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

The Company grants equity-based compensation under its 2016 Equity Incentive Plan (the "Plan"). The Plan allows the Company to grant incentive and nonqualified stock options, and shares of restricted stock to its employees, directors and consultants. As of September 30, 2020, there is a total of 22,000,000 shares of the Company's common stock available under the Plan.

Stock-based compensation:

The Company recognized total expenses for stock-based compensation during the three and six months ended September 30, 2020 and 2019, which are included in the accompanying statements of operations, as follows (unaudited):

Restricted stock awards:

A summary of the Company's restricted stock activity during the six months ended September 30, 2020 is as follows:

During the six months ended September 30, 2020, the Company issued 4,000,000 shares of fully vested restricted common stock to its Chief Executive Officer. The Company repurchased 500,000 shares of the restricted stock (See Note 9).

The fair value of restricted stock awards is measured based on their fair value at the grant date and amortized over the vesting period, which is generally 24 months. As of September 30, 2020, the unrecognized stock-based compensation expense related to restricted stock awards was approximately $0.4 million to be recognized over a period of 0.4 years.

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.

On April 13, 2020, the Company granted 6,970,000 options to purchase shares of its common stock with a fair value of approximately $3.2 million to executives and employees of the Company. The options will vest over a period of 24 months.

During the three months ended June 30, 2020, the Company granted 1,166,667 options to purchase shares of its common stock with a fair value of approximately $0.3 million for consulting services.

In June 2020, the Company granted 100,000 options to purchase shares of its common stock with a fair value of approximately $40,000 to members of the Company's Board of Directors.

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. As of June 30, 2020, the Company had no unrecognized compensation expense related to its stock options granted under the Company's equity incentive plan.

On September 16, 2020, the Company granted 2,233,932 options to purchase shares of its common stock to its chief financial officer. The options fully vest thirty days from the grant date and have a fair value of approximately $1.1 million.

During the three months ended September 30, 2020, the Company granted 200,000 options to purchase shares of its common stock with a fair value of approximately $0.1 million for consulting services.

The following was used in determining the fair value of stock options granted during the six months ended September 30, 2020.

A summary of activity under the Plan for the six months ended September 30, 2020 is as follows:

Warrants:

A summary of the Company's warrant activity during the six months ended September 30, 2020 is as follows:

During the three months ended June 30, 2020, the Company issued 350,000 warrants to purchase shares of the Company's common stock. During the six months ended September 30, 2020, the Company recognized approximately $0.1 million of stock-based compensation expense related to the warrants. The warrants were exercised on a cashless basis on June 30, 2020, and the Company issued 291,667 shares of its common stock.

During the three months ended September 30, 2020 the Company issued 624,000 warrants to purchase shares of the Company's common stock. During the three and six months ended the Company recorded a $0.2 million loss on issuance of these common stock warrants.

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