Share-Based Compensation | 9 Months Ended |
Sep. 27, 2014 |
Share-Based Compensation | ' |
Note 7. Share-Based Compensation | ' |
7A. Employee Share-Based Compensation |
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Stock Option Plans |
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The fair value of the Company’s stock options was estimated at the date of grant using the Black-Scholes option pricing model. The table below outlines the weighted average assumptions for options granted to employees during the nine months ended September 27, 2014. |
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Nine Months Ended September 27, 2014 | | | | | | | | | | | | | | | |
Expected volatility | | | 73.55 | % | | | | | | | | | | | | |
Expected dividends | | | 0 | % | | | | | | | | | | | | |
Expected term | | 5.7 years | | | | | | | | | | | | | |
Risk-free rate | | | 1.86 | % | | | | | | | | | | | | |
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The weighted average grant date fair value of options granted during the nine months ended September 27, 2014 was $0.91. |
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Service Period Based Stock Options |
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The majority of options granted by the Company feature service conditions. Accordingly, these options vest ratably over specified periods of approximately 3 to 5 years following the date of grant. |
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The following table summarizes our stock option activity during the nine months ended September 27, 2014: |
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| | | | | Weighted Average | | | | |
| | | | | | | | Remaining | | | Aggregate | |
| | Number of | | | Exercise | | | Contractual | | | Intrinsic | |
| | Shares | | | Price | | | Term | | | Value | |
Outstanding at December 28, 2013 | | | 12,113,655 | | | $ | 1.06 | | | | 7.43 | | | | |
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Options Granted | | | 2,033,987 | | | | 1.37 | | | | 10 | | | | |
Options Classification from Employee to Non-Employee | | | (113,151 | ) | | | 0.76 | | | | | | | | |
Options Exercised | | | (511,642 | ) | | | 0.88 | | | | | | | | |
Options Expired | | | (253,900 | ) | | | 1 | | | | | | | | |
Options Forfeited | | | (628,634 | ) | | | 1.11 | | | | | | | | |
Outstanding at September 27, 2014 | | | 12,640,315 | | | $ | 1.12 | | | | 7.22 | | | $ | 1,475,920 | |
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Exercisable at September 27, 2014 | | | 8,822,108 | | | $ | 1.13 | | | | 6.53 | | | $ | 1,071,805 | |
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The aggregate intrinsic values in the table above are before income taxes, based on the Company’s closing stock price of $1.06 on the last day of business for the period ended September 27, 2014. |
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As of September 27, 2014, there was approximately $2,035,000 of total unrecognized compensation expense expected to be recognized over a weighted average period of 2.12 years. |
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Restricted Stock |
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Restricted stock awards granted by the Company to employees have vesting conditions that are unique to each award. |
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The following table summarizes activity of restricted stock awards granted to employees at September 27, 2014 and changes during the nine months then ended: |
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| | | | | Weighted Average | | | | | | | | | |
| | | | | Award-Date | | | | | | | | | |
| | Shares | | | Fair Value | | | | | | | | | |
Unvested shares at December 28, 2013 | | | 500,000 | | | $ | 0.69 | | | | | | | | | |
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Granted | | | 1,090,000 | | | | 1.41 | | | | | | | | | |
Vested | | | - | | | | - | | | | | | | | | |
Forfeited | | | - | | | | - | | | | | | | | | |
Unvested shares at September 27, 2014 | | | 1,590,000 | | | $ | 1.18 | | | | | | | | | |
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Expected to Vest as of September 27, 2014 | | | 1,590,000 | | | $ | 1.18 | | | | | | | | | |
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On January 2, 2014, the Company awarded an aggregate of 1,090,000 shares of restricted stock to the Company’s officers and members of the board of directors. These shares shall vest upon the earlier to occur of the following: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination of the officers and members of the board of directors without cause for any reason. The fair values of these restricted stock awards were based on the trading price of the Company’s common stock on the date of grant. The expense related to the restricted stock award has been amortized over the period of six months through July 1, 2014, as the Company determined the requisite service period to be 6 months as that is when they are eligible to vest. |
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Employee Option and Restricted Stock Compensation |
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The Company recognized compensation expense of approximately $388,000 and $2,359,000 in general and administrative expenses in the statement of operations for the three and nine months ended September 27, 2014, respectively, and $244,000 and $817,000 for the three and nine months ended September 28, 2013, respectively. |
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7B. Non-Employee Share-Based Compensation |
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Stock Option Plans |
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The following table summarizes activity of stock options granted to non-employees at September 27, 2014 and changes during the nine months then ended: |
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| | | | | Weighted Average | | | | |
| | | | | | | | Remaining | | | Aggregate | |
| | Number of | | | Exercise | | | Contractual | | | Intrinsic | |
| | Shares | | | Price | | | Term | | | Value | |
Outstanding at December 28, 2013 | | | 847,300 | | | $ | 1.44 | | | | 5.74 | | | | |
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Options Granted | | | 90,000 | | | | 1.24 | | | | 10 | | | | |
Options Classification from Employee to Non-Employee | | | 113,151 | | | | 0.76 | | | | | | | | |
Options Exercised | | | - | | | | - | | | | | | | | |
Options Forfeited | | | - | | | | - | | | | | | | | |
Outstanding at September 27, 2014 | | | 1,050,451 | | | $ | 1.35 | | | | 5.73 | | | $ | 64,067 | |
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Exercisable at September 27, 2014 | | | 960,451 | | | $ | 1.36 | | | | 5.34 | | | $ | 64,067 | |
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The aggregate intrinsic values in the table above are before income taxes, based on the Company’s closing stock price of $1.06 on the last day of business for the period ended September 27, 2014. |
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Stock Awards |
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On July 1, 2014, the Company awarded 65,000 shares of the Company’s common stock that were fully vested and non-forfeitable to a non-employee. The fair value of the award, which amounted to $83,850 was based on the trading price of the Company’s stock on the date of grant. The expense related to this stock award is being amortized over the period of approximately 7 months, as the services relating to this award are being provided over this period of time. The expense the Company recognized for this award was approximately $35,000 for the nine months ended September 27, 2014. During the nine months ended September 28, 2013, the Company awarded an aggregate of 600,000 shares of the Company’s common stock to non-employees and recognized approximately $238,000 for the expense. |
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As of September 27, 2014, there was approximately $49,000 of total unrecognized compensation expense related to the stock award to a non-employee. That cost is expected to be recognized over a period of approximately 4 months as of September 27, 2014. |
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Restricted Stock |
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Restricted stock awards granted by the Company to non-employees generally feature time vesting service conditions, specified in the respective service agreements. Restricted stock awards issued to non-employees are accounted for at current fair value through the vesting period. The fair value of vested non-employee restricted shares awarded during the nine months ended September 27, 2014 was approximately $15,000, which represents the market value of the Company’s common stock on respective vesting dates charged to expense. |
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The following table summarizes activity of restricted stock awards issued to non-employees at September 27, 2014 and changes during the nine months then ended: |
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| | | | | Weighted Average | | | | | | | | | |
| | Shares | | | Fair Value | | | | | | | | | |
Unvested shares at December 28, 2013 | | | - | | | $ | - | | | | | | | | | |
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Granted | | | 96,000 | | | | 1.3 | | | | | | | | | |
Vested | | | (12,000 | ) | | | 1.28 | | | | | | | | | |
Forfeited | | | - | | | | - | | | | | | | | | |
Unvested shares expected to vest at September 27, 2014 | | | 84,000 | | | $ | 1.06 | | | | | | | | | |
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As of September 27, 2014, there was approximately $87,000 of total unrecognized compensation expense related to the restricted stock award to a non-employee. That cost is expected to be recognized over a period of 3.4 years as of September 27, 2014. |
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Non-Employee Option, Stock and Restricted Stock Compensation |
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The Company recognized share-based compensation expense of approximately $43,000 and $109,000 in general and administrative expenses in the statement of operations for the three and nine months ended September 27, 2014, respectively, and $87,000 and $243,000 for the three and nine months ended September 28, 2013, respectively. |
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