Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Jan. 31, 2015 | Mar. 13, 2015 | |
Document Information [Line Items] | ||
Entity Registrant Name | MAJESCO ENTERTAINMENT CO | |
Entity Central Index Key | 1076682 | |
Current Fiscal Year End Date | -21 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | COOL | |
Entity Common Stock, Shares Outstanding | 7,092,750 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Jan-15 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $10,479 | $7,196 |
Accounts and other receivables | 826 | 1,597 |
Inventory | 271 | 1,292 |
Capitalized software development costs and license fees | 270 | 674 |
Advances to GMS Entertainment Limited | 0 | 250 |
Prepaid expenses and other current assets | 304 | 249 |
Total current assets | 12,150 | 11,258 |
Property and equipment, net | 66 | 198 |
Total assets | 12,216 | 11,456 |
Current liabilities: | ||
Accounts payable and accrued expenses | 3,002 | 4,427 |
Due to distribution partners | 918 | 1,286 |
Customer credits | 1,744 | 171 |
Advances from customers and deferred revenue | 237 | 21 |
Total current liabilities | 5,901 | 5,905 |
Warrant liability | 1,382 | 0 |
Total liabilities | 7,283 | 5,905 |
Private placement units held in escrow - representing 7,352,940 shares of 0% Series A Convertible Preferred Stock with an aggregate liquidation preference of $5,000 and 7,352,940 warrants, net of $5,000 of proceeds held in escrow | 0 | 0 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
0% Series A Convertible Preferred stock - 8,830,000 shares authorized, 1,470,588 shares outstanding with an aggregate liquidation preference of $1,000 | 318 | 0 |
Common stock — $.001 par value; 250,000,000 shares authorized; 7,092,750 and 6,620,660 shares issued and outstanding at January 31, 2015 and October 31, 2014, respectively | 7 | 7 |
Additional paid-in capital | 125,491 | 125,271 |
Accumulated deficit | -120,883 | -119,727 |
Net stockholders’ equity | 4,933 | 5,551 |
Total liabilities and stockholders’ equity | $12,216 | $11,456 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 7,092,750 | 6,620,660 |
Common stock, shares outstanding | 7,092,750 | 6,620,660 |
Amount To Be Returned By Escrow Agent | $5,000 | $5,000 |
Warrant [Member] | ||
Preferred Stock Held In Escrow Shares | 7,352,940 | 7,352,940 |
0% Series A Convertible Preferred stock [Member] | ||
Preferred Stock, Shares Authorized | 8,830,000 | 8,830,000 |
Preferred Stock, Shares Outstanding | 1,470,588 | 1,470,588 |
Preferred Stock, Liquidation Preference, Value | 1,000 | 1,000 |
Preferred Stock Held In Escrow Shares | 7,352,940 | 7,352,940 |
Preferred Stock Held In Escrow Liquidation Preference Value | $5,000 | $5,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 |
Net revenues | $3,471 | $21,934 |
Cost of sales | ||
Product costs | 1,407 | 7,542 |
Software development costs and license fees | 707 | 11,003 |
Total cost of sales | 2,114 | 18,545 |
Gross profit | 1,357 | 3,389 |
Operating costs and expenses | ||
Product research and development | 26 | 1,246 |
Selling and marketing | 440 | 4,056 |
General and administrative | 1,744 | 2,107 |
Workforce reduction | 74 | 0 |
Depreciation and amortization | 40 | 81 |
Total operating costs and expenses | 2,324 | 7,490 |
Operating loss | -967 | -4,101 |
Other expenses (income) | ||
Interest and financing costs | 60 | 162 |
Loss from equity method investment | 0 | 247 |
Gain on extinguishment of liabilities | -526 | 0 |
Gains on asset sales, net | -125 | 0 |
Change in fair value of warrant liability | 779 | 0 |
Loss before income taxes | -1,155 | -4,510 |
Income taxes | 1 | 2 |
Net loss | -1,156 | -4,512 |
Beneficial conversion feature accreted as a dividend | 397 | 0 |
Net loss attributable to common shareholders | ($1,553) | ($4,512) |
Net loss attributable to common shareholders per share: | ||
Basic and diluted (in dollars per share) | ($0.24) | ($0.71) |
Weighted average shares outstanding: | ||
Basic and diluted (in shares) | 6,519,600 | 6,385,087 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 |
Net loss | ($1,156) | ($4,512) |
Other comprehensive (loss) income | ||
Foreign currency translation adjustments | 0 | 60 |
Other comprehensive (loss) income | 0 | 60 |
Comprehensive loss | ($1,156) | ($4,452) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ($1,156) | ($4,512) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Change in warrant liability | 779 | 0 |
Depreciation and amortization | 40 | 81 |
Loss from equity method investment | 0 | 247 |
Non-cash compensation expense | 220 | 373 |
Provision for price protection | 50 | 2,722 |
Amortization of capitalized software development costs and license fees | 404 | 7,226 |
Gains on asset sales, net | -125 | 0 |
Provision for excess inventory | 65 | 28 |
Gain on extinguishment of liabilities | -526 | 0 |
Changes in operating assets and liabilities: | ||
Customer credits | 1,573 | -2,185 |
Accounts and other receivables | 988 | -316 |
Inventory | 956 | 1,828 |
Capitalized software development costs and license fees | 0 | -1,522 |
Advance payments for inventory | 17 | 904 |
Prepaid expenses and other assets | 48 | 2,579 |
Accounts payable and accrued expenses | -1,267 | 378 |
Advances from customers and deferred revenue | 216 | -6,808 |
Net cash provided by operating activities | 2,282 | 1,023 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | 0 | -289 |
Net proceeds from sale of assets | 200 | 0 |
Net cash provided by (used in) investing activities | 200 | -289 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of inventory financing | 0 | -1,767 |
Net proceeds from sale of units | 801 | 0 |
Net cash provided by (used in) financing activities | 801 | -1,767 |
Effect of exchange rates on cash and cash equivalents | 0 | -3 |
Net increase (decrease) in cash and cash equivalents | 3,283 | -1,036 |
Cash and cash equivalents — beginning of period | 7,196 | 13,385 |
Cash and cash equivalents — end of period | 10,479 | 12,349 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid during the period for interest and financing costs | 60 | 137 |
Cash paid during the period for income taxes | $0 | $0 |
PRINCIPAL_BUSINESS_ACTIVITY_AN
PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION | 3 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||
Organization, Consolidation and Presentation Of Financial Statements Disclosure [Text Block] | 1. PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION | |||||||||||||
The accompanying financial statements present the financial results of Majesco Entertainment Company and Majesco Europe Limited, its wholly-owned subsidiary, (“Majesco” or the “Company”) on a consolidated basis. | ||||||||||||||
The Company is a provider of video game products primarily for the mass-market consumer. It sells its products primarily to large retail chains, specialty retail stores, and distributors. It publishes video games for major current generation 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 also publishes games for digital platforms, including mobile platforms like the iPhone, iPad and Android devices, as well as online sites such as Microsoft’s XBLA, Sony’s PSN and Steam for PCs. | ||||||||||||||
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, it focuses on publishing more casual games targeting mass-market consumers. In some instances, its titles are based on licenses of well-known properties and, in other cases, based on original properties. The Company enters into agreements with content providers and video game development studios for the creation of its video games. | ||||||||||||||
The Company’s operations involve similar products and customers worldwide. These products are developed and sold domestically and internationally. The Company may also enter into agreements with licensees, particularly for sales of its products internationally. The Company is centrally managed and its 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, the Company operates in a single reportable segment. | ||||||||||||||
Geographic regions. Net revenues by geographic region were as follows for the three months ended January 31: | ||||||||||||||
2015 | % | 2014 | % | |||||||||||
United States | $ | 3,409 | 98 | $ | 18,937 | 86 | ||||||||
Europe | 62 | 2 | 2,997 | 14 | ||||||||||
Total net revenues | $ | 3,471 | 100 | $ | 21,934 | 100 | ||||||||
The accompanying interim condensed consolidated financial statements of the Company are unaudited, but in the opinion of management, reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim period. Accordingly, they do not include all information and notes required by generally accepted accounting principles for complete financial statements. The Company’s financial results are impacted by the seasonality of the retail selling season and the timing of the release of new titles. The results of operations for interim periods are not necessarily indicative of results to be expected for the entire fiscal year. The balance sheet at October 31, 2014 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended October 31, 2014 filed with the Securities and Exchange Commission on Form 10-K on January 29, 2015. | ||||||||||||||
Reverse Stock Split. In 2013, the Company received a notification letter from NASDAQ notifying it that it was not in compliance with its $1.00 minimum bid price requirement because the bid price for the Company’s common stock closed below $1.00 over the prior 30 consecutive business days. To regain compliance with this requirement, we completed a reverse stock split, which was effected on June 13, 2014 at a ratio of one-for-seven with no change in par value. All share information presented in this Quarterly Report on Form 10-Q gives effect to the reverse stock split. | ||||||||||||||
Going Concern Basis. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered losses that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. As of January 31, 2015, management believes that there may not be sufficient capital resources from operations and existing financing arrangements in order to meet operating expenses and working capital requirements for the next twelve months. Accordingly, the Company is evaluating various alternatives, including reducing operating expenses and personnel costs, securing additional financing for future business activities and other strategic alternatives including a sale or merger of the Company. There can be no assurance that the Company will be able to generate the level of operating revenues in its business plan, or if additional sources of financing will be available on acceptable terms, if at all. If no additional sources of financing are available, it could have a material effect on future operating prospects. | ||||||||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jan. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Principles of Consolidation. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary located in the United Kingdom. Significant intercompany accounts and transactions have been eliminated in consolidation. 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. | |
Revenue Recognition. The Company recognizes revenue upon the shipment of its products when: (1) title and the risks and rewards of ownership are transferred; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is probable. Certain products are sold to customers with a street date (the earliest date these products may be resold by retailers). Revenue for sales of these products is not recognized prior to their street date. Some of the Company’s software products provide limited online features at no additional cost to the consumer. Generally, such features have been considered to be incidental to the Company’s overall product offerings and an inconsequential deliverable. Accordingly, the Company does not defer any revenue related to products containing these limited online features. However, in instances where online features or additional functionality is considered a substantive deliverable in addition to the software product, such characteristics will be taken into account when applying the Company’s revenue recognition policy. | |
The Company generally sells its products on a no-return basis, although in certain instances, the Company provides price protection or other allowances on certain unsold products. Price protection, when granted and applicable, allows customers a partial credit against amounts they owe the Company with respect to merchandise unsold by them. Revenue is recognized, and accounts receivable is presented, net of estimates of these allowances. | |
The Company estimates potential future product price protection and other allowances related to current period product revenue. The Company analyzes historical experience, current sell through of retailer inventory of the Company’s products, current trends in the video game market, the overall economy, changes in customer demand and acceptance of the Company’s products and other related factors when evaluating the adequacy of price protection and other allowances. | |
Sales incentives or other consideration given by the Company to customers that are considered adjustments of the selling price of its products, such as rebates and product placement fees, are reflected as reductions of revenue. Sales incentives and other consideration that represent costs incurred by the Company for benefits received, such as the appearance of the Company’s products in a customer’s national circular ad, are reflected as selling and marketing expenses, in accordance with Accounting Standards Codification (“ASC”) 605-50, Customer Payments and Incentives. | |
In addition, some of 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). | |
When the Company operates hosted online games in which players can play for free and purchase virtual goods for use in the games, it recognizes revenues from the sale of virtual goods as service revenues over the estimated period in which players use the game. It currently estimates these periods of use to be three to four months. The Company periodically assesses its estimates for this period of use and future increases or decreases in these estimates and adjusts recognized revenues prospectively. The Company also recognizes advertising revenue as ads are served. The Company has not earned significant revenue to date related to its online games. | |
The Company records revenue for distribution agreements where it is acting as an agent as defined by ASC Topic 605, Revenue Recognition, Subtopic 45, Principal Agent Considerations, on a net basis. When the Company enters into license or distribution agreements that provide for multiple copies of games in exchange for guaranteed amounts, revenue is recognized in accordance with the terms of the agreements, generally upon delivery of a master copy, assuming our performance obligations are complete and all other recognition criteria are met, or as per-copy royalties are earned on sales of games. | |
In certain instances, customers and distributors provide the Company with cash advances on their orders. These advances are then applied against future sales to these customers. Advances are classified as advances from customers and deferred revenue in the accompanying balance sheets. | |
Inventory. Inventory is stated at the lower of cost as determined by the first-in, first-out method, or market. The Company estimates the net realizable value of slow-moving inventory on a title-by-title basis and charges the excess of cost over net realizable value to cost of sales. Such estimates may change and additional charges may be incurred until the related inventory items are sold or otherwise disposed of. | |
Capitalized Software Development Costs and License Fees. 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. | |
Estimates. 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. | |
Loss Per Share. 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. 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. | |
Concentrations. The Company develops and distributes video game software for proprietary platforms under licenses from Nintendo, Sony and Microsoft, which must be periodically renewed. The Company’s agreements with these manufacturers also grant them certain control over the supply and manufacturing of the Company’s products. In addition, for the three months ended January 31, 2015, sales of the Company’s Zumba Fitness games accounted for approximately 22% of net revenues and for the three months ended January 31, 2014, sales of the Company’s Zumba Fitness games accounted for approximately 72% of net revenues. | |
Recent Accounting Pronouncements. | |
Revenue. In May 2014, the FASB issued an Accounting Standards Update creating a new Topic 606, Revenue from Contracts with Customers, which broadly establishes new standards for the recognition of certain revenue and updates related disclosure requirements. The update becomes effective for the Company on November 1, 2017. The Company is reviewing the potential impact of the statement on its financial position, results of operations, and cash flows. | |
FAIR_VALUE
FAIR VALUE | 3 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
Fair Value Disclosures [Text Block] | 3. FAIR VALUE | |||||||||||||
The table below segregates all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. | ||||||||||||||
January 31, | Quoted prices | Significant | Significant | |||||||||||
2015 | in active | other | unobservable | |||||||||||
markets | observable | inputs | ||||||||||||
for identical | inputs | (level 3) | ||||||||||||
assets | (level 2) | |||||||||||||
(level 1) | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 9,102 | $ | 9,102 | $ | — | $ | — | ||||||
Bank deposits | 1,377 | 1,377 | — | — | ||||||||||
Total financial assets | $ | 10,479 | $ | 10,479 | $ | — | $ | — | ||||||
Warrant liability | $ | 1,382 | $ | - | $ | — | $ | 1,382 | ||||||
October 31, | Quoted prices | Significant | Significant | |||||||||||
2014 | in active | other | unobservable | |||||||||||
markets | observable | inputs | ||||||||||||
for identical | inputs | (level 3) | ||||||||||||
assets | (level 2) | |||||||||||||
(level 1) | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 6,099 | $ | 6,099 | $ | — | $ | — | ||||||
Bank deposits | 1,097 | 1,097 | — | — | ||||||||||
Total financial assets | $ | 7,196 | $ | 7,196 | $ | — | $ | — | ||||||
The Company has outstanding warrants that contain re-pricing provisions for future “down-round” issuances and other events not indexed to the Company’s own stock (see note 11) and are classified as liabilities in the Company’s consolidated balance sheets. The Company recognizes these warrants as liabilities at their fair value and re-measures them at fair value on each reporting date. ASC 820 Fair Value Measurement provides requirements for disclosure of liabilities that are measured at fair value on a recurring basis in periods subsequent to the initial recognition. | ||||||||||||||
The Company uses Level 3 inputs for its valuation methodology for the warrant derivative 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 assumptions and other re-pricing events in the binominal valuation models. Future changes in these factors will have a significant impact on the computed fair value of the warrant liability. Accordingly, the Company expects future changes in the fair value of the warrants to continue to vary from quarter to quarter. | ||||||||||||||
A summary of the changes to the Company’s warrant liability, as measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the three months ended January 31, 2015 is presented below: | ||||||||||||||
Beginning balance | $ | - | ||||||||||||
Issuance of warrants | 603 | |||||||||||||
Change in fair value of warrant liability | 779 | |||||||||||||
Ending balance | $ | 1,382 | ||||||||||||
Assumptions used to determine the fair value of the warrants in the three months ended January 31, 2015 were: | ||||||||||||||
Estimated fair value of stock | $ | 0.59-$1.20 | ||||||||||||
Expected warrant term | 4.8-5.0 years | |||||||||||||
Risk-free rate | 1.2% -1.7 | % | ||||||||||||
Expected volatility | 80 | % | ||||||||||||
Dividend yield | 0 | % | ||||||||||||
Probability of certain litigation costs at each of three pricing thresholds | 33 | % | ||||||||||||
Probability of future down-round financing | 50 | % | ||||||||||||
The carrying value of accounts receivable, accounts payable and accrued expenses, customer credits, due to distribution partners and advances from customers are reasonable estimates of their fair values because of their short-term maturity. | ||||||||||||||
DUE_FROM_FACTOR_AND_CUSTOMER_C
DUE FROM FACTOR AND CUSTOMER CREDITS, NET | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Due From Factor Disclosure [Text Block] | 4. DUE FROM FACTOR AND CUSTOMER CREDITS, NET | |||||||
Due from factor and customer credits, net, consists of the following: | ||||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Outstanding accounts receivable sold to factor | $ | 1,175 | $ | 3,277 | ||||
Less: customer allowances | -1,668 | -1,110 | ||||||
Less: provision for price protection | -1,251 | -2,338 | ||||||
(Customer credits)/Due from Factor | $ | -1,744 | $ | -171 | ||||
Outstanding accounts receivable sold to the factor as of January 31, 2015 and October 31, 2014 for which the Company retained credit risk amounted to $12 and $164, respectively. As of January 31, 2015 and October 31, 2014, there were no allowances for uncollectible accounts. Allowances include provisions for customer payments and incentives deductible in future periods. As of January 31, 2015, customer allowances and provisions for price protection exceeded outstanding accounts receivable sold to the Company’s factor. The excess is classified as a liability in the accompanying balance sheet. | ||||||||
ACCOUNTS_AND_OTHER_RECEIVABLES
ACCOUNTS AND OTHER RECEIVABLES, NET | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 5. ACCOUNTS AND OTHER RECEIVABLES, NET | |||||||
Accounts and other receivables, net, consist of the following: | ||||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Royalties receivable | $ | 10 | $ | - | ||||
Trade accounts receivable, net of allowances of $0 | 816 | 1,597 | ||||||
Total accounts and other receivables, net | $ | 826 | $ | 1,597 | ||||
INVENTORIES
INVENTORIES | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
Inventory Disclosure [Text Block] | 6. INVENTORIES | |||||||
Inventories consist of the following: | ||||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Finished goods | $ | 268 | $ | 1,245 | ||||
Packaging and components | 3 | 47 | ||||||
Total inventories | $ | 271 | $ | 1,292 | ||||
PREPAID_EXPENSES_AND_OTHER_CUR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||
Prepaid Expense and Other Assets Current Disclosure [Text Block] | 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS | |||||||
Prepaid expenses and other current assets consist of the following: | ||||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Advance payments for inventory | $ | 40 | $ | 57 | ||||
Prepaid rent | 39 | 72 | ||||||
Prepaid insurance | 181 | 98 | ||||||
Other | 44 | 22 | ||||||
Total prepaid expenses and other current assets | $ | 304 | $ | 249 | ||||
PROPERTY_AND_EQUIPMENT_NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Property and Equipment, Net [Abstract] | ||||||||
Property, Plant and Equipment Disclosure [Text Block] | 8. PROPERTY AND EQUIPMENT, NET | |||||||
Property and equipment, net, consist of the following: | ||||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Computers and software | $ | 61 | $ | 1,239 | ||||
Furniture and equipment | 78 | 402 | ||||||
Leasehold improvements | - | 150 | ||||||
Total property and equipment, gross | 139 | 1,791 | ||||||
Accumulated depreciation | -73 | -1,593 | ||||||
Total property and equipment, net | $ | 66 | $ | 198 | ||||
INVESTMENT_IN_GMS_ENTERTAINMEN
INVESTMENT IN GMS ENTERTAINMENT LIMITED | 3 Months Ended |
Jan. 31, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments and Joint Ventures Disclosure [Text Block] | 9. INVESTMENT IN GMS ENTERTAINMENT LIMITED |
In the fiscal year ended October 31, 2013, the Company formed GMS, an Isle of Man company, with a third party to pursue online casino gaming. The Company accounts for GMS on the equity method as a corporate joint venture. | |
In the three months ended January 31, 2014, the Company’s share of GMS’s net loss was $247, which is included in loss from equity method investment in the statement of operations. In the fiscal year ended October 31, 2014 the Company recorded operating losses and impairments reducing the carrying amount of its investment in GMS to $0 and its advances receivable from GMS to $250 as of October 31, 2014. In November 2014, the Company sold its investment in GMS, including its preferred stock investment and receivables from working capital advances to its joint venture partner, and received $250 in cash. | |
ACCOUNTS_PAYABLE_AND_ACCRUED_E
ACCOUNTS PAYABLE AND ACCRUED EXPENSES; DUE TO DISTRIBUTION PARTNERS | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES; DUE TO DISTRIBUTION PARTNERS | |||||||
Accounts payable and accrued expenses consist of the following: | ||||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Accounts payable-trade | $ | 607 | $ | 1,403 | ||||
Royalties, fees and development | 1,498 | 1,859 | ||||||
Salaries and other compensation | 681 | 867 | ||||||
Other accruals | 216 | 298 | ||||||
Total accounts payable and accrued expenses | $ | 3,002 | $ | 4,427 | ||||
During the three months ended January 31, 2015, the Company recognized a gain on extinguishment of liabilities of $526. 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 January 31, 2015. | ||||||||
Salaries and other compensation include accrued payroll expense, accrued incentive compensation and employer 401K plan contributions. | ||||||||
Due to distribution partners amounts due to publishers for games distributed by the Company as an agent. | ||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Jan. 31, 2015 | |
Equity [Abstract] | |
Stockholders Equity Note Disclosure [Text Block] | 11. STOCKHOLDERS’ EQUITY |
Private Placement | |
On December 17, 2014, pursuant to subscription agreements entered into with certain accredited investors (the “Subscription Agreements”) the Company completed a private placement of $6,000 of units (the “Units”) at a purchase price of $0.68 per Unit, with each Unit consisting of one share of the Company’s 0% Series A Convertible Preferred Stock (the “Preferred Shares”) and a five year warrant (the “Warrants”) to purchase one share of the Company’s common stock at an initial exercise price of $0.68 per share. | |
The Preferred Shares are convertible into shares of Common Stock based on a conversion calculation equal to the stated value of the of such Preferred Share, plus all accrued and unpaid dividends, if any, on such 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 $0.68 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. Pursuant to the Certificate of Designations, Preferences and Rights of the 0% Series A Convertible Preferred Stock (the “Certificate of Designations”), 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 Subscription Agreements) as long as any of the Series A Convertible Preferred Stock is outstanding. The Preferred Shares bear no interest. | |
The holders of Preferred Shares shall vote together with the holders of Common Stock on all matters on an as if converted basis, subject to certain limitations described in the Certificate of designations preferences and rights of the series A Convertible Preferred Stock, and shall not vote as a separate class. At no time may all or a portion of the Series A Preferred Stock 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 the 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 upon the holder may waive the 4.99% limitation at which time he may not own more than 9.99% beneficial ownership. If the Company has not obtained the approval of its shareholders in accordance with NASDAQ Listing Rule 5635(d), then the Company may not issue upon conversion of the Preferred Shares a number of shares of Common Stock, which, when aggregated with any shares of Common Stock (i) issued pursuant to the Subscription Agreement, (ii) underlying the Preferred Shares issued pursuant to the Subscription Agreement; (iii) issuable upon prior exercise of any Warrants issued pursuant to the Subscription Agreement and (iv) issuable pursuant to any warrants issued to any registered broker-dealer as a fee in connection with the issuance of Securities pursuant to the Subscription Agreement, would exceed 19.99% of the shares of Common Stock issued and outstanding as of the Subscription Date, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of the Subscription Agreement. The Company’s shareholders will vote at the annual shareholders meeting scheduled for March 30, 2015 regarding the allowable conversion in excess of 19.99% of the outstanding common stock of the Company. | |
The Warrants are exercisable, at any time, following the date the Warrants are issued, at a price of $0.68 per share, subject to adjustment, and expire five years from the date of issuance. The holders may exercise the Warrants for shares of common stock on a cashless basis if there is no effective registration statement, or no current prospectus is available for resale of the warrant shares. The Warrants are subject to certain adjustments upon certain actions by the Company as outlined in the 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, as a result of which the exercise price shall be reduced to such lower price, subject to certain exceptions. The exercise price is also adjustable down to $0.34 per share if costs related to outstanding litigation exceed certain thresholds outlined in the agreement. | |
The proceeds of the offering and certificates representing the Preferred Shares and Warrants underlying the Units issued in the offering were deposited into an escrow account (the “Escrow Amount”) with Signature Bank as the escrow agent (the “Escrow Agent”) pursuant to an escrow agreement (the “Escrow Agreement”) dated December 17, 2014, by and between the Company, the lead investor in the unit financing. Upon the closing of the Private Placement on December 17, 2014 (such date, the “Closing Date”), $1,000 of the Escrow Amount was released by the Escrow Agent to the Company in exchange for the release of $1,000 of Units by the Securities Escrow Agent. Following the Closing Date, provided that the approval of NASDAQ and the Company’s stockholders has been obtained, in one or multiple tranches, the remaining $5,000 may be released (a “Subsequent Release”) by the Escrow Agent to the Investors in exchange for the release of $5,000 of Units by the Securities Escrow Agent, if either, (i) the lead investor has approved the release, (ii) the approval of the requisite number of Investors has been obtained, (iii) the Company has executed definitive binding documents for certain transactions, as described in the 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 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 Escrow Amount has been consummated; and (c) no more than $1,000 is released (the “Release Conditions”). The holders of the preferred shares issued and held in escrow can vote the shares subject to the limitations described below. The price of the securities issued in the offering were below the book value per share of the Company’s stock prior to the offering. Therefore, the Company is seeking shareholder approval for the conversion of the full amount of preferred stock and exercise of warrant shares issued in the offering to comply with NASDAQ listing rule 5635(d) rules that require shareholder approval of stock issuances representing more than 19.99% of the Company’s outstanding shares at a price below the fair market value per share or book value per share. In the event that on and as of the twelve month anniversary of the Closing Date none of the Release Conditions have been satisfied, the Escrow Agent shall return $5,000 to the Investors, without interest or deduction, and the Securities Escrow Agent shall return the Units to the Company for cancellation. | |
The Company received net proceeds of $801 for the units released by the Escrow Agent, net of offering costs, and has accounted for each of the preferred shares released by the Escrow Agent, the warrants released by the Escrow Agent and the Units 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. The exercise price of the released warrants can be adjusted downward if the Company issues 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. Accordingly, $603 of net proceeds were recorded as a derivative liability representing the fair value of the warrants at issuance as described in Note 3 and $120 of offering costs allocated to the warrants and were expensed. The Company will re-measure the fair value of the warrants at each reporting date and record related gains or losses in its statement of operations. In the three months ended January 31, 2015, the Company recorded a change in fair value of $779 related to the increase in the fair value of the warrants during the period. | |
The remaining net proceeds of $318 were allocated to the preferred shares. The Preferred Shares do not represent an unconditional obligation to be settled in a variable number of shares as they are convertible only at the option of the holder, 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 stockholder’s equity. As of January 31, 2015, the preferred shares are convertible into 1,470,588 shares of common stock based on the current conversion rate, limited to 1,413,595 shares, based on the limitations on conversion currently imposed by NASDAQ rules prior to the receipt of stockholder approval to allow for the full conversion of the preferred shares and warrants. | |
As a result of the allocations, described above, the preferred shares are deemed to have a beneficial conversion feature at issuance amounting to $397, which was recorded in stockholders equity and immediately charged as a dividend in determining net loss attributable to common shareholders. | |
Approval of the Company shareholders and obtaining NASDAQ approval to allow for the full conversion of the Units pursuant to NASDAQ rules, are events that are beyond the Company’s control, therefore the remaining Units and cash held in escrow are recorded as offsetting amounts in temporary equity at the original purchase price and maximum refundable amount if approval of the Company’s shareholders and NASDAQ is not obtained of $5,000, net of cash proceeds of $5,000 held in escrow. Not taking into account the limitations on conversion currently imposed by the NASDAQ rules, the preferred shares under the escrowed units would be convertible into 7,352,939 shares of common stock based on the current conversion rate and the warrants under the escrowed units are exercisable for 7,352,939 shares of common stock based on the current exercise price. As of January 31, 2015, the aggregate intrinsic value of the convertible preferred shares and warrants held in escrow, based on the price of the Company’s common shares on that date, was approximately $7,647. | |
In connection with the private placement, the Company also entered into a Registration Rights Agreement, with the investors pursuant to which 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 securities and to maintain its effectiveness until all such securities have been sold or may be sold without restriction. In the event a registration statement covering such shares of common stock is not effective, the Company is required to pay to the investors on a monthly basis an amount equal to 1% of the investors’ investment. | |
STOCK_BASED_COMPENSATION_ARRAN
STOCK BASED COMPENSATION ARRANGEMENTS | 3 Months Ended | |||
Jan. 31, 2015 | ||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Text Block] | 12. STOCK BASED COMPENSATION ARRANGEMENTS | |||
Stock-based compensation expense in the three months ended January 31, 2015 and 2014 amounted to $220 and $373, respectively. Stock-based compensation expense is recorded in general and administrative expenses in the accompanying consolidated statements of operations. | ||||
A summary of the Company’s stock option activity in the three months ended January 31, 2015 is presented below: | ||||
Outstanding at beginning of period | 429,200 | |||
Forfeited | -49,444 | |||
Expired | -4,081 | |||
Outstanding at end of period | 375,675 | |||
In addition, in the three months ended January 31, 2015, the Company approved the issuance of stock options totaling 366,468 to certain directors and employees, subject to the approval by the Company’s shareholders of an equity compensation plan. The shareholder approval is not considered perfunctory and therefore, the options are not considered granted as of January 31, 2015 and, accordingly, the Company has recognized no related compensation cost. The options have an exercise price of $0.68 per share and a term of five years. | ||||
A summary of the Company’s restricted stock activity in the three months ended January 31, 2015 is presented below: | ||||
Outstanding at beginning of period | 126,239 | |||
Granted | 481,730 | |||
Vested | -52,892 | |||
Canceled | -9,716 | |||
Outstanding at end of period | 545,361 | |||
Restricted shares granted during the period include 300,000 shares issued to a consultant and 88,002 shares issued to employees and directors that vest only upon the completion certain performance conditions. The shares issued to employees are accounted for in accordance with ASC 718 Compensation-Stock Compensation and measured on the date of grant and recorded as an expense over the expected period of performance. The shares issued to non-employees are accounted for in accordance with ASC 505-50 Equity Based Payments to Non-Employees and will be measured and recorded as an operating expense in the period in which the performance condition occurs. The company considers vesting of the shares to be probable within a two year period. The cost of the 300,000 consultant shares is recognizable in future periods upon the completion of a transaction at their then-current fair value. | ||||
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Jan. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | 13. INCOME TAXES |
Due to the Company’s history of losses and uncertainty of future taxable income, a valuation allowance sufficient to fully offset net operating losses and other deferred tax assets has been established. The valuation allowance will be maintained until sufficient positive evidence exists to support a conclusion that a valuation allowance is not necessary. The Company’s effective tax rate for the three months ended January 31, 2015 and 2014 differed from the expected U.S. federal statutory rate primarily due to the change in the valuation allowance. Full conversion of the Preferred Stock issued in the Unit Offering will likely result in limitations on the utilization of the Company’s net operating loss carryforwards under IRS section 382. | |
LOSS_PER_SHARE
LOSS PER SHARE | 3 Months Ended | |||
Jan. 31, 2015 | ||||
Earnings Per Share [Abstract] | ||||
Earnings Per Share [Text Block] | 14. LOSS PER SHARE | |||
The Company incurred a net loss for the three months ended January 31, 2015, therefore potentially dilutive securities were not included in basic and diluted shares outstanding due to their antidilutive effect. | ||||
Options, warrants, restricted shares and shares issuable upon conversion of preferred shares to acquire 2,215,968 and 717,105 shares of common stock were not included in the weighted average shares outstanding calculation of diluted loss per common share for the three months ended January 31, 2015 and 2014, respectively, as the effect of their inclusion would be anti-dilutive. | ||||
The table below provides shares issuable under potentially dilutive securities that were not included in EPS due to their dilutive effect: total potentially dilutive shares outstanding, including those that are anti-dilutive, at January 31, 2015: | ||||
Shares issuable upon conversion of preferred stock | 1,470,588 | |||
Shares issuable upon conversion of preferred stock held in escrow | 7,352,939 | |||
Shares issuable under common stock warrants | 1,477,731 | |||
Shares issuable under common stock warrants held in escrow | 7,352,939 | |||
Non-vested portion of restricted stock grants | 545,361 | |||
Shares issuable under stock options | 375,675 | |||
Shares issuable under stock options subject to option plan approval | 366,468 | |||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jan. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | 15. COMMITMENTS AND CONTINGENCIES |
Contingencies | |
On September 20, 2012, a complaint for patent infringement was filed in the United States District Court for the Eastern District of Virginia by Intelligent Verification Systems, LLC against Microsoft Corporation and the Company. The complaint alleges that Kinect and certain of the Company’s Kinect games, including Zumba Fitness Rush, infringe the plaintiff’s patents relating to biometric facial recognition and facial expression recognition technology. Intelligent Verification Systems is seeking injunctive relief and monetary damages of approximately $2,700 for the alleged infringement. 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. The Company cannot currently estimate a potential range of loss if the claim against the Company is successful. | |
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 the Company, along with Microsoft, Nintendo 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 claims he has been damaged by the Company in the amount of $1,296. The Company intends to defend itself against the claim. The Company cannot currently estimate a potential range of loss if the claim against the Company is successful. | |
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 routinely issues purchase orders and enters into short-term commitments in the ordinary course of business. As of January 31, 2015, commitments under development agreements amounted to $714. | |
WORKFORCE_REDUCTION
WORKFORCE REDUCTION | 3 Months Ended | ||||
Jan. 31, 2015 | |||||
Work force Reduction Disclosure [Abstract] | |||||
Workforce Reduction Disclosure [Text Block] | 16. WORKFORCE REDUCTION | ||||
Beginning in October 2014 and continuing during the three months ended January 31, 2015 the Company made reductions in its workforce affecting development, sales and marketing and other operating personnel. The Company recorded additional severance costs of $74 in the three months ended January 31, 2015: | |||||
Changes in the Company’s accrued liabilities for workforce reduction costs in the three months ended January 31, 2015 were as follows: | |||||
Three months | |||||
ended January 31, | |||||
Beginning balance | $ | 323 | |||
Workforce reduction costs accrued | 74 | ||||
Workforce reduction costs paid | -343 | ||||
Ending balance included in accounts payable and accrued expenses | $ | 54 | |||
RELATED_PARTIES
RELATED PARTIES | 3 Months Ended |
Jan. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | 17. RELATED PARTIES |
In the three months ended January 31, 2014, the Company had an agreement with Morris Sutton, the Company’s former Chief Executive Officer and Chairman Emeritus, under which he provided services as a consultant for a monthly retainer of $13. The agreement was terminated in October 2014. For the three months ended January 31, 2014, consulting fees incurred under the agreement amounted to $38. The Company purchases a portion of its Zumba belt accessories from a supplier, on terms equal to those of another supplier. The Company estimates that Morris Sutton and another relative of Jesse Sutton, the Company’s Chief Executive Officer, earned compensation from such supplier of approximately $16 in the three months ended January 31, 2014, based on the value of the Company’s purchases. | |
In the three months ended January 31, 2014, the Company had an agreement with a Board member under which he provided specified strategic consulting services for a monthly retainer of $10. The agreement was terminated in October 2014. For the three months ended January 31, 2014, consulting fees incurred under the agreement amounted to $30. | |
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 $2 in the three months ended January 31, 2015. | |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Jan. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | 18. SUBSEQUENT EVENTS |
In March 2015, the Company entered into separation agreements with certain of its officers and employees. The agreements provide for aggregate cash severance payments of $625 to be made during the remainder of fiscal 2015. In addition, the vesting of certain stock options and restricted stock grants was accelerated. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jan. 31, 2015 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary located in the United Kingdom. Significant intercompany accounts and transactions have been eliminated in consolidation. 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. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition. The Company recognizes revenue upon the shipment of its products when: (1) title and the risks and rewards of ownership are transferred; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is probable. Certain products are sold to customers with a street date (the earliest date these products may be resold by retailers). Revenue for sales of these products is not recognized prior to their street date. Some of the Company’s software products provide limited online features at no additional cost to the consumer. Generally, such features have been considered to be incidental to the Company’s overall product offerings and an inconsequential deliverable. Accordingly, the Company does not defer any revenue related to products containing these limited online features. However, in instances where online features or additional functionality is considered a substantive deliverable in addition to the software product, such characteristics will be taken into account when applying the Company’s revenue recognition policy. |
The Company generally sells its products on a no-return basis, although in certain instances, the Company provides price protection or other allowances on certain unsold products. Price protection, when granted and applicable, allows customers a partial credit against amounts they owe the Company with respect to merchandise unsold by them. Revenue is recognized, and accounts receivable is presented, net of estimates of these allowances. | |
The Company estimates potential future product price protection and other allowances related to current period product revenue. The Company analyzes historical experience, current sell through of retailer inventory of the Company’s products, current trends in the video game market, the overall economy, changes in customer demand and acceptance of the Company’s products and other related factors when evaluating the adequacy of price protection and other allowances. | |
Sales incentives or other consideration given by the Company to customers that are considered adjustments of the selling price of its products, such as rebates and product placement fees, are reflected as reductions of revenue. Sales incentives and other consideration that represent costs incurred by the Company for benefits received, such as the appearance of the Company’s products in a customer’s national circular ad, are reflected as selling and marketing expenses, in accordance with Accounting Standards Codification (“ASC”) 605-50, Customer Payments and Incentives. | |
In addition, some of 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). | |
When the Company operates hosted online games in which players can play for free and purchase virtual goods for use in the games, it recognizes revenues from the sale of virtual goods as service revenues over the estimated period in which players use the game. It currently estimates these periods of use to be three to four months. The Company periodically assesses its estimates for this period of use and future increases or decreases in these estimates and adjusts recognized revenues prospectively. The Company also recognizes advertising revenue as ads are served. The Company has not earned significant revenue to date related to its online games. | |
The Company records revenue for distribution agreements where it is acting as an agent as defined by ASC Topic 605, Revenue Recognition, Subtopic 45, Principal Agent Considerations, on a net basis. When the Company enters into license or distribution agreements that provide for multiple copies of games in exchange for guaranteed amounts, revenue is recognized in accordance with the terms of the agreements, generally upon delivery of a master copy, assuming our performance obligations are complete and all other recognition criteria are met, or as per-copy royalties are earned on sales of games. | |
In certain instances, customers and distributors provide the Company with cash advances on their orders. These advances are then applied against future sales to these customers. Advances are classified as advances from customers and deferred revenue in the accompanying balance sheets. | |
Inventory, Policy [Policy Text Block] | Inventory. Inventory is stated at the lower of cost as determined by the first-in, first-out method, or market. The Company estimates the net realizable value of slow-moving inventory on a title-by-title basis and charges the excess of cost over net realizable value to cost of sales. Such estimates may change and additional charges may be incurred until the related inventory items are sold or otherwise disposed of. |
Capitalized Software Development Costs and License Fees [Policy Text Block] | Capitalized Software Development Costs and License Fees. 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. | |
Use of Estimates, Policy [Policy Text Block] | Estimates. 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. |
Earnings Per Share, Policy [Policy Text Block] | Loss Per Share. 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] | Commitments and Contingencies. 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. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations. The Company develops and distributes video game software for proprietary platforms under licenses from Nintendo, Sony and Microsoft, which must be periodically renewed. The Company’s agreements with these manufacturers also grant them certain control over the supply and manufacturing of the Company’s products. In addition, for the three months ended January 31, 2015, sales of the Company’s Zumba Fitness games accounted for approximately 22% of net revenues and for the three months ended January 31, 2014, sales of the Company’s Zumba Fitness games accounted for approximately 72% of net revenues. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements. |
Revenue. In May 2014, the FASB issued an Accounting Standards Update creating a new Topic 606, Revenue from Contracts with Customers, which broadly establishes new standards for the recognition of certain revenue and updates related disclosure requirements. The update becomes effective for the Company on November 1, 2017. The Company is reviewing the potential impact of the statement on its financial position, results of operations, and cash flows. | |
PRINCIPAL_BUSINESS_ACTIVITY_AN1
PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION (Tables) | 3 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||
Schedule Of Revenue By Geographical Areas [Table Text Block] | Geographic regions. Net revenues by geographic region were as follows for the three months ended January 31: | |||||||||||||
2015 | % | 2014 | % | |||||||||||
United States | $ | 3,409 | 98 | $ | 18,937 | 86 | ||||||||
Europe | 62 | 2 | 2,997 | 14 | ||||||||||
Total net revenues | $ | 3,471 | 100 | $ | 21,934 | 100 | ||||||||
FAIR_VALUE_Tables
FAIR VALUE (Tables) | 3 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The table below segregates all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. | |||||||||||||
January 31, | Quoted prices | Significant | Significant | |||||||||||
2015 | in active | other | unobservable | |||||||||||
markets | observable | inputs | ||||||||||||
for identical | inputs | (level 3) | ||||||||||||
assets | (level 2) | |||||||||||||
(level 1) | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 9,102 | $ | 9,102 | $ | — | $ | — | ||||||
Bank deposits | 1,377 | 1,377 | — | — | ||||||||||
Total financial assets | $ | 10,479 | $ | 10,479 | $ | — | $ | — | ||||||
Warrant liability | $ | 1,382 | $ | - | $ | — | $ | 1,382 | ||||||
October 31, | Quoted prices | Significant | Significant | |||||||||||
2014 | in active | other | unobservable | |||||||||||
markets | observable | inputs | ||||||||||||
for identical | inputs | (level 3) | ||||||||||||
assets | (level 2) | |||||||||||||
(level 1) | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 6,099 | $ | 6,099 | $ | — | $ | — | ||||||
Bank deposits | 1,097 | 1,097 | — | — | ||||||||||
Total financial assets | $ | 7,196 | $ | 7,196 | $ | — | $ | — | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | A summary of the changes to the Company’s warrant liability, as measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the three months ended January 31, 2015 is presented below: | |||||||||||||
Beginning balance | $ | - | ||||||||||||
Issuance of warrants | 603 | |||||||||||||
Change in fair value of warrant liability | 779 | |||||||||||||
Ending balance | $ | 1,382 | ||||||||||||
Fair Value Assumptions Warrants [Table Text Block] | Assumptions used to determine the fair value of the warrants in the three months ended January 31, 2015 were: | |||||||||||||
Estimated fair value of stock | $ | 0.59-$1.20 | ||||||||||||
Expected warrant term | 4.8-5.0 years | |||||||||||||
Risk-free rate | 1.2% -1.7 | % | ||||||||||||
Expected volatility | 80 | % | ||||||||||||
Dividend yield | 0 | % | ||||||||||||
Probability of certain litigation costs exceeding thresholds | 67 | % | ||||||||||||
Probability of future down-round financing | 50 | % | ||||||||||||
DUE_FROM_FACTOR_AND_CUSTOMER_C1
DUE FROM FACTOR AND CUSTOMER CREDITS, NET(Tables) | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Schedule Of Due From Factor [Table Text Block] | Due from factor and customer credits, net, consists of the following: | |||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Outstanding accounts receivable sold to factor | $ | 1,175 | $ | 3,277 | ||||
Less: customer allowances | -1,668 | -1,110 | ||||||
Less: provision for price protection | -1,251 | -2,338 | ||||||
(Customer credits)/Due from Factor | $ | -1,744 | $ | -171 | ||||
ACCOUNTS_AND_OTHER_RECEIVABLES1
ACCOUNTS AND OTHER RECEIVABLES, NET (Tables) | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | Accounts and other receivables, net, consist of the following: | |||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Royalties receivable | $ | 10 | $ | - | ||||
Trade accounts receivable, net of allowances of $0 | 816 | 1,597 | ||||||
Total accounts and other receivables, net | $ | 826 | $ | 1,597 | ||||
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
Schedule of Inventory, Current [Table Text Block] | Inventories consist of the following: | |||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Finished goods | $ | 268 | $ | 1,245 | ||||
Packaging and components | 3 | 47 | ||||||
Total inventories | $ | 271 | $ | 1,292 | ||||
PREPAID_EXPENSES_AND_OTHER_CUR1
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||
Prepaid Expenses and Other Current Assets [Table Text Block] | Prepaid expenses and other current assets consist of the following: | |||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Advance payments for inventory | $ | 40 | $ | 57 | ||||
Prepaid rent | 39 | 72 | ||||||
Prepaid insurance | 181 | 98 | ||||||
Other | 44 | 22 | ||||||
Total prepaid expenses and other current assets | $ | 304 | $ | 249 | ||||
PROPERTY_AND_EQUIPMENT_NET_Tab
PROPERTY AND EQUIPMENT, NET (Tables) | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Property and Equipment, Net [Abstract] | ||||||||
Property, Plant and Equipment [Table Text Block] | Property and equipment, net, consist of the following: | |||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Computers and software | $ | 61 | $ | 1,239 | ||||
Furniture and equipment | 78 | 402 | ||||||
Leasehold improvements | - | 150 | ||||||
Total property and equipment, gross | 139 | 1,791 | ||||||
Accumulated depreciation | -73 | -1,593 | ||||||
Total property and equipment, net | $ | 66 | $ | 198 | ||||
ACCOUNTS_PAYABLE_AND_ACCRUED_E1
ACCOUNTS PAYABLE AND ACCRUED EXPENSES; DUE TO DISTRIBUTION PARTNERS (Tables) | 3 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | Accounts payable and accrued expenses consist of the following: | |||||||
January 31, | October 31, | |||||||
2015 | 2014 | |||||||
Accounts payable-trade | $ | 607 | $ | 1,403 | ||||
Royalties, fees and development | 1,498 | 1,859 | ||||||
Salaries and other compensation | 681 | 867 | ||||||
Other accruals | 216 | 298 | ||||||
Total accounts payable and accrued expenses | $ | 3,002 | $ | 4,427 | ||||
STOCK_BASED_COMPENSATION_ARRAN1
STOCK BASED COMPENSATION ARRANGEMENTS (Tables) | 3 Months Ended | |||
Jan. 31, 2015 | ||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the Company’s stock option activity in the three months ended January 31, 2015 is presented below: | |||
Outstanding at beginning of period | 429,200 | |||
Forfeited | -49,444 | |||
Expired | -4,081 | |||
Outstanding at end of period | 375,675 | |||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | A summary of the Company’s restricted stock activity in the three months ended January 31, 2015 is presented below: | |||
Outstanding at beginning of period | 126,239 | |||
Granted | 481,730 | |||
Vested | -52,892 | |||
Canceled | -9,716 | |||
Outstanding at end of period | 545,361 | |||
LOSS_PER_SHARE_Tables
LOSS PER SHARE (Tables) | 3 Months Ended | |||
Jan. 31, 2015 | ||||
Earnings Per Share [Abstract] | ||||
Share-based Compensation, Performance Shares Award Outstanding Activity [Table Text Block] | The table below provides shares issuable under potentially dilutive securities that were not included in EPS due to their dilutive effect: total potentially dilutive shares outstanding, including those that are anti-dilutive, at January 31, 2015: | |||
Shares issuable upon conversion of preferred stock | 1,470,588 | |||
Shares issuable upon conversion of preferred stock held in escrow | 7,352,939 | |||
Shares issuable under common stock warrants | 1,477,731 | |||
Shares issuable under common stock warrants held in escrow | 7,352,939 | |||
Non-vested portion of restricted stock grants | 545,361 | |||
Shares issuable under stock options | 375,675 | |||
Shares issuable under stock options subject to option plan approval | 366,468 | |||
WORKFORCE_REDUCTION_Tables
WORKFORCE REDUCTION (Tables) | 3 Months Ended | ||||
Jan. 31, 2015 | |||||
Work force Reduction Disclosure [Abstract] | |||||
Schedule Of Accrued Workforce Reduction Liabilities [Table Text Block] | Changes in the Company’s accrued liabilities for workforce reduction costs in the three months ended January 31, 2015 were as follows: | ||||
Three months | |||||
ended January 31, | |||||
Beginning balance | $ | 323 | |||
Workforce reduction costs accrued | 74 | ||||
Workforce reduction costs paid | -343 | ||||
Ending balance included in accounts payable and accrued expenses | $ | 54 | |||
PRINCIPAL_BUSINESS_ACTIVITY_AN2
PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 |
Product Information [Line Items] | ||
Total net revenues | $3,471 | $21,934 |
Sales Revenue Percentage | 100.00% | 100.00% |
United States [Member] | ||
Product Information [Line Items] | ||
Total net revenues | 3,409 | 18,937 |
Sales Revenue Percentage | 98.00% | 86.00% |
Europe [Member] | ||
Product Information [Line Items] | ||
Total net revenues | $62 | $2,997 |
Sales Revenue Percentage | 2.00% | 14.00% |
PRINCIPAL_BUSINESS_ACTIVITY_AN3
PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION (Details Textual) | 3 Months Ended |
Jan. 31, 2015 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |
Stockholders' Equity, Reverse Stock Split | In 2013, the Company received a notification letter from NASDAQ notifying it that it was not in compliance with its $1.00 minimum bid price requirement because the bid price for the Companys common stock closed below $1.00 over the prior 30 consecutive business days. To regain compliance with this requirement, we completed a reverse stock split, which was effected on June 13, 2014 at a ratio of one-for-seven with no change in par value. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 3 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | |
Accounting Policies [Line Items] | ||
Concentration Risk, Percentage | 22.00% | 72.00% |
GMS Entertainment Limited [Member] | ||
Accounting Policies [Line Items] | ||
Equity Method Investment, Ownership Percentage | 50.00% |
FAIR_VALUE_Details
FAIR VALUE (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Assets: | ||
Total financial assets | $10,479 | $7,196 |
Warrant liability | 1,382 | |
Money Market Funds [Member] | ||
Assets: | ||
Total financial assets | 9,102 | 6,099 |
Bank Deposits [Member] | ||
Assets: | ||
Total financial assets | 1,377 | 1,097 |
Fair Value, Inputs, Level 1 [Member] | ||
Assets: | ||
Total financial assets | 10,479 | 7,196 |
Warrant liability | 0 | |
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member] | ||
Assets: | ||
Total financial assets | 9,102 | 6,099 |
Fair Value, Inputs, Level 1 [Member] | Bank Deposits [Member] | ||
Assets: | ||
Total financial assets | 1,377 | 1,097 |
Fair Value, Inputs, Level 2 [Member] | ||
Assets: | ||
Total financial assets | 0 | 0 |
Warrant liability | 0 | |
Fair Value, Inputs, Level 2 [Member] | Money Market Funds [Member] | ||
Assets: | ||
Total financial assets | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Bank Deposits [Member] | ||
Assets: | ||
Total financial assets | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Assets: | ||
Total financial assets | 0 | 0 |
Warrant liability | 1,382 | |
Fair Value, Inputs, Level 3 [Member] | Money Market Funds [Member] | ||
Assets: | ||
Total financial assets | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Bank Deposits [Member] | ||
Assets: | ||
Total financial assets | $0 | $0 |
FAIR_VALUE_Details_1
FAIR VALUE (Details 1) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Jan. 31, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Beginning balance | $0 |
Issuance of warrants | 603 |
Change in fair value of warrant liability | 779 |
Ending balance | $1,382 |
FAIR_VALUE_Details_2
FAIR VALUE (Details 2) (USD $) | 3 Months Ended |
Jan. 31, 2015 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Expected volatility | 80.00% |
Dividend yield | 0.00% |
Probability of certain litigation costs at each of three pricing thresholds | 33.00% |
Probability of future down-round financing | 50.00% |
Maximum [Member] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Estimated fair value of stock | 1.2 |
Expected warrant term | 5 years |
Risk-free rate | 1.70% |
Minimum [Member] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Estimated fair value of stock | 0.59 |
Expected warrant term | 4 years 9 months 18 days |
Risk-free rate | 1.20% |
DUE_FROM_FACTOR_AND_CUSTOMER_C2
DUE FROM FACTOR AND CUSTOMER CREDITS, NET (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Outstanding accounts receivable sold to factor | $1,175 | $3,277 |
Less: customer allowances | -1,668 | -1,110 |
Less: provision for price protection | -1,251 | -2,338 |
(Customer credits)/Due from Factor | ($1,744) | ($171) |
DUE_FROM_FACTOR_AND_CUSTOMER_C3
DUE FROM FACTOR AND CUSTOMER CREDITS, NET (Details Textual) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Credit Risk Amount | $12 | $164 |
Allowances For Uncollectible Accounts | $0 | $0 |
ACCOUNTS_AND_OTHER_RECEIVABLES2
ACCOUNTS AND OTHER RECEIVABLES, NET (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts and other receivables, net | $826 | $1,597 |
Trade Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts and other receivables, net | 816 | 1,597 |
Royalties Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts and other receivables, net | $10 | $0 |
ACCOUNTS_AND_OTHER_RECEIVABLES3
ACCOUNTS AND OTHER RECEIVABLES, NET (Details Textual) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for Doubtful Accounts Receivable, Current | $0 | $0 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Inventory [Line Items] | ||
Finished goods | $268 | $1,245 |
Packaging and components | 3 | 47 |
Total inventories | $271 | $1,292 |
PREPAID_EXPENSES_AND_OTHER_CUR2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Prepaid Expenses [Line Items] | ||
Advance payments for inventory | $40 | $57 |
Prepaid Rent | 39 | 72 |
Prepaid Insurance | 181 | 98 |
Other | 44 | 22 |
Total prepaid expenses and other current assets | $304 | $249 |
PROPERTY_AND_EQUIPMENT_NET_Det
PROPERTY AND EQUIPMENT, NET (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ||
Computers and software | $61 | $1,239 |
Furniture and equipment | 78 | 402 |
Leasehold improvements | 0 | 150 |
Total property and equipment, gross | 139 | 1,791 |
Accumulated depreciation | -73 | -1,593 |
Total property and equipment, net | $66 | $198 |
INVESTMENT_IN_GMS_ENTERTAINMEN1
INVESTMENT IN GMS ENTERTAINMENT LIMITED (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 | Oct. 31, 2014 | Nov. 30, 2014 |
Schedule of Equity Method Investments [Line Items] | ||||
Loss from equity method investment | $0 | $247 | ||
Due from Related Parties, Current | 0 | 250 | ||
GMS Entertainment Limited [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Loss from equity method investment | 247 | 0 | ||
Cash And Working Capital Of Joint Venture | 250 | |||
Equity Method Investments | 0 | |||
Due from Related Parties, Current | $250 |
ACCOUNTS_PAYABLE_AND_ACCRUED_E2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES; DUE TO DISTRIBUTION PARTNERS (Details) (USD $) | Jan. 31, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accounts Payable and Accrued Expenses [Line Items] | ||
Accounts payable-trade | $607 | $1,403 |
Royalties, fees and development | 1,498 | 1,859 |
Salaries and other compensation | 681 | 867 |
Other accruals | 216 | 298 |
Total accounts payable and accrued expenses | $3,002 | $4,427 |
ACCOUNTS_PAYABLE_AND_ACCRUED_E3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES; DUE TO DISTRIBUTION PARTNERS (Details Textual) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Jan. 31, 2015 |
Accounts Payable and Accrued Expenses [Line Items] | |
Extinguishment of Debt, Gain (Loss), Net of Tax | $526 |
STOCKHOLDERS_EQUITY_Details_Te
STOCKHOLDERS' EQUITY (Details Textual) (USD $) | 3 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 | Dec. 17, 2014 | Dec. 31, 2014 | Jan. 31, 2015 | Dec. 31, 2014 | Oct. 31, 2014 |
Class of Stock [Line Items] | |||||||
Escrow Deposits Release Conditions Minimum Amount | $5,000 | $5,000 | |||||
Amount To Be Returned By Escrow Agent | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | ||
Derivative Liability | 1,382 | 1,382 | |||||
Fair Value Adjustment of Warrants | 779 | 0 | |||||
Conversion of Stock, Shares Issued | 1,470,588 | ||||||
Preferred Stock Beneficial Conversion Feature | -397 | 0 | |||||
Preferred Stock Held In Escrow Value | 7,647 | 7,647 | |||||
Deferred Offering Costs | 120 | 120 | |||||
Minimum [Member] | |||||||
Class of Stock [Line Items] | |||||||
Beneficial Ownership Percentage Limit | 4.99% | ||||||
Maximum [Member] | |||||||
Class of Stock [Line Items] | |||||||
Beneficial Ownership Percentage Limit | 9.99% | ||||||
Private Placement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Stock Units Issued During Period Value | 6,000 | ||||||
Shares Issued, Price Per Share | 0.68 | ||||||
Stock Units Issued During Period Description | one share | ||||||
Warrant Expiration Period | five year | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.34 | 0.68 | $0.34 | ||||
Deposit Assets | 1,000 | 5,000 | 5,000 | ||||
Units Held In Escrow Value | 1,000 | 5,000 | |||||
Escrow Deposits Release Conditions Minimum Amount | 1,000 | 1,000 | |||||
Proceeds from Other Deposits | 801 | ||||||
Derivative Liability | 603 | 603 | |||||
Fair Value Adjustment of Warrants | 779 | ||||||
Proceeds Allocated to Preferred Shares | 318 | ||||||
Conversion of Stock, Shares Issued | 7,352,939 | 1,470,588 | |||||
Conversion of Stock, Shares Converted | 1,413,595 | ||||||
Preferred Stock Beneficial Conversion Feature | 397 | ||||||
Percent Of Investor Investment | 1 | ||||||
Preferred Stock, Par or Stated Value Per Share | 0.68 | ||||||
Percentage of Common Stock Outstanding | 19.99% | ||||||
Private Placement [Member] | Series A [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred Stock, Dividend Rate, Percentage | 0.00% | ||||||
Private Placement [Member] | Additional Paid-in Capital [Member] | |||||||
Class of Stock [Line Items] | |||||||
Deposit Assets | $5,000 | $5,000 |
STOCK_BASED_COMPENSATION_ARRAN2
STOCK BASED COMPENSATION ARRANGEMENTS (Details) | 3 Months Ended |
Jan. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding at beginning of period year - Number Of Shares | 429,200 |
Forfeited -Number Of Shares | -49,444 |
Expired - Number Of Shares | -4,081 |
Outstanding at end of period year - Number Of Shares | 375,675 |
STOCK_BASED_COMPENSATION_ARRAN3
STOCK BASED COMPENSATION ARRANGEMENTS (Details 1) (Restricted Stock [Member]) | 3 Months Ended |
Jan. 31, 2015 | |
Restricted Stock [Member] | |
Schedule of Restricted Stock Unit Activity [Line Items] | |
Outstanding at beginning of period | 126,239 |
Granted | 481,730 |
Vested | -52,892 |
Canceled | -9,716 |
Outstanding at end of period | 545,361 |
STOCK_BASED_COMPENSATION_ARRAN4
STOCK BASED COMPENSATION ARRANGEMENTS (Details Textual) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 5 years | |
Share-based Compensation, Total | $220 | $373 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $0.68 | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 366,468 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 481,730 | |
Restricted Stock [Member] | Share-based Compensation Award, Tranche One [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 2 years | |
Restricted Stock [Member] | Share-based Compensation Award, Tranche One [Member] | Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 88,002 | |
Restricted Stock [Member] | Share-based Compensation Award, Tranche One [Member] | Consultant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 300,000 |
LOSS_PER_SHARE_Details
LOSS PER SHARE (Details) | 3 Months Ended | |
Jan. 31, 2015 | Oct. 31, 2014 | |
Conversion of Stock, Shares Issued | 1,470,588 | |
Shares issuable under stock options subject to option plan approval | 366,468 | |
Shares Issuable Under Common Stock Warrants | 1,477,731 | |
Shares issuable under stock options | 375,675 | 429,200 |
Restricted Stock Units (RSUs) [Member] | ||
Non-vested portion of restricted stock grants | 545,361 | |
Escrow [Member] | ||
Shares Issuable Under Conversion Of Preferred Stock | 7,352,939 | |
Shares Issuable Under Common Stock Warrants | 7,352,939 |
LOSS_PER_SHARE_Details_Textual
LOSS PER SHARE (Details Textual) (Preferred Stock [Member]) | 3 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | |
Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,215,968 | 717,105 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details Textual) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Jan. 31, 2015 |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Software Developers For Future Milestone Payments | $714 |
Loss Contingency, Damages Sought | Intelligent Verification Systems is seeking injunctive relief and monetary damages of approximately $2,700 for the alleged infringement |
Loss Contingency, Damages Awarded, Value | $1,296 |
WORKFORCE_REDUCTION_Details
WORKFORCE REDUCTION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 |
Work Force Reduction [Line Items] | ||
Workforce reduction costs accrued | $74 | $0 |
Accrued Liabilities [Member] | ||
Work Force Reduction [Line Items] | ||
Beginning balance | 323 | |
Workforce reduction costs accrued | 74 | |
Workforce reduction costs paid | -343 | |
Ending balance included in accounts payable and accrued expenses | $54 |
WORKFORCE_REDUCTION_Details_Te
WORKFORCE REDUCTION (Details Textual) (Accrued Liabilities [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Jan. 31, 2015 |
Accrued Liabilities [Member] | |
Work Force Reduction [Line Items] | |
Severance Costs | $74 |
RELATED_PARTIES_Details_Textua
RELATED PARTIES (Details Textual) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2015 |
Chief Executive Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Earned Compensation From Suppliers | $16 | |
Board Of Directors [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction Strategic Consulting Services Fee From Transaction With Related Party Monthly | 10 | |
Professional Fees | 30 | |
Former Chief Executive Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Monthly Consulting Fee | 13 | |
Professional Fees | 38 | |
Transfer Agent [Member] | ||
Related Party Transaction [Line Items] | ||
Professional Fees | $2 |
SUBSEQUENT_EVENTS_Details_Text
SUBSEQUENT EVENTS (Details Textual) (Subsequent Event [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Jan. 31, 2015 |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Severance Costs | $625 |