Note 13 - Warrants and Derivative Liabilities

3 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

13.

Warrants and Derivative Liabilities

The Company accounts for its warrants and contingent consideration as liabilities due to certain adjustment provisions within the instruments, which require that they be recorded at fair value. The warrants are subject to revaluation at each balance sheet date and any change in fair value is recorded as a change in fair value of warrants until the earlier of its expiration or its exercise at which time the warrant liability will be reclassified to equity. The Company calculated the fair value of the warrants utilizing an integrated lattice model. See Note

6,

"Fair Value Measurements", for further discussion.

Hercules Warrants

On

December 19, 2014,

the Company entered into a

second

amendment to the Loan and Security Agreement with Hercules (the "Hercules Second Amendment"). In conjunction with the Hercules Second Amendment, the Company issued Hercules a warrant to purchase

58,823

shares of the Company’s common stock (the "Hercules Warrant") which replaced the First Warrant and the Second Warrant.  The Hercules Warrant was exercisable at any time after its issuance at an exercise price of

$7.85

per share, subject to certain price-based and other anti-dilution adjustments, including the equity offering in

May 2017,

the acquisition of ITC with common stock in

September 2017

and sales of common stock under the ATM entered into in

January 2017.  

This warrant had a fair value of

$0.4

million as of

March 31, 2019.  

On

April 8, 2019

Hercules notified the Company of its intent to exercise this warrant on a cashless basis.  Hercules received

22,821

shares of the Company's common stock on

April 17, 2019. 

As a result of this exercise the Company recorded a net gain of

$0.1

million to change in fair value of warrants, resulting from the decrease in the fair value upon exercise of the Hercules Warrant during the

three

months ended

June 30, 2019.

November 2014

Warrant

On

November 13, 2014,

the Company completed an offering of

909,090

units of the Company’s common stock with Hudson Bay Capital. Each unit consisted of

one

share of the Company’s common stock and

0.9

of a warrant to purchase

one

share of common stock, or a warrant to purchase in the aggregate

818,181

shares (the

“November 2014

Warrant”).  The

November 2014

Warrant is exercisable at any time, at an exercise price equal to

$7.81

per share, subject to certain price-based and other anti-dilution adjustments including those noted above, and expires on

November 

13,

2019.

  

Following is a summary of the key assumptions used to calculate the fair value of the

November 2014

Warrant:

Fiscal Year 2019	June 30, 2019
Risk-free interest rate	2.11%
Expected annual dividend yield	—
Expected volatility	60.58%
Term (years)	0.37
Fair value	$1.7 million

	March 31,	December 31,	September 30,	June 30,	March 31,
Fiscal Year 2018	2019	2018	2018	2018	2018
Risk-free interest rate	2.43%	2.61%	2.62%	2.40%	2.20%
Expected annual dividend yield	—	—	—	—	—
Expected volatility	75.61%	70.29%	63.66%	67.40%	65.86%
Term (years)	0.62	0.87	1.12	1.37	1.62
Fair value	$4.6 million	$3.6 million	$1.3 million	$1.6 million	$1.1 million

The Company recorded a net gain of $

2.9

million resulting from the

decrease

in the fair value of the

November 2014

Warrant during the

three

months ended

June 30, 2019

. The Company recorded a net loss of

$0.5

million resulting from the increase in the fair value of the

November 2014

Warrant during the 

three

months ended

June 30, 2018

.