NOTE

STOCK-BASED COMPENSATION

Stock Option Plan

Our

2000

Stock Option Plan, as amended, provides for issuance to employees, directors, and certain service providers of incentive stock options and nonstatutory stock options. Generally, the options

may

be exercised at any time prior to expiration, subject to vesting based on terms of employment. The period ranges from immediate vesting to vesting over a

five

-year period. The options have exercisable lives ranging from

one

year to

ten

years from the date of grant, and are generally

not

eligible to vest early in the event of retirement, death, disability, or change in control. Exercise prices are

not

less than fair market value of the underlying Common Stock at the date the options are granted. Stock-based compensation expense was

$45,572

in fiscal

2021

and

$48,360

in fiscal

2020.

Valuation assumptions

We use the Black-Scholes standard option-pricing model to determine the fair value of stock options. The following assumptions were used to estimate the fair value of options granted:

	Year Ended March 31
	2021			2020
Risk-free interest rate	0.2	–	0.4%		1.7	%
Expected volatility	34	–	35%		37	%
Expected life (years)		4.6			4.6
Dividend yield	7.0	–	7.4%		5.9	%

The determination of the fair value of the awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions of other variables, including projected stock option exercise behaviors, risk-free interest rate, and expected volatility of our stock price in future periods. Our estimates and assumptions affect the amounts reported in the financial statements and accompanying notes.

Expected life

We analyze historical exercise and termination data to estimate the expected life assumption. We believe historical data currently represents the best estimate of the expected life of a new option.

Risk-free interest rate

The risk-free rate is based on the yield of U.S. Treasury securities on the grant date for maturities similar to the expected lives of the options.

Volatility

We use historical volatility to estimate the expected volatility of our common stock.

Dividend yield

We assumed a

7.0%

7.4%

dividend yield for fiscal

2021

and

5.9%

for fiscal

2020

based on the dividend yield on the date the options were granted.

Tax effects of stock-based compensation

Stock-based compensation increased deferred tax assets by

$9,971

for fiscal

2021

and

$10,581

for fiscal

2020.

General stock option information

The following table summarizes information on options outstanding as of

March

31,

2021:

Ranges of Exercise Prices			Number Outstanding		Weighted Average Exercise Price		Weighted Remaining Contractual Life (years)
$49.86	–	$67.69		22,000	$	59.85		5.3
$76.13	–	$107.86		8,000		92.00		6.9
				30,500	$	68.28		5.7

A summary of our stock options is shown in the following table:

	Option Shares Reserved			Options Outstanding			Weighted Average Option Exercise Price
At March 31, 2019		135,230			22,000		$	70.89
Granted		(4,000	)		4,000		$	67.65
Exercised		-			(2,000	)	$	56.18
At March 31, 2020		131,230			24,000		$	71.58
Granted		(6,500	)		6,500		$	56.12
At March 31, 2021		124,730			30,500		$	68.28

The remaining weighted-average exercisable life was

5.7

years as of

March

31,

2021

and

6.6

years as of

March

31,

2020.

28,000

outstanding options were exercisable as of

March

31,

2021

and

24,000

outstanding options were exercisable as of

March 31, 2020.

The total intrinsic value of options outstanding

March

31,

2021,

based on our closing stock price for that day, was

$230,540,

$191,140

of which was exercisable. The total fair value of option grants was

$47,140

in fiscal

2021.

There was

$1,568

of unrecognized stock-based compensation as of

March 31, 2021

related to nonvested options, which we expect to recognize in the

first

quarter of fiscal

2022.