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 During the fiscal year ended March 31, 2026, the Company completed two PIPE financing transactions, each of which is described in the Company's Annual Report on Form 10-K for that fiscal year. No new PIPE financing transactions were entered into during the three months ended June 30, 2026. A summary of each transaction and related instruments outstanding as of June 30, 2026 follows. November 2025 PIPE Financing Transaction On November 24, 2025, the Company entered into a Securities Purchase Agreement with certain accredited investors (the "November 2025 PIPE") pursuant to which it issued and sold (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, 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 offering costs. Net proceeds were used in part to repay the Exit New Money Notes maturing December 7, 2025 (see Note 11 – Debt), with the remainder used for working capital and general corporate purposes. March 2026 Common Stock Issuance and PIPE Financing Transaction In connection with the issuance of the Series A Preferred Stock on March 31, 2026 (see Note 13 – Temporary Equity), the Company issued 3,333,334 shares of common stock to Monarch at a purchase price of $4.50 per share for aggregate gross proceeds of $15.0 million. On March 31, 2026, the Company also issued 3,588,889 shares of common stock at $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 were offered in a private placement under the Securities Act of 1933, as amended. Total offering costs of approximately $8.5 million, consisting primarily of a placement agent cash fee of 5.5% of gross proceeds and reimbursement of expenses, were allocated among the Series A Preferred Stock, common stock, and pre-funded warrants on a relative fair value basis (approximately $6.0 million, $2.4 million, and $0.1 million, respectively). Offering costs allocated to the Series A Preferred Stock were recorded as a direct reduction of its carrying amount within temporary equity; those 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 Preferred Stock issuance, was used to fund the $83.5 million redemption of the Operating Subsidiary's Preferred Units (see Note 13 – Temporary Equity and Note 12 – Commitments and Contingencies), with the remainder used 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. On May 8, 2026, an investor exercised 1,719,840 pre-funded warrants issued in the November 2025 PIPE on a cashless basis. During the three months ended June 30, 2026, holders also exercised 299,972 pre-funded warrants issued in the March 2026 PIPE financing. As of June 30, 2026, 1,800,188 pre-funded warrants remained outstanding, consisting of 1,800,160 warrants from the November 2025 PIPE financing and 28 warrants from the March 2026 PIPE financing. The following table summarizes pre-funded warrant activity for the three months ended June 30, 2026:
Registration Rights In connection with each transaction, the Company entered into a Registration Rights Agreement 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. The registration statement related to the November 2025 PIPE was filed with the SEC on December 23, 2025. The registration statement related to the March 2026 PIPE was filed with the SEC on April 28, 2026.
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