Stock Options

12 Months Ended

Jun. 30, 2024

Stock Options

Stock Options

NOTE 10 - Stock Options

The Company follows ASC 718 (“Share-Based Payment”), which requires that all share-based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period. For the fiscal years ended June 30, 2024, 2023 and 2022, the Company recorded non-cash compensation expense of $1,733,000 ($.05 per basic and diluted share), $1,464,000 ($.04 per basic and diluted share) and $1,649,000 ($.04 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

2012 Employee Stock Option Plan

In December 2012, the stockholders approved the 2012 Employee Stock Option Plan (the “2012 Employee Plan”). The 2012 Employee Plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 1,900,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (ISOs), to valued employees. Any plan participant who is granted ISOs and possesses more than 10% of the voting rights of the Company’s outstanding common stock must be granted an option with a price of at least 110% of the fair market value on the date of grant.

Under the 2012 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2024, 363,036 stock options were outstanding, 190,960 stock options were exercisable and no further stock options were available for grant under this plan. No options were granted under this plan during the year ended June 30, 2024.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2024	2023		2022
Risk-free interest rates	n/a	3.03	%	1.64	%
Expected lives	n/a	7.27 Years		6.18 Years
Expected volatility	n/a	43	%	43	%
Expected dividend yields	n/a	0	%	0	%

The Company uses a weighted-average expected stock-price volatility assumption that is a combination of both current and historical implied volatilities of the underlying stock. The implied volatilities were obtained from publicly available data sources. For the weighted-average expected option life assumption, the Company considers the exercise behavior of past grants. The average risk-free interest rate is based on the U.S. Treasury Bond rate for the expected term of the options and the average dividend yield is based on historical experience.

The following table reflects activity under the 2012 Plan for the fiscal years ended June 30,:

	2024				2023				2022
			Weighted average				Weighted average				Weighted average
	Options		exercise price		Options		exercise price		Options		exercise price
Outstanding, beginning of year		521,580	$	19.37		523,080	$	18.59		214,080	$	9.59
Granted		—		—		37,500	$	26.94		338,000	$	23.17
Forfeited/Lapsed		(11,000)	$	3.16		—		—		—		-
Exercised		(147,544)	$	15.43		(39,000)	$	10.44		(29,000)	$	5.45
Outstanding, end of period		363,036	$	21.47		521,580	$	19.37		523,080	$	18.59
Exercisable, end of period		190,960	$	20.87		247,628	$	17.16		176,752	$	14.68
Weighted average fair value at grant date of options granted		n/a			$	13.36			$	12.16
Total intrinsic value of options exercised	$	3,972,000			$	822,000			$	502,000
Total intrinsic value of options outstanding	$	11,067,000			$	7,968,000			$	1,916,000
Total intrinsic value of options exercisable	$	5,936,000			$	4,330,000			$	1,218,000

0, 37,500 and 338,000 options were granted during the fiscal years ended June 30, 2024, 2023 and 2022, respectively. 147,544, 39,000 and 29,000 options were exercised during the fiscal years ended June 30, 2024, 2023 and 2022, respectively. 109,544 of the 147,544 stock options exercised during the fiscal year ended June 30, 2024 were settled by the Company withholding 46,570 from the shares issuable on exercise of the options. The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. 29,600 of the 39,000 stock options exercised during the fiscal year ended June 30, 2023, were settled by the Company withholding 10,150 from the shares issuable on exercise of the options. The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. 1,000 of the 29,000 stock options exercised during the fiscal year ended June 30, 2022, were settled by the Company withholding 153 from the shares issuable on exercise of the options. The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. $427,000, $84,000 and $155,000 was received from the remaining option exercises for the fiscal years ended June 30, 2024, 2023 and 2022, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $119,000, $0 and $0 for the years ended June 30, 2024, 2023 and 2022, respectively.

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at June 30, 2024:

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
$10.02 ‑ $26.94	363,036	7.16	$	21.47	190,960	$	20.87
	363,036	7.16	$	21.47	190,960	$	20.87

As of June 30, 2024 and 2023, there was $1,094,000 and 1,971,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan, respectively. 101,876, 109,876 and 107,576 options vested during the years June 30, 2024, 2023 and 2022, respectively. The total grant date fair value of the options vesting during the fiscal years ended June 30, 2024, 2023 and 2022 under this plan was $946,000, $981,000 and $1,040,000, respectively.

2012 Non-Employee Stock Option Plan

In December 2012, the stockholders approved the 2012 Non-Employee Stock Option Plan (the “2012 Non-Employee Plan”). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.

Under the 2012 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2024, 20,400 stock options were outstanding, 16,560 stock options were exercisable and 0 stock options were available for grant under this plan. No stock options were granted under this plan during the year ended June 30, 2024.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2024	2023	2022
Risk-free interest rates	n/a	n/a	1.68	%
Expected lives	n/a	n/a	6.18 Years
Expected volatility	n/a	n/a	43	%
Expected dividend yields	n/a	n/a	0	%

The following table reflects activity under the 2012 Non-Employee Plan for the fiscal years ended June 30,:

	2024				2023				2022
			Weighted average				Weighted average				Weighted average
	Options		exercise price		Options		exercise price		Options		exercise price
Outstanding, beginning of year		20,400	$	14.39		20,400	$	14.39		12,000	$	6.55
Granted		—		—		—		—		9,600	$	22.93
Forfeited/Lapsed		—		—		—		—		—		—
Exercised		—		—		—		—		(1,200)	$	4.35
Outstanding, end of period		20,400	$	14.39		20,400	$	14.39		20,400	$	14.39
Exercisable, end of period		16,560	$	12.41		13,920	$	10.99		11,280	$	8.92
Weighted average fair value at grant date of options granted		n/a				n/a			$	12.58
Total intrinsic value of options exercised		n/a				n/a			$	19,000
Total intrinsic value of options outstanding	$	766,000			$	413,000			$	149,000
Total intrinsic value of options exercisable	$	655,000			$	329,000			$	136,000

0, 0 and 9,600 options were granted during the fiscal years ended June 30, 2024, 2023 and 2022, respectively. 0, 0 and 1,200 options were exercised during the fiscal years ended June 30, 2024, 2023 and 2022, respectively. 1,200 stock options exercised during the fiscal year ended June 30, 2022 were settled by the Company withholding 258 from the shares issuable on exercise of the options. The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. $0 was received from the remaining option exercises for each of the fiscal years ended June 30, 2024, 2023 and 2022, and the actual tax benefit realized for the tax deductions from option exercises was $0, $0 and $4,000 in fiscal 2024, 2023 and 2022 respectively.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at June 30, 2024:

	Options outstanding				Options exercisable
		Weighted average	Weighted			Weighted
	Number	remaining	average exercise		Number	average exercise
Range of exercise prices	outstanding	contractual life	price		exercisable	price
$4.35 - $22.93	20,400	5.65	$	14.39	16,560	$	12.41
	20,400	5.65	$	14.39	16,560	$	12.41

As of June 30, 2024 and 2023, there was $24,000 and $46,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan, respectively. 2,640, 2,640 and 6,240 options vested during the years June 30, 2024, 2023 and 2022, respectively. The total grant date fair value of the options vesting during each of the fiscal years ended June 30, 2024, 2023 and 2022 under this plan was $24,000, $24,000 and $39,000, respectively.

2018 Non-Employee Stock Option Plan

In December 2018, the stockholders approved the 2018 Non-Employee Stock Option Plan (the “2018 Non-Employee Plan”). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.

Under the 2018 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2024, 68,900 stock options were outstanding, 59,500 stock options were exercisable and 0 stock options were available for grant under this plan. No stock options were granted under this plan during the year ended June 30, 2024.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2024	2023	2022
Risk-free interest rates	n/a	n/a	1.68	%
Expected lives	n/a	n/a	6.18 Years
Expected volatility	n/a	n/a	43	%
Expected dividend yields	n/a	n/a	0	%

The following table reflects activity under the 2018 Non-Employee plan for the fiscal year ended June 30,:

	2024				2023				2022
			Weighted average				Weighted average				Weighted average
	Options		exercise price		Options		exercise price		Options		exercise price
Outstanding, beginning of year		75,000	$	14.83		89,000	$	14.91		70,100	$	11.93
Granted		—		—		—		—		23,500	$	22.93
Forfeited/Lapsed		—		—		—		—		—		—
Exercised		(6,100)	$	18.15		(14,000)	$	15.32		(4,600)	$	10.43
Outstanding, end of period		68,900	$	14.54		75,000	$	14.83		89,000	$	14.91
Exercisable, end of period		59,500	$	13.21		50,720	$	12.87		45,040	$	12.98
Weighted average fair value at grant date of options granted		n/a				n/a			$	12.58
Total intrinsic value of options exercised	$	141,000			$	209,000			$	58,000
Total intrinsic value of options outstanding	$	2,578,000			$	1,486,000			$	561,000
Total intrinsic value of options exercisable	$	2,305,000			$	1,104,000			$	354,000

0, 0 and 23,500 options were granted during the fiscal years ended June 30, 2024, 2023 and 2022, respectively. 6,100, 14,000 and 4,600 options were exercised during the fiscal years ended June 30, 2024, 2023 and 2022, respectively. 6,100 stock options exercised during the fiscal year ended June 30, 2024 were settled by the Company withholding 2,700 from the shares issuable on exercise of the options. The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. 14,000 stock options exercised during the fiscal year ended June 30, 2023 were settled by the company withholding 7,235 from the shares issuable on exercise of the options. The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. 4,600 stock options exercised during the fiscal year ended June 30, 2022 were settled by the company withholding 2,075 from the shares issuable on exercise of the options. The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. $0 was received from the remaining option exercises for each of the fiscal years ended June 30, 2024, 2023 and 2022, and the actual tax benefit realized for the tax deductions from option exercises was $30,000, $44,000 and $12,000 in fiscal 2024, 2023 and 2022, respectively.

The following table summarizes information about stock options outstanding under the 2018 Non- Employee Plan at June 30, 2024:

	Options outstanding				Options exercisable
		Weighted average	Weighted			Weighted
	Number	remaining	average exercise		Number	average exercise
Range of exercise prices	outstanding	contractual life	price		exercisable	price
$8.10 - $22.93	68,900	5.71	$	14.54	59,500	$	13.21
	68,900	5.71	$	14.54	59,500	$	13.21

As of June 30, 2024 and 2023, there was $59,000 and $135,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan, respectively. 14,880, 19,680 and 19,680 options vested during the years June 30, 2024, 2023 and 2022, respectively. The total grant date fair value of the options vesting during the fiscal year ended June 30, 2024, 2023 and 2022 under this plan was $124,000, $149,000 and $160,000, respectively.

2020 Non-Employee Stock Option Plan

In May 2020, the stockholders approved the 2020 Non-Employee Stock Option Plan (the “2020 Non-Employee Plan”). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.

Under the 2020 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2024, 56,900 stock options were outstanding, 30,140 stock options were exercisable and 43,100 stock options were available for grant under this plan. No options were granted under this plan during the year ended June 30, 2024.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2024	2023		2022
Risk-free interest rates	n/a	3.03 - 3.40	%	1.68	%
Expected lives	n/a	7.23 - 7.27 Years		6.18 Years
Expected volatility	n/a	43	%	43	%
Expected dividend yields	n/a	0	%	0	%

The following table reflects activity under the 2020 Non-Employee plan for the fiscal year ended June 30,:

	2024				2023				2022
			Weighted average				Weighted average				Weighted average
	Options		exercise price		Options		exercise price		Options		exercise price
Outstanding, beginning of year		56,900	$	23.35		26,900	$	18.64		10,000	$	11.40
Granted		—		—		30,000	$	27.57		16,900	$	22.93
Forfeited/Lapsed		—		—		—		—		—		—
Exercised		—		—		—		—		—		—
Outstanding, end of period		56,900	$	23.35		56,900	$	23.35		26,900	$	18.64
Exercisable, end of period		30,140	$	21.72		18,760	$	20.73		7,380	$	16.68
Weighted average fair value at grant date of options granted		n/a			$	13.74			$	12.58
Total intrinsic value of options exercised		n/a				n/a				n/a
Total intrinsic value of options outstanding	$	1,627,000			$	643,000			$	92,000
Total intrinsic value of options exercisable	$	911,000			$	261,000			$	37,000

0, 30,000 and 16,900 options were granted during the fiscal years ended June 30, 2024, 2023 and 2022, respectively. No options were exercised during the fiscal years ended June 30, 2024, 2023 and 2022.

The following table summarizes information about stock options outstanding under the 2020 Non- Employee Plan at June 30, 2024:

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
$11.40 - $30.71	56,900	7.59	$	23.35	30,140	$	21.72
	56,900	7.59	$	23.35	30,140	$	21.72

As of June 30, 2024 and 2023, there was $215,000 and $344,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan, respectively. 11,380, 11,380 and 5,380 options vested during the years June 30, 2024, 2023 and 2022, respectively. The total grant date fair value of the options vesting during the fiscal year ended June 30, 2024, 2023 and 2022 under this plan was $129,000, $129,000 and $55,000, respectively.

2022 Employee Stock Option Plan

In December 2022, the stockholders approved the 2022 Employee Stock Option Plan (the “2022 Employee Plan”). The plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 950,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options, which are intended to

qualify as incentive stock options (“ISOs”) or non-incentive stock options, to valued employees. Any plan participant who is granted ISOs and possesses more than 10% of the voting rights of the Company’s outstanding common stock must be granted an option with a price of at least 110% of the fair market value on the date of grant.

Under the 2022 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2024, 130,000 stock options were outstanding, 26,000 stock options were exercisable and 820,000 stock options were available for grant under this plan. 130,000 options were granted under this plan during the year ended June 30, 2024.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2024		2023
Risk-free interest rates	4.42 - 4.62	%	3.84	%
Expected lives	5.63 - 5.87 Years		7.28 Years
Expected volatility	56	%	45	%
Expected dividend yields	.76 - 1.01	%	0.62	%

The following table reflects activity under the 2022 Employee plan for the fiscal year ended June 30,:

	2024				2023
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		5,000	$	40.01		—		—
Granted		130,000	$	41.38		5,000	$	40.01
Forfeited/Lapsed		(5,000)		(40.01)		—		—
Exercised		—		—		—		—
Outstanding, end of period		130,000	$	41.38		5,000	$	40.01
Exercisable, end of period		26,000	$	41.38		1,000	$	40.01
Weighted average fair value at grant date of options granted	$	21.29			$	19.77
Total intrinsic value of options exercised		n/a				n/a
Total intrinsic value of options outstanding	$	1,375,000			$	—
Total intrinsic value of options exercisable	$	275,000			$	—

130,000 and 5,000 options were granted during the fiscal year ended June 30, 2024 and 2023. No options were exercised during the fiscal year ended June 30, 2023.

The following table summarizes information about stock options outstanding under the 2022 Employee Plan at June 30, 2024:

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
$21.60 - $49.39	130,000	9.81	$	41.38	26,000	$	41.38
	130,000	9.81	$	41.38	26,000	$	41.38

As of June 30, 2024 and 2023, there was $2,066,000 and $74,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan, respectively. 26,000 and 1,000 options vested during the year ended June 30, 2024 and 2023. The total grant date fair value of the options vesting during the fiscal year ended June 30, 2024 and 2023 under this plan was $553,000 and $20,000, respectively.