11. Stock Compensation

2013 Stock Option and Incentive Plan

On June 7, 2013, the Company's stockholders approved the 2013 Stock Option and Incentive Plan (the "2013 Plan"), which became effective on June 25, 2013. The number of shares of stock reserved and available for issuance under the 2013 Plan is the sum of (i) 1,100,000, plus (ii) 54,129 shares originally reserved under the Company's 2008 Incentive Stock Option and Restricted Stock Plan (the "2008 Plan") that became available for issuance under the 2013 Plan upon completion of the Company's initial public offering, plus (iii) the shares underlying any awards granted under the 2008 Plan that are forfeited, canceled, held back upon the exercise of an option or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise). Additionally, on each January 1 the number of shares reserved and available for issuance under the 2013 Plan shall be cumulatively increased by two and a half percent of the number of shares issued and outstanding on the immediately preceding December 31 or such lesser number of shares as determined by the plan administrator.

2008 Stock Option and Restricted Stock Plan

In April 2008, the Company adopted the 2008 Plan, administered by the Board of Directors or a committee appointed by the Board of Directors. The 2008 Plan provides for the granting of stock options and restricted stock to employees and nonemployees of the Company. Options granted under the 2008 Plan may either be incentive stock options (“ISO”s), restricted stock awards (“RSA”s) or nonqualified stock options (“NQSO”s). Stock options and restricted stock grants may be granted to employees, directors and consultants.

Stock awards under the 2008 Plan may be granted for up to ten years from the adoption of the 2008 Plan at prices no less than 100 percent of the fair value of the shares on the date of the grant as determined by (i) the closing price of the Company's common stock on any national exchange, (ii) the National Association of Securities Dealers Inc. Automated Quotation System (“NASDAQ”), if so authorized for quotation as a NASDAQ security, or (iii) by reasonable application of a reasonable valuation method. The valuation methods utilized by the Company are consistent with the AICPA Technical Practice Aid.

Under the 2013 Plan and the 2008 Plan the vesting of options granted or restricted awards given will be determined individually with each option grant. Generally, 25 percent of the granted amount will vest upon the first anniversary of the option grant with the remainder vesting ratably on the first day of each calendar quarter for the following three years. Stock options have a 10 year life and expire if not exercised within that period, or if not exercised within 90 days of cessation of providing service to the Company.

The following table summarizes the activity relating to the Company's options to purchase common stock for the year ended December 31, 2014:

	Number of Options			Weighted-Average Price Per Share		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
								(in thousands)
Outstanding at December 31, 2013		1,401,101		$	9.59		8.95	$	7,755
Granted		561,500		$	15.03
Forfeited or expired (vested and unvested)		(125,052	)	$	12.97
Exercised		(107,963	)	$	4.38

Outstanding at December 31, 2014		1,729,586		$	11.44		8.43	$	50,155

The following table summarizes information about the Company's stock option plan as of December 31, 2014:

	Number of Options		Weighted-Average Price Per Share		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
							(in thousands)
Vested and expected to vest at December 31, 2014		1,671,313	$	11.37		8.41	$	48,588

Exercisable at December 31, 2014		752,397	$	6.61		7.58	$	25,452

The total intrinsic value of stock options exercised during the years ended December 31, 2014, 2013 and 2012 was $1.4 million, $0.2 million and less than $0.1 million, respectively.

The following table shows the weighted-average assumptions used to compute the stock-based compensation costs for the stock options granted to employees and non-employees during the period from December 31, 2012 to December 31, 2014, using the Black-Scholes option pricing model:

	Year ended December 31,
	2014			2013			2012
Risk-free interest rate		1.81	%		1.45	%		0.85	%
Dividend yield		—			—			—
Weighted-average expected life of options (years)		6.32			6.26			6.25
Volatility		75	%		74	%		80	%

The risk-free interest rate assumption was based on the United States Treasury's rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The assumed dividend yield was based on the Company's expectation of not paying dividends in the foreseeable future. The weighted-average expected life of the options was calculated using the simplified method as prescribed by the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 107 (“SAB No. 107”). This decision was based on the lack of relevant historical data due to the Company's limited historical experience. In addition, due to the Company's limited historical data, the estimated volatility also reflects the application of SAB No. 107, incorporating the historical volatility of comparable companies whose share prices are publicly available.

The weighted-average grant-date fair values of stock options granted during the years ended December 31, 2014, 2013, and 2012 were $10.15, $7.14, and $1.33 respectively. During the years ended December 31, 2014, 2013, and 2012, the Company recognized stock-based compensation expense of $3.7 million, $1.2 million, and $0.1 million, respectively.

As of December 31, 2014, there was approximately $9.3 million of unrecognized compensation cost related to unvested options, adjusted for forfeitures, which will be recognized over a weighted-average period of approximately 2.9 years.