(11)	Stock Options

In August 2016, the Company’s board of directors adopted the 2016 Equity Incentive Plan (the 2016 Plan) for employees, directors, and consultants. As of December 31, 2016, 709,750 shares are available for issuance under the 2016 Plan, of which 429,750 shares were rolled from the 2013 Equity Incentive Plan (the 2013 Plan) into the 2016 Plan.

In 2013, the Company’s board of directors adopted the 2013 Plan for employees, directors, and consultants. On March 18, 2015, the Company’s Board of Directors adopted an amendment to the 2013 Plan to increase the share reserve thereunder by 300,000 shares. On June 18, 2015, the Company’s Board of Directors adopted an amendment to the 2013 Plan to increase the share reserve thereunder by an additional 300,000 shares. The common stock authorized under the 2013 Plan is 1,200,000 shares. Under the Plan, the administrator shall have authority to determine which service providers will receive awards, to grant awards and to set all terms and conditions of awards (including, but not limited to, vesting, exercise and forfeiture provisions). Vested options are canceled 90 days after termination of employment and become available for reissuance under the Plan. As of December 31, 2016, no shares were available for issuance under the 2013 Plan and as of December 31, 2015, 321,313 shares were available for issuance under the 2013 Plan.

In 2003, the Company’s board of directors adopted the 2003 Equity Incentive Plan (the 2003 Plan) for employees, directors, and consultants, which terminated December 31, 2012. The common stock authorized under the 2003 Equity Incentive Plan was 600,000 shares. As of December 31, 2016, there are no shares available for issuance under the 2003 Plan.

The service period for stock options granted to employees is generally 1 to 4 years.

The grant-date fair value of each option award is estimated on the date of grant using the Black- Scholes-Merton option-pricing model. The weighted average assumptions for December 31, 2016 and 2015 grants are provided in the following table. The Company’s lack of historical share option exercise experience does not provide it a reasonable basis upon which to estimate an expected term because of a lack of sufficient data.

Therefore, the Company estimates the expected term by using the simplified method, which calculates the expected term as the average of the time-to-vesting and the contractual life of the options. Since the Company’s shares have only been publicly traded since August 12, 2016 and its shares were rarely traded privately, expected volatility is estimated based on the average historical volatility of similar entities with publicly traded shares. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve at the date of grant.

	December 31, 2016			December 31, 2015			December 31, 2014
Valuation assumptions:
Expected dividend yield		0	%		0	%		0	%
Expected volatility		41.82	%		56.74	%		64.40	%
Expected term (years)		6.07			5.42			5.74
Risk-free interest rate		1.6	%		1.7	%		1.9	%

Stock option activity during the periods indicated is as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining contractual term
Balance at December 31, 2013		364,450		$	2.73		4.3
Granted		255,600			2.70		9.2
Exercised		(100	)		2.20	-
Expired/Forfeited		(115,400	)		3.22	-
Balance at December 31, 2014		504,550		$	2.60		5.8
Granted		512,402			2.00		9.2
Exercised		(24,260	)		3.19		—
Expired/Forfeited		(236,000	)		2.77		—
Balance at December 31, 2015		756,692		$	2.10		7.6
Granted		359,319			2.60		9.4
Exercised		(58,155	)		2.36		3.5
Expired/Forfeited		(17,469	)		2.13		2.6
Balance at December 31, 2016		1,040,387		$	2.25		7.8
Vested and exercisable at December 31, 2016		628,933		$	2.05		7.0
Vested and expected to vest at December 31, 2016		1,012,596		$	2.24		7.8

The weighted average grant-date fair value of options granted during the year ended December 31, 2016, 2015 and 2014 was $1.23, $0.84 and $1.43, respectively. For fully vested stock options the aggregate intrinsic value was $7,770,086 as of December 31, 2016. For stock options expected to vest the aggregate intrinsic value was $4,569,243 as of December 31, 2016. At December 31, 2015, the aggregate intrinsic value for fully vested stock options and stock options expected to vest was immaterial. The total grant date fair value of shares vested during the years ended December 31, 2016, 2015 and 2014 was $176,597, $345,174, and $621,709, respectively.

During the year ended December 31, 2014, the Company granted 260,924 shares of restricted common stock with a fair value of $2.20 per share to its Chief Executive Officer (CEO) of which 68.75% were vested immediately and 6.25% of the shares vest on each of March 31, 2014, June 30, 2014, September 30, 2014, December 31, 2014 and March 31, 2015. During the year ended December 31, 2015, 50,000 shares of restricted stock were granted to other executives contingent upon the Company achieving an initial public offering of its equity securities. The performance measures were not met and the shares expired as of December 31, 2015. There was no expense recorded for these contingently issuable shares. During the year ended December 31, 2016, a total of 57,475 shares of restricted common stock with a fair value of $2.00 per share were issued to the Company’s Chief Financial Officer and Chief Operating Officer of which 100% of the shares vest six months following the completion of the IPO.

At December 31, 2016 and 2015 there was $522,818 and $214,304, respectively, of total unrecognized compensation cost related to unvested stock options and restricted stock granted under the plans. That cost is expected to be recognized over the next three years.

The Company currently uses authorized and unissued shares to satisfy share award exercises.