Warrants

3 Months Ended

Mar. 31, 2020

Warrants and Rights Note Disclosure [Abstract]

The exercise prices and the number of shares issuable upon exercise of each of the Series B Warrants are subject to adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions. The Series B warrants contain provisions, often referred to as “down-round protection,” that leads to adjustment of the exercise price and number of underlying warrant shares if the Company issues securities, including its common stock or convertible securities or debt securities, in the future at sale prices below the then-current exercise price.

On February 24, 2020, the Company entered into a Series B Warrants Exchange Agreement (the “Exchange Agreement”) with holders of its Series B Warrants. Under the terms of the Exchange Agreement, each Series B Warrant was canceled in exchange for 0.61 shares of common stock. The Warrant holders participating in the exchange held 3,373,900 of the 3,638,780 Series B Warrants then outstanding, and received an aggregate of 2,040,757 shares of common stock. As a result, the warrant liability decreased by $2.5 million and the additional paid in capital increased by the same amount.

As a result of the warrant exchange and exercise price adjustment feature the exercise price of all outstanding Series B Warrants has been adjusted to $0.37 per share and the number of shares of common stock reserved for and issuable upon the exercise of outstanding Series B Warrants has been adjusted to 530,381 underlying Series B warrant shares as of March 31, 2020.

On March 10, 2020, the Company closed an underwritten public offering under which it issued, as part of units and the exercise of an over-allotment option, 25,367,646 Series C Warrants, each to acquire one share of common stock at an exercise price of $0.68 per share, and 25,367,646 Series D Warrants, each to acquire one share of common stock at an exercise price of $0.68 per share. See Note 15 for a description of the public offering.

The Company concluded that the Series C Warrants and Series D Warrants are considered equity instruments. The fair value of the Series C Warrants and Series D Warrants on the issuance date was determined using a Black-Scholes Merton model. The unit proceeds were then allocated to the Common Stock, Series A preferred stock, Series C Warrants, and Series D Warrants, respectively, based on their relative fair values. As a result, the Company determined that a beneficial conversion feature was created by the difference between the effective conversion price of the preferred stock and the fair value of the Company's Common Stock as of the issuance date. The Company therefore recorded a beneficial conversion charge of $0.4 million as a deemed dividend included in additional paid-in capital and an immediate charge to earnings available to common stockholders for the three months ended March 31, 2020.

The following table summarizes the change in warrant shares for all outstanding warrants, including the Series B Warrants, the Series C Warrants, and the Series D Warrants for the three months ended March 31, 2020:



	Number of Warrant Shares		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)	Weighted Average Fair Value
Outstanding at December 31, 2019	2,071,172		$2.05	2.4	$	1.34
Sold or granted	50,735,292		0.68	2.9	0.12
Exercised	—		—	—	—
Exchanged	(2,040,757	)	1.24	—	—
Adjustment to number of warrant shares due to down-round adjustment	607,687		0.37	2.1	0.14
Outstanding at March 31, 2020	51,373,394		$0.71	2.9	$	0.13