Quarterly report pursuant to Section 13 or 15(d)


6 Months Ended
Oct. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  

Stock Options


As of October 31, 2015, the Company had outstanding stock options held by its directors, officers and an employee that were issued pursuant to compensation and director agreements.


The Company has adopted the provisions of ASC 718, “Compensation-Stock,” which requires the measurement and recognition of compensation expense for all stock-based awards made to employees.


The fair value of the stock options at the date of grant was estimated using the Black-Scholes option-pricing model.


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 the periods ended October 31, 2015 and 2014, the Company used a calculated volatility for each grant. The Company lacks adequate information about the exercise behavior at this time 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 fifth years for an average of two and two third 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. No amounts relating to employee stock-based compensation have been capitalized.


Presented below is the Company’s stock option activity for employees and directors:


A summary of the activity for unvested employee stock options during the six months ended October 31, 2015 is presented below: 


      Options Outstanding     Weighted Average Grant Date Fair Value per Share  
Nonvested, April 30, 2015       6,600,000     $ 0.10  
Vested       3,600,000       0.10  
Nonvested, October 31, 2015       3,000,000     $ 0.10  

The Company recorded approximately $141,000 and $286,000 and $0 and $0 of non-cash charges related to the vesting of stock options to certain directors and an employee in exchange for services during the three months and six months ended October 31, 2015 and 2014, respectively.


At October 31, 2015, there remained approximately $238,000 of unrecognized compensation expense related to unvested employee stock options to be recognized as expense over a weighted-average period of one year.


The following table summarizes ranges of outstanding stock options at October 31, 2015:


    Exercise Prices  
Exercise Price   $ 0.19     $ 0.11     $ 0.18  
Number of Options     25,000,000       27,200,000       250,000  
Weighted Average Remaining Contractual Life (years)     3.92       4.17       4.47  
Weighted Average Stock Price   $ 0.19     $ 0.11     $ 0.18  
Number of Options Exercisable     25,000,000       27,200,000       250,000  
Weighted Average Contractual Life (years)     5       5       5  
Weighted Average Exercise Price   $ 0.19     $ 0.11     $ 0.18  


There was no aggregate intrinsic value of outstanding options as of October 31, 2015. This represents options whose exercise price was less than the closing fair market value of the Company’s common stock on October 31, 2015 of approximately $0.11 per share.


Warrants (As Restated)


The Company issued certain cashless warrants in connection with its entry into the Consultant Agreement during the year ended April 30, 2015. The Company accounted for the cashless warrants as a derivative liability, as disclosed in the Original Filing. However, upon further analysis, the Company determined that the cashless warrants should have been accounted for as equity in accordance with U.S. GAAP. Additionally, the Company determined that the issuance of shares of common stock and the issuance of certain cash warrants and the cashless warrants to the consultant pursuant to the Consultant Agreement should have been recorded as a prepaid asset and amortized over the term of the Consultant Agreement in accordance with U.S. GAAP in the Original Filing.


The warrants issued by the Company are classified as equity. The fair value of the warrants calculated at the time of issuance was recorded as an increase to additional-paid-in-capital, and no further adjustments were 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 505-50 and ASC 505, as amended.


A summary of the Company’s warrant activity and related information for the six months ended October 31, 2015 are shown below:


      Warrants     Weighted Average Price     Weighted Average Fair Value  
Outstanding, April 30, 2015       72,969,908     $     0.17     $     0.08  
Outstanding, October 31, 2015       72,969,908       0.17       0.08  
Exercisable, October 31, 2015       72,969,908     $ 0.17     $ 0.08  


The following table summarizes additional information concerning warrants outstanding and exercisable at October 31, 2015:


Exercise Prices   Number of Warrant Shares Exercisable at 10/31/2015     Weighted Average Remaining Contractual Life     Exercisable Weighted Average Exercise Price  
Five Year Term - $0.08     1,056,000       1.94          
Five Year Term - $0.12     18,347,508       2.25          
Five Year Term - $0.18     19,811,200       2.17          
Five Year Term - $0.25     18,755,200       2.18          
Five Year Term - $0.11     10,000,000       4.40          
Nine Month Term - $0.11     5,000,000       0.17          
Total     72,969,908       2.36     $ 0.17