NOTE 9 — STOCKHOLDERS’ EQUITY

2017 Equity Incentive Plan

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

On January 1st of each year during the term of the Plan (the “Calculation Date”), the aggregate number of shares of Common Stock that are available for issuance shall automatically be increased by such number of shares as is equal to the number of shares sufficient to cause the Share Limit (as defined in the Plan) to equal twenty percent (20%) of the issued and outstanding Common Stock of the Company at such time, provided, however, that if on any Calculation Date the number of shares equal twenty percent (20%) of our total issued and outstanding Common Stock is less than the number of shares of Common Stock available for issuance under the Plan, no change will be made to the aggregate number of shares of Common Stock issuable under the Plan for that year (such that the aggregate number of shares of Common Stock available for issuance under the Plan will never decrease).

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 was 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 7).

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 4). 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 former 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. For the year ended April 30, 2018, the Company received total proceeds of approximately $2,590,000.

On November 2, 2018, the Company entered into an ATM Agreement with H.C. Wainwright & Co., LLC as sales manager. Under the terms of the ATM Agreement, the Company will be entitled to sell, at its sole discretion and from time to time as it may choose, common stock of the Company through Wainwright, with such sales having an aggregate gross sales value of up to $1,000,000. Subject to the terms and conditions of the ATM Agreement, Wainwright will use its commercially reasonable efforts to sell the shares of common stock from time to time, based upon the Company’s instructions. The Company has provided Wainwright with customary indemnification rights, and Wainwright will be entitled to a commission at a fixed commission rate equal to 3.0% of the gross proceeds per share sold.

For the year ended April 30, 2019, the Company has sold 290,066 shares of common stock and raised a net proceeds of $219,796, net of issuance costs including legal cost related to the sale of shares of common stock of $79,031, through the ATM Agreement at prices per share averaging $1.03.

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 accrued services

In May 2017, in the Company issued 37,879 shares of the Company’s common stock having a fair value of $100,000 to the Company’s former 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 14,706 shares of the Company’s common stock to its former Chief Geologist which consisted of 14,706 shares related to services rendered to the Company from February 2017 to April 2017 pursuant to his employment agreement (see Note 11) having a total fair value of $37,500 or $2.55 per common share based on the quoted trading price on the date of grant. In connection with these issuances, the Company reduced accrued salaries by $137,500 during the year ended April 30, 2018.

On May 8, 2018, the Company paid an accrued service liability to its former Chief Geologist in the amount of $12,500 by issuing 9,191 shares of common stock at a price of $1.36 per common share based on the quoted trading price on the date of grant. In connection with this issuance, the Company reduced accrued salaries by $12,500 during the year ended April 30, 2019.

Common stock issued for exploration services

On December 31, 2018, the Company paid a portion of its accounts payable to a vendor, in the amount of $183,226 by issuing 199,159 shares of common stock. The Company valued these common shares at the fair value of $183,226 or $0.92 per common share based on the quoted trading price on the date of grant. The Company recognized stock-based compensation of $183,226 during the year ended April 30, 2019.

Common stock issued for salaries

Between May 2018 and April 2019, the Company issued 130,941 shares of the Company’s common stock to its former Chief Geologist for services rendered to the Company from May 2018 to March 2019 pursuant to his employment agreement (see Note 11). The Company valued these common shares at the fair value of $137,500, or $0.90 to $1.33 per common share based on the quoted trading prices on the date of grants and recognized stock-based compensation of $137,500 during the year ended April 30, 2019.

On April 12, 2019, the Company issued an aggregate of 438,820 shares of the Company’s common stock to the CEO and COO of the Company for services rendered. The Company valued these common shares at the fair value of $430,000 or $0.98 per common share based on the quoted trading price on the date of grant and recognized stock-based compensation of $430,000 during the year ended April 30, 2019.

Common stock issued for prepaid services

Between May 2018 and April 2019, the Company issued 130,941 shares of the Company’s common stock to its former Chief Geologist for services rendered to the Company from May 2018 to March 2019 pursuant to his employment agreement (see Note 11). The Company valued these common shares at the fair value of $137,500, or $0.90 to $1.33 per common share based on the quoted trading prices on the date of grants and recognized stock-based compensation of $137,500 during the year ended April 30, 2019.

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 $5,975 (amortization of prepaid stock-based expense balance as of April 30, 2018) and $274,850 during the years ended April 30, 2019 and 2018, respectively.

Common stock issued for services

During the year ended April 30, 2018, the Company issued an aggregate of 74,091 shares of the Company’s common stock to its former Chief Geologist for services rendered to the Company pursuant to his employment agreement (see Note 11). The Company valued these common shares at the fair value of $137,500 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 $137,500 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.

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.

Between March 2018 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.

On February 19, 2019, the Company entered into consulting agreements with various investor relations firms under which it was required to pay for services in cash and shares of the Company’s common stock. The consulting agreements range from a six-month to twelve-month term. Additionally, on April 16, 2019, the Company entered into a one year consulting agreement with a director of the Company for providing services related to investor and strategic introduction to potential industry partners. A total of 201,874 shares were issued at a fair value of $205,630 or $0.98 to $1.03 per common share based on the quoted trading prices on the date of grants. The Company recognized stock-based compensation of $45,253 during the year ended April 30, 2019 and recorded prepaid stock-based expense of $160,377 at April 30, 2019 to be amortized over the respective terms of the consulting agreements.

Common stock issued for services with vesting terms

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 February 20, 2018, the Company issued 150,000 shares of the Company’s common stock as compensation to a consultant. The term of the consulting agreement was for 12 months. The shares vested 1/12 per month over the term. The Company valued these common shares at the fair value of $199,875 or $1.33 per common share based on the quoted trading prices on the date of grants.

On September 30, 2018, the Company issued an aggregate of 1,000,000 shares of the Company’s common stock to officers, directors, employees and consultants for services rendered. The shares vest 50% on the date of issuance and 50% on the one-year anniversary of the date of issuance. The 1,000,000 shares had a fair value of $990,000 or $0.99 per common share based on the quoted trading price on the date of grant and will be expensed over the vesting period.

In connection with the issuances above, the Company recognized total stock-based compensation of $982,370 and $37,004 during the years ended April 30, 2019 and 2018, respectively. As of April 30, 2019, the remaining balance of unvested common stock amounted to $188,488.

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. Of these options, 231,250 vested immediately, 231,250 vested 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. Of these options, 37,500 unvested options were forfeited with the departure of an employee on May 1, 2018.

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 vested 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. Of these options, 18,750 vested immediately, 18,750 vested 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 50,000 common stock options to the former CFO of the Company for services, having a total fair value of approximately $52,000. Of these options 12,500 vested immediately, 12,500 were to vest on April 9, 2019, 12,500 were to vest on April 9, 2020 and 12,500 were to vest on April 9, 2021. These options expire on April 9, 2023. These options have an exercise price of $1.49 per share. Of these options, 37,500 unvested options were forfeited with the departure of the CFO on December 31, 2018.

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. Of these options, 12,500 vested on July 15, 2018, 12,500 vested 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, 2019 and 2018. 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, 2019 and 2018:

At April 30, 2019 and 2018, the aggregate intrinsic value of options outstanding and exercisable was $0 and $1,000, respectively.

Stock-based compensation for stock options has been recorded in the consolidated statements of operations and totaled $328,082 and $174,835 for the years ended April 30, 2019 and 2018. As of April 30, 2019, the remaining balance of unvested stock options is $477,014 and is expected to be recognized over the remaining weighted average vesting period of 1.66 years.

Stock Warrants

The following is a summary of the Company’s warrant activity during the years ended April 30, 2019 and 2018:

At April 30, 2019 and 2018, the aggregate intrinsic value of warrants outstanding and exercisable was $0 and $0, respectively.