Stockholders’ Equity

Warrants

A summary of warrant activity is as follows:

	2016					2015
	Number of Shares			Weighted- Average Exercise Price Per Share		Number of Shares			Weighted- Average Exercise Price Per Share
Beginning balance		252,620		$	44.18		255,671		$	44.18
Warrants granted		5,238,971		$	9.83		--			--
Warrants exercised (cashless)		(51,712	)	$	13.60		--			--
Warrants expired/canceled		(611,156	)	$	17.21		(3,051	)	$	43.00
Outstanding at June 30		4,828,723		$	9.37		252,620		$	44.18
Exercisable at June 30		600,782		$	19.02		252,620		$	44.18

Equity Plans and Agreements

On July 7, 2016, the Compensation Committee of the Board of Directors adopted the 2016 Equity Incentive Plan (“2016 Plan”) under which up to 325,000 shares may be issued pursuant to grants of shares, options, or other forms of incentive compensation. The 2016 Plan remains subject to stockholder approval, which must be received by July 7, 2017.

The 2012 Independent Director Plan (“2012 Plan”) permits the grant of stock or options to independent directors. A total of 25,000 shares were approved by the stockholders for issuance under the 2012 Plan. Options are granted at prices that are equal to 100% of the fair market value on the date of grant, and expire over a term not to exceed ten years. Options generally vest in monthly increments over one year, unless otherwise determined by the Board of Directors. As of June 30, 2016, there were 3,209 shares available for issuance.

The 2006 Equity Incentive Plan (“2006 Plan”) permits the grant of options, restricted stock, stock bonuses and stock appreciation rights to employees, directors and consultants. Under the 2006 Plan, the number of shares of common stock equal to 6% of the number of outstanding shares of the Company, are authorized to be issued. The number of shares available to grant for awards adjusts at the beginning of each fiscal year if additional options to purchase shares of common stock were issued in the preceding fiscal year. As of June 30, 2016, there have been 392,320 shares approved under the 2006 Plan for issuance and 177,189 available for issuance.

On July 7, 2016, the Compensation Committee also adopted a short term incentive plan under which cash awards and shares of common stock may be granted to employees of the Company (the “Short Term Plan”). The aggregate amount of the cash awards issuable pursuant to the Short Term Plan is approximately $276. Up to 104,000 shares of common stock from the Company’s 2006 Plan, subject to vesting, are issuable pursuant to the Short Term Plan. On July 26, 2016, 93,002 shares and $266 of cash awards were granted under the Short Term Plan. The cash awards granted pursuant to the Short Term Plan will be payable and the shares of common stock issued pursuant to the Short Term Plan will fully vest on July 1, 2017, provided, that such award recipients are employed by the Company as of such date or immediately if terminated without cause. The named executive officers of the Company are participating in the Short Term Plan.

Upon the appointment as Chief Executive Officer (CEO) in June 2015, in accordance with his employment agreement, the Company’s CEO received restricted stock units representing 50,000 shares of restricted common stock vesting in four equal installments based upon a combination of time and milestone based targets and a seven year option to acquire 50,000 shares of common stock, 25% of which vested immediately with the balance vesting in equal monthly installments during the following 24 months.

Stock Options

Upon the separation with the Company’s former Chief Executive Officer in October 2014, in accordance with his employment agreement, all outstanding options and restricted stock awards which would have otherwise vested by July 31, 2015, immediately vested. As a result, the Company recognized $158 of stock compensation expense in general and administrative during the year ended June 30, 2015 as the vesting accelerated on 8,334 options and 3,500 restricted stock awards.

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at June 30, 2015		147,609		$	25.51

Granted		55,875		$	9.64
Forfeited/cancelled		(93,855	)	$	27.02
Expired		(5,251	)	$	41.47
Exercised		--			--
Outstanding at June 30, 2016		104,378		$	14.85		5.8	$	--
Vested and Expected to Vest at June 30, 2016		91,810		$	15.34		5.7	$	--
Exercisable at June 30, 2016		61,271		$	16.15		5.5	$	--

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock. There were no options that were exercised during the years ended June 30, 2016 and 2015.

Non-vested stock option activity for the year ended June 30, 2016, is as follows:

	Non-vested Stock Options			Weighted-Average Grant Date Fair Value
Outstanding at June 30, 2015		89,198		$	13.07
Granted		55,875		$	5.75
Vested		(53,496	)	$	9.79
Forfeited		(48,470	)	$	13.35
Outstanding at June 30, 2016		43,107		$	7.66

The fair value of the Company’s stock options granted for the years ended June 30, 2016 and 2015 was estimated using the following weighted-average assumptions:

	2016			2015
Expected life (years)		5			5
Risk-free interest rate		1.5	%		1.5	%
Expected volatility		80	%		75	%
Dividend yield		0	%		0	%

The weighted average grant date fair value of options granted during the years ended June 30, 2016 and 2015 was $5.75 and $12.40, respectively.

At June 30, 2016, the total compensation cost related to options granted under the Company's stock option plans but not yet recognized was $212. This cost will be amortized on a straight-line basis over a weighted-average period of approximately one and a half years and will be adjusted for subsequent changes in estimated forfeitures. The total fair value of options vested during the years ended June 30, 2016 and 2015 was $354 and $678.

Common Stock Restricted Awards

The following is a summary of restricted stock activity:

	2016					2015
	Number of Shares			Weighted- Average Grant Date Fair Value		Number of Shares			Weighted- Average Grant Date Fair Value
Balance at June 30		72,589		$	22.40		40,190		$	38.00
Granted		10,000		$	2.98		54,850		$	16.60
Vested		(6,120	)	$	28.94		(18,828	)	$	36.40
Forfeited		(12,903	)	$	41.15		(3,623	)	$	35.40
Outstanding at June 30		63,566		$	14.96		72,589		$	22.40

In connection with the vesting of the restricted stock awards, the election was made by some of the employees to satisfy the applicable federal income tax withholding obligation by a net share settlement, pursuant to which the Company withheld 1,300 and 6,098 shares for the years ended June 30, 2016 and 2015, respectively and used the deemed proceeds from those shares to pay the income tax withholding. The net share settlement is deemed to be a repurchase by the Company of its common stock.

As of June 30, 2016, the Company had $375 in total unrecognized compensation expense related to the Company’s restricted stock awards, which will be recognized over a weighted average period of approximately six months.