In November 2017, the Company’s shareholders approved the 2017 Omnibus Incentive Plan (the “2017 Plan”) which supersedes the 2014 Equity Incentive Plan (the “2014 Plan”). The 2017 Plan allows the Company’s Board of Directors (“the Board of Directors”) to grant stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards, as well as cash incentive awards to all employees, non-employee directors, and advisors or consultants of the Company. The vesting schedule and term for each award are determined by the Board of Directors upon each grant. The maximum number of shares of common stock available for issuance under the 2017 Plan is 900,000. There were 490,750 stock options granted under the 2014 Plan and prior plans outstanding as of September 30, 2019. There were 315,600 stock options and 82,500 shares of restricted stock issued under the 2017 Plan outstanding and 500,400 shares available for grant under the 2017 Plan as of September 30, 2019.

The Company recorded approximately $210,000 and $257,000 of compensation expense related to current and past grants of stock options and restricted stock for the three months ended September 30, 2019 and 2018, respectively. This expense is included in selling, general and administrative expense. As of September 30, 2019, approximately $1,254,000 of total unrecognized compensation expense related to non-vested equity awards was expected to be recognized over a weighted average period of approximately 0.9 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 historical 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 stock options granted:

	Three Months Ended September 30, 2019		Fiscal Year Ended June 30, 2019
Risk-free interest rate		1.85%		2.36% - 2.77	%
Expected term (years)		6		6
Expected volatility		190.1%		182.4% - 192.0	%

The Company issued 149,300 stock options pursuant to the 2017 Plan during the three months ended September 30, 2019. Stock option transactions during the three months ended September 30, 2019 are summarized as follows:

	Number of Shares			Weighted Average Exercise Price per Share
Outstanding at June 30, 2019		683,000		$	3.84
Granted		149,300		$	5.29
Exercised		(5,000	)	$	2.61
Cancelled or Forfeited		(20,950	)	$	5.30
Outstanding at September 30, 2019		806,350		$	4.08

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, 2019, the weighted average remaining contractual term for all outstanding stock options was 7.21 years and their aggregate intrinsic value was approximately $2,046,000. Outstanding at September 30, 2019 were 806,350 stock options issued to employees, of which 504,174 were exercisable and had an aggregate intrinsic value of approximately $1,679,000.

The 2017 Plan also permits the grant of other stock-based awards, including shares of restricted stock. 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, 2019, the Company issued restricted stock awards to employees totaling 32,500 shares of the Company’s common stock, with a vesting term of one to three years and a fair value of $5.29 per share. The fair value per share or restricted stock represents the closing price of the Company’s common stock the on the NYSE American on the date of the grant. Restricted stock transactions during the three months ended September 30, 2019 are summarized as follows:

	Number of Shares		Weighted Average Grant Date Fair Value per Share
Outstanding Shares of Restricted Stock Unvested at June 30, 2019		29,998	$	5.46
Granted		32,500	$	5.29
Vested		–		–
Forfeited		–		–
Outstanding Shares of Restricted Stock Unvested at September 30, 2019		62,498	$	5.37