Shareholders' Equity

12 Months Ended

Dec. 31, 2018

Note 7. Shareholders’ Equity

During 2018, we granted options to acquire: (i) 40 thousand shares of our common stock to employees at prices ranging from $2.17 to $3.35 per share; (ii) 105 thousand shares of our common stock to executive officers at prices ranging from $2.09 to $2.17 per share; and (iii) 90 thousand shares of our common stock to non-employee board members at a price of $2.17 per share.

During 2017, we granted options to acquire: (i) 17 thousand shares of our common stock to employees at prices ranging between $1.80 and $2.25 per share; and (ii) 30 thousand shares of our common stock to a non-employee board member at a price of $2.25 per share.

The weighted average fair market value of the options granted during the years ended December 31 were estimated on the date of grant, using a Black-Scholes option pricing model with the following assumptions:

	2018	2017
Expected life of options (using the “simplified” method)	4 years	4 years
Average risk-free interest rate	2.63%	1.44%
Average expected volatility of stock	69%	78%
Expected dividend rate	None	None
Fair value of options granted	$282	$55

Compensation cost related to stock options recognized in operating results (included in general and administrative expenses) totaled $227 and $242 for the years ended December 31, 2018 and 2017, respectively. Approximately $338 of total unrecognized compensation costs related to non-vested stock options is expected to be recognized over the next four years, 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”). At the Annual Shareholders’ Meeting in May 2011, shareholders approved an amendment to the 2005 Plan to increase the number of shares issuable under the plan from 1.5 million shares to a total of 3 million shares.

In 2015, we adopted, and shareholders approved, a stock option plan for our employees, officers and directors (the “2015 Plan”) to replace the 2005 Plan, which expired on March 31, 2015.

Stock option activity under the 2005 and 2015 Plans are as follows:

	Number of Options (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
2005 Plan
Maximum number of shares under the plan		3,000
Outstanding, December 31, 2016		628		$	0.63	3.8 years	$	510
Granted		-		$	-
Exercised		(136	)	$	0.26
Cancelled/Expired		-		$	-
Outstanding, December 31, 2017		492		$	0.73	3.8 years	$	1,067
Exercisable, December 31, 2017		397		$	0.70	3.1 years	$	872
Available for issuance, December 31, 2017		-
Granted		-		$	-
Exercised		(376	)	$	0.70
Cancelled/Expired		(62	)	$	0.86
Outstanding, December 31, 2018		54		$	0.79	0.4 years	$	95
Exercisable, December 31, 2018		54		$	0.79	0.4 years	$	95
Available for issuance, December 31, 2018		-

2015 Plan
Maximum number of shares under the plan		2,000
Outstanding, December 31, 2016		788		$	1.27	7.2 years	$	136
Granted		47		$	2.18
Exercised		-		$	-
Cancelled/Expired		(50	)	$	1.26
Outstanding, December 31, 2017		785		$	1.32	6.4 years	$	1,238
Exercisable, December 31, 2017		422		$	1.31	6.0 years	$	673
Available for issuance, December 31, 2017		1,215
Granted		235		$	2.26
Exercised		(147	)	$	1.25
Cancelled/Expired		(151	)	$	1.25
Outstanding, December 31, 2018		722		$	1.66	4.7 years	$	660
Exercisable, December 31, 2018		422		$	1.44	4.4 years	$	473
Available for issuance, December 31, 2018		1,278

A summary of additional information related to the options outstanding as of December 31, 2018 under the 2005 and 2015 Plans are as follows:

Range of Exercise Prices	Number of Options (in thousands)		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
2005 Plan
$0.63-$0.86		54	0.4 years	$	0.79
Total		54	0.4 years	$	0.79

2015 Plan
$1.20-$1.25		238	5.4 years	$	1.25
$1.26-$1.38		203	3.3 years	$	1.32
$1.80-$2.25		257	4.6 years	$	2.15
$3.15-$3.35		24	9.2 years	$	3.23
Total		722	4.7 years	$	1.66

We have an Employee Stock Ownership Plan (“Plan”) to provide retirement benefits for our employees. The Plan is designed to invest primarily in our common stock and is non-contributory on the part of our employees. Contributions to the Plan are discretionary as determined by our Board of Directors. We expense the cost of contributions to the Plan. No contributions were made to the Plan in 2018 and 2017. At December 31, 2018 and 2017, a total of 491 and 618 shares of our common stock, respectively, have been allocated and earned by our employees.