SHARE-BASED COMPENSATION - Note 8

6 Months Ended

Jun. 30, 2019

Disclosure Of Compensation Related Costs

Share-Based Compensation - Note 8

8. SHARE-BASED COMPENSATION

We issue share-based compensation to employees in the form of stock options, restricted stock units (RSUs), and performance stock units (PSUs). We account for the share-based awards by recognizing the fair value of share-based compensation expense on a straight-line basis over the service period of the award, net of estimated forfeitures. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. The fair value of RSUs is determined by the closing price of our common stock on the grant date. The PSUs are valued using a binomial option pricing model using the following inputs: stock price, volatility, and risk-free interest rates. Changes in estimated inputs or using other option valuation methods may result in materially different option values and share-based compensation expense.

The following table summarizes the amount of share-based compensation expense by line item on the statements of operations:

Share-based compensation expense		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in thousands)		2019		2018		2019		2018
Cost of product revenue	$	-	$	-	$	1	$	-
Research and development expense		76		88		199		267
Sales, marketing, general and administrative expense		192		131		419		272
	$	268	$	219	$	619	$	539

Options activity and positions

The following table summarizes shares, weighted-average exercise price, weighted-average remaining contractual term and aggregate intrinsic value of options outstanding and options exercisable as of June 30, 2019:

				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise	Contractual		Intrinsic
Options	Shares		Price	Term (years)		Value
Outstanding as of June 30, 2019	4,437,000	$	2.03	6.8	$	44,000
Exercisable as of June 30, 2019	2,348,000	$	2.72	5.0	$	6,000

During the three months ended June 30, 2019 we issued 475,000 stock options and 195,000 PSUs to our executive officers. These PSUs have performance vesting criteria that would require the Company's stock price to appreciate by more than 100% of the stock price on the grant date before they become earned.  Earned PSUs are eligible to vest as to one-third of the PSUs subject to the Award on each of the first three anniversaries of May 22, 2019, subject to the recipient's employment on the above vesting dates.   PSUs that become earned prior to a vesting date that would have vested on any earlier vesting date would become immediately vested.

As of June 30, 2019, our unrecognized share-based employee compensation related to stock options was $1.2 million which we plan to amortize over the next 2.1 years, our unrecognized share-based compensation related to RSUs was $465,000 which we plan to amortize over the next 1.8 years, and our unrecognized share-based compensation related to the PSUs was $19,000, which we plan to amortize over the next 2.2 years.