NOTE 9 - STOCK-BASED COMPENSATION

Equity Incentive Plan

In 2012, the Board of Directors approved and adopted The 2012 Stock Incentive Plan (the “Plan”). The Plan allows for the granting of restricted stock awards, restricted stock units and stock options to employees, directors and non-employees. As of June 30, 2018, the 2012 Plan has 1.0 million shares reserved for issuance and a total of 0.1 million granted equity incentive shares remaining to be issued.

A summary of the activity for restricted stock awards is presented below:

	Number of Shares			Weighted Avg Grant Date Fair Value per Share			Weighted Avg Contractual Term in Years
Outstanding at July 1, 2016		5,263		$	3.80			1.46
Exercised		(2,632	)		—			—
Outstanding at June 30, 2017		2,631		$	3.80			0.49
Exercised		(2,631	)		(3.8	)		(0.49	)
Outstanding at June 30, 2018		—			—			—
Expected to vest at June 30, 2018		—		$	—			—

The Company’s vesting period for restricted stock awards varies from immediate vesting upon issuance to ratably over a four year period. The Company had an unrecognized expense at June 30, 2018 and 2017 of approximately $0 and $4,586 respectively, related to unvested restricted stock grants which will be recognized over the remaining weighted average service periods of 0 and 0.5 years, respectively.

In accordance with the Company’s board of director’s compensation policy, restricted stock units totaling 93,334 and 45,180 vested during FY18 and FY17, respectively, and resulted in the noncash issuance of the Company’s Class A common shares.

A summary of the activity for restricted stock units is presented below:

	Number of Shares			Weighted Avg Grant Date Fair Value per Share			Weighted Avg Contractual Term in Years
Outstanding at July 1, 2016		88,930		$	3.30			2.22
Granted		33,334			2.25			—
Vested		(45,180	)		1.66			—
Forfeited, cancelled or expired		(43,750	)		5.00			—
Outstanding at June 30, 2017		33,334		$	2.25			0.50
Granted		172,184			1.86			—
Vested		(93,334	)		(1.98	)		—
Forfeited, cancelled or expired		(16,990	)		—			—
Outstanding at June 30, 2018		95,194		$	1.86			0.52
Expected to vest at June 30, 2018		95,194		$	—			—

The restricted stock units vest predominantly over four years. The Company had an unrecognized expense at June 30, 2018 and 2017 of approximately $58,559 and $54,181, respectively, related to unvested restricted stock units which will be recognized over the remaining weighted average service periods of 0.3 and 0.5 years, respectively.

A summary of the activity for stock options is presented below:

	Number of Shares			Weighted Avg Exercise Price Fair Value per Share			Weighted Avg Contractual Term in Years		Aggregate Intrinsic Value (in thousands)
Outstanding at July 1, 2016		465,000		$	2.95			9.04	$	—
Granted		100,000			1.78			—		—
Forfeited, cancelled or expired		(350,000	)		—			—		—
Outstanding at June 30, 2017		215,000		$	1.67			9.04	$	—
Options Vested		50,000		$	1.61			8.90		—
Options Non-Vested		165,000		$	1.69			9.07	$	—
Options Exercisable		50,000		$	1.61			8.90		—

Granted		50,000			1.35			—		—
Forfeited, cancelled or expired		(155,000	)		(1.27	)		—		—
Outstanding at June 30, 2018		110,000		$	1.09			8.18	$	(109	)
Options Vested		55,000		$	1.09			8.33		(78.8	)
Options Non-Vested		55,000		$	1.09			7.72	$	(30	)
Options Exercisable		55,000		$	1.09			8.33		(78.8	)

Stock options vest predominantly over four years. As of June 30, 2018, and June 30, 2017 unrecognized expense associated with unvested stock options totaled $29,452 and $171,568, respectively. These expenses will be recognized over the remained weighted average service periods of 0.4 and 2.0 years respectively.

During the year ended June 30, 2018, the Company granted various employees options to purchase a total of 50,000 shares of common stock. The options have a 3-year term and have an exercise price of 2.08 per share. The Company accounts for stock-based compensation costs at fair value measured on the date of grant of the award using a Black-Scholes option valuation model for stock option awards.

The weighted average estimated fair value per share of the stock options at grant date was $1.35 per share. Such fair values were estimated using the Black-Scholes stock option pricing model and the following weighted average assumptions.

	2018			2017
Expected life	5.4 years			6.3 years
Estimated volatility		79.97	%		83.05	%
Risk-free interest rate		0.02	%		0.01	%
Dividends		—			—

The following table summarizes stock-based compensation included in the consolidated statements of operations for the fiscal years ended June 30, 2018 and 2017, respectively:

	Fiscal Year Ended June 30,
	(in thousands)
	2018		2017
Sales and marketing	$	21	$	33
General and administrative		354		96
Total stock-based compensation	$	375	$	129

In March 2018, Evan B. Meyer, the Company’s former Chief Financial Officer, terminated employment with the Company. In connection with his termination, the Company and Mr. Meyer entered into a separation agreement providing that outstanding equity-based awards granted by the Company that were unvested on the date of his termination became fully vested and, in the case of options, exercisable. Stock compensation expense of $0.2 million was accrued in association with the acceleration of 120,000 (of which 43,125 shares were previously vested) stock options and 60,000 restricted stock units based on the market rate at the date of termination of $1.84. The acceleration of the vesting of these shares is reflected in the activity of the table for restricted units as the acceleration was dependent on Mr. Meyer’s acceptance of the separation agreement which occurred in April of 2018. There was no incremental expense as a result of this modification. Due to the acceleration of vesting there was a one time charge to expense of $0.3 million in April 2018.