NOTE 1

1 – Stockholders’ equity

1989 Non-Qualified Stock Option Plan

On June 15, 1989, the Company instituted a non-qualified stock option plan (the “Plan”). In connection therewith, 700,000 shares of the Company’s common stock were reserved for

issuance pursuant to options granted under the Plan through June 30, 2009. All options granted vested over a four-year period and expire between five to seven years after the date of grant. This 1989 Non-Qualified Stock Option Plan expired in June 2009.

2001 Non-Qualified Stock Option Plan

In November 2006, the Company registered a non-qualified stock option plan that the shareholders had approved in July 2001, covering key employees, officers, directors and other persons that may be considered as service providers to the Company. Options were awarded by the Board of Directors or by a committee appointed by the Board. Under the plan, an aggregate

of 300,000 shares of Company common stock, $.01 par value, were reserved for issuance or transfer upon the exercise of options which were granted. Unless otherwise provided in the option agreement, options granted under the plan would vest over a four year period commencing one year from the anniversary date of the grant. The stock option plan expired on July 22, 2011.

2007 Share Incentive Plan

On December 12, 2007, shareholders approved the Company’s 2007 Share Incentive Plan (“Incentive Plan”), in connection therewith, 750,000 shares of the Company’s common stock are reserved for issuance pursuant to options or restricted stock that may be granted under the Share

Incentive Plan through December 12, 2017. In 2014, 42,320 shares of stock were granted and issued to directors and key employees, additionally, options were granted to a key employee for 100,000 shares of the Company’s common stock. In 2015, 36,108 shares of stock were granted and issued to directors and key employees.

The purchase price of the common stock under each option plan shall be determined by the Committee, provided, however, that such purchase price shall not be less than the fair market value of the shares on the date such option is granted. The stock options generally expire seven to ten years after the date of grant. The Company recorded stock-based compensation of $750,758 and $515,933 for the years ended December 31, 2015 and 2014, respectively.

A summary of the stock option activity related to the 1989 and 2001 Stock Option Plans and the 2007 Share Incentive Plan for the period from January 1, 2014 through December 31, 2015 is as follows:

1989 Non-Qualified Stock Option Plan

	Beginning Balance Outstanding		Granted During Period		Exercised During Period		Canceled During Period		Ending Balance Outstanding		Exercisable

Year ended December 31, 2014
Number of shares		35,250		-0-		-0-		0		35,250		35,250
Weighted average exercise price
Per share	$	4.62		-0-		-0-		-0-	$	4.62	$	4.62
Year ended December 31, 2015
Number of shares		35,250		-0-		-0-		-0-		35,250		35,250
Weighted average exercise price
Per share	$	4.62		-0-		-0-		-0-	$	4.62	$	4.62

2001 Non-Qualified Stock Option Plan

	Beginning Balance Outstanding		Granted During Period		Exercised During Period		Canceled During Period		Ending Balance Outstanding		Exercisable

Year ended December 31, 2014
Number of shares		152,480		-0-		28,000		-0-		124,480		111,980
Weighted average exercise price
Per share	$	4.35		-0-		-0-		-0-	$	4.57	$	4.56
Year ended December 31, 2015
Number of shares		124,480		-0-		-0-		-0-		124,480		111,980
Weighted average exercise price
Per share	$	4.35		-0-		-0-		-0-	$	4.57	$	4.56

2007 Share Incentive Plan

	Beginning Balance Outstanding		Granted During Period		Exercised During Period		Canceled During Period		Ending Balance Outstanding		Exercisable

Year ended December 31, 2014
Number of shares		-0-		100,000		-0-		-0-		100,000		-0-
Weighted average exercise price
Per share	$	11.17
Year ended December 31, 2015
Number of shares		100,000		-0-		-0-		-0-		100,000		-0-
Weighted average exercise price
Per share									$	11.17

The Company has 259,730 of outstanding stock options under the three Plans at December 31, 2015.

The following table summarizes information about the outstanding and exercisable options at December 31, 2015.

				Options Outstanding								Options Exercisable
Exercise Price Range				Number Outstanding		Weighted Average Remaining Contractual		Weighted Average Exercise Price		Intrinsic Value		Number Exercisable		Weighted Average Exercise Price		Intrinsic Value

$	3.00	-	3.99		34,000		2.95	$	3.65	$	218,620		34,000	$	3.65	$	218,620
$	4.00	-	4.49		15,930		5.04	$	4.25	$	92,872		15,930	$	4.25	$	92,872
$	4.50	-	4.99		100,000		2.78	$	4.62	$	546,000		75,000	$	4.62	$	546,000
$	5.00	-	7.99		9,800		6.04	$	7.90	$	21,364		9,800	$	7.90	$	21,364
$	8.00	-	12.00		100,000		9.80	$	11.17	$	0		0	$	11.17	$	0

There were no options exercised during the year ended December 31, 2015. The intrinsic value of the 28,000 options exercised during the year ended December 31, 2014 was $310,520.

Restricted Stock Awards

The following table summarizes restricted stock awards for the year ended December 31, 2014:

	Shares of Restricted Stock			Weighted Average Grant Date Fair Value
Unvested outstanding at January 1, 2014		12,000		$	10.97

Granted		6,400		$	14.24
Vested		(10,400	)	$	12.98
Forfeited/Cancelled		-

Unvested outstanding at December 31, 2014		8,000		$	10.97

Granted		9,211		$	13.66
Vested		(13,211	)	$	12.84
Forfeited/Cancelled		-

Unvested outstanding at December 31, 2015		4,000		$	10.97

The total fair value of shares of restricted stock awards vested for the years ended December 31, 2015 and 2014 was approximately $170,000 and $135,000 respectively.

The fair value of the outstanding restricted stock awards will be recorded as stock compensation expense over the vesting period. As of December 31, 2015 there was $44,000 of unrecognized compensation costs related to restricted stock awards, which is to be recognized over a period of 0.35 years.

Restricted Stock Units

The following table summarizes restricted stock units for the year ended December 31, 2015:

	Shares of Restricted Stock Units			Weighted Average Grant Date Fair Value
Unvested outstanding at January 1, 2014		144,243		$	11.26

Granted		--
Vested		(37,925	)	$	10.09
Forfeited/Cancelled		(2,500	)	$	10.71

Unvested outstanding at December 31, 2014		103,319		$	11.71

Granted		24,210		$	14.61
Vested		(24,892	)	$	11.55
Forfeited/Cancelled		(8,057	)	$	10.54

Unvested outstanding at December 31, 2015		94,580		$	12.55

The total fair value of vested restricted stock units was $288,000 and $383,000 respectively for the years ended December 31, 2015 and 2014.

The fair value of the outstanding restricted stock units will be recorded as stock compensation expense over the vesting period. As of December 31, 2015, there was $1,187,000 of total unrecognized compensation costs related to restricted stock units, which is expected to be recognized over a weighted-average period of 1.53 years.

During the years ended December 31, 2015 and 2014, the Company recorded into selling and general administrative expense approximately $751,000 and $516,000 for the cost of employee and director services received in exchange for equity instruments based on the grant-date fair value of those instruments in accordance with the provisions of ASC 718.