Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Stock-Based Compensation

Note 8: Stock-Based Compensation

On June 28, 2013, the Company registered with the Securities and Exchange Commission a stock-based compensation plan, which superseded all other plans. There are 342,000 shares available for grant under this plan at September 30, 2016.

Stock-based compensation expense related to stock awards for both the three month periods ended September 30, 2016 and 2015 was zero. For the nine months ended September 30, 2016 and 2015, stock-based compensation expense related to stock awards was $16 thousand and $17 thousand, respectively. Compensation expense for stock options is the estimated fair value of options on the date granted using the Black-Scholes Model amortized on a straight-line basis over the vesting period of the award. There was no unrecognized compensation expense related to stock options as of September 30, 2016.

Options for a total of 7,500 shares were granted and vested during the nine months ended September 30, 2016. The aggregate fair value of options granted during the nine months ended September 30, 2016 was $16 thousand. Options for a total of 7,500 shares were granted and vested during the nine months ended September 30, 2015. The aggregate fair value of options granted during the nine months ended September 30, 2015 was $17 thousand.

The variables used in these calculations of the fair value of the options are as follows:

	For the nine months ended September 30,
	2016	2015
Risk free interest rate (5 year Treasury)	1.49%	1.52%
Expected dividend yield	0.0%	0.0%
Expected term (years)	5	5
Expected volatility	40.1%	47.1%

Stock option activity for the nine months ended September 30, 2016 is summarized below:

						Weighted Average Remaining Contractual Life (in years)
				Weighted Average				Aggregate
				Exercise				Intrinsic
	Shares			Price				Value (1)
Options outstanding, January 1, 2016		211,185		$	6.57		6.0
Granted		7,500			5.76
Forfeited		(13,787	)		5.90
Exercised		—			—
Expired		(8,598	)		12.84
Options outstanding and exercisable, September 30, 2016		196,300		$	6.20		5.7	$	126,134

(1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2016. This amount changes based on changes in the market value of the Company’s common stock.