Note H – Stock Based Compensation

The Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation ("ASC 718-10"), which requires a fair value measurement and recognition of compensation expense for all share-based payment awards made to its employees and directors, including employee stock options and restricted stock awards. The Company estimates the fair value of stock options granted using the Black-Scholes valuation model. This model requires the Company to make estimates and assumptions including, among other things, estimates regarding the length of time an employee will retain vested stock options before exercising them, the estimated volatility of our common stock price and the number of options that will be forfeited prior to vesting. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Changes in these estimates and assumptions can materially affect the determination of the fair value of stock-based compensation and consequently, the related amount recognized in the Company's consolidated statements of operations.

As of March 31, 2018, the Company had one stock option plan, the 2010 Executive Stock Incentive Plan (the "2010 Plan"), for officers, other key employees, and non-employee directors. Incentive stock options granted under the 2010 plan must have exercise prices that are not less than 100% of the fair market value of the stock on the dates the options are granted. Restricted stock awards may also be granted to participants under the 2010 Plan with restrictions determined by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee"). Under the 2010 Plan, non-qualified stock options granted to participants will have exercise prices determined by the Compensation Committee. No options or restricted stock were granted in the first quarters of fiscal years 2018 or 2017.

The 2010 Plan also permits the issuance of stock appreciation rights ("SARs"). The SARs are in the form of an option with a cashless exercise price equal to the fair value of the Company's common stock at the date of grant. During the first quarter of 2018, the Company issued 51,000 SARs at an exercise price of $24.90. The SARs will vest on February 1, 2021 and are subject to meeting performance measurements. When exercised, the Company will issue shares of the Company' common stock with a value equal to the difference between the closing stock price on the date of exercise and the exercise price of the SARs.

Stock-based compensation expense in connection with SARs granted to employees and directors in the first quarter of 2018 and 2017 was approximately $56,000 and $7,000, respectively.

As of March 31, 2018, there were 275,000 units reserved and available for future grant under the above noted 2010 plan.

	Three Months Ended March 31, 2018					Year Ended December 30, 2017
	Units			Weighted - Average Exercise Price		Units			Weighted - Average Exercise Price
Outstanding at beginning of period		141,500		$	20.36		--		$	--
Issued		51,000			24.90		149,500			20.39
Forfeited		(2,000	)		19.10		(8,000	)		21.10
Outstanding at end of period		190,500			21.44		141,500			20.36

SARs Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of December 30, 2017		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of March 31, 2018		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	19.10-24.90		190,500		4.2	$	21.44		20,670		4.0		19.10

The following tables set forth the outstanding stock grants for the period specified:

	Three Months Ended March 31, 2018				Year Ended December 30, 2017
	Shares		Weighted - Average Exercise Price		Shares		Weighted - Average Exercise Price
Outstanding at beginning of period		25,000	$	—		—	$	—
Issued		—		—		25,000		—
Forfeited		—		—		—		—
Outstanding at end of period		25,000		—		25,000		—

Stock Grants Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of March 31, 2018		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of December 30, 2017		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	0.00		25,000		4.0		—		—		—		—

At March 31, 2018, outstanding SARs and options had an intrinsic value of $2,040,450.