Shareholders' Equity

12 Months Ended

Mar. 31, 2015

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 5.  Shareholder’s Equity

All share amounts and price per share amounts in this footnote relate to VSCI shares with UPI shares and price per share converted to VSCI amounts based on the conversion ratio of .72662 from the acquisition agreement and the one for five reverse stock split.

Reverse Acquisition.

As discussed in note 2, the merger is accounted for as reverse acquisition with VSCI as the legal acquirer and UPI as the accounting acquirer. Under reverse acquisition accounting, the dollar amount for common stock is based on the par value and number of shares issued by VSCI (reflecting the legal structure of VSCI as the legal acquirer) on the merger date plus subsequent shares issued by the Company. Additional paid-in capital represents that of UPI and includes the fair value of shares deemed for accounting purposes to have been issued by UPI on the merger date, as well as the fair value of the VSCI stock options and warrants included in the purchase price calculation. The UPI additional paid-in capital was also adjusted for the difference between the number of common shares outstanding and the historical number of shares of UPI common stock.

Share-based Compensation.

At March 31, 2015, as a result of the merger, the Company had one active plan, the Cogentix Medical 2015 Omnibus Incentive Plan, for share-based compensation grants (“the 2015 Plan”). Under the 2015 Plan, if we have a change in control, all outstanding grants, including those subject to vesting or other performance targets, fully vest immediately.  Under the 2015 Plan, we reserved 2,500,000 shares of our common stock for share-based grants and 2,500,000shares remain available for grant at March 31, 2015.

On July 23, 2013, and in connection with the commencement of his employment, our CEO Robert Kill received a stock grant of 217,986 shares that did not have vesting restrictions.

We grant option awards with an exercise price equal to the closing market price of our stock at the date of the grant.  We have options outstanding to purchase 2,251,085 shares of common stock granted under the 2015 Plan or UPI and VSCI plans.Options that were previously granted under the UPI plans generally expire over a period ranging from five to seven years from date of grant and vest at varying rates ranging up to three years.  All outstanding VSCI options and restricted stock became fully vested due to the change of control upon closing of the merger.

We have fully vested options outstanding to purchase 291,000 shares of common stock, not granted under a plan, which expire through May 2016.

We grant options at the discretion of our directors.  The options granted under the 2015 Plan generally provide for the exercise of options during a limited period following termination of employment, death or disability.

We recognize share-based compensation expense in the statement of operations based on the fair value at the time of grant of the share-based payment over the requisite service period.  We incurred a total of approximately $1,389,000, $1,436,000 and $812,000 in share-based compensation expense in fiscal 2015, 2014 and 2013, respectively.

We determine the fair value of the option awards using the Black-Scholes option pricing model.  We used the following weighted-average assumptions to value the options granted during the years ended March 31:

	2015			2014			2013
Expected life, in years		3.29			4.51			6.00
Risk-free interest rate		.74	%		1.36	%		1.15	%
Expected volatility		63.4	%		89.1	%		89.03	%
Expected dividend yield		0	%		0	%		0	%

The expected life for options granted represents the period of time we expect options to be outstanding based on historical data of option holder exercise and termination behavior for similar grants.  The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate over the expected life at the time of grant.  Expected volatility is based upon historical volatility of our stock.  We estimate the forfeiture rate for stock awards to be approximately 0% for executive employees and directors and approximately 18% for non-executive employees for fiscal 2015 awards based on our historical experience.

The following table summarizes the activity related to our stock options in fiscal 2013, 2014 and 2015:

	Number of shares			Weighted average exercise price		Weighted  average grant date  fair value		Aggregate  intrinsic value		Weighted average  remaining life in years
Balance at March 31, 2012		1,513,549		$	5.01			$	1,332,196		2.96
Options granted		136,604			4.26	$	3.12
Options exercised		(29,064	)		5.17				24,772
Options surrendered		(156,223	)		6.01
Balance at March 31, 2013		1,464,866		$	4.84			$	882,989		2.64
Options granted		682,296			3.54	$	2.36
Options exercised		(251,410	)		1.67				1,089,978
Options surrendered		(204,203	)		5.81
Balance at March 31, 2014		1,691,549		$	4.67			$	2,451,075		3.85
Options granted		135,070			4.73	$	1.26
Options exercised		(61,761	)		1.10				170,944
Options surrendered		(469,466	)		6.91
UPI Balance at March 31, 2015		1,295,392		$	4.03			$	0		3.91
Options converted from VSCI		955,693			7.07	$	4.75				6.62
Balance at March 31, 2015		2,251,085			5.32			$	0		5.06
Options exercisable at March 31, 2015		1,713,395		$	5.86			$	0		4.94

The total fair value of UPI stock options vested during fiscal 2015, 2014 and 2013 was approximately $723,000, $441,000 and $493,000, respectively.

We received net proceeds of $68,000 in fiscal 2015, $360,000 in fiscal 2014 and $150,000 in fiscal 2013 from the exercise of stock options.

We grant restricted shares at the discretion of our directors with vesting terms ranging from six months to four years.  The following table summarizes the activity related to our restricted stock in fiscal 2013, 2014 and 2015:

	Number of Shares			Weighted average grant date  fair value		Weighted average remaining life in years		Aggregate  intrinsic value
Balance at March 31, 2012		50,863		$	8.68		0.95	$	609,672
Shares granted		121,345			4.97
Shares vested		(34,151	)		6.56			$	309,653
Shares surrendered		(7,266	)	$	4.42
Balance at March 31, 2013		130,791		$	6.05		1.50	$	1,087,226
Shares granted		88,647			4.22
Shares vested		(38,510	)		5.69			$	304,148
Shares surrendered		(74,652	)	$	6.03
Balance at March 31, 2014		106,276		$	4.65		2.23	$	743,167
Shares granted		305,248			4.34
Shares vested		(82,060	)		4.41				185,957
Shares surrendered		(11,723	)		5.56
Balance at March 31, 2015		317,741		$	4.47		1.93	$	387,644

The aggregate intrinsic value shown above for the restricted shares represents the total pre-tax value based on the closing price of our common stock on the grant date.

At March 31, 2015, we had approximately $1,799,190 of unrecognized share-based compensation cost, net of estimated forfeitures, related to stock options and restricted shares that we expect to recognize over a weighted-average requisite service period of approximately two years.

Stock Warrants-Related Party.

At March 31, 2015, the Company has warrants outstanding that were issued to Mr. Pell to purchase an aggregate of 376,123 shares of our common stock at a weighted average exercise price of $9.31 per share.  The duration in which the warrants may be exercised commences on the earlier of (i) March 31, 2018 or (ii) three days prior to the record date established for the declaration of any dividend or distribution of any rights in respect to our common stock in cash or other property other than our common stock, and terminates on the later of (x) the maturity date of the convertible promissory notes or (y) the date the convertible promissory notes are paid in full or converted into shares.  In addition, the warrants may be exercised immediately prior to a change in control.

Long-Term Incentive Plan and Awards.

On October 1, 2014, the compensation committee of our board of directors and our board of directors approved and adopted a Performance Award Agreement under the Uroplasty, Inc. 2006 Amended Stock and Incentive Plan, as amended, and on October 2, 2014, grants of Performance Awards (the “Awards”) were made to certain members of our senior management team.

Performance goals for the Awards are based on the achievement of specified stock price targets during the period beginning on the date of grant and ending on the fourth anniversary of the date of grant or, if earlier, the closing date of a change of control (as defined in the Plan) of the Company (the “Performance Period”).  The stock price targets under the Awards are: $7.57 price per share of common stock, $10.32 price per share of common stock and $13.76 price per share of common stock.

A stock price target is considered achieved on the date (a) the average closing price of the Cogentix common stock equals or exceeds a stock price target for at least 45 consecutive trading days or (b) of the consummation of a change of control of the Company, provided the closing price of Cogentix common stock on the last trading day immediately preceding the closing date of the change of control equals or exceeds a stock price target not previously achieved during the Performance Period.

The Awards are accounted for as liability awards under the share based compensation accounting guidance, as the awards are based on the performance of our common stock and are expected to be settled in cash. Expense for the Awards value is recognized over the derived service period of approximately 2.4 years. We recorded a liability of $153,000 at March 31, 2015 and related expense was $153,000 for the year ended March 31, 2015 for the Awards.