Stockholders’ Equity

6 Months Ended

Apr. 30, 2024

Equity [Abstract]

Stockholders’ Equity

Note 7 – Stockholders’ Equity

Series B Convertible Preferred Stock

On May 30, 2023, the Company issued 900,000 shares of the Series B Preferred Stock as consideration for the acquisition of the GoFire Purchased Assets. The Series B Preferred Stock carries no voting rights except: (i) with respect to the ability of the holders of a majority of the then outstanding Series B Preferred Stock (the “Majority Holders”), to nominate a director to the Company’s board of directors, and (ii) that the vote of the Majority Holders is necessary for effecting any amendment to the Company’s Certificate of Incorporation or Certificate of Designation that affects the Series B Preferred Stock. The Series B Preferred Stock is redeemable at the option of the Company at a redemption price of $15 per share, subject to potential downward adjustments based on the trading price of the Common Stock. Subject to additional limitations in the GoFire APA, the Series B Preferred Stock holds seniority over the Common Stock and each other class of series of securities now existing or hereafter authorized with respect to dividend rights, the distribution of assets upon liquidation, and dissolution and redemption rights. Upon a liquidation and winding up of the Company, the holders of Series B Preferred Stock are entitled to a liquidation preference of $15 per share (the “Liquidation Preference”), though the redemption may be adjusted downward based on the trading price of the Common Stock at the time of liquidation. The holders of Series B Preferred Stock are entitled to receive a dividend equal to 2% of the Liquidation Preference, accruing from the Closing Date and payable on the eighteen-month anniversary of the Closing Date. Amounts payable in respect of the Series B Dividend shall begin to accrue on a daily basis, be cumulative from and including the Original Issue Date, whether or not the Corporation has funds legally available for such dividends or such dividends are declared, shall compound on each six month anniversary of the Original Issue Date and shall be payable in arrears on the 18-month anniversary of the Original Issue Date. No preemptive rights are granted to the holders of Series B Preferred Stock. The Majority Holders have the ability to cause a voluntary conversion of the Series B Preferred Stock into Common Stock at a conversion rate of 0.3968 shares of Common Stock per share of Series B Preferred Stock which may only occur on or after the following dates 18-month, 24 month, 36 month, 48 month, and 60 month anniversary of the original issuance date; and only up to 180,000 shares of Series B Preferred Stock on each of these dates. All shares of Series B Preferred Stock will automatically convert to Common Stock upon the occurrence of a Change of Control (as defined in the GoFire APA).

Reverse Stock Split

On January 22, 2024, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to affect a 1-for-21 reverse stock split (the “2024 Reverse Stock Split”) of the shares of the Common Stock. The 2024 Reverse Stock Split was effective on January 25, 2024, on the Nasdaq Stock Market. No fractional shares were issued in connection with the 2024 Reverse Stock Split. Any fractional shares of the Company’s Common Stock that would have otherwise resulted from the 2024 Reverse Stock Split were rounded up to the nearest whole number. In connection with the 2024 Reverse Stock Split, the Board approved appropriate and proportional adjustments to all outstanding securities or other rights convertible or exercisable into shares of the Common Stock, including, without limitation, all preferred stock, warrants, options, and other equity compensation rights. All historical share and per-share amounts reflected throughout the accompanying unaudited interim consolidated financial statements and other financial information in this Report have been retroactively adjusted to reflect the 2024 Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of the Common Stock was not affected by the 2024 Reverse Stock Split.

Common Stock

During the three and six months ended April 30, 2024, the Company issued zero and 52,949 shares of common stock, respectively, for rounding of shares related to the Reverse Split.

During the three and six months ended April 30, 2024, the Company issued zero and 16,667 shares of common stock, respectively, to a FINRA member broker-dealer in connection with the termination of its relationship with such broker dealer. The fair value was $62,000 based on the closing price of the common stock on the termination date and recorded as stock-based compensation.

Stock Options  

Summary of stock options information is as follows:

									Weighted
				Aggregate					Average
	Aggregate Number			Exercise Price			Exercise Price Range		Exercise Price
Outstanding, October 31, 2023		449,106		$	14,081,408		$	10.08-602.28	$	31.36
Granted		104,693			529,899			2.81-11.76		5.06
Exercised		—			—			—		—
Cancelled, forfeited, or expired		(285,978	)		(4,504,492	)		2.81 - 36.12		15.75
Outstanding, April 30, 2024		267,821		$	10,106,815		$	2.81-602.28	$	37.74
Exercisable, April 30, 2024		225,963		$	9,619,018		$	3.64-602.28	$	42.57

During the three months ended April 30, 2024, and 2023, the Company recognized ($289,088) and $1,352,938, respectively, of stock option expense related to outstanding stock options. During the six months ended April 30, 2024, and 2023, the Company recognized $20,870 and $2,788,725, respectively, of stock option expense related to outstanding stock options. The stock option expense is net of forfeitures related to the stock option expense of cancelled stock options during the three and six months ended April 30, 2024 that were reversed. The weighted-average grant-date fair value of the options granted during the fiscal six month periods ended April 30, 2024 and April 30, 2023 was $5.03 and $17.64, respectively.

On April 30, 2024, the Company had $144,413 of unrecognized expenses related to options, which is expected to be recognized over a weighted-average period of approximately 1.30 years. The weighted average remaining contractual life is approximately 8.53 years for stock options outstanding on April 30, 2024. The aggregate intrinsic value of these outstanding options as of April 30, 2024, was $25,920.

Compensation expense related to performance-based options is recognized on a straight-line basis over the requisite service period, provided that it is probable that performance conditions will be achieved, with probability assessed on a quarterly basis and any changes in expectations recognized as an adjustment to earnings in the period of the change. Compensation cost is not recognized for service- and performance-based awards that do not vest because service or performance conditions are not satisfied, and any previously recognized compensation cost is reversed. If vesting occurs prior to the end of the requisite service period, expense is accelerated and fully recognized through the vesting date.

Warrants

Warrant information as of the periods indicated is as follows:

									Weighted
	Aggregate			Aggregate			Exercise Price		Average
	Number			Exercise Price			Range		Exercise Price
Outstanding, October 31, 2023		242,548		$	13,946,006		$	12.39-126.00	$	57.51
Granted		—			—			—		—
Exercised		—			—			—		—
Cancelled, forfeited, or expired		(36,912	)		(544,025	)		12.39-15.33		14.74
Outstanding, April 30, 2024		205,636		$	13,401,981		$	39.90-126.00	$	65.19
Exercisable, April 30, 2024		205,636		$	13,401,981		$	39.90-126.00	$	65.19

The weighted average remaining contractual life is approximately 2.72 years for Common Stock warrants outstanding as of April 30, 2024. As of April 30, 2024, there was no intrinsic value of outstanding stock warrants.