Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2018	Mar. 06, 2019	Jun. 29, 2018
Document And Entity Information
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	mram
Entity Registrant Name	EVERSPIN TECHNOLOGIES INC
Entity Central Index Key	0001438423
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 116.6
Entity Common Stock, Shares Outstanding		17,095,552
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 23,379	$ 12,950
Accounts receivable, net	7,522	4,041
Inventory	9,097	9,837
Prepaid expenses and other current assets	688	590
Total current assets	40,686	27,418
Property and equipment, net	4,286	3,946
Other assets	73	73
Total assets	45,045	31,437
Current liabilities:
Accounts payable	2,637	2,920
Accrued liabilities	5,001	3,748
Deferred income on shipments to distributors		1,720
Current portion of long-term debt	5,977	3,987
Total current liabilities	13,615	12,375
Long-term debt, net of current portion	6,509	8,178
Total liabilities	20,124	20,553
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 5,000,000 shares authorized; no shares issued and outstanding as of December 31, 2018 and December 31, 2017
Common stock, $0.0001 par value per share; 100,000,000 shares authorized; 17,095,456 and 12,817,201 shares issued and outstanding as of December 31, 2018 and December 31, 2017	2	1
Additional paid-in capital	158,912	128,422
Accumulated deficit	(133,993)	(117,539)
Total stockholders’ equity	24,921	10,884
Total liabilities and stockholders’ equity	$ 45,045	$ 31,437

Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Balance Sheets
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	17,095,456	12,817,201
Common stock, shares outstanding	17,095,456	12,817,201

Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Total revenue	$ 49,417	$ 35,936
Cost of sales	24,083	14,451
Gross profit	25,334	21,485
Operating expenses:
Research and development	23,637	25,437
General and administrative	12,551	11,516
Sales and marketing	6,467	4,740
Total operating expenses	42,655	41,693
Loss from operations	(17,321)	(20,208)
Interest expense	(890)	(764)
Other income, net	457	118
Loss on extinguishment of debt		(246)
Net loss and comprehensive loss	$ (17,754)	$ (21,100)
Net loss per common share, basic and diluted	$ (1.08)	$ (1.69)
Weighted-average shares used to compute net loss per common share, basic and diluted	16,372,638	12,484,984
Product sales
Total revenue	$ 39,514	$ 30,838
Licensing, royalty and other revenue
Total revenue	$ 9,903	$ 5,098

Statements of Stockholders’ Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2016	$ 1	$ 123,309	$ (96,439)	$ 26,871
Balance (in shares) at Dec. 31, 2016	12,498,128
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon exercise of stock options		1,337		1,337
Issuance of common stock upon exercise of stock options (in shares)	281,483
Issuance of common stock under Employee Stock Purchase Plan		256		256
Issuance of common stock under Employee Stock Purchase Plan (in shares)	37,590
Compensation expense related to vesting of common stock issued to GLOBALFOUNDRIES		1,472		1,472
Stock-based compensation expense		2,048		2,048
Net loss			(21,100)	(21,100)
Balance at Dec. 31, 2017	$ 1	128,422	(117,539)	10,884
Balance (in shares) at Dec. 31, 2017	12,817,201
Increase (Decrease) in Stockholders' Equity
Adjustment to opening balance for adoption of new accounting standard			1,300	1,300
Issuance of common stock in secondary offering, net of issuance costs	$ 1	24,523		24,524
Issuance of common stock in secondary offering, net of issuance costs (in shares)	3,772,447
Issuance of common stock under stock incentive plans		2,503		$ 2,503
Issuance of common stock under stock incentive plans (in shares)	505,808
Issuance of common stock upon exercise of stock options (in shares)				448,411
Issuance of warrant		43		$ 43
Compensation expense related to vesting of common stock issued to GLOBALFOUNDRIES		753		753
Stock-based compensation expense		2,668		2,668
Net loss			(17,754)	(17,754)
Balance at Dec. 31, 2018	$ 2	$ 158,912	$ (133,993)	$ 24,921
Balance (in shares) at Dec. 31, 2018	17,095,456

Statement of Cash Flows - USD ($) $ in Thousands	12 Months Ended
Statement of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Net loss	$ (17,754)	$ (21,100)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,450	1,191
Loss on disposal of property and equipment	19
Stock-based compensation	2,668	2,048
Non-cash loss on extinguishment of debt		185
Non-cash interest expense	375	297
Compensation expense related to vesting of common stock to GLOBALFOUNDRIES	753	1,472
Changes in operating assets and liabilities:
Accounts receivable	(3,816)	(385)
Inventory	694	(3,871)
Prepaid expenses and other current assets	(98)	460
Other assets		(23)
Accounts payable	(178)	809
Accrued liabilities	1,253	136
Deferred income on shipments to distributors		(107)
Shipping term reversal	(39)
Net cash used in operating activities	(14,673)	(18,888)
Cash flows from investing activities
Purchases of property and equipment	(1,914)	(3,070)
Net cash used in investing activities	(1,914)	(3,070)
Cash flows from financing activities
Proceeds from the issuance of common stock, net of offering costs	24,524
Proceeds from debt	1,000	12,000
Payments on debt	(1,000)	(8,356)
Payments of debt issuance costs		(49)
Payments on capital lease obligation	(11)	(7)
Proceeds from exercise of stock options and purchase of shares in employee stock purchase plan	2,503	1,593
Net cash provided by financing activities	27,016	5,181
Net increase (decrease) in cash and cash equivalents	10,429	(16,777)
Cash and cash equivalents at beginning of period	12,950	29,727
Cash and cash equivalents at end of period	23,379	12,950
Supplementary cash flow information:
Interest paid	504	467
Non-cash investing and financing activities:
Purchases of property and equipment in accounts payable	11	116
Purchases of property and equipment under capital lease obligations		$ 31
Issuance of warrant in lieu of financing costs	$ 43

Organization and Operations	12 Months Ended
Organization and Operations	Dec. 31, 2018
Organization and Operations
Organization and Operations	1. Organization and Operations Everspin Technologies, Inc. (the Company) was incorporated in Delaware on May 16, 2008. The Company’s magnetoresistive random access memory (MRAM) solutions offer the persistence of non-volatile memory with the speed and endurance of random access memory (RAM) and enable the protection of mission critical data particularly in the event of power interruption or failure. The Company’s MRAM solutions allow its customers in the industrial, automotive and transportation, and enterprise storage markets to design high performance, power efficient and reliable systems without the need for bulky batteries or capacitors. Ability to continue as a going concern The Company believes that its existing cash and cash equivalents as of December 31, 2018 will be sufficient to meet its anticipated cash requirements for at least the next 12 months from the financial statement issuance date. The Company’s future capital requirements will depend on many factors, including its growth rate, the timing and extent of its spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products. The Company may be required at some point in the future to seek additional equity or debt financing, to sustain operations beyond that point, and such additional financing may not be available on acceptable terms or at all. If the Company is unable to raise additional capital or generate sufficient cash from operations to adequately fund its operations, it will need to curtail planned activities to reduce costs. Doing so will likely harm its ability to execute on its business plan.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, fair value of assets and liabilities, inventory, product warranty reserves, income taxes, and stock-based compensation. The Company believes its estimates and assumptions are reasonable; however, actual results may differ from the Company’s estimates.

Segments

The Company’s chief operating decision maker is its Chief Executive Officer who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the entire Company. As a result, the Company has single operating and reportable segment..

Cash and Cash Equivalents

The Company considers all highly liquid, short-term investments with maturity dates of 90 days or less at the date of purchase to be cash equivalents. The Company’s cash equivalents consist solely of money market funds.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company generally does not require collateral or other security in support of accounts receivable. Allowances are provided for individual accounts receivable when the Company becomes aware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy, deterioration in the customer’s operating results or change in financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. The Company also considers a number of factors in evaluating the sufficiency of its allowance for doubtful accounts, including the length of time receivables are past due, significant one-time events, creditworthiness of customers and historical experience. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At December 31, 2018 and 2017, there was no allowance for doubtful accounts.

The Company establishes an allowance for product returns. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of products when evaluating the adequacy of sales returns. As the returns are processed as credits on future purchases, the allowance is recorded against the balance of trade accounts receivable. In addition, the Company establishes an allowance for estimated price concessions related to its distributer agreements. The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales. The allowance for product returns and the allowance for price concessions were $144,000 and $569,000 at December 31, 2018, respectively, and $147,000 and $0 at December 31, 2017, respectively.

Accounts receivable, net consisted of the following (in thousands):


	December 31,
	2018		2017
Trade accounts receivable	$	7,297	$	4,188
Unbilled accounts receivable		938		—
Allowance for accounts receivable		(713)		(147)
Accounts receivable, net	$	7,522	$	4,041

Concentration of Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents that are held by a financial institution in the United States and accounts receivable. Amounts on deposit with a financial institution may at times exceed federally insured limits. The Company maintains its cash accounts with high credit quality financial institutions and accordingly, minimal credit risk exists with respect to the financial institutions.

Significant customers are those which represent more than 10% of the Company’s total revenue or net accounts receivable balance at each respective balance sheet date. For the purposes of this disclosure, the Company defines “customer” as the entity that is purchasing the products or licenses directly from the Company, which includes the distributors of the Company’s products in addition to end customers that the Company sells to directly. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows:


	Revenue				Accounts Receivable, net
	Year Ended				As of
	December 31,				December 31,
Customers	2018		2017		2018		2017
Customer A	13	%	16	%	*		*
Customer B	11	%	*		*		*
Customer C	10	%	*		*		11	%
Customer D	*		15	%	*		*
Customer E	*		*		23	%	*
Customer F	*		*		21	%	*
Customer G	*		*		11	%	15	%
Customer H	*		*		11	%	*
Customer I	*		*		*		10	%

*Less than 10%

Inventory

Inventory is valued at the lower of cost, using the first-in, first-out or specific identification method, or market. The carrying value of inventory is adjusted for excess and obsolete inventory based on inventory age, shipment history and the forecast of demand over a specific future period. At the point of loss recognition, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that new cost basis.

Fair Value of Financial Instruments

Fair value is defined as an exit price, representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. The framework for measuring fair value provides a three-tier hierarchy prioritizing inputs to valuation techniques used in measuring fair value as follows:

Level 1— Observable inputs such as quoted prices for identical assets or liabilities in active markets;

Level 2— Inputs, other than quoted prices for identical assets or liabilities in active markets, which are observable either directly or indirectly; and

Level 3— Unobservable inputs in which there is little or no market data requiring the reporting entity to develop its own assumptions.

The carrying value of accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments. As of December 31, 2018, based on Level 2 inputs and the borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s variable interest rate debt, excluding unamortized debt issuance costs, approximates fair value. The Company’s financial instruments consist of Level 1 assets. Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 assets consist of highly liquid money market funds that are included in cash equivalents.

The following tables sets forth the fair value of the Company’s financial assets measured at fair value on a recurring basis (in thousands):


	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	23,478	$	—	$	—	$	23,478
Total assets measured at fair value	$	23,478	$	—	$	—	$	23,478


	December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	13,369	$	—	$	—	$	13,369
Total assets measured at fair value	$	13,369	$	—	$	—	$	13,369

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation begins at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:


	Useful Lives
Computer and network equipment		2 years
Manufacturing equipment		2 – 7 years
Furniture and fixtures		7 years
Software		3 years

Leasehold improvements are amortized over the shorter of the lease term or useful life. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Amortization expense of assets acquired through capital leases is included in the statements of operations and comprehensive loss.

Impairment of Long-lived Assets

The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. There have been no impairments of the Company’s long-lived assets during any of the periods presented.

Leases

The Company leases office, lab, and manufacturing space in various locations. Rent expense under operating leases is recognized on a straight-line basis over the lease term taking into consideration rent abatements, scheduled rent increases and any lease incentives.

Debt Issuance Costs

The Company defers and amortizes issuance costs, underwriting fees, end of term payments, and related expenses incurred in connection with the issuance of debt instruments using the effective interest method over the terms of the respective instruments. Debt issuance costs are reflected as a direct reduction of the carrying amount of the related debt liability.

Revenue Recognition

The Company recognizes revenue when a customer obtains control of the promised products or services, in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue is recognized net of allowances for returns and price concessions, and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Nature of Products and Services

The Company’s revenue is derived from the sale of MRAM-based products in discrete unit form, licenses of and royalties on its MRAM and magnetic sensor technology, the sale of backend foundry services and design services to third parties. Sales of products in discrete unit form are recognized at a point in time, revenue related to licensing agreements is recognized when the Company has delivered control of the technology, revenue related to royalty agreements is recognized in the period in which sales generated from products sold using the Company’s technology occurs, sales of backend foundry services are recognized over time, and design services to third parties are recognized either at a point in time or over time, depending on the nature of the services.

Product Revenue

For products sold in their discrete form, the Company either sells its products directly to original equipment manufacturers (OEMs), original design manufacturers (ODMs) and contract manufacturers (CMs), or through a network of distributors, who in turn sell to those customers. For sales directly to OEMs, ODMs and CMs, revenue is recognized when the OEM, ODM or CM obtains control of the product, which occurs at a point in time, generally upon shipment to the customer.

The Company sells the majority of its products to its distributors at a uniform list price. However, distributors may resell the Company’s products to end customers at a very broad range of individually negotiated price points. Distributors are provided with price concessions subsequent to the delivery of product to them and such amounts are dependent on the end customer and product sales price. The price concessions are based on a variety of factors, including customer, product, quantity, geography and competitive differentiation. Price protection rights grant distributors the right to a credit in the event of declines in the price of the Company’s products. Under these circumstances, the Company remits back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors’ outstanding accounts receivable balance. The credits are on a per unit basis and are not given to the distributor until the distributor provides information regarding the sale to their end customer. The Company estimates these credits and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of an allowance for price concessions due to distributors. The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales. Revenue on shipments to distributors is recorded when control of the products has been transferred to the distributor.

The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates its product return liability by analyzing its historical returns, current economic trends and changes in customer demand and acceptance of products. The Company has received insignificant returns to date and believes that returns of its products will continue to be minimal.

At the time of shipment to distributors, the Company records a trade receivable for the selling price as there is a legally enforceable obligation of the distributor to pay for the product delivered, an allowance is recorded for the estimated discount that will be provided to the distributor, and the net of these amounts is recorded as revenue on the statement of operations.

License Revenue

For licenses of technology, recognition of revenue is dependent upon whether the Company has delivered rights to the technology, and whether there are future performance obligations under the contract. In some instances, the license agreements call for future events or activities to occur in order for milestones amounts to become due from the customer. The terms of such agreements include payment to the Company of one or more of the following: non-refundable upfront fees; and royalties on net sales of licensed products. Historically, these license agreements have not included other future performance obligations for the Company once the license has been transferred to the customer.

Revenue from non-refundable up-front payments is recognized when the license is transferred to the customer and the Company has no other performance obligations.

Royalties

Revenue from sales-based royalties from licenses of the Company’s technology are recognized at the later of when (1) the sale occurs or (2) the performance obligation to which some or all of the sales-based royalty has been allocated is satisfied (in whole or in part).

Other Revenue

For certain revenue streams, the Company recognizes revenue based on the pattern of transfer of the services. The Company uses the input method of measuring costs incurred to date compared to total estimated costs to be incurred under the contract as this method most faithfully depicts its performance. The Company will record an unbilled receivable (within accounts receivable, net) for the portion of the work that has been completed but not invoiced at the end of each reporting period.

Revenue from milestone payments must be estimated using either the expected value method or the most likely amount method. At the inception of each agreement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price by using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability or achievement of each such milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

Product Warranty

The Company generally sells products with a limited warranty of product quality and a limited indemnification of customers against intellectual property infringement claims related to the Company’s products. The Company accrues for known warranty and indemnification issues if a loss is probable and can be reasonably estimated, and accrues for estimated losses incurred for unidentified issues based on historical experience. A warranty liability was not recorded at December 31, 2018 and 2017, as the estimated future warranty costs were not material based on the Company’s historical experience.

Research and Development

Research and development expenses are incurred in support of internal development programs or as part of our joint development agreement with GLOBALFOUNDRIES and joint collaboration agreement with Silterra Malaysia Sdn. Bhd. (see Note 10). Research and development expenses include personnel-related costs (including stock-based compensation), circuit design costs, purchases of materials and laboratory supplies, fabrication and packaging of experimental integrated circuit products, depreciation of research and development related capital equipment and overhead, and are expensed as incurred.

Stock-based Compensation

Stock-based compensation arrangements include stock option grants and restricted stock unit (RSU) awards under the Company’s equity incentive plans, as well as shares issued under the Company’s Employee Stock Purchase Plan (ESPP), through which employees may purchase the Company’s common stock at a discount to the market price.

The Company measures its stock option grants made to employees based on the estimated fair value of the options as of the grant date using the Black-Scholes option-pricing model. Stock-based compensation expense is recognized over the requisite service period using the straight-line method. The Company has made an accounting policy election to account for forfeitures as they occur, rather than estimating expected forfeitures at the time of the grant.

Stock-based compensation expense for options granted to non-employees as consideration for services received is measured on the date of performance at the fair value of the consideration received or the fair value of the equity instruments issued, using the Black-Scholes option-pricing model, whichever can be more reliably measured. Compensation expense for options granted to non-employees is periodically remeasured as the underlying options vest.

Income Taxes

The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company must then assess the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. The Company does not have any unrecognized tax benefits.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period less shares subject to repurchase, without consideration of potentially dilutive securities. Diluted net loss per common share is the same as basic net loss per common share since the effect of potentially dilutive securities is anti-dilutive.

Prior Period Reclassifications

Certain amounts in the prior period have been reclassified to conform with current period presentation. There was no impact on total revenue or net loss for the prior period.

Recently Adopted Pronouncements

ASU No. 2014-09, Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014‑09, Revenue from Contracts with Customers (Topic 606). Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. The new standard permits adoption either by using (i) a full retrospective approach for all periods presented in the period of adoption or (ii) a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. The new standard is effective for annual reporting periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of its accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

Topic 606 permits the application of certain practical expedients. The Company’s billing practices approximate the Company’s performance as measured by an output method, where each output represents the completion of a performance obligation. Accordingly, the Company utilizes the invoice practical expedient as defined in Topic 606, resulting in recognition of revenue in the amount that the Company has the right to invoice.

Unsatisfied performance obligations primarily represent contracts for products with future delivery dates and with an original expected duration of one year or less. As allowed under Topic 606, the Company has opted to not disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year.

The Company incurs direct and incremental costs of obtaining contracts and such costs are expensed as incurred, as the life of the underlying contract is less than one year. Accordingly, the Company has concluded, based on the structure of its contracts, no adjustments are necessary under Topic 606.

As a result of the adoption of the new standard, the Company changed its accounting policy for revenue recognition and the details of the significant changes and quantitative impact of the changes are disclosed below.

Distributor sales – Some of the Company's contracts with distributors provide the distributor with certain concessions and price protection credits. Under Topic 605, Revenue, these concessions and price protection credits were not fixed or determinable and, as a result, the associated revenue was deferred until delivery of the product to the end customer. At the time of shipment to distributors, the Company recorded a trade receivable for the selling price as there was a legally enforceable obligation of the distributor to pay for the product delivered, inventory was reduced by the carrying value of goods shipped, and the net of these amounts, the gross profit, was recorded as deferred income on shipments to distributors on the balance sheet. Under Topic 606, the Company recognizes revenue from sales to distributors when control of the product is transferred to the distributor and estimates the amount of the concessions and price protection credits at the point of revenue recognition. Accordingly, the balance of the deferred income on shipments to distributors was eliminated as a cumulative effect adjustment of implementing Topic 606 as of January 1, 2018, net of the Company’s estimate of concessions and price protection credits for those contracts.

Performance obligations delivered over time – Topic 605 permitted straight-line recognition of revenue for performance obligations that were delivered over time. The new revenue standard requires an entity to recognize revenue based on the pattern of transfer of the services. Entities must use either an input method or an output method to measure progress toward complete satisfaction of a performance obligation. The Company determined that the input method of measuring time elapsed to date compared to total estimated time to be incurred under the contract most faithfully depicts its performance. Under Topic 606, the Company will record an unbilled receivable (within accounts receivable, net) for the portion of the service that has been completed but not invoiced at the end of each reporting period.

Milestone payments – Topic 605 permitted recognition using the milestone method, whereby revenue was recognized upon the completion of substantive milestones once the customers acknowledge the milestones have been met and the collection of the amounts is reasonably assured. The milestone method no longer exists under the new revenue standard. Revenue from milestone payments must be estimated using either the expected value method or the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. The adoption of Topic 606 did not have an impact on milestone revenue recorded to date as the practical expedient adopted for a single contract resulted in revenue recognition similar to milestone revenue under Topic 605.

Sales-based royalties – Topic 605 permitted recognition of royalties when reported to the Company, which generally coincided with the receipt of payment. Under the new revenue standard, revenue generated from sales-based royalties from licenses of technology are recognized at the later of when (1) the sale occurs or (2) the performance obligation to which some or all of the sales-based royalty has been allocated is satisfied (in whole or in part).

There was no impact to the recognition of revenue for non-refundable, up-front payments for licenses of the Company’s technology, which occurs when the license is transferred to the customer and there are no other performance obligations.

The change in revenue recognition upon adoption of Topic 606 resulted in a decrease in the accumulated deficit balance of $1.3 million on January 1, 2018.

The following table summarizes the impact of adopting Topic 606 on select balance sheet line items (in thousands):


					Balances without
					the adoption of
December 31, 2018	As reported		Adjustments		Topic 606
Accounts receivable, net	$	7,522	$	(1,211)	$	6,311
Inventory		9,097		190		9,287
Total current assets		40,686		(1,021)		39,665
Total assets		45,045		(1,021)		44,024
Deferred income on shipments to distributors		—		3,017		3,017
Total current liabilities		13,615		3,017		16,632
Total liabilities		20,124		3,017		23,141
Accumulated deficit		(133,993)		(4,038)		(138,031)
Total liabilities and stockholders’ equity		45,045		(1,021)		44,024

The following table summarizes the impact of adopting Topic 606 on select statement of operations line items (in thousands, except per share data):


					Results without
					the adoption of
Year Ended December 31, 2018	As reported		Adjustments		Topic 606
Product sales	$	39,514	$	(2,915)	$	36,599
Licensing, royalty, and other revenue		9,903		(577)		9,326
Total revenue		49,417		(3,492)		45,925
Cost of sales		24,083		(754)		23,329
Gross profit		25,334		(2,738)		22,596
Loss from operations		(17,321)		(2,738)		(20,059)
Net loss and comprehensive loss		(17,754)		(2,738)		(20,492)
Net loss per common share, basic and diluted		(1.08)		(0.17)		(1.25)

The adoption had no impact to cash used in operating, investing or financing activities in the statement of cash flows.

ASU No. 2017-09, Compensation-Stock Compensation

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting, which is intended to amend the scope of modification accounting for share-based payment arrangements. The amendments in the update provide guidance on types of changes to the terms or conditions of share-based payment awards that would require the Company to apply modification accounting under ASC 718, Compensation-Stock Compensation. This ASU is effective for annual reporting periods beginning after December 15, 2017, and early adoption was permitted. The Company adopted this standard on January 1, 2018, and the impact of its adoption on the Company’s financial statements was not material.

ASU No. 2016-15, Statement of Cash Flows

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows. The standard is effective for fiscal years and interim periods beginning after December 15, 2017. The standard should be applied retrospectively and early adoption was permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2018, and the impact of its adoption on the Company’s financial statements was not material.

Recently Issued Pronouncements

In February 2016, the FASB issued ASU No. 2016‑02, Leases, which establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 Leases and ASU No. 2018-11, Leases (Topic 842) Targeted Improvements. ASU 2018-10 clarifies how to apply certain aspects of ASU 2016-02. The Company will adopt this standard on January 1, 2019 using the modified retrospective method. The Company is substantially complete with its analysis as to the impact of adoption and estimates that the adoption will result in the recognition of right-of-use assets and lease liabilities for operating leases within the range of approximately $3.6 million to $4.0 million on its balance sheet, with no material impact to its statement of operations.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is evaluating the impact of the adoption of ASU 2016-13 on its financial statements.

In June 2018, the FASB issued ASU No. 2018‑07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share based payment. The ASU expands the scope of Topic 718, (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606. The Company adopted this standard on January 1, 2019, and the impact of its adoption on the Company’s financial statements was not material.

In August 2018, the Securities and Exchange Commission (SEC) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018, however in light of the proximity of the effective date to the filing date for most filers’ quarterly reports, the SEC will allow a filer’s first presentation of the changes in stockholders’ equity to be included in its Form 10-Q for the quarter that begins after the effective date. The Company will begin to present a statement of changes in stockholders’ equity in its quarterly financial statements beginning on January 1, 2019.

Revenue

12 Months Ended

Dec. 31, 2018

Revenue

Revenue

3. Revenue

The Company sells the majority of its products to its distributors, but does recognize some revenue under licensing and royalty agreements. The following table presents the Company’s revenues disaggregated by sales channel, (in thousands):


	Year Ended
	December 31, 2018
Distributor	$	35,126
Non-distributor		14,291
Total revenue	$	49,417

The following table presents the Company’s revenues disaggregated by timing of recognition (in thousands):


	Year Ended
	December 31, 2018
Point in time	$	45,102
Over time		4,315
Total revenue	$	49,417

The following table presents the Company’s revenues disaggregated by type (in thousands):


	Year Ended
	December 31, 2018
Product sales	$	39,514
License fees		5,000
Royalties		588
Other revenue		4,315
Total revenue	$	49,417

The Company recognizes revenue in three primary geographic regions: North America; Europe, Middle East and Africa (EMEA); and Asia-Pacific and Japan (APJ). The following table presents the Company’s revenues disaggregated by the geographic region to which the product is delivered or licensee is located (in thousands):


	Year Ended
	December 31, 2018
North America	$	9,124
EMEA		11,175
APJ		29,118
Total revenue	$	49,417

Balance Sheet Components

12 Months Ended

Dec. 31, 2018

Balance Sheet Components

Balance Sheet Components

4. Balance Sheet Components

Inventory

Inventory consisted of the following (in thousands):


	December 31,
	2018		2017
Raw materials	$	288	$	682
Work-in-process		6,759		7,970
Finished goods		2,050		1,185
Total inventory	$	9,097	$	9,837

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	December 31,
	2018		2017
Manufacturing equipment	$	11,723	$	10,465
Computer and network equipment		820		710
Furniture and fixtures		110		218
Software		680		455
Leasehold improvements		1,432		1,474
Total property and equipment, gross		14,765		13,322
Less: accumulated depreciation		(10,479)		(9,376)
Total property and equipment, net	$	4,286	$	3,946

Depreciation and amortization expense during the years ended December 31, 2018 and 2017 was $1.5 million and $1.2 million, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


	December 31,
	2018		2017
Accrued payroll-related expenses	$	1,558	$	1,331
Accrued joint development agreement expenses		661		749
Accrued inventory		1,678		897
Deferred rent		390		230
Accrued sales commissions payable to sales representatives		51		75
Other		663		466
Total accrued liabilities	$	5,001	$	3,748

Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies

Commitments and Contingencies

5. Commitments and Contingencies

Operating Leases

During 2017, the Company entered into a lease for 27,974 square feet of office space for its corporate headquarters located in Chandler, Arizona. The lease expires in January 2022, however the Company has the option to renew the lease through August 2024. Rent expense is recognized on a straight-line basis over the term of the leases and, accordingly, the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability.

In April 2018, the Company entered into a lease termination agreement that released the Company from any further obligations on its previous headquarters’ space in Chandler, Arizona. The remaining unamortized balance of deferred rent of $18,000 was written off and a lease termination fee of $43,000 was recognized as rent expense on the statement of operations and comprehensive loss.

The Company leases office and lab space for its design facility located in Austin, Texas. The lease expires in January 2022.

The Company has another operating lease for its Arizona manufacturing facility, which includes office and fabrication space. This lease is cancellable upon 24 months’ notice by either of the parties. In March 2017, the Company amended the premises covered to remove laboratory space, decrease fabrication space and expand office space. In October 2017, the Company extended the lease through January 31, 2020, which could be further extended through January 31, 2021 if an option to extend is initiated by the lessor. In August 2018, the Company amended its lease agreement for its Arizona manufacturing facility to extend the lease term through January 2021.

The following is a schedule of minimum rental commitments under the Company’s operating leases at December 31, 2018 (in thousands):


Year Ending December 31,	Amount
2019	$	1,645
2020		1,701
2021		846
2022		47
2023		—
Thereafter		—
Total minimum lease payments	$	4,239

Total rent expense was $1.6 million and $1.4 million for the years ended December 31, 2018 and 2017, respectively.

Legal Proceedings

From time to time, the Company may become involved in legal proceedings arising from the ordinary course of its business. Management is currently not aware of any matters that it expects will have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Indemnifications

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance.

Debt and Related Warrants

12 Months Ended

Dec. 31, 2018

Debt and Related Warrants

Debt and Related Warrants

6. Debt and Related Warrants

Prior Facilities

In June 2015, the Company executed a Loan and Security Agreement with Ares Venture Finance (2015 Credit Facility) comprising an $8.0 million term loan and a $4.0 million revolving loan. In April 2017, the Company repaid the outstanding balance of $1.1 million on the revolving loan at which time the unamortized balance of the debt discount of $10,000 was recognized as a loss on extinguishment of debt. In May 2017, the Company repaid the outstanding principal balance of $6.2 million on the term loan at which time the unamortized balance of the debt discount was $175,000, and paid a prepayment penalty of $61,000. The unamortized debt discount balance and the prepayment penalty were recognized as a loss on extinguishment of debt in the statements of operations and comprehensive loss.

2017 Credit Facility

On May 4, 2017, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (2017 Credit Facility) for a $12.0 million term loan. The term loan provided for interest at a floating rate equal to the prime rate minus 0.75%. The term loan provided for a period of interest-only payments through April 30, 2018, followed by fixed principal and interest payments based on either a 24-month amortization schedule or a 36-month amortization schedule if the Company met certain sales milestones. As of December 31, 2017, the Company determined it would not meet the sales milestones and as such the term loan was based on a 24-month amortization schedule. An end of term fee of 6% of the amount borrowed must be made when the loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise.

On July 6, 2018, the Company entered into the First Amendment to the 2017 Credit Facility (the Amended Credit Facility). The Amended Credit Facility extends the period of interest-only payments through December 31, 2018, followed by fixed principal and interest payments based on either a 24-month or a 36-month amortization schedule if the Company achieves certain milestones. The Company determined it would not meet the milestones, as such the Amended Credit Facility is based on a 24-month amortization schedule. The Amended Credit Facility provides for interest at a floating rate equal to the prime rate minus 0.75%. As of December 31, 2018, the interest rate was 4.75%. The terms of the Amended Credit Facility include the refund of $1.0 million in principal payments previously made by the Company. An end of term fee of 7% of the amount borrowed must be made when the loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise. The additional payment is being accreted using the effective interest method. As of December 31, 2018, the effective interest rate under the Amended Credit Facility was 7.77%. Borrowings under the Amended Credit Facility mature in December 2020.

Security for the Amended Credit Facility includes all of the Company’s assets except for intellectual property. The Company is required to comply with certain covenants under the Amended Credit Facility, including requirements to maintain a minimum liquidity ratio, meet certain revenue targets, and restrictions on certain actions without the consent of the lender, such as limitations on its ability to engage in mergers or acquisitions, sell assets, enter into transactions involving related parties, incur indebtedness or grant liens or negative pledges on its assets, make loans or make other investments. Under these covenants, the Company is prohibited from paying cash dividends with respect to its capital stock. The Company was in compliance with all covenants at December 31, 2018. The Amended Credit Facility contains a material adverse effect clause which provides that an event of default will occur if, among other triggers, an event occurs that could reasonably be expected to result in a material adverse effect on the Company’s business, operations or condition, or on the Company’s ability to perform its obligations under the term loan. As of December 31, 2018, management believes that it is remote that the clause will be triggered within the next twelve months, and therefore the term loan is classified as long-term.

The carrying value of the Company’s Amended Credit Facility at December 31, 2018, was as follows (in thousands):


	Current		Long-Term
	Portion		Debt		Total
Credit Facility	$	6,000	$	6,840	$	12,840
Unamortized debt discounts		(33)		(341)		(374)
Net carrying value	$	5,967	$	6,499	$	12,466

The carrying value of the Company’s 2017 Credit Facility at December 31, 2017, was as follows (in thousands):


	Current		Long-Term
	Portion		Debt		Total
Credit Facility	$	4,000	$	8,720	$	12,720
Unamortized debt discounts		(23)		(563)		(586)
Net carrying value	$	3,977	$	8,157	$	12,134

The table below includes the principal repayments due under the Amended Credit Facility as of December 31, 2018 (in thousands):


	Principal Repayment
	as of December 31, 2018
2019	$	6,000
2020		6,840
2021		—
2022		—
2023		—
Total principal repayments	$	12,840

Capital Lease Obligations

The Company leases certain equipment under capital lease obligations expiring in October 2020. The balance of the capital lease obligations was $20,000 and $31,000 at December 31, 2018 and 2017, respectively.

Property and equipment under capital leases amounted to $31,000 at December 31, 2018 and 2017. Accumulated depreciation and amortization on these assets was $13,000 and $2,000 at December 31, 2018 and 2017, respectively.

Future minimum rental commitments under the Company’s capital lease obligations are $10,000 for each of the years ended December 31, 2019 and 2020.

Stockholders' Equity

12 Months Ended

Dec. 31, 2018

Stockholders’ Equity

Stockholders’ Equity

7. Stockholders’ Equity

Common Stock

Common stockholders are entitled to dividends if and when declared by the board of directors. As of December 31, 2018, no dividends on common stock had been declared by the board of directors.

In February 2018, the Company completed a follow-on underwritten public offering of its common stock under its Registration Statement filed in November 2017 (File No. 333-221331), selling 3,772,447 shares of its common stock at an offering price of $7.00 per share for proceeds of $24.5 million, net of $1.9 million of underwriting discounts and commissions and other offering costs.

The Company had reserved shares of common stock for future issuance as follows:


	December 31,
	2018	2017
Options issued and outstanding	1,475,299	1,593,195
Shares available for future option grants	764,145	83,929
RSUs subject to future vesting	93,560	30,680
Common stock warrants	27,836	27,690
Total	2,360,840	1,735,494

Warrants

In connection with a credit facility, Silicon Valley Bank held warrants to purchase 9,229 shares of the Company’s common stock at an exercise price of $26.00 per share. These warrants were cancelled when the Company entered into the Amended Credit Facility (see Note 6) and the Company subsequently issued a warrant to SVB for the purchase of 9,375 shares of the Company’s common stock at an exercise price of $8.91 per share. The warrant can be exercised at any time and expires five years after the date of issuance. The Company estimated the fair value of the warrant as $43,000 on the date of issuance using the Black-Scholes option pricing model. The warrant was recorded as a discount to the debt and will be amortized into interest expense over the remaining term of the loan using the effective interest method.

In connection with the 2015 Credit Facility, Ares Venture Finance holds a warrant to purchase 18,461 shares of the Company’s common stock at an exercise price of $26.00 per share. The warrant can be exercised at any time and expires 10 years after the date of issuance.

Stock-Based Compensation

12 Months Ended

Dec. 31, 2018

Stock-Based Compensation

Stock-Based Compensation

8. Stock-Based Compensation

2016 Employee Incentive Plan

The Company’s board of directors adopted the 2016 Equity Incentive Plan (the 2016 Plan) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The 2016 Plan became effective on October 7, 2016, the date the Company’s registration statement was declared effective by the SEC.

The Company’s 2016 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation to employees, directors and consultants. In addition, the Company’s 2016 Plan provides for the grant of performance cash awards to employees, directors and consultants.

The maximum number of shares of common stock that may be issued under the Company’s 2016 Plan is 500,000 subject to an automatic increase on January 1 of each year, beginning on January 1, 2017, and continuing through and including January 1, 2026, by 3% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors.

2008 Employee Incentive Plan

The 2008 Equity Incentive Plan (the 2008 Plan) provided for the issuance of incentive stock options (ISO), nonqualified stock options, and other stock compensation awards. Under the terms of the 2008 Plan, the exercise price of an ISO shall be not less than 100% of the fair value of the stock at the date of grant, as determined by the board of directors, or in the case of certain ISOs, at 110% of the fair market value at the date of grant.

The term and vesting periods for options granted under the 2008 Plan were determined by the Company’s board of directors. Options granted generally vest over four years. Options must be exercised within a 10‑year period or sooner if so specified within the option agreement.

No further grants will be made under the Company’s 2008 Plan. However, any outstanding stock awards granted under the 2008 Plan will remain outstanding, subject to the terms of the Company’s 2008 Plan and the applicable stock award agreements, until such outstanding stock awards that are stock options are exercised or until they terminate or expire by their terms, or until such stock awards are fully settled, terminated or forfeited. At December 31, 2018, 407,780 options under the 2008 Plan remained outstanding.

Summary of Stock Option Activity

The following table summarizes the stock option and award activity for all grants under the 2008 Plan and 2016 Plan:


		Options Outstanding
			Weighted-		Weighted-
	Options and		Average		Average
	Awards		Exercise		Remaining	Aggregate
	Available for	Number of	Price Per		Contractual	Intrinsic
	Grant	Options	Share		Life (years)	Value
						(In thousands)
Balance—December 31, 2017	83,929	1,593,195	$	8.88	6.6	$	1,997
Immaterial prior period adjustment	(1,026)	11,477		4.84
Authorized	1,084,516	—		—
RSUs granted	(80,950)	—		—
RSUs cancelled/forfeited	3,000	—		—
Options granted	(434,665)	434,665		8.52
Options exercised	—	(448,411)		4.99		$	1,915
Options cancelled/forfeited	109,341	(115,627)		8.68
Balance—December 31, 2018	764,145	1,475,299	$	7.60	7.8	$	284
Options exercisable—December 31, 2018		617,718	$	6.79	6.4	$	276

During the years ended December 31, 2018 and 2017, the Company granted options with a weighted-average grant date fair value of $4.45 and $6.48 per share, respectively.

The total fair value of options vested during the year was $1.9 million and $1.5 million, for the years ended December 31, 2018, and 2017, respectively.

2016 Employee Stock Purchase Plan

The Company’s board of directors adopted the 2016 Employee Stock Purchase Plan (the ESPP) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward the Company’s success and that of the Company’s affiliates. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. The board of directors, or a duly authorized committee thereof, will administer the Company’s ESPP.

The maximum aggregate number of shares of common stock that may be issued pursuant to the exercise of purchase rights under the Company’s ESPP that are granted to employees or to employees of any of the Company’s designated affiliates is 96,153 shares, subject to annual increases. The number of shares of common stock reserved for issuance under the Company’s ESPP will increase automatically each year, beginning on January 1, 2017, and continuing through and including January 1, 2026, by 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number as determined by the board of directors. In 2018 and 2017, there was an increase of 128,172 and 124,981 shares, respectively, reserved for issuance under the Company’s ESPP due to this provision. Shares subject to purchase rights granted under the Company’s ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under the Company’s ESPP. There are two offering periods each year and each offering under the ESPP will consist of two purchase periods of approximately six months in duration and will run concurrently. The Company had 269,389 shares available for issuance under the Company’s ESPP as of December 31, 2018. Employees purchased 42,327 shares for $266,000 during the year ended December 31, 2018 and 37,590 shares for $256,000 during the year ended December 31, 2017.

The following table summarizes the assumptions used in the Black-Scholes option-pricing model to determine fair value of the Company’s common shares issued under the ESPP: