12.

Equity Incentive Plan

Share-based Compensation Plans

June 1, 2015,

the Company's stockholders approved the Aytu BioScience

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. On

February 13, 2020,

the Company's stockholders approved an increase to

5.0

million total shares of common stock in the

2015

Plan. As of

December 31, 2020

, we have

4,560,864

shares that are available for grant under the

2015

Plan.

Stock Options

Employee Stock Options:

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. There were

grants of stock options to employees during the

three

- and

six

-months ended

December 31, 2020

and

2019

Stock option activity is as follows:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Outstanding June 30, 2020		76,614		$	19.39		9.67	$	-
Granted		-			-
Exercised		-			-
Forfeited/Cancelled		(3,187	)		-
Expired		(2	)		-
Outstanding December 31, 2020		73,425			19.71		9.08		-
Exercisable at December 31, 2020		9,095		$	67.62		7.81	$	-

As of

December 31, 2020

, there was

$494,000

unrecognized option-based compensation expense related to non-vested stock options. The Company expects to recognize this expense over a weighted-average period of

2.68

years.

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, 2020		418,454		$	14.69		6.4
Granted
Vested		(52,743	)
Forfeited
Unvested at December 31, 2020		365,711		$	15.66		6.3

Under the

2015

Plan, there was

$4.3

million of total unrecognized stock-based compensation expense related to the non-vested restricted stock as of

December 31, 2020

. The Company expects to recognize this expense over a weighted-average period of

6.3

years. The Company previously issued

158

shares of restricted stock outside the Company's

2015

Plan, which vest in

July 2026.

The unrecognized expense related to these shares was

$1.1

million as of

December 31, 2020

and is expected to be recognized over the weighted average period of

5.5

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:

	Three Months Ended December 31,				Six Months Ended December 31,
Selling, general and administrative:	2020		2019		2020		2019
Stock options	$	94,000	$	2,000	$	166,000	$	7,000
Restricted stock		414,000		160,000		797,000		320,000
Total stock-based compensation expense	$	508,000	$	162,000	$	963,000	$	327,000