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SHARE-BASED COMPENSATION - Note 7
 9 Months Ended
Sep. 30, 2018
Disclosure Of Compensation Related Costs  
Share-Based Compensation - Note 7

7. 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) that contain market conditions. 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 fair value of PSUs is estimated to reflect the effect of the underlying market condition using developed techniques to value the dependent market conditions. 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 in the statements of operations:

Share-based compensation expense     Three Months Ended     Nine Months Ended
      September 30,     September 30,
(in thousands)     2018     2017     2018     2017
Cost of product revenue   $ -    $ 14    $ -    $ 33 
Research and development expense     109      131      377      394 
Sales, marketing, general and administrative expense     73      179      344      600 
    $ 182    $ 324    $ 721    $ 1,027 

 

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 September 30, 2018:

              Weighted-      
          Weighted-   Average      
          Average   Remaining     Aggregate
          Exercise   Contractual     Intrinsic
Options   Shares     Price   Term (years)     Value
Outstanding as of September 30, 2018   5,614,000    $ 2.45    6.2    $ 43,000 
                     
Exercisable as of September 30, 2018   3,100,000    $ 3.16    3.9    $ -  

 

As of September 30, 2018, our unrecognized share-based employee compensation related to stock options was $2.0 million which we plan to amortize over the next 2.5 years, and our unrecognized share-based compensation related to RSUs was $728,000 which we plan to amortize over the next 2.5 years.

During the three months ended September 30, 2018 we issued 875,000 RSUs to our executive officers. Two-thirds of these shares are PSUs that 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 June 5, 2018, subject to the recipient's employment on the above vesting dates.   PSUs that become earned that would have vested on any earlier vesting date would become immediately vested.