Stockholders' Equity

12 Months Ended

Dec. 31, 2013

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 8 - Stockholders' Equity

Common Stock

In June 2011, we completed a public offering of 1,857,143 shares of common stock at $3.50 per share inclusive of warrants to purchase up to an additional 371,423 shares of common stock. The warrants were exercisable immediately at an exercise price of $3.50 per share until the fifth anniversary of the date of issuance which is June 15, 2016. The warrants are classified as derivative instruments because they include net settlement provisions. We received gross proceeds of approximately $6.5 million and net proceeds of approximately $5.1 million for stock and $0.7 million for derivative instruments.

Controlled Equity Offering

On March 25, 2013, we entered into a controlled equity offering arrangement with a sales agent pursuant to which we may offer and sell, from time to time, through the agent shares of our common stock having an aggregate offering price of up to $15.0 million. Under the arrangement, the agent may sell shares by any method permitted by law and deemed to be an "at-the-market" offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly on NYSE MKT, or any other existing trading market for our common stock or to or through a market maker. Subject to the terms and conditions of that agreement, the agent will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of NYSE MKT, to sell shares from time to time based upon our instructions. We are not obligated to sell any shares under the arrangement. We are obligated to pay the agent a commission of 3.0% of the aggregate gross proceeds from each sale of shares under the arrangement.

Through December 31, 2013, we sold 3,883,173 shares of our common stock under this arrangement resulting in net proceeds (net of commission and offering costs) to the Company of approximately $5.9 million. As of December 31, 2013, aggregate gross sales for additional common stock of approximately $8.6 million remained available under the arrangement.

Long-Term Incentive Compensation Plan

In 2007, the Company's stockholders approved the 2007 Long-Term Incentive Compensation Plan, or the 2007 Plan, which provides for the granting of incentive and non-qualified stock options, stock appreciation rights, performance units, restricted common awards and performance bonuses (collectively "awards") to Company employees. Additionally, the 2007 Plan authorizes the granting of non-qualified stock options and restricted stock awards to Company directors and to independent consultants.

In 2008, the Company's shareholders approved amendments to the 2007 Plan, increasing the maximum number of shares authorized for issuance under the plan from 3.5 million shares to 4.6 million shares and adding an evergreen provision pursuant to which the number of shares authorized for issuance under the plan will increase automatically in each year, beginning in 2009 and continuing through 2015, according to certain limits set forth in the 2007 Plan. At December 31, 2013, there are approximately 9.3 million shares approved for issuance under the 2007 plan, of which approximately 2.6 million shares are available to be issued. The Board of Directors in conjunction with management determines who receives awards, the vesting conditions and the exercise price. Options may have a maximum term of ten years.

The following table summarizes the activity of the 2007 Plan for options:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term
Options
Outstanding January 1, 2011		5,339,413		$	3.18		8.3
Granted		1,934,566			1.71
Exercised		(44,464	)		2.66
Forfeited		(936,533	)		3.07
Outstanding, December 31, 2011		6,292,982		$	2.74		8.0
Granted		852,139			1.22
Exercised		(31,474	)		1.24
Forfeited		(888,035	)		2.91
Outstanding, December 31, 2012		6,225,612		$	2.52		7.4
Granted		240,000			1.65
Exercised		(61,756	)		1.21
Forfeited		(390,694	)		2.20
Expired		(39,123	)		2.96
Outstanding, December 31, 2013		5,974,039		$	2.52		6.5
Exercisable, December 31, 2013		4,589,956		$	2.75		6.0
Vested and expected to vest, December 31, 2013		5,809,558		$	2.54		6.5

The aggregate intrinsic value is calculated as the difference between (i) the closing price of the common stock at December 31, 2013 and (ii) the exercise price of the underlying awards, multiplied by the number of options that had an exercise price less than the closing price on the last trading day. Our outstanding and exercisable options had an aggregate intrinsic value of approximately $1.6 million as of December 31, 2013.

At December 31, 2013, total compensation costs for unvested stock option awards outstanding approximated $1.3 million, net of estimated forfeitures, which we expect to recognize as stock compensation expense over a weighted average period of 1.75 years.

Valuation assumptions used to determine fair value of share-based compensation

The weighted-average grant date fair value for options granted in 2013, 2012 and 2011 approximated $1.23, $0.86 and $1.17, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 was approximately $28 thousand, $9 thousand, and $35 thousand, respectively. The total fair value of awards vested during 2013, 2012 and 2011 was approximately $1.4 million, $2.1 million and $2.3 million, respectively.

The fair value for the 2013, 2012 and 2011 awards were estimated at the date of grant using the Black-Scholes option-pricing model using the following assumptions:

	December 31,
	2013	2012	2011
Weighted-average volatility	86%	86%	83%
Risk-free rate	0.96% - 1.90%	0.79% - 1.18%	0.79% - 2.79%
Expected annual dividend yield	-	-	-
Expected weighted-average life, in years	5.6	5.9	5.9

The valuation assumptions were determined as follows:

• Weighted average volatility:  Beginning in the third quarter of 2013 we determined expected volatility by using our historical volatility. Prior to that period we determined expected volatility by using our historical volatility weighted 50% and the average historical volatility from comparable public companies with an expected term consistent with the expected term of our options weighted 50%.

• Risk-free interest rate:  The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term of the award.

• Expected annual dividend yield:  The estimate for annual dividends is zero because we have not historically paid a dividend and do not intend to do so in the foreseeable future.

• Expected life:  The expected term of the awards represents the period of time that the awards are expected to be outstanding. The Company estimated the expected term using the "simplified-method" as it does not have sufficient historical exercise data to provide a reasonable estimate.

The following table summarizes the activity of the 2007 plan for restricted shares:

	Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Restricted Shares
Outstanding January 1, 2011		111,131		$	2.92	$	470,084
Granted		145,000			1.43
Vested		(123,066	)		2.59
Forfeited or expired		(9,168	)		2.46
Outstanding, December 31, 2011		123,897		$	1.53	$	157,349
Granted		-			-
Vested		(110,564	)		1.53
Forfeited or expired		-			-
Outstanding, December 31, 2012		13,333		$	1.59	$	14,933
Granted		-			-
Vested		(6,666	)		1.59
Forfeited or expired		-			-
Outstanding, December 31, 2013		6,667		$	1.59	$	12,401

Warrants

At December 31, 2013 and 2012 there were warrants outstanding to purchase 5,620,128 shares of our common stock, respectively. At December 31, 2011 there were warrants outstanding to purchase 5,573,544 shares of our common stock. The warrants outstanding as of December 31, 2013 were as follows:

Number of Common Shares Underlying Warrants			Issue Date/Exercisable Date	Exercise Price		Expiration Date
	100,778	(1)	Mar-07/Mar-07	$	3.97	Mar-17
	705,354	(2)	Mar-09/Sep-09	$	3.00	Sep-14
	2,572,775	(1)	Jul-09/Jan-10	$	2.50	Jan-15
	500,000	(2)	Apr-10/Oct-10	$	1.89	Oct-15
	1,323,214	(2)	Jul-10/Jan-11	$	1.63	Jan-17
	371,423	(2)	Jun-11/Jun-11	$	3.50	Jun-16
	46,584	(1)	Mar-12/Mar-12	$	1.61	Mar-22
	5,620,128

(1) These warrants to purchase common stock are classified as equity.

(2) These warrants to purchase common stock are classified as derivative liabilities. The fair value of these liabilities (see Note 3 - Fair Value Measurements) is remeasured at the end of every reporting period and the change in fair value is reported in the consolidated statements of operations as other income (expense).