Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Stockholders' Equity

6.    Stockholders’ Equity

March 2015 Financing

On March 25, 2015, the Company completed a financing with institutional investors in which it raised $10.0 million, or approximately $9.2 million after deducting placement agent fees and other offering expenses. Investors purchased shares of the Company’s common stock at a price of $1.7125 per share and received one warrant to purchase one half of a share of the Company’s common stock at the same exercise price per share as each share of common stock purchased. A total of 5,839,420 shares of common stock and warrants for the purchase of 2,919,710 shares of common stock were issued. The warrants were exercisable immediately after issuance and expire 5 years from the date of issuance. Also, in connection with the financing, the Company issued to its placement agent and related persons warrants to purchase 233,577 shares of the Company’s common stock, which were exercisable immediately after issuance, have an exercise price of $2.13 per share and expire on March 20, 2020.

Warrants

The following is a summary of the Company’s outstanding common stock warrants:

Expiration Date	Exercise Price		December 31, (in thousands)
			2016		2015
04/16/18	$	3.40		1,460		1,460
09/23/18	$	2.80		147		147
02/18/19	$	2.75		1,872		1,872
02/11/19	$	2.56		293		293
08/28/19	$	2.90		2,700		2,700
06/14/17	$	3.70		216		216
03/25/20	$	1.71		2,920		2,920
03/20/20	$	2.13		234		234
Total Warrants Outstanding				9,842		9,842

No warrants were exercised during the years ended December 31, 2016 and 2015.

All warrants outstanding at December 31, 2016 and 2015 were recorded by the Company as equity at the time of issuance.

Options and restricted stock

As of December 31, 2016, options to purchase common stock were outstanding under two stockholder-approved plans — the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2005 Stock Plan (the “2005 Plan”). Options to purchase common stock may no longer be made under the 2005 Plan, although options previously granted remain outstanding in accordance with their terms. Under the 2015 Plan, up to 4,000,000 shares of the Company’s common stock may be issued pursuant to awards granted in the form of incentive stock options, nonqualified stock options, restricted and unrestricted stock awards, and other stock-based awards to employees, consultants, and directors. The 2015 Plan also allows additional shares of the Company’s common stock to be issued if awards previously authorized or outstanding under the Company’s 2005 Stock Plan are cancelled, forfeited, surrendered, or terminated. Under the 2005 Plan, up to 726,000 shares of the Company’s common may be issued or transferred to the 2015 Plan.

The following is a summary of the Company’s stock option activity under its 2015 and 2005 Plans:

	Options Available for Grant			Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
	(in thousands)								(years)		(in thousands)
Balance at December 31, 2014		54			672		$	3.63		8.49
Options granted		(1,842	)		1,842		$	1.95
Options forfeited		483			(483	)	$	1.93
Options authorized		4,000			—
Balance at December 31, 2015		2,695			2,031		$	2.01		8.44
Options granted		(2,569	)		2,569		$	0.70
Options forfeited		423			(423	)	$	1.74
Balance at December 31, 2016		549			4,177		$	1.47		8.14	$	—
Vested and exercisable at December 31, 2016					1,053		$	2.20		6.96	$	—
Vested and expected to vest at December 31, 2016					3,226		$	1.33		8.00	$	—
Unvested at December 31, 2016					3,124		$	1.23

As of December 31, 2016 there was approximately $1.3 million of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over a weighted average period of approximately 2.6 years.

The weighted average fair value of stock options issued in 2016 and 2015 was $0.51 and $1.05, respectively.

The fair values for the stock options granted were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Year ended December 31,
	2016			2015
Risk-free interest rate		1.5	%		1.7	%
Expected life (years)		6.0			6.0
Expected volatility		88	%		92	%
Dividend yield		0	%		0	%

In calculating the estimated fair value of its stock options, the Company used the Black-Scholes option pricing model which requires the consideration of the following variables for purposes of estimating fair value:

• the stock option exercise price,

• the grant date price of the Company’s common stock,

• the expected term of the option,

• the expected volatility of the Company’s common stock,

• the expected dividends on the Company’s common stock, and

• the risk-free interest rate for the expected option term.

Stock Option Exercise Price and Grant Date Price of the Company’s common stock — The closing market price of the Company’s common stock on the date of grant.

Expected Term — The expected term of options represents the period of time for which the options are expected to be outstanding, and is calculated based on the average of the vesting period and the option term.

Expected Volatility — The expected volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate during the term of the option granted. The Company determines the expected volatility based on the historical volatility of its common stock over a period commensurate with the option’s expected term.

Expected Dividends — Because the Company has never declared or paid any cash dividends on any of its common stock and does not expect to do so in the foreseeable future, the Company uses an expected dividend yield of zero to calculate the grant date fair value of a stock option.

Risk-Free Interest Rate — The risk-free interest rate is the implied yield available on U.S. Treasury issues with a remaining life consistent with the option’s expected term on the date of grant.

The Company estimates the level of award forfeitures expected to occur and records compensation expense only for those awards that are ultimately expected to vest.