	March 31, 2019		June 30, 2018
2013 Equity Incentive Plan shares available for grant		8,092		9,957
Employee stock options and awards outstanding		11,192		12,060
2014 Employee Stock Purchase Plan		10,085		5,365
Total shares reserved for issuance		29,369		27,382

Share-based compensation expense recognized in the condensed consolidated financial statements by line item caption is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 31, 2018		March 31, 2019		March 31, 2018
Cost of product revenue	$	223	$	163	$	618	$	389
Cost of service revenue		648		354		1,670		783
Research and development		2,814		2,367		7,953		5,247
Sales and marketing		3,187		2,735		8,529		7,077
General and administrative		1,942		2,199		5,569		6,150
Total share-based compensation expense	$	8,814	$	7,818	$	24,339	$	19,646

During the three and nine months ended March 31, 2019, or 2018, the Company did not capitalize any share-based compensation expense in inventory, as the amounts were immaterial.

Stock awards may be granted under the 2013 Equity Incentive Plan (the “2013 Plan”) on terms approved by the Compensation Committee of the Board. Stock awards generally provide for the issuance of restricted stock units (“RSUs”) including performance or market-based RSUs which vest over a fixed period of time or based upon the satisfaction of certain performance criteria. The Company uses the straight-line method for expense attribution, and beginning with fiscal 2017, the Company does not estimate forfeitures, but accounts for them as incurred.

The following table summarizes stock award activity for the nine months ended March 31, 2019 (in thousands, except grant date fair value):

	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Fair Market Value
Non-vested stock awards outstanding at June 30, 2018		7,764		$	8.60	$	61,804
Granted		4,516			6.44
Released		(2,909	)		7.92
Cancelled		(921	)		8.74
Non-vested stock awards outstanding at March 31, 2019		8,450		$	7.66	$	63,280

The following table summarizes stock option activity for the nine months ended March 31, 2019 (in thousands, except per share and contractual term):

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Options outstanding at June 30, 2018		2,193		$	3.88		2.90	$	8,996
Granted		852			6.40
Exercised		(216	)		3.73
Cancelled		(87	)		6.01
Options outstanding at March 31, 2019		2,742		$	4.60		3.48	$	7,947
Vested and expected to vest at March 31, 2019		2,742		$	4.60		3.48	$	7,947
Exercisable at March 31, 2019		1,974		$	3.90		2.33	$	7,097

The fair value of each stock option grant under the 2013 Plan and 2005 Equity Incentive Plan is estimated on the date of grant using the Black-Scholes-Merton option valuation model. The Company uses the Monte-Carlo simulation model to determine the fair value and the derived service period of stock awards with market conditions, on the date of the grant. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk-free rate is based upon the estimated life of the option and the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s stock.

The fair value of each RSU grant with performance-based vesting criteria (“PSUs”) under the 2013 Plan is estimated on the date of grant using the Monte-Carlo simulation model to determine the fair value and the derived service period of stock awards with market conditions, on the date of the grant.

During the third quarter of fiscal 2019, the Company approved the grant of 474,016 stock awards in the form of RSUs to its employees, but did not approve any grants of stock awards to its named executive officers or directors. During the nine months ended March 31, 2019, the Company approved the grant of 4,515,899 stock awards to employees and directors of which 634,900 were PSU’s with a grant date fair value of $6.40 and 3,880,999 were RSUs. The RSUs vest from the original grant date as to one-third (1/3) on the one-year anniversary and one-twelfth (1/12) each quarter thereafter, subject to continued service to the Company. These awards included 921,434 awards to named executive officers and directors, of which 209,500 were PSUs and 711,934 were RSUs.

For the PSUs referenced in the preceding paragraph, they will be considered performance earned once the Company’s combined earnings per share equals or exceeds $0.20 over two consecutive quarters (the “FY19 Performance Threshold”). Upon satisfying the FY19 Performance Threshold, the PSUs shall vest with respect to the same number of RSUs that have vested which were granted on the same date and thereafter, shall vest on the same schedule as the RSUs, subject to continued service to the Company. If the FY19 Performance Threshold is not met by the third anniversary of the grant date the award is canceled. In addition, the FY19 Performance Threshold shall be deemed satisfied upon the closing of a Change in Control (within the meaning of the Company’s 2013 Equity Incentive Plan) in the event the per share consideration received by the Company’s stockholders equals or exceeds $10.00 per share.

During the third quarter of fiscal 2019, the compensation committee of the Board of Directors modified the FY18 Performance Threshold of $0.32 earnings per share over two consecutive quarters for PSUs issued in fiscal 2018, to $0.20 earnings per share over two consecutive quarters. All other terms of the FY18 PSUs remained the same.

During the nine months ended March 31, 2019, the Performance Thresholds were not achieved for fiscal 2018 or fiscal 2019.

During the first quarter of fiscal 2019, the Company granted 851,700 Performance Stock Options (“PSOs”) to certain officers and executive vice presidents that will vest if the Company’s stock price achieves a price hurdle of $10.00 during the three-year performance period from August 29, 2018 through August 31, 2021. The price hurdle will be deemed to have been achieved if, at any time over the performance period, the Company’s stock maintains a price of $10.00 for 30 consecutive days. If the price hurdle is achieved, the PSOs will vest as follows:

If the price hurdle is met before or on August 31, 2019, one-third of the PSOs will vest on August 31, 2019 and the remainder will vest quarterly over two years.

If the price hurdle is met after August 31, 2019, a number of the PSOs will vest (ratably calculated based upon the time elapsed between August 31, 2018 and the date the hurdle is met) and the remainder will vest quarterly through August 31, 2021. The grant date fair value was $2.62.

The fair value of each share purchase option under the Company’s 2014 Employee Stock Purchase Plan (“ESPP”) is estimated on the date of grant using the Black-Scholes-Merton option valuation model with the weighted average assumptions noted in the following table. The expected term of the ESPP represents the term of the offering period of each option. The risk-free rate is based upon the estimated life and on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s stock.

There were 1,499,042 and 1,151,759 shares issued under the ESPP during the three months ended March 31, 2019 and 2018, respectively. There were 2,779,750 and 2,419,689 shares issued under the ESPP during the nine months ended March 31, 2019 and 2018, respectively. The following assumptions were used to calculate the fair value of shares granted under the ESPP during the following periods:

	Employee Stock Purchase Plan						Employee Stock Purchase Plan
	Three Months Ended						Nine Months Ended
	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
Expected life	0.5 years			0.5 years			0.5 years			0.5 years
Risk-free interest rate		2.46	%		1.15	%		2.35	%	1.64%-1.15%
Volatility		75	%		42	%		70	%		42	%
Dividend yield		—	%		—	%		—	%		—	%

The weighted-average fair value of shares granted under the ESPP during the three months ended March 31, 2019 and 2018 was $2.69 and $4.00, respectively. The weighted-average fair value of shares granted under the ESPP during the nine months ended March 31, 2019 and 2018 was $2.71 and $3.26, respectively.