Stock Issuance

12 Months Ended

Jan. 02, 2016

Stock Issuance

Stock Issuance

On November 4, 2015, the Company entered into Securities Purchase Agreements (“SPAs”) with certain existing stockholders to raise $2,000,000 in a registered direct offering. Pursuant to the SPAs, the Company sold a total of 200,000 Units at a purchase price of $10.00 per Unit, with each Unit consisting of eight shares of the Company’s common stock and a warrant to purchase four shares of common stock (800,000 total) with an exercise price of $1.50 and a term of 3 years. The aggregate estimated fair value of the warrants was approximately $489,000 and these warrants were determined to be classified as equity. The fair value was estimated at the date of issuance using the Black-Scholes based valuation model. The table below outlines the assumptions for the warrants issued.

	November 9, 2015
Fair value of common stock	$1.47
Volatility	62.26%
Expected dividends	0.00%
Contractual term	3.0 years
Risk-free rate	1.27%

In Fiscal Year 2014, the Company issued 126,605 shares of common stock to vendors to settle outstanding payables balances of approximately $146,000.

In Fiscal Year 2013, the Company sold approximately 3.5 million shares with gross proceeds of approximately $3.0 million to two strategic accredited investors pursuant to a subscription agreement. A total placement agent fee of $20,000 was incurred in connection with the investments.