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Additionally, in connection with the Company’s acquisition of the publishing rights to the franchise of Duke Nukem PC and video games in December 2000, the Company is contingently obligated to pay $6,000 in cash upon delivery of the final version of Duke Nukem Forever for the PC. In May 2003, the Company agreed to make pay- ments of up to $6,000 in cash upon the achievement of certain sales targets for Max Payne 2 . The Company also agreed to make addition- al payments of up to $2,500 to the former owners of Cat Daddy based on a percentage of Cat Daddy’s future profits for the first three years after acquisition. See Note 4. The payables will be recorded when the conditions requiring their payment are met. 

## 14. EMPLOYEE SAVINGS PLAN 

The Company maintains a 401(k) retirement savings plan and trust (the “401(k) Plan”). The 401(k) Plan is offered to all eligible employees and participants may make voluntary contributions. The Company did not match employee contributions during the year ended October 31, 2001. The Company began matching contributions in July 2002. 

The matching contribution expense incurred by the Company during the years ended October 31, 2003 and 2002 was $384 and $95, respectively. 

## 15. INCOME TAXES 

The Company is subject to foreign income taxes in certain coun- tries where it does business. Domestic and foreign income (loss) before income taxes and cumulative effect of change in accounting principle is as follows: 

<img src='content_image/63565.jpg'>

Income tax expense (benefit) is as follows: 

<img src='content_image/63566.jpg'>

The differences between the provision for income taxes and the income tax computed using the U.S. statutory federal income tax rate to pretax income are as follows: 

<img src='content_image/63570.jpg'>

The components of the net deferred tax asset as of October 31, 2003 and 2002 consist of the following: 

<img src='content_image/63571.jpg'>

At October 31, 2003 and October 31, 2002, the Company had capital loss carryforwards totaling approximately $21,000. The capital loss carryforwards will expire in the periods fiscal 2006 through fiscal 2008. Failure to achieve sufficient levels of taxable income from capi- tal transactions will affect the ultimate realization of the capital loss carryforwards. At October 31, 2002 management had a strategy of 

