Note 12

Stockholders' Equity:

Preferred Stock

The Company has authorized preferred stock consisting of 5,000,000 shares with a $.01 par value, which shall be designated as blank check preferred. The Board of Directors may authorize the issuance from time to time of one or more classes of preferred stock with one or more series within any class thereof, with such voting powers, full or limited, or without voting powers and with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions thereon as shall be set forth in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such preferred shares. At December 31, 2014 and 2013, no shares of preferred stock were issued or outstanding.

Common Stock

On December 12, 2014, the Company closed on a registered offering in which it sold an aggregate of 645,000 shares of its common stock at an offering price of $2.19 per share. The closing price of the Company's common stock was $1.37 on December 12, 2014. The sale resulted in net proceeds of approximately $1.4 million.

On August 18, 2012, the Board of Directors approved a stock repurchase program up to a maximum of $25 million. In August 2013, the Board of Directors has authorized an additional $30 million share re-purchase program of its common shares in the open market over the next twelve months, at such times and prices as determined appropriate by the Company's management in collaboration with the Board of Directors. To date, the Company has repurchased 2,987,413 shares at an average price of $13.98 per share for a total of $41,757.

On April 27, 2012, the Company closed on a two-tranche registered offering in which it sold an aggregate of 3,023,432 shares of its common stock at an offering price of $13.23 per share. The sale resulted in net proceeds of approximately $37.8 million. The net proceeds were used for general corporate purposes, including capital expenditures, continued product development, sales and marketing initiatives and working capital.

Common Stock Options

The Company has a Non-Employee Director Stock Option Plan. This plan has authorized 370,000 shares; of which 7,000 shares had been issued or were reserved for issuance as awards of shares of common stock, and 14,578 shares were reserved for outstanding stock options. The directors, who were elected to our Board in connection with the reverse merger, each received a one-time stock award of 5,000 shares of the Company's common stock in January 2012.

In addition, the Company has a 2005 Equity Compensation Plan ("2005 Equity Plan"). The 2005 Equity Plan has authorized 6,000,000 shares, of which 1,576,095 shares had been issued or were reserved for issuance as awards of shares of common stock, and 1,144,976 shares were reserved for outstanding options.

A summary of option transactions for all of the Company's stock options during the years ended December 31, 2014, 2013 and 2012 follows:

	Number of Stock Options	Weighted Average Exercise Price
Outstanding at December 31, 2011	180,718	$ 19.54
Granted	739,000	15.87
Exercised	(10,048)	6.67
Expired/cancelled	(11,129)	20.25
Outstanding at December 31, 2012	898,541	16.65
Granted	259,625	16.59
Exercised	(3,750)	6.24
Expired/cancelled	(21,738)	31.36
Outstanding at December 31, 2013	1,132,678	16.51
Granted	181,500	14.10
Exercised	-	-
Expired/cancelled	(154,624)	15.73
Outstanding at December 31, 2014	1,159,554	$16.23
Exercisable at December 31, 2014	510,954	$16.47

The outstanding and exercisable options at December 31, 2014, have a range of exercise prices and associated weighted remaining contractual life and weighted average exercise price, as follows:

Options Range of Exercise Prices	Outstanding Number of Shares	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price	Exercisable Number of Shares	Exercisable Weighted Avg. Exercise Price
$0 - $7.50	21,584	4.58	$ 6.12	21,584	$ 6.11
$7.51 - $15.00	699,622	7.85	$ 14.11	255,022	$ 13.93
$15.01 - $22.50	427,900	7.32	$ 19.02	223,900	$ 18.13
$22.51- up	10,448	1.56	$ 64.42	10,448	$ 64.42
Total	1,159,554	7.54	$ 16.23	510,954	$ 16.47

The outstanding options will expire, as follows:

Year Ending	Number of Shares	Weighted Average Exercise Price	Exercise Price
2015	2,499	$102.90	$102.90
2016	2,634	$ 69.48	$48.72 - $93.66
2017	3,146	$ 46.85	$46.62 - $47.88
2018	2,169	$ 39.41	$37.80 - $39.90
2019 and later	1,149,106	$ 15.79	$5.70 - $20.00
	1,159,554	$ 16.23	$5.70 - $102.90

As the share price as of December 31, 2014 was $1.53, the aggregate intrinsic value for options outstanding and exercisable was immaterial.

The Company uses the Black-Scholes option-pricing model to estimate fair value of grants of stock options with the following weighted average assumptions:

	Year Ended December 31,
	2014	2013	2012
Risk-free interest rate	2.17%	1.3%	N/A
Volatility	78.41%	85.25%	N/A
Expected dividend yield	0%	0%	N/A
Expected life	5.5 years	5.5 years	N/A
Estimated forfeiture rate	0%	0%	N/A

The Company calculates expected volatility for a share-based grant based on historic daily stock price observations of its common stock. For estimating the expected term of share-based grants made in the years ended December 31, 2014 and 2013, the Company has adopted the simplified method. The Company has used historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of expense as of the grant date.

With respect to grants of options, the risk-free rate of interest is based on the U.S. zero-coupon US Government bond rates appropriate for the expected term of the grant or award.

On December 10, 2014, the Company issued 290,000 restricted stock units to a number of employees. The restricted shares have a purchase price of $0.01 per share and vest, and cease to be subject to the Company's right of repurchase, over a four-year period. The Company determined the fair value of the awards to be the fair value of the Company's common stock units on the date of issuance less the value paid for the award. The aggregate fair value of these restricted stock issued was $435. On November 7, 2014, the Company also issued 390,000 restricted stock units to two executive employees. The restricted shares have a purchase price of $0.01 per share and vest, and cease to be subject to the Company's right of repurchase, over a four-year period. The Company determined the fair value of the awards to be the quoted market value of the Company's common stock on the date of issuance less the value paid for the award. The aggregate fair value of these restricted stock issued was $1,217.

On May 12, 2014, the Company granted 141,337 restricted stock units to three LCA employees as part of their respective employment agreements related to the acquisition. These restricted shares have a purchase price of $0.01 per share and vest, and cease to be subject to the Company's right of repurchase, over a three-year period. The Company determined the fair value of the awards to be the quoted market value of the Company's common stock on the date of issuance less the value paid for the award. The aggregate fair value of these restricted stock issued was $1,936. The Company also granted an aggregate of 109,000 options to purchase common stock to a number of employees with a strike price of $13.70, which was higher than the quoted market value of our stock at the date of grants. The options vest over four years and expire ten years from the date of grant. The aggregate fair value of these options granted was $975.

On April 17, 2014, the Company issued 5,000 shares of common stock to a non-employee director for an aggregate fair value of $75.

On February 27, 2014, the Company granted an aggregate of 71,500 options to purchase common stock to a number of employees and consultants with a strike price of $14.80, which was higher than the quoted market value of our stock at the date of grants. The options vest over five years and expire ten years from the date of grant. The aggregate fair value of the options granted was $718.

On February 28, 2013, the Company granted an aggregate of 177,125 options to purchase common stock to a number of employees and consultants with a strike price of $15, which was higher than the quoted market value of our stock at the date of grants. The options vest over five years and expire ten years from the date of grant. Also on February 28, 2013, the Company granted an aggregate of 82,500 non-qualified options to purchase common stock to two executive employees with a strike price of $20, which was set to match the exercise price of the warrants issued in the reverse merger and was higher than the quoted market value of our stock at the date of grant. The aggregate fair value of the options granted was $2,590. The options vest over five years and expire ten years from the date of grant.

On January 26, 2012, the Company issued 30,000 shares of common stock to the six non-employee directors with an aggregate fair value of $405.

On March 18, 2012, the Company granted an aggregate of 509,000 options to purchase common stock to a number of employees and consultants with a strike price of $14, which was higher than the quoted market value of our stock at the date of grants. The options vest over five years and expire ten years from the date of grant. Also on March 18, 2012, the Company granted an aggregate of 230,000 non-qualified options to purchase common stock to two executive employees with a strike price of $20, which was set to match the exercise price of the warrants issued in the reverse merger and was higher than the quoted market value of our stock at the date of grant. The aggregate fair value of the options granted was $6,652. The options vest over five years and expire ten years from the date of grant.

Total stock-based compensation expense was as $4,936, $4,985 and $6,197 for the years ended December 31, 2014, 2013 and 2012.

At December 31, 2014, there was $7,644 of total unrecognized compensation cost related to non-vested stock awards that is expected to be recognized over a weighted-average period of 3.14 years.

Common Stock Warrants

As a result of the cash raise on December 12, 2014, the Company issued separately detachable warrants to the shareholders participating in the raise at 0.50 per share acquired. The warrants have the following principal terms: (i) a warrant exercise price of $2.25 per share of common stock, (ii) an exercise period of December 12, 2015 through December 12, 2017. The underlying warrants were registered via registration statement.

Following the closing of the reverse merger, the Company had warrants outstanding, a majority of which were issued in conjunction with the reverse merger on December 13, 2011. As a result of the reverse merger, Pre-merged PhotoMedex shareholders were issued warrants at a ratio of 0.305836 per each outstanding share held or a total of 1,026,435 warrants. The warrants have the following principal terms: (i) a warrant exercise price of $20 per share of common stock, (ii) an exercise period of five years, and (iii) the right of the Company to notify the holders of the warrants of an earlier expiration of the warrants, at any time following such time as the Company's common stock will have had a closing trading price in excess of $30 per share for a period of 20 consecutive trading days, provided that such earlier expiration date shall not be earlier than that date which is 20 trading days following the delivery of such notification by the Company.

A summary of warrant transactions for the years ended December 31, 2014, 2013 and 2012 follows:

	Number of Warrants	Weighted Average Exercise Price
Outstanding at January 1, 2012	1,067,240	$ 19.98
Issued	25,000	20.00
Exercised	(17,756)	7.50
Expired/cancelled	(11,216)	47.04
Outstanding at December 31, 2012	1,063,268	19.91
Issued	-	-
Exercised	-	-
Expired/cancelled	(4,589)	18.48
Outstanding at December 31, 2013	1,058,679	19.91
Issued	322,500	2.25
Exercised	-	-
Expired/cancelled	-	-
Outstanding at December 31, 2014	1,381,179	$ 15.79

At December 31, 2014, all outstanding warrants were exercisable. As the share price as of December 31, 2014 was $1.53, the aggregate intrinsic value for warrants outstanding and exercisable was immaterial.

If not previously exercised, the outstanding warrants will expire as follows:

Year Ending December 31,	Number of Warrants	Weighted Average Exercise Price

2015	32,250	$ 17.19
2016	1,026,429	20.00
2017	322,500	2.25
	1,381,179	$15.79

As all of the then outstanding warrants were fully vested at the date of the consummation of the reverse merger, the fair value of the warrants at that date was included as part of the calculation of the consideration transferred, as the consideration was determined based on the equity interests Radiancy would have had to issue to the stockholders of Pre-merged PhotoMedex to provide them the same equity interests in the combined company.