SHARE-BASED COMPENSATION - Note 10

12 Months Ended

Dec. 31, 2019

Disclosure Of Compensation Related Costs

Share-Based Compensation - Note 10

10. SHARE-BASED COMPENSATION

We use the straight-line attribution method to allocate the fair value of share-based compensation awards over the requisite service period for each award. The valuation of and accounting for share-based awards includes a number of complex and subjective estimates. These estimates include, but are not limited to, the future volatility of our stock price, future stock option exercise behaviors, estimated employee turnover, and award forfeiture rates.

Description of Incentive Plan

Our 2013 Incentive Plan has 12.3 million shares authorized, of which 3.0 million shares were available for awards as of December 31, 2019.

Options Valuation Methodology and Assumptions

We use the Black-Scholes option valuation model to determine the fair value of options granted and use the closing price of our common stock as the fair market value of our stock on that date.

We consider historical stock price volatilities, volatilities of similar companies and other factors in determining estimates of future volatilities.

We use historical lives, including post-termination exercise behavior, as the basis for estimating expected lives.

Risk-free rates are based on the U.S. Treasury Yield Curve, as published by the U.S. Treasury.

The following table summarizes the weighted-average valuation assumptions and weighted-average grant date fair value of options granted during the periods shown below:

		Year Ended December 31,
		2019		2018
Assumptions (weighted-average)
Volatility		78%		73%
Expected term (in years)		4.0		3.2
Risk-free rate		1.9%		2.8%
Expected dividends		0.0%		0.0%
Pre-vest forfeiture rate		8.5%		8.5%
Grant date fair value of options granted	$	0.37	$	0.58

Options Activity and Positions

The following table summarizes activity and positions with respect to options for the periods shown below (in thousands):

				Weighted-average
				remaining		Aggregate
			Weighted-average	contractual		intrinsic
Options	Shares		exercise price	term (in years)		value
Outstanding as of December 31, 2017	5,034	$	2.94	6.6	$	53
Granted	1,229		1.16	-		-
Exercised	-		-	-		-
Forfeited or expired	(1,617)		3.51	-		-
Outstanding as of December 31, 2018	4,646		2.27	7.0		-
Granted	1,636		0.65	-		-
Exercised	-		-	-		-
Forfeited or expired	(1,178)		2.66	-		-
Outstanding as of December 31, 2019	5,104	$	1.66	7.4	$	122
Vested and expected to vest as of December 31, 2019	4,807	$	1.71	7.3	$	106
Exercisable as of December 31, 2019	2,355	$	2.45	5.6	$	3

No options were exercised during the years ended December 31, 2019 and 2018.

The total grant date fair value of options vested during the years ended December 31, 2019 and 2018 was $801,000 and $958,000, respectively. As of December 31, 2019, our unrecognized share-based compensation was $1.2 million related to options, which we plan to amortize over the next 2.0 years.

In the fourth quarter of 2019, we issued 384,751 vested RSUs to our executives in lieu of cash for payment of short-term incentive bonuses earned in 2018.

On May 22, 2019, we issued 195,000 PSUs to our executive officers. And on September 30, 2018, we issued 583,333 PSUs to our executives.  The performance criteria for PSUs issued in both May and September is the achievement of the Company's share price of $2.50 sustained for 60 of trailing 90 days before the PSUs are earned ("Earned PSUs").  To the extent the PSUs become Earned PSUs, the May PSUs shall be eligible to vest as to one-third (1/3) of the PSUs subject to the Award on the each of the first three (3) anniversaries of May 22, 2019. The September 2018 PSUs become Earned PSUs and shall be eligible to vest as to one-third (1/3) of the PSUs subject to the Award on the each of the first three (3) anniversaries of June 5, 2018. PSUs issued in May 2019 and September 2018 are subject to the executive's continuous employment on the applicable vesting date. If there are outstanding but unearned PSUs as of a vesting date and the PSUs become Earned PSUs prior to the next vesting date the Earned PSUs that would have vested on any earlier vesting date shall become immediately vested and deliverable.  The PSUs are valued using a binomial option pricing model using the following inputs: stock price, volatility, and risk-free interest rates.

We also issued 475,000 stock options to our executives on May 22, 2019, that vest one-third on each of the first three anniversaries of May 22, 2019. And on September 30, 2018, we issued 291,667 RSUs to our executives that vest one-third on each of the first three anniversaries of June 5, 2018.

On November 11, 2019 we issued 163,734 RSUs to the members of the board in lieu of the annual cash fee. The members of the board vest ownership in the RSUs immediately. We also issued 180,000 RSUs to members of the board on May 22, 2019, vesting ownership in the RSUs on the earlier of the day prior to the date of the Company's annual meeting of shareholders following the date of grant, or one year from the grant date, provided the member of the board continues to serve as a director on the vesting date.

As of December 31, 2019, our unrecognized share-based compensation related to the RSUs was $318,000, which we plan to amortize over the next 1.4 years. As of December 31, 2019, our unrecognized share-based compensation related to the PSUs was $14,000, which we plan to amortize over the next 1.8 years.