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Note 12 - Stock-based Compensation
12 Months Ended
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

12. STOCK-BASED COMPENSATION


The Company had two stock-based compensation plans at December 31, 2015. The shares outstanding are for grants under the Company’s 1997 Stock Option Plan (the “1997 Plan”) and the 2008 Equity Incentive Plan (the “2008 Plan”), (collectively, the “Plans”). The 1997 Plan matured on April 8, 2008 and no additional options may be granted under the 1997 Plan. At December 31, 2015, the 1997 Plan had 27,750 granted unexercised stock option shares. At December 31, 2015, the 2008 Plan includes 138,000 granted unexercised stock option shares, 10,425 granted nonvested restricted stock award shares and 806,100 shares available to be granted.


Stock Option Grants. Options granted under the 2008 Plan are granted at the closing price of the Company’s common stock on the NASDAQ Stock Market on the date of grant. Stock options expire ten years from the date of grant and vest over service periods ranging from one year to five years. The Company settles stock option exercises with authorized unissued shares. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on the U.S. Treasury rate for the expected life at the time of grant. Volatility is based on the average volatility of the Company based upon previous trading history. The expected life and forfeiture assumptions are based on historical data. Dividend yield is based on the yield at the time of the option grant.


A summary of option activity under the Plans as of December 31, 2015 and 2014, and changes during the years then ended is presented below:


   

Shares Available

   

Options Outstanding

   

Price

   

Aggregate

Intrinsic Value

 

Outstanding at December 31, 2013

    842,250       160,375     $ 11.84     $ 185,900  

Options granted

    (19,000 )     19,000       8.34          

Restricted stock awards

    (13,900 )     -       8.36          

Forfeited

    3,500       (3,500 )     6.78          

Expired

    -       (6,375 )     16.42          

Exercised

    -       -       0.00          

Outstanding at December 31, 2014

    812,850       169,500     $ 11.38     $ 194,020  

Options granted

    (14,000 )     14,000       8.01          

Forfeited

    7,250       (7,250 )     7.15          

Expired

    -       (10,500 )     19.54          

Exercised

    -       -       0.00          

Outstanding at December 31, 2015

    806,100       165,750     $ 10.76     $ 234,380  

The fair value of option grants is estimated on the grant date using the Black-Scholes option-pricing model, with the following weighted-average assumptions used for grants during the years ended December 31, 2015 and 2014.


   

December 31,

 

Year Ended:

 

2015

   

2014

 

Dividend growth rate

    1.00 %     1.00 %

Expected volatility

    96.90 %     53.00 %

Average risk-free interest rates

    1.49 %     1.85 %

Expected lives (years)

    7.0       6.5  

The following table summarizes additional information about the Company’s outstanding options and exercisable options as of December 31, 2015, including weighted-average remaining contractual term expressed in years ("Life") and weighted average exercise price (“Price”):


     

Outstanding

   

Exercisable

 

Range of Exercise Price

   

Shares

   

Life

   

Price

   

Shares

   

Price

 
$4.00 10.00       100,000       6.81     $ 6.16       46,700     $ 5.56  
$10.01 17.00       27,000       3.70       11.01       27,000       11.01  
$17.01 26.00       29,250       2.26       20.65       29,750       20.65  
$26.01 34.00       9,500       .69       28.14       9,500       28.14  
            165,750       5.15       10.76       112,450       12.70  

Following is a summary of nonvested option vesting changes during the years ended December 31, 2015 and 2014:


Year Ended:

 

December 31, 2015

   

December 31, 2014

 
   

Shares

   

Price

   

Shares

   

Price

 

Nonvested at beginning of year

    62,700     $ 6.14       58,750     $ 5.38  

Granted

    14,000       8.01       19,000       8.34  

Forfeited

    (5,250 )     7.22       (3,500 )     6.78  

Vested

    (18,150 )     5.71       (11,550 )     5.72  

Nonvested at end of year

    53,300       6.67       62,700       6.14  

Restricted Stock Awards. The Company measures the fair value of restricted shares based on the price of its common stock on the grant date and compensation expense is recorded over the vesting period. During the years ended December 31, 2015 and 2014, none and 13,900 restricted stock awards were granted with a four year vesting period. Following is a summary of nonvested restricted stock awards for the years ended December 31, 2015 and 2014, and vesting changes during the respective periods:


   

Shares

   

Price

 

Nonvested at December 31, 2014

    13,900     $ 8.36  

Granted

    -       -  

Vested

    (3,475 )     8.36  

Forfeited

    -       -  

Nonvested at December 31, 2015

    10,425     $ 8.36  

For the years ended December 31, 2015 and 2014, net compensation expense charged to income for the Plans was $68,705 and $59,798, respectively.


Total unrecognized compensation cost on granted unexercised option shares was $137,812 at December 31, 2015, compared to $112,764 at December 31, 2014. That cost is expected to be recognized over the next 4 years. There were no income tax benefits available for recognition during the years ended December 31, 2015 or 2014, as there were no stock options exercised during either of the respective periods.


Total unrecognized compensation cost on nonvested restricted stock awards granted under the 2008 Plan was $60,522 at December 31, 2015, compared to $89,574 at December 31, 2014. That cost is expected to be recognized over the next 2 years.


The following table reflects the impact of stock based compensation by increasing or reducing income before income taxes, net income, basic earnings per share and diluted earnings per share for the years ended December 31, 2015 and 2014:


   

Year Ended December 31,

 
   

2015

   

2014

 

Increased (reduced) net income before income taxes

  $ (68,705 )   $ (59,798 )

Increased (reduced) net income

    (68,705 )     (59,798 )

Reduced basic earnings per share

    0.01       0.00  

Reduced diluted earnings per share

    0.01       0.00