5. STOCK-BASED COMPENSATION

On February 27, 2013, the Board of Directors authorized the Company’s 2013 Equity Incentive Plan (the “Incentive Plan”), which provides for the grant of non-statutory stock options and restricted shares to eligible employees and directors of the Company. The Incentive Plan authorizes the Company to issue up to 2,600,000 shares of Company’s Common Stock. The Company issues new shares upon the exercise of stock options. Options granted under the Plan generally expire no later than 10 years from the date of grant. The exercise price of any option granted to a 10% stockholder may be no less than 110% of the fair value of the Company’s common stock on the date of grant. As of June 30, 2015, 844,239 shares of Common Stock were available for issuance under the Incentive Plan.

The Company granted stock options to purchase approximately 840,000 shares of its common stock on April 30, 2014 under the Incentive Plan. The stock options were granted to certain employees including an executive officer and members of the Board of Directors, at an exercise price of $1.44 per share, and a grant date fair value of $736. These options become fully exercisable over a two-year period (1/3 exercisable on the grant date, 1/3 exercisable one year after the grant date and the remaining 1/3 exercisable two years after the grant date, respectively) and expire on April 30, 2024.

The Company granted stock options to purchase approximately 25,000 shares of its common stock on May 12, 2014 under the Incentive Plan. The stock options were granted to a non-employee independent contractor at an exercise price of $1.24 per share, and an aggregate grant date fair value of $24. These options become fully exercisable over a two-year period (1/3 exercisable on the grant date, 1/3 exercisable one year after the grant date and the remaining 1/3 exercisable two years after the grant date) and expire on May 12, 2024.

The Company granted stock options to purchase approximately 430,000 shares of its Common Stock on February 10, 2015 under the Incentive Plan. The stock options were granted to certain employees including an executive officer and members of the Board of Directors, at an exercise price of $0.79 per share, and an aggregate grant date fair value of $160. These options become fully exercisable over a two-year period (1/3 exercisable on the grant date, 1/3 exercisable one year after the grant date and the remaining 1/3 exercisable two years after the grant date) and expire on February 10, 2025.

The fair values of options granted were estimated on the date of grant using the Black-Scholes Merton option pricing model based on the assumptions included in the table below. The fair value of the Company’s stock option awards is charged to expense over the vesting life of the underlying stock options using the straight-line method. Expected volatility is based on the historical volatility of the Company’s Common Stock. The risk-free interest rate for periods within the contractual life of the stock option award is based on the yield of U.S. Treasury bonds on the grant date with a maturity equal to the expected term of the stock option. The expected life of stock option awards granted to employees and non-employee directors is based upon the “simplified” method for “plain vanilla” options described in SEC Staff Accounting Bulletin No. 107, as amended by SEC Staff Accounting Bulletin No. 110. Forfeiture rates are based on management’s estimates.

	Six months ended June 30, 2015			Six months ended June 30, 2014
Expected volatility		79	%		79	%
Expected dividend yield		0.00	%		0.00	%
Weighted average risk-free interest rate		1.81	%		1.81	%
Expected life	5.50 years			5.50 years
Forfeiture rate		0	%		0	%

	Stock Options (In thousands)			Weighted Average Exercise Price			Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2014		1,503		$	0.85
Grants		430			0.79
Exercised		(34	)		(0.34	)
Forfeited, cancelled or expired		(254	)		0.95
Outstanding at June 30, 2015		1,645		$	0.83			7	$	150

Exercisable at June 30, 2015		1,243		$	0.76			7	$	150

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of our Common Stock on the date of determination for those awards that have an exercise price currently below the closing price. During the six months ended June 30, 2015 and 2014, there were 33,689 and 23,600 stock options exercised under the Incentive Plan with an intrinsic value of $12 and $22, respectively.

Total stock-based compensation recorded for the three and six months ended June 30, 2015 was $96 and $244, respectively, and for the three and six months ended June 30, 2014 was $310 and $323, respectively and is included in selling, general and administrative expenses. As of June 30, 2015, the Company has approximately $219 of unrecognized stock-based compensation expense that will be recognized over a period of approximately 1.2 years.