Annual report pursuant to Section 13 and 15(d)

Capital Stock

v3.20.2
Capital Stock
12 Months Ended
Mar. 31, 2020
Stockholders' Equity Note [Abstract]  
Capital Stock

Common Stock

 

At our Annual Meeting of Stockholders on September 5, 2019, as approved by and recommended to our stockholders by our Board, our stockholders approved an amendment to our Restated Articles of Incorporation to increase the authorized number of shares of common stock that we may issue from 100.0 million shares to 175.0 million shares. The amendment became effective on September 6, 2019, upon our filing of a certificate of amendment with the Nevada Secretary of State. In connection with an underwritten public offering of our common stock and warrants in May 2016, our common stock was approved for listing on the Nasdaq Capital Market. Our common stock has been trading on the Nasdaq Capital Market under the symbol “VTGN” since May 11, 2016.

 

Series A Preferred Stock

 

In December 2011, our Board authorized the creation of a series of up to 500,000 shares of Series A Preferred, par value $0.001 (Series A Preferred).  Each restricted share of Series A Preferred is currently convertible at the option of the holder into one and one-half restricted shares of our common stock.  The Series A Preferred ranks prior to the common stock for purposes of liquidation preference.

 

The Series A Preferred has no separate dividend rights, however, whenever the Board 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 applicable 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 our affairs, 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 distributions out of our assets, if any, 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, 2020 and 2019, 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 two respective holders.

 

Series B Preferred Stock

 

In July 2014, our Board authorized the creation of a class of Series B Preferred Stock, par value $0.001 (Series B Preferred). In May 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) with the Nevada Secretary of State to designate 4.0 million shares of our authorized preferred stock as Series B Preferred.

 

Each share of Series B Preferred is convertible, at the option of the holder (Voluntary Conversion), into one (1) share of our common stock, subject to adjustment only for customary stock dividends, reclassifications, splits and similar transactions set forth in the Certificate of Designation. Outstanding shares of Series B Preferred are also convertible automatically on a one-to-one basis into shares of our common stock (Automatic Conversion) upon the closing or effective date of any of the following transactions or events: (i) a strategic transaction involving AV-101 with an initial up-front cash payment to us of at least $10.0 million; (ii) a registered public offering of our common stock with aggregate gross proceeds to us of at least $10.0 million; or (iii) for 20 consecutive trading days, our common stock trades at least 20,000 shares per day with a daily closing price of at least $12.00 per share; provided, however, that Automatic Conversion and Voluntary Conversion (collectively, Conversion) are subject to certain beneficial ownership blockers as set forth in the Certificate of Designation and/or securities purchase agreements. Following the completion of our underwritten public offering in May 2016, which occurred concurrently with and facilitated the listing of our common stock on the NASDAQ Capital Market, approximately 2.4 million shares of Series B Preferred were converted automatically into approximately 2.4 million shares of our common stock pursuant to the Automatic Conversion provision. There have been no conversions of Series B Preferred since August 2016.

 

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).  The Accrued Dividends are payable on the date of either a Voluntary Conversion or Automatic Conversion in that number of shares of common stock equal to the Accrued Dividends. At March 31, 2020, we have recognized a liability in the amount of $5,011,800 for Accrued Dividends in the accompanying Consolidated Balance Sheet at March 31, 2020, based on the Series B Preferred issued and outstanding through that date. We have recognized a deduction from net loss of $1,263,600 and $1,139,900 related to dividends on Series B Preferred in arriving at net loss attributable to common stockholders in the accompanying Consolidated Statement of Operations and Comprehensive Loss for the fiscal years ended March 31, 2020 and 2019, respectively.

 

In the event of the liquidation, dissolution or winding-up of our affairs, after payment or provision for payment of our debts and other liabilities, the Holders of the Series B Preferred then outstanding shall be entitled to receive distributions out of our assets, if any, of an amount equal to the Stated Value of the Series B Preferred ($7.00 per share), plus any accrued and unpaid dividends thereon, before any distribution or payment shall be made to the holders of any junior securities, including holders of our common stock. If our assets are insufficient to pay, in full, such amounts, then the entire assets to be distributed to the holders of the Series B Preferred shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. Upon liquidation, each share of Series B Preferred ranks pari-passu with our Series A Preferred and our Series C Preferred (defined below).The liquidation value of the Series B Preferred at March 31, 2020 is approximately $13,134,400.

 

At March 31, 2020 and 2019, there were 1,160,240 shares of Series B Preferred outstanding, which shares are subject to beneficial ownership blockers and are exchangeable at the option of the two respective holders by Voluntary Conversion, or pursuant to Automatic Conversion to the extent not otherwise subject to beneficial ownership blockers, into an aggregate of 1,160,240 shares of our common stock, excluding shares of our common stock which may be issued in payment of Accrued Dividends upon conversion.

 

Series C Preferred Stock

 

In January 2016, our Board authorized the creation of and 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) with the Nevada Secretary of State to designate 3.0 million shares of our preferred stock, par value $0.001 per share, as Series C Convertible Preferred Stock (Series C Preferred).

 

In the event of the liquidation, dissolution or winding up of our affairs, after payment or provision for payment of our debts and other liabilities, the holders of Series C Preferred then outstanding shall be entitled to receive, out of our assets, if any, an amount per share of Series C 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 C 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 C Preferred can be exchanged before any payment shall be made or any assets distributed to the holders of the common stock or any other junior stock. Upon liquidation, each share of Series C Preferred ranks pari-passu with our Series B Preferred and our Series A Preferred.

 

Each share of Series C Preferred is convertible, at the option of the holder into one share of our common stock, subject to certain beneficial ownership limitations as set forth in the Series C Preferred Certificate of Designation. Shares of the Series C Preferred do not accrue dividends, and holders of the Series C Preferred have no voting rights. At March 31, 2020 and 2019, one holder and its affiliates held all 2,318,012 outstanding shares of Series C Preferred.

 

During our fiscal years ended March 31, 2019 and 2020, we completed private placement and public offerings as described below.

 

Common Stock and Warrants Issued in Summer 2018 Private Placement

 

Between June 2018 and October 2018, we completed a self-placed private placement with accredited investors, pursuant to which we sold units, at a purchase price of $1.25 per unit, consisting of 4,605,000 unregistered shares of our common stock and warrants, exercisable through February 28, 2022, to purchase 4,605,000 unregistered shares of our common stock at an exercise price of $1.50 per share (the Summer 2018 Private Placement). The purchasers of the units have no registration rights with respect to the shares of common stock, warrants or the shares of common stock issuable upon exercise of the warrants comprising the units sold. The warrants are not exercisable until at least six months and one day following the date of issuance. We received aggregate cash proceeds of $5,756,200 in connection with the Summer 2018 Private Placement and the entire amount of the proceeds was credited to stockholders’ equity. Refer to Note 16, Subsequent Events, for disclosure regarding filing of a registration statement including the shares of common stock underlying the warrants issued in the Summer 2018 Private Placement.

 

Common Stock and Warrants Issued in Fall 2018 Private Placement

 

The Summer 2018 Private Placement was oversubscribed. To accommodate additional investor interest, during October 2018, we accepted subscription agreements from accredited investors, pursuant to which we sold to such investors units, at a unit purchase price equal to $0.15 above the closing quoted market price of our common stock on the Nasdaq Capital Market on the effective date of the investor’s subscription agreement, consisting of an aggregate of 420,939 unregistered shares of our common stock and four-year, immediately exercisable warrants to purchase 420,939 unregistered shares of our common stock at a per share exercise price equal to the closing quoted market price of our common stock on the Nasdaq Capital Market on the effective date of the investor’s subscription agreement (the Fall 2018 Private Placement). The purchasers of the units have no registration rights with respect to the shares of common stock, warrants or the shares of common stock issuable upon exercise of the warrants comprising the units sold. We received aggregate cash proceeds of $812,500 in connection with the Fall 2018 Private Placement and settled an outstanding professional service payable by accepting a subscription agreement in the amount of $40,000 and issuing the corresponding number of shares of common stock and warrants. The entire amount of the proceeds of the Fall 2018 Private Placement was credited to stockholders’ equity. The fair value of the common stock and warrant issued in the Fall 2018 Private Placement in settlement of the professional services payable was determined to be $62,700 on the effective date of the agreement. Accordingly, we recognized a loss on extinguishment of accounts payable in the amount of $22,700 in our Consolidated Statement of Operations and Comprehensive Loss for the fiscal year ended March 31, 2019. Refer to Note 16, Subsequent Events, for disclosure regarding filing of a registration statement including the shares of common stock underlying the warrants issued in the Fall 2018 Private Placement.

 

Modification of Warrants issued in Summer 2018 Private Placement

 

Subsequent to the completion of the Summer 2018 Private Placement, we amended warrants to purchase an aggregate of 304,000 shares of our common stock issued to investors who submitted Summer 2018 Private Placement subscription agreements between October 3, 2018 and October 5, 2018 to increase the exercise price of their warrants from $1.50 per share to $1.59 per share or $1.69 per share, depending on the effective date of the related subscription agreement, to comply with certain provisions of The Nasdaq Stock Market Rules applicable to the private placement. As additional consideration for agreeing to the increase in the warrant exercise price, we granted the investors additional warrants to purchase an aggregate of 23,800 unregistered shares of our common stock at an exercise price of $1.75 per share through February 28, 2022. We calculated the fair value of the modified warrants immediately before and after the modification using the Black Scholes Option Pricing Model and determined that the increase in the exercise price resulted in a decrease in the fair value of the warrants, which decrease is not recognized. We calculated the fair value of the 23,800 additional warrants using the Black-Scholes Option Pricing Model and the weighted average assumptions indicated in the table below, recognizing $25,800 as the fair value of the new warrants and as warrant modification expense, included as a component of general and administrative expenses, in our Consolidated Statement of Operations and Comprehensive Loss for the fiscal year ended March 31, 2019.

 

Assumption:

  New Warrants  
Market price per share   $ 1.80  
Exercise price per share   $ 1.75  
Risk-free interest rate     2.83 %
Remaining contractual term in years     3.25  
Volatility     88.80 %
Dividend rate     0.0 %
         
Number of warrant shares     23,800  
Weighted average fair value per share   $ 1.08  

 

 

Issuance of Common Stock for Product Licenses and Option

 

As indicated in Note 3, Summary of Significant Accounting Policies, in September 2018 we issued an aggregate of 1,630,435 shares of our unregistered common stock having a fair market value of $2,250,000, based on the $1.38 per share quoted closing market price of our common stock on the Nasdaq Capital Market, to Pherin to acquire an exclusive worldwide license to develop and commercialize PH94B and an option to acquire a similar license for PH10. In October 2018, we exercised our option to acquire an exclusive worldwide license to develop and commercialize PH10 by issuing 925,926 shares of our unregistered common stock having a fair market value of $2,000,000, based on the $2.16 per share closing quoted market price of our common stock on the Nasdaq Capital Market, to Pherin under the terms of the PH10 license agreement. Under the terms of the PH94B and PH10 license agreements, we are obligated to make additional cash payments and pay royalties to Pherin in the event that certain regulatory and performance-based milestones and commercial sales are achieved. Additionally, in connection with the license agreements, we are obligated to pay to Pherin monthly support payments of $10,000 for a term of 18 months, however no monthly support payment is required during the 18-month period identified in the PH10 license agreement if support payments are being made under the terms of the PH94B license agreement. The support payments required under the PH94B license agreement terminated in March 2020 and will terminate in April 2020 under the PH10 license agreement.

 

Common Stock Issued in Spring 2019 Public Offering

 

During the quarter ended March 31, 2019, we completed an underwritten public offering of 11,500,000 shares of our common stock, including the overallotment option, at a public offering price of $1.00 per share, resulting in gross proceeds to us of $11,500,000, pursuant to our shelf registration statement on Form S-3 (File No. 333-215671), previously filed with the SEC (the Spring 2019 Public Offering). We received net proceeds of approximately $10.4 million after deducting underwriter’s commission and offering expenses.

 

Common Stock and Warrants Issued in Fall 2019 Private Placement

 

Between October 30, 2019 and November 7, 2019, in a self-placed private placement and pursuant to subscription agreements received from certain accredited investors, we sold to such investors units, at a purchase price of $1.00 per unit, consisting of an aggregate of 650,000 unregistered shares of our common stock and warrants, exercisable beginning six months and one day following issuance and through November 1, 2023, to purchase 325,000 unregistered shares of our common stock at an exercise price of $2.00 per share (the Fall 2019 Private Placement). We received cash proceeds of $650,000 from the Fall 2019 Private Placement.

 

As further described below under “Winter 2019 Warrant Modification,” in December 2019, we modified the warrants issued in connection with the Fall 2019 Private Placement to (i) reduce the exercise price from $2.00 per share to $0.50 per share and (ii) to allow for the warrants to become immediately exercisable. Further, we issued warrants to purchase an aggregate of 325,000 additional shares of our common stock to the participants in the Fall 2019 Private Placement (the Additional Warrants) to increase the number of unregistered shares of common stock issuable upon exercise of the warrants from 50% to 100%. The Additional Warrants are immediately exercisable through March 31, 2024 at an exercise price of $0.50 per share.

 

We calculated the fair value of the Additional Warrants using the Black Scholes Option Pricing Model and the weighted average assumptions indicated in the table below, recognizing $88,800 as the fair value of the new warrants and as warrant modification expense, included as a component of general and administrative expenses, in our Consolidated Statement of Operations and Comprehensive Loss for the fiscal year ended March 31, 2020.

 

Assumption:

  Additional Warrants  
Market price per share   $ 0.44  
Exercise price per share   $ 0.50  
Risk-free interest rate     1.59 %
Contractual term in years     4.32  
Volatility     86.64 %
Dividend rate     0.0 %
         
Number of warrant shares     325,000  
Weighted average fair value per share   $ 0.27  

 

Winter 2019 Warrant Modification

 

On December 4, 2019, we modified outstanding warrants previously issued as a part of completed private placements to temporarily reduce, for a period of two years or, if sooner, until the expiration of the warrant, the exercise price of such warrants to $0.50 per share, in order to more closely align the exercise price of the warrants with the trading price of our common stock at such time (the Winter 2019 Warrant Modification). Following the two-year period during which the exercise price is reduced, the exercise price of each then-outstanding modified warrant will revert to its pre-modification price. As a result of the Winter 2019 Warrant Modification, outstanding warrants to purchase a total of approximately 6.6 million unregistered shares of our common stock were modified.

 

We calculated the fair value of the modified warrants, including those issued in the Fall 2019 Private Placement, immediately before and after the modification using the Black Scholes Option Pricing Model for pre-modification valuations and for post-modification valuations for warrants expiring in less than two years. For the warrants expiring after the December 4, 2021 exercise price reversion date, we ran a binomial model using 24 steps, one for each month, and lognormal distribution to estimate our stock price at December 4, 2021, the termination date for the exercise price reduction. We then compared the exercise value of each warrant at each estimated stock price to the remaining option value if the warrant was not exercised on December 4, 2021 and allowed to revert to its original exercise price. For any estimated stock price above $0.50 per share (an in-the-money warrant), we determined that the holders would convert their warrants. For any estimated stock price below $0.50 per share, we determined that the holders would continue to hold their warrants. Given the significant reductions in exercise price (the pre-modification exercise prices ranged from $1.50 to $2.24 per share), if the warrants are not exercised prior to December 4, 2021, the Black-Scholes values upon the reversion of the exercise prices are very low, such that there is nominal additional value for continuing to hold the warrants. Accordingly, our estimated post-modification fair value for warrants having an expiration date later than the two-year exercise price reversion date, December 4, 2021, is equal to the value of an option determined using the Black Scholes Option Pricing Model having an exercise price of $0.50 per share and a two-year term and related assumptions. The table below indicates the pre- and post-modification weighted average assumptions used in our valuations. We recognized the incremental fair value, $702,500, as warrant modification expense, included as a component of general and administrative expenses, in our Consolidated Statement of Operations and Comprehensive Loss for the fiscal yer ended March 31, 2020.

 

Assumption:

  Pre-modification     Post-modification  
Market price per share   $ 0.44     $ 0.44  
Exercise price per share   $ 1.85     $ 0.50  
Risk-free interest rate     1.58 %     1.58 %
Remaining contractual term in years     2.25       1.91  
Volatility     87.5 %     88.1 %
Dividend rate     0.0 %     0.0 %
                 
Number of warrant shares     6,611,759       6,611,759  
Weighted average fair value per share   $ 0.08     $ 0.19  

 

Following the Winter 2019 Warrant Modification, investors holding a total of 820,000 warrants elected to exercise their warrants at the reduced price of $0.50 per share, resulting in proceeds to us of $410,000. Refer to Note 16, Subsequent Events, for disclosure regarding filing of a registration statement including the shares of common stock underlying essentially all of the warrants subject to the Winter 2019 Warrant Modification.

 

December 19, 2019 Warrant Modification

 

On December 19, 2019, we modified outstanding warrants previously issued as a part of a completed private placement to permanently reduce the exercise price of such warrants to $0.805 per share and to extend the term of such warrants through December 31, 2022, in order to more closely align the exercise price of the warrants with the current trading price of our common stock and to provide additional time for the holders to exercise the warrants (the December 19, 2019 Warrant Modification). As a result of the December 19, 2019 Warrant Modification, outstanding warrants to purchase a total of 80,431 shares of common stock were modified.

 

We calculated the fair value of the modified warrants immediately before and after the modification using the Black Scholes Option Pricing Model and the weighted average assumptions indicated in the table below. We recognized the incremental fair value, $35,600, as warrant modification expense, included as a component of general and administrative expenses, in our Consolidated Statement of Operations and Comprehensive Loss for the fiscal year ended March 31, 2020.

 

Assumption:

  Pre-modification     Post-modification  
Market price per share   $ 0.805     $ 0.805  
Exercise price per share   $ 7.00     $ 0.805  
Risk-free interest rate     1.57 %     1.65 %
Remaining contractual term in years     0.58       3.034  
Volatility     98.7 %     84.9 %
Dividend rate     0.0 %     0.0 %
                 
Number of warrant shares     80,431       80.431  
Weighted average fair value per share   $ 0.00     $ .044  

 

 

 

Warrants issued in Winter 2019 Warrant Offering

 

In December 2019, we commenced a self-placed private placement of warrants to purchase unregistered shares of our common stock at an offering price of $0.15 per warrant (the Winter 2019 Warrant Offering). Warrants offered and sold in the Winter 2019 Warrant Offering have an exercise price of $0.50 per share and term of three years from the issuance date. Over the course of the Winter 2019 Warrant Offering, we sold warrants to purchase a total of 2.0 million unregistered shares of common stock for cash proceeds to us of $300,000, which we accounted for with a corresponding credit to additional paid-in capital, an equity account. Refer to Note 16, Subsequent Events, for disclosure regarding filing of a registration statement including the shares of common stock underlying the warrants issued in the Winter 2019 Warrant Offering.

 

Registered Direct Offering of Common Stock and Concurrent Warrant Offering

 

In January 2020, we entered into a self-placed securities purchase agreement with certain accredited investors pursuant to which we received gross cash proceeds of $2.75 million upon the sale of an aggregate of 3,870,077 shares of our common stock at a purchase price of $0.71058 per share (the January 2020 Offering). Concurrently with the January 2020 Offering, we also commenced a private placement in which we issued and sold warrants (the January 2020 Warrants) exercisable for an aggregate of 3,870,077 unregistered shares of our common stock (the Warrant Shares), having an exercise price of $0.73 per Warrant Share. The 3,870,077 shares of common stock sold in the January 2020 Offering (but not the January 2020 Warrants or the Warrant Shares) were offered and sold pursuant to a prospectus, dated September 30, 2019, and a prospectus supplement dated January 24, 2020, in connection with a takedown from our shelf registration statement on Form S-3 (File No. 333-234025).

 

The January 2020 Warrants contain customary provisions allowing for adjustment to the exercise price and number of Warrant Shares issuable only in the event of any stock dividend and split, reverse stock split, recapitalization, reorganization or similar transaction, as described in the January 2020 Warrants. In addition, subject to limited exceptions, holders of the January 2020 Warrants will not have the right to exercise any portion of their respective January 2020 Warrants if the holder, together with any affiliates, would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to such exercise. The January 2020 Warrants are exercisable from any time after the six-month anniversary of issuance (the Initial Exercise Date) and will expire on the fifth year anniversary of the Initial Exercise Date. Refer to Note 16, Subsequent Events, for disclosure regarding filing of a registration statement including the shares of common stock underlying the January 2020 Warrants.

 

Common Stock Purchase Agreement with Lincoln Park

 

On March 24, 2020, we entered into a purchase agreement and a registration rights agreement with Lincoln Park Capital Fund (LPC) pursuant to which LPC committed to purchase up to $10,250,000 of our common stock at market-based prices over a period of 24 months (the LPC Agreement). On March 24, 2020, we sold 500,000 unregistered shares of our common stock (the Initial Purchase Shares) to LPC under the purchase agreement at a price of $0.50 per share for gross cash proceeds of $250,000 (the Initial Purchase) and we also issued 750,000 unregistered shares of our common stock to LPC under the terms of the LPC Agreement (the Commitment Shares). To satisfy our obligations under the registration rights agreement, we filed a Registration Statement on Form S-1 (the LPC Registration Statement) with the SEC on March 31, 2020 (Registration No. 333-237514), which the SEC declared effective on April 14, 2020 (the Commencement Date). The LPC Registration Statement included registration of the Initial Purchase Shares and the Commitment Shares. The fair value of the Commitment Shares, $284,400, determined based on the quoted closing market price of our common stock on March 24, 2020, is a component of deferred offering costs attributable to this offering, which costs are amortized ratably to additional paid-in capital as we sell shares of our common stock to LPC under the LPC Agreement.

 

Following the Commencement Date, on any business day over the term of the LPC Agreement, we have the right, in our sole discretion, to direct LPC to purchase up to 100,000 shares on such business day (the “Regular Purchase”) (subject to adjustment under certain circumstances as provided in the LPC Agreement). The purchase price per share for each such Regular Purchase will be based on prevailing market prices of our common stock immediately preceding the time of sale as computed under the LPC Agreement. In each case, LPC’s maximum commitment in any single Regular Purchase may not exceed $1,000,000. In addition to Regular Purchases, provided that we present LPC with a purchase notice for the full amount allowed for a Regular Purchase, we may also direct LPC to make accelerated purchases and additional accelerated purchases as described in the LPC Agreement. Although LPC has no right to require us to sell any shares of our common stock to LPC, LPC is obligated to make purchases as we direct, subject to certain conditions. In all instances, we may not sell shares of our common stock to LPC under the LPC Agreement if such sales would result in LPC beneficially owning more than 9.99% of our common stock. There are no upper limits on the price per share that LPC must pay for shares of our common stock.  See Note 16, Subsequent Events, for disclosure regarding sales of our common stock under the LPC Agreement after March 31, 2020.

 

Issuance of Common Stock and Warrants to Professional Services Providers

 

During our fiscal year ended March 31, 2019, we issued the following securities in private placement transactions as compensation for various professional services. In all cases, we recorded the related noncash expense as a component of general and administrative expense in the Consolidated Statement of Operations and Comprehensive Loss for the fiscal year ended March 31, 2019.

 

During the quarter ended June 30, 2018, we issued an aggregate of 100,000 unregistered shares of our common stock having a fair value on the dates of issuance of $123,000 as full or partial compensation to an investor relations service provider and under a financial advisory agreement.

 

During the quarter ended September 30, 2018, we issued 50,000 shares of our unregistered common stock having a fair value on the date of issuance of $68,000 as partial compensation to a corporate awareness service provider.

 

During the quarter ended September 30, 2018, we also issued four-year warrants to three service providers to purchase an aggregate of 288,000 unregistered shares of our common stock at an exercise price of $1.50 per share as full or partial compensation for investor relations and corporate awareness services. We valued the warrants at an aggregate fair value of $266,900 using the Black-Scholes Option Pricing Model and the following grant date weighted average assumptions: exercise price per share: $1.50; market price per share: $1.40; risk-free interest rate: 2.71%; contractual term: 4 years; volatility: 94.17%; dividend rate: 0%; deriving a value per warrant share of $0.93. The fair value of the common stock and warrants was recognized in expense ratably over the term of the underlying contracts.

 

During the quarter ended March 31, 2019, we issued 25,000 registered shares of our common stock having a fair value of $41,500 on the date of issuance from our Amended and Restated 2016 Stock Incentive Plan to an investor relations and social media service provider. The fair value of the common stock was recognized in expense ratably over the term of the underlying contract.

 

Stock Option Exercises

 

During the quarter ended March 31, 2019, our Chief Executive Officer and Chief Scientific Officer and a member of our Board exercised outstanding stock options to purchase an aggregate of 29,250 shares of our common stock and we received cash proceeds of $43,900. There were no stock option exercises during the fiscal year ended March 31, 2020.

 

Warrants Outstanding

 

Following the Winter 2019 Warrant Modifications, the December 19, 2019 Warrant Modification, the Winter 2019 Warrant Offering and the issuance of the January 2020 Warrants and the other transactions described above, the following table summarizes outstanding and exercisable warrants to purchase shares of our common stock as of March 31, 2020.  The weighted average exercise price of outstanding and exercisable warrants at March 31, 2020 was $1.64 per share and $1.82 per share, respectively.

 

        Warrants   Warrants
Exercise       Outstanding at   Exercisable at
Price   Expiration   March 31,   March 31,
per Share    Date    2020   2019
             
$ 0.50       5/20/2020 to 3/31/2024       8,116,759       7,791,759  
$ 0.73       7/25/2025       3,870,077       —    
$ 0.805       12/31/2022       80,431       80,431  
$ 1.50       12/13/2022       9,596,200       9,596,200  
$ 1.82       3/7/2023       1,388,931       1,388,931  
$ 3.51       12/31/2021       50,000       50,000  
$ 5.30       5/16/2021       2,705,883       2,705,883  
$ 7.00       9/2/2020 to 3/3/2023       747,000       747,000  
                             
                 26,555,281       22,360,204  

  

Of the warrants outstanding at March 31, 2020, 2,705,883 shares of common stock underlying the warrants exercisable at $5.30 per share issued in our May 2016 public offering, 1,388,931 shares of common stock underlying the warrants exercisable at $1.82 per share issued in our September 2017 public offering and 9,596,200 shares of common stock underlying the warrants exercisable at $1.50 per share issued in our December 2017 public offering are registered for resale by the warrant holders. The common shares issuable upon exercise of our remaining outstanding warrants are unregistered at March 31, 2020; however, refer to Note 16, Subsequent Events, for disclosure regarding filing of a registration statement including the shares of common stock underlying a significant number of the the warrants issued in earlier private placements and currently exercisable at $0.50 per share. At March 31, 2020, none of our outstanding warrants are subject to down round anti-dilution protection features. With the exception of the January 2020 Warrants exercisable at $0.73 per share to purchase 3,870,077 shares of our common stock, which have a cashless exercise feature prior to an effective registration statement, all of the outstanding warrants are exercisable by the holders only by payment in cash of the stated exercise price per share. Refer to Note 16, Subsequent Events, for disclosure regarding filing of a registration statement including the shares of common stock underlying the January 2020 Warrants.

 

 

Reserved Shares

 

At March 31, 2020, we have reserved shares of our common stock for future issuance as follows:

 

Upon exchange of all shares of Series A Preferred currently issued and outstanding (1)     750,000  
         
Upon exchange of all shares of Series B Preferred currently issued and outstanding (2)     5,096,738  
         
Upon exchange of all shares of Series C Preferred currently issued and outstanding (3)     2,318,012  
         
Pursuant to warrants to purchase common stock:        
    Subject to outstanding warrants     26,555,281  
         
Pursuant to stock incentive plans:        
    Subject to outstanding options under the Amended and Restated 2016 Stock Incentive        
      Plan and the 2019 Omnibus Equity Incentive Plan     10,003,088  
    Available for future grants under the 2019 Omnibus Equity Incentive Plan     6,730,162  
    Available for future issuance under the 2019 Employee Stock Purchase Plan     1,000,000  
      17,733,250  
         
Reserved for issuance under Lincoln Park Purchase Agreement     8,750,000  
         
Total     61,203,281  

 

____________      
(1) Assumes exchange under the terms of the October 11, 2012 Note Exchange and Purchase Agreement      
       
(2) Assumes exchange under the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B 10% Convertible Preferred Stock, effective May 5, 2015; includes 3,936,498 shares of common stock reserved for payment of dividends on Series B Preferred upon conversion. Refer to Series B Preferred Stock, above, for additional information regarding payment of dividends in common stock.      
       
(3) Assumes exchange under the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock, effective January 25, 2016      

 

At March 31, 2020, we have 64,583,677 authorized shares of our common stock not subject to reserves and available for future issuance.