Shareholders' Equity

12 Months Ended

Jan. 28, 2017

Equity [Abstract]

SHAREHOLDERS’ EQUITY

SHAREHOLDERS’ EQUITY

PREFERRED STOCK

The Company’s Articles of Incorporation authorize the issuance of up to 1,000,000 shares of preferred stock. The preferred stock may be issued from time to time at the discretion of the Board of Directors without shareholders’ approval. The Board of Directors is authorized to issue these shares in different series and, with respect to each series, to determine the dividend rate, and provisions regarding redemption, conversion, liquidation preference and other rights and privileges. As of January 28, 2017, no preferred stock had been issued.

TREASURY STOCK

As of January 28, 2017, the Company had repurchased 898,249 shares of common stock for approximately $8.6 million, all of which are held as treasury shares. There were no repurchases during fiscal 2016 or fiscal 2015.

WARRANTS

In connection with the Parlux acquisition, the Company issued warrants for an aggregate of 4,805,304 shares of our common stock at an exercise price of $8.00 per share. See further discussion at Note 6 of these consolidated financial statements.

In connection with the Company's merger with a predecessor company on August 11, 2008, the Company issued warrants to purchase an additional 1,500,000 shares of our common stock with an exercise price per share of $23.94. These warrants became exercisable effective August 11, 2011 and will be exercisable until August 11, 2018.

STOCK OPTION PLANS

The 2010 Equity Incentive Plan (the “2010 Plan”) provides for equity-based awards to the Company’s employees, directors and consultants. Under the 2010 Plan, the Company initially reserved 1,000,000 shares of common stock for issuance. This number automatically increases on the first trading day of each fiscal year beginning with fiscal 2011, by an amount equal to 1.5% of the shares of common stock outstanding as of the last trading day of the immediately preceding fiscal year; accordingly, 2,194,305 shares of common stock were reserved for issuance as of January 28, 2017. The Company previously had two stock option plans which expired on October 31, 2010. No further awards will be granted under these plans, although all options previously granted and outstanding will remain outstanding until they are either exercised or forfeited. As of January 28, 2017, 1,030,053 stock options have been granted pursuant to the 2010 Plan.

The following is a summary of the stock option activity during the fiscal year ended January 28, 2017:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
Outstanding as of January 30, 2016	975,916		$	8.01
Granted	410,000		2.30
Exercised	—		—
Forfeited	(201,916	)	7.83
Outstanding as of January 28, 2017	1,184,000		$	6.07	6.9	$	—
Vested and expected to vest as of January 28, 2017	766,500		$	8.09	6.9	$	—
Exercisable as of January 28, 2017	766,500		$	8.09	6.9	$	—

The following is a summary of stock warrants activity during the fiscal year ended January 28, 2017:

	Number of Warrants	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
Outstanding as of January 30, 2016	6,299,971	$	11.80
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of January 28, 2017	6,299,971	$	11.80	1.4	$	—
Vested and expected to vest as of January 28, 2017	—	$	11.80	1.4	$	—
Exercisable as of January 28, 2017	—	$	11.80	1.4	$	—

Share-based compensation expense was $0.1 million and $0.3 million during fiscal 2016 and 2015, respectively.

The fair value for stock options issued during the fiscal years ended January 28, 2017 and January 30, 2016 was estimated at the date of grant, using the Black-Scholes option pricing model with the following weighted average assumptions:

	Fiscal Year Ended January 28, 2017	Fiscal Year Ended January 30, 2016
Expected life (years)	5	5
Expected stock price volatility	85.0% - 86.0%	86.0% - 88.9%
Risk-free interest rates	1.1% - 1.3%	1.6% - 1.7%
Expected dividend yield	0%	0%

The expected life of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The expected stock price volatility is estimated using the historical volatility of the Company’s stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero coupon issues with a term equal to the option’s expected life. The Company has not paid dividends in the past and does not intend to in the foreseeable future.

The weighted average estimated fair values of options granted during fiscal years 2016 and 2015 were $1.54 and $2.96 per share, respectively. As of January 28, 2017, there was $0.6 million of unrecognized compensation expense related to non-vested outstanding stock options. These costs are expected to be recognized over a weighted-average period of 4.5 years. There were no exercises of options during fiscal 2016. The aggregate intrinsic value of options exercised during fiscal 2015 was $42,000. Cash received from option exercises during fiscal 2015 was $57,000.