Share-Based Compensation

9 Months Ended

Sep. 30, 2013

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

Share-Based Compensation

 Stock Option Activity

	Shares		Weighted- Average Exercise  Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic  Value
							(Thousands)
Options outstanding at December 31, 2012		2,691,633	$	1.86
Granted		740,000		1.30
Exercised		(10,000)		0.65
Expired		(71,666)		1.56
Forfeited		(228,332)		1.68
Options outstanding at September 30, 2013		3,121,635	$	1.76		7.53	$	578
Options exercisable at September 30, 2013		1,814,140	$	2.00		6.42	$	389

 Intrinsic value is defined as the difference between the relevant current market value of the Company’s common stock and the grant price for options with exercise prices less than the market values on such dates.  During the three and nine months ended September 30, 2013, there were 0 and 10,000 stock options exercised.  The Company received cash proceeds of $6,500 related to the stock options exercised in 2013. During the three months and nine months ended September 30, 2012, the Company received cash proceeds from the exercise of stock options of approximately $0 and $26,000, respectively.

 During the nine months ended September 30, 2013, the Company modified 276,667 options in connection with the resignation of two members of the board of directors and one officer.  The modifications, which resulted in an extension of the term that the board members and officer are allowed to exercise stock options, resulted in approximately $152,000 of incremental share-based compensation expense during the nine month period ended September 30, 2013, which excludes an offset of approximately $30,000 related to forfeited officer stock options.

 The weighted-average estimated fair value of employee stock options granted during the three and nine months ended September 30, 2013 was $0.77 and $0.80, respectively. The weighted-average estimated fair value of employee stock options granted during the three and nine months ended September 30, 2012 was $0.79 and $0.98, respectively.

 Restricted Stock Award Activity

 The Company periodically issues restricted stock awards to certain directors and key employees, subject to certain vesting requirements based on future service.  Fair value is calculated using the Black-Scholes option-pricing valuation model (single option approach).  There was no restricted stock award activity during the three and nine months ended September 30, 2013. However, the Company awarded 23,607 fully vested, non-restricted shares at a $1.20 weighted-average grant date fair value during the three months ended September 30, 2013.  The Company awarded 60,123 fully vested, non-restricted shares at a $1.37 weighted-average grant date fair value during the nine months ended September 30, 2013. These shares were issued to certain members of the Company’s board of directors in lieu of cash payment for quarterly board fees.  The expense related to these shares was $28,000 and $82,000 during the three and nine months ended September 30, 2013, respectively, and was recorded in general and administrative expense.

 The Company recognized the following share-based compensation expense during the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2013		2012		2013		2012
	(Thousands)				(Thousands)
Stock options
General and administrative expense	$	114	$	40	$	498	$	280
Cost of sales		6		3		17		10
Selling and marketing		32		156		112		239
Shipping and warehouse		1		1		3		3
Research and development		4		5		10		11
Total share-based compensation for stock options		157		205		640		543
Restricted stock
General and administrative expense (Board of Directors fees in lieu of cash payments)		28		26		82		52
Total share-based compensation for restricted stock		28		26		82		52
Total Share-based compensation expense	$	185	$	231	$	722	$	595

 Total unrecognized share-based compensation expense for outstanding stock option awards at September 30, 2013 is approximately $0.7 million, which will be recognized over a weighted average remaining life of 1.68 years.