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Stock-based Compensation | 9 Months Ended
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Sep. 30, 2017
Stock-based Compensation |
Stock-based Compensation | Note 9. Stock-Based Compensation We account for stock-based compensation in accordance with the provisions of ASC topic 718, Compensation-Stock Compensation (“ASC 718”), which established accounting for stock-based awards exchanged for employee services. Stock-based compensation cost is measured at each grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period of the award. All of our stock compensation is accounted for as an equity instrument. The following table summarizes compensation costs related to our stock-based awards (in thousands, except per share data):
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Cost of revenue |  | $ | 7 |  | $ | 5 |  | $ | 22 |  | $ | 15 |
Selling, general and administrative |  |  | 280 |  |  | 238 |  |  | 788 |  |  | 651 |
Research and development |  |  | 52 |  |  | 38 |  |  | 151 |  |  | 123 |
Total stock-based compensation |  |  | 339 |  |  | 281 |  |  | 961 |  |  | 789 |
Tax effect on stock-based compensation |  |  | — |  |  | — |  |  | — |  |  | — |
Net effect on net income |  | $ | 339 |  | $ | 281 |  | $ | 961 |  | $ | 789 |
As of September 30, 2017, the unamortized compensation costs related to unvested stock options granted to employees under our stock option plan was approximately $1.4 million, net of estimated forfeitures of $167,000. These costs will be amortized on a straight-line basis over a weighted-average period of approximately 2.4 years and will be adjusted for subsequent changes in estimated forfeitures. We did not capitalize any stock-based compensation to inventory as of September 30, 2017 and December 31, 2016 due to the immateriality of the amount. We estimate the fair value of stock options using the Black-Scholes valuation model, consistent with the provisions of ASC 718. There were no options granted in the three months ended September 30, 2017 and 2016. There were 60,000 and 68,000 options with weighted-average grant date fair values of $2.76 and $1.01 granted in the nine months ended September 30, 2017 and 2016, respectively. The fair values of our stock options granted to employees for the three and nine months ended September 30, 2017 were estimated using the following weighted-average assumptions:
|  | Three Months Ended |  | Nine Months Ended |  |  |
|  | September 30, |  | September 30, |  |  |
|  | 2017 |  | 2017 |  |  |
Expected term (in years) |  | — |  | 5.9 |  |  |
Volatility |  | — | % | 46.71 | % |  |
Expected dividend |  | — | % | — | % |  |
Risk-free interest rate |  | — | % | 2.08 | % |  |
The following table summarizes the stock option transactions during the nine months ended September 30, 2017 (in thousands, except per share data):
|  |  |  |  |  |  | Weighted- |  |  |  |
|  |  |  |  |  |  | average |  |  |  |
|  |  |  | Weighted- |  | Remaining |  |  |  |
|  | Number of |  | average |  | Contractual |  | Aggregate |
|  | Options |  | Exercise |  | Life |  | Intrinsic |
Stock Options |  | Outstanding |  | Price |  | (in years) |  | Value |
Balance as of January 1, 2017 |  | 3,294 |  | $ | 3.38 |  | 7.23 |  | $ | 5,301 |
Granted |  | 60 |  |  | 5.95 |  |  |  |  |  |
Exercised |  | (481) |  |  | 3.17 |  |  |  |  |  |
Canceled and expired |  | (24) |  |  | 3.31 |  |  |  |  |  |
Balance as of September 30, 2017 |  | 2,849 |  | $ | 3.47 |  | 6.98 |  | $ | 16,173 |
Options vested as of September 30, 2017 and unvested options expected to vest, net of forfeitures |  | 2,806 |  | $ | 3.46 |  | 6.95 |  | $ | 15,964 |
Options exercisable as of September 30, 2017 |  | 1,591 |  | $ | 3.26 |  | 5.83 |  | $ | 9,366 |
The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $9.15 on September 30, 2017, which would have been received by the option holder had all option holders exercised their options on that date. Restricted stock awards A summary of activity related to restricted stock awards for the nine months ended September 30, 2017 is presented below (in thousands, except per share data):
|  |  |  | Weighted-Average |
|  |  |  | Grant Date |
Stock Awards |  | Shares |  | Fair Value |
Non-vested as of January 1, 2017 |  | 325 |  | $ | 3.27 |
Granted |  | 71 |  | $ | 7.96 |
Vested |  | (74) |  | $ | 3.22 |
Forfeited |  | — |  | $ | — |
Non-vested as of September 30, 2017 |  | 322 |  | $ | 4.32 |
As of September 30, 2017, the unamortized compensation costs related to unvested restricted stock awards was approximately $1.1 million, which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.3 years.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65895303&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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