STOCK OPTION PLAN

6 Months Ended

Jun. 29, 2012

STOCK OPTION PLAN

3. STOCK OPTION PLAN

As of June 29, 2012, options to purchase 1,600,512 shares of common stock under the Company’s stock option plan were authorized and reserved for future grant. A summary of activity in the stock option plan for the six months ended June 29, 2012 follows (shares in thousands):

				Weighted-
				Average
	Number			Exercise
	of Shares			Price
Outstanding at beginning of the period		1,151		$	3.74
Granted		101			0.23
Exercised		-			-
Forfeited or expired		(89	)		6.59
Outstanding at end of the period		1,163			3.22
Exercisable at end of the period		994		$	3.68

As of June 29, 2012, options exercisable and options outstanding had a weighted average remaining contractual term of 4.4 and 5.1 years, respectively, and no aggregate intrinsic value.

The Black-Scholes option-pricing model is used to estimate the fair value of options under the Company’s stock option plan. The weighted average values of employee stock options granted under the stock option plan, as well as the weighted average assumptions used in calculating these values during the first six months of 2012, were based on estimates at the date of grant as follows:

Risk-free interest rate	0.36	%
Dividend yield	0.0	%
Volatility	396	%
Expected life (in years)	3.5

Expected option life and volatility are based on historical data of the Company. The risk-free interest rate is calculated based on the average US Treasury Bill rate that corresponds with the option life. Historically, the Company has not declared dividends and there are no foreseeable plans to do so.

No options were exercised during the six months ended June 29, 2012. Options were cancelled as a result of the expiration of the exercise period of the options. As of June 29, 2012, there was approximately $35 of total unrecognized share-based compensation cost related to grants under the plan that will be recognized over a weighted-average period of 2.1 years.

Share-based compensation expense included in selling, general and administrative (excluding pension) expense in the statements of comprehensive loss for the three and six months ended June 29, 2012 was approximately $7 and $17, respectively. Share-based compensation expense included in selling, general and administrative (excluding pension) expense in the statements of comprehensive loss for the three and six months ended July 1, 2011 was approximately $13 and $21, respectively.