Securities Purchase Agreement

3 Months Ended

Jul. 31, 2011

Notes to Financial Statements

Securities Purchase Agreement

(10) Securities Purchase Agreement

On May 11, 2011, the Company and certain investors entered into a securities purchase agreement in connection with a registered direct offering, pursuant to which the Company agreed to sell an aggregate of 1,775,000 shares of its common stock and warrants to purchase a total of 1,331,250 shares of its common stock to such investors for aggregate net proceeds, after deducting fees to the Placement Agent and other estimated offering expenses payable by the Company, of approximately $2,998,000. The common stock and warrants were sold in fixed combinations, with each combination consisting of one share of common stock and 0.75 of one warrant, with each whole warrant exercisable for one share of common stock. The purchase price was $1.88 per fixed combination. The warrants will become exercisable six months and one day following the closing date of the Offering and will remain exercisable for five years thereafter at an exercise price of $2.26 per share. The exercise price of the warrants is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The exercisability of the warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99% of the Company’s common stock. After the one year anniversary of the initial exercise date of the warrants, the Company will have the right to call the warrants for cancellation for $.001 per share in the event that the volume weighted average price of the Company’s common stock for 20 consecutive trading days exceeds $4.52. On May 17, 2011, this transaction closed. The Company’s Statement of Stockholder’s Equity for the three month period ended July 31, 2011 is as follows:

	Number of Common Shares		Common Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Total Stockholders’ Equity
Balance at April 30, 2011		8,928,309	$	8,928,309	$	8,621,729	$	(10,168,878	)	$	7,381,160
Issuance of shares under Registered Direct Offering		1,775,000		1,775,000		1,222,875					2,997,875
Net loss								(853,957	)		(853,957	)
Stock-based compensation expense						148,252					148,252
Balance at July 31, 2011		10,703,309	$	10,703,309	$	9,992,856	$	(11,022,835	)	$	9,673,330