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 and performance-based stock options 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 six months ended June 29, 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 and six months ended June 29, 2019 and June 30, 2018:

	Three Months Ended				Six Months Ended
(in thousands)	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Cost of revenues	$	10	$	21	$	29	$	45
Research and development		62		60		165		120
Sales and marketing		46		83		209		179
General and administrative		507		251		837		499
	$	625	$	415	$	1,240	$	843

Stock-based compensation expense capitalized to inventory was immaterial for the six months ended June 29, 2019 and June 30, 2018.

Occasionally, the Company will grant stock-based instruments to non-employees. During the six months ended June 29, 2019 and June 30, 2018, the amount of stock-based compensation related to non-employee options was not material.

The following table summarizes stock options information during the six months ended June 29, 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		731,700		$	4.90
Exercised		(210	)	$	3.49
Canceled or forfeited		(170,911	)	$	9.68
Outstanding as of June 29, 2019		1,405,477		$	6.68	$	21

The weighted average grant date fair value of the options granted was $1.76 and $2.32 per share for the three months ended June 29, 2019 and June 30, 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						Six Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Average risk free interest rate		1.74	%		2.65	%		1.76	%		2.60	%
Expected life (in years)	4.55 years			4.55 years			4.55 years			4.55 years
Dividend yield	—%			—%			—%			—%
Average volatility		45	%		40	%		45	%		40	%

Performance stock options granted with market conditions are valued using a Monte Carlo simulation model in combination with a Black-Scholes option pricing model.

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 June 29, 2019 is summarized below:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (thousands)
Options outstanding		1,405,477	$	6.68		5.31	$	21
Options vested and expected to vest		1,227,921	$	6.88		5.11	$	20
Options exercisable		442,940	$	8.93		2.59	$	14

The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of June 29, 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 six months ended June 29, 2019 and June 30, 2018 was approximately $0 thousand and $48 thousand, respectively.

As of June 29, 2019, there was $3.7 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements. The cost is expected to be recognized over a weighted average period of 3.31 years.

Information regarding the restricted stock units (“RSUs”) activity for the six months ended June 29, 2019 is summarized below:

	Number of Shares
Outstanding as of December 29, 2018		597,121
Restricted stock units granted		—
Restricted stock units released		(166,916	)
Restricted stock units forfeited		(172,441	)
Outstanding as of June 29, 2019		257,764