Annual report pursuant to Section 13 and 15(d)

Outstanding Warrants

v3.8.0.1
Outstanding Warrants
12 Months Ended
Dec. 31, 2017
Warrants and Rights Note Disclosure [Abstract]  
Outstanding Warrants

Note 14 - Outstanding Warrants

 

On June 27, 2016, the Company entered into the Ontario Note (See Note 7). In consideration of the loan amount, the Ontario Noteholder received a warrant to purchase 100,000 shares of the Company’s common stock at an exercise price of $2.61 (the “Ontario Warrant”). Using the Black-Scholes option pricing model, the fair value of the Ontario Warrant was determined to be $0.1 million. The Ontario Warrant is exercisable at any time through June 27, 2026, in whole or in part. As of December 31, 2017, there are 100,000 shares still available for purchase under the Ontario Warrant.

 

On August 11, 2016, the Company entered into the Anson August Note (See Note 7). In consideration of the loan amount, Anson received a warrant to purchase 300,000 shares of the Company’s common stock at an exercise price of $2.61 (the “Anson August Warrant”). Using the Black-Scholes option pricing model, the fair value of the Anson August Warrant was determined to be $0.4 million. The Anson August Warrant is exercisable at any time through August 11, 2026, in whole or in part. As of December 31, 2017, there are 300,000 shares still available for purchase under the Anson August Warrant.

 

On October 24, 2016, the Company entered into the Anson October Note (See Note 7). In consideration of the loan amount, Anson received a warrant to purchase 340,000 shares of the Company’s common stock at an exercise price of $2.39 per share (the “Anson October Warrant”). Using the Black-Scholes option price model, the fair value of the Anson October Warrant was determined to be $0.4 million. The Anson October Warrant is exercisable at any time through October 24, 2026, in whole or in part. The Anson October Warrant contains limitations that prevent Anson from acquiring shares of the Company’s common stock upon exercise of the Anson October Warrant that would result in the number of shares beneficially owned by Anson and to exceed 9.99% of the total number of shares of the Company’s common stock then issued and outstanding. As of December 31, 2017, there are 340,000 shares still available for purchase under the Anson October Warrant.

 

On November 15, 2017, the Company entered into a Securities Purchase Agreement (See Note 17) with certain investors pursuant to which such investors were issued warrants to purchase an aggregate of 875,000 shares of the Company’s common stock at an exercise price of $1.63 per share (the “SPA Warrants”). Each SPA Warrant is exercisable commencing on the sixth month anniversary of the date of issuance and will expire on the fifth anniversary of the date that it became exercisable. As of December 31, 2017, there are 875,000 shares still available for purchase under the SPA Warrants. Using the Black-Scholes option price model, the fair value of the SPA Warrants was determined to be $0.4 million.

 

The fair values of warrants issued during 2017 and 2016 were estimated on the date of issuance using the Black-Scholes option pricing model with the following assumptions by year:

 

    December 31,   December 31,
    2017   2016
Expected life (in years)   5 years   10 years
Risk-free interest rate   2.04%   1.00% - 1.77%
Volatility   38.1%   37.0%
Dividend yield   0%   0%