Stock-Based Compensation

12 Months Ended

Oct. 31, 2017

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

Stock-Based Compensation

9. STOCK-BASED COMPENSATION

In the years ended October 31, 2017 and 2016, the Company recorded stock-based compensation expense related to restricted stock awards and stock options as follows (in thousands):

	For the Years Ended October 31,
	2017		2016
General and administrative expense:
Continuing operations	$	14,869	$	2,042
Discontinued operations		1,118		1,100
		15,987		3,142
Research and development expense:
Continuing operations		1,758		-
Total stock-based compensation expense	$	17,745	$	3,142

Incentive Compensation Plans

In the fiscal years ended October 31, 2017 and 2016, the Company made, stock-based compensation awards under its 2017 Equity Incentive Plan (the “2017 Plan”), 2016 Equity Incentive Plan (the “2016 Plan”), 2014 Equity Incentive Plan (the “2014 Plan”) and its Amended and Restated 2004 Employee, Director and Consultant Incentive Plan (the “2004 Plan”).

2017 Plan

On December 1, 2016, the Company’s Board of Directors (the “Board”) approved the Company’s 2017 Equity Incentive Plan (the “2017 Plan”). The purpose of the 2017 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees, consultants and other eligible persons. The 2017 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to the Company’s employees, officers, directors and consultants. The Compensation Committee of the Board will administer the 2017 Plan, including determining which eligible participants will receive awards, the number of shares of common stock subject to the awards and the terms and conditions of such awards. Up to 7,300,000 (increased from 3,450,000 in October 2017) shares of common stock are issuable pursuant to awards under the 2017 Plan. Unless earlier terminated by the Board, the 2017 Plan shall terminate at the close of business on December 1, 2026.

2016 Plan

In the fiscal year ended October 31, 2016, the Company adopted the 2016 Plan, an omnibus equity incentive plan administered by the Company’s board of directors, or by one or more committees of directors appointed by the Board, pursuant to which the Company may issue up to 666,665 shares of the Company’s common stock under equity-linked awards to certain officers, employees, directors and consultants. The 2016 Plan permits the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted shares, restricted share units, cash awards, or other awards, whether at a fixed or variable price, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof. As of October 31, 2017, the Company had zero shares available for future issuances under the 2016 Plan.

2014 Plan

In the fiscal year ended October 31, 2015, the Company adopted the 2014 Plan, an omnibus equity incentive plan administered by the Company’s board of directors, or by one or more committees of directors appointed by the Board, pursuant to which the Company may issue up to 375,000 shares of the Company’s common stock under equity-linked awards to certain officers, employees, directors and consultants. The 2014 Plan permits the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted shares, restricted share units, cash awards, or other awards, whether at a fixed or variable price, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof. As of October 31, 2017, the Company had approximately 83,262 shares available for future issuances under the 2014 Plan.

2004 Plan

The 2004 Plan covers employees, directors and consultants and also provides for the issuance of restricted stock, non-qualified stock options, incentive stock options and other awards under terms determined by the Company. In April 2014, 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 71,429 shares. As of October 31, 2017, the Company had approximately 19,217 shares available for future issuances under the 2004 Plan.

Stock Options

Employee stock-option activity in the fiscal year ended October 31, 2017:

	Number of shares			Weighted-Average Exercise Price
Outstanding, October 31, 2015		97,771		$	16.81
Granted		347,010		$	4.84
Forfeited		(12,258	)	$	36.97
Exercised		(31,657	)	$	4.08
Expired		(17,656	)	$	30.72
Outstanding - October 31, 2016		383,210		$	5.74
Granted		3,482,000		$	6.29
Exercised		(268,847	)	$	4.84
Forfeited		(70,833	)		6.42
Outstanding - October 31, 2017		3,525,530		$	6.34
Options exercisable, October 31, 2017		1,415,440		$	4.26
Weighted-average grant date fair value of options granted during the year				$	4.28

Non-employee stock option activity in the fiscal year ended October 31, 2017:

	Number of shares		Weighted-Average Exercise Price
Outstanding - October 31, 2016		-	$	-
Granted		293,000	$	19.61
Outstanding - October 31, 2017		293,000	$	19.61
Options exercisable - October 31, 2017		26,667	$	6.87

Stock options are generally granted to employees or non-employees at exercise prices equal to the fair market value of the Company’s stock at the dates of grant. Stock options generally vest over one to three years and have a term of five to ten years. The total fair value of employee options granted during the year ended October 31, 2017 was approximately $14.9 million. The grant date fair value of non-employee option granted was approximately $4.0 million. The intrinsic value of options outstanding at October 31, 2017 was $70.7 million. The intrinsic value of options exercised during the fiscal year ended October 31, 2017 was $3.2 million. The weighted average remaining contractual term of outstanding and exercisable options at October 31, 2017 was 9.2 years and 9.0 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 range of assumptions for the years ended October 31:

	October 31,
	2017			2016
Risk free annual interest rate		1.64%-2.43	%		1.03%-1.73	%
Expected volatility		71.65-86.48	%		77.49-81.91	%
Expected term of options (years)		5.04-6.01			2.75-5.26
Assumed dividends		-			-

The fair value of employee and non-employee stock option grants is amortized over the vesting period of, generally, one to three years. As of October 31, 2017, there was approximately $12.2 million of unrecognized compensation cost related to non-vested employee and non-employee stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.7 year.

Restricted-stock activity for employees and non-employees in the fiscal year ended October 31, 2017:

	Number of shares			Weighted-Average Grant-Date Fair Value
Unvested, October 31, 2015		230,799		$	7.47
Granted		356,666		$	5.14
Vested		(312,636	)	$	6.10
Unvested - October 31, 2016		274,829		$	6.00
Granted		1,057,500		$	4.80
Vested		(1,105,197	)	$	4.47
Unvested - October 31, 2017		227,132		$	7.83

The total fair value of restricted stock vested during the year ended October 31, 2017 was approximately $5.1 million.

The value of restricted stock grants is measured based on the fair market value of the Company’s common stock on the date of grant and amortized over the vesting period of, generally, six months to three years. As of October 31, 2017, there was approximately $1.3 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 0.4 years.