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Stock-Based Compensation
3 Months Ended
Sep. 30, 2011
Stock-Based Compensation [Abstract] 
Stock-Based Compensation

Note 3. Stock-Based Compensation

The stock-based compensation expense in our condensed consolidated statement of operations for the three months ended September 30, 2011 and 2010 was $130,000 and $54,000, respectively.

Below is a summary of stock-based compensation included in the costs and expenses (unaudited, in thousands):

 

     Three Months Ended
September 30,		  
     2011      2010  

Cost of professional services

    $ 18       $ 7   

Research and development

      23         15   

Sales and marketing

      43         11   

General and administrative

      46         21   
  

 

 

     

 

 

  

Total stock-based compensation expense

    $ 130       $ 54   
  

 

 

     

 

 

  

We utilized the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted. All shares of our common stock issued pursuant to our stock option plans are only issued out of an authorized reserve of shares of common stock which were previously registered with the Securities and Exchange Commission on a registration statement on Form S-8. Options to purchase 203,300 and 23,400 shares of common stock were granted during the three months ended September 30, 2011 and 2010, with a weighted-average fair value of $2.41 and $0.49, respectively, using the following assumptions:

 

     Three Months Ended
September 30,		  
     2011     2010  

Dividend yield

      —          —     

Expected volatility

      85 %      80 % 

Average risk-free interest rate

      1.15 %      1.55 % 

Expected life (in years)

      4.50        4.50   

 

The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. We determined the appropriate measure of expected volatility by reviewing historic volatility in the share price of our common stock, as adjusted for certain events that management deemed to be non-recurring and non-indicative of future events. The risk-free interest rate is derived from the average U.S. Treasury Strips rate with maturities approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant.

We develop the estimate of the expected life based on the historical exercise behavior, and cancellations of all past option grants made by the company during the time period which its equity shares have been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options.

Total compensation cost, net of forfeitures, of all options granted but not yet vested as of September 30, 2011 was $660,000, which is expected to be recognized over the weighted average period of 1.39 years. There were 40,161 options exercised for the three months ended September 30, 2011 and no options exercised for three months ended September 30, 2010.