Stock-based Compensation

3 Months Ended

Jun. 30, 2013

Share-based Compensation [Abstract]

Stock-based Compensation

4. Stock-based Compensation

The Company recognized compensation expense of $39,372 and $43,779 in general and administrative expense in the Consolidated Statements of Operations for the three months ended June 30, 2013 and 2012, respectively.  The total cost related to non-vested awards not yet recognized at June 30, 2013 totals approximately $238,519 which is expected to be recognized over a weighted average of 2.69 years.

The fair value of each stock option is estimated on the date of grant using the Binomial valuation model.  Expected volatilities are based on historical volatility of the Company’s stock over the expected term of 84 months for employees and 96 months for directors and other factors.  We use historical data to estimate option exercise and employee termination within the valuation model.  The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.  As the Company has never declared dividends, no dividend yield is used in the calculation.  Actual value realized, if any, is dependent on the future performance of the Company’s common stock and overall stock market conditions.  There is no assurance the value realized by an optionee will be at or near the value estimated by the Binomial model.

Included in the following table is a summary of the grant-date fair value of stock options granted and the related assumptions used in the Binomial models for stock options granted during the three months ended June 30, 2013 and 2012.  All such amounts represent the weighted average amounts.

	Three Months Ended
	June 30
	2013			2012
Grant-date fair value	$	4.75			-
Volatility factor		77.01	%		-
Dividend yield		-			-
Risk-free interest rate		1.74	%		-
Expected term (in years)		7			-

During the three months ended June 30, 2013, stock options covering 35,000 shares were granted.  There were no stock options granted during the three months ended June 30, 2012.

During the three months ended June 30, 2013 and 2012, no stock options were exercised.

The following table is a summary of activity of stock options for the three months ended June 30, 2013:

	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Aggregate Average Remaining Contract Life in Years		Intrinsic Value
Outstanding at March 31, 2013		80,000	$	6.52		8.03	$	-
Granted		35,000		5.98
Exercised		-		-
Forfeited or Expired		-		-
Outstanding at June 30, 2013		115,000	$	6.35		8.40	$	-
Vested at June 30, 2013		30,000	$	6.42		7.57	$	-
Exercisable at June 30, 2013		30,000	$	6.42		7.57	$	-

The following table summarizes information about options outstanding at June 30, 2013:

Range of Exercise Prices		Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contract Life in Years		Aggregate Intrinsic Value
	5.98 – 6.29		75,000		6.11
	6.30 – 6.80		40,000		6.80
$	5.98 – 6.80		115,000	$	6.35		8.40	$	-

Outstanding options at June 30, 2013 expire between August 2020 and April 2023 and have exercise prices ranging from $5.98 to $6.80.

No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history for these types of awards.  There were no stock options forfeited or expired during the three months ended June 30, 2013 or 2012.