12. Stock-Based Compensation

As of June 24, 2015, the Company adopted the 2015 Equity Incentive Plan, or the 2015 Plan.

The Company’s employees are eligible to receive awards under the 2015 Plan. The 2015 Plan is administered by the Board of Directors and permits the granting of stock options, stock appreciation rights, or SARs, restricted stock, restricted stock units and dividend equivalent rights (“DERs”) to employees, officers, directors and consultants of the Company. The Board of Directors may, at its sole discretion, grant DERs with respect to any award and such DER is treated as a separate award. The number of shares authorized for issuance under the 2015 Plan is 2,190,320. Option awards under the 2015 Plan are granted with an exercise price equal to the fair value of the Company’s common stock at the date of grant. Time based option awards vest based on time, typically four years, and performance based option awards vest based on the performance criteria specified in the grant. All option awards have a ten-year contractual term. The Company recognizes compensation costs for its time based awards on a straight-line basis equal to the vesting period. The compensation cost for performance based awards is recognized on a graded vesting basis, based on the probability of achieving the performance targets over the requisite service period for the entire award. The fair value of each option award is estimated on the date of grant using a Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historic volatility of a selected peer group. Expected dividends represent the dividends expected to be issued at the date of grant. The expected term of options represents the period of time that options granted are expected to be outstanding. The risk-free interest rate assumption is the U.S. Treasury rate at the date of the grant which most closely resembles the expected life of the options.

The Company uses the following Black-Scholes inputs to determine the fair value of new stock option grants.


	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Expected volatility		30	%		—		26 – 30	%		33 – 35	%
Expected dividends		—			—		—			—
Expected life (in years)		6.0			—		4.1 – 6.3			5.5 – 6.3
Risk-free interest rate		1.8	%		—		1.3 – 1.9	%		1.5 – 1.9	%

A summary of option activity for 2015 is presented below:


	Time Based			Performance Based			Total			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2015		1,146,509			384,601			1,531,110		$	13.57		6.4	$	3,979,000
Options granted		281,474			—			281,474			12.11
Options cancelled		(30,759	)		(3,904	)		(34,663	)		21.33
Options exercised		—			—			—			—
Options forfeited or expired		(312,413	)		(143,737	)		(456,150	)		19.25

Outstanding at September 30, 2015		1,084,810			236,962			1,321,772			11.10		5.2	$	—

Vested and expected to vest at September 30, 2015		1,042,638			232,695			1,275,332			11.03		5.1	$	—

Exercisable at September 30, 2015		662,891			208,579			871,470			10.01		4.1	$	—

The weighted average grant-date fair value of options granted during the nine months ended September 30, 2015 and 2014 was $1.44 and $2.08, respectively. The weighted average grant-date fair value of options granted during the three months ended September 30, 2015 was $2.35. No options were granted during the three months ended September 30, 2014.

A summary of restricted stock awards activity for 2015 is presented below:


	Time Based			Weighted Average Grant Date Fair Value
Issued and unvested at January 1, 2015		—		$	—
Granted		1,276,700			6.14
Vested		—			—
Forfeited		(184,340	)		6.27

Issued and unvested at September 30, 2015		1,092,360		$	6.12

Stock-based compensation expense for both time based and performance based stock options, restricted stock awards and common stock grants were recognized in the condensed consolidated statements of operations as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2015		2014		2015		2014
Cost of goods sold	$	51	$	32	$	102	$	104
General and administrative		417		151		1,095		474
Sales and marketing		71		34		186		116
Research and development		52		30		141		88

Total stock-based compensation expense	$	591	$	247	$	1,524	$	782