|3 Months Ended|
Mar. 31, 2017
8. Capital Structure
As of March 31, 2017, the Company was authorized to issue 100,000,000 shares of common stock at $0.0001 par value per share.
On July 27, 2016, the Company sold 14,000,000 shares of its common stock and warrants to purchase an additional 14,000,000 shares of its common stock in an underwritten Follow-on Offering for gross proceeds of $35.0 million. The Company received net proceeds of approximately $32.0 million after underwriting discounts, commissions and offering expenses payable by the Company.
The warrants have an exercise price of $3.00 per share and expire five years from the date of issuance (the “CMPO Warrants”). The CMPO Warrants contain a fundamental transaction provision that obligates the Company to cash settle the CMPO Warrants under a limited set of conditions not entirely within the Company’s control. Due to this conditional obligation, the Company determined that the CMPO Warrants should be classified as a liability in the Company’s consolidated balance sheet. At issuance, the Company determined the fair value of the CMPO Warrants to be $18.6 million and reclassified this balance from stockholders’ equity to warrant liability. The fair value of the CMPO Warrants is re-measured at each reporting period and changes in fair value is recognized in the consolidated statement of operations (see Note 4, “Fair Value Measurements”). Additionally, the Company allocated approximately $1.6 million of issuance costs to the CMPO Warrants based on the proportion of the proceeds allocated to the fair value of CMPO Warrants. The allocated issuance costs were expensed as other expense in the Company’s consolidated statement of operations.
On June 12, 2015, the Company sold an aggregate of 4,728,128 common shares and warrants to purchase an additional 2,364,066 shares of common stock for gross proceeds of $20.0 million in a private placement (the “PIPE”). The warrants have an exercise price of $8.00 per share and expire three years form the date of issuance (the “PIPE Warrants”). The Company received net proceeds from the PIPE of $18.3 million, after deducting expenses payable by the Company.
The placement agents in the PIPE received warrants to purchase a total of 189,126 shares of common stock at an exercise price of $4.65 per share which expire on June 11, 2020 (the “Placement Agent Warrants”). The PIPE Warrants and Placement Agent Warrants have been classified as stockholders’ equity in the Company’s consolidated balance sheet.
Initial Public Offering
In August 2014, the Company completed an initial public offering (“IPO”), raising net proceeds of $35.0 million after underwriting discounts, commissions and offering expenses payable by us, through the issuance and sale of our units, which consisted of one share of common stock, one Class A Warrant to purchase one share of common stock at an exercise price of $4.80 per share and one Class B Warrant to purchase one-half share of common stock at an exercise price of $4.00 per full share (“Units”). As of November 2, 2015, the date of expiration of the Class B Warrants, holders of the Class B Warrants had exercised 4,812,328 Class B Warrants, resulting in the issuance of 2,406,164 shares of the Company’s common stock and the receipt by the Company of approximately $9.6 million in gross proceeds. The Class A Warrants expired on February 1, 2017. As none of the Class A Warrants were exercised prior to expiration, the Class A Warrants have terminated and are no longer exercisable.
The Maxim Group, LLC, the representative of the underwriter in the IPO, received the Representative’s Warrant to purchase 3% of the total number of shares of common stock sold in the IPO, including those shares sold upon the exercise of the over-allotment option, for a total of 206,410 shares of common stock underlying the Representative’s Warrant. The Representative’s Warrant is exercisable at an exercise price of $7.50 per share beginning 180 days after the effective date of the Company’s registration statement (January 24, 2015) and expiring on July 28, 2019. The Company classified the Representative’s Warrant as a liability since it did not meet the requirements to be included in equity. The fair value of the Representative’s warrant is re-measured at each reporting period and changes in fair value are recognized in the consolidated statement of operations (see Note 4, “Fair Value Measurements”).
In January 2016, the Company entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”) to sell shares of the Company’s common stock, with aggregate gross sales proceeds of up to $30 million, through an “at the market” equity offering program under which Cowen was to act as sales agent. On July 21, 2016, the Company terminated the Sales Agreement. The Company did not sell any shares under the program.
The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings.
The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors. As of March 31, 2017, no dividends have been declared or paid on the Company’s common stock since inception.
Reserved for Future Issuance
The Company has reserved for future issuance the following number of shares of common stock as of March 31, 2017 and December 31, 2016:
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/presentationRef