13. 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.

Years Ended December 31,

2015

2014

2013

Expected volatility

26 – 30

27 – 35

30 – 37

Expected dividends

—

Expected life (in years)

4.1 – 6.3

3.1 – 7.0

3.6 – 6.3

Risk-free interest rate

1.3 – 1.9

1.1 – 2.0

0.5 – 1.7

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		(34,498	)		(4,934	)		(39,432	)		19.78
Options exercised		—			—			—			—
Options forfeited and expired		(448,442	)		(143,737	)		(592,179	)		17.71

Outstanding at December 31, 2015		945,043			235,930			1,180,973			10.95		4.5	$	—

Vested and expected to vest at December 31, 2015		919,115			231,338			1,150,453			10.87		4.4	$	—

Exercisable at December 31, 2015		668,425			208,793			877,218			10.05		3.9	$	—

The weighted average grant-date fair value of options granted during the years ended December 31, 2015, 2014 and 2013 was $1.44, $1.70 and $2.45, respectively.

No stock options were exercised during the year ended December 31, 2015. During the year ended December 31, 2014, 6,237 options were exercised. The intrinsic value for the options exercised during the year ended December 31, 2014 was approximately $25,000.

Stock-based compensation expense for both time based and performance based awards was recognized in the consolidated statements of operations as follows:


	Years Ended December 31,
(in thousands)	2015		2014		2013
Cost of goods sold	$	192	$	135	$	41
Sales and marketing		254		154		93
General and administrative		1,330		621		429
Research and development		226		121		15

Total stock-based compensation expense	$	2,002	$	1,031	$	578

Stock-based compensation expense recognized in the consolidated statement of operations for the years ended December 31, 2015, 2014, and 2013 are based on awards ultimately expected to vest as well as any changes in the probability of achieving certain performance features as required. Upon termination of employment, the Company has the right to call shares held by employees that were purchased or acquired through option exercise. As a result of this right, upon termination of service, vested stock-based awards are reclassified to liability-based awards when it is probable the employee will exercise the option and the Company will exercise its call right. The Company did not reclassify any equity awards to liability-based awards as of December 31, 2015 and 2014. There were no liability awards paid out during the years ended December 31, 2015, 2014 and 2013.

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


	Time Based			Weighted Average Grant Date Fair Value Per Share
Issued and unvested at January 1, 2015		—		$	—
Granted		1,368,700			5.97
Vested		—			—
Forfeited		(280,532	)		6.01

Issued and unvested at December 31, 2015		1,088,168		$	5.96

The Company did not recognize an income tax benefit for the years ended December 31, 2015, 2014 and 2013. As of December 31, 2015, there was approximately $5.6 million of total unrecognized compensation costs related to stock options and restricted stock awards granted under the 2015, 2013 and 2008 Plans. These costs are expected to be recognized over a weighted-average remaining period of 3.1 years. In addition, performance based awards contain certain contingent features, such as change in control provisions, which allow for the vesting of previously forfeited and unvested awards.