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11. STOCK-BASED COMPENSATION | 12 Months Ended
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Mar. 31, 2025
STOCK-BASED COMPENSATION |
NOTE 11 - STOCK-BASED COMPENSATION | NOTE 11—STOCK-BASED COMPENSATION The 2007 Equity Incentive Plan In January 2007, the Company’s board of directors approved the 2007 Equity Incentive Plan, (the “2007 Plan”), which was subsequently approved by the Company’s stockholders in March 2007. A total of 3,000,000 shares of common stock were authorized and reserved for issuance under the 2007 Plan. This reserve automatically increased on April 1 of each year through 2017 by an amount equal to the smaller of (a) five percent of the number of shares of common stock issued and outstanding on the immediately preceding March 31, or (b) a lesser amount determined by the board of directors. As described below, the 2007 Plan was terminated in August 2016 and no further awards may be granted pursuant to the 2007 Plan. In the event of a stock split or other change in the Company’s capital structure, appropriate adjustments will be made in the number of outstanding awards to prevent dilution or enlargement of participants’ rights. Awards could be granted under the 2007 Plan to the Company’s employees, including officers, directors, or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. Options granted to non-officer employees generally vested at the rate of 25% on the first anniversary and subsequent anniversaries of the date of grant, while grants to officers vested in full four years after the anniversary date of the officer’s employment that is closest to the date of grant. In the event of a change in control as described in the 2007 Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the 2007 Plan or substitute substantially equivalent awards. Any awards that are not assumed or continued in connection with a change in control or exercised or settled prior to the change in control will terminate effective as of the time of the change in control. The administrator may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all nonemployee director awards will automatically be accelerated in full. The 2007 Plan also authorizes the administrator, in its discretion and without the consent of any participant, to cancel each or any outstanding award denominated in shares upon a change in control in exchange for a payment to the participant with respect to each vested share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the change in control transaction over the exercise price per share, if any, under the award. The 2016 Equity Incentive Plan In June 2016, the Company’s board of directors approved the 2016 Equity Incentive Plan, (the “2016 Plan”), which was subsequently approved by the Company’s stockholders in August 2016. In connection with the stockholders’ approval of the 2016 Plan, 6,000,000 shares available for future award under the 2007 Plan were transferred to the 2016 Plan, 705,699 shares available for grant under the 2007 plan were canceled and the 2007 Plan was terminated. The Company granted options under the 2007 Plan until August 2016, and the 2007 Plan continues to govern the terms of options that remain outstanding under the 2007 Plan. In July 2021, the Company’s board of directors approved the amendment and restatement of the 2016 Plan, which was subsequently approved by the Company’s stockholders in August 2021. The following summary highlights the material changes to the 2016 Plan:
| ● | The number of shares available for issuance was increased by 4,000,000 shares;
| ● | The sum of the aggregate grant date fair value of all equity awards and cash compensation for services as a director that may be provided to any non-employee director in any fiscal year was limited to $300,000, reflecting an amendment to a provision of the 2016 Plan that applies a limit of $150,000 to the grant of equity awards alone in any fiscal year; and
| ● | The period during which new awards may be granted under the 2016 Plan was extended to August 25, 2031.
Appropriate and proportionate adjustments will be made to the number of shares authorized and other numerical limits in the 2016 Plan and to outstanding awards in the event of any change in the Company’s common stock through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or similar change in the Company’s capital structure, or if the Company makes a distribution to its stockholders in a form other than common stock (excluding regular and periodic cash dividends) that has a material effect on the fair market value of the Company’s common stock. In such circumstances, the administrator also has the discretion under the 2016 Plan to adjust other terms of outstanding awards as it deems appropriate. If any award granted under the 2016 Plan expires or otherwise terminates for any reason without having been exercised or settled in full, or if shares subject to forfeiture or repurchase are forfeited or repurchased by the Company for not more than the participant's purchase price, any such shares reacquired or subject to a terminated award will again become available for issuance under the 2016 Plan. Shares will not be treated as having been issued under the 2016 Plan and will therefore not reduce the number of shares available for issuance to the extent an award is settled in cash or to the extent that shares are withheld or reacquired by the Company in satisfaction of a tax withholding obligation. Upon the exercise of a stock appreciation right, tender of shares in payment of an option's exercise price or net-exercise of an option, the number of shares available under the 2016 Plan will be reduced by number of shares actually issued in settlement of the award. To enable compensation provided in connection with certain types of awards intended to qualify as “performance-based” within the meaning of Section 162(m) of the Internal Revenue Code, the 2016 Plan establishes limits on the maximum aggregate number of shares or dollar value for which awards may be granted to an employee in any fiscal year, as follows:
| ● | No more than 300,000 shares subject to stock options and stock appreciation rights.
| ● | No more than 100,000 shares subject to restricted stock and restricted stock unit awards.
| ● | For each full fiscal year of the Company contained in the performance period of performance shares or performance unit awards, no more than 50,000 shares subject to performance share awards or more than $500,000 subject to performance unit awards.
| ● | For each full fiscal year of the Company contained in the performance period of cash-based or other stock-based awards, no more than $500,000 subject to cash-based awards or more than 50,000 shares subject to other stock-based awards.
Awards may be granted under the 2016 Plan to the Company’s employees, including officers, directors and consultants or those of any present or future parent or subsidiary corporation or other affiliated entity of the Company. To date, options granted to non-officer employees generally vest 25% on the first anniversary and subsequent anniversaries of the date of grant, while grants to officers generally vest in full four years after the anniversary date of the officer’s employment that is closest to the date of grant. While the Company may grant incentive stock options only to employees, the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock and stock units, performance shares and units, other stock-based awards and cash-based awards to any eligible participant. Non-employee director awards may be granted only to members of the Company’s board of directors who, at the time of grant, are not employees. Only members of the board of directors who are not employees at the time of grant are eligible to participate in the nonemployee director awards component of the 2016 Plan. The board or the compensation committee shall set the amount and type of nonemployee director awards to be awarded on a periodic, non-discriminatory basis. Nonemployee director awards may be granted in the form of NSOs, stock appreciation rights, restricted stock awards and restricted stock unit awards. Subject to adjustment for changes in the Company's capital structure, no nonemployee director may be awarded, in any fiscal year, one or more nonemployee director awards for more than a number of shares determined by dividing $150,000 by the fair market value of a share of the Company’s stock determined on the last trading day immediately preceding the date on which the applicable nonemployee award is granted. The 2016 Plan provides that, without the approval of a majority of the votes cast in person or by proxy at a meeting of the Company’s stockholders, the administrator may not provide for any of the following with respect to underwater options or stock appreciation rights: (1) either the cancellation of such outstanding options or stock appreciation rights in exchange for the grant of new options or stock appreciation rights at a lower exercise price or the amendment of outstanding options or stock appreciation rights to reduce the exercise price, (2) the issuance of new full value awards in exchange for the cancellation of such outstanding options or stock appreciation rights, or (3) the cancellation of such outstanding options or stock appreciation rights in exchange for payments in cash. In the event of a change in control as described in the 2016 Plan, the surviving, continuing, successor or purchasing entity or its parent may, without the consent of any participant, either assume or continue outstanding awards or substitute substantially equivalent awards for its stock. If so determined by the Committee, stock-based awards will be deemed assumed if, for each share subject to the award prior to the change in control, its holder is given the right to receive the same amount of consideration that a stockholder would receive as a result of the change in control. Any awards that are not assumed or continued in connection with a change in control or exercised or settled prior to the change in control will terminate effective as of the time of the Change in Control. The administrator may provide for the acceleration of vesting or settlement of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all nonemployee director awards will automatically be accelerated in full. The 2016 Plan also authorizes the administrator, in its discretion and without the consent of any participant, to cancel each or any outstanding award denominated in shares of stock upon a change in control in exchange for a payment to the participant with respect to each vested share (and each unvested share if so determined by the administrator) subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the change in control transaction over the exercise or purchase price per share, if any, under the award. The 2007 Employee Stock Purchase Plan In January 2007, the board of directors approved the 2007 Employee Stock Purchase Plan (the “2007 Purchase Plan”) which was subsequently approved by the Company’s stockholders in March 2007. A total of 500,000 shares of the Company’s common stock was authorized and reserved for sale under the 2007 Purchase Plan. In addition, the 2007 Purchase Plan provides for an automatic annual increase in the number of shares available for issuance under the plan on April 1 of each year beginning in 2008 and continuing through and including April 1, 2017 equal to the lesser of (1) one percent of the number of issued and outstanding shares of common stock on the immediately preceding March 31, (2) 250,000 shares or (3) a number of shares as the board of directors may determine. Appropriate adjustments will be made in the number of authorized shares and in outstanding purchase rights to prevent dilution or enlargement of participants' rights in the event of a stock split or other change in our capital structure. Shares subject to purchase rights that expire or are canceled will again become available for issuance under the 2007 Purchase Plan. The Company’s employees and employees of any parent or subsidiary corporation designated by the administrator will be eligible to participate in the 2007 Purchase Plan if they are customarily employed by us for more than 20 hours per week and more than five months in any calendar year. However, an employee may not be granted a right to purchase stock under the 2007 Purchase Plan if: (1) the employee immediately after such grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock or of any parent or subsidiary corporation, or (2) the employee’s rights to purchase stock under all of our employee stock purchase plans would accrue at a rate that exceeds $25,000 in value for each calendar year of participation in such plans. The 2007 Purchase Plan is designed to be implemented through a series of sequential offering periods, generally six (6) months in duration beginning on the first trading day on or after May 1 and November 1 of each year. The administrator is authorized to establish additional or alternative sequential or overlapping offering periods and offering periods having a different duration or different starting or ending dates, provided that no offering period may have a duration exceeding 27 months. Amounts accumulated for each participant under the 2007 Purchase Plan are used to purchase shares of the Company’s common stock at the end of each offering period at a price generally equal to 85% of the lower of the fair market value of our common stock at the beginning of an offering period or at the end of the offering period. Prior to commencement of an offering period, the administrator is authorized to reduce, but not increase, this purchase price discount for that offering period, or, under circumstances described in the 2007 Purchase Plan, during that offering period. The maximum number of shares a participant may purchase in any six-month offering period is the lesser of (i) that number of shares determined by multiplying (x) 1,000 shares by (y) the number of months (rounded to the nearest whole month) in the offering period and rounding to the nearest whole share or (ii) that number of whole shares determined by dividing (x) the product of $2,083.33 and the number of months (rounded to the nearest whole month) in the offering period and rounding to the nearest whole dollar by (y) the fair market value of a share of our common stock at the beginning of the offering period. Prior to the beginning of any offering period, the administrator may alter the maximum number of shares that may be purchased by any participant during the offering period or specify a maximum aggregate number of shares that may be purchased by all participants in the offering period. If insufficient shares remain available under the plan to permit all participants to purchase the number of shares to which they would otherwise be entitled, the administrator will make a pro rata allocation of the available shares. Any amounts withheld from participants' compensation in excess of the amounts used to purchase shares will be refunded, without interest. During fiscal 2025, 230,395 shares of common stock were issued under the 2007 Purchase Plan. In the event of a change in control, an acquiring or successor corporation may assume our rights and obligations under the 2007 Purchase Plan. If the acquiring or successor corporation does not assume such rights and obligations, then the purchase date of the offering periods then in progress will be accelerated to a date prior to the change in control. The following table summarizes stock option activities: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | Weighted | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Number of Shares | ​ | Average | ​ | Weighted | ​ | ​ | Weighted | ​
​ | ​ | Shares | ​ | Underlying | ​ | Remaining | ​ | Average | ​ | ​ | Average Grant | ​
​ | ​ | Available for | ​ | Options | ​ | Contractual | ​ | Exercise | ​ | Date Fair | ​
​ |  | Grant |  | Outstanding |  | Life (Years) |  | Price |  | Value Per Share |
Balance at March 31, 2024 | ​ | 2,584,186 | ​ | 8,968,199 | ​ | ​ | ​ | $ | 5.26 | ​ | $ | 2.11 | ​
Granted | ​ | (831,635) | ​ | 831,635 | ​ | ​ | ​ | $ | 3.08 | ​ | $ | 2.23 | ​
Exercised | ​ | — | ​ | (73,730) | ​ | ​ | ​ | $ | 2.08 | ​ | $ | 0.99 | ​
Forfeited | ​ | 1,343,425 | ​ | (2,089,388) | ​ | ​ | ​ | $ | 5.36 | ​ | $ | 2.19 | ​
Balance at March 31, 2025 | ​ | 3,095,976 | ​ | 7,636,716 | ​ | 5.38 | ​ | $ | 5.03 | ​ | $ | 2.11 | ​
Options vested and exercisable | ​ | ​ | ​ | 5,480,321 | ​ | 4.28 | ​ | $ | 5.47 | ​ | $ | 2.07 | ​
Options vested and expected to vest | ​ | ​ | ​ | 7,585,284 | ​ | 5.36 | ​ | $ | 5.03 | ​ | $ | 2.11 | ​
Options unvested | ​ | ​ | ​ | 2,179,020 | ​ | 8.16 | ​ | $ | 3.90 | ​ | $ | 2.21 | ​
​ The options outstanding and by exercise price at March 31, 2025 are 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 |
$ | 0.00 | - | 2.00 | ​ | 822,453 | ​ | $ | 1.91 | ​ | 8.39 | ​ | 632,965 | ​ | $ | 1.91 | ​
$ | 2.01 | - | 4.00 | ​ | 1,356,822 | ​ | $ | 3.02 | ​ | 7.20 | ​ | 594,312 | ​ | $ | 2.93 | ​
$ | 4.01 | - | 6.00 | ​ | 3,216,716 | ​ | $ | 5.07 | ​ | 5.04 | ​ | 2,012,319 | ​ | $ | 5.28 | ​
$ | 6.01 | - | 8.00 | ​ | 1,616,512 | ​ | $ | 6.97 | ​ | 3.40 | ​ | 1,616,512 | ​ | $ | 6.97 | ​
$ | 8.01 | - | 10.00 | ​ | 624,213 | ​ | $ | 8.23 | ​ | 4.33 | ​ | 624,213 | ​ | $ | 8.23 | ​
​ | ​ | ​ | ​ | ​ | 7,636,716 | ​ | $ | 5.03 | ​ | 5.38 | ​ | 5,480,321 | ​ | $ | 5.47 | ​
​ Stock-based compensation The Company recognized $2.3 million, $2.8 million and $2.5 million of stock-based compensation expense for the years ended March 31, 2025, 2024 and 2023, respectively, as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended March 31, | ​
​ |  | 2025 |  | 2024 |  | 2023 |
​ | ​ | (In thousands) | ​
Cost of revenues | ​ | $ | 199 | ​ | $ | 228 | ​ | $ | 202 | ​
Research and development | ​ | ​ | 1,010 | ​ | ​ | 1,411 | ​ | ​ | 1,316 | ​
Selling, general and administrative | ​ | ​ | 1,053 | ​ | ​ | 1,199 | ​ | ​ | 951 | ​
​ | ​ | $ | 2,262 | ​ | $ | 2,838 | ​ | $ | 2,469 | ​
​ Stock-based compensation expense in the years ended March 31, 2025, 2024 and 2023 included $176,000, $230,000 and $211,000, respectively, related to the Company’s Employee Stock Purchase Plan. No tax benefit was recognized in either fiscal 2025 or fiscal 2024 due to a full valuation allowance. There were no windfall tax benefits realized from exercised stock options recognized in fiscal 2025 or fiscal 2024. Compensation cost capitalized within inventory at March 31, 2025 and 2024 was not material. As of March 31, 2025, the Company’s total unrecognized compensation cost was $5.1 million, which will be recognized over the weighted average period of 2.95 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: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended March 31, | ​
​ |  | 2025 |  | 2024 |  | 2023 |
Stock Option Plans: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Risk-free interest rate | ​ | 4.05 | - | 4.48 | % | 3.69 | - | 4.80 | % | 2.95 | - | 4.27 | %
Expected life (in years) | ​ | 4.89 | - | 5.00 | ​ | 4.46 | - | 4.94 | ​ | 4.55 | - | 5.00 | ​
Volatility | ​ | 91.0 | - | 96.7 | % | 80.7 | - | 85.9 | % | 49.2 | - | 53.1 | %
Dividend yield | ​ | ​ | ​ | — | % | ​ | ​ | — | % | ​ | ​ | — | %
Employee Stock Purchase Plan: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Risk-free interest rate | ​ | 4.44 | - | 5.41 | % | 5.26 | - | 5.38 | % | 1.54 | - | 4.54 | %
Expected life (in years) | ​ | ​ | ​ | 0.50 | ​ | ​ | ​ | 0.50 | ​ | ​ | ​ | 0.50 | ​
Volatility | ​ | 6.1 | - | 12.4 | % | 28.8 | - | 83.9 | % | 49.3 | - | 58.2 | %
Dividend yield | ​ | ​ | ​ | — | % | ​ | ​ | — | % | ​ | ​ | — | %
​ The weighted average fair value of options granted during the years ended March 31, 2025, 2024 and 2023 was $2.23, $2.13 and $1.38, respectively.

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