(

) S

tock

Based Compensation

The Company has established the

2005

Equity Incentive Plan, which provide for the granting of options and restricted stock for up to

2,850,000

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. The

2005

Plan has been extended to be effective until

2025.

Option grants under the

2000

Stock Option Plan are

longer available. Options granted generally vest in

one

or more installments in a

four

five

year period and must be exercised while the grantee is employed by the Company or within a certain period after termination of employment or service arrangement. Options granted to employees shall

not

have terms in excess of

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 30, 2018,

SAR’s have been granted under the option plan. As of

June 30, 2018,

the total number of shares of common stock available for issuance was

437,677.

All outstanding options have a

ten

year life from the date of grant. The Company records compensation cost associated with share-based compensation equivalent to the estimated fair value of the awards over the requisite service period.

Stock

Options

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

	Three Months Ended
	June 30, 2018			June 2 4 , 2017
Dividend yield		—			—
Expected volatility		92.55	%		—
Risk-free interest rate		2.82	%		—
Expected term (years)		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 30, 2018

and the year ended

March 31, 2018

is as follows:

				Weighted Average		Weighted Average Remaining		Aggregate
	Shares			Exercise Price per share		Contractual Terms (Years)		Intrinsic Value
Outstanding at March 25, 2017		1,104,500		$	1.41		6.1	$	3
Granted		856,000			0.34		10.0
Forfeited / Expired		(481,800	)		1.34
Outstanding at March 31, 2018		1,478,700		$	0.56		8.0	$	—
Granted		50,000			0.27		10.0
Forfeited / Expired		(31,000	)		1.41
Outstanding at June 30, 2018		1,497,700		$	0.53		7.8	$	—

Exercisable at June 30, 2018		500,650		$	0.79		4.4	$	—

At June 30, 2018 expected to vest in the future		702,491		$	0.40		9.6	$	—

As of

June 30, 2018,

there was

$205,000

of total unrecognized compensation cost related to non-vested options. That cost is expected to be recognized over a weighted average period of

3.71

years and will be adjusted for subsequent changes in estimated forfeitures. There were

7,200

options that vested during the quarter ended

June 30, 2018,

and

26,500

options that vested during the quarter ended

June 24, 2017.

The total fair value of options vested during each of the quarters ended

June 30, 2018

and

June 24, 2017

was

$9,052

and

$33,000

respectively. There were

options exercised in the

three

-month period ended

June 30, 2018

and

June 24, 2017.

Share based compensation cost related to stock options recognized in operating results for the

three

months ended

June 30, 2018

and

June 24, 2017

totaled

$20,000

and

$37,000,

respectively.

Restricted Stock

The Company granted

restricted awards (“RSAs”) during the

first

quarter of fiscal

2019.

RSAs were granted during the

first

quarter of fiscal

2018.

The RSAs 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. As of

June 30, 2018,

there was

$61,000

of total unrecognized compensation cost related to non-vested RSAs. That cost is expected to be recognized over a weighted average period of

0.87

years and will be adjusted for subsequent changes in estimated forfeitures. Compensation cost recognized for RSAs and unrestricted stock awards in operating results for the

three

months ended

June 30, 2018

and

June 24, 2017

totaled

$37,000

and

$9,000,

respectively

A summary of the changes in non-vested RSAs outstanding for the

three

-month period ended

June 30, 2018

and the fiscal year ended

March 31, 2018

is as follows:

	Shares			Weighted Average Fair Value
Non-Vested at March 25, 2017		—		$	—
Granted		586,950			0.66
Vested		(51,000	)		(0.60	)
Forfeited or cancelled		(236,000	)		(0.68	)
Non-Vested at March 31, 2018		299,950		$	0.65
Vested		(37,500	)		(0.39	)
Non-Vested at June 30, 2018		262,450		$	0.68