• Filing Date: 2019-07-11
  • Form Type: 10-K
  • Description: Annual report
v3.19.2
Common Stock
12 Months Ended
Apr. 30, 2019
Common Stock [Text Block]
Note 10

Common Stock

   
 

Private Placements

   

On January 24, 2018, the Company issued an aggregate of 427,500 shares of common stock under a non-brokered private placement at a price of $4.01 per share for total gross proceeds of $1,714,275 less issuance costs of $48,325.

   

On July 20, 2017, the Company issued an aggregate of 539,240 shares of common stock under a non-brokered private placement at a price of $2.20 per share for total gross proceeds of $1,186,328 less issuance costs of $19,832.

   
 

Shares Issued Pursuant to a Consulting Agreement

   

On October 16, 2017, the Company entered into an agreement to issue 14,000 shares of the Company’s common stock in exchange for investor relation services. The agreement was terminated on April 8, 2018 as the services were no longer required. Pursuant to the terms of the agreement, upon termination, 7,211 shares of common stock were returned to the Company.

Normal Course Issuer Bid Plan

During the year ended April 30, 2018, the Company repurchased 13,600 shares of common stock at an average price of approximately $2.49 (CDN$3.18), for a total of approximately $33,119 (CDN$43,218) pursuant to a normal course issuer bid effective during the period.

On March 27, 2018, the Company filed a normal course issuer bid commencing on March 29, 2018 which expired on March 28, 2019. Under this normal course issuer bid, the Company was authorized to purchase up to 284,278 shares of its common stock through the facilities of the TSX and other Canadian marketplaces or U.S. marketplaces. As of April 30, 2019, a total of 153,988 shares have been cancelled.

Stock Options

The Company has a stock option plan (the “2010 Stock Option Plan”) under which options to purchase common shares of the Company may be granted to employees, directors and consultants. The 2010 Stock Option Plan is effectively a merging of the Company’s 2004 and 2005 stock option plans. 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 under 2010 Stock Option Plan is 1,186,000.

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted. In accordance with ASC 718 “Share-Based Payment” 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 re-measured 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 historic data as prescribed by ASC 718.

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 year ended April 30, 2019 and 2018 in determining the expense recorded in the accompanying consolidated statement of operations.

For the majority of the stock options granted, the number of shares issued on the date the stock options are exercised is net of the minimum statutory withholding requirements that the Company pays in cash to the appropriate taxing authorities on behalf of its employees. These withheld shares are not issued or considered common stock repurchases under the Company’s authorized plan and are not included in the common stock repurchase totals. In the consolidated financial statements, these withheld shares are netted against the number of shares that would have been issued upon vesting.

The weighted-average fair values of options granted during the years ended April 30, 2019 and 2018 were $0.82 and $1.90, respectively. The weighted-average assumptions utilized to determine such values are presented in the following table:

    Year Ended   Year Ended
    April 30, 2019   April 30, 2018
  Risk-free interest rate 2.7%   2.14%
  Expected volatility 77.2%   95.55%
  Expected term 3.7 years   3.7 years
  Dividend yield 0%   0%

The following is a summary of the status of the Company’s stock options as of April 30, 2019 and the stock option activity during the years ended April 30, 2019 and 2018:

      Number of     Weighted-Average  
      Options     Exercise Price  
  Outstanding at April 30, 2017   396,922   $  2.46  
  Granted   324,000   $  2.89  
  Exercised   (495 ) $  2.46  
  Forfeited / Cancelled   (15,385 ) $  2.53  
  Expired   (30,000 ) $  2.50  
  Outstanding at April 30, 2018   675,042   $  2.66  
  Granted   221,000   $  1.45  
  Exercised   (35,500 ) $  2.50  
  Forfeited / Cancelled   (173,093 ) $  2.62  
  Expired   (71,000 ) $  2.50  
  Outstanding at April 30, 2019   616,449   $  2.27  
               
  Exercisable at April 30, 2019   239,551   $  $2.58  
  Exercisable at April 30, 2018   256,555   $  $2.47  

The following table summarizes information regarding stock options outstanding as of April 30, 2019:

    Number of     Aggregate           Number of     Aggregate  
Exercise   Options     Intrinsic           Options     Intrinsic  
Price   Outstanding     Value     Expiry Date     Exercisable     Value  
$1.41 – $1.42   197,500     88,795     12/14/2023 – 1/22/2024       $  –  
$2.03 – $2.41   74,272         12/14/2020 – 12/15/2021     56,947   $  –  
$2.46 – $2.50   123,582         7/17/2020 – 3/14/2022     108,932   $  –  
$2.51 – $2.89   221,095         12/14/2022 – 7/26/2023     73,672   $  –  
April 30, 2019   616,449     88,795           239,551   $  –  
                               
April 30, 2018   675,042   $  51,302           256,555   $  32,636  

The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of $1.86 per share as of April 30, 2019 (April 30, 2018 – $2.60), 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 April 30, 2019 was zero (April 30, 2018 – 256,555). The total intrinsic value of options exercised during the year ended April 30, 2019 was $24,765 (2018 – $1,742). The grant date fair value of options vested during the year ended April 30, 2019 was $276,391 (April 30, 2018 – $269,423).

The following table summarizes information regarding the non-vested stock purchase options outstanding as of April 30, 2019:

      Number of     Grant-Date  
      Options     Fair Value  
  Non-vested options at April 30, 2017   175,183   $  3.49  
  Granted   324,000   $  1.90  
  Vested   (73,965 ) $  3.64  
  Forfeited   (6,731 ) $  1.98  
  Non-vested options at April 30, 2018   418,487   $  1.91  
  Granted   221,000   $  0.82  
  Vested   (136,323 ) $  2.03  
  Forfeited   (126,266 ) $  1.72  
  Non-vested options at April 30, 2019   376,898   $  1.30  

As of April 30, 2019, there was $373,324 of total unrecognized compensation cost related to unvested stock options. This unrecognized compensation cost is expected to be recognized over a weighted average period of 2.9 years.

Employee and non-employee stock-based compensation amounts classified in the Company’s consolidated statements of operations for the year ended April 30, 2019 and 2018 were as follows:

      Years Ended  
      April 30,  
      2019     2018  
  Cost of sales $  48,608   $  55,444  
  Sales and marketing   71,811     84,685  
  Research and development   48,405     60,964  
  General and administrative   65,755     129,227  
  Total stock-based compensation $  234,579   $  330,320  

Warrants

On September 4, 2015, the Company completed a non-brokered private placement (the “Private Placement”) of 293,000 units, at a price of $5.00 per unit, for gross aggregate proceeds of $1,465,000 less stock issuance costs of $23,161. Each unit consists of one share of common stock and one-half of one non-transferable common share purchase warrant. Each whole warrant entitled the holder to purchase one additional share of the Company’s common stock at an exercise price of $7.50 per share until September 4, 2017.

The following tables summarize information regarding the warrants outstanding as of April 30, 2019 and April 30, 2018.

            Weighted        
      Number of     Average        
      Warrants     Exercise Price     Expiry Dates  
  Warrants at April 30, 2017   146,500   $  7.50     September 4, 2017  
  Granted     $  –      
  Exercised     $  –      
  Expired   (146,500 ) $  7.50     September 4, 2017  
  Warrants at April 30, 2018     $  –      
  Granted     $  –      
  Exercised     $  –      
  Expired     $  –      
  Warrants at April 30, 2019     $  –      

Employee Stock Purchase Plan

Under the terms of the Employee Stock Purchase Plan (the “ESPP”) all regular salaried (non-probationary) employees can purchase up to 6% of their base salary in common shares of the Company at market price. The Company will match 50% of the shares purchased by issuing or purchasing in the market up to 3% of the respective employee’s base salary in shares. During the year ended April 30, 2019, the Company matched $25,012 (2018 - $43,614) in shares purchased by employees under the ESPP. During the year ended April 30, 2019, 26,945 shares (2018 – 16,696) were purchased on the open market and 12,820 shares (2018 – 24,699) were issued from treasury under the ESPP.

A total of 220,000 shares have been reserved for issuance under the ESPP. As of April 30, 2019, a total of 147,802 shares were available for issuance under the ESPP.

Deferred Share Unit Plan

Under the terms of the DSUP which is effective as at October 22, 2009, each deferred share unit (each, a “DSU”) 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 DSUs 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. A DSU granted to a participant who is a director of the Company shall vest immediately on the award date. A DSU granted to a participant other than a director will generally vest as to one-third (1/3) of the number of DSUs granted on the first, second and third anniversaries of the award date. Fair value of the DSUs, 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.

On September 12, 2017, the maximum number of shares of common stock authorized by the Company’s stockholders reserved for issuance under the DSUP was increased from 500,000 shares to 700,000 shares. During the year ended April 30, 2019, 236,981 (2018 — 119,998) DSUs were issued under the DSUP, of which 168,491 were granted to officers or employees and 68,490 were granted to non-employee directors. Of the 236,981 granted to officers and employees, 45,661 was forfeited during the year. As of April 30, 2019, a total of 42,495 shares were available for issuance under the DSUP.

The following table summarizes the Company’s outstanding DSU awards as of April 30, 2019 and 2018, and changes during the period then ended:

            Weighted Average  
            Grant Date Fair  
      Number of DSUs     Value  
  DSUs at April 30, 2017   345,392   $  7.85  
  Granted   119,998   $  2.21  
  Conversions     $  –  
  Outstanding at April 30, 2018   465,390   $  6.40  
  Granted   236,981   $  2.05  
  Forfeited   (68,880 ) $  2.42  
  Outstanding at April 30, 2019   633,491   $  5.20  

As of April 30, 2019, there was $178,984 (2018 – $73,615) of total unrecognized compensation cost related to unvested DSU awards. This unrecognized compensation cost is expected to be recognized over a weighted average period of 2.42 years (2018 – 1.98 years). The total fair value of DSUs that vested during the year was $262,165 (2018 – $308,163).

Employee and non-employee DSU based compensation amounts classified in the Company’s consolidated statements of operations for the year ended April 30, 2019 and 2018 are as follows:

      Year Ended  
      April 30,  
      2019     2018  
  General and administrative $  240,147   $  274,246  

The following table summarizes information regarding the non-vested DSUs outstanding as of April 30, 2019:

            Weighted Average  
      Number of     Grant Date Fair  
      DSUs     Value per Unit  
  Non-vested DSUs at April 30, 2017   46,217   $  4.58  
  Granted   119,998   $  2.21  
  Vested   (101,963 ) $  3.02  
  Non-vested DSUs at April 30, 2018   64,252   $  2.62  
  Granted   236,981   $  2.05  
  Vested   (97,913 ) $  2.68  
  Forfeited   (68,880 ) $  2.41  
  Non-vested DSUs at April 30, 2019   134,440   $  1.67