Stockholders' Equity

12 Months Ended

Dec. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Shareholders Equity and Share-based Payments [Text Block]

7. Stockholders’ Equity

Stock Options

2009 Incentive Stock Plan

The Company sponsors an incentive stock plan (the “2009 Plan”) allowing for a maximum of 1,000,000 shares to be granted in the form of either incentive stock options, non-qualified stock options, restricted stock awards, or unrestricted stock awards. Employees, directors, advisors, and consultants of the Company are eligible to receive the grants. The plan has been approved by the stockholders of the Company. The Compensation Committee of the Board of Directors administers the plan.

The 2009 Plan provides that options may be issued under the plan at an option price not less than fair market value of the stock at the time the option is granted. Under the 2009 Plan, restricted stock of the Company may be granted at no cost to the grantee. The grantees are entitled to dividends and voting rights for their respective shares. Restrictions limit the sale or transfer of these shares during the requisite service period. In addition, the committee may grant or sell unrestricted stock at a purchase price to be determined by the committee.

Vesting terms and restrictions, if applicable, under the plan, are set by the committee and will be 10 years or less. The 2009 Plan expires in 2019.

In January 2012, the Company issued stock option grants totaling 775,000 shares. These option grants contain exercise prices ranging from $1.20 to $1.32 per share with a five-year term. One half of the options granted have time vesting provisions ranging from one to 4.8 years while the remainder have vesting provisions that are contingent upon the Company achieving certain financial performance measurements. The aggregate estimated compensation cost related to the time vesting stock option grant is $172,000 recognized on a straight-line basis over the weighted requisite service periods. The aggregate estimated compensation cost related to the performance based options is $185,000; however, recognition is contingent upon performance vesting. The grant-date fair value of the options range from $0.42 to $0.48 per share and was determined using the Black-Scholes option pricing model using an average risk-free rate of 0.82%, an average dividend yield of 1.60%, and an average volatility of 49.31%.

In March 2013, the Company issued performance-based stock option grants totaling 230,000 shares. These option grants have an exercise price of $1.17 per share with a five-year term. The options’ vesting provisions are contingent upon the Company achieving certain financial performance measurements. The aggregate estimated compensation cost related to the performance based options is $110,400; however, recognition is contingent upon performance vesting. The grant-date fair value of the options was $0.48 per share and was determined using a binomial option pricing model using an average risk-free rate of 0.90%, an average dividend yield of 1.60%, and an average volatility of 52.7%.

2003 Stock Option Plan

The Company sponsors a stock option plan (the “2003 Plan”) allowing for incentive stock options and non-qualified stock options to be granted to employees and eligible directors. The plan has been approved by the stockholders of the Company. The 2003 Plan provided that a maximum of 1,000,000 shares may be issued under the plan at an option price not less than the fair market value of the stock at the time the option is granted. The options vest pursuant to the schedule set forth for the plan. With stockholder approval of the 2009 Incentive Stock Plan, the Board of Directors resolved not to award any additional stock option grants under the 2003 Plan.

Compensation cost for all of the stock option plans was approximately $36,772 ($35,000 net of tax) and $96,800 ($74,000 net of tax) for the years ended December 31, 2013 and 2012, respectively, and has been recorded in selling, general, and administrative expense. As of December 31, 2013, the total remaining unrecognized compensation cost related to the non-vested portion of time vesting stock options totaled $98,000 ($95,000 net of tax), which will be amortized over the weighted remaining requisite service period of three years.

A summary of the Company’s stock option activity and related information for the years ended December 31 follows:

	2013			2012
		Weighted			Weighted
		Avg.			Avg.
		Exercise			Exercise
	Options	Price		Options	Price
Outstanding beginning of the year	1,313,500	$	3.95	739,500	$	8.29
Granted
Price = Fair Value	230,000		1.17	639,250		1.20
Price > Fair Value	-			135,750		1.32
Exercised	-			-
Expired and forfeited	(78,500)		5.57	(201,000)		9.40
Outstanding at end of year	1,465,000	$	3.42	1,313,500	$	3.95
Exercisable at end of year	555,500	$	7.05	542,375	$	7.79

	As of December 31, 2013
	Options Outstanding				Options Exercisable
Range of	Number	Weighted Avg.	Weighted Avg.		Number	Weighted Avg.	Weighted Avg.
Exercise Prices	Outstanding	Remaining Life	Exercise Price		Exercisable	Remaining Life	Exercise Price
$1.17	230,000	4.17	$	1.17	-	-	$	-
$1.20 - $1.32	755,000	3.00		1.22	75,500	3.00		1.23
$7.92	450,000	1.00		7.92	450,000	1.00		7.92
$8.68	30,000	1.79		8.68	30,000	1.79		8.68
$1.17 - $8.68	1,465,000	2.55	$	3.42	555,500	1.31	$	7.05

The aggregate intrinsic value of stock options outstanding and currently exercisable at December 31, 2013 was $119,000. Intrinsic value for stock options is calculated based on the exercise price of the underlying awards as compared to the quoted price of the Company’s common stock as of the reporting date.

For the years ended December 31, 2013 and 2012, no stock options were exercised.

Distributor Stock Purchase Plan

In July 2009, the Company established a Distributor Stock Purchase Plan (2009 Plan) which replaced a similar plan which had expired. The 2009 Plan commenced in August 2009. Since inception, a total of 57,071 warrants have been issued under the 2009 Plan.

The plan allows distributors who have reached the “Ambassador” status the opportunity to allocate up to 10% of their monthly compensation into the plan to be used to purchase the Company’s common stock at the current market value. The plan also states that at the end of each year, the Company will grant warrants to purchase additional shares of the Company’s common stock based on the number of shares purchased by the distributors under the plan during the year. The warrant exercise price will equal the market price for the Company’s common stock at the date of issuance. The warrants issued shall be in the amount of 25% of the total shares purchased under the plan during the year and the warrants are fully vested upon grant.

The Company records expense under the fair value method for warrants granted to distributors. Total expense recorded for these warrants was $4,973 and $5,665 in 2013 and 2012, respectively.

The fair value of the warrants was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:

	Year ended December 31
	2013		2012
Expected warrant life (years)	3.0		3.0
Risk-free weighted average interest rate	0.78	%	0.37	%
Stock price volatility	62.8	%	46.4	%
Dividend yield	0.8	%	1.6	%

A summary of the Company’s warrant activity and related information for the years ended December 31 follows:

	2013			2012
		Weighted			Weighted
		Avg.			Avg.
		Exercise			Exercise
	Warrants	Price		Warrants	Price
Outstanding beginning of the year	41,827	$	1.49	31,565	$	1.74
Granted	12,065		2.81	13,441		1.31
Exercised	(7,789)		1.76	-
Expired	(8,116)		1.94	(3,179)		3.28
Outstanding at end of year	37,987	$	1.76	41,827	$	1.49
Exercisable at end of year	37,987			41,827

	As of December 31, 2013
	Warrants Outstanding				Warrants Exercisable
Range of	Number	Weighted Avg.	Weighted  Avg.		Number	Weighted Avg.
Exercise Prices	Outstanding	Remaining Life	Exercise  Price		Exercisable	Exercise Price
$ 1.23	14,154	1.00	$	1.23	14,154	$	1.23
$ 1.31	11,768	2.00		1.31	11,768		1.31
$ 2.81	12,065	3.00		2.81	12,065		2.81
$1.23 - $2.81	37,987	1.95	$	1.76	37,987	$	1.76

The intrinsic value for stock warrants outstanding at December 31, 2013 was $40,000.

A summary of the total intrinsic value, actual tax benefit realized, and cash received for stock warrants exercised for the years ended December 31 follows:

	Year ended December 31
	2013		2012
Stock Warrants Exercised:
Intrinsic value	$	9,548	$	-
Actual tax benefit realized		2,045		-
Cash received		13,668		-