Quarterly report pursuant to Section 13 or 15(d)

Description of Business and Significant Accounting Policies (Policies)

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Description of Business and Significant Accounting Policies (Policies)
6 Months Ended
Oct. 31, 2015
Accounting Policies [Abstract]  
Liquidity and Going Concern

Liquidity and Going Concern

 

At October 31, 2015, the Company had cash and cash equivalents of approximately $617,000 and a working capital of approximately $1.48 million. During the six month period ended October 31, 2015, the Company incurred a net loss of approximately $97,000 and included approximately $272,000 of stock based compensation expense. As of October 31, 2015, the Company also had an accumulated deficit of approximately $24.6 million. The Company has primarily financed operations through the sale of equity securities and debt securities.

 

In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of the NJ State tax benefit associated with its State of New Jersey specific Net Operating Losses (NOLs) for which the Company has received approval from the state of NJ.  The Company executed a contract of sale and received proceeds of approximately $190,000 on December 9, 2015.

 

While the Company has made significant financial and operational changes in the last nine months, there remains substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

If current and projected revenue growth does not meet estimates, the Company may continue to choose to raise additional capital through debt and/or equity transactions, reduce certain overhead costs through the deferral of salaries and other means, or settle liabilities through negotiation. Currently, the Company does not have any commitments or assurances for additional capital, nor can the Company provide assurance that such financing will be available to it on favorable terms, or at all.

Basis of Presentation

Basis of Presentation

 

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of October 31, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended October 31, 2015 are not necessarily indicative of the operating results for the full fiscal year for any future period.

 

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2015. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended April 30, 2015, and updated, as necessary, in this Quarterly Report on Form 10-Q.

Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including deferred tax asset valuation allowances and certain other reserves and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Some of the more significant estimates made by management include allowance for doubtful accounts and sales returns, reserve for inventory obsolescence, deferred income tax asset and related valuation allowance, fair value of certain financial instruments and other operating allowances and accruals. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

 

Revenue is recognized when title passes upon shipment of goods to customers. The Company’s revenue earning activities involve delivering or producing goods. The following criteria are met before revenue is recognized: persuasive evidence of an arrangement exists, shipment has occurred, selling price is fixed or determinable and collection is reasonably assured. The Company does experience a minimal level of sales returns and allowances for which the Company accrues a reserve at the time of sale. Estimated warranty costs are accrued by management upon product shipment based on an estimate of future warranty claims.

Net loss per share

Net Loss per Share

 

Basic net loss per share is computed by dividing the net loss available to common stock holders by the weighted average number of shares of common stock issued and outstanding during the period. The calculation of diluted loss per share for the three and six months ended October 31, 2015 and 2014 includes only the weighted average number of shares of common stock outstanding. The denominator excludes the dilutive effect of common shares issuable upon exercise or conversion of stock options, warrants, convertible notes and Series A preferred shares as their effect would be anti-dilutive.

 

Anti-dilutive securities consisted of the following at October 31:

 

    2015     2014  
Common stock equivalent of convertible notes     300,000       240,000  
Common stock equivalent of convertible notes – related parties     27,210       51,020  
Series A preferred shares     2,838,207        
Warrants     3,358,275       1,385,775  
Common shares reserved for series A preferred share dividends     46,785          
Stock options     335,747       256,580  
Total     6,906,224       1,933,375  
Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”.  The purpose of this new standard is to clarify the principles for recognizing revenue so that it can be applied consistently across various transactions, industries and capital markets.  We have not completed our assessment of ASU No. 2014-09.

 

The Company has evaluated the other recent accounting pronouncements through ASU 2015-17 and believe that none of them will have a material effect on its condensed consolidated financial statements.