The Company maintains a 2004 Stock Incentive Plan (“2004 Plan”) covering substantially all company employees, non-employee directors and certain other key persons. The 2004 Plan is administered by a committee of our Board of Directors: The Management Development, Compensation and Stock Option Committee (“MDCSOC”).

Awards under the 2004 Plan may be in the form of stock options, stock appreciation rights, restricted stock or restricted stock units, performance share awards, director stock purchase rights and deferred stock units; or any combination thereof. The terms of the awards are determined by the MDCSOC, except as otherwise specified in the 2004 Plan.

Options outstanding under the 2004 Plan generally become exercisable at 33.3 % per year beginning one year after the date of grant and expire ten years after the date of grant. Option prices from options granted under this plan must not be less than fair market value of our stock on the date of grant. The Company uses the Black-Scholes model for determining stock option valuations. The Black-Scholes model requires subjective assumptions, including future stock price volatility and expected time to exercise, which affect the calculated values. The expected term of option exercises is derived from historical data regarding employee exercises and post-vesting employment termination behavior. The risk-free rate of return is based on published U.S. Treasury rates in effect for the corresponding expected term. The expected volatility is based on historical volatility of our stock price. These factors could change in the future, which would affect the stock-based compensation expense in future periods.

The Company recognized operating expenses for non-cash stock-based compensation costs related to stock options in the amount of $160,000 and $390,000 for the fiscal years ended June 30, 2020 and 2019, respectively. As of June 30, 2020, the total remaining unrecognized compensation cost related to non-vested stock-based compensation amounted to $51,000. The Company expects to recognize this cost over a weighted average vesting period of 1.5 years.

We received $318,000 in cash from option exercises under all stock option payment arrangements for the twelve months ended June 30, 2019. The actual tax benefit realized related to the tax deductions for non-qualified options exercised and disqualifying dispositions under all stock option payment arrangements total approximately $160,000 for fiscal 2019. The Company received zero in cash from option exercises under all stock option payment arrangements for the twelve months ended June 30, 2020.

Activity relating to stock options granted under this Plan is shown in the following tables:

	Fiscal Year 2020							Fiscal Year 2019
				Weighted		Aggregate					Weighted		Aggregate
				Average		Intrinsic					Average		Intrinsic
				Exercise		Value (1)					Exercise		Value (1)
Shares subject to option	Shares			Price		($000)		Shares			Price		($000)
Outstanding at beginning of period		567,121		$	7.22				635,036		$	7.02

New Grants (based on fair value of common stock at dates of grant)		33,000		$	4.53				8,000		$	8.28
Exercised		-							(55,445	)	$	5.73
Expired		-							(10,900	)	$	3.63
Forfeited		(395,195	)	$	6.95	$	6,600.00		(9,570	)	$	7.78

Outstanding at end of period		204,926		$	7.28	$	-		567,121		$	7.22	$	-
Exercisable at end of period		166,593		$	7.79	$	-		436,953		$	7.16	$	-

The estimated fair value as of the date options were granted during the periods presented using the Black-Scholes option-pricing model, was as follows:

	2020			2019
Weighted average estimated fair value per
share of options granted during the period	$	2.19		$	3.91
Assumptions:
Dividend yield		-			-
Common stock price volatility		43.50	%		43.50	%
Risk free rate of return		2.56	%		2.56	%
Expected option term (in years)		6.6			6.6

The following table summarizes information about stock options at June 30, 2020:

					Options Outstanding						Options Exercisable
							Weighted		Weighted				Weighted
							Average		Average				Average
							Remaining		Exercise				Exercise
Range of Exercise Prices					Shares		Contractual Life		Price		Shares		Price
$	2.80	to	$	4.87		33,000		9.38	$	4.53		-
	4.88	to		8.81		136,426		5.08	$	6.89		131,093	$	6.83
	8.82	to		14.01		35,500		3.27	$	11.33		35,500	$	11.33
$	2.80	to		14.01		204,926		5.46	$	7.28		166,593	$	7.79

Our restricted stock and restricted stock units under the 2004 Plan generally have been awarded by four methods as follows:

The grant date fair value associated with the restricted stock and restricted stock units is calculated in accordance with ASC 718 “Compensation – Stock Compensation”. Compensation expense related to restricted stock and restricted stock units awards is based on the closing price of our Common Stock on the grant date authorized by our MDCSOC, multiplied by the number of restricted stock and restricted stock unit award expected to be issued and vested and is amortized over the combined performance and service periods. The non-cash stock-based compensation expense recorded for restricted stock and restricted stock unit awards for the fiscal years ended June 30, 2020 and 2019 was $252,000 and $244,000, respectively. As of June 30, 2020, the total remaining unrecognized compensation cost related to restricted stock and restricted stock unit awards is approximately $66,000. The Company expects to recognize this cost over a weighted average vesting period of 0.9 years.

A summary of the status of restricted stock and restricted stock unit awards issued at June 30, 2020 is presented in the table below:

				Weighted Average
	Nonvested			Grant Date
	Shares			Fair Value
Nonvested at June 30, 2019		93,420		$	7.49
Granted		-			-
Vested		(36,103	)		7.51
Forfeited or expired		(29,608	)		7.57
Nonvested at June 30, 2020		27,709		$	7.41

During the second quarter of fiscal 2020, the Company’s MDCSOC granted certain employees Performance Share Units (“PSUs”) as part of the Fiscal Year 2020 Long-Term Incentive Compensation Plan. The Performance Measures were defined by the Committee as a specific target level of Revenue and Operating Income Before Incentive Compensation for each of the following: fiscal year 2020, fiscal year 2021 and fiscal year 2022. Up to one-third of the PSUs can be earned each year, determined based upon actual performance levels achieved in that year. One half of the award earned each year is based upon the achievement of the two Performance Targets in that year, provided that a minimum level of Operating Income Before Incentive Compensation is achieved for that year. The actual award level for each year can range from 50% to 150% (for Revenue Target) or 75% to 200% (for Operating Income Target) of the target awards depending on actual performance levels achieved in each year compared to that year’s target. If Operating Income Before Incentive Compensation is less than 75% of the targeted Operating Income Before Incentive Compensation for the year, then no PSU’s will vest for that year and the PSU’s vesting that year will expire. For fiscal year 2020, actual Revenue and Operating Income Before Incentive Compensation did not meet the fiscal year 2020 targets, resulting in the forfeiture of PSU’s vesting in fiscal 2020.

During the second quarter of fiscal 2019, the Company’s MDCSOC granted certain employees PSUs as part of the Fiscal Year 2019 Long-Term Incentive Compensation Plan, up to one-third of which could be earned in plan year 2019 (October 1, 2018 to September 30, 2019), fiscal year 2020 and fiscal year 2021 upon the achievement of a specific target level of Revenue and a threshold and specific target level of Operating Income Before Incentive Compensation. For plan year 2019 and fiscal year 2020, actual Revenue and Operating Income Before Incentive Compensation did not meet the plan year 2019 and fiscal year 2020 targets, respectively, resulting in the forfeiture of PSU’s vesting in plan year 2019 and fiscal year 2020.

During the second quarter of fiscal 2018, the Company’s MDCSOC granted certain employees PSUs as part of the Fiscal Year 2018 Long-Term Incentive Compensation Plan, up to one-third of which could be earned in fiscal 2018, fiscal year 2019 and fiscal year 2020 upon the achievement of a specific target level of Revenue and a threshold and specific target level of Operating Income Before Incentive Compensation. For fiscal year 2019 and fiscal year 2020, actual Revenue and Operating Income Before Incentive Compensation did not meet the fiscal 2019 and fiscal year 2020 targets, respectively, resulting in the forfeiture of PSU’s vesting in fiscal 2019 and fiscal year 2020.

The non-cash stock-based compensation expense recorded for PSU’s issued under the Company’s Fiscal 2020, 2019 and 2018 Long-Term Incentive Compensation Plans for fiscal year 2020 was zero, because, the level of actual performance as measured against the Operating Income Before Incentive Compensation target levels for fiscal year 2020, was less than 75%, of the threshold performance level required for the vesting of these awards in fiscal 2020. The non-cash stock-based compensation expense recorded for performance share unit awards for the fiscal year ended June 30, 2020 was zero. As of June 30, 2020, the total remaining unrecognized compensation cost related to performance share unit awards is approximately $126,000. The Company expects to recognize this cost over a weighted average vesting period of 1.3 years.

During the third quarter of fiscal 2019, the MDCSOC granted PSUs to the Company’s interim President and Chief Executive Officer in lieu of a portion of his cash compensation. During fiscal year 2020, the Company recorded expense related to these PSU’s of $181,000.

A summary of the status of the PSUs outstanding at June 30, 2020 is presented in the table below:

				Weighted Average
	Nonvested			Grant Date
	Shares			Fair Value
Nonvested at June 30, 2019		69,701		$	7.46
Granted		60,070			4.64
Vested		(18,057	)		3.82
Forfeited or expired		(47,450	)		7.42
Nonvested at June 30, 2020		64,264		$	5.65

Our Board of Directors’ fees are typically payable in cash on September 1, December 1, March 1, and June 1 of each fiscal year; however, under our 2004 Plan each director can elect to receive our stock in lieu of cash on a calendar year election. Each of our Directors elected a combination of cash and stock for calendar year 2019 and calendar year 2020. The Company issued 42,368 shares to our directors and recorded expense of $172,000 in fiscal year 2020.

At June 30, 2020, the 2004 Plan had 1,129,674 shares available for future grants.