Stockholders' Equity and Convertible Preferred Stock

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity and Convertible Preferred Stock

Note 7. Stockholders’ Equity and Convertible Preferred Stock

Common Stock

At-the-Market Offering Agreement

On August 9, 2019, the Company entered into an At-the-Market Offering Agreement (the “Offering Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time to time through H.C. Wainwright shares of the Company’s common stock having an aggregate offering price of up to $1.2 million (the “Shares”). The Company will pay H.C. Wainwright a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of Shares.

During the nine months ended September 30, 2019, the Company sold a total of 239,359 shares of common stock under the ATM for aggregate total gross proceeds of approximately $0.6 million at an average selling price of $2.51 per share, resulting in net proceeds of approximately $0.5 million after deducting commissions and other transaction costs.

Registered Common Stock and Warrant Financing

On May 29, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) for the sale by the Company of 221,000 shares of the Company’s common stock, at a purchase price of $2.60 per share, and pre-funded common stock purchase warrants to purchase up to 86,692 shares of common stock at a purchase price of $2.5999 per Warrant, which represents the per share purchase price, less a $0.0001 per share exercise price for each of the warrants (“Penny Warrants”). The Company sold the shares and warrants for net proceeds of approximately $787 thousand which transaction closed on May 31, 2019. 

Common Stock Warrant Exchange

On June 6, 2019, the Company entered into an amendment to the Purchase Agreement, pursuant to which the Purchaser surrendered an aggregate of 115,269 shares to the Company and the Company issued 115,269 Penny Warrants to the Purchaser in order to limit the Purchaser’s beneficial ownership.

The exchange of 115,269 Penny Warrants do not meet the definition of a derivative under ASC 815 because their fair value at issuance is equal to the fair value of the shares underlying the warrant. As such, they have the characteristics of a prepaid forward sale of equity. Since the shares underlying the Penny Warrants are issuable for little or no consideration, they are considered outstanding in the context of earnings per share, as discussed in ASC 260-10-45-13.

Warrants

A summary of warrant activity for the nine months ended September 30, 2019 is presented below:

	Warrants			Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2018		294,072		$	38.15	$	-		1.92
Issued		301,960			-		506,273		-
Exercised		(235,294	)		-		394,940		-
Expired		(8,799	)		476.66		-		-
Outstanding as of September 30, 2019		351,939		$	19.96		55,666		1.19

On May 29, 2019, the Company entered into the Master Service Agreement (“MSA”) with a consultant, World Wide Holdings, LLC (“Consultant”). In consideration for services provided by Consultant, the Company paid to Consultant three warrants (the “Consultant Warrant”), with each warrant immediately exercisable for 33,333 shares of common stock with a $0.01 strike price. The Company issued each of the three warrants on June 28, July 28 and August 27, 2019, respectively. The Company recorded $0.2 and $0.3 million in stock-based compensation during the three and nine months ended September 30, 2019 related to this arrangement. On July 12, 2019, the Company issued 33,333 shares of common stock upon exercise of one Consultant Warrant which resulted in gross proceeds of approximately $333.

Stock Options

A summary of option activity under the Company’s stock option plan for the nine months ended September 30, 2019 is presented below:

	Number of Shares			Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2018		124,381		$	209.22	$	-		4.8
Employee options expired		(35,121	)		302.29		-		-
Non-employee options expired		(310	)		571.71		-		-
Outstanding as of September 30, 2019		88,950		$	172.39	$	-		5.9
Options vested and expected to vest		88,950		$	172.39	$	-		5.9
Options vested and exercisable		88,950		$	172.39	$	-		5.9

Stock-based Compensation

Stock-based compensation for the three and nine months ended September 30, 2019 and 2018 was comprised of the following ($ in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Employee and non-employee restricted stock awards	$	-	$	-	$	-	$	106
Employee and non-employee stock option awards		-		28		8		208
Employee and non-employee stock warrants		214		-		321		-
Total compensation expense	$	214	$	28	$	329	$	314

Legal Proceedings

In the past, in the ordinary course of business, the Company actively pursued legal remedies to enforce its intellectual property rights and to stop unauthorized use of technology. From time to time, the Company may be involved in various claims and counterclaims and legal actions arising in the ordinary course of business. The Company knows of no pending material claims or legal matters against it as of the date of this report.