Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

7.  Stock-Based Compensation

The following table summarizes the stock-based compensation expense, net of amounts capitalized, we recorded in our Unaudited Condensed Consolidated Statements of Operations for the three and six-month periods ended June 30, 2012 and 2011, respectively, by classification:

	Three Months Ended June 30,				Six Months Ended June 30,
Statement of Operations Classification	2012		2011		2012		2011
Costs of revenue	$	4,100	$	1,000	$	10,400	$	2,000
Selling and marketing expense		25,200		4,200		51,600		8,900
General and administrative expense		260,600		14,700		333,700		17,600
Research and development expense		86,200		3,900		169,800		6,100
	$	376,100	$	23,800	$	565,500	$	34,600

We estimated the fair value of each stock-based award granted during the three-month and six month periods ended June 30, 2012 and 2011 as of the respective dates of grant, using a binomial model with the assumptions set forth in the following table:

	Estimated Volatility			Annualized Forfeiture Rate			Expected Option Term (Years)		Estimated Exercise Factor		Risk-Free Interest Rate			Dividends
2012		70% - 174	%		0.00% - 9.19	%		0.25 - 10.0		5 - 15		0.18% - 2.04	%		-
2011		180% - 185	%		2.00	%		7.5 - 10.0		20 - 150		2.82% - 3.24	%		-

Expected volatility is based on the historical volatility of our common stock over the expected option term period ended on the last business day of each respective quarterly reporting period. The estimated annualized forfeiture rate was based on an analysis of historical data and considered the impact of events such as work force reductions we carried out in previous years. The expected term of our stock-based option awards was based on historical award holder exercise patterns and considered the market performance of our common stock and other items. The estimated exercise factor was based on an analysis of historical data; historical exercise patterns; and a comparison of historical and current share prices. The approximate risk free interest rate was based on the implied yield available on U.S. Treasury issues with remaining terms equivalent to our expected term on our stock-based awards. We do not anticipate paying dividends on our common stock for the foreseeable future.

The following table presents summaries of the status and activity of our stock option awards for the three-month period ended June 30, 2012.

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)	Aggregate Intrinsic Value
Outstanding - March 31, 2012		13,983,105		$	0.19
Granted		1,410,000			0.18
Exercised		(74,724	)		0.06
Forfeited or expired		(1,156,666	)		0.21
Outstanding - June 30, 2012		14,161,715		$	0.19	6.83	$ 187,700

The following table presents summaries of the status and activity of our stock option awards for the six-month period ended June 30, 2012.

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)	Aggregate Intrinsic Value
Outstanding - December 31, 2011		11,636,694		$	0.18
Granted		3,912,500			0.21
Exercised		(130,813	)		0.06
Forfeited or expired		(1,256,666	)		0.21
Outstanding - June 30, 2012		14,161,715		$	0.19	6.83	$ 187,700

The weighted average fair value of options granted during the three and six-month periods ended June 30, 2012 was $0.14 and $0.17, respectively. Of the options outstanding as of June 30, 2012, 6,388,277 were vested, 7,533,005 were estimated to vest in future periods and 240,433 were estimated to be forfeited prior to their vesting.

All options are exercisable immediately upon grant. Options vest, generally, ratably over a 33-month period commencing in the fourth month after the grant date. We have the right to repurchase common stock issued upon the exercise of an option upon an optionee's termination of service to us prior to full vesting at the option's exercise price.

As of June 30, 2012, there was approximately $656,400 of total unrecognized compensation cost, net of estimated forfeitures, related to stock-based compensation. That cost is expected to be recognized over a weighted-average period of approximately fourteen months.