Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

10. Shareholders' Equity

Stock Options

We have a stock plan (the "Stock Plan") and an inducement stock plan for newly hired employees (the "Inducement Plan") (collectively the "Plans"). Under the Plans, stock options may be granted with a fixed exercise price that is equivalent to fair market value on the date of grant. These options have a term of up to 10 years and vest over a predetermined period, generally four years. Incentive stock options granted under the Stock Plan may only be granted to our employees. The Plans also allow for awards of non-qualified stock options, stock appreciation rights, RSAs and unrestricted stock awards, and RSUs. The Stock Plan allows for an automatic annual increase in the number of shares reserved for issuance under the Stock Plan. Such automatic annual increase is in an amount equal to the lesser of: (i) four percent of our outstanding shares at the end of the previous fiscal year, (ii) an amount determined by our Board of Directors, or (iii) 375,000 shares. The Inducement Plan was established in connection with the MPC acquisition. Initially, 250,000 shares were allocated for award under the Inducement Plan. The number of shares available for award may be modified by our Board of Directors, subject to SEC and NASDAQ limitations. There were no grants under the Inducement Plan during 2011.

Stock-Based Compensation

The estimated fair value of stock based awards is recognized as compensation expense over the vesting period of the award, net of estimated forfeitures. We estimate forfeitures of stock based awards based on historical experience and expected future activity. The fair value of restricted stock awards and restricted stock units is determined based on the number of shares granted and the quoted price of the Company's common stock on the date of grant. The fair value of stock option awards are estimated at the grant date based on the fair value of each vesting tranche as calculated by the Black-Scholes-Merton ("BSM") option-pricing model. The BSM model requires various highly judgmental assumptions including expected volatility and option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. The fair values of our equity awards, primarily stock option grants, were estimated with the following weighted average assumptions:

	Year Ended December 31,
	2011			2010
Dividend yield		0	%		0	%
Expected life		3.9 years			4.2 years
Expected volatility		74	%		72	%
Risk-free interest rate		1.1	%		1.6	%

The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2011 and 2010 was as follows (in thousands, except per share amounts):

	Year Ended December 31,
	2011		2010
Cost of revenue—service	$	668	$	295
Selling, general and administrative		1,363		439
Research and development		147		27
Total stock-based compensation expense	$	2,178	$	761
Per diluted share	$	0.21	$	0.07

Stock Option Activity

The following table summarizes stock option activity under the Stock Plan for 2010 and 2011:

Stock Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Balance at January 1, 2010		2,171,470		$	3.83
Granted at fair value		182,788			2.83
Exercised		(158,471	)		2.41
Forfeited		(103,439	)		3.80
Expired		(149,625	)		6.35
Balance at December 31, 2010		1,942,723		$	3.66		4.91	$	10,195,000
Granted at fair value		423,715			7.93
Exercised		(208,821	)		2.94
Forfeited		(44,334	)		3.32
Expired		(173,808	)		5.74
Balance at December 31, 2011		1,939,475		$	4.49		4.33	$	880,000
Vested and expected to vest at December 31, 2011		1,848,240		$	4.40		4.26	$	859,000
Exercisable at December 31, 2011		1,348,266		$	3.88		3.64	$	695,000

At December 31, 2011, total compensation cost related to stock options granted to employees under the Plan but not yet recognized was $907,000, net of estimated forfeitures. This cost will be amortized on the straight-line method over a weighted-average period of approximately 1.5 years. The aggregate intrinsic value represents the difference between the exercise price of the underlying options and the quoted price of our common stock for the number of options that were in-the-money at year end. We issue new shares of common stock upon exercise of stock options.

The following table summarizes certain information about stock options for 2011 and 2010:

	Year Ended December 31,
	2011		2010
Weighted average grant-date fair value for options granted during the year	$	4.52	$	1.83
Options in-the-money at December 31		708,441		1,480,789
Aggregate intrinsic value of options exercised	$	909,117	$	373,348

Restricted Stock Award Activity

The following table summarizes restricted stock award activity under the Stock Plan for 2011:

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at December 31, 2010		42,000		$	3.78
Granted		30,000			6.58
Vested		(45,000	)		3.64
Forfeited		—			—
Unvested at December 31, 2011		27,000		$	6.49
Expected to vest after December 31, 2011		24,300		$	6.49

At December 31, 2011, total compensation cost related to restricted stock awards granted under the Stock Plan but not yet recognized was $55,000, net of estimated forfeitures. This cost will be amortized on the straight-line method over a period of approximately 0.4 years. Currently, only our Board of Directors has received restricted stock awards.

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity under the Stock Plan for 2011:

	Number of Shares			Weighted Average Exercise Price
Unvested at December 31, 2010		221,776		$	5.27
Granted		312,760			5.57
Vested		(260,803	)		3.85
Forfeited		(32,485	)		4.80
Unvested at December 31, 2011		241,248		$	5.91
Expected to vest after December 31, 2011		206,820		$	5.90

At December 31, 2011, total compensation cost related to restricted stock units granted under the Stock Plan but not yet recognized was $1,056,000, net of estimated forfeitures. This cost will be amortized on the straight-line method over a period of approximately 2.3 years.

Common Stock Reserved for Future Issuance

The following table summarizes our shares of common stock reserved for future issuance at December 31, 2011 and 2010:

	December 31,
	2011		2010
Stock options outstanding		1,939,475		1,942,723
Restricted stock units outstanding		241,248		221,776
Stock options available for future grant		617,086		540,419
Common stock reserved for future issuance		2,797,809		2,704,918