Stockholders' Equity

12 Months Ended

Oct. 31, 2015

(7) STOCKHOLDERS’ EQUITY

Common Stock

On August 29, 2013, we entered into an agreement for investor relation services that required us to issue up to 400,000 shares of common stock as a component of the consideration for the services. The shares were issuable in 100,000 increments for each quarter of service rendered. We valued these shares at $224,000 using the Black-Scholes option pricing model and recognized expense over the 12 months the services were rendered. For the year ended October 31, 2014 we recorded $186,667 of stock compensation expense which is included in general and administrative expense in the accompanying consolidated statements of operations with a corresponding entry to liabilities on the accompanying consolidated balance sheet. There was no expense under this agreement during the year ended October 31, 2015.

Units

During the year ended October 31, 2014 we sold 25,000 (the “Units”) for $1.00 per Unit, receiving net proceeds of $24,956. Each Unit consists of (i) one share of common stock, and (ii) two warrants with one warrant exercisable at $1.50 per share and one warrant exercisable at $2.00 per share. (the “Unit Warrants”). The Unit Warrants expire five years from the date of issuance.

Warrants

As of October 31, 2015, we had 5,518,358 warrants outstanding with weighted average remaining lives of 19 months and a weighted average exercise price of $1.66.

Stock Options

On November 1, 2013, we issued a non-statutory stock option to acquire up to 200,000 shares of common stock with an exercise price of $1.00 per share to a consultant for providing certain services as defined in the consulting agreement. The option expires 7 years from the date of grant. The options vest as follows: (i) as to 100,000 options, vesting shall occur 1/3 on each one year anniversary date of the consulting agreement (“Vesting 1”) and (ii) as to 100,000 options, vesting shall occur upon the closing of certain transactions as defined in the agreement at a rate of 2 stock options for each $100 received by the Company in a deal or transaction resulting from the efforts of the consultant (“Vesting 2”). We valued this option at $58,400 using the Black Scholes option-pricing model using the following assumptions: option life 5 years, risk free interest rate 1.37%, and annualized volatility of 78.9% based on a peer group of publicly traded common stocks. Stock options issued to non-employees are remeasured at each reporting date and the cumulative expense is adjusted based on the remeasured grant. We are recognizing expense for this option as the underlying services are provided, ratably over 36 months for Vesting 1, and upon the occurrence of a vesting event for Vesting 2. For the years ended October 31, 2015 and 2014, we recognized $9,733 of expense for this option which is included in general and administrative expense on the accompanying consolidated statements of operations.

In April 2014, we issued stock options to acquire 1,200,000 shares of common stock to certain employees and consultants with an exercise price of $1.00 per share. The options expire 7 years from the date of grant. The options vest under terms ranging from immediately to 1/3 on each anniversary date from the date of grant. We valued these options at $352,800 using the Black Scholes option-pricing model using the following assumptions: option life 5 years, risk free interest rate 1.65%, and annualized volatility of 78.9% based on a peer group of publicly traded stocks. We are recognizing expense for these options over the respective vesting periods. For the years ended October 31, 2015 and 2014, we recognized $66,150 and $185,483, respectively, of expense for these options which is included in general and administrative expense on the accompanying consolidated statements of operations.

In August 2014, we issued 75,000 stock options to a board member for his services as a director as well as certain consulting services provided. The options have an exercise price of $1.00 per share, vested immediately and expire 5 years from the date of grant. We valued these option at $22,050 using the Black Scholes option-pricing model using the following assumptions: option life 5 years, risk free interest rate 1.63%, and annualized volatility of 78.9% based on a peer group of publicly traded common stocks. For the year ended October 31, 2014, we recognized $22,050 of expense for these options which is included in general and administrative expense on the accompanying consolidated statements of operations.

A summary of stock option activity for the year ended October 31, 2015 follows below:

	Number of Shares	Avg. Weighted Exercise Price
Shares outstanding, October 31, 2014	1,450,000	$ 1.00
Shares granted	--	--
Shares exercised	--	--
Shares forfeited	--	--
Shares outstanding, October 31, 2015	1,450,000	$ 1.00
Exercisable at October 31, 2015	833,333	$ 1.00

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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+ Details

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