Equity Transactions

9 Months Ended

Mar. 31, 2022

Equity Transactions

Equity Transactions

9. Equity Transactions

Stock Options

The following table summarizes the activity relating to the Company’s stock options for the nine months ended March 31, 2022:

	Options			Weighed- Average Exercise Price			Weighted Remaining Average Contractual Term		Aggregate Intrinsic Value
Outstanding at June 30, 2021		755,200		$	4.34			4.4	$	2,569,232
Granted		1,763,169			6.69			9.5		—
Options Expired		(7,200	)		29.17			0.0
Options Forfeited		(73,125	)		(13.91	)		—		—
Outstanding at March 31, 2022		2,438,044		$	8.63			7.9	$	678,545
Exercisable at March 31, 2022		675,825		$	10.84			6.2	$	18,480

The fair value of each option grant on the date of grant is estimated using the Black-Scholes option. The pricing model reflects the following weighted-average assumptions for the nine months ended March 31, 2022 and 2021:

	March 31, 2022	March 31, 2021
Expected life of options (In years)	5	5
Expected volatility	75.12%	77.05%
Risk free interest rate	1.6%	0.5%
Dividend Yield	0%	0%

Expected volatility is based on the historical volatilities of the daily closing price of the common stock of three comparable companies and the expected life of options is based on historical data with respect to employee exercise periods. The Company accounts for forfeitures as they are incurred.

The Company recorded stock option-based compensation expense of approximately $930,000 and $804,000 for three-month periods ended March 31, 2022 and 2021, respectively; and of approximately $4.0 million and $2.3 million for nine-month periods ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, there was approximately $7.1 million of unrecognized compensation cost related to non-vested stock options granted to Directors and Officers and other employees, which is expected to be recognized over a weighted-average period of approximately 4.1 years.

The following is a summary of stock options listed by exercise price, the number options outstanding and exercisable as of March 31, 2022:

	Exercise Price	Outstanding		Weighted Average Contract Life		Exercisable
$	2.74		124,167		5.0		—
$	2.80		7,200		2.8		7,200
$	3.20		248,167		5.0		24,833
$	3.24		25,000		5.0		—
$	3.75		4,800		1.8		4,800
$	6.25		1,600		1.6		1,600
$	7.50		25,600		4.0		25,600
$	7.74		1,365,835		4.4		273,167
$	8.75		1,600		2.0		1,600
$	9.54		800		3.5		800
$	9.90		800		3.5		800
$	12.50		4,000		0.8		4,000
$	13.91		618,475		3.7		321,425
$	25.00		1,600		0.5		1,600
$	26.25		2,000		0.2		2,000
$	27.50		—		—		—
$	28.75		1,600		0.3		1,600
$	31.25		—		—		—
$	42.09		4,800		3.8		4,800
			2,438,044				675,825

Stock Warrants

The following table summarizes warrant activity during the nine months ended March 31, 2022:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Aggregate Intrinsic Value
Outstanding and exercisable at June 30, 2021		158,761		$	10.37		3.1	$	1,765,437
Granted		361,002			5.82		5.0		—
Expired		(8,300	)		62.50		—		—
Exercised		—			—		—		—
Outstanding and exercisable at March 31, 2022		511,463		$	6.31		4.0	$	271,187

Of the above warrants, 1,091 expire in the fiscal year ending June 30, 2022, 4,815 expire in the fiscal year ending June 30, 2023, 2,714 expire in the fiscal year ending June 30, 2025, and 502,843 expire in the fiscal year ending June 30, 2026.

Issuance of common stock for cash

On August 11, 2021, the Company closed a registered public offering issuing 2,500,000 of its Class A common stock at $8.00 per share, resulting in net proceeds to the Company of approximately $17.8 million, net of issuance costs of approximately $2.2 million.

On September 24, 2021, the Company issued 92,000 of its Class A common stock at $8.00 per share in connection with the underwriters’ exercise of its over-allotment option in for the August 2021 registered public offering, resulting in net proceeds to the Company of approximately $707,000, net of issuance cost of approximately $29,000.

Issuance of Shares for Services

On August 20, 2021, the Company awarded 58,759 restricted stock units (“RSUs”) to the President and CEO under the Company’s 2019 Omnibus Incentive Equity Plan (the “2019 Omnibus Plan”) as his salary for the period from April 27, 2021, the date of his appointment, through December 31, 2021. The number of RSUs awarded was based on a prorated annual base salary of $600,000 at a 10% discount to the grant date fair value of $7.74 per share of the Company’s common stock. Each RSU awarded to the CEO entitles him to receive one share of common stock upon vesting. A total of 15,339 RSUs (representing the pro rata portion of the RSU award for the period from April 27, 2021 to June 30, 2021) vested at the grant date, 21,710 vested at September 30, 2021 and 21,710 vested at December 31, 2021. Accordingly, the common stock was issued to the CEO at each of the quarter end vesting dates.

The stock-based compensation expense related to these RSUs totaled $97,695 for the fiscal year ended June 30, 2021 and $384,454 for the nine month period ended March 31, 2022, respectively. There were no stock-based compensation expense related to these RSUs for the three month period ended March 31, 2022 and 2021.

Issuance of Stock Options

On August 20, 2021, the Company granted, under the 2019 Omnibus Plan, stock options to purchase 1,365,835 shares of common stock to the executive management team. Twenty percent (20%) of the shares underlying the options awarded vested on the grant date, and the remaining 80% vest equally over a 5-year period, on the first, second, third, fourth and fifth anniversary of the grant date. The exercise price of the options is $7.74 per share, the grant date fair value of the stock, and the options terminate on the earlier of the tenth anniversary of the grant date or the date as of which the options were fully exercised.

On February 1, 2022, the Company granted stock options to purchase 124,167 shares of common stock to a new employee. Twenty percent (20%) of the shares underlying the options awarded vested on the grant date, and the remaining 80% vest equally over a 5-year period, on the first, second, third, fourth and fifth anniversary of the grant date. The exercise price is $3.20 per share, the grant date fair value, and the options terminate on the tenth anniversary of the grant date.

During the three months ended March 31, 2022, the Company granted, stock options to purchase shares of common stock totaling 273,167 to four new employees.

The exercise prices per share are $3.20; $2.74 and $3.24, which were fair values of the Company’s common stock on the respective grant dates. Twenty percent (20%) of the shares underlying the options awarded vest on the one year anniversary of the grant date, and the remaining 80% vest in equal monthly installments over 48 month. options terminate on the tenth anniversary of the grant date or date as of which the options were fulling exercised.

Forfeiture of Stock Options

On August 27, 2021, the Chief Executive Officer forfeited unvested stock options to purchase up to 73,125 shares of common stock that were previously granted to him as compensation as an independent director of the board.