7. Stock-Based Compensation

The following table summarizes the stock option activity for the three months ended March 31, 2018:


		Options Outstanding
			Weighted-		Weighted-
			Average		Average
	Options		Exercise		Remaining	Aggregate
	Available for	Number of	Price Per		Contractual	Intrinsic
	Grant	Options	Share		Life (years)	Value
						(In thousands)
Balance—December 31, 2017	83,929	1,593,195	$	8.88	6.6	$	1,997
Prior period adjustment	(1,026)	13,784		4.54	0.3
Options authorized	384,516	—
RSUs granted	(36,350)	—
RSUs cancelled/forfeited	400	—
Options granted	(218,600)	218,600		9.12
Options exercised	—	(58,229)		5.31		$	200
Options cancelled/forfeited	—	(391)		6.63
Balance—March 31, 2018	212,869	1,766,959	$	7.04	7.0	$	1,949
Options exercisable—March 31, 2018		783,554	$	5.29	4.0	$	1,803

The total grant date fair value of options vested was $377,000 and $107,000 during the three months ended March 31, 2018 and 2017, respectively.

The weighted-average grant date fair value of employee options granted during the three months ended March 31, 2018 and 2017 was $4.74 and $3.69 per share, respectively.

2016 Employee Stock Purchase Plan

In January 2018, there was an increase of 128,172 shares reserved for issuance under the Company’s Employee Stock Purchase Plan (ESPP).

Modification of Stock Awards

In February 2018, the Company modified the terms of 400,000 vested and unvested stock option awards granted to the Chief Executive Officer, by reducing their exercise price from $16.25 per share to $7.64 per share. There was no change to any of the other terms of the option awards. The modification resulted in an incremental value of $600,000 being allocated to the options, of which $63,000 was recognized to expense immediately based on options that were vested at the time of the modification. The remaining incremental value of $537,000 attributable to unvested options will be recognized over the remaining vesting term through September 2021.

Restricted Stock Units

The following table summarizes Restricted Stock Units (RSUs) activity for the three months ended March 31, 2018:


	RSUs Outstanding
		Weighted-
		Average
	Number of	Grant Date
	Restricted Stock	Fair Value Per
	Units	Share
Balance—December 31, 2017	30,680	$	10.55
Granted	36,350		9.12
Cancelled/forfeited	(400)		7.80
Balance—March 31, 2018	66,630	$	9.79

The fair value of RSUs is determined on the date of grant based on the market price of the Company’s common stock on that date. As of March 31, 2018, there was $535,000 of unrecognized stock-based compensation expense related to RSUs to be recognized over a weighted-average period of 3.4 years.

Stock-based Compensation Expense

The Company recognized stock-based compensation expense from awards granted to employees and non-employees under its equity incentive plans and from its ESPP as follows, excluding amounts related to GLOBALFOUNDRIES, Inc. (GF) (in thousands):


	Three Months Ended
	March 31,
	2018		2017
Research and development	$	108	$	172
General and administrative		433		226
Sales and marketing		84		33
Total	$	625	$	431

As of March 31, 2018, there was $6.2 million of total unrecognized compensation expense related to unvested options which is expected to be recognized over a weighted-average period of 3.3 years.

Employee Stock-based Compensation

Stock-based compensation expense for employees was $610,000 and $420,000 for the three months ended March 31, 2018 and 2017, respectively.

The Company estimated the fair value of each option using the Black-Scholes option-pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the assumptions below. Each of these inputs is subjective and its determination generally requires significant judgment.


	Option Plan				ESPP
	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2018		2017		2018		2017
Expected volatility	51.9-52.0	%	47.2-47.3	%	66.2-72.7	%	—	%
Risk-free interest rate	2.70-2.72	%	2.0-2.1	%	0.94	%	—	%
Expected term (in years)	6.08		5.8-6.0		0.5		—
Dividend yield	—	%	—	%	—	%	—	%

Non-employee Stock-based Compensation

Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options vest. During the three months ended March 31, 2018, the Company granted 7,200 stock options to non-employees. No stock options were granted to non-employees during the three months March 31, 2017. As of March 31, 2018, options to purchase 45,072 shares of common stock were outstanding with a weighted-average exercise price of $9.15 per share. Stock-based compensation expense for non-employees was $15,000 and $11,000 for the three months ended March 31, 2018 and 2017, respectively.