Transition report pursuant to Rule 13a-10 or 15d-10

Stock-Based Compensation, Restricted Stock and Stock Options

v3.22.1
Stock-Based Compensation, Restricted Stock and Stock Options
9 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation, Restricted Stock and Stock Options

Note 10 – Stock-Based Compensation, Restricted Stock and Stock Options:

 

On December 16, 2020, the Company adopted its 2020 Long-Term Incentive Plan ( the “2020 Plan”). Under the 2020 Plan, there are 5,333,333 shares of the Company’s common stock available for issuance and the 2020 Plan has a term of 10 years. The available shares in the 2020 Plan will automatically increase on the first trading day in January of each calendar year during the term of this Plan, commencing with January 2021, by an amount equal to the lesser of (i) five percent (5%) of the total number of shares of common stock issued and outstanding on December 31 of the immediately preceding calendar year, (ii) 1,000,000 shares of common stock or (iii) such number of shares of common stock as may be established by the Company’s Board of Directors.

 

The Company grants equity-based compensation under its 2020 Plan and its 2016 Equity Incentive Plan (the “2016 Plan”). The 2020 Plan and 2016 Plan allows the Company to grant incentive and nonqualified stock options, and shares of restricted stock to its employees, directors and consultants. On June 14, 2019, the Board of Directors of the Company approved increasing the number of shares allocated to the Company’s 2016 Equity Incentive Plan from 5,500,000 to 7,333,333.

 

Under the 2016 Plan and the 2020 Plan, upon the exercise of stock options and issuance of fully vested restricted common stock, shares of common stock may be withheld to satisfy tax withholdings. The Company intends to net settle certain employee options to ensure adequate authorized shares under the Incentive Plan.

 

Stock-based compensation:

 

The Company recognized total expenses for stock-based compensation during the nine months ended December 31, 2021 and the fiscal year ended March 31, 2021, which are included in the accompanying statements of operations, as follows (in thousands):

 

   

Nine months ended

    Fiscal year ended  
    December 31,
2021
    March 31,
2021
 
Research and development expenses   $ 384     $ 2,444  
Selling, general and administrative expenses     8,318       11,987  
Total stock-based compensation   $ 8,702     $ 14,431  

 

Restricted stock units:

 

A summary of the Company’s restricted stock activity during the nine months ended December 31, 2021 is as follows:

 

    Number of Shares    

Weighted Average
Grant-Date

Fair Value

 
Unvested at March 31, 2021     1,061,905     $ 4.50  
Granted     1,200,000     $ 1.33  
Vested     (322,222 )   $ 1.24  
Unvested at December 31, 2021     1,939,683     $ 3.08  

 

Upon the Company’s uplisting to Nasdaq in January 2021, the Company granted 1,061,905 restricted stock units with a fair value of approximately $4.7 million to the Company’s Chief Executive Officer.

 

During the nine months ended December 31, 2021, the Company granted 800,000 restricted stock units with a fair value of approximately $4.1 million, in exchange for 800,000 restricted stock awards issued to an officer of the Company and a consultant during the fiscal year ended March 31, 2021. The fair value and vesting terms of the restricted stock units are identical to the terms of the restricted stock awards, and therefore, no incremental stock-based compensation has been recognized during the nine months ended December 31, 2021.

 

During the nine months ended December 31, 2021, the Company granted 400,000 restricted stock units with a fair value of approximately $1.6 million to its Chief Financial Officer.

 

During the nine months ended December 31, 2021, the Company recognized stock-based compensation of approximately $5.9 million, related to restricted stock. As of December 31, 2021, unrecognized stock-based compensation totaled approximately $2.6 million, which is expected to be recognized over a weighted-average period of 1 year.

 

Restricted stock awards:

 

A summary of the Company’s restricted stock activity during the nine months ended December 31, 2021 is as follows:

 

    Number of Shares    

Weighted Average
Grant-Date

Fair Value

 
Unvested at March 31, 2021     777,778     $            5.12  
Vested     (66,666 )   $ 5.12  
Canceled     (711,112 )   $ 5.12  
Unvested at December 31, 2021    
-
    $
-  
 

 

During the nine months ended December 31, 2021, 66,666 shares of the Company’s restricted stock awards vested. During the nine months ended December 31, 2021, the Company exchanged 88,888 shares of its vested restricted stock awards and 711,112 of its unvested restricted stock awards for restricted stock units. (See Restricted stock units).

 

Stock Options:

 

The Company provides stock-based compensation to employees, directors and consultants under the Plan. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The risk-free interest rate is determined by referencing the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

 

During the nine months ended December 31, 2021, the Company granted 1,442,204 options to purchase shares of the Company’s common stock to members of the Company’s Board of Directors, employees and consultants. The options have a fair value of approximately $5.1 million. The Company granted 8,949,107 stock options with a fair value of approximately $28.9 million during the fiscal year ended March 31, 2021. The following was used in determining the fair value of stock options granted during the nine months ended December 31, 2021 and the fiscal year ended March 31, 2021.

 

    Nine months
ended
    Fiscal year
ended
 
    December 31,
2021
    March 31,
2021
 
Dividend yield     0 %     0 %
Expected price volatility     50% - 103 %     50 %
Risk free interest rate     0.35% - 1.33 %     0.16% - 0.94 %
Expected term     3-7 years       1-7 years  

 

A summary of activity under the Plan for the nine months ended December 31, 2021 is as follows:

 

    Shares Underlying
Options
    Weighted Average
Exercise Price
    Weighted Average
Remaining
Contractual
Term (Years)
    Aggregate Intrinsic
Value
 
Outstanding at March 31, 2021     10,928,607 *   $ 2.73       8.2     $ 17,524  
Granted     1,442,204     $ 3.53       9.8          
Exercised     (419,000 )   $ 0.51       -          
Canceled     (816,379 )   $ 3.88       -          
Outstanding at December 31, 2021     11,135,432     $ 2.85       7.6     $ 13,031  
                                 
Exercisable at December 31, 2021     9,850,155     $ 2.75       7.4     $ 12,402  

 

* Options outstanding as of March 31, 2021 includes 66,667 options to purchase shares of the Company’s common stock granted on October 16, 2020 and were recorded as an out of period adjustment. The related stock-based compensation of approximately $0.2 million has been expensed during the nine months ended December 31, 2021.

 

On June 22, 2020, the Company’s Board of Directors adopted a resolution to accelerate the vesting of all options granted to be fully vested as of June 22, 2020.

 

During the fiscal year ended March 31, 2021, the Company granted 3,854,088 options to purchase shares of its common stock with a fair value of approximately $6.0 million to the Company’s Board of Directors, executives and employees. The options vest over a period of one month – 2 years.

 

On December 30, 2020, the Company granted 4,464,463 options to purchase shares of its common stock with a fair value of approximately $10.2 million to its officers and employees, in exchange for 2,000,000 shares of vested and non-vested restricted common shares. The options vest on the 90 day anniversary of the grant date. The restricted stock had a fair value of approximately $0.9 million on the date the shares were canceled. The incremental fair value of $1.2 million related to the options will be recognized as stock-based compensation expense over the 90 day vesting period.

 

During the fiscal year ended March 31, 2021, the Company granted 630,556 options to purchase shares of its common stock with a fair value of approximately $0.9 million for consulting services.

 

During the nine months ended December 31, 2021, the Company recognized stock-based compensation of approximately 1.3 million, related to stock options. As of December 31, 2021, the Company had approximately $1.7 million of unrecognized compensation expense related to options granted under the Company’s equity incentive plan, which is expected to be recognized over a weighted-average period of 1.6 years.

 

Warrants:

 

A summary of the Company’s warrant (excluding penny warrants) activity during the nine months ended December 31, 2021 is as follows:

 

    Shares Underlying
Warrants
    Weighted Average
Exercise Price
    Weighted Average
Remaining
Contractual
Term (Years)
    Aggregate Intrinsic
Value
 
                         
Outstanding at March 31, 2021     3,883,083     $ 2.49       4.6     $ 7,763  
Issued     775,724     $ 3.94       4.8          
Canceled     (133,630 )   $ 5.63       -          
Outstanding at December 31, 2021     4,525,177     $ 2.65       4.0     $ 7,088  
                                 
Exercisable at December 31, 2021     3,468,422     $ 1.95       3.8     $ 6,751  

 

During the fiscal year ended March 31, 2021, the Company issued 3,727,765 warrants to purchase shares of the Company’s common stock with a fair value of approximately $11 million. Details of these issuances are as follows:

 

During the fiscal year ended March 31, 2021, the Company issued 116,667 warrants to purchase shares of the Company’s common stock. The warrants were exercised on a cashless basis on June 30, 2020, and the Company issued 97,222 shares of its common stock.

 

During the fiscal year ended March 31, 2021, the Company issued 398,896 warrants to purchase common stock in connection with the Company’s private placement transactions.

 

During the fiscal year ended March 31, 2021 the Company issued 208,000 warrants to purchase shares of the Company’s common stock and recorded a $0.2 million loss on issuance of these common stock warrants.

 

On January 26, 2021, in connection with the Company’s public offering, the Company issued a warrant to the underwriters to purchase 381,800 shares of its common stock. (See Note 9).

 

During the fiscal year ended March 31, 2021, 53,093 warrants were exercised for cash of approximately $0.2 million and the Company issued 53,093 shares of its common stock.

 

During the fiscal year ended March 31, 2021, the Company amended and restated 956,775 warrants related to its convertible notes and issued replacement warrants totaling 2,090,847.
     
During the fiscal year ended March 31, 2021, the Company issued 531,555 warrants in connection with its convertible notes.

 

During the nine months ended December 31, 2021, the Company issued 775,724 common stock warrants in exchange for consulting and advisory services. The warrants have a fair value of approximately $1.3 million which is recorded as stock-based compensation in the accompanying statement of operations for the nine months ended December 31, 2021.

 

The Company estimated the fair value of the warrants using the Black-Scholes pricing model as follows:

 

    Nine months ended
December 31,
2021
    Fiscal year ended
March 31,
2021
 
             
Expected price volatility     50% - 103%     50.0%
Risk free interest rate     0.81% - 1.2%     0.4% - 2.4%
Expected term     5 years       5 years