Equity Transactions

12 Months Ended

Jun. 30, 2023

Equity [Abstract]

Equity Transactions

10. Equity Transactions

Stock Options

The following table summarizes the activity relating to the Company’s stock options for the years ended June 30, 2023 and 2022:

	Options			Weighted-Average Exercise Price			Weighted Remaining Average Contractual Term		Aggregate Intrinsic Value
Outstanding at June 30, 2021		755,200		$	4.34			4.4	$	2,569,232
Granted		2,724,689			5.86			7.7		—
Options Expired		(8,000	)		29.17			—		—
Options Forfeited		(73,125	)		(13.91	)		—		—
Outstanding at June 30, 2022		3,398,764			7.42			5.5		—
Granted		714,667			5.90			8.6		38,610
Options Expired		(10,000	)		28.69			—		—
Options Canceled		(49,667	)		7.74			—		—
Options Exercised		(100,900	)		8.12			—		—
Outstanding at June 30, 2023		3,952,864		$	7.10			6.3	$	1,067,966
Exercisable at June 30, 2023		1,473,413		$	7.68			5.4	$	315,206

The fair value of each option grant on the date of grant is estimated using the Black-Scholes option. The pricing model reflects the following weighted-average assumptions for the years ended June 30, 2023 and 2022:

	June 30, 2023	June 30, 2022
Expected life of options (In years)	6	5
Expected volatility	81.65%	76.47%
Risk free interest rate	3.82%	1.56%
Dividend Yield	0%	0%

Expected volatility is based on the historical volatilities of three comparable companies of the daily closing price of their respective Common Stock and the expected life of options is based on historical data with respect to employee exercise periods. The Company accounts for forfeitures as they are incurred.

The Company recorded stock option-based compensation expense of approximately $4.2 million and $5.8 million for the years ended June 30, 2023 and 2022, respectively.

The following is a summary of stock options outstanding and exercisable by exercise price as of June 30, 2023:

Exercise Price		Outstanding		Weighted Average Contract Life		Exercisable
$	1.69		124,520		4.0		41,507
$	1.81		10,000		3.9		2,000
$	1.98		72,000		3.9		16,000
$	2.74		124,167		8.6		35,180
$	2.80		5,600		1.6		5,600
$	3.13		4,000		0.6		4,000
$	3.20		248,167		8.6		79,834
$	3.24		25,000		8.7		6,667
$	4.09		175,500		10.0		—
$	5.04		755,000		3.8		377,500
$	5.21		10,000		9.4		—
$	5.78		148,000		9.9		29,600
$	6.12		195,000		4.4		97,500
$	6.25		1,600		0.3		1,600
$	7.36		124,167		9.8		—
$	7.50		800		1.3		800
$	7.74		1,241,668		8.1		447,000
$	7.81		62,000		9.8		—
$	8.75		1,600		0.8		1,600
$	9.54		800		2.3		800
$	9.90		800		2.3		800
$	13.91		618,475		2.5		321,425
$	42.09		4,000		2.6		4,000
			3,952,864				1,473,413

Issuance of Common Stock through exercise of Stock Options and Warrants

In December 2022, the Company issued 22,082 shares of Common Stock pursuant to a cashless exercise of stock options to purchase 99,300 shares at an average exercise price of $7.64.

In November 2022, the Company issued 800 shares of Common Stock pursuant to a cash exercise of stock options to purchase 800 shares at an average exercise price of $2.80 per share.

In October 2022, the Company issued 3,590 shares of Common Stock pursuant to a cashless exercise of warrants to purchase 8,000 shares at an average exercise price of $2.25.

In May 2023, the Company issued 481 shares of Common Stock pursuant to a cashless exercise of stock options to purchase 800 shares at an average exercise price of $3.13.

Issuance of common stock for cash

During the three months ended September 30, 2021, the Company issued 2,592,000 of its Class A common stock at $8.00 per share in connection with its registered public offering of approximately $18.5 million, net of issuance costs of approximately $2.2 million.

On August 31, 2022, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (collectively, the “Agents”), pursuant to which the Company may issue and sell from time-to-time shares of the Company’s common stock through the Agents, subject to the terms and conditions of the Sales Agreement. On April 6, 2023, the Company and B. Riley Securities, Inc. mutually agreed to terminate B. Riley Securities, Inc.’s role as a sales agent under the Sales Agreement. During the year ended June 30, 2023, the Company sold 7,539,254 shares of common stock under the Sales Agreement for total net proceeds of $49.5 million after 3% commissions and expenses of approximately $2.0 million.

Issuance of restricted stock units for services

On August 20, 2021, the Company awarded 58,759 RSUs to the Company’s President and CEO under the Company’s 2019 Omnibus Incentive Equity Plan (the “2019 Omnibus Plan”) as his salary for the period from April 27, 2021, the date of his appointment, through December 31, 2021. The number of RSUs awarded was based on a prorated annual base salary of $600,000 at a 10% discount to the grant date fair value of $7.74 per share of the Company’s Common Stock. Each RSU awarded to the CEO entitled him to receive one share of Common Stock upon vesting. A total of 15,339 RSUs (representing the pro rata portion of the RSU award for the period from April 27, 2021 to June 30, 2021) vested at the grant date, 21,710 vested at September 30, 2021 and the remaining 21,710 vested at December 31, 2021. Accordingly, the CEO was issued an aggregate of 58,759 shares of Common Stock over the vesting period of the RSUs. The stock-based compensation expense related to these RSUs was $384,456 for the year ended June 30, 2022.

On June 21, 2022, the Company awarded 124,520 RSUs to the President and CEO under the Company’s 2019 Omnibus Plan. Each RSU awarded to the CEO entitles him to receive one share of Common Stock upon vesting. The RSUs vest in three equal annual installments beginning on the first grant anniversary date. 41,506 RSUs vested in June 2023 at a fair value of $5.90 per share of the Company’s Common Stock. The stock-based compensation expense related to these RSUs was approximately $243,000 and $1,754 for the years ended June 30, 2023, and 2022, respectively.

On November 23, 2022, the Company awarded 381,976 RSUs to certain employees and a consultant, with a grant date fair value of $6.12 per share. 25% of these RSUs vested on the grant date and the remaining RSUs vest in three equal installments over three years beginning on the first anniversary of the grant date. For the year ended June 30, 2023, the stock-based compensation expense related to these RSUs was $584,424. On February 16, 2023, the Company delivered the vested portion of the RSU’s and issued 72,612 shares of Common Stock net of 25% withholding. 22,880 shares issued to employees were withheld in Treasury stock in exchange for payment of withholding tax on behalf of the employees.

On November 23, 2022, the Company issued equity awards for the Board of Directors’ annual compensation. Four directors received RSUs to purchase a total of 155,636 shares of Common Stock at the grant date fair value of $6.12 per share, a total cost of $952,492 recognized as stock compensation in the year ended June 30, 2023. Three directors received stock options to purchase 195,000 shares of Common Stock at an exercise price of $6.12 per share, the grant date fair value. The total stock compensation cost of stock options of $791,700 was recognized in the year ended June 30, 2023. The equity awards vest every three months beginning from the last annual shareholders’ meeting on November 9, 2022, on February 9, 2023, May 9, 2023, August 9, 2023 and earlier of November 9, 2023 or the next annual shareholders’ meeting. While the agreements contain certain contractual vesting terms, there are circumstances where the vesting can be accelerated that is not within the Company’s control and as a result, for accounting purposes, the awards are assumed to have been fully vested on the grant date, accordingly, the Company recognized the total compensation cost of $1,744,192 on November 23, 2022. On February 9, 2023, the Company delivered the vested portion and issued 39,088 shares of Common Stock. On May 9, 2023, the Company delivered the vested portion and issued 39,088 shares of Common Stock.

On June 20, 2023, the Company awarded 149,500 RSUs to the President and CEO under the Company’s 2019 Omnibus Plan. Each RSU awarded to the CEO entitles him to receive one share of Common Stock upon vesting. The RSUs vest in three equal annual installments beginning on the first grant date anniversary.

Compensation expense related to vested RSUs for the year ended June 30, 2023 was approximately $1.8 million.

The following table summarizes vesting of restricted common stock:

	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Unvested at June 30, 2021		—		$	—
Granted		124,520			1.69
Unvested at June 30, 2022		124,520			1.69
Granted		687,112			5.89
Vested		(215,175	)		5.27
Unvested at June 30, 2023		596,457		$	5.24

Issuance of Shares for Services

On April 6, 2023, the Company awarded 50,000 shares of Common Stock to a vendor as part of their fees in exchange for services. The fair value of the Common Stock at the date of issuance was $7.45 per share. The stock-based compensation expense related to this Common Stock issuance was $372,500.

Issuance of Stock Options under the 2019 Omnibus Plan.

On August 20, 2021, the Company granted stock options to purchase 1,365,835 shares of Common Stock to the executive management team. 20% of the shares underlying the options awarded vested on the grant date, and the remaining 80% will vest equally over a 5-year period, on the first, second, third, fourth and fifth anniversary of the grant date. The exercise price of the options is $7.74 per share, the grant date fair value of the stock, and the options terminate on the earlier of the tenth anniversary of the grant date or the date on which the options have been fully exercised.

On April 5, 2022, the Company granted stock options to purchase 755,000 shares of Common Stock to the independent directors of the board as compensation for services at an exercise price of $5.04 per share, the grant date fair value. 25% of the shares underlying the options awarded vested on the grant date, and the remaining 75% vest ratably over three years on the first, second, and third anniversary of the grant date. The options terminate on the earlier of the fifth anniversary of the grant date or the date as of Xwhich the options are fully exercised.

Pursuant to a former employee Separation Agreement, dated April 11, 2022, the Company modified a former employee’s stock option award granted on August 20, 2021, pursuant to the 2019 Omnibus Plan (“2021 Options Grant”). Pursuant to the terms of the Separation Agreement, effective on July 8, 2022 (“the Separation Date”), the Company accelerated the vesting of options scheduled to vest on the first and second anniversary of the grant date as deemed vested (“Accelerated Options”) and after giving effect to the Accelerated Options, extended the exercise period of the total vested outstanding and unexercised options (totaling 74,500 options) to one year following the Separation Date. The unvested portion of the 2021 Option Grant (totaling 49,667 options) was canceled. The modification was remeasured as of July 8, 2022, and the incremental difference totaled $181,154, net credit, due to the original exercise price of $7.74 being greater than the stock price of $1.80 on the remeasurement date, and accordingly was recognized on July 8, 2022.

On June 21, 2022, the Company granted stock options to purchase 124,520 shares of Common Stock to the CEO. The options vest in three equal annual installments beginning on the first grant date anniversary. The exercise price is $1.69 per share, the grant date fair value, and the options terminate on the tenth anniversary of the grant date.

During the fiscal year ended June 30, 2022, the Company granted stock options to purchase a total of 479,334 shares of Common Stock in connection with compensation packages of seven new employees. The exercise prices were based on each of respective the grant date fair values with vesting terms over a five years period and the options terminate on the earlier of tenth grant date anniversary or the date of which the options are fully exercised.

 On June 7, 2023, the Company granted stock options to purchase 148,000 shares of Common Stock to the certain employees. 20% of the shares underlying the options awarded vested on the grant date, and the remaining 80% will vest in four equal annual installments beginning, on the first grant date anniversary. The exercise price of the options is $5.78 per share, the grant date fair value of the stock, and the options terminate on the earlier of the tenth grant date anniversary or the date of which the options are fully exercised.

During the fiscal year ended June 30, 2023, the Company granted stock options to purchase a total of 286,167 share of Common Stock in connection with compensation packages of three new employees. The exercise prices were as of each respective grant date fair value with vesting terms over five year period and the options terminate on the earlier of tenth grant date anniversary or the date of which the options are fully exercised.

Forfeiture of Stock Options

On August 27, 2021, the Chief Executive Officer forfeited unvested stock options to purchase up to 73,125 shares of Common Stock that were previously granted to him as compensation as an independent director of the Board of Directors.

Stock Warrants

The following table summarizes the warrants activity during the years ended June 30, 2023 and 2022:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Aggregate Intrinsic Value
Outstanding and exercisable at June 30, 2021		158,761		$	10.37		3.1	$	1,765,437
Granted		361,002			5.82		5.0		—
Expired		(9,391	)		12.29		—		—
Exercised		—			—		—		—
Outstanding and exercisable at June 30, 2022		510,372		$	6.17		3.8	$	—
Granted		7,272,728			1.82		5.0		—
Expired		(4,815	)		75.00		—		—
Exercised		(8,000	)		2.25		—		—
Outstanding and exercisable at June 30, 2023		7,770,285		$	2.06		4.0	$	18,318,954

The total warrants outstanding at June 30, 2023 expire in the following fiscal years ending June 30 as follows: 101,380 in 2025; 35,175 expire in 2026; and 7,633,730 in 2027.