NOTE 13. EMPLOYEE EQUITY-BASED COMPENSATION

The following table summarizes option activity under all plans during the nine-month period ended September 30, 2018:



	Number of Shares		Weighted Average Exercise Price per Share
Options Outstanding January 1, 2018	7,328,131		$	10.16
Granted	1,355,371		24.70
Forfeited	(131,226	)	21.35
Exercised	(351,626	)	10.55
Expired	(18,266	)	24.24
Options Outstanding September 30, 2018	8,182,384		$	12.34

The table below summarizes the resulting weighted average inputs used to calculate the estimated fair value of options awarded during the periods shown below:



	Three Months Ended
	September 30,			September 30,
	2018			2017
Expected term (in years)	5.53			6.46
Volatility	58		%	74		%
Expected dividends	—			—
Risk free interest rates	2.75		%	2.02		%
Weighted average fair value	$	11.48		$	15.74

The following table shows summary information for outstanding options and options that are exercisable (vested) as of September 30, 2018:



	Options Outstanding		Options Exercisable
Number of options	8,182,384		5,751,558
Weighted average remaining contractual term (in years)	6.05		4.95
Weighted average exercise price	$	12.34	$	8.26
Weighted average fair value	$	8.57	$	5.83
Aggregate intrinsic value (in thousands)	$	91,273	$	85,694

The following table summarizes restricted stock unit and restricted stock award activity during the nine-month period ending September 30, 2018:



	Number of Shares		Weighted Average Grant Date Fair Value per Share
Outstanding January 1, 2018	24,150		$	26.45
Granted	50,000		20.80
Forfeited	—		—
Vested/released	(8,050	)	26.45
Outstanding September 30, 2018	66,100		22.18

Equity-based compensation is summarized below (in thousands):



	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2018		2017		2018		2017
Cost of sales	$	68	$	22	$	172	$	44
Research and development	1,476		994		3,926		2,886
Sales, general and administrative	1,921		2,504		8,378		8,040
Equity-based compensation expense	$	3,465	$	3,520	$	12,476	$	10,970

As of September 30, 2018 and 2017, $380,000 and $262,000 of equity-based compensation expense was included as a component of capitalized inventory, respectively. As of September 30, 2018 and 2017, $170,000 and $33,000 of equity-based compensation expense was included as a component of capitalized property and equipment, respectively.

As of September 30, 2018, unrecognized equity-based compensation expense related to unvested stock options and unvested restricted stock units was $21.5 million and $1.1 million, respectively. This is expected to be recognized over the years 2018 through 2023.

Included in the above-noted stock option grants and stock compensation expense are performance-based stock options which vest only upon the achievement of certain targets. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options. In August, 2018, the Company granted 225,000 performance based-options to certain employees. The Company recognized $545,000 of stock compensation expense for the three and nine months ended September 30, 2018, for performance-based stock options.