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STOCKHOLDERS’ EQUITY
 12 Months Ended
Mar. 31, 2025
Stockholders Equity  
STOCKHOLDERS’ EQUITY

10. STOCKHOLDERS’ EQUITY

 

The Company is authorized to issue 110,000,000 shares of stock, of which 100,000,000 is designated as common stock and 10,000,000 is designated as preferred stock.

 

Common stock

 

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share, of which 19,291,000 and 15,653,449 were issued and outstanding as of March 31, 2025 and 2024, respectively.

 

Sale of common stock from private placement

 

During May to August 2023, the Company issued 409,050 shares of common stock at a par value of $0.0001 and a purchase price of $6.00 per share. The total net proceeds were $2,179, net of broker fees and expenses. The holders of the common stock shall be entitled to cast one vote for each share held at all stockholder meetings and have no right to subscribe to or purchase any new or additional issue of shares.

 

 

Shares and Warrants Issued as Part of the Company’s Underwritten Public Offering

 

On February 7, 2024, the company entered into an underwriting agreement with ThinkEquity LLC, as representative (the “Representative”) of the several underwriters identified therein, relating to the Company’s initial public offering (the “IPO”) of 1,334,000 shares of the Company’s common stock, par value $0.0001 per share. The Company previously filed the form of underwriting agreement as an exhibit to the Company’s registration statement on Form S-1, as amended from time to time (File No. 333-274913), which was declared effective by the Securities and Exchange Commission on February 7, 2024. The price per share to the public was $6.00 generating gross proceeds of $8,004. On February 12, 2024, the Company consummated the IPO and issued 1,334,000 shares of Common Stock for aggregate net proceeds of approximately $6,009, after deducting underwriting discounts and commissions and estimated offering expenses.

 

Series A and Series B Convertible Preferred Stock

 

On February 12, 2024, all outstanding shares of our Series A convertible preferred stock and the Series B convertible preferred stock were automatically converted into 5,323,782 and 1,189,998, respectively, shares of common stock in connection with the closing of the initial public offering.

 

Series AA Preferred Stock

 

In March 2025, the Company designated a series of preferred stock as the 12.00% Series AA Convertible Preferred Stock, par value of $0.0001 per share (the “Series AA Preferred Stock”) and authorized 1,800,000 shares of Series AA Preferred Stock.

 

In March 2025, the Company entered into securities purchase agreements with twelve investors whereby the Company issued 924,921 shares of Series AA Preferred Stock at an original issue price of $5.8005 per share for gross proceeds of $5,365, less $217 of issuance costs or total net proceeds of $5,148. In connection with the securities purchase agreements, the Company entered into a registration rights agreement with the investors whereby the Company committed to file the registration statement to register for resale the shares of common stock issuable upon conversion of the Series AA Preferred Stock purchased by the investors pursuant to the securities purchase agreements no later than thirty days from the final closing date. Registration statement was filed on March 6, 2025

 

Additionally, the Company entered into a placement agency agreement with a placement agent in exchange for a cash fee of 6.0% of the gross proceeds paid by investors introduced to the Company by the placement agent. Additionally, the Placement Agent received 56,676 warrants to purchase shares of common stock equal to 5.0% of the shares of common stock issuable upon conversion of the Series AA Preferred Stock purchased by these investors (the “March 2025 Warrant”) at a per share price of $1.45 for a term of five years that may be exercised on a cash or cashless basis (see Note 12).

 

The Series AA Preferred Stock holder and the March 2025 Warrant holder (collectively, the “March 2025 Investors”) shall not have the right to convert any portion of the Series AA Preferred Stock or March 2025 Warrant to the extent that after giving effect to such conversion the March 2025 Investors, together with any affiliates, would beneficially own in excess of 4.99% (which may be increased to 9.99% at the March 2025 Investor’s sole discretion) of the number of common shares outstanding immediately after giving effect to such conversion. Any increase to the beneficial ownership limitation will not be effective until the 61st day after notice is received by the Company.

 

The March 2025 Warrant was determined to be an equity classified warrant and fair value was calculated as $31 using the Black-Scholes option-pricing model with the following assumptions: volatility of 55.0%, risk-free rate of 3.98%, annual dividend yield of 0.0% and expected life of five years.

 

 

The rights, preferences, privileges and restrictions for the Series AA Preferred Stock are as follows:

 

Dividends: Dividends on the Series AA Preferred Stock accrue daily and will be cumulative from the first day of the calendar month in which they are issued, and shall be payable monthly in arrears on the 30th day of each calendar month, when, as and if declared by the board of directors, at the rate of 12.0% per annum of its original issue price, which is the equivalent to $0.6961 per annum per share.

 

Liquidation preference: Upon (i) a liquidation or winding up of the Company, or (ii) a reorganization, merger or consolidation in which the holders of the voting securities of the Company do not retain at least a majority of the total outstanding voting securities, or (iii) a sale, lease, transfer, exclusive license or other disposition of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, the holders of Series AA Preferred Stock are entitled to receive a preferential payment per share equal to the greater of (a) $5.8005 plus declared but unpaid dividends, or (b) the amount per share that would have been payable had all shares of Series AA Preferred Stock been converted into Common Stock immediately prior to such event.

 

Conversion: Shares of Series AA Preferred Stock are convertible into shares of common stock at the option of the holder, according to a conversion ratio equal to the original issue price of $5.8005 divided by the conversion price of $1.1601, or $5.00. The conversion price is subject to adjustment from time to time as specified in the March 2025 Certificate of Designation.

 

Shares of Series AA Preferred Stock are convertible into shares of common stock automatically any time after the date six months after the original issuance date if the closing price of the common stock equals or exceeds 200.0% of the original issuance price, or $11.601, and the average trading column of the common stock exceeds 200,000 shares for at least twenty trading days in a period of thirty consecutive trading days.

 

Redemption: The Series AA Preferred Stock are not redeemable at the option of the holder, on either a contingent or non-contingent basis.

 

Voting: The Series AA Preferred Stock are non-voting in Company matters, with the exception that Series AA Preferred Stock holders are required to approve (i) any amendment, or other change, to the Company’s articles of incorporation that would have an adverse impact to the Series AA Preferred Stock holders dividend rights, preferences or special rights and (ii) any increase to the authorized number of shares of Series AA Preferred Stock, or authorize or issuance shares of any class or series of Senior Stock or Parity Stock, both of which are defined in the March 2025 Certificate of Designation.

 

The Series AA Convertible Preferred Stock has no stated maturity, is not subject to any sinking fund, and will remain outstanding indefinitely unless a holder chooses to convert the Series AA Preferred Stock into shares of our common stock, or we elect to automatically convert it into shares of our common stock. As of March 31, 2025, the Series AA Convertible Preferred Stock were convertible into 4,624,620 common shares.

 

Shares Issued for Services

 

During the year ended March 31, 2025, the Company issued 1,352,102 shares of restricted common stock to vendors for services rendered and to be rendered with a fair value of $1,488. These shares of common stock were valued based on the market value of the Company’s common stock price at the issuance date or the date the Company entered into the agreement related to the issuance. During the year ended March 31, 2025, the Company amortized $910 of the value of the shares as the services were rendered and $578 of the remaining fair value of the shares was included as a prepaid asset as of March 31, 2025 (see Note 4).