| EQUITY TRANSACTIONS | Issuances of common stock for services During the nine months ended November 30, 2015, the Company issued
an aggregate of 28,001 shares of common stock to consultants for services that vested immediately and 6,667 shares of common stock
to a consultant for services that vest over 6 months. The weighted average fair value of these shares of common stock
amounted to $4.96. During the three and nine months ended November 30, 2015, the Company
terminated a contract with a consultant whereby the consultant returned an aggregate of 4,222 shares of common stock previously
issued to the consultant and the Company reduced stock-based expense in the amount of $22,164. During the nine months ended November 30, 2014, the Company issued
an aggregate of 20,001 shares of common stock to consultants for services that vested immediately, and 31,504 shares of common
stock to members of its Board that vested immediately, 12,987 shares of common stock to members of its Board that vested one year
after issuance and 1,334 shares of common stock to an employee that will vest upon a certain milestone being reached. The
weighted average fair value of these shares of common stock amounted to $13.78. During the three and nine months ended November 30, 2014, the Company
modified the vesting term of 16,668 shares of common stock previously issued to certain members of its Board, resulting in the
shares being fully vested upon modification. As a result of the modification, the Company recognized a compensation
charge of $192,500, equal to the fair value of these shares on the date of the modification. During the nine months ended November 30, 2015 and 2014, the Company
recognized $236,148 and $666,265, respectively, of share-based compensation related to common stock issued for services, all of
which was recognized into general and administrative expense. Settlement On April 1, 2015, the Company entered into a settlement agreement
to settle a dispute with two affiliated security holders in which the Company paid $150,000, in exchange for the cancellation of
all Company securities held by such parties, which included an aggregate of 10,728 shares of common stock, 1,667 common stock
purchase warrants with an exercise price of $31.50 and 5,001 common stock purchase warrants with an exercise price of $22.50. Additionally,
the Company reimbursed $3,000 of legal expenses to the two affiliated security holders. The Company recorded the fair value of
the instruments as a reduction of equity as equity instruments were cancelled and recognized a settlement expense of $39,097 for
the excess of the amount paid over the fair value of the cancelled equity instruments. Series B preferred stock financing – the Series B Private
Placement The Company entered into an amended and restated securities purchase
agreement (the “A&R Series B Purchase Agreement”) on March 27, 2015 and March 31, 2015 with a number of new and
existing accredited investors (collectively, the “Series B Investors”) pursuant to which it sold $2,130,750 of Series
B Preferred Stock convertible into common stock at $8.25 per share in a private placement (the “Series B Private Placement”). In
addition, pursuant to the A&R Series B Purchase Agreement, the Company issued series A warrants (the “Series A Warrants”)
to purchase up to 193,708 shares of common stock at an initial exercise price per share of $20.50 to the Series B Investors. The
Series A Warrants expire on March 31, 2020. Pursuant to the closings of the Series B Private Placements in March
2015, the Company issued 387.4088 shares of Series B Preferred Stock convertible into 258,281 shares of common stock and Series
A Warrants to purchase 193,708 shares of common stock for an aggregate purchase price of $2,130,750, of which $18,000 represents
the exchange of stock-based compensation to a consultant that was to be settled in the form of shares of common stock but
was actually settled with Series B Preferred Stock and Series A Warrants. As a result of the exchange, the Company recorded
an additional $12,695 of stock-based compensation. In connection with the March 2015 closings of the Series B Private
Placement, the placement agents were paid a total cash fee of $147,451 including expense allowances and reimbursements, and were
issued an aggregate of 20,668 Series A Warrants. On the grant dates, the fair value of the placement agent warrants amounted to
$158,441 and was recorded as a stock issuance cost. Net proceeds amounted to $1,945,244 after deducting offering expenses to be
paid in cash, including the placement agent fees and legal fees and other expenses. Accounting for the Series B Preferred Stock The Company determined the Series B Preferred Stock should be classified
as equity as it is not mandatorily redeemable, and there are no unconditional obligations in that (1) the Company must or may settle
in a variable number of its equity shares and (2) the monetary value is predominantly (a) fixed, (b) varying with something other
than the fair value of the CompanyÂ’s equity shares or (c) varying inversely in relation to the CompanyÂ’s equity shares. Because the Series B Preferred Stock contain certain embedded features
that could affect the ultimate settlement of the Series B Preferred Stock, the Company analyzed the instrument for embedded derivatives
that require bifurcation. The CompanyÂ’s analysis began with determining whether the Series B Preferred Stock is more akin
to equity or debt. The Company evaluated the following criteria/features in this determination: redemption, voting rights,
collateral requirements, covenant provisions, creditor and liquidation rights, dividends, conversion rights and exchange rights.
The Company determined that the preponderance of evidence suggests the Series B Preferred Stock was more akin to equity than to
debt when evaluating the economic characteristics and risks of the entire Series B Preferred Stock, including the embedded features.
The Company then evaluated the embedded features to determine whether their economic characteristics and risks were clearly and
closely related to the economic characteristics and risks of the Series B Preferred Stock. Since the Series B Preferred Stock was
determined to be more akin to equity than debt, and the underlying that causes the value of the embedded features to fluctuate
would be the value of the CompanyÂ’s common stock, the embedded features were considered clearly and closely related to the
Series B Preferred Stock. As a result, the embedded features would not need to be bifurcated from the Series B Preferred Stock. Any beneficial conversion features related to the exercise of the
Most Favored Nation exchange right or the application of the Mandatory Conversion provision will be recognized upon the occurrence
of the contingent events based on its intrinsic value at the commitment date. Accounting for the Series A Warrants The Company concluded the freestanding Series A Warrants were indexed
to the CompanyÂ’s common stock and should be classified in stockholderÂ’s equity, based on their relative fair value. Allocation of Proceeds of the Series B Private Placement on March
27, 2015 and March 31, 2015 The $2,130,750 proceeds from the Series B Private Placement on March
27, 2015 and March 31, 2015 were allocated to the Series B Preferred Stock and Series A Warrant instruments based on their relative
fair values. The Series B Preferred Stock was valued on an as-if-converted basis
based on the underlying common stock. The Series A Warrants were valued using the Black-Scholes model with the following
weighted-average input at the time of issuance: expected term of 5.0 years based on their contractual life, volatility of 125%
based on the CompanyÂ’s historical volatility and risk free rate of 1.4% based on the rate of the 5-years U.S. treasury bill. After allocation of the proceeds, the effective conversion price
of the Series B Preferred Stock was determined to be beneficial and, as a result, the Company recorded a non-cash deemed dividend
of $1,067,491 equal to the intrinsic value of the beneficial conversion feature. The Series B Registration Rights Agreement In connection with the closing of the Series B Private Placement,
the Company entered into an amended and restated registration rights agreement (the “A&R Series B Registration Rights
Agreement”) with the Series B Investors, in which the Company agreed to file a registration statement (the “Registration
Statement”) with the Securities and Exchange Commission ("SEC") to register for resale the shares of common stock
underlying the Series B Preferred Stock, the Series A Warrants and the Series B Warrants within 30 calendar days of the final closing
date of March 31, 2015 (the “Filing Date”), and to have the registration statement declared effective within 120 calendar
days of the Filing Date. If the Registration Statement has not been filed with the SEC on
or before the Filing Date, the Company shall, on the business day immediately following the Filing Date, and each 15th day thereafter,
make a payment to the Series B Investors as partial liquidated damages for such delay (together, the “Late Registration Payments”)
equal to 2.0% of the purchase price paid for the Series B Preferred Stock then owned by the Series B Investors for the initial
15 day period and 1.0% of the purchase price for each subsequent 15 day period until the Registration Statement is filed with the
SEC. Late Registration Payments will be prorated on a daily basis during each 15 day period and will be paid to the
Series B Investors by wire transfer or check within five business days after the end of each 15 day period following the Filing
Date. The Company filed the Registration Statement on Form S-1 with the
SEC on April 10, 2015 and the Registration Statement was declared effective on July 29, 2015. As a result, no penalty was incurred. Common stock financing – the Qualified Financing On June 30, 2014, the Company issued 314,269 shares of common stock
and 500,000 shares of Series A Convertible Preferred Stock to certain accredited investors that entered into a securities purchase
agreement (the “Qualified Financing Purchase Agreement”), whereby the Company received aggregate gross proceeds of
$5,735,427, of which $4,092,427 represents the automatic conversion of outstanding convertible promissory notes with principal
amounts totaling $3,357,000 and related interest amounts as referenced in Note 4 below (the “Qualified Financing”).
The net proceeds from this transaction amounted to $1,643,000. Included in the net proceeds is the receipt of $100,000 from an
investor that was concurrently paid $100,000 for due diligence and legal fees by the Company. Approximately $1,000,000 of these
proceeds was generated from the sale of marketable securities transferred to the Company by an investor (see Note 12). On July 14, 2014, the Company completed a second closing under the
Qualified Financing Purchase Agreement whereby the Company issued 12,546 shares of common stock for an aggregate purchase price
of $207,000. Series A preferred stock financing – the October 2014
Private Placement On October 14, 2014, the Company issued 374,257 shares of Series
A Convertible Preferred Stock to a certain accredited investors that entered into a securities purchase agreement in exchange for
the transfer to the Company of 1,069,305 freely tradable shares of common stock of Quantum Materials Corp. (QTMM), a public reporting
company whose shares of common stock are eligible for quotation on the OTCQB (the “October 2014 Private Placement”).
We recorded the issuance of the Series A Convertible Preferred Stock in connection with the October 2014 Private Placement based
on the fair value of the consideration received, which amounted to $256,633. The shares of QTMM were sold by the Company, generating
approximately $214,000 of proceeds (see Note 12). Purchase agreement with Lincoln Park Capital Fund, LLC On October 10, 2014, the Company entered into a purchase agreement
(the “LPC Purchase Agreement”), together with a registration rights agreement (the “LPC Registration Rights Agreement”),
with Lincoln Park Capital Fund, LLC (“LPC”). Under the terms and subject to the conditions of the LPC Purchase
Agreement, we have the right to sell to and LPC is obligated to purchase up to $10 million in shares of our common stock subject
to certain limitations, from time to time, over the 24-month period commencing on the date that a registration statement, which
the Company agreed to file with the Securities and Exchange Commission (the “SEC”) pursuant to the LPC Registration
Rights Agreement, is declared effective by the SEC and a final prospectus in connection therewith is filed. We may direct LPC,
at its sole discretion and subject to certain conditions, to purchase up to 2,000 shares of common stock on any business day, provided
that at least one business day has passed since the most recent purchase, increasing to up to 6,667 shares, depending upon the
closing sale price of the common stock (such purchases, “Regular Purchases”). However, in no event shall a Regular
Purchase be more than $500,000. The purchase price of shares of common stock related to the future funding will be based on the
prevailing market prices of such shares at the time of sales, but in no event will shares be sold to LPC on a day the common stock
closing price is less than the floor price as set forth in the LPC Purchase Agreement. In addition, we may direct LPC to purchase
additional amounts as accelerated purchases if on the date of a Regular Purchase the closing sale price of the common stock is
not below the threshold price as set forth in the LPC Purchase Agreement. In connection with the LPC Purchase Agreement, the Company
issued 13,334 shares of common stock to LPC as a fee, and may issue up to 26,667 additional shares of common stock pro rata only
if and as the $10 million is funded by LPC. The fair value of the 13,334 issued shares of common stock amounted to $139,980 on
the grant date, which was recorded as a stock-based compensation during the three and nine months ended November 30, 2014, as the
Company did not expect to close an offering with LPC within ninety days of the issuance of these shares. The LPC Purchase Agreement and the LPC Registration Rights Agreement
contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification
rights and obligations of the parties. The LPC Registration Rights Agreement does not contain any obligation for the Company to
make payments to LPC if a registration statement has not been filed with the SEC. We have the right to terminate the LPC Purchase
Agreement at any time, at no cost or penalty. Actual sales of shares of common stock to LPC under the LPC Purchase Agreement will
depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading
price of the common stock and determinations by us as to the appropriate sources of funding for us and our operations. There are
no trading volume requirements or restrictions under the LPC Purchase Agreement. LPC has no right to require any sales by us, but
is obligated to make purchases from us as it directs in accordance with the LPC Purchase Agreement. LPC has covenanted not to cause
or engage in any manner whatsoever, any direct or indirect short selling or hedging of our shares. The net proceeds under the LPC Purchase Agreement to us will depend
on the frequency and prices at which we sell shares of our common stock to LPC. We expect that any proceeds received by us from
such sales to LPC under the LPC Purchase Agreement will be used for general corporate purposes and working capital requirements. As of November 30, 2015, the Company did not file the registration
statement in connection with the LPC Registration Rights Agreement, and have not directed any sales of common stock pursuant to
the LPC Purchase Agreement. Deferred Offering Costs During the three months ended November 30, 2015, the Company incurred
$151,566 of incremental costs in connection with a public offering of the CompanyÂ’s common stock. These costs
have been classified as deferred offering costs in the consolidated condensed balance sheet and will be either offset against the
proceeds of the public offering and charged to additional paid-in capital or charged to earnings if the public offering is aborted. |
