10.	Shareholders’ Equity

Repurchase Program

During the year ended

December

31,

2016,

the Company repurchased and retired

2,453,900

shares of its common stock for

$6,773,000.

During the year ended

December

31,

2015,

the Company repurchased and retired

973,100

shares of its common stock for

$2,110,000.

As of

December

31,

2016,

the Company had

$2,505,000

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

4,205,000

options had been granted as of

December

31,

2016.

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

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,

2016

and

2015:

				Weighted
				Average
				Exercise Price
	Shares			Per Option

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
Granted to non-employee directors		45,000			3.45
Granted to employees		810,000			2.12
Exercised		(15,000	)		1.15
Canceled/expired/forfeited		-			-
Options outstanding, December 31, 2016		1,065,000			2.06
Options exercisable, December 31, 2016		130,000			1.53

Stock options to purchase

1,065,000

and

225,000

shares of common stock were outstanding as of

December

31,

2016

and

2015,

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,

2016.

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,
	2016			2015
Exercise price	$	2.19		$	1.58
Risk-free interest rate		1.13	%		1.69	%
Expected volatility		59.16	%		59.20	%
Expected life in years		4.25			4.25
Dividend rate		-			-
Black-Scholes fair value	$	1.03		$	0.75

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 consistent with the expected term 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,

2016:

			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	-	$3.45		1,065,000	$	2.06		4.2	$	1,530,000		130,000	$	1.53		2.4	$	256,000

		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, 2016 and 2015 was $29,000 and $340,000, respectively.

		As of December 31, 2016, $803,000 of total unrecognized compensation cost related to stock options was expected to be recognized over a weighted-average remaining period of 2.41 years. Cash received from 15,000 options exercised for the year ended December 31, 2016 was $17,000 .