Common Stock Issuance and Private Investment in Public Equity ("PIPE") Financing Transaction |
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| Common Stock Issuance and Private Investment in Public Equity ("PIPE") Financing Transaction |
15. Common Stock Issuance and Private Investment in Public Equity ("PIPE") Financing Transaction November 2025 PIPE Financing Transaction Overview On November 24, 2025, the Company entered into a Securities Purchase Agreement with certain accredited investors pursuant to which the Company agreed to issue and sell (collectively, the “November 2025 PIPE”) (i) 3,980,000 shares of common stock at $2.00 per share and (ii) pre-funded warrants to purchase 3,520,000 shares of common stock at a purchase price equal to the common stock purchase price minus $0.001, with an exercise price of $0.001 per share. The transaction closed on November 25, 2025, generating gross proceeds of approximately $15.0 million before placement agent fees and offering costs. Total offering costs were approximately $1.4 million, consisting of a placement agent cash fee of 7.0% of gross proceeds received from investors who were not directors or executive officers, plus reimbursement of up to $100,000 of legal and out-of-pocket expenses. Offering costs were recorded as a reduction of additional paid-in capital. Net proceeds were approximately $13.6 million, of which approximately $8.3 million was used to repay the Exit New Money Notes maturing December 7, 2025 (see Note 11 – Debt), with the remainder available for working capital and general corporate purposes. As of March 31, 2026, all 3,520,000 pre-funded warrants from this transaction remained outstanding and unexercised. March 2026 Common Stock Issuance and PIPE Financing Transaction Overview In connection with the issuance of the Series A Preferred Stock on March 31, 2026, the Company also issued 3,333,334 shares of common stock to the Series A Preferred investor at a purchase price of $4.50 per share for aggregate gross proceeds of $15.0 million. The issuance of common stock was part of the same securities purchase agreement and closed contemporaneously with the Series A Preferred Stock financing. The Company evaluated the common stock and Series A Preferred Stock as separate freestanding financial instruments and concluded that the transaction price was representative of the relative fair value of the instruments at issuance. Accordingly, no material reallocation of proceeds was required. On March 31, 2026, the Company issued 3,588,889 shares of common stock of the Company, at a price of $4.50 per share as well as pre-funded warrants at a price of $4.499 to purchase up to 300,000 shares of common stock for aggregate gross proceeds of approximately $17.5 million (the “March 2026 PIPE”). The shares of common stock issued in the PIPE Investment were offered in a private placement under the Securities Act of 1933, as amended (the “Securities Act”). Upon closing, total offering costs of approximately $8.5 million were incurred, consisting primarily of a placement agent cash fee of 5.5% of gross proceeds and reimbursement of legal and other out-of-pocket expenses. These offering costs were allocated to the Series A Preferred Stock, common stock, and pre-funded warrants on a relative fair value basis, resulting in approximately:
Offering costs allocated to the Series A Preferred Stock were presented as a direct reduction of the carrying amount of the preferred stock within temporary equity. Offering costs allocated to the common stock and pre-funded warrants were recorded as a reduction of additional paid-in capital. A portion of the net proceeds, together with the proceeds from the Series A Convertible Preferred Stock issuance, was used to fund the $83.5 million redemption of the Preferred Units (see Note 12 – Commitments and Contingencies and Note 13 – Temporary Equity), with the remainder available for working capital and growth initiatives. Pre-Funded Warrants The pre-funded warrants issued in both PIPE Financings have substantially similar terms. Each warrant is exercisable at any time following issuance until exercised in full, subject to beneficial ownership limitations restricting exercise if the holder would beneficially own more than 4.99% of the Company's outstanding common stock (or, at the holder's election upon 61 days' prior notice, up to 9.99%). The warrants are exercisable into a fixed number of shares at a fixed exercise price and contain no cash settlement features outside the Company's control. Accordingly, both series of pre-funded warrants are classified as equity in accordance with ASC 480 and ASC 815, with proceeds allocated to additional paid-in capital. The following table summarizes pre-funded warrant activity for fiscal 2026:
Registration Rights In connection with each transaction, the Company entered into Registration Rights Agreements requiring it to file a resale registration statement covering the shares issued and the shares underlying the pre-funded warrants. Neither agreement imposes cash penalties for failure to meet filing or effectiveness deadlines; accordingly, no liability has been recorded in connection with these obligations. As of March 31, 2026, the registration statement related to the November 2025 PIPE had been filed with the SEC. The registration statement related to the March 2026 PIPE was filed with the SEC on April 28, 2026, subsequent to the fiscal year end.
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