Stock-Based Compensation

9 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 4 - 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-month periods presented:

	March 31, 2021			March 31, 2020
Expected term (years)		6.00			6.00
Risk-free interest rate		0.12	%		1.50	%
Expected volatility		46.30	%		45.00	%
Dividend yield		0	%		0	%

A summary of option activity for the nine months ended March 31, 2021 is presented below:

Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at July 1, 2020		2,962,833		$	1.82		9.06
Granted		234,000			3.97		9.59
Terminated		(286,708	)		2.29		-
Outstanding at March 31, 2021		2,910,125			1.95		8.42

The weighted-average grant-date fair value of options granted during the nine month period ended March 31, 2021 was $1.75. The options contained time-based vesting conditions satisfied over periods ranging from two to five years from the grant date.

The Company recognized $221,168 and $100,375 in expense related to the Plan for the three month periods ended March 31, 2021 and 2020, respectively. The Company recognized $650,656 and $380,620 in expense related to the Plan for the nine month periods ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there was approximately $976,000 of total unrecognized compensation cost for employees and non-employees related to nonvested options. That cost is expected to be recognized through June 2025.