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Equity

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Equity

NOTE 5—EQUITY

(a) Rights Offering

On June 28, 2019, the Company completed a rights offering, raising $2,186 in proceeds, net of $208 in expenses. Pursuant to the rights offering, Acorn securityholders and parties to a backstop agreement purchased 9,975,553 shares of Acorn common stock for $0.24 per share.

Under the terms of the rights offering, each right entitled securityholders as of June 3, 2019, the record date for the rights offering, to purchase 0.312 shares of Acorn common stock at a subscription price of $0.24 per whole share. No fractional shares were issued. The closing price of Acorn’s common stock on the record date of the rights offering was $0.2925. Distribution of the rights commenced on June 6, 2019 and were exercisable through June 24, 2019.

In connection with the rights offering, Acorn entered into a backstop agreement with certain of its directors and Leap Tide Capital Management LLC, the sole manager of which is Acorn’s President and CEO, pursuant to which they agreed to purchase from Acorn any and all unsubscribed shares of common stock in the rights offering, subject to the terms, conditions and limitations of the backstop agreement. The backstop purchasers did not receive any compensation or other consideration for entering into or consummating the backstop agreement. See Note 3 for further discussion.

On July 1, 2019, the Company utilized a portion of the rights offering proceeds to complete the planned reacquisition of a 19% interest in its OMX Holdings, Inc. subsidiary (“Holdings”) for $1,273. Holdings owns 100% of the membership interests of OmniMetrix, LLC. The purchase price was based on terms established in November 2015 at the time of the original investment. The purchase raised Acorn’s ownership in Holdings from 80% to 99%, with the remaining 1% owned by the CEO of OmniMetrix, LLC.

The balance of the rights offering net proceeds provides OmniMetrix with additional sales and marketing resources to facilitate expansion into additional geographic markets and new product applications, to support next-generation product development and for general working capital purposes.

(b) Summary Employee Option Information

At September 30, 2019, 1,383,614 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. During the nine months ended September 30, 2019, 30,000 options were granted to directors, 60,000 to officers and 137,500 to employees. The fair value of the options issued was $52.

No options were exercised in the nine months ended September 30, 2019. The intrinsic value of options outstanding and of options exercisable at September 30, 2019 was $14 and $21, respectively.

A summary of stock option activity for the nine months ended September 30, 2019 is as follows:

		Number of Options (in shares)				Weighted Average Exercise Price Per Share				Weighted Average Remaining Contractual Life				Aggregate Intrinsic Value
Outstanding at December 31, 2018			1,466,489			$	3.01				1.88 years			$	13
Granted			227,500				0.31
Exercised			—
Forfeited or expired			(192,334	)			7.28
Outstanding at September 30, 2019			1,501,655			$	2.05				2.0 years			$	14
Exercisable at September 30, 2019			1,282,321			$	2.35				1.3 years			$	14

The fair value of the options granted of $58 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate			2.3	%
Expected term of options			4.7 years
Expected annual volatility			119	%
Expected dividend yield			—	%

(c) Stock-based Compensation Expense

Stock-based compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations was $6 and $11 for the three-month periods ended September 30, 2019 and 2018, respectively, and $19 and $18 for the nine-month periods ended September 30, 2019 and 2018, respectively.

The total compensation cost related to non-vested awards not yet recognized was $49 as of September 30, 2019.

(d) Warrants

The Company previously 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:

		Number of Warrants (in shares)				Weighted Average Exercise Price Per Share				Weighted Average Remaining Contractual Life
Outstanding at December 31, 2018			2,392,142			$	1.28				1.3 years
Granted			—				—
Exercised			—				—
Forfeited or expired			—				—
Outstanding at September 30, 2019			2,392,142			$	1.28				.6 years

(e) Shares granted in lieu of professional fees

Pursuant to a contractual agreement, 60,000 shares of common stock were issued on May 31, 2019 to the Company’s investor relations consultants for professional fees rendered. The shares were valued at the market price at the time of issuance of approximately $18 in the aggregate.