LONG-TERM INCENTIVE PLAN AWARDS

6 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

LONG-TERM INCENTIVE PLAN AWARDS

NOTE 9 - LONG-TERM INCENTIVE PLAN AWARDS

We apply the provisions of ASC 718, “Compensation - Stock Compensation,” to all of our stock-based compensation awards and use the Black-Scholes option pricing model to value stock options. Under this application, we record compensation expense for all awards granted.

In 2009, we adopted the Stock Incentive Plan (“2009 Plan”), which provided for the grant of incentive stock options and non-qualified stock options to our employees and directors. Options granted under the 2009 Plan generally have a term of ten years and generally vest and become exercisable at the rate of 33% after one year and 33% on the second and third anniversaries of the option grant dates. Historically, some stock option grants have included shorter vesting periods ranging from one to two years.

In July of 2020, the Board of Directors adopted the 2020 Franklin Wireless Corp. Stock Option Plan (the “2020 Plan”), which covers 800,000 shares of Common Stock. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options and restricted stock to our employees, directors, and independent contractors. These options will have such vesting or other provisions as may be established by the Board of Directors at the time of each grant.

The estimated forfeiture rate considers historical turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. We periodically revise the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. There were $360,525 and $192,465 compensation expenses recorded under this method for the six months ended December 31, 2022 and 2021, respectively.

A summary of the status of our stock options is presented below as of December 31, 2022:

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual		Aggregate
				Exercise		Life		Intrinsic
Options	Shares			Price		(In Years)		Value
Outstanding as of June 30, 2022		766,001		$	3.85		3.37	$	183,270
Granted		–			–		–		–
Exercised		(100,000	)		1.34		–		–
Cancelled		–			–		–		–
Forfeited or expired		(16,000	)		5.40		–		–
Outstanding as of December 31, 2022		650,001		$	4.24		3.37	$	401,760
Exercisable as of December 31, 2022		352,475		$	4.68		3.05	$	134,898

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $4.46 as of December 31, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average grant-date fair value of stock options outstanding as of December 31, 2022, in the amount of 650,001 shares was $3.35 per share. As of December 31, 2022, there was unrecognized compensation cost of $905,275 related to non-vested stock options granted.

A summary of the status of our stock options s presented below as of December 31, 2021: 

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual		Aggregate
				Exercise		Life		Intrinsic
Options	Shares			Price		(In Years)		Value
Outstanding as of June 30, 2021		484,000		$	3.67		2.83	$	2,662,830
Granted		388,000			3.38		–		–
Exercised		(3,999	)		5.40		–		–
Cancelled		–			–		–		–
Forfeited or expired		(5,000	)		5.40		–		–
Outstanding as of December 31, 2021		863,001		$	3.52		3.51	$	1,026,570
Exercisable as of December 31, 2021		329,115		$	2.84		1.76	$	644,472

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $4.37 as of December 31, 2021, which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average grant-date fair value of stock options outstanding as of December 31, 2021, in the amount of 863,001 shares was $2.99 per share. As of December 31, 2021, there was unrecognized compensation cost of $1,750,766 related to non-vested stock options granted.