(4) STOCK-BASED COMPENSATION PLANS

In June 2017, our stockholders approved the 2017 Stock Incentive Plan (the “2017 Stock Plan”) with a maximum of 5,000,000 shares reserved for issuance. Awards permitted under the 2017 Stock Plan include: Stock Options and Restricted Stock. Awards issued under the 2017 Stock Plan are at the discretion of the Board of Directors. As applicable, awards are granted with an exercise price equal to the closing price of our common stock on the date of grant and generally vest over four years. During the three and nine months ended September 30, 2017, 76,000 and 286,000 options have been granted under the 2017 Stock Plan.

During the three and nine months ended September 30, 2017, 0 and 10,000 shares of restricted stock were issued to management, respectively. During the three and nine months ended September 30, 2017 no shares of restricted stock vested. No shares of restricted stock were forfeited during the three and nine months ended September 30, 2017. The fair market value of restricted shares for share-based compensation expensing is equal to the closing price of our common stock on the date of grant. The restrictions on the stock awards are released annually over four years

The Company previously reserved 3,000,000 shares of common stock for issuance under its 2005 Stock Option Plan (the “Option Plan”). The Option Plan expired as of December 31, 2014. Vesting provisions of the expired plan were to be determined by the Board of Directors. All stock options under the Option Plan expire no later than ten years from the date of grant. Options granted in 2016 and through May 2017 prior to the approval of the 2017 Stock Incentive Plan were approved by and certified by the board of directors on September 6, 2017 under the existing 2005 stock option plan.

The following summarizes stock-based compensation expenses recorded in the condensed consolidated statement of operations:

In the three and nine months ended September 30, 2017, the Company recorded compensation expense related to stock options of $9,000 and $46,000, respectively, all of which was recorded in selling, general and administrative expense on the accompanying condensed consolidated statement of operations.

In the three and nine months ended September 30, 2016, the Company recorded compensation expense related to stock options of $12,000 and $171,000, respectively, all of which was recorded in selling, general and administrative expense on the accompanying condensed consolidated statement of operations.

During the three and nine months ended September 30, 2017, the Company granted options to purchase up to 76,000 and 511,000 shares of common stock to employees at a weighted average exercise price of $0.92 and $0.41 per share, respectively. The weighted-average grant date fair value of options granted during the three and nine months ended September 30, 2017 were $0.90 and $0.39 respectively.

During the three and nine months ended September 30, 2016, the Company granted options to purchase up to 100,000 and 854,000 shares of common stock to employees at a weighted average exercise price of $0.22 and $0.27 per share, respectively. The weighted-average grant date fair value of options granted during the three and nine months ended September 30, 2016 were $0.19 and $0.33, respectively.

No options were exercised during the three or nine months ended September 30, 2017. 1,000 shares were exercised during the three and nine months ended September 30, 2016.

The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Expected term (years)		6.25			6.25			6.25			6.25
Risk-free interest rate		1.82	%		1.12	%		1.79	%		1.49	%
Expected volatility		123.85	%		122.80	%		124.38	%		122.63	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%

A summary of stock option activity under all equity compensation plans for the nine months ended September 30, 2017, is presented below:

					Weighted
			Weighted		Average		Aggregate
	Number		Average		Remaining		Intrinsic
	of Shares		Exercise		Contractual		Value
	(in thousands)		Price		Life (Years)		(in thousands)
Outstanding at December 31, 2016		2,233	$	0.40		6.76	$	130
Granted		511	$	0.41
Exercised		—		—
Forfeited		(787)	$	0.31
Outstanding at September 30, 2017		1,957	$	0.43		6.40	$	2,769
Exercisable at September 30, 2017		1,415	$	0.44		5.41	$	1,975

As of September 30, 2017, the Company had approximately $0.2 million of unrecognized compensation expense related to stock options that will be recognized over a weighted average period of approximately 3.40 years.