7. Share-based Compensation

As of September 30, 2014, we had one active plan for share-based compensation grants. Under the 2006 Amended Stock and Incentive 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 plan, we reserved 3,450,000 shares of our common stock for share-based grants. As of September 30, 2014, we had 360,531 shares remaining that were available for grant.

We recognize share-based compensation expense in our Condensed Consolidated 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 approximately $661,000 and $921,000 in share-based compensation expense for the six months ended September 30, 2014 and 2013, respectively.

As of September 30, 2014, we had approximately $1,161,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to stock options that we expect to recognize over a weighted-average period of 1.9 years. We also had $1,353,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to restricted shares that we expect to recognize over a weighted-average period of 2.2 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 six months ended September 30:

	2014			2013

Expected life in years		2.81			4.51
Risk-free interest rate		1.0	%		1.35	%
Expected volatility		66.41	%		89.43	%
Expected dividend yield		0	%		0	%
Weighted-average grant date fair value	$	1.21		$	1.65

The expected life selected for options granted during the six-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 the forfeiture rate for stock awards to be approximately zero percent for executive employees and directors and approximately 18% for non-executive employees based on our historical experience.

The following table summarizes the activity related to our stock options during the six months ended September 30, 2014:

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

Outstanding at March 31, 2014		2,328,043		$	3.39		3.85	$	1,781,415
Options granted		131,300			2.98
Options exercised		(85,000	)		0.80
Options surrendered		(163,018	)		5.02

Outstanding at September 30, 2014		2,211,325		$	3.34		3.75	$	117,780

Exercisable at September 30, 2014		1,402,997		$	3.74		2.50	$	39,994

The total fair value of stock options that vested during the six months ended September 30, 2014 and 2013 was $620,000 and $315,000, 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 six months ended September 30, 2014:

	Number of Shares			Weighted average grant date fair value		Weighted average remaining life in years		Aggregate intrinsic value
Balance at March 31, 2014		146,262		$	3.38		2.23	$	540,000
Shares granted		405,625			3.25
Shares vested		(50,436	)		3.57
Shares forfeited		(9,212	)		3.94

Balance at September 30, 2014		492,239		$	3.24		2.20	$	1,230,598

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.