Share-Based Compensation Plans

12 Months Ended

Dec. 28, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

5) Share-Based Compensation Plans

The Company adopted the 2009 Stock Incentive Plan ("2009 Plan") on December 10, 2009. Under the terms of the 2009 Plan all of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted options, restricted stock awards, or other stock-based awards. All outstanding options are nonstatutory stock options exercisable at the fair market value of the stock on the date of grant, and expire ten years from the date of grant. The options granted to employees generally vest in equal annual installments over a five-year period. The options granted to directors generally vest one year from date of grant.

Under the 2009 Plan a total of 1,500,000 shares of common stock are available for issuance, of which 356,895 shares remain available for grant as of December 28, 2013.

As of December 28, 2013, the 2009 Plan is the only stock option plan from which awards can be made as all other option plans have expired. The 1999 Stock Option Plan (“1999 Plan”) expired on January 22, 2009 and no additional options can be granted from the plan. As of December 28, 2013 there are 238,250 options outstanding under the 1999 Plan.

A summary of stock option activity for all the above plans as of December 28, 2013 and changes during the year then ended is presented below:

			Weighted	Weighted
			Average	Remaining		Aggregate
			Exercise	Contractual		Intrinsic
	Shares		Price	Life (years)		Value
Outstanding at
beginning of year	1,418,155	$	1.25
Granted	231,000	$	1.00
Exercised	(250,000)	$	0.37
Forfeited	(21,000)	$	1.53
Expired	(32,000)	$	0.31
Outstanding at
end of year	1,346,155	$	1.39	7.16	$	1,401,461
Options exercisable
at year-end	799,113	$	1.38	6.60	$	803,570

The total intrinsic value of options exercised during fiscal years 2013, 2012 and 2011 was $310,170, $28,835 and $321,842, respectively. As of December 28, 2013, there was $480,409 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans; that cost is expected to be recognized over a weighted average period of 1.8 years.

Cash received from option exercises under all share-based payment arrangements was $93,360, $9,333 and $99,533, for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, respectively.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following table presents the annualized weighted average values of the significant assumptions used to estimate the fair values of the options granted during 2013 and 2011:

		2013		2011
Risk-free interest rate		1.62%		2.45%
Expected life in years		9		9
Expected volatility		53%		82%
Expected dividend yield		0		0
Weighted average fair value of grants	$	0.60	$	1.60

All options are granted with an exercise price equal to the fair market value of the underlying common stock on the date of grant. There were no options granted in 2012.

The Company recognized $248,535, $242,793 and $210,125 as compensation expense related to total stock options outstanding in 2013, 2012 and 2011, respectively. The expense in 2012 included $20,500 associated with extending the option exercise period for five individuals terminated during the year. Their options were extended to the lesser of four years or the original expiration date of the option.

A tax benefit of $117,401, $0 and $126,049 was recognized as additional paid in capital in the years ended December 28, 2013, December 29, 2012 and December 31, 2011, respectively, resulting from the excess tax benefit of share-based awards over the cumulative compensation expense recognized for financial reporting.