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OPTIONS

12 Months Ended

Oct. 31, 2015

The Company under its 2012 option plan issues options to various officers, directors and consultants. The options vest in equal annual installments over a five year period with the first 20% vested when the options were granted. All of the options are exercisable at a purchase price based on the last trading price of the Company's common stock.

On January 13, 2014 the Company issued 580,000 options with an exercise price of $0.88 per share to four officers of the Company. Computed volatility of 359.38% and a discount rate of 2.84 were used in calculating the fair value of the option of $510,400.

On May 12, 2014 the Company issued 90,000 options with an exercise price of $1.40 per share to one employee and two consultants. Computed volatility of 359.38% and a discount rate of 2.66 were used in calculating the fair value of the option of $126,000.

On August 22, 2014, the Company issued 275,000 options to 5 employees with exercise price of $1.20. 20% of the option will vest immediately, the additional 20% to vest on August 22 of each successive year. Computed volatility of 290.77% and a discount rate of 2.41 were used in calculating the fair value of the option of $329,999.

On August 22, 2014, the Company issued 1,015,000 options to 2 employees with exercise price of $1.20. The option will vest on August 22, 2024. The vesting of the options may accelerate at the rate of 200,000 options for each $1,000,000 of annual audited sale above the first $1,000,000 of sales up to 815,000 options and 50,000 options for every $1,000,000 of annual audited sales up to 200,000 options. Computed volatility of 290.77% and a discount rate of 2.41 were used in calculating the fair value of the option of $1,217,995

On October 1, 2014, the Company issued 5,000 options to 2 directors with exercise price of $1.49. 20% of the option will vest immediately, the additional 20% to vest on October 1 of each successive year. Computed volatility of 281.49% and a discount rate of 2.42 were used in calculating the fair value of the option of $7,450.

On October 6, 2014, the Company issued 50,000 options to 1 director with exercise price of $1.49. 20% of the option will vest immediately, the additional 20% to vest on October 6 of each successive year. Computed volatility of 280.48% and a discount rate of 2.43 were used in calculating the fair value of the option of $74,499.

On January 19, 2015, the Company issued 106,000 options to 4 employees with exercise price of $1.32. 20% of the option will vest immediately, the additional 20% to vest on January 19 of each successive year. Computed volatility of 130.49% and a discount rate of 2.42 were used in calculating the fair value of the option of $160,575.

On February 10, 2015, the Company issued 10,000 options to one consultant with exercise price of $1.30. 20% of the option will vest immediately, the additional 20% to vest on February 10 of each successive year. Computed volatility of 131% and a discount rate of 1.53 were used in calculating the fair value of the option of $12,539.

On October 31, 2015, the Company issued 377,200 options to three officers and two directors with exercise price of $0.01 for accrued compensation. The options vested upon issuance.

On October 31, 2015, the Company issued 5,000 options to two directors with exercise price of $1.02. 20% of the option will vest immediately, the additional 20% to vest on October 31of each successive year. Computed volatility of 115.77% and a discount rate of 1.53 were used in calculating the fair value of the option of $4,928.

The Company has elected to expense the options over the life of the option as stock based compensation. The expense is calculated with a Black Scholes model to reach the fair value over the length of each option. The total value calculated for option expense above is $2,131,213. As of October 31, 2015 the Company expensed $415,186 for the year ended October 31, 2015 and $403,860 was expensed for the same period in 2014. The unrecognized future balance to be expensed over the term of the options is $1,716,027.

The following sets forth the options granted and outstanding as of October 31, 2015:

					Weighted
			Weighted		Average
			Average		Remaining		Granted
			Exercise		Contract		Options		Intrinsic
	Options		Price		Life		Exercisable		Value
Outstanding at Year Ended October 31, 2015		3,055,000		0.11		8.1		1,221,000		1,372,500
Granted		2,215,000		1.07		9.51		997,000
Exercised
Outstanding at Year Ended October 31, 2014		5,270,000		0.51		8.69		2,218,000		5,164,900
Granted		498,200		.36		9.51		99,600		-
Exercised		-		-		-		-		-
Outstanding at Year Ended October 31, 2015		5,768,200		.50		7.88		2,317,600		3,209,363

The number of options becoming exercisable during the year ended October 31, 2015 was 1,679,600 with a total number exercisable as of October 31, 2015 of 3,897,600.