4. Stock-Based Compensation

Stock options are granted with exercise prices not less than the fair market value of our common stock at the time of the grant, with an exercise term (as determined by the committee administering the applicable option plan (the “Committee”)) not to exceed 10 years. The Committee determines the vesting period for the Company’s stock options. Generally, such stock options have vesting periods of immediate to four years. Certain option awards provide for accelerated vesting upon meeting specific retirement, death or disability criteria and upon a change in control. During the six month periods ended December 31, 2014 and 2013, the Company granted options to purchase 279,000 and 324,000 shares of the Company’s common stock, respectively.

Stock-based compensation expense for the six month periods ended December 31, 2014 and 2013 was approximately $484,000 and $325,000, respectively. Compensation expense is recognized in the general and administrative expenses line item of the Company’s consolidated statements of operations on a straight-line basis over the vesting periods. As of December 31, 2014, there was approximately $2,849,000 of total unrecognized compensation cost related to non-vested stock-based compensation arrangements to be recognized over a weighted-average period of 3.1 years.

Shares may be acquired by various methods. They may be acquired by (a) cash or by certified check, (b) with previously acquired shares of common stock having an aggregate fair market value, on the date of exercise, equal to the aggregate exercise price of all options being exercised (provided that such shares were not acquired less than six (6) months prior to such exercise date), (c) by surrendering options to acquire shares of common stock in exchange for the number of shares of common stock equal to the product of the number of shares of common stock as to which the option is being exercised multiplied by a fraction, the numerator of which is the fair market value of the common stock less the exercise price of the options and the denominator of which is such fair market value. Cash in the amount of $127,976 was received from the exercise of stock options for the six months ended December 31, 2014. The Company received 47,422 shares of previously acquired common stock as payment for option exercises as of December 31, 2014. The acquired shares are held and accounted for as treasury stock. Total options, exercised by either cash or through surrender of previously owned shares, were 471,701. The total number of options forfeited for the six months ended December 31, 2014 was 4,250 options representing the unvested portion upon termination of employment. Options expiring at the end of the option term totaled 28,000 for the six months ended December 31, 2014.

The fair values of the options granted during the six months ended December 31, 2014 and 2013 were estimated on the date of the grant using the Black-Scholes option-pricing model on the basis of the following weighted average assumptions during the respective periods:

	For the six months ended
	December 31,
	2014			2013
Risk-free interest rate		1.3	%		3.0	%
Expected option life in years		6.5			6.5
Expected stock price volatility		75.05	%		76.09	%
Expected dividend yield		0.0	%		0.0	%
Weighted-average fair value of options granted	$	5.90		$	3.95

The expected option term is based upon the number of years the Company estimates the option will be outstanding based on historical exercises and terminations. The expected volatility for the expected life of the options is determined using historical price changes of the Company’s stock over a period equal to that of the expected life of the options. The risk free rate is based upon the U.S. Treasury yield in effect at the time of the grant. The expected dividend yield is 0% as the Company has historically not declared dividends and does not anticipate declaring any in the future.

Changes in outstanding stock options during the six months ended December 31, 2014 were as follows:

	Options
			Weighted
			Average
		Weighted	Remaining
		Average	Contractual	Aggregate
	Number of	Exercise	Life	Intrinsic
	Shares	Price ($)	(years)	Value (a)
Outstanding as of June 30, 2014	1,663,329	3.88
Granted	279,000	7.71
Exercised	(471,701)	3.79		$	1,204,388
Forfeited	(4,250)	3.78
Expired	(28,000)	8.00
Outstanding as of December 31, 2014	1,438,378	4.57	6.50	$	11,220,393
Exercisable and vested at December 31, 2014	709,056	3.55	5.3	$	6,256,483
Available for grant as of December 31, 2014	289,725

(a)	Intrinsic value for purposes of this table represents the amount by which the fair value of the underlying stock, based on the respective market prices at December 31, 2014 or if exercised, the exercise dates, exceeds the exercise prices of the respective options.