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| COMMON STOCK | COMMON STOCK In the fiscal year ended March 31, 2023, the Company’s stockholders approved an increase in its authorized shares of common stock from 125 million to 225 million.
Long-Term Incentive Plan
The Company maintains the 2023 Long-Term Incentive Plan (the “2023 LTIP”) which provides for grants of performance share units, restricted stock units and stock options. On August 15, 2024, the stockholders of the Company approved an additional 250,000 shares of Common Stock under the 2023 LTIP for future issuance and on December 16, 2025, the Company’s stockholders approved an amendment to (i) increase the number of shares of the Company’s common stock reserved for issuance thereunder by 1,400,000 shares and (ii) remove the individual annual award limits for employees and consultants.
Equity awards typically vest between and four years. Stock options, performance shares and restricted stock grants to non-employee directors typically vest over one year. The term of each stock option under the 2023 Plan will not exceed seven years. Stock options, performance share units and restricted stock units granted under the 2023 Plan are subject to forfeiture if employment terminates.
The 2023 Plan has 2.2 million shares authorized for issuance of new shares, with 0.5 million performance shares and restricted shares outstanding, 0.1 million stock options outstanding, and 1.6 million shares available for future issuance under the Plan as of March 31, 2026.
2021 Inducement Plan
The Company's 2021 Inducement Plan (the "2021 Inducement Plan") became effective on February 1, 2021 and provides for issuance of inducement equity awards to individuals who were not previously an employee or non-employee director of the Company as an inducement to such individual's entering into employment with the Company. The term of each stock option and restricted stock unit under the plan will not exceed seven years, and each award generally vests between and three years.
On December 30, 2022, the Leadership and Compensation Committee of the Board of Directors approved an amendment to the 2021 Inducement Plan to increase the number of shares of common stock of the Company authorized for issuance thereunder from 38,500 to 0.1 million. In addition, the committee approved increasing the number of shares of common stock of the Company authorized for issuance under the 2021 Inducement Plan to 0.2 million. There were 0.1 million shares available for future issuance as of March 31, 2026.
The Company accounts for all forfeitures of stock-based awards when they occur.
Employee Stock Purchase Plan
The Company's has an Employee Stock Purchase Plan (the "ESPP") which enables eligible employees to purchase shares of its common stock at a discount. Purchases will be accomplished through participation in discrete offering periods. On each purchase date, eligible employees will purchase the Company's common stock at a price per share equal to 85% of the lesser of (i) the fair market value of the Company's common stock on the first trading day of the offering period, and (ii) the fair market value of the Company's common stock on the purchase date.
The Company has reserved shares of common stock for future issuance under its ESPP as follows (in thousands):
Performance Stock Units
The Company granted 120,000 and 180,126 units of performance stock units with financial performance conditions (“Performance PSUs”) in the fiscal years ended March 31, 2026 and 2025, respectively. Performance PSUs become eligible for vesting based on the Company achieving certain financial performance targets, and are contingent upon continued service of the holder of the award during the vesting period. Performance PSUs are valued at the market closing share price on the date of grant and compensation expense for Performance PSUs is recognized when it is probable that the performance conditions will be achieved. Compensation expense recognized related to Performance PSUs is reversed if the Company determines that it is no longer probable that the performance conditions will be achieved.
The following table summarizes activity for the unvested Market PSUs and Performance PSUs for the year ended March 31, 2026 (shares in thousands):
As of March 31, 2026, there was $0.7 million of unrecognized stock-based compensation related to Market PSUs and Performance PSUs, which is expected to be recognized over a weighted-average period of 1.6 years.
The total grant date fair value of shares granted during fiscal years ended March 31, 2026 and 2025 was $0.7 million and $0.4 million, respectively.
Restricted Stock Units
The Company granted 370,905 and 312,250 of service-based restricted stock units (“RSUs”) in the fiscal years ended March 31, 2026 and 2025, respectively, which generally vest ratably over a three-year service period. RSUs are valued at the market closing share price on the date of grant and compensation expense for RSUs is recognized ratably over the applicable vesting period.
The following table summarizes activity for the unvested RSUs for the year ended March 31, 2026 (shares in thousands):
The total grant date fair value of RSUs granted during fiscal years ended March 31, 2026 and 2025 was $2.6 million and $3.8 million, respectively.
As of March 31, 2026, there was $2.8 million of total unrecognized stock-based compensation related to RSUs, which is expected to vest over a weighted-average period of 1.7 years.
Stock Options
During fiscal 2026, the Company granted equity awards to its Chief Executive Officer including options to purchase 100,000 shares of the Company’s common stock, one award for 50,000 in November 2025 with a grant date fair value of $7.39 per share and the other award for 50,000 in January 2026 which had a grant date fair value if $5.02 per share. Both awards vest in four equal annual installments, subject to continued service. The stock option was valued using the Black-Scholes option pricing model on the grant date.
The significant assumptions used by the Company to estimate the fair value of the option awards as of March 31, 2026 are summarized below:
1 Volatility is based of the Company's historical stock price over a period of the expected term of the options.
2 Dividend yield is set to —% as the Company has not historically paid dividends.
3 Risk-free interest rate is based on the Treasury yield for the expected term of the options.
Stock-based Compensation Expense
The following table details the Company's stock-based compensation expense (in thousands):
The negative stock compensation expense in fiscal 2026 is largely driven by separations during the period.
Warrants
In connection with various debt refinancing and debt amendment activities detailed in Note 4: Debt, the Company issued warrants to purchase shares of the Company common stock. As of March 31, 2026, there was a Forbearance Warrant issued in September 2025 which are exercisable until the seventh anniversary of its issuance. As of March 31, 2024, there were Lender Warrants that were issued in December 2018 which were exercisable until December 27, 2028, issued in June 2020 which were exercisable until June 16, 2030 and issued in June 2023 which were exercisable until June 1, 2033 (collectively the "Lender Warrants"). The Lender Warrants were fully exercised in fiscal 2025.
Lender Warrants
On December 30, 2024, 467,248 warrants were exercised in a cashless exercise whereby 61,270 shares with a value of $6.20 per share were used to settle the exercise price and the remaining 405,978 shares were issued to the warrant holders.
On January 3, 2025, certain PIMCO-managed entities exercised 677,905 warrants in a cashless exercise whereby 228,195 shares with a weighted-average value of $35.42 per share were used to settle the exercise price and the remaining 449,710 shares were issued to the warrant holders. As PIMCO was a related party, this transaction was reviewed and approved in accordance with the Company’s related party transaction policy.
The table below sets forth a summary of changes in the fair value of the Company’s Level 2 Lender Warrant liabilities for the years ended March 31, 2024 and March 31, 2025. The Company did not issue any Lender Warrants during the year ended March 31, 2026 and had no outstanding Lender Warrants as of March 31, 2026.
Forbearance Warrant
The Forbearance Warrant, issued on September 23, 2025, has an exercise price of $8.81 per share, representing 80% of the -day volume-weighted average price as of September 22, 2025, and is exercisable until the seventh anniversary of its issuance. It includes a put right that allows the holder to require the Company to repurchase the unexercised portion for cash after the fifth anniversary, or earlier upon a change of control or
liquidation. The repurchase price equals the holder’s pro rata share of the original issue value of $20 million, adjusted for any exercised portion.
The Forbearance Warrant is classified as a liability under ASC 480, as it may require cash settlement and meets the definition of a derivative. It is initially measured at fair value, with subsequent changes recognized in the consolidated statements of operations and comprehensive loss under “Change in fair value of warrant liabilities.” See Note 11: Fair Value of Financial Instruments, for additional information.
The table below sets forth a summary of changes in the fair value of the Company’s Level 2 Forbearance Warrant liabilities for the years ended March 31, 2026 and March 31, 2025:
Other Warrants
The Company also issued 2,500 warrants to purchase the Company's common stock in June 2020 and June 2023 to advisors of the Company at an exercise price of $60.00 and $20.00, respectively (collectively the "Other Warrants"). The Company has concluded that the Other Warrants do not contain provisions that would require liability classification under Topic 480 or Topic 718 and have been equity classified.
Standby Equity Purchase Agreement
On January 25, 2025, we entered into the SEPA with YA in which pursuant to and subject to its terms, the Company has the right, but not the obligation, to sell up to $200.0 million of common stock at any time during the three-year period following the date of the SEPA. On January 27, 2025, the Company filed a registration statement on Form S-1 in connection with the SEPA. The Registration Statement on Form S-1 was declared effective February 11, 2025.
Sales of common stock under the SEPA may be made by the Company at its discretion from time to time and will depend upon market conditions and other factors. The purchase price for shares sold under the SEPA is based on a formula tied to the volume-weighted average price of the Company’s common stock.
In addition, in no event may the Company issue more than 1,157,139 shares of common stock under the SEPA, representing 19.99% of the Company’s common stock outstanding immediately prior to execution of the SEPA (the “Exchange Cap”), unless the Company obtains stockholder approval in accordance with applicable Nasdaq rules or otherwise satisfies the conditions under which the Exchange Cap would not apply. The SEPA is also subject to a 4.99% beneficial ownership limitation, which restricts YA from acquiring shares that would result in ownership above that threshold.
As of March 31, 2026, the Company has issued approximately 8.7 million shares of common stock under the SEPA for net proceeds of approximately $91.0 million with 7.6 million shares sold in fiscal 2026 for net proceeds of $75.2 million.
The amount of additional capital that may be raised under the SEPA will depend on market conditions, trading volumes, the Company’s stock price, and the continued satisfaction of the applicable limitations and conditions under the agreement.
The Company evaluated the SEPA that includes the right to require YA to purchase shares of common stock in the future (“put right”) considering the guidance in ASC 815-40, Derivatives and Hedging — Contracts on an Entity’s Own Equity, and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting. The Company has analyzed the terms of the freestanding put right and has concluded that it has an immaterial value as of March 31, 2026 and 2025.
Registration Rights Agreements
Pursuant to the registration rights agreements applicable to the Lender Warrants, the holders have certain registration rights for the shares of common stock issuable upon exercise of the applicable warrants, including (a) the ability of a holder to request that the Company file a Form S-1 registration statement with respect to at least
40% of the registrable securities held by such holder as of the issuance date of the applicable warrants; (b) the ability of a holder to request that the Company file a Form S-3 registration statement with respect to outstanding registrable securities if at any time the Company is eligible to use a Form S-3 registration statement; and (c) certain piggyback registration rights related to potential future equity offerings of the Company, subject to certain limitations.
The registration rights agreement dated September 23, 2025, by and between the Company and Dialectic, grants Dialectic certain registration rights with respect to the shares of common stock issuable upon exercise of the Forbearance Warrant, including certain mandatory resale registration and piggyback registration rights, subject to certain limitations.
In addition, the registration rights agreement dated December 18, 2025, by and between the Company and Dialectic, grants Dialectic certain registration rights with respect to the shares of common stock issuable upon conversion of the Convertible Note, including certain mandatory resale registration and piggyback registration rights, subject to certain limitations.
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