|12 Months Ended|
Apr. 30, 2017
|Stockholders' Equity Note [Abstract]|
Note 11. Stockholders Equity
On June 8, 2015, in exchange for the termination of a consulting agreement with a Director, the Company issued 25,000 restricted stock units (with the value of $50,400 based on the market value on the grant date). Two-thirds are fully vested and the remaining balance vests in six equal monthly installments commencing on June 30, 2015. At January 31, 2016, the Company has recorded consulting expense of $50,400 and it was fully vested.
On January 19, 2016, the Company paid $29,500 as part of settlement to repurchase 3,500 shares. After adjusting for the shares, the Company recorded an expense of $23,662.
On April 22, 2016, the Company issued, 404,624 shares of common stock to two of its warrant holders in exchange for their early exercise of warrants at a reduced price of $1.86 (originally, $2.28) per share. The Company recorded a warrant modification expense of $48,555 in accordance with ASC 718-20-35 related to the incremental increase in value. The Company received gross proceeds of $752,500 from these exercises. As a condition of the warrant holders exercising their warrants, the CEO converted a $300,000 note and the related interest on the Note and the conversion price was reduced from $12.00 to $2.28 per share. In connection with these conversions, the CEO was issued 132,588 shares of common stock. (See Note 9)
On June 21, 2016, the Company issued 208,333 shares valued at $400,000 and made a cash payment of $400,000 to a warrant holder in exchange for the buyback of 1,120,968 warrants. The Company re-valued the fair value of the warrants on the buyback date which equaled $594,000 and accordingly, the Company recorded an expense associated with the buyback of $206,000.
On July 31, 2016, the Company issued 29,167 shares to two IR firms for services. 16,667 shares were issued for services under a six month contract with a value of $30,000. 12,500 shares were issued for services under a one year contract with a value of $22,500. The Company recorded a prepaid for the value of the services and is amortizing over the respective service periods.
Following approval from its shareholders, on January 10, 2017, the Company effected 1-for-12 reverse split of its common stock. All references to common shares and per-share data for all periods presented in this report have been retroactively adjusted to give effect to this reverse split.
On April 7, 2017, the Company raised $7,500,000 through the issuance of 2,000,000 common shares at a price of $3.75. The net proceeds were $6,996,000 and there were additional cash disbursements of $57,000. In addition, one firm received 20,000 shares of common stock for their services valued at $3.75 per share or $75,000.
A summary of the Companys warrant activity during the year ended April 30, 2017 is presented below:
On April 22, 2016, the Company issued, 404,624 shares of common stock to two of its warrant holders in exchange for their early exercise of warrants at a reduced price of $1.86 (originally, $2.28) per share. The Company received gross proceeds of $752,500 from these exercises.
On June 24, 2016, the Company issued 208,333 shares and a cash payment of $400,000 to a warrant holder in exchange for 93,414 warrants.
On August 31, 2016, the Company announced that it had closed on a $3 million credit line with its largest shareholder. The Company paid a 2% origination fee of $60,000 and issued 62,500 common-stock warrants at an exercise price of $2.40 per share, which are redeemable by the Company if the closing price of its common stock averages at least $3.00 per share for 10 consecutive trading days.
Stock Incentive Plan and Stock Option Grants to Employees and Directors
On March 13, 2012, the Company adopted the 2012 Equity Incentive Plan (the Plan) that provides for the grant of 1,691,667 effective November 2015 and 2,108,333 shares effective June 2016, in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and restricted stock units to employees, consultants, officers and directors. As of April 30, 2017, there were 38,783 shares remaining under the Plan for future issuance. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Companys stock price over the expected term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the year ended April 30, 2017.
The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on the average of the expected volatilities from the most recent audited financial statements available for comparative public companies that are deemed to be similar in nature to the Company. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.
A summary of the Companys stock option activity for employees and directors during the year ended April 30, 2017, is presented below:
On June 8, 2015, the Chief Academic Officer received a grant of 83,334 options which has a fair value of $60,000, the Chief Operating Officer received a grant of 58,834 options which has a fair value of $42,000 and the Chief Financial Officer received a grant of 25,000 options which has a fair value of $18,000. All of these options have an exercise price of $2.016 per share.
On August 5, 2015, 41,667 options were granted to the Senior Vice President of Compliance. The exercise price was $2.16 and the fair value was $30,000. The options vest over 3 years.
On September 23, 2015, 38,750 options were granted to a total of 39 employees. The exercise prices were $1.572 and the fair value of the total grant was $48,600. The options vest over 3 years.
On November 20, 2015, three directors were each awarded 20,834 five- year options. The options vest over three years, the exercise prices were $1.98 and the fair value of the total grant of 62,500 options is $37,500.
On December 11, 2015, the Chief Executive Officer was granted 125,000 options that vest over three years. The exercise price is $2.10, the life of the options is ten years and the fair value of the grant is $105,000.
On May 19, 2016, the Company granted to each of its eight non-employee directors 12,500 five-year stock options. The Company granted an additional 4,167 five-year stock options to the chairman of the Compensation Committee and to the chairman of the Audit Committee. These options are exercisable at $1.92 and vest in three years. For the directors receiving 12,500, the fair value was approximately $7,500 per grant and for the two directors receiving 16,667 options, the fair value on the date of grant was approximately $10,000.
On June 20, 2016, the Company granted 2,500 options to an employee. The fair value was approximately $5,000 and vest over 3 years.
On June 23, 2016, the Company granted 166,667 stock options to the Chief Operating Officer, 58,333 stock options to the Chief Academic Officer and 25,000 to the Chief Financial Officer. The five-year options are exercisable at a price of $1.99 and vest over three years. On the date of grant, the grant to the Chief Operating Officer had a fair value of approximately $100,000, the grant to the Chief Academic Officer had a fair value of approximately $35,000 and the grant to the Chief Financial Officer had a fair value of approximately $15,000.
On September 12, 2016, the Company extended approximately 420,000 options that were expiring in 2017. The new expiration dates were extended three years. The cost associated with these extensions is approximately $150,000, which represents the difference between the fair value of the options before the modification and the fair value immediately after the modification. These extended options will vest over the next three years.
On October 1, 2016, the Company granted 20,417 options to a pool of employees. The fair value was approximately $17,000 and the options vest over 3 years.
On November 18, 2016, under the Plan the Company granted 41,667 five-year options to each of the two new directors elected at the annual meeting held that month. These options are exercisable at $3.24 per share. The options were valued at $40,000 each and vest over a three year term, subject to continued service.
On January 6, 2017, the Company granted 69,583 options to a pool of employees. The fair value was approximately $225,000 and the options vest over three years.
From February 1, 2017 to April 17, 2017 inclusive, the Company granted new employees a total of 20,000 options with an exercise price ranging from $3.60 to $4.50. All of these options are five year options that vest over 3 years. The fair value of the group of options is $22,710.
On April 12, 2017, the Board of Directors was issued a total of 113,333 five-year options that vest of 3 years. The strike price was $4.32 and the fair value is $140,533.
The Company recorded compensation expense of $338,294 for the year ended April 30, 2017 in connection with employee stock options. The Company recorded compensation expense of $308,260 for the year ended April 30, 2016 in connection with employee stock options.
As of April 30, 2017, there was approximately $585,000 of unrecognized compensation costs related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2.0 years.
Stock Option Grants to Non-Employees
There were no stock options granted to non-employees during the year April 30, 2017 and 2016. The Company recorded no compensation expense for the years ended April 30, 2017, and 2016 in connection with non-employee stock options. There was no unrecognized compensation cost at April 30, 2017.
A summary of the Company's stock option activity for non-employees during the year ended April 30, 2017 is presented below:
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/presentationRef