Note 3 - Stock-Based Compensation

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

3. STOCK-BASED COMPENSATION

We have one stock option plan which provides for annual stock option grants to non-employee directors with an exercise price equal to the fair market value of the shares at the date of grant. Under this plan, 12,000 options were awarded to directors during the six months ended June 30, 2013, while no options were awarded during the six months ended June 30, 2014. The options vest and become exercisable six months from the option grant date. Options outstanding and exercisable were granted at a stock option price which was not less than the fair market value of our common stock on the date the option was granted and no option has a term in excess of ten years. We recognized share based compensation expense of $5,843 and $11,686 for the quarter and six months ended June 30, 2013, respectively, as a component of operating expenses. No share based compensation expense pertaining to stock options grants was recognized in 2014.

During the six months ended June 30, 2014 and 2013, the stock option activity under our stock option plans was as follows:

	Weighted Average Exercise Price		# of shares			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding, January 1, 2013	$	4.53		121,600
Granted		6.87		12,000
Cancelled		-		-
Exercised		4.24		(22,000	)
Outstanding, June 30, 2013	$	4.84		111,600			5.72	$	167,186
Exercisable, June 30, 2013	$	4.60		99,600			5.24	$	155,500
Outstanding, January 1, 2014	$	5.04		84,600
Granted		-		-
Cancelled		-		-
Exercised		-		-
Outstanding, June 30, 2014	$	5.04		84,600			6.47	$	104,656
Exercisable, June 30, 2014	$	5.04		84,600			6.47	$	104,656

Other information pertaining to option activity during the six-month periods ended June 30, 2014 and 2013 are as follows:

	June 30, 2014	June 30, 2013
Weighted average grant-date fair value of stock options granted	N/A	$11,686
Total fair value of stock options vested	N/A	N/A
Total intrinsic value of stock options exercised	N/A	$51,260

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

	2014	2013
Volatility	N/A	19.1%
Expected option life (in years)	N/A	3
Interest rate (risk free)	N/A	0.80%
Dividends	None	None

There was no unrecognized compensation cost pertaining to stock option grants as of June 30, 2014 and 2013.

We have a restricted stock plan that was adopted by our Board of Directors in January 2013 and approved by our stockholders in June 2013. The plan reserves up to 300,000 shares of our common stock for restricted stock awards to our executive officers, non-employee directors and other key employees. Awards granted under the plan may be stock awards or performance awards, and may be subject to a graded vesting schedule with a minimum vesting period of four years.

In February 2014, our Chief Executive Officer, Chief Financial Officer and Senior Vice President were awarded restricted stock grants consisting of 9,375 shares each. In addition, four of our independent directors were awarded restricted stock grants consisting of 1,619 shares each. The grants will vest in equal annual amounts over a four-year period. The fair value of nonvested restricted common stock awards is the market value of our common stock on the date of grant. Compensation costs for these awards will be recognized on a straight-line basis over the four year vesting period.

A summary of the activity for nonvested restricted common stock awards as of June 30, 2014 is presented below:

	Shares		Grant Fair Value
Balance, January 1, 2014		-		-
Granted		34,601	$	8.96
Forfeited		-		-
Vested		-		-
Balance, June 30, 2014		34,601	$	8.96

Pertaining to restricted stock awards, we recognized share based compensation expense of $29,065 during the quarter ended June 30, 2014 as a component of operating expenses. As of June 30, 2014, there was unrecognized compensation cost related to non-vested restricted stock awards of $280,960 to be recognized in equal amounts over a period of four years.