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Stock-Based Compensation
3 Months Ended
Mar. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Note H: Stock-Based Compensation
 
We compensate officers, directors and key employees with stock-based compensation under stock option and incentive plans approved by our shareholders and administered under the supervision of our Board of Directors. Stock option awards are granted at exercise prices equal to the closing price of our stock on the day before the date of grant. Generally, options vest proportionally over periods of three to five years from the dates of the grant, beginning one year from the date of grant, and have a contractual term of nine to ten years.
 
Performance stock options are time based; however, the final number of awards earned and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately vest ranges from 90% to 100% of the targeted amount if the minimum performance target is achieved. For performance stock awards granted in 2015, the performance target is revenue. We evaluate the likelihood of meeting the performance target at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each performance target.
 
Compensation expense, net of estimated forfeitures, is recognized ratably over the vesting period. Stock-based compensation expense included in general and administrative expense for the three-month periods ended March 31, 2015 and 2014 was $75,000 and $87,000, respectively. At March 31, 2015, a total of 550,649 shares were available for grant under the Company’s stock option and incentive plans.
 

Stock Options
 
A summary of the option activity for the first three months of 2015 is as follows:
                         
   
Number of
Shares
   
Weighted
Average
Exercise
Price per
Share
   
Weighted
Average Remaining Contractual
Term (in years)
   
Aggregate Intrinsic
Value
 
Options outstanding at December 31, 2014
    354,000     $ 6.30       7.0     $  
Granted
    50,000     $ 2.73       5.0     $  
Exercised
        $           $  
Expired
        $           $  
Forfeited
    (53,500 )   $ 5.56           $  
                                 
Options outstanding at March 31, 2015
    350,500     $ 5.91       7.1     $  
Options exercisable at March 31, 2015
    129,000     $ 7.75       4.5     $  
 
There were no options exercised during the three-month periods ended March 31, 2015 and March 31, 2014. As of March 31, 2015, there was $398,000 of total unrecognized compensation cost related to non-vested stock options. The weighted average period over which the compensation cost is expected to be recognized is 2.5 years.
 
Stock Awards
 
We issue stock awards as a portion of the annual retainer for each director on a quarterly basis. The stock awards are fully vested at the time of issuance. Compensation expense related to stock awards is determined on the grant date based on the publicly quoted fair market value of our common stock and is charged to earnings on the grant date. During the quarter ended March 31, 2015, there were stock awards issued for 9,840 shares with a weighted-average grant date fair value of $2.54.