• Filing Date: 2013-11-07
  • Form Type: 10-Q
  • Description: Quarterly report
v2.4.0.8
5. STOCKHOLDERS EQUITY
9 Months Ended
Sep. 27, 2013
Stockholders equity:  
Note 5 - STOCKHOLDERS EQUITY

Issuance of Common Stock: There were no shares issued during the thirteen or thirty-nine weeks ended September 27, 2013.

 

There are approximately 1.3 million shares to be issued related to the acquisition of assets of DR Services of Louisiana, LLC as part of a contingent fee calculation. The shares are to be issued to the owners of DR Services of Louisiana, LLC upon final approval by our Board of Directors. Due to the pending issuance, earlier this year we reclassified approximately $323,000 originally recorded as a contingent liability to additional paid-in capital in stockholders' equity, as the contingent fee was fully earned.

 

Stock Warrants: The following warrants for our common stock were issued and outstanding on September 27, 2013 and December 28, 2012, respectively:

 

   

September 27,

2013

   

December 28,

2012

 
Warrants outstanding at beginning of period     11,887,803       12,137,803  
Expired     (6,312,803 )     (250,000 )
Warrants outstanding at end of period     5,575,000       11,887,803  

 

A detail of warrants outstanding September 27, 2013 is as follows:

 

    Number of Warrants   Expiration Date
Exercisable at $0.08 per share     4,200,000   4/1/2014
Exercisable at between $0.50 and $1.00 per share     1,375,000   4/15/14 to 4/15/15
      5,575,000    

 

Of the warrants outstanding, 4.2 million are defined as a derivative instrument and the fair value of these warrants is estimated each period using the Black-Scholes pricing model. Expected volatility is based on historical annualized volatility of our stock. The expected term of warrants issued represents the period of time that warrants issued are expected to be outstanding. The risk-free rate is based upon the U.S. Treasury yield curve in effect at the time of issuance. The assumptions used to calculate the fair value are as follows:

 

   

September 27,

2013

   

December 28,

2012

 
Expected terms (years)     0.5       1.3  
Expected volatility     74.6 %     95.2 %
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.03 %     0.2 %

 

The change in fair value amounted to approximately $(787,000) and $218,000 for the thirty-nine weeks ended September 27, 2013 and September 28, 2012, respectively. These changes are included in the line item Change in fair value of derivative liabilities in our Statement of Income.