PURE Bioscience (PURE) 10-Q 2 Mar 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jan. 31, 2017	Mar. 02, 2017
Document And Entity Information
Entity Registrant Name	PURE BIOSCIENCE, INC.
Entity Central Index Key	1,006,028
Document Type	10-Q
Document Period End Date	Jan. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--07-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		62,601,037
Trading Symbol	PURE
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jan. 31, 2017	Jul. 31, 2016
Current assets
Cash and cash equivalents	$ 3,893,000	$ 5,194,000
Accounts receivable	142,000	263,000
Inventories, net	340,000	350,000
Restricted cash	75,000	75,000
Prepaid expenses	189,000	260,000
Total current assets	4,639,000	6,142,000
Property, plant and equipment, net	568,000	440,000
Patents, net	901,000	980,000
Total assets	6,108,000	7,562,000
Current liabilities
Accounts payable	424,000	479,000
Restructuring liability	29,000	39,000
Accrued liabilities	245,000	216,000
Derivative liabilities	1,494,000	1,802,000
Total current liabilities	2,192,000	2,536,000
Deferred rent	13,000	3,000
Total liabilities	2,205,000	2,539,000
Commitments and contingencies (See Note 6)
Stockholders' equity
Preferred stock, $0.01 par value: 5,000,000 shares authorized, no shares issued
Common stock, $0.01 par value: 100,000,000 shares authorized, 62,601,037 shares issued and outstanding at January 31, 2017, and 64,823,917 shares issued and outstanding at July 31, 2016	627,000	649,000
Additional paid-in capital	109,174,000	107,593,000
Accumulated deficit	(105,898,000)	(103,219,000)
Total stockholders' equity	3,903,000	5,023,000
Total liabilities and stockholders' equity	$ 6,108,000	$ 7,562,000

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jan. 31, 2017	Jul. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	62,601,037	64,823,917
Common stock, shares outstanding	62,601,037	64,823,917

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Income Statement [Abstract]
Net product sales	$ 447,000	$ 176,000	$ 978,000	$ 362,000
Operating costs and expenses
Cost of goods sold	134,000	48,000	399,000	102,000
Selling, general and administrative	1,333,000	1,386,000	2,670,000	2,472,000
Research and development	214,000	238,000	462,000	474,000
Share-based compensation	170,000	763,000	448,000	1,435,000
Total operating costs and expenses	1,851,000	2,435,000	3,979,000	4,483,000
Loss from operations	(1,404,000)	(2,259,000)	(3,001,000)	(4,121,000)
Other income (expense)
Fair value of derivative liabilities in excess of proceeds		(859,000)		(1,867,000)
Change in derivative liabilities	459,000	(7,790,000)	300,000	(7,747,000)
Interest expense, net	(2,000)	(3,000)	(3,000)	(5,000)
Other income (expense), net	11,000	9,000	25,000	18,000
Total other income (expense)	468,000	(8,643,000)	322,000	(9,601,000)
Net loss	$ (936,000)	$ (10,902,000)	$ (2,679,000)	$ (13,722,000)
Basic and diluted net loss per share	$ (0.01)	$ (0.19)	$ (0.04)	$ (0.27)
Shares used in computing basic and diluted net loss per share	63,617,030	58,678,242	64,220,473	50,848,785

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016
Operating activities
Net loss	$ (2,679,000)	$ (13,722,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation	448,000	1,435,000
Amortization of stock issued for services	72,000	106,000
Fair value of derivative liabilities in excess of proceeds		1,867,000
Depreciation and amortization	134,000	103,000
Change in fair value of derivative liability	(300,000)	7,747,000
Changes in operating assets and liabilities:
Accounts receivable	121,000	83,000
Inventories	10,000	(30,000)
Prepaid expenses	(2,000)	(7,000)
Accounts payable and accrued liabilities	(36,000)	(33,000)
Deferred rent	10,000	(2,000)
Net cash used in operating activities	(2,222,000)	(2,453,000)
Investing activities
Investment in patents	(10,000)	(8,000)
Purchases of property, plant and equipment	(173,000)	(154,000)
Net cash used in investing activities	(183,000)	(162,000)
Financing activities
Net proceeds from the sale of common stock	1,104,000	8,000,000
Net cash provided by financing activities	1,104,000	8,000,000
Net decrease and increase in cash and cash equivalents	(1,301,000)	5,385,000
Cash and cash equivalents at beginning of period	5,194,000	1,321,000
Cash and cash equivalents at end of period	3,893,000	6,706,000
Supplemental disclosure of cash flow information
Cash paid for taxes	2,000	2,000
Warrant liabilities removed due to settlements	8,000
Restricted stock unit cancelation	$ 38,000

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jan. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of PURE Bioscience, Inc. and its wholly owned subsidiary, ETI H2O Inc., a Nevada corporation. ETI H2O, Inc. currently has no business operations and no material assets or liabilities and there have been no significant transactions related to ETI H2O, Inc. during the periods presented in the condensed consolidated financial statements. All inter-company balances and transactions have been eliminated. All references to “PURE,” “we,” “our,” “us” and the “Company” refer to PURE Bioscience, Inc. and our wholly owned subsidiary. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information pursuant to the instructions to Form 10-Q and Article 10/Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended January 31, 2017 are not necessarily indicative of the results that may be expected for other quarters or the year ending July 31, 2017. The July 31, 2016 balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP and included in our Annual Report on Form 10-K. For more complete information, these unaudited financial statements and the notes thereto should be read in conjunction with the audited financial statements for the year ended July 31, 2016 included in our Annual Report on Form 10-K covering such period filed with the Securities and Exchange Commission, or SEC, on October 27, 2016. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

Liquidity

Liquidity	6 Months Ended
	Jan. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Liquidity	2. Liquidity Since our inception, we have financed our operations primarily through public and private offerings of securities, debt financing, and revenue from product sales and license agreements. We have a history of recurring losses, and as of January 31, 2017, we have incurred a cumulative net loss of $105,898,000. As of January 31, 2017, we had $3,893,000 in cash and cash equivalents, and $424,000 of accounts payable. As of January 31, 2017, we have no long-term debt. Our future capital requirements depend on numerous forward-looking factors. These factors may include, but are not limited to, the following: the acceptance of, and demand for, our products; our success and the success of our partners in selling our products; our success and the success of our partners in obtaining regulatory approvals to sell our products; the costs of further developing our existing products and technologies; the extent to which we invest in new product and technology development; and the costs associated with the continued operation, and any future growth, of our business. The outcome of these and other forward-looking factors will substantially affect our liquidity and capital resources. We expect that we will need to increase our liquidity and capital resources by one or more measures. These measures may include, but are not limited to, the following: reducing operating expenses; obtaining financing through the issuance of equity, debt, or convertible securities; entering into partnerships, licenses, or other arrangements with third parties; and reducing the exercise price of outstanding warrants. Any one of these measures could substantially reduce the value to us of our technology and its commercial potential. If we issue equity, debt or convertible securities to raise additional funds, our existing stockholders may experience dilution, and the new equity, debt or convertible securities may have rights, preferences and privileges senior to those of our existing stockholders. There is no guarantee that we would be able to obtain capital on terms acceptable to us, or at all. If we are unable to obtain sufficient capital, it would have a material adverse effect on our business and operations. It could cause us to fail to execute our business plan, fail to take advantage of future opportunities, or fail to respond to competitive pressures or customer requirements. It also may require us to delay, scale back or eliminate some or all of our research and development programs, to license to third parties the right to commercialize products or technologies that we would otherwise commercialize ourselves, or to reduce or cease operations. If adequate funds are not available when needed, we may be required to significantly modify our business model and operations to reduce spending to a sustainable level. We believe our available cash on-hand, our current efforts to market and sell our products, and our ability to significantly reduce expenses, will provide sufficient cash resources to satisfy our needs over the next 12 months. However, we do not yet have, and we may never have, significant cash inflows from product sales or from other sources of revenue to offset our ongoing and planned investments in research and development projects, regulatory submissions, business development activities, and sales and marketing, among other investments. Some or all of our ongoing or planned investments may not be successful. In addition, irrespective of our cash resources, we may be contractually or legally obligated to make certain investments which cannot be postponed.

Net Loss Per Share

Net Loss Per Share	6 Months Ended
	Jan. 31, 2017
Earnings Per Share [Abstract]
Net Loss Per Share	3. Net Loss Per Share Basic net loss per common share is computed as net loss divided by the weighted average number of common shares outstanding for the period. Our diluted net loss per common share is the same as our basic net loss per common share because we incurred a net loss during each period presented, and the potentially dilutive securities from the assumed exercise of all outstanding stock options, restricted stock units, and warrants would have an anti-dilutive effect. As of January 31, 2017 and 2016, the number of shares issuable upon the exercise of stock options, the vesting of restricted stock units, and the exercise of warrants, none of which are included in the computation of basic net loss per common share, was 11,980,795 and 28,609,468, respectively.

Comprehensive Loss

Comprehensive Loss	6 Months Ended
	Jan. 31, 2017
Equity [Abstract]
Comprehensive Loss	4. Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on marketable securities and foreign currency translation adjustments. For the three and six months ended January 31, 2017 and 2016, our comprehensive loss consisted only of net loss.

Inventory

Inventory	6 Months Ended
	Jan. 31, 2017
Inventory Disclosure [Abstract]
Inventory	5. Inventory Inventories are stated at the lower of cost or net realizable value, and net of a valuation allowance for potential excess or obsolete material. Cost is determined using the average cost method. Depreciation related to manufacturing is systematically allocated to inventory produced, and expensed through cost of goods sold at the time inventory is sold. Inventories consist of the following: January 31, 2017 July 31, 2016 Raw materials $ 98,000 $ 120,000 Finished goods 242,000 230,000 $ 340,000 $ 350,000

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jan. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	6. Commitments and Contingencies Severance Agreement On August 13, 2013, the Company entered into a Severance and Release Agreement with Dennis Brovarone, a former Board member. Mr. Brovarone will receive $91,000, payable in 60 monthly installments of approximately $1,600, commencing December 11, 2013 for amounts previously accrued as of July 31, 2013. Approximately $29,000 remains payable under the agreement and is included in the accrued restructuring liability section of the condensed consolidated balance sheets as of January 31, 2017.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets	6 Months Ended
	Jan. 31, 2017
Impairment Of Long-lived Assets
Impairment of Long-Lived Assets	7. Impairment of Long-Lived Assets In accordance with GAAP, if indicators of impairment exist, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, we measure the amount of such impairment by comparing the carrying value of the asset to the fair value of the asset and we record the impairment as a reduction in the carrying value of the related asset and a charge to operating results. Estimating the undiscounted future cash flows associated with long-lived assets requires judgment, and assumptions could differ materially from actual results. During the three and six months ended January 31, 2017 and 2016, no impairment of long-lived assets was indicated or recorded.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	6 Months Ended
	Jan. 31, 2017
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	8. Fair Value of Financial Instruments Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the authoritative guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities. ● Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In connection with the October and November 2015 Private Placement and a prior Bridge Loan, we issued warrants with derivative features. These instruments are accounted for as derivative liabilities (See Note 9 to these condensed consolidated financial statements). We used Level 3 inputs for the valuation methodology of the derivative liabilities. The estimated fair values were computed using a Monte Carlo option pricing model based on various assumptions. Our derivative liabilities are adjusted to reflect estimated fair value at each period end, with any decrease or increase in the estimated fair value being recorded in other income or expense accordingly, as adjustments to the fair value of the derivative liabilities. Various factors are considered in the pricing models we use to value the warrants, including the Company’s current stock price, the remaining life of the warrants, the volatility of the Company’s stock price, and the risk free interest rate. Future changes in these factors will have a significant impact on the computed fair value of the warrant liabilities. As such, we expect future changes in the fair value of the warrants to vary significantly from quarter to quarter. The following table provides a reconciliation of the beginning and ending balances of the derivative liabilities for the six months ended January 31, 2017: Fair Value of Significant Unobservable Inputs (Level 3) Warrant Liabilities Balance at July 31, 2015 $ 4,000 Issuances 9,867,000 Settlement of warrant liabilities (13,550,000 ) Adjustments to estimated fair value 5,481,000 Balance at July 31, 2016 $ 1,802,000 Issuances — Settlement of warrant liabilities (8,000 ) Adjustments to estimated fair value (300,000 ) Balance at January 31, 2017 $ 1,494,000

Derivative Liabilities

Derivative Liabilities	6 Months Ended
	Jan. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Liabilities	9. Derivative Liabilities On October 23, 2015 (the “October Closing Date”), we completed a first closing of a private placement financing (the “2015 Private Placement Financing”), where we issued, among other securities, a warrant to purchase up to an aggregate of 6,666,666 shares of common stock with a term of five years and a warrant to purchase up to an aggregate of 8,666,666 shares of common stock with a term of six months (See Note 10 to these condensed consolidated financial statements). On November 23, 2015 (the “November Closing Date’), we completed a second and final closing of the 2015 Private Placement Financing, where we issued, among other securities a warrant to purchase up to an aggregate of 2,222,217 shares of common stock with a term of five years and a warrant to purchase up to an aggregate of 2,820,670 shares of common stock with a term of six months (See Note 10 to these condensed consolidated financial statements). We accounted for the combined 20,376,219 warrants issued in connection with the 2015 Private Placement Financing in accordance with the accounting guidance for derivatives. The applicable accounting guidance sets forth a two-step model to be applied in determining whether a financial instrument is indexed to an entity’s own stock, which would qualify such financial instruments for a scope exception. This scope exception specifies that a contract that would otherwise meet the definition of a derivative financial instrument would not be considered as such if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the stockholders’ equity section of the entity’s balance sheet. We determined the warrants were ineligible for equity classification due to anti-dilution provisions set forth therein. During the fiscal year ended July 31, 2016, (i) all 2,820,670 of the six-month warrants issued in the second and final closing were exercised, (ii) the six-month warrants issued in the first closing expired and (iii) the five-year warrants issued in the first closing were cancelled. On the October Closing Date, the derivative liabilities were recorded at an estimated fair value of $7,008,000. Given that the fair value of the derivative liabilities exceeded the total proceeds of the private placement of $6,000,000, no net amounts were allocated to the common stock. The $1,008,000 amount by which the recorded liabilities exceeded the proceeds was charged to other expense at the October Closing Date. Given that the fair value of the derivative liabilities issued on the November Closing Date exceeded the total proceeds of the private placement of $2,000,000, as of the November Closing Date, no net amounts were allocated to the common stock. The $859,000 amount by which the recorded liabilities exceeded the proceeds was charged to other expense at the November Closing Date. As of January 31, 2017, we had a warrant liability of $1,494,000 related to the 2,222,217 warrants outstanding issued in connection with the November closing of the 2015 Private Placement Financing. The following assumptions were used as inputs to the model at January 31, 2017: stock price of $0.88 per share and a warrant exercise price of $0.45 per share as of the valuation date; our historical stock price volatility of 85.00%; risk free interest rate on U.S. treasury notes of 1.7%; warrant expiration of 3.8 years. During the fourth quarter of 2012 we issued 132,420 warrants with derivative features pursuant to a Bridge Loan financing. During the six months ended January 31, 2017, of the current 9,709 warrants outstanding, there was a net exercise on 5,335 warrants which resulted in the issuance of 4,179 shares of our common stock. As these warrants were net exercised, as permitted under the respective warrant agreement, we did not receive any cash proceeds. The remaining 4,374 warrants issued in connection with the Bridge Loan expired during the six months ended January 31, 2017. The fair value on the exercise date and the date of expiration was returned to additional paid in capital and is reflected in the Settlement of warrant liability section on the table above. On January 31, 2017, the total value of the derivative liabilities was $1,494,000. The change in fair value of the warrant liabilities for the three and six months ended January 31, 2017, was a decrease of $300,000 and $459,000, respectively, which was recorded as a change in derivative liabilities in the condensed consolidated statement of operations. The change in fair value of the warrant liability for the three and six months ended January 31, 2016, was an increase of $7,790,000 and $7,747,000, respectively, which was recorded as a change in derivative liability in the condensed consolidated statement of operations. We have revalued the derivative liabilities as of January 31, 2017, and will continue to do so on each subsequent balance sheet date until the securities to which the derivative liabilities relate are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense.

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Jan. 31, 2017
Equity [Abstract]
Stockholders' Equity	10. Stockholders’ Equity Private Placements On December 1, 2016, we completed an initial closing (the “Initial Closing”) of a private placement financing (the “Private Placement Offering”) to accredited investors. We raised aggregate gross proceeds of $1,000,000 from the sale of (i) an aggregate of 1,176,472 shares of the Company’s common stock at a purchase price of $0.85 per share and (ii) warrants to purchase up to an aggregate of 1,176,472 shares of common stock with a term of five years at an exercise price of $1.25 per share. On January 23, 2017, we closed on a second and final closing (the “Final Closing”) of the Private Placement Offering. In the Final Closing we raised aggregate gross proceeds of approximately $337,000 from the sale of (i) an aggregate of 396,469 shares of the Company’s common stock at a purchase price of $0.85 per share and (ii) warrants to purchase up to an aggregate of 396,469 shares of common stock with a term of five years at an exercise price of $1.25 per share. The securities issued in the Private Placement Offering were issued pursuant to a securities purchase agreement entered into with the accredited investors. We utilized the services of a placement agent for the Private Placement Offering. In connection with the Private Placement Offering, we paid such placement agent an aggregate cash fee of $128,600 and issued to such placement agent or its designees warrants to purchase 151,294 shares of common stock at an exercise price of $1.275 per share. The terms of the placement agent warrants are substantially identical to the investor warrants, other than the exercise price and the holders’ ability to exercise the placement agent warrants on a cashless basis at its discretion. Additionally, we agreed to pay the placement agent a $12,000 due diligence fee and to reimburse the placement agent for fees of counsel up to $35,000. The net proceeds from the Private Placement Offering were approximately $1,104,000 and we expect to use the net proceeds for general corporate purposes, including our research and development efforts, and for general administrative expenses and working capital. We also entered into a registration rights agreement with the Investors (the “Registration Rights Agreement”), pursuant to which we were obligated to file with the Securities and Exchange Commission (the “SEC”) as soon as practicable, but in any event, by February 6, 2017, this registration statement on Form S-1 to register 1,572,941 shares of common stock issued to the selling security holders in the Private Placement Offering and up to 1,572,941 shares of our common stock issuable upon the exercise of warrants issued to the selling security holders in the Private Placement Offering. We were obligated to use our commercially reasonable best efforts to cause this registration statement to be declared effective by the SEC within 45 days after the filing of this registration statement (or within 75 days if this registration statement is subject to a full review by the SEC). Additionally, the Registration Rights Agreement provides for certain monetary penalties if the registration statement is not filed or declared effective prior to certain dates, or it is not maintained effective, as set forth in the Registration Rights Agreement. The Private Placement Offering described above was made pursuant to the exemption provided by Section 4(a)(2) of the Securities Act, and Regulation D promulgated thereunder. On February 6, 2017, we filed a resale registration statement on Form S-1 with the SEC, which was declared effective on February 15, 2017, registering the In the October closing of the 2015 Private Placement Financing we received aggregate gross proceeds to us of $6.0 million. We did not engage a placement agent or investment banker to facilitate the Private Placement Financing. In the November closing of the 2015 Private Placement Financing we received aggregate gross proceeds to us of $2.0 million. We did not engage a placement agent or investment banker to facilitate the Private Placement Financing. During the fiscal year ended July 31, 2016, (i) all 2,820,670 of the six-month warrants issued in the second and final closing of the 2015 Private Placement were exercised, (ii) the six-month warrants issued in the first closing of the 2015 Private Placement expired and (iii) the five-year warrants issued in the first closing of the 2015 Private Placement were cancelled. We also entered into a registration rights agreement with the Investors in the 2015 Private Placement Financing (the “Registration Rights Agreement”), pursuant to which we are obligated, upon request of the Investor in the October closing of the 2015 Private Placement Financing and subject to certain conditions, to file with the SEC as soon as practicable, but in any event within 60 days after receiving such applicable request, a registration statement on Form S-1 (the “2015 Resale Registration Statement”) to register the Purchase Shares and the Warrant Shares for resale under the Securities Act of 1933, as amended (the “Securities Act”) and other securities issued or issuable with respect to or in exchange for the Purchase Shares or Warrant Shares. We are obligated to use our commercially reasonable efforts to cause the 2015 Resale Registration Statement to be declared effective by the SEC as promptly as reasonably practicable after the filing of the Resale Registration Statement, but no monetary penalty or liquidated damages will be imposed upon the Company if the Registration Statement is not declared effective by the SEC. Other Activity On April 13, 2016, we entered into a two-year service agreement for general financial advisory services. In accordance with the agreement we issued 250,000 shares of common stock, with a value of $290,000. The value was capitalized to prepaid expense and is being amortized over the term of the agreement. During the three and six months ended January 31, 2017, we recognized $36,000 and $72,000 of expense related to these services, respectively.

Share-Based Compensation

Share-Based Compensation	6 Months Ended
	Jan. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation	11. Share-Based Compensation Restricted Stock Units For the three months ended January 31, 2017 and 2016, share-based compensation expense for outstanding restricted stock units (“RSUs”) was $24,000 and $700,000, respectively. For the six months ended January 31, 2017 and 2016, share-based compensation expense for outstanding RSUs was $75,000 and $1,357,000, respectively. Of the 1,110,000 RSUs outstanding, we currently expect 150,000 to vest based on service conditions. As of January 31, 2017, there was $47,000 of unrecognized non-cash compensation cost related to RSUs we expect to vest, which will be recognized over a weighted average period of 0.50 years. RSU Termination On December 13, 2016, we entered into an RSU Cancellation Agreement with our officers and directors who received RSUs in October 2013 as compensation for their continued services to us over a required vesting period. Under this Agreement, our officers and directors agreed to cancel RSUs representing the right to receive an aggregate of 3.9 million vested shares of our common stock. Pursuant to the terms of the cancelled RSUs, we would have been required to settle and deliver these vested shares to the individual officers and directors prior to January 1, 2017, which would have triggered a taxable event. Our officers and directors, in their individual capacities, voluntarily agreed to cancel their respective RSUs based on their determination that cancelling the RSUs would be in the best interests of the Company and our stockholders. The individual officers and directors reached this conclusion for the following reasons: 1. Conserves our Available Cash Resources 2. Reduces Pressure on Our Stock Price Each of our officers and directors who are parties to the RSU Cancellation Agreement agreed to cancel their RSUs and the shares of common stock underlying the RSUs in their individual capacities as stockholders and equity award holders, and without any agreement or promise from us or our officers or directors to issue them equity, equity-based awards or cash compensation in the future in exchange for entering into the Agreement. As a result of the RSU cancelation, $87,000 of pre-vest expense was reversed. Stock Option Plans In February 2016, we amended and restated our 2007 Equity Incentive Plan, or the Plan, to, among other changes, increase the number of shares of common stock issuable under the Plan by 4,000,000 shares and extend the term of the Plan until February 4, 2026. The Plan During the six months ended January 31, 2017, we issued 100,000 options to purchase common stock to a member of our Scientific Advisory Board. The options vest quarterly over one year and carry a five-year term. No stock options were granted during the three months ended January 31, 2017. During the three and six months ended January 31, 2016, we issued 110,000 options to purchase common stock to key employees. The options vested on the date of grant and carry a five-year term. A summary of our stock option activity is as follows: Shares Weighted- Average Exercise Price Aggregate Intrinsic Value Outstanding at July 31, 2015 434,218 $ 4.07 $ — Granted 1,850,000 $ 1.07 Exercised — $ — Cancelled (6,250 ) $ 14.72 Outstanding at July 31, 2016 2,277,968 $ 1.60 $ 48,000 Granted 100,000 $ 1.02 Exercised — $ — Cancelled (253,125 ) $ 1.42 Outstanding at January 31, 2017 2,124,843 $ 1.60 $ 22,000 At January 31, 2017, options to purchase 1,652,343 shares of common stock were exercisable. These options had a weighted-average exercise price of $1.74, an aggregate intrinsic value of $22,000, and a weighted average remaining contractual term of 3.32 years. The weighted average grant date fair value for options granted during the six months ended January 31, 2017 was $0.49. We use the Black-Scholes valuation model to calculate the fair value of stock options. Stock-based compensation expense is recognized over the vesting period using the straight-line method. The fair value of options granted is estimated at the date of grant using the following weighted average assumptions for the three and six months ended January 31, 2017 and 2016: Three Months Ended Three Months Ended Six Months Ended Six Months Ended January 31, 2017 January 31, 2016 January 31, 2017 January 31, 2016 Volatility — % 96.60 % 74.71 % 96.60 % Risk-free interest rate — % 0.92 % 0.93 % 0.92 % Dividend yield — % 0 % 0.0 % 0.0 % Expected life — 2.50 years 2.81 years 2.50 years Volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. Volatility is derived from the historical daily change in the market price of our common stock, as we believe that historical volatility is the best indicator of future volatility. The risk-free interest rates used in the Black-Scholes calculations are based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve. We have never paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. Accordingly, we have assumed no dividend yield for purposes of estimating the fair value of our share-based compensation. The weighted average expected life of options was estimated using the average of the contractual term and the weighted average vesting term of the options. Certain options granted to consultants are subject to variable accounting treatment and are required to be revalued until vested. Stock-based compensation expense is based on awards ultimately expected to vest, and therefore is reduced by expected forfeitures. We have not had significant forfeitures of stock options granted to employees and directors as a significant number of our historical stock option grants were fully vested at issuance or were issued with short vesting provisions. Therefore, we have estimated the forfeiture rate of our outstanding stock options as zero. The total unrecognized compensation cost related to unvested stock option grants as of January 31, 2017 was approximately $82,000 and the weighted average period over which these grants are expected to vest is 0.40 years. For the three months ended January 31, 2017 and 2016, share-based compensation expense for stock options was $234,000 and $62,000 respectively. For the six months ended January 31, 2017 and 2016, share-based compensation expense for stock options was $460,000 and $78,000 respectively.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	6 Months Ended
	Jan. 31, 2017
Accounting Changes and Error Corrections [Abstract]
Recent Accounting Pronouncements	12. Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606)

Subsequent Events

Subsequent Events	6 Months Ended
	Jan. 31, 2017
Subsequent Events [Abstract]
Subsequent Events	13. Subsequent Events Subsequent to January 31, 2017, we received $79,500 from the exercise of warrants to purchase 106,000 shares of our common stock.

Inventory (Tables)

Inventory (Tables)	6 Months Ended
	Jan. 31, 2017
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventories consist of the following: January 31, 2017 July 31, 2016 Raw materials $ 98,000 $ 120,000 Finished goods 242,000 230,000 $ 340,000 $ 350,000

Fair Value of Financial Instr20

Fair Value of Financial Instruments (Tables)	6 Months Ended
	Jan. 31, 2017
Fair Value Disclosures [Abstract]
Schedule of Derivative Liabilities at Fair Value	The following table provides a reconciliation of the beginning and ending balances of the derivative liabilities for the six months ended January 31, 2017: Fair Value of Significant Unobservable Inputs (Level 3) Warrant Liabilities Balance at July 31, 2015 $ 4,000 Issuances 9,867,000 Settlement of warrant liabilities (13,550,000 ) Adjustments to estimated fair value 5,481,000 Balance at July 31, 2016 $ 1,802,000 Issuances — Settlement of warrant liabilities (8,000 ) Adjustments to estimated fair value (300,000 ) Balance at January 31, 2017 $ 1,494,000

Share-Based Compensation (Table

Share-Based Compensation (Tables)	6 Months Ended
	Jan. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Stock Option Activity	A summary of our stock option activity is as follows: Shares Weighted- Average Exercise Price Aggregate Intrinsic Value Outstanding at July 31, 2015 434,218 $ 4.07 $ — Granted 1,850,000 $ 1.07 Exercised — $ — Cancelled (6,250 ) $ 14.72 Outstanding at July 31, 2016 2,277,968 $ 1.60 $ 48,000 Granted 100,000 $ 1.02 Exercised — $ — Cancelled (253,125 ) $ 1.42 Outstanding at January 31, 2017 2,124,843 $ 1.60 $ 22,000
Schedule of Fair Value Assumptions	The fair value of options granted is estimated at the date of grant using the following weighted average assumptions for the three and six months ended January 31, 2017 and 2016: Three Months Ended Three Months Ended Six Months Ended Six Months Ended January 31, 2017 January 31, 2016 January 31, 2017 January 31, 2016 Volatility — % 96.60 % 74.71 % 96.60 % Risk-free interest rate — % 0.92 % 0.93 % 0.92 % Dividend yield — % 0 % 0.0 % 0.0 % Expected life — 2.50 years 2.81 years 2.50 years

Liquidity (Details Narrative)

Liquidity (Details Narrative) - USD ($)	Jan. 31, 2017	Jul. 31, 2016	Jan. 31, 2016	Jul. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cumulative net loss	$ 105,898,000	$ 103,219,000
Cash and cash equivalents	3,893,000	5,194,000	$ 6,706,000	$ 1,321,000
Accounts payable	424,000	$ 479,000
Long term debt

Net Loss Per Share (Details Nar

Net Loss Per Share (Details Narrative) - shares	6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016
Earnings Per Share [Abstract]
Number of antidilutive shares	11,980,795	28,609,468

Inventory - Schedule of Invento

Inventory - Schedule of Inventory (Details) - USD ($)	Jan. 31, 2017	Jul. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 98,000	$ 120,000
Finished goods	242,000	230,000
Inventory, net, total	$ 340,000	$ 350,000

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative) - USD ($)	Aug. 13, 2013	Jan. 31, 2017	Jul. 31, 2016
Restructuring liability		$ 29,000	$ 39,000
Dennis Brovarone [Member]
Release agreement payment	$ 91,000
Cash severance payment period	60 months
Monthly installment amount	$ 1,600

Impairment of Long-Lived Asse26

Impairment of Long-Lived Assets (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Impairment Of Long-lived Assets
Impairment of long-lived assets

Fair Value of Financial Instr27

Fair Value of Financial Instruments - Schedule of Derivative Liabilities at Fair Value (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jan. 31, 2017	Jul. 31, 2016
Warrant [Member]
Beginning balance	$ 1,802,000
Issuances
Settlement of warrant liabilities	(8,000)
Adjustments to estimated fair value	(300,000)
Ending balance	1,494,000	$ 1,802,000
Warrant [Member]
Beginning balance	$ 1,802,000	4,000
Issuances		9,867,000
Settlement of warrant liabilities		(13,550,000)
Adjustments to estimated fair value		5,481,000
Ending balance		$ 1,802,000

Derivative Liability (Details N

Derivative Liability (Details Narrative) - USD ($)	Nov. 23, 2015	Oct. 23, 2015	Jan. 31, 2017	Jan. 31, 2016	Jul. 31, 2012	Jan. 31, 2017	Jan. 31, 2016	Jul. 31, 2016
Derivative liabilities			$ 1,494,000			$ 1,494,000		$ 1,802,000
Proceeds from private placement
Warrants liabilities			1,494,000			1,494,000
Change in fair value of warrant liability			$ 300,000	$ 7,790,000		$ 459,000	$ 7,747,000
Bridge Loan [Member]
Warrants outstanding			9,709			9,709
Number of warrants exercise during the period			5,335			5,335
Issuance of share of common stock						4,179
Remaining Warrants to be issued			4,374			4,374
Number of warrants issued for bridge loan financing					132,420
2015 Private Placement Financing [Member]
Number of warrants issued			20,376,219			20,376,219
2015 Private Placement Financing [Member] | Six-Month Warrant [Member]
Warrants to purchase of common stock shares	2,820,670
Number of warrants issued								2,820,670
2015 Private Placement Financing [Member] | October Closing Date [Member] | Five Years [Member]
Warrants to purchase of common stock shares		6,666,666
Warrant term		5 years
2015 Private Placement Financing [Member] | October Closing Date [Member] | Six Months [Member]
Warrants to purchase of common stock shares		8,666,666
Warrant term		6 months
2015 Private Placement Financing [Member] | November Closing Date [Member]
Warrants liabilities			$ 1,494,000			$ 1,494,000
Warrants outstanding			2,222,217			2,222,217
Stock price			$ 0.88			$ 0.88
Warrant expiration warrant exercise price			$ 0.45			$ 0.45
Fair value assumption of historical stock price volatility						85.00%
Fair value assumption of risk free interest rate						1.70%
Fair value assumption of warrant expiration term						3 years 9 months 18 days
2015 Private Placement Financing [Member] | November Closing Date [Member] | Five Years [Member]
Warrants to purchase of common stock shares	2,222,217
Warrant term	5 years
2015 Private Placement Financing [Member] | November Closing Date [Member] | Six Months [Member]
Warrant term	6 months
Private Placement Financing [Member] | Five Years [Member]
Warrant term								5 years
Private Placement Financing [Member] | Six Months [Member]
Warrant term								6 months
Private Placement Financing [Member] | October Closing Date [Member]
Derivative liabilities			$ 7,008,000			$ 7,008,000
Proceeds from private placement						6,000,000
Other expenses						1,008,000
Private Placement Financing [Member] | November Closing Date [Member]
Proceeds from private placement						2,000,000
Other expenses						$ 859,000

Stockholders' Equity (Details N

Stockholders' Equity (Details Narrative) - USD ($)	Jan. 23, 2017	Dec. 01, 2016	Apr. 13, 2016	Jan. 31, 2017	Jan. 31, 2017	Jan. 31, 2016	Jul. 31, 2016
Proceeds from private placement
Expenses recognized related to services					72,000	$ 106,000
October Closing Date [Member] | Private Placement Financing [Member]
Proceeds from private placement					6,000,000
November Closing Date [Member] | Private Placement Financing [Member]
Proceeds from private placement					2,000,000
Private Placement Financing [Member]
Proceeds from private placement	$ 337,000				$ 1,104,000
Aggregate number of shares	396,469
Purchase price per share	$ 0.85
Number of warrants issued to purchase common stock	396,469
Warrant exercise price	$ 1.25
Warrant term	5 years
Private Placement Financing [Member] | Placement Agent Warrant [Member]
Number of warrants issued to purchase common stock				151,294	151,294
Warrant exercise price				$ 1.275	$ 1.275
Aggregate cash fees paid to placement agent					$ 128,600
Due diligence fees paid					12,000
Reimbursement of counsel fees					$ 35,000
Private Placement Financing [Member] | Accredited Investors [Member]
Proceeds from private placement		$ 1,000,000
Aggregate number of shares		1,176,472
Purchase price per share		$ 0.85
Number of warrants issued to purchase common stock		1,176,472
Warrant exercise price		$ 1.25
Warrant term		5 years
Registration Rights Agreement [Member] | February 6, 2017 [Member] | Private Placement Financing [Member]
Aggregate number of shares					1,572,941
2015 Private Placement Financing [Member] | October Closing Date [Member]
Proceeds from private placement					$ 6,000,000
2015 Private Placement Financing [Member] | November Closing Date [Member]
Proceeds from private placement					2,000,000
Six Months [Member] | Private Placement Financing [Member]
Warrant term							6 months
Warrants issued							2,820,670
Five Years [Member] | Private Placement Financing [Member]
Warrant term							5 years
Service Agreement [Member]
General financial advisory services			2 years
Number of common shares issued for services			250,000
Value of shares issued for services			$ 290,000
Expenses recognized related to services				$ 36,000	$ 72,000

Share-Based Compensation (Detai

Share-Based Compensation (Details Narrative) - USD ($)	Dec. 13, 2016	Feb. 29, 2016	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016	Jul. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options issued to purchase common stock					100,000		1,850,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 234,000	$ 62,000	$ 460,000	$ 78,000
2007 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares increase under the plan		4,000,000
Contractual life vesting periods		10 years
Number of shares available for issuance under the plan			2,200,000		2,200,000
Scientific Advisory Board Member [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options issued to purchase common stock					100,000
Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options issued to purchase common stock				110,000		110,000
RSU Cancellation Agreement [Member] | Officers and Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate number of vested shraes of common stock	3,900,000
Pre-vest expense reversed	$ 87,000
Restricted Stock Units RSU [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 24,000	$ 700,000	$ 75,000	$ 1,357,000
Restricted stock units outstanding			1,110,000		1,110,000
Shares expected to vest					150,000
Unrecognized non-cash compensation costs			$ 47,000		$ 47,000
Unrecognized non-cash compensation costs, weighted average period					6 months
Stock Option Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options were exercisable			1,652,343		1,652,343
Exercise price			$ 1.74		$ 1.74
Aggregate intrinsic value			$ 22,000		$ 22,000
Weighted-average contractual term of options outstanding					3 years 3 months 26 days
Weighted average grant date fair value for options granted					$ 0.49
Unrecognized compensation cost of unvested stock option grants			$ 82,000		$ 82,000
Weighted average period over grants are expected to vest					4 months 24 days

Share-Based Compensation - Sche

Share-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jan. 31, 2017	Jul. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options Outstanding Shares, Beginning Balance	2,277,968	434,218
Options Granted, Shares	100,000	1,850,000
Option Exercised, Shares
Options Cancelled, Shares	(253,125)	(6,250)
Options Outstanding Shares, Ending Balance	2,124,843	2,277,968
Weighted Average Exercise Price Outstanding, Beginning Balance	$ 1.60	$ 4.07
Weighted Average Exercise Price Granted	1.02	1.07
Weighted Average Exercise Price Exercised
Weighted Average Exercise Price Cancelled	1.42	14.72
Weighted Average Exercise Price Outstanding, Ending Balance	$ 1.60	$ 1.60
Aggregate Intrinsic Value Outstanding, Beginning Balance	$ 48,000
Aggregate Intrinsic Value Outstanding, Ending Balance	$ 22,000	$ 48,000

Share-Based Compensation - Sc32

Share-Based Compensation - Schedule of Fair Value Assumptions (Details)	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Volatility	0.00%	96.60%	74.71%	96060.00%
Risk-free interest rate	0.00%	0.92%	0.93%	0.92%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Expected life	0 years	2 years 6 months	2 years 9 months 22 days	2 years 6 months

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - Subsequent Event [Member]	Jan. 31, 2017USD ($)shares
Proceeds from exercise of warrants | $	$ 79,500
Warrants to purchase of common stock shares | shares	106,000