CAPITAL STOCK

9 Months Ended

Apr. 30, 2015

CAPITAL STOCK [Text Block]

NOTE 10: CAPITAL STOCK

Capital Stock

At April 30, 2015, the Company’s capital stock was 750,000,000 authorized shares of common stock with a par value of $0.001 per share.

The Company previously filed a Form S-3 “Shelf” Registration Statement effective September 2, 2011 (the “2011 Shelf”) providing for the public offer and sale of certain securities of the Company from time to time, at its discretion, up to an aggregate amount of $50 million of which a total of $34.4 million was utilized through public offers and sales of shares and units. The Company filed a further registration statement effective December 31, 2013 providing for the public offer and sale of certain securities of the Company representing an additional 20%, or $3.1 million, of the then remaining $15.6 million available under the 2011 Shelf, which increased the remaining amount available under the 2011 Shelf to $18.7 million.

The Company filed a prospectus supplement to the 2011 Shelf, providing for the public offer and sale of the Company’s shares having an aggregate offering price of up to $18.7 million through one or more “at-the-market” offerings (the “ATM Offering”) pursuant to a Controlled Equity Offering ^SM Sales Agreement effective December 31, 2013 between Cantor Fitzgerald & Co., as sales agent, and the Company. During the nine months ended April 30, 2015, the Company completed a public offer and sale of 280,045 shares of the Company at a price of $1.70 per share for gross proceeds of $474,788 under the ATM Offering, with transaction costs of $289,870 relating to the 2011 Shelf and ATM Offering previously included in prepaid expenses and deposits charged to additional paid-in capital as corresponding share issuance costs.

The 2011 Shelf expired on September 2, 2014. As a result, no further public offer and sale of the Company’s shares may be completed through the ATM Offering under the 2011 Shelf.

During Fiscal 2014, the Company filed a second Form S-3 “Shelf” Registration Statement effective January 10, 2014 providing for the public offer and sale of certain securities of the Company from time to time, at its discretion, up to an aggregate offering of $100 million.

Share Transactions

Period / Description	Common		Value per Share				Issuance
	Shares Issued		Low		High		Value
Balance, July 31, 2014	90,966,558
Equity Financing	280,045	$	1.70	$	1.70	$	175,423
Consulting Services	254,171		1.07		1.63		330,330
Options Exercised	28,937		0.33		0.33		9,550
Balance, October 31, 2014	91,529,711
Consulting Services	309,898		1.09		1.90		547,095
Options Exercised (1)	52,011		0.33		0.45		10,999
Balance, January 31, 2015	91,891,620
Consulting Services	327,204		1.40		2.40		502,854
Options Exercised (2)	215,600		0.33		1.32		4,000
Balance, April 30, 2015	92,434,424

(1)	Options to purchase 25,000 shares were exercised on a cashless basis resulting in the issuance of a net 18,679 shares; and
(2)	Options to purchase 492,500 shares were exercised on a cashless basis resulting in the issuance of a net 203,479 shares.

Share Purchase Warrants

A summary of share purchase warrants outstanding and exercisable at April 30, 2015 is presented below:

	Weighted	Number of Warrants Outstanding		Weighted Average
	Average		Expiry Date	Remaining Contractual
	Exercise Price			Life (Years)
$	1.00	500,000	March 1, 2016	0.84
	1.95	50,000	June 3, 2016	1.10
	2.50	2,600,000	July 30, 2018	3.25
	2.60	1,859,524	October 23, 2016	1.48
$	2.38	5,009,524		2.33

Stock Options

At April 30, 2015, the Company had one stock option plan, the 2014 Stock Incentive Plan (the “2014 Plan”). The 2014 Plan provides for 7,500,000 shares of the Company that may be issued pursuant to awards that may be granted and an additional 7,958,941 shares of the Company that may be issued pursuant to stock options previously granted under the Company’s prior 2013 Stock Incentive Plan. The 2014 Plan supersedes and replaces the Company’s prior 2013 Stock Incentive Plan, which superseded and replaced the Company’s prior 2009 and 2006 Stock Option Plans, such that no further shares are issuable under these prior plans.

In September 2014, the Company granted stock options under the 2014 Plan to the Company’s directors, officers, employees and consultants to purchase a total of 7,540,000 shares of the Company exercisable at a price of $1.32 per share over a five-year term. These stock options are subject to an 18-month vesting provision whereby at the end of each of the first three, six, 12 and 18 months after the grant date, 25% of the total stock option grant becomes exercisable.

These stock options have a five-year contractual term, which is significantly different from the 10-year contractual term generally applicable to stock options previously granted by the Company. Since no relevant historical information was available to provide a reasonable basis in estimating the expected life, the Company adopted the simplified method, being the mid-point of the average vesting date and the end of the contractual term, to estimate the expected life for these stock options.

A summary of stock options granted by the Company during the nine months ended April 30, 2015, including corresponding grant date fair values and assumptions using the Black Scholes option pricing model, is presented below:

	Options		Exercise	Term			Expected	Risk-Free	Dividend	Expected
Date	Issued		Price	(Years)		Fair Value	Life (Years)	Interest Rate	Yield	Volatility
September 3, 2014	7,540,000	$	1.32	5	$	3,750,388	2.90	0.94%	0.00%	56.28%
January 19, 2015	50,000		1.20	5		25,430	2.90	0.77%	0.00%	64.54%
February 10, 2015	50,000		1.31	5		28,714	2.90	1.01%	0.00%	66.72%
Total	7,640,000				$	3,804,532

In December 2014, the Company cancelled certain stock options previously granted to the Company’s directors, officers, employees and consultants to purchase a total of 4,294,000 shares of the Company exercisable at prices ranging from $2.25 to $5.65 per share with original contractual terms of ten years.

A continuity schedule of outstanding stock options for the underlying common shares for the nine months ended April 30, 2015 is presented below:

	Number of Stock Options			Weighted Average Exercise Price	Weighted Average
					Remaining Contractual
					Term (Years)
Balance, July 31, 2014	7,987,214		$	2.10	4.97
Issued	7,540,000			1.32	4.84
Exercised	(28,937	)		0.33	1.28
Forfeited	(58,750	)		2.82	7.26
Balance, October 31, 2014	15,439,527			1.72	4.78
Issued	50,000			1.20	4.97
Exercised	(58,332	)		0.38	1.45
Expired	(487	)		5.13	-
Forfeited	(67,500	)		2.25	5.28
Cancelled	(4,294,000	)		2.59	5.59
Balance, January 31, 2015	11,069,208			1.39	4.16
Issued	50,000			1.31	4.78
Exercised	(504,621	)		1.29	4.28
Balance, April 30, 2015	10,614,587		$	1.39	3.90

At April 30, 2015, the aggregate intrinsic value under the provisions of ASC 718 of all outstanding stock options was estimated at $13,568,356 (vested: $8,641,756 and unvested: $4,926,600).

At April 30, 2015, unrecognized stock-based compensation expense related to the unvested portion of stock options granted under the Company’s 2014 Plan totaled $1,139,756 to be recognized over the next 0.85 years.

A summary of stock options outstanding and exercisable at April 30, 2015 is presented below:

	Options Outstanding			Options Exercisable
	Outstanding at April 30, 2015		Weighted	Exercisable at April 30, 2015		Weighted
Range of Exercise Prices			Average Exercise			Average Exercise
			Price			Price
$0.33 to $0.70	1,901,801	$	0.41	1,901,801	$	0.41
$0.71 to $2.45	7,745,000		1.39	3,900,000		1.46
$2.46 to $5.90	967,786		3.33	967,786		3.33
	10,614,587	$	1.39	6,769,587	$	1.43

Stock-Based Compensation

A summary of stock-based compensation expense is presented below:

		Three Months Ended April 30,					Nine Months Ended April 30,
		2015		2014			2015		2014
Stock-Based Consulting Fees
Common stock issued for consulting services	$	502,854	$	216,640		$	1,380,279	$	773,558
Options issued to consultants		346,995		(9,189	)		721,430		64,529
		849,849		207,451			2,101,709		838,087
Stock-Based Management Fees
Options issued to management		263,306		-			1,424,585		55,000
		263,306		-			1,424,585		55,000
Stock-Based Wages and Benefits
Options issued to employees		204,723		26,018			1,102,250		94,591
		204,723		26,018			1,102,250		94,591
Stock-based compensation charged to inventory		-		(1,596	)		-		(4,239	)
	$	1,317,878	$	231,873		$	4,628,544	$	983,439