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 $476,000 and $624,000 was recognized for the three months ended October 31, 2013 and 2012, respectively, and $1,028,000 and $1,364,000 for the six months ended October 31, 2013 and 2012, respectively. Stock-based compensation expense was recognized as follows (in thousands):

	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2013		2012		2013		2012
General and administrative	$	401	$	550	$	820	$	1,119
Sales and marketing		63		61		126		143
Research and development		3		3		16		29
TOS cost of sales		3		4		11		12
POS cost of sales		6		6		55		61

Total stock-based compensation expense	$	476	$	624	$	1,028	$	1,364

Stock Option Grants

Black-Scholes assumptions used to calculate the fair value of options granted during the three and six months ended October 31, 2013 and 2012 were as follows (in thousands):

	Three Months Ended		Six Months Ended
	October 31,		October 31,
	2013	2012	2013	2012

Expected term in years	6.0	6.0	6.0	6.0
Risk-free interest rates	1.13% - 2.41%	0.9%	1.13% - 2.41%	0.8% - 0.9%
Volatility	97.9% - 101.4%	99% - 100%	97.9% - 101.4%	99% - 100%
Dividend yield	0%	0%	0%	0%

The weighted average fair value of stock options granted during the three months ended October 31, 2013 and 2012 was $1.06 and $ 0.26, respectively. The weighted average fair value of stock options granted during the six months ended October 31, 2013 and 2012 was $0.94 and $0.52, respectively. The Company’s stock options activity for the six months ended October 31, 2013 is as follows:

						Weighted
				Weighted		Average
		Directors		Average		Remaining	Aggregate
	Non-	and		Exercise		Contractual	Intrinsic
	Employees	Employees	Total	Price		Life (Years)	Value
Outstanding, May 1, 2013	765,000	13,125,205	13,890,205	$	0.85	7.0	$	89,000
Granted	-	1,645,000	1,645,000		1.18	9.8		237,000
Exercised	-	(15,000)	(15,000)		0.62
Forfeited	-	(20,000)	(20,000)		0.50
Expired	-	(26,250)	(26,250)		0.75

Outstanding, October 31, 2013	765,000	14,708,955	15,473,955		0.89	6.8		6,290,000

Vested and expected to
vest as of October 31, 2013	765,000	14,708,955	15,473,955		0.89	6.8		6,290,000

Exercisable as of
October 31, 2013	514,792	13,014,370	13,529,162		0.85	6.5		2,703,000

Included in the balances outstanding in the table above are 10,000,000 options granted to the Company’s Chief Executive Officer and its President at the time of commencement of their employment in fiscal 2011, of which 5,000,000 contain only service-based vesting provisions and 5,000,000 contain both service and performance-based vesting provisions. The service-based provisions of these options provide for vesting to occur monthly over a period of three years. The performance-based conditions, which had to be met prior to vesting to occur included: (i) closing of one or more financings of the Company in the aggregate amount of at least $5,000,000; (ii) bringing in new Company management; (iii) launching of personalized medicine (oncology) business; and (iv) commencing implementation of the Company’s business plan. The service-based options, like all of the Company’s 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 5,000,000 performance-based options are being expensed on an accelerated basis. The Company’s Board of Directors determined that in April 2011 each of the performance conditions under the awards were met.

Subsequent to October 31, 2013, but prior to the issuance of this Form 10Q, the company granted approximately 6.4 million stock options to certain employees at a weighted average exercise price of $1.23.

Restricted Stock Grants

A summary of the activity related to restricted stock grants is as follows (in thousands):

		Weighted
		Average Grant
		Date Fair Value
	Shares	Per Share
Nonvested as of May 1, 2013	50,000	$	0.30
Granted	-		-
Vested	(50,000)		0.30
Forfeited	-		-
Expired	-		-

Nonvested as of October 31, 2013	-		-

The aggregate fair value of shares vested during the six months ended October 31, 2013 and 2012 was $7,500 and $11,000, respectively.

Stock Purchase Warrants

As of October 31, 2013 and April 30, 2013, the Company had warrants outstanding for the purchase of 3,276,667 shares of its common stock, all of which were exercisable. Of these warrants, 1,266,667 were issued in connection with the April 2011 Private Placement and 1,860,000 were issued in connection with the January 2013 Private Placement and are accounted for as liabilities as further discussed in Note 4. The remaining 150,000 warrants are accounted for as equity instruments and expire on July 31, 2014. Activity related to these warrants, which expire at various dates through April 2016, is summarized as follows (dollars in thousands):

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

Outstanding, May 1, 2013	3,276,667	$	0.61	3.9	$	-
Granted	-		-	-		-
Exercised	-		-	-		-
Expired	-		-	-		-

Outstanding, October 31, 2013	3,276,667	$	0.61	3.4	$	2,215,967