On September 18, 2003, the Company adopted a new stock option plan (the “2003 Plan”) that provides for the grant of incentive stock options and nonqualified stock options. The option price of incentive stock options must be at least 100% of market value at the date of the grant and incentive stock options have a maximum term of 10 years. Options granted typically vest ratably over a three-year period or are based on achievement of performance criteria. The Company grants selected executives and other key employees share option awards, whose vesting is contingent upon meeting various departmental and company-wide performance goals including meeting sales targets and net profit targets. In March 2009, the Company amended the 2003 Plan to extend the post-service termination exercise period of non-statutory stock options granted to directors for their service to the Company as directors from three months after the director’s termination date to the tenth anniversary of the date of grant. The 2003 Plan does not contain any provisions which would trigger automatic vesting upon a change in control. The Board has determined that no further awards will be made pursuant to the 2003 Plan. As of December 31, 2014, 379,380 shares of common stock were vested and exercisable under the 2003 Plan, and 379,380 shares have been reserved for issuance under the 2003 Plan.

In May 2013, shareholders approved the 2013 Stock Incentive Plan (the “2013 Plan”). An aggregate of 3,000,000 shares of the Company’s common stock may be issued pursuant to the 2013 Plan, as amended, to officers, employees, non-employee directors and consultants of the Company and its affiliates. Awards under the plan may be in the form of stock options, which may constitute incentive stock options, or non-qualified stock options, restricted shares, restricted stock units, performance awards, stock bonus awards, share appreciation rights and other stock based awards. Stock options will be issued at an exercise price not less than 100% of the market value at the date of grant and expire no later than ten years after the date of grant. Stock awards typically vest over three years but vesting periods for non-employees may be longer or based on the achievement of performance goals.

Through December 31, 2014, 35,000 options and 1,949,499 restricted shares have been awarded, net of forfeitures, under the 2013 Plan. A total of 1,015,501 common shares are reserved for future issuance under the 2013 Plan, of which 291,000 are approved but unissued.

The following table summarizes option activity of the 2003 and 2013 Plans:

A summary of the non-vested options as of December 31, 2014 and changes during the year ending December 31, 2014 is presented below:

The total future compensation cost related to non-vested stock option awards is estimated to be nominal for the years ending December 31, 2015 and 2016. The average fair value of options granted at market during 2014 and 2012 was $3.02 and $0.39 per option, respectively. The total intrinsic value of options exercised during the year ended December 31, 2013 was $95,000. No options were exercised in 2014 and 2012. Options outstanding at December 31, 2014 had no intrinsic value. The total fair value of shares vested during the years ended December 31, 2014, 2013 and 2012 was approximately $1,000, $2,000 and $158,000, respectively.

Additionally, during the year ended December 31, 2014, the Company issued 848,000 restricted shares under the 2013 Plan to employees and non-employee service providers, and 130,000 were forfeited. The weighted average term of employee restricted stock is three years. Unrecognized compensation expense for employee restricted stock grants outstanding at December 31, 2014 amounted to $1,670,240. The weighted average grant date fair value is $3.00 per share.

Prior to 2012, the Company granted selected executives and other key employees share option awards, whose vesting is contingent upon meeting various departmental and company-wide performance goals including meeting sales targets and net profit targets. No performance options were granted during 2014 and 2013, and there was no unrecognized compensation cost related to non-vested performance options at December 31, 2014. A summary of activity of options that vested upon achievement of certain performance criteria under the 2003 Plan as of December 31, 2014 and changes during the year then ended is presented below. These shares were also included in the summary of activity of stock option plans for the year ended December 31, 2014 above.

.Stock-based compensation expense for employees recognized in the accompanying statements of operations for the years ended December 31, 2014, 2013 and 2012 was $1,751,000, $302,000 and $45,000, respectively. Stock-based compensation expense (benefit) recorded with respect to non-employee service providers during the years ended December 31, 2014 and 2013 was ($40,000) and $506,000, respectively. There was no such compensation recorded for year ended December 31, 2012. Stock-based compensation for 2014 includes $911,000 of bonus and commissions to be paid in the form of common stock.