Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.19.1
Stockholders' Equity
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Stockholders' Equity

9.

Stockholders' Equity

Authorized, Issued, and Outstanding Common Shares

The Company’s common stock has a par value of $0.001 per share and consists of 125,000,000 authorized shares as of December 31, 2018 and 2017, respectively; 47,971,989 and 28,971,651 shares were issued and outstanding as of December 31, 2018 and 2017, respectively. 

Shares Reserved for Future Issuance

The Company had reserved shares of common stock for future issuance as follows:

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

Outstanding stock options

 

 

4,052,913

 

 

 

3,075,994

 

Outstanding restricted stock units

 

 

111,891

 

 

 

64,365

 

Outstanding Series C-1 Preferred warrants

 

 

14,033

 

 

 

14,033

 

Warrants to purchase common stock associated with June 2016 Public Offering

 

 

4,218,750

 

 

 

4,218,750

 

Warrants to purchase common stock associated with March 2018 Public Offering - Series 1

 

 

13,198,075

 

 

 

 

Warrants to purchase common stock associated with March 2018 Public Offering - Series 2

 

 

7,988,175

 

 

 

 

Warrants to purchase common stock associated with Solar loan agreement

 

 

122,435

 

 

 

122,435

 

For possible future issuance under 2014 Equity Incentive Plan (Note 10)

 

 

612,018

 

 

 

492,382

 

For possible future issuance under 2014 Employee Stock Purchase Plan (Note 10)

 

 

81,667

 

 

 

83,617

 

For possible future issuance under 2015 Inducement Plan (Note 10)

 

 

5,000

 

 

 

5,000

 

Total common shares reserved for future issuance

 

 

30,404,957

 

 

 

8,076,576

 

 

Liquidation Rights

In the event of any liquidation or dissolution of the Company, the holders of the common stock are entitled to the remaining assets of the Company legally available for distribution.

Dividends and Voting Rights

The holders of the common stock are entitled to receive dividends if and when declared by the Company.  

Preferred Stock

On May 7, 2014, the Company amended and restated its articles of incorporation relating to its approved capital structure. The Company's board of directors has authorized the Company, subject to limitations prescribed by Delaware law, to issue up to 5,000,000 shares of preferred stock with a par value of $0.001 per share in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions. The Company's board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by the stockholders. The Company's board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. There were no shares of preferred stock issued and outstanding as of December 31, 2018 and 2017.

Warrants Associated with Convertible Preferred Stock Issuances

In July 2006, the Company issued warrants to purchase 196,923 shares of Series C-1 Preferred Stock, which converted into the right to purchase 14,033 shares of common stock in connection with our IPO, however, we refer to these warrants as our Series C-1 Preferred warrants. The Series C-1 Preferred warrants were issued in conjunction with a loan financing agreement with an original exercise price of $3.25 per share of Series C-1 Preferred, which converted into an exercise price of $45.61 per share of common stock in connection with our IPO. These warrants remain outstanding as of December 31, 2018 and will expire on May 7, 2019, which is the five year anniversary of the Company's IPO. The fair value at the date of grant for these instruments was $0.5 million, which was recorded as a debt discount. The debt discount related to these warrants was fully amortized as of December 31, 2010. The Company determined that the warrants should be recorded as a derivative liability and stated at fair value at each reporting period.  As of December 31, 2018 and 2017, the fair value of the warrant derivative liability was zero.

Warrants Associated with June 2016 and March 2018 Public Offerings

On June 21, 2016, the Company completed the June 2016 Public Offering and sold 9,375,000 shares of its common stock and warrants to purchase up to 4,218,750 shares of the Company’s common stock.  Each purchaser received a warrant to purchase 0.45 of a share for each share purchased in the June 2016 Public Offering. There is not expected to be any trading market for the warrants. Each warrant was exercisable immediately upon issuance, will expire five years from the date of issuance, and has an exercise price of $3.00 per share.  

On March 8, 2018, the Company completed the March 2018 Public Offering and sold 17,751,500 shares of its common stock and warrants to purchase up to 21,301,800 shares of the Company’s common stock.  Each purchaser received a warrant to purchase 0.75 of a share of common stock (the “Series 1 warrants”) and 0.45 of a share of common stock (the “Series 2 warrants”) for each share purchased in the March 2018 Public Offering.  The Series 1 warrants to purchase in the aggregate up to 13,313,625 shares of common stock have a 53-week term and an exercise price of $1.85 per share, and the Series 2 warrants to purchase in the aggregate up to 7,988,175 shares of common stock have a five-year term and an exercise price of $2.00 per share.  There is not expected to be any market for the warrants and each warrant is exercisable immediately upon issuance, subject to certain limitations on beneficial ownership.  During the year ended December 31, 2018, there were 115,550 of the Series 1 warrants exercised for total proceeds of $0.2 million.  The Series 1 warrants expire on March 14, 2019.

The warrants contain a provision where the warrant holder has the option to receive cash, equal to the Black-Scholes fair value of the remaining unexercised portion of the warrant, as cash settlement in the event that there is a fundamental transaction (contractually defined to include various merger, acquisition or stock transfer activities). Due to this provision, ASC 480, Distinguishing Liabilities from Equity requires that these warrants be classified as liabilities. The fair values of these warrants have been determined using the Black-Scholes valuation model, and the changes in the fair value are recorded in the accompanying statements of operations. During the year ended December 31, 2018, the Company recorded a gain of $11.9 million due to the change in fair value of the warrant liability.  As of December 31, 2018, the fair value of the warrant liabilities was $1.0 million.

Warrant Associated with Solar Loan Agreement

Pursuant to a loan agreement, on the closing date the Company issued to Solar the a warrant to purchase an aggregate of up to 122,435 shares of the Company’s common stock at an exercise price of $3.6754 per share. The warrant will expire five years from the date of the grant. The warrant was classified as equity and recorded at its relative fair value at issuance in the stockholders' equity section of the balance sheet.