Warrants

3 Months Ended

Mar. 31, 2019

Warrants and Rights Note Disclosure [Abstract]

Warrants

(9) Warrants

2018 Warrants

On September 17, 2018, the Company issued warrants to purchase an aggregate of 1.2 million shares of Company common stock to the Investors with an exercise price of $0.01 per share and an expiration date of August 1, 2028 (the “2018 Warrants”). The issuance of the 2018 Warrants was a condition to the effectiveness of the 25^th Amendment. The fair value of the 2018 Warrants upon issue was determined to be $5.1 million (see Note 6, “Debt”). In accordance with ASC No. 815-40, the 2018 Warrants meet all requirements to be classified as equity awards. The number of shares of Company common stock issuable upon exercise of the 2018 Warrants is subject to standard and customary anti-dilution provisions for stock splits, stock dividends or similar transactions.

2019 Warrants

On April 1, 2019, the Company issued warrants to purchase an aggregate of 1.2 million shares of Company common stock to the Investors with an exercise price of $0.01 per share and an expiration date of April 1, 2029. As a result of the issuance of the warrant to purchase 1.2 million shares of common stock on April 1, 2019, the total outstanding common stock warrants as of April 1, 2019 was 2,910,609. The issuance of the 2019 Warrants was a condition to the effectiveness of the Second Amended and Restated Credit Agreement. The fair value of the 2019 Warrants upon issuance was determined to be $9 thousand. The significant decrease in value of the 2019 Warrants compared to the 2018 Warrants was attributable to the updated forecasts and assumptions used by the Company during the annual planning process for 2019 that resulted in our decision to conclude that a goodwill and intangible asset impairment charge was appropriate during the fourth quarter of 2018. See Note 4, “Goodwill and Intangible Assets.” The 2019 Warrants meet all the requirements to be classified as equity awards in accordance with ASC No. 815-40. The number of shares of Company common stock issuable upon exercise of the 2019 Warrants is subject to standard and customary anti-dilution provisions for stock splits, stock dividends, or similar transactions. See Note 15, “Subsequent Events.”

	Common Stock Warrants		Weighted Average Exercise Price
Outstanding at January 1, 2019		1,710,609	$	7.33
Issued		—		—
Expired		—		—
Outstanding at March 31, 2019		1,710,609	$	7.33

The estimated fair value was derived using a valuation model with the following weighted-average assumptions:

	Three Months Ended March 31,
	2019			2018
Value of underlying common stock (per share)	$	3.05		$	7.89
Risk free interest rate		2.3	%		2.3	%
Expected term in years		3.5			4.3
Volatility		93	%		98	%
Dividend yield		0	%		0	%

The following table summarizes our activities related to warrants accounted for as a derivative liability for the three months ended March 31, 2019 and 2018:

	2019		2018
Balance at January 1,		87,509		93,759
Derivative warrants issued		—		—
Derivative warrants exercised		—		—
Derivative warrants expired		—		—
Balance at March 31,		87,509		93,759

We utilize a lattice valuation model to determine the fair market value of the warrants accounted for as liabilities. The lattice valuation model accommodates the probability of exercise price adjustment features, as outlined in the warrant agreements. We recorded an unrealized loss of $15 thousand resulting from the change in the fair value of the warrant derivative liability for the three months ended March 31, 2019. Under the terms of some of our warrant agreements, at any time while the warrant is outstanding, the exercise price per share can be reduced to the price per share of future subsequent equity sales of our common stock or a common stock equivalent that is lower than the exercise price per share as stated in the warrant agreement.