Stock-based compensation

3 Months Ended

Mar. 31, 2016

Stock-based compensation

Stock-based compensation

Note 12. Stock-based compensation

The following table summarizes the stock-based compensation expense recognized in the three months ended March 31, 2016 and 2015 (in thousands):

	Three Months Ended
	March 31,
	2016		2015
Cost of goods sold	$	589	$	370
Research and development		971		493
Sales and marketing		887		453
General and administrative		992		740
	$	3,439	$	2,056

Determining Fair Value

The Company estimated the fair value of certain stock-based awards using a Black-Scholes-Merton valuation model with the following assumptions:

	Three Months Ended March 31,
Stock options	2016	2015
Weighted-average expected term (years)	4.96	5.25
Weighted-average volatility	64%	63%
Risk-free interest rate	1.76%	1.65%
Expected dividends	—  %	—  %
Stock appreciation units
Weighted-average expected term (years)	3.03	1.91
Weighted-average volatility	61%	57%
Risk-free interest rate	0.65%-1.47%	0.25% – 1.10%
Expected dividends	—  %	—  %
ESPP
Weighted-average expected term (years)	0.70	0.70
Weighted-average volatility	70%	58%
Risk-free interest rate	0.08%-0.33%	0.03% – 0.13%
Expected dividends	—  %	—  %

Stock Options and Restricted Stock Units (RSUs)

The following table summarizes the Company’s stock option and RSU activity during the three months ended March 31, 2016:

	Stock Options			Restricted Stock Units
		Weighted			Weighted
		Average			Average
	Number of	Exercise		Number of	Grant Date
	Shares	Price		Units	Fair Value
Balance at December 31, 2015	5,007,797	$	4.34	1,213,686	$	7.46
Granted	12,300		10.40	16,900		9.19
Exercised/Converted	(349,954)		3.52	(8,001)		7.65
Cancelled/Forfeited	(30,108)		6.05	(7,618)		7.36
Balance at March 31, 2016	4,640,035	$	4.41	1,214,967	$	7.49

Stock appreciation units (“SAUs”)

SAUs are liability classified share-based awards. The Company did not grant any SAUs during the three months ended March 31, 2016 or 2015. As of March 31, 2016 and December 31, 2015, there were 322,057 and 342,316 SAUs outstanding. Outstanding SAUs are re-measured each reporting period at fair value.

Employee Stock Purchase Plan (“ESPP”)

As of March 31, 2016, there was $0.5 million of unrecognized stock-based compensation expense for employee stock purchase rights that will be recognized over the remaining offering period, through November 2016.