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STOCK BASED COMPENSATION | 12 Months Ended
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Jun. 30, 2023
Share-Based Payment Arrangement [Abstract] |
STOCK BASED COMPENSATION | STOCK BASED COMPENSATION STOCK COMPENSATION PLANS The Company has three active stock based compensation plans at June 30, 2023 as shown in the table below:
Date Approved |  | Name of Plan |  | Type of Plan |  | Authorized Shares
June 2014 |  | 2014 Stock Option Incentive Plan |  | Stock options |  | 750,000 |
June 2015 |  | 2015 Equity Incentive Plan |  | Stock & stock options |  | 1,250,000 |
April 2018 |  | 2018 Equity Incentive Plan |  | Stock & stock options |  | 10,000,000 |
|  |  |  |  |  | 12,000,000 |
As of June 30, 2023, the Company had reserved shares of Common Stock for future issuance for the following:
Common Stock |  | Reserved Shares
Conversions of Preferred Stock and cumulative Preferred Stock dividends |  | 106,141 |
Issuance of shares to former CEO George Jensen upon the occurrence of a Cantaloupe transaction (1) |  | 140,000 |
Issuance under 2014 Stock Option Incentive Plan |  | 15,687 |
Issuance under 2015 Equity Incentive Plan |  | 339,492 |
Issuance under 2018 Equity Incentive Plan |  | 5,421,009 |
Total shares reserved for future issuance |  | 6,022,329 |
(1)Represents 140,000 shares issuable to our former CEO George Jensen upon the occurrence of a "USA Transaction" as such term is defined in the Jensen Stock Agreement dated September 27, 2011 by and between the Company and George R. Jensen. STOCK OPTIONS Stock options are granted at exercise prices equal to the fair market value of the Company's common stock at the date of grant. The options typically vest over a three year period and each option, if not exercised or terminated, expires on the seventh anniversary of the grant date. The Company estimates the grant date fair value of the stock options with service conditions (i.e., a condition that requires an employee to render services to the Company for a stated period of time to vest) 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 uses the simplified method to determine expected term, as the Company does not have adequate historical exercise and forfeiture behavior on which to base the expected life assumption. 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. The fair value of options granted during the years ended June 30, 2023, 2022, and 2021 was determined using the following assumptions:
| For the year ended June 30,
| 2023 |  | 2022 |  | 2021
Expected volatility | 74.6 - 77.6% |  | 73.2 - 74.6% |  | 74.3 - 77.3%
Expected life (years) | 4.4 - 4.6 |  | 4.5 - 4.6 |  | 4.5
Expected dividends | 0.0% |  | 0.0% |  | 0.0%
Risk-free interest rate | 2.7 - 4.1% |  | 1.0-2.9% |  | 0.2-0.7%
The following tables provide information about outstanding options for the years ended June 30, 2023, 2022, and 2021:
| For the year ended June 30, 2023
Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding options, beginning of period | 3,529,833 |  |  | $ | 7.41 |  |  | 4.5 |  | $ | 194 |
Granted | 1,720,000 |  |  | $ | 4.61 |  |  |  |  |
Exercised | — |  |  | $ | — |  |  |  |  | $ | — |
Forfeited | (1,376,201) |  |  | $ | 6.86 |  |  |  |  |
Expired | — |  |  | $ | — |  |  |  |  |
Outstanding options, end of period | 3,873,632 |  |  | $ | 6.35 |  |  | 5.1 |  | $ | 7,595 |
Exercisable options, end of period | 1,341,466 |  |  | $ | 7.26 |  |  | 3.9 |  | $ | 1,536 |
| For the year ended June 30, 2022
Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding options, beginning of period | 2,952,092 |  |  | $ | 6.97 |  |  | 5.6 |  | $ | 14,419 |
Granted | 904,500 |  |  | $ | 8.86 |  |  |  |  |
Exercised | (121,248) |  |  | $ | 6.30 |  |  |  |  | $ | (53) |
Forfeited | (205,511) |  |  | $ | 8.09 |  |  |  |  |
Expired | — |  |  | $ | — |  |  |  |  |
Outstanding options, end of period | 3,529,833 |  |  | $ | 7.41 |  |  | 4.5 |  | $ | 194 |
Exercisable options, end of period | 1,538,302 |  |  | $ | 6.79 |  |  | 4.5 |  | $ | 183 |
| For the year ended June 30, 2021
| Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding options, beginning of period | 2,437,425 |  |  | $ | 6.43 |  |  | 6.2 |  | $ | 1,411 |
Granted | 755,000 |  |  | $ | 8.40 |  |  |  |  |
Exercised | (74,667) |  |  | $ | 3.81 |  |  |  |  | $ | (601) |
Forfeited | (165,666) |  |  | $ | 6.90 |  |  |  |  |
Expired | — |  |  | $ | — |  |  |  |  |
Outstanding options, end of period | 2,952,092 |  |  | $ | 6.97 |  |  | 5.6 |  | $ | 14,419 |
Exercisable options, end of period | 1,040,131 |  |  | $ | 6.52 |  |  | 5.1 |  | $ | 5,558 |
The weighted average grant date fair value per share for the Company's stock options granted during the years ended June 30, 2023, 2022, and 2021 was $2.89, $5.12, and $4.92, respectively. The total fair value of stock options vested during the years ended June 30, 2023, 2022, and 2021 was $3.8 million, $3.0 million, and $2.4 million, respectively. Performance based awards The Company has awarded stock options to certain executives which vest each year over a three to four year period. These stock options are also subject to the achievement of performance goals to be established by the Company's Board for each fiscal year. On January 27, 2021, the Compensation Committee of the Board of Directors established the performance metrics as a price target for the trading price of the Company’s common stock in each applicable fiscal year. The price target is achieved if the average closing price of the common stock during any consecutive 30-trading-day period during the applicable fiscal year meets or exceeds: (i) $10.50 in the case of fiscal year 2021; (ii) $13.50 in the case of fiscal year 2022; (iii) $16.50 in the case of fiscal year 2023; and (iv) $19.50 in the case of fiscal year 2024. If at least 80% of the performance goals for an applicable fiscal year are achieved, the Compensation Committee may determine that the portion of the option eligible to vest based on such fiscal year’s performance will vest on a prorated basis. In so determining, the Compensation Committee will consider the Company’s performance relative to its market competitors and any other considerations deemed relevant by the Compensation Committee. The Compensation Committee’s guideline is generally that for every percentage point the achieved price falls below the price target, the percentage of the performance options eligible to vest in respect of the applicable fiscal year should be reduced by 2%, but the Compensation Committee may vary this formula in its sole discretion. For these performance based awards that provide discretion to the Compensation Committee, a mutual understanding of the key terms and conditions between the Company and the employees have not yet been met and a grant date has not been established. When the service period begins prior to the grant date, the Company begins recognizing compensation cost before there is a grant date. The Company estimates the award's fair value at each reporting period for these equity classified awards, until the grant date, utilizing a Monte Carlo simulation valuation model. For the year ended June 30, 2023, the total net benefit recognized for these awards was $0.8 million, primarily as a result of reversing unvested grants for terminated executives during the period. The tota l expense rec ognized during the year ended June 30, 2022 for these awards was $1.0 million. COMMON STOCK GRANTS The Company makes annual grants of restricted shares of common stock to executive officers pursuant to long-term stock incentive plans (“LTIPs”) which vest annually, typically over three years. The Company also grants restricted stock units ("RSU"s) to members of the board of directors as compensation for their service on the board as well as to employees as additional compensation. These stock awards typically vest over a one to three year period. Two employees of Hudson Executive, a greater than 10% shareholder and a related party of the Company, entered into consulting agreements with the Company in August and September of 2020, respectively, under which the consultants were to provide financial and strategic analysis and advisory services to the Company's CEO through July 31, 2021. As consideration for the services, in March 2021 the consultants were granted a total of 80,000 restricted stock units. The total expense recognized as of June 30, 2021 for these agreements was $0.8 million. These restricted stock units had fully vested as of June 30, 2021. During August and September of 2021, the Company extended these consulting agreements to provide advisory services from August 1, 2021 through July 31, 2022. As consideration for the extended agreements the consultants were granted an additional 20,000 restricted stock units. The restricted stock units granted to each consultant vested in equal installments on January 1, 2022 and July 1, 2022. On February 2, 2022, the Board of Directors of the Company appointed one of the above mentioned employees of Hudson Executive as a director of the Company, effective immediately. In connection with the appointment to the Board, the consulting agreement for that individual was terminated, effective February 2, 2022. Total expense recognized for the year ended June 30, 2022 for these consulting agreements was $0.2 million. The company did not recognize any additional expenses related to the consulting agreements for the year ended June 30, 2023. A summary of the status of the Company’s nonvested common shares and RSUs as of June 30, 2023, 2022, and 2021, and changes during the years then ended is presented below:
| Shares |  | Weighted-Average Grant-Date Fair Value
Nonvested at June 30, 2020 | 213,014 |  |  | $ | 6.50 |
Granted | 187,848 |  |  | 10.33 |
Vested | (248,016) |  |  | 7.71 |
Forfeited | (15,000) |  |  | 6.28 |
Nonvested at June 30, 2021 | 137,846 |  |  | $ | 9.57 |
Granted | 507,729 |  |  | 7.33 |
Vested | (101,515) |  |  | 10.34 |
Forfeited | (95,152) |  |  | $ | 8.89 |
Nonvested at June 30, 2022 | 448,908 |  |  | $ | 7.00 |
Granted | 346,346 |  |  | 5.41 |
Vested | (274,011) |  |  | 5.96 |
Forfeited | (97,342) |  |  | 8.27 |
Nonvested at June 30, 2023 | 423,901 |  |  | $ | 6.08 |
STOCK BASED COMPENSATION EXPENSE The Company applies the fair value method to recognize compensation expense for stock-based awards. Using this method, the estimated grant-date fair value of the award is recognized over the requisite service period using the accelerated attribution method. The Company accounts for forfeitures as they occur. A summary of the Company's stock-based compensation expense recognized during the years ended June 30, 2023, 2022, and 2021 is as follows (in thousands):
|  | For the year ended June 30,
Award type |  | 2023 |  | 2022 |  | 2021
Stock options |  | $ | 2,967 |  |  | $ | 4,424 |  |  | $ | 7,806 |
Stock grants |  | 1,770 |  |  | 1,824 |  |  | 1,269 |
Total stock-based compensation expense |  | $ | 4,737 |  |  | $ | 6,248 |  |  | $ | 9,075 |
The Company recognized tax benefits of $1.4 million, $0.6 million, and $2.4 million related to stock compensation expense for the years ended June 30, 2023, 2022, and 2021, respectively. A summary of the Company's unrecognized stock-based compensation expense as of June 30, 2023 is as follows:
|  | As of June 30, 2023
Award type |  | Unrecognized Expense (in thousands) |  | Weighted Average Recognition Period (in years)
Stock options |  | $ | 3,944 |  |  | 1.8
Stock grants |  | $ | 1,557 |  |  | 1.3

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