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STOCK BASED COMPENSATION | 9 Months Ended
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Jul. 31, 2021
Share-based Payment Arrangement [Abstract] |
STOCK BASED COMPENSATION |
3. | STOCK BASED COMPENSATION
The Company maintains stock equity incentive plans under which the Company grants incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, performance awards, or stock units to employees, directors and consultants. Stock Option Compensation Expense The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is expensed on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years. We recorded stock-based compensation expense related to service-based stock options granted to employees and directors of approximately $1,066,000 and $997,000 during the three months ended July 31, 2021 and 2020, respectively, and approximately $2,822,000 and $3,016,000 during the nine months ended July 31, 2021 and 2020, respectively. For stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s common stock exceeding certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest). On May 8, 2018, we issued market condition options to purchase 1,500,000 shares of common stock, to our Chairman, President and Chief Executive Officer, vesting at target trading prices of $5.00 to $8.00 per share before May 31, 2021, with implied service periods of three to seven months. In October 2018, the first tranche of 500,000 shares of market condition options became exercisable upon achieving an average closing price above $5.00 per share for twenty consecutive trading days. The remaining tranches did not vest as of May 31, 2021 and expired. On June 1, 2021, our Chairman, President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer were awarded options for 2,000,000 shares and 100,000 shares of common stock, respectively, that vest in four equal installments upon the Company’s share price achieving targets ranging from $5.00 to $8.00 per share, with implied service periods of three to fifteen months. The assumptions used in the Monte Carlo Simulation for the June 1, 2021 grants were stock price on date of grant of $4.02, contract term of 10 years, expected volatility of 75% and risk-free interest rate of 1.62%. We recorded stock-based compensation expense related to market condition stock options of approximately $1,981,000 for both the three and nine month periods ended July 31, 2021. We did not record any market condition stock-based compensation expense for these grants during the three and nine month periods ended July 31, 2020. As of July 31, 2021, the unrecognized compensation cost related to market condition stock options was approximately $4,528,000 which will be recognized over future periods through the fourth quarter of fiscal 2022. The compensation cost for service-based stock options granted to consultants is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is expensed on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to three years. We recorded stock-based consulting expense related to stock options granted to consultants of approximately $139,000 and $45,000 during the three months ended July 31, 2021 and 2020, respectively, and approximately $326,000 and $157,000 during the nine months ended July 31, 2021 and 2020, respectively. Stock Option Plans During the nine months ended July 31, 2021, we had two stock option plans: the Anixa Biosciences, Inc. 2010 Share Incentive Plan (the “2010 Share Plan”) and the Anixa Biosciences, Inc. 2018 Share Incentive Plan (the “2018 Share Plan”), which were adopted by our Board of Directors on July 14, 2010 and January 25, 2018, respectively. The 2018 Share Plan was approved by our shareholders on March 29, 2018. Further, we had an additional stock option plan: the Anixa Biosciences, Inc. 2003 Share Incentive Plan (the “2003 Share Plan”), under which all outstanding options expired during the nine months ended July 31, 2020. Stock Option Activity During the three months ended July 31, 2021 and 2020, we granted options to purchase 2,990,000 shares and -0- shares of common stock, respectively, and during the nine months ended July 31, 2021 and 2020, we granted options to purchase 4,370,000 shares and 800,000 shares of common stock, respectively, to employees and consultants, with exercise prices ranging from $2.83 to $5.30 per share, pursuant to the 2018 Share Plan. During the three months ended July 31, 2021 and 2020, stock options to purchase -0- shares and 7,200 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $-0- and $19,000, respectively. During the nine months ended July 31, 2021 and 2020, stock options to purchase 107,451 shares, net of 7,937 shares withheld on a cashless exercise, and 51,100 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $294,000 and $122,000, respectively. 2003 Share Plan The 2003 Share Plan provided for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. In accordance with the provisions of the 2003 Share Plan, the plan terminated with respect to the ability to grant future awards on April 21, 2013. Information regarding the 2003 Plan for the nine months ended July 31, 2020 is as follows: SCHEDULE OF OPTION ACTIVITY
|  | Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Options outstanding at October 31, 2019 |  |  | 400 |  |  | $ | 17.00 |  |  |  |  |
Granted |  |  | - |  |  | $ | - |  |  |  |  |
Exercised |  |  | - |  |  | $ | - |  |  |  |  |
Forfeited/Expired |  |  | (400 | ) |  | $ | 17.00 |  |  |  |  |
Options outstanding and exercisable at July 31, 2020 |  |  | - |  |  | $ | -0- |  |  | $ | -0- |
Options outstanding at July 31, 2020 |  |  | - |  |  | $ | - |  |  | $ | - |
Options exercisable at July 31, 2020 |  |  | - |  |  | $ | - |  |  | $ | - |
2010 Share Plan The 2010 Share Plan provided for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. In accordance with the provisions of the 2010 Share Plan, the plan terminated with respect to the ability to grant future awards on July 14, 2020. Information regarding the 2010 Share Plan for the nine months ended July 31, 2021 is as follows: SCHEDULE OF OPTION ACTIVITY
|  | Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Options outstanding at October 31, 2020 |  |  | 1,907,534 |  |  | $ | 2.82 |  |  |  |  |
Exercised |  |  | (37,500 | ) |  | $ | 2.40 |  |  |  |  |
Forfeited/Expired |  |  | (10,400 | ) |  | $ | 4.57 |  |  |  |  |
Options outstanding and exercisable at July 31, 2021 |  |  | 1,859,634 |  |  | $ | 2.82 |  |  | $ | 3,138,347 |
The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of July 31, 2021: SCHEDULE OF OUTSTANDING AND EXERCISABLE
Range of Exercise Prices |  |  | Number Outstanding And Exercisable |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |
$ | 0 $ .67 - $ 2.30 |  |  |  | 527,500 |  |  |  | 4.80 |  |  | $ | 1.54 |
$ | 2.58 - $ 3.13 |  |  |  | 818,000 |  |  |  | 2.65 |  |  | $ | 2.80 |
$ | 3.46 - $ 5.30 |  |  |  | 514,134 |  |  |  | 6.75 |  |  | $ | 4.16 |
Information regarding the 2010 Share Plan for the nine months ended July 31, 2020 is as follows:
|  | Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Options outstanding at October 31, 2019 |  |  | 1,998,668 |  |  | $ | 2.80 |  |  |  |  |
Exercised |  |  | (51,100 | ) |  | $ | 2.39 |  |  |  |  |
Forfeited/Expired |  |  | (20,534 | ) |  | $ | 1.72 |  |  |  |  |
Options outstanding at July 31, 2020 |  |  | 1,927,034 |  |  | $ | 2.82 |  |  | $ | 731,670 |
Options exercisable at July 31, 2020 |  |  | 1,772,034 |  |  | $ | 2.84 |  |  | $ | 630,120 |
The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of July 31, 2020:
|  |  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  |  | Number Outstanding |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Number Exercisable |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |
$ | 0.67 - $2.30 |  |  |  | 549,000 |  |  |  | 5.70 |  |  | $ | 1.57 |  |  |  | 494,000 |  |  |  | 5.56 |  |  | $ | 1.64 |
$ | 2.58 - $ 3.13 |  |  |  | 846,000 |  |  |  | 3.05 |  |  | $ | 2.79 |  |  |  | 846,000 |  |  |  | 3.41 |  |  | $ | 2.79 |
$ | 3.46 - $ 5.75 |  |  |  | 532,034 |  |  |  | 7.45 |  |  | $ | 4.16 |  |  |  | 432,034 |  |  |  | 7.33 |  |  | $ | 4.33 |
2018 Share Plan The 2018 Share Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. As of July 31, 2021, the 2018 Share Plan had 1,257,937 shares available for future grants. Information regarding the 2018 Share Plan for the nine months ended July 31, 2021 is as follows: SCHEDULE OF OPTION ACTIVITY
|  | Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Options outstanding at October 31, 2020 |  |  | 4,346,661 |  |  | $ | 3.69 |  |  |  |  |
Granted |  |  | 4,370,000 |  |  | $ | 3.79 |  |  |  |  |
Exercised |  |  | (33,888 | ) |  | $ | 3.81 |  |  |  |  |
Forfeited/Expired |  |  | (1,392,781 | ) |  | $ | 3.70 |  |  |  |  |
Options outstanding at July 31, 2021 |  |  | 7,289,992 |  |  | $ | 3.74 |  |  | $ | 5,164,696 |
Options exercisable at July 31, 2021 |  |  | 2,914,586 |  |  | $ | 3.64 |  |  | $ | 2,328,335 |
The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of July 31, 2021: SCHEDULE OF OUTSTANDING AND EXERCISABLE
|  |  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  |  | Number Outstanding |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Number Exercisable |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |
$ | 2.09 - $3.70 |  |  |  | 2,975,000 |  |  |  | 7.90 |  |  | $ | 3.28 |  |  |  | 2,047,360 |  |  |  | 7.25 |  |  | $ | 3.49 |
$ | 3.84 - $5.30 |  |  |  | 4,314,992 |  |  |  | 8.95 |  |  | $ | 4.06 |  |  |  | 867,226 |  |  |  | 7.33 |  |  | $ | 3.99 |
Information regarding the 2018 Share Plan for the nine months ended July, 2020 is as follows: SCHEDULE OF OPTION ACTIVITY
|  | Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Options outstanding at October 31, 2019 |  |  | 3,935,000 |  |  | $ | 3.74 |  |  |  |  |
Granted |  |  | 800,000 |  |  | $ | 3.85 |  |  |  |  |
Forfeited/Expired |  |  | (258,376 | ) |  | $ | 3.86 |  |  |  |  |
Options outstanding at July 31, 2020 |  |  | 4,476,624 |  |  | $ | 3.76 |  |  | $ | -0- |
Options exercisable at July 31, 2020 |  |  | 2,403,014 |  |  | $ | 3.76 |  |  | $ | -0- |
The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of July 31, 2020:
|  |  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  |  | Number Outstanding |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Number Exercisable |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |
$ | 3.70 |  |  |  | 3,100,000 |  |  |  | 7.78 |  |  | $ | 3.70 |  |  |  | 1,700,000 |  |  |  | 7.78 |  |  | $ | 3.70 |
$ | 3.84 - $4.61 |  |  |  | 1,376,624 |  |  |  | 7.55 |  |  | $ | 3.89 |  |  |  | 703,014 |  |  |  | 6.15 |  |  | $ | 3.90 |
Non-Plan Options In addition to options granted under stock option plans, during the years ended October 31, 2012 and 2013, the Board of Directors approved the grant of stock options to certain employees and directors (the “Non-Plan Options”). Information regarding Non-Plan Options for the nine months ended July 31, 2021 is as follows: SCHEDULE OF OPTION ACTIVITY
|  | Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Options outstanding at October 31, 2020 |  |  | 1,698,000 |  |  | $ | 2.58 |  |  |  |  |
Exercised |  |  | (44,000 | ) |  | $ | 2.58 |  |  |  |  |
Options outstanding and exercisable at July 31, 2021 |  |  | 1,654,000 |  |  | $ | 2.58 |  |  | $ | 3,051,630 |
The following table summarizes information about Non-Plan Options outstanding and exercisable as of July 31, 2021: SCHEDULE OF OUTSTANDING AND EXERCISABLE
Range of Exercise Prices |  |  | Number Outstanding and Exercisable |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |
$ | 2.58 |  |  |  | 1,654,000 |  |  |  | 1.06 |  |  | $ | 2.58 |
Information regarding Non-Plan Options for the nine months ended July 31, 2020 is as follows:
|  | Shares |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Options outstanding at October 31, 2019 |  |  | 1,698,000 |  |  | $ | 2.58 |  |  |  |  |
Options outstanding and exercisable at July 31, 2020 |  |  | 1,698,000 |  |  | $ | 2.58 |  |  | $ | 348,000 |
The following table summarizes information about Non-Plan Options outstanding and exercisable as of July 31, 2020:
Range of Exercise Prices |  |  | Number Outstanding and Exercisable |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |
$ | 2.58 |  |  |  | 1,698,000 |  |  |  | 2.00 |  |  | $ | 2.58 |
Stock Awards On May 8, 2018, a restricted stock award of 1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President and Chief Executive Officer. The restricted stock award was to vest in its entirety upon achievement of a target trading price of $11.00 per share of the Company’s common stock before May 31, 2021. The restricted stock award did not vest as of May 31, 2021 and expired. For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest). We did not record any compensation expense related to the restricted stock award during the nine months ended July 31, 2021 and 2020. Employee Stock Purchase Plan The Company maintains the Anixa Biosciences, Inc. Employee Stock Purchase Plan which permits eligible employees to purchase shares at not less than 85% of the market value of the Company’s common stock on the offering date or the purchase date of the applicable offering period, whichever is lower. The plan was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018. During the nine months ended July 31, 2021 and 2020, employees purchased 1,634 and 9,618 shares, respectively, with aggregate proceeds of approximately $3,000 and $15,000, respectively. Warrants On October 30, 2020 we issued a warrant, expiring on October 30, 2025, to purchase 60,000 shares of common stock at $2.06 per share, vesting over five months, to a consultant for investor relations services. We recorded consulting expense of approximately $-0- and $96,000, respectively, during the three and nine months ended July 31, 2021, based on the fair value of the warrant on the date of grant recognized on a straight-line basis over the vesting period. We did not record any consulting expense related to warrants during the three and nine months ended July 31, 2020. As discussed in Note 2, in connection with the March 25, 2021 public offering we issued to certain designees of the underwriter, as compensation, warrants to purchase 300,000 shares of common stock at $6.5625 per share, expiring on March 22, 2026. No warrants were issued during the nine month period ended July 31, 2020. As of July 31, 2021, we also had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share, issued during fiscal year 2017 and expiring on November 30, 2021.

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