Stockholders' Equity

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

Warrants

A summary of warrant activity for the nine months ended September 30, 2016 is presented as follows:

	Warrants Outstanding		Weighted Average Exercise Price During Period
Balance at December 31, 2015	14,250		$	4.30
Exercised	—		—
Canceled/forfeited	(7,500	)	4.30
Expired	—		—
Balance at September 30, 2016	6,750		$	4.30
Exercisable at September 30, 2016	—		$	—

Stock-based compensation

Stock-based compensation expense is attributable to stock options and restricted stock unit awards. For all stock-based awards, we recognize expense using a straight-line amortization method.

The following table summarizes stock-based compensation expense and the impact it had on operations for the periods presented (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Cost of sales	$	13	$	11	$	37	$	29
Product development	24		10		60		26
Selling, general, and administrative	399		294		979		544
Total stock-based compensation	$	436	$	315	$	1,076	$	599

Total unearned stock-based compensation was $1.6 million at September 30, 2016, compared to $1.4 million at September 30, 2015. These costs will be charged to expense and amortized on a straight-line basis in future periods. The weighted average period over which the unearned compensation at September 30, 2016 is expected to be recognized is approximately 1.9 years.

Stock options

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model. Estimates utilized in the calculation include the expected life of the option, risk-free interest rate, and expected volatility, and are further comparatively detailed as follows:

	Nine months ended September 30,
	2016			2015
Fair value of options issued	$	5.36		$	5.18
Exercise price	$	7.59		$	7.04
Expected life of option (in years)	5.8			5.8
Risk-free interest rate	1.6		%	1.7		%
Expected volatility	93.9		%	90.7		%
Dividend yield	0.0		%	0.0		%

A summary of option activity under all plans for the nine months ended September 30, 2016 is presented as follows:

	Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2015	602,207		$	8.58
Granted	159,568		7.42
Exercised	(68,307	)	4.59
Canceled/forfeited	(103,289	)	15.80
Expired	—		—
Balance at September 30, 2016	590,179		$	7.47	7.9
Vested and expected to vest at September 30, 2016	564,369		$	7.50	7.8
Exercisable at September 30, 2016	414,023		$	7.82	7.4

Restricted stock units

A summary of restricted stock unit activity under all plans for the nine months ended September 30, 2016 is presented as follows:

	Restricted Stock Units		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2015	57,500		$	7.31
Granted	279,754		6.62
Released	(10,000	)	15.08
Canceled/forfeited	(60,580	)	6.96
Balance at September 30, 2016	266,674		$	6.37	3.3