Document and Entity Information
Document and Entity Information | 6 Months Ended |
Aug. 31, 2016 | |
Document And Entity Information | |
Entity Registrant Name | MetaStat, Inc. |
Entity Central Index Key | 1,404,943 |
Document Type | S1 |
Document Period End Date | Aug. 31, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --02-29 |
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 |
Trading symbol | MTST |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Aug. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2015 |
CURRENT ASSETS | |||
Cash and cash equivalents | $ 86,233 | $ 363,783 | $ 257,820 |
Notes receivable | 0 | 125,000 | 0 |
Prepaid expenses | 103,983 | 33,121 | 38,748 |
Total Current Assets | 190,216 | 521,904 | 296,568 |
Equipment (net of accumulated depreciation of $216,928, $169,396 and $96,089, respectively) | 449,520 | 497,052 | 526,606 |
Refundable deposits | 43,600 | 43,600 | 278,952 |
TOTAL ASSETS | 683,336 | 1,062,556 | 1,102,126 |
Current liabilities | |||
Accounts payable | 1,240,800 | 746,144 | 293,152 |
Accrued expenses | 273,782 | 214,311 | 4,565 |
Current portion of capital lease | 0 | 99,965 | |
Notes payable (net of discount $390,015 and $743,282, respectively) | 1,792,601 | 1,533,120 | 0 |
Accrued interest payable | 108,000 | 56,000 | 2,352 |
Accrued dividends on Series B Preferred Stock | 48,812 | 48,317 | 16,767 |
Total Current Liabilities | 3,463,995 | 2,597,892 | 416,800 |
Capital lease | 0 | 169,676 | |
Warrant liability | 226,771 | 234,461 | 273,000 |
Total Liabilities | 3,690,766 | 2,832,353 | 859,476 |
STOCKHOLDERS' (DEFICIT) EQUITY | |||
Common Stock, ($0.0001 par value; 150,000,000 shares authorized; 1,976,201, 1,851,201 and 1,831,483 shares issued and outstanding, respectively) | 222 | 185 | 183 |
Additional Paid-in-capital | 22,468,879 | 21,607,259 | 18,965,529 |
Accumulated deficit | (25,476,618) | (23,377,328) | (18,723,149) |
Total stockholders' (deficit) equity | (3,007,430) | (1,769,797) | 242,650 |
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | 683,336 | 1,062,556 | 1,102,126 |
Series A Preferred Stock [Member] | |||
STOCKHOLDERS' (DEFICIT) EQUITY | |||
Convertible Preferred Stock: Series A convertible preferred stock ($0.0001 par value; 1,000,000 shares authorized; 874,257, 874,257 and 874,257 issued and outstanding, respectively), Series B convertible preferred stock ($0.0001 par value; 1,000 shares authorized; 666, 659 and 229 shares issued and outstanding, respectively) | 87 | 87 | 87 |
Series B Preferred Stock [Member] | |||
STOCKHOLDERS' (DEFICIT) EQUITY | |||
Convertible Preferred Stock: Series A convertible preferred stock ($0.0001 par value; 1,000,000 shares authorized; 874,257, 874,257 and 874,257 issued and outstanding, respectively), Series B convertible preferred stock ($0.0001 par value; 1,000 shares authorized; 666, 659 and 229 shares issued and outstanding, respectively) | $ 0 | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Aug. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2015 |
STOCKHOLDERS' EQUITY | |||
Accumulated depreciation | $ 216,928 | $ 169,396 | $ 96,089 |
Convertible debentures, discount | $ 390,015 | $ 743,282 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 | 150,000,000 |
Common stock, shares issued | 2,222,103 | 1,851,201 | 1,831,483 |
Common stock, shares outstanding | 2,222,103 | 1,851,201 | 1,831,483 |
Series A Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY | |||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ .0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 874,257 | 874,257 | 874,257 |
Preferred stock, shares outstanding | 874,257 | 874,257 | 874,257 |
Series B Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY | |||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000 | 1,000 | 1,000 |
Preferred stock, shares issued | 666 | 659 | 229 |
Preferred stock, shares outstanding | 666 | 659 | 229 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Revenue | ||||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Total revenue | 0 | 0 | 0 | 0 | 0 | 0 |
OPERATING EXPENSES | ||||||
General & administrative | 615,849 | 1,076,032 | 1,171,530 | 2,024,928 | 3,418,235 | 3,524,901 |
Research & development | 356,168 | 317,968 | 627,291 | 537,294 | 1,360,739 | 1,266,158 |
Total Operating Expenses | 972,017 | 1,394,000 | 1,798,821 | 2,562,222 | 4,778,974 | 4,791,059 |
OTHER EXPENSES (INCOME) | ||||||
Interest expense | 401,990 | 40,444 | 706,636 | 45,361 | 317,238 | 634,338 |
Deferred financing costs amortization | 0 | 60,523 | ||||
Other income, net | (14) | (139,967) | (281) | (140,136) | (141,549) | (2,253) |
Realized loss on marketable securities, including brokerage fees and commissions | 0 | 68,748 | ||||
Change in fair value of warrant liability | (96,241) | (36,400) | (61,749) | (172,900) | (349,596) | 118,300 |
Change in fair value of put embedded in note payable | (510,867) | 3,134 | (456,868) | 3,134 | 10,015 | 0 |
Beneficial conversion feature | 0 | 2,324,759 | ||||
Loss on sale of notes receivable | 112,500 | 0 | 112,500 | 0 | ||
Settlement expense | 116 | 660 | 231 | 39,097 | 39,097 | 0 |
Total Other Expenses (Income) | (92,516) | (132,129) | 300,469 | (225,444) | (124,795) | 3,204,415 |
NET LOSS | (879,501) | (1,261,871) | (2,099,290) | (2,336,778) | (4,654,179) | (7,995,474) |
Net loss | (879,501) | (1,261,871) | (2,099,290) | (2,336,778) | (4,654,179) | (7,995,474) |
Deemed dividend on Series B Preferred Stock issuance | 0 | 0 | (708,303) | 0 | (1,067,491) | (225,296) |
Accrued dividends on Series B Preferred Stock | (73,452) | (69,205) | (146,894) | (124,467) | (267,058) | (16,767) |
Deemed dividend to Series B Preferred stock holders for exchange of warrants | (29,311) | 0 | (29,311) | 0 | ||
Loss attributable to common shareholders | $ (982,264) | $ (1,331,076) | $ (2,983,798) | $ (3,528,736) | $ (5,988,728) | $ (8,237,537) |
Net loss per share, basic and diluted | $ (0.46) | $ (0.73) | $ (1.5) | $ (1.94) | $ (3.30) | $ (4.96) |
Weighted average of shares outstanding, basic and diluted | 2,127,833 | 1,823,003 | 1,987,487 | 1,816,136 | 1,816,060 | 1,661,933 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Series A Preferred Stock | Series B Preferred Stock | Common Stock | Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Feb. 28, 2014 | 0 | 0 | 1,438,344 | |||
Beginning Balance, Amount at Feb. 28, 2014 | $ 0 | $ 0 | $ 144 | $ 8,646,773 | $ (10,727,675) | $ (2,080,758) |
Common stock issued for services, Shares | 66,324 | |||||
Common stock issued for services, Amount | $ 7 | 886,200 | 886,207 | |||
Common stock and warrant units issued for cash, Shares | 45,455 | |||||
Common stock and warrant units issued for cash, Amount | $ 4 | 711,049 | 711,053 | |||
Common stock and series A preferred stock issued for equity | 500,000 | 33,334 | ||||
Common stock and series A preferred stock issued for equity | $ 50 | $ 3 | 999,947 | 1,000,000 | ||
Series A preferred stock issued for equity, Shares | 374,257 | |||||
Series A preferred stock issued for equity, Amount | $ 37 | 256,596 | 256,633 | |||
Series B preferred units issued for cash, conversion of accounts payable and conversion of short-term notes, Shares | 229 | |||||
Series B preferred units issued for cash, conversion of accounts payable and conversion of short-term notes, Amount | $ 0 | 931,291 | 931,291 | |||
Beneficial conversion feature of Series A Preferred Stock | 225,296 | 225,296 | ||||
Deemed dividend to Series A Preferred Stock | (225,296) | (225,296) | ||||
Accrued dividends on Series B Preferred Stock | (16,767) | (16,767) | ||||
Stock option expense | 447,664 | 447,664 | ||||
Warrants issued with convertible notes | 127,289 | 127,289 | ||||
Warrants issued for services | 46,592 | 46,592 | ||||
Beneficial conversion feature in convertible notes | 45,746 | 45,746 | ||||
Conversion of debt and accrued interest into common stock and warrants, Shares | 248,026 | |||||
Conversion of debt and accrued interest into common stock and warrants, Amount | $ 25 | 3,558,390 | 3,558,415 | |||
Beneficial conversion feature in convertible notes | 2,324,759 | 2,324,759 | ||||
Common stock and warrants cancellation settlement, Amount | 0 | |||||
Net Loss | (7,995,474) | (7,995,474) | ||||
Ending Balance, Shares at Feb. 28, 2015 | 874,257 | 229 | 1,831,483 | |||
Ending Balance, Amount at Feb. 28, 2015 | $ 87 | $ 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 and conversion of accrued liability, Shares | 387 | |||||
Series B preferred units issued for cash and conversion of accrued liability, Amount | $ 0 | 1,945,244 | 1,945,244 | |||
Beneficial conversion feature of Series B 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 | 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) | |||
Net Loss | (4,654,179) | (4,654,179) | ||||
Ending Balance, Shares at Feb. 29, 2016 | 874,257 | 659 | 1,851,201 | |||
Ending Balance, Amount at Feb. 29, 2016 | $ 87 | $ 0 | $ 185 | $ 21,607,259 | $ (23,377,328) | $ (1,769,797) |
Common stock issued for services, Shares | 25,000 | |||||
Share based compensation | $ 362,326 | |||||
Net Loss | (2,099,290) | |||||
Ending Balance, Amount at Aug. 31, 2016 | $ (3,007,430) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net loss | $ (2,099,290) | $ (2,336,778) | $ (4,654,179) | $ (7,995,474) |
Adjustments to reconcile net loss to net cash used in operating activities | ||||
Depreciation | 47,532 | 48,657 | 96,188 | 61,897 |
Share based compensation | 362,326 | 492,359 | 822,801 | 1,333,871 |
Loss on sale of notes receivable and assets | 112,500 | 10,196 | 10,196 | 42,421 |
Loss on settlement of capital lease | 0 | 8,820 | 8,820 | 0 |
Gain related to reimbursement of prior period research and development expense (Note 4) | 0 | (100,000) | (150,000) | 0 |
Accretion expense | 253,313 | 539,319 | ||
Beneficial conversion feature | 0 | 2,324,759 | ||
Amortization of deferred financing costs | 652,879 | 29,883 | 0 | 60,523 |
Change in fair value of warrant liability | (61,749) | (172,900) | (349,596) | 118,300 |
Change in fair value of put embedded in note payable | (456,868) | 3,134 | 10,015 | 0 |
Net changes in assets and liabilities | ||||
Other receivable | 0 | 20,000 | ||
Prepaid expenses | 87,538 | (40,729) | 112,877 | 67,165 |
Refundable deposit | 0 | (2,100) | (3,600) | (268,585) |
Accounts payable and accrued expenses | 507,022 | 199,350 | 648,980 | 44,915 |
Interest payable | 52,000 | 5,649 | 53,649 | 66,064 |
NET CASH USED IN OPERATING ACTIVITIES | (796,110) | (1,854,459) | (3,140,536) | (3,584,825) |
Cash Flows from Investing Activities | ||||
Proceeds from sale of notes receivable | 12,500 | 0 | 100,000 | 0 |
Proceeds received from settlement of capital lease | 0 | 2,897 | 2,897 | 0 |
Proceeds from sale of marketable securities | 0 | 1,214,212 | ||
Purchase of equipment | 0 | (149,458) | (151,830) | (65,646) |
Net cash (used in) provided by investing activities | 12,500 | (146,561) | (48,933) | 1,148,566 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from issuance of debt | 122,790 | 1,111,408 | 1,700,000 | 615,000 |
Payment of debt issuance costs | (88,592) | 0 | ||
Proceeds from issuance of common stock and warrants, net | 462,565 | 0 | 0 | 711,053 |
Re-purchase of common stock and warrants | 0 | (111,563) | ||
Proceeds from issuance of short-term notes | 0 | 65,000 | ||
Common stock and warrant cancellation settlement | (111,563) | 0 | ||
Proceeds from issuance of Series B preferred stock and warrant, net | 0 | 1,945,244 | 1,945,244 | 1,062,420 |
Payment of convertible notes | 0 | (100,000) | ||
Payment of capital lease obligation | 0 | (42,407) | (42,407) | (48,962) |
Payment of short-term debt | (79,295) | (71,500) | (107,250) | (93,840) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 506,060 | 2,831,182 | 3,295,432 | 2,210,671 |
Net increase (decrease) in cash and cash equivalents | (277,550) | 830,162 | 105,963 | (225,588) |
Cash and cash equivalents at the beginning of the year | 363,783 | 257,820 | 257,820 | 483,408 |
Cash and cash equivalents at the end of the year | 86,233 | 1,087,982 | 363,783 | 257,820 |
Supplemental Disclosure of Non-Cash Financing Activities | ||||
Warrant liability associated with note payable | 15,225 | 150,544 | 311,057 | 0 |
Warrant liability component of Series B Units | 0 | 154,700 | ||
Accrued offering costs | $ 0 | $ 19,836 | ||
Placement agent warrants issued with note payable | 16,800 | 0 | ||
Beneficial conversion feature associated with the convertible notes | $ 0 | $ 45,746 | ||
Warrants issued with convertible notes | 0 | 127,289 | ||
Issuance on lease financing for fixed assets | 0 | 318,603 | ||
Securities held-for-sale exchanged for common and preferred shares | 0 | 1,000,000 | ||
Common stock and warrants issued for conversion of debt | 0 | 3,558,413 | ||
Accrued offering costs | 0 | 38,950 | ||
Securities exchanged for preferred shares | 0 | 256,633 | ||
Financing of insurance premium through notes payable | 107,250 | 93,840 | ||
Note receivable received for sale of assets | 0 | 75,000 | 75,000 | 0 |
Warrants issued to placement agents | 35,859 | 175,241 | 0 | 46,592 |
Series B Preferred PIK dividend | 146,399 | 94,793 | 235,508 | 0 |
Series B Preferred Stock accrued dividends | 146,894 | 124,467 | 267,058 | 16,767 |
Issuance of common stock as payment of accounts payable | 32,000 | 0 | ||
Financing of insurance premium through notes payable | 158,400 | 107,250 | ||
Capital lease settled against deposit | 0 | 227,235 | 227,235 | 0 |
Conversion of short-term notes and accounts payable into Series B units | 0 | 90,000 | ||
Deemed dividend related to Series B Preferred Stock BCF adjustment for conversion price adjustment | 708,303 | 0 | $ 1,067,491 | $ 225,296 |
Deemed dividend to Series B Preferred stock holders upon exercising Most Favored Nation option | 29,311 | 0 | ||
Issuance of warrants in connection with OID Notes amendment | $ 44,095 | $ 0 |
ORGANIZATION, BASIS OF PRESENTA
ORGANIZATION, BASIS OF PRESENTATION AND GOING CONCERN | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
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. These interim unaudited financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States and should be read in conjunction with the Companys audited consolidated financial statements and related footnotes for the year ended February 29, 2016 included in the Companys Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (SEC) on May 31, 2016. These unaudited financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Companys financial position as of August 31, 2016 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading. 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. The Company has sustained cumulative losses of approximately $25.5 million as of August 31, 2016, has a negative working capital 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 Companys ability to continue as a going concern. 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 Companys 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. Subsequent to August 31, 2016, the Company completed closings of the Additional Unit Private Placement (as defined in Note 3), whereby the Company issued an aggregate of 135 units for 192,000 shares of common stock, 48,300 shares of its Series A-2 Convertible Preferred Stock, convertible into 483,000 shares of common stock, and five-year common stock purchase warrants to purchase 337,500 shares of common stock with an exercise price of $3.00 per share for aggregate gross proceeds of $1.35 million and net proceeds of approximately $1.23 million. See Note 12 - Subsequent Events. | 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. Reverse Stock Split On October 8, 2015, the Company effected a 1-for-15 reverse stock split of our common stock, whereby every 15 shares of issued and outstanding common stock became 1 share of newly issued and outstanding common stock. The reverse stock split was approved by the Company's stockholders at a special stockholders meeting on June 22, 2015. The purpose of the reverse stock split was to qualify for the minimum stock price listing requirement for a planned up-listing to a national securities exchange including the NASDAQ Capital Market or NYSE Market. All reference in the document to the number of shares, price per share and weighted average number of shares outstanding of the Company's common stock prior to the reverse stock split have been adjusted to reflect the reverse stock split on a retroactive basis. 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 $1,769,697. The Company has sustained cumulative losses of $23,377,328 million as of February 29, 2016 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 Companys ability to continue as a going concern. 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 Companys 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. Subsequent to February 29, 2016, the Company completed a first closing of a private placement effective on May 26, 2016 pursuant to a subscription agreement with various accredited investors, whereby the Company issued an aggregate of 100,000 shares of common stock and 50,000 common stock purchase warrants with an exercise price of $3.00 per share and a term of five years for aggregate gross proceeds of $200,000 and net proceeds of approximately $162,000. See Note 17 Subsequent Events for more details on this transaction. |
DESCRIPTION OF BUSINESS AND GOI
DESCRIPTION OF BUSINESS AND GOING CONCERN | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Description Of Business And Going Concern | ||
DESCRIPTION OF BUSINESS 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. These interim unaudited financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States and should be read in conjunction with the Companys audited consolidated financial statements and related footnotes for the year ended February 29, 2016 included in the Companys Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (SEC) on May 31, 2016. These unaudited financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Companys financial position as of August 31, 2016 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading. 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. The Company has sustained cumulative losses of approximately $25.5 million as of August 31, 2016, has a negative working capital 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 Companys ability to continue as a going concern. 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 Companys 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. Subsequent to August 31, 2016, the Company completed closings of the Additional Unit Private Placement (as defined in Note 3), whereby the Company issued an aggregate of 135 units for 192,000 shares of common stock, 48,300 shares of its Series A-2 Convertible Preferred Stock, convertible into 483,000 shares of common stock, and five-year common stock purchase warrants to purchase 337,500 shares of common stock with an exercise price of $3.00 per share for aggregate gross proceeds of $1.35 million and net proceeds of approximately $1.23 million. See Note 12 - Subsequent Events. | 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. Reverse Stock Split On October 8, 2015, the Company effected a 1-for-15 reverse stock split of our common stock, whereby every 15 shares of issued and outstanding common stock became 1 share of newly issued and outstanding common stock. The reverse stock split was approved by the Company's stockholders at a special stockholders meeting on June 22, 2015. The purpose of the reverse stock split was to qualify for the minimum stock price listing requirement for a planned up-listing to a national securities exchange including the NASDAQ Capital Market or NYSE Market. All reference in the document to the number of shares, price per share and weighted average number of shares outstanding of the Company's common stock prior to the reverse stock split have been adjusted to reflect the reverse stock split on a retroactive basis. 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 $1,769,697. The Company has sustained cumulative losses of $23,377,328 million as of February 29, 2016 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 Companys ability to continue as a going concern. 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 Companys 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. Subsequent to February 29, 2016, the Company completed a first closing of a private placement effective on May 26, 2016 pursuant to a subscription agreement with various accredited investors, whereby the Company issued an aggregate of 100,000 shares of common stock and 50,000 common stock purchase warrants with an exercise price of $3.00 per share and a term of five years for aggregate gross proceeds of $200,000 and net proceeds of approximately $162,000. See Note 17 Subsequent Events for more details on this transaction. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Feb. 29, 2016 | |
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(TM) 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 29, 2016 and February 28, 2015. 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 29, 2016 and February 28, 2015. Debt issuance Costs We have early adopted ASU-No. 2015-03, Interest Imputation of Interest and are recording debt issuance costs 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 issuance 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 instruments level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Companys 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 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 29, 2016 and February 28, 2015, 11,536 and 24,522, 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 29, 2016 and February 28, 2015, 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 29, 2016 February 28, 2015 Stock options 426,976 187,334 Warrants 913,514 580,515 Preferred stock 497,527 210,708 Total 1,838,017 978,557 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 more likely than not that some portion or all of the deferred tax assets will not 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 compensation cost for our employees and consultants that perform our research activities, the fees paid to maintain our licenses, the payments to third parties for clinical testing and additional product development, and consumables and other materials used in research and development. Research and development costs were $1,360,739 and $1,266,158 for the years ended February 29, 2016 and February 28, 2015, respectively. 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 awards 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 awards are 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 awards 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 over the requisite service period begins 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 managements responsibility to evaluate whether there is substantial doubt about an entitys 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 entitys ability to continue as a going concern. This update is effective for interim and annual reporting periods beginning December 15, 2016; early adoption is permitted. We do not believe the adoption of this standard will have an effect on our 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. |
LICENSE AGREEMENTS AND COMMITME
LICENSE AGREEMENTS AND COMMITMENTS | 12 Months Ended |
Feb. 29, 2016 | |
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 29, 2016. We are required to make payments of $75,000 in 2016 and $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. The license maintenance payment of $30,000 for 2016, is currently outstanding. We are required to make additional payments of $50,000 in 2017, $75,000 in 2018 and $100,000 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 Second License Agreement. We paid a license-signing fee of $15,000 in connection with entering into the Alternative Splicing Diagnostic License Agreement and a license-signing fee of $5,000 in connection with entering into the Alternative Splicing Therapeutic License Agreement. Pursuant to these agreements, we are required to make annual license maintenance fee payments for each license beginning on January 1, 2015. The license maintenance payment of $15,000 for 2016 is currently outstanding. We are required to make additional payments of $25,000 in 2017, $37,500 in 2018, and $50,000 in 2019 and every year each license is in effect thereafter. On November 25, 2014, we entered into the ASET License Agreement with ASET (see Note 4) who will assume responsibility for payment of half of the annual license maintenance fees as long as the Alternative Splicing Diagnostic License Agreement remains in effect. These annual license maintenance fee payments will be credited to running royalties due on net sales earned in the same calendar year, if any. No annual license maintenance fee payments are due on the Alternative Splicing Therapeutic License Agreement so as long as the Alternative Splicing Diagnostic License Agreement is in effect. We are in compliance with the Alternative Splicing License Agreement. We paid a license-signing fee of $10,000 in connection with entering into the Antibody License Agreement and are required to make license maintenance fee payments beginning on January 1, 2015. The license maintenance payment of $10,000 for 2016 is currently outstanding. We are required to make additional payments of $15,000 in 2017, $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 in Boston, MA. The term of the Boston Lease is for two years, from September 1, 2014 through August 31, 2016, and the basic rent payable thereunder is $10,280 per month for the first year and $10,588 per month for the second year. Additional monthly payments under the Boston Lease shall include tax payments and operational and service costs. Additionally, 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 increased to $17,164 per month plus additional monthly payments including tax payments and operational and service costs. Effective March 1, 2015 we entered into a lease agreement for short-term office space in New York, NY. The term of the lease is month-to-month and may be terminated upon twenty-one (21) days notice. The basic rent payment is $1,400 per month and 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 remains month-to-month and may be terminated with twenty-one (21) days notice. The basic rent payment increased to $2,400 per month and we paid an additional $1,500 security deposit in connection with the amended lease. |
LICENSE, DEVELOPMENT AND COMMER
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT WITH ASET THERAPEUTICS, LLC | 12 Months Ended |
Feb. 29, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT WITH ASET THERAPEUTICS, LLC | On November 25, 2014, we entered into a License, Development and Commercialization Agreement (the ASET License Agreement) with ASET Therapeutics LLC (ASET or the Licensee), a private third party entity affiliated with one of the Companys directors. The ASET License Agreement sets forth the rights and obligations of the parties with respect to the grant by the Company to the Licensee of an exclusive license of certain of Companys therapeutic assets and an exclusive sublicense, with the right to sublicense through multiple tiers, of all rights and obligations under the Companys existing Therapeutic License Agreement dated as of December 7, 2013 with the Massachusetts Institute of Technology and its David H. Koch Institute for Integrative Cancer Research at MIT and its Department of Biology (MIT), Albert Einstein College of Medicine of Yeshiva University, and Montefiore Medical Center (the Therapeutic License Agreement). The licensed technology includes: (i) Alternative Splicing Event (ASE) technology based on International Patent Application WO 2012/116248 A1 entitled "Alternatively Spliced mRNA Isoforms as Prognostic and Therapeutic Tools for Metastatic Breast Cancer and Other Invasive/Metastatic Cancers"; and (ii) Technology and know-how stemming from all ASE discovery work carried out in our labs at SUNY Stony Brook from September 2013 through November 25, 2014. The ASET License Agreement provides that the Company has the right to commercialize any companion diagnostic or biomarker (the Companion Diagnostics) arising from the work performed by the Licensee under the ASET License Agreement, pursuant to an exclusive sublicense. The ASET License Agreement calls for certain customary payments such as annual license maintenance payments ranging from $5,000 to $25,000 and milestone payments upon the achievement of specified regulatory and sales milestones. The ASET License Agreement also requires the payment by ASET of a low single-digit royalty on net sales, at such time, if ever, as ASETs products are fully developed, receive the required regulatory approvals and are commercialized. MIT shall retain the sole and exclusive right to file, prosecute and maintain the MIT patent rights in accordance with the Therapeutic License Agreement. ASET shall have the first right to file, prosecute and maintain at its expense, the MetaStat patent rights not covered by the Therapeutic License Agreement and any patent application(s) or patent(s) arising from joint inventions, using patent counsel selected by ASET. In addition, ASET shall have the first right to initiate and prosecute such legal action or to control the defense of any declaratory judgment action relating to the parties patent rights in the territory in the field. ASET and MetaStat shall jointly bear the expense of such legal action. Pursuant to the Memorandum of Understanding between the Company and ASET (as assignee), as amended (the MOU), ASET is obligated to invest an aggregate of $1.25 million in new equity in the Company, $250,000 of which was invested in the Qualified Financing (see Note 6) with the balance to be invested in a separate financing on substantially similar terms on or before December 31, 2015. In the event that ASET does not satisfy its investment obligation, the ASET License Agreement will terminate and the assets will automatically revert back to the Company. The MOU also required ASET to pay for all costs and expenses of the SUNY Stony Brook facility, up to a maximum of $50,000 per month, from October 15, 2014 until the transfer of such assets under the ASET License Agreement. In addition, ASET agreed to reimburse the Company $150,000 for certain costs incurred at such facility by March 1, 2015. Pursuant to the MOU, the Company is obligated to make a $1 million preferred stock equity investment in exchange for a 20% equity interest in ASET (on a fully diluted, as converted basis) on or before December 31, 2015. The Company will maintain its 20% equity ownership in ASET until such time that ASET raises an aggregate of $4,000,000 in equity or in a financing in which ASET issues securities convertible into equity (including the $1 million received from the Company, but excluding any proceeds received by ASET from the sale of the Companys securities), after which it will be diluted proportionately with all other equity holders of ASET. The Company will have the right to maintain its equity position in ASET by participating in future financings; provided, however, that such right will terminate in the event the Company does not make a minimum investment in a future financing of ASET equal to at least the lesser of (i) $250,000 and (ii) an amount required to maintain its 20% equity ownership interest. The MOU also provides that so long as the Company owns at least ten percent (10%) of the outstanding equity interests of ASET, the Company will have the right to designate one member of the ASETs board of directors or similar governing body and that the Companys current chief executive officer shall provide an oversight function to ASET for a period of six months following the execution of the ASET License Agreement. We determined that ASET meets the criteria for variable interest entities (VIEs), which are entities in which equity investors lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary. The primary beneficiary is the party who has both the power to direct the activities of a variable interest entity that most significantly impact the entitys economic performance and an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. We determined that the Company is not the primary beneficiary of ASET based primarily on the facts that we do not have the power to direct ASETs operations nor do we have any obligation to absorb ASET losses. As a result, ASET has not been consolidated by the Company. Our determination of whether we are the primary beneficiary of the VIE is based upon the facts and circumstances for the VIE and requires significant judgment regarding whether we have power to direct the VIEs most significant activities, which includes, but is not limited to, the VIEs purpose and design and the risks passed through to investors, the voting interests of the VIE, management, service and/or other agreements of the VIE, involvement in the VIEs initial design and the existence of explicit or implicit financial guarantees. On June 22, 2015, effective May 31, 2015, the Company and ASET entered into a side letter that clarifies certain terms of the MOU including allowing for the equity investments in multiple tranches. In addition, the parties mutually agreed to an extension of the $150,000 due the Company on March 1, 2015 in connection with the reimbursement for certain costs. ASET issued an interest free promissory Note to the Company in the aggregate amount of $150,000, payable in three installments of $50,000 each due on June 1, 2015, July 1, 2015 and August 1, 2015, respectively. The Company has received each of the first two payments of $50,000 and as of February 29, 2016, has a $50,000 note receivable from ASET. ASET also issued a Note to the Company in the principal amount of $75,000 for the purchase of the equipment and fixed assets of the Stony Brook, NY laboratory. The Note is interest free and matured on December 30, 2015. In the event the Company has purchased at least $925,000 in equity of ASET prior to December 30, 2015, then the Company may use the Note as payment for its remainder purchase of equity in ASET. The $75,000 balance has been recorded as a note receivable on the Companys Balance Sheet. In accordance with the MOU, during the year ended February 28, 2015, we received payments in the aggregate of $75,000 from ASET as a reimbursement of research and development expenses incurred from October 15, 2014 through November 25, 2014. These payments are presented as a reduction of the research and development expense for the year ended February 28, 2015. Pursuant to the terms of the ASET License Agreement, as of December 31, 2015, the license granted thereunder was terminated by its terms as a result of ASETs failure to invest $1 million in new equity in MetaStat. However, we are currently in discussions with ASET regarding the relationship, if any, moving forward, and the resolution of certain issues arising under the ASET License Agreement and the MOU. We have determined that the $125,000 notes receivable from ASET at February 29, 2016, are still collectible. |
CAPITAL STOCK
CAPITAL STOCK | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
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 the Company. 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 senior to our common stock with respect to distributions of assets upon the liquidation, dissolution or winding up of the Company. 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 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 the Series A Preferred Stock and common stock with respect to distributions of assets upon the liquidation, dissolution or winding up of the Company. Stated Value Each share 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 August 31, 2016 and February 29, 2016, the dividend payable to the holders of the Series B Preferred Stock amounted to approximately $48,812 and $48,317, respectively. During the three and six months ended August 31, 2016, the Company issued 13.4407 and 26.6178 shares of Series B Preferred Stock, respectively, for payment of dividends amounting to $73,925 and $146,399. During the three and six months ended August 31, 2015, the Company issued 12.4175 and 17.2354 shares of Series B Preferred Stock, respectively, for payment of dividends amounting to $68,295 and $94,793. 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 Companys 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 Companys 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 holders Series B Preferred Stock plus all accrued and unpaid dividends thereon. At August 31, 2016 and February 29, 2016, the value of the liquidation preference of the Series B Preferred Stock aggregated to approximately $3.7 million and $3.7 million, respectively. Conversion; Anti-Dilution Adjustments Each share of Series B Preferred Stock will be convertible at the holders 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 3) 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 3 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 Companys 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 $5,000,000. 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 3 for the accounting treatment of the Series B Preferred 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 senior to our common stock with respect to distributions of assets upon the liquidation, dissolution or winding up of the Company. 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 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 the Companys Series A Convertible 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 29, 2016 and February 28, 2015, the dividend payable to the holders of the Series B Preferred stocks amounted to $48,317 and $16,767, respectively. During the year ended February 29, 2016 and February 28, 2015, the Company issued 42.8202 and 0 shares of Series B Preferred Stock, respectively, for payment of dividends amounting to $235,508 and $0, 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 Companys 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 Companys 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 holders Series B Preferred Stock plus all accrued and unpaid dividends thereon. At February 29, 2016 and February 28, 2015, the value of the liquidation preference of the Series B Preferred stocks aggregated to $3,672,000 and $1,274,000, respectively. Conversion; Anti-Dilution Adjustments Each share of Series B Preferred Stock will be convertible at the holders 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 is $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 Series B Preferred Stock is subject to automatic conversion (the Mandatory Conversion) at such time when the Companys 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 As of February 29, 2015, the holders of the Series B Preferred Stock had no 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 6 for the accounting treatment of the Series B Preferred Stock. |
EQUITY ISSUANCES
EQUITY ISSUANCES | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Equity [Abstract] | ||
EQUITY ISSUANCES | Common stock financing the 2016 Unit Private Placement During the six months ended August 31, 2016, 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 Warrants) to purchase 2,500 shares of common stock (the Warrant Shares), at an exercise price of $3.00 per share. First Closing of the 2016 Unit Private Placement On May 26, 2016, the Company issued an aggregate of 20 units consisting of an aggregate of 100,000 shares of common stock and 50,000 Warrants for an aggregate purchase price of $200,000. After deducting placement agent fees and other offering expenses, including legal expenses, net proceeds amounted to approximately $126,000. Additionally, the Company issued an aggregate of 10,000 placement agent warrants in substantially the same form as the Warrants. Second and Final Closing of the 2016 Unit Private Placement On June 8, 2016, the Company issued an aggregate of 29.5 units consisting of an aggregate of 147,500 shares of common stock and 73,750 Warrants for an aggregate purchase price of $295,000. After deducting placement agent fees and other offering expenses, the Company received net proceeds of approximately $264,000. Additionally, the Company issued an aggregate of 14,750 placement agent warrants in substantially the same form as the 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 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 November 21, 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 $2,143 of accrued and unpaid dividends for an aggregate exchange amount of $109,304, 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 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 three and six months ended August 31, 2016, the Company has recorded a non-cash deemed dividend to Additional Paid-in Capital of $29,311 in connection with the MFN Exchange equal to the excess fair value of the warrants received over the fair value of the Series A Warrants. Common stock financing Additional Unit Private Placement First Closing of the Additional Unit Private Placement On August 31, 2016, the Company entered into a subscription agreement pursuant to a private placement (the Additional Unit Private Placement) with an accredited investor pursuant to which the Company issued an aggregate of 8.75 units consisting of an aggregate of 43,750 shares of common stock at an effective price of $2.00 per share (the Effective Price) and five-year warrants to purchase 21,875 shares of common stock at a purchase price of $3.00 per share (the Warrants) for an aggregate purchase price of $87,500. After deducting placement agent fees and other offering expenses, including legal expenses, net proceeds amounted to approximately $73,000. Additionally, the Company issued an aggregate of 438 placement agent warrants in substantially the same form as the Warrants. Pursuant to the subscription agreement, for a period of one hundred eighty (180) days following the final closing of the Additional 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 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 Warrants are not indexed to the Companys 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 Condensed 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. Issuances of common stock for services During the six months ended August 31, 2015, the Company issued an aggregate of 28,001 shares of common stock to consultants for services that vested immediately and 6,667 shares of common stock to a consultant for services that vest over 6 months. The weighted average fair value of these shares of common stock amounted to $4.96. During the six months ended August 31, 2015, the Company recognized approximately $208,000 into general and administrative expense. During the six months ended August 31, 2016, 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 $46,250 on the grant date, of which $14,250 was recognized into general and administrative expense during the six months ended August 31, 2016. Settlement On April 1, 2015, the Company entered into a settlement agreement to settle a dispute with two affiliated security holders in which the Company paid $150,000, in exchange for the cancellation of all Company securities held by such parties, which included an aggregate of 10,728 shares of common stock, 1,667 common stock purchase warrants with an exercise price of $31.50 and 5,001 common stock purchase warrants with an exercise price of $22.50 Additionally, the Company reimbursed $3,000 of legal expenses to the two affiliated security holders. The Company recorded the fair value of the instruments as a reduction of equity as equity instruments were cancelled and recognized a settlement expense of $38,437 for the excess of the amount paid over the fair value of the cancelled equity instruments. Series B preferred stock financing the Series B Private Placement The Company entered into an amended and restated securities purchase agreement (the A&R Series B Purchase Agreement) on March 27, 2015 and March 31, 2015 with a number of new and existing accredited investors (collectively, the Series B Investors) pursuant to which it sold $2,130,750 of Series B Preferred Stock convertible into common stock at $8.25 per share in a private placement (the Series B Private Placement). In addition, pursuant to the A&R Series B Purchase Agreement, the Company issued series A warrants (the Series A Warrants) to purchase up to 193,708 shares of common stock at an initial exercise price per share of $20.50 to the Series B Investors. The Series A Warrants expire on March 31, 2020. Pursuant to the closings of the Series B Private Placement in March 2015, the Company issued 387.4088 shares of Series B Preferred Stock convertible into 3,874,088 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 shares of common stock and was settled in Series B Preferred Stock and Series A Warrants. As a result of the exchange, the Company recorded an additional $12,695 of stock-based compensation. In connection with the March 2015 closings of the Series B Private Placement, the placement agents were paid a total cash fee of $147,451 including expense allowances and reimbursements, and were issued an aggregate of 20,668 Series A Warrants. On the grant dates, the fair value of the placement agent warrants amounted to $158,441 and was recorded as a stock issuance cost. Net proceeds amounted to $1,945,244 after deducting offering expenses to be paid in cash, including the placement agent fees and legal fees and other expenses. Accounting for the Series B Preferred Stock The Company determined the Series B Preferred Stock should be classified as equity as it is not mandatorily redeemable, and there are no unconditional obligations in that the Company must or may settle in a variable number of its 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 Companys 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 Companys 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 contingent beneficial conversion features will be recognized upon the occurrence of the contingent events based on its intrinsic value at the commitment date. Accounting for the Series A Warrants The Company concluded the freestanding Series A Warrants were indexed to the Companys common stock and should be classified in stockholders equity, based on their relative fair value. Allocation of Proceeds of the Series B Private Placement on March 27 and 31, 2015 The $2,130,750 proceeds from the Series B Private Placement on March 27 and 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 Companys historical volatility and risk free rate of 1.4% based on the rate of the 5-years U.S. treasury bill. After allocation of the proceeds, the effective conversion price of the Series B Preferred Stock was determined to be beneficial and, as a result, the Company recorded a non-cash deemed dividend of $1,067,491 equal to the intrinsic value of the beneficial conversion feature since the Series B Preferred Stock was immediately convertible. Deemed Dividend due to Conversion Price Adjustment During the six months ended August 31, 2016, 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 $708,303 (the Deemed Dividend due to Conversion Price Adjustment). 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 an amended and restated registration rights agreement (the A&R Series B Registration Rights Agreement) with the Series B Investors, in which the Company agreed to file a registration statement (the Registration Statement) with the Securities and Exchange Commission ("SEC") to register for resale the shares of common stock underlying the Series B Preferred Stock, the Series A Warrants and the Series B Warrants within 30 calendar days of the final closing date of March 31, 2015 (the Filing Date), and to have the registration statement declared effective within 120 calendar days of the Filing Date. If the Registration Statement has not been filed with the SEC on or before the Filing Date, the Company shall, on the business day immediately following the Filing Date, and each 15th day thereafter, make a payment to the Series B Investors as partial liquidated damages for such delay (together, the Late Registration Payments) equal to 2.0% of the purchase price paid for the Series B Preferred Stock then owned by the Series B Investors for the initial 15 day period and 1.0% of the purchase price for each subsequent 15 day period until the Registration Statement is filed with the SEC. Late Registration Payments will be prorated on a daily basis during each 15-day period and will be paid to the Series B Investors by wire transfer or check within five business days after the end of each 15-day period following the Filing Date. The Company filed the Registration Statement on Form S-1 with the SEC on April 10, 2015, and as a result no penalty was incurred. | Issuances of common stock for services During the year ended February 28, 2015, the Company issued 20,001 and 31,500 shares of common stock to consultants and members of its Board, respectively, that vested immediately, 12,987 shares of common stock to members of its Board that vested one year after issuance and 1,334 shares of common stock to a member of management that will vest upon the Companys common stock being listed on a national stock exchange such as NASDAQ, New York Stock Exchange or NYSE MKT. The weighted average fair value of these shares of common stock amounted to $13.78 per share. During the year ended February 28, 2015, the Company entered into an agreement with a consultant, whereby it shall pay $6,000 per month in immediately vested shares of the Companys common stock, with the number of shares to be determined based on the closing price on the last trading date of each month. Under the agreement, the Company issued 3,837 shares of common stock. The fair value of the shares amounted to $31,076 on the issuance date, of which $30,000 was in general and administrative expenses and $1,076 was recorded in other expenses. As of February 28, 2015, the Company was obligated to issue shares for equivalent amount of $12,000. During the year ended February 28, 2015, the Company modified the vesting term of 16,668 shares of common stock previously issued to certain members of its Board, resulting in the shares being fully vested upon modification. As a result of the modification, the Company recognized a compensation charge of $192,500 equal to the fair value of these shares on the date of modification. 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 $22,164. During the year ended February 29, 2016 and February 28, 2015, the Company recognized $220,547 and $746,208, 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 $39,097 for the excess of the amount paid over the fair value of the cancelled equity instruments. Purchase agreement with Lincoln Park Capital Fund, LLC During the year ended February 28, 2015, the Company entered into a purchase agreement (the LPC Purchase Agreement), together with a registration rights agreement (the LPC Registration Rights Agreement), with Lincoln Park Capital Fund, LLC (LPC) effective October 10, 2014. Under the terms and subject to the conditions of the LPC Purchase Agreement, we have the right to sell to and LPC is obligated to purchase up to $10 million in shares of our common stock subject to certain limitations, from time to time, over the 24-month period commencing on the date that a registration statement, which the Company agreed to file with the Securities and Exchange Commission (the SEC) pursuant to the LPC Registration Rights Agreement, is declared effective by the SEC and a final prospectus in connection therewith is filed. We may direct LPC, at its sole discretion and subject to certain conditions, to purchase up to 2,000 shares of common stock on any business day, provided that at least one business day has passed since the most recent purchase, increasing to up to 6,667 shares, depending upon the closing sale price of the common stock (such purchases, Regular Purchases). However, in no event shall a Regular Purchase be more than $500,000. The purchase price of shares of common stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales, but in no event will shares be sold to LPC on a day the common stock closing price is less than the floor price as set forth in the LPC Purchase Agreement. In addition, we may direct LPC to purchase additional amounts as accelerated purchases if on the date of a Regular Purchase the closing sale price of the common stock is not below the threshold price as set forth in the LPC Purchase Agreement. In connection with the LPC Purchase Agreement, the Company issued 13,334 shares of common stock to LPC as a fee, and may issue up to 26,667 additional shares of common stock pro rata only if and as the $10 million is funded by LPC. The fair value of the 13,334 issued shares of common stock amounted to $140,000 on the grant date, which was recorded as a stock-based compensation during the year ended February 28, 2015, as the Company did not expect to close an offering with LPC within ninety days of the issuance of these shares. The LPC Purchase Agreement and the LPC Registration Rights Agreement contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of the parties. The LPC Registration Rights Agreement does not contain any obligation for the Company to make payments to LPC if a registration statement has not been filed with the SEC. We have the right to terminate the LPC Purchase Agreement at any time, at no cost or penalty. Actual sales of shares of common stock to LPC under the LPC Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of the common stock and determinations by us as to the appropriate sources of funding for us and our operations. There are no trading volume requirements or restrictions under the LPC Purchase Agreement. LPC has no right to require any sales by us, but is obligated to make purchases from us as it directs in accordance with the LPC Purchase Agreement. LPC has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of our shares. The net proceeds under the LPC Purchase Agreement to us will depend on the frequency and prices at which we sell shares of our common stock to LPC. We expect that any proceeds received by us from such sales to LPC under the LPC Purchase Agreement will be used for general corporate purposes and working capital requirements. As of February 29, 2016, the Company did not file the registration statement in connection with the LPC Registration Rights Agreement, and have not directed any sales of common stock pursuant to the LPC Purchase Agreement. Common stock financing the Qualified Financing During the year ended February 28, 2015, the Company issued 314,269 shares of common stock and 500,000 shares of Series A Convertible Preferred Stock to certain accredited investors that entered into a securities purchase agreement effective June 30, 2014 (the Qualified Financing Purchase Agreement), whereby the Company received aggregate gross proceeds of $5,735,427, of which $4,092,427 represents the automatic conversion of outstanding convertible promissory notes with principal amounts totaling $3,357,000 and related interest amounts as referenced in Note 10 below (the Qualified Financing). The net proceeds from this transaction amounted to $1,643,000. Included in the net proceeds is the receipt of $100,000 from an investor that was concurrently paid $100,000 for due diligence and legal fees by the Company. $1,000,000 of these proceeds was generated from the sale of marketable securities transferred to the Company by an investor (see Note 12). During the year ended February 28, 2015, the Company completed a second closing effective July 14, 2014 under the Qualified Financing Purchase Agreement whereby the Company issued 12,546 shares of common stock for an aggregate purchase price of $207,000. Series A preferred stock financing the October 2014 Private Placement During the year ended February 28, 2015, the Company issued 374,257 shares of Series A Convertible Preferred Stock to a certain accredited investor that entered into a securities purchase agreement in exchange for the transfer to the Company of 1,069,305 freely tradable shares of common stock of Quantum Materials Corp. (QTMM), a public reporting company whose shares of common stock are eligible for quotation on the OTCQB, effective October 14, 2014 (the October 2014 Private Placement). We recorded the issuance of the Series A Convertible Preferred Stock in connection with the October 2014 Private Placement based on the fair value of the consideration received, which amounted to $256,633. The shares of QTMM were sold by the Company, generating approximately $214,000 of proceeds (see Note 12). Series B preferred stock financing the 2014 Series B Private Placement During the year ended February 28, 2015, the Company entered into a securities purchase agreement effective December 31, 2014 (the Series B Purchase Agreement) with a number of new and existing accredited investors (collectively, the Series B Investors) pursuant to which it may sell up to $3,492,500 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 Series B Purchase Agreement, the Company shall issue series A warrants (the Series A Warrants) to purchase up to 317,500 shares of common stock at an initial exercise price per share of $10.50 and issued series B warrants (the Series B Warrants) to purchase 30,334 shares of common stock at an initial exercise price per share of $8.25 to the Series B Investors who purchased a minimum of $500,000 of Series B Preferred Stock on or before December 31, 2014. The Series A Warrants and Series B Warrants expire on March 31, 2020. Pursuant to the initial closing of the Series B Private Placement on December 31, 2014, the Company issued 228.6363 shares of Series B Preferred Stock convertible into 152,426 shares of common stock, Series A Warrants to purchase 114,319 shares of common stock and Series B Warrants to purchase 30,334 shares of common stock for an aggregate purchase price of $1,257,500, of which $65,000 was paid through the conversion of short-term outstanding indebtedness (See Note 10) and $25,000 was paid through the exchange of accrued liabilities due to certain members of our Board of Directors. In connection with the December 31, 2014 closing of the Series B Private Placement, the placement agent was paid a cash fee of $105,080, including expense allowance, and was issued an aggregate of 9,710 Series A Warrants. On the grant date, the fair value of the placement agent warrants was $46,592, which was recorded as a stock issuance cost. Net proceeds amounted to $1,132,584 after deducting offering expenses to be paid in cash, including the placement agent fees and legal fees. Series B preferred stock financing the 2015 Series B Private Placement During the year ended February 29, 2016, 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 Series B Investors, pursuant to which it sold $2,130,750 of Series B Preferred Stock convertible into common stock at $8.25 per share in the Series B Private Placement. In addition, pursuant to the A&R Series B Purchase Agreement, the Company issued 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 Placements in March 2015, the Company issued 387.4088 shares of Series B Preferred Stock convertible into 258,281 shares of common stock and Series A Warrants to purchase 193,708 shares of common stock for an aggregate purchase price of $2,130,750, of which $18,000 represents the exchange of stock-based compensation to a consultant that was to be settled in the form of shares of common stock but was actually settled with Series B Preferred Stock and Series A Warrants. As a result of the exchange, the Company recorded an additional $12,695 of stock-based compensation. In connection with the March 2015 closings of the Series B Private Placement, the placement agents were paid a total cash fee of $147,451 including expense allowances and reimbursements, and were issued an aggregate of 20,668 Series A Warrants. On the grant dates, the fair value of the placement agent warrants amounted to $158,441 and was recorded as a stock issuance cost. Net proceeds amounted to $1,945,244 after deducting offering expenses to be paid in cash, including the placement agent fees and legal fees and other 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 Companys equity shares or (c) varying inversely in relation to the Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 stockholders equity, based on their relative fair value. Allocation of Proceeds of the 2014 Series B Private Placement For the year ended February 28, 2015, the $1,257,500 proceeds of the Series B Private Placement were allocated first to the Series B Warrants based on their fair value, and then to the Series B Preferred Stock and Series A Warrant instruments based on their relative fair values. A Monte Carlo simulation approach was used to determine the fair value of the Series B Warrants at issuance, which was $154,700 (see Note 13 for inputs to the Monte Carlo simulation). The remaining proceeds of $1,102,800 were then allocated between the Series B Preferred Stock and the Series A Warrants, based on the relative fair value. The Series B Preferred Stocks were 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 input at the time of issuance: expected term of 5.25 years based on their contractual life, volatility of 123% based on the Companys historical volatility and risk free rate of 1.65% 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 deemed dividend of $225,296 equal to the intrinsic value of the beneficial conversion feature. Allocation of Proceeds of the 2015 Series B Private Placement For the year ended February 29, 2016, the $2,130,750 proceeds from the Series B Private Placement on March 27, 2015 and March 31, 2015 were allocated to the Series B Preferred Stock and Series A Warrant instruments based on their relative fair values. The Series B Preferred Stock was valued on an as-if-converted basis based on the underlying common stock. The Series A Warrants were valued using the Black-Scholes model with the following weighted-average input at the time of issuance: expected term of 5.0 years based on their contractual life, volatility of 125% based on the Companys historical volatility and risk free rate of 1.4% based on the rate of the 5-years U.S. treasury bill. After allocation of the proceeds, the effective conversion price of the Series B Preferred Stock was determined to be beneficial and, as a result, the Company recorded a non-cash deemed dividend of $1,067,491 equal to the intrinsic value of the beneficial conversion feature. The Series B Registration Rights Agreement In connection with the closing of the Series B Private Placement, the Company entered into 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 $171,386 of incremental costs in connection with a public offering of the Companys common stock that was aborted. These costs have been charged to expense. |
STOCK OPTIONS
STOCK OPTIONS | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Stock Options | ||
STOCK OPTIONS | During the six months ended August 31, 2015, 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 six months ended August 31, 2015, 1,667 of these options with an aggregate fair value of $8,000 vested based on achieving certain milestones. During the six months ended August 31, 2015, the Company issued options to purchase 80,004 shares of common stock at $8.25 per share to non-executive members of its Board. 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 $388,000 as calculated using the Black-Scholes model. During the six months ended August 31, 2016, 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 $86,500 as calculated using the Black-Scholes model. During the six months ended August 31, 2016, 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 three and six months ended August 31, 2016, 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. 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 three and six months ended August 31, 2016, 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 $142,834 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 three and six months ended August 31, 2016, 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 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. The weighted average inputs to the Black-Scholes model used to value the stock options granted during the six months ended August 31, 2016 and 2015 are as follows: August 31, 2016 August 31, 2015 Expected volatility 98.98 102.74 % 113.47 - 123.55 % Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 98.98 102.74 % 113.47 - 123.55 % Expected Term 5.47 years 6.07 years For the three months ended August 31, 2016, the Company recognized $243,240 of compensation expense related to stock options, of which $200,032 was recognized in general and administrative expenses and $43,208 in research and development expenses. For the six months ended August 31, 2016, the Company recognized $348,076 of compensation expense related to stock options, of which $287,860 was recognized in general and administrative expenses and $60,416 in research and development expenses. For the three months ended August 31, 2015, the Company recognized $183,233 of compensation expense related to stock options, of which $159,002 was recognized in general and administrative expenses and $24,231 in research and development expenses. For the six months ended August 31, 2015, the Company recognized $252,168 of compensation expense related to stock options, of which $227,937 was recognized in general and administrative expenses and $24,231 in research and development expenses. 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 29, 2016 426,976 $ 14.45 $ - 7.98 Granted 880,000 $ 2.02 - - Expired and forfeited (43,667 ) $ 9.66 - - Outstanding and expected to vest at August 31, 2016 1,263,309 $ 5.95 $ - 9.08 Exercisable at August 31, 2016 328,184 $ 12.39 $ - 7.61 The following table breaks down exercisable and unexercisable common stock options by exercise price as of August 31, 2016: Exercisable Unexercisable Number of Options Exercise Price Weighted Average Remaining Life (years) Number of Options Exercise Price Weighted Average Remaining Life (years) 124,442 $ 2.00 9.85 655,558 $ 2.00 9.85 - $ 2.19 - 100,000 $ 2.19 9.74 8,375 $ 3.55 9.43 25,125 $ 3.55 9.43 1,068 $ 8.10 8.42 - $ 8.10 - 74,447 $ 8.25 5.72 105,554 $ 8.25 8.76 52,434 $ 10.20 5.35 - $ 10.20 - 3,334 $ 11.25 8.72 3,333 $ 11.25 8.72 4,445 $ 16.50 8.13 15,555 $ 16.50 8.13 14,735 $ 22.50 7.91 30,000 $ 22.50 7.30 44,904 $ 48.75 6.60 - $ 48.75 - 328,184 $ 12.39 7.61 935,125 $ 3.67 9.59 As of August 31, 2016, we had approximately $611,000 of unrecognized compensation related to employee and consultant stock options that are expected to vest over a weighted average period of 1.3 years and, approximately $580,000 of unrecognized compensation related to employee stock options whose recognition is dependent on certain milestones to be achieved. Additionally, there were 230,000 stock options with a performance vesting condition that were granted to consultants which will be measured and recognized when vesting becomes probable. | 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 Companys 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 29, 2016, there are an aggregate of 352,309 total shares available under the 2012 Incentive Plan, of which 294,349 are issued and outstanding and 57,960 shares are available for potential issuances. The Company may issue shares outside of the 2012 Incentive Plan. During the year ended February 28, 2015, 14,667 non-employee performance-based stock options vested with a value of $232,000. These options vested based on the completion of a trial and subsequent publication of results on June 3, 2014. The Company recognized $232,000 in expense during the year ended February 28, 2015. During the year ended February 28, 2015, the Company issued options to purchase 40,000 shares of common stock at $16.50 per share to members of its management team. The options expire on October 14, 2024. The options vest upon certain milestones being achieved as follows: (i) 13,334 stock options shall fully vest two years following the date of issuance; (ii) of the remaining 26,667 stock options, one-third shall vest once the Companys CLIA laboratory is operational (which was achieved in November 2015), one-third shall vest upon the Companys first commercial sale, and one-third shall vest upon the Company achieving $25 million in sales for the prior twelve-month period. These options had a total fair value of $368,002 as calculated using the Black-Scholes model. The Company has recognized $24,131 in expense in connection with the tranche with time-vesting condition of these options during the year ended February 28, 2015. As of February 29, 2016, the Company has not recognized any stock based compensation for the last two tranches 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, 2015, 8,068 stock options issued to certain members of our scientific advisory board and clinical advisory board with an exercise price equal to $22.50 per share. These options vested immediately and had a total fair value of $59,290 as calculated using the Black-Scholes model. During the year ended February 28, 2015, 1,602 stock options issued to certain members of our scientific advisory and clinical advisory board with an exercise price equal to $8.10 per share. The options vest in four equal installments on each of February 1, 2015, May 1, 2015, August 1, 2015 and November 1, 2015 and expire on November 1, 2024. Compensation expense related to these options is measured at each vesting date and each reporting period for the unvested tranche. The aggregated fair value of these options on the measurement dates amounted to $14,480 as calculated using the Black-Scholes model. For the year ended February 28, 2015, the Company recognized $447,664 of compensation expense related to stock options, of which $319,664 was recognized in general and administrative expenses and $128,000 was recognized in research and development expenses. 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 $14,918, 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 $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 $44,267 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 $22,150 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 $122,054 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 $19,600 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 Companys Scientific and Clinical Advisory Board were mutually cancelled by the parties. The member will continue to serve on the Companys Scientific and Clinical Advisory Board without any equity compensation. For the year ended February 29, 2016, the Company recognized $555,044 of compensation expense related to stock options, of which $441,837 was recognized in general and administrative expenses and $113,207 was recognized in research and development expenses. The weighted average inputs to the Black-Scholes model used to value the stock options granted during the year ended February 29, 2016 and February 28, 2015 are as follows: February 28, 2015 February 29, 2016 Expected volatility 117.00 % 114.78 % Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 1.72 % 1.64 % Expected Term 6.24 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 187,342 $ 23.70 $ 20,670 8.29 Granted 243,835 7.26 - - Exercised - - - - Forfeited 534 8.10 - - Expired 3,667 10.20 - - Outstanding and expected to vest at February 29, 2016 426,976 $ 14.45 $ - 7.98 Exercisable at February 29, 2016 187,575 $ 19.71 $ - 6.55 The following table breaks down exercisable and unexercisable common stock options by exercise price as of February 29, 2016: Exercisable Unexercisable Number of Options Exercise Price Weighted Average Remaining Life (years) Number of Options Exercise Price Weighted Average Remaining Life (years) 13,875 $ 3.55 9.94 41,625 $ 3.55 9.94 1,068 $ 8.10 8.92 - $ 8.10 - 48,335 $ 8.25 4.61 133,333 $ 8.25 9.26 52,434 $ 10.20 5.86 - $ 10.20 - 3,334 $ 11.25 9.22 3,333 $ 11.25 9.22 8,890 $ 16.50 8.63 31,110 $ 16.50 8.63 14,735 $ 22.50 8.42 30,000 $ 22.50 7.80 44,904 $ 48.75 7.10 - $ 48.75 - 187,575 $ 19.71 6.55 239,401 $ 10.33 9.11 As of February 29, 2016, we had approximately $371,000 of unrecognized compensation related to employee and consultant stock options that are expected to vest over a weighted average period of 1.31 years and, approximately $272,000 of unrecognized compensation related to employee stock options whose recognition is dependent on certain milestones to be achieved. Additionally, there were 43,333 stock options with a performance vesting condition that were granted to consultants which will be measured and recognized when vesting becomes probable. |
WARRANTS
WARRANTS | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Warrants | ||
WARRANTS | For the three and six months ended August 31, 2015, 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 on July 31, 2015, referenced in Note 6. This warrant is exercisable at $8.25 per share and expires on March 31, 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. 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. In connection with the issuances 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 $16,800, 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. $16,800 was recorded as part of the debt discount against the stated value of the Note. For the six months ended August 31, 2015, the Company issued an aggregate of 193,708 Series A Warrants in connection with the issuances of Series B Preferred Stock in March 2015, referenced in Note 3. These Series A Warrants were issued on March 27 and 31, 2015, are exercisable at $10.50 per share and expire on March 31, 2020. The Series A Warrants vest immediately. The Series A Warrants do not contain any provision that would require liability treatment, therefore they were classified as equity in the Condensed Consolidated Balance Sheet. In connection with the issuances of the Series B Preferred Stock on March 27 and 31, 2015, the Company issued placement agent warrants to purchase an aggregate of 20,668 shares of common stock. These placement agent warrants had the same terms as the Series A Warrants and were issued on March 27, 2015, are exercisable at $10.50 per share and expire on March 31, 2020. These placement agent warrants vest immediately. The fair value of these warrants was determined to be $158,441, as calculated using the Black-Scholes model. 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 six months ended August 31, 2015, 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. 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 vest immediately. The fair value of these warrants was determined to be $4,771, 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 six months ended August 31, 2015, the Company recognized $4,771 of stock-based compensation for these warrants. For the three and six months ended August 31, 2015, 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 vests immediately. The fair value of this warrant was determined to be $26,945, 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 three and six months ended August 31, 2015, the Company recognized $26,945 of stock-based compensation for this warrant. For the six months ended August 31, 2015, 1,668 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 were repurchased and cancelled as part of a settlement of a dispute with two affiliated security holders (see Note 3). For the six months ended August 31, 2016, 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 6. These warrants were initially exercisable at $8.25 per share and expire between March 3 and 15, 2021. These warrants vested immediately. These warrants contained an anti-dilution price protection provision, which required the warrants to be recorded as derivative warrant liability. 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 six months ended August 31, 2016, the Company issued warrants to purchase an aggregate of 60,000 shares of common stock to investors and placement agents in connection with the issuance of common stock pursuant to the 2016 Unit Private Placement referenced in Note 3. These warrants are exercisable at $3.00 per share and expire on May 26, 2021. These warrants vested immediately. These warrants do not contain any provision that would require liability treatment, therefore they were classified as equity in the Condensed Consolidated Balance Sheet. For the three and six months ended August 31, 2016, the Company issued warrants to purchase an aggregate of 88,500 shares of common stock in connection with the issuance of common stock pursuant to the 2016 Unit Private Placement referenced in Note 3. These warrants are exercisable at $3.00 per share and expire on June 7, 2021. These warrants vested immediately. These warrants do not contain any provision that would require liability treatment, therefore they were classified as equity in the Condensed Consolidated Balance Sheet. For the three and six months ended August 31, 2016, the Company issued warrants to purchase an aggregate of 27,326 shares of common stock in connection with the MFN Exchange referenced in Note 3. These warrants are exercisable at $3.00 per share and expire on June 7, 2021. These warrants vested immediately. Additionally, in connection with the MFN Exchange, the Company cancelled warrants to purchase an aggregate of 9,000 shares of common stock. These warrants were originally issued in connection with the Series B Private Placement and were exercisable at $10.50 per share. For the three and six months ended August 31, 2016, 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 6. These warrants are exercisable at $2.00 per share and expire between August 11, 2021 and August 18, 20121. These warrants vested immediately. The fair value of these warrants was determined to be $44,096, as calculated using the Black-Scholes model and were recorded as a debt discount based on their fair value. For the three and six months ended August 31, 2016, the Company issued warrants to purchase an aggregate of 21,875 shares of common stock in connection with the issuance of common stock pursuant to the Additional Unit Private Placement referenced in Note 3. These warrants are exercisable at $3.00 per share and expire on August 30, 2021. These warrants vested immediately. As discussed in Note 3, due to the Price Protection Provision, these warrants are being classified as a derivative liability and measured at fair value. In connection with the Additional Unit Private Placement, the Company issued placement agent warrants to purchase an aggregate of 438 shares of common stock. These placement agent warrants were issued on August 31, 2016, are exercisable at $3.00 per share and expire on August 30, 2021. These placement agent warrants vest immediately. The fair value of these warrants was determined to be approximately $400, as calculated using the Black-Scholes model. Weighted-average assumptions used in the Black-Scholes model included: (1) a discount rate of 1.18 %; (2) an expected term of 5.0 years; (3) an expected volatility of 102% and (4) zero expected dividends. 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, 2016 913,514 $ 14.56 $ - 3.14 Granted 252,690 2.78 - - Cancelled 23,672 17.00 - - Outstanding at August 31, 2016 1,142,532 $ 11.23 $ - 3.15 Warrants exercisable at August 31, 2016 are: Exercise Prices Number of shares Weighted average remaining life (years) Exercisable number of shares $ 2.00 134,554 2.78 134,554 $ 2.20 43,636 4.45 43,636 $ 3.00 198,139 1.43 198,139 $ 8.25 39,468 3.68 39,468 $ 10.20 14,668 0.21 14,668 $ 10.50 335,005 3.59 335,005 $ 13.65 99,826 0.42 99,826 $ 15.00 556 3.75 556 $ 18.75 695 3.75 695 $ 21.00 23,334 0.49 23,334 $ 22.50 219,754 1.80 219,754 $ 31.50 29,830 1.62 29,830 $ 37.50 1,733 1.37 1,733 $ 45.00 1,334 0.42 1,334 1,142,532 3.15 1,142,532 | During the year ended February 28, 2015, the Company issued 12,007 warrants in connection with the issuance of convertible notes referenced in Note 10 below. These warrants have exercise prices ranging from $22.50 to $31.50 per share, expire five years after their issuance date and vested immediately. These warrants were recorded as a debt discount based on their relative fair value. During the year ended February 28, 2015, the Company issued an aggregate of 204,420 warrants in connection with the closing of the Qualified Financing as described in Note 6. 197,520 warrants were issued on June 30, 2014, and 6,900 warrants were issued on July 14, 2014, and expire on June 30, 2018 and July 14, 2018, respectively. These warrants vested immediately. These warrants are exercisable at $22.50 per share. The warrants do not contain any provision that would require liability treatment, therefore they were classified as equity in the consolidated balance sheet. During the year ended February 28, 2015, the Company issued 124,029 Series A Warrants in connection with the closing of the Series B Private Placement as described in Note 6, including 9,710 warrants issued to the placement agent. These warrants were issued on December 31, 2014, are exercisable at $10.50 per share and expire on March 31, 2020. These warrants vested immediately and 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 $46,592, as calculated using a Black-Scholes model, which was recorded as a stock issuance cost. Assumptions used in the Black-Scholes model included: (1) a discount rate of 1.65%; (2) an expected term of 5.25 years; (3) an expected volatility of 123%; and (4) zero expected dividends. During the year ended February 28, 2015, the Company issued 30,334 Series B Warrants in connection with the closing of the Series B Private Placement as described in Note 6. These warrants were issued on December 31, 2014, are exercisable at $8.25 per share and expire on March 31, 2020. These warrants vested immediately. These warrants contained a full ratchet anti-dilution price protection provision, which required the Series B Warrants to be classified as derivative warrant liability (see Note 6 and Note 13). 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 $4,771, 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 $4,771 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 $158,441, 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 9. 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 9 and Note 13). Such clause will lapse upon listing of the Companys 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 $16,800, 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. $16,800 was recorded as part of the debt discount against the stated value of the Promissory Note (see Note 9). 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 9 and Note 13). 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 6). 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 28, 2015 580,604 $ 17.81 $ 72,250 3.33 Granted 354,000 9.68 - - Cancelled/Expired 21,090 22.19 - - Outstanding at February 29, 2016 913,514 $ 14.56 $ - 3.14 Warrants exercisable at February 29, 2016 are: Exercise Prices Number of shares Weighted average remaining life (years) Exercisable number of shares $ 8.25 163,107 4.63 163,107 $ 10.20 14,668 0.71 14,668 $ 10.50 344,005 4.09 344,005 $ 13.65 99,826 0.92 99,826 $ 15.00 556 4.25 556 $ 18.75 695 4.25 695 $ 21.00 38,006 0.68 38,006 $ 22.50 219,754 2.28 219,754 $ 31.50 29,830 2.12 29,830 $ 37.50 1,733 1.87 1,733 $ 45.00 1,334 0.92 1,334 913,514 913,514 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Note Payable | ||
NOTES PAYABLE | Promissory Note and Promissory Note Amendment 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 Companys common stock in a private placement (the Note Private Placement). The Promissory Note matured on July 31, 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 a 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 Companys 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 7 for fair value measurement). The adjustment clause lapses upon listing of the Companys 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 Notes 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 will be 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 $150,544 and to the fair value of the Note Voluntary Exchange provision in the amount of $227,740, with the difference of $821,716 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 Holders 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 Companys 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 Company evaluated the Note Voluntary Exchange provision, which provides for settlement of the Promissory Note at an 8% premium to the Promissory Notes stated principal amount, in accordance with ASC 815-15-25. The 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 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 Companys 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 three months ended August 31, 2016, the Company recognized $153,174 of interest expense related to the Promissory Note, as amended, including amortization of debt discount of $125,174 and accrued interest expense of $28,000. Additionally, the Company recognized a gain of $294,114 in the three months ended August 31, 2016 due to the change in estimated fair value of the Voluntary Exchange provision. During the six months ended August 31, 2016, the Company recognized $291,177 of interest expense related to the Promissory Note, as amended, including amortization of debt discount of $239,177 and accrued interest expense of $52,000. Additionally, the Company recognized a gain of $265,438 in the six months ended August 31, 2016 due to the change in estimated fair value of the Voluntary Exchange provision. OID Notes In February 2016, the Company entered into an OID note purchase agreement dated February 12, 2016 (the February 2016 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 Companys 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). Pursuant to the February 2016 OID Note Purchase Agreement, 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 Companys common stock. During the six months ended August 31, 2016, 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 issued OID Notes with an aggregate Purchase Price of $125,000 and OID Warrants to purchase 9,902 shares of the Companys common stock. The OID Notes issued in March 2016 have an OID Principal Amount equal to $150,000 or 120% of the Purchase Price. 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 Companys 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 7 for fair value measurement). The adjustment clause lapses upon the Company completing the Qualified Offering. 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 $15,225, 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 $32,497, and lastly to the debt discount related to offering costs of $2,210 with the difference of $75,069 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. During the three months ended August 31, 2016, the Company recognized $248,113 of interest expense related to the OID Notes, as amended, including amortization of debt discount. Additionally, the Company recognized a gain of $216,753 in the three months ended August 31, 2016 due to the change in estimated fair value of the OID Note Voluntary Exchange provision. During the six months ended August 31, 2016, the Company recognized $413,703 of interest expense related to the OID Notes, as amended, including amortization of debt discount. Additionally, the Company recognized a gain of $191,430 in the six months ended August 31, 2016 due to the change in estimated fair value of the OID Note Voluntary Exchange provision. The following table summarizes the notes payable: Note Payable Discount Voluntary Exchange Feature Note Payable, Net 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 Additional debt discount upon Note amendments 75,000 (224,681 ) 105,586 (44,095 ) Amortization of debt discount - 652,879 - 652,879 Change in fair value of voluntary exchange feature - - (456,868 ) (456,868 ) August 31, 2016 balance $ 2,025,000 $ (390,015 ) $ 157,616 $ 1,792,601 | Promissory Note and Promissory Note Amendment 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 Companys common stock in a private placement (the Note Private Placement). The Promissory Note matures on July 30, 2016, accrues 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 Companys 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 13 for fair value measurement). The adjustment clause lapses upon listing of the Companys 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 Notes 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 will be 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 $150,544 and to the fair value of the Note Voluntary Exchange provision in the amount of approximately $227,740, with the difference of approximately $821,716 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 Holders consent to the consummation of the OID Note Private Placement (as defined below), as required under the Promissory Note. Additionally, 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 mean 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 Companys 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 Company evaluated the Voluntary Exchange provision, which provides for settlement of the Promissory Note at an 8% premium to the Promissory Notes 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 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 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, we determined that the Amendment Warrant was not indexed to the Companys 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 the Qualified Offering. As such, the Company recorded a debt discount related to the warrant liability of $84,552 and a debt discount related to the Voluntary Exchange of $103,806. During the year ended February 29, 2016, the Company recognized $300,675 of interest expense related to the Promissory Note, as amended, including amortization of debt discount of $244,675 and accrued interest expense of $56,000. Additionally, the Company recognized a loss of $8,433 in the year ended February 29, 2016 due to the change in estimated fair value of the Voluntary Exchange provision. OID Notes 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) 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 Companys common stock for every $100,000 of Purchase Price in a private placement (the OID Note Private Placement). 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 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 Companys 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) 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 a purchaser 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 Principal Amount was first allocated to the fair value of the OID Warrants in the amount of $75,961, 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 $134,841, and lastly to the debt discount related to offering costs of $13,758 with the difference of approximately $275,440 representing the initial carrying value of the OID Notes. During the year ended February 29, 2016, the Company recognized $8,637 of interest expense related to the OID Notes, including amortization of debt discount. Additionally, the Company recognized a loss of $1,582 in the year ended February 29, 2016 due to the change in estimated fair value of the OID Note Voluntary Exchange provision. The OID Warrants contain 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 OID Warrants. As a result, we determined that the OID Warrants were not indexed to the Companys 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 13 for fair value measurement). The adjustment clause lapses upon the Company completing the Qualified Offering. The following table summarizes the notes payable: Notes Payable Discount Put Exchange Feature Notes Payable, Net February 28, 2015 balance $ - $ - $ - $ - 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 - - 10,015 10,015 February 29, 2016 balance $ 1,800,000 $ (743,282) $ 476,402 $ 1,533,120 |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 12 Months Ended |
Feb. 29, 2016 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES | 2014 Convertible Notes During the year ended February 28, 2015, the Company issued convertible promissory notes in the aggregate principal amount of $615,000 with 1,668 detachable warrants that can be exercised at $31.50 per share within a five-year period and 10,339 detachable warrants that can be exercised at $22.50 per share within a five-year period (the 2014 Convertible Notes). The 2014 Convertible Notes bore interest at the rate of 8% per annum, originally matured on June 30 and August 15, 2014 and ranked pari passu Debt Discount and beneficial conversion feature The detachable warrants issued in connection with the 2014 Convertible Notes were recorded as a debt discount based on their relative fair value. The detachable warrants issued during the year ended February 28, 2015 had a weighted-average fair value of $14.55 per share, as calculated using the Black-Scholes model. Assumptions used in the Black-Scholes model included: (1) a discount rate of 1.64%; (2) an expected term of 5 years; (3) an expected volatility of 116.8%; and (4) zero expected dividends. The 2014 Convertible Notes issued during the year ended February 28, 2015 included a conversion feature that was in the money at the commitment date. The intrinsic value of the conversion feature was recorded as a debt discount at the time of issuance. The relative fair value of the warrants and the intrinsic value of the beneficial conversion feature for the convertible notes issued during the years ended February 28, 2015 totaled $173,035 and was recorded as a discount to the convertible debt. During the year ended February 28, 2015, $379,672 was recognized as accretion expense related to the debt discount. Automatic Exchange of the Convertible Notes During the year ended February 28, 2015, the Company completed the Qualified Financing whereby all outstanding convertible notes with aggregate principal amounts totaling $3,357,000 were automatically exchanged into the securities offered in the Qualified Financing. The exchange also included approximately $201,413 of accrued interest. As of February 28, 2015, the Company had no convertible notes outstanding. During the year ended February 28, 2015, as a result of the exchange of all outstanding convertible notes in the Qualified Financing, the Company recorded an expense during the year ended February 28, 2015, amounting to $2,324,759. The expense was measured at the intrinsic value of the beneficial conversion feature for each of the outstanding convertible notes at their respective measurement date. As of February 29, 2016, the Company had no convertible notes outstanding. |
SHORT-TERM NOTES
SHORT-TERM NOTES | 12 Months Ended |
Feb. 29, 2016 | |
Short-term Notes | |
SHORT-TERM NOTES | During the year ended February 28, 2015, the Company received an aggregate of $65,000 in December 2014 from two members of the Board of Directors, in the form of short-term notes. These short-term notes were applied to the purchase price of the December 31, 2014 closing of the Series B Private Placement (See Note 6). The interest was considered de minimis. |
MARKETABLE SECURITIES HELD FOR
MARKETABLE SECURITIES HELD FOR SALE | 12 Months Ended |
Feb. 29, 2016 | |
Marketable Securities Held For Sale | |
MARKETABLE SECURITIES HELD FOR SALE | As part of the June 30, 2014 Qualified Financing (see Note 6), the Company received 4,800,000 shares of common stock of Quantum Materials Corp (Consideration Shares) in lieu of $1.0 million of cash proceeds from an investor. In the event the Company did not receive gross proceeds of at least $1.0 million from the sale of the Consideration Shares by the earliest to occur of (i) September 28, 2014 or (ii) the date the Company has sold of the Consideration Shares, then the investor was obligated to make a payment to the Company equal to the difference between $1.0 million and the aggregate gross proceeds received by the Company from the sale of the Consideration Shares. In the event the Company received gross proceeds of at least $1.0 million from the sale of the Consideration Shares within the 90 days following the closing date of the equity financing, the Company was obligated to immediately cease to sell the Consideration Shares and to return all the unsold Consideration Shares to the investor and any proceeds from the sale of the Consideration Shares in excess of the $1.0 million. The Company elected to account for the Consideration Shares and the related liability to the investor at fair value. As such any changes in fair value of the Consideration Shares and the related liability, which are expected to offset each other, are recorded in earnings. The Consideration Shares and the related liability due to investor are financial instruments which are considered Level 1 in the fair value hierarchy and whose value is based on quoted prices in active market. The Company generated $1.0 million of gross proceeds from the sale of 3,730,695 Consideration Shares through September 28, 2014. On October 14, 2014, the Company entered into an agreement with the investor whereby the remaining 1,069,305 Consideration Shares were to remain with the Company in exchange for the issuance of Series A Convertible Preferred Stock (see Note 6). As of February 28, 2015, the Company sold all remaining Consideration Shares for approximately $214,000 of gross proceeds and incurred a loss of approximately $42,000 on the holding and selling of the securities. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
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. At August 31, 2016 and February 29, 2016, the warrant liability and put exchange feature liability balances were classified as Level 3 instruments. Derivative Warrant Liability 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 Additional Unit Private Placement Warrants Total Fair value at February 29, 2016 $ 188,351 $ 46,110 $ - $ 234,461 Additions 15,225 - 38,834 54,059 Change in fair value: (49,874 ) (11,875 ) - (61,749 ) Fair value at August 31, 2016 $ 153,702 $ 34,235 $ 38,834 $ 226,771 The Series B Warrants 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 Companys common stock and therefore should be recorded as a derivative liability. The Series B Warrants were measured at fair value on the issuance date using a Monte Carlo simulation and will be re-measured to fair value at each balance sheet date, and any resultant changes in fair value will be recorded in earnings. The Monte Carlo simulation as of August 31, 2016 and February 29, 2016 used the following assumptions: (1) a stock price of $1.40 and $1.80, respectively; (2) a risk free rate of 0.99% and 1.08%, respectively; (3) an expected volatility of 134% and 134%, respectively; and (4) a fundraising event to occur on October 31, 2016 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. The warrant was issued on July 31, 2015, was originally exercisable at $8.25 per share and expires on July 31, 2020. The 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 six months ended August 31, 2016. The fair value of the warrant at August 31, 2016 and February 29, 2016 was determined to be $50,228 and $64,438, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of August 31, 2016 and February 29, 2016 used the following assumptions: (1) stock price of $1.40 and $1.80, respectively; (2) a risk free rate of 1.04% and 1.13%, respectively; (3) an expected volatility of 134% and 134%, respectively; and (4) a fundraising event to occur on October 31, 2016 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. The warrant was issued on February 12, 2016, initially exercisable at $8.25 per share and expires on February 11, 2021. The warrant contains a full-ratchet anti-dilution price protection provision that requires liability treatment and the exercise price of this warrant was adjusted to $2.20 during the six months ended August 31, 2016. The fair value of the warrant at August 31, 2016 and February 29, 2016 was determined to be $50,877 and $68,292, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of August 31, 2016 and February 29, 2016 used the following assumptions: (1) stock price of $1.40 and $1.80, respectively; (2) a risk free rate of 1.12% and 1.20%, respectively; (3) an expected volatility of 134% and 134%, respectively; and (4) a fundraising event to occur on October 31, 2016 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 six months ended August 31, 2016. The fair value of these warrants at August 31, 2016 and February 29, 2016 was determined to be $42,316 and $55,621, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of August 31, 2016 and February 29, 2016 used the following weighted-average assumptions: (1) stock price of $1.40 and $1.80, respectively; (2) a risk free rate of 1.12% and 1.21%, respectively; (3) an expected volatility of 134% and 134%, respectively; and (4) a fundraising event to occur on October 31, 2016 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 six months ended August 31, 2016. The fair value of these warrants at August 31, 2016 and at issuance between March 4 and 15, 2016 was determined to be $10,281 and $15,225, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of August 31, 2016, and between March 4 and 15, 2016, used the following weighted-average assumptions: (1) stock price of $1.40 and $1.97, respectively; (2) a risk free rate of 1.12% and 1.41%, respectively; (3) an expected volatility of 134% and 136%, respectively; and (4) a fundraising event to occur on October 31, 2016 and July 31, 2016, respectively, that would result in the issuance of additional common stock. In connection with the Additional Unit Private Placement, the Company issued warrants to purchase an aggregate of 21,875 shares of common stock. These warrants were issued on August 31, 2016, are exercisable at $3.00 per share and expire on August 30, 2021. As described in Note 3, the Price Protection provision associated with these warrants requires liability treatment. The fair value of these warrants at August 31, 2016 was determined to be $38,834 as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of August 31, 2016 used the following weighted-average assumptions: (1) stock price of $1.40; (2) a risk free rate of 1.22%; (3) an expected volatility of 134%; and (4) a fundraising event to occur on January 31, 2017, that would result in the issuance of additional common stock. Put Exchange Feature Liability 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: (265,438 ) (191,430 ) (456,868 ) Fair value, August 31, 2016: $ 74,541 $ 83,075 $ 157,616 The Promissory Note issued on July 31, 2015, as amended on February 12, 2016, contains a Note Voluntary Exchange provision that is a contingent put that requires liability treatment (see Note 6). The fair value of this put exchange feature at February 29, 2016 and August 31, 2016 was determined to be $339,979 and $74,541, respectively. 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 and October 31, 2016 at August 31, 2016; 2) the combined probability of both a Qualified Offering and a voluntary exchange to occur, which was determined to be 71% at both February 29 and August 31, 2016 and 3) a discount rate of 18%, approximating high yield distressed debt rates, used for all measurement dates. The OID Notes issued contain an OID Note Voluntary Exchange provision that is a contingent put that requires liability treatment (see Note 6). The fair value of this put exchange feature at February 29, 2016 and August 31, 2016 was determined to be $136,423 and $83,075, respectively, as calculated using a probability weighted present value methodology. The significant inputs to the fair value model at all measurement dates were 1) the timing of a Qualified Offering expected to occur in May 2016 at February 29, 2016 and October 31, 2016 at August 31, 2016; 2) the combined probability of both a Qualified Offering and a voluntary exchange to occur, which was determined to be 81% at February 29, 2016 and 85% at August 31, 2016; and 3) a discount rate of 18%, approximating high yield distressed debt rates, used for all measurement dates. | 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. At February 29, 2016 and February 28, 2015, the warrant liability balances of $234,461 and $273,000, 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: Notes Payable Warrants Series B Warrants Total Fair value, February 28, 2015: $ $ 273,000 $ 273,000 Additions 311,057 - 311,057 Change in fair value: (122,706) (226,890) (349,596) Fair value, February 29, 2016: $ 188,351 $ 46,110 $ 234,461 The Series B Warrants 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 Companys common stock and therefore should be recorded as a derivative liability. The Series B Warrants were measured at fair value on the issuance date using a Monte Carlo simulation and will be re-measured to fair value at each balance sheet date, and any resultant changes in fair value will be recorded in earnings. The Monte Carlo simulation as of February 29, 2016 and February 28, 2015 used the following assumptions: (1) a stock price of $1.80 and $10.50, respectively; (2) a risk free rate of 1.08% and 1.50%, respectively; (3) an expected volatility of 134% and 125%, respectively; and (4) a fundraising event to occur on May 15, 2016 and September 30, 2015, 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. The warrant was issued on July 31, 2015, is exercisable at $8.25 per share and expires on July 31, 2020. The warrant contains a full-ratchet anti-dilution price protection provision that requires liability treatment. The fair value of the warrant at February 29, 2016 and July 31, 2015 was determined to be $64,438 and $150,544, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 29, 2016 and July 31, 2015 used the following assumptions: (1) stock price of $1.80 and $3.90, respectively; (2) a risk free rate of 1.13% and 1.58%, respectively; (3) an expected volatility of 134% and 128%, respectively; and (4) a fundraising event to occur on May 15, 2016 and November 30 2015, respectively, that would result in the issuance of additional common stock. In connection with the Note Amendment on February 12, 2016, the Company issued a warrant to purchase an aggregate of 43,636 shares of common stock. The warrant was issued on February 12, 2016, is exercisable at $8.25 per share and expires on February 11, 2021. The warrant contains a full-ratchet anti-dilution price protection provision that requires liability treatment. The fair value of the warrant at February 29, 2016 and February 12, 2016 was determined to be $68,292 and $84,552, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 29, 2016 and February 12, 2016 used the following assumptions: (1) stock price of $1.80 and $2.35, respectively; (2) a risk free rate of 1.20% and 1.21%, respectively; (3) an expected volatility of 134% and 134%, respectively; and (4) a fundraising event to occur on May 15, 2016 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 on between February 12 and 22, 2016, are 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. The fair value of these warrants at February 29, 2016 and at issuance between February 12 and 22, 2016 was determined to be $55,621 and $75,961, respectively, as calculated using the Monte Carlo simulation. The Monte Carlo simulation as of February 29, 2016 and between February 12 and 22, 2016 used the following weighted-average assumptions: (1) stock price of $1.80 and $2.37, respectively; (2) a risk free rate of 1.21% and 1.22%, respectively; (3) an expected volatility of 134% and 134%, respectively; and (4) a fundraising event to occur on May 15, 2016 that would result in the issuance of additional common stock. At February 29, 2016 and February 28, 2015, the put exchange feature liability balances of $476,402 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 28, 2015: $ - $ - $ - Additions 331,546 134,841 466,387 Change in fair value: 8,433 1,582 10,015 Fair value, February 29, 2016: $ 339,979 $ 133,259 $ 476,402 The Promissory Note issued on July 31, 2015, as amended on February 12, 2016, contains a Note Voluntary Exchange provision that is a contingent put that requires liability treatment (see Note 9). The fair value of this put exchange feature at issuance on July 31, 2015, on the amendment date of February 12, 2016 and at February 29, 2016 was determined to be $227,740, $103,806, and $339,979, respectively. 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 incur in November 2015 at July 31, 2015 and May 2016 at both February 12 and 29, 2016 2) the combined probability of both a qualified offering and a voluntary exchange to occur, which was determined to be 100% at July 31, 2015 and 81% at both February 12 and 29, 2016 and 3) a discount rate of 18%, approximating high yield distressed debt rates, used for all measurement dates. The OID Notes issued between February 12 and 22, 2016 contain an OID Note Voluntary Exchange provision that is a contingent put that requires liability treatment (see Note 9). The fair value of this put exchange feature at issuance between February 12 and 22, 2016 and at February 29, 2016 and was determined to be $134,841 and $133,259, respectively, as calculated using a probability weighted present value methodology. The significant inputs to the fair value model at all measurement dates were 1) the timing of a qualified offering expected to incur in May 2016, 3) the combined probability of both a qualified offering and a voluntary exchange to occu |
EQUIPMENT
EQUIPMENT | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Property, Plant and Equipment [Abstract] | ||
EQUIPMENT | Equipment consists of the following: Estimated Useful Lives August 31, 2016 February 29, 2016 Research equipment 7 years $ 590,373 $ 590,373 Computer equipment 5 years 76,075 76,075 666,448 666,448 Accumulated depreciation and amortization (216,928 ) (169,396 ) Equipment, net $ 449,520 $ 497,052 Depreciation and amortization expense was $23,766 and $23,812 for the three months ended August 31, 2016 and 2015, respectively. Depreciation of equipment utilized in research and development activities is included in research and development expenses and amounted to $20,126 and $20,126 for the three months ended August 31, 2016 and 2015, respectively. All other depreciation is included in general and administrative expense and amounted to $3,640 and $3,686 for the three months ended August 31, 2016 and 2015, respectively. Depreciation and amortization expense was $47,532 and $48,657 for the six months ended August 31, 2016 and 2015, respectively. Depreciation of equipment utilized in research and development activities is included in research and development expenses and amounted to approximately $40,252 and $41,286 for the six months ended August 31, 2016 and 2015, respectively. All other depreciation is included in general and administrative expense and amounted to approximately $7,280 and $7,371 for the six months ended August 31, 2016 and 2015, respectively. | Equipment consists of the following: Estimated Useful lives February 29, 2016 February 28, 2015 Research equipment 7 years $ 590,373 $ 548,991 Computer and software equipment 5 years 76,075 73,704 666,448 622,695 Accumulated depreciation and amortization (169,396) (96,089) Equipment, net $ 497,052 $ 526,606 Depreciation of equipment utilized in research and development activities is included in research and development expenses. All other depreciation is included in general and administrative expense. Total depreciation and amortization expense was $96,188 and $61,897 for the years ended February 29, 2016 and February 28, 2015, respectively. On March 26, 2014, we entered into an agreement to finance the purchase of research equipment for a purchase price of $318,603. The terms of the agreement required a down payment of $20,520 and 36 monthly payments of approximately $10,260. The agreement further required a security deposit of $238,952, which will be refunded to the Company in three equal installments upon the payment of the twelfth, the twenty-fourth and the thirty-sixth monthly payments. This security deposit has been satisfied by the Company. As further security, a personal guaranty was required of our chief executive officer. Effective July 8, 2015, we prepaid all the remaining installments due under the agreement through application of the security deposit. |
COMMITMENTS
COMMITMENTS | 6 Months Ended |
Aug. 31, 2016 | |
Research and Development [Abstract] | |
COMMITMENTS | Lease Agreements On August 28, 2014, we entered into a lease agreement (the Boston Lease) for our diagnostic laboratory and office space located in Boston, MA. The term of the Boston Lease is for two years, from September 1, 2014 through August 31, 2016, and the basic rent payable thereunder is $10,280 per month for the first year and $10,588 per month for the second year. Additional monthly payments under the Boston Lease shall include tax payments and operational and service costs. Additionally, 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 increased to $17,164 per month plus additional monthly payments including tax payments and operational and service costs. Effective March 1, 2015, we entered into a lease agreement for short-term office space in New York, NY. The term of the lease is month-to-month and may be terminated upon twenty-one (21) days notice. The basic rent payment is $1,400 per month and 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 remains month-to-month and may still be terminated with twenty-one (21) days notice. The basic rent payment increased to $2,400 per month and we paid an additional $1,500 security deposit in connection with the amended lease. |
LICENSE AGREEMENT WITH ASET THE
LICENSE AGREEMENT WITH ASET THERAPEUTICS, LLC | 6 Months Ended |
Aug. 31, 2016 | |
License Agreement With Aset Therapeutics Llc | |
LICENSE AGREEMENT WITH ASET THERAPEUTICS, LLC | Effective 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 for the three and six months ended August 31, 2016. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Accounting Policies [Abstract] | ||
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 condition that have not been met at the end of the period are excluded from the computation of the weighted average shares. As of August 31, 2016 and 2015, 10,417 and 31,188 restricted shares of common stock, respectively, 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, shares issuable from convertible securities, and unvested restricted shares. When dilutive, warrants classified as liabilities are included in the potential common shares and any change in fair value of the warrant for the period presented is excluded from the net loss. For the periods ended August 31, 2016 and 2015, the liability warrants were not dilutive. In computing diluted loss per share for the periods ended August 31, 2016 and 2015, 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: August 31, 2016 August 31, 2015 Stock options 1,263,309 371,476 Warrants 1,142,532 847,932 Preferred stock 1,888,552 480,472 Total 4,293,552 1,699,880 | 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 29, 2016 and February 28, 2015, 11,536 and 24,522, 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 29, 2016 and February 28, 2015, 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 29, 2016 February 28, 2015 Stock options 426,976 187,334 Warrants 913,514 580,515 Preferred stock 497,527 210,708 Total 1,838,017 978,557 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Feb. 29, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | ASET Therapeutics Memorandum of Understanding and License Agreement Between July and November 25, 2014, we entered into agreements with ASET, a private third party entity affiliated with one of our directors, Dr. David Epstein (see Note 4). On May 21, 2015, Dr. David Epstein resigned from our Board. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Feb. 29, 2016 | |
Income Taxes | |
INCOME TAXES | During the fiscal years ended February 29, 2016, and February 28, 2015, 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 29, 2016 February 28, 2015 Income tax benefit at the federal statutory rate 34 % 34 % Permanent differences (2) % (3 )% Increase in valuation allowance (32) % (31 )% Provision for income tax 0 % 0 % At February 29, 2016, and February 28, 2015, d eferred tax assets (liabilities) consisted of the following: February 29, February 28, 2016 2015 Accrued compensation $ 87,969 $ Accrued interest 23,520 Net operating loss carryovers 5,555,259 4,058,611 Research and development credits 130,422 Capital loss carryover 25,421 Stock compensation 1,491,106 1,183,918 7,313,697 5,242,529 Depreciation (76,987 ) (10,273 ) 7,236,710 5,232,256 Less: Valuation allowance (7,236,710 ) (5,232,256 ) 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 not 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 taxabl At February 29, 2016, the cumulative federal and state net operating loss carry-forwards are approximately $14.7 million and $10.4 million, respectively and, and will expire between 2029 and 2035. 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 29, 2016 and February 28, 2015. The Company is no longer subject to Federal income tax assessment for years before 2011. 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | Additional Closings of the Additional Unit Private Placement Subsequent to August 31, 2016, the Company completed additional closings of the Additional Unit Private Placement (as defined in Note 3), whereby the Company issued an aggregate of 135 units for 192,000 shares of common stock, 48,300 shares of its Series A-2 Convertible Preferred Stock (the Series A-2 Preferred), convertible into 483,000 shares of common stock, and five-year common stock purchase warrants to purchase 337,500 shares of common stock with an exercise price of $3.00 per share for aggregate gross proceeds of $1.35 million and net proceeds of approximately $1.23 million. The Company may issue shares of Series A-2 Preferred in lieu of issuing shares of common stock in the Additional Unit Private PLacement for the benefit of certain purchasers that would be deemed to have beneficial ownership in excess of 4.99% or 9.99%. Additionally, the company will issue an aggregate of 54,000 placement agent warrants in substantially the same form as the warrants issued to the investors in the Additional Unit Private Placement. Research Collaboration On September 29, 2016, the Company and Celgene Corporation (Celgene) entered into an amendment (the Amendment) to a previously executed pilot materials transfer agreement (the Research Agreement), to conduct a mutually agreed upon pilot research project (the Pilot Project). The Amendment provides for milestone payments to the Company of up to $973,482. Under the terms of the Research Agreement, Celgene will provide certain proprietary materials to the Company and the Company will evaluate Celgenes proprietary materials in the Companys metastatic cell line and animal nonclinical models. The milestone schedule calls for Celgene to pay the Company $486,741 upon execution of the Amendment, which the Company has received, and the balance in accordance with the completion of three (3) milestones to Celgenes 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. | Lease Agreement Effective April 6, 2016, the Company entered into an amendment to the Boston Lease (the Boston Lease Amendment) whereby the Company 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. Appointment of New Director Effective as of April 25, 2016, Jerome B. Zeldis, M.D., Ph.D. was appointed to the Companys Board and will serve as Vice Chairman of the Board. Dr. Zeldis is currently the chief medical officer of Celgene Corporation and the chief executive officer of Celgene Global Health. The Board has agreed to grant Dr. Zeldis an aggregate of 100,000 non-qualified stock options. The stock options shall provide for vesting as follows: (i) 50% or 50,000 shares shall vest as follows: (a) 16,668 shares on the first anniversary of the grant date, (b) 16,666 shares on the second anniversary of the grant date, and (c) 16,666 on the third anniversary of the grant date, and (ii) the remaining 50% or 50,000 shares shall vest upon the consummation of a business development or similar joint venture transaction with a strategic partner that contains a minimum upfront payment to the Company of at least $10 million within 18 months of appointment or October 25, 2017. The stock options shall be granted on the date of closing of the Companys next equity or equity-linked financing (the Offering) and provide for an exercise price equal to the effective price per share of the Offering, provided however n the effective price per share in the Offering, then the exercise price shall equal the closing price of the Companys common stock on the grant date. Consulting Services Effective as of April 26, 2016, the Company entered into consulting agreement with a consultant to provide business advisory services, including public relations and market awareness for a two-month term (the Services). The Consultant will be issued 25,000 shares of restricted common stock for the Services and to settle $32,000 of accounts payable. Common Stock and Warrant Financing On May 26, 2016, the Company entered into a subscription agreement (the Subscription Agreement) with a number of accredited investors (collectively, the Investors) pursuant to which the Company may sell up a maximum of (the Maximum Offering) 500 units or $5,000,000, subject to increase of the Maximum Offering by up to 225 units or $2,250,000 (the Over-Allotment), with each unit consisting of (i) 5,000 shares of common stock, and (ii) and five-year warrants (the Warrants) to purchase 2,500 shares of common stock (the Warrant Shares), at a purchase price of $3.00 per share. The offering price is $10,000 per unit. Pursuant to the initial closing of the private placement under the Subscription Agreement, the Company issued an aggregate of 200 units consisting of an aggregate of 100,000 shares of common stock and 50,000 Warrants for an aggregate purchase price of $200,000. After deducting placement agent fees and other offering expenses, the Company received net proceeds of approximately $162,000. Additionally, the Company will issue an aggregate of 10,000 placement agent warrants in substantially the same form as the Warrants. Pursuant to a registration rights agreement entered into by the parties, the Company has agreed to file a registration statement with the SEC providing for the resale of the shares of common stock and the Warrant Shares issued pursuant to the private placement on or before the date which is ninety (90) days after the date of the final closing of the 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. |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
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 29, 2016 and February 28, 2015. | |
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 29, 2016 and February 28, 2015. | |
Debt issuance Costs | We have early adopted ASU-No. 2015-03, Interest Imputation of Interest and are recording debt issuance costs 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 issuance 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 instruments level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Companys 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 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 condition that have not been met at the end of the period are excluded from the computation of the weighted average shares. As of August 31, 2016 and 2015, 10,417 and 31,188 restricted shares of common stock, respectively, 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, shares issuable from convertible securities, and unvested restricted shares. When dilutive, warrants classified as liabilities are included in the potential common shares and any change in fair value of the warrant for the period presented is excluded from the net loss. For the periods ended August 31, 2016 and 2015, the liability warrants were not dilutive. In computing diluted loss per share for the periods ended August 31, 2016 and 2015, 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: August 31, 2016 August 31, 2015 Stock options 1,263,309 371,476 Warrants 1,142,532 847,932 Preferred stock 1,888,552 480,472 Total 4,293,552 1,699,880 | 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 29, 2016 and February 28, 2015, 11,536 and 24,522, 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 29, 2016 and February 28, 2015, 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 29, 2016 February 28, 2015 Stock options 426,976 187,334 Warrants 913,514 580,515 Preferred stock 497,527 210,708 Total 1,838,017 978,557 |
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 more likely than not that some portion or all of the deferred tax assets will not 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 compensation cost for our employees and consultants that perform our research activities, the fees paid to maintain our licenses, the payments to third parties for clinical testing and additional product development, and consumables and other materials used in research and development. Research and development costs were $1,360,739 and $1,266,158 for the years ended February 29, 2016 and February 28, 2015, respectively. | |
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 awards 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 awards are 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 awards 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 over the requisite service period begins 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 managements responsibility to evaluate whether there is substantial doubt about an entitys 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 entitys ability to continue as a going concern. This update is effective for interim and annual reporting periods beginning December 15, 2016; early adoption is permitted. We do not believe the adoption of this standard will have an effect on our 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. |
DESCRIPTION OF BUSINESS AND G29
DESCRIPTION OF BUSINESS AND GOING CONCERN (Policies) | 6 Months Ended |
Aug. 31, 2016 | |
Description Of Business And Going Concern Policies | |
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. These interim unaudited financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States and should be read in conjunction with the Companys audited consolidated financial statements and related footnotes for the year ended February 29, 2016 included in the Companys Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (SEC) on May 31, 2016. These unaudited financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Companys financial position as of August 31, 2016 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading. |
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. The Company has sustained cumulative losses of approximately $25.5 million as of August 31, 2016, has a negative working capital 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 Companys ability to continue as a going concern. 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 Companys 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. Subsequent to August 31, 2016, the Company completed closings of the Additional Unit Private Placement (as defined in Note 3), whereby the Company issued an aggregate of 135 units for 192,000 shares of common stock, 48,300 shares of its Series A-2 Convertible Preferred Stock, convertible into 483,000 shares of common stock, and five-year common stock purchase warrants to purchase 337,500 shares of common stock with an exercise price of $3.00 per share for aggregate gross proceeds of $1.35 million and net proceeds of approximately $1.23 million. See Note 12 - Subsequent Events. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Summary Of Significant Accounting Policies Tables | ||
Anti-dilutive securities | August 31, 2016 August 31, 2015 Stock options 1,263,309 371,476 Warrants 1,142,532 847,932 Preferred stock 1,888,552 480,472 Total 4,293,552 1,699,880 | In computing diluted loss per share for the years ended February 29, 2016 and February 28, 2015, 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 29, 2016 February 28, 2015 Stock options 426,976 187,334 Warrants 913,514 580,515 Preferred stock 497,527 210,708 Total 1,838,017 978,557 |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Stock Options Tables | ||
Weighted average inputs to the Black-Scholes model used to value the stock options granted | August 31, 2016 August 31, 2015 Expected volatility 98.98 102.74 % 113.47 - 123.55 % Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 98.98 102.74 % 113.47 - 123.55 % Expected Term 5.47 years 6.07 years | The weighted average inputs to the Black-Scholes model used to value the stock options granted during the year ended February 29, 2016 and February 28, 2015 are as follows: February 28, 2015 February 29, 2016 Expected volatility 117.00 % 114.78 % Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 1.72 % 1.64 % Expected Term 6.24 years 5.60 years |
Common stock options issued and outstanding | 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 29, 2016 426,976 $ 14.45 $ - 7.98 Granted 880,000 $ 2.02 - - Expired and forfeited (43,667 ) $ 9.66 - - Outstanding and expected to vest at August 31, 2016 1,263,309 $ 5.95 $ - 9.08 Exercisable at August 31, 2016 328,184 $ 12.39 $ - 7.61 | 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 187,342 $ 23.70 $ 20,670 8.29 Granted 243,835 7.26 - - Exercised - - - - Forfeited 534 8.10 - - Expired 3,667 10.20 - - Outstanding and expected to vest at February 29, 2016 426,976 $ 14.45 $ - 7.98 Exercisable at February 29, 2016 187,575 $ 19.71 $ - 6.55 |
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) 124,442 $ 2.00 9.85 655,558 $ 2.00 9.85 - $ 2.19 - 100,000 $ 2.19 9.74 8,375 $ 3.55 9.43 25,125 $ 3.55 9.43 1,068 $ 8.10 8.42 - $ 8.10 - 74,447 $ 8.25 5.72 105,554 $ 8.25 8.76 52,434 $ 10.20 5.35 - $ 10.20 - 3,334 $ 11.25 8.72 3,333 $ 11.25 8.72 4,445 $ 16.50 8.13 15,555 $ 16.50 8.13 14,735 $ 22.50 7.91 30,000 $ 22.50 7.30 44,904 $ 48.75 6.60 - $ 48.75 - 328,184 $ 12.39 7.61 935,125 $ 3.67 9.59 | The following table breaks down exercisable and unexercisable common stock options by exercise price as of February 29, 2016: Exercisable Unexercisable Number of Options Exercise Price Weighted Average Remaining Life (years) Number of Options Exercise Price Weighted Average Remaining Life (years) 13,875 $ 3.55 9.94 41,625 $ 3.55 9.94 1,068 $ 8.10 8.92 - $ 8.10 - 48,335 $ 8.25 4.61 133,333 $ 8.25 9.26 52,434 $ 10.20 5.86 - $ 10.20 - 3,334 $ 11.25 9.22 3,333 $ 11.25 9.22 8,890 $ 16.50 8.63 31,110 $ 16.50 8.63 14,735 $ 22.50 8.42 30,000 $ 22.50 7.80 44,904 $ 48.75 7.10 - $ 48.75 - 187,575 $ 19.71 6.55 239,401 $ 10.33 9.11 |
WARRANTS (Tables)
WARRANTS (Tables) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Warrants Tables | ||
Warrants issued and outstanding | Warrants Weighted average exercise price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at February 29, 2016 913,514 $ 14.56 $ - 3.14 Granted 252,690 2.78 - - Cancelled 23,672 17.00 - - Outstanding at August 31, 2016 1,142,532 $ 11.23 $ - 3.15 | 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 28, 2015 580,604 $ 17.81 $ 72,250 3.33 Granted 354,000 9.68 - - Cancelled/Expired 21,090 22.19 - - Outstanding at February 29, 2016 913,514 $ 14.56 $ - 3.14 |
Warrants exercisable | Exercise Prices Number of shares Weighted average remaining life (years) Exercisable number of shares $ 2.00 134,554 2.78 134,554 $ 2.20 43,636 4.45 43,636 $ 3.00 198,139 1.43 198,139 $ 8.25 39,468 3.68 39,468 $ 10.20 14,668 0.21 14,668 $ 10.50 335,005 3.59 335,005 $ 13.65 99,826 0.42 99,826 $ 15.00 556 3.75 556 $ 18.75 695 3.75 695 $ 21.00 23,334 0.49 23,334 $ 22.50 219,754 1.80 219,754 $ 31.50 29,830 1.62 29,830 $ 37.50 1,733 1.37 1,733 $ 45.00 1,334 0.42 1,334 1,142,532 3.15 1,142,532 | Warrants exercisable at February 29, 2016 are: Exercise Prices Number of shares Weighted average remaining life (years) Exercisable number of shares $ 8.25 163,107 4.63 163,107 $ 10.20 14,668 0.71 14,668 $ 10.50 344,005 4.09 344,005 $ 13.65 99,826 0.92 99,826 $ 15.00 556 4.25 556 $ 18.75 695 4.25 695 $ 21.00 38,006 0.68 38,006 $ 22.50 219,754 2.28 219,754 $ 31.50 29,830 2.12 29,830 $ 37.50 1,733 1.87 1,733 $ 45.00 1,334 0.92 1,334 913,514 913,514 |
NOTE PAYABLE (Tables)
NOTE PAYABLE (Tables) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Note Payable Tables | ||
Summary of notes payable | Note Payable Discount Voluntary Exchange Feature Note Payable, Net 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 Additional debt discount upon Note amendments 75,000 (224,681 ) 105,586 (44,095 ) Amortization of debt discount - 652,879 - 652,879 Change in fair value of voluntary exchange feature - - (456,868 ) (456,868 ) August 31, 2016 balance $ 2,025,000 $ (390,015 ) $ 157,616 $ 1,792,601 | The following table summarizes the notes payable: Notes Payable Discount Put Exchange Feature Notes Payable, Net February 28, 2015 balance $ - $ - $ - $ - 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 - - 10,015 10,015 February 29, 2016 balance $ 1,800,000 $ (743,282) $ 476,402 $ 1,533,120 |
Fair value measurements | Note Payable Warrants Series B Warrants Additional Unit Private Placement Warrants Total Fair value at February 29, 2016 $ 188,351 $ 46,110 $ - $ 234,461 Additions 15,225 - 38,834 54,059 Change in fair value: (49,874 ) (11,875 ) - (61,749 ) Fair value at August 31, 2016 $ 153,702 $ 34,235 $ 38,834 $ 226,771 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: (265,438 ) (191,430 ) (456,868 ) Fair value, August 31, 2016: $ 74,541 $ 83,075 $ 157,616 | The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative warrant liability: Notes Payable Warrants Series B Warrants Total Fair value, February 28, 2015: $ 273,000 $ 273,000 Additions $ 311,057 - 311,057 Change in fair value: (122,706) (226,890) (349,596) Fair value, February 29, 2016: $ 188,351 $ 46,110 $ 234,461 The following table sets forth the changes in the estimated fair value for our Level 3 classified contingent put derivative liability: Promissory Note, as amended OID Notes Total Fair value, February 28, 2015: $ - $ - $ - Additions 331,546 134,841 466,387 Change in fair value: 8,433 1,582 10,015 Fair value, February 29, 2016: $ 339,979 $ 133,259 $ 476,402 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Fair Value Disclosures [Abstract] | ||
Changes in the estimated fair value for our Level 3 classified derivative warrant liability | Note Payable Warrants Series B Warrants Additional Unit Private Placement Warrants Total Fair value at February 29, 2016 $ 188,351 $ 46,110 $ - $ 234,461 Additions 15,225 - 38,834 54,059 Change in fair value: (49,874 ) (11,875 ) - (61,749 ) Fair value at August 31, 2016 $ 153,702 $ 34,235 $ 38,834 $ 226,771 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: (265,438 ) (191,430 ) (456,868 ) Fair value, August 31, 2016: $ 74,541 $ 83,075 $ 157,616 | The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative warrant liability: Notes Payable Warrants Series B Warrants Total Fair value, February 28, 2015: $ 273,000 $ 273,000 Additions $ 311,057 - 311,057 Change in fair value: (122,706) (226,890) (349,596) Fair value, February 29, 2016: $ 188,351 $ 46,110 $ 234,461 The following table sets forth the changes in the estimated fair value for our Level 3 classified contingent put derivative liability: Promissory Note, as amended OID Notes Total Fair value, February 28, 2015: $ - $ - $ - Additions 331,546 134,841 466,387 Change in fair value: 8,433 1,582 10,015 Fair value, February 29, 2016: $ 339,979 $ 133,259 $ 476,402 |
EQUIPMENT (Tables)
EQUIPMENT (Tables) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Equipment | Estimated Useful Lives August 31, 2016 February 29, 2016 Research equipment 7 years $ 590,373 $ 590,373 Computer equipment 5 years 76,075 76,075 666,448 666,448 Accumulated depreciation and amortization (216,928 ) (169,396 ) Equipment, net $ 449,520 $ 497,052 | Equipment consists of the following: Estimated Useful lives February 29, 2016 February 28, 2015 Research equipment 7 years $ 590,373 $ 548,991 Computer and software equipment 5 years 76,075 73,704 666,448 622,695 Accumulated depreciation and amortization (169,396) (96,089) Equipment, net $ 497,052 $ 526,606 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Accounting Policies [Abstract] | ||
Anti-dilutive securities | August 31, 2016 August 31, 2015 Stock options 1,263,309 371,476 Warrants 1,142,532 847,932 Preferred stock 1,888,552 480,472 Total 4,293,552 1,699,880 | In computing diluted loss per share for the years ended February 29, 2016 and February 28, 2015, 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 29, 2016 February 28, 2015 Stock options 426,976 187,334 Warrants 913,514 580,515 Preferred stock 497,527 210,708 Total 1,838,017 978,557 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Income Taxes Tables | |
Schedule of Effective Income Tax Rate Reconciliation | 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 29, 2016 February 28, 2015 Income tax benefit at the federal statutory rate 34 % 34 % Permanent differences (2) % (3 )% Increase in valuation allowance (32) % (31 )% Provision for income tax 0 % 0 % |
Schedule of Deferred Tax Assets and Liabilities | At February 29, 2016, and February 28, 2015, d eferred tax assets (liabilities) consisted of the following: February 29, February 28, 2016 2015 Accrued compensation $ 87,969 $ Accrued interest 23,520 Net operating loss carryovers 5,555,259 4,058,611 Research and development credits 130,422 Capital loss carryover 25,421 Stock compensation 1,491,106 1,183,918 7,313,697 5,242,529 Depreciation (76,987 ) (10,273 ) 7,236,710 5,232,256 Less: Valuation allowance (7,236,710 ) (5,232,256 ) Net deferred tax asset $ $ |
ORGANIZATION, BASIS OF PRESEN38
ORGANIZATION, BASIS OF PRESENTATION AND GOING CONCERN (Details Narrative) - USD ($) | 6 Months Ended | ||
Aug. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2015 | |
Description Of Business And Going Concern Policies | |||
Date of incorporation | Mar. 28, 2007 | ||
State of incorporation | Nevada | ||
Accumulated deficit | $ (25,476,618) | $ (23,377,328) | $ (18,723,149) |
DESCRIPTION OF BUSINESS AND G39
DESCRIPTION OF BUSINESS AND GOING CONCERN (Details Narrative) - USD ($) | 6 Months Ended | ||
Aug. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2015 | |
Description Of Business And Going Concern Policies | |||
Date of incorporation | Mar. 28, 2007 | ||
State of incorporation | Nevada | ||
Going Concern | |||
Accumulated deficit | $ (25,476,618) | $ (23,377,328) | $ (18,723,149) |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Anti-dilutive securities | 4,293,552 | 1,699,880 | 1,838,017 | 978,557 |
Stock Options [Member] | ||||
Anti-dilutive securities | 1,263,309 | 371,476 | 426,976 | 187,334 |
Warrants [Member] | ||||
Anti-dilutive securities | 1,142,532 | 847,932 | 913,514 | 580,515 |
Preferred Stock [Member] | ||||
Anti-dilutive securities | 1,888,552 | 480,472 | 497,527 | 210,708 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Summary Of Significant Accounting Policies Details Narrative | ||||||
Research and development costs | $ 356,168 | $ 317,968 | $ 627,291 | $ 537,294 | $ 1,360,739 | $ 1,266,158 |
LICENSE AGREEMENTS AND COMMIT42
LICENSE AGREEMENTS AND COMMITMENTS (Details Narrative) | 12 Months Ended |
Feb. 29, 2016USD ($) | |
Rent payable, Boston, monthly installment rate | $ 10,280 |
Rent payable, second year | 10,588 |
Rent payable, New York, monthly installment rate | 2,400 |
License Agreement [Member] | |
License maintenance fee due at one year | 75,000 |
License maintenance fee due at two years | 100,000 |
License Agreement 2 [Member] | |
License maintenance fee due at one year | 30,000 |
License maintenance fee due at two years | 50,000 |
License maintenance fee due at three years | 75,000 |
License maintenance fee due at four years | 100,000 |
License Agreement 3 [Member] | |
License maintenance fee due at one year | 15,000 |
License maintenance fee due at two years | 25,000 |
License maintenance fee due at three years | 37,500 |
License maintenance fee due at four years | 50,000 |
License Agreement 4 [Member] | |
License maintenance fee due at one year | 10,000 |
License maintenance fee due at two years | 15,000 |
License maintenance fee due at three years | 15,000 |
License maintenance fee due at four years | $ 20,000 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - USD ($) | Aug. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2015 |
Par value of shares | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Authorized shares of common stock | 150,000,000 | 150,000,000 | 150,000,000 |
Dividend payable | $ 48,317 | $ 16,767 | |
Series B Preferred Stock [Member] | |||
Authorized shares of preferred stock | 1,000 | 1,000 | 1,000 |
Stated value per share | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Liquidation preference | $ 3,700,000 | ||
Series A Preferred Stock [Member] | |||
Authorized shares of preferred stock | 1,000,000 | 1,000,000 | 1,000,000 |
Stated value per share | $ 0.0001 | $ 0.0001 | $ .0001 |
EQUITY ISSUANCES (Details Narra
EQUITY ISSUANCES (Details Narrative) - shares | 6 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Equity [Abstract] | ||
Common stock issued for services | 25,000 | 28,001 |
STOCK OPTIONS (Details)
STOCK OPTIONS (Details) - Option [Member] | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Expected volatility, minimum | 98.98% | 113.47% | ||
Expected volatility, maximum | 102.74% | 123.55% | ||
Expected volatility | 117.00% | 114.78% | ||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate, minimum | 98.98% | 111.347% | ||
Risk-free interest rate, maximum | 102.74% | 123.55% | ||
Risk-free interest rate | 1.72% | 1.64% | ||
Expected Term | 5 years 5 months 19 days | 6 years 25 days | 6 years 2 months 26 days | 5 years 7 months 6 days |
STOCK OPTIONS (Details 1)
STOCK OPTIONS (Details 1) - Option [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Options Outstanding | ||
Outstanding at Beginning of Period | 426,976 | 187,342 |
Granted | 880,000 | 243,835 |
Exercised | (43,667) | 0 |
Forfeited | 534 | |
Expired | 3,667 | |
Outstanding and expected to vest at End of Period | 1,263,309 | 426,976 |
Options exercisable | 328,184 | 187,575 |
Weighted Average Exercise Price | ||
Outstanding at Beginning of Period | $ 14.45 | $ 23.70 |
Granted | 2.02 | 7.26 |
Exercised | 9.66 | 0 |
Forfeited | 8.10 | |
Expired | 10.20 | |
Outstanding and expected to vest at End of Period | 5.95 | 14.45 |
Exercisable at End of period | $ 12.39 | $ 19.71 |
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 | $ 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 | 9 years 29 days | 7 years 11 months 23 days |
Exercisable at End of period | 7 years 7 months 10 days | 6 years 6 months 18 days |
STOCK OPTIONS (Details 2)
STOCK OPTIONS (Details 2) - $ / shares | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Option [Member] | ||
Options Exercisable | ||
Options exercisable | 328,184 | |
Exercise Price | $ 12.39 | |
Weighted Average Remaining Life (years) | 7 years 7 months 10 days | |
Options Unexercisable | ||
Number of Options | 935,125 | |
Exercise Price | $ 3.67 | |
Weighted Average Remaining Life (years) | 9 years 7 months 2 days | |
Exercise Price 1 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 124,442 | |
Exercise Price | $ 2 | |
Weighted Average Remaining Life (years) | 9 years 10 months 6 days | |
Exercise Price 1 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 655,558 | |
Exercise Price | $ 2 | |
Weighted Average Remaining Life (years) | 9 years 10 months 6 days | |
Exercise Price 2 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 0 | |
Exercise Price | $ 2.19 | |
Weighted Average Remaining Life (years) | 0 years | |
Exercise Price 2 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 100,000 | |
Exercise Price | $ 2.19 | |
Weighted Average Remaining Life (years) | 9 years 8 months 27 days | |
Exercise Price 3 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 8,375 | |
Exercise Price | $ 3.55 | |
Weighted Average Remaining Life (years) | 9 years 5 months 5 days | |
Exercise Price 3 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 25,125 | |
Exercise Price | $ 3.55 | |
Weighted Average Remaining Life (years) | 9 years 5 months 5 days | |
Exercise Price 4 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 1,068 | |
Exercise Price | $ 8.1 | |
Weighted Average Remaining Life (years) | 8 years 5 months 1 day | |
Exercise Price 4 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 0 | |
Exercise Price | $ 8.1 | |
Weighted Average Remaining Life (years) | 0 years | |
Exercise Price 5 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 74,447 | |
Exercise Price | $ 8.25 | |
Weighted Average Remaining Life (years) | 5 years 8 months 19 days | |
Exercise Price 5 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 105,554 | |
Exercise Price | $ 8.25 | |
Weighted Average Remaining Life (years) | 8 years 9 months 4 days | |
Exercise Price 6 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 52,434 | |
Exercise Price | $ 10.2 | |
Weighted Average Remaining Life (years) | 5 years 4 months 6 days | |
Exercise Price 6 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 0 | |
Exercise Price | $ 10.2 | |
Weighted Average Remaining Life (years) | 0 years | |
Exercise Price 7 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 3,334 | |
Exercise Price | $ 11.25 | |
Weighted Average Remaining Life (years) | 8 years 8 months 19 days | |
Exercise Price 7 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 3,333 | |
Exercise Price | $ 11.25 | |
Weighted Average Remaining Life (years) | 8 years 8 months 19 days | |
Exercise Price 8 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 4,445 | |
Exercise Price | $ 16.5 | |
Weighted Average Remaining Life (years) | 8 years 1 month 17 days | |
Exercise Price 8 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 15,555 | |
Exercise Price | $ 16.5 | |
Weighted Average Remaining Life (years) | 8 years 1 month 17 days | |
Exercise Price 9 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 14,735 | |
Exercise Price | $ 22.5 | |
Weighted Average Remaining Life (years) | 7 years 10 months 28 days | |
Exercise Price 9 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 30,000 | |
Exercise Price | $ 22.5 | |
Weighted Average Remaining Life (years) | 7 years 3 months 18 days | |
Exercise Price 10 | Option [Member] | Exercisable | ||
Options Exercisable | ||
Options exercisable | 44,904 | |
Exercise Price | $ 48.75 | |
Weighted Average Remaining Life (years) | 6 years 7 months 6 days | |
Exercise Price 10 | Option [Member] | Unexercisable | ||
Options Unexercisable | ||
Number of Options | 0 | |
Exercise Price | $ 48.75 | |
Weighted Average Remaining Life (years) | 0 years | |
Option [Member] | ||
Options Exercisable | ||
Options exercisable | 328,184 | 187,575 |
Exercise Price | $ 12.39 | $ 19.71 |
Weighted Average Remaining Life (years) | 7 years 7 months 10 days | 6 years 6 months 18 days |
Options Unexercisable | ||
Number of Options | 239,401 | |
Exercise Price | $ 10.33 | |
Weighted Average Remaining Life (years) | 9 years 1 month 10 days | |
Option [Member] | $3.55 | ||
Options Exercisable | ||
Options exercisable | 13,875 | |
Exercise Price | $ 3.55 | |
Weighted Average Remaining Life (years) | 9 years 11 months 8 days | |
Options Unexercisable | ||
Number of Options | 41,625 | |
Exercise Price | $ 3.55 | |
Weighted Average Remaining Life (years) | 9 years 11 months 8 days | |
Option [Member] | $8.10 | ||
Options Exercisable | ||
Options exercisable | 1,068 | |
Exercise Price | $ 8.1 | |
Weighted Average Remaining Life (years) | 8 years 11 months 1 day | |
Options Unexercisable | ||
Number of Options | 0 | |
Exercise Price | $ 8.1 | |
Option [Member] | $8.25 | ||
Options Exercisable | ||
Options exercisable | 48,335 | |
Exercise Price | $ 8.25 | |
Weighted Average Remaining Life (years) | 4 years 7 months 10 days | |
Options Unexercisable | ||
Number of Options | 133,333 | |
Exercise Price | $ 8.25 | |
Weighted Average Remaining Life (years) | 9 years 3 months 4 days | |
Option [Member] | $10.20 | ||
Options Exercisable | ||
Options exercisable | 52,434 | |
Exercise Price | $ 10.2 | |
Weighted Average Remaining Life (years) | 5 years 10 months 10 days | |
Options Unexercisable | ||
Number of Options | 0 | |
Exercise Price | $ 10.2 | |
Option [Member] | $11.25 | ||
Options Exercisable | ||
Options exercisable | 3,334 | |
Exercise Price | $ 11.25 | |
Weighted Average Remaining Life (years) | 9 years 2 months 19 days | |
Options Unexercisable | ||
Number of Options | 3,333 | |
Exercise Price | $ 11.25 | |
Weighted Average Remaining Life (years) | 9 years 2 months 19 days | |
Option [Member] | $16.50 | ||
Options Exercisable | ||
Options exercisable | 8,890 | |
Exercise Price | $ 16.5 | |
Weighted Average Remaining Life (years) | 8 years 7 months 17 days | |
Options Unexercisable | ||
Number of Options | 31,110 | |
Exercise Price | $ 16.5 | |
Weighted Average Remaining Life (years) | 8 years 7 months 17 days | |
Option [Member] | $22.50 | ||
Options Exercisable | ||
Options exercisable | 14,735 | |
Exercise Price | $ 22.5 | |
Weighted Average Remaining Life (years) | 8 years 5 months 1 day | |
Options Unexercisable | ||
Number of Options | 30,000 | |
Exercise Price | $ 22.5 | |
Weighted Average Remaining Life (years) | 7 years 9 months 18 days | |
Option [Member] | $48.75 | ||
Options Exercisable | ||
Options exercisable | 44,904 | |
Exercise Price | $ 48.75 | |
Weighted Average Remaining Life (years) | 7 years 1 month 6 days | |
Options Unexercisable | ||
Number of Options | 0 | |
Exercise Price | $ 48.75 |
STOCK OPTIONS (Details Narrativ
STOCK OPTIONS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | |
Stock based compensation expense | $ 362,326 | $ 492,359 | $ 585,739 | ||
Option [Member] | |||||
Stock based compensation expense | $ 243,240 | $ 183,233 | 348,076 | 252,168 | |
Unrecognized compensation expense, expected to vest | 611,000 | $ 611,000 | |||
Period for compensation expense recognition | 1 year 3 months 18 days | ||||
General and Administrative Expense [Member] | |||||
Stock based compensation expense | 200,032 | 159,002 | $ 287,860 | 227,937 | |
Research and Development Expense [Member] | |||||
Stock based compensation expense | $ 43,208 | $ 24,231 | $ 60,416 | $ 24,231 |
WARRANTS (Details)
WARRANTS (Details) - Stock Warrants [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Warrants Outstanding | ||
Outstanding at Beginning of Period | 913,514 | 580,604 |
Granted | 252,690 | 354,000 |
Cancelled/Expired | 23,672 | 21,090 |
Outstanding at End of Period | 1,142,532 | 913,514 |
Weighted Average Exercise Price | ||
Outstanding at Beginning of Period | $ 14.56 | $ 17.81 |
Granted | 2.78 | 9.68 |
Cancelled/Expired | 17 | 22.19 |
Outstanding at End of Period | $ 11.23 | $ 14.56 |
Average Intrensic 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 | 3 years 1 month 24 days | 3 years 1 month 20 days |
WARRANTS (Details 1)
WARRANTS (Details 1) - Warrants [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Number of shares | 1,142,532 | 913,514 |
Weighted average remaining life (years) | 3 years 1 month 24 days | |
Exercisable number of shares | 1,142,532 | 913,514 |
$ 8.25 | ||
Exercise prices | $ 8.25 | |
Number of shares | 163,107 | |
Weighted average remaining life (years) | 4 years 7 months 17 days | |
Exercisable number of shares | 163,107 | |
$ 10.20 | ||
Exercise prices | $ 10.2 | |
Number of shares | 14,668 | |
Weighted average remaining life (years) | 8 months 16 days | |
Exercisable number of shares | 14,668 | |
$ 10.50 | ||
Exercise prices | $ 10.5 | |
Number of shares | 344,005 | |
Weighted average remaining life (years) | 4 years 1 month 2 days | |
Exercisable number of shares | 344,005 | |
$ 13.65 | ||
Exercise prices | $ 13.65 | |
Number of shares | 99,826 | |
Weighted average remaining life (years) | 11 months 1 day | |
Exercisable number of shares | 99,826 | |
$ 15 | ||
Exercise prices | $ 15 | |
Number of shares | 556 | |
Weighted average remaining life (years) | 4 years 3 months | |
Exercisable number of shares | 556 | |
$ 18.75 | ||
Exercise prices | $ 18.75 | |
Number of shares | 695 | |
Weighted average remaining life (years) | 4 years 3 months | |
Exercisable number of shares | 695 | |
$ 21 | ||
Exercise prices | $ 21 | |
Number of shares | 38,006 | |
Weighted average remaining life (years) | 8 months 5 days | |
Exercisable number of shares | 38,006 | |
$ 22.50 | ||
Exercise prices | $ 22.5 | |
Number of shares | 219,754 | |
Weighted average remaining life (years) | 2 years 3 months 11 days | |
Exercisable number of shares | 219,754 | |
$ 31.50 | ||
Exercise prices | $ 31.5 | |
Number of shares | 29,830 | |
Weighted average remaining life (years) | 2 years 1 month 13 days | |
Exercisable number of shares | 29,830 | |
$ 37.50 | ||
Exercise prices | $ 37.5 | |
Number of shares | 1,733 | |
Weighted average remaining life (years) | 1 year 10 months 13 days | |
Exercisable number of shares | 1,733 | |
$ 45 | ||
Exercise prices | $ 45 | |
Number of shares | 1,334 | |
Weighted average remaining life (years) | 11 months 1 day | |
Exercisable number of shares | 1,334 | |
Exercise Price 1 | ||
Exercise prices | $ 2 | |
Number of shares | 134,554 | |
Weighted average remaining life (years) | 2 years 9 months 11 days | |
Exercisable number of shares | 134,554 | |
Exercise Price 2 | ||
Exercise prices | $ 2.2 | |
Number of shares | 43,636 | |
Weighted average remaining life (years) | 4 years 5 months 12 days | |
Exercisable number of shares | 43,636 | |
Exercise Price 3 | ||
Exercise prices | $ 3 | |
Number of shares | 198,139 | |
Weighted average remaining life (years) | 1 year 5 months 5 days | |
Exercisable number of shares | 198,139 | |
Exercise Price 4 | ||
Exercise prices | $ 8.25 | |
Number of shares | 39,468 | |
Weighted average remaining life (years) | 3 years 8 months 5 days | |
Exercisable number of shares | 39,468 | |
Exercise Price 5 | ||
Exercise prices | $ 10.2 | |
Number of shares | 14,668 | |
Weighted average remaining life (years) | 2 months 16 days | |
Exercisable number of shares | 14,668 | |
Exercise Price 6 | ||
Exercise prices | $ 10.5 | |
Number of shares | 335,005 | |
Weighted average remaining life (years) | 3 years 7 months 2 days | |
Exercisable number of shares | 335,005 | |
Exercise Price 7 | ||
Exercise prices | $ 13.65 | |
Number of shares | 99,826 | |
Weighted average remaining life (years) | 5 months 1 day | |
Exercisable number of shares | 99,826 | |
Exercise Price 8 | ||
Exercise prices | $ 15 | |
Number of shares | 556 | |
Weighted average remaining life (years) | 3 years 9 months | |
Exercisable number of shares | 556 | |
Exercise Price 9 | ||
Exercise prices | $ 18.75 | |
Number of shares | 695 | |
Weighted average remaining life (years) | 3 years 9 months | |
Exercisable number of shares | 695 | |
Exercise Price 10 | ||
Exercise prices | $ 21 | |
Number of shares | 23,334 | |
Weighted average remaining life (years) | 5 months 26 days | |
Exercisable number of shares | 23,334 | |
Exercise Price 11 | ||
Exercise prices | $ 22.5 | |
Number of shares | 219,754 | |
Weighted average remaining life (years) | 1 year 9 months 18 days | |
Exercisable number of shares | 219,754 | |
Exercise Price 12 | ||
Exercise prices | $ 31.5 | |
Number of shares | 29,830 | |
Weighted average remaining life (years) | 1 year 7 months 13 days | |
Exercisable number of shares | 29,830 | |
Exercise Price 13 | ||
Exercise prices | $ 37.5 | |
Number of shares | 1,733 | |
Weighted average remaining life (years) | 1 year 4 months 13 days | |
Exercisable number of shares | 1,733 | |
Exercise Price 14 | ||
Exercise prices | $ 45 | |
Number of shares | 1,334 | |
Weighted average remaining life (years) | 5 months 1 day | |
Exercisable number of shares | 1,334 |
NOTE PAYABLE (Details)
NOTE PAYABLE (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Note Payable | ||
Note Payable, beginning of period | $ 1,800,000 | $ 0 |
Issuance of note | 150,000 | 1,800,000 |
Additional debt discount upon Note amendments | 75,000 | |
Amortization of debt discount | 0 | |
Change in value | 0 | 0 |
Note payable, end of period | 2,025,000 | 1,800,000 |
Discount [Member] | ||
Note Payable | ||
Note Payable, beginning of period | (743,282) | 0 |
Issuance of note | (74,931) | (996,595) |
Additional debt discount upon Note amendments | (224,681) | |
Amortization of debt discount | 652,879 | 253,313 |
Change in value | 0 | 0 |
Note payable, end of period | (390,015) | (743,282) |
Put Exchange Feature [Member] | ||
Note Payable | ||
Note Payable, beginning of period | 476,402 | 0 |
Issuance of note | 32,496 | 466,387 |
Additional debt discount upon Note amendments | 105,586 | |
Amortization of debt discount | 0 | 0 |
Change in value | (456,868) | 10,015 |
Note payable, end of period | 157,616 | 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 |
Additional debt discount upon Note amendments | (44,095) | |
Amortization of debt discount | 652,879 | 253,313 |
Change in value | (456,868) | 10,015 |
Note payable, end of period | $ 1,792,601 | $ 1,533,120 |
NOTE PAYABLE (Details Narrative
NOTE PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Aug. 31, 2016 | Feb. 29, 2016 | |
Amortization of debt discount | $ 0 | ||
OID Note | |||
Note interest expense | $ 248,113 | $ 413,703 | |
Promissory Note | |||
Note interest expense | 153,174 | 291,117 | |
Amortization of debt discount | $ 125,174 | $ 239,177 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Aug. 31, 2016 | Feb. 29, 2016 | |
Fair value of Level 3 derivative warrant liability, beginning of period | $ 234,461 | $ 273,000 |
Additions | 311,057 | |
Change in fair value: | (349,596) | |
Fair value at end of period | 234,461 | |
Promissory Note | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 339,979 | 0 |
Additions | 0 | 331,546 |
Change in fair value: | (265,438) | 8,433 |
Fair value at end of period | 74,541 | 339,979 |
OID Note | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 136,423 | 0 |
Additions | 138,082 | 134,841 |
Change in fair value: | (191,430) | 1,582 |
Fair value at end of period | 83,075 | 136,423 |
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: | (49,874) | (122,706) |
Fair value at end of period | 153,702 | 188,351 |
Total | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 476,402 | 0 |
Additions | 466,387 | |
Change in fair value: | 10,015 | |
Fair value at end of period | 476,402 | |
Derivative Warrant Liability | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 234,461 | |
Additions | 54,059 | |
Change in fair value: | (61,749) | |
Fair value at end of period | 226,771 | 234,461 |
Put Exchange Feature Liability | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 476,402 | |
Additions | 138,082 | |
Change in fair value: | (456,858) | |
Fair value at end of period | 157,616 | 476,402 |
Additional Unit Private Placement Warrants | ||
Fair value of Level 3 derivative warrant liability, beginning of period | 0 | |
Additions | 38,834 | |
Change in fair value: | 0 | |
Fair value at end of period | 38,834 | 0 |
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: | (11,875) | (226,890) |
Fair value at end of period | $ 34,235 | $ 46,110 |
EQUIPMENT (Details)
EQUIPMENT (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Aug. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2015 | |
Equipment, gross | $ 666,448 | $ 666,448 | $ 622,695 |
Accumulated depreciation and amortization | (216,928) | (169,396) | (96,089) |
Equipment, net | $ 449,520 | $ 497,052 | 526,606 |
Computer Equipment [Member] | |||
Estimated useful life | 5 years | 5 years | |
Equipment, gross | $ 76,075 | $ 76,075 | 73,704 |
Research Equipment [Member] | |||
Estimated useful life | 7 years | 7 years | |
Equipment, gross | $ 590,373 | $ 590,373 | $ 548,991 |
EQUIPMENT (Details Narrative)
EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Depreciation | $ 23,766 | $ 23,812 | $ 47,532 | $ 48,657 | $ 96,188 | $ 61,897 |
Research and Development Expense [Member] | ||||||
Depreciation | 20,126 | 20,126 | 40,252 | 41,286 | ||
General and Administrative Expense [Member] | ||||||
Depreciation | $ 3,640 | $ 3,686 | $ 7,280 | $ 7,371 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - shares | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Anti-dilutive securities | 4,293,552 | 1,699,880 | 1,838,017 | 978,557 |
Warrants [Member] | ||||
Anti-dilutive securities | 1,142,532 | 847,932 | 913,514 | 580,515 |
Stock Options [Member] | ||||
Anti-dilutive securities | 1,263,309 | 371,476 | 426,976 | 187,334 |
Preferred Stock [Member] | ||||
Anti-dilutive securities | 1,888,552 | 480,472 | 497,527 | 210,708 |
NET LOSS PER SHARE (Details Nar
NET LOSS PER SHARE (Details Narrative) - shares | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Anti-dilutive securities | 4,293,552 | 1,699,880 | 1,838,017 | 978,557 |
Warrants [Member] | ||||
Anti-dilutive securities | 1,142,532 | 847,932 | 913,514 | 580,515 |
Stock Options [Member] | ||||
Anti-dilutive securities | 1,263,309 | 371,476 | 426,976 | 187,334 |
Preferred Stock [Member] | ||||
Anti-dilutive securities | 1,888,552 | 480,472 | 497,527 | 210,708 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Income Taxes Details | ||
Income tax benefit at the federal statutory rate | 34.00% | 34.00% |
Permanent differences | (2.00%) | (3.00%) |
Increase in valuation allowance | (32.00%) | (31.00%) |
Provision for income tax | 0.00% | 0.00% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Income Taxes Details 1 | ||
Accrued compensation | $ 87,969 | |
Accrued interest | 23,520 | |
Net operating loss carryovers | 5,555,259 | 4,058,611 |
Research and development credits | 130,422 | |
Capital loss carryover | 25,421 | |
Stock-based compensation | 1,491,106 | 1,183,918 |
Total | 7,313,697 | 5,242,529 |
Depreciation | (76,987) | (10,273) |
Total | 7,236,710 | 5,232,256 |
Less: Valuation allowance | (7,236,710) | (5,232,256) |
Net deferred tax asset |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Income Taxes Details Narrative | ||
Change in valuation allowance | $ 2,000,000 | $ 1,500,000 |
Federal and state net operating loss carry-forwards | $ 14,700,000 | $ 10,400,000 |