4) Stock-based Compensation

9 Months Ended

Sep. 30, 2016

Notes

4) Stock-based Compensation

4)      Stock-Based Compensation

The Company has four fixed option plans (the “2003 Plan”, the “2006 Director Plan”, the “2013 Plan” and the “2014 Director Plan”). Compensation expense for options issued of $84,949 and $88,510 has been recognized for these plans for the three months ended September 30, 2016 and 2015, respectively, and $253,427 and $299,986 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, the total unrecognized compensation expense related to the options issued in December 2015 was $59,161, 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 September 30, 2016, and the changes during the nine months ended September 30, 2016, are presented below:

	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares	Weighted Average Exercise Price
Outstanding at December 31, 2015	618,261	$      3.89	577,436	$      3.54
Granted	-		-
Exercised	(32,417)	2.38	-
Cancelled	-		-
Outstanding at September 30, 2016	585,844		577,436
As of September 30, 2016:
Options exercisable	550,792	$      3.82	551,186	$      3.38
As of September 30, 2016:
Available options for future grant	397,342		57,750
Weighted average contractual term of options
outstanding at September 30, 2016	6.99 years		2.00 years
Weighted average contractual term of options
exercisable at September 30, 2016	6.86 years		1.90 years
Aggregated intrinsic value of options
outstanding at September 30, 2016 (1)	$1,179,541		$1,460,167
Aggregated intrinsic value of options
exercisable at September 30, 2016 (1)	$1,179,541		$1,460,167
(1) The Company used a stock price of $5.86 as of September 30, 2016 to derive intrinsic value.

A summary of the status of the Company’s stock incentive plans as of September 30, 2015, and the changes during the nine months ended September 30, 2015, are presented below:

	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares	Weighted Average Exercise Price
Outstanding at December 31, 2014	512,795	$      3.20	691,591	$      2.00
Granted	-		-
Exercised	(23,820)	1.85	(114,023)	2.14
Cancelled	(8,846)	2.31	-
Outstanding at September 30, 2015	480,129	$      3.28	577,568	$      2.62
As of September 30, 2015:
Options exercisable	447,571	$      3.17	550,693	$      2.51
As of September 30, 2015:
Available options for future grant	561,649		155,000
Weighted average contractual term of options
outstanding at September 30, 2015	7.15 years		2.43 years
Weighted average contractual term of options
exercisable at September 30, 2015	7.00 years		2.35 years
Aggregated intrinsic value of options
outstanding at September 30, 2015 (1)	$1,646,768		$2,363,921
Aggregated intrinsic value of options
exercisable at September 30, 2015 (1)	$1,583,605		$2,312,190
(1) The Company used a stock price of $6.71 as of September 30, 2015 to derive intrinsic value.

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 nine months ended September 30, 2016 and 2015 was $98,663 and $532,418, respectively.