Shareholders’ Equity

12 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Shareholders’ Equity

7. Shareholders’ Equity

Preferred Shares.  The Company has 600,000 shares of authorized preferred stock with a par value of $0.001 available for issuance in such series and preferences as determined by the Board of Directors.  Since inception, the Company has not issued any preferred shares.

Common Shares.  The Company has authorized 6,400,000 shares of common stock with a par value of $0.001.  The total issued common stock as of March 31, 2012, was 1,788,000 common shares.

Share-Based Compensation.  On March 8, 2007, the Board of Directors adopted a Director Compensation Plan (“the Plan”) allotting up to 50,728 shares of the Company’s common stock to be issued to independent, non-employee directors.  In connection with the Plan, an annual stock grant equal to $36,000 is awarded to each independent director.  The number of shares included in each grant is calculated based upon the average closing price of the ten trading days preceding each April 1st anniversary date.  Shares are subject to certain restrictions and vesting.  

During the year ended March 31, 2012, 5,601 shares of common stock reserved for issuance under the Plan were authorized for issuance.  Accordingly, as of March 31, 2012, 15,115 shares of common stock remain available for issuance under the Plan.  Grants of shares of restricted stock vest one-third each year over three years.  In accordance with the terms of the Plan, if a director’s participation as a member of the Board ceases or is terminated for any reason prior to the date the shares of restricted stock are fully vested, the unvested portion of the restricted stock shall be automatically forfeited and shall revert back to the Company.  The aggregate number of restricted stock awards outstanding and subject to vesting at March 31, 2012, for each non-employee director was as follows: Robertson – 6,272 shares; Rodgers – 6,272; and Calerich – 2,235.  In addition, each of the three independent directors was granted 1,643 shares of restricted stock on April 1, 2012, subject to vesting and forfeiture.  All restricted shares are considered issued and outstanding shares of the Company’s common stock at the grant date and have the same dividend and voting rights as other common stock.

A summary of the status of the Company’s nonvested shares under the Director Compensation Plan as of March 31, 2012 and 2011, and changes during the years ended on those dates is presented below:

	2012						2011
				Weighted						Weighted
				Average						Average
				Grant Date Fair						Grant Date Fair
	Shares			Value			Shares			Value
Nonvested shares, beginning of year		17,662		$	153,000			15,306		$	144,000
Granted		5,601			108,000			9,270			81,000
Vested		(8,484	)		(75,000	)		(6,914	)		(72,000	)
Forfeited		-			-			-			-
Nonvested shares, end of year		14,779		$	186,000			17,662		$	153,000

As of March 31, 2012, there was $102,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Director Compensation Plan.  That cost is expected to be recognized over a weighted-average period of 1.01 years.

The Company granted one key employee 624 restricted shares of Company common stock during the year ended March 31, 2010, valued at $5,000.  Such shares vest one-third each year over three years, subject to forfeiture.

Share-based compensation expense of $88,000 and $75,000 was recognized during the years ended March 31, 2012 and 2011, respectively, for restricted share grants to independent directors.

The 2011 Equity Incentive Compensation Plan (“the Equity Plan”) was adopted by the Board of Directors on July 14, 2011, subject to the approval of our Stockholders, which was obtained on September 23, 2011, making the Plan effective as of September 23, 2011.  The Equity Plan was established to promote our interests and the interests of our Stockholders by encouraging the participants, namely employees, to increase their equity interest in us, thereby giving them an added incentive to work toward the Company’s continued growth and success, all the while enabling us to compete for the services of the individuals needed for our continued growth and success.  Awards are in the form of restricted shares of common stock.  These awards are subject to such restrictions as the Compensation Committee of the Board of Directors may impose, including vesting and risk of forfeiture.

The Equity Plan allows up to 150,000 shares of the Company’s common stock to be issued to personnel under the Plan.  No shares were granted during the year ended March 31, 2012; however, 9,027 shares have been granted subsequent to March 31, 2012.  Accordingly, as of June 1, 2012, 140,973 shares of common stock remain available for issuance under the Equity Plan.

Treasury Shares.  On October 22, 2008, the Company’s Board of Directors authorized a share buyback program for the Company to repurchase up to 50,000 shares of its common stock for a period of up to 18 months.  The program does not require the Company to repurchase any specific number of shares, and the Company may terminate the repurchase program at any time.  On November 13, 2009, the Board of Directors increased the number of shares authorized for repurchase to 150,000.  On February 10, 2010, the Board extended the termination date of the program from April 22, 2010 to October 22, 2011.  Upon plan expiration, the Board again extended the program with a termination date of October 22, 2013.  During the year ended March 31, 2012, 6,156 shares were repurchased under the share buyback program and 103,284 shares remain available for future repurchase.  No treasury shares have been retired.