8. Stockholders' Equity

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

8. Stockholders' Equity

Note 8 – Stockholders’ Equity

Dividend Declared

Dividends declared and paid on Common Stock were $582,439 and $307,274 for the six months ended June 30, 2014 and 2013, respectively. Dividends declared and paid on Common Stock were $291,776 and $153,637 for the three months ended June 30, 2014 and 2013, respectively. The Company’s Board of Directors approved a quarterly dividend on August 12, 2014 of $.05 per share payable in cash on September 15, 2014 to stockholders of record as of August 29, 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 six months ended June 30, 2014 and 2013 include stock-based compensation expense totaling approximately $27,000 and $13,000, respectively. The results of operations for the three months ended June 30, 2014 and 2013 include stock-based compensation expense totaling approximately $13,000 and $4,000, respectively. Stock-based compensation expense related to stock options is net of estimated forfeitures of 20% for the six months and three months ended June 30, 2014 and 21% for the six months and three months ended June 30, 2013. 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 six months ended June 30, 2014 and 2013.

A summary of option activity under the Company’s 2005 Plan for the six months ended June 30, 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		(58,865	)	$	2.45		-	$	248,179
Forfeited		-		$	-		-	$	-
Outstanding at June 30, 2014		262,500		$	3.56		2.04	$	816,650
Vested and Exercisable at June 30, 2014		185,625		$	2.87		1.17	$	705,650

The aggregate intrinsic value of options outstanding and options exercisable at June 30, 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 $6.67 closing price of the Company’s Common Stock on June 30, 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”). A total of 58,865 options were exercised during the six months ended June 30, 2014. No options were exercised during the six months ended June 30, 2013.

As of June 30, 2014, the fair value of unamortized compensation cost related to unvested stock option awards was approximately $45,000. Unamortized compensation cost as of June 30, 2014 is expected to be recognized over a remaining weighted-average vesting period of 1.32 years.