NOTE 12. SHAREHOLDERS’ EQUITY

The Company has three classes of common equity: class A, class B, and class C common stock. The Company’s class A common stock is traded over-the-counter and is quoted daily under NASDAQ’s Capital Markets under the symbol “GROW.” There is no established public trading market for the Company’s class B and class C common stock. There are no shares of class B stock issued as of June 30, 2019, or 2018.

The Company’s class A and class B common stock have no voting privileges.

Dividends

Dividends of $0.0025 per share per month totaling $392,000 and $393,000 were paid to holders of class A common stock in fiscal years 2019 and 2018, respectively. Dividends of $62,000 and $62,000 were paid to holders of class C common stock in fiscal years 2019 and 2018, respectively.

The monthly dividend of $0.0025 is authorized through September 2019 and will be considered for continuation at that time by the Board. Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company and general business conditions. On a per share basis, the holders of the class C common stock and the nonvoting class A common stock participate equally in dividends as declared by the Company’s Board of Directors.

Share Repurchase Plan

The Company has a share repurchase program, approved by the Board of Directors, authorizing the Company to annually purchase up to $2.75 million of its outstanding common shares, as market and business conditions warrant, on the open market in compliance with Rule 10b-18 of the Securities Exchange Act of 1934 through December 31, 2019. The repurchase program has been in place since December 2012, and the Board of Directors has annually renewed the repurchase program each calendar year. The acquired shares may be used for corporate purposes, including shares issued to employees in the Company’s stock-based compensation programs. As of June 30, 2019, approximately $2.74 million remains available for repurchase under this authorization.

During fiscal years 2019 and 2018, the Company repurchased 20,575 and 48,947, respectively, of its class A shares on the open market using cash of $24,000 and $141,000, respectively. To date, the Company has repurchased a total of 560,810 class A shares under the repurchase program using cash of $1.3 million.

Other Activity

The Company did not grant any shares of class A common stock to employees during fiscal year 2019 or 2018. Grants vest immediately after issuance.

The Company granted 3,600 and 7,200 shares of class A common stock at a weighted average fair value of $1.34 and $2.62 to its non-employee directors in fiscal years 2019 and 2018, respectively. Grants vest immediately after issuance.

Issuances of treasury stock for grants or bonuses are accounted for using the weighted-average cost basis of the shares issued. During fiscal year 2019, shares were issued, as described above, with a weighted-average cost basis greater than current fair value, which resulted in a combined negative adjustment to additional paid-in capital of approximately $4,000 for fiscal year 2019. During fiscal year 2018, shares were issued, as described above, with a weighted-average cost basis less than current fair value, which resulted in a combined increase to additional paid-in capital of approximately $2,000 for fiscal year 2018.

Shareholders of class C shares are allowed to convert to class A. During fiscal years 2019 and 2018, 60 and 90 shares, respectively, were converted from class C to class A. Conversions are one class A share for one class C share and are recorded at par value. There are no restrictions or requirements to convert.

Stock-based compensation

In November 1989, the Board of Directors adopted the 1989 Non-Qualified Stock Option Plan (“1989 Plan”), amended in December 1991, which provides for the granting of options to purchase 1,600,000 shares of the Company’s class A common stock to directors, officers and employees of the Company and its subsidiaries. Options issued under the 1989 Plan vest six months from the grant date or 20 percent on the first, second, third, fourth, and fifth anniversaries of the grant date. Options issued under the 1989 Plan expire ten years after issuance. No options were granted in fiscal years 2019 or 2018. As of June 30, 2019, there were no options outstanding under the 1989 Plan.

In April 1997, the Board of Directors adopted the 1997 Non-Qualified Stock Option Plan (“1997 Plan”), which provides for the granting of stock appreciation rights (SARs) and/or options to purchase 400,000 shares of the Company’s class A common stock to directors, officers, and employees of the Company and its subsidiaries. Options issued under the 1997 Plan expire ten years after issuance. No options were granted in fiscal year 2019. In fiscal year 2018, 2,000 options were granted with a fair value, net of tax, of approximately $4,000. The options granted in fiscal year 2018 vested over six months through September 2018. As of June 30, 2019, there were 4,000 options outstanding under the 1997 Plan.

The estimated fair value of options granted is amortized to expense over the options’ vesting period. The fair value of these options is estimated at the date of the grant using a Black-Scholes option pricing model.

Stock option transactions under the 1997 Plan for the past two fiscal years are summarized below:

(dollars in thousands, except price data)	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value (net of tax)
Outstanding June 30, 2017		2,000	$	12.31
Granted		2,000	$	2.74
Exercised		-		n/a
Forfeited		-		n/a
Outstanding June 30, 2018		4,000	$	7.53
Granted		-		n/a
Exercised		-		n/a
Forfeited		-		n/a
Outstanding June 30, 2019		4,000	$	7.53		4.49	$	-

Class A common stock options outstanding and exercisable under the employee stock option plans at June 30, 2019, were as follows:

	Options Outstanding							Options Exercisable
	Date of Option Grant	Number Outstanding		Remaining Life in Years		Weighted Average Exercise Price ($)		Number Exercisable		Weighted Average Option Price ($)
1997 Plan Class A	10/07/09		2,000		0.27	$	12.31		2,000	$	12.31
	03/21/18		2,000		8.72	$	2.74		2,000	$	2.74
			4,000		4.49	$	7.53		4,000	$	7.53