Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Apr. 30, 2015 | Jul. 10, 2015 | Oct. 31, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | TENAX THERAPEUTICS, INC. | ||
Entity Central Index Key | 34,956 | ||
Document Type | 10-K | ||
Document Period End Date | Apr. 30, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --04-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 95,681,069 | ||
Entity Common Stock, Shares Outstanding | 28,119,520 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
Current assets | ||
Cash and cash equivalents | $ 7,926,491 | $ 58,320,555 |
Marketable securities | 9,200,082 | 0 |
Accounts receivable | 76,475 | 36,358 |
Government grant receivable | 0 | 29,750 |
Prepaid expenses | 249,505 | 401,964 |
Other current assets | 58,623 | 177,406 |
Total current assets | 17,511,176 | 58,966,033 |
Marketable securities | 30,974,961 | 0 |
Property and equipment, net | 50,322 | 124,374 |
Debt issuance costs, net | 0 | 21,427 |
Intangible assets, net | 22,000,000 | 22,999,744 |
Goodwill | 11,265,100 | 11,265,100 |
Other assets | 1,106,785 | 52,762 |
Total assets | 82,908,344 | 93,429,440 |
Current liabilities | ||
Accounts payable | 1,183,939 | 411,145 |
Accrued liabilities | 2,660,666 | 858,136 |
Warrant liabilities | 572,445 | 954,876 |
Notes payable, net | 100,160 | 346,890 |
Total current liabilities | 4,517,210 | 2,571,047 |
Other liabilities | 0 | 10,932 |
Deferred tax liability | 7,962,100 | 7,962,100 |
Total liabilities | 12,479,310 | 10,544,079 |
Commitments and contingencies; see Note I | 0 | 0 |
Stockholders' equity | ||
Preferred stock, undesignated, authorized 10,000,000 and 9,947,439 shares; respectively, See Note G. | 0 | 0 |
Common stock, par value $.0001 per share; authorized 400,000,000 shares; issued and outstanding 28,119,520 and 27,858,000, respectively | 2,812 | 2,786 |
Additional paid-in capital | 221,067,239 | 219,468,498 |
Accumulated other comprehensive gain | 26,718 | 0 |
Accumulated deficit | (150,667,735) | (136,585,923) |
Total stockholders' equity | 70,429,034 | 82,885,361 |
Total liabilities and stockholders' equity | $ 82,908,344 | $ 93,429,440 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Apr. 30, 2015 | Apr. 30, 2014 |
Stockholders' equity | ||
Preferred stock, undesignated, authorized | 10,000,000 | 9,947,439 |
Common stock, par value | $ .0001 | $ .0001 |
Common stock, authorized | 400,000,000 | 400,000,000 |
Common stock, issued | 28,119,520 | 27,858,000 |
Common stock, outstanding | 28,119,520 | 27,858,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Consolidated Statements Of Operations | ||
Product Revenue | $ 0 | $ 25,731 |
Cost of sales | 0 | 129,800 |
Net product revenue | 0 | (104,069) |
Government grant revenue | 49,286 | 262,995 |
Total net revenue | 49,286 | 158,926 |
Operating expenses | ||
General and administrative | 7,170,779 | 13,773,325 |
Research and development | 6,660,387 | 2,996,721 |
Loss on impairment of long-lived assets | 1,034,863 | 0 |
Total operating expenses | 14,866,029 | 16,770,046 |
Net operating loss | 14,816,743 | 16,611,120 |
Interest expense | 49,081 | 2,212,283 |
Other (income) expense | (784,012) | 718,436 |
Net loss | 14,081,812 | 19,541,839 |
Unrealized (gain) loss on marketable securities | (26,718) | 0 |
Total comprehensive loss | 14,055,094 | 19,541,839 |
Reconciliation of net loss to net loss attributable to common stockholders | ||
Net loss | 14,081,812 | 19,541,839 |
Preferred stock dividend | 0 | 5,803,362 |
Net loss attributable to common stockholders | $ 14,081,812 | $ 25,345,201 |
Net loss per share, basic and diluted | $ (0.50) | $ (2.71) |
Weighted average number of common shares outstanding, basic and diluted | 28,077,963 | 9,362,031 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Preferred Stock | Common Stock | Additional paid-in capital | Accumulated other comprehensive gain (loss) | Accumulated deficit | Total |
Beginning Balance, Shares at Apr. 30, 2013 | 987 | 1,930,078 | ||||
Beginning Balance, Amount at Apr. 30, 2013 | $ 1 | $ 193 | $ 115,265,854 | $ 0 | $ (117,044,084) | $ (1,778,036) |
Preferred stock sold, net of offering costs, Shares | 5,369 | |||||
Preferred stock sold, net of offering costs, Amount | $ 1 | 4,895,187 | 4,895,188 | |||
Preferred stock issued for convertible debt, Shares | 4,600 | |||||
Preferred stock issued for convertible debt, Amount | $ 3 | 4,599,997 | 4,600,000 | |||
Common and preferred stock issued for asset purchase, Shares | 32,992 | 1,366,844 | ||||
Common and preferred stock issued for asset purchase, Amount | $ 3 | $ 137 | 24,046,860 | 24,047,000 | ||
Common stock sold, net of offering costs, Shares | 10,678,571 | |||||
Common stock sold, net of offering costs, Amount | $ 1,068 | 54,907,282 | 54,908,350 | |||
Common stock issued for convertible preferred stock, Shares | (43,948) | 9,056,415 | ||||
Common stock issued for convertible preferred stock, Amount | $ (8) | $ 906 | (898) | 0 | ||
Common stock issued as interest on convertible debt, Share | 4,881 | |||||
Common stock issued as interest on convertible debt, Amount | $ 1 | 220,040 | 220,041 | |||
Common stock issued as dividend on convertible preferred stock, Shares | 1,407,485 | |||||
Common stock issued as dividend on convertible preferred stock, Amount | $ 140 | (140) | 0 | |||
Compensation on options and restricted stocks issued, Share | 50,144 | |||||
Compensation on options and restricted stocks issued, Amount | $ 5 | 8,131,619 | 8,131,624 | |||
Common stock issued for services rendered, Shares | 198,668 | |||||
Common stock issued for services rendered, Amount | $ 20 | 499,980 | 500,000 | |||
Exercise of warrants, Shares | 3,161,145 | |||||
Exercise of warrants, Amount | $ 316 | 7,135,753 | 7,136,069 | |||
Reclassification of warrants from equity to derivative liability | (233,036) | (233,036) | ||||
Fractional shares of common stock due to reverse stock split, Amount | $ 3,769 | 0 | ||||
Net income (loss) | (19,541,839) | (19,541,839) | ||||
Ending Balance, Shares at Apr. 30, 2014 | 0 | 27,858,000 | ||||
Ending Balance, Amount at Apr. 30, 2014 | $ 0 | $ 2,786 | 219,468,498 | 0 | (136,585,923) | 82,885,361 |
Common stock issued as interest on convertible debt, Share | 255 | |||||
Common stock issued as interest on convertible debt, Amount | $ 0 | 11,500 | 11,500 | |||
Compensation on options and restricted stocks issued, Share | 29,956 | |||||
Compensation on options and restricted stocks issued, Amount | $ 3 | 465,151 | 465,154 | |||
Common stock issued for services rendered, Shares | 22,079 | |||||
Common stock issued for services rendered, Amount | $ 2 | 99,998 | 100,000 | |||
Issuance of warrants | 478,115 | $ 478,115 | ||||
Exercise of warrants, Shares | 209,230 | 543,998 | ||||
Exercise of warrants, Amount | $ 21 | 543,977 | ||||
Unrealized gain (loss) on marketable securities | 26,718 | 0 | $ 26,718 | |||
Net income (loss) | (14,081,812) | (14,081,812) | ||||
Ending Balance, Shares at Apr. 30, 2015 | 0 | 28,119,520 | ||||
Ending Balance, Amount at Apr. 30, 2015 | $ 0 | $ 2,812 | $ 221,067,239 | $ 26,718 | $ (150,667,735) | $ 70,429,034 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (14,081,812) | $ (19,541,839) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 148,140 | 150,489 |
Interest on debt instruments | 45,606 | 2,181,955 |
Loss on impairment, disposal and write down of long-lived assets | 1,034,863 | 0 |
Gain on disposal of property and equipment | (6,050) | 2,519 |
Issuance and vesting of compensatory stock options and warrants | 769,906 | 8,042,662 |
Issuance of common stock as compensation | 117,295 | 651,460 |
Change in the fair value of warrants | (382,431) | 721,840 |
Amortization of premium on marketable securities | 674,378 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable, prepaid expenses and other assets | (793,148) | 519,255 |
Inventory | 0 | 99,204 |
Accounts payable and accrued liabilities | 2,724,459 | (2,089,116) |
Net cash used in operating activities | (9,748,794) | (9,261,571) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of marketable securities | (55,142,333) | 0 |
Sale of marketable securities | 14,319,630 | 0 |
Purchase of property and equipment | (4,234) | (9,804) |
Proceeds from the sale of property and equipment | 6,500 | 0 |
Capitalization of patent costs and license rights | (105,423) | (137,234) |
Net cash used in investing activities | (40,925,860) | (147,038) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from sale of common stock and exercise of stock options and warrants, net of related expenses and payments | 543,998 | 62,044,419 |
Proceeds from issuance of notes payable, net of issuance costs | 172,025 | 141,320 |
Proceeds for issuance of convertible preferred stock, net of issuance costs | 0 | 4,895,188 |
Payments on notes - short-term | (435,433) | (135,291) |
Net cash provided by financing activities | 280,590 | 66,945,636 |
Net change in cash and cash equivalents | (50,394,064) | 57,537,027 |
Cash and cash equivalents, beginning of period | 58,320,555 | 783,528 |
Cash and cash equivalents, end of period | 7,926,491 | 58,320,555 |
Cash paid for: | ||
Interest | 3,475 | 30,328 |
Non-cash financing activities: | ||
Restricted stock issued during period in payment of interest on convertible notes | $ 11,500 | 220,041 |
Common stock issued for payment of dividends on Series C Convertible Preferred stock | 1,300,204 | |
Series D Convertible Preferred Stock issued as consideration for cancellation of $4.6 million in outstanding principal amount of a convertible promissory note issued by the Company on July 1, 2011 | 4,600,000 | |
Common stock issued as payment for dividends on the Series D Convertible Preferred stock | 1,104,000 | |
Goodwill recorded for Phyxius Pharma asset purchase for which common stock and preferred stock were issued | $ 11,265,100 |
A. DESCRIPTION OF BUSINESS
A. DESCRIPTION OF BUSINESS | 12 Months Ended |
Apr. 30, 2015 | |
Accounting Policies [Abstract] | |
NOTE A-DESCRIPTION OF BUSINESS | Description of Business—Tenax Therapeutics (the “Company”) was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. On June 17, 2008, the stockholders of Synthetic Blood International approved the Agreement and Plan of Merger dated April 28, 2008, between Synthetic Blood International and Oxygen Biotherapeutics, Inc., a Delaware corporation. Oxygen Biotherapeutics was formed on April 17, 2008, by Synthetic Blood International to participate in the merger for the purpose of changing the state of domicile of Synthetic Blood International from New Jersey to Delaware. Certificates of Merger were filed with the states of New Jersey and Delaware, and the merger was effective June 30, 2008. Under the Plan of Merger, Oxygen Biotherapeutics was the surviving corporation and each share of Synthetic Blood International common stock outstanding on June 30, 2008 was converted to one share of Oxygen Biotherapeutics common stock. On September 19, 2014, the Company changed its name to Tenax Therapeutics, Inc. On October 18, 2013, the Company created a wholly owned subsidiary, Life Newco, Inc., a Delaware corporation (“Life Newco”), to acquire certain assets of Phyxius Pharma, Inc., a Delaware corporation (“Phyxius”), pursuant to an Asset Purchase Agreement, dated October 21, 2013 (the “Asset Purchase Agreement”), by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius (the “Phyxius Stockholders”). As further discussed in Note D below, on November 13, 2013, under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired certain assets, including a license granting Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada. Reverse Stock Split The Company initiated a 1-for-20 reverse stock split effective May 10, 2013. All shares and per share amounts in these Consolidated Financial Statements and notes thereto have been retroactively adjusted to give effect to the reverse stock split. |
B. SUMMARY OF SIGNIFICANT ACCOU
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Apr. 30, 2015 | |
Accounting Policies [Abstract] | |
NOTE B-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. Principles of Consolidation The accompanying consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation. Goodwill Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired, including identifiable intangible assets, and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate potential impairment. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, an impairment charge is recognized through a charge to operations based upon the excess of the carrying value of goodwill over the implied fair value. There was no impairment to goodwill recognized during 2015 and 2014. Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents. Cash Concentration Risk On July 21, 2010, the Wall Street Reform and Consumer Protection Act permanently increased the Federal Deposit Insurance Corporation (the “FDIC”) insurance limits to $250,000 per depositor per insured bank. At April 30, 2015, the Company had $7,190,971 of cash balances uninsured by the FDIC. Liquidity and Capital Resources The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $17,511,176 and $58,966,033 and working capital of $12,993,966 and $56,394,986 as of April 30, 2015 and April 30, 2014, respectively. The Company’s practice is to invest excess cash, where available, in short-term money market investment instruments. Cash resources, including the fair value of the Company’s available for sale marketable securities as of April 30, 2015 were approximately $48.1 million, compared to approximately $58.3 million as of April 30, 2014. Based on its resources at April 30, 2015, and the current plan of expenditure on continuing development of the Company’s current product candidates, the Company believes that it has sufficient capital to fund its operations through the calendar year 2017. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates, or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance. Deferred financing costs Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful, or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital. Derivative financial instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments, and are evaluated and accounted for in accordance with the provisions of ASC 815. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability. Beneficial conversion and warrant valuation In accordance with FASB ASC 470-20, Debt with Conversion and Other Options, the Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that have conversion features at fixed rates that are in-the-money when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. As described in Note F, the discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the life of the convertible note. Preclinical Study and Clinical Accruals The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following: – Fees paid to CROs in connection with clinical trials, – Fees paid to research institutions in conjunction with preclinical research studies, and – Fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials. Property and Equipment, Net Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Laboratory equipment 3 – 5 years Office equipment 5 years Office furniture and fixtures 7 years Computer equipment and software 3 years Leasehold improvements Shorter of useful life or remaining lease term Maintenance and repairs are charged to expense as incurred, improvements to leased facilities and equipment are capitalized. Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Revenue Recognition Revenues from merchandise sales are recognized upon transfer of ownership, including passage of title to the customer and transfer of the risk of loss related to those goods. Revenues are reported on a net sales basis, which is computed by deducting from gross sales the amount of actual product returns received, discounts, incentive arrangements with retailers and an amount established for anticipated product returns. The Company’s practice is to accept product returns from retailers only if properly requested, authorized and approved. As a percentage of gross sales, returns were less than 5% in fiscal years 2014. Revenues from a cost-reimbursement grant sponsored by the United States Army (“Grant Revenue”), are recognized as milestones under the Grant program are achieved. Grant Revenue is earned through reimbursements for the direct costs of labor, travel, and supplies, as well as the pass-through costs of subcontracts with third-party CROs. Research and Development Costs Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our preclinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred. Income Taxes Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. Stock-Based Compensation The Company accounts for stock based compensation in accordance with ASC 718 Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards granted, modified and settled to our employees and directors. The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option on a straight-line basis over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. Loss Per Share Basic loss per share, which excludes antidilutive securities, is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, warrants and convertible debentures. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share follows. Year ended April 30, 2015 2014 Historical net loss per share: Numerator Net loss attributable to common stockholders $ (14,081,812 ) $ (25,345,201 ) Less: Effect of amortization of interest expense on convertible notes - - Net loss attributable to common stockholders (diluted) (14,081,812 ) (25,345,201 ) Denominator Weighted-average common shares outstanding 28,077,963 9,362,031 Effect of dilutive securities - - Denominator for diluted net loss per share 28,077,963 9,362,031 Basic and diluted net loss per share $ (0.50 ) $ (2.71 ) The following outstanding options, convertible note shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Year ended April 30, 2015 2014 Options to purchase common stock 3,718,298 3,647,858 Warrants to purchase common stock 2,728,236 2,762,466 Restricted stock grants 90 42,629 Convertible preferred shares outstanding - 6,652 Operating Leases The Company maintains operating leases for its office and laboratory facilities. The lease agreements may include rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the company takes possession of the leased space. Differences between rental expense and actual rental payments are recorded as deferred rent liabilities and are included in “Other liabilities” on the consolidated balance sheets. Recent Accounting Pronouncements In August 2014, the FASB issued ASU No. 2014-15 (“ASU 2014-15”), Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In June 2014, the FASB issued ASU No. 2014-12 (“ASU 2014-12”), Compensation – Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period In June 2014, the FASB issued ASU 2014-10 (“ASU 2014-10”), Development Stage Entities (Topic 915) In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) In May 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued its updated Internal Control – Integrated Framework (the 2013 Framework) and related illustrative documents. The original COSO Framework was published in 1992 and was recognized as the leading guidance for designing, implementing and conducting internal controls over external financial reporting and assessing its effectiveness. The 2013 Framework is expected to help organizations design and implement internal control in light of many changes in business and operating environments since the issuance of the original Framework, broaden the application of internal control in addressing operations and reporting objectives, and clarify the requirements for determining what constitutes effective internal control. The Company transitioned from the 1992 framework to the 2013 framework during the first quarter of fiscal year ending April 30, 2015. Fair Value The Company records its financial assets and liabilities in accordance with the FASB Accounting Standards Codification (“ASC”) 820 Fair Value Measurements. The Company’s balance sheet includes the following financial instruments: cash and cash equivalents, investments in marketable securities, short-term notes payable, and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments. Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The fair value measurement hierarchy consists of three levels: Level one Quoted market prices in active markets for identical assets or liabilities; Level two Inputs other than level one inputs that are either directly or indirectly observable; and Level three Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use. The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s consolidated financial statements. Investments in Marketable Securities The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in other income (expense) in the Consolidated Statements of Operations and are determined using the specific identification method with transactions recorded on a settlement date basis. The Company recognized a gain of $1,025 and $0 for the year ended April 30, 2015 and 2014, respectively Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At April 30, 2015, the Company believes that the costs of its investments are recoverable in all material respects. The following tables summarize the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs: April 30, 2015 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized losses Estimated Fair Value Obligations of U.S. Government and its agencies $ 2,448,987 $ 7,233 $ 1,122 $ - $ 2,457,342 Corporate debt securities 37,373,264 318,841 45,034 (19,438 ) 37,717,701 Total investments $ 39,822,251 $ 326,074 $ 46,156 $ (19,438 ) $ 40,175,043 The following table summarizes the scheduled maturity for the Company’s investments at April 30, 2015 and 2014, respectively: April 30, 2015 April 30, 2014 Maturing in one year or less $ 9,200,082 $ - Maturing after one year through three years 30,974,961 - Total investments $ 40,175,043 $ - Warrant liability On July 23, 2013, the Company issued common stock warrants in connection with the issuance of Series C 8% Preferred Stock (the “Series C Warrants”). As part of the offering, the Company issued 2,753,348 warrants at an exercise price of $2.60 per share and contractual term of 6 years. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,380,883, which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the subsequent changes in fair value are recorded as a component of other expense. Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Series C Warrants are measured using the Monte Carlo valuation model which is based, in part, upon inputs for which there is little or no observable market data, requiring the Company to develop its own assumptions. The assumptions used in calculating the estimated fair value of the warrants represent the Company’s best estimates; however, these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and different assumptions are used, the warrant liabilities and the change in estimated fair value of the warrants could be materially different. Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The Monte Carlo model is used for the Series C Warrants to appropriately value the potential future exercise price adjustments triggered by the anti-dilution provisions. This requires Level 3 inputs which are based on the Company’s estimates of the probability and timing of potential future financings and fundamental transactions. The other assumptions used by the Company are summarized in the following table for the Series C Warrants that were outstanding as of April 30, 2015 and April 30, 2014: Series C Warrants April 30, 2015 April 30, 2014 Closing stock price $ 3.42 $ 4.88 Expected dividend rate 0 % 0 % Expected stock price volatility 83.53 % 90.32 % Risk-free interest rate 1.23 % 1.75 % Expected life (years) 4.23 5.23 As of April 30, 2015, the fair value of the warrant liability was $572,445. The Company recorded a gain of $382,431 and a loss of $721,840 for the change in fair value as a component of other expense on the consolidated statement of operations for the years ended April 30, 2015 and 2014, respectively. A roll-forward of fair value measurements using significant unobservable inputs (Level 3) for the warrants for the years ended April 30, 2015 and 2014 are as follows: Balance, at April 30, 2013 $ - Issuance of warrants 233,036 Exercise of warrants - Loss included in income from change in fair value of warrants for the period 721,840 Balance, at April 30, 2014 $ 954,876 Issuance of warrants - Exercise of warrants - Gain included in income from change in fair value of warrants for the period (382,431) Balance, at April 30, 2015 $ 572,445 As of April 30, 2015, 240,523 Series C Warrants are outstanding. The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of April 30, 2015 and April 30, 2014: Fair Value Measurements at Reporting Date Using Balance as of April 30, 2015 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 7,926,491 $ 7,926,491 $ - $ - Marketable securities $ 9,200,082 $ - $ 9,200,082 $ - Long-term Assets Marketable securities $ 30,974,961 $ - $ 30,974,961 $ - Current Liabilities Warrant liabilities $ 572,445 $ - $ - $ 572,445 Fair Value Measurements at Reporting Date Using Balance as of April 30, 2014 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 58,320,555 $ 58,320,555 $ - $ - Current Liabilities Warrant liabilities $ 954,876 $ - $ - $ 954,876 There were no significant transfers between levels during the year ended April 30, 2015. Change in Fiscal Year On April 9, 2015, the Company’s Board of Directors approved a change in the Company’s fiscal year to a fiscal year beginning on January 1 and ending on December 31 of each year, such change beginning as of January 1, 2016. This Annual Report on Form 10-K will be the last annual filing under the old fiscal year. In accordance with certain rules promulgated under the Securities Exchange Act of 1934, as amended, the Company will file a Transition Report on Form 10-K with the Securities and Exchange Commission for the eight-month period ending December 31, 2015. The Company will subsequently file its quarterly and annual reports for the new fiscal year ending December 31. |
C. BALANCE SHEET COMPONENTS
C. BALANCE SHEET COMPONENTS | 12 Months Ended |
Apr. 30, 2015 | |
Notes to Financial Statements | |
NOTE C-BALANCE SHEET COMPONENTS | Other current assets Other current assets consist of the following: April 30, 2015 April 30, 2014 R&D materials $ 29,479 $ 177,406 Other 29,144 - $ 58,623 $ 177,406 Property and equipment, net Property and equipment consist of the following: April 30, 2015 April 30, 2014 Laboratory equipment $ 514,214 $ 683,632 Computer equipment and software 123,295 142,380 Office furniture and fixtures 130,192 130,192 767,701 956,204 Less: Accumulated depreciation (717,379 ) (831,830 ) $ 50,322 $ 124,374 Depreciation and amortization expense was $77,836 and $88,300 for the years ended April 30, 2015 and 2014, respectively. Accrued liabilities Accrued liabilities consist of the following: April 30, 2015 April 30, 2014 Operating costs $ 2,053,597 $ 76,632 Employee related 596,137 609,130 Restructuring liability 10,932 43,728 Deferred revenue - 124,521 Convertible note interest payable - 4,125 $ 2,660,666 $ 858,136 Other liabilities As further discussed in Note H below, following the closing of the CompanyÂ’s research and development facility in California, the Company entered into a long-term sublease agreement with an unrelated third party covering the vacated space which extends through the termination date. The Company recorded a liability for the remaining lease payments due under its long-term, non-cancelable operating lease for this facility, net of sublease payments, which expires in July 2015. The table below summarizes the net future minimum payments due under this lease agreement. April 30, 2015 April 30, 2014 Net non-cancelable operating lease obligation $ 10,932 $ 54,660 Less: current portion (10,932 ) (43,728 ) Long-term portion of net non-cancelable operating lease obligation $ - $ 10,932 |
D. ACQUISITION
D. ACQUISITION | 12 Months Ended |
Apr. 30, 2015 | |
Business Combinations [Abstract] | |
NOTE D-ACQUISITION | On November 13, 2013, the Company, through its wholly owned subsidiary, Life Newco, acquired certain assets of Phyxius pursuant to the Asset Purchase Agreement. The acquisition was accounted for under the acquisition method of accounting for business combinations in accordance with FASB ASC 805, Business Combinations, Under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired (the “Acquisition”) certain assets, including that certain License Agreement (the “License”), dated September 20, 2013 by and between Phyxius and Orion Corporation, a global healthcare company incorporated under the laws of Finland (“Orion”), and that certain Side Letter, dated October 15, 2013 by and between Phyxius and Orion. The License grants Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial (the “Product”) in the United States and Canada (the “Territory”). Pursuant to the License, Life Newco must use Orion’s “Simdax®” trademark to commercialize the Product. The License also grants to Life Newco a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication. Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the Territory, and certain regulatory participation rights. Additionally, Life Newco must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by Life Newco under the License. The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country (the “Term”). Orion had the right to terminate the License if the human clinical trial using the Product and studying reduction in morbidity and mortality of cardiac surgery patients at risk of low cardiac output syndrome (LCOS) as described in the US Food and Drug Administration (the “FDA”) agreed upon clinical study protocol (the “Study”) was not started by July 31, 2014. While the Company did not commence the trial by that date, on September 9, 2014, Orion notified the Company in writing that it did not intend to terminate the License so long as the trial was commenced on or before October 31, 2014. The Company subsequently commenced the human clinical trial for levosimendan on September 18, 2014 when the first patient was enrolled. The following table summarizes the consideration transferred to acquire Phyxius and the amounts of identified assets acquired and liabilities assumed at the acquisition date. Fair Value of Consideration Transferred: Common stock 8,747,802 Series E convertible preferred stock 15,299,198 Total 24,047,000 The Company issued 1,366,844 shares of its common stock that had a total fair value of approximately $8.7 million based on the closing market price on November 13, 2013, the acquisition date. The Company also issued 32,992 shares of its Series E Convertible Preferred Stock (the “Series E Stock”), which are convertible into an aggregate of 3,299,200 shares of common stock that had a total fair value of approximately $15.3 million. The rights, preferences and privileges of the Series E Stock are set forth in the Certificate of Designation of Series E Convertible Preferred Stock that the Company filed with the Secretary of State of the State of Delaware on November 13, 2013. Each share of Series E Stock automatically converted into 100 shares of common stock following receipt of stockholder approval for the transaction at the special meeting of stockholders held on March 13, 2014. Approximately 11% of the shares of converted common stock vested immediately upon receipt of stockholder approval for the transaction, while the remainder vested upon the closing of the Company’s underwritten offering of 9,285,714 shares of common stock on March 21, 2014, which resulted in net proceeds of approximately $55 million. The Series E Stock was convertible into restricted common shares using a 100-for-one ratio at any time and in accordance with a vesting schedule contingent upon achievement of Company-specific non-financial conditions. As a result, the fair value of the Preferred Shares was inferred based on their common stock equivalent value given the conversion terms. The conditional vesting of the Series E Stock was accounted for by subtracting the fair value of an equal number of put options that would effectively protect the common stock equivalent stock value as of the closing date. The terms of the put options were as follows: - Exercise price equal to the common stock price as of the Valuation Date. - Term based on management’s risk-adjusted expected time to meeting the vesting condition, which was further increased by 6 months to reflect the marketability restriction of the unregistered stock, consistent with SEC Rule 144 of the Securities Act. - Volatility was consistent with the term for the individual milestone payments derived from the median historical asset volatility for a set of comparable guideline companies. The volatility was then relevered to estimate the equity volatility of the Company. In accordance with the provisions of FASB ASC 805, the following table presents the preliminary allocation of the total fair value of consideration transferred, as discussed above, to the acquired tangible and intangible assets and assumed liabilities of Phyxius based on their estimated fair values as of the closing date of the transaction, measurement period adjustments recorded since the acquisition date and the adjusted allocation of the total fair value: November 13, 2013 (As initially reported) Measurement Period Adjustments (1) November 13, 2013 (As adjusted) IPR&D $ 22,000,000 $ - $ 22,000,000 Trade and other payables (256,000 ) - (256,000 ) Liabilities arising from a contingency (1,000,000 ) - (1,000,000 ) Deferred tax liability related to intangibles acquired - (7,962,100 ) (7,962,100 ) Total identifiable net assets 20,744,000 (7,962,100 ) 12,781,900 Goodwill 3,303,000 7,962,100 11,265,100 Total fair value of consideration $ 24,047,000 $ - $ 24,047,000 (1) The measurement period adjustments primarily reflect the recording of a deferred tax liability and resulting goodwill. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date and did not result from intervening events subsequent to the acquisition date. The fair value of the acquired in-process research and development, (“IPR&D”), intangible asset of approximately $22.0 million was determined using the multi-period excess earnings method. The Company did not acquire any other class of assets as a result of the acquisition. Pursuant to the terms of the License, the Company paid to Orion a non-refundable up-front payment in the amount of $1 million. The License also includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory. The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the Term, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as the Company sells the Product in the Territory. In connection with the closing of the Acquisition, Phyxius’ co-founder, Chief Executive Officer and stockholder, John Kelley, became the Company’s Chief Executive Officer and two other Phyxius employees and stockholders, Doug Randall and Douglas Hay, PhD became employees of the Company as Vice President, Business and Commercial Operations and Vice President, Regulatory Affairs, respectively. Michael Jebsen, the Company’s prior Interim Chief Executive Officer and current Chief Financial Officer, continued serving as the Company’s Chief Financial Officer. In addition, Mr. Kelley was subsequently appointed to the Company’s Board of Directors, and Gerald T. Proehl, a designee of the Phyxius Stockholders, was appointed to the Board of Directors on April 3, 2014 following receipt of stockholder approval for the transaction. Pursuant to the Asset Purchase Agreement, the Company agreed to propose that its stockholders approve an amendment to the Company’s 1999 Stock Plan to increase the amount of stock options authorized for issuance under the 1999 Stock Plan to not less than 4,000,000 shares of common stock. On March 13, 2014, the Company received stockholder approval to increase the option plan. In accordance with terms of the Acquisition, the Company issued an aggregate of 3,572,880 stock options with a grant date fair value of $15,818,512, to the individuals described above. See Note G for additional details. The common stock and Series E Stock issued as the consideration in the Acquisition were issued and sold without registration under the Securities Act of 1933 (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, the Phyxius Stockholders may sell the shares of common stock and Series E Stock only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act. The table below presents unaudited pro forma information as if the Company’s acquisition of Phyxius had occurred at the beginning of the earliest period presented, which was May 1, 2013. The pro forma financial information is not indicative of the results of operations that would have occurred had the transaction been effected on the assumed date or of the results that may occur in the future: Year ended April 30, 2015 2014 Total net revenue 49,286 158,926 Net loss $ 14,081,812 $ 19,975,030 Net loss attributable to common stockholders $ 14,081,812 $ 25,778,392 Net loss per share, basic $ (0.50) $ (2.56) Weighted average number of common shares outstanding, basic 28,077,963 10,086,186 |
E. INTANGIBLE ASSETS
E. INTANGIBLE ASSETS | 12 Months Ended |
Apr. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NOTE E-INTANGIBLE ASSETS | The following table summarizes our intangible assets as of April 30, 2015: Asset Category Weighted Average Amortization Period (in Years) Value Assigned Accumulated Amortization Impairments Carrying Value (Net of Impairments and Accumulated Amortization) IPR&D N/A $ 22,000,000 $ - $ - $ 22,000,000 Patents 10.3 806,771 (327,476 ) (479,295 ) - License Rights 13.6 630,666 (181,484 ) (449,182 ) - Trademarks N/A 106,386 (106,386 ) - Total $ 23,543,823 $ (1,034,863 ) $ 22,000,000 The following table summarizes our intangible assets as of April 30, 2014: Asset Category Weighted Average Amortization Period (in Years) Value Assigned Accumulated Amortization Impairments Carrying Value (Net of Impairments and Accumulated Amortization) IPR&D N/A $ 22,000,000 $ - $ - $ 22,000,000 Patents 10.8 724,067 (289,943 ) - 434,124 License Rights 14.6 607,947 (148,713 ) - 459,234 Trademarks N/A 106,386 - 106,386 Total $ 23,438,400 $ - $ 22,999,744 For the years ended April 30, 2015 and 2014, the aggregate amortization expense on the above intangibles was $70,304 and $62,189, respectively. In Process Research and Development Patents and License Rights The Company completed its annual impairment test of its patents and license rights during the fourth quarter of fiscal years 2015 and 2014. The Company wrote-off approximately $929,000 and $0 of capitalized costs for patent applications that were withdrawn or abandoned during the years ended April 30, 2015 and 2014, respectively. These asset impairment charges primarily related to the CompanyÂ’s Oxycyte and other PFC formulations which were determined not to be a core component of the CompanyÂ’s development strategy. Trademarks |
F. NOTES PAYABLE
F. NOTES PAYABLE | 12 Months Ended |
Apr. 30, 2015 | |
Debt Disclosure [Abstract] | |
NOTE F-NOTES PAYABLE | The following table summarizes the Company’s outstanding notes payable as of April 30, 2015 and 2014: April 30, 2015 April 30, 2014 Notes payable, net $ 100,160 $ 63,568 Convertible notes payable - 300,000 Less: Unamortized discount - (16,678 ) Notes payable, net $ 100,160 $ 346,890 Convertible Note On June 29, 2011, the Company issued a note (the “June Note”) with a principal amount of approximately $300,000 and Warrants to purchase 6,652 shares of common stock. On July 1, 2011, the Company issued a separate note (together with the June Note, the “Notes”) with a principal amount of $4,600,000 and warrants to purchase 101,996 shares of common stock. The aggregate gross proceeds to the Company from the offering were approximately $4.9 million, excluding any proceeds from the exercise of any warrants. The aggregate placement agent fees were $297,000 and legal fees associated with the offering were $88,839. These costs have been capitalized as debt issue costs and will be amortized as interest expense over the life of the Notes. The Company recorded amortization of debt issue costs of $21,427 and $128,616 for the years ended April 30, 2015 and 2014, respectively. All debt issue costs were fully amortized in the first quarter of the current year. Interest on the Notes accrues at a rate of 15% annually and will be paid in quarterly installments commencing on the third month anniversary of issuance. The Notes were scheduled to mature 36 months from the date of issuance. The Notes may be converted into shares of common stock at a conversion price of $45.10 per share (subject to adjustment for stock splits, dividends and combinations, recapitalizations and the like) (the "Conversion Price") in whole or in part, at any time at the option of the holders of the Notes. The Notes also will automatically convert into shares of common stock at the Conversion Price at the election of a majority-in-interest of the holders of notes issued under the purchase agreement or upon the acquisition or sale of all or substantially all of the assets of the Company. The Company could make each applicable interest payment or payment of principal in cash, shares of common stock at the Conversion Price, or any combination thereof. The Company could elect to prepay all or any portion of the Notes without prepayment penalties only with the approval of a majority-in-interest of the note holders under the purchase agreement at the time of the election. The Notes contained various events of default such as failing to timely make any payment under the Note when due, which would have resulted in all outstanding obligations under the Note becoming immediately due and payable. On August 22, 2013 holders of $4.6 million of the Notes received 4,600 shares of the Company’s Series D 8% Convertible Preferred Stock (the “Series D Stock”) as consideration for cancelling their outstanding Note. On that date, the Company recognized non-cash interest expense of $1,311,847 for the remaining unamortized debt discount associated with this Note. On June 29, 2014, the Company paid the remaining principal balance of $300,000 to the June Note holders upon maturity. The Company recorded interest expense of $45,606 and $2,181,955 for the years ended April 30, 2015 and 2014, respectively. The total value allocated to the warrants was $1,960,497 and was recorded as a debt discount against the proceeds of the notes. In addition, the beneficial conversion features related to the Notes were determined to be $2,939,504. As a result, the aggregate discount on the Notes totaled $4,900,001, and was amortized over the term of the notes. The Company recorded interest expense for the amortization of debt discount of $16,678 and $483,330 for the years ended April 30, 2015 and 2014, respectively. |
G. STOCKHOLDERS' EQUITY
G. STOCKHOLDERS' EQUITY | 12 Months Ended |
Apr. 30, 2015 | |
Equity [Abstract] | |
NOTE G-STOCKHOLDERS' EQUITY | Preferred Stock Under the Company’s Certificate of Incorporation, the Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. On November 13, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 32,992 shares of its authorized but unissued shares of preferred stock as Series E Stock. On August 22, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 4,600 shares of its authorized but unissued shares of preferred stock as Series D Stock. On July 22, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 5,369 shares of its authorized but unissued shares of preferred stock as Series C Stock. On February 25, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 1,600 shares and 500 shares of its authorized but unissued shares of preferred stock as Series B-1 Convertible Preferred Stock (the “Series B-1 Stock”) and Series B-2 Convertible Preferred Stock (the “Series B-2 Stock” and together with the Series B-1 Stock, the “Series B Stock”), respectively. On December 8, 2011, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 7,500 shares of its authorized but unissued shares of preferred stock as Series A Stock. Series E Stock As further discussed in Note D above, on November 13, 2013 the Company issued 32,992 shares of its Series E Stock, which are convertible into an aggregate of 3,299,200 shares of common stock, as partial consideration to acquire certain assets of Phyxius Pharma, Inc. pursuant to the Asset Purchase Agreement. The rights, preferences and privileges of the Series E Stock are set forth in the Certificate of Designation of Series E Convertible Preferred Stock (the “Certificate of Designation”) that the Company filed with the Secretary of State of the State of Delaware on November 13, 2013. Each share of Series E Stock will automatically convert into 100 shares of common stock following receipt of stockholder approval for the transaction. Approximately 11% of the shares of converted common stock vest immediately upon receipt of stockholder approval for the transaction, while the remainder will vest upon achievement of certain performance milestones related to the development and commercialization of the levosimendan product in North America. In addition, all unvested converted common stock will vest if certain change of control transactions or significant equity financings occur within 24 months of the closing of the Acquisition. The number of shares of common stock into which the Series E Stock converts is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The Series E Stock does not carry dividend or a liquidation preference. The Series E Stock carries voting rights aggregating 4.99% of the Company’s common stock voting power immediately prior to the closing of the Acquisition. During the year ended April 30, 2014, all 32,992 shares of Series E Stock were converted into 3,299,200 shares of common stock. As of April 30, 2015 there were no shares of Series E Stock outstanding. Series D Stock On August 22, 2013, the Company closed its private placement of an aggregate of $4.6 million of shares of the Company’s Series D Stock to JP SPC 3 obo OXBT FUND, SP (“OXBT Fund”). In connection with the purchase of shares of Series D Stock, OXBT Fund received a warrant to purchase 2,358,975 shares of common stock at an exercise price equal to $2.60 (the “Series D Warrant”). As consideration for the sale of the Series D Stock and Series D Warrant, $4.6 million in outstanding principal amount of a Note issued by the Company on July 1, 2011 and held by OXBT Fund was cancelled. The Note carried interest at a rate of 15% per annum and matured on July 1, 2014. Mr. Gregory Pepin, one of the Company’s directors, is the investment manager of OXBT Fund. Pursuant to the terms of a lock-up agreement (the “Lock-Up Agreement”) executed prior to the closing, OXBT Fund and its affiliates are prohibited from engaging in certain transactions with respect to shares of the Company’s common stock and common stock equivalents until such time as the lead investor in the Company’s offering of Series C Stock ceases to own at least 25% of the shares of Series C Stock originally issued to such investor. The table below sets forth a summary of the designation, powers, preferences and rights of the Series D Stock. Conversion Subject to certain ownership limitations, the Series D Stock is convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion ratio determined by dividing the stated value of the Series C Stock (or $1,000) by a conversion price of $1.95 per share. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. Until such time that for at least 25 trading days during any 30 consecutive trading days, the volume weighted average price of the Company’s common stock exceeds 250% of the initial conversion price, if the Company sells or grants any option to purchase or sell any common stock or common stock equivalents entitling any person to acquire shares of common stock at an effective price per share that is lower than the then conversion price, or the Base Conversion Price, then the conversion price shall be reduced to equal the Base Conversion Price Dividends and Make-Whole Payment Until the third anniversary of the date of issuance of the Series D Stock, the holder of the Series D Stock is entitled to receive dividends at the rate of 8% per annum of the stated value for each share of Series D Stock held by such holder payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the original issue date, and on each dividend payment date. The Company can elect to pay the dividends in cash or in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination thereof. If the Company pays the dividends in shares of common stock, the shares used to pay the dividends will be valued at 90% of the average volume weighted average price for the 20 consecutive trading days ending on the trading day immediately prior to the applicable dividend payment date. From and after the third anniversary of the date of issuance of the Series D Stock, the holder of Series D Stock will be entitled to receive dividends equal, on an as-if-converted to common stock basis, to and in the same form as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock. The Company has never paid dividends on its common stock and the Company does not intend to do so for the foreseeable future. In the event OXBT Fund converts its Series D Stock prior to the third anniversary of the date of issuance of the Series D Stock, the Company must also pay to OXBT Fund in cash, or at the Company’s option in common stock valued as described above, or a combination of cash and shares of common stock, with respect to the Series D Stock so converted, an amount equal to $240 per $1,000 of the stated value of the Series D Stock, less the amount of any dividends paid in cash or in common stock on such Series D Stock on or before the date of conversion. Liquidation Upon any liquidation, dissolution or winding up of the Company after payment or provision for payment of debts and other liabilities of the Company, but before any distribution or payment is made to the holders of any junior securities, the holder of Series D Stock shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount equal to $1,000 per share, after which any remaining assets of the Company shall be distributed among the holders of the other class or series of stock in accordance with the Company’s Certificate of Incorporation. Voting rights Shares of Series D Stock will generally have no voting rights, except as required by law and except that the consent of the holder of the outstanding Series D Stock will, among other things, be required to amend the terms of the Series D Stock. During the year ended April 30, 2014, 4,600 shares of Series D Stock were converted into 2,358,974 shares of common stock and the Company issued 576,084 shares of its common stock in the form of Series D Stock dividends. As of April 30, 2015 there were no shares of Series D Stock outstanding. Series C Stock On July 21, 2013, the Company entered into a Securities Purchase Agreement with certain investors providing for the issuance and sale by the Company (the “Series C Offering”) of an aggregate of approximately $5.4 million of shares of the Company’s Series C Stock, which are convertible into a combined total of 2,753,348 shares of common stock (the “Conversion Shares”). In connection with the purchase of shares of Series C Stock in the Series C Offering, each investor will receive a warrant to purchase a number of shares of common stock equal to 100% of the number of Conversion Shares at an exercise price equal to $2.60 (the “Warrants”). On July 23, 2013, the Company sold 5,369 units for net proceeds of approximately $4.9 million. The table below sets forth a summary of the designation, powers, preferences and rights of the Series C Stock. Conversion Subject to certain ownership limitations, the Series C Stock is convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion ratio determined by dividing the stated value of the Series C Stock (or $1,000) by a conversion price of $1.95 per share. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. Until such time that for at least 25 trading days during any 30 consecutive trading days, the volume weighted average price of the Company’s common stock exceeds 250% of the initial conversion price, if the Company sells or grants any option to purchase or sell any common stock or common stock equivalents entitling any person to acquire shares of common stock at an effective price per share that is lower than the then conversion price, or the Base Conversion Price, then the conversion price shall be reduced to equal the Base Conversion Price Dividends and Make-Whole Payment Until the third anniversary of the date of issuance of the Series C Stock, each holder of the Series C Stock is entitled to receive dividends at the rate of 8% per annum of the stated value for each share of Series C Stock held by such holder payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the original issue date, and on each dividend payment date. The Company can elect to pay the dividends in cash or in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination thereof. If the Company pays the dividends in shares of common stock, the shares used to pay the dividends will be valued at 90% of the average volume weighted average price for the 20 consecutive trading days ending on the trading day immediately prior to the applicable dividend payment date. From and after the third anniversary of the date of issuance of the Series C Stock, each holder of Series C Stock will be entitled to receive dividends equal, on an as-if-converted to common stock basis, to and in the same form as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock. The Company has never paid dividends on its common stock and the Company does not intend to do so for the foreseeable future. In the event a holder converts his, her or its Series C Stock prior to the third anniversary of the date of issuance of the Series C Stock, the Company must also pay to the holder in cash, or at the Company’s option in common stock valued as described above, or a combination of cash and shares of common stock, with respect to the Series C Stock so converted, an amount equal to $240 per $1,000 of the stated value of the Series C Stock, less the amount of any dividends paid in cash or in common stock on such Series C Stock on or before the date of conversion. Liquidation Upon any liquidation, dissolution or winding up of the Company after payment or provision for payment of debts and other liabilities of the Company, but before any distribution or payment is made to the holders of any junior securities, the holders of Series C Stock shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount equal to $1,000 per share, after which any remaining assets of the Company shall be distributed among the holders of the other class or series of stock in accordance with the Company’s Certificate of Incorporation. Voting rights Shares of Series C Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series C Stock will, among other things, be required to amend the terms of the Series C Stock. During the year ended April 30, 2014, 5,369 shares of Series C Stock were converted into 2,753,327 shares of common stock and the Company issued 831,401 shares of its common stock for the payment of $1,288,560 as dividends on the Series C Stock. As of April 30, 2015 there were no shares of Series C Stock outstanding. Series B Stock On February 22, 2013, the Company entered into a Securities Purchase Agreement with an institutional investor providing for the issuance and sale by the Company of $1.6 million of shares of the Company’s Series B-1 Stock and $0.5 million of shares of the Company's Series B-2 Stock which are convertible into a combined total of 420,000 shares of common stock, subject to adjustment for subsequent equity sales. On February 27, 2013, the Company sold 2,100 units for net proceeds of approximately $1.9 million. Each unit sold consisted of (i) one share of the Company’s Series B Stock and (ii) a Warrant representing the right to purchase 300 shares of common stock at a price of $1,000 per unit, less issuance costs. The shares of Series B Stock were immediately convertible upon issuance. The table below sets forth a summary of the designation, powers, preferences and rights of the Series B Stock. Dividends No dividends shall be paid on shares of Preferred Stock. Conversion Holders may elect to convert shares of Series B Stock into shares of common stock at the then-existing conversion price at any time. The initial conversion price is $5.00 per share of common stock, and is subject to certain adjustments, including an anti-dilution provision that reduces the conversion price upon the issuance of any common stock or securities convertible into common stock at an effective price per share less than the conversion price and a one-time price reset following the effectiveness of a reverse split of the Company’s outstanding common stock. Liquidation preference In the event of the Company’s voluntary or involuntary dissolution, liquidation or winding up, each holder of Series B Stock will be entitled to be paid a liquidation preference equal to the initial stated value of such holder’s Series B Stock of $1,000 per share, plus accrued and unpaid dividends and any other payments that may be due on such shares, before any distribution of assets may be made to holders of capital stock ranking junior to the Series B Stock. Voting rights Shares of Series B Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series B Stock will among other things, be required to amend the terms of the Series B Stock. The Company will not affect any conversion of the Series B Stock, nor shall a holder convert its shares of Series B Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Series B Stock or otherwise, beneficial ownership of a number shares of common stock in excess of 4.99% of the common stock outstanding immediately preceding the conversion. During the year ended April 30, 2014, 987 shares of Series B Stock were converted into 644,915 shares of common stock. As of April 30, 2015 there were no shares of Series B Stock outstanding. Series A Stock On December 12, 2011, the Company sold 3,500 units for net proceeds of approximately $3.2 million. Each unit sold consisted of (i) one share of the Company’s Series A Stock and (ii) a warrant representing the right to purchase 11.275 shares of common stock (the “2011 Warrants”), at a price of $1,000 per unit, less issuance costs. The shares of Series A Stock were immediately convertible and the 2011 Warrants are exercisable on the one-year anniversary of the closing date. On June 15, 2012, the Company sold an additional 2,500 units for net proceeds of approximately $2.3 million. Each unit sold consisted of (i) one share of the Company’s Series A Stock and (ii) a 2011 Warrant, at a price of $1,000 per unit, less issuance costs. The shares of Series A Stock were immediately convertible and the 2011 Warrants are exercisable beginning on the one-year anniversary of the closing date. During fiscal 2013, the final outstanding shares of Series A Stock were converted into shares of common stock and there were no shares of Series A Stock outstanding as of April 30, 2015 and April 30, 2014. On February 23, 2015, the Company filed certificates of elimination (the “Certificates of Elimination”) with the Secretary of State of Delaware effecting the elimination of the Certificates of Designations with respect to the Series A Stock, Series B-1 Stock, Series B-2 Stock, Series C Stock, Series D Stock and Series E Stock. No shares of the Preferred Stock were outstanding at the time of the filing of the Certificates of Elimination. The Certificates of Elimination, which were effective upon filing, canceled the Company’s Series A Stock, Series B-1 Stock, Series B-2 Stock, Series C Stock, Series D Stock and Series E Stock. At the time of filing the Certificates of Elimination, no shares of preferred stock remained outstanding. As of April 30, 2015, 10,000,000 shares of preferred stock are undesignated. Common Stock The Company’s Certificate of Incorporation authorizes it to issue 400,000,000 shares of $0.0001 par value common stock. As of April 30, 2015 and 2014, there were 28,119,520 and 27,858,000 shares of common stock issued and outstanding. Warrants On November 11, 2014, the Company issued common stock warrants in connection with the execution of a service agreement for investor relations and corporate communications. As part of the compensation under the agreement, the Company issued up to 175,000 warrants at an exercise price of $4.00 per share and contractual term of 5 years. The warrant is initially exercisable for 25,000 shares of common stock, and the number of shares of common stock exercisable under this warrant will be automatically increased by 50,000 upon the first occurrence of market price goals of $6.00, $8.00 and $10.00, respectively, during the eighteen month period beginning on the effective date. In accordance with ASC 815, these warrants are classified as equity and their estimated fair-value of $478,115 was recorded as an operating expense in the consolidated statement of operations and as additional paid in capital during the year ended April 30, 2015. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. Series D Warrants On August 22, 2013, the Company closed its private placement of an aggregate of $4.6 million shares of the Company’s Series D Stock to OXBT Fund. In connection with the purchase of shares of Series D Stock, OXBT Fund received the Series D Warrant to purchase 2,358,975 shares of common stock at an exercise price equal to $2.60 and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,531,167 was recognized as a deemed dividend on the Series D Stock during the year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. The Series D Warrant is exercisable beginning on the date of issuance and expires on August 22, 2019. The exercise price and the number of shares issuable upon exercise of Series D Warrant is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock, and also upon any distributions of assets, including cash, stock or other property to the Company’s stockholders. In addition, if stockholder approval for the transaction is obtained, the Series D Warrant will be subject to anti-dilution provisions until such time that for 25 trading days during any 30 consecutive trading day period, the volume weighted average price of the Company’s common stock exceeds $6.50 and the daily dollar trading volume exceeds $350,000 per trading day. On January 30, 2014, the Company entered into an agreement with the OXBT Fund to amend the terms of the outstanding Series D Warrants. The amendment replaced the price protection anti-dilution provision of each warrant with a covenant that the Company will not issue common stock or common stock equivalents at an effective price per share below the exercise price of such warrant without prior written consent, subject to certain exceptions. The Series D Stock and the Series D Warrant were issued and sold without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, OXBT Fund may exercise the Warrant and sell the Series D Stock and underlying shares only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act. During the year ended April 30, 2015, the Company received proceeds of $544,000 and issued 209,230 shares of common stock upon the exercise of the Series D warrants. As of April 30, 2015, 2,149,745 Series D Warrants are outstanding. Series C Warrants On July 23, 2013, as part of the offering of Series C Stock, the Company issued 2,753,348 Series C Warrants at an exercise price of $2.60 per share and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,867,991 was recognized as a deemed dividend on the Series C Stock during the year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. In connection with the Series C Offering described above, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Placement Agent”) pursuant to which the Placement Agent agreed to act as the Company’s exclusive placement agent for the Series C Offering. In accordance with the Placement Agency Agreement, on July 23, 2013 the Company issued to the Placement Agent warrants to purchase 53,539 shares of common stock at an exercise price of $2.4375 per share and a contractual term of 3 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $51,231 was recognized as additional paid in capital during the year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. During the year ended April 30, 2014, the Company received cash of approximately $6.5 million and issued 2,512,825 shares of common stock upon the exercise of outstanding Series C Warrants. As of April 30, 2015, 240,523 Series C Warrants are outstanding. In accordance with ASC 815-40-35-8, the company reassessed the classification of the remaining Series C Warrants. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, on November 11, 2013, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,082,941 which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the change in fair value was recorded as a component of other expense. The estimated fair value is determined using the Monte Carlo Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends, expected volatility of the price of the underlying common stock as well as other estimates and assumptions. As of April 30, 2015, the fair value of the warrant liability was $572,445. The Company recorded a gain of $382,431 and a loss of $721,840 for the change in fair value of this warrant liability on the consolidated statement of operations for the years ended April 30, 2015 and 2014, respectively. Series B Warrants In connection with the issuance of 2,100 shares of Series B Preferred Stock described above, on February 27, 2013 the Company issued Class A and Class B warrants to purchase an aggregate of 630,000 shares of common stock. The warrants were issued at an initial exercise price equal to $10.00 and were immediately exercisable. The Class A warrants were issued with a six-year term and the Class B warrants were issued with a two-year term. During the year ended April 30, 2014, the Company received proceeds of $567,000 and issued 630,000 shares of common stock upon the exercise of the Series B warrants. As of April 30, 2015, there were no Series B warrants outstanding. The following table summarizes the Company’s warrant activity for the year ended April 30, 2015 and 2014 : Warrants Weighted Average Exercise Price Outstanding at April 30, 2013 759,410 $ 11.00 Issued 5,165,862 2.60 Exercised (3,161,145 ) 2.26 Forfeited (1,661 ) 126.00 Outstanding at April 30, 2014 2,762,466 $ 4.28 Issued 175,000 4.00 Exercised (209,230 ) 2.60 Outstanding at April 30, 2015 2,728,236 $ 4.39 During the years ended April 30, 2015 and 2014, the Company received approximately $544,000 and $7.1 million and issued 209,230 and 3,161,145 shares of common stock, respectively upon the exercise of outstanding warrants . 1999 Amended Stock Plan In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “Plan”). Under the Plan, with the approval of the Compensation Committee of the Board of Directors, the Company may grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On September 30, 2011, the Company’s stockholders approved an amendment to the Plan which increased the amount of shares authorized for issuance under the Plan to 300,000, up from 40,000 previously authorized. Pursuant to the Asset Purchase Agreement described in Note D above, the Company agreed to propose that its stockholders approve an amendment to the Company’s 1999 Stock Plan to increase the amount of stock options authorized for issuance under the 1999 Stock Plan to not less than 4,000,000 shares of common stock. On March 13, 2014, at the special meeting of stockholders, the Company’s stockholders approved an amendment to the Plan to increase the number of shares of common stock authorized for issuance under the Plan to 4,000,000 shares of common stock. In accordance with terms of the Acquisition, the Company issued an aggregate of 3,572,880 stock options with a grant date fair value of $15,818,512, to the Chief Executive Officer, the Chief Financial Officer, the Executive Vice President, Business and Commercial Operations and the Executive Vice President, Regulatory Affairs. During the year ended April 30, 2014, the Company recorded approximately $7.9 million of compensation expense for the vested options in its consolidated statements of operations. An additional $7.9 million of compensation expense related to these grants will be recognized as performance vesting conditions are achieved. As of April 30, 2015 the Company had 122,399 shares of common stock available for grant under the Plan. The following table summarizes the shares available for grant under the Plan for the year ended April 30, 2015 and 2014: Shares Available for Grant Balances, at April 30, 2013 282,726 Additional shares reserved 3,600,000 Options granted (3,637,822 ) Options cancelled/forfeited 1,300 Restricted stock granted (135,662 ) Restricted stock cancelled/forfeited 44,866 Balances, at April 30, 2014 155,408 Options granted (50,225 ) Options cancelled/forfeited 4,785 Restricted stock granted (2,624 ) Restricted stock cancelled/forfeited 15,055 Balances, at April 30, 2015 122,399 Plan Stock Options Stock options granted under the Plan may be either incentive stock options (“ISOs”), or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the Plan may be granted with a term of up to ten years and at prices no less than fair market value for ISOs and no less than 85% of the fair market value for NSOs. Stock options granted generally vest over one to three years. The following table summarizes the outstanding stock options under the Plan for the years ended April 30, 2015 and 2014: Outstanding Options Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balances, at April 30, 2013 11,336 $ 57.00 Options granted 3,637,822 $ 5.64 Options cancelled (1,300 ) $ 43.90 Balances, at April 30, 2014 3,647,858 $ 5.79 Options granted 50,225 $ 4.82 Options cancelled (4,785 ) $ 63.84 Balances, at April 30, 2015 3,693,298 $ 5.70 $ 3 (1) (1) Amount represents the difference between the exercise price and $3.42, the closing price of Tenax Therapeutics’ stock on April 30, 2015, as reported on The NASDAQ Capital Market, for all in-the-money options outstanding. The following table summarizes all options outstanding as of April 30, 2015: Options Outstanding at April 30, 2015 Options Exercisable and Vested at April 30, 2015 Exercise Price Number of Options Weighted Average Remaining Contractual Life (Years) Number of Options Weighted Average Exercise Price $ 3.22 to $5.65 3,712,818 5.1 1,851,196 $ 5.63 $ 14.80 to $59.80 4,477 5.7 4,445 $ 39.30 $ 60.80 to $102.00 297 4.6 297 $ 82.28 $ 111.60 to $138.00 706 4.3 706 $ 122.66 3,718,298 5.1 1,856,644 $ 5.77 The following table summarizes options outstanding that have vested and are expected to ve |
H. RESTRUCTURING EXPENSE
H. RESTRUCTURING EXPENSE | 12 Months Ended |
Apr. 30, 2015 | |
Business Combinations [Abstract] | |
NOTE H-RESTRUCTURING EXPENSE | In May 2012, the Company decided to consolidate its operations and relocate its research and development function to North Carolina from Costa Mesa, California. To allow for this transition period, all existing development work had been completed and all of the manufacturing of the CompanyÂ’s PFC-based products had been transferred to contract manufacturers. As part of these initiatives, the Company terminated all related research and development activities and a workforce reduction was implemented. In September 2012, the Company entered into a sublease agreement with an unrelated third party that extends throughout the remaining term of the existing lease for the vacated facility. The following table summarizes the impact of the work force reductions and other associated costs on operating expenses and payments for the year ended April 30, 2015, and the liability remaining on the balance sheet as of April 30, 2015. Charges Incurred During the Year Ended April 30, 2015 Amounts Paid Through April 30, 2015 Amounts Accrued at April 30, 2015 Future lease obligations, net of sublease revenue $ - $ 130,952 $ 10,932 The Company recorded all restructuring expenses as operating expenses on the consolidated statement of operations. All restructuring costs were paid by April 30, 2015, with the exception of approximately $11,000 of future lease obligations, net of sublease revenue. |
I. COMMITMENTS AND CONTINGENCIE
I. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Apr. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE I-COMMITMENTS AND CONTINGENCIES | Operating Leases The Company leases its office space under an operating lease that includes fixed annual increases and expires in February 2016. Total rent expense was $111,171 and $107,946 for the years ended April 30, 2015 and 2014, respectively. The future minimum payments for the long-term, non-cancelable lease are as follows: Year ending April 30, 2016 $ 94,917 Simdax license agreement As further discussed in Note D above, on November 13, 2013 the Company acquired the License which granted it an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan in the United States and Canada. Pursuant to the License, the Company must use Orion’s “Simdax®” trademark to commercialize the Product. The License also grants to the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication. Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the Territory, and certain regulatory participation rights. Additionally, the Company must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by the Company under the License. The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country. Orion had the right to terminate the License if the Study is not started by July 31, 2014. While the Company did not commence the trial by that date, on September 9, 2014, Orion notified the Company in writing that it did not intend to terminate the License so long as the trial was commenced on or before October 31, 2014. The Company subsequently commenced the human clinical trial for levosimendan on September 18, 2014 when the first patient was enrolled. The License includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory. The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the Term, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as Life Newco sells the Product in the Territory. As of April 30, 2015, the Company has not met any of the developmental milestones and, accordingly, has not recorded any liability for the contingent payments due to Orion. Agreement with Virginia Commonwealth University In May 2008 the Company entered into a license agreement with Virginia Commonwealth University (“Licensor”, “VCU”) whereby it obtained a worldwide, exclusive license to valid claims under three of the Licensor's patent applications that relate to methods for non-pulmonary delivery of oxygen to tissue and the products based on those valid claims used or useful for therapeutic and diagnostic applications in humans and animals. The license includes the right to sub-license to third parties. The term of the agreement is the life of the patents covered by the patent applications unless the Company elects to terminate the agreement prior to patent expiration. Under the agreement the Company has an obligation to diligently pursue product development and pursue, at its own expense, prosecution of the patent applications covered by the agreement. As part of the agreement, the Company is required to pay to VCU nonrefundable payments upon achieving development and regulatory milestones. As of April 30, 2015, the Company has not met any of the developmental milestones. The agreement with VCU also requires the Company to pay royalties to VCU at specified rates based on annual net sales derived from the licensed technology. Pursuant to the agreement, the Company must make minimum annual royalty payments to VCU totaling $70,000 as long as the agreement is in force. These payments are fully creditable against royalty payments due for sales and sublicense revenue earned during the fiscal year as described above. This fee is recorded as an other current asset and is amortized over the fiscal year. Amortization expense was $70,000 for each of the years ended April 30, 2015 and 2014. In September 2014, the Company discontinued the development of its Oxycyte product candidates. As part of the this change in business strategy, on May 5, 2015 the Company provided VCU its 90 day notice terminating the license agreement entered into with the Licensor, whose effective date was May 21, 2008. The license agreement gave the Company exclusive rights to intellectual property that was used for the development and commercialization of Oxycyte and is therefore no longer needed. Litigation The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s Consolidated Financial Statements. |
J. 401(k) BENEFIT PLAN
J. 401(k) BENEFIT PLAN | 12 Months Ended |
Apr. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
NOTE J-401(k) BENEFIT PLAN | The Company sponsors a 401(k) Retirement Savings Plan (the “401(k) Plan”) for all eligible employees. Full-time employees over the age of 18 are eligible to participate in the 401(k) Plan after 90 days of continuous employment. Participants may elect to defer earnings into the 401(k) Plan up to the annual IRS limits and the Company provides a matching contribution up to 5% of the participants’ annual salary in accordance with the 401(k) Plan documents. The 401(k) Plan is managed by a third-party trustee. For the periods ended April 30, 2015 and 2014, the Company recorded $82,185 and $47,087 respectively, for matching contributions expense. |
K. INCOME TAXES
K. INCOME TAXES | 12 Months Ended |
Apr. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
NOTE K-INCOME TAXES | The Company has not recorded any income tax expense (benefit) for the periods ended April 30, 2015 and 2014 due to its history of net operating losses. The reconciliation of income tax expenses (benefit) at the statutory federal income tax rate of 34% for the periods ended April 30, 2015 and 2014 is as follows: 2015 2014 U.S. federal taxes (benefit) at statutory rate $ (4,787,816 ) $ (6,644,225 ) State income tax benefit, net of federal benefit (551,276 ) (765,026 ) Stock compensation 4,612 3,099,270 Nondeductible interest - 827,284 Other permanent differences (140,532 ) 292,355 Other, including expiration of NOL carryforwards 425,567 53,621 Change in state tax rate - (8,377 ) Change in valuation allowance 5,049,445 3,145,098 $ - $ - The tax effects of temporary differences and carry forwards that give rise to significant portions of the deferred tax assets are as follows: Deferred Tax Assets 2015 2014 Net operating Loss Carryforwards $ 35,404,245 $ 30,748,100 Accruals and other 618,400 230,900 Valuation allowance (35,994,545 ) (30,945,100 ) Net deferred tax assets 28,100 33,900 Deferred Tax Liabilities IPR&D (7,962,100 ) (7,962,100 ) Other liabilities (28,100 ) (33,900 ) Net Deferred Tax Liabilities $ (7,962,100 ) $ (7,962,100 ) The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time that it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced. As of April 30, 2015, the Company had Federal and State net operating loss carryforwards of approximately $95.3 million and $76.6 million available to offset future federal and state taxable income, respectively. The federal net operating loss carryforwards began to expire in 2013 and the state net operating loss carryforwards begin to expire in 2023. Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of the net operating losses before utilization. Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at April 30, 2015. The Company files U.S. and state income tax returns with varying statutes of limitations. The tax years 2000 and forward remain open to examination due to the carryover of unused net operating losses or tax credits. |
B. SUMMARY OF SIGNIFICANT ACC18
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Apr. 30, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the CompanyÂ’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the CompanyÂ’s results of operations and financial position could be materially impacted. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation. |
Goodwill | Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired, including identifiable intangible assets, and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate potential impairment. The CompanyÂ’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unitÂ’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unitÂ’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, an impairment charge is recognized through a charge to operations based upon the excess of the carrying value of goodwill over the implied fair value. There was no impairment to goodwill recognized during 2015 and 2014. |
Cash and Cash Equivalents | The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents. |
Cash Concentration Risk | On July 21, 2010, the Wall Street Reform and Consumer Protection Act permanently increased the Federal Deposit Insurance Corporation (the “FDIC”) insurance limits to $250,000 per depositor per insured bank. At April 30, 2015, the Company had $7,190,971 of cash balances uninsured by the FDIC. |
Liquidity and Capital Resources | The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $17,511,176 and $58,966,033 and working capital of $12,993,966 and $56,394,986 as of April 30, 2015 and April 30, 2014, respectively. The CompanyÂ’s practice is to invest excess cash, where available, in short-term money market investment instruments. Cash resources, including the fair value of the CompanyÂ’s available for sale marketable securities as of April 30, 2015 were approximately $48.1 million, compared to approximately $58.3 million as of April 30, 2014. Based on its resources at April 30, 2015, and the current plan of expenditure on continuing development of the CompanyÂ’s current product candidates, the Company believes that it has sufficient capital to fund its operations through the calendar year 2017. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates, or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the CompanyÂ’s business and financial performance. |
Deferred financing costs | Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful, or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital. |
Derivative financial instruments | The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments, and are evaluated and accounted for in accordance with the provisions of ASC 815. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability. |
Beneficial conversion and warrant valuation | In accordance with FASB ASC 470-20, Debt with Conversion and Other Options, the Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that have conversion features at fixed rates that are in-the-money when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. As described in Note F, the discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the life of the convertible note. |
Preclinical Study and Clinical Accruals | The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following: – Fees paid to CROs in connection with clinical trials, – Fees paid to research institutions in conjunction with preclinical research studies, and – Fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials. |
Property and Equipment, Net | Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Laboratory equipment 3 – 5 years Office equipment 5 years Office furniture and fixtures 7 years Computer equipment and software 3 years Leasehold improvements Shorter of useful life or remaining lease term Maintenance and repairs are charged to expense as incurred, improvements to leased facilities and equipment are capitalized. |
Impairment of Long-Lived Assets | The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. |
Revenue Recognition | Revenues from merchandise sales are recognized upon transfer of ownership, including passage of title to the customer and transfer of the risk of loss related to those goods. Revenues are reported on a net sales basis, which is computed by deducting from gross sales the amount of actual product returns received, discounts, incentive arrangements with retailers and an amount established for anticipated product returns. The Company’s practice is to accept product returns from retailers only if properly requested, authorized and approved. As a percentage of gross sales, returns were less than 5% in fiscal years 2014. Revenues from a cost-reimbursement grant sponsored by the United States Army (“Grant Revenue”), are recognized as milestones under the Grant program are achieved. Grant Revenue is earned through reimbursements for the direct costs of labor, travel, and supplies, as well as the pass-through costs of subcontracts with third-party CROs. |
Research and Development Costs | Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our preclinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred. |
Income Taxes | Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. |
Stock-Based Compensation | The Company accounts for stock based compensation in accordance with ASC 718 Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards granted, modified and settled to our employees and directors. The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option on a straight-line basis over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. |
Loss per Share | Basic loss per share, which excludes antidilutive securities, is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, warrants and convertible debentures. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share follows. Year ended April 30, 2015 2014 Historical net loss per share: Numerator Net loss attributable to common stockholders $ (14,081,812 ) $ (25,345,201 ) Less: Effect of amortization of interest expense on convertible notes - - Net loss attributable to common stockholders (diluted) (14,081,812 ) (25,345,201 ) Denominator Weighted-average common shares outstanding 28,077,963 9,362,031 Effect of dilutive securities - - Denominator for diluted net loss per share 28,077,963 9,362,031 Basic and diluted net loss per share $ (0.50 ) $ (2.71 ) The following outstanding options, convertible note shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Year ended April 30, 2015 2014 Options to purchase common stock 3,718,298 3,647,858 Warrants to purchase common stock 2,728,236 2,762,466 Restricted stock grants 90 42,629 Convertible preferred shares outstanding - 6,652 |
Operating Leases | The Company maintains operating leases for its office and laboratory facilities. The lease agreements may include rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the company takes possession of the leased space. Differences between rental expense and actual rental payments are recorded as deferred rent liabilities and are included in “Other liabilities” on the consolidated balance sheets. |
Recent Accounting Pronouncements | In August 2014, the FASB issued ASU No. 2014-15 (“ASU 2014-15”), Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In June 2014, the FASB issued ASU No. 2014-12 (“ASU 2014-12”), Compensation – Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period In June 2014, the FASB issued ASU 2014-10 (“ASU 2014-10”), Development Stage Entities (Topic 915) In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) In May 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued its updated Internal Control – Integrated Framework (the 2013 Framework) and related illustrative documents. The original COSO Framework was published in 1992 and was recognized as the leading guidance for designing, implementing and conducting internal controls over external financial reporting and assessing its effectiveness. The 2013 Framework is expected to help organizations design and implement internal control in light of many changes in business and operating environments since the issuance of the original Framework, broaden the application of internal control in addressing operations and reporting objectives, and clarify the requirements for determining what constitutes effective internal control. The Company transitioned from the 1992 framework to the 2013 framework during the first quarter of fiscal year ending April 30, 2015. |
Fair Value | The Company records its financial assets and liabilities in accordance with the FASB Accounting Standards Codification (“ASC”) 820 Fair Value Measurements. The Company’s balance sheet includes the following financial instruments: cash and cash equivalents, investments in marketable securities, short-term notes payable, and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments. Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The fair value measurement hierarchy consists of three levels: Level one Quoted market prices in active markets for identical assets or liabilities; Level two Inputs other than level one inputs that are either directly or indirectly observable; and Level three Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use. The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s consolidated financial statements. |
Investments in Marketable Securities | The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in other income (expense) in the Consolidated Statements of Operations and are determined using the specific identification method with transactions recorded on a settlement date basis. The Company recognized a gain of $1,025 and $0 for the year ended April 30, 2015 and 2014, respectively Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At April 30, 2015, the Company believes that the costs of its investments are recoverable in all material respects. The following tables summarize the fair value of the CompanyÂ’s investments by type. The estimated fair value of the CompanyÂ’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs: April 30, 2015 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized losses Estimated Fair Value Obligations of U.S. Government and its agencies $ 2,448,987 $ 7,233 $ 1,122 $ - $ 2,457,342 Corporate debt securities 37,373,264 318,841 45,034 (19,438 ) 37,717,701 Total investments $ 39,822,251 $ 326,074 $ 46,156 $ (19,438 ) $ 40,175,043 The following table summarizes the scheduled maturity for the CompanyÂ’s investments at April 30, 2015 and 2014, respectively: April 30, 2015 April 30, 2014 Maturing in one year or less $ 9,200,082 $ - Maturing after one year through three years 30,974,961 - Total investments $ 40,175,043 $ - |
Warrant liability | On July 23, 2013, the Company issued common stock warrants in connection with the issuance of Series C 8% Preferred Stock (the “Series C Warrants”). As part of the offering, the Company issued 2,753,348 warrants at an exercise price of $2.60 per share and contractual term of 6 years. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,380,883, which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the subsequent changes in fair value are recorded as a component of other expense. Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Series C Warrants are measured using the Monte Carlo valuation model which is based, in part, upon inputs for which there is little or no observable market data, requiring the Company to develop its own assumptions. The assumptions used in calculating the estimated fair value of the warrants represent the Company’s best estimates; however, these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and different assumptions are used, the warrant liabilities and the change in estimated fair value of the warrants could be materially different. Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The Monte Carlo model is used for the Series C Warrants to appropriately value the potential future exercise price adjustments triggered by the anti-dilution provisions. This requires Level 3 inputs which are based on the Company’s estimates of the probability and timing of potential future financings and fundamental transactions. The other assumptions used by the Company are summarized in the following table for the Series C Warrants that were outstanding as of April 30, 2015 and April 30, 2014: Series C Warrants April 30, 2015 April 30, 2014 Closing stock price $ 3.42 $ 4.88 Expected dividend rate 0 % 0 % Expected stock price volatility 83.53 % 90.32 % Risk-free interest rate 1.23 % 1.75 % Expected life (years) 4.23 5.23 As of April 30, 2015, the fair value of the warrant liability was $572,445. The Company recorded a gain of $382,431 and a loss of $721,840 for the change in fair value as a component of other expense on the consolidated statement of operations for the years ended April 30, 2015 and 2014, respectively. A roll-forward of fair value measurements using significant unobservable inputs (Level 3) for the warrants for the years ended April 30, 2015 and 2014 are as follows: Balance, at April 30, 2013 $ - Issuance of warrants 233,036 Exercise of warrants - Loss included in income from change in fair value of warrants for the period 721,840 Balance, at April 30, 2014 $ 954,876 Issuance of warrants - Exercise of warrants - Gain included in income from change in fair value of warrants for the period (382,431) Balance, at April 30, 2015 $ 572,445 As of April 30, 2015, 240,523 Series C Warrants are outstanding. The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of April 30, 2015 and April 30, 2014: Fair Value Measurements at Reporting Date Using Balance as of April 30, 2015 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 7,926,491 $ 7,926,491 $ - $ - Marketable securities $ 9,200,082 $ - $ 9,200,082 $ - Long-term Assets Marketable securities $ 30,974,961 $ - $ 30,974,961 $ - Current Liabilities Warrant liabilities $ 572,445 $ - $ - $ 572,445 Fair Value Measurements at Reporting Date Using Balance as of April 30, 2014 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 58,320,555 $ 58,320,555 $ - $ - Current Liabilities Warrant liabilities $ 954,876 $ - $ - $ 954,876 There were no significant transfers between levels during the year ended April 30, 2015. |
Change in Fiscal Year | On April 9, 2015, the CompanyÂ’s Board of Directors approved a change in the CompanyÂ’s fiscal year to a fiscal year beginning on January 1 and ending on December 31 of each year, such change beginning as of January 1, 2016. This Annual Report on Form 10-K will be the last annual filing under the old fiscal year. In accordance with certain rules promulgated under the Securities Exchange Act of 1934, as amended, the Company will file a Transition Report on Form 10-K with the Securities and Exchange Commission for the eight-month period ending December 31, 2015. The Company will subsequently file its quarterly and annual reports for the new fiscal year ending December 31. |
B. SUMMARY OF SIGNIFICANT ACC19
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
Accounting Policies [Abstract] | |
Historical Net Loss | Year ended April 30, 2015 2014 Historical net loss per share: Numerator Net loss attributable to common stockholders $ (14,081,812 ) $ (25,345,201 ) Less: Effect of amortization of interest expense on convertible notes - - Net loss attributable to common stockholders (diluted) (14,081,812 ) (25,345,201 ) Denominator Weighted-average common shares outstanding 28,077,963 9,362,031 Effect of dilutive securities - - Denominator for diluted net loss per share 28,077,963 9,362,031 Basic and diluted net loss per share $ (0.50 ) $ (2.71 ) |
Anti-dilutive securities | Year ended April 30, 2015 2014 Options to purchase common stock 3,718,298 3,647,858 Warrants to purchase common stock 2,728,236 2,762,466 Restricted stock grants 90 42,629 Convertible preferred shares outstanding - 6,652 |
Fair values | April 30, 2015 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized losses Estimated Fair Value Obligations of U.S. Government and its agencies $ 2,448,987 $ 7,233 $ 1,122 $ - $ 2,457,342 Corporate debt securities 37,373,264 318,841 45,034 (19,438 ) 37,717,701 Total investments $ 39,822,251 $ 326,074 $ 46,156 $ (19,438 ) $ 40,175,043 |
Scheduled of investments maturity | April 30, 2015 April 30, 2014 Maturing in one year or less $ 9,200,082 $ - Maturing after one year through three years 30,974,961 - Total investments $ 40,175,043 $ - |
Exercise price adjustments | Series C Warrants April 30, 2015 April 30, 2014 Closing stock price $ 3.42 $ 4.88 Expected dividend rate 0 % 0 % Expected stock price volatility 83.53 % 90.32 % Risk-free interest rate 1.23 % 1.75 % Expected life (years) 4.23 5.23 |
Significant unobservable inputs | Balance, at April 30, 2013 $ - Issuance of warrants 233,036 Exercise of warrants - Loss included in income from change in fair value of warrants for the period 721,840 Balance, at April 30, 2014 $ 954,876 Issuance of warrants - Exercise of warrants - Gain included in income from change in fair value of warrants for the period (382,431) Balance, at April 30, 2015 $ 572,445 |
Fair Value Measurements | Fair Value Measurements at Reporting Date Using Balance as of April 30, 2015 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 7,926,491 $ 7,926,491 $ - $ - Marketable securities $ 9,200,082 $ - $ 9,200,082 $ - Long-term Assets Marketable securities $ 30,974,961 $ - $ 30,974,961 $ - Current Liabilities Warrant liabilities $ 572,445 $ - $ - $ 572,445 Fair Value Measurements at Reporting Date Using Balance as of April 30, 2014 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 58,320,555 $ 58,320,555 $ - $ - Current Liabilities Warrant liabilities $ 954,876 $ - $ - $ 954,876 |
C. BALANCE SHEET COMPONENTS (Ta
C. BALANCE SHEET COMPONENTS (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
Notes to Financial Statements | |
Other current assets | April 30, 2015 April 30, 2014 R&D materials $ 29,479 $ 177,406 Other 29,144 - $ 58,623 $ 177,406 |
Property Plant and Equipment | April 30, 2015 April 30, 2014 Laboratory equipment $ 514,214 $ 683,632 Computer equipment and software 123,295 142,380 Office furniture and fixtures 130,192 130,192 767,701 956,204 Less: Accumulated depreciation (717,379 ) (831,830 ) $ 50,322 $ 124,374 |
Accrued Liabilities | April 30, 2015 April 30, 2014 Operating costs $ 2,053,597 $ 76,632 Employee related 596,137 609,130 Restructuring liability 10,932 43,728 Deferred revenue - 124,521 Convertible note interest payable - 4,125 $ 2,660,666 $ 858,136 |
Other liabilities | April 30, 2015 April 30, 2014 Net non-cancelable operating lease obligation $ 10,932 $ 54,660 Less: current portion (10,932 ) (43,728 ) Long-term portion of net non-cancelable operating lease obligation $ - $ 10,932 |
D. ACQUISITION (Tables)
D. ACQUISITION (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
D. Acquisition Tables | |
Fair Value of Consideration Transferred | Common stock 8,747,802 Series E convertible preferred stock 15,299,198 Total 24,047,000 |
Recognized amounts of identifiable assets acquired and liabilities assumed | November 13, 2013 (As initially reported) Measurement Period Adjustments (1) November 13, 2013 (As adjusted) IPR&D $ 22,000,000 $ - $ 22,000,000 Trade and other payables (256,000 ) - (256,000 ) Liabilities arising from a contingency (1,000,000 ) - (1,000,000 ) Deferred tax liability related to intangibles acquired - (7,962,100 ) (7,962,100 ) Total identifiable net assets 20,744,000 (7,962,100 ) 12,781,900 Goodwill 3,303,000 7,962,100 11,265,100 Total fair value of consideration $ 24,047,000 $ - $ 24,047,000 |
Schedule of acquisition | Year ended April 30, 2015 2014 Total net revenue 49,286 158,926 Net loss $ 14,081,812 $ 19,975,030 Net loss attributable to common stockholders $ 14,081,812 $ 25,778,392 Net loss per share, basic $ (0.50) $ (2.56) Weighted average number of common shares outstanding, basic 28,077,963 10,086,186 |
E. INTANGIBLE ASSETS (Tables)
E. INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Asset Category Weighted Average Amortization Period (in Years) Value Assigned Accumulated Amortization Impairments Carrying Value (Net of Impairments and Accumulated Amortization) IPR&D N/A $ 22,000,000 $ - $ - $ 22,000,000 Patents 10.3 806,771 (327,476 ) (479,295 ) - License Rights 13.6 630,666 (181,484 ) (449,182 ) - Trademarks N/A 106,386 (106,386 ) - Total $ 23,543,823 $ (1,034,863 ) $ 22,000,000 Asset Category Weighted Average Amortization Period (in Years) Value Assigned Accumulated Amortization Impairments Carrying Value (Net of Impairments and Accumulated Amortization) IPR&D N/A $ 22,000,000 $ - $ - $ 22,000,000 Patents 10.8 724,067 (289,943 ) - 434,124 License Rights 14.6 607,947 (148,713 ) - 459,234 Trademarks N/A 106,386 - 106,386 Total $ 23,438,400 $ - $ 22,999,744 |
F. NOTES PAYABLE (Tables)
F. NOTES PAYABLE (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | April 30, 2015 April 30, 2014 Notes payable, net $ 100,160 $ 63,568 Convertible notes payable - 300,000 Less: Unamortized discount - (16,678 ) Notes payable, net $ 100,160 $ 346,890 |
G. STOCKHOLDERS' EQUITY (Tables
G. STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
Equity [Abstract] | |
Warrant Activity | Warrants Weighted Average Exercise Price Outstanding at April 30, 2013 759,410 $ 11.00 Issued 5,165,862 2.60 Exercised (3,161,145 ) 2.26 Forfeited (1,661 ) 126.00 Outstanding at April 30, 2014 2,762,466 $ 4.28 Issued 175,000 4.00 Exercised (209,230 ) 2.60 Outstanding at April 30, 2015 2,728,236 $ 4.39 |
Shares available for grant under the Plan | Shares Available for Grant Balances, at April 30, 2013 282,726 Additional shares reserved 3,600,000 Options granted (3,637,822 ) Options cancelled/forfeited 1,300 Restricted stock granted (135,662 ) Restricted stock cancelled/forfeited 44,866 Balances, at April 30, 2014 155,408 Options granted (50,225 ) Options cancelled/forfeited 4,785 Restricted stock granted (2,624 ) Restricted stock cancelled/forfeited 15,055 Balances, at April 30, 2015 122,399 |
Outstanding stock options | Outstanding Options Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balances, at April 30, 2013 11,336 $ 57.00 Options granted 3,637,822 $ 5.64 Options cancelled (1,300 ) $ 43.90 Balances, at April 30, 2014 3,647,858 $ 5.79 Options granted 50,225 $ 4.82 Options cancelled (4,785 ) $ 63.84 Balances, at April 30, 2015 3,693,298 $ 5.70 $ 3 (1) |
Options Activity | Options Outstanding at April 30, 2015 Options Exercisable and Vested at April 30, 2015 Exercise Price Number of Options Weighted Average Remaining Contractual Life (Years) Number of Options Weighted Average Exercise Price $ 3.22 to $5.65 3,712,818 5.1 1,851,196 $ 5.63 $ 14.80 to $59.80 4,477 5.7 4,445 $ 39.30 $ 60.80 to $102.00 297 4.6 297 $ 82.28 $ 111.60 to $138.00 706 4.3 706 $ 122.66 3,718,298 5.1 1,856,644 $ 5.77 |
Options vested and expected to vest | Number of Option Shares Weighted Average Exercise Price Aggregate Intrinsic Value (1) Weighted Average Remaining Contractual Life (Years) Vested 1,856,644 $ 5.77 $ 3 5.1 Vested and expected to vest 3,516,820 $ 5.68 $ 7,509 5.1 |
Fair Value Assumptions | For the year ended April 2015 2014 Risk-free interest rate (weighted average) 2.23 % 1.80 % Expected volatility (weighted average) 98.43 % 98.20 % Expected term (in years) 7 6 Expected dividend yield 0.00 % 0.00 % |
Stock options | Number of Shares Weighted Average Exercise Price Inducement Stock Options outstanding at April 30, 2014 - $ - Options granted 25,000 3.22 Options exercised - - Options forfeited or expired - - Inducement Stock Options outstanding at April 30, 2015 25,000 3.22 Options exercisable at April 30, 2015 - $ - |
Restricted Stock Grants | Outstanding Restricted Stock Grants Number of Shares Weighted Average Grant Date Fair Value Balances, at April 30, 2013 1,917 $ 48.40 Restricted stock granted 135,662 $ 3.00 Restricted stock vested (50,235 ) $ 2.30 Restricted stock cancelled (31,503 ) $ 1.67 Restricted stock forfeited (13,363 ) $ 4.49 Balances, at April 30, 2014 42,478 $ 6.39 Restricted stock granted 2,624 $ 4.90 Restricted stock vested (29,957 ) $ 5.99 Restricted stock cancelled (15,055 ) $ 6.95 Balances, at April 30, 2015 90 $ 4.01 |
H. RESTRUCTURING EXPENSE (Table
H. RESTRUCTURING EXPENSE (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
H. Restructuring Expense Tables | |
Impact of the work force reductions and other associated costs on operating expenses and payments | Charges Incurred During the Year Ended April 30, 2015 Amounts Paid Through April 30, 2015 Amounts Accrued at April 30, 2015 Future lease obligations, net of sublease revenue $ - $ 130,952 $ 10,932 |
I. COMMITMENTS AND CONTINGENC26
I. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
I. Commitments And Contingencies Tables | |
Future lease payments | Year ending April 30, 2016 $ 94,917 |
K. INCOME TAXES (Tables)
K. INCOME TAXES (Tables) | 12 Months Ended |
Apr. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of income tax expenses (benefit) | 2015 2014 U.S. federal taxes (benefit) at statutory rate $ (4,787,816 ) $ (6,644,225 ) State income tax benefit, net of federal benefit (551,276 ) (765,026 ) Stock compensation 4,612 3,099,270 Nondeductible interest - 827,284 Other permanent differences (140,532 ) 292,355 Other, including expiration of NOL carryforwards 425,567 53,621 Change in state tax rate - (8,377 ) Change in valuation allowance 5,049,445 3,145,098 $ - $ - |
Deferred tax assets | Deferred Tax Assets 2015 2014 Net operating Loss Carryforwards $ 35,404,245 $ 30,748,100 Accruals and other 618,400 230,900 Valuation allowance (35,994,545 ) (30,945,100 ) Net deferred tax assets 28,100 33,900 Deferred Tax Liabilities IPR&D (7,962,100 ) (7,962,100 ) Other liabilities (28,100 ) (33,900 ) Net Deferred Tax Liabilities $ (7,962,100 ) $ (7,962,100 ) |
B. SUMMARY OF SIGNIFICANT ACC28
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Numerator | ||
Net loss attributable to common stockholders | $ (14,081,812) | $ (25,345,201) |
Less: Effect of amortization of interest expense on convertible notes | 0 | 0 |
Net loss attributed to common stockholders (diluted) | $ (14,081,812) | $ (25,345,201) |
Denominator | ||
Weighted-average common shares outstanding | 28,077,963 | 9,362,031 |
Effect of dilutive securities | $ 0 | $ 0 |
Denominator for diluted net loss per share | 28,077,963 | 9,362,031 |
Basic and diluted net loss per share | $ (0.50) | $ (2.71) |
B. SUMMARY OF SIGNIFICANT ACC29
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Options | ||
Anti-dilutive securities | 3,718,298 | 3,647,858 |
Warrants | ||
Anti-dilutive securities | 2,728,236 | 2,762,466 |
Restricted stock | ||
Anti-dilutive securities | 90 | 42,629 |
Convertible preferred shares | ||
Anti-dilutive securities | 6,652 |
B. SUMMARY OF SIGNIFICANT ACC30
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 12 Months Ended |
Apr. 30, 2015USD ($) | |
Amortized Cost | $ 39,822,251 |
Accrued Interest | 326,074 |
Gross Unrealized Gains | 46,156 |
Gross Unrealized losses | (19,438) |
Estimated Fair Value | 40,175,043 |
Obligations of U.S. Government and its agencies | |
Amortized Cost | 2,448,987 |
Accrued Interest | 7,233 |
Gross Unrealized Gains | 1,122 |
Gross Unrealized losses | 0 |
Estimated Fair Value | 2,457,342 |
Corporate debt securities | |
Amortized Cost | 37,373,264 |
Accrued Interest | 318,841 |
Gross Unrealized Gains | 45,034 |
Gross Unrealized losses | (19,438) |
Estimated Fair Value | $ 37,717,701 |
B. SUMMARY OF SIGNIFICANT ACC31
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
B. Summary Of Significant Accounting Policies Details | ||
Maturing in one year or less | $ 9,200,082 | $ 0 |
Maturing after one year through three years | 30,974,961 | 0 |
Total investments | $ 40,175,043 | $ 0 |
B. SUMMARY OF SIGNIFICANT ACC32
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - $ / shares | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
B. Summary Of Significant Accounting Policies Details 4 | ||
Closing stock price | $ 3.42 | $ 4.88 |
Expected dividend rate | 0.00% | 0.00% |
Expected stock price volatility | 83.53% | 90.32% |
Risk-free interest rate | 1.23% | 1.75% |
Expected life (years) | 4 years 2 months 23 days | 5 years 2 months 23 days |
B. SUMMARY OF SIGNIFICANT ACC33
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
B. Summary Of Significant Accounting Policies Details | ||
Beginning Balance | $ 954,876 | $ 0 |
Issuance of warrants | 0 | 233,036 |
Exercise of warrants | 0 | 0 |
(Gain)/Loss included in income from change in fair value of warrants for the period | (382,431) | 721,840 |
Ending Balance | $ 572,445 | $ 954,876 |
B. SUMMARY OF SIGNIFICANT ACC34
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
Current Assets | ||
Cash and cash equivalents | $ 7,926,491 | $ 58,320,555 |
Marketable securities | 9,200,082 | |
Long-term Assets | ||
Marketable securities | 30,974,961 | |
Current Liabilities | ||
Warrant liabilities | 572,445 | 954,876 |
Level 1 | ||
Current Assets | ||
Cash and cash equivalents | 7,926,491 | 58,320,555 |
Marketable securities | 0 | |
Long-term Assets | ||
Marketable securities | 0 | |
Current Liabilities | ||
Warrant liabilities | 0 | 0 |
Level 2 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 9,200,082 | |
Long-term Assets | ||
Marketable securities | 30,974,961 | |
Current Liabilities | ||
Warrant liabilities | 0 | 0 |
Level 3 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 0 | |
Long-term Assets | ||
Marketable securities | 0 | |
Current Liabilities | ||
Warrant liabilities | $ 572,445 | $ 954,876 |
B. SUMMARY OF SIGNIFICANT ACC35
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
B. Summary Of Significant Accounting Policies Details Narrative | ||
Uninsured FDIC | $ 7,190,971 | |
Current assets | 17,511,176 | $ 58,966,033 |
Working capital | 12,993,966 | 56,394,986 |
Cash | 48,100,000 | 58,300,000 |
Marketable securities gain recognised | 1,025 | $ 0 |
Fair value of the warrant liability | 572,445 | |
Change in fair value gain | 382,431 | |
Series C Warrants are outstanding | $ 240,523 |
C. BALANCE SHEET COMPONENTS (De
C. BALANCE SHEET COMPONENTS (Details) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
C. Balance Sheet Components Details | ||
R&D materials | $ 29,479 | $ 177,406 |
Other | 29,144 | 0 |
Total Other Assets | $ 58,623 | $ 177,406 |
C. BALANCE SHEET COMPONENTS (37
C. BALANCE SHEET COMPONENTS (Details 1) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
C. Balance Sheet Components Details 1 | ||
Laboratory equipment | $ 514,214 | $ 683,632 |
Computer equipment and software | 123,295 | 142,380 |
Office furniture and fixtures | 130,192 | 130,192 |
Subtotal | 767,701 | 956,204 |
Less: Accumulated depreciation | (717,379) | (831,830) |
Property Plant and Equipment | $ 50,322 | $ 124,374 |
C. BALANCE SHEET COMPONENTS (38
C. BALANCE SHEET COMPONENTS (Details 2) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
C. Balance Sheet Components Details 2 | ||
Operating costs | $ 2,053,597 | $ 76,632 |
Employee related | 596,137 | 609,130 |
Restructuring liability | 10,932 | 43,728 |
Deferred revenue | 0 | 124,521 |
Convertible note interest payable | 0 | 4,125 |
Total | $ 2,660,666 | $ 858,136 |
C. BALANCE SHEET COMPONENTS (39
C. BALANCE SHEET COMPONENTS (Details 3) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
Notes to Financial Statements | ||
Net non-cancelable operating lease obligation | $ 10,932 | $ 54,660 |
Less: current portion | (10,932) | (43,728) |
Long-term portion of net non-cancelable operating lease obligation | $ 0 | $ 10,932 |
C. BALANCE SHEET COMPONENTS (40
C. BALANCE SHEET COMPONENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Notes to Financial Statements | ||
Depreciation and amortization expense | $ 77,836 | $ 88,300 |
D. ACQUISITION (Details)
D. ACQUISITION (Details) | 12 Months Ended |
Apr. 30, 2015USD ($) | |
Total | $ 24,047,000 |
Common stock | |
Total | 8,747,802 |
Series E convertible preferred stock | |
Total | $ 15,299,198 |
D. ACQUISITION (Details 1)
D. ACQUISITION (Details 1) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 | Nov. 13, 2013 |
Goodwill | $ 11,265,100 | $ 11,265,100 | |
As initially reported [Member] | |||
IPR&D | $ 22,000,000 | ||
Trade and other payables | (256,000) | ||
Liability arising from a contingency | (1,000,000) | ||
Deferred tax liability related to intangibles acquired | 0 | ||
Total identifiable net assets | 20,744,000 | ||
Goodwill | 3,303,000 | ||
Total fair value of consideration | 24,047,000 | ||
Measurement Period Adjustments [Member] | |||
IPR&D | 0 | ||
Trade and other payables | 0 | ||
Liability arising from a contingency | 0 | ||
Deferred tax liability related to intangibles acquired | (7,962,100) | ||
Total identifiable net assets | (7,962,100) | ||
Goodwill | 7,962,100 | ||
Total fair value of consideration | 0 | ||
As adjusted [Member] | |||
IPR&D | 22,000,000 | ||
Trade and other payables | (256,000) | ||
Liability arising from a contingency | (1,000,000) | ||
Deferred tax liability related to intangibles acquired | (7,962,100) | ||
Total identifiable net assets | 12,781,900 | ||
Goodwill | 11,265,100 | ||
Total fair value of consideration | $ 24,047,000 |
D. ACQUISITION (Details 2)
D. ACQUISITION (Details 2) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
D. Acquisition Details 2 | ||
Total net revenue | $ 49,286 | $ 158,926 |
Net loss | 14,081,812 | 19,975,030 |
Net loss attributable to common stockholders | $ 14,081,812 | $ 25,778,392 |
Net loss per share, basic | $ (0.50) | $ (2.56) |
Weighted average number of common shares outstanding, basic | 28,077,963 | 10,086,186 |
E. INTANGIBLE ASSETS (Details)
E. INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Value Assigned | $ 23,543,823 | $ 23,438,400 |
Impairments | (1,034,863) | 0 |
Carrying Value (Net of Impairments and Accumulated Amortization) | 22,000,000 | 22,999,744 |
IPR&D | ||
Value Assigned | 22,000,000 | 22,000,000 |
Accumulated Amortization | 0 | 0 |
Impairments | 0 | 0 |
Carrying Value (Net of Impairments and Accumulated Amortization) | $ 22,000,000 | $ 22,000,000 |
Patents | ||
Weighted Average Amortization Period (in Years) | 10 years 3 months 18 days | 10 years 9 months 18 days |
Value Assigned | $ 806,771 | $ 724,067 |
Accumulated Amortization | (327,476) | (289,943) |
Impairments | (479,295) | 0 |
Carrying Value (Net of Impairments and Accumulated Amortization) | $ 0 | $ 434,124 |
License Rights | ||
Weighted Average Amortization Period (in Years) | 13 years 7 months 6 days | 14 years 7 months 6 days |
Value Assigned | $ 630,666 | $ 607,947 |
Accumulated Amortization | (181,484) | (148,713) |
Impairments | (449,182) | 0 |
Carrying Value (Net of Impairments and Accumulated Amortization) | 0 | 459,234 |
Trademarks | ||
Value Assigned | 106,386 | 106,386 |
Impairments | (106,386) | 0 |
Carrying Value (Net of Impairments and Accumulated Amortization) | $ 0 | $ 106,386 |
E. INTANGIBLE ASSETS (Details N
E. INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
E. Intangible Assets Details Narrative | ||
Amortization Of Intangible Assets | $ 70,304 | $ 62,189 |
Capitalized patent costs | 105,000 | 137,000 |
Trademark costs written off | $ 106,000 | $ 0 |
F. NOTES PAYABLE (Details)
F. NOTES PAYABLE (Details) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
F. Notes Payable Details | ||
Notes payable, net | $ 100,160 | $ 63,568 |
Convertible notes payable | 0 | 300,000 |
Less: Unamortized discount | 0 | (16,678) |
Notes payable, net | $ 100,160 | $ 346,890 |
F. NOTES PAYABLE (Details Narra
F. NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Interest expense | $ 49,081 | $ 2,212,283 |
Convertible Notes Payable [Member] | ||
Amortization of debt issue costs recorded | 21,427 | 128,616 |
Interest expense | 45,606 | 2,181,955 |
Interest expense for amortization of debt discount | $ 16,678 | $ 483,330 |
G. STOCKHOLDERS' EQUITY (Detail
G. STOCKHOLDERS' EQUITY (Details) - $ / shares | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
G. Stockholders Equity Details | ||
Number of Warrants Outstanding, Beginning | 2,762,466 | 759,410 |
Number of Warrants Issued | 175,000 | 5,165,862 |
Number of Warrants Exercised | (209,230) | (3,161,145) |
Number of Warrants Forfeited | (1,661) | |
Number of Warrants Outstanding, Ending | 2,728,236 | 2,762,466 |
Weighted Average Exercise Price Outstanding, Beginning | $ 4.28 | $ 11 |
Weighted Average Exercise Price Issued | 4 | 2.60 |
Weighted Average Exercise Price Exercised | 2.60 | 2.26 |
Weighted Average Exercise Price Forfeited | 126 | |
Weighted Average Exercise Price Outstanding, Ending | $ 4.39 | $ 4.28 |
G. STOCKHOLDERS' EQUITY (Deta49
G. STOCKHOLDERS' EQUITY (Details 1) - shares | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
G. Stockholders Equity Details 1 | ||
1999 Amended Stock Plan Shares available for grant. Beggining Balance | 155,408 | 282,726 |
Additional shares reserved | 3,600,000 | |
Options granted | (50,225) | (3,637,822) |
Options cancelled/forfeited | 4,785 | 1,300 |
Restricted stock granted | (2,624) | (135,662) |
Restricted stock cancelled/forfeited | 15,055 | 44,866 |
1999 Amended Stock Plan Shares available for grant, Ending balance | 122,399 | 155,408 |
G. STOCKHOLDERS' EQUITY (Deta50
G. STOCKHOLDERS' EQUITY (Details 2) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Number of Options Outstanding, Ending | 3,718,298 | |
Plan Stock Options [Member] | ||
Number of Options Outstanding, Beginning | 3,647,858 | 11,336 |
Number of Options Granted | 50,225 | 3,637,822 |
Number of Options Cancelled | (4,785) | (1,300) |
Number of Options Outstanding, Ending | 3,693,298 | 3,647,858 |
Weighted Average Exercise Price Outstanding, Beginning | $ 5.79 | $ 57 |
Weighted Average Exercise Price Granted | 4.82 | 5.64 |
Weighted Average Exercise Price Canceled | 63.84 | 43.90 |
Weighted Average Exercise Price Outstanding, Ending | $ 5.70 | $ 5.79 |
Aggregate Intrinsic Value | $ 3 |
G. STOCKHOLDERS' EQUITY (Deta51
G. STOCKHOLDERS' EQUITY (Details 3) - 12 months ended Apr. 30, 2015 - $ / shares | Total |
Number of Options Outstanding, Ending | 3,718,298 |
Weighted Average Remaining Contractual Life (Years) | 5 years 1 month 6 days |
Number of Options Exercisable and Vested | 1,856,644 |
Options Exercisable and Vested Weighted Average Exercise Price | $ 5.77 |
Exercise Price $3.22 to $5.65 | |
Number of Options Outstanding, Ending | 3,712,818 |
Weighted Average Remaining Contractual Life (Years) | 5 years 1 month 6 days |
Number of Options Exercisable and Vested | 1,851,196 |
Options Exercisable and Vested Weighted Average Exercise Price | $ 5.63 |
Exercise Price $14.80 to $59.80 | |
Number of Options Outstanding, Ending | 4,477 |
Weighted Average Remaining Contractual Life (Years) | 5 years 8 months 12 days |
Number of Options Exercisable and Vested | 4,445 |
Options Exercisable and Vested Weighted Average Exercise Price | $ 39.30 |
Exercise Price $60.80 to $102.00 | |
Number of Options Outstanding, Ending | 297 |
Weighted Average Remaining Contractual Life (Years) | 4 years 7 months 6 days |
Number of Options Exercisable and Vested | 297 |
Options Exercisable and Vested Weighted Average Exercise Price | $ 82.28 |
Exercise Price $111.60 to $138.00 | |
Number of Options Outstanding, Ending | 706 |
Weighted Average Remaining Contractual Life (Years) | 4 years 3 months 18 days |
Number of Options Exercisable and Vested | 706 |
Options Exercisable and Vested Weighted Average Exercise Price | $ 122.66 |
G. STOCKHOLDERS' EQUITY (Deta52
G. STOCKHOLDERS' EQUITY (Details 4) - Apr. 30, 2015 - USD ($) | Total |
G. Stockholders Equity Details 4 | |
Number of Option Shares Vested | 1,856,644 |
Weighted Average Exercise Price Vested | $ 5.77 |
Aggregate Intrinsic Value Vested | $ 3 |
Weighted Average Remaining Contractual Life (Years) Vested | 5 years 1 month 6 days |
Number of Option Shares Vested and expected to vest | 3,516,820 |
Weighted Average Exercise Price Vested and expected to vest | $ 5.68 |
Aggregate Intrinsic Value Vested and expected to vest | $ 7,509 |
Weighted Average Remaining Contractual Life (Years) Vested and expected to vest | 5 years 1 month 6 days |
G. STOCKHOLDERS' EQUITY (Deta53
G. STOCKHOLDERS' EQUITY (Details 5) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
G. Stockholders Equity Details 5 | ||
Risk-free interest rate (weighted average) | 2.23% | 1.80% |
Expected volatility (weighted average) | 98.43% | 98.20% |
Expected term (in years) | 7 years | 6 years |
Expected dividend yield | 0.00% | 0.00% |
G. STOCKHOLDERS' EQUITY (Deta54
G. STOCKHOLDERS' EQUITY (Details 6) - $ / shares | 12 Months Ended |
Apr. 30, 2015 | |
Options exercised | 543,998 |
Number of Options Outstanding, Ending | 3,718,298 |
Stock Option [Member] | |
Number of Options Outstanding, Beginning | 0 |
Options granted | 25,000 |
Options exercised | 0 |
Options forfeited or expired | 0 |
Number of Options Outstanding, Ending | 25,000 |
Options exercisable at April 30, 2015 | 0 |
Weighted Average Exercise Price Outstanding, Beginning | $ 0 |
Weighted Average Exercise Price, Option granted | 3.22 |
Weighted Average Exercise Price, Options exercised | 0 |
Weighted Average Exercise Price, Options forfeited or expired | 0 |
Weighted Average Exercise Price Outstanding, Ending | 3.22 |
Weighted Average Exercise Price, Options exercisable | $ 0 |
G. STOCKHOLDERS' EQUITY (Deta55
G. STOCKHOLDERS' EQUITY (Details 7) - $ / shares | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
G. Stockholders Equity Details 7 | ||
Number of Restricted Stock Grants, Beginning | 42,478 | 1,917 |
Granted | 2,624 | 135,662 |
Vested | (29,957) | (50,235) |
Cancelled | (15,055) | (31,503) |
Forfeited | (13,363) | |
Number of Restricted Stock Grants Ending | 90 | 42,478 |
Weighted Average Grant Date Fair Value, Beginning | $ 6.39 | $ 48.40 |
Weighted Average Grant Date Fair Value, Granted | 4.90 | 3 |
Weighted Average Grant Date Fair Value, Vested | 5.99 | 2.30 |
Weighted Average Grant Date Fair Value, Cancelled | 6.95 | 1.67 |
Weighted Average Grant Date Fair Value, Forfeited | 4.49 | |
Weighted Average Grant Date Fair Value, Ending | $ 4.01 | $ 6.39 |
G. STOCKHOLDERS' EQUITY (Deta56
G. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Common stock, shares issued upon exercise of warrants | $ 2,812 | $ 2,786 |
Proceeds from exercise of warrants | $ (233,036) | |
Common stock, shares outstanding | 28,119,520 | 27,858,000 |
Fair value of warrant liability | $ 572,445 | |
Gain from change in fair value | $ 382,431 | |
Common stock available for grant | 122,399 | 155,408 |
Inducement stock option compensation expense | $ 9,830 | $ 0 |
Remaining unrecognized compensation expense related to inducement stock options | $ 54,513 | |
Inducement stock options outstanding, Weighted Average Remaining Contractual Term | 9 years 9 months 15 days | |
Compensation expense for restricted stock grants | $ 18,092 | $ 356,639 |
Unrecognized compensation costs related to non-vested restricted stock grants | 361 | |
Series D Warrants [Member] | ||
Common stock, shares issued upon exercise of warrants | 209,230 | |
Proceeds from exercise of warrants | $ 544,000 | |
Common stock, shares outstanding | 2,149,745 | |
Series C Warrants [Member] | ||
Common stock, shares issued upon exercise of warrants | $ 2,512,825 | |
Proceeds from exercise of warrants | $ 6,500,000 | |
Common stock, shares outstanding | 240,523 | |
Series B Warrants | ||
Common stock, shares issued upon exercise of warrants | $ 630,000 | |
Proceeds from exercise of warrants | $ 567,000 | |
Common stock, shares outstanding | 0 |
H. RESTRUCTURING EXPENSE (Detai
H. RESTRUCTURING EXPENSE (Details) - Apr. 30, 2015 - Future lease obligations, net of sublease revenue - USD ($) | Total |
Charges Incurred During the Year Ended April 30, 2015 | $ 0 |
Amounts Paid Through April 30, 2015 | 130,952 |
Amounts Accrued at April 30, 2015 | $ 10,932 |
H. RESTRUCTURING EXPENSE (Det58
H. RESTRUCTURING EXPENSE (Details Narrative) | Apr. 30, 2015USD ($) |
H. Restructuring Expense Details Narrative | |
Future lease obligation | $ 11,000 |
I. COMMITMENTS AND CONTINGENC59
I. COMMITMENTS AND CONTINGENCIES (Details) | Apr. 30, 2015USD ($) |
I. Commitments And Contingencies Tables | |
Year ending April 30, 2016 | $ 94,917 |
I. COMMITMENTS AND CONTINGENC60
I. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Total rent expense | $ 111,171 | $ 107,946 |
Amortization expense | $ 70,000 | $ 70,000 |
J. 401(k) BENEFIT PLAN (Details
J. 401(k) BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ||
Matching contributions expense for Retirement Savings Plan | $ 82,185 | $ 47,087 |
K. INCOME TAXES (Details)
K. INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal taxes (benefit) at statutory rate | $ (4,787,816) | $ (6,644,225) |
State income tax benefit, net of federal benefit | (551,276) | (765,026) |
Stock compensation | 4,612 | 3,099,270 |
Nondeductible interest | 0 | 827,284 |
Other permanent differences | (140,532) | 292,355 |
Other, including expiration of NOL carryforwards | 425,567 | 53,621 |
Change in state tax rate | 0 | (8,377) |
Change in valuation allowance | 5,049,445 | 3,145,098 |
Income tax | $ 0 | $ 0 |
K. INCOME TAXES (Details 1)
K. INCOME TAXES (Details 1) - USD ($) | Apr. 30, 2015 | Apr. 30, 2014 |
Deferred tax assets | ||
Net operating loss carryforwards | $ 35,404,245 | $ 30,748,100 |
Accruals and others | 618,400 | 230,900 |
Valuation allowance | (35,994,545) | (30,945,100) |
Net deferred tax assets | 28,100 | 33,900 |
Deferred Tax Liabilities | ||
IPR&D | (7,962,100) | (7,962,100) |
Other liabilities | (28,100) | (33,900) |
Net Deferred Tax Liabilities | $ (7,962,100) | $ (7,962,100) |
K. INCOME TAXES (Details Narrat
K. INCOME TAXES (Details Narrative) - Apr. 30, 2015 - USD ($) | Total |
Federal [Member] | |
Operating loss carryforwards | $ 95,300,000 |
Operating loss carryforwards, expiration dates | Apr. 30, 2013 |
State [Member] | |
Operating loss carryforwards | $ 76,600,000 |
Operating loss carryforwards, expiration dates | Apr. 30, 2023 |