̽Ƶapp

Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.20.1
Stockholders' Equity
 9 Months Ended
Jan. 31, 2020
Stockholders' Equity Note [Abstract]
Stockholders' Equity Stockholders’ Equity
On June 28, 2019, the Company amended its Certificate of Incorporation, as amended, to reduce in the number of shares of common stock the Company is authorized to issue from 250,000,000 to 40,000,000 shares, and the number of shares of preferred stock the Company is authorized to issue from 10,000,000 to 1,000,000 shares. The stockholders of the Company had previously approved the Amendment at a special meeting of stockholders held on June 28, 2019.
Preferred Stock
The Company is authorized to issue 1,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our Board of Directors. As of January31, 2020 and April30, 2019, we had no shares of preferred stock issued and outstanding.
Common Stock
The Company is authorized to issue 40,000,000 shares of common stock.
During the three months ended January31, 2020, the Company issued 8,352 shares of common stock upon the cashless exercise of stock options.
During the three months ended January31, 2020, the Company issued 121,407 shares of common stock upon the exercise of stock options for cash and received proceeds of $530,668.
During the three months ended January31, 2020, the Company issued 25,000 shares of common stock for services in connection with the CFO transition which immediately vested. The total value of the grant was $177,500. The Company also issued 15,000 shares of common stock to its new Chief Financial Officer upon the vesting of RSUs previously granted to him for Audit Committee services. The total value of the grant was approximately $103,350.
On January 22, 2020 the Company raised $17,267,250 through the issuance of 2,415,000 common shares at a price of $7.15. The net proceeds were $16,044,879 after deducting underwriting discounts and commissions. The number of shares sold through this public offering includes 315,000 shares of common stock pursuant to an option granted to the underwriters to cover over allotments that were exercised in full.
During the three months ended October 31, 2019, the Company issued 80,313 shares of common stock upon the cashless exercise of stock options.
During the three months ended October 31, 2019, the Company issued 57,526 shares of common stock upon the cashless exercise of 121,070 warrants.
During the three months ended October 31, 2019, the Company issued 90,950 shares of common stock upon the exercise of stock options for cash and received proceeds of $192,522.

During the three months ended July 31, 2019, the Company issued 101,894 shares of common stock upon the cashless exercise of stock options.

During the three months ended July 31, 2019, the Company issued 19,403 shares of common stock upon the cashless exercise of 43,860 warrants.

During the three months ended July 31, 2019, the Company issued 21,876 shares of common stock upon the exercise of stock options for cash and received proceeds of $45,190.
Restricted Stock
There were 226,922 unvested shares of restricted common stock outstanding at January31, 2020. Total unrecognized compensation expense related to the unvested restricted stock as of January31, 2020 amounted to $1,285,524 which will be amortized over the remaining vesting periods.
In December 2019, the CFO and CAO received grants of 100,000 and 20,000 RSU's, respectively, as part of their employment agreements. These grants will vest annually over three years and had a combined fair value of $826,800.
In November 2019, the Chief Nursing Officer received a grant of 50,000 RSUs as part of her employment agreement. These grants will vest annually over three years and had a combined fair value of $314,500. The Company also issued 17,250 RSUs to employees vesting over three years subject to continued employment and had a combined fair value of $108,500.
The Board approved a grant of 25,000 shares of restricted stock to the then Chief Financial Officer in September 2018. The stock price was $7.15 on the date of the grant and was to vest over a period of 36 months. The value of the compensation was approximately $180,000. Upon leaving the Company on November 30, 2019 the remaining two-thirds of restricted stock was immediately vested as part of the separation agreement resulting in accelerated amortization expense of approximately $108,000.
During the three months ended July 31, 2019, the Company issued 30,131 shares of restricted common stock to certain directors with a fair value of $122,332.
On June 18, 2019, in order to correct errors in a third party software system used to track stock options, the Company granted Andrew Kaplan, a current director, 5,131 shares of restricted common stock and two former directors (not recipients of the May 2019 stock options mentioned above) a total of 25,000 shares of restricted common stock.
During fiscal 2019, the Company granted 25,000 shares to its investor relations firm, of which 5,000 were vested with the balance vesting quarterly over one year, subject to continued service. The total value was $122,250 which is being recognized over the service period.
On December 24, 2018, the Company granted a total of 24,672 shares to certain directors with a value of $126,320 which is being recognized over 36 months.
Warrants
A summary of the Company’s warrant activity during the nine months ended January31, 2020 is presented below:
Warrants Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2019 731,152 $ 5.28 3.29 $ 413,296
Granted — — — —
Exercised (164,929) $ 2.05 — —
Surrendered — — — —
Expired — — — —
Balance Outstanding, January 31, 2020 566,223 $ 6.22 3.41 $ 1,425,727
Exercisable, January 31, 2020 516,223 $ 6.35 3.34 $ 1,233,227
ALL WARRANTS EXERCISABLE WARRANTS
Exercise
Price		 Weighted
Average
Exercise
Price		 Outstanding
No. of
Warrants		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining Life
In Years		 Exercisable
No. of
Warrants
$ 4.89 $ 4.89 50,000 $ 4.89 4.19 50,000
$ 5.85 $ 5.85 92,049 $ 5.85 3.76 92,049
$ 6.00 $ 6.00 200,000 $ 6.00 4.10 200,000
$ 6.87 $ 6.87 224,174 $ 6.87 2.48 224,174
566,223 566,223
On August 17, 2019 an investor elected a cashless exercise of 13,542 warrants, receiving 6,271 shares. On August 20, 2019 two investors elected cashless exercises of 18,818 and 88,710 warrants, receiving 8,970 and 42,285 shares, respectively.
On June 3, 2019, a former director elected a cashless exercise of 21,930 warrants, receiving 9,806 shares. On June 7, 2019, the Chief Executive Officer elected a cashless exercise for the same amount receiving 9,597 shares.
Stock Incentive Plan and Stock Option Grants to Employees and Directors
On March 13, 2012, the Company adopted the ̽Ƶapp, Inc. 2012 Equity Incentive Plan (the “2012 Plan”) that provides for the grant of 3,500,000 shares in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and restricted stock units ("RSUs") to employees, consultants, officers and directors. As of January31, 2020, there were 177,046 shares remaining available for future issuance under the 2012 Plan.
On December 13, 2018, the stockholders of the Company approved the ̽Ƶapp, Inc. 2018 Equity Incentive Plan (the “2018 Plan”) that provides for the grant of 500,000 shares in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and restricted stock units to employees, consultants, officers and directors.
On December 30, 2019, the Company held its Annual Meeting of Shareholders and voted amend to the Company’s 2018 Equity Incentive Plan to increase the number of shares of common stock available for issuance under the Plan from 500,000 to 1,100,000 shares. As of January31, 2020, there were 109,352 shares remaining available for future issuance under the 2018 Plan.
The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the period ended.
January 31,
2020		 April 30,
2019
Expected life (years) 3.5 3.5
Expected volatility 47.4 % 50.1 %
Risk-free interest rate 1.63 % 2.63 %
Dividend yield 0.00 % 0.00 %
Expected forfeiture rate n/a n/a
The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on historical volatility. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.
A summary of the Company’s stock option activity for employees and directors during the nine months ended January31, 2020, is presented below:
Options Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2019 3,408,154 $ 4.44 2.90 $ 6,880,644
Granted 150,000 5.21 — —
Exercised (580,901) 2.72 — —
Forfeited (200,475) 7.44 — —
Expired — — — —
Balance Outstanding, January31, 2020
 2,776,778 $ 4.61 2.21 $ 14,302,102
Exercisable, January31, 2020
 1,824,684 $ 3.77 1.66 $ 11,808,246

ALL OPTIONS EXERCISABLE OPTIONS
Exercise
Price		 Weighted
Average
Exercise
Price		 Outstanding
No. of
Options		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining Life
In Years		 Exercisable
No. of
Options
$1.57 to $2.10
 $ 2.00 564,724 $ 2.00 0.96 564,723
$2.28 to $2.76
 $ 2.30 382,780 $ 2.29 0.60 391,736
$3.24 to $4.38
 $ 3.89 323,925 $ 3.91 1.73 215,817
$4.50 to $5.20
 $ 4.93 708,960 $ 4.90 2.28 336,278
$5.95 to $6.28
 $ 6.07 80,417 $ 6.13 2.43 36,806
$7.17 to $7.55
 $ 7.41 551,639 $ 7.32 3.82 224,546
$8.57 to $9.07
 $ 8.97 164,333 $ 8.97 2.94 54,778
Options only 2,776,778 1,824,684
On December 9, 2019, the Company granted 61,000 options to its directors with an exercise price of $6.92 for services performed for the calendar year 2019. The fair value of these options was approximately $116,000 and was fully recognized for the three months ended January31, 2020.
On August 1, 2019, the Company granted 59,000 options to 26 employees who had been hired during the first quarter ended July 31, 2019. The fair value of these options was approximately $83,000 and will be recognized over 36 month. The exercise price is $3.99.
Effective May 13, 2019, the Company granted a total of 30,000 five years non-qualified stock options which were immediately vested to certain former directors exercisable at $4.12 per share. The fair value of the options was $33,600 and expensed during the three months ended July 31, 2019.
For the three and nine months ended January31, 2020, the Company recorded compensation expense of $805,405 and $1,721,293, respectively, in connection with stock options and restricted stock grants. For the three months ended January31, 2020, the Company recorded stock based compensation expense related to the executive officer target bonus plan of $188,031.
As of January31, 2020, there was approximately $930,000 of unrecognized compensation costs related to non-vested share-based option arrangements. That cost is expected to be recognized over a weighted-average period of approximately 2.0 years.