SHARE-BASED COMPENSATION - Note 5

3 Months Ended

Mar. 31, 2016

Disclosure Of Compensation Related Costs

Share-Based Compensation - Note 5

5. SHARE-BASED COMPENSATION

We issue share-based compensation to employees in the form of options exercisable into our common stock and restricted shares of our common stock. We account for equity instruments issued to employees using the straight-line attribution method of allocating the fair value of share-based compensation expense over the requisite service period of the related award. We determine the fair value of options using the Black-Scholes option pricing model with estimates of option lives, stock price volatility and interest rates, expensed over the periods of service, allowing for pre-vest forfeitures. The fair value of restricted shares is determined by the closing price of our common stock on the NASDAQ Global Market on the date of grant. Changes in the estimated inputs, or using other option valuation methods, could result in materially different option values and share-based compensation expense.

The following table shows the amount of share-based compensation expense included in each line item of the statements of operations:

		Three Months Ended
(in thousands)		March 31,
Share-based compensation expense		2016		2015
Cost of product revenue	$	10	$	4
Research and development expense		83		47
Sales, marketing, general and administrative expense		207		139
	$	300	$	190

Options activity and positions

The following table summarizes shares, weighted-average exercise price, weighted-average remaining contractual term and aggregate intrinsic value of options outstanding and options exercisable as of March 31, 2016:

				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise	Contractual		Intrinsic
Options	Shares		Price	Term (years)		Value
Outstanding as of March 31, 2016	3,133,000	$	5.51	7.1	$	120,000
Exercisable as of March 31, 2016	1,580,000	$	8.37	5.6	$	65,000

As of March 31, 2016, our unamortized share-based employee compensation related to stock options was $2.1 million which we plan to amortize over the next 2.8 years and our unamortized share-based compensation related to the restricted stock units was $36,000 which we plan to amortize over the next 0.2 years.