Stock Compensation

12 Months Ended

Dec. 31, 2016

On September 19, 2008, the Board of Directors and Stockholders of the Company adopted the 2008 Stock Option Plan (the "2008 Plan"), which allows the Company to grant up to 500,000 options to employees, officers, directors and consultants to

purchase shares of the Company's Common Stock. Options granted under the plan may be either Incentive Stock Options or Non-Qualified Stock Options. Of the 68,133 stock options remaining un-exercised, 20,000 options are Non-Qualified options belonging to Rodney I. Smith. As a 10% shareholder, Mr. Rodney Smith can only receive Non-Qualified stock options. Incentive Stock Options may be granted only to employees of the Company, while Non-qualified options may be issued to non-employee directors, consultants, and others, as well as to employees of the Company. There were no grants of options during the years ended December 31, 2016 or 2015. There have not been any grants under the 2008 Stock Option Plan since its inception. The Board of Directors replaced the 2008 Stock Option Plan with the 2016 Equity Incentive Plan described below.

Options generally vest over a three year period. The Company recognizes stock option expense over the vesting period. The Company did not record any stock option expense for the years 2016 and 2015 as all of the options were fully vested.

There were 62,800 options exercised for the year ending December 31, 2016 and there were 38,000 options exercised in 2015. The intrinsic value of outstanding and exercisable options at December 31, 2016 was approximately $45,000.

The following tables summarize activity under the 2004 Stock Option Plan of the Company and the stock options outstanding at December 31, 2016:



	Weighted Average Exercise Price			Options Outstanding		Vested and Exercisable
Balance, December 31, 2014	$	1.96		315,233		315,233
Granted	—			—		—
Forfeited	(2.52		)	(86,300	)	(86,300	)
Exercised	(1.85		)	(38,000	)	(38,000	)
Vested	—			—		—

Balance, December 31, 2015	1.96			190,933		190,933
Granted	—			—		—
Forfeited	(2.21		)	(60,000	)	(60,000	)
Exercised	(1.31		)	(62,800	)	(62,800	)
Vested	—			—		—

Balance, December 31, 2016	$	1.79		68,133		68,133

On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan, which allows the Company to grant up to 400,000 shares of restricted common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. There were 103,000 shares of restricted stock issued during the year ended December 31, 2016. The shares have a three year vesting period which vests ratably, on an annual basis, over a three year period. The total intrinsic value of the outstanding shares of restricted stock is $1,588,950.

The fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of date of grant. Restricted stock activity during the years ended December 31, 2016 and 2015, respectively, are as follows:



	December 31, 2016
	Number of Shares	Weighted Average Grant Date Fair Value per Share
Non-vested, beginning of period	—	—
Granted	103,000	4.95
Vested	—	—
Forfeited	—	—

Non-vested, end of period	103,000	4.95

Awards are being amortized to expense ratably, on an annual basis, over a three year vesting term. There was no expense for the year ended December 31, 2016, as the grants were made in December 2016. The total unrecognized compensation cost related to the non-vested restricted stock is $509,850 as of December 31, 2016.