8. Stockholders' Equity

6 Months Ended

Jun. 30, 2015

Notes to Financial Statements

8. Stockholders' Equity

Dividend Declared

Dividends declared and paid on Common Stock were $732,190 and $582,439 for the six months ended June 30, 2015 and 2014, respectively. Dividends declared and paid on Common Stock were $366,685 and $291,776 for the three months ended June 30, 2015 and 2014, respectively. The Company’s Board of Directors approved a quarterly dividend on August 11, 2015 of $.05 per share payable in cash on September 15, 2015 to stockholders of record as of September 1, 2015 (see Note 13).

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 the Company’s Common Stock are permitted to be issued pursuant to options granted and restricted stock issued. Effective August 12, 2014, the Company adopted the 2014 Equity Participation Plan (the “2014 Plan”) pursuant to which, subject to stockholder approval on or before August 12, 2015, a maximum of 700,000 shares of Common Stock of the Company are authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and stock bonuses. The stockholders approved the 2014 Plan on August 11, 2015. Incentive stock options granted under the 2014 Plan and 2005 Plan expire no later than ten years from the 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 stock options and the vesting provisions for restricted stock granted under the 2014 Plan and 2005 Plan.

The results of operations for the six months ended June 30, 2015 and 2014 include stock-based stock option compensation expense totaling approximately $78,000 and $27,000, respectively. The results of operations for the three months ended June 30, 2015 and 2014 include stock-based stock option compensation expense totaling approximately $39,000 and $13,000, respectively. Stock-based compensation expense related to stock options is net of estimated forfeitures of 17% for the six months and three months ended June 30, 2015 and 20% for the six months and three months ended June 30, 2014. Such amounts have been included in the condensed consolidated statements of income and comprehensive income within other operating expenses.

Stock-based compensation expense in 2015 and 2014 is the estimated fair value of options granted 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, 2015 and 2014.

A summary of option activity under the Company’s 2005 Plan for the six months ended June 30, 2015 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, 2015	421,250	$               5.16	3.13	$    1,258,013
Granted	-	$                  -	-	$                   -
Exercised	(120,000)	$               2.50	-	$       650,400
Forfeited	-	$                  -	-	$                   -
Outstanding at June 30, 2015 (1)	301,250	$               6.22	3.79	$       414,325
Vested and Exercisable at June 30, 2015	112,500	$               6.06	3.75	$       173,038

(1) On August 12, 2014, an additional 50,000 options were granted under the 2014 Plan, which is subject to stockholder approval. The stockholders approved the 2014 Plan on August 11, 2015.

The aggregate intrinsic value of options outstanding and options exercisable at June 30, 2015 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 $7.60 closing price of the Company’s Common Stock on June 30, 2015. The total intrinsic value of options exercised in the six months ended June 30, 2015 was $650,400, determined as of the date of exercise.

Participants in the 2014 Plan and 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”). All of the 120,000 options exercised during the six months ended June 30, 2015 were Net Exercises. A total of 58,865 options were exercised during the six months ended June 30, 2014.

As of June 30, 2015, the fair value of unamortized compensation cost related to unvested stock option awards was approximately $84,000. Unamortized compensation cost as of June 30, 2015 is expected to be recognized over a remaining weighted-average vesting period of .94 years.

As of June 30, 2015, there were 1,135 shares reserved for grants under the 2005 Plan and 650,000 shares reserved for grants under the 2014 Plan.