| Equity | NOTE 5—EQUITY (a) General At December 31, 2018 the
Company had issued and outstanding 29,555,786 shares of its common stock, par value $0.01 per share. Holders of outstanding common
stock are entitled to receive dividends when, as and if declared by the Board and to share ratably in the assets of the Company
legally available for distribution in the event of a liquidation, dissolution or winding up of the Company. Holders of common stock
do not have subscription, redemption, conversion or other preemptive rights. Holders of the common stock are entitled to elect
all of the Directors on the Company’s Board. Holders of the common stock do not have cumulative voting rights, meaning that
the holders of more than 50% of the common stock can elect all of the Company’s Directors. Except as otherwise required by
Delaware General Corporation Law, all stockholder action is taken by vote of a majority of shares of common stock present at a
meeting of stockholders at which a quorum (a majority of the issued and outstanding shares of common stock) is present in person
or by proxy or by written consent pursuant to Delaware law (other than the election of Directors, who are elected by a plurality
vote). On August 6, 2018, the
Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation to authorize a
reverse split of the Company’s common stock at any time prior to August 6, 2019, at a ratio between one-for-ten and one-for-twenty,
if and as determined by the Company’s Board of Directors. The Company is not authorized
to issue preferred stock. Accordingly, no preferred stock is issued or outstanding. See Note 8, Subsequent
Events. (b) Summary Employee Option Information The Company’s stock
option plans provide for the grant to officers, directors and other key employees of options to purchase shares of common stock.
The purchase price may be paid in cash or at the end of the option term, if the option is “in-the-money”, it is automatically
exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the
option from the optionee, but reduces the number of shares of common stock issued upon the exercise of the option by the smallest
number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option
shares covered by the option exercised. Each option is exercisable to one share of the Company’s common stock. Most options
expire within five to ten years from the date of the grant, and generally vest over three-year period from the date of the grant.
At the annual meeting of stockholders on September 11, 2012, the Company’s stockholders approved an Amendment to the Company’s
2006 Stock Incentive Plan to increase the number of available shares by 1,000,000 and an Amendment to the Company’s 2006
Stock Incentive Plan for Non-Employee Directors to increase the number of available shares by 200,000. In February 2019, the Company’s
Board extended the expiration date of the 2006 Stock Incentive Plan until December 31, 2024. At March 31, 2019, 1,537,114
options were available for grant under the 2006 Amended and Restated Stock Incentive Plan and no options were available for grant
under the 2006 Director Plan. During the three months ended March 31, 2019, 30,000 options were granted to directors. The fair
value of the options issued was $7. No options were exercised
in the three months ended March 31, 2019. The intrinsic value of options outstanding and of options exercisable at March 31, 2019
was $25 and $24, respectively. A summary of stock option
activity for the three months ended March 31, 2019 is as follows:
Number of Options (in shares)
Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life Aggregate Intrinsic Value
Outstanding at December 31, 2018 1,466,489 $ 3.01
Granted 30,000 0.31
Exercised —
Forfeited or expired (73,334 ) 6.55
Outstanding at March 31, 2019 1,423,155 $ 2.77 1.8 years $ 25
Exercisable at March 31, 2019 1,320,655 $ 2.96 1.5 years $ 24 The options granted in
2019 were to directors with an exercise price of $0.31. The fair value of the options granted was estimated on the grant date using
the Black-Scholes option-pricing model with the following weighted average assumptions:
Risk-free interest rate 2.5 %
Expected term of options 3.7 years
Expected annual volatility 123 %
Expected dividend yield — % (c) Stock-based Compensation Expense Stock-based compensation
expense included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations
was $6 and $7 for the three month-periods ended March 31, 2019 and 2018, respectively. The total compensation
cost related to non-vested awards not yet recognized was $16 as of March 31, 2019. (d) Warrants The Company previously
issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date of issuance.
A summary of warrant activity follows:
Number of Warrants (in shares) Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life
Outstanding at December 31, 2018 2,392,142 $ 1.28
Granted — —
Exercised — —
Forfeited or expired — —
Outstanding at March 31, 2019 2,392,142 $ 1.28 1.09 years |
