10. 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 March 31, 2014, there were options to purchase an aggregate of 2,194,607 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 (as subsequently amended, 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 March 31, 2014, the number of shares authorized for issuance under the 2010 Plan, was 11,000,000 shares. As of March 31, 2014, there were options to purchase an aggregate of 8,237,140 shares of Common Stock outstanding under the 2010 Plan and 2,491,382 shares available for future grants under the 2010 Plan. Options issued under the 2007 Plan and the 2010 Plan are exercisable for up to 10 years from the date of issuance.

Share-based compensation

For stock options issued and outstanding for the three months ended March 31, 2014 and 2013, the Company recorded non-cash, stock-based compensation expense of $835,000 and $432,000, 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. 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:

	March 31, 2014

Risk-free interest rate	2.03	%
Expected dividend yield	0.00	%
Expected term	6.07
Expected volatility	125.55	%

A summary of option activity as of March 31, 2014 and changes for the period then ended are presented below:

Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at December 31, 2013	8,055,522		$	1.56
Granted	2,650,000		$	2.29
Expired	(6,771	)	$	1.88
Forfeited	(214,379	)	$	1.80
Exercised	(52,625	)	$	1.97

Outstanding at March 31, 2014	10,431,747		$	1.73	7.69	$	3,989,065

Vested at March 31, 2014	4,055,415		$	1.03	5.08	$	3,645,280

The weighted average grant-date fair value of options granted during the three months ended March 31, 2014 was $2.03 per share. The total fair value of options that vested in three months ended March 31, 2014 was $0.97. As of March 31, 2014, there was $8,770,968 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 3.23 years at March 31, 2014.