NOTE 5 – STOCK OPTIONS AND WARRANTS

Stock Options

As of April 30, 2019, the Company had 107,450,000 outstanding stock options to its directors and officers (collectively, “Employee Options”) and consultants (“Non-Employee Options”).

During the years ended April 30, 2019 and 2018, the Company granted 11,000,000 and 10,750,000 Employee Options, respectively.

The fair value of the Employee Options at the date of grant was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:

The Company’s computation of expected volatility is based on the historical daily volatility of its publicly traded stock. For stock option grants issued during years ended April 30, 2019 and 2018, the Company used a calculated volatility for each grant. The Company lacks adequate information about the exercise behavior now and has determined the expected term assumption under the simplified method provided for under ASC 718, which averages the contractual term of the Company’s stock options of five years with the average vesting term of two and one-half years for an average of three years. The dividend yield assumption of zero is based upon the fact the Company has never paid cash dividends and presently has no intention of paying cash dividends. The risk-free interest rate used for each grant is equal to the U.S. Treasury rates in effect at the time of the grant for instruments with a similar expected life.

During the years ended April 30, 2019 and 2018, the Company granted Non-Employee Options of 1,200,000 and 5,400,000, respectively.

The fair value of the Non-Employee Options was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:

Non-Employee Option grants that do not vest immediately upon grant are recorded as an expense over the vesting period. Effective August 1, 2018 the Company adopted ASU 2018-07 early using the modified retrospective transition approach. The Company determined there was no transition adjustment upon adoption of ASU 2018-07. The Company issued 1,200,000 stock options to a non-employee during the year ended April 30, 2019. The value of these options was determined as of the grant date using the Black-Scholes-Merton option-pricing model and compensation expense is being recognized over the service period.

A summary of the Company’s stock option activity and related information for the two years ended April 30, 2019 are shown below:

A summary of the activity for unvested stock options during the years ended April 30, 2019 and 2018 is as follows:

The Company recorded $320,178 and $741,476 of stock-based compensation related to the issuance of Employee Options to certain officers and directors in exchange for services during the years ended April 30, 2019 and 2018, respectively. At April 30, 2019, there remained approximately $226,195 of unrecognized compensation expense related to unvested Employee Options granted to officers and directors, to be recognized as expense over a weighted-average period of the remaining eight months in the calendar year. The non-vested options vest at 750,000 shares per month and are expected to be fully vested on December 31, 2019.

The Company recorded $92,171 and $203,602 of stock-based compensation related to the issuance of Non-Employee Options in exchange for services during the years ended April 30, 2019 and 2018, respectively. The non-vested Non-Employee Options vest at 100,000 shares per month and are expected to be fully vested on June 30, 2019.

The following table summarizes ranges of outstanding stock options by exercise price at April 30, 2019:

The aggregate intrinsic value of outstanding options as of April 30, 2019 was zero. This represents options whose exercise price was less than the closing fair market value of the Company’s common stock on April 30, 2019 of approximately $0.041 per share.

Warrants

The warrants issued by the Company are equity-classified. The fair value of the warrants was recorded as additional paid-in-capital, and no further adjustments are made.

For stock warrants paid in consideration of services rendered by non-employees, the Company recognizes consulting expense in accordance with the requirements of ASC 505.

During the year ended April 30, 2013, the Company entered into numerous “Private Placement” agreements whereby investors, in exchange for their investment, received restricted common stock of the Company and three classes of warrants, all with five-year terms: (i) Class A with an exercise price of $0.075; (ii) Class B with an exercise price of $0.12; and (iii) Class C with an exercise price of $0.18. For each Class of warrant, there were 19,811,200 warrant shares issued.

In January 2014, the Company implemented a “Warrant Conversion Program” (“Program”) pertaining to all Class A warrants. The Program consisted of offering each holder of Class A warrants the ability to exercise all their Class A warrants into shares of common stock and to also receive an equal number of new Class D warrants, with an exercise price of $0.25 per warrant share. The Program resulted in 18,755,200 Class A warrants being converted into restricted common stock and the issuance of the same number of Class D warrants to those who participated in the Program.

Also, during the year ended April 30, 2014 four of the Private Placement investors exercised 2,318,000 warrant shares of their Class B warrants into an equal number of shares of restricted common stock.

During the year ended April 30, 2018 all remaining original Private Placement warrants expired: (i) Class A, 1,056,000 warrant shares: (ii) Class B, 17,493,200 warrant shares; (iii) Class C, 18,755,200 warrant shares. All 18,755,200 Class D Warrants expired on December 31, 2016.

Effective May 24, 2017, the Company issued a Common Stock purchase warrant to Chardan for a Block Trade. The Company issued a warrant to purchase 833,333 shares based upon a Block Trade pursuant to the amended engagement agreement dated March 21, 2017 with Chardan. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of $0.03 per share. Using the Black-Scholes-Merton warrant pricing model, the Company determined the aggregate value of these warrants to be approximately $20,000. The warrants have a cashless exercise feature.

Effective July 26, 2017, the Company issued a Common Stock purchase warrant to Chardan for a Block Trade. The Company issued a warrant to purchase 2,000,000 shares based upon a Block Trade pursuant to the amended engagement agreement dated March 21, 2017 with Chardan. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of approximately $0.03 per share. Using the Black-Scholes-Merton warrant pricing model, the Company determined the aggregate value of these warrants to be approximately $39,000. The warrants have a cashless exercise feature.

Effective February 27, 2018, the Company issued a Common Stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,666,667 shares based upon a Block Trade pursuant to the engagement agreement dated February 22, 2018 with Aeon. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of $0.03 per share. Using the Black-Scholes-Merton warrant pricing model, the Company determined the aggregate value of these warrants to be approximately $37,000. The warrants have a cashless exercise feature.

Effective May 30, 2018, the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,388,889 shares of common stock based upon a Block Trade pursuant to the engagement agreement with Aeon dated February 22, 2018. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of approximately $0.02 per share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate value of these warrants to be approximately $19,000. The warrants have a cashless exercise feature.

Effective June 28, 2018, the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,923,077 shares of common stock based upon a Block Trade pursuant to the engagement agreement with Aeon dated February 22, 2018. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of approximately $0.03 per share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate value of these warrants to be approximately $38,000. The warrants have a cashless exercise feature.

Effective November 1, 2018, the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 2,272,727 shares of common stock based upon a Block Trade pursuant to the engagement agreement with the Company’s placement agent dated February 22, 2018. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of approximately $0.01 per share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate value of these warrants to be approximately $19,000. The warrants have a cashless exercise feature.

Effective March 26, 2019 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,250,000 shares of common stock based upon a Block Trade pursuant to the engagement agreement with Aeon dated February 22, 2018. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of $0.01 per share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate value of these warrants to be approximately $9,000. The warrants have a cashless exercise feature.

Effective March 26, 2019 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,250,000 shares of common stock based upon a Block Trade pursuant to the engagement agreement with Aeon dated February 22, 2018. The Company classified these warrants as equity, and the warrants have a term of five years with an exercise price of $0.01 per share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate value of these warrants to be approximately $9,000. The warrants have a cashless exercise feature.

A summary of the Company’s warrant activity and related information for the two years ended April 30, 2019 are shown below:

The following table summarizes additional information concerning warrants outstanding and exercisable at April 30, 2019: