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Stockholders' Equity
 12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Stockholders' Equity
7. Stockholders’ Equity

 

Common Stock

 

 On September 27, 2018, the Company filed the certificate of first amendment to its restated certificate of incorporate with the state of Delaware to effect the reverse stock split, effective October 1, 2018. The Company also filed a certificate of second amendment to its restated certificate of incorporation with the state of Delaware to reduce the number of authorized shares of common stock from 100,000,000 to 10,000,000 shares. The filing did not affect the number of authorized preferred stock of 1,000,000 shares.

 

As a result of the reverse stock split, every ten shares of issued and outstanding common stock were converted into one share of common stock, without any change in the par value per share. No fractional shares were issued, therefore shareholders entitled to receive a fractional share in connection with the reverse stock split received a cash payment instead. There was no financial impact to the Company’s condensed consolidated financial statements. All shares and per share information in this Form 10-K has been retroactively adjusted for all periods presented to reflect the reverse stock split, including reclassifying any amount equal to the reduction in par value of common stock to additional paid-in capital.

 

On November 23, 2018, a holder of 1 share of Series B Preferred stock converted into 132 shares of our common stock.

 

On December 28, 2018, a Securities Purchase Agreement was entered into with foreign investors, as part of a non-brokered private placement pursuant to which a total of 2,940,767 shares of common stock were issued. See Note 1 for more information.

  

In August 2017, a Securities Purchase Agreement was entered into with accredited investors, as part of a private placement pursuant to which a total of 975,000 shares of common stock were issued. See Note 1 for more information.

 

Warrants and Other Common Stock Activity

  

During the years ended December 31, 2018 and 2017, there were no warrants exercised.

  

A summary of all warrant activity is set forth below:

 

Outstanding and exercisable  Warrants   Weighted Average Exercise Price   Weighted Average
Remaining Contractual Life		 
January 1, 2017   791,368   $6.19    5.13 
Issued   325,000    20.00    - 
December 31, 2017   1,116,368   $10.18    3.68 
Issued   -    -    - 
Expired/forfeited   -    -    - 
Exercised   -    -    - 
Outstanding and exercisable, December 31, 2018   1,116,368   $10.18    2.68 

 

Outstanding Warrants to Purchase Common Stock as of December 31, 2018:

   

Description  Issue Date  Exercise
Price		   Shares   Expiration
Date
               
August 2016 Prefunded Warrants (1)  08/16/16  $10.00    360,000   02/16/22
August 2016 Purchase Warrants  08/17/16  $11.20    431,368   02/17/22
August 2017 Purchase Warrants  08/08/17  $20.00    325,000   08/08/20
Total Warrants Outstanding           1,116,368    

 

(1)Under the terms of the prefunded warrants, the warrant holder prepaid $9.90 of the original $10.00 warrant per share exercise price at the time of issuance of the warrant. The remaining $0.10 exercise price is required to be paid in full prior to the issuance of any common stock under the terms of the prefunded warrant agreement.

 

As a result of the December 2018 private placements and previous warrants, we have issued or reserved 27,305 more than our available shares of authorized common stock, even though a total of 333,334 warrants cannot be legally exercised. We automatically come into compliance on April 26, 2019, when 44,300 stock options are expired because their original issuance terms is reached, and we anticipate proposing an increase in our authorized common stock at our 2019 Annual Meeting of Stockholders. The estimated fair value of warrants that would be reclassified as a result of the insufficient authorized shares was determined to be insignificant.

 

Preferred Stock

 

The terms of our Series B Preferred stock are as follows:

 

Dividends and Distributions

 

The holders of shares of Series B Preferred stock are entitled to participate with the holders of our common stock with respect to any dividends declared on the common stock in proportion to the number of shares of common stock issuable upon conversion of the shares of Series B Preferred stock held by them.

 

Liquidation Preference

 

In the event of any liquidation, dissolution, or winding up of our operations, either voluntary or involuntary, subject to the rights of the Series B Preferred stock and Senior Preferred stock, shall be entitled to receive, after any distribution to the holders of senior preferred stock and prior to and in preference to any distribution to the holders of common stock, $0.001 for each share of Series B Preferred stock then outstanding.

  

Voting

 

The holders of shares of Series B Preferred stock have one vote for each share of Series B Preferred stock held by them.

 

Conversion

 

Initially, each share of Series B Preferred stock was convertible into one share of our common stock. On March 31, 2009, our stockholders approved a resolution to increase the authorized share capital, and to increase the conversion ratio to 132.07 shares of our common stock for each share of Series B Preferred stock.  

  

Conversion of Preferred Stock Issued to Common Stock

 

The following table summarizes the amounts as of December 31, 2018:

 

   Shares of Preferred Stock Not Exchanged as of December 31, 2018   Conversion Ratio   Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at December 31, 2018 
                
Series B Preferred Stock   82    132.07    10,830