Shareholders' Equity

6 Months Ended

Jun. 30, 2016

Shareholders' Equity [Abstract]

Shareholders' Equity

5.Shareholders’ Equity

Under the terms of our 2011 Incentive Plan (the “Plan”), the number of shares authorized under the Plan may be increased each January 1st by an amount equal to the least of (a) 1,300,000 shares, (b) 4.0% of our outstanding common stock as of the end of our immediately preceding fiscal year, and (c) a lesser amount determined by the Board of Directors (the “Board”), provided that the number of shares that may be granted pursuant to awards in a single year may not exceed 10% of our outstanding shares of common stock on a fully diluted basis as of the end of the immediately preceding fiscal year. Effective January 1, 2016, the total number of shares of common stock authorized under the Plan increased to 9,484,032 shares.

Under the terms of the Plan, the Board may grant awards to employees, officers, directors, consultants, agents, advisors and independent contractors. Awards may consist of stock options, stock appreciation rights, stock awards, restricted stock, stock units, performance awards or other stock or cash-based awards. Stock options are granted at the closing price of our stock on the date of grant, and generally have a ten-year term and vest over a period of 48 months with the first 25.0% cliff vesting one year from the grant date and monthly thereafter. As of June 30, 2016, there were 3,723,538 shares of unissued common stock authorized and available for future awards under the Plan.

(a) Stock options:

A summary of our stock option activity is as follows:

	Outstanding Options
	Number of Shares	Weighted Average Exercise Price
Balance at January 1, 2016	3,117,820	$	0.58
Options granted	540,000		0.50
Options exercised	(2,500)		0.34
Options cancelled/expired	(117,500)		0.36
Balance at June 30, 2016	3,537,820	$	0.54
Exercisable, June 30, 2016	2,371,883	$	0.58
Vested and expected to vest	3,196,282	$	0.55

(b)Stock-based compensation expense:

Stock-based compensation expense is recognized using the straight-line attribution method over the employees’ requisite service period. We recognize compensation expense for only the portion of stock options or restricted stock expected to vest. Therefore, we apply estimated forfeiture rates that are derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to stock-based compensation expense may be required in future periods.

At June 30, 2016, we had unrecognized compensation expense related to stock options of $214,000 to be recognized over a weighted-average period of 2.8 years.

The following table summarizes the stock-based compensation expense attributable to stock options (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Income statement account:
Selling and marketing	$	14	$	11	$	25	$	24
General and administrative		34		79		52		106
	$	48	$	90	$	77	$	130

We employ the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options:

	Six months ended June 30,
	2016			2015
Expected dividend yield		—			—
Expected stock price volatility		87.2	%		88.3	%
Risk-free interest rate		1.7	%		1.6	%
Expected term (in years)		6.1	years		5.4	years
Weighted-average grant date fair-value	$	0.37		$	0.24

The aggregate intrinsic value of stock options outstanding at June 30, 2016 and 2015 was $691,000 and $21,000 and for options exercisable was $458,000 and $16,000, respectively.The intrinsic value of outstanding and exercisable stock options is calculated as the quoted market price of the stock at the balance sheet date less the exercise price of the option. There were 2,500 and 342,500 options exercised during the six months ended June 30, 2016 and 2015, respectively. The aggregate intrinsic value of the options exercised during the six months ended June 30, 2016 and 2015, was $1,000 and $2,000 respectively.