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9. CAPITAL STOCK

9 Months Ended

Sep. 30, 2016

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]

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 September 30, 2016, we were authorized to issue 276,695 shares under this plan.

During the three and nine months ended September 30, 2016, we issued 3,672 and 10,596 shares, respectively, of common stock to members of our Board of Directors. During the three and nine months ended September 30, 2016, we recorded compensation expense of $42,000 and $126,000, respectively, which was the fair market value of the shares on the grant dates. These shares are fully vested.

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 the next four years. We valued the units at an average 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. Also in the first quarter of 2016, we issued an additional 2,000 restricted stock units to a member of management. These units vest the same as the first issuance. We valued the units at an average fair value of $10.29 per unit, which was the closing price of our stock on the last trading date prior to the grant date. In the first quarter of 2015, we issued 28,000 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 from the grant date. We valued the units at a fair value of $13.42 per unit, which was the closing price of our stock on the last trading date prior to the grant date. For the three months ended September 30, 2016, we recorded a net credit of $4,668 as a result of employee forfeitures, related to restricted stock units. For the three months ended September 30, 2015, we recorded expense of $41,109 related to restricted stock units. For the nine months ended September 30, 2016 and 2015, we recorded expense of $120,714 and $123,328, 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. In the first quarter of 2015, we made available up to 32,000 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 2016. For the three and nine months ended September 30, 2016 and 2015, 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 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 calculations consist 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. Also in the first quarter of 2016, we issued an additional 2,000 stock options to a member of our management. These units vest the same as the first issuance. The options are exercisable at $10.29 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 $2.84 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 42.32%, a risk free interest rate of 1.88%, a dividend yield of 4.30% and an initial employee forfeiture rate of 7.7%. In the first quarter of 2015, we issued 28,000 stock options to certain members of our management. These stock options vest in increments of 20% per year from the grant date. The options are exercisable at $13.42 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 $4.70 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 46.20%, a risk free interest rate of 1.92%, a dividend yield of 2.99% and an initial employee forfeiture rate of 3.8%. 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 September 30, 2016, we recorded net credit of $10,032 as a result of employee forfeitures, related to stock option issuances. For the three months ended September 30, 2015, we recorded expense of $12,368, related to stock option issuances. For the nine months ended September, 2016 and 2015, we recorded expense of $20,133 and $37,107, respectively, related to stock option issuances.

The following summarizes stock option transactions from January 1, 2016 through September 30, 2016:

	Shares			Weighted Average Exercise Price
Options outstanding at January 1, 2016		51,600		$	14.08
Issued		32,000		$	11.48
Exercised		-		$	-
Forfeited		(3,000	)	$	12.80
Options outstanding at September 30, 2016		80,600		$	13.10

Options exercisable at:
January 1, 2016		4,000		$	14.57
September 30, 2016		14,000		$	14.25
Unvested options at September 30, 2016		66,600		$	12.86

Repurchase of Common Stock

In March 2016, 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 the next 12 months. Purchases of stock under this program were funded with borrowings from our amended and restated revolving credit facility. During the three and nine months ended September 30, 2016, there were 39,613 and 145,784 shares repurchased and retired, for $410,646 and $1,646,587, respectively. As of September 30, 2016, we have $5,853,413 of availability remaining under the March 2016 authorization.