13. STOCK OPTIONS

In 2007, the Company adopted the 2007 Employee, Director and Consultant Stock Plan (the "2007 Plan"). Pursuant to the 2007 Plan, the Company's Board of Directors (or committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options to the Company's employees, officers, directors, consultants and advisors. As of December 31, 2013, there were options to purchase an aggregate of 2,198,050 shares of Common Stock outstanding under the 2007 Plan and no shares available for future grants under the 2007 Plan.

On October 26, 2010, the Company's Board of Directors adopted and the Company's shareholders subsequently approved the 2010 Equity Incentive Plan, (the "2010 Plan"). The 2010 Plan provides for grants of incentive stock options to employees and nonqualified stock options and restricted Common Stock to employees, consultants and non-employee directors of the Company. As of December 31, 2013, the number of shares authorized for issuance under the 2010 Plan, as amended, was 11,000,000 shares. As of December 31, 2013, there were options to purchase an aggregate of 5,857,472 shares of Common Stock outstanding under the 2010 Plan and 4,923,675 shares available for future grants under the 2010 Plan. Options issued under the 2007 Plan and the 2010 Plan (collectively the "Plans") are exercisable for up to 10 years from the date of issuance.

Share-based compensation

For stock options issued and outstanding for the years ended December 31, 2013, 2012 and 2011, the Company recorded non-cash, stock-based compensation expense of $3,135,646, $1,232,959 and $921,512, respectively, net of forfeitures.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. Due to its limited operating history and limited number of sales of its Common Stock, the Company estimated its volatility in consideration of a number of factors including the volatility of comparable public companies. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercises and employee terminations within the valuation model. The expected term of options granted under the Plans, all of which qualify as "plain vanilla," is based on the average of the contractual term (10 years) and the vesting period (generally 48 months). For non-employee options, the expected term is the contractual term. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option.

The assumptions used principally in determining the fair value of options granted were as follows:

	December 31,

	2013	2012	2011
Risk-free interest rate	0.77 - 2.52%	0.62 - 1.23%	0.97 - 3.05%
Expected dividend yield	0%	0%	0%
Expected term (employee grants)	6.25	6.25	6.25
Expected volatility	102%	75%	49%

A summary of option activity as of December 31, 2013 and changes for the year then ended are presented below:

Options			Weighted Average Exercise Price			Aggregate Intrinsic Value

Outstanding at December 31, 2012	8,648,268		$	1.29
Granted	3,035,000		$	2.23
Forfeited	(2,902,584	)	$	1.63
Exercised	(725,162	)	$	0.88


Outstanding at December 31, 2013	8,055,522		$	1.56	7.55	$	6,704,149




Vested at December 31, 2013	3,661,215		$	0.91	5.50	$	5,035,700

The weighted average grant-date fair value of options granted during years ended December 31, 2013, 2012, and 2011 was $2.04, $1.28, and $1.14 per share, respectively. The total fair value of options that vested in years ended December 31, 2013, 2012, and 2011 was $1,985,034, $1,186,098 and $1,324,325 respectively. As of December 31, 2013, there was approximately $6,277,267 of total unrecognized compensation expense, related to non-vested share-based option compensation arrangements. The unrecognized compensation expense is estimated to be recognized over a period of 3.09 years at December 31, 2013.

In September 2011, the Company granted 80,000 shares of Common Stock under the 2010 Plan to a consultant as a restricted stock award with 30,000 shares vesting upon FDA clearance of an Investigational Device Exemption to permit the commencement of a human clinical trial and 50,000 shares vesting upon FDA approval of the Company's biopolymer scaffolding device to treat spinal cord injuries. The Company had previously determined that the vesting of the 30,000 shares was probable and the fair value of these shares at $23,400 was being amortized over an eight month period from September 2011 through April 2012. In March of 2012, the contract with the consultant was terminated and the consultant had no vested right to the restricted stock, so accordingly, the $11,700 of expense previously recorded was reversed in 2012.