Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS

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STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS
9 Months Ended
Sep. 30, 2013
STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS [Abstract]  
STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS
NOTE 6 STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS

On April 5, 2013, the board of directors approved the Company's 2013 Incentive Plan (the "2013 Plan"), which was subsequently approved at the 2013 annual meeting of shareholders. 1,500,000 shares were authorized for grant under the 2013 Plan, plus the number of shares remaining available for future grants under the Company's predecessor 2009 Equity Incentive Plan on the date the shareholders approved the 2013 Plan. The 2013 Plan is intended to provide a means whereby the Company may be able, by granting equity and other types of awards, to attract, retain and motivate capable and loyal employees, non-employee directors, consultants and advisors of the Company, for the benefit of the Company and its shareholders.

Restricted Stock Awards

During the nine months ended September 30, 2013, the Company issued 299,401 restricted shares of common stock as compensation to officers, employees and directors of the Company. Unvested restricted shares vest over various terms with all restricted shares vesting no later than February 2017. As of September 30, 2013, there was approximately $6.2 million of total unrecognized compensation expense related to unvested restricted stock. This compensation expense will be recognized over the remaining vesting period of the grants. The Company has assumed a zero percent forfeiture rate for restricted stock due to the small number of officers, employees and directors that have received restricted stock awards.

The following table reflects the outstanding restricted stock awards and activity related thereto for the nine months ended September 30, 2013:

 
Nine Months Ended
September 30, 2013
 
 
Number of
Shares
 
Weighted-Average
Price
 
Restricted Stock Awards:
 
 
Restricted Shares Outstanding at the Beginning of Period
   
777,437
   
$
18.93
 
Shares Granted
   
299,401
     
15.38
 
Shares Forfeited
   
(37,697
)
   
16.85
 
Lapse of Restrictions
   
(361,103
)
   
19.15
 
Restricted Shares Outstanding at September 30, 2013
   
678,038
   
$
17.37
 

Stock Option Awards

On November 1, 2007, the board of directors granted options to purchase 560,000 shares of the Company's common stock under the Company's 2006 Incentive Stock Option Plan. The Company granted options to purchase 500,000 shares of the Company's common stock, to members of the board and options to purchase 60,000 shares of the Company's common stock to one employee pursuant to an employment agreement. These options were granted at a price of $5.18 per share and the optionees were fully vested on the grant date. As of September 30, 2013, options to purchase a total of 251,963 shares remain outstanding but unexercised. The board of directors determined that no future grants will be made pursuant to the 2006 Incentive Stock Option Plan. All future stock compensation will be issued under the 2013 Plan.

The Company used the Black-Scholes option valuation model to calculate stock-based compensation at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate. The total fair value of the options is recognized as compensation over the vesting period. There were no stock options granted by the Company in the nine months ended September 30, 2013.

Currently Outstanding Options

·
  No options were forfeited in the nine month period ended September 30, 2013.
·
  No options expired during the nine month period ended September 30, 2013.
·
  Options covering 251,963 shares were exercisable and outstanding at September 30, 2013.
·
 There is no further compensation expense that will be recognized in future periods relative to any options that had been granted as of September 30, 2013, because the Company recognized the entire fair value of such compensation upon vesting of the options.
·
  There were no unvested options at September 30, 2013.