Common Stock Incentive, Stock Purchase Plans and Other Compensation Plans

2008 Stock Incentive Plan (“2008 Plan”)

The 2008 Plan was created to promote growth of the Company by aligning the long-term financial success of the Company with the employees, directors and consultants. At the time of approval, 5,500,000 shares of our common stock were reserved for issuance under this plan. The 2008 Plan, administered by the Compensation Committee of the Board of Directors, provides for granting of incentive awards in the form of stock options, stock appreciation rights (“SARs”) and restricted stock to employees, directors and consultants of the Company. As of June 30, 2015, there are no shares available for grant under the 2008 Plan.

2011 Stock Incentive Plan (“2011 Plan”)

The 2011 Plan was designed to increase shareholder value by compensating employees over the long term. The plan is to be used to promote long-term financial success and execution of our business strategy. At the time of approval, 1,750,000 shares of our common stock were reserved for issuance under this plan. On June 26, 2014, an additional 2,000,000 shares of our common stock were approved for issuance under this plan. The 2011 Plan, administered by the Compensation Committee of the Board of Directors, provides for granting of incentive awards in the form of stock options, SARs and restricted stock to employees, directors and consultants of the Company. Stock options awarded vest upon completing one year of service with the Company or meeting certain performance yearly measurements over the next three years. These options expire ten years from the grant date or upon employee or director termination. As of June 30, 2015, there are 1,068,740 shares available for grant under the 2011 Plan.

Stock Option Activity Summary

The Company’s stock option activity for the years ended June 30, 2015 and 2014 was as follows:



	Shares (in thousands)		Weighted Average Exercise Price
Outstanding at June 30, 2013	1,175		$	0.94
Granted	—		—
Exercised	(66	)	0.64
Cancelled or expired	(234	)	1.75
Outstanding at June 30, 2014	875		$	0.91
Granted	409		2.76
Exercised	(149	)	0.75
Cancelled or expired	(7	)	14.01
Outstanding at June 30, 2015	1,128		$	1.53

The aggregate intrinsic value of options exercisable at June 30, 2015 was $2.0 million as the fair value of the Company’s common stock is more than the exercise prices of these options. The aggregate intrinsic value of all options outstanding at June 30, 2015 was $3.1 million.



Range of exercise prices	Number Outstanding	Options Outstanding Weighted- Average Remaining Contractual Life (years)	Weighted- Average Exercise Price		Number Exercisable	Options Exercisable Weighted- Average Exercise Price
$0.32 – 0.71	448,750	5.12	$	0.60	448,750	$	0.60
$1.20 – 2.60	570,000	8.35	1.94		180,000	1.20
$3.20 – 3.20	109,000	9.78	3.20		—	—
$0.32 – 3.20	1,127,750	7.20	$	1.53	628,750	$	0.77

Compensation costs recognized related to vested stock option awards during the year ended June 30, 2015 and 2014 was $0.1 million and $0.6 million, respectively. At June 30, 2015, there was $0.3 million of total unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a weighted average period of 2.0 years.

Restricted Stock

At June 30, 2015 and 2014, there was $1 million and $1 thousand of unrecognized compensation costs related to restricted stock, respectively, which is expected to be recognized over a weighted average period of 2.8 years.

The Company’s restricted stock activity for the years ended June 30, 2015 and 2014, was as follows:



	Shares (in thousands)		Weighted Average Grant-Date Fair Value
Non-vested at June 30, 2013	17		$	0.75
Vested	(9	)	0.75
Cancelled or expired	—		—
Non-vested at June 30, 2014	8		$	0.75
Granted	336		3.16
Vested	(8	)	0.75
Cancelled or expired	—		—
Non-vested at June 30, 2015	336		$	3.16

Immediately Vested Stock Compensation

In addition, the Company issued 1.5 million shares to the Board of Directors, Chief Executive Officer and Chief Financial Officer for a total cost of $4.8 million.

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 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 assumptions used for the year ended June 30, 2015 and the resulting estimates of weighted-average fair value per share of options granted are summarized in the following table:



	Year ended June 30, 2015
Expected Dividend Yield	—		%
Expected Volatility	109		%
Risk-Free Interest Rates	2.18		%
Expected Option Life (in years)	10.00
Weighted-average grant-date fair value of options awarded	$	0.70


•	The expected dividend yield is based on our 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%.


•	We estimated volatility using our historical share price performance over the last ten years. 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.


•	The expected life is calculated using the contractual term of the options as well as an analysis of the Company’s historical exercises of stock options.

Securities Repurchase Program

On December 12, 2014, the Board of Directors amended the share repurchase program to allow for the repurchase of up to $5 million more treasury shares until December 31, 2015. As of June 30, 2015, we had repurchased 145,335 shares of Common Stock at a cost of $375 thousand, which represents an average cost of $2.58 per share, and $4.6 million of securities are still available for repurchase under this program.

Common stock repurchases under the Company’s securities repurchase program may be made from time-to-time, in the open market, through block trades or otherwise in accordance with applicable regulations of the Securities and Exchange Commission. Depending on market conditions and other factors, these purchases may be commenced or suspended at any time or from time-to-time without prior notice. Additionally, the timing of such transactions will depend on other corporate strategies and will be at the discretion of the management of the Company.

Shares Repurchased from Related Parties

The Company repurchased 100,000 shares from a Director in October 2014 at an average price of $2.56 which was the average market price at the date of the transaction. In April of 2015, the Company repurchased 563,580 shares issued to the Directors, CEO and CFO related to their tax withholding obligation at an average price of $3.20 which was the average market price at the date of the transaction.