11. Stockholders’ Equity

The holders of common stock are entitled one vote for each share held and to receive dividends whenever funds are legally available and when declared by the Board of Directors subject to the prior rights of holders of all classes of stock having priority rights as dividends and the conditions of the Revolving Credit Agreement. No dividends have been declared or paid as of December 31, 2015.

Controlled Equity Offering

The Company entered into a Controlled Equity OfferingSM sales agreement (the “Sales Agreement”) in May 2014, as amended on March 26, 2015, with Cantor Fitzgerald & Co. (“Cantor”), as agent and/or principal, pursuant to which the Company could issue and sell, from time to time, shares of its common stock having an aggregate gross sales price of up to $18.0 million. The Company will pay Cantor a commission of 3.0% of the gross proceeds from any common stock sold through the Sales Agreement.

During the twelve months ended December 31, 2015, the Company sold an aggregate of 542,996 shares of common stock under the Sales Agreement, at an average price of approximately $1.98 per share for gross proceeds of $1,072,743 and net proceeds of $1,040,561, after deducting Cantor’s commission. As of December 31, 2015, $13.8 million of common stock remained available to be sold under this facility, subject to certain conditions as specified in the Sales Agreement.

Warrant Offering

On October 8, 2015 the Company completed an offering (the “Warrants Offering”) of transferable subscription warrants to holders of record of the Company’s common stock. Under the terms of the Warrants Offering shareholders of record on September 9, 2015 and holders of certain of the Company’s warrants (pursuant to the terms of their respective warrants) were entitled to one subscription warrant to purchase one share of common stock at a price of $1.10 per share for every four common shares held up to an aggregate of 5,755,775 shares of common stock. Pursuant to the Warrants Offering, subscription warrants to purchase 267,256 shares of common stock were exercised, resulting in gross proceeds to the Company of $293,982.

The Company has reserved shares of common stock for the exercise of warrants, the issuance of options granted under the Company’s stock option plan and its stock purchase plan as follows:


	December 31,	December 31,
	2015	2014
Warrants	2,120,365	2,197,883
Stock award plans	731,442	1,297,389
Employee Stock Purchase Plan	231,298	250,000
	3,083,105	3,745,272

Stock Award Plans

The Company has various stock plans that permit the Company to provide incentives to employees and directors of the Company in the form of equity compensation. In August 2012, the Board of Directors adopted a stock incentive plan (the 2012 Stock Incentive Plan) which was subsequently approved by the Company’s stockholders. This plan replaces the 2002 Stock Incentive Plan which expired on March 25, 2012.

The 2012 Stock Incentive Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units to employees, directors, and consultants. Options granted under the 2012 Stock Incentive Plan expire no later than ten years from the date of grant. The exercise price of each incentive stock option shall not be less than 100% of the fair value of the stock subject to the option on the date the option is granted. The vesting provisions of individual options may vary, but incentive stock options generally vest 25% on the first anniversary of each grant and 1/48 per month over the next three years. Stock appreciation rights are rights to acquire a calculated number of shares of the Company’s common stock upon exercise of the rights. The number of shares to be issued is calculated as the difference between the exercise price of the right and the aggregate market value of the underlying shares on the exercise date divided by the market value as of the exercise date. Stock appreciation rights granted under the 2012 Stock Incentive Plan generally vest 25% on the first anniversary of such grant and 1/48 per month over the next three years and expire no later than ten years from the date of grant. The Company generally issues new shares upon the exercise of stock options and stock appreciation rights.

Restricted share grants are either time-based or performance-based. Time-based restricted shares generally cliff vest three years after grant. Performance-based restricted shares vest upon the achievement of performance objectives which are determined by the Company’s Board of Directors.

Restricted stock unit grants are time-based and generally vest over a period of four years. Options granted to non-employee directors expire no later than ten years from the date of grant. The exercise price of options to non-employee directors shall not be less than 100% of the fair value of the stock subject to the option on the date the option is granted. Initial grants of options to new directors generally vest over a two year period. Annual grants to directors generally vest upon the earlier of one year or the next stockholder meeting.

A summary of the option and stock appreciation rights activity for the year ended December 31, 2015 is as follows:


	Number of Options/SARs	Range of Exercise Price		Weighted Average Exercise Price per Share

Outstanding, December 31, 2014	487,146	$1.69 - $116.40		$17.21
Granted	353,350	$1.45 - $2.15		$2.07
Exercised	-	-	-
Forfeited	(134,002)	$1.45 - $91.90		$18.81
Outstanding, December 31, 2015	706,494	$1.45 - $116.40		$9.34

As of December 31, 2015, the weighted average remaining contractual life of the options and stock appreciation rights outstanding was 8.00 years. Of the 706,494 options and stock appreciation rights that were outstanding as of December 31, 2015, 235,572 were vested and exercisable with a weighted average exercise price of $22.43 per share and a weighted average remaining term of 6.42 years.

A summary of the options and stock appreciation rights outstanding by range of exercise price is as follows:


	Year Ended December 31, 2015
							Number of		Weighted
			Weighted		Weighted		Options		Average Exercise
	Options		Average		Average		Currently		Price Per Vested
Range of Exercise Prices	Outstanding		Remaining Life		Exercise Price		Exercisable		Share
$0.00 - $10.00		607,749		8.67 years	$	3.07		136,827	$	4.07
$30.01 - $40.00		61,495		4.95 years	$	34.89		61,495	$	34.89
$40.01 - $50.00		12,250		3.44 years	$	43.90		12,250	$	43.90
$50.01 - $60.00		12,250		2.41 years	$	54.90		12,250	$	54.90
$90.01+		12,750		0.95 years	$	107.59		12,750	$	107.59
		706,494		8.00 years	$	9.34		235,572	$	22.43

The intrinsic value of options and stock appreciation rights is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for the options and stock appreciation rights that were in-the-money at December 31, 2015. The intrinsic value of the options and stock appreciation rights outstanding at December 31, 2015 and the intrinsic value of fully vested options and stock appreciation rights outstanding at December 31, 2015 were zero based on a closing share price of $0.74 on December 31, 2015. No options or stock appreciation rights were exercised under the Company’s stock option plans during the years ended December 31, 2014 or 2015 and the Company realized no proceeds during these periods. The weighted average grant date fair value of options and stock appreciation rights granted during the year ended December 31, 2015 was $2.07 per share.

A summary of the restricted stock unit activity for the year ended December 31, 2015 is as follows:


	Number of Restricted Stock Units	Weighted Average Grant Date Fair Value per Unit

Outstanding, December 31, 2014	697,751	$3.14
Granted	391,200	$2.04
Vested	(241,775)	$3.06
Forfeited	(95,168)	$2.82
Outstanding, December 31, 2015	752,008	$2.63

The intrinsic value of restricted stock units outstanding at December 31, 2015 was $0.6 million based on a closing share price of $0.74 as of December 31, 2015. During the year ended December 31, 2015, the aggregate intrinsic value of restricted stock units vested was $0.4 million determined at the date of vesting.

During the fourth quarter of 2015, the Company made an adjustment to its forfeiture rate based on historical information, which resulted in an increase to share-based compensation of approximately $0.2 million for the year ended December 31, 2015.

As of December 31, 2015, the total compensation cost related to options, stock appreciation rights and non-vested stock granted to employees under the Company’s stock award plans but not yet recognized was approximately $2.1 million, net of estimated forfeitures of approximately $0.8 million. This cost will be amortized over a weighted average period of approximately two years on a straight-line basis over the underlying estimated service periods and will be adjusted for subsequent changes in estimated forfeitures.

2009 Employee Stock Purchase Plan

In 2009, the Company adopted its 2009 Employee Stock Purchase Plan (“ESPP”). In June 2014, our shareholders approved a proposal to amend the ESPP to increase the number of shares authorized for issuance under the ESPP by 250,000 shares. Eligible employees have the opportunity to participate in a new purchase period every 3 months. Under the terms of the plan, employees can purchase up to 15% of their compensation of the Company’s common stock, subject to an annual maximum of $25,000, at 95% of the fair market value of the stock at the end of the purchase period, subject to certain plan limitations. As of December 31, 2015, there were 231,298 remaining shares available for issuance under the Employee Stock Purchase Plan.