• Filing Date: 2012-09-13
  • Form Type: 10-Q
  • Description: Quarterly report
v2.4.0.6
Common Stock
3 Months Ended
Jul. 31, 2012
Common Stock [Text Block]
Note 5 Common Stock
   
  Private Placement
   
 

On June 14, 2011, the Company issued an aggregate of 3,145,800 units under a brokered private placement for aggregate gross proceeds of $5,636,170 (CDN$5,505,150) at a price of $1.79 (CDN$1.75) per unit, with each unit consisting of one share of the Company’s common stock and one-half of one common share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share of the Company’s common stock at an exercise price of CDN$2.25 per share until June 14, 2013. In connection with the offering, the Company issued an aggregate of 220,206 broker warrants, with each broker warrant entitling the holder thereof to purchase one common share of the Company at an exercise price of CDN$1.75 per share until December 14, 2012. In addition, the Company incurred $605,922 in share issue costs.

 

 

 

On June 19, 2012, the Company issued an aggregate of 1,465,000 units under a non–brokered private placement for aggregate gross proceeds of CDN $3,662,500 ($3,580,156) at a price of CDN $2.50 ($2.24) per unit, with each unit consisting of one share of the Company’s common stock and one–half of one common share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share of the Company’s common stock at an exercise price of $3.25 per share until June 19, 2014.

 

 

 

Stock Options

 

 

 

The Company has a stock option plan under which options to purchase common shares of the Company may be granted to employees, directors and consultants. Stock options entitle the holder to purchase common stock at a subscription price determined by the Board of Directors of the Company at the time of the grant. The options generally vest in the amount of 12.5% on the date which is six months from the date of grant and then beginning in the seventh month at 1/42 per month for 42 months, at which time the options are fully vested.

 

 

 

The maximum number of shares of common stock authorized by the stockholders and reserved for issuance by the Board of Directors of the Company under the 2010 Stock Option Plan is 6,860,000.

 

 

The Company has elected to use the Black-Scholes option pricing model to determine the fair value of stock options granted. In accordance with ASC 718 for employees, the compensation expense is amortized on a straight-line basis over the requisite service period which approximates the vesting period. Compensation expense for stock options granted to non-employees is amortized over the vesting period or, if none exists, over the service period.

 

 

 

Compensation associated with unvested options granted to non-employees is remeasured on each balance sheet date using the Black-Scholes option pricing model.

 

 

 

The expected volatility of options granted has been determined using the method described under ASC 718 using the historical stock price. The expected term of options granted to employees in the current fiscal period has been determined utilizing the “simplified” method as prescribed by ASC 718 Share-Based Payment.

 

 

 

For non-employees, based on the Company’s history, the expected term of the options approximates the full term of the options. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. In addition, ASC 718 requires companies to utilize an estimated forfeiture rate when calculating the expense for the period, whereas prior to the adoption of ASC 718 the Company recorded forfeitures based on actual forfeitures and recorded a compensation expense recovery in the period when the awards were forfeited. As a result, based on the Company’s experience, the Company applied an estimated forfeiture rate of 15% for the three month period ended July 31, 2012 and 2011 in determining the expense recorded in the accompanying consolidated statement of operations.

 

 

 

The weighted-average fair value of options granted during the three months ended July 31, 2012 was $1.54 (2011 - $nil). The weighted-average assumptions utilized to determine such values are presented in the following table:


      Three Months Ended  
      July 31, 2012     July 31, 2011  
  Risk-free interest rate   0.62%     n/a  
  Expected volatility   74.47%     n/a  
  Expected term   3.7 years     n/a  
  Dividend yield   0%     n/a  

The following is a summary of the status of the Company’s stock options as of July 31, 2012 and the stock option activity during the three months ended July 31, 2012:

            Weighted Average  
      Number of     Exercise Price  
      Options     per Share  
  Outstanding at April 30, 2012   3,925,979   $ 1.15  
  Granted   305,000   $ 2.90  
  Exercised   (80,874 ) $ 0.85  
  Forfeited/Cancelled   (175,875 ) $ 1.69  
  Outstanding at July 31, 2012   3,974,230   $ 1.27  
               
  Exercisable at July 31, 2012   2,286,993   $ 0.90  
  Exercisable at April 30, 2012   2,087,742   $ 0.85  

 

 

The following table summarizes information regarding stock purchase options outstanding as of July 31, 2012:


    Number of     Aggregate       Number of     Aggregate  
Exercise   Options     Intrinsic       Options     Intrinsic  
Price   Outstanding     Value   Expiry Date   Exercisable     Value  
$0.44   387,258   $   778,389   December 15, 2013   344,119   $   691,679  
$0.47   411,389     814,550   October 12, 2012 to September 26, 2016   411,389     814,550  
$0.60   425,708     787,560   December 14, 2014   279,088     516,313  
$0.62   850,000     1,555,500   April 17, 2014   690,625     1,263,844  
$1.70   800,000     600,000   December 17, 2014   116,667     87,500  
$1.90   421,875     232,031   December 14, 2015   165,104     90,807  
$2.00   6,000     2,700   October 1, 2012   6,000     2,700  
$2.15   240,000     72,000   September 7, 2016   240,000     72,000  
$2.27   102,000     18,360   March 10, 2016   34,001     6,120  
$2.55   25,000       March 8, 2017        
$2.90   305,000       July 19, 2017        
July 31, 2012   3,974,230   $   4,861,090       2,286,993   $   3,545,513  
                           
April 30, 2012   3,925,979   $   6,751,493       2,087,742   $   4,213,032  

The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of $2.45 per share as of July 31, 2012 (April 30, 2012 – $2.87), which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options vested and exercisable as of July 31, 2012 was 2,286,993 (April 30, 2012 – 2,087,742). The total intrinsic value of options exercised during the three months ended July 31, 2012 was $129,403 (2011 – $61,665). The grant date fair value of options vested during the three months ended July 31, 2012 was $199,542 (2011 – $112,474).

The following table summarizes information regarding the non-vested stock purchase options outstanding as of July 31, 2012.

        Weighted Average
    Number of Options   Grant Date Fair Value
  Non-vested options at April 30, 2012 1,838,237   $0.82
  Granted 305,000   $1.54
  Vested (280,125)   $0.71
  Cancelled/Forfeited (175,875)   $0.90
  Non-vested options at July 31, 2012 1,687,237   $0.96

As of July 31, 2012 there was, $1,411,923 of total unrecognized compensation cost related to unvested share-based compensation awards. This unrecognized compensation cost is expected to be recognized over a weighted average period of 3.14 years.

 

 

Employee and non-employee stock-based compensation amounts classified in the Company’s consolidated statements of operations for the three months ended July 31, 2012 and 2011 are as follows:


      Three Months Ended  
      July 31,  
      2012     2011  
  Cost of sales $   8,839   $   9,044  
  Sales and marketing   53,935     8,966  
  Research and development   10,716     10,050  
  General and administrative   55,943     30,878  
  Total stock-based compensation $   129,433   $   58,938  

Warrants

During the three months ended July 31, 2010, the Company entered into a warrant agreement with a customer whereby the Company issued 1,000,000 stock purchase warrants as part of a contract that the Company entered into with the customer. The fair value of 320,000 stock purchase warrants that was charged to revenue during the three months ended July 31, 2011 was $136,934. These warrants expired unexercised on July 30, 2012.

On May 17, 2012, and July 25, 2012, holder of warrants issued under a brokered private placement, exercised 50,000 warrants and 7,000 warrants respectively, at the original exercise price of $2.25 per common share.

The following table summarizes information regarding the warrants outstanding as of July 31, 2012:

      Number of     Weighted Average    
      Warrants     Exercise Price   Expiry Dates
  Warrants at April 30, 2012   2,793,105     $1.94   July 30, 2012 to June 14, 2013
  Granted   732,500     $3.25   June 19, 2014
  Exercised   (57,000 )   $2.25   June 14, 2013
  Expired   (1,000,000 )   $1.50   July 30, 2012
  Warrants at July 31, 2012   2,468,605     $2.50   December 14, 2012 to June 19, 2014

Employee Stock Purchase Plan

Under the terms of the Employee Stock Purchase Plan (the “ESPP”), all regular salaried (non-probationary) employees may purchase up to 6% of their base salary in common shares of the Company at market price. The Company matches 50% of the shares purchased by issuing or purchasing in the market up to 3% of the respective employee’s base salary in shares.

A total of 700,000 shares have been reserved for issuance under the ESPP. As of July 31, 2012, a total of 556,401 (April 30, 2012 - 556,401) shares were available for issuance under the ESPP. During the three months ended July 31, 2012, nil shares (April 30, 2012 - 55,571) were sold or issued to employees under the ESPP.

 

 

Deferred Share Unit Plan

 

 

 

Under the terms of the Deferred Share Unit Plan (the “DSUP”), each deferred share unit is equivalent to one share of common stock. The maximum number of shares of common stock that may be reserved for issuance to any one participant pursuant to deferred share units granted under the DSUP and any share compensation arrangement is 5% of the number of shares of common stock of the Company outstanding at the time of reservation and, as applicable, any grants of deferred share units to any one participant may not exceed a value of $100,000 per annum on the date of grant. A deferred share unit (DSU) granted to a participant who is a director of the board of the Company shall vest immediately on the award date. A deferred share unit granted to a participant other than a director will generally vest as to one-third (1/3) of the number of deferred share units granted on the first, second and third anniversaries of the award date. Fair value of the DSU’s, which is based on the closing price of the Company’s common stock on the date of grant, is recorded as compensation expense over the vesting period.

 

 

 

A total of 2,000,000 shares have been reserved for issuance under the DSUP. During the three months ended July 31, 2012, 133,443 deferred share units were issued under the DSUP, of which 59,878 were granted to officers or employees and 73,565 were granted to non-employee directors. As of July 31, 2012, a total of 278,493 shares were available for issuance under the DSUP.

 

 

 

The following table summarizes the Company’s outstanding deferred share unit awards as of July 31, 2012, and changes during the period then ended:


        Weighted Average
        Grant Date Fair
    Number of DSU’s   Value Per Unit
  DSU’s outstanding at April 30, 2012 1,588,064   $0.83
  Granted 133,443   $2.90
  Conversions  
  DSU’s outstanding at July 31, 2012 1,721,507   $1.01

The following table summarizes information regarding the non-vested deferred share units outstanding as of July 31, 2012:

        Weighted Average
        Grant Date Fair
    Number of DSU’s   Value Per Unit
  Non-vested DSU’s at April 30, 2012 334,337   $1.33
  Granted 133,443   $2.90
  Vested (165,007)   $1.52
  Non-vested DSU’s at July 31, 2012 302,773   $1.63

As of July 31, 2012 there was $428,461 (2011 – $496,636) of total unrecognized compensation cost related to unvested deferred share units awards. This unrecognized compensation cost is expected to be recognized over a weighted average period of 2.17 years (2011 – 2.47 years).

 

 

Employee and non-employee deferred share unit based compensation amounts classified in the Company’s consolidated statements of operations for the three months ended July 31, 2012 and 2011 are as follows:


      Three Months Ended  
      July 31,  
      2012     2011  
  Sales and marketing $   4,167   $   –  
  Research and development   272      
  General and administrative   262,898     185,323  
  Total deferred share unit-based compensation $   267,337   $   185,323