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Stock-Based Awards and Per Share Information (Tables)
 9 Months Ended
Sep. 30, 2013
Summary of Income Statement Classification of Compensation Expense

The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands):

 

 

Three Months Ended
September 30,

 

  

Nine Months Ended
September 30,

 

 

2013

 

  

2012

 

  

2013

 

  

2012

 

Cost of revenue             

$

  73

  

  

$

  67

  

  

$

  227

  

  

$

  183

  

Sales and marketing             

 

  154

  

  

 

  134

  

  

 

  443

  

  

 

  375

  

General and administrative             

 

  225

  

  

 

  103

  

  

 

  459

  

  

 

  586

  

Engineering and development             

 

  39

  

  

 

  53

  

  

 

  110

  

  

 

  136

  

 

$

  491

  

  

$

  357

  

  

$

  1,239

  

  

$

  1,280

  

 
Assumptions on Estimation of Stock Option Fair Values

The stock option fair values were estimated using the Black-Scholes option-pricing model with the following assumptions:

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2013

 

 

2012

 

 

2013

 

 

2012

 

Expected term (in years)             

 

  3.70

  

 

 

  3.70

  

 

 

  3.66

  

 

 

  3.80

  

Volatility             

 

  83

%

 

 

  97

%

 

 

  83

%

 

 

  101

%

Annual dividend per share             

$

  0.00

  

 

$

  0.00

  

 

$

  0.00

  

 

$

  0.00

  

Risk-free interest rate             

 

  1.54

%

 

 

  0.68

%

 

 

  0.99

%

 

 

  0.81

%

 
Summary of Option Activity Under Stock Option Plan

A summary of option activity under the Company’s stock option plan for the nine months ended September 30, 2013 is as follows:

 

 

Shares

 

 

Weighted
average
exercise price

 

  

Weighted average
remaining
contractual term
(years)

 

  

Aggregate intrinsic value(1)

 

Options outstanding at December 31, 2012             

 

  3,860,000

  

 

$

  3.48

  

  

 

 

 

  

 

 

 

Plus: Options granted             

 

  1,516,000

  

 

$

  3.90

  

  

 

 

 

  

 

 

 

Less: Options exercised             

 

(342,000

) 

 

$

  2.07

  

  

 

 

 

  

 

 

 

Options forfeited, canceled, or expired             

 

(660,000

) 

 

$

  4.34

  

  

 

 

 

  

 

 

 

Options outstanding at September 30, 2013             

 

  4,374,000

  

 

$

  3.55

  

  

 

  4.02

  

  

$

  171,000

  

Options exercisable at September 30, 2013             

 

  2,480,000

  

 

$

  3.57

  

  

 

  3.39

  

  

$

  166,000

  

Vested options expired during the quarter ended  September 30, 2013             

 

  66,000

  

 

$

  10.28

  

  

 

 

 

  

 

 

 

 

(1) The intrinsic value calculation does not include negative values. This can occur when the fair market value on the reporting date is less than the exercise price of the grant.

 
Cash Proceeds Along with Fair Value Disclosures Related to Grants, Exercises, and Vesting Options

Cash proceeds along with fair value disclosures related to grants, exercises, and vesting options are provided in the following table (in thousands, except per share amounts):

 

 

Three Months Ended September 30,

 

  

Nine Months Ended September 30,

 

 

2013

 

  

2012

 

  

2013

 

  

2012

 

Proceeds from stock options exercised             

$

  10

  

  

$

  33

  

  

$

  707

  

  

$

  455

  

Tax benefit related to stock options exercised (1)             

 

N/A

  

  

 

N/A

  

  

 

N/A

  

  

 

N/A

  

Intrinsic value of stock options exercised (2)             

$

  6

  

  

$

  0

  

  

$

  860

  

  

$

  91

  

Weighted-average fair value of options granted during period             

$

  3.31

  

  

$

  1.02

  

  

$

  3.90

  

  

$

  1.55

  

Total fair value of shares vested during the period             

$

  437

  

  

$

  398

  

  

$

  1,155

  

  

$

  1,410

  

 

(1) Excess tax benefits received related to stock option exercises are presented as financing cash inflows. The Company currently does not receive a tax benefit related to the exercise of stock options due to the Company’s net operating losses.

 

(2) The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant.