9.	Shareholders’ Equity

Equity Compensation Plans

We have a stock plan (the “Stock Plan”) and an inducement stock plan for newly hired employees (the “Inducement Plan”) (collectively the “Plans”). Under the Plans, stock options may be granted with a fixed exercise price that is equivalent to fair market value on the date of grant. These options have a term of up to 10 years and vest over predetermined periods, generally one to four years. Incentive stock options granted under the Stock Plan may only be granted to our employees. The Plans also allow for awards of non-qualified stock options, stock appreciation rights, RSAs and unrestricted stock awards, and RSUs.

Stock-Based Compensation

The estimated fair value of stock-based awards is recognized as compensation expense over the vesting period of the award, net of estimated forfeitures. We estimate forfeitures of stock based awards based on historical experience and expected future activity. The fair value of restricted stock awards and restricted stock units is determined based on the number of shares granted and the quoted price of the Company’s common stock on the date of grant. The fair value of stock option awards are estimated at the grant date based on the fair value of each vesting tranche as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. The BSM model requires various highly judgmental assumptions including expected volatility and option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. The fair values of our equity awards, primarily stock option grants, were estimated with the following weighted average assumptions:

	Year Ended
	December 31,
	2015			2014
Dividend yield		0	%		0	%
Expected life	3.3 years			3.3 years
Expected volatility		52	%		59	%
Risk-free interest rate		1.2	%		1.3	%

The impact on our results of operations of recording stock-based compensation expense was as follows (in thousands, except per share amounts):

	Year Ended
	December 31,
	2015		2014
Cost of revenue—service	$	508	$	236
Selling, general and administrative		925		698
Research and development		83		48
Total stock-based compensation expense	$	1,516	$	982
Per basic and diluted share	$	0.12	$	0.08

Stock Option Activity

The following table summarizes stock option activity under the Plans for 2015 and 2014:

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
	Number of			Exercise		Life		Intrinsic
Stock Options	Shares			Price		(in years)		Value
Balance at January 1, 2014		1,515,621		$	3.36		3.93
Granted		848,208			3.53
Exercised		(393,128	)		2.50
Forfeited		(122,280	)		3.28
Expired		(295,061	)		4.34
Balance at December 31, 2014		1,553,360		$	3.50		7.04
Granted		564,450			6.37
Exercised		(250,196	)		3.18
Forfeited		(81,666	)		4.01
Expired		(7,251	)		2.82
Balance at December 31, 2015		1,778,697		$	4.43		7.83	$	3,166,290
Vested and expected to vest at December 31, 2015		1,656,034		$	4.35		7.72	$	3,065,335
Exercisable at December 31, 2015		762,555		$	3.61		6.28	$	1,911,371

At December 31, 2015, total compensation cost related to stock options granted under the Plans but not yet recognized was $1,326,412, net of estimated forfeitures. This cost will be amortized on the straight-line method over a weighted-average period of approximately 1.26 years. The aggregate intrinsic value represents the difference between the exercise price of the underlying options and the quoted price of our common stock for the number of options that were in-the-money at year end. We issue new shares of common stock upon exercise of stock options.

The following table summarizes certain information about stock options:

	Year Ended
	December 31,
	2015		2014
Weighted average grant-date fair value for options granted during the year	$	3.13	$	1.73
Vested options in-the-money at December 31		703,765		443,309
Aggregate intrinsic value of options exercised during the year	$	860,743	$	436,770

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity under the Stock Plan for 2015 and 2014:

				Weighted
				Average
	Number of			Award
	Shares			Price
Unvested at January 1, 2014		187,382		$	4.40
Granted		110,235			3.21
Vested		(159,565	)		3.68
Forfeited		(57,873	)		5.51
Unvested at December 31, 2014		80,179		$	3.40
Granted		117,049			6.34
Vested		(83,789	)		4.32
Forfeited		(8,976	)		3.15
Unvested at December 31, 2015		104,463		$	5.97
Expected to vest after December 31, 2015		92,303		$	5.95

At December 31, 2015, total compensation cost related to restricted stock units granted under the Stock Plan but not yet recognized was $357,040, net of estimated forfeitures. This cost will be amortized on the straight-line method over a period of approximately 1.34 years.

Common Stock Reserved for Future Issuance

The following table summarizes our shares of common stock reserved for future issuance under the Plans:

	December 31,
	2015		2014
Stock options outstanding		1,778,697		1,553,360
Restricted stock units outstanding		104,463		80,179
Stock options available for future grant		1,020,477		654,083
Common stock reserved for future issuance		2,903,637		2,287,622