Stockholders' Equity | 5. Equity Stock-based compensation expense is based on the estimated grant date fair value of the portion of stock-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 Black-Scholes-Merton valuation model. Forfeitures of stock-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 three months ended June 30, 2015 and 2014, was approximately 7.54% and 9.85%, respectively, based on historical data. Valuation and Expense Information: The weighted-average fair value of stock-based compensation is based on the Black-Scholes-Merton valuation model. 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: Six Months Ended Six Months Ended Risk free interest rate 0.04% - 3.73% 0.04% - 4.89% Expected life (years) 3.26 - 6.88 3.26 - 7.00 Expected volatility 93.63% - 198.38% 91.99% - 198.38% Expected dividends None None The Company granted 1,000 and 36,633 stock options during the three and six months ended June 30, 2015 at a weighted average exercise price of $0.0224 per share. There were no stock options exercised during the three and six months ended June 30, 2015. The Company granted 2,500 stock options during the three and six months ended June 30, 2014 at a weighted average exercise price of $0.0273 per share. There were no stock options exercised during the three and six months ended June 30, 2014. The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three and six months ended June 30: Three Months Ended June 30, Three Months Ended June 30, 2015 2014 2015 2014 Research and development $ 47 $ 21 $ 113 $ 48 Sales and marketing $ 34 $ 24 $ 86 $ 37 General and administrative $ 65 $ 37 $ 145 $ 83 Director options $ 12 $ 4 $ 27 $ 9 Total stock-based $ 158 $ 86 $ 371 $ 177 A summary of option activity under the Company's plans as of June 30, 2015 and 2014 is as follows: Options 2015 2014 Shares Weighted Share Weighted (Years) Aggregate Value Shares Weighted Share Weighted (Years) Aggregate Value Outstanding at January 1, 72,012 $ 0.04 $ - 69,537 $ 0.05 $ - Granted 36,633 $ 0.02 $ - 2,500 $ 0.03 $ 7 Exercised - - $ - - $ - $ - Forfeited or expired (1,045) $ 0.03 $ - (50) $ 0.22 $ - Outstanding at June 30 107,600 $ 0.04 4.59 $ - 71,987 $ 0.05 4.60 $ 7 Vested and expected to 104,525 $ 0.03 3.24 $ - 46,864 $ 0.05 4.24 $ - Exercisable at June 30 65,365 $ 0.04 3.56 $ - 51,984 $ 0.05 4.24 $ - The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2015: Range of Exercise Prices Options Outstanding Options Exercisable Number Weighted Weighted Number Weighted $ 0.0100 - $0.0200 3,000 6.48 $ 0.019 334 $ 0.020 $0.0210 - $0.0300 54,009 5.38 $ 0.023 20,850 $ 0.025 $0.0310 - $0.0600 31,556 4.29 $ 0.046 25,147 $ 0.046 $0.0610 - $0.2000 19,035 2.55 $ 0.066 19,034 $ 0.066 107,600 4.59 $ 0.037 65,365 $ 0.048 A summary of the status of the Company's non-vested shares as of June 30, 2015, is as follows: Non-vested Shares Shares Weighted Non-vested at January 1, 2015 14,954 $ 0.0374 Granted 36,633 $ 0.0196 Forfeited (1,020) $ 0.0207 Vested (8,332) $ 0.0297 Non-vested at June 30, 2015 42,235 $ 0.0233 As of June 30, 2015, there was a total of $443 of unrecognized compensation expense related to non-vested stock-based compensation arrangements granted under the plans. The unrecognized compensation expense is expected to be realized over a weighted average period of 3.2 years. Preferred Stock Information with respect to the class of Preferred Stock at June 30, 2015 is as follows: Class of Annual Annual Dividend Per Share Per Share Total Common Series A-1 8% Quarterly in $ 1.00 $ 0.1400 910 6,502 Series B 10% Quarterly in $ 1.50 $ 0.0433 12,867 296,945 Series C 10% Quarterly in $ 1.50 $ 0.0225 5,225 232,203 Series D-1 10% Quarterly in $ 1.00 $ 0.0225 7,357 326,987 Series D-2 10% Quarterly in $ 1.00 $ 0.0500 6,070 121,409 Information with respect to in-kind dividends issued on the Company's Preferred stock for the three and six-month periods ended June 30, 2015 and June 30, 2014 is as follows: Dividends Beneficial Conversion Feature Related to dividends Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 2015 2014 2015 2014 Series A-1 $ 17 $ 21 $ 35 $ 41 $ - $ - $ - $ - Series B 313 284 615 558 - - - - Series C 127 115 250 226 - 13 13 50 Series D-1 179 107 324 201 - 12 16 43 Series D-2 149 132 292 255 - - - - Total $ 785 $ 659 $ 1,516 $ 1,281 $ - $ 25 $ 29 $ 93 Series D Preferred Stock On February 7, 2014, the Company sold for $733 in cash, net of a $47 administrative fee paid in cash to SG Phoenix and a nonrelated third party, 520 Shares of Series D-1 preferred stock and 260 shares of Series D-2 Preferred Stock. The investors received one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire December 31, 2016. The warrants are exercisable in whole or in part and contain a cashless exercise provision. On March 6, 2014, the Company sold for $406 in cash, net of $4 in administrative fees paid in cash to an unrelated third party, 273 Shares of Series D-1 preferred stock and 137 shares of Series D-2 Preferred Stock. The investors received one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire December 31, 2016. The warrants are exercisable in whole or in part and contain a cashless exercise provision. SG Phoenix received warrants to purchase 3,000 shares of common stock, and two unrelated parties received warrants to purchase an aggregate of 1,600 shares of common stock in payment of administrative and finder's fees associated with the financings, in addition to the cash payments discussed above. These warrants are immediately exercisable and expire three (3) years from the date of issuance. The warrants are exercisable in whole or in part and contain a cashless exercise provision. On March 24, 2015, the Company sold for $1,200 in cash, net of $33 in administrative fees paid in cash to SG Phoenix, 1,233 Shares of Series D-1 preferred stock. The investors received 27,400 warrants, immediately exercisable into common stock of the Company at $0.0225 per share. The warrants expire March 23, 2018. The Company ascribed a value of $366 to the warrants using the Black-Scholes-Merton pricing model. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision. Warrants On February 23, 2015, the Company and Venture Champion Asia Limited, an affiliate of IGC Global Limited, mutually agreed to terminate the $2,000 Credit Agreement signed in May 2014. At the time of the termination of the Credit Agreement, no amount was owed by the Company under the Credit Agreement, and contemporaneously with the termination of the Credit Agreement, the 10,909 warrants were likewise terminated. A summary of the warrant activity is as follows: June 30, 2015 June 30, 2014 Shares Weighted Shares Weighted Outstanding at beginning of period 213,521 $ 0.0289 77,155 $ 0.0289 Issued 27,399 $ 0.0275 72,589 $ 0.0275 Expired (16,258) $ 0.0500 (4,333) $ 0.0225 Outstanding at end of period 224,662 $ 0.0272 145,411 $ 0.0289 Exercisable at end of period 224,662 $ 0.0272 145,411 $ 0.0289 A summary of the status of the warrants outstanding and exercisable as of June 30, 2015, is as follows: Number of Weighted Average Weighted Average 27,400 2.77 $ 0.0225 193,968 1.52 $ 0.0275 3,294 0.38 $ 0.0500 224,662 1.65 $ 0.0272 |