6. Stockholders’ Equity and Stock-Based Compensation

In December 2010 the Company’s Board of Directors authorized the repurchase of up to $15 million of the Company’s common stock in open market or negotiated transactions through December 2012. Since the plan’s inception through December 31, 2011 the Company has purchased 1,069,162 shares of its common stock for $4,414,626.

The Company has stock-based awards outstanding under several plans. In 2001, the Company adopted a 2001 Equity Incentive Plan (the Equity Plan) and a 2001 Supplemental Equity Plan (the Supplemental Plan). The Equity Plan authorized 7,100,000 shares of common stock, to be issued to employees, non-employees, and members of the Board of Directors (the Board). The Supplemental Plan authorized 1,300,000 shares of common stock, to be issued to employees and certain non-employees and only permits the issuance of nonqualified stock options and restricted common stock awards. The Equity Plan and the Supplemental had ten year lives and therefore no new equity awards may be issued under these plans. In 2010 the Company adopted a 2010 Equity Incentive Plan (the 2010 Equity Plan) which authorized the issuance of shares of common stock to employees, non-employees, and the Board. The 2010 Equity Plan has been subsequently amended to increase the number of authorized shares. The number of shares authorized is 1,800,000 plus the number of shares of common stock which were available for grant under the Equity Plan, the number of shares of common stock which were the subject of awards outstanding under the Equity Plan and are forfeited, terminated, cancelled or expire after the adoption of the 2010 Equity Plan and the number of shares of common stock delivered to the Company either in exercise of a Equity Plan award or in satisfaction of a tax withholding obligation. The option price of statutory incentive stock options shall not be less than 100% of the fair market value of the stock at the date of grant, or in the case of certain statutory incentive stock options, at 110% of the fair market value at the time of the grant. The option price of nonqualified stock options is determined by the Board or Compensation Committee. Options must be exercised within a ten-year period or sooner if so specified within the option agreement. The term and vesting period for restricted stock awards and options granted under the 2010 Equity Plan are determined by the Board’s compensation committee.

The Company has available approximately 0.6 million shares of common stock available for issuance under the Company’s 2010 Equity Plan in excess of shares of common stock which have already been reserved for under previously issued equity awards.

Stock Options

A summary of stock option activity under the stock award plans as of December 31, 2011 and changes during the twelve month period is as follows:


	2011
	Shares			Weighted Average Exercise Price
Balance, beginning of year		2,899,261		$	6.45
Options forfeited/cancelled		(976,236	)		9.19
Options exercised		(19,700)			3.68

Balance, end of year		1,903,325		$	5.07

Exercisable, end of year		1,903,325

The following table summarizes information about stock options outstanding and exercisable at December 31, 2011:


	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$ 0.01—$ 3.50		130,000		4.00	$	3.49		130,000	$	3.49
$ 3.75—$ 4.82		1,077,010		1.60		4.45		1,077,010		4.45
$ 5.00—$ 8.72		596,215		2.13		5.70		596,215		5.70
$10.00—$10.42		100,100		4.00		10.00		100,100		10.00

		1,903,325		2.06	$	5.07		1,903,325	$	5.07

Aggregate intrinsic value on December 31, 2011	$	78,637					$	78,637

No stock options were issued in 2011, 2010 or 2009. The intrinsic value of options exercised in 2011, 2010 and 2009 was approximately $23,000, $41,000 and $81,000, respectively. In June 2010 the Company issued a warrant to purchase 200,000 shares of the Company’s stock at $3.49. The warrant vests ratably over a two year period and as of December 31, 2011 150,000 shares had vested. The intrinsic value of the warrant at December 31, 2011 was approximately $78,000.

Cash received from option exercises under all share-based payment arrangements was approximately $0.1 million and $0.1 million for fiscal years 2011 and 2010, respectively. No tax benefits were realized during the three year period ended 2011 due to the existence of tax net operating loss carryforwards.

NonVested Restricted Common Stock

The Company has issued shares of nonvested restricted common stock to certain employees. Each award requires the employee to fulfill certain obligations, including remaining employed by the Company for one, two or four years (the vesting period) and in certain cases also meeting performance criteria. A summary of the activity for nonvested restricted common stock awards as of December 31, 2011 and changes during the twelve months then ended is presented below:


	Shares			Weighted Average Grant Fair Value
Balance December 25, 2010		2,033,607		$	3.79
Granted		1,891,012			4.12
Forfeited		(128,988	)		4.17
Vested		(897,949	)		3.13

Balance, December 31, 2011		2,897,682		$	4.20

The forfeitures in 2011 were primarily due to fact that the performance criteria were not met related to these awards.

Stock-Based Compensation

The following table summarizes stock-based compensation expense related to employee stock options and nonvested restricted common stock awards for the fiscal years 2011, 2010 and 2009 (no tax benefits were recognized):


	2011		2010		2009
Cost of product revenues	$	613,274	$	590,950	$	475,461
Research and development		577,514		428,123		231,890
Selling, general and administrative		2,732,840		1,564,655		1,176,989

Total	$	3,923,628	$	2,583,728	$	1,884,340

Total unrecognized compensation expense for the nonvested restricted common stock as of December 31, 2011 totals $7,388,000 and is expected to be recognized over a period of 3 years.