4. Stock Option Plan

6 Months Ended

Jun. 29, 2018

Notes

4. Stock Option Plan

As of June 29, 2018, options to purchase 1,001,781 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, 2018 follows (shares in thousands):

		Weighted-
		Average
	Number	Exercise
	of Shares	Price
Outstanding as of beginning of the period	1,609	$0.66
Granted	150	1.12
Exercised	-	-
Forfeited or expired	(162)	1.21
Outstanding as of end of the period	1,597	0.65
Exercisable as of end of the period	1,128	$0.48

As of June 29, 2018, options exercisable and options outstanding had a weighted average remaining contractual term of 5.21 and 6.23 years, respectively, and had an aggregate intrinsic value of $641 and $676, 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 2018, were based on estimates as of the date of grant as follows:

Risk-free interest rate	2.04%
Dividend yield	0.00%
Volatility	125%
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 June 29, 2018, there was approximately $162 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 operations for the six-month periods ended June 29, 2018 and June 30, 2017 was $76 and $86, respectively. Share-based compensation expense included in selling, general and administrative expense in the statements of operations for the three-month periods ended June 29, 2018 and June 30, 2017 was $37 and $46, respectively.