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COMMON STOCK, COMMON STOCK OPTIONS AND WARRANTS | 9 Months Ended
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Mar. 31, 2015
Common Stock And Common Stock Warrants Abstract |
COMMON STOCK, COMMON STOCK OPTIONS AND WARRANTS | 8. COMMON STOCK, COMMON STOCK OPTIONS AND WARRANTS Under the 2011 Stock Incentive Plan, the Company recorded $0 and $604 of stock compensation expense and 0 and 10,002 shares of Common Stock vested during the three and nine months ended March 31, 2015, respectively, related to shares granted to Directors of the Company in July 2012. Under the 2012 Stock Incentive Plan, the Company recorded stock compensation expense of $2,879 and $17,357 and 2,500 and 62,682 shares of Common Stock vested during the three and nine months ended March 31, 2015, respectively. All of the expense and 7,500 of the shares vested in the nine months ended March 31, 2015 related to a grant in 2014 to a non-executive employee. Additionally, 23,698 and 31,484 of the shares were issued in the nine months ended March 31, 2015 related to payment to Directors for services on the Board of Directors in the fourth quarter of fiscal 2014 and to certain non-executive employees for fiscal 2014 performance, respectively. Under the 2013 Stock Incentive Plan, the Company recorded stock compensation expense of $111,199 and $266,461 and 28,727 and 136,102 shares of Common stock were issued during the three and nine months ended March 31, 2015. These amounts include expenses and issuances to Directors, non-executive employees, as well as to the Company’s executives under the 2014 Long Term Stock Incentive Plan and expenses under the 2015 Long Term Stock Incentive Plans (“LTI Stock Plans”) as more fully described below. Stock compensation expense of $29,583 and $112,083 related to the vesting of shares for Directors in lieu of cash payment for services on the Board of Directors and 28,727 and 48,866 shares of Common Stock were issued during the three and nine months ended March 31, 2015. No expense and 68,633 of shares were issued during the nine months ended March 31, 2015 to certain non-executive employees for fiscal 2014 performance. On account of the 2014 LTI Stock Plan, the Company recorded stock compensation expense under the 2013 Stock Incentive Plan during the three and nine months ended March 31, 2015 of $8,586 and $25,760, respectively, for shares vesting June 30, 2015 and 2016. In addition, the Company issued 18,603 shares of Common Stock for shares vested on June 30, 2014, respectively, on account of the 2014 LTI Stock Plan. On August 28, 2014, the Board of Directors approved the 2015 LTI Stock Plan covering Stephen P. Herbert, Chairman and Chief Executive Officer, and David M. DeMedio, Chief Financial Officer. The 2015 LTI Stock Plan provides that each executive officer would be awarded shares of common stock of the Company in the event that certain metrics relating to the Company’s 2015 fiscal year would result in specified ranges of year-over-year percentage growth. The metrics are total number of connections as of June 30, 2015 as compared to total number of connections as of June 30, 2014 and adjusted EBITDA earned during the 2015 fiscal year as compared to adjusted EBITDA earned during the 2014 fiscal year. If none of the minimum threshold year-over-year percentage target goals are achieved, the executive officers would not be awarded any shares. If all of the year-over-year percentage target goals are achieved, the executive officers would be awarded shares having the following value: Stephen P. Herbert – $341,227 (100% of base salary); and David M. DeMedio – $178,406 (75% of base salary). If all of the maximum distinguished year-over-year percentage target goals are achieved, the executive officers would be awarded shares having the following value: Mr. Herbert – $682,454 (200% of base salary); and Mr. DeMedio – $356,812 (150% of base salary). Assuming the minimum threshold year-over-year percentage target goal would be achieved for a particular metric, the number of shares to be awarded for that metric would be determined on a pro rata basis, provided that the award would not exceed the maximum distinguished award for that metric. The shares awarded under the 2015 LTI Stock Plan would vest as follows: one-third at the time of issuance (June 30, 2015); one-third on the first anniversary of issuance; and one-third on the second anniversary of issuance. The Company recorded stock compensation expense of $73,030 and $128,619 during the three and nine months ended March 31, 2015, respectively, on account of the 2015 LTI Stock Plan. During the nine months ended March 31, 2015, non-executive employees of the Company cancelled 31,899 shares of Common Stock to satisfy $61,987 of payroll tax obligations resulting from share based compensation. During the three and nine months ended March 31, 2014, the Company recorded stock compensation expense of $60,024 and $248,880 and 31,770 and 164,466 shares of Common Stock were issued, respectively; $44,432 and $165,768 of expenses related to compensation for Directors of the Company; $24,499 and $88,639 of expense related to compensation of Company executives; and, a reversal of compensation expense of $0 and $5,527 for non-executive employees of the Company for the three and nine months ended March 31, 2014, respectively. During the three and nine months ended March 31, 2014, executive officers exercised their rights to cancel shares of Common Stock awarded to them under prior employment agreements and the Special Equity Plan granted to an executive officer in September 2012 for the payment of payroll taxes, including 13,796 and 42,354 shares of the Company’s Common Stock to satisfy $27,731 and $75,106 of related payroll obligations, respectively. COMMON STOCK OPTIONS The Company estimates the grant date fair value of the stock options it grants using a Black-Scholes valuation model. The Company’s assumption for expected volatility is based on its historical volatility data related to market trading of its own common stock. The Company bases its assumptions for expected life of the new stock option grants on the life of the option granted, and if relevant, its analysis of the historical exercise patterns of its stock options. The dividend yield assumption is based on dividends expected to be paid over the expected life of the stock option. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the same period as the expected option term of each stock option. On August 28, 2014, the Board of Directors awarded options to purchase common stock under the Company’s 2014 Stock Option Incentive Plan to each of Messrs. Herbert and DeMedio. Mr. Herbert was awarded incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code), to purchase up to 55,555 shares at an exercise price of $1.80 per share. The options vest on September 1, 2015, and expire if not exercised prior to September 1, 2021. Mr. Herbert was also awarded non-qualified stock options to purchase up to 150,000 shares at an exercise price of $1.80 per share. The options vest as follows: one-third on September 1, 2015; one-third on September 1, 2016; and one-third on September 1, 2017. The options expire if not exercised prior to September 1, 2021. Mr. DeMedio was awarded incentive stock options intended to qualify under Section 422 of the Code to purchase up to 33,333 shares at an exercise price of $1.80 per share. The options vest on September 1, 2015, and expire if not exercised prior to September 1, 2021. Mr. DeMedio was also awarded non-qualified stock options to purchase up to 90,000 shares at an exercise price of $1.80 per share. The options vest as follows: one-third on September 1, 2015; one-third on September 1, 2016; and one-third on September 1, 2017. The options expire if not exercised prior to September 1, 2021. In January 2015, various non-executive employees were awarded options to purchase a total of 85,000 shares of common stock under the Company’s 2014 Stock Option Incentive Plan. The fair value of options granted during the nine months ended March 31, 2015 was estimated at the grant date using the following weighted average assumptions:
|  | August 2014 |  |  | January 2015 |  |
Expected volatility |  |  | 79 | % |  |  | 78 | % |
Expected life |  |  | 7 years |  |  | 7 years |
Expected dividends |  |  | 0.00 | % |  |  | 0.00 | % |
Risk-free interest rate |  |  | 2.04 | % |  |  | 1.92 | % |
During the three and nine months ended March 31, 2015, the Company recorded compensation expense of $88,733 and $188,452, respectively, related to the stock options granted to the executive and non-executive employees of the Company during the current fiscal year under the 2014 Stock Option Incentive Plan. For the three and nine months ended March 31, 2015, the Company recorded compensation expense of $13,658 and $68,290, respectively, for stock options granted in the fiscal year ended June 30, 2014 to its non-employee Directors under the 2014 Stock Option Incentive Plan. In the three months ended March 31, 2015 options to purchase up to 20,000 shares common stock were forfeited with the resignation of a non-employee Director of the Company. There were no options granted during the three and nine months ended March 31, 2014. COMMON STOCK WARRANTS No warrants were issued, exercised or expired during the three and nine months ended March 31, 2015. Warrants were exercised during the three and nine months ended March 31, 2014, resulting in the issuance of 0 and 2,090,226, respectively, shares of Common Stock at $1.13 per share. The Company received cash proceeds of $549,493 and $2,361,955 for the three and nine months ended March 31, 2014.

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