Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

Stockholders' Equity

6 Months Ended

Jun. 30, 2017

10. Stockholders’ Equity

Investment Agreement

On February 7, 2017, the Company entered into a Stock Purchase Agreement with Johnson Controls pursuant to which the Company issued and sold to a wholly-owned subsidiary of Johnson Controls International plc, (“Johnson Controls”), 939,005 shares of its common stock at $11.33 per share for the gross proceeds of approximately $10.6 million. Costs incurred in connection with the transaction, primarily legal fees, totaled approximately $167,000. The Stock Purchase Agreement includes customary representations, warranties, and covenants by Johnson Controls and the Company, and an indemnity from the Company in favor of Johnson Controls.

In connection with the investment transactions, the Company also entered into an Investors Rights Agreement dated February 7, 2017 with Johnson Controls pursuant to which the Company granted Johnson Controls customary demand and piggyback registration rights, limited board observation rights and limited preemptive rights allowing Johnson Controls the right to purchase its proportional share of certain future equity issuances by the Company. The board observation and preemptive rights shall expire on the earlier of (i) such time as Johnson Controls no longer owns 50% of the acquired shares or (ii) the termination of both the Tolling/Lead Purchase Agreement and Equipment Supply Agreement.

There were no sales commissions paid by the Company in connection with the sale of its common shares to Johnson Controls.

Warrants exercised

During the six months ended June 30, 2017, 1,175,796 shares were issued pursuant to cash and cashless warrant exercises as detailed below. Generally, the warrants specify using the preceding five-day average of closing prices for the Company’s common stock in the calculation of common stock to be issued pursuant to a cashless exercise.

		Average Closing				Warrant		Common
		Market Price		Exercise Price		Shares		Shares
Date		Per Share		Per Share		Exercised		Issued

	2/10/2017	$	11.016	$	0.0034375		392,728		392,605
	2/13/2017	$	13.062	$	3.00		25,119		19,349
	2/13/2017	$	13.062	$	6.00		72,420		39,154
	2/15/2017	$	16.768	$	6.00		65,177		41,856
	2/16/2017	$	16.768	$	6.00		35,000		22,470
	3/17/2017	$	20.262	$	6.00		2,500		2,500
	3/20/2017	$	20.304	$	3.00		226,068		192,666
	3/20/2017	$	20.304	$	6.00		586,596		413,253
	4/3/2017	$	19.148	$	0.0034375		43,636		43,628
	4/11/2017	$	17.920	$	6.00		12,500		8,315

							1,461,744		1,175,796

Warrants outstanding

Warrants to purchase shares of the Company’s common stock at a weighted average exercise price of $8.45 are as follows.

Exercise Price		Expiration		Shares Subject to purchase
per Share		Date		at June 30, 2017

$	7.12		5/18/2018		702,247
$	9.00		5/18/2019		1,605,131
$	10.00		11/21/2019		33,450

					2,340,828

Stock based compensation

The stock-based compensation expense attributable to option grants granted was allocated as follows:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Sales cost	$	24	$	—	$	24	$	—
Research and development cost		73		55		160		106
General and administrative expense		209		475		283		632
Total	$	306	$	530	$	467	$	738

The following assumptions were used in the Black-Scholes-Merton pricing model to estimate the fair value of the options.

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016

Expected stock volatility		71.04% - 72.65	%		72.36% - 80	%		70.92% - 72.65	%		72%-80	%
Risk free interest rate		1.38% - 1.66	%		0.94% - 1.20	%		1.38% - 1.79	%		0.94%-1.77	%
Expected years until exercise		2.50-3.50			2.50-3.50			2.50-3.50			2.50-3.50
Dividend yield		0	%		0	%		0	%		0	%

The Company issued 16,561 and 35,334 shares of common stock for the three and six months ended June 30, 2017, respectively, upon stock option exercises.