Note 3 - Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

3. Stock-Based Compensation

The Company maintains a stock option plan under which the Company may grant incentive stock options and non-qualified stock options to employees and non-employee directors. Stock options have been granted with exercise prices at or above the fair market value of the underlying shares of common stock on the date of grant. Options vest and expire according to terms established at the grant date.

The Company records compensation expense for the fair value of stock-based awards determined as of the grant date, including employee stock options.

For the three months ended March 31, 2016 and 2015, there were no stock options granted under the Company’s option plan. The Company recognized $16,000 and $6,000 in stock-based compensation expense for the three months ended March 31, 2016 and 2015, respectively, related to the vesting of previously issued options.

Stock options to purchase 225,000 shares of common stock were outstanding as of March 31, 2016, and December 31, 2015.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

The Company uses the Black-Scholes option-pricing model to value the options. The Company uses historical data to estimate the life of the options. The risk-free interest rate for periods within the contractual life of the award is based on the US Treasury yield curve in effect at the time of grant. The estimated volatility is based on historical volatility and management’s expectations of future volatility. The Company uses an estimated dividend payout 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 stock option activity for the three months ended March 31, 2016:

			Weighted
			Average
			Exercise Price
	Shares		Per Option
Options outstanding, December 31, 2015		225,000	$	1.52
Granted to employees and non-employee directors		-		-
Exercised		-		-
Canceled/expired/forfeited		-		-
Options outstanding, March 31, 2016		225,000		1.52
Options exercisable, March 31, 2016		65,000		1.43

As of March 31, 2016, $94,000 of total unrecognized compensation cost related to stock options was expected to be recognized over a weighted average period of 2.3 years.