3. Stock Option Plan

3 Months Ended

Mar. 28, 2014

Notes

3. Stock Option Plan

3.  STOCK OPTION PLAN

As of March 28, 2014, options to purchase 1,396,413 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 three months ended March 28, 2014 follows (shares in thousands):

		Weighted-
		Average
	Number	Exercise
	of Shares	Price
Outstanding as of beginning of the period	1,235	$2.62
Granted	200	0.13
Exercised	-	-
Forfeited or expired	(58)	4.44
Outstanding as of end of the period	1,377	2.18
Exercisable as of the end of the period	1,036	$2.87

As of March 28, 2014, options exercisable and options outstanding had a weighted average remaining contractual term of 4.0 and 5.3 years, respectively, and aggregate intrinsic value of $10 and $36, 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 three months of 2014, were based on estimates as of the date of grant as follows:

Risk-free interest rate	0.74%
Dividend yield	0.00%
Volatility	340%
Expected life	3.5 years

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 March 28, 2014, there was approximately $22 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 2.6 years.

Share-based compensation expense included in selling, general and administrative expense in the statements of comprehensive loss for each of the three month periods ended March 28, 2014 and March 29, 2013 was $5 and $10, respectively.