Stockholders' Equity | Stockholders’ Equity Common Stock On November 17, 2017, the Company entered into a CSPA with Aspire Capital that allows the Company to sell up to $10.0 million worth of common stock to Aspire Capital over a 24 month period. Upon execution of the agreement, Aspire Capital purchased from the Company 1,867,692 shares of common stock at a per share price of $0.5354 for a total purchase price of $1.0 million . The Company also issued to Aspire Capital 840,461 commitment shares. The Company incurred approximately $0.1 million in related issuance costs. Beyond the initial purchase, the Company, at its discretion, has the right to direct Aspire Capital to purchase additional shares up to a daily maximum of 200,000 shares. As of December 31, 2017, the Company sold an additional 400,000 shares to Aspire Capital for $0.2 million , resulting in a total of 3,108,153 shares issued to Aspire Capital. Equity Incentive Plans The Company has two stock plans that permit it to grant stock options, restricted stock awards and restricted stock units to employees (“Employee Plan”) and to directors (“Director Plan”). Stock options granted to employees generally vest 25% on the first anniversary of the grant date with the remainder vesting ratably over the remaining 36 months ; stock options generally expire 10 years after the date of grant. Restricted stock awards give the recipient the right to receive shares upon the lapse of the instruments’ time and/or performance-based restrictions. The restricted stock awards with time-based restrictions are considered outstanding at the time of grant, as the holders are entitled to dividends and voting rights. Employees may surrender a portion of their award shares to satisfy minimum statutory tax withholding obligations with respect to the vesting of restricted stock awards. Restricted stock awards with only performance-based restrictions are not considered outstanding until the performance criteria have been met and therefore are not entitled to dividends or voting rights at the time of grant. The performance-based restricted stock awards vest upon the achievement of pre-defined financial performance goals. During 2015, the Company granted a total of 1,200,000 shares of performance-based restricted stock awards, which vest on different dates, based on targeted trailing four quarters revenue of Open Mobile. In 2016, 600,000 shares of those performance-based restricted stock awards were canceled. In 2017, 600,000 shares of those performance-based restricted stock awards were canceled. As of December 31, 2017, there were no outstanding awards solely based on performance. During 2014, the Company granted a total of 420,000 shares of performance-based restricted stock awards that vest based on targeted quarterly revenue of Open Mobile which carry a service-condition to vest in full if performance has not been met at December 31, 2017; however, vesting will be accelerated upon the achievement of performance goals. None of the performance goals were met as of December 31, 2017 and 287,500 shares were canceled due to terminations while the remaining 132,500 shares were earned in full as of December 31, 2017. The following table summarizes the stock option and restricted stock activity under the Plans for the indicated periods: Shares Available for Future Grant Number of Options Outstanding Weighted Average Exercise Price per Share Weighted Average Grant Date Fair Value per Share Number of Restricted Stock Awards and Units Outstanding Weighted Average Grant Date Fair Value per Share Balance at December 31, 2014 25,526,755 6,820,892 $ 1.64 2,661,425 $ 1.65 Authorized 3,246,685 Granted (1) (5,373,000 ) 4,033,000 $ 0.97 $ 0.45 1,340,000 $ 0.92 Options Exercised (131,780 ) $ 0.88 Restricted Stock Vested (43,334 ) $ 1.25 Terminated/canceled/forfeited 4,083,092 (1,604,167 ) $ 1.99 (2,478,925 ) $ 1.66 Balance at December 31, 2015 27,483,532 9,117,945 $ 1.29 1,479,166 $ 0.98 Authorized 3,229,224 Granted (4,197,000 ) 4,137,000 $ 1.24 $ 0.62 60,000 $ 1.21 Options Exercised (2,650,009 ) $ 1.13 Restricted Stock Vested (93,335 ) $ 1.08 Terminated/canceled/forfeited 2,554,651 (1,924,651 ) $ 1.91 (630,000 ) $ 0.92 Reduce Evergreen Shares (2) (15,000,000 ) Balance at December 31, 2016 14,070,407 8,680,285 $ 1.18 815,831 $ 1.03 Authorized Granted (1,696,000 ) 1,646,000 $ 1.22 $ 0.63 50,000 $ 1.40 Options Exercised (175,926 ) $ 1.03 Restricted Stock Vested (66,666 ) $ 1.20 Terminated/cancelled/forfeited 1,675,877 (1,075,877 ) $ 1.43 (600,000 ) 0.90 Balance at December 31, 2017 14,050,284 9,074,482 $ 1.16 199,165 $ 1.04 (1) Restricted stock granted during 2015 included 140,000 awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. The remaining 1,200,000 shares of restricted stock with performance-based vesting criteria are not considered outstanding until the performance criterion has been met and as such, are excluded from shares outstanding . (2) On July 5, 2016, the Board of Directors of Company resolved to reduce the share reserve under the iPass Inc. 2003 Equity Incentive Plan ("Plan") by 15,000,000 shares, and eliminate the "evergreen" provision in the Plan. The aggregate intrinsic value of options exercised was approximately $0.1 million for the years ended December 31, 2017. The aggregate intrinsic value of options exercised were $0.8 million , and $0.1 million for the years ended December 31, 2016, and 2015, respectively. The following table summarizes the stock options outstanding and exercisable by range of exercise prices as of December 31, 2017: Options Outstanding Options Exercisable Range of Exercise Prices Number Weighted- Weighted- Number Weighted-Average $0.62— $0.94 3,135,880 7.47 $ 0.88 1,875,703 $ 0.90 0.95 — 1.18 3,053,290 7.62 1.14 1,643,158 1.12 1.19— 2.48 2,885,312 8.13 1.50 1,099,598 1.64 Total 9,074,482 7.73 1.16 4,618,459 1.15 Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (In thousands) Options outstanding at December 31, 2017 9,074,482 $ 1.16 7.73 $ — Options vested and expected to vest at December 31, 2017 8,521,198 $ 1.16 7.73 $ — Options exercisable at December 31, 2017 4,618,459 $ 1.15 7.02 $ — Stock-Based Compensation The following table sets forth the total stock-based compensation expense from operations included in the Company’s Consolidated Statements of Operations and Comprehensive Loss: Year Ended December 31, 2017 2016 2015 (In thousands) Network operations $ 53 $ 33 $ (186 ) Research and development 183 131 (92 ) Sales and marketing 212 153 (80 ) General and administrative 906 787 (220 ) Total $ 1,354 $ 1,104 $ (578 ) The following table sets forth the total stock-based compensation expense by award-type: Year Ended December 31, 2017 2016 2015 (In thousands) Stock options $ 1,169 $ 906 $ 484 Restricted stock 122 136 (1,138 ) Employee stock purchase plan 63 62 76 Total $ 1,354 $ 1,104 $ (578 ) As of December 31, 2017, there was $2.1 million of total unrecognized stock-based compensation expense related to stock options, net of expected forfeitures that will be recognized over the weighted average period of 2.4 years. As of December 31, 2017, there was less than $0.1 million of total unrecognized compensation cost related to the unvested restricted stock awards granted, net of expected forfeitures which is expected to be recognized over the remaining weighted average vesting period of 0.2 years. Valuation Assumptions The weighted average estimated fair value of stock options granted during the years ended December 31, 2017, 2016, and 2015 were calculated under the Black-Scholes option-pricing model, using the following weighted-average assumptions: Year Ended December 31, 2017 2016 2015 Risk-free rate 1.97 % 1.45 % 1.35 % Expected dividend yield — % — % — % Expected volatility 56 % 55 % 53 % Expected term 5.7 years 5.8 years 4.6 years Expected volatility is based on the historical volatility of the Company’s common stock. The expected term of stock options granted is based on the historical average expected term. The risk-free rate for periods within the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. During the year ended December 31, 2017, 2016 and 2015, the Company did not pay any cash dividends on its common stock and does not expect to pay cash dividends in the future. Employee Stock Purchase Plan Under the Company’s Employee Stock Purchase Plan (“ESPP”), the Company can grant stock purchase rights to all eligible employees during a one-year offering period with purchase dates at the end of each six-month purchase period (each April and October). As of December 31, 2017, the Company reserved 7.5 million shares of common stock for issuance under the ESPP plan and approximately 4.4 million shares remain available for future issuance. The ESPP plan permits employees to purchase common stock through payroll deductions of up to 15% on an employee’s compensation, including commissions, overtime, bonuses and other incentive compensation. The purchase price per share is equal to the lower of 85% of the fair market value per share at the beginning of the offering period, or 85% of the fair market value per share on the semi-annual purchase date. No participant may purchase more than 2,500 shares per offering or $25,000 worth of common stock in any one calendar year. During the years ended December 31, 2017, 2016 and 2015, 139,592 , 51,341 , and 79,009 shares were purchased at average per share prices of $0.83 , $0.72 , and $0.91 , respectively. Compensation cost related to the Company’s employee stock purchase plan is calculated using the fair value of the employees’ purchase rights granted. The estimated fair value of employee purchase rights granted during the years ended December 31, 2017, 2016, and 2015 was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions: Year Ended December 31, 2017 2016 2015 Risk-free rate 1.38 % 0.58 % 0.32 % Expected dividend yield — % — % — % Expected volatility 92 % 44 % 62 % Expected term 0.5 to 1 year 0.5 to 1 year 0.5 to 1 year Stock Repurchase Program On November 3, 2015, the Board authorized a share repurchase program of up to $3.0 million of the Company’s Common Stock beginning in the fourth quarter of 2015. Under the repurchase program, the Company was authorized to repurchase shares through open market purchases, in accordance with applicable federal securities laws, including through trading plans under Rule 10b5-1 of the Securities and Exchange Act of 1934. The repurchase program ran through December 31, 2016. The number of shares repurchased and the timing of purchases were based on general business and market conditions, and other factors, including legal requirements. During 2015, no shares had been repurchased under this program. During 2016, the Company repurchased 339,228 shares for $ 345,296 under the repurchase program, for an average price of $1.02 per share. As of December 31, 2016 the repurchase program terminated. |