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Warrants | 6 Months Ended
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Dec. 31, 2019
Warrants |
Warrants | In connection with the October 2019 private placement financing, the Company issued warrants (the October 2019 Warrants) to the investors to purchase an aggregate of 10,000,000 shares of the Company’s common stock at an exercise price of $1.25 and a term of five years. These warrants feature a contingent cashless exercise provision. During the three months ended December 31, 2019, the cashless exercise contingency was satisfied, reducing the strike price of the October 2019 Warrants to $0. In January 2020, an investor exercised 2 million October 2019 Warrants using the cashless exercise feature. While these warrants are classified as a component of equity, in order to allocate the fair value of the October 2019 private placement between the Series F Convertible Preferred Stock and the October 2019 Warrants, the Company was required to calculate the fair value of the October 2019 Warrants. These warrants issued had a relative fair value of $4.0 million. All warrants issued in October 2019 were valued using a Monte Carlo model. In order to calculate the fair value of the warrants, certain assumptions were made, including the selling price or fair market value of the underlying common stock, risk-free interest rate, volatility, expected dividend yield, and contractual life. Changes to the assumptions could cause significant adjustments to valuation. The Company estimated a volatility factor utilizing a weighted average of comparable published betas of peer companies. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. Significant assumptions in valuing the warrants issued during the quarter are as follows:
|  | As of October 11, 2019 |
Expected volatility |  |  | 1.53 |
Equivalent term (years) |  |  | 5 |
Risk-free rate |  |  | 1.59 | %
Dividend yield |  |  | 0.00 | %
A summary of equity-based warrants is as follows:
|  | Number of Warrants |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life in Years |
Outstanding June 30, 2019 |  |  | 16,218,908 |  |  | $ | 3.15 |  |  |  | 4.36 |
Warrants issued (*) |  |  | 10,000,000 |  |  |  | 1.25 |  |  |  | 5.00 |
Warrants expired |  |  | – |  |  |  | – |  |  |  | – |
Warrants exercised |  |  | – |  |  |  | – |  |  |  | – |
Outstanding December 31, 2019 |  |  | 26,218,908 |  |  | $ | 2.43 |  |  |  | 4.21 |
(*) In January 2020, and investor exercised 2.0 million of the October 2019 private placement warrants under the cashless exercise provision. A summary of liability warrants is as follows:
|  | Number of Warrants |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life in Years |
Outstanding June 30, 2019 |  |  | 240,755 |  |  | $ | 72.00 |  |  |  | 3.16 |
Warrants expired |  |  | – |  |  |  | – |  |  |  | – |
Warrants exercised |  |  | – |  |  |  | – |  |  |  | – |
Outstanding December 31, 2019 |  |  | 240,755 |  |  | $ | 72.00 |  |  |  | 2.65 |

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- Definition Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=116856206&loc=d3e5047-113901 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(i)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section S99 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6784392&loc=d3e188667-122775 + Details
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