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STOCK-BASED COMPENSATION - Note 7

3 Months Ended

Jun. 30, 2015

7. STOCK-BASED COMPENSATION

The following table summarizes stock-based compensation expense (in thousands):

		Three Months Ended
		June 30,
		2015		2014
Cost of service revenue	$	219	$	115
Cost of product revenue		-		-
Research and development		531		314
Sales and marketing		1,197		744
General and administrative		1,075		674
Total stock-based compensation expense related to employee
stock options and employee stock purchases, pre-tax		3,022		1,847

Tax benefit		-		-
Stock-based compensation expense related to employee
stock options and employee stock purchases, net of tax	$	3,022	$	1,847

Stock Options, Stock Purchase Right and Restricted Stock Unit Activity

Stock Option activity under all the Company's stock option plans for the three months ended June 30, 2015, is summarized as follows:

			Weighted Average
	Number of		Exercise Price
	Shares		Per Share
Outstanding at March 31, 2015	5,327,907	$	5.19
Granted	229,000		8.66
Exercised	(88,048)		3.10
Canceled/Forfeited	(8,167)		6.78
Outstanding at June 30, 2015	5,460,692	$	5.37

Vested and expected to vest at June 30, 2015	5,460,692	$	5.37
Exercisable at June 30, 2015	3,316,717	$	3.57

Stock Purchase Right activity for the three months ended June 30, 2015 is summarized as follows:

			Weighted	Weighted
			Average	Average
			Grant-Date	Remaining
	Number of		Fair Market	Contractual
	Shares		Value	Term (in Years)
Balance at March 31, 2015	223,835	$	5.92	1.50
Granted	-		-
Vested	(28,760)		4.42
Forfeited	(1,875)		11.26
Balance at June 30, 2015	193,200	$	6.09	1.31

Restricted Stock Unit activity for the three months ended June 30, 2015 is summarized as follows:

				Weighted
			Weighted	Average
			Average	Remaining
	Number of		Grant Date	Contractual
	Shares		Fair Value	Term (in Years)
Balance at March 31, 2015	2,698,686	$	7.33	1.88
Granted	543,147		8.85
Vested	(39,921)		7.86
Forfeited	(35,462)		8.63
Balance at June 30, 2015	3,166,450	$	7.57	1.77

The following table summarizes stock options outstanding and exercisable at June 30, 2015:

	Options Outstanding						Options Exercisable
			Weighted	Weighted					Weighted
			Average	Average					Average
			Exercise	Remaining		Aggregate			Exercise		Aggregate
			Price	Contractual		Intrinsic			Price		Intrinsic
	Shares		Per Share	Life (Years)		Value	Shares		Per Share		Value
$ 0.55 to $ 1.26	1,095,000	$	1.11	2.6	$	8,595,630	1,095,000	$	1.11	$	8,595,630
$ 1.27 to $ 4.32	1,166,033	$	1.98	1.9		8,144,892	1,141,467	$	1.93		8,029,723
$ 4.45 to $ 6.86	1,353,069	$	6.33	8.3		3,558,963	544,405	$	5.87		1,682,505
$ 7.52 to $ 9.70	1,272,022	$	8.99	8.8		368,605	295,412	$	9.54		2,925
$ 9.74 to $ 11.26	574,568	$	10.10	8.3		-	240,433	$	10.05		-
	5,460,692				$	20,668,090	3,316,717			$	18,310,783

As of June 30, 2015, there was $26.3 million of unamortized stock-based compensation expense related to unvested stock options and awards which is expected to be recognized over a weighted average period of 2.71 years.

Assumptions Used to Calculate Stock-Based Compensation Expense

The fair value of each of the Company's option grants has been estimated on the date of grant using the Black-Scholes pricing model with the following assumptions:

		Three Months Ended
		June 30,
		2015		2014
Expected volatility		53%		59%
Expected dividend yield		-		-
Risk-free interest rate		1.59%		1.53%
Weighted average expected option term		5.25 years		5.00 years

Weighted average fair value of options granted	$	4.17	$	4.01

Stock Repurchases

In February 2015, the Company's board of directors authorized the Company to purchase up to $20.0 million of its common stock from time to time until February 29, 2016 (the Repurchase Plan). Share repurchases, if any, will be funded with available cash. Repurchases under the Repurchase Plan may be made through open market purchases at prevailing market prices or in privately negotiated transactions. The timing, volume and nature of share repurchases are subject to market prices and conditions, applicable securities laws and other factors, and are at the discretion of the Company's management. Share repurchases under the Repurchase Plan may be commenced, suspended or discontinued at any time. The remaining authorized repurchase amount at June 30, 2015 was approximately $15.7 million. There were no stock repurchases made under the Repurchase Plan in the three months ended June 30, 2015.

The stock repurchase activity as of June 30, 2015 is summarized as follows:

	Shares		Weighted Average Price		Amount
	Repurchased		Per Share		Repurchased⁽¹⁾
Repurchase of common stock
under 2015 Repurchase Plan	574,467	$	7.38	$	4,239,216
Total	574,467			$	4,239,216

(1) Amount excludes commission fees.