Note 12 - Shareholders' Equity

12 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

NOTE 12. SHAREHOLDERS’ EQUITY

The Company has three classes of common equity: class A, class B, and class C common stock. The Company’s class A common stock is traded over-the-counter and is quoted daily under NASDAQ’s Capital Markets under the symbol “GROW.” There is no established public trading market for the Company’s class B and class C common stock. There are no shares of class B stock issued as of June 30, 2022, or 2021.

The Company’s class A and class B common stock have no voting privileges.

Dividends

Dividends totaling $1.1 million and $552,000 were paid to holders of class A common stock in fiscal years 2022 and 2021, respectively. Dividends of $171,000 and $88,000 were paid to holders of class C common stock in fiscal years 2022 and 2021, respectively. The dividend rate per share for both classes was $0.0025 per month for July 2020 through January 2021, $0.0050 per month for February 2021 through September 2021, and $0.0075 per month for October 2021 through June 2022.

As of June 30, 2022, the Board has authorized a monthly dividend of $0.0075 per share through September 2022, at which time it will be considered for continuation by the Board. Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company and general business conditions. On a per share basis, the holders of the class C common stock and the nonvoting class A common stock participate equally in dividends as declared by the Company’s Board of Directors.

Share Repurchase Plan

The Company has a share repurchase program, approved by the Board of Directors, authorizing the Company to annually purchase up to $5.0 million of its outstanding common shares, as market and business conditions warrant, on the open market in compliance with Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The repurchase program has been in place since December 2012, and the Board of Directors has annually renewed the repurchase program each calendar year. The Company announced on February 25, 2022, that the Board of Directors of the Company approved an increase to the limit of its annual share buyback program from $2.75 million to $5.0 million. The acquired shares may be used for corporate purposes, including shares issued to employees in the Company’s stock-based compensation programs. As of June 30, 2022, approximately $4.7 million remains available for repurchase under this authorization.

During fiscal years 2022 and 2021, the Company repurchased 89,287 and 53,151, respectively, of its class A shares on the open market using cash of $452,000 and $314,000, respectively. To date, the Company has repurchased a total of 808,969 class A shares under the repurchase program using cash of $2.2 million.

Other Activity

During fiscal year 2021, the Company granted 4,000 shares of class A common stock to certain employees at a weighted average fair value of $2.50. No shares were granted in fiscal year 2022.

The Company granted 3,300 of class A common stock at a weighted average fair value of $2.68 per share to its non-employee directors in fiscal year 2021. No shares were granted in fiscal year 2022.

All stock grants vest immediately after issuance. Issuances of treasury stock for grants, bonuses, and the share repurchase plan are accounted for using the weighted-average cost basis of the shares issued.

Shareholders of class C shares are allowed to convert to class A. During fiscal year 2022, 86 shares were converted from class C to class A. During fiscal year 2021, no shares were converted from class C to class A. Conversions are one class A share for one class C share and are recorded at par value. There are no restrictions or requirements to convert.

Stock Option Plans

In November 1989, the Board of Directors adopted the 1989 Non-Qualified Stock Option Plan (“1989 Plan”), amended in December 1991, which provides for the granting of options to purchase 1,600,000 shares of the Company’s class A common stock to directors, officers and employees of the Company and its subsidiaries. Options issued under the 1989 Plan vest six months from the grant date or 20 percent on the first, second, third, fourth, and fifth anniversaries of the grant date. Options issued under the 1989 Plan expire ten years after issuance. There were 231,000 options granted during the year ended June 30, 2021, with a weighted-average grant date fair value price of $3.36 and a vesting period of six months. The options vested during the year ended June 30, 2022. The fair value is estimated at the date of the grant using a Black-Scholes option pricing model. There were no options granted during the year ended June 30, 2022.

The assumptions utilized to estimate the fair value of options granted under the 1989 Plan during the year ended June 30, 2021, are presented in the following table:

Risk-free interest rate	0.9	%
Expected volatility	70.0	%
Expected life (in years)	5.25
Expected dividend yield	1.0	%

The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. Expected volatility is based on historical volatility of the Company’s common stock. The Company did not have historical post-vesting activity under the 1989 Plan and utilized the simplified method to calculate expected term for stock options granted during the year ended June 30, 2021. The simplified method calculates the expected term as mid-point between the weighted-average time to vest and the contractual maturity. The expected dividend yield is based on the date of grant.

The estimated fair value of options granted is amortized to expense over the options’ vesting period. During the year ended June 30, 2022, $733,000 was recognized as compensation expense and $154,000 was recognized as a deferred tax asset. During the year ended June 30, 2021, $43,000 was recognized as compensation expense and $9,000 was recognized as a deferred tax asset. As of June 30, 2022, there was no unrecognized compensation costs related to nonvested stock options under the Plan. As of June 30, 2021, $733,000 of total unrecognized compensation costs related to nonvested stock options under the Plan was expected to be recognized over a weighted average period of 0.47 years. There were no options forfeited or exercised during the year ended June 30, 2022, or June 30, 2021. Under the 1989 Plan, there were 231,000 options outstanding and exercisable as of June 30, 2022, and 231,000 options outstanding and nonvested as of June 30, 2021, with a weighted-average grant date fair value price of $3.36.

Stock option transactions under the 1989 Plan for the last two fiscal years are summarized below.

			Weighted Average		Weighted Average Remaining		Aggregate Intrinsic
			Exercise		Contractual		Value
(dollars in thousands, except price data)	Options		Price		Life in Years		(net of tax)
Outstanding June 30, 2020		-		n/a
Granted		231,000	$	6.05
Exercised		-		n/a
Forfeited		-		n/a
Outstanding June 30, 2021		231,000	$	6.05
Granted		-		n/a
Exercised		-		n/a
Forfeited		-		n/a
Outstanding June 30, 2022		231,000	$	6.05		8.98	$	-

In April 1997, the Board of Directors adopted the 1997 Non-Qualified Stock Option Plan (“1997 Plan”), which provides for the granting of stock appreciation rights (SARs) and/or options to purchase 400,000 shares of the Company’s class A common stock to directors, officers, and employees of the Company and its subsidiaries. Options issued under the 1997 Plan expire ten years after issuance. There were no options granted, exercised, or forfeited during the years ended June 30, 2022, or  June 30, 2021. There were 2,000 options outstanding and exercisable under the 1997 Plan as of June 30, 2022, and 2021.

The estimated fair value of options granted is amortized to expense over the options’ vesting period. The fair value of these options is estimated at the date of the grant using a Black-Scholes option pricing model.

Stock option transactions under the 1997 Plan for the past two fiscal years are summarized below:

			Weighted Average		Weighted Average Remaining		Aggregate Intrinsic
			Exercise		Contractual		Value
(dollars in thousands, except price data)	Options		Price		Life in Years		(net of tax)
Outstanding June 30, 2020		2,000	$	2.74
Granted		-		n/a
Exercised		-		n/a
Forfeited		-		n/a
Outstanding June 30, 2021		2,000	$	2.74
Granted		-		n/a
Exercised		-		n/a
Forfeited		-		n/a
Outstanding June 30, 2022		2,000	$	2.74		5.72	$	3.00