Fair Value

12 Months Ended

Oct. 31, 2011

Fair Value [Abstract]

FAIR VALUE

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.

	October 31, 2011		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	$	9,046	$	9,046	$	—	$	—
Bank deposits		4,643		4,643	$	—	$	—
Total financial assets	$	13,689	$	13,689	$	—	$	—
Liabilities:
Warrant liability	$	1,949	$	—	$	—	$	1,949
Total financial liabilities	$	1,949	$	—	$	—	$	1,949

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 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:

	2011	2010	2009
Estimated fair value of stock	$0.62-$3.75	$0.62-$1.02	$0.55-$2.17
Expected warrant term	1.4-2.4 years	2.4-3.4 years	3.4-4.4 years
Risk-free rate	0.2-0.8%	0.4-1.6%	1.6%-2.8%
Expected volatility	73.5-79.7%	73.5-76.1%	65.4-76.1%
Dividend yield	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) is presented below:

	2011			2010			2009
Beginning balance	$	144		$	626		$	211
Warrants exercised		(1,042	)		—			—
Total loss (gain) included in net income		2,847			(482	)		415
Ending balance	$	1,949		$	144		$	626

In the fiscal year ended October 31, 2011, upon exercise of 587,734 of the warrants outstanding, the warrant liability associated with those warrants, amounting to $1.0 million, was reclassified to additional paid-in capital.

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.