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Shareholders' Equity | 12 Months Ended
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Dec. 31, 2015
Shareholders' Equity |
Shareholders' Equity | 8. Shareholders’ Equity. Stock-Based Compensation. The Company’s stock-based compensation plans are administered by the Compensation Committee of the Board of Directors, which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award. The following table summarizes the stock-based compensation expense that was recognized in the Company’s statements of comprehensive income for the years ended December 31, 2015 and 2014:
Year ended December 31 |  | 2015 |  | 2014 |
Cost of sales |  | $ | 34,000 |  | $ | 6,000 |
Selling |  | 69,000 |  | 87,000 |
Marketing |  | 15,000 |  | 12,000 |
General and administrative |  | 235,000 |  | 298,000 |
|  | $ | 353,000 |  | $ | 403,000 |
The Company uses the Black-Scholes option-pricing model to estimate fair value of stock-based awards with the following weighted average assumptions:
|  | 2015 |  | 2014 |
Stock Options: |  |  |  |  |
Expected life (years) |  | 3.4 |  | 3.6 |
Expected volatility |  | 45 | % | 50 | %
Dividend yield |  | 0 | % | 0 | %
Risk-free interest rate |  | 1.2 | % | 1.0 | %
|  | 2015 |  | 2014 |
Stock Purchase Plan Options: |  |  |  |  |
Expected life (years) |  | 1.0 |  | 1.0 |
Expected volatility |  | 37 | % | 50 | %
Dividend yield |  | 0 | % | 0 | %
Risk-free interest rate |  | 0.3 | % | 0.1 | %
The Company uses the graded attribution method to recognize expense for unvested options and restricted stock units. The amount of stock-based compensation recognized during a period is based on the value of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company re-evaluates the forfeiture rate annually and adjusts it as necessary. As of December 31, 2015, there was approximately $120,000 of total unrecognized compensation costs related to the outstanding stock options, which is expected to be recognized over a weighted average period of 1.8 years. As of December 31, 2015, there was approximately $149,000 of total unrecognized compensation costs related to restricted stock units, which is expected to be recognized over a weighted average period of 1.7 years. Stock Options, Restricted Stock Units, and Other Stock-Based Compensation Awards. The Company maintains the 2003 Incentive Stock Option Plan (the “2003 Plan”) and the 2013 Omnibus Stock and Incentive Plan (the “2013 Plan”). The 2013 Plan replaced the 2003 Plan upon its ratification by shareholders in 2013. Awards granted under the 2003 Plan will remain in effect until they are exercised or expire according to their terms. Since May 2013, all equity awards are made under the 2013 Plan. In May 2015, the 2013 Plan was amended to increase the total number of shares available to a total of 1,100,000 shares. Under the terms of the 2013 Plan, as amended, the Company may grant up to 1,100,000 awards in a variety of instruments including incentive or non-qualified stock options and restricted stock units to employees, consultants and directors generally at an exercise price at or above 100% of fair market value at the close of business on the date of grant. Stock options expire 10 years after the date of grant and generally vest over three years. The Company issues new shares of common stock when stock options are exercised. The following table summarizes activity under the 2003 and 2013 Plans:
|  | Plan Shares Available for Grant |  | Plan Options Outstanding |  | Weighted Average Exercise Price Per Share |  | Aggregate Intrinsic Value |
Balance at December 31, 2013 |  | 95,968 |  | 1,251,442 |  | $ | 2.72 |  |  |
Shares reserved |  | 650,000 |  | — |  |  |  |  |
Stock awards granted |  | (29,701 | ) | — |  |  |  |  |
Restricted stock units granted |  | (25,000 | ) | — |  |  |  |  |
Stock options granted |  | (426,000 | ) | 426,000 |  | 3.02 |  |  |
Stock options exercised |  | — |  | (155,407 | ) | 1.94 |  | $ | 217,694 |
Cancelled or forfeited - 2013 Plan |  | 42,500 |  | (42,500 | ) | 3.03 |  |  |
Cancelled of forfeited - 2003 Plan |  | — |  | (224,458 | ) | 2.95 |  |  |
Balance at December 31, 2014 |  | 307,767 |  | 1,255,077 |  | 2.86 |  |  |
Shares reserved |  | 200,000 |  | — |  |  |  |  |
Stock awards granted |  | (37,233 | ) | — |  |  |  |  |
Restricted stock units granted |  | (99,000 | ) | — |  |  |  |  |
Stock options granted |  | (200,000 | ) | 200,000 |  | 2.82 |  |  |
Stock options exercised |  | — |  | (113,837 | ) | 1.90 |  | $ | 105,012 |
Cancelled or forfeited - 2013 Plan |  | 279,000 |  | (279,000 | ) | 2.87 |  |  |
Cancelled or forfeited - 2013 Plan restricted stock units |  | 27,000 |  | — |  | 2.89 |  |  |
Cancelled of forfeited - 2003 Plan |  | — |  | (167,079 | ) | 4.13 |  |  |
Balance at December 31, 2015 |  | 477,534 |  | 895,161 |  | 2.73 |  |  |
The number of options exercisable under the Plans was:
December 31, 2015 |  | 653,840
December 31, 2014 |  | 710,598
The following table summarizes information about the stock options outstanding at December 31, 2015:
|  | Options Outstanding |  | Options Exercisable |
Ranges of Exercise Prices |  | Number Outstanding |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price Per Share |  | Number Exercisable |  | Weighted Average Exercise Price Per Share |
$1.61 - $2.46 |  | 363,997 |  | 6.57 years |  | $ | 1.78 |  | 352,331 |  | $ | 1.76 |
$2.79 - $4.22 |  | 480,164 |  | 7.73 years |  | 3.16 |  | 250,509 |  | 3.35 |
$5.49 |  | 51,000 |  | 4.41 years |  | 5.49 |  | 51,000 |  | 5.49 |
|  | 895,161 |  | 7.06 years |  | $ | 2.73 |  | 653,840 |  | $ | 2.66 |
Options outstanding under the Plans expire at various dates during the period from January 2015 through December 2024. Options outstanding at December 31, 2015 had an aggregate intrinsic value of $404,000. Options exercisable at December 31, 2015 had a weighted average remaining life of 6.45 years and an aggregate intrinsic value of $395,000. The weighted average grant-date fair value of options granted during the years ended December 31, 2015 and 2014 were $0.94 and $1.13, respectively. In June 2015 and May 2014, equity grants were made by the Company to the Board of Directors, pursuant to the 2013 Plan in the form of shares of common stock. The total number of shares granted to the Board of Directors was 37,233 and 29,701 during the years ended December 31, 2015 and 2014, respectively. The shares were issued at $2.82 per share in 2015 and $3.03 per share in 2014, based on the stock price on the date of grant, for a total value of $105,000 in 2015 and $90,000 in 2014, which is included in stock-based compensation. The Company issued 99,000 restricted stock units, under the 2013 Plan, during the year ended December 31, 2015. The units were assigned a weighted average value of $2.71 per share, based on the stock price on the date of the grant, and vest over a weighted average of 2.3 years. The Company issued 25,000 restricted stock units during the year ended December 31, 2014. The units were assigned a value of $3.03 per share, based on the stock price on the date of the grant, and vest over three years. Restricted stock unit transactions during the years ended December 31, 2015 and 2014 are summarized as follows:
|  | Number of Shares |  | Weighted average grant date fair value |
Unvested shares at January 1, 2014 |  | — |  | $ | — |
Granted |  | 25,000 |  | 3.03 |
Vested |  | — |  | — |
Forfeited or surrendered |  | — |  | — |
Unvested shares at December 31, 2014 |  | 25,000 |  | $ | 3.03 |
Granted |  | 99,000 |  | 2.71 |
Vested |  | (8,334 | ) | 3.03 |
Forfeited or surrendered |  | (27,000 | ) | 2.89 |
Unvested shares at December 31, 2015 |  | 88,666 |  | 2.72 |
Employee Stock Purchase Plan. The Company has an Employee Stock Purchase Plan (the “Plan”) that enables employees to contribute up to 10% of their base compensation toward the purchase of the Company’s common stock at 85% of its market value on the first or last day of the year. During the years ended December 31, 2015 and 2014, employees purchased 18,000 and 27,000 shares under the Plan. At December 31, 2015, 134,000 shares were reserved for future employee purchases of common stock under the Plan. For the years ended December 31, 2015 and 2014, the Company recognized $16,000 and $26,000, respectively, of stock-based compensation expense related to the Plan. Stock Repurchase Plans. On December 3, 2013, the Board of Directors authorized the repurchase of up to $5,000,000 of the Company’s common stock on or before December 3, 2015. The Plan allowed the repurchases to be made in open market or privately negotiated transactions. This plan was terminated on November 3, 2015. On October 30, 2015, the Board authorized the repurchase of up to $5,000,000 of the Company’s common stock on or before October 30, 2017. The plan allows the repurchases to be made in open market or privately negotiated transactions. The plan does not obligate the Company to repurchase any particular number of shares, and may be suspended at any time at the Company’s discretion. For the years ended December 31, 2015 and December 31, 2014, the Company repurchased approximately 664,000 and 787,000 shares at a total cost of $1,762,000 and $2,450,000, respectively.

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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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