Stock-Based Compensation

3 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement, Disclosure [Abstract]

7. Stock-Based Compensation

On November 15, 2017, the Company’s stockholders approved the 2017 Equity Incentive Plan (the “2017 Plan”) for the purpose of granting equity awards to employees, directors and consultants. On March 12, 2020, the Company’s Board of Directors approved the Amended and Restated 2017 Equity Incentive Plan, which amends the 2017 Plan (the "Amended 2017 Plan"). On August 19, 2021, the Company's Board of Directors adopted a further amendment to the Amended 2017 Plan, which was approved by the Company's stockholders on November 11, 2021, that increased the number of shares available for issuance under the Amended 2017 Plan by 1,700,000 shares. As amended, the 2017 Plan allows for the granting of up to 3,607,523 shares of common stock as approved by the Board of Directors or committees thereof in the form of nonqualified or incentive

stock options, restricted stock awards, restricted stock unit awards, performance share awards, performance unit awards or stock appreciation rights to officers, directors, consultants and employees of the Company. As of September 30, 2022, there were 1,065,622 shares available for grant under the 2017 Plan.

Equity awards classified as restricted stock and performance-based restricted stock are treated as issued shares when granted; however, these shares are not included in the computation of basic weighted average shares outstanding. When shares vest, unless the holder elects to pay the payroll tax liability in cash or through a sale of shares, the Company withholds the appropriate amount of shares to settle the payroll tax liability, on behalf of the individual receiving the shares, as an adjustment to accumulated deficit.

Restricted Stock

The value of each restricted stock award is equal to the fair market value of the Company’s common stock at the date of grant. Vesting of time-based restricted stock awards ranges from one year to three years. The estimated fair value of restricted stock awards, including the effect of estimated forfeitures, is recognized on a straight-line basis over the restricted stock’s vesting period.

Restricted stock award activity for the three months ended September 30, 2022 is as follows:


	Number of Shares	Weighted Average Fair Value
Outstanding at June 30, 2022	678,899	$	28.88
Granted	648,605	$	16.55
Forfeited	(38,966)	$	25.01
Vested	(189,683)	$	36.23
Outstanding at September 30, 2022	1,098,855	$	20.47

The Company also grants performance-based restricted stock awards to certain executives and other management, as summarized below.

Performance-Based Restricted Stock - Total Shareholder Return

In August 2022, the Company granted an aggregate maximum of 303,272 shares that vest based on the Company’s total shareholder return relative to total shareholder return of the Company’s peer group (a market condition), as measured by the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2022 compared to the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2025. Vesting of these awards will be determined on the date that the Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2025 is filed.

To calculate the estimated fair value of these restricted stock awards with market conditions, the Company uses a Monte Carlo simulation, which uses the expected average stock prices to estimate the expected number of shares that will vest. The Monte Carlo simulation resulted in an aggregate fair value of approximately $2,800, which the Company will recognize as expense using the straight-line method over the period that the awards are expected to vest. Stock-based compensation expense related to an award with a market condition will be recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

Performance-based restricted stock awards granted in fiscal 2022 and 2021 that are outstanding vest based on the Company’s total shareholder return relative to total shareholder return of the Company’s peer group (a market condition), as measured by the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2021 and July 1, 2020, respectively, compared to the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2024 and July 1, 2023, respectively.

Performance-Based Restricted Stock - Revenue

In August 2022, the Company granted an aggregate maximum of 303,244 shares that vest based on the Company’s average annual revenue growth during the performance period. Annual revenue growth is measured as the percentage increase in the revenue reported in the Form 10-K for each of the fiscal years ending June 30, 2023, 2024 and 2025, compared to the revenue reported in the Form 10-K for each preceding fiscal year. Vesting of these awards will be determined on the date that the

Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2025 is filed. The Company recognizes expense for awards with performance conditions when it concludes that it is probable that the performance condition will be achieved. Probability is assessed at each reporting period and expense is adjusted for such changes accordingly with a cumulative catch up adjustment.

Performance-based restricted stock award activity for the three months ended September 30, 2022 is as follows:


	Number of Shares	Weighted Average Fair Value
Outstanding at June 30, 2022	744,215	$	19.89
Granted	606,516	$	16.55
Forfeited	(218,625)	$	29.34
Vested	—	$	—
Outstanding at September 30, 2022	1,132,106	$	16.27

Unrecognized stock compensation related to unvested stock awards outstanding as of September 30, 2022 was $25,252.