Note 6 - Stock-Based Awards

3 Months Ended

Jun. 30, 2014

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

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

Note 6.  Stock-Based Awards

We maintain the following stockholder-approved equity incentive plans:

● The 2000 Stock Incentive Plan (the “2000 Plan”) authorizes the issuance of up to 4,500,000 shares of common stock covering several different types of awards, including stock options, restricted shares, stock appreciation rights, and performance shares.

● The 2007 Stock Incentive Plan, as amended, (the “2007 Plan) authorizes the issuance of up to 7,000,000 shares of common stock covering several different types of awards, including stock options, restricted shares, stock appreciation rights, and other stock-based awards.

● The 2003 Director Option Plan (the “2003 Plan”) authorizes the issuance of up to 450,000 shares of common stock covering the annual automatic grant, unless waived, of 10,000 stock options per outside director per year. The 2003 Plan also provides for granting newly elected or appointed outside directors a one-time grant of 10,000 stock options.

The stock option plans provide that options may be granted at an exercise price of 100% of fair market value of our common stock on the date of grant, may be exercised in full or in installments, at the discretion of our Board of Directors (the “Board”) or its Compensation Committee (the “Compensation Committee”), and must be exercised within ten years from date of grant. We recognize stock-based compensation expense on a straight-line basis over the requisite service period based on fair values, generally four years. We use historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of stock-based compensation expense as of the grant date.

Stock Options

The following table summarizes stock options activity for the three months ended June 30, 2014:

	Number of Shares			Exercise Price Range					Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding at April 1, 2014		4,377,874			$ 0.85	–	$	4.88	$	1.78		6.0
Granted		430,000			$ 1.04	–	$	1.25		1.12
Exercised		(25,000	)		$ 0.97	–	$	0.97		0.97
Canceled		(426,505	)		$ 0.95	–	$	4.30		2.65
Outstanding at June 30, 2014		4,356,369			$ 0.85	–	$	4.88	$	1.64		5.8
Vested and expected to vest at June 30, 2014		4,310,973			$ 0.85	–	$	4.88	$	1.64		5.8
Exercisable at June 30, 2014		3,558,703			$ 0.85	–	$	4.88	$	1.73		5.0

 The weighted average fair value of options granted during the three months ended June 30, 2014 and 2013 was $0.77 and $0.70 per share, respectively.

The total intrinsic value (the excess of the market price over the exercise price) was approximately $234 thousand for stock options outstanding, $180 thousand for stock options exercisable, and $230 thousand for stock options vested and expected to vest as of June 30, 2014.

We do not expect to realize any tax benefits from future disqualifying dispositions, if any.

Restricted Stock

We determine stock-based compensation expense for performance based restricted stock based upon the fair value of our common stock at the date of grant and recognize expense based upon the most probable outcome as to whether the performance targets will be achieved and the stock-based compensation being earned.

The following table summarizes restricted stock activity for the three months ended June 30, 2014:

	Number of Shares			Weighted Average Grant Price
Nonvested at April 1, 2014		1,325,402		$	1.06
Vested		(68,950	)		1.51
Forfeited		(19,805	)		1.62
Nonvested at June 30, 2014		1,236,647		$	1.05

We grant restricted stock awards to certain executive officers and management employees and certain members of our Board.

Stock-Based Compensation Expense
 

We estimated the fair value of the stock options granted on the date of grant using a Black-Scholes valuation model that used the weighted average assumptions noted in the following table. The risk-free interest rate assumption we use is based upon United States Treasury interest rates appropriate for the expected life of the awards. The expected life (estimated period of time that we expect employees, consultants and directors to hold their stock options) was estimated based on historical rates for two group classifications, (i) employees and consultants and (ii) outside directors. Expected volatility was based on historical volatility of our stock price for a period equal to the stock option’s expected life and calculated on a daily basis. The expected dividend rate is zero since we do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future.

	Three Months Ended June 30,
	2014			2013
Risk-free interest rate		1.9	%		1.3	%
Expected life (in years)		6.7			7.0
Expected volatility		77	%		82	%
Expected dividend yield		--			--

The following table summarizes stock-based compensation recorded in our consolidated statements of operations for the three months ended June 30, 2014 and 2013, respectively: 

	Three Months Ended June 30,
	2014		2013
Cost of sales	$	16	$	30
Selling, general, and administrative expenses		123		509
Research and development expenses		15		16
Total stock-based compensation expense	$	154	$	555

At June 30, 2014, unrecognized stock-based compensation expense related to stock options was approximately $0.6 million and is expected to be recognized over a weighted average period of approximately 3.1 years. At June 30, 2014, unrecognized stock-based compensation expense related to nonvested (restricted stock) awards was approximately $0.4 million, which is expected to be recognized over a weighted average period of approximately 3.4 years.