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Stock Incentive Plans | 12 Months Ended
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Dec. 31, 2014
Stock Incentive Plans | NOTE E: STOCK INCENTIVE PLANS In August 2012, our shareholders approved the 2012 Equity Incentive Plan (the “2012 Plan”), which provides for the grant of equity incentives, consisting of options, stock appreciation rights, restricted stock and restricted stock units to officers, other key employees, directors and consultants. The 2012 Plan initially set aside, for the grant of such equity incentives, 300,000 shares of our common stock, plus an additional 17,666 shares which was equal to the total of the number of shares that were then available for the grant of new options or other equity incentives under our then existing stockholder-approved stock incentive plans (the “Previous Plans”). At the same time, those 17,666 shares ceased to be available for the grant of equity incentive under those Previous Plans. The Previous Plans had provided that, if any options outstanding under any of those plans were to expire or otherwise terminate, rather than being exercised, or any unvested restricted shares were to be cancelled, the shares that had been subject to those options and such cancelled restricted shares would become available for the grant of new options or other equity incentives under those plans. However, the 2012 Plan provides, instead, that if any of those options expire or terminate for any reason or any of those unvested restricted shares are cancelled, then, the number of shares that will become available for grants or awards of equity incentives under the 2012 Plan will be increased by an equivalent number of shares, instead of becoming available for new equity incentive grants under the Previous Plans. Therefore, if any equity incentives that are outstanding under the Previous Plans expire, terminate or, subject to certain limitations, are reacquired by the Company, then a number of shares equal to the number of shares that had been subject to those equity incentives would become available for future grants under the 2012 Plan and those shares would cease to be available for future grants under the Previous Plans. As of December 31, 2014, 207,333 shares from the Previous Plans have been redistributed and made available for grant under the 2012 Plan. As of December 31, 2014, 372,332 shares remained available for grant under the 2012 Plan. Information Regarding Stock Options. The fair value of outstanding options was estimated as of the date of grant using a binomial model. This model incorporates certain assumptions including a risk-free market interest rate, the expected dividend yield of the underlying common stock, the expected life of the option and expected volatility in the market value of the underlying common stock. We used the following assumptions in estimating the fair value of the options issued in the periods indicated below:
|  | Year Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Expected volatility |  |  | 56.7 | % |  |  | 57.0 | % |  |  | 59.0 | %
Risk free interest rate |  |  | 2.39 | % |  |  | 2.73 | % |  |  | 1.64 | %
Expected dividend yields |  |  | N/A |  |  |  | N/A |  |  |  | N/A |
Expected lives |  |  | 10 yrs. |  |  |  | 10 yrs. |  |  |  | 10 yrs. |
Expected volatilities are based on the historical volatility of the Company’s common stock. The risk free interest rate is based upon market yields for United States Treasury debt securities. The expected dividend yields are based upon the Company’s dividend policy in effect in each of the years presented and the fair market value of the Company’s shares at the time of grant. Expected lives are based on several factors, including the average holding period of the outstanding options, their remaining terms and the cycle of our long range business plan. The following tables summarize stock option activity during the years ended December 31, 2014 and 2013:
|  | Year Ended December 31, 2014 |
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term |  |  | Aggregate Intrinsic Values |
Outstanding at January 1, 2014 |  |  | 279,000 |  |  | $ | 3.31 |  |  |  |  |  |  |  |  |
Granted |  |  | 8,000 |  |  |  | 3.30 |  |  |  |  |  |  |  |  |
Exercised |  |  | (142,000 | ) |  |  | 1.14 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (44,000 | ) |  |  | 5.72 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2014 |  |  | 101,000 |  |  |  | 5.31 |  |  |  | 4.0 years |  |  | $ | 15,300 |
Exercisable at December 31, 2014 |  |  | 93,000 |  |  |  | 5.48 |  |  |  | 3.5 years |  |  | $ | 15,300 |
Options vested and expected (as of December 31, 2014) to vest in the future |  |  | 101,000 |  |  |  | 5.31 |  |  |  | 4.0 years |  |  | $ | 15,300 |
|  | Year Ended December 31, 2013 |
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term |  |  | Aggregate Intrinsic Values |
Outstanding at January 1, 2013 |  |  | 433,000 |  |  | $ | 3.60 |  |  |  |  |  |  |  |  |
Granted |  |  | 10,000 |  |  |  | 3.80 |  |  |  |  |  |  |  |  |
Exercised |  |  | (30,500 | ) |  |  | 0.94 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (133,500 | ) |  |  | 4.84 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2013 |  |  | 279,000 |  |  |  | 3.31 |  |  |  | 2.5 years |  |  | $ | 321,200 |
The aggregate intrinsic value in each of the tables above represents the total pre-tax intrinsic value (the aggregate difference between the closing price of the Company’s common stock on the American Stock Exchange on December 31, 2014 and 2013, respectively, and the exercise price for in-the-money options that would have been received by the option holders if all in-the-money options had been exercised on December 31, 2014 and 2013, respectively). The total pre-tax intrinsic values of the options exercised during 2014 and 2013 were $350,000 and $75,000, respectively. The weighted-average grant-date fair values of options granted during the years ended December 31, 2014 and 2013 were $3.23 and $2.77, respectively. The Company recognized stock-based compensation expense in the amount of $33,000, $24,000 and $16,000 for stock options in the years ended December 31, 2014, 2013 and 2012. At December 31, 2014, the Company had no unrecognized compensation cost related to unvested options. Set forth below is additional information with respect to the stock options that were outstanding under our equity incentive plans at December 31, 2014:
Range |  | Outstanding Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Options Exercisable |  |  | Weighted Average Exercise Price |
$1.80 – $4.25 |  |  | 46,000 |  |  | $ | 3.14 |  |  |  | 7.2 |  |  |  | 38,000 |  |  | $ | 3.11 |
$4.90 – $9.80 |  |  | 55,000 |  |  |  | 7.12 |  |  |  | 1.3 |  |  |  | 55,000 |  |  |  | 7.12 |
$1.80 – $9.80 |  |  | 101,000 |  |  | $ | 5.31 |  |  |  | 4.0 |  |  |  | 93,000 |  |  | $ | 5.48 |
Restricted Shares. We began granting “service-contingent” restricted shares of common stock to some of our officers and other key management employees in 2010. The terms of those grants provided for those restricted shares to vest in equal annual installments over a three or four year service period following the respective dates of those awards, subject to the continued service with the Company of the recipients of such shares. In accordance with ASC 718 - compensation expense for such awards is based on the fair market value of those awards on their respective dates of grant and is recognized over those service periods. A total of 103,494 of those service-contingent restricted shares remained unvested at December 31, 2014. Since all of the holders of those remaining unvested restricted shares were still in the Company’s employ at December 30, 2014, we expect that all of those unvested restricted shares will vest over the remainder of their respective vesting periods. The Company recognized stock-based compensation expense in the amount of $233,000, $278,000 and $440,000 for “service-contingent” restricted shares in the years ended December 31, 2014, 2013 and 2012, respectively. At December 31, 2014, unrecognized stock-based compensation cost attributable to service-contingent restricted shares totaled approximately $52,439 which, as of that date, was expected to be recognized over a weighted average period of approximately one year. The aggregate intrinsic value of these restricted shares, at December 31 2014, was $335,321. In 2013 and 2014, our officers and other key management employees were granted performance-contingent restricted shares. These performance-contingent shares vest in three annual installments and are subject to the achievement by the Company of different financial performance goals applicable to those years. Stock-based compensation expense with respect to each one-third of those performance-contingent shares is recognized only if, and when we are able to determine that the Company’s achievement of the performance goal for the particular year has become probable. However, if any stock-based compensation expense were to be recognized based on such a determination, but the performance goal was not ultimately achieved, then that previously recognized stock-based compensation expense would be reversed. The Company has not recognized any stock-based compensation expense for performance-contingent restricted shares in the years ended December 31, 2014, 2013 and 2012. The Company did not achieve the financial performance goal for 2014. As a result, no stock-based compensation expense was recognized in respect of any of the performance-contingent shares in 2014, one-third of the performance-contingent restricted shares were cancelled, and the remaining 165,491 of these performance-contingent shares continued to be unvested as of December 31, 2014. We cannot predict, as of yet, whether any of those remaining performance contingent shares will become vested as that will depend on the Company’s results of operations in 2015 and 2016. At December 31, 2014, a total of 165,491 performance-contingent restricted shares were outstanding. A summary of restricted stock activity during the years ended December 31, 2014 and 2013 is presented below:
|  | Shares |  | Weighted Average Grant Date Fair Values
Outstanding at January 1, 2014 |  |  |  | 318,660 |  |  |  |  | $3.27 |
Granted |  |  |  | 164,500 |  |  |  |  | 3.66 |
Vested |  |  |  | (103,503 | ) |  |  |  | 3.44 |
Forfeited |  |  |  | (110,672 | ) |  |  |  | 3.31 |
Outstanding and unvested at end of year |  |  |  | 268,985 |  |  |  |  | $3.43 |
|  | Shares |  | Weighted Average Grant Date Fair Values
Outstanding at January 1, 2013 |  |  |  | 312,501 |  |  |  |  | $3.39 |
Granted |  |  |  | 167,500 |  |  |  |  | 2.96 |
Vested |  |  |  | (105,504 | ) |  |  |  | 3.29 |
Forfeited |  |  |  | (55,837 | ) |  |  |  | 2.96 |
Outstanding and unvested at end of year |  |  |  | 318,660 |  |  |  |  | $3.27 |
The intrinsic value of the 103,503 restricted shares that vested during the year ended December 31, 2014 was approximately $384,500. A total of 34,793 of those restricted shares were cancelled in satisfaction of a total of $129,000 of tax withholding obligations of holders of those restricted shares that arose as a result of the vesting of those shares. At December 31, 2014, unrecognized stock-based compensation cost attributable to performance-contingent restricted shares totaled approximately $567,000 which, as of that date, was expected to be recognized over a weighted average period of approximately 0.8 years. All of the restricted shares outstanding at December 31, 2014 are expected to vest. The aggregate intrinsic value of the performance-contingent restricted shares, at December 31, 2014, was $536,200.

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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 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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