Stock Option Plan

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

In December 2012, the Company's Board of Directors adopted the 2013 Stock Option Plan (the Plan). Pursuant to the Plan, employees, consultants, and directors may be granted either incentive stock options or non-qualified stock options to purchase shares of the Company's common stock. In July 2019, the number of shares reserved for issuance under the Plan was increased from 669,806 to 1,663,681 shares.

In September 2019, the Company's Board of Directors adopted, and the Company's stockholders approved, the 2019 Incentive Award Plan (the 2019 Plan). Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. A total of (i) 2,011,832 shares of common stock plus (ii) shares subject to awards granted under the 2013 Plan on or before the effective date of the 2019 Plan became available for issuance under the 2019 Plan and will initially be reserved for issuance under the 2019 Plan. In addition, the number of shares of common stock available for issuance under the 2019 Plan will be increased annually on the first day of each fiscal year during the term of the 2019 Plan, beginning with the 2020 fiscal year, by an amount equal to 4% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year or such smaller amount as the Board of Directors may determine. As of September 30, 2019, 1,199,631 shares remained available for future awards.

The options generally expire ten years after the date of grant and are exercisable to the extent vested. Vesting is established by the Board of Directors and is generally four years from the date of grant.

Activity under the Company's stock option plans is set forth below:


	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2018	661,180	$	1.22	9.52	$	6,198
Granted	814,339	$	13.99
Exercised	(50)	$	1.84
Forfeited	(310)	$	5.75
Expired	(153)	$	37.20
Outstanding, September 30, 2019	1,475,006	$	8.26	8.89	$	10,993
Vested and expected to vest, September 30, 2019	1,475,006	$	8.26	8.89	$	10,993
Options exercisable, September 30, 2019	20,464	$	30.74	4.56	$	23

The intrinsic value is calculated as the difference between the fair value of the Company's common stock and the exercise price of the stock options.

Stock-Based Compensation Expense

The fair value of employee stock options was estimated using the following assumptions to determine the fair value of stock options granted:


	Three Months Ended September 30,			Nine Months Ended September 30,
	2019	2018	2019	2018
Expected volatility	59%	70%	59%	70%
Risk-free interest rate	2.0%	2.6%	2.0%-2.6%	1.4% - 2.6%
Dividend yield	—	—	—	—
Expected term (in years)	5.75-6.08	6.08	5.75-6.08	6.08

Total non-cash stock-based compensation expense recorded related to options granted in the condensed statement of operations is as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenue	$	4	$	1	$	6	$	11
Selling, general and administrative	55		9		73		83
Research and development	3		—		6		6
Total	$	62	$	10	$	85	$	100

As of September 30, 2019, total unrecognized compensation cost was $6.4 million, which is expected to be recognized over a remaining weighted-average vesting period of 3.5 years.

Employee Stock Purchase Plan

In September 2019, the Board of Directors adopted the Employee Stock Purchase Plan (the ESPP). The ESPP became effective on the day the ESPP was adopted by the Company's Board of Directors. The ESPP permits participants to purchase common stock through payroll deductions of up to 20% of their eligible compensation. A total of 120,000 shares of common stock was initially reserved for issuance under the ESPP. In addition, the number of shares of common stock available for issuance under the ESPP will be annually increased on the first day of each fiscal year during the term of the ESPP, beginning with the 2020 fiscal year, by an amount equal to 1% of the total number capital stock outstanding on December 31 of the preceding calendar year or such smaller other amount as the Board of Directors may determine. There has been no stock-based compensation expense incurred related to the ESPP for the three and nine months ended September 30, 2019.