Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.7.0.1
Stockholders' Equity
3 Months Ended
Apr. 30, 2017
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
9.
Stockholders’ Equity
 
Authorized
 
2,000,000 shares of blank check preferred stock, no par value.
18,000,000 shares of common stock, par value $0.001.
 
Equity Transactions
 
On February 10, 2017, the Company entered into an At The Market Offering Agreement (the “Agreement”) with Maxim Group LLC (“Maxim”), as amended on March 30, 2017, pursuant to which the Company could sell from time to time, up to an aggregate of $5,500,000 of shares of the Company’s common stock (the “Shares”), through Maxim, as sales agent.
 
Under the terms of the Agreement, Maxim was entitled to a commission at a fixed rate of 3.5% of the gross sales price of Shares sold under the Agreement. The Company also reimbursed Maxim for certain expenses incurred in connection with the Agreement, and agreed to provide indemnification and contribution to Maxim with respect to certain liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended.
 
During the three months ended April 30, 2017 pursuant to and under the terms of the Agreement, as amended, the Company issued an aggregate of 2,189,052 shares of common stock for gross proceeds of $5,499,723, net proceeds of $5,307,233 after deducting commissions.
 
Stock Options
 
2014 Stock Option Plan
 
On June 6, 2014, the Company’s board of directors approved a 2014 Long-Term Incentive Plan (the “2014 Plan”), which provides for the grant of stock options, restricted shares, restricted share units and performance stock and units to directors, officers, employees and consultants of the Company. Stockholder approval of the plan was obtained on August 21, 2014.
 
The maximum number of shares of common stock reserved for issue under the plan is 2,750,000 shares subject to adjustment in the event of a change of the Company’s capitalization (as described in the 2014 Plan). As a result of the adoption of the 2014 Plan, no further option awards will be granted under any previously existing stock option plan. Stock option awards previously granted under previously existing stock option plans remain outstanding in accordance with their terms.
 
The 2014 Plan is administered by the board of directors, except that it may, in its discretion, delegate such responsibility to a committee of such board. The exercise price will be determined by the board of directors at the time of grant. Stock options may be granted under the 2014 Plan for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the board, subject to earlier termination in accordance with the terms of the 2014 Plan. At April 30, 2017, 509,601 (January 31, 2017: 509,601) options remained available for issuance under the 2014 Plan.
 
Stock Based Compensation
 
A summary of the status of the Company’s outstanding stock options for the periods ended April 30, 2017 and January 31, 2017 is presented below:
 
 
 
Number
 
Weighted
Average
 
Weighted Average
Grant Date
 
 
 
of Options
 
Exercise Price
 
Fair Value
 
Outstanding at February 1, 2016
 
 
2,191,274
 
$
5.12
 
$
7.86
 
Expired
 
 
(93,875)
 
$
5.19
 
 
 
 
Forfeited
 
 
(70,000)
 
$
5.12
 
 
 
 
Granted
 
 
260,000
 
$
2.21
 
$
1.41
 
Outstanding at January 31, 2017
 
 
2,287,399
 
$
4.78
 
 
 
 
Granted
 
 
1,200,000
 
$
2.14
 
$
0.89
 
Outstanding at April 30, 2017
 
 
3,487,399
 
$
3.87
 
 
 
 
Exercisable at April 30, 2017
 
 
3,072,043
 
$
3.89
 
 
 
 
 
At April 30, 2017, the following stock options were outstanding, entitling the holder thereof to purchase shares of common stock of the Company as follows:
 
Number
 
Exercise
Price
 
Expiry
Date
 
Number
Vested
 
 
15,000
 
 
10.00
 
October 9, 2017
 
 
15,000
 
 
1,250
 
 
10.00
 
February 1, 2018
 
 
1,250
 
 
3,750
 
 
10.00
 
May 1, 2018
 
 
3,750
 
 
2,000
 
 
10.00
 
April 1, 2019
 
 
2,000
 
 
25,000
 
 
10.00
 
July 30, 2022
 
 
25,000
 
 
1,536,750
 
 
5.12
 
June 6, 2024
 
 
1,421,358
 
 
25,000
 
 
6.00
 
June 10, 2024
 
 
25,000
 
 
37,500
 
 
5.12
 
February 3, 2025
 
 
25,000
 
 
37,500
 
 
4.48
 
February 25, 2025
 
 
25,000
 
 
6,250
 
 
4.80
 
July 6, 2025
 
 
6,250
 
 
337,399
 
 
4.40
 
August 18, 2026
 
 
212,435
 
 
10,000
 
 
2.50
 
February 25, 2026
 
 
10,000
 
 
100,000
 
 
2.50
 
November 1, 2026
 
 
100,000
 
 
150,000
 
 
2.00
 
November 1, 2026
 
 
-
 
 
1,200,000
 
 
2.14
 
March 13, 2021
 
 
1,200,000
 
 
3,487,399
 
 
 
 
 
 
 
3,072,043
 
 
The aggregate intrinsic value of stock options outstanding is calculated as the difference between the exercise price of the underlying awards and the fair value of the Company’s common stock. At April 30, 2017, the aggregate intrinsic value of stock options outstanding was $Nil and exercisable was $Nil (January 31, 2017: $Nil and $Nil, respectively).
 
During the three months ended April 30, 2017, the Company recognized a total fair value of $1,641,781 (2016: $1,271,361) of stock based compensation expense relating to the issuance of stock options in exchange for services. An amount of $992,625 in stock based compensation expense is expected to be recognized over the remaining vesting term of these options to February 2019.
 
The fair value of each option award was estimated on the date of the grant using the Black-Scholes option pricing model based on the following weighted average assumptions:
 
 
 
2017
 
 
2016
 
Expected term of stock option (years) (1)
 
 
2.00
 
 
 
5.00
 
Expected volatility (2)
 
 
76.10
%
 
 
67.70
%
Stock price at date of issuance
 
$
2.14
 
 
$
2.50
 
Risk-free interest rate
 
 
1.40
%
 
 
1.16
%
Dividend yields
 
 
0.00
%
 
 
0.00
%
(1) As the Company has insufficient historical data on which to estimate the expected term of the options, the Company has elected to apply the short-cut method to determine the expected term under the guidance of Staff Accounting Bulletin No. 110.
(2) As the Company has insufficient historical data on which to estimate expected future share price volatility, the Company has estimated expected share price volatility based on the historical share price volatility of comparable entities.
 
Share Purchase Warrants
 
At April 30, 2017, the Company had 1,627,010 share purchase warrants outstanding as follows:
 
Number
 
 
Exercise
Price
 
Expiry
Date
 
12,451
 
 
$
10.00
 
August 10, 2017
 
3,750
 
 
$
10.00
 
August 10, 2018
 
60,001
 
 
$
6.00
 
April 4, 2019
 
555,968
 
 
$
6.00
 
June 10, 2019
 
155,052
 
 
$
3.00
 
June 10, 2019
 
168,883
 
 
$
6.00
 
July 8, 2019
 
29,343
 
 
$
3.00
 
July 8, 2019
 
24,625
 
 
$
8.00
 
October 23, 2019
 
137,180
 
 
$
4.80
 
December 23, 2020
 
365,688
 
 
$
4.80
 
June 15, 2022
 
36,569
(1)
 
$
4.80
 
June 15, 2022
 
15,000
 
 
$
4.80
 
July 6, 2022
 
62,500
 
 
$
5.11
 
September 1, 2022
 
 
 
 
 
 
 
 
 
1,627,010
 
 
 
 
 
 
 
(1) These warrants may vest and become exercisable only under certain anti-dilution performance conditions contained in the warrant agreement.
 
During the year ended January 31, 2016, the Company issued an aggregate of 479,757 warrants exercisable at a weighted average exercise price of $4.84 per share for a period of seven years from the date of issuance, pursuant to negotiated consulting and endorsement agreements. The weighted average grant date fair value of these warrants at issuance was $4.67 for an aggregate grant date fair value of $2,239,000, based on the Black-Scholes option pricing model using the following weighted average assumptions: expected term 7 years, expected volatility 158.04%, expected dividend yield 0.00%, risk free interest rate 2.09%. Stock based compensation is being recorded in the financial statements over the vesting term of three years from the date of grant. The Company recognized stock based compensation expense of $41,348 during the three months ended April 30, 2017 (2016: $(104,284)) in connection with warrants granted.
 
Certain of the warrants granted during the year ended January 31, 2016 become exercisable only under certain anti-dilution performance conditions contained in the warrant agreement. The fair value of these warrants at issuance was calculated to be $168,500 based on the Black-Scholes option pricing model using the following assumptions: expected term 7 years, expected volatility 153.00%, expected dividend yield 0.00%, risk free interest rate 2.11%. No stock-based compensation has been recorded in the financial statements as none of the performance conditions have been met.
 
A summary of the Company’s share purchase warrants outstanding is presented below:
 
 
 
Number of
 
Weighted Average
 
 
 
Warrants
 
Exercise Price
 
Outstanding at February 1, 2016
 
 
1,645,198
 
$
5.27
 
Expired
 
 
(18,188)
 
$
4.00
 
 
 
 
 
 
 
 
 
Outstanding at January 31, 2017 and April 30, 2017
 
 
1,627,010
 
$
5.29