Stock-Based Compensation

9 Months Ended

Mar. 31, 2022

Stock-Based Compensation

8. Stock-based Compensation

8. Stock-Based Compensation

Our directors, officers, and key employees are granted stock-based compensation through our Amended and Restated Omnibus Incentive Plan, as amended (the “Omnibus Plan”), through October 2018 and after that date, the 2018 Stock and Incentive Compensation Plan (the “SICP”), including incentive stock options, non-qualified stock options, and restricted stock unit (“RSU”) awards. The stock-based compensation expense is based primarily on the fair value of the award as of the grant date, and is recognized as an expense over the requisite service period.

The following table shows total stock-based compensation expense for the three and nine months ended March 31, 2022 and 2021 included in selling, general and administrative (“SG&A”) expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Stock options	$	25,596	$	17,036	$	75,603	$	51,277
RSUs		214,747		183,025		465,869		391,800
Total	$	240,343	$	200,061	$	541,472	$	443,077

We also adopted the LightPath Technologies, Inc. Employee Stock Purchase Plan (the “2014 ESPP”). The 2014 ESPP permits employees to purchase Class A common stock through payroll deductions, subject to certain limitations. A discount of $5,129 and $2,978 for the nine months ended March 31, 2022 and 2021, respectively, is included in SG&A expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income, which represents the value of the 10% discount given to the employees purchasing stock under the 2014 ESPP.

Grant Date Fair Values and Underlying Assumptions; Contractual Terms

We estimate the fair value of each stock option as of the date of grant, using the Black-Scholes-Merton pricing model. The fair value of 2014 ESPP shares is the amount of the discount the employee obtains at the date of the purchase transaction.

Most stock options granted vest ratably over two to four years and are generally exercisable for ten years. The assumed forfeiture rates used in calculating the fair value of RSU grants was 0%, and the assumed forfeiture rates used in calculating the fair value of options for performance and service conditions were 20% for each of the nine months ended March 31, 2022 and 2021. The volatility rate and expected term are based on seven-year historical trends in Class A common stock closing prices and actual forfeitures. The interest rate used is the U.S. Treasury interest rate for constant maturities.

No stock options were granted during the nine months ended March 31, 2022. For stock options granted in the nine-month period ended March 31, 2021, we estimated the fair value of each stock option as of the date of grant using the following assumptions:

Weighted-average expected volatility	71.2	%
Dividend yields	0	%
Weighted-average risk-free interest rate	0.28	%
Weighted-average expected term, in years	7.49

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the nine months ended March 31, 2022 is presented below:

	Stock Options							Restricted Stock Units (RSUs)
				Weighted-		Weighted-					Weighted-
				Average		Average					Average
				Exercise		Remaining					Remaining
	Shares			Price		Contract		Shares			Contract
June 30, 2021		432,927		$	2.01		8.8		1,761,885			0.9
Granted		-		$	-				368,461			1.2
Exercised		-		$	-				(27,341	)
Cancelled/Forfeited		(23,465	)	$	1.67				(5,534	)
March 31, 2022		409,462		$	2.03		8.1		2,097,471			0.9
Awards exercisable/
vested as of
March 31, 2022		151,691		$	1.61		7.5		1,334,978
Awards unexercisable/
unvested as of
March 31, 2022		257,771		$	2.28		8.4		762,493			0.9
		409,462							2,097,471

RSU awards vest immediately or from one to four years from the date of grant.

As of March 31, 2022, there was approximately $1.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options and RSUs) granted. We expect to recognize the compensation cost as follows:

Fiscal Year Ending:	Stock Options		RSUs		Total
June 30, 2022 (remaining three months)	$	26,682	$	214,698	$	241,380
June 30, 2023		115,881		531,851		647,732
June 30, 2024		94,196		190,864		285,060
June 30, 2025		33,885		54,308		88,193
	$	270,644	$	991,721	$	1,262,365