STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS

The Company maintains its 2013 Incentive Plan (the “2013 Plan”) to provide a means whereby the Company may be able, by granting equity and other types of awards, to attract, retain and motivate capable and loyal employees, non-employee directors, consultants and advisors of the Company, for the benefit of the Company and its shareholders. As of December 31, 2017, there were 2.9 million shares available for future awards under the 2013 Plan.

Restricted Stock Awards

During the years ended December 31, 2017, 2016 and 2015, the Company issued 911,355, 2,109,814 and 2,112,998, respectively, restricted shares of common stock under the 2013 Plan as compensation to officers, employees and directors of the Company. Unvested restricted shares vest over various terms with all restricted shares vesting no later than April 2020. As of December 31, 2017, there was approximately $3.1 million of total unrecognized compensation expense related to unvested restricted stock that will be recognized over a weighted-average period of approximately 1.8 years years. The Company has historically assumed a zero percent forfeiture rate, thus recognizing forfeitures as they occur, for restricted stock due to the small number of officers, employees and directors that have received restricted stock awards.

The following table reflects the outstanding restricted stock awards and activity related thereto for the years ended December 31, 2017, 2016 and 2015:



	Year Ended December 31, 2017				Year Ended December 31, 2016				Year Ended December 31, 2015
	Number of Shares		Weighted- Average Price		Number Of Shares		Weighted- Average Price		Number Of Shares		Weighted- Average Price
Restricted Stock Awards:
Restricted Shares Outstanding at the Beginning of the Year	1,905,104		$	4.59	2,365,396		$	7.15	538,499		$	13.54
Shares Granted	911,355		2.10		2,109,814		3.83		2,112,998		6.29
Shares Forfeited	(108,993	)	3.59		(1,594,542	)	4.67		(1,397	)	14.79
Lapse of Restrictions	(985,933	)	4.05		(975,564	)	7.34		(284,704	)	12.24
Restricted Shares Outstanding at the End of the Year	1,721,533		$	3.65	1,905,104		$	4.59	2,365,396		$	7.15

Stock Option Awards

On November 1, 2007, the board of directors granted options to purchase 560,000 shares of the Company’s common stock under the Company’s 2006 Incentive Stock Option Plan. The Company granted options to purchase 500,000 shares of the Company’s common stock to members of the board and options to purchase 60,000 shares of the Company’s common stock to one employee pursuant to an employment agreement. These options were granted at a price of $5.18 per share and the optionees were fully vested on the grant date. On November 1, 2017, the remaining options expired. The board of directors previously determined that no future grants will be made pursuant to the 2006 Incentive Stock Option Plan.

On February 12, 2016, the board of directors granted options to purchase 250,000 shares of the Company’s common stock under the Company’s 2013 Plan. The Company granted options to purchase 250,000 shares of the Company’s common stock to one of its board members in connection with his appointment as chairman of the board of directors in January 2016. These options were granted with an exercise price of $2.79 per share and were fully vested on the grant date. As a result of the options being fully vested on the grant date, the Company recorded share-based compensation expense of $0.4 million for the year ended December 31, 2016.

Changes in stock option awards for the years ended December 31, 2017, 2016, and 2015 were as follows:



	Stock Option Awards	Weighted-Average Price		Weighted Average Contractual Term	Intrinsic Value
Outstanding as of December 31, 2014⁽¹⁾	141,872	$	5.18	2.8	$	66,680
Granted	—	—
Exercised	—	—
Expired or canceled	—	—
Forfeited	—	—
Outstanding as of December 31, 2015⁽¹⁾	141,872	$	5.18	1.8	$	—
Granted	250,000	$	2.79
Exercised	—	—
Expired or canceled	—	—
Forfeited	—	—
Outstanding as of December 31, 2016⁽¹⁾	391,872	$	3.66	2.9	$	—
Granted	—	—
Exercised	—	—
Expired or canceled	(141,872)	—
Outstanding as of December 31, 2017⁽¹⁾	250,000	$	2.79	1.0	$	—

____________

⁽¹⁾ All of the stock options outstanding were vested and exercisable at the end of the period.

Performance Equity Awards

The Company has granted performance equity awards under its 2017 Long Term Incentive Program to certain officers. The awards are subject to market conditions that are based on the Company’s 2017 total shareholder return on both an absolute and relative basis. Depending on the Company’s stock price performance, on both an absolute basis and on a relative basis compared to the defined peer group, the award recipients may earn between 0% and 150% of their 2017 base salaries, with any such amounts expected to be settled in restricted shares of the Company’s common stock that will vest over a three-year service-based period beginning in 2018.

The Company used a Monte Carlo simulation model to estimate the fair value of the awards based on the expected outcome of the Company’s stock price performance, on both an absolute basis and on a relative basis compared to the defined peer group, using key valuation assumptions. The assumptions used for the Monte Carlo model to determine the fair value of the awards and associated compensation expense included a forecast period for the relevant stock price period in 2017, a risk-free interest rate of 0.97% and 80% for the Company’s stock price volatility.

The maximum value of the performance shares issuable if all participants earned the maximum award would total $1.3 million. For the year ended December 31, 2017, the Company recorded $0.1 million of compensation expense related to these performance equity awards.