NOTE 4 – STOCK-BASED COMPENSATION

There were no options granted or issued during the three and six-month periods ended June 30, 2018.

The following is a summary of the changes in outstanding options during the six-month period ended June 30, 2018:

	Option Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding, January 1, 2018		418,233		$	5.17		3.8	$	1,343,442
Granted		—			—
Exercised		(184,480	)	$	3.99
Forfeited		—			—
Expired		—			—
Outstanding, June 30, 2018		233,753		$	6.10		5.9	$	617,693
Vested, June 30, 2018		144,753		$	5.49		3.8	$	470,843

	Option Shares		Weighted Average Grant- Date Fair Value
Non-vested options, January 1, 2018		89,000	$	4.41
Granted		—		—
Vested		—		—
Forfeited		—		—
Non-vested options, June 30, 2018		89,000	$	4.41

The number of shares of Common Stock available for issuance under the P&F Industries, Inc. 2012 Stock Incentive Plan (the “2012 Plan”) as of June 30, 2018 was 79,437. At June 30, 2018, there were 184,253 options outstanding issued under the 2012 Plan and 49,500 options outstanding issued under the 2002 Stock Incentive Plan.

Restricted Stock

The Company, in May 2018, granted 1,250 restricted shares of its Common Stock to each non-employee member of its Board of Directors, totaling 6,250 restricted shares. The Company determined that the fair value of these shares was $8.43 per share, which was the closing price of the Company’s Common Stock on the date of the grant. These shares cannot be traded earlier than the first anniversary of the grant date. The Company will ratably amortize the total non-cash compensation expense of approximately $53,000 in its selling, general and administrative expenses through May 2019.

The Company, in May 2017, granted 1,000 restricted shares of its common stock to each non-employee member of its Board of Directors, totaling 5,000 restricted shares. The Company determined that the fair value of these shares was $6.17 per share, which was the closing price of the Company’s Common Stock on the date of the grant. These shares could not have been traded earlier than the first anniversary of the grant date. The Company ratably amortized the total non-cash compensation expense of approximately $30,000 in its selling, general and administrative expenses.

Treasury Stock

On August 9, 2017, the Company’s Board of Directors authorized the Company to repurchase up to 100,000 shares of its common stock over a period of up to twelve months (the “Repurchase Program”). On August 24, 2017, the Company announced that, pursuant to the Repurchase Program, it had adopted a written trading plan in accordance with the guidelines specified under Rule 10b5-1 under the Securities Exchange Act of 1934. A plan under Rule 10b5-1 allows the Company to repurchase shares at times when it might otherwise be prevented from doing so by securities laws or because of self-imposed trading blackout periods. Repurchases made under the plan are subject to the SEC’s regulations, as well as certain price, market, volume, and timing constraints specified in the plan. Since repurchases under the plan are subject to certain constraints, there is no guarantee as to the exact number of shares that will be repurchased under the plan. Since the inception of the Repurchase Program through June 30 2018, the Company repurchased approximately 81,000 shares of its common stock at an aggregate cost of approximately $638,000. During the period January 1, 2018 through June 30, 2018, the Company repurchased 34,000 shares of its common stock at an aggregate cost of $280,000.

Additionally, in June 2018, the Company purchased 18,140 shares of its common stock in a privately negotiated transaction outside of the Repurchase Program pursuant to an additional authorization of the Company’s Board of Directors at a total cost of $150,000. The purchase price per share was equal to five percent below the average of the closing price of its common stock for the three days prior to the transaction.