STOCKHOLDERS’ EQUITY

12 Months Ended

Jun. 30, 2022

Equity [Abstract]

STOCKHOLDERS’ EQUITY

(4) STOCKHOLDERS’ EQUITY

(a) Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for the years ended June 30: 

	2022		2021
Cost of Goods Sold	$	115,021	$	113,659
Research and Development Expenses		218,847		171,447
Selling, General and Administrative Expenses		561,626		448,824
Stock Based Compensation Expense	$	895,494	$	733,930

As of June 30, 2022, the unrecognized compensation costs related to options vesting in the future is $534,653. No compensation has been capitalized because such amounts would have been immaterial. There was no net income tax benefit recognized related to such compensation for the years ended June 30, 2022, or 2021, as the Company is currently in a loss position. There were 614,500 stock options granted during the year ended June 30, 2022, and 630,000 stock options granted during the year ended June 30, 2021.

The Company uses the Black-Scholes option-pricing model as the most appropriate method for determining the estimated fair value for the stock awards. The Black-Scholes method of valuation requires several assumptions: (1) the expected term of the stock award; (2) the expected future stock volatility over the expected term; and (3) risk-free interest rate. The expected term represents the expected period of time the Company believes the options will be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock and the risk-free interest rate is based on the U.S. Zero-Bond rate. The Company utilizes a forfeiture rate based on an analysis of the Company’s actual experience. The fair value of options at date of grant was estimated with the following assumptions for options granted in fiscal year 2022:

	Year Ended
	June 30, 2022
Assumptions:
Option life		5.3 years
Risk-free interest rate		3.0%
Weighted average stock volatility		100%
Dividend yield		0
Weighted average fair value of grants	$	2.11

(b)        Common Stock Issued for Services

In December 2021, the Company issued 9,095 shares of its common stock to its Chief Financial Officer as compensation for services performed. The company recognized $20,000 of stock based compensation expense during the three months ended December 31, 2021 relating to these common stock shares.

(c)        Stock Option Plans

The type of share-based payments currently utilized by the Company is stock options.

The Company has various stock option and other compensation plans for directors, officers and employees. The Company has the following stock option plans outstanding as of June 30, 2022: The Precision Optics Corporation, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), the Precision Optics Corporation, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) and the Precision Optics Corporation, Inc. 2006 Equity Incentive Plan (the “2006 Plan”). Vesting periods under each of the Plans are at the discretion of the Board of Directors and typically average three years and in some instances are subject to future performance criteria. Options under these Plans are granted at fair market value on the date of grant and typically have an initial term of ten years from the date of grant, subject to certain cancellation provisions including employment termination. As of June 30, 2022, all shares of the Company’s common stock issuable pursuant to exercise of stock options granted pursuant to the three plans have been registered by filing of Registration Statements on Form S-8 with the Securities and Exchange Commission.

On April 8, 2022, the Shareholders approved the 2022 Plan which provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. A maximum 1,000,000 shares of the Company’s common stock may be issued under the 2022 Plan. At June 30, 2022, there were no stock options outstanding and 1,000,000 shares of common stock were available for future grants under the 2022 Plan.

On May 10, 2021, the Board of Directors approved the 2021 Plan which provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. A maximum 1,000,000 shares of the Company’s common stock may be issued under the 2021 Plan. At June 30, 2022, a total of 784,502 stock options are outstanding and 206,403 shares of common stock were available for future grants under the 2021 Plan.

The 2011 Plan provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. On April 16, 2015, the Board of Directors approved an amendment to the 2011 Equity Incentive Plan which increased the maximum number of shares of the Company’s common stock that may be awarded and issued under the Plan from 325,000 to 1,825,000, an increase of 1,500,000 shares. On May 1, 2019, the Board of Directors approved an amendment to the 2011 Equity Incentive Plan which increased the maximum number of shares of our common stock that may be awarded and issued under the Plan from 1,825,000 to 2,825,000, an increase of 1,000,000 shares. At June 30, 2022, a total of 1,884,800 stock options are outstanding and no shares of common stock were available for future grants under the 2011 Plan.

The 2006 Plan provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. At June 30, 2022, a total of 44,698 stock options are outstanding, and no shares of common stock were available for future grants under the 2006 Plan.

The following tables summarize stock option activity for the years ended June 30, 2022 and 2021: 

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Life
Outstanding at July 1, 2020		2,065,200		$	0.95		6.59 years
Grants		630,000		$	1.65
Exercised		(112,000	)	$	0.57
Cancellations		(5,000	)	$	1.30
Outstanding at June 30, 2021		2,578,200		$	1.13		6.73 years
Grants		614,500		$	1.74
Exercised		(295,700	)	$	1.05
Cancellations		(183,000	)	$	1.60
Outstanding at June 30, 2022		2,714,000		$	1.33		7.08 years

Information related to the stock options outstanding as of June 30, 2022 is as follows: 

Range of Exercise Prices		Number of Shares		Weighted- Average Remaining Contractual Life (years)		Weighted- Average Exercise Price		Exercisable Number of Shares		Exercisable Weighted- Average Exercise Price
$	0.48		60,000		3.75	$	0.48		60,000	$	0.48
$	0.50		80,000		3.98	$	0.50		80,000	$	0.50
$	0.55		15,000		5.76	$	0.55		15,000	$	0.55
$	0.70		100,000		6.10	$	0.70		100,000	$	0.70
$	0.73		630,000		4.67	$	0.73		630,000	$	0.73
$	0.85		6,000		0.51	$	0.85		6,000	$	0.85
$	0.90		36,000		1.94	$	0.90		36,000	$	0.90
$	1.25		45,000		7.72	$	1.25		30,000	$	1.25
$	1.30		441,000		6.95	$	1.30		398,500	$	1.30
$	1.40		70,000		8.39	$	1.40		70,000	$	1.40
$	1.42		100,000		7.20	$	1.42		66,667	$	1.42
$	1.45		5,000		8.69	$	1.45		1,667	$	1.45
$	1.50		70,000		7.44	$	1.50		70,000	$	1.50
$	1.68		540,000		8.93	$	1.68		540,000	$	1.68
$	1.87		30,000		9.87	$	1.87		–	$	1.87
$	2.00		100,000		8.82	$	2.00		10,000	$	2.00
$	2.09		246,000		9.61	$	2.09		–	$	2.09
$	2.26		140,000		9.39	$	2.26		90,000	$	2.26
$	0.48–2.26		2,714,000		7.08	$	1.33		2,203,834	$	1.33

The aggregate intrinsic value of the Company’s “in-the-money” outstanding and exercisable options as of June 30, 2022, was $1,844,170 and $1,779,345, respectively.

(d) Sale of Stock in April 2020

On April 14, 2020, the Company entered into agreements with accredited investors for the sale and purchase of 200,000 unregistered shares of its common stock, $0.01 par value at a purchase price of $1.25 per share. The Company received $250,000 in gross proceeds from the offering. The Company is using the net proceeds from this placement for general working capital purposes.

In connection with the placement, the Company also entered into a registration rights agreement with the investors, whereby the Company was obligated to file a registration statement with the Securities Exchange Commission on or before 120 calendar days after April 14, 2020, to register the resale by the investors of 200,000 shares of our common stock purchased in the placement. The registration statement was filed with the Securities and Exchange Commission on August 14, 2020, and became effective on November 4, 2020.

(e) Sale of Stock in October 2021

On October 1, 2021, the Company entered into agreements with accredited investors for the sale and purchase of 937,500 unregistered shares of its common stock, $0.01 par value at a purchase price of $1.60 per share. The Company used the net proceeds from this placement to partially fund the October 4, 2021, acquisition of the operating assets of Lighthouse Imaging, LLC with an effective date of October 4, 2021.

In conjunction with the placement, the Company also entered into a registration rights agreement with the investors, whereby it is obligated to file a registration statement with the Securities and Exchange Commission on or before 120 calendar days after October 4, 2021 to register the resale by the investors of 937,500 shares of its common stock purchased in the placement. The registration statement was filed on January 31, 2022 and became effective on February 11, 2022. 

(f) Issuance of Common Stock in Business Acquisition

On October 4, 2021, the Company issued 2,500,000 unregistered shares of its common stock to the sellers of Lighthouse Imaging, LLC, valued on that date at $1.60 per share or $4,000,000, as shown in the accompanying statement of stockholders’ equity for the fiscal year ended June 30, 2022.

In conjunction with the issuance, the Company agreed to use reasonable efforts to effectuate within a reasonable period after the October 4, 2021 business acquisition date a registration statement with the Securities and Exchange Commission to register the resale by the sellers of 2,500,000 shares of its common stock issued in the business acquisition. The registration statement was filed on June 13, 2022 and became effective on July 14, 2022.