Stockholders' Equity

12 Months Ended

Dec. 31, 2014

Stockholders' Equity

Note 12. Stockholders’ Equity

On June 12, 2014, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of the State of Delaware to increase the number of authorized shares of the Company’s common stock, par value $0.001 per share, from 112,500,000 shares to 225,000,000 shares. The amendment was approved by the Company’s stockholders at the Company’s 2014 Annual Meeting of Stockholders held on June 11, 2014.

Common Stock and Associated Warrant Liability

In August 2009, the Company issued warrants to purchase 2.4 million shares of common stock, exercisable at an exercise price of $2.90 per share (“2009 Warrants”). In August 2014, all outstanding 2009 Warrants were exercised in full and accordingly were no longer outstanding at December 31, 2014.

In November 2010, the Company issued warrants to purchase 3.7 million shares of common stock, exercisable at an exercise price of $3.20 per share. The warrants issued in November 2010 (“2010 Warrants”) became exercisable on May 15, 2011, and are exercisable for a period of five years from the issue date.

The fair value of the 2009 Warrants and 2010 Warrants was recorded on the consolidated balance sheets as a liability pursuant to ASC Topic 480-10 “Distinguishing Liabilities from Equity” and are adjusted to fair value at each financial reporting date thereafter until the earlier of exercise, expiration or modification to remove the provisions which require the warrants to be treated as a liability, at which time, these warrants would be reclassified into stockholders’ equity. The Company classified the 2009 Warrants and 2010 Warrants as a liability as these warrants contain certain provisions that, under certain circumstances, which may be out of the Company’s control, could require the Company to pay cash to settle the exercise of the warrants or may require the Company to redeem the warrants.

The fair value of the warrants outstanding at December 31, 2014 and 2013, consisted of the following (in thousands):

	December 31,
	2014		2013
2009 Warrants	$	—	$	8,542
2010 Warrants		10,485		11,848
Total warrant liability	$	10,485	$	20,390

The fair value of the Company’s warrants was based on option valuation model and using the following assumptions at December 31, 2014 and 2013:

	December 31, 2014	December 31, 2013
2009 Warrants:
Expected term (in years)	—	0.65
Estimated volatility	—	45%
Risk-free interest rate	—	0.10%
Expected dividend yield	—	0%
	December 31, 2014	December 31, 2013
2010 Warrants:
Expected term (in years)	0.86	1.86
Estimated volatility	55%	41%
Risk-free interest rate	0.25%	0.38%
Expected dividend yield	0%	0%

The Company recognizes non-cash loss and gains in “Gain (loss) from revaluation of warrant liability” on the consolidated statements of operations due to the changes in fair value of the warrants. Significant changes to the Company’s market price for its common stock will impact the implied and/or historical volatility used to fair value the warrants. Any significant increases in the Company’s stock price will likely create an increase to the fair value of the warrant liability. Similarly, any significant decreases in the Company’s stock price will likely create a decrease to the fair value of the warrant liability. During the years ended December 31, 2014, 2013 and 2012, Warrants to purchase 2.6 million, 0.2 million and 0.005 million shares of common stock, respectively were exercised. At December 31, 2014, the Company had 2010 Warrants outstanding to purchase an aggregate 3.3 million shares of common stock.

Sales Agreement

On March 21, 2014, the Company entered into Amendment No. 1 to the Controlled Equity Offering^SM Sales Agreement, dated August 31, 2012 (as amended, the “Amended Cantor Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) that provides for the issuance and sale of shares of its common stock over the term of the Amended Cantor Agreement having an aggregate offering price of up to $70.0 million through Cantor. Under the Amended Cantor Agreement, Cantor also acts as the Company’s sales agent and receives compensation based on an aggregate of 2% of the gross proceeds on the sale price per share of its common stock. The issuance and sale of these shares by the Company pursuant to the Amended Cantor Agreement are deemed an “at-the-market” offering and are registered under the Securities Act of 1933, as amended. During the year ended December 31, 2014 and 2013, approximately, 4.3 million and 5.4 million shares, respectively, of the Company’s common stock were sold under the Amended Cantor Agreement for aggregate net proceeds of $18.6 million and $23.5 million, respectively. At December 31, 2014, the Company had approximately $22.5 million of common stock available to be sold under the Amended Cantor Agreement.

Stockholder Rights Plan

In October 2009, the Company’s Board of Directors adopted an amendment to its 1999 stockholder rights plan, commonly referred to as a “poison pill,” to reduce the exercise price, extend the expiration date and revise certain definitions under the plan. The stockholder rights plan is intended to deter hostile or coercive attempts to acquire the Company. The stockholder rights plan enables stockholders to acquire shares of the Company’s common stock, or the common stock of an acquirer, at a substantial discount to the public market price should any person or group acquire more than 15% of the Company’s common stock without the approval of the Board of Directors under certain circumstances. The Company has designated 250,000 shares of Series C Junior Participating preferred stock for issuance in connection with the stockholder rights plan.