Shareholders' Equity

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Shareholders' Equity

9. Shareholders’ Equity

Equity Compensation Plans

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.

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,
	2013			2012
Dividend yield		0	%		0	%
Expected life		4.2 years			3.8 years
Expected volatility		61	%		73	%
Risk-free interest rate		0.9	%		0.6	%

The impact on our results of operations of recording stock-based compensation expense for the years ended December 31, 2013 and 2012 was as follows (in thousands, except per share amounts):

	Year Ended December 31,
	2013		2012
Cost of revenue—service	$	219	$	315
Selling, general and administrative		579		521
Research and development		100		115
Total stock-based compensation expense	$	898	$	951
Per diluted share	$	0.08	$	0.08

Stock Option Activity

The following table summarizes stock option activity under the Plans for 2013 and 2012:

Stock Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Balance at January 1, 2012		1,939,475		$	4.49		4.33
Granted at fair value		244,125			3.27
Exercised		(90,786	)		2.41
Forfeited		(327,422	)		6.67
Expired		(225,774	)		7.24
Balance at December 31, 2012		1,539,618		$	3.55		4.24
Granted at fair value		328,080			3.03
Exercised		(31,925	)		2.49
Forfeited		(130,131	)		3.23
Expired		(190,021	)		4.58
Balance at December 31, 2013		1,515,621		$	3.36		3.93	$	953,186
Vested and expected to vest at December 31, 2013		1,466,306		$	3.36		3.82	$	932,995
Exercisable at December 31, 2013		1,118,271		$	3.34		2.73	$	784,434

At December 31, 2013, total compensation cost related to stock options granted to employees under the Plans but not yet recognized was $296,340, net of estimated forfeitures. This cost will be amortized on the straight-line method over a weighted-average period of approximately 1.3 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 2013 and 2012:

	Year Ended December 31,
	2013		2012
Weighted average grant-date fair value for options granted during the year	$	1.59	$	2.02
Options in-the-money at December 31		734,130		606,666
Aggregate intrinsic value of options exercised	$	24,429	$	73,000

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity under the Stock Plan for 2013 and 2012:

	Number of Shares			Weighted Average Exercise Price
Unvested at December 31, 2012		241,248		$	5.91
Granted		177,592			3.49
Vested		(148,743	)		4.98
Forfeited		(33,584	)		6.07
Unvested at December 31, 2013		236,513		$	4.95
Granted		128,838			2.75
Vested		(171,404	)		3.82
Forfeited		(6,565	)		6.80
Unvested at December 31, 2013		187,382		$	4.40
Expected to vest after December 31, 2013		172,790		$	4.23

At December 31, 2013, total compensation cost related to restricted stock units granted under the Stock Plan but not yet recognized was $509,004, net of estimated forfeitures. This cost will be amortized on the straight-line method over a period of approximately 1.2 years.

Common Stock Reserved for Future Issuance

The following table summarizes our shares of common stock reserved for future issuance under the Plans at December 31, 2013 and 2012:

	December 31,
	2013		2012
Stock options outstanding		1,515,621		1,539,618
Restricted stock units outstanding		187,382		236,513
Stock options available for future grant		1,024,941		1,157,149
Common stock reserved for future issuance		2,727,944		2,933,280