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,
	2016			2015
Dividend yield		0	%		0	%
Expected life	3.4 years			3.3 years
Expected volatility		55	%		52	%
Risk-free interest rate		1.1	%		1.2	%

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,
	2016		2015
Cost of revenue— professional engineering service	$	220	$	508
Selling, general and administrative		868		925
Research and development		159		83
Total stock-based compensation expense	$	1,247	$	1,516
Per basic and diluted share	$	0.10	$	0.12

Stock Option Activity

The following table summarizes stock option activity under the Plans for 2016 and 2015:

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
	Number of			Exercise		Life		Intrinsic
Stock Options	Shares			Price		(in years)		Value
Balance at January 1, 2015		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
Granted		903,248			5.24
Exercised		(371,845	)		3.17
Forfeited		(396,161	)		5.32
Expired		(67,171	)		5.91
Balance at December 31, 2016		1,846,768		$	4.84		8.19	$	2,138,361
Vested and expected to vest at December 31, 2016		1,676,601		$	4.79		8.05	$	2,036,356
Exercisable at December 31, 2016		771,265		$	4.15		6.63	$	1,425,867

At December 31, 2016, total unrecognized compensation cost related to stock options granted under the Plans was $1,688,358, net of estimated forfeitures. This cost will be amortized on the straight-line method over a weighted-average period of approximately 1.69 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,
	2016		2015
Weighted average grant-date fair value for options granted during the year	$	2.63	$	3.13
Vested options in-the-money at December 31		605,017		703,765
Aggregate intrinsic value of options exercised during the year	$	773,327	$	860,743

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity under the Stock Plan for 2016 and 2015:

				Weighted
				Average
	Number of			Award
	Shares			Price
Unvested at January 1, 2015		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
Granted		107,370			5.41
Vested		(76,258	)		5.81
Forfeited		(15,969	)		5.77
Unvested at December 31, 2016		119,606		$	5.60
Expected to vest after December 31, 2016		102,834		$	5.62

At December 31, 2016, total unrecognized compensation cost related to restricted stock units granted under the Stock Plan was $368,505, net of estimated forfeitures. This cost will be amortized on the straight-line method over a period of approximately 1.50 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,
	2016		2015
Stock options outstanding		1,846,768		1,778,697
Restricted stock units outstanding		119,606		104,463
Stock options available for future grant		689,160		1,020,477
Common stock reserved for future issuance		2,655,534		2,903,637