Quarterly report pursuant to Section 13 or 15(d)

9. STOCK COMPENSATION

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9. STOCK COMPENSATION
9 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [Abstract]  
STOCK COMPENSATION

9. STOCK COMPENSATION

 

The following tables summarize share-based compensation expenses relating to RSUs and stock options and the effect on basic and diluted loss per common share during the three and nine month periods ended December 31, 2020 and 2019:

 

    Three Months
Ended
December 31,
2020
    Three Months
Ended
December 31,
2019
    Nine Months
Ended
December 31,
2020
    Nine Months
Ended
December 31,
2019
 
Vesting of stock options and restricted stock units   $ 377,958     $ 102,576     $ 629,207     $ 755,648  
Total stock-based compensation expense   $ 377,958     $ 102,576     $ 629,207     $ 755,648  
Weighted average number of common shares outstanding – basic and diluted     12,093,361       2,887,883       11,265,725       1,821,557  
                                 
Basic and diluted loss per common share attributable to stock-based compensation expense   $ (0.03 )   $ (0.04 )   $ (0.06 )   $ (0.41 )

  

 

All of the stock-based compensation expense recorded during the nine months ended December 31, 2020 and 2019, which totaled $629,207 and $755,648, respectively, is included in payroll and related expense in the accompanying condensed consolidated statements of operations.  Stock-based compensation expense recorded during the nine months ended December 31, 2020 and 2019 represented an impact on basic and diluted loss per common share of $(0.06) and $(0.41), respectively.

 

We review share-based compensation on a quarterly basis for changes to the estimate of expected award forfeitures based on actual forfeiture experience. The cumulative effect of adjusting the forfeiture rate for all expense amortization is recognized in the period the forfeiture estimate is changed. The effect of forfeiture adjustments for the nine months ended December 31, 2020 was insignificant.

 

Stock Option Activity and Approval of 2020 Plan

 

From February 2020 through May 2020, our compensation committee granted options to purchase 521,476 shares of our common stock that were contingent upon stockholder approval of the 2020 Plan. Upon approval of the 2020 Plan at the Annual Meeting, these option grants were considered effective and no longer contingent as of that date.

 

The 2020 Plan approved by our stockholders at the Annual Meeting, authorizes up to 1,842,556 shares for issuance pursuant to stock option grants, RSUs or other forms of stock-based compensation. No future grants will be made under the 2010 Plan.

 

We issued an option to purchase shares 239,122 shares of our common stock pursuant to the 2020 Plan to our Chief Executive Officer during the three months ended December 31, 2020, in connection with the appointment of Dr. Fisher as our Chief Executive Officer, effective as of October 30, 2020.

 

In connection with the Separation Agreement and pursuant to Dr. Rodell’s employment agreement with the Company, the vesting was accelerated on 50% of outstanding and unvested options to purchase shares of our common stock held by Dr. Rodell as of the Separation Date of October 30, 2020, such that the accelerated stock options were fully vested and exercisable as of the Separation Date.

 

In December 2020, Dr. Rodell elected to net exercise a portion of his stock options. As a result, we issued Dr. Rodell an aggregate of 15,896 shares of our common stock and we paid the estimated withholding taxes of $34,209 related to the net exercise.

 

Options outstanding that were vested as of December 31, 2020 and options that are expected to vest subsequent to December 31, 2020 are as follows:

 

    Number of
Shares
    Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term in
Years
 
Vested     34,509     $ 32.53       5.84  
Expected to vest     567,814     $ 1.51       9.67  
Total     602,323                  

 

A summary of stock option activity during the nine months ended December 31, 2020 is presented below:

 

    Amount     Range of
Exercise Price
    Weighted
Average
Exercise
Price
 
Stock options outstanding at March 31, 2020     51,124       $18.75 - $187.50     $ 44.12  
Exercised     (15,896 )     $1.28     $ 1.28  
Granted     770,094       $1.28 – $2.45     $ 1.45  
Cancelled/Expired     (202,999 )     $1.28 - $187.50     $ 6.76  
Stock options outstanding at December 31, 2020     602,323       $1.28 - $187.50     $ 3.29  
Stock options exercisable at December 31, 2020     34,509       $1.28 - $187.50     $ 32.53  

 

On December 31, 2020, our outstanding stock options had no intrinsic value since the closing price on that date of $2.47 per share was below the weighted average exercise price of our outstanding stock options.

 

At December 31, 2020, there was approximately $2,240,000 of unrecognized compensation cost related to share-based payments, which is expected to be recognized over a weighted average period of 1.48 years.