Shareholders' Equity

12 Months Ended

Mar. 31, 2014

Shareholders' Equity [Abstract]

Shareholders' Equity

2. Shareholders’ Equity

Share-based Compensation.At March 31, 2014, we had one active plan for share-based compensation grants (“2006 Plan”).Under the 2006 plan, if we have a change in control, all outstanding grants, including those subject to vesting or other performance targets, fully vest immediately.  Under the 2006 Plan, we reserved 3,450,000 shares of our common stock for share-based grants, which includes an additional 750,000 shares as approved by the shareholders at our annual meeting on September 12, 2013, and 821,496shares remain available for grant at March 31, 2014.

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

We grant option awards with an exercise price equal to the closing market price of our stock at the date of the grant.  We have options outstanding to purchase 1,428,043 shares of common stock granted under the 2006 Plan.Options granted under the 2006 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 have fully vested options outstanding to purchase 900,000 shares of common stock, not granted under a plan, which expire up to ten years from date of grant.

We grant options at the discretion of our directors.  The options granted under the 2006 Plan generally provide for the exercise of options during a limited period following termination of employment, death or disability.

We recognize share-based compensation expense in the statement of operations based on the fair value at the time of grant of the share-based payment over the requisite service period.  We incurred a total of approximately $1,436,000, $812,000 and $685,000 in share-based compensation expense (inclusive of $0, $2,000 and $5,000, respectively, for grants to consultants) in fiscal 2014, 2013 and 2012, respectively.

We determine the fair value of the option awards using the Black-Scholes option pricing model.  We used the following weighted-average assumptions to value the options granted during the years ended March 31:

	2014			2013			2012
Expected life, in years		4.51			6.00			5.32
Risk-free interest rate		1.36	%		1.15	%		1.57	%
Expected volatility		89.1	%		89.03	%		90.08	%
Expected dividend yield		0	%		0	%		0	%

The expected life selected for options granted represents the period of time we expect 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 volatility is based upon historical volatility of our stock.  We estimate the forfeiture rate for stock awards to be approximately 1.6% for executive employees and directors and approximately 18% for non-executive employees for fiscal 2014 based on our historical experience.

The following table summarizes the activity related to our stock options in fiscal 2012, 2013 and 2014:

	Number of shares			Weighted average exercise price		Weighted average grant date fair value		Aggregate intrinsic value		Weighted average remaining life in years
Balance at March 31, 2011		2,066,000		$	3.39
Options granted		140,000			6.66	$	4.70
Options exercised		(94,000	)		2.22			$	430,000
Options surrendered		(29,000	)		5.36
Balance at March 31, 2012		2,083,000		$	3.64			$	968,000		2.96
Options granted		188,000			3.09	$	2.26
Options exercised		(40,000	)		3.75				18,000
Options surrendered		(215,000	)		4.36
Balance at March 31, 2013		2,016,000		$	3.51			$	598,000		2.64
Options granted		939,000			2.57	$	1.71
Options exercised		(346,000	)		1.21				792,000
Options surrendered		(280,000	)		4.22
Balance at March 31, 2014		2,329,000			3.39			$	1,781,000		3.85
Options exercisable at March 31, 2014		1,279,340		$	3.98			$	684,236		1.87

The total fair value of stock options vested during fiscal 2014, 2013 and 2012 was $435,000, $490,000 and $398,000, respectively.

We received net proceeds of $360,000 in fiscal 2014, $150,000 in fiscal 2013 and $209,000 in fiscal 2012 from the exercise of stock options.

We grant restricted shares at the discretion of our directors with vesting terms ranging from six months to four years.  The following table summarizes the activity related to our restricted stock in fiscal 2012, 2013 and 2014:

	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		(35,000	)	$	4.91			$	170,000
Balance at March 31, 2012		70,000		$	6.30		0.95		443,000
Shares granted		167,000			3.61
Shares vested		(47,000	)		4.76				225,000
Shares surrendered		(10,000	)	$	3.21
Balance at March 31, 2013		180,000		$	4.39		1.50	$	790,000
Shares granted		122,000			3.06
Shares vested		(53,000	)		4.13				221,000
Shares surrendered		(102,000	)		4.38
Balance at March 31, 2014		147,000		$	3.38		2.23	$	540,000

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.

At March 31, 2014, we had approximately $1,750,460 of unrecognized share-based compensation cost, net of estimated forfeitures, related to stock options and restricted shares that we expect to recognize over a weighted-average requisite service period of approximately two years.