NOTE 6  STOCK-BASED COMPENSATION

On September 30, 2015, the Board of Directors approved the 2015 Stock Option Plan (“the Plan”) authorizing the Company to grant stock option awards to certain officers, employees and consultants under the plan, subject to shareholder approval at the Annual Meeting of Shareholders held on September 6, 2016.  The total number of shares of common stock of the Company, par value $0.01 per share (“Common Stock”), with respect to which awards may be granted pursuant to the Plan was not exceed 2,000,000 shares.  

On June 29, 2016, the Board of Directors approved the amendment to the Plan authorizing the total number of shares of common stock authorized to be subject to awards granted under the Plan to be increased to 4,000,000 shares.  On September 6, 2016, at the Annual Shareholder Meeting, the Company’s shareholders approved the Plan as amended.

As of August 31, 2016, the Company had awarded 965,000 options to certain executives and key employees under the plan.

On October 21, 2015, the Board of Directors of the Company approved non-employee director compensation of $25,000 each annually, to be paid quarterly half in cash and half in common stock, beginning September 1, 2015. The per share weighted average fair value of stock options granted during the six months ended August 31, 2016 and August 31, 2015 was $0.19 and zero, respectively.  The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the six months ended August 31, 2016. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options.  The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued:

The following table summarizes the status of the Company’s stock option plan:

Total stock-based compensation expense for stock option awards totaled $75,084 and zero for the six months ended August 31, 2016 and August 31, 2015, respectively.

The weighted-average grant-date fair value of options granted during the six months ended August 31, 2016 and August 31, 2015 was zero for both periods. The total intrinsic value of options exercised during the six months ended August 31, 2016 and August 31, 2015, was zero for both periods.

The following table presents information pertaining to options outstanding at August 31, 2016:

As of August 31, 2016, there was $0.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 17 months. The total fair value of shares vested during the six months ended August 31, 2016 and August 31, 2015, was zero for both periods.