Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2013 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Stock-Based Compensation | ' |
12. Stock-Based Compensation |
Stock Option Plans |
2012 Equity Incentive Award Plan |
The Company’s stockholders approved the 2012 Equity Incentive Award Plan (the “2012 Plan”) at the 2012 Annual Meeting of Stockholders on May 17, 2012 and approved 3,000,000 shares of common stock authorized for issuance. On May 17, 2012, all shares of common stock that remained available for issuance under the 1996 Stock Option Plan (the “1996 Plan”) and the 1998 Director Stock Option Plan (the “Director Plan”) were added to the shares reserved under the 2012 Plan. In addition, pursuant to the 2012 Plan, any shares of common stock subject to awards previously granted under the 1996 Plan, the Director Plan and certain non-plan option agreements entered into with certain individuals as of March 31, 2012 that terminate, expire or lapse will become available for issuance under the 2012 Plan. Options granted under the 2012 Plan may be designated as qualified or nonqualified at the discretion of the Compensation Committee of the Board of Directors. Generally, shares issuable upon exercise of options vest ratably over four years, beginning one year from the date of grant; however, options can vest upon grant. Option terms expire no later than 10 years from the date of grant, or 5 years from the date the option is granted to a greater than 10% stockholder. The stock options are exercisable at not less than the fair market value of the stock at the date of grant, or not less than 110% of the fair market value of the stock at the date of grant if granted to a greater than 10% stockholder. As of September 30, 2013, options to purchase 3,031,850 shares of common stock were outstanding and 2,325,617 shares were available for issuance under the 2012 Plan. |
1996 Stock Option Plan |
The 1996 Plan initially had 4,750,000 shares of common stock authorized for issuance and a provision that automatically increased this number by 3.5% of the issued and outstanding common stock on the last trading day of the December immediately preceding each fiscal year through January 2007. Options granted under the 1996 Plan were designated as qualified or nonqualified at the discretion of the Compensation Committee of the Board of Directors. Generally, shares issuable upon exercise of options vest ratably over four years, beginning one year from the date of grant; however, options could vest upon grant. All options expire no later than 10 years from the date of grant. Qualified stock options are exercisable at not less than the fair market value of the stock at the date of grant, and nonqualified stock options are exercisable at prices determined at the discretion of the Board of Directors, but not less than 85% of the fair market value of the stock at the date of grant. On May 17, 2012, the 1996 Plan was terminated in connection with the effectiveness of the 2012 Plan. All 1,555,492 shares that were available for issuance under the 1996 Plan were transferred to the 2012 Plan, and the 6,398,904 shares that were subject to awards outstanding under the 1996 Plan remained outstanding pursuant to the terms of the 1996 Plan. As of September 30, 2013, options to purchase 3,050,288 shares of common stock were outstanding pursuant to the terms of the 1996 Plan. |
1998 Director Stock Option Plan |
The Director Plan for non-employee directors had 300,000 shares of common stock authorized for issuance. On May 17, 2012, the Director Plan was terminated in connection with the effectiveness of the 2012 Plan. All 130,000 shares that were available for issuance under the Director Plan were transferred to the 2012 Plan, and the 170,000 shares that were subject to awards outstanding under the Director Plan remained outstanding pursuant to the terms of the Director Plan. As of September 30, 2013, options to purchase 60,000 shares of common stock were outstanding pursuant to the terms of the Director Plan. |
Non-Plan Grants |
In October 2004, the Company granted non-qualified stock options to purchase 30,000 shares of common stock outside of the Company’s stock option plans to its former director with an exercise price of $12.27 per share. These options were granted with terms that are substantially in accordance with the Company’s standard stock option terms. As of September 30, 2013, all of these options remained outstanding. |
In September 2011, the Company granted non-qualified stock options to purchase 1,530,000 shares of common stock outside of the Company’s stock option plans to its current Chief Executive Officer with an exercise price of $0.25 per share. These options were granted with terms that are substantially in accordance with the Company’s standard stock option terms. As of September 30, 2013, all of these options remained outstanding. |
In October 2011, the Company granted non-qualified stock options to purchase 1,130,000 shares of common stock outside of the Company’s stock option plans to its current Chief Business Officer with an exercise price of $0.26 per share. These options were granted with terms that are substantially in accordance with the Company’s standard stock option terms. As of September 30, 2013, 1,018,458 of these options remained outstanding. |
On February 1, 2012, the Company granted non-qualified stock options to purchase 1,060,000 shares of common stock outside of the Company’s stock option plans to its current Chief Financial Officer with an exercise price of $0.28 per share. These options were granted with terms that are substantially in accordance with the Company’s standard stock option terms. As of September 30, 2013, 1,057,460 of these options remained outstanding. |
Restricted Stock Units |
On August 6, 2013, the Company awarded an aggregate of 41,708 RSUs to its directors with a grant-date fair value equal to $55,472 in the aggregate. Each RSU entitles the recipient to received one share of the Company’s common stock upon vesting. RSUs awarded to directors generally vest annually. As of September 30, 2013, all of these RSUs remained outstanding and none was vested. |
The following table summarizes stock compensation expense related to employee stock options and employee stock-based compensation for the three and nine months ended September 30, 2013 and 2012, which was incurred as follows (in thousands): |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Stock compensation expense: | | | | | | | | | | | | | | | | |
Product costs | | $ | 7 | | | $ | 3 | | | $ | 17 | | | $ | 8 | |
Research and development | | | 38 | | | | 19 | | | | 92 | | | | 50 | |
Sales and marketing | | | 29 | | | | 19 | | | | 87 | | | | 48 | |
General and administrative | | | 119 | | | | 52 | | | | 236 | | | | 151 | |
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Total stock compensation expense | | $ | 193 | | | $ | 93 | | | $ | 432 | | | $ | 257 | |
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Stock-based compensation expense recognized during the three and nine months ended September 30, 2013 and 2012 includes compensation expense for stock-based awards granted to employees based on the grant date fair value estimated in accordance with the provisions of ASC 718. As of September 30, 2013, the total remaining unrecognized cost was approximately $1.1 million to be recognized over approximately three years. |
Valuation Assumptions |
The compensation expense related to stock options recognized was determined using the Black-Scholes option valuation model. Option valuation models require the input of subjective assumptions and these assumptions can vary over time. The weighted average assumptions used were as follows: |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Dividend yield | | | 0 | % | | | 0 | % | | | 0 | % | | | 0 | % |
Risk-free interest rate | | | 1.13 | % | | | 0.58 | % | | | 0.93 | % | | | 0.54 | % |
Expected volatility | | | 79.42 | % | | | 95.47 | % | | | 84.66 | % | | | 95.98 | % |
Forfeiture rate | | | 13.9 | % | | | 13.24 | % | | | 13.9 | % | | | 13.24 | % |
Expected term (years) | | | 4.06 | | | | 4.12 | | | | 4.06 | | | | 4.12 | |
Fair value per share at grant date | | $ | 0.75 | | | $ | 0.22 | | | $ | 0.61 | | | $ | 0.21 | |
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For the three and nine months ended September 30, 2013, volatility assumption was determined by examining the historical volatilities for industry peers and the trading history for the Company’s common stock. For the three and nine months ended September 30, 2012, volatility assumption was determined by examining the historical volatilities for industry peers only as the Company did not have sufficient trading history for the Company’s common stock during that period. The Company will continue to incorporate its historical stock price volatility and expected term assumption for future periods. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. Different estimates of volatility and expected term could materially change the value of an option and the resulting expense. The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on the options’ vesting terms, contractual terms and historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. |
Employee Stock-Based Compensation |
The table below presents information related to stock option activity for the nine months ended September 30, 2013, as follows: |
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| | Number of | | | Weighted- | | | Weighted- | | | Aggregate | |
Options | Average | Average | Intrinsic |
Outstanding | Exercise | Remaining | Value |
| Price | Contractual | |
| | Term | |
| | (In years) | |
Outstanding at December 31, 2012 | | | 8,963,226 | | | $ | 0.47 | | | | | | | | | |
Options granted | | | 1,563,910 | | | | 1 | | | | | | | | | |
Options exercised | | | (611,596 | ) | | | 0.26 | | | | | | | | | |
Options cancelled/forfeited/expired | | | (137,484 | ) | | | 3.92 | | | | | | | | | |
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Outstanding at September 30, 2013 | | | 9,778,056 | | | $ | 0.52 | | | | 8.15 | | | $ | 13,734,086 | |
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Exercisable at September 30, 2013 | | | 5,110,489 | | | $ | 0.52 | | | | 7.64 | | | $ | 7,639,909 | |
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Vested and expected to vest at September 30, 2013 | | | 9,031,664 | | | $ | 0.52 | | | | 8.1 | | | $ | 12,784,188 | |
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