Stock-Based Compensation

12 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

NOTE 12 — STOCK-BASED COMPENSATION

Stock Incentive Plan — In July 2003, the Company implemented the 2003 Stock Incentive Plan (the “2003 Plan”), which provides for awards of incentive and non-qualified stock options, restricted stock and stock appreciation rights for its officers, employees, consultants and directors to attract and retain such individuals. Stock option grants under the Plan are granted with an exercise price at or above the fair market value of the underlying common stock at the date of grant, generally vest over a three to five year period and expire ten years after the grant date.

As established, there were 2,000,000 shares of common stock available for distribution under the 2003 Plan. In January 2009, the Company’s shareholders approved an amendment to the 2003 Plan to increase the number of shares available under the 2003 Plan from 2,000,000 to 12,000,000 and to establish the maximum number of shares issuable to any one individual in any particular year. As of August 2013, no new awards may be issued under the 2003 Plan.

In October 2012, the Company’s shareholders approved the 2013 Incentive Compensation Plan (“2013 Plan”) which provides for an aggregate of 10,000,000 shares of the Company’s stock for awards of incentive and non-qualified stock options, restricted stock and stock appreciation rights for its officers, employees, consultants and directors to attract and retain such individuals. In February 2017, the Company’s shareholders approved an amendment to the 2013 Plan to increase the number of shares available under the 2013 Plan from 10,000,000 to 20,000,000. As of March 31, 2017, 8,289,000 shares had been issued under the 2013 Plan, with 11,711,000 shares remaining available for issuance.

Stock-based compensation expense for the years ended March 31, 2017, 2016 and 2015 amounted to $1,577,994, $1,370,556 and $787,710, respectively, of which $495,775, $493,666 and $178,137, respectively, is included in selling expense and $1,082,219, $876,890 and $609,573, respectively, is included in general and administrative expense for the years ended March 31, 2017, 2016 and 2015, respectively. At March 31, 2017, total unrecognized compensation cost amounted to approximately $3,348,495, representing 6,546,375 unvested options. This cost is expected to be recognized over a weighted-average period of 2.35 years. There were 671,028, 1,079,602 and 677,127 options exercised during the years ended March 31, 2017, 2016 and 2015, respectively. The Company did not recognize any related tax benefit for the years ended March 31, 2017, 2016 and 2015, as the effects were de minimis.

Stock Options — A summary of the options outstanding under the 2003 and 2013 Plans is as follows:

		Years ended March 31,
		2017								2016								2015
						Weighted								Weighted								Weighted
						Average								Average								Average
						Exercise								Exercise								Exercise
		Shares				Price				Shares				Price				Shares				Price
Outstanding at beginning of year			13,508,086			$	0.79				11,988,188			$	0.58				11,174,007			$	0.51
Granted			3,280,000				0.91				2,622,500				1.63				2,525,000				1.04
Exercised			(671,028	)			0.37				(1,079,602	)			0.35				(677,127	)			0.33
Forfeited			(318,500	)			3.44				(23,000	)			4.30				(1,033,692	)			1.10

Outstanding and expected to vest at end of period			15,798,558			$	0.78				13,508,086			$	0.79				11,988,188			$	0.58

Exercisable at period end			9,285,121			$	0.55				7,931,813			$	0.53				7,064,133			$	0.49

Weighted average fair value of grants during the period						$	0.57							$	1.07							$	0.65

The following table summarizes activity pertaining to options outstanding and exercisable at March 31, 2017:

		Options Outstanding								Options Exercisable
						Weighted
						Average								Weighted
						Remaining								Average				Aggregate
Range of						Life in								Exercise				Intrinsic
Exercise Prices		Shares				Years				Shares				Price				Value
$0.01 — $0.25			303,100				1.48				303,100			$	0.22			$	403,354
$0.26 — $0.40			7,132,458				4.32				6,783,396				0.34				8,223,876
$0.41 — $1.00			5,299,500				8.40				1,137,250				0.98				644,688
$1.01 — $1.50			586,000				7.88				391,000				1.24				121,620
$1.51 — $2.00			2,471,500				7.99				664,375				1.69				—
$6.01 — $7.00			6,000				0.22				6,000				6.93				—

			15,798,558				6.34				9,285,121			$	0.55			$	9,393,538

Total stock options exercisable as of March 31, 2017 were 9,285,121. The weighted average exercise price of these options was $0.55. The weighted average remaining life of the options outstanding was 6.33 years and of the options exercisable was 4.87 years.

The following summarizes activity pertaining to the Company’s unvested options for the years ended March 31, 2017, 2016 and 2015:

						Weighted
						Average
						Exercise
		Shares				Price
Unvested at March 31, 2014			5,662,560			$	0.32

Granted			2,525,000				1.04
Canceled or expired			(954,083	)			0.44
Vested			(2,309,422	)			0.41

Unvested at March 31, 2015			4,924,055			$	0.70

Granted			2,622,500				1.63
Canceled or expired			(12,000	)			0.97
Vested			(1,958,282	)			0.70

Unvested at March 31, 2016			5,576,273			$	1.17

Granted			3,280,000				0.91
Canceled or expired			(138,250	)			0.55
Vested			(2,171,648	)			0.94

Unvested at March 31, 2017			6,546,375			$	1.11

The fair value of each award under the 2003 and 2013 Plans is estimated on the grant date using the Black-Scholes option pricing model and is affected by assumptions regarding a number of complex and subjective variables. The use of an option pricing model also requires the use of a number of complex assumptions including expected volatility, risk-free interest rate, expected dividends, and expected term. Expected volatility is based on the Company’s historical volatility and the volatility of a peer group of companies over the expected life of the option. The expected term and vesting of the options represents the estimated period of time until exercise. The expected term was determined using the simplified method available under current guidance. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company has not paid dividends on its common stock in the past and does not plan to pay any dividends on its common stock in the near future. Current authoritative guidance also requires the Company to estimate forfeitures at the time of grant and revise these estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its expectation of future experience while considering its historical experience.

The fair value of options at grant date was estimated using the Black-Scholes option pricing model utilizing the following weighted average assumptions:

		March 31,
		2017				2016				2015
Risk-free interest rate			1.37% - 1.89	%			1.39% - 1.81	%			1.47% - 1.76	%
Expected option life in years			5.5 - 6.25				5.5 - 6.25				5.5 - 6.25
Expected stock price volatility			68% - 69	%			70% - 73	%			74% - 77	%
Expected dividend yield			0	%			0	%			0	%

Employee Stock Purchase Plan - In February 2017, the Company’s shareholders approved the 2017 Employee Stock Purchase Plan (“2017 ESPP”) which provides for an aggregate of 3,000,000 shares of the Company’s stock reserved for issuance over the term of the 2017 ESPP. The purpose of the 2017 ESPP is to provide incentives for present and future employees of the Company and any designated subsidiary to acquire a proprietary interest in the Company through the purchase of shares of the Company’s common stock. As of March 31, 2017, no shares had been acquired under the 2017 ESPP.