Stockholders’ (Deficit) Equity

The Company’s certificate of incorporation adopted in connection with the IPO provides for 105,000,000 shares of capital stock, consisting of 5,000,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”) and 100,000,000 shares of Common Stock, par value $0.001 per share (“Common Stock”).

The Company’s 2006 Stock Incentive Plan, as amended and restated in April 2015 (the “2006 Plan”), authorizes the Company to issue up to 3,500,000 shares of Common Stock to employees, non-employee directors and consultants pursuant to awards of stock options, stock appreciation rights, restricted stock, in payment of performance shares or other stock-based awards. The Company amended the 2006 Plan to increase the aggregate number of shares of common stock issuable under the 2006 Plan by 1,000,000 shares to a total of 4,500,000 in May 2016, and by 2,000,000 shares to a total of 6,500,000 in May 2017. As of December 31, 2017, there were 2,072,967 shares available to be issued under the 2006 Plan.

In September 2016, the Chief Operating Officer’s employment with the Company was terminated. As a result of the termination, the Company partially accelerated certain share awards previously granted to the Chief Operating Officer. The Company incurred non-cash severance expense of $250 related to this acceleration.

Beginning January 1, 2017, the Company adopted ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” As a result of this updated guidance, the Company elected to account for forfeitures of share-based payments by recognizing forfeitures of awards as they occur. In the year ended December 31, 2017, the Company adjusted the forfeiture estimates to reflect actual forfeitures. The forfeiture adjustment reduced stock-based compensation expense by $234 in the year ended December 31, 2017.

a. Common Stock Options

The outstanding Common Stock options as of December 31, 2017 were all fully vested. Stock options generally vest over a three to four year service period and expire five to ten years from the date of grant.

As of December 31, 2017, 2016 and 2015, a total of 61,013, 150,207 and 544,869 Common Stock options were exercisable, respectively.

At December 31, 2017, the Company had 61,013 stock options outstanding under the 2006 Plan.

The Company recognizes stock option expense equal to the grant date fair value of a stock option on a straight-line basis over the requisite service period, which is generally the vesting period. The total compensation expense related to options, classified within Payroll and related on the consolidated statements of operations was $15, $156, and $99 for the years ended December 31, 2017, 2016 and 2015, respectively, and the related tax benefit was $5, $67 and $38 for the years ended December 31, 2017, 2016 and 2015, respectively. Each of these 2017, 2016 and 2015 tax benefits were prior to the recognition of the valuation allowance.

The following table summarizes the stock option activity for the years ended December 31, 2017, 2016 and 2015:



	Common		Weighted Average Exercise Price
Balance at January 1, 2015	1,030,521		$	5.29
Granted	850,000			2.68
Exercised	(171,718	)		1.68
Canceled	(313,934	)		8.61
Balance at December 31, 2015	1,394,869			3.40
Exercised	(226,011	)		1.41
Canceled	(533,484	)		3.99
Forfeited	(447,667	)		2.71
Balance at December 31, 2016	187,707			5.78
Exercised	(44,114	)		2.50
Canceled	(57,580	)		13.32
Forfeited	(25,000	)		2.95
Balance at December 31, 2017	61,013		$	2.19

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2017:



	Options Outstanding				Options Exercisable
	Number of Options	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number of Options	Weighted-Average Exercise Price
Common
2008 grants	26,208	11 months	$	2.70	26,208	$	2.70
2009 grants	23,490	23 months	$	1.74	23,490	$	1.74
2010 grants	11,315	30 months	$	1.91	11,315	$	1.91
Total Grants	61,013	19 months	$	2.19	61,013	$	2.19

At December 31, 2017, stock options outstanding have a weighted average remaining contractual life of 1.6 years and the total intrinsic value for “in-the-money” options, based on the Company’s closing stock price of $5.55, was $209. At December 31, 2017, stock options exercisable have a weighted average remaining contractual life of 1.6 years and the total intrinsic value for “in-the-money” exercisable options was $209. The total intrinsic value of options exercised was $111 for the year ended December 31, 2017.

The aggregated intrinsic value represents the pre-tax intrinsic value (the difference between the fair value of the Company’s common stock at December 31, 2017 of $5.55 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2017. The intrinsic value is based on the fair market value of the Company’s stock and therefore changes as the fair market value of the stock price changes.

Under the 2006 Plan, stock options must be granted at a price not less than the fair market value of the stock on the date the option is granted, generally are not subject to re-pricing, and will not be exercisable more than ten years after the date of grant. Options granted under the 2006 Plan generally qualify as “non-qualified stock options” under the U.S. Internal Revenue Code. The exercise price of a stock option is equal to the fair market value of the Company’s Common Stock on the option grant date. The Company did not grant any stock options during the years ended December 31, 2017 and 2016. In the year ended December 31, 2015, the Company granted 850,000 stock options, with an aggregate grant date fair value of $2,279.

Options granted during the year ended December 31, 2015 to employees of the Company were as follows:



Date	Number of Shares	Exercise Price		Grant Date Fair Value
August 19, 2015	700,000	$	2.61	$	1,827
October 12, 2015	50,000	$	2.95	148
October 19, 2015	100,000	$	3.04	304
	850,000			$	2,279

The weighted average fair value of stock options as of the grant date was $1.10 in 2015. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:



Common	Risk-Free Interest Rate		Expected Dividend Yield	Expected Term (Years)	Expected Volatility
2015 Grants	1.1	%	—	3.99	52.03	%

The Company calculated the weighted average expected term of stock options to be 3.99 years, which represented the period of time that options were expected to be outstanding. The risk free interest rate for periods within the contractual life of the option was based on the U.S. treasury yield in effect at the time of grant. The volatility was determined based on management's estimate or historical volatilities of comparable companies.

As of December 31, 2017, there was no unrecognized compensation cost related to stock options.

b. Common Stock Grants

Restricted Stock Grants

The following restricted stock grants were issued to employees of the Company during the year ended December 31, 2017.



	Number of Shares	Share Price		Grant Date Fair Value
March 8, 2017	26,000	$	4.00	$	104
December 4, 2017	480,200	$	5.85	2,809
Total	506,200			$	2,913

The following table summarizes the restricted stock activity for the years ended December 31, 2017, 2016 and 2015:



	Number of Shares		Weighted Average Grant Date Fair Value
Balance as of January 1, 2015	401,534		$	9.38
Granted	507,000			4.27
Vested	(133,874	)		9.20
Forfeited	(249,790	)		8.19
Balance as of December 31, 2015	524,870			5.06
Granted	1,711,000			2.48
Vested	(222,495	)		4.59
Forfeited	(402,000	)		3.39
Balance as of December 31, 2016	1,611,375			2.80
Granted	506,200			5.75
Vested	(534,968	)		2.93
Forfeited	(70,666	)		3.06
Balance as of December 31, 2017	1,511,941		$	3.73

The fair value of restricted stock is based on the closing stock price of an unrestricted share of the Company’s Common Stock on the grant date and is amortized to compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period. The total compensation expense, classified within Payroll and related on the consolidated statements of operations, related to restricted stock grants was $1,478, $1,155 and $842 for the years ended December 31, 2017, 2016 and 2015, respectively, and the related tax benefit was $452, $496 and $321 for the years ended December 31, 2017, 2016 and 2015, respectively. Each of these 2017, 2016 and 2015 tax benefit were prior to the recognition of the valuation allowance. The restricted shares contain vesting restrictions and vest in equal installments over either three or four years on the anniversary date of the grants. In the year ended December 31, 2017, the Company granted 506,200 restricted shares with an aggregate grant date fair value of $2,913. In the years ended December 31, 2016 and 2015, the Company granted 1,711,000 and 507,000 restricted shares, respectively, with an aggregate grant date fair value of $4,245 and $2,166, respectively.

As of December 31, 2017, $5,128 of unrecognized compensation cost related to restricted stock was expected to be recognized over a weighted-average period of 2.4 years.

Non-Restricted Stock Grants

The Company issued 56,940 and 52,000 shares of Common Stock to members of the Company’s Board of Directors with respect to their annual retainer on February 1, 2017 and March 8, 2017. The fair value of the shares issued on February 1, 2017 and March 8, 2017 was $2.81 and $4.00 per share, respectively, and was expensed upon the date of grant. The total compensation expense, classified within general and administrative expenses, related to Board of Director Common Stock grants was $368 in the year ended December 31, 2017. In the years ended December 31, 2016 and 2015, the Company issued 206,750 and 67,609 shares of Common Stock, respectively, with an aggregate grant date fair value of $246 and $445, respectively.