Annual report pursuant to Section 13 and 15(d)

Acquisition Obligation

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Acquisition Obligation
12 Months Ended
Jul. 31, 2015
Acquisition Obligation  
Acquisition Obligation

Note 7—Acquisition Obligation

 

On March 24, 2011, the Company recorded an acquisition obligation for amounts due to Inovio in accordance with the Asset Purchase Agreement (see Note 6).  Amendments were entered into which obligated the Company to make certain payments on certain dates. In addition, in consideration of the two amendments entered into, the Company issued to Inovio a warrant to purchase 50,000 shares of common stock pursuant to the first amendment and a warrant to purchase 150,000 shares of common stock pursuant to the second amendment. The Company evaluated these warrants and determined that each met the criteria for equity classification.

 

In accordance with ASC 835-30 “Interest on Receivables and Payables”, the future payments under the acquisition obligation were discounted using the incremental borrowing rate of 5.0%, to arrive at an initial imputed interest discount on the obligation as of the acquisition date of approximately $174,000.  The imputed interest discount was recorded as a reduction to the relative fair value of the intangible assets acquired (see Note 6).  The discount was revised with each purchase agreement amendment.  Non-cash interest expense recognized during the years ended July 31, 2015, 2014 and 2013 was approximately $0, $21,000 and $83,000, respectively.

 

The scheduled payments for the $3,000,000 obligation under this arrangement, as amended, were completed by December 31, 2013. At July 31, 2015 and July 31, 2014 there were no payment obligations outstanding under the Asset Purchase Agreement.