Note 13 - Stock-based Compensation

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

13. Stock-Based Compensation

On September 15, 2010, the Board adopted the Contango ORE, Inc. Equity Compensation Plan (the “2010 Plan”).   On November 10, 2022, the stockholders of the Company approved and adopted the Second Amendment (the “Second Amendment”) to the Contango ORE, Inc. Amended and Restated 2010 Equity Compensation Plan (as amended, the “Amended Equity Plan”) which increased the number of shares of Common Stock that the Company may issue under the Amended Equity Plan by 600,000 shares.  Under the Amended Equity Plan, the Board may issue up to 2,600,000 shares of Common Stock and options to officers, directors, employees or consultants of the Company. Awards made under the Amended Equity Plan are subject to such restrictions, terms and conditions, including forfeitures, if any, as may be determined by the Board. 

As of March 31, 2023, there were 429,376 shares of unvested restricted Common Stock outstanding and 100,000 options to purchase shares of Common Stock outstanding issued under the Equity Plan. Stock-based compensation expense for the three and nine months ended March 31, 2023  was $607,818 and $2,206,239, respectively.  Stock-based compensation expense for the three and nine months ended March 31, 2022 was $897,742 and $3,175,903, respectively.  The amount of compensation expense recognized does not reflect cash compensation actually received by the individuals during the current period, but rather represents the amount of expense recognized by the Company in accordance with US GAAP.  All restricted stock grants are expensed over the applicable vesting period based on the fair value at the date the stock is granted.  The grant date fair value may differ from the fair value on the date the individual’s restricted stock actually vests.

Restricted Stock.  

On December 1, 2020, the Company granted an aggregate 20,000 shares of Common Stock to two new employees.  The restricted stock granted to such employees vests in equal installments over three years on the anniversary of the grant date.    As of March 31, 2023, 3,334 shares of restricted stock granted in December 2020 remained unvested.

On August 16, 2021, the Company granted 10,000 shares of Common Stock to a new employee.  The restricted stock granted to the employee vests in equal installments over three years on the anniversary of the grant date.  As of March 31, 2023, 6,667 shares of restricted stock granted in August 2021 remain unvested.

On November 11, 2021, the Company granted 123,500 restricted shares of Common Stock to its executives and non-executive directors. The restricted stock granted to the executives and non-executive directors vests between January 2023 and  January 2024.    As of  March 31, 2023, all 113,500 shares of such restricted stock granted remained unvested.

On February 2, 2022 the Company also granted to four employees a total of 12,000 shares of restricted stock.  These restricted shares vest between  January 2023 and January 2025.  As of  March 31, 2023, 6,000 shares of such restricted stock granted remained unvested.

In December 2022, the Company cancelled 167,500 shares of unvested restricted stock held by executives and the non-executive directors that were set to vest in  January 2023.  The Company also granted 209,375 restricted shares of common stock to its executives and non-executive directors. The restricted shares cancellation and the subsequent new grants were accounted for as modification to the original restricted stock grants.  The incremental fair value will be recognized over the vesting period.  The impact of the modification to the current quarter was immaterial.  All of the restricted stock granted in December 2022 vest in January 2025. As of  March 31, 2023, there were 209,375 shares of such restricted stock that remained unvested.

On February 7, 2023, the Company granted 90,500 restricted shares of Common Stock to its executives and non-executive directors. The restricted stock granted to the executives and non-executive directors vests in January 2025.  As of  March 31, 2023, all 90,500 shares of such restricted stock granted remained unvested.

As of March 31, 2023, the total compensation cost related to unvested awards not yet recognized was $3,952,212.  The remaining costs will be recognized over the remaining vesting period of the awards. 

Stock options.  There were no stock option exercises during the three and nine months ended March 31, 2023.  There were also no stock option exercises during the three and nine months ended March 31, 2022.   The Company applies the fair value method to account for stock option expense. Under this method, cash flows from the exercise of stock options resulting from tax benefits in excess of recognized cumulative compensation cost (excess tax benefits) are classified as financing cash flows.  All employee stock option grants are expensed over the stock option’s vesting period based on the fair value at the date the options are granted. The fair value of each option is estimated as of the date of grant using the Black-Scholes options-pricing model (Level 2 of the fair value hierarchy).  As of  March 31, 2023, the stock options had a weighted-average remaining life of 1.77 years. All of the compensation cost related to these stock options had been recognized as of March 31, 2023.

  A summary of the status of stock options granted under the Equity Plan as of  March 31, 2023 and changes during the nine months then ended, is presented in the table below: 

		Nine Months Ended
		March 31, 2023
		Shares Under Options		Weighted Average Exercise Price
Outstanding as of June 30, 2022		100,000	$	14.50
Granted		—
Exercised		—
Forfeited		—
Outstanding at the end of the period		100,000	$	14.50
Aggregate intrinsic value	$	1,032,000
Exercisable, end of the period		100,000
Aggregate intrinsic value	$	1,032,000
Available for grant, end of period		473,386
Weighted average fair value per share of options granted during the period	$	—