Stockholders’ Equity

Common Stock

August

2016,

the Company sold

600,000

shares of common stock at a price of

$4.10

per share. The net proceeds to the Company from the sale and issuance of the shares, after deducting the offering expenses borne by the Company of

$369,

were

$2,091.

July

2016,

the compensation committee of the board of directors granted

118,288

shares of fully vested common stock to employees in partial payment of their earned amounts under the Company’s

2016

short term incentive plan. 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

46,879

shares 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.

Stock Based Compensation

The Company recorded stock-based compensation of

$735

and

$1,033

for the

three

and

six

months ended

December

31,

2016,

and

($39)

and

$304

for the

three

and

six

months ended

December

31,

2015.

Upon the separation with the Company’s CEO in

November

2016,

in accordance with his employment agreement, all outstanding options and restricted stock awards immediately vested. As a result, the Company recognized

$539

of stock compensation expense in general and administrative as the vesting accelerated on

72,496

options and

79,720

restricted stock awards. Additionally, the terms of the options were modified upon the CEO’s termination such that the options were deemed to be exercisable for the entire period of the option versus expiring

days from the date of termination. There was no incremental compensation cost recorded for this modification as the fair-value-based measure of the modified award on the date of modification was less than the fair-value-based measure of the original award immediately before the modification.

The following is a summary of option activity for the Company’s stock option plans:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value

Outstanding at June 30, 2016		104,378		$	14.85

Granted		223,825		$	2.93
Forfeited		(3,835	)	$	16.15
Expired		(2,500	)	$	18.46

Outstanding at December 31, 2016		321,868		$	6.52		6.3	$	129

Vested and Expected to Vest at December 31, 2016		285,743		$	6.88		6.2	$	111

Exercisable at December 31, 2016		157,553		$	9.58		5.9	$	49

December

2016,

the compensation committee of the board of directors granted

50,000

options to the Company’s interim CEO. The options have an exercise price of

$2.91,

the closing price on the date of grant, they vest in

five

equal installments on each of

December

16,

2016,

February

2017,

May

2017,

August

2017

and

November

2017

and have a

seven

year life. As the options were granted out of the

2016

Equity Incentive Plan

(“2016

Plan”), they will not be exercisable until the

2016

Plan is approved by the stockholders, which approval must be received by

July

2017.

July

2016,

the compensation committee of the board of directors granted

156,100

options to various employees. The options have an exercise price of

$2.86,

the closing price on the date of grant, they vest ratably every

six

months over a

three

year period and have a

seven

year life. As the options were granted out of the

2016

Equity Incentive Plan

(“2016

Plan”), they will not be exercisable until the

2016

Plan is approved by the stockholders, which approval must be received by

July

2017.

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

options exercised during the

six

months ended

December

31,

2016

and

2015.

The fair value of the Company’s stock options granted for the

six

months ended

December

31,

2016

was estimated using the following weighted-average assumptions:

Expected life (years)	4.2
Risk-free interest rate	1.1	%
Expected volatility	102.7	%
Dividend yield	0	%

December

31,

2016,

the total compensation cost related to options granted but not yet recognized was

$259

which will be amortized over a weighted-average period of approximately

two

years.

Common Stock Restricted

Units

The following is a summary of restricted stock activity during the

six

months ended

December

31,

2016:

				Weighted Average
	Number of Shares			Grant Date Fair Value
Balance at June 30, 2016		63,566		$	14.96
Granted		98,417		$	4.97
Vested		(95,902	)	$	10.85
Forfeited		(933	)	$	26.37
Outstanding at December 31, 2016		65,148		$	5.26

July

26,

2016,

the compensation committee of the board of directors granted

98,417

shares of restricted stock to

eight

employees. The shares will fully vest on

July

2017

provided that the individual is employed by the Company as of such date. If the employee is terminated without cause prior to

July

2017

the shares vest immediately. Two of the

eight

employees were terminated during the quarter ended

December

31,

2016,

as such,

35,902

shares vested.

Warrants

A summary of warrant activity for the

six

months ended

December

31,

2016

follows:

	Number of Shares		Weighted- Average Exercise Price Per Share
Beginning balance		4,828,721	$	9.37
Warrants granted		--		--
Warrants canceled		--		--
Warrants exercised		--		--

Outstanding at December 31, 2016		4,828,721	$	9.37

Exercisable at December 31, 2016		4,130,192	$	9.60

December

31,

2016,

the total intrinsic value of warrants outstanding and exercisable was

$0.