We have three stock-based compensation plans that are administered by the Compensation Committee of the Board of Directors. We have an Employee Stock Incentive Plan for officers, other employees, consultants and independent contractors under which we have granted options and restricted stock units to officers and other employees, an Employee Stock Purchase Plan under which shares of our common stock may be acquired by employees at discounted prices, and a Non-Employee Director Stock Plan that provides for automatic grants of shares of our common stock to non-employee directors. New shares of our common stock are issued upon stock option exercises, vesting of restricted stock units, issuances of shares to board members and issuances of shares under the Employee Stock Purchase Plan.

As of September 30, 2017, there were 429,939 shares of common stock reserved in the aggregate for issuance pursuant to future awards under our Employee Stock Incentive Plan and 530,174 shares of common stock reserved in the aggregate for issuance pursuant to outstanding awards under our Employee Stock Incentive Plan. Although our Compensation Committee has authority to issue options, restricted stock, restricted stock units, share grants and other share based benefits under our Employee Stock Incentive Plan, to date only restricted stock units and stock options have been granted under the plan. Options have been granted at an option price per share equal to the market value of our common stock on the date of grant, vest over a four year period and expire seven years after the date of grant. Restricted stock units vest over a four year period and entitle the holders to one share of our common stock for each restricted stock unit. Reserved shares underlying outstanding awards, including options and restricted shares, that are forfeited are available under the Employee Stock Incentive Plan for future grants.

As of September 30, 2017, there were 68,000 shares of common stock reserved in the aggregate for issuance pursuant to future awards under our Non-Employee Director Stock Plan and 16,000 shares of common stock reserved in the aggregate for issuance pursuant to outstanding stock option awards under our Non-Employee Director Stock Plan. Under the terms of the plan, each non-employee director will automatically be granted 2,000 shares of our common stock on the date of each annual meeting at which such director is elected to serve on the board. At our May 11, 2017 annual meeting, our shareholders, upon recommendation of the Board of Directors, approved amendments to the Non-Employee Director Stock Plan that eliminated annual stock option grants for non-employee directors and provide for share grants under the Non-Employee Director Stock Plan which will vest in four equal quarterly installments during the year after the grant date provided the non-employee director is still serving as a director on the applicable vesting date.

Pursuant to the plan, on the date of our 2017 annual meeting, we issued a total of 8,000 shares of our common stock to our non-employee directors. The shares had an aggregate fair market value on the date of grant equal to $167,000 (grant date fair value of $20.90 per share). As of September 30, 2017, 2,000 of these shares were vested. The aggregate fair value of the vested shares, based on the closing share price of our common stock on the vesting date, was $31,000. The aggregate fair value of the outstanding unvested shares based on the closing share price of our common stock on September 30, 2017 was $98,000.

Pursuant to the original plan, on the date of our 2016 annual meeting, we issued a total of 8,000 shares of our common stock and stock options to acquire 16,000 shares of our common stock to our non-employee directors. Both the shares and the options were fully vested on the date of grant. The shares had an aggregate fair market value on the date of grant equal to $136,000 (grant date fair value of $16.97 per share) and the options had an aggregate fair market value on the date of grant using the Black-Scholes model equal to $139,000 (grant date fair value of $8.71 per option to acquire one share of our common stock).

The following is a summary of stock option activity in the nine months ended September 30, 2017:


	Options Outstanding		Weighted Average Exercise Price Per Share
Outstanding, December 31, 2016	547,625		$	9.39
Granted	—		—
Exercised	(42,000	)	9.24
Expired	—		—
Forfeited	—		—
Outstanding, September 30, 2017	505,625		$	9.41

Exercisable, September 30, 2017	229,063		$	7.67

The intrinsic value of an option is the amount by which the market price of the underlying stock exceeds the option's exercise price. For options outstanding at September 30, 2017, the weighted average remaining contractual term of all outstanding options was 4.2 years and their aggregate intrinsic value was $3.8 million. At September 30, 2017, the weighted average remaining contractual term of options that were exercisable was 3.7 years and their aggregate intrinsic value was $2.0 million. The aggregate intrinsic value of stock options exercised in the nine months ended September 30, 2017 was $679,000. We received proceeds from stock option exercises of $330,000 in the nine months ended September 30, 2017 and $425,000 in the nine months ended September 30, 2016. The total fair value of options that vested in the nine months ended September 30, 2017 was $130,000.

Restricted stock units are granted under our Employee Stock Incentive Plan. There were no restricted stock units granted in the nine months ended September 30, 2017. The aggregate fair value of outstanding restricted stock units based on the closing share price of our common stock on September 30, 2017 was $659,000. The aggregate fair value of restricted stock units that vested, based on the closing share price of our common stock on the vesting date, in the nine months ended September 30, 2017 was $170,000.

A summary of activity for non-vested restricted stock units in the nine months ended September 30, 2017 is as follows:


Non-vested restricted stock units	Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2016	45,549		$	11.93
Granted	—		—
Vested	(5,000	)	6.97
Forfeited	—		—
Non-vested at September 30, 2017	40,549		$	12.54

We have an Employee Stock Purchase Plan available to eligible U.S. employees. Under terms of the plan, eligible employees may designate from 1% to 10% of their compensation to be withheld through payroll deductions, up to a maximum of $6,500 in each plan year, for the purchase of common stock at 85% of the lower of the market price on the first or last day of the offering period. Shares issued under this plan totaled 18,404 shares in the nine months ended September 30, 2017 and 36,481 shares in the nine months ended September 30, 2016. As of September 30, 2017, 40,872 shares remain available for future issuance under the Employee Stock Purchase Plan.

All stock based compensation awarded to our employees and non-employee directors, representing grants of shares, stock options and restricted stock units are recognized as an expense in our consolidated statement of operations based on the grant date fair value of the award. We utilize the straight-line method of expense recognition over the vesting period for our options subject to time-based vesting restrictions. The fair value of stock options granted has been determined using the Black-Scholes model. Prior to January 1, 2017, stock compensation expense for all equity based awards was recognized based on the number of awards that were expected to vest. On January 1, 2017, we adopted the provisions of Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which permits accounting for the impact of stock option forfeitures on stock compensation expense when the forfeitures occur. In the nine months ended September 30, 2017, the impact of the change in accounting for stock option forfeitures was inconsequential. We have classified equity-based compensation expenses within our statement of operations in the same manner as our cash based compensation costs.

Stock based compensation expense in the three months ended September 30, 2017 totaled $240,000, and included $116,000 for stock options, $33,000 for our Employee Stock Purchase Plan, $49,000 for unvested restricted stock units and $42,000 for unvested restricted shares. Stock based compensation expense in the nine months ended September 30, 2017 totaled $640,000, and included $345,000 for stock options, $85,000 for our Employee Stock Purchase Plan, $145,000 for unvested restricted stock units and $65,000 for unvested restricted shares.

Stock based compensation expense in the three months ended September 30, 2016 totaled $142,000, and included $88,000 for stock options, $22,000 for our Employee Stock Purchase Plan and $32,000 for unvested restricted stock units. Stock based compensation expense in the nine months ended September 30, 2016 totaled $694,000, and included $409,000 for stock options, $54,000 for our Employee Stock Purchase Plan, $95,000 for unvested restricted stock units and $136,000 for shares issued without restriction.

At September 30, 2017, the total unrecognized compensation cost related to outstanding non-vested stock based compensation arrangements was $1.3 million, and the related weighted average period over which this cost is expected to be recognized is 1.25 years.