(10) Stock-based Compensation Effective May 5, 2015, the Company adopted the 2015 Equity Plan (the “2015 Plan”), pursuant to which it may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. The number of common stock reserved for issuance is 2,000,000. The Company also maintains an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). The 2005 Plan expired in 2015 and no additional options may be granted. Nonetheless, the 2005 Plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated. As of October 3, 2021, there were 723,690 shares available for grant pursuant to the 2015 Plan. Stock options granted to employees and directors generally vest over two to five years, in monthly or annual installments, as outlined in each agreement. Options generally expire ten years from the date of grant. Compensation expense equal to the grant date fair value of the options is recognized in general and administrative expense over the applicable service period. The Company utilizes the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions: | ● | Stock price – Published trading market values of the Company’s common stock as of the date of grant. |
| ● | Exercise price – The stated exercise price of the stock option. |
| ● | Expected life – The simplified method as outlined in ASC 718. |
| ● | Expected dividend – The rate of dividends that the Company expects to pay over the term of the stock option. |
| ● | Volatility – Actual volatility over the most recent historical period equivalent to the expected life of the option. |
| ● | Risk-free interest rate – The daily United States Treasury yield curve rate. |
The Company recognized stock-based compensation expense in its consolidated statements of operations for the three and nine months ended October 3, 2021 and September 27, 2020, respectively, as follows: | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | (in thousands) | | October 3, 2021 | | September 27, 2020 | | October 3, 2021 | | September 27, 2020 | | Stock options | | $ | 62 | | $ | 110 | | $ | 245 | | $ | 235 | | Restricted stock | | | 232 | | | 64 | | | 687 | | | 187 | | | | $ | 294 | | $ | 174 | | $ | 932 | | $ | 422 | |
Information regarding the Company’s stock options is summarized below: | | | | | | | | | | | | | | | Weighted | | | | | | | | Average | | | | | | | | Remaining | | | Number of | | Weighted Average | | Contractual | (number of options in thousands) | | Options | | Exercise Price | | Life in Years | Options outstanding at January 3, 2021 | | 557 | | $ | 4.53 | | | Granted | | 123 | | | 12.99 | | | Exercised | | (181) | | | 4.63 | | | Canceled, forfeited or expired | | (51) | | | 4.21 | | | Options outstanding at October 3, 2021 | | 448 | | $ | 6.85 | | 7.4 |
| | | | | | | | | | Nine Months Ended | | | | October 3, 2021 | | September 27, 2020 | | Weighted-average fair value of options granted during the period | | $ | 7.33 | | $ | 1.79 | | Expected life (in years) | | | 5.6 | | | 5.1 | | Expected dividend | | $ | — | | $ | — | | Expected stock volatility | | | 64.02 | % | | 55.02 | % | Risk-free interest rate | | | 0.9 | % | | 0.9 | % |
Information regarding the Company’s restricted stock is summarized below: | | | | | | | | | | | | | | | Weighted | | | | | | | | Average | | | | | | | | Remaining | | | Number of | | Weighted Average | | Contractual | (number of awards in thousands) | | Awards | | Award Date Fair Value | | Life in Years | Unvested at January 3, 2021 | | 475 | | $ | 4.43 | | | Granted | | 53 | | | 13.25 | | | Exercised/Released | | (168) | | | 4.93 | | | Canceled, forfeited or expired | | (55) | | | 4.30 | | | Unvested at October 3, 2021 | | 305 | | $ | 5.71 | | 14.8 |
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