Equity | 9 Months Ended |
Sep. 30, 2013 |
Stockholders' Equity [Abstract] | ' |
Stockholders' Equity | ' |
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7. Equity |
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Share-based compensation expense is based on the estimated grant date fair value of the portion of share-based payment awards that are ultimately expected to vest during the period. The grant date fair value of stock-based awards to employees and directors is calculated using the single option valuation approach. Forfeitures of share-based payment awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated average forfeiture rate for the nine-months ended September 30, 2013 and 2012, was approximately 9.73% and 9.60%, respectively, based on historical data. |
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Valuation and Expense Information: |
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The weighted-average fair value of stock-based compensation is based on the single option valuation approach. Forfeitures are estimated and it is assumed no dividends will be declared. The estimated fair value of stock-based compensation awards to employees is amortized using the accrual method over the vesting period of the options. The fair value calculations are based on the following assumptions: |
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| Nine-months Ended | Nine-months Ended | | | | | | |
30-Sep-13 | 30-Sep-12 | | | | | | |
Risk free interest rate | 0.35% - 4.92% | 0.62% - 5.11% | | | | | | |
Expected life (years) | 2.82 - 7.00 | 2.82 - 7.00 | | | | | | |
Expected volatility | 91.99% - 198.38% | 91.99% - 180.36% | | | | | | |
Expected dividends | None | None | | | | | | |
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The Company granted 26,554 stock options during the three and nine months ended September 30, 2013. There were no stock options exercised during the three and nine months ended September 30, 2013. |
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The Company granted 2,000 stock options during the three and nine months ended September 30, 2012, and 184 stock options were exercised for $12 in cash. |
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The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three and nine months ended September 30, 2013 and 2012. |
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| Three Months Ended September 30, | Nine months Ended September 30, | | | | |
2013 | 2012 | 2013 | 2012 | | | | |
Research and development | $ | $ | $ | $ | | | | |
36 | 45 | 153 | 166 | | | | |
Sales and marketing | 13 | 27 | 55 | 70 | | | | |
General and administrative | 75 | 30 | 320 | 117 | | | | |
Director options | 7 | 7 | 32 | 23 | | | | |
Stock-based compensation expense | $ | $ | $ | $ | | | | |
131 | 109 | 560 | 376 | | | | |
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A summary of option activity under the Company's plans as of September 30, 2013 and 2012 is as follows: |
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Options | 2013 | 2012 |
Shares | Weighted | Weighted | Aggregate | Shares | Weighted | Weighted | Aggregate |
Average | Average | Intrinsic | Average | Average | Intrinsic |
Exercise | Remaining | Value | Exercise | Remaining | Value |
Price | Contractual | | Price | Contractual | |
| Term | | | Term | |
Outstanding at January 1, | 44,529 | $0.05 | | $ | 51,353 | $0.09 | | $ |
- | 4,449 |
Granted | 26,554 | $0.04 | | $ | 2,000 | $0.06 | | $ |
- | 120 |
Exercised | - | $ - | | $ | -184 | $0.07 | | $ |
- | -2 |
Forfeited or expired | -1,066 | $0.13 | | $ | -7,089 | $0.26 | | $ |
- | -1,830 |
Outstanding at September 30 | 70,017 | $0.05 | 5.24 | $ | 46,080 | $0.06 | 5.38 | $ |
- | 2,237 |
Vested and expected to vest at September 30 | 63,204 | $0.05 | 5.24 | $ | 41,656 | $0.06 | 5.38 | $ |
- | 2,465 |
Exercisable at September 30 | 38,793 | $0.05 | 4.73 | $ | 21,411 | $0.07 | 4.96 | $ |
- | 1,603 |
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The following tables summarize significant ranges of outstanding and exercisable options as of September 30, 2013: |
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Range of Exercise Prices | Options Outstanding | Options Exercisable | | | |
Number | Weighted | Weighted | Number | Weighted | | | |
Outstanding | Average | Average | Outstanding | Average | | | |
| Remaining | Exercise | | Exercise | | | |
| Contractual | Price | | Price | | | |
| Life (in years) | | | | | | |
$ 0.02 - $ 0.50 | 70,017 | 5.24 | $0.05 | 38,793 | $0.05 | | | |
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The following tables summarize the Company's unvested shares as of September 30, 2013: |
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Non-vested Shares | Shares | Weighted Average | | | | | | |
Grant-Date | | | | | | |
Fair Value | | | | | | |
Unvested at January 1, 2013 | 21,210 | $0.05 | | | | | | |
Granted | 26,554 | $0.04 | | | | | | |
Forfeited | (682) | $0.14 | | | | | | |
Vested | (15,858) | $0.06 | | | | | | |
Unvested at September 30, 2013 | 31,224 | $0.04 | | | | | | |
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As of September 30, 2013, there was $ 399 of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the plans. The unrecognized compensation expense is expected to be realized over a weighted average period of 2.75 years. |
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Information with respect to the class of Preferred Stock at September 30, 2013 is as follows: |
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Class of | Issue Date | Annual | Annual | Liquidation | Conversion | YTD | Total | Common |
Preferred | Dividend | Dividend | Preference | Price | Dividend | Preferred | Shares to be |
Stock | | Payable, in | | | Shares in | Shares | issued if |
| | Cash or In | | | Kind | Outstanding | Fully |
| | Kind | | | | | Converted |
Series A-1 | May-08 | 8% | Quarterly in Arrears | $1.00 | $0.14 | 58 | 1,011 | 7,221 |
Series B | Aug-10 | 10% | Quarterly in Arrears | $1.50 | $0.04 | 771 | 10,830 | 250,115 |
Series C | December/March 2011 | 10% | Quarterly in Arrears | $1.50 | $0.02 | 320 | 4,496 | 199,822 |
Series D-1 | November 2012/May 2013 | 10% | Quarterly in Arrears | $1.00 | $0.02 | 95 | 1,449 | 64,400 |
Series D-2 | November 2012/May 2013 | 10% | Quarterly in Arrears | $1.00 | $0.05 | 288 | 4,511 | 90,220 |
Total | | | | | | 1,532 | | |
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Series A-1 Preferred Stock |
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In May 2008, the Company issued shares of the Company's Series A Cumulative Convertible Preferred Stock in exchange for certain debt. The Series A Cumulative Convertible Preferred Stock was subsequently exchanged in October 2008 for an equivalent number of shares of Series A-1 Preferred Stock. The shares of Series A-1 Preferred Stock are convertible any time and are subordinate to the Series B, Series C and Series D Preferred Stock. |
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Series B Preferred Stock |
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In August 2010, the Company completed the conversion of all of its outstanding indebtedness and issued shares of Series B Preferred Stock in accordance with an executed Exchange Agreement entered into with Phoenix Venture Fund LLC and certain other holders of the Company's indebtedness (the "Recapitalization"). The Company sold additional shares of Series B Preferred Stock for cash (the "Series B Financing") in addition to the conversion of its outstanding debt. The proceeds were used for working capital and general corporate purposes, in each case in the ordinary course of business, and to pay fees and expenses associated with the Recapitalization and Series B Financing. The shares of Series B Preferred Stock are convertible at any time and are subordinate to the Series C and Series D Preferred Stock. |
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Series C Preferred Stock |
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In December 2010, the Company completed the sale of shares of Series C Preferred Stock through a Securities Purchase Agreement with Phoenix Venture Fund LLC and certain other investors. The proceeds were used for working capital and general corporate purposes, in each case in the ordinary course of business, and to pay fees and expenses associated with the sale of the Series C Preferred Stock. The shares of Series C Preferred Stock are convertible into Common Stock at any time and are subordinate to the Series D Preferred Stock. |
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In March 2011, the Company issued shares of its Series C Preferred Stock and warrants to purchase shares of Common Stock to its President as part of a professional services agreement. In addition the Company sold additional shares of Series C Preferred Stock for cash. |
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In January 2012, the Company received 6,500 shares of Common Stock from Phoenix Venture Fund LLC ("Phoenix") in settlement of a 16b claim brought by a Company stockholder against Phoenix, certain affiliates and the Company, as a nominal defendant. The Common Stock was valued at $325. In settlement of an indemnification claim brought by Phoenix in March 2012, resulting from the settlement of the 16b claim in January 2012, the Company issued to Phoenix 278 shares of Series C Preferred Stock valued at $417. The Company booked a $418 accretion amount for the beneficial conversion feature on the 278 shares of Series C Preferred Stock. |
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Series D Preferred Stock |
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In November 2012, stockholders approved an increase in the Company's authorized capital and the issuance of Series D-1 and Series D-2 Preferred Stock. |
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In May 2013, the Company completed a private placement of 230 units of Series D Preferred Stock consisting of one (1) share of Series D-1 Preferred Stock and four (4) shares of Series D-2 Preferred Stock. The Series D-1 Preferred Stock can convert to Common Stock at a price of $0.0225 per share, and the Series D-2 Preferred Stock can convert to Common Stock at a price of $0.05 per share. The private placement provided $1,150 in proceeds to the Company. The proceeds were used for general working capital purposes and to repay a bridge loan that was secured in April 2013 from Phoenix Banner Holdings LLC in the amount of $250 plus $2 in accrued interest. |
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In November 2012, the Company converted approximately $3,099 of short-term debt and accrued interest into shares of Series D Preferred Stock net of offering costs of $190. The Company sold, for cash in a private placement, 1,082 of additional shares of Series D-2 Preferred Stock at a purchase price of $1.00 per share and received $967 net of offering costs of $115. The material terms of the Series D-1 and Series D-2 Preferred Stock, other than the initial conversion price, are essentially the same. The shares of Series D Preferred Stock are convertible at any time and rank senior to the Company's outstanding shares of Series A-1, Series B and Series C Preferred Stock, and of Common Stock with respect to dividend rights and liquidation preferences. |
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Preferred Stock Voting and Other Rights |
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Generally, the Company's Preferred Stock votes together on an as converted basis with the holders of Common Stock. In addition, the Company's Preferred Stock enjoys certain protective provisions, a liquidation preference and anti-dilution protection that are similar to one another. |
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Warrants |
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Series C Preferred Stock Warrants |
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Each investor who purchased shares of Series C Preferred Stock in the financing transactions which closed on December 31, 2010 and March 31, 2011 received a warrant to purchase a number of shares of Common Stock equal to the aggregate number of shares of Series C Preferred Stock purchased by the investor divided by 0.0225. Each warrant issued in connection with the Series C Financing has an exercise price of $0.0225 per share and is exercisable in whole or in part, including by means of cashless exercise, for a period of three years from the date of issuance. In February and March 2012, an aggregate of 35,162 warrants were exercised, 28,678 warrants were exercised by holders of the Series C Preferred Stock warrants and 6,484 warrants were exercised by the holders of the warrants other than the Series C Preferred Stock warrants. Of the Series C Preferred Stock warrants exercised, 6,222 were exercised for cash for which the Company received $213 and 22,456 were exercised on a cashless basis. The Company issued 23,928 shares of Common Stock related to these exercises. If the remaining outstanding Series C Warrants are exercised in their entirety, the Company would issue 107,623 shares of Common Stock. |
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Other Warrants |
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In January 2013, 1,300 warrants were exercised for $29 in cash. In February and March 2012, 6,484 warrants were exercised by the holders of the warrants other than the Series C Preferred Stock warrants described above. At September 30, 2013, 21,712 shares of Common Stock were reserved for issuance upon exercise of other outstanding warrants, in addition to the 107,623 shares of Common Stock issuable upon exercise of the Series C Warrants described above. |
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A summary of the warrant activity is as follows: |
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| 30-Sep-13 | 31-Dec-12 | | | | |
Warrants | Weighted | Warrants | Weighted | | | | |
Average | Average | | | | |
Exercise Price | Exercise Price | | | | |
Outstanding at beginning of period | 151,722 | $0.03 | 182,644 | $0.03 | | | | |
Issued | - | - | 8,643 | $0.05 | | | | |
Exercised | (1,300) | $0.02 | (35,162) | $0.03 | | | | |
Expired | (21,087) | $0.04 | (4,403) | - | | | | |
Outstanding at end of period | 129,335 | $0.03 | 151,722 | $0.03 | | | | |
Exercisable at end of period | 129,335 | $0.03 | 151,722 | $0.03 | | | | |
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A summary of the status of the warrants outstanding and exercisable as of September 30, 2013, is as follows: |
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Number of Warrants | Weighted Average | Weighted Average | | | | | | |
Remaining Life | Exercise Price per | | | | | | |
| share | | | | | | |
120,692 | 0.44 | $0.02 | | | | | | |
8,643 | 1.86 | $0.05 | | | | | | |
129,335 | 0.53 | $0.03 | | | | | | |