Note 4 - Stock-based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Text Block] |
Note 4. Stock-Based CompensationThe Company recorded $563,666 and $1,102,190 of compensation expense related to current and past stock option grants, restricted stock grants and the Company’s Employee Stock Purchase Plan (“ESPP”) for the three and six months ended March 31, 2019, respectively. For the three months ended March 31, 2019,
$532,425 of this expense is included in selling, general and administrative expense, and $31,241 is included in cost of sales. For the six months ended March 31, 2019,
$1,039,709 of this expense is included in selling, general and administrative expense, and $62,481 is included in cost of sales. The Company recorded $485,794 and $969,081 of compensation expense related to current and past stock option grants, restricted stock grants and the Company’s ESPP for the three and six months ended March 31, 2018, respectively. For the three months ended March 31, 2018,
$443,763 of this expense is included in selling, general and administrative expense, and $42,031 is included in cost of sales. For the six months ended March 31, 2018,
$885,020 of this expense is included in selling, general and administrative expense, and $84,061 is included in cost of sales. As of March 31, 2019,
$2,965,292 of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a period of approximately 5.4 years.Stock Options The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of stock options granted. During the six months ended March 31, 2019, the Company granted employees non-qualified stock options to purchase an aggregate of 172,000 shares of common stock with a weighted average contractual term of four years, a three year vesting term, and a weighted average exercise price of $12.17. There were no stock options granted during the six months ended March 31, 2018. The weighted-average fair value at the grant date for options issued during the six months ended March 31, 2019 was $3.53.
This fair value was estimated at the grant date using the assumptions listed below:
The expected stock price volatility is based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after their grant date. The risk-free interest rate reflects the interest rate at grant date on zero -coupon U.S. governmental bonds having a remaining life similar to the expected option term.Options are granted at fair market values determined on the date of grant and vesting normally occurs over a three to five -year period. However, options granted to directors have a one year vesting period and a six -year contractual term. The maximum contractual term is normally six years. Shares issued upon exercise of a stock option are issued from the Company’s authorized but unissued shares.The following is a summary of stock option activity during the six months ended March 31, 2019:
The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. As of March 31, 2019, the weighted average remaining contractual term for all outstanding and exercisable stock options was 1.4 years and their aggregate intrinsic value was $287,850. During the six months ended March 31, 2019, the Company received proceeds of $24 from the exercise of stock options. During the six months ended March 31, 2018, exercised stock options totaled 6,100 shares, resulting in proceeds of $17,949 from the exercise of stock options.Restricted Stock The Company’s 2007 Stock Compensation Plan permits its Compensation Committee to grant stock-based awards, including stock options and restricted stock, to key employees and non-employee directors. The Company has made restricted stock grants that vest over one to ten years.During the six months ended March 31, 2019, the Company granted non-employee directors elected at the Company’s 2019 Annual Meeting of Shareholders restricted stock awards totaling 4,340 shares of common stock, with a vesting term of approximately one year and a fair value of $14.40 per share.During the six months ended March 31, 2018, the Company granted non-employee directors elected at the Company’s 2018 Annual Meeting of Shareholders restricted stock awards totaling 4,235 shares of common stock, with a vesting term of approximately one year and a fair value of $14.75 per share.Restricted stock transactions during the six months ended March 31, 2019 are summarized as follows:
Employee Stock Purchase Plan The Company’s ESPP allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees subject to certain eligibility requirements. Terms of the ESPP provide that participating employees
may purchase the Company’s common stock on a voluntary after-tax basis. Employees may purchase the Company’s common stock at a price that is no less than the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period or phase. The ESPP is carried out in six month phases, with phases beginning on January 1 and July 1 of each calendar year. For the phases that ended on December 31, 2018 and December 31, 2017, employees purchased 17,312 and 14,242 shares at a price of $8.43 and $10.41 per share, respectively. After the employee purchase on December 31, 2018,
69,769 shares of common stock were available for future purchase under the ESPP. |