Stock-Based Compensation Plans

3 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stock-Based Compensation Plans

9. Stock-Based Compensation Plans

Stock Option Awards

For the three months ended September 30, 2018 and 2017, the compensation cost relating to stock option awards that has been charged against income for the Company’s stock option plans was $278,121 and $398,359 respectively. As of September 30, 2018, there was $2,996,027 of total unrecognized compensation cost related to non-vested share-based compensation arrangements to be recognized over a weighted-average period of 2.7 years.

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 fair market value, as defined in the applicable 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 per share at date of grant for options granted during the three months ended September 30, 2018 was $8.62. There were options to purchase 137,000 and 172,500 shares granted during the three months ended September 30, 2018 and 2017, respectively. The fair value was estimated based on the weighted average assumptions of:

	For three months ended
	September 30, 2018
	2018			2017
Risk-free interest rates		2.87	%		1.86	%
Expected option life in years		6.25			5.72
Expected stock price volatility		55.39	%		59.52	%
Expected dividend yield		0	%		0	%

A summary of option activity under the Company’s equity plans as of September 30, 2018, and changes during the three months ended September 30, 2018 is presented below:

	Outstanding Shares			Average Exercise Price		Aggregate Intrinsic Value
Outstanding at June 30, 2018		1,330,193		$	8.47	$	5,369,557
Granted		137,000			15.55
Exercised		(51,660	)		8.05
Forfeited		(55,627	)		9.16
Expired		(15,000	)		2.66
Outstanding as of September 30, 2018		1,344,906		$	9.31	$	12,364,220
Vested and exercisable at September 30, 2018		710,280		$	8.04	$	7,428,351

The total fair value of stock options vested during the three months ended September 30, 2018 was $526,729. The number and weighted-average grant-date fair value of non-vested stock options at the beginning of fiscal 2018 was 648,877 and $5.08, respectively. The number and weighted-average grant-date fair value of stock options which vested during the three months ended September 30, 2018 was 95,624 and $5.51, respectively.

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 $3.6 million. Compensation expense recorded in the three months ended September 30, 2018 and 2017 related to these awards was $726,377 and $226,934 respectively. As of September 30, 2018, there was approximately $1,552,272 of total unrecognized compensation cost related to non-vested restricted stock awards to be recognized over a weighted-average period of 3.06 years. 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 September 30, 2018, 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%. As of September 30, 2018, 186,600 shares from this set of awards have vested.

During the three months ended September 30, 2018, the performance conditions of one of these restricted stock awards were met, resulting in the full amortization of this award during the quarter. The number of restricted stock awards which vested was 133,333 and the related compensation expense during the quarter was $573,686.