Stockholders' Equity

6 Months Ended

Jan. 31, 2017

Stockholders' Equity Note [Abstract]

Stockholders' Equity

4. Stockholders’ Equity

Common Stock

On November 2, 2016, the Company granted 1,000 restricted shares of Company’s Common Stock to a consultant pursuant to a consulting agreement dated October 12, 2016 for consulting services provided by the consultant. The shares issued in this transaction were valued using the stock price at issuance date and amounted to $7,520.

On November 10, 2016, the Company issued 14,327 shares of unregistered Common Stock pursuant to the LOI described in Note 6. The shares issued in this transaction were valued using the stock price at issuance date and amounted to $85,103.

Stock Options

As required by the Stock Compensation Topic, ASC 718, the Company measures and recognizes compensation expense for all share based payment awards made to the officers and directors based on estimated fair values at the grant date and over the requisite service period.

On October 6, 2016, the Company granted options to purchase a total of 50,000 shares of Common Stock exercisable on a cashless basis to two employees. These options all have an exercise price of $10.00 and a term of 10 years. The options vest as follows: 1,388 shares vest upon each of the first through twentieth month anniversaries of the grant date; 1,390 shares vest upon each of the twenty-first through thirty-sixth month anniversaries of the grant date. The Company has valued these options using the Black-Scholes option pricing model which resulted in a fair market value of $425,000, of which $145,920 has been recognized as expense for the six months ended January 31, 2017.

On November 4, 2016, the Company appointed Thomas T. Thomas to the Company’s Board of Directors (the “Board”) and granted Mr. Thomas options to purchase 35,000 shares of Common Stock exercisable on a cashless basis. Such options have an exercise price of $10.00, a term of 5 years and vest as follows: (i) 11,667 shares vest upon the uplisting of the Company to the NASDAQ Stock Market; (ii) 11,667 shares vest upon the cumulative funding of the Company of or in excess of $5,000,000 by institutional investors starting from November 4, 2016; and 11,666 shares vest upon the first submission of a New Drug Application to the U.S. Food and Drug Administration for one of Company’s products by Company itself or a Company licensee. The Company has valued these options using the Black-Scholes option pricing model which resulted in a fair market value of $220,116, of which $115,564 has been recognized as expense for the six months ended January 31, 2017.

On December 24, 2016, the Company granted options to purchase a total of 35,000 shares of Common Stock exercisable on a cashless basis to an employee. The options have an exercise price of $10.00 and a term of 10 years. The options vest as follows: 972 shares vest upon each of the first through twenty-eighth month anniversaries of the grant date; 973 shares vest upon each of the twenty-ninth through thirty-sixth month anniversaries of the grant date. The Company has valued these options using the Black-Scholes option pricing model which resulted in a fair market value of $219,450, of which $25,443 has been recognized as expense for the six months ended January 31, 2017.

The Company also recognized stock based compensation expense of $230,602 in connection with vested options granted in prior periods. 

The assumptions used in the valuation for all of the options granted for the six months ended January 31, 2017 and 2016 were as follows:

	2017			2016
Market value of stock on measurement date	$	5.61 to 8.71		$	7.00
Risk-free interest rate		0.88-2.55	%		2.05	%
Dividend yield		0	%		0	%
Volatility factor		112-348	%		373	%
Term		2.78-10.00 years			10 years

Stock option activity for six months ended January 31, 2017 is presented in the table below:

					Weighted-
					average
			Weighted-		Remaining
			average		Contractual		Aggregate
	Number of		Exercise		Term		Intrinsic
	Shares		Price		(years)		Value
Outstanding at July 31, 2016		4,635,000		8.79		7.39	$	2,731,250
Granted		120,000		10.00
Outstanding at January 31, 2017		4,755,000		8.82		6.92	$	4,243,250
Exercisable at January 31, 2017		4,330,136		8.39		7.28	$	4,243,250

A summary of the status of the Company’s non-vested options as of January 31, 2017 and changes during the three months ended January 31, 2017 are presented below:

Non-vested options	Number of Options		Weighted Average Grant Date Fair Value
Non-vested at July 31, 2016		90,833	$	7.27
Granted		120,000		7.20
Vested		(48,470)		7.10
Non-vested at January 31, 2017		162,363	$	7.30

At January 31, 2017, there was $795,321 of unrecognized compensation costs related to non-vested stock options.

Warrants

Warrant activity for the six months ended January 31, 2017 is presented in the table below:

	Number of Shares		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at July 31, 2016		1,215,385	$	17.90		2.86	$	-
Expired		(63,100)		50.00
Outstanding at January 31, 2017		1,152,285	$	16.15		2.50	$	13,580
Exercisable at January 31, 2017		427,285	$	18.09		5.21	$	13,580