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Stock-Based Compensation

3 Months Ended

Sep. 30, 2021

8. 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”), 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 three months ended September 30, 2021 and 2020 included in selling, general and administrative (“SG&A”) expenses in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income:

	Three Months Ended September 30,
	2021		2020

Stock options	$	24,128	$	15,220
RSUs		92,463		121,629
Total	$	116,591	$	136,849

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 $2,155 and $1,091 for the three months ended September 30, 2021 and 2020, respectively, is included in SG&A expenses 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, 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.

No stock options or RSUs were granted during the three-month periods ended September 30, 2021 and 2020.

Information Regarding Current Share-Based Compensation Awards

A summary of the activity for share-based compensation awards in the three months ended September 30, 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, 2021		432,927		$	2.01		8.8		1,761,885			0.9

Granted		-		$	-				-
Exercised		-		$	-				-
Cancelled/Forfeited		(8,700	)	$	1.93				(5,534	)
September 30, 2021		424,227		$	2.01		8.5		1,756,351			0.9

Awards exercisable/
vested as of
September 30, 2021		110,943		$	1.55		7.7		1,163,298			—

Awards unexercisable/
unvested as of
September 30, 2021		313,284		$	2.17		8.8		593,053			0.9
		424,227							1,756,351

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

As of September 30, 2021, there was approximately $963,000 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, 2022 (remaining nine months)	$	79,443	$	216,566	$	296,009
June 30, 2023		116,117		256,102		372,219
June 30, 2024		94,273		132,045		226,318
June 30, 2025		33,885		34,707		68,592
	$	323,718	$	639,420	$	963,138