Stock-Based Compensation Plans

6 Months Ended

Dec. 31, 2018

Equity [Abstract]

Stock-Based Compensation Plans

9. Stock-Based Compensation Plans

Stock Option Awards

For the three and six months ended December 31, 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 $500,087 and $844,601, and $1,504,586 and $1,016,026, respectively. As of December 31, 2018, there was $2,928,738 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 six months ended December 31, 2018 was $8.51. There were options to purchase 182,000 and 305,500 shares granted during the six months ended December 31, 2018 and 2017, respectively. The fair value was estimated based on the weighted average assumptions of:

	For six months ended
	December 31, 2018
	2018			2017
Risk-free interest rates		2.90	%		1.98	%
Expected option life in years		6.25			5.95
Expected stock price volatility		55.87	%		57.42	%
Expected dividend yield		0	%		0	%

A summary of option activity under the Company’s equity plans as of December 31, 2018, and changes during the six months ended December 31, 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	182,000			15.40
Exercised	(183,285	)		7.81
Forfeited	(73,752	)		9.01
Expired	(15,000	)		2.66
Outstanding as of December 31, 2018	1,240,156		$	9.69	$	7,835,881
Vested and exercisable at December 31, 2018	676,780		$	8.24	$	5,258,285

The total fair value of stock options vested during the six months ended December 31, 2018 was $999,195. 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 six months ended December 31, 2018 was 194,374 and $5.14, 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 six months ended December 31, 2018 and 2017 related to these awards was $871,329 and $453,868 respectively. As of December 31, 2018, there was approximately $1,377,319 of total unrecognized compensation cost related to non-vested restricted stock awards to be recognized over a weighted-average period of 2.81 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 December 31, 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 December 31, 2018, 186,600 shares from this set of awards have vested.

During the six months ended December 31, 2018, the performance conditions of one of these restricted stock awards were met, resulting in the full amortization of this award during the period, totaling $475,286 of additional amortization during the first quarter of the current fiscal year. The number of restricted stock awards which vested was 133,333.