Note 8. Stock Options	3 Months Ended
Mar. 31, 2014
Notes
Note 8. Stock Options	Note 8. Stock Options The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes valuation model. The Company uses historical data among other factors to estimate the expected price volatility, the expected option term and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of grant for the expected term of the option. In addition to its first stock option plan approved in 1993, the Company has a stock option plan approved in May 2004, amended in June 2008 and again in August 2009 (the “2004 Plan”), for directors and key employees under which 2,500,000 shares of common stock may be issued. The Company also has a stock option plan approved in July 2010 (the “2010 Plan”), for directors and key employees under which 5,000,000 shares of common stock may be issued. Unless otherwise stated in the stock option agreement, options are 20% vested on the date of grant, with the balance vesting 20% per year over the next four years, except for directors whose options vest six months from the date of grant. Options were granted in 2013 and 2014 from both the 2004 and 2010 Plans at the approximate market value of the stock at date of grant, as defined in each of the plans. Pursuant to their respective five-year employment agreements, in March 2010 a total of 890,000 stock options were granted to the three executive officers of the Company. Twenty percent of the options vested immediately on the date of grant, with the balance of the options to vest in equal annual installments over the next four years on the anniversary date of the original grant. These options were granted pursuant to the 2004 Plan, are for a period of ten years and are intended as Incentive Stock Options. To reflect the value of the stock options granted for the employment services provided, the Company was taking a charge to earnings totaling approximately $2,358,000 through March 2014. For the three months ended March 31, 2014 and 2013 this charge was $-0- and $117,900, respectively. In May 2013, in connection and effective with their respective Amendment to Employment Agreement, the Board approved both a return of previously granted options and a new grant of stock options to Messrs. Kasmoch, Bohmer and McHugh, which are immediately exercisable for shares of the Company's common stock. The grants were made pursuant to both the 2004 Plan and the 2010 Plan. All grants awarded were priced at $1.25, in accordance with both the 2004 Plan and 2010 Plan. Future grants required under each officer’s Amendment will be priced at the time of grant. Additional information is available in the Company’s Form 10-K filed June 2, 2014, under Item 11, “Executive Compensation”. In November 2012, the Company granted stock options totaling 20,000 options to four directors. All of the options granted were for a period of ten years, were pursuant to the 2010 Plan, are exercisable at $0.88 and did not vest until May 2013. To reflect the value of the stock options granted, the Company recorded a charge to earnings totaling approximately $17,200 ratably over the subsequent six-month period. For the three months ended March 31, 2013, the Company recorded an expense of approximately $8,600. In December 2013, the Company granted stock options totaling 25,000 options to five directors. All of the options granted are for a period of ten years, are pursuant to the 2010 Plan, are exercisable at $1.52 and did not vest until June 2014. To reflect the value of the stock options granted, the Company is taking a charge to earnings totaling approximately $36,700 ratably over the subsequent six-month period. For the three months ended March 31, 2014, the Company recorded an expense of approximately $18,400.

Note 8. Stock Options

3 Months Ended

Mar. 31, 2014

Note 8. Stock Options

The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes valuation model. The Company uses historical data among other factors to estimate the expected price volatility, the expected option term and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of grant for the expected term of the option.

In addition to its first stock option plan approved in 1993, the Company has a stock option plan approved in May 2004, amended in June 2008 and again in August 2009 (the “2004 Plan”), for directors and key employees under which 2,500,000 shares of common stock may be issued. The Company also has a stock option plan approved in July 2010 (the “2010 Plan”), for directors and key employees under which 5,000,000 shares of common stock may be issued. Unless otherwise stated in the stock option agreement, options are 20% vested on the date of grant, with the balance vesting 20% per year over the next four years, except for directors whose options vest six months from the date of grant. Options were granted in 2013 and 2014 from both the 2004 and 2010 Plans at the approximate market value of the stock at date of grant, as defined in each of the plans.

Pursuant to their respective five-year employment agreements, in March 2010 a total of 890,000 stock options were granted to the three executive officers of the Company. Twenty percent of the options vested immediately on the date of grant, with the balance of the options to vest in equal annual installments over the next four years on the anniversary date of the original grant. These options were granted pursuant to the 2004 Plan, are for a period of ten years and are intended as Incentive Stock Options. To reflect the value of the stock options granted for the employment services provided, the Company was taking a charge to earnings totaling approximately $2,358,000 through March 2014. For the three months ended March 31, 2014 and 2013 this charge was $-0- and $117,900, respectively.

In May 2013, in connection and effective with their respective Amendment to Employment Agreement, the Board approved both a return of previously granted options and a new grant of stock options to Messrs. Kasmoch, Bohmer and McHugh, which are immediately exercisable for shares of the Company's common stock. The grants were made pursuant to both the 2004 Plan and the 2010 Plan. All grants awarded were priced at $1.25, in accordance with both the 2004 Plan and 2010 Plan. Future grants required under each officer’s Amendment will be priced at the time of grant. Additional information is available in the Company’s Form 10-K filed June 2, 2014, under Item 11, “Executive Compensation”.

In November 2012, the Company granted stock options totaling 20,000 options to four directors. All of the options granted were for a period of ten years, were pursuant to the 2010 Plan, are exercisable at $0.88 and did not vest until May 2013. To reflect the value of the stock options granted, the Company recorded a charge to earnings totaling approximately $17,200 ratably over the subsequent six-month period. For the three months ended March 31, 2013, the Company recorded an expense of approximately $8,600.

In December 2013, the Company granted stock options totaling 25,000 options to five directors. All of the options granted are for a period of ten years, are pursuant to the 2010 Plan, are exercisable at $1.52 and did not vest until June 2014. To reflect the value of the stock options granted, the Company is taking a charge to earnings totaling approximately $36,700 ratably over the subsequent six-month period. For the three months ended March 31, 2014, the Company recorded an expense of approximately $18,400.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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