Warrants

3 Months Ended

Mar. 31, 2019

12. 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 Company’s November 2018 private placement, the Company issued warrants to purchase an aggregate

of 18,939,394

shares of common stock which are exercisable six months after the closing of the private placement. 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.