6. Stock-Based Compensation

Restricted Stock

A summary of the Company's unvested restricted stock as of June 30, 2013 and changes during the six months ended June 30, 2013 is as follows:


	Shares			Weighted- Average Grant Date Fair Value
Unvested at December 31, 2012		2,899		$	2.23
Vested		(2,899	)	$	2.09
Unvested at June 30, 2013		-		$	-

As of June 30, 2013, all restricted stock has vested and accordingly all stock-based compensation expense related to vested restricted stock has been recognized.

Stock Options

The following is a summary of the stock option activity for the six months ended June 30, 2013:


	Shares			Weighted Average Exercise Price
Outstanding, December 31, 2012		590,047		$	0.71
Granted		72,496		$	8.81
Forfeited		(18,263	)	$	0.59
Outstanding, June 30, 2013		644,280		$	1.63

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2013 was $7.26. The total fair value of stock options that vested during the six months ended June 30, 2013 was approximately $158,000. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following assumptions for stock options granted during the six months ended June 30, 2013:


Dividend yield	0.0	%
Expected volatility	90	%
Risk-free interest rate	1.39-1.5	%
Expected lives (years)	5-6

The risk-free interest rate is based on U.S. Treasury interest rates at the time of the grant whose term is consistent with the expected life of the stock options. The Company used an average historical stock price volatility based on an analysis of reported data for a peer group of comparable companies that have issued stock options with substantially similar terms, as the Company did not have any trading history for its common stock. Expected term represents the period that the Company's stock option grants are expected to be outstanding. The Company elected to utilize the "simplified" method to value stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.

Expected dividend yield was considered to be 0% in the option pricing formula since the Company had not paid any dividends and had no plans to do so in the future. The forfeiture rate was considered to be none insofar as the historical experience of the Company is very limited. As required by ASC 718, the Company will adjust the estimated forfeiture rate based upon actual experience.

The Company recognized $183,575 and $100,079 in stock-based compensation expense for the six months ended June 30, 2013 and 2012, respectively for the Company's stock option awards.

The following table summarizes information about stock options outstanding at June 30, 2013:


Options Outstanding			Options Exercisable			Options Vested or Expected to Vest
Balance as of 6/30/2013	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price	Balance as of 6/30/2013	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price	Balance as of 6/30/2013	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price
644,280	8.08	$1.63	457,823	7.62	$0.76	457,823	7.62	$0.76

As of June 30, 2013, the unrecognized stock-based compensation expense related to unvested stock options was approximately $949,000, which is expected to be recognized over a weighted average period of approximately 28 months.

Series B Financing

In March 2013, we sold an aggregate of 1,891,419 shares of our Series B-1 Preferred Stock for gross proceeds of $5,050,090 in our Series B Preferred Stock private placement. All shares of the Series B Preferred Stock, together with accrued dividends, automatically were to convert into shares of our common stock upon the consummation of a firm commitment underwritten public offering resulting in aggregate net cash proceeds to us of at least $15,000,000 (a "Qualified Public Offering"). In addition, upon consummation of a Qualified Public Offering, the investors in our Series B-1 Preferred Stock were to be issued shares of our common stock having a value based upon the initial public offering price of $361,668 and our obligation to issue, and the investors, obligation to purchase, Series B-2 Preferred Stock and warrants upon fulfillment of certain conditions specified in our stock purchase agreement dated as of March 25, 2013 entered into in connection with such private placement (the "Stock Purchase Agreement") will terminate. See Note 7- "Subsequent Events" below with respect to the stock issuances that occurred upon consummation of the Qualified Public Offering on July 29, 2013.