Stock Options and Warrants

6 Months Ended

Jun. 29, 2014

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

Stock Options and Warrants

NOTE 13 – STOCK OPTIONS AND WARRANTS

Employee Stock Options

The following table summarizes the changes in the options outstanding at June 29, 2014, and the related prices for the shares of the Company’s common stock issued to employees of the Company under a non-qualified employee stock option plan.

Range of Exercise Prices		Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Number Exercisable		Weighted Average Exercise Price
$	4.50		175,000	$	4.50		2.35		175,000	$	4.50
			175,000				2.35		175,000

A summary of the Company’s stock awards for options as of December 29, 2013 and changes for the thirteen weeks ended June 29, 2014 is presented below:

	Stock Options		Weighted Average Exercise Price
Outstanding, December 29, 2013		175,000	$	4.50
Granted		—		—
Exercised		—		—
Expired/Cancelled		—		—
Outstanding, June 29, 2014		175,000	$	4.50
Exercisable, June 29, 2014		175,000	$	4.50

The weighted-average fair value of stock options granted to employees during the period ended June 29, 2014 and June 30, 2013 and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	June 29, 2014			June 30, 2013
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		0.78	%		0.78	%
Expected stock price volatility		139	%		139	%
Expected dividend payout		-			-
Expected option life (in years)		5.00			4.59
Expected forfeiture rate		-	%		-	%
Fair value per share of options granted	$	3.96		$	3.96

The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company has no historical experience with which to establish a basis for determining an expected life of these awards. Therefore, the Company only gave consideration to the contractual terms and did not consider the vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures significant to the expected life of the option award.

We estimate the volatility of our common stock based on the calculated historical volatility of similar entities in industry, in size and in financial leverage whose share prices are publicly available. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. We have not paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model.

There were no options granted during the quarter ended June 29, 2014.

There were no stock-based compensation expenses in connection with options granted to employees recognized in the consolidated statement of operations for the twenty-six weeks ended June 29, 2014 and six months ended June 30, 2013.

Warrants

The following table summarizes the changes in the warrants outstanding at June 29, 2014, and the related prices.

Range of Exercise Prices	Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Number Exercisable		Weighted Average Exercise Price
$0.01 to $0.37		723,431	$	0.13		3.79		169,946	$	0.37
		723,431				3.79		169,946

A summary of the Company’s warrant as of December 29, 2013 and the changes for the twenty-six weeks ended June 29, 2014 is presented below:

	Warrants			Weighted Average Exercise Price
Outstanding, December 29, 2013		575,676		$	0.37
Granted		386,741			0.09
Exercised		(238,986	)		0.01
Expired/Cancelled		—			—
Outstanding, June 29, 2014		723,431		$	0.13
Exercisable, June 29, 2014		169,946		$	0.37