Quarterly report pursuant to Section 13 or 15(d)

Shareholder's Equity

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Shareholder's Equity
9 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Shareholder's Equity

NOTE 5 SHAREHOLDER’S EQUITY

 

On February 16, 2018, the Company entered into a Securities Purchase Agreement with several accredited shareholders. The Company issued warrants to purchase 4,599,604 shares of its common stock, par value $0.0001 per share at a purchase price of $0.01 per underlying warrant share. The warrants are comprised of an aggregate of (i) 2,299,802 Tranche A Warrants to purchase shares of common stock at an exercise price of $4.25 per share exercisable within three days from the issue date of the Tranche A Warrants and (ii) an equal amount of Tranche B Warrants to purchase shares of common stock at an exercise price of $4.25 per share for the Tranche B Warrant, exercisable within three years from the issue date of the warrants. In connection with the February 2018 stock offering, the Company’s Board of Directors approved the issuance of warrants to purchase common stock with an exercise price of $4.25 per share. Immediately following the closing, all the shareholders in this offering exercised the full amount of their Tranche A Warrants resulting in net proceeds of $8,734,320.

 

In February 2018, the Board of Directors repriced outstanding options to purchase common stock issued in 2017 to $4.25 per share. The Company accounted for the change in option exercise price as a modification pursuant to ASC 718. Accordingly, additional stock-based compensation of $59,507 was recorded over the remaining vesting period based upon the incremental fair value of the modified award and the fair value of the original award on the modification date.

 

On August 10, 2018, the Company entered into a $20 million Stock Purchase Agreement (commonly known as At The Market Offering, or ATM) with LPC. Pursuant to the terms of the Stock Purchase Agreement, the Company may sell and issue LPC and LPC is obligated to purchase up to $20 million in value of shares of common stock from time to time over three years. The Company also entered into a registration rights agreement with LPC whereby the Company agreed to file a registration statement with the SEC and the shares of the Company’s common stock that may be issued to LPC under the terms of the Stock Purchase Agreement. The Company may direct LPC, at its sole discretion, and subject to certain conditions, to purchase up to 10,000 shares of common stock on any business day, provided that at least one business day has passed since the most recent purchase. The amount of a purchase may be increased under certain circumstances provided, however that LPC cannot make any single purchase that exceeds $750,000. The purchase price of shares of common stock related to the future funding will be based on the then prevailing market prices of such shares at the time of sales as described in the Stock Purchase Agreement. The Company filed a registration statement with the SEC and it was accepted on October 12, 2018.

 

From the execution of the Stock Purchase Agreement on August 10, 2018 to December 31, 2018, the Company issued and sold to LPC 127,000 shares of common stock at an average price of $4.51 per shares for net proceeds of $27,170 and incurred offering costs of $545,000 that was charged to additional paid in capital. On January 17, 2019 through January 23, 2019, the Company issued and sold to LPC 65,000 shares of common stock for proceeds of $279,265 at an average price of $4.30 per share. There is $19,148,565 remaining on the Stock Purchase Agreement.

 

Issuance of Restricted Shares

 

In January 2017, the Company issued 492,624 restricted shares to a director of the Company which 246,312 vested in July 2017. The unvested 246,312 restricted shares were cancelled in June 2017 and the Company recorded stock-based compensation expenses related to these restricted shares for the nine months ended December 31, 2018 and 2017 of $0 and $2,063,791. There was no stock-based compensation expense for the three months ended December 31, 2018 and 2017, respectively.

 

Stock Option Plan

 

The Company has an amended and restated Incentive Option Plan (the “2013 Plan”), that grants options, restricted stock units and restricted shares to officers, directors, employees, and non-employees for shares of the Company’s stock. The options vesting terms are generally between two to four years and expire up to ten years after the grant date. Certain options will be accelerated upon fulfillment of certain conditions. On August 2, 2018, the Board of Directors authorized the increase of an additional 1,033,324 shares to a total of 1,500,000 shares for issuance under the 2013 Plan. On December 26, 2018, the Board of Directors authorized the increase of an additional 600,000 shares to a total of 2,100,000 shares for issuance under the 2013 Plan. As of December 31, 2018, 188,527 options are available for future grants.

 

A summary of the Company’s options for the nine months ended December 31, 2018 is as follows:

 

    Number Of Options     Weighted
Average
Exercise price
    Weighted
Average
Remaining
Contractual
Life
 
                   
Options outstanding as of April 1, 2018     510,904     $ 4.32       9.0  
Granted     1,381,000       4.25          
Exercised     (9,601 )     4.25          
Forfeited     (33,333 )     4.25          
                         
Options outstanding as of December 31, 2018     1,848,970     $ 4.29       8.9  
Options exercisable as of December 31, 2018     761,896     $ 4.29       8.6  

 

As of December 31, 2018, the aggregate intrinsic value of outstanding and exercisable options was and $623,900 and $343,800, respectively. The aggregate intrinsic value of options exercised during the period was $27,300. As of December 31, 2018, the Company has unrecognized stock-based compensation expense of approximately $1,434,100 related to unvested stock options over the weighted average remaining service period of 1.8 years. The weighted average fair value of options granted during the nine months ended December 31, 2018 and 2017 was approximately $2.79 per share and $2.23 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following assumption:

 

      December 31, 2018       December 31, 2017  
Risk -free interest rate     2.5% - 3.2 %     2.1% - 3.5 %
Expect volatility     80.7% - 83 %     75.2 %
Expected terms (in years)     5-9.9       5.5-7.5  
Dividend yield     0 %     0 %

 

Stock-based Compensation

 

The following summarizes the components of stock-based compensation expense which includes common stock, stock options, warrants and restricted stock in the condensed consolidated statements of comprehensive income (loss) for the three and nine months ended December 31, 2018 and 2017, respectively

 

    Three Months Ended     Nine Months Ended  
    December 31,     December 31,  
    2018     2017     2018     2017  
                         
Research and development   $ 88,830     $ 44,430     $ 187,103     $ 117,597  
General and administrative     676,949       178,195       1,506,796       2,391,312  
                                 
Total stock-based compensation expense   $ 765,779     $ 222,625     $ 1,693,899     $ 2,508,909  

 

In August 2018 and November 2018, the Board of Directors granted to the Directors and Officers, 810,000 options to purchase common stock. For the three and nine months ended, the stock-based compensation expense was $462,339 and $666,565, respectively related to these issuances.

 

Warrants

 

On September 7, 2016, the Company entered into an Option Agreement (the “Option Agreement”) with a third party whereby the Company acquired the Option to purchase certain intellectual property assets and rights (the “Option”) for $25,000. The Company exercised the Option in January 2017 and paid $500,000. On January 13, 2017 the Company issued to the third party a fully vested warrant (the “Third Party Warrant”) to purchase up to 178,570 common stock of the Company at an exercise price of $4.80 per share for each share of common stock. On May 10, 2018, the Company issued to the same third-party additional fully vested warrants to purchase up to 29,763 common stock of the Company at an exercise price of $4.80 per share. The warrant expires in January 2024. For the nine months ended December 31, 2018 and 2017, the Company recorded stock-based compensation expense of $55,900 and $0 to research and development expenses, respectively and is included in the table above. There was no stock stock-based compensation expense for the three months ended December 31, 2018 and 2017, respectively, see Note 8, commitments and contingencies.

 

A summary of the Company’s outstanding warrants as of December 31, 2018 are as follows:

 

Warrant Holders   Number Of Warrants     Exercise
Price
    Date Of
Expiration
 
January 2017 offering - investors     1,701,616     $ 4.25       January 2022 (a)
January 2017 offering - investors     1,701,616     $ 4.25       February 2022 (a)
March 2017 offering - investors     220,988     $ 4.25       March 2021  
March 2017 offering - placement agent     11,050     $ 4.25       March 2021  
February 2018 offering - investors     2,299,802     $ 4.25       March 2022  
Third-party     208,333     $ 4.80       January 2024  
                         
Total     6,143,405                  

 

  (a) These warrants have down round protection.