CAPITAL STOCK

3 Months Ended

Oct. 31, 2014

CAPITAL STOCK [Text Block]

NOTE 10: CAPITAL STOCK

Capital Stock

At October 31, 2014, 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.

On December 31, 2013, 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 three months ended October 31, 2014, 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

	Common		Value per Share				Issuance
Period / Description	Shares Issued		Low		High		Value
Balance, July 31, 2014	90,966,558
Equity Financing	280,045	$	1.70	$	1.70	$	175,423
Service Agreements	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

Share Purchase Warrants

A summary of warrants outstanding and exercisable at October 31, 2014 is presented below:

Weighted			Weighted Average
Average	Number of Warrants		Remaining Contractual
Exercise Price	Outstanding	Expiry Date	Life (Years)
$1.00	500,000	March 1, 2016	1.33
1.95	50,000	June 3, 2016	1.59
2.50	2,600,000	July 30, 2018	3.75
2.60	1,859,524	October 23, 2016	1.98
$2.38	5,009,524		2.83

Stock Options

At October 31, 2014, the Company has 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.

During the three months ended October 31, 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 5 -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.

The grant date fair value of these stock options was $0.50 which was valued using the Black-Scholes option pricing model with the following assumptions:

Expected Risk Free Interest Rate	0.94%
Expected Volatility	56.28%
Expected Life in Years	2.90
Expected Dividend Yield	0.00%

A continuity schedule of outstanding stock options for the underlying common shares at October 31, 2014, and the changes during the period, is presented below:

					Weighted Average
	Number of Stock			Weighted Average	Remaining Contractual
	Options			Exercise Price	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

At October 31, 2014, the aggregate intrinsic value under the provisions of ASC 718 of all outstanding options was estimated at $1,475,491 (vested: $1,475,491 and unvested: $Nil).

At October 31, 2014, unrecognized compensation cost related to non-vested stock options granted under the Company’s 2014 Plan was $2,576,401, which is expected to be recognized over 1.34 years.

A summary of options outstanding and exercisable at October 31, 2014 is presented below:

	Options Outstanding			Options Exercisable
Range of Exercise Prices	Outstanding at		Weighted Average	Exercisable at		Weighted Average
	October 31, 2014		Exercise Price	October 31, 2014		Exercise Price
$0.33 to $0.70	1,972,254	$	0.41	1,972,254	$	0.41
$0.71 to $2.45	11,324,000		1.67	3,764,000		2.37
$2.46 to $5.90	2,143,273		3.20	2,139,940		3.20
	15,439,527	$	1.72	7,876,194	$	2.10

Stock-Based Compensation

A summary of stock-based compensation expense for the three months ended October 31, 2014 and 2013 is presented below:

		Three Months Ended October 31,
		2014		2013
Stock-Based Consulting Fees
Common stock issued for consulting services	$	330,331	$	290,552
Options issued to consultants		100,379		13,604
		430,710		304,156
Stock-Based Management Fees
Options issued to management		572,276		-
		572,276		-
Stock-Based Wages and Benefits
Options issued to employees		451,310		34,169
		451,310		34,169
Stock-based compensation charged to inventory		-		(993	)
	$	1,454,296	$	337,332