Stockholders’ Equity

Common Stock

On June 18, 2014, the Company completed a public offering of 7,530,000 shares of common stock at $1.50 per share, together with warrants to purchase up to an aggregate of 2,259,000 shares of common stock. The warrants may be exercised by the holders at a price of $1.55 per share immediately thru June 18, 2019. Net proceeds after expenses from the offering were approximately $10.1 million after underwriting discount and estimated offering expenses.

On January 30, 2014, the Company completed a private placement of the sale of 3,336,800 shares of the Company’s common stock at $2.00 per share, together with warrants to purchase up to an aggregate of 1,668,400 shares of common stock. The warrants may be exercised by the holders at a price of $2.81 per share starting July 30, 2014 continuing through January 29, 2019. Net proceeds after expenses from the offering were approximately $5.9 million.

Warrants

A summary of warrant activity is as follows:

	2015					2014
	Number of Shares			Weighted-Average Exercise Price Per Share		Number of Shares		Weighted-Average Exercise Price Per Share
Beginning balance		5,113,420		$	2.21		1,125,000	$	2.64
Warrants granted		--			--		3,988,420	$	2.09
Warrants expired		(61,020	)	$	2.15		--		--
Outstanding at June 30		5,052,400		$	2.21		5,113,420	$	2.21
Exercisable at June 30		5,052,400		$	2.21		3,445,020	$	1.92

Stock Options

The 2012 Independent Director Plan (“2012 Plan”) permits the grant of stock or options to independent directors. A total of 500,000 shares were approved by the stockholders for issuance under the 2012 Plan. Options are granted at prices that are equal to 100% of the fair market value on the date of grant, and expire over a term not to exceed ten years. Options generally vest in monthly increments over one year, unless otherwise determined by the Board of Directors. As of June 30, 2015, there were 180,696 shares available for issuance.

The 2006 Equity Incentive Plan (“2006 Plan”) permits the grant of options, restricted stock, stock bonuses and stock appreciation rights to employees, directors and consultants. Under the 2006 Plan, the number of shares of common stock equal to 6% of the number of outstanding shares of the Company are authorized to be issued. The number of shares available to grant for awards adjusts at the beginning of each fiscal year if additional options to purchase shares of common stock were issued in the preceding fiscal year. As of June 30, 2015, there have been 5,223,074 shares approved under the 2006 Plan for issuance and 109,934 available for issuance.

Stock Options (Continued)

The 2002 Independent Directors Equity Incentive Plan (“2002 Plan”) permits the grant of stock or options to independent directors. A total of 87,500 shares were approved by the stockholders for issuance under the 2002 Plan. Options are granted at prices which are equal to 100% of the fair market value on the date of grant, and expire over a term not to exceed ten years. Options generally vest immediately, unless otherwise determined by the Board of Directors. The 2002 Plan, but not the options granted, expired in January 2012.

Upon the appointment as Chief Executive Officer in June 2015, in accordance with his employment agreement, the Company’s CEO received restricted stock units representing 1,000,000 shares of restricted common stock vesting in four equal installments based upon a combination of time and milestone based targets and a seven year option to acquire 1,000,000 shares of common stock, 25% of which vested immediately with the balance vesting in equal monthly installments during the following 24 months.

Upon the separation with the Company’s Chief Executive Officer in October 2014, in accordance with his employment agreement, all outstanding options and restricted stock awards which would have otherwise vested by July 31, 2015, immediately vested. As a result, the Company recognized $158 of stock compensation expense in general and administrative during the year ended June 30, 2015 as the vesting accelerated on 166,667 options and 70,000 restricted stock awards.

The Company issues new shares of common stock upon exercise of stock options. The following is a summary of option activity for the Company’s stock option plans:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at June 30, 2014		1,253,035		$	2.08

Granted		2,369,250		$	1.08
Forfeited/cancelled		(394,473	)	$	1.44
Expired		(275,750	)	$	3.00
Exercised		--			--
Outstanding at June 30, 2015		2,952,062		$	1.28		5.3	$	18
Vested and Expected to Vest at June 30, 2015		2,454,167		$	1.27		5.1	$	15
Exercisable at June 30, 2015		1,167,929		$	1.40		4.0	$	5

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock. There were no options that were exercised during the year ended June 30, 2015. During the year ended June 30, 2014, the aggregate intrinsic value of options exercised under the Company's stock option plans was $4 determined as of the date of option exercise.

Non-vested stock option activity for the year ended June 30, 2015, is as follows:

	Non-vested Stock Options			Weighted-Average Grant Date Fair Value
Outstanding at June 30, 2014		638,739		$	1.02
Granted		2,369,250		$	0.62
Vested		(896,883	)	$	0.71
Forfeited		(326,973	)	$	0.69
Outstanding at June 30, 2015		1,784,133		$	0.61

The fair value of the Company’s stock options granted for the years ended June 30, 2015 and 2014 was estimated using the following weighted-average assumptions:

	2015			2014
Expected life (years)		5			4
Risk-free interest rate		1.5	%		1.1	%
Expected volatility		75	%		75	%
Dividend yield		0	%		0	%

The weighted average grant date fair value of options granted during the years ended June 30, 2015 and 2014 was $0.62 and $1.15, respectively.

At June 30, 2015, the total compensation cost related to options granted under the Company's stock option plans but not yet recognized was $628. This cost will be amortized on a straight-line basis over a weighted-average period of approximately two years and will be adjusted for subsequent changes in estimated forfeitures. The total fair value of options vested during the years ended June 30, 2015 and 2014 was $678 and $309.

Common Stock Restricted Awards

For the year ended June 30, 2014, the Company’s Compensation Committee granted 692,968 shares of restricted common stock to director level and executive members of management, vesting in three equal installments on the first, second and third anniversary of the grant date.

The following is a summary of restricted stock activity:

	2015					2014
	Number of Shares			Weighted-Average Grant Date Fair Value		Number of Shares			Weighted-Average Grant Date Fair Value
Balance at June 30		803,799		$	1.90		390,003		$	1.81
Granted		1,097,000		$	0.83		692,968		$	1.95
Vested		(376,558	)	$	1.82		(191,672	)	$	1.86
Forfeited		(72,457	)	$	1.77		(87,500	)	$	2.00
Outstanding at June 30		1,451,784		$	1.12		803,799		$	1.90

In connection with the vesting of the restricted stock awards, the election was made by some of the employees to satisfy the applicable federal income tax withholding obligation by a net share settlement, pursuant to which the Company withheld 121,958 and 57,680 shares for the years ended June 30, 2015 and 2014, respectively and used the deemed proceeds from those shares to pay the income tax withholding. The net share settlement is deemed to be a repurchase by the Company of its common stock.

As of June 30, 2015, the Company had $1,066 in total unrecognized compensation expense related to the Company’s restricted stock awards, which will be recognized over a weighted average period of approximately one year.