11. STOCKHOLDERS' EQUITY

12 Months Ended

Oct. 31, 2013

Equity [Abstract]

STOCKHOLDERS' EQUITY

a. The Company concluded an offering to selected investors of 890,000 units, each of which consisted of one share of our common stock, par value $0.001 per share, and three-tenths (3/10ths) of a warrant, each to purchase one share of our common stock at an exercise price of $13.59 per share.  The units were sold at a per unit price of $10.40.  No units were issued, however, and investors received only shares of common stock and warrants.  The common stock and the warrants were transferrable separately immediately upon issuance.  The warrants are currently exercisable and will expire on April 1, 2017.   The gross proceeds of the offering amounted to $9,256,000.  The offering costs consisted of placement agent fee of $647,920, underwriter fee of $77,456, regulatory fee of $12,223 and legal and professional fees of $186,610, resulting in net proceeds received of $8,331,791.

The Warrants issued in the subscription agreement are linked to 267,000 shares of common stock with an exercise price of $13.59 per share.  The Warrants became exercisable on April 1, 2012 and remain exercisable through April 1, 2017. The exercise price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.  The Warrants may also be exercised on a cashless basis under a formula that explicitly limits the number of issuable common shares. Further, the exercisability of the Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.9% and 9.9% of the Company’s Common Stock.

The principal concepts underlying accounting for warrants provide a series of conditions, related to the potential for net cash settlement, which must be met in order to achieve equity classification. Management evaluated the terms and conditions of the Warrants and determined that i) the Warrants did not embody any of the conditions for liability classification under ASC 480 and ii) they were considered to be solely indexed to the

Company’s own stock and met all the established criteria for equity classification set forth in ASC 815. Accordingly, the Warrants achieved equity classification at inception. The classification of the Warrants will be re-evaluated each reporting period.

b. Treasury Stock.  The Company utilizes the cost method of accounting for treasury stock.  The cost of reissued shares is determined under the last-in, first-out method.  The Company did not purchase any shares during the years ended October 31, 2013 and 2012.

c. Dividends.  On December 27, 2012, the Company paid a cash dividend of $387,379 ($0.06 per share) to all stockholders of record as of December 15.  On October 26, 2012, July 26, 2012, April 30, 2012 and January 26, 2012 the Company paid a cash dividend of $193,689 ($0.03 per share) to all stockholders of record as of October 16, 2012, July 16, 2012, April 17, 2012 and January 16, 2012.  On June 30, 2013, the Company announced that the Board elected to terminate the dividend program.