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Note 10 - Convertible Preferred Stock and Stockholder's Equity | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Stockholders' Equity Note Disclosure [Text Block] | 10. Convertible Preferred Stock and Stockholder’s Equity In contemplation of completing the private placement described below, the Company amended and restated its articles of incorporation and authorized 13,750,000 shares of Series A convertible preferred stock. Series A Convertible Preferred Stock Transaction In March 2017, the Company completed a $25.0 million private placement of its securities in which the Company offered and sold units consisting of one share of the Company ’s Series A convertible preferred stock and a warrant to purchase one share of common stock for each share of Series A convertible preferred stock purchased in the offering. Each share of Series A convertible preferred stock entitles the holder to an 8.0% cumulative dividend payable in shares of the Company's common stock on a semi-annual basis. The holders may, at their option, convert each share of Series A convertible preferred stock into one share of the Company’s common stock based on the initial conversion price of $2.02 per share, subject to adjustment. Each warrant entitles the holder to purchase one share of common stock at an initial exercise price of $2.22, subject to adjustment and expires on the fifth anniversary of their original issuance date. The Company sold 12,376,329 units in the private placement and received approximately $22.1 million in aggregate net cash proceeds, after deducting commissions and other expenses of approximately $2.9 million. In addition, as compensation for its services, the Company granted to its placement agent in the offering warrants to purchase an aggregate of 1,179,558 shares of common stock at an initial exercise price of $2.22 per share, which expire on the fifth anniversary of their original issuance date. During its evaluation of equity classification for the common stock warrants, the Company considered the conditions as prescribed within ASC 815 - 40, Derivatives and Hedging, Contracts in an Entity’s own Equity (“ASC 815 - 40” ). The conditions within ASC 815 - 40 are not subject to a probability assessment. As the Company was obligated to issue a variable number of shares to settle the cumulative dividends on the Series A convertible preferred stock, the Company could not assert that there would be sufficient authorized shares available to settle the warrants issued in connection with the Series A offering. Accordingly, these warrants were classified as liabilities. On November 1, 2017 the Company held a Special Stockholders meeting, requesting stockholders, both common and Series A, to approve a proposed amendment to the Company’s Certificate of Incorporation to permit the Company to pay dividends on the Company’s Series A Convertible Preferred Stock in either cash or shares of the Company’s Common, which was approved by the stockholders. As a result of this amendment, the Company is able to assert that there will be sufficient authorized shares available to settle the Series A warrants, and as a result, the Series A warrants were reclassified from liabilities to stockholders’ equity in the fourth quarter of 2017. As the fair value of the warrants upon issuance was in excess of the proceeds of the Series A offering, there are no proceeds allocated to the Series A convertible preferred stock. The excess fair value of the warrants over the gross proceeds of the Series A offering and the fair value of the warrants granted to its placement agent was $10.2 million in the aggregate and was recorded as warrant related expenses in the statement of operations for the year ended December 31, 2017. As a result of the completion of our common stock offering in January 2018, all outstanding shares of the Company's Series A convertible preferred stock converted into 20,568,632 shares (the "Conversion Shares") of common stock of which (i) 8,306,278 shares were issued for the automatic conversion of Series A convertible preferred stock (ii) 593,933 shares were issued upon settlement of accrued dividends and (iii) 11,668,421 shares were issued for the settlement of the “make-whole” adjustment feature. Dividends Until the conversion of all outstanding Series A convertible preferred stock in January 2018, the cumulative preferred dividend on the Series A convertible preferred stock was payable at a rate of 8.0% per annum, payable only in shares of common stock, semi-annually in arrears on April 1 and October 1 of each year commencing on October 1, 2017. This cumulative preferred dividend was not subject to declaration. The Company recognized approximately $1.3 million in dividends during the year ended December 31, 2017, of which $0.2 million was settled upon by the issuance of 86,335 shares of the Company's common stock. As of December 31, 2017, there were approximately $1.1 million in accrued dividends that were subsequently settled in January 2018. Voting Subject to certain preferred stock class votes specified in the Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock (the “Certificate of Designation”) or as required by law, the holders of the Series A convertible preferred stock voted together with the holders of common stock as a single class on an adjusted as-converted basis. In accordance with NASDAQ listing rules, in any matter voted on by the holders of the common stock, each share of Series A convertible preferred stock entitled the holder thereof to a number of votes based upon the closing price of our common stock on the NASDAQ Capital Market on the date of issuance of such shares of Series A convertible preferred stock. Accordingly, shares of Series A convertible preferred stock issued in the initial closing of the private placement on March 14, 2017 were entitled to 0.84874 votes per share and shares of Series A Preferred Stock issued in the final closing of the private placement on March 31, 2017 were entitled to 0.50627 votes per share, in each case, subject to adjustment as described in the Certificate of Designation. Liquidation Preference The Series A convertible preferred stock was senior to the common stock. In the event of a liquidation, dissolution or winding up of the Company, either voluntary or involuntary, or in the event of a deemed liquidation event, which includes a sale of the Company as defined in the Certificate of Designation, the holders of the Series A convertible preferred stock would be entitled to receive their original investment amount. If upon the occurrence of such event, the assets and funds available for distribution are insufficient to pay such holders the full amount to which they are entitled, then the entire remaining assets and funds legally available for distribution would be distributed ratably among the holders of the Series A convertible preferred stock in proportion to the full amounts to which they would otherwise be entitled. Conversion The Series A convertible preferred stock was convertible, at the holder ’s option, into common stock. The Series A convertible preferred stock was also mandatorily convertible into common stock upon (a) the thirty -day moving average of the closing price of the Company’s common stock exceeding $8.00 per share, (b) a financing of at least $10.0 million in gross proceeds or (c) upon the majority vote of the voting power of the then outstanding shares of Series A convertible preferred stock. The conversion price of the Series A convertible preferred stock was subject to adjustment as described in the Certificate of Designation. During the year ended December 31, 2017, 4,070,051 shares of Series A convertible preferred stock were converted into common stock. Upon completion of the Company’s public offering of its common stock in January 2018, all remaining shares of Series A convertible preferred stock issued and outstanding were converted into common stock. Make-Whole Provision Until March 2020 and subject to certain exceptions, if the Company issued at least $10.0 million of its common stock or securities convertible into or exercisable for common stock at a per share price less than $2.02 (such lower price, the “Make-Whole Price”) while any shares of Series A convertible preferred stock remain outstanding, the Company would be required to issue to these holders of Series A convertible preferred stock a number of shares of common stock equal to the additional number of shares of common stock that such shares of Series A convertible preferred stock would be convertible into if the conversion price of such shares was equal to 105% of the Make-Whole Price (the “Make-Whole Adjustment”). The Make-Whole Adjustment was evaluated and was not required to be bifurcated from the Series A convertible preferred stock. The Make-Whole Adjustment was triggered and settled in January 2018 in connection with the Company's common stock offering. The Company issued 11,668,421 shares as part of the Make-Whole Adjustment. Common Stock In connection with the Merger (See Note 4 ) the Company ascribed non-cash consideration of $0.4 million to 478,200 warrants outstanding prior to the Merger. During the year ended December 31, 2016, the Company issued 2,226,698 shares of its Common Stock of which 1,861,503 are shares held by the pre-Merger stockholders of the Company, 45,643 shares were issued for advisory services provided in connection with the Merger, 102,430 shares were issued for general financial advisory services provided to the Company and 217,122 shares were issued pursuant to conversions of convertible debt as discussed in Note 8. In 2017, the Company issued 17,606 shares for advisory services. The Company did not purchase or retire any shares of its common stock. Common Stock Warrants As of December 31, 2017, the Company had the following warrants outstanding to acquire shares of its common stock:
|  | Outstanding |  |  | Range of exercise price per share |
Common stock warrants issued prior to Merger |  |  | 447,721 |  |  | $20.00 | - | $49.00 |
Common stock warrants issued in Series A |  |  | 13,555,887 |  |  | $2.22 |
|  |  | 14,003,608 |  |  |  |  |  |
During the years ended December 31, 2017 and 2016, 13,000 and 17,479 warrants issued prior to the Merger expired, respectively; these common stock warrants will expire periodically through 2019. The common stock warrants issued in connection with the March 2017 Series A private placement expire in March 2022. During the year ended December 31, 2017, the Company recognized a gain of $22.1 million upon the change in fair value of the warrant until they were reclassified to permanent equity in November 2017 and $10.2 million in warrant related charges associated with the Series A private placement, which consisted primarily of the excess fair value of the common stock warrants over the gross cash proceeds of the Series A offering.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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