Form 10-Q DATARAM CORP For: Oct 31

December 15, 2015 4:18 PM EST

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the quarterly period ended October 31, 2015
   
  or
   
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the transition period from _____________ to _____________

 

Commission file number: 1-8266

 

 

DATARAM CORPORATION
(Exact name of registrant as specified in its charter)
   
New Jersey 22-1831409
(State or other jurisdiction of (I.R.S.  Employer Identification No.)
incorporation or organization)  
   
777 Alexander Road, Suite 100 Princeton, NJ 08540
(Address of principal executive offices) (Zip Code)
 
(609) 799-0071
(Registrant's telephone number, including area code)
 
Route 571, P.O. Box 7258, Princeton, NJ 08543-7528
(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X ] Yes [ ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definitions of “accelerated filer and large accelerated filer” in Rule 12b of the Exchange Act. (Check One):

 

Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [ ]   Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock ($1.00 par value ): As of December 15, 2015, there were 4,119,154 shares outstanding.

 

 

PART I: FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

Dataram Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

 

   October 31,
2015
   April 30,
2015
 
   (Unaudited)     
Assets          
Current assets:          
Cash and cash equivalents  $617,012   $327,298 
Accounts receivable, less allowance for doubtful accounts and sales returns of $130,000 and $140,000, respectively   3,291,508    2,170,261 
Inventories   1,391,041    2,088,737 
Other current assets   72,882    69,076 
Total current assets   5,372,443    4,655,372 
           
Property and equipment, net of accumulated depreciation and amortization of $1,014,831 and $966,831, respectively   94,997    120,997 
           
Other assets   29,479    49,210 
Capitalized software development costs, net   345,123    365,424 
Goodwill   1,083,555    1,083,555 
Total assets  $6,925,597   $6,274,558 
           
Liabilities and Stockholders' Equity          
Current liabilities:          
Note payable-revolving credit line  $2,122,744   $2,109,449 
Accounts payable   912,926    879,573 
Accrued liabilities   174,752    282,284 
Convertible notes payable   600,000    600,000 
Convertible notes payable related parties   80,000    107,500 
Total current liabilities   3,890,422    3,978,806 
           
  Other liabilities   143,331    179,163 
           
        Total liabilities   4,033,753    4,157,969 
           
Commitments and contingencies          
Stockholders' equity:          
Preferred stock, par value $.01 per share. Authorized 1,300,000 shares; Issued and outstanding shares 544,600 at October 31, 2015 and 626,600 at April 30, 2015   1,635,147    1,856,903 
Common stock, par value $1.00 per share .          
Authorized 54,000,000 shares; issued and outstanding 3,925,870 at October 31, 2015 and 2,776,012 at April 30, 2015   3,925,870    2,776,012 
Additional paid-in capital   21,859,171    21,862,333 
Shares to be issued   59,121    111,745 
Accumulated deficit   (24,587,465)   (24,490,404)
Total stockholders' equity   2,891,844    2,116,589 
Total liabilities and stockholder’s equity  $6,925,597   $6,274,558 

 

See accompanying notes to condensed consolidated financial statements.

 

1 

 

Dataram Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

Three and Six Months Ended October 31, 2015 and 2014

(Unaudited)

 

   Three months ended October 31,   Six months ended October 31, 
   2015   2014   2015   2104 
                 
Revenues  $6,050,772   $6,879,716   $13,388,454   $14,604,753 
                     
Costs and expenses:                    
Cost of sales   4,848,192    5,871,582    10,782,669    12,347,814 
Engineering   46,280    151,734    100,239    317,289 
Selling, general and administrative   1,279,723    1,667,084    2,683,989    3,311,292 
Total costs and expenses   6,174,195    7,690,400    13,566,897    15,976,395 
                     
Loss from operations   (123,423)   (810,684)   (178,443)   (1,371,642)
                     
Other income (expense):                    
Interest expense, net   (53,726)   (683,345)   (116,370)   (877,032)
Other gain (loss), net   6,881    (12,932)   7,289    (15,204)
Total other expense, net   (46,845)   (696,277)   (109,081)   (892,236)
                     
Income (loss) before income taxes   (170,268)   (1,506,961)   (287,524)   (2,263,878)
                     
Gain on sale of state NOL   190,462        190,462     
Income tax expense (benefit)               (2,850)
                     
Net income (loss)   20,194    (1,506,961)   (97,062)   (2,266,728)
                     
Dividend – Series A preferred stock   58,949        121,609     
                     
Net loss allocated to common shareholders  $(38,755)  $(1,506,961)  $(218,671)  $(2,266,728)
                     
Net loss per share of common stock                    
Basic and diluted  $(.01)  $(.63)  $(.07)  $(.94)
Weighted average common shares outstanding                    
Basic and diluted   3,536,037    2,410,512    3,108,422    2,410,512 

 

See accompanying notes to condensed consolidated financial statements.

2 

 

Dataram Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Six Months Ended October 31, 2015 and 2014

(Unaudited)

 

   2015   2014 
Cash flows from operating activities:          
Net loss  $(97,062)  $(2,266,728)
Adjustments to reconcile net loss to net cash used in operating activities:          
Amortization of deferred gain on sale leaseback   (35,832)   (35,831)
Depreciation and amortization   68,301    53,999 
Bad debt expense   5,222    23,147 
Amortization of debt discount       750,000 
Stock-based compensation expense   272,317    9,432 
Changes in assets and liabilities:          
(Increase) decrease in accounts receivable   (1,126,469)   678,774 
Decrease in inventories   697,696    219,125 
Increase in other current assets   (3,806)   (162,117)
Decrease in other assets   19,731    1,950 
Increase in accounts payable   33,353    810,607 
Decrease in accrued liabilities   (107,532)   (338,367)
Net cash used in operating activities   (274,081)   (256,009)
           
Cash flows from investing activities:          
Software development cost       (365,424)
Additions of property and equipment   (22,000)    
Net cash used in investing activities   (22,000)   (365,424)
           
Cash flows from financing activities:          
Net borrowings (repayments) under revolving credit line   13,295    (353,483)
Proceeds from issuance of convertible notes and warrants       750,000 
Repayment of convertible notes   (27,500)    
Proceeds from sale of preferred shares   100,000     
Proceeds from sale of common shares   500,000     
Net cash provided by financing activities   585,795    396,517 
           
Net increase (decrease) in cash and cash equivalents   289,714    (224,916)
           
Cash and cash equivalents at beginning of period   327,298    257,633 
           
Cash and cash equivalents at end of period  $617,012   $32,717 
           
Supplemental disclosures of cash flow information:          
Cash paid during the period for:          
Interest  $116,370   $127,032 
Supplemental disclosures of cash flow information:          
Debt discount on convertible notes payable  $   $750,000 
Issuance of common stock for accrued dividend on Series A preferred shares  $174,233   $ 

 

See accompanying notes to condensed consolidated financial statements.

3 

 

Dataram Corporation

Condensed Consolidated Statements of Stockholders’ Equity

Six Months Ended October 31, 2015

(Unaudited)

 

 

           Additional             
   Series A Preferred Stock   Common Stock   Paid-in   Shares   Accumulated   Total 
   Shares   Amount   Shares   Amount   Capital   to be issued   deficit   equity 
Balance at May 1, 2015   626,600   $1,856,903    2,776,012   $2,776,012   $21,862,333   $111,745   $(24,490,403)  $2,116,590 
                                         
Net loss                           (97,062)   (97,062)
                                         
Stock-option expense                   184,752            184,752 
                                         
Issuance of common shares for cash           500,000    500,000                500,000 
                                         
Common shares surrendered             (7,265)   (7,265)   7,265                
                                         
Common shares issued for service           54,667    54,667    32,897            87,564 
                                         
Issuance of preferred shares and warrants for cash   20,000    80,317            19,683            100,000 
                                         
Preferred shares converted to common shares   (102,000)   (302.073)   510,000    510,000    (207,927)            
                                         
Non-cash preferred stock dividend                   (121,609)   121,609         
                                         
Common shares issued for preferred stock dividend             92,456    92,456     81,777    (174,233)        
                                         
Balance at October 31, 2015   544,600   $1,635,147    3,925,870   $3,925,870   $21.859,171   $59,121   $(24,587,465)  $2,891,844 

 

See accompanying notes to condensed consolidated financial statements.

 

4 

 

Dataram Corporation

Notes to Condensed Consolidated Financial Statements

October 31, 2015 and 2014

(Unaudited)

 

Note 1: Basis of Presentation and Summary of Significant Accounting Policies

 

Organization and Nature of Business

 

Since 1967, Dataram Corporation (referred to as “Dataram” or the “Company”) has been a manufacturer of memory products and provider of performance solutions. The Company provides customized memory solutions for original equipment manufacturers (OEMs) and compatible memory for leading brands including Cisco, Dell, Fujitsu, HP, IBM, Lenovo and Oracle as well as a line of memory products for Intel and AMD motherboard based servers. 

 

Dataram’s customers include a domestic and an international network of distributors, resellers, retailers, OEM customers and end users.

 

Liquidity and Going Concern

 

At October 31, 2015, the Company had cash and cash equivalents of approximately $617,000 and a working capital of approximately $1.48 million. During the six month period ended October 31, 2015, the Company incurred a net loss of approximately $97,000 and included approximately $272,000 of stock based compensation expense. As of October 31, 2015, the Company also had an accumulated deficit of approximately $24.6 million. The Company has primarily financed operations through the sale of equity securities and debt securities.

 

In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of the NJ State tax benefit associated with its State of New Jersey specific Net Operating Losses (NOLs) for which the Company has received approval from the state of NJ.  The Company executed a contract of sale and received proceeds of approximately $190,000 on December 9, 2015.

 

While the Company has made significant financial and operational changes in the last nine months, there remains substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

If current and projected revenue growth does not meet estimates, the Company may continue to choose to raise additional capital through debt and/or equity transactions, reduce certain overhead costs through the deferral of salaries and other means, or settle liabilities through negotiation. Currently, the Company does not have any commitments or assurances for additional capital, nor can the Company provide assurance that such financing will be available to it on favorable terms, or at all.

 

5 

 

 

Basis of Presentation

 

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of October 31, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended October 31, 2015 are not necessarily indicative of the operating results for the full fiscal year for any future period.

 

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2015. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended April 30, 2015, and updated, as necessary, in this Quarterly Report on Form 10-Q.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including deferred tax asset valuation allowances and certain other reserves and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Some of the more significant estimates made by management include allowance for doubtful accounts and sales returns, reserve for inventory obsolescence, deferred income tax asset and related valuation allowance, fair value of certain financial instruments and other operating allowances and accruals. Actual results could differ from those estimates.

 

Revenue Recognition

 

Revenue is recognized when title passes upon shipment of goods to customers. The Company’s revenue earning activities involve delivering or producing goods. The following criteria are met before revenue is recognized: persuasive evidence of an arrangement exists, shipment has occurred, selling price is fixed or determinable and collection is reasonably assured. The Company does experience a minimal level of sales returns and allowances for which the Company accrues a reserve at the time of sale. Estimated warranty costs are accrued by management upon product shipment based on an estimate of future warranty claims.

6 

 

 

Net Loss per Share

 

Basic net loss per share is computed by dividing the net loss available to common stock holders by the weighted average number of shares of common stock issued and outstanding during the period. The calculation of diluted loss per share for the three and six months ended October 31, 2015 and 2014 includes only the weighted average number of shares of common stock outstanding. The denominator excludes the dilutive effect of common shares issuable upon exercise or conversion of stock options, warrants, convertible notes and Series A preferred shares as their effect would be anti-dilutive.

 

Anti-dilutive securities consisted of the following at October 31:

 

   2015   2014 
Common stock equivalent of convertible notes   300,000    240,000 
Common stock equivalent of convertible notes – related parties   27,210    51,020 
Series A preferred shares   2,838,207     
Warrants   3,358,275    1,385,775 
Common shares reserved for series A preferred share dividends   46,785     
Stock options   335,747    256,580 
Total   6,906,224    1,933,375 

 

Recently Adopted Accounting Guidance

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”.  The purpose of this new standard is to clarify the principles for recognizing revenue so that it can be applied consistently across various transactions, industries and capital markets.  We have not completed our assessment of ASU No. 2014-09.

 

The Company has evaluated the other recent accounting pronouncements through ASU 2015-17 and believe that none of them will have a material effect on its condensed consolidated financial statements.

7 

 

 

Note 2: Related Party Transactions

 

During the three month periods ended October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $165,000 and $299,000, respectively, from Sheerr Memory, LLC (“Sheerr Memory”). During the six month periods ending October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $289,000 and $773,000, respectively, from Sheerr Memory, LLC. Sheerr Memory’s owner (“Mr. Sheerr”) is employed by the Company as an advisor. Approximately $12,000 and $15,000 of accounts payable in the Company’s condensed consolidated balance sheets as of October 31, 2015 and April 30, 2015, respectively, is payable to Sheerr Memory. Sheerr Memory offers the Company trade terms of net 30 days and all invoices are settled in the normal course of business. No interest is paid. The Company has made approximately $20,000 in purchases from Sheerr Memory subsequent to October 31, 2015 and management anticipates that the Company will continue to do so, although the Company has no obligation to do so.

 

During the three month periods ended October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $25,000, and $270,000 respectively, from Keystone Memory Group (“Keystone Memory”). During the six month periods ending October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $658,000 and $526,000, respectively, from Keystone Memory Group. Keystone Memory’s owner is a relative of Mr. Sheerr. Approximately $37,000 and $27,000 of accounts payable in the Company’s condensed consolidated balance sheets as of October 31, 2015 and April 30, 2015 is payable to Keystone Memory. Keystone Memory offers the Company trade terms of immediately due and all invoices are settled in the normal course of business. No interest is paid. The Company has made approximately $161,000 in purchases from Keystone Memory subsequent to October 31, 2015 and management anticipates that the Company will continue to do so, although the Company has no obligation to do so.

 

As of October 31, 2013, the Company entered into an agreement with Mr. Sheerr to leaseback the equipment and furniture that was sold to Mr. Sheerr on October 31, 2013 for $500,000. The lease is for a term of 60 months and the Company is obligated to pay approximately $7,500 per month for the term of the lease. The Company has an option to extend the lease for an additional two year period. The transactions described have been accounted for as a sale-leaseback transaction. Accordingly, the Company recognized a gain on the sale of assets of approximately $139,000, which is the amount of the gain on sale in excess of present value of the future lease payments and will recognize the remaining deferred gain of approximately $322,000 in proportion to the related gross rental charged to expense over the term of the lease, 60 months. The current portion of $72,000 deferred gain was reflected in accrued liabilities and the long-term portion of $179,000 is reflected in other liabilities – long-term in the condensed consolidated balance sheet as of April 30, 2015. As of October 31, 2015, the current portion of $72,000 deferred gain is reflected in accrued liabilities and the long-term portion of $143,000 is reflected in other liabilities – long-term in the condensed consolidated balance sheet as of October 31, 2015.

8 

 

 

Note 3: Note Payable – Revolving Credit Line

 

The Company’s financing agreement (the “Financing Agreement”) with Rosenthal & Rosenthal, Inc. provides for a revolving loan with a maximum borrowing capacity of $3,500,000. The Financing Agreement mature on November 30, 2016 unless such Financing Agreement is either earlier terminated or renewed. The amount outstanding under the Financing Agreement bear interest at a rate of the Prime Rate (as defined in the Financing Agreement) plus 3.25% (the “Effective Rate”) or on Over-advances (as defined in the Financing Agreement), if any, at a rate of the Effective Rate plus 3%. The Financing Agreement contains other financial and restrictive covenants, including, among others, covenants limiting the Company’s ability to incur indebtedness, guarantee obligations, sell assets, make loans, enter into mergers and acquisition transactions and declare or make dividends. The Company requested and received a waiver of compliance with respect to certain provisions of the Financing Agreement in connection certain Bridge Notes issued in July 2014. Borrowings under the Financing Agreement are collateralized by substantially all the assets of the Company. The Financing Agreement provides for advances against eligible accounts receivable and inventory balances based on prescribed formulas of raw materials and finished goods. There was approximately $18,000 of additional availability as of October 31, 2015.

 

Note 4: Convertible Notes Payable

 

On July 15, 2014, the Company entered into the Purchase Agreement governing the issuance of $750,000 aggregate principal amount of Bridge Notes and Bridge Warrants. The Bridge Notes and Bridge Warrants were issued on July 15, 2014.  The Company issued $600,000 aggregate principal amount of the Bridge Notes to certain institutional investors and $150,000 aggregate principal amount of the Bridge Notes to certain members of Management. The Bridge Notes, the initial maturity date of which was October 15, 2014 (which was subject to a three-month extension at the option of the holders that occurred; see below), are convertible into shares of the Company’s common stock. The initial conversion price for institutional Investors is $2.50 per share (which was subsequently reduced; see below), and the initial conversion price for Management is equal to the closing price of the Company’s common stock on the closing date of the Purchase Agreement, $2.94. The Bridge Notes are secured obligations of the Company and bear interest at a rate of 8% per year. The Bridge Notes are subordinated to the Rosenthal & Rosenthal Financing Agreement. The Bridge Warrants are exercisable for five years after the closing date of the Purchase Agreement, or July 15, 2019. For each $1,000 of principal amount of Bridge Notes, the holder received 1,200 Bridge Warrants, each exercisable for the purchase of one share of the Company’s common stock. Each holder is entitled to exercise one-third of all Bridge Warrants received at an exercise price of $3.00, one-third of all Bridge Warrants received at an exercise price of $3.50, and one-third of all Bridge Warrants received at an exercise price that is equal to the closing price on the closing date of the Purchase Agreement, $2.94. Pursuant to the terms of the Purchase Agreement, the Company has agreed to register for re-sale the shares underlying the Bridge Notes and the Bridge Warrants.

 

On October 15, 2014, the original maturity date of the Bridge Notes, the maturity date of the Bridge Notes was extended to January 15, 2015 for all holders of the Bridge Notes. On November 17, 2014 the Company closed the sale of 600,000 shares of its Series A Stock, which resulted in the reduction of the conversion price of the Bridge Notes held by the institutional investors to $2.00 from $2.50, to equal the conversion price of the Series A Preferred Stock (see below). In addition, two additional 90-day extensions were provided to the institutional investors, which had it extend the final maturity date to July 15, 2015. The Company has paid off approximately $70,000 of the notes and received extensions from all Bridge note holders except for one holder of an $80,000 Bridge Note, to extend the maturity date to January 15, 2016. The Company continues to accrue interest on the Bridges Notes. In the event the Bridge Notes are converted to equity, their incremental fair value will be recognized in the consolidated statement of operations. The Company advised Rosenthal and Rosenthal, Inc. of the default on a certain Bridge Note which is a default under our finance agreement and received a waiver of compliance.

 

The pricing model the Company used for determining fair values of the Bridge Warrants is the Black-Scholes Pricing Model. The model uses market-sourced inputs such as interest rates, dividend yields, market prices and volatilities. The risk-free interest rate used of 1.26% is based on the rate of U.S Treasury zero-coupon issues with a remaining term equal to the expected life of the Bridge Warrants. Expected dividend yield assumes the current dividend rate of zero. Expected volatility of approximately 100% was calculated using the daily closing price over a five-year period of the Company’s Common Stock.

9 

 

 

The value of the Bridge Warrants was derived and used as a basis to allocate the proceeds received between the Bridge Warrants and Bridge Notes. The proportionate value ascribed to the Warrants amounted to approximately $562,000 and was reflected as a discount on notes payable. Further the Company estimated a value of beneficial conversion feature of approximately $188,000 (limited to the amount of proceeds allocated to the notes payable) and reflected such as an additional discount on the Bridge Notes. The discount on notes payable is being amortized using the straight-line amortization over ninety days. This resulted in a non-cash interest charge of approximately $617,000 and $750,000 during the three and six months ended October 31, 2014, respectively.

 

Note 5: Stockholders’ Equity

 

Series A preferred shares

 

On November 12, 2014 and February 2, 2015, the Company completed a private placement of an aggregate of 626,600 shares of its Series A Preferred Stock (“Series A Stock”) together with warrants to purchase shares of its common stock (“Preferred Warrant”) at a price of $5.00 per share, in accordance with the Series A Preferred Stock Purchase Agreement dated October 20, 2014 (the “Purchase Agreement”). The aggregate net proceeds to the Company from the sale of the Series A Stock and Preferred Warrant, after deducting the estimated offering expenses incurred by the Company were approximately $2,833,000. From the date of respective closings and prior to October 20, 2019 (the “Put/Call Exercise Period”), the investors may exercise a right to purchase and require the Company to sell up to an additional 673,400 shares of Series A Stock. If the investors have not exercised this right during the Put/Call Exercise Period, the Company may exercise a right to cause and require the investors to purchase up to an additional 673,400 shares of Series A Stock, for an aggregate purchase price of $3,367,000. In September 2015, all the residual call options were removed from the Preferred Series A Stock Purchase Agreements. Holders of the Series A Stock shall initially have the right to convert such shares of Series A Stock into the number of authorized but previously unissued shares of the Company’s common stock obtained by dividing the stated value of each share of Series A ($5.00) by $2.00. For each share of Series A Stock, the investors will receive 2.5 Preferred Warrants to purchase the Company’s common stock at an exercise price of $2.50 per share. The Preferred Warrants are exercisable immediately for a period of five years from the date of closing. The exercise price of the Preferred Warrants is subject to adjustments in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The exercisability of the Preferred Warrants may be limited if upon exercise, the warrant holder or any of its affiliates would beneficially own more than 4.99% of the Company’s Common Stock. The Holders of the Series A Stock will receive preferential cumulative dividends at the rate of 8% per annum (equivalent to a fixed annual payment of $0.40 per share). The dividends are payable in shares of common stock and shall be valued at the volume weighted average price of the Company’s common stock over the ten (10) consecutive trading days ended on the second trading day immediately before the dividend payment date.

 

10 

 

 

In September 2015, as a condition of the sale of the approximately 400,000 remaining shares of Series A Stock held by Isaac Capital Group to a group of independent accredited investors, all the residual call options were removed from the Preferred Series A Stock Purchase Agreements.

 

In accordance with the Preferred Series A Stock Purchase Agreement, on October 30, 2015, investors in the Series A Preferred Stock exercise a right to purchase 20,000 shares of Series A Preferred Stock and warrants, gross proceeds of the transaction was $100,000.

 

During the six months ended October 31, 2015, holders of Preferred Series A Stock converted 102,000 Preferred Series A shares into 510,000 of Common Stock. The converted value for each Preferred Series A Share is approximately $2.96 which resulted in approximately $302,000 reduction to Preferred Stock and approximately $208,000 reduction to Additional Paid in Capital in the October 31, 2015 condensed consolidated balance sheet.

 

Dividends recorded in the three and six months ended October 31, 2015 were approximately $59,000 and $122,000, respectively. The Board of Directors authorized accumulated dividends from the date of Preferred Series A Stock issuance to July 31, 2015 be paid in the form of Common Stock. This resulted in the issuance of 92,456 Common Shares and a reduction of accumulated dividends of approximately $174,000 and offsetting increase of approximately $82,000 in Additional Paid in Capital in the accompanying condensed balance sheet.

 

Common Stock

 

On July 29, 2015, the Company entered into separate securities purchase agreements with five (5) accredited investors for the issuance and sale of an aggregate of 500,000 shares of its common stock, par value $1.00 per share at a per share price of $1.00 or an aggregate purchase price of $500,000.

 

On August 12, 2015 the Company received notification from NASDAQ that the financing completed in January 2015 in which the Company’s Chairman and Chief Executive Officer participated resulted in the purchase of the Company’s common stock at a discount to market price, which represented equity compensation and therefore requires shareholder approval. On August 19, 2015 the Company’s Chairman and Chief Executive Officer surrendered 7,265 common shares such that the investment would have been made at the then-market value.

 

11 

 

 

During the three and six months ended October 31, 2015, the Company granted 25,000 and 54,667 restricted shares of its common stock with a fair value of approximately $38,000 and $88,000, respectively to certain executive officers. The fair value of these restricted shares is estimated on the date of grant using the closing market price as listed on the NASDAQ.

 

Stock-based compensation – Options

 

During three and six months ended October 31, 2015, the Company granted stock option to purchase 72,000 and 238,667 shares of common stock to certain employees, officers and board of directors of the Company. The Company’s condensed consolidated statements of operations for the three and six month periods ended October 31, 2015 includes approximately $22,000 and $185,000 of stock-based compensation expense, respectively. The three and six month periods ended October 31, 2014 includes approximately $5,000 and $9,000 of stock-based compensation expense, respectively. As of October 31, 2015, there was approximately $34,000 of total unrecognized compensation costs related to stock options. These costs are expected to be recognized over a weighted average period of approximately twenty-two months.

 

The fair value of each stock option granted during the six months ended October 31, 2015 is estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions:

 

  Three months ended
October 31, 2015
  Six months ended
October 31, 2015
Expected term (years) 3.0   2.5-3.0
Expected volatility 80%   79%-80%
Dividend yield 0   0
Risk-free interest rate 1.01%   .90% -1.01%
Weighted average per share grant date fair value $0.78   $0.78 - $1.03

 

The Company calculated stock-based compensation expense using a 5% forfeiture rate. There were no stock options granted during the three and six months ended October 31, 2014.

 

A summary of option activity for the six months ended October 31, 2015 is as follows:

 

   Shares   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life
   Aggregate
intrinsic
value (1)
 
                 
Balance May 1, 2015   125,746   $8.48    3.59   $ 
                     
Granted   238,667   $1.63    6.49   $ 
Expired   36,996   $12.71         
Balance October 31, 2015   327,414   $3.01    3.34   $ 
Exercisable October 31, 2015   279,414   $3.27    3.09   $ 
Expected to vest October 31, 2015   327,414   $3.01    3.34   $ 

 

(1)This amount represents the difference between the exercise price and $1.11, the closing price of Dataram common stock on October 31, 2015 as reported on the NASDAQ Stock Market, for all in-the-money options outstanding and all the in-the-money shares exercisable

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b. Other Stock Options

 

On June 30, 2008, the Company granted options to purchase 8,333 shares of the Company’s common stock to a privately held company in exchange for certain patents and other intellectual property. The options granted are exercisable at a price of $15.60 per share, which was the fair value at the date of grant, were 100% exercisable on the date of grant and expire ten years after the date of grant.

 

Warrants

 

At October 31, 2015 the Company had 3,358,275 warrants outstanding with exercise prices between $2.00 and $13.56. A summary of warrant activity for the six months ended October 31, 2015 is as follows:

 

   Shares   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life years
   Aggregate
intrinsic
value (1)
 
                 
Balance May 1, 2015   3,308,275   $3.52         
                     
Issued   50,000   $2.50         
Balance October 31, 2015   3,358,275   $3.51         

 

(1)This amount represents the difference between the conversion price and $1.11, the closing price of Dataram common stock on October 31, 2015 as reported on the NASDAQ Stock Market, for all in-the-money warrants outstanding.

 

Note 6: Commitments and Contingencies

 

Leases

 

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of October 31, 2015 are as follows:

 

    Non-Related     Related        
    Party     Party     Total  
Year ending April 30:                        
2016 remaining     80,000       45,000       125,000  
2017     82,000       90,000       172,000  
2018     84,000       90,000       174,000  
2019     85,000       45,000       130,000  
2020     86,000             86,000  
 Thereafter                        
Total   $ 417,000     $ 270,000     $ 687,000  

 

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Legal Proceedings

 

Dataram is party to certain legal proceedings noted herein. They are as follows:

 

Effective as of the close of business on December 17, 2014, the Company terminated its agreement with MPP Associates, Inc., pursuant to which Marc P. Palker had been providing CFO services to the Company. On April 8, 2015, MPP Associates, Inc. and Mr. Palker filed a complaint, styled MPP Associates, Inc. and Marc Palker v. Dataram Corporation, Jon Isaac, David Moylan, Michael Markulec and Richard Butler, in the Superior Court of the State of New Jersey, Essex County, Docket No. ESX-L-002413-15.

 

Effective as of the close of business on January 22, 2015, the Company terminated the employment agreement with John H. Freeman, its former Chief Executive Officer. On April 9, 2015, Mr. Freeman filed a complaint, styled John Freeman v. Dataram Corporation, David A. Moylan, Jon Isaac, and John Does 1-5, in the Superior Court of the State of New Jersey, Essex County, Docket No. ESX-L-002471-15.

 

Similarly, on April 10, 2015, the Company filed an action against Mr. Freeman, Mr. Palker and MPP Associates, Inc., styled as Dataram Corporation v. John Freeman, Marc Palker and MPP Associates, Inc., in the Superior Court of the State of New Jersey, Mercer County, Docket No. ESX-L-000886-15.

 

The aforementioned three State Court actions described have been consolidated in Essex County.

 

On March 9, 2015, Marc Palker filed a complaint against the Company with the U.S. Department of Labor, Occupational Safety and Health Administration, alleging a violation of the Sarbanes-Oxley Act of 2002.

 

On June 26, 2015, Alethea Douglas, a former employee, filed a complaint against the Company with the U.S. Equal Employment Opportunity Commission, alleging a claim for age discrimination in connection with the termination of her employment effective May 20, 2015.

 

A range of loss, if any, on the aforementioned matters cannot be estimated at this point in time.

 

Note 7: Financial Information by Geographic Location

 

The Company currently operates in one business segment that develops, manufactures and markets a variety of memory systems for use with network servers and workstations which are manufactured by various companies. Revenues for the three and six months ended October 31, 2015 and 2014 by geographic region are as follows:

 

   Three months
ended
October 31,
2015
   Six months
ended
October 31,
2015
 
   Approximate ($)   Approximate ($) 
United States  $5,108,000   $11,220,000 
Europe   879,000    1,995,000 
Other (principally Asia Pacific Region)   64,000    173,000 
Consolidated  $6,051,000   $13,388,000 

 

14 

 

 

   Three months
ended
October 31,
2014
   Six months
ended
October 31,
2014
 
   Approximate ($)   Approximate ($) 
United States  $5,699,000   $12,330,000 
Europe   1,059,000    1,998,000 
Other (principally Asia Pacific Region)   122,000    277,000 
Consolidated  $6,880,000   $14,605,000 

 

Note 8: Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, and trade receivables. The Company maintains its cash and cash equivalents in financial institutions and brokerage accounts. To the extent that such deposits exceed the maximum insurance levels, they are uninsured. In regard to trade receivables, the Company performs ongoing evaluations of its customers' financial condition as well as general economic conditions and, generally, requires no collateral from its customers.

 

Note 9: Subsequent Events

 

In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of the NJ State tax benefit associated with its State of New Jersey specific Net Operating Losses (NOLs) for which the Company has received approval from the state of NJ.  The Company executed a contract of sale and received proceeds of approximately $190,000 on December 9, 2015.

 

15 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The Business section and other parts of this Quarterly Report on Form 10Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A described in the Company’s most recent Annual Report on Form 10-K under the heading “Risk Factors filed with the Securities and Exchange Commission which can be reviewed at http://www.sec.gov. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

 

Executive Overview

 

Since 1967, Dataram Corporation (“Dataram” or the “Company”) has been a leading independent manufacturer of memory products and provider of performance solutions. The Company provides customized memory solutions for original equipment manufacturers (OEMs) and compatible memory for leading brands including Cisco, Dell, Fujitsu, HP, IBM, Lenovo and Oracle as well as a line of memory products for Intel and AMD motherboard based servers.  Dataram manufactures its memory in-house to meet three key criteria - quality, compatibility, and selection - and tests its memory for performance and original equipment manufacturer (OEM) compatibility as part of the production process.  With memory designed for over 50,000 systems and with products that range from energy-efficient DDR4 modules to legacy SDR offerings, Dataram offers one of the most complete portfolios in the industry.   Backed by in-depth quality test programs, nearly fifty years of manufacturing expertise, and a limited lifetime warranty, Dataram memory products are built to last.  The Company is a CMTL Premier Participant and ISO 9001 (2008 Certified). Its products are fully compliant with JEDEC Specifications.

 

Dataram’s customers include an international network of distributors, resellers, OEM customers and end users.

 

Dataram competes with several other large independent memory manufacturers and the OEMs noted above.  The primary raw material used in producing memory boards is dynamic random access memory (DRAM) chips. The purchase cost of DRAMs is the largest single component of the total cost of a finished memory board. Consequently, average selling prices for computer memory boards are significantly dependent on the pricing and availability of DRAM chips.

 

In addition to memory products, Dataram offers solutions that provide its customers significant and quantifiable cost savings (reduction in total cost of ownership) while helping them manage end-of-life transitions.  These include:

·Design and engineering services
·Contract and flexible manufacturing to accommodate special customer needs
·Simulation labs for testing and validation
·Financial programs and trade-in / trade-up programs to allow customers to optimize memory procurements
·Software tools to assess memory needs and optimize memory deployment and application performance

 

Dataram has four business lines which provide complimentary solutions to the market.  Each has a different customer focus and “go to market” approach.  They are:

·Princeton Memory 
·Micro Memory Bank (MMB)
·MemoryStore.com
·18004Memory.com

 

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The Princeton Memory Business provides innovative new memory products that support enterprise / mission critical need; custom and high end memory solutions for most demanding customers ranging from enterprise and data center segments to power users and gamers; provides solutions to extend the density memory options available to customers.  The business also provides:

Memory Solutions Services:
Performance optimization, total cost of computing reduction consulting
Engineering and design services for embedded applications
Proof of concept engagements
Customized consignment programs
Product on-demand offerings
Installation services
Software: products that improve application and computing performance
Buy-back program:  in conjunction with the MMB business, provides customers with opportunity to “trade-in” existing memory as part of a sale with trade-in credited towards purchase of new memory

 

The Micro Memory Bank business provides new and refurbished memory products which are not commonly available.  These solutions extend the life of the system where memory is no longer available by the OEM, helping companies avoid the cost of additional hardware expenditures.  The business also provides:

Brokerage services:  makes opportunistic purchases of excess surplus inventories for less than market price; also buys unknown inventory which is then opened, cataloged, and sometimes refurbished.
Buy-back program: works with Princeton business to provide customers with opportunity to “trade-in” existing memory as part of a sale with trade-in credited towards purchase of new memory.  Memory traded-in is refurbished and then sold.
Technology recycling program: provides end of life recycling services to customers across all IT hardware categories including laptops, desktops, workstations, servers, main frames, hubs and switches.

 

Operating since 1994, 18004Memory.com provides a one-stop source for new and refurbished memory products used in desktops, laptops, notebooks, servers, MAC systems, printers, digital cameras, PDAs, MP3 players, and more.  They provide memory upgrades for all major brands including Compaq, Dell, Apple, Hewlett-Packard, Toshiba, IBM, Gateway, Sony, Fujitsu, Acer.  Products are backed by a limited lifetime warranty on all computer memory and 30-day money back guarantee

 

The Memorystore.com business provides a one-stop web source for “Dataram Value Memory” products used in desktops, laptops, notebooks, servers, workstations, and MAC systems.  Dataram Value Memory is memory specifically designed and tested to meet industry standards.  It is purchased by customers who know the exact technical specifications of the memory they need. Dataram Value Memory is fully compliant with JEDEC Specifications.  It is 100-percent tested and backed by a limited lifetime warranty.

 

In fiscal 2009, the Company acquired certain assets of Micro Memory Bank, Inc. ("MMB"), a privately held corporation.  The acquisition expanded the Company's memory product offerings and routes to market.

 

The Company was incorporated in New Jersey in 1967 and made its initial public offering in 1968.  Its common stock, $1 par value (the "Common Stock"), was listed for trading on the American Stock Exchange in 1981. In 2000 the Company changed its listing to the NASDAQ National Market (now the NASDAQ Stock Market) where its stock trades under the symbol "DRAM." The Company's principal executive office is located at 777 Alexander Road, Suite 100 Princeton, New Jersey 08540, its telephone number is (609) 799-0071, its fax is (609) 799-6734 and its website is located at http://www.dataram.com. Proxy Statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and all amendments thereto, are available on the Company’s website free of charge.

 

Liquidity and Capital Resources

 

At October 31, 2015, the Company had cash and cash equivalents of approximately $617,000 and working capital of approximately $1.48 million. The Company has incurred recurring operating losses. During the six month period ended October 31, 2015, the Company incurred a net loss of approximately $97,000 and included approximately $272,000 of stock based compensation expense. As of October 31, 2015, the Company also had an accumulated deficit of approximately $24.6 million. The Company has primarily financed operations through the sale of equity and debt securities.

 

17 

 

 

In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of the NJ State tax benefit associated with its State of New Jersey specific Net Operating Losses (NOLs) for which the Company has received approval from the state of NJ.  The Company executed a contract of sale and received proceeds of approximately $190,000 on December 9, 2015

 

While the Company has made significant financial and operational changes in the last nine months, there remains a substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

If current and projected revenue growth does not meet estimates, the Company may continue to choose to raise additional capital through debt and/or equity transactions, reduce certain overhead costs through the deferral of salaries and other means, and settle liabilities through negotiation. Currently, the Company does not have any commitments or assurances for additional capital, nor can the Company provide assurance that such financing will be available to it on favorable terms, or at all.

 

On November 12, 2014, the Company completed a private placement of 600,000 shares of its Series A Preferred Stock (“Series A Stock”) together with warrants to purchase shares of its common stock (“Preferred Warrant”) at a price of $5.00 per share, in accordance with the Series A Preferred Stock Purchase Agreement dated October 20, 2014 (the “Purchase Agreement”). The net proceeds to the Company from the sale of the Series A Stock and Preferred Warrant, after deducting the estimated offering expenses incurred by the Company were approximately $2,700,000. At any time from November 17, 2014, the date of closing, and prior to October 20, 2019 (the “Put/Call Exercise Period”), and the investors may exercise a right to purchase and require the Company to sell up to an additional 700,000 shares of Series A Stock. If the investors have not exercised this right during the Put/Call Exercise Period, the Company may exercise a right to cause and require the investors to purchase up to an additional 700,000 shares of Series A Stock, for an aggregate purchase price of $3,500,000. In September 2015, as a condition of the sale of the approximately 400,000 remaining Preferred Series A Shares held by Isaac Capital Group to a group of independent accredited investors, all the residual call options were removed from the Preferred Series A Stock Purchase Agreements.

 

On October 30, 2015, investors in the Series A Preferred Stock exercise a right to purchase 20,000 shares of Series A Preferred Stock and warrants, gross proceeds of the transaction was $100,000.

 

On July 29, 2015, the Company entered into separate Common Stock Purchase Agreements, pursuant to which the Company sold and issued 500,000 shares of common stock to 5 accredited investors. Gross proceeds of the common stock offering were $500,000.

 

As of October 31, 2015, cash and cash equivalents amounted to approximately $617,000 and working capital of approximately $1,482,000. This compares to cash and cash equivalents of approximately $327,000 and working capital of approximately $882,000, reflecting a current ratio of 1.4 to 1 compared to 1.2 to 1 as of April 30, 2015.

 

During the six month period ended October 31, 2015, net cash used in operating activities totaled approximately $274,000. Net loss in the period totaled approximately $97,000 and included approximately $272,000 of stock based compensation expense. Depreciation and amortization expense of approximately $68,000 was recorded in the period. Inventory decreased by approximately $697,000. The decrease in inventories was a management decision to reduce inventory levels and increase working capital. Trade receivable increased by approximately $1,126,000, primarily the result of a shipments that occurred towards the end of quarter. Accounts payable increased by approximately $33,000 and accrued liabilities decreased by approximately $108,000.

 

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Net cash provided by financing activities totaled approximately $586,000 for the six month period ended October 31, 2015 and consisted of proceeds of $500,000 from the sale of common shares and $100,000 from the sale of preferred series A shares. The Companies borrowing on its line of credit increased by approximately $13,000 in the period and the Company paid back approximately $28,000 of convertible notes.

 

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of October 31, 2015 are as follows:

 

    Non-Related     Related        
    Party     Party     Total  
Year ending April 30:                        
2016 remaining     80,000       45,000       125,000  
2017     82,000       90,000       172,000  
2018     84,000       90,000       174,000  
2019     85,000       45,000       130,000  
2020     86,000             86,000  
 Thereafter                        
Total   $ 417,000     $ 270,000     $ 687,000  

The Company has no other material commitments.

 

Results of Operations

 

Revenues for the three month period ended October 31, 2015 were $6,051,000 compared to revenues of $6,880,000 for the comparable prior year period. Revenues for the first six months of the current fiscal year were $13,388,000 compared to revenues of $14,605,000 for the comparable prior year period. The decline in revenues for the three and six months ended October 31, 2015 is primarily attributable to management’s decision to discontinue the consumer memory product. The Company exited the business in fiscal 2015’s third quarter ended January 31, 2015. The consumer memory business was not profitable, did not align with the corporate strategy, and consumed valuable working capital. The Company shipped approximately $627,000 and $1,275,000, respectively in the prior year periods of the discontinued product.

 

Cost of sales for the three and six months ended October 31, 2015 were $4,848,000 and $10,783,000, respectively versus $5,871,000 and $12,348,000, respectively in the prior year comparable periods. Cost of sales as a percentage of revenues for the three and six months October 31, 2014 were 80% and 81%, respectively of revenues versus 85% of revenues for the same respective prior year periods. The aforementioned shutdown of the unprofitable consumer memory business accounted for the favorable reduction is cost of sales a percentage of sales. The Company has also reduced manufacturing overhead cost by approximately $470,000 on an annualized basis. Most of the cost reductions were implemented during in the first quarter of the current fiscal year.

 

Engineering expense in the three and six months ended October 31, 2015 were approximately $46,000 and $100,000, respectively, compared to $151,000 and $317,000 for the same respective prior year periods. The Company has reduced annualized engineering overhead cost by approximately $800,000 during the last six months.

 

Selling, general and administrative (S,G&A) expense for the three and six month period ended October 31, 2015 totaled $1,280,000 and $2,684,000, respectively, compared to $1,667,000 and $3,311,000 for the same prior year periods. The Company has reduced annualized S,G&A overhead cost by approximately $2,500,000. The decrease is the result of reduction in employees and other cost. The Company has realigned cost associated employee benefits with the current market and also reduced facility and other fixed cost.

19 

 

 

Other income (expense), net for the three and six month period ended October 31, 2015 totaled approximately $47,000 and $109,000 of expense, respectively, compared to expense of approximately $696,000 and $892,000, for the same prior year periods.  Other expense in the three month period ended October 2015 consisted of approximately 54,000 of interest expense and approximately $7,000 of foreign currency transaction gains. Other expense for the six months ended October 31, 2015 of approximately $109,000 and primarily consisted of interest expense. Other income (expense) in the three month period ended October 31, 2014 consisted of primarily $683,000 of interest. The interest expense recorded in the quarter ended October 31, 2014 includes a non cash interest charge of approximately $617,000 recorded for the amortization of debt discount as a result of the issuance of the subordinated convertible notes and interest expense of approximately $66,000 on the Company’s revolving bank credit line. For the six month period ended October 31, 2014 other expense of approximately $892,000 consisted of primarily $877,000 of interest expense. The interest expense recorded in six months ended October 31, 2014 includes a non cash interest charge of approximately $750,000 recorded for the amortization of debt discount as a result of the issuance of the subordinated convertible notes and interest expense of approximately $127,000 on the Company’s revolving bank credit line.

 

Critical Accounting Policies

 

During December 2001, the Securities and Exchange Commission (“SEC”) published a Commission Statement in the form of Financial Reporting Release No. 60 which encouraged that all registrants discuss their most “critical accounting policies” in management’s discussion and analysis of financial condition and results of operations. The SEC has defined critical accounting policies as those that are both important to the portrayal of a company’s financial condition and results, and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. While the Company’s significant accounting policies are summarized in Note 1 of notes to consolidated financial statements included in this Annual Report, management believes the following accounting policies to be critical:

 

Revenue Recognition - Revenue is recognized when title passes upon shipment of goods to customers. The Company’s revenue earning activities involve delivering or producing goods. The following criteria are met before revenue is recognized: persuasive evidence of an arrangement exists, shipment has occurred, selling price is fixed or determinable and collection is reasonably assured. The Company does experience a minimal level of sales returns and allowances for which the Company accrues a reserve at the time of sale in accordance with the Revenue Recognition – Right of Return Topic of the FASB ASC. Estimated warranty costs are accrued by management upon product shipment based on an estimate of future warranty claims.

 

Research and Development - Research and development costs are expensed as incurred, including Company-sponsored research and development and costs of patents and other intellectual property that have no alternative future use when acquired and in which we had an uncertainty in receiving future economic benefits. Development costs of a computer software product to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. Technological feasibility of a computer software product is established when all planning, designing, coding and testing activities that are necessary to establish that the product can be produced to meet its design specifications (including functions, features and technical performance requirements) are completed.

 

Income Taxes - The Company utilizes the asset and liability method of accounting for income taxes in accordance with the provisions of the Expenses – Income Taxes Topic of the FASB ASC. Under the asset and liability method, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The Company considers certain tax planning strategies in its assessment as to the recoverability of its tax assets. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in earnings in the period that the tax rate changes. The Company recognizes, in its consolidated financial statements, the impact of a tax position, if that position is more likely than not to be sustained on audit, based on technical merits of the position. There are no material unrecognized tax positions in the financial statements.

 

20 

 

 

Goodwill – The carrying value of goodwill is not amortized, but is tested annually as of April 30 as well as whenever events or changes in circumstances indicate that the carrying amount may not be recoverable using a two-step process. As of October 31, 2015, management has concluded that no impairment of goodwill is required.

 

Warrants –The pricing model the Company uses for determining fair values for warrants is the Black-Scholes Pricing Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates, market prices and volatilities.

 

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including deferred income tax asset valuation allowances and certain other reserves and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Some of the more significant estimates made by management include the allowance for doubtful accounts and sales returns, the deferred income tax asset valuation allowance and other operating allowances and accruals. Actual results could differ from those estimates.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company does not invest in market risk sensitive instruments. At times, the Company's cash equivalents consist of overnight deposits with banks and money market accounts. The Company's objective in connection with its investment strategy is to maintain the security of its cash reserves without taking market risk with principal.

 

The Company purchases and sells primarily in U.S. dollars. The Company sells in foreign currency (primarily Euros) to a limited number of customers and as such incurs some foreign currency risk. At any given time, approximately 5% to 25% of the Company’s accounts receivable are denominated in currencies other than U.S. dollars. At present, the Company does not purchase forward contracts as hedging instruments, but could do so as circumstances warrant.

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

The Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended October 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

21 

 

 

PART II: OTHER INFORMATION

 

Item 1. Legal ProceEdinGS

 

Dataram is party to certain legal proceedings noted herein. They are as follows:

 

·MPP Associates, Inc. and Marc Palker v. Dataram Corporation, Jon Isaac, David Moylan, Michael Markulec and Richard Butler, in the Superior Court of the State of New Jersey, Essex County, Docket No. ESX-L-002413-15. Filed on April 8, 2015.

 

·John H. Freeman v. Dataram Corporation, David A. Moylan, Jon Isaac, and John Does 1-5, in the Superior Court of the State of New Jersey, Essex County, Docket No. ESX-L-002471-15. Filed on April 9, 2015.

 

·Dataram Corporation v. John Freeman, Marc Palker and MPP Associates, Inc., in the Superior Court of the State of New Jersey, Mercer County, Docket No. ESX-L-000886-15. Filed on April 10, 2015.

 

The three aforementioned State Court actions described have been consolidated in Essex County.

 

·On March 9, 2015, Marc Palker filed a complaint against the Company with the U.S. Department of Labor, Occupational Safety and Health Administration, alleging a violation of the Sarbanes-Oxley Act of 2002.

 

·On June 26, 2015, Alethea Douglas, a former employee, filed a complaint against the Company with the U.S. Equal Employment Opportunity Commission, alleging a claim for age discrimination in connection with the termination of her employment effective May 20, 2015.

 

Item 1A. Risk Factors.

 

There have been no material changes to the Risk Factors in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2015, other than the following:

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

No reportable event.

 

 

Item 3. Defaults upon Senior Securities.

 

No reportable event.

 

 

Item 4. MINE SAFETY DISCLOSURES

 

No reportable event.

 

 

Item 5. Other Information.

 

No reportable event.

22 

 

 

Item 6. Exhibits.

 

Exhibit No Description
   
31(a) Rule 13a-14(a) Certification of David A. Moylan.
   
31(b) Rule 13a-14(a) Certification of Anthony M. Lougee.
   
32(a) Section 1350 Certification of David A. Moylan (furnished not filed).
   
32(b) Section 1350 Certification of Anthony M. Lougee (furnished not filed).
   
101.INS XBRL Instance Document.
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  DATARAM CORPORATION
     
Date: December 15, 2015 By: /s/ DAVID A MOYLAN
    David A. Moylan
    Chairman and Chief Executive Officer
     
Date: December 15, 2015 By: /s/ ANTHONY M. LOUGEE
    Anthony M. Lougee
    Chief Financial Officer

 

 

 

23 

Exhibit 31(a)

 

Rule 13a-14(a) Certification

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302

 

I, David A. Moylan, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Dataram Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date:  December 15, 2015 /s/ David A. Moylan
  David A. Moylan, Chairman and
  Chief Executive Officer
  (Principal Executive Officer)

 

Exhibit 31(b)

 

Rule 13a-14(a) Certification

 

CERTIFICATION OF CHIEF ACCOUNTING OFFICER PURSUANT TO SECTION 302

 

I, Anthony M. Lougee, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Dataram Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date:  December 15, 2015 /s/ Anthony M. Lougee
  Anthony M. Lougee
  Chief Financial Officer
  (Principal Accounting Officer)

Exhibit 32(a)

 

 

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

In connection with the Quarterly Report of Dataram Corporation, a New Jersey corporation (the “Company”), on Form 10-Q for the quarter ended October 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), David A. Moylan, Chief Executive Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

 

 

December 15, 2015 /s/ David A. Moylan
  David A. Moylan,
  Chairman and Chief Executive Officer

 

[A signed original of this written statement required by Section 906 has been provided to Dataram Corporation and will be retained by Dataram Corporation and furnished to the Securities and Exchange Commission or its staff upon request.]

Exhibit 32(b)

 

 

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

In connection with the Quarterly Report of Dataram Corporation, a New Jersey corporation (the “Company”), on Form 10-Q for the quarter ended October 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), Anthony M. Lougee, Chief Financial Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

 

December 15, 2015 /s/ Anthony M. Lougee
  Anthony M. Lougee
  Chief Financial Officer

 

 

 

[A signed original of this written statement required by Section 906 has been provided to Dataram Corporation and will be retained by Dataram Corporation and furnished to the Securities and Exchange Commission or its staff upon request.]

 

v3.3.1.900
Document and Entity Information - shares
6 Months Ended
Oct. 31, 2015
Dec. 15, 2015
Document And Entity Information    
Entity Registrant Name Dataram Corporation  
Entity Central Index Key 0000027093  
Document Type 10-Q  
Document Period End Date Oct. 31, 2015  
Amendment Flag false  
Current Fiscal Year End Date --04-30  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   4,119,154
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2016  
v3.3.1.900
Condensed Consolidated Balance Sheets - USD ($)
Oct. 31, 2015
Apr. 30, 2015
Current assets:    
Cash and cash equivalents $ 617,012 $ 327,298
Accounts receivable, less allowance for doubtful accounts and sales returns of $130,000 and $140,000, respectively 3,291,508 2,170,261
Inventories 1,391,041 2,088,737
Other current assets 72,882 69,076
Total current assets 5,372,443 4,655,372
Property and equipment, net of accumulated depreciation and amortization of $1,014,831 and $966,831, respectively 94,997 120,997
Other assets 29,479 49,210
Capitalized software development costs 345,123 365,424
Goodwill 1,083,555 1,083,555
Total assets 6,925,597 6,274,558
Current liabilities:    
Note payable-revolving credit line 2,122,744 2,109,449
Accounts payable 912,926 879,573
Accrued liabilities 174,752 282,284
Convertible notes payable 600,000 600,000
Convertible notes payable related parties 80,000 107,500
Total current liabilities 3,890,422 3,978,806
Other liabilities 143,331 179,163
Total liabilities 4,033,753 4,157,969
Stockholders' equity:    
Preferred stock, par value $.01 per share. Authorized 1,300,000 shares; Issued and outstanding shares 544,600 at October 31, 2015 and 626,600 at April 30, 2015 1,635,147 1,856,903
Authorized 54,000,000 shares; issued and outstanding 3,925,870 at October 31, 2015 and 2,776,012 at April 30, 2015 3,925,870 2,776,012
Additional paid-in capital 21,859,171 21,862,333
Accumulated deficit (24,587,465) (24,490,404)
Shares to be issued 59,121 111,745
Total stockholders' equity 2,891,844 2,116,589
Total liabilities and stockholders' equity $ 6,925,597 $ 6,274,558
v3.3.1.900
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Oct. 31, 2015
Apr. 30, 2015
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts and sales returns $ 130,000 $ 140,000
Accumulated depreciation and amortization $ 1,014,831 $ 966,831
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, authorized shares 1,300,000 1,300,000
Preferred stock, outstanding shares 544,600 626,600
Common stock, par value $ 1 $ 1
Common stock, authorized shares 54,000,000 54,000,000
Common stock, issued shares 3,925,870 2,776,012
Common stock, outstanding shares 3,925,870 2,776,012
v3.3.1.900
Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Oct. 31, 2015
Oct. 31, 2014
Income Statement [Abstract]        
Revenues $ 6,050,772 $ 6,879,716 $ 13,388,454 $ 14,604,753
Costs and expenses:        
Cost of sales 4,848,192 5,871,582 10,782,669 12,347,814
Engineering 46,280 151,734 100,239 317,289
Selling, general and administrative 1,279,723 1,667,084 2,683,989 3,311,292
Total costs and expenses 6,174,195 7,690,400 13,566,897 15,976,395
Loss from operations (123,423) (810,684) (178,443) (1,371,642)
Other income (expense):        
Interest expense, net (53,726) $ (683,345) (116,370) $ (877,032)
Gain on sale of state NOL 190,462 190,462
Currency gain (loss) 6,881 $ (12,932) 7,289 $ (15,204)
Total other expense, net 143,617 (696,277) 81,381 (892,236)
Income (loss) before income taxes $ 20,194 $ (1,506,961) $ (97,062) (2,263,878)
Income tax expense (benefit) 2,850
Net income (loss) $ 20,194 $ (1,506,961) $ (97,062) $ (2,266,728)
Dividend – Series A preferred stock 58,949 121,609
Net loss allocated to common shareholders $ (38,755) $ (1,506,961) $ (218,671) $ (2,266,728)
Net loss per share of common stock        
Basic and diluted $ (.01) $ (.63) $ (.07) $ (.94)
Weighted average common shares outstanding        
Basic and diluted 3,536,037 2,410,512 3,108,422 2,410,512
v3.3.1.900
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Cash flows from operating activities:    
Net loss $ (97,062) $ (2,266,728)
Adjustments to reconcile net loss to net cash used in operating activities:    
Amortization of deferred gain on sale leaseback (35,832) (35,831)
Depreciation and amortization 68,301 53,999
Bad debt expense $ 5,222 23,147
Amortization of debt discount 750,000
Stock-based compensation expense $ 272,317 9,432
Changes in assets and liabilities:    
Increase (decrease) in accounts receivable (1,126,469) 678,774
Decrease in inventories 697,696 219,125
Increase in other current assets (3,806) (162,117)
Decrease in other assets 19,731 1,950
Increase in accounts payable 33,353 810,607
Decrease in accrued liabilities (107,532) (338,367)
Net cash used in operating activities $ (274,081) (256,009)
Cash flows from investing activities:    
Software development costs $ (365,424)
Additions of property and equipment $ (22,000)
Net cash used in investing activities (22,000) $ (365,424)
Cash flows from financing activities:    
Net borrowings (repayments) under revolving credit line $ 13,295 (353,483)
Proceeds from issuance of notes and warrants $ 750,000
Repayment of convertible notes $ (27,500)
Proceeds from sales of preferred shares 100,000
Proceeds from sale of common shares 500,000
Net cash provided by financing activities 585,795 $ 396,517
Net increase (decrease) in cash and cash equivalents 289,714 (224,916)
Cash and cash equivalents at beginning of period 327,298 257,633
Cash and cash equivalents at end of period 617,012 32,717
Cash paid during the period for:    
Interest $ 116,370 127,032
Supplemental disclosures of non cash flow information:    
Debt discount on convertible notes payable $ 750,000
Issuance of common stock for accrued dividend on Series A preferred shares $ 174,233
v3.3.1.900
Consolidated Statements of Stockholders' Equity (Unaudited) - 6 months ended Oct. 31, 2015 - USD ($)
Preferred Stock
Common Stock
Additional Paid-In Capital
Shares to be Issued
Accumulated Deficit
Total
Beginning balance (shares) at Apr. 30, 2015 626,600 2,776,012        
Beginning balance at Apr. 30, 2015 $ 1,856,903 $ 2,776,012 $ 21,862,333 $ 111,745 $ (24,490,404) $ 2,116,589
Net loss         $ (97,062) (97,062)
Stock option expense     $ 184,752 184,752
Issuance of common shares for cash (shares)   500,000        
Issuance of common shares for cash   $ 500,000 500,000
Common shares surrendered (shares)   (7,265)        
Common shares surrendered   $ (7,265) $ 7,265      
Common shares issued for service (shares)   54,667        
Common shares issued for service   $ 54,667 32,897 87,564
Issuance of preferred shares and warrants for cash (shares) 20,000          
Issuance of preferred shares and warrants for cash $ 80,317   19,683 100,000
Preferred shares converted to common shares (shares) (102,000) 510,000        
Preferred shares converted to common shares $ (302,073) $ 510,000 (207,927)      
Non-cash preferred stock dividend     (121,609) $ 121,609    
Common shares issued for preferred stock dividend (shares)   92,456        
Common shares issued for preferred stock dividend   $ 92,456 $ 81,777 $ (174,233)   174,233
Ending balance at Oct. 31, 2015 $ 1,856,903         $ 2,891,844
v3.3.1.900
Basis of Presentation and Summary of Significant Accounting Policies
6 Months Ended
Oct. 31, 2015
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies

Note 1: Basis of Presentation and Summary of Significant Accounting Policies

 

Organization and Nature of Business

 

Since 1967, Dataram Corporation (referred to as “Dataram” or the “Company”) has been a manufacturer of memory products and provider of performance solutions. The Company provides customized memory solutions for original equipment manufacturers (OEMs) and compatible memory for leading brands including Cisco, Dell, Fujitsu, HP, IBM, Lenovo and Oracle as well as a line of memory products for Intel and AMD motherboard based servers. 

 

Dataram’s customers include a domestic and an international network of distributors, resellers, retailers, OEM customers and end users.

 

Liquidity and Going Concern

 

At October 31, 2015, the Company had cash and cash equivalents of approximately $617,000 and a working capital of approximately $1.48 million. During the six month period ended October 31, 2015, the Company incurred a net loss of approximately $97,000 and included approximately $272,000 of stock based compensation expense. As of October 31, 2015, the Company also had an accumulated deficit of approximately $24.6 million. The Company has primarily financed operations through the sale of equity securities and debt securities.

 

In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of the NJ State tax benefit associated with its State of New Jersey specific Net Operating Losses (NOLs) for which the Company has received approval from the state of NJ.  The Company executed a contract of sale and received proceeds of approximately $190,000 on December 9, 2015.

 

While the Company has made significant financial and operational changes in the last nine months, there remains substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

If current and projected revenue growth does not meet estimates, the Company may continue to choose to raise additional capital through debt and/or equity transactions, reduce certain overhead costs through the deferral of salaries and other means, or settle liabilities through negotiation. Currently, the Company does not have any commitments or assurances for additional capital, nor can the Company provide assurance that such financing will be available to it on favorable terms, or at all.

 

Basis of Presentation

 

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of October 31, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended October 31, 2015 are not necessarily indicative of the operating results for the full fiscal year for any future period.

 

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2015. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended April 30, 2015, and updated, as necessary, in this Quarterly Report on Form 10-Q.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including deferred tax asset valuation allowances and certain other reserves and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Some of the more significant estimates made by management include allowance for doubtful accounts and sales returns, reserve for inventory obsolescence, deferred income tax asset and related valuation allowance, fair value of certain financial instruments and other operating allowances and accruals. Actual results could differ from those estimates.

 

Revenue Recognition

 

Revenue is recognized when title passes upon shipment of goods to customers. The Company’s revenue earning activities involve delivering or producing goods. The following criteria are met before revenue is recognized: persuasive evidence of an arrangement exists, shipment has occurred, selling price is fixed or determinable and collection is reasonably assured. The Company does experience a minimal level of sales returns and allowances for which the Company accrues a reserve at the time of sale. Estimated warranty costs are accrued by management upon product shipment based on an estimate of future warranty claims.

 

Net Loss per Share

 

Basic net loss per share is computed by dividing the net loss available to common stock holders by the weighted average number of shares of common stock issued and outstanding during the period. The calculation of diluted loss per share for the three and six months ended October 31, 2015 and 2014 includes only the weighted average number of shares of common stock outstanding. The denominator excludes the dilutive effect of common shares issuable upon exercise or conversion of stock options, warrants, convertible notes and Series A preferred shares as their effect would be anti-dilutive.

 

Anti-dilutive securities consisted of the following at October 31:

 

   2015   2014 
Common stock equivalent of convertible notes   300,000    240,000 
Common stock equivalent of convertible notes – related parties   27,210    51,020 
Series A preferred shares   2,838,207     
Warrants   3,358,275    1,385,775 
Common shares reserved for series A preferred share dividends   46,785     
Stock options   335,747    256,580 
Total   6,906,224    1,933,375 

 

Recently Adopted Accounting Guidance

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”.  The purpose of this new standard is to clarify the principles for recognizing revenue so that it can be applied consistently across various transactions, industries and capital markets.  We have not completed our assessment of ASU No. 2014-09.

 

The Company has evaluated the other recent accounting pronouncements through ASU 2015-17 and believe that none of them will have a material effect on its condensed consolidated financial statements.

v3.3.1.900
Related Party Transactions
6 Months Ended
Oct. 31, 2015
Notes to Financial Statements  
Related Party Transactions

Note 2: Related Party Transactions

 

During the three month periods ended October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $165,000 and $299,000, respectively, from Sheerr Memory, LLC (“Sheerr Memory”). During the six month periods ending October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $289,000 and $773,000, respectively, from Sheerr Memory, LLC. Sheerr Memory’s owner (“Mr. Sheerr”) is employed by the Company as an advisor. Approximately $12,000 and $15,000 of accounts payable in the Company’s condensed consolidated balance sheets as of October 31, 2015 and April 30, 2015, respectively, is payable to Sheerr Memory. Sheerr Memory offers the Company trade terms of net 30 days and all invoices are settled in the normal course of business. No interest is paid. The Company has made approximately $20,000 in purchases from Sheerr Memory subsequent to October 31, 2015 and management anticipates that the Company will continue to do so, although the Company has no obligation to do so.

 

During the three month periods ended October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $25,000, and $270,000 respectively, from Keystone Memory Group (“Keystone Memory”). During the six month periods ending October 31, 2015 and 2014, the Company purchased inventories for resale totaling approximately $658,000 and $526,000, respectively, from Keystone Memory Group. Keystone Memory’s owner is a relative of Mr. Sheerr. Approximately $37,000 and $27,000 of accounts payable in the Company’s condensed consolidated balance sheets as of October 31, 2015 and April 30, 2015 is payable to Keystone Memory. Keystone Memory offers the Company trade terms of immediately due and all invoices are settled in the normal course of business. No interest is paid. The Company has made approximately $161,000 in purchases from Keystone Memory subsequent to October 31, 2015 and management anticipates that the Company will continue to do so, although the Company has no obligation to do so.

 

As of October 31, 2013, the Company entered into an agreement with Mr. Sheerr to leaseback the equipment and furniture that was sold to Mr. Sheerr on October 31, 2013 for $500,000. The lease is for a term of 60 months and the Company is obligated to pay approximately $7,500 per month for the term of the lease. The Company has an option to extend the lease for an additional two year period. The transactions described have been accounted for as a sale-leaseback transaction. Accordingly, the Company recognized a gain on the sale of assets of approximately $139,000, which is the amount of the gain on sale in excess of present value of the future lease payments and will recognize the remaining deferred gain of approximately $322,000 in proportion to the related gross rental charged to expense over the term of the lease, 60 months. The current portion of $72,000 deferred gain was reflected in accrued liabilities and the long-term portion of $179,000 is reflected in other liabilities – long-term in the condensed consolidated balance sheet as of April 30, 2015. As of October 31, 2015, the current portion of $72,000 deferred gain is reflected in accrued liabilities and the long-term portion of $143,000 is reflected in other liabilities – long-term in the condensed consolidated balance sheet as of October 31, 2015.

v3.3.1.900
Convertible Notes Payable
6 Months Ended
Oct. 31, 2015
Debt Disclosure [Abstract]  
Convertible Notes Payable

Note 4: Convertible Notes Payable

 

On July 15, 2014, the Company entered into the Purchase Agreement governing the issuance of $750,000 aggregate principal amount of Bridge Notes and Bridge Warrants. The Bridge Notes and Bridge Warrants were issued on July 15, 2014.  The Company issued $600,000 aggregate principal amount of the Bridge Notes to certain institutional investors and $150,000 aggregate principal amount of the Bridge Notes to certain members of Management. The Bridge Notes, the initial maturity date of which was October 15, 2014 (which was subject to a three-month extension at the option of the holders that occurred; see below), are convertible into shares of the Company’s common stock. The initial conversion price for institutional Investors is $2.50 per share (which was subsequently reduced; see below), and the initial conversion price for Management is equal to the closing price of the Company’s common stock on the closing date of the Purchase Agreement, $2.94. The Bridge Notes are secured obligations of the Company and bear interest at a rate of 8% per year. The Bridge Notes are subordinated to the Rosenthal & Rosenthal Financing Agreement. The Bridge Warrants are exercisable for five years after the closing date of the Purchase Agreement, or July 15, 2019. For each $1,000 of principal amount of Bridge Notes, the holder received 1,200 Bridge Warrants, each exercisable for the purchase of one share of the Company’s common stock. Each holder is entitled to exercise one-third of all Bridge Warrants received at an exercise price of $3.00, one-third of all Bridge Warrants received at an exercise price of $3.50, and one-third of all Bridge Warrants received at an exercise price that is equal to the closing price on the closing date of the Purchase Agreement, $2.94. Pursuant to the terms of the Purchase Agreement, the Company has agreed to register for re-sale the shares underlying the Bridge Notes and the Bridge Warrants.

 

On October 15, 2014, the original maturity date of the Bridge Notes, the maturity date of the Bridge Notes was extended to January 15, 2015 for all holders of the Bridge Notes. On November 17, 2014 the Company closed the sale of 600,000 shares of its Series A Stock, which resulted in the reduction of the conversion price of the Bridge Notes held by the institutional investors to $2.00 from $2.50, to equal the conversion price of the Series A Preferred Stock (see below). In addition, two additional 90-day extensions were provided to the institutional investors, which had it extend the final maturity date to July 15, 2015. The Company has paid off approximately $70,000 of the notes and received extensions from all Bridge note holders except for one holder of an $80,000 Bridge Note, to extend the maturity date to January 15, 2016. The Company continues to accrue interest on the Bridges Notes. In the event the Bridge Notes are converted to equity, their incremental fair value will be recognized in the consolidated statement of operations. The Company advised Rosenthal and Rosenthal, Inc. of the default on a certain Bridge Note which is a default under our finance agreement and received a waiver of compliance.

 

The pricing model the Company used for determining fair values of the Bridge Warrants is the Black-Scholes Pricing Model. The model uses market-sourced inputs such as interest rates, dividend yields, market prices and volatilities. The risk-free interest rate used of 1.26% is based on the rate of U.S Treasury zero-coupon issues with a remaining term equal to the expected life of the Bridge Warrants. Expected dividend yield assumes the current dividend rate of zero. Expected volatility of approximately 100% was calculated using the daily closing price over a five-year period of the Company’s Common Stock.

 

The value of the Bridge Warrants was derived and used as a basis to allocate the proceeds received between the Bridge Warrants and Bridge Notes. The proportionate value ascribed to the Warrants amounted to approximately $562,000 and was reflected as a discount on notes payable. Further the Company estimated a value of beneficial conversion feature of approximately $188,000 (limited to the amount of proceeds allocated to the notes payable) and reflected such as an additional discount on the Bridge Notes. The discount on notes payable is being amortized using the straight-line amortization over ninety days. This resulted in a non-cash interest charge of approximately $617,000 and $750,000 during the three and six months ended October 31, 2014, respectively.

v3.3.1.900
Stockholders’ Equity
6 Months Ended
Oct. 31, 2015
Notes to Financial Statements  
Stockholders’ Equity

Note 5: Stockholders’ Equity

 

Series A preferred shares

 

On November 12, 2014 and February 2, 2015, the Company completed a private placement of an aggregate of 626,600 shares of its Series A Preferred Stock (“Series A Stock”) together with warrants to purchase shares of its common stock (“Preferred Warrant”) at a price of $5.00 per share, in accordance with the Series A Preferred Stock Purchase Agreement dated October 20, 2014 (the “Purchase Agreement”). The aggregate net proceeds to the Company from the sale of the Series A Stock and Preferred Warrant, after deducting the estimated offering expenses incurred by the Company were approximately $2,833,000. From the date of respective closings and prior to October 20, 2019 (the “Put/Call Exercise Period”), the investors may exercise a right to purchase and require the Company to sell up to an additional 673,400 shares of Series A Stock. If the investors have not exercised this right during the Put/Call Exercise Period, the Company may exercise a right to cause and require the investors to purchase up to an additional 673,400 shares of Series A Stock, for an aggregate purchase price of $3,367,000. In September 2015, all the residual call options were removed from the Preferred Series A Stock Purchase Agreements. Holders of the Series A Stock shall initially have the right to convert such shares of Series A Stock into the number of authorized but previously unissued shares of the Company’s common stock obtained by dividing the stated value of each share of Series A ($5.00) by $2.00. For each share of Series A Stock, the investors will receive 2.5 Preferred Warrants to purchase the Company’s common stock at an exercise price of $2.50 per share. The Preferred Warrants are exercisable immediately for a period of five years from the date of closing. The exercise price of the Preferred Warrants is subject to adjustments in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The exercisability of the Preferred Warrants may be limited if upon exercise, the warrant holder or any of its affiliates would beneficially own more than 4.99% of the Company’s Common Stock. The Holders of the Series A Stock will receive preferential cumulative dividends at the rate of 8% per annum (equivalent to a fixed annual payment of $0.40 per share). The dividends are payable in shares of common stock and shall be valued at the volume weighted average price of the Company’s common stock over the ten (10) consecutive trading days ended on the second trading day immediately before the dividend payment date.

 

In September 2015, as a condition of the sale of the approximately 400,000 remaining shares of Series A Stock held by Isaac Capital Group to a group of independent accredited investors, all the residual call options were removed from the Preferred Series A Stock Purchase Agreements.

 

In accordance with the Preferred Series A Stock Purchase Agreement, on October 30, 2015, investors in the Series A Preferred Stock exercise a right to purchase 20,000 shares of Series A Preferred Stock and warrants, gross proceeds of the transaction was $100,000.

 

During the six months ended October 31, 2015, holders of Preferred Series A Stock converted 102,000 Preferred Series A shares into 510,000 of Common Stock. The converted value for each Preferred Series A Share is approximately $2.96 which resulted in approximately $302,000 reduction to Preferred Stock and approximately $208,000 reduction to Additional Paid in Capital in the October 31, 2015 condensed consolidated balance sheet.

 

Dividends recorded in the three and six months ended October 31, 2015 were approximately $59,000 and $122,000, respectively. The Board of Directors authorized accumulated dividends from the date of Preferred Series A Stock issuance to July 31, 2015 be paid in the form of Common Stock. This resulted in the issuance of 92,456 Common Shares and a reduction of accumulated dividends of approximately $174,000 and offsetting increase of approximately $82,000 in Additional Paid in Capital in the accompanying condensed balance sheet.

 

Common Stock

 

On July 29, 2015, the Company entered into separate securities purchase agreements with five (5) accredited investors for the issuance and sale of an aggregate of 500,000 shares of its common stock, par value $1.00 per share at a per share price of $1.00 or an aggregate purchase price of $500,000.

 

On August 12, 2015 the Company received notification from NASDAQ that the financing completed in January 2015 in which the Company’s Chairman and Chief Executive Officer participated resulted in the purchase of the Company’s common stock at a discount to market price, which represented equity compensation and therefore requires shareholder approval. On August 19, 2015 the Company’s Chairman and Chief Executive Officer surrendered 7,265 common shares such that the investment would have been made at the then-market value.

 

During the three and six months ended October 31, 2015, the Company granted 25,000 and 54,667 restricted shares of its common stock with a fair value of approximately $38,000 and $88,000, respectively to certain executive officers. The fair value of these restricted shares is estimated on the date of grant using the closing market price as listed on the NASDAQ.

 

Stock-based compensation – Options

 

During three and six months ended October 31, 2015, the Company granted stock option to purchase 72,000 and 238,667 shares of common stock to certain employees, officers and board of directors of the Company. The Company’s condensed consolidated statements of operations for the three and six month periods ended October 31, 2015 includes approximately $22,000 and $185,000 of stock-based compensation expense, respectively. The three and six month periods ended October 31, 2014 includes approximately $5,000 and $9,000 of stock-based compensation expense, respectively. As of October 31, 2015, there was approximately $34,000 of total unrecognized compensation costs related to stock options. These costs are expected to be recognized over a weighted average period of approximately twenty-two months.

 

The fair value of each stock option granted during the six months ended October 31, 2015 is estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions:

 

  Three months ended
October 31, 2015
  Six months ended
October 31, 2015
Expected term (years) 3.0   2.5-3.0
Expected volatility 80%   79%-80%
Dividend yield 0   0
Risk-free interest rate 1.01%   .90% -1.01%
Weighted average per share grant date fair value $0.78   $0.78 - $1.03

 

The Company calculated stock-based compensation expense using a 5% forfeiture rate. There were no stock options granted during the three and six months ended October 31, 2014.

 

A summary of option activity for the six months ended October 31, 2015 is as follows:

 

   Shares   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life
   Aggregate
intrinsic
value (1)
 
                 
Balance May 1, 2015   125,746   $8.48    3.59   $ 
                     
Granted   238,667   $1.63    6.49   $ 
Expired   36,996   $12.71         
Balance October 31, 2015   327,414   $3.01    3.34   $ 
Exercisable October 31, 2015   279,414   $3.27    3.09   $ 
Expected to vest October 31, 2015   327,414   $3.01    3.34   $ 

 

(1)This amount represents the difference between the exercise price and $1.11, the closing price of Dataram common stock on October 31, 2015 as reported on the NASDAQ Stock Market, for all in-the-money options outstanding and all the in-the-money shares exercisable

 

b. Other Stock Options

 

On June 30, 2008, the Company granted options to purchase 8,333 shares of the Company’s common stock to a privately held company in exchange for certain patents and other intellectual property. The options granted are exercisable at a price of $15.60 per share, which was the fair value at the date of grant, were 100% exercisable on the date of grant and expire ten years after the date of grant.

 

Warrants

 

At October 31, 2015 the Company had 3,358,275 warrants outstanding with exercise prices between $2.00 and $13.56. A summary of warrant activity for the six months ended October 31, 2015 is as follows:

 

   Shares   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life years
   Aggregate
intrinsic
value (1)
 
                 
Balance May 1, 2015   3,308,275   $3.52         
                     
Issued   50,000   $2.50         
Balance October 31, 2015   3,358,275   $3.51         

 

(1)This amount represents the difference between the conversion price and $1.11, the closing price of Dataram common stock on October 31, 2015 as reported on the NASDAQ Stock Market, for all in-the-money warrants outstanding.

 

v3.3.1.900
Commitments and Contingencies
6 Months Ended
Oct. 31, 2015
Leases [Abstract]  
Commitments and Contingencies

Note 6: Commitments and Contingencies

 

Leases

 

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of October 31, 2015 are as follows:

 

    Non-Related     Related        
    Party     Party     Total  
Year ending April 30:                        
2016 remaining     80,000       45,000       125,000  
2017     82,000       90,000       172,000  
2018     84,000       90,000       174,000  
2019     85,000       45,000       130,000  
2020     86,000             86,000  
 Thereafter                        
Total   $ 417,000     $ 270,000     $ 687,000  

 

Legal Proceedings

 

Dataram is party to certain legal proceedings noted herein. They are as follows:

 

Effective as of the close of business on December 17, 2014, the Company terminated its agreement with MPP Associates, Inc., pursuant to which Marc P. Palker had been providing CFO services to the Company. On April 8, 2015, MPP Associates, Inc. and Mr. Palker filed a complaint, styled MPP Associates, Inc. and Marc Palker v. Dataram Corporation, Jon Isaac, David Moylan, Michael Markulec and Richard Butler, in the Superior Court of the State of New Jersey, Essex County, Docket No. ESX-L-002413-15.

 

Effective as of the close of business on January 22, 2015, the Company terminated the employment agreement with John H. Freeman, its former Chief Executive Officer. On April 9, 2015, Mr. Freeman filed a complaint, styled John Freeman v. Dataram Corporation, David A. Moylan, Jon Isaac, and John Does 1-5, in the Superior Court of the State of New Jersey, Essex County, Docket No. ESX-L-002471-15.

 

Similarly, on April 10, 2015, the Company filed an action against Mr. Freeman, Mr. Palker and MPP Associates, Inc., styled as Dataram Corporation v. John Freeman, Marc Palker and MPP Associates, Inc., in the Superior Court of the State of New Jersey, Mercer County, Docket No. ESX-L-000886-15.

 

The aforementioned three State Court actions described have been consolidated in Essex County.

 

On March 9, 2015, Marc Palker filed a complaint against the Company with the U.S. Department of Labor, Occupational Safety and Health Administration, alleging a violation of the Sarbanes-Oxley Act of 2002.

 

On June 26, 2015, Alethea Douglas, a former employee, filed a complaint against the Company with the U.S. Equal Employment Opportunity Commission, alleging a claim for age discrimination in connection with the termination of her employment effective May 20, 2015.

 

A range of loss, if any, on the aforementioned matters cannot be estimated at this point in time.

v3.3.1.900
Financial Information by Geographic Location
6 Months Ended
Oct. 31, 2015
Segment Reporting [Abstract]  
Financial Information by Geographic Location

Note 7: Financial Information by Geographic Location

 

The Company currently operates in one business segment that develops, manufactures and markets a variety of memory systems for use with network servers and workstations which are manufactured by various companies. Revenues for the three and six months ended October 31, 2015 and 2014 by geographic region are as follows:

 

   Three months
ended
October 31,
2015
   Six months
ended
October 31,
2015
 
   Approximate ($)   Approximate ($) 
United States  $5,108,000   $11,220,000 
Europe   879,000    1,995,000 
Other (principally Asia Pacific Region)   64,000    173,000 
Consolidated  $6,051,000   $13,388,000 

 

   Three months
ended
October 31,
2014
   Six months
ended
October 31,
2014
 
   Approximate ($)   Approximate ($) 
United States  $5,699,000   $12,330,000 
Europe   1,059,000    1,998,000 
Other (principally Asia Pacific Region)   122,000    277,000 
Consolidated  $6,880,000   $14,605,000 

 

v3.3.1.900
Concentration of Credit Risk
6 Months Ended
Oct. 31, 2015
Notes to Financial Statements  
Concentration of Credit Risk

Note 8: Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, and trade receivables. The Company maintains its cash and cash equivalents in financial institutions and brokerage accounts. To the extent that such deposits exceed the maximum insurance levels, they are uninsured. In regard to trade receivables, the Company performs ongoing evaluations of its customers' financial condition as well as general economic conditions and, generally, requires no collateral from its customers.

v3.3.1.900
Subsequent Events
6 Months Ended
Oct. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events

Note 9: Subsequent Events

 

In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of the NJ State tax benefit associated with its State of New Jersey specific Net Operating Losses (NOLs) for which the Company has received approval from the state of NJ.  The Company executed a contract of sale and received proceeds of approximately $190,000 on December 9, 2015.

v3.3.1.900
Description of Business and Significant Accounting Policies (Policies)
6 Months Ended
Oct. 31, 2015
Accounting Policies [Abstract]  
Liquidity and Going Concern

Liquidity and Going Concern

 

At October 31, 2015, the Company had cash and cash equivalents of approximately $617,000 and a working capital of approximately $1.48 million. During the six month period ended October 31, 2015, the Company incurred a net loss of approximately $97,000 and included approximately $272,000 of stock based compensation expense. As of October 31, 2015, the Company also had an accumulated deficit of approximately $24.6 million. The Company has primarily financed operations through the sale of equity securities and debt securities.

 

In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of the NJ State tax benefit associated with its State of New Jersey specific Net Operating Losses (NOLs) for which the Company has received approval from the state of NJ.  The Company executed a contract of sale and received proceeds of approximately $190,000 on December 9, 2015.

 

While the Company has made significant financial and operational changes in the last nine months, there remains substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

If current and projected revenue growth does not meet estimates, the Company may continue to choose to raise additional capital through debt and/or equity transactions, reduce certain overhead costs through the deferral of salaries and other means, or settle liabilities through negotiation. Currently, the Company does not have any commitments or assurances for additional capital, nor can the Company provide assurance that such financing will be available to it on favorable terms, or at all.

Basis of Presentation

Basis of Presentation

 

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of October 31, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended October 31, 2015 are not necessarily indicative of the operating results for the full fiscal year for any future period.

 

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2015. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended April 30, 2015, and updated, as necessary, in this Quarterly Report on Form 10-Q.

Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including deferred tax asset valuation allowances and certain other reserves and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Some of the more significant estimates made by management include allowance for doubtful accounts and sales returns, reserve for inventory obsolescence, deferred income tax asset and related valuation allowance, fair value of certain financial instruments and other operating allowances and accruals. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

 

Revenue is recognized when title passes upon shipment of goods to customers. The Company’s revenue earning activities involve delivering or producing goods. The following criteria are met before revenue is recognized: persuasive evidence of an arrangement exists, shipment has occurred, selling price is fixed or determinable and collection is reasonably assured. The Company does experience a minimal level of sales returns and allowances for which the Company accrues a reserve at the time of sale. Estimated warranty costs are accrued by management upon product shipment based on an estimate of future warranty claims.

Net loss per share

Net Loss per Share

 

Basic net loss per share is computed by dividing the net loss available to common stock holders by the weighted average number of shares of common stock issued and outstanding during the period. The calculation of diluted loss per share for the three and six months ended October 31, 2015 and 2014 includes only the weighted average number of shares of common stock outstanding. The denominator excludes the dilutive effect of common shares issuable upon exercise or conversion of stock options, warrants, convertible notes and Series A preferred shares as their effect would be anti-dilutive.

 

Anti-dilutive securities consisted of the following at October 31:

 

   2015   2014 
Common stock equivalent of convertible notes   300,000    240,000 
Common stock equivalent of convertible notes – related parties   27,210    51,020 
Series A preferred shares   2,838,207     
Warrants   3,358,275    1,385,775 
Common shares reserved for series A preferred share dividends   46,785      
Stock options   335,747    256,580 
Total   6,906,224    1,933,375 
Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”.  The purpose of this new standard is to clarify the principles for recognizing revenue so that it can be applied consistently across various transactions, industries and capital markets.  We have not completed our assessment of ASU No. 2014-09.

 

The Company has evaluated the other recent accounting pronouncements through ASU 2015-17 and believe that none of them will have a material effect on its condensed consolidated financial statements.

v3.3.1.900
Description of Business and Significant Accounting Policies (Tables)
6 Months Ended
Oct. 31, 2015
Accounting Policies [Abstract]  
Anti-dilutive securities
   2015   2014 
Common stock equivalent of convertible notes   300,000    240,000 
Common stock equivalent of convertible notes – related parties   27,210    51,020 
Series A preferred shares   2,838,207     
Warrants   3,358,275    1,385,775 
Common shares reserved for series A preferred share dividends   46,785      
Stock options   335,747    256,580 
Total   6,906,224    1,933,375 
v3.3.1.900
Stockholders' Equity (Tables)
6 Months Ended
Oct. 31, 2015
Stockholders Equity Tables  
Fair value of stock options granted
  Three months ended
October 31, 2015
  Six months ended
October 31, 2015
Expected term (years) 3.0   2.5-3.0
Expected volatility 80%   79%-80%
Dividend yield 0   0
Risk-free interest rate 1.01%   .90% -1.01%
Weighted average per share grant date fair value $0.78   $0.78 - $1.03
Summary of option activity
   Shares   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life
   Aggregate
intrinsic
value (1)
 
                 
Balance May 1, 2015   125,746   $8.48    3.59   $ 
                     
Granted   238,667   $1.63    6.49   $ 
Expired   36,996   $12.71         
Balance October 31, 2015   327,414   $3.01    3.34   $ 
Exercisable October 31, 2015   279,414   $3.27    3.09   $ 
Expected to vest October 31, 2015   327,414   $3.01    3.34   $ 
Warrants
   Shares   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life years
   Aggregate
intrinsic
value (1)
 
                 
Balance May 1, 2015   3,308,275   $3.52         
                     
Issued   50,000   $2.50         
Balance October 31, 2015   3,358,275   $3.51         
v3.3.1.900
Contractual Obligations - Future Minimum Lease Payments (Tables)
6 Months Ended
Oct. 31, 2015
Leases [Abstract]  
Schedule of Future Minimum Lease Payments for Operating Leases
    Non-Related     Related        
    Party     Party     Total  
Year ending April 30:                        
2016 remaining     80,000       45,000       125,000  
2017     82,000       90,000       172,000  
2018     84,000       90,000       174,000  
2019     85,000       45,000       130,000  
2020     86,000             86,000  
 Thereafter                        
Total   $ 417,000     $ 270,000     $ 687,000  
v3.3.1.900
Financial Information by Geographic Location (Tables)
6 Months Ended
Oct. 31, 2015
Segment Reporting [Abstract]  
Revenue by geographic location
   Three months
ended
October 31,
2015
   Six months
ended
October 31,
2015
 
   Approximate ($)   Approximate ($) 
United States  $5,108,000   $11,220,000 
Europe   879,000    1,995,000 
Other (principally Asia Pacific Region)   64,000    173,000 
Consolidated  $6,051,000   $13,388,000 

 

   Three months
ended
October 31,
2014
   Six months
ended
October 31,
2014
 
   Approximate ($)   Approximate ($) 
United States  $5,699,000   $12,330,000 
Europe   1,059,000    1,998,000 
Other (principally Asia Pacific Region)   122,000    277,000 
Consolidated  $6,880,000   $14,605,000 
v3.3.1.900
Basis of Presentation and Summary of Significant Accounting Policies - Net loss per share - Anti-dilutive securities (Details) - shares
6 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Anti-dilutive securities 6,906,224 1,933,375
Common stock equivalent of convertible notes    
Anti-dilutive securities 300,000 240,000
Common stock equivalent of convertible notes - related parties    
Anti-dilutive securities 27,210 51,020
Series A preferred shares    
Anti-dilutive securities 2,838,207
Warrant    
Anti-dilutive securities 3,358,275 1,385,775
Common shares reserved for series A preferred share dividends    
Anti-dilutive securities 46,785
Stock options    
Anti-dilutive securities 335,747 265,580
v3.3.1.900
Related Party Transactions (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Dec. 15, 2015
Nov. 30, 2013
Oct. 31, 2015
Oct. 31, 2014
Oct. 31, 2015
Oct. 31, 2014
Apr. 30, 2015
Nov. 06, 2013
Related Party Transactions (Textual) [Abstract]                
Sale leaseback, gain on sale of assets         $ (35,832) $ (35,831)    
Sale leaseback, portion of deferred gain in accrued liabilities     $ 174,752   174,752   $ 282,284  
Sale leaseback, portion of deferred gain in other long term liabilities     143,331   $ 143,331   179,163  
Leaseback Agreement with Mr. Sheerr                
Related Party Transactions (Textual) [Abstract]                
Sale-leaseback transaction date         October 31, 2013      
Sale leaseback transaction, lease terms         The Company entered into an agreement with Mr. Sheerr to leaseback the equipment and furniture that was sold to Mr. Sheerr on October 31, 2013. The lease is for a term of 60 months and the Company is obligated to pay approximately $7,500 per month for the term of the lease. The Company has an option to extend the lease for an additional two year period.      
Sale leaseback transaction, value     500,000   $ 500,000      
Sale leaseback, monthly rental payments         7,500      
Sale leaseback, gain on sale of assets         139,000      
Sale leaseback, deferred gain     322,000   322,000      
Sale leaseback, portion of deferred gain in accrued liabilities     72,000   72,000   72,000  
Sale leaseback, portion of deferred gain in other long term liabilities     143,000   143,000   179,000  
Sheerr Memory, LLC                
Related Party Transactions (Textual) [Abstract]                
Purchase of inventories for resale $ 20,000   165,000 $ 299,000 289,000 773,000    
Accounts payable     12,000   $ 12,000   15,000  
Creditor trade cycle term         30 days      
Keystone Memory Group                
Related Party Transactions (Textual) [Abstract]                
Purchase of inventories for resale $ 161,000   25,000 $ 270,000 $ 658,000 $ 526,000    
Accounts payable     37,000   37,000   $ 27,000  
Rosenthal & Rosental, Inc. | Revolving Credit Line                
Related Party Transactions (Textual) [Abstract]                
Formula-based secured debt financing capacity               $ 3,500,000
Maturity date   Nov. 30, 2016            
Borrowings, collateral, description   Borrowings under the Financing Agreement are collateralized by substantially all the assets of the Company.            
Interest rate, description   Prime Rate (as defined in the Financing Agreement) plus 3.25% (the "Effective Rate") or on Over-advances (as defined in the Financing Agreement), if any, at a rate of the Effective Rate plus 3%.            
Credit facility, description   The Company's financing agreement (the “Financing Agreement”) with Rosenthal & Rosenthal, Inc. provides for a revolving loan with a maximum borrowing capacity of $3,500,000. The Company requested and received a waiver of compliance with respect to certain provisions of the Financing Agreement in connection certain Bridge Notes issued July 2014. The Financing Agreement provides for advances against eligible accounts receivable and inventory balances based on prescribed formulas of raw materials and finished goods.            
Credit facility, covenant terms   The Financing Agreement contains other financial and restrictive covenants, including, among others, covenants limiting the Company’s ability to incur indebtedness, guarantee obligations, sell assets, make loans, enter into mergers and acquisition transactions and declare or make dividends.            
Additional availability under the terms of the agreement     $ 18,000   $ 18,000      
v3.3.1.900
Convertible Notes Payable (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Jul. 31, 2014
Oct. 31, 2015
Oct. 31, 2014
Short-term Debt [Line Items]          
Risk-free interest rate 1.01%        
Expected volatility 80.00%        
Expected dividend rate 0.00%     0.00%  
Securities Purchase Agreement | Bridge Notes and Bridge Warrants          
Short-term Debt [Line Items]          
Bridge loan     $ 750,000    
Bridge loan, issuance date     Jul. 15, 2014    
Bridge loan, maturity date   Jan. 15, 2016 Oct. 15, 2014    
Bridge loan, conversion description   The sale of shares of its Series A Stock resulted in the reduction of the conversion price of the Bridge Notes held by the institutional investors to $2.00 from $2.50 to equal the conversion price of the Series A Preferred Stock. The initial conversion price for Institutional Investors is $2.50 per share (which was subsequently reduced), and the initial conversion price for Management is equal to the closing price of the Company’s common stock on the closing date of the Purchase Agreement, $2.94.    
Bridge loan, interest rate     8.00%    
Sale of Series A preferred stock   600,000     600,000
Description of period for exercisability of warrants     The Bridge Warrants are exercisable for five years after the closing date of the Purchase Agreement, or July 15, 2019. For each $1,000 of principal amount of Bridge Notes, the holder received 1,200 Bridge Warrants, each exercisable for the purchase of one share of the Company’s common stock. Each holder is entitled to exercise one-third of all Bridge Warrants received at an exercise price of $3.00, one-third of all Bridge Warrants received at an exercise price of $3.50, and one-third of all Bridge Warrants received at an exercise price that is equal to the closing price on the closing date of the Purchase Agreement, $2.94.    
Bridge loan, repayment of debt       $ 70,000  
Bridge loan, amount of default $ 80,000     $ 80,000  
Bridge loan, description of notice of default       The Company advised Rosenthal and Rosenthal, Inc. of the default on a certain Bridge Note which is a default under our finance agreement and received a waiver of compliance.  
Risk-free interest rate       1.26%  
Expected volatility       100.00%  
Expected dividend rate       0.00%  
Discount on notes payable, warrants   $ 562,000     $ 562,000
Beneficial conversion feature   188,000      
Non-cash interest charge   $ 617,000     $ 750,000
v3.3.1.900
Stockholders' Equity - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - $ / shares
3 Months Ended 6 Months Ended
Oct. 31, 2015
Oct. 31, 2015
Expected term (years) 3 years  
Expected volatility 80.00%  
Expected volatility, minimum   79.00%
Expected volatility, maximum   80.00%
Dividend yield 0.00% 0.00%
Risk-free interest rate 1.01%  
Risk-free interest rate, minimum   0.90%
Risk-free interest rate, maximum   1.01%
Weighted average per share grant date fair value $ 0.78  
Minimum    
Expected term (years)   2 years 6 months
Weighted average per share grant date fair value   $ 0.78
Maximum    
Expected term (years)   3 years
Weighted average per share grant date fair value   $ 1.03
v3.3.1.900
Stockholders' Equity - Schedule of Share-based Compensation, Stock Options, Activity (Details)
6 Months Ended
Oct. 31, 2015
USD ($)
$ / shares
shares
Share-Based Compensation Arrangement By Share-Based Payment Award Options Outstanding  
Shares outstanding, beginning of period | shares 125,746
Shares granted | shares 238,667
Shares expired | shares 36,996
Shares outstanding at end of period | shares 327,414
Shares exercisable at end of period | shares 279,414
Shares expected to vest at end of period | shares 327,414
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]  
Weighted average exercise price outstanding at beginning of period | $ / shares $ 8.48
Weighted average exercise price granted | $ / shares 1.63
Weighted average exercise price expired | $ / shares 12.71
Weighted average exercise price outstanding at end of period | $ / shares 3.01
Weighted average exercise price exercisable at end of period | $ / shares 3.27
Weighted average exercise price expected to vest at end of period | $ / shares $ 3.01
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]  
Weighted average remaining contractual life outstanding at beginning of period 3 years 7 months
Weighted average remaining contractual life granted 6 years 6 months
Weighted average remaining contractual life outstanding at end of period 3 years 4 months
Weighted average remaining contractual life exercisable at end of period 3 years 1 month
Weighted average remaining contractual life expected to vest at end of period 3 years 4 months
Aggregate intrinsic value outstanding at beginning of period | $ [1]
Aggregate intrinsic value outstanding at end of period | $ [1]
Aggregate intrinsic value exercisable at end of period | $ [1]
Aggregate intrinsic value expected to vest at end of period | $ [1]
[1] This amount represents the difference between the exercise price and $1.11, the closing price of Dataram common stock on October 31, 2015 as reported on the NASDAQ Stock Market, for all in-the-money options outstanding and all the in-the-money shares exercisable.
v3.3.1.900
Stockholders' Equity - Schedule of Stockholders' Equity Note, Warrants or Rights (Details)
6 Months Ended
Oct. 31, 2015
USD ($)
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Number of Warrants  
Warrants outstanding, beginning of period | shares 3,308,275
Warrants, issued | shares 50,000
Warrants outstanding, end of period | shares 3,358,275
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Grant Date Fair Value  
Warrants, weighted average exercise price outstanding, beginning of period | $ / shares $ 3.52
Warrants, weighted average exercise price, issued | $ / shares 2.50
Warrants, weighted average exercise price outstanding, end of period | $ / shares $ 3.51
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures  
Warrants, weighted average remaining contractual term, beginning of period 0 years
Warrants, weighted average remaining contractual terms, issued 0 years
Warrants, weighted average remaining contractual term, end of period 0 years
Warrants, aggregate intrinsic value, outstanding, beginning of period | $ [1]
Warrants, aggregate intrinsic value, issued | $ [1]
Warrants, aggregate intrinsic value, outstanding, end of period | $ [1]
[1] This amount represents the difference between the conversion price and $1.11, the closing price of Dataram common stock on October 31, 2015 as reported on the NASDAQ Stock Market, for all in-the-money warrants outstanding.
v3.3.1.900
Stockholders' Equity (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Feb. 28, 2015
Jun. 30, 2008
Oct. 31, 2015
Jul. 29, 2015
Oct. 31, 2014
Oct. 31, 2015
Oct. 31, 2014
Stockholders' Equity              
Stock options granted, term           3 years 1 month  
Warrants              
Stockholders' Equity              
Stock warrants outstanding     3,358,275     3,358,275  
Warrants | Minimum              
Stockholders' Equity              
Exercise price of warrants     $ 2.00     $ 2.00  
Warrants | Maximum              
Stockholders' Equity              
Exercise price of warrants     $ 13.56     $ 13.56  
Stock-Based Compensation              
Stockholders' Equity              
Stock options granted     72,000     238,667  
Stock based compensation expense     $ 22,000   $ 5,000 $ 185,000 $ 9,000
Unrecognized compensation expense     $ 34,000     $ 34,000  
Unrecognized compensation expense, period for recognition           22 months  
Stock Options              
Stockholders' Equity              
Stock options granted   8,333          
Stock options granted, fair value at date of grant   $ 15.60          
Stock options granted, term   10 years          
Chief Executive Officer              
Stockholders' Equity              
Common shares surrendered           7,265  
Securities Purchase Agreement | Accredited Investors              
Stockholders' Equity              
Shares of stock sold       500,000      
Sale of stock, price per share       $ 1.00      
Sale of stock, value       $ 500,000      
Restricted stock issued, shares     25,000     54,667  
Restricted stock issued, value     $ 38,000     $ 88,000  
Preferred stock, call features           In September 2015, as a condition of the sale of the approximately 400,000 remaining shares of Series A Stock held by Isaac Capital Group to a group of independent accredited investors, all the residual call options were removed from the Preferred Series A Stock Purchase Agreements.  
Private Placement              
Stockholders' Equity              
Series A preferred stock converted           102,000  
Common stock issued upon conversion of Series A preferred stock           510,000  
Reduction of preferred stock upon conversion, value           $ 302,000  
Adjustment to additional paid in capital upon redemption of preferred stock           $ 208,000  
Series A preferred stock and warrants issued     20,000     20,000  
Proceeds from issuance of Series A preferred stock and warrants           $ 100,000  
Private placement, description On November 12, 2014 and February 2, 2015, the Company completed a private placement of an aggregate of 626,600 shares of its Series A Preferred Stock (“Series A Stock”) together with warrants to purchase shares of its common stock (“Preferred Warrant”) at a price of $5.00 per share, in accordance with the Series A Preferred Stock Purchase Agreement dated October 20, 2014 (the “Purchase Agreement”). From the date of respective closings and prior to October 20, 2019 (the “Put/Call Exercise Period”), the investors may exercise a right to purchase and require the Company to sell up to an additional 673,400 shares of Series A Stock. If the investors have not exercised this right during the Put/Call Exercise Period, the Company may exercise a right to cause and require the investors to purchase up to an additional 673,400 shares of Series A Stock, for an aggregate purchase price of $3,367,000. In September 2015, all the residual call options were removed from the Preferred Series A Stock Purchase Agreements.            
Private placement, conversion terms Holders of the Series A Stock shall initially have the right to convert such shares of Series A Stock into the number of authorized but previously unissued shares of the Company’s common stock obtained by dividing the stated value of each share of Series A ($5.00) by $2.00. For each share of Series A Stock, the investors will receive 2.5 Preferred Warrants to purchase the Company’s common stock at an exercise price of $2.50 per share. The Preferred Warrants are exercisable immediately for a period of five years from the date of closing. The exercise price of the Preferred Warrants is subject to adjustments in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The exercisability of the Preferred Warrants may be limited if upon exercise, the warrant holder or any of its affiliates would beneficially own more than 4.99% of the Company’s Common Stock.            
Private placement preferred shares issued 626,600            
Proceeds from issuance of private placement $ 2,833,000            
Preferred stock, dividend rate, percentage 8.00%            
Preferred stock, dividend rate, per share dollar amount $ 0.40            
Preferred stock, dividends recorded     $ 59,000     $ 122,000  
Common stock issued for accumulated dividends     92,456        
Accumulated dividends, settled through issuance of stock     $ 174,000        
Adjustment to additional paid in capital, settlement of dividends     $ 82,000        
Price per share $ 5.00            
v3.3.1.900
Commitments and Contingencies - Future Minimum Lease Payments (Details)
Oct. 31, 2015
USD ($)
For fiscal year:  
2016 remaining $ 125,000
2017 172,000
2018 174,000
2019 130,000
2020 86,000
Total 687,000
Non-Related Party  
For fiscal year:  
2016 remaining 80,000
2017 82,000
2018 84,000
2019 85,000
2020 86,000
Total 417,000
Related Party  
For fiscal year:  
2016 remaining 45,000
2017 90,000
2018 90,000
2019 $ 45,000
2020
Total $ 270,000
v3.3.1.900
Commitments and Contingencies (Details Narrative)
6 Months Ended
Oct. 31, 2015
Legal Proceeding MPP Associates and Marc Palker v Dataram  
Lawsuit Filing Date April 8, 2015
Plaintiff MPP Associates, Inc. and Marc P. Palker
Defendant Dataram Corporation, Jon Isaac, David Moylan, Michael Markulec and Richard Butler
Domicile Superior Court of the State of New Jersey, Essex County
Legal Proceeding John Freeman v Dataram  
Lawsuit Filing Date April 9, 2015
Plaintiff John H. Freeman
Defendant Dataram Corporation, David A. Moylan, Jon Isaac, and John Does 1-5
Domicile Superior Court of the State of New Jersey, Essex County
Legal Proceeding Dataram v John Freeman, Marc Palker and MPP Associates, Inc.  
Lawsuit Filing Date April 10, 2015
Plaintiff Dataram
Defendant John Freeman, Marc Palker and MPP Associates, Inc.
Domicile Superior Court of the State of New Jersey, Essex County
Legal Proceeding Marc Palker complaint  
Lawsuit Filing Date March 9, 2015
Plaintiff Marc Palker
Defendant Dataram Corporation
Domicile U.S. Department of Labor, Occupational Safety and Health Administration
Allegations violation of the Sarbanes-Oxley Act of 2002
Legal Proceeding Alethea Douglas complaint  
Lawsuit Filing Date June 26, 2015
Plaintiff Alethea Douglas
Defendant Dataram Corporation
Domicile U.S. Equal Employment Opportunity Commission
Allegations a claim for age discrimination in connection with the termination of her employment effective May 20, 2015
v3.3.1.900
Financial Information by Geographic Location (Details) - USD ($)
3 Months Ended 6 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Oct. 31, 2015
Oct. 31, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]        
Revenues by geographic location $ 6,050,772 $ 6,879,716 $ 13,388,454 $ 14,604,753
United States        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Revenues by geographic location 5,108,000 5,699,000 11,220,000 12,330,000
Europe        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Revenues by geographic location 879,000 1,059,000 1,995,000 1,998,000
Other (principally Asia Pacific Region)        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Revenues by geographic location $ 64,000 $ 122,000 $ 173,000 $ 277,000
v3.3.1.900
Subsequent Events (Details Narrative)
Dec. 09, 2015
Subsequent Event  
Subsequent Event [Line Items]  
Subsequent event In May 2015, Dataram filed an application with the state of New Jersey (NJ) for the transfer of its NJ Net Operating Losses (NOLs).  On October 26, 2015 the Company received approval to sell the NOL’s, the Company executed a contract of sale and recorded the gain of approximately $190,000. On December 9, 2015 the Company received full payment of approximately $190,000.
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/**
 * Rivet Software Inc.
 *
 * @copyright Copyright (c) 2006-2011 Rivet Software, Inc. All rights reserved.
 * Version 2.4.0.3
 *
 */

var Show = {};
Show.LastAR = null,

Show.hideAR = function(){	
	Show.LastAR.style.display = 'none';
};

Show.showAR = function ( link, id, win ){
	if( Show.LastAR ){
		Show.hideAR();
	}
		
	var ref = link;
	do {
		ref = ref.nextSibling;
	} while (ref && ref.nodeName != 'TABLE');

	if (!ref || ref.nodeName != 'TABLE') {
		var tmp = win ?
			win.document.getElementById(id) :
			document.getElementById(id);

		if( tmp ){
			ref = tmp.cloneNode(true);
			ref.id = '';
			link.parentNode.appendChild(ref);
		}
	}

	if( ref ){
		ref.style.display = 'block';
		Show.LastAR = ref;
	}
};
	
Show.toggleNext = function( link ){
	var ref = link;
	
	do{
		ref = ref.nextSibling;	
	}while( ref.nodeName != 'DIV' );

	if( ref.style &&
		ref.style.display &&
		ref.style.display == 'none' ){
		ref.style.display = 'block';

		if( link.textContent ){
			link.textContent = link.textContent.replace( '+', '-' );
		}else{
			link.innerText = link.innerText.replace( '+', '-' );
		}
	}else{
		ref.style.display = 'none';
			
		if( link.textContent ){
			link.textContent = link.textContent.replace( '-', '+' );
		}else{
			link.innerText = link.innerText.replace( '-', '+' );
		}
	}
};

/* Updated 2009-11-04 */
/* v2.2.0.24 */

/* DefRef Styles */
.report table.authRefData{
	background-color: #def;
	border: 2px solid #2F4497;
	font-size: 1em; 
	position: absolute;
}

.report table.authRefData a {
	display: block;
	font-weight: bold;
}

.report table.authRefData p {
	margin-top: 0px;
}

.report table.authRefData .hide {
	background-color: #2F4497;
	padding: 1px 3px 0px 0px;
	text-align: right;
}

.report table.authRefData .hide a:hover {
	background-color: #2F4497;
}

.report table.authRefData .body {
	height: 150px;
	overflow: auto;
	width: 400px;
}

.report table.authRefData table{
	font-size: 1em;
}

/* Report Styles */
.pl a, .pl a:visited {
	color: black;
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