Compensation Related Costs, Share Based Payments

9 Months Ended

Sep. 30, 2015

Compensation Related Costs, Share Based Payments:

Disclosure of Compensation Related Costs, Share-based Payments

Share-Based Awards

The Company estimates the fair value of stock options granted using the Black-Scholes-Merton (Black-Scholes) option-pricing formula. The Company’s expected term represents the period that the Company’s share-based awards are expected to be outstanding and was determined based on historical experience regarding similar awards, giving consideration to the contractual terms of the share-based awards and employee termination data.  Executive level employees who hold a majority of options outstanding, and non-executive level employees each have similar historical option exercise and termination behavior and thus were grouped for valuation purposes.  The Company’s expected volatility is based on the historical volatility of its traded common stock and places exclusive reliance on historical volatilities to estimate our stock volatility over the expected term of its awards.  The Company has historically not paid dividends to common stockholders and has no foreseeable plans to issue dividends.  The risk-free interest rate is based on the yield from the U.S. Treasury zero-coupon bonds with an equivalent term.

Under the Company’s stock option plans, option awards generally vest over a four-year period of continuous service and have a 10 year contractual term.  The fair value of each option is amortized on a straight-line basis over the option’s vesting period.

As of September 30, 2015, the total unrecognized compensation cost related to non-vested options amounted to $200,000, which is expected to be recognized over the options’ average remaining vesting period of 2.56 years.  No income tax benefit was realized by the Company in the nine months ended September 30, 2015 or 2014 related to stock options.

There were 136,000 and 110,000 options granted during the first nine months of 2015 and 2014, respectively.  Activity under the Company’s stock option plans for the nine months ended September 30, 2015 is as follows:

	OPTIONS OUTSTANDING
	Shares			Weighted Average Exercise Price Per Share
Balance, December 31, 2014		689,000		$	3.77
Granted		136,000			1.36
Canceled		(43,000	)		3.04
Expired		(54,000	)		7.57
Balance, September 30, 2015		728,000		$	3.06

The following table summarizes outstanding options under the Company’s stock option plans as of September 30, 2015:

	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding Options		728,000	$	3.06		5.77	$	208,000
Vested and Exercisable		467,000	$	3.62		4.12	$	26,000
Options Vested and Expected to Vest		652,000	$	3.20		5.39	$	143,000