7. Stock-Based Compensation

Under our Stock Incentive Plan (the “Plan”), we may grant stock-based incentive compensation awards to eligible employees and non-employee directors in the form of distribution equivalent rights, incentive stock options, non-qualified stock options, performance share awards, performance unit awards, restricted stock awards, restricted stock units awards, stock appreciation rights, tandem stock appreciation rights, unrestricted stock awards or any combination of the foregoing, as may be best suited to the circumstances of the particular employee, director or consultant. As of June 30, 2015, we had 1,622,590 shares authorized under the Plan available for future stock-based compensation.

Stock Options

Under the terms of the Plan, options to purchase shares of our common stock are granted at a price set by the Compensation Committee of the Board of Directors (the “Compensation Committee”). The Compensation Committee establishes the vesting period of the awards, which is generally set at 25 percent per year for four years. Options may be exercised any time after they vest for a period up to 10 years from the grant date.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. Option valuation models require the input of highly subjective assumptions, particularly for the expected term and stock price volatility. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our experience. Our employee stock options do not trade on a secondary exchange; therefore, employees do not derive a benefit from holding stock options unless there is an appreciation in the market price of our stock above the grant price. Such an increase in stock price would benefit all shareholders commensurately. No stock options were granted during the first six months of 2015.

A summary of option activity under the Plan as of June 30, 2015, and the changes during the six months then ended is presented below:

	Stock Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (years)
Outstanding at December 31, 2014		551,409		$	6.05
Granted		-			-
Forfeited / Expired		(178,589	)		5.75
Exercised		-			-
Outstanding at June 30, 2015		372,820		$	6.20		7.26
Exercisable at June 30, 2015		227,969		$	7.47		6.53

During the three and six months ended June 30, 2015, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was zero. During the three and six months ended June 30, 2014, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was $0.7 million. The aggregate intrinsic value of outstanding and exercisable stock options was zero, based on our $2.44 closing stock price at June 30, 2015.

Compensation expense recognized in the consolidated statement of operations for stock options was $40 thousand and $0.3 million for the three months ended June 30, 2015 and 2014, respectively, before the effect of income taxes. Compensation expense recognized in the consolidated statement of operations for stock options was $77 thousand and $0.4 million for the six months ended June 30, 2015 and 2014, respectively, before the effect of income taxes.

As of June 30, 2015, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $0.1 million.

Restricted Stock Grants

Under the terms of the Plan, restricted stock awards and restricted stock units are granted by the Compensation Committee on the same terms as options. The Compensation Committee also establishes the vesting period of the awards. The fair value of restricted stock awards and restricted stock units are based on the market price of our shares on the grant date.

A summary of the activity of non-vested restricted stock awards and restricted stock units under the Plan as of June 30, 2015, and the changes during the six months then ended is presented below:

	Restricted Stock Awards						Restricted Stock Units
	Restricted Stock Awards			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (years)	Restricted Stock Units			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (years)
Balance at December 31, 2014		341,637		$	2.83			82,572		$	4.17
Granted		31,251			-			165,000			2.55
Forfeited		(97,210	)		5.21			(95,836	)		3.22
Vested		(32,294	)		2.72			(35,726	)		3.08
Balance at June 30, 2015		243,384		$	2.60	1.24		116,010		$	2.98	1.83

At June 30, 2015, the aggregate value of non-vested restricted stock awards and restricted stock units was $0.6 million and $0.3 million, respectively, before applicable income taxes, based on a $2.44 closing stock price. During the six months ended June 30, 2015 and 2014, the weighted-average grant date fair value of restricted stock awards which vested was $0.1 million and $0.9 million, respectively. Compensation expense recognized in the consolidated statement of operations for restricted stock awards and units was $0.3 million and $0.5 million for the six months ended June 30, 2015 and 2014, respectively, before the effect of income taxes.

As of June 30, 2015, total unrecognized stock-based compensation expense related to restricted stock awards and restricted stock units was approximately $0.5 million and $0.3 million, respectively.

Performance Stock Awards

Under the terms of the Plan, performance stock awards are granted by the Compensation Committee to key executive employees. Performance stock awards are based on achieving key internal metrics measured at the end of each fiscal year over a three year performance period. If performance objectives are achieved as determined by the Compensation Committee, common stock is granted. The fair value of these awards is determined on the date of grant based on our share price.

A summary of the activity of performance stock units under the Plan as of June 30, 2015, and the changes during the six months then ended is presented below:

	Performance Stock Units			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (years)
Balance at December 31, 2014		229,315		$	2.50
Granted		165,000			2.55
Forfeited		(90,798	)		2.77
Vested		-			-
Balance at June 30, 2015		303,517		$	2.40	2.42

Performance stock units outstanding on June 30, 2015 are payable upon the achievement of certain internal metrics over various performance periods. Compensation expense recognized on the consolidated statement of operations for performance stock awards was $0.1 million for the six months ended June 30, 2015. No compensation expense was recorded during the comparable 2014 period. As of June 30, 2015, there was $0.5 million of unrecognized compensation expense related to unvested performance share unit awards.