EQUITY, SHARE-BASED COMPENSATION AND WARRANTS | NOTE 12. EQUITY, SHARE-BASED COMPENSATION AND WARRANTS On March 8, 2019, we issued and sold 3,046,668 shares of common stock for $3.00 per share and a pre-funded warrant (the Prefunded Warrant) exercisable into 1,003,344 shares of common stock for $2.99 per share, in a private placement. The Pre-Funded Warrant had an exercise price of $0.01 per share and was immediately exercisable; however, we had to obtain approval from our shareholders before the holder could exercise the Pre-Funded Warrant to the extent such exercise would result in the holder owning in excess of 19.99% of our common shares outstanding. The holder exercised the entire Pre-Funded Warrant automatically when our shareholders approved the exercise in June 2019. We determined the Pre-Funded Warrant qualified for equity accounting. The net proceeds from the offering of $11.6 million, after deducting commissions and other cash offering expenses of $0.5 million, are recorded in equity. We determined the exercise price of the warrant was nominal and, as such, have considered the 1,003,344 shares underlying the warrant to be outstanding effective March 8, 2019, for the purposes of calculating basic EPS. Summaries of equity activity for the six months ended June 30, 2019 and 2018, follow (in thousands, except share amounts). Shares Preferred Series G Common Preferred Stock Common Stock Accumulated Deficit Equity Balance, December 31, 2018 405 29,098,207 $ 201 $ 296,739 $ (273,229 ) $ 23,711 Sale of common stock and Pre-Funded warrant, net of costs - 3,046,668 - 11,593 - 11,593 Common stock awards under equity incentive plans - 36,881 - 364 - 364 Exercise of common stock warrants - 600,000 - 1,980 - 1,980 Conversion of preferred stock into common stock (180 ) 170,818 (89 ) 89 - - Exercise of common stock options - 77,078 - 60 - 60 Other - - - 28 - 28 Net loss - - - - (3,227 ) (3,227 ) Balance, March 31, 2019 225 33,029,652 112 310,853 (276,456 ) 34,509 Exercise of Prefunded Warrant - 1,003,344 - 10 - 10 Common stock awards under equity incentive plans - 134,984 - 219 - 219 Exercise of common stock options - 78,734 - 87 - 87 Other - - - 32 - 32 Net loss - - - - (3,659 ) (3,659 ) Balance, June 30, 2019 225 34,246,714 $ 112 $ 311,201 $ (280,115 ) $ 31,198 Shares Preferred Series G Common Preferred Stock Common Stock Accumulated Deficit Equity Balance, December 31, 2017 630 18,046,731 $ 313 $ 279,548 $ (265,128 ) $ 14,733 Common stock awards under equity incentive plans - 78,377 - 245 - 245 Exercise of common stock warrants - 1,827,999 - 1,755 - 1,755 Other - - - 75 - 75 Net loss - - - - (1,913 ) (1,913 ) Balance, March 31, 2018 630 19,953,107 313 281,623 (267,041 ) 14,895 Common stock awards under equity incentive plans - 208,829 - 148 - 148 Exercise of common stock warrants - 4,092,077 - 3,928 - 3,928 Other - - - 23 - 23 Net loss - - - - (2,160 ) (2,160 ) Balance, June 30, 2018 630 24,254,013 $ 313 $ 285,722 $ (269,201 ) $ 16,834 Common stock issued under equity incentive plans for the six months ended June 30, 2019 and 2018, follows. 2019 2018 Shares Issued Grant Date Fair Value Per Share Vesting Period (Years) Shares Issued Grant Date Fair Value Per Share Vesting Period (Years) Three Months Ended March 31: Directors 30,887 $ 3.22 1.0 50,469 $ 1.38 1.0 Consultant 5,994 $ 3.48 - 27,908 $ 1.42 - 36,881 78,377 Three Months Ended June 30 Directors 118,111 $ 2.86 1.0 208,829 $ 1.78 1.0 Consultant 16,873 $ 2.86 1.0 - NA NA 134,984 208,829 Options Stock option activity for the six months ended June 30, 2019 and 2018, follows. 2019 2018 Shares Under Options Weighted Average Exercise Price Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Life (Years) Shares Under Options Weighted Average Exercise Price Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Life (Years) Outstanding, January 1 950,727 $ 3.06 8.5 639,658 $ 8.83 7.2 Granted (1 ) 188,662 3.25 $ 2.05 10.0 278,873 1.42 $ 0.97 10.0 Cash exercised (77,078 ) 0.78 7.7 - NA NA Forfeited (25,548 ) 5.66 5.3 (2,047 ) 5.02 8.1 Outstanding, March 31 1,036,763 3.20 8.6 916,484 2.45 8.7 Granted 98,221 3.04 $ 1.84 10.0 - NA NA NA Cash exercised (2 ) (78,734 ) 1.10 8.2 - NA NA Forfeited (133,016 ) 2.92 0.3 (23,964 ) 1.21 8.5 Outstanding, June 30 923,234 $ 3.40 8.4 892,520 $ 2.49 8.4 (1) The options granted vest and become exercisable in annual or monthly installments ending four months from the date of grant. (2) Includes options for 31,955 shares of common stock at a weighted average exercise price of $1.16 per share for which we accelerated vesting upon termination of employment for an employee in June of 2019. We expensed $0.1 million of incremental expense upon acceleration of vesting. Restricted Stock Units Restricted stock unit (RSU) activity for the six months ended June 30, 2019 and 2018, follows. 2019 2018 RSU Shares Issued to Employees Unrecognized Stock Compensation (in thousands) Weighted Average Expense Period (Years) RSU Shares Issued to Employees Unrecognized Stock Compensation (in thousands) Weighted Average Expense Period (Years) Nonvested at January 1 1,215,000 $ 683 2.3 1,175,000 $ 161 3.0 Cancelled - - (705,000 ) (31 ) Expensed - (77 ) (11 ) Nonvested at March 31 1,215,000 606 2.0 470,000 119 2.8 Granted 132,062 107 2.3 - - Forfeited (250,000 ) (155 ) (130,000 ) (30 ) Expensed - (66 ) - (11 ) Nonvested at June 30 1,097,062 $ 492 1.9 340,000 $ 78 2.5 As of June 30, 2019, we have outstanding RSUs covering a total of 1,097,062 shares of our common stock. The shares subject to the RSUs vest based upon a vesting price equal to the volume weighted average trading price of our common stock over sixty-five consecutive trading days. Subject to a minimum service period in certain grants, as described in the next sentence, the RSU shares vest as to (i) 109,706 shares on the date the vesting price equals or exceeds $5.00 per share (ii) 329,119 shares the date the vesting price equals or exceeds $10.00 per share and (ii) 658,237 shares the date the vesting price equals or exceeds $15.00 per share. In certain RSUs, vesting occurs the later of the one-year anniversary of the grant and the date the shares reach the vesting price indicated in the preceding sentence. The RSUs expire on the fifth anniversary of each grant. Nonvested Stock Summaries of nonvested stock activity for the six months ended June 30, 2019 and 2018, follow (in thousands, except share and per share amounts). 2019 2018 Shares Granted Weighted Average Grant Date Fair Value Per Share Fair Value Unrecognized Stock Compensation Shares Granted Weighted Average Grant Date Fair Value Per Share Fair Value Unrecognized Stock Compensation (1 ) (2 ) (1 ) (2 ) Nonvested at January 1 193,965 $ 1.84 $ 582 $ 173 384,744 $ 0.94 $ 569 $ 176 Granted - NA NA - NA NA Vested - NA NA - NA NA Nonvested March 31 193,965 1.84 722 81 384,744 0.94 315 80 Granted to directors 118,111 2.86 338 208,875 1.78 372 Granted to consultants 16,873 2.86 48 - NA NA Vested (193,965 ) 1.84 566 (384,744 ) 0.94 686 Nonvested at June 30 (3) 134,984 $ 2.86 $ 393 $ 374 208,875 $ 1.78 $ 451 $ 360 (1) Represents pre-tax fair value, based on our closing stock prices, which would have been received by the holders of the stock had all such holders sold their underlying shares on the date indicated, the dates of grant or the dates of vesting, as applicable. (2) As of June30, 2019 and June 30, 2018, unrecognized compensation is amortizing over a remaining period of 1 year. (3) Excludes 830,104 shares, issued to a supplier, nonvested and unearned as of June 30, 2019. In February 2016, we issued 950,000 shares of common stock to that supplier. The shares are being held in escrow until earned (as defined in our agreement) by the supplier at a fixed price of $2.80 per share. Cumulatively, as of June 30, 2019, 119,896 shares have been released from escrow. We intend to recall any shares remaining in escrow, after the related supply agreement terminates in August 2019. Any recalled shares will be cancelled. During the three months ended June 30, 2019 and March 31, 2019, we released from escrow and expensed the value of 11,492 and 9,148 shares earned by a vendor, at $2.92 per share, the fair value of the shares on January 1, 2019, when we adopted ASU 2018-07. During the three months ended June 30, 2018 and March 31, 2018, we released from escrow and expensed the value of 10,660 shares ($2.16 per share) and 9,842 ($1.57 per share) shares earned by that vendor. The shares released from escrow in 2018 were valued at the fair value of the shares when earned, under the guidance for nonemployee awards in effect in 2018, prior to our adoption of ASU 2018-07. Warrants Warrant activity, excluding activity related to the Pre-Funded Warrant, for the six months ended June 30, 2019 and 2018, follows. 2019 2018 Shares Under Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Shares Under Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) (1) Outstanding, January 1 10,252,714 $ 2.25 2.3 21,157,273 $ 2.30 3.4 Issued (2) - NA NA 315,000 4.73 2.4 Cash exercised (600,000 ) 3.30 - (1,827,999 ) 0.96 4.1 Expired (950,614 ) 5.25 - - NA NA Outstanding, March 31 8,702,100 1.85 2.4 19,644,274 2.47 3.0 Cash exercised - NA NA (4,092,077 ) 0.96 3.7 Expired (989,875 ) 5.60 - (6,000 ) 16.80 - Outstanding, June 30 7,712,225 $ 1.37 2.4 15,546,197 $ 2.86 2.5 (1) Under the terms of certain outstanding warrants, the holders may elect to exercise the warrants under a cashless exercise feature. As of June 30, 2019, warrant holders may elect to exercise cashless warrants for 3,774,344 shares of common stock at an exercise price of $0.96 per share and 384,536 shares of common stock at an average exercise price of $5.25 per share. If we register for resale the shares subject to warrants, the holders of some of the warrants may no longer have the right to elect a cashless exercise. If we fail to maintain a registration statement for the resale of shares under certain other warrants, the shares under those warrants may again become exercisable using a cashless exercise feature. (2) We recognized $0.1 million of expense for these warrant issuances in the three months ended June 30, 2018. |