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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2019
Stockholders Equity Note [Abstract] |
Stockholders' Equity |
11. | Stockholders’ Equity
Preferred Stock The Company has authorized 5,000,000 shares of preferred stock, par value $0.001 per share. The Company’s Board of Directors is authorized to designate the terms and conditions of any preferred stock we issue without further action by the common stockholders. There were no shares of Series A 3.6% Convertible Preferred Stock outstanding as of September 30, 2019 or December 31, 2018. There were 1,021 and 1,112 shares of Series B Convertible Preferred Stock issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. There were 938 and 3,494 shares of Series C Preferred Stock issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. On July 25, 2018, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (the “Certificate of Designation”) with the Delaware Secretary of State creating a new series of its authorized preferred stock, par value $0.001 per share, designated as the Series C Convertible Preferred Stock (the “Series C Preferred Stock”). The number of shares initially constituting the Series C Preferred Stock was set at 7,000 shares. Pursuant to a registration statement on Form S-1 originally filed on April 27, 2018, as amended, and became effective on July 17, 2018, and related prospectus (as supplemented), the Company registered and distributed to holders of its common stock and Series B Convertible Preferred Stock, at no charge, non-transferable subscription rights to purchase up to an aggregate of 20,000 units each consisting of one share of Series C Preferred Stock and 1,050 warrants for $1,000 per unit. Pursuant to the 2018 Rights Offering, which closed on July 25, 2018, the Company sold an aggregate of 6,723 units, resulting in total net proceeds to the Company of approximately $5.7 million. On August 2, 2019, in connection with a sale of common stock, the Company notified holders of the Company’s Series C Preferred Stock that the conversion price of such stock was reduced from $39.93 to $7.50. The reduction of the effective conversion price of the Series C Preferred Stock resulted in a beneficial conversion feature recorded as a deemed dividend to the Series C Preferred Stock holders in the amount of $554,000. The deemed dividend is recorded as a reduction to loss available for common stockholder for basic and diluted loss per share calculation (Note 7). In addition, on August 2, 2019, the Company notified holders of the Company’s Series T Warrants that the exercise price of such warrants was reduced from $0.7986 to $0.15, so that every 50 Series T warrants can be exercised into on share of common stock at $7.50. On September 25, 2019, in connection with the September 2019 Offering, the exercise price of the Series T Warrants was further adjusted such that every 50 warrants can be exercised into one share of common stock for $3.2132, and the conversion price of the Series C Preferred Stock was reduced from $7.50 to $3.2132. As of September 30, 2019, there were 3,788,400 outstanding Series T Warrants which can be exercised into in aggregate 75,768 shares of common stock. In addition, there were 938 shares of Series C Preferred Stock that can be exercised into 291,920 shares of common stock. The fair value of the common stock into which the Series C Preferred Stock was convertible on the date of issuance exceeded the proceeds allocated to the preferred stock, resulting in the beneficial conversion feature that we recognized as a deemed dividend to the preferred stockholders and, accordingly, an adjustment to net loss to arrive at net loss allocable to common stockholders. We recorded a deemed dividend within additional paid-in capital of $2.5 million for the quarter ended December 31, 2018, related to a beneficial conversion feature included in the issuance of our Series C Convertible Preferred Stock. Based on the relevant authoritative accounting guidance, the warrants were liability classified at the issuance date. The warrants may be redeemed by the Company at $0.01 per warrant prior to their expiration if the Company’s common stock closes above $181.50 per share, subject to adjustment, for 20 consecutive trading days. The initial fair value of the liability associated with these warrants was $3.1 million, and the fair value decreased to $0.2 million as of September 30, 2019. The main driver for the change in the fair value of warrants at September 30, 2019, was related to exercise of 3.2 million of the warrants during the three months ended September 30, 2019, and the change in our stock price. All future changes in the fair value of the warrants will be recognized in the Company’s consolidated statements of operations until they are either exercised or expire. The warrants are not traded in an active securities market, and as such the estimated the fair value as of September 30, 2019 was determined by using an option pricing model with the following assumptions:
|  | As of September 30, 2019 |  |  |  | As of December 31, 2018 |
Expected term |  | 1.6 years |  |  |  | 2.1 years |
Common stock market price |  | $ | 3.42 |  |  | $ | 14.50 |
Risk-free interest rate |  |  | 1.70 | % |  |  | 2.48 | %
Expected volatility |  |  | 176 | % |  |  | 125 | %
Resulting fair value (per 50 warrants as of September 30, 2019) |  | $ | 2.53 |  |  | $ | 0.13 |
Expected volatility was computed using daily pricing observations of traded shares of the Company for recent periods that correspond to the expected term of the warrants. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. We currently have no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the warrants. The risk-free interest rate is the U.S. Treasury bond rate as of the valuation date. Common Stock As mentioned in Note 3, the Company completed the September 2019 Offering. The Company issued 289,000 shares of its common stock, along with pre-funded warrants to purchase 2,711,000 shares of its common stock and Series U Warrants to purchase 3,450,000 shares of its common stock at $5.00 per share. By September 30, 2019, 1,672,000 pre-funded warrants were exercised, with the remaining 1,039,000 exercised in October 2019. The Series U Warrants remained outstanding as of September 30, 2019 and have a term of five years from the issuance date. In addition, the Company issued warrants to the Representatives to purchase 75,000 shares of its common stock at $6.25 per share with a term of 5.0 years from the issuance date, in the form of Series U Warrants. In accordance with authoritative guidance, the pre-funded warrants are classified as equity. The Series U Warrants and the Representative Warrants are classified as liabilities due to a contingent obligation for the Company to settle the Series U Warrants with cash upon certain change in control events. The Company estimated the fair value of the Series U Warrants on the issuance date as well as at the quarter end of September 30, 2019 with the Black Scholes model. The Series U warrants will be marked to market as of each balance sheet date until they are exercised or upon expiration, with the changes in fair value recorded as non-operating income or loss in the statement of operations and comprehensive income (loss).
|  | As of September 25, 2019 |  |  |  | As of September 30, 2019 |
Expected term |  | 5 years |  |  |  | 5 years |
Common stock market price |  | $ | 3.42 |  |  | $ | 3.42 |
Risk-free interest rate |  |  | 1.60 | % |  |  | 1.55 | %
Expected volatility |  |  | 134.9 | % |  |  | 134.9 | %
Resulting fair value (per warrant) |  | $ | 2.90 |  |  | $ | 2.90 |
In accordance with authoritative guidance, the proceeds from the September 2019 Offering was allocated using the residual method, first to the Series U Warrants at the full fair value and the remainder to equity. The Series U Warrants and the Representative Warrants are revalued at each balance sheet date with change in fair value recorded as other income or loss in the statement of operations and comprehensive income (loss). The following table summarizes the change in our Level 3 Series T and Series U warrants liabilities carrying value (in thousands):
Warrant liability |  |  | September 30, 2019 |  |  |  | December 31, 2018 |
Beginning balance |  | $ | 916 |  |  | $ | 3,148 |
Issuance |  |  | 10,215 |  |  |  | — |
Exercises/Settlement |  |  | (794) |  |  |  | — |
Change in fair value |  |  | 69 |  |  |  | (2,233) |
Ending balance |  | $ | 10,406 |  |  | $ | 916 |
On June 1, 2018, the Company entered into a Sales Agreement with B. Riley FBR to sell shares of its common stock having an aggregate offering price of up to $6.5 million through its ATM Program. Through September 30, 2019, the Company sold a total of 0.2 million shares for proceeds of approximately $3.8 million through the ATM Program. The ATM Program financing facility has been exhausted and there is no availability remaining under this financing facility. On September 21, 2018, the Company entered into a Purchase Agreement (the “Lincoln Park Purchase Agreement”) with Lincoln Park pursuant to which the Company has the right to sell to Lincoln Park and Lincoln Park is obligated to purchase up to $5.0 million of shares, of the Company’s common stock, over the 24-month period following October 15, 2018. The Company may direct Lincoln Park, at its sole discretion and subject to certain conditions, to purchase up to 5,000 shares of common stock on any business day but in no event will the amount of a single Regular Purchase (as defined in the Lincoln Park Purchase Agreement) exceed $1.0 million. The purchase price of shares of common stock related to the Regular Purchases will be based on the prevailing market prices of such shares at the time of sales. The Company’s sales of shares of common stock to Lincoln Park under the Lincoln Park Purchase Agreement are limited to the number of shares that would result in the beneficial ownership by Lincoln Park and its affiliates, at any single point in time, of no more than 4.99% of the then outstanding shares of the common stock. There are no trading volume requirements or restrictions under the Lincoln Park Purchase Agreement. There is no upper limit on the price per share that Lincoln Park must pay for common stock under a Regular Purchase or an accelerated purchase and in no event under an accelerated purchase will shares be sold to Lincoln Park on a day the closing price of the Company’s common stock is less than the floor price of $12.50 per share as set forth in the Lincoln Park Purchase Agreement. Through December 31, 2018, the Company sold a total of 12,802 shares for proceeds of approximately $0.3 million through the Lincoln Park Purchase Agreement and 32,170 shares for proceeds of approximately $0.3 million were sold during the nine months ended September 30, 2019. The Company believes there is less than $0.1 million remaining available under this financing facility.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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