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STOCK-BASED COMPENSATION

9 Months Ended

Dec. 31, 2020

STOCKHOLDERS' EQUITY (DEFICIT)

STOCK-BASED COMPENSATION

2017 Equity Incentive Plan

In October 2017, the Company’s board of directors (the Board) approved the 2017 Equity Incentive Plan (the Plan) with 3,000,000 shares of common stock reserved for issuance. In January 2020, the Board approved an increase in the number of shares reserved for issuance under the Plan by 1,000,000 shares. Under the Plan, 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 Plan is administered by the Board or, in the alternative, a committee designated by the Board.

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 at December 31, 2020, was $2,354,079 related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 2.06 years.

During the nine months ended December 31, 2020, the Company granted options to purchase 355,476 shares of its common stock to employees, directors and consultants. The options had 10-year terms, and 10,476 options vested immediately when granted. The fair value of the options was determined to be $825,838 of which $223,878 was recorded as stock-based compensation expense and included in the condensed consolidated statement of operations for the nine months ended December 31, 2020.

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

		Three Months Ended December 31								Nine Months Ended December 31
		2020				2019				2020				2019
Risk-free interest rates			.38	%			1.51% - 1.69	%			.28% - .38	%			1.34% - 2.41	%
Volatility			87	%			87% - 96	%			87% - 127	%			87% - 102	%
Expected life (years)			5.2 - 5.7				5.0 - 6.0				5.0 - 6.0				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 Plan is presented below:

						Options Outstanding
										Weighted
		Shares								Average
		Available				Number of				Exercise
		for Grant				Shares				Prices
Balance at March 31, 2020			822,055				3,177,945			$	1.58
Options granted			(230,476	)			230,476				2.88
Options cancelled and returned to the Plan			833				(833	)			2.25
Balance at June 30, 2020			592,412				3,407,588				1.67
Options granted			(72,500	)			72,500				2.87
Balance at September 30, 2020			519,912				3,480,088				1.70
Options granted			(52,500	)			52,500				2.87
Options cancelled and returned to the Plan			20,000				(20,000	)			2.25
Balance at December 31, 2020			487,412				3,512,588				1.71

There were no stock options exercised during the nine months ended December 31, 2020 and 2019.

The following table summarizes the range of outstanding and exercisable options at December 31, 2020:

		Options Outstanding												Options Exercisable
Range of Exercise Price		Number Outstanding				Weighted Average Remaining Contractual Life (in Years)				Weighted Average Exercise Price				Number Exercisable				Weighted Average Exercise Price				Aggregate Intrinsic value
$0.66 - $3.16			3,512,588				8.44			$	1.71				1,927,052			$	1.16			$	4,036,117

The intrinsic value per share is calculated as the excess of the closing price of the common stock on the Company’s principal trading market over the exercise price of the option at December 31, 2020. The Company’s common stock has minimal trading volume, and the closing price is not necessarily representative of the fair value.

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 nine months ended December 30, 2020 and 2019, there were no such tax benefits associated with the exercise of stock options.