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Stock Options
3 Months Ended
Sep. 30, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Options
NOTE 7 - Stock Options
 
The Company follows ASC 718 (“Share-Based Payment”), which requires that all share based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period.  For the three months ended September 30, 2016 and 2015, the Company recorded non-cash compensation expense of $33,000 ($.00 per basic and diluted share) and $32,000 ($.00 per basic and diluted share), respectively, relating to stock-based compensation.
 
2012 Employee Stock Option Plan
 
In December 2012, the stockholders approved the 2012 Employee Stock Option Plan (the 2012 Employee Plan). The 2012 Employee Plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 950,000 shares of the Company's common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (ISOs), to valued employees. Any plan participant who is granted ISOs and possesses more than 10% of the voting rights of the Company's outstanding common stock must be granted an option with a price of at least 110% of the fair market value on the date of grant.
 
Under the 2012 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At September 30, 2016, 112,500 stock options were granted, 60,700 stock options were exercisable and 837,500 stock options were available for grant under this plan.
 
The following table reflects activity under the 2012 Plan for the three months ended September 30,:
 
 
 
2016
 
2015
 
 
 
Options
 
Weighted average
exercise price
 
Options
 
Weighted average
exercise price
 
Outstanding, beginning of year
 
 
112,500
 
$
5.54
 
 
112,500
 
$
5.30
 
Granted
 
 
 
 
 
 
 
 
 
Terminated/Lapsed
 
 
 
 
 
 
(15,000)
 
 
4.29
 
Exercised
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, end of period
 
 
112,500
 
$
5.54
 
 
97,500
 
$
5.46
 
Exercisable, end of period
 
 
60,700
 
$
5.55
 
 
29,500
 
$
5.33
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average fair value at grant date of options granted
 
 
n/a
 
 
 
 
$
n/a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intrinsic value of options exercised
 
 
n/a
 
 
 
 
 
n/a
 
 
 
 
Total intrinsic value of options outstanding
 
$
186,000
 
 
 
 
$
69,000
 
 
 
 
Total intrinsic value of options exercisable
 
$
100,000
 
 
 
 
$
24,000
 
 
 
 
 
The following table summarizes information about stock options outstanding under the 2012 Employee Plan at September 30, 2016:
 
 
 
Options outstanding
 
Options exercisable
 
Range of
exercise prices
 
Number
outstanding
 
Weighted average
remaining
contractual life
 
Weighted
average
exercise price
 
Number
exercisable
 
Weighted
average
exercise price
 
$4.29-$6.31
 
 
112,500
 
 
7.7
 
$
5.54
 
 
60,700
 
$
5.55
 
 
 
 
112,500
 
 
7.7
 
$
5.54
 
 
60,700
 
$
5.55
 
 
As of September 30, 2016, there was $186,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan. No options were granted during the three months ended September 30, 2016. The total fair value of the options vesting during each of the three months ended September 30, 2016 and 2015 under this plan was $16,000.
 
2012 Non-Employee Stock Option Plan
 
In December 2012, the stockholders approved the 2012 Non-Employee Stock Option Plan (the 2012 Non-Employee Plan). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 50,000 shares of the Company's common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.
 
Under the 2012 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At September 30, 2016, 35,000 stock options were granted, 24,000 stock options were exercisable and 15,000 stock options were available for grant under this plan.
 
The following table reflects activity under the 2012 Non-Employee Plan for the three months ended September 30,:
 
 
 
2016
 
2015
 
 
 
Options
 
Weighted average
exercise price
 
Options
 
Weighted average
exercise price
 
Outstanding, beginning of year
 
 
35,000
 
$
4.73
 
 
35,000
 
$
4.73
 
Granted
 
 
 
 
 
 
 
 
 
Terminated/Lapsed
 
 
 
 
 
 
 
 
 
Exercised
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, end of period
 
 
35,000
 
$
4.73
 
 
35,000
 
$
4.73
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, end of period
 
 
24,000
 
$
4.80
 
 
17,000
 
$
4.82
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average fair value at grant date of options granted
 
 
n/a
 
 
 
 
$
n/a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intrinsic value of options exercised
 
 
n/a
 
 
 
 
 
n/a
 
 
 
 
Total intrinsic value of options outstanding
 
$
86,000
 
 
 
 
$
46,000
 
 
 
 
Total intrinsic value of options exercisable
 
$
57,000
 
 
 
 
$
21,000
 
 
 
 
 
The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at September 30, 2016:
 
 
 
Options outstanding
 
Options exercisable
 
Range of
exercise prices
 
Number
outstanding
 
Weighted average
remaining
contractual life
 
Weighted
average exercise
price
 
Number
exercisable
 
Weighted
average exercise
price
 
$4.37 - $4.88
 
 
35,000
 
 
7.3
 
$
4.73
 
 
24,000
 
$
4.80
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35,000
 
 
7.3
 
$
4.73
 
 
24,000
 
$
4.80
 
 
As of September 30, 2016, there was $34,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan. No options were granted during the three months ended September 30, 2016. The total fair value of the options vesting during each of the three months ended September 30, 2016 and 2015 under this plan was $16,000.
 
2002 Employee Stock Option Plan
 
In December 2002, the stockholders approved the 2002 Employee Stock Option Plan (the 2002 Employee Plan). This plan expired in October 2012. This plan authorized the granting of awards, the exercise of which would allow up to an aggregate of 1,836,000 shares of the Company's common stock to be acquired by the holders of such awards. Under this plan, the Company may have granted stock options, which were intended to qualify as incentive stock options (ISOs), to key employees. Any plan participant who was granted ISOs and possessed more than 10% of the voting rights of the Company's outstanding common stock must have been granted an option with a price of at least 110% of the fair market value on the date of grant.
 
Under the 2002 Employee Plan, stock options have been granted to key employees with a term of 10 years at an exercise price equal to the fair market value on the date of grant and are exercisable in whole or in part at 20% per year from the date of grant. At September 30, 2016, 1,471,480 stock options had been granted and 140,000 stock options were exercisable. No further stock options were available for grant under this plan after the plans expiration in October 2012.
 
The following table reflects activity under the 2002 Employee plan for the three months ended September 30,:
 
 
 
2016
 
2015
 
 
 
Options
 
Weighted average
exercise price
 
Options
 
Weighted average
exercise price
 
Outstanding, beginning of year
 
 
102,500
 
$
6.86
 
 
208,500
 
$
6.86
 
Granted
 
 
 
 
 
 
 
 
 
Terminated/Lapsed
 
 
 
 
 
 
 
 
 
Exercised
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, end of period
 
 
102,500
 
$
6.86
 
 
208,500
 
$
6.86
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, end of period
 
 
102,500
 
$
6.86
 
 
208,500
 
$
6.86
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average fair value at grant date of options granted
 
 
n/a
 
 
 
 
 
n/a
 
 
 
 
Total intrinsic value of options exercised
 
 
n/a
 
 
 
 
 
n/a
 
 
 
 
Total intrinsic value of options outstanding
 
$
118,000
 
 
 
 
$
37,000
 
 
 
 
Total intrinsic value of options exercisable
 
$
118,000
 
 
 
 
$
37,000
 
 
 
 
 
No stock options were exercised during either of the three months ended September 30, 2016 and 2015. No cash was received from option exercises during either of the three months ended September 30, 2016 and 2015 and the actual tax benefit realized for the tax deductions from option exercises was $0 for each of these periods.
 
The following table summarizes information about stock options outstanding under the 2002 Employee Plan at September 30, 2016:
 
 
 
Options outstanding and exercisable
 
Range of
exercise prices
 
Number
outstanding
 
Weighted average
remaining contractual life
 
Weighted average
exercise price
 
 
 
 
 
 
 
 
 
 
 
 
$5.35 - $6.62
 
 
102,500
 
 
0.4
 
$
6.04
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
102,500
 
 
0.4
 
$
6.04