Note 10. Stock-Based Compensation

In June 2020, the Board of Directors adopted the 2020 Stock Incentive Plan, which provided for the grant of qualified incentive stock options and nonqualified stock options or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the purchase of up to 1,650,000 shares of the Company’s common stock. On October 22, 2021, the Company’s stockholders approved an increase of the total authorized shares to 3,650,000 shares. Other awards include restricted stock, restricted stock units, stock appreciation rights and other stock-based awards. Other stock-based awards are awards valued in whole or in part by reference to, or are otherwise based on, shares of common stock. Stock options generally vest over a four-year period, at achievement of a performance requirement, or upon change of control (as defined in the applicable plan). The awards expire in five to ten years from the date of grant. As of June 30, 2022 and 2021, the Company had 756,041 and 63,096, respectively, shares available for future issuance under the 2020 Stock Incentive Plan.

Stock Options

The Company grants non-qualified stock option awards under the 2020 Stock Incentive Plan to its directors, employees and consultants of the Company. These awards are subject to vesting requirements pursuant to the award and satisfaction of certain performance targets in some cases.

The Company estimates the fair value of stock-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables, such as assumptions the Company makes for the volatility of the Company’s common stock, the expected term of the stock options, the risk-free interest rate for a period that approximates the expected term, and the Company’s expected dividend yield. Each of these inputs is subjective and generally requires significant judgement to determine. Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award.

The following table provides the assumptions used in determining the fair value of option awards for the years ended June 30, 2022 and 2021:

Schedule of Fair Value Assumptions of Stock Options 

The following table summarizes stock option activity for the year ended June 30, 2022:

Schedule of Stock Awards Granted 

The weighted-average grant date fair value of options awarded during the fiscal years ended June 30, 2022 and 2021 was approximately $2.32 and $0.78, respectively, per share. As of June 30, 2022, unrecognized stock-based compensation expense related to unvested stock options totaled approximately $2,927,934, which is expected to be recognized over a weighted average period of 3.1 years.

Restricted Stock

In September 2020, the Company awarded 982,500 shares of restricted common stock to its former CEO, at a grant date fair value of $0.11 per share. The restrictions were subject to the satisfaction of certain performance targets and vesting requirements pursuant to the award and employment agreement.

The Company closed its IPO in May 2021 and the former CEO became entitled to the full vesting of his restricted common stock.

Schedule of Restricted Stock-based Awards Granted but Not Yet Vested

The aggregate fair value of restricted shares vested during the year ended June 30, 2021 totaled $106,437.

Stock-Based Compensation Expense

The Company recorded stock-based compensation expenses for the following years ended:

Schedule of Stock- Based Compensation Expenses