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Note 4 - Capital Stock, Stock Plans and Stock-based Compensation | 6 Months Ended
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Jun. 30, 2017
Notes to Financial Statements |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
4. | Capital Stock, Stock Plans and Stock-Based Compensation
The Company has certain stock option plans under which it awards incentive and non-qualified stock options to employees, officers, and outside directors. On January 13, 2017, the Company granted 6,000 non-qualified stock options (“NQSOs”) from the Company’s 2003 Outside Directors Stock Plan to a new director elected by the Company’s Board of Directors (“Board”) to fill the vacancy left by Mr. Jack Lahav who retired from the Board in October 2016. The options granted were for a contractual term of ten years with a vesting period of six months. The exercise price of the NQSO was $3.79 per share, which was equal to our closing stock price the day preceding the grant date, pursuant to the 2003 Outside Directors Stock Plan. On May 15, 2016, the Company granted 50,000 incentive stock options (“ISOs”) from the Company’s 2010 Stock Option Plan to our Executive Vice President (“EVP”)/Chief Operating Officer (“COO”). The ISOs granted were for a contractual term of six years with one - third yearly vesting over a three year period. The exercise price of the ISO was $3.97 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant. The summary of the Company’s total Stock Option Plans as of June 30, 2017, as compared to June 30, 2016, and changes during the periods then ended, are presented below. The Company’s Plans consist of the 2010 Stock Option Plan and the 2003 Outside Directors Stock Plan:
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (2) |
Options outstanding January 1, 2017 |  |  | 247,200 |  |  | $ | 6.69 |  |  |  |  |  |  |  |  |
Granted |  |  | 6,000 |  |  |  | 3.79 |  |  |  |  |  |  |  |  |
Exercised |  |  | ─ |  |  |  | ─ |  |  |  |  |  |  |  |  |
Forfeited/expired |  |  | (30,000 | ) |  |  | 5.00 |  |  |  |  |  |  |  |  |
Options outstanding end of period (1) |  |  | 223,200 |  |  | $ | 6.84 |  |  |  | 4.5 |  |  | $ | 13,080 |
Options exercisable at June 30, 2017 (1) |  |  | 180,534 |  |  | $ | 7.51 |  |  |  | 4.3 |  |  | $ | 13,080 |
Options exercisable and expected to be vested at June 30, 2017 |  |  | 223,200 |  |  | $ | 6.84 |  |  |  | 4.5 |  |  | $ | 13,080 |
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (2) |
Options outstanding January 1, 2016 |  |  | 218,000 |  |  | $ | 7.65 |  |  |  |  |  |  |  |  |
Granted |  |  | 50,000 |  |  |  | 3.79 |  |  |  |  |  |  |  |  |
Exercised |  |  | ─ |  |  |  | ─ |  |  |  |  |  |  |  |  |
Forfeited/expired |  |  | ─ |  |  |  | ─ |  |  |  |  |  |  |  |  |
Options outstanding end of period (1) |  |  | 268,000 |  |  | $ | 6.96 |  |  |  | 4.6 |  |  | $ | 134,102 |
Options exercisable at June 30, 2016 (1) |  |  | 181,533 |  |  | $ | 8.18 |  |  |  | 4.4 |  |  | $ | 74,802 |
Options exercisable and expected to be vested at June 30, 2016 |  |  | 254,883 |  |  | $ | 7.10 |  |  |  | 4.6 |  |  | $ | 125,230 |
The Company estimates the fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield.
|  | Outside Director Stock Options Granted |
|  | January 13, 2017 |
Weighted-average fair value per option |  | $ | 2.63 |
Risk -free interest rate (1) |  |  | 2.40% |
Expected volatility of stock (2) |  |  | 56.32% |
Dividend yield |  |  | None |
Expected option life (years) (3) |  |  | 10.0 |
|  | Employee Stock Option Granted |
|  | May 15, 2016 |
Weighted-average fair value per share |  | $ | 2.00 |
Risk -free interest rate (1) |  |  | 1.27% |
Expected volatility of stock (2) |  |  | 53.12% |
Dividend yield |  |  | None |
Expected option life (years) (3) |  |  | 6.0 |
| ( 1 ) | The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.
| ( 2 ) | The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.
| ( 3 ) | The expected option life is based on historical exercises and post-vesting data.
The following table summarizes stock-based compensation recognized for the three and six months ended June 30, 2017 and 2016 for our employee and director stock options.
|  | Three Months Ended |  |  | Six Months Ended |
Stock Options |  | June 30, |  |  | June 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Employee Stock Options |  | $ | 11,000 |  |  | $ | 17,000 |  |  | $ | 21,000 |  |  | $ | 31,000 |
Director Stock Options |  |  | 8,000 |  |  |  | — |  |  |  | 20,000 |  |  |  | 14,000 |
Total |  | $ | 19,000 |  |  | $ | 17,000 |  |  | $ | 41,000 |  |  | $ | 45,000 |
As of June 30, 2017, the Company has approximately $64,000 of total unrecognized compensation cost related to unvested options, of which $18,000 is expected to be recognized in remaining 2017, $33,000 in 2018, with the remaining $13,000 in 2019. During the six months ended June 30, 2017, the Company issued a total of 28,964 shares of its common stock under the 2003 Outside Directors Stock Plan to its outside directors as compensation for serving on our Board. The Company has recorded approximately $110,000 in compensation expenses for the six months ended June 30, 2017 ( included in selling, general and administration expenses) in connection with the issuance of shares of its common stock to outside directors.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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