Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.7.0.1
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-Based Compensation

We have two equity incentive plans: the 2008 Stock Option Plan (the “2008 Plan”) and the 2011 Equity Incentive Plan (the “2011 Plan”, and together with the 2008 Plan, the “Stock Option Plans”). The Stock Option Plans are meant to provide additional incentive to officers, employees and consultants to remain in our employment. Options granted are generally exercisable for up to 10 years.

At June 30, 2017, 681,179 shares remain available for future awards under the 2011 Plan and 133,214 shares remain available for future awards under the 2008 Plan.

A summary of employee and non-employee stock option activity for the six months ended June 30, 2017 is as follows:
 
Options Outstanding
 
Weighted-
Average
Remaining
Contractual
Term (in years)
 
Aggregate
Intrinsic
Value
(in thousands)
 
Number of
Shares
(in thousands)
 
Weighted-
Average
Exercise
Price
 
Outstanding January 1, 2017
2,198

 
$
9.09

 
7.04
 
$
—

Granted
602

 
2.85

 
 
 
 
Exercised
(2
)
 
2.27

 
 
 
 
Cancelled or expired
(220
)
 
11.12

 
 
 
 
Outstanding June 30, 2017
2,578

 
$
7.46

 
7.14
 
$
1,407

Exercisable June 30, 2017
1,435

 
$
9.77

 
5.72
 
$
196



Aggregate intrinsic value represents the difference between the fair value of our common stock and the exercise price of outstanding, in-the-money options. During the three and six months ended June 30, 2017, the Company received approximately $4,000 from the exercise of options.

As of June 30, 2017, total unrecognized compensation cost related to non-vested stock options granted to employees was $2,807,360 which we expect to recognize over the next 2.42 years.

As of June 30, 2017, total unrecognized compensation cost related to non-vested stock options granted to non-employees was $47,750 which we expect to recognize over the next 0.51 years. The estimate of unrecognized non-employee compensation is based on the fair value of the non-vested options as of June 30, 2017.

The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model requires us to make assumptions and judgments about the variables used in the calculation, including the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. No compensation cost is recorded for options that do not vest. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on the historical volatility of our common stock. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Forfeitures will be recorded when they occur.

The following table presents the weighted-average assumptions used to estimate the fair value of options granted to employees during the periods presented:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2017
Volatility
76.91
%
 
74.31
%
Risk free interest rate
1.87
%
 
1.99
%
Dividend yield
0.00
%
 
0.00
%
Term (years)
5.90

 
5.98

Weighted-average fair value of options granted during the period
2.75

 
1.88



In May 2014, we issued 200,000 options to our Director, Raju Chaganti, with an exercise price of $15.89. See Note 11 for additional information. The following table presents the weighted-average assumptions used to estimate the fair value of options reaching their measurement date for non-employees during the periods presented:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Volatility
76.39
%
 
74.61
%
 
76.90
%
 
75.26
%
Risk free interest rate
2.19
%
 
1.27
%
 
2.21
%
 
1.42
%
Dividend yield
0.00
%
 
0.00
%
 
0.00
%
 
0.00
%
Term (years)
6.89

 
7.89

 
7.02

 
8.02



Restricted stock awards have been granted to employees, directors and consultants as compensation for services. At June 30, 2017, there was $331,076 of unrecognized compensation cost related to non-vested restricted stock granted to employees and directors; we expect to recognize the cost over 1.53 years.

The following table summarizes the activities for our non-vested restricted stock awards for the six months ended June 30, 2017:
 
Non-vested Restricted Stock Awards
 
Number of
Shares
(in thousands)
 
Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2017
80

 
$
6.30

Granted
18

 
4.15

Vested
(21
)
 
8.42

Cancelled
(2
)
 
$
11.36

Non-vested at June 30, 2017
75

 
$
5.07



The following table presents the effects of stock-based compensation related to stock option and restricted stock awards to employees and non-employees on our Consolidated Statements of Operations during the periods presented (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Cost of revenues
$
69

 
$
67

 
$
128

 
$
136

Research and development
49

 
45

 
99

 
95

General and administrative
293

 
352

 
593

 
739

Sales and marketing
30

 
26

 
56

 
54

Total stock-based compensation
$
441

 
$
490

 
$
876

 
$
1,024