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10. STOCK-BASED COMPENSATION | 9 Months Ended
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Dec. 31, 2020
STOCK-BASED COMPENSATION |
NOTE 10 - STOCK-BASED COMPENSATION | NOTE 10—STOCK-BASED COMPENSATION As of December 31, 2020, 1,576,722 shares of common stock were available for grant under the Company’s 2016 Equity Incentive Plan. The following table summarizes the Company’s stock option activities for the nine months ended December 31, 2020:
|  |  |  |  |  | Weighted |  |  |  |  |  |  |
|  |  |  | Number of Shares |  | Average |  | Weighted |  |  |  |
|  | Shares |  | Underlying |  | Remaining |  | Average |  |  |  |
|  | Available for |  | Options |  | Contractual |  | Exercise |  | Intrinsic |
|  | Grant |  | Outstanding |  | Life (Years) |  | Price |  | Value |
Balance at March 31, 2020 |  | 2,522,314 |  | 8,135,791 |  |  |  | $ | 6.17 |  |  |  |
Granted |  | (989,842) |  | 989,842 |  |  |  | $ | 6.14 |  |  |  |
Exercised |  | — |  | (443,190) |  |  |  | $ | 5.94 |  | $ | 583,645 |
Forfeited |  | 44,250 |  | (161,833) |  |  |  | $ | 7.01 |  |  |  |
Balance at December 31, 2020 |  | 1,576,722 |  | 8,520,610 |  | 5.57 |  | $ | 6.17 |  |  |  |
Options vested and exercisable |  |  |  | 5,497,662 |  | 4.02 |  | $ | 5.70 |  | $ | 9,735,923 |
Options vested and expected to vest |  |  |  | 8,440,795 |  | 5.54 |  | $ | 6.16 |  | $ | 11,522,386 |
The weighted average fair value per underlying share of options granted during the three months ended December 31, 2020 and 2019 was $2.51 and $2.66, respectively, and $2.39 and $2.84 for the nine months ended December 31, 2020 and 2019, respectively. Options outstanding by exercise price at December 31, 2020 were as follows:
|  |  |  |  | Number of |  | Options Outstanding |  | Options Exercisable |
|  |  |  |  | Shares |  | Weighted |  | Weighted Average |  |  |  | Weighted |
|  |  |  |  | Underlying |  | Average |  | Remaining |  | Number |  | Average |
|  |  |  |  | Options |  | Exercise |  | Contractual |  | Vested and |  | Exercise |
Exercise Price |  | Outstanding |  | Price |  | Life (Years) |  | Exercisable |  | Price |
$ | 3.40 | - | 4.81 |  | 888,007 |  | $ | 4.06 |  | 3.32 |  | 888,007 |  | $ | 4.06 |
$ | 4.90 | - | 4.99 |  | 1,255,826 |  | $ | 4.97 |  | 4.48 |  | 1,255,826 |  | $ | 4.97 |
$ | 5.13 | - | 5.59 |  | 910,509 |  | $ | 5.32 |  | 3.68 |  | 910,509 |  | $ | 5.32 |
$ | 5.69 | - | 5.83 |  | 854,567 |  | $ | 5.81 |  | 7.36 |  | 270,874 |  | $ | 5.76 |
$ | 5.91 | - | 6.45 |  | 933,860 |  | $ | 6.17 |  | 6.18 |  | 568,329 |  | $ | 6.20 |
$ | 6.54 | - | 6.70 |  | 1,100,140 |  | $ | 6.65 |  | 5.15 |  | 555,193 |  | $ | 6.60 |
$ | 6.86 | - | 7.26 |  | 1,042,797 |  | $ | 7.08 |  | 5.55 |  | 563,773 |  | $ | 6.95 |
$ | 7.40 | - | 8.09 |  | 812,431 |  | $ | 7.79 |  | 8.27 |  | 330,598 |  | $ | 7.79 |
$ | 8.30 |  |  |  | 613,893 |  | $ | 8.30 |  | 8.58 |  | 45,973 |  | $ | 8.30 |
$ | 9.20 |  |  |  | 108,580 |  | $ | 9.20 |  | 0.08 |  | 108,580 |  | $ | 9.20 |
|  |  |  |  | 8,520,610 |  | $ | 6.17 |  | 5.57 |  | 5,497,662 |  | $ | 5.70 |
The following table summarizes stock-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to employee stock plans:
|  | Three Months Ended December 31, |  | Nine Months Ended December 31, |
|  | 2020 |  | 2019 |  | 2020 |  | 2019 |
|  |  |  |  |  | (In Thousands) |  |  |  |
Cost of revenues |  | $ | 88 |  | $ | 77 |  | $ | 260 |  | $ | 184 |
Research and development |  |  | 343 |  |  | 347 |  |  | 1,109 |  |  | 1,143 |
Selling, general and administrative |  |  | 262 |  |  | 205 |  |  | 732 |  |  | 595 |
Total |  | $ | 693 |  | $ | 629 |  | $ | 2,101 |  | $ | 1,922 |
As stock-based compensation expense recognized in the Condensed Consolidated Statement of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures in accordance with authoritative guidance. The Company estimates forfeitures at the time of grant and revises the original estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. No tax benefit related to stock-based compensation was recognized in the nine months ended December 31, 2020 due to a full valuation allowance. There were no windfall tax benefits realized from exercised stock options in either of these periods. Compensation cost capitalized within inventory at December 31, 2020 was immaterial. As of December 31, 2020, the Company’s total unrecognized compensation cost was $5.2 million, which will be recognized over a weighted average period of 2.09 years. The Company calculated the fair value of stock-based awards in the periods presented using the Black-Scholes option pricing model and the following weighted average assumptions:
|  | Three Months Ended December 31, |  | Nine Months Ended December 31, |
|  | 2020 |  | 2019 |  |  |  | 2020 |  |  |  |  | 2019 |  |
Stock Option Plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk-free interest rate |  |  |  | 0.38 | % |  |  |  | 1.66 | % |  | 0.22 | - | 0.38 | % |  | 1.66 | - | 2.30 | % |
Expected life (in years) |  |  |  | 5.00 |  |  |  |  | 5.00 |  |  |  |  | 5.00 |  |  |  |  | 5.00 |  |
Volatility |  |  |  | 47.1 | % |  |  |  | 36.5 | % |  | 41.9 | - | 47.1 | % |  | 36.5 | - | 37.3 | % |
Dividend yield |  |  |  | — | % |  |  |  | — | % |  |  |  | — | % |  |  |  | — | % |
Employee Stock Purchase Plan: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk-free interest rate |  |  |  | 0.12 | % |  |  |  | 1.58 | % |  | 0.12 | - | 0.15 | % |  | 1.58 | - | 2.43 | % |
Expected life (in years) |  |  |  | 0.50 |  |  |  |  | 0.50 |  |  |  |  | 0.50 |  |  |  |  | 0.50 |  |
Volatility |  |  |  | 68.6 | % |  |  |  | 33.5 | % |  | 67.1 | - | 68.6 | % |  | 33.5 | - | 43.1 | % |
Dividend yield |  |  |  | — | % |  |  |  | — | % |  |  |  | — | % |  |  |  | — | % |

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