3. Stock Option Plan

9 Months Ended

Sep. 27, 2013

Notes

3. Stock Option Plan

3.           STOCK OPTION PLAN

As of September 27, 2013, options to purchase 1,538,913 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 nine months ended September 27, 2013 follows (shares in thousands):

		Weighted-
		Average
	Number	Exercise
	of Shares	Price
Outstanding as of beginning of the period	1,169	$3.19
Granted	150	0.03
Exercised	-	-
Forfeited or expired	(84)	5.82
Outstanding as of end of the period	1,235	2.62
Exercisable as of the end of the period	974	$3.28

As of September 27, 2013, options exercisable and options outstanding had a weighted average remaining contractual term of 3.8 and 4.8 years, respectively, and aggregate intrinsic value of $0 and $6, respectively.

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 nine months of 2013, were based on estimates as of the date of grant as follows:

Risk-free interest rate	0.38	%
Dividend yield	0.00	%
Volatility	377	%
Expected life (in years)	3.50

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.

As of September 27, 2013, there was approximately $10 of total unrecognized share-based compensation cost related to grants under the stock option 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 income (loss) for each of the three and nine months ended September 27, 2013 was $4 and $14, respectively.  Share-based compensation expense included in selling, general and administrative (excluding pension) expense in the statements of comprehensive income (loss) for each of the three and nine months ended September 28, 2012 was $8 and $25, respectively.