The Company accounts for stock-based compensation granted to employees and directors, including employees stock option awards, restricted stock and restricted stock units in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized as expense over the employee’s service period. The Company recognizes compensation expense on a ratable basis over the requisite service period of the award.

The Company values options using the Black-Scholes option pricing model. Restricted stock and time-based restricted stock units are valued at the grant date fair value of the underlying common shares. Performance-based restricted stock units with market conditions are valued using the Monte Carlo simulation model. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. The Monte Carlo simulation model incorporates assumptions for the holding period, risk-free interest rate, stock price volatility and dividend yield.

The terms of awards granted during the three months ended March 30, 2019 were consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 29, 2018.

The following table shows stock-based compensation expenses included in the condensed consolidated statements of operations for the three months ended March 30, 2019 and March 31, 2018:

	Three Months Ended
(in thousands)	March 30, 2019		March 31, 2018
Cost of revenues	$	19	$	24
Research and development		103		60
Sales and marketing		163		96
General and administrative		330		248
	$	615	$	428

Stock-based compensation expense capitalized to inventory was immaterial for the three months ended March 30, 2019 and March 31, 2018.

Occasionally, the Company will grant stock-based instruments to non-employees. During the three months ended March 30, 2019 and March 31, 2018, the amount of stock-based compensation related to non-employee options was not material.

The following table summarizes information regarding activity under the Incentive Plan during the three months ended March 30, 2019:

	Number of Shares			Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value (thousands)
Outstanding as of December 29, 2018		844,898		$	8.84
Granted		31,700		$	4.33
Exercised		(208	)	$	3.49
Canceled or forfeited		(54,140	)	$	10.16
Outstanding as of March 30, 2019		822,250		$	8.58	$	22

The weighted average grant date fair value of the options granted under the Incentive Plan as calculated using the Black-Scholes option-pricing model was $1.70 and $2.21 per share for the three months ended March 30, 2019 and March 31, 2018, respectively.

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

	Three Months Ended
	March 30, 2019			March 31, 2018
Average risk free interest rate		2.15	%		2.53	%
Expected life (in years)	4.55 years			4.55 years
Dividend yield	—%			—%
Average volatility		44	%		41	%

Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history over a period commensurate with the expected term of the options, trading volume of the Company’s stock, look-back volatilities and Company specific events that affected volatility in a prior period. The expected term of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is based on the history of exercises and cancellations on all past option grants made by the Company, the contractual term, the vesting period and the expected remaining term of the outstanding options. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.

Information regarding stock options outstanding, vested, expected to vest, and exercisable as of March 30, 2019 is summarized below:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (thousands)
Options outstanding		822,250	$	8.58		4.71	$	22
Options vested and expected to vest		765,064	$	8.64		4.62	$	21
Options exercisable		413,743	$	8.94		3.70	$	15

The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of March 30, 2019, 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 common stock. The total intrinsic value of options exercised for the three months ended March 30, 2019 and March 31, 2018 was approximately $0 thousand and $16 thousand, respectively.

As of March 30, 2019, there was $4.1 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements under the Incentive Plan. The cost is expected to be recognized over a weighted average period of 2.47 years.

Information regarding the restricted stock units (“RSUs”) activity for the three months ended March 30, 2019 is summarized below:

	Number of Shares
Outstanding as of December 29, 2018		597,121
Restricted stock units granted		—
Restricted stock units released		(51,599	)
Restricted stock units forfeited		(96,000	)
Outstanding as of March 30, 2019		449,522