INCOME TAXES

12 Months Ended

Oct. 31, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

13.  INCOME TAXES

The provision (benefit) for income taxes for the years ended October 31, 2012, 2011 and 2010 consists of:

	2012			2011			2010
Current:
Federal	$	34		$	274		$	—
State		39			152			(1,656	)
Deferred:
Federal		1,259			3,954			(403	)
State		213			77			(84	)
Impact of change in effective tax rates on deferred taxes		—			1,937			1,312
Less: valuation allowance		(1,472	)		(5,968	)		(825	)
	$	73		$	426		$	(1,656	)

The difference between income taxes computed at the statutory federal rate and the provision for income taxes for 2012, 2011 and 2010 relates to the following:

	2012						2011						2010
	Amount			Percent of Pretax income			Amount			Percent of Pretax income			Amount			Percent of Pretax income
Tax (benefit) at federal statutory rate	$	1,593			34	%	$	2,469			34	%	$	(894	)		(34	)%
State income taxes, net of federal income taxes		252			5	%		229			3	%		(84	)		(3	)%
Effect of warrant liability		(657	)		(14	)%		968			13	%		(164	)		(6	)%
Effect of sale of NOL		—			—	%		—			—	%		563			21	%
Effect of other permanent items		325			7	%		48			1	%		34			1	%
Impact of change in effective tax rates on deferred taxes		—			—	%		1,937			27	%		1,312			50	%
Sale of state net operating losses		—			—	%		—			—	%		(1,656	)		(63	)%
Change in valuation allowance		(1,472	)		(31	)%		(5,968	)		(82	)%		(825	)		(31	)%
Reduction of deferred benefits		32			1	%		743			10	%		58			2	%
	$	73			2	%	$	426			6	%	$	(1,656	)		(63	)%

The components of deferred income tax assets (liabilities) were as follows:

	October 31,
	2012			2011
Impairment of capitalized software development costs and prepaid license fees not currently deductible	$	-		$	1,448
Depreciation and amortization		(103	)		(174	)
Impairment of inventory		565			631
Compensation expense not deductible until options are exercised		244			224
All other temporary differences		1,673			1,006
Net operating loss carry forward		22,987			23,703
Less valuation allowance		(25,366	)		(26,838	)
Deferred tax asset	$	—		$	—

Realization of deferred tax assets, including those related to net operating loss carryforwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. Based upon the Company’s current and forecast operating results, management cannot conclude that it is more likely than not that such assets will be realized.

Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code. The annual limitation may result in the expiration of net operating loss carryforwards before utilization. The net operating loss carryforwards available for income tax purposes at October 31, 2012 amounts to approximately $66,980 and expires between 2025 and 2030 for federal income taxes, and approximately $18,988 for state income taxes, which primarily expires between 2013 and 2017.

The Company files income tax returns in the U.S., various states and the United Kingdom. As of October 31, 2012, the Company had no unrecognized tax benefits, which would impact its tax rate if recognized. As of October 31, 2012, the Company had no accrual for the potential payment of penalties. As of October 31, 2012, the Company was not subject to any U.S. federal, state or foreign income tax examinations. The Company’s U.S. federal tax returns have been examined for the tax years 2003 through 2004, and income taxes for Majesco Europe Limited have been examined for the year ended October 31, 2006 in the United Kingdom with the results of such examinations being reflected in the Company’s results of operations as of October 31, 2012. The Company does not anticipate any significant changes in its unrecognized tax benefits over the next 12 months.

In the years ended October 31, 2012, 2011 and 2010, the Company received proceeds of approximately $0, $0, and $1,676, respectively, from the sale of the rights to $0, $0, and $21,155, respectively, of New Jersey state income tax net operating loss carryforwards, under the Technology Business Tax Certificate Program administered by the New Jersey Economic Development Authority, which is reflected as an income tax benefit in the consolidation statements of operations.