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Stockholders' Equity

12 Months Ended

Jun. 30, 2021

Note 6. Stockholders’ Equity

Stock Options

In December 2007, we established the 2007 Equity Compensation Plan (the “2007 Plan”) and in November 2017 we established the 2017 Omnibus Incentive Plan (the “2017 Plan”), collectively (the “Plans”). The Plans were approved by our board of directors and stockholders. The purpose of the Plans is to grant stock and options to purchase our common stock, and other incentive awards, to our employees, directors and key consultants. On November 10, 2016, the maximum number of shares of common stock that may be issued pursuant to awards granted under the 2007 Plan increased from 5,000,000 to 7,000,000. On November 21, 2017, the Company’s stockholders approved the adoption of the 2017 Plan (previously adopted by our board of directors on September 14, 2017), which authorized a maximum of 1,874,513 shares of common stock that may be issued pursuant to awards granted under the 2017 Plan. Upon adoption of the 2017 Plan we ceased granting incentive awards under the 2007 Plan and commenced granting incentive awards under the 2017 Plan. The shares of our common stock underlying cancelled and forfeited awards issued under the 2017 Plan may again become available for grant under the 2017 Plan. Cancelled and forfeited awards issued under the 2007 Plan that were cancelled or forfeited prior to November 21, 2017 became available for grant under the 2007 Plan. On November 12, 2019, the maximum number of shares of common stock that may be issued pursuant to awards granted under the 2017 Plan increased from 1,874,513 to 2,374,513. On November 17, 2020, the Company's stockholders approved an increase in the maximum number of shares of common stock that may be issued pursuant to awards granted under the 2017 Omnibus Incentive Plan from 2,374,513 to 3,374,513. As of June 30, 2021, there were 1,100,021 shares available for grant under the 2017 Plan, and no shares were available for grant under the 2007 Plan. All incentive stock award grants prior to the adoption of the 2017 Plan on November 21, 2017 were made under the 2007 Plan, and all incentive stock award grants after the adoption of the 2017 Plan on November 21, 2017 were made under the 2017 Plan.

The majority of awards issued under the Plan vest immediately or over three years, with a one year cliff vesting period, and have a term of ten years. Stock-based compensation cost is measured at the grant date, based on the fair value of the awards that are ultimately expected to vest, and recognized on a straight-line basis over the requisite service period, which is generally the vesting period.

The following table summarizes vested and unvested stock option activity:


	All Options			Vested Options			Unvested Options
		Weighted			Weighted			Weighted
		Average			Average			Average
		Exercise			Exercise			Exercise
	Shares	Price		Shares	Price		Shares	Price
Outstanding at July 1, 2019	3,287,335		1.38	2,827,251		1.27	460,084		2.09
Granted	324,000		3.04	250,000		3.13	74,000		2.72
Options vesting	—		—	278,249		2.05	(278,249)		2.05
Exercised	(263,755)		1.16	(263,755)		1.16	—		—
Forfeited/Cancelled	(20,000)		1.95	(10,000)		1.95	(10,000)		1.95
Outstanding at June 30, 2020	3,327,580	$	1.56	3,081,745	$	1.50	245,835	$	2.34
Granted	575,348		2.28	270,000		2.25	305,348		2.31
Options vesting	—		—	199,499		2.16	(199,499)		2.16
Exercised	(274,520)		1.34	(274,520)		1.34	—		—
Forfeited	(126,250)		2.59	(102,500)		2.72	(23,750)		1.99
Repurchased	(243,750)		1.32	(243,750)		1.32	—		—
Outstanding at June 30, 2021	3,258,408	$	1.68	2,930,474	$	1.60	327,934	$	2.46

The following table presents the assumptions used to estimate the fair values based upon a Black-Scholes option pricing model of the stock options granted during the years ended June 30, 2021 and 2020.


	Years Ended
	June 30,
	2021		2020
Expected dividend yield	0	%	0	%
Risk-free interest rate	0.37 - 1.05	%	0.43 - 1.69	%
Expected life (in years)	5 - 6		5 - 6
Expected volatility	56 - 63	%	62 - 64	%

The weighted average remaining contractual life of all options outstanding as of June 30, 2021 was 5.45 years. The remaining contractual life for options vested and exercisable at June 30, 2021 was 4.96 years. Furthermore, the aggregate intrinsic value of options outstanding as of June 30, 2021 was $3,897,018, and the aggregate intrinsic value of options vested and exercisable at June 30, 2021 was $3,752,794, in each case based on the fair value of the Company’s common stock on June 30, 2021.

During the year ended June 30, 2021, the Company granted 575,348 options to employees with a fair value of $686,461 which amount will be amortized over the vesting period. The total fair value of options that vested during the year ended June 30, 2021 was $631,335 and was included in selling, general and administrative expenses in the accompanying statement of operations. As of June 30, 2021, the amount of unvested compensation related to the unvested options was $340,692 which will be recorded as an expense in future periods as the options vest. During the year ended June 30, 2021, the Company issued 158,609 net shares of common stock upon the exercise of options underlying 274,520 shares of common stock, resulting in net cash proceeds of $88,850.

On March 31, 2021 the Company repurchased options underlying 243,750 shares of stock from a former director for $213,313. The entire amount was charged to equity.

During the year ended June 30, 2020, the Company granted 324,000 options to employees and directors with a fair value of $488,080 which amount will be amortized over the vesting period. The total fair value of options that vested during the year ended June 30, 2020 was $610,634 and was included in selling, general and administrative expenses in the accompanying statement of operations. As of June 30, 2020, the amount of unvested compensation related to the unvested options was $290,515 which will be recorded as an expense in future periods as the options vest. During the year ended June 30, 2020, the Company issued 161,698 net shares of common stock upon the exercise of 263,755 options on a cashless basis.

Additional information regarding stock options outstanding and exercisable as of June 30, 2021 is as follows:


	Option		Remaining
	Exercise	Options	Contractual	Options
	Price	Outstanding	Life (in years)	Exercisable
$	0.59	8,150	1.00	8,150
	0.60	5,000	1.00	5,000
	0.65	6,150	1.00	6,150
	0.70	225,000	4.43	225,000
	0.77	49,500	2.08	49,500
	0.80	16,000	4.14	16,000
	0.90	25,667	2.81	25,667
	0.97	6,000	1.00	6,000
	1.00	28,249	2.43	28,249
	1.02	2,000	1.00	2,000
	1.05	315,529	5.01	315,529
	1.07	33,898	1.29	33,898
	1.09	75,000	4.12	75,000
	1.10	105,000	4.00	105,000
	1.15	128,400	1.61	128,400
	1.20	274,000	6.05	274,000
	1.25	32,000	1.62	32,000
	1.30	243,000	0.68	243,000
	1.50	185,000	1.48	185,000
	1.59	25,000	6.87	25,000
	1.80	94,050	2.13	94,050
	1.85	17,800	1.80	17,800
	1.95	200,000	7.01	200,000
	2.13	216,708	9.39	200,000
	2.17	35,955	9.87	—
	2.40	338,667	7.38	326,000
	2.43	61,250	9.93	31,250
	2.45	173,000	9.10	—
	2.49	88,435	8.84	45,832
	2.50	20,000	7.88	15,000
	2.99	8,000	8.87	3,333
	3.13	208,000	8.38	204,666
	3.50	8,000	8.62	4,000
	Total	3,258,408		2,930,474

Warrants

The following table summarizes warrant activity:


		Weighted
		Average
	Number of	Exercise
	Warrants	Price
Outstanding, June 30, 2019	1,885,000	$	1.25
Granted	—		—
Exercised	(1,500,000)		1.25
Expired/Cancelled	—		—
Outstanding, June 30, 2020	385,000	$	1.24
Granted	—		—
Exercised	(190,000)		1.25
Repurchased	(100,000)		1.25
Expired/Cancelled	(45,000)		1.25
Outstanding, June 30, 2021	50,000	$	1.19
Exercisable, June 30, 2020	385,000	$	1.24
Exercisable, June 30, 2021	50,000	$	1.19

The intrinsic value for all warrants outstanding as of June 30, 2021 was $83,500, based on the fair value of the Company’s common stock on June 30, 2021.

During the year ended June 30, 2021, certain holders of warrants to purchase shares of the Company’s common stock at a per share exercise price of $1.25 exercised those warrants to purchase 190,000 shares, generating gross proceeds to the Company of $237,501.

On March 31, 2021 the Company repurchased warrants underlying 100,000 shares of stock from a former director for $95,000. The entire amount was charged to equity.

During the year ended June 30, 2020, certain holders of warrants to purchase shares of the Company’s common stock at a per share exercise price of $1.25 exercised those warrants to purchase 1,500,000 shares, generating gross proceeds to the Company of $1,875,000.

Additional information regarding warrants outstanding and exercisable as of June 30, 2021 is as follows:


			Remaining
	Warrant	Warrants	Contractual	Warrants
	Exercise Price	Outstanding	Life (in years)	Exercisable
$	1.19	50,000	0.48	50,000
	Total	50,000		50,000

Restricted Common Stock

Prior to July 1, 2019, the Company issued 2,166,549 shares of restricted common stock to employees valued at $2,198,240, of which $1,785,857 had been recognized as an expense. As of June 30, 2019, 311,535 of these shares with a grant date fair value of $412,383 had not yet vested.

During the year ended June 30, 2020, the Company issued an additional 110,817 shares of restricted stock to employees. These shares vest over a three year period, with a one year cliff vesting period, and remain subject to forfeiture if vesting conditions are not met. The aggregate fair value of the stock awards was $322,875 based on the market price of our common stock ranging from $2.75 to $3.50 per share on the date of grant, which will be amortized over the three-year vesting period.

During the year ended June 30, 2021, the Company issued an additional 195,810 shares of restricted stock to employees. These shares vest over a three year period, with a one year cliff vesting period, and remain subject to forfeiture if vesting conditions are not met. The aggregate fair value of the stock awards was $463,994 based on the market price of our common stock ranging from $2.13 to $2.49 per share on the date of grant, which will be amortized over the three-year vesting period.

The total fair value of restricted common stock vested during the year ended June 30, 2021 and 2020 was $376,338 and $340,961, respectively, and is included in selling, general and administrative expenses in the accompanying statements of operations. As of June 30, 2021, the amount of unvested compensation related to issuances of restricted common stock was $481,953, which will be recognized as an expense in future periods as the shares vest. When calculating basic net income (loss) per share, these shares are included in weighted average common shares outstanding from the time they vest. When calculating diluted net income per share, these shares are included in weighted average common shares outstanding as of their grant date.

The following table summarizes restricted common stock activity:


				Weighted
				Average
	Number of			Grant Date
	Shares	Fair Value		Fair Value
Non-vested, June 30, 2019	311,535		412,383	$	1.66
Granted	110,817		322,875		2.91
Vested	(230,497)		(340,961)		1.56
Forfeited	—		—		—
Non-vested, June 30, 2020	191,855	$	394,297	$	2.51
Granted	195,810		463,994		2.37
Vested	(142,413)		(376,338)		2.37
Forfeited	—		—		—
Non-vested, June 30, 2021	245,252	$	481,953	$	2.47

Common Stock Repurchase and Retirement

Effective as of February 11, 2020, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2020 on the last day of each trading window and otherwise in accordance with our insider trading policies, of up to $400,000 of outstanding common stock (at prices no greater than $4.00 per share) from our employees to satisfy their tax obligations in connection with the vesting of stock incentive awards. The actual number of shares repurchased will be determined by applicable employees in their discretion, and will depend on their evaluation of market conditions and other factors.

Effective as of February 9, 2021, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2021 on the last day of each trading window and otherwise in accordance with our insider trading policies, of up to $400,000 of outstanding common stock (at prices no greater than $4.00 per share) from our employees to satisfy their tax obligations in connection with the vesting of stock incentive awards. The actual number of shares repurchased will be determined by applicable employees in their discretion, and will depend on their evaluation of market conditions and other factors.

During the years ended June 30, 2021 and 2020, we repurchased approximately 78,467 and 116,200 shares of our common stock under the repurchase plan at an average price of approximately $2.27 and $2.77 per share, respectively, for an aggregate amount of $178,012 and $321,601, respectively. As of June 30, 2021, $349,263 remains under the current authorization to repurchase our outstanding common stock from our employees.

Shares repurchased are retired and deducted from common stock for par value and from additional paid in capital for the excess over par value. Direct costs incurred to acquire the shares are included in the total cost of the shares.

The following table summarizes repurchases of our common stock on a monthly basis:


				Total Number of Shares	Approximate Dollar Value
	Total Number	Average		Purchased as Part of	of Shares that May Yet Be
	of Shares	Price Paid		Publicly Announced	Purchased Under the
Period	Purchased¹	per Share		Plans or Programs	Plans or Programs
September 2019	28,750	$	2.50	—		—
December 2019	42,500	$	3.00	—		—
March 2020	25,150	$	2.75	—		—
June 2020	19,800	$	2.68	—		—
Year ended June 30, 2020	116,200	$	2.77	—		—

September 2020	25,500	$	2.29	—		—
December 2020	31,167	$	2.21	—		—
March 2021	10,750	$	2.15	—	$	376,888
June 2021	11,050	$	2.50	—	$	349,263
Year ended June 30, 2021	78,467	$	2.27	—	$	349,263

¹ Consists of shares of common stock purchased from employees to satisfy tax obligations in connection with the vesting of stock incentive awards.