Stockholders' Equity

9 Months Ended

Sep. 30, 2013

Equity [Abstract]

Stockholders' Equity

10. Stockholders’ Equity:

Stock-based compensation:

During the nine months ended September 30, 2013, a total of 177,110 options to purchase Common Stock with an aggregate fair market value of approximately $0.5 million were granted to Company employees. The options granted have a term of 10 years from the grant date and vest ratably over a three year period. The fair value of each option is amortized as compensation expense evenly through the vesting period. The fair value of each option award is estimated on the grant date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on implied volatilities from historical volatility of the Common Stock, and other factors estimated over the expected term of the options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The weighted average for key assumptions used in determining the fair value of options granted during the nine months ended September 30, 2013 follows:

Expected price volatility	78.76-81.65%
Risk-free interest rate	0.81-1.20%
Weighted average expected life in years	6 years
Dividend yield	—

Option activity during the nine months ended September 30, 2013 was as follows:

	Number of Shares			Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at January 1, 2013		4,279,919		$	3.70
Granted in 2013:
Officers and Directors		—			—
Others		177,110			4.38
Exercised		(102,827	)		3.38
Forfeitures		(218,431	)		2.71
Outstanding at September 30, 2013		4,135,771		$	3.79	$	7,590,138

Options outstanding at September 30, 2013 are as follows:

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value
$1.00 – 5.00		3,229,271		5.63	$	3.08
$5.01 – 10.00		906,500		3.91	$	6.30
		4,135,771					$	7,590,138

Options exercisable at September 30, 2013 are as follows:

Range of Exercise Prices	Number Exercisable		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value
$1.00 – 5.00		2,657,674		4.94	$	3.00
$5.01 – 10.00		906,500		3.91	$	6.30
		3,564,174					$	6,475,065

The weighted average grant date fair value of options granted during the nine months ended September 30, 2013 was $2.97. There were no options granted during the nine months ended September 30, 2013 whose exercise price was lower than the estimated market price of the stock at the grant date. A summary of the status of the Company’s non-vested stock options as of January 1, 2013, and changes during the nine months ended September 30, 2013 is summarized as follows:

Nonvested Shares	Shares			Weighted Average Grant  Date Fair Value		Aggregate Intrinsic Value
Nonvested at January 1, 2013		854,640
Granted		177,110
Vested		(305,872	)
Forfeited		(154,281	)
Nonvested at September 30, 2013		571,597		$	2.41	$	1,115,073

As of September 30, 2013, there was approximately $7.4 million of unrecognized compensation cost related to unvested share-based compensation awards, including restricted stock units (“RSUs”), granted. These costs will be expensed through 2019.

Warrants:

The Company has granted warrants to purchase shares of Common Stock. Warrants may be granted to affiliates in connection with certain agreements. Warrants outstanding at September 30, 2013, all of which are exercisable are as follows:

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value
$0.01 – 5.00		2,366,792		0.97	$	3.93	$	3,560,668

MidCap:

The Company issued warrants to purchase 357,356 shares of Common Stock at a price of $4.20 in connection with a loan financing in July 2013. The warrants had a fair value of $1 million at the date of the grant.

Restricted Stock Units:

During the nine months ended September 30, 2013, a total of 1,078,336 RSUs with a fair market value of approximately $4.5 million were granted to members of the Company’s senior management. The fair value of restricted units is determined using quoted market prices of the Common Stock and the number of shares expected to vest. These RSUs were issued under the Company’s 2011 Equity Incentive Plan, as amended, and vest in equal installments over three years. This grant was in lieu of the 2012 annual option grant typically given to senior management in order to bring the percentage ownership of senior management in line with the senior management of companies in the Company’s peer group.

In addition, in June 2013, the Company issued 3,125 RSUs with a fair value of $0.01 million to a new board member, which vested immediately. The Company also issued in August 2013, a total of 118,853 RSUs to board members with a fair value of approximately $0.6 million, of which 63,853 RSUs vested immediately and the remaining 55,000 vest in August 2014.

Preferred Stock

The Company has authorized five million “blank check” shares of $.001 par value convertible preferred stock. At September 30, 2013, 2,709,300 shares of Series A Preferred were outstanding.