̽Ƶapp

Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.20.2
Stockholders' Equity
 3 Months Ended
Jul. 31, 2020
Stockholders' Equity Note [Abstract]
Stockholders' Equity Stockholders’ EquityPreferred 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 July31, 2020 and April30, 2020, 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 July31, 2020, the Company issued 415,175 shares of common stock upon the exercise of stock options for cash and received proceeds of $1,269,982.
During the three months ended July31, 2020, the Company issued 192,049 shares of common stock upon the exercise of warrants for cash and received proceeds of $1,081,792.

Restricted Stock
As of July31, 2020 and 2019, there were 16,448 and 49,672 unvested shares of restricted common stock outstanding, respectively. Total unrecognized compensation expense related to the unvested shares as of July31, 2020 and 2019 amounted to $59,651 and $225,129 respectively.

Restricted Stock Units "RSUs"
A summary of the Company’s Restricted Stock Unit activity which were granted under the 2012 and 2018 equity incentive plans during the three months ended July 31, 2020 is presented below:
Restricted Stock Units Number of Shares Weighted Average Grant Price
Unvested Balance Outstanding, April 30,2020 643,175 $ 5.64
Granted 158,793 9.12
Exercised — —
Forfeits (500) 6.09
Vested — —
Expired — —
Unvested Balance Outstanding, July 31,2020 801,468 $ 6.33
In connection with 158,793 RSU grants, the grant date fair value of these awards range from $6.95 to $10.62 per share and the awards vest annually over three years.
There were approximately 800,000 unvested RSUs as of July 31, 2020 including 375,000 RSUs described below. Total unrecognized compensation expense related to the unvested RSUs as of July 31, 2020 is approximately $4.4million which will be amortized over the remaining vesting periods.
On February 4, 2020, the Compensation Committee approved a 375,000 RSU grant to executives under the Company’s 2018 Equity Incentive Plan. As modified on June 18, 2020, one-half of the RSUs vest four years from the grant date, subject to accelerated vesting for all RSUs as follows: (i) if the closing price of the Company’s common stock is at least $9 for 20 consecutive trading days, 10% of the RSUs will vest immediately; (ii) if the closing price of the Company’s common stock is at least $10 for 20 consecutive trading days, 25% of the RSUs will vest immediately; and (iii) if the closing price of the Company’s common stock is at least $12 for 20 consecutive trading days, all of the unvested RSUs will vest immediately. On the grant date, the closing price of the Company’s common stock on The Nasdaq Global Market was $9.49 per share. The grants have a four year vesting period. For the three months ended July 31, 2020, amortization expense related to these RSUs was $111,211. See "Subsequent Events" Note for additional information on the accelerated vesting of 35% of the RSUs.

Warrants
A summary of the Company’s warrant activity during the three months ended July31, 2020 is presented below:
Warrants Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2020 566,223 $ 6.22 3.17 $ 950,100
Granted — $ — — —
Exercised (192,049) $ 5.60 — —
Surrendered — $ — — —
Expired — $ — — —
Balance Outstanding, July 31, 2020 374,174 $ 6.37 2.64 $ 908,156
Exercisable, July 31, 2020 374,174 $ 6.37 2.64 $ 908,156

OUTSTANDING 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 3.70 50,000
$ 6.00 $ 6.00 100,000 $ 6.00 3.60 100,000
$ 6.87 $ 6.87 224,174 $ 6.87 1.98 224,174
374,174 374,174
On June 5, 2020, the Company, as an inducement to exercise, reduced by 5% the exercise price of the common stock purchase warrants issued to The Leon and Toby Cooperman Family Foundation (the “Foundation”), of which Mr. Leon Cooperman, a stockholder of the Company, is the trustee. The warrants were issued on November 5, 2018 (the “2018 Cooperman Warrants”) and on March 5, 2019 (the “2019 Cooperman Warrants”). The 2018 Cooperman Warrants exercise price was reduced from $5.85 to $5.56 per share. The 2019 Cooperman Warrants exercise price was reduced from $6.00 to $5.70 per share. On June 8, 2020, the Foundation immediately exercised the 2018 and 2019 Cooperman Warrants paying the Company $1,081,792 and the Company issued 192,049 shares of common stock to the Foundation. The warrant modification and acceleration charge related to this transaction in the first quarter of fiscal year 2021 was approximately $26,000.
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 RSUs to employees, consultants, officers and directors.
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 RSUs to employees, consultants, officers and directors.

On December 30, 2019, the Company held its Annual Meeting of Shareholders at which the shareholders voted to amend the 2018 Plan to increase the number of shares of common stock available for issuance under the 2018 Plan from 500,000 to 1,100,000 shares.

As of July31, 2020 and 2019, there were 74,032 and 10,852 shares remaining available for future issuance under the 2012 Plan and 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 and expected dividend yield rate over the expected option term. 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 three months ended April 30, 2020. There were no options granted to employees during the three months ended July 31, 2020.
July 31,
2020		 April 30,
2020
Expected life (years) n/a 3.5
Expected volatility n/a 57.0 %
Risk-free interest rate n/a 0.24 %
Dividend yield n/a 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 three months ended July31, 2020, is presented below:
Options Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2020 2,732,899 $ 4.62 1.97 $ 9,146,198
Granted — — — —
Exercised (415,175) 9.18 — —
Forfeited (3,688) 6.94 — —
Expired — — — —
Balance Outstanding, July31, 2020
 2,314,036 $ 4.89 1.89 $ 9,073,489
Exercisable, July31, 2020
 1,884,793 $ 4.68 1.65 $ 7,797,166
OUTSTANDING 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
 $ 2.02 306,166 $ 2.02 0.56 261,771
$2.28 to $2.76
 $ 2.30 307,779 $ 2.30 0.27 307,779
$3.24 to $4.38
 $ 3.90 318,174 $ 3.87 1.32 262,507
$4.50 to $5.20
 $ 4.93 665,195 $ 4.91 1.98 536,597
$5.95 to $6.28
 $ 6.08 75,751 $ 6.11 1.96 61,195
$7.17 to $7.55
 $ 7.44 481,639 $ 7.41 3.16 342,056
$8.57 to $9.07
 $ 8.98 159,332 $ 8.98 2.44 112,888
Options only 2,314,036 1,884,793

For the three months ended July31, 2020, the Company recorded compensation expense of $168,734, $307,852 and $10,524, respectively, in connection with stock option, restricted stock units and restricted stock grants.
As of July31, 2020, there was approximately $550,000 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.
As of July31, 2020, there was approximately $4.4million of unrecognized compensation costs related to non-vested RSU grants. That cost is expected to be recognized over a weighted-average period of approximately 4.0 years.
As of July31, 2020, there was approximately $60,000 of unrecognized compensation costs related to non-vested share-based common and restricted stock arrangements. That cost is expected to be recognized over a weighted-average period of approximately 1.5 years.