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Stock-Based Compensation
 6 Months Ended
Sep. 30, 2021
Compensation Related Costs [Abstract]  
Stock-Based Compensation

12. Stock-Based Compensation

 

Stock Option Plan

 

On August 8, 2018, the Board and stockholders holding a majority of our voting power approved the RocketFuel Blockchain, Inc., 2018 Plan, which plan enables us to make awards that qualify as performance-based compensation. Under the terms of the 2018 Plan, the options will (i) be incentive stock options, (ii) have an exercise price equal to the fair market value per share of our common stock on the date of grant as determined by an independent valuation by a qualified appraiser, (iii) have a term of 10 years, (iv) vest and become exercisable pursuant to the terms set forth in the grantees stock option agreement, (v) be subject to the exercise, forfeiture and termination provisions set forth in the 2018 Plan and (vi) otherwise be evidenced by and subject to the terms of our standard form of stock option agreement. We initially reserved 2,000,000 shares of our common stock for issuance in connection with awards under the plan. On September 15, 2020 and March 18, 2021, our board of directors unanimously resolved to amend the 2018 Plan to increase the number of shares of our common stock available for grant to 4,000,000 shares and 6,000,000 shares, respectively. As of September 30, 2021 and March 31, 2021 there were 399,405 shares and 502,230 shares, respectively, of our common stock available for grant pursuant to the 2018 Plan. As of the date of the filing of this Quarterly Report on Form 10-Q, we had not yet solicited votes from our stockholders to approve the increase in the number of shares of our common stock available for grant pursuant to the 2018 Plan.

 

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

 

Service-Based Stock Option Grants

 

From August 8, 2018 through September 30, 2021, we granted service-based options to employees and consultants, pursuant to the 2018 Plan, exercisable into a total of 5,000,595 shares of our common stock. In determining the fair value of the service-based options granted during the period from August 8, 2018 through September 30, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions:

 

  

Service-Based

Options

 
Option exercise price per share   $1.00 - $2.75  
Grant date fair market value per share   $1.00 - $2.75  
Expected term of option in years   6.25 
Expected volatility   40.3% to 220.5%
Expected dividend rate   0.00%
Risk free interest rate   0.42% to 2.83%

 

During the three months ended September 30, 2021, we granted service-based options pursuant to the 2018 Plan to (i) one employee exercisable into 1,010 shares of our common stock at exercise prices from $1.00 per share to $1.11 per share; and (ii) one consultant exercisable into 100,000 shares of our common stock at an exercise price of $1.08 per share. During the six months ended September 30, 2021, we granted service-based options pursuant to the 2018 Plan to (i) one employee exercisable into 2,825 shares of our common stock at exercise prices from $1.00 per share to $2.75 per share; and (ii) one consultant exercisable into 100,000 shares of our common stock at an exercise price of $1.08 per share. In determining the fair value of the service-based options granted during the three and six months September 30, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions:

 

  

Service-Based

Options

 
Option exercise price per share   $1.00 - $2.75  
Grant date fair market value per share   $1.00 - $2.75  
Expected term of option in years   6.25 
Expected volatility   211.1% to 220.5%
Expected dividend rate   0.00%
Risk free interest rate   0.71% to 1.02%

 

Activity under the 2018 Plan for all service-based stock options for the six months ended September 30, 2021 are as follows:

 

  

Options

Outstanding

  

Weighted-

Average Exercise

Price per Share

  

Weighted-

Average

Remaining

Contractual

Term in Years

  

Aggregate

Intrinsic Value

 
Options outstanding at April 1, 2021:   4,897,770   $1.08    9.63    1,175,417 
Granted   102,825    1.10    9.80    - 
Exercised   -                
Cancelled or forfeited   -                
Options outstanding as of September 30, 2021   5,000,595   $1.08    7.96   $99,982 
Options exercisable as of September 30, 2021   1,551,422   $1.08    7.96   $30,998 
Options vested or expected to vest as of September 30, 2021   1,551,422   $1.08    7.96   $30,988 

 

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

 

As of September 30, 2021 and March 31, 2021 there were 399,405 shares and 502,230 shares, respectively, of our common stock available for grant pursuant to the 2018 Plan.

 

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on September 30, 2021 of $1.10 and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. There were no service-based stock options exercised under the 2018 Plan for the three and six months ended September 30, 2021 and 2020.

 

For the three and six months ended September 30, 2021, we recorded stock-based compensation expense for service-based stock options pursuant to the 2018 Plan in the amount of $294,446 and $585,939, respectively. For the three and six months ended September 30, 2020, we recorded no stock-based compensation expense for service-based stock options pursuant to the 2018 Plan. As of September 30, 2021, we had $3,623,019 of unrecognized stock-based compensation cost related to service-based stock options.

 

Performance-Based Stock Option Grants

 

We also granted performance-based options pursuant to the 2018 Plan to Rohan Hall, our chief technology officer, which are exercisable into 600,000 shares of our common stock subject to certain designated milestones. On March 18, 2021, our Board of Directors determined that Mr. Hall earned all of the performance-based options effective February 1, 2021. The Board of Directors also entered into a resolution whereby 75,000 shares of our common stock underlying the performance-based options would vest immediately and 525,000 shares of our common stock underlying the performance-based option would vest ratably over a 48 month period with the first vesting date being February 1, 2021.

 

In determining the fair value of the performance-based options granted Mr. Hall on September 14, 2020 and earned effective February 1, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions:

 

   Performance -Based Options 
Option exercise price per share  $1.08 
Grant date fair market value per share  $1.08 
Expected term of option in years   6.25 
Expected volatility   85.0%
Expected dividend rate   0.00%
Risk free interest rate   0.54%

 

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

 

Activity under the 2018 Plan for all performance-based stock options for the six months ended September 30, 2021 is as follows:

 

   Options Outstanding  

Weighted- Average Exercise

Price per Share

   Weighted- Average Remaining Contractual Term in Years   Aggregate Intrinsic Value 
Balance at April 1, 2021   600,000    1.08    9.83    144,000 
Granted   -                
Exercised   -                
Cancelled or forfeited   -                
Options outstanding as of September 30, 2021   600,000   $1.08    9.21   $12,000 
Options exercisable as of September 30, 2021   151,566   $1.08    8.96   $3,031 
Options vested or expected to vest as of September 30, 2021   151,566   $1.08    8.96   $3,031 

 

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on September 30, 2021 of $1.10 and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. There were no performance-based stock options exercised under the 2018 Plan for the three months ended September 30, 2021.

 

For the three and six months ended September 30, 2021, we recorded performance-based compensation expense for performance-based stock options pursuant to the 2018 Plan in the amount of $25,404 and $50,808, respectively. For the three and six months ended September 30, 2020, we recorded no performance-based compensation expense for performance-based stock options pursuant to the 2018 Plan. As of September 30, 2021, we had $347,167 of unrecognized stock-based compensation cost related to performance-based stock options.