Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.7.0.1
Stockholders' Equity
 3 Months Ended
Mar. 31, 2017
Equity [Abstract]  
Stockholders' Equity

 

NOTE 4 — STOCKHOLDERS’ EQUITY

Common Stock Warrant Valuation

The Company accounts for its common stock warrants under guidance now codified in ASC 815 that clarifies the determination of whether an instrument (or an embedded feature) is indexed to an entity’s own stock, which would qualify for classification as a liability or equity. ASC 815 requires the Company’s outstanding warrants to be classified as liabilities and to be fair valued at each reporting period, with the changes in fair value recognized as other income (expense) in the Company’s consolidated statements of operations.

At both March 31, 2017 and December 31, 2016 the Company had warrants outstanding to purchase 8.3 million shares of common stock, having an exercise price of $3.62 per share, which warrants were issued by the Company in the February 2015 offering. The fair value of these warrants on March 31, 2017 and December 31, 2016 was determined using a Black-Scholes model with the following key level 3 inputs:

 

 

March 31,

2017

 

 

December 31, 2016

 

Risk-free interest rate

 

1.50

%

 

 

1.93

%

Expected life (in years)

 

2.89

 

 

 

3.13

 

Dividend yield

 

—

 

 

 

—

 

Volatility

 

141

%

 

 

135

%

Stock price

$

0.57

 

 

$

0.44

 

 

 

During three months ended March 31, 2017, the change in fair value of $0.7 million of noncash expense related to the February 2015 warrants was recorded as other income (expense) in the Company’s consolidated statement of operations.

The following table sets forth the Company’s financial liabilities, related to warrants issued in the February 2015 offering, subject to fair value measurements as of March 31, 2017 and December 31, 2016:

 

 

Fair Value as of March 31, 2017

 

 

Basis of Fair Value Measurements

 

(in thousands)

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

February 2015 warrants

$

2,407

 

 

$

—

 

 

$

—

 

 

$

2,407

 

 

 

 

Fair Value as of December 31, 2016

 

 

Basis of Fair Value Measurements

 

(in thousands)

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

February 2015 warrants

$

1,743

 

 

$

—

 

 

$

—

 

 

$

1,743

 

 

The following table is a reconciliation of the warrant liability measured at fair value using level 3 inputs (in thousands):

 

 

Warrant

Liability

 

Balance at December 31, 2016

$

1,743

 

Change in fair value of common stock warrants during three months ended March 31, 2017

 

664

 

Balance at March 31, 2017

$

2,407