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Stock-Based Compensation

9 Months Ended

Dec. 31, 2023

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 5 – STOCK-BASED COMPENSATION

Amended 2017 Equity Incentive Plan

In October 2017, the Company’s board of directors (the Board) approved the 2017 Equity Incentive Plan (the Plan), as amended, with 1,000,000 shares of common stock reserved for issuance. In January 2020 and August 2021, the Board approved an increase in the number of shares reserved for issuance by 333,334 and 1,333,334 shares, respectively. In January 2023, the Company’s stockholders approved an increase in the number of shares reserved for issuance under the plan by an additional 2,000,000 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 (RSUs). The Plan is administered by the Board or, in the alternative, a committee designated by the Board.

Stock-Based Compensation Expense

As of December 31, 2023, the unamortized compensation cost was approximately $2,512,000 related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 1.4 years.

During the three months ended December 31, 2023, under its Two-Part FDA Submission and Clearance Milestone Bonus Program, the Company granted stock options for 909,533 shares, which are subject to vesting upon the achievement of certain performance milestones by the Company. As of December 31, 2023, the Company had not commenced expense recognition of 251,567 of these option shares based on its assessment of the probability of achievement of the applicable performance requirements.

During the three months ended December 31, 2023, the Company issued 6,375 shares to members of the Board in accordance with its outside director compensation plan and recorded approximately $11,000 of stock-based compensation expense for these share awards.

The weighted-average grant date fair value of options granted was $0.98 and $3.58 per share for the nine months ended December 31, 2023 and 2022, respectively, and $0.97 and $1.86 for the three months ended December 31, 2023 and 2022, respectively. The following assumptions were used in the fair-value method calculations:

		Three Months Ended December 31,								Nine Months Ended December 31,
		2023				2022				2023				2022
Risk-free interest rates			3.8% - 4.7	%			3.93% - 3.99	%			3.5% - 4.7	%			2.82% - 4.06	%
Volatility			123.4% - 127.6	%			149	%			82.5% - 152.2	%			149% - 223	%
Expected life (years)			5.0 – 5.4				5.0 – 5.7				5.0 – 6.2				5.0 – 5.7

The fair value of options at the grant date was estimated utilizing the Black-Scholes valuation model, which includes simplified methods to establish the fair term of options, as well as average volatility. 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. The Company accounts for forfeitures as they occur.

The following table summarizes the activity in the shares available for grant under the Plan during the nine months ended December 31, 2023:

						Options Outstanding
		Shares				Number				Weighted
		Available				of				Average
		for Grant				Shares				Exercise Prices
Balance at March 31, 2023			2,132,292				2,481,090			$	5.19
Options granted			(373,375	)			373,375				1.27
Share awards			(6,375	)			—				—
Options cancelled and returned to the Plan			30,272				(30,272	)			4.29
Balance at June 30, 2023			1,782,814				2,824,193				4.68
Options granted			(101,875	)			101,875				1.16
Share awards			(6,265	)			—				—
RSUs granted			(250,000	)			—				—
Options cancelled and returned to the Plan			13,404				(13,404	)			9.05
Balance at September 30, 2023			1,438,078				2,912,664				4.54
Options granted			(941,408	)			941,408				1.11
Share awards			(6,375	)			—				—
Options cancelled and returned to the Plan			155,679				(155,679	)			3.77
Balance at December 31, 2023			645,974				3,698,393			$	3.70

No stock options were exercised during the nine months ended December 31, 2023 and 2022.

A summary of RSU activity under the Plan is presented below.

		Number				Weighted Average Grant-
		of Shares				Date Fair Value
Balance at June 30, 2023			—			$	—
Granted			250,000			$	0.91
Vested			(20,834	)		$	0.91
Non-vested shares at September 30, 2023			229,166			$	0.91
Vested			(20,834	)		$	0.91
Non-vested shares at December 31, 2023			208,332			$	0.91

The total intrinsic value of the RSUs outstanding as of December 31, 2023 was approximately $379,000. The unamortized compensation cost at December 31, 2023 was approximately $190,000 related to RSUs and is expected to be recognized as expense over a period of approximately 2.50 years.

The following table summarizes the range of outstanding and exercisable options as of December 31, 2023:

		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
$0.93 - $2.00			2,246,118				8.55			$	1.48				653,549			$	1.83			$	62,794
$3.95 - $7.51			943,145				7.45			$	5.29				734,459			$	5.59				—
$8.61 - $17.70			509,130				7.48			$	10.53				448,562			$	10.35				—
$0.93 - $17.70			3,698,393				8.12			$	3.70				1,836,570			$	5.47			$	62,794

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.