STOCKHOLDERS’ EQUITY

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 March 31,
	2018		2017
Cost of sales	$	9	$	18
Product development	25		13
Selling, general, and administrative	161		176
Total stock-based compensation	$	195	$	207

The table above excludes approximately $0.3 million in stock-based compensation expense from prior periods that was reversed and included as a reduction to restructuring expenses due to the workforce reduction associated with our restructuring actions in the first quarter of 2017.

Total unearned stock-based compensation was $1.3 million at March 31, 2018, compared to $1.1 million at March 31, 2017. 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 March 31, 2018 is expected to be recognized is approximately 2.3 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:



	Three months ended March 31,
	2018			2017
Fair value of options issued	$	1.74		$	2.79
Exercise price	$	2.46		$	3.71
Expected life of options (in years)	5.8			5.8
Risk-free interest rate	2.3		%	2.1		%
Expected volatility	84.3		%	92.2		%
Dividend yield	0.0		%	0.0		%

A summary of option activity under all plans for the three months ended March 31, 2018 is presented as follows:



	Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2017	248,512		$	5.76
Granted	25,035		2.46
Exercised	—		—
Canceled/forfeited	(20,523	)	10.09
Expired	—		—
Balance at March 31, 2018	253,024		$	5.08	7.8

Vested and expected to vest at March 31, 2018	232,906		$	5.26	7.6

Exercisable at March 31, 2018	126,505		$	6.95	6.5

Restricted stock units

A summary of restricted stock unit activity under all plans for the three months ended March 31, 2018 is presented as follows:



	Restricted Stock Units		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2017	306,142		$	3.37
Granted	421,514		2.48
Released	(74,655	)	4.10
Canceled/forfeited	(11,571	)	3.80
Balance at March 31, 2018	641,430		$	2.69	2.7