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Stock-Based Compensation

3 Months Ended

Sep. 30, 2018

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

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”), including incentive stock options, non-qualified stock options, and restricted stock unit (“RSU”) awards. 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 months ended September 30, 2018 and 2017 included in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

		Three Months Ended September 30,
		2018				2017

Stock options		$	8,910			$	12,348
RSUs			85,000				79,893
Total		$	93,910			$	92,241

The amounts above were included in:
Selling, general & administrative		$	92,730			$	90,274
Cost of sales			1,518				1,603
New product development			(338	)			364
		$	93,910			$	92,241

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 $2,084 and $1,915 for the three months ended September 30, 2018 and 2017, respectively, is included in the selling, general and administrative expense in the accompanying 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 three months ended September 30, 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.

No stock options were granted in the three month periods ended September 30, 2018 and 2017.

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the three months ended September 30, 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, 2018			1,005,129			$	1.77				6.3				1,649,353				0.9

Granted			—				—								—				—
Exercised			—				—				—				—				—
Cancelled/Forfeited			(1,000	)		$	0.97				—				—				—
September 30, 2018			1,004,129			$	1.77				6.0				1,649,353				0.9

Awards exercisable/
vested as of
September 30, 2018			786,710			$	1.63				5.5				1,287,370				—

Awards unexercisable/
unvested as of
September 30, 2018			217,419			$	2.27				8.1				361,983				0.9
			1,004,129												1,649,353

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

As of September 30, 2018, there was approximately $390,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including share options and RSUs) granted. We expect to recognize the compensation cost as follows:

		Stock
		Options				RSUs				Total
Nine months ending June 30, 2019			12,777				179,983				192,760

Year ending June 30, 2020			8,926				149,944				158,870

Year ending June 30, 2021			5,939				29,978				35,917

Year ending June 30, 2022			2,021				—				2,021
		$	29,663			$	359,905			$	389,568