Share-Based Compensation

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

The Company’s board of directors (the “Board”) adopted the 2009 Equity Incentive Plan (as amended to date, the “Plan”) effective September 3, 2009.  The Plan is intended to further align the interests of the Company and its stockholders with its employees, including its officers, non-employee directors, consultants and advisers by providing incentives for such persons to exert maximum efforts for the success of the Company.  The Plan allows for the issuance of up to 5,600,000 shares of the Company’s common stock.  The Company issued 206,000 options outside of the Plan to consultants.

The types of awards that may be granted under the Plan include stock options (both non-qualified stock options and incentive stock options), stock appreciation rights, stock awards, stock units and other stock-based awards.  The term of each award is determined by the Compensation Committee of the Board of Directors at the time each award is granted, provided that the terms of options do not exceed ten years.  Vesting schedules for the stock options vary, but generally vest 25% per year, over four years.  The Plan had 2,700,253 options available for grant as of March 31, 2015.

Note 7. Share-Based Compensation (continued)

Total share-based compensation expense recognized using the straight-line attribution method in the consolidated statements of operations is as follows:

	Three months ended March 31,
($ in thousands)	2015		2014
Stock option compensation expense for employees and directors	$	240	$	300
Equity awards for non-employees issued for services	—		3
Total stock-based compensation expense	$	240	$	303

($ in thousands except share and per share data)	Number of shares		Weighted- average exercise price		Weighted-average remaining contractual term (in years)	Aggregate intrinsic value ($ in thousands)
Outstanding at December 31, 2014	2,086,450		$	7.43	8 years	$	—
Granted	830,300		4.13
Exercised	(31,250	)	4.86
Forfeited	—		—
Expired	—		—
Outstanding at March 31, 2015	2,885,500		$	6.51	8 years, 4 months	$	1,510
Exercisable at March 31, 2015	1,162,250		$	10.25	7 years, 3 months	$	349

The total fair value of shares vested during the three months ended March 31, 2015 was approximately $0.2 million.  As of March 31, 2015, there was approximately $4.1 million of total unrecognized compensation cost, related to time-based and performance-based non-vested stock options.  That cost is expected to be recognized over a weighted-average period of 3.26 years.  As of March 31, 2015, there was no unrecognized compensation expense related to non-vested non-employee options.

During the three months ended March 31, 2015 and 2014, the weighted average fair market value of the options granted was $3.39 and $2.88, respectively.  The fair market value of these options was computed using the Black-Scholes option-pricing model with the following key weighted average assumptions for the three months ended as of the dates indicated:

	March 31, 2015		March 31, 2014
Expected life	6 years, 2 months		6 years, 3 months
Interest rate	1.48	%	1.99	%
Dividend yield	—		—
Volatility	106.3	%	71.0	%

The Company uses a peer group to determine historical stock price volatility as it has not had enough standalone trading to satisfy the "look-back" requirements of ASC 718, Compensation: Stock Compensation. For grants issued during the first quarter of 2015, the Company reassessed those companies it would include in its peer group, resulting in an increase in volatility as compared to the first quarter of 2014.