Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Dec. 19, 2016 | Apr. 30, 2016 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | MAJESCO ENTERTAINMENT CO | ||
Entity Central Index Key | 1,076,682 | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Trading Symbol | COOL | ||
Entity Common Stock, Shares Outstanding | 3,208,284 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Oct. 31, 2016 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 9.4 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 6,523 | $ 17,053 |
Accounts receivable | 113 | 283 |
Capitalized software development costs and license fees | 50 | 179 |
Prepaid expenses and other current assets | 47 | 101 |
Total current assets | 6,733 | 17,616 |
Property and equipment, net | 18 | 45 |
Total assets | 6,751 | 17,661 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,284 | 1,686 |
Warrant liability | 70 | 0 |
Payable to Zift | 0 | 318 |
Total current liabilities | 1,354 | 2,004 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Convertible Preferred stock - 10,000,000 shares authorized, 7,374,454 and 9,025,265 shares issued and outstanding at October 31, 2016 and 2015, respectively, aggregate liquidation preference $4,854 and $5,968, respectively | 10,153 | 10,694 |
Common stock - $.001 par value; 250,000,000 shares authorized; 2,782,963 and 1,851,503 shares issued and outstanding at October 31, 2016 and 2015, respectively | 3 | 2 |
Additional paid-in capital | 123,417 | 128,497 |
Accumulated deficit | (128,176) | (123,536) |
Net stockholders' equity | 5,397 | 15,657 |
Total liabilities and stockholders' equity | $ 6,751 | $ 17,661 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 7,374,454 | 9,025,265 |
Preferred Stock, Shares Outstanding | 7,374,454 | 9,025,265 |
Preferred Stock, Liquidation Preference, Value | $ 4,854 | $ 5,968 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 2,782,963 | 1,851,503 |
Common stock, shares outstanding | 2,782,963 | 1,851,503 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Income Statement [Abstract] | ||
Net revenues | $ 1,542 | $ 6,693 |
Cost of sales | ||
Product costs | 1 | 2,328 |
Software development costs and license fees | 285 | 1,095 |
Total cost of sales | 286 | 3,423 |
Gross profit | 1,256 | 3,270 |
Operating costs and expenses | ||
Product research and development | 90 | 174 |
Selling and marketing | 14 | 771 |
General and administrative | 6,031 | 5,350 |
Workforce reduction | 0 | 840 |
Depreciation and amortization | 27 | 61 |
Total operating costs and expenses | 6,162 | 7,196 |
Operating loss | (4,906) | (3,926) |
Other expenses (income) | ||
Interest and financing costs (income) | (18) | 45 |
Gain on extinguishment of liabilities | 0 | (1,465) |
Gain on asset sales, net | 0 | (50) |
Other nonoperating gains, net | 0 | (198) |
Change in fair value of warrant liability | (248) | 1,548 |
Loss before income taxes | (4,640) | (3,806) |
Income taxes | 0 | 3 |
Net loss | (4,640) | (3,809) |
Special cash dividend attributable to preferred stockholders | (6,002) | 0 |
Conversion features accreted as dividends | 0 | (2,252) |
Net loss attributable to common shareholders | $ (10,642) | $ (6,061) |
Net loss per share, basic and diluted: | $ (5.08) | $ (4.93) |
Weighted average shares outstanding, basic and diluted: | 2,096,022 | 1,228,275 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance at Oct. 31, 2014 | $ 0 | $ 7 | $ 125,271 | $ (119,727) | $ 5,551 |
Balance (in shares) at Oct. 31, 2014 | 0 | 1,103,397 | |||
Issuance of common stock in connection with: | |||||
Reverse split par value adjustment | $ (6) | 6 | |||
Restricted stock grants | 1 | 1,060 | 1,061 | ||
Non-cash compensation charges - stock options | 375 | 375 | |||
Shares withheld for taxes | (15) | (15) | |||
Shares withheld for taxes (in shares) | (1,953) | ||||
Private placement of units, December 2014 | $ 2,156 | 2,156 | |||
Private placement of units, December 2014 (in shares) | 8,823,537 | ||||
Exchange agreement, April 2015 | $ 4,569 | 744 | 5,313 | ||
Exchange agreement, April 2015 (in shares) | 54,201 | 147,059 | |||
Private placement of units, May 2015 | $ 2,010 | 3,015 | 5,025 | ||
Private placement of units, May 2015 (in shares) | 25,763 | 271,997 | |||
Exchange agreement, September 2015 | $ 1,969 | (1,969) | |||
Exchange agreement, September 2015 (in shares) | 168,333 | ||||
Conversion of Series A preferred stock | $ (10) | 10 | |||
Conversion of Series A preferred stock (in shares) | (46,569) | 7,762 | |||
Net loss | (3,809) | (3,809) | |||
Balance at Oct. 31, 2015 | $ 10,694 | $ 2 | 128,497 | (123,536) | 15,657 |
Balance (in shares) at Oct. 31, 2015 | 9,025,265 | 1,851,503 | |||
Issuance of common stock in connection with: | |||||
Restricted stock grants | $ 1 | (1) | |||
Restricted stock grants (in shares) | 356,666 | ||||
Non-cash compensation charges - stock options | 3,142 | 3,142 | |||
Conversion of Series A preferred stock | $ (401) | 401 | |||
Conversion of Series A preferred stock (in shares) | (1,638,810) | 273,135 | |||
Conversion of Series D preferred stock | $ (140) | 140 | |||
Conversion of Series D preferred stock (in shares) | (12,001) | 20,002 | |||
Proceeds from stock option exercise | 129 | 129 | |||
Proceeds from stock option exercise (in shares) | 31,657 | ||||
Shares issued for cash | 1,406 | 1,406 | |||
Shares issued for cash (in shares) | 250,000 | ||||
Warrant liability | (318) | (318) | |||
Allocation of warrant offering cost | 21 | 21 | |||
Special cash dividend | (10,000) | (10,000) | |||
Net loss | (4,640) | (4,640) | |||
Balance at Oct. 31, 2016 | $ 10,153 | $ 3 | $ 123,417 | $ (128,176) | $ 5,397 |
Balance (in shares) at Oct. 31, 2016 | 7,374,454 | 2,782,963 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (4,640) | $ (3,809) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of warrant liability | (248) | 1,548 |
Depreciation and amortization | 27 | 61 |
Non-cash compensation expense | 3,142 | 1,436 |
Provision for price protection | 0 | 41 |
Amortization of capitalized software development costs and license fees | 150 | 432 |
Capital software impairment losses | 0 | 148 |
Provision for excess inventory | 0 | 65 |
Gain on extinguishment of liabilities | 0 | (1,465) |
Gain on asset sales, net | 0 | (50) |
Other nonoperating gains | 0 | (198) |
Offering costs expensed | 21 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 170 | 1,273 |
Inventory | 0 | 1,227 |
Capitalized software development costs and license fees | (21) | (85) |
Advance payments for inventory | 0 | 57 |
Prepaid expenses and other current assets | 54 | 91 |
Accounts payable and accrued expenses | (402) | (2,194) |
Payable to Zift | (19) | 0 |
Customer credits | 0 | (171) |
Advances from customers and deferred revenue | 0 | (21) |
Net cash used in operating activities | (1,766) | (1,614) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Repayment from GMS Entertainment Limited | 0 | 250 |
Proceeds from sale of assets | 0 | 290 |
Net cash provided by investing activities | 0 | 540 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Special cash dividend | (10,000) | 0 |
Proceeds from stock options exercise | 129 | 0 |
Net proceeds from the sale of common stock and warrants | 1,406 | 0 |
Payments to Zift | (299) | 0 |
Net proceeds from sale of units | 0 | 10,946 |
Income tax withholding from exercise of options and warrants | 0 | (15) |
Net cash (used in) provided by financing activities | (8,764) | 10,931 |
Net (decrease) increase in cash and cash equivalents | (10,530) | 9,857 |
Cash and cash equivalents - beginning of year | 17,053 | 7,196 |
Cash and cash equivalents - end of year | 6,523 | 17,053 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid during the year for interest and financing costs | 0 | 141 |
Cash paid during the year for income taxes | 0 | 0 |
SUPPLEMENTAL SCHEDULE OF NON CASH FINANCING ACTIVITIES | ||
Other warrants settled under exchange agreement | 0 | 1,969 |
Conversion of preferred stock into common stock | 0 | 10 |
Conversion of Series A preferred stock to common stock | 401 | 0 |
Conversion of Series D preferred stock to common stock | 140 | 0 |
Common stock shares and warrants issued for offering costs | $ 75 | $ 0 |
PRINCIPAL BUSINESS ACTIVITY AND
PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION | 12 Months Ended |
Oct. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation Of Financial Statements Disclosure [Text Block] | The accompanying financial statements present the financial results of Majesco Entertainment Company and Majesco Europe Limited, its wholly-owned subsidiary, (together, “Majesco” or the “Company”) on a consolidated basis. Prior to the November 2014 sale of its equity investment, the Company had 50% of the voting control of GMS Entertainment Limited (“GMS”) and the right to appoint one-half of the directors of GMS. Accordingly, the Company accounted for GMS on the equity method as a corporate joint venture. The Company is a provider of video game products primarily for the casual-game consumer and has published video games for interactive entertainment hardware platforms, including Nintendo’s DS, 3DS, Wii and WiiU, Sony’s PlayStation 3 and 4, or PS3 and PS4, Microsoft’s Xbox 360 and Xbox One and the personal computer, or PC. It has historically sold its products through two sales channels, retail and digital. It has sold packaged software to large retail chains, specialty retail stores, video game rental outlets and distributors and through digital distribution for platforms such as Xbox Live Arcade, PlayStation Network, or PSN, and Steam, and for mobile devices and online platforms. In July 2015, the Company transferred retail distribution activities, assets and obligations to a company owned by its former chief executive officer (see Note 15). The Company’s video game titles are targeted at various demographics at a range of price points. Due to the larger budget requirements for developing and marketing premium console titles for core gamers, the Company has focused on publishing more lower-cost games targeting casual-game consumers and independent game developer fans. In some instances, the Company’s titles are based on licenses of well-known properties and, in other cases, original properties. The Company enters into agreements with content providers and video game development studios for the creation of our video games. The Company’s operations involve similar products and customers worldwide. These products are developed and sold domestically and internationally. The Company is centrally managed and our chief operating decision makers, the chief executive and other officers, use consolidated and other financial information supplemented by sales information by product category, major product title and platform for making operational decisions and assessing financial performance. Accordingly, it operates in a single segment. Reverse stock-split The Reverse Stock Split was effective with The NASDAQ Capital Market (“NASDAQ”) at the open of business on August 1, 2016. The par value and other terms of Company’s common stock were not affected by the Reverse Stock Split. The Company’s post-Reverse Stock Split common stock has a new CUSIP number, 560690 406. The Company’s transfer agent, Equity Stock Transfer LLC, is acting as exchange agent for the Reverse Stock Split. As a result of the Reverse Stock Split, every six shares of the Company’s pre-Reverse Stock Split common stock was combined and reclassified into one share of the Company’s common stock. No fractional shares of common stock were issued as a result of the Reverse Stock Split. Stockholders who otherwise would be entitled to a fractional share shall receive a cash payment in an amount equal to the product obtained by multiplying (i) the closing sale price of our common stock on the business day immediately preceding the effective date of the Reverse Stock Split as reported on NASDAQ by (ii) the number of shares of our common stock held by the stockholder that would otherwise have been exchanged for the fractional share interest. All common share and per share amounts have been restated to show the effect of the Reverse Stock Split. NASDAQ listing. The Company had a period of 180 calendar days, or until August 30, 2016, to achieve compliance with the Rule. The Company regained compliance with the Rule in August 2016 by effecting the Reverse Stock Split. Major customers. Concentrations. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Principles of Consolidation. Revenue Recognition. Prior to July 2015, when the Company entered into license or distribution agreements that provided for multiple copies of games in exchange for guaranteed amounts, revenue was recognized in accordance with the terms of the agreements, generally upon delivery of a master copy, assuming our performance obligations were complete and all other recognition criteria were met, or as per-copy royalties are earned on sales of games. Cash and cash equivalents. Accounts and Other Receivables and Accounts Payable and Accrued Expenses. Allowance for doubtful accounts Capitalized Software Development Costs and License Fees. Prepaid license fees represent license fees to owners for the use of their intellectual property rights in the development of the Company’s products. Minimum guaranteed royalty payments for intellectual property licenses are initially recorded as an asset (prepaid license fees) and a current liability (accrued royalties payable) at the contractual amount upon execution of the contract or when specified milestones or events occur and when no significant performance remains with the licensor. Licenses are expensed to cost of sales at the higher of (i) the contractual royalty rate based on actual sales or (ii) an effective rate based upon total projected revenue related to such license. Capitalized software development costs and prepaid license fees are classified as non-current if they relate to titles for which the Company estimates the release date to be more than one year from the balance sheet date. The amortization period for capitalized software development costs and prepaid license fees is usually no longer than one year from the initial release of the product. If actual revenues or revised forecasted revenues fall below the initial forecasted revenue for a particular license, the charge to cost of sales may be larger than anticipated in any given quarter. The recoverability of capitalized software development costs and prepaid license fees is evaluated quarterly based on the expected performance of the specific products to which the costs relate. When, in management’s estimate, future cash flows will not be sufficient to recover previously capitalized costs, the Company expenses these capitalized costs to “cost of sales-software development costs and license fees,” in the period such a determination is made. These expenses may be incurred prior to a game’s release for games that have been developed. If a game is cancelled prior to completion of development and never released to market, the amount is expensed to operating costs and expenses. If the Company was required to write off licenses, due to changes in market conditions or product acceptance, its results of operations could be materially adversely affected. Costs of developing online free-to-play social games, including payments to third-party developers, are expensed as research and development expenses. Revenue from these games is largely dependent on players’ future purchasing behavior in the game and currently the Company cannot reliably project that future net cash flows from developed games will exceed related development costs. Prepaid license fees and milestone payments made to the Company’s third party developers are typically considered non-refundable advances against the total compensation they can earn based upon the sales performance of the products. Any additional royalty or other compensation earned beyond the milestone payments is expensed to cost of sales as incurred. Property and equipment. Income taxes. Stock Based Compensation. The fair value for options issued is estimated at the date of grant using a Black-Scholes option-pricing model. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of the grant. The volatility factor is determined based on the Company’s historical stock prices. The value of restricted stock grants are measured based on the fair market value of the Company's common stock on the date of grant and amortized over the vesting period of, generally, six months to three years. Extinguishment of Liabilities. Loss Per Share. Commitments and Contingencies. Accounting for Warrants Change in fair value of warrant liability. Estimates. Other Nonoperating Gains, Net. Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") creating a new Topic 606, Revenue from Contracts with Customers In January 2016, issued No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Oct. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | In accordance with ASC 820, Fair Value Measurements and Disclosures ● Level 1: Observable inputs such as quoted prices in active markets for identical instruments ● Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the market ● Level 3: Significant unobservable inputs supported by little or no market activity. Financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, for which determination of fair value requires significant judgment or estimation. Prior to the April 2015 exchange transaction described in Note 8, the Company had outstanding warrants, the December warrants, that contained re-pricing provisions for “down-round” issuances and other events not indexed to the Company’s own stock and were classified as liabilities in the Company’s consolidated balance sheets. The Company recognized these warrants as liabilities at their fair value and re-measured them through the date of their exchange in April 2015. ASC 820, Fair Value Measurements and Disclosures The Company uses Level 3 inputs for its valuation methodology for the warrant liabilities. The estimated fair values were determined using a binomial option pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect estimated fair value at each period end, with any decrease or increase in the estimated fair value being recorded in other income or expense accordingly, as adjustments to the fair value of derivative liabilities. Various factors are considered in the pricing models the Company uses to value the warrants, including the Company’s current common stock price, the remaining life of the warrants, the volatility of the Company’s common stock price, and the risk-free interest rate. In addition, as of the valuation dates, management assessed the probabilities of future financing and other re-pricing events in the binominal valuation models. 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 year ended October 31, 2015 is presented below: Beginning balance - November 1, 2014 $ - Issuance of warrants 3,765 Change in fair value of warrant liability 1,548 Settlement of warrants (5,313 ) Ending balance - October 31, 2015 $ - Assumptions used to determine the fair value of the warrants during the year ended October 31, 2015 were: Market price of common stock $3.54-$7.56 Expected warrant term 4.5-5.0 years Risk-free rate 1.0% -1.7 % Expected volatility 80 % Dividend yield 0 % Probability of certain litigation costs at each of three pricing thresholds 0-33 % Probability of future down-round financing 0-50 % Stock price discount 0-41 % In connection with the April 19, 2016 common stock offering, the Company issued warrants to purchase an aggregate of 187,500 shares of common stock. These warrants are exercisable at $6.90 per share and expire on April 19, 2018. These warrants were analyzed and it was determined that they require liability treatment. Under ASC 815, registered common stock warrants that require the issuance of registered shares upon exercise and do not expressly preclude an implied right to cash settlement are accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the consolidated balance sheet as a current liability. The fair value of these warrants at April 19, 2016 and October 31, 2016 was determined to be approximately $318,000 and $70,000, respectively, as calculated using Black-Scholes with the following assumptions: (1) stock price of $4.74 and $3.58, respectively; (2) a risk free rate of 0.77% and 0.75%, respectively; and (3) an expected volatility of 86% and 61%, respectively. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. At October 31, 2016, the warrant liability balance of $70,000 was classified as a Level 3 instrument. The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative warrant liability (from April 19, 2016 through October 31, 2016) (in thousands): Warrants Fair value - November 1, 2015 $ - Additions 318 Change in fair value (248 ) Fair value - October 31, 2016 $ 70 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Oct. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expense and Other Assets Current Disclosure [Text Block] | The following table presents the major components of prepaid expenses and other current assets (in thousands): October 31, 2016 2015 Prepaid insurance $ 22 $ 61 Tax receivable 18 - Other 7 40 Total prepaid expenses and other current assets $ 47 $ 101 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Oct. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | The following table presents the components of property and equipment, net (in thousands): October 31, 2016 2015 Computers and software $ 61 $ 61 Furniture and equipment 78 78 139 139 Accumulated depreciation (121 ) (94 ) $ 18 $ 45 Depreciation expense was approximately $27,000 and $61,000 for the year ended October 31, 2016 and 2015, respectively. |
ACCOUNTS PAYABLE, ACCRUED EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND DUE TO DISTRIBUTION PARTNER | 12 Months Ended |
Oct. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | The following table presents the major components of accounts payable and accrued expenses (in thousands): October 31, 2016 2015 Accounts payable-trade $ 130 $ 479 Royalties, fees and development 680 681 Salaries and other compensation 463 510 Other accruals 11 16 Total accounts payable and accrued expenses $ 1,284 $ 1,686 During the year ended October 31, 2015, the Company recognized a gain on the extinguishment of liabilities for approximately $1.5 million related to certain accounts payable balances and claims for license fees and services that the Company determined would never be paid because they were no longer being pursued for payment and had passed the statute of limitations. Salaries and other compensation includes accrued payroll expense and estimated employer 401K plan liabilities. |
SHORT-TERM FINANCING ARRANGEMEN
SHORT-TERM FINANCING ARRANGEMENTS | 12 Months Ended |
Oct. 31, 2016 | |
Short Term Financing Arrangements [Abstract] | |
Short Term Financing Arrangements [Text Block] | Accounts receivable and inventory Prior to July 31, 2015, the Company used a factor to approve credit and to collect the proceeds from a substantial portion of its sales. Under the terms of the agreement, the Company sold to the factor and the factor purchased from the Company, eligible accounts receivable. The factor, in its sole discretion, determined whether or not it would accept the credit risk associated with a receivable. If the factor did not accept the credit risk on a receivable, the Company sold the accounts receivable to the factor while retaining the credit risk. In both cases, the Company surrendered all rights and control over the receivable to the factor. However, in cases where the Company retained the credit risk, the amount could be charged back to the Company in the case of non-payment by the customer. The factor was required to remit payments to the Company for the accounts receivable purchased from it, provided the customer did not have a valid dispute related to the invoice. The amount remitted to the Company by the factor equaled the invoiced amount, adjusted for allowances and discounts the Company provided to the customer, less factor charges. The Company reviewed the collectability of accounts receivable for which it held the credit risk quarterly, based on a review of an aging of open invoices and payment history, to make a determination if any allowance for bad debts was necessary. In addition, the Company could request that the factor provide it with cash advances based on its accounts receivable and inventory, up to a maximum amount. Amounts to be paid to the Company by the factor for any accounts receivable were offset by any amounts previously advanced by the factor. The interest rate was prime plus 1.5%, annually, subject to a 5.5% floor. In certain circumstances, an additional 1.0% annually was charged for advances against inventory. The Company also maintained purchase order financing, up to a maximum of $2,500, to provide funding for the manufacture of its products. In connection with these arrangements, the factor had a security interest in substantially all of the Company’s assets. The factor charged 0.5% of invoiced amounts, subject to certain minimum charges per invoice. Inventory purchases Prior to July 31, 2015, certain manufacturers required the Company to prepay or present letters of credit upon placing a purchase order for inventory. The Company had arrangements with a finance company which provided financing secured by the specific goods underlying the goods ordered from the manufacturer. The finance company made the required payment to the manufacturer at the time a purchase order is placed, and was entitled to demand payment from the Company when the goods are delivered. The Company paid a financing fee equal to 1.5% of the purchase order amount for each transaction, plus administrative fees. Additional charges of 0.05% per day (18% annualized) were incurred if the financing remained open for more than 30 days. The agreements were terminated in the year ended October 31, 2015. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Oct. 31, 2016 | |
Equity [Abstract] | |
Stockholders Equity Note Disclosure [Text Block] | Preferred stock Under the Company’s Amended and Restated Certificate of Incorporation, the Company is authorized to issue two classes of shares: preferred and common stock. The preferred stock is issuable in series, and the Company’s Board of Directors is authorized to determine the rights, preferences, and terms of each series. Convertible preferred stock as of October 31, 2016 consisted of the following: Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 7,138,158 $ 1,745 $ 4,854 1,189,693 Series B 54,250 54,201 4,569 - 903,362 Series C 26,000 25,763 2,010 - 429,392 Series D 170,000 156,332 1,829 - 260,553 Other authorized, unissued 919,750 - - - - Total 10,000,000 7,374,454 $ 10,153 $ 4,854 2,783,000 Convertible preferred stock as of October 31, 2015 consisted of the following: Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 8,776,968 $ 2,146 $ 5,968 1,462,828 Series B 54,250 54,201 4,569 - 903,362 Series C 26,000 25,763 2,010 - 429,392 Series D 170,000 168,333 1,969 - 280,555 Other authorized, unissued 919,750 - - - - Total 10,000,000 9,025,265 $ 10,694 $ 5,968 3,076,137 December Units and Series A Preferred Shares On December 17, 2014, pursuant to subscription agreements (the “December Subscription Agreements”) entered into with certain accredited investors (the “December Investors”) the Company completed a private placement of $6.0 million of units (the “December Units”) at a purchase price of $0.68 per Unit, with each December Unit consisting of one share of the Company’s 0% Series A Convertible Preferred Stock (each a “Series A Preferred Share”) and a five-year warrant (each a “December Warrant”) to purchase one sixth of a share of the Company’s common stock at an initial exercise price of $4.08 per share (such issuance and sale, the “December Private Placement”). The December Warrants were subsequently exchanged for shares of the Company’s 0% Series B Convertible Preferred Stock (the “Series B Preferred Shares”) and shares of the Company’s common stock (see below). The offering was made in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Series A Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series A Preferred Share, plus all accrued and unpaid dividends, if any, on such Series A Preferred Share, as of such date of determination, divided by the conversion price. The stated value of each Preferred Share is $0.68 and the initial conversion price is $4.08 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, in the event the Company issues or sells, or is deemed to issue or sell, shares of its common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions. Pursuant to the Certificate of Designations, Preferences and Rights of the 0% Series A Convertible Preferred Stock of Majesco Entertainment Company, the Company is prohibited from incurring debt or liens, or entering into new financing transactions without the consent of the lead investor (as defined in the December Subscription Agreements) as long as any of the Series A Preferred Shares are outstanding. The Series A Preferred Shares bear no dividends. The holders of Series A Preferred Shares shall vote together with the holders of common stock on all matters on an as if converted basis, subject to certain conversion and ownership limitations, and shall not vote as a separate class. Notwithstanding the foregoing, the conversion price for purposes of calculating voting power shall in no event be lower than $3.54 per share. At no time may all or a portion of the Series A Preferred Shares be converted if the number of shares of common stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of common stock owned by the holder at such time, the number of shares of common stock which would result in such Holder beneficially owning (as determined in accordance with Section 13(d) of the 1934 Act and the rules thereunder) more than 4.99% of all of the common stock outstanding at such time; provided, however, that the holder may waive the 4.99% limitation at which time he may not own beneficially own more than 9.99% of all the common stock outstanding at such time. Prior to the exchange transaction described below, the December Warrants were exercisable at any time at a price of $4.08 per share, subject to adjustment, and expired five years from the date of issuance. The holders could exercise the December Warrants for shares of common stock on a cashless basis if there was no effective registration statement or no current prospectus available for resale of the underlying shares of common stock. The December Warrants were subject to certain adjustments upon certain actions by the Company as outlined in the December Warrants, including, for twenty-four months following the initial issuance date, the issuance or sale, or deemed issuance or sale, by the Company of shares of its common stock at a per share price that is less than the exercise price then in effect. The proceeds of the offering and certificates representing the Series A Preferred Shares and December Warrants underlying the December Units issued in the offering were deposited into escrow accounts. Upon the closing of the December Private Placement on December 17, 2014 (such date, the “December Closing Date”), $1.0 million of the December Escrow Amount was released to the Company and $1.0 million of December Units to the December Investors, on a pro rata basis. Effective upon the approval of the Company’s stockholders on March 30, 2015, in one or multiple tranches, the remaining $5.0 million became eligible to be released to the Company and $5.0 million of December Units became eligible to be released to the December Investors from their respective escrow accounts, if either, (i) the lead investor has approved the release, (ii) the approval of the requisite number of December Investors has been obtained, (iii) the Company has executed definitive binding documents for certain transactions, as described in the December Subscription Agreements, and such transaction(s) are to close contemporaneously with the release, following approval by the Company’s stockholders or (iv) the following conditions are present: (a) nine months has elapsed from the December Closing Date and release is approved by each of the directors appointed at closing (being the non-continuing directors); (b) no subsequent release of the December Escrow Amount has been consummated; and (c) no more than $1.0 million is released (the “December Release Conditions”). In the event that on and as of the twelve month anniversary of the December Closing Date none of the December Release Conditions have been satisfied, $5.0 million would be returned on a pro rata basis to the December Investors, without interest or deduction, and $5,000 of December Units would be returned to the Company for cancellation. On September 25, 2015, the lead investor approved the release and the escrow agent released all funds and corresponding December Units remaining in escrow. The Company received net proceeds of $801,000 for the December Units released from escrow, net of offering costs, and has accounted for each of the Series A Preferred Shares released from escrow, the December Warrants released from escrow and the Series A Preferred Shares and December Warrants remaining in escrow as freestanding instruments. The Company has evaluated the guidance ASC 480-10 Distinguishing Liabilities from Equity and ASC 815-40 Contracts in an Entity’s Own Equity to determine the appropriate classification of the instruments. Prior to the exchange described below, the exercise price of the released December Warrants could be adjusted downward if the Company issued securities at a price below the initial exercise price and in certain other circumstances outside the control of the Company and therefore contain contingent settlement terms not indexed solely to the Company’s own shares of common stock. Accordingly, $603,000 of proceeds were recorded as a derivative liability representing the fair value of the December Warrants released from escrow at issuance and $120,000 of offering costs allocated to the December Warrants were expensed. As a result of the allocations, described above, the Series A Preferred Shares released were deemed to have a beneficial conversion feature at issuance amounting to $397,000, which was recorded in stockholders’ equity and immediately charged as a dividend in determining net loss attributable to common stockholders. The remaining net proceeds of $318,000 were allocated to the Series A Preferred Shares net of $79,000 of offering costs. The Series A Preferred Shares do not represent an unconditional obligation to be settled in a variable number of shares of common stock, are not redeemable and do not contain fixed or indexed conversion provisions similar to debt instruments. Accordingly, the Series A Preferred Shares are considered equity hosts and recorded in stockholders’ equity. Upon stockholder approval in March 2015 of full conversion provisions of the escrowed December Warrants, the Company recorded a warrant liability and a discount on the Series A Preferred Shares amounting to $3,162, based on the estimated fair value of the warrants. In addition, upon shareholder approval of the full conversion provisions of the escrowed Series A Preferred Shares, the carrying value of such Series A Preferred Shares, net of proceeds remaining in escrow was reclassified from temporary equity to paid-in capital. The Company recorded a beneficial conversion feature and a discount on the Series A Preferred Shares amounting to $1.8 million, which was immediately recognized as a deemed dividend in determining net loss attributable to common shareholders. In connection with the December Private Placement, the Company also entered into separate Registration Rights Agreements with each December Investor, (as amended on January 30, 2015 and March 31, 2015, the “December Registration Rights Agreement”). The Company agreed to use its best efforts to file by March 31, 2015 a registration statement covering the resale of the shares of common stock issuable upon exercise or conversion of the Series A Preferred Shares and December Warrants and to maintain its effectiveness until all such securities have been sold or may be sold without restriction under Rule 144 of the Securities Act. In the event the Company fails to satisfy its obligations under the December Registration Rights Agreements, the Company is required to pay to the December Investors on a monthly basis an amount equal to 1% of the investors’ investment, up to a maximum of 12%. On March 31, 2015, the Company and the required holders of December Units amended the registration rights agreement to extend the filing deadline for the registration statement to June 30, 2015. April 2015 Exchange and Series B Preferred Shares On April 30, 2015, pursuant to warrant exchange agreements, the Company retired the 1,470,590 December Warrants issued in the December Private Placement, including those subject to the escrow conditions and those released from escrow, in exchange for shares of the Company's common stock, or shares of 0% Series B Convertible Preferred Stock (the “Series B Preferred Shares”), in lieu of shares of common stock equal, on an as-converted basis, to the number of shares of common stock that would have otherwise been received by the holder, if such issuance would result in the recipient holder exceeding certain thresholds. An aggregate of 1,050,421 shares of common stock, which amount includes the shares of common stock issuable upon conversion of the Series B Preferred Shares, were issuable in connection with the exchange agreements. The Company re-measured the fair value of the December Warrants through the date of their exchange and recorded related losses in its statement of operations. In the year ending October 31, 2015, the Company recorded a change in fair value of $1.5 million related to the increase in the fair value of the December Warrants during the period outstanding. Upon exchange, the contingent-conversion features of the December Warrants expired and the carrying value of the warrant liability of $5.3 million was reclassified to paid-in capital and allocated to the Series B Preferred Shares and the common shares distributed. Such Series B Shares and shares of common stock exchanged for the December Warrants are not held in escrow and as such are not subject to the December Release Conditions. The Series B Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series B Preferred Shares, plus all accrued and unpaid dividends, if any, on such Series B Preferred Shares, as of such date of determination, divided by the conversion price. The stated value of each Series B Preferred Share is $140.00 and the initial conversion price is $8.40 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The Company is prohibited from effecting a conversion of the Series B Preferred Shares to the extent that, as a result of such conversion, such holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series B Preferred Shares, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Subject to such beneficial ownership limitations, each holder is entitled to vote on all matters submitted to stockholders of the Company on an as converted basis, based on a conversion price of $8.40 per share. The Series B Preferred Shares rank junior to the Series A Preferred Shares and bear no dividends. All of the convertible preferred shares do not represent an unconditional obligation to be settled in a variable number of shares, are not redeemable and do not contain fixed or indexed conversion provisions similar to debt instruments. Accordingly, the convertible preferred shares are considered equity hosts and recorded in stockholders’ equity. May 2015 Units and Series C Preferred Shares On May 15, 2015 (the “May Closing Date”), the Company completed a private placement pursuant to separate subscription agreements (the “May Subscription Agreements”) with accredited investors (the “May Investors”) of $5,050 of units (the “May Units”), at a purchase price of $7.20 per Unit, resulting in net proceeds to the Company of $5.0 million. Each May Unit consists of one share of the Company’s common stock, provided that, if the issuance of any such shares of common stock would have resulted in the recipient May Investor owning in excess of 4.99% of the Company’s issued and outstanding common stock, then such May Investor could elect to receive shares of the Company’s 0% Series C Convertible Preferred Stock (the “Series C Preferred Shares”) in lieu of common stock that are, on an as converted basis, equal to one share of common stock for every May Unit purchased, and a three-year warrant (the “May Warrants”) to purchase one share of the Company’s common stock at an exercise price of $8.40 per share (such sale and issuance, the “May Private Placement”). An aggregate of 25,763 Series C Preferred Shares, 271,997 shares of common stock and 701,390 May Warrants were issued under the May Units. The offering was made in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Series C Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series C Preferred Shares, plus all accrued and unpaid dividends, if any, on such Series C Preferred Shares, as of such date of determination, divided by the conversion price. The stated value of each Series C Preferred Share is $120.00 per share, and the initial conversion price is $7.20 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions and provided that the conversion price may not be reduced to less than $5.16, unless and until such time as the Company obtains shareholder approval to allow for a lower conversion price. The Company is prohibited from effecting a conversion of the Series C Preferred Shares to the extent that, as a result of such conversion, such May Investor would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series C Preferred Shares, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Subject to the beneficial ownership limitations discussed previously, each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series C Preferred Shares, based on a conversion price of $7.20 per share. The Series C Preferred Shares bear no dividends and shall rank junior to the Company’s Series A Preferred Shares but senior to the Company’s Series B Preferred Shares. The May Warrants are exercisable, at any time, following the date the May Warrants are issued, at a price of $8.40 per share, subject to adjustment, and expire three years from the date of issuance. The holders may, subject to certain limitations, exercise the May Warrants on a cashless basis. The Company is prohibited from effecting an exercise of any May Warrant to the extent that, as a result of any such exercise, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of such May Warrant, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. In connection with the sale of the May Units, the Company also entered into separate registration rights agreements (the “May Registration Rights Agreement”) with each May Investor. The Company agreed to use its best efforts to file a registration statement to register the Shares and the common stock issuable upon the conversion of the Series C Preferred Shares, within thirty days following the May Closing Date, to cause such registration statement to be declared effective within ninety days of the filing day and to maintain the effectiveness of the registration statement until all of such shares of common stock have been sold or are otherwise able to be sold pursuant to Rule 144 without restriction. In the event the Company fails to satisfy its obligations under the Registration Rights Agreement, the Company is obligated to pay to the May Investors on a monthly basis, an amount equal to 1% of the May Investor’s investment, up to a maximum of 12%. Effective as of the original filing deadline of the registration statement, the Company obtained the requisite approval from the May Investors for the waiver of its obligations under the May Registration Rights Agreement. The proceeds of the May Private Placement were deposited into an escrow account (the “May Escrow Amount”) with Signature Bank, as escrow agent (the “May Escrow Agent”) pursuant to an escrow agreement (the “May Escrow Agreement”), entered into by and between the Company, the lead investor (as defined in the May Subscription Agreements) and the May Escrow Agent, and certificates representing the May Warrants and a record of the Shares and Series C Preferred Shares, sold in the May Private Placement were deposited and recorded with the Company’s corporate secretary (the “May Securities Escrow Agent”) to be held in escrow. On the May Closing Date, twenty percent (20%) of the May Escrow Amount ($1.0 million) was released by the May Escrow Agent to the Company in exchange for the release of twenty percent (20%) of May Units by the May Securities Escrow Agent to the May Investors. The remaining eighty percent (80%) of the May Escrow Amount ($4.0 million) was released by the May Escrow Agent to the Company and the corresponding percentage of May Units were released to the May Investors, under amendments to the May subscription agreements. On September 25, 2015, the lead investor approved the release and the May Escrow Agent and the May Securities Escrow Agent released all funds and May Units remaining in escrow. The Company evaluated the guidance ASC 480-10 Distinguishing Liabilities from Equity Contracts in an Entity’s Own Equity September 2015 Exchange and Series D Preferred Shares On September 25, 2015, the Company entered into Amendment Agreements (the “Amendments”) which amended the terms of the December Subscription Agreements and May Subscription Agreements. Under the Amendments, the lead investors under the subscription agreements agreed to release all funds remaining held in escrow ($5.0 million under the December 17, 2014 closing and $4.0 million under the May 15, 2015 closing) upon the appointment of certain persons as officers and directors of the Company. In connection with the Amendments, the Company also entered into Exchange Agreements with the holders of the May Warrants (the “September Exchange Agreements”) and authorized the issuance of .4 shares of common stock for each share of our Common Stock into which the May Warrants was then convertible, in exchange for cancellation of the May Warrants. The Company agreed that holders of the May Warrants could exchange their May Warrants and receive either: (1) .4 shares of common stock for each share of common stock into which the May Warrant was exercisable immediately, or (2) at the election of any holder who would, as a result of receipt of the common stock hold in excess of 4.99% of the Company’s issued and outstanding common stock, shares of 0% Series D Convertible Preferred Stock (the “Preferred D Shares”) exercisable for common stock on the same basis, but subject to 4.9% beneficial ownership blocker provisions which at the election of the holder, could be reduced to 2.49%. Under the agreement, the Company exchanged all of its May Warrants for an aggregate of 168,333 new shares of 0% Series D Convertible Preferred Stock, which upon full conversion on a fully-diluted basis, convert into 280,555 shares of newly issued common stock. The Preferred D Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Preferred D Share, plus all accrued and unpaid dividends, if any, on such Preferred D Share, as of such date of determination, divided by the conversion price. The stated value of each Preferred D Share is $1,000.00 per share and the initial conversion price is $600.00 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The Company is prohibited from effecting a conversion of the Preferred D Shares to the extent that, as a result of such conversion, such investor would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Preferred D Shares. Upon 61 days written notice, the beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Except as otherwise required by law, holders of Series D Preferred Shares shall not have any voting rights. Pursuant to the Certificate of Designations, Preferences and Rights of the 0% Series D Convertible Preferred Stock, the Preferred D Shares bear no interest and shall rank senior to the Company’s other classes of capital stock. The Company accounted for the exchange as a redemption of the warrants and recorded the estimated fair value of Series D Convertible Preferred Stock issued, amounting to $1,969 with a charge to paid-in capital. As the value of the preferred shares issued was less than the value of the warrants redeemed, no excess value needed to be attributed and no portion of the redemption was deemed a dividend. April 2016 Registered Common Stock and Warrant Offering On April 13, 2016, the Company entered into a Securities Purchase Agreement with certain institutional investors providing for the issuance and sale by the Company of 250,000 shares of the Company’s common stock, par value $0.001 per share at an offering price of $6.00 per share, for net proceeds of $1.4 million after deducting placement agent fees and expenses. In addition, the Company sold to purchasers of common stock in this offering, warrants to purchase 187,500 shares of its common stock. The common shares and the warrant shares were offered by the Company pursuant to an effective shelf registration statement on Form S-3, which was initially filed with the Securities and Exchange Commission on October 22, 2015 and declared effective on December 7, 2015. The closing of the offering occurred on April 19, 2016. Each warrant is immediately exercisable for two years, but not thereafter, at an exercise price of $6.90 per share. Subject to limited exceptions, a holder of warrants will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to such exercise. The exercise price and number of warrants are subject to adjustment in the event of any stock dividends and splits, reverse stock split, stock dividend, recapitalization, reorganization or similar transaction. The warrants require the issuance of registered shares upon exercise and do not expressly preclude an implied right to cash settlement by the holder. Preferred Share Conversion Activity During the year ended October 31, 2016, 1,638,810 shares of Convertible Preferred Stock Series A and 12,001 shares of Convertible Preferred Stock Series D were converted into 293,137 shares of common stock. Warrants A summary of the status of the Company’s outstanding warrants as of October 31 and changes during the years then ended is presented below: October 31, 2016 2015 Outstanding at beginning of year - 1,191 Issued in offerings of units 187,500 2,171,979 Settled under exchange agreements - (2,171,979 ) Expired - (1,191 ) Outstanding at end of year 187,500 - Special Cash Dividend On January 4, 2016, the Company declared a special cash dividend of an aggregate of $10.0 million to holders of record on January 14, 2016 of its outstanding shares of: (i) common stock (ii) Series A Convertible Preferred Stock; (iii) Series B Convertible Preferred Stock; (iv) Series C Convertible Preferred Stock and (v) Series D Convertible Preferred Stock. The holders of record of the Company’s outstanding preferred stock participated in the dividend on an “as converted” basis. Approximately, $6.0 million of the special cash dividend relates to Preferred Stock shares. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Oct. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure Of Compensation Related Costs, Share-Based Payments [Text Block] | In the years ended October 31, 2016 and 2015, the Company recorded stock-based compensation expense amounting to $3.1 million and $1.4 million, respectively, related to restricted stock awards and stock options. Incentive Compensation Plans In the fiscal years ended October 31, 2016 and 2015, the Company made stock-based compensation awards under its 2016 Equity Incentive Plan (the “2016 Plan”), 2014 Equity Incentive Plan (the “2014 Plan”) and its Amended and Restated 2004 Employee, Director and Consultant Incentive Plan (the “2004 Plan”). 2016 Plan In the fiscal year ended October 31, 2016, the Company adopted the 2016 Plan, an omnibus equity incentive plan administered by the Company’s board of directors, or by one or more committees of directors appointed by the Board, pursuant to which the Company may issue up to 666,665 shares of the Company’s common stock under equity-linked awards to certain officers, employees, directors and consultants. The 2016 Plan permits the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted shares, restricted share units, cash awards, or other awards, whether at a fixed or variable price, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof. As of October 31, 2016, the Company had zero shares available for future issuances under the 2016 Plan. 2014 Plan In the fiscal year ended October 31, 2015, the Company adopted the 2014 Plan, an omnibus equity incentive plan administered by the Company’s board of directors, or by one or more committees of directors appointed by the Board, pursuant to which the Company may issue up to 375,000 shares of the Company’s common stock under equity-linked awards to certain officers, employees, directors and consultants. The 2014 Plan permits the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted shares, restricted share units, cash awards, or other awards, whether at a fixed or variable price, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof. As of October 31, 2016, the Company had approximately 83,262 shares available for future issuances under the 2014 Plan. 2004 Plan The 2004 Plan covers employees, directors and consultants and also provides for the issuance of restricted stock, non-qualified stock options, incentive stock options and other awards under terms determined by the Company. In April 2014, the Company’s stockholders and Board of Directors approved an amendment to the Plan to increase the number of common shares available for issuance under the Plan by 71,429 shares. As of October 31, 2016, the Company had approximately 19,217 shares available for future issuances under the 2004 Plan. Stock Options Stock-option activity in the fiscal year ended October 31, 2016: Number Of Shares Weighted Average Exercise Price Outstanding, November 1, 2014 71,533 $ 39.24 Granted 55,070 $ 4.44 Forfeited (14,188 ) $ 31.98 Expired (15,834 ) $ 61.08 Outstanding, October 31, 2015 96,581 $ 16.92 Granted 347,010 $ 4.84 Forfeited (12,258 ) $ 36.97 Exercised (31,657 ) $ 4.08 Expired (17,656 ) $ 30.72 Outstanding, October 31, 2016 382,020 $ 5.73 Options exercisable, October 31, 2016 205,941 $ 6.50 Weighted-average grant date fair value of options granted during the year $ 3.38 Stock options are generally granted to employees or directors at exercise prices equal to the fair market value of the Company’s stock at the dates of grant. Stock options generally vest over one to three years and have a term of five to ten years. The total fair value of options granted during the year ended October 31, 2016 was approximately $1.2 million. The intrinsic value of options outstanding at October 31, 2016 was $0. The intrinsic value of options exercised during the fiscal years ended October 31, 2016 was $15,000. The weighted average remaining contractual term of exercisable and outstanding options at October 31, 2016 was 8.3 years and 8.7 years, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years ended October 31: October 31, 2016 2015 Risk free annual interest rate 1.0-1.7 % 1.4 % Expected volatility 77-79 % 80 % Expected life 2.75-5.00 years 4.77 years Assumed dividends None None The fair value of stock option grants is amortized over the vesting period of, generally, one to three years. As of October 31, 2016, there was approximately $5,000 of unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.1 year. Additionally, approximately 165,000 options are subject to vesting upon the achievement of a performance condition. The grant date fair value of these options is approximately $551,000. Restricted-stock activity in the fiscal year ended October 31, 2016: Number of shares Weighted-Average Grant-Date Fair Value Unvested, January 1, 2015 21,040 $ 28.56 Granted 339,813 $ 6.66 Vested (113,482 ) $ 8.88 Forfeited (16,572 ) $ 7.98 Unvested, December 31, 2015 230,799 $ 7.47 Granted 356,666 $ 5.14 Vested (312,636 ) $ 6.10 Unvested, December 31, 2016 274,829 $ 6.00 The weighted-average grant date fair value of restricted shares granted during the year ended October 31, 2016 was $5.14. The total fair value of restricted stock vested during the years ended October 31, 2016 and 2015 was approximately $1.8 million and $865,000, respectively. The value of restricted stock grants are measured based on the fair market value of the Company's common stock on the date of grant and amortized over the vesting period of, generally, six months to three years. As of October 31, 2016, there was approximately $6,000 of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.2 years. Additionally, approximately 169,000 restricted shares are subject to vesting upon the achievement of a performance condition. The grant date fair value of these restricted shares is approximately $871,000. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | The provision (benefit) for income taxes for the years ended October 31, 2016 and 2015 consisted of (in thousands): 2016 2015 Current: Federal $ - $ - State (3 ) 3 Deferred: Federal (1,709 ) 182 State (692 ) 181 Impact of change in effective tax rates on deferred taxes - - Change in: valuation allowance 2,404 (363 ) $ - $ 3 The difference between income taxes computed at the statutory federal rate and the provision for income taxes for 2016 and 2015 related to the following (in thousands, except percentages): 2016 2015 Amount Percent of Pretax income Amount Percent of Pretax income Tax (benefit) at federal statutory rate $ (1,577 ) 34 % $ (1,297 ) 34 % State income taxes, net of federal income taxes (695 ) 15 % 184 (5 )% Effect of warrant liability (84 ) 2 % 526 (14 )% Effect of other permanent items 144 (3 )% 574 (15 )% Change in valuation allowance 2,404 (52 )% (363 ) 10 % Reduction of deferred benefits (192 ) 4 % 379 (10 )% $ - - % $ 3 - % The components of deferred income tax assets (liabilities) were as follows (in thousands): October 31, 2016 2015 Impairment of development costs $ 641 $ 597 Depreciation and amortization 224 144 Impairment of inventory - 14 Compensation expense not deductible until options are exercised 1,116 174 All other temporary differences 629 370 Net operating loss carry forward 2,461 1,368 Less valuation allowance (5,071 ) (2,667 ) 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 operating results management cannot conclude that it is more likely than not that such assets will be realized. As a result of the Company’s private placements during the fiscal year ended October 31, 2015, a change of ownership under Internal Revenue Section 382 has occurred and, accordingly, the annual utilization of the Company’s federal net operating loss carryforwards will be severely limited. The annual limitations are expected to result in the expiration of federal net operating loss carryforwards of approximately $94.0 million before full utilization. The federal net operating loss carryforwards expected to be available for income tax purposes at October 31, 2016 after application of these limitations are estimated to be approximately $9.2 million, which expire between 2027 and 2036 for federal income taxes, and approximately $35.6 million for state income taxes, which primarily expire between 2013 and 2036. The Company files income tax returns in the U.S., various states and the United Kingdom. As of October 31, 2016, the Company had no unrecognized tax benefits, which would impact its tax rate if recognized. As of October 31, 2016, the Company had no accrual for the potential payment of penalties. As of October 31, 2015, 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 tax years through 2011, and income taxes for Majesco Europe Limited have been examined for tax years through 2006 in the United Kingdom with the results of such examinations being reflected in the Company’s results of operations as of October 31, 2013. The Company does not anticipate any significant changes in its unrecognized tax benefits over the next 12 months. |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Oct. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | Shares of common stock issuable under convertible preferred stock, warrants and options and shares subject to restricted stock grants were not included in the calculation of diluted earnings per common share for the years ended October 31, 2016 and 2015, as the effect of their inclusion would be anti-dilutive. The table below provides total potential shares outstanding, including those that are anti-dilutive, on October 31: October 31, 2016 2015 Shares issuable upon conversion of preferred stock 2,783,000 3,076,137 Shares issuable upon exercise of warrants 187,500 - Shares issuable upon exercise of stock options 382,020 96,581 Non-vested shares under restricted stock grants 274,832 230,799 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Oct. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Contingencies On February 26, 2015, a complaint for patent infringement was filed in the United States District Court for the Eastern District of Texas by Richard Baker, an individual residing in Australia, against Microsoft, Nintendo, the Company and a number of other game publisher defendants. The complaint alleges that the Company’s Zumba Fitness Kinect game infringed plaintiff’s patents in motion tracking technology. The plaintiff is representing himself pro se in the litigation and is seeking monetary damages in the amount of $1.3 million. The Company, in conjunction with Microsoft, is defending itself against the claim and has certain third party indemnity rights from developers for costs incurred in the litigation. In August 2015, the defendants jointly moved to transfer the case to the Western District of Washington. On May 17, 2016, the Washington Court issued a scheduling order that provides that defendants leave to jointly file an early motion for summary judgement in June 2016. On June 17, 2016, the defendants jointly filed a motion for summary judgment that stated that none of the defendants, including the Company, infringed upon the asserted patent. On July 9, 2016, Mr. Baker opposed the motion. On July 15, 2016, the defendants jointly filed a reply. The briefing on the motion is now closed. The Court has not yet issued a decision or indicated if or when there will be oral argument on the motion. Intelligent Verification Systems, LLC ("IVS"), filed a patent infringement complaint on September 20, 2012, in the United States District Court for the Eastern District against the Company and Microsoft Corporation. In March 2015, the court issued an order excluding the evidence proffered by IVS in support of its alleged damages, including the opinion of its damages expert. IVS appealed that decision. On January 19, 2016, the Federal Circuit denied IVS’ appeal and affirmed the district court’s orders that excluded the plaintiff’s damages expert and dismissed the case. In addition to the item above, the Company at times may be a party to claims and suits in the ordinary course of business. We record a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. The Company has not recorded a liability with respect to the matter above. While the Company believes that it has valid defenses with respect to the legal matter pending and intends to vigorously defend the matter above, given the uncertainty surrounding litigation and our inability to assess the likelihood of a favorable or unfavorable outcome, it is possible that the resolution of the matter could have a material adverse effect on our consolidated financial position, cash flows or results of operations. Commitments The Company leases office space at 4041 T Hadley Road, South Plainfield, New Jersey at a cost of approximately $1,613 per month under a lease agreement that expires in March 2017. Total rent expense amounted to approximately $20,000 and $165,000 for the years ended October 31, 2016 and 2015, respectively, including charges incurred upon vacating its previous administrative offices in 2015. The Company has entered into employment agreements with key executives that contain severance terms and change of control provisions. |
WORKFORCE REDUCTION
WORKFORCE REDUCTION | 12 Months Ended |
Oct. 31, 2016 | |
Work force Reduction Disclosure [Abstract] | |
Workforce Reduction Disclosure [Text Block] | In the year ended October 31, 2015, the Company incurred severance charges in connection with employee layoffs. Changes in accrued severance liabilities in the year ended October 31, 2015 (in thousands): 2015 Accrued severance liability, beginning of period $ 323 Severance costs accrued 840 Payments (1,163 ) Accrued severance liability, end of period $ - |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Prior to its termination in October 2014, the Company had a consulting agreement with Morris Sutton, the Company’s former Chief Executive Officer and Chairman Emeritus. The Company estimates that Morris Sutton and another relative of Jesse Sutton, the Company’s former Chief Executive Officer, earned compensation of approximately $26,000 in the year ended October 31, 2015 from a supplier of its Zumba belt accessory, based on the value of the Company’s purchases. In January 2015, the Company entered into an agreement with Equity Stock Transfer for transfer agent services. A Board member of the Company is a co-founder and chief executive officer of Equity Stock Transfer. Fees under the agreement were approximately $2,000 and $8,000 for the years ended October 31, 2016 and 2015, respectively. |
ASSIGNMENT OF ASSETS AND LIABIL
ASSIGNMENT OF ASSETS AND LIABILITIES | 12 Months Ended |
Oct. 31, 2016 | |
Assignment of Assets And Liabilities [Abstract] | |
Assignment of Assets And Liabilities [Text Block] | In connection with the transfer of distribution rights and the assumption of liabilities by Zift, the Company reduced its estimated accrued liabilities for royalties, customer credits and other related liabilities by approximately $1.2 million with a credit to gains on sales of assets, net of transferred assets of $269,000. The Company has accrued approximately $219,000 of contingent liabilities for certain potential licensor and customer liabilities and claims not extinguished by the transactions. The net gain of approximately $50,000 resulting from the transactions is included in gain on asset sales, net in 2015. As of October 31, 2016, the Company did not have a balance payable to or receivable from Zift. |
EMPLOYEE RETIREMENT PLAN
EMPLOYEE RETIREMENT PLAN | 12 Months Ended |
Oct. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | The Company has a defined contribution 401(k) plan covering all eligible employees. The Company had no charge to operations for contributions to the retirement plan for the years ended October 31, 2016 and 2015. Certain stockholders and key employees of the Company serve as trustees of the plan. The Company believes that the operation of its 401k plan may not be in compliance with certain plan provisions. The Company is currently assessing what corrective actions may be needed to be taken to bring the plan back into compliance. The Company has recorded a liability for the estimated cost of correcting any plan deficiencies, including additional plan contributions, if required. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Oct. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | PolarityTE, Inc. On December 1, 2016, the Company entered into an Agreement and Plan of Reorganization (the “Agreement”) with Majesco Acquisition Corp., a Nevada corporation and wholly-owned subsidiary of the Company, PolarityTE, Inc., a Nevada corporation (“Polarity”) and Dr. Denver Lough, the owner of 100% of the issued and outstanding shares of capital stock of Polarity (the “Seller”). The closing is subject to various closing conditions, including, approval of stockholders of the Company in accordance with Delaware law and NASDAQ Listing Rule 5635 and a minimum cash balance available to the Company. At closing, upon satisfaction of each of the closing conditions, the Seller will be issued 7,050 shares of the Company’s newly authorized Series E Preferred Stock (the “Preferred Shares”) convertible into an aggregate of 7,050,000 shares of the Company’s common stock (the “Merger Consideration” and such transaction, the “Merger”), expected to constitute approximately 50% of the issued and outstanding shares of common stock of the Company on a fully diluted basis at closing and depending in part, upon the Company’s expected cash balance at closing. Until converted, each Preferred Share is entitled to two votes for every share of common stock into which it is convertible on any matter submitted for a vote of stockholders. The Company is still in the process of analyzing the accounting treatment for this transaction. Series E Preferred Stock On or prior to the effective time of the Merger, the Company will file a Certificate of Designations, Preferences and Rights of the 0% Series E Convertible Preferred Stock (the “Certificate of Designation”) with the Delaware Secretary of State pursuant to which the Company will designate 7,050 shares of the Company’s authorized shares of preferred stock as Series E Preferred Stock. The Series E Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such preferred stock, plus all accrued and unpaid dividends, if any, on such preferred stock, as of such date of determination, divided by the conversion price. The stated value of each Series E Preferred Stock is $1,000 and the initial conversion price is $1.00 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The Series E Preferred Stock, with respect to dividend rights and rights on liquidation, winding-up and dissolution, in each case will rank senior to the Company's common stock and all other securities of the Company that do not expressly provide that such securities rank on parity with or senior to the Series E Preferred Stock. Until converted, each share of Series E Preferred Stock is entitled to two votes for every share of common stock into which it is convertible on any matter submitted for a vote of stockholders. 2017 Equity Incentive Plan On December 1, 2016, the Company’s Board of Directors (the “Board”) approved the Company’s 2017 Equity Incentive Plan (the “2017 Plan”). The purpose of the 2017 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees, consultants and other eligible persons. The 2017 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to the Company’s employees, officers, directors and consultants. The Compensation Committee of the Board will administer the 2017 Plan, including determining which eligible participants will receive awards, the number of shares of common stock subject to the awards and the terms and conditions of such awards. Up to 3,450,000 shares of common stock are issuable pursuant to awards under the 2017 Plan. Unless earlier terminated by the Board, the 2017 Plan shall terminate at the close of business on December 1, 2026. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | . |
Revenue Recognition, Policy [Policy Text Block] | Since July 2015 when retail distribution activities were transferred and retail sales ceased, the Company's software products are sold exclusively as downloads of digital content for which the consumer takes possession of the digital content for a fee. Revenue from product downloads is generally recognized when the download is made available (assuming all other recognition criteria are met). Prior to July 2015, when the Company entered into license or distribution agreements that provided for multiple copies of games in exchange for guaranteed amounts, revenue was recognized in accordance with the terms of the agreements, generally upon delivery of a master copy, assuming our performance obligations were complete and all other recognition criteria were met, or as per-copy royalties are earned on sales of games. |
Capitalized Software Development Costs and License Fees [Policy Text Block] | Software development costs include fees in the form of milestone payments made to independent software developers and licensors. Software development costs are capitalized once technological feasibility of a product is established and management expects such costs to be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle. Technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to product research and development costs. Commencing upon a related product’s release, capitalized costs are amortized to cost of sales based upon the higher of (i) the ratio of current revenue to total projected revenue or (ii) straight-line charges over the expected marketable life of the product. Prepaid license fees represent license fees to owners for the use of their intellectual property rights in the development of the Company’s products. Minimum guaranteed royalty payments for intellectual property licenses are initially recorded as an asset (prepaid license fees) and a current liability (accrued royalties payable) at the contractual amount upon execution of the contract or when specified milestones or events occur and when no significant performance remains with the licensor. Licenses are expensed to cost of sales at the higher of (i) the contractual royalty rate based on actual sales or (ii) an effective rate based upon total projected revenue related to such license. Capitalized software development costs and prepaid license fees are classified as non-current if they relate to titles for which the Company estimates the release date to be more than one year from the balance sheet date. The amortization period for capitalized software development costs and prepaid license fees is usually no longer than one year from the initial release of the product. If actual revenues or revised forecasted revenues fall below the initial forecasted revenue for a particular license, the charge to cost of sales may be larger than anticipated in any given quarter. The recoverability of capitalized software development costs and prepaid license fees is evaluated quarterly based on the expected performance of the specific products to which the costs relate. When, in management’s estimate, future cash flows will not be sufficient to recover previously capitalized costs, the Company expenses these capitalized costs to “cost of sales-software development costs and license fees,” in the period such a determination is made. These expenses may be incurred prior to a game’s release for games that have been developed. If a game is cancelled prior to completion of development and never released to market, the amount is expensed to operating costs and expenses. If the Company was required to write off licenses, due to changes in market conditions or product acceptance, its results of operations could be materially adversely affected. Costs of developing online free-to-play social games, including payments to third-party developers, are expensed as research and development expenses. Revenue from these games is largely dependent on players’ future purchasing behavior in the game and currently the Company cannot reliably project that future net cash flows from developed games will exceed related development costs. Prepaid license fees and milestone payments made to the Company’s third party developers are typically considered non-refundable advances against the total compensation they can earn based upon the sales performance of the products. Any additional royalty or other compensation earned beyond the milestone payments is expensed to cost of sales as incurred. |
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | The carrying amounts of accounts and other receivables and accounts payable and accrued expenses approximate fair value as these accounts are largely current and short term in nature. The Company recognizes an allowance for losses on accounts receivable for estimated probable losses. The allowance is based on historical experiences, current aging of accounts, and other expected future write-offs, including specific identifiable customer accounts considered at risk or uncollectible. Any related expense associated with an allowance for doubtful accounts is recognized as general and administrative expense. |
Income Tax, Policy [Policy Text Block] | The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company evaluates the potential for realization of deferred tax assets at each quarterly balance sheet date and records a valuation allowance for assets for which realization is not more likely than not. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | The Company measures all stock-based compensation to employees using a fair value method and records such expense in general and administrative expenses. Compensation expense for stock options is recognized on a straight-line basis over the vesting period of the award, based on the fair value of the option on the date of grant. The fair value for options issued is estimated at the date of grant using a Black-Scholes option-pricing model. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of the grant. The volatility factor is determined based on the Company’s historical stock prices. The value of restricted stock grants are measured based on the fair market value of the Company's common stock on the date of grant and amortized over the vesting period of, generally, six months to three years. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash equivalents consist of highly liquid investments with original maturities of three months or less at the date of purchase. At various times, the Company has deposits in excess of the Federal Deposit Insurance Corporation limit. The Company has not experienced any losses on these accounts. |
Property, Plant and Equipment, Policy [Policy Text Block] | Property and equipment is stated at cost. Depreciation and amortization is being provided for by the straight-line method over the estimated useful lives of the assets, generally five years. Amortization of leasehold improvements is provided for over the shorter of the term of the lease or the life of the asset. |
Use of Estimates, Policy [Policy Text Block] | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities or the disclosure of gain or loss contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Among the more significant estimates included in these financial statements are price protection and customer allowances, the valuation of inventory, the recoverability of advance payments for capitalized software development costs and intellectual property licenses, and the valuation allowances for deferred tax benefits. Actual results could differ from those estimates. |
Other Nonoperating Gains Net [Policy Text Block] | In the year ended October 31, 2015, in connection with the expiration of its prior facilities lease and its relocation, the Company disposed of property and equipment with a net book value of $92 and received proceeds of $20 from the sale of certain of the property and equipment. The $72 loss on the disposals is included in other non-operating gains, net. In addition, the Company recorded a gain of $270 on the transfer of certain game rights. |
Earnings Per Share, Policy [Policy Text Block] | Basic loss per share of common stock is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted loss per share excludes the potential impact of common stock options, unvested shares of restricted stock and outstanding common stock purchase warrants because their effect would be anti-dilutive. |
Commitments and Contingencies, Policy [Policy Text Block] | We are subject to claims and litigation in the ordinary course of our business. We record a liability for commitments and contingencies when the amount is both probable and reasonably estimable. |
New Accounting Pronouncements, Policy [Policy Text Block] | In May 2014, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") creating a new Topic 606, Revenue from Contracts with Customers In January 2016, issued No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers |
Extinguishment of Liabilities, Policy [Policy Text Block] | During the year ended October 31, 2015, the Company recognized a gain on extinguishment of liabilities of $1.5 million. The Company determined that certain accounts payable balances and claims for license fees and services would never be paid because they were no longer being pursued for payment and had passed the statute of limitations as of October 31, 2015. |
Accounting for Warrants, Policy [Policy Text Block] | The Company accounts for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). In addition, Under ASC 815, registered common stock warrants that require the issuance of registered shares upon exercise and do not expressly preclude an implied right to cash settlement are accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the consolidated balance sheet as a current liability. |
Change in fair value of warrant liability, Policy [Policy Text Block] | The Company assessed the classification of common stock purchase warrants as of the date of each offering and determined that such instruments met the criteria for liability classification. Accordingly, the Company classified the warrants as a liability at their fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized as “change in the fair value of warrant liabilities” in the consolidated statements of operations. The fair value of the warrants has been estimated using a Black-Scholes valuation model (see Note 3). |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | Beginning balance - November 1, 2014 $ - Issuance of warrants 3,765 Change in fair value of warrant liability 1,548 Settlement of warrants (5,313 ) Ending balance - October 31, 2015 $ - Warrants Fair value - November 1, 2015 $ - Additions 318 Change in fair value (248 ) Fair value - October 31, 2016 $ 70 |
Fair Value Assumptions Warrants [Table Text Block] | Market price of common stock $3.54-$7.56 Expected warrant term 4.5-5.0 years Risk-free rate 1.0% -1.7 % Expected volatility 80 % Dividend yield 0 % Probability of certain litigation costs at each of three pricing thresholds 0-33 % Probability of future down-round financing 0-50 % Stock price discount 0-41 % |
PREPAID EXPENSES AND OTHER CU26
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets [Table Text Block] | October 31, 2016 2015 Prepaid insurance $ 22 $ 61 Tax receivable 18 - Other 7 40 Total prepaid expenses and other current assets $ 47 $ 101 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | October 31, 2016 2015 Computers and software $ 61 $ 61 Furniture and equipment 78 78 139 139 Accumulated depreciation (121 ) (94 ) $ 18 $ 45 |
ACCOUNTS PAYABLE, ACCRUED EXP28
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND DUE TO DISTRIBUTION PARTNER (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | October 31, 2016 2015 Accounts payable-trade $ 130 $ 479 Royalties, fees and development 680 681 Salaries and other compensation 463 510 Other accruals 11 16 Total accounts payable and accrued expenses $ 1,284 $ 1,686 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Equity [Abstract] | |
Schedule of Stock by Class [Table Text Block] | Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 7,138,158 $ 1,745 $ 4,854 1,189,693 Series B 54,250 54,201 4,569 - 903,362 Series C 26,000 25,763 2,010 - 429,392 Series D 170,000 156,332 1,829 - 260,553 Other authorized, unissued 919,750 - - - - Total 10,000,000 7,374,454 $ 10,153 $ 4,854 2,783,000 Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Common Shares Issuable Upon Conversion Series A 8,830,000 8,776,968 $ 2,146 $ 5,968 1,462,828 Series B 54,250 54,201 4,569 - 903,362 Series C 26,000 25,763 2,010 - 429,392 Series D 170,000 168,333 1,969 - 280,555 Other authorized, unissued 919,750 - - - - Total 10,000,000 9,025,265 $ 10,694 $ 5,968 3,076,137 |
Schedule Of Shares Based Compensation Warrants Activity [Table Text Block] | October 31, 2016 2015 Outstanding at beginning of year - 1,191 Issued in offerings of units 187,500 2,171,979 Settled under exchange agreements - (2,171,979 ) Expired - (1,191 ) Outstanding at end of year 187,500 - |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number Of Shares Weighted Average Exercise Price Outstanding, November 1, 2014 71,533 $ 39.24 Granted 55,070 $ 4.44 Forfeited (14,188 ) $ 31.98 Expired (15,834 ) $ 61.08 Outstanding, October 31, 2015 96,581 $ 16.92 Granted 347,010 $ 4.84 Forfeited (12,258 ) $ 36.97 Exercised (31,657 ) $ 4.08 Expired (17,656 ) $ 30.72 Outstanding, October 31, 2016 382,020 $ 5.73 Options exercisable, October 31, 2016 205,941 $ 6.50 Weighted-average grant date fair value of options granted during the year $ 3.38 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | October 31, 2016 2015 Risk free annual interest rate 1.0-1.7 % 1.4 % Expected volatility 77-79 % 80 % Expected life 2.75-5.00 years 4.77 years Assumed dividends None None |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Number of shares Weighted-Average Grant-Date Fair Value Unvested, January 1, 2015 21,040 $ 28.56 Granted 339,813 $ 6.66 Vested (113,482 ) $ 8.88 Forfeited (16,572 ) $ 7.98 Unvested, December 31, 2015 230,799 $ 7.47 Granted 356,666 $ 5.14 Vested (312,636 ) $ 6.10 Unvested, December 31, 2016 274,829 $ 6.00 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | 2016 2015 Current: Federal $ - $ - State (3 ) 3 Deferred: Federal (1,709 ) 182 State (692 ) 181 Impact of change in effective tax rates on deferred taxes - - Change in: valuation allowance 2,404 (363 ) $ - $ 3 |
Schedule Of Components Of Federal and State Income Tax Expense Benefit [Table Text Block] | 2016 2015 Amount Percent of Pretax income Amount Percent of Pretax income Tax (benefit) at federal statutory rate $ (1,577 ) 34 % $ (1,297 ) 34 % State income taxes, net of federal income taxes (695 ) 15 % 184 (5 )% Effect of warrant liability (84 ) 2 % 526 (14 )% Effect of other permanent items 144 (3 )% 574 (15 )% Change in valuation allowance 2,404 (52 )% (363 ) 10 % Reduction of deferred benefits (192 ) 4 % 379 (10 )% $ - - % $ 3 - % |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | October 31, 2016 2015 Impairment of development costs $ 641 $ 597 Depreciation and amortization 224 144 Impairment of inventory - 14 Compensation expense not deductible until options are exercised 1,116 174 All other temporary differences 629 370 Net operating loss carry forward 2,461 1,368 Less valuation allowance (5,071 ) (2,667 ) Deferred tax asset $ - $ - |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Earnings Per Share [Abstract] | |
Share-based Compensation, Performance Shares Award Outstanding Activity [Table Text Block] | October 31, 2016 2015 Shares issuable upon conversion of preferred stock 2,783,000 3,076,137 Shares issuable upon exercise of warrants 187,500 - Shares issuable upon exercise of stock options 382,020 96,581 Non-vested shares under restricted stock grants 274,832 230,799 |
WORKFORCE REDUCTION (Tables)
WORKFORCE REDUCTION (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Work force Reduction Disclosure [Abstract] | |
Schedule Of Accrued Workforce Reduction Liabilities [Table Text Block] | 2015 Accrued severance liability, beginning of period $ 323 Severance costs accrued 840 Payments (1,163 ) Accrued severance liability, end of period $ - |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 12 Months Ended |
Oct. 31, 2016 | |
Property, Plant and Equipment [Member] | |
Accounting Policies [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
FAIR VALUE (Details)
FAIR VALUE (Details) $ in Thousands | 12 Months Ended |
Oct. 31, 2015USD ($) | |
Fair Value Disclosures [Abstract] | |
Beginning balance | $ 0 |
Issuance of warrants | 3,765 |
Change in fair value of warrant liability | 1,548 |
Settlement of warrants | (5,313) |
Ending balance | $ 0 |
FAIR VALUE (Details 1)
FAIR VALUE (Details 1) - $ / shares | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Expected warrant term | 0 years | 4 years 9 months 7 days |
Risk-free rate | 14.00% | |
Expected volatility | 80.00% | |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Market price of common stock | $ 3.54 | |
Expected warrant term | 2 years 9 months | |
Risk-free rate | 1.00% | |
Expected volatility | 77.00% | |
Probability of certain litigation costs at each of three pricing thresholds | 0.00% | |
Probability of future down-round financing | 0.00% | |
Stock price discount | 0.00% | |
Maximum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Market price of common stock | $ 7.56 | |
Expected warrant term | 5 years | |
Risk-free rate | 1.70% | |
Expected volatility | 79.00% | |
Probability of certain litigation costs at each of three pricing thresholds | 33.00% | |
Probability of future down-round financing | 50.00% | |
Stock price discount | 41.00% |
PREPAID EXPENSES AND OTHER CU37
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $ 22 | $ 61 |
Advance payments for inventory | 18 | 0 |
Other | 7 | 40 |
Total prepaid expenses and other current assets | $ 47 | $ 101 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Computers and software | $ 61 | $ 61 |
Furniture and equipment | 78 | 78 |
Total property and equipment, gross | 139 | 139 |
Accumulated depreciation | (121) | (94) |
Total property and equipment, net | $ 18 | $ 45 |
ACCOUNTS PAYABLE, ACCRUED EXP39
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND DUE TO DISTRIBUTION PARTNER (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accounts payable-trade | $ 130 | $ 479 |
Royalties, fees and development | 680 | 681 |
Salaries and other compensation | 463 | 510 |
Other accruals | 11 | 16 |
Total accounts payable and accrued expenses | $ 1,284 | $ 1,686 |
SHORT-TERM FINANCING ARRANGEM40
SHORT-TERM FINANCING ARRANGEMENTS (Details Textual) $ in Thousands | 12 Months Ended |
Oct. 31, 2016USD ($) | |
Short Term Financing Arrangements [Abstract] | |
Interest Rate Terms On Account Receivables | Amounts to be paid to the Company by the factor for any accounts receivable were offset by any amounts previously advanced by the factor. The interest rate was prime plus 1.5%, annually, subject to a 5.5% floor. In certain circumstances, an additional 1.0% annually was charged for advances against inventory. |
Maximum Purchase Order Financing Maintained | $ 2,500 |
Percentage Of Factor Charges For Security Interest | 0.50% |
Interest Rate Terms On Inventory Purchases | Prior to July 31, 2015, certain manufacturers required the Company to prepay or present letters of credit upon placing a purchase order for inventory. The Company had arrangements with a finance company which provided financing secured by the specific goods underlying the goods ordered from the manufacturer. The finance company made the required payment to the manufacturer at the time a purchase order is placed, and was entitled to demand payment from the Company when the goods are delivered. The Company paid a financing fee equal to 1.5% of the purchase order amount for each transaction, plus administrative fees. Additional charges of 0.05% per day (18% annualized) were incurred if the financing remained open for more than 30 days. |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Outstanding | 7,374,454 | 9,025,265 |
Preferred Stock, Value, Issued | $ 10,153 | $ 10,694 |
Preferred Stock, Liquidation Preference, Value | $ 4,854 | $ 5,968 |
Convertible Preferred Stock Shares Issuable | 2,783,000 | 3,076,137 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 8,830,000 | 8,830,000 |
Preferred Stock, Shares Outstanding | 7,138,158 | 8,776,968 |
Preferred Stock, Value, Issued | $ 1,745 | $ 2,146 |
Preferred Stock, Liquidation Preference, Value | $ 4,854 | $ 5,968 |
Convertible Preferred Stock Shares Issuable | 1,189,693 | 1,462,828 |
Series B Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 54,250 | 54,250 |
Preferred Stock, Shares Outstanding | 54,201 | 54,201 |
Preferred Stock, Value, Issued | $ 4,569 | $ 4,569 |
Preferred Stock, Liquidation Preference, Value | $ 0 | $ 0 |
Convertible Preferred Stock Shares Issuable | 903,362 | 903,362 |
Series C Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 26,000 | 26,000 |
Preferred Stock, Shares Outstanding | 25,763 | 25,763 |
Preferred Stock, Value, Issued | $ 2,010 | $ 2,010 |
Preferred Stock, Liquidation Preference, Value | $ 0 | $ 0 |
Convertible Preferred Stock Shares Issuable | 429,392 | 429,392 |
Series D Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 170,000 | 170,000 |
Preferred Stock, Shares Outstanding | 156,332 | 168,333 |
Preferred Stock, Value, Issued | $ 1,829 | $ 1,969 |
Preferred Stock, Liquidation Preference, Value | $ 0 | $ 0 |
Convertible Preferred Stock Shares Issuable | 260,553 | 280,555 |
Other Member [Member] | ||
Preferred Stock, Shares Authorized | 919,750 | 919,750 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Preferred Stock, Value, Issued | $ 0 | $ 0 |
Preferred Stock, Liquidation Preference, Value | $ 0 | $ 0 |
Convertible Preferred Stock Shares Issuable | 0 | 0 |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) - shares | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Equity [Abstract] | ||
Outstanding at beginning of year | 0 | 1,191 |
Issued in offerings of units | 187,500 | 2,171,979 |
Settled under exchange agreements | 0 | (2,171,979) |
Expired | 0 | (1,191) |
Outstanding at end of year | 187,500 | 0 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - $ / shares | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Outstanding at beginning of period - Number Of Shares | 96,581 | 71,533 |
Granted - Number Of Shares | 347,010 | 55,070 |
Forfeited or expired -Number Of Shares | (12,258) | (14,188) |
Exercised - Number Of Shares | (31,657) | |
Expired - Number Of Shares | (17,656) | (15,834) |
Outstanding at end of period - Number Of Shares | 382,020 | 96,581 |
Options exercisable at year-end - Number Of Shares | 205,941 | |
Outstanding at beginning of year -Weighted Average Exercise Price (in dollars per share) | $ 16.92 | $ 39.24 |
Granted - Weighted Average Exercise Price (in dollars per share) | 4.84 | 4.44 |
Forfeited - Weighted Average Exercise Price (in dollars per share) | 36.97 | 31.98 |
Exercised - Weighted Average Exercise Price (in dollars per share) | 4.08 | |
Expired - Weighted Average Exercise Price (in dollars per share) | 30.72 | 61.08 |
Outstanding at end of year - Weighted Average Exercise Price (in dollars per share) | 5.73 | $ 16.92 |
Options exercisable at year-end - Weighted Average Exercise Price (in dollars per share) | 6.50 | |
Weighted-average fair value of options granted during the year - Weighted Average Exercise Price (in dollars Per share) | $ 3.38 |
STOCK-BASED COMPENSATION (Det44
STOCK-BASED COMPENSATION (Details 1) | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Risk free annual interest rate | 14.00% | |
Expected volatility | 80.00% | |
Expected life | 0 years | 4 years 9 months 7 days |
Assumed dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Risk free annual interest rate | 1.00% | |
Expected volatility | 77.00% | |
Expected life | 2 years 9 months | |
Maximum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Risk free annual interest rate | 1.70% | |
Expected volatility | 79.00% | |
Expected life | 5 years |
STOCK-BASED COMPENSATION (Det45
STOCK-BASED COMPENSATION (Details 2) - $ / shares | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Unvested at beginning of period | 230,799 | 21,040 |
Number Of Shares Granted | 274,832 | 230,799 |
Number Of Shares Vested | (312,636) | (113,482) |
Number Of Shares Forfeited | (16,572) | |
Unvested at end of period | 274,829 | 230,799 |
Weighted-Average Grant-Date Fair Value Unvested at beginning of period | $ 7.47 | $ 28.56 |
Weighted-Average Grant-Date Fair Value Granted | 5.14 | 6.66 |
Weighted-Average Grant-Date Fair Value Vested | 6.10 | 8.88 |
Weighted-Average Grant-Date Fair Value Forfeited | 7.98 | |
Weighted-Average Grant-Date Fair Value Unvested at end of period | $ 6 | $ 7.47 |
STOCK-BASED COMPENSATION (Det46
STOCK-BASED COMPENSATION (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based Compensation Arrangement By Share-based Payment Award Options Granted In Period Fair Value | $ 1,200 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | 0 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | 5 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | 551 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Restricted Stock | 6 | |
Share-based Compensation, Total | $ 3,142 | $ 1,436 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 4.84 | $ 4.44 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | (3) | 3 |
Deferred: | ||
Federal | (1,709) | 182 |
State | (692) | 181 |
Impact of change in effective tax rates on deferred taxes | 0 | 0 |
Change in: valuation allowance | 2,404 | (363) |
Income taxes | $ 0 | $ 3 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Tax (benefit) at federal statutory rate, Amount | $ (1,577) | $ (1,297) |
State income taxes, net of federal income taxes, Amount | (695) | 184 |
Effect of warrant liability, Amount | (84) | 526 |
Effect of other permanent items, Amount | 144 | 574 |
Change in valuation allowance, Amount | 2,404 | (363) |
Reduction of deferred benefits, Amount | (192) | 379 |
Income taxes, Amount | $ 0 | $ 3 |
Tax (benefit) at federal statutory rate, Percentage Of Pre Tax Income | 34.00% | (34.00%) |
State income taxes, net of federal income taxes, Percentage Of Pre Tax Income | 15.00% | (5.00%) |
Effect of warrant liability, Percentage Of Pre Tax Income | 2.00% | (14.00%) |
Effect of other permanent items, Percentage Of Pre Tax Income | (3.00%) | (15.00%) |
Change in valuation allowance, Percentage Of Pre Tax Income | (52.00%) | 10.00% |
Reduction of deferred benefits, Percentage Of Pre Tax Income | (4.00%) | (10.00%) |
Income taxes, Percentage Pre Tax Income | 0.00% | 0.00% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Impairment of development costs | $ 641 | $ 597 |
Depreciation and amortization | 224 | 144 |
Impairment of inventory | 0 | 14 |
Compensation expense not deductible until options are exercised | 1,116 | 174 |
All other temporary differences | 629 | 370 |
Net operating loss carry forward | 2,461 | 1,368 |
Less valuation allowance | (5,071) | (2,667) |
Deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards Expiration Period | The net operating loss carryforwards available for income tax purposes at October 31, 2016 amounts to approximately $94.0 million and expires between 2025 and 2035 for federal income taxes, and approximately $35.4 million for state income taxes, which primarily expires between 2014 and 2022. | |
Operating Loss Carryforwards, Limitations on Use | 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. | |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ (2,404) | $ 363 |
Federal Tax [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | 94,000 | |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | $ 35,400 |
LOSS PER SHARE (Details)
LOSS PER SHARE (Details) - shares | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Shares issuable upon conversion of preferred stock | 2,783,000 | 3,076,137 | |
Shares issuable upon exercise of warrants | 187,500 | 0 | |
Shares issuable upon exercise of stock options | 382,020 | 96,581 | 71,533 |
Non-vested portion of restricted stock grants | 274,832 | 230,799 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases, Rent Expense | $ 20,000 | $ 165,000 |
WORKFORCE REDUCTION (Details)
WORKFORCE REDUCTION (Details) $ in Thousands | 12 Months Ended |
Oct. 31, 2015USD ($) | |
Work force Reduction Disclosure [Abstract] | |
Accrued severance liability, beginning of period | $ 323 |
Severance costs accrued | 840 |
Payments | (1,163) |
Accrued severance liability, end of period | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Chief Executive Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Monthly Consulting Fee | $ 26,000 | |
Consulting agreement [Member] | Board Of Directors [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction Strategic Consulting Services Fee From Transaction With Related Party Monthly | $ 2,000 | $ 8,000 |
ASSIGNMENT OF ASSETS AND LIAB55
ASSIGNMENT OF ASSETS AND LIABILITIES (Details Textual) $ in Thousands | 3 Months Ended |
Jul. 31, 2016USD ($) | |
Assets Payable In Twelve Equal Consecutive Monthly Installments | $ 33,000 |
Zift Interactive LLC [Member] | |
Assets Transferred | 800,000 |
Contingent Liabilities | 219,000 |
Zift Interactive LLC [Member] | Transferred Immediately [Member] | |
Assets Transferred | 400,000 |
Zift Interactive LLC [Member] | Payable In Twelve Equal Consecutive Monthly Installments [Member] | |
Assets Transferred | $ 400,000 |
EMPLOYEE RETIREMENT PLAN (Detai
EMPLOYEE RETIREMENT PLAN (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||
Defined Contribution Plan, Cost Recognized | $ 0 | $ 0 |