8. Stockholders' Equity

3 Months Ended

Mar. 31, 2020

Stockholders' Equity

8. Stockholders' Equity

Dividends Declared and Paid

Dividends declared and paid on Common Stock were $675,960 and $1,075,962 for the three months ended March 31, 2020 and 2019, respectively. The Company’s Board of Directors approved a quarterly dividend on May 6, 2020 of $.04 per share payable in cash on June 15, 2020 to stockholders of record as of May 29, 2020 (see Note 13 - Subsequent Events).

Stock Options

Effective August 12, 2014, the Company adopted the 2014 Equity Participation Plan (the “2014 Plan”) pursuant to which, a maximum of 700,000 shares of Common Stock of the Company are authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and stock bonuses. Incentive stock options granted under the 2014 Plan expire no later than ten years from the date of grant (except no later than five years for a grant to a 10% stockholder). The Board of Directors or the Compensation Committee determines the expiration date with respect to non-statutory stock options and the vesting provisions for restricted stock granted under the 2014 Plan.

The results of operations for the three months ended March 31, 2020 and 2019 include stock-based compensation expense for stock options totaling approximately $17,000 and $1,000, respectively. Stock-based compensation expense related to stock options is net of estimated forfeitures of approximately 16% for the three months ended March 31 2020 and 2019. Such amounts have been included in the consolidated statements of operations and comprehensive loss within other operating expenses.

The weighted average estimated fair value of stock options granted during the three months ended March 31, 2020 was $1.66 per share. No options were granted during the three months ended March 31, 2019. The fair value of stock options at the grant date was estimated using the Black-Scholes option-pricing model.

The following weighted average assumptions were used for grants during the following periods:

	Three months ended
	March 31,
	2020	2019
Dividend Yield	3.14%	n/a
Volatility	37.69%	n/a
Risk-Free Interest Rate	1.40%	n/a
Expected Life	2.75 years	n/a

The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options.

A summary of stock option activity under the Company’s 2014 Plan for the three months ended March 31, 2020 is as follows:

Stock Options	Number of Shares	Weighted Average Exercise Price per Share	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2020	82,000	$               8.61	3.38	$                 -
Granted	74,523	$               7.96	4.84	$                 -
Exercised	-	$                  -	-	$                 -
Forfeited	-	$                  -	-	$                 -
Outstanding at March 31, 2020	156,523	$               8.30	3.94	$                 -
Vested and Exercisable at March 31, 2020	50,000	$               8.45	1.84	$                 -

The aggregate intrinsic value of options outstanding and options exercisable at March 31, 2020 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $5.11 closing price of the Company’s Common Stock on March 31, 2020. No options were exercised or forfeited during the three months ended March 31, 2020.

Participants in the 2014 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised (“Net Exercise”), or by exchanging a number of shares owned for a period of greater than one year having a fair market value equal to the exercise price of the option being exercised (“Share Exchange”).

As of March 31, 2020, the estimated fair value of unamortized compensation cost related to unvested stock option awards was approximately $138,000. Unamortized compensation cost as of March 31, 2020 is expected to be recognized over a remaining weighted-average vesting period of 1.89 years.

As of March 31, 2020, there were 66,600 shares reserved for grants under the 2014 Plan.

Restricted Stock Awards

A summary of the restricted Common Stock activity under the Company’s 2014 Plan for the three months ended March 31, 2020 is as follows:

Restricted Stock Awards	Shares	Weighted Average Grant Date Fair Value per Share	Aggregate Fair Value
Balance at January 1, 2020	213,929	$             16.51	$   3,554,174
Granted	199,812	$               7.94	$   1,586,507
Vested	(38,866)	$             18.90	$    (734,467)
Forfeited	(3,046)	$             15.15	$      (46,135)
Balance at March 31, 2020	371,829	$             12.21	$   4,360,079

Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the three months ended March 31, 2020 and 2019, stock-based compensation for these grants was approximately $472,000 and $309,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive loss. These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be recognized by the directors, executives and employees.