Quarterly report pursuant to Section 13 or 15(d)

Warrants

v3.23.3
Warrants
9 Months Ended
Sep. 30, 2023
Warrants  
Warrants

7. Warrants

 

The following is a summary of activity in the number of warrants outstanding to purchase the Company’s common stock for the nine months ended September 30, 2023 (in thousands):

 

Summary of Warrant Activity

   

Warrants

Accounted for as: Equity

   

Warrants

Accounted for as:

Liabilities

       
    May 2018
Warrants
    October 2013
Warrants
    January 2014
Warrants
    Total  
Outstanding, December 31, 2022          -       2       11       13  
Exercised     -       -       -       -  
Granted     -       -       -       -  
Expired     -       -       -       -  
Outstanding, September 30, 2023     -       2       11       13  
Expiration date:     -       10/24/2023       01/16/2024       -  

 

Warrants Classified as Liabilities

 

Liability-classified warrants consist of warrants issued by Biozone Pharmaceuticals, Inc. (“Biozone”), the Company’s predecessor, in connection with an equity financing in October 2013 which were assumed by the Company in connection with its merger with Biozone in January 2014 and warrants issued by the Company in January 2014. Warrants accounted for as liabilities have the potential to be settled in cash or are not indexed to the Company’s own stock.

 

 

The estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the condensed consolidated statement of operations as changes in fair value of derivative liabilities.

 

The fair value of the warrants classified as liabilities is estimated using the Black-Scholes option-pricing model with the following inputs as of September 30, 2023:

 

Schedule of Fair Value of Warrants Classified as Liabilities

    October 2013
Warrants
    January 2014
Warrants
 
             
Strike price   $ 180.00     $ 180.00  
Expected dividend yield     0.00 %     0.00 %
Contractual term (years)     0.1       0.3  
Cumulative volatility     133.64 %     134.93 %
Risk-free rate     4.93 %     4.89 %
Value per warrants   $ 0.00     $ 0.00  
Fair value (in thousands)   $ 0.00     $ 0.00  

 

The fair value of the warrants classified as liabilities is estimated using the Black-Scholes option-pricing model with the following inputs as of December 31, 2022:

 

    October 2013
Warrants
    January 2014
Warrants
 
             
Strike price   $ 180.00     $ 180.00  
Expected dividend yield     0.00 %     0.00 %
Expected term (years)     0.8       1.0  
Cumulative volatility     143.06 %     145.00 %
Risk-free rate     4.42 %     4.40 %
Fair value (in thousands)   $ 0.00     $ 0.00  

 

The Company estimates volatility using its own historical stock price volatility. The expected life assumption is based on the remaining contractual terms of the warrants. The risk-free rate is based on the zero-coupon rates in effect at the balance sheet date. The dividend yield used in the pricing model is zero, because the Company has no present intention to pay cash dividends.