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Compensatory Equity Incentive Plan and Other Equity Incentives | 9 Months Ended
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Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Compensatory Equity Incentive Plan and Other Equity Incentives | Share-Based Compensation Arrangements. The Omnibus Plan provides several available forms of stock compensation, including incentive stock options and restricted stock unit (“RSU”) awards. Stock-based compensation is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. We estimate the fair value of each stock option as of the date of grant using the Black-Scholes-Merton pricing model. Most options granted under the Omnibus Plan vest ratably over two to four years and generally have ten-year contract lives. The volatility rate is based on four-year historical trends in common stock closing prices and the expected term was determined based primarily on historical experience of previously outstanding options. The interest rate used is the U.S. Treasury interest rate for constant maturities. The likelihood of meeting targets for option grants that are performance based are evaluated each quarter. If it is determined that meeting the targets is probable, then the compensation expense will be amortized over the remaining vesting period. The LightPath Technologies, Inc. Employee Stock Purchase Plan (“2014 ESPP”) 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 shares of our Class A 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 our Class A common 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 $4,879 and $1,927 for the nine months ended March 31, 2018 and 2017, respectively, is included in the selling, general and administrative expense in the accompanying unaudited Consolidated Statements of Comprehensive Income, which represents the value of the 10% discount given to the employees purchasing stock under the 2014 ESPP. These plans are summarized below:
|  |  |  |  | Award Shares |  |  | Available for |
|  | Award Shares |  |  | Outstanding |  |  | Issuance |
|  | Authorized |  |  | at March 31, |  |  | at March 31, |
Equity Compensation Arrangement |  |  |  |  | 2018 |  |  | 2018 |
Omnibus Plan |  |  | 5,115,625 |  |  |  | 2,678,482 |  |  |  | 1,665,776 |
2014 ESPP |  |  | 400,000 |  |  |  | — |  |  |  | 358,008 |
|  |  | 5,515,625 |  |  |  | 2,678,482 |  |  |  | 2,023,784 |
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 2014 ESPP fair value is the amount of the discount the employee obtains at the date of the purchase transaction. For stock options granted under the Omnibus Plan in the nine month periods ended March 31, 2018 and 2017, we estimated the fair value of each stock option as of the date of grant using the following assumptions:
| Nine months ended March 31,
| 2018 | 2017
Weighted-average expected volatility | 63% - 75% | 77% - 83%
Dividend yields | 0% | 0%
Weighted-average risk-free interest rate | 1.28% - 1.80% | 1.18% - 1.90%
Weighted-average expected term, in years | 7.25 | 7.49
Most options granted under the Omnibus 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 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, 2018 and 2017. 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 under the Omnibus Plan in the nine months ended March 31, 2018 is presented below:
|  |  |  |  | Restricted |
|  | Stock Options |  |  | Stock Units (RSUs) |
|  |  |  |  | Weighted- |  |  | Weighted- |  |  |  |  |  | Weighted- |
|  |  |  |  | Average |  |  | Average |  |  |  |  |  | Average |
|  |  |  |  | Exercise |  |  | Remaining |  |  |  |  |  | Remaining |
|  | Shares |  |  | Price |  |  | Contract |  |  | Shares |  |  | Contract |
June 30, 2017 |  |  | 1,096,186 |  |  | $ | 1.68 |  |  |  | 6.3 |  |  |  | 1,508,782 |  |  |  | 0.9 |
Granted |  |  | 58,849 |  |  | $ | 4.24 |  |  |  | — |  |  |  | 140,571 |  |  |  | — |
Exercised |  |  | (93,813 | ) |  | $ | 2.10 |  |  |  | — |  |  |  | — |  |  |  | — |
Cancelled/Forfeited |  |  | (32,093 | ) |  | $ | 2.62 |  |  |  | — |  |  |  | — |  |  |  | — |
March 31, 2018 |  |  | 1,029,129 |  |  | $ | 1.74 |  |  |  | 6.4 |  |  |  | 1,649,353 |  |  |  | 0.9 |
Awards exercisable/ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
vested as of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
March 31, 2018 |  |  | 818,960 |  |  | $ | 1.60 |  |  |  | 5.9 |  |  |  | 1,287,370 |  |  |  | — |
Awards unexercisable/ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
unvested as of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
March 31, 2018 |  |  | 210,169 |  |  | $ | 2.27 |  |  |  | 8.6 |  |  |  | 361,983 |  |  |  | 0.9 |
|  |  | 1,029,129 |  |  |  |  |  |  |  |  |  |  |  | 1,649,353 |  |  |  |  |
The total intrinsic value of options outstanding and exercisable at March 31, 2018 and 2017 was approximately $639,000 and $900,135, respectively. The total fair value of option shares vested during the nine months ended March 31, 2018 and 2017 was approximately $550,000 and $406,000 respectively. No RSUs were exercised during the nine months ended March 31, 2018. The total intrinsic value of RSUs exercised during the nine months ended March 31, 2017 was approximately $79,000. The total intrinsic value of RSUs outstanding and exercisable at March 31, 2018 and 2017 was approximately $2.8 million and $2.9 million, respectively. The total fair value of RSUs vested during the nine months ended March 31, 2018 and 2017 was approximately $519,000 and $333,000, respectively. As of March 31, 2018, there was approximately $569,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including share options and RSUs) granted under the Omnibus Plan. We expect to recognize the compensation cost as follows:
|  | Stock |  |  |  |  |  |  |
|  | Options |  |  | RSUs |  |  | Total |
Three months ending June 30, 2018 |  |  | 8,938 |  |  |  | 85,036 |  |  |  | 93,974 |
Year ending June 30, 2019 |  |  | 19,747 |  |  |  | 264,982 |  |  |  | 284,729 |
Year ending June 30, 2020 |  |  | 6,720 |  |  |  | 149,944 |  |  |  | 156,664 |
Year ending June 30, 2021 |  |  | 3,733 |  |  |  | 29,978 |  |  |  | 33,711 |
|  | $ | 39,138 |  |  | $ | 529,940 |  |  | $ | 569,078 |
RSU 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 March 31, 2018 and changes during the nine months then ended:
Unexercisable/unvested awards | Stock Options Shares |  | RSU Shares |  | Total Shares |  |  | Weighted-Average
|  |  | Grant Date Fair Values
|  |  | (per share)
June 30, 2017 | 244,511 |  | 438,912 |  | 683,423 |  |  | $ | 1.39
Granted | 58,849 |  | 140,571 |  | 199,420 |  |  | $ | 3.69
Vested | (83,441) |  | (217,500) |  | (300,941) |  |  | $ | 3.79
Cancelled/Forfeited | (9,750) |  | — |  | (9,750) |  |  | $ | 0.97
March 31, 2018 | 210,169 |  | 361,983 |  | 572,152 |  |  | $ | 1.51
Financial Statement Effects and Presentation. The following table shows total stock-based compensation expense for the nine months ended March 31, 2018 and 2017 included in the consolidated statements of comprehensive income:
|  | Nine Months Ended March 31, |
|  | 2018 |  |  | 2017 |
Stock options |  | $ | 249,946 |  |  | $ | 34,882 |
RSUs |  |  | 29,450 |  |  |  | 284,300 |
Total |  | $ | 279,396 |  |  | $ | 319,182 |
The amounts above were included in: |  |  |  |  |  |  |  |
Selling, general & administrative |  | $ | 274,004 |  |  | $ | 315,429 |
Cost of sales |  |  | 4,388 |  |  |  | 2,792 |
New product development |  |  | 1,004 |  |  |  | 961 |
|  | $ | 279,396 |  |  | $ | 319,182 |

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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 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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