Stockholders' Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Stockholders' Equity

12. Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.10 per share with such designation rights and preferences as may be determined from time to time by the Company’s board of directors. There were 11,787 shares and 0 shares of preferred stock issued and outstanding on December 31, 2014 and December 31, 2013, respectively.

On July 24, 2014, in connection with the offering (see Note 9 “Debt”), the Company exchanged 12,300 shares of its Series A convertible preferred stock issued on February 5, 2014 with 12,300 shares of Series B convertible preferred Stock at a stated value of $1,000 per share convertible into common stock at an initial price of $2.565 per share and July 2014 Series B Warrants to purchase up to an aggregate of 4,795,321 shares of common stock at an exercise price of $2.45 per share, expiring in January 2016. The preferred stock is convertible into an aggregate of 4,795,321 shares of common stock. Holders of the preferred stock are entitled to dividends only in the event that dividends are paid on the common stock, and the preferred stock has no preferences over the common stock, including liquidation rights. The Series B Preferred Stock and the July 2014 Series B Warrants are immediately exercisable and are subject to certain ownership limitations.

For financial reporting purposes, the $12,300 preferred stock value was allocated first to the fair value of the July 2014 Series B warrants, which totaled $2,487, then to the intrinsic value of the beneficial conversion feature of $1,887. The amount of the beneficial conversion feature is considered to be a deemed dividend on the date of issuance to the Series B preferred stockholders due to the July 2014 Series B Warrants being immediately exercisable.

 On February 5, 2014, pursuant to a securities purchase agreement, dated as of January 31, 2014, the Company sold to the Purchasers (i) an aggregate of 12,300 shares of Series A Convertible Preferred Stock, par value $0.10 and a stated value of $1,000 per share (the “Series A Preferred Stock”), convertible into 1,464,287 shares of common stock at an initial conversion price of $8.40, and (ii)warrants to purchase up to 1,329,731 shares of common stock for net proceeds of $11,458. The warrants have an exercise price of $7.40 per share, are immediately exercisable and have a term of five years. These warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon a change in control of the Company and therefore are classified as a derivative liability and recorded at fair value on the inception date of February 5, 2014. They will be recorded at their respective fair value at each subsequent balance sheet date. The fair value of these warrants on December 31, 2014, was approximately $266. The change in fair value of these warrants for the twelve months ended December 30, 2014 was a benefit of $5,319 (see Note 10 “Fair Value of Financial Instruments”).

Pursuant to the terms of the Purchase Agreement, the Series A Convertible Preferred Stock was exchanged for the Series B Convertible Preferred Stock. In September 2014, the Company amended the registration statement related to the Series A Convertible Preferred Stock to deregister those shares that would have been issuable upon conversion of the Series A Convertible Preferred Stock had it not already been redeemed by the proceeds of the Series B Convertible Preferred Stock.

In connection with this financing, the Company also granted to the Purchasers resale registration rights with respect to the shares of common stock underlying the Series A Preferred Stock and the warrants pursuant to the terms of a Registration Rights Agreement. The Purchasers were entitled to receive liquidated damages upon the occurrence of a number of events relating to filing, effectiveness and maintaining an effective registration statement covering the shares underlying the Series A Preferred Stock and the warrants. The Company was unable to meet certain filing and effectiveness requirements and as a result paid liquidated damages to the Purchasers in the aggregate amount of $3,420.

Common Stock and Warrants

The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.001 per share. There were 6,037,232 and 4,750,160 shares of common stock issued and outstanding at December 31, 2014 and December 31, 2013, respectively.

On October 29, 2013, the Company entered into a securities purchase agreement with certain accredited investors in connection with a $6,000 registered offering of 422,819 shares of the Company’s common stock, fully paid prefunded Series B Warrants to purchase up to 434,325 shares of its common stock and additional warrants (“October 2013 Series A Warrants”) to purchase up to 685,715 shares of its common stock. The October 2013 Series A Warrants were exercisable beginning on May 1, 2014 at a price of $8.50 per share and expire on May 1, 2019. The prefunded Series B Warrants were exercisable immediately for no additional consideration. The October 29, 2013 offering closed on October 31, 2013. The holders exercised all of the prefunded Series B warrants in March 2014. There were no warrant exercises in 2013.

The October 2013 Series A Warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon a change in control of the Company and therefore are classified as a derivative. These warrants have been recorded at fair value at the inception date and will be recorded at their respective fair values at each subsequent balance sheet date. Any change in value between reporting periods will be recorded as a non-operating, non-cash charge in the Statements of Operations. The fair value of these warrants on December 31, 2014 and December 31, 2013 was approximately $233 and $3,017, respectively.

The change in fair value of these warrants for the twelve months ended December 31, 2014 and 2013, was a benefit of $2,784 and charge of $206, respectively (see Note 10 “Fair Value of Financial Instruments”).

Outstanding common stock warrants on December 31, 2014 consist of the following:

		Total
Issue Date	Expiration Date	Warrants		Ex. Price
4/26/2013	4/26/2018		69,321	$	11.18
10/31/2013	4/30/2019		685,715	$	8.50
2/5/2014	2/5/2019		1,329,731	$	7.40
7/24/2014	7/24/2019		6,198,832	$	2.45
7/24/2014	1/24/2016		4,795,321	$	2.45
			13,078,920

On August 22, 2013, the Company received a notice from NASDAQ that, for the previous 30 consecutive business days, the Company was not in compliance with the minimum bid price requirement of $1.00 per share for continued listing on the NASDAQ Capital Market. In July 2014, the Company effected a one-for-ten reverse split of its common stock in order to regain compliance with the minimum bid price requirement prior to the expiration of the last applicable grace period. On July 24, 2014, the Company was notified by NASDAQ that it is now in compliance with the minimum bid price requirement.