Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.7.0.1
Stockholders' Equity
 12 Months Ended
Jun. 30, 2017
Equity [Abstract]  
Stockholders' Equity
STOCKHOLDERS’ EQUITY
Payment of Dividends
    In fiscal 2015, the Board of Directors of the Company initiated a cash dividend policy that calls for the payment of quarterly dividends. The table below summarizes the quarterly dividends declared pursuant to this policy:
Dividend
Declaration Date
 
Record Date
 (at close of Business)
 
Type of Dividend
 
Basis of Payment
 
Payment Date
 
 
 
 
 
 
 
 
 
 
 
 
September 11, 2015
 
September 24, 2015
 
Cash
 
$
0.05

per common share
 
October 5, 2015
 
October 30, 2015
 
November 13, 2015
 
Cash
 
$
0.05

per common share
 
November 25, 2015
 
February 2, 2016
 
February 15, 2016
 
Cash
 
$
0.07

per common share
 
February 29, 2016
 
April 29, 2016
 
May 13, 2016
 
Cash
 
$
0.07

per common share
 
May 27, 2016
 
September 7, 2016
 
September 19, 2016
 
Cash
 
$
0.07

per common share
 
October 7, 2016
 
November 1, 2016
 
November 14, 2016
 
Cash
 
$
0.07

per common share
 
December 1, 2016
 
January 26, 2017
 
February 8, 2017
 
Cash
 
$
0.08

per common share
 
February 24, 2017
 
May 2, 2017
 
May 15, 2017
 
Cash
 
$
0.08

per common share
 
May 25, 2017
 
 
 
 
 
 
 
 
 
 
 
 

On August 30, 2017 the Board of Directors of the Company declared a quarterly cash dividend of $0.08 per common share to stockholders of record at the close of business on September 18, 2017, which is scheduled to be paid on or about September 27, 2017.
2014 Stock Award and Incentive Plan
Prior to the Distribution, the Company’s Board of Directors ("Board") adopted and the Company's then sole stockholder approved the 2014 Stock Award and Incentive Plan ("2014 Plan"), which was approved by the Company's stockholders in February 2015. Under the 2014 Plan, the Company may grant options and other equity awards as a means of attracting and retaining officers, employees, non-employee directors and consultants, to provide incentives to such persons, and to align the interests of such persons with the interests of stockholders by providing compensation based on the value of the Company's stock. Awards under the 2014 Plan may be granted in the form of incentive or non-qualified stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units, dividend equivalent rights and other stock-based awards (which may include outright grants of shares). The 2014 Plan also authorizes grants of performance-based cash incentive awards, including awards qualifying under Internal Revenue Code Section 162(m). The 2014 Plan is administered by the Compensation Committee of the Board of Directors, which, in its discretion, may select officers and other employees, directors (including non-employee directors) and consultants to the Company and its subsidiaries to receive grants of awards. The Board of Directors itself may perform any of the functions of the Compensation Committee under the 2014 Plan.
Under the 2014 Plan, the exercise price of options and base price of SARs, as set by the Compensation Committee, generally may not be less than the fair market value of the shares on the date of grant, and the maximum term of stock options and SARs is 10 years. The 2014 Plan limits the number of share-denominated awards that may be granted to any one eligible person to 250,000 shares in any fiscal year. Also, in the case of non-employee directors, the 2014 Plan limits the maximum grant-date fair value at $300,000 of stock-denominated awards granted to a director in a given fiscal year, except for a non-employee Chairman of the Board whose grant-date fair value maximum is $600,000 per fiscal year. The 2014 Plan will terminate when no shares remain available for issuance and no awards remain outstanding; however, the authority to grant new awards will terminate on December 13, 2022.
As of June 30, 2017, 103,800 shares were available for grant under the 2014 Plan.
Valuation and Significant Assumptions of Equity Awards Issued
The Company uses the Black-Scholes option pricing model, which uses various inputs such as the estimated common share price, the risk-free interest rate, volatility, expected life and dividend yield, all of which are estimates. The Company also records share-based compensation expense net of expected forfeitures. The significant assumptions for share-based compensation valuations are as follows: 

•
Determining Fair Values. For all equity grants granted, the primary factor in the valuation of equity awards was the fair value of the underlying common stock at the time of grant.
•
Expected Volatility. The Company has limited data regarding company-specific historical or implied volatility of its share price. Consequently, the Company estimates its volatility based on the average of the historical volatilities of peer group companies from publicly available data for sequential periods approximately equal to the expected terms of its option grants. Management considers factors such as stage of life cycle, competitors, size, market capitalization and financial leverage in the selection of similar entities.
•
Expected Term. The expected term represents the period of time in which the options granted are expected to be outstanding. The Company estimates the expected term of options granted based on the midpoint between the vesting date and the end of the contractual term under the “short-cut” or simplified method permitted by the SEC implementation guidance for “plain vanilla” options. The Company will continue to use the short-cut method, as permitted, until we have developed sufficient historical data for employee exercise and post-vesting employment termination behavior after our common stock has been publicly traded for a reasonable period of time.
•
Forfeitures.  The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual experience differs from those estimates. For the years ended June 30, 2017 and 2016, the Company estimated an average overall forfeiture rate of 0%.
•
Risk-Free Rate.  The risk-free interest rate is selected based upon the implied yields in effect at the time of the option grant on U.S. Treasury zero-coupon issues with a term approximately equal to the expected life of the option being valued.
•
Dividends.  The Company anticipates paying quarterly cash dividends of $0.08 per outstanding share of common stock for the foreseeable future. The Company estimates dividend yield based upon expectations of future dividends as of the grant date.

The weighted-averages for key assumptions used in determining the fair value of options granted during the years ended June 30, 2017 and 2016 follows:
Years Ended June 30,
 
June 30, 2017
 
June 30, 2016
 
Average volatility
 
39.0
%
 
41.3
%
 
Risk-free interest rate
 
1.5
%
 
1.5
%
 
Weighted-average expected life in years
 
5.95

 
6.27

 
Estimated dividend quarterly yield rate
 
0.4
%
 
0.4
%
 
Estimated dividend annual yield rate
 
1.7
%
 
1.6
%
 
There are no awards with performance conditions nor awards with market conditions.
Stock Options
During the years ended June 30, 2017 and 2016, the Company incurred $996,190 and $357,889 of compensation expense related to stock options, respectively. As of June 30, 2017, there was total remaining compensation expense of $2.2 million related to employee stock options, which will be recorded over a weighted average period of approximately 2.4 years.
The following table summarizes the stock option activity for the year ended June 30, 2017.
 
 
Options
 
Weighted Average Exercise Price Per Share
 
Aggregate Intrinsic Value
(in thousands)
 
Weighted Average Grant Date Fair Value Per Award
Outstanding at June 30, 2016
 
581,527

 
$
17.55

 
$
1,466

 
$
6.32

Granted
 
168,000

 
$
19.17

 
 
 
 
Cancellations, expirations and forfeitures
 
(8,200
)
 
$
19.98

 
 
 
 
Outstanding at June 30, 2017
 
741,327

 
$
17.89

 
$
1,514

 
$
6.19

 
 
 
 
 
 
 
 
 
Exercisable at June 30, 2017
 
346,671

 
$
14.65

 
$
1,315

 
$
6.10


Following is a summary of the status of stock options outstanding at June 30, 2017:
 
 
 
 
Options Outstanding
 
Options Exercisable
Exercise Price Ranges
 
Number of Shares Outstanding
 
Weighted Average Remaining Contractual Life (Years)
 
Weighted Average Exercise Price
 
Number of Shares Exercisable
 
Weighted Average Remaining Contractual Life (Years)
 
Weighted Average Exercise Price
From
 
To
 
 
 
 
 
 
$
—

 
$
10.00

 
134,239

 
5.35
 
$
8.39

 
110,267

 
5.36
 
$
8.40

10.01

 
15.00

 
98,888

 
5.28
 
$
11.94

 
97,888

 
5.26
 
$
11.96

15.01

 
25.00

 
408,200

 
8.95
 
$
20.60

 
113,516

 
8.84
 
20.64

25.01

 
60.00

 
100,000

 
8.65
 
$
25.50

 
25,000

 
8.65
 
25.50

 
 
 
 
741,327

 
7.77
 
$
17.89

 
346,671

 
6.71
 
$
14.65


Restricted Stock Units
During the years ended June 30, 2017 and 2016, the Company incurred $0 and $61,360 of compensation expense related to Restricted Stock Units ("RSUs"), respectively. There was no RSU activity during the year ended June 30, 2017, and there are no RSUs outstanding as June 30, 2017.
Certain Anti-Takeover Provisions
The Company’s Certificate of Incorporation and by-laws contain certain anti-takeover provisions that could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of the Company without negotiating with its Board. Such provisions could limit the price that certain investors might be willing to pay in the future for the Company’s securities. Certain of such provisions provide for a Board with staggered terms, allow the Company to issue preferred stock with rights senior to those of the common stock, or impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions.