7. Share-based Compensation

As of December 31, 2013, we had one active 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, as of December 31, 2013 we had reserved 3,450,000 shares of our common stock for share-based grants, which includes 750,000 shares as approved by the shareholders at our annual meeting on September 12, 2013. As of December 31, 2013, we had 814, 575 shares remaining that were available for grant.

On July 23, 2013, and in connection with the commencement of his employment, our new CEO received a stock grant of 300,000 shares under the 2006 Stock and Incentive Plan that did not carry vesting restrictions.

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 $1,210 and $611 in share-based compensation and consulting expense for the nine months ended December 31, 2013 and 2012, respectively.

As of December 31, 2013, we had approximately $1,953 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 2.4 years.

Options. 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 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 nine months ended December 31:

	2013			2012

Expected life in years		4.51			5.42
Risk-free interest rate		1.35	%		0.93	%
Expected volatility		89.32	%		91.31	%
Expected dividend yield		0	%		0	%
Weighted-average grant date fair value	$	1.67		$	2.60

The expected life selected for options granted during the nine-months represents the period of time that we expect our options to be outstanding based on management’s expectation 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 an average forfeiture rate for stock awards of 6.3% based on our historical experience.

The following table summarizes the activity related to our stock options during the nine months ended December 31, 2013:

	Number of shares			Weighted average exercise price		Weighted average remaining life in years		Aggregate intrinsic value

Outstanding at March 31, 2013		2,015,889		$	3.51		2.64	$	598
Options granted		908,625			2.51
Options exercised		(190,132	)		1.14
Options surrendered		(293,807	)		3.99

Outstanding at December 31, 2013		2,440,575		$	3.26		3.87	$	716

Exercisable at December 31, 2013		1,383,840		$	3.74		1.88	$	426

The total fair value of stock options that vested during the nine months ended December 31, 2013 and 2012 was $379 and $472, respectively.

Restricted Stock. Our 2006 Stock and Incentive Plan also permits 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 three to four years.

The following table summarizes the activity related to our restricted shares during the nine months ended December 31, 2013:

	Number of Shares			Weighted average grant date fair value		Weighted average remaining life in years		Aggregate intrinsic value
Balance at March 31, 2013		180,085		$	4.39		1.50	$	790
Shares granted		121,750			3.06
Shares vested		(31,693	)		4.59
Shares forfeited		(90,074	)		4.38

Balance at December 31, 2013		180,068		$	3.45		2.32	$	622

The aggregate intrinsic value shown above for the restricted shares represents the total pre-tax value based on the closing price of our common stock on the grant date.