4) Stock-based Compensation

3 Months Ended

Mar. 31, 2014

Notes

4) Stock-based Compensation

4)      Stock-Based Compensation

The Company has three fixed option plans (the “2003 Plan”, the “2006 Plan” and the “2013 Plan”). Compensation expense for options issued of $64,325 and $52,969 has been recognized for these plans for the quarters ended March 31, 2014 and 2013, respectively. As of March 31, 2014, the total unrecognized compensation expense related to the options issued in December 2013 was $175,696, which is expected to be recognized over the vesting period of one year.

The Company generally estimates the expected life of the options based upon the contractual term of the options adjusted for actual experience.Future volatility is estimated based upon the a weighted historical volatility of the Company’s Class A common stock and three peer company stocks over a period equal to the estimated life of the options.Common stock issued upon exercise of stock options are generally new share issuances rather than from treasury shares.

A summary of the status of the Company’s stock incentive plans as of March 31, 2014, and the changes during the three months ended March 31, 2014, is presented below:

	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares(1)	Weighted Average Exercise Price(1)
Outstanding at December 31, 2013	405,133	$      2.41	5,086,562	$      2.00
Granted	-		-
Exercised	(34,955)	1.44	-
Cancelled	(1,838)	2.92	-
Outstanding at March 31, 2014	368,340	$      2.50	5,086,562	$      2.00
As of March 31, 2014:
Options exercisable	303,716	$      2.06	4,692,812	$      1.75
As of March 31, 2014:
Available options for future grant	314,480		1,050,000
Weighted average contractual term of options
outstanding at March 31, 2014	7.02 years		2.36 years
Weighted average contractual term of options
exercisable at March 31, 2014	6.45 years		2.17 years
Aggregated intrinsic value of options
outstanding at March 31, 2014	$631,778		$1,098,384
Aggregated intrinsic value of options
exercisable at March 31, 2014	$631,586		$1,098,384
(1) Class “C” shares are converted to Class “A” shares on a 10 to 1 ratio. The Weighted Average Exercise Price is based on Class A Common shares.

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the three months ended March 31, 2014 and 2013 was $-0- and $1,027,181, respectively. The Company used a stock price of $4.06 as of March 31, 2014 to derive intrinsic value.