FAIR VALUE

9 Months Ended

Jul. 31, 2012

Fair Value [Abstract]

Fair Value Disclosures [Text Block]

3. FAIR VALUE

The table below segregates all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

	July 31, 2012		Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)
Assets:
Money market funds	$	27,048	$	27,048	$	—	$	—
Bank deposits	$	244	$	244	$	—	$	—
Total financial assets	$	27,292	$	27,292	$	—	$	—
Liabilities:
Warrant liability	$	363	$	—	$	—	$	363
Total financial liabilities	$	363	$	—	$	—	$	363

The Company has outstanding warrants that may require settlement by transferring assets under certain change of control circumstances. These warrants are classified as liabilities in the accompanying condensed consolidated balance sheets. The warrants have an exercise price of $2.04 per share and expire in March 2013. The Company measures the fair value of the warrants at each balance sheet date, using the Black-Scholes method, and a gain or loss is recorded in earnings each period as change in fair value of warrants.

Assumptions used to determine the fair value of the warrants were:

	Three Months ended July 31,						Nine months ended July 31,
	2012			2011			2012			2011
Estimated fair value of stock		$1.77-$2.45			$2.45-$3.75			$1.77-$3.37			$0.62-$3.75
Expected warrant term		0.6-0.9 years			1.6-1.9 years			0.6-1.4 years			1.6-2.4 years
Risk-free rate		0.1-0.2	%		0.3-0.6	%		0.1-0.2	%		0.3-0.8	%
Expected volatility		77.9-79.0	%		77.9-77.9	%		77.9-80.1	%		73.5-77.9	%
Dividend yield		0	%		0	%		0	%		0	%

A summary of the changes to the Company’s warrant liability, as measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended July 31, 2012 and 2011 is presented below:

	Three Months ended July 31,						Nine months ended July 31,
	2012			2011			2012			2011
Beginning balance	$	957		$	2,551		$	1,949		$	144
Warrants exercised		-			(106	)		-			(1,042	)
Total (gain) loss included in net income (loss)		(594	)		(1,258	)		(1,586	)		2,085
Ending balance	$	363		$	1,187		$	363		$	1,187

The carrying value of accounts receivable, accounts payable and accrued expenses, due from/to factor, and advances from customers are reasonable estimates of their fair values because of their short-term maturity.