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 June 30, 2015, there were options to purchase an aggregate of 368,159 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 the 2010 Equity Incentive Plan, which was subsequently approved by the Company’s shareholders (the “2010 Plan”). The 2010 Plan provided 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. The Company’s shareholders approved subsequent amendments in 2012 and 2013 to increase the number of shares available for issuance under the 2010 Plan.

In 2015, the Company’s Board of Directors adopted the 2015 Equity Incentive Plan, which was subsequently approved by the Company’s shareholders on June 16, 2015 (the “2015 Plan,” and together with the 2007 Plan and 2010 Plan, the “Plans”). The 2015 Plan replaced the 2010 Plan, and no further grants will be made under the 2010 Plan. The 2015 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. The total number of shares approved for grants under the 2015 Plan is 4,322,355 shares, consisting of 4,000,000 shares plus 322,355 shares that remained available for grant under the 2010 Plan.

As of June 30, 2015, the number of shares authorized for issuance under the 2015 Plan was 4,322,355 shares. As of June 30, 2015, there were options to purchase an aggregate of 2,105,258 shares of common stock outstanding under the 2010 Plan and no shares under the 2015 Plan. Options issued under the Plans are exercisable for up to 10 years from the date of issuance.

The Company’s Employee Stock Purchas Plan (ESPP) was adopted by the board of directors and approved by the Company’s shareholders on June 16,2015. The plan allows employees to buy company stock twice a year through after tax payroll deductions at a discount from market. The company has authorized 187,500 shares for this program Commencing on the first day of fiscal 2016 and on the first day of each fiscal year thereafter during the term of the ESPP, the number of shares of common stock shall be increased by the lesser of (i) 1% of our outstanding shares of common stock on such date, (ii) 50,000 shares or (iii) a lesser amount determined by the Board. In no event shall the aggregate number of shares reserved for issuance during the term of the ESPP exceed 1,250,000 shares.

Share-based compensation (in thousands)

For stock options issued and outstanding for the six months ended June 30, 2015 and 2014, the Company recorded non-cash, stock-based compensation expense of approximately $2,241 and $1,596, 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:

	June 30, 2015

Risk-free interest rate	1.72	%
Expected dividend yield	0.00	%
Expected term (in years)	6.08
Expected volatility	120.01	%

A summary of option activity as of June 30, 2015 and changes for the period then ended are presented below (in thousands, except per share data):

Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at December 31, 2014	2,606,737		$	6.58
Granted	146,249		$	12.51
Forfeited	(59,599	)	$	9.46
Exercised	(219,970	)	$	6.24

Outstanding at June 30, 2015	2,473,417		$	6.88	7.584	$	23,002


Vested at June 30, 2015	1,154,371		$	5.93	6.197	$	11,825

The weighted average grant-date fair value of options granted during the six months ended June 30, 2015 was $10.64 per share. The total fair value of options that vested for the six months ended June 30, 2015 was approximately $2,907. As of June 30, 2015, there was $5,613 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 2.55 years at June 30, 2015.