Compensatory Equity Incentive Plan and Other Equity Incentives

3 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Compensatory Equity Incentive Plan and Other Equity Incentives

6. Compensatory Equity Incentive Plan and Other Equity Incentives

Share-Based Compensation Arrangements—The Plan includes several available forms of stock compensation of which incentive stock options and restricted stock awards have been granted to date.

The 2004 Employee Stock Purchase Plan (“ESPP”) permits employees to purchase shares of Class A common stock through payroll deductions, which may not exceed 15% of an employee’s compensation, at a price not less than 85% of the market value of the stock on specified dates (June 30 and December 31). In no event may any participant purchase more than $25,000 worth of shares of Class A common stock in any calendar year and an employee may purchase no more than 4,000 shares on any purchase date within an offering period of 12 months and 2,000 shares on any purchase date within an offering period of six months. The discount on market value is included in selling, general and administrative expense in the accompanying consolidated statements of operations and comprehensive income and was $502 and $248 for the three months ended September 30, 2014 and 2013, respectively.

These two plans are summarized below:

			Award Shares		Available for
			Outstanding		Issuance
	Award Shares		at September 30,		at September 30,
Equity Compensation Arrangement	Authorized		2014		2014
Amended and Restated Omnibus Incentive Plan		2,715,625		1,510,458		566,103
Employee Stock Purchase Plan		200,000		—		97,833
		2,915,625		1,510,458		663,936

Grant Date Fair Values and Underlying Assumptions; Contractual Terms—The Company estimates the fair value of each stock option as of the date of grant using the Black-Scholes-Merton pricing model. The ESPP fair value is the amount of the discounted market value the employee obtains at the date of the purchase transaction.

No stock options or restricted stock units were granted in the first quarter of fiscal 2015 or 2014.

Most options granted under the Plan vest ratably over two to four years and are generally exercisable up to ten years. The assumed forfeiture rates used in calculating the fair value of options and restricted stock unit grants with both performance and service conditions were 20% and 0%, respectively, for the three months ended September 30, 2014 and 2013. The volatility rate and expected term are based on seven-year historical trends in Class A common stock closing prices and actual forfeitures. The interest rate used is the U.S. Treasury interest rate for constant maturities.

Information Regarding Current Share-Based Compensation Awards—A summary of the activity for share-based compensation awards in the three months ended September 30, 2014 is presented below:

	Stock Options						Restricted Stock Units (RSUs)
			Weighted		Weighted				Weighted
			Average		Average				Average
			Exercise		Remaining				Remaining
			Price		Contract				Contract
	Shares		(per share)		Life (YRS)		Shares		Life (YRS)
June 30, 2014		654,158	$	2.25		5.5		856,300		0.9
Granted		—		—		—		—		—
Exercised		—		—		—		—		—
Cancelled		—		—		—		—		—
September 30, 2014		654,158	$	2.25		5.3		856,300		0.8
Awards exercisable/ vested as of September 30, 2014		461,158	$	2.63		4.0		501,997		—
Awards unexercisable/ unvested as of September 30, 2014		193,000	$	1.34		8.2		354,303		0.8
		654,158						856,300

The total intrinsic value of options outstanding and exercisable at September 30, 2014 and 2013 was $31,529 and $7,653, respectively.

The total intrinsic value of RSUs exercised during the three months ended September 30, 2014 and 2013 was $0 and $0, respectively.

The total intrinsic value of RSUs outstanding and exercisable at September 30, 2014 and 2013 was $737,936 and $495,737, respectively.

The total fair value of RSUs vested during the three months ended September 30, 2014 and 2013 was $0 and $0, respectively.

The total fair value of option shares vested during the three months ended September 30, 2014 and 2013 was $0 and $0, respectively.

As of September 30, 2014, there was $316,837 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including share options and restricted stock units) granted under the Plan. We expect to recognize the compensation cost as follows:

			Restricted
	Stock		Stock
	Options		Units		Total
Nine Months ended June 30, 2015	$	28,329	$	106,675	$	135,004
Year ended June 30, 2016		27,299		112,291		139,590
Year ended June 30, 2017		17,571		20,865		38,436
Year ended June 30, 2018		3,807		—		3,807
	$	77,006	$	239,831	$	316,837

The table above does not include shares under the Company’s ESPP, which has purchase settlement dates in the second and fourth fiscal quarters of each year and issuance dates in the first and third fiscal quarters of each year. The Company’s ESPP is not administered with a look-back option provision and, as a result, there is not a population of outstanding option grants during the employee contribution period.

Restricted stock unit awards vest immediately or from two to four years from the date of grant.

The Company issues new shares of Class A common stock upon the exercise of stock options. The following table is a summary of the number and weighted average grant date fair values regarding the Company’s unexercisable/unvested awards as of September 30, 2014 and changes during the three months then ended:

	Stock Options		RSU		Total		Weighted-Average Grant Date Fair Values
Unexercisable/unvested awards	Shares		Shares		Shares		(per share)
June 30, 2014		193,000		354,303		514,637	$	1.18
Granted		—		—		—		—
Vested		—		—		—		—
Cancelled/Forfeited		—		—		—		—
September 30, 2014		193,000		354,303		514,637	$	1.18

Financial Statement Effects and Presentation—The following table shows total stock-based compensation expense for the three months ended September 30, 2014 and 2013 included in the consolidated statements of operations and comprehensive income:

	(Unaudited)		(Unaudited)
	Three months ended		Three months ended
	September 30,		September 30,
	2014		2013
Stock options	$	13,313	$	17,676
RSU		49,950		52,152
Total	$	63,263	$	69,828
The amounts above were included in:
General & administrative	$	60,869	$	67,330
New product development		2,394		2,498
	$	63,263	$	69,828