Stock-Based Compensation

12 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The 2020 Equity Incentive Plan (the “2020 Plan”) was approved by the Company’s stockholders on February 11, 2020. The 2020 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), to employees, and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance units, and performance shares to employees, directors and consultants.

Subject to the adjustment provisions of the 2020 Plan and the automatic annual increase described below, the maximum aggregate number of shares of common stock that may be issued under the 2020 Plan is 5,050,000 shares, which includes (i) 2,588,077 shares initially reserved for issuance, plus (ii) any shares of the Company’s common stock subject to issued and outstanding awards under the Transphorm Technology 2007 Stock Plan or the Transphorm Technology 2015 Equity Incentive Plan that, on or after February 12, 2020, expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest, with the maximum number of shares to be added to the 2020 Plan pursuant to this clause (ii) equal to 2,461,923 shares.

Subject to the adjustment provisions of the 2020 Plan, the number of shares of common stock available for issuance under the 2020 Plan will also include an annual increase on the first day of each fiscal year beginning with the Company’s 2022 fiscal year and ending on (and including) the Company’s 2030 fiscal year, in an amount equal to the least of: (i) 5,000,000 shares of common stock; (ii) five percent (5%) of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year; or (iii) such number of shares of common stock as the administrator of the 2020 Plan may determine. On April 1, 2022, 2,668,965 shares were added to the 2020 Plan pursuant to such automatic annual increase provision.

As of March 31, 2023, there were 2,909,204 stock options outstanding, 816,022 RSUs outstanding and 5,080,099 shares available for grant under the 2020 Plan.

Stock Options

The following table summarizes stock option activity and related information for the periods presented:

	Number of Options	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (1) (in thousands)
Outstanding at March 31, 2022	2,879,008	$	4.88	6.02	$	6,747
Options granted	281,712	5.09
Options exercised	(168,326)	4.22
Options canceled	(83,190)	5.95
Outstanding at March 31, 2023	2,909,204	4.90		5.50	126
Exercisable at March 31, 2023	2,302,834	4.66		4.63	125
Outstanding at March 31, 2021	2,543,125	$	4.82	6.05	$	—
Options granted	528,077	6.31
Options exercised	(52,799)	4.19
Options canceled	(139,395)	9.52
Outstanding at March 31, 2022	2,879,008	4.88		6.02	6,747
Exercisable at March 31, 2022	2,206,259	4.44		4.99	5,984

(1) Intrinsic value represents the excess of the fair value on the last day of the period (which was $3.99 and $7.07 as of March 31, 2023 and 2022, respectively) over the exercise price, multiplied by the number of options.

The assumptions used to value options granted to employees during the periods presented were as follows:

	Year Ended March 31,
	2023	2022
Weighted average expected life (in years)	5.68	5.87
Risk-free interest rate	3.24% - 3.75%	1.08% - 1.32%
Expected volatility	44.60% - 47.20%	42.50% - 43.80%
Grant date fair market value	$4.77 - $5.24	$6.34
Grant date fair value	$2.21 - $2.49	$1.94 - $3.32
Dividend yield	—%	—%

Option Modifications

During the year ended March 31, 2023, the Company recognized $0.3 million in incremental compensation cost as a result of an amendment to a former employee’s option agreements to allow for an extended post termination exercise period.

Restricted Stock Units

RSUs are grants of shares of the Company’s common stock that vest in accordance with terms and conditions established by the administrator of the 2020 Plan. Subject to the provisions of the 2020 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria.

The following table summarizes RSU activity and related information for the periods presented:

	Year Ended March 31,
	2023			2022
	Number of Shares	Weighted-Average Grant Date Fair Value Per Share		Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Balance at beginning of period	954,775	$	4.61	935,397	$	3.96
Granted	333,585	5.16		342,640	6.31
Vested	(403,157)	5.93		(305,982)	3.98
Canceled	(69,181)	5.66		(17,280)	3.98
Balance at end of period	816,022	5.74		954,775	4.61

Stock-Based Compensation

The accompanying consolidated statement of operations includes stock-based compensation expense for the periods presented as follows (in thousands):

	Year Ended March 31,
	2023		2022
Cost of revenue	$	243	$	161
Research and development	528		552
Sales and marketing	268		190
General and administrative	2,160		1,711
Total	$	3,199	$	2,614

Unrecognized Stock-Based Compensation

Unrecognized stock-based compensation expense as of dates presented was as follows (in thousands, except years):

	March 31,
	2023			2022
	Unrecognized Expense		Average Expected Recognition Period (in years)	Unrecognized Expense		Average Expected Recognition Period (in years)
Stock options	$	1,325	1.05	$	1,413	2.11
Restricted stock units	1,813		1.34	2,576		1.57
Total	$	3,138	1.22	$	3,989	1.76