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Share-Based Compensation
6 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation

Note 8. Share-Based Compensation

 

The Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2023. Share-based compensation expenses were $791,000 and $316,000 for the six months ended December 31, 2023, and 2022, respectively. This expense is included in selling, general and administrative expense in the Condensed Statements of Operations.

 

Stock Options

 

Stock option transactions during the six months ended December 31, 2023, are summarized as follows:

 

  

Number of Shares

  

Weighted-Average
Exercise Price per Share

 
Outstanding at June 30, 2023   451,570   $6.93 
Granted   262,062   $10.70 
Exercised   (5,563)  $9.88 
Cancelled or Forfeited   (8,713)  $11.02 
Outstanding at December 31, 2023   699,356   $8.27 

 

The following assumptions were used to estimate the fair value of stock options granted:

 

  Six Months Ended
December 31, 2023
  Fiscal Year Ended
June 30, 2023
Risk-free interest rate         4.07 - 4.64%           2.884.23%
Expected term (years)       6              6
Expected volatility        52 - 53%                53 - 54%

 

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. On December 31 2023, the weighted average remaining contractual term for all outstanding stock options was 6.7 years and the aggregate intrinsic value of the options was $1,983,000. Outstanding on December 31, 2023, were 699,356 stock options issued to employees, of which 371,402 were vested and exercisable and had an aggregate intrinsic value of $1,879,000. As of December 31, 2023, $1,199,000 of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately 3.0 years.

 

Restricted Stock

 

During the six months ended December 31, 2023, the Company issued restricted stock awards to employees totaling 20,878 shares of common stock, with a weighted average vesting term of 3.0 years and a weighted average fair value of $10.72 per share, and to directors totaling 21,000 shares of common stock, with a vesting term of six months and a weighted average fair value of $10.44 per share. There were 55,111 shares of unvested restricted stock with a weighted average fair value of $10.51 per share outstanding as of December 31, 2023. As of December 31, 2023, $385,000 of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.4 years.

 

Performance-Based Restricted Stock Units

 

The Company granted 175,000 performance-based restricted stock units (“PSUs”) to our CEO in connection with his appointment as CEO on July 1, 2023. The PSUs are to be earned based on the extent to which performance goals tied to Total Shareholder Return (“TSR”) are achieved. The performance-based restricted stock units will be eligible to vest and settle into shares of common stock on a 1-for-1 basis with respect to one-half of the shares upon achieving a total shareholder return of 50% and the remaining shares upon a total shareholder return of 100%, in each case within four years of the date of grant. The grant date fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years.

 

Stock based compensation expense recognized for PSUs was $145,000 and $0 for the six months ended December 31, 2023, and 2022, respectively. The weighted average grant date fair value per unit was $6.58 and as of December 31, 2023, there are 175,000 PSUs outstanding. On December 31, 2023, there was approximately $1,006,000 of total unrecognized compensation expense related to outstanding PSUs that is expected to be recognized over a period of 3.50 years.