Stock Based Compensation Plans

6 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Based Compensation Plans

NOTE 10 – STOCK BASED COMPENSATION PLANS

The Company follows Accounting Standard Codification (ASC) Topic 718 “Compensation – Stock Compensation”, which addresses accounting for equity-based compensation arrangements, including employee stock options and restricted stock units.

Please refer to Note 16 – Stock Based Compensation Plans in the Company’s Form 10-K for the year ended June 30, 2020 for more detailed information on the Company’s stock-based compensation plans.

During the three months ended December 31, 2020 and 2019, the Company recorded stock option compensation cost of $5,000 and $9,000, respectively, related to stock options that were previously issued. During the six months ended December 31, 2020 and 2019, the Company recorded stock option compensation cost of $10,000 and $17,000, respectively, related to stock options that were previously issued. As of December 31, 2020, there was a total of $8,000 of unamortized compensation related to stock options which is expected to be recognized over the weighted-average period of 1.17 years.

In December 2018, the Company’s President and Chief Executive Officer, John V. Winfield exercised 26,805 vested Incentive Stock Options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.

On February 25, 2020, shareholders of the Company voted in favor of amendments to the Company’s 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”) which would amend Section 1.3 of the 2010 Incentive Plan to extend the term from ten (10) years to sixteen (16) years, and Section 6.4 of the 2010 Incentive Plan to change “tenth (10th) anniversary date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to 20 years (expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The purpose of the amendment to the term is to extend its existence as our only equity incentive plan. The purpose of amendment of the allowable term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s contributions to and leadership of our Company. Upon approval of these amendments by the shareholders, our Board of Directors extended the term of Mr. Winfield’s options as described in this paragraph. As a result of extending Mr. Winfield’s options, the Company recorded stock option compensation cost of $116,000 in March 2020.

Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history. The Company has selected to use the simplified method for estimating the expected term. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.

The following table summarizes the stock options activity from July 1, 2019 through December 31, 2020:

		Number of		Weighted Average		Weighted Average	Aggregate
		Shares		Exercise Price		Remaining Life	Intrinsic Value
Oustanding at	July 1, 2019		341,195	$	16.95	3.07 years	$	4,680,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Outstanding at	June 30, 2020		341,195	$	16.95	3.83 years	$	3,271,000
Exercisable at	June 30, 2020		323,195	$	16.38	3.67 years	$	3,271,000
Vested and Expected to vest at	June 30, 2020		341,195	$	16.95	3.83 years	$	3,271,000
Oustanding at	July 1, 2020		341,195	$	16.95	3.83 years	$	3,271,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Outstanding at	December 31, 2020		341,195	$	16.95	3.32 years	$	5,004,000
Exercisable at	December 31, 2020		333,995	$	16.73	3.26 years	$	4,973,000
Vested and Expected to vest at	December 31, 2020		341,195	$	16.95	3.32 years	$	5,004,000