Share-Based Compensation

6 Months Ended

Jan. 31, 2016

Share-Based Compensation [Abstract]

Share-Based Compensation

11.  Share-Based Compensation

During the three months ended January 31, 2016, the Compensation Committee of the Board of Directors issued 200,000 restricted stock units (“RSUs”) to Henry R. Lambert, our Chief Executive Officer. The RSUs vest based on performance conditions and expire July 31, 2018. If the performance conditions are not met, or expected to be met, no compensation cost will be recognized on the underlying RSUs.  If the performance condition is expected to be met, the expense will be allocated over the performance period. The RSUs granted to Mr. Lambert were not granted pursuant to any compensatory, bonus, or similar plan maintained or otherwise sponsored by the Company.

In addition, during the three months ended January 31, 2016, we issued 612,500 RSUs to key employees.  The RSUs vest based on performance and service conditions. If the performance conditions are not met, or expected to be met, no compensation cost will be recognized on the underlying RSUs. If the performance condition is expected to be met, the expense will be allocated over the performance period.

During the three and six months ended January 31, 2016, 506,250 and 525,000 RSUs vested based on service conditions that were satisfied during the period, resulting in the issuance of 506,250 and 525,000 shares of common stock, respectively. Of the 2,685,000 RSUs outstanding, we currently expect 1,900,000 to vest. As of January 31, 2016, there was $332,000 of unrecognized non-cash compensation cost related to RSUs we expect to vest, which will be recognized over a weighted average period of 0.37 years. During the six months ended January 31, 2016, 812,500 RSUs were forfeited.

During the three months ended January 31, 2016, we issued options to purchase 110,000 shares of our common stock to key employees, at an exercise price of $0.75, valued at $46,000 (based on the Black-Scholes Option Pricing Model assuming no dividend yield, volatility of 96.60%, and a risk-free interest rate of 0.92%). The options vested on the date of grant and carry a five year term.

As of January 31, 2016, there was $52,000 of unrecognized non-cash compensation cost related to unvested stock options, which will be recognized over a weighted average period of 0.87 years.

For the three months ended January 31, 2016 and 2015, share-based compensation expense for outstanding RSUs and stock options was $763,000 and $482,000, respectively. For the six months ended January 31, 2016 and 2015, share-based compensation expense was $1,435,000 and $985,000, respectively.