Note 3. Share-Based Payments

The Company has in place a 2010 Equity Incentive Plan and a 2008 Equity Incentive Plan. In general, these plans provide for stock-based compensation in the form of (i) Non-statutory Stock Options; (ii) Restricted Stock Awards; and (iii) Stock Appreciation Rights to the Company’s employees, directors and non-employees. The plans also provide for limits on the aggregate number of shares that may be granted, the term of grants and the strike price of option awards.

Stock-based compensation in the amount of $567,000 and $657,000 was recognized for the three months ended January 31, 2016 and 2015, respectively, and $2,090,000 and $2,284,000 for the nine months ended January 31, 2016 and 2015, respectively. Stock-based compensation expense was recognized as follows (table in thousands):

	Three Months Ended				Nine Months Ended
	January 31,				January 31,
	2016		2015		2016		2015

General and administrative	$	488	$	474	$	1,600	$	1,530
Sales and marketing		27		114		173		447
Research and development		49		65		262		267
TOS cost of sales		2		2		28		20
POS cost of sales		1		2		27		20

Total stock-based compensation expense	$	567	$	657	$	2,090	$	2,284

Stock Option Grants

Black-Scholes assumptions used to calculate the fair value of options granted during the three and nine months ended January 31, 2016 and 2015 were as follows:

	Three Months Ended		Nine Months Ended
	January 31,		January 31,
	2016	2015	2016	2015

Expected term in years	2.5 - 6	-	2.5 - 6	3 - 6
Risk-free interest rates	0.995% - 1.75%	-	0.995% - 1.77%	0.79% - 1.94%
Volatility	82.72% - 91.98%	-	82.72% - 92.32%	85.8% - 102.1%
Dividend yield	0%	-	0%	0%

The weighted average fair value of stock options granted during the three months ended January 31, 2016 and 2015 was $3.12 and nil, respectively. The weighted average fair value of stock options granted during the nine months ended January 31, 2016 and 2015 was $3.60 and $8.04, respectively. The Company’s stock options activity for the nine months ended January 31, 2016 was as follows:

									Weighted
							Weighted		Average
			Directors				Average		Remaining		Aggregate
	Non-		and				Exercise		Contractual		Intrinsic
	Employees		Employees		Total		Price		Life (Years)		Value

Outstanding, May 1, 2015		57,917		1,946,085		2,004,002	$	5.74		6.7	$	4,166,000
Granted		-		331,582		331,582		5.33		8.9		-
Exercised		-		-		-		-
Forfeited		-		(38,140)		(38,140)		6.64
Expired		(6,667)		(78,206)		(84,873)		6.91

Outstanding, January 31, 2016		51,250		2,161,321		2,212,571		5.61		6.4	$	1,000

Vested and expected to vest as of January 31, 2016		51,250		2,161,321		2,212,571		5.61		6.4	$	1,000

Exercisable as of January 31, 2016		34,271		1,644,223		1,678,494		5.76		5.8	$	1,000

Included in the balances outstanding in the table above are 224,663 options (which vest based on service criteria) granted to each of the Company’s Chief Executive Officer and its President as of November 5, 2013 as part of their employment agreements. In addition to the above, there are 224,663 additional options granted to each of the Company’s Chief Executive Officer and President which vest based on both service and performance criteria. The service-based conditions of these options provide for vesting to occur monthly over a period of three years. The service-based options are expensed on a straight-line basis. Since the straight-line method is not available for performance or market-based share-based payments, the 224,663 performance-based options will be expensed on an accelerated basis once the Company determines it is probable that the performance-based conditions will be met.

Stock Purchase Warrants

As of January 31, 2016 and April 30, 2015, the Company had warrants outstanding for the purchase of 2,109,840 shares of its common stock, all of which were exercisable. Of these warrants, 1,849,285 were issued in connection with the March 2015 Private Placement as further discussed in Note 7 in the Company’s Form 10-K for the fiscal year ended April 30, 2015. Activity related to these warrants, which expire at various dates through January 2019, is summarized as follows:

					Weighted
			Weighted		Average
	Number		Average		Remaining		Aggregate
	of		Exercise		Contractual		Intrinsic
	Shares		Price		Life (Years)		Value

Outstanding, May 1, 2015		2,109,840	$	5.54		4.6	$	3,764,871
Granted		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-

Outstanding, January 31, 2016		2,109,840	$	5.54		3.9	$	-