| Capital Stock | 9. Capital
Stock Reverse
Split (Stock Consolidation) of our Common Stock As
indicated in Note 2, Basis of Presentation FINRA . Each reference to shares of common stock or the price per share of common stock
in these financial statements is post-Stock Consolidation, and reflects the 1-for-20 adjustment as a result of the Stock Consolidation. Series
A Preferred Stock In
December 2011, our Board of Directors authorized the creation of a series of up to 500,000 shares of Series A Preferred, par value
$0.001 ( Series A Preferred The
Series A Preferred has no separate dividend rights, however, whenever the Board of Directors declares a dividend on the common
stock, each holder of record of a share of Series A Preferred shall be entitled to receive an amount equal to such dividend declared
on one share of common stock multiplied by the number of shares of common stock into which such share of Series A Preferred could
be converted on the Record Date. Except
with respect to transactions upon which the Series A Preferred shall be entitled to vote separately as a class, the Series A Preferred
has no voting rights. The restricted common stock into which the Series A Preferred is convertible shall, upon issuance, have
all of the same voting rights as other issued and outstanding shares of our common stock. In
the event of the liquidation, dissolution or winding up of the affairs of the Company, after payment or provision for payment
of our debts and other liabilities, the holders of Series A Preferred then outstanding shall be entitled to receive an amount
per share of Series A Preferred calculated by taking the total amount available for distribution to holders of all of our outstanding
common stock before deduction of any preference payments for the Series A Preferred, divided by the total of (x), all of the then
outstanding shares of our common stock, plus (y) all of the shares of our common stock into which all of the outstanding shares
of the Series A Preferred can be converted before any payment shall be made or any assets distributed to the holders of the common
stock or any other junior stock. At
March 31, 2016 and 2015, there were 500,000 restricted shares of Series A Preferred outstanding, convertible into 750,000 shares
of our common stock at the option of the holder, all held by PLTG or its affiliates and a third party to whom PLTG transferred
certain of the shares. PLTG initially acquired the Series A Preferred pursuant to certain transactions with us that occurred between
December 2011 and June 2012, the latter of which involved, among other considerations, the exchange of common stock then owned
by PLTG for shares of Series A Preferred. The common shares exchanged for shares of Series A Preferred are treated
as treasury stock in the accompanying Consolidated Balance Sheets at March 31, 2016 and 2015. Creation
of Series B Preferred Stock On
July 17, 2014, our Board of Directors authorized the creation of a class of Series B Preferred Stock. On May 7, 2015, we
filed a Certificate of Designation of the Relative Rights and Preferences of the Series B 10% Preferred Stock of VistaGen Therapeutics,
Inc. ( Certificate of Designation Each
share of Series B Preferred is convertible, at the option of the holder ( Voluntary Conversion Automatic Conversion Conversion Prior
to Conversion, shares of Series B Preferred accrue in-kind dividends (payable only in unregistered shares of our common stock)
at a rate of 10% per annum ( Accrued Dividends Refer
to Note 16, Subsequent Events Creation
of Series C Preferred Stock On
January 13, 2016, our Board authorized the creation of, and effective January 25, 2016, we filed a Certificate of Designation
of the Relative Rights and Preferences of the Series C Convertible Preferred Stock of VistaGen Therapeutics, Inc. (the Series
C Preferred Certificate of Designation Series C Preferred 2014
Unit Private Placement Between
late-March 2014 and March 31, 2015, we entered into securities purchase agreements with accredited investors, including PLTG,
pursuant to which we sold units to such accredited investors in private placement transactions ( 2014 Units 2014 Unit Stock) 2014 Unit Warrants We
allocated the proceeds from the sale of the 2014 Units to the various securities based on their relative fair values on the dates
of the sales. As described in Note 8, Convertible Promissory Notes and Other Notes Payable
Unit
Warrants Aggregate
Allocation of Proceeds
Based on Relative
Fair Value of:
Weighted
Average Issuance Date Valuation Assumptions Per
Aggregate
Warrant Risk
free Share Fair Fair Value
Aggregate Proceeds
Shares Market Exercise Term Interest Dividend Value
of of
Unit of
Unit Unit
Unit Unit
Issued Price Price (Years) Rate Volatility Rate Warrant Warrants Sales Stock Warrant Note
282,850 $ 9.28 $ 10.00 2.17 0.62 % 72.36 % 0.00 % $ 3.63 $ 1,027,000 $ 3,133,500 $ 1,122,400 $ 454,200 $ 1,556,900 Between
April 1, 2015 and May 14, 2015, we entered into additional securities purchase agreements with accredited investors pursuant
to which we sold 2014 Units to such accredited investors for aggregate cash proceeds of $280,000, such 2014 Units consisting of
(i) 2014 Unit Notes in the aggregate face amount of $280,000 due between April 30, 2015 and May 15, 2015 or automatically convertible
into securities issuable upon our consummation of a Qualified Financing, as defined in the note; (ii) an aggregate of 33,000 restricted
shares 2014 Unit Stock; and (iii) 2014 Unit Warrants exercisable through December 31, 2016 to purchase an aggregate of 24,250
restricted shares of our common stock at an exercise price of $10.00 per share. As
described above, we allocated the proceeds from the private placement sales of the 2014 Units sold during the fiscal year ended
March 31, 2016 to the various securities based on their relative fair values on the dates of the sales. We calculated the fair
value of these 2014 Unit Warrants using the Black Scholes Option Pricing Model and the weighted average assumptions indicated
in the table below. The table below also presents the aggregate allocation of the 2014 Unit sales proceeds based on the relative
fair values of the 2014 Unit Stock, 2014 Unit Warrants and 2014 Unit Notes as of their respective 2014 Unit sales dates during
the fiscal year ended March 31, 2016.
Unit
Warrants Aggregate
Allocation of Proceeds
Based on Relative
Fair Value of:
Weighted
Average Issuance Date Valuation Assumptions Per
Aggregate
Warrant Risk
free Share Fair Fair Value
Aggregate Proceeds
Shares Market Exercise Term Interest Dividend Value
of of
Unit of
Unit Unit
Unit Unit
Issued Price Price (Years) Rate Volatility Rate Warrant Warrants Sales Stock Warrant Note
24,250 $ 10.00 $ 10.00 1.70 0.45 % 73.19 % 0.00 % $ 3.69 $ 89,600 $ 280,000 $ 128,900 $ 2,057,900 $ 118,200 In
aggregate, between late-March 2014 and May 14, 2015, we entered into securities purchase agreements with accredited investors for
the 2014 Unit Private Placement pursuant to which we sold 2014 Units to such accredited investors for aggregate cash proceeds
of $3,413,500, consisting of (i) 2014 Unit Notes in the aggregate face amount of $3,413,500 due between March 31, 2015 and May
15, 2015 or automatically convertible into securities issuable upon our consummation of a Qualified Financing, as defined in the
note; (ii) an aggregate of 315,850 restricted shares of 2014 Unit Stock; and (iii) 2014 Unit Warrants exercisable through December
31, 2016 to purchase an aggregate of 307,100 restricted shares of our common stock at an exercise price of $10.00 per share. May
2015 Agreement with PLTG On
May 5, 2015, we entered into an Agreement with PLTG, which, as modified, became effective on May 12, 2015 ( PLTG Agreement
● Converted
into 641,335 shares of Series B Preferred all of the approximately $4.5 million outstanding balance (principal and accrued
but unpaid interest) of the Senior Secured Notes we had previously issued to PLTG, as described previously in Note 8, Convertible
Promissory Notes and Other Notes Payable
● Released
all of its security interests in our assets and those of our subsidiaries by terminating the Amended and Restated Security
Agreement, IP Security Agreement and Negative Covenant, each dated October 11, 2012 between us and PLTG;
● Converted
into 240,305 shares of Series B Preferred and five-year warrants to purchase 240,305 shares of our common stock at a fixed
exercise price of $7.00 per share ( Series B Warrants Convertible Promissory Notes and Other Notes Payable
● Purchased
approximately $1.5 million (including accrued but unpaid interest thereon) of outstanding 2014 Unit Notes we had previously
issued to various accredited investors from the respective holders thereof ( Acquired Unit Notes Convertible Promissory
Notes and Other Notes Payable
● Entered into
a Securities Purchase Agreement ( SPA
● Amended
the PLTG Warrants previously issued by us to PLTG in connection with the Senior Secured Notes and the Series A Exchange Warrant
to (i) fix the exercise price thereof, (ii) eliminate the exercise price reset features; (iii) fix the number of shares of
our common stock issuable thereunder, and (iv) eliminate the cashless exercise provisions from the PLTG Warrants, as described
in Note 4. Fair Value Measurements
● Agreed
to refrain from the sale of any shares of our common stock held by PLTG or its affiliates until the earlier to occur of an
effective registration statement relating to resale of certain specified shares of common stock under the Securities Act of
1933, as amended, or the closing price of our common stock is at least $15.00 per share. As
additional consideration for the several agreements of PLTG under the PLTG Agreement, we issued to PLTG 400,000 shares of Series
B Preferred ( Additional Consideration Shares Additional Consideration Warrants Convertible Promissory Notes and Other
Notes Payable August
2015 Agreement with PLTG On
August 3, 2015, we entered into the August 2015 Agreement with PLTG pursuant to which we agreed to sell to PLTG an additional
$3.0 million of our Series B Preferred and Series B Warrants (together Series B Preferred Units 2015
Series B Preferred Unit Offering Between
May 26, 2015 and March 31, 2016, in self-placed private placement transactions, we sold to accredited investors an aggregate of
$5,025,800 of units in our Series B Preferred Unit offering, which units consist of Series B Preferred and Series B Warrants (together
Series B Preferred Units We
allocated the proceeds from the sale of the Series B Preferred Units to the Series B Preferred and the Series B Warrants based
on their relative fair values on the dates of the sales. As described in Note 8, Convertible Promissory Notes and Other Notes
Payable
Unit
Warrants Aggregate
Allocation of
Proceeds Based on Relative
Fair Value of:
Weighted
Average Issuance Date Valuation Assumptions Per
Aggregate
Warrant Risk
free Share Fair Fair Value Aggregate Proceeds
Shares Market Exercise Term Interest Dividend Value
of of
Unit of
Unit Unit
Unit
Issued Price Price (Years) Rate Volatility Rate Warrant Warrants Sales Stock Warrant
717,978 $ 10.45 $ 7.00 5.00 1.61 % 77.30 % 0.0 % $ 7.37 $ 5,288,600 $ 5,025,800 $ 2,967,900 $ 2,057,900
See
Note 16, Subsequent Events Registration
Statement for Common Stock underlying Series B Preferred and Series B Warrants The
securities purchase agreements for the Series B Preferred and Series B Preferred Units executed with PLTG, the holders of the
Investor Unit Notes, the holders of our promissory notes and other indebtedness converted into shares of Series B Preferred, initial
investors in Series B Preferred Units, and certain others to whom we issued Series B Preferred, contained registration rights
requiring that a Registration Statement on Form S-1 ( Registration Statement Conversion
of Series B Preferred into Common Stock Between
September 2015 and March 31, 2016, holders of an aggregate of 228,818 shares of Series B Preferred converted such shares into
an equivalent number of registered shares of our common stock. Additionally, we issued an aggregate of 6,837 shares
of our restricted common stock in payment of $50,900 in accrued dividends on the Series B Preferred converted. Warrant
Exchanges into Series C Preferred and Common Stock On
January 25, 2016, we entered into an Exchange Agreement (the Exchange Agreement Montsant Holders Outstanding PLTG Warrants NEPA We
accounted for the exchange of the Outstanding PLTG Warrants and the Series A Preferred Exchange Warrant as a warrant modification,
determining the fair value of the Outstanding PLTG Warrants, and the Series A Preferred Exchange Warrant as if issued on the Exchange
Agreement date, as of the Exchange Agreement date, and comparing that to the fair value of the Series C Preferred stock issued.
We calculated the weighted average fair value of the Outstanding PLTG Warrants to be $6.03 per share, or $11,797,400, using the
Black Scholes Option Pricing Model and the following weighted average assumptions: market price per share: $8.25; exercise price
per share: $7.13; risk-free interest rate: 1.27%; remaining contractual term: 3.99 years; volatility: 79.5%; expected dividend
rate: 0%. We calculated the fair value of the Series A Exchange Warrants to be $5.45 per share, or an aggregate of $2,919,200,
allocated as $2,481,300 to PLTG and $437,900 to the other Holder, using the Black Scholes Option Pricing Model and the following
assumptions: market price per share: $8.25; exercise price per share: $7.00; risk-free interest rate: 1.47%; remaining contractual
term: 5.00 years; volatility: 77.9%; expected dividend rate: 0%. Considering the direct exchangeability of the Series C
Preferred shares into shares of our common stock, we determined that the fair value of a share of Series C Preferred issued pursuant
to the Exchange Agreement was equal to the market value of a share of our common stock on the date of the Exchange Agreement.
Accordingly, the fair value of the aggregate of 2,118,012 Series C Preferred issued to PLTG pursuant to the Exchange Agreement
was $17,473,600 and we recognized the additional fair value, $3,194,900, as warrant modification expense, included as a component
of general and administrative expenses in the accompanying Consolidated Statement of Operations and Comprehensive Loss for the
fiscal year ended March 31, 2016. Between
January 29, 2016 and March 31, 2016, we entered into Warrant Exchange Agreements with certain holders of outstanding warrants
to purchase an aggregate of 1,086,610 shares of our common stock pursuant to which the holders agreed to the cancellation of such
warrants in exchange for our issuance to them of an aggregate of 814,989 shares of our unregistered common stock. In connection
with these exchanges, we extended the expiration date of certain warrants by three months. We
also accounted for the exchange of these warrants as warrant modifications, comparing their fair value prior to the exchange with
the fair value of the common stock issued. We calculated the weighted average fair value of the warrants prior to the exchange
to be $3.76 per share, or $4,081,600, using the Black Scholes Option Pricing Model and the following weighted average assumptions:
market price per share: $8.00; exercise price per share: $8.47; risk-free interest rate: 0.88%; remaining contractual term: 3.04
years; volatility: 81.0%; expected dividend rate: 0%. The weighted average fair value of the aggregate of 814,989 shares
of common stock issued in the exchange was $7.97 per share or $6,495,000. Accordingly, we recognized the additional
fair value, $2,143,400, as warrant modification expense, included as a component of general and administrative expenses in the
accompanying Consolidated Statement of Operations and Comprehensive Loss for the fiscal year ended March 31, 2016. As
noted, effective on January 25, 2016, we extended the term of warrants to purchase an aggregate of 91,230 unregistered shares
of our common stock otherwise due to expire between January 31, 2016 and June 11, 2016 by three months. We calculated
the fair value of the extended warrants immediately before and after the extension and determined that the fair value of the warrants
increased by an aggregate of $45,700, which we treated as an additional component of warrant modification expense for the fiscal
year ended March 31, 2016 in the accompanying Consolidated Statement of Operations and Comprehensive Loss. The warrants subject
to the term extension were valued using the Black-Scholes Option Pricing Model and the following weighted average assumptions:
Assumption:
Pre- modification
Post- modification
Market price per share $ 8.25 $ 8.25
Exercise price per share $ 12.99 $ 12.99
Risk-free interest rate 0.28% 0.36%
Remaining contractual term in years 0.15 0.40
Volatility 91.2% 91.2%
Dividend rate 0.0% 0.0%
Fair Value per share $ 0.30 $ 0.80 For warrants which were extended and subsequently exchanged, the pre-modification fair value used
in the warrant exchange calculation was the post-modification term extension fair value, since those warrants were treated as
having been modified twice in a twelve-month period. Amendment
of 2013 Unit Notes and 2013 Unit Warrants Effective
May 31, 2014, we entered into note and warrant amendment agreements with substantially all holders of 10% convertible promissory
notes maturing on July 30, 2014 ( 2013 Unit Notes) 2013 Unit Warrants Convertible Promissory Notes and Other
Notes Payable We
calculated the fair value of the modified 2013 Unit Warrants immediately before and after the modifications and determined that
the fair value of the warrants increased by an aggregate of $272,900, which we treated as a component of loss on extinguishment
of debt for the fiscal year ended March 31, 2015 in the accompanying Consolidated Statements of Operations and Comprehensive Loss
with a corresponding credit to additional paid-in capital, an equity account. The warrants subject to the exercise price modifications
were valued using the Black-Scholes Option Pricing Model and the following assumptions:
Assumption:
Pre- modification
Post- modification
Market price per share $ 12.60 $ 12.60
Exercise price per share $ 20.00 $ 10.00
Risk-free interest rate 0.44% 0.62%
Remaining contractual term in years 2.17 2.59
Volatility 75.6% 76.6%
Dividend rate 0.0% 0.0%
Fair Value per share $ 3.73 $ 6.65 Issuance
of Securities in Satisfaction of Technology License and Maintenance Fees and Patent Expenses In
April 2014, we entered into an agreement with Icahn School of Medicine at Mount Sinai ( ISMMS Icahn School Agreement Convertible Promissory Notes and Other Notes Payable Issuance
of Securities to Professional Service Providers During
our fiscal year ended March 31, 2016, we issued the following securities in private placement transactions as compensation for
various professional services. Unless otherwise noted, we recorded the related expense as a component of general and administrative
expense in the Consolidated Statement of Operations and Comprehensive Loss for the year ended March 31, 2016.
● In
June 2015, we issued an aggregate of 25,000 shares of our Series B Preferred having a fair value of $250,000 as compensation
for legal services related to our debt restructuring and other corporate finance matters.
● On
June 30, 2015, we issued an aggregate of 90,000 shares of our Series B Preferred having an aggregate value of $1,350,000 as
compensation for financial advisory and corporate development service contracts with two independent contractors for services
to be performed through June 30, 2016. The value of the Series B Preferred grants was recorded as a prepaid expense at the
date of the grant and is being expensed ratably over the twelve months ending June 30, 2016, with $1,012,500 expensed during
the fiscal year ended March 31, 2016.
● During
the quarter ended June 30, 2015, we also issued an aggregate of 50,000 shares of our common stock having an aggregate value
of $500,000, as compensation under two corporate development service contracts.
● During
the quarter ended September 30, 2015 we issued to two providers of intellectual property-related legal services an aggregate
of 10,000 shares of our Series B Preferred having an aggregate fair value of $120,000.
● In
January 2016, we issued 10,000 shares of our common stock having a fair value of $90,000 in connection with legal services.
● In
February 2016 we issued an aggregate of 6,250 shares of our common stock in connection with legal ($25,000) and investor relations
($25,000) services;
● In
March 2016, we issued an aggregate of 10,375 shares of our common stock in connection with investor relations ($58,000) and
legal ($25,000) services. As
indicated in the following table, during the quarter ended December 31, 2015, we issued warrants to purchase an aggregate of 45,000
shares of our unregistered common stock to four parties as compensation under certain investment banking agreements. In
connection with the November 2015 warrant grant, we also issued 15,750 shares of unregistered common stock valued at $106,300
and, in connection with the December 11, 2015 warrant grant, we made a cash payment of $20,000. In March 2016, we issued warrants
to purchase an aggregate of 230,000 shares of our common stock to eleven professional service providers in connection with investment
banking, strategic planning and financing, tax, legal and research and development consulting services. We recognized $1,042,400
of general and administrative expense and $127,100 of research and development expense attributable to the March 2016 grants.
We valued the warrants granted on the dates indicated using the Black Scholes Option Pricing Model and the following assumptions:
Assumption:
11/23/2015
12/11/2015 3/25/2016
Market price per share $ 6.75 $ 5.00 $ 8.00
Exercise price per share $ 7.00 $ 7.00 $ 8.00
Risk-free interest rate 1.70% 1.16% 1.39%
Contractual term in years 5.0 3.0 5.0
Volatility 77.95% 77.88% 78.96%
Dividend rate 0.0% 0.0% 0.0%
Fair Value per share $ 4.22 $ 2.12 $ 5.08
Warrant shares granted 7,500 37,500 230,000
Expense recognized $ 31,700 $ 79,600 $ 1,169,500 In May 2014,
we entered into a consulting agreement for strategic advisory and business development services pursuant to which we issued 10,000
restricted shares of our common stock as partial compensation for such professional services. We determined the fair value of
stock to be $134,000, based on the $13.40 per share quoted market price of our common stock on the date of the agreement. Additionally,
under the terms of the agreement, we paid an aggregate of $80,000 between May 2014 and December 31, 2014 as additional compensation
for professional services rendered by the consultant. Effective January 12, 2015, we entered into a new consulting agreement with
this consultant for similar services pursuant to which we issued 20,000 restricted shares of our common stock valued at $160,000,
based on the $8.00 per share quoted market price of our common stock on the date of the agreement, and made cash payments of $175,000
through March 31, 2016 as compensation for such professional services. In
March 2015, we entered into a consulting agreement with another consultant for additional advisory and business development services
pursuant to which we issued 25,000 restricted shares of our common stock as compensation for such professional services. We determined
the fair value of stock to be $175,000, based on the $7.50 per share quoted market price of our common stock on the date of the
agreement. In
March 2015, we issued 16,667 shares of our common stock valued at $166,700 to our legal counsel in settlement of direct legal
fees related to services provided with respect to prospective, unconsummated public and private offerings of our equity securities
during 2013 and 2014. We recognized a loss of $16,700 with respect to this settlement, which is included in Loss on
Extinguishment of Debt in the accompanying Consolidated Statement of Operations and Comprehensive Loss for the year ended March
31, 2015. Modification
of Warrants In
addition to warrants modified in connection with conversions of certain of our outstanding promissory notes into Series B Preferred
as described earlier in Note 8, Convertible Promissory Notes and Other Notes Payable,
Assumption:
Pre-modification
Post-modification
Market price per share $ 10.00 $ 10.00
Exercise price per share (weighted average) $ 30.23 $ 11.92
Risk-free interest rate (weighted average) 0.83% 0.83%
Remaining contractual term in years (weighted
average) 2.26 2.26
Volatility (weighted average) 73.7% 73.7%
Dividend rate 0.0% 0.0%
Fair Value per share (weighted average) $ 1.55 $ 3.79 Officer
and Director Warrant Grants and Modifications On
September 2, 2015, when the market price of our common stock was $9.11 per share, our Board of Directors ( Board On
November 11, 2015, when the market price of our common stock was $6.50 per share, the Board authorized the modification of outstanding
warrants to purchase an aggregate of 1,123,533 shares of our common stock, including the warrants to purchase an aggregate of
600,000 shares granted in September 2015, as described above, previously granted to company officers, independent members of the
Board and a key scientific advisor to reduce the exercise prices thereof to $7.00 per share and to extend through March 19, 2019
the expiration date of such warrants to purchase an aggregate of 10,803 shares of our unregistered common stock otherwise scheduled
to expire during calendar 2016. We calculated the fair value of the modified warrants immediately before and after the modifications
and determined that the fair value of the warrants increased by an aggregate of $492,600. We recognized $357,500 of such increase
as a component of general and administrative expense in the accompanying Consolidated Statement of Operations and Comprehensive
Loss for the fiscal year ended March 31, 2016, and the remaining $135,100 as a component of research and development expense in
the same period. The warrants subject to the exercise price modifications were valued using the Black-Scholes Option
Pricing Model and the following assumptions:
Assumption:
Pre-modification
Post-modification
Market price per share $ 6.50 $ 6.50
Exercise price per share (weighted average) $ 9.97 $ 7.00
Risk-free interest rate (weighted average) 1.74% 1.75%
Remaining contractual term in years (weighted
average) 5.13 5.16
Volatility (weighted average) 78.8% 78.7%
Dividend rate 0.0% 0.0%
Fair Value per share (weighted average) $ 3.65 $ 4.08 In
January 2015, when the market price of our common stock was $8.00 per share, the Board authorized the grant of fully-vested five-year
warrants to purchase an aggregate of 381,000 restricted shares of our common stock at an exercise price of $10.00 per share, including
an aggregate of 340,000 such shares to company officers and independent members of the Board. The Board also granted one-year
warrants to purchase 5,715 restricted shares of our common stock at an exercise price of $10.00 per share to consultants whose
warrants had expired at December 31, 2014. Additionally, the Board extended by one year the expiration date of outstanding warrants
to purchase 90,675 shares of our restricted common stock otherwise expiring during calendar 2015 and reduced the exercise price
to $15.00 per share for such of those extended term warrants having exercise prices in excess of that amount. We
valued the new warrant grants at $1,756,900 using the Black Scholes Option Pricing Model and the following assumptions: market
price per share: $8.00; exercise price per share: $10.00; risk-free interest rate: 1.45% for five-year warrants and 0.24% for
one-year warrants; contractual term: 5 years or 1 year; volatility: 75.86% for five-year warrants and 69.74% for one-year warrants;
expected dividend rate: 0%. We calculated the fair value of the modified warrants immediately before and after the modifications
and determined that the fair value of the warrants increased by $98,400, which is reflected in general and administrative expense
in the accompanying Consolidated Statement of Operations and Comprehensive Loss for the fiscal year ended March 31, 2015. The
warrants subject to the exercise price modifications and term extensions were valued using the Black-Scholes Option Pricing Model
and the following assumptions:
Assumption:
Pre- modification
Post- modification
Market price per share
at modification date $ 8.00 $ 8.00
Exercise price per share (weighted average) $ 23.13 $ 13.00
Risk-free interest rate (weighted average) 0.04% 0.31%
Contractual term in years (weighted average) 0.24 1.24
Volatility (weighted average) 69.7% 69.8%
Dividend rate 0.0% 0.0%
Weighted Average Fair Value per share $ 0.22 $ 1.31 In
making our fair value determinations for both new warrant grants and warrant modifications using the Black Scholes Option Pricing
Model, we utilize the following principles in selecting our input assumptions. The market price per share during the years ended
March 31, 2016 and 2015 is based on the quoted market price of our common stock on the OTCQB on the date of the grant or modification.
Because of our relatively short history as a public company, we estimate stock price volatility based on the historical volatilities
of a peer group of public companies over the contractual or remaining contractual term of the warrant. The contractual
term of the warrant is determined based on the grant or modification date and the latest date on which the warrant can be exercised
under its original or modified terms. The risk-free rate of interest is based on the quoted constant maturity rate for U.S. Treasury
Bills on the date of the grant or modification for the term most closely corresponding with the contractual term or remaining
term of the warrant. We assume a dividend rate of zero as we have not paid and do not expect to pay dividends in the
near future. Warrants
Outstanding The
following table summarizes outstanding warrants to purchase shares of our common stock as of March 31, 2016. The weighted
average exercise price of outstanding warrants at March 31, 2016 was $8.17 per share.
Exercise
Price Expiration Shares
Subject to Purchase at
per
Share Date March
31, 2016
$ 7.00 12/11/2018
to 3/3/2023 1,417,125
$ 8.00 3/25/2021 230,000
$ 10.00 8/31/2016
to 1/11/2020 135,384
$ 15.00 4/30/2016
to 8/31/2016 10,664
$ 20.00 9/15/2019 110,448
$ 30.00 11/20/2017 3,600
1,907,221 Note
Receivable from Sale of Common Stock In
May 2011, the Company accepted a $500,000 short-term note from an investor in payment for shares of the Companys common
stock sold to the investor in a private placement transaction. On October 2, 2014 we received a cash payment of $60,000
from the maker of the note. We considered that payment to be in full satisfaction of the outstanding principal balance of the
note and related accrued interest, aggregating $194,900, at the date of the payment and recognized a loss of $134,900 on the settlement
of the note, which is reflected as a component of Other expenses, net in the accompanying Consolidated Statement of Operations
and Comprehensive Loss for the fiscal year ended March 31, 2015. Reserved
Shares At
March 31, 2016, the Company has reserved shares of its common stock for future issuance as follows:
Upon
exchange of all shares of Series A Preferred Stock currently issued and outstanding (1) 750,000
Upon
exchange of all shares of Series B Preferred Stock currently issued and outstanding 3,663,077
Reserved
for potential future issuance of Series B Preferred Stock 108,105
Upon
exchange of all shares of Series C Preferred Stock currently issued and outstanding 2,318,012
Reserved
for potential future issuance of Series C Preferred Stock 681,988
Pursuant
to warrants to purchase common stock:
Subject
to outstanding warrants 1,907,221
Pursuant
to stock incentive plans:
Subject
to outstanding options under the 2008 and 1999 Stock Incentive Plans 336,987
Available
for future grants under the 2008 Stock Incentive Plan 660,242
997,229
Total 10,425,632
____________
(1) assumes
exchange under the terms of the October 11, 2012 Note Exchange and Purchase Agreement with PLTG, as amended |
