Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Stock-Based Compensation [Abstract]

Stock-Based Compensation

4. Stock-Based Compensation

Stock Plans

During the three months ended March 31, 2013, the Company granted options to purchase 80,000 shares of common stock and 1.5 million shares of restricted stock, with a total value of $2.6 million. This cost will be amortized ratably over the vesting period of 12 to 48 months.

As of March 31, 2013 there were 1.6 million shares available for future grants under the 2005 Plan.

Employee Stock Purchase Plan

The Company has a shareholder approved employee stock purchase plan (“ESPP”), under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning and end of six-month offering periods. An employee’s payroll deductions under the ESPP are limited to 10% of the employee’s compensation and employees may not purchase more than the lesser of $25,000 of stock, or 1,000 shares, for any purchase period. Additionally, no more than 1,000,000 shares may be purchased under the plan. Shares purchased under the plan are valued using a Black-Scholes valuation model.

The Company’s most recent six-month offering period ended March 31, 2013 and resulted in 18,594 shares being purchased/granted at a fair value of $0.65 per share.

Stock Compensation

The Company accounts for all stock-based payment awards made to employees and directors based on their fair values and recognized as compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB ASC Topic No. 718, Compensation-Stock Compensation. Restricted stock is valued using the closing stock price on the date of the grant. Options are valued using a Black-Scholes valuation model.

Stock-based non-cash compensation expenses related to stock options, restricted stock grants and the employee stock purchase plan were recorded in the financial statements as follows (in thousands):

	Three Months Ended March 31, 2013
	2013		2012
	(unaudited)
Cost of revenues	$	5	$	4
Selling and marketing		226		217
Research and development		209		186
General and administrative		465		765
Restructuring expense		—		6
Total non-cash stock compensation expense	$	905	$	1,178

Total share-based compensation for each quarter includes cash payment of income taxes related to grants of restricted stock in the amount of $0.2 million for the three months ended March 31, 2013 and $0.1 million for the three months ended March 31, 2012.