Note 6 - Share-based Compensation and Employee Benefit Plans

3 Months Ended

Jun. 29, 2013

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

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

(6)     Share Based Compensation

The Company has established the 2000 Stock Option Plan and the 2005 Equity Incentive Plan, which provide for the granting of options and restricted stock for up to 1,750,000 shares of common stock at 100% of fair market value at the date of grant, with each grant requiring approval by the Board of Directors of the Company. Option grants under the 2000 Stock Option Plan are no longer available. Options granted generally vest in one or more installments in a four or five year period and must be exercised while the grantee is employed by the Company or within a certain period after termination of employment. Options granted to employees shall not have terms in excess of 10 years from the grant date. Holders of options may be granted stock appreciation rights (SARs), which entitle them to surrender outstanding awards for a cash distribution under certain changes in ownership of the Company, as defined in the stock option plan. As of June 29, 2013, no SAR’s have been granted under the option plan. As of June 29, 2013, the total number of shares of common stock available for issuance is 225,427. All outstanding options have either a five year or a ten year life. The Company records compensation cost associated with share-based compensation equivalent to the estimated fair value of the awards over the requisite service period. There were options for 137,000 shares granted in the first quarter of fiscal 2014 and options for 85,500 shares granted in the first quarter of fiscal 2013. The weighted average grant date fair value was $1.26 and $0.83, respectively.

Included in the options granted during the first quarter of fiscal 2014 are performance-based options for 20,000 shares granted as an inducement to a new employee. A portion of the options vest following the filing of the Company’s Form 10K for fiscal 2015 provided certain bookings goals are achieved by the Company. No compensation cost was recognized for these stock options during the first quarter of fiscal 2014 because management believes it is not probable that the performance criteria will be met.

In calculating compensation related to stock option grants, the fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted average assumptions:

	Three Months Ended
	June 29, 2013			June 30, 2012
Dividend yield	None			None
Expected volatility		80.00	%		92.00	%
Risk-free interest rate		0.72	%		0.76	%
Expected term (years)		7.31			8.36

The computation of expected volatility used in the Black-Scholes-Merton option-pricing model is based on the historical volatility of the Company’s share price. The expected term is estimated based on a review of historical employee exercise behavior with respect to option grants. The risk-free interest rate is based on the U.S. Treasury rates with maturity similar to the expected term of the option on the date of grant.

A summary of the changes in stock options outstanding for the three month period ended June 29, 2013 and the year ended March 30, 2013 is as follows:

					Weighted Average
			Weighted Average		Remaining Contractual		Aggregate Intrinsic
	Shares		Exercise Price		Terms (Years)		Value
Outstanding at March 31, 2012		1,221,312	$	1.74		6.7	$	3,041
Granted		521,000		1.31
Exercised		-		-
Forfeited / Expired		186,062		1.58
Outstanding at March 30, 2013		1,556,250	$	1.62		6.8	$	252,455
Granted		137,000		1.53
Exercised		-		-
Forfeited / Expired		81,000		1.73
Outstanding at June 29, 2013		1,612,250	$	1.61		6.9	$	130,275
Exercisable at June 29, 2013		405,775	$	1.93		4.1	$	11,495
At June 29,2013, expected to vest in the future		856,662	$	1.49		7.9	$	84,340

As of June 29, 2013, there was $726,248 of total unrecognized compensation cost related to non-vested options. That cost is expected to be recognized over a weighted average period of 1.9 years and will be adjusted for subsequent changes in estimated forfeitures. There were 45,600 options that vested during the quarter ended June 29, 2013, and 39,125 options that vested during the quarter ended June 30, 2012. The total fair value of options vested during each of the quarters ended June 29, 2013 and June 30, 2012 was $59,947 and $56,464, respectively. No options were exercised for the three month periods ended June 29, 2013 and June 30, 2012. Share based compensation cost related to stock options recognized in operating results for the three months ended June 29, 2013 and June 30, 2012 totaled $78,000 and $57,000, respectively.

Restricted Stock

The Company granted 71,500 shares of restricted stock during the first quarter of fiscal 2014 to members of the Board of Directors in lieu of cash compensation for services to be performed in fiscal 2014. The weighted average grant date fair value was $1.53. The Company also granted 30,000 shares of unrestricted stock during the first quarter of fiscal 2014 as part of severance to a previous employee. The 30,000 shares did not have a restriction period because they vested immediately on the grant date, but are included in the roll forward schedule of restricted stock below because they were granted under the 2005 Plan. No restricted stock awards were granted in the first quarter of fiscal 2013. The restricted stock awards are considered fixed awards as the number of shares and fair value at the grant date is amortized over the requisite service period net of estimated forfeitures. Compensation cost of $77,000 was recognized for the restricted and unrestricted stock awards during the first quarter of fiscal 2014. No compensation cost was recognized for the restricted stock awards during the first quarter of fiscal 2013 because management did not believe it was probable that certain performance criteria would be met for the then non-vested restricted stock awards.

A summary of the changes in non-vested restricted stock awards outstanding for the three month period ended June 29, 2013 and the fiscal years ended March 30, 2013 is as follows:

			Weighted
			Average
	Shares		Fair Value
Non-vested at March 31, 2012		60,000	$	2.40
Granted		50,000		1.18
Forfeited or cancelled		60,000		2.40
Non-vested at March 30, 2013		50,000	$	1.18
Granted		101,500		1.08
Vested		30,000		1.53
Forfeited or cancelled		-		-
Non-vested at June 29, 2013		121,500	$	1.39