EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS

3 Months Ended

Sep. 30, 2018

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

EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS

NOTE 8 - EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS

The Company previously adopted the 2007 Equity Incentive Plan (“2007 Plan”) that authorized the board of directors or a committee to grant up to 300,000 shares to employees and directors of the Company. Unless defined in an employment agreement or otherwise determined, the stock options vest ratably over a three-year period. Stock options expire 10 years after the date of grant. No shares are available to be issued for future awards under the 2007 Plan.

In November 2010, the Company adopted the 2010 Omnibus Long-Term Incentive Plan (“2010 Omnibus Plan”), which authorizes a committee of the board of directors to grant stock options, stock appreciation rights, restricted stock, RSUs, unrestricted stock, other stock-based awards and cash awards. The 2010 Omnibus Plan, as amended, authorizes up to 13,950,000 shares plus shares of Common Stock underlying any outstanding stock option of other awards granted by any predecessor employee stock plan of the Company that is forfeited, terminated, or cancelled without issuance of shares, to employees, officers, non-employee members of the board of directors, consultants and advisors. Unless otherwise determined, options vest ratably over a three-year period and expire eight years after the date of grant. At the annual meeting of shareholders held on December 19, 2017, the Company’s shareholders approved an amendment of the 2010 Omnibus Plan which increased the number of shares of the Company’s Common Stock available for issuance pursuant to awards under the 2010 Omnibus Plan by 2,000,000 to 13,950,000.

In November 2012, the Company adopted the 2012 Non-Employee Director Equity Compensation Plan, as amended (“2012 Director Equity Plan”), under which the Company may issue up to 4,400,000 RSUs and other equity awards to our non-employee directors pursuant to the Company’s director compensation policy. At the annual meeting of shareholders held on November 14, 2016, the Company’s shareholders approved an amendment of the 2012 Director Equity Plan which increased the number of shares of the Company’s Common Stock available for issuance pursuant to awards under the 2012 Director Equity Plan by 1,200,000 to 4,400,000.

As of September 30, 2018, there were a total of 1,350,217 shares available to be issued for future awards under the 2010 Omnibus Plan and 298,375 shares available to be issued for future awards under the 2012 Director Equity Plan.

Stock Options

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing method. The Company uses historical data to estimate the expected price volatility, the expected option life and the expected forfeiture rate. The Company has not made any dividend payments nor does it have plans to pay dividends in the foreseeable future. The following assumptions were used to estimate the fair value of stock options granted during the three months ended September 30, 2018 and September 30, 2017 using the Black-Scholes option-pricing model:

	Three months ended September 30,
	2018	2017
Expected life of option (years)	N/A	4
Risk-free interest rate	N/A	1.66 - 1.69%
Assumed volatility	N/A	113.62 - 113.75%
Expected dividend rate	N/A	0.00%
Expected forfeiture rate	N/A	6.15 - 6.72%

Time-vested and performance-based stock options are accounted for at fair value at date of grant. Total fair values of stock options granted for the three months ended September 30, 2018 and September 30, 2017 were $0 and $9,319 respectively. Compensation expense is recognized over the requisite service and performance periods. The amounts recognized in the condensed consolidated financial statements related to stock options were $11,300 and $188,439, based on the amortized grant date fair value of stock options granted under its various equity incentive plans, during the three months ended September 30, 2018 and September 30, 2017, respectively. At September 30, 2018, there was $314,235 in unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.3 years.

Information with respect to stock option activity is as follows:

	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (in years)
Balance at June 30, 2017		8,249,298		$	0.71		6.50
Options granted		1,407,000			0.40
Options forfeited		(2,781,483	)		0.71
Balance at June 30, 2018		6,874,815			0.65		5.87
Options forfeited		(677,217	)		0.54
Balance at September 30, 2018		6,197,598			0.66		5.66

The following table summarizes information relating to the stock options outstanding as of September 30, 2018:

	Outstanding						Exercisable
Range of Exercise Prices	Number of Options		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number of Options		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
$0.28 to $0.50		3,313,815		6.08	$	0.39		1,596,616		5.32	$	0.40
$0.51 to $1.00		2,222,983		5.64		0.68		1,437,584		5.26		0.71
$1.01 to $1.50		170,000		5.41		1.02		130,000		5.23		1.02
$1.51 to $2.00		400,950		3.51		1.73		400,950		3.51		1.73
$2.01 to $5.80		89,850		1.06		4.90		89,850		1.06		4.90
Balance at September 30, 2018		6,197,598		5.66		0.66		3,655,000		4.99		0.80

During the three months ended September 30, 2017, stock options to purchase 27,000 shares were granted to employees exercisable at $0.39 to $0.48 per share based on various service-based vesting terms from July 2017 through September 2020 and exercisable at various dates through September 2025.

There is no aggregate intrinsic value of outstanding stock options based on the Company’s adjusted closing stock price of $0.26 as of September 30, 2018.

Information with respect to unvested employee stock option activity is as follows:

	Number of  Options			Weighted Average Grant Date Fair Value Per Share		Average Remaining Contractual Life (in years)
Balance at June 30, 2017		5,197,098		$	0.54		6.93
Options granted		1,407,000			0.40
Options vested		(1,581,266	)		0.56
Options forfeited		(1,840,499	)		0.48
Balance at June 30, 2018		3,182,333			0.51		6.57
Options vested		(362,835	)		0.71
Options forfeited		(276,900	)		0.65
Balance at September 30, 2018		2,542,598			0.47		6.63

RSUs

The Company compensates its directors with time-vested RSUs and cash. On September 24, 2018 and June 26, 2018, 148,276 and 119,444 RSUs were granted under the 2012 Director Equity Plan to the Company’s directors in lieu of cash based director’s fee payments of $43,000 for services rendered during each of the first quarter of fiscal 2019 and fourth quarter of fiscal 2018, respectively. The RSUs vested immediately on the date of grant. On November 14, 2017, 1,163,075 RSUs were granted to the Company’s directors in partial payment of director’s fees through November 2018 under the 2012 Director Equity Plan. As of September 30, 2018, all of the RSUs from the November 14, 2017 grant had vested.

On November 14, 2016, 581,816 RSUs were granted to the Company’s directors in partial payment of director’s fees through November 2017 under the 2012 Director Equity Plan. As of September 30, 2017, 563,635 of the RSUs from the November 14, 2016 grant had vested and 18,181 had forfeited.

The Company also compensates its key employees with time-vested and performance-based RSUs. No RSUs were granted to the Company’s employees under the 2010 Omnibus Plan and inducement awards during the three months ended September 30, 2018 and September 30, 2017.

Time-vested and performance-based RSUs are accounted for at fair value at date of grant. Total fair value of RSUs granted for the three months ended September 30, 2018 and September 30, 2017 was $43,000 and $0, respectively. Compensation expense is recognized over the requisite service and performance periods. The amount recognized in the condensed consolidated financial statements related to RSUs was $303,342 and $247,169, based on the amortized grant date fair value of RSUs granted under its various equity incentive plans, during the three months ended September 30, 2018 and September 30, 2017, respectively. As of September 30, 2018, there were 3,855,000 of unvested RSUs and $1,487,901 in unrecognized compensation cost. Generally, shares of Common Stock related to vested RSUs are to be issued six months after the holder’s separation from service with the Company.

Information with respect to RSU activity is as follows:

	Number of Restricted Stock Units			Weighted Average Valuation Price Per Unit
Balance at June 30, 2017		5,556,332		$	1.07
RSUs granted		4,342,519			0.41
RSUs forfeited		(1,147,231	)		0.75
Shares issued		(1,041,152	)		1.42
Balance at June 30, 2018		7,710,468			0.70
RSUs granted		148,276			0.29
Shares issued		(70,654	)		0.40
Balance at September 30, 2018		7,788,090			0.69