Stock Options

The Company periodically grants stock options to employees and 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 the awards are 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 years ended December 31, 2013 and 2012:



	Year Ended December 31,
	2013	2012
Risk free interest rate	0.8%	0.9%
Expected option lives	5 years	5 years
Expected volatility	103.2%	111.0%
Estimated forfeiture rate	10%	10%
Expected dividend yields	—	—
Weighted average grant date fair value of options	$1.39	$2.30

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 expected term of the options and forfeiture rates are estimated based on the Company’s exercise and employment termination experience. 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 assumptions used in the Black-Scholes option valuation model are highly subjective and can materially affect the resulting valuations.

Glowpoint 2007 Stock Incentive Plan

Pursuant to the Glowpoint 2007 Stock Incentive Plan (as amended, the "2007 Plan"), 3,010,000 shares of common stock have been reserved for issuance thereunder. The 2007 Plan permits the grant of ISOs to employees and non-qualified stock options ("NQSOs") to employees, directors and consultants. As of December 31, 2013, options to purchase a total of 1,592,000 shares of common stock were outstanding and 409,000 shares of common stock remained available for future issuance under the 2007 Plan.

Glowpoint 2000 Stock Incentive Plan

Pursuant to the Glowpoint 2000 Stock Incentive Plan (as amended, the "2000 Plan"), that was terminated in June 2010, 1,100,000 shares of common stock has been reserved for issuance thereunder. The 2000 Plan provided for the grant of ISOs to employees and NQSOs to employees, directors and consultants. As of December 31, 2013, options to purchase a total of 201,000 shares of common stock were outstanding under the 2000 Plan.

Other Option Information

A summary of options granted, exercised, expired and forfeited under our plans and options outstanding as of, and changes made during, the years ended December 31, 2013 and 2012 (options in thousands):



	Outstanding				Exercisable
	Number of Options		Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
Options outstanding, January 1, 2012	750		$	2.90	570	$	3.12
Granted	1,310		3.20
Exercised	(6	)	1.62
Expired	(11	)	7.61
Forfeited	(186	)	3.00
Options outstanding, December 31, 2012	1,857		$	3.07	605	$	2.93
Granted	1,075		1.84
Exercised	(70	)	1.61
Expired	(14	)	13.56
Forfeited	(1,056	)	3.16
Options outstanding, December 31, 2013	1,792		$	2.21	410	$	2.71

Additional information as of December 31, 2013 is as follows (options in thousands):



	Outstanding				Exercisable
Range of price	Number of Options	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
$0.90 – $1.80	289	7.55	$	1.28	89	$	1.44
$1.84 – $2.05	971	8.66	1.97		95	1.89
$2.12 – $2.88	199	6.56	2.36		103	2.42
$3.02 – $3.47	260	8.20	3.07		50	3.02
$3.80 – $8.60	73	0.84	5.48		73	5.48
	1,792	7.86	$	2.21	410	$	2.71

A summary of unvested options as of, and changes during the years ended December 31, 2013 and 2012, is presented below (options in thousands):



	Options		Weighted Average Grant Date Fair Value
Unvested options outstanding, January 1, 2012	180		$	1.72
Granted	1,310		2.30
Vested	(77	)	1.27
Forfeited	(161	)	2.33
Unvested options outstanding, December 31, 2012	1,252		$	2.27
Granted	1,075		1.39
Vested	(85	)	1.43
Forfeited	(860	)	2.25
Unvested options outstanding, December 31, 2013	1,382		$	1.57

Stock option compensation expense relating to stock option awards is allocated as follows for the years ended December 31, 2013 and 2012 (in thousands):



	Year Ended December 31,
	2013		2012
Cost of revenue	$	—	$	—
Research and development	—		1
Sales and marketing	—		2
General and administrative	646		206
	$	646	$	209

The intrinsic value of vested options at December 31, 2013 and 2012 was $6,000 and $107,000, respectively. The intrinsic value of unvested options at December 31, 2013 and 2012 was $48,000 and $0, respectively.

The remaining unrecognized stock-based compensation expense for options at December 31, 2013 was $1,501,000, of which $203,000, representing 90,000 options, will only be expensed upon a “change in control” and the remaining $1,298,000 will be amortized over a weighted average period of approximately 1.2 years.

The tax benefit recognized for stock-based compensation for the year ended December 31, 2013 was diminimus. There was no tax benefit recognized for stock-based compensation for the year ended December 31, 2012. No compensation costs were capitalized as part of the cost of an asset.