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STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION

2.       stock-based compensation

 

The Company accounts for compensation expense associated with stock options and restricted stock units (“RSUs”) based on the fair value of the options and units on the date of grant.

 

The Company’s net income for the nine months ended September 30, 2016 and 2015 includes approximately $564,500 and $491,500, respectively, of non-cash compensation expense related to the Company’s stock compensation grants. On January 1, 2016, the Company granted 53,882 RSUs to its board of directors as partial compensation for the 2016 year. On January 1, 2015, the Company granted 51,349 RSUs to its board of directors as partial compensation for the 2015 year. RSUs granted to our board of directors vest straight line on a quarterly basis over a one year period. The non-cash compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component of selling, general and administrative expenses.

 

On August 2, 2016, the Company granted a total of 98,645 shares of common stock to various employees. In the event that any of these employees voluntarily terminates his employment prior to certain dates, portions of the shares may be forfeited. In addition, if certain Company performance criterion are not achieved, portions of these shares may be forfeited. These shares will be expensed at various periods through March 2019 based upon the service and performance thresholds. For the three months ended September 30, 2016, approximately $60,700 of compensation expense is included in selling, general and administrative expenses and approximately $12,400 of compensation expense is included in cost of sales for this grant.

 

The estimated fair value of each RSU and common share granted was determined based on the fair value of the Company’s common stock on the date of grant.

 

A summary of the status of the Company’s stock option plans as of September 30, 2016 and changes during the nine months ended September 30, 2016 is as follows:

 

   Options   Weighted
average
exercise
price		   Weighted
average
remaining
contractual
term (in years)		   Aggregate
intrinsic value		 
Outstanding at beginning of period   269,983   $11.29           
Forfeited   (55,000)   15.27           
Outstanding and vested at end of period   214,983   $10.27    1.34   $11,850 

 

During the nine months ended September 30, 2016, no stock options were granted or exercised.

 

The intrinsic value of all options exercised during the nine months ended September 30, 2015 was approximately $230,500.