STOCK-BASED COMPENSATION AND WARRANTS (Tables)
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12 Months Ended |
Jun. 30, 2019 |
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| STOCK-BASED COMPENSATION AND WARRANTS |
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| Schedule of summary of combined stock option activity |
The following table sets forth a summary of combined stock option activity under the 2015 Plan, the 2016 Plan and the Terminated Plans for the fiscal years ended June 30, 2019 and 2018 (shares in thousands):
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2019
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2018
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Shares
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Price (1)
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Term (2)
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Shares
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Price (1)
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Term (2)
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Outstanding, beginning of fiscal year
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19,415
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$
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1.55
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7.8
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21,291
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$
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1.65
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7.7
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Granted
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1,125
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0.52
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255
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1.08
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Forfeited
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(6,675)
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1.53
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(1,881)
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1.62
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Expired
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—
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—
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(250)
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4.50
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Outstanding, end of fiscal year
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13,865
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1.60
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6.4
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19,415
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1.55
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7.8
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Vested, end of fiscal year
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9,604
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1.85
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5.7
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11,399
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1.92
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6.4
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(1)
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Represents the weighted average exercise price.
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(2)
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Represents the weighted average remaining contractual term until the stock options expire.
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| Schedule of the fair value of stock options was estimated on the date of grant using the BSM option-pricing model using following weighted-average assumptions |
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2019
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2018
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Grant date fair value of common stock
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$
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0.52
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$
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1.08
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Expected volatility
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84
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%
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84
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%
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Risk free interest rate
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2.8
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%
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2.1
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%
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Expected term (years)
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7.0
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7.0
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Dividend yield
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—
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%
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—
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%
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| Schedule of Stock-based compensation expense |
Stock-based compensation expense for the fiscal years ended June 30, 2019 and 2018 is included in compensation and benefits under the following captions in the consolidated statements of operations (in thousands):
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2019
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2018
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Research and development
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$
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538
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$
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982
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General and administrative
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2,098
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4,113
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Total
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$
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2,636
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$
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5,095
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| Summary of warrant activity |
Presented below is a summary of warrant activity for the fiscal years ended June 30, 2019 and 2018 (shares in thousands):
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2019
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2018
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Shares
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Price (1)
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Term (2)
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Shares
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Price (1)
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Term (2)
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Outstanding, beginning of fiscal year
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45,635
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$
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1.37
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3.4
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32,796
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$
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1.71
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3.7
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Warrants issued for:
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Consulting services
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—
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—
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650
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(3)
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1.03
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Debt discount for Fiscal 2018 Notes
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—
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—
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12,185
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(4)
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0.52
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Placement agent debt discount
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—
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—
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289
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(5)
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0.52
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Modification for debt discount to
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former member of Board of Directors:
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Replacement warrant
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1,207
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(6)
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0.18
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—
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—
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Canceled warrant
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(500)
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(6)
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0.52
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—
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—
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Warrant expirations
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(345)
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2.41
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(285)
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2.43
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Outstanding, end of fiscal year
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45,997
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1.34
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2.3
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45,635
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1.37
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3.4
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(1)
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Represents the weighted average exercise price.
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(2)
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Represents the weighted average remaining contractual term until the warrants expire.
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(3)
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Consists of three warrants for an aggregate of 650,000 shares granted to consultants for services that were immediately exercisable. The commitment date fair value of approximately $0.5 million is included in consulting expense for the fiscal year ended June 30, 2018. The fair value of these warrants was determined on the commitment date using the BSM option-pricing model. Key weighted average assumptions included the grant date fair value of Company’s Common Stock of $1.07 per share, expected volatility of 82%, a risk-free interest rate of 2.1%, and a remaining term of 6.5 years.
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(4)
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The aggregate commitment date fair value of the warrants issued to convertible note holders and the placement agent was approximately $3.8 million. The warrants and debt were recorded based on their relative fair value which resulted in a debt discount of $2.5 million related to the Fiscal 2018 Notes discussed in Note 5. The fair value of these warrants was determined on the commitment date using the BSM option-pricing model. Key weighted average assumptions included the grant date fair value of Company’s Common Stock of $0.45 per share, expected volatility of 96%, a risk-free interest rate of 2.8%, and an estimated term of 5.0 years.
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(5)
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Pursuant to the terms of the warrants, the exercise price was not established until June 30, 2018 so the fair value of these warrants was determined using a lattice option-pricing model. Key weighted average assumptions included the grant date fair value of Company’s Common Stock of $0.58 per share, expected volatility of 86%, a risk-free interest rate of 2.8%, a remaining term of 10 years, and a discount rate of 20%.
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(6)
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As discussed in Note 10, in January 2019 the Company agreed to modify a warrant originally issued in June 2018 for 500,000 shares that was exercisable at $0.52 per share. This warrant was originally issued in connection with one of the Fiscal 2018 Notes issued to a former member of the Board of Directors. The difference between the fair value of the modified warrant and the fair value of the canceled warrant amounted to $138,000, which was accounted for as an additional debt discount that was charged to interest expense upon repayment of the Fiscal 2018 Notes on January 30, 2019. Key assumptions for valuation of the modified warrant and the canceled warrant included the fair value of Company’s Common Stock on the modification date of $0.23 per share, expected volatility of 100%, a risk-free interest rate of 2.5%, and an estimated remaining term of 4.0 years.
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