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Note 8 - Shareholders' Equity | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Shareholders' Equity and Share-based Payments [Text Block] | Note 8 - Shareholders' Equity
a. | Stock-Based Compensation Expense
We recorded non-cash stock compensation expense in each period as follows:
|  | 2016 |  |  | 201 5 |
Stock Options |  | $ | 676 |  |  | $ | 489 |
Restricted Stock Grants |  |  | 34 |  |  |  | 82 |
Total |  | $ | 710 |  |  | $ | 571 |
These are more fully discussed as follows:
b. | Stock Options
We have various stock-based employee compensation plans, for which compensation cost is recognized in the financial statements. The cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Our shareholders have approved various equity-based plans that permit the grant of stock options, restricted stock and other equity-based awards. In addition, our shareholders have approved the grant of stock options outside of these plans. In June 2004, our shareholders adopted the 2004 Long-Term Incentive Plan (“2004 LTIP”) pursuant to which we were authorized to issue up to 750,000 shares of common stock and grant stock options, restricted stock awards, stock appreciation rights and other stock-based awards. Through shareholder approved amendments to the LTIP in 2006, 2008, 2011, and 2013, the total number of shares authorized under the LTIP was increased to 2,900,000. In June 2014, our shareholders approved the 2014 Long-Term Incentive Plan (“2014 LTIP”) as the successor plan to the 2004 LTIP that expired on June 10, 2014. Under the 2014 LTIP, a total of 1,750,000 shares of Common Stock will be available for grant of awards. However, of the total number of shares of common stock available for awards under the 2014 LTIP, no more than 800,000 shares of Common Stock may be used for awards other than stock options and stock appreciation rights. Grants under the 2014 LTIP may be awarded through June 2, 2024. Stock options granted under the LTIPs are either Incentive Stock Options (“ISOs”) or Non-Qualified Stock Options (“NQSOs”). Key employees are eligible to receive ISOs and NQSOs; however, directors and consultants are eligible to receive only NQSOs. Most ISOs vest over a three - year period and expire on the seventh anniversary of the grant date. All NQSOs issued to non-employee directors vest immediately and expire on the seventh anniversary of the grant date. As of December 31, 2016, there were 1,243,697 stock options outstanding under the 2004 LTIP and 679,884 stock options outstanding under the 2014 LTIP. On December 30, 2010, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, options to purchase shares of common stock under the 2004 LTIP as follows: (i) 50,000 shares at $6.42, vesting in annual increments of 12,500 shares over a four -year period commencing December 30, 2011; (ii) 250,000 shares at $6.42, vesting in annual increments of 62,500 shares over a four -year period commencing December 30, 2011; (iii) 200,000 shares at $10.00, with vesting to begin on the date the stock reaches a closing price of $10.00 per share for 15 trading days within a 30 -day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date; and (iv) 200,000 shares at $15.00, with vesting to begin on the date the stock reaches a closing price of $15.00 per share for 15 trading days within a 30 -day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date. All such options in items (i) and (ii) shall expire on December 30, 2017. All such options in items (iii) and (iv) shall expire as of the later of December 30, 2017 and five years after the initial vesting commences, but in no event later than December 30, 2020. The market-based conditions for the stock options in items (iii) and (iv) had not been met as of December 31, 2016. The options set forth in items (ii), (iii) and (iv) were subject to shareholder approval of an amendment to the 2004 LTIP, which approval was obtained on June 7, 2011. On January 3, 2011, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, an option to purchase 50,000 shares of common stock at $6.58 under the 2004 LTIP. The option vested in annual increments of 12,500 shares over a four -year period commencing December 30, 2011. The option expires on December 30, 2017. As of December 31, 2016, there was $505 of total unrecognized compensation costs related to outstanding stock options, which we expect to recognize over a weighted average period of 1.1 years. We use the Black-Scholes option-pricing model to estimate fair value of stock-based awards. The following weighted average assumptions were used to value options granted during the years ended December 31, 2016 and 2015:
|  | Years Ended December 31, |
|  | 2016 |  |  | 2015 |
Risk-free interest rate |  |  | 1.36 | % |  |  | 0.72 | %
Volatility factor |  |  | 48.20 | % |  |  | 48.54 | %
Dividends |  |  | 0.00 | % |  |  | 0.00 | %
Weighted average expected life (years) |  |  | 4.83 |  |  |  | 4.15 |
Forfeiture rate |  |  | 10.0 | % |  |  | 13.8 | %
We used a Monte Carlo simulation option-pricing model to estimate the fair value of market performance stock-based awards, of which there were no new awards in the years ended December 31, 2016 or 2015. We calculate expected volatility for stock options by taking an average of historical volatility over the expected term. The computation of expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards and vesting schedules. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield in effect at the time of grant. Forfeiture rates are calculated by dividing unvested shares forfeited by beginning shares outstanding. The pre-vesting forfeiture rate is calculated yearly and is determined using a historical twelve -quarter rolling average of the forfeiture rates. The following tables summarize data for the stock options issued by us:
Year Ended December 31, 201 6 |
|  | Number of Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Weighted Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
Shares under Option – January 1 |  |  | 2,257,969 |  |  | $ | 6.30 |  |  |  |  |  |  |  |  |
Options Granted |  |  | 369,550 |  |  |  | 4.69 |  |  |  |  |  |  |  |  |
Options Exercised |  |  | (152,789 | ) |  |  | 3.86 |  |  |  |  |  |  |  |  |
Options Forfeited or Expired |  |  | (151,149 | ) |  |  | 6.09 |  |  |  |  |  |  |  |  |
Shares under option – December 31 |  |  | 2,323,581 |  |  | $ | 6.22 |  |  |  | 3.31 |  |  | $ | 1,101 |
Vested and Expected to Vest - December 31 |  |  | 2,192,138 |  |  | $ | 6.31 |  |  |  | 2.98 |  |  | $ | 1,006 |
Options Exercisable – December 31 |  |  | 1,302,390 |  |  | $ | 5.05 |  |  |  | 1.92 |  |  | $ | 669 |
Year Ended December 31, 201 5 |
|  |  |  |  |  |  |  |  |  | Number of Shares |  |  | Weighted Average Exercise Price Per Share |
Shares under Option – January 1 |  |  |  |  |  |  |  |  |  |  | 2,056,122 |  |  | $ | 6.66 |
Options Granted |  |  |  |  |  |  |  |  |  |  | 411,250 |  |  |  | 4.68 |
Options Exercised |  |  |  |  |  |  |  |  |  |  | (137,937 | ) |  |  | 3.90 |
Options Forfeited or Expired |  |  |  |  |  |  |  |  |  |  | (71,466 | ) |  |  | 11.86 |
Shares under option – December 31 |  |  |  |  |  |  |  |  |  |  | 2,257,969 |  |  | $ | 6.30 |
Options Exercisable – December 31 |  |  |  |  |  |  |  |  |  |  | 1,255,736 |  |  | $ | 5.22 |
The following table represents additional information about stock options outstanding at December 31, 2016:
|  |  |  |  | Option Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  |  | Number of Outstanding Options – December 31, 2016 |  |  | Weighted- Average Remaining Contractual Life |  |  | Weighted- Average Exercise Price |  |  | Number of Options Exercisable at December 31, 2016 |  |  | Weighted- Average Exercise Price |
$3.22 | - | $3.99 |  |  |  | 608,200 |  |  |  | 3.68 |  |  | $ | 3.76 |  |  |  | 394,218 |  |  | $ | 3.75 |
$4.00 | - | $4.99 |  |  |  | 686,548 |  |  |  | 3.62 |  |  | $ | 4.40 |  |  |  | 396,006 |  |  |  | 4.45 |
$5.00 | - | $9.99 |  |  |  | 628,833 |  |  |  | 2.17 |  |  | $ | 6.58 |  |  |  | 512,166 |  |  |  | 6.52 |
$10.00 | - | $15.00 |  |  |  | 400,000 |  |  |  | 4.00 |  |  | $ | 12.50 |  |  |  | - |  |  |  | - |
$3.22 | - | $15.00 |  |  |  | 2,323,581 |  |  |  | 3.31 |  |  | $ | 6.22 |  |  |  | 1,302,390 |  |  | $ | 5.05 |
The weighted average fair value of options granted during the years ended December 31, 2016 and 2015 was $2.01 and $2.32, respectively. The total intrinsic value of options (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) exercised during the years ended December 31, 2016 and 2015 was $149 and $364, respectively. Cash received from option exercises under our stock-based compensation plans for the years ended December 31, 2016 and 2015 was $460 and $538, respectively. There were no excess tax benefits realized in accumulated paid-in capital on exercised options for the years ended December 31, 2016 and 2015.
c. | Restricted Stock Awards
During 2014, we awarded 49,200 restricted stock units under the 2014 LTIP to certain key employees. These units vest over three years and we estimated their weighted average grant date fair value to be $3.24 per share. $34 and $82 of expense was recorded in 2016 and 2015, respectively, relating to these units. In September 2016, 15,900 shares of the awarded restricted stock vested and the Company repurchased 4,131 shares to satisfy the statutory tax withholding on shares vested for certain employees. At December 31, 2016, there was $11 of unrecognized compensation expense related to restricted stock grants.
d. | Reserved Shares
We have reserved 901,700 shares of common stock under the various stock option plans, warrants and restricted stock awards as of December 31, 2016.

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References No definition available. + Details
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