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v2.4.0.6
Stock-based Compensation
6 Months Ended
Jun. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-based Compensation
Stock-based Compensation
Under the terms of our 2011 Incentive Plan (Plan), our Board of Directors may grant awards to employees, officers, directors, consultants, agents, advisors and independent contractors. Awards may consist of stock options, stock appreciation rights, stock awards, restricted stock, stock units, performance awards or other stock or cash-based awards. Stock options are granted at the closing price of our common stock on the date of grant, and generally have a ten-year term and vest over a period of 48 months with the first 25% vesting one year from the grant date and monthly thereafter. Effective January 1, 2012, the total number of shares of common stock authorized for issuance under the Plan increased to 3,888,407 shares. As of June 30, 2012, there were 3,754,088 shares of unissued common stock authorized and available for issuance under the Plan.
Equity awards outstanding under the 2002 Stock Options and Restricted Stock Plan, which was terminated in May 2011, will remain outstanding in accordance with their existing terms.
(a)
Stock options:
A summary of our stock option activity is as follows:
 
Outstanding Options
 
Number of Shares
 
Weighted Average Exercise Price
Balance at January 1, 2012
2,154,112

 
$
1.49

Options granted
190,000

 
0.51

Options exercised

 

Options cancelled/expired
(591,037
)
 
2.65

Balance at June 30, 2012
1,753,075

 
$
0.99

Exercisable, June 30, 2012
1,221,251

 
$
1.08

Vested and expected to vest
1,720,091

 
$
0.99

Subsequent to the quarter ended June 30, 2012, on August 6, 2012, the Board of Directors granted options for the purchase of a total of 2,000,000 shares of common stock under the Plan to our new Chief Executive Officer with an exercise price and grant date fair value of $0.29 and $0.23, respectively. The first option grant is for 1,000,000 shares and was fully vested upon grant. The second option is for 1,000,000 shares to vest over time subject to her continued employment, with 50% vesting on June 27, 2013 and the balance vesting on June 27, 2014.

(b)
Restricted stock awards:
A summary of our restricted stock activity is as follows:
 
Restricted Shares
 
Weighted-Average Grant Date Fair Value
 
Weighted-Average Contractual Life
Non-vested restricted stock at January 1, 2012
40,607

 
$
0.68

 
9.69 yrs
Granted

 

 
 
Vested

 

 
 
Cancelled/expired
(5,681
)
 
0.68

 
 
Non-vested restricted stock at June 30, 2012
34,926

 
$
0.68

 
9.19 yrs

We withheld a total of 47,352 shares as payment for withholding taxes due in connection with the vesting of restricted stock awards issued under the 2002 Stock Option and Restricted Stock Plan for the six months ended June 30, 2011 and the average price paid per share of $1.32 reflects the average market value per share of the shares withheld for tax purposes. There were no shares withheld by the Company for the other periods presented.
(c) Stock-based compensation expense:
We recognize stock-based compensation expense using the straight-line attribution method over the employees’ requisite service periods. We recognize compensation expense for only the portions of stock options or restricted stock that are expected to vest. In estimating the options and shares that are expected to vest, we apply estimated forfeiture rates that are derived from historical termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to stock-based compensation expense may be required in future periods.
At June 30, 2012, we had unrecognized compensation expense related to stock options and non-vested restricted stock of $243,000 and $11,000, respectively, to be recognized over weighted-average periods of 2.9 years and 0.7 years, respectively.
The following table summarizes the stock-based compensation expense (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Type of awards:
2012
 
2011
 
2012
 
2011
Stock options
$
42

 
$
115

 
$
129

 
$
200

Restricted stock
4

 
5

 
7

 
95

 
$
46

 
$
120

 
$
136

 
$
295

Income statement account:
 

 
 

 
 
 
 
Promotion and selling
$
19

 
$
28

 
$
43

 
$
86

General and administrative
27

 
92

 
93

 
209

 
$
46

 
$
120

 
$
136

 
$
295


We employ the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the provisions of Staff Accounting Bulletins (SAB) 107 and 110, which allow the simplified method to estimate the expected term of "plain vanilla" options:
 
Six Months Ended June 30,
 
2012
 
2011
Expected dividend yield

 

Expected stock price volatility
102.0
%
 
99.4
%
Risk-free interest rate
1.2
%
 
2.5
%
Expected term (in years)
6.1 years

 
5.9 years

Weighted-average grant date fair-value
$
0.41

 
$
1.06


During the quarter ended June 30, 2012, no material modifications were made to outstanding stock options.
The aggregate intrinsic value of stock options outstanding at June 30, 2012 and 2011 was $0 and $135,000 and for options exercisable was $0 and $257,000, respectively. The intrinsic value of outstanding and exercisable stock options is calculated as the closing market price of the stock at the balance sheet date less the exercise price of the option. The total intrinsic value of options exercised during the three and six months ended June 30, 2012 and 2011 was $0 and $700 and $0 and $14,000, respectively.