DERIVATIVE INSTRUMENTS

3 Months Ended

Jan. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

10.DERIVATIVE INSTRUMENTS

Warrants

As of January 31, 2013, there were outstanding warrants to purchase 125,154,408 shares of our common stock with exercise prices ranging from $0.045 to $0.17 per share. Information on the outstanding warrants is as follows:

Type	Exercise Price		Amount		Expiration Date	Type of Financing
Exchange warrants-nonexercisable	$	0.15		34,791,156	October 2014	July 2012 Warrant Exchanges
Common Stock Purchase Warrant	$	0.15		3,578,949	May 2015	May 2011 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.15		1,453,553	October 2014-October 2015	October 2011 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.15		2,213,234	January 2015-January 2016	December 2011 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.085		2,777,777	May 2017	May 2012 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.1399-0.17		25,400,659	January 2013-April 2015	Bridge Notes
Common Stock Purchase Warrant	$	0.15		46,956	N/A	Vendor & Other
Common Stock Purchase Warrant	$	0.085-0.15		3,735,430	May 2014 – May 2017	Placement Agent – Convertible Debt Financing
Common Stock Purchase Warrant		0.045-0.085		1,919,764	October 2015-August 2017	August – September 2012 Convertible Promissory Notes
Common Stock Purchase Warrant		0.15		23,676,930	December 2014	Tonaquint Promissory Note
		Subtotal:		99,594,408
Common Stock Purchase Warrant		TBD (1)		25,560,000	April 2014	Preferred Stock Agreement (4/04/2011)
		Grand Total		125,154,408

(1) During December 2011, the Company unreserved for issuance shares related to the preferred stock warrants. If exercisable, exercise price means an amount per warrant share equal to the closing sale price of a share of common stock on the applicable tranche notice date.

As of October 31, 2012, there were outstanding warrants to purchase 100,322,588 shares of our common stock with exercise prices ranging from $0.053 to $0.17 per share. Information on the outstanding warrants is as follows:

Type	Exercise Price		Amount		Expiration Date	Type of Financing
Exchange warrants-nonexercisable	$	0.15		34,791,156	October 2014	July 2012 Warrant Exchanges
Common Stock Purchase Warrant	$	0.15		3,578,949	May 2015	May 2011 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.15		1,453,553	October 2014-October 2015	October 2011 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.15		2,213,234	January 2015-January 2016	December 2011 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.15		2,777,777	May 2017	May 2012 Convertible Debt Financing
Common Stock Purchase Warrant	$	0.1495-0.17		24,754 ,595	January 2013-April 2015	Bridge Notes
Common Stock Purchase Warrant	$	0.15		46,956	N/A	Vendor & Other
Common Stock Purchase Warrant	$	0.15		3,735,430	May 2014 – May 2017	Placement Agent – Convertible Debt Financing
Common Stock Purchase Warrant		0.0530-0.15		1,410,938	October 2015-August 2017	August – September 2012 Convertible Promissory Notes
		Subtotal:		74, 762,588
Common Stock Purchase Warrant		TBD (1)		25,560,000	April 2014	Preferred Stock Agreement (4/04/2011)
		Grand Total		100,322,588

(1) During December 2011, the Company unreserved for issuance shares related to the preferred stock warrants. If exercisable, exercise price means an amount per warrant share equal to the closing sale price of a share of common stock on the applicable tranche notice date.

At both January 31, 2013 and October 31, 2012, the Company had approximately 15.1 million of its outstanding warrants classified as equity (equity warrants). At issuance, equity warrants are recorded at their relative fair values, using the Relative Fair Value Method, in the shareholders’ equity section of the balance sheet. Its equity warrants can only be settled through the issuance of shares and are not subject to anti-dilution provisions.

As of January 31, 2013, the Company had approximately 110 million of its total 125.1 million outstanding warrants classified as liability warrants (common stock warrant liability). The fair value of the warrant liability, as of January 31, 2013 was approximately $3.4 million. At October 31, 2012, the Company had approximately 85.2 million of its total 100.3 million outstanding warrants classified as liability warrants (common stock warrant liability). The fair value of the warrant liability, as of October 31, 2012, was approximately $0.4 million. In fair valuing the warrant liability, at January 31, 2013 and 2012, the Company used the following inputs in its Black-Scholes Model (BSM Model):

	(Unaudited) January 31, 2013			October 31, 2012
Exercise Price:		$  0.045-0.17			$  0.053-0.17
Stock Price		0.072			0.045
Expected term:		84-1769 days			81-1736 days
Volatility %		87.77%-180.89	%		66.51%-146.78	%
Risk Free Rate:		.06%-.26	%		.09-.56	%

Warrant Liability

As of January 31, 2013, the Company had approximately 110 million of its total approximately 125.1 million total warrants classified as liabilities (liability warrants). Of these 110 million liability warrants, approximately 75.2 million warrants are outstanding and 34.8 million warrants are exchange warrants – nonexercisable. The Company utilizes the BSM Model to calculate the fair value of these warrants at issuance and at each subsequent reporting date. For those warrants with exercise price reset features (anti-dilution provisions), the Company computes multiple valuations, each quarter, using an adjusted BSM model, to account for the various possibilities that could occur due to changes in the inputs to the BSM model as a result of contractually-obligated changes (for example, changes in strike price to account for down-round provisions). The Company effectively weights each calculation based on the likelihood of occurrence to determine the value of the warrants at the reporting date. Approximately 14.0 million of our 110 million liability warrants are subject to anti-dilution provisions. A certain number of liability warrants contain a cash settlement provision in the event of a fundamental transaction (as defined in the common stock purchase warrant). Any changes in the fair value of the warrant liability (i.e. - the total fair value of all outstanding liability warrants at the balance sheet date) between reporting periods will be reported on the statement of operations.

 As of January 31, 2013 and October 31, 2012, the fair value of the warrant liability was approximately $3.4 million and $434,000, respectively. For the three months ended January 31, 2013 and 2012, the Company reported expense of approximately $2.95 million and income of approximately$0.9 million, respectively, due to changes in the fair value of the warrant liability.

Exercise of Warrants

During the three months ended January 31, 2013, no warrants were exercised by investors.  During the three months ended January 31, 2012, investors in the Company exercised 2,745,097 warrants at a price of $0.15 per share, resulting in total proceeds to the Company of approximately $412,000.

Warrants with Anti-Dilution Provisions

Some of our warrants (approximately 14.0 million) contain anti-dilution provisions originally set at $0.20 with a term of five years. As of January 31, 2013, these warrants had an exercise price of approximately $0.14. As of October 31, 2012, these warrants had an exercise price of approximately $0.15. If the Company issues any common stock , except for exempt issuances as defined in the warrant for consideration less than the exercise price then the exercise price and the amount of warrant shares available would be adjusted to a new price and amount of shares per the “ weighted average” formula included in the warrant. The anti-dilution provision requires the Company to issue approximately 901,000 additional warrant shares; and the exercise price to be lowered to a de minimis amount ($0.1399). Any future financial offering or instrument issuance below the current exercise price will cause further anti-dilution and re-pricing provisions in approximately 14.0 million of our total outstanding warrants.

For those warrants with exercise price reset features (anti-dilution provisions), the Company computes multiple valuations, each quarter, using an adjusted BSM model, to account for the various possibilities that could occur due to changes in the inputs to the BSM model as a result of contractually-obligated changes (for example, changes in strike price to account for down-round provisions). The Company utilized different exercise prices of $0.1399 and $0.10, weighting the possibility of warrants being exercised at $0.1399 between 40% and 50% and warrants being exercised at $0.10 between 60% and 50%.

As of January 31, 2013, there were outstanding warrants to purchase 90,363,252 shares of our common stock and exchange warrants - nonexercisable to purchase 34,791,156 shares of our common stock with exercise prices ranging from $0.045 to $0.17 per share.