All stock option awards are amortized based on their graded vesting over the requisite service period of the awards. Compensation costs are recognized over the requisite service period using the accelerated method and included in selling expenses and general and administrative expenses, based upon the department to which the associated employee or non-employee resides.

 

 

The Company has various stock option and stock-based incentive plans and agreements whereby stock options, restricted stock awards (“RSUs”), and stock appreciation rights (“SARs”) were made available to certain employees, directors and others approved by the Company’s Board of Directors (the “Board) or Compensation Committee. Stock options are granted at, or above, fair market value and generally expire in to years from the grant date. RSUs are granted at the fair market value on the date of grant and generally become exercisable over a period of up to years. In new RSUs were granted that become exercisable over a period of years based on market conditions. SARs are granted at the fair market value on the date of grant and generally become exercisable over a period of up to year. Awards typically vest and are issued only if the participants remain employed by the Company through the vesting date. Stock options, RSUs and SARs are issued from shares under of the Company’s plans described below. Grants be made in the form of stock options, restricted stock units or unrestricted common stock.

 

In the Company adopted the Stock Incentive Plan (the “Plan”) providing for the issuance of a maximum of million shares of common stock in connection with the grant of stock-based or stock-denominated awards. On the Company’s stockholders approved the reservation of an additional million shares to be issued under the Plan. As of the Plan is longer in effect as all the stock options that were previously granted and remained outstanding were issued in the quarter of

 

On the Company’s Board adopted the Amended and Restated Stock Incentive Plan (the Plan”). The Plan was approved by the Company’s shareholders at the Annual Meeting and became effective as of the date it was adopted by the Board of Directors. The Plan replaced our Stock Incentive Plan (the “Plan”) and provided for the issuance of a maximum of million shares of common stock in connection with the grant of stock-based or stock-denominated awards. On the Company’s stockholders approved the reservation of an additional million shares to be issued under the Plan. As of a total of less than million common shares remained available for future grant under the Plan.

 

The Company granted stock options under the Plan during the years ended and respectively.

 

During the years ended and shares of common stock were issued to employees and directors as their restricted stock awards vested or stock options were exercised. Under the terms of the Company’s stock plans, at the election of each employee, the Company can authorize a net settlement of distributable shares to employees after satisfaction of an individual employees' tax withholding obligations. For the years ended and respectively, the Company received less than million shares from employees for tax withholding obligations.

 

 

As of approximately million SARs were vested and outstanding and could be settled in cash or units of the Company’s common stock as follows:

 

() million SARs vested and became exercisable during the period beginning on and ending on if the shares have a closing public market price on the New York Stock Exchange of or more for any period of () consecutive trading days during the period beginning on and ending on and

 

() million SARs vested and became exercisable during the period beginning on and ending on if the Compensation Committee certifies that the Company achieved percent () or more of target on both elements of the Company’s corporate objectives under the Employee Incentive Compensation Plan.

 

As of million of expense was recorded for outstanding SARs.

 

The following table summarizes SARs share activity for the years ended

 

						Weighted
						average
						grant
		Number of				date fair				Aggregate
		shares				value				fair value
Unvested at December 31, 2016			-			$	-
Granted			200,000				1.26			$	60,000
Vested			-				-
Vested shares forgone to satisfy minimum statutory withholding			-				-
Forfeitures			-				-
Unvested at December 31, 2017			200,000				1.26			$	60,000
Granted			-				-
Vested (1)			(200,000	)			1.26			$	288,000
Vested shares forgone to satisfy minimum statutory withholding			-				-
Forfeitures			-				-
Unvested at December 31, 2018			-			$	-			$	-

 

 

 

 

During the year ended the Company granted million restricted shares. During the year ended the Company did grant any restricted shares. Restricted shares entitle the holder to receive, upon meeting certain vesting criteria, a specified number of shares of the Company’s common stock. Stock-based compensation cost of restricted shares is measured by the market value of the Company’s common stock on the date of grant. Compensation cost associated with certain restricted share grants also takes into account market conditions in its measurement.

 

The following table summarizes restricted share activity, excluding the Company’s employee stock purchase plan, for the years ended

 

						Weighted
						average
						grant
		Number of				date fair				Aggregate
		shares				value				fair value
Unvested at December 31, 2016			57,333			$	2.21
Granted			-				-
Vested			(15,730	)			0.88			$	83,003
Vested shares forgone to satisfy minimum statutory withholding			(20,811	)			2.80			$	51,304
Forfeitures			(8,333	)			2.60
Unvested at December 31, 2017			12,459				2.61
Granted			125,000				1.37
Vested			(4,116	)			2.60			$	13,749
Vested shares forgone to satisfy minimum statutory withholding			(2,134	)			2.60			$	4,695
Forfeitures			(1,626	)			2.60
Unvested at December 31, 2018			129,583			$	1.42

 

As of there was million of pre-tax total unrecognized compensation cost related to non-vested restricted shares, which will be adjusted for future forfeitures, if any. The Company expects to recognize such cost over the period ending in

 

In the Company received approval from stockholders to adopt an employee stock purchase plan ("ESPP") effective collectively the “Original ESPP”). Under the Original ESPP, shares of common stock were authorized for purchase by eligible employees at a discount through payroll deductions during the -month offering periods. Shares were purchased in whole numbers and generally would be the last day of the offering period. On the Company received approval from shareholders for an additional shares. employee purchase more than worth of fair market value shares in any calendar year. As allowed under the ESPP, a participant elect to withdraw from the plan, effective for the purchase period in progress at the time of the election with all accumulated payroll deductions returned to the participant at the time of withdrawal. As of there were shares remaining available for future issuance. The following table summarizes the activity relating to the Company’s ESPP program for the years ended

 

		2018				2017
Compensation expense		$	33,874			$	49,150
Shares of stock sold to employees			43,433				68,958
Weighted average fair value per ESPP award		$	2.45			$	2.21

 

The Company calculates the fair value of stock option awards using the Black-Scholes option pricing model, which incorporates various assumptions including volatility, expected term, risk-free interest rates and dividend yields. The expected volatility assumption is based on historical volatility of the Company’s common stock over the most recent period commensurate with the expected life of the stock option granted. The Company uses historical volatility because management believes such volatility is representative of prospective trends. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the stock option awarded. The Company determines expected lives as the average of the vesting period and the contractual period. Dividend yields have been a factor in determining fair value of stock options granted as the Company has never issued cash dividends and does anticipate issuing cash dividends in the future.

 

During the year ended the Company granted million stock options, of which million were issued to Board members, at exercise prices based on a preceding -day average price on the date of grant with a vesting period of months. During the year ended the Company granted million stock options, of which million were issued to Board members, at exercise prices based on a preceding -day average price on the date of grant with a vesting period of months. The following table details the various stock option and inducement stock option activity for the years ended

 

										Weighted-
										Average
		Number				Weighted-				Remaining				Aggregate
		of Authorized				Average Exercise				Contractual				Intrinsic
2007 Plan (Options)		Shares				Price				Term (in Years)				Value
Outstanding at December 31, 2016			488,332			$	2.31				0.25			$	118,899
Granted			-				-
Exercised			(25,037	)			1.51								86,900
Exercised shares forgone to satisfy minimum statutory withholding			(13,245	)			2.32
Cashless exercise			(71,718	)			2.32
Forfeited			(245,000	)			2.83
Outstanding at December 31, 2017			133,332			$	1.99							$	40,716
Granted			-				-
Exercised			(33,576	)			1.96								162,134
Exercised shares forgone to satisfy minimum statutory withholding			(14,255	)			1.96
Cashless exercise			(65,501	)			1.96
Forfeited			(20,000	)			1.93
Outstanding at December 31, 2018			-			$	-				-			$	-
Exercisable at December 31, 2018			-			$	-

 

 

										Weighted-
										Average
		Number				Weighted-				Remaining				Aggregate
		of Authorized				Average Exercise				Contractual				Intrinsic
2014 Plan (Options)		Shares				Price				Term (in Years)				Value
Outstanding at December 31, 2016			1,249,999			$	2.80				4.26			$	-
Granted			1,087,500			$	2.09				3.13
Exercised			-				-
Exercised shares forgone to satisfy minimum statutory withholding			-				-
Cashless exercise			-				-
Forfeited			(374,999	)			2.61
Outstanding at December 31, 2017			1,962,500			$	2.44				3.18			$	-
Exercisable at December 31, 2017			955,868			$	2.69
Granted			825,000				3.14				3.64
Exercised			(10,953	)			2.15								12,159
Exercised shares forgone to satisfy minimum statutory withholding			(5,134	)			2.15
Cashless exercise			(33,079	)			2.15
Forfeited			(514,167	)			2.62
Outstanding at December 31, 2018			2,224,167			$	2.67				3.01			$	1,719,584
Exercisable at December 31, 2018			1,101,910			$	2.52

 

										Weighted-
										Average
		Number				Weighted-				Remaining				Aggregate
Inducement		of Authorized				Average Exercise				Contractual				Intrinsic
Options		Shares ( 1 )				Price				Term (in Years)				Value
Outstanding at December 31, 2016			800,000			$	2.25				2.26			$	240,000
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			(800,000	)			-				-				-
Outstanding at December 31, 2017			-			$	-				-			$	-
Granted			125,000				2.55				5.42				111,250
Exercised			-				-				-				-
Forfeited			-				-				-				-
Outstanding at December 31, 2018			125,000			$	2.55				5.42			$	111,250
Exercisable at December 31, 2018			-			$	-

 

 

The following table summarizes information about stock options outstanding at

 

				Options Outstanding												Options Exercisable
2014 Plan (Options):
Range of Exercise Prices				Number of Shares Outstanding				Weighted-Average Remaining Contractual Life				Weighted-Average Exercise Price				Number of Shares Exercisable				Weighted- Average Exercise Price
$2.01	-	$3.00			1,519,167				2.48			$	2.41				1,040,243			$	2.48
$3.01	-	$4.00			705,000				3.39			$	3.22				61,667			$	3.18
Outstanding at December 31, 2018					2,224,167				3.01			$	2.67				1,101,910			$	2.52

 

The following is the average fair value per share estimated on the date of grant and the assumptions used for options granted during the years ended

 

Stock Options:		2018						2017
Expected volatility			35%	to	49%				30%	to	69%
Risk free interest rate			2.43%	to	2.88%				0.69%	to	2.05%
Expected lives at date of grant (in years)				3.83						3.93
Weighted average fair value of options granted				$1.00						$2.09

 

 

The following table presents the total stock-based compensation expense, which is included in selling, general and administrative expenses for the years ended in thousands):

 

		2018				2017
Restricted share expense		$	78			$	48
Stock option and SARs expense			879				634
Total stock-based compensation expense		$	957			$	682

 

 

On our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to shares of the Company’s outstanding common stock (the “Share Repurchase Program”). Repurchases under the repurchase program will be subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the Company’s existing Credit Agreement. The repurchase program does obligate the Company to repurchase shares and be suspended, terminated, or modified at any time. Repurchases under the program take place in the open market or in privately negotiated transactions and be made under a Rule - plan.

 

During the year ended the Company repurchased approximately million shares under the Share Repurchase Program in addition to the approximately million shares repurchased under the First Stock Purchase Agreement (as defined below) and approximately million shares repurchased under the Second Stock Purchase Agreement (as defined below). This total of approximately million shares represents a reduction in the shares outstanding at During the year ended the Company did repurchase any shares in the open market.

 

 

On the Company and an individual shareholder and his affiliates (the “Sellers”) entered into a stock purchase and settlement agreement (the “First Stock Purchase Agreement”) for the purchase by the Company of the approximately million shares of the Company's common stock cumulatively owned by the Sellers for per share, equaling approximately million in total. The First Stock Purchase Agreement contains customary representations and warranties, an agreement by the Sellers to purchase any shares of the Company's common stock for years following closing, a mutual non-disparagement agreement and a mutual release of claims between the Company and the Sellers. The closing of the stock purchases under the First Stock Purchase Agreement occurred in full during the quarter of with respect to approximately million shares, and the Sellers sold approximately of the remaining shares to parties on the open market. The Company funded the purchase price for the shares with the proceeds from the Term Loan C, which is described in Note in the Notes to the Consolidated Financial Statements included in this Form -K.

 

On the Company and a shareholder entered into a stock purchase agreement (the “Second Stock Purchase Agreement”) for the purchase by the Company of approximately million shares of the Company's common stock owned by a shareholder for per share, equaling approximately million in total. The Second Stock Purchase Agreement contains customary representations and warranties, and the closing of the stock purchases under the stock purchase agreement occurred during the quarter of The Company funded the purchase price for the shares with the proceeds from the Term Loan C, which is described in Note in the Notes to the Consolidated Financial Statements included in this Form -K, and cash-on-hand.