Note 12 - Equity Transactions and Stock-based Compensation

12 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Equity [Text Block]

Note 12. Equity Transactions and Stock-Based Compensation

Stock Option Plans. The Company has adopted a stock option plan for the granting of options or restricted shares to employees, officers, directors and consultants of the Company that originally provided for the issuance of up to 7,000,000 shares of common stock, at the discretion of the Board of Directors. Subsequent to the adoption, the Board of Directors and stockholders approved additional common stock shares aggregating 6,000,000 to be available for grant, for a total of 13,000,000 shares of common stock reserved for issuance under the Company’s 2001 Stock Option Plan, as amended (the “Plan”). The Company also has a 1997 Stock Option Plan with 5,000,000 shares of common stock reserved for issuance. Stock option grants may not be priced less than the fair market value of the Company’s common stock at the date of grant. Options granted are generally for ten-year periods, except that incentive stock options granted to a 10% stockholder (as defined) are limited to five-year terms. As of June 30, 2023, the Company has 6,823,569 shares of common stock remaining under the Plans.

In the fiscal year ended June 30, 2023, the Board of Directors authorized the issuance of up to 538,500 stock options to Company officers and employees. The Company issued 527,000 stock options with an exercise price ranging from $0.41 to $0.45, vesting over three years, with expiration terms of either five or ten years from the date of grant.  For the fiscal years ended June 30, 2023 and 2022, the Company incurred stock-based compensation expense of $320 and $369, respectively.  The Company expects to record additional stock-based compensation of $480 over the remaining estimated vesting period of approximately two and half years. 

In July 2023, the Board of Directors authorized the issuance of 200,000 stock options to the non-executive directors of (50,000 each) with an exercise price of $0.33, vesting over one year, 25% at the end of each quarter ending September 30, 2023, December 21, 2023, March 31, 2024 and June 30, 2024.

The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the year ended June 30, 2023:

Risk Free Interest Rate		3.85% to 3.00	%
Volatility		103.3% to 116.9	%
Term		4.5 to 7.5 years
Dividend Rate		0.00	%
Closing Price of Common Stock	$	0.41

The Company calculates expected volatility for a stock-based grant based on historic daily stock price observations of its common stock during the period immediately preceding the grant that is equal in length to the expected term of the grant. The expected term of the options is estimated based on the Company’s historical exercise rate and forfeiture rates are estimated based on employment termination experience. The risk free interest rate is based on U.S. Treasury yields for securities in effect at the time of grants with terms approximating the term of the grants. The assumptions used in the Black-Scholes option valuation model are highly subjective, and can materially affect the resulting valuations.

In the fiscal year ended June 30, 2022, the Board of Directors authorized the issuance of 764,700 stock options to Company officers, employees and directors with an exercise price of $0.51, $0.95 or $1.045, vesting over one or three years, with terms of either five or ten years.

In the fiscal years ended June 30, 2023 and 2022, stock options in the aggregate amount of 4,376,284 and 537,600, were not included in the computation of weighted average diluted common shares outstanding as the effect of doing so would have been anti-dilutive.

The intrinsic value of options outstanding and exercisable at June 30, 2023 and 2022 was $461 and $1,002, respectively.

A summary of the Company’s stock option activity, and related information for the years ended June 30, follows:

				Weighted
				Average
				Exercise
	Options			Price
Outstanding as of July 1, 2021		3,916,666		$	0.26
Granted		764,700			0.85
Exercised		(146,333	)		0.23
Terminated		(44,700	)		0.53
Expired		(46,400	)		0.47
Outstanding as of June 30, 2022		4,443,933			0.36
Granted		527,000			0.42
Exercised		-			-
Terminated		-			-
Expired		(594,649	)		0.46
Outstanding as of June 30, 2023		4,376,284		$	0.35
Exercisable at June 30, 2022		3,524,500		$	0.26
Exercisable at June 30, 2023		3,626,551		$	0.30

The following table summarizes the range of exercise prices and weighted-average exercise prices for stock options outstanding and exercisable as of June 30, 2023 under the Company’s stock option plans:

												Weighted
							Weighted		Weighted Average			Average
							Average		Remaining			Exercise
Range of Exercise Price					Outstanding		Exercise Price		Contractual Life (years)	Exercisable		Price
$	0.09	-	$	0.10		1,221,000	$	0.09	1.9		1,296,000	$	0.09
$	0.21	-	$	0.21		1,194,000		0.21	5.9		1,209,000		0.21
$	0.23	-	$	0.25		250,000		0.23	3.4		250,000		0.23
$	0.41	-	$	0.41		426,500		0.41	9.4		-		0.00
$	0.51	-	$	0.51		200,000		0.51	9.0		200,000		0.51
$	0.65	-	$	0.65		570,667		0.65	7.4		431,000		0.65
$	0.72	-	$	0.72		66,667		0.72	0.7		66,667		0.72
$	0.95	-	$	0.95		425,783		0.95	8.4		242,217		0.95
$	1.05	-	$	1.05		21,667		1.05	0.7		21,667		1.05
$	0.09	-	$	1.05		4,376,284	$	0.35	7.0		3,626,551	$	0.30