Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.10.0.1
Stockholders' Equity
12 Months Ended
Dec. 31, 2018
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
14.
Stockholders’ Equity
 
Preferred Stock
 
The Company has authorized 1,000,000 shares of preferred stock, $0.001 par value per share, which may be divided into series and with preferences, limitations and relative rights determined by the Board of Directors.
 
Common Stock
 
The Company effected a 1-for-10 reverse stock split of its outstanding common stock on October 6, 2017. The accompanying consolidated financial statements and accompanying notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented. The shares of common stock retained a par value of $0.001 per share. Accordingly, stockholders’ equity reflects the reverse stock split by reclassifying from common stock to additional paid-in capital an amount equal to the par value of the decreased shares resulting from the reverse stock split.
 
2011 Plan
 
The Company maintains the 2011 Long-Term Incentive Plan (the “2011 Plan”) that provides for the granting of stock options, restricted stock units (“RSUs”), restricted stock and other awards to employees, directors and others. A total of 182,857 shares of common stock have been authorized for issuance under the 2011 Plan, of which, as of December 31, 2018, 54,131 shares were available for future issuances.
 
2014 Plan
 
The Company maintains the 2014 Long-Term Incentive Plan (the “2014 Plan”) that provides for the granting of stock options, RSUs, restricted stock and other awards to employees, directors and others. On February 26, 2015 and May 6, 2015, the Company’s Board of Directors and the Company’s shareholders, respectively, approved an amendment to the 2014 Plan to increase the total number of shares of common stock authorized for issuance under the 2014 Plan by an additional 350,000 shares. On April 26, 2017 and June 23, 2017, the Company’s Board of Directors and the Company’s shareholders, respectively, approved an amendment to the 2014 Plan to increase the total number of shares of common stock authorized for issuance under the 2014 Plan by an additional 400,000 shares. A total of
950,000
shares of common stock are reserved for award under the 2014 Plan, of which, as of December 31, 2018,
434,616
shares were available for future issuances.
 
Private Placement
 
On February 27, 2017, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors, pursuant to which the Company agreed to issue and sell to the investors in a private placement (the “Private Placement”) an aggregate of 554,000 shares of the Company’s common stock at a purchase price of $5.00 per share. The Company closed the Private Placement on the same day as it entered into the Securities Purchase Agreement and received aggregate gross proceeds of approximately $2.8 million. In connection with the Private Placement, the Company paid an aggregate of $196,000 of financial advisory fees and $40,000 of administrative fees, which were recorded as a reduction of additional paid-in capital.
 
The Securities Purchase Agreement contains a “most-favored nation” provision that provides that if the Company, during 120 days from February 27, 2017, issues or sells any common stock or common stock equivalents reasonably believed to be more favorable in terms or conditions than those in the Private Placement, then the Company must amend the terms of the Securities Purchase Agreement to give the private investors the benefit of such favorable terms or conditions. In connection with the common stock sold in the Public Offering (as defined below) and in accordance with this provision, on April 11, 2017, the Company issued an aggregate of 38,072 shares of its common stock to these investors. On June 23, 2017, the Company held its 2017 annual meeting of stockholders during which the stockholders approved the issuance of the remaining 100,428 additional shares of common stock to be issued to the investors, and, following the meeting, on June 23, 2017, the Company issued the remaining shares.
 
Underwritten Public Offering
 
On April 3, 2017, the Company closed an underwritten public offering (the “Public Offering”) of 947,325 shares of its common stock at a price to the public of $4.00 per share. The Company received aggregate gross proceeds of approximately $3.8 million. In connection with the Public Offering, the Company paid an aggregate of $365,000 of financial advisory fees and $92,000 of administrative fees, which were recorded as a reduction of additional paid-in capital. The shares of common stock were issued pursuant to the Company’s shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission and declared effective on September 25, 2014.
 
On April 3, 2017, the Company issued warrants to purchase an aggregate of 23,686 of the Company’s common stock to the underwriter of this offering. These warrants are immediately exercisable, have an exercise price of $4.40, and expire on March 29, 2022. The warrants had an aggregate issuance date fair value of $78,000 which was recorded as both a debit and credit to additional paid in capital.
 
Pursuant to an anti-dilution provision provided in the warrants dated November 8, 2012 to purchase common stock at an initial exercise price of $21.90, the exercise price of these warrants was adjusted to the public offering price of $4.00. As of April 3, 2017, November 2012 warrants to purchase 36,231 shares of the Company’s common stock were outstanding. These warrants expired in November 2017.
 
Stock-Based Compensation
 
On May 7, 2018, in connection with the closing of the sale under the APA of substantially all of the Company’s assets to Cellularity, which triggered certain change in control provisions of the Company’s equity plans, all unvested and outstanding options and restricted stock awards under the 2011 Plan and 2014 Plan became vested and exercisable.
 
For the year ended December 31, 2018, the Company recognized $1.0 million of stock-based compensation expense, of which, $0.03 million is included in cost of revenues and $0.97 million is included in selling, general and administrative expenses in the consolidated statements of operations. For the year ended December 31, 2017, the Company recognized $2.0 million of stock-based compensation expense, of which, $0.045 is included in cost of revenues and $2.0 million is included in selling, general and administrative expenses in the consolidated statements of operation. As of December 31, 2018, there was no unrecognized stock-based compensation expense remaining.
 
Restricted Stock
 
During the year ended December 31, 2017, the Company granted an aggregate of 181,936 shares of restricted stock to employees with an aggregate grant date value of $621,000, which will be recognized proportionate to the vesting period. The shares vest as follows: (i) 66,936 shares vest on September 21, 2017, (ii) 5,000 shares vest on December 31, 2017, (iii) 50,000 shares vest on June 23, 2018, and (iv) 60,000 shares vest pursuant to the satisfaction of certain performance conditions.
 
During the year ended December 31, 2018, the Company granted an aggregate of 20,000 shares of restricted stock to consultants with an aggregate grant date value of $39,200, which will be recognized proportionate to the vesting period. The shares vest pursuant to the satisfaction of certain performance conditions.
 
A summary of restricted stock award activity during the years ended December 31, 2018 and 2017 is presented below (in thousands, except per share data):
 
 
 
Number of

Shares
 
 
Weighted

Average

Grant Date

Fair Value Per

Share
 
 
Total Grant

Date Fair

Value
 
Non-vested, December 31, 2016
 
 
147
 
 
$
26.26
 
 
$
3,862
 
Granted
 
 
182
 
 
 
3.41
 
 
 
621
 
Vested
 
 
(137
)
 
 
17.35
 
 
 
(2,373
)
Forfeited
 
 
(2
)
 
 
3.87
 
 
 
(10
)
Non-vested, December 31, 2017
 
 
190
 
 
$
11.07
 
 
$
2,100
 
Granted
 
 
20
 
 
 
1.96
 
 
 
39
 
Vested
 
 
(185
)
 
 
11.07
 
 
 
(2,045
)
Forfeited
 
 
(5
)
 
 
11.07
 
 
 
(55
)
Non-vested, December 31, 2018
 
 
20
 
 
$
1.96
 
 
$
39
 
 
Warrants
 
There were no compensatory warrants issued during the years ended December 31, 2018 and 2017.
 
A summary of the warrant activity during the years ended December 31, 2018 and 2017 is presented below (in thousands, except years and per warrant data):
 
 
 
Number of

Warrants
 
 
Weighted

Average

Exercise

Price per

Warrant
 
 
Weighted

Average

Remaining

Life in

Years
 
 
Intrinsic Value
 
Outstanding, December 31, 2016
 
 
337
 
 
$
56.90
 
 
 
 
 
 
 
 
 
Issued
 
 
159
 
 
 
4.66
 
 
 
 
 
 
 
 
 
Adjustment for price reset
 
 
29
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
Forfeited
 
 
(47
)
 
 
9.35
 
 
 
 
 
 
 
 
 
Outstanding, December 31, 2017
 
 
478
 
 
$
32.79
 
 
 
 
 
 
$
-
 
Issued
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
Cancelled
 
 
(202
)
 
 
50.03
 
 
 
 
 
 
 
 
 
Outstanding, December 31, 2018
 
 
276
 
 
$
20.20
 
 
 
2.7
 
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, December 31, 2018
 
 
276
 
 
$
20.20
 
 
 
2.7
 
 
$
-
 
 
The following table presents information related to warrants at December 31, 2018 (in thousands, except years and per warrant data):
 
Warrants Outstanding
 
Warrants Exercisable
 
Exercise Price
 
Outstanding

Number of

Warrants
 
 
Weighted

Average

Remaining

Life in

Years
 
 
Exercisable

Number of

Warrants
 
$4.40 - $39.99
 
 
233
 
 
 
3.1
 
 
 
233
 
$40.00 - $105.00
 
 
43
 
 
 
0.3
 
 
 
43
 
 
 
 
276
 
 
 
2.4
 
 
 
276
 
 
Stock Options
 
During 2017, the Company granted ten-year options to purchase an aggregate of 258,105 shares of common stock at exercise prices ranging from $2.09 to $5.70 per share with an aggregate grant date value of $642,000 to non-executive employees and directors pursuant to the 2014 Plan. The options vest as follows: (i) 45,045 shares vest one-twelfth monthly over one year, and (ii) 213,060 shares vest in one-fourth increments every six months over a period of two years. The grant date value is being amortized over the vesting term.
 
In applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:
 
 
 
Year Ended December 31,
 
 
 
2018
 
 
2017
 
Risk free interest rate
 
 
N/A
 
 
 
1.81%-2.43
%
Expected term (years)
 
 
N/A
 
 
 
5.04-6.50
 
Expected volatility
 
 
N/A
 
 
 
81.94% - 87.00
%
Expected dividends
 
 
N/A
 
 
 
0.00
%
 
The risk-free interest rate is based on rates of treasury securities with the same expected term as the options. The Company uses the “simplified method” to calculate the expected term of employee and director stock-based options. The expected term used for consultants is the contractual life. The Company is utilizing an expected volatility figure based on a review of the Company’s historical volatility, over a period of time, equivalent to the expected life of the instrument being valued. The expected dividend yield is based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the near future.
 
Option forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate will be adjusted periodically based on the extent to which actual option forfeitures differ, or are expected to differ, from the previous estimate, when it is material. The Company estimated forfeitures related to options at annual rates ranging from 0% to 5% for options outstanding at December 31, 2018 and 2017.
 
There were no options granted during the year ended December 31, 2018. The weighted average estimated grant date fair value of the options granted during the year ended December 31, 2017 was $2.49 per share.
 
A summary of the stock option activity during the years ended December 31, 2018 and 2017 is presented below (in thousands, except years and per option data):
 
 
 
Number of

Options
 
 
Weighted

Average

Exercise

Price per

Option
 
 
Weighted

Average

Remaining

Life in

Years
 
 
Intrinsic Value
 
Outstanding, December 31, 2016
 
 
720
 
 
$
52.90
 
 
 
 
 
 
 
 
 
Granted
 
 
258
 
 
 
3.53
 
 
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
Forfeited
 
 
(168
)
 
 
40.60
 
 
 
 
 
 
 
 
 
Outstanding, December 31, 2017
 
 
810
 
 
$
39.67
 
 
 
 
 
 
 
 
Granted
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
Forfeited
 
 
(434
)
 
 
31.42
 
 
 
 
 
 
 
 
 
Outstanding, December 31, 2018
 
 
376
 
 
$
49.29
 
 
 
4.3
 
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exerciseable, December 31, 2018
 
 
376
 
 
$
49.29
 
 
 
4.3
 
 
$
-
 
 
As a result, a summary of the Company’s outstanding and exercisable options as of December 31, 2018 was as follows (in thousands, except years and per option data):
 
 
 
Options Outstanding
 
 
Options Exercisable
 
 
 
 
Range of

Exercise Price
 
Weighted

Average

Exercise

Price
 
 
Outstanding

Number of

Options
 
 
Weighted Average

Exercise Price
 
 
Weighted

Average

Remaining

Life in

Years
 
 
Exercisable

Number of

Options
 
$2.00 - $4.00
 
$
3.64
 
 
 
52
 
 
 
3.64
 
 
 
8.5
 
 
 
52
 
$4.10 - $9.90
 
 
8.72
 
 
 
23
 
 
 
8.72
 
 
 
7.4
 
 
 
23
 
$10.00 - $19.90
 
 
10.50
 
 
 
8
 
 
 
10.50
 
 
 
7.2
 
 
 
8
 
$20.00 - $39.90
 
 
33.47
 
 
 
40
 
 
 
33.47
 
 
 
4.4
 
 
 
40
 
$40.00 - $49.90
 
 
44.54
 
 
 
33
 
 
 
44.54
 
 
 
3.3
 
 
 
33
 
$50.00 - $59.90
 
 
53.87
 
 
 
26
 
 
 
53.87
 
 
 
1.2
 
 
 
26
 
$60.00 - $69.90
 
 
65.91
 
 
 
152
 
 
 
65.91
 
 
 
3.6
 
 
 
152
 
$70.00 - $79.90
 
 
79.40
 
 
 
1
 
 
 
79.40
 
 
 
5.3
 
 
 
1
 
$80.00 - $89.90
 
 
87.50
 
 
 
18
 
 
 
87.50
 
 
 
2.2
 
 
 
18
 
$90.00 - $99.90
 
 
90.00
 
 
 
18
 
 
 
90.00
 
 
 
2.1
 
 
 
18
 
$100.00 - $266.90
 
 
109.40
 
 
 
5
 
 
 
109.40
 
 
 
1.4
 
 
 
5
 
 
 
 
49.29
 
 
 
376
 
 
 
49.29
 
 
 
4.3
 
 
 
376