STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2015

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

NOTE B—STOCK BASED COMPENSATION

Stock Options

Compensation expense related to stock options and restricted stock awards recognized in operating results (general and administrative expenses) was approximately $1.1 million and $0.5 million for the three months ended March 31, 2015 and March 31, 2014, respectively.

The following assumptions were used to value stock options calculated using the Black-Scholes options pricing model:

	Three months ended March 31,
	2015		2014
Dividend yield	0	%	0	%
Expected volatility	60.71	%	52.9	%
Risk-free interest rate	1.9	%	1.0	%
Expected life	3.5 years		3.5 years

			Weighted		Weighted
			Average		Average	Aggregate
	Number		Exercise		Remaining	Intrinsic Value
	of Options		Price		Term (in years)	(in thousands)
Outstanding at December 31, 2014	1,987,159		$	4.37
Granted	1,728,400		1.11
Exercised	—		—
Forfeited or expired	(97,433	)	3.17
Outstanding at March 31, 2015	3,618,126		$	2.85	4.25	$	—
Exercisable at March 31, 2015	488,478		$	3.88	2.68	$	—

The total intrinsic value of options exercised during the three months ended March 31, 2015 and 2014 were approximately $0 and $0.9 million respectively.

As of March 31, 2015 total unrecognized stock-based compensation expense related to non-vested stock options was approximately $3.3 million, which we expect to recognize over a weighted average period of 2.7 years.

Restricted Shares

Restricted share activity for the three months ended March 31, 2015 was as follows:

	Shares		Weighted Average Fair Value
Outstanding at December 31, 2014	689,370		$	2.87
Granted	521,322		1.11
Vested	(599,241	)	1.60
Forfeited	—		—
Outstanding at March 31, 2015	611,451		$	2.61

Restricted stock awards for executive officers and employees generally vest ratably over three years. Fair value of our restricted shares is based on our closing stock price on the date of grant.  As of March 31, 2015, total unrecognized stock-based compensation expense related to non-vested restricted shares was $1.3 million, which is expected to be recognized over a weighted average period of approximately 2.0 years.