NOTE (9) – Stock-based Compensation

Prior to July 25, 2018, the Company issued stock-based compensation awards to its directors and employees under the 2008 Long-Term Incentive Plan (“2008 LTIP”). The 2008 LTIP permitted the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards for up to 2,000,000 shares of common stock. As of July 25, 2018, the Company ceased granting awards under the 2008 LTIP.

On July 25, 2018, the stockholders approved the 2018 Long-Term Incentive Plan ("2018 LTIP"). As with the 2008 LTIP, the 2018 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards. The plan is in effect for ten years. The maximum number of shares that can be awarded under the plan is 1,293,109 shares of common stock as of December 31, 2018.

In February 2019, the Company awarded 428,796 shares of restricted stock to its employees under the 2018 LTIP. A restricted stock award is valued at the average of the high and the low price of the Company’s stock on the date of the award. These shares of restricted stock vest over a two-year period. Stock-based compensation expense is recognized over the vesting period. The Company recorded $63 thousand and $149 thousand of stock-based compensation expense related to this award during the three and nine months ended September 30, 2019, respectively. As of September 30, 2019, the unrecognized compensation cost related to nonvested restricted-stock awards under the plan was $363 thousand. The remaining cost is expected to be recognized over a period of 1.42 years.

In January 2019, the Company awarded 42,168 shares of common stock to its directors under the 2018 LTIP which are fully vested. The Company recorded $52 thousand of compensation expense for the quarter ended March 31, 2019 based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the date of the award. In January 2018, the Company awarded 18,906 shares of common stock to its directors under the 2008 LTIP, all of which are fully vested. The Company recorded $45 thousand of compensation expense for the quarter ended March 31, 2018.

In February 2018 and April 2017, the Company also awarded 97,195 and 129,270 of cash-settled restricted stock units (“RSUs”) to its CEO under the 2008 LTIP. All RSUs vest at the end of two years from the date of the grant and are subject to forfeiture until vested. Each RSU entitles the CEO to receive cash equal to the fair market value of one share of common stock on the applicable payout date. Compensation expense is determined based on the fair value of the award and is re-measured at each reporting period and is classified as a liability in the consolidated statements of financial condition. The Company recorded $26 thousand and reversed $37 thousand of compensation expense related to these awards, primarily due to a decrease in the Company’s stock price, during the quarters ended September 30, 2019 and 2018, respectively.

No stock options were granted during the nine months ended September 30, 2019 and 2018.

The following table summarizes stock option activity during the nine months ended September 2019 and 2018:


	Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018
		Weighted			Weighted
		Average			Average
	Number	Exercise		Number	Exercise
	Outstanding	Price		Outstanding	Price
Outstanding at beginning of period	537,500	$	2.19	537,500	$	2.19
Granted during period	—		—	—		—
Exercised during period	—		—	—		—
Forfeited or expired during period	(82,500)		4.89	—		—
Outstanding at end of period	455,000	$	1.67	537,500	$	2.19
Exercisable at end of period	275,000	$	1.70	267,500	$	2.71

The Company recorded $10 thousand and $29 thousand of stock-based compensation expense related to stock options during the three and nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, the unrecognized compensation cost related to nonvested stock options granted under the plan was $55 thousand. The cost is expected to be recognized over a period of 1.40 years.

Options outstanding and exercisable at September 30, 2019 were as follows:


	Outstanding						Exercisable
		Weighted
		Average	Weighted					Weighted
		Remaining	Average		Aggregate			Average		Aggregate
	Number	Contractual	Exercise		Intrinsic		Number	Exercise		Intrinsic
Grant Date	Outstanding	Life	Price		Value		Outstanding	Price		Value
January 21, 2010	5,000	0.30 years	$	6.00			5,000	$	6.00
February 24, 2016	450,000	6.40 years	$	1.62			270,000	$	1.62
	455,000	6.33 years	$	1.67	$	—	275,000	$	1.70	$	—