Annual report pursuant to Section 13 and 15(d)

WARRANTS

v3.20.1
WARRANTS
12 Months Ended
Dec. 31, 2019
Warrants and Rights Note Disclosure [Abstract]  
WARRANTS
WARRANTS
From time to time, we have issued warrants to purchase shares of common stock. These warrants have been issued in connection with financing transactions and for consulting services. Our warrants are subject to standard anti-dilution provisions applicable to shares of our common stock.
In January 2018, we entered into an agreement with our founders to exchange warrants to purchase an aggregate of 249,999 shares of our common stock, with an exercise price of $0.20 per share, for an amount of shares that would equal the number of shares they would have received if exercised under a cashless exercise. The effect of exchanging the warrants for shares of our common stock was considered a modification of the award which required us to record expense for the excess of the fair value of the common stock issued over the fair value of the exchanged warrants. On the date of the exchange the fair value of the warrants was determined to be $1.6 million and the fair value of the shares of common stock issued were $1.6 million. There was a difference in fair value of $2,000 which was recorded to sales, marketing and administration expenses during the year ended December 31, 2018. No expense was recorded for the year ended December 31, 2019.

Consulting Warrant, Financing Warrant and Underwriting Warrant
Upon consummation of our Senior Convertible Note financing in June 2013, we issued warrants for business consulting services provided by MDB Capital Group, LLC, or MDB. We issued a 7-year warrant to purchase 222,222 shares of our common stock at an exercise price of $0.01 per share, which we refer to as the Consulting Warrant. The Consulting Warrant is exercisable six months after the completion of our initial public offering, or IPO, in 2014 and expires June 17, 2020.
In addition, for placement agent services provided by MDB in connection with our Senior Convertible Note financing, we issued to MDB a 7-year warrant to purchase 208,763 shares of our common stock at an exercise price of $3.35 per share, which we refer to as the Financing Warrant. The Financing Warrant is exercisable six months after the completion of our IPO and expires June 17, 2020.
In connection with the closing of our IPO, we also issued a third warrant to MDB related to their role as the sole underwriter for our IPO, which we refer to as the Underwriting Warrant.  We issued them a 5-year warrant to purchase 310,500 shares of common stock at an exercise price of $7.50 per share.  The warrant was not exercisable until November 24, 2014 (180-days from the date of the underwriting agreement) and expired May 28, 2019.
Private Placement Warrants - 2016

In April 2016, we issued warrants to purchase 1,996,880 shares of our common stock at an exercise price of $2.86 in connection with our private placement sale of 1,996,880 shares of common stock. The warrants were exercisable for a period
commencing October 2016 and expired on April 25, 2019. We also issued to the placement agents in the financing, warrants to purchase an aggregate of 99,844 shares of our common stock at an exercise price of $2.86 for a period commencing 6 months and ending 36 months after the closing. We refer to these warrants as Private Placement Warrants - 2016. In December 2017, we entered into Warrant Exercise Agreements with certain holders of Private Placement Warrants - 2016 to induce the exercise of 836,780 warrants in full. Pursuant to the agreements, the warrant holders exercised in full the warrants and purchased an aggregate of 836,780 shares of our common stock at an exercise price of $2.86 per share, for an aggregate exercise price of approximately $2.4 million and we paid the warrant holders aggregated inducement fees of approximately $239,000, which resulted in net proceeds to us of $2.2 million. All remaining unexercised warrants as of April 25, 2019 expired.

Underwriting Warrants - Public Offering 2016

In September 2016, we issued warrants to purchase 135,750 shares of our common stock at an exercise price of $4.25 to the underwriter of our public offering of 2,715,000 shares of common stock. The warrants were exercisable for a 2 year period commencing September 9, 2017. We refer to these warrants as Underwriting Warrants - Public Offering 2016. All remaining unexercised warrants as of September 9, 2019 expired.

Private Placement Warrants - September 2017

In September and October 2017, we issued warrants to purchase an aggregate of 1,976,919 shares of our common stock at an exercise price of $4.85 in connection with our private placement sale of 1,976,919 shares of common stock. The sale was completed in two tranches with the first tranche, which closed on September 28, 2017, including 1,745,581 warrants, and the second tranche, which closed on October 2, 2017, including 231,338 warrants. The warrants are exercisable for a period commencing 6 months after the closing of the financing and expire on September 28, 2020. Collectively, we refer to these warrants as Private Placement Warrants - September 2017.

Placement Agent Warrants - 2017

In addition to the Private Placement Warrants - September 2017 issued in connection with our private placement sale of 1,976,919 shares of our common stock, we also issued to the placement agent, warrants to purchase a total of 98,846 shares of our common stock at an exercise price of $4.85 per share. Upon closing of the first tranche on September 28, 2017, we issued 87,279 warrants, and upon closing the second tranche, we issued 11,567 warrants. The warrants are exercisable for a period commencing 6 months after the closing of the financing and expire on September 28, 2020. Collectively, we refer to these warrants as Placement Agent Warrants - 2017.

A roll-forward of warrant activity from January 1, 2018 to December 31, 2018 is shown in the following table:
 
 
Issued and
Outstanding
Warrants as of
January 1, 2018
 
Warrants
Exercised/
Expired
 
Issued and
Outstanding
Warrants as of
December 31, 2018
Bridge Warrants
 
249,999

 
(249,999
)
(1) 

Consulting Warrant
 
12,223

 
(5,556
)
(2) 
6,667

Financing Warrant
 
62,530

 

 
62,530

Underwriting Warrant
 
310,500

 

 
310,500

IR Consulting Warrant
 
6,000

 
(6,000
)
(3) 

Private Placement Warrants - 2016
 
891,063

 
(73,000
)
(4) 
818,063

Underwriting Warrants - Public Offering 2016
 
122,175

 

 
122,175

Private Placement Warrants - September 2017
 
1,976,919

 
(10,600
)
(5) 
1,966,319

Placement Agent Warrants - 2017
 
98,846

 

 
98,846

 
 
3,730,255

 
(345,155
)
 
3,385,100

(1)
During the year ended December 31, 2018, there were 249,999 warrants that were exchanged for 242,913 shares of common stock in an exchange transaction where the warrant holders exchanged the warrants for the same number of shares they would have been entitled to in a cashless exercise.
(2)
During the year ended December 31, 2018, there were 5,556 warrants that were exercised through a cashless exercise, which netted 5,542 shares being issued.
(3)
During the year ended December 31, 2018, 6,000 warrants expired.
(4)
During the year ended December 31, 2018, there were 73,000 warrants exercised for cash.
(5)
During the year ended December 31, 2018, there were 10,600 warrants exercised for cash.

A roll-forward of warrant activity from January 1, 2019 to December 31, 2019 is shown in the following table:
 
 
Exercise Price
 
Expiration Date
 
Issued and
Outstanding
Warrants as of
January 1, 2019
 
Warrants
Exercised/
Expired
 
Issued and
Outstanding
Warrants as of
December 31, 2019
Consulting Warrant
 
$0.01
 
6/17/2020
 
6,667

 

 
6,667

Financing Warrant
 
$3.35
 
6/17/2020
 
62,530

 

 
62,530

Underwriting Warrant
 
$7.50
 
5/28/2019
 
310,500

 
(310,500
)
(1) 

Private Placement Warrants - 2016
 
$2.86
 
4/25/2019
 
818,063

 
(818,063
)
(2) 

Underwriting Warrants - Public Offering 2016
 
$4.25
 
9/9/2019
 
122,175

 
(122,175
)
(3) 

Private Placement Warrants - September 2017
 
$4.85
 
9/28/2020
 
1,966,319

 

 
1,966,319

Placement Agent Warrants - 2017
 
$4.85
 
9/28/2020
 
98,846

 

 
98,846

 
 
 
 
 
 
3,385,100

 
(1,250,738
)
 
2,134,362

(1)
During the year ended December 31, 2019, 310,500 warrants expired.
(2)
During the year ended December 31, 2019, there were 485,000 warrants exercised for cash, including 335,000 warrants exercised by our significant shareholder, Park City Capital. Additionally, there were 44,928 warrants that were exercised through a cashless exercise which netted 1,809 shares being issued and 288,135 warrants that expired.
(3)
During the year ended December 31, 2019, 122,175 warrants expired.