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Series C-1 Convertible Preferred Stock
12 Months Ended
Dec. 31, 2019
Temporary Equity Disclosure [Abstract]  
Series C-1 Convertible Preferred Stock

(10) Series C-1 Convertible Preferred Stock

In October 2018, we entered into a Stock Purchase Agreement with certain institutional investors (the “Purchasers”), pursuant to which we issued and sold an aggregate of 18,459 shares of Series C-1 Convertible Preferred Stock (the “C-1 Preferred Shares”), at a purchase price of $2,167 per share. Each C-1 Preferred Share is convertible into 1,000 shares of our common stock at an initial conversion price of $2.167 per share of common stock, which represents a 10% premium over the prior day’s closing price on Nasdaq. The aggregate purchase price paid by the Purchasers C-1 Preferred Shares was approximately $40,000,000.  We received net proceeds of $39.9 million after offering expenses.

The Stock Purchase Agreement requires us to register the resale of the Common Stock underlying the C-1 Preferred Shares (the “Conversion Shares”), which occurred in the fourth quarter of 2018.

The C-1 Preferred Shares have been classified as temporary or mezzanine equity on our Consolidated Balance Sheets in accordance with U.S. GAAP as the C-1 Convertible Preferred Shares contain deemed liquidation rights that are a contingent redemption feature not solely in the Company’s control.

Conversion

The C-1 Preferred Shares are convertible at the option of the stockholder into the number of shares of Common Stock determined by dividing the stated value of the C-1 Preferred Shares being converted by the conversion price of $2.167, subject to adjustment for stock splits, reverse stock splits and similar recapitalization events. We will not effect any conversion of the C-1 Preferred Shares, and a stockholder shall not have the right to convert any portion of the C-1 Preferred Shares, to the extent that, after giving effect to the conversion such stockholder would beneficially own in excess of 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to a notice of conversion (the “Beneficial Ownership Limitation”). By written notice to us, a Purchaser may from time to time increase or decrease the Beneficial Ownership Limitation percentage not in excess of 19.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the shares of Common Stock pursuant to a notice of conversion; provided that any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the us.

In the year ended December 31, 2019, holders of shares of Series C-1 Preferred Stock converted a portion of such shares into 6.0 million shares of our common stock. As of December 31, 2019, 12,459 shares of Series C-1 Convertible Preferred Stock remained outstanding.

Voting

The C-1 Preferred Shares do not have voting rights. However, as long as any Preferred Shares are outstanding, we may not, without the affirmative vote of the holders of a majority of the then-outstanding C-1 Preferred Shares, (i) alter or change adversely the powers, preferences or rights given to the C-1 Preferred Shares or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, our Certificate of Incorporation or bylaws, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the C-1 Preferred Shares, regardless of whether any of the foregoing actions shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise, (ii) issue further C-1 Preferred Shares or increase or decrease (other than by conversion) the number of authorized C-1 Preferred Shares, or (iii) enter into any agreement with respect to any of the foregoing.

Dividends

The C-1 Preferred Shares are entitled to receive dividends equal (on an as-if-converted-to-Common-Stock-basis, without regard to the Beneficial Ownership Limitation) to and in the same form, and in the same manner, as dividends (other than dividends in the form of Common Stock) actually paid on shares of Common Stock when, and if paid.

Liquidation

In any liquidation or dissolution of the Company, the C-1 Preferred Shares are entitled to participate in the distribution of assets, to the extent legally available for distribution, on a pari passu basis with the Common Stock.

Redemption

If at any time while the C-1 Preferred Shares are outstanding, a) the Company effects any merger, consolidation, stock sale or other business combination (other than such a transaction in which the Company is the surviving or continuing entity and its common stock is not exchanged for or converted into other securities, cash or property), b) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, c) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which more than 50% of the common stock not held by the Company or is exchanged for or converted into other securities, cash or property, or d) the Company effects any reclassification of the common stock or any compulsory share exchange pursuant (other than as a result of a dividend, subdivision or combination covered above) to which the common stock is effectively converted into or exchanged for other securities, cash or property, (in any such case, a “Fundamental Transaction”) then, upon any subsequent conversion of the C-1 Preferred Shares, the holder shall have the right to receive, in lieu of the right to receive shares of common stock, for each share of common stock that would have been issued upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the equivalent amount of common stock.

Registration Payment Arrangement

We were required to file a registration statement covering the resale of the full number of shares no later than 30 days after the closing of the agreement and must use commercially reasonable efforts to cause the registration statement to be declared effective no later than 90 days after the closing date (no review by the SEC) or in the event of a review by the SEC, 120 days after the closing date. We filed, and the SEC declared effective this registration statement during 2018. If the registration statement is not maintained we must pay to each holder 1.0% of the holder’s ratable interest in the aggregate purchase price on the day of the filing/maintenance failure and on every thirtieth day thereafter until the filing/maintenance failure is cured, up to a maximum of 6% (six months). We currently deem the likelihood that we will ever be required to make payments under this arrangement to be remote, and as such no contingent liability has been recorded in our Consolidated Balance Sheets.