Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jul. 31, 2017 | Sep. 12, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | POLARITYTE, INC. | |
Entity Central Index Key | 1,076,682 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 6,333,985 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 3,027 | $ 6,523 |
Prepaid expenses and other current assets | 411 | 47 |
Receivable from Zift | 60 | |
Current assets related to discontinued operations | 163 | |
Total current assets | 3,498 | 6,733 |
Non-current assets: | ||
Property and equipment, net | 2,073 | 18 |
Receivable from Zift, non-current | 30 | |
Total non-current assets | 2,103 | 18 |
TOTAL ASSETS | 5,601 | 6,751 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,439 | 474 |
Warrant liability | 70 | |
Current liabilities related to discontinued operations | 810 | |
Total current liabilities | 1,439 | 1,354 |
Total liabilities | 1,439 | 1,354 |
Commitments and Contingencies | ||
STOCKHOLDERS' EQUITY: | ||
Convertible preferred stock - 10,000,000 shares authorized, 3,246,042 and 7,374,454 shares issued and outstanding at July 31, 2017 and October 31, 2016, aggregate liquidation preference $2,140 and $4,854, respectively | 111,195 | 10,153 |
Common stock - $.001 par value; 250,000,000 shares authorized; 6,093,743 and 2,782,963 shares issued and outstanding at July 31, 2017 and October 31, 2016, respectively | 6 | 3 |
Additional paid-in capital | 142,358 | 123,417 |
Accumulated deficit | (249,397) | (128,176) |
Total stockholders' equity | 4,162 | 5,397 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 5,601 | $ 6,751 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Convertible preferred stock, shares issued | 3,246,042 | 7,374,454 |
Convertible preferred stock, shares outstanding | 3,246,042 | 7,374,454 |
Convertible preferred stock, liquidation preference | $ 2,140 | $ 4,854 |
Common stock, par value | $ 0.001 | $ .001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 6,093,743 | 2,782,963 |
Common stock, shares outstanding | 6,093,743 | 2,782,963 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Operating costs and expenses | ||||
Research and development | $ 1,641 | $ 3,424 | ||
Research and development - intellectual property acquired | 104,693 | |||
General and administrative | 3,629 | 1,880 | 12,757 | 3,531 |
Operating costs and expenses total | 5,270 | 1,880 | 120,874 | 3,531 |
Operating loss | (5,270) | (1,880) | (120,874) | (3,531) |
Other expenses (income) | ||||
Interest income | (3) | (5) | (10) | (15) |
Change in fair value of warrant liability | (159) | 8 | (133) | |
Net loss from continuing operations | (5,267) | (1,716) | (120,872) | (3,383) |
Loss from discontinued operations | (33) | (770) | (449) | (851) |
Gain on sale of discontinued operations | 100 | 100 | ||
Gain (loss) from discontinued operations, net | 67 | (770) | (349) | (851) |
Net loss | (5,200) | (2,486) | (121,221) | (4,234) |
Special cash dividend attributable to preferred stockholders | (6,002) | |||
Net loss attributable to common stockholders | $ (5,200) | $ (2,486) | $ (121,221) | $ (10,236) |
Net loss per share, basic and diluted: | ||||
Loss from continuing operations | $ (0.94) | $ (0.65) | $ (26.65) | $ (1.73) |
Gain (loss) from discontinued operations | 0.01 | (0.29) | (0.08) | (0.43) |
Special cash dividend attributable to preferred stockholders | (3.06) | |||
Net loss attributable to common stockholders | $ (0.93) | $ (0.94) | $ (26.73) | $ (5.22) |
Weighted average shares outstanding, basic and diluted: | 5,568,072 | 2,631,640 | 4,534,967 | 1,960,643 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Jul. 31, 2017 - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Oct. 31, 2016 | $ 10,153 | $ 3 | $ 123,417 | $ (128,176) | $ 5,397 |
Balance, shares at Oct. 31, 2016 | 7,374,454 | 2,782,963 | |||
Conversion of Series A preferred stock to common stock | $ (976) | $ 1 | 975 | ||
Conversion of Series A preferred stock to common stock, shares | (3,991,487) | 761,798 | |||
Conversion of Series B preferred stock to common stock | $ (549) | 549 | |||
Conversion of Series B preferred stock to common stock, shares | (6,512) | 108,543 | |||
Conversion of Series C preferred stock to common stock | $ (609) | 609 | |||
Conversion of Series C preferred stock to common stock, shares | (7,798) | 146,346 | |||
Conversion of Series D preferred stock to common stock | $ (1,517) | 1,517 | |||
Conversion of Series D preferred stock to common stock, shares | (129,665) | 216,106 | |||
Issuance of Series E preferred stock for research and development intellectual property | $ 104,693 | 104,693 | |||
Issuance of Series E preferred stock for research and development intellectual property, shares | 7,050 | ||||
Proceeds from option exercises | 1,123 | 1,123 | |||
Proceeds from option exercises, shares | 231,404 | ||||
Warrant exchange to common stock | 78 | 78 | |||
Warrant exchange to common stock, shares | 56,250 | ||||
Stock-based compensation expense | $ 1 | 11,813 | 11,814 | ||
Stock-based compensation expense, shares | 1,031,000 | ||||
Shares issued for cash | $ 1 | 2,277 | 2,278 | ||
Shares issued for cash, shares | 759,333 | ||||
Net loss | (121,221) | (121,221) | |||
Balance at Jul. 31, 2017 | $ 111,195 | $ 6 | $ 142,358 | $ (249,397) | $ 4,162 |
Balance, shares at Jul. 31, 2017 | 3,246,042 | 6,093,743 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (121,221) | $ (4,234) |
Loss from discontinued operations | 349 | 851 |
Loss from continuing operations | (120,872) | (3,383) |
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operating activities: | ||
Depreciation and amortization | 295 | |
Stock based compensation expense | 10,696 | 1,845 |
Research and development - intellectual property acquired | 104,693 | |
Change in fair value of warrant liability | 8 | (133) |
Offering costs expensed | 21 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | (364) | (20) |
Accounts payable and accrued expenses | 857 | (46) |
Net cash used in continuing operating activities | (4,687) | (1,716) |
Net cash provided by discontinued operating activities | 33 | 163 |
Net cash used in operating activities | (4,654) | (1,553) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (2,253) | |
Net cash used in continuing investing activities | (2,253) | |
Net cash provided by discontinued investing activities | 10 | |
Net cash used in investing activities | (2,243) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Special cash dividend | (10,000) | |
Proceeds from stock options exercised | 1,123 | 129 |
Net proceeds from the sale of common stock and warrants | 1,406 | |
Proceeds from the sale of common stock | 2,278 | |
Payments to Zift | (299) | |
Net cash provided by (used in) financing activities | 3,401 | (8,764) |
Net decrease in cash and cash equivalents | (3,496) | (10,317) |
Cash and cash equivalents - beginning of period | 6,523 | 17,053 |
Cash and cash equivalents - end of period | 3,027 | 6,736 |
Supplemental schedule of non-cash investing and financing activities: | ||
Conversion of Series A preferred stock to common stock | 976 | 401 |
Conversion of Series B preferred stock to common stock | 549 | |
Conversion of Series C preferred stock to common stock | 609 | |
Conversion of Series D preferred stock to common stock | 1,517 | 140 |
Unpaid liability for acquisition of property and equipment | 108 | |
Warrant exchange for common stock shares | 78 | |
Common stock shares and warrants issued for offering costs | $ 75 |
Principal Business Activity and
Principal Business Activity and Basis of Presentation | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principal Business Activity and Basis of Presentation | 1. PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION Asset Acquisition and Name Change. , n/k/a On December 1, 2016, the Company appointed Dr. Denver Lough as Chief Executive Officer, Chief Scientific Officer and Chairman of our Board of Directors and Dr. Ned Swanson as Chief Operating Officer of the Company. Until their respective appointments, both doctors were associated with Johns Hopkins University, Baltimore, Maryland, as full-time residents. On December 1, 2016, Dr. Lough assigned the patent application as well as all related intellectual property to a newly-formed Nevada corporation, Polarityte, Inc. (“Polarity NV”), and the Company entered into an Agreement and Plan of Reorganization (the “Agreement”) with Polarity NV and Dr. Lough. As a result, at closing, the patent application would be owned by the Company without the need for further assignments or recordation with the Patent Trademark Office. On April 7, 2017, the Company issued 7,050 shares of its newly authorized Series E Preferred Stock (the “Series E Preferred Shares”) convertible into an aggregate of 7,050,000 shares of the Company’s common stock with a fair value of approximately $104.7 million which is equal to 7,050,000 common shares times $14.85 (the closing price of the Company’s common stock as of April 7, 2017) to Dr. Lough for the purchase of the Polarity NV’s assets. Since the assets purchased were in-process research and development assets, the total purchase price was immediately expensed as research and development - intellectual property acquired since they have no alternative future use. Drs. Lough and Swanson lead the Company’s current efforts focused on scientific research and development and in this regard on December 1, 2016, the Company leased laboratory space and purchased laboratory equipment in Salt Lake City, Utah. Subsequent expenditures include the purchase of medical equipment, including microscopes for high end real-time imaging of cells and tissues required for tissue engineering and regenerative medicine research. The Company has added additional facilities, and established university and scientific relationships and collaborations in order to pursue its business. None of these activities were performed by Dr. Lough or Dr. Swanson prior to December 1, 2016 in connection with their university positions or privately. Dr. Lough is the named inventor under a pending patent application for a novel regenerative medicine and tissue engineering platform filed in the United States and elsewhere. The Company believes that its future success depends significantly on its ability to protect its inventions and technology. Prior to December 1, 2016, no employees, consultants or partners engaged in any business activity related to the patent application and no licenses or contracts were granted related to the patent application, other than professional services related to preparation and filing of the patent. There was never any intent to acquire an ongoing business and no ongoing business was acquired. The asset is preserved in a stand-alone entity merely as a vehicle to provide the Company a seamless means to acquire the asset (a patent application) without undue cost, expense and time. Polarity NV has never had employees and, therefore, no employees were acquired in the transaction. The Company adopted ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business Step 1 - Is substantially all the fair value of the gross assets acquired concentrated in a single or (group of similar) identifiable asset(s)? - The Company has a proposal to acquire a single intellectual property asset and no employees on the acquisition date. Step 2 - Evaluate whether an input and a substantive process exists? Does the set have outputs? - The set does not yet have outputs, as Polarity NV’s intellectual property does not generate any revenue. Without outputs, the set requires employees that form an organized workforce with skills, knowledge, or experience to perform an acquired process that is critical to the ability to create outputs to qualify as a business. Polarity NV never had any employees or workforce. On December 1, 2016, prior to any Polarity NV acquisition, the Company hired Denver Lough as its Chief Executive and Chief Scientific Officer and Edward Swanson as Chief Operating Officer. Both of these executives were employed full-time by Johns Hopkins University and were not employed by Polarity NV. In December 2016, the Company established a clinical advisory board and added three members in December 2016 and three more in January 2017. Establishing the clinical advisory board and hiring a COO are critical to establishing at the Company for the first time a workforce that has the knowledge and experience to obtain regulatory approval of the Company’s intellectual property. Therefore, the acquisition of an intellectual property asset and no employees from Polarity NV on April 7, 2017 did not represent the acquisition of an organized workforce with the necessary skills and experience to create outputs. Discontinued Operations. As a result of transactions contemplated above, the Company disposed entirely of its gaming business assets and intends to devote its resources and attention to its regenerative medicine efforts going forward. General. Segments. Regenerative Medicine Through its regenerative medicine efforts, the Company is developing the proprietary tissue engineering platform invented by Dr. Denver Lough to translate regenerative products into clinical application. Preliminarily, the technological platform has demonstrated the potential capacity to grow fully functional tissue across the entire spectrum of the musculoskeletal and integumentary systems, including skin, muscle, bone, cartilage, peripheral nerve, fat, and fascia. Preliminary results indicate it has applications across solid organ and specialty tissue regeneration as well, including bowel, liver, kidney, and urethra. The product furthest in the development pipeline is an autologous (tissue from the patient themselves) skin regeneration construct, SkinTE TM TM NASDAQ listing. On February 22, 2017, the Company regained compliance with Listing Rule 5605(b)(1), the independent director requirement for continued listing on The NASDAQ Stock Market, with the appointment of Mr. Steve Gorlin and Dr. Jon Mogford, and the matter is now closed. PolarityTE’s common stock will continue to be listed on The NASDAQ Capital Market. The accompanying interim condensed consolidated financial statements of the Company are unaudited, but in the opinion of management, reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim period. Accordingly, they do not include all information and notes required by generally accepted accounting principles for complete financial statements. The Company’s financial results are impacted by the seasonality of the retail selling season and the timing of the release of new titles. The results of operations for interim periods are not necessarily indicative of results to be expected for the entire fiscal year. The balance sheet at October 31, 2016 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended October 31, 2016 filed with the Securities and Exchange Commission on Form 10-K on December 30, 2016. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation. Cash and cash equivalents. Accounts Payable and Accrued Expenses. Property and Equipment. Income Taxes. Stock Based Compensation. The fair value for options issued is estimated at the date of grant using a Black-Scholes option-pricing model. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of the grant. The volatility factor is determined based on the Company’s historical stock prices. The value of restricted stock grants is measured based on the fair market value of the Company’s common stock on the date of grant and amortized over the vesting period of, generally, six months to three years. Loss Per Share. Commitments and Contingencies. Accounting for Warrants Change in Fair Value of Warrant Liability. Reverse stock-split The Reverse Stock Split was effective with The NASDAQ Capital Market (“NASDAQ”) at the open of business on August 1, 2016. The par value and other terms of Company’s common stock were not affected by the Reverse Stock Split. The Company’s post-Reverse Stock Split common stock has a new CUSIP number, 560690 406. The Company’s transfer agent, Equity Stock Transfer LLC, acted as exchange agent for the Reverse Stock Split. As a result of the Reverse Stock Split, every six shares of the Company’s pre-Reverse Stock Split common stock was combined and reclassified into one share of the Company’s common stock. No fractional shares of common stock were issued as a result of the Reverse Stock Split. Stockholders who otherwise would be entitled to a fractional share shall receive a cash payment in an amount equal to the product obtained by multiplying (i) the closing sale price of our common stock on the business day immediately preceding the effective date of the Reverse Stock Split as reported on NASDAQ by (ii) the number of shares of our common stock held by the stockholder that would otherwise have been exchanged for the fractional share interest. All common share and per share amounts have been restated to show the effect of the Reverse Stock Split. Reclassifications. Estimates. Recently Adopted Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business Recent Accounting Pronouncements. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842), Leases (Topic 840) In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception, |
Going Concern
Going Concern | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | 3. GOING CONCERN The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced net losses and negative cash flows from operations since its inception. The Company has sustained cumulative losses of approximately $249.4 million as of July 31, 2017, has negative working capital and has not generated positive cash flows from operations. The continuation of the Company as a going concern is dependent upon continued financial support from its shareholders, potential collaborations, the ability of the Company to obtain necessary equity and/or debt financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company cannot make any assurances that additional financings will be available to it and, if available, completed on a timely basis, on acceptable terms or at all. If the Company is unable to complete a debt or equity offering, execute a collaboration arrangement or otherwise obtain sufficient financing when and if needed, it would negatively impact its business and operations and could also lead to the reduction or suspension of the Company’s operations and ultimately force the Company to cease operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Jul. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following (in thousands): July 31, 2017 October 31, 2016 Legal retainer $ 60 $ - Prepaid insurance 86 22 Tax receivable - 18 Trade show deposit 160 - Other prepaids 71 - Deposits 32 - Other assets 2 7 Total prepaid expenses and other current assets $ 411 $ 47 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Jul. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consist of the following (in thousands): July 31, 2017 October 31, 2016 Medical equipment $ 2,193 $ - Computers and software 198 61 Furniture and equipment 109 78 Total property and equipment, gross 2,500 139 Accumulated depreciation (427 ) (121 ) Total property and equipment, net $ 2,073 $ 18 |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Jul. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following (in thousands): July 31, 2017 October 31, 2016 Accounts payable $ 56 $ - Due to Zift 66 - Medical equipment purchase 108 - Salaries and other compensation 662 463 Legal and accounting 454 - Other accruals 93 11 Total accounts payable and accrued expenses $ 1,439 $ 474 Salaries and other compensation include accrued payroll expense and employer 401K plan contributions. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Jul. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 7. STOCKHOLDERS’ EQUITY Convertible preferred stock as of July 31, 2017 consisted of the following (in thousands, except share amounts): Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 3,146,671 $ 769 $ 2,140 713,245 Series B 54,250 47,689 4,020 - 794,806 Series C 26,000 17,965 1,401 - 417,791 Series D 170,000 26,667 312 - 44,445 Series E 7,050 7,050 104,693 - 7,050,000 Other authorized, unissued 912,700 - - - - Total 10,000,000 3,246,042 $ 111,195 $ 2,140 9,020,287 Convertible preferred stock as of October 31, 2016 consisted of the following (in thousands, except share amounts): Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 7,138,158 $ 1,745 $ 4,854 1,189,693 Series B 54,250 54,201 4,569 - 903,362 Series C 26,000 25,763 2,010 - 429,392 Series D 170,000 156,332 1,829 - 260,553 Other authorized, unissued 919,750 - - - - Total 10,000,000 7,374,454 $ 10,153 $ 4,854 2,783,000 Series A Preferred Shares The Series A Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series A Preferred Share, plus all accrued and unpaid dividends, if any, on such Series A Preferred Share, as of such date of determination, divided by the conversion price. The stated value of each Preferred Share is $0.68 and the initial conversion price is $4.08 (current conversion price is $3.00) per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, in the event the Company issues or sells, or is deemed to issue or sell, shares of its common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions. Pursuant to the Certificate of Designations, Preferences and Rights of the 0% Series A Convertible Preferred Stock of PolarityTE, Inc., the Company is prohibited from incurring debt or liens, or entering into new financing transactions without the consent of the lead investor (as defined in the December Subscription Agreements) as long as any of the Series A Preferred Shares are outstanding. The Series A Preferred Shares bear no dividends. The holders of Series A Preferred Shares shall vote together with the holders of common stock on all matters on an as if converted basis, subject to certain conversion and ownership limitations, and shall not vote as a separate class. Notwithstanding the foregoing, the conversion price for purposes of calculating voting power shall in no event be lower than $3.54 per share. At no time may all or a portion of the Series A Preferred Shares be converted if the number of shares of common stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of common stock owned by the holder at such time, the number of shares of common stock which would result in such Holder beneficially owning (as determined in accordance with Section 13(d) of the 1934 Act and the rules thereunder) more than 4.99% of all of the common stock outstanding at such time; provided, however, that the holder may waive the 4.99% limitation at which time he may not own beneficially own more than 9.99% of all the common stock outstanding at such time. The Series A Preferred Shares do not represent an unconditional obligation to be settled in a variable number of shares of common stock, are not redeemable and do not contain fixed or indexed conversion provisions similar to debt instruments. Accordingly, the Series A Preferred Shares are considered equity hosts and recorded in stockholders’ equity. The Company entered into separate Registration Rights Agreements with each Series A Preferred Shares Investor, (as amended on January 30, 2015 and March 31, 2015, the “December Registration Rights Agreement”). The Company agreed to use its best efforts to file by March 31, 2015 a registration statement covering the resale of the shares of common stock issuable upon exercise or conversion of the Series A Preferred Shares and to maintain its effectiveness until all such securities have been sold or may be sold without restriction under Rule 144 of the Securities Act. In the event the Company fails to satisfy its obligations under the December Registration Rights Agreements, the Company is required to pay to the Investors on a monthly basis an amount equal to 1% of the investors’ investment, up to a maximum of 12%. On March 31, 2015, the Company and the required holders of Series A Preferred Shares amended the registration rights agreement to extend the filing deadline for the registration statement to June 30, 2015. Series B Preferred Shares The Series B Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series B Preferred Shares, plus all accrued and unpaid dividends, if any, on such Series B Preferred Shares, as of such date of determination, divided by the conversion price. The stated value of each Preferred Share is $140.00 and the initial conversion price is $8.40 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The Company is prohibited from effecting a conversion of the Series B Preferred Shares to the extent that, as a result of such conversion, such holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series B Preferred Shares, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Subject to such beneficial ownership limitations, each holder is entitled to vote on all matters submitted to stockholders of the Company on an as converted basis, based on a conversion price of $8.40 per shares. The Series B Preferred Shares rank junior to the Series A Preferred Shares and bear no dividends. All of the convertible preferred shares do not represent an unconditional obligation to be settled in a variable number of shares, are not redeemable and do not contain fixed or indexed conversion provisions similar to debt instruments. Accordingly, the convertible preferred shares are considered equity hosts and recorded in stockholders’ equity. Series C Preferred Shares The Series C Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series C Preferred Shares, plus all accrued and unpaid dividends, if any, on such Series C Preferred Shares, as of such date of determination, divided by the conversion price. The stated value of each Series C Preferred Share is $120.00 per share, and the initial conversion price is $7.20 (current conversion price is $5.16) per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions and provided that the conversion price may not be reduced to less than $5.16, unless and until such time as the Company obtains shareholder approval to allow for a lower conversion price. The Company is prohibited from effecting a conversion of the Series C Preferred Shares to the extent that, as a result of such conversion, such May Investor would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series C Preferred Shares, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Subject to the beneficial ownership limitations discussed previously, each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series C Preferred Shares, based on a conversion price of $7.80 per share. The Series C Preferred Shares bear no dividends and shall rank junior to the Company’s Series A Preferred Shares but senior to the Company’s Series B Preferred Shares. In connection with the sale of the Series C Preferred Shares, the Company also entered into separate registration rights agreements (the “May Registration Rights Agreement”) with each Investor. The Company agreed to use its best efforts to file a registration statement to register the Shares and the common stock issuable upon the conversion of the Series C Preferred Shares, within thirty days following the Closing Date, to cause such registration statement to be declared effective within ninety days of the filing day and to maintain the effectiveness of the registration statement until all of such shares of common stock have been sold or are otherwise able to be sold pursuant to Rule 144 without restriction. In the event the Company fails to satisfy its obligations under the Registration Rights Agreement, the Company is obligated to pay to the Investors on a monthly basis, an amount equal to 1% of the Investor’s investment, up to a maximum of 12%. Effective as of the original filing deadline of the registration statement, the Company obtained the requisite approval from the Investors for the waiver of its obligations under the May Registration Rights Agreement. The Company evaluated the guidance ASC 480-10 Distinguishing Liabilities from Equity and Contracts in an Entity’s Own Equity Series D Preferred Shares The Preferred D Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Preferred D Shares, plus all accrued and unpaid dividends, if any, on such Preferred D Share, as of such date of determination, divided by the conversion price. The stated value Preferred D Shares is $1,000 per share and the initial conversion price is $600 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The Company is prohibited from effecting a conversion of the Preferred D Shares to the extent that, as a result of such conversion, such investor would beneficially own more than 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of the Preferred D Shares. Upon 61 days written notice, the beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Except as otherwise required by law, holders of Series D Preferred Shares shall not have any voting rights. Pursuant to the Certificate of Designations, Preferences and Rights of the 0% Series D Convertible Preferred Stock, the Preferred D Shares bear no dividends and shall rank senior to the Company’s other classes of capital stock. Series E Preferred Shares The Preferred E Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Preferred E Shares, plus all accrued and unpaid dividends, if any as of such date of determination, divided by the conversion price. The stated value of each Preferred E Share is $1,000 and the initial conversion price is $1.00 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The Preferred E Shares, with respect to dividend rights and rights on liquidation, winding-up and dissolution, in each case will rank senior to the Company’s common stock and all other securities of the Company that do not expressly provide that such securities rank on parity with or senior to the Preferred E Shares. Until converted, each Preferred E Share is entitled to two votes for every share of common stock into which it is convertible on any matter submitted for a vote of stockholders. The Preferred E Shares participate on an “as converted” basis with all dividends declared on the Company’s common stock. April 2016 Registered Common Stock and Warrant Offering On April 13, 2016, the Company entered into a Securities Purchase Agreement with certain institutional investors providing for the issuance and sale by the Company of 250,000 shares of the Company’s common stock, par value $0.001 per share at an offering price of $6.00 per share, for net proceeds of $1.4 million after deducting placement agent fees and expenses. In addition, the Company sold to purchasers of common stock in this offering, warrants to purchase 187,500 shares of its common stock. The common shares and the Warrant Shares were offered by the Company pursuant to an effective shelf registration statement on Form S-3, which was initially filed with the Securities and Exchange Commission on October 22, 2015 and declared effective on December 7, 2015. The closing of the offering occurred on April 19, 2016. Each Warrant is immediately exercisable for two years, but not thereafter, at an exercise price of $6.90 per share. Subject to limited exceptions, a holder of warrants will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to such exercise. The exercise price and number of warrants are subject to adjustment in the event of any stock dividends and splits, reverse stock split, stock dividend, recapitalization, reorganization or similar transaction. The Warrants were classified as liabilities and measured at fair value, with changes in fair value recognized in the Condensed Consolidated Statements of Operations in other expenses (income) until they were exchanged for shares of common stock on January 18, 2017. The initial recognition of the Warrants resulted in an allocation of the net proceeds from the offering to a warrant liability of approximately $318,000, with the remainder being attributable to the common stock sold in the offering. Preferred Share Conversion Activity During the nine months ended July 31, 2017, 3,991,487 shares of Convertible Preferred Stock Series A, 6,512 shares of Convertible Preferred Stock Series B, 7,798 shares of Convertible Preferred Stock Series C and 129,665 shares of Convertible Preferred Stock Series D were converted into 1,232,793 shares of common stock. During the nine months ended July 31, 2016, 1,638,810 shares of Convertible Preferred Stock Series A and 12,001 shares of Convertible Preferred Stock Series D were converted into 293,137 shares of common stock. Common Stock On January 4, 2016, the Company declared a special cash dividend of an aggregate of $10.0 million to holders of record on January 14, 2016 of its outstanding shares of: (i) common stock (ii) Series A Convertible Preferred Stock; (iii) Series B Convertible Preferred Stock; (iv) Series C Convertible Preferred Stock and (v) Series D Convertible Preferred Stock. The holders of record of the Company’s outstanding preferred stock participated in the dividend on an “as converted” basis. Approximately $6.0 million of the special cash dividend relates to preferred stock shares. On January 6, 2016, certain employees exercised their options at $4.08 in exchange for the Company’s common stock for an aggregated amount of 31,656 shares. On December 16, 2016, the Company sold an aggregate of 759,333 shares of its common stock to certain accredited investors pursuant to separate subscription agreements at a price of $3.00 per share for gross proceeds of $2.3 million. On January 18, 2017, the Company entered into separate exchange agreements (each an “Exchange Agreement”) with certain accredited investors (the “Investors”) who purchased warrants to purchase shares of the Company’s common stock (the “Warrants”) pursuant to the prospectus dated April 13, 2016. In 2016, the Company issued 250,000 shares of the Company’s common stock and Warrants to purchase 187,500 shares of common stock (taking into account the reverse split of the Company’s common stock on a 1 for 6 basis effective with The NASDAQ Stock Market LLC on August 1, 2016). The common stock and Warrants were offered by the Company pursuant to an effective shelf registration statement. Under the terms of the Exchange Agreement, each Investor exchanged each Warrant it purchased in the Offering for 0.3 shares of common stock. Accordingly, the Company issued an aggregate of 56,250 shares of common stock in exchange for the return and cancellation of 187,500 Warrants. During the nine months ended July 31, 2017, certain employees exercised their options at a weighted-average exercise price of $4.85 in exchange for the Company’s common stock for an aggregated amount of 231,404 shares. The Company received approximately $1.1 million from the exercise of stock options. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jul. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 8. FAIR VALUE MEASUREMENTS In accordance with ASC 820, Fair Value Measurements, financial instruments were measured at fair value using a three-level hierarchy which maximizes use of observable inputs and minimizes use of unobservable inputs: ● Level 1: Observable inputs such as quoted prices in active markets for identical instruments ● Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the market ● Level 3: Significant unobservable inputs supported by little or no market activity. Financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, for which determination of fair value requires significant judgment or estimation. In connection with the April 19, 2016 common stock offering, the Company issued warrants to purchase an aggregate of 187,500 shares of common stock. These warrants were exercisable at $6.90 per share and expire on April 19, 2018. These warrants were analyzed and it was determined that they require liability treatment. Under ASC 815, registered common stock warrants that require the issuance of registered shares upon exercise and do not expressly preclude an implied right to cash settlement are accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the condensed consolidated balance sheet as a current liability. The fair value of these warrants at January 18, 2017 and October 31, 2016 was determined to be approximately $78,000 and $70,000, respectively, as calculated using Black-Scholes with the following assumptions: (1) stock price of $3.62 and $3.58, respectively; (2) a risk-free rate of 0.97% and 0.75%, respectively; and (3) an expected volatility of 68% and 61%, respectively. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. At July 31, 2017, there was no warrant liability balance. The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative warrant liability (in thousands): Warrant Liability Fair value - October 31, 2016 $ 70 Change in fair value 8 Exchanged - January 18, 2017 (see Note 7) (78 ) Fair value - July 31, 2017 $ - |
Stock Based Compensation Arrang
Stock Based Compensation Arrangements | 9 Months Ended |
Jul. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation Arrangements | 9. STOCK BASED COMPENSATION ARRANGEMENTS Stock-based compensation expense during the three months ended July 31, 2017 and 2016 amounted to approximately $3.7 million and $1.6 million, respectively. Stock-based compensation expense (including stock based compensation recorded in discontinued operations) during the nine months ended July 31, 2017 and 2016 amounted to approximately $11.8 million and $2.8 million, respectively. Stock-based compensation expense is recorded in general and administrative and research and development expenses in the accompanying consolidated statements of operations. On February 8, 2017, the Board appointed Steve Gorlin as a Class II director with a term expiring in 2019 and Dr. Jon Mogford as a Class III director with a term expiring in 2017 to fill vacancies created upon the resignations of Messrs. Brauser and Honig. In addition, Mr. Gorlin was appointed as a member of each of the Board’s Audit, Compensation and Nominating and Corporate Governance Committees. Each of Mr. Gorlin and Dr. Mogford are deemed an “independent” director as such term is defined by the rules of The NASDAQ Stock Market LLC. There are no family relationships between either of Mr. Gorlin and Dr. Mogford and any of our other officers and directors. Mr. Gorlin and Dr. Mogford were each granted (i) an option to purchase up to 50,000 shares of the Company’s common stock at an exercise price equal to $4.72 per share (the “Options”) which Options will vest in 24 equal monthly installments commencing on the one month anniversary of the grant date and (ii) a restricted stock award of 50,000 shares of common stock that will vest in 24 equal monthly installments commencing on the one month anniversary of the grant date (the “RSUs”). The Options and the RSUs were granted pursuant to the Company’s 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan, the vesting and the exercise of the Options and the vesting of the RSUs are subject to stockholder approval (which was considered perfunctory given management’s high level of ownership interest). A summary of the Company’s employee stock option activity in the nine months ended July 31, 2017 is presented below: Number of shares Weighted-Average Exercise Price Outstanding - October 31, 2016 383,210 $ 5.74 Granted 2,715,000 $ 3.49 Exercised (231,404 ) $ 4.85 Outstanding - July 31, 2017 2,866,806 $ 3.68 Options exercisable - July 31, 2017 997,008 $ 3.88 Weighted-average fair value of options granted during the period $ 2.37 A summary of the Company’s non-employee stock option activity in the nine months ended July 31, 2017 is presented below: Number of shares Weighted-Average Exercise Price Outstanding - October 31, 2016 - $ - Granted 52,000 $ 4.71 Outstanding - July 31, 2017 52,000 $ 4.71 Options exercisable - July 31, 2017 10,833 $ 4.71 The value of employee and non-employee stock option grants is amortized over the vesting period of, generally, one to three years. As of July 31, 2017, there was approximately $2.8 million of unrecognized compensation cost related to non-vested employee and non-employee stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.7 years. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the nine months ended July 31, 2017: Risk free annual interest rate 1.78-2.28 % Expected volatility 71.65-86.34 % Expected life 5.04-6.00 Assumed dividends None A summary of the Company’s restricted stock activity in the nine months ended July 31, 2017 is presented below: Number of shares Weighted-Average Grant-Date Fair Value Unvested - October 31, 2016 274,829 $ 6.00 Granted 1,031,000 $ 4.56 Vested (1,011,466 ) $ 4.22 Unvested - July 31, 2017 294,363 $ 7.07 During the nine months ended July 31, 2017, the Company granted 1,031,000 restricted shares to employees and non-employees. The weighted-average fair value of restricted shares granted during the nine months ended July 31, 2017 was $4.56. The total fair value of restricted stock granted during the nine months ended July 31, 2017 was approximately $4.7 million. The value of restricted stock grants is measured based on its fair value on the date of grant and amortized over the vesting period of, generally, six months to three years. As of July 31, 2017, there was approximately $2.0 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.6 years. |
Income Taxes
Income Taxes | 9 Months Ended |
Jul. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. INCOME TAXES Due to the Company’s history of losses and uncertainty of future taxable income, a valuation allowance sufficient to fully offset net operating losses and other deferred tax assets has been established. The valuation allowance will be maintained until sufficient positive evidence exists to support a conclusion that a valuation allowance is not necessary. The Company’s effective tax rate for the nine months ended July 31, 2017 and 2016 differed from the expected U.S. federal statutory rate primarily due to the change in the valuation allowance. The issuance of Preferred Stock in connection with the Polarity acquisition will likely result in limitations on the utilization of the Company’s net operating loss carryforwards under IRS section 382. |
Loss Per Share
Loss Per Share | 9 Months Ended |
Jul. 31, 2017 | |
Earnings Per Share [Abstract] | |
Loss Per Share | 11. LOSS PER SHARE Shares of common stock issuable under convertible preferred stock, warrants and options and shares subject to restricted stock grants were not included in the calculation of diluted earnings per common share for the three months and nine months ended July 31, 2017 and 2016, as the effect of their inclusion would be anti-dilutive. The table below provides total potential shares outstanding, including those that are anti-dilutive, on July 31, 2017 and 2016: July 31, 2017 2016 Shares issuable upon exercise of warrants - 187,500 Shares issuable upon conversion of preferred stock 9,020,287 2,783,000 Shares issuable upon exercise of stock options 2,918,806 394,278 Non-vested shares under restricted stock grants 294,363 303,477 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jul. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. COMMITMENTS AND CONTINGENCIES Contingencies On February 26, 2015, a complaint for patent infringement was filed in the United States District Court for the Eastern District of Texas by Richard Baker, an individual residing in Australia, against Microsoft, Nintendo, the Company and a number of other game publisher defendants. The complaint alleges that the Company’s Zumba Fitness Kinect game infringed plaintiff’s patents in motion tracking technology. The plaintiff is representing himself pro se in the litigation and is seeking monetary damages in the amount of $1.3 million. The Company, in conjunction with Microsoft, is defending itself against the claim and has certain third-party indemnity rights from developers for costs incurred in the litigation. In August 2015, the defendants jointly moved to transfer the case to the Western District of Washington. On May 17, 2016, the Washington Court issued a scheduling order that provides that defendants leave to jointly file an early motion for summary judgement in June 2016. On June 17, 2016, the defendants jointly filed a motion for summary judgment that stated that none of the defendants, including the Company, infringed upon the asserted patent. On July 9, 2016, Mr. Baker opposed the motion. On July 15, 2016, the defendants jointly filed a reply. The briefing on the motion is now closed. The Court has not yet issued a decision or indicated if or when there will be oral argument on the motion. Intelligent Verification Systems, LLC (“IVS”), filed a patent infringement complaint on September 20, 2012, in the United States District Court for the Eastern District against the Company and Microsoft Corporation. In March 2015, the court issued an order excluding the evidence proffered by IVS in support of its alleged damages, including the opinion of its damages expert. IVS appealed that decision. On January 19, 2016, the Federal Circuit denied IVS’ appeal and affirmed the district court’s orders that excluded the plaintiff’s damages expert and dismissed the case. In addition to the item above, the Company at times may be a party to claims and suits in the ordinary course of business. We record a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. The Company has not recorded a liability with respect to the matter above. While the Company believes that it has valid defenses with respect to the legal matter pending and intends to vigorously defend the matter above, given the uncertainty surrounding litigation and our inability to assess the likelihood of a favorable or unfavorable outcome, it is possible that the resolution of the matter could have a material adverse effect on our consolidated financial position, cash flows or results of operations. Commitments The Company leases office space in Hazlet, New Jersey at a cost of approximately $1,100 per month under a lease agreement that expires on March 31, 2018. The Company also leases space in Salt Lake City, Utah at a cost of approximately $24,044 per month under a lease agreement that expires on March 31 2018. The Company has entered into employment agreements with key executives that contain severance terms and change of control provisions. |
Related Parties
Related Parties | 9 Months Ended |
Jul. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Parties | 13. RELATED PARTIES In January 2015, the Company entered into an agreement with Equity Stock Transfer for transfer agent services. A former Board member of the Company is a co-founder and chief executive officer of Equity Stock Transfer. Fees under the agreement were approximately $2,000 and $0, in the nine months ended July 31, 2017 and 2016, respectively. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Jul. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 14. DISCONTINUED OPERATIONS On July 31, 2015, the Company transferred to Zift Interactive LLC (“Zift”), a newly-formed subsidiary, certain rights under certain of its publishing licenses related to developing, publishing and distributing video game products through retail distribution for a term of one year. The Company transferred Zift to its former chief executive officer, Jesse Sutton. In exchange, the Company received Mr. Sutton’s resignation from the position of chief executive officer of the Company, including waiver of any severance payments and the execution of a separation agreement, together with his agreement to serve as a consultant to the Company. In addition, Zift will pay the Company a specified percent of its net revenue from retail sales on a quarterly basis. In addition, the Company entered into a conveyance agreement with Zift under which it assigned to Zift certain assets used in the retail business and Zift agreed to assume and indemnify the Company for liabilities and claims related to the retail business, including customer claims for price protection and promotional allowances. The assets transferred to Zift included cash in an amount of $800,000, of which $400,000 was transferred immediately and the remaining $400,000 was payable by the Company in twelve equal consecutive monthly installments of $33,000 commencing August 1, 2015, and certain accounts receivable and inventory with an aggregate carrying value of approximately $87,000. On June 23, 2017, the Company sold Majesco Entertainment Company, a Nevada corporation and wholly-owned subsidiary of the Company (“Majesco”) to Zift (the “Purchaser”) pursuant to a purchase agreement (the “Purchase Agreement”). Pursuant to the terms of the Purchase Agreement, the Company sold to the Purchaser 100% of the issued and outstanding shares of common stock of Majesco, including all of the right, title and interest in and to Majesco’s business of developing, publishing and distributing video game products through mobile and online digital downloading. Pursuant to the terms of the Purchase Agreement, the Company will receive total cash consideration of $100,000 ($5,000 upon signing the Purchase Agreement and 19 additional monthly payments of $5,000) plus contingent consideration based on net revenues valued at $0. The Company received $10,000 in cash consideration as of July 31, 2017. Subsequent to July 31, 2017, the Company received another $5,000. The Company recorded a gain of $100,000 on the sale of Majesco Entertainment Company, calculated as the difference between the $100,000 in non-contingent consideration and the net carrying amount of Majesco Entertainment Company, which was $0. The gain on the sale of Majesco Entertainment Company may be adjusted in future periods by the contingent consideration, based upon the achievement of pre-determined revenue milestones of more than $50,000 per month. The sale of Majesco Entertainment Company, classified in the Company’s video games segment, qualifies as a discontinued operation as the sale represents a strategic shift that has (or will have) a major effect on operations and financial results. The results of operations from the discontinued business for the three and nine months ended July 31, 2017 and 2016 are as follows (in thousands): For the Three Months Ended For the Nine Months Ended July 31, July 31, 2017 2016 2017 2016 Revenues $ 143 $ 315 $ 558 $ 1,318 Expenses 176 1,085 1,007 2,169 Loss from discontinued operations $ (33 ) $ (770 ) $ (449 ) $ (851 ) Gain on sale of discontinued operations $ 100 $ - $ 100 $ - The assets and liabilities related to the discontinued operations as of July 31, 2017 and October 31, 2016 are as follows (in thousands): July 31, 2017 October 31, 2016 (Unaudited) Current assets related to discontinued operations Accounts receivable $ - $ 113 Capitalized software development costs and license fees - 50 $ - $ 163 Current liabilities related to discontinued operations Accounts payable and accrued expenses $ - $ 810 $ - $ 810 The cash flows from the discontinued business for the nine months ended July 31, 2017 and 2016 are as follows (in thousands): For the nine months ended July 31, 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net loss from discontinued operations (349 ) (851 ) Adjustments to reconcile net loss from discontinued operations to net cash used in discontinued operating activities: Depreciation and amortization 11 21 Stock based compensation expense 1,118 994 Amortization of capitalized software development costs and license fees 50 150 Gain on sale of Majesco Sub (100 ) - Changes in operating assets and liabilities: Accounts receivable 113 107 Capitalized software development costs and license fees - (21 ) Accounts payable and accrued expenses (810 ) (218 ) Payable to Zift - (19 ) Net cash provided by discontinued operating activities 33 163 CASH FLOWS FROM INVESTING ACTIVITIES Cash received from sale of Majesco Sub 10 - Net cash provided by discontinued investing activities 10 - |
Subsequent Events
Subsequent Events | 9 Months Ended |
Jul. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. SUBSEQUENT EVENTS On September 14, 2017, the Company announced that it has entered into securities purchase agreements with investors for the sale of $15.2 million of Series F Convertible Preferred Stock. The Investor will also receive 276,364 Warrants exercisable at $30.00 per share of common stock. The Series F Convertible Preferred stock converts at $27.50 per share into a total of 552,727 shares of common stock, upon conversion. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation. |
Cash and Cash Equivalents | Cash and cash equivalents. |
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses. |
Property and Equipment | Property and Equipment. |
Income Taxes | Income Taxes. |
Stock Based Compensation | Stock Based Compensation. The fair value for options issued is estimated at the date of grant using a Black-Scholes option-pricing model. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of the grant. The volatility factor is determined based on the Company’s historical stock prices. The value of restricted stock grants is measured based on the fair market value of the Company’s common stock on the date of grant and amortized over the vesting period of, generally, six months to three years. |
Loss Per Share | Loss Per Share. |
Commitments and Contingencies | Commitments and Contingencies. |
Accounting for Warrants | Accounting for Warrants |
Change in Fair Value of Warrant Liability | Change in Fair Value of Warrant Liability. |
Reverse Stock-split | Reverse stock-split The Reverse Stock Split was effective with The NASDAQ Capital Market (“NASDAQ”) at the open of business on August 1, 2016. The par value and other terms of Company’s common stock were not affected by the Reverse Stock Split. The Company’s post-Reverse Stock Split common stock has a new CUSIP number, 560690 406. The Company’s transfer agent, Equity Stock Transfer LLC, acted as exchange agent for the Reverse Stock Split. As a result of the Reverse Stock Split, every six shares of the Company’s pre-Reverse Stock Split common stock was combined and reclassified into one share of the Company’s common stock. No fractional shares of common stock were issued as a result of the Reverse Stock Split. Stockholders who otherwise would be entitled to a fractional share shall receive a cash payment in an amount equal to the product obtained by multiplying (i) the closing sale price of our common stock on the business day immediately preceding the effective date of the Reverse Stock Split as reported on NASDAQ by (ii) the number of shares of our common stock held by the stockholder that would otherwise have been exchanged for the fractional share interest. All common share and per share amounts have been restated to show the effect of the Reverse Stock Split. |
Reclassifications | Reclassifications. |
Estimates | Estimates. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842), Leases (Topic 840) In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception, |
Prepaid Expenses and Other Cu23
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (in thousands): July 31, 2017 October 31, 2016 Legal retainer $ 60 $ - Prepaid insurance 86 22 Tax receivable - 18 Trade show deposit 160 - Other prepaids 71 - Deposits 32 - Other assets 2 7 Total prepaid expenses and other current assets $ 411 $ 47 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment, net, consist of the following (in thousands): July 31, 2017 October 31, 2016 Medical equipment $ 2,193 $ - Computers and software 198 61 Furniture and equipment 109 78 Total property and equipment, gross 2,500 139 Accumulated depreciation (427 ) (121 ) Total property and equipment, net $ 2,073 $ 18 |
Accounts Payable and Accrued 25
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following (in thousands): July 31, 2017 October 31, 2016 Accounts payable $ 56 $ - Due to Zift 66 - Medical equipment purchase 108 - Salaries and other compensation 662 463 Legal and accounting 454 - Other accruals 93 11 Total accounts payable and accrued expenses $ 1,439 $ 474 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Equity [Abstract] | |
Schedule of Convertible Preferred Stock | Convertible preferred stock as of July 31, 2017 consisted of the following (in thousands, except share amounts): Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 3,146,671 $ 769 $ 2,140 713,245 Series B 54,250 47,689 4,020 - 794,806 Series C 26,000 17,965 1,401 - 417,791 Series D 170,000 26,667 312 - 44,445 Series E 7,050 7,050 104,693 - 7,050,000 Other authorized, unissued 912,700 - - - - Total 10,000,000 3,246,042 $ 111,195 $ 2,140 9,020,287 Convertible preferred stock as of October 31, 2016 consisted of the following (in thousands, except share amounts): Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 7,138,158 $ 1,745 $ 4,854 1,189,693 Series B 54,250 54,201 4,569 - 903,362 Series C 26,000 25,763 2,010 - 429,392 Series D 170,000 156,332 1,829 - 260,553 Other authorized, unissued 919,750 - - - - Total 10,000,000 7,374,454 $ 10,153 $ 4,854 2,783,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Changes in Estimated Fair Value for Level 3 Classified Derivative Warrant Liability | The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative warrant liability (in thousands): Warrant Liability Fair value - October 31, 2016 $ 70 Change in fair value 8 Exchanged - January 18, 2017 (see Note 7) (78 ) Fair value - July 31, 2017 $ - |
Stock Based Compensation Arra28
Stock Based Compensation Arrangements (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the nine months ended July 31, 2017: Risk free annual interest rate 1.78-2.28 % Expected volatility 71.65-86.34 % Expected life 5.04-6.00 Assumed dividends None |
Schedule of Share-based Compensation, Restricted Stock Activity | A summary of the Company’s restricted stock activity in the nine months ended July 31, 2017 is presented below: Number of shares Weighted-Average Grant-Date Fair Value Unvested - October 31, 2016 274,829 $ 6.00 Granted 1,031,000 $ 4.56 Vested (1,011,466 ) $ 4.22 Unvested - July 31, 2017 294,363 $ 7.07 |
Employee Stock Option [Member] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of the Company’s employee stock option activity in the nine months ended July 31, 2017 is presented below: Number of shares Weighted-Average Exercise Price Outstanding - October 31, 2016 383,210 $ 5.74 Granted 2,715,000 $ 3.49 Exercised (231,404 ) $ 4.85 Outstanding - July 31, 2017 2,866,806 $ 3.68 Options exercisable - July 31, 2017 997,008 $ 3.88 Weighted-average fair value of options granted during the period $ 2.37 |
Non-Employee Stock Option [Member] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of the Company’s non-employee stock option activity in the nine months ended July 31, 2017 is presented below: Number of shares Weighted-Average Exercise Price Outstanding - October 31, 2016 - $ - Granted 52,000 $ 4.71 Outstanding - July 31, 2017 52,000 $ 4.71 Options exercisable - July 31, 2017 10,833 $ 4.71 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Anti-dilutive Potential Shares Outstanding Activity | The table below provides total potential shares outstanding, including those that are anti-dilutive, on July 31, 2017 and 2016: July 31, 2017 2016 Shares issuable upon exercise of warrants - 187,500 Shares issuable upon conversion of preferred stock 9,020,287 2,783,000 Shares issuable upon exercise of stock options 2,918,806 394,278 Non-vested shares under restricted stock grants 294,363 303,477 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Assets and Liabilities of Discontinued Operations | The results of operations from the discontinued business for the three and nine months ended July 31, 2017 and 2016 are as follows (in thousands): For the Three Months Ended For the Nine Months Ended July 31, July 31, 2017 2016 2017 2016 Revenues $ 143 $ 315 $ 558 $ 1,318 Expenses 176 1,085 1,007 2,169 Loss from discontinued operations $ (33 ) $ (770 ) $ (449 ) $ (851 ) Gain on sale of discontinued operations $ 100 $ - $ 100 $ - The assets and liabilities related to the discontinued operations as of July 31, 2017 and October 31, 2016 are as follows (in thousands): July 31, 2017 October 31, 2016 (Unaudited) Current assets related to discontinued operations Accounts receivable $ - $ 113 Capitalized software development costs and license fees - 50 $ - $ 163 Current liabilities related to discontinued operations Accounts payable and accrued expenses $ - $ 810 $ - $ 810 The cash flows from the discontinued business for the nine months ended July 31, 2017 and 2016 are as follows (in thousands): For the nine months ended July 31, 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net loss from discontinued operations (349 ) (851 ) Adjustments to reconcile net loss from discontinued operations to net cash used in discontinued operating activities: Depreciation and amortization 11 21 Stock based compensation expense 1,118 994 Amortization of capitalized software development costs and license fees 50 150 Gain on sale of Majesco Sub (100 ) - Changes in operating assets and liabilities: Accounts receivable 113 107 Capitalized software development costs and license fees - (21 ) Accounts payable and accrued expenses (810 ) (218 ) Payable to Zift - (19 ) Net cash provided by discontinued operating activities 33 163 CASH FLOWS FROM INVESTING ACTIVITIES Cash received from sale of Majesco Sub 10 - Net cash provided by discontinued investing activities 10 - |
Principal Business Activity a31
Principal Business Activity and Basis of Presentation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 23, 2017 | Apr. 07, 2017 | Jul. 31, 2017 | Oct. 31, 2016 |
Convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||
Cash consideration received | $ 10 | |||
Majesco to Zift [Member] | ||||
Common stock issued, outstanding percentage | 100.00% | |||
Cash consideration | $ 100 | |||
Additional monthly payments | 5 | |||
Net revenue | $ 0 | |||
Series E Preferred Stock [Member] | ||||
Convertible preferred stock, shares authorized | 7,050 | |||
Number of convertible into an aggregate shares of common stock | 7,050,000 | |||
Number of convertible into an aggregate value of common stock | $ 104,700 | |||
Number of preferred stock convertible into common stock | 7,050,000 | |||
Common stock closing price per share | $ 14.85 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Apr. 30, 2017 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Property and equipment, estimated useful lives | 5 years | |||||
Common stock, par value | $ 0.001 | $ 0.001 | $ .001 | |||
Reverse stock split, description | one (1) for six (6) basis, effective on July 29, 2016 | |||||
Research and development expenses | $ 1,641 | $ 1,800 | $ 3,424 | |||
Minimum [Member] | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | |||||
Maximum [Member] | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years | |||||
Restricted Stock [Member] | Minimum [Member] | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 6 months | |||||
Restricted Stock [Member] | Maximum [Member] | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cumulative losses | $ (249,397) | $ (128,176) |
Prepaid Expenses and Other Cu34
Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Legal retainer | $ 60 | |
Prepaid insurance | 86 | 22 |
Tax receivable | 18 | |
Trade show deposit | 160 | |
Other prepaids | 71 | |
Deposits | 32 | |
Other assets | 2 | 7 |
Total prepaid expenses and other current assets | $ 411 | $ 47 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Medical equipment | $ 2,193 | |
Computers and software | 198 | 61 |
Furniture and equipment | 109 | 78 |
Total property and equipment, gross | 2,500 | 139 |
Accumulated depreciation | (427) | (121) |
Total property and equipment, net | $ 2,073 | $ 18 |
Accounts Payable and Accrued 36
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 56 | |
Due to Zift | 66 | |
Medical equipment purchase | 108 | |
Salaries and other compensation | 662 | 463 |
Legal and accounting | 454 | |
Other accruals | 93 | 11 |
Total accounts payable and accrued expenses | $ 1,439 | $ 474 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Dec. 16, 2016 | Apr. 13, 2016 | Jan. 06, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | Apr. 19, 2016 | Jan. 14, 2016 |
Common stock, par value | $ 0.001 | $ .001 | ||||||
Warrant exercise price per share | $ 6.90 | |||||||
Number of common stock value issued | $ 2,278 | |||||||
Reverse stock split, description | one (1) for six (6) basis, effective on July 29, 2016 | |||||||
Employees [Member] | ||||||||
Number of common stock option exercise price per share | $ 4.08 | |||||||
Number of common stock shares issued | 31,656 | |||||||
Accredited Investors [Member] | ||||||||
Sale of common stock issued, shares | 759,333 | |||||||
Sale of stock price, per share | $ 3 | |||||||
Warrants to purchase shares of common stock | 187,500 | 187,500 | ||||||
Number of common stock shares issued | 56,250 | 250,000 | ||||||
Proceeds from sale of common stock | $ 2,300 | |||||||
Reverse stock split, description | 1 for 6 basis | |||||||
Number of warrant offering, shares | 0.3 | |||||||
Warrant [Member] | ||||||||
Beneficially not ownership percentage | 4.99% | |||||||
Proceeds from offering to a warrant liability | $ 318 | |||||||
Warrant exercisable term | 2 years | |||||||
Warrant exercise price per share | $ 6.90 | |||||||
Common Stock [Member] | ||||||||
Number of convertible into an aggregate shares issued | (761,798) | |||||||
Cash dividend | $ 6,000 | |||||||
Number of common stock shares issued | 759,333 | |||||||
Number of common stock value issued | $ 1 | |||||||
Securities Purchase Agreement [Member] | ||||||||
Sale of common stock issued, shares | 250,000 | |||||||
Common stock, par value | $ 0.001 | |||||||
Common stock offering price per share | $ 6 | |||||||
Proceeds from offering to a warrant liability | $ 1,400 | |||||||
Warrants to purchase shares of common stock | 187,500 | |||||||
Series A Preferred Shares [Member] | ||||||||
Preferred stock, stated value per share | $ 0.68 | |||||||
Preferred stock initial conversion price, per share | 4.08 | |||||||
Preferred stock current conversion price per share | $ 3 | |||||||
Series A Preferred Shares [Member] | Minimum [Member] | ||||||||
Beneficially ownership percentage | 4.99% | |||||||
Beneficially not ownership percentage | 9.99% | |||||||
Investors monthly payment percentage | 1.00% | |||||||
Series A Preferred Shares [Member] | Maximum [Member] | ||||||||
Preferred stock conversion price, per share | $ 3.54 | |||||||
Investors monthly payment percentage | 12.00% | |||||||
Series A Convertible Preferred Stock [Member] | ||||||||
Preferred stock conversion price, percentage | 0.00% | |||||||
Number of convertible into an aggregate shares issued | 3,991,487 | 1,638,810 | ||||||
Series B Preferred Shares [Member] | ||||||||
Preferred stock, stated value per share | $ 140 | |||||||
Preferred stock initial conversion price, per share | 8.40 | |||||||
Preferred stock conversion price, per share | $ 8.40 | |||||||
Series B Preferred Shares [Member] | Minimum [Member] | ||||||||
Beneficially ownership percentage | 4.99% | |||||||
Series B Preferred Shares [Member] | Maximum [Member] | ||||||||
Beneficially ownership percentage | 9.99% | |||||||
Series C Preferred Shares [Member] | ||||||||
Preferred stock, stated value per share | $ 120 | |||||||
Preferred stock initial conversion price, per share | 7.20 | |||||||
Preferred stock current conversion price per share | 5.16 | |||||||
Preferred stock conversion price, per share | $ 7.80 | |||||||
Series C Preferred Shares [Member] | Minimum [Member] | ||||||||
Beneficially ownership percentage | 4.99% | |||||||
Investors monthly payment percentage | 1.00% | |||||||
Series C Preferred Shares [Member] | Maximum [Member] | ||||||||
Beneficially ownership percentage | 9.99% | |||||||
Investors monthly payment percentage | 12.00% | |||||||
Preferred stock reduction conversion price, per share | $ 5.16 | |||||||
Series D Preferred Shares [Member] | ||||||||
Preferred stock, stated value per share | 1,000 | |||||||
Preferred stock initial conversion price, per share | $ 600 | |||||||
Preferred stock conversion price, percentage | 0.00% | |||||||
Series D Preferred Shares [Member] | Minimum [Member] | ||||||||
Beneficially ownership percentage | 4.99% | |||||||
Series D Preferred Shares [Member] | Maximum [Member] | ||||||||
Beneficially ownership percentage | 9.99% | |||||||
Series E Preferred Shares [Member] | ||||||||
Preferred stock, stated value per share | $ 1,000 | |||||||
Preferred stock initial conversion price, per share | $ 1 | |||||||
Series B Convertible Preferred Stock [Member] | ||||||||
Number of convertible into an aggregate shares issued | 6,512 | |||||||
Series C Convertible Preferred Stock [Member] | ||||||||
Number of convertible into an aggregate shares issued | 7,798 | |||||||
Series D Convertible Preferred Stock [Member] | ||||||||
Number of convertible into an aggregate shares issued | 129,665 | 12,001 | ||||||
Common Stock [Member] | ||||||||
Number of convertible into an aggregate shares issued | 1,232,793 | 293,137 | ||||||
Cash dividend | $ 10,000 | |||||||
Number of common stock option exercise price per share | $ 4.85 | |||||||
Number of common stock shares issued | 231,404 | |||||||
Number of common stock value issued | $ 1,100 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Convertible Preferred Stock (Details) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued and outstanding | 3,246,042 | 7,374,454 |
Preferred stock, net carrying value | $ 111,195 | $ 10,153 |
Preferred stock, aggregate liquidation preference | $ 2,140 | $ 4,854 |
Preferred stock, common shares issuable upon conversion | 9,020,287 | 2,783,000 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 8,830,000 | 8,830,000 |
Preferred stock, shares issued and outstanding | 3,146,671 | 7,138,158 |
Preferred stock, net carrying value | $ 769 | $ 1,745 |
Preferred stock, aggregate liquidation preference | $ 2,140 | $ 4,854 |
Preferred stock, common shares issuable upon conversion | 713,245 | 1,189,693 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 54,250 | 54,250 |
Preferred stock, shares issued and outstanding | 47,689 | 54,201 |
Preferred stock, net carrying value | $ 4,020 | $ 4,569 |
Preferred stock, aggregate liquidation preference | ||
Preferred stock, common shares issuable upon conversion | 794,806 | 903,362 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 26,000 | 26,000 |
Preferred stock, shares issued and outstanding | 17,965 | 25,763 |
Preferred stock, net carrying value | $ 1,401 | $ 2,010 |
Preferred stock, aggregate liquidation preference | ||
Preferred stock, common shares issuable upon conversion | 417,791 | 429,392 |
Series D Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 170,000 | 170,000 |
Preferred stock, shares issued and outstanding | 26,667 | 156,332 |
Preferred stock, net carrying value | $ 312 | $ 1,829 |
Preferred stock, aggregate liquidation preference | ||
Preferred stock, common shares issuable upon conversion | 44,445 | 260,553 |
Series E Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 7,050 | |
Preferred stock, shares issued and outstanding | 7,050 | |
Preferred stock, net carrying value | $ 104,693 | |
Preferred stock, aggregate liquidation preference | ||
Preferred stock, common shares issuable upon conversion | 7,050,000 | |
Other Authorized, Unissued [Member] | ||
Preferred stock, shares authorized | 912,700 | 919,750 |
Preferred stock, shares issued and outstanding | ||
Preferred stock, net carrying value | ||
Preferred stock, aggregate liquidation preference | ||
Preferred stock, common shares issuable upon conversion |
Fair Value Measurements (Detail
Fair Value Measurements (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 18, 2017 | Apr. 19, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 |
Fair Value Disclosures [Abstract] | |||||||
Number of warrant to purchase shares of common stock | 187,500 | ||||||
Warrant exercisable price per share | $ 6.90 | ||||||
Warrant expiry date | Apr. 19, 2018 | ||||||
Fair value of warrants | $ 78 | $ (159) | $ 8 | $ (133) | $ 70 | ||
Stock price | $ 3.62 | $ 3.58 | |||||
Risk-free rate | 0.97% | 0.75% | |||||
Expected volatility | 68.00% | 61.00% |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Estimated Fair Value for Level 3 Classified Derivative Warrant Liability (Details) $ in Thousands | 9 Months Ended |
Jul. 31, 2017USD ($) | |
Fair Value Disclosures [Abstract] | |
Fair value at the beginning of period | $ 70 |
Change in fair value | 8 |
Exchanged - January 18, 2017 (see Note 7) | (78) |
Fair value at the end of period |
Stock Based Compensation Arra41
Stock Based Compensation Arrangements (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 3,700 | $ 1,600 | $ 10,696 | $ 1,845 |
Unrecognized compensation cost | 2,800 | $ 2,800 | ||
Unrecognized compensation cost, period for recognition | 8 months 12 days | |||
Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation cost | $ 2,000 | $ 2,000 | ||
Unrecognized compensation cost, period for recognition | 7 months 6 days | |||
Weighted-average grant-date fair value granted | $ 4.56 | |||
Fair value of restricted stock vested | $ 4,700 | |||
Restricted Stock [Member] | Employees [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of restricted shares of common stock | 1,031,000 | |||
Restricted Stock [Member] | Non-employees [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of restricted shares of common stock | 1,031,000 | |||
Restricted Stock [Member] | Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 6 months | |||
Restricted Stock [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
2017 Equity Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options to purchase shares of common stock | 50,000 | |||
Options exercise price per share | $ 4.72 | |||
Vesting period | 24 months | |||
2017 Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 24 months | |||
Number of restricted shares of common stock | 50,000 | |||
General and Administrative Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 11,800 | $ 2,800 |
Stock Based Compensation Arra42
Stock Based Compensation Arrangements - Schedule of Share-based Compensation, Stock Options, Activity (Details) | 9 Months Ended |
Jul. 31, 2017$ / sharesshares | |
Employees [Member] | |
Number of Shares, Outstanding at beginning of period | shares | 383,210 |
Number of Shares, Granted | shares | 2,715,000 |
Number of Shares, Exercised | shares | (231,404) |
Number of Shares, Outstanding at end of period | shares | 2,866,806 |
Number of Shares, Options exercisable | shares | 997,008 |
Weighted Average Exercise Price, Outstanding at beginning of year | $ 5.74 |
Weighted Average Exercise Price, Granted | 3.49 |
Weighted Average Exercise Price, Exercised | 4.85 |
Weighted Average Exercise Price, Outstanding at end of year | 3.68 |
Weighted Average Exercise Price, Options exercisable | $ 3.88 |
Weighted Average Exercise Price, Weighted-average fair value of options granted during the period | 2 years 4 months 13 days |
Non-employees [Member] | |
Number of Shares, Granted | shares | 52,000 |
Number of Shares, Exercised | shares | |
Number of Shares, Outstanding at end of period | shares | 52,000 |
Number of Shares, Options exercisable | shares | 10,833 |
Weighted Average Exercise Price, Outstanding at beginning of year | |
Weighted Average Exercise Price, Granted | 4.71 |
Weighted Average Exercise Price, Exercised | |
Weighted Average Exercise Price, Outstanding at end of year | 4.71 |
Weighted Average Exercise Price, Options exercisable | $ 4.71 |
Stock Based Compensation Arra43
Stock Based Compensation Arrangements - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) | 9 Months Ended |
Jul. 31, 2017 | |
Risk free annual interest rate, minimum | 1.78% |
Risk free annual interest rate, maximum | 2.28% |
Expected volatility, minimum | 71.65% |
Expected volatility, Maximum | 86.34% |
Assumed dividends | 0.00% |
Minimum [Member] | |
Expected life | 5 years 15 days |
Maximum [Member] | |
Expected life | 6 years |
Stock Based Compensation Arra44
Stock Based Compensation Arrangements - Schedule of Share-based Compensation, Restricted Stock Activity (Details) - Restricted Stock [Member] | 9 Months Ended |
Jul. 31, 2017$ / sharesshares | |
Number of Shares, Unvested at beginning of period | shares | 274,829 |
Number of Shares, Granted | shares | 1,031,000 |
Number of Shares, Vested | shares | (1,011,466) |
Number of Shares, Unvested at end of period | shares | 294,363 |
Weighted-Average Grant-Date Fair Value Unvested at beginning of period | $ / shares | $ 6 |
Weighted-Average Grant-Date Fair Value, Granted | $ / shares | 4.56 |
Weighted-Average Grant-Date Fair Value, Vested | $ / shares | 4.22 |
Weighted-Average Grant-Date Fair Value, Unvested at end of period | $ / shares | $ 7.07 |
Loss Per Share - Schedule of An
Loss Per Share - Schedule of Anti-dilutive Potential Shares Outstanding Activity (Details) - shares | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Shares Issuable Upon Exercise of Warrants [Member] | ||
Antidilutive shares | 187,500 | |
Shares Issuable Upon Conversion of Preferred Stock [Member] | ||
Antidilutive shares | 9,020,287 | 2,783,000 |
Shares Issuable Upon Exercise of Stock Options [Member] | ||
Antidilutive shares | 2,918,806 | 394,278 |
Non-vested Shares Under Restricted Stock Grants [Member] | ||
Antidilutive shares | 294,363 | 303,477 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 9 Months Ended |
Jul. 31, 2017USD ($) | |
Litigation damages sought | $ 1,300,000 |
Hazlet, New Jersey [Member] | |
Operating leases, rent expense | $ 1,100 |
Operating lease expiration date | Mar. 31, 2018 |
Salt Lake City, Utah [Member] | |
Operating leases, rent expense | $ 24,044 |
Operating lease expiration date | Mar. 31, 2018 |
Related Parties (Details Narrat
Related Parties (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Transfer Agent [Member] | ||
Related Party Transaction [Line Items] | ||
Related party transaction strategic consulting services fee from transaction with related party monthly | $ 2 | $ 0 |
Discontinued Operations (Detail
Discontinued Operations (Details Narrative) - USD ($) $ in Thousands | Jun. 23, 2017 | Jul. 31, 2017 |
Cash consideration received | $ 10 | |
Gain on sale of business | 100 | |
Non-contingent consideration and net carrying amount | 0 | |
Predetermined revenue milestone, amount | 50 | |
Subsequent to July 31, 2017 [Member] | ||
Cash consideration received | 5 | |
Conveyance Agreement [Member] | ||
Cash included in assets | 400 | |
Cash payable | 400 | |
Accounts receivable and inventory carrying value | 87 | |
Conveyance Agreement [Member] | Twelve Monthly Installments [Member] | ||
Cash payable | 33 | |
Conveyance Agreement [Member] | Zift Interactive LLC [Member] | ||
Cash included in assets | $ 800 | |
Purchase Agreement [Member] | ||
Issued and outstanding shares, percentage | 100.00% | |
Cash consideration received | $ 100 | |
Purchase Agreement [Member] | Upon Signing Agreement [Member] | ||
Cash consideration received | 5 | |
Purchase Agreement [Member] | 19 Additional Monthly Payments [Member] | ||
Cash consideration received | 5 | |
Contingent consideration based on net revenue | $ 0 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Assets and Liabilities of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Loss from discontinued operations | $ (33) | $ (770) | $ (449) | $ (851) | |
Net loss from discontinued operations | 67 | (770) | (349) | (851) | |
Net cash provided by discontinued operating activities | 33 | 163 | |||
Net cash provided by discontinued investing activities | 10 | ||||
Majesco Entertainment Company [Member] | |||||
Revenues | 143 | 315 | 558 | 1,318 | |
Expenses | 176 | 1,085 | 1,007 | 2,169 | |
Loss from discontinued operations | (33) | (770) | (449) | (851) | |
Gain on sale of discontinued operations | 100 | 100 | |||
Accounts receivable | $ 113 | ||||
Capitalized software development costs and license fees | 50 | ||||
Accounts payable and accrued expenses | $ 163 | ||||
Net loss from discontinued operations | $ (770) | (349) | (851) | ||
Depreciation and amortization | 11 | 21 | |||
Stock based compensation expense | 1,118 | 994 | |||
Amortization of capitalized software development costs and license fees | 50 | 150 | |||
Gain on sale of Majesco Sub | (100) | ||||
Accounts receivable | 113 | 107 | |||
Capitalized software development costs and license fees | (21) | ||||
Accounts payable and accrued expenses | (810) | (218) | |||
Payable to Zift | (19) | ||||
Net cash provided by discontinued operating activities | 33 | 163 | |||
Cash received from sale of Majesco Sub | 10 | ||||
Net cash provided by discontinued investing activities | $ 10 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Sep. 14, 2017 | Apr. 19, 2016 |
Number of warrants exercisable during the period | 187,500 | |
Warrants exercisable price per share | $ 6.90 | |
Subsequent Event [Member] | Investors [Member] | ||
Number of warrants exercisable during the period | 276,364 | |
Warrants exercisable price per share | $ 30 | |
Subsequent Event [Member] | Series F Convertible Preferred Stock [Member] | ||
Convertible preferred stock conversion price per share | $ 27.50 | |
Convertible preferred stock into common stock shares | 552,727 | |
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Series F Convertible Preferred Stock [Member] | Investors [Member] | ||
Proceeds from sale of convertible preferred stock | $ 15,200 |