(13) Common Stock and Common Stock Equivalents

12 Months Ended

Jun. 30, 2018

Disclosure Text Block [Abstract]

(13) Common Stock and Common Stock Equivalents

On December 16, 2016, the shareholders approved an increase to the aggregate number of shares of common stock that the Company is authorized to issue from 50,000,000 shares to 100,000,000 shares.

For the year ended June 30, 2018, the Company granted 50,000 shares of restricted common stock to directors in connection with compensation arrangements and 53,853 shares to employees. For the year ended June 30, 2017, the Company granted 36,122 shares of restricted common stock to directors in connection with compensation arrangements and 106,932 shares to employees.

For the year ended June 30, 2018, the Company issued 3,041,935 shares of common stock in conversion of 3,041,935 shares of preferred stock.

For the year ended June 30, 2017, the Company issued 1,559,000 shares of common stock pursuant to the private placement with gross proceeds of $7,795,000 (see Note 14) used for the Hausmann acquisition and 6,173 shares for professional fees in conjunction with the acquisition.

The Company issued 290,445 shares of common stock during the fiscal year ended June 30, 2018 and 139,658 shares of common stock during the fiscal year ended June 30, 2017 as payment of preferred stock dividends.

The Company maintained a 2005 equity incentive plan for the benefit of employees. On June 29, 2015 the shareholders approved a new 2015 equity incentive plan setting aside 500,000 shares (“2015 Equity Plan”). The 2015 Equity Plan was filed with the SEC on September 3, 2015. Incentive and nonqualified stock options, restricted common stock, stock appreciation rights, and other share-based awards may be granted under the plan. Awards granted under the plan may be performance-based. As of June 30, 2018, 162,361 shares of common stock remained authorized and reserved for issuance, but were not granted under the terms of the 2015 Equity Plan.

The Company granted options for the purchase of 70,000 shares of common stock under its 2015 Equity Plan during fiscal year 2018 and options for purchase of 49,500 shares during fiscal year 2017. The options were granted at not less than 100% of the market price of the stock at the date of grant. Option terms are determined by the board of directors or the compensation committee of the board of directors, and exercise dates may range from 6 months to 10 years from the date of grant.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	2018	2017
Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected life of options	4 -5 years	6 - 8 years

The weighted average fair value of options granted during fiscal year 2018 was $1.11. The following table summarizes the Company’s stock option activity during the reported fiscal years:

	2018							2017
						Weighted
				Weighted		average					Weighted
	Number			average		remaining		Number			average
	of			exercise		contractual		of			exercise
	shares			price		term		shares			price
Options outstanding at beginning of the year		166,990		$	3.14		4.46 years		121,557		$	3.33
Options granted		70,000			2.88		5.90 years		49,500			2.83
Options canceled or expired		(45,194	)		5.00				(4,067	)		4.86
Options outstanding at end of the year		191,796		$	3.04		5.38 years		166,990		$	3.14
Options exercisable at end of the year		56,843		$	3.32				74,473		$	4.46
Range of exercise prices at end of the year				$	1.75 – 4.25						$	1.75 – 5.55

The Company recognized $254,758 and $419,925 in stock-based compensation for the years ended June 30, 2018 and 2017, respectively, which is included in selling, general, and administrative expenses in the consolidated statements of operations. The stock-based compensation includes amounts for both restricted stock and stock options. Included in the stock-based compensation for fiscal year 2017 was $123,877, related to severance expenses that were settled with the issuance of common stock.

As of June 30, 2018, there was $203,014 of unrecognized stock-based compensation cost that is expected to be expensed over the next four years.

No options were exercised during fiscal years 2017 and 2018. The aggregate intrinsic value of the outstanding options as of June 30, 2018 and 2017 was $4,530 and $1,646, respectively.