Stock Option Activity

The option activity for the years ended March 31, 2001, 2000 and 1999 was as follows:
   

2001

  

2000

  

1999
   

Number
of
Shares

  

Weighted
Average
Exercise
Price

  

Number
of
Shares

  

Weighted
Average
Exercise
Price

  

Number
of
Shares

  

Weighted
Average
Exercise
Price

Outstanding options at
 beginning of year:

  

1,990,625 

  

$  5.64 

  

1,908,125 

  

$  6.23 

  

649,510 

  

$ 6.41 

     Granted

  

1,019,000 

  

4.28 

  

590,000 

  

4.34 

  

1,502,500 

  

7.70 

     Exercised

  

(26,000) 

  

4.97 

  

— 

  

— 

  

(63,260) 

  

6.01 

     Cancelled

  

(726,625) 

  

5.39 

  

(507,500) 

  

6.34 

  

(180,625) 

  

12.98 

Outstanding options at
 end of year

  

2,257,000 

  

5.08 

  

1,990,625 

  

5.64 

  

1,908,125 

  

$ 6.23 

Exercisable at end of year

  

1,085,625 

  

5.47 

  

846,377 

  

5.43 

  

542,000 

  

$ 4.98 

Available for future grant
 at end of year

  

932,750 

  

— 

  

1,043,500 

  

— 

  

1,306,625 

  

— 

Weighted average fair
 value of options granted
 during the year

  

$3.77 

      

$3.19 

      

$4.29 

    

 

The following table summarizes stock options outstanding at March 31, 2001:

 

 

  

Options Outstanding

  

Options Exercisable



Range of
Exercise Price

  



Number
Outstanding

  

Weighted
Average
Remaining
Contractual
Life

  

Weighted
Average
Exercise
Price

  



Number
Exercisable

  

Weighted
Average
Exercise
Price

$  0.91         

  

277,000    

  

4.44          

  

$   0.91     

  

277,000    

  

$   0.91       

2.38         

  

168,000    

  

9.68          

  

2.38     

  

—    

  

—       

2.63         

  

30,000    

  

9.93          

  

2.63     

  

—    

  

—       

3.63         

  

46,000    

  

9.18          

  

3.63     

  

—    

  

—       

3.81         

  

90,000    

  

8.40          

  

3.81     

  

70,000    

  

3.81       

3.88         

  

36,000    

  

8.67          

  

3.88     

  

12,000    

  

3.88       

4.00         

  

64,000    

  

9.55          

  

4.00     

  

—    

  

—       

4.13         

  

109,000    

  

8.57          

  

4.13     

  

21,000    

  

4.13       

4.25         

  

60,000    

  

6.78          

  

4.25     

  

60,000    

  

4.25       

4.69         

  

263,000    

  

9.42          

  

4.69     

  

—    

  

—       

5.05         

  

45,000    

  

9.30          

  

5.05     

  

—    

  

—       

5.06         

  

614,000    

  

7.94          

  

5.06     

  

364,333    

  

5.06       

5.25         

  

60,000    

  

9.09          

  

5.25     

  

—    

  

—       

5.31         

  

45,000    

  

9.04          

  

5.31     

  

—    

  

—       

7.13         

  

8,000    

  

8.91          

  

7.13     

  

2,667    

  

7.13       

8.38         

  

15,000    

  

9.01          

  

8.38     

  

—    

  

—       

9.00         

  

136,750    

  

6.87          

  

9.00     

  

136,750    

  

9.00       

13.00         

  

73,250    

  

7.14          

  

13.00     

  

53,375    

  

13.00       

13.44         

  

40,000    

  

7.16          

  

13.44     

  

20,000    

  

13.44       

14.13         

  

60,000    

  

7.53          

  

14.13     

  

60,000    

  

14.13       

15.00         

  

17,000    

  

7.47          

  

15.00     

  

8,500    

  

15.00       

$0.91 — $15.00

  

2,257,000    

  

7.91          

  

$   5.07     

  

1,085,625    

  

$   5.45       

Pro forma information regarding net income (loss) and earnings per share is required by SFAS No. 123, and has been determined as if the Company had accounted for its employee share options under the fair value method of that statement. The fair value for employee options granted during this year was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

 

  

For the Year Ended
   

March 31,
2001

  

March 31,
2000

  

March 31,
1999

Risk free interest rate

  

4.7 — 6.6%

  

5.6%

  

4.2 — 6.7%

Volatility

  

118%

  

80%

  

80%

Dividend yield

  

—

  

—

  

—

Expected life in years

  

4 years

  

4 years

  

4 years

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period, which includes actual accelerated vesting entitlements during the year.

 

The Company’s pro forma information follows (in thousands except for earnings per share information):

 

For the Year Ended
   

March 31,
2001

  

March 31,
2000

  

March 31,
1999

Pro forma net income (loss)

  

$(3,812,000)  

  

$(2,032,000)  

  

$6,267,000  

Pro forma earnings per share (basic)

  

$     (0.29)  

  

$     (0.16)  

  

$     0.50  

Pro forma earnings per share (diluted)

  

$     (0.29)  

  

$     (0.15)  

  

$     0.49  

The effect on net income and earnings per share may not be indicative of the effects in future years as options vest over several years and the Company continues to grant stock options to new employees.