Stock-Based Compensation Plans

9 Months Ended

Sep. 30, 2013

(7) STOCK-BASED COMPENSATION PLANS

The Company has reserved 3,000,000 shares of common stock for issuance under its 2005 Stock Option Plan (the “Option Plan”). Vesting provisions are determined by the Board of Directors. All stock options under the Option Plan expire no later than ten years from the date of grant.

In the three months ended September 30, 2013 and 2012, the Company recorded compensation expense related to stock options of $29 and $60, respectively. In the nine months ended September 30, 2013 and 2012, the Company recorded compensation expense related to stock options of $98 and $150, respectively. Stock-based compensation recorded in the accompanying condensed consolidated statement of operations for the three months ended September 30, 2013 and 2012 included $2 and $7, respectively, in cost of goods sold and $27 and $53, respectively, in selling, general and administrative expenses. Stock-based compensation recorded in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2013 and 2012 included $9 and $20, respectively, in cost of goods sold and $89 and $130, respectively, in selling, general and administrative expenses.

In the nine months ended September 30, 2013, the Company granted options to purchase up to 356,000 shares of common stock to employees at exercise prices that ranged from $0.32 to $0.48. In the nine months ended September 30, 2012, the Company granted options to purchase up to 322,500 shares of common stock to employees at exercise prices that ranged from $0.70 to $0.81 per share.

(7) STOCK-BASED COMPENSATION PLANS (continued)

The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions during the nine months ended September 30, 2013 and 2012:

	2013		2012
Weighted average expected term	6.25 years		6.17 years
Weighted average volatility	111	%	134	%
Weighted average risk-free interest rate	1.3	%	1.0	%
Dividend yield	0	%	0	%

A summary of stock option activity under the Option Plan for the nine months ended September 30, 2013 is presented below:

			Weighted Average Exercise Price			Aggregate Intrinsic Value
Outstanding at January 1, 2013	1,501,500		$	0.95
Granted	356,000		$	0.37
Exercised	—		$	—
Forfeited	(374,500	)	$	0.88
Outstanding at September 30, 2013	1,483,000		$	0.83	7.0 years	$	75
Exercisable at September 30, 2013	843,997		$	1.04	5.7 years	$	75

A summary of status of the Company’s non-vested share awards as of and for the nine months ended September 30, 2013 is presented below:

			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2013	690,877		$	0.69
Granted	356,000		$	0.31
Vested	(251,999	)	$	0.77
Forfeited	(155,875	)	$	0.81
Non-vested at September 30, 2013	639,003		$	0.49

As of September 30, 2013, the Company had approximately $163 of unrecognized compensation expense related to stock options that will be recognized over a weighted-average period of approximately 3 years.

- 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.

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