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Note 10 - Common Stock Incentive, Stock Purchase Plans, and Other Compensation Plans

12 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(10) Common Stock Incentive, Stock Purchase Plans, and Other Compensation Plans

2021 Omnibus Equity Plan (“2021 Plan”)

On May 26, 2021 (the “Effective Date”), at the 2020 Annual Meeting of Shareholders, the shareholders of the Company voted to adopt the 2021 Plan. We currently maintain the 2011 Stock Incentive Plan and the 2008 Stock Incentive Plan (the “Prior Plans”). However, following the Effective Date, no further awards may be issued under the Prior Plans, but all awards under the Prior Plans that are outstanding as of the Effective Date will continue to be governed by the terms, conditions, and procedures set forth in the Prior Plans and any applicable award agreement. The 2021 Plan provides for (i) 1,500,000 shares of Company common stock; (ii) the number of shares of common stock reserved, but unissued under the Prior Plans; (iii) the number of shares of common stock underlying forfeited awards under the Prior Plans; and (iv) an annual increase on the first day of each calendar year beginning with the first January 1 following the Effective Date and ending with the last January 1 during the initial ten-year term of the 2021 Plan, equal to the lesser of (A) five percent (5%) of the shares of common stock outstanding (on an as-converted basis, which shall include shares of common stock issuable upon the exercise or conversion of all outstanding securities or rights convertible into or exercisable for shares of common stock, including without limitation, preferred stock, warrants or employee options to purchase any shares of common stock) on the final day of the immediately preceding calendar year and (B) such lesser number of shares of common stock as determined by our board of directors (the "Annual Evergreen Shares"). Based on the number of shares of common stock outstanding on December 31, 2021, the maximum increase to the number of Annual Evergreen Shares of common stock that can be issued under the 2021 Plan in 2022 is approximately 2,616,860 shares.

The number of shares available for grant under the 2021 Plan is designed to enable the Company to properly incentivize its employees and management teams over a number of years on a going-forward basis. The 2021 Plan, administered by the Compensation Committee of the Board of Directors, provided for granting of incentive awards in the form of stock, stock options, stock appreciation rights, restricted stock units, and restricted stock to employees, directors, and consultants of the Company.

Stock Option Activity Summary

The Company’s stock option activity for the years ended June 30, 2022 and 2021 was as follows:

						*Weighted*
		*Shares*				*Average*
		*(In thousands)*				*Exercise Price*
Outstanding at June 30, 2020			325			$	5.68
Granted			50				5.00
Exercised			—				—
Canceled or expired			(100	)			6.49
Outstanding at June 30, 2021			275			$	5.25
Granted			876				0.64
Exercised			—				—
Canceled or expired			(122	)			4.96
Outstanding at June 30, 2022			1,029			$	1.35

The aggregate intrinsic value of options exercisable at June 30, 2022 was $0 as the fair value of the Company’s common stock is less than the exercise prices of these options. The aggregate intrinsic value of all options outstanding at June 30, 2022 was $0.

Options

Outstanding

Options

Weighted-

Exercisable

Average

Weighted-

Weighted-

Number

Remaining

Average

Number

Average

Outstanding

Contractual

Exercise

Exercisable

Exercise

Range of exercise prices

(In thousands)

Life (years)

Price

(In thousands)

Price

$0.64 – $2.83

889

9.75

$

0.66

9

$

2.15

$5.30 – $5.85

88

4.86

5.55

88

5.55

$6.00 – $6.00

52

0.14

6.00

52

6.00

$0.64 – $6.00

1,029

8.84

$

1.35

149

$

5.49

Compensation costs recognized related to vested stock option awards during the years ended June 30, 2022 and 2021 were $37 thousand and $1 thousand, respectively. At June 30, 2022, there was $507 thousand of total unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a weighted average period of 2.65 years.

Restricted Stock

The Company’s restricted stock activity for the years ended June 30, 2022 and 2021, was as follows:

						*Weighted*
						*Average*
		*Shares*				*Grant-Date*
		*(In thousands)*				*Fair Value*
Outstanding at June 30, 2020			133			$	3.95
Granted			2,019				2.02
Vested			(58	)			1.84
Canceled or expired			(71	)			3.57
Outstanding at June 30, 2021			2,023			$	2.05
Granted			1,200				0.63
Vested			(693	)			2.08
Canceled or expired			(254	)			2.02
Outstanding at June 30, 2022			2,276			$	1.30

Compensation costs recognized related to vested restricted stock awards during the years ended June 30, 2022 and 2021 were $1.5 million and $625 thousand, respectively. At June 30, 2022, there was $2.5 million of unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 2.47 years.

Fair Value of Stock-Based Compensation

Stock-based compensation costs are generally based on the fair value calculated from the Black-Scholes model on the date of the grant of stock options. The fair values of stock options are amortized as compensation expense on a straight-line basis over the vesting period of the grants. The Company recognizes forfeitures as they occur. The assumptions used for the years ended June 30, 2022 and 2021 and the resulting estimates of weighted-average fair value per share of options granted or modified are summarized in the following table:

		*Year Ended*				*Year Ended*
		*June 30, 2022*				*June 30, 2021*
Expected dividend yield			—				—
Expected volatility			104.97	%			106.29	%
Risk-free interest rates			0.65	%			1.45	%
Expected option life (in years)			3.5				3.5
Weighted-average grant-date fair value of options awarded		$	0.86			$	2.40

•

The expected dividend yield is based on the Company’s current dividend yield and the best estimate of projected dividend yield for future periods within the expected life of the option, which is currently 0%.

•

The Company estimated volatility using the historical share price performance over the expected life. Management believes the historical estimated volatility is materially indicative of expectations about future volatility.

•

The estimate of the risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.

•

For the years ended June 30, 2022 and 2021, the Company used the simplified method of calculating the expected life of the options.