Note 11 - Share-Based Compensation

Share-based compensation represents the cost related to share-based awards, typically stock options or stock grants, granted to employees, non-employees, officers and directors. Share-based compensation is measured at grant date, based on the estimated aggregate fair value of the award on the grant date, and such amount is charged to compensation expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. For the years ended December 31, 2017, 2016 and 2015, the share-based compensation expense of $1.5 million, $0.6 million and $0.2 million, respectively, is reflected in general and administrative expenses in the consolidated Statements of Operations.

Share-based awards have historically been made as stock options, and recently also as stock grants, issued pursuant to the terms of the Company’s stock option and stock incentive plans, (collectively, the “Plans”), described below. The Plans may be administered by the Board of Directors or the Compensation Committee of the Board or by another committee appointed by the Board from among its members as provided in the Plans. Presently, the Plans are administered by the Company’s Compensation Committee of the Board of Directors. As of December 31, 2017, the Plans authorized the issuance of stock options to purchase 6,000,000 shares of the Company’s common stock and, as of December 31, 2017 there were 2,259,130 shares of the Company’s common stock available for issuance for future stock option grants or other stock based awards.

Stock option awards, which allow the recipient to purchase shares of the Company’s common stock at a fixed price, are typically granted at an exercise price equal to the Company’s stock price at the date of grant. Typically, the Company’s stock option awards have vested from immediately to two years from the grant date and have had a contractual term ranging from three to ten years.

During the years ended December 31, 2017, 2016 and 2015, the Company issued options to purchase 1,400,203 shares, 1,170,534 shares, and 164,506 shares, respectively. During the years ended December 31, 2017, 2016 and 2015, the Company issued stock grants of 6,236 shares, 17,148 shares, and 9,835 shares, respectively.

Effective September 10, 2004, the Company adopted its 2004 Stock Incentive Plan (“2004 Plan”) pursuant to which 2,500,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either incentive stock options (“ISOs”) under the Internal Revenue Code of 1986, as amended (the “Code”) or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs could be granted under the 2004 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards could be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights could also be issued in tandem with stock options. Effective September 10, 2014, the Company’s ability to grant options or other awards under the 2004 Plan expired.

Effective August 27, 2008, the Company adopted its 2008 Stock Incentive Plan (“2008 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2008 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2008 Plan is sooner terminated, the ability to grant options or other awards under the 2008 Plan will expire on August 27, 2018.

ISOs granted under the 2008 Plan may not be granted at a price less than the fair market value of the common stock on the date of grant (or 110% of fair market value in the case of persons holding 10% or more of the voting stock of the Company). Nonqualified options granted under the 2008 Plan may not be granted at a price less than the fair market value of the common stock. Options granted under the 2008 Plan expire not more than ten years from the date of grant (five years in the case of ISOs granted to persons holding 10% or more of the voting stock of the Company).

Effective September 17, 2014, the Company adopted its 2014 Stock Incentive Plan (“2014 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2014 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2014 Plan is sooner terminated, the ability to grant options or other awards under the 2014 Plan will expire on September 17, 2024.

ISOs granted under the 2014 Plan may not be granted at a price less than the fair market value of the common stock on the date of grant (or 110% of fair market value in the case of persons holding 10% or more of the voting stock of the Company). Nonqualified options granted under the 2014 Plan may not be granted at a price less than the fair market value of the common stock. Options granted under the 2014 Plan expire not more than ten years from the date of grant (five years in the case of ISOs granted to persons holding 10% or more of the voting stock of the Company).

All stock options have been granted to employees and non-employees at exercise prices equal to or in excess of the market value on the date of the grant.

The Company determines the fair value of share based awards at the grant date by using the Black-Scholes option-pricing model, and is incorporating the simplified method to compute expected lives of share based awards with the following weighted-average assumptions:

Years ended December 31,	2017			2016			2015
Assumptions
Dividend yield		0	%		0	%		0	%
Risk free interest rate		1.97%-2.08	%		0.%-1.0	%		0.83%-1.03	%
Expected volatility		44%-46	%		47%-53	%		49%-60	%
Expected lives		3 years			3 years			3 years

A summary of the activity for the Company's Plans for the indicated periods is presented below:

Stock Option Plan Totals	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2014		3,280,874	$	1.98
-Cancelled		(132,500)	$	3.72
-Exercised		(679,291)	$	1.65
-Granted		164,506	$	3.28
Outstanding at December 31, 2015		2,633,589	$	2.06
-Exercised		(589,725)	$	2.43
-Granted		1,170,534	$	3.95
Outstanding at December 31, 2016		3,214,398	$	2.68
-Exercised		(1,545,161)	$	2.27
-Granted		1,400,203	$	5.72
Outstanding at December 31, 2017		3,069,440	$	4.28

The following is the weighted average contractual life in years and the weighted average exercise price at December 31, 2017 and 2016 of:

	Number of		Weighted Average Remaining		Weighted Average
2017	Options		Contractual Life		Exercise Price
Options outstanding		3,069,440		2.4 years	$	4.28
Options vested		1,308,203		3.0 years	$	3.94
Options unvested		92,000		0.9 years	$	5.76

	Number of		Weighted Average Remaining		Weighted Average
2016	Options		Contractual Life		Exercise Price
Options outstanding		3,214,398		2.0 years	$	2.68
Options vested		1,191,368		3.0 years	$	3.94

The intrinsic values of options outstanding at December 31, 2017 and 2016 are $5.5 million and $17.1 million respectively.

The intrinsic value of options unvested at December 31, 2017 and 2016 are approximately $0 for both periods.

The intrinsic values of options vested and exercised during the years ended 2017, 2016 and 2015 were as follows :

	2017		2016		2015
Intrinsic value of options vested	$	462,369	$	4,843,774	$	5,000
Intrinsic value of options exercised	$	8,025,527	$	1,777,476	$	1,309,000