Stock-Based Compensation

12 Months Ended

Mar. 31, 2018

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, 2018, 9,277,500 shares had been issued under the 2013 Plan, with 10,722,500 shares remaining available for issuance.

Stock-based compensation expense for the years ended March 31, 2018, 2017 and 2016 amounted to $1,974,745, $1,577,994 and $1,370,556, respectively, of which $704,772, $495,775 and $493,666, respectively, is included in selling expense and $1,269,973, $1,082,219 and $876,890, respectively, is included in general and administrative expense for the years ended March 31, 2018, 2017 and 2016, respectively. At March 31, 2018, total unrecognized compensation cost amounted to approximately $3,311,178, representing 4,021,500 unvested options and 1,182,000 unvested restricted shares. This cost is expected to be recognized over a weighted-average period of 1.63 years for the unvested options and 2.98 years for the unvested restricted shares. There were 356,700, 671,028 and 1,079,602 options exercised during the years ended March 31, 2018, 2017 and 2016, respectively. The Company did not recognize any related tax benefit for the years ended March 31, 2018, 2017 and 2016, 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,
		2018								2017								2016
						Weighted								Weighted								Weighted
						Average								Average								Average
						Exercise								Exercise								Exercise
		Shares				Price				Shares				Price				Shares				Price
Outstanding at beginning of year			15,798,558			$	0.78				13,508,086			$	0.79				11,988,188			$	0.58
Granted			-				-				3,280,000				0.91				2,622,500				1.63
Exercised			(356,700	)			0.66				(671,028	)			0.37				(1,079,602	)			0.35
Forfeited			(95,250	)			2.01				(318,500	)			3.44				(23,000	)			4.30

Outstanding and expected to vest at end of period			15,346,608			$	0.78				15,798,558			$	0.78				13,508,086			$	0.79

Exercisable at period end			11,325,108			$	0.65				9,285,121			$	0.55				7,931,813			$	0.53

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

The following table summarizes activity pertaining to options outstanding and exercisable at March 31, 2018:

		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			273,200				0.51				273,200			$	0.22			$	278,596
$0.26 - $0.40			6,977,908				3.32				6,977,908				0.34				6,276,104
$0.41 - $1.00			5,153,500				7.42				2,348,000				0.96				660,076
$1.01 - $1.50			560,000				6.99				535,000				1.21				61,400
$1.51 - $2.00			2,382,000				7.18				1,191,000				1.67				-

			15,346,608				5.38				11,325,108			$	0.65			$	7,276,177

Total stock options exercisable as of March 31, 2018 were 11,325,108. The weighted average exercise price of these options was $0.65. The weighted average remaining life of the options outstanding was 5.38 years and of the options exercisable was 4.58 years.

The following summarizes activity pertaining to the Company’s unvested options for the years ended March 31, 2018, 2017 and 2016:

						Weighted
						Average
						Exercise
		Shares				Price
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

Granted			-				-
Canceled or expired			(56,000	)			0.94
Vested			(2,433,875	)			1.05

Unvested at March 31, 2018			4,056,500			$	1.14

Restricted Share Grants — In April 2017, the Company’s Compensation Committee approved the grant of 1,092,000 restricted common shares to certain directors, officers, employees and related parties. The restricted shares vest in four equal annual installments. In March 2018, the Company’s Compensation Committee approved the grant of 90,000 restricted common shares to certain directors. The restricted shares vest in two equal installments.

A summary of the restricted stock outstanding under the 2013 Plan is as follows:

		Shares
Restricted stock outstanding at March 31, 2017			—
Granted			1,182,000
Canceled or expired			—

Restricted stock outstanding at March 31, 2018			1,182,000

Weighted average fair value per restricted share at grant date		$	1.65
Weighted average share price at grant date		$	1.65

The fair value of each option award under the 2003 and 2013 Plans was 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				March 31, 2016
Risk-free interest rate			1.37% - 1.89	%			1.39% - 1.81	%
Expected option life in years			5.5 - 6.25				5.5 - 6.25
Expected stock price volatility			68% - 69	%			70% - 73	%
Expected dividend yield			0	%			0	%