Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.19.2
Stockholders' Equity
9 Months Ended
Apr. 30, 2019
Equity [Abstract]  
Stockholders' Equity

Note 7—Stockholders’ Equity

 

Aspire Capital

 

On March 29, 2019, the Company entered into a common stock purchase agreement (the “Purchase Agreement”) with Aspire Capital Fund, LLC, (“Aspire Capital”) pursuant to which the Company agreed to issue and sell to Aspire Capital shares of its common stock equal to an aggregate amount of up to $20.0 million at the Company’s request from time to time during a 30-month period. The Company has filed with the Securities and Exchange Commission a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 registering all the shares of common stock that may be offered to Aspire Capital from time to time. In consideration for entering into the Purchase Agreement the Company issued to Aspire Capital 120,201 shares of the Company’s common stock which represented 3% of the aggregate commitment.

 

Under the Purchase Agreement, on any trading day selected by the Company, the Company has the right, in its sole discretion, to present Aspire Capital with a purchase notice, directing Aspire Capital to purchase up to 30,000 shares of the Company’s common stock per business day, up to $20.0 million of the Company’s common stock in the aggregate at a per share price equal to the lesser of:

 

  the lowest sale price of the Company’s common stock on the purchase date; or
     
  the arithmetic average of the three (3) lowest closing sale prices for the Company’s common stock during the ten (10) consecutive trading days ending on the trading day immediately preceding the purchase date.

 

Upon execution of the Purchase Agreement, the Company agreed to sell to Aspire Capital 400,674 shares of common stock for total proceeds, before expenses, of $2,000,000. Additionally, in April 2019, the Company sold a total of 90,000 shares of its common stock to Aspire Capital resulting in the Company receiving total proceeds, before expenses, of approximately $520,000 in cash. There were no underwriting or placement agent fees associated with the offering.

 

On May 27, 2019, the Company terminated the Purchase Agreement.

 

Alpha Holdings

 

On August 31, 2018, the Company entered into a stock purchase agreement (the “Agreement”) with Alpha Holdings, Inc. (“Alpha Holdings”), pursuant to which the Company agreed to issue and sell to Alpha Holdings shares of its common stock equal to an aggregate amount of up to $15.0 million at a market purchase price of $15.00 per share, which was the closing price of the Company’s common stock the day immediately before the Agreement was executed by the parties.

 

On October 9, 2018, the Company received total proceeds, before expenses, of $8.0 million in cash from the offering and issued Alpha Holdings 533,333 shares of common stock at a purchase price of $15.00 per share. There were no underwriting or placement agent fees associated with the offering.

 

On December 6, 2018, the Company received total proceeds, before expenses, of $7.0 million in cash from the offering and issued Alpha Holdings 466,666 shares of common stock at a purchase price of $15.00 per share. There were no underwriting or placement agent fees associated with the offering.

 

Controlled Equity Offering Sales Agreement

 

On November 2, 2018, the Company entered into a controlled equity offering sales agreement (“Sales Agreement”) with Cantor Fitzgerald & Co, regarding an at-the-market offering, pursuant to which the Company may, from time to time, issue and sell shares of common stock having an aggregate offering price of up to $30.0 million. The Company is not obligated to make any sales of shares under the Sales Agreement. To date, the Company has not made any sales of shares under the Sales Agreement.

 

On May 27, 2019, the Company terminated the Sales Agreement.

 

Common Stock Option Exercise

 

During the nine months ended April 30, 2019, shares of common stock issued related to option exercises totaled 43,029. The Company realized proceeds of $0.6 million from the stock option exercises.

 

February 2018 Offering

 

On February 6, 2018, the Company completed a follow-on public offering, selling 1,333,333 shares at an offering price of $15.00 per share. Additionally, the underwriters exercised in full their over-allotment option to purchase an additional 200,000 shares at an offering price of $15.00 per share. Aggregate gross proceeds from this follow-on public offering, including the exercise of the over-allotment option, were approximately $23.0 million, and net proceeds received, after underwriting fees of approximately $1.7 million and offering expenses of approximately $0.5 million, were approximately $20.8 million.

 

November 2017 Warrant Exercise Inducement Offering

 

On November 13, 2017, the Company entered into a warrant exercise agreement with certain holders of outstanding warrants (the “Original Warrants”) to purchase up to an aggregate of 550,964 shares of the Company’s common stock at an exercise price of $16.90 per share. Pursuant to the terms of the warrant exercise agreement, each holder agreed to exercise, from time to time and in accordance with the terms of the Original Warrants, including certain beneficial ownership limitations set forth therein, all Original Warrants held by it for cash. As a result of the exercise of all of the Original Warrants, the Company received gross proceeds of approximately $9.3 million and net proceeds, after deducting estimated expenses paid or payable by the Company, of approximately $9.1 million.

 

Pursuant to the terms of the warrant exercise agreement, and in order to induce each holder to exercise its Original Warrants, the Company issued 137,741 new warrants to purchase a number of shares of its common stock which is equal to 25% of the number of shares of common stock received by such holders upon the cash exercise of its Original Warrants. The terms of the inducement warrants are substantially similar to the terms of the Original Warrants, except that the inducement warrants: (i) have an initial exercise price of $22.60 per share; (ii) become exercisable on May 13, 2018 and expire on November 13, 2019; and, (iii) contain certain additional transfer restrictions and limitations due to their offer and sale in a private placement offering.

 

Also on November 13, 2017, and in connection with its entry into the warrant exercise agreement, the Company agreed to issue warrants to purchase up to an aggregate of 113,830 shares of its common stock to the accredited investors that participated in the Company’s offerings completed in October 2017, in consideration for such investors agreement to waive certain covenants made by the Company to such investors and as an inducement to such investors to exercise certain other warrants to purchase the Company’s common stock. The terms of the October 2017 investor warrants are substantially similar to the terms of the new warrants, except that the October 2017 investor warrants will become exercisable only if and when each October 2017 investor exercises in full and for cash the warrants to purchase the Company’s common stock that were sold to such investors in the Company’s offerings completed in October 2017.

 

The warrants issued in connection with the warrant exercise agreement were considered inducement warrants and are classified in equity. The fair value of the warrants issued was approximately $2.5 million (based on the Black-Scholes option valuation model assuming no dividend yield, a 2.0-year life, volatility of 73.12% and a risk-free interest rate of 1.7%). The fair value of the inducement warrants of $2.5 million was expensed as warrant inducement expense in the accompanying condensed consolidated statement of operations for the three and nine months ended April 30, 2018.

 

First October 2017 Offering

 

On October 25, 2017, the Company completed an offer and sale to certain accredited investors of, in a registered public offering, 527,093 shares of its common stock and, in a concurrent private placement offering, warrants to purchase an aggregate of up to 395,320 shares of its common stock, all at a purchase price of $13.4375 per share. The warrants have an initial exercise price of $12.50 per share, became exercisable on October 25, 2017 and expire on April 25, 2022. The gross proceeds of the offering were $7.1 million and the net proceeds, after deducting the placement agent’s fee and other offering fees and expenses paid or payable by the Company (and excluding the proceeds, if any, from any cash exercise of the warrants), were approximately $6.2 million. In connection with the offering, the Company paid the placement agent (i) a cash fee equal to 5.5% of the gross proceeds of the offering, as well as offering expenses in a nonaccountable sum of $60,000, and (ii) warrants to purchase up to an aggregate of 31,625 shares of its common stock. The warrants issued to the placement agent are exercisable at an exercise price of $16.80 per share, became exercisable on their original issuance date and expire on October 21, 2022.

 

The fair value of the warrants issued to the purchasers in the offerings, based on their fair value relative to the common stock issued, was approximately $2.4 million (based on the Black-Scholes option valuation model assuming no dividend yield, a 5.5-year life, volatility of 75.55% and a risk-free interest rate of 2.12%). The fair value of the warrants issued to the placement agent in the offerings was $0.2 million (based on the Black-Scholes option valuation model assuming no dividend yield, a 5.0-year life, volatility of 73.25% and a risk-free interest rate of 2.06%). The Company completed an evaluation of these warrants and determined they should be classified as equity within the accompanying condensed consolidated balance sheets.

 

Second October 2017 Offering

 

On October 25, 2017, the Company completed an offer and sale to one accredited investor of 80,000 shares of its common stock and warrants to purchase up to 60,000 shares of its common stock, all at a purchase price of $13.4375 per share and associated warrant. The warrants have an initial exercise price of $12.50 per share, became exercisable on April 27, 2018 and will expire on April 27, 2022. The gross proceeds of the offering were $1.1 million and the net proceeds, after deducting the placement agent’s fee and other offering fees and expenses paid or payable by the Company (and excluding the proceeds, if any, from any cash exercise of the warrants), were approximately $1.0 million. In connection with the offering, the Company paid the placement agent (i) a cash fee equal to 5.5% of the gross proceeds of the offering, as well as offering expenses in a non-accountable sum of $15,000, and (ii) warrants to purchase up to an aggregate of 4,800 shares of its common stock. The warrants issued to the placement agent are exercisable at an exercise price of $16.80 per share, became exercisable on their original issuance date and expire on October 25, 2022.

 

The fair value of the warrants issued to the purchasers in the offering, based on their fair value relative to the common stock issued, was approximately $0.4 million (based on the Black-Scholes option valuation model assuming no dividend yield, a 5.5-year life, volatility of 75.51% and a risk-free interest rate of 2.12%). The fair value of the warrants issued to the placement agent in the offering was $31,000 (based on the Black-Scholes option valuation model assuming no dividend yield, a 5.0-year life, volatility of 73.22% and a risk-free interest rate of 2.06%). The Company completed an evaluation of these warrants and determined they should be classified as equity within the accompanying condensed consolidated balance sheets.

 

ATM Program

 

On July 25, 2017, the Company entered into an equity distribution agreement with Oppenheimer & Co. Inc. (“Oppenheimer”) to commence an “at the market” offering program (the “ATM Program”), under which the Company was permitted to offer and sell, from time to time through or to Oppenheimer, acting as sales agent or principal, shares of the Company’s common stock having an aggregate gross sales price of up to $8.4 million. An aggregate of 89,731 shares of the Company’s common stock were sold in the ATM Program during the nine months ended April 30, 2018, for net proceeds to the Company, after deducting Oppenheimer’s commissions and other expenses paid or payable by the Company, of $1.1 million. Effective as of October 22, 2017, the Company terminated the ATM Program. As a result of such termination, no further offers or sales of the Company’s common stock will be made in the ATM Program.

 

Outstanding Warrants

 

At April 30, 2019, the Company had outstanding warrants to purchase 892,890 shares of its common stock, with exercise prices ranging from $12.50 to $180.00, all of which were classified as equity instruments. These warrants expire at various dates between May 2019 and April 2023.