StockBased Compensation

6 Months Ended

Dec. 31, 2022

StockBased Compensation

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, through our 2018 Stock and Incentive Compensation Plan (the “SICP”). Such stock-based compensation may include, among other things, incentive stock options, non-qualified stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). The SICP is administered by the Compensation Committee of the Board of Directors. At our 2018 Annual Stockholders Meeting, our stockholders approved the SICP under which an aggregate of 1,650,870 shares of our Class A common stock were authorized for issuance pursuant to awards granted thereunder. As of December 31, 2022, 1,882,094 shares of Class A common stock are authorized and available for issuance pursuant to awards granted under the SICP. The Company’s executive officers are eligible to earn incentive compensation consisting of equity-based awards, as well as cash bonuses, based on the achievement of certain individual and/or Company performance goals set by the Compensation Committee.

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 six months ended December 31, 2022 and 2021 included in selling, general and administrative (“SG&A”) expenses in these unaudited Condensed Consolidated Statements of Comprehensive Income:

	Three Months Ended December 31,				Six Months Ended December 31,
	2022		2021		2022		2021
Stock options	$	59,284	$	25,879	$	118,049	$	50,007
RSAs	$	66,850		—	$	66,850		—
RSUs	$	361,413	$	158,659	$	587,246		251,122
Total	$	487,547	$	184,538	$	772,145	$	301,129

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 $1,954 and $2,155 for the six months ended December 31, 2022 and 2021, respectively, is included in SG&A expenses in these 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 six months ended December 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 six months ended December 31, 2022 or during the six months ended December 31, 2021.

Restricted Stock Awards

RSAs are granted primarily to our executive officers, employees and consultants, and typically vest over a one to three year period from the date of grant, although some may vest immediately upon grant. The stock underlying RSAs is issued upon vesting.

Restricted Stock Units

RSUs are granted primarily to our directors, although RSU awards may also be made to executive officers, employees and consultants. RSUs typically vest over a one to four year period from the date of grant, although some may vest immediately upon grant.

Information Regarding Current Share-Based Compensation Awards

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

	Stock Options						Restricted Stock Units (RSUs)					Restricted Stock Awards (RSAs)
			Weighted-		Weighted-					Weighted-					Weighted-
			Average		Average					Average					Average
			Exercise		Remaining					Remaining					Remaining
	Shares		Price		Contract		Shares			Contract		Shares			Contract
June 30, 2022		534,462	$	2.03		7.0		2,079,669			0.9		—
Granted		-	$	-				523,618					129,604
Exercised		-	$	-				(169,273	)				(59,809	)
Cancelled/Forfeited		-	$	-				-
December 31, 2022		534,462	$	2.03		6.6		2,434,014			1.5		69,795			1.4
Awards exercisable/
vested as of
December 31, 2022		282,756	$	1.92		6.1		1,703,187			—		—
Awards unexercisable/
unvested as of
December 31, 2022		251,706	$	2.15		7.2		730,827			1.5		69,795			1.4
		534,462						2,434,014					69,795

As of December 31, 2022, there was approximately $1.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options, RSAs and RSUs) granted. We expect to recognize the compensation cost as follows:

Fiscal Year Ending:	Stock Options		RSAs		RSUs		Total
June 30, 2023 (remaining six months)	$	85,039	$	18,239	$	344,980	$	448,258
June 30, 2024		94,196		36,451		338,723		469,370
June 30, 2025		33,885		15,164		113,804		162,853
June 30, 2026		—		—		19,829		19,829
	$	213,120	$	69,854	$	817,336	$	1,100,310