9. CAPITAL STOCK

3 Months Ended

Mar. 31, 2017

Share-based Arrangements with Employees and Nonemployees [Abstract]

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

9. CAPITAL STOCK

On May 7, 2014, our shareholders approved the 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan includes 500,000 of our common shares that may be granted under various types of awards as described in the 2014 Plan. As of March 31, 2017, we were authorized to issue 269,087 shares under this plan.

Service Based Restricted Stock

In the first quarter of 2016, we issued 30,000 restricted stock units to certain members of our management that will be settled in one share of common stock of the company per unit. These restricted stock units vest in increments of 25% per year over four years, commencing at the date of award. We valued the units at a fair value of $11.56 per unit, which was the closing price of our stock on the last trading date prior to the grant date. There were no issuances of restricted stock units in 2017. For the three months ended March 31, 2017 and 2016, we recorded expense of $18,426 and $62,691, respectively, related to restricted stock units.

Performance Based Restricted Stock

In the first quarter of 2016, we made available up to 43,000 performance based restricted stock units to certain members of our management. Shares underlying the performance based restricted stock units will be issued upon achieving certain established EPS goals at the end of fiscal year 2017. There were no issuances of performance based restricted stock units in 2017. For the three months ended March 31, 2017 and 2016, we did not record any expense related to these performance based restricted stock units as it is uncertain if we will reach the performance goals.

Stock Options

In the first quarter of 2017, we issued 43,500 stock options to certain members of our management. These stock options vest in increments of 20% per year over the next five years. The options are exercisable at $11.55 per option, which was the closing price of our stock on the last trading date prior to the grant date. We have determined the fair value of the options to be $2.85 per option using the Black Scholes calculation. The significant assumptions utilized for the Black Scholes calculations consist of an expected life of 6.5 years, historical volatility of 35.24%, a risk free interest rate of 2.26%, a dividend yield of 3.78% and an initial employee forfeiture rate of 7.7%. Our expected life estimate is based on the sum of the vesting terms divided by the number of vesting tranches. Also in the first quarter of 2017, we issued an additional 11,500 stock options to a member of our management. These units vest the same as the first issuance. The options are exercisable at $10.35 per option, which was the closing price of our stock on the last trading date prior to the grant date. We have determined the fair value of the options to be $2.45 per option using the Black Scholes calculation. The significant assumptions utilized for the Black Scholes calculation consists of an expected life of 6.5 years, historical volatility of 35.26%, a risk free interest rate of 2.43%, a dividend yield of 4.19% and an initial employee forfeiture rate of 7.7%. In the first quarter of 2016, we issued 30,000 stock options to certain members of our management. These stock options vest in increments of 20% per year over the next five years. The options are exercisable at $11.56 per option, which was the closing price of our stock on the last trading date prior to the grant date. We have determined the fair value of the options to be $3.41 per option using the Black Scholes calculation. The significant assumptions utilized for the Black Scholes calculation consists of an expected life of 6.5 years, historical volatility of 42.32%, a risk-free interest rate of 2.06%, a dividend yield of 3.81% and an initial employee forfeiture rate of 7.7%. Our expected life estimate is based on the sum of the vesting terms divided by the number of vesting tranches. For the three months ended March 31, 2017 and 2016, we recorded expense of $29,004 and $17,417, respectively, related to stock option issuances.

The following summarizes stock option transactions from January 1, 2017 through March 31, 2017:

	Shares			Weighted Average Exercise  Price
Options outstanding at January 1, 2017		42,250		$	12.85
Issued		55,000		$	11.30
Exercised		-		$	-
Forfeited		(20,650	)	$	12.19
Options outstanding at March 31, 2017		76,600		$	11.91
Options exercisable at:
January 1, 2017		6,900		$	14.10
March 31, 2017		14,100		$	13.46
Unvested options at March 31, 2017		62,500		$	11.56

During the three months ended March 31, 2017, we issued 3,636 shares of common stock to members of our Board of Directors. We recorded compensation expense of $42,000, which was the fair market value of the shares on the grant dates. The shares are fully vested.

Repurchase of Common Stock

In March 2017, our Board of Directors authorized the repurchase of up to $7,500,000 of common shares outstanding in open market or privately negotiated transactions over 12 months. The new authorization ran consecutively to the previous authorization made in February 2016, where the Board of Directors authorized the repurchase of up to $7,500,000 of common shares outstanding in open market or privately negotiated transactions over the next 12 months. During the three months ended March 31, 2017, we did not repurchase any shares. As of March 31, 2017, the February 2016 authorization has expired and we have $7,500,000 of availability remaining under the current authorization.