Stock-Based Compensation Plans

9 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Plans

9. Stock-Based Compensation Plans

Stock Option Awards

For the nine months ended March 31, 2019 and 2018, the compensation cost relating to stock option awards that has been charged against income for the Company’s stock option plans was $896,730 and $1,405,152, respectively. As of March 31, 2019, there was $2,965,772 of total unrecognized compensation cost related to non-vested share-based compensation arrangements to be recognized over a weighted-average period of 2.9 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 nine months ended March 31, 2019 was $9.22. There were options to purchase 255,000 and 305,500 shares granted during the nine months ended March 31, 2019 and 2018, respectively. The fair value was estimated based on the weighted average assumptions of:

	For nine months ended
	March 31, 2019
	2019			2018
Risk-free interest rates		2.80	%		1.98	%
Expected option life in years		6.25			5.95
Expected stock price volatility		56.01	%		57.42	%
Expected dividend yield		0	%		0	%

A summary of option activity under the Company’s equity plans as of March 31, 2019, and changes during the nine months ended March 31, 2019 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		255,000			16.64
Exercised		(240,210	)		7.97
Forfeited		(159,252	)		10.18
Expired		(15,000	)		2.66
Outstanding as of March 31, 2019		1,170,731		$	10.27	$	10,530,733
Vested and exercisable at March 31, 2019		642,355		$	8.28	$	7,034,104

The total fair value of stock options vested during the nine months ended March 31, 2019 was $1,101,971. 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 nine months ended March 31, 2019 was 220,624 and $4.99, 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 nine months ended March 31, 2019 and 2018 related to these awards was $992,445 and $675,869 respectively. As of March 31, 2019, there was approximately $1,256,204 of total unrecognized compensation cost related to non-vested restricted stock awards to be recognized over a weighted-average period of 2.82 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 March 31, 2019, 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 March 31, 2019, 186,600 shares from this set of awards have vested.

During the nine months ended March 31, 2019, 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.