Annual report pursuant to Section 13 and 15(d)

DERIVATIVES

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DERIVATIVES
12 Months Ended
Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES

NOTE 7 – DERIVATIVES

 

The Company has determined that certain warrants the Company has issued contain provisions that protect holders from future issuances of the Company’s common stock at prices below such warrants’ respective exercise prices and these provisions could result in modification of the warrants’ exercise price based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40. The warrants granted to Ironman PI Fund II, LP contain anti-dilution provisions that provide for a reduction in the exercise price of such warrants in the event that future common stock (or securities convertible into or exercisable for common stock) is issued (or becomes contractually issuable) at a price per share (a “Lower Price”) that is less than the exercise price of such warrant at the time. The amount of any such adjustment is determined in accordance with the provisions of the warrant agreement and depends upon the number of shares of common stock issued (or deemed issued) at the Lower Price and the extent to which the Lower Price is less than the exercise price of the warrant at the time.

 

Activities for derivative warrant instruments during the years ended March 31, 2017 and 2016 were as follows:

 

    Fair Value
Balance, March 31, 2015   $ —   
Additions     139,019  
Change in fair value     (12,059 )
Balance, March 31, 2016     126,960  
Change in fair value     (105,298 )
Balance, March 31, 2017   $ 21,662  

 

The fair value of the derivative warrants was calculated using the Black-Scholes pricing model. Variables used in the Black-Scholes pricing model as of March 31, 2017 include (1) discount rate of 1.28%, (2) expected term of 2 years, (3) expected volatility of 168.75%, and (4) zero expected dividends. Variables used in the Black-Scholes pricing model as of March 31, 2016 include (1) discount rate of 0.87%-1.74%, (2) expected term of 3 to 5 years, (3) expected volatility of 97.84%-149.62%, and (4) zero expected dividends.