Quarterly report pursuant to Section 13 or 15(d)

Stock Plans

Stock Plans

9 Months Ended

Sep. 30, 2014

2. Stock Plans

The following table summarizes the stock-based compensation expense recorded for awards under the stock option plans for the three and nine month periods ended September 30, 2014 and 2013:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share amounts)	2014		2013		2014		2013
Research and development	$	33	$	11	$	206	$	367
General and administrative		38		10		251		289
Total stock-based compensation expenses	$	71	$	21	$	457	$	656

No tax benefit was recognized related to stock-based compensation expense since we have incurred operating losses and we have established a full valuation allowance to offset all the potential tax benefits associated with our deferred tax assets.

We use the Black-Scholes-Merton option-pricing model with the following assumptions to estimate the stock-based compensation expense for the three and nine month periods ended September 30, 2014 and 2013:

	Three Months Ended						Nine Months Ended
		September 30,					September 30,
		2014			2013		2014			2013
Weighted-average risk-free interest rate			1.7	%	0.9	%		2.0	%		0.9	%
Expected dividend payments			—		—			—			—
Expected holding period (years) ¹			4.21		3.8			6.5			4.0
Weighted-average volatility factor ²			1.66		1.05			1.66			1.48
Estimated forfeiture rates ³			31	%	32	%		31	%		32	%

	(1)	Expected holding periods are based on the simplified method provided in Staff Accounting Bulletin No. 107 for “plain vanilla options.”
	(2)	Weighted average volatility is based on the historical volatility of our common stock.
	(3)	Estimated forfeiture rates are based on historical data.

No options were granted during the three month periods ended September 30, 2014 and 2013.

The following table summarizes option activity for the nine month period ended September 30, 2014:

				Weighted
		Weighted		Average
		Average		Remaining		Aggregate
		Exercise		Option		Intrinsic
(in thousands, except per share amounts)	Options	Price		Term		Value
Outstanding at January 1, 2014	6,732	$	1.31		5.75	$	—
Granted	275		0.66
Exercised	—		—
Expired or cancelled	(410)		2.12
Forfeited	(27)		1.66
Outstanding at September 30, 2014	6,570	$	1.23		5.36	$	—
Exercisable at September 30, 2014	6,495	$	1.24		5.31	$	—

The following table summarizes restricted stock activity for the nine month period ended September 30, 2014:

			Weighted		Weighted
			Average		Average	Aggregate
	Restricted		Exercise		Remaining	Intrinsic
(in thousands, except per share amounts)		Stock	Price		Term	Value
Outstanding at January 1, 2014		—	$	—	—	$	—
Granted		617		—
Released		(259)		—
Expired or cancelled		—		—
Forfeited		—		—

Outstanding at September 30, 2014		358	$	—	9.37	$	199

Exercisable at September 30, 2014		—	$	—	—	$	—

No shares of restricted stock were awarded to employees, directors and consultants during the three month periods ended September 30, 2014 and 2013.

As of September 30, 2014, there was approximately $92,000 of total unrecognized compensation expense related to non-vested options and restricted stock. This expense is expected to be recognized over a weighted-average period of 0.4 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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