STOCKHOLDERS’ EQUITY

Warrants

A summary of warrant activity for the nine months ended September 30, 2017 is presented as follows:



	Warrants Outstanding		Weighted Average Exercise Price During Period
Balance at December 31, 2016	6,750		$	4.30
Exercised	—		—
Canceled/forfeited	(6,750	)	4.30
Expired	—		—
Balance at September 30, 2017	—		$	—

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,
	2017		2016		2017		2016
Cost of sales	$	10	$	13	$	40	$	37
Product development	16		24		45		60
Selling, general, and administrative	166		399		540		979
Total stock-based compensation	$	192	$	436	$	625	$	1,076

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 six months of 2017.

Total unearned stock-based compensation was $0.9 million at September 30, 2017, compared to $1.6 million at September 30, 2016. 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, 2017 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,
	2017			2016
Fair value of options issued	$	2.66		$	5.36
Exercise price	$	3.55		$	7.59
Expected life of options (in years)	5.8			5.8
Risk-free interest rate	2.1		%	1.6		%
Expected volatility	91.9		%	93.9		%
Dividend yield	0.0		%	0.0		%

A summary of option activity under all plans for the nine months ended September 30, 2017 is presented as follows:



	Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2016	530,734		$	7.48
Granted	192,984		3.55
Exercised	(40,500	)	2.30
Canceled/forfeited	(298,720	)	5.73
Expired	(56,111	)	10.65
Balance at September 30, 2017	328,387		$	6.86	8.0

Vested and expected to vest at September 30, 2017	301,768		$	7.16	7.8

Exercisable at September 30, 2017	179,162		$	9.63	6.8

Restricted stock units

A summary of restricted stock unit activity under all plans for the nine months ended September 30, 2017 is presented as follows:



	Restricted Stock Units		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2016	250,115		$	6.34
Granted	375,542		3.18
Released	(115,622	)	5.78
Canceled/forfeited	(183,265	)	5.45
Balance at September 30, 2017	326,770		$	3.41	2.5