ɫTV

Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.20.4
Stockholders' Equity
 6 Months Ended
Oct. 31, 2020
Stockholders' Equity Note [Abstract]
Stockholders' Equity Stockholders’ Equity
Preferred Stock
The Company is authorized to issue 1,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our Board of Directors. As of October31, 2020 and April30, 2020, 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 August 31, 2020, the Company entered into an Equity Distribution Agreement (the “Agreement”) with Canaccord Genuity LLC (“Canaccord”), pursuant to which the Company may issue and sell from time to time, through Canaccord, up to $12,309,750 of shares of the Company’s common stock (the “Shares”). The Shares are being offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission on August 31, 2020. The purpose of this Agreement is to allow the Company to sell common stock that has been surrendered from executive officers and director vesting events to pay their portion of withholding taxes as well as to pay the Company the strike price of options upon cashless exercise. As of the date of this filing, 292,000 shares have been sold under the Agreement.

Sales of the Shares may be made by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act of 1933, including without limitation sales made directly on or through The Nasdaq Global Market, the trading market for the Company’s common stock, on any other existing trading market in the United States for the Company’s common stock, or to or through a market maker. Canaccord may also sell the Shares by any other method permitted by law, including in privately negotiated transactions. Canaccord will use commercially reasonable efforts to sell on the Company’s behalf all of the Shares requested to be sold by the Company, consistent with its normal trading and sales practices, subject to the terms of the Agreement. Under the Agreement, Canaccord is entitled to compensation of 3% of the gross proceeds from the sales of the Shares sold under the Agreement. The Company also reimbursed Canaccord for certain specified expenses, including the fees and disbursements of its legal counsel, in an amount of $50,000. Total expenses for the offering, excluding compensation and reimbursement payable to Canaccord under the terms of the Agreement, was approximately $50,000, which is included in general and administrative expense in the consolidated statement of operations.
During the three months ended October31, 2020, the Company issued 502,412 shares of common stock upon the exercise of stock options for cash and received proceeds of $945,332. As of October 31, 2020, approximately 36,000 shares of common stock were surrendered to the Company by the executive officers to pay their portion of withholding taxes for stock options exercised, and to pay the Company the strike price of options upon cashless exercise for a director; but were not yet sold through Canaccord. The Company did remit the withholding taxes on behalf of the executive officers for their stock option
exercises from the Company's operating bank account. As a result, upon sale of these shares through the Agreement approximately $350,000 will be received by the Company and credited to additional paid in capital.
During the three months ended October31, 2020, the Company issued 22,339 shares of common stock upon the cashless exercise of 36,111 stock options.
During the three months ended October31, 2020, the Company issued 132,109 shares of common stock upon the vesting of Restricted Stock Units (“RSUs”).
On September 14, 2020, after the closing price of our common stock was at least $10.725 over a 20 consecutive trading day period, the $10million Convertible Notes (see Note 6) automatically converted into 1,398,602 shares of the Company’s common stock at a conversion price of $7.15 per share.
During the three months ended July 31, 2020, the Company issued 415,175 shares of common stock upon the exercise of stock options for cash and received proceeds of $1,269,982.
During the three months ended July 31, 2020, the Company issued 192,049 shares of common stock upon the exercise of warrants for cash and received proceeds of $1,081,792.

Restricted Stock
As of October31, 2020 and 2019, there were 16,448 and 69,672 unvested shares of restricted common stock outstanding, respectively. Total unrecognized compensation expense related to the unvested shares as of October31, 2020 and 2019 amounted to $49,125 and $249,000 respectively.

Restricted Stock Units
A summary of the Company’s RSU activity which were granted under the 2012 and 2018 Equity Incentive Plans during the six months ended October 31, 2020 is presented below:
Restricted Stock Units Number of Shares Weighted Average Grant Price
Unvested Balance Outstanding, April 30,2020 643,175 $ 5.64
Granted 169,043 9.33
Exercised — —
Forfeits (4,250) 7.49
Vested (138,168) 12.83
Expired — —
Unvested Balance Outstanding, October 31,2020 669,800 $ 6.16
In connection with 169,043 RSU grants, the grant date fair value of these awards range from $6.95 to $12.78 per share and the awards vest annually over three years.
There were approximately 669,800 unvested RSUs as of October31, 2020. Total unrecognized compensation expense related to the unvested RSUs is approximately $4.5million which will be amortized over the remaining vesting periods. Included in this amount is approximately $1.8million of total unrecognized compensation expense related to the $12 tranche of the executive RSU grant discussed below.
On February 4, 2020, the Compensation Committee approved a 375,000 RSU grant to executives under the Company’s 2018 Equity Incentive Plan. As modified on June 18, 2020, one-half of the RSUs vest four years from the grant date, if the executives are still employed by the Company on the vesting date and subject to accelerated vesting for all RSUs as follows: (i) if the closing price of the Company’s common stock is at least $9 for 20 consecutive trading days, 10% of the RSUs will vest immediately; (ii) if the closing price of the Company’s common stock is at least $10 for 20 consecutive trading days, 25% of the RSUs will vest immediately; and (iii) if the closing price of the Company’s common stock is at least $12 for 20 consecutive
trading days, all of the unvested RSUs will vest immediately. On the grant date, the closing price of the Company’s common stock on The Nasdaq Global Market was $9.49 per share. The Company determined that because the terms of the grant include both a market condition and a service condition that must be achieved simultaneously, the appropriate treatment under ASC 718 Stock-based Compensation is to amortize the fair market value over the longer of the explicit service period of four years and not the shorter of the derived service period of .64 years.
On August 31, 2020, the closing price of the Company’s common stock was at least $9 for 20 consecutive trading days, resulting in 10% or 37,500 of the February 4, 2020 RSU grants to executives vesting immediately. Additionally, on September 2, 2020, the Company’s common stock was at least $10 for 20 consecutive trading days and 25% or 93,750 of the RSUs granted vested immediately. On the grant date, the closing price of the Company's common stock on The Nasdaq Global Market was $9.49 per share. The accelerated amortization expense related to these transactions in the second quarter of fiscal year 2021 was approximately $1.2million, for the vesting of these 131,250 RSUs, which is included in general and administrative expense in the consolidated statements of operations.
Warrants
A summary of the Company’s warrant activity during the six months ended October31, 2020 is presented below:
Warrants Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2020 566,223 $ 6.22 3.17 $ 950,100
Granted — $ — — —
Exercised (192,049) $ 5.60 — —
Surrendered — $ — — —
Expired — $ — — —
Balance Outstanding, October 31, 2020 374,174 $ 6.37 2.39 $ 1,125,177
Exercisable, October 31, 2020 374,174 $ 6.37 2.39 $ 1,125,177

OUTSTANDING WARRANTS EXERCISABLE WARRANTS
Exercise
Price		 Weighted
Average
Exercise
Price		 Outstanding
No. of
Warrants		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining Life
In Years		 Exercisable
No. of
Warrants
$ 4.89 $ 4.89 50,000 $ 4.89 3.44 50,000
$ 6.00 $ 6.00 100,000 $ 6.00 3.35 100,000
$ 6.87 $ 6.87 224,174 $ 6.87 1.73 224,174
374,174 374,174
On June 5, 2020, the Company, as an inducement to exercise, reduced by 5% the exercise price of the common stock purchase warrants issued to The Leon and Toby Cooperman Family Foundation (the “Foundation”), of which Mr. Leon Cooperman, a stockholder of the Company, is the trustee. The warrants were issued on November 5, 2018 (the “2018 Cooperman Warrants”) and on March 5, 2019 (the “2019 Cooperman Warrants”). The 2018 Cooperman Warrants exercise price was reduced from $5.85 to $5.56 per share. The 2019 Cooperman Warrants exercise price was reduced from $6.00 to $5.70 per share. On June 8, 2020, the Foundation immediately exercised the 2018 and 2019 Cooperman Warrants paying the Company $1,081,792 and the Company issued 192,049 shares of common stock to the Foundation. The warrant modification and acceleration charge related to this transaction in the first quarter of fiscal year 2021 was approximately $26,000.
Stock Incentive Plan and Stock Option Grants to Employees and Directors
On March 13, 2012, the Company adopted the 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 October31, 2020 and 2019, there were 27,560 and 194,286 shares remaining available for future issuance under the 2012 Plan and the 2018 Plan.

The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term and expected dividend yield rate over the expected option term. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award.

There were no options granted to employees during the three and six months ended October 31, 2020. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the period ended:
October 31,
2020
Expected life (years) n/a
Expected volatility n/a
Risk-free interest rate n/a
Dividend yield n/a
Expected forfeiture rate 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 six months ended October31, 2020, is presented below:
Options Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Term		 Aggregate
Intrinsic
Value
Balance Outstanding, April 30, 2020 2,740,539 $ 4.62 1.97 $ 9,146,198
Granted — $ — — —
Exercised (989,767) $ 10.78 — —
Forfeited (6,418) $ 6.51 — —
Expired — $ — — —
Balance Outstanding, October31, 2020
 1,744,354 $ 5.66 1.99 $ 6,482,286
Exercisable, October31, 2020
 1,439,330 $ 5.66 1.79 $ 5,495,787

OUTSTANDING OPTIONS EXERCISABLE OPTIONS
Exercise
Price		 Weighted
Average
Exercise
Price		 Outstanding
No. of
Options		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining Life
In Years		 Exercisable
No. of
Options
$1.57 to $2.10
 $ 1.86 35,141 $ 1.86 0.44 35,141
$2.28 to $2.76
 $ 2.34 96,573 $ 2.34 0.25 96,573
$3.24 to $4.38
 $ 3.90 262,658 $ 3.87 0.95 220,657
$4.50 to $5.20
 $ 4.93 650,808 $ 4.91 1.75 540,896
$5.95 to $6.28
 $ 6.10 67,000 $ 6.10 1.72 67,000
$7.17 to $7.55
 $ 7.45 474,425 $ 7.43 2.87 329,175
$8.57 to $9.07
 $ 8.98 157,749 $ 9.00 2.18 149,888
Options only 1,744,354 1,439,330

For the three months ended October31, 2020, the Company recorded compensation expense of $142,397, $1,678,622 and $10,529, respectively, in connection with stock option, restricted stock units and restricted stock grants.
For the six months ended October31, 2020, the Company recorded compensation expense of $311,131, $1,986,474 and $21,053, respectively, in connection with stock option, RSU and restricted stock grants.
As of October31, 2020, there was approximately $400,000 of unrecognized compensation costs related to non-vested share-based option arrangements. That cost is expected to be recognized over a weighted-average period of approximately 1.1 years.
As of October31, 2020, there was approximately $4.5million of unrecognized compensation costs related to non-vested RSU grants. That cost is expected to be recognized over a weighted-average period of approximately 1.8 years.
As of October31, 2020, there was approximately $49,000 of unrecognized compensation costs related to non-vested share-based common and restricted stock arrangements. That cost is expected to be recognized over a weighted-average period of approximately 1.1 years.

Treasury Stock
On October 16, 2020 the Company retired all 16,667 shares of its treasury stock valued at $70,000.