Stock Options and Warrants

12 Months Ended

Mar. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

(6) Stock Options and Warrants

The Company has four stock option plans, the 1997 Incentive Stock Option Plan (“1997 Plan”), the 2000 Incentive Stock Option Plan (“2000 Plan”), the 2005 Incentive Stock Option Plan (“2005 Plan”) and the 2007 Incentive Stock Option Plan (“2007 Plan”). The 1997 and 2000 Plans have expired except as to options outstanding. The 2005 and 2007 Plans provide for incentive or nonqualified stock options to be granted to key employees, officers, directors, independent contractors and consultants of the Company.

Under the 2005 and 2007 Plans, options may be granted at prices not less than the fair market value on the date the option is granted. Options become exercisable and vest as determined at the date of grant by a committee of the Board of Directors. Options expire ten years after the date of grant unless an earlier expiration date is set at the time of grant. At March 31, 2012, options to purchase 750,000 and 135,000 shares of common stock were available for grant under the 2007 Plan and 2005 Plan, respectively.

Changes in the options outstanding during the years ended March 31, 2012 and 2011 are summarized in the following table:

				Weighted		Average
				Average		Remaining	Aggregate
				Exercise		Contractual	Intrinsic
	Shares			Price		Term	Value
Outstanding @ March 31, 2010		1,241,000		$	2.12	4.5 years
Granted		380,000			2.56	10 years
Expired		(325,000	)		2.56	-
Outstanding @ March 31, 2011		1,296,000			2.11	6.3 years
Granted		20,000			2.14	10 years
Expired		(25,000	)		2.50	-
Outstanding @ March 31, 2012		1,291,000		$	2.10	5.3 years	$	8,400
Exercisable @ March 31, 2012		1,264,333		$	2.11	5.3 years	$	5,600

Aggregate intrinsic value represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing price of $1.22 as of March 31, 2012, which would have been recognized by the option holders had these option holders exercised their options as of that date.

The Company recognized stock-based compensation totaling $12,267 and $493,000 for the years ended March 31, 2012 and 2011, respectively, based on the fair value of stock options granted. This expense is included in selling, general and administrative expenses in the Consolidated Statements of Operations. At March 31, 2012, outstanding options to purchase 1,264,333 shares of common stock are fully vested. In addition, certain option grants contain disposition restrictions which prohibit the sale of 50% of the shares acquired by exercising the awarded options until the first anniversary of the grant date and the remaining 50% of the shares acquired by exercising the awarded options until the second anniversary of the grant date. As of March 31, 2012, the fair value of unamortized stock-based compensation expense related to unvested stock options was approximately $25,533 which is expected to be recognized over a remaining vesting period of three years.

The per share weighted average fair values of stock options granted during the years ended March 31, 2012 and 2011 were $1.56 and $1.29, respectively. The Company’s calculations were made using the Black-Scholes option pricing model on the date of the grant based on the following weighted average assumptions:

	2012			2011
Expected option term (years)		5.0			5.0
Expected volatility		95.8	%		83.4	%
Expected dividend yield		-			-
Risk-free interest rate		1.55	%		2.37	%

The Company estimates expected volatility by considering the historical volatility of the Company’s stock. The risk-free interest rate is based on the United States Treasury constant maturity interest rate whose term is consistent with the expected life of the award. The expected option term was calculated using the simplified method prescribed in Securities and Exchange Commission Staff Accounting Bulletin No. 107. Under this method, the expected option life is equal to the sum of the weighted average vesting term plus the original contract term divided by two.

During September 2011, the Company issued warrants to purchase an aggregate of 75,000 shares of the Company’s common stock in connection with consulting services for investor relations services. The warrants have a four and one-half year term and are currently exercisable as follows: warrants to purchase 25,000 shares of common stock at an exercise price of $3.00 per share; warrants to purchase 25,000 shares of common stock at an exercise price of $4.00 per share; and warrants to purchase 25,000 shares of common stock at an exercise price of $5.00 per share. The shares underlying the warrants are not registered and are subject to certain trading restrictions.

The Company recognized $82,250 of stock-based compensation expense related to investor relations services based on a fair value weighted average of the warrants of $1.10. The fair values of the warrants was calculated using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility, 93.6%; risk-free interest rate of 0.97%; expected option term, four and one-half years; and expected dividend yield of 0%.