EQUITY PLANS AND SHARE-BASED COMPENSATION

Share-Based Compensation: The Company measures share-based compensation cost at the grant date based on the fair value of the award and recognizes this cost as an expense over the grant recipients’ requisite service periods for all awards made to employees, officers, directors and consultants.

The share-based compensation expense recognized in the Condensed Statements of Operations for the three months ended March 31, 2012 and 2011 was as follows:



	For the three months ended March 31,
	2012		2011
Share-based compensation cost included in:
Research and development	$	102,165	$	186,091
Selling, general and administrative	248,177		625,883
Total share-based compensation cost	$	350,342	$	811,974

The following table presents share-based compensation expense by type of award for the three months ended March 31, 2012 and 2011:



	For the three months ended March 31,
	2012		2011
Type of Award:
Stock Options	$	190,279	$	537,793
Restricted Stock Units and Awards	160,063		274,181
Total share-based compensation cost	$	350,342	$	811,974

Stock Options: The Company recognized share-based compensation expense for stock options of approximately $190,000 to officers, directors and employees for the three months ended March 31, 2012 related to stock option awards ultimately expected to vest and reduced for estimated forfeitures. The weighted average estimated fair value of employee stock options granted for the three months ended March 31, 2012 and 2011 was $0.56 and $2.56 per share, respectively. Fair value was calculated using the Black-Scholes Model with the following assumptions:



	For the three months ended March 31,
	2012		2011
Expected volatility	103	%	98	%
Risk free interest rate	1	%	3	%
Expected dividends	—		—
Expected life (in years)	5.2		6.3

Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate of return is based on the yield of U.S. Treasury bonds with a maturity equal to the expected term of the award. Historical data is used to estimate forfeitures within the Company’s valuation model. The Company’s expected life of stock option awards is derived from historical experience and represents the period of time that awards are expected to be outstanding.

As of March 31, 2012, total compensation cost related to non-vested stock options not yet recognized was approximately $705,000 which is expected to be recognized over a weighted average period of approximately 2.9 years. As of March 31, 2012, approximately 1,112,000 shares were vested or expected to vest in the future at a weighted average exercise price of $2.74. As of March 31, 2012, approximately 1,736,000 shares remained available for future grants under the Option Plan.

Restricted Stock: In addition to the stock options discussed above, the Company recognized share-based compensation expense related to restricted stock grants of approximately $160,000 for the three months ended March 31, 2012. The weighted average estimated fair value of restricted stock grants for the three months ended March 31, 2012 and 2011 was $0.56 and $3.21, respectively.

Total unrecognized share-based compensation expense from unvested restricted stock as of March 31, 2012 was approximately $391,000 which is expected to be recognized over a weighted average period of approximately 0.8 years. As of March 31, 2012, approximately 530,000 shares were expected to vest in the future. As of March 31, 2012, approximately 160,000 shares remained available for future grants under the Restricted Stock Plan.