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

As of June 30, 2025, the unrecognized compensation costs related to options vesting in the future was $1,409,980. 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, 2025, or 2024, as the Company is currently in a loss position. There were 520,000 stock options granted during the year ended June 30, 2025, and 285,527 stock options granted during the year ended June 30, 2024.

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 2025:

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

The Company has four stock option plans outstanding as of June 30, 2025, namely the Precision Optics Corporation, Inc. 2022 Equity Incentive Plan (the “2022 Plan”), 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 such as upon employment termination. The Company has filed Registration Statements on Form S-8 with the Securities and Exchange Commission to register all shares of common stock issuable under the 2022, 2021, 2011, and 2006 Plans.

On April 8, 2022, our 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. A maximum of 933,333 shares of the Company’s common stock may be issued pursuant to stock options or other awards under the 2022 Plan. At June 30, 2025, options for a total of 876,091 shares of common stock were outstanding and 57,242 shares of common stock were available for future grants under the 2022 Plan. The 2022 Plan permits the Board of Directors to authorize and increase up to 5% of the then outstanding shares on an annual basis.

On May 10, 2021, our Board of Directors approved the 2021 Plan which likewise authorizes a broad variety of equity based and cash awards. A maximum of 333,333 shares of the Company’s common stock may be issued under the 2021 Plan. At June 30, 2025, options for a total of 264,495 shares of common stock were outstanding under the 2021 Plan. No further shares may be issued from this plan.

The 2011 Plan and 2006 Plan likewise provided for a broad variety of equity based and cash awards, but terminated in 2021 and 2016, respectively. At June 30, 2025, options for 482,990 shares of common stock were outstanding under the 2011 Plan. At June 30, 2025, options for a total of zero shares of common stock were outstanding under the 2006 Plan.

The following tables summarize stock option activity for the years ended June 30, 2025 and 2024:

The aggregate intrinsic value of the Company’s “in-the-money” outstanding and exercisable options as of June 30, 2025, was $833,438 and $787,363, respectively.

On August 14, 2024, the Company entered into agreements with certain institutional and accredited investors, in addition to certain directors and officers of the Company, for the sale and purchase of 265,868 shares of the Company’s common stock pursuant to a registered direct offering at a purchase price of $5.25 per share for the institutional and unaffiliated accredited investors and $5.79 per share for the directors and officers, resulting in gross proceeds of approximately $1.4 million before deducting placement agent commissions and other estimated offering expenses. Net proceeds were approximately $1.2 million.

On February 19, 2025, the Company entered into agreements with certain institutional and accredited investors for the sale and purchase of 1,272,500 unregistered shares of its common stock, $0.01 par value at a purchase price of $4.00 per share, resulting in gross proceeds of approximately $5.1 million before deducting placement agent commissions and other estimated offering expenses. The Company used the net proceeds from this placement for general working capital needs and paydown of the Company’s line of credit.