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STOCK-BASED COMPENSATION

6 Months Ended

Sep. 30, 2019

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

In October 2017, the Company’s board of directors (the “Board”) approved the 2017 Equity Incentive Plan (the “EIP”) with 3,000,000 shares of common stock reserved for issuance. Under the EIP, eligible employees, directors and consultants may be granted a broad range of awards including stock options, stock appreciation rights, restricted stock, performance-based awards, and restricted stock units. The EIP is administered by the Board or, in the alternative, if necessary, a committee designated by the Board, and has the sole power over the administration of the EIP.

The exercise or purchase price shall be calculated as follows:

(i)

In the case of an incentive stock option, (A) granted to employees, who, at the time of the grant of such incentive stock option own stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company, the per share exercise price shall be not less than one hundred ten percent (110%) of the fair market value per share on the date of grant; or (B) granted to employees, other than to employees, described in the preceding clause, the per share exercise price shall be not less than one hundred percent (100%) of the fair market value per share on the date of grant;

(ii)	In the case of a non-qualified stock option, the per share exercise price shall be not less than one hundred percent (100%) of the fair market value per share on the date of grant unless otherwise determined by the Board; and

(iii)

In the case of other grants, such price as is determined by the Board.

The Board is responsible for determining the consideration to be paid for the shares of common stock to be issued upon exercise or purchase. The EIP generally doesn’t allow for the transfer of awards, and the Board may amend, suspend or terminate the EIP at any time.

Stock-Based Compensation Expense

The expense relating to stock options is recognized on a straight-line basis over the requisite service period, usually the vesting period, based on the grant-date fair value. The unamortized compensation cost, as of September 30, 2019, was $352,936 related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 2.45 years.

During the six months ended September 30, 2019, the Company granted options to purchase 100,485 shares of its common stock to employees, directors and consultants. The options had 10-year terms, and 41,485 options vested immediately on the grant dates. The fair value of the options was determined to be $173,631, and $78,711 was recorded as stock-based compensation expense and included in the condensed consolidated statement of operations for the six months ended September 30, 2019.

The following assumptions were used in the fair value method calculations:

		Six Months Ended
		September 30, 2019
Risk-free interest rates			1.35% - 2.41	%
Volatility			97% - 102	%
Expected life (years)			5.0 - 6.0
Dividend yield			—	%

The fair values of options at the grant date were estimated utilizing the Black-Scholes valuation model, which includes simplified methods to establish the fair term of options as well as average volatility of three comparable organizations. The risk-free interest rate was derived from the Daily Treasury Yield Curve Rates, as published by the U.S. Department of the Treasury as of the grant date for terms equal to the expected terms of the options. A dividend yield of zero was applied because the Company has never paid dividends and has no intention to pay dividends in the foreseeable future. In accordance with ASU No. 2016-09, the Company accounts for forfeitures as they occur.

A summary of stock option activity under the EIP is presented below.

						Options Outstanding
										Weighted
		Shares								Average
		Available				Number of				Exercise
		for Grant				Shares				Prices
Balance at April 1, 2019			1,470,092				1,529,908			$	$0.86
Options granted			(22,686)				22,686				2.25
Balance at June 30, 2019			1,447,406				1,552,594			$	0.88
Options granted			(77,800)				77,800				2.25
Balance at September 30, 2019			1,369,606				1,630,394			$	0.95

There were no stock options exercised during the six months ended September 30, 2019 and 2018.

The following table summarizes the range of outstanding and exercisable options as of September 30, 2019:

Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Weighted

Weighted

Contractual

Average

Average

Aggregate

Number

Life

Exercise

Number

Exercise

Intrinsic

Range of Exercise Price

Outstanding

(in Years)

Price

Exercisable

Price

value

$0.66 - $2.25

1,630,394

8.94

$

0.95

1,386,172

$

0.72

$

—

The Company is required to present the tax benefits resulting from tax deductions in excess of the compensation cost recognized from the exercise of stock options as financing cash flows in the consolidated statements of cash flows. For the six months ended September 30, 2019 and 2018, there were no such tax benefits associated with the exercise of stock options.