STOCKHOLDERS' EQUITY

9 Months Ended

Jan. 31, 2017

Stockholders' Equity Note [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 11 – STOCKHOLDERS’ EQUITY

Conversion of Preferred Shares – Series H and H-1

For the nine months ended January 31, 2017, holders of the Company’s Series H Convertible Preferred Stock (“Series H Shares”) have converted 2,630 Series H Shares into 263,000 shares of common stock.

For the nine months ended January 31, 2017, holders of the Company’s Series H-1 Convertible Preferred Stock (“Series H-1 Shares”) have converted 3,830 Series H-1 Shares into 383,000 shares of common stock. The conversion of these Series H-1 Shares resulted in a deemed dividend of $378,000 due to the beneficial conversion feature associated with the shares converted.

Issuance of Preferred Shares – Series H-2

On December 21, 2016, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with two investors pursuant to which the Company issued to the investors an aggregate of 3,305 shares of Series H-2 Preferred Convertible Stock of the Company, par value $0.0001 per share (“Series H-2 Shares”), and warrants to purchase 495,750 shares of common stock of the Company, with an exercise price of $1.21 per share (the “Warrants”). for an aggregate purchase price for the Series H-2 Shares and Warrants of $462,000.

The Company has determined that the Warrants qualify for accounting as equity classification. On the issuance date, the Company estimated the fair value of the Warrants at $462,000 under the Black-Scholes option pricing model using the following primary assumptions: contractual term of  5.0 years, volatility rate of  238%, risk-free interest rate of  2% and expected dividend rate of  0%. Based on the Warrant’s relative fair value to the fair value of the Series H-2 Shares, approximately $231,000 of the $462,000 of aggregate fair value was allocated to the Warrants, creating a corresponding preferred stock discount in the same amount. 

Due to the reduction of allocated proceeds to Series H-2 Shares, the effective conversion price was approximately $0.60 per share creating a beneficial conversion feature of $183,000. Since the conversion option of the Series H-2 Shares was immediately exercisable, the beneficial conversion feature was immediately accreted to preferred dividends, resulting in an increase in the carrying value of the Series H-2 Shares.

Registration Statement

The Company filed a registration statement on January 25, 2017, for the common shares underlying the series H-2 Preferred Stock and Warrants, and it was declared effective on January 31, 2017.