6. Stock-Based Compensation

The following table summarizes the stock option activity for the six months ended June 30, 2017:


		Options Outstanding
			Weighted-		Weighted-
			Average		Average
	Options		Exercise		Remaining	Aggregate
	Available for	Number of	Price Per		Contractual	Intrinsic
	Grant	Options	Share		Life (years)	Value
						(In thousands)
Balance—December 31, 2016	342,500	1,414,730	$	5.28	7.6	$	4,267
Options granted	(197,950)	197,950		8.79
Options exercised	—	(158,339)		4.63		$	1,216
Options cancelled/forfeited	184,781	(185,676)		6.07
Balance—June 30, 2017	329,331	1,268,665		5.76	7.4	$	18,036
Options exercisable—June 30, 2017		752,725		4.82	6.2	$	11,414
Options vested and expected to vest—June 30, 2017		1,268,665		5.76	7.4	$	18,036

The total grant date fair value of options vested was $797,000 and $173,000 during the three months ended June 30, 2017 and 2016, respectively, and $904,000 and $276,000 for the six months ended June 30, 2017 and 2016, respectively.

The weighted-average grant date fair value of employee options granted during the three and six months ended June 30, 2017 was $5.25 and $4.67 per share, respectively. The Company did not grant any options during the three and six months ended June 30, 2016.

2016 Employee Incentive Plan

The Company’s board of directors adopted the 2016 Equity Incentive Plan (the “2016 Plan”) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The 2016 Plan became effective on October 7, 2016, the date the Company’s registration statement was declared effective by the SEC. No further grants will be made under the Company’s 2008 Equity Incentive Plan (the “2008 Plan”). However, any outstanding stock awards granted under the 2008 Plan will remain outstanding, subject to the terms of the Company’s 2008 Plan and the applicable stock award agreements, until such outstanding stock awards that are stock options are exercised or until they terminate or expire by their terms, or until such stock awards are fully settled, terminated or forfeited.

The Company’s 2016 Plan provides for the grant of incentive stock options (“ISOs”), non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation to employees, directors and consultants. In addition, the Company’s 2016 Plan provides for the grant of performance cash awards to employees, directors and consultants.

The maximum number of shares of common stock that may be issued under the Company’s 2016 Plan is 500,000. The number of shares of common stock reserved for issuance under the Company’s 2016 Plan will automatically increase on January 1 of each year, beginning on January 1, 2017, and continuing through and including January 1, 2024, by 3% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors.

2016 Employee Stock Purchase Plan

The Company’s board of directors adopted the 2016 Employee Stock Purchase Plan (the “ESPP”) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward the Company’s success and that of the Company’s affiliates. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. The board of directors, or a duly authorized committee thereof, will administer the Company’s ESPP.

The maximum aggregate number of shares of common stock that may be issued pursuant to the exercise of purchase rights under the Company’s ESPP that are granted to employees or to employees of any of the Company’s designated affiliates is 96,153 shares. Additionally, the number of shares of common stock reserved for issuance under the Company’s ESPP will increase automatically each year, beginning on January 1, 2017, and continuing through and including January 1, 2026, by 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number as determined by the board of directors. Shares subject to purchase rights granted under the Company’s ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under the Company’s ESPP. The first purchase period under the 2016 ESPP commenced on October 12, 2016 and ended on April 12, 2017. The second purchase period began on April 13, 2017 and will end on October 12, 2017. The Company had 78,229 shares available for future issuance under the Company’s ESPP as of June 30, 2017. Employees purchased 17,924 shares for $122,000 during the six months ended June 30, 2017.

Stock-based Compensation Expense

The Company recognized stock-based compensation expense from options granted to employees and non-employees and from its ESPP as follows, excluding amounts related to GLOBALFOUNDRIES, Inc. (“GF”) (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Research and development	$	73	$	44	$	245	$	89
General and administrative		213		46		439		100
Sales and marketing		122		10		155		22
Total	$	408	$	100	$	839	$	211

As of June 30, 2017, there was $3.0 million of total unrecognized compensation expense related to unvested options which is expected to be recognized over a weighted-average period of 2.8 years.

Employee Stock-based Compensation

Stock-based compensation expense for employees was $319,000 and $96,000 for the three months ended June 30, 2017 and 2016, respectively, and $740,000 and $201,000 for the six months ended June 30, 2017 and 2016, respectively.

The Company estimated the fair value of each option using the Black-Scholes option-pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the assumptions below. Each of these inputs is subjective and its determination generally requires significant judgment.


	2016 Plan				2016 ESPP
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Expected volatility	47.2-59.3	%	—	%	49.5	%	—	%
Risk-free interest rate	2.0-2.1	%	—	%	0.50	%	—	%
Expected term (in years)	5.8-6.1		—		0.5		—
Dividend yield	—	%	—	%	—	%	—	%

Non-employee Stock-based Compensation

Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options vest. No stock options were granted to non-employees during the six months ended June 30, 2017 and 2016. As of June 30, 2017, options to purchase 35,568 shares of common stock were outstanding with a weighted-average exercise price of $4.80 per share. Stock-based compensation expense for non-employees was $89,000 and $4,000 for the three months ended June 30, 2017 and 2016, respectively, and $99,000 and $10,000 for the six months ended June 30, 2017 and 2016, respectively.