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 restricted 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 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 were originally 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 each of the foregoing 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 September 26, 2015 and changes during the nine month period then ended is as follows:



	Nine Months Ended September 26, 2015
	Shares		Weighted Average Exercise Price
Balance, December 27, 2014	130,500		$	3.49
Options forfeited/canceled	(125,358	)	3.50
Options exercised	(5,142	)	3.16
Balance, all exercisable, September 26, 2015	—		$	—

Non-Vested Restricted Common Stock

A summary of the activity for non-vested restricted common stock awards as of September 26, 2015 and changes during the nine month period then ended is presented below:



	Shares		Weighted Average Grant Fair Value
Balance, December 27, 2014	2,551,631		$	3.75
Granted	1,192,400		3.80
Forfeited	(291,720	)	3.65
Vested	(527,500	)	3.54
Balance, September 26, 2015	2,924,811		$	3.82

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 grant fair value was $3.75. The Company has revised the amount within the period ended September 26, 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 nine months ended September 26, 2015 and September 27, 2014 (no tax benefits were recognized):



	Nine Months Ended
	September 26, 2015		September 27, 2014
Cost of component revenues	$	620,494	$	590,467
Research and development	669,605		773,106
Selling, general and administrative	1,496,395		2,191,881
Total	$	2,786,494	$	3,555,454

Unrecognized compensation expense for non-vested restricted common stock as of September 26, 2015 totaled $5.0 million and is expected to be recognized over a weighted average period of three years.