(8) Accounting for Stock-Based Compensation

6 Months Ended

Sep. 30, 2013

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

Accounting for Stock-Based Compensation

(8) Accounting for Stock-Based Compensation

(i) Stock Options

On July 1, 2002, the Company established the 2002 Long-Term Incentive Plan (the “2002 Plan”) providing for the grant of options or other awards, including stock grants, to employees, officers or directors of, consultants to, the Company or its subsidiaries to acquire up to an aggregate of 750,000 shares of Common Stock. In September 2005, the 2002 Plan was amended so as to increase the number of shares of Common Stock available under the plan to 1,250,000. In September 2008, the 2002 Plan was amended to increase the number of shares of Common Stock available under the plan to 1,650,000. Options granted under the 2002 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options. Grants under the 2002 Plan are awarded by a committee of the Board of Directors, and are exercisable over periods not exceeding ten years from date of grant. The option price for incentive stock options granted under the 2002 Plan must be at least 100% of the fair market value of the shares on the date of grant, while the price for non-qualified options granted is determined by the Compensation Committee of the Board of Directors. At September 30, 2013, there were options to purchase 70,000 shares of Common Stock, expiring from April 2015 through September 2017, issued under the 2002 Plan that remained outstanding. The 2002 Plan terminated on September 30, 2012.

On March 25, 2010, the stockholders of the Company approved the ‘mktg, inc.’ 2010 Equity Incentive Plan (the “2010 Plan”), under which 3,000,000 shares of Common Stock have been set aside and reserved for issuance. The 2010 Plan provides for the granting to our employees, officers, directors, consultants and advisors of stock options (non-statutory and incentive), restricted stock awards, stock appreciation rights, restricted stock units and other performance stock awards. The 2010 Plan is administered by the Compensation Committee of the Board of Directors. The exercise price per share of a stock option, which is determined by the Compensation Committee, may not be less than 100% of the fair market value of the common stock on the date of grant. For non-qualified options the term of the option is determined by the Compensation Committee. For incentive stock options the term of the option is not more than ten years. However, if the optionee owns more than 10% of the total combined voting power of the Company, the term of the incentive stock option will be no longer than five years. The 2010 Plan automatically terminates on February 22, 2020, unless it is terminated earlier by a vote of the Company’s stockholders or the Board of Directors; provided, however, that any such action does not affect the rights of any participants of the 2010 Plan. In addition, the 2010 Plan may be amended by the stockholders of the Company or the Board of Directors, subject to stockholder approval if required by applicable law or listing requirements. At September 30, 2013, there were options to purchase 2,455,428 shares of Common Stock, expiring May 2020, issued under the 2010 Plan that remained outstanding. Any option under the 2010 Plan that is not exercised by an option holder prior to its expiration may be available for re-issuance by the Company.As of September 30, 2013, the Company had options or other awards for 135 shares of Common Stock available for grant under the 2010 Plan.

The maximum contractual life for any of the options is ten years. The Company uses the Black-Scholes model to estimate the value of stock options granted under FASB guidance. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of options.

A summary of option activity under all plans as of September 30, 2013, and changes during the six month period then ended is presented below:

	Weighted  average  exercise price		Number of options		Weighted average  remaining  contractual  term (years)		Aggregate intrinsic value
Balance at March 31, 2013	$	0.49		2,525,428		7.05	$	2,171,868
Granted		—		—
Exercised		—		—
Canceled		—		—
Balance at September 30, 2013 (vested and expected to vest)	$	0.49		2,525,428		6.55	$	1,666,782
Exercisable at September 30, 2013	$	0.50		1,911,572		6.58	$	1,242,522

Total unrecognized compensation cost related to vested and expected to vest options at September 30, 2013 amounted to $105,992 and is expected to be recognized over a weighted average period of .67 years. Total compensation cost for all outstanding option awards amounted to $39,747 and $79,494 for the three and six months ended September 30, 2013 and $39,747 and $82,612 for the three and six months ended September 30, 2012, respectively.

(ii) Warrants

At September 30, 2013 and March 31, 2013 there were warrants outstanding to purchase 2,456,272 shares of common stock at a price of $.001 per share, which were issued in the December 2009 financing and expire December 15, 2015. The aggregate intrinsic value of the warrants outstanding at September 30, 2013 and March 31, 2013 were $2,822,257 and $3,313,511, respectively.

(iii) Restricted Stock

As of September 30, 2013 the Company had awarded 1,185,571 shares (net of forfeited shares) of restricted stock under the Company’s 2002 Plan, 400,000 shares (net of forfeited shares) of restricted stock under the Company’s 2010 Plan, and 189,767 shares (net of forfeited shares) of restricted stock that were issued outside of the Company’s 2002 and 2010 Plans. Grant date fair value is determined by the market price of the Company’s common stock on the date of grant. The aggregate value of these shares at their respective grant dates amount to approximately $2,675,044 and are recognized ratably as compensation expense over the vesting periods. The shares of restricted stock granted pursuant to such agreements vest in various tranches over one to five years from the date of grant.

The shares awarded to employees under the restricted stock agreements vest on the applicable vesting dates only to the extent the recipient of the shares is then an employee of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment is terminated.

A summary of all non-vested stock activity as of September 30, 2013, and changes during the six month period then ended is presented below:

	Weighted  average  grant date  fair value		Number  of  shares			Weighted  average  remaining  contractual  term (years)		Aggregate intrinsic  value
Unvested at March 31, 2013	$	1.36		485,616			1.70	$	655,582
Awarded	$	1.38		45,000
Vested	$	1.81		(181,193	)
Forfeited		—		—
Unvested at September 30, 2013	$	1.06		349,423			1.97	$	401,836

Total unrecognized compensation cost related to unvested stock awards at September 30, 2013 amounted to $246,834 and is expected to be recognized over a weighted average period of 1.97 years. Total compensation cost for the stock awards amounted to $49,175 and $118,508 for the three and six months ended September 30, 2013, and $73,350 and $143,117 for the three and six months ended September 30, 2012, respectively.