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Stockholders' Equity
 12 Months Ended
Jan. 02, 2015
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
Note 11 — Stockholders’ Equity
 
The cost that has been charged against income for stock-based compensation is set forth below (in thousands):
 
 
 
Fiscal Year Ended
 
 
 
January 2,
2015
 
January 3,
2014
 
December 28,
2012
 
Employee stock options
 
$
2,842
 
$
2,683
 
$
2,595
 
Restricted stock
 
 
935
 
 
999
 
 
590
 
Restricted stock units
 
 
795
 
 
589
 
 
—
 
Consultant compensation
 
 
91
 
 
218
 
 
23
 
Total
 
$
4,663
 
$
4,489
 
$
3,208
 
 
The Company recorded stock-based compensation expense in the following categories on the accompanying condensed consolidated statements of operations (in thousands):
 
 
 
Fiscal Year Ended
 
 
 
January 2,
2015
 
January 3,
2014
 
December 28,
2012
 
General and administrative
 
$
2,660
 
$
2,663
 
$
2,231
 
Marketing and selling
 
 
1,065
 
 
1,167
 
 
545
 
Research and development
 
 
938
 
 
659
 
 
432
 
Total
 
$
4,663
 
$
4,489
 
$
3,208
 
 
There was no net income tax benefit recognized in the consolidated statements of operations for stock-based compensation expense for non-qualified stock options, as the Company fully offsets net deferred tax assets with a valuation allowance (see Note 9).  In addition, the Company capitalized $306,000, $232,000, and $150,000 of stock-based compensation to inventory during the year ended January 2, 2015, January 3, 2014, and December 28, 2012, respectively, and recognizes these amounts as cost of sales as the inventory is sold. The Company does not recognize deferred income taxes for incentive stock option compensation expense, and records a tax deduction only when a disqualified disposition has occurred (see Note 9).
 
Stock Option Plans
 
The Amended and Restated 2003 Omnibus Equity Incentive Plan (“the Plan”) provides for various forms of stock-based incentives. To date, of the available forms of awards under the Plan, the Company has granted only stock options, restricted stock, unrestricted share grants, and restricted stock units (RSUs). Options under the plan are granted at fair market value on the date of grant, become exercisable over a three year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain option and share awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Plan). Grants of restricted stock outstanding under the Plan generally vest over periods of one to three years. Grants of RSUs outstanding under the Plan generally vest based on time, performance or a combination of both. As of January 2, 2015 there were 2,201,123 shares authorized and available for grants under the Plan.
 
Assumptions
 
The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of options granted is derived from the historical exercises and post-vesting cancellations, and represents the period of time that options granted are expected to be outstanding. The Company has calculated a 7% estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.
 
 
 
Fiscal Year Ended
 
 
 
January 2,
2015
 
January 3,
2014
 
December 28,
2012
 
Expected dividend yield
 
0
%
0
%
0
%
Expected volatility
 
55
%
71
%
79
%
Risk-free interest rate
 
1.29
%
0.73
%
0.82
%
Expected term (in years)
 
4.12
 
4.12
 
5.21
 
 
A summary of option activity under the Plan for the year ended January 2, 2015 is presented below:
 
Options
 
Shares
(000’s)
 
Weighted-
Average
Exercise
Price
 
 
Weighted-
Average
Remaining
Contractual
Term (years)
 
Aggregate
Intrinsic
Value
(000’s)
 
Outstanding at January 3, 2014
 
3,299
 
$
6.17
 
 
 
 
 
 
 
Granted
 
617
 
 
15.43
 
 
 
 
 
 
 
Exercised
 
(584)
 
 
6.09
 
 
 
 
 
 
 
Forfeited or expired
 
(157)
 
 
11.92
 
 
 
 
 
 
 
Outstanding at January 2, 2015
 
3,175
 
$
7.79
 
 
6.19
 
$
8,692
 
Exercisable at January 2, 2015
 
2,085
 
$
5.71
 
 
4.91
 
$
7,583
 
 
Included in forfeited or expired options, are 48,000 share representing net shares withheld from an option holder for the exercise price in lieu of cash.
 
The weighted-average grant-date fair value of options granted during the fiscal years ended January 2, 2015, January 3, 2014, and December 28, 2012, were $6.81, $3.51, and $6.65 per option respectively.   The total intrinsic value of options exercised during the fiscal years ended January 2, 2015, January 3, 2014, and December 28, 2012, were $5.5 million, $3.9 million, and $1.2 million, respectively.
 
As of January 2, 2015, there was $6.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.79 years.
 
Warrants
 
On June 1, 2009, the Company issued warrants to Broadwood Partners, L.P. (“Broadwood”), pursuant to a Warrant Agreement, granting the right to purchase up to an additional 700,000 shares of Common Stock at an exercise price of $4.00 per share, exercisable for a period of six years, which remain outstanding. The warrants are accounted for as an equity instrument.
 
The Warrant Agreement provides that the Company will register the shares issuable upon exercise of the warrants with the Securities Exchange Commission.  The Company filed and secured effectiveness of a registration statement covering resale of the shares.  If the Company fails to keep the registration statement effective and the lapse exceeds permitted suspensions, as the holder’s sole remedy, the Company will be obligated to issue an additional 30,000 warrants (“Penalty Warrants”) for each month that the Company does not meet this effectiveness requirement through June 1, 2015, the term of the remaining warrants.  The Company considers the issuance of Penalty Warrants to be unlikely.
 
                The fair value of the warrants was estimated on the issuance date, June 1, 2009, using a Black-Scholes option valuation model applying the assumptions noted in the following table:
 
 
 
As of
June 1, 2009
 
Common stock price per share
 
$
1.01
 
Number of warrants
 
 
700,000
 
Expected dividends
 
 
0
%
Expected volatility
 
 
74.4
%
Risk-free rate
 
 
3.28
%
Life (in years)
 
 
6.0
 
 
A summary of the warrant activity for the year ended January 2, 2015 is provided below:
 
 
 
Shares
(000’s)
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
(years)
 
Aggregate
Intrinsic
Value
(000’s)
 
Outstanding at January 3, 2014
 
700
 
$
4.00
 
 
 
 
 
 
Granted
 
—
 
 
—
 
 
 
 
 
 
Exercised
 
—
 
 
—
 
 
 
 
 
 
Forfeited or expired
 
—
 
 
—
 
 
 
 
 
 
Outstanding at January 2, 2015
 
700
 
$
4.00
 
0.41
 
$
3,521
 
Exercisable at January 2, 2015
 
700
 
$
4.00
 
0.41
 
$
3,521
 
 
Restricted stock
 
A summary of restricted stock activity for the year ended January 2, 2015 is presented below:
 
 
 
Shares
(000’s)
 
Weighted
Average
Grant-Date
Fair Value
per Share
 
Outstanding at January 3, 2014
 
341
 
$
7.55
 
Granted
 
65
 
 
13.89
 
Vested
 
(140)
 
 
6.92
 
Forfeited or expired
 
(19)
 
 
9.91
 
Outstanding at January 2, 2015
 
247
 
$
9.41
 
 
Restricted Stock Units
 
A summary of restricted stock units activity for the year ended January 2, 2015 is presented below:
 
 
 
Units
(000’s)
 
Weighted
Average
Grant-Date
Fair Value
per Share
 
Outstanding at January 3, 2014
 
135
 
$
5.34
 
Granted
 
314
 
 
15.34
 
Vested
 
(135)
 
 
5.34
 
Forfeited or expired
 
(158)
 
 
15.54
 
Outstanding at January 2, 2015
 
156
 
$
15.14