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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2014
Stock-Based Compensation [Abstract] |
Stock-Based Compensation | 9. Stock-Based Compensation We have adopted equity incentive plans for which stock options and restricted stock awards are available to grant to employees, consultants and directors. All employee and director stock options granted under our stock option plans have an exercise price equal to the market value of the underlying common stock on the grant date. There are no vesting provisions tied to performance conditions for any options, as vesting for all outstanding option grants was based only on continued service as an employee, consultant or director. All of our outstanding stock options and restricted stock awards are classified as equity instruments. Stock Options As of December 31, 2014, we had two equity incentive plans:
| · | The 1998 Non-Officer Stock Option Plan (the “1998 Plan”), which expired in June 2008; and
| · | The 2006 Equity Incentive Plan (the “2006 Plan”).
We also had one non-employee director stock option plan as of December 31, 2014:
| · | The 2001 Non-Employee Director Stock Option Plan (the “Director Plan”), which expired in March 2011.
The following table summarizes information with respect to all options to purchase shares of common stock outstanding under the 1998 Plan, the 2006 Plan and the Director Plan at December 31, 2014:
Options Outstanding |  | Options Exercisable |
Range of Exercise Price |  | Number Outstanding at 12/31/14 |  |  | Weighted Average Remaining Contractual Life (years) |  |  | Weighted Average Exercise Price |  |  | Number Exercisable at 12/31/14 |  |  | Weighted Average Exercise Price |
$ 2.08 - $ 3.50 |  |  | 70,200 |  |  |  | 6.70 |  |  | $ | 2.61 |  |  |  | - |  |  | $ | - |
$ 3.51 - $ 5.00 |  |  | 1,221,000 |  |  |  | 4.33 |  |  | $ | 4.24 |  |  |  | 1,211,834 |  |  | $ | 4.25 |
$ 5.01 - $ 6.50 |  |  | 245,000 |  |  |  | 5.57 |  |  | $ | 5.90 |  |  |  | 91,383 |  |  | $ | 5.62 |
$ 6.51 - $ 10.00 |  |  | 170,000 |  |  |  | 3.79 |  |  | $ | 7.83 |  |  |  | 138,334 |  |  | $ | 7.93 |
$ 10.01 - $ 86.25 |  |  | 3,200 |  |  |  | 0.01 |  |  | $ | 86.25 |  |  |  | 3,200 |  |  | $ | 86.25 |
|  |  | 1,709,400 |  |  |  | 4.54 |  |  | $ | 4.92 |  |  |  | 1,444,751 |  |  | $ | 4.87 |
A summary of the combined activity under all of the stock option plans is set forth below:
|  | Weighted Average Number of Shares |  |  | Exercise Price Per Share |  |  | Weighted-Average Exercise Price |
Outstanding at January 1, 2012 |  |  | 19,324 |  |  | $ | 35.39 – 368.75 |  |  | $ | 92.19 |
Granted |  |  | 1,704,000 |  |  | $ | 4.02 – 6.28 |  |  | $ | 4.35 |
Cancelled or expired |  |  | (8,124 | ) |  | $ | 35.39 – 368.75 |  |  | $ | 69.36 |
Exercised |  |  | -- |  |  |  | -- |  |  | $ | -- |
Outstanding, vested and expected to vest at December 31, 2012 |  |  | 1,715,200 |  |  | $ | 4.02 – 125.00 |  |  | $ | 5.04 |
Granted |  |  | 145,000 |  |  | $ | 5.54 - 7.70 |  |  | $ | 6.06 |
Cancelled or expired |  |  | (18,256 | ) |  | $ | 4.25- 125.00 |  |  | $ | 5.57 |
Exercised |  |  | (241,361 | ) |  | $ | 4.25 – 6.28 |  |  | $ | 4.39 |
Outstanding, vested and expected to vest at December 31, 2013 |  |  | 1,600,583 |  |  | $ | 4.02 – 122.50 |  |  | $ | 5.22 |
Granted |  |  | 405,200 |  |  | $ | 2.08-8.21 |  |  | $ | 6.31 |
Cancelled or expired |  |  | (296,383 | ) |  | $ | 4.65- 122.50 |  |  | $ | 5.46 |
Exercised |  |  | -- |  |  | $ | -- |  |  | $ | -- |
Outstanding, vested and expected to vest at December 31, 2014 |  |  | 1,709,400 |  |  | $ | 2.08 – 86.25 |  |  | $ | 4.92 |
The assumptions used to value stock options granted to directors, employees and consultants during the years ended December 31, 2014 and 2013 are as follows:
|  | For the year
|  | ended December 31, 2014
Annual dividend yield |  | -
Expected life (years) |  | 3.5
Risk-free interest rate |  | 0.28% - 1.47%
Expected volatility |  | 60.68% - 108.75%
|  | For the year
|  | ended December 31, 2013
Annual dividend yield |  | -
Expected life (years) |  | 4.3
Risk-free interest rate |  | 0.65% - 2.15%
Expected volatility |  | 117% - 154%
|  | For the year
|  | ended December 31, 2012
Annual dividend yield |  | -
Expected life (years) |  | 3.8 - 4.3
Risk-free interest rate |  | 0.43% - 0.62%
Expected volatility |  | 169% - 187%
The aggregate intrinsic value of the 1,709,400 stock options that are outstanding, vested and expected to vest as of December 31, 2014 is $54,060. During the years ended December 31, 2014, 2013 and 2012, we recorded $1.7 million, $2.5 million and $3.4 million, respectively, of compensation expense related to the vesting of stock options. The estimated fair value of the stock-based compensation was calculated using the Black-Scholes option pricing model as of the grant date of the stock option. The 1998 Plan terminated effective June 15, 2008. Although we can no longer issue stock options out of the plans, the outstanding options at the date of termination will remain outstanding and vest in accordance with their terms. Options granted under the Director Plan vest over a one to four-year period, expire five to seven years after the date of grant and have exercise prices reflecting market value of the shares of our common stock on the date of grant. Stock options granted under the 1998 and 2006 Plans are exercisable over a maximum term of ten years from the date of grant, vest in various installments over a one to four-year period and have exercise prices reflecting the market value of the shares of common stock on the date of grant. During the year ended December 31, 2014, we granted options to purchase 395,200 shares of our common stock to employees and an option to purchase 10,000 shares of our common stock to a former member of our board of directors with total grant date estimated fair value of $1.3 million computed using the Black-Scholes option pricing model. The weighted-average grant date fair value of the options granted during year ended December 31, 2014 was $3.14 per share. During the year ended December 31, 2013, we received an aggregate of $1.1 million from five employees in connection with the exercise of stock options into 241,361 shares of common stock. The intrinsic value of the options exercised was $502,000 on the date of exercise. We granted options to purchase 145,000 shares of our common stock to three employees during the year ended December 31, 2013 with an aggregate grant date fair value of approximately $748,000 computed using the Black-Scholes option pricing model. The options have a 7-year life and 1/3 of the options are vested on the one year anniversary date of grant with the remaining to vest monthly over the remaining 24-months. During the year ended December 31, 2012, we granted 1,175,000 options to purchase shares of our common stock to employees and 360,000 options to purchase shares of our common stock to members of our Board. During the year ended December 31, 2012, we granted 169,000 options to purchase shares of our common stock to a consultant. Warrants During the year ended December 31, 2014 and 2013, certain warrant holders exercised their warrants under the cash and cashless exercise provisions, as defined in the agreements. See Note 8 for details of such exercises and number of common stock shares issued. On December 3, 2010, we issued 120,000 warrants at an exercise price of $1.63 per share to an employee. The estimated fair value of the warrants was $198,000 on the date of grant, using the Black-Scholes option pricing model, which has been amortized to expense over 24 months. During the year ended December 31, 2012, we recorded $91,000 of stock based compensation expense related to vesting of such warrants. We issued 20,000 three-year stock purchase warrants at an exercise price of $3.90 per share with a vesting period over 24 months to an employee during the year ended December 31, 2011. The unvested warrant granted to an employee had an estimated fair value on the date of grant of $75,000. This amount was expensed over the vesting period and $26,000 and $38,000 of expense related to this warrant is included in research and development expense for the years ended December 31, 2013 and 2012, respectively. The estimated fair value of stock-based compensation related to the issuance of warrants is calculated using the Black-Scholes option pricing model as of the grant date of the underlying warrant. The stock-based compensation expense for the years ended December 31, 2014, 2013 and 2012 reflects the estimated fair value of the vested portion of options and warrants granted to directors, employees and non-employees.
(In thousands) |  | Years ended |
|  | December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Research and development |  | $ | 510 |  |  | $ | 267 |  |  | $ | 315 |
Sales and marketing |  |  | 353 |  |  |  | 909 |  |  |  | 1,407 |
General and administrative |  |  | 866 |  |  |  | 1,480 |  |  |  | 1,777 |
Stock compensation expense |  | $ | 1,729 |  |  | $ | 2,656 |  |  | $ | 3,499 |
(In thousands) |  |  |  |
|  |  | Remaining unamortized expense at December 31, 2014 |
| Stock-based compensation |  |  | $ | 880 |
The remaining unamortized expense related to stock options and warrants will be recognized on a straight line basis monthly as compensation expense over the remaining vesting period which approximates 1.7 years. A summary of all warrant activity is set forth below:
Outstanding and exercisable |  | Warrants |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life |
January 1, 2012 |  |  | 5,405,606 |  |  | $ | 1.57 |  |  |  | 2.45 |
Issued |  |  | - |  |  |  | - |  |  |  | - |
Expired/forfeited |  |  | (232 | ) |  |  | 31.75 |  |  |  | - |
Exercised |  |  | (700,738 | ) |  |  | 1.18 |  |  |  | - |
December 31, 2012 |  |  | 4,704,636 |  |  |  | 1.61 |  |  |  | 1.41 |
Issued |  |  | - |  |  |  | - |  |  |  | - |
Expired/forfeited |  |  | - |  |  |  | - |  |  |  | - |
Exercised |  |  | (3,876,063 | ) |  |  | 1.45 |  |  |  | - |
December 31, 2013 |  |  | 828,573 |  |  |  | 2.39 |  |  |  | 2.06 |
Issued |  |  | 2,575,000 |  |  |  | 5.09 |  |  |  | - |
Expired/forfeited |  |  | (40,000 | ) |  |  | 3.98 |  |  |  | - |
Exercised |  |  | (28,500 | ) |  |  | 2.85 |  |  |  | - |
Outstanding and exercisable, December 31, 2014 |  |  | 3,335,073 |  |  | $ | 4.45 |  |  |  | 0.93 |
The estimated fair value of stock-based awards is calculated using the Black-Scholes option pricing model, even though this model was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which differ significantly from our stock options. The Black-Scholes model also requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The expected term and forfeiture rate of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior, as well as expected behavior on outstanding options and warrants. The risk-free rate is based on the U.S. Treasury rates in effect during the corresponding period of grant. The expected volatility is based on the historical volatility of our stock price. These factors could change in the future, which would affect fair values of stock options granted in such future periods, and could cause volatility in the total amount of the stock-based compensation expense reported in future periods.
Outstanding Warrants to Purchase Common Stock as of December 31, 2014:
Description |  | Issue Date |  |  | Exercise Price |  |  | Shares |  |  | Expiration Date |
August 2009 Employee Warrants |  |  | 8/25/2009 |  |  | $ | 0.50 |  |  |  | 80,000 |  |  |  | 8/25/2016 |
2007 Debt Extension Warrants |  |  | 9/22/2010 |  |  | $ | 1.00 |  |  |  | 16,000 |  |  |  | 9/22/2015 |
December 2010 Employee Warrants |  |  | 12/3/2010 |  |  | $ | 1.63 |  |  |  | 200,000 |  |  |  | 12/3/2015 |
February 2011 Legal Advisor Warrant |  |  | 2/22/2011 |  |  | $ | 2.50 |  |  |  | 80,000 |  |  |  | 2/22/2016 |
March 2011 Investor Warrants |  |  | 3/9/2011 |  |  | $ | 3.13 |  |  |  | 349,973 |  |  |  | 3/9/2016 |
March 2011 Investor Warrants |  |  | 4/7/2011 |  |  | $ | 3.13 |  |  |  | 34,100 |  |  |  | 4/7/2016 |
May 2014 Agent Warrant |  |  | 5/15/2014 |  |  | $ | 5.09 |  |  |  | 75,000 |  |  |  | 11/15/2015 |
May 2014 Investor Warrant |  |  | 5/15/2014 |  |  | $ | 5.09 |  |  |  | 2,500,000 |  |  |  | 11/15/2015 |
Total Warrants Outstanding |  |  |  |  |  |  |  |  |  |  | 3,335,073 |  |  |  |  |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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