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Stock-Based Compensation
 3 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

Note 7. Stock-Based Compensation

 

The Company recorded approximately $190,000 and $109,000 of compensation expense related to current and past grants of stock options and restricted stock for the three months ended September 30, 2017 and 2016, respectively. This expense is included in selling, general and administrative expense. As of September 30, 2017, approximately $1,170,000 of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of approximately 1.0 years.

 

The Company recognizes compensation expense related to share-based payment transactions in the financial statements based on the estimated fair value of the award issued. The fair value of each option is estimated using the Black-Scholes pricing model at the time of award grant. The Company estimates the expected life of options based on the expected holding period by the option holder. The risk-free interest rate is based upon observed U.S. Treasury interest rates for the expected term of the options. The Company makes assumptions with respect to expected stock price volatility based upon the volatility of its stock price. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates. Forfeitures are estimated based on the percentage of awards expected to vest, taking into consideration the seniority level of the award recipient.

 

The following assumptions were used to estimate the fair value of options granted:

 

  Three Months Ended September 30, 2017   Fiscal Year Ended June 30, 2017
Risk-free interest rate 1.77% - 2.07%   1.14% - 1.27%
Expected term (years) 6   6
Expected volatility 125.2% - 141.2%   100.5% - 105.8%

 

Stock Options

 

The Company issued 182,250 stock options pursuant to its 2014 Equity Incentive Plan (the “Plan”) during the three months ended September 30, 2017. Stock option transactions during the three months ended September 30, 2017 are summarized as follows:

 

   Number of Shares   Weighted Average Exercise Price per Share 
Outstanding at June 30, 2017   747,634   $2.91 
Granted   182,250   $5.64 
Exercised   –    – 
Cancelled or Forfeited   (9,334)  $3.60 
Outstanding at September 30, 2017   920,550   $3.44 

 

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. At September 30, 2017, the weighted average remaining contractual term for all outstanding stock options was 5.95 years and their aggregate intrinsic value was approximately $3,562,000. Outstanding at September 30, 2017 were 920,550 stock options issued to employees, of which 586,303 were exercisable and had an aggregate intrinsic value of approximately $2,653,000.

 

Restricted Stock

 

The Plan permits the grant of other stock-based awards. Historically, the Company makes restricted stock grants to key employees and non-employee directors that vest over six months to three years.

 

During the three months ended September 30, 2017, the Company issued restricted stock awards to employees totaling 30,000 shares of common stock, with a vesting term of one to three years and a fair value of $5.53 per share. The restricted stock’s fair value per share represents the closing price of the Company’s common stock on the date the grants were made. Restricted stock transactions during the three months ended September 30, 2017 are summarized as follows:

 

   Number of Shares   Weighted Average Grant Date Fair Value per Share 
Unvested shares at June 30, 2017    29,998   $3.15 
Granted    30,000   $5.53 
Vested    –    – 
Forfeited    –    – 
Unvested at September 30, 2017    59,998   $4.34