Stockholders' Equity | (2) Stockholders’ Equity Common Stock As of September 30, 2015, the Company had 112,809,935 shares of common stock issued and 112,614,671 shares of common stock outstanding. During the three months ended September 30, 2015, the Company: • issued 331,066 shares of common stock for vested restricted stock grants at par value • acquired 63,032 shares of common stock at a cost of $46,000, which is included in treasury stock. Employee and Director Stock Compensation During the three months ended September 30, 2015 and 2014, the Company recognized stock based compensation for employees and directors of $0.5 million and $0.5 million, respectively. Options The Company granted a stock option to an officer to purchase 750,000 shares during the three months ended September 30, 2015. The fair value of options is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The following table illustrates the assumptions used in estimating the fair value of the options valued as of the grant date, July 30, 2015: Expected volatility 65.29 % Expected dividends — Expected term (years) 5.93 Risk-free rate 1.81 % A summary of option activity from July 1, 2015 to September 30, 2015 is presented below (in thousands except per share and year amounts): Options Shares Weighted Weighted Aggregate Outstanding at July 1, 2015 7,685 $ 1.02 Options granted 1,050 0.69 Exercised — — Forfeited, cancelled or expired (109 ) 1.62 Outstanding at September 30, 2015 8,626 $ 0.97 7.61 $ 305 Exercisable at September 30, 2015 2,289 $ 1.66 1.99 $ — The estimated grant date fair value of options granted during the three months ended September 30, 2015 was $0.5 million. No options were granted during the three months ended September 30, 2014. Restricted Stock Awards and Units A summary of the activity of the Company’s restricted stock awards from July 1, 2015 to September 30, 2015 is presented below (in thousands except per share amounts): Restricted Stock Awards Shares Weighted Average Outstanding July 1, 2015 6 $ 1.29 Vested — — Outstanding September 30, 2015 6 $ 1.29 A summary of the activity of the Company’s restricted stock units from July 1, 2015 to September 30, 2015 is presented below (in thousands, except share amounts): Restricted Stock Units Restricted Stock Weighted Average Outstanding at July 1, 2015 1,393 $ 1.60 Granted — — Vested (331 ) 1.63 Forfeited (30 ) 1.67 Outstanding at September 30, 2015 1,032 $ 1.59 As of September 30, 2015, there was $3.2 million of total unrecognized compensation cost related to all unvested share awards and options. Consultant Stock Compensation The Company granted a non-employee stock option to purchase 300,000 shares to a consultant during the three months ended September 30, 2015. The fair value of options is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The following table illustrates the assumptions used in estimating the fair value of the options valued as of the grant date, September 30, 2015: Expected volatility 69.12 % Expected dividends — Expected term (years) 9.88 Risk-free rate 2.05 % During the three months ended September 30, 2015 the Company recognized stock based compensation for non-employees of $46,000. Adoption of replacement shareholder rights plan On January 20, 2015, the Board of Directors of the Company adopted a Tax Benefits Preservation Agreement, between the Company and Computershare Trust Company, N.A., as Rights Agent (the “Agreement”) to replace the Company’s existing Tax Benefits Preservation Agreement, which expired on January 29, 2015, (the “Expired Agreement”). The Agreement is substantially the same as the Expired Agreement. The Agreement is designed to preserve the Company’s substantial tax assets associated with net operating loss carry forwards (“NOLs”) and built in losses under Section 382 of the Internal Revenue Code. The Company’s ability to use its NOLs and built in losses would be limited if there was an “ownership change” under Section 382. This would occur if shareholders owning (or deemed under Section 382 of the Internal Revenue Code to own) 5% or more of the Company’s stock increase their collective ownership of the aggregate amount of outstanding shares of the Company by more than 50 percentage points over a rolling three-year period. Pursuant to the terms of the Agreement, the Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right (a “Right”) for each outstanding share of common stock, par value $0.001 per share of the Company (the “Common Stock”) to stockholders of record as of the close of business on January 29, 2015 (the “Record Date”). In addition, one Right will automatically attach to each share of Common Stock issued between the Record Date and the Distribution Date (as defined in the Agreement). Each Right entitles the registered holder thereof to purchase from the Company a unit consisting of one ten-thousandth of a share (a “Unit”) of Series A Junior Participating Cumulative Preferred Stock, par value $0.001 per share, of the Company (the “Preferred Stock”) at a cash exercise price of $15.00 per Unit (the “Exercise Price”), subject to adjustment, under certain conditions specified in the Agreement. For additional information, please refer to the Company’s Registration Statement on Form 8-A and the Company’s Current Report on Form 8-K, both filed with the SEC on January 21, 2015. The Rights are not exercisable until the Distribution Date (as defined in the Agreement) and will expire at the earlier of (i) January 29, 2018, (ii) the time when the Rights are redeemed as provided therein; (iii) the time when the Rights are exchanged as provided therein; (iv) the repeal of Section 382 of the Internal Revenue Code if the Independent Directors determine that this Agreement is no longer necessary for the preservation of Tax Benefits (as defined in the Agreement), (v) the beginning of the taxable year of the Company to which the Board determines that no Tax Benefits may be carried forward, or (vi) the close of business on January 29, 2016, if stockholder approval of the Agreement has not been obtained prior to that time, unless previously redeemed or exchanged by the Company. |