Note 13. Stockholders’ Equity (Deficit)

Equity Offering Program

The Company is party to an ATM Sales Agreement, dated May 2, 2022, with Craig-Hallum Capital Group LLC and Roth Capital Partners, LLC pursuant to which the Company may sell from time-to-time shares of its common stock having an aggregate offering price of up to $50,000,000 (the “2022 Equity Offering Program”), of which $48 million remains available to be sold. On May 25, 2022, the Company announced that it was suspending sales under the 2022 Equity Offering Program. If, in the future, the Company determines to resume sales pursuant to the 2022 Equity Offering Program, it intends to notify investors by the filing of a Current Report on Form 8-K, other SEC filings or other public announcement.

No sales were made through the 2022 Equity Offering Program during the year ended June 30, 2024 or June 30, 2023.

Underwritten Offerings of Common Stock

On January 19, 2023, the Company closed an underwritten public offering of 12,545,454 shares of its Common Stock at a price to the public of $2.75 per share pursuant to an underwriting agreement with B. Riley Securities, Inc., as representative of the several underwriters named therein. The shares of Common Stock issued at closing included 1,636,363 shares issued pursuant to the underwriters’ over-allotment option, which was exercised in full. Gross proceeds totaled $34.5 million before deducting the underwriting discount and offering expenses of approximately $2.5 million resulting in net proceeds from the offering of approximately $32.0 million. Certain of the Company’s directors and officers participated in the offering by purchasing shares on the same terms and conditions as other investors. 

On January 29, 2024, the Company closed an underwritten public offering of 23,000,000 shares of its common stock at a price to the public of $0.50 per share pursuant to an underwriting agreement with Roth Capital Partners, LLC. The shares of common stock issued at closing included 3,000,000 shares issued pursuant to the underwriters’ over-allotment option, which was exercised in full. Gross proceeds totaled $11.5 million before deducting the underwriting discount and offering expenses of approximately $1.1 million resulting in net proceeds from the offering of approximately $10.4 million. Certain of the Company’s directors, officers and employees participated in the offering by purchasing an aggregate of $1.0 million of shares on the same terms and conditions as other investors.

Registered Direct Offering of Common Stock and Pre-Funded Warrants

On May 22, 2024, the Company entered into a securities purchase agreement and placement agency agreement with Roth Capital Partners, to issue and sell an aggregate of 10,500,000 shares of its common stock, and pre-funded warrants to purchase up to 39,500,000 shares of common stock in a registered direct offering. The offering price was $0.20 per share and $0.199 per pre-funded warrant. The closing of the offering occurred on May 24, 2024. Gross proceeds were approximately $10.0 million, before deducting the placement fee and offering expenses of approximately $0.8 million resulting in net proceeds from the offering of approximately $9.2 million. The prefunded warrant was treated as equity and is included in Additional paid in capital on the Consolidated Balance Sheet. During the fiscal year ended June 30, 2024, 8.5 million pre-funded warrants were exercised. 31.0 million unexercised warrants remain outstanding as of June 30, 2024 and none were outstanding as of June 30, 2023.

Equity incentive plans

On November 1, 2018, the Board of Directors adopted and approved the Company’s 2018 Stock Incentive Plan (as amended, the “2018 Plan”), which authorizes the grant to participants of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants and other stock awards. The 2018 Plan initially reserved a total of 3,000,000 shares of common stock for issuance thereunder. On September 24, 2019, the Company’s stockholders approved an amendment to the 2018 Plan increasing the number of shares reserved for issuance thereunder to 6,000,000. On November 10, 2022, the Company’s stockholders approved an amendment to the 2018 Plan increasing the number of shares reserved for issuance thereunder to 12,000,000. As of June 30, 2024, 3,614,154, shares remained available for future grants under the 2018 Plan. The Company previously maintained the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2016 Stock Incentive Plan (the “2016 Plan”). No additional shares will be issued under the 2015 Plan or the 2016 Plan. The Company settles awards issued under all plans with newly issued common shares.

In addition, the number of shares of our common stock subject to the 2015 Plan, 2016 Plan and 2018 Plan, any number of shares subject to any numerical limit in the Plans, and the number of shares and terms of any incentive awards thereunder would be adjusted in the event of any change in our outstanding common stock by reason of any stock dividend, spin-off, split-up, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares or similar transaction.

Options granted under the 2015 Plan, 2016 Plan and 2018 Plan vest as determined by the Company’s board of directors and expire over varying terms, but not more than ten years from the date of grant. In the case of an Incentive Stock Option that is granted to a 10% shareholder on the date of grant, such Option shall not be exercisable after the expiration of five years from the date of grant.

The fair values of the Company’s options were estimated at the dates of grant using a Black-Scholes option pricing model with the following assumptions:

Expected term: The Company’s expected term is based on the period the options are expected to remain outstanding. The Company estimated this amount utilizing the “Simplified Method” in that the Company does not have sufficient historical experience to provide a reasonable basis to estimate an expected term.

Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar term on the date of the grant.

Volatility: The Company calculates the expected volatility of the stock price using the historical volatilities of the Company’s common stock traded on the Nasdaq Capital Market.

Dividend yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

The following is a summary of the option activity:

The total intrinsic value of options exercised during the fiscal years ended June 30, 2024 and June 30, 2023 was $0.

Unrecognized stock-based compensation expense and weighted-average years to be recognized are as follows (in thousands):

For the years ended June 30, 2024 and 2023, the Company recorded $2.8 million and $9.4 million, respectively, in stock-based compensation which is reflected in total operating expenses in the consolidated statements of operations as follows (in thousands):

Restricted Stock Units and Restricted Stock Awards

A summary of unvested restricted stock awards (“RSAs”) and restricted stock unit awards (“RSUs”) outstanding as of June 30, 2024 and changes during the year ended is as follows:

The weighted average grant date fair value per share for awards granted during the fiscal years ended June 30, 2024 and June 30, 2023 was $0.81 and $3.20, respectively. The total fair value of restricted awards that vested during the fiscal years ended June 30, 2024 and June 30, 2023 was $0.7 million and $3.5 million, respectively.

During the years ended June 30, 2024 and 2023, the Company recorded stock-based compensation expense of $1.8 million and $6.5 million, respectively related to the RSAs and RSUs that have been issued to date.

As of June 30, 2024, the Company had approximately $2.9 million in unrecognized stock-based compensation expense related to the unvested shares.

Market Value Stock Unit Awards

During the year ended June 30, 2024 the Company awarded certain employees grants of an aggregate of approximately 0.55 million RSUs with market value appreciation conditions (“MVSUs”) with a weighted average grant date fair value of $1.41. The MVSUs will be expensed over the requisite service period. The terms of the MVSUs include vesting provisions based on continued service. The number of shares of the Company’s common stock earned at vesting is based on the Company’s stock price performance with amounts earned subject to a vesting multiplier ranging from 0% to 200%. If the service criteria are satisfied, the MVSUs will vest over 3 years.

The fair values of the Company’s MVSUs were estimated at the dates of grant using a Monte Carlo simulation with the following assumptions:

The Target Price: The price used in determining the vesting multiplier.

Expected term: The Company’s expected term is based on the contract period for the MVSU grants.

Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar term on the date of the grant.

Volatility: The Company calculates the expected volatility of the stock price using the historical volatilities of the Company’s common stock traded on the Nasdaq Capital Market.

A summary of unvested MVSUs outstanding as of June 30, 2024 and changes during the year ended is as follows:

The weighted average grant date fair value per share for MVSU awards granted during the fiscal years ended June 30, 2024 and June 30, 2023 was $1.41 and $7.60, respectively. No MVSU awards vested during the fiscal years ended June 30, 2024 and June 30, 2023.

During the years ended June 30, 2024 and 2023, the Company recorded stock-based compensation expense of $0.8 million and $0.9 million, respectively related to the MVSUs that have been issued to date.

As of June 30, 2024, the Company had approximately $1.4 million in unrecognized stock-based compensation expense related to the unvested MVSU shares.

Employee Stock Purchase Plan

Effective November 1, 2018, the Company adopted the Akoustis Technologies, Inc. Employee Stock Purchase Plan 2018 (the “ESPP”), which was approved by the stockholders on the same date, The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. All regular full-time employees of the Company (including officers) and all other employees who meet the eligibility requirements of the plan may participate in the ESPP. The ESPP provides eligible employees an opportunity to acquire the Company’s common stock at 85.0% of the lower of the closing price per share of the Company’s common stock on the first or last day of each six-month purchase period. At June 30, 2024, 0.34 million shares were available for future issuance under this plan. The Company makes no cash contributions to the ESPP but bears the expenses of its administration. The Company issued 0.29 million, and 0.09 million shares under the ESPP in fiscal years 2024 and 2023, respectively. The Company settles awards issued under the ESPP with newly issued common shares.

For the years ended June 30, 2024 and 2023, the Company recorded $0.10 million and $0.25 million, respectively, in stock-based compensation related to grants of ESPP shares.

Nasdaq Stock Market notification

On October 24, 2023, we received notification from the Listing Qualifications Department of The Nasdaq Stock Market, or Nasdaq, stating that the Company did not comply with the minimum $1.00 bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”). In accordance with Nasdaq listing rules, the Company was afforded 180 calendar days (until April 22, 2024) to regain compliance with the Bid Price Requirement (the “Initial Compliance Period”). To regain compliance, the closing bid price of Common Stock needed to meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-day period. Since the Company did not regain compliance by April 22, 2024, the Company requested, and was granted, an additional 180 calendar days to regain compliance with Bid Price Requirement expiring October 21, 2024.

On August 19, 2024, the Company received notice from the Staff indicating that the bid price for the Common Stock had closed at $0.10 or less per share for the 10-consecutive trading day period ended August 16, 2024 and, accordingly, the Company is subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii). As a result, the Staff determined to delist the Common Stock from The Nasdaq Capital Market (the “Delisting Determination”). The Company has requested a hearing before a Nasdaq Hearings Panel (the “Panel”) to appeal the Delisting Determination. The hearing request automatically stays any suspension or delisting action pending the hearing and the expiration of any compliance period granted by the Panel following the hearing. The Company’s hearing has been scheduled for October 8, 2024.

Additionally, Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain minimum stockholders’ equity of $2.5 million. As of June 30, 2024, as reflected in the consolidated balance sheet included in this Report, we had a negative stockholders’ equity and therefore may receive an additional delisting notice from the Staff in respect of this deficiency.