NOTE 6 — STOCKHOLDERS’ EQUITY

2017 Equity Incentive Plan

In August 2017, the Company’s Board of Directors approved the Company’s 2017 Equity Incentive Plan including the reservation of 1,650,000 shares of common stock thereunder.

Series E Convertible Preferred Stock

On January 19, 2018, the Company filed a Certificate of Designations of Series E Preferred with the Secretary of State of Nevada. The Company designated 2,500 shares as Series E Preferred Stock, par value $0.001 per share. Each share of Series E Preferred Stock is convertible into shares of the Company’s common stock equal to the stated value of the Preferred Share, which is $2,000, divided by the conversion price, which is $2.00 per share of common stock, subject to adjustment in the event of stock split, stock dividends, and recapitalization or otherwise. Holders of shares of Series E Preferred Stock shall be entitled to receive dividends when and as declared by the Company’s board of directors, from time to time, and shall participate on an “as converted” basis with all dividends declared on the Company’s common stock.

The Series E Preferred Stock does not contain any redemption provision. Upon the Company’s liquidation, the holders of shares of Series E Preferred Stock are entitled to receive in cash out of the assets of the Company, after payment of the liquidation preference for any outstanding shares of senior preferred stock, but before any amount is paid to the holders of any of shares of junior stock and pari passu with any parity stock then outstanding, an amount per share equal the greater of (A) the stated value thereof on the date of such payment and (B) the amount per share such holder would receive if such holder converted shares of Series E Preferred Stock into common stock immediately prior to the date of such payment.

Except as required by law or the Company’s Articles of Incorporation, including certain protective provisions in the Certificate of Designations, holders of shares of Series E Preferred Stock have the same voting rights as holders of common stock, voting together as one class on an as-converted basis based on a conversion price equal to $3.10, subject to beneficial ownership limitations.

On January 22, 2018, the Company completed a private placement to several investors for the purchase of 2,500 shares of the Company’s Series E Preferred Stock for aggregate gross proceeds of $5.0 million. The purchase price of one share of Series E Preferred Stock was $2,000. Based on the initial conversion price, approximately 2,500,000 shares of common stock would be issuable upon conversion of all of the shares sold.

The investors in the private placement were granted warrants to acquire an aggregate of 1,250,000 shares of common stock at an exercise price of $3.30, subject to adjustment in the event of stock split, stock dividends, and recapitalization or otherwise. The warrants shall be exercisable commencing six months from the issuance and have a term of exercise equal to three years from the initial exercise date. The Company is obligated to register the shares of common stock issuable upon exercise of the warrants as soon as practicable, but no later than 60 days from the closing date of the offering and to have such registration statement declared effective no later than 181 days from the closing.

If at any time after the six-month anniversary of the initial issuance date of the warrants, there is no effective registration statement registering, or no current prospectus available for, the resale of the warrant shares by the investors, then this warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the investor shall be entitled to receive a number of warrant shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

The Company determined that these warrants issued should be classified in equity since such instruments met the criteria for equity classification, as the settlement terms indicate that the instruments are indexed to the entity’s underlying stock.

In connection with the private placement above, the Company paid legal fees and related private placement expenses of approximately $81,000 for total net proceeds of approximately $4.9 million from the private placement.

The Series E Preferred Stock was determined to have characteristics more akin to equity than debt. As a result, the conversion option was determined to be clearly and closely related to the Series E Preferred Stock and therefore does not need to be bifurcated and classified as a liability. The proceeds received from the issuance of the Series E Preferred Stock were allocated to the warrants and Series E Preferred Stock on a relative fair value basis. The warrants were valued on the grant date using a Black-Scholes option pricing model with the following assumptions: stock price of $2.19 per share, volatility of 96%, term of 3 years, and a risk free interest rate of 2.21%. The fair value of the preferred stock if converted on the date of issuance was greater than the value allocated to the preferred stock. As a result, a BCF of $1,576,602 was recorded upon issuance of the Series E Preferred Stock. This BCF amount has been recorded as a deemed dividend as of April 30, 2018 and is included in dividends on Series E Preferred Stock on the consolidated statement of operations. The BCF is recorded as a decrease to retained earnings (or in the absence of retained earnings, additional paid-in capital) and an increase to additional paid-in capital. The deemed dividend increased and decreased Additional paid-in capital by the same amount.

Common stock issued in connection with merger

In connection with the Merger, the Company is deemed to have issued 1,204,667 shares of common stock to the Dataram Memory Legacy Shareholders which represents the outstanding common shares of the Company prior to the closing of the Merger (see Note 4).

Common stock issued in asset acquisition

In August 2017, the Company closed on a transaction under a purchase and sale agreement executed in June 2017 with Nevada Gold and the Buyer pursuant to which Nevada Gold sold and the Buyer purchased all right, title and interest in the Gold Bar North Property, a gold development project located in Eureka County, Nevada (see Note 3). The purchase price for the Gold Bar North Property was: (a) cash payment in the amount of $20,479 which was paid in August 2017 and (b) 15,000 shares of common stock of the Company which were issued in August 2017. The Company valued these common shares at the fair value of $35,850 or $2.39 per common share based on the quoted trading price on the date of grant. Mr. David Mathewson, the Company’s Chief Geologist, is a member of Nevada Gold.

Common stock issued for cash

In July 2017, the Company sold 179,211 shares of its common stock at $2.79 per common share for proceeds of approximately $500,000. Additionally, in October 2017, pursuant to an underwriting agreement, the Company sold 1,388,889 shares of its common stock at $1.80 per share to an underwriter for net proceeds of approximately $2,090,000 after payment of underwriting discounts, commissions and related offering expenses and legal fees of approximately $410,000.

Common stock issued for conversion of Series C Preferred Stock

During the year ended April 30, 2018 . the Company issued 4,500,180 shares of the Company’s common stock in exchange for the conversion of 45,002 shares of the Company’s Series C Preferred Stock.

Common stock issued for conversion of Series E Preferred Stock

During the year ended April 30, 2018, the Company issued 2,500,000 shares of the Company’s common stock in exchange for the conversion of 2,500 shares of the Company’s Series E Preferred Stock.

Common stock issued for services

On May 18, 2016, the Company issued an aggregate of 62,500 shares of the Company’s common stock to the Chief Operating Officer and a director of the Company for services rendered to the Company. These shares vested immediately on the date of issuance. The Company valued these common shares at the fair value of $75,000 or $1.20 per common share based on the sale of its preferred stock in a private placement at $0.10 per common share. In connection with the issuance of these common shares, the Company recorded stock based compensation of $75,000 for the year ended April 30, 2017.

On May 18, 2016, the Company issued 125,000 shares of the Company’s common stock to a consultant in connection with a one year consulting agreement. The Company valued these common shares at the fair value of $150,000 or $1.20 per common share based on the sale of its preferred stock in a private placement. In connection with the issuance of these common shares, the Company recorded stock based compensation of $12,500 (amortization of prepaid stock based expense balance as of April 30, 2017) for the year ended April 30, 2018 and $137,500 during the year ended April 30, 2017.

In May 2017, in connection with the Merger (see Note 4), the Company issued 37,879 shares of the Company’s common stock having a fair value of $100,000 to the Chief Geologist for services rendered to the Company from June 2016 to January 2017 pursuant to his employment agreement with the Company’s wholly-owned subsidiary Gold King. Additionally, in August 2017, the Company issued 29,412 shares of the Company’s common stock to the Chief Geologist for services rendered to the Company from February 2017 to July 2017 pursuant to his employment agreement (see Note 8). The Company valued these common shares at the fair value of $75,000 or $2.55 per common share based on the quoted trading price on the date of grant and reduced accrued salaries by $137,500 during the year ended April 30, 2018 and recognized stock based compensation of $37,500 for services rendered between May 2017 to July 2017.

During the year ended April 30, 2018, the Company issued 59,385 shares of the Company’s common stock to the Chief Geologist for services rendered to the Company pursuant to his employment agreement (see Note 8). The Company valued these common shares at the fair value of $100,000 or $1.40 to $2.55 per common share based on the quoted trading prices on the dates of grant and recognized stock based compensation of $100,000 during the year ended April 30, 2018.

In August 2017, the Company issued an aggregate of 195,525 shares of the Company’s common stock to officers and employees of the Company for services rendered. The Company valued these common shares at the fair value of $467,305 or $2.39 per common share based on the quoted trading price on the date of grant and recognized stock based compensation of $467,305 during the year ended April 30, 2018.

In August 2017, the Company issued an aggregate of 6,462 shares of the Company’s common stock to five directors of the Company for services rendered. The Company valued these common shares at the fair value of $15,444 or $2.39 per common share based on the quoted trading price on the date of grant and recognized stock based compensation of $15,444 during the year ended April 30, 2018.

In August 2017, the Company issued an aggregate of 117,500 shares of the Company’s common stock to four consultants pursuant to consulting agreements related to investor relations and business advisory services. The term of the consulting agreements ranged from 3 months to 12 months. The Company valued these common shares at the fair value of $280,825 or $2.39 per common share based on the quoted trading price on the date of grant. The Company recognized stock based compensation of $256,925 during the year ended April 30, 2018. As of April 30, 2018, $5,975 was recorded as a prepaid expense and will be amortized over the remaining term of its respective consulting agreements.

On November 10, 2017, the Company appointed Andrew Kaplan as a director of the Company. Mr. Kaplan received the Company’s equity award for new independent directors of 12,000 shares of the Company’s common stock as compensation, which shall vest in 24 equal monthly installments over a two year period, beginning on the one month anniversary of the date of issuance. The Company valued these common shares at the fair value of $15,240 or $1.27 per common share based on the quoted trading price on the date of grant. The fair value of the shares will be expensed on a straight line basis to consulting expense over the vesting period.

On November 16, 2017, the Company issued an aggregate of 33,681 shares of the Company’s common stock to two former officers of the Company for services rendered. The Company valued these common shares at the fair value of $55,574 or $1.65 per common share based on the quoted trading price on the date of grant and reduced accrued salaries of $55,574.

During the year ended April 30, 2018, the Company issued 150,000 shares of the Company’s common stock as compensation to a consultant. The term of the consulting agreement is 12 months. The shares vest 1/12 per month over the term. The Company recognized stock based compensation of $33,413 during the year ended April 30, 2018.

Between March and April 2018, the Company issued an aggregate of 228,724 shares of the Company’s common stock to officers and employees of the Company for services rendered. The Company valued these common shares at the fair value of $430,001 or $2.39 per common share based on the quoted trading price on the date of grant and recognized stock based compensation of $430,001 during the year ended April 30, 2018.

Stock options issued for services

On December 21, 2017, the Company issued four employees an aggregate of 925,000 common stock options for services, having a total fair value of approximately $878,000. 231,250 of the options vest immediately, 231,250 vest on December 21, 2018, 231,250 vest on December 21, 2019 and 231,250 vest on December 21, 2020. These options expire on December 21, 2022. These options have an exercise price of $1.47 per share.

On December 21, 2017, the Company issued four board members an aggregate of 200,000 common stock options for services, having a total fair value of approximately $170,000. 100,000 of the options vest immediately and 100,000 vest on December 21, 2018. These options expire on December 21, 2022. These options have an exercise price of $1.47 per share.

On December 21, 2017, the Company issued three consultants an aggregate of 75,000 common stock options for services, having a total grant date fair value of approximately $76,000. 18,750 of the options vest immediately, 18,750 vest on December 21, 2018, 18,750 vest on December 21, 2019 and 18,750 vest on December 21, 2020. These options expire on December 21, 2022. These options have an exercise price of $1.47 per share.

On April 10, 2018, the Company issued our Chief Financial Officer (“CFO”) 50,000 common stock options for services, having a total fair value of approximately $52,000. 12,500 of the options vest immediately, 12,500 vest on April 9, 2019, 12,500 vest on April 9, 2020 and 12,500 vest on April 9, 2021. These options expire on April 9, 2023. These options have an exercise price of $1.49 per share.

On April 16, 2018, the Company issued an employee 50,000 common stock options for services, having a total fair value of approximately $47,000. 12,500 of the options vest on July 15, 2018, 12,500 vest on April 16, 2019, 12,500 vest on April 16, 2020 and 12,500 vest on April 16, 2021. These options expire on April 16, 2023. These options have an exercise price of $1.34 per share.

The Company used the Black-Scholes model to determine the fair value of stock options granted during the year ended April 30, 2018 and 2017. In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:

The following is a summary of the Company’s stock option activity during the years ended April 30, 2018 and 2017:

At April 30, 2017, the aggregate intrinsic value of options outstanding and exercisable was $0 and $0, respectively.

At April 30, 2018, the aggregate intrinsic value of options outstanding and exercisable was $1,000 and $0, respectively.

Stock-based compensation for stock options has been recorded in the consolidated statements of operations and totaled $174,835 for the year ended April 30, 2018 and $0 for the year ended April 30, 2017. As of April 30, 2018, the remaining balance of unamortized expense is $1,043,704 and is expected to be amortized over a weighted average period of 2.36 years.

Stock Warrants

The following is a summary of the Company’s warrant activity during the years ended April 30, 2018 and 2017:

At April 30, 2017, the aggregate intrinsic value of warrants outstanding and exercisable was $0 and $0, respectively.

At April 30, 2018, the aggregate intrinsic value of warrants outstanding and exercisable was $0 and $0, respectively.