Note 13 - Stock Option Plans

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

13. STOCK OPTION PLANS

We instituted the

2003

Incentive Stock Plan (the

“2003

Plan”) in

March

2003.

The

2003

Plan authorized the issuance of up to

450,000

options to purchase shares of common stock to officers and key employees, with vesting of such options occurring equally over a

3

-year time period. In

2013,

the

2003

Plan expired with

197,500

options ungranted. In

June

2015,

shareholders approved the

2015

Incentive Stock Plan (the

“2015

Plan”) which authorizes the issuance of up to

750,000

options to purchase shares of common stock to employees and key consultant and advisors. In the year ended

December

31,

2016,

30,000

options were granted to a new officer of the company under the

2015

Plan. No grants were made in

2015

under the

2015

Plan. In

August

2000,

we instituted a Non-Employee Directors’ Stock Option Plan (the “Directors Plan”) that authorized the issuance of up to

200,000

shares of common stock to non-employee directors. Upon adoption of the Directors Plan, each non-employee director was granted an option to acquire

5,000

shares. At each Annual Meeting, each director receives a grant of

4,000

options, which vest in

50%

increments on the

first

and

second

anniversary. The Directors Plan expired in

2011,

with

60,000

options ungranted. The shareholders approved a new plan, the

2011

Non-Employee Directors Stock Plan (the

“2011

Directors Plan”), in

May

2011,

with essentially the same terms and conditions as the Directors Plan. Stock options under all plans are granted at an exercise price equal to fair value on the date of grant and vest over

2

-

3

years. As of

December

31,

2016,

a total of

1,285,500

options under all plans have been granted,

740,320

have been exercised,

240,680

have been cancelled,

256,500

are fully vested and exercisable and

48,000

are not vested. All options expire

ten

years from their respective dates of grant.

As of

December

31,

2016,

there was

$103,000

unrecognized compensation cost related to stock options granted under the plans, which is expected to be a recognized over a weighted-average period of

2.8

years.

Stock option activity during the years ended

December

31,

2016

and

2015

was as follows:

	2016				2015
Options outstanding at January 1			274,500				274,500
Options cancelled			0				(8,000	)
Options exercised			(12,000	)			(4,000	)
Options granted			42,000				12,000
Options outstanding at December 31			304,500				274,500
Options available for grant at December 31			834,000				876,000
Options exercisable at December 31			256,500				254,500
Exercise price ranges per share:
Granted	$3.50	-	$3.89			$2.97
Exercised	$0.69	-	$1.66			$2.08
Outstanding	$0.69	-	$3.89		$0.69	-	$3.84
Weighted average exercise price per share:
Granted	$		3.78		$		2.97
Exercised	$		1.18		$		2.08
Outstanding at December 31	$		2.06		$		1.76
Exercisable at December 31	$		1.76		$		1.72

The following tables summarize information about the stock options outstanding under the company’s option plans as of

December

31,

2016.

Options Outstanding:
Range of  Exercise Price			Number Outstanding		Wgt. Avg. Contractual Life Remaining (in years)	Wgt. Avg. Exercise Price		Aggregate Intrinsic Value
$0.69	-	$1.72		226,500	4.8	$	1.54	$	593,970
$2.97	-	$3.89		78,000	6.8	$	3.59	$	68,880
$0.69	-	$3.89		304,500	5.3	$	2.06	$	662,850

Options Exercisable:
Range of  Exercise Price			Number Exercisable		Wgt. Avg. Contractual Life Remaining (in years)	Wgt. Avg. Exercise Price		Aggregate Intrinsic Value
$0.69	-	$1.72		226,500	4.8	$	1.54	$	566,970
$2.97	-	$3.84		30,000	2.4	$	3.45	$	68,880
$0.69	-	$3,84		256,500	4.5	$	1.76	$	635,850

Aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the company’s closing stock price on the last trading day of the year ended

December

31,

2016

and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on

December

31,

2016.

The amount of aggregate intrinsic value will change based on the fair value of the company’s common stock.