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STOCKHOLDERS’ DEFICIT AND STOCK-BASED COMPENSATION

9 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS’ DEFICIT AND STOCK-BASED COMPENSATION

NOTE 6 – STOCKHOLDERS’ DEFICIT AND STOCK-BASED COMPENSATION

During the three months ended December 31, 2021, the Company sold 30,865 shares of common stock to its chief executive officer and its chairman of the board of directors, president, chief financial officer and treasurer, issued 8,334 shares of common stock to a service provider and issued 5,775 shares to its non-employee directors under the Company’s outside director compensation plan. At December 31, 2021, the Company had an obligation to issue 16,666 shares of common stock to service providers, and the value of these shares was recorded as common stock issuable in the condensed consolidated balance sheet.

Amended 2017 Equity Incentive Plan

In October 2017, the Company’s board of directors (the Board) approved the 2017 Equity Incentive Plan (the Plan) with 1,000,000 shares of common stock reserved for issuance. In January 2020 and August 2021, the Board approved increases in the number of shares reserved for issuance under the Plan by 333,334 and 1,333,334 shares, respectively. 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, as of December 31, 2021, was $7,419,022 related to stock options and is expected to be recognized as expense over a weighted-average period of approximately two years.

During the nine months ended December 31, 2021, the Company granted options to purchase 723,269 shares of its common stock to employees, directors and consultants. The options had 10-year terms, and 85,484 options vested immediately when granted. The fair value of the options was determined to be $8,108,043 of which $1,769,805 was recorded as stock-based compensation expense and included in the condensed consolidated statement of operations for the nine months ended December 31, 2021.

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

Schedule of Fair Value Assumptions

		Three Months Ended December 31,								Nine Months Ended December 31,
		2021				2020				2021				2020
Risk-free interest rates			1.26% - 1.36%				0.38%				0.8% - 1.36%				0.28% - 0.38%
Volatility			197% - 253%				87%				89% - 370%				87% - 127%
Expected life (years)			5.0 – 6.0				5.2 – 5.7				5.0 - 6.2				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:

Schedule of Stock Option activity

						Options Outstanding
		Shares Available for Grant				Number of Shares				Weighted Average Exercise Prices
Balance at March 31, 2021			136,082				1,197,252			$	5.25
Options granted			(60,774	)			60,774				12.69
Share awards			(1,836	)			—				—
Options cancelled and returned to the Plan			7,547				(7,547	)			8.61
Balance at June 30, 2021			81,089				1,250,479				5.58
Additional shares authorized under the Plan			1,333,334				—				—
Options granted			(396,384	)			396,384				12.15
Share awards			(3,636	)			—				—
Options cancelled and returned to the Plan			49,213				(49,213	)			7.02
Balance at September 30, 2021			1,063,546				1,597,650				7.17
Options granted			(266,112	)			259,559				9.99
Share awards			(5,775	)			—
Options cancelled and returned to the Plan			29,073				(11,256	)			7.24
Balance at December 31, 2021			820,732				1,845,953				7.57

There were no stock options exercised during the nine months ended December 31, 2021 and 2020.

The following table summarizes the range of outstanding and exercisable options as of December 31, 2021:

		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
$1.98 - $17.70			1,845,953				8.13			$	7.57				1,011,586			$	5.10			$	3,564,268

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, 2021.

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 31, 2021 and 2020, there were no such tax benefits associated with the exercise of stock options.