XML 40 R12.htm IDEA: XBRL DOCUMENT v2.4.1.9
Compensatory Equity Incentive Plan and Other Equity Incentives
 6 Months Ended
Dec. 31, 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 Omnibus Incentive 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”) permitted employees to purchase shares of Class A common stock through payroll deductions, which could 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 could any participant purchase more than $25,000 worth of shares of Class A common stock in any calendar year and an employee could 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 ESPP expired on December 6, 2014, and was replaced by the 2014 Employee Stock Purchase Plan, which was adopted by the Company’s Board of Directors on October 30, 2014 and approved by the Company’s stockholders on January 29, 2015. 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 $1,356 and $248 for the six months ended December 31, 2014 and 2013, respectively.

 These two plans are summarized below:

      Award Shares  Available for
     Outstanding  Issuance
   Award Shares  at December 31,  at December 31,
Equity Compensation Arrangement  Authorized  2014  2014
Amended and Restated Omnibus Incentive Plan   2,715,625    1,799,458    277,103 
Employee Stock Purchase Plan   200,000    —      —   
    2,915,625    1,799,458    277,103 

 

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 was the amount of the discounted market value the employee obtained at the date of the purchase transaction.

For stock options granted in the six month periods ended December 31, 2014 and 2013, the Company estimated the fair value of each stock option as of the date of grant using the following assumptions:

 

   Six Months Ended  Six Months Ended
  December 31, 2014       December 31, 2013
Expected volatility   103%   118%
Weighted average expected volatility   103%   118%
Dividend yields   0%   0%
Risk-free interest rate   1.77%   2.48%
Expected term, in years   7.50    11.85 

Most options granted under the Plan vest ratably over two to four years and are generally exercisable for 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 six months ended December 31, 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 six months ended December 31, 2014 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, 2014   654,158   $2.25    5.5    856,300    0.9 
                          
Granted   80,000   $1.16    9.8    219,000    2.8 
Exercised   —      —      —      —      —   
Cancelled/Forfeited   (10,000)  $3.04    —      —      —   
                          
December 31, 2014   724,158   $2.12    5.6    1,075,300    1.1 
                          
                          
Awards exercisable/                         
vested as of                         
December 31, 2014   516,658   $2.46    4.3    604,765    —   
                          
                          
Awards unexercisable/                         
unvested as of                         
December 31, 2014   207,500   $1.28    8.9    470,535    1.1 
    724,158              1,075,300      

 

The total intrinsic value of options outstanding and exercisable at December 31, 2014 and 2013 was $208 and $19,325, respectively.

The total intrinsic value of RSUs exercised during the six months ended December 31, 2014 and 2013 was $0 and $288,652, respectively. 

The total intrinsic value of RSUs outstanding and exercisable at December 31, 2014 and 2013 was $550,155 and $592,052, respectively.

The total fair value of RSUs vested during the six months ended December 31, 2014 and 2013 was $156,660 and $264,372, respectively.

The total fair value of option shares vested during the six months ended December 31, 2014 and 2013 was $65,500 and $62,986, respectively.

As of December 31, 2014, there was $594,973 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  Share/   
   Options       Units       Total
          
Six Months ended June 30, 2015  $24,665   $120,398   $145,063 
                
Year ended June 30, 2016   40,802    211,931    252,733 
                
Year ended June 30, 2017   31,074    120,513    151,587 
                
Year ended June 30, 2018   17,310    24,906    42,216 
                
Year ended June 30, 2019   3,374    —      3,374 
   $117,225   $477,748   $594,973 

 

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 December 31, 2014 and changes during the six months then ended:

 

  Stock      Weighted-Average
  Options     Total  Grant Date Fair Values
Unexercisable/unvested awards  Shares  RSU Shares  Shares  (per share)
June 30, 2014   193,000    354,303    547,303   $1.18 
Granted   80,000    219,000    299,000   $1.31 
Vested   (65,500)   (102,768)   (168,268)  $1.37 
Cancelled/Forfeited   —      —      —      —   
December 31, 2014   207,500    470,535    678,035   $1.19 

 

Financial Statement Effects and Presentation—The following table shows total stock-based compensation expense for the six months ended December 31, 2014 and 2013 included in the consolidated statements of operations and comprehensive income:

 

   (Unaudited)  (Unaudited)
   Six months ended  Six months ended
   December 31,  December 31,
   2014       2013
       
 Stock options  $27,106   $38,857 
 RSU   110,969    188,789 
      Total  $138,075   $227,646 
           
 The amounts above were included in:          
 General & administrative  $133,042   $221,995 
 New product development   5,033    5,651 
   $138,075   $227,646