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Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.20.4
Stockholders' Equity
 9 Months Ended
Jan. 31, 2021
Stockholders' Equity Note [Abstract]
Stockholders' Equity Stockholders’ Equity
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, 2021 and April30, 2020, we had no shares of preferred stock issued and outstanding.
Common Stock
At January 31, 2021, the Company is authorized to issue 40,000,000 shares of common stock.
On August 31, 2020, the Company entered into an Equity Distribution Agreement (the “Agreement”) with Canaccord Genuity LLC (“Canaccord”), pursuant to which the Company may issue and sell from time to time, through Canaccord, up to $12,309,750 of shares of the Company’s common stock (the “Shares”). The Shares are being offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission on August 31, 2020. The purpose of this Agreement is, among other things, to allow the Company to sell common stock that has been surrendered from executive officers and directors related to vesting of RSUs and exercise of stock options as well as the funds the Company would otherwise have received if the stock options exercised under the net share program were exercised for cash. During the nine months ended January 31, 2021, the Company sold 449,632 shares under the Agreement. On February 8, 2021, the Company provided written notice to Canaccord Genuity of its election to terminate the Equity Distribution Agreement. This action terminates the Company’s at-the-market offering facility effective February 18, 2021. See Note 11.

Sales of the Shares may be made by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act of 1933, including without limitation sales made directly on or through The Nasdaq Global Market, the trading market for the Company’s common stock, on any other existing trading market in the United States for the Company’s common stock, or to or through a market maker. Canaccord may also sell the Shares by any other method permitted by law, including in privately negotiated transactions. Canaccord will use commercially reasonable efforts to sell on the Company’s behalf all of the Shares requested to be sold by the Company, consistent with its normal trading and sales practices, subject to the terms of the Agreement. Under the Agreement, Canaccord is entitled to compensation of 3% of the gross proceeds from the sales of the Shares sold under the Agreement. The Company also reimbursed Canaccord for certain specified expenses, including the fees and disbursements of its legal counsel, in an amount of $50,000. Total expenses for the offering, excluding compensation and reimbursement payable to Canaccord under the terms of the Agreement, was approximately $50,000, which is included in general and administrative expense in the consolidated statement of operations.

During the three months ended January31, 2021, the Company issued 447,134 shares of common stock upon the exercise of stock options for cash and received proceeds of $363,385. As of January31, 2021, 155,486 shares of common stock related to
the Company options exercised by the executive officers were surrendered to the Company. (See Treasury stock discussion below.)
During the three months ended January31, 2021, the Company issued 74,000 shares of common stock upon the vesting of RSUs.
During the three months ended January31, 2021, the Company issued 2,000 shares of common stock to a former director for services provided. The shares were valued using a grant date share price of $9.95 and the Company recognized $19,900 of expense.

During the three months ended October 31, 2020, the Company issued 502,412 shares of common stock upon the exercise of stock options for cash and received proceeds of $945,332.

During the three months ended October 31, 2020, the Company issued 132,109 shares of common stock upon the vesting of Restricted Stock Units (“RSUs”).

During the three months ended October 31, 2020, the Company issued 22,339 shares of common stock upon the cashless exercise of 36,111 stock options.

On September 14, 2020, after the closing price of our common stock was at least $10.725 over a 20 consecutive trading day period, the $10million Convertible Notes (see Note 6) automatically converted into 1,398,602 shares of the Company’s common stock at a conversion price of $7.15 per share.
During the three months ended July 31, 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 July 31, 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 January31, 2021 and 2020, there were 8,224 and 226,922 unvested shares of restricted common stock outstanding, respectively. Total unrecognized compensation expense related to the unvested shares as of January31, 2021 and 2020 amounted to $38,598 and $1,285,524, respectively.

Restricted Stock Units
A summary of the Company’s RSU activity which were granted under the 2012 and 2018 Equity Incentive Plans during the nine months ended January31, 2021 is presented below:
Restricted Stock Units Number of Shares Weighted Average Grant Price
Unvested balance outstanding, April 30, 2020 643,175 $ 5.64
Granted 251,521 9.82
Exercised — —
Forfeits (19,250) 8.94
Vested (206,109) 12.46
Expired — —
Unvested balance outstanding, January 31, 2021 669,337 $ 6.95
Of the 251,521 RSU grants, 15,791 RSUs correspond to RSUs granted to the Board of Directors. The grant occurred during the three months ending January 31, 2021 and immediately vested with a fair value of $11.13 per share and total expense of $175,754. The grant date fair value of the remaining awards range from $6.95 to $12.78 per share, or a total of $2.1million, with an annual vest over three years.
There were 669,337 unvested RSUs as of January31, 2021. Total unrecognized compensation expense related to the unvested RSUs is approximately $4.6million which will be amortized over the remaining vesting periods. Included in this amount is approximately $1.7million of total unrecognized compensation expense related to the $12 tranche of the executive RSU grant of 243,750 RSUs discussed below.
On February 4, 2020, the Compensation Committee approved a 375,000 RSU grant to executives under the Company’s 2018 Equity Incentive Plan. As subsequently clarified, the RSUs vest four years from the grant date, if each applicable executive is still employed by the Company on the vesting date and 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 Company determined that because the terms of the grant include both a market condition and a service condition that must be achieved simultaneously, the appropriate treatment under ASC 718 Stock-based Compensation is to amortize the fair market value of $3.4million over the longer of the explicit service period of four years and not the shorter of the derived service period of .64 years.
On August 31, 2020, the closing price of the Company’s common stock was at least $9 for 20 consecutive trading days, resulting in 10% or 37,500 of the February 4, 2020 RSU grants to executives vesting immediately. Additionally, on September 2, 2020, the Company’s common stock was at least $10 for 20 consecutive trading days and 25% or 93,750 of the RSUs granted vested 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 accelerated amortization expense related to these transactions in the second quarter of fiscal year 2021 was approximately $1.2million, for the vesting of these 131,250 RSUs, which is included in general and administrative expense in the consolidated statements of operations.
The 48,750 unvested RSUs related to the February 4, 2020 grant, discussed above, held by the Company’s former Chief Financial Officer, Frank J. Cotroneo, were forfeited with his resignation in February 2021. See Note 11. Of the remaining approximately $1.7million of total unrecognized compensation expense related to the $12 tranche of the executive RSU grant discussed above, the expense portion related to the Company's former Chief Financial Officer was approximately $0.3million.
Warrants
A summary of the Company’s warrant activity during the nine months ended January31, 2021 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, January 31, 2021 374,174 $ 6.37 2.14 $ 1,151,369
Exercisable, January 31, 2021 374,174 $ 6.37 2.14 $ 1,151,369
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 3.44 50,000
$ 6.00 $ 6.00 100,000 $ 6.00 3.09 100,000
$ 6.87 $ 6.87 224,174 $ 6.87 1.48 224,174
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 for 192,049 shares on common stock 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 èƵ Group, 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 èƵ Group, 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.

On December 21, 2020, 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 authorized for issuance thereunder from 1,100,000 to 1,600,000 shares.

As of January31, 2021 and 2020 there were 515,491 and 286,398 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 Company utilizes 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.

There were no options granted to employees during the three and nine months ended January31, 2021.
A summary of the Company’s stock option activity for employees and directors during the nine months ended January31, 2021, is presented below:
Options Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2020 2,740,539 $ 4.62 1.97 $ 9,146,198
Granted — $ — — —
Exercised (1,400,832) $ 10.80 — —
Forfeited (7,585) $ 6.23 — —
Expired (71,909) $ 3.98 — —
Balance Outstanding, January31, 2021
 1,260,213 $ 6.13 2.08 $ 4,184,115
Exercisable, January31, 2021
 1,038,024 $ 6.14 1.94 $ 3,432,509

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
 $ 1.92 29,167 $ 1.92 0.44 29,167
$2.28 to $2.76
 $ 2.76 11,415 $ 2.76 0.67 11,415
$3.24 to $4.38
 $ 3.82 188,639 $ 3.75 1.32 146,804
$4.50 to $5.20
 $ 4.94 362,818 $ 4.95 1.82 297,714
$5.95 to $6.28
 $ 6.10 66,000 $ 6.10 1.47 66,000
$7.17 to $7.55
 $ 7.44 444,425 $ 7.43 2.62 329,175
$8.57 to $9.07
 $ 8.98 157,749 $ 8.98 1.93 157,749
Options only 1,260,213 1,038,024

For the three months ended January31, 2021, the Company recorded compensation expense of $721,067 which consisted of: $123,401, $567,239 and $30,427, respectively, in connection with stock option, RSUs and restricted and common stock grants.
For the nine months ended January31, 2021, the Company recorded compensation expense of $3,039,729 which consisted of:$434,532, $2,553,717 and $51,480, respectively, in connection with stock option, RSUs and restricted and common stock grants.
As of January31, 2021, there was approximately $275,000 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 1.1 years.
As of January31, 2021, there was approximately $4.6million of unrecognized compensation costs related to non-vested RSU grants. That cost is expected to be recognized over a weighted-average period of approximately 1.8 years.
As of January31, 2021, there was approximately $39,000 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 1.0 year.

Treasury Stock

As of January 31, 2021, 155,486 shares of common stock were held in treasury representing shares of common stock surrendered upon the exercise of stock options in payment of the exercise prices and the taxes and similar amounts due arising from the option exercises. The values aggregating approximately $1.8million are based upon the fair market value of shares surrendered as of the date of each applicable exercise date.
On October 16, 2020 the Company retired 16,667 shares of its treasury stock valued at $70,000, which was outstanding at April 30, 2020.