RESTRICTED STOCK

9 Months Ended

Sep. 30, 2014

Notes to Financial Statements

Note 11. RESTRICTED STOCK

For restricted stock issued and outstanding during the nine month period ended September 30, 2014 and 2013, the Company incurred non-cash compensation expense of approximately $349,000 and $355,000, respectively, each net of estimated forfeitures.

During the nine months ended September 30, 2014, the Company granted an aggregate of 36,936 restricted shares of Common Stock to certain Officers, employees, Directors and consultants of the Company. The grants were issued pursuant to the 2008 Plan. The grant date fair value of these restricted stock grants was approximately $111,000.

A summary of non-vested restricted stock activity as of and for the nine months ended September 30, 2014 is as follows:

Restricted Stock	Shares			Weighted- Average Grant-Date Fair Value
Non-vested shares at January 1, 2014		201,655		$	10.66
Granted		36,936		$	3.00
Vested		(66,333	)	$	7.15
Forfeited		(47,223	)	$	7.41
Non-vested shares at September 30, 2014		125,035		$	11.48

Among the 125,035 shares of non-vested restricted stock, the various vesting criteria include the following:

· 51,685 shares of restricted stock vest upon the FDA approval of Symphony or the sale of the Company; and

· 73,350 shares of restricted stock vest over four years, at each of the anniversary dates of the grants.

As of September 30, 2014, there was approximately $296,000 of total unrecognized compensation expense related to non-vested share-based restricted stock arrangements granted pursuant to the Company’s equity compensation plans that vest over time in the foreseeable future.  As of September 30, 2014, the Company cannot estimate the timing of completion of performance vesting requirements required by certain of these restricted stock grant arrangements.  Compensation expense related to these restricted share grants will be recognized when the Company concludes that achievement of the performance vesting conditions is probable.