Share-based Compensation

6 Months Ended

Sep. 30, 2011

Share-based Compensation [Abstract]

Share-based compensation

11. Share-based Compensation

As of September 30, 2011, we had one active plan (2006 Amended Stock and Incentive Plan) for share-based compensation grants.  Under the plan, if we have a change in control, all outstanding grants, including those subject to vesting or other performance targets, fully vest immediately.  Under this plan, we had reserved 2,700,000 shares of our common stock for share-based grants.  As of September 30, 2011, we had 1,138,000 shares remaining that were available for grant.  We grant option awards with an exercise price equal to the closing market price of our stock at the date of the grant.  Options granted under this plan generally expire over a period ranging from five to seven years from date of grant and vest at varying rates ranging up to three years.

We recognize share-based compensation expense in the statement of operations based on the fair value of the share-based payment over the requisite service period.  We incurred approximately $292,000 and $149,000 in share-based compensation expense (inclusive of $3,000 and $8,000, respectively, for option grants to consultants) for the six months ended September 30, 2011 and 2010, respectively.

We determined the fair value of our option awards using the Black-Scholes option pricing model.  We used the following weighted-average assumptions to value the options granted during the six months ended September 30:

	2011			2010
Expected life in years		5.46			6.05
Risk-free interest rate		1.67	%		2.20	%
Expected volatility		89.98	%		90.99	%
Expected dividend yield		0			0
Weighted-average grant date fair value	$	4.90		$	3.50

The expected life selected for options granted during the quarter represents the period of time that we expect our options to be outstanding based on historical data of option holder exercise and termination behavior for similar grants.  The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate over the expected life at the time of grant.  Expected volatilities are based upon historical volatility of our stock.  We estimate a forfeiture rate for stock awards of up to 13.0% based on our historical experience.

The following table summarizes the activity related to our stock options during the six months ended September 30, 2011:

	Number of shares			Weighted average exercise  price		Weighted average remaining life in years		Aggregate intrinsic value
Outstanding at March 31, 2011		2,066,000		$	3.39
Options granted		126,000			6.90
Options exercised		(92,000	)		2.26			$	420,000
Options surrendered		(12,000	)		5.43
Outstanding at September 30, 2011		2,088,000		$	3.64		3.45	$	3,004,000
Exercisable at September 30, 2011		1,811,000		$	3.30		3.02	$	2,987,000

The total fair value of stock options vested during the six months ended September 30, 2011 and 2010 was $280,000 and $219,000 respectively.

Our 2006 Stock and Incentive Plan also allows for our Compensation Committee to grant other stock-based benefits, including restricted shares.  Restricted shares are subject to risk of forfeiture for termination of employment.  The forfeiture risk generally lapses over a period of four years.

The following table summarizes the activity related to our restricted shares during the six months ended September 30, 2011:

	Number of Shares			Weighted average grant date fair value		Weighted average remaining life in years		Aggregate intrinsic value
Balance at March 31, 2011		55,000		$	4.96
Shares granted		50,000			6.80
Shares vested		(16,000	)		5.00			$	79,000
Balance at September 30, 2011		89,000		$	5.99		1.36	$	534,000

The aggregate intrinsic value represents the total pre-tax value of stock that holders would have received (based on the closing price of our Company's common stock on the grant date) had all restricted stock vested and if we had issued common stock to the holders on the grant date.

As of September 30, 2011, we had approximately $1,378,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to stock options and restricted shares that we expect to recognize over a weighted-average period of approximately 2.2 years.