of each stock award for employees and directors is estimated on the grant date and for consultants at each reporting period, using the Black-Scholes option-pricing model based on the weighted-average assumptions. No stock options were granted for the three months ended March 31, 2018 and 2017. The expected life was calculated based on the simplified method as permitted by the SEC’s Staff Accounting Bulletin 110, Share-Based Payment. We consider the use of the simplified method appropriate because of the lack of sufficient historical exercise data following the Arrangement. The computation of expected volatility was based on the historical volatility of comparable companies from a representative peer group selected based on industry and market capitalization. The risk-free interest rate is based on a U.S. Treasury instrument whose term is consistent with the expected life of the stock options. In addition to the assumptions above, as required under ASC 718, management made an estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest. Forfeiture rates are estimated using historical actual forfeiture rates. These rates are adjusted on a quarterly basis and any change in compensation expense is recognized in the period of the change. We have never paid or declared cash dividends on our common stock and do not expect to pay cash dividends in the foreseeable future. The results for the periods set forth below included share-based compensation expense for stock options and restricted stock units in the following expense categories of the consolidated statements of loss (in thousands):
|  | Three Months Ended |
|  | March 31, |
|  | 2018 |  |  | 2017 |
Research and development |  | $ | 57 |  |  | $ | — |
General and administrative |  | $ | 124 |  |  |  | — |
Total stock-based compensation |  | $ | 181 |  |  | $ | — |
As of March 31, 2018 and December 31, 2017, the total unrecognized compensation expense related to stock options granted was $1.8 million and $2.0 million, respectively, which is expected to be recognized as expense over a period of approximately 3.2 years from March 31, 2018. For the three months ended March 31, 2018, a total of 1.7 million shares, consisting of 0.4 million warrants, 1.1 million options and 0.2 million restricted stock units, have not been included in the loss per share computation, as their effect on diluted per share amounts would have been anti-dilutive. For the same period in 2017, we had no shares underlying options, restricted stock units or warrants.
[d] | Restricted Stock Unit Awards
We grant restricted stock unit awards that generally vest and are expensed over a four year period. We also grant restricted stock unit awards that vest in conjunction with certain performance conditions to certain executive officers, key employees and consultants. At each reporting date, we are required to evaluate whether achievement of the performance conditions is probable. Compensation expense is recorded over the appropriate service period based upon our assessment of accomplishing each performance condition. For the three months ended March 31, 2018, we recorded a compensation expense of $37,000, related to these awards. We did not have any restricted stock units outstanding during the three months ended March 31, 2017. The following table summarizes our restricted stock unit award activity during the three months ended March 31, 2018:
|  |  |  |  |  | Weighted |
|  | Number |  |  | Average |
|  | of |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Balance, December 31, 2017 |  |  | 210,160 |  |  | $ | 3.74 |
Forfeited or expired |  |  | (5,056 | ) |  |  | 3.15 |
Balance, March 31, 2018 |  |  | 205,104 |  |  | $ | 3.75 |
As of March 31, 2018, we had approximately $0.5 million in total unrecognized compensation expense related to our restricted stock unit awards that is to be recognized over a weighted-average period of approximately 3.1 years.
[e] | Non-employee options and restricted stock units
We recognize non-employee stock-based compensation expense over the period of expected service by the non-employee. As the service is performed, we are required to update our valuation assumptions, re-measure unvested options and restricted stock units and record the stock-based compensation using the valuation as of the vesting date. This differs from the accounting for employee awards where the fair value is determined at the grant date and is not subsequently adjusted. This re-measurement may result in higher or lower stock-based compensation expense in the Consolidated Statements of Loss and Comprehensive Loss. As such, changes in the market price of our stock could materially change the value of an option or restricted stock unit and the resulting stock-based compensation expense.
[f] | Common Stock Warrants
The following is a summary of outstanding warrants to purchase common stock at March 31, 2018:
|  | Total |  |  |  |  |  |  |
|  | Outstanding |  |  | Exercise |  |  |
|  | and |  |  | price per |  |  |
|  | Exercisable |  |  | Share |  |  | Expiration Date
(1) Series A Warrants issued in July 2014 financing |  |  | 252,721 |  |  |  | 44.000 |  |  | July 2019
(2) Series B Warrants issued in July 2014 financing |  |  | 60,933 |  |  |  | 44.000 |  |  | July 2019
(3) Series A-1 Warrants issued in April 2015 financing |  |  | 21,748 |  |  |  | 26.400 |  |  | October 2020
(4) Warrants issued in September 2017 financing |  |  | 82,237 |  |  |  | 3.496 |  |  | March 2023
No warrants were exercised during the three months ended March 31, 2018 or 2017. The Series A-1 Warrants assumed by us as part of the Arrangement and the warrants issued in the September 2017 financing are classified as equity. The Series A and Series B assumed by us as part of the Arrangement are classified as liabilities. The estimated fair value of warrants classified as liabilities is reassessed at each reporting date using the Black-Scholes pricing model. As at march 31, 2018 and Dec 31, 2017, the fair value of the warrants was insignificant.
|  | As of |
|  | March 31, |
Series A and Series B Warrant Valuation Assumptions |  | 2018 |
Risk-free interest rates |  |  | 2.12 | %
Expected dividend yield |  |  | 0 | %
Expected life |  | 1.25 years |
Expected volatility |  |  | 88.48 | %

X
- References No definition available. + Details
Name: | us-gaap_EquityAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
Name: | us-gaap_StockholdersEquityNoteDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration