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Compensatory Equity Incentive Plan and Other Equity Incentives

12 Months Ended

Jun. 30, 2016

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:

Equity Compensation Arrangement		Award Shares Authorized				Award Shares Outstanding at June 30, 2016				Available for Issuance at June 30, 2016
Amended and Restated Omnibus Incentive Plan			3,915,625				2,131,055				1,139,429
Employee Stock Purchase Plan			400,000				—				390,094
			4,315,625				2,131,055				1,529,523

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 $2,303 and $1,356 for fiscal 2016 and 2015, respectively, is included in the selling, general and administrative expense in the accompanying consolidated statements comprehensive income (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 market value of the Company’s stock when issued, as described above.

For stock options and restricted stock units (“RSUs”) granted in the years ended June 30, 2016 and 2015, the Company estimated the fair value of each stock award as of the date of grant using the following assumptions:

	Year ended June 30, 2016			Year ended June 30, 2015
Expected volatility	68% - 103	%		103% - 104	%
Weighted average expected volatility	68% - 103	%		103% - 104	%
Dividend yields	0	%		0	%
Risk-free interest rate	0.37% - 1.49	%		1.64% - 1.77	%
Expected term, in years	4.29 - 7.50			7.49

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, 2016 and 2015. 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, 2016 and 2015 is presented below: 

		Stock Options												Restricted Stock Units (RSUs)
		Shares				Weighted Average Exercise Price (per share)				Weighted Average Remaining Contract Life (YRS)				Shares				Weighted Average Remaining Contract Life (YRS)
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
Granted			155,592			$	1.49				9.4				236,495				2.3
Exercised			(6,077	)		$	1.07				3.7				—				—
Cancelled/Forfeited			(52,738	)		$	3.26				—				—				—
June 30, 2016			819,260			$	1.90				5.6				1,311,795				0.9
Awards exercisable/vested as of
June 30, 2016			637,010			$	2.06				4.8				870,196				—
Awards unexercisable/unvested as of
June 30, 2016			182,250			$	1.35				8.2				441,599				0.9
			819,260												1,311,795

The total intrinsic value of share options exercised for years ended June 30, 2016 and 2015 was $9,919 and $0, respectively.

The total intrinsic value of shares options outstanding and exercisable at both June 30, 2016 and 2015 was $148,000 and $86,000, respectively.

The total fair value of shares options vested during the years ended June 30, 2016 and 2015 was $234,000 and $122,000, respectively.

The total intrinsic value of RSUs exercised was $0 during both years ended June 30, 2016 and 2015.

The total intrinsic value of RSUs outstanding and exercisable at June 30, 2016 and 2015 was $1.51 million and $1.18 million, respectively.

The total fair value of RSUs vested during the years ended June 30, 2016 and 2015 was $389,000 and $200,000, respectively.

As of June 30, 2016 there was $494,555 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: 

		Stock Options				Restricted Stock Share/ Units				Total
Year ended June 30, 2017			42,434				237,187				279,621
Year ended June 30, 2018			28,667				141,580				170,247
Year ended June 30, 2019			12,929				29,153				42,082
Year ended June 30, 2020			2,605				—				2,605
		$	86,635			$	407,920			$	494,555

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, 2016 and 2015 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, 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
Granted			155,592				236,495				392,087			$	1.39
Vested			(197,842	)			(198,766	)			(396,608	)		$	1.21
Cancelled/Forfeited			—				—				—				—
June 30, 2016			182,250				441,599				623,849			$	1.35

Acceleration of Vesting—The Company does not generally accelerate the vesting of any stock options.

Financial Statement Effects and Presentation—The following table shows total stock-based compensation expense for the years ended June 30, 2016 and 2015 included in the Consolidated Statement of Comprehensive Income (Loss): 

		Year ended June 30, 2016				Year ended June 30, 2015
Stock options		$	49,293			$	53,584
RSU			299,442				231,367
Total		$	348,735			$	284,951
The amounts above were included in:
Selling, general & administrative		$	347,206			$	283,962
Cost of sales			316				158
New product development			1,213				831
		$	348,735			$	284,951

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- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=65895303&loc=d3e17540-113929

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=68057994&loc=d3e25284-112666

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 14)
-URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

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