Note 4 - Accounting for Stock-based Compensation

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

4. Accounting for Stock-Based Compensation

During the

three

month periods ended

March 31, 2020

and

2019,

the Company did

not

grant any stock options to employees or directors. The Company recognized

$19,000

and

$4,000,

respectively, in stock-based compensation expense for the

three

month periods ended

March 31, 2020

and

2019.

During the

three

month period ended

March 31, 2020,

172,600

options were exercised under the

2005

Plan compared to

266,000

in the previous year comparative quarter.

Valuation Assumptions

The fair values of employee and director option awards were estimated at the date of grant using a Black-Scholes option-pricing model.

Expected volatility is based on historical volatility and in part on implied volatility. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award. Options granted to non-employees are valued using the fair market value on each measurement date of the option.