Equity Incentive Plans

12 Months Ended

Dec. 31, 2018

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

Equity Incentive Plans

Note 14 – Equity Incentive Plans

In May 2016, the stockholders of the Company approved the 2016 Employee Equity Incentive Plan (the "2016 Employee Plan"), which authorized the Compensation Committee of the Board of Directors (the "Committee") to grant a maximum of 1,000 shares of equity based and other performance based awards to executive officers and other key employees of the Company. The term of the 2016 Employee Plan expires on February 4, 2026. In May 2017, the stockholders of the Company approved an amendment to the 2016 Employee Plan to increase the annual individual award limits relating to stock options and stock appreciation rights from 100 to 250 shares of Common Stock. . In June 2018, the stockholders of the Company approved an amendment to the 2016 Employee Plan to increase the maximum number of equity based and other performance awards to 3,000. The Committee determines the recipients and the terms of the awards granted under the 2016 Employee Plan, including the type of awards, exercise price, number of shares subject to the award and the exercisability thereof.

In May 2005, the stockholders of the Company approved the 2005 Employee Equity Incentive Plan (the "Employee Plan"), which initially authorized the Compensation Committee of the Board of Directors (the "Committee") to grant a maximum of 500 shares of equity based and other performance based awards to executive officers and other key employees of the Company. In May 2007, the stockholders of the Company approved an amendment to the Employee Plan to increase the maximum number of equity based and other performance awards to 1,100. In May 2010, the stockholders of the Company approved an amendment to the Employee Plan to increase the maximum number of equity based and other performance awards to 1,600. In May 2014, the stockholders of the Company approved the amendment and restatement of the Employee Plan to extend the term of the Employee Plan to February 7, 2024 and increase the maximum number of equity based and other performance awards to 2,600. In June 2018, the stockholders of the Company approved an amendment to the Employee Plan to increase the maximum number of equity based and other performance awards to 2,700. The Committee determines the recipients and the terms of the awards granted under the Employee Plan, including the type of awards, exercise price, number of shares subject to the award and the exercisability thereof.

In May 2016, the stockholders of the Company approved the 2016 Director Equity Incentive Plan (the "2016 Director Plan"). The 2016 Director Plan authorizes the Board of Directors (the "Board") to grant a maximum of 400 shares of equity based and other performance based awards to non-employee directors of the Company. The term of the 2016 Director Plan expires on February 4, 2026. The Board determines the recipients and the terms of the awards granted under the 2016 Director Plan, including the type of awards, exercise price, number of shares subject to the award and the exercisability thereof.

In May 2005, the stockholders of the Company approved the 2005 Director Equity Incentive Plan (the "Director Plan"). The Director Plan authorizes the Board of Directors (the "Board") to grant a maximum of 200 shares of equity based and other performance based awards to non-employee directors of the Company. In May 2010, the stockholders of the Company approved an amendment to the Director Plan to increase the maximum number of equity based and other performance awards to 400. In May 2014, the stockholders of the Company approved the amendment and restatement of the Director Plan to extend the term of the Director Plan to February 7, 2024 and increase the maximum number of equity based and other performance awards to 600. The Board determines the recipients and the terms of the awards granted under the Director Plan, including the type of awards, exercise price, number of shares subject to the award and the exercisability thereof.

The Company issues performance based stock options to employees. The Company estimates the fair value of performance stock option awards using the Black-Scholes-Merton option pricing model. Compensation expense for stock option awards is amortized on a straight-line basis over the awards' vesting period.

The expected term of the stock options represents the average period the stock options are expected to remain outstanding and is based on the expected term calculated using the approach prescribed by the Securities and Exchange Commission's Staff Accounting Bulletin No. 110 for "plain vanilla" options. The expected stock price volatility for the Company's stock options was determined by using an average of the historical volatilities of the Company. The Company will continue to analyze the stock price volatility and expected term assumptions as more data for the Company's common stock and exercise patterns become available. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company's stock options. The expected dividend assumption is based on the Company's history and expectation of dividend payouts. The Company does not estimate forfeitures based on historical experience but rather reduces compensation expense when they occur.

The fair value of employee stock options is being amortized on a straight-line basis over the requisite service periods of the respective awards. The fair value of employee stock options was estimated using the following weighted-average assumptions:

	Years ended December 31,
	2018			2017
Fair value of the company's common stock on date of grant	$	0.95		$	0.54
Expected term		6.5 years			6.5 years
Risk free interest rate		2.92	%		2.02	%
Dividend yield		0.00	%		0.00	%
Volatility		79.0	%		79.0	%
Fair value of options granted	$	0.68		$	0.38

The following table summarizes total stock-based compensation costs recognized for the years ended December 31, 2018 and 2017:

	Years ended December 31,
	2018		2017
Cost of goods sold	$	38	$	34
Selling expenses		74		33
General and administrative		263		274
Research and development		118		45
Total	$	493	$	386

The following table summarizes information about stock-based awards outstanding for the year ended December 31, 2018:

Plan	Stock Options		Restricted Stock		Total
2016 Employee Plan		1,452		48		1,500
2016 Director Plan		199		-		199
Other		500				500
2005 Employee Plan		1,181		88		1,269
2005 Director Plan		324		-		324
		3,656		136		3,792
Stock-based awards available for grant as of December 31, 2018						1,271

Stock options award activity for the year ended December 31, 2018 is as follows:

	Number of shares			Weighted- Average Exercise Price		Weighted- Average Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2018		2,269		$	0.83
Options granted		1,546			0.95
Options exercised		(94	)		0.70
Options forfeited		(23	)		0.80
Options expired		(42	)		1.23
Outstanding at December 31, 2018		3,656		$	0.88		7.4	$	1,023
Exercisable at December 31, 2018		1,592		$	0.97		5.3	$	397

During the year ended December 31, 2018, the Company granted options under the 2016 Employee Plan, the 2016 Director Plan, the 2005 Employee Plan as well as non plan grants to purchase 1,546 shares of common stock to its employees and directors. The fair value of these options was approximately $1,051.

The aggregate intrinsic value of stock options is calculated as the difference between exercise price of the underlying stock options and the fair value of the Company's common stock or $1.11 per share at December 31, 2018.

Restricted stock award activity is as follows:

	Number of shares			Weighted- Average Grant Date Fair Value per Share
Unvested restricted stock awards outstanding at January1, 2018		381		$	0.64
Restricted stock awards granted		476			1.06
Restricted stock awards vested		(315	)		0.66
Restricted stock awards forfeited		(406	)		1.10
Unvested restricted stock awards outstanding at December 31, 2018		136		$	0.71

During the year ended December 31, 2018, the Company granted restricted stock awards under the 2016 Employee Plan, the 2016 Director Plan, the 2005 Employee Plan as well as non plan grants of 476 shares of common stock to its employees. The fair value of these awards was approximately $506.

The Company does not capitalize any cost associated with stock-based compensation.

The Company issues new shares of common stock (or reduces the amount of treasury stock) upon exercise of stock options or release of restricted stock awards.

In connection with the hiring of the Company's new Executive Vice President and Chief Operating Officer (the "COO"), on April 23, 2018, the Company granted the COO 400 shares of restricted common stock at $1.05 per share, with 100 shares vesting on each of the first four one-year anniversaries of his first day of employment with the Company. On August 20, 2018, the COO notified the Company that he was resigning from his position, effective on September 14, 2018, resulting in the 400 shares of restricted stock being forfeited.

In August 2012, the Company issued a warrant to purchase 100 shares of common stock of the Company to Adaptive Micro-Ware, Inc., an Indiana corporation ("AMW"). The warrant was granted as partial consideration in connection with a commercial licensing and manufacturing agreement between the Company and AMW. The warrant is exercisable at $1.09 per share, and the warrant vested one-third (1/3) on May 23, 2013, one-third (1/3) on May 23, 2014 and one-third (1/3) on May 23, 2015. The fair value of the warrant was not deemed to be material.