ɫTV

Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.20.2
Stockholders' Equity
 12 Months Ended
Apr. 30, 2020
Stockholders' Equity Note [Abstract]
Stockholders' Equity Stockholders’ Equity
On June 28, 2019, the Company amended its Certificate of Incorporation, as amended, to reduce in the number of shares of common stock the Company is authorized to issue from 250,000,000 to 40,000,000 shares, and the number of shares of preferred stock the Company is authorized to issue from 10,000,000 to 1,000,000 shares. The stockholders of the Company had previously approved the amendment at a special meeting of stockholders held on June 28, 2019.

Preferred Stock

The Company is authorized to issue 1,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our Board of Directors. As of April30, 2020 and April30, 2019, we had no shares of preferred stock issued and outstanding.

Common Stock

The Company is authorized to issue 40,000,000 shares of common stock.

On January 22, 2020 the Company raised $17,267,250 through the issuance of 2,415,000 shares of common stock at a price of $7.15. The net proceeds were $16,044,879 after deducting underwriting discounts and commissions. The number of shares sold through this public offering includes 315,000 shares of common stock pursuant to an option granted to the underwriters to cover over allotments that was exercised in full.

On November 30, 2019, the Company issued 25,000 shares of common stock for services in connection with the CFO transition which immediately vested. The total value of the grant was $177,500. The Company also issued 15,000 shares of common stock to its new Chief Financial Officer upon the vesting of RSUs previously granted to him for Audit Committee services. The total value of the grant was approximately $103,350.

During the years ended April30, 2020 and 2019, the Company issued 190,559 and 111,666 shares of common stock upon the cashless exercise of 363,334 and 194,276 stock options, respectively.

During the years ended April30, 2020 and 2019, the Company issued 76,929 and 119,594 shares of common stock upon the cashless exercise of 164,929 and 218,323 stock warrants, respectively.

During the years ended April30, 2020 and 2019, the Company issued 277,678 and 56,910 shares of common stock upon the exercise of stock options for cash and received proceeds of $962,650 and $128,201, respectively.

During the year ended April 30, 2020, the company did not issue any common stock for warrants exercised for cash. During the years ended April 30, 2019, the Company issued 43,860 shares of common stock, respectively, upon the exercise of 43,860 warrants for cash and received proceeds of $100,000.

Restricted Stock

As of the years ended April 30, 2020 and 2019, there were 24,672 and 64,116 unvested shares of restricted common stock outstanding, respectively. Total unrecognized compensation expense related to the unvested shares as of the years ended April 30, 2020 and 2019 amounted to $70,178 and $340,000 respectively.

In December 2018, Company issued 24,672 shares of restricted common stock to directors, with a fair value of $126,320 to be recognized over 36 months, of which $70,178 is unrecognized as of April 30, 2020 and will be amortized over the remaining vesting periods. Amortization expense for these shares was $42,107 and $14,036 for the years ended April30, 2020 and 2019.
On June 18, 2019, in order to correct errors in a third-party software system used to track stock options, the Company granted Andrew Kaplan, a current director, 5,131 shares of restricted common stock and two former directors a total of 25,000 shares of restricted common stock valued at $122,232 and expensed immediately.

In April 2019, the Company granted 25,000 shares to its investor relations firm, of which 5,000 were vested with the balance vesting quarterly over one year, subject to continued service. The total value was $122,250 which was amortized and recognized over the fiscal 2020 year.
The Board approved a grant of 25,000 shares of restricted common stock to the then Chief Financial Officer in September 2018. The stock price was $7.15 on the date of the grant and was to vest over a period of 36 months. The value of the compensation was approximately $180,000. Upon leaving the Company on November 30, 2019 the remaining two-thirds of restricted stock was immediately vested as part of the separation agreement resulting in accelerated amortization expense of approximately $108,000.

Restricted Stock Units

A summary of the Company’s Restricted Stock Unit activity during the year ended April 30, 2020 is presented below:

Number of Shares Weighted Average Grant Price
Restricted Stock Units
Balance outstanding at April 30, 2019 — $ —
Granted 658,675 5.67
Vested (15,000) 6.89
Forfeited (500) 5.18
Balance outstanding at April 30, 2020 643,175 5.64

For the year ended April30, 2020, the Company recorded compensation expense of $454,999 in connection with RSU grants.

There were 643,175 unvested RSUs as of April30, 2020. Total unrecognized compensation expense related to the unvested RSUs as of April30, 2020 is approximately $3,274,970 which will be amortized over the remaining vesting periods.

On February 4, 2020, the Compensation Committee approved the following grants of restricted stock units (the“RSUs”) to the executive officers of the Company under the Company’s 2018 Equity Incentive Plan: 100,000 RSUs to the Chief Executive Officer, 75,000 RSUs to each of the Chief Financial Officer, Chief Operating Officer, and Chief Academic Officer, and 50,000 to the Chief Nursing Officer. Each RSU represents the right to receive one share of the Company’s common stock. The RSUs vest four years from the grant date, subject to accelerated vesting as follows: (i)if the closing price of the Company’s common stock is at least $9 for 20 consecutive trading days, 10% of the RSUs will vest immediately; (ii) if the closing price of the Company’s common stock is at least $10 for 20 consecutive trading days, 25% of the RSUs will vest immediately; and (iii) if the closing price of the Company’s common stock is at least $12 for 20 consecutive trading days, all of the unvested RSUs will vest immediately. On the grant date, the closing price of the Company’s common stock on The Nasdaq Global Market was $9.49 per share. The grants have a four year vesting period. For fiscal 2020 amortization expense related to these RSUs was $111,211.

In December 2019, the CFO and CAO received grants of 100,000 and 20,000 RSU's, respectively, as part of their employment agreements. These grants will vest annually over three years and had a combined fair value of $826,800.

In December 2019, the current CFO immediately vested in 15,000 RSUs with a total expense of $103,350, which he was granted as Audit Committee Chairman in November 2019.

In November 2019, the Chief Nursing Officer received a grant of 50,000 RSUs as part of her employment agreement. These grants will vest annually over three years and have a fair value of $314,500. The Company also issued 98,675 RSUs to employees vesting over three years subject to continued employment with a fair value of $708,425.
Treasury Stock
On July 19, 2018, AGI in simultaneous transactions repurchased $1,000,000 shares of common stock at $7.40 per share and re-sold the shares to a large well-known institutional money manager at $7.40 per share. The shares were purchased by the Company from ESL pursuant to a Securities Purchase Agreement dated July 18, 2018. The purchaser paid $30,000 to a broker-dealer in connection with the transaction.
Warrants
A summary of the Company’s warrant activity during the year ended April30, 2020 is presented below:
Warrants
Number of Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2019 731,152 $ 5.28 3.29 $ 413,296
Granted
 — — — —
Exercised
 (164,929) 2.05 — —
Surrendered
 — — — —
Expired
 — — — —
Balance Outstanding, April 30, 2020 566,223 $ 6.22 3.17 $ 950,100
Exercisable, April 30, 2020 566,223 $ 6.22 3.17 $ 950,100

ALL WARRANTS
EXERCISABLE WARRANTS
Exercise
Price
Weighted
Average
Exercise
Price
Outstanding
No. of
Warrants
Weighted
Average
Exercise
Price
Weighted
Average
Remaining Life
In Years
Exercisable
No. of
Warrants
$ 4.89 $ 4.89 50,000 $ 4.89 3.85 50,000
$ 5.85 $ 5.85 92,049 $ 5.85 3.82 92,049
$ 6.00 $ 6.00 200,000 $ 6.00 3.85 200,000
$ 6.87 $ 6.87 224,174 $ 6.87 2.24 224,174
566,223 566,223

On August 17, 2019 an investor elected a cashless exercise of 13,542 warrants, receiving 6,271 shares. On August 20, 2019 two investors elected cashless exercises of 18,818 and 88,710 warrants, receiving 8,970 and 42,285 shares, respectively.

On June 3, 2019, a former director cashlessly exercised 21,930 warrants, receiving 9,806 shares of common stock. On June 7, 2019, the CEO cashlessly exercised the same amount of warrants receiving 9,597 shares of common stock.

As part of the Credit Facility Agreement executed on November 8, 2018, 92,049 five-year warrants were issued with an exercise price of $5.85 per share.

The Company issued 200,000 warrants on March 5, 2019 related to senior secured loans.
The Company issued 50,000 warrants on April30, 2019 to an advisory board member for services. The warrants vest ratably over three years.

During the year ended April30, 2019, 262,183 warrants were exercised. Of these, 218,323 warrants were cashless exercises resulting in a net of 119,594 shares of common stock being issued and 43,860 were exercised for cash resulting in 43,860 shares being issued and generating $100,000 in proceeds.

Stock Incentive Plan and Stock Option Grants to Employees and Directors
On March 13, 2012, the Company adopted the ɫTV. 2012 Equity Incentive Plan (the “2012 Plan”) that provides for the grant of 3,500,000 shares in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and RSUs to employees, consultants, officers and directors.
On December 13, 2018, the stockholders of the Company approved the ɫTV. 2018 Equity Incentive Plan (the “2018 Plan”) that provides for the grant of 500,000 shares in the form of incentive stock options, non-qualified stock options, restricted shares, stock appreciation rights and RSUs to employees, consultants, officers and directors.
On December 30, 2019, the Company held its Annual Meeting of Shareholders at which the shareholders voted to amend the 2018 Plan to increase the number of shares of common stock available for issuance under the 2018 Plan from 500,000 to 1,100,000 shares.
As of April30, 2020, there were 179,380 and 47,277 shares remaining available for future issuance under the 2012 and 2018 Plan, respectively.

The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the period ended.
 April 30,
2020 2019
Expected life (years)
 3.5 3.5
Expected volatility
 57.0 % 50.1 %
Risk-free interest rate
 0.24 % 2.63 %
Dividend yield
 0.00 % 0.00 %
Expected forfeiture rate
 n/a n/a
The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on historical volatility. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.
A summary of the Company’s stock option activity for employees and directors during the year ended April30, 2020, is presented below:
Options
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2019 3,408,154 $ 4.44 2.90 $ 6,880,644
Granted
 156,900 5.18 — —
Exercised
 (624,346) 3.17 — —
Forfeited
 (205,809) 7.37 — —
Expired
 — — — —
Balance Outstanding, April 30, 2020 2,734,899 $ 4.62 1.97 $ 9,146,198
Exercisable, April 30, 2020 1,742,599 $ 3.71 1.48 $ 7,366,936

ALL OPTIONS
EXERCISABLE OPTIONS
Exercise
Price
Weighted
Average
Exercise
Price
Outstanding
No. of
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining Life
In Years
Exercisable
No. of
Options
$1.57 to $2.10
 $2.00 561,724 $2.00 0.71 561,724
$2.28 to $2.76
 $2.30 374,446 $2.30 0.41 374,446
$3.24 to $4.38
 $3.89 327,730 $3.87 1.60 275,063
$4.50 to $5.20
 $4.94 677,277 $4.94 2.54 226,125
$5.95 to $6.28
 $6.07 79,917 $6.07 2.20 26,639
$7.17 to $7.55
 $7.41 549,639 $7.32 3.58 223,880
$8.57 to $9.07
 $8.97 164,166 $8.97 2.69 54,722
Options only 2,734,899 1,742,599

For the years ended April30, 2020 and 2019, the Company recorded compensation expense in connection with stock options of $1,289,546 and $1,190,385. For the years ended April30, 2020 and 2019, the Company recorded no stock based compensation expense related to the executive officer target bonus plan.

As of April 30, 2020, there was approximately $724,965 of unrecognized compensation costs related to non-vested share-based option arrangements. That cost is expected to be recognized over a weighted-average period of 1.7 years.

In April 2020, the Company awarded 6,900 options to employees hired during the fiscal third quarter. The fair value of these grants was $11,088 with an average grant price of $4.58.

On December 9, 2019, the Company granted 61,000 options to its directors with an exercise price of $6.92 per share for services performed for the calendar year 2019. The fair value of these options was approximately $116,000 and was fully recognized as of January 31, 2020.
On August 1, 2019, the Company granted 59,000 options with an exercise price of $3.99 per share to 26 employees who had been hired during the first quarter ended July 31, 2019. The fair value of these options was approximately $83,000 and will be recognized over 36 months.
The Company granted a total of 30,000 five years non-qualified stock options on May 13, 2019, which were immediately vested, to certain former directors exercisable at $4.12 per share. The fair value of the options was $33,600 and expensed during the three months ended July 31, 2019.

The Company granted 65,750 options to 44 new and continuing employees on April 30, 2019. The exercise price was $4.56 per share and the fair value was approximately $117,000. The options vest over 36 months.

On December 24, 2018, the Company granted 61,667 options to three directors, 41,667 to one director, and 10,000 each to two others. The exercise price was $5.14 per share and the total fair value was approximately $123,000, which will be recognized over 36 months.

On December 13, 2018, the Company granted 89,125 options to 61 employees who had been hired throughout 2018. The fair value of these options was approximately $136,000 and will be recognized over 36 month. The exercise price is $5.20 per share.

On July 19, 2018, the Board granted 200,000 five year options to the Chief Executive Officer and 180,000 options to each of the Chief Operating Officer and Chief Academic Officer. The fair value per option was $2.56 or $1,433,600 for all 560,000 options granted. The exercise price is $7.55 per share. In April 2019, the CEO rescinded his grant and the expenses associated with the unvested options previously recorded were reversed during the fiscal year ended April 30, 2019.

As of September 6, 2018, the Board approved a grant of 180,000 five-year options to the then Chief Financial Officer and 50,000 five years options to the then Chief Accounting Officer. The fair value of the two grants on September 6, 2018 was $257,400 for the Chief Financial Officer and $71,500 for the Chief Accounting Officer. As required by the rules of the Nasdaq Stock Market, both option grants were subject to shareholder approval which occurred on December 13, 2018, which is the measurement date for recording the transaction. The compensation will be recognized over 36 months.