LONG-TERM INCENTIVE PLAN AWARDS

9 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

LONG-TERM INCENTIVE PLAN AWARDS

NOTE 7 - 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. The fair value of each share option award on the date of grant was estimated using the Black-Scholes method based on the following weighted average assumptions: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for periods corresponding with the expected term of options award; the expected term represents awards granted are expected to be outstanding giving considerations vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the dividend yield is based upon the company’s dividend rate at the time fair value is measure and future expectations. Under this application, we record compensation expense for all awards granted.

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 $208,860 and $536,922 compensation expenses recorded under this method for the nine months ended March 31, 2024 and 2023, respectively.

A summary of the status of our stock options is presented below as of March 31, 2024:

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual		Aggregate
				Exercise		Life		Intrinsic
Options	Shares			Price		(In Years)		Value
Outstanding as of June 30, 2023		647,001		$	4.24		2.88	$	130,200
Granted		–			–		–		–
Exercised		–			–		–		–
Cancelled		–			–		–		–
Forfeited or expired		(20,000	)		4.90		–		–
Outstanding as of March 31, 2024		627,001		$	4.22		2.14	$	–
Exercisable as of March 31, 2024		539,921		$	4.37		2.03	$	–

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $2.99 per share as of March 31,2024, 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 March 31, 2024, in the amount of 627,001 shares was $3.33 per share. As of March 31, 2024, there was unrecognized compensation cost of $259,182 related to non-vested stock options granted.

A summary of the status of our stock options is presented below as of March 31, 2023:

						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		(17,000	)		5.40		–		–
Outstanding as of March 31, 2023		649,001		$	4.24		3.12	$	595,200
Exercisable as of March 31, 2023		405,277		$	4.63		2.85	$	248,724

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $4.98 as of March 31, 2023, 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 March 31, 2023, in the amount of 649,001 shares was $3.35 per share. As of March 31, 2023, there was unrecognized compensation cost of $724,837 related to non-vested stock options granted.