STOCK BASED COMPENSATION ARRANGEMENTS

3 Months Ended

Jan. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK BASED COMPENSATION ARRANGEMENTS

8. STOCK BASED COMPENSATION ARRANGEMENTS

Stock-based compensation expense in the three months ended January 31, 2016 and 2015 amounted to approximately $547,000 and $220,000 respectively. Stock-based compensation expense is recorded in general and administrative expenses in the accompanying consolidated statements of operations.

A summary of the Company’s stock option activity in the three months ended January 31, 2016 is presented below:

	Number of shares	Weighted-Average Exercise Price
Outstanding at beginning of period	579,485	$                           2.82
Granted	38,092	$                           1.05
Exercised	(189,938)	$                           0.68
Expired	(105,933)	$                           5.12
Outstanding at end of period	321,706	$                           3.11
Options exercisable at year-end	276,621	$                           3.44
Weighted-average fair value of options granted during the period		$                           1.05

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the three months ended January 31, 2016:

	January 31, 2016
Risk free annual interest rate	1.7%
Expected volatility	79%
Expected life	5
Assumed dividends	None

The value of stock option grants is amortized over the vesting period of, generally, one to three years. As of January 31, 2016, there was approximately $43,000 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 0.5 year.

A summary of the Company’s restricted stock activity in the three months ended January 31, 2016 is presented below:

	Number of shares	Weighted-Average Grant-Date Fair Value
Unvested at beginning of period	1,384,791	$                           1.25
Granted	50,000	$                           0.77
Vested	(272,711)	$                           1.25
Forfeited	-	$                             -
Unvested at end of period	1,162,080	$                           1.22

 The weighted-average fair value of restricted shares granted during the three months ended January 31, 2016 was $0.77. The total fair value of restricted stock vested during the three months ended January 31, 2016 was approximately $535,000.

The value of restricted stock grants are measured based on their fair value on the date of grant and amortized over the vesting period of, generally, six months to three years. As of January 31, 2016, there was approximately $1.1 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.7 years. The vesting period of 630,212 restricted shares is subject to acceleration upon the achievement of certain performance conditions related to financing or other corporate transactions.