Annual report pursuant to Section 13 and 15(d)

Restricted Cash

Restricted Cash
12 Months Ended
Oct. 31, 2010
Cash and Cash Equivalents [Abstract]  
Restricted Cash



On March 16, 2009, the Company and the holder of the secured convertible debenture (“The Noteholder”) entered into a Cash Control Framework Agreement, pursuant to which it is assumed that, subject to the Company being fully compliant with the terms of this agreement and those set out in the Transaction Documents entered into between the Company and the Noteholder on February 21, 2008, no adverse actions will be taken by the Noteholder. The agreement provides, among other things, for the placement of approximately $2.15 million into a segregated cash account. Under the terms of the agreement, we may request the release of funds from the account from time to time for working capital purposes, subject to the Noteholder’s consent and agreed upon terms and conditions. Under the terms of the agreement, we must also adhere to a strict cost cutting program which involves reducing our SG&A, R&D and capital expenditure by an annualized $3.35 million.


This agreement was extended for a further period of one year, expiring on March 16, 2009. On January 18, 2010, the noteholder notified us in writing that it had waived its right to demand repayment of the loan as a result of our failure to observe certain specified loan covenants. The agreement was extended for a further period of 12 months. We believe that the terms of this agreement may provide us with sufficient liquidity to operate for fiscal 2011.


At October 31, 2010 we have received net advances from this facility of $827,266.


See Note 16 of the Consolidated Financial Statement for current information on the Cash Control Framework Agreement.