Annual report pursuant to Section 13 and 15(d)

6. STOCK OPTIONS AND WARRANTS

v3.20.2
6. STOCK OPTIONS AND WARRANTS
12 Months Ended
Apr. 30, 2020
Share-based Payment Arrangement [Abstract]  
STOCK OPTIONS AND WARRANTS

NOTE 6 – STOCK OPTIONS AND WARRANTS

 

Stock Options

 

As of April 30, 2020, the Company had 67,200,000 outstanding stock options to its directors and officers (collectively, “Employee Options”) and consultants (“Non-Employee Options”).

 

During the years ended April 30, 2020 and 2019, the Company granted 11,000,000 and 11,000,000 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:

 

    Years Ended April 30,  
    2020     2019  
Risk-free interest rate     1.8%       2.0%  
Expected volatility     91%       97%  
Expected lives (years)     2.7       2.7  
Expected dividend yield     0.00%       0.00%  

 

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, 2020 and 2019, 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, 2020 and 2019, the Company granted Non-Employee Options of 1,200,000 and 1,200,000, 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:

 

    Years Ended April 30,  
    2020     2019  
Risk-free interest rate     1.6%       2.5%  
Expected volatility     90%       98%  
Expected lives (years)     5.0       5.0  
Expected dividend yield     0.00%       0.00%  

 

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.

 

A summary of the Company’s stock option activity and related information for the two years ended April 30, 2020 are shown below:

 

    Options     Weighted
Average
Exercise Price
    Weighted
Average
Grant Date
Fair Value
per Share
 
                   
Outstanding, April 30, 2018     95,250,000     $ 0.11     $ 0.11  
Issued     12,200,000       0.05       0.05  
Forfeited                  
Exercised                  
Outstanding, April 30, 2019     107,450,000       0.11       0.11  
Issued     12,200,000       0.04       0.04  
Forfeited     (52,450,000 )     0.15       0.14  
Exercised                  
Outstanding, April 30, 2020     67,200,000     $ 0.06     $ 0.06  
Exercisable, April 30, 2020     61,000,000     $ 0.07     $  
Vested and expected to vest     67,200,000     $ 0.06     $  

 

A summary of the activity for unvested stock options during the years ended April 30, 2020 and 2019 is as follows:

 

    Options     Weighted
Average
Grant Date
Fair Value
per Share
 
             
Unvested, April 30, 2018     7,200,000     $  
Granted     12,200,000       0.05  
Vested     (13,200,000 )      
Forfeited            
Unvested, April 30, 2019     6,200,000        
Granted     12,200,000       0.04  
Vested     (12,200,000 )      
Forfeited            
Unvested, April 30, 2020     6,200,000     $ 0.05  

 

The Company recorded $338,050 and $320,178 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, 2020 and 2019, respectively. At April 30, 2020, there remained $141,642 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 unvested options vest at 750,000 shares per month and are expected to be fully vested on December 31, 2020.

 

The Company recorded $41,326 and $92,171 of stock-based compensation related to the issuance of Non-Employee Options in exchange for services during the years ended April 30, 2020 and 2019, respectively. The unvested Non-Employee Options vest at 100,000 shares per month and are expected to be fully vested on June 30, 2020.

 

The following table summarizes the outstanding stock options by exercise price at April 30, 2020:

 

Exercise Price     Number of
Options
Outstanding
    Weighted
Average
Remaining
Contractual Life
(years) of
Outstanding
Options
    Weighted
Average
Exercisable
Price
    Number of
Options
Exercisable
    Weighted Average
Exercise Price
of Exercisable
Options
 
$ 0.063       15,600,000       0.40     $ 0.063       15,600,000     $ 0.063  
$ 0.104       10,450,000       1.20     $ 0.104       10,450,000     $ 0.104  
$ 0.0685       600,000       1.00     $ 0.0685       600,000     $ 0.0685  
$ 0.058       2,450,000       1.62     $ 0.058       2,450,000     $ 0.058  
$ 0.0734       1,200,000       2.00     $ 0.0734       1,200,000     $ 0.0734  
$ 0.0729       1,800,000       2.19     $ 0.0729       1,800,000     $ 0.0729  
$ 0.089       1,200,000       2.22     $ 0.089       1,200,000     $ 0.089  
$ 0.0553       500,000       1.22     $ 0.0553       500,000     $ 0.0553  
$ 0.0558       9,000,000       1.60     $ 0.0558       9,000,000     $ 0.0558  
$ 0.0534       1,200,000       3.35     $ 0.0534       1,200,000     $ 0.0534  
$ 0.0539       1,000,000       1.50     $ 0.0539       1,000,000     $ 0.0539  
$ 0.0683       500,000       1.58     $ 0.0683       500,000     $ 0.0683  
$ 0.0649       500,000       1.72     $ 0.0649       500,000     $ 0.0649  
$ 0.0495       9,000,000       2.33     $ 0.0495       9,000,000     $ 0.0495  
$ 0.0380       1,200,000       4.40     $ 0.0380       1,000,000     $ 0.0380  
$ 0.0404       1,000,000       2.00     $ 0.0404       1,000,000     $ 0.0404  
$ 0.0370       500,000       2.09     $ 0.0370       500,000     $ 0.0370  
$ 0.0340       500,000       2.22     $ 0.0340       500,000     $ 0.0340  
$ 0.0408       9,000,000       2.81     $ 0.0408       3,000,000     $ 0.0408  
  Total       67,200,000       1.61     $ 0.06       61,000,000     $ 0.07  

 

The aggregate intrinsic value of outstanding options as of April 30, 2020 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, 2020 of approximately $0.0245 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.

 

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.

 

Effective June 13, 2019 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,338,889 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 $0.01 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 July 15, 2019 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,944,444 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 $0.01 per share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate value of these warrants to be approximately $12,000. The warrants have a cashless exercise feature.

  

Effective August 7, 2019 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 3,000,000 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 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 $10,000. The warrants have a cashless exercise feature.

 

Effective August 7, 2019 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 500,000 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 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 $2,000. The warrants have a cashless exercise feature.

 

Effective February 24, 2020 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,000,000 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 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 $3,000. The warrants have a cashless exercise feature.

 

Effective February 24, 2020 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,000,000 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 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 $3,000. The warrants have a cashless exercise feature.

 

Effective March 24, 2020 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 3,500,000 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 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 $12,000. The warrants have a cashless exercise feature.

 

Effective March 31, 2020 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 1,000,000 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 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 $3,000. The warrants have a cashless exercise feature.

 

Effective April 7, 2020 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 2,500,000 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 $17,000. The warrants have a cashless exercise feature.

 

Effective April 21, 2020 the Company issued a common stock purchase warrant to Aeon for a Block Trade. The Company issued a warrant to purchase 833,333 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 $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, 2020 are shown below:

 

    Warrants     Weighted
Average
Exercise Price
 
Outstanding, April 30, 2018     33,993,104     $ 0.10  
Issued     8,084,693        
Expired            
Outstanding, April 30, 2019     42,077,797       0.09  
Issued     16,666,666        
Expired     (10,854,308 )      
Outstanding, April 30, 2020     47,890,155        
Exercisable, April 30, 2020     47,890,155     $ 0.05  

  

The following table summarizes additional information concerning warrants outstanding and exercisable at April 30, 2020:

 

Exercise Prices   Number of
Warrant Shares
Exercisable at
April 30, 2020
    Weighted
Average
Remaining
Contractual
Life
    Weighted
Average
Exercise Price
 
                   
$0.12     17,000,000       0.69          
$0.065     769,231       1.64          
$0.0575     869,565       1.93          
$0.03     2,500,000       2.58          
$0.026     1,923,077       3.16          
$0.025     2,000,000       2.24          
$0.018     1,388,889       3.08          
$0.011     2,272,727       3.51          
$0.01     5,000,000       4.42          
$0.015     833,333       4.98          
$0.009     3,333,333       4.17          
$0.005     10,000,000       4.67          
      47,890,155       2.73     $ 0.05