3.	Share-Based Compensation

The Company’s 2008 Equity Compensation Plan (the “Plan”) allows for grants in the form of incentive stock options, nonqualified stock options, stock units, stock awards, stock appreciation rights, and other stock-based awards. All of the Company’s officers, directors, employees, consultants and advisors are eligible to receive grants under the Plan. The maximum number of shares authorized for issuance under the amended and restated Plan is 32,200,000 and the maximum number of shares of stock that may be granted to any one employee for qualified performance-based compensation during a calendar year is 4,000,000 shares. Options to purchase shares of common stock are granted at exercise prices not less than 100% of fair market value on the dates of grant. The term of each option is ten years and the options typically vest in quarterly installments over a three-year period with a minimum vesting period of one year. As of March 31, 2017, the Plan had approximately 10,100,000 shares available for grant. Stock option exercises are satisfied through the issuance of new shares.

Stock Options

The following is a summary of stock option activity under the Plan as of and for the three months ended March 31, 2017:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (Years)		Value
Outstanding at December 31, 2016		11,313,909		$	1.84
Granted		60,000			2.33
Exercised		(280,194	)		1.36
Cancelled/Forfeited		(192,543	)		1.58
Outstanding at March 31, 2017		10,901,172			1.86		6.9	$	11,648,293
Exercisable at March 31, 2017		8,103,989		$	2.01		6.1	$	7,681,442

The per share weighted average fair values of all options granted during the three months ended March 31, 2017 and 2016 were estimated as $1.20 and $0.44, respectively, on the date of grant using the Black-Scholes option pricing model based on the assumptions noted in the table below. Expected volatilities are based on the historical volatility of the Company’s stock price. The weighted average expected life is based on both historical and anticipated employee behavior.

	March 31,
	2017			2016
Risk-free interest rate		1.9	%		1.3	%
Annualized volatility		53.1	%		50.2	%
Weighted average expected life, in years		6.0			6.0
Expected dividend yield		0.0	%		0.0	%

During the three months ended March 31, 2017, stock option exercises resulted in cash proceeds to the Company of $380,983 and the issuance of 280,194 shares of common stock. No stock options were exercised during the three months ended March 31, 2016.

The Company recognized $467,400 and $562,200 of compensation expense related to stock options for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, there was approximately $1,600,000 of total unrecognized compensation cost related to non-vested outstanding stock options that is expected to be recognized over a weighted average period of approximately 1.8 years.

Long Term Incentive Program

The Company’s Board of Directors has approved a long term incentive program (“LTIP”) for the benefit of the Company’s senior executives. Pursuant to the LTIP, the Company’s senior executives have been awarded stock options, restricted stock units (“RSU”) and performance stock units (“PSU”) with targeted values based on values granted to similarly situated senior executives in the Company’s peer group.

The stock options have a ten-year term, have an exercise price equal to the closing price of the Company’s common stock on the date of grant, vest in quarterly installments over three years, were otherwise granted on the same standard terms and conditions as other stock options granted pursuant to the Plan and are included in the stock options table above. The RSUs vest in three equal annual installments. The PSU awards made to the senior executives vest and convert into shares of the Company’s common stock based on the Company’s attainment of certain performance goals as established by the Company’s Board of Directors over a performance period, which is typically three to five years.

The performance stock unit awards and restricted stock unit awards granted under the long term incentive program are summarized in the following table:

	Performance Stock Units					Restricted Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016		1,347,289		$	1.50		822,658		$	1.39
Granted		—					—
Vested/settled		—					—
Forfeited/expired		(502,308	)		2.16		(67,464	)		1.70
Outstanding at March 31, 2017		844,981		$	1.45		755,194		$	1.36

In connection with PSU awards, the Company recognized compensation expense of $7,900 for the three months ended March 31, 2017, and a net expense reduction of $95,100 for the three months ended March 31, 2016. Compensation expense recognized in connection with RSU awards was $60,400 and $68,700 for the three months ended March 31, 2017 and 2016, respectively.