Stockholders’ Equity and Stock-Based Compensation

In March 2013, the Company’s Board of Directors authorized the repurchase of up to $30 million of the Company’s common stock in open market or negotiated transactions through March 2014. Since the plan’s inception through December 28, 2013, the Company has purchased 2,171,400 shares of its common stock for $7,991,954.

The Company has stock-based awards outstanding under several plans. In 2001, the Company adopted a 2001 Equity Incentive Plan (the Equity 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 Equity Plan had a ten year life and therefore no new equity awards may be issued under this plan. 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 2,600,000 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, canceled 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 1.2 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 28, 2013 and changes during the twelve month period is as follows:



	2013
	Shares		Weighted Average Exercise Price
Balance, beginning of year	983,680		$	5.26
Options forfeited/canceled	(424,830	)	5.48
Options exercised	—		—
Balance, end of year	558,850		$	5.09
Exercisable, end of year	558,850

The following table summarizes information about stock options outstanding and exercisable at December 28, 2013:



	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		2.00	$	3.49	130,000		$	3.49
$ 3.75—$ 4.82	328,850		1.00	4.23		328,850		4.23
$ 5.00—$ 8.03	—		2.23	5.40		—		5.40
$10.00—$10.00	100,000		1.00	10.00		100,000		10.00
	558,850		1.23	$	5.09	558,850		$	5.09
Aggregate intrinsic value on December 28, 2013	$	182,643				$	182,643

No stock options were issued in 2013, 2012 or 2011. The intrinsic value of options exercised in 2013, 2012 and 2011 was approximately $0, $0 and $23,000, respectively. The Company has issued warrants to purchase 200,000 shares of the Company’s stock at $3.49. During the year ended December 29, 2012, the warrants became fully vested.

Cash received from option exercises under all share-based payment arrangements was approximately $0.1 million for fiscal year 2011. No tax benefits were realized during the three year period ended 2013 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 28, 2013 and changes during the twelve months then ended is presented below:



	Shares		Weighted Average Grant Fair Value
Balance, December 29, 2012	2,283,048		$	4.76
Granted	2,135,000		3.22
Forfeited	(227,000	)	3.87
Vested	(1,216,900	)	3.46
Balance, December 28, 2013	2,974,148		$	4.25

The forfeitures in 2013 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 2013, 2012 and 2011 (no tax benefits were recognized):



	2013		2012		2011
Cost of product revenues	$	414,842	$	513,789	$	613,274
Research and development	423,548		366,443		577,514
Selling, general and administrative	3,365,018		3,606,758		2,732,840
Total	$	4,203,408	$	4,486,990	$	3,923,628

Total unrecognized compensation expense for the nonvested restricted common stock as of December 28, 2013 totals $6.2 million and is expected to be recognized over a period of two years.