8. STOCK OPTIONS

Stock based compensation expense is recognized using the fair-value method for all awards. During the nine months ended September 30, 2015 the Company granted options to purchase 3,000 shares of the Company’s common stock to one director. The exercise price of the option is equal to $12.75 per share, the market price of the stock on the date of grant and the option expires on August 25, 2016. The Company determined the fair value of its option awards using the Black-Scholes option pricing model. The following assumptions were used to value the options granted during the nine months ended September 30, 2015: 1.6 year expected life; expected volatility of approximately 37%; risk-free of .17% and annual dividend yield of 4%. The expected life for options granted during the period represents the period of time that options are to be outstanding based on the expiration date of the Plan. Expected volatilities are based upon historical volatility of the Company’s stock over a period equal to the 1.6 year expected life.

The weighted average fair value for options granted during the nine months ended September 30, 2015 was $12.04 per share. For the nine months ended September 30, 2015 the Company recorded approximately $6,000 in non-employee stock option expense relating to the options granted in 2015.

The following table summarizes stock option activity during the three and nine months ended September 30, 2015.

			Weighted
			Average
	Options		Exercise
	Outstanding		Price
Outstanding at January 1, 2015		17,700	$	18.35
Granted		3,000	$	12.75
Outstanding at September 30, 2015		20,700	$	17.54

The following table summarizes information concerning outstanding and exercisable options as of September 30, 2015:

		Number Outstanding		Weighted Average
Strike Price		and exercisable		Strike Price
$	12.75		3,000	$	12.75
$	17.84		9,500	$	17.84
$	18.89		7,500	$	18.89
$	19.50		700	$	19.50
			20,700	$	17.54

As of September 30, 2015 the options outstanding and exercisable had no intrinsic value.