XML 35 R20.htm IDEA: XBRL DOCUMENT v3.24.3
Note 13 - Stockholders Equity
 12 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Equity [Text Block]

NOTE 13.

STOCKHOLDERS EQUITY

 

Officers and Directors Stock Compensation

 

Effective October 2018, the Board of Directors approved the following compensation for directors who are not employed by the Company:

 

 

●

Annual compensation of $75,000 payable at the rate of $18,750 per quarter. The Company has the right to pay this amount in the form of cash or shares of the Company’s Common Stock.

 

 

●

Upon appointment, outside independent directors receive a grant of $150,000 payable in shares of the Company’s restricted Common Stock calculated based on the market value of the shares of Common Stock on the date of grant. The shares vest ratably over a five-year period.

 

 

●

Reimbursement of all travel expense related to performance of Directors’ duties on behalf of the Company.

 

Officers, Key Employees, Consultants and Directors Stock Compensation

 

 

In January 2013, the Board of Directors approved the Second Amended and Restated 2011 Stock Plan (the “Amended 2011 Plan”), which Amended 2011 Plan was approved by shareholders on March 29, 2013. Under the terms of the Amended 2011 Plan, all employees, consultants and directors of the Company are eligible to participate. The maximum aggregate number of shares of Common Stock that may be granted under the Amended 2011 Plan is 675,000 shares. The Company’s Amended 2011 Plan terminated on April 1, 2023, and no new awards were granted under the 2011 Plan thereafter. Awards outstanding under the 2011 Plan remain subject to the 2011 Plan. Any shares subject to outstanding awards under the 2011 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under the 2023 Plan, as defined below.

 

In August 2023, our Board of Directors approved the 2023 Omnibus Equity Incentive Plan (the “2023 Plan”), which plan was approved by shareholders on November 20, 2023. Under the terms of the 2023 Plan, all employees, consultants and directors of the Company are eligible to participate. The maximum aggregate number of shares of Common Stock that may be granted under the 2023 Plan is 400,000 shares. A Committee of independent members of the Company’s Board of Directors administers the 2023 Plan.

 

In August 2023, our Board of Directors approved the 2023 Employee Stock Purchase Plan (the “2023 ESPP”), which plan was approved by shareholders on November 20, 2023. Under the terms of the 2023 ESPP, all full- and part-time employees of the Company are eligible to participate. The maximum aggregate number of shares of Common Stock that may be granted under the 2023 ESPP is 50,000 shares. A Committee of independent members of the Company’s Board of Directors administers the 2023 ESPP.

 

The Company issued 0 and 38,291 shares to its directors during the years ended June 30, 2024 and 2023, respectively, under the Amended 2011 Plan. The Company issued 0 and 43,523 shares to employees and consultants during the years ended June 30, 2024 and 2023, respectively, under the Amended 2011 Plan.

 

The Company issued 18,978 and 0 shares to its directors during the years ended June 30, 2024 and 2023, respectively, under the 2023 Plan. The Company issued 64,266 and 0 shares to employees and consultants during the years ended June 30, 2024 and 2023, respectively, under the 2023 Plan.

 

The Company issued 19,635 and 0 shares to its employees during the years ended June 30, 2024 and 2023, respectively, under its 2023 ESPP.

 

The Company holds no treasury stock.

 

Vested and issued shares under the Amended 2011 plan for the fiscal year ending  June 30, 2024 and  June 30, 2023 totaling 0 and 25,995, respectively, and vested and issued shares under the 2023 Plan for the fiscal year ending  June 30, 2024 and June 30, 2023 totaling 69,437 and 0, respectively are included in the roll-forward of restricted stock units below.

 

Restricted Stock Units

 

      

Weighted

 
      

Average

 
  

Restricted

  

Grant Date

 
  

Stock

  

Fair Value

 
  

Units

  

($/share)

 
         

Outstanding at July 1, 2022

  906,155   5.34 

Granted

  61,859   5.02 

Vested and issued

  (25,995)  5.77 

Forfeited

  (34,568)  5.52 

Outstanding at June 30, 2023

  907,451   5.30 

Granted

  15,130   10.55 

Vested and issued

  (69,437)  5.53 

Forfeited

  -   - 

Outstanding at June 30, 2024

  853,144   5.37 

 

The number of restricted stock units outstanding at June 30, 2024 includes 2,483 units that have vested but for which shares of Common Stock had not yet been issued pursuant to the terms of the agreement.

 

As of June 30, 2024, there was approximately $4.6 million of unrecognized stock-based compensation obligations under our equity compensation plans. The stock-based compensation obligation is in connection with certain employment agreements which have a deferral option at the Board’s discretion. At the end of the deferral period, the stock-based compensation expense associated with the obligation is expected to be recognized on a straight-line basis over a period of three years.

 

Warrants

 

Outstanding warrants were issued in connection with private placements of the Company’s Common Stock and with the restructuring of the Series B Preferred that occurred in March of 2018. The following table summarizes information about fixed stock warrants outstanding at June 30, 2024:

 

Warrants Outstanding

  

Warrants Exercisable

 

at June 30, 2024

  

at June 30, 2024

 

Range of

      

Weighted average

  

Weighted

      

Weighted

 

exercise

  

Number

  

remaining contractual

  

average

  

Number

  

average

 

prices

  

Outstanding

  

life (years)

  

exercise price

  

exercisable

  

exercise price

 
$4.00   1,085,068   1.60  $4.00   1,085,068  $4.00 
$10.00   23,737   1.57  $10.00   23,737  $10.00 
     1,108,805   1.60  $4.13   1,108,805  $4.13 

 

Preferred Stock

 

The Company’s articles of incorporation currently authorizes the issuance of up to 30,000,000 shares of ‘blank check’ preferred stock, par value $0.01 (“Preferred Stock”) with designations, rights, and preferences as may be determined from time to time by the Company’s Board of Directors, of which 700,000 shares are currently designated as Series B Preferred Stock (“Series B Preferred”) and 550,000 shares are designated as Series B-1 Preferred Stock (“Series B-1 Preferred”). Both classes of Series B Preferred Stock pay dividends at a rate of 7% per annum if paid by the Company in cash, or 9% if paid by the Company by the issuance of additional shares of Series B Preferred, or Series B-1 Preferred, as applicable.

 

The Company does business with some of the largest retailers and wholesalers in the world. Management believes the Series B-1 Preferred favorably impacts the Company’s overall cost of capital in that it is: (i) perpetual and, therefore, an equity instrument that positively impacts the Company’s coverage ratios; (ii) possesses a below market dividend rate relative to similar instruments; (iii) offers the flexibility of a paid-in-kind (PIK) payment option; and (iv) is without covenants. After exploring alternative options for redeeming the Series B-1 Preferred, management determined that alternative financing options were materially more expensive, or would impair the Company’s net cash position, which management believes could cause customer concerns and negatively impact the Company’s ability to attract new business.

 

Preferred Redemption

 

Section 4 of the Company’s First Amended and Restated Certificate of Designation of the Relative Rights, Powers and Preferences of the Series B-1 Preferred Stock, as amended (the “Series B-1 COD”) provides the Company’s Board of Directors with the right to redeem any or all of the outstanding shares of the Company’s Series B-1 Preferred for a cash payment of $10.70 per share at any time upon providing the holders of Series B-1 Preferred at least ten days written notice that sets forth the date on which the redemption will occur (the “Redemption Notice”).

 

On August 29, 2023, the Board approved the redemption and retirement of its Series B Preferred and Series B-1 Preferred for their stated value, or $10.70 for each share of Preferred Stock, resulting in an aggregate purchase price of $8,964,214 (the “Preferred Redemption”). The Preferred Redemption is to occur over a three year period beginning August 29, 2023.

 

As of June 30, 2024, a total of 616,470 shares of Series B Preferred and 0 shares of Series B-1 Preferred were issued and outstanding. Since inception, a total of 221,307 Preferred shares at the redemption price of $10.70 per share have been redeemed for a total of $2,367,985.

 

The following table provides information about the redemption and retirement of the Series B Preferred during the year ended June 30, 2024:

 

  

Series B Preferred

 
          

Dollars

  

Remaining

 
          

Expended

  

Amount

 
  

Total

      

by Period

  

Available

 
  

Number of

      

under the

  

for Future

 
  

Shares

  

Price Paid

  

Preferred

  

Preferred

 

Period (1)

 

Redeemed

  

Per Share

  

Redemption

  

Redemption

 

July 1, 2023 – September 30, 2023:

  -  $10.70  $-     

October 1, 2023 – December 31, 2023:

  -  $10.70  $-  $6,691,513 

January 1, 2024 – March 31, 2024:

  -  $10.70  $-  $6,691,513 

April 1, 2024 – June 30, 2024:

  8,905  $10.70  $95,284  $6,596,229 

Total

  8,905      $95,284  $6,596,229 

 

(1)

We close our books and records on the last calendar day of each month to align our financial closing with our business processes.

 

The following table provides information about the redemption and retirement of the Series B-1 Preferred during the three months ended June 30, 2024:

 

  

Series B-1 Preferred

 
          

Dollars

  

Remaining

 
          

Expended

  

Amount

 
  

Total

      

by Period

  

Available

 
  

Number of

      

under the

  

for Future

 
  

Shares

  

Price Paid

  

Preferred

  

Preferred

 

Period (1)

 

Redeemed

  

Per Share

  

Redemption

  

Redemption

 

July 1, 2023 – September 30, 2023:

  -  $10.70  $-     

October 1, 2023 – December 31, 2023:

  70,093  $10.70  $749,995  $1,522,706 

January 1, 2024 – March 31, 2024:

  70,093  $10.70  $749,995  $772,711 

April 1, 2024 – June 30, 2024:

  72,216  $10.70  $772,711  $- 

Total

  212,402      $2,272,701  $- 

 

(1)

We close our books and records on the last calendar day of each month to align our financial closing with our business processes.

 

Section 4 of the Company’s First Amended and Restated Certificate of Designation of the Relative Rights, Powers and Preferences of the Series B-1 Preferred Stock, as amended (the “Series B-1 COD”) provides the Company’s Board of Directors with the right to redeem any or all of the outstanding shares of the Company’s Series B-1 Preferred for a cash payment of $10.70 per share at any time upon providing the holders of Series B-1 Preferred at least ten days written notice that sets forth the date on which the redemption will occur (the “Redemption Notice”).

 

As of June 30, 2024, a total of 616,470 shares of Series B Preferred and 0 shares of Series B-1 Preferred were issued and outstanding.

 

Share Repurchase Program

 

On May 9, 2019, our Board of Directors approved the repurchase of up to $4.0 million in shares of our Common Stock, which repurchases may be made in privately negotiated transactions or in the open market at prices per share not exceeding the then-current market prices (the “Share Repurchase Program”). Under the Share Repurchase Program, management has discretion to determine the dollar amount of shares to be repurchased and the timing of any repurchases in compliance with applicable laws and regulations, including Rule 10b-18 of the Exchange Act.

 

On March 17, 2020, the Board, given the extreme uncertainty due to COVID-19 at the time, suspended the Share Repurchase Program.

 

On May 18, 2021, our Board of Directors resumed its Share Repurchase Program, and increased the number of shares of Common Stock available to repurchase under the Share Repurchase Program by an additional $4 million bringing the total number of Common Stock authorized to repurchase under the Share Repurchase Program to $8.0 million.

 

On August 31, 2021, our Board of Directors approved a further increase to its Share Repurchase program to $12.0 million in shares of our Common Stock which added an additional $4 million to the Share Repurchase Program.

 

On May 10, 2022, our Board of Directors approved an increase of $9.0 million in the number of shares of Common Stock available to repurchase under the Share Repurchase Program.

 

Since inception of the Share Repurchase Program through June 30, 2024, a total of $21,000,000 in shares of Common Stock have been approved under the Share Repurchase Program, and 2,122,703 shares of Common Stock have been repurchased at an average purchase price of $6.13, resulting in $7,992,206 remaining available to repurchase under the current Share Repurchase Program. From time-to-time, our Board of Directors may authorize further increases to our Share Repurchase Program. In addition, the Share Repurchase Program may also be suspended for periods of time or discontinued at any time, at the Board’s discretion.

 

The following table provides information about repurchases of our Common Stock registered pursuant to Section 12 of the Exchange Act, during the years ended June 30, 2024 and 2023:

 

              

Remaining

 
              

Amount

 
              

Available for

 
          

Dollars

  

Future

 
  

Total

      

Expended

  

Share

 
  

Number

      

by Period

  

Repurchases

 
  

of Shares

  

Average

  

Under the

  

Under the

 
  

Purchased

  

Price Paid

  

Plans or

  

Plans or

 

Period (1)

 

by Period

  

Per Share

  

Programs

  

Programs

 
                 

Year Ended June 30, 2023:

                

July 1, 2022 – September 30, 2022

  20,859  $4.97  $103,657  $10,713,447 

October 1, 2022 – December 31, 2022

  88,741  $5.05  $448,266  $10,265,181 

January 1, 2023 – March 31, 2023

  74,150  $5.79  $429,271  $9,835,910 

April 1, 2023 – June 30, 2023

  47,847  $6.86  $328,129  $9,507,781 

Year Ended June 30, 2024:

                

July 1, 2023 – September 30, 2023

  155,025  $8.53  $1,322,082  $8,185,698 

October 1, 2023 – December 31, 2023

  22,012  $8.79  $193,492  $7,992,206 

January 1, 2024 – March 31, 2024

  -  $-  $-  $7,992,206 

April 1, 2024 – June 30, 2024

  -  $-  $-  $7,992,206 

 

(1) We close our books and records on the last calendar day of each month to align our financial closing with our business processes.