Acquisitions (Tables)

9 Months Ended

Apr. 30, 2019

Net purchase price of NGDx

The net purchase price of NGDx was determined to be as follows:

	Stock Price at Closing		Shares		Fair Value
Purchase price:
Common Stock at closing	$	.23		1,117,011	$	253,721
Common Stock after closing	$	.23		420		95
Common Stock post reverse stock split	$	.23		4,830,000		1,097,100
Total purchase price				5,947,431	$	1,350,916

Fair Value Assumptions Used in Accounting for Warrants

The key inputs used in the fair value calculations were as follows:

	December 1, 2018			July 31, 2018
Exercise price		2.50			2.50
Time to expiration		3.14 years			3.47 years
Risk-free interest rate		3.01	%		2.77	%
Estimated volatility		138.61	%		143.97	%
Dividend		—			—
Stock price at valuation date	$	0.9		$	0.1

Fair Value Assumptions Used in Accounting for Call Options

The following assumptions were used in estimating the value of the Call Option:

	December 1, 2018			July 31, 2018
Risk-free interest rate		2.52	%		2.44	%
Estimated volatility		164.43	%		129.95	%
Remaining Term		1.13 years			1.47 years
Stock price at valuation date	$	0.9043		$	0.0976

Purchase price allocated as of acquisition date

The final allocation of the purchase price as of January 31, 2019, is as follows:

	Preliminary Allocation as of December 28, 2017		Allocation Adjustments		Final Allocation
Intangible assets (licenses)	$	276,380	$	—	$	276,380
Property and equipment		19,879		—		19,879
Computer software acquired		5,980		—		5,980
Leasehold Improvements		17,761		—		17,761
Total assets acquired		320,000		—		320,000
Consideration:
Note Payable		320,000				320,000
Goodwill	$	—			$	—

Schedule of Finite-Lived Intangible Assets

The components of the acquired intangible assets were as follows:

	Preliminary Fair Value		Average Estimated Life
In-process research and development	$	3,980,000		—
Non-compete agreement		790,000		3
	$	4,770,000

Supplemental Pro Forma

Unaudited pro forma results of operations for the nine months ended April 30, 2019 and 2018 as though the Company acquired Veneto, Olaregen and Regentys (the “Acquired Companies”) on the first day of each fiscal year are set forth below.

	Nine months Ended April 30
	2019			2018
Revenues	$	9,434,017		$	30,045,595
Cost of revenues		4,151,810			12,011,144
Gross profit		5,282,207			18,034,451
Operating expenses		12,597,408			20,674,120
Operating loss		(7,315,201	)		(2,639,669	)
Other income (expense)		245,096			(85,809	)
Net loss		(7,070,105	)		(2,725,478	)
Net loss attributable to noncontrolling interests		(1,712,060	)		(123,379	)
Net loss available to common stockholders		(5,358,045	)		(2,602,099	)
Comprehensive net loss	$	(5,358,045	)	$	(2,602,099	)
Basic and diluted net loss per common share		(0.09	)		(0.12	)

Veneto Holdings, L.L.C.

Summary of Acquisition

The following table summarizes the allocation of the preliminary purchase price as of the Veneto acquisition as of the First Closing and the Second Closing:

	“First Closing” completed on October 3, 2018		“Second Closing” completed on November 1, 2018		Total
Cash and cash equivalents	$	2,410,150	$	—	$	2,410,150
Accounts receivable, net		1,935,078		—		1,935,078
Inventory, net		1,068,856		—		1,068,856
Prepaid expenses		95,804		—		95,804
Property and equipment, net		652,590		—		652,590
Other receivables		1,014,316		—		1,014,316
Notes receivable - LT		1,387,763		—		1,387,763
Other assets, net		25,745		—		25,745
Intangible assets, net		35,603		7,110,000		7,145,603
Total assets acquired		8,625,905		7,110,000		15,735,905
Total current liabilities		2,509,887		—		2,509,887
Notes payable		—		3,403,948		3,403,948
Total liabilities assumed		2,509,887		3,403,948		5,913,835
Net identifiable assets acquired		6,116,018		3,706,052		9,822,070
Goodwill		8,883,982		16,293,948		25,177,930
Total consideration transferred	$	15,000,000	$	20,000,000	$	35,000,000

The following table summarizes the allocation of the revalued purchase price as of the Veneto acquisition as of the First Closing and the Second Closing during the quarter ending April 30, 2019:

	“First Closing” completed on October 3, 2018		“Second Closing” completed on November 1, 2018			Total
Cash and cash equivalents	$	2,410,150	$	—		$	2,410,150
Accounts receivable, net		1,430,638		—			1,490,638
Inventory, net		1,068,856		—			1,068,856
Prepaid expenses		95,804		—			95,804
Property and equipment, net		652,590		—			652,590
Other receivables		1,014,316		—			1,014,316
Notes receivable - LT		1,387,763		—			1,387,763
Other assets, net		25,745		—			25,745
Intangible assets, net		35,603		2,277,000			2,312,603
Total assets acquired		8,181,465		2,277,000			10,458,465
Total current liabilities		2,065,448		—			2,065,448
Notes payable		—		3,403,948			3,403,948
Total liabilities assumed		2,065,448		3,403,948			5,469,396
Net identifiable assets acquired		6,116,017		(1,126,948	)		4,989,069
Goodwill							13,585,769
Total consideration tranferred	$	—	$	—		$	18,574,838

Estimated amortization expense

The preliminary amounts assigned to the identifiable intangible assets, the estimated useful lives, and the estimated amortization expense related to these identifiable intangible assets are as follows:

	Preliminary Fair Value		Average Estimated Life
Developed Software/Technology	$	780,000		5
Referral Base		3,920,000		15
Non-compete agreements		2,410,000		3
	$	7,110,000

During the quarter ending April 30, 2019, the amounts assigned to the identifiable intangible assets, the estimated useful lives, and the estimated amortization expense related to these identifiable intangible assets were revalued as follows:

	Preliminary Fair Value		Average Estimated Life
Developed Software/Technology	$	397,000		5
Referral Base		10,000		15
Non-compete agreements		1,870,000		3
	$	2,277,000

Regentys

Summary of Acquisition

The following table summarizes the allocation of the preliminary purchase price as of the Regentys acquisition:

	Preliminary Allocations as of January 7, 2019
Cash and cash equivalents	$	61,857
Other current assets		13,138
Property and equipment, net		444
Accounts payable and accrued liabilities		(1,181,375	)
Notes payable		(639,009	)
Loans from related parties		(16,506	)
In-process research & development		3,510,680
Deferred tax liability		(889,782	)
Total Fair Value of Assets Acquired		859,447
Consideration:
Note receivable from Generex		14,345,205
Goodwill	$	13,485,758

Olaregen

Summary of Acquisition

The following table summarizes the allocation of the preliminary purchase price as of the Olaregen acquisition:

	Preliminary Allocation as of January 7, 2019
Cash and cash equivalents	$	608,419
Prepaid expenses		20,488
Inventory		408,501
Other current assets		37,950
Accounts payable		(216,670	)
Accrued liabilities		(216,694	)
In-process research & development		3,980,000
Non-compete agreement		790,000
Deferred tax liability		(1,040,173	)
Total Fair Value of Assets Acquired	$	3,844,925
Consideration:
Cash paid prior to the time of closing		400,000
Note receivable from Generex		11,472,663
Goodwill	$	8,027,738