SHARE-BASED COMPENSATION - Note 8

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs

Share-Based Compensation - Note 8

8. SHARE-BASED COMPENSATION

We issue share-based compensation to employees in the form of stock options, restricted stock units (RSUs), and performance stock units (PSUs). We account for the share-based awards by recognizing the fair value of share-based compensation expense on a straight-line basis over the service period of the award, net of estimated forfeitures. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. The fair value of RSUs is determined by the closing price of our common stock on the grant date. The PSUs are valued using a binomial option pricing model using the following inputs: stock price, volatility, and risk-free interest rates. Changes in estimated inputs or using other option valuation methods may result in materially different option values and share-based compensation expense.

The following table summarizes the amount of share-based compensation expense by line item on the statements of operations:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in thousands)		2020		2019		2020		2019
Cost of product revenue	$	-	$	-	$	-	$	1
Research and development expense		103		76		142		199
Sales, marketing, general and administrative expense		97		192		247		419
	$	200	$	268	$	389	$	619

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 June 30, 2020:

				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise	Contractual		Intrinsic
Options	Shares		Price	Term (years)		Value
Outstanding as of June 30, 2020	4,011,000	$	1.50	6.8	$	1,070,000
Exercisable as of June 30, 2020	2,287,000	$	1.98	5.4	$	165,000

During the three months ended June 30, 2020, we issued 1.2 million shares of RSUs to non-executive employees for retention purposes. These shares were valued based on the closing price of our common stock on the date of grant. These shares vest on the earlier of a change of control of the Company or the one-year anniversary of the grant date.

During the three months ended June 30, 2019 we issued 475,000 stock options and 195,000 PSUs to our executive officers. These PSUs have performance criteria that would require the Company's stock price to appreciate by more than 100% of the closing stock price on the grant date before they become earned.  In the event that the performance criteria are satisfied, earned PSUs vest in equal annual installments on each of the first three anniversaries of May 22, 2019, subject to the recipient's continued employment on the applicable vesting date.  In the event the performance criteria are satisfied after any such annual vesting date, the portion of any such earned PSUs that would have vested on any such earlier annual vesting date will immediately vest.

As of June 30, 2020, our unrecognized share-based employee compensation related to stock options was $600,000 which we plan to amortize over the next 1.6 years, our unrecognized share-based compensation related to RSUs was $1.3 million which we plan to amortize over the next 0.9 years, and our unrecognized share-based compensation related to the PSUs was $8,000, which we plan to amortize over the next 1.4 years.