Note 16: Shareholders’ Equity

Common Stock: Our Articles of Incorporation authorize 10,000,000 shares of common stock that may be issued from time to time having such rights, powers, preferences and designations as the Board of Directors may determine.  During the 26 weeks ended June 27, 2020 and June 29, 2019, 74,530 and nil shares of common stock were granted and issued in lieu of professional services at a fair value of $376 and nil, respectively.

On November 8, 2016, the Company entered into a securities purchase agreement with Energy Efficiency Investments, LLC (“EEI”) pursuant to which the Company agreed to issue up to $7,732 principal amount of 3% Original Issue Discount Senior Convertible Promissory Notes of the Company and related common stock purchase warrants. On December 31, 2019, the Company terminated its agreement with EEI, as a result, EEI returned 122,257 common shares.

As of June 27, 2020, and December 28, 2019, there were 1,993,578 and 1,919,048 shares, respectively, of common stock issued and outstanding.

Additionally, the Company is amortizing the fair value of 223,214 common shares granted during September 2019, but not vested, in lieu of professional services at a fair value of $1,000.  The share-based compensation expense remaining of $188 is being amortized through September 2021.

Stock options: The 2016 Plan, which replaces the 2011 Plan, authorizes the granting of awards in any of the following forms: (i) incentive stock options, (ii) nonqualified stock options, (iii) restricted stock awards, and (iv) restricted stock units, and expires on the earlier of October 28, 2026, or the date that all shares reserved under the 2016 Plan are issued or no longer available. The 2016 Plan provides for the issuance of up to 400,000 shares of common stock pursuant to awards granted under the 2016 Plan. Options granted to employees typically vest over two years, while grants to non-employee directors vest in six months. As of June 27, 2020, and December 28, 2019, 38,000 and  4,000 options were outstanding under the 2016 Plan, respectively.

Our 2011 Plan authorizes the granting of awards in any of the following forms: (i) stock options, (ii) stock appreciation rights, and (iii) other share-based awards, including but not limited to, restricted stock, restricted stock units or performance shares, and expires on the earlier of May 12, 2021, or the date that all shares reserved under the 2011 Plan are issued or no longer available. As of June 27, 2020, and December 28, 2019, 40,400 and 40,400 options, respectively, were outstanding under the 2011 Plan. No additional awards will be granted under the 2011 Plan.

We issue shares of new common stock when stock options are exercised. The Company periodically grants stock options that vest based upon the achievement of performance targets. For performance-based options, the Company evaluates the likelihood of the targets being met and records the expense over the probable vesting period.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model for the 34,000 options granted during the 26 weeks ended June 27, 2020.

Additional information relating to all outstanding options is as follows:

As of June 27, 2020, 52,900 stock options are exercisable with a weighted average exercise price of $11.51.

We recognized $41 and $60 share-based compensation expense related to option grants for the 13 weeks ended June 27, 2020 and June 29, 2019, respectively.  We recognized $72 and $120 share-based compensation expense related to option grants for the 26 weeks ended June 27, 2020 and June 29, 2019, respectively.

There is estimated future share-based compensation expense as of June 27, 2020 of $39 to be amortized until February 2021.

Warrants:

As of June 27, 2020, and December 28, 2019, we had fully vested warrants outstanding to purchase 33,363 shares of common stock at a price of $3.40 per share and expire in November 2021.