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Warrants | 9 Months Ended
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Mar. 31, 2020
Warrants Abstract |
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. During the three months ended March 31, 2020, an investor exercised 5,000,000 of the warrants using the cashless exercise provision. In April 2020, another investor exercised the remaining 5,000,000 of the October 2019 warrants using the cashless exercise provision, resulting in no remaining October 2019 warrants as of April 30, 2020. In connection with the March Offerings, the following warrants were granted, and potentially subsequently exercised:
● |  | On March 10, 2020, the Company granted 3,376,087 Pre-Funded Warrants for total proceeds of $3.9 million, which were fully exercised as of March 31, 2020. In addition, the Company issued 508,696 of Placement Agent Warrants with an exercise price of $1.4375 to purchase 508,696 shares of the Company’s common stock, which expire five years after the grant date. None of the Placement Agent Warrants have been exercised as of March 31, 2020.
● |  | On March 12, 2020, the Company granted 16,000,000 March 12, 2020 $1.25 Warrants to purchase 16,000,000 shares of the Company’s common stock for an exercise price of $1.25 per share of common stock, and expire one-year after the grant date, of which 10,450,000 were exercised as of March 31, 2020 for total proceeds of approximately $13.1 million. In addition, the Company granted 1,040,000 of the March 12, 2020 Placement Agent Warrants with an exercise price of $1.5625 per share of common stock to purchase 1,040,000 shares of the Company’s common stock, which expire five years after the grant date. As of March 31, 2020, there were no exercises of the March 12, 2020 Placement Agent Warrants.
● |  | On March 19, 2020, the Company granted 12,539,197 March 19, 2020 $1.47 Warrants to purchase 12,539,197 shares of the Company’s common stock for an exercise price of $1.47 per share of common stock, and expire one-year after the grant date, of which 700,000 were exercised as of March 31, 2020 for total proceeds of approximately $1.0 million. In addition, the Company granted 815,047 of the March 19, 2020 Placement Agent Warrants with an exercise price of $1.9938 per share of common stock to purchase 815,047 shares of the Company’s common stock, which expire five years after the grant date. As of March 31, 2020, there were no exercises of the March 19, 2020 Placement Agent Warrants.
While these warrants are classified as a component of equity, in order to allocate the fair value of the March offerings between the investor warrants and the placement agent warrants, the Company was required to calculate the fair value of the warrants issued in March. These warrants issued had a relative fair value of $11.2 million. All warrants issued in March 2020 were valued using a Black-Scholes 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:
|  | Warrants Issued Three Months Ended March 31, 2020 |
Expected volatility |  |  | 100 | %
Equivalent term (years) |  |  | 1 - 5 |
Risk-free rate |  |  | 0.20% - 0.66 | %
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 |  |  | 44,627,120 |  |  |  | 1.21 |  |  |  | 1.88 |
Warrants expired |  |  | – |  |  |  | – |  |  |  | – |
Warrants exercised (*) |  |  | (29,859,990 | ) |  |  | – |  |  |  | – |
Outstanding March 31, 2020 |  |  | 30,986,038 |  |  | $ | 2.39 |  |  |  | 2.31 |
(*) During the quarter ended March 31, 2020, investor exercised 5.0 million of the October 2019 private placement warrants under the cashless exercise provision. In April 2020, another investor exercised all remaining 5.0 million October 2019 private placement warrants. There are no more October 2019 private placement warrants outstanding as of April 30, 2020. During the quarter ended March 31, 2020, warrants issued from the October 2018 registered offering and March 2020 offerings to purchase an aggregate of 17,082,994 shares of common stock were exercised for aggregate gross proceeds to our Company of approximately $23.0 million. 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 March 31, 2020 |  |  | 240,755 |  |  | $ | 72.00 |  |  |  | 2.37 |

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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=120381028&loc=d3e5047-113901 Reference 2: 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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