9. Stock-Based Compensation

The following table summarizes the stock option activity for the six months ended June 30, 2018:


		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, 2017	83,929	1,593,195	$	8.88	6.6	$	1,997
Prior period adjustment	(1,026)	13,784		4.54
Options authorized	1,084,516	—		—
RSUs granted	(60,450)	—		—
RSUs cancelled/forfeited	1,900	—		—
Options granted	(310,715)	310,715		8.79
Options exercised	—	(190,800)		4.69		$	815
Options cancelled/forfeited	28,834	(30,707)		7.97
Balance—June 30, 2018	826,988	1,696,187	$	7.28	7.2	$	3,204
Options exercisable—June 30, 2018		746,702	$	5.85	4.8	$	2,355

The total grant date fair value of options vested was $545,000 and $797,000 during the three months ended June 30, 2018 and 2017, respectively, and $922,000 and $904,000 during the six months ended June 30, 2018 and 2017, respectively.

The weighted-average grant date fair value of employee options granted during the three months ended June 30, 2018 and 2017 was $4.14 and $5.25 per share, respectively, and during the six months ended June 30, 2018 and 2017 was $4.56 and $4.67 per share, respectively.

2016 Employee Stock Purchase Plan

In January 2018, there was an increase of 128,172 shares reserved for issuance under the Company’s Employee Stock Purchase Plan (ESPP). The Company had 291,659 shares available for future issuance under the Company’s ESPP as of June 30, 2018. Employees purchased 20,057 shares for $137,000 during the three and six months ended June 30, 2018. Employees purchased 17,924 shares for $122,000 during the three and six months ended June 30, 2017.

Modification of Stock Awards

In February 2018, the Company modified the terms of 400,000 vested and unvested stock option awards granted to the Chief Executive Officer, by reducing their exercise price from $16.25 per share to $7.64 per share. There was no change to any of the other terms of the option awards. The modification resulted in an incremental value of $600,000 being allocated to the options, of which $63,000 was recognized to expense immediately based on options that were vested at the time of the modification. The remaining incremental value of $537,000 attributable to unvested options will be recognized over the remaining vesting term through September 2021.

Restricted Stock Units

The following table summarizes Restricted Stock Units (RSUs) activity for the six months ended June 30, 2018:


	RSUs Outstanding
		Weighted-
		Average
	Number of	Grant Date
	Restricted Stock	Fair Value Per
	Units	Share
Balance—December 31, 2017	30,680	$	10.55
Granted	60,450		8.66
Cancelled/forfeited	(1,900)		8.39
Balance—June 30, 2018	89,230	$	9.32

The fair value of RSUs is determined on the date of grant based on the market price of the Company’s common stock on that date. As of June 30, 2018, there was $625,000 of unrecognized stock-based compensation expense related to RSUs to be recognized over a weighted-average period of 2.9 years.

Stock-based Compensation Expense

The Company recognized stock-based compensation expense from awards granted to employees and non-employees under its equity incentive plans 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,
	2018		2017		2018		2017
Research and development	$	138	$	73	$	246	$	245
General and administrative		466		213		899		439
Sales and marketing		113		122		197		155
Total	$	717	$	408	$	1,342	$	839

As of June 30, 2018, there was $5.9 million of total unrecognized compensation expense related to unvested options which is expected to be recognized over a weighted-average period of 2.9 years.

Employee Stock-based Compensation

Stock-based compensation expense for employees was $688,000 and $319,000 for the three months ended June 30, 2018 and 2017, respectively, and $1.3 million and $740,000 for the six months ended June 30, 2018 and 2017, 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.


	Option Plan				ESPP
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Expected volatility	51.9-53.1	%	47.2-59.3	%	59.5- 87.8	%	49.5	%
Risk-free interest rate	2.6-2.9	%	2.0-2.1	%	0.9-2.1	%	0.5	%
Expected term (in years)	5.7-6.1		5.8-6.1		0.5-1.0		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 three months June 30, 2018. During the six months ended June 30, 2018, the Company granted stock options to non-employees to purchase 7,200 shares of common stock. No stock options were granted to non-employees during the three and six months June 30, 2017. As of June 30, 2018, options to purchase 45,072 shares of common stock were outstanding with a weighted-average exercise price of $9.15 per share. Stock-based compensation expense for non-employees was $29,000 and $89,000 for the three months ended June 30, 2018 and 2017, respectively, and $44,000 and $99,000 for the six months ended June 30, 2018 and 2017, respectively.