Stockholders Equity [Text Block] | 12. Stockholders’ Equity Effective August 10, 2015, the Company effected a reverse stock split of the basis of 1:40. As such, the Company’s authorized capital was decreased from 450,000,000 shares of common stock to 11,250,000 shares of common stock and an aggregate of 53,278,818 shares of common stock issued and outstanding were decreased to 1,331,977 shares of common stock. These financial statements give retroactive effect to such reverse split and all share and per share amounts have been adjusted accordingly. Authorized 11,250,000 shares of common stock, par value $0.001. Nine months ended October 31, 2015 i) In connection with a debt settlement agreement, the Company issued 2,500 common shares to a consultant of the Company. The fair value of $4.80 per share was determined with reference to the quoted market price of the Company’s shares on the date these shares were committed to be issued. There was no gain or loss in connection with the debt settlement agreement. ii) On July 3, 2015, the Company issued an aggregate 205,248 shares of common stock at $4 per share, in connection with warrant amendment agreements (the “Warrant Amendments”) for gross proceeds of $821,000. Under the terms of the Warrant Amendments, the holders of such warrants elected to reduce the exercise price of the warrants from $6 to $4, subject to a shortened exercise period and subject to certain resale restrictions on the shares issuable upon exercise of such warrants. Of the total, an aggregate of 140,249 of the shares issued were issued to a director and officer of the Company and a director of the Company for an aggregate exercise price of $560,996. The Company determined that the Warrant Amendments must be accounted for using modification accounting pursuant to the guidance under Accounting Standards Codification 718 (“ASC 718 ”). Under this guidance, a short-term inducement offer shall be accounted for as a modification of the terms of equity based awards, to the extent that the inducement is accepted by the equity holders. Modification accounting requires the incremental fair value of the instrument arising from the modification to be recognized as an expense on the income statement, or a charge directly to equity, depending on the nature of the offer. The Company determined that it was appropriate to record the incremental fair value of the Warrant Amendments as an expense on the income statement and consequently the Company recorded the incremental fair value as a component of general and administrative expenses on the consolidated statement of operations for the three and nine months ended October 31, 2015. The Company determined that the incremental fair value of the instruments arising from the modification was $32,800, based on the difference between the fair value of the warrants immediately prior to the amendment and the fair value of these instruments immediately after the amendment. The fair values were determined using the Black Scholes option pricing model based on the following assumptions: risk free interest rate 1.33%, expected life: 3.94 years, expected volatility: 139.54%, dividend yields: 0.00%. iii) On August 3, 2015, the Company consummated a tender offer to amend and exercise certain warrants to purchase common stock of the Company. Under the terms of the tender offer, the holders of such warrants elected to reduce the exercise price of the warrants from $6 to $4, subject to a shortened exercise period and subject to certain resale restrictions on the shares issuable upon exercise of such warrants. Pursuant to the tender offer, the holders of an aggregate of 380,457 warrants agreed to amend their warrants and tendered and exercised such warrants for gross proceeds to the Company of $1,521,996. In connection with the Tender Offer, the Company incurred issuance costs of $91,422. 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 our common shares 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 October 31, 2015, 607,101 options remain 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 October 31, 2015 and January 31, 2015 is presented below: Weighted Weighted Average Number Average Grant Date of Options Exercise Price Fair Value Outstanding at February 1, 2014 75,125 $ 13.60 Expired (7,125 ) $ 10.00 Granted 1,726,875 $ 5.20 $ 8.40 Outstanding at January 31, 2015 1,794,875 $ 5.48 $ 8.40 Expired (9,375 ) $ 23.33 Forfeited (3,750 ) $ 4.48 Granted 422,399 $ 4.48 $ 4.16 Outstanding at October 31, 2015 2,204,149 $ 5.22 Exercisable at October 31, 2015 1,113,471 $ 5.49 Exercisable at January 31, 2015 346,563 $ 6.80 At October 31, 2015, the following stock options were outstanding, entitling the holder thereof to purchase common shares of the Company as follows: Exercise Expiry Number Number Price Date Vested 375 $ 10.00 December 19, 2015 375 3,750 $ 14.00 January 6, 2016 3,750 3,750 $ 22.00 January 6, 2016 3,750 5,000 $ 30.00 January 6, 2016 5,000 1,375 $ 10.00 April 1, 2016 1,375 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 1,699,250 $ 5.12 June 6, 2024 949,750 25,000 $ 6.00 June 10, 2024 15,000 37,500 $ 4.48 February 3, 2025 - 37,500 $ 4.48 February 25, 2025 - 6,250 $ 4.80 July 6, 2025 - 337,399 $ 4.40 August 18, 2025 87,471 2,204,149 1,113,471 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 October 31, 2015, the aggregate intrinsic value of stock options outstanding is $Nil and exercisable is $Nil (January 31, 2015: $Nil and $Nil, respectively). During the three and nine months ended October 31, 2015, the Company recognized a total fair value of $1,613,117 and $4,065,628, respectively (2014: $1,973,875 and $2,094,586, respectively) of stock based compensation expense relating to the issuance of stock options in exchange for services. An amount of approximately $9,232,000 in stock based compensation expense is expected to be recognized over the remaining vesting term of these options to August, 2018. 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: 2015 2014 Expected term of stock option (years) (1) 6.43 2.14 Expected volatility (2) 124.33% 142.13% Stock price at date of issuance $ 4.71 $ 5.60 Risk-free interest rate 1.81% 0.53% 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 (“SAB 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 October 31, 2015, the Company had 1,508,018 share purchase warrants outstanding as follows: Exercise Expiry Number Price Date 6,250 $ 4.00 November 14, 2016 6,250 $ 4.00 November 26, 2016 5,688 $ 4.00 December 24, 2016 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 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 1,508,018 (1) These warrants may vest and become exercisable only under certain anti-dilution performance conditions contained in the warrant During the nine months ended October 31, 2015, 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 $4.61 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 153.15%, expected dividend yield 0.00%, risk free interest rate 2.12% . 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 $165,849 and $325,648 during the three and nine months ended October 31, 2015, respectively (2014: $Nil and $Nil, respectively) in connection with warrants granted. Certain of the warrants granted during the nine months ended October 31, 2015 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 $168,530 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 yet 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, 2014 94,262 $ 16.00 Cancelled (15,000 ) $ 20.00 Issued 1,579,581 $ 5.60 Expired (30,262 ) $ 25.60 Outstanding at January 31, 2015 1,628,581 $ 5.74 Issued 479,757 $ 4.84 Exercised (585,709 ) $ 4.00 Expired (14,611 ) $ 9.82 Outstanding at October 31, 2015 1,508,018 $ 5.10 |