NOTE 6 – Share-Based Compensation

The table below sets forth the line items where share-based compensation expense was recorded:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Cost of goods sold	$	96	$	152	$	267	$	462
Selling, general and administrative		3,993		4,050		13,477		11,348
Research and development		807		760		2,233		2,117
Total share-based compensation expense	$	4,896	$	4,962	$	15,977	$	13,927

The table below sets forth share-based compensation expense by type:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Stock options	$	-	$	168	$	275	$	767
Share grants		4,896		4,794		15,702		13,160
Total share-based compensation expense	$	4,896	$	4,962	$	15,977	$	13,927

Stock Options. Approximately $4.9 million in cash proceeds was received from stock option exercises during the nine months ended September 30, 2018.

As of September 30, 2018, there was no unrecognized share-based compensation expense related to unvested stock options.

Share Grants. Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period. We also have share grants that are performance based that vest upon achievement of certain performance criteria. Our Chief Executive Officer had a grant of 600,000 performance-based stock units that vested upon the Company reaching $1.0 billion in revenue. Based on the Company reaching approximately $1.1 billion in revenue in 2017, our Chief Executive Officer’s grant of 600,000 performance-based stock units were released to the Chief Executive Officer, upon filing of the Company’s Annual Report on Form 10-K, in February 2018. The expense related to the 600,000 performance-based units was all recognized in previous periods. During the nine months ended September 30, 2018, we issued 639,755 stock awards. This was primarily made up of the annual grant for officers, employees and directors.

As of September 30, 2018, total unrecognized share-based compensation expense related to share grants was approximately $39.9 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 2.4 years.

Stock Modification. During the nine months ended September 30, 2018 we modified previously granted stock option and stock awards for two corporate officers who retired. The result of the modification was the acceleration of the vesting of 7,500 stock options and 79,720 stock awards for the corporate officers. The incremental expense recorded for this modification was approximately $1.8 million, which was expensed in SG&A in the nine months ended September 30, 2018.