(10) Stock-Based Compensation

Stock-based compensation expense was $0.3 million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively.

Stock-based compensation relates to options granted to employees, non-employee members of the Board of Directors and non-employees, time-based restricted stock units granted to employees and non-employee members of the Board of Directors and performance-based restricted stock units granted to employees. Total stock-based compensation expense was recorded to cost of revenues and operating expenses based upon the functional responsibilities of the individuals holding the respective awards as follows (in thousands):

	Three Months Ended March 31,
	2017			2016
Cost of revenues	$	28		$	26
Sales and marketing		11			14
Research and development		(43	)		(146	)
General and administrative		345			224
Total	$	341		$	118

There were no option exercises in the three months ended March 31, 2017 and 2016.

Juniper granted options to purchase 655,400 shares of common stock to employees and non-employee directors in the three months ended March 31, 2017 and options to purchase 397,500 shares of common stock to employees during the three months ended March 31, 2016. Stock options granted to employees typically vest over a four-year term. Stock options granted to non-employee directors typically vest over a three-year term.

Juniper granted 52,700 time-based restricted stock units to employees during the three months ended March 31, 2017. No time-based restricted stock units were granted during the three months ended March 31, 2016.

Juniper granted 181,000 performance-based restricted stock units to employees during the three months ended March 31, 2017. No performance-based restricted stock units were granted during the three months ended March 31, 2016. The performance-based restricted stock units vest based on the occurrence of certain operational and strategic events which were determined by the Company’s Board of Directors.

The Company uses the Black-Scholes option pricing model to determine the estimated grant date fair values for stock options and estimates the fair value of time-based restricted stock units and performance-based restricted stock units based on the closing price of the Company’s common stock on the date of grant. The Company’s assumptions do not include an estimated forfeiture rate.

The weighted-average grant date fair values of options granted to employees during the three months ended March 31, 2017 and 2016 were $2.44 and $4.81, respectively, using the following assumptions:

	Three Months Ended March 31,
	2017		2016
Risk free interest rate	1.45% - 1.48%		1.14%
Expected term	4.5 - 4.75 years		4.75 years
Dividend yield		—		—
Expected volatility	54.6% - 55.2%		79.23% - 79.29%

The Company records stock-based compensation expense for stock options granted to non-employees based on the fair value of the stock options, which is re-measured over the graded vesting term resulting in periodic adjustments to stock-based compensation expense. The stock-based compensation expense recorded for non-employees is primarily reflected in the research and development line of the statement of operations and is remeasured on a quarterly basis from the date of grant. During the three months ended March 31, 2017 the Company recorded a reduction of stock-based compensation expense of $0.1 million for non-employee options as a result of changes in the fair value of the options during the period. During the three months ended March 31, 2016 the Company recorded a reduction of stock-based compensation expense of $0.2 million for non-employee options. No tax benefit has been recognized due to the net tax losses during the periods presented. There were no options granted to non-employees during the three months ended March 31, 2017 and 2016.

Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. Juniper’s estimated expected stock price volatility is based on its own historical volatility. Juniper’s expected term of options granted during the three months ended March 31, 2017 and 2016 was derived using the simplified method for employees. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The weighted-average grant date fair value of both the time-based restricted stock units and performance-based restricted stock units was $5.15 during the three months ended March 31, 2017. The Company recognizes stock-based compensation expense for time-based restricted stock units over the vesting period. For performance-based restricted stock units, the Company considers the performance criteria at each balance sheet date and recognizes stock-based compensation expense for those criteria considered probable. The criteria associated with these performance-based stock units were not determined to be probable at March 31, 2017 and as such, no expense was recorded.

As of March 31, 2017, the total unrecognized compensation cost related to outstanding stock options, time-based restricted stock units and performance-based restricted stock units expected to vest was $5.7 million, which the Company expects to recognize over a weighted-average period of 3.19 years.