Common Stock | 6 Months Ended |
Oct. 31, 2013 |
Common Stock [Text Block] | ' |
Note 5 | Common Stock | | | | | | | | | | | | | | |
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| Stock Options | | | | | | | | | | | | | | |
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| 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. Stock options entitle the holder to purchase common shares at a subscription price determined by the board of directors (the “Board”) 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. | | | | | | | | | | | | | | |
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| The maximum number of common shares authorized by the stockholders and reserved for issuance by the Board under the 2010 Stock Option Plan is 6,860,000. | | | | | | | | | | | | | | |
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| 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, Compensation – Stock Compensation (“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. | | | | | | | | | | | | | | |
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| 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. | | | | | | | | | | | | | | |
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| 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. | | | | | | | | | | | | | | |
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| 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 six month period ended October 31, 2013 and 2012 in determining the expense recorded in the accompanying consolidated statement of operations. | | | | | | | | | | | | | | |
| The weighted-average fair value of options granted during the six months ended October 31, 2013 was $0.89 (2012 - $2.90). The weighted-average assumptions utilized to determine such values are presented in the following table: | | | | | | | | | | | | | | |
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| | | Six Months Ended | | | | | | | | | |
| | | 31-Oct-13 | | | 31-Oct-12 | | | | | | | | | |
| Risk-free interest rate | | 1.31% | | | 0.62% | | | | | | | | | |
| Expected volatility | | 78.94% | | | 74.47% | | | | | | | | | |
| Expected term | | 3.7 years | | | 3.7 years | | | | | | | | | |
| Dividend yield | | 0% | | | 0% | | | | | | | | | |
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The following is a summary of the status of the Company’s stock options as of October 31, 2013 and the stock option activity during the six months ended October 31, 2013: |
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| | | Weighted Average | | | | | | | | | |
| | | Number of | | | Exercise Price | | | | | | | | | |
| | | Options | | | per Share | | | | | | | | | |
| Outstanding at April 30, 2013 | | 3,930,818 | | | $1.33 | | | | | | | | | |
| Granted | | 1,055,000 | | | $1.67 | | | | | | | | | |
| Exercised | | (231,655 | ) | | $0.47 | | | | | | | | | |
| Forfeited/Cancelled | | (18,604 | ) | | $1.86 | | | | | | | | | |
| Expired | | (40,000 | ) | | $0.47 | | | | | | | | | |
| Outstanding at October 31, 2013 | | 4,695,559 | | | $1.45 | | | | | | | | | |
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| Exercisable at October 31, 2013 | | 2,682,368 | | | $1.14 | | | | | | | | | |
| Exercisable at April 30, 2013 | | 2,677,887 | | | $1.00 | | | | | | | | | |
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| The following table summarizes information regarding stock options outstanding as of October 31, 2013: | | | | | | | | | | | | | | |
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| | Number of | | | Aggregate | | | | | | Number of | | | Aggregate | |
| | Options | | | Intrinsic | | | | | | Options | | | Intrinsic | |
Exercise Price | | Outstanding | | | Value | | | Expiry Date | | | Exercisable | | | Value | |
$0.44 | | 227,541 | | $ | 172,704 | | | 15-Dec-13 | | | 227,541 | | $ | 172,704 | |
$0.47 | | 173,270 | | | 126,314 | | | January 1, 2014 to September 26, 2016 | | | 173,270 | | | 126,314 | |
$0.60 | | 388,873 | | | 232,935 | | | 14-Dec-14 | | | 372,527 | | | 223,144 | |
$0.62 | | 850,000 | | | 492,150 | | | 17-Apr-14 | | | 850,000 | | | 492,150 | |
$1.41 | | 100,000 | | | – | | | 1-Oct-18 | | | – | | | – | |
$1.44 | | 250,000 | | | – | | | 12-Sep-18 | | | – | | | – | |
$1.53 | | 200,000 | | | – | | | 29-Aug-18 | | | – | | | – | |
$1.70 | | 750,000 | | | – | | | 14-Dec-16 | | | 343,749 | | | – | |
$1.88 | | 30,000 | | | – | | | 13-Dec-17 | | | 6,250 | | | – | |
$1.90 | | 916,875 | | | – | | | December 14, 2015 to July 25, 2018 | | | 290,832 | | | – | |
$2.00 | | 12,000 | | | – | | | December 31, 2014 to February 28, 2015 | | | 12,000 | | | – | |
$2.15 | | 240,000 | | | – | | | 7-Sep-16 | | | 240,000 | | | – | |
$2.26 | | 200,000 | | | – | | | 14-Mar-18 | | | 37,302 | | | – | |
$2.27 | | 52,000 | | | – | | | 10-Mar-16 | | | 33,584 | | | – | |
$2.90 | | 305,000 | | | – | | | 19-Jul-17 | | | 95,313 | | | – | |
October 31, 2013 | | 4,695,559 | | $ | 1,024,103 | | | | | | 2,682,368 | | $ | 1,014,312 | |
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April 30, 2013 | | 3,930,818 | | $ | 2,636,687 | | | | | | 2,677,887 | | $ | 2,464,253 | |
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The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of $1.20 per share as of October 31, 2013 (April 30, 2013 – $1.87), 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 October 31, 2013 was 1,623,338 (April 30, 2013 – 2,096,096). The total intrinsic value of options exercised during the six months ended October 31, 2013 was $168,839 (2012 – $238,038). The grant date fair value of options vested during the six months ended October 31, 2013 was $280,074 (2012 – $320,694). |
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The following table summarizes information regarding the non-vested stock purchase options outstanding as of October 31, 2013. |
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| | | | | | Weighted | | | | | | | | | |
| | | Number of | | | Average Grant | | | | | | | | | |
| | | Options | | | Date Fair Value | | | | | | | | | |
| Non-vested options at April 30, 2013 | | 1,252,931 | | | $1.09 | | | | | | | | | |
| Granted | | 1,055,000 | | | $0.89 | | | | | | | | | |
| Vested | | (285,053 | ) | | $0.98 | | | | | | | | | |
| Cancelled/Forfeited | | (9,687 | ) | | $1.08 | | | | | | | | | |
| Non-vested options at October 31, 2013 | | 2,013,191 | | | $1.00 | | | | | | | | | |
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| As of October 31, 2013 there was, $1,727,835 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 years. | | | | | | | | | | | | | | |
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| Employee and non-employee stock-based compensation amounts classified in the Company’s consolidated statements of operations for the three months and six months ended October 31, 2013 and 2012 are as follows: | | | | | | | | | | | | | | |
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| | | Three Months Ended | | | Six Months Ended | | | |
| | | October 31, | | | October 31, | | | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | | | |
| Cost of sales | $ | 18,285 | | $ | 8,797 | | $ | 26,838 | | $ | 17,636 | | | |
| Sales and marketing | | 107,933 | | | 73,072 | | | 197,273 | | | 127,007 | | | |
| Research and development | | 15,851 | | | 10,531 | | | 24,537 | | | 21,247 | | | |
| General and administrative | | 37,083 | | | 55,100 | | | 70,570 | | | 111,043 | | | |
| Total stock-option based compensation | $ | 179,152 | | $ | 147,500 | | $ | 319,218 | | $ | 276,933 | | | |
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Warrants |
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On May 17, 2012 and July 25, 2012, holders 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. On October 25, 2012 and November 27, 2012, holders of warrants issued under a brokered private placement, exercised 110,103 and 110,103 warrants respectively, at the original exercise price of $1.75 per common share. |
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Following the guidance in ASC 815-40-15, the Company recorded the warrants issued as derivative instruments due to their exercise price being denominated in a currency other than the Company’s U.S. dollar functional currency. The fair value of the derivative instruments are revalued at the end of each reporting period, and the change in fair value of the derivative instruments are recorded as a gain or loss in the Company’s consolidated statements of operations. |
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The warrant liability is accounted for at its fair value as follows: |
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| | | October 31, | | | April 30, | | | | | | | | | |
| | | 2013 | | | 2013 | | | | | | | | | |
| Opening balance at the beginning of the period/year | $ | 93,057 | | $ | 2,026,944 | | | | | | | | | |
| Fair value of warrant liability, at issuance | | – | | | – | | | | | | | | | |
| Change in fair value of warrant liability | | (93,057 | ) | | (1,753,368 | ) | | | | | | | | |
| Fair value of warrants exercised during the period/year | | – | | | (180,519 | ) | | | | | | | | |
| Fair value of warrant liability at end of period/year | $ | – | | $ | 93,057 | | | | | | | | | |
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| The Company uses the Binomial Method to estimate the fair value of the warrants with the following assumptions: | | | | | | | | | | | | | | |
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| | | | | | As at the date of | | | | | | | | | |
| | As at | | As at | | issuance | | | | | | | | | |
| | 31-Oct-13 | | 30-Apr-13 | | 14-Jun-11 | | | | | | | | | |
| Risk-free interest rate | – | | 0.11% | | 1.60% | | | | | | | | | |
| Expected volatility | – | | 70% | | 70% | | | | | | | | | |
| Expected term | – | | 0.12 years | | 1.5 years to 2 years | | | | | | | | | |
| Dividend yield | – | | 0% | | 0% | | | | | | | | | |
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The warrant liability is revalued at the end of each reporting period with the change in the fair value of the derivative instruments recorded as a gain or loss in the Company’s consolidated statement of operations. The fair value of the warrants will continue to be classified as a liability until such time as they are exercised, expire or there is an amendment to the respective agreements that renders these financial instruments to be no longer classified as a liability. The balance of unexercised warrants expired on June 14, 2013, and the balance in the liability account of $93,057 has been recorded as a gain in the Company’s consolidated statement of operations. |
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At the time of the private placement offering, the Company allocated the proceeds to each of the common shares and the one-half of one common share purchase warrants. Because the warrants were classified as a liability and are subsequently marked to fair value through earnings in each reporting period, the Company allocated the proceeds of $1,311,141 to the warrants at inception with the residual proceeds of $3,773,946 allocated to common stock. |
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The following table summarizes information regarding the warrants outstanding as of October 31, 2013: |
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| | | Number of | | | Weighted Average | | | | | | | | | |
| | | Warrants | | | Exercise Price | | | Expiry Dates | | | | | | |
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| Warrants at April 30, 2013 | | 2,248,399 | | | 2.57 | | | June 14, 2013 to June 19, 2014 | | | | | | |
| Granted | | – | | | – | | | – | | | | | | |
| Exercised | | – | | | – | | | – | | | | | | |
| Expired | | (1,515,899 | ) | | 2.25 | | | 14-Jun-13 | | | | | | |
| Warrants at October 31, 2013 | | 732,500 | | | 3.25 | | | 19-Jun-14 | | | | | | |
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| Employee Stock Purchase Plan | | | | | | | | | | | | | | |
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| 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 six months ended October 31, 2013, the Company matched $26,106 (April 30, 2013 - $56,250) in shares purchased by employees under the ESPP. | | | | | | | | | | | | | | |
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| A total of 700,000 shares have been reserved for issuance under the ESPP. As of October 31, 2013, a total of 556,401 shares were available for issuance under the ESPP. During the six months ended October 31, 2013, 48,222 shares (April 30, 2013 – 61,622) were sold, issued, or purchased by employees on the open market under the ESPP. | | | | | | | | | | | | | | |
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| Normal Course Issuer Bid Plan | | | | | | | | | | | | | | |
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| Pursuant to a normal course issuer bid commencing on August 20, 2012 and expiring on March 19, 2013, the Company was authorized to purchase up to 1,995,414 of its common shares and on March 19, 2013 (expiring March 18, 2014) the Company was authorized to purchase 2,462,365 of its common shares through the facilities of the Toronto Stock Exchange (the “TSX”) and other Canadian marketplaces. Between August 20, 2012 and March 18, 2013, the Company repurchased 72,292 common shares at an average price of $1.99 (CDN$1.98) for a total of $143,861 and during the period from March 19, 2013 to October 31, 2013, the Company repurchased 154,836 common shares at an average price of $1.77 (CDN$1.83) for a total of $274,060. As of October 31, 2013 a total of 202,308 common shares have been cancelled and the remaining 24,820 repurchased shares are in the process of being cancelled. | | | | | | | | | | | | | | |
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| Deferred Share Unit Plan | | | | | | | | | | | | | | |
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| Under the terms of the Deferred Share Unit Plan (the “DSUP”), each deferred share unit (“DSU”) is equivalent to one common share. The maximum number of common shares 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 common shares of the Company outstanding at the time of reservation. A DSU granted to a participant who is a director of the Board 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 shares on the date of grant, is recorded as compensation expense over the vesting period. | | | | | | | | | | | | | | |
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| A total of 2,500,000 common shares have been reserved for issuance under the DSUP. During the six months ended October 31, 2013, 191,066 (2012 - 133,443) DSUs were issued under the DSUP, of which 75,417 were granted to officers or employees and 115,649 were granted to non-employee directors. As of October 31, 2013, a total of 587,427 common shares were available for issuance under the DSUP. | | | | | | | | | | | | | | |
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| The following table summarizes the Company’s outstanding DSU awards as of October 31, 2013, and changes during the period then ended: | | | | | | | | | | | | | | |
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| | | | | | Weighted Average | | | | | | | | | |
| | | | | | Grant Date Fair | | | | | | | | | |
| | | Number of DSU’s | | | Value Per Unit | | | | | | | | | |
| DSUs outstanding at April 30, 2013 | | 1,643,119 | | | $1.02 | | | | | | | | | |
| Granted | | 191,066 | | | $1.90 | | | | | | | | | |
| Conversions | | (73,334 | ) | | $1.00 | | | | | | | | | |
| DSUs outstanding at October 31, 2013 | | 1,760,851 | | | $1.10 | | | | | | | | | |
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The following table summarizes information regarding the non-vested DSUs outstanding as of October 31, 2013: |
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| | | | | | Weighted Average | | | | | | | | | |
| | | | | | Grant Date Fair | | | | | | | | | |
| | | Number of DSU’s | | | Value Per Unit | | | | | | | | | |
| Non-vested DSUs at April 30, 2013 | | 207,444 | | | $1.98 | | | | | | | | | |
| Granted | | 191,066 | | | $1.90 | | | | | | | | | |
| Vested | | (227,048 | ) | | $1.79 | | | | | | | | | |
| Non-vested DSUs at October 31, 2013 | | 171,462 | | | $2.19 | | | | | | | | | |
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As of October 31, 2013 there was $297,160 (2012 – $361,356) 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 1.94 years (2012 – 2.02 years). |
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Employee and non-employee DSU based compensation amounts classified in the Company’s consolidated statements of operations for the three and six months ended October 31, 2013 and 2012 are as follows: |
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| | | Three Months Ended | | | Six Months Ended | | | |
| | | October 31, | | | October 31, | | | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | | | |
| Sales and marketing | $ | 6,667 | | $ | 4,167 | | $ | 13,334 | | $ | 8,334 | | | |
| Research and development | | 2,082 | | | 2,082 | | | 4,164 | | | 2,354 | | | |
| General and administrative | | 74,592 | | | 60,856 | | | 300,327 | | | 323,754 | | | |
| Total DSU-based compensation | $ | 83,341 | | $ | 67,105 | | $ | 317,825 | | $ | 334,442 | | | |
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