Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Note 7. Stock-Based Compensation

The expense relating to stock options is recognized on a straight-line basis over the requisite service period, usually the vesting period, based on the grant-date fair value. The unamortized compensation cost, as of June 30, 2019, was $0.2 million related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 2.3 years. The expense related to restricted stock units (RSUs) is recognized over a three-to-four year vesting period and is based on the fair value of the underlying stock on the dates of grant. The unamortized compensation cost, as of June 30, 2019, was $0.4 million related to RSUs and is expected to be recognized as expense over a weighted-average period of approximately 2.6 years.

For the three and six months ended June 30, 2019 and 2018, there were no excess tax benefits associated with the exercise of stock options due to the Company’s historical loss positions.

Valuation Assumptions

The fair value of the Company’s stock options granted during the six months ended June 30, 2019 and 2018 was estimated on the grant dates using the Black-Scholes valuation option-pricing model with the following assumptions:


	Six Months Ended
	June 30,
	2019			2018
Risk-free interest rate		2.5	%		2.2	%
Volatility		128.4	%		109.5	%
Expected life (years)		3.0 - 5.0			4.0
Dividend yield		—	%		—	%

There were no stock option grants during the three months ended June 30, 2019 and 2018.

The risk-free interest rate was derived from the Daily Treasury Yield Curve Rates, as published by the U.S. Department of the Treasury as of the grant date for terms equal to the expected terms of the options. The expected volatility was based on the historical volatility of the Company’s stock price over the expected term of the options. The expected term of options granted was derived from historical data based on employee exercises and post-vesting employment termination behavior. A dividend yield of zero is applied because the Company has never paid dividends, and has no intention to pay dividends in the near future.

Prior to January 1, 2019, the stock-based compensation expense recorded was adjusted based on estimated forfeiture rates. An annualized forfeiture rate was used as a best estimate of future forfeitures based on the Company’s historical forfeiture experience. Stock-based compensation expense was then adjusted in later periods if the actual forfeiture rate was different from the estimate. Upon the adoption of ASU No. 2016-09 on January 1, 2019, the Company changed its accounting policy and began accounting for forfeitures as they occur. Historically, estimated forfeitures were immaterial to the condensed consolidated financial statements.

Common Stock Options and Restricted Stock

A summary of option and RSU activity under the Company’s Amended and Restated 2010 Equity Incentive Plan (the Plan) is presented below (in thousands, except exercise price):


				Options outstanding
							Weighted
	Shares						Average
	Available			Number of			Exercise
	for Grant			Shares			Prices
Balance at January 1, 2019		4,007			337		$	4.19
Additional shares authorized under the Plan		50			—			—
RSUs granted		(2,028	)		—			—
RSUs cancelled and returned to the Plan		11			—			—
Options granted		(1,297	)		1,297		$	0.20
Options cancelled and returned to the Plan		1			(1	)	$	7.20

Balance at March 31, 2019		744			1,633		$	1.02
RSUs granted		(120	)		—			—
Options cancelled and returned to the Plan		5			(5	)	$	7.20

Balance at June 30, 2019		629			1,628		$	1.00

A summary of RSU activity under the Plan is presented below (in thousands, except for fair value):


				Weighted
				Average
	Number of			Grant-Date
	Shares			Fair Value
Non-vested shares at January 1, 2019		272		$	1.23
Granted		2,028		$	0.20
Vested		(167	)	$	1.48
Cancelled		(11	)	$	1.26

Non-vested shares at March 31, 2019		2,122		$	0.23
Granted		120		$	0.23
Vested		(94	)	$	0.81

Non-vested shares at June 30, 2019		2,148		$	0.20

The total intrinsic value of the RSUs outstanding as of June 30, 2019 was $0.4 million.

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2019 (in thousands, except contractual life and exercise price):


	Options Outstanding						Options Exercisable
			Weighted
			Average
			Remaining		Weighted				Weighted
			Contractual		Average				Average		Aggregate
	Number		Life		Exercise		Number		Exercise		Intrinsic
Range of Exercise Price	Outstanding		(in Years)		Price		Exercisable		Price		value
$0.18 - $0.74		1,297		9.60	$	0.20		122	$	0.20	$	—
$0.75 - $1.27		160		4.31	$	0.75		53	$	0.75	$	—
$1.28 - $7.19		51		5.08	$	2.09		23	$	2.94	$	—
$7.20 - $20.49		101		7.15	$	7.20		96	$	7.20	$	—
$20.50 - $46.20		19		5.69	$	21.53		19	$	21.53	$	—

$0.18 - $46.20		1,628		8.74	$	1.00		313	$	3.94	$	—

There were no stock options exercised during the six months ended June 30, 2019 or 2018.