Note 9 - Common Stock

Shelf Registration

In March 2017, the Company filed a shelf registration statement on Form S‑3 (the “Shelf Registration Statement”) with the SEC to register the Company’s common stock and warrants in an aggregate amount of up to $100.0 million for offerings from time to time, as well as 5.0 million shares of common stock available for sale by selling shareholders. The Shelf Registration Statement was declared effective in April 2017 by the SEC and expires in March 2020. Approximately $66.7 million remained available under the Shelf Registration Statement as of September 30, 2019. However, such availability may be limited due to the number of remaining authorized shares available for the Company to issue.

Public Offerings

In June 2019, the Company completed a public offering whereby it issued 30.0 million shares of its common stock at a stock price of $0.40, generating gross proceeds of $12.0 million. In connection with this offering, the placement agent received a 7% commission of $840,000, and $230,000 as compensation for other costs related to the offering. The placement agent also received 2.1 million warrants with an exercise price of $0.50 and an expiration date of June 17, 2024 (“Placement Agent Warrants”). Such Placement Agent Warrants provide for cashless exercise, which the placement agent may elect if the Company does not have an effective registration statement registering, or the prospectus contained therein is not available for the issuance of, the shares underlying the warrants. The Company also incurred expenses related to legal, accounting and other registration costs of $173,000. The shares were offered and sold pursuant to the Company’s Shelf Registration Statement.

In August 2018, the Company completed a confidentially marketed public offering whereby it issued 20.0 million shares of its common stock at a stock price of $0.40, along with investor warrants to purchase up to 20.0 million shares of common stock, generating gross proceeds of $8.0 million. In connection with the offering, the underwriter received a 7% commission of $560,000. The Company also incurred expenses related to legal, accounting, and other registration costs of $284,000. The shares and the warrants were offered and sold pursuant to the Company’s Shelf Registration Statement.

The investor warrants have an exercise price of $0.40 per share and are exercisable immediately with a term of five years from issuance. The warrants include a provision where the warrant holder has the contractual right to request a cash exercise if the effectiveness of the registration statement is not maintained, but securities law would prevent the Company from issuing registered shares in a cash exercise. Therefore, the Company could be forced to cash settle the warrants. Based on this derivative feature, these warrants must be accounted for as a liability at fair value under Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging”. On the date of issuance, these warrants were valued at $8.0 million.

The Company’s net cash proceeds from the confidentially marketed public offering totaled $7.2 million. When the additional non-cash charges of $8.0 million related to the 20.0 million warrants were offset against the net cash transaction proceeds, the non-cash charges exceeded 100% of the proceeds. Therefore, the Company was required to take the additional cost above the transaction proceeds and recognize a loss on the day it entered into the transaction. The loss on the transaction was $853,000 and this amount is included in the derivative gain on the statement of operations.

Equity Distribution Agreement

In April 2019, the Company entered into an Equity Distribution Agreement with a placement agent to implement an “at-the-market” equity program under which the Company, from time to time could offer and sell shares of its common stock, having an aggregate offering price of up to $24.65 million (the “Shares”) through the placement agent. The Company had no obligation to sell any of the Shares and could at any time suspend sales under the Equity Distribution Agreement or terminate the Equity Distribution Agreement in accordance with its terms. The Company provided the placement agent with customary indemnification rights. The placement agent was entitled to a fixed commission of 3.0% of the gross proceeds from shares sold. In conjunction with the public offering noted above, the Company terminated the Equity Distribution Agreement in June 2019.

The following table summarizes the Company’s sales under the Equity Distribution Agreement:


	Equity Distribution Agreement

Total shares of common stock sold		254,984

Average price per share	$	0.56
Gross Proceeds	$	142,000
Commissions earned by placement agent	$	4,000
Legal fees	$	140,000

Common Stock Issued for Services

The Company issued 136,362 and 17,241 shares of common stock valued at $60,000 and $60,000, respectively, to certain non-employee directors as part of their annual director compensation for fiscal years 2019 and 2018, respectively.