Note 9 - Share-based Compensation

3 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

9. SHARE-BASED COMPENSATION

The Company has share-based compensation plans, which are more fully described in Note 10, Share-Based Compensation, to the Consolidated Financial Statements included in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2022 as filed with the SEC on June 22, 2022.

As of June 30, 2022, the Company had two equity-based compensation plans: the 2016 Equity Incentive Plan (the “2016 Plan”) and the 2014 Independent Director Stock Option and Restricted Stock Grant Plan (the “2014 Directors Plan”). The Company has also issued stock options, which remain outstanding as of June 30, 2022, under two equity-based compensation plans which have expired according to their terms: the 2005 Stock Option Plan (the “2005 Plan”) and the 2004 Independent Director Stock Option and Stock Grant Plan (the “2004 Directors Plan”). These plans allowed the Company to award stock options and shares of restricted common stock to eligible employees, certain outside consultants and independent directors. No additional awards will be issued under the 2005 Plan or the 2004 Directors Plan.

The following table presents shares authorized, available for future grant and outstanding under each of the Company’s plans:

	As of June 30, 2022
	Authorized		Available		Outstanding
2016 Plan		1,300,000		944,938		247,868
2014 Directors Plan		650,000		287,695		12,000
2005 Plan		—		—		49,500
2004 Directors Plan		—		—		6,000
Total		1,950,000		1,232,633		315,368

Stock Options

All stock option grants made under the equity-based compensation plans were issued at exercise prices no less than the Company’s closing stock price on the date of grant. Options under the 2016 Plan, 2005 Plan and 2014 Directors Plan were determined by the Board of Directors or the Compensation Committee of the Board of Directors in accordance with the provisions of the respective plans.  The terms of each option grant include vesting, exercise, and other conditions set forth in a Stock Option Agreement evidencing each grant. No option can have a life in excess of ten (10) years. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The model requires various assumptions, including a risk-free interest rate, the expected term of the options, the expected stock price volatility over the expected term of the options, and the expected dividend yield. Compensation expense for employee stock options is recognized ratably over the vesting term. Compensation expense recognized for options issued under all Plans was $17,000 and $13,000 for the three months ended June 30, 2022 and 2021, respectively.

A summary of option activity under the Company’s stock plans for the three months ended June 30, 2022 is presented below: 

Option Activity	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at March 31, 2022		252,500	$	3.34		6.5	$	159,650
Granted		50,000	$	3.43
Outstanding at June 30, 2022		302,500	$	3.36		6.9	$	78,400
Exercisable at June 30, 2022		127,500	$	4.17		4.3	$	25,316

The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $2.92 and $3.37 at June 30, 2022 and March 31, 2022, respectively.

A summary of the Company’s non-vested options for the three months ended June 30, 2022 is presented below:

Nonvested Options	Shares			Weighted Average Grant-Date Fair Value
Nonvested at March 31, 2022		141,667		$	1.33
Granted		50,000			1.94
Vested		(16,667	)		1.60
Nonvested at June 30, 2022		175,000		$	1.48

The weighted average grant-date fair value of stock options granted during the three months ended June 30, 2022 was $97,000. As of June 30, 2022, total unrecognized stock-based compensation expense related to all unvested stock options was $186,000, which is expected to be expensed over a weighted average period of 2.3 years.

Restricted Stock Units (“RSUs”) 

RSUs are service-based awards granted to eligible employees under the 2016 Plan. Compensation expense recognized for RSUs issued under the 2016 Plan was $5,000 and $8,000 for the three months ended June 30, 2022 and 2021, respectively.

The following table summarizes information related to awarded RSUs for the three months ended June 30, 2022:

Nonvested Restricted Stock Units	Shares			Weighted Average Grant Price
Nonvested restricted stock units at March 31, 2022		14,465		$	2.22
Granted		850			3.03
Vested		(2,277	)		2.29
Forfeited		(170	)		2.52
Nonvested restricted stock units at June 30, 2022		12,868		$	2.26

As of June 30, 2022, total unrecognized stock-based compensation expense related to unvested restricted stock units was $17,000, which is expected to be expensed over a weighted average period of 1.0 years.