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 $535,000 and $748,000 was recognized for the three months ended October 31, 2016 and 2015, respectively, and $1.7 million and $1.5 million for the six months ended October 31, 2016 and 2015, respectively. Stock-based compensation expense was recognized as follows (table in thousands):



	Three Months Ended October 31,				Six Months Ended October 31,
	2016		2015		2016		2015
General and administrative	$	469	$	674	$	1,298	$	1,112
Sales and marketing	18		25		187		145
Research and development	45		46		130		213
TOS cost of sales	3		2		47		26
POS cost of sales	—		1		2		27
Total stock-based compensation expense	$	535	$	748	$	1,664	$	1,523

Stock Option Grants

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



	Three Months Ended October 31,		Six Months Ended October 31,
	2016	2015	2016	2015
Expected term in years	6	6	2.6 - 6	5 - 6
Risk-free interest rates	1.48%	1.63% - 1.72%	0.75% - 1.48%	1.57% - 1.72%
Volatility	87.32%	87.46% - 87.81%	73.2% - 95.6%	87.46% - 92.32%
Dividend yield	—%	—%	—%	—%

The weighted average fair value of stock options granted during the three months ended October 31, 2016 and 2015 was $1.16 and $5.47, respectively. The weighted average fair value of stock options granted during the six months ended October 31, 2016 and 2015 was $1.73 and $4.99, respectively. The Company’s stock options activity for the six months ended October 31, 2016 was as follows:



	Non- Employees		Directors and Employees		Total		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding, May 1, 2016	51,250		2,161,507		2,212,757		$	5.58	6.1	$	10,000
Granted	—		2,320,681		2,320,681		1.98		7.4	—
Exercised	—		—		—		—
Forfeited	—		(9,063	)	(9,063	)	10.18
Canceled	—		(1,996,821	)	(1,996,821	)	4.63
Expired	(16,664	)	(61,137	)	(77,801	)	7.34

Outstanding, October 31, 2016	34,586		2,415,167		2,449,753		2.87		6.9	$	—

Vested and expected to vest as of October 31, 2016	34,586		2,415,167		2,449,753		2.87		6.9	$	—

Exercisable as of October 31, 2016	34,586		1,806,295		1,840,881		3.21		5.9	$	—

Included in the balances outstanding in the table above are 203,043 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, which are fully vested as of October 31, 2016. In addition to the above, there are 203,043 additional options granted to each of the Company’s Chief Executive Officer and President which vest based on 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 203,043 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, which is currently under review.

On July 21, 2016, the Company and certain members of its senior management team agreed to exchange existing options to purchase shares of the Company's common stock with new options. The new options have a lower exercise price for fewer shares and have the same vesting schedules and the same termination expiration dates as the existing options. The Company used the Black Scholes valuation method to determine if the modification created additional stock option expense. As a result of the option exchange, an aggregate of 1,793,781 existing options with exercise prices ranging from $4.55 to $6.96 per share were exchanged for an aggregate of 1,568,191 new options with exercise prices of $2.10 per share. Due to the modification the Company had an additional stock option expense of $414,756, $330,945 of which was recognized in the first quarter ended July 31, 2016, 38,590 which was recognized in the second quarter ended October 31, 2016 and $45,221 of which will be recognized over the next year and a half as the options continue to vest.

Stock Purchase Warrants

As of October 31, 2016 and April 30, 2016, the Company had warrants outstanding for the purchase of 2,109,840 shares of its common stock, all of which were exercisable. Activity related to these warrants, which expire at various dates through January 2019, is summarized as follows:



	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding, May 1, 2016	2,109,840	$	5.54	3.6	$	—
Granted	—	—		—	—
Exercised	—	—		—	—
Expired	—	—		—	—

Outstanding, October 31, 2016	2,109,840	$	5.54	3.1	$	—