| Stock-Based Compensation | 9. Stock-Based Compensation Under the 2003 Plan, as
restated in June 2011, and amended in 2015, the Company is authorized to issue stock options covering up to 6,000,000 common shares. A summary of stock option
activity for the six months ended June 30, 2015 (unaudited) is presented below.
Weighted Average
Weighted Remaining
Number of Average Contractual
Shares Exercise Price Life (in Years)
Options outstanding at December 31, 2014 3,251,627 $ 6.07 5.60
Granted 517,848 $ 12.69
Exercised (508,864 ) $ 4.82
Forfeited or expired (187,135 ) $ 6.89
Options outstanding at June 30, 2015 3,073,476 $ 7.35
Options exercisable at June 30, 2015 1,397,293 $ 4.93 3.50 The estimated aggregate
intrinsic value of stock options exercisable at June 30, 2015 was approximately $12.1 million. As of June 30, 2015, there was $7.8
million of total unrecognized compensation cost related to outstanding stock options that will be recognized over a weighted average
period of 3.48 years. On January 1, 2015, the
Companys Chief Executive Officer exercised stock options expiring on that date on a cashless basis to purchase 59,063 shares
of common stock at an exercise price of $4.75 per share. Based on the closing market price of the Companys common stock
of $10.26 on December 31, 2014, the Chief Executive Officer tendered 27,344 shares of common stock that he owned to satisfy the
aggregate exercise price and surrendered 12,055 shares of common stock to satisfy the related $123,684 of income and payroll tax
withholding amounts related to the transaction. On June 2, 2015 and June
3, 2015 the Companys Chief Executive Officer exercised stock options on a cashless basis to purchase 150,000 shares of common
stock at an exercise price of $4.75 per share. Related to these exercises, the Chief Executive Officer tendered 50,753 shares of
common stock that he owned to satisfy the aggregate exercise price. During the six months ended
June 30, 2015, the Company granted stock options to purchase 517,848 shares of common stock to certain employees and contractors.
The options are exercisable for a period of ten years from the date of grant at $12.46 to $13.90 per share, which was the fair
value of the Companys common stock on such dates. The options vest over a period of either four or five years. The fair
value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $3,356,325 ($6.48
average per share). On a weighted average basis, assumptions used in the model were an expected term of 6.38 years, volatility
of 50.4%, a risk-free interest rate of 2.2% and an expected dividend rate of 0%. On May 15, 2015 shareholders
approved (1) an increase of 2,000,000 shares in the number of shares available for option awards under the 2011 Equity Incentive
Plan, and (2) an Employee Stock Purchase Plan, with an initial 250,000 shares with annual increases of shares available equal to
the lesser of (i) 1% of outstanding shares or (ii) 100,000 shares. The Company initiated an employee stock purchase
plan in June, 2015 for all eligible employees. Under the plan, shares of the Company's common stock may be purchased at six-month
intervals at 85% of the lower of the fair market value of the common stock (i) on the first trading day of the offering period
or (ii) on the last trading day of the purchase period. An employee may purchase in any one calendar year shares of common stock
having an aggregate fair market value of up to $25,000 determined as of the first trading day of the offering period. Additionally,
a participating employee may not purchase more than 100,000 shares of common stock in any one offering period. At June 30, 2015,
250,000 shares were reserved for future issuance. On June 19, 2015 the Company
entered into an at will employment agreement with Will McGuire to become the Companys President and Chief Executive Officer.
The Company has agreed to pay Mr. McGuire an annual salary of $390,000 and he will also be entitled to receive performance bonuses
which will be based on performance standards and goals established by the Companys Board of Directors. Upon termination
without cause, Mr. McGuire will be entitled to receive severance consisting of his salary for a period of 12 months following such
termination and his pro-rated target bonus through the balance of the calendar year in which such termination occurs. As part of
the agreement, the Company agreed to grant Mr. McGuire, effective on his official start date as an employee, options to purchase
420,000 shares of the Companys common stock and 190,000 Restricted Stock Units (RSUs). The options will be priced at the
closing price of the Companys stock on Nasdaq at the close of trading on the business day prior to his official start date
which is expected to be no later than August 18, 2015. The options and RSUs will vest over four years, with twenty-five percent
vesting on the first anniversary of the grant date, and the remainder vesting thereafter in twelve equal installments of six and
one quarter percent on the quarterly anniversaries of the grant date. The total stock-based compensation
recognized for stock-based awards in the condensed consolidated statements of operations for the three and six months ended June
30, 2015 and 2014 (unaudited) is as follows:
Three Months June 30, 2015
Three Months June 30, 2014
Six Months June 30, 2015
Six Months June 30, 2014
Cost of sales $ 62,186 $ 37,280 $ 161,622 $ 62,336
Research and development 38,413 23,300 117,961 137,634
Clinical and regulatory 51,569 20,193 121,174 33,765
Selling and marketing 96,028 24,854 185,520 41,558
General and administrative 315,953 122,326 475,051 548,471
Total $ 564,149 $ 227,953 $ 1,061,328 $ 823,764 |
