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Compensatory Equity Incentive Plan and Other Equity Incentives

6 Months Ended

Dec. 31, 2015

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

Compensatory Equity Incentive Plan and Other Equity Incentives

6. Compensatory Equity Incentive Plan and Other Equity Incentives

Share-Based Compensation Arrangements—The Plan includes several available forms of stock compensation of which incentive stock options and restricted stock awards have been granted to date.

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 our board of directors on October 30, 2014 and approved by our 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. A discount of $846 and $1,356 for the six months ended December 31, 2015 and 2014, respectively, is included in the selling, general and administrative expense in the accompanying consolidated statements of comprehensive income (loss), which represents the value of the 10% discount given to the employees purchasing stock under the 2014 Plan.

These plans are summarized below:

						Award Shares				Available for
						Outstanding				Issuance
		Award Shares				at December 31,				at December 31,
Equity Compensation Arrangement		Authorized				2015				2015
Amended and Restated Omnibus Incentive Plan			3,915,625				2,144,432				1,131,903
Employee Stock Purchase Plan			400,000				—				395,298

			4,315,625				2,144,432				1,527,201

Grant Date Fair Values and Underlying Assumptions; Contractual Terms— We estimate the fair value of each stock option as of the date of grant. We use 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 granted in the six month periods ended December 31, 2015 and 2014, we estimated the fair value of each stock option as of the date of grant using the following assumptions:

	Six months ended	Six month ended
	December 31, 2015	December 31, 2014
Expected volatility	68% - 103%	103%
Weighted average expected volatility	68% - 103%	103%
Dividend yields	0%	0%
Risk-free interest rate	0.37% - 1.49%	1.77%
Expected term, in years	4.29 - 7.50	7.50

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 six months ended December 31, 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 Compensation Awards—A summary of the activity for share-based compensation awards in the six months ended December 31, 2015 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)
June 30, 2015			722,483			$	2.08				5.3				1,075,300				0.9

Granted			150,592			$	1.48				9.8				236,495				2.8
Exercised			(2,700	)		$	1.05				3.0				—				—
Cancelled/Forfeited			(37,738	)		$	2.76				—				—				—

December 31, 2015			832,637			$	1.95				5.9				1,311,795				1.1

Awards exercisable/
vested as of
December 31, 2015			643,637			$	2.13				5.2				803,526				—

Awards unexercisable/
unvested as of
December 31, 2015			189,000			$	1.33				8.6				508,269				1.1
			832,637												1,311,795

The total intrinsic value of options outstanding and exercisable at December 31, 2015 and 2014 was $590,174 and $208, respectively.

The total intrinsic value of RSUs exercised during the six months ended December 31, 2015 and 2014 was $0 and $0, respectively.

The total intrinsic value of RSUs outstanding and exercisable at December 31, 2015 and 2014 was $2,273,979 and $550,155, respectively.

The total fair value of RSUs vested during the six months ended December 31, 2015 and 2014 was $183,101 and $156,660, respectively.

The total fair value of option shares vested during the six months ended December 31, 2015 and 2014 was $223,229 and $65,500, respectively.

As of December 31, 2015, there was $664,681 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including share options and restricted stock units) granted under the Plan. We expect to recognize the compensation cost as follows:

								Restricted
								Stock
				Stock				Share/
				Options				Units				Total

	Six months ended June 30, 2016			$	24,168			$	149,896			$	174,064

	Year ended June 30, 2017				41,429				237,187				278,616

	Year ended June 30, 2018				27,661				141,580				169,241

	Year ended June 30, 2019				11,923				29,153				41,076

	Year ended June 30, 2020				1,684				—				1,684
				$	106,865			$	557,816			$	664,681

Restricted stock unit awards vest immediately or from two to four years from the date of grant.

We issue new shares of Class A 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 December 31, 2015 and changes during the six months then ended:

Unexercisable/unvested awards		Stock Options Shares				RSU Shares				Total Shares				Weighted-Average Grant Date Fair Values (per share)
June 30, 2015			224,500				403,870				628,370			$	1.23
Granted			150,592				236,495				387,087			$	1.39
Vested			(186,092	)			(132,096	)			(318,188	)		$	1.28
Cancelled/Forfeited			—				—				—				—
December 31, 2015			189,000				508,269				697,269			$	1.30

Financial Statement Effects and Presentation—The following table shows total stock-based compensation expense for the six months ended December 31, 2015 and 2014 included in the consolidated statements of comprehensive income (loss):

		(Unaudited)				(Unaudited)
		Six months ended				Six months ended
		December 31,				December 31,
		2015				2014

Stock options		$	25,041			$	27,106
RSU			149,546				110,969
Total		$	174,587			$	138,075

The amounts above were included in:
General & administrative		$	173,662				133,042
Cost of sales			158				—
New product development			767				5,033
		$	174,587				138,075