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STOCK-BASED COMPENSATION

12 Months Ended

Mar. 31, 2024

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 7 – STOCK-BASED COMPENSATION

Our board of directors, upon the recommendation of the compensation committee of our board of directors, approved the 2016 TechPrecision Equity Incentive Plan, or the “2016 Plan”, on November 10, 2016. Our stockholders approved the 2016 Plan at the Company’s Annual Meeting of Stockholders on December 8, 2016. The 2016 Plan succeeds the 2006 Plan (as defined below) and applies to awards granted after the 2016 Plan’s adoption by the Company’s stockholders. We have designed the 2016 Plan to reflect our commitment to having best practices in both compensation and corporate governance. Following the February 2023 reverse stock split, the 2016 Plan now provides for a share reserve of 1,250,000 shares of common stock.

The 2016 Plan authorizes the award of incentive and non-qualified stock options, restricted and unrestricted stock awards, restricted stock units, and performance awards to employees, directors, consultants, and other individuals who provide services to TechPrecision or its affiliates. The purpose of the 2016 Plan is to enable TechPrecision and its affiliated companies to recruit and retain highly qualified employees, directors, and consultants; and to provide those employees, directors, and consultants with an incentive for productivity, and an opportunity to share in the growth and value of the Company. Subject to adjustment as provided in the 2016 Plan, the maximum number of shares of common stock that may be issued with respect to awards under the 2016 Plan is 1,250,000 shares (inclusive of awards issued under the 2006 Long-Term Incentive Plan, or the “2006 Plan”, that remained outstanding as of the effective date of the 2016 Plan). Shares of our common stock subject to awards that expire unexercised or are otherwise forfeited shall again be available for awards under the 2016 Plan.

The fair value of the options we grant is estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The average dividend yield over the historical period for which volatility was computed is zero. The risk-free interest rate was selected based upon yields of five-year U.S. Treasury issues. We used the simplified method for all grants to estimate the expected life of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. We account for award forfeitures as they occur. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. On March 31, 2024, there were 257,500 shares available for grant under the 2016 Plan. The following table summarizes information about options granted during the two most recently completed fiscal years:


										Weighted
										Average
				Weighted			Aggregate			Remaining
		Number Of		Average			Intrinsic			Contractual Life
		Options		Exercise Price			Value			(in years)
Outstanding at March 31, 2022		667,500		$	1.37		$	3,597,700		4.66
Canceled		—			—			—		—
Outstanding at March 31, 2023		667,500		$	1.37		$	3,804,625		3.70
Exercised		(125,000)		$	0.68		$	846,250		—
Outstanding at March 31, 2024		542,500		$	1.53		$	1,128,825		2.93
Vested or expected to vest at March 31, 2024		542,500		$	1.53		$	1,128,825		2.93
Exercisable and vested at March 31, 2024		542,500		$	1.53		$	1,128,825		2.93

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price and the exercise price multiplied by the number of in-the-money options on the measurement date) that would have been received by the option holders had all option holders exercised their options on March 31, 2024 and 2023. This amount changes based on the fair value of the Company’s common stock. At March 31, 2024, there was no remaining unrecognized compensation cost related to stock options. The maximum contractual term is ten years for option grants. Other information relating to stock options outstanding at March 31, 2024 is as follows:


				Weighted
				Average
				Remaining		Weighted					Weighted
		Options		Contractual		Average			Options		Average
Range of Exercise Prices:		Outstanding		Term		Exercise Price			Exercisable		Exercise Price
$0.01-$0.99		192,500		1.36		$	0.32		192,500		$	0.32
$2.00-$2.99		350,000		3.16		$	2.19		350,000		$	2.19
Totals		542,500							542,500

Common Stock Awards

On September 15, 2022, we granted each non-employee director 6,250 shares of common stock for a total of 25,000 shares of common stock in the aggregate, of fully vested stock awards under the Plan in recognition of such directors’ service and in lieu of the annual grant to purchase Company common stock previously approved by the Board as annual director compensation. The fair value of the award was $144,000 based on the closing market price of the Company’s common stock on the grant date.

On January 2, 2024, we granted 15,000 shares of the Company’s common stock pursuant to the 2016 Plan to the Company’s former CFO in connection with his consulting services agreement, which shares were fully vested on the grant date. The stock-based compensation expense of $79,500 was measured at fair value on the date of grant.

Restricted Stock Awards

Our board authorizes the issuance of restricted stock as service-based awards measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. The shares of restricted stock fully vested and ceased to be subject to forfeiture one year from the grant date. Each grantee is required to have been serving as a director on the vesting date and must have been continuously serving in such capacity from the grant date through the vesting date for the shares of restricted stock to vest. Prior to the vesting date, the grantee is not permitted to sell, transfer, pledge, assign or otherwise encumber the

shares of restricted stock and if the grantee’s service with the Company has terminated prior to the vesting date, subject to certain exceptions, the grantee’s restricted stock is to have been forfeited automatically.

On August 3, 2023 the Company issued 15,000 shares of restricted common stock to the Company’s new CFO. Under the terms of the employment agreement, provided employment with the Company continues from the grant date through the applicable vesting dates, 5,000 shares of the restricted stock will vest on each of the first, second, and third anniversaries of the effective employment date of July 17, 2023. Fair value of $110,700 was measured on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. Stock-based compensation expense will be recognized ratably over the vesting period. Total recognized compensation cost related to this award for the fiscal year ended March 31, 2024 was $27,675. On March 31, 2024, there was $83,025 of remaining unrecognized compensation cost related to this award which is expected to be recognized over the next three years.

On October 11, 2023, we granted a total of 25,000 shares of restricted common stock under the 2016 Plan to the board of directors. The stock-based compensation expense of $177,750 was measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock.

Total recognized compensation cost related to restricted stock awards for the fiscal year ended March 31, 2024 and 2023 was $284,925 and $109,079, respectively.