10.STOCK-BASED COMPENSATION

In 2007, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, 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, 2018, there were options to purchase an aggregate of 1,859 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 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.

In April 2015, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for grants of incentive stock options to employees, and nonqualified stock options, restricted common stock, restricted stock units, and stock appreciation rights to employees, consultants, and non-employee directors of the Company.

Upon approval of the 2015 Plan by the Company’s shareholders on June 16, 2015, the 2010 Plan was terminated and no additional shares or share awards have been subsequently granted under the 2010 Plan. As of March 31, 2018, the total number of shares available to be issued under the 2015 Plan was 160,199 shares, consisting of 160,000 shares initially authorized under the 2015 Plan shares plus the 12,894 shares that remained available for grant under the 2010 Plan at the time of its termination adjusted for cumulative cancellations, forfeitures and issuances from the 2010 Plan and 2015 Plan.

Options issued under the 2007 Plan, 2010 Plan, and 2015 Plan (collectively, the “Plans”) are exercisable for up to 10 years from the date of issuance.

As of March 31, 2018, there were outstanding options to purchase an aggregate of 48,599, 27,252 and 1,859 shares under the 2015 Plan, 2010 Plan, and 2007 Plan, respectively. As of December 31, 2017, there were outstanding options to purchase an aggregate of 75,125, 57,786 and 1,859 shares under the 2015 Plan, 2010 Plan, and 2007 Plan, respectively.

In March 2015, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, the ESPP. The ESPP allows employees to buy company stock twice per year through after-tax payroll deductions at a discount from market. The Company’s Board of Directors initially authorized 7,500 shares for issuance under the ESPP. Commencing on the first day of the year ended December 31, 2016 and on the first day of each year thereafter during the term of the ESPP, the number of shares of common stock reserved for issuance shall be increased by the lesser of (i) 1% of the Company’s outstanding shares of common stock on such date, (ii) 2,000 shares, or (iii) a lesser amount determined by the Board of Directors. Under the terms of the ESPP, in no event shall the aggregate number of shares reserved for issuance during the term of the ESPP exceed 50,000 shares. As of March 31, 2018 and December 31, 2017, there were 9,933 shares reserved for issuance under the ESPP.

In January 2018, 188 shares that were purchased in the offering period commencing on July 1, 2017 and ending on December 31, 2017 were issued under the ESPP. The ESPP is considered a compensatory plan with the related compensation cost recognized over each six-month offering period. The compensation expense related to the ESPP for the three-month periods ended March 31, 2018 and 2017 was $1 and $4, respectively, and is included in share-based compensation expense. As of March 31, 2018, $1 of employee payroll deductions had been withheld since January 1, 2018, the commencement of the current offering period, and are included in accrued expenses on the balance sheet.

Share-based compensation

For the three-month periods ended March 31, 2018 and 2017, the Company recorded stock-based compensation expense of $306 and $1,315, respectively, inclusive of the expense related to the ESPP. Stock-based compensation expense for the three-month period ended March 31, 2017 included $24 of expense related to a stock option modification.

The Company adopted ASU 2016-09 on January 1, 2017. Prior to the adoption of this standard, the Company recognized share-based compensation, net of estimated forfeitures, over the vesting period of the grant. Upon adoption of ASU 2016-09, the Company elected to change its accounting policy to recognize forfeitures as they occur. The Company continues to recognize share-based compensation expense over the vesting period of the grant. The new forfeiture policy election was adopted using a modified retrospective approach with a cumulative effect adjustment of $155 recorded to accumulated deficit on the balance sheet as of January 1, 2017.

The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option pricing 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,	December 31,
	2018	2017
Risk-free interest rate	2.45%	1.69 - 2.36%
Expected dividend yield	0%	0%
Expected term (employee grants)	5.27 Years	6.22 Years
Expected volatility	96.07%	104%

Stock options

A summary of option activity as of March 31, 2018 and changes for the three-month period then ended are presented below:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
Options	Shares	Price		Term in Years	Value
Outstanding at December 31, 2017	134,770	$	164.29
Granted	3,000	$	17.25
Expired	(3,473)	$	261.96
Cancelled/Forfeited	(53,286)	$	176.39
Exercised	—	$	—
Outstanding at March 31, 2018	81,011	$	146.70	—	$	—
Vested at March 31, 2018	52,998	$	175.14	6.29	$	11
Vested and expected to vest at March 31, 2018	81,011	$	146.70	7.20	$	11

The weighted average grant-date fair value of options granted during the three months ended March 31, 2018 was $12.88 per share. The total fair value of options that vested in the three months ended March 31, 2018 was $684. For the three-month period ended March 31, 2018, the Company recorded stock-based compensation expense of $250 related to stock options. As of March 31, 2018, total unrecognized compensation expense related to non-vested share-based option compensation arrangements amounted to $1,596 and is estimated to be recognized over a period of 2.10 years.

Restricted Stock Units

The following table summarizes the restricted stock unit (“RSU”) activity under the 2015 Equity Incentive Plan during the three-month period ended March 31, 2018:


			Weighted-Average
	Number of Grants		Grant Date Fair Value
Unvested balance at December 31, 2017	20,000	$	25.70
Granted	—		—
Vested	—		—
Forfeited	(3,300)		31.25
Unvested balance at March 31, 2018	16,700	$	24.60

For the three-month period ended March 31, 2018, the Company recorded stock-based compensation expense of $56 related to the time-based RSUs. As of March 31, 2018, total unrecognized compensation expense related to non-vested RSUs amounted to $418 which the Company expects to recognize over a remaining weighted-average of 2.75 years.