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Stock-Based Compensation

9 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Our directors, officers, and key employees are granted stock-based compensation through our Amended and Restated Omnibus Incentive Plan, as amended (the “Omnibus Plan”), through October 2018 and after that date, the 2018 Stock and Incentive Compensation Plan (the “SICP”), 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 nine months ended March 31, 2021 and 2020 included in selling, general and administrative expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

	Nine Months Ended March 31,
	2021		2020

Stock options	$	51,277	$	(15,330	)
RSUs		391,800		261,616
Total	$	443,077	$	246,286

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 $2,978 and $2,491 for the nine months ended March 31, 2021 and 2020, 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 and nine months ended March 31, 2021 and 2020. 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.

For the nine months ended March 31, 2021 and 2020, there were no stock options granted under the Omnibus Plan. For stock options granted under the SICP in the nine-month periods ended March 31, 2021 and 2020, we estimated the fair value of each stock option as of the date of grant using the following assumptions:

	Nine Months Ended March 31,
	2021		2020
Weighted-average expected volatility		71.2%		65.6%
Dividend yields		0%		0%
Weighted-average risk-free interest rate		0.28%		1.56%
Weighted-average expected term, in years		7.49		7.50

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the nine months ended March 31, 2021 is presented below:

	Stock Options							Restricted Stock Units (RSUs)
				Weighted-		Weighted-					Weighted-
				Average		Average					Average
				Exercise		Remaining					Remaining
	Shares			Price		Contract		Shares			Contract
June 30, 2020		942,575		$	1.65		6.5		2,328,303			0.9

Granted		18,139		$	2.80		9.5		209,852			2.3
Exercised		(224,326	)	$	1.49				(443,628	)
Cancelled/Forfeited		(391,288	)	$	1.73				-
March 31, 2021		345,100		$	1.71		8.6		2,094,527			0.9

Awards exercisable/
vested as of
March 31, 2021		115,940		$	1.53		8.1		1,517,323			—

Awards unexercisable/
unvested as of
March 31, 2021		229,160		$	1.81		8.9		577,204			0.9
		345,100							2,094,527

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

As of March 31, 2021, there was approximately $888,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including stock options and RSUs) granted. We expect to recognize the compensation cost as follows:

Fiscal Year Ending:	Stock Options		RSUs		Total
June 30, 2021 (remaining three months)	$	16,540	$	91,601	$	108,141
June 30, 2022		65,123		286,468		351,591
June 30, 2023		71,980		219,864		291,844
June 30, 2024		49,393		87,185		136,578
	$	203,036	$	685,118	$	888,154