Stock Based Compensation

9 Months Ended

Sep. 29, 2012

Stock Based Compensation [Abstract]

Stock Based Compensation

7. Stock Based Compensation

2008 Equity Incentive Plan

For the nine months ended September 29, 2012, the only active share-based compensation plan was the 2008 Equity Incentive Plan (the “Incentive Plan”). The terms of awards granted during the nine months ended September 29, 2012 were consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011.

Summary of Stock Options

The following table summarizes information regarding activity in our stock option plan during the nine months ended September 29, 2012:

	Number of Shares			Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value (thousands)
Outstanding at December 31, 2011		1,766,401		$	3.63
Granted		137,150		$	4.00
Exercised		(154,657	)	$	2.62
Canceled or forfeited		(322,737	)	$	4.32
Outstanding at September 29, 2012		1,426,157		$	3.61	$	1,000

The weighted-average grant date fair value of the options granted under the Company’s stock plans as calculated using Black-Scholes option-pricing model was $2.37 per share for the three months ended September 29, 2012. The weighted-average grant date fair value of the options granted under the Company’s stock plans as calculated using Black-Scholes option-pricing model was $2.70 per share for the nine months ended September 29, 2012.

The Company uses the Black-Scholes option-pricing model to estimate fair value of stock-based awards with the following weighted average assumptions:

	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Average risk free interest rate		0.59	%		0.94	%		0.68	%		1.23	%
Expected life (in years)		4.55 years			4.69 years			4.55 years			4.71 years
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Average volatility		90	%		91	%		91	%		91	%

The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine month periods ended September 29, 2012 and October 1, 2011 (in thousands):

	Three Months Ended					Nine Months Ended
	September 29, 2012			October 1, 2011		September 29, 2012		October 1, 2011
Cost of revenues	$	17		$	15	$	51	$	43
Research and development		19			15		58		52
Sales and marketing		29			26		84		81
General and administrative		(85	)		50		84		149
	$	(20	)	$	106	$	277	$	325

Approximately $11 thousand and $10 thousand of the stock based compensation expense recognized was capitalized into inventory as a component of overhead at September 29, 2012 and October 1, 2011, respectively.

Information regarding stock options outstanding, exercisable and expected to vest at September 29, 2012 is summarized below:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining  Contractual Life (Years)		Aggregate Intrinsic  Value (thousands)
Options outstanding		1,426,157	$	3.61		3.17	$	1,000
Options vested and expected to vest		1,351,086	$	3.61		3.05	$	979
Options exercisable		1,127,084	$	3.59		2.56	$	935

The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of September 28, 2012, that would have been received by option holders had all option holders exercised their stock options as of that date. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of options exercised for the nine months ended September 29, 2012 and October 1, 2011 were approximately $225 thousand and $84 thousand, respectively.

As of September 29, 2012, there was $738 thousand of total unrecognized compensation cost, net of forfeitures, related to non-vested share-based compensation arrangements under the Incentive Plan. The cost is expected to be recognized over a weighted average period of 2.68 years.

Summary of Restricted Stock Units and Awards

The Company recognizes the estimated compensation expense of restricted stock units and awards, net of estimated forfeitures, over the vesting term. The estimated compensation expense is based on the fair value of the Company’s common stock on the date of grant.

Information regarding the restricted stock units outstanding, vested and expected to vest as of September 29, 2012 is summarized below:

	Number of Shares		Weighted Average  Remaining Contractual Life (years)		Aggregate Intrinsic  Value (thousands)
Restricted stock units outstanding		120,999		1.17	$	448
Restricted stock units vested and expected to vest		39,665		1.14	$	147

The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of September 28, 2012.

As of December 31, 2011, there were 90,189 restricted stock units outstanding. During the nine months ended September 29, 2012, there were 45,999 restricted stock units awarded and 15,189 restricted stock units released.

The following table summarizes information regarding activity in restricted stock awards during the nine months ended September 29, 2012:

	Number of Shares			Weighted Average  Grant Date Fair Value
Outstanding at December 31, 2011		10,126		$	3.95
Awarded		10,666		$	3.75
Released		(10,126	)	$	3.95
Outstanding at September 29, 2012		10,666		$	3.75