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Equity Incentive Plans

9 Months Ended

Mar. 31, 2022

15. Equity Incentive Plans

Aytu 2015 Plan. On June 1, 2015, the Company’s stockholders approved the Aytu BioPharma 2015 Stock Option and Incentive Plan (the “Aytu 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 Aytu 2015 Plan. On February 13, 2020, the Company’s stockholders approved an increase to 5.0 million total shares of common stock in the Aytu 2015 Plan. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 3 to 4 years. The restricted stock awards have a vesting period ranging from 4 to 10 years, whereas the restricted stock units have a vesting period of 4 years. As of March 31, 2022, the Company had 2,401,186 shares available for grant under the Aytu 2015 Plan.

Neos 2015 Plan. Pursuant to the Neos Acquisition, the Company assumed 69,721 stock options and 35,728 restricted stock units (RSUs) previously granted under Neos plan. Accordingly, on April 19, 2021, the Company registered 105,449 shares of its common stock under the Neos Therapeutics, Inc. 2015 Stock Options and Incentive Plan (the "Neos 2015 Plan") with the SEC. The terms and conditions of the assumed equity securities will stay the same as they were under the previous Neos plan. The Company allocated costs of the replacement awards attributable to pre- and post-combination service periods. The pre-combination service costs were included in the considerations transferred. The remaining costs attributable to the post-combination service period are being recognized as stock-based compensation expense over the remaining terms of the replacement awards. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 1 to 4 years. As of March 31, 2022, the Company had 43,151 shares available for grant under the Neos 2015 Plan.

Stock Options

Stock option activity is as follows:


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual
	Options	Exercise Price		Life in Years
Outstanding June 30, 2021	109,588	$	14.52	8.07
Forfeited/Cancelled	(15,132)		8.03
Expired	(10,599)		9.16
Outstanding at March 31, 2022	83,857	$	16.37	7.79

Exercisable at March 31, 2022	55,611	$	20.51	7.68

As of March 31, 2022, there was $0.2 million total unrecognized compensation costs adjusted for estimated forfeitures, related to non-vested stock options granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.8 years.

Restricted Stock

During the nine months ended March 31, 2022, the Company granted a total of 295,000 shares of restricted stock, with certain accelerated vesting conditions, to members of its management team pursuant to the Aytu 2015 Plan, of which 1/3 vest on the grant date and 1/12 on the first day of each quarter thereafter, subject to continuing employment with the Company through each vesting date. These restricted stock grants have a grant date fair value ranging from $2.65 per-share to $4.02 per-share.

Restricted stock activity under the Aytu 2015 Plan is as follows:


		Weighted
		Average Grant
	Number of	Date Fair
	Shares	Value
Unvested at June 30, 2021	1,955,268	$	7.83
Granted	295,000		3.67
Vested	(112,787)		8.03
Unvested at March 31, 2022	2,137,481	$	7.25

As of March 31, 2022, there was $10.8 million total unrecognized compensation costs adjusted for estimated forfeitures, related to non-vested restricted stock granted under the Company’s equity incentive plan. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.9 years.

The Company previously issued 158 shares of restricted stock outside the Aytu 2015 Plan, which vest in July 2026. On January 17, 2022, the Company granted 100,000 shares of restricted stock to a member of its management team outside of the Aytu 2015 Plan, of which 1/3 vest on January 17, 2023 and 1/12 each quarter thereafter, subject to continuing employment with the Company through each vesting date until January 17, 2025. This restricted stock grant has a grant date fair value of $1.35 per-share. As of March 31, 2022, there was $1.0 million total unrecognized costs adjusted for estimated forfeitures, related to non-vested restricted stock outside of the Company’s equity incentive plan. The unrecognized compensation cost is expected to be recognized over a weighted average period of 4.1 years.

Restricted Stock Units

During the nine months ended March 31, 2022, the Company granted a total of 150,000 shares of restricted stock units (“RSUs”), to members of its management pursuant team to the Aytu 2015 Plan, of which 1/3 vest on the grant date and 1/12 on the first day of each quarter thereafter, subject to continuing employment with the Company through each vesting date. These RSUs have a grant date fair value ranging from $1.08 per-share to $1.86 per-share.

RSUs activity is as follows:



		Weighted
		Average Grant
	Number of	Date Fair
	Shares	Value
Unvested at June 30, 2021	78,318	$	7.20
Granted	150,000		1.33
Vested	(10,908)		6.50
Forfeited	(62,922)		7.44
Unvested at March 31, 2022	154,488	$	1.45

As of March 31, 2022, there was $0.2 million total unrecognized compensation costs adjusted for any estimated forfeitures, related to non-vested RSUs granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.8 years.

Stock-based compensation expense related to the fair value of stock options and restricted stock and RSUs was included in the statements of operations as set forth in the below table:


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021		2022		2021

					(In thousands)
Cost of sales	$	7	$	9	$	24	$	9
Research and development		73		3		467		3
Selling and marketing		23		5		51		5
General and Administrative		1,167		1,505		3,476		2,468
Total stock-based compensation expense	$	1,270	$	1,522	$	4,018	$	2,485