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Compensatory Equity Incentive Plan and Other Equity Incentives | 12 Months Ended
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Jun. 30, 2013
Compensatory Equity Incentive Plan And Other Equity Incentives |
Compensatory Equity Incentive Plan and Other Equity Incentives | 9. Compensatory Equity Incentive Plan and Other Equity Incentives Share-based payment arrangements — The Company's Amended and Restated Omnibus Incentive Plan (the "Plan") included several available forms of stock compensation of which incentive stock options, non-qualified stock options and restricted stock units have been granted to date. These plans are summarized below:
|  |  |  |  | Award Shares |  |  | Available for |
|  | Award Shares |  |  | Outstanding |  |  | Issuance |
|  | Authorized |  |  | at June 30, |  |  | at June 30, |
Equity Compensation Arrangement |  |  |  |  | 2013 |  |  | 2013 |
Amended and Restated Omnibus Incentive Plan |  |  | 2,715,625 |  |  |  | 1,419,709 |  |  |  | 848,012 |
Employee Stock Purchase Plan |  |  | 200,000 |  |  |  | — |  |  |  | 109,457 |
|  |  | 2,915,625 |  |  |  | 1,419,709 |  |  |  | 957,469 |
The 2004 Employee Stock Purchase Plan ("ESPP") permits employees to purchase 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 in any calendar year and an employee may purchase no more than 4,000 shares on any purchase date. This discount of $898 and $1,433 for fiscal 2013 and 2012, respectively, is included in selling, general and administrative expense in the accompanying financial statements. 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. The Company uses the Black-Scholes pricing model. The ESPP fair value is the amount of the discount the employee obtains at the date of the purchase transaction. For stock options and restricted stock units ("RSUs") granted in the years ended June 30, 2013 and 2012, the Company estimated the fair value of each stock award as of the date of grant using the following assumptions:
|  | Year ended |  |  | Year ended |
|  | June 30, 2013 |  |  | June 30, 2012 |
Expected volatility |  |  | 110% - 120 | % |  |  | 119% - 122 | %
Weighted average expected volatility |  |  | 110% - 120 | % |  |  | 119% - 122 | %
Dividend yields |  |  | 0 | % |  |  | 0 | %
Risk-free interest rate |  |  | 0.67% - 1.72 | % |  |  | 0.9% - 2.01 | %
Expected term, in years |  |  | 3 - 7 |  |  |  | 3 - 7 |
Most awards granted under the Company's Plan vest ratably over two to four years and generally have three-year to ten-year contract lives. The initial assumed forfeiture rate used in calculating the fair value of option grants with both performance and service conditions was 20% for 2013 and 2012. The forfeiture rate for RSUs was 0% for both 2013 and 2012. The volatility rate is based on historical trends in common stock closing prices and the expected term was determined based primarily on historical experience of previously outstanding awards. The interest rate used is the treasury interest rate for constant maturities. The forfeiture rate for RSUs for directors is 0% because upon termination of service as a director, all outstanding RSUs immediately vest. Information Regarding Current Share-based Payment Awards—A summary of the activity for share-based payment awards in the years ended June 30, 2013 and 2012 is presented below:
|  |  |  |  |  |  |  |  |  |  | Restricted |
|  | Stock Options |  | 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, 2011 |  |  | 500,233 |  |  | $ | 3.01 |  |  |  | 6.9 |  |  |  | 434,700 |  |  |  | 0.9 |
Granted |  |  | 90,000 |  |  |  | 1.39 |  |  |  | 9.3 |  |  |  | 160,000 |  |  |  | 1.0 |
Exercised |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Cancelled |  |  | (13,840 | ) |  |  | 9.14 |  |  |  | 3.0 |  |  |  | — |  |  |  | — |
June 30, 2012 |  |  | 576,393 |  |  | $ | 2.61 |  |  |  | 6.4 |  |  |  | 594,700 |  |  |  | 1.0 |
Granted |  |  | 98,500 |  |  |  | 0.96 |  |  |  | 9.4 |  |  |  | 240,000 |  |  |  | 2.6 |
Exercised |  |  | (2,511 | ) |  |  | 1.05 |  |  |  | 5.5 |  |  |  | — |  |  |  | — |
Cancelled |  |  | (87,373 | ) |  |  | 2.37 |  |  |  | 7.0 |  |  |  | — |  |  |  | — |
June 30, 2013 |  |  | 585,009 |  |  | $ | 2.38 |  |  |  | 5.9 |  |  |  | 834,700 |  |  |  | 1.1 |
Awards exercisable/ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
vested as of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2013 |  |  | 401,759 |  |  | $ | 2.76 |  |  |  | 4.8 |  |  |  | 463,030 |  |  |  | — |
Awards unexercisable/ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
unvested as of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2013 |  |  | 183,250 |  |  | $ | 1.53 |  |  |  | 8.5 |  |  |  | 371,670 |  |  |  | 1.1 |
|  |  | 585,009 |  |  |  |  |  |  |  |  |  |  |  | 834,700 |  |  |  |  |
|  |  |  |  |  | Stock |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  | Options |  |  | RSU |  |  | All Awards |  |  |  |  |
Weighted average fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
of share awards granted for the year ended |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2013 |  |  |  |  |  | $ | 0.80 |  |  | $ | 0.87 |  |  | $ | 0.85 |  |  |  |  |
The total intrinsic value of share options exercised for years ended June 30, 2013 and 2012 was $452 and $0, respectively. The total intrinsic value of shares options outstanding and exercisable at both June 30, 2013 and 2012 was $9,000 and $0 respectively. The total fair value of shares options vested during the years ended June 30, 2013 and 2012 was $123,000 and $177,000, respectively. The total intrinsic value of RSUs exercised during the years ended June 30, 2013 and 2012 was $0 and $0, respectively. The total intrinsic value of RSUs outstanding and exercisable at June 30, 2013 and 2012 was $508,000 and $371,000, respectively. The total fair value of RSUs vested during the years ended June 30, 2013 and 2012 was $94,000 and $275,000, respectively. As of June 30, 2013 there was $386,656 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including share options and restricted stock units) granted under the Plan. The cost expected to be recognized as follows:
|  |  |  |  | Restricted |  |  |  |
|  |  |  |  | Stock |  |  |  |
|  | Stock |  |  | Share/ |  |  |  |
|  | Options |  |  | Units |  |  | Total |
Year ended June 30, 2014 |  | $ | 57,371 |  |  | $ | 163,769 |  |  | $ | 221,140 |
Year ended June 30, 2015 |  |  | 27,092 |  |  |  | 88,056 |  |  |  | 115,148 |
Year ended June 30, 2016 |  |  | 12,749 |  |  |  | 34,597 |  |  |  | 47,346 |
Year ended June 30, 2017 |  |  | 3,022 |  |  |  | — |  |  |  | 3,022 |
|  | $ | 100,234 |  |  | $ | 286,422 |  |  | $ | 386,656 |
The table above does not include shares under the Company's ESPP, which has purchase settlement dates in the second and fourth fiscal quarters. 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. RSU awards vest immediately or from two to four years from the grant date. The Company issues new shares of 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 our unexercisable/unvested awards as of June 30, 2013 and 2012 and changes during the two years then ended:
Unexercisable/unvested awards |  | Stock Options Shares |  |  | RSU Shares |  |  | Total Shares |  |  | Weighted-Average Grant Date Fair Values |
June 30, 2011 |  |  | 182,500 |  |  |  | 200,000 |  |  |  | 382,500 |  |  | $ | 2.53 |
Granted |  |  | 90,000 |  |  |  | 160,000 |  |  |  | 250,000 |  |  |  | 1.30 |
Vested |  |  | (74,375 | ) |  |  | (125,000 | ) |  |  | (199,375 | ) |  |  | 2.27 |
June 30, 2012 |  |  | 198,125 |  |  |  | 235,000 |  |  |  | 433,125 |  |  | $ | 2.42 |
Granted |  |  | 98,500 |  |  |  | 240,000 |  |  |  | 338,500 |  |  |  | 0.85 |
Vested |  |  | (59,875 | ) |  |  | (103,330 | ) |  |  | (163,205 | ) |  |  | 1.91 |
Cancelled/Forfeited |  |  | (53,500 | ) |  |  | — |  |  |  | (53,500 | ) |  |  | 1.64 |
June 30, 2013 |  |  | 183,250 |  |  |  | 371,670 |  |  |  | 554,920 |  |  | $ | 1.57 |
Acceleration of Vesting— The Company has not accelerated the vesting of any stock options or RSUs. Financial Statement Effects and Presentation—The following table shows total stock-based compensation expense for the years ended June 30, 2013 and 2012 included in the Consolidated Statement of Operations and Comprehensive Income:
|  | Year ended |  |  | Year ended |
|  | June 30, |  |  | June 30, |
|  | 2013 |  |  | 2012 |
Stock options |  |  | 65,286 |  |  |  | 86,096 |
RSU |  |  | 203,021 |  |  |  | 185,948 |
Total |  |  | 268,307 |  |  |  | 272,044 |
The amounts above were included in: |  |  |  |  |  |  |  |
General & administrative |  |  | 263,247 |  |  |  | 254,337 |
Cost of sales |  |  | (4,350 | ) |  |  | 8,328 |
New product development |  |  | 9,410 |  |  |  | 9,379 |
|  |  | 268,307 |  |  |  | 272,044 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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