Note 10 - Shareholders' Equity

12 Months Ended

Dec. 31, 2015

Shareholders' Equity and Share-based Payments [Text Block]

10.	Shareholders' Equity

Repurchase Program

During the year ended December 31, 2015, the Company repurchased and retired 973,100 shares of its common stock for $2,110,000. During the year ended December 31, 2014, the Company repurchased and retired 1,019,553 shares of its common stock for $2,206,000. As of December 31, 2015, the Company had $1,278,000 available to repurchase common shares under the repurchase program.

Option Activity

The 2004 Stock Option Plan (the “2004 Plan”) is an equity compensation plan that provides for grants of both incentive stock options and non-qualified stock options to eligible individuals. The 2004 Plan is intended to recognize the contributions made to the Company by key employees of the Company, provide key employees with additional incentive to devote themselves to the future success of the Company and improve the ability of the Company to attract, retain and motivate individuals. The 2004 Plan also is intended as an incentive to certain members of the Board of Directors of the Company to continue to serve on the Board of Directors and to devote themselves to the future success of the Company.

The 2004 Plan provides for a total of 5,000,000 common shares eligible for issuance.

Under the 2004 Plan, approximately 3,350,000 options had been granted as of December 31, 2015. Under the 2004 Plan, option grants have a three-year vesting period and, since 2005, expire no later than the fifth anniversary from the date of grant. In 2004 and 2005, options granted had an expiration date of 10 years after the date of grant. The exercise price of the options is determined based on the fair value of the stock on the date of grant.

The following table summarizes option activity for the years ended December 31, 2015 and 2014:

	Shares			Weighted Average Exercise Price Per Option

Options outstanding, December 31, 2013		1,070,000		$	1.58
Exercised		(490,000	)		1.58
Canceled/expired/forfeited		-			-
Options outstanding, December 31, 2014		580,000			1.58
Granted to non-employee directors		120,000			1.58
Exercised		(475,000	)		1.61
Canceled/expired/forfeited		-			-
Options outstanding, December 31, 2015		225,000			1.52
Options exercisable, December 31, 2015		65,000			1.43

Stock options to purchase 225,000 and 580,000 shares of common stock were outstanding as of December 31, 2015 and 2014, respectively. All of the stock options were included in the computation of the weighted-average number of dilutive common shares outstanding for the year ended December 31, 2015. All except 30,000 of the stock options were included in the computation of the weighted-average number of dilutive common shares outstanding for the year ended December 31, 2014.

The fair values of the share-based compensation awards granted were estimated using the Black-Scholes option-pricing model with the following assumptions and weighted average fair values:

	Stock Options For the Years Ended December 31,
	2015			2014
Exercise price	$	1.58			-
Risk-free interest rate		1.69	%		-
Expected volatility		59.20	%		-
Expected life in years		4.25			-
Dividend rate		-			-
Black-Scholes fair value	$	0.75	(1)		-

(1)

The fair value calculation was based on the stock options granted during the year.

The Company used the Black-Scholes option-pricing model to value the options. The Company uses historical data to estimate the expected term of the options. The risk-free interest rate for periods within the contractual life of the award is based on the US Treasury rates in effect at the time of grant. The expected volatility is based on historical volatility. The Company uses an estimated dividend payout ratio of zero, as the Company has not paid dividends in the past and, at this time, does not expect to do so in the future.

The following table summarizes information about stock options as of December 31, 2015:

			Options Outstanding								Options Exercisable
Range of Exercise Prices			Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Life (in years)		Aggregate Intrinsic Value		Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Life (in years)		Aggregate Intrinsic Value

$1.51	-	$1.98		225,000	$	1.52		3.76	$	51,000		65,000	$	1.43		2.29	$	21,000

The intrinsic value is the amount by which the market value of the underlying common stock exceeds the exercise price of the respective stock options. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2015 and 2014 was $340,000 and $1,057,000, respectively.

As of December 31, 2015, $107,000 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average remaining period of 2.45 years. Cash received from 475,000 options exercised for the year ended December 31, 2015 was $765,000