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Compensatory Equity Incentive Plan and Other Equity Incentives

12 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Compensatory Equity Incentive Plan and Other Equity Incentives

8. Compensatory Equity Incentive Plan and Other Equity Incentives

Share-based payment arrangements — The Plan included several available forms of stock compensation of which incentive stock options, non-qualified stock options and restricted stock units have been granted to date.

These plans are summarized below:

						Award Shares				Available for
		Award Shares				Outstanding				Issuance
		Authorized				at June 30,				at June 30,
Equity Compensation Arrangement						2015				2015
Amended and Restated Omnibus Incentive Plan			3,915,625				1,797,783				1,478,778
Employee Stock Purchase Plan			400,000				—				400,000
			4,315,625				1,797,783				1,878,778

The 2004 Employee Stock Purchase Plan (“ESPP”) permitted employees to purchase common stock through payroll deductions, not to exceed 15% of an employee’s compensation, at a price not less than 85% of the market value of the stock on specified dates (June 30 and December 31). In no event could any participant purchase more than $25,000 worth of shares of Class A common stock in any calendar year and an employee could purchase no more than 4,000 shares on any purchase date within an offering period of 12 months and 2,000 shares on any purchase date within an offering period of six months. The ESPP expired on December 6, 2014, and was replaced by the LightPath Technologies, Inc. Employee Stock Purchase Plan (“2014 ESPP”), which was adopted by the Company’s Board of Directors on October 30, 2014 and approved by the Company’s stockholders on January 29, 2015. The 2014 ESPP permits employees to purchase common stock through payroll deductions, which may not exceed 15% of an employee’s compensation, at a price not less than 85% of the market value of the stock on specified dates (June 30 and December 31). In no event can any participant purchase more than $25,000 worth of shares of Class A common stock in any calendar year and an employee cannot purchase more than 8,000 shares on any purchase date within an offering period of 12 months and 4,000 shares on any purchase date within an offering period of six months. This discount of $1,356 and $755 for fiscal 2015 and 2014, respectively, is included in the selling, general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss.

Grant Date Fair Values and Underlying Assumptions; Contractual Terms—The Company estimates the fair value of each stock option as of the date of grant. The Company uses the Black-Scholes-Merton pricing model. The ESPP or the 2014 ESPP fair value is the amount of the discount the employee obtains at the date of the purchase transaction.

For stock options and restricted stock units (“RSUs”) granted in the years ended June 30, 2015 and 2014, the Company estimated the fair value of each stock award as of the date of grant using the following assumptions:

	Year Ended				Year Ended
	June 30, 2015				June 30, 2014
Expected volatility		103% - 104%				105% - 123%
Weighted average expected volatility		103% - 104%				105% - 123%
Dividend yields		0%				0%
Risk-free interest rate		1.64% - 1.77%				1.60% - 2.81%
Expected term, in years		7.49				3 - 7

Most options granted under the Plan 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 options and restricted stock unit grants with both performance and service conditions were 20% for each of the years ended June 30, 2015 and 2014. 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.

Information Regarding Current Share Based Payment Awards—A summary of the activity for share-based payment awards in the years ended June 30, 2015 and 2014 is presented below:

														Restricted
							Stock Options								Stock Units (RSUs)
							Weighted				Weighted								Weighted
							Average				Average								Average
							Exercise				Remaining								Remaining
							Price				Contract								Contract
			Shares				(per share)				Life (YRS)				Shares				Life (YRS)
Options Outstanding
June 30, 2013			585,009			$	2.38				5.9				834,700				1.1

Granted			83,000				1.41				9.4				212,760				2.3
Exercised			—				—				—				(191,160	)			—
Cancelled			(13,851	)			2.40				—				—				—

June 30, 2014			654,158			$	2.25				5.5				856,300				0.9

Granted			103,000			$	1.35				9.4				219,000				2.3
Exercised			—				—				—				—				—
Cancelled/Forfeited			(34,675	)		$	3.06				2.9				—				—

June 30, 2015			722,483			$	2.08				5.3				1,075,300				0.9

Awards exercisable/
vested as of
June 30, 2015			497,983			$	2.44				3.9				671,430				—


Awards unexercisable/
unvested as of
June 30, 2015			224,500			$	1.29				8.5				403,870				0.9
			722,483												1,075,300

The total intrinsic value of share options exercised for years ended June 30, 2014 and 2013 was $0.

The total intrinsic value of shares options outstanding and exercisable at both June 30, 2015 and 2014 was $86,000 and $22,000, respectively.

The total fair value of shares options vested during the years ended June 30, 2015 and 2014 was $92,000 and $122,000, respectively.

The total intrinsic value of RSUs exercised during the years ended June 30, 2015 and 2014 was $0 and $289,000, respectively.

The total intrinsic value of RSUs outstanding and exercisable at June 30, 2015 and 2014 was $1.18 million and $683,000, respectively.

The total fair value of RSUs vested during the years ended June 30, 2015 and 2014 was $200,000 and $334,000, respectively.

As of June 30, 2015 there was $462,548 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including share options and restricted stock units) granted under the Plan. The cost expected to be recognized as follows:

								Restricted
								Stock
				Stock				Share/
				Options				Units				Total
	Year ended June 30, 2016			$	44,425			$	211,931			$	256,356

	Year ended June 30, 2017				34,682				120,513				155,195

	Year ended June 30, 2018				20,915				24,906				45,821

	Year ended June 30, 2019				5,176				—				5,176
				$	105,198			$	357,350			$	462,548

The table above does not include shares under the Company’s 2014 ESPP, which has purchase settlement dates in the second and fourth fiscal quarters. The Company’s 2014 ESPP is not administered with a look back option provision and, as a result, there is not a population of outstanding option grants during the employee contribution period.

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

The Company issues new shares of common stock upon the exercise of stock options. The following table is a summary of the number and weighted average grant date fair values regarding our unexercisable/unvested awards as of June 30, 2015 and 2014 and changes during the two years then ended:

Unexercisable/unvested awards		Stock Options Shares				RSU Shares				Total Shares				Weighted-Average Grant Date Fair Values (per share)
June 30, 2013			183,250				371,670				554,920			$	1.57
Granted			83,000				212,760				295,760			$	1.36
Vested			(73,250	)			(230,127	)			(303,377	)		$	1.36
Cancelled/Forfeited			—				—				—				—
June 30, 2014			193,000				354,303				547,303			$	1.18
Granted			103,000				219,000				322,000			$	1.30
Vested			(71,500	)			(169,433	)			(240,933	)		$	1.28
Cancelled/Forfeited			—				—				—				—
June 30, 2015			224,500				403,870				628,370			$	1.10

Acceleration of Vesting—The Company does not generally accelerate the vesting of any stock options. Upon the death of one of the former members of the Company’s Board of Directors in fiscal 2014, 75,460 of his RSUs vested on an accelerated basis.

Financial Statement Effects and Presentation—The following table shows total stock-based compensation expense for the years ended June 30, 2015 and 2014 included in the Consolidated Statement of Operations and Comprehensive Loss:

	Year ended				Year ended
	June 30,				June 30,
	2015				2014
Stock options	$	53,583			$	68,113
RSU		231,367				288,702
Total	$	284,950			$	356,815

The amounts above were included in:
General & administrative	$	273,379			$	346,119
Cost of sales		158				—
New product development		11,413				10,696
	$	284,950			$	356,815