Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 28, 2017 | May 26, 2017 | Aug. 31, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | MetaStat, Inc. | ||
Entity Central Index Key | 1,404,943 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 28, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --02-28 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 2,600,000 | ||
Entity Common Stock, Shares Outstanding | 4,807,942 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Trading symbol | MTST |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Feb. 28, 2017 | Feb. 29, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 782,707 | $ 363,783 |
Note receivable | 0 | 125,000 |
Prepaid expenses | 20,856 | 33,121 |
Total Current Assets | 803,563 | 521,904 |
Equipment (net of accumulated depreciation of $265,234 and $169,396, respectively) | 414,635 | 497,052 |
Refundable deposits | 43,600 | 43,600 |
TOTAL ASSETS | 1,261,798 | 1,062,556 |
Current liabilities | ||
Accounts payable | 572,195 | 746,144 |
Accrued expenses | 179,680 | 214,311 |
Deferred research & development reimbursement | 177,517 | 0 |
Notes payable (net of debt discount of $743,282) | 0 | 1,533,120 |
Convertible note payable (net of debt discount of $10,914) | 989,086 | 0 |
Accrued interest payable | 15,890 | 56,000 |
Accrued dividends on Series B Preferred Stock | 15,638 | 48,317 |
Total Current Liabilities | 1,950,006 | 2,597,892 |
Warrant liability | 2,106,972 | 234,461 |
Total Liabilities | 4,056,978 | 2,832,353 |
STOCKHOLDERS' DEFICIT | ||
Common Stock, ($0.0001 par value; 150,000,000 shares authorized; 4,707,942 and 1,851,201 shares issued and outstanding, respectively) | 471 | 185 |
Additional Paid-in-capital | 23,523,140 | 21,607,259 |
Accumulated deficit | (26,318,885) | (23,377,328) |
Total stockholders' deficit | (2,795,180) | (1,769,797) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 1,261,798 | 1,062,556 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 87 | 87 |
Series A-2 Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 7 | 0 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Feb. 28, 2017 | Feb. 29, 2016 |
Accumulated depreciation | $ 265,234 | $ 169,396 |
Notes payable, discount | 743,282 | |
Convertible debentures, discount | $ 10,914 | |
STOCKHOLDERS' DEFICIT | ||
Common stock, par value | $ .0001 | $ 0.0001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 4,707,942 | 1,851,201 |
Common stock, shares outstanding | 4,707,942 | 1,851,201 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, par value | $ .0001 | $ .0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 874,257 | 874,257 |
Preferred stock, shares outstanding | 874,257 | 874,257 |
Series A-2 Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 70,541 | 0 |
Preferred stock, shares outstanding | 70,541 | 0 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 213 | 659 |
Preferred stock, shares outstanding | 213 | 659 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Revenue | ||
Revenue | $ 0 | $ 0 |
Total Revenue | 0 | 0 |
OPERATING EXPENSES | ||
General & administrative | 2,338,818 | 3,418,235 |
Research & development | 1,009,134 | 1,360,739 |
Total Operating Expenses | 3,347,952 | 4,778,974 |
OTHER EXPENSES (INCOME) | ||
Interest expense | 1,062,389 | 317,238 |
Other income, net | (965) | (141,549) |
Change in fair value of warrant liability | (2,405,985) | (349,596) |
Change in fair value of put option embedded in note payable | (614,484) | 10,015 |
Loss on sale of notes receivable | 112,500 | 0 |
Loss on extinguishment of debt | 1,375,829 | 0 |
Loss on settlement of accounts payable | 64,323 | 0 |
Settlement expense | 0 | 39,097 |
Total Other Expenses (Income) | (406,395) | (124,795) |
NET LOSS | (2,941,557) | (4,654,179) |
Net loss | (2,941,557) | (4,654,179) |
Deemed dividend on Series B Preferred Stock issuance | (708,303) | (1,067,491) |
Accrued dividends on Series B Preferred Stock | (227,163) | (267,058) |
Deemed dividend to Series B Preferred stock holders for exchange of warrants | (2,340,552) | 0 |
Loss attributable to common shareholders | $ (6,217,575) | $ (5,988,728) |
Net loss per share, basic and diluted | $ (2.10) | $ (3.30) |
Weighted average of shares outstanding, basic and diluted | 2,965,910 | 1,816,060 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Series A Preferred Stock [Member] | Series A-2 Preferred Stock [Member] | Series B Preferred Stock [Member] | Common Stock | Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Feb. 28, 2015 | 874,257 | 0 | 229 | 1,831,483 | |||
Beginning Balance, Amount at Feb. 28, 2015 | $ 87 | $ 0 | $ 0 | $ 183 | $ 18,965,529 | $ (18,723,149) | $ 242,650 |
Common stock issued for services, Shares | 30,446 | ||||||
Common stock issued for services, Amount | $ 3 | 237,059 | 237,062 | ||||
Share-based compensation | 585,739 | 585,739 | |||||
Series B preferred units issued for cash, conversion of accounts payable and conversion of short-term notes, Shares | 387 | ||||||
Series B preferred units issued for cash, conversion of accounts payable and conversion of short-term notes, Amount | $ 0 | 1,945,244 | 1,945,244 | ||||
Beneficial conversion feature of Series A Preferred Stock | 1,067,491 | 1,067,491 | |||||
Deemed dividend to Series B Preferred Stock | (1,067,491) | (1,067,491) | |||||
Accrued dividends on Series B Preferred Stock | (267,058) | (267,058) | |||||
Series B PIK Dividend, Shares | 43 | ||||||
Series B PIK Dividend, Amount | $ 0 | 235,508 | 235,508 | ||||
Placement agent warrants issued with note payable | 16,800 | 16,800 | |||||
Common stock and warrants cancellation settlement, Shares | (10,728) | ||||||
Common stock and warrants cancellation settlement, Amount | $ (1) | (111,562) | (111,563) | ||||
Issuance of warrants in connection with OID Notes amendment | 0 | ||||||
Net Loss | (4,654,179) | (4,654,179) | |||||
Ending Balance, Shares at Feb. 29, 2016 | 874,257 | 0 | 659 | 1,851,201 | |||
Ending Balance, Amount at Feb. 29, 2016 | $ 87 | $ 0 | $ 0 | $ 185 | 21,607,259 | (23,377,328) | (1,769,797) |
Issuance of common stock, preferred stock and warrants for cash, net of offering costs, Shares | 48,300 | 1,065,750 | |||||
Issuance of common stock, preferred stock and warrants for cash, net of offering costs, Amount | $ 5 | $ 107 | 962,550 | 962,662 | |||
Issuance of common stock and warrants to convert accounts payable, Shares | 32,500 | ||||||
Issuance of common stock and warrants to convert accounts payable, Amount | $ 3 | 212,275 | 212,278 | ||||
Issuance of common stock and warrants to convert notes payable, Shares | 16,000 | 440,500 | |||||
Issuance of common stock and warrants to convert notes payable, Amount | $ 2 | $ 44 | 1,566,755 | 1,566,801 | |||
Beneficial conversion feature of Series B Preferred Stock | 708,303 | 708,303 | |||||
Deemed dividend to Series B Preferred Stock | (708,303) | (708,303) | |||||
Accrued dividends on Series B Preferred Stock | (227,163) | (227,163) | |||||
Series B PIK Dividend, Shares | 35 | ||||||
Series B PIK Dividend, Amount | $ 0 | 191,941 | 191,941 | ||||
Issuance of common stock, preferred stock and warrants in exchange for cancellation of Series B preferred stock and Series A Warrants, Shares | 6,241 | (481) | 1,292,991 | ||||
Issuance of common stock, preferred stock and warrants in exchange for cancellation of Series B preferred stock and Series A Warrants, Amount | $ 0 | $ 0 | $ 129 | 747,486 | 747,615 | ||
Deemed dividend to Series B Preferred Stock holders for exchange of warrants | (2,340,552) | (2,340,552) | |||||
Issuance of warrants in connection with OID Notes amendment | 44,095 | 44,095 | |||||
Issuance of warrants in connection with convertible note | 117,632 | 117,632 | |||||
Share-based compensation, Shares | 25,000 | ||||||
Share-based compensation, Amount | $ 3 | 640,862 | 640,865 | ||||
Net Loss | (2,941,557) | (2,941,557) | |||||
Ending Balance, Shares at Feb. 28, 2017 | 874,257 | 70,541 | 213 | 4,707,942 | |||
Ending Balance, Amount at Feb. 28, 2017 | $ 87 | $ 7 | $ 0 | $ 471 | $ 23,523,140 | $ (26,318,885) | $ (2,795,180) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (2,941,557) | $ (4,654,179) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation | 95,838 | 96,188 |
Share-based compensation | 640,865 | 822,801 |
Accretion of debt discount included in interest expense | 958,053 | 253,313 |
Loss on sale of notes receivable and assets | 112,500 | 10,196 |
Loss on settlement of accounts payable | 64,323 | 0 |
Loss on settlement of capital lease | 0 | 8,820 |
Gain related to reimbursement of prior period research and development expense (Note 4) | 0 | (150,000) |
Loss on extinguishment of debt | 1,375,829 | 0 |
Change in fair value of warrant liability | (2,405,985) | (349,596) |
Change in fair value of put option embedded in note payable | (614,484) | 10,015 |
Net changes in assets and liabilities | ||
Prepaid expenses | 170,664 | 112,877 |
Refundable deposit | 0 | (3,600) |
Accounts payable and accrued expenses | (50,095) | 648,980 |
Deferred research and development reimbursement | 177,517 | 0 |
Interest payable | 101,889 | 53,649 |
Net Cash used in Operating Activities | (2,314,643) | (3,140,536) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from note receivable | 0 | 100,000 |
Proceeds received from settlement of capital lease | 0 | 2,897 |
Proceeds from sale of note receivable | 12,500 | 0 |
Purchase of equipment | (13,421) | (151,830) |
Net Cash used in Investing Activities | (921) | (48,933) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of debt | 122,790 | 1,611,408 |
Proceeds from issuance of common stock and warrants, net | 2,746,688 | 0 |
Proceeds from issuance of Series B preferred stock and warrant, net | 0 | 1,945,244 |
Re-purchase of common stock and warrants | 0 | (111,563) |
Payment of notes | (8,000) | 0 |
Payment of capital lease obligation | 0 | (42,407) |
Payment of short-term debt | (126,990) | (107,250) |
Net Cash provided by Financing Activities | 2,734,488 | 3,295,432 |
Net increase in cash and cash equivalents | 418,924 | 105,963 |
Cash and cash equivalents at the beginning of the year | 363,783 | 257,820 |
Cash and cash equivalents at the end of the year | 782,707 | 363,783 |
Supplemental Disclosure of Non-Cash Financing Activities | ||
Warrant liability associated with note payable | 15,225 | 311,057 |
Placement agent warrants issued with note payable | 0 | 16,800 |
Issuance of common stock and warrants as payment of accounts payable | 212,278 | 0 |
Issuance of common stock and warrants to convert debt and accrued interest | 2,326,321 | 0 |
Financing of insurance premium through notes payable | 158,400 | 107,250 |
Note receivable received for sale of assets | 0 | 75,000 |
Warrants issued to placement agents | 278,223 | 175,241 |
Series B Preferred PIK dividend | 191,941 | 235,508 |
Series B Preferred Stock accrued dividends | 227,163 | 267,058 |
Capital lease settled against deposit | 0 | 227,235 |
Deemed dividend related to Series B Preferred Stock BCF adjustment for conversion price adjustment | 708,303 | 0 |
Issuance of common stock , preferred stock and warrants in exchange for cancellation of Series B preferred stock and Series A Warrants | 67,900 | 0 |
Deemed dividend to Series B preferred stock holders upon exercising Most Favorable Nation option | 2,340,552 | 0 |
Exchange OID notes and note payable to convertible debt | 986,269 | 0 |
Issuance of warrants in connection with OID Notes amendment | $ 44,095 | $ 0 |
ORGANIZATION, BASIS OF PRESENTA
ORGANIZATION, BASIS OF PRESENTATION AND GOING CONCERN | 12 Months Ended |
Feb. 28, 2017 | |
Description Of Business And Going Concern | |
ORGANIZATION, BASIS OF PRESENTATION AND GOING CONCERN | MetaStat, Inc. (“we,” “us,” “our,” the “Company,” or “MetaStat”) is a pre-commercial molecular diagnostic company focused on the development and commercialization of novel diagnostics to provide physicians and patients actionable information regarding the risk of systemic metastasis and adjuvant chemotherapy treatment decisions. We believe cancer treatment strategies can be personalized and outcomes improved through new diagnostic tools that identify the aggressiveness and metastatic potential of primary tumors. The Company was incorporated on March 28, 2007 under the laws of the State of Nevada. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MetaStat Biomedical, Inc., a Delaware corporation and all significant intercompany balances have been eliminated by consolidation. Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced net losses and negative cash flows from operations since its inception and currently has a stockholders’ deficit of approximately $2.8 million. The Company has sustained cumulative losses of approximately $26.3 million as of February 28, 2017 and has not generated revenues or positive cash flows from operations. The continuation of the Company as a going concern is dependent upon continued financial support from its shareholders, the ability of the Company to obtain necessary equity and/or debt financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. Although it is actively working on obtaining additional funding, the Company cannot make any assurances that additional financings will be available to it and, if available, completed on a timely basis, on acceptable terms or at all. If the Company is unable to complete a debt or equity offering, or otherwise obtain sufficient financing when and if needed, it would negatively impact its business and operations and could also lead to the reduction or suspension of the Company’s operations and ultimately force the Company to cease operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Feb. 28, 2017 | |
Summary Of Significant Accounting Policies | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | The accompanying consolidated financial statements have been prepared in accordance with the FASB “FASB Accounting Standard Codification™” or “ASC,” which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, including contingencies. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. All cash balances were highly liquid at February 28, 2017 and February 29, 2016. Concentration of Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company primarily maintains its cash balances with financial institutions in federally insured accounts. The Company may from time to time have cash in banks in excess of FDIC insurance limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high quality financial institutions. Equipment Equipment is stated at cost. The cost of equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Expenditures for major renewals or betterments that extend the useful lives of equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Long-lived Assets Long-lived assets are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. There was no impairment of long-lived assets as of February 28, 2017 and February 29, 2016. Debt Issuance Costs Effective March 1, 2016 debt issuance costs are recorded as a direct reduction of the carrying amount of the related debt. Debt issuance costs are amortized over the maturity period of the related debt instrument using the effective interest method. Debt Instruments We analyze debt instruments for various features that would generally require either bifurcation and derivative accounting, or recognition of a debt discount or premium under authoritative guidance. Detachable warrants issued in conjunction with debt are measured at their relative fair value, if they are determined to be equity instrument, or their fair value, if they are determined to be liability instruments, and recorded as a debt discount. Conversion features that are in the money at the commitment date constitute a beneficial conversion feature that is measured at its intrinsic value and recognized as debt discount. Debt discount is amortized as interest expense over the maturity period of the debt using the effective interest method. Contingent beneficial conversion features are recognized when the contingency has been resolved. Fair Value Measurements The Company groups its assets and liabilities measured at fair value in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, some discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the financial instrument. The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period. Revenues We currently do not have any revenues. We expect to primarily derive our revenues from sale of our products, which are currently under development. Net Loss Per Share Basic net loss per common share is computed based on the weighted average number of common shares outstanding during the period. Restricted shares issued with vesting conditions that have not been met at the end of the period are excluded from the computation of the weighted average shares. As of February 28, 2017 and February 29, 2016, 11,536 and 11,536, respectively, restricted shares of common stock were excluded from the computation of the weighted average shares. Diluted net loss per common share is calculated giving effect to all dilutive potential common shares that were outstanding during the period. Diluted potential common shares generally consist of incremental shares issuable upon exercise of stock options and warrants and conversion of outstanding options and warrants and shares issuable from convertible securities, as well as nonvested restricted shares. In computing diluted loss per share for the years ended February 28, 2017 and February 29, 2016, no effect has been given to the common shares issuable at the end of the period upon the conversion or exercise of the following securities as their inclusion would have been anti-dilutive: February 28, 2017 February 29, 2016 Stock options 966,474 426,976 Warrants 2,698,694 913,514 Preferred stock 1,350,109 497,527 Convertible debt 507,946 - Total 5,523,223 1,838,017 Income Taxes Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to net operating loss carry forwards and temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. A valuation allowance is recorded if it is not more likely than not that some portion or all of the deferred tax assets will be realized in future periods. Research and Development Costs Research and development costs are charged to operations when incurred and are included in operating expenses. Research and development costs consist principally of (i) compensation and related expenses for our employees and consultants that perform our research activities, (ii) the fees paid to maintain our licenses, (iii) the payments to third parties for clinical testing and additional product development including contract research organizations, (iv) facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, and (v) laboratory and other supplies, consumables and other materials used in research and development. Research and development costs were approximately $1.0 million and approximately $1.36 million for the years ended February 28, 2017 and February 29, 2016, respectively. During the year ended February 28, 2017, the Company recorded approximately $309,000 of research and development expense reimbursement related to a research agreement (See Note 11). In the future, the Company may be required to make advance payments to vendors for goods or services that will be received in the future for use in research and development activities. In such circumstances, the advance payments will be deferred and expensed when the activity has been performed or when the goods have been received. Patent Costs The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses. Stock-Based Compensation We account for share-based payments award issued to employees and members of our Board of Directors (the “Board”) by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line basis over the requisite service period, generally the vesting period. For award issued to non-employees, the measurement date is the date when the performance is complete or when the award vests, whichever is the earliest. Accordingly, non-employee award is remeasured at each reporting period until the final measurement date. The fair value of the award is recognized as stock-based compensation over the requisite service period, generally the vesting period. For award with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable. For awards with market conditions that affect their vesting, the fair value of the award is recognized as stock-based compensation over the requisite service period, generally the vesting period. Recently Issued Accounting Pronouncements In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements-Going Concern” (“ASU 2014-15”), which establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. ASU 2014-15 also provides guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This update is effective for annual reporting periods ending after December 15, 2016. The adoption of this guidance in 2016 had no effect on the consolidated financial statements. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies certain aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact ASU 2016-09 will have on our consolidated financial statements. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Feb. 28, 2017 | |
Equity [Abstract] | |
CAPITAL STOCK | The Company has authorized 160,000,000 shares of capital stock, par value $0.0001 per share, of which 150,000,000 are shares of common stock and 10,000,000 are shares of “blank-check” preferred stock. Our Board is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights, which could adversely affect the voting power or other rights of the holders of common stock. The preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us. Common Stock The holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably such dividends, if any, as may be declared by our Board out of legally available funds; however, the current policy of our Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. Series A Convertible Preferred Stock Pursuant to the Certificate of Designation of Rights and Preferences of the Series A Preferred Stock (the “Series A Certificate of Designation”), the terms of the Series A Preferred Stock are as follows: Ranking The Series A Preferred Stock will rank (i) senior to our common stock, ii) pari passu Dividends The Series A Preferred Stock is not entitled to any dividends. Liquidation Rights In the event of any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Series A Preferred Stock an amount equal to the fair market value as determined in good faith by the Board. Voluntary Conversion; Anti-Dilution Adjustments Each fifteen (15) shares of Series A Preferred Stock shall be convertible into one share of common stock (the “Series A Conversion Ratio”). The Series A Conversion Ratio is subject to customary adjustments for issuances of shares of common stock as a dividend or distribution on shares of the common stock, or mergers or reorganizations. Voting Rights The Series A Preferred Stock has no voting rights. The common stock into which the Series A Preferred Stock is convertible shall, upon issuance, have all of the same voting rights as other issued and outstanding common stock, and none of the rights of the Series A Preferred Stock. Series A-2 Convertible Preferred Stock Pursuant to the Certificate of Designation of Rights and Preferences of the Series A-2 Convertible Preferred Stock (the “Series A-2 Preferred Stock” or “Series A-2 Preferred”), the terms of the Series A-2 Preferred Stock are as follows: Ranking The Series A-2 Preferred will rank (i) senior to our common stock, (ii) pari passu Dividends The Series A-2 Preferred is not entitled to any dividends. Liquidation Rights In the event of any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Series A-2 Preferred shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Series A-2 Preferred an amount of cash, securities or other property to which such holder would be entitled to receive with respect to each such share of Preferred Stock if such shares had been converted to common stock immediately prior to such liquidation, dissolution or winding-up of the Company. Voluntary Conversion; Anti-Dilution Adjustments Each share of Series A-2 Preferred shall, at any time, and from time to time, at the option of the holder, be convertible into ten (10) shares of common stock (the “Series A-2 Conversion Ratio”). The Series A-2 Conversion Ratio is subject to customary adjustments for issuances of shares of common stock as a dividend or distribution on shares of common stock, or mergers or reorganizations. Conversion Restrictions The holders of the Series A-2 Preferred may not convert their shares of Series A-2 Preferred into shares of common stock if the resulting conversion would cause such holder and its affiliates to beneficially own (as determined in accordance with Section 13(d) of the Exchange Act, and the rules thereunder) in excess of 4.99% or 9.99% of the common stock outstanding, when aggregated with all other shares of common stock owned by such holder and its affiliates at such time; provided, however, that such holder may elect to waive these conversion restrictions. Voting Rights The Series A-2 Preferred has no voting rights. The common stock into which the Series A-2 Preferred is convertible shall, upon issuance, have all of the same voting rights as other issued and outstanding common stock, and none of the rights of the Series A-2 Preferred. Series B Convertible Preferred Stock Pursuant to the Certificate of Designation of Rights and Preferences of the Series B Preferred Stock (the “Series B Certificate of Designation”), the terms of the Series B Preferred Stock are as follows: Ranking The Series B Preferred Stock will rank senior to our Series A Preferred Stock, Series A-2 Preferred Stock and common stock with respect to distributions of assets upon the liquidation, dissolution or winding up of the Company. Stated Value Each shares of Series B Preferred Stock will have a stated value of $5,500, subject to adjustment for stock splits, combinations and similar events (the “Stated Value”). Dividends Cumulative dividends on the Series B Preferred Stock accrue at the rate of 8% of the Stated Value per annum, payable quarterly on March 31, June 30, September 30, and December 31 of each year, from and after the date of the initial issuance. Dividends are payable in kind in additional shares of Series B Preferred Stock valued at the Stated Value or in cash at the sole option of the Company. At February 28, 2017 and February 29, 2016, the dividend payable to the holders of the Series B Preferred Stock amounted to approximately $16,000 and approximately $48,000, respectively. During the year ended February 28, 2017 and February 29, 2016, the Company issued 34.5085 and 42.8202 shares of Series B Preferred Stock, respectively, for payment of dividends amounting to approximately $190,000 and approximately $236,000, respectively. Liquidation Rights If the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs, each holder of the Series B Preferred Stock will be entitled to receive out of the Company’s assets available for distribution to stockholders, after satisfaction of liabilities to creditors, if any, but before any distribution of assets is made on the Series A Preferred Stock or common stock or any of the Company’s shares of stock ranking junior as to such a distribution to the Series B Preferred Stock, a liquidating distribution in the amount of the Stated Value of all such holder’s Series B Preferred Stock plus all accrued and unpaid dividends thereon. At February 28, 2017 and February 29, 2016, the value of the liquidation preference of the Series B Preferred stocks aggregated to approximately $1.19 million and approximately $3.67 million, respectively. Conversion; Anti-Dilution Adjustments Each share of Series B Preferred Stock will be convertible at the holder’s option into common stock in an amount equal to the Stated Value plus accrued and unpaid dividends thereon through the conversion date divided by the then applicable conversion price. The initial conversion price was $8.25 per share (the “Series B Conversion Price”) and is subject to customary adjustments for issuances of shares of common stock as a dividend or distribution on shares of common stock, or mergers or reorganizations, as well as “full ratchet” anti-dilution adjustments for future issuances of other Company securities (subject to certain standard carve-outs) at prices less than the applicable Series B Conversion Price. The issuance of shares of common stock pursuant to the 2016 Unit Private Placement (as defined in Note 4) triggered the full ratchet anti-dilution price protection provision of the Series B Preferred Stock. Accordingly, the Series B Conversion Price was adjusted from $8.25 to $2.00 per share. See Note 4 for the accounting treatment of the conversion price adjustment. The Series B Preferred Stock is subject to automatic conversion (the “Mandatory Conversion”) at such time when the Company’s common stock has been listed on a national stock exchange such as the NASDAQ, New York Stock Exchange or NYSE MKT; provided, that, on the Mandatory Conversion date, a registration statement providing for the resale of the shares of common stock underlying the Series B Preferred Stock is effective. In the event of a Mandatory Conversion, each share of Series B Preferred Stock will convert into the number of shares of common stock equal to the Stated Value plus accrued and unpaid dividends divided by the applicable Series B Conversion Price. Voting Rights On March 27, 2015, the holders of the Series B Preferred Stock entered into an Amended and Restated Series B Preferred Purchase Agreement, whereby the Company filed an Amended and Restated Series B Preferred Certificate of Designation. The Amended and Restated Series B Preferred Certificate of Designation provides that the holders of the Series B Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such Series B Preferred Stock could be converted for purposes of determining the shares entitled to vote at any regular, annual or special meeting of stockholders of the Company, and shall have voting rights and powers equal to the voting rights and powers of the common stock (voting together with the common stock as a single class). Most Favored Nation For a period of up to 30 months after March 31, 2015, if the Company issues any New Securities (as defined below) in a private placement or public offering (a “Subsequent Financing”), the holders of Series B Preferred Stock may exchange all of the Series B Preferred Stock at their Stated Value plus all Series A Warrants (as defined below) issued to the Series B Preferred Stock investors in the Series B Private Placement for the securities issued in the Subsequent Financing on the same terms of such Subsequent Financing. This right expires upon the earlier of (i) September 30, 2017 and (ii) the consummation of a bona fide underwritten public offering in which the Company receives aggregate gross proceeds of at least $5.0 million. ”New Securities” means shares of the common stock, any other securities, options, warrants or other rights where upon exercise or conversion the purchaser or recipient receives shares of the common stock, or other securities with similar rights to the common stock, subject to certain standard carve-outs. See Note 4 for the accounting treatment of the Series B Preferred Stock. |
EQUITY ISSUANCES
EQUITY ISSUANCES | 12 Months Ended |
Feb. 28, 2017 | |
Equity [Abstract] | |
EQUITY ISSUANCES | Common stock financing – the 2016 Unit Private Placement During the year ended February 28, 2017, the Company entered into a subscription agreement pursuant to a private placement (the “2016 Unit Private Placement”) with a number of accredited investors pursuant to which the Company issued units for an offering price of $10,000 per unit, with each unit consisting of (i) 5,000 shares of its common stock, and (ii) five-year warrants (the “Unit Warrants”) to purchase 2,500 shares of common stock at an exercise price of $3.00 per share. During the year ended February 28, 2017, the Company issued an aggregate of 49.5 units consisting of an aggregate of 247,500 shares of common stock and 123,750 Unit Warrants for an aggregate purchase price of $495,000. After deducting placement agent fees and other offering expenses, including legal expenses, net proceeds amounted to approximately $390,000. Additionally, the Company issued an aggregate of 24,750 placement agent warrants in substantially the same form as the Unit Warrants. Registration Rights Agreement Pursuant to a registration rights agreement entered into by the parties, the Company agreed to file a registration statement with the SEC providing for the resale of the shares of common stock and the shares of common stock underlying the Unit Warrants issued pursuant to the 2016 Unit Private Placement on or before the date which is forty-five (45) days after the date of the final closing of the 2016 Unit Private Placement. The Company will use its commercially reasonable efforts to cause the registration statement to become effective within one hundred fifty (150) days from the filing date. The Company has received a waiver from a majority of the 2016 Unit Private Placement investors extending the filing date of the registration statement to no later than December 15, 2016. The Company filed the Registration Statement on Form S-1 with the SEC on December 14, 2016. Most Favored Nation Exchange – the MFN Exchange On July 12, 2016, the Company and one Series B Preferred Stock shareholder (the “Exchange Purchaser”) entered into an exchange agreement effective July 1, 2016 (the “Exchange Agreement”) whereby the Exchange Purchaser elected to exercise their Most Favored Nation exchange right into the securities offered pursuant to the 2016 Unit Private Placement (the “MFN Exchange”). Accordingly, the Exchange Purchaser tendered all of their 19.4837 shares of Series B Preferred Stock and approximately $2,000 of accrued and unpaid dividends for an aggregate exchange amount of approximately $109,000, plus 9,000 Series A Warrants with an exercise price of $10.50 per share originally issued in connection with the Series B Private Placement for an aggregate of 54,652 shares of common stock and Unit Warrants to purchase 27,326 shares of common stock at an exercise price of $3.00 per share. Additionally, the parties entered into a joinder agreement, and the Exchange Purchaser was granted all rights and benefits under the 2016 Unit Private Placement financing agreements. The Company analyzed and determined that the MFN Exchange is a contingent beneficial conversion feature that should be recognized upon the occurrence of the contingent event based on its intrinsic value at the commitment date. Since the Company had fully recognized all allocated proceeds of the Series B Preferred Stock in previously recognized beneficial conversion features, no beneficial conversion was recognized upon the exchange of the Series B Preferred Stock in the MFN Exchange. For the year ended February 28, 2017, the Company has recorded a non-cash deemed dividend to Additional Paid-in Capital of approximately $29,000, in connection with the MFN Exchange equal to the excess fair value of the shares of common stock and Unit Warrants received over the carrying value of the exchanged shares of Series B Preferred and Series A Warrants Common stock financing – Additional 2016 Unit Private Placement During the year ended February 28, 2017, the Company entered into a subscription agreement (the “Additional 2016 Unit Subscription Agreement”) pursuant to a private placement (the “Additional 2016 Unit Private Placement”) whereby the Company may issue units for an offering price of $10,000 per unit, with each unit consisting of (i) 5,000 shares of its common stock at an effective price of $2.00 per share (the “Effective Price”), and (ii) five-year warrants (the “Additional Unit Warrants”) to purchase 2,500 shares of common stock at an exercise price of $3.00 per share. Pursuant to the Additional 2016 Unit Subscription Agreement, for the benefit of certain investors that would be deemed to have beneficial ownership in excess of 4.99% or 9.99%, the Company may issue shares of Series A-2 Preferred Stock in lieu of issuing shares of common stock to such investors. Pursuant to the Additional 2016 Unit Subscription Agreement, for a period of one hundred eighty (180) days following the final closing of the Additional 2016 Unit Private Placement, the investors shall have “full-ratchet” anti-dilution price protection (the “Price Protection”) based on certain issuances by the Company of common stock or securities convertible into shares of common stock at an effective price per share less than the Effective Price (a "Down-round Issuance"), whereby the Company would be required to issue the investors additional shares of common stock and Additional Unit Warrants. On April 30, 2017, the Price Protection provision lapsed without the Company issuing any additional shares of common stock and additional Unit Warrants. During the year ended February 28, 2017, the Company issued an aggregate of 260.25 units consisting of an aggregate of 818,250 shares of common stock, 48,300 shares of Series A-2 Preferred Stock convertible into 483,000 shares of common stock, and Additional Unit Warrants to purchase 650,625 shares of common stock, for an aggregate purchase price of approximately $2.6 million. After deducting placement agent fees and other offering expenses, including legal expenses, net proceeds amounted to approximately $2.4 million. Additionally, in connection with the Additional 2016 Unit Private Placement, the Company issued placement agent warrants to purchase an aggregate of 108,958 shares of common stock in substantially the same form as the Additional Unit Warrants but without the Price Protection provision. Exchange of Payables – the Company Payable Exchange During the year ended February 28, 2017, the Company entered into the Additional 2016 Unit Subscription Agreement with certain accredited vendors of the Company in connection with the exchange (the “Company Payable Exchange”) of an aggregate of $65,000 of accounts payable into the Additional 2016 Unit Private Placement. Pursuant to the Company Payable Exchange, the Company issued an aggregate of 6.5 units consisting of an aggregate of 32,500 shares of common stock, and Additional Unit Warrants to purchase 16,250 shares of common stock in consideration for the cancellation of $65,000 of accounts payable in the aggregate. As a result of the Company Payable Exchange, the Company recognized a loss of approximately $62,000. Exchange of Promissory Note – the Promissory Note Exchange During the year ended February 28, 2017, the Company entered into the Additional 2016 Unit Subscription Agreement with the holder (the “Noteholder”) of the Promissory Note (as defined in Note 7) in connection with the exchange (the “Promissory Note Exchange”) of $600,000 principal amount of Promissory Notes plus $48,000 of accrued and unpaid interest into the Additional 2016 Unit Private Placement. In connection with the Promissory Note Exchange, the Company issued 64.8 units consisting of 230,000 shares of common stock, 9,400 shares of Series A-2 Preferred, convertible into 94,000 shares of common stock, and Additional Unit Warrants to purchase 162,000 shares of common stock in exchange for the cancellation of $600,000 principal amount plus $48,000 of accrued and unpaid interest of the Promissory Note (See Note 7). Exchange of OID Notes – the OID Note Exchange During the year ended February 28, 2017, the Company entered into the Additional 2016 Unit Subscription Agreement with certain holders of OID Notes (the “OID Noteholders”) in connection with the exchange (the “OID Note Exchange”) of an aggregate of $553,000 principal amount of OID Notes (the “OID Exchange Amount”) into the Additional 2016 Unit Private Placement. In connection with the OID Note Exchange, the Company issued an aggregate of 55.3 units consisting of 210,500 shares of common stock, 6,600 shares of Series A-2 Preferred, convertible into 66,000 shares of common stock and Additional Unit Warrants to purchase 138,250 shares of common stock in exchange for the cancellation of $553,000 of OID Notes (See Note 7). Most Favored Nation Exchange – the Additional MFN Exchange During the year ended February 28, 2017, the Company and certain Series B Preferred Stockholders (the “Additional Exchange Purchasers”) entered into exchange agreements (the “Exchange Agreements”) whereby the Additional Exchange Purchasers elected to exercise their Most Favored Nation exchange rights into the securities offered pursuant to the Additional 2016 Unit Private Placement (the “Additional MFN Exchange”). Accordingly, the Additional Exchange Purchasers tendered all of their 460.6480 shares of Series B Preferred Stock and approximately $68,000 of accrued and unpaid dividends for an aggregate exchange amount of approximately $2.6 million, plus 208,027 Series A Warrants with an exercise price of $10.50 per share originally issued in connection with the Series B Private Placement (as defined below) for an aggregate of 1,238,339 shares of common stock, 6,240.8 shares of Series A-2 Preferred Stock convertible into 62,408 shares of common stock, and Additional Unit Warrants to purchase 650,381 shares of common stock. Additionally, the parties entered into a joinder agreement, and the Exchange Purchasers were granted all rights and benefits under the Additional 2016 Unit Private Placement financing agreements. The Company analyzed and determined that the Additional MFN Exchange is a contingent beneficial conversion feature that should be recognized upon the occurrence of the contingent event based on its intrinsic value at the commitment date. Since the Company had fully recognized all allocated proceeds of the Series B Preferred Stock in previously recognized beneficial conversion features, no beneficial conversion was recognized upon the exchange of the Series B Preferred Stock in the Additional MFN Exchange. For the year ended February 28, 2017, the Company recorded a non-cash deemed dividend to Additional Paid-in Capital of approximately $2.3 million in connection with the Additional MFN Exchange equal to the excess fair value of the shares of common stock, shares of Series A-2 Preferred Stock and Additional Unit Warrants issued over the carrying value of the cancelled shares of Series B Preferred Stock and exchanged Series A Warrants. Accounting for the Price Protection Provision The Company analyzed the Price Protection provision for embedded derivatives that require bifurcation. The Company evaluated the Price Protection provision for both the issuance of additional shares of common stock and additional warrants in connection with a down-round issuance in accordance with ASC 480 and ASC 815. In connection with the potential issuance of additional shares of common stock, the Company concluded that since the embedded down-round feature is within the equity host contract, the embedded Price Protection provision would be considered clearly and closely related to the equity host under ASC 815-15-25-1(a) and that the Price Protection provision should not be bifurcated. In connection with the potential issuance of additional warrants, the Company concluded that the freestanding Additional Unit Warrants are not indexed to the Company’s common stock within the scope of ASC 815-40 and therefore was initially bifurcated and measured at fair value and recorded as a derivative liability in the Consolidated Balance Sheet. The derivative liability will be measured at fair value on an ongoing basis, with changes in fair value recognized in the statement of operations until the Price Protection provision lapses. Registration Rights Agreement Pursuant to a registration rights agreement entered into by the parties, the Company agreed to file a registration statement with the SEC providing for the resale of the shares of common stock and the shares of common stock underlying the Additional Unit Warrants issued pursuant to the Additional 2016 Unit Private Placement on or before the date which is forty-five (45) days after the date of the final closing of the Additional 2016 Unit Private Placement, which occurred on October 30, 2016. The Company will use its commercially reasonable efforts to cause the registration statement to become effective within one hundred fifty (150) days from the filing date. The Company filed the Registration Statement on Form S-1 with the SEC on December 14, 2016. Issuances of common stock for services During the year ended February 29, 2016, 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 vested over 6 months. The weighted average fair value of these shares of common stock amounted to $4.96. During the year ended February 29, 2016, 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 approximately $22,000. During the year ended February 28, 2017, the Company issued an aggregate of 25,000 shares of common stock to a consultant for services that vested over a two-month term and to settle $32,000 of accounts payable. The fair value of the shares amounted to approximately $46,000 on the grant date. During the year ended February 28, 2017 and February 29, 2016, the Company recognized approximately $14,000 and approximately $221,000, respectively, of share-based compensation related to common stock issued for services, all of which was recognized into general and administrative expense. Settlement During the year ended February 29, 2016, 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 approximately $39,000 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 approximately $2,131,000 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 $10.50 to the Series B Investors. The Series A Warrants expire on March 31, 2020. Pursuant to the closings of the Series B Private Placement on March 2015, the Company issued an aggregate of 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 approximately $13,000 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 approximately $147,000 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 approximately $158,000 and was recorded as a stock issuance cost. Net proceeds amounted to approximately $1,945,000 after deducting offering expenses to be paid in cash, including the placement agent fees and legal fees and other expense. 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 Company’s equity shares or (c) varying inversely in relation to the Company’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 Company’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 Company’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 B Warrants The Series B Warrants issued in the Series B Private Placement contain an adjustment clause affecting the exercise price of the Series B Warrants, which may be reduced if the Company issues shares of common stock or convertible securities at a price below the then-current exercise price of the Series B Warrants. As a result, we determined that the Series B Warrants were not indexed to the Company’s common stock and therefore should be recorded as a derivative liability, based on their fair value at the time of issuance. The fair value of Series B Warrants will be re-measured at each reporting period, and any resultant changes in fair value will be recorded in the Company’s Consolidated Statement of Operations. Accounting for the Series A Warrants The Company concluded the freestanding Series A Warrants did not contain any provision that would require liability classification and therefore should be classified in stockholder’s equity, based on their relative fair value. Allocation of Proceeds of the 2015 Series B Private Placement For the year ended February 29, 2016, the proceeds of approximately $2,131,000 from the closings of 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 Company’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 approximately $1,067,000 equal to the intrinsic value of the beneficial conversion feature. Deemed Dividend due to Conversion Price Adjustment. During the year ended February 28, 2017, as a result of the adjustment of the Series B Conversion Price from $8.25 to $2.00 per share due to the 2016 Unit Private Placement, the Company recorded a non-cash deemed dividend, amounting to approximately $708,000. The expense was measured at the intrinsic value of the beneficial conversion feature for each issuance of Series B Preferred Stock in the Series B Private Placement and was limited to the amount of Series B Preferred Stock allocated proceeds less previously recognized beneficial conversion features. The Series B Registration Rights Agreement In connection with the closing of the Series B Private Placement, the Company entered into a registration rights agreement (the “Series B Registration Rights Agreement”) with all 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. Deferred Offering Costs During the year ended February 29, 2016, the Company incurred approximately $171,000 of incremental costs in connection with a proposed public offering of the Company’s common stock that was aborted due to market conditions. These costs were charged to expense. |
STOCK OPTIONS
STOCK OPTIONS | 12 Months Ended |
Feb. 28, 2017 | |
Stock Options | |
STOCK OPTIONS | Our 2012 Incentive Plan, which is administrated by the compensation committee of the Board, reserves shares of common stock available for issuance that we may grant to employees, non-employee directors and consultants, equity incentives in the form of, among other, stock options, restricted stock, and stock appreciation rights. On June 22, 2015, our stockholders approved amending our 2012 Incentive Plan to increase the number of authorized shares of common stock reserved for issuance under the 2012 Incentive Plan to a number not to exceed fifteen percent (15%) of the issued and outstanding shares of common stock on an as converted primary basis (the “As Converted Primary Shares”) on a rolling basis. For calculation purposes, the As Converted Primary Shares shall include all shares of common stock and all shares of common stock issuable upon the conversion of outstanding preferred stock and other convertible securities, but shall not include any shares of common stock issuable upon the exercise of options, warrants and other convertible securities issued pursuant to the 2012 Incentive Plan. The number of authorized shares of common stock reserved for issuance under the 2012 Incentive Plan shall automatically be increased concurrently with the Company’s issuance of fully paid and non- assessable shares of As Converted Primary Shares. Shares shall be deemed to have been issued under the 2012 Incentive Plan solely to the extent actually issued and delivered pursuant to an award under the 2012 Incentive Plan. As of February 28, 2017, there are an aggregate of 908,708 total shares available under the 2012 Incentive Plan, of which 330,514 are issued and outstanding and 578,194 shares are available for potential issuances. The Company may issue shares outside of the 2012 Incentive Plan. During the year ended February 29, 2016, the Company issued options to purchase 6,667 shares of common stock at $11.25 per share to a consultant. The options vest upon achieving certain performance-based milestones and expire on March 1, 2025. The Company will measure the fair value of these options with vesting contingent on achieving certain performance-based milestones and recognize the compensation expense when vesting becomes probable. The fair value will be measured using a Black-Scholes model. During the year ended February 29, 2016, 3,334 of these options, with an aggregate fair value of approximately $15,000, vested based on achieving certain milestones. During the year ended February 29, 2016, the Company issued options to purchase 80,000 shares of common stock at $8.25 per share to non-executive members of its Board of Directors. The options vest in three equal installments on each of May 18, 2016, May 18, 2017, and May 18, 2018 and expire on May 18, 2025. These options had a total fair value of approximately $388,000 as calculated using the Black-Scholes model. During the year ended February 29, 2016, the Company issued options to purchase an aggregate of 5,001 shares of common stock at $8.25 per share to employees. The options vest over time through September 2017. During the year ended February 29, 2016, the Company issued options to purchase 60,000 shares of common stock at $8.25 per share to our Chief Executive Officer. Certain of these options vest upon achieving certain performance-based or market-based milestones and expire on June 17, 2025. The fair value of these options on the grant date was $221,100 as calculated using the Black-Scholes model. The Company will recognize the compensation expense when vesting becomes probable. During the year ended February 29, 2016, 10,000 of these options vested immediately and 10,000 of these options vested upon achieving a performance based milestone. During the year ended February 29, 2016, the Company issued options to purchase 26,667 shares of common stock at $8.25 per share to our former Chief Executive Officer and Chief Medical Officer. These options vested immediately. These options had a total fair value of approximately $44,000 as calculated using the Black-Scholes model. The Company also modified the expiration date of certain vested options previously granted to our former Chief Executive Officer and Chief Medical Officer, which resulted in an additional compensation expense of approximately $22,000 being recorded during the year ended February 29, 2016. During the year ended February 29, 2016, the Company issued options to purchase 10,000 shares of common stock at $8.25 per share to a consultant. The options vest upon achieving certain performance-based milestones and expire on June 17, 2025. The Company will measure the fair value of these options with vesting contingent on achieving certain performance-based milestones and recognize the compensation expense when vesting becomes probable. The fair value will be measured using a Black-Scholes model. During the year ended February 29, 2016, the Company issued options to purchase an aggregate of 45,500 shares of common stock at $3.55 per share to members of its management team and employees. These options expire on February 2, 2026. The fair value of these options on the grant date was approximately $122,000 as calculated using the Black-Scholes model. During the year ended February 29, 2016, 11,375 of these options vested immediately and 34,125 of these options will vest based on achieving certain milestones, which the Company deems probable to occur in December 2016. During the year ended February 29, 2016, the Company issued options to purchase 10,000 shares of common stock at $3.55 per share to a consultant. These options expire on February 2, 2026. The fair value of these options on the measurement dates was approximately $20,000 as calculated using the Black-Scholes model. During the year ended February 29, 2016, 2,500 of these options vested immediately and 7,500 of these options will vest based on achieving certain milestones, which the Company deems probable to occur in December 2016. During the year ended February 29, 2016, 534 options previously issued to a member of the Company’s Scientific and Clinical Advisory Board were mutually cancelled by the parties. The member will continue to serve on the Company’s Scientific and Clinical Advisory Board without any equity compensation. For the year ended February 29, 2016, the Company recognized approximately $555,000 of compensation expense related to stock options, of which approximately $442,000 was recognized in general and administrative expenses and approximately $113,000 was recognized in research and development expenses. During the year ended February 28, 2017, the Company issued options to purchase 50,000 shares of common stock at $2.19 per share to a non-executive member of its Board. These 50,000 options vest in three equal installments on each of May 26, 2017, May 26, 2018, and May 26, 2019 and expire on May 26, 2026. These options had a total fair value of approximately $87,000 as calculated using the Black-Scholes model. During the year ended February 28, 2017, the Company issued options to purchase 50,000 shares of common stock at $2.19 per share to a non-executive member of its Board for performing other services. These 50,000 options vest upon achieving a certain milestone and expire on May 26, 2026. These options will be measured and recognized when vesting becomes probable. During the year ended February 28, 2017, the Company issued options to purchase an aggregate of 440,000 shares of common stock at an exercise price of $2.00 per share to members of its management team. These options expire on July 7, 2026. These options had a grant date fair value of approximately $622,000 as calculated using the Black-Scholes model. 73,333 of these options vested immediately and 146,667 of these options vest in equal monthly installments over a twenty-four-month period. 220,000 options are subject to certain milestone-based vesting. The Company has not recognized any stock based compensation for the options with performance-vesting conditions, and expects to recognize the compensation expense when vesting become probable, which has not yet occurred. During the year ended February 28, 2017, the Company issued options to purchase an aggregate of 100,000 shares of common stock at an exercise price of $2.00 per share to a non-executive member of its Board. These options expire on July 7, 2026. These options had a total fair value of approximately $143,000 as calculated using the Black-Scholes model. 33,333 of these options vested immediately and 66,667 of these options vest in equal monthly installments over a twenty-four-month period. During the year ended February 28, 2017, the Company issued options to purchase an aggregate of 240,000 shares of common stock at an exercise price of $2.00 per share to consultants. These options expire on July 7, 2026. 33,333 of these options, with an aggregate fair value of approximately $57,000, vest on the first anniversary date and then 66,667 of these options vest in equal monthly installments over a twenty-four-month period. 140,000 of these options are subject to certain milestone-based vesting and the Company will measure the fair value of these options with vesting contingent on achieving certain performance-based milestones and recognize the compensation expense when vesting becomes probable. During the year ended February 28, 2017, the Company and a member of its Board voluntarily cancelled options to purchase an aggregate of 100,000 shares of common stock at an exercise price of $2.00 per share without replacement. The Company recognized approximately $69,000 of compensation expense related to the cancellation of these options. During the year ended February 28, 2017, the Company issued options to purchase an aggregate of 21,000 shares of common stock at an exercise price of $3.00 per share to employees. These options expire between on November 21, 2026 and December 1, 2026. These options had a grant date fair value of approximately $29,000 as calculated using the Black-Scholes model. 7,000 of these options vest one year following issuance and then 14,000 of these options vest in equal monthly installments over the following twenty-four-month period. During the year ended February 28, 2017, the Company issued options to purchase 100,000 shares of common stock at $3.00 per share to a consultant. These options expire on January 13, 2027 and vest upon achieving certain performance-based milestones. The Company will measure the fair value of these options with vesting contingent on achieving certain performance-based milestones and recognize the compensation expense when vesting becomes probable. The fair value will be measured using a Black-Scholes model. For the year ended February 28, 2017, the Company recognized approximately $580,000 of compensation expense related to stock options, of which approximately $495,000 was recognized in general and administrative expenses and approximately $85,000 in research and development expenses. The inputs to the Black-Scholes model used to value the stock options granted during the year ended February 28, 2017 and February 29, 2016 are as follows: February 28, 2017 February 29, 2016 Expected volatility 98.9% - 133.4% 114.8% Expected dividend yield 0.00% 0.00% Risk-free interest rate 0.97% - 1.90% 1.64% Weighted-average expected Term 6.31 years 5.60 years The following table summarizes common stock options issued and outstanding: Options Weighted average exercise price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at February 28, 2015 187,575 $ 23.70 $ 20,670 8.29 Granted 243,835 $ 7.26 $ - - Expired/ Exercised/ Forfeited (4,201 ) $ (9.93 ) $ - - Outstanding at February 29, 2016 426,976 $ 14.45 $ - 7.98 Granted 1,001,000 $ 2.14 $ - - Expired/ Exercised/ Forfeited (461,502 ) $ 6.05 $ - - Outstanding and expected to vest at February 28, 2017 966,474 $ 5.71 $ 8.87 Exercisable at February 28, 2017 315,476 $ 10.84 $ - 8.08 The following table breaks down exercisable and unexercisable common stock options by exercise price as of February 28, 2017: Exercisable Unexercisable Number of Options Exercise Price Weighted Average Remaining Life (years) Number of Options Exercise Price Weighted Average Remaining Life (years) 142,222 $ 2.00 9.36 337,778 $ 2.00 9.36 - $ 2.19 - 100,000 $ 2.19 9.24 - $ 3.00 - 121,000 $ 3.55 9.86 30,000 $ 3.55 8.94 - $ 8.10 - 1,068 $ 8.10 7.92 - $ 8.25 - 40,001 $ 8.25 8.26 79,999 $ 10.20 8.26 41,434 $ 10.20 4.86 - $ 10.50 - 3,334 $ 11.25 8.22 3,333 $ 11.25 8.22 11,112 $ 16.50 7.63 8,888 $ 16.50 7.63 8,068 $ 22.50 7.92 - $ 22.50 - 38,237 $ 48.75 6.10 - $ 48.75 - 315,476 $ 10.84 8.08 650,998 $ 3.23 9.27 As of February 28, 2017, we had approximately $212,000 of unrecognized compensation related to employee and consultant stock options that are expected to vest over a weighted average period of 0.90 years and, approximately $500,000 of unrecognized compensation related to employee stock options whose recognition is dependent on certain milestones to be achieved. Additionally, there were approximately $213,000 stock options with a performance vesting condition that were granted to consultants which will be measured and recognized when vesting becomes probable. |
WARRANTS
WARRANTS | 12 Months Ended |
Feb. 28, 2017 | |
Warrants | |
WARRANTS | For the year ended February 29, 2016, the Company issued to a consultant for services a five-year warrant to purchase 9,134 shares of common stock at an exercise price of $8.25 per share. This warrant vested immediately. The fair value of this warrant was determined to be approximately $27,000, as calculated using the Black-Scholes model. Average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.54%; (2) an expected term of 5.0 years; (3) an expected volatility of 128%; and (4) zero expected dividends. For the year ended February 29, 2016, the Company recognized approximately $27,000 of stock-based compensation for this warrant. For the year ended February 29, 2016, the Company issued an aggregate of 1,251 warrants to a consultant for services. These warrants were issued on May 31, 2015 and expire on May 31, 2020. A total of 556 of such warrants are exercisable at $15.00 per share and 695 of such warrants are exercisable at $18.75 per share. These warrants vested immediately. The fair value of these warrants was determined to be approximately $5,000, as calculated using the Black-Scholes model. Average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.49%; (2) an expected term of 5.0 years; (3) an expected volatility of 124%; and (4) zero expected dividends. For the year ended February 29, 2016, the Company recognized approximately $5,000 of stock-based compensation for these warrants. For the year ended February 29, 2016, the Company issued an aggregate of 214,376 Series A Warrants in connection with the issuances of Series B Preferred Stock in March 2015, referenced in Note 6, including 20,668 warrants issued to the placement agent. These Series A Warrants were issued on March 27, 2015 and March 31, 2015, are exercisable at $10.50 per share and expire on March 31, 2020. The Series A Warrants vested immediately. The Series A Warrants do not contain any provision that would require liability treatment, therefore they were classified as equity in the Consolidated Balance Sheet. The fair value of the placement agent warrants was determined to be approximately $158,000, as calculated using the Black-Scholes model, and recorded as stock issuance cost. Weighted-average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.41%; (2) an expected term of 5.0 years; (3) an expected volatility of 125%; and (4) zero expected dividends. For the year ended February 29, 2016, the Company issued a warrant to purchase an aggregate of 43,636 shares of common stock in connection with the issuance of the Promissory Note pursuant to the Note Purchase Agreement on July 31, 2015, referenced in Note 7. This warrant is exercisable at $8.25 per share and expires on July 30, 2020. The warrant vested immediately. The warrant contains a clause affecting its exercise price that caused it to be classified as a derivative warrant liability (see Note 7 and Note 8). Such clause will lapse upon listing of the Company’s common stock on a National Trading Market. The warrant was recorded as a debt discount based on its fair value. For the year ended February 29, 2016, in connection with the issuance of the Promissory Note pursuant to the Note Purchase Agreement on July 31, 2015, the Company issued placement agent warrants to purchase an aggregate of 5,600 shares of common stock. These placement agent warrants were issued on July 31, 2015, are exercisable at $10.50 per share and expire on July 31, 2020. These placement agent warrants vested immediately. The fair value of these warrants was determined to be approximately $17,000, as calculated using the Black-Scholes model. Weighted-average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.54%; (2) an expected term of 5.0 years; (3) an expected volatility of 128%; and (4) zero expected dividends. Approximately $17,000 was recorded as part of the debt discount against the stated value of the Promissory Note (see Note 7). For the year ended February 29, 2016, the Company issued a warrant to purchase an aggregate of 43,636 shares of common stock in connection with the Note Amendment on February 12, 2016, referenced in Note 9. This warrant is exercisable at $8.25 per share and expire on July 30, 2020. The warrant vested immediately. This warrant contained an anti-dilution price protection provision, which required the warrant to be recorded as derivative warrant liability (see Note 7 and Note 8). Such clause will lapse upon completion of a Qualified Offering, as defined in the warrant agreement. The warrant was recorded as a debt discount based on its fair value. For the year ended February 29, 2016, the Company issued warrants to purchase an aggregate of 36,367 shares of common stock in connection with the issuance of the OID Notes pursuant to the OID Note Purchase Agreement dated February 12, 2016, referenced in Note 9. These warrants are exercisable at $8.25 per share and expire on between February 12 and 22, 2021. These warrants vested immediately. Such clause will lapse upon completion of a Qualified Offering, as defined in the warrant agreement. These warrants were recorded as a debt discount based on their fair value. During the year ended February 29, 2016, a total of 1,668 common stock purchase warrants with an exercise price of $31.50 per share and 5,001 common stock purchase warrants with an exercise price of $22.50 per share were repurchased and cancelled as part of a settlement of a dispute with two affiliated security holders (see Note 4). For the year ended February 28, 2017, the Company issued warrants to purchase an aggregate of 9,092 shares of common stock in connection with the issuance of the OID Notes pursuant to the March 2016 OID Note Purchase Agreements dated between March 3 and 15, 2016, referenced in Note 7. These warrants vested immediately, were initially exercisable at $8.25 per share and expire between March 3 and 15, 2021. These warrants contained an anti-dilution price protection provision, which required the warrants to be recorded as derivative warrant liability. In connection with the issuances of common stock pursuant to the 2016 Unit Private Placement, the exercise price of these warrants was adjusted to $2.00 per share. Such clause will lapse upon completion of a Qualified Offering, as defined in the warrant agreement. These warrants were recorded as a debt discount based on their fair value. For the year ended February 28, 2017, the Company issued Unit Warrants to purchase an aggregate of 175,826 shares of common stock to investors in connection with the 2016 Unit Private Placement and MFN Exchange referenced in Note 4. These Unit Warrants vested immediately, are exercisable at $3.00 per share and expire between May 26, 2021 and June 7, 2021. These Unit Warrants do not contain any provision that would require liability treatment, therefore they were classified as equity in the Consolidated Balance Sheet. Additionally, in connection with the MFN Exchange, the Company cancelled Series A Warrants to purchase an aggregate of 9,000 shares of common stock that were exercisable at $10.50 per share and originally issued in connection with the Series B Private Placement. For the year ended February 28, 2017, the Company issued warrants to purchase an aggregate of 45,459 shares of common stock in connection with the OID Note Amendments referenced in Note 7. These warrants vested immediately, are exercisable at $2.00 per share and expire between August 11, 2021 and August 18, 2021. The fair value of these warrants was determined to be approximately $44,000, as calculated using the Black-Scholes model and were recorded as a debt discount based on their fair value. For the year ended February 28, 2017, the Company issued Additional Unit Warrants to purchase an aggregate of 650,625 shares of common stock in connection with the Additional 2016 Unit Private Placement referenced in Note 4. These Additional Unit Warrants vested immediately, are exercisable at $3.00 per share and expire between August 30, 2021 and October 20, 2021. As discussed in Note 4, due to the Price Protection Provision, these Additional Unit Warrants are being classified as a derivative liability and measured at fair value. For the year ended February 28, 2017, the Company issued Additional Unit Warrants to purchase an aggregate of 966,881 shares of common stock in connection with the Company Payable Exchange, Promissory Note Exchange, OID Note Exchange, and Additional MFN Exchange referenced in Note 4. These Additional Unit Warrants vested immediately, are exercisable at $3.00 per share and expire between October 20, 2021 and October 29, 2021. As discussed in Note 4, due to the Price Protection Provision, these Additional Unit Warrants are being classified as a derivative liability and measured at fair value. Additionally, in connection with the Additional MFN Exchange, the Company cancelled Series A Warrants to purchase an aggregate of 208,027 shares of common stock that were exercisable at $10.50 per share and originally issued in connection with the Series B Private Placement. For the year ended February 28, 2017, in connection with the Additional 2016 Unit Private Placement, the Company issued placement agent warrants to purchase an aggregate of 108,958 shares of common stock. These placement agent warrants were issued between August 30, 2016 and October 28, 2016, vested immediately, are exercisable at $3.00 per share and expire between August 29, 2021 and October 27, 2021. The fair value of these warrants was determined to be approximately $259,000, as calculated using the Black-Scholes model. Weighted-average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.25%; (2) an expected term of 5.0 years; (3) an expected volatility of 133% and (4) zero expected dividends. For the year ended February 28, 2017, in connection with the Debt Exchange referenced in Note 7, the Company issued warrants to purchase an aggregate of 100,000 shares of common stock. These warrants were issued on January 17, 2017, vested immediately, are exercisable at $3.00 per share and expire January 16, 2022. The fair value of these warrants was determined to be approximately $118,000, as calculated using the Black-Scholes model. Average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.84%; (2) an expected term of 5.0 years; (3) an expected volatility of 132%; and (4) zero expected dividends. For the year ended February 28, 2017, the Company recorded approximately $118,000 to Additional Paid-in Capital in connection with the debt extinguishment accounting related to the Debt Exchange (See Note 7). For the year ended February 28, 2017, the Company issued warrants to purchase an aggregate of 37,500 shares of common stock to a consultant for financial advisory services. These warrants were issued between on December 31, 2016 February 28, 2017, vested immediately, are exercisable at $3.00 per share, and expire between December 30, 2021 and February 27, 2022. The fair value of these warrants was determined to be approximately $47,000, as calculated using the Black-Scholes model. Average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.91%; (2) an expected term of 5.0 years; (3) an expected volatility of 131%; and (4) zero expected dividends. For the year ended February 28, 2017, the Company recognized approximately $47,000 of stock-based compensation for these warrants. For the year ended February 28, 2017, the Company issued warrants to purchase an aggregate of 75,618 shares of common stock in connection with a settlement of an outstanding cash obligation payable to Dr. Oscar Bronsther, the Company’s former chief executive officer and board member, per a consulting agreement, dated June 17, 2015, between the parties. These warrants were issued on February 15, 2017, vested immediately, are exercisable at $3.00 per share, and expire on February 14, 2022. The fair value of these warrants was determined to be approximately $95,000, as calculated using the Black-Scholes model. Average assumptions used in the Black-Scholes model included: (1) a discount rate of 2.01%; (2) an expected term of 5.0 years; (3) an expected volatility of 131%; and (4) zero expected dividends. For the year ended February 28, 2017, the Company recorded approximately $95,000 to Additional Paid-in Capital in connection with this settlement. The following table summarizes common stock purchase warrants issued and outstanding: Warrants Weighted average exercise price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at February 29, 2015 580,604 $ 17.81 $ 72,250 3.33 Granted 354,000 $ 9.68 $ - - Expired/ Exercised/ Cancelled (21,090 ) $ 22.19 $ - - Outstanding at February 29, 2016 913,514 $ 14.56 $ - 3.14 Granted 2,169,959 $ 2.97 $ - - Expired/ Exercised/ Cancelled (384,779 ) $ 12.94 $ - - Outstanding and expected to vest at February 28, 2017 2,698,694 $ 5.11 $ 4.21 Warrants exercisable at February 28, 2017 are: Exercise Prices Number of shares Weighted average remaining life (years) Exercisable number of shares $ 2.00 164,888 2.57 164,888 $ 2.20 43,636 3.96 43,636 $ 3.00 2,115,408 0.12 2,115,408 $ 8.25 9,134 3.49 9,134 $ 10.50 126,978 3.10 126,978 $ 15.00 556 3.25 556 $ 18.75 695 3.25 695 $ 22.50 209,754 1.38 209,754 $ 31.50 25,912 1.30 25,912 $ 37.50 1,733 0.87 1,733 2,698,694 4.21 2,698,694 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Feb. 28, 2017 | |
Note Payable | |
NOTES PAYABLE | Promissory Note and Promissory Note Amendments During the year ended February 29, 2016, the Company entered into a note purchase agreement effective July 31, 2015 (the “Note Purchase Agreement”) with one its existing institutional investors (the “Note Holder”). Pursuant to the Note Purchase Agreement, the Company issued and sold a non-convertible promissory note in the principal amount of $1.2 million (the “Promissory Note”) and a warrant (the “Note Warrant”) to purchase 43,636 shares of the Company’s common stock in a private placement (the “Note Private Placement”). The Promissory Note matured on July 30, 2016, accrued interest at a rate of eight percent (8%) per annum and may be prepaid by the Company at any time prior to the maturity date without penalty or premium. The Note Holder has the right at its option to exchange (the “Note Voluntary Exchange”) the outstanding principal balance of the Promissory Note plus the Conversion Interest Amount (as defined below) into such number of securities to be issued in the Public Offering (as defined below). Upon effectuating such Note Voluntary Exchange, the Note Holder shall be deemed to be a purchaser in the Public Offering. “Public Offering” means a registered offering of equity or equity-linked securities resulting in gross proceeds of at least $5.0 million to the Company; and “Conversion Interest Amount” means interest payable in an amount equal to all accrued but unpaid interest assuming the Promissory Note had been held from the issuance date to the maturity date. In the event the Company completes a Public Offering and the Note Holder elected not to effectuate the Note Voluntary Exchange, then the Company shall promptly repay the outstanding principal amount of the Promissory Note plus all accrued and unpaid interest following completion of the Public Offering. The Note Warrant contains an adjustment clause affecting its exercise price, which may be reduced if the Company issues shares of common stock or convertible securities at a price below the then-current exercise price of the Note Warrant. As a result, we determined that the Note Warrant was not indexed to the Company’s common stock and therefore should be recorded as a derivative liability. The detachable Note Warrant issued in connection with the Promissory Note was recorded as a debt discount based on its fair value (see Note 8 for fair value measurement). The adjustment clause lapses upon listing of the Company’s common stock on a national stock exchange such as the NASDAQ, New York Stock Exchange or NYSE MKT. The Company evaluated the Note Voluntary Exchange provision, which provides for settlement of the Promissory Note at an 8% premium to the Promissory Note’s stated principal amount, in accordance with ASC 815-15-25. The Voluntary Exchange provision is a contingent put that is not clearly and closely related to the debt host instrument and therefore was initially bifurcated and measured at fair value and recorded as a derivative liability in the Consolidated Balance Sheet. The derivative liability was measured at fair value on an ongoing basis, with changes in fair value recognized in the statement of operations. The proceeds of the Note Private Placement were first allocated to the fair value of the Note Warrant in the amount of approximately $151,000 and to the fair value of the Note Voluntary Exchange provision in the amount of approximately $228,000, with the difference of approximately $822,000 representing the initial carrying value of the Promissory Note. Further, approximately $105,000 of debt issuance cost was recorded as additional debt discount at issuance. On February 12, 2016, the Company entered into an amendment (the “Note Amendment”) with the Note Holder, whereby the Company and the Note Holder agreed to extend the maturity date of the Promissory Note from July 31, 2016 to December 31, 2016 and increase the interest rate commencing August 1, 2016 to 12% per annum. The Company also obtained the Note Holder’s consent to the consummation of the OID Note Private Placement (as defined below), as required under the Promissory Note. Additionally, pursuant to the Note Amendment, the Note Voluntary Exchange was modified to effect a voluntary exchange of $600,000 principal amount (“Initial Exchange Principal Amount”) of the Promissory Note plus the Initial Conversion Interest Amount into a Qualified Offering (as defined below) or Public Offering. “Initial Conversion Interest Amount” shall mean interest payable in an amount equal to all accrued but unpaid interest assuming the Initial Exchange Principal Amount has been held from the issuance date to the original maturity date of July 31, 2016 (for the avoidance of doubt, such amount that is calculated using the following formula: (a) 8% multiplied by the Initial Exchange Principal Amount ($600,000), multiplied by (b) the actual number of days elapsed in a year of three hundred and sixty-five (365) days, which amount shall equal $48,000 in the aggregate). “Qualified Offering” means one or a series of offerings of equity or equity-linked securities resulting in aggregate gross proceeds of at least $2,000,000 to the Company. Further, under the modified Note Voluntary Exchange, the Note Holder shall have the right to effect a voluntary exchange with respect to the remaining $600,000 principal amount (the “Remaining Principal Amount”) plus the Remaining Conversion Interest Amount into a Qualified Offering or Public Offering. “Remaining Conversion Interest Amount” shall mean interest payable in an amount equal to the sum of (A) all accrued but unpaid interest on such portion of the Remaining Principal Amount subject to such Voluntary Exchange assuming such portion of the Remaining Principal Amount had been held from the original maturity date of July 31, 2016 to the amended maturity date of December 31, 2016 (for the avoidance of doubt, such amount that is calculated using the following formula: (a) 12% multiplied by such portion of the Remaining Principal Amount subject to such Voluntary Exchange, multiplied by (b) the actual number of days elapsed in a year of three hundred and sixty-five (365) days, which amount shall equal $30,000 in the aggregate assuming the aggregate Remaining Principal Amount of $600,000 is used in such calculation), plus (B) all accrued but unpaid interest assuming such portion of the Remaining Principal Amount had been held from the issuance date to the original maturity date of July 31, 2016 (for the avoidance of doubt, such amount that is calculated using the following formula: (a) 8% multiplied by such portion of the Remaining Principal Amount, multiplied by (b) the actual number of days elapsed in a year of three hundred and sixty-five (365) days, which amount shall equal $48,000 in the aggregate assuming the aggregate Remaining Principal Amount of $600,000 is used in such calculation).In consideration for entering into the Note Amendment, the Company issued the Note Holder a warrant to purchase 43,636 shares of the Company’s common stock (the “Amendment Warrant”) in substantially the same form as the Note Warrant issued in the Note Private Placement, provided, however, that with respect to the “full-ratchet” anti-dilution price protection adjustments for future issuances of other Company equity or equity-linked securities (subject to certain standard carve-outs), such price protection adjustment shall be equal to 110% of the consideration price per share of the issued equity or equity-linked securities. The Company evaluated the Note Amendment transaction in accordance with ASC 470-50-40-12 and determined the Note Amendment did not constitute a substantive modification of the Promissory Note and that the transaction should be accounted for as a debt modification. The Amendment Warrant contains an adjustment clause affecting its exercise price, which may be reduced if the Company issues shares of common stock or convertible securities at a price below the then-current exercise price of the Amendment Warrant. As a result, the Company determined that the Amendment Warrant was not indexed to the Company’s common stock and therefore should be recorded as a derivative liability. The fair value of the detachable Amendment Warrant issued in connection with the Note Amendment was recorded as a debt discount. The adjustment clause lapses upon the Company completing a Qualified Offering. Accordingly, the Company recorded a debt discount related to the warrant liability of approximately $85,000 and a debt discount related to the Voluntary Exchange of approximately $104,000 during the year ended February 29, 2016. Effective October 21, 2016, in connection with the Promissory Note Exchange as referenced in Note 4, $600,000 principal amount of the Promissory Note plus $48,000 of accrued and unpaid interest was exchanged into the Additional 2016 Unit Private Placement. Accordingly, the Company recorded a loss on extinguishment of approximately $694,000 during the year ended February 28, 2017. On January 17, 2017, in connection with the Debt Exchange (as described in the Convertible Note subsection below), $600,000 principal amount of the Promissory Note plus $96,000 of accrued and unpaid interest was exchanged into the Convertible Note. During the year ended February 29, 2016, the Company recognized approximately $301,000 of interest expense related to the Promissory Note, as amended, including amortization of debt discount of approximately $245,000 and accrued interest expense of $56,000. Additionally, the Company recognized a loss of approximately $8,500 in the year ended February 29, 2016 due to the change in estimated fair value of the Voluntary Exchange provision. During the year ended February 28, 2017, the Company recognized approximately $461,000 of interest expense related to the Promissory Note, as amended, including amortization of debt discount of approximately $367,000 and accrued interest expense of approximately $94,000. Additionally, the Company recognized a gain of approximately $340,000 in the year ended February 28, 2017 due to the change in estimated fair value of the Voluntary Exchange provision. OID Notes and OID Note Amendments During the year ended February 29, 2016, the Company entered into an OID note purchase agreement dated February 12, 2016 (the “OID Note Purchase Agreement”) in a private placement (the “OID Note Private Placement”) with various accredited investors (the “OID Note Holders”). Pursuant to the OID Note Purchase Agreement, the Company may issue and sell non-convertible OID promissory notes (the “OID Notes”) up to an aggregate purchase price of $1,000,000 (the “Purchase Price”) and warrants (the “OID Warrants”) to purchase 7,273 shares of the Company’s common stock for every $100,000 of Purchase Price. The OID Notes shall have an initial principal balance equal to 120% of the Purchase Price (the “OID Principal Amount”). During the year ended February 29, 2016, the Company entered into OID Note Purchase Agreements between February 12 and 22, 2016 (the “February 2016 OID Note Purchase Agreements”) with various accredited investors. Pursuant to the February 2016 OID Note Purchase Agreements, the Company received an aggregate Purchase Price of $500,000 and issued OID Notes in the aggregate OID Principal Amount of $600,000 and OID Warrants to purchase an aggregate of 36,367 shares of the Company’s common stock. During the year ended February 28, 2017, the Company entered into OID Note Purchase Agreements between March 4 and 15, 2016 (the “March 2016 OID Note Purchase Agreements”) with various accredited investors. Pursuant to the March 2016 OID Note Purchase Agreements, the Company received an aggregate Purchase Price of $125,000 and issued OID Notes with an aggregate OID Principal Amount of $150,000 and OID Warrants to purchase 9,902 shares of the Company’s common stock. The OID Notes mature six (6) months following the issuance date of each OID Note and may be prepaid by the Company at any time prior to the maturity date without penalty or premium. In the event the OID Notes are prepaid in full on or before the date that is ninety (90) days following the issuance date of each OID Note, the prepayment amount shall be equal to 110% of the Purchase Price and in the event the OID Notes are prepaid following such initial ninety (90) day period, the prepayment amount shall be equal to the OID Principal Balance (the “Optional Redemption”). The Company determined the Optional Redemption feature represents a contingent call option. The Company evaluated the Optional Redemption provision in accordance with ASC 815-15-25. The Company determined that the Optional Redemption feature is clearly and closely related to the debt host instrument and is not an embedded derivative requiring bifurcation. Each OID Note Holder has the right at its option to act as a purchaser in a Qualified Offering and, in lieu of investing new cash subscriptions, mechanically effect a voluntary exchange (the “OID Note Voluntary Exchange”) of the OID Principal Amount of the OID Notes into such number of securities to be issued in a Qualified Offering. Upon effectuating such OID Voluntary Exchange, the OID Note Holders shall be deemed to be purchasers in the Qualified Offering. The Company evaluated the OID Note Voluntary Exchange provision, which provides for settlement of the OID Notes at the OID Principal Amount in accordance with ASC 815-15-25. The Company determined the OID Note Voluntary Exchange provision is a contingent put that is not clearly and closely related to the debt host instrument and therefore was initially separately measured at fair value and will be measured at fair value on an ongoing basis, with changes in fair value recognized in the statement of operations. The OID Warrants contain an adjustment clause affecting their exercise price, which may be reduced if the Company issues shares of common stock or convertible securities at a price below the then-current exercise price of the OID Warrants. As a result, we determined that the OID Warrants were not indexed to the Company’s common stock and therefore should be recorded as a derivative liability. The detachable OID Warrants issued in connection with the OID Notes were recorded as a debt discount based on their fair value (see Note 8 for fair value measurement). The adjustment clause lapses upon the Company completing the Qualified Offering. Pursuant to the February 2016 closings of the OID Note Private Placement, the OID Principal Amount was first allocated to the fair value of the OID Warrants in the amount of approximately $76,000, next to the value of the original issuance discount in the amount of $100,000, then to the fair value of the OID Note Voluntary Exchange provision in the amount of approximately $135,000, and lastly to the debt discount related to offering costs of approximately $14,000 with the difference of approximately $275,000 representing the initial carrying value of the OID Notes. During the year ended February 29, 2016, the Company recognized approximately $9,000 of interest expense related to the OID Notes, including amortization of debt discount. Additionally, the Company recognized a loss of approximately $2,000 in the year ended February 29, 2016 due to the change in estimated fair value of the OID Note Voluntary Exchange provision Pursuant to the March 2016 closings of the OID Note Private Placement, the OID Principal Amount was first allocated to the fair value of the OID Warrants in the amount of approximately $15,000, next to the value of the original issuance discount in the amount of $25,000, then to the fair value of the OID Note Voluntary Exchange provision in the amount of approximately $33,000, and lastly to the debt discount related to offering costs of approximately $2,000 with the difference of approximately $75,000 representing the initial carrying value of the OID Notes issued in March 2016. Between August 12, 2016 and August 19, 2016, the Company entered into certain amendments (the “OID Note Amendments”), to its outstanding non-convertible OID Notes originally issued between February 12, 2016 and March 15, 2016 (the “OID Notes”), with the holders of an aggregate of $750,000 principal amount of OID Notes, whereby the holders of the OID Notes extended the maturity date of the OID Notes an additional three (3) months to between November 12, 2016 and December 15, 2016. In consideration for entering into the Note Amendments, the Company (i) increased the principal amount of the OID Notes by 10% to $825,000 in the aggregate from $750,000 in the aggregate, (ii) issued an aggregate of 45,459 common stock purchase warrants with an exercise price of $2.00 per share and a term of five years, and (iii) modified the voluntary exchange provision of the OID Notes by reducing the “Qualified Offering” threshold amount to $500,000 from $2,000,000. Additionally, the Company will have the sole option to extend the maturity date of the OID Notes an additional three (3) months in consideration for a further 10% increase in the principal amount from $825,000 to $907,500. The Company evaluated the OID Note Amendments transactions in accordance with ASC 470-50-40-12 and determined the OID Note Amendments did not constitute a substantive modification of the OID Notes and that the transaction should be accounted for as a debt modification. Effective October 28, 2016, in connection with the OID Note Exchange as referenced in Note 4, $553,000 principal amount of OID Notes was exchanged into the Additional 2016 Unit Private Placement. Accordingly, the Company recorded a loss on extinguishment of approximately $555,000. Additionally, the Company repaid $8,000 of OID Notes. Effective November 12, 2016, the Company provided notice that it effected its sole option to extend the maturity date (the “Second OID Note Amendment”) of its outstanding OID Note in the aggregate of $264,000 principal amount of OID Note, whereby the holder of the OID Note extended the maturity date of the OID Note an additional three (3) months to February 12, 2017. In consideration for entering into the Note Amendment, the Company increased the principal amount of the OID Note by 10% or $26,400 to $290,400 in the aggregate. The Company evaluated the Second OID Note Amendment in accordance with ASC 470-50-40-12 and determined the OID Note Amendments did not constitute a substantive modification of the OID Notes and that the transaction should be accounted for as a debt modification. On January 17, 2017, in connection with the Debt Exchange, the OID Note with an OID Principal Amount of $290,400 was exchanged into the Convertible Note. See Convertible Note. During the year ended February 28, 2017, the Company recognized approximately $583,000 of interest expense related to the OID Notes, as amended, including amortization of debt discount. Additionally, the Company recognized a gain of approximately $275,000 in the year ended February 28, 2017 due to the change in estimated fair value of the Voluntary Exchange provision. Convertible Note On January 17, 2017, the Company entered into an exchange agreement, pursuant to which the Company issued to a new convertible promissory note in the principal amount of $1,000,000 (the “Convertible Note”) in exchange (the “Debt Exchange”) for the cancellation of (i) $600,000 principal amount of the Promissory Note plus $96,000 of accrued and unpaid interest, and (ii) $290,400 principal amount of the OID Note. In consideration for the Debt Exchange, the Company issued a warrant to purchase 100,000 shares of common stock at an exercise price of $3.00 per share and a term of five years. The Convertible Note matures on September 30, 2017, accrues interest at a rate of ten percent (10%) per annum commencing as of January 1, 2017, and may be prepaid upon 10 days’ advanced written notice by the Company at any time prior to the maturity date without penalty or premium (the “Prepayment Option”). The holder has the right to convert the outstanding principal balance of the Convertible Note plus all accrued and unpaid interest thereon into shares of the Company’s common stock at a conversion price per share of $2.00 (the “Conversion Option”). The Company evaluated the Debt Exchange transaction in accordance with ASC 470-50-40-12 and determined the Debt Exchange constituted a substantive modification and that the transaction should be accounted for as an extinguishment. The Company determined the Prepayment Option feature represents a contingent call option. The Company evaluated the Prepayment Option in accordance with ASC 815-15-25. The Company determined that the Prepayment Option feature is clearly and closely related to the debt host instrument and is not an embedded derivative requiring bifurcation. Additionally, the Company determined the Conversion Option represents an embedded call option. The Company evaluated the Conversion Option in accordance with ASC 815-15-25. The Company determined that the Conversion Option feature meets the scope exception from ASC 815 and is not an embedded derivative requiring bifurcation. The Company evaluated the Convertible Note for a beneficial conversion feature in accordance with ASC 470-20. The Company determined that the effective conversion price was above the closing stock price on the commitment date, and the Convertible Note did not contain a beneficial conversion feature. The Company recorded the Convertible Note at fair value of approximately $986,000 with an initial debt discount of $14,000. Accordingly, in accordance with ASC 470-50-40-2, the Company recognized a loss on extinguishment of approximately $127,000, which equals the difference between the reacquisition price of debt and the net carrying amount of the extinguished debt. During the year ended February 28, 2017, the Company recognized approximately $19,000 of interest expense related to the Convertible Note, including amortization of debt discount of approximately $3,000 and accrued interest expense of approximately $16,000 The following table summarizes the notes payable: Note Payable Convertible Note Payable Note Discount Put Exchange Feature Note Payable, Net February 28, 2015 balance $ - $ - $ - $ - $ - Proceeds from issuance of notes 1,800,000 - (996,595 ) 466,387 1,269,792 Amortization of debt discount - - 253,313 - 253,313 Change in fair value of voluntary exchange feature - - - 10,015 10,015 February 29, 2016 balance 1,800,000 - (743,282 ) 476,402 1,533,120 Issuance of notes 150,000 - (74,931 ) 32,496 107,565 Repayment of notes (8,000 ) - - (8,000 ) Additional debt discount upon Notes amendments 101,400 - (251,081 ) 105,586 (44,095 ) Note conversions (2,043,400 ) 1,000,000 100,327 - (943,073 ) Amortization of debt discount - - 958,053 - 958,053 Change in fair value of voluntary exchange feature - - - (614,484 ) (614,484 ) February 28, 2017 balance $ - $ 1,000,000 $ (10,914 ) $ - $ 989,086 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Feb. 28, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | In accordance with ASC 820, Fair Value Measurements, financial instruments were measured at fair value using a three-level hierarchy which maximizes use of observable inputs and minimizes use of unobservable inputs: ● Level 1: Observable inputs such as quoted prices in active markets for identical instruments ● Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the market ● Level 3: Significant unobservable inputs supported by little or no market activity. Financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, for which determination of fair value requires significant judgment or estimation. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Derivative Warrant Liability At February 28, 2017 and February 29, 2016, the warrant liability balances of approximately $2.1 million and approximately $234,000, respectively, were classified as Level 3 instruments. The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative warrant liability: Note Payable Warrants Series B Warrants PPM Warrants Total Fair value at February 28, 2015 $ - $ 273,000 $ - $ 273,000 Additions: 311,057 - - 311,057 Change in fair value: (122,706 ) (226,890 ) - (349,596 ) Fair value at February 29, 2016 188,351 46,110 - 234,461 Additions: 15,225 4,263,271 4,278,496 Change in fair value: (46,372 ) (10,420 ) (2,349,193 ) (2,405,985 ) Fair value at February 28, 2017 $ 157,204 $ 35,690 $ 1,914,078 $ 2,106,972 In connection with the initial closing of the Series B Private Placement on December 31, 2014, the Company issued a warrant to purchase an aggregate of 30,334 shares of common stock (the “Series B Warrant”), originally exercisable at $8.25 per share and expiring on March 31, 2020. The Series B Warrant contains a full-ratchet anti-dilution price protection provision that requires liability treatment and the exercise price of the Series B Warrant was adjusted to $2.00 during the year ended February 28, 2017. The fair value of the Series B Warrant at February 28, 2017 and February 29, 2016 was determined to be approximately $36,000 and $46,000, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 28, 2017 and February 29, 2016 used the following assumptions: (1) a stock price of $1.50 and $1.80, respectively; (2) a risk-free rate of 1.50% and 1.08%, respectively; (3) an expected volatility of 131% and 134%, respectively; and (4) a fundraising event to occur on May 31, 2017 and May 15, 2016, respectively, that would result in the issuance of additional common stock. In connection with the issuance of the Promissory Note on July 31, 2015, the Company issued a warrant to purchase an aggregate of 43,636 shares of common stock, originally exercisable at $8.25 per share and expiring on July 31, 2020. This warrant contains a full-ratchet anti-dilution price protection provision that requires liability treatment and the exercise price of this warrant was adjusted to $2.00 during the year ended February 28, 2017. The fair value of the warrant at February 28, 2017 and February 29, 2016 was determined to be approximately $51,000 and $64,000, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 28, 2017 and February 29, 2016 used the following assumptions: (1) stock price of $1.50 and $1.80, respectively; (2) a risk-free rate of 1.57% and 1.13%, respectively; (3) an expected volatility of 131% and 134%, respectively; and (4) a fundraising event to occur on May 31, 2017 and May 15, 2016, respectively, that would result in the issuance of additional common stock. In connection with the execution of the Note Amendment on February 12, 2016, the Company issued a warrant to purchase an aggregate of 43,636 shares of common stock, initially exercisable at $8.25 per share and expiring on February 11, 2021. This warrant contains a ratchet anti-dilution price protection provision that requires liability treatment and the exercise price of this warrant was adjusted to $2.20 during the year ended February 28, 2017. The fair value of the warrant at February 28, 2017 and February 29, 2016 was determined to be approximately $51,000 and $68,000, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 28, 2017 and February 29, 2016 used the following assumptions: (1) stock price of $1.50 and $1.80, respectively; (2) a risk-free rate of 1.68% and 1.20%, respectively; (3) an expected volatility of 131% and 134%, respectively; and (4) a fundraising event to occur on May 31, 2017 and May 15, 2016, respectively, that would result in the issuance of additional common stock. In connection with the issuance of OID Notes in February 2016, the Company issued warrants to purchase an aggregate of 36,367 shares of common stock. These warrants were issued between February 12 and 22, 2016, were initially exercisable at $8.25 per share and expire between February 11 and 21, 2021. These warrants contain a full-ratchet anti-dilution price protection provision that requires liability treatment and the exercise price of these warrants were adjusted to $2.00 during the year ended February 28, 2017. The fair value of these warrants at February 28, 2017 and February 29, 2016 was determined to be approximately $44,000 and $56,000, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 28, 2017 and February 29, 2016 used the following weighted-average assumptions: (1) stock price of $1.50 and $1.80, respectively; (2) a risk-free rate of 1.68% and 1.21%, respectively; (3) an expected volatility of 131% and 134%, respectively; and (4) a fundraising event to occur on May 31, 2017 and May 15, 2016, respectively, that would result in the issuance of additional common stock. In connection with the issuance of OID Notes in March 2016, the Company issued warrants to purchase an aggregate of 9,092 shares of common stock. These warrants were issued between March 4 and 15, 2016, were initially exercisable at $8.25 per share and expire between March 4 and 15, 2021. These warrants contain a full-ratchet anti-dilution price protection provision that requires liability treatment and the exercise price of these warrants were adjusted to $2.00 during the year ended February 28, 2017. The fair value of these warrants at February 28, 2017 and at issuance between March 4 and 15, 2016 was determined to be approximately $11,000 and approximately $15,000, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of November 30, 2016, and between March 4 and 15, 2016, used the following weighted-average assumptions: (1) stock price of $1.50 and $1.97, respectively; (2) a risk-free rate of 1.69% and 1.41%, respectively; (3) an expected volatility of 131% and 136%, respectively; and (4) a fundraising event to occur on May 31, 2017 and July 31, 2016, respectively, that would result in the issuance of additional common stock. In connection with the Additional 2016 Unit Private Placement including the Company Payable Exchange, the OID Note Exchange, the Promissory Note Exchange and the Additional 2016 MFN Exchange, the Company issued warrants to purchase an aggregate of 1,617,506 shares of common stock. These warrants were issued between August 31, 2016 and October 30, 2016, are exercisable at $3.00 per share and expire between August 30, 2021 and October 29, 2021. As referenced in Note 6, the Price Protection provision associated with these warrants requires liability treatment. The fair value of these warrants at February 28, 2017 and issuance between August 31, 2016 and October 30, 2016 was determined to be approximately $1.9 million and $4.3 million, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 28, 2017 and issuance between August 31, 2016 and October 30, 2016, used the following weighted-average assumptions: (1) stock price of $1.50 and $2.61, respectively; (2) a risk-free rate of 1.66% and 1.81%, respectively; (3) an expected volatility of 131% and 134%, respectively; and (4) a fundraising event to occur on May 31, 2017 and March 31, 2017, respectively, that would result in the issuance of additional common stock. Put Exchange Feature Liability At February 29, 2016 and February 28, 2017, the put exchange feature liability balances of approximately $476,000 and $0, respectively, were classified as Level 3 instruments. The following table sets forth the changes in the estimated fair value for our Level 3 classified put exchange feature liabilities: Promissory Note, as amended OID Notes Total Fair value, February 29, 2016: $ 339,979 $ 136,423 $ 476,402 Additions - 138,082 138,082 Change in fair value: (339,979 ) (274,505 ) (614,484 ) Fair value, February 28, 2017: $ - $ - $ - The Promissory Note originally issued on July 31, 2015, as amended, contains a Note Voluntary Exchange provision that is a contingent put that requires liability treatment (see Note 7). The fair value of this put exchange feature at February 29, 2016 was determined to be approximately $340,000. At February 29, 2016, the fair value was calculated using a probability weighted present value methodology. The significant inputs to the fair value model were 1) the timing of a Qualified Offering expected to occur in May 2016 at February 29, 2016; 2) the combined probability of both a Qualified Offering and a voluntary exchange to occur, which was determined to be 71% at February 29, 2016 and 3) a discount rate of 18%, approximating high yield distressed debt rates. The Promissory Note was extinguished as of February 28, 2017. The OID Notes originally issued between February 12, 2016 and March 15, 2016, as amended, contain an OID Note Voluntary Exchange provision that is a contingent put that requires liability treatment (see Note 7). The fair value of this put exchange feature at February 29, 2016 was determined to be approximately $136,000. At February 29, 2016, the fair value was calculated using a probability weighted present value methodology. The significant inputs to the fair value model were 1) the timing of a Qualified Offering expected to occur in May 2016; 2) the combined probability of both a Qualified Offering and a voluntary exchange to occur, which was determined to be 81%; and 3) a discount rate of 18%, approximating high yield distressed debt rates. The OID Notes were extinguished as of February 28, 2017. |
EQUIPMENT
EQUIPMENT | 12 Months Ended |
Feb. 28, 2017 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT | Equipment consists of the following: Estimated Useful lives February 28, 2017 February 29, 2016 Research equipment 7 years $ 601,720 $ 590,373 Computer and software equipment 5 years 78,149 76,075 679,869 666,448 Accumulated depreciation and amortization (265,234 ) (169,396 ) Equipment, net $ 414,635 $ 497,052 Total depreciation and amortization expense was approximately $96,000 for each of the years ended February 28, 2017 and February 29, 2016. Depreciation of equipment utilized in research and development activities is included in research and development expenses and amounted to approximately $81,000 for each of the years ended February 28, 2017 and February 29, 2016. All other depreciation is included in general and administrative expense and amounted to approximately $15,000 for each of the years ended February 28, 2017 and February 29, 2016. |
LICENSE AGREEMENTS AND COMMITME
LICENSE AGREEMENTS AND COMMITMENTS | 12 Months Ended |
Feb. 28, 2017 | |
Research and Development [Abstract] | |
LICENSE AGREEMENTS AND COMMITMENTS | License Agreements Pursuant to the License Agreement, we are required to make annual license maintenance fee payments beginning August 26, 2011. We have satisfied all license maintenance payments due through February 28, 2017. We are required to make payments of $100,000 in 2017 and every year the license is in effect thereafter. These annual license maintenance fee payments will be credited to running royalties due on net sales earned in the same calendar year, if any. We are in compliance with the License Agreement. Pursuant to the Second License Agreement, we are required to make annual license maintenance fee payments beginning on January 3, 2013. Effective February 1, 2017, we amended the Second License Agreement to reduce the maintenance payment for 2016 from $30,000 to $5,000, 2017 from $50,000 to $5,000, 2018 from $75,000 to $5,000, 2019 from $100,000 to $60,000, and 2020 from $100,000 to $60,000. We are required to make payments of $100,000 in 2021 and every year the license is in effect thereafter. These annual license maintenance fee payments will be credited to running royalties due on net sales earned in the same calendar year, if any. The license maintenance payment of $5,000 for 2017 is currently outstanding, pending invoice. As such, we are in compliance with the Second License Agreement. Pursuant to the Alternative Splicing Diagnostic License Agreement and the Alternative Splicing Therapeutic License Agreement, we are required to make annual license maintenance fee payments for each license beginning on January 1, 2015. We have satisfied all license maintenance payments due through February 28, 2017. We are required to make additional payments of $37,500 in 2018, and $50,000 in 2019 and every year each license is in effect thereafter. Pursuant to the Antibody License Agreement, we are required to make license maintenance fee payments beginning on January 1, 2015. We have satisfied all license maintenance payments due through February 28, 2017. We are required to make additional payments of $15,000 in 2018 and $20,000 in 2019 and every year the license is in effect thereafter. These annual license maintenance fee payments will be credited to running royalties due on net sales earned in the same calendar year, if any. We are in compliance with the Antibody License Agreement. Lease Agreements On August 28, 2014, we entered into a lease agreement (the “Boston Lease”) for our diagnostic laboratory and office space located at 27, Drydock Ave, 2nd Floor, Boston, MA 02210 (the “Boston Property”). We paid a $40,000 security deposit in connection with entering into the Boston Lease. Effective April 6, 2016, we entered into an amendment to the Boston Lease (the “Boston Lease Amendment”), whereby we extended the term by one year from September 1, 2016 to August 31, 2017. The basic rent payable under the Boston Lease Amendment is $17,164 per month plus additional monthly payments including tax payments and operational and service costs. We anticipate entering into an additional amendment or new long-term lease agreement on reasonable commercial terms for the Boston Property. Effective March 1, 2015 we entered into a lease agreement for short-term office space in New York, NY. We paid a $2,100 security deposit in connection with entering into the lease. Effective December 1, 2015 we amended our lease agreement for the short-term office space in New York, NY. The term of the lease is month-to-month and may be terminated with twenty-one (21) days’ notice. The basic rent payment is $2,400 per month and we paid an additional $1,500 security deposit in connection with the amended lease. |
COLLABORATIVE AND OTHER RELATIO
COLLABORATIVE AND OTHER RELATIONSHIPS | 12 Months Ended |
Feb. 28, 2017 | |
Collaborative And Other Relationships | |
COLLABORATIVE AND OTHER RELATIONSHIPS | In connection with our business strategy, we may enter into research and development and other collaboration agreements. Depending on the arrangement, we may record payments as advances, funding receivables, payable balances or non-product income with our partners, based on the nature of the cost-sharing mechanism and activity within the collaboration. On September 29, 2016, the Company entered into an amendment (the “Amendment”) to a previously executed pilot materials transfer agreement (the “MTA” and together with the Amendment, the “Research Agreement”) with Celgene Corporation (“Celgene”), to conduct a mutually agreed upon pilot research project (the “Pilot Project”). The Amendment provides for milestone payments to the Company of up to approximately $973,000. Under the terms of the Research Agreement, Celgene will provide certain proprietary materials to the Company and the Company will evaluate Celgene’s proprietary materials in the Company’s metastatic cell line and animal nonclinical models. The milestone schedule calls for Celgene to pay the Company approximately $487,000 upon execution of the Amendment, which the Company has received, and the balance in accordance with the completion of three (3) milestones to Celgene’s reasonable satisfaction. The term of the Research Agreement is one (1) year, unless extended by the parties. Either party may terminate the Research Agreement with thirty (30) days prior written notice. The Company recognizes the upfront payment as a deferred research and development reimbursement in the Consolidated Balance Sheet and will amortize the deferred research and development reimbursement as incurred over the term of the Research Agreement. For the year ended February 28, 2017, the Company recorded approximately $309,000 in deferred research and development reimbursement, and, at February 28, 2017, the Company had a deferred research and development reimbursement amount of approximately $178,000. The Company will recognize deferred research and development reimbursement for each subsequent milestone in the period in which the milestone is achieved. As of February 28, 2017, none of the milestone has been achieved. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Feb. 28, 2017 | |
Income Taxes | |
INCOME TAXES | During the fiscal years ended February 28, 2017, and February 29, 2016, MetaStat incurred net losses and, therefore, has no tax liability. The difference between income taxes at the statutory federal income tax rate and income taxes reported in the statements of operations are attributable to the following: February 28, 2017 February 29, 2016 Income tax benefit at the federal statutory rate 34 % 34 % Permanent differences (19 )% (2 )% Increase in valuation allowance (15 )% (32 )% Provision for income tax 0 % 0 % Included in the permanent differences for the year ended February 28, 2017, are the change in fair value of warrant liability and put option embedded in notes payable (33%), offset by the loss on extinguishment of debt (16%). At February 28, 2017, and February 29, 2016, deferred tax assets (liabilities) consisted of the following: February 28, 2017 February 29, 2017 Accrued compensation $ 70,354 $ 87,969 Accrued interest 6,674 23,520 Net operating loss carryovers 7,257,930 5,555,259 Research and development credits 253,125 130,422 Capital loss carryover 16,663 25,421 Stock compensation 1,537,117 1,491,106 9,141,863 7,313,697 Depreciation (90,655 ) (76,987 ) 7,236,710 Less: Valuation allowance (9,051,208 ) (7,236,710 ) Net deferred tax asset $ - $ - In assessing the realization of deferred tax assets, management determines whether it is more likely than not some, or all, of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the carryforward period as well as the period in which those temporary differences become deductible. Management considers the reversal of taxable temporary differences, projected taxable income and tax planning strategies in making this assessment. Based upon historical losses and the possibility of continued taxable losses over the periods that the deferred tax assets are deductible, management believes it is not more likely than not that the Company will realize the benefits of these deferred tax assets and thus recorded a valuation allowance against the entire net deferred tax asset balance. The valuation allowance increased by approximately $1.8 million and $2.0 million in the years ended February 28, 2017 and February 29, 2016, respectively. At February 28, 2017, the cumulative federal and state net operating loss carry-forwards are approximately $18.7 million and $17.3 million, respectively and, and will expire between 2029 and 2036. At February 28, 2017, the Company has research and development credits amounting to approximately $0.3 million that will start expiring in 2033. The Internal Revenue Code (“IRC”) limits the amount of net operating loss carryforwards that a company may use in a given year in the event of certain cumulative changes in ownership over a three-year period as described in Section 382 of the IRC. We have not performed a detailed analysis to determine whether an ownership change has occurred. Such a change of ownership could limit our utilization of the net operating losses, and could be triggered by subsequent sales of securities by the Company or its stockholders. The Company records interest and penalties related to unrecognized tax benefits within income tax expense. The Company had not accrued any interest or penalties related to unrecognized benefits. No amounts were provided for unrecognized tax benefits attributable to uncertain tax positions as of February 28, 2017 and February 29, 2016. The Company is no longer subject to Federal income tax assessment for years before 2013. However, since the Company has incurred net operating losses every year since inception, all of its income tax returns are subject to examination and adjustments by the Internal Revenue Service for at least three years following the year in which the tax attributes are utilized. |
LICENSE AGREEMENT WITH ASET THE
LICENSE AGREEMENT WITH ASET THERAPEUTICS, LLC | 12 Months Ended |
Feb. 28, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
LICENSE AGREEMENT WITH ASET THERAPEUTICS, LLC | On August 31, 2016, the Company and ASET Therapeutics, LLC (“ASET”) entered into a mutual release of claims with respect to the termination of the Memorandum of Understanding dated July 14, 2014, as amended, the License and Development and Commercialization Agreement dated November 25, 2014 and all other related documents and agreements. The Company assessed the collectability of its notes receivable in connection with two past due promissory notes of ASET in the aggregate principal amount of $125,000 held by the Company (the “ASET Notes”). The Company determined that the probability of repayment of the ASET Notes had decreased significantly and were to be written off. On August 30, 2016, the Company entered into a sale and assignment agreement with a non-affiliated shareholder, whereby the Company sold the ASET Notes for gross proceeds of $12,500. The Company recorded a loss on sale of notes receivable of $112,500 during the year ended February 28, 2017. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Feb. 28, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Effective May 24, 2017, Paul Billings, M.D., Ph.D. was appointed as a member of our board of directors. |
SUMMARY OF SIGNIFICANT ACCOUN21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Feb. 28, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, including contingencies. Accordingly, actual results could differ from those estimates. |
Cash and Cash Equivalents | The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. All cash balances were highly liquid at February 28, 2017 and February 29, 2016. |
Concentration of Credit Risk | Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company primarily maintains its cash balances with financial institutions in federally insured accounts. The Company may from time to time have cash in banks in excess of FDIC insurance limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high quality financial institutions. |
Equipment | Equipment is stated at cost. The cost of equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Expenditures for major renewals or betterments that extend the useful lives of equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. |
Long-lived Assets | Long-lived assets are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. There was no impairment of long-lived assets as of February 28, 2017 and February 29, 2016. |
Debt Issuance Costs | Effective March 1, 2016 debt issuance costs are recorded as a direct reduction of the carrying amount of the related debt. Debt issuance costs are amortized over the maturity period of the related debt instrument using the effective interest method. |
Debt Instruments | We analyze debt instruments for various features that would generally require either bifurcation and derivative accounting, or recognition of a debt discount or premium under authoritative guidance. Detachable warrants issued in conjunction with debt are measured at their relative fair value, if they are determined to be equity instrument, or their fair value, if they are determined to be liability instruments, and recorded as a debt discount. Conversion features that are in the money at the commitment date constitute a beneficial conversion feature that is measured at its intrinsic value and recognized as debt discount. Debt discount is amortized as interest expense over the maturity period of the debt using the effective interest method. Contingent beneficial conversion features are recognized when the contingency has been resolved. |
Fair Value Measurements | The Company groups its assets and liabilities measured at fair value in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, some discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the financial instrument. The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period. |
Revenues | We currently do not have any revenues. We expect to primarily derive our revenues from sale of our products, which are currently under development. |
Net Loss Per Share | Basic net loss per common share is computed based on the weighted average number of common shares outstanding during the period. Restricted shares issued with vesting conditions that have not been met at the end of the period are excluded from the computation of the weighted average shares. As of February 28, 2017 and February 29, 2016, 11,536 and 11,536, respectively, restricted shares of common stock were excluded from the computation of the weighted average shares. Diluted net loss per common share is calculated giving effect to all dilutive potential common shares that were outstanding during the period. Diluted potential common shares generally consist of incremental shares issuable upon exercise of stock options and warrants and conversion of outstanding options and warrants and shares issuable from convertible securities, as well as nonvested restricted shares. In computing diluted loss per share for the years ended February 28, 2017 and February 29, 2016, no effect has been given to the common shares issuable at the end of the period upon the conversion or exercise of the following securities as their inclusion would have been anti-dilutive: February 28, 2017 February 29, 2016 Stock options 966,474 426,976 Warrants 2,698,694 913,514 Preferred stock 1,350,109 497,527 Convertible debt 507,946 - Total 5,523,223 1,838,017 |
Income Taxes | Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to net operating loss carry forwards and temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. A valuation allowance is recorded if it is not more likely than not that some portion or all of the deferred tax assets will be realized in future periods. |
Research and Development Costs | Research and development costs are charged to operations when incurred and are included in operating expenses. Research and development costs consist principally of (i) compensation and related expenses for our employees and consultants that perform our research activities, (ii) the fees paid to maintain our licenses, (iii) the payments to third parties for clinical testing and additional product development including contract research organizations, (iv) facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, and (v) laboratory and other supplies, consumables and other materials used in research and development. Research and development costs were approximately $1.0 million and approximately $1.36 million for the years ended February 28, 2017 and February 29, 2016, respectively. During the year ended February 28, 2017, the Company recorded approximately $309,000 of research and development expense reimbursement related to a research agreement (See Note 11). In the future, the Company may be required to make advance payments to vendors for goods or services that will be received in the future for use in research and development activities. In such circumstances, the advance payments will be deferred and expensed when the activity has been performed or when the goods have been received. |
Patent costs | The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses. |
Stock-Based Compensation | We account for share-based payments award issued to employees and members of our Board of Directors (the “Board”) by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line basis over the requisite service period, generally the vesting period. For award issued to non-employees, the measurement date is the date when the performance is complete or when the award vests, whichever is the earliest. Accordingly, non-employee award is remeasured at each reporting period until the final measurement date. The fair value of the award is recognized as stock-based compensation over the requisite service period, generally the vesting period. For award with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable. For awards with market conditions that affect their vesting, the fair value of the award is recognized as stock-based compensation over the requisite service period, generally the vesting period. |
Recently Issued Accounting Pronouncements | In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements-Going Concern” (“ASU 2014-15”), which establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. ASU 2014-15 also provides guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This update is effective for annual reporting periods ending after December 15, 2016. The adoption of this guidance in 2016 had no effect on the consolidated financial statements. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies certain aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact ASU 2016-09 will have on our consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Feb. 28, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Anti-dilutive securities | February 28, 2017 February 29, 2016 Stock options 966,474 426,976 Warrants 2,698,694 913,514 Preferred stock 1,350,109 497,527 Convertible debt 507,946 - Total 5,523,223 1,838,017 |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 12 Months Ended |
Feb. 28, 2017 | |
Stock Options Tables | |
Weighted average inputs to the Black-Scholes model used to value the stock options granted | February 28, 2017 February 29, 2016 Expected volatility 98.9% - 133.4% 114.8% Expected dividend yield 0.00% 0.00% Risk-free interest rate 0.97% - 1.90% 1.64% Expected Term 6.31 years 5.60 years |
Common stock options issued and outstanding | Options Weighted average exercise price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at February 28, 2015 187,575 $ 23.70 $ 20,670 8.29 Granted 243,835 $ 7.26 $ - - Expired/ Exercised/ Forfeited (4,201 ) $ (9.93 ) $ - - Outstanding at February 29, 2016 426,976 $ 14.45 $ - 7.98 Granted 1,001,000 $ 2.14 $ - - Expired/ Exercised/ Forfeited (461,502 ) $ 6.05 $ - - Outstanding and expected to vest at February 28, 2017 966,474 $ 5.71 $ 8.87 Exercisable at February 28, 2017 315,476 $ 10.84 $ - 8.08 |
Exercisable and unexercisable stock options | Exercisable Unexercisable Number of Options Exercise Price Weighted Average Remaining Life (years) Number of Options Exercise Price Weighted Average Remaining Life (years) 142,222 $ 2.00 9.36 337,778 $ 2.00 9.36 - $ 2.19 - 100,000 $ 2.19 9.24 - $ 3.00 - 121,000 $ 3.55 9.86 30,000 $ 3.55 8.94 - $ 8.10 - 1,068 $ 8.10 7.92 - $ 8.25 - 40,001 $ 8.25 8.26 79,999 $ 10.20 8.26 41,434 $ 10.20 4.86 - $ 10.50 - 3,334 $ 11.25 8.22 3,333 $ 11.25 8.22 11,112 $ 16.50 7.63 8,888 $ 16.50 7.63 8,068 $ 22.50 7.92 - $ 22.50 - 38,237 $ 48.75 6.10 - $ 48.75 - 315,476 $ 10.84 8.08 650,998 $ 3.23 9.27 |
WARRANTS (Tables)
WARRANTS (Tables) | 12 Months Ended |
Feb. 28, 2017 | |
Warrants Tables | |
Warrants issued and outstanding | Warrants Weighted average exercise price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at February 29, 2015 580,604 $ 17.81 $ 72,250 3.33 Granted 354,000 $ 9.68 $ - - Expired/ Exercised/ Cancelled (21,090 ) $ 22.19 $ - - Outstanding at February 29, 2016 913,514 $ 14.56 $ - 3.14 Granted 2,169,959 $ 2.97 $ - - Expired/ Exercised/ Cancelled (384,779 ) $ 12.94 $ - - Outstanding and expected to vest at February 28, 2017 2,698,694 $ 5.11 $ 4.21 |
Warrants exercisable | Exercise Prices Number of shares Weighted average remaining life (years) Exercisable number of shares $ 2.00 164,888 2.57 164,888 $ 2.20 43,636 3.96 43,636 $ 3.00 2,115,408 0.12 2,115,408 $ 8.25 9,134 3.49 9,134 $ 10.50 126,978 3.10 126,978 $ 15.00 556 3.25 556 $ 18.75 695 3.25 695 $ 22.50 209,754 1.38 209,754 $ 31.50 25,912 1.30 25,912 $ 37.50 1,733 0.87 1,733 2,698,694 4.21 2,698,694 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Feb. 28, 2017 | |
Note Payable Tables | |
Notes Payable | Note Payable Convertible Note Payable Note Discount Put Exchange Feature Note Payable, Net February 28, 2015 balance $ - $ - $ - $ - $ - Proceeds from issuance of notes 1,800,000 - (996,595 ) 466,387 1,269,792 Amortization of debt discount - - 253,313 - 253,313 Change in fair value of voluntary exchange feature - - - 10,015 10,015 February 29, 2016 balance 1,800,000 - (743,282 ) 476,402 1,533,120 Issuance of notes 150,000 - (74,931 ) 32,496 107,565 Repayment of notes (8,000 ) - - (8,000 ) Additional debt discount upon Notes amendments 101,400 - (251,081 ) 105,586 (44,095 ) Note conversions (2,043,400 ) 1,000,000 100,327 - (943,073 ) Amortization of debt discount - - 958,053 - 958,053 Change in fair value of voluntary exchange feature - - - (614,484 ) (614,484 ) February 28, 2017 balance $ - $ 1,000,000 $ (10,914 ) $ - $ 989,086 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Feb. 28, 2017 | |
Fair Value Disclosures [Abstract] | |
Changes in the estimated fair value for our Level 3 classified derivative warrant liability | Note Payable Warrants Series B Warrants PPM Warrants Total Fair value at February 28, 2015 $ - $ 273,000 $ - $ 273,000 Additions: 311,057 - - 311,057 Change in fair value: (122,706 ) (226,890 ) - (349,596 ) Fair value at February 29, 2016 188,351 46,110 - 234,461 Additions: 15,225 4,263,271 4,278,496 Change in fair value: (46,372 ) (10,420 ) (2,349,193 ) (2,405,985 ) Fair value at February 28, 2017 $ 157,204 $ 35,690 $ 1,914,078 $ 2,106,972 Promissory Note, as amended OID Notes Total Fair value, February 29, 2016: $ 339,979 $ 136,423 $ 476,402 Additions - 138,082 138,082 Change in fair value: (339,979 ) (274,505 ) (614,484 ) Fair value, February 28, 2017: $ - $ - $ - |
EQUIPMENT (Tables)
EQUIPMENT (Tables) | 12 Months Ended |
Feb. 28, 2017 | |
Property, Plant and Equipment [Abstract] | |
Equipment | Estimated Useful lives February 28, 2017 February 29, 2016 Research equipment 7 years $ 601,720 $ 590,373 Computer and software equipment 5 years 78,149 76,075 679,869 666,448 Accumulated depreciation and amortization (265,234 ) (169,396 ) Equipment, net $ 414,635 $ 497,052 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Feb. 28, 2017 | |
Income Taxes Tables | |
Schedule of Effective Income Tax Rate Reconciliation | February 28, 2017 February 29, 2016 Income tax benefit at the federal statutory rate 34 % 34 % Permanent differences (19 )% (2 )% Increase in valuation allowance (15 )% (32 )% Provision for income tax 0 % 0 % |
Schedule of Deferred Tax Assets and Liabilities | February 28, 2017 February 29, 2017 Accrued compensation $ 70,354 $ 87,969 Accrued interest 6,674 23,520 Net operating loss carryovers 7,257,930 5,555,259 Research and development credits 253,125 130,422 Capital loss carryover 16,663 25,421 Stock compensation 1,537,117 1,491,106 9,141,863 7,313,697 Depreciation (90,655 ) (76,987 ) 7,236,710 Less: Valuation allowance (9,051,208 ) (7,236,710 ) Net deferred tax asset $ - $ - |
ORGANIZATION, BASIS OF PRESEN29
ORGANIZATION, BASIS OF PRESENTATION AND GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2017 | Feb. 29, 2016 | Feb. 28, 2015 | |
Description Of Business And Going Concern Policies | |||
Date of incorporation | Mar. 28, 2007 | ||
State of incorporation | Nevada | ||
Stockholders' deficit | $ (2,795,180) | $ (1,769,797) | $ 242,650 |
Accumulated deficit | $ (26,318,885) | $ (23,377,328) |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Anti-dilutive securities | 5,523,223 | 1,838,017 |
Stock Options [Member] | ||
Anti-dilutive securities | 966,474 | 426,976 |
Warrants [Member] | ||
Anti-dilutive securities | 2,698,694 | 913,514 |
Preferred Stock [Member] | ||
Anti-dilutive securities | 1,350,109 | 497,527 |
Convertible Debt [Member] | ||
Anti-dilutive securities | 507,946 | 0 |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Summary Of Significant Accounting Policies Details Narrative | ||
Research and development costs | $ 1,009,134 | $ 1,360,739 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - USD ($) | Feb. 28, 2017 | Feb. 29, 2016 |
Equity [Abstract] | ||
Dividend payable | $ 16,000 | $ 48,000 |
STOCK OPTIONS (Details)
STOCK OPTIONS (Details) - Option [Member] | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Expected volatility | 114.80% | |
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 1.64% | |
Expected Term | 6 years 3 months 22 days | 5 years 7 months 6 days |
Minimum [Member] | ||
Expected volatility | 98.90% | |
Risk-free interest rate | 0.97% | |
Maximum [Member] | ||
Expected volatility | 133.40% | |
Risk-free interest rate | 1.90% |
STOCK OPTIONS (Details 1)
STOCK OPTIONS (Details 1) - Option [Member] - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Options Outstanding | ||
Outstanding at Beginning of Period | 426,976 | 187,575 |
Granted | 1,001,000 | 243,835 |
Expired/ Exercised/ Forfeited | (461,502) | (4,201) |
Outstanding and expected to vest at End of Period | 966,474 | 426,976 |
Options exercisable | 315,476 | |
Weighted Average Exercise Price | ||
Outstanding at Beginning of Period | $ 14.45 | $ 23.70 |
Granted | 2.14 | 7.26 |
Expired/ Exercised/ Forfeited | 6.05 | (9.93) |
Outstanding and expected to vest at End of Period | 5.71 | $ 14.45 |
Exercisable at End of period | $ 10.84 | |
Outstanding at Beginning of Period | $ 0 | $ 20,670 |
Outstanding and expected to vest at End of Period | 0 | $ 0 |
Exercisable at End of period | $ 0 | |
Weighted Average Remaining Contractual Term | ||
Outstanding and expected to vest at Beginning of Period | 7 years 11 months 23 days | 8 years 3 months 14 days |
Outstanding and expected to vest at End of Period | 8 years 10 months 13 days | 7 years 11 months 23 days |
Exercisable at End of period | 8 years 29 days |
STOCK OPTIONS (Details 2)
STOCK OPTIONS (Details 2) - Option [Member] | 12 Months Ended |
Feb. 28, 2017$ / sharesshares | |
Options Exercisable | |
Options exercisable | shares | 315,476 |
Exercise Price | $ / shares | $ 10.84 |
Weighted Average Remaining Life (years) | 8 years 29 days |
Options Unexercisable | |
Number of Options | shares | 650,998 |
Exercise Price | $ / shares | $ 3.23 |
Weighted Average Remaining Life (years) | 9 years 3 months 7 days |
$ 2 | |
Options Exercisable | |
Options exercisable | shares | 142,222 |
Exercise Price | $ / shares | $ 2 |
Weighted Average Remaining Life (years) | 9 years 4 months 10 days |
Options Unexercisable | |
Number of Options | shares | 337,778 |
Exercise Price | $ / shares | $ 2 |
Weighted Average Remaining Life (years) | 9 years 4 months 10 days |
$ 2.19 | |
Options Exercisable | |
Options exercisable | shares | 0 |
Exercise Price | $ / shares | $ 2.19 |
Weighted Average Remaining Life (years) | 0 years |
Options Unexercisable | |
Number of Options | shares | 100,000 |
Exercise Price | $ / shares | $ 2.19 |
Weighted Average Remaining Life (years) | 9 years 2 months 26 days |
$ 3 | |
Options Exercisable | |
Options exercisable | shares | 0 |
Exercise Price | $ / shares | $ 3 |
Weighted Average Remaining Life (years) | 0 years |
$ 3.55 | |
Options Exercisable | |
Options exercisable | shares | 30,000 |
Exercise Price | $ / shares | $ 3.55 |
Weighted Average Remaining Life (years) | 8 years 11 months 8 days |
Options Unexercisable | |
Number of Options | shares | 121,000 |
Exercise Price | $ / shares | $ 3.55 |
Weighted Average Remaining Life (years) | 9 years 10 months 10 days |
$ 8.10 | |
Options Exercisable | |
Options exercisable | shares | 1,068 |
Exercise Price | $ / shares | $ 8.10 |
Weighted Average Remaining Life (years) | 7 years 11 months 1 day |
Options Unexercisable | |
Number of Options | shares | 0 |
Exercise Price | $ / shares | $ 8.10 |
Weighted Average Remaining Life (years) | 0 years |
$ 8.25 | |
Options Exercisable | |
Options exercisable | shares | 40,001 |
Exercise Price | $ / shares | $ 8.25 |
Weighted Average Remaining Life (years) | 8 years 3 months 4 days |
Options Unexercisable | |
Number of Options | shares | 0 |
Exercise Price | $ / shares | $ 8.25 |
Weighted Average Remaining Life (years) | 0 years |
$ 10.20 | |
Options Exercisable | |
Options exercisable | shares | 41,434 |
Exercise Price | $ / shares | $ 10.20 |
Weighted Average Remaining Life (years) | 4 years 10 months 10 days |
Options Unexercisable | |
Number of Options | shares | 799,999 |
Exercise Price | $ / shares | $ 10.20 |
Weighted Average Remaining Life (years) | 8 years 3 months 4 days |
$ 10.50 | |
Options Unexercisable | |
Number of Options | shares | 0 |
Exercise Price | $ / shares | $ 10.50 |
Weighted Average Remaining Life (years) | 0 years |
$ 11.25 | |
Options Exercisable | |
Options exercisable | shares | 3,334 |
Exercise Price | $ / shares | $ 11.25 |
Weighted Average Remaining Life (years) | 8 years 2 months 19 days |
Options Unexercisable | |
Number of Options | shares | 3,333 |
Exercise Price | $ / shares | $ 11.25 |
Weighted Average Remaining Life (years) | 8 years 2 months 19 days |
$ 16.50 | |
Options Exercisable | |
Options exercisable | shares | 11,112 |
Exercise Price | $ / shares | $ 16.50 |
Weighted Average Remaining Life (years) | 7 years 7 months 17 days |
Options Unexercisable | |
Number of Options | shares | 8,888 |
Exercise Price | $ / shares | $ 16.50 |
Weighted Average Remaining Life (years) | 7 years 7 months 17 days |
$ 22.50 | |
Options Exercisable | |
Options exercisable | shares | 8,068 |
Exercise Price | $ / shares | $ 22.50 |
Weighted Average Remaining Life (years) | 7 years 11 months 1 day |
Options Unexercisable | |
Number of Options | shares | 0 |
Exercise Price | $ / shares | $ 22.50 |
Weighted Average Remaining Life (years) | 0 years |
$ 48.75 | |
Options Exercisable | |
Options exercisable | shares | 38,237 |
Exercise Price | $ / shares | $ 48.75 |
Weighted Average Remaining Life (years) | 6 years 1 month 6 days |
Options Unexercisable | |
Number of Options | shares | 0 |
Exercise Price | $ / shares | $ 48.75 |
Weighted Average Remaining Life (years) | 0 years |
WARRANTS (Details)
WARRANTS (Details) - Stock Warrants [Member] - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Warrants Outstanding | ||
Outstanding at Beginning of Period | 913,514 | 580,604 |
Granted | 2,169,959 | 354,000 |
Expired/ Exercised/ Cancelled | (384,779) | (21,090) |
Outstanding at End of Period | 2,698,694 | 913,514 |
Weighted Average Exercise Price | ||
Outstanding at Beginning of Period | $ 14.56 | $ 17.81 |
Granted | 2.97 | 9.68 |
Expired/ Exercised/ Cancelled | 12.94 | 22.19 |
Outstanding at End of Period | $ 5.11 | $ 14.56 |
Average Intrinsic Value | ||
Outstanding at Beginning of Period | $ 0 | $ 72,250 |
Outstanding at End of Period | $ 0 | $ 0 |
Weighted Average Remaining Contractual Term | ||
Outstanding at Beginning of Period | 3 years 1 month 20 days | 3 years 3 months 29 days |
Outstanding at End of Period | 4 years 2 months 16 days | 3 years 1 month 20 days |
WARRANTS (Details 1)
WARRANTS (Details 1) - Warrants [Member] | 12 Months Ended |
Feb. 28, 2017$ / sharesshares | |
Number of shares | 2,698,694 |
Weighted average remaining life (years) | 4 years 2 months 16 days |
Exercisable number of shares | 2,698,694 |
$ 2 | |
Exercise prices | $ / shares | $ 2 |
Number of shares | 164,888 |
Weighted average remaining life (years) | 2 years 6 months 25 days |
Exercisable number of shares | 164,888 |
$ 2.20 | |
Exercise prices | $ / shares | $ 2.20 |
Number of shares | 43,636 |
Weighted average remaining life (years) | 3 years 11 months 16 days |
Exercisable number of shares | 43,636 |
$ 3 | |
Exercise prices | $ / shares | $ 3 |
Number of shares | 2,115,408 |
Weighted average remaining life (years) | 1 month 13 days |
Exercisable number of shares | 2,115,408 |
$ 8.25 | |
Exercise prices | $ / shares | $ 8.25 |
Number of shares | 9,134 |
Weighted average remaining life (years) | 3 years 5 months 26 days |
Exercisable number of shares | 9,134 |
$ 10.50 | |
Exercise prices | $ / shares | $ 10.50 |
Number of shares | 126,978 |
Weighted average remaining life (years) | 3 years 1 month 6 days |
Exercisable number of shares | 126,978 |
$ 15 | |
Exercise prices | $ / shares | $ 15 |
Number of shares | 556 |
Weighted average remaining life (years) | 3 years 3 months |
Exercisable number of shares | 556 |
$ 18.75 | |
Exercise prices | $ / shares | $ 18.75 |
Number of shares | 695 |
Weighted average remaining life (years) | 3 years 3 months |
Exercisable number of shares | 695 |
$ 22.50 | |
Exercise prices | $ / shares | $ 22.50 |
Number of shares | 209,754 |
Weighted average remaining life (years) | 1 year 4 months 17 days |
Exercisable number of shares | 209,754 |
$ 31.50 | |
Exercise prices | $ / shares | $ 31.50 |
Number of shares | 25,912 |
Weighted average remaining life (years) | 1 year 2 months 18 days |
Exercisable number of shares | 25,912 |
$ 37.50 | |
Exercise prices | $ / shares | $ 37.50 |
Number of shares | 1,733 |
Weighted average remaining life (years) | 10 months 13 days |
Exercisable number of shares | 1,733 |
NOTE PAYABLE (Details)
NOTE PAYABLE (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Note Payable | ||
Note Payable, beginning of period | $ 1,800,000 | $ 0 |
Issuance of note | 150,000 | 1,800,000 |
Repayment of notes | (8,000) | 0 |
Additional debt discount upon Notes amendments | 101,400 | |
Note conversions | (2,043,400) | |
Amortization of debt discount | 0 | 0 |
Change in value | 0 | 0 |
Note payable, end of period | 0 | 1,800,000 |
Convertible Note Payable [Member] | ||
Note Payable | ||
Note Payable, beginning of period | 0 | 0 |
Issuance of note | 0 | 0 |
Repayment of notes | 0 | |
Additional debt discount upon Notes amendments | 0 | |
Note conversions | 1,000,000 | |
Amortization of debt discount | 0 | 0 |
Change in value | 0 | 0 |
Note payable, end of period | 1,000,000 | 0 |
Discount [Member] | ||
Note Payable | ||
Note Payable, beginning of period | (743,282) | 0 |
Issuance of note | (74,931) | (996,595) |
Repayment of notes | 0 | |
Additional debt discount upon Notes amendments | (251,081) | |
Note conversions | 100,327 | |
Amortization of debt discount | 958,053 | 253,313 |
Change in value | 0 | 0 |
Note payable, end of period | (10,914) | (743,282) |
Put Exchange Feature [Member] | ||
Note Payable | ||
Note Payable, beginning of period | 476,402 | 0 |
Issuance of note | 32,496 | 466,387 |
Repayment of notes | 0 | |
Additional debt discount upon Notes amendments | 105,586 | |
Note conversions | 0 | |
Amortization of debt discount | 0 | 0 |
Change in value | (614,484) | 10,015 |
Note payable, end of period | 0 | 476,402 |
Note Payable Net [Member] | ||
Note Payable | ||
Note Payable, beginning of period | 1,533,120 | 0 |
Issuance of note | 107,565 | 1,269,792 |
Repayment of notes | (8,000) | |
Additional debt discount upon Notes amendments | (44,095) | |
Note conversions | (973,073) | |
Amortization of debt discount | 958,053 | 253,313 |
Change in value | (614,484) | 10,015 |
Note payable, end of period | $ 989,086 | $ 1,533,120 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Fair value of Level 3 derivative warrant liability, beginning of period | $ 234,461 | $ 273,000 |
Additions | 4,278,496 | 311,057 |
Change in fair value | (2,405,985) | (349,596) |
Fair value at end of year | 2,106,972 | 234,461 |
Series B Preferred Stock [Member] | Warrants [Member] | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 46,110 | 273,000 |
Additions | 0 | 0 |
Change in fair value | (10,420) | (226,890) |
Fair value at end of year | 35,690 | 46,110 |
Promissory Note | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 339,979 | |
Additions | 0 | |
Change in fair value | (339,979) | |
Fair value at end of year | 0 | 339,979 |
OID Note | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 136,423 | |
Additions | 138,082 | |
Change in fair value | (274,505) | |
Fair value at end of year | 0 | 136,423 |
Total | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 476,402 | |
Additions | 138,082 | |
Change in fair value | (614,484) | |
Fair value at end of year | 0 | 476,402 |
Notes Payable [Member] | Warrants [Member] | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 188,351 | 0 |
Additions | 15,225 | 311,057 |
Change in fair value | (46,372) | (122,706) |
Fair value at end of year | 157,204 | 188,351 |
PPM [Member] | Warrants [Member] | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 0 | 0 |
Additions | 4,263,271 | 0 |
Change in fair value | (2,349,193) | 0 |
Fair value at end of year | $ 1,914,078 | $ 0 |
EQUIPMENT (Details)
EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Equipment, gross | $ 679,869 | $ 666,448 |
Accumulated depreciation and amortization | (265,234) | (169,396) |
Equipment, net | $ 414,635 | 497,052 |
Research Equipment [Member] | ||
Estimated useful life | 7 years | |
Equipment, gross | $ 601,720 | 590,373 |
Computer Equipment [Member] | ||
Estimated useful life | 5 years | |
Equipment, gross | $ 78,149 | $ 76,075 |
EQUIPMENT (Details Narrative)
EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 95,838 | $ 96,188 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Income Taxes Details | ||
Income tax benefit at the federal statutory rate | 34.00% | 34.00% |
Permanent differences | (19.00%) | (2.00%) |
Increase in valuation allowance | (15.00%) | (32.00%) |
Provision for income tax | 0.00% | 0.00% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Feb. 28, 2017 | Feb. 29, 2016 |
Income Taxes Details 1 | ||
Accrued compensation | $ 70,354 | $ 87,969 |
Accrued interest | 6,674 | 23,520 |
Net operating loss carryovers | 7,257,930 | 5,555,259 |
Research and development credits | 253,125 | 130,422 |
Capital loss carryover | 16,663 | 25,421 |
Stock-based compensation | 1,537,117 | 1,491,106 |
Total | 9,141,863 | 7,313,697 |
Depreciation | (90,655) | (76,987) |
Total | 7,236,710 | |
Less: Valuation allowance | (9,051,208) | (7,236,710) |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Income Taxes Details Narrative | ||
Change in valuation allowance | $ 1,800,000 | $ 2,000,000 |
Federal and state net operating loss carry-forwards | 18,700,000 | $ 17,300,000 |
Research and development credits | $ 300,000 |