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Stock-Based Compensation

3 Months Ended

Jun. 30, 2024

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 5 – STOCK-BASED COMPENSATION

Amended 2017 Equity Incentive Plan

In October 2017, 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 increases in the number of shares reserved for issuance by 333,334 and 1,333,334 shares, respectively. In January 2023 and February 2024, the Company’s stockholders approved increases in the number of shares reserved for issuance under the Plan by an additional 2,000,000 and 3,000,000 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

Stock options granted by the Company generally vest over 36 months and have a 10-year term. As of June 30, 2024, the unamortized compensation cost related to stock options was approximately $2,262,000 and is expected to be recognized as expense over a weighted-average period of approximately 1.6 years.

In October 2023, under its Two-Part FDA Submission and Clearance Milestone Bonus Program (the Bonus Program), the Company granted stock options for 909,533 shares, which are subject to vesting based upon the achievement of certain performance milestones by the Company and continued service by the optionees. In January 2024, options to purchase 625,326 shares (net of forfeitures), which were granted under part one of the Bonus Program, vested upon the Company’s submission to the FDA. As of June 30, 2024, the Company had not commenced expense recognition of 242,307 (net of forfeitures) of the options, which were granted under part two of the Bonus Program, based on its assessment of the probability of achievement of the applicable performance requirements.

The weighted-average grant date fair value of options granted was $1.33 and $1.00 per share for the three months ended June 30, 2024 and 2023, respectively. The following assumptions were used in the fair-value method calculations:

		Three Months Ended June 30,
		2024			2023
Risk-free interest rates		4.33% - 4.43%			3.51% - 4.13%
Volatility		118% - 123%			83% - 152%
Expected life (years)		5.0 - 5.7			5.0 - 6.1

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. 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 three months ended June 30, 2024:

						Options Outstanding
										Weighted
		Shares								Average
		Available				Number of				Exercise
		for Grant				Shares				Prices
Balance at March 31, 2024			3,648,651				3,689,341			$	3.70
Share awards			(3,875	)			—				1.56
Options granted			(682,375	)			682,375				1.52
Options exercised			—				(7,530	)			1.08
Options cancelled and returned to the Plan			42,230				(42,230	)			2.62
Balance at June 30, 2024			3,004,631				4,321,956			$	3.36

A stock option was exercised on a cashless basis for 7,530 shares of common stock during the three months ended June 30, 2024. There were no stock options exercised during the three months ended June 30, 2023. During the three months ended June 30, 2024 and 2023, the Company awarded 3,875 and 6,375 shares, respectively, to its non-employee directors under the Company’s outside director compensation plan. For the three months ended June 30, 2024 and 2023, the Company recorded stock-based compensation expense for these share awards of approximately $6,000 and $5,900, respectively.

A summary of restricted stock unit (RSU) activity under the Plan is presented below.

						Weighted Average
		Number of Shares				Grant-Date Fair Value
Balance at March 31, 2024			187,499			$	0.91
Vested			(20,832	)		$	0.91
Non-vested shares at June 30, 2024			166,667			$	0.91

The total intrinsic value of RSUs outstanding as of June 30, 2024 was approximately $263,000. The unamortized compensation cost at June 30, 2024 was approximately $153,000 related to RSUs and is expected to be recognized as expense over a period of approximately two years.

The following table summarizes the range of outstanding and exercisable options as of June 30, 2024:

		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			2,872,922				8.46			$	1.49				1,564,467			$	1.51			$	369,936
$3.95 - $7.51			940,367				6.94			$	5.29				807,756			$	5.46				—
$8.61 - $17.70			508,667				6.98			$	10.53				485,934			$	10.53				—
$0.93 - $17.70			4,321,956				7.96			$	3.38				2,858,157			$	4.16				—

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.