8. Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Notes to Financial Statements

8. Stockholders' Equity

Note 8 – Stockholders’ Equity

Dividend Declared

Dividends declared and paid on Common Stock were $290,664 and $153,637 for the three months ended March 31, 2014 and 2013, respectively. The Company’s Board of Directors approved a quarterly dividend on May 13, 2014 of $.04 per share payable in cash on June 13, 2014 to stockholders of record as of May 30, 2014 (see Note 12).

Stock Options

Pursuant to the Company’s 2005 Equity Participation Plan (the “2005 Plan”), which provides for the issuance of incentive stock options, non-statutory stock options and restricted stock, a maximum of 700,000 shares of Common Stock are permitted to be issued pursuant to options granted and restricted stock issued.  Incentive stock options granted under the 2005 Plan expire no later than ten years from date of grant (except no later than five years for a grant to a 10% stockholder). The Board of Directors or the Stock Option Committee determines the expiration date with respect to non-statutory options, and the vesting provisions for restricted stock, granted under the 2005 Plan.

The results of operations for the three months ended March 31, 2014 and 2013 include stock-based compensation expense totaling approximately $13,000 and $9,000, respectively. Stock-based compensation expense related to stock options is net of estimated forfeitures of 20% and 21% for the three months ended March 31, 2014 and 2013, respectively. Such amounts have been included in the condensed consolidated statements of income and comprehensive income within other operating expenses.

Stock-based compensation expense in 2014 and 2013 is the grant date estimated fair value of options amortized on a straight-line basis over the requisite service period for the entire portion of the award. No stock options were granted during the three months ended March 31, 2014 and 2013.

A summary of option activity under the Company’s 2005 Plan for the three months ended March 31, 2014 is as follows:

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2014		321,365	$	3.36		2.26	$	1,257,936
Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Forfeited		-	$	-		-	$	-
Outstanding at March 31, 2014		321,365	$	3.36		2.01	$	1,161,527
Vested and Exercisable at March 31, 2014		244,490	$	2.77		1.25	$	1,027,464

The aggregate intrinsic value of options outstanding and options exercisable at March 31, 2014 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $6.97 closing price of the Company’s Common Stock on March 31, 2014.

Participants in the 2005 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised (“Net Exercise”). No options were exercised during the three months ended March 31, 2014 and 2013.

As of March 31, 2014 and December 31, 2013, the fair value of unamortized compensation cost related to unvested stock option awards was approximately $58,000 and $71,000, respectively. Unamortized compensation cost as of March 31, 2014 is expected to be recognized over a remaining weighted-average vesting period of 1.38 years.