NOTE 6. STOCK-BASED COMPENSATION
Stock Option Plan

Our 2000 Stock Option Plan, as amended, provides for issuance to employees, directors, and certain service providers of incentive stock options and nonstatutory stock options. Generally, the options may be exercised at any time prior to expiration, subject to vesting based on terms of employment. The period ranges from immediate vesting to vesting over a five-year period. The options have exercisable lives ranging from one year to ten years from the date of grant, and are generally not eligible to vest early in the event of retirement, death, disability, or change in control. Exercise prices are not less than fair market value of the underlying Common Stock at the date the options are granted. Stock-based compensation expense was $21,160 in fiscal 2016, $58,960 in fiscal 2015, and $53,200 in fiscal 2014.

Valuation assumptions

We use the Black-Scholes standard option-pricing model to determine the fair value of stock options. The following assumptions were used to estimate the fair value of options granted:

	Year Ended March 31
	2016			2015			2014
Risk-free interest rate		1.6	%		1.6	%		1.4	%
Expected volatility		26	%		24	%		30	%
Expected life (years)		4.3			4.2			4.3
Dividend yield		7.1	%		0	%		0	%

The determination of the fair value of the awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions of other variables, including projected stock option exercise behaviors, risk-free interest rate, and expected volatility of our stock price in future periods. Our estimates and assumptions affect the amounts reported in the financial statements and accompanying notes.

Expected life

We analyze historical exercise and termination data to estimate the expected life assumption. We believe historical data currently represents the best estimate of the expected life of a new option.

Risk-free interest rate

The risk-free rate is based on the yield of U.S. Treasury securities on the grant date for maturities similar to the expected lives of the options.

Volatility

We use historical volatility to estimate the expected volatility of our common stock.

Dividend yield

We assumed a dividend yield of 7.1% for fiscal 2016 based on the dividend yield on the date the options were granted. We assumed a dividend yield of zero for fiscal 2015 and 2014 because we had no plans to pay dividends at the time options were granted.

Tax effects of stock-based compensation

Stock-based compensation increased deferred tax assets by $7,688 for fiscal 2016 and $21,420 for fiscal 2015.

General stock option information

We had no nonvested shares as of March 31, 2016 or 2015. The following table summarizes information about options outstanding as of March 31, 2016, all of which were exercisable:

Ranges of Exercise Prices				Number Outstanding		Weighted Average Exercise Price		Weighted Remaining Contractual Life (years)
$	31.27	-	42.45		5,000	$	37.12		2.8
	51.04	-	67.69		16,000		57.77		7.2
					21,000	$	52.85		6.2

Our 2000 Stock Option Plan, as amended, provides for issuance to employees, directors, and certain service providers of incentive stock options and nonstatutory stock options. Generally, the options may be exercised at any time prior to expiration, subject to vesting based on terms of employment. The period ranges from immediate vesting to vesting over a five-year period. The options have exercisable lives ranging from one year to ten years from the date of grant. Exercise prices are not less than fair market value as determined by our Board at the date the options are granted.

A summary of our stock options and warrants are shown in the following table:

	Option Shares Reserved			Options Outstanding			Weighted Average Option Exercise Price		Warrants Outstanding			Weighted Average Warrant Exercise Price
At March 31, 2013		158,230			49,000		$	30.27		4,000		$	29.69
Granted		(4,000	)		4,000		$	49.86		-			-
Exercised		-			(14,000	)	$	29.77		-			-
Terminated		1,000			(1,000	)	$	58.27		(2,000	)		21.99
At March 31, 2014		155,230			38,000		$	31.78		2,000		$	37.38
Granted		(4,000	)		4,000		$	67.69		-			-
Exercised		-			(6,910	)	$	43.81		-			-
Terminated		-			-		$	-		(2,000	)		37.38
At March 31, 2015		151,230			35,090		$	33.51		-		$	-
Granted		(4,000	)		4,000		$	56.76		-			-
Exercised		-			(18,090	)	$	16.19		-			-
Terminated		-			-		$	-		-			-
At March 31, 2016		147,230			21,000		$	52.85		-		$	-

The remaining weighted-average exercisable life was 6.2 years as of March 31, 2016; 3.5 years as of March 31, 2015; and 4.2 years as of March 31, 2014. All outstanding options were exercisable as of March 31, 2016, 2015, and 2014. The total intrinsic value of options exercised during fiscal 2016 was $969,704 based on the difference between the exercise price and stock price at the time of exercise for in-the-money options. The total intrinsic value of options outstanding March 31, 2016, based on our closing stock price for that day, was $126,220, all of which was exercisable. The total fair value of option grants was $21,160 in fiscal 2016. There was no unrecognized stock-based compensation as of March 31, 2016.

No warrants were issued in the past three fiscal years and none were outstanding as of March 31, 2016 or 2015. Remaining weighted-average exercisable warrant life was 0.4 years as of March 31, 2014.