Stockholders' Equity

6 Months Ended

Jun. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 6 – Stockholders’ Equity

Common Stock and Preferred Stock

The Company is authorized to issue 62,500,000 shares of common stock and 2,000,000 shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Company’s Board of Directors. The Company has not issued any shares of preferred stock.

In February 2015, the Company completed an underwritten public offering of common stock whereby 2,990,000 shares were issued at $5.85 per share. Gross proceeds from the offering totaled $17.5 million and net cash proceeds approximated $16.3 million. Expenses of the offering approximated $1.2 million, including underwriting fees of $1,049,000, underwriter legal fees and other costs of $55,000, and other costs of $110,000.

In March 2014, the Company completed a registered direct offering of common stock whereby 812,500 shares were issued at $8.00 per share. Gross proceeds from the offering totaled $6.5 million and net cash proceeds approximated $5.8 million. Expenses of the offering approximated $0.8 million. Cash expenses included placement agent fees of $488,000, placement agent legal and other fees of $75,000, issuer legal fees of $113,000, and other costs of $44,000. Non-cash expenses consisted of a warrant to purchase 20,313 shares of the Company’s common stock at $10.00 per share exercisable until March 2019 valued at $92,000.

Equity Incentive Plan

The Company has an Equity Incentive Plan (the Plan) which provides for the granting of options to purchase shares of common stock, stock awards to purchase shares at no less than 85% of the value of the shares, and stock bonuses to officers, employees, board members, consultants, and advisors. The Compensation Committee of the Board of Directors is authorized to administer the Plan and establish the grant terms, including the grant price, vesting period and exercise date. As of June 30, 2015, the number of shares reserved for issuance under the Plan totaled 1,389,297 shares. The Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 10% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine.

In the six months ended June 30, 2015, the Company granted 405,200 stock options under the Plan to employees and a consultant, including 300,000 stock options granted to its Chief Executive Officer, Stephen E. Pirnat. The stock options have exercise prices at the grant date fair values which range from $5.07 to $5.97 per share, contractual lives of 10 years, and vest over 1-2 years in the case of Mr. Pirnat’s stock options and over 4 years in the case of all other stock options. The fair value of stock options granted estimated on the date of grant using the Black-Scholes option valuation model was $1,232,000, which includes $923,000 for Mr. Pirnat’s stock options. The recognized compensation expense associated with these grants for the six months ended June 30, 2015 was $230,000. The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

Expected life	5.81 years
Weighted average volatility	72	%
Forfeiture rate	11	%
Weighted average risk-free interest rate	1.46	%
Expected dividend rate	0	%

In February 2015, the Company authorized 23,034 shares of common stock to be issued under the Plan to its three independent directors in accordance with board agreements and which will be earned quarterly for service in 2015. The fair value of the stock at the time of grant was $5.97 per share for a total value of $138,000. The Company recognized $37,000 and $62,000 in general and administrative expense for the three and six months ended June 30, 2015, respectively, and will recognize the remaining $76,000 on a pro-rated quarterly basis in the remainder of 2015.

In the six months ended June 30, 2015, 129,062 shares of common stock were issued through the exercise of stock options with a strike price of $2.20 per share and 210 shares of common stock were issued through the exercise of stock options with a strike price of $4.88 per share for proceeds of $285,000.

Stock options may be exercised prior to vesting where the resulting shares of common stock are issued with a declining repurchase right in favor of the Company at the exercise price should the employee terminate employment or upon other related circumstances prior to the previous vesting date. At June 30, 2015, there are 5,837 shares outstanding subject to a repurchase right at $4.88 per share through December 31, 2016.

Outstanding stock option grants at June 30, 2015 and December 31, 2014 totaled 817,790 and 643,817 with 290,651 and 441,958 being vested and exercisable at June 30, 2015 and December 31, 2014, respectively. Stock grants made to date through June 30, 2015 and December 31, 2014 totaled 200,894 shares and 190,424 shares, respectively. Of these amounts, 20,000 and 28,000 at June 30, 2015 and December 31, 2014, respectively, are subject to declining repurchase rights by the Company at $0.0001 per share through September 30, 2016. The recognized compensation expense associated with these grants for the three and six months ended June 30, 2015 and 2014 totaled $276,000, $417,000, $81,000 and $162,000, respectively. At June 30, 2015, the number of shares reserved under the Plan but unissued totaled 370,613. At June 30, 2015, there was $1,433,000 of total unrecognized compensation cost related to non-vested share based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.1 years.

Consultant Stock Plan

The Company has a 2013 Consultant Stock Plan (the Consultant Plan) which provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and board members are not entitled to receive grants from the Consultant Plan. The Compensation Committee of the Board of Directors is authorized to administer the Consultant Plan and establish the grant terms. The number of shares reserved for issuance under the Consultant Plan on June 30, 2015 totaled 115,087 with 96,837 of those shares unissued. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine.

Warrants

The Company has the following warrants outstanding at June 30, 2015:

	Total Outstanding Warrants
		Weighted Average		Life
Exercise Price	Warrants	Exercise Price		(in years)
$1.80	80,000	$	1.80	5.64
$2.20	118,959	$	2.20	0.86
$5.00	345,000	$	5.00	1.82
$10.00	20,313	$	10.00	3.68
	564,272	$	4.14