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 amounts earned 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.

2016

Equity Incentive Plan (Subsequent Event)

May

2017,

the stockholders approved the Amended

2016

Equity Incentive Plan (“Amended

2016

Plan”) under which up to

600,000

may

be issued pursuant to grants of shares, options, or other forms of incentive compensation. As of

March

31,

2017,

255,942

awards have been issued under the Amended

2016

Plan.

Stock Based Compensation

The Company recorded stock-based compensation of

$247

and

$1,280

for the

three

and

nine

months ended

March

31,

2017,

and

$247

and

$551

for the

three

and

nine

months ended

March

31,

2016.

Upon the termination of the employment of the Company’s Chief Executive Officer (“CEO”) in

November

2016

and Chief Financial Officer (“CFO”) in

March

2017,

in accordance with their employment agreements, all outstanding options and restricted stock awards immediately vested. As a result, the Company recognized (i)

$539

of stock compensation expense in general and administrative for the quarter ended

December

31,

2016,

as the vesting accelerated on the CEO’s options to purchase

72,496

shares of common stock and

79,720

restricted stock awards, and (ii)

$94

of stock compensation expense in general and administrative for the quarter ended

March

31,

2017

as the vesting accelerated on the CFO’s options to purchase

16,248

shares of common stock and

15,914

restricted stock awards. Additionally, the terms of the options were modified upon the executives’ termination such that the options were deemed to be exercisable for longer than

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 our 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		251,325		$	2.92
Forfeited		(19,013	)	$	6.78
Expired		(2,500	)	$	18.46

Outstanding at March 31, 2017		334,190		$	6.31		5.8	$	89

Vested and Expected to Vest at March 31, 2017		309,878		$	6.55		5.7	$	81

Exercisable at March 31, 2017		208,534		$	8.08		5.3	$	48

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 exercised during the

nine

months ended

March

31,

2017

and

2016.

February

24,

2017,

the Company appointed a Chief Operating Officer. As part of the terms of her employment agreement, she received an annual grant of

25,000

restricted stock units (“RSUs”) and options to purchase

25,000

common shares under the

2016

Equity Incentive Plan

(“2016

Plan”). The annual grant of RSUs and stock options will vest in

four

equal installments:

25%

March

31,

25%

June

30,

25%

September

and

25%

December

of each year. The stock options granted in

February

2017

have an exercise price of

$2.89,

which was the closing price on the date of grant.

December

2016,

the Compensation Committee of the Board of Directors granted

50,000

options to the Company’s interim CEO under the

2016

Plan. 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.

July

2016,

the Compensation Committee of the Board of Directors granted options to purchase a total of

156,100

common shares to various employees under the

2016

Plan. The options have an exercise price of

$2.86,

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

six

months over a

three

year period, and have a

seven

year life.

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

nine

months ended

March

31,

2017

was estimated using the following weighted-average assumptions:

Expected life (years)	4.2
Risk-free interest rate	1.1	%
Expected volatility	103	%
Dividend yield	0	%

The weighted average grant date fair value of options granted during the

nine

months ended

March

31,

2017

was

$2.09.

March

31,

2017,

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

$211

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

nine

months ended

March

31,

2017:

				Weighted Average
	Number of Shares			Grant Date Fair Value
Balance at June 30, 2016		63,566		$	14.96
Granted		247,168		$	2.27
Vested		(235,567	)	$	4.77
Forfeited		(933	)	$	26.37
Outstanding at March 31, 2017		74,234		$	4.91

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. Three of the

eight

employees were terminated during the

nine

months ended

March

31,

2017,

as such,

51,636

shares vested.

Warrants

There was no warrant activity for the

nine

months ended

March

31,

2017.

March

31,

2017,

there were

4,828,721

warrants outstanding with a weighted-average exercise price per share of

$9.37

and

4,130,192

warrants exercisable with a weighted-average exercise price per share of

$9.60.

March

31,

2017,

the total intrinsic value of warrants outstanding and exercisable was

$0.