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Stock Plans And Stock-Based Compensation

6 Months Ended

Sep. 30, 2014

Stock Plans And Stock-Based Compensation

3. STOCK PLANS AND STOCK-BASED COMPENSATION

In July 1998, shareholders of the Company approved the adoption of the 1998 Stock Option Plan (“1998 Plan”). The 1998 Plan was effective October 1998 and expired in October 2008. Accordingly, no further option awards may be granted under the 1998 Plan; however, any awards granted prior to its expiration remain outstanding subject to their terms. Each option granted under the 1998 Plan has an exercise price equal to the fair market value of the Company’s common stock on the date of the grant, a maximum term of ten years and a vesting period from zero to five years.

In July 2003, shareholders of the Company approved the adoption of the 2003 Stock Option Plan (“2003 Plan”). The 2003 Plan was effective July 2003 and expired in July 2013. Accordingly, no further option awards may be granted under the 2003 Plan; however, any awards granted prior to its expiration remain outstanding subject to their terms. Each option granted under the 2003 Plan has an exercise price equal to the fair market value of the Company’s common stock on the date of the grant, a maximum term of ten years and a vesting period from zero to five years.

The following table presents information on stock options outstanding for the periods shown.

	Six Months Ended September 30, 2014				Six Months Ended September 30, 2013
	Number of Shares			Weighted Average Exercise Price	Number of Shares			Weighted Average Exercise Price

Balance, beginning of period	474,654		$	7.91	407,500		$	9.05
Grants	-			-	87,154			2.78
Options exercised	-			-	-			-
Forfeited	-			-	-			-
Expired	(32,000	)		9.55	(20,000	)		8.98
Balance, end of period	442,654		$	7.79	474,654		$	7.91

The following table presents information on stock options outstanding for the periods shown, less estimated forfeitures.

	Six Months Ended September 30, 2014		Six Months Ended September 30, 2013

Stock options fully vested and expected to vest:
Number		442,504		469,896
Weighted average exercise price	$	7.79	$	7.96
Aggregate intrinsic value ⁽¹⁾	$	151,000	$	3,000
Weighted average contractual term of options (years)		4.20		5.06
Stock options fully vested and currently exercisable:
Number		442,054		385,300
Weighted average exercise price	$	7.79	$	9.10
Aggregate intrinsic value ⁽¹⁾	$	150,000	$	3,000
Weighted average contractual term of options (years)		4.20		4.04

⁽¹⁾ The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price) that would have been received by the option holders had all option holders exercised. This amount changes based on changes in the market value of the Company’s stock.

Stock-based compensation expense related to stock options for the six months ended September 30, 2014 and 2013 was $27,000 and $26,000, respectively. As of September 30, 2014, there was less than $1,000 of unrecognized compensation expense related to unvested stock options, which will be recognized over the remaining vesting periods of the underlying stock options through December 2014.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes based stock option valuation model. The fair value of all awards is amortized on a straight-line basis over the requisite service periods, which are generally the vesting periods. The expected life of options granted represents the period of time that they are expected to be outstanding. The expected life is determined based on historical experience with similar options, giving consideration to the contractual terms and vesting schedules. Expected volatility was estimated at the date of grant based on the historical volatility of the Company’s common stock. Expected dividends are based on dividend trends and the market value of the Company’s common stock at the time of grant. The risk-free interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of the grant. During the six months ended September 30, 2014, there were no stock options granted. During the six months ended September 30, 2013, the Company granted 87,154 stock options. The weighted average fair value of stock options granted during the six months ended September 30, 2013 was $1.18.

The Black-Scholes model uses the assumptions listed in the following table:

Risk Free Interest Rate

Expected

Life (years)

Expected

Volatility

Expected

Dividends

Fiscal 2014

1.95%

6.25

51.87%

2.04%

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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