Note 5 - Stock-based Compensation

12 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 5. 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 $81,855 in fiscal 2022 and $45,572 in fiscal 2021.

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
	2022			2021
Risk-free interest rate	0.7	–	0.9%	0.2	–	0.4%
Expected volatility	35	–	36%	34	–	35%
Expected life (years)		4.6			4.6
Dividend yield	5.0	–	5.4%	7.0	–	7.4%

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 5.0% to 5.4% dividend yield for fiscal 2022 and 7.0% to 7.4% for fiscal 2021 based on the dividend yield on the date the options were granted.

Tax effects of stock-based compensation

Stock-based compensation increased deferred tax assets by $13,521 for fiscal 2022 and $9,971 for fiscal 2021.

General stock option information

The following table summarizes information on options outstanding as of March 31, 2022:

Ranges of Exercise Prices			Number Outstanding		Weighted Average Exercise Price		Weighted Remaining Contractual Life (years)
$49.86	–	$57.46		17,500	$	55.94		4.0
$67.65	–	$107.86		11,500		78.44		5.7
				29,000	$	69.52		5.0

A summary of our stock options is shown in the following table:

	Option Shares Reserved			Options Outstanding			Weighted Average Option Exercise Price
At March 31, 2019		135,230			22,000		$	70.89
Granted		(4,000	)		4,000		$	67.65
Exercised		-			(2,000	)	$	56.18
At March 31, 2020		131,230			24,000		$	71.58
Granted		(6,500	)		6,500		$	56.12
At March 31, 2021		124,730			30,500		$	68.28
Granted		(6,500	)		6,500		$	74.22
Exercised		5,000			(5,000	)	$	61.36
Terminated		3,000			(3,000	)	$	80.75
At March 31, 2022		126,230			29,000		$	69.52

The remaining weighted-average exercisable life was 5.0 years as of March 31, 2022 and 5.7 years as of March 31, 2021. 24,000 outstanding options were exercisable as of March 31, 2022 and 28,000 outstanding options were exercisable as of March 31, 2021. Options outstanding as of March 31, 2022 had no intrinsic value based on our closing stock price for that day. The total fair value of option grants was $81,855 in fiscal 2022. There was $3,133 of unrecognized stock-based compensation as of March 31, 2022 related to nonvested options, which we expect to recognize in the first quarter of fiscal 2023.