Stock-based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

(8) Stock-based Compensation

Stock Plans

The Company issued stock options and had restricted stock awards outstanding during the three months ended March 31, 2016. A summary of the status of the Company’s stock option activity at March 31, 2016 and changes during the three months then ended is presented in the table and narrative below.

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2015		4,796,005		$	3.78
Granted		1,139,500		$	1.08
Exercised		─			─
Forfeited		(351,085	)	$	1.38
Outstanding at March 31, 2016		5,584,420		$	3.38		7.17	$	88,258
Vested or expected to vest at March 31, 2016		3,176,655		$	5.04		5.82	$	43,329
Exercisable at March 31, 2016		2,537,373		$	6.00		4.99	$	27,625

Stock options to purchase 321,000 shares of common stock contain market conditions which were not deemed probable of vesting at March 31, 2016.

The fair value of stock options subject only to service or performance conditions that are granted to employees is estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions noted in the following table:

	Three Months Ended March 31,
	2016		2015
Volatility factor	73.79%-73.91%		78.7%
Expected term (in years)	6.25		6.25
Risk-free interest rates		1.38%		1.54%
Dividend yield		—		—

The risk-free interest rate is determined based upon the United States Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the options being valued. The Company does not expect to pay dividends in the foreseeable future.

The Company does not have sufficient history to support a calculation of volatility and expected term using only its historical data. As such, the Company has used a weighted-average volatility considering the Company’s own volatility since March 2010, and the volatilities of several peer companies. For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, similar vesting terms and in-the-money option status. Due to lack of available option activity data, the Company elected to use the “simplified” method for “plain vanilla” options to estimate the expected term of the stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. Based upon these assumptions, the weighted-average grant date fair value of stock options granted to employees during the three months ended March 31, 2016 and 2015 was $0.71 per share and $0.62 per share, respectively.

The Company is required to include an estimate of the value of the awards that will be forfeited in calculating compensation costs, which the Company estimates based upon actual historical forfeitures. The forfeiture estimates are recognized over the requisite service period of the awards on a straight-line basis. The Company estimated its forfeiture rate to be approximately 76% and 70% as of March 31, 2016 and 2015, respectively.

As of March 31, 2016, there was $0.7 million of total unrecognized stock-based compensation expense related to stock options granted to employees under the Company’s 2002 Stock Incentive Plan and 2010 Stock Incentive Plan (collectively, the “Plans”). The expense is expected to be recognized over a weighted-average period of 3.0 years. The intrinsic value of options exercised during the three months ended March 31, 2015 was $13,000. No options were exercised during the three months ended March 31, 2016.

The restricted stock activity for the three months ended March 31, 2016 is as follows:

	Number of Shares			Weighted- Average Fair-Value
Unvested at December 31, 2015		42,750		$	1.61
Granted		—			—
Vested/Released		(42,750	)		1.61
Unvested at March 31, 2016		—			—

As of March 31, 2016, there was no unrecognized stock-based compensation expense related to restricted stock awards granted under the Plan.