10. SHARE-BASED COMPENSATION

The following table presents share-based compensation expense included in our consolidated statements of comprehensive loss for the years ended December 31, 2016, 2015, and 2014, respectively:



	Year ended December 31,
	2016		2015		2014
Research and development expense	$	630,296	$	235,138	$	1,076,655
Selling, general, and administrative expense		1,579,942		964,196		3,451,577
Total share-based compensation expense	$	2,210,238	$	1,199,334	$	4,528,232

We did not capitalize any expense related to share-based payments. As of December 31, 2016, there was $1,526,272 of total unrecognized compensation cost related to all non-vested share-based compensation awards. That cost is expected to be recognized over a weighted-average period of approximately 1 year.

Stock Incentive Plans

2000 Performance Equity Plan

We adopted a performance equity plan in July 2000 (the “2000 Plan”). The 2000 Plan provided for the grant of options and other stock awards to employees, directors and consultants, not to exceed 500,000 shares of common stock. The 2000 Plan provided for benefits in the form of incentive and nonqualified stock options, stock appreciation rights, restricted share awards, stock bonuses and various stock benefits or cash. Upon shareholder approval of amendments to our 2011 Long-Term Incentive Equity Plan on June 17, 2014, the 2000 Plan was amended such that no further awards may be granted under this plan.

2008 Equity Incentive Plan

We adopted an equity incentive plan in August 2008 (the “2008 Plan”). The 2008 Plan provides for the grant of stock-based awards to employees (excluding named executives), directors and consultants, not to exceed 50,000 shares of common stock. The 2008 Plan provides for benefits in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted share awards, and other stock based awards. Forfeited and expired options under the 2008 Plan become available for reissuance. The plan provides that no participant may be granted awards in excess of 5,000 shares in any calendar year. At December 31, 2016, 21,142 shares of common stock were available for future grants.

2011 Long-Term Incentive Equity Plan

We adopted a long-term incentive equity plan in September 2011 that, as amended in 2014, provided for the grant of stock-based awards to employees, officers, directors and consultants, not to exceed 1,200,000 shares of common stock (the “2011 Plan”). On August 12, 2016, shareholders approved an amendment to the 2011 plan increasing the shares available in the plan by 750,000 shares. The 2011 Plan provides for benefits in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted share awards, and other stock based awards. Forfeited and expired options under the 2011 Plan become available for reissuance. The plan provides that no participant may be granted awards in excess of 150,000 shares in any calendar year. At December 31, 2016, 603,885 shares of common stock were available for future grants.

Restricted Stock Awards

RSAs are issued as executive and employee incentive compensation and as payment for services to others. The value of the award is based on the closing price of our common stock on the date of grant. RSAs are generally immediately vested.

Restricted Stock Units

RSUs are issued as incentive compensation to executives, employees, and non-employee directors as well as payment for services to third parties. Each RSU represents a right to one share of our common stock, upon vesting. The RSUs are not entitled to voting rights or dividends, if any, until vested. RSUs generally vest over a one to three year period for employee awards, a one year period for non-employee director awards and the life of the related service contract for third-party awards. The fair value of RSUs is generally based on the closing price of our common stock on the date of grant and is amortized to share-based compensation expense over the estimated life of the award, generally the vesting period. In the case of RSUs issued to consultants, the fair value is recognized based on the closing price of our common stock on each vesting date.

RSAs and RSUs

The following table presents a summary of RSA and RSU activity under the 2000, 2008, and 2011 Plans (collectively, the “Stock Plans”) as of December 31, 2016:



	Non-vested Shares
	Shares	Weighted-Average Grant-Date Fair Value
Non-vested at beginning of year	417	$	31.30
Granted	600,000		5.46
Vested	(270,417)		5.87
Forfeited	-		-
Non-vested at end of year	330,000	$	5.16

The total fair value of RSAs and RSUs vested under the Stock Plans for the year ended December 31, 2016 is $1,214,536.

Stock Options

Stock options are issued as incentive compensation to executives, employees, non-employee directors, and consultants. Stock options are generally granted with exercise prices at or above fair market value of the underlying shares at the date of grant. The fair value of options granted is estimated using the Black-Scholes option pricing model. Generally, fair value is determined as of the grant date. In the case of option grants to third parties, the fair value is estimated at each interim reporting date until vested. Options for employees, including executives and non-employee directors, are generally granted under the Stock Plans.

The following table presents a summary of option activity under the Stock Plans for the year ended December 31, 2016:



	Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value ($)
Outstanding at beginning of year	651,784	$	17.90
Granted	100,000		2.12
Exercised	-		-
Forfeited	-		-
Expired	(61,088)		25.95
Outstanding at end of year	690,696		14.89	3.31	years	$	2,400
Vested and expected to vest at end of year	563,196	$	17.76	2.59	years	$	600

The weighted average per share fair value of option shares granted during the years ended December 31, 2016, 2015, and 2014 was $1.74, $1.32, and $11.30, respectively. The total fair value of option shares vested during the years ended December 31, 2016, 2015, and 2014 was $153,460, $482,652, and $3,069,131, respectively.

The fair value of option grants under the Stock Plans for the years ended December 31, 2016, 2015, and 2014, respectively, was estimated using the Black-Scholes option-pricing model with the following assumptions:



	Year ended December 31,
	2016	2015	2014
Expected option term 1	7 years	5 years	6 years
Expected volatility factor 2	97.83%	97.12%	106.4%
Risk-free interest rate 3	2.30%	1.66%	1.9%
Expected annual dividend yield	0%	0%	0%

1 The expected term was generally determined based on historical activity for grants with similar terms and for similar groups of employees and represents the period of time that options are expected to be outstanding. For employee options, groups of employees with similar historical exercise behavior are considered separately for valuation purposes. For consultants, the expected term was determined based on the contractual life of the award.

2 The stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period equal to the expected option life of the grant.

3 The risk-free interest rate for periods equal to the expected term of the share option is based on the U.S. Treasury yield curve in effect at the measurement date.

In addition, we occasionally grant stock options outside the stock plans, generally to third parties. At December 31, 2016, we had one option for the purchase of 6,000 shares of common stock outstanding and exercisable. This option has an exercise price of $20.10 and expires October 2017.

The aggregate intrinsic value of plan and non-plan options exercised during 2016, 2015, and 2014 was $0, $0, and $1,155,495, respectively.

Options by Price Range

The options outstanding at December 31, 2016 under all plans, including the non-plan options, have exercise price ranges, weighted average contractual lives, and weighted average exercise prices are as follows:



	Options Outstanding				Options Vested
Range of Exercise Prices	Number Outstanding at December 31, 2016	Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life	Number Exercisable at December 31, 2016	Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life
$1.80 - $5.80	163,531	$	2.08	6.44	38,531	$	2.33	6.00
$6.80 - $10.30	224,559		8.90	1.77	224,559		8.90	1.77
$11.80 - $20.10	56,175		14.11	3.18	53,675		14.15	3.22
$22.60 - $38.80	243,551		28.23	2.58	243,551		28.23	2.58
$45.10 - $45.10	8,880		45.10	3.96	8,880		45.10	3.96
	696,696	$	14.94	3.29	569,196	$	17.79	2.57

Upon exercise of options under all plans, we issue new shares of our common stock. For shares issued upon exercise of equity awards granted under the Stock Plans, the shares of common stock are registered. For shares issued upon exercise of non-plan awards, the shares are not registered unless they have been subsequently registered by us on a registration statement. Cash received from option exercises for the years ended December 31, 2016, 2015, and 2014, was $0, $0, and $1,109,466 respectively. No tax benefit was realized for the tax deductions from exercise of the share-based payment arrangements for the years ended December 31, 2016, 2015, and 2014 as the benefits were fully offset by a valuation allowance (see Note 9).