Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.22.1
Stock-Based Compensation
9 Months Ended
Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 3 - Stock-Based Compensation

 

The Company’s Equity Incentive Plan (the “Plan”) permits the grant of stock options, stock appreciation rights, restricted stock, or restricted stock units to officers, employees, directors, consultants, agents, and independent contractors of the Company. The Company believes that such awards better align the interests of its employees, directors, and consultants with those of its stockholders. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vest over two years from the grant date and generally have ten-year contractual terms. Certain option awards provide for accelerated vesting (as defined in the Plan).

 

The Company has reserved 4,600,000 shares of common stock to be available for granting under the Plan.

 

The Company estimates the fair value of each option award using a Black Scholes Model (“BSM”) that uses the weighted average assumptions included in the table below. Expected volatilities are based on historical volatility of comparable companies. The Company uses historical data to estimate option exercise within the valuation model or estimates the expected option exercise when historical data is unavailable. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future. When calculating the amount of annual compensation expense, the Company has elected not to estimate forfeitures and instead accounts for forfeitures as they occur.

 

The following table summarizes the assumptions used for estimating the fair value of the stock options granted for the nine months ended:

 

    March 31,
2022
    March 31,
2021
 
Expected term (years)     10.00       6.00  
Risk-free interest rate     1.75 - 2.2 %     0.12 %
Expected volatility     78% - 93 %     45% - 46.3 %
Dividend yield     0 %     0 %

 

A summary of option activity for the nine months ended March 31, 2022 is presented below:

 

Options   Number of
Shares
    Weighted Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term
(in years)
 
Outstanding at July 1, 2021     3,222,125     $ 1.96       8.34  
Granted     125,024       1.76       9.51  
Cancelled     (139,125 )     3.09       8.91  
Outstanding and expected to vest at March 31, 2022     3,208,024       1.91       7.61  

 

The weighted-average grant-date fair value of options granted during the nine months ended March 31, 2022 as $1.76. The options contained time-based vesting conditions satisfied over four years from the grant date.

 

For the three months ended March 31, 2022 and 2021, the Company recognized $414,746 and $221,168, in expense related to the Plan, respectively. For the nine months ended March 31, 2022 and 2021, the Company recognized $1,226,357 and $650,656 in expense related to the Plan, respectively.  

 

On September 28, 2021, the Board approved certain stock awards to its board members in the form of stock options and restricted stock. The stock option awards are expected to vest ratably over twelve-month period from beginning September 28, 2021 through September 28, 2022. The restricted stock awards are expected to vest over a twelve-month period beginning July 1, 2021 through June 30, 2022. The total approved compensation was $172,702 in stock options and $600,000 in restricted stock. The number of options was determined based on the fair value of the Company’s share price as of the date of grant. The Company determined that there will be 337,078 of restricted shares issued upon vesting, based on the fair value of the Company’s share price on the grant date.

 

Accordingly, $43,176 and $87,310 related to the stock option grants made to the board members, was recognized as stock-based compensation expense for the three and nine months ended March 31, 2022. The Company also recognized $150,000 and $450,000 as stock-based compensation expense related to the restricted stock unit grants made to the board members for the three and nine months ended March 31, 2022, respectively. The cost related to the grants made to board members is expected to be recognized through September of 2022.

 

As of March 31, 2022, there was approximately $610,011 of total unrecognized compensation cost for employees and non-employees related to nonvested options. These costs are expected to be recognized through March 2026.