Note 3 - Employee Stock Compensation Plans

6 Months Ended

Dec. 31, 2014

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

3. Employee Stock Compensation Plans

On November 7, 2012, the Company’s stockholders approved the Omnibus Equity Compensation Plan (the “Omnibus Plan”). The Compensation Committee of the Company’s Board of Directors administers the Omnibus Plan and, in that capacity, has the exclusive authority to grant various incentive awards under the Omnibus Plan in the form of stock options, stock awards, stock units, performance units, and other stock-based awards. Up to 2,000,000 shares of the Company’s common stock are available for issuance to participants under the Omnibus Plan. The Omnibus Plan is available to all employees of the Company and its subsidiaries, including employees who are officers or members of the Board, and all non-employee directors and consultants of the Company and its subsidiaries. Prior to the adoption of the Omnibus Plan, the Board of Directors granted options to purchase shares of the Company’s common stock at an exercise price of not less than the fair market value of the common stock on the date of grant, under the Avatech Solutions, Inc. 2002 Stock Option Plan (the “2002 Option Plan”). The 2002 Option Plan, which expired in August 2012, provided for the granting of either incentive or non-qualified stock options to purchase an aggregate of up to 7,800,000 shares of common stock to eligible employees, officers, and directors of the Company and its subsidiaries.

On September 29, 2014, the Company’s Board of Directors approved a planned recapitalization of its balance sheet in order to provide liquidity to its shareholders and to maximize shareholder value. This planned recapitalization process was accomplished through a tender offer which was concluded on November 3, 2014 whereby the Company purchased 25,849,945 shares of its common stock from its shareholders for a price of $1.20 per share. In conjunction with the tender offer, the Company’s Board of Directors voted to accelerate the vesting of all unvested stock options effective September 29, 2014. The Board of Directors also voted to provide option holders the ability to exercise their options under a net-settlement program, whereby the Company issued common shares for the aggregate difference between the exercise price and the $1.20 tender offer price, minus required tax withholdings. There were 1,810,920 options exercised under this program. Stock compensation expense for the six months ended December 31, 2014 was $556,000 and includes $476,000 of expense due to the accelerated vesting of options. For the six months ended December 31, 2013, total stock compensation expense was $159,000.

A summary of stock option activity during the six months ended December 31, 2014 and related information is included in the table below:

	Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value

Outstanding at July 1, 2014		3,311,745		$	0.83
Granted		36,000			1.72
Exercised		(1,810,920	)		0.78
Forfeited		(42,000	)		0.83
Expired		—			—
Outstanding at December 31, 2014		1,494,825		$	0.90	$	1,301,000
Exercisable at December 31, 2014		1,470,825		$	0.89	$	1,300,000
Weighted-average remaining contractual life of shares outstanding (Years)		6.0
Weighted-average remaining contractual life of shares exercisable (Years)		6.0

All options granted have an exercise price equal to the fair market value of the Company’s common stock on the date of grant. Exercise prices for options outstanding as of December 31, 2014 ranged from $0.50 to $1.72 as follows:

Range of Exercise Prices			Options Outstanding		Weighted Average Exercise Prices of Options Outstanding		Weighted Average Remaining Contractual Life of Options Outstanding (years)		Options Exercisable		Weighted Average Exercise Prices of Options Exercisable		Weighted Average Remaining Contractual Life of Options Exercisable (years)
$ 0.50	–	0.75		447,975	$	0.65		5.0		447,975	$	0.65		5.0
0.76	–	1.00		744,100		0.89		7.4		744,100		0.89		7.4
1.01	–	1.72		302,750		1.30		4.2		278,750		1.27		3.7
				1,494,825						1,470,825

Assuming that no additional share-based payments are granted after December 31, 2014

, $34,000 of compensation expense will be recognized in the consolidated statements of operations over a weighted-average period of 1.75 years.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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RAND WORLDWIDE INC 10-Q