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Equity Transactions | 9 Months Ended
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Sep. 30, 2017
Equity [Abstract] |
Equity Transactions | 19. Equity Transactions Preferred Stock Offering On September 29, 2017, the Company entered into a Securities Purchase Agreement with several investors for the issuance and sale (the “Offering”) of 5,500 shares of the Company’s newly designated Series B 10% Convertible Preferred Stock (the “Series B Preferred Stock”) at a stated value of $1,000 per share, for a total purchase price of $5.5 million. The Series B Preferred Stock is convertible into the Company’s Common Stock at a conversion price of $1.14 per share, which was the closing bid price of the Common Stock on September 28, 2017, or approximately 4,824,562 shares of Common Stock in the aggregate. The holders of Series B Preferred Stock are entitled to receive cumulative dividends out of funds legally available thereof at a rate of ten percent (10%) per annum, payable (i) when and as declared by the Board of Directors, in quarterly installments on March 1, June 1, September 1 and December 1, and (ii) upon conversion into Common Stock with respect the Series B Preferred Stock being converted. In the event that the trading price of the Company’s Common Stock for 20 consecutive trading days (as determined in the Certificate of Designation) exceeds 400% of the then effective Conversion Price of the Series B Preferred Stock (initially set at $1.14), the Company may force conversion of the Series B Preferred Stock into shares of Common Stock or elect to redeem the Series B Preferred Stock for cash. In addition, upon the occurrence of certain triggering events, each holder of Series B Preferred Stock will have the right to require the Company to redeem such holder’s shares for cash equal to the stated value plus accrued and unpaid dividends and liquidated damages, costs, expenses and other amounts due in respect of the Series B Preferred Stock, and with respect to certain other triggering events, each holder will have the right to increase the dividend rate on such holder’s Series B Preferred Stock to twelve percent (12%) while such triggering event is continuing. In the Offering, the Company raised gross cash proceeds of $2.7 million, and exchanged outstanding indebtedness with a principal amount of $2.8 million owed to Smith (both long and short-term debt) and $0.1 million owed to Arno. The Offering raised net cash proceeds of $2.5 million (after deducting the placement agent fee and expenses of the Offering). The Company intends to use the net cash proceeds from the Offering for working capital purposes. In connection with the Offering, the Company granted customary registration rights to investors with respect to the resale of shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock. Common Stock Offering On May 16, 2017, the Company entered into subscription agreements with several investors for the issuance and sale of an aggregate of 2,077,000 shares of its common stock, in a registered direct offering at a purchase price of $1.05 per share. The Shares were offered by the Company pursuant to a shelf registration statement on Form S-3 (File No. 333-215786), which was declared effective on February 10, 2017 by the Securities and Exchange Commission (the “SEC”). Also, on May 16, 2017, the Company entered into subscription agreements with four accredited investors in a private placement pursuant to which the Company issued and sold to the Investors an aggregate of 85,000 shares of its unregistered common stock at a price per share of $1.10. The Company engaged Sutter Securities Incorporated and Chardan Capital Markets, LLC as co-placement agents in connection with the registered direct offering pursuant to engagement letter agreements with each firm. The Company agreed to pay the placement agents a cash placement fee and issued to the placement agents warrants to purchase shares of Common Stock equal to 5% of the number of shares sold through each of them, without duplication, at an exercise price per share equal to $1.21 (Sutter) and $1.155 (Chardan). The warrants have a term of five years and will be exercisable beginning on November 18, 2017. The transactions closed on May 17, 2017 and the Company realized gross proceeds of $2.3 million before deducting transaction fees and other expenses. Offering costs related to the transaction totaled $0.2 million, comprised of $0.1 million of transaction fees and $0.1 million of legal and other expenses, resulting in net proceeds of $2.1 million. Warrants On September 2, 2016, we entered into a Note and Warrant Purchase Agreement with Unterberg Koller Capital Fund L.P. and William W. and Dieva L. Smith (collectively, the “Investors”), pursuant to which the Company issued five-year warrants (the “Warrants”) to purchase an aggregate of 1,700,000 shares of the Company’s common stock at an Exercise Price of $2.74 per share, which expire five years from the date of issuance. The Company completed the transaction contemplated by the Note and Warrant Purchase Agreement and issued the Warrants on September 6, 2016. The Warrants contain provisions that if the Company sells or issues shares of Common Stock (as defined in Warrants) with an exercise price per share less than the Exercise Price of $2.74, the Exercise Price shall be adjusted according to the terms set forth within the Warrants (“Triggering Event”). On May 16, 2017, the Company engaged Sutter Securities Incorporated (“Sutter”) and Chardan Capital Markets, LLC (“Chardan”) as co-placement agents in connection with a registered direct offering. The Company agreed to pay the placement agents a cash placement fee and issued to the placement agents warrants to purchase shares of Common Stock equal to 5% of the number of shares sold through each of them, without duplication, at an exercise price per share equal to $1.21 (Sutter) and $1.155 (Chardan). The warrants issued to Sutter and Chardan have a term of five years and will be exercisable beginning on November 18, 2017. Since the issuance of the Warrants on September 6, 2016, there have been five Triggering Events, which caused the Warrants to be repriced from the original Exercise Price of $2.74: Common Stock offerings in May 2017 for $1.10 and $1.05, the issuance of warrants to Sutter and Chardan with exercise prices of $1.21 and $1.155, respectively, all resulting in a charge of $3,000, and the Series B Preferred Stock issuance with a conversion price of $1.14 in September 2017, resulting in a charge of $41,000. The Triggering Event charges were recorded to Stockholders’ Equity in the applicable period. Upon application of the Triggering Events above, the Unterberg Koller Capital Fund L.P. Adjusted Exercise Price is $2.14 and the Smith Adjusted Exercise Price is $2.38, which is also the agreed upon floor for the Smith Warrants. The Company early adopted ASU 2017-11 and changed its method of accounting for certain warrants that were initially recorded as liabilities during the nine months ended September 30, 2017 on a full retrospective basis. Since the warrants were issued in conjunction with the Related – party notes payable and Notes payable (the “Notes Payable”) issuance, the Company also revalued the amount of debt discount related to the valuation of the warrants, which impacted the net carrying value of Notes Payable. The following tables provide a reconciliation of Warrant liability, Additional paid-in capital, Accumulated deficit and Change in fair value of warrant liability on the consolidated balance sheets as of September 30, 2016, December 31, 2016, March 31, 2017, and June 30, 2017 (in thousands):
|  | Consolidated Balance Sheet |
|  | Related-party notes payable |  |  | Notes payable |  |  | Warrant liability |  |  | Additional paid-in capital |  |  | Accumulated deficit |
Balance, September 30, 2016 (Prior to adoption of ASU 2017-11) |  | $ | 883 |  |  | $ | 883 |  |  | $ | 1,761 |  |  | $ | 227,565 |  |  | $ | (222,185 | )
Change in valuation of notes payable |  |  | 359 |  |  |  | 359 |  |  |  | — |  |  |  | (718 | ) |  |  | — |
Reclassification of warrant liability |  |  | — |  |  |  | — |  |  |  | (1,761 | ) |  |  | 1,761 |  |  |  | — |
Change in fair value of warrant liability |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 335 |  |  |  | (335 | )
Change in interest (expense) income, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (17 | ) |  |  | 17 |
Balance, September 30, 2016 (After adoption of ASU 2017-11) |  | $ | 1,242 |  |  | $ | 1,242 |  |  | $ | — |  |  | $ | 228,926 |  |  | $ | (222,503 | )
The adoption of ASU 2017-11 increased the Loss before provision for income taxes and Net loss by $0.3 million for the three months and nine months ended September 30, 2016, and increased the Net loss per share by $0.03 and $0.02 for the same periods, respectively. The Company’s consolidated statement of cash flows for the nine months ended September 30, 2016 was also impacted by the adoption of ASU 2017-11, including the increase in the Net loss by $0.3 million, the reduction of Amortization of debt discounts by a nominal amount and the elimination of the previously reported Change in fair value of warrant liabilities of $0.3 million.
|  | Consolidated Balance Sheet |
|  | Related-party notes payable |  |  | Notes payable |  |  | Warrant liability |  |  | Additional paid-in capital |  |  | Accumulated deficit |
Balance, December 31, 2016 (Prior to adoption of ASU 2017-11) |  | $ | 967 |  |  | $ | 967 |  |  | $ | 1,210 |  |  | $ | 227,889 |  |  | $ | (225,397 | )
Change in valuation of notes payable |  |  | 328 |  |  |  | 328 |  |  |  | — |  |  |  | (656 | ) |  |  | — |
Reclassification of warrant liability |  |  | — |  |  |  | — |  |  |  | (1,210 | ) |  |  | 1,210 |  |  |  | — |
Change in fair value of warrant liability |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 910 |  |  |  | (910 | )
Change in interest (expense) income, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (79 | ) |  |  | 79 |
Balance, December 31, 2016 (After adoption of ASU 2017-11) |  | $ | 1,295 |  |  | $ | 1,295 |  |  | $ | — |  |  | $ | 229,274 |  |  | $ | (226,228 | )
The adoption of ASU 2017-11 increased the Loss before provision for income taxes and Net loss by $0.5 million and $0.8 million for the three and twelve months ended December 31, 2016, and increased the Net loss per share by $0.04 and $0.07 for the same periods, respectively. The Company’s consolidated statement of cash flows for the year ended December 31, 2016 was also impacted by the adoption of ASU 2017-11, including the increase in the Net loss by $0.8 million, the reduction of Amortization of debt discounts by $0.1 million and the elimination of the previously reported Change in fair value of warrant liabilities of $0.9 million.
|  | Consolidated Balance Sheet |
|  | Related-party notes payable |  |  | Notes payable |  |  | Warrant liability |  |  | Additional paid-in capital |  |  | Accumulated deficit |
Balance, March 31, 2017 (Prior to adoption of ASU 2017-11) |  | $ | 1,062 |  |  | $ | 1,062 |  |  | $ | 502 |  |  | $ | 228,265 |  |  | $ | (227,629 | )
Change in valuation of notes payable |  |  | 298 |  |  |  | 298 |  |  |  | — |  |  |  | (596 | ) |  |  | — |
Reclassification of warrant liability |  |  | — |  |  |  | — |  |  |  | (502 | ) |  |  | 502 |  |  |  | — |
Change in fair value of warrant liability |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,618 |  |  |  | (1,618 | )
Change in interest (expense) income, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (139 | ) |  |  | 139 |
Balance, March 31, 2017 (After adoption of ASU 2017-11) |  | $ | 1,360 |  |  | $ | 1,360 |  |  | $ | — |  |  | $ | 229,650 |  |  | $ | (229,108 | )
The adoption of ASU 2017-11 increased the Loss before provision for income taxes and Net loss by $0.6 million for the three months ended March 31, 2017, and increased the Net loss per share by $0.05 for the same period. The Company’s consolidated statement of cash flows for the three months ended March 31, 2017 was also impacted by the adoption of ASU 2017-11, including the increase in the Net loss by $0.6 million, the reduction of Amortization of debt discounts by a nominal amount and the elimination of the previously reported Change in fair value of warrant liabilities of $0.7 million.
|  | Consolidated Balance Sheet |
|  | Related-party notes payable |  |  | Notes payable |  |  | Warrant liability |  |  | Additional paid-in capital |  |  | Accumulated deficit |
Balance, June 30, 2017 (Prior to adoption of ASU 2017-11) |  | $ | 1,158 |  |  | $ | 1,158 |  |  | $ | 1,063 |  |  | $ | 230,657 |  |  | $ | (230,203 | )
Change in valuation of notes payable |  |  | 267 |  |  |  | 267 |  |  |  | — |  |  |  | (534 | ) |  |  | — |
Reclassification of warrant liability |  |  | — |  |  |  | — |  |  |  | (1,063 | ) |  |  | 1,063 |  |  |  | — |
Change in fair value of warrant liability |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,060 |  |  |  | (1,060 | )
Change in interest (expense) income, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (200 | ) |  |  | 200 |
Balance, June 30, 2017 (After adoption of ASU 2017-11) |  | $ | 1,425 |  |  | $ | 1,425 |  |  | $ | — |  |  | $ | 232,046 |  |  | $ | (231,063 | )
The adoption of ASU 2017-11 reduced the Loss before provision for income taxes and Net loss by $0.6 million for the three months ended June 30, 2017 and increased the Loss before provision for income taxes and Net loss by a nominal amount for the six months ended June 30, 2017, and decreased the Net loss per share by $0.05 and $0.00 for the same periods, respectively. The Company’s consolidated statement of cash flows for the six months ended June 30, 2017 was also impacted by the adoption of ASU 2017-11, including the increase in the Net loss by a nominal amount, the reduction of Amortization of debt discounts by $0.1 million and the elimination of the previously reported Change in fair value of warrant liabilities of $0.1 million. During the nine months ended September 30, 2017, there was no impact on the Loss before provision for income taxes, Net loss and Net loss per share due to the adoption of ASU 2017-11.

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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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