STOCK-BASED COMPENSATION ARRANGEMENTS

12 Months Ended

Oct. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure Of Compensation Related Costs, Share-Based Payments [Text Block]

12. STOCK-BASED COMPENSATION ARRANGEMENTS

On February 13, 2004, the stockholders approved a stock option plan that provides for the granting of stock-based awards. The plan covers employees, directors and consultants and provides for among other things, the issuance of restricted stock, non-qualified options and incentive stock options. On June 8, 2005, the Company’s stockholders and Board of Directors approved the amendment and restatement to the Company’s 2004 Employee, Director and Consultant Stock Plan (renamed 2004 Employee, Director and Consultant Incentive Plan) (the “Plan”) to: (a) increase the number of shares of common stock reserved for issuance under the Plan by 4,000,000; (b) add a share-counting formula to the Plan pursuant to which each share issued under restricted stock or other awards, other than options or stock appreciation rights, counts against the number of total shares available under the Plan as 1.3 shares, and each share issued as options or stock appreciation rights counts against the total shares available under the Plan as one share; (c) increase the share limitation on the number of awards that may be granted to any participant in any fiscal year to 1,000,000; (d) add provisions for the grant of cash awards and other types of equity based awards; and (e) delete a provision allowing for the repricing of awards. On June 11, 2007, the Company’s stockholders and Board of Directors approved an amendment to the Plan to increase the number of shares of common stock reserved for issuance under the Plan by 4,000,000. On April 21, 2009 the Company’s stockholders and Board of Directors approved an amendment to the Plan to increase the number of common shares available for issuance under the Plan by 3,000,000 shares. On April 18, 2012 the Company’s stockholders and Board of Directors approved an amendment to the Plan to increase the number of common shares available for issuance under the Plan by 3,800,000 shares.

As of October 31, 2012, the Company had reserved 14.4 million shares of common stock for issuance under the Plan, of which 4.3 million shares are available for future issuance.

A summary of the status of the Company’s outstanding stock options as of October 31, 2012 and changes during the year then ended is presented below:

	Number Of Shares			Weighted Average Exercise Price
Outstanding at beginning of year		1,560,629		$	4.50
Granted		84,840		$	1.76
Cancelled		(390,744	)	$	3.33
Exercised		(13,158	)	$	0.68
Outstanding at end of year		1,241,567		$	4.72
Options exercisable at year-end		1,057,999		$	5.46
Weighted-average fair value of options granted during the year				$	1.11

The fair value of options granted during the year ended October 31, 2012 was $94.

The intrinsic value of options outstanding at October 31, 2012 was $99 based on a fair value of $1.00 per share. The intrinsic value of options exercised in the years ended October 31, 2012 and 2011 was $13 and $126, respectively.

The weighted average contractual term of exercisable and outstanding options October 31, 2012 was 3.0 years and 3.5 years, respectively.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions for the years ended October 31:

	2012			2011			2010
Risk free annual interest rate		0.5	%		1.5	%		1.3	%
Expected volatility		86	%		76	%		74	%
Expected life		4.25 years			4.25 years			4.25 years
Assumed dividends		None			None			None

Restricted stock grants are granted to directors and employees and have a vesting period of six months to three years. The value of restricted stock grants are measured based on their fair value on the date of grant and amortized over the vesting period.

Non-cash compensation expenses related to stock options and restricted stock grants are recorded in general and administrative expenses in the accompanying consolidated statements of operations and totaled $1,686, $1,468 and $1,395 for the years ended October 31, 2012, 2011 and 2010, respectively. As of October 31, 2012 and 2011, there was approximately $160 and $200 of unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 1.4 and 1.8 years, respectively. The total fair value of shares vested during October 31, 2012 was $948.

A summary of the status of the Company’s restricted stock grants as of October 31, 2012 and changes during the year then ended is presented below:

	2012
Balance at beginning of period		1,623,651
Granted		632,634
Vested		(859,851	)
Cancelled		(16,720	)
Outstanding at end of period		1,379,714

The fair value of restricted shares granted during the years ended October 31, 2012, 2011 and 2010 was $1,171, $2,084 and $893, respectively. As of October 31, 2012, there was approximately $1,854 of unrecognized compensation cost related to restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 1.8 years. The fair value of restricted shares vested during the years ended October 31, 2012, 2011 and 2010 was $1,698, $2,489 and $766, respectively.

On March 29, 2010, the Company issued warrants to purchase an aggregate of 100,000 shares of common stock to a consultant in consideration for services, under the Plan, of which 30,000 were exercised in 2011, 20,000 were exercised in 2012 and 50,000 were outstanding as of October 31, 2012. The warrants are exercisable at an exercise price of $1.06 at any time over a five-year period.

On July 21, 2006, the Company issued warrants to purchase an aggregate of 150,000 shares of common stock to a consulting firm in consideration for services, under the Plan. In the years ended October 31, 2012, 2011 and 2010, 0, 23,500, and 0 warrants were exercised on a cashless basis for 0, 14,160, and 0 shares of common stock, respectively, and 16,500 were outstanding as of October 31, 2012. The warrants are exercisable at an exercise price of $1.55 at any time over a seven-year period.

The Company issued 170,652 shares of restricted common stock as part of the inducement and retention of employees of Quick Hit, Inc. (See Note 16). The shares of restricted common stock have a transaction-date fair value of $524, which will be recognized as stock-based compensation expense as the shares vest at the rate of one-third of the shares granted every six months over the 18 month period following June 2011.