Stock Options (Stock Options [Member])

9 Months Ended

Sep. 30, 2013

Stock Options [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock Options

Stock Options

The Company periodically grants stock options to employees and the Board of Directors in accordance with the provisions of our stock option plans, with the exercise price of the stock options being set at or above the closing price of our Common Stock on the date of grant.

In our stock option plans, the exercise price of each award is established by the administrator of the plan and, in the case of incentive stock options ("ISOs") issued to employees who are less than 10% stockholders. The per share exercise price must be equal to at least 100% of the fair market value of a share of the Common Stock on the date of grant or not less than 110% of the fair market value of the shares in the case of an employee who is a 10% stockholder. The administrator of the plan determines the terms and provisions of each award granted, including the vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment, payment contingencies and satisfaction of any performance criteria.

The weighted average fair value of each option granted is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions during the nine and three months ended September 30, 2013 and 2012:

	Nine Months Ended September 30,		Three Months Ended September 30,
	2013	2012	2013	2012
Risk free interest rate	0.8%	0.9%	—%	0.6%
Expected option lives	5 years	5 years	0 years	5 years
Expected volatility	103.2%	111.0%	—%	107.8%
Estimated forfeiture rate	10%	10%	—%	10%
Expected dividend yields	—	—	—	—
Weighted average grant date fair value of options	$1.39	$2.30	$—	$1.51

The risk free interest rate is based on U.S. Treasury yields for securities in effect at the time of grants with terms approximating the expected life of the grants. The expected option lives and forfeiture rates are estimated based on the Company’s exercise and employment termination experience. The Company calculates expected volatility for a stock-based grant based on historic daily stock price observations of its Common Stock during the period immediately preceding the grant that is equal in length to the expected term of the grant. The assumptions used in the Black-Scholes option valuation model are highly subjective and can materially affect the resulting valuations.

A summary of options granted, exercised, expired and forfeited under our plans and options outstanding as of, and changes made during, the nine months ended September 30, 2013 (shares in thousands):

	Outstanding				Exercisable
	Number of Options Shares Underlying		Weighted Average Exercise Price		Number of Options Shares Underlying	Weighted Average Exercise Price
Options outstanding, January 1, 2013	1,857		$	3.02	605	$	2.93
Granted	1,075		1.84
Exercised *	(70	)	1.61
Expired	(14	)	13.56
Forfeited and canceled	(924	)	3.17
Options outstanding, September 30, 2013	1,924		$	2.27	457	$	2.75

* 14,000 common shares were issued from the cashless exercise of 70,000 options.

Stock option compensation expense is allocated as follows for the nine and three months ended September 30, 2013 and 2012 (in thousands):

	Nine Months Ended September 30,				Three Months Ended September 30,
	2013		2012		2013		2012
Global managed services	$	—	$	8	$	—	$	2
Sales and marketing	—		4		—		—
General and administrative	503		143		146		63
	$	503	$	155	$	146	$	65

The remaining unrecognized stock-based compensation expense for options at September 30, 2013 was $1,838,000, of which $396,000, representing 175,000 options, will only be expensed upon a “change in control” and the remaining $1,442,000 will be amortized over a weighted average period of approximately 1.5 years.

The tax benefit recognized for stock-based compensation for the nine and three months ended September 30, 2013 was de minimis. There was no tax benefit recognized for stock-based compensation for the nine and three months ended September 30, 2012. No compensation costs were capitalized as part of the cost of an asset during the periods presented.