Stock-Based Compensation

Equity Incentive Plan

In May 2012, the Board approved the 2012 Equity Incentive Plan (“2012 Plan”), which provides for the issuance of Awards (as defined in the 2012 Plan) of up to a maximum of 440 shares of the Company’s common stock to employees, non-employee members of the Board, and consultants of the Company. During 2014, the 2012 Plan was amended to provide for the issuance of Awards up to 880 shares of the Company’s common stock. The awards could be issued in the form of incentive stock options, non-qualified stock options or restricted stock, and have expiration dates of 5 or 10 years after issuance, depending on whether the recipient held above 10% of the voting power of all classes of the Company’s shares as of the grant date. The exercise price was based on the fair market value of the share on the date of issuance; vesting periods were determined by the Board upon issuance of the Award.

In November 2016, in connection with its initial public offering, the Company adopted the 2016 Omnibus Incentive Plan (“2016 Plan”) which provides for the issuance of Awards (as defined in the 2016 Plan) of up to a maximum of 3,911 shares of the Company’s common stock to employees, non-employee members of the Board and consultants of the Company. The awards can be issued in the form of incentive stock options, non-qualified stock options or restricted stock. Together, the 2012 Plan and the 2016 Plan are referenced to collectively as the “Plans”.

During 2018, 2017 and 2016, 746, 352 and 161 shares of restricted stock were issued under the Plans, respectively. The grant date fair value of all the restricted stock per share was $3.03 - $19.00. The shares vest over one to five years from their respective grant dates. For Awards issued under the 2016 Plan, the grant date fair value was the either the actual market price of the Company’s shares or an adjusted price using a Monte Carlo simulation for awards subject to the Company’s performance as compared to a defined peer group. The significant assumptions used in the Monte Carlo simulation are presented in the following table.



	Years ended December 31,
	2018		2017
Expected volatility	67.13	%	59.48	%
Expected life (years)	2.67		2.75
Risk-free interest rate	2.55	%	1.49	%

The total number of shares and their respective fair values that vested during the years ended December 31, 2018, 2017 and 2016 were 177 at $1,047, 90 at $731 and 167 at $1,557, respectively. For awards issued under the 2012 Plan, the grant date fair value was calculated based on a weighted analysis of (i) publicly-traded companies in a similar line of business to the Company (market comparable method) - Level 2 inputs, and (ii) discounted cash flows of the Company - Level 3 inputs.

The Company recognized $2,938, $1,973 and $1,072 of compensation expense for the restricted stock during 2018, 2017 and 2016, respectively, in cost of goods sold and operating expenses on the consolidated income statements. There is no impact to the cash flows of the Company related to stock-based compensation expense. At December 31, 2018, the Company had unrecognized compensation expense of $5,782 related to granted but unvested stock awards. That expense is expected to be recognized as follows:



Year Ended December 31,
2019	$	2,772
2020	1,896
2021	854
2022	260
	$	5,782

The following table summarizes restricted stock activity under the Plans from January 1, 2017 through December 31, 2018:



	Number of Shares		Weighted Average
Unvested, January 1, 2017	274		$	7.35
Granted	352		$	14.77
Vested	(90	)	$	8.01
Forfeiture	(2	)	$	8.94
Unvested, December 31, 2017	534		$	11.27
Granted	746		$	6.61
Vested	(177	)	$	12.15
Forfeiture	(76	)	$	11.56
Unvested December 31, 2018	1,027		$	9.83

Employee Stock Purchase Plan

Shares of the Company’s common stock may be purchased by eligible employees under the Company’s 2016 Employee Stock Purchase Plan in six-month intervals at a purchase price equal to at least 85% of the lesser of the fair market value of the Company’s common stock on either the first day or the last day of each six-month offering period. Employee purchases may not exceed 20% of their gross compensation during an offering period.