Equity (Deficit) | 7. Equity (Deficit) 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 nine months ended September 30, 2016 and 2015, was approximately 12.34% and 7.89%, 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: Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Risk free interest rate 0.04% - 3.19% 0.04% - 3.28% Expected life (years) 2.82 – 7.00 3.26 – 6.33 Expected volatility 112.75% - 198.90% 120.74% – 198.38% Expected dividends None None There were no stock options granted during the three and nine month periods ended September 30, 2016. There were no stock options exercised during the three- and nine-months ended September 30, 2016. There were no stock options granted during the three month period ended September 30, 2015. The Company granted 29 stock options during the nine months ended September 30, 2015 at a weighted average exercise price of $28.13 per share. There were no stock options exercised during the three- and nine-months ended September 30, 2015. The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three- and nine-month periods ended September 30, 2016 and 2015. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Research and development $ 12 $ 35 $ 46 $ 148 Sales and marketing - 26 15 112 General and administrative 15 47 59 192 Director options 5 8 19 35 Stock-based compensation expense $ 32 $ 116 $ 139 $ 487 A summary of option activity under the Company’s plans as of September 30, 2016 and 2015 is as follows: 2016 2015 Options Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at January 1, 82 $ 45.35 $ - 58 $ 50.00 $ - Granted - $ - $ - 29 $ 25.00 $ - Forfeited or expired (11 ) $ 45.66 $ - (2 ) $ 37.50 $ - Outstanding at September 30 71 $ 45.30 3.41 $ - 85 $ 46.75 4.39 $ - Vested and expected to vest at September 30 70 $ 46.14 3.36 $ - 83 $ 37.50 3.21 $ - Exercisable at September 30 58 $ 49.70 2.95 $ - 56 $ 50.00 3.53 $ - The following table summarizes significant ranges of outstanding and exercisable options as of September 30, 2016: Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Per Share Number Outstanding Weighted Average Exercise Price Per Share $ 25.00 – $625.00 71 3.41 $ 45.30 58 $ 49.70 The following table summarizes the Company’s non-vested option shares as of September 30, 2016: Non-vested Option Shares Shares Weighted Average Non-vested at January 1, 2016 25 $ 28.61 Forfeited (4 ) $ 28.71 Vested (8 ) $ 28.61 Non-vested at September 30, 2016 13 $ 26.29 As of September 30, 2016, there was $75 of total 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 2.2 years. Sale of Common Stock and Conversion of Preferred Stock, Short-term Debt and Deferred Compensation On May 19, 2016, the Company closed an underwritten public offering of 690 shares of common stock at a public offering price of $1.74 per share. In addition, the Company sold 345 warrants, at a public offering price of $0.01 per warrant, to purchase shares of Common Stock. The warrants expire on May 18, 2021 and have an exercise price of $2.175 per share. The Company raised gross cash proceeds of $1,204 before deducting underwriting discounts and commissions and other offering expenses of $780. As a result of the consummation of the offering, each series of the Company’s outstanding preferred stock, including accrued and unpaid dividends through May 19, 2016, were converted into shares of common stock. As a result of the Amendments to the Certificates of Designations to all classes of Preferred Stock and pursuant to the terms thereof, the conversion price of the Company’s Preferred Stock was reduced. The following table summarizes the change in conversion price, the number of shares outstanding as of the conversion date and the number of shares of Common Stock issued upon conversion of the Preferred Stock. Class of Preferred Stock Old Conversion Price Adjusted Conversion Price Shares Outstanding at Conversion Date Common shares issued upon conversion Series A-1 $ 175.00 $ 19.44 976 50 Series B $ 54.13 $ 12.96 14,042 1,083 Series C $ 28.13 $ 9.71 5,702 587 Series D-1 $ 28.13 $ 7.24 8,386 1,159 Series D-2 $ 62.50 $ 8.58 6,625 773 Total 35,731 3,652 The Company is using the net proceeds from the offering for working capital and general corporate purposes. In conjunction with the sale of Common Stock, $1,188 of Short-term debt including accrued interest of $120 was converted into 683 shares of the Company’s Common Stock. The Company issued 854 warrants with the conversion of the Short–term debt. The Company ascribed a relative fair value of $586 to the warrants using the Black-Scholes-Merton valuation model, which was charged to additional paid-in capital during the quarter ended June 30, 2016. In addition to the conversion of the Short-term debt, approximately $498 of deferred compensation including accrued interest of $59 was converted into 286 shares of the Company’s Common Stock. The Company issued 352 warrants with the conversion of the deferred compensation. The Company ascribed a relative fair value of $244 to the warrants using the Black-Scholes-Merton valuation model, which was charged to additional paid- in capital during the quarter ended June 30, 2016. The conversion price of the Short-term debt and deferred compensation was $1.74 per share. The warrants expire on May 18, 2021 and have an exercise price of $2.175. Information with respect to in-kind dividends issued on the Company’s Preferred stock for the three and nine-month periods ended September 30, 2016 and September 30, 2015 is as follows: Dividends Beneficial Conversion Feature Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended 2016 2015 2016 2015 2016 2015 2016 2015 Series A-1 $ - $ 18 $ 29 $ 53 $ - $ - $ 3 $ - Series B - 324 519 939 - - 73 - Series C - 132 211 382 - - 39 13 Series D-1 - 192 309 516 - - 78 16 Series D-2 - 153 245 445 - - 52 - Total $ - $ 819 $ 1,313 $ 2,335 $ - $ - $ 245 $ 29 Warrants A summary of the warrant activity for the nine months ended September 30 is as follows: September 30, 2016 September 30, 2015 Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Outstanding at beginning of period 205 $ 28.70 171 $ 36.13 Issued 1,551 $ 2.18 32 $ 24.13 Expired - $ - (13 ) $ 62.50 Outstanding at end of period 1,756 $ 1.74 190 $ 33.00 Exercisable at end of period 1,756 $ 1.74 190 $ 33.00 A summary of the status of the warrants outstanding and exercisable as of September 30, 2016 is as follows: Number of shares exercisable under Warrants Weighted Average Remaining Life Weighted Average Exercise 14 0.00 $ 0.30 105 0.02 $ 2.06 32 0.00 $ 0.52 54 0.05 $ 0.48 ‘ 1,551 4.15 $ 1.92 1,756 4.22 $ 1.74 |