Note 4 - Stock-based Compensation

6 Months Ended

Jul. 31, 2016

Notes to Financial Statements

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

4.            Stock-Based Compensation

We grant stock awards for a fixed number of shares to employees, consultants, and directors pursuant to the our shareholder-approved equity incentive plans.

We account for stock-based compensation using the modified prospective method, which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using a Lattice Binomial model for options with performance-based vesting tied to our stock price and the Black-Scholes valuation model for options with ratable term vesting. Both the Lattice Binomial and Black-Scholes valuation models require the input of subjective assumptions. These assumptions include estimating the length of time optionees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of our common stock price over the expected term, and the number of awards that will ultimately not complete their vesting requirements (“forfeitures”). Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related amount recognized as an expense on the consolidated statements of operations. As required under applicable accounting rules, we review our valuation assumptions at each grant date and, as a result, we are likely to change our valuation assumptions used to value stock-based awards granted in future periods. The values derived from using either the Lattice Binomial or the Black-Scholes model are recognized as an expense over the vesting period, net of estimated forfeitures. The estimation of stock awards that will ultimately vest requires significant judgment. Actual results, and future changes in estimates, may differ from our current estimates.

The compensation expense recognized is summarized in the table below (in thousands except per share amounts):

	Three Months Ended						Six Months Ended
	July 31,						July 31,
	2016			2015			2016			2015
Stock-based compensation expense	$	5		$	9		$	18		$	16
Impact on basic and diluted earnings per share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

There is no compensation cost related to nonvested awards yet to be recognized.

During the three and six months ended July 31, 2016, no stock options and no restricted stock units were granted.

During the three and six months ended July 31, 2015, 350,000 stock options were granted and no restricted stock units were granted. The fair value of the 350,000 options granted under our stock option plans during the six ended July 31, 2015 was estimated on the date of grant using the following weighted average assumptions:

	Six Months Ended July 31, 2015
Weighted average risk-free interest rate		2	%
Expected life (in years)		10
Expected stock volatility		152	%
Dividend yield		-
Expected forfeitures		-

Transactions and other information related to stock options granted under these plans for the six months ended July 31, 2016 are summarized below:

	Outstanding Options
				Weighted-Ave.
	Number of			Exercise
	Shares			Price
Balance, January 31, 2016		950,000		$	0.96
Options granted		-			-
Options canceled or expired		(246,192	)		1.06
Options exercise		-			-
Balance, July 31, 2016		703,808		$	0.51
Stock Options Exercisable at July 31, 2016		663,808		$	0.48

As of July 31, 2016, the stock awards outstanding have an aggregate intrinsic value of $0, based on a closing market price of $0.08 per share on July 31, 2016. The following table summarizes information about the Company’s stock awards outstanding at July 31, 2016:

			Awards Outstanding						Options Exercisable
					Weighted-Ave.
Range of			Number		Remaining		Weighted-Ave.		Number		Weighted-Ave.
Exercise/Grant Prices			Outstanding		Contractual Life		Exercise/Grant Price		Exercisable		Exercise Price
$0.14	-	$0.16		203,808		8.88	$	0.15		203,808	$	0.15
$0.40				385,000		6.01	$	0.40		385,000	$	0.40
$1.09				100,000		2.28	$	1.09		60,000	$	1.09
$4.53				15,000		1.58	$	4.53		15,000	$	4.53
				703,808			$	0.51		663,808	$	0.48

Shares available under the plans for future grants at July 31, 2016 totaled 219,724.