Warrants

12 Months Ended

Dec. 31, 2018

Warrants

The Company assesses whether an equity classified financial instrument is indexed to an entity’s own stock for purposes of determining whether a financial instrument should be treated as a derivative.

In connection with the November 2018

financing (Note 2),

the Company issued warrants to purchase an aggregate of 18,939,394 shares of common stock which are exercisable six months after the closing. The warrants have an exercise price of $3.01 per share and have a five-year term. The relative fair value of the warrants was estimated at $18.4 million using a Black-Scholes model with the following assumptions: expected volatility of 71%, risk free interest rate of 2.99%, expected life of five years and no dividends.

The Company assessed whether the warrants require accounting as derivatives. The Company determined that the warrants were

(1)

indexed to the Company’s own stock and (2) classified in stockholders’ equity

in accordance with

Financial Accounting Standards Board (FASB”) Accounting Standards Codification (“ASC”)

Topic 815,

Derivatives and Hedging

. As such, the Company has concluded the warrants meet the scope exception for determining whether the instruments require accounting as derivatives and should be classified in

stockholders’

equity.