Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

4. Stock-Based Compensation

Stock Plans

During the six months ended June 30, 2013, the Company granted options to purchase 100,000 shares of common stock and 1.5 million shares of restricted stock, with a total value of $2.6 million. This cost will be amortized ratably over a period of 12 to 48 months.

As of June 30, 2013 there were 1.8 million shares available for future grants under the 2005 Plan.

Employee Stock Purchase Plan

The Company has a shareholder approved employee stock purchase plan (“ESPP”), under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning and end of six-month offering periods. An employee’s payroll deductions under the ESPP are limited to 10% of the employee’s compensation and employees may not purchase more than the lesser of $25,000 of stock, or 1,000 shares, for any calendar year. Additionally, no more than 1,000,000 shares may be purchased under the plan. Shares purchased under the plan are valued using a Black-Scholes valuation model.

The Company’s most recent six-month offering period ended March 31, 2013 and resulted in 18,594 shares being purchased/granted at a fair value of $0.65 per share. The next six-month offering period began on April 1, 2013 and will end on September 30, 2013. These shares will have a fair value of $0.44 per share.

Stock Compensation

The Company accounts for all stock-based payment awards made to employees and directors based on their fair values and recognized as compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB ASC Topic No. 718, Compensation-Stock Compensation. Restricted stock is valued using the closing stock price on the date of the grant. Options are valued using a Black-Scholes valuation model.

Stock-based non-cash compensation expenses related to stock options, restricted stock grants and the employee stock purchase plan were recorded in the financial statements as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(unaudited)				(unaudited)
Cost of revenues	$	6	$	2	$	11	$	6
Selling and marketing		334		222		560		439
Research and development		208		195		417		381
General and administrative		473		557		938		1,322
Restructuring expense		-		-		-		6
Total non-cash stock compensation expense	$	1,021	$	976	$	1,926	$	2,154

Total share-based compensation for each quarter included cash payments of income taxes related to grants of restricted stock in the amount of $0.1 million for both three month periods ended June 30, 2013 and 2012. The cash payments of income taxes related to grants of restricted stock totaled $0.2 million for both six month periods ended June 30, 2013 and 2012.