Quarterly report pursuant to sections 13 or 15(d)

Other Equity and Common Stock Transactions

Other Equity and Common Stock Transactions
3 Months Ended
Oct. 31, 2011
Other Equity and Common Stock Transactions  
Other Equity and Common Stock Transactions

Note 8— Other Equity and Common Stock Transactions


On March 1, 2011 the Company affected a 32 for one forward stock split of its authorized, issued and outstanding common stock.  As a result, its authorized capital increased from 100,000,000 shares of common stock at $0.001 par value to 3,200,000,000 shares of common stock at $0.0001 par value, and its outstanding common stock has increased from 2,140,000 shares of common stock to 68,480,000 shares of common stock as of that date.  The accompanying consolidated financial statements for the annual prior periods presented have been retroactively adjusted to reflect the effects of the forward stock split.


On March 22, 2011, 17,280,000 shares of common stock held by previous majority stockholders were returned to the Company for no consideration.  The shares were not retired and are available for future issuance.


On May 9, 2011, the Board of Directors authorized the issuance of 200,000 fully vested shares of the Company’s common stock to a consultant in exchange for advisory services.  The shares were valued at $332,000, based on the closing price of the Company’s common stock on the date of issuance, and are amortized over the service period of twelve months.  During the period ended October 31, 2011, $83,000 of consulting expense was recorded for these shares.


On September 28, 2011, in consideration for the Amendment entered into with Inovio, the Company issued to Inovio a warrant to purchase 1,000,000 shares of the Company’s common stock (see Note 6).  The warrant has an exercise price of $1.20 per share, is exercisable immediately upon issuance and has an exercise term of five years.  The warrant also contains a mandatory exercise provision allowing the Company to request the exercise of the warrant in whole provided that the Company’s Daily Market Price (as defined in the warrant) is equal to or greater than $2.40 for twenty consecutive trading days.  The Company completed an evaluation of the warrant issued in connection with this private placement and determined the warrants should be classified as equity within the consolidated balance sheet. The fair value of the warrant is $228,509 (based on the Black-Scholes Option Pricing Model assuming no dividend yield, volatility of 87.62%, and a risk-free interest rate of 0.96%).  In accordance with the guidance, the fair value of the warrants will be recorded as a discount to the acquisition obligation and amortized to interest expense over the remaining term of the modified obligation payable.


At October 31, 2011 the Company had outstanding warrants to purchase 14,696,000 shares of common stock, with exercise prices ranging from $0.75 to $1.20.  These warrants expire at various times between February 2012 and September 2016.  At October 31, 2011, 6,456,000 of these warrants were classified as equity instruments.  The remaining warrants in the amount of 8,240,000 were recorded as derivative liabilities.


The Company has not adopted any policy regarding payment of dividends.  No dividends have been paid during the periods presented.