| Stockholders' Equity (Deficit) | NOTE 14: STOCKHOLDERS’ EQUITY (DEFICIT) The total number of shares of all classes of
stock that the Company shall have the authority to issue is 7,625,000,000 shares consisting of 7,500,000,000 shares of common stock
with a $0.000001 par value per share of which 10,278,867 are issued at October 31, 2020 and 125,000,000 shares of preferred stock,
par value $0.000001 per share of which (A) 120,000,000 shares have been designated as Series A Convertible Preferred of which 28,944,601
are outstanding at October 31, 2020, (B) 1,000,000 shares have been designated as Series B Convertible Preferred Stock, of which
no shares are outstanding at October 31, 2020 and (C) 1,000,000 have been designated as Series C Convertible Preferred Stock, of
which 680,801 shares are outstanding at October 31, 2020. On January 11, 2019, stockholders holding a
majority of the voting power of the Company’s issued and outstanding shares of voting stock, executed a written consent approving
1) an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate of
Incorporation”) to (i) increase the number of authorized shares of common stock of the Company to 7,500,000,000 shares from
1,500,000,000 shares and (ii) decrease the par value of the common stock and preferred stock to $0.000001 from $0.001 per share;
and 2) granting discretionary authority to the Company’s Board of Directors to amend the Certificate of Incorporation to
effect one or more consolidations of the issued and outstanding shares of common stock of the Company, pursuant to which the shares
of common stock would be combined and reclassified into one share of common stock at a ratio within the range from 1-for-2 up to
1-for-400 (the “Reverse Stock Split”), provided that, (X) that the Company may not effect Reverse Stock Splits that,
in the aggregate, exceed 1-for-400, and (Y) any Reverse Stock Split may not be completed later than January 11, 2020. On April
16, 2019, the Company filed a Certificate of Amendment to its Certificate of Incorporation to increase its authorized common stock
from 1,500,000,000 shares to 7,500,000,000 shares and to decrease the par value of its common stock and preferred stock from $0.001
per share to $0.000001 per share. As of January 11, 2020, the approved Reverse Stock Split expired as such Reverse Stock Split
had not been completed. On October 6, 2020, stockholders holding a
majority of the voting power of the Company’s issued and outstanding shares of voting stock, executed a written consent approving
1) an amendment to the Company’s Certificate of Incorporation, (the “Certificate of Incorporation”) to effect
a consolidation of the issued and outstanding shares of Common Stock, pursuant to which the shares of Common Stock would be combined
and reclassified into one share of Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”), 2) approval of
the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) and the reservation of 750,000,000 (1,500,000 post-split)
shares of Common Stock for issuance thereunder; and, 3) approval of Amendments to and Restatement of the Company’s Certificate
of Incorporation pursuant to the Delaware General Corporation Law Section 242(a)(3) to (a) with the exception of actions to enforce
a duty or liability arising from the Exchange Act, which may be brought only in federal court pursuant to Section 27 of the Exchange
Act, or claims made under the Securities Act, that may be brought in either state or federal court pursuant to Section 22 of the
Exchange Act, adopt Delaware General Corporation Law Section 115 to require that any or all other internal corporate claims, including
claims made in the right of the Company, shall be brought solely and exclusively in any or all of the courts of the State of Delaware;
and, (b) revise the Certificate of Incorporation to correct and consolidate legacy disclosures, including a description of its
common stock and the adoption of Section 155 of the General Delaware Corporation Law, so as to comprise one document with the Delaware
Secretary of State in the future. On November 18, 2020, the Company filed a Certificate
of Amendment (the “Amendment”) to its Certificate of Incorporation, to 1) effect a consolidation of the issued and
outstanding shares of Common Stock, pursuant to which the shares of Common Stock would be combined and reclassified into one share
of Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”), 2) adopt Delaware General Corporation Law Section
115 to require that any or all other internal corporate claims, including claims made in the right of the Company, shall be brought
solely and exclusively in any or all of the courts of the State of Delaware; and, 3) revise the Certificate of Incorporation to
correct and consolidate legacy disclosures, including a description of its common stock and the adoption of Section 155 of the
General Delaware Corporation Law, so as to comprise one document with the Delaware Secretary of State in the future. On January
13, 2021, the Company’s Reverse Stock Split was completed and became effective. Common Stock During the year ended October 31, 2020, the
Company:
● issued 4,282,326 shares of its common stock valued at $7,370,059, which includes aggregate beneficial conversion features of $830,162, as repayment for outstanding principal and interest on convertible promissory notes as requested by the note holders in accordance with contractual terms.
● issued 31,251 shares of its common stock for the conversion of 15,625,500 shares of its Series A Convertible Preferred stock.
● issued 30,000 shares of its common stock for the vesting of the first 50% of a 60,000 common stock grant to the Company’s Chief Financial Officer. The Company recorded $142,500 of stock-based compensation expense during the year ended October 31, 2020, related to this common stock grant.
● issued 24,483 shares of its common stock to an accredited investor for proceeds of $91,917.
● issued 52,000 shares of its common stock to a vendor for services rendered, valued at $78,000.
● issued 50,219 shares of its common stock to its Chief Executive Officer for proceeds of $20,087.
● issued 1,197,031 shares of its common stock under a registration statement, valued at $1,327,248. During the year ended October 31, 2019, the
Company:
● issued 304,060 shares of its common stock to satisfy the settlement agreement by and among the Company, Monaker, American Stock Transfer & Trust Company, LLC and NestBuilder that was executed on or about December 22, 2017.
● entered into a securities purchase agreement with an accredited investor pursuant to which the Company issued 83,333 shares of its common stock for aggregate gross proceeds of $500,000.
● entered into a letter agreement with the First Investor, pursuant to which the principal amount of the First Note together with interest accrued thereon was converted into an aggregate of 1,024,667 shares of the Company’s common stock at a fixed conversion price of $1.25 per share and the First Warrant was amended such that the First Warrant is exercisable for 1,000,000 shares of the Company’s common stock at a fixed exercise price of $1.25 per share. The Company issued the 1,024,667 shares of its common stock on June 4, 2019.
● entered into a letter agreement with the Second Investor, pursuant to which the principal amount of the Second Note together with interest accrued thereon was converted into an aggregate of 163,840 shares of the Company’s common stock at a fixed conversion price of $1.25 per share and the Second Warrant was amended such that the Second Warrant is exercisable for 160,000 shares of the Company’s common stock at a fixed exercise price of $1.25 per share. The Company issued the 163,840 shares of its common stock on June 4, 2019.
● granted 60,000 shares of its common stock to the Company’s Chief Financial Officer. The common stock will vest 25% on the six month, 1 year, 2 year, and 3 year anniversaries of the grant date. The Company recorded $143,750 of stock-based compensation expense during the year ended October 31, 2019, related to this common stock grant.
● issued 4,839 shares of its common stock to satisfy a former employee’s exercise of 6,000 warrants on a cashless basis.
● issued 25,819 shares of its common stock valued at $152,897 as repayment for outstanding principal and interest on a convertible promissory note as requested by the note holder according to contractual terms. Common Stock Warrants On April 29, 2020, the Company entered into
an amended and restated employment agreement (the “2020 Employment Agreement”) with its Chief Executive Officer, whereby
the 2020 Employment Agreement amended and restated the prior employment agreement dated January 31, 2017 (the “2017 Agreement”). Under the provisions of the 2017 Agreement,
the Company was committed to issue warrants to its Chief Executive Officer to purchase shares of its common stock as follows:
● For each $1 million in revenue generated by the Company, a warrant to purchase 15,000 shares of the Company’s common stock at an exercise price of $3.00 per warrant will be granted, until such time as the Chief Executive Officer owns 20% of the then-outstanding shares of common stock.
● At the beginning of each calendar year, a warrant to acquire 3% of the Company’s outstanding common stock will be granted. These provisions were amended and replaced
in the 2020 Employment Agreement with the one-time grant of warrants to purchase 943,768 shares of the Company’s common stock
at an exercise price of $3.00 per share. This one-time grant of warrants increased the Chief Executive Officer’s ownership
to 20% of the Company’s common stock on a fully diluted basis, which is consistent with the intentions of the Company’s
Board of Directors and with the Company’s former management. All warrants to purchase shares of the Company’s common
stock that are granted under the provisions of the Chief Executive Officer’s 2020 Employment Agreement and 2017 Agreement
are immediately vested upon being earned. During February 2019, the Company entered into
securities purchase agreements with the First and Second Investor, whereby the Company sold the First and Second Notes and First
and Second Warrants, respectively. The Company allocated a value of $697,611 to the First and Second Warrants based upon a relative
fair value methodology. At October 31, 2020, the Company has no further
commitments to issue warrants to purchase shares of its common stock to its Chief Executive Officer. At October 31, 2019, the Company
was committed to issue warrants to purchase 285,000 shares of its common stock under the provisions of the employment agreement
of its Chief Executive Officer. The fair value of these warrants was $2,515,794 and was recognized as an operating expense within
the consolidated statements of operations. At October 31, 2020 and 2019, there were warrants
to purchase up to 2,619,114 and 1,451,410 shares, respectively, of the Company’s common stock outstanding which may dilute
future EPS. At October 31, 2020, no warrants remained to
be earned by the Chief Executive Officer. At October 31, 2019, there remained warrants to purchase approximately 788,000 shares
of the Company’s common stock, to be issued if earned, under the provisions of the Chief Executive Officer’s employment
agreement, which would increase such ownership percentage of the Company’s common stock to the 20% limit. The Company estimates the fair value of each
award on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the table below. Since
Black-Scholes option valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities
are based on the historical volatility of the Company’s stock. The Company uses historical data to estimate award exercise
and employee termination within the valuation model, whereby separate groups of employees that have similar historical exercise
behavior are considered separately for valuation purposes. The expected term of granted awards is derived from the output of the
option valuation model and represents the period of time that granted awards are expected to be outstanding; the range given below
results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life
of the award is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were utilized
during the years ended October 31, 2020 and 2019:
2020 2019
Expected volatility 194.54% - 399.10 % 0.20% - 486.01 %
Weighted-average volatility 122.01 % 50.14 %
Expected dividends 0 % 0 %
Expected term (in years) 5.0 0.5
Risk-free rate 0.37% - 1.57 % 1.46% - 2.60 % The following table sets forth common share
purchase warrants outstanding as of October 31, 2020:
Weighted
Average
Exercise Intrinsic
Warrants Price Value
Outstanding, October 31, 2019 1,451,410 $ 1.72 $ -
Warrants granted and issued 1,172,114 $ 3.00 $ -
Warrants exercised - $ - $ -
Warrants forfeited (4,410 ) $ (32.99 ) $ -
Outstanding, October 31, 2020 2,619,114 $ 2.24 $ -
Common stock issuable upon exercise of warrants 2,619,114 $ 2.24 $ -
Common Stock Issuable
Common Stock Issuable Upon Exercise of Upon Warrants
Warrants Outstanding Exercisable
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise at October 31, Contractual Exercise at October 31, Exercise
Prices 2020 Life (Years) Price 2020 Price
$ 1.25 1,160,000 1.35 $ 1.25 1,160,000 $ 1.25
$ 3.00 1,457,114 2.26 $ 3.00 1,457,114 $ 3.00
$ 25.00 2,000 2.17 $ 25.00 2,000 $ 25.00
2,619,114 1.85 $ 2.24 2,619,114 $ 2.24 The following table sets forth common share
purchase warrants outstanding as of October 31, 2019:
Weighted
Average
Exercise Intrinsic
Warrants Price Value
Outstanding, October 31, 2018 247,523 $ 10.10 $ -
Warrants granted and issued 3,593,148 $ 0.641 $ -
Warrants exercised (6,000 ) $ (3.00 ) $ -
Warrants exchanged (2,383,261 ) $ (1.20 ) $ -
Outstanding, October 31, 2019 1,451,410 $ 1.72 $ -
Common stock issuable upon exercise of warrants 1,451,410 $ 1.72 $ -
Common Stock Issuable
Common Stock Issuable Upon Exercise of Upon Warrants
Warrants Outstanding Exercisable
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise at October 31, Contractual Exercise at October 31, Exercise
Prices 2019 Life (Years) Price 2019 Price
$ 1.25 1,160,000 2.35 $ 1.25 1,160,000 $ 1.25
$ 3.00 285,000 0.79 $ 3.00 285,000 $ 3.00
$ 12.50 2,000 0.17 $ 12.50 2,000 $ 12.50
$ 25.00 2,000 1.17 $ 25.00 2,000 $ 25.00
$ 50.00 2,410 0.35 $ 50.00 2,410 $ 50.00
1,451,410 1.99 $ 1.72 1,451,410 $ 1.72 Series A Convertible Preferred Stock On October 14, 2014, the Company filed a certificate
of amendment to its Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred
Stock with the Delaware Secretary of State pursuant to the July 31, 2014 Board of Directors approval to increase the Series A Convertible
Preferred A shares from 100,000,000 shares to 120,000,000 shares. The Series A Convertible Preferred Stock was issued at $0.001
par value and bear dividends at a rate of 10% per annum payable on a quarterly basis when declared by the board of directors. Dividends
accrue whether or not they have been declared by the board. At the election of the Company, Preferred Dividends may be converted
into Series A Convertible Preferred Stock, with each converted share having a value equal to the market price per share, subject
to adjustment for stock splits. In order to exercise such option, the Company delivers written notice to the holder. Each 10,000
shares of Series A Convertible Preferred Stock is convertible at the option of the holder thereof at any time into one share of
Common Stock. Each holder of Series A Convertible Preferred Stock shall be entitled to one vote for each whole share of common
stock that would be issuable upon conversion of such share on the record date for determining eligibility to participate in the
action being taken. In the event of (a) the sale, conveyance, exchange,
exclusive license, lease or other disposition of all or substantially all of the intellectual property or assets of the Company,
(b) any acquisition of the Company by means of consolidation, stock exchange, stock sale, merger of other form of corporate reorganization
of the Company with any other entity in which the Company’s stockholders prior to the consolidation or merger own less than
a majority of the voting securities of the surviving entity, or (c) the winding up or dissolution of the Company, whether voluntary
or involuntary (each such event in clause (a), (b) or (c) a “liquidation event”), the Board shall determine in good
faith the amount legally available for distribution to stockholders after taking into account the distribution of assets among,
or payment thereof over to, creditors of the Company (the “net assets available for distribution”). The holders of
the Series A Convertible Preferred Stock then outstanding shall be entitled to be paid out of the net assets available for Distribution
(or the consideration received in such transaction) before any payment or distribution shall be made to the holders of any class
of preferred stock ranking junior to the Series A Convertible Preferred Stock or to the Common Stock, an amount for each share
of Series A Convertible Preferred Stock equal to all accrued and unpaid Preferred Dividends plus the Stated Value, as adjusted
(the “Series A Liquidation Amount”). On February 8, 2019, the Company filed a Second
Amended and Restated Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock (the “Second
Amended and Restated Series ACOD”), as amended on April 9, 2019 with the Delaware Secretary of State. Pursuant to the Second
Amended and Restated Series A COD, the Company designated 120,000,000 shares as Series A Convertible Preferred Stock (the “Series
A Preferred Stock”). Each share of Series A Preferred Stock is convertible at any time at the option of the holder into such
number of shares of the Company’s common stock determined by dividing the Series A Conversion Price divided by the Series
A Stated Value. The “Series A Conversion Price” is $1.00 per share, subject to adjustment, and the “Series A
Stated Value is $1.00 per share. Each share of Series A Preferred Stock shall be entitled to vote such number of shares into which
the Series A Preferred Stock are convertible into. In addition, from the date the Company issued the First Note until such time
that no shares of Series A Preferred Stock are outstanding, each holder of Series A Preferred Stock shall have the right to participate
in any subsequent financings of the Company in an amount equal to up to 50% of such financing. In the event of (a) the sale, conveyance,
exchange, exclusive license, lease or other disposition of all or substantially all of the intellectual property or assets of the
Company, (b) any acquisition of the Company by means of consolidation, stock exchange, stock sale, merger of other form of corporate
reorganization of the Company with any other entity in which the Company’s stockholders prior to the consolidation or merger
own less than a majority of the voting securities of the surviving entity, or (c) the winding up or dissolution of the Company,
whether voluntary or involuntary (each such event in clause (a), (b) or (c) a “Liquidation Event”), the board shall
determine in good faith the amount legally available for distribution to stockholders after taking into account the distribution
of assets among, or payment thereof over to, creditors of the Company (the “Net Assets Available for Distribution”).
The holders of the Series A Preferred Stock then outstanding shall be entitled to be paid out of the Net Assets Available for Distribution
(or the consideration received in such transaction) before any payment or distribution shall be made to the holders of any class
of preferred stock ranking junior to the Series A Preferred Stock or to the common stock, an amount for each share of Series A
Preferred Stock equal to the Series A Stated Value. On March 25, 2019, the Company entered into
an inducement agreement (the “Inducement Agreement”) effective as of February 8, 2019, pursuant to which the Company
issued Monaker 304,069 shares of its common stock as an inducement to remove certain anti-dilution provisions contained in the
Series A Preferred Stock Certificate of Designation in connection with the offering to the First Investor of the First Note and
the First Warrant. At October 31, 2018, the value of the 304,069 shares of common stock was $456,090 and was recorded as shares
to be issued within our Consolidated Statement of Changes in Stockholders’ Equity (Deficit). During the year ended October 31, 2020, shareholders
converted 15,625,500 shares of Series A Preferred Stock into 31251 shares of the Company’s common stock. During the year
ended October 31, 2019, there were no conversions of Series A Preferred Stock into shares of the Company’s common stock. At October 31, 2020 and 2019, there were 28,944,601
and 44,570,101 shares of Series A Convertible Preferred Stock outstanding, respectively. Series B Convertible Preferred Stock On July 31, 2014, the Company’s Board
of Directors approved the creation of a new Series B Convertible Preferred Stock and on October 14, 2014 the Company filed a Certificate
of Designation of Series B Convertible Preferred Stock with the Delaware Secretary of State designating 1,000,000 shares, par value
of $0.001 per share, as Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”). The Series B
Convertible Preferred Stock have a stated value of $5.00 per share (the “Series B Stated Value”). The Series B Convertible
Preferred Stock accrue dividends at a rate of 10% per annum on the Series B Stated Value of such shares of the Series B Convertible
Preferred Stock. Dividends accrue whether or not they have been declared by the board of directors. At the election of the Company,
it may satisfy its obligations to pay dividends on the Series B Convertible Preferred Stock by issuing shares of common stock to
the holders of Series B Convertible Preferred Stock on a uniform and prorated basis. Each share of Series B Convertible Preferred
Stock is convertible at the option of the holder thereof at any time into a number of shares of common stock determined by dividing
the Series B Stated Value by the conversion price then in effect. The conversion price for the Series B Convertible Preferred Stock
is equal to $0.05 per share, subject to adjustment. Each holder of Series B Convertible Preferred Stock shall be entitled to the
number of votes equal to 200 votes for each shares of Series B Convertible Preferred Stock held by them. Upon the occurrence of a Liquidation Event,
the board shall determine in good faith the amount legally available for distribution to stockholders after taking into account
the Net Assets Available for Distribution. The holders of the Series B Convertible Preferred Stock then outstanding shall be entitled
to be paid out of the Net Assets Available for Distribution (or the consideration received in such transaction) before any payment
or distribution shall be made to the holders of any class of preferred stock ranking junior to the Series B Convertible Preferred
Stock or to the common stock, an amount for each share of Series B Convertible Preferred Stock equal to all accrued and unpaid
preferred dividends plus the Series B Stated Value. As of October 31, 2020 and 2019, there were
no shares of Series B Convertible Preferred Stock outstanding. Series C Convertible Preferred Stock On May 5, 2015, the Company filed a Certificate
of Designation of Series C Convertible Preferred Stock (the “Series C COD”) with the Delaware Secretary of State. Pursuant
to the Series C COD, the Company designated 1,000,000 shares as Series C Convertible Preferred Stock (the “Series C Preferred
Stock”). Each share of Series C Preferred Stock is convertible at any time at the option of the holder into such number of
shares of the Company’s common stock determined by dividing the Series C Stated Value by the Series C Conversion Price. The
“Series C Stated Value” means $5.00 per share, and the “Series C Conversion Price” means $0.05 per share,
subject to adjustment. Each share of Series C Preferred Stock shall
be entitled to vote such number of shares equal to 100 votes for each share of common stock into which the Series C Preferred Stock
is then convertible into. Shares of Series C Preferred Stock shall accrue dividends at a rate of 10% per annum on the Series C
Stated Value which shall be payable when and if declared by the board of directors. Upon the occurrence of a Liquidation Event,
the board shall determine in good faith the amount legally available for distribution to stockholders after taking into account
the Net Assets Available for Distribution. The holders of the Series C Convertible Preferred Stock then outstanding shall be entitled
to be paid out of the Net Assets Available for Distribution (or the consideration received in such transaction) before any payment
or distribution shall be made to the holders of any class of preferred stock ranking junior to the Series C Convertible Preferred
Stock or to the common stock, an amount for each share of Series C Convertible Preferred Stock equal to all accrued and unpaid
preferred dividends plus the Series C Stated Value. On December 28, 2018, the Board of Directors
awarded the Company’s Chief Executive Officer 295,801 shares of Series C Preferred Stock, in exchange for 235,113 of his
warrants to acquire shares of common stock and a 1,002 share common stock bonus as approved by the Company’s Board of Directors
related to the Company’s fiscal 2018 performance. On April 26, 2019, a shareholder converted
25,000 shares of Series C Preferred Stock into an aggregate of 5,000 shares of the Company’s common stock. On September 25, 2020, the Board of Directors
awarded the Company’s Chief Executive Officer 250,000 shares of Series C Preferred Stock to ensure his aggregate voting percentage
across all classes of voting stock remained in excess of 50.1%. At October 31, 2020 and 2019, there were 680,801
and 430,801 shares of Series C Convertible Preferred Stock outstanding, respectively. |
