Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.20.1
Stockholders' Equity
12 Months Ended
Dec. 31, 2019
Stockholders' Equity  
Stockholders' Equity

Note 6 - Stockholders’ Equity

Common Stock

The Company is authorized to issue 60,000,000 common shares with a par value of $0.0001 per share, of which 7,000,000 shares are designated as “Class A common stock.” As of December 31, 2019, there were  7,000,000 shares of Class A common stock issued and outstanding to Fortress. Dividends are to be distributed pro-rata to the Class A and common stock-holders. The holders of common stock are entitled to one vote per share of common stock held. The Class A common stock-holders are entitled to a number of votes per share equal to 1.1 times a fraction, the numerator of which is the sum of the shares of outstanding common stock and the denominator of which is the number of shares of Class A common stock. Accordingly, the holder of shares of Class A common stock will be able to control or significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions. Each share of Class A common stock is convertible, at the option of the holder thereof, into one (1) fully paid and non-assessable share of common stock subject to adjustment for stock splits and combinations.

In November 2017, the Company filed a shelf registration statement (No. 333-221493) on Form S‑3 (the "S‑3"), which was declared effective in December 2017. Under the S‑3, the Company may sell up to a total of $100 million of its securities. In connection with the S‑3, the Company entered into an ATM with Cantor Fitzgerald & Co., Ladenburg Thalmann & Co. Inc. and H.C. Wainwright & Co., LLC (each an "Agent" and collectively, the "Agents"), relating to the sale of shares of common stock. Under the ATM, the Company pays the Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock.

Pursuant to the Founders Agreement, the Company issued 960,428 shares of common stock to Fortress for the Annual Equity Fee, representing 2.5% of the fully-diluted outstanding equity of Checkpoint on January 1, 2019 (see Notes 2 and 4).

In November 2019, the Company completed an underwritten public offering, in which it sold 15,400,000 shares of its common stock at a price of $1.27 per share for gross proceeds of approximately $19.6 million. Total net proceeds from the offering were approximately $17.6 million, net of underwriting discounts and offering expenses of approximately $2.0 million. The shares were sold under the S-3.

During the year ended December 31, 2019, the Company sold a total of 2,273,189 shares of common stock under the ATM for aggregate total gross proceeds of approximately $8.0 million at an average selling price of $3.52 per share, resulting in net proceeds of approximately $7.8 million after deducting commissions and other transactions costs.

In March 2018, the Company completed an underwritten public offering, whereby it sold 5,290,000 shares of its common stock at a price of $4.35 per share for gross proceeds of approximately $23.0 million. Total net proceeds from the offering were approximately $20.8 million, net of underwriting discounts and offering expenses of approximately $2.2 million. The shares were sold under the S-3.

During the year ended December 31, 2018, the Company sold a total of 1,841,774 shares of common stock under the ATM for aggregate total gross proceeds of approximately $8.0 million at an average selling price of $4.33 per share, resulting in net proceeds of approximately $7.7 million after deducting commissions and other transactions costs.

Pursuant to the Founders Agreement, the Company issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the offerings noted above. Accordingly, the Company issued 441,816 shares and 178,292 shares to Fortress for the year ended December 31, 2019 and 2018, respectively, and recorded expenses of approximately $738,000 and $815,000 related to these stock grants, which is included in general and administrative expenses in the Company’s Statements of Operations for the years ended December 31, 2019 and 2018, respectively.

Pursuant to the Founders Agreement, the Company will  issue 1,459,305 shares of common stock to Fortress for the Annual Equity Fee, representing 2.5% of the fully-diluted outstanding equity of Checkpoint on January 1, 2020. The Company did not have enough unreserved authorized shares under its Certificate of Incorporation on January 1, 2020 to issue the shares for the Annual Equity Fee, therefore, in December 2019, Fortress and Checkpoint mutually agreed to defer the issuance until such time as the Checkpoint Charter has been amended in order to increase the number of authorized that may be issued thereunder (see Notes 2 and 4).

The S‑3 is currently the Company’s only active shelf registration statement. Subsequent to the offerings noted above, approximately $41.4 million of the shelf remains available for sale under the S‑3. The Company may offer the securities under the S‑3 from time to time in response to market conditions or other circumstances if it believes such a plan of financing is in the best interests of its stockholders. The Company believes that the S‑3 provides it with the flexibility to raise additional capital to finance its operations as needed.

Equity Incentive Plan

The Company has in effect the Amended and Restated 2015 Incentive Plan (“2015 Incentive Plan”). The 2015 Incentive Plan was adopted in March 2015 by our stockholders. Under the 2015 Incentive Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to directors, officers, employees and consultants. An amendment to the 2015 Incentive Plan was approved by stockholders in June 2017 to increase the shares available for issuance to 5,000,000 shares. The plan expires 10 years from the effective date of the amendment and limits the term of each option to no more than 10 years from the date of grant.

As of December 31, 2019, 1,465,805 shares are available for issuance under the 2015 Incentive Plan.

Restricted Stock

Certain employees, directors and consultants have been awarded restricted stock. The restricted stock vesting consists of milestone and time-based vesting. The following table summarizes restricted stock award activity for the year ended December 31, 2019 and 2018:

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

Grant Date Fair

 

    

Number of Shares

    

Value

Nonvested at December 31, 2017

 

2,611,116

 

$

3.89

Granted

 

616,240

 

 

3.75

Vested

 

(295,250)

 

 

0.29

Nonvested at December 31, 2018

 

2,932,106

 

$

4.22

Granted

 

800,652

 

 

3.33

Forfeited

 

(21,000)

 

 

3.16

Vested

 

(407,919)

 

 

1.96

Nonvested at December 31, 2019

 

3,303,839

 

$

4.29

 

As of December 31, 2019, there was $2.8 million of total unrecognized compensation cost related to non-vested restricted stock, which is expected to be recognized over a weighted-average period of 1.1 years. This amount does not include, as of December 31, 2019, 333,334 shares of restricted stock outstanding which are performance-based and vest upon achievement of certain corporate milestones. The expense is recognized over the vesting period of the award. Stock-based compensation for milestone awards will be measured and recorded if and when it is probable that the milestone will be achieved.

Stock Options

The following table summarizes stock option award activity for the year ended December 31, 2019 and 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

Remaining

 

 

 

 

Weighted Average

 

Contractual Life

 

    

Stock Options

    

Exercise Price

    

(in years)

Outstanding as of December 31, 2017

 

60,000

 

$

5.43

 

9.09

Granted

 

 —

 

 

 —

 

  

Outstanding as of December 31, 2018

 

60,000

 

$

5.43

 

8.09

Granted

 

100,000

 

 

2.56

 

 

Outstanding as of December 31, 2019

 

160,000

 

$

3.64

 

8.56

 

Upon the exercise of stock options, the Company will issue new shares of its common stock.

Warrants

A summary of warrant activities for year ended December 31, 2019 and 2018 is presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

Remaining

 

 

 

 

Weighted Average

 

Contractual Life

 

    

Warrants

    

Exercise Price

    

(in years)

Outstanding as of December 31, 2017

 

4,326,555

 

$

6.62

 

3.67

Exercised

 

(45,583)

 

 

 —

 

  

Outstanding as of December 31, 2018

 

4,280,972

 

$

6.69

 

2.33

Exercised

 

(73,525)

 

 

 —

 

 

Outstanding as of December 31, 2019

 

4,207,447

 

$

6.81

 

1.25

 

Upon the exercise of warrants, the Company will issue new shares of its common stock.

Stock-Based Compensation

The following table summarizes stock-based compensation expense for the years ended December 31, 2019 and 2018 (in thousands).

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 

 

    

2019

    

2018

Research and development

 

$

707

 

$

95

General and administrative

 

 

2,414

 

 

1,899

Total stock-based compensation expense

 

$

3,121

 

$

1,994