SHARE-BASED COMPENSATION

12 Months Ended

Jun. 30, 2025

Share-Based Payment Arrangement [Abstract]

11. SHARE-BASED COMPENSATION

Stock Option Plans

Our 2016 Equity Incentive Plan provides for the award of up to 1,500,000 shares of our common stock in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, restricted stock units, performance awards, and other stock-based awards. As of June 30, 2025, performance awards for 200,000 shares of common stock, non-qualified stock options for 372,000 shares of common stock, and 18,000 restricted shares of common stock have been granted under the 2016 Equity Incentive Plan.

Performance Awards

In October 2023, the Compensation Committee reallocated previously forfeited performance awards for 15,200 shares of common stock to other employees. The weighted average fair value of the performance awards reallocated in 2023 which were expected to vest was $10.17, calculated using the weighted average fair market value for each award, using a Monte Carlo simulation. During the fiscal years ended June 30, 2025 and 2024 we recorded share-based compensation expense of $28,000 and $106,000, respectively, related to outstanding performance awards. On June 30, 2025, there was approximately $28,000 of unrecognized compensation cost related to non-vested performance awards expected to be expensed over the weighted-average period of 1.0 year.

On July 1, 2024, it was determined by the Compensation Committee that the vesting of performance awards for 40,000 shares of common stock had been achieved. Each participant elected a net issuance to cover their individual withholding taxes and, therefore, we issued participants 25,134 shares of common stock and paid $273,000 of participant-related payroll tax liabilities.

The following is a summary of performance awards activity for the fiscal years ended June 30, 2025 and 2024:


	2025					2024
	Number of Shares			Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Grant Date Fair Value
Outstanding at July 1,		80,000		$	7.00		64,800	$	7.03

Granted		—			—		15,200		10.04
Vested		(40,000	)		7.39		—		—
Forfeited		—			—		—		—
Outstanding at June 30		40,000		$	6.65		80,000	$	7.00

Non-Qualified Stock Options

In December 2020, the Compensation Committee of our Board of Directors granted non-qualified stock options for 310,000 shares of our common stock to our directors and certain employees under the 2016 Equity Incentive Plan. Whether any stock options vest, and the amount that does vest, is tied to the completion of service periods that range from 18 months to 10.5 years at inception and the achievement of our common stock trading at certain pre-determined prices. We recorded compensation expense of $416,000 and $490,000 for the fiscal year ended June 30, 2025 and 2024, respectively, related to these options. The weighted average fair value of the stock option awards granted was $16.72, calculated using a Monte Carlo simulation. We recognize forfeitures for our non-qualified stock options as they occur. As of June 30, 2025, there was approximately $1.1 million of unrecognized compensation cost related to these non-vested non-qualified stock options expected to be expensed over the weighted-average period of 44.6 months.

In February 2021, the Compensation Committee of our Board of Directors granted non-qualified stock options for 62,000 shares of our common stock to our directors and certain employees under the 2016 Equity Incentive Plan. Whether any stock options vest, and the amount that does vest, was tied to the completion of service periods that ranged from 4 months to 1.3 years at inception and the achievement of our common stock trading at certain pre-determined prices. Of these stock options, the right to acquire 57,750 shares vested on July 1, 2021, as our common stock met the pre-determined prices set forth in the underlying agreements. We recorded compensation expense of $182,000 for the fiscal year ended June 30, 2021 related to these options. The weighted average fair value of the stock option awards granted was $3.16, calculated using a Monte Carlo simulation. In December 2021, the Compensation Committee of our Board of Directors granted 5,000 previously forfeited non-qualified stock options to another employee.

The following is a summary of non-qualified stock option activity under the 2016 Equity Incentive Plan for the fiscal year ended June 30, 2025 and 2024:


	2025					2024
	Number of Shares			Weighted-Average Exercise Price		Number of Shares			Weighted-Average Exercise Price
Outstanding at July 1,		267,750		$	42.11		298,937		$	42.19
Options granted		—			—		—			—
Options exercised		(4,250	)		27.50		—			—
Options forfeited/expired		(26,250	)		42.00		(31,187	)		42.88
Outstanding at June 30		237,250		$	42.38		267,750		$	42.11
Stock Options Exercisable at June 30,		79,750		$	32.27		57,750		$	27.50

The aggregate intrinsic value of options, which represents the cumulative difference between the fair market value of the underlying common stock and the option exercise prices, exercised was $82,000 in fiscal 2025. On June 30, 2025 the options outstanding and exercisable had intrinsic values of $299,000 and $907,000, respectively. On June 30, 2024 the options outstanding and exercisable had no intrinsic value.

Restricted Shares

In November 2024, the Compensation Committee awarded 18,000 restricted shares of common stock to our directors and certain employees under the 2016 Equity Incentive Plan. The shares vest ratably over five years from the date of grant. The fair value of the restricted shares on the date of grant was $857,000, based upon the closing price of our common stock on the date of grant. During the fiscal year ended June 30, 2025, we recorded $105,000 of compensation expense related to these restricted shares. As of June 30, 2025, there was approximately $753,000 of unrecognized compensation cost related to these restricted shares expected to be expensed over the weighted-average period of 53 months.

Employee Stock Purchase Plan

In September 2014, our Board approved the establishment of an Employee Stock Purchase Plan (the “ESPP”), which was approved by our shareholders at our 2014 Annual Meeting. The ESPP conforms to the provisions of Section 423 of the Internal Revenue Code, has coterminous offering and purchase periods of six months, and bases the pricing to purchase shares of our common stock on a formula so as to result in a per share purchase price that approximates a 15% discount from the market price of a share of our common stock at the end of the purchase period. Our Board of Directors also approved that 704,715 shares, be reserved for issuance pursuant to the ESPP. An amendment to the ESPP to extend its term for an additional ten years (through 2035) was approved by our Board in October 2023 and by our shareholders at our 2023 Annual Meeting.

During the fiscal years ended June 30, 2025 and 2024, shares totaling 1,593 and 3,004, respectively, were purchased pursuant to the ESPP and allocated to participating employees based upon their contributions at weighted- average prices of $26.42 and $16.64, respectively. On a cumulative basis, since the inception of the ESPP, employees have purchased a total of 37,095 shares. During the fiscal years ended June 30, 2025 and 2024, we recorded stock compensation expense in the amount of $7,000 and $9,000, respectively, relating to the ESPP.

PRO DEX INC 10-K