MNKD 2017 Annual Report

2017, and expanded limits on employee remuneration. The Company has calculated its best estimate of the impact of the Act in its year end income tax provision in accordance with its understanding of the Act and guidance available as of the date of this filing, and as a result, the Company recorded no additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities is based on the rates at which they are expected to reverse in the future. The impact of this Act was a decrease of deferred tax assets approximately $301 million, offset by a decrease in valuation allowance of $301 million, resulting in no additional income tax expense or benefit. No provisional amount was recorded related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings. Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has determined that the provisional amounts recorded are a reasonable estimate at December 31, 2017. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 during which the analysis is complete. 17. Warrants In May 2016, the Company sold in a registered offering an aggregate of 9,708,737 shares of common stock together with A Warrants exercisable for up to an aggregate of 7,281,553 shares of common stock and B Warrants exercisable for up to an aggregate of 2,427,184 shares of common stock with a total fair value of $44.7 million. Each of the warrants had an exercise price of $7.50 per share. The A Warrants became exercisable upon issuance and expired two years thereafter. The B Warrants became exercisable beginning in May 2017 and expired 30 months after the date of issuance. The shares of common stock and the warrants are immediately separable and issued separately. The Company determined that the A Warrants required liability classification primarily due to a price- protection clause that applies in the event of certain dilutive financings. The fair value of the A Warrants was recorded as a warrant liability in the consolidated balance sheet at issuance and was adjusted to fair value at each reporting period until exercise or expiration. The Company determined that the B Warrants met the criteria for equity classification and accounted for such warrants in additional paid in capital. On September 29, 2017 the Company and four holders of 9.7 million A and B Warrants entered into separate, privately-negotiated exchange agreements, pursuant to which the Company agreed to issue to such holders an aggregate of 1,292,510 shares of the Company’s common stock (to be delivered on October 3, 2017) in exchange for such warrants. The warrant liability associated with the exchanged warrants was adjusted to fair value and $1.9 million, the fair value of the remaining obligation was reclassified into equity as of September 29, 2017. In addition, as of December 31, 2017, warrants to acquire approximately 32,000 shares of common stock were outstanding. See Note 11 – Common and Preferred Stock, for additional information. 18. Restructuring Charges As of December 31, 2017 and 2016, the Company had a remaining restructuring liability of $0.4 million and $1.4 million, respectively, which is recorded in accrued expenses and other current liabilities in the consolidated balance sheets. The Company expects to substantially pay out the remainder of this obligation by end of first quarter of 2018. 120