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Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

NOTE 12—EQUITY

(a) General

At December 31, 2018 the Company had issued and outstanding 29,555,786 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when, as and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company. Holders of common stock do not have subscription, redemption, conversion or other preemptive rights. Holders of the common stock are entitled to elect all of the Directors on the Company’s Board. Holders of the common stock do not have cumulative voting rights, meaning that the holders of more than 50% of the common stock can elect all of the Company’s Directors. Except as otherwise required by Delaware General Corporation Law, all stockholder action is taken by vote of a majority of shares of common stock present at a meeting of stockholders at which a quorum (a majority of the issued and outstanding shares of common stock) is present in person or by proxy or by written consent pursuant to Delaware law (other than the election of Directors, who are elected by a plurality vote).

On August 6, 2018, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation to authorize a reverse split of the Company’s common stock at any time prior to August 6, 2019, at a ratio between one-for-ten and one-for-twenty, if and as determined by the Company’s Board of Directors.

The Company is not authorized to issue preferred stock. Accordingly, no preferred stock is issued or outstanding.

(b) Shares issued in lieu of director’s fees – See Note 15(a).

(c) Conversion of director loan to common stock – See Note 15(b).

(d) Summary Employee Option Information

The Company’s stock option plans provide for the grant to officers, directors and other key employees of options to purchase shares of common stock. The purchase price may be paid in cash or at the end of the option term, if the option is “in-the-money”, it is automatically exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee, but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable to one share of the Company’s common stock. Most options expire within five to ten years from the date of the grant, and generally vest over three-year period from the date of the grant. At the annual meeting of stockholders on September 11, 2012, the Company’s stockholders approved an Amendment to the Company’s 2006 Stock Incentive Plan to increase the number of available shares by 1,000,000 and an Amendment to the Company’s 2006 Stock Incentive Plan for Non-Employee Directors to increase the number of available shares by 200,000. In February 2019, the Company’s Board extended the expiration date of the 2006 Stock Incentive Plan until December 31, 2024.

At December 31, 2018, 1,493,780 options were available for grant under the 2006 Amended and Restated Stock Incentive Plan and no options were available for grant under the 2006 Director Plan. In 2018 and 2017, 175,000 and 90,000 options were granted to directors and employees, respectively. In 2018, there were 5,000 grants to non-employees. In 2017, 1,500 options were granted to a non-employee. The fair value of the options issued was $43 and $18 in 2018 and 2017, respectively.

No options were exercised in the years ended December 31, 2018 or 2017. The intrinsic value of options outstanding and of options exercisable at December 31, 2018 was $13 and $13, respectively.

The Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective years (all in weighted averages):

		2018				2017
Risk-free interest rate			2.5	%			2.2	%
Expected term of options, in years			3.9				6.6
Expected annual volatility			123.6	%			83	%
Expected dividend yield			—	%			—	%
Determined weighted average grant date fair value per option		$	0.24			$	0.18

The expected term of the options is the length of time until the expected date of exercising the options. With respect to determining expected exercise behavior, the Company has grouped its option grants into certain groups in order to track exercise behavior and establish historical rates. The Company estimated volatility by considering historical stock volatility over the expected term of the option. The risk-free interest rates are based on the U.S. Treasury yields for a period consistent with the expected term. The Company expects no dividends to be paid. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in determining the estimated fair value of the Company’s stock options granted in the years ended December 31, 2018 and 2017. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

(e) Summary Option Information

A summary of the Company’s option plans as of December 31, 2018 and 2017, as well as changes during each of the years then ended, is presented below:

		2018								2017
		Number of Options (in shares)				Weighted Average Exercise Price				Number of Options (in shares)				Weighted Average Exercise Price
Outstanding at beginning of year			1,401,489			$	3.45				2,050,369			$	3.62
Granted at market price			175,000				0.32				91,500				0.25
Exercised			—				—				—				—
Forfeited or expired			(110,000	)			4.32				(740,380	)			3.54
Outstanding at end of year			1,466,489				3.01				1,401,489				3.45
Exercisable at end of year			1,386,489			$	3.16				1,393,155			$	3.47

Summary information regarding the options outstanding and exercisable at December 31, 2018 is as follows:

		Outstanding												Exercisable
Range of Exercise Prices		Number Outstanding				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price				Number Exercisable				Weighted Average Exercise Price
		(in shares)				(in years)								(in shares)
$0.14 – $0.77			527,523				2.99			$	0.45				447,523			$	0.47
$0.97 – $2.49			422,785				1.53			$	1.55				422,785			$	1.55
$3.51 – $5.91			125,466				1.50			$	4.24				125,466			$	4.24
$6.31 – $7.57			227,356				.83			$	6.79				227,356			$	6.79
$7.60 - $11.42			163,359				.98			$	8.82				163,359			$	8.82
			1,466,489												1,386,489

Stock-based compensation expense included in Selling, general and administrative expense in the Company’s Consolidated Statements of Operations was $15 and $22 in the years ending December 31, 2018 and 2017, respectively.

The total compensation cost related to non-vested awards not yet recognized was $30 for the year ended December 31, 2018.

(f) Warrants

The Company has issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date of issuance. A summary of warrant activity follows:

		2018								2017
		Number of shares underlying warrants				Weighted Average Exercise Price				Number of shares underlying warrants				Weighted Average Exercise Price
Outstanding at beginning of year			2,654,423			$	1.46				2,654,423			$	1.46
Granted			—				—				—				—
Exercised			—				—				—				—
Forfeited or expired			262,281				3.14				—				―
Outstanding and exercisable at end of year			2,392,142			$	1.28				2,654,423			$	1.46

The warrants outstanding at December 31, 2018 have a weighted average remaining contractual life of 1.34 years.