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Table of Contents



incentive awards and options granted under the 2009 Plan generally expire at the earlier of a specified period after termination of service or the date specified
by the Board or its designated committee at the date of grant, but not more than ten years from such grant date. Concurrent with the approval of the 2009
Plan, the 2006 Plan was terminated for purposes of future grants.
On May 26, 2011 the Board of Directors authorized and the Company's shareholders' approved the allocation of an additional 1,000,000 shares of
common stock to the 2009 Plan. On May 23, 2012, the Board of Directors authorized and the Company's shareholders approved the allocation of 1,122,930
additional shares of common stock to the 2009 Plan. On May 23, 2013, the Board of Directors authorized and the Company's shareholders approved the
allocation of 2,317,000 additional shares of common stock to the 2009 Plan. On May 20, 2014, the Board of Directors authorized and the Company's
shareholders approved the allocation of 500,000 additional shares of common stock to the 2009 Plan. On June 12, 2015, the Board of Directors authorized
and the Company's shareholders approved the allocation of 1,200,000 additional shares of common stock to the 2009 Plan. At December 31, 2015 there were
3,349,235 shares available for future grant under the 2009 Plan.
In accordance with ASC 718, the fair value of stock-based awards to employees is calculated as of the date of grant. Compensation expense is then
recognized on a straight-line basis over the requisite service period of the award. The Company uses the Black-Scholes pricing model to value its stock
options, which requires the use of estimates, including future stock price volatility, expected term and forfeitures. Stock-based compensation expense
recognized is based on the estimated portion of the awards that are expected to vest. Estimated forfeiture rates were applied in the expense calculation.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model as follows:




Expected stock price volatility
49%-63%
63%-65%
64%-67%
Expected term of options
6 years
6 years
6 years
Expected dividend yield
—
—
—
Risk-free interest rate
1.19%-1.75%
1.46%-1.80%
0.75%-1.65%
Prior to the completion of the Company's initial public offering in April 2009, the Company's stock was not publicly quoted and the Company had a
limited history of stock option activity, so the Company reviewed a group of comparable industry-related companies to estimate its expected volatility over
the most recent period commensurate with the estimated expected term of the awards. In addition to analyzing data from the peer group, the Company also
considered the contractual option term and vesting period when determining the expected option life and forfeiture rate. Subsequent to the initial public
offering and through April 2015, the Company continued to review a group of comparable industry-related companies to estimate volatility, but also
reviewed the volatility of its own stock since the initial public offering. During this period, the Company considered the volatility of the comparable
companies to be the best estimate of future volatility. After April 2015, the Company had a sufficient period of stock price data to estimate volatility based
upon the historical volatility experienced in its own stock price. For the risk-free interest rate, the Company uses a U.S. Treasury Bond rate consistent with the
estimated expected term of the option award.
The expected term of options granted represents the period of time that they are expected to be outstanding and is derived using a combination of peer
company information and the simplified method as described in ASC 718-10-S99. Prior to the completion of the Company's initial public offering in April
2009, the stock was not publicly quoted and there was a limited history of stock option activity. The Company believes the limited historical exercise data
related to our stock options does not provide a reasonable basis on which to estimate the expected term.
F-31