Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

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Subsequent Events
6 Months Ended
Sep. 30, 2012
Notes to Financial Statements  
NOTE 11 - Subsequent Events

Debt Financing by Platinum Long Term Growth VII, LLC

 

Issuance of Notes

 

On October 11, 2012, Platinum and the Company entered into a Note Exchange and Purchase Agreement (the “October 2012 Agreement”), pursuant to which Platinum agreed to purchase from the Company additional senior secured convertible promissory notes in the aggregate principal amount of up to $2.0 million (the “Investment Notes”).  Investment Notes for $500,000 each were issued to Platinum on October 11, 2012 and on October 19, 2012, and the additional Investment Notes are issuable in two separate $500,000 tranches in November and December 2012, conditioned on the closing by the Company of a debt or equity financing, or a combination of financings, resulting in gross proceeds of at least an additional $850,000 (refer to Note 9, Capital Stock, Fall 2012 Private Placement of Units). In addition, under the terms of the October 2012 Agreement, the secured convertible promissory notes issued by the Company to Platinum in July 2012 and August 2012 (the “Existing Notes”) in the principal amounts of $500,000 and $750,000, respectively, were exchanged for a note in the principal amount of $1,272,577, which amount represented the sum of the principal amounts outstanding under the Existing Notes, plus all accrued interest (the “Exchange Note”). Each Investment Note and the Exchange Note accrues interest at a rate of 10% per annum and, subject to certain limitations and exceptions set forth in the Exchange Note and Investment Notes, will be due and payable in shares of the Company’s common stock on October 11, 2015, or three years from the date of issuance, as determined by the terms of the Investment Notes.

 

The Company and Platinum also entered into an amended and restated Security Agreement to secure repayment of all obligations due and payable under the terms of the Investment Notes and Exchange Note.

 

Issuance of Warrants

 

As additional consideration for the purchase of the Investment Notes, the Company agreed to issue to Platinum a warrant to purchase an aggregate of 2,000,000 shares of the Company’s common stock, issuable in separate tranches of 500,000 shares each, to be issued together with each Investment Note, of which a warrant to purchase 500,000 shares was issued to Platinum on October 11, 2012 and on October 19, 2012.  In addition, the Company issued Platinum a warrant to purchase 1,272,577 shares of the Company’s common stock in connection with the issuance of the Exchange Notes. Each warrant has a term of 5 years and an exercise price of $1.50.

 

Series A Preferred Exchange

 

The October 2012 Agreement also provides Platinum with the right and option to exchange all shares of the Company’s Series A Preferred held by Platinum for (i) a total of 15,000,000 shares of the Company’s common stock, and (ii) a five-year warrant to purchase 7,500,000 shares of the Company’s common stock at an exercise price of $1.50 per share.

 

Debt Restructuring

 

Cato Holding Company

 

On October 10, 2012, the Company and Cato Holding Company (“CHC”) restructured certain indebtedness evidenced by an unsecured promissory note issued to CHC on April 29, 2011, in the principal amount of $352,273 (the “2011 CHC Note”).  The 2011 CHC Note was cancelled and exchanged for a new unsecured promissory note in the principal amount of $310,443 (the “2012 CHC Note”) and a five-year warrant to purchase 250,000 shares of the Company’s common stock at a price of $1.50 per share (the “CHC Warrant”). The 2012 CHC Note accrues interest at a rate of 7.5% per annum and is due and payable in monthly installments of $10,000, beginning November 1, 2012 and continuing until the outstanding balance is paid in full.

  

Cato Research Ltd.

 

On October 10, 2012, the Company issued to Cato Research Ltd. (“ CRL ”) (i) an unsecured promissory note in the initial principal amount of $1,009,000, which promissory note is payable solely in restricted common stock of the Company and accrues interest at the rate of 7.5% per annum (the “ CRL Note ”), as payment in full for all contract research and development services and regulatory advice (“ CRO Services ”) rendered by CRL to the Company and its affiliates through December 31, 2012 with respect to the preclinical and clinical development of AV-101, and (ii) a five-year warrant to purchase, at a price of $1.00 per share, 1,009,000 restricted shares of the Company’s common stock, the amount equal to the sum of the principal amount of the CRL Note, plus all accrued interest thereon, divided by $1.00 per share (the “ CRL Warrant ”). The principal amount of the CRL Note may, at the Company’s option, be automatically increased as a result of future CRO Services rendered by CRL to the Company and its affiliates from January 1, 2013 to June 30, 2013.  The CRL Note is due and payable on March 31, 2016 and shall be payable solely by CRL's surrender from time to time of all or a portion of the principal and interest balance due on the CRL Note in connection with its concurrent exercise of the CRL Warrant, provided, however, that CRL shall have the option to require payment of the CRL Note in cash upon the occurrence of a change in control of VistaGen or an event of default, and only in such circumstances.

 

University Health Network

 

On October 10, 2012, the Company issued to University Health Network (“ UHN ”) (i) an unsecured promissory note in the principal amount of $549,500, which promissory note is payable solely in restricted common stock of the Company and accrues interest at the rate of 7.5% per annum, as payment in full for all sponsored stem cell research and development activities by UHN and Gordon Keller, Ph.D. under the Company’s long-standing Sponsored Research Collaboration Agreement with UHN and Dr. Keller (the “ SRCA ”) through September 30, 2012 (the “ UHN Note ”), and (ii) a five-year warrant to purchase, at a price of $1.00 per share, 549,500 restricted shares of the Company’s common stock, the amount equal to the sum of the principal amount of the UHN Note, plus all accrued interest thereon, divided by $1.00 per share (the “ UHN Warrant ”).   The UHN Note is due and payable on March 31, 2016 and shall be payable solely by UHN's surrender from time to time of all or a portion of the principal and interest balance due on the UHN Note in connection with its concurrent exercise of the UHN Warrant, provided, however, that UHN shall have the option to require payment of the UHN Note in cash upon the occurrence of a change in control of VistaGen or an event of default, and only in such circumstances.

 

Additionally, the Company and UHN entered into Amendment No. 5 to the SRCA (“Amendment No. 5”), establishing the sponsored research projects and the sponsored research budgets under the SRCA from October 1, 2012 to September 30, 2013, as well as a schedule of the Company’s sponsored research payments for such period totaling $309,000, including an initial payment of $75,000 applicable to services for the period from October 1, 2012 to December 31, 2012.

 

Modification of Note Receivable

 

In connection with the May 2011 Private Placement, the Company accepted a short term note receivable from an investor in the face amount of $500,000 that was due on September 6, 2011 in payment for units purchased in the private placement. In October 2011, the Company modified the note to extend the repayment term through September 1, 2012 and to increase the interest rate to 5% per annum. On November 8, 2012 the Company and the investor again amended the note to require payment of the outstanding balance of $256,000, reflecting unpaid principal and accrued interest, in twenty-four monthly payments of $11,000 through November 2014, with a final payment of the remaining unpaid principal and interest due in December 2014.