Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

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

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 previously 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 at the time each award is granted, provided that the terms of options do not exceed ten years. Vesting schedules for stock options vary, but generally vest 25% per year, over four years. The Plan had 2,369,409 shares available for future grants as of September 30, 2015.

Total stock-based compensation expense, net of estimated forfeitures, recognized using the straight-line attribution method in the condensed consolidated statements of operations is as follows:



	Three months ended September 30,				Nine months ended September 30,
($ in thousands)	2015		2014		2015		2014
Stock-based compensation expense for employees and directors	$	506	$	266	$	1,550	$	1,002
Equity awards for non-employees issued for services	—		—		—		3
Total stock-based compensation expense	$	506	$	266	$	1,550	$	1,005

The following table summarizes stock option activity for the nine months ended September 30, 2015:



($ in thousands except share and per share data)	Number of shares		Weighted- average exercise price		Weighted-average remaining contractual term	Aggregate intrinsic value
Outstanding at December 31, 2014	2,086,450		$	7.43	8 years	$	—
Granted	1,352,114		4.48
Exercised	(56,250	)	4.53
Forfeited	(178,970	)	5.63
Expired	(12,000	)	10.50
Outstanding at September 30, 2015	3,191,344		$	6.32	8 years, 1 month	$	602
Exercisable at September 30, 2015	1,469,897		$	8.81	7 years	$	189

The total fair value of options vested during the nine months ended September 30, 2015 was approximately $1.3 million. As of September 30, 2015, there was approximately $4.5 million of total forfeiture adjusted unrecognized compensation cost, related to time-based non-vested stock options. That cost is expected to be recognized over a weighted-average period of 2.9 years. As of September 30, 2015, there was no unrecognized compensation expense related to non-vested non-employee options.

During the nine months ended September 30, 2015 and 2014, the weighted average fair market value of the options granted was $3.59 and $2.64, 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 nine months ended as of the dates indicated:



	September 30, 2015		September 30, 2014
Expected life	6 years, 1 month		5 years, 11 months
Interest rate	1.56	%	1.91	%
Dividend yield	—		—
Volatility	103.2	%	70.3	%

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 nine months ended September 30, 2015, the Company reassessed those companies it includes in its peer group, which resulted in an increase in volatility as compared to the nine months ended September 30, 2014.