11. Share-Based Compensation

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

11. Share-Based Compensation

Equity Plans

The Company’s board of directors and stockholders approved the following equity plans:

· the 1998 Share Incentive Plan

· the 2000 Share Incentive Plan

· the 2004 Share Incentive Plan

· the 2006 Share Incentive Plan

· the 2013 Equity Incentive Plan (“2013 Plan”)

The Company issues stock options to employees, consultants and non-employee directors. Stock option awards generally vest over a four year period and have a maximum term of ten years. Stock options under these plans have been granted with an exercise price equal to the fair market value on the date of the grant. Nonqualified and Incentive Stock Options, restrictive stock awards (“RSAs”) and restrictive stock units (“RSUs”) may be granted from these plans. Prior to the Company’s initial public offering, the fair market value of the Company’s stock had been historically determined by the board of directors and from time to time with the assistance of third party valuation specialists.

Stock Options

Options have been granted to the Company’s employees under the five incentive plans and generally become exercisable as to 25% of the shares on the first anniversary date following the date of grant and semi-annually thereafter. All options expire ten years after the date of grant.

The following is a summary of option activity:

	Number of shares			Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding, December 31, 2014		1,423			8.96		4.48		–		3,486
Exercised		(11	)		7.05		3.59		–		50
Forfeited		(16	)		9.93		5.32		–		22
Outstanding, March 31, 2015		1,396		$	8.96	$	4.47		7.852	$	6,869
Exercisable, March 31, 2015		687		$	8.20	$	3.69		7.357	$	3,905
Vested and expected to vest		1,326		$	8.91	$	4.43		7.823	$	6,592

As of March 31, 2015, there was approximately $3.2 million of unrecognized stock option expense, net of estimated forfeitures, which is expected to be recognized over 2.37 years.

Restricted Stock Units/Awards

The following is a summary of RSU/RSA activity:

	Number of shares			Weighted Average Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2014		21			18.22		238
Granted		123			8.94		1,105
Exercised/Released		1			3.59		16
Cancelled/Forfeited		(2	)		8.94		–
Outstanding at March 31, 2015		143		$	10.31	$	1,992
Exercisable, March 31, 2015		17		$	18.20	$	231
Vested and expected to vest		137		$	10.35	$	1,908

As of March 31, 2015 was $1.0 million of unrecognized compensation expense related to these RSU’s and RSA’s. This expense is expected to be recognized over 3.81 years.

Share-Based Compensation

Employee share-based compensation expenses recognized for the periods indicated (in thousands):

	Three months ended March 31,
	2015		2014
Share-Based compensation - by expense type
Cost of sales	$	16	$	25
Research and development		53		25
Sales and marketing		50		23
General and administrative		397		416
	$	516	$	489

	Three months ended March 31,
	2015		2014
Share-Based compensation - by award type
Employee stock options	$	385	$	414
Restricted stock units/awards		131		73
Warrants		–		2
	$	516	$	489