Note 9 — Stock-Based Compensation

The stock-based compensation expense included in the Company's consolidated financial statements for the three and nine-months ended September 30, 2018 and October 1, 2017 was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2018		October 1, 2017		September 30, 2018		October 1, 2017
Cost of revenue	$	30	$	32	$	99	$	85
Research and development		220		151		610		424
Selling, general and administrative		266		212		718		551
Total costs and expenses	$	516	$	395	$	1,427	$	1,060

No stock-based compensation was capitalized during any period presented above.

No stock options were granted during the three and nine month periods ended September 30, 2018 and October 1, 2017. As of September 30, 2018 and October 1, 2017, the fair value of unvested stock options, net of expected forfeitures, was approximately $172,000 and $309,000, respectively. The remaining unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 1.8 years as of September 30, 2018.

Stock-Based Compensation Award Activity

The following table summarizes the activity in the shares available for grant under the 2009 Plan during the nine months ended September 30, 2018:

	Shares Available for Grant
	(in thousands)
Balance at December 31, 2017		3,899
Authorized		4,000
RSUs granted		(1,389	)
RSUs forfeited or expired		151
Options forfeited		50
Balance at September 30, 2018		6,711

Stock Options

The following table summarizes stock options outstanding and stock option activity under the 2009 Plan, and the related weighted average exercise price, for the nine months of 2018:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Term		Aggregate Intrinsic Value
	(in thousands)					(in years)		(in thousands)
Balance outstanding at December 31, 2017		3,558		$	2.09
Forfeited or expired		(50	)
Exercised		(5	)		—
Balance outstanding at September 30, 2018		3,503		$	2.08		3.64	$	131
Exercisable at September 30, 2018		3,116		$	2.22		3.11	$	80
Vested and expected to vest at September 30, 2018		3,441		$	2.10		3.56	$	122

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company's closing stock price of $1.00 as of September 30, 2018, which would have been received by the option holders had all option holders exercised their options as of that date.

The total intrinsic value of options exercised during the three months ended September 30, 2018 and October 1, 2017 was $5,000 and $15,000, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2018 and October 1, 2017 was $5,000 and $111,000, respectively. Total cash received from employees as a result of employee stock option exercises during the nine months ended September 30, 2018 and October 1, 2017 was approximately $5,000 and $82,000, respectively. The Company settles employee stock option exercises with newly issued common shares. In connection with these exercises, there was no tax benefit realized by the Company due to the Company's current loss position. Total stock-based compensation related to stock options was $30,000 and $60,000 for the three months ended September 30, 2018 and October 1, 2017, respectively, and $102,000 and $185,000 for the nine months ended September 30, 2018 and October 1, 2017, respectively.

Restricted Stock Units

The Company grants restricted stock units or RSUs, to employees and board of directors with various vesting terms. RSUs entitle the holder to receive, at no cost, one common share for each RSU as it vests. In general, the Company's policy is to withhold shares in settlement of employee tax withholding obligations upon the vesting of RSUs. The stock-based compensation related to RSUs was $435,000 and $295,000 for three months and $1.2 million and $768,000 the nine months ended September 30, 2018 and October 1, 2017, respectively. As of September 30, 2018 and October 1, 2017, there was $2.1 million and $2.3 million, respectively, in unrecognized compensation expense related to RSUs. The remaining unrecognized stock-based compensation expense is expected to be recorded over a weighted average period of 2.37 years.

A summary of activity for the Company's RSUs for the nine months ended September 30, 2018 and information regarding RSUs outstanding and expected to vest as of September 30, 2018 is as follows:

	RSUs & PRSUs Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value
	(in thousands)
Nonvested at December 31, 2017		2,363		$	1.54
Granted		1,388			1.50
Vested		(827	)		1.28
Forfeited		(150	)		—
Nonvested at September 30, 2018		2,774		$	1.59

Employee Stock Purchase Plan

The weighted average estimated fair value, as defined by the amended authoritative guidance, of rights issued pursuant to the Company's 2009 ESPP during the third quarters ended September 30, 2018 and October 1, 2017, was $0.47 and $0.41 per right, respectively.

As of September 30, 2018, 1.4 million shares remained available for issuance under the 2009 ESPP. For the three and nine months ended September 30, 2018, the Company recorded stock-based compensation expense related to the 2009 ESPP of $51,000 and $168,000 respectively.

The fair value of rights issued pursuant to the Company's 2009 ESPP was estimated on the commencement date of each offering period using the following weighted average assumptions:

	Three Months Ended						Nine Months Ended
	September 30, 2018			October 1, 2017			September 30, 2018			October 1, 2017
Expected term (months)		6.00			6.0			6.00			6.00
Risk-free interest rate		2.09	%		1.02	%		2.09	%		1.02	%
Volatility		44.76	%		49.71	%		44.76	%		49.71	%
Dividend yield		—			—			—			—

As of September 30, 2018, the unrecognized stock-based compensation expense relating to the Company's 2009 ESPP was $25,000 and is expected to be recognized over a weighted average period of approximately 1.6 months.