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Equity Incentive Plan | 12 Months Ended
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Jun. 30, 2020
Share-based Payment Arrangement [Abstract] |
Equity Incentive Plan | 2015 Stock Option and Incentive Plan. On June 1, 2015, the Company’s stockholders approved the 2015 Stock Option and Incentive Plan (the “2015 Plan”), which, as amended in July 2017, provides for the award of stock options, stock appreciation rights, restricted stock and other equity awards for up to an aggregate of 3.0 million shares of common stock. The shares of common stock underlying any awards that are forfeited, canceled, reacquired by Aytu prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the 2015 Plan will be added back to the shares of common stock available for issuance under the 2015 Plan. As of June 30, 2020, we have 4,837 shares that are available for grant under the 2015 Plan. On December 23, 2019, the Company filed Form S-4 related to the proposed Innovus merger, in which shareholders are asked to approve an increase to 5.0 million total shares of common stock in the 2015 Plan. As of the date of this report, Aytu shareholders approved the proposal to increase the total number of common shares in the 2015 Plan. Stock Options Employee Stock Options: In June 2020, the Company granted 200,000 shares of stock options to executive officers pursuant to the 2015 Plan, which vest over four years. Compensation expense related to these options will be fully recognized over the four-year vesting period. In June 2020, the Company granted 50,000 shares of stock options to board of directors pursuant to the 2015 Plan, which vest on the one employee pursuant to the 2015 Plan, which vest over four years. Compensation expense related to these options will be fully recognized over the four-year vesting period. In June 2020, the Company granted 180,000 shares of stock options to board of directors pursuant to the 2015 Plan, which vest on the one-year anniversary of the grant date. Compensation expense related to these options will be fully recognized over the one-year vesting period. In January 2020, the Company granted 12,500 shares of stock options to 5 employees pursuant to the 2015 Plan, which vest immediately upon grant. Compensation expense related to these options were fully recognized in the three months ended March 31, 2020. In November 2019, the Company granted 327,000 shares of stock options to 28 employees pursuant to the 2015 Plan, which vest over four years. Compensation expense related to these options will be fully recognized over the four-year vesting period. The fair value of the options is calculated using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding components of the model, including the estimated fair value of the underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to valuation. Aytu estimates the expected term based on the average of the vesting term and the contractual term of the options. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The fair value of all options granted during the year ended June 30, 2020 utilized the following range of assumptions:
|  | During the Year Ended June 30, 2020 |
Expected volatility |  |  | 100.00-182.16 | %
Expected term (years) |  |  | 1.-4.00 |
Risk-free interest rate |  |  | 0.41-1.82 | %
Dividend yield |  |  | 0.00 | %
Stock option activity is as follows:
|  | Number of Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life in Years |
Outstanding June 30, 2018 |  |  | 1,798 |  |  | $ | 325.97 |  |  |  | 6.95 |
Granted |  |  | 75,000 |  |  |  | 1.00 |  |  |  |  |
Exercised |  |  | - |  |  |  | - |  |  |  |  |
Forfeited/Canceled |  |  | (75,036 | ) |  |  | 1.16 |  |  |  |  |
Expired |  |  | (155 | ) |  |  | 328.00 |  |  |  |  |
Outstanding June 30, 2019 |  |  | 1,607 |  |  |  | 325.97 |  |  |  | 6.13 |
Granted |  |  | 769,500 |  |  |  | 1.24 |  |  |  |  |
Exercised |  |  | (5,000 | ) |  |  | 0.97 |  |  |  |  |
Forfeited/Canceled |  |  | - |  |  |  | - |  |  |  |  |
Expired |  |  | (170 | ) |  |  | 328.00 |  |  |  |  |
Outstanding June 30, 2020 |  |  | 765,937 |  |  |  | 1.85 |  |  |  | 9.67 |
Exercisable at June 30, 2020 |  |  | 8,937 |  |  | $ | 53.15 |  |  |  | 8.92 |
The following table details the options outstanding at June 30, 2020 by range of exercise prices:
| Range of Exercise Prices |  |  | Number of Options Outstanding |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life of Options Outstanding |  |  | Number of Options Exercisable |  |  | Weighted Average Exercise Price |
| $ | 0.97 |  |  |  | 7,500 |  |  | $ | 0.97 |  |  |  | 9.52 |  |  |  | 7,500 |  |  | $ | 0.97 |
|  | 0.98 |  |  |  | 327,000 |  |  |  | 0.98 |  |  |  | 9.37 |  |  |  | - |  |  |  | 0.98 |
|  | 1.45 |  |  |  | 430,000 |  |  |  | 1.45 |  |  |  | 9.94 |  |  |  | - |  |  |  | 1.45 |
|  | 280.00 |  |  |  | 76 |  |  |  | 280.00 |  |  |  | 6.84 |  |  |  | 76 |  |  |  | 280.00 |
| $ | 328.00 |  |  |  | 1,361 |  |  | $ | 328.00 |  |  |  | 5.70 |  |  |  | 1,361 |  |  | $ | 328.00 |
|  |  |  |  |  | 765,937 |  |  | $ | 1.85 |  |  |  | 9.67 |  |  |  | 8,937 |  |  | $ | 53.15 |
As of June 30, 2020, there was $669,000 of total unrecognized stock-based compensation expense related to employee non-vested stock options. The Company expects to recognize this expense over a weighted-average period of 2.80 years. As of June 30, 2019, there was $7,000 of total unrecognized stock-based compensation expense related to employee non-vested stock options. The Company expected to recognize this expense over a weighted-average period of 0.32 years. As of Jun 30, 2020, the aggregate intrinsic value of the stock options outstanding was approximately $0.1 million. Restricted Stock Restricted stock activity is as follows:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Weighted Average Remaining Contractual Life in Years |
Unvested at June 30, 2018 |  |  | 37,200 |  |  | $ | 39.80 |  |  |  | 9.4 |
Granted |  |  | 2,772,022 |  |  | $ | 1.30 |  |  |  |  |
Vested |  |  | – |  |  |  | – |  |  |  |  |
Forfeited |  |  | (463,008 | ) |  | $ | 1.23 |  |  |  |  |
Unvested at June 30, 2019 |  |  | 2,346,214 |  |  | $ | 1.83 |  |  |  | 9.1 |
Granted |  |  | 1,952,912 |  |  | $ | 1.06 |  |  |  |  |
Vested |  |  | (114,610 | ) |  | $ | 1.79 |  |  |  |  |
Forfeited |  |  | - |  |  |  | - |  |  |  |  |
Unvested at June 30, 2020 |  |  | 4,184,516 |  |  | $ | 1.47 |  |  |  | 6.4 |
Activity during Year Ended June 30, 2020
● | In January 2020, the Company issued 75,000 shares of restricted stock to an employee pursuant to the 2015 Plan, which vest in January 2030.
● | In January 2020, the Company issued 10,000 shares of restricted stock to a director pursuant to the 2015 Plan, which vest in November 2027.
● | In January 2020, The Company issued 200,000 shares of restricted stock to an employee pursuant to the 2015 Plan, which vest in November 2021.
● | In February 2020, The Company issued 783,000 shares of restricted stock to employees pursuant to the 2015 Plan, which vest in February 2021.
● | In June 2020, The Company issued 700,000 shares of restricted stock to executives pursuant to the 2015 Plan, of which 25% vests on June 7, 2021, with an additional 6.25% of the total shares vesting quarterly thereafter, subject to continued service through each vesting date until June 7, 2024.
● | In June 2020, The Company issued 10,000 shares of restricted stock to a director pursuant to the 2015 Plan, which vest in June 2021.
● | In June 2020, The Company issued 175,000 shares of restricted stock to employees pursuant to the 2015 Plan, of which 25% vests on June 7, 2021, with an additional 6.25% of the total shares vesting quarterly thereafter, subject to continued service through each vesting date until June 7, 2024.
● | 114,610 shares of restricted stock were exchanged with common stock due to employee turnover, and the Company recognized an increase in aggregate stock compensation expense of $130,000.
Activity During the Year Ended June 30, 2019
● | In October 2018, the Company issued 2,707,022 shares of restricted stock to executives, directors, employees pursuant to the 2015 Plan, which vest in October 2028.
● | In February 2019, The Company issued 65,000 shares of restricted stock to a director pursuant to the 2015 Plan, which vest in February 2029.
● | 372,408 shares of restricted stock were exchanged with common stock, and the Company recognized an increase in aggregate stock compensation expense of $371,000.
● | 90,600 shares of restricted stock were forfeited due to employee turnover.
Under the 2015 Plan, there was $5,035,000 of total unrecognized stock-based compensation expense related to the non-vested restricted stock as of June 30, 2020. The Company expects to recognize this expense over a weighted-average period of 6.37 years. As of June 30, 2020, the aggregate remaining intrinsic value for the Company’s restricted stock units was $5.9 million. The Company previously issued 1,540 shares of restricted stock outside the Company’s 2015 Plan, which vest in July 2026. The unrecognized expense related to these shares was $1,197,761 as of June 30, 2020 and is expected to be recognized over the weighted average period of 6.02 years. Stock-based compensation expense related to the fair value of stock options and restricted stock was included in the statements of operations as selling, general and administrative expenses as set forth in the table below. Aytu determined the fair value of stock compensation as of the date of grant using the Black-Scholes option pricing model and expenses the fair value ratably over the service period which is commensurate with vesting period. The following table summarizes stock-based compensation expense for the stock option and restricted stock issuances for fiscal 2020 and 2019:
Selling, general and administrative: |  | 2020 |  |  | 2019 |
Stock options |  | $ | 80,000 |  |  | $ | 125,000 |
Restricted stock |  |  | 999,000 |  |  |  | 897,000 |
Total stock-based compensation expense |  | $ | 1,079,000 |  |  | $ | 1,022,000 |

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