2. Stock Option Plan

6 Months Ended

Jul. 03, 2015

Notes

2. Stock Option Plan

2.           STOCK OPTION PLAN

As of July 3, 2015, options to purchase 1,476,468 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 July 3, 2015 follows (shares in thousands):

		Weighted-
		Average
	Number	Exercise
	of Shares	Price
Outstanding as of beginning of the period	1,333	$2.08
Granted	211	0.36
Exercised	-	-
Forfeited or expired	(68)	7.57
Outstanding as of end of the period	1,476	1.58
Exercisable as of end of the period	1,078	$2.07

As of July 3, 2015, options exercisable and options outstanding had a weighted average remaining contractual term of 3.82 and 5.22 years, respectively, and aggregate intrinsic value of $212 and $376, 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 six months of 2015, were based on estimates as of the date of grant as follows:

Risk-free interest rate	0.91%
Dividend yield	0.00%
Volatility	343%
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 July 3, 2015, there was approximately $47 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 2.3 years.

Share-based compensation expense included in selling, general and administrative expense in the statements of comprehensive income (loss) for each of the six-month periods ended July 3, 2015 and June 27, 2014 was $20 and $8, respectively.  Share-based compensation expense included in selling, general and administrative expense in the statements of comprehensive income (loss) for each of the three-month periods ended July 3, 2015 and June 27, 2014 was $11 and $3, respectively.