Stock-based compensation and equity transactions

3 Months Ended

Jan. 31, 2017

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock-based compensation and equity transactions

Note 7 - Stock-based compensation and equity transactions

The Company’s current stock incentive plan provides for the granting of qualified and nonqualified options to the Company’s officers, directors and employees. The Company satisfies the exercise of options by issuing previously unissued common shares. No options were granted to Company employees during the three months ended January 31, 2017 and 2016.

Company stock option plans

Descriptions of the Company’s stock option plans are included in Note 10 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2016. A summary of the status of the options granted under the Company’s stock option plans as of January 31, 2017 and the changes in options outstanding during the three months then ended is presented in the table that follows:

			Weighted
			Average
	Shares		Exercise Price
Outstanding at November 1, 2016		1,007,851	$	4.07
Options granted		309,356	$	1.50
Options canceled or expired		(143,019)	$	3.77
Options outstanding at January 31, 2017		1,174,188	$	3.43
Options exercisable at January 31, 2017		738,444	$	3.71
Options vested and expected to vest at January 31, 2017		1,172,141	$	3.43

Weighted average remaining contractual life of options outstanding as of January 31, 2017: 4.36 years

Weighted average remaining contractual life of options exercisable as of January 31, 2017: 3.46 years

Weighted average remaining contractual life of options vested and expected to vest as of January 31, 2017: 4.35 years

Aggregate intrinsic value of options outstanding at January 31, 2017: $107,000

Aggregate intrinsic value of options exercisable at January 31, 2017: $84,000

Aggregate intrinsic value of options vested and expected to vest at January 31, 2017: $107,000

As of January 31, 2017, $359,000 of expense with respect to nonvested share-based arrangements has yet to be recognized but is expected to be recognized over a weighted average period of 2.72 years.

 

Effective for the fiscal year ending October 31, 2017, non-employee directors receive $50,000 annually, which is paid one-half in cash and one-half through the grant of non-qualified stock options to purchase shares of the Company’s common stock. Previously, for the fiscal year ended October 31, 2016, non-employee directors received $30,000 annually. During the quarter ended January 31, 2017, the Company granted each of its four non-employee directors 77,339 options. The number of stock options granted to each director was determined by dividing $25,000 by the fair value of a stock option grant using the Black-Scholes model ($0.32 per share). These options vest ratably over fiscal year 2017.

Stock option expense

During the three months ended January 31, 2017 and 2016, stock-based compensation expense totaled $51,000 and $52,000, respectively. For the three months ended January 31, 2017 and 2016, stock-based compensation classified in cost of sales amounted to $3,000 and $10,000, respectively, and stock-based compensation classified in selling and general expense amounted to $48,000 and $42,000, respectively.