Share-Based Compensation

12 Months Ended

Dec. 31, 2011

Share-Based Compensation [Abstract]

SHARE-BASED COMPENSATION

NOTE 10 — SHARE-BASED COMPENSATION

For the years ended December 31, 2011 and 2010, share based awards consisted of grants of stock options and stock warrants, and for the year ended December 31, 2009, share-based awards consisted of grants of restricted stock and stock options. The Company recognizes the compensation from share-based awards on a straight-line basis over the requisite service period of the award. The vesting period of share-based awards is determined by the board of directors, and is generally four years for employees. The restrictions on the restricted stock lapse over the vesting period, which is typically four years. The per-share weighted-average fair value of stock options granted during the years ended December 31, 2011, 2010 and 2009 was $2.20, $2.12 and $2.68, respectively, on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions and estimated forfeiture rates of 10%, 10% and 11% in 2011, 2010 and 2009, respectively:

Year ended December 31,	Expected Dividend  Yield		Risk Interest Rate			Expected Life		Expected Volatility
2011		—		0.89	%		4.75 years		99	%
2010		—		1.93	%		4.75 years		105	%
2009		—		2.28	%		4.75 years		113	%

The per-share weighted-average fair value of stock warrants granted during the year ended December 31, 2011 was $0.72 on the date of grant, using the Black-Scholes option-pricing model with weighted-average assumptions for the risk-free interest rate, expected life and expected volatility of 0.12%, 0.63 years and 60%, respectively, and no estimated forfeiture rate for the year ended December 31, 2011.

The per-share weighted-average fair value of stock warrants granted during the year ended December 31, 2010 was $2.44 on the date of grant, using the Black-Scholes option-pricing model with weighted-average assumptions for the risk-free interest rate, expected life and expected volatility of 2.37%, 5 years and 114%, respectively, and an estimated average forfeiture rate of 7% for the year ended December 31, 2010.

The Company elected to use the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants granted. The Company determined the volatility for stock options based on the reported closing prices of the Company’s stock since its initial public offering in November 2006. The expected life of stock options and stock warrants has been determined utilizing the “simplified” method as prescribed by the SEC’s Staff Accounting Bulletin No. 107, “Share-Based Payment”. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options and stock warrants. The Company has not paid and does not anticipate paying cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. In addition, guidance from the FASB requires companies to utilize an estimated forfeiture rate when calculating the expense for the period. As a result, the Company applied estimated forfeiture rates to unvested share-based compensation of 10%, 10% and 11% for stock options and restricted stock for the years ended December 31, 2011, 2010 and 2009, respectively, in determining the expense recorded in the accompanying consolidated statements of operations. The Company did not apply an estimated forfeiture rate to unvested share-based compensation for stock warrants for the year ended December 31, 2011, and applied an estimated forfeiture rate of 7% to unvested share-based compensation for stock warrants for the year ended December 31, 2010, in determining the expense recorded in the accompanying consolidated statements of operations.

The approximate total share-based compensation expense for the periods presented is included in the following expense categories:

	Years Ended December 31,
	2011		2010		2009
Cost of revenue	$	69,000	$	79,000	$	93,000
Sales and marketing		356,000		227,000		350,000
General and administrative		185,000		365,000		190,000
Total share-based compensation	$	610,000	$	671,000	$	633,000

As of December 31, 2011, there was approximately $839,000 of unrecognized compensation expense related to share-based awards, including approximately $809,000 related to non-vested stock option awards that is expected to be recognized over a weighted-average period of 2.54 years, approximately $11,000 related to non-vested restricted stock awards that is expected to be recognized over a weighted average period of 0.48 years and approximately $19,000 related to non-vested stock warrants that is expected to be recognized over a weighted average period of 0.17 years. See Note 8 to the consolidated financial statements for a summary of the share-based activity under the Company’s stock-based employee compensation plans for the years ended December 31, 2011, 2010 and 2009.

The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of such services received or of the equity instruments issued, whichever is more reliably measured. During 2011, stock warrants were granted for 300,000 shares of common stock to consultants in consideration for services performed, for which the Company recognized a charge of approximately $197,000 to sales and marketing expense in the statement of operations for the year ended December 31, 2011. During 2010, stock warrants were granted for 64,500 shares of common stock to consultants in consideration for services performed, for which the Company recognized a charge of approximately $4,000 and $153,000 to general and administrative expense in the statement of operations for the year ended December 31, 2011 and 2010, respectively.