Note 9 - Share-based Compensation

6 Months Ended

Sep. 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 September 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 September 30, 2022, under an equity-based compensation plan which has expired according to its terms: the 2004 Independent Director Stock Option and Stock Grant Plan (the “2004 Directors Plan”). The plan 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 2004 Directors Plan.

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

	As of September 30, 2022
	Authorized		Available		Outstanding
2016 Plan		1,300,000		879,875		306,896
2014 Directors Plan		650,000		223,206		12,000
2004 Directors Plan		—		—		6,000
Total		1,950,000		1,103,081		324,896

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 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 $24,000 and $17,000 for the three months ended September 30, 2022 and 2021, respectively. Compensation expense recognized for options issued under all Plans was $41,000 and $30,000 for the six months ended September 30, 2022 and 2021, respectively.

A summary of option activity under the Company’s stock plans for the six months ended September 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
Expired		(49,500	)	$	5.80
Outstanding at September 30, 2022		253,000		$	2.88		8.0	$	250
Exercisable at September 30, 2022		111,333		$	2.90		7.1	$	250

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 $2.16 and $3.37 at September 30, 2022 and March 31, 2022, respectively.

A summary of the Company’s non-vested options for the six months ended September 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		(50,000	)		1.33
Nonvested at September 30, 2022		141,667		$	1.55

The weighted average grant-date fair value of stock options granted during the six months ended September 30, 2022 was $97,000. As of September 30, 2022, total unrecognized stock-based compensation expense related to all unvested stock options was $166,000, which is expected to be expensed over a weighted average period of 2.0 years.

Restricted Stock 

Grants of fully vested restricted stock issued to Non-Employee Directors during the six months ended September 30, 2022 and 2021 were 64,489 and 0, respectively. Compensation expense recognized for fully vested restricted stock grants under the 2014 Directors Plan was $158,000 and $0 for both the three and six months ended September 30, 2022 and 2021, respectively.

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 $17,000 and $82,000 for the three months ended September 30, 2022 and 2021, respectively. Compensation expense recognized for RSUs issued under the 2016 Plan was $22,000 and $90,000 for the six months ended September 30, 2022 and 2021, respectively.

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

Nonvested Restricted Stock Units	Shares			Weighted Average Grant Price
Nonvested restricted stock units at March 31, 2022		14,465		$	2.22
Granted		66,423			3.13
Vested		(8,312	)		2.35
Forfeited		(680	)		2.82
Nonvested restricted stock units at September 30, 2022		71,896		$	3.04

As of September 30, 2022, total unrecognized stock-based compensation expense related to unvested restricted stock units was $153,000, which is expected to be expensed over a weighted average period of 2.7 years.