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4) Stock-based Compensation
 6 Months Ended
Jun. 30, 2013
Notes  
4) Stock-based Compensation

4)         Stock-Based Compensation

 

The Company has four fixed option plans (the “1993 Plan,” the “2000 Plan”, the “2003 Plan” and the “2006 Plan”). Compensation expense for options issued of $9,620 and $47,218 has been recognized for these plans for the quarters ended June 30, 2013 and 2012, respectively, and $62,589 and $94,436 for the six months ended June 30, 2013 and 2012, respectively.

 

Options to purchase 5,000 shares of the Company’s common stock were granted December 7, 2012. The fair value relating to stock-based compensation is $15,920 and will be expensed as options become available to exercise at the rate of 25% at the end of each quarter over the twelve months ended December 7, 2013.

 

Options to purchase 342,000 shares of the Company’s common stock were granted April 13, 2012. The fair value relating to stock-based compensation is $219,881. These options have been expensed and are available to be exercised.

 

The weighted-average fair value of each option granted in 2012 under the 2006 Plan, is estimated at $3.18 for the December 7, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5%, volatility of 73.89%, risk-free interest rate of 0.70%, and an expected term of 5.31 years.

 

The weighted-average fair value of each option granted in 2012 under the 2003 Plan and the 2006 Plan, is estimated at $0.66 for the April 13, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5%, volatility of 72.58%, risk-free interest rate of 1.04%, and an expected term of 5.32 years, respectively.

 

The Company generally estimates the expected life of the options based upon the contractual term of the options adjusted for actual experience. Future volatility is estimated based upon the a weighted historical volatility of the Company’s Class A common stock and three peer company stocks over a period equal to the estimated life of the options. Common stock issued upon exercise of stock options are generally new share issuances rather than from treasury shares.

 

 

 

A summary of the status of the Company’s stock incentive plans as of June 30, 2013, and the changes during the six months ended June 30, 2013, is presented below:

 

Number of Class A Shares

Weighted Average Exercise Price

 

Number of Class C Shares(1)

Weighted Average Exercise Price(1)

Outstanding at January 1, 2013

     972,253

$   2.07

   5,838,505

$   2.18

Granted

          -

        -

           -

       -  

Exercised

    (138,537)

     2.18

   (1,906,022)

     2.24

Cancelled

     (76,032)

     3.36

     (638,138)

     3.33

Outstanding at June 30, 2013

     757,684

$   1.97

   3,294,345

$   1.78

As of June 30, 2013:

Options Exercisable

     757,684

$   1.97

   3,294,345

$   1.78

Weighted average contractual term of options

outstanding at June 30, 2013

3.98 years

2.12 years

Weighted average contractual term of options

exercisable at June 30, 2013

3.98 years

2.12 years

Aggregated intrinsic value of options

outstanding at June 30, 2013

$2,999,954

$1,363,863

Aggregated intrinsic value of options

exercisable at June 30, 2013

$2,999,954

$1,363,863

(1) Class “C” shares are converted to Class “A” shares on a 10 to 1 ratio. The Weighted Average Exercise Price is based on Class A Common shares.

 

 

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the six months ended June 30, 2013 and 2012 was $1,241,181 and $-0-, respectively.