STOCK BASED COMPENSATION

3 Months Ended

Jun. 30, 2015

NOTE 13 - STOCK BASED COMPENSATION

In 2006, our board of directors adopted, and our stockholders approved, the 2006 long-term incentive plan, or the Plan, covering 1,000,000 shares of common stock. On August 5, 2010, the Plan was amended to increase the maximum number of shares of common stock that may be issued to an aggregate of 3,000,000 shares. On September 15, 2011, the directors adopted and the shareholders approved an amendment to increase the maximum number of shares of common stock that may be issued to an aggregate of 3,300,000 shares. The Plan provides for the grant of incentive and non-qualified options, stock grants, stock appreciation rights and other equity-based incentives to employees, including officers, and consultants. The Plan is to be administered by a committee of not less than two directors each of whom is to be an independent director. In the absence of a committee, the Plan is administered by our board of directors. Independent directors are not eligible for discretionary options.

Pursuant to the Plan, each newly elected independent director receives, at the time of election, a five-year option to purchase 50,000 shares of common stock at the market price on the date of his or her election. In addition, the Plan provides for the annual grant of an option to purchase 10,000 shares of common stock on July 1 of each year following the third anniversary of the date of election.

The fair value of the options we granted was estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The risk-free interest rate was selected based upon yields of five-year U.S. Treasury issues. We use the simplified method for all grants to estimate the expected term of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. Because of our limited stock exercise activity we did not rely on our historical exercise data. At June 30, 2015, there were 1,832,006 shares of common stock available for grant under the Plan.

The following table summarizes information about options for the periods presented below:

	Number Of		Weighted Average		Aggregate Intrinsic		Weighted Average Remaining Contractual Life
	Options		Exercise Price		Value		(in years)
Outstanding at 4/1/2014	1,355,500		$	1.014	$	329,025	7.32
Granted	50,000		$	0.620
Forfeited	(215,000	)	$	0.730

Outstanding at 3/31/2015	1,190,500		$	1.049	$	21,600	5.18

Granted	—		$	—
Forfeited	(120,000	)	$	1.110

Outstanding at 6/30/2015	1,070,500		$	1.042	$	14,418	4.77

Vested or expected to vest at 6/30/2015	1,070,500		$	1.042	$	14,418	4.77

Exercisable and vested at 6/30/2015	1,044,666		$	1.052	$	14,418	4.72

At June 30, 2015 there was $12,697 of total unrecognized compensation cost related to stock options. These costs are expected to be recognized over the next two years. The total fair value of shares vested during the three months ended June 30, 2015 was $31,266.

The following table summarizes the activity of our stock options outstanding but not vested for the three months ended June 30, 2015:

	Number of Options		Weighted Average Exercise Price
Outstanding at 3/31/2015	112,500		$	0.664
Granted	—		$	—
Forfeited	(40,000	)	$	0.670
Vested	(46,666	)	$	0.670

Outstanding at 6/30/2015	25,834		$	0.646