XML 45 R21.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Warrants
 6 Months Ended
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