STOCK-BASED COMPENSATION

The fair value of non-vested restricted common stock awards is generally the market value of the Company’s common stock on the date of grant. The non-vested common stock awards require 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 require meeting either performance criteria or the Company’s stock achieving a certain price. For non-vested restricted common stock awards which solely require the recipient to remain employed with the Company, the stock compensation expense is amortized over the anticipated service period. For non-vested restricted common stock awards which require the achievement of performance criteria, the Company reviews the probability of achieving the performance goals on a periodic basis. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for the performance goal is amortized over the anticipated service period. If the performance criteria are not met, no compensation cost is recognized and any previously recognized compensation cost is reversed. The Company recognizes compensation costs on a straight-line basis over the requisite service period for time-vested awards.

On February 13, 2015, the Company modified the termination date of certain restricted stock grants previously made to Dr. Fan, the Company’s President and Chief Executive Officer. In 2011, the Company granted Dr. Fan 260,000 shares of restricted stock which will vest upon the first 10 consecutive trading day period following the grant date during which the Company's common stock trades at a price equal to or greater than $5.25 subject to acceleration upon the occurrence of an acceleration event. This grant was originally set to terminate on September 12, 2016. In 2013, the Company granted compensation awards to its Dr. Fan that consisted of two grants of 150,000 shares of restricted stock each. One of the grants will vest at the end of the first 10 consecutive trading day period following the grant date during which the Company’s common stock trades at a price per share equal to or greater than $6.00. The other award will vest at the end of the first 10 consecutive trading day period following the grant date during which the Company’s common stock trades at a price per share equal to or greater than $7.00. Both are due to expire in 2023. On December 31, 2014, Dr. Fan entered into a 3 year employment agreement with the Company which expires on December 31, 2017. The Company has amended the three grants to now terminate on December 31, 2017, to be consistent with Dr. Fan's employment agreement.

A summary of stock option award activity under the equity plans as of March 28, 2015 and changes during the three month period then ended is as follows (all options were vested as of March 28, 2015):



	Three months ended March 28, 2015
	Shares		Weighted Average Exercise Price
Balance, December 27, 2014	130,500		$	3.49
Options forfeited/canceled	(500	)	3.87
Options exercised	—		—
Balance, all exercisable, March 28, 2015	130,000		$	3.49

The weighted average remaining contractual life of the outstanding options is less than one year. The Company has issued warrants to purchase 148,000 shares of the Company’s common stock for $3.49 per share.

Non-Vested Restricted Common Stock

A summary of the activity for non-vested restricted common stock awards as of March 28, 2015 and changes during the three month period then ended is presented below:



	Shares		Weighted Average Grant Fair Value
Balance, December 27, 2014	2,551,631		$	3.75
Granted	919,000		3.92
Forfeited	(128,520	)	3.75
Vested	—		—
Balance, March 28, 2015	3,342,111		$	3.80

Included within the non-vested restricted common stock table above is 50,000 awards granted for which the performance conditions have yet to be determined and therefore a grant date has not yet been established for the award. No stock-based compensation expense has been recorded relating to this award during the three month period ended March 28, 2015.

Subsequent to the year ended December 27, 2014, the Company identified an error in its calculation of the weighted average grant fair value of issued restricted stock outstanding as of December 27, 2014. The Company had disclosed a weighted average grant fair value of $4.41 in its Form 10-K for the year ended December 27, 2014, however the correct weighted average fair value was $3.75. The Company has revised the amount within the quarter ended March 28, 2015.

Stock-Based Compensation

The following table summarizes stock-based compensation expense within each of the categories below as it relates to non-vested restricted common stock awards for the three months ended March 28, 2015 and March 29, 2014 (no tax benefits were recognized):



	Three Months Ended
	March 28, 2015		March 29, 2014
Cost of component revenues	$	199,239	$	230,333
Research and development	234,406		332,463
Selling, general and administrative	563,819		564,161
Total	$	997,464	$	1,126,957

Unrecognized compensation expense for non-vested restricted common stock as of March 28, 2015 totaled $6.2 million and is expected to be recognized over a weighted average period of three years.