Stockholders' Equity | 12 Months Ended |
Sep. 30, 2014 |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | 9. Stockholders' Equity |
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Common Stock |
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The Company's authorized common stock consists of 62,500,000 shares of a single class of common stock, having a par value of $0.01 per share. The holders of the common stock are entitled to one vote for each share and have no cumulative voting rights or preemptive rights. |
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Preferred Stock |
The Company is authorized to issue up to 50,000,000 shares of preferred stock, having a par value of $0.01 per share. The Company's preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Company's Board of Directors, without further action by stockholders, and may include voting rights (including the right to vote as a series on particular matters), preferences as to dividends and liquidation and conversion, redemption rights and sinking fund provisions. The issuance of preferred stock could reduce the rights, including voting rights, of the holders of common stock and, therefore, could reduce the value of the common stock. In particular, specific rights granted to holders of preferred stock could be used to restrict the Company's ability to merge with or sell the Company's assets to a third party, thereby preserving control of the Company by existing management. |
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Financings |
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July 2014 Purchase Agreement |
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On July 25, 2014, the Company entered into a purchase agreement (the "Purchase Agreement"), together with a registration rights agreement (the "Registration Rights Agreement") with Lincoln Park Capital Fund, LLC ("LPC"). Under the terms, and subject to the conditions of the Purchase Agreement, the Company has the right to sell to LPC, and LPC is obligated to purchase, up to $15 million in shares of common stock, subject to certain limitations, from time to time over the 36-month period commencing on the date that a registration statement, which the Company agreed to file with the SEC pursuant to the Registration Rights Agreement, is declared effective by the SEC and a final prospectus in connection therewith is filed. The Company's registration statement was declared effective on September 2, 2014. The Company was obligated, within twenty (20) calendar days, to file with the SEC an initial Registration Statement covering the maximum number of Registrable Securities as shall be permitted to be included thereon in accordance with applicable SEC rules, regulations and interpretations so as to permit the resale of such Registrable Securities by the Investor under Rule 415 under the Securities Act at then prevailing market prices (and not fixed prices), as mutually determined by both the Company and LPC in consultation with their respective legal counsel, subject to the aggregate number of authorized shares of the Company's Common Stock then available for issuance in its Certificate of Incorporation. The Company shall use its commercially reasonable efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the Securities Act and available for the resale by the Investor of all of the Registrable Securities covered thereby at all times until the date on which LPC shall have resold all the Registrable Securities covered thereby and no Available Amount remains under the Purchase Agreement. The Company may direct LPC, at its sole discretion and subject to certain conditions, to purchase up to 150,000 shares of common stock in any business day, increasing to amounts of up to 250,000 shares, depending upon the closing sale price of the common stock. In addition, the Company may direct LPC to purchase additional shares as accelerated purchases if, on the date of a regular purchase, the closing sale price of the common stock is not below $2.50 per share (subject to adjustment). The purchase price of shares of common stock to be purchased under the Purchase Agreement are based on the prevailing market prices of such shares at the time of sales, but in no event will the Company be able to sell shares to LPC on a day when the closing sale price of the common stock is less than a floor price of $1.50 per share (subject to adjustment). The Company will control the timing and amount of any sales of common stock to LPC under the Purchase Agreement. As consideration for LPC's commitment to purchase shares of common stock pursuant to the Purchase Agreement, the Company issued to LPC 95,000 shares of Common Stock as commitment shares, with a fair market value of $189, which is recorded as the cost of capital in additional paid in capital. As of September 30, 2014, the Company sold 300,000 shares of common stock pursuant to the Purchase Agreement, and received proceeds, net of expenses, of $490. During the period from October 1, 2014 through the date of this filing, the Company sold an aggregate of 300,000 shares of common stock pursuant to the Purchase Agreement, and received proceeds, net of expenses, of $468. |
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May 2013 At-the-Market Issuance Sales Agreement |
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In May 2013, the Company entered into an At-the-Market Issuance Sales Agreement (the "Sales Agreement") with MLV & Co. LLC ("MLV"), under which the Company may initially issue and sell shares of common stock having aggregate sales proceeds of up to $14 million from time to time through MLV as the Company's sales agent. For the year ended September 30, 2014, the Company sold an aggregate of 1,564,821 shares of common stock pursuant to the Sales Agreement and received proceeds, net of sales agent commissions and expenses, of $3.0 million. During the period from October 1, 2014 through the date of this filing, the Company sold an aggregate of 66,057 shares of common stock pursuant to the Sales Agreement, and received proceeds, net of expenses, of $100. |
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June 2013 Public Offering |
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On June 24, 2013, the Company completed an underwritten public offering of 4,482,760 shares of its common stock at a price to the public of $4.35 per share. On July 22, 2013, the Company issued 236,007 additional shares of common stock, at the public offering price of $4.35 per share, in connection with the underwriters' exercise of a portion of their over-allotment option. The Company received net proceeds from this offering, after deducting underwriting discounts, commissions and expenses, of $19.2 million. |
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June 2012 Private Placement |
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On June 27, 2012 the Company completed a private placement (the "2012 Private Placement") of an aggregate of 4,250,020 shares of common stock, 3,605,607 shares of Series B preferred stock and warrants to purchase 2,749,469 shares of common stock at an exercise price of $2.66 per share. For each unit consisting of either, a share of common stock or Series B preferred stock and a warrant to purchase 0.35 of a share of common stock, the purchasers in the June 2012 Private Placement paid a negotiated price of $2.355. The warrants are immediately exercisable and will expire on June 26, 2017, five years from the original issuance date of June 27, 2012. |
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Each share of Series B preferred stock is convertible into one share of the Company's common stock at any time at the option of the holder, except that the securities purchase agreement that the Company entered into in connection with the 2012 Private Placement (the "Securities Purchase Agreement") provides that a holder will be prohibited from converting shares of Series B preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.98% of the total number of shares of common stock then issued and outstanding. In the event of the Company's liquidation, dissolution or winding up, holders of the Series B preferred stock will receive a payment equal to $0.01 per share of Series B preferred stock before any proceeds are distributed to the holders of common stock. After the payment of this preferential amount, and subject to the rights of holders of any class or series of capital stock specifically ranking by its terms senior to the Series B preferred stock, holders of Series B preferred stock and holders of the Company's Series A preferred stock will participate ratably in the distribution of any remaining assets with the common stock and any other class or series of capital stock that participates with the common stock in such distributions. Shares of Series B preferred stock will generally have no voting rights, except as required by law and except that the consent of the holders of a majority of the outstanding Series B preferred stock will be required to amend the terms of the Series B preferred stock. Holders of Series B preferred stock are entitled to receive, and the Company is required to |
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pay, dividends on shares of the Series B preferred stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends (other than dividends in the form of common stock) are paid on shares of the common stock. |
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As required by the Securities Purchase Agreement, the Company filed a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") on July 27, 2012, which was within 30 days after the closing of the 2012 Private Placement. The Registration Statement, which was declared effective on August 13, 2012, registers the resale of the shares of common stock and Series B preferred stock issued and sold in the 2012 Private Placement, the shares of common stock issuable upon conversion of the Series B preferred stock issued and sold in the 2012 Private Placement, and the shares of common stock issuable upon exercise of the warrants issued and sold in the 2012 Private Placement. Pursuant to the terms of the Securities Purchase Agreement, the Company agreed to pay liquidated damages to the purchasers in the 2012 Private Placement if, after effectiveness of the Registration Statement and subject to certain specified exceptions, the Company suspends the use of the Registration Statement or the Registration Statement ceases to remain continuously effective as to all the securities for which it is required to be effective (each such event, a "Registration Default"). Subject to specified exceptions, for each 30-day period or portion thereof during which a Registration Default remains uncured, the Company is obligated to pay liquidated damages to each purchaser in cash in an amount equal to 1.0% of the aggregate purchase price paid by each such purchaser in the 2012 Private Placement, up to a maximum of 8.0% of such aggregate purchase price. As of the date of these financial statements, the Company does not believe that it is probable that it will be obligated to pay any such liquidated damages. Accordingly, the Company has not established an accrual for liquidated damages. |
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The Company received net proceeds, after deducting placement agent fees and other offering expenses of approximately $17,100 from this financing. In June 2013, 176,964 shares of the Company's Series B preferred stock were converted into an equal number of shares of common stock. In September 2013, 1,478,643 shares of the Company's Series B preferred stock were converted into an equal number of shares of common stock. As of September 30, 2014, the Company has 1,950,000 shares of the Series B preferred stock outstanding. |
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In the event that the Company enters into a merger or change of control transaction, the holders of the warrants issued in the 2012 Private Placement will be entitled to receive consideration as if they had exercised the warrants immediately prior to such transaction, or they may require the Company to purchase the unexercised warrants at the Black-Scholes value (as defined in the warrant) of the warrant on the date of such transaction. The holders have up to 30 days following any such transaction to exercise this right. As a result of this provision, the Company recognizes the warrants as liabilities at their fair value on each reporting date. |
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May 2011 Registered Direct Offering |
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On May 12, 2011, the Company completed a registered direct offering of an aggregate of 3,018,736 shares of common stock, 1,813,044 shares of Series A preferred stock to one investor and warrants to purchase 2,256,929 shares of common stock at an exercise price of $9.92 per share. The investor who purchased Series A preferred stock units received units consisting of one share of Series A preferred stock and a warrant to purchase 0.1625 of a share of common stock. No fractional warrants were issued. Each unit was sold at a price of $8.84 per unit. |
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Each share of Series A preferred stock was convertible into 0.25 of a share of the Company's common stock at any time at the option of the holder, provided that the holder would be prohibited from converting the shares of |
Series A preferred stock into shares of the Company's common stock if, as a result of such conversion, the holder, together with its affiliates, would beneficially own more than 9.98% of the total number of shares of the Company's common stock then issued and outstanding. In the event of the Company's liquidation, dissolution or winding up, holders of the Series A preferred stock would receive a payment equal to $0.01 per |
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share of Series A preferred stock before any proceeds are distributed to the holders of the Company's common stock. After the payment of this preferential amount, and subject to the rights of holders of any class or series of capital stock specifically ranking by its terms senior to the Series A preferred stock, holders of Series A preferred stock and holders of the Company's Series B preferred stock will participate ratably in the distribution of any remaining assets with the Company's common stock and any other class or series of capital stock that participates with the common stock in such distributions. Shares of Series A preferred stock generally have no voting rights, except as required by law and except that the consent of the holders of a majority of the outstanding Series A preferred stock will be required to amend the terms of the Series A preferred stock. The Series A preferred stock will not be entitled to receive any dividends, unless and until specifically declared by the Company's board of directors. |
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The Company received net proceeds, after deducting placement agent fees and other offering expenses, of approximately $28,000 from this financing. As of September 2013, all of the Company's Series A preferred stock was converted into 453,483 shares of common stock. |
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In the event that the Company enters into a merger or change of control transaction, the holders of the warrants issued in the May 2011 financing will be entitled to receive consideration as if they had exercised the warrant immediately prior to such transaction, or they may require the Company to purchase the unexercised warrants at the Black-Scholes value (as defined in the warrant) of the warrant on the date of such transaction. As per the terms of the warrants, the holders have up to 30 days following any such transaction to exercise this right. As a result of this provision, the Company recognizes the warrants as liabilities at their fair value on each reporting date. |
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The Company's warrant liability is marked-to-market each reporting period with the change in fair value recorded as a gain or loss within Other (Income) Expense ("Adjustments to fair value of common stock warrant liability"), until the warrants are exercised, expire or other facts and circumstances lead the warrant liability to be reclassified as an equity instrument. |
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2004 Stock Incentive Plan |
The Company established the 2004 Stock Incentive Plan on October 1, 2004 (the "Plan"), as amended in March 2007, and subsequently replaced by the 2010 Stock Incentive Plan. The Plan provides for the granting of shares of common stock or securities convertible into or exercisable for shares of common stock, including stock options ("Incentive Stock Options") to directors, employees, consultants and advisors of or to the Company. Incentive Stock Options can be awarded only to persons who are employees of the Company at the time of the grant. Stock options are exercisable at the conclusion of the vesting period. Employees can exercise their vested shares up to 90 days after termination of services. No awards may be granted under the Plan after the effective date of the 2010 Plan. |
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The Plan is administered by either the Board of Directors of the Company or a Committee thereof, which determines the terms and conditions of the awards granted under the Plan, including the recipient of the award, the nature of the award, the exercise price of the award, the number of shares subject to the award and the exercisability thereof. |
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Non-employee directors are not entitled to receive awards other than the non-qualified stock options the plan directs be issued to non-employee directors. |
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2010 Stock Incentive Plan |
In March 2013, the stockholders of the Company approved the amended and restated 2010 Stock Incentive Plan (the "2010 Plan"). Up to 3,750,000 shares of the Company's common stock may be issued pursuant to awards granted under the 2010 Plan, plus 1,540,739 shares of common stock underlying already outstanding awards under the Company's prior plans. As of September 30, 2014, the Company had 2,643,523 |
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shares of common stock subject to outstanding awards. The contractual life of options granted under the 2010 Plan may not exceed seven years. The 2010 Plan uses a "fungible share" concept under which any awards that are not a full-value award will be counted against the share limit as one (1) share for each share of common stock and any award that is a full-value award will be counted against the share limit as 1.5 shares for each one share of common stock. The Company has not made any new awards under any prior equity plans after March 2, 2010 — the effective date the 2010 Plan was approved by the Company's stockholders. The 2010 Plan replaces the 2004 Stock Incentive Plan and 2005 Non-Employee Directors Stock Option Plan. |
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2005 Employee Stock Purchase Plan |
The Company's 2005 Employee Stock Purchase Plan, or the Purchase Plan, was adopted by its Board of Directors and approved by its stockholders on March 20, 2007. The Purchase Plan became effective upon the closing of the Company's initial public offering. The Purchase Plan is intended to qualify as an employee stock purchase plan within the meaning of Section 423 of the Code. |
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Under the Purchase Plan, eligible employees may contribute up to 15% of their eligible earnings for the period of that offering for the purchase of common stock under the Purchase Plan. The employee's purchase price is equal to the lower of: 85% of the fair market value per share on the start date of the offering period in which the employee is enrolled or 85% of the fair market value per share on the semi-annual purchase date. The Purchase Plan imposes a limitation upon a participant's right to acquire common stock if immediately after the purchase, the employee would own 5% or more of the total combined voting power or value of the Company's common stock or of any of its affiliates not eligible to participate in the Purchase Plan. The Purchase Plan provides for an automatic rollover when the purchase price for a new offering period is lower than previously established purchase price(s). The Purchase Plan also provides for a one-time election that allows an employee the opportunity to enroll into a new offering period when the new offering is higher than their current offering price. This election must be made within 30 days from the start of a new offering period. Offering periods are twenty-seven months in length. The compensation cost in connection with the plan for the years ended September 30, 2013 and 2014 was $5 and $4 respectively. |
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An aggregate of 500,000 shares of common stock are reserved for issuance pursuant to purchase rights to be granted to the Company's eligible employees under the Purchase Plan. The Purchase Plan shares are replenished annually on the first day of each fiscal year by virtue of an evergreen provision. The provision allows for share replenishment equal to the lesser of 1% of the total number of shares outstanding on that date or 25,000 shares. As of September 30, 2013 and 2014, a total of 366,926 and 383,737 shares, respectively, were reserved and available for issuance under this plan. For the years ended September 30, 2013 and 2014, the Company issued a total of 108,074, and 116,263 shares, respectively, under the Purchase Plan. |
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2005 Non-Employee Directors' Stock Option Plan |
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The Company's 2005 Non-Employee Directors' Stock Option Plan (the "Directors' Plan") was adopted by its Board of Directors and approved by its stockholders on March 20, 2007 and subsequently replaced with the 2010 Stock Incentive Plan. The Directors' Plan became effective upon the closing of the Company's initial public offering. An aggregate of 125,000 shares of common stock were reserved for issuance under the Directors' Plan. Upon the effective date of the registration statement in connection with the Company's initial public offering, each of its non-employee directors automatically received an initial option to purchase 6,250 shares of common stock. Upon appointment, non-employee directors receive a one-time grant of an option to purchase 6,250 shares of common stock. Annually, non-employee directors receive an option to purchase 10,000 shares of common stock. Effective March 3, 2009, these shares vest pro rata over one year. However, in the event a non-employee director has not served since the date of the preceding annual meeting of stockholders, that director will receive an annual grant that has been reduced pro rata for each full quarter prior to the date of grant during which such person did not serve as a non-employee director. |
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The following table summarizes all stock option activity through September 30, 2014: |
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| Options | | | | | | Number | | | | | | Weighted | | | | | | Weighted | | | | | | Aggregate | |
Average | Average | Intrinsic Value |
Exercise Price | Remaining | |
| Contractual | |
| Life in Years | |
| Outstanding balance September 30, 2012 | | | | | | 1,546,454 | | | | | $ | 27.8 | | | | | | | | | | | | — | |
| Granted | | | | | | 486,000 | | | | | | 2.43 | | | | | | | | | | | | — | |
| Exercised | | | | | | (30,250 | ) | | | | | 2.48 | | | | | | | | | | | | — | |
| Forfeited, expired | | | | | | (82,153 | ) | | | | | 15.37 | | | | | | | | | | | | — | |
| Outstanding balance September 30, 2013 | | | | | | 1,920,051 | | | | | $ | 22.31 | | | | | | 4 | | | | | $ | 445 | |
| Granted | | | | | | 1,427,000 | | | | | | 2.35 | | | | | | 6 | | | | | | — | |
| Exercised | | | | | | (19,241 | ) | | | | | 2.48 | | | | | | 5 | | | | | | 10 | |
| Forfeited, expired | | | | | | (684,287 | ) | | | | | 16.48 | | | | | | | | | | | | — | |
| Outstanding balance September 30, 2014 | | | | | | 2,643,523 | | | | | $ | 13.15 | | | | | | 5 | | | | | | — | |
| Exercisable shares, September 30, 2014 | | | | | | 1,217,854 | | | | | $ | 25.81 | | | | | | 3 | | | | | | — | |
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Restricted Stock Units |
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The Company grants restricted stock units ("RSUs") to executive officers and employees pursuant to the 2010 Plan from time to time. There is no direct cost to the recipients of RSUs, except for any applicable taxes. |
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In December 2010, the Company issued RSU awards to our executive officers and employees. Each RSU award represents one share of common stock and each award vests annually over three years, with fifty percent vesting on the first anniversary of the date of grant and the remainder vesting in two equal installments on each anniversary thereafter. Each year following the annual vesting date, between January 1st and March 15th, the Company will issue common stock for each vested RSU. During the period when the RSU is vested but not distributed, the RSUs cannot be transferred and the grantee has no voting rights. If the Company declares a dividend, RSU recipients will receive payment based upon the percentage of RSUs that have vested prior to the date of declaration. The costs of the awards, determined as the fair market value of the shares on the grant date, are expensed per the vesting schedule outlined in the award. For example, the December 2010 RSU awards vested over three years and were expensed 50% the first year and 25% the next two years; whereas, the December 2009 RSU awards were expensed ratably over the four year vesting period. |
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Based on historical experience of option cancellations, the Company has estimated an annualized forfeiture rate of 10% for all employee options and RSUs. Forfeiture rates will be adjusted over the requisite service period when actual forfeitures differ, or are expected to differ, from the estimate. As of September 30, 2014, the executives, the board of directors and employees had 418,295 vested and distributed RSUs. |
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The stock-based compensation expense associated with the RSUs has been recorded in the statement of operations and in additional paid-in-capital on the balance sheets as follows: |
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| | | | | | | | | | September 30, | | | | | | | |
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| Stock compensation expense — RSUs | | | | | | | | $ | 363 | | | | | $ | 54 | | | | |
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At September 30, 2014, all of the RSU awards had vested and were distributed. |
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The following table summarizes RSU activity from October 1, 2012 through September 30, 2014: |
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Average | | | | | | | | | | | | |
Grant-Date | | | | | | | | | | | | |
Fair Value | | | | | | | | | | | | |
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| Non-vested and outstanding balance at September 30, 2012 | | | | | | 68,153 | | | | | $ | 10.51 | | | | | | | | | | | | | |
| Changes during the period: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares granted | | | | | | — | | | | | | — | | | | | | | | | | | | | |
| Shares vested and issued | | | | | | (36,851 | ) | | | | | 10.26 | | | | | | | | | | | | | |
| Shares forfeited or expired | | | | | | (6 | ) | | | | | 15.8 | | | | | | | | | | | | | |
| Non-vested and outstanding balance at September 30, 2013 | | | | | | 31,296 | | | | | | 10.48 | | | | | | | | | | | | | |
| Changes during the period: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares granted | | | | | | — | | | | | | — | | | | | | | | | | | | | |
| Shares vested and issued | | | | | | 31,296 | | | | | | 10.48 | | | | | | | | | | | | | |
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| Non-vested and outstanding balance at September 30, 2014 | | | | | | — | | | | | | — | | | | | | | | | | | | | |
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Shares Reserved for Future Issuance |
As of September 30, 2014, the Company reserved shares of common stock for future issuance as follows: |
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| 2010 stock incentive plan | | | | | | 5,240,202 | | | | | | | | | | | | | | | | | | | |
| 2005 employee stock purchase plan | | | | | | 500,000 | | | | | | | | | | | | | | | | | | | |
| Common stock issuable upon conversion of Series B Preferred Stock | | | | | | 1,950,000 | | | | | | | | | | | | | | | | | | | |
| Warrants issued in connection with May 2011 registered direct offering | | | | | | 2,256,929 | | | | | | | | | | | | | | | | | | | |
| Warrants issued in connection with June 2012 private placement | | | | | | 2,749,469 | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | 12,696,600 | | | | | | | | | | | | | | | | | | | |