Note 9 – Stockholders' Deficit

Preferred Stock

As of September 30, 2020 and March 31, 2020, there were no shares of the Company's par value $0.0001, 50,000,000 shares, of authorized preferred stock outstanding.

Common Stock and Warrants

During the six months ended September 30, 2020, the Company issued 10 shares of common stock and 4,000,000 shares of fully vested restricted common stock to its Chief Executive Officer. The Company purchased 500,000 shares of the restricted stock, at a fair value of approximately $0.5 million, to reimburse the Company's Chief Executive Officer for amounts previously lent to the Company, to pay deferred compensation to the Chief Executive Officer and to cover the withholding taxes related to the restricted stock.

During the six months ended September 30, 2020, the Company issued 310,010 shares of its common stock with a fair value of approximately $0.3 million to consultants.

During the six months ended September 30, 2020, the Company issued 4,706,407 shares of its common stock with a fair value of $4.5 million with a weighted average share price of approximately $0.95 per share, upon conversion of its senior secured convertible notes (See Note 8).

During the six months ended September 30, 2020, the Company issued 955,000 shares of its common stock with a fair value of approximately $0.9 million in connection with its convertible notes (see Note 8).

On April 27, 2020, the Company issued 162,447 shares of its common stock in satisfaction of accounts payable of approximately $122,000 owed for advisory services.

On June 6, 2020, the Company issued a warrant to purchase 350,000 shares of the Company's common stock with a fair value of approximately $0.1 million. The warrant was exercised on a cashless basis on June 30, 2020, and the Company issued 291,667 shares of its common stock.

Financing

On September 11, 2020, the Company, entered into a securities purchase agreement with certain institutional and accredited investors to sell an aggregate of 1,390,000 unregistered shares of the Company's common stock, par value $0.0001 per share and 695,000 warrants to purchase common stock in a private placement transaction, for gross proceeds of approximately $1.7 million. The shares were issued at a price of $1.25 per share. The warrants have a five year term and an exercise price of $1.50 per share. The Company is not required to issue common stock upon exercise of any portion of a warrant if doing so results in the warrant holder beneficially owning more than 4.99% of the outstanding common stock after giving effect to such exercise.

In connection with the September 11, 2020 financing, the Company paid transaction fees of approximately $139,000, and issued 108,100 common stock warrants to its placement agent. The placement agent warrants have the same terms as the warrants issued with the private placement.

Under the guidance of ASC 815, Derivatives and Hedging, the Company determined the warrants related to the financing are not indexed to the Company's own stock and do not meet the scope exception to derivative accounting, and therefore should be accounted for as a warrant liability. The warrant liability is initially measured at fair value and subsequent changes in fair value are recorded in earnings each reporting period. As of September 11, 2020, the Company recorded an initial warrant liability of approximately $0.6 million. The change in fair value during the three and six months ended September 30, 2020, was nominal.