Stock-Based Compensation

3 Months Ended

Sep. 30, 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 used in the BSM assumptions are based on historical volatility of the Company’s stock prices. The expected term of stock options granted has been estimated using the simplified method because the Company is generally unable to rely on its limited historical exercise data or alternative information as a reasonable basis upon which to estimate the expected term of such options. 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. Accordingly, $30,953 was reversed related to forfeited options for the three months ended September 30, 2022. There were no forfeited options for the three months ended September 30, 2021.

A summary of option activity for the three months ended September 30, 2022 is presented below:

Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at July 1, 2022		3,163,190		$	1.89		7.34
Granted		-			-		-
Terminated		(47,667	)		2.84		8.55
Outstanding and expected to vest at September 30, 2022		3,115,523			1.88		7.07

During the quarter ended September 30, 2022, no options were issued and 47,667 options were terminated.

For the three months ended September 30, 2022 and 2021, the Company recognized $175,779 and $389,085, 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 and restricted stock awards are expected to vest ratably over a twelve-month period. 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. On September 28, 2022, the restricted shares became fully vested and are expected to be issued in the near term.

Accordingly, $42,200 related to the stock option grants made to the board members, was recognized as stock-based compensation expense for the three months ended September 30, 2022. The Company also recognized $150,000 as stock-based compensation expense related to the restricted stock unit grants made to the board members for the three months ended September 30, 2022, respectively. The cost related to the grants made to board members is expected to be recognized through September of 2022.

As of September 30, 2022, there was approximately $171,964 of total unrecognized compensation cost for employees and non-employees related to nonvested options. These costs are expected to be recognized through March 2026.