STOCK COMPENSATION PLAN

3 Months Ended

Mar. 31, 2018

STOCK COMPENSATION PLAN [Abstract]

STOCK COMPENSATION PLAN

NOTE 5 - STOCK COMPENSATION PLAN

The Company has two share-based compensation plans which are described below.

Stock Option Plan

The Company established the 1999 Stock Option Plan (the “1999 Plan”), as amended, under which certain employees and directors may receive stock options. Stock options are generally granted with an exercise price equal to 100% of the fair value of the common stock at the date of grant. As of March 31, 2018 and December 31, 2017, there were no unissued shares of the Company’s common stock authorized for option grants under the Plan.

Equity Incentive Plan

In May 2009 the Company approved the 2009 Equity Incentive Plan (the “2009 Plan”) as a successor to the 1999 Plan. The 2009 Plan permits the granting of restricted shares, incentive stock options (“ISO”), nonqualified stock options, stock appreciation rights, restricted share units and other stock-based awards to employees, directors, officers, consultants, advisors, suppliers and any other persons or entity whose services are considered valuable for up to 1,183,000 shares. The authorized shares will be new issues upon exercise of any options granted. Under the terms of the 2009 Plan, each option agreement cannot have an exercise price that is less than 100% of the fair value of the shares covered by the option on the date of grant. In the case of an ISO granted to any 10% stockholder, the exercise price shall not be less than 110% of the fair value of the shares covered by the option on the date of grant.

In no event shall the exercise price of an option be less than the par value of the shares for which the option is exercisable. In no event shall the exercise period exceed ten years from the date of grant of the option, except, in the case of an ISO granted to a 10% stockholder, the exercise period shall not exceed five years from the date of grant. In the event of a change in control, the Committee may determine that any award then outstanding shall be assumed or an equivalent award shall be substituted by the successor company.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities based on historical volatilities of the Company’s common stock are not significant. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. No options were granted during three months ended March 31, 2018 and 2017.

A summary of the status of the Company’s stock option plan and the change during the three months ended March 31, 2018 is presented below:

	Three Months Ended March 31, 2018
	Number of Options		Weighted Average Exercise Price
Outstanding, beginning of period		271,500	$	19.79
Granted		-		-
Exercised		-		-
Cancelled/forfeited		-		-
Outstanding, end of year		271,500	$	19.79
Options vested and exercisable at end of period		271,500	$	19.79
Weighted average remaining contractual life (years)				5.33

There was no unrecognized compensation cost related to non-vested stock options granted under the Plan at March 31, 2018 and December 31, 2017.

There was no compensation cost related to stock option plan for the three months ended March 31, 2018 and 2017. There were no grants of stock options during the three months ended March 31, 2018 and 2017.

The following table summarizes information about stock options outstanding at March 31, 2018:

		Options Outstanding
Range of Average Exercise Prices		Number Outstanding at March 31, 2018		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$	10 – 20		231,000		6.14	$	18.00
$	21 – 30		40,500		0.70	$	30.00
$	10 – 30		271,500		5.33	$	19.79

The Company issued restricted stock awards to certain key personnel under the 2009 Equity Incentive Plan. Each restricted stock award vests based on vesting schedule outlined in the reward agreement. Restricted stock awards are subject to forfeiture if the holder is not employed by the Company on the vesting date. In 2013, stockholders approved an additional 300,000 shares available under the plan, and in 2016, an additional 760,000 shares were authorized. Total shares issuable under the plan are 823,629 at March 31, 2018. There were no shares issued in the three months ended March 31, 2018. As of March 31, 2018, there was $1.0 million of total unrecognized compensation expense related to the restricted stock awards. The cost is expected to be recognized over a weighted-average period of 1.56 years.

Total compensation cost that has been charged against income for this plan was $293,000 and $92,000 respectively, for the three months ended March 31, 2018 and 2017.

The following table summarizes the changes in the Company’s non-vested restricted stock awards for the three months ended March 31, 2018:

	Three Months Ended March 31, 2018
	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding, beginning of period		76,104		$	20.61
Granted		-		$	-
Forfeited		-		$	-
Vested		(7,334	)	$	18.00
Outstanding at end of period		68,770		$	20.61

The total fair value of shares vested was $309,000 during the three months ended March 31, 2018.