7. Capital Stock and Warrants

Registered Public Offering of Common Stock and Warrants

On June 3, 2016, the Company completed a registered public offering of 212,766 shares of its common stock and warrants to purchase 106,383 shares of common stock. Each share of common stock was sold together with a warrant to purchase 0.50 of a share of common stock at a combined purchase price of $23.50 per unit, for aggregate gross proceeds to the Company of $5.0 million. The warrants have an exercise price of $22.50 per share, were exercisable immediately upon issuance and expire five years following the date of issuance. The Company received net proceeds from the offering of approximately $4.2 million, after deducting placement agent fees and other offering expenses payable by the Company.

The Company has classified the warrants as a liability due to certain net cash settlement provisions in the warrant agreement. The derivative liability for the warrants was marked-to-market at $29,000 as of June 30, 2017, with the decrease in fair value of $245,000 recorded as a component of change in fair value of derivative liabilities in the Company’s consolidated statement of operations (see Note 4) for the six months ended June 30, 2017.

Underwritten Public Offering of Common Stock and Warrants

On November 22, 2016, the Company completed an underwritten public offering of 533,500 shares of its common stock and warrants to purchase up to an aggregate of 533,500 shares of common stock. Each share of common stock was sold together with a warrant to purchase one share of common stock at a combined purchase price of $7.50 per unit, for aggregate gross proceeds to the Company of $4.0 million. The warrants originally had an exercise price of $7.50 per share, are exercisable immediately upon issuance and expire five years following the date of issuance. The Company received net proceeds from the offering of approximately $3.3 million, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. In connection with the Company’s April 2017 1-for-10 reverse stock split and a provision in the November 2016 warrants that required reduction of the exercise price following the reverse stock split to the lowest daily volume-weighted average price of the Company’s common stock during the 15 trading days immediately following the reverse stock split, the exercise price of the warrants was adjusted to $1.00 per share. The exercise price of the warrants is subject to further adjustment upon future dilutive issuances of the Company’s common stock including, but not limited to, the potential issuance of 523,210 shares of common stock to the shareholders who are party to the CSIA (see Note 6).

The Company has classified the warrants as a liability primarily because the warrants are not indexed to the Company’s common stock due to an exercise price adjustment provision and the Company may be required to pay the warrant holders cash under certain circumstances. The derivative liability for the warrants was marked-to-market at $358,000 as of June 30, 2017, with the decrease in fair value of $1,685,000 recorded as a component of change in fair value of derivative liabilities in the Company’s consolidated statement of operations (see Note 4) for the six months ended June 30, 2017.

Underwritten Public Offering of Common Stock, Pre-funded Warrants and Warrants

On May 10, 2017, the Company completed an underwritten public offering and sold 2,584,085 shares of its common stock and 4,483,334 pre-funded warrants to purchase common stock in lieu of additional shares of common stock, and common warrants to purchase 8,000,000 shares of common stock. The combined price to the public for each share of common stock and accompanying common warrant was $1.50. The combined price to the public for each pre-funded warrant and accompanying common warrant was $1.49. Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.01 per share and 4,283,434 pre-funded warrants were exercised as of June 30, 2017. The common warrants are immediately exercisable at a price of $1.50 per share of common stock, and will expire five years from the date of issuance. The Company received net proceeds from the offering of $9.0 million, after deducting $1.6 million in offering costs including the underwriting discount and commissions, certain internal incentive payments and other offering expenses payable by the Company. The Company evaluated the pre-funded warrants and common warrants issued in the May 2017 offering and determined that the warrants should be classified as equity instruments.

Warrants

At June 30, 2017, outstanding warrants to purchase shares of common stock, accounted for as equity or liabilities, are as follows:



Shares Underlying
Outstanding		Exercise		Expiration
Warrants		Price		Date

30,405		$	70.00		February 4 to July 15, 2018
8,640		$	82.50		December 23, 2018
48,841		$	107.50		March 16, 2020
31,519		$	40.50		March 31, 2021
8,492		$	120.00		December 31, 2018
8,492		$	120.00		March 1, 2019
106,381		$	22.50		June 3, 2021
533,497		$	1.00		November 22, 2021
8,000,000		$	1.50		May 10, 2022
8,776,267	(1)

(1)

Balance excludes outstanding pre-funded warrants. As of June 30, 2017, there were 199,900 outstanding pre-funded warrants to purchase shares of common stock which were exercised in full in July 2017 for $0.01 per share.