Annual report pursuant to Section 13 and 15(d)

Securities Purchase Agreement

v3.7.0.1
Securities Purchase Agreement
12 Months Ended
Apr. 30, 2017
Equity [Abstract]  
Securities Purchase Agreement

Note 5. Securities Purchase Agreement

 

Common Stock

 

On July 31, 2015, the Company entered into separate securities purchase agreements with five (5) accredited investors for the issuance and sale of an aggregate of 41,666 shares of its common stock at a per share price of $12.00 or an aggregate purchase price of approximately $500,000.

 

Stock-based compensation

 

In the fiscal year ended April 30, 2017, the Company did not grant any stock options. For fiscal year ended April 30, 2017 the Company recorded approximately $476,000 of stock-based compensation expense which relates to 55,083 restricted stock grants. In fiscal year ended April 30, 2016, the Company granted stock options to purchase 19,889 shares of common stock to certain employees, officers and board of directors of the Company. Additionally the Company issued 28,000 shares of common stock to non-employees. The Company’s recorded approximately $624,000 of stock-based compensation expense in the fiscal 2016 consolidated statements of operations.

 

On January 19, 2016, the Company entered into exchange agreements (the “Option Exchange Agreements”) (Note 6) with certain of its employees pursuant to which such employees agreed to return options to purchase an aggregate of up to 27,256 shares of common stock in consideration for restricted stock grants (the “Restricted Stock Grants”) in the aggregate amount of 21,922 shares of Common Stock pursuant to the Company’s 2011 Equity Incentive Plan and 2014 Equity Incentive Plan, as amended. The Restricted Stock Grants are vested in full upon issuance. The Company recorded an additional one time stock based compensation expense of approximately $122,000 as a result of the stock option exchange agreements. As of April 30, 2017, there was no unearned compensation costs related to stock options remaining.

 

Series A preferred shares

 

In accordance with the Series A Purchase Stock Purchase Agreement, on October 30, 2015, investors in the Series A Preferred Stock exercised a right to purchase 20,000 shares of Series A Preferred Stock and warrants; gross proceeds of the transaction were $100,000.

 

In fiscal year ended April 30, 2016, holders of Series A Preferred Stock converted 123,300 Series A Preferred shares into 51,375 shares of Common Stock. The converted value for each Series A Preferred Share was approximately $11.84 which resulted in approximately $365,000 reduction to the Series A Preferred Stock and a $365,000 offsetting increase to Additional Paid in Capital in the April 30, 2016 consolidated balance sheet.

 

Dividends on the Series A Preferred Stock recorded in the year ended April 30, 2016 were approximately $122,000. The Board of Directors authorized accumulated dividends from the date of Series A Preferred Stock issuance to be paid in the form of Common Stock. This resulted in the issuance of 11,603 Common Shares and a reduction of accumulated dividends of approximately $233,000 and offsetting increase of approximately $233,000 in Additional Paid in Capital in the accompanying condensed balance sheet. The preferential cumulative dividends accrued at the rate of 8% per annum. The dividends payable were paid in shares of common stock and were valued at the volume weighted average price of the Company’s common stock over the ten (10) consecutive trading days ended on the second trading day immediately before the dividend payment date.

 

During fiscal year ended April 30, 2016, all Series A Preferred Stock were converted into Common Shares or exchanged for into Series B Preferred Stock. (see note 6). No Series A Preferred Stock were outstanding at April 30, 2017 or April 30, 2016.

 

Series B preferred shares

 

On January 15, 2016 the Company entered into an agreement with the institutional bridge note holders to exchange their entire balance (principal and accrued and unpaid interest) of Bridge Notes originally issued on July 14, 2014 through the issuance of 55,083 shares of Series B Preferred Stock, having a value of $649,967. The carrying value of principal and accrued interest extinguished was $672,000 resulting in a gain on extinguishment of $22,033 (see note 6).

 

During the fiscal year ended April 30, 2016, the holders of Series B Preferred Stock converted 4,125 Series B Preferred shares into 6,875 shares of Common Stock. The converted value for each Series B Preferred Share was approximately $12.20 or $50,325 and resulted in an offsetting increase to Additional Paid in Capital in the April 30, 2016 consolidated balance sheet.

 

During the fiscal year ended April 30, 2017, the holders of Series B Preferred Stock converted 331,559 Series B Preferred Shares into 552,598 shares of Common Stock. The converted value for each Series B Preferred Share was approximately $12.20 or $4,045,007 and resulted in an offsetting increase to Additional Paid in Capital in the April 30, 2017 consolidated balance sheet. As of April 30, 2017 there are no remaining outstanding Series B Preferred Shares.

 

Series D preferred shares

 

On August 3, 2016, the Company entered into separate securities purchase agreements with accredited investors for the issuance and sale of the Company’s newly designated 0% Series D Convertible Preferred Stock which are convertible into shares of the Company’s common stock, par value $0.001 per share. The Series D Preferred Stock is governed by a Certificate of Designations, Preferences and Rights of the 0% Series D Convertible Preferred Stock. Each share of Series D Preferred Stock was sold at a per share purchase price of $136.00 and converts into 25 shares of common stock, subject to adjustment for dividends and stock splits. On August 5, 2016, the Company closed the private placement and sold 3,699 shares of Series D Preferred Stock convertible into an aggregate of approximately 92,500 shares of common stock with gross proceeds to the Company of $503,000. The Company evaluated the convertible Series D Preferred Stock conversion features under ASC 815, Derivatives and Hedging and determined that under this the conversion features did not meet the definition of a derivative. The Company also evaluated the Series D Preferred Stock purchase agreement and it does not contain a beneficial conversion feature.

 

On February 2, 2017 the Company issued a dividend of approximately 3,699 shares of Series D Preferred stock to the holders of the Series D Convertible Preferred Stock. The Company recorded a non cash dividend of approximately $544,000. The dividend was calculated using the conversion rate 25 shares of common stock for each Preferred Series D share at a closing market price on February 2, 2017 of $5.88. The dividend was recorded as an off-setting debit and credit to Additional Paid in Capital in the April 30, 2017 consolidated balance sheet.

 

As of April 30, 2017, 7,398 Series D Preferred Shares have been converted into approximately 184,927 Common Shares. No Series D Preferred Stock were outstanding at April 30, 2017.