Stock Options and Warrants
|3 Months Ended|
Nov. 30, 2012
|Stock Options and Warrants||
Note 5 - Stock Options and Warrants
The Company has one stock-based equity plan at November 30, 2012. Pursuant to the 2004 Stock Incentive Plan, as amended (the “Plan”), which was originally adopted by the Company’s shareholders in 2005, the Company was authorized to issue options to purchase up to 7,600,000 shares of the Company’s common stock. As of November 30, 2012, the Company had 3,658,500 shares available for future stock option grants under the Plan. See Note 11 for shareholder approval of the 2012 Equity Incentive Plan, which was approved on December 12, 2012.
During the six months ended November 30, 2012, the Company granted a total of 125,000 common stock options to directors with an exercise price of $1.55 per share, which vest in quarterly increments over one year and have an expiration date of five years from the date of grant. The average grant date fair value related to these options was $.92 per share.
During the six months ended November 30, 2012, the Company granted a total of 225,000 common stock options to employees with an exercise price of $1.80 per share. Fifty percent of the options vested immediately, and 50% vest in October 2013. The options have an expiration date of three years from the date of grant. The average grant date fair value related to these options was $.89 per share.
During the six months ended November 30, 2012, the Company granted a total of 515,000 common stock warrants to consultants with exercise prices ranging from $1.00 to $5.00 per share. The warrants have varying vesting terms, but will all be fully vested by April 2013. The expiration dates for the warrants range from September 2014 to October 2015. The average grant date fair value related to these warrants was $.56 per share.
Related to certain settled litigation, as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2012, the Company granted warrants for 750,000 common shares to consultants at an exercise price of $.25 per share. All compensation expense associated with the warrants was recognized at May 31, 2012. The consultants exercised all the warrants during the six months ended November 30, 2012.
As discussed in Note 4, the Company issued warrants to purchase 7,530,676 common shares to investors. The grant date fair value of the warrants was $.77 per share.
Net cash proceeds from the exercise of common stock warrants were $192,500 for the six months ended November 30, 2012.
Compensation expense related to stock options and warrants was approximately $742,000 and $2,354,000, and $550,000 and $791,000 for the three and six months ended November 30, 2012 and 2011, respectively. The grant date fair value of options and warrants vested during the three and six month periods ended November 30, 2012 and 2011 was $6,433,000 and $8,525,000, and $245,000 and $456,000, respectively. As of November 30, 2012, there was approximately $2,402,000 of unrecognized compensation costs related to share-based payments for unvested options, which is expected to be recognized over a weighted average period of 1.76 years.
The following table represents stock option and warrant activity as of and for the six months ended November 30, 2012:
The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.
Reference 1: http://www.xbrl.org/2003/role/presentationRef