Molecular Templates, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2018

Outstanding Warrants to Purchase Shares of Common Stock

As of March 31, 2018, the Company had warrants outstanding to purchase 3.5 million shares of the Company’s stock. The Company accounts for certain of its common stock warrants under guidance in ASC 480 that clarifies the determination of whether an instrument is classified as a liability or equity. The following table summarizes the Company’s outstanding warrants as of March 31, 2018 and December 31, 2017 and the warrant activity during the three months ended March 31, 2018:

	Warrants Outstanding						Warrants Outstanding		Weighted Average
	December 31, 2017		Issued		Exercised		March 31, 2018		Exercise Price
2017 Warrants		377,273		—		—		377,273	$	39.82
2017 Private Placement Warrants		2,954,462		—		—		2,954,462	$	6.84
2018 Warrants		—		190,000		—		190,000	$	9.58
		3,331,735		190,000		—		3,521,735

Reconciliation of Warrant Liability Measured at Fair Value

The following table is a reconciliation of the 2017 Warrant liability measured at fair value using level 3 inputs (in thousands):

	Warrant Liability
Balance at December 31, 2017	$	954
Change in fair value during the three months ended March 31, 2018		(614	)
Balance at March 31, 2018	$	340

Outstanding Warrants Valuation Assumption

The fair value of the 2017 Warrants on March 31, 2018 and December 31, 2017 was determined using a Black-Scholes model with the following key level 3 inputs:

	March 31, 2018			December 31, 2017
Risk-free interest rate		2.27	%		1.89	%
Expected life (in years)		1.89			2.13
Dividend yield		—			—
Volatility		89	%		103	%
Stock price	$	8.00		$	10.02

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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