Stock-Based Compensation

6 Months Ended

Jun. 30, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 2. Stock-Based Compensation

During the six months ended June 30, 2017, we granted options to acquire 7,536 shares of our common stock to an employee at a price of $1.80 per share. During the six months ended June 30, 2016, we granted options to acquire 3,000 shares of our common stock to an employee at a price of $1.20 per share.

The weighted average fair market value of the options granted in the six months ended June 30, 2017 and 2016 was estimated on the date of grant, using a Black-Scholes option pricing model with the following assumptions:

	June 30, 2017	June 30, 2016
Expected life of options (using the “simplified” method)	6 years	6 years
Average risk-free interest rate	1.82%	1.50%
Average expected volatility of stock	107%	134%
Expected dividend rate	None	None
Fair value of options granted	$11,100	$3,488

Compensation cost related to stock options recognized in operating results (included in general and administrative expenses) was $112,000 and $127,900 in the six months ended June 30, 2017 and 2016, respectively. Approximately $522,600 of total unrecognized compensation costs related to non-vested stock options is expected to be recognized over the next 12 – 60 months, depending on the vesting provisions of the options. There was no tax benefit from recording the non-cash expense as it relates to the options granted to employees, as these were qualified stock options which are not normally tax deductible.

In 2005, we adopted a stock option plan for our employees, officers and directors (the “2005 Plan”). In 2015, we adopted a stock option plan for our employees, officers and directors (the “2015 Plan”) to replace the 2005 Plan, which expired on March 31, 2015. At the Annual Shareholders’ Meeting in June 2015, shareholders approved the adoption of the 2015 Plan.

Activity under our two stock option plans is as follows:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
2005 Plan
Outstanding, December 31, 2016		628,313		$	0.63	3.8 years	$	510,000
Granted		-
Exercised		(136,250	)
Cancelled/Expired		-
Outstanding, June 30, 2017		492,063		$	0.73	4.3 years	$	963,700
Exercisable, June 30, 2017		357,690		$	0.69	3.5 years	$	716,400
2015 Plan
Outstanding, December 31, 2016		787,615		$	1.27	7.2 years	$	136,000
Granted		7,536
Exercised		-
Cancelled/Expired		(49,491	)
Outstanding, June 30, 2017		745,660		$	1.27	6.9 years	$	1,056,200
Exercisable, June 30, 2017		323,422		$	1.27	6.4 years	$	459,800