Stock-Based Compensation

3 Months Ended

Sep. 30, 2024

Stock-Based Compensation [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, restricted stock units, and deferred stock units to officers, employees, directors, consultants, agents, and independent contractors of the Company. The Company believes that such awards 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 four 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 estimates the fair value of each option award using a Black Scholes Model (“BSM”). 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.

No options were granted for the three months ended September 30, 2024 or 2023. As of September 30, 2024, there were approximately $50,052 of total unrecognized compensation costs for employees and non-employees related to nonvested options. These costs are expected to be recognized through December 2026.

A summary of options that vested in the three months ended September 30, 2024 is presented below:

Options	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at July 1, 2024		235,219		22.05		5.46
Additional vesting		3,577		9.50		8.23
Outstanding and expected to vest at September 30, 2024		238,796		20.96		5.29

On September 29, 2021, the board of directors approved changes to our director compensation program for fiscal year 2022 and beyond. The board instituted an annual cash retainer for directors in the amount of $48,000 per director with an additional retainer for the chair of our Compensation Committee and Audit Committee of $7,500 and $10,000, respectively. Directors can choose to receive deferred stock units in lieu of cash payments. For the three months ended September 30, 2024, $62,500 in deferred stock units were awarded and $13,875 in cash compensation was accrued.

On May 3, 2024, the board of directors of the Company approved an amendment to the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) to increase the number of shares available for issuance under the 2018 Plan by 508,488 shares and increase the number of shares that may be issued pursuant to the exercise of incentive stock options by 508,488 shares. The amendment to the 2018 Plan is intended to ensure that the Company can continue to provide an incentive to employees, directors and consultants by enabling them to share in the Company’s future growth. If approved by the stockholders, all of the additional shares would be available for grant as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or as nonqualified stock options, restricted stock awards, stock appreciation rights, or other kinds of equity-based compensation available under the 2018 Plan. The amendment to the 2018 Plan was approved by the Company’s stockholders at the Company’s special meeting on June 18, 2024.

As of September 30, 2024, the Company has 822,524 shares of common stock available for granting under the Plan.

On August 1, 2024, the Company issued 250,000 shares of common stock to a consultant under an agreement for activities related to potential future financing. The $720,000 market value of those shares is reflected in the Company’s common stock and additional paid in capital accounts and has been capitalized as deferred issuance costs and shown as a current asset as of September 30, 2024. These costs will be recognized as an expense against the proceeds of a potential future equity issuance, or amortized over the life of the debt of a potential future debt issuance, or if an equity or debt transaction is not executed, then expensed at the conclusion of the contract with the consultant in July 2025.