Stock-Based Compensation Plans

12 Months Ended

Jun. 30, 2017

Equity [Abstract]

Stock-Based Compensation Plans

6. Stock-Based Compensation Plans

At June 30, 2017, the Company had outstanding equity-linked grants under eight stock-based compensation plans (the “Plans”), as follows: 

											Available
	Initial						Expired /				For
Plan	Shares		Granted		Exercised		Forfeited		Outstanding		Issuance
2001 Employee Stock Option Plan		1,000,000		1,251,261		376,368		868,955		5,938		—
2005 Employee Equity Incentive Plan		500,000		547,125		484,250		48,925		13,950		—
2005 Non Employee Director Stock Option Plan		200,000		195,000		97,500		7,500		90,000		—
2009 Employee Equity Incentive Plan		500,000		619,925		357,227		123,100		139,598		3,175
2009 Non Employee Director Stock Option Plan		200,000		195,000		48,750		33,750		112,500		38,750
2012 Employee Equity Incentive Plan		500,000		664,000		111,250		188,250		364,500		24,250
2012 Non Employee Director Stock Option Plan		200,000		180,000		—		41,250		138,750		61,250
2014 Employee Equity Incentive Plan		750,000		480,000		—		154,000		326,000		24,000
2017 Equity Incentive Plan		750,000		—		—		—		—		750,000
Total										1,191,236		901,425

The compensation cost that has been charged against income for these plans was $1,086,139, $1,629,644 and $1,107,250 for the fiscal years ended June 30, 2017, 2016 and 2015, respectively, and is recorded in the department associated with the employee to which the grants are issued. The expense for fiscal 2017 included a charge to modify certain stock options of $81,765 and a reversal of stock compensation from prior periods due to forfeitures of unvested options of $625,202. As of June 30, 2017, there was approximately $5,612,949 of total unrecognized compensation cost related to non-vested share-based compensation arrangements to be recognized over a weighted-average period of 3.2 years, which includes $3,148,986 of unrecognized compensation expense on restricted stock awards.

Shares from option exercises may be acquired by various methods. They may be acquired by (a) cash or certified check, (b) with previously acquired shares of common stock having an aggregate fair market value, on the date of exercise, equal to the aggregate exercise price of all options being exercised (provided that such shares were not acquired less than six (6) months prior to such exercise date), (c) in certain circumstances by surrendering options to acquire shares of common stock in exchange for the number of shares of common stock. Cash in the amount of $332,592 was received from the exercise of stock options for the year ended June 30, 2017. The Company received 141,351 shares of common stock as payment for options exercised during the year ended June 30, 2017. During the year ended June 30, 2017, the Company issued 280,200 treasury shares in connection with stock option exercises. 

Stock options typically expire 10 years from the date of grant and vest over service periods, which typically are 4 years. All options are granted at the price of the Common Stock on the NASDAQ Stock Market on the date of grant as set forth in the Plans.

The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. The expected volatility represents the historical price changes of the Company’s stock over a period equal to that of the expected term of the option. The Company uses the simplified method for determining the option term. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based upon historical and projected dividends. The Company has historically not paid dividends, and is not expected to do so in the near term.

The weighted average fair value at date of grant for options granted during the fiscal years ended June 30, 2017, 2016 and 2015 was $4.46, $4.68 and $5.70 per share, respectively. The fair value was estimated based on the weighted average assumptions of:

	For twelve months ended June 30,
	2017			2016			2015
Risk-free interest rates		1.80	%		1.71	%		1.60	%
Expected option life in years		6.25			6.25			6.50
Expected stock price volatility		54.68	%		55.41	%		61.13	%
Expected dividend yield		0	%		0	%		0	%

  A summary of option activity under the Plans as of June 30, 2017, 2016 and 2015, and changes during the years ending on those dates is presented below:

	Options
				Weighted
				Average		Aggregate
	Outstanding			Exercise		Intrinsic
	Shares			Price		Value
Outstanding as of June 30, 2014		1,663,329			3.88	$	4,879,106
Vested and exercisable at June 30, 2014		967,056			3.81	$	2,937,802
Granted		549,000			10.11
Exercised		(579,463	)		4.11
Forfeited		(47,250	)		7.70
Expired		(28,000	)		8.00
Outstanding as of June 30, 2015		1,557,616			5.80	$	6,553,821
Vested and exercisable at June 30, 2015		620,256			3.19	$	3,911,604
Granted		320,000			8.80
Exercised		(82,737	)		4.60
Forfeited		(4,375	)		9.23
Expired		(280	)		5.82
Outstanding as of June 30, 2016		1,790,224		$	6.38	$	1,675,072
Vested and exercisable at June 30, 2016		813,349		$	3.82	$	1,501,208
Granted		327,500			8.34
Exercised		(527,663	)		3.30
Forfeited		(383,625	)		8.23
Expired		(15,200	)		8.51
Outstanding as of June 30, 2017		1,191,236		$	7.66	$	2,748,956
Vested and exercisable at June 30, 2017		517,361		$	6.33	$	1,923,794

 The total fair value of shares vested during the year ended June 30, 2017 was $1,213,325. The number and weighted-average grant-date fair value of non-vested stock options at the beginning of fiscal 2017 was 977,000 and $4.96, respectively. The number and weighted-average grant-date fair value of stock options which vested during fiscal 2017 was 248,625 and $4.88, respectively.

The following table summarizes information about stock options outstanding and exercisable at June 30, 2017:

	Options Outstanding				Options Exercisable
		Weighted
		Average	Weighted				Weighted
Range of		Contractual	Average				Average
Exercise		Life	Exercise				Exercise
Prices	Number	(Yrs.)	Price			Number	Price
$0.85-$6.74	352,236	4.1	$	4.09		313,861	$	3.98
$6.75-$8.53	341,750	8.3	$	7.23		85,000	$	7.57
$8.54-13.89	497,250	8.4	$	10.49		118,500	$	11.65
	1,191,236	7.1	$	7.66		517,361	$	6.33

Stock options are granted with exercise prices not less than the fair market value of the Company’s Common Stock, at the time of the grant, with an exercise term as determined by the compensation committee of the Company’s board of directors (the “Committee”) not to exceed 10 years. The Committee determines the vesting period for the Company’s stock options. Generally, such stock options have vesting periods of immediate to four years. Certain option awards provide for accelerated vesting upon meeting specific retirement, death or disability criteria, and upon change of control.

Restricted Stock Awards

On December 15, 2016, the Company issued 400,000 shares of restricted stock to its Chief Executive Officer. These awards vest over a period of up to five years, subject to meeting certain service, performance and market conditions. These awards were valued at approximately $3.4 million and compensation expense recorded for the year ended June 30, 2017 was $488,402. The awards contain a combination of vesting terms which include time vesting, performance vesting relating to revenue achievement, and market vesting related to obtaining certain levels of Company stock prices. At June 30, 2017, the Company has estimated that it is probable that the performance conditions will be met. The awards were valued using a Monte Carlo valuation model using a stock price at the date of grant of $9.60, a term of 3 to 5 years, a risk free interest rate of 1.6% to 2.1% and a volatility factor of 66.5%.