The Company grants stock-based awards, including stock options, restricted stock awards, and restricted stock units. The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes it as expense over the vesting or service period, as applicable, of the stock-based award using the straight-line method. The Company accounts for forfeitures as they occur.

Stock-based compensation expense was included in the following operating expense categories as follows (in thousands):

	Nine Months Ended September 30,				Three Months Ended September 30,
	2019		2020		2019		2020
Service costs	$	131	$	42	$	36	$	10
Sales and marketing		529		898		180		291
Product development		215		287		72		96
General and administrative		1,275		1,615		535		481
Total stock-based compensation	$	2,150	$	2,842	$	823	$	878

The Company uses the Black-Scholes option pricing model to estimate the per share fair value of stock option grants with time-based vesting. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. For the three and nine months ended September 30, 2019 and September 30, 2020 the expected life of each award granted was determined based on historical experience with similar awards, giving consideration to contractual terms, anticipated exercise patterns, vesting schedules and expirations. Expected volatility is based on historical volatility levels of the Company’s Class B common stock and the expected volatility of companies in similar industries that have similar vesting and contractual terms. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury issues with terms approximately equal to the expected life of the option.

The following weighted average assumptions were used in determining the fair value of time-vested stock option grants for the periods presented:

	Nine months ended September 30,		Three months ended September 30,
	2019	2020	2019	2020
Expected life (in years)	4.0 - 6.25	4.0 - 6.25	4.0 - 6.25	4.0
Risk-free interest rate	1.57%-2.22%	.17%-1.22%	1.57%-1.59%	.22%
Expected volatility	39%-50%	46%-53%	40%-50%	53%

Stock option activity during the nine months ended September 30, 2020 is summarized as follows:

	Shares (in thousands)			Weighted average exercise price		Weighted average remaining contractual term (in years)
Balance at December 31, 2019		4,782		$	4.80		5.82
Options granted		288			2.77
Options forfeited		(119	)		3.47
Options expired		(352	)		4.83
Balance at September 30, 2020		4,599		$	4.70		5.51

In October 2020, the Company sold certain assets related to its Local Leads Platform, Call Marketplace and other assets not related to core conversational analytics to an entity controlled by certain officers and shareholders of the Company (the “Divestiture”). Company stock options for 1.5 million shares currently held by two officers of the Company who are involved in the transaction were cancelled subsequent to the quarter ended September 30, 2020 in connection with the Divestiture. See Note 16. Subsequent Event in the Notes to Condensed Consolidated Financial Statements for additional information.

Restricted stock awards and restricted stock units are generally measured at fair value on the date of grant based on the number of awards granted and the quoted price of the Company’s common stock. Restricted stock units entitle the holder to receive one share of the Company’s Class B common stock upon satisfaction of certain service conditions.

Restricted stock awards and restricted stock unit activity during the nine months ended September 30, 2020 is summarized as follows:

	Shares/ Units (in thousands)			Weighted average grant date fair value
Unvested balance at December 31, 2019		1,786		$	3.70
Granted		175			2.92
Vested		(420	)		3.48
Forfeited		(21	)		2.72
Unvested balance at September 30, 2020		1,520		$	3.69