Stock-based Compensation

Stock compensation expense for both equity-classified and liability-classified awards for the three months ended March 31, 2018 and March 31, 2017 was $0.6 million and $0.2 million, respectively. Stock compensation expense is recognized in cost of goods sold, selling, general and administrative expenses, and research and development expenses. At March 31, 2018, there was $3.5 million of unrecognized compensation cost relating to outstanding unvested equity instruments expected to be recognized over the weighted average period of 1.7 years.

On March 29, 2018, the Company granted the following share-based awards to members of management employed in the United States. These awards will be settled in shares of the Company's common stock and are equity-classified. The grant date fair value of these awards will be recognized on a straight-line basis over the vesting period. The performance-based restricted stock units each have a performance period that ends on December 31, 2020 and the other awards vest ratably on the first, second, and third anniversaries of the grant date.



Performance-based restricted stock units	195,650
Time-based restricted stock	149,700
Options	134,250
Total	479,600

On March 29, 2018, the Company also granted the following share-based awards to members of management employed in countries outside of the United States. These awards will be settled in cash and are liability-classified. Therefore, the fair value of these liability-classified awards will be re-measured on each balance sheet date. The performance-based phantom shares each have a performance period that ends on December 31, 2020 and the other awards vest ratably on the first, second, and third anniversaries of the grant date.



Performance-based phantom shares	24,450
Service-based phantom shares	41,750
Stock appreciation rights	2,800
Total	69,000

The performance-based restricted stock units and phantom shares were valued with a Monte Carlo simulation model using the assumptions in the table below. Based on these assumptions, the grant date fair value of the performance-based restricted stock units and phantom shares was estimated to be $7.28 per share.



Volatility	69.9		%
Risk-free interest rate	2.39		%
Dividend yield	0.00		%
Grant date stock price	$	7.35
Performance period	3 years

The stock options and stock appreciation rights were valued with a Black-Scholes option pricing model using the assumptions in the table below. Since the Company has limited historical volatility information available, the expected volatility was based on actual volatility for comparable public companies projected over the expected term of the Options and the actual volatility for the Company since the Business Combination. The risk-free interest rate was based on the U.S. Treasury yield curve at the time of the grant over the expected term of the Options. The expected life was estimated using the simplified method. Based on these assumptions, the grant-date fair value of the stock options and stock appreciation rights was estimated to be $3.57.



Volatility	48.80		%
Risk-free interest rate	2.56		%
Dividend yield	0.00		%
Grant date stock price	$	7.35
Expected term	6 years

The fair value of the time-based restricted stock and the service-based phantom shares is equal to the closing price of the Company’s common stock on the grant date of the awards.