Stock-Based Compensation Plans

3 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Plans

8. Stock-Based Compensation Plans

The compensation cost that has been charged against income for the Company’s stock option plans was ($226,119) of income, which included a reversal of stock compensation from prior periods due to forfeitures of unvested options of $597,196, and $301,743 of expense for the three months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, there was approximately $2,074,029 of total unrecognized compensation cost related to non-vested share-based compensation arrangements to be recognized over a weighted-average period of 2.5 years. Certain share based costs for the quarter ended September 30, 2015 included in general and administrative expenses were reclassified to cost of revenue, selling and research and development expenses to be consistent with the current year’s classification.

During the quarter ended September 30, 2016, the Company modified the terms of certain stock options, which resulted in a charge to operations of $60,747.

Stock options typically expire 10 years from the date of grant and vest over service periods, which typically are 4 years. All options are granted at fair market value, as defined in the applicable plans.

The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. The expected volatility represents the historical price changes of the Company’s stock over a period equal to that of the expected term of the option. The Company uses the simplified method for determining the option term. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based upon historical and projected dividends. The Company has historically not paid dividends, and is not expected to do so in the near term. 

The weighted average fair value at date of grant for options granted during the three months ended September 30, 2015 was $4.73. There were no options granted during the three months ended September 30, 2016. The fair value was estimated based on the weighted average assumptions of:

	For three months ended September 30,
	2016		2015
Risk-free interest rates		-		1.80	%
Expected option life in years		-		6.25
Expected stock price volatility		-		55.35	%
Expected dividend yield		-		0	%

A summary of option activity under the Company’s equity plans as of September 30, 2016, and changes during the three months ended September 30, 2016 is presented below:

	Outstanding Shares			Average Exercise Price		Aggregate Instrinsic Value
Vested and exercisable at June 30, 2016		1,790,224		$	6.38	$	1,675,072
Granted		-			-
Exercised		-			-
Forfeited		(325,875	)		8.17
Expired		-			-
Outstanding as of September 30, 2016		1,464,349		$	5.98	$	1,701,312
Vested and exercisable at September 30, 2016		957,474		$	4.30	$	1,683,139

The total fair value of shares vested during the quarter ended September 30, 2016 was $606,000. The number and weighted-average grant-date fair value of non-vested stock options at the beginning of fiscal 2017 was 976,875 and $4.81, respectively. The number and weighted-average grant-date fair value of stock options which vested during the quarter ended September 30, 2016 was 144,250 and $4.20, respectively.