Stockholders' equity (deficit)

6 Months Ended

Jun. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' equity (deficit)

Note 7 - Stockholders’ equity (deficit)

Initial public offering

On May 8, 2015, the Company completed its IPO pursuant to which the Company offered and sold 2,850,000 units, each consisting of one share of common stock and a detachable stock purchase warrant to purchase an additional share of common stock, at an initial offering price of $6.00 per unit. Of the total gross proceeds of $17.1 million, approximately $2.1 million was satisfied by exchanging outstanding demand notes. After considering the demand notes, and underwriting discounts, commissions and offering expenses of $2.9 million (which were charged to additional paid in capital), the total net cash proceeds to the Company was $12.1 million. On the IPO closing date, the underwriters exercised a portion of their over-allotment option to acquire an additional 422,500 stock purchase warrants for cash of $4,225. In connection with the IPO, all of the Company’s outstanding Series A Preferred Stock, 2014 convertible notes and 2015 convertible notes were converted into 7,374,852 shares of common stock.

The stock purchase warrants issued as part of the units (including over-allotment option) are exercisable for 3,272,500 shares of common stock at $6.60 per share beginning six months after the closing of the IPO for five years, expiring on May 8, 2020. Additionally, the Company issued additional warrants to its investment bankers to purchase 185,250 shares of common stock, on the same terms as the warrants issued with the units. The warrants were valued using the Black-Scholes option pricing model and are classified as equity.

Stock options

In 2002, the Company adopted the 2002 Stock Option and Restricted Stock Plan, or the 2002 plan, pursuant to which the Company’s Board of Directors could grant either incentive stock options or non-qualified stock options, shares of restricted stock, shares of unrestricted common stock, and other share-based awards to officers and employees. In 2008, the Company adopted the 2008 Stock Option and Restricted Stock Plan, or the 2008 plan, pursuant to which the Company’s Board of Directors may grant either incentive or non-qualified stock options or shares of restricted stock to directors, key employees, consultants and advisors.

In April 2015, the Company adopted, and the Company’s stockholders approved, the 2015 Equity Incentive Plan, or the 2015 Plan; the 2015 Plan became effective upon the execution and delivery of the underwriting agreement for the Company’s IPO. Following the effectiveness of the 2015 Plan, no further grants will be made under the 2002 or 2008 plans. The 2015 Plan provides for the granting of incentive stock options within the meaning of Section 422 of the Code to employees and the granting of non-qualified stock options to employees, non-employee directors and consultants. The 2015 Plan also provides for the grants of restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and stock payments to employees, non-employee directors and consultants.

Under the 2015 Plan, the aggregate number of shares of the common stock authorized for issuance may not exceed (1) 1,355,000 plus (2) the sum of the number of shares subject to outstanding awards under the 2008 Plan as of the 2015 Plan’s effective date, that are subsequently forfeited or terminated for any reason before being exercised or settled, plus (3) the number of shares subject to vesting restrictions under the 2008 Plan as of the 2015 Plan’s effective date that are subsequently forfeited. In addition, the number of shares that have been authorized for issuance under the 2015 Plan will be automatically increased on the first day of each fiscal year beginning on January 1, 2016 and ending on (and including) January 1, 2025, in an amount equal to the lesser of (1) 4% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, or (2) another lesser amount determined by the Board of Directors. Shares subject to awards granted under the 2015 Plan that are forfeited or terminated before being exercised or settled, or are not delivered to the participant because such award is settled in cash, will again become available for issuance under the 2015 Plan. However, shares that have actually been issued shall not again become available unless forfeited. As of June 30, 2015, there remained 879,571  shares available for issuance under the 2015 Plan.

For the three months ended June 30, 2015 and 2014, the Company recorded $320,088 and $26,553, respectively, of stock compensation expense. For the six months ended June 30, 2015 and 2014, the Company recorded $910,691 and $55,480, respectively, of stock compensation expense. The allocation of share-based compensation expense by operating expenses is as follows:

		Three months ended June 30,
		2015		2014
Research and development	$	70,228	$	5,975
General and administrative		199,179		19,818
Sales and marketing		50,681		760
	$	320,088	$	26,553

		Six months ended June 30,
		2015		2014
Research and development	$	106,684	$	12,069
General and administrative		282,478		41,878
Sales and marketing		521,529		1,533
	$	910,691	$	55,480

During the six months ended June 30, 2015, the Company granted stock options to acquire 1,406,887 shares of common stock at a weighted average exercise price of $ 2.83 per share. The 2015 awards had a weighted average grant date fair value per share of $3.47. The Company has total stock options to acquire 1,704,959 shares of common stock outstanding at June 30, 2015.

Restricted stock units

In March 2014, the Company awarded restricted stock units to acquire 130,640 shares of common stock to its Chief Executive Officer. The restricted stock units were compensation for his service as Chief Executive Officer, or CEO, from October 2013 through June 2014 and were subject to forfeiture if he did not continue to perform management services through October 24, 2014. The restricted stock units vested on October 24, 2014 and 130,640 shares of common stock were issued to the CEO.

Stock purchase warrants

The Company has total stock purchase warrants to acquire 3,716,355 and 33,594 shares of common stock outstanding at June 30, 2015 and December 31, 2014, respectively. In the first quarter of 2015, the Company issued 225,011 warrants in connection with the issuance of its 2015 convertible debt. In the second quarter of 2015 in connection with the Company’s IPO, the Company issued 3,457,750 stock purchase warrants to investors and to its investment bankers. As of June 30, 2015, the warrants are classified as equity.