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.

	April 30, 2014		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	$	8,790	$	8,790	$	—	$	—
Bank deposits		2,157		2,157		—		—
Total financial assets	$	10,947	$	10,947	$	—	$	—

	October 31, 2013		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	$	7,283	$	7,283	$	—	$	—
Bank deposits		6,102		6,102		—		—
Total financial assets	$	13,385	$	13,385	$	—	$	—

In the three and six months ended April 30, 2013, the Company had outstanding warrants that required settlement by transferring assets under certain change of control circumstances and were classified as liabilities in the Company’s consolidated balance sheets. The Company measured the fair value of the warrants at each balance sheet date, using the Black-Scholes method, and recorded a gain or loss in earnings each period as change in fair value of warrants. The warrants expired in March 2013. 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 six months ended April 30, 2013 is presented below:

	Three months ended April 30		Six months ended April 30
	2013		2013
Beginning balance	$	-	$	17
Total (gain) included in net loss		-		(17)
Ending balance	$	-	$	-

Assumptions used to determine the fair value of the warrants in the three and six months ended April 30, 2013 were:

	Three months ended April 30			Six months ended April 30
	2013			2013
Estimated fair value of stock	$	0.61			$0.61-$1.00
Expected warrant term		0.0-0.1 years			0.0-0.3 years
Risk-free rate		0.1	%		0.0-0.1	%
Expected volatility		84.8	%		77.4-84.8	%
Dividend yield		0	%		0	%

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