Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.19.2
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation
Stock-Based Compensation

We have two equity incentive plans: the 2008 Stock Option Plan (the “2008 Plan”) and the 2011 Equity Incentive Plan (the “2011 Plan”, and together with the 2008 Plan, the “Stock Option Plans”). The Stock Option Plans are meant to provide additional incentive to officers, employees and consultants to remain in our employment. Options granted are generally exercisable for up to 10 years. Effective April 9, 2018, the Company cannot issue additional options from the 2008 Plan.

At June 30, 2019, 1,174,875 shares remain available for future awards under the 2011 Plan. On July 23, 2019, the Company issued 100,000 stock options to each of its five non-employee directors. The options will vest in equal monthly installments over the next twelve months and have an exercise price of $0.15 per share.

A summary of employee and non-employee stock option activity for the six months ended June 30, 2019 is as follows:
 
Options Outstanding
 
Weighted-
Average
Remaining
Contractual
Term (in years)
 
Aggregate
Intrinsic
Value
(in thousands)
 
Number of
Shares
(in thousands)
 
Weighted-
Average
Exercise
Price
 
Outstanding January 1, 2019
3,004

 
$
5.77

 
5.70
 
$
—

Granted
95

 
0.44

 
 
 
 
Cancelled or expired
(1,356
)
 
5.55

 
 
 
 
Outstanding June 30, 2019
1,743

 
$
5.66

 
6.91
 
$
—

Exercisable June 30, 2019
1,149

 
$
7.92

 
5.93
 
$
—



Aggregate intrinsic value represents the difference between the fair value of our common stock and the exercise price of outstanding, in-the-money options.

As of June 30, 2019, total unrecognized compensation cost related to non-vested stock options granted to employees was $423,948 which we expect to recognize over the next 2.89 years.

The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model requires us to make assumptions and judgments about the variables used in the calculation, including the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. Forfeitures will be recorded when they occur. No compensation cost is recorded for options that do not vest. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on the historical volatility of our common stock. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future.

The following table presents the weighted-average assumptions used to estimate the fair value of options granted to employees during the periods presented:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2019
 
2018
Volatility
77.81
%
 
90.15
%
 
77.81
%
Risk free interest rate
2.89
%
 
2.54
%
 
2.89
%
Dividend yield
0.00
%
 
0.00
%
 
0.00
%
Term (years)
6.49

 
6.32

 
6.49

Weighted-average fair value of options granted during the period
$
0.63

 
$
0.34

 
$
0.63



Restricted stock awards have been granted to employees, directors and consultants as compensation for services. At June 30, 2019, there was $13,817 of unrecognized compensation cost related to non-vested restricted stock granted to employees and directors; we expect to recognize the cost over 0.25 years.

The following table summarizes the activities for our non-vested restricted stock awards for the six months ended June 30, 2019:
 
Non-vested Restricted Stock Awards
 
Number of
Shares
(in thousands)
 
Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2019
29

 
$
3.43

Vested
(9
)
 
4.15

Cancelled
(1
)
 
6.30

Non-vested at June 30, 2019
19

 
$
2.94



The TSA with Buyer described in Note 1 requires the Company to continue to employ individuals who will transfer to Buyer no later than six months from the closing of the transaction. Buyer will reimburse the Company for the payroll and benefit costs of these employees, but not the stock-based compensation. Therefore, stock-based compensation is considered part of the Company’s continuing operations. The following table presents the effects of stock-based compensation related to stock option and restricted stock awards to employees and non-employees on our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss during the periods presented (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Cost of revenues
$
28

 
$
90

 
$
56

 
$
181

Research and development
7

 
16

 
15

 
31

General and administrative
62

 
140

 
178

 
298

Sales and marketing
5

 
22

 
11

 
32

Total stock-based compensation
$
102

 
$
268

 
$
260

 
$
542