Stockholders' Equity (Deficit)

9 Months Ended

Oct. 31, 2015

Equity [Abstract]

Stockholders' Equity (Deficit)

Note 11 - Stockholders’ Equity (Deficit)

(A) Series A Convertible Preferred Stock Transactions

On May 28, 2015, the Company amended its articles of incorporation to establish the designation, powers, rights, privileges, preferences and restrictions of the Series A Convertible Preferred Stock (“Series A Preferred”). The Company authorized 120,000 shares of Series A Preferred with each share of our Series A Preferred having a par value of $0.00001 and stated value equal to $100, as adjusted for stock dividends, combinations, splits and certain other events. The holders of the Series Preferred A will be entitled to dividends at a rate of 8%, liquidation preference equal to $1.25 per share and the option to convert the preferred shares to common stock. On July 23, 2015, the preference changed to $1.00. During September 2015, the liquidation preference was changed to $0.675.

During May 2015, six directors of the Company entered into convertible note agreements with a maturity date of July 22, 2016 for total proceeds to the Company of $650,000. In June 2015, the notes were converted into Series A Preferred. Additional proceeds of $560,000 were received pursuant to closings that occurred in June, August and September. In connection with the closings, the Company also granted warrants to purchase 1,481,481 and 179,259 shares of common stock at $0.675 per share to shareholders and the placement agent, respectively. The warrants granted to the placement agent have a grant date fair value of $84,547 which is treated as a direct cost of the Financing and has been recorded as a reduction in additional paid in capital.

(B) Common Stock Transactions

Common Stock

On December 19, 2014, the Company issued a convertible redeemable debenture (the “Manatuck Debenture” as discussed in Note 8). Upon issuance of the Manatuck Debenture, the Company granted Manatuck 200,000 shares of the Company’s restricted common stock. In April 2015 the maturity date of the note was extended until May 2016. Upon execution of the extension, the Company granted Manatuck 30,000 shares of the Company’s restricted common stock.

During the nine months ended October 31, 2015, the Company issued 8,540 shares of its common stock for a cashless conversion of 22,666 warrants.

During the nine months ended October 31, 2015, the Company issued 231,175 shares of its common stock to employees for services rendered a value of $111,449.

Treasury Stock

As discussed in Note 8, upon amendment of the Manatuck Debenture on October 29, 2015, the Company repurchased the 230,000 shares for an aggregate purchase price of $149,500 which is presented as Treasury Stock on the condensed consolidated balance sheets.

(C) Options

The following is a summary of the Company’s option activity:

	Options		Weighted Average Exercise Price
Outstanding – January 31, 2015		496,404	$	1.04
Exercisable – January 31, 2015		496,404	$	1.04
Granted		-	$	-
Exercised		-	$	-
Forfeited/Cancelled		-	$	-
Outstanding – October 31, 2015		496,404	$	1.04
Exercisable – October 31, 2015		496,404	$	1.04

Options Outstanding					Options Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	1.00		487,404	2.49 years	$	1.00		487,404	$	1.00
$	2.97		9,000	3.50 years	$	2.97		9,000	$	2.97

At October 31, 2015 and January 31, 2015, the total intrinsic value of options outstanding and exercisable was $0 and $219,332, respectively.

As of October 31, 2015, the Company has $0 in stock-based compensation related to stock options that is yet to be vested. The weighted average remaining life of the options is 1.99 years.

(D) Warrants

The following is a summary of the Company’s warrant activity:

	Warrants			Weighted Average Exercise Price
Outstanding – January 31, 2015		1,027,401		$	1.27
Exercisable – January 31, 2015		1,027,401		$	1.27
Granted		1,971,852		$	0.68
Exercised		(22,666	)	$	1.25
Forfeited/Cancelled		-		$	-
Outstanding – October 31, 2015		2,976,587		$	0.88
Exercisable – October 31, 2015		2,976,587		$	0.88

Warrants Outstanding								Warrants Exercisable
Range of Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.68-$2.50		2,976,587		3.89 years	$	0.88		2,976,587	$	0.88

At October 31, 2015 and January 31, 2015, the total intrinsic value of warrants outstanding and exercisable was $0 and $227,430, respectively.