Stock-Based Compensation | 8. 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 Stock Incentive Plan (the “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 2,000,000 4,000,000 6,000,000 502,430 Stock Option Re-Pricing On August 8, 2018, our Board of Directors approved the grant of service-based options to purchase 500,000 3.00 10 3.00 4.00 7 40% 0.0% 2.80% 1,100,350 On March 18, 2021, our Board of Directors approved the re-pricing of the exercise price of these shares from $3.00 per share to $ 1.08 489,064 1,589,414 Service-Based Stock Option Grants In addition to the service-based option granted to Mr. Yankowitz in August 2018 exercisable into a total of 500,000 4,397,570 In determining the fair value of the service-based options granted during the fiscal year ended March 31, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions Service-Based Options Option exercise price per share $ 1.08 1.32 Grant date fair market value per share $1.08 1.96 Expected term of option in years 6.25 Expected volatility 85.0% 214.5 % Expected dividend rate 0.00 % Risk free interest rate 0.42% 0.84 % ROCKETFUEL BLOCKCHAIN, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2021 Activity under the 2018 Plan for all service-based stock options for the fiscal year ended March 31, 2021 and 2020 are as follows: Schedule of Stock Option Activity Options Outstanding Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term in Years Aggregate Intrinsic Value Options outstanding as of April 1, 2019 500,000 $ 1.08 9.33 $ 120,000 Granted - - Exercised - - Cancelled or forfeited - - Options outstanding as of March 31, 2020 500,000 $ 1.08 8.33 $ 120,000 Options outstanding as of March 31, 2020 500,000 $ 1.08 8.33 $ 120,000 Granted 4,397,770 $ 1.08 Exercised - - Cancelled or forfeited - - Options outstanding as of March 31, 2021 4,897,770 $ 1.08 9.63 $ 1,175,417 Options exercisable as of March 31, 2021 992,641 $ 1.08 9.63 $ 258,811 Options vested or expected to vest as of March 31, 2021 992,641 $ 1.08 9.63 $ 258,811 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 March 31, 2021 of $ 1.32 no For the fiscal years ended March 31, 2021 and 2020, we recorded stock-based compensation expense for service-based stock options pursuant to the 2018 Plan in the amount of $ 1,023,672 , inclusive of the additional stock-based compensation of $489,064 recorded in connection with the re-pricing of Mr. Yankowitz’ August 8, 20128 stock option, and $ 0 , respectively. As of March 31, 2021, we had $ 4,069,865 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 Mr. Hall which are exercisable into 600,000 The Board of Directors also entered into a resolution whereby 75,000 525,000 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: Schedule of Share-based Payment Award, Stock Options, Valuation 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 MARCH 31, 2021 Activity under the 2018 Plan for all performance-based stock options for the fiscal year ended March 31, 2021 is as follows: Schedule of Stock Option Activity Options Outstanding Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Term in Years Aggregate Intrinsic Value Options outstanding as of April 1, 2020 - $ - - $ - Granted 600,000 1.08 Exercised - - Cancelled or forfeited - - Options outstanding as of March 31, 2021 600,000 $ 1.08 9.83 $ 144,000 Options exercisable as of March 31, 2021 85,938 $ 1.08 9.83 $ 20,625 Options vested or expected to vest as of March 31, 2021 85,938 $ 1.08 9.83 $ 20,625 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 March 31, 2021 of $ 1.32 no For the fiscal years ended March 31, 2021, we recorded stock-based compensation expense for performance-based stock options pursuant to the 2018 Plan in the amount of $ 66,531 . As of March 31, 2021, we had $ 397,975 of unrecognized stock-based compensation cost related to performance-based stock options. There was no performance-based stock option activity during the fiscal year ended March 31, 2020. CEO Warrant On February 15, 2021, we issued a warrant to purchase 265,982 1.00 10 1.00 1.4 6.25 214.4% 0.0% 0.54% 370,131 |