Stock-Based Compensation

12 Months Ended

Mar. 31, 2023

Compensation Related Costs [Abstract]

Stock-Based Compensation

10. 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, 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 March 31, 2023 and 2022 there were 1,308,114 shares and 393,987 shares, respectively, of our common stock available for grant pursuant to the 2018 Plan. As of the date of the filing of this Annual Report on Form 10-K, 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. On May 10, 2022, the Board has approved a plan to increase the number of shares to 8,000,000 for 2018 Plan. In addition to the options discussed here, there have been 600,000 performance-based option shares issued outside the 2018 Plan.

Stock Option Re-Pricing

On January 11, 2022, our Board of Directors approved the re-pricing of the exercise price of certain options totaling 5,597,970 (vested and unvested) from $1.08 per share to $0.33 per share. All other terms of these stock option grants were unchanged. Also included in the re-pricing is a warrant to purchase 265,982 shares issued to our chief executive officer with an exercise price of $1.00 per share. As a result of this repricing, we recorded a total incremental stock-based compensation of $123,580, among which $34,465 was recorded as an additional expense for the fiscal year ended March 31, 2022.

On October 27, 2022, our Board of Directors approved the re-pricing of the exercise price of certain options totaling 5,597,970 (vested and unvested) from $0.33 per share to $0.2065 per share. All other terms of these stock option grants were unchanged. Also included in the re-pricing is a warrant to purchase 265,982 shares issued to our chief executive officer with an exercise price of $0.33 per share. As a result of this repricing, we recorded a total incremental stock-based compensation of $129,820 among which $90,679 was recorded as an additional expense for the fiscal year ended March 31, 2023.

Service-Based Stock Option Grants

In determining the fair value of the service-based options during the fiscal years ended March 31, 2023 and 2022, we utilized the Black-Scholes pricing model utilizing the following assumptions:

	Year Ended March 31
	2023			2022
Option exercise price per share		$0.0265-$0.13			$0.25 - $2.75
Grant date fair value per share		$0.11-$4.00			$0.20 - $2.75
Range of Expected volatility		161.0%-220.5	%		161.0% - 220.5	%
Expected term of option in years		3-10			3 - 6.25
Range of risk-free interest rate		0.50%-2.20	%		0.50% - 2.20	%
Dividend yield		-			-

Activity under the 2018 Plan for all service-based stock options for the years ended March 31, 2023 and 2022 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		708,243	$	0.31
Exercised		-		-
Cancelled or forfeited		-		-
Options outstanding as of March 31, 2022		5,606,013	$	0.33		8.57	$	5,000
Granted		875,000
Exercised		-		-
Cancelled or forfeited		-		-
Options outstanding as of March 31, 2023		6,481,013		0.33		7.74		-
Options vested and exercisable as of March 31, 2023

ROCKETFUEL BLOCKCHAIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023

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 to 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		240.1	%
Expected dividend rate		0.00	%
Risk free interest rate		0.54	%

Activity under the 2018 Plan for all performance-based stock options for the years ended March 31, 2023 and 2022 is as follows:

	Options Outstanding		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding as of March 31, 2021		600,000	$	1.08		9.83	$	144,000
Granted		-
Exercised		-
Cancelled or forfeited		-
Options outstanding at March 31, 2022		600,000	$	0.33		8.46	$	nil
Granted
Exercised
Cancelled or forfeited
Options outstanding as of March 31, 2023		600,000		0.33
Options vested and exercisable as of March 31, 2023

ROCKETFUEL BLOCKCHAIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023