

11.	Stockholder’s Equity

Stock Offering

On April 3, 2017, in connection with the Tealstone Acquisition, the Company issued 1,882,058 shares of the Company’s stock as consideration paid to the sellers. The value of the shares issued was $17.1 million based on the average fair value of the shares on the date of acquisition.

On May 9, 2016, the Company completed an underwritten public offering of 5,175,000 shares of the Company’s common stock, which included the full exercise of the sole underwriter’s over-allotment option, at a price to the public of $4.00 per share ($3.77 per share net of underwriting discounts). The net proceeds from the offering of $19.1 million, after deducting underwriting discounts and other offering expenses, were used for working capital, repayment of our indebtedness under the revolving loan portion of our then existing equipment-based credit facility and for general corporate purposes.

Warrants

On April 3, 2017, the Company issued warrants (the “Warrants”) to the lenders under the Loan Agreement (the “Holders”) pursuant to which such holders have the right to purchase, for a period of five years from the date of issuance, up to an aggregate of 1,000,000 shares of the Company’s common stock (the “Warrant Shares”) at an initial exercise price of $10.25 per share, subject to adjustment for stock splits, combinations and similar recapitalization events and weighted-average anti-dilution upon the issuance by the Company of shares of common stock or rights, options or convertible securities exercisable for common stock in the future at a price below the exercise price of the Warrants.

The Company valued these Warrants using the Black-Scholes model, which is a type 3 fair value measurement. The key assumptions used in the Black-Scholes Model with respect to these valuations are summarized in the following table:



	At April 3, 2017
Current stock price	$	8.88
Exercise option price	$	10.25
Expected term of warrants (in years)	5
Expected volatility rate	48.29		%
Risk-free rate	1.88		%
Expected dividend yield	—		%

Based on these inputs, the total fair value of the warrants was $3.5 million, which was recorded as a Loan discount and netted against our new Loan and included in “additional paid in capital” on our balance sheet.

Stock-Based Compensation

The Company has a stock-based incentive plan that is administered by the Compensation Committee of the Board of Directors. Refer to Note 14 of the Notes to Consolidated Financial Statements included in the 2016 Form 10-K for further information.

During the three and nine months ended September 30, 2017, the Company awarded a total of 8,000 and 174,410 shares of common stock, respectively. The Company recorded stock-based compensation expense of $0.6 million and $2.5 million for the three and nine months ended September 30, 2017, respectively. The nine months ended September 30, 2017 included costs for the acceleration of unvested shares related to the departure of our former CEO of $0.7 million. The Company recorded stock-based compensation expense of $0.4 million and $1.2 million for the three and nine months ended September 30, 2016, respectively.

At September 30, 2017 and 2016, total unrecognized compensation cost related to unvested common stock awards was $1.1 million and $2.3 million, respectively. This cost is expected to be recognized over a weighted average period of 1.6 years. At September 30, 2017, there were 0.5 million shares of common stock covered by outstanding unvested common stock.