JanOne Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Shareholders' Equity

Shareholders' Equity

12 Months Ended

Jan. 02, 2016

Stockholders' Equity Note [Abstract]

Shareholders’ Equity

Common Stock: During fiscal year 2015, stock options to purchase 13 shares of common stock were exercised that resulted in cash proceeds of $24 and had an intrinsic value of $10. During fiscal year 2014, stock options to purchase 10 shares of common stock were exercised that resulted in cash proceeds of $24 and had an intrinsic value of $9. In 2015, 100 shares of common stock were granted from the 2011 Stock Compensation Plan (the "2011 Plan") to the Company's then CEO and the corresponding fair value of $114 was included in share-based compensation.

Stock options: The 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. The 2011 Plan provides for the issuance of up to 700 shares of common stock pursuant to awards granted under the 2011 Plan. Options granted to employees typically vest over two years, while grants to non-employee directors vest in six months. As of January 2, 2016, 534 options were outstanding under the 2011 Plan. Our 2006 Stock Option Plan (the “2006 Plan”) expired on June 30, 2011, but the options outstanding under the 2006 Plan continue to be exercisable in accordance with their terms. As of January 2, 2016, 238 options were outstanding to employees and non-employee directors under the 2006 Plan. Our Restated 1997 Stock Option Plan (the “1997 Plan”) has expired, but the options outstanding under the expired 1997 Plan continue to be exercisable in accordance with their terms. As of January 2, 2016, options to purchase an aggregate of 8 shares were outstanding under the 1997 Plan. We issue 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 with the following weighted-average assumptions for fiscal years 2015 and 2014:



	For the fiscal years ended
	January 2, 2016		January 3, 2015
Expected dividend yield	—		—
Expected stock price volatility	84.80	%	83.82	%
Risk-free interest rate	2.16	%	2.16	%
Expected life of options (years)	10.00		7.55

Additional information relating to all outstanding options is as follows (in thousands, except per share data):



	Options Outstanding			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life
Balance at December 28, 2013	766			$	3.26
Granted	219			3.04
Exercised	(10		)	2.38
Forfeited	(70		)	2.73
Balance at January 3, 2015	905			3.25		$	212	4.56
Granted	130			1.33
Exercised	(12		)	1.89
Cancelled/expired	(173		)	4.63
Forfeited	(70		)	2.67
Balance at January 2, 2016	780			$	2.70	$	—	5.23

Options exercisable at January 2, 2016	$	632		$	2.79	$	—

The weighted average fair value per option of options granted during fiscal years 2015 and 2014 was $1.12 and $2.34, respectively. We recognized share-based compensation expense of $316 and $267 for fiscal years 2015 and 2014, respectively. The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $1.05 on January 2, 2016, which theoretically could have been received by the option holders had all option holders exercised their options as of that date. As of January 2, 2016, there were no in-the-money options exercisable.

Based on the value of options outstanding as of January 2, 2016, estimated future share-based compensation expense is as follows:



Fiscal year 2016	$	138
Fiscal year 2017	43
	$	181

The estimate above does not include any expense for additional options that may be granted and vest during 2016 and 2017.

Warrants: On October 21, 2009, we issued a warrant to GE to purchase 248 shares of common stock at a price of $0.75 per share. The fair market value of the warrant issued was $479 and it was exercisable in full at any time during a term of ten years. The fair value per share of common stock underlying the warrant issued to GE was $1.93 based on our closing stock price of $1.97. The exercise price may be reduced and the number of shares of common stock that may be purchased under the warrant may be increased if the Company issues or sells additional shares of common stock at a price lower than the then-current warrant exercise price or the then-current market price of the common stock. The shares underlying the warrant include legal restrictions regarding the transfer or sale of the shares. As a result of our private placement offering in April 2010, the number of shares of common stock underlying the warrant increased to 254 shares and the exercise price decreased to $0.73 per share as defined in the agreement. There was no accounting charge as a result of the change in warrant shares or exercise price due to the treatment of the warrant as permanent equity. In July 2014, the warrant to purchase 254 shares of common stock was exercised on a cashless basis, which resulted in GE receiving 207 shares of common stock.

As of January 2, 2016, we had fully vested warrants outstanding to purchase 24 shares of common stock at a price of $3.55 per share and expire in May 2020.

Preferred Stock: Our amended Articles of Incorporation authorize two million shares of preferred stock that may be issued from time to time in one or more series having such rights, powers, preferences and designations as the Board of Directors may determine. To date no such preferred shares have been issued.