Note 10 - Stockholders’ equity

Controlled Equity Offering

On March 28, 2013, the Company entered into a Controlled Equity Offering^SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”). Under the Sales Agreement, the Company may offer and sell, from time to time, through Cantor, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), having an aggregate offering price of up to $20.0 million (the “Shares”). The Company will pay Cantor a commission of 3.0% of the aggregate gross proceeds received under the Sale Agreement. The Company is not obligated to make any sales of the Shares under the Sales Agreement. The offering of Shares pursuant to the Sales Agreement will terminate upon the earlier of (a) the sale of all of the Shares subject to the Sales Agreement or (b) the termination of the Sales Agreement by Cantor or the Company, as permitted therein. The Shares were initially issued pursuant to the Company’s Registration Statement which was declared effective on August 5, 2010 and the prospectus supplement, dated March 28, 2013, and more recently under a current registration statement declared effective August 13, 2013 and the prospectus supplement dated August 1, 2013, filed by the Company with the Securities and Exchange Commission.

On December 31, 2014, the Sales Agreement was amended in order for the Company to offer and sell, through Cantor, acting as agent, additional shares of Common Stock having an aggregate offering price of $20.0 million.  In connection with the amendment to the Sales Agreement, the Company also filed with the SEC a prospectus supplement dated December 31, 2014. 

For the year ended July 31, 2015, the Company sold an aggregate of 1,588,480 shares of common stock under the Sales Agreement at an average price of $4.34 per share and received proceeds of approximately $6.7 million, net of expenses of $207. For the year ended July 31, 2014, the Company sold an aggregate of 3,421,176 shares of common stock under the Sales Agreement at an average price of $3.48 per share and received proceeds of approximately $11.5 million, net of expenses of $357.

Common stock

In fiscal 2015, the Company issued 214,984 shares of common for its employees’ 401(k) matching contributions obligation. The Company recorded an expense of $662 for the match, representing the fair value of the shares at the date of issuance.

In fiscal 2014, the Company issued 165,646 shares of common for its employees’ 401(k) matching contributions obligation. The Company recorded an expense of $636 for the match, representing the fair value of the shares at the date of issuance.

In fiscal 2013, the Company issued 9,419 shares of common stock for its employees’ 401(k) matching contributions obligation. The Company recorded an expense of $27 for the match representing the fair value of the shares at the date of issuance.

Treasury stock

In fiscal 2013, the Company issued 216,556 shares from treasury stock to match a portion of its employees’ 401(k) contributions. The Company recorded an expense of $616 for the match, reducing treasury stock by $3,074 for the average acquisition cost of such shares and adjusting additional paid in capital by $2,458.

Incentive stock plans

The Company has an incentive stock option and restricted (non-vested) stock award plan (the “2005 Plan”), under which the Company may grant options and restricted stock (non-vested) awards for up to 1,000,000 common shares under the 2005 Plan. 0 additional awards may be granted under the 2005 Plan. On January 14, 2011, the Company’s stockholders approved the adoption of the 2011 Incentive Plan (the “2011 Plan”) which provides for the issuance of equity awards, including among others, options, restricted stock and restricted stock units for up to 3,000,000 Common Shares. The exercise price of options granted under the 2011 Plan, and consistent with other Plans, is equal to or greater than fair market value of the Common Stock on the date of grant. Unless terminated earlier by the Board of Directors, the 2011 Plan will terminate at the earliest of; (a) such time as 0 shares of Common Stock remain available for issuance under the 2011 Plan or (b) tenth anniversary of the effective date of the 2011 Plan. Awards outstanding upon expiration of the 2011 Plan shall remain in effect until they have been exercised, terminated, or have expired. As of July 31, 2015, there were approximately 1,301,000 shares available for grant under the 2011 Plan.

The Company estimates the fair value of each stock option award on the measurement date using a Black-Scholes option pricing model. The fair value of awards is amortized to expense on a straight line basis over the requisite service period. The Company expenses restricted stock awards based on vesting requirements, primarily time elapsed.

Options granted pursuant to the plans may be either incentive stock options or non-statutory options The 2011 Plan provides for the issuance of stock options, restricted stock and restricted stock unit awards which generally vest over a two to four year period. A summary of the activity pursuant to the Company’s stock option plans for the years ended July 31, 2015, 2014, and 2013 is as follows:

The intrinsic value of stock option awards that vested during the fiscal year represents the value of the Company’s closing stock price on the last trading day of the fiscal year in excess of the exercise price multiplied by the number of options that vested. Total intrinsic value of options that vested and were exercisable during the fiscal years ended July 31, 2015, 2014, and 2013 was $97, $425 and $0, respectively. The intrinsic value of options outstanding at July 31, 2015, 2014, and 2013 was $154, $1,915 and $0, respectively.

On January 21, 2015, the Company awarded 293,373 options to two senior officers and the board of directors with an exercise price of $3.40 and a five year term, which vest annually over two years. The fair value of the options granted was $1.27 per share. The assumptions used to fair value this option award were as follows: expected life of 3.25 years, expected volatility 52.25%, a risk free interest rate of 0.93% and 0 dividend yield. As of July 31, 2015, 0 of these options were vested. Further on January 21, 2015, the Company awarded 40,000 options to executive officers with an exercise price of $3.40 and a five year term, which vest annually over three years. The fair value of the options granted was $1.39 per share. The assumptions used to fair value this option award were as follows: expected life of 3.5 years, expected volatility 55.63%, a risk free interest rate of 1.00% and 0 dividend yield. As of July 31, 2015, 0 of these options were vested.

On December 10, 2014, the Company awarded 50,500 options to employees with an exercise price of $4.66 and a five year term, which vest annually over three years. The fair value of the options granted was $1.894 per share. The assumption used to fair value this option award were as follows: expected life of 3.5 years, expected volatility 55.16%, a risk free interest rate of 1.15% and 0 dividend yield. As of July 31, 2015 0 of these options were vested.

On January 17, 2014, the Company awarded 267,797 options to two senior officers and the board of directors with an exercise price of $2.70 and a five year term, which vest annually over two years. The fair value of the options granted was $1.05 per share. The assumptions used to fair value this option award were as follows: expected life of 3.25 years, expected volatility 54.78%, a risk free interest rate of 0.90% and 0 dividend yield. As of July 31, 2015, approximately 133,900 of these options were vested. Further on January 17, 2014, the Company awarded 95,729 options to executive officers with an exercise price of $2.70 and a five year term, which vest annually over three years. The fair value of the options granted was $1.10 per share. The assumptions used to fair value this option award were as follows: expected life of 3.5 years, expected volatility 55.45%, a risk free interest rate of 1.00% and 0 dividend yield. As of July 31, 2015, approximately 55,600 of these options were vested, including approximately 42,000 which became fully vested upon termination and 12,000 of which were forfeited.

On February 3, 2014, the Company awarded 20,000 options to an executive officer with an exercise price of $2.75 and a five year term, which vest annually over three years. The fair value of the options granted was $1.11 per share. The assumptions used to fair value this option award were as follows: expected life of 3.5 years, expected volatility 55.07%, risk free interest rate of 0.84% and 0 dividend yield. As of July 31, 2015, approximately 6,600 of these options were vested.

On November 26, 2013, the Company awarded 271,591 options to two senior officers with an exercise price of $3.00 and a four year term, which vest over one year. The award satisfies $0.2 million of their fiscal 2013 incentive compensation award liability in lieu of cash. The fair value of the options granted was $0.66 per share. The assumptions used to fair value this option award were as follows: expected life of 2.5 years, expected volatility 54.79%, risk free interest rate of 0.42% and 0 dividend yield. As of July 31, 2015, all of these options were vested.

On January 17, 2013, the Company awarded 336,817 options to directors and certain officers with an exercise price of $2.88 and a five year term, of which 247,672 options vest over two years and 89,145 vest over three years. The weighted average assumptions used to fair value this option award were as follows: expected life of 3.3 years, expected volatility 60.8%, risk free interest rate of 0.45% and 0 dividend yield. As of July 31, 2015, approximately 307,000 of these options were vested.

The following table summarizes information for stock options outstanding at July 31, 2015:

Restricted Stock Awards

During fiscal 2015, 2014 and 2013, the compensation committee of the Company’s board of directors approved grants of restricted stock and restricted stock unit awards (the “Awards”) to certain officers and certain employees under the 2011 or 2005 Plans. The Awards vest upon the recipient’s continued employment service rateably over either two, three or four years. Share-based compensation expense is based on the fair value of the award as measured on the grant date and is recorded over the vesting period on a straight-line basis. The Awards will be forfeited if the recipient ceases to be employed by the Company, as defined in the Plans’ terms. The Awards settle in shares of the Company’s common stock on a one-for-one basis.

The following table summarizes the activity pursuant to restricted stock awards for the years ended July 31,

The fair value of the awards that vested during the years ended July 31, 2015, 2014 and 2013 was $79, $253 and $411, respectively.