Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2015 | Feb. 05, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SOFO | |
Entity Registrant Name | SONIC FOUNDRY INC | |
Entity Central Index Key | 1,029,744 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 4,370,640 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,666 | $ 1,976 |
Accounts receivable, net of allowances of $100 and $150 | 9,257 | 12,659 |
Inventories | 2,535 | 2,385 |
Prepaid expenses and other current assets | 833 | 927 |
Total current assets | 15,291 | 17,947 |
Property and equipment: | ||
Leasehold improvements | 915 | 904 |
Computer equipment | 6,098 | 5,852 |
Furniture and fixtures | 950 | 837 |
Total property and equipment | 7,963 | 7,593 |
Less accumulated depreciation and amortization | 5,231 | 4,785 |
Property and equipment, net | 2,732 | 2,808 |
Other assets: | ||
Goodwill | 10,817 | 10,853 |
Customer relationships, net of amortization of $524 and $457 | 1,796 | 1,872 |
Software development costs, net of amortization of $474 and $429 | 59 | 104 |
Product rights, net of amortization of $195 and $164 | 477 | 508 |
Other intangibles, net of amortization of $207 and $190 | 104 | 112 |
Other long-term assets | 608 | 599 |
Total assets | 31,884 | 34,803 |
Current liabilities: | ||
Revolving line of credit | 1,716 | 1,818 |
Accounts payable | 1,072 | 2,026 |
Accrued liabilities | 1,105 | 1,666 |
Unearned revenue | 10,964 | 11,359 |
Current portion of capital lease and financing arrangements | 272 | 211 |
Current portion of notes payable, net of discounts | 1,583 | 1,299 |
Current portion of subordinated note payable | 90 | 186 |
Total current liabilities | 16,802 | 18,565 |
Long-term portion of unearned revenue | 1,191 | 1,325 |
Long-term portion of capital lease and financing arrangements | 277 | 196 |
Long-term portion of notes payable and warrant debt, net of discounts | 2,033 | 2,080 |
Long-term portion of subordinated note payable | 0 | 92 |
Derivative liability, at fair value | 63 | 109 |
Other liabilities | 289 | 311 |
Deferred tax liability | 4,353 | 4,322 |
Total liabilities | $ 25,008 | $ 27,000 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $.01 par value, authorized 10,000,000 shares; 4,376,456 shares issued and 4,363,740 shares outstanding, respectively | $ 44 | $ 44 |
Additional paid-in capital | 196,307 | 195,973 |
Accumulated deficit | (188,104) | (186,897) |
Accumulated other comprehensive loss | (1,176) | (1,122) |
Receivable for common stock issued | (26) | (26) |
Treasury stock, at cost, 12,716 shares | (169) | (169) |
Total stockholders’ equity | 6,876 | 7,803 |
Total liabilities and stockholders’ equity | 31,884 | 34,803 |
5% Preferred Stock, Series B, Voting, Cumulative, Convertible | ||
Stockholders’ equity: | ||
5% preferred stock, Series B, voting, cumulative, convertible, $.01 par value (liquidation preference at par), authorized 1,000,000 shares, none issued | $ 0 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Accounts receivable, allowances | $ 100 | $ 150 |
Customer relationships, amortization | 524 | 457 |
Software development costs, amortization | 474 | 429 |
Product rights, amortization | 195 | 164 |
Other intangibles, amortization | $ 207 | $ 190 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 4,376,456 | 4,376,456 |
Common stock, shares outstanding | 4,363,740 | 4,363,740 |
Treasury stock, shares | 12,716 | 12,716 |
5% Preferred Stock, Series B, Voting, Cumulative, Convertible [Member] | ||
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, dividend rate | 5.00% | 5.00% |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue: | ||
Product | $ 3,791 | $ 3,374 |
Services | 5,199 | 5,244 |
Other | 101 | 123 |
Total revenue | 9,091 | 8,741 |
Cost of revenue: | ||
Product | 1,865 | 1,536 |
Services | 846 | 1,135 |
Total cost of revenue | 2,711 | 2,671 |
Gross margin | 6,380 | 6,070 |
Operating expenses: | ||
Selling and marketing | 4,412 | 4,394 |
General and administrative | 1,471 | 1,370 |
Product development | 1,614 | 1,533 |
Total operating expenses | 7,497 | 7,297 |
Loss from operations | (1,117) | (1,227) |
Non-operating income (expenses): | ||
Interest expense, net | (149) | (63) |
Other income, net | 65 | 168 |
Total non-operating income (expenses) | (84) | 105 |
Loss before income taxes | (1,201) | (1,122) |
Benefit (provision) for income taxes | (6) | 90 |
Net loss | $ (1,207) | $ (1,032) |
Loss per common share: | ||
– basic (in usd per share) | $ (0.28) | $ (0.24) |
– diluted (in usd per share) | $ (0.28) | $ (0.24) |
Weighted average common shares | ||
– basic (in shares) | 4,363,740 | 4,271,885 |
– diluted (in shares) | 4,363,740 | 4,271,885 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (1,207) | $ (1,032) |
Foreign currency translation adjustment | (54) | (772) |
Comprehensive loss | $ (1,261) | $ (1,804) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | ||
Net loss | $ (1,207) | $ (1,032) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization of other intangibles | 85 | 104 |
Amortization of software development costs | 45 | 44 |
Amortization of product rights | 31 | 31 |
Amortization of debt discount | 18 | 0 |
Depreciation and amortization of property and equipment | 394 | 382 |
Provision for doubtful accounts | (50) | 0 |
Deferred taxes | 6 | 15 |
Stock-based compensation expense related to stock options | 334 | 317 |
Remeasurement gain on subordinated debt | (6) | (179) |
Remeasurement gain on derivative liability | (62) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,426 | 1,044 |
Inventories | (152) | (223) |
Prepaid expenses and other current assets | 61 | 233 |
Accounts payable and accrued liabilities | (1,492) | (967) |
Other long-term liabilities | (22) | (21) |
Unearned revenue | (510) | (979) |
Net cash provided by (used in) operating activities | 899 | (1,231) |
Investing activities | ||
Purchases of property and equipment | (77) | (109) |
Net cash used in investing activities | (77) | (109) |
Financing activities | ||
Proceeds from notes payable | 500 | 0 |
Proceeds from line of credit | 2,300 | 0 |
Payments on notes payable | (447) | (550) |
Payments on line of credit | (2,400) | 0 |
Payment of debt issuance costs | (10) | 0 |
Proceeds from issuance of common stock and warrants | 0 | 625 |
Payments on capital lease and financing arrangements | (65) | (53) |
Net cash provided by (used in) financing activities | (122) | 22 |
Changes in cash and cash equivalents due to changes in foreign currency | (10) | (215) |
Net increase (decrease) in cash and cash equivalents | 690 | (1,533) |
Cash and cash equivalents at beginning of period | 1,976 | 4,344 |
Cash and cash equivalents at end of period | 2,666 | 2,811 |
Supplemental cash flow information: | ||
Interest paid | 165 | 97 |
Income taxes paid, foreign | 10 | 9 |
Non-cash financing and investing activities: | ||
Property and equipment financed by capital lease | 207 | 488 |
Debt discount | $ 38 | $ 0 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Financial Statements In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Operating results for the three month period ended December 31, 2015 are not necessarily indicative of the results that might be expected for the year ending September 30, 2016 . Inventory Valuation Inventory consists of raw materials and supplies used in the assembly of Mediasite recorders and finished units. Inventory of completed units and spare parts are carried at the lower of cost or market, with cost determined on a first-in, first-out basis. Inventory consists of the following (in thousands): December 31, September 30, Raw materials and supplies $ 219 $ 254 Finished goods 2,316 2,131 $ 2,535 $ 2,385 Capitalized Software Development Costs Software development costs incurred in conjunction with product development are charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs are capitalized and reported at the net realizable value of the related product. Typically the period between achieving technological feasibility of the Company’s products and the general availability of the products has been short. Consequently, software development costs qualifying for capitalization are typically immaterial and are generally expensed to research and development costs, as incurred. Upon product release, the amortization of software development costs is determined annually as the greater of the amount computed using the ratio of current gross revenues for the products to their total of current and anticipated future gross revenues, or the straight-line method over the estimated economic life of the products, expected to be three years . Amortization expense of software development costs of $45 thousand is included in Cost of Revenue – Product for the three months ending December 31, 2015 and 2014 , respectively. The gross amount of capitalized external and internal development costs is $533 thousand at December 31, 2015 and September 30, 2015 . There were no software development efforts that qualified for capitalization for the three months ended December 31, 2015 . Fair Value of Financial Instruments Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis The Company’s goodwill, intangible assets and other long-lived assets are nonfinancial assets that were acquired either as part of a business combination, individually or with a group of other assets. These nonfinancial assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition. Fair value measurements of reporting units are estimated using an income approach involving discounted or undiscounted cash flow models and the public company guideline method that contain certain Level 3 inputs requiring management judgment, including projections of economic conditions and customer demand, revenue and margins, changes in competition, operating costs, working capital requirements, and new product introductions. Fair value measurements of the reporting units associated with the Company’s goodwill balances are estimated at least annually at the beginning of the fourth quarter of each fiscal year for purposes of impairment testing. Fair value measurements associated with the Company’s intangible assets and other long-lived assets are estimated when events or changes in circumstances such as market value, asset utilization, physical change, legal factors, or other matters indicate that the carrying value may not be recoverable. In determining the fair value of financial assets and liabilities, the Company currently utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market, and adjusts for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1 Inputs: Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible to the Company at the measurement date. Level 2 Inputs: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3. Financial Liabilities Measured at Fair Value on Recurring Basis The initial fair values of PFG debt and warrant debt (see Note 4) were based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3). The fair value of the bifurcated conversion feature represented by the warrant derivative liability which is measured at fair value on a recurring basis is based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described for share-based compensation which were generally observable (Level 2). Financial liabilities measured at fair value are summarized below (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Total Fair Value Derivative liability — 63 — 63 $ — $ 63 $ — $ 63 September 30, 2015 Level 1 Level 2 Level 3 Total Fair Value PFG debt, net of discount $ — $ — $ 1,347 $ 1,347 Warrant debt — — 63 63 Derivative liability — 109 — 109 $ — $ 109 $ 1,410 $ 1,519 Included below is a summary of the changes in our Level 3 fair value measurements (in thousands): PFG Debt, net of discount Warrant Debt Balance as of September 30, 2015 $ 1,347 $ 63 Activity during the current period: Disbursement of Tranche 2, net of discount 462 22 Payments to PFG (50 ) — Change in fair value 15 3 Balance as of December 31, 2015 $ 1,774 $ 88 Financial Instruments Not Measured at Fair Value The Company's other financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and debt instruments, excluding the PFG debt. The book values of cash and cash equivalents, accounts receivable, debt (excluding the PFG debt) and accounts payable are considered to be representative of their respective fair values. The carrying value of capital lease obligations and debt (excluding the PFG debt), including the current portion, approximates fair market value as the variable and fixed rate approximates the current market rate of interest available to the Company. Legal Contingencies When legal proceedings are brought or claims are made against the Company and the outcome is uncertain, we are required to determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probably and the amount of loss can be reasonably estimated, the loss must be charged to earnings. When it is considered probable that a loss has been incurred, but the amount of loss cannot be estimated, disclosure but not accrual of the probable loss is required. Disclosure of a loss contingency is also required when it is reasonably possible, but not probable, that a loss has been incurred and there is a possibility the loss could be material. No legal contingencies were recorded or were required to be disclosed for the three months ended December 31, 2015 and 2014 , respectively. Stock Based Compensation The Company uses a lattice valuation model to account for all employee stock options granted. The lattice valuation model is a more flexible analysis to value options because of its ability to incorporate inputs that change over time, such as actual exercise behavior of option holders. The Company uses historical data to estimate the option exercise and employee departure behavior in the lattice valuation model. Expected volatility is based on historical volatility of the Company’s stock. The Company considers all employees to have similar exercise behavior and therefore has not identified separate homogeneous groups for valuation. The expected term of options granted is derived from the output of the option pricing model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods the options are expected to be outstanding is based on the U.S. Treasury yields in effect at the time of grant. Forfeitures are based on actual behavior patterns. The fair value of each option grant is estimated using the assumptions in the following table: Three Months Ended 2015 2014 Expected life 4.9 years 5.0 years Risk-free interest rate 1.23% 0.98% Expected volatility 53.75% 45.46% Expected forfeiture rate 11.76% 10.72% Expected exercise factor 1.43 1.43 Expected dividend yield 0% 0% A summary of option activity as of December 31, 2015 and changes during the three months then ended is presented below: Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Period in Years Outstanding at October 1, 2015 1,449,409 $ 10.03 6.6 Granted 223,631 7.25 9.8 Exercised — — — Forfeited (23,285 ) 10.41 2.0 Outstanding at December 31, 2015 1,649,755 9.65 6.9 Exercisable at December 31, 2015 1,109,713 10.16 5.8 A summary of the status of the Company’s non-vested shares and changes during the three month period ended December 31, 2015 is presented below: 2015 Non-vested Shares Shares Weighted-Average Grant Date Fair Value Non-vested at October 1, 2015 563,632 $ 4.46 Granted 223,631 2.79 Vested (243,386 ) 3.06 Forfeited (3,835 ) 3.43 Non-vested at December 31, 2015 540,042 $ 3.26 The weighted average grant date fair value of options granted during the three months ended December 31, 2015 was $2.79 . As of December 31, 2015 , there was $959 thousand of total unrecognized compensation cost related to non-vested stock-based compensation, with total forfeiture adjusted unrecognized compensation cost of $759 thousand . The cost is expected to be recognized over a weighted-average remaining life of 2.8 years . Stock-based compensation recorded in the three month period ended December 31, 2015 of $334 thousand was allocated $205 thousand to selling and marketing expenses, $36 thousand to general and administrative expenses, and $93 thousand to product development expenses. Stock-based compensation recorded in the three month period ended December 31, 2014 of $317 thousand was allocated $196 thousand to selling and marketing expenses, $84 thousand to general and administrative expenses, and $37 thousand to product development expenses. There was no cash received from exercises under all stock option plans and warrants in either of the three month periods ended December 31, 2015 or 2014 . There were no tax benefits realized for tax deductions from option exercises in either of the three month periods ended December 31, 2015 or 2014 . The Company currently expects to satisfy share-based awards with registered shares available to be issued. The Company also has an Employee Stock Purchase Plan (Purchase Plan) under which an aggregate of 150,000 common shares may be issued. A total of 31,516 shares are available to be issued under the plan. The Company recorded stock compensation expense under this plan of $7 thousand and $6 thousand during each of the three month periods ended December 31, 2015 and 2014 , respectively. Common Stock Warrants On December 22, 2014, the company issued 74,802 warrants to two individuals in combination with the sale of a like number of shares of common stock, one of which is the Chairman of the Company’s Board of Directors. These warrants were immediately exercisable, expire five years after the date of issuance and have an exercise and weighted average price of $14.00 . The remaining contractual life of these outstanding warrants as of December 31, 2015 was 3.98 years. The fair value of the warrants was determined using the lattice model and the same inputs as those used for valuing the Company’s stock option fair value. The fair value of the warrants was $133 thousand at the date of issuance. The Company determined that the warrants are freestanding and do not fall within the scope of ASC 480 or ASC 815. The warrants were recorded in conjunction with the stock issued. Per share computation Basic loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period, less shares that may be repurchased, and excludes any dilutive effects of options and warrants. In periods where the Company reports net income, diluted net income per share is computed using common equivalent shares related to outstanding options and warrants to purchase common stock. The numerator for the calculation of basic and diluted earnings per share is net loss. The following table sets forth the computation of basic and diluted weighted average shares used in the earnings per share calculations: Three Months Ended 2015 2014 Denominator for basic loss per share - weighted average common shares 4,363,740 4,271,885 Effect of dilutive options (treasury method) — — Denominator for diluted loss per share - adjusted weighted average common shares 4,363,740 4,271,885 Options and warrants outstanding during each period, but not included in the computation of diluted loss per share because they are antidilutive 1,773,057 1,579,564 Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The guidance substantially converges final standards on revenue recognition between the FASB and the International Accounting Standards Board providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all exiting revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The FASB subsequently issued a one-year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, the guidance is effective for annual reporting periods beginning after December 15, 2017. We are currently evaluating the impact of adopting ASU 2014-09 to determine the impact, if any, it may have on our financial statements. In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which amends the current presentation of debt issuance costs in the financial statements. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, instead of as an asset. The amendments are to be applied retrospectively and are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015, but early adoption is permitted. The adoption of the new guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”). The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. The amendments in ASU 2015-05 are effective for fiscal years beginning after December 15, 2015, and interim periods within those years. Early adoption is permitted. The guidance may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330)" ("ASU 2015-11"). The amendments in ASU 2015-11 require an entity to measure inventory at the lower of cost and net realizable value. The amendments in ASU 2015-11 are effective for fiscal years beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic 805)" ("ASU 2015-16"). ASU 2015-16 simplifies the accounting for measurement-period adjustments. The amendments in ASU 2015-16 are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of the ASU with earlier application permitted for financial statements that have not been issued. The Company is currently evaluating this guidance, but it does not have an impact on previous acquisitions. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740)", ("ASU 2015-17"). ASU 2015-17 simplifies the presentation of deferred income taxes. The amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, including interims periods within those annual periods. The amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10)", ("ASU 2016-01"). ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values should be applied prospectively to equity investments that exist at the date of the adoption. The Company is currently evaluating this guidance and its impact to the financial statements. Accounting standards that have been issued but are not yet effective by the FASB or other standards-setting bodies that do not require adoption until a future date, which are not discussed above, are not expected to have a material impact on the Company’s financial statements upon adoption. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions During the three months ended December 31, 2015 , the Company incurred fees of $32 thousand , to a law firm, a partner of which is a director and stockholder of the Company. The Company incurred similar fees of $35 thousand , during the three months ended December 31, 2014 . The Company had accrued liabilities for unbilled services of $25 thousand at December 31, 2015 and September 30, 2015 , respectively, to the same law firm. As of December 31, 2015 and September 30, 2015 , the Company had a loan outstanding to an executive totaling $26 thousand . The loan is collateralized by Company stock. As of December 31, 2015 , and September 30, 2015 , the Company had outstanding amounts due for management fees and dividends payable to the sellers of and current employees of its wholly-owned subsidiary, MediaMission B.V. totaling $97 thousand and $114 thousand , respectively. |
Commitments
Commitments | 3 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments Inventory Purchase Commitments The Company enters into unconditional purchase commitments on a regular basis for the supply of Mediasite product. At December 31, 2015 , the Company has an obligation to purchase $776 thousand of Mediasite product, which is not recorded on the Company’s Condensed Consolidated Balance Sheet. Operating Leases In November 2011, the Company occupied office space related to a lease agreement entered into on June 28, 2011. The lease term is from November 2011 through December 2018 . The lease includes a tenant improvement allowance of $613 thousand that was recorded as a leasehold improvement liability and is being amortized as a credit to rent expense on a straight-line basis over the lease term. At December 31, 2015 , the unamortized balance was $248 thousand . At September 30, 2015 , the unamortized balance was $270 thousand . |
Credit Arrangements
Credit Arrangements | 3 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Credit Arrangements | Credit Arrangements Silicon Valley Bank The Company and its wholly owned subsidiary, Sonic Foundry Media Systems, Inc. (the “Companies”) entered into that certain Second Amended and Restated Loan and Security Agreement with Silicon Valley Bank, dated as of June 27, 2011, as amended by those certain First, Second, Third, Fourth, Fifth, and Sixth Amendments, dated as of May 31, 2013, January 10, 2014, March 31, 2014, January 27, 2015, and May 13, 2015 (the Second Amended and Restated Loan Agreement, as amended by the First, Second, Third, Fourth and Fifth Amendments, collectively, the “Second Amended and Restated Loan Agreement”). The Second Amended and Restated Loan Agreement provides for a revolving line of credit in the maximum principal amount of $4,000,000 . Interest accrues on the revolving line of credit at the variable per annum rate equal to the Prime Rate (as defined) plus one and one-quarter percent ( 1.25% ), which currently equates to 4.75% ). The Second Amended and Restated Loan Agreement provides for an advance rate on domestic receivables of 80% , and an advance rate on foreign receivables of 75% of the lesser of (x) Foreign Eligible Accounts (as defined) or (y) $1,000,000 . The maturity date of the revolving credit facility is January 31, 2017. Under the Second Amended and Restated Loan Agreement, a term loan was entered into on January 27, 2015 in the original principal amount of $2,500,000 which accrues interest at the variable per annum rate equal to the Prime Rate (as defined) plus two and three-quarters percent (which currently equates to an interest rate of ( 6.25% ), and is to be repaid in 36 equal monthly principal payments, beginning in February 2015. The Second Amended and Restated Loan Agreement also required Sonic Foundry to comply with certain financial covenants, including (i) a liquidity financial covenant, which required minimum Liquidity (as defined), tested with respect to the Company only (excluding the subsidiaries) of at least (x) 1.35 :1.00 for each month-end that was not the last day of a fiscal quarter, and (y) 1.50 :1.00 for each month-end that was the last day of a fiscal quarter, and (ii) a covenant that required the Debt Service Coverage Ratio (as defined) to be at or greater than 1.0 :1 for the quarter ending June 30, 2015, 1.25 :1 for the quarter ending September 30, 2015, and 1.50 :1 for the quarter ending December 31, 2015 and thereafter (with the change in the deferred revenue included in the numerator of the ratio). On October 5, 2015, the Companies entered into a Sixth Amendment to the Second Amended and Restated Loan and Security Agreement (the “Sixth Amendment”), with Silicon Valley Bank. Under the Sixth Amendment: (i) the Liquidity covenant was modified to require minimum Liquidity (as defined) with respect to the Company only, on a monthly basis, of at least 1.5 :1.0 at the last day of each month, replacing the previous Liquidity requirement of 1.35:1.0 for each month-end that is not the last day of a fiscal quarter, and 1.5:1.0 for each month-end that is the last day of a fiscal quarter, and (ii) the Minimum Debt Service covenant was replaced with a requirement to maintain, commencing September 30, 2015, a Minimum EBITDA, as defined, on a trailing six month period, of at least $1.00 plus the net change in Deferred Revenue, as defined, with such covenant measured as of the last day of each fiscal quarter. On February 8, 2016, the Companies entered into a Seventh Amendment to the Second Amended and Restated Loan and Security Agreement (the “Seventh Amendment”), with Silicon Valley Bank. The Seventh Amendment: (i) waives existing default under the Second Amended Agreement by virtue of the Company’s failure to comply with the minimum EBITDA financial covenant for the compliance period ended December 31, 2015 and (ii) updates the definition of eligible foreign accounts to include additional countries. At December 31, 2015 , a balance of $1.7 million was outstanding on the term loans with Silicon Valley Bank, with an effective interest rate of six-and-one-quarter percent ( 6.25% ), and a balance of $1.3 million was outstanding on the revolving line of credit, with an effective interest rate of four-and-three-quarters percent ( 4.75% ). At September 30, 2015 , a balance of $1.9 million was outstanding on the term loans with Silicon Valley Bank and a balance of $1.4 million was outstanding on the revolving line of credit. At December 31, 2015 , there was a remaining amount of $1.4 million available under the line of credit facility for advances. At December 31, 2015 , the Company was not in compliance with the Minimum EBITDA financial covenant in the Second Amended and Restated Loan Agreement, as amended. Silicon Valley Bank subsequently waived the covenant default as part of the Seventh Amendment. Partners for Growth IV, L.P. On May 13, 2015, Sonic Foundry, Inc., entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Partners for Growth IV, L.P. (“PFG”), (the “Loan and Security Agreement”). The Loan and Security Agreement provides for a Term Loan in the amount of $2,000,000 , which can be disbursed in two (2)Tranches as follows: Tranche 1 was drawn in the amount of $1,500,000 shortly after execution thereof; and Tranche 2 in the amount of $500,000 , was drawn on December 15, 2015. Each tranche of the Term Loan bears interest at 10.75% per annum. Tranche 1 of the Term Loan was payable interest only until November 30, 2015. Beginning on December 1, 2015, principal is due in 30 equal monthly principal installments, plus accrued interest, continuing until May 1, 2018 , when the principal balance is to be paid in full. Tranche 2 of the Term Loan is payable in 29 equal monthly principal installments, plus accrued interest, beginning January 1, 2015 and continuing until May 1, 2018. The principal of the Term Loan may be prepaid at any time, provided that Sonic Foundry pays to PFG a prepayment fee equal to 1% of the principal amount prepaid, if the prepayment occurs before May 13, 2016. Coincident with execution of the Loan and Security Agreement, the Company entered into a Warrant Agreement (“Warrant”) with PFG. Pursuant to the terms of the Warrant, the Company issued to PFG a warrant to purchase up to 50,000 shares of common stock of the Company at an exercise price of $9.66 per share, subject to certain adjustments, of which 37,500 were exercisable with the disbursement of Tranche 1 and 12,500 became exercisable upon a disbursement under Tranche 2. Pursuant to the Warrant, PFG is also entitled, under certain conditions, to require the Company to exchange the Warrant for the sum of $200,000 . Each warrant issued has an exercise term of 5 years from the date of issuance. On August 12, 2015, the Company and PFG entered into a waiver agreement to waive the existing covenant default and to change the exercise price of the aforementioned warrants from $9.66 per share to $6.80 per share. The warrants could be settled for cash in the event of acquisition of the company, any liquidation of the company, or expiration of the warrant. The Company has determined the cash payment date to be the expiration date ( May 14, 2020 ). Due to the fixed payment amount on the expiration date, the warrant structure is in substance a debt arrangement (the “Warrant Debt”) with a zero interest rate, a fixed maturity date and a feature that makes the debt convertible to common stock. The Warrant Debt had a fair value of $80 thousand at the time of issuance. The derivative had a fair value of $136 thousand . The conversion feature is an embedded derivative; thus, for accounting purposes, the conversion feature is bifurcated and accounted for separately from the PFG Debt and Warrant Debt as a derivative liability measured at fair value at each reporting period. At December 31, 2015 , a balance of $1.95 million was outstanding on the term debt with PFG, with an effective interest rate of ten-and-three-quarters percent ( 10.75% ). At September 30, 2015 , a balance of $1.5 million was outstanding with PFG. As of December 31, 2015 , the estimated fair value of the derivative liability associated with the warrants issued in connection with the Loan and Security Agreement, was $63 thousand . The change in the fair value of the derivative liability for the three months ended December 31, 2015 , was recorded as a gain of $62 thousand included in the other income (expense). The proceeds from the Loan and Security Agreement were allocated between the PFG Debt and the Warrant Debt (inclusive of its conversion feature) based on their relative fair value on the date of issuance which resulted in carrying values of $1.784 million and $216 thousand , respectively. The conversion feature of $216 thousand is treated together as a debt discount on the PFG Debt and will be accreted to interest expense under the effective interest method over the three -year term of the PFG Debt and the five -year term of the Warrant Debt. For the first quarter of fiscal 2016 , the Company recorded accretion of discount expense associated with the warrants issued with the PFG loan of $3 thousand as well as $15 thousand related to amortization of the debt discount. There was no accretion of discount expense or related amortization recorded in the first quarter of fiscal 2015 as the loan was funded in May 2015. At December 31, 2015 , the fair values of the PFG Debt and the Warrant Debt (inclusive of its conversion feature) were $1.774 million and $176 thousand , respectively. The fair values of term debt and warrant debt are based on the present value of expected future cash flows and assumptionsb about current interest rates and the creditworthiness of the Company (Level 3). At December 14, 2015, the carrying amounts of the Company’s term debt and warrant debt totaled $1.784 million and $216 thousand , respectively. At December 14, 2015, the Company’s term debt and warrant debt were recorded at fair value. At December 31, 2015 , the derivative liability was remeasured at fair value. The fair value of the bifurcated conversion feature represented by the warrant derivative liability is based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described previously for share-based compensation which were generally observable (Level 2). The Term Loan is collateralized by substantially all the Company’s assets, including intellectual property, subject to a first lien held by Silicon Valley Bank, The Term Loan requires compliance with the same financial covenants as set forth in the loan from Silicon Valley Bank. At December 31, 2015 , the Company was not in compliance with the Minimum EBITDA financial covenant in the Loan and Security Agreement. PFG subsequently waived the covenant default. Other Indebtedness At December 31, 2015 , a balance of $18 thousand was outstanding on the notes payable to Mitsui Sumitomo Bank. At September 30, 2015 , the outstanding balance on the notes was $25 thousand . At December 31, 2015 , a balance of $416 thousand was outstanding on the line of credit with Mitsui Sumitomo Bank. At September 30, 2015 , a balance of $418 thousand was outstanding on the line of credit. The notes and credit facility are both related to Mediasite K.K., and both accrue interest at an annual rate of approximately one-and-one half percent ( 1.575% ). At December 31, 2015 , a balance of $90 thousand was outstanding on the subordinated note payable related to the acquisition of MediaMission, with an annual interest rate of six-and-one half percent ( 6.5% ). At September 30, 2015 , the outstanding balance was $278 thousand . In the three months ended December 31, 2015 , a foreign currency gain of $6 thousand was realized related to re-measurement of the subordinated notes payable related to the Company’s foreign subsidiaries. In the three months ended December 31, 2014 , a foreign currency gain of $179 thousand was recorded related to the remeasurement of the subordinated notes payable. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accruals for interest and penalties on the Company’s Condensed Consolidated Balance Sheets at December 31, 2015 or September 30, 2015 , and has not recognized any interest or penalties in the Condensed Consolidated Statements of Operations for either of the three months ended December 31, 2015 or 2014 , respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill for the three months ended December 31, 2015 are as follows: Balance as of September 30, 2015 $ 10,853 Foreign currency translation adjustment (36 ) Balance as of December 31, 2015 $ 10,817 |
Basis of Presentation and Sig13
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Inventory Valuation | Inventory Valuation Inventory consists of raw materials and supplies used in the assembly of Mediasite recorders and finished units. Inventory of completed units and spare parts are carried at the lower of cost or market, with cost determined on a first-in, first-out basis. |
Capitalized Software Development Costs | Capitalized Software Development Costs Software development costs incurred in conjunction with product development are charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs are capitalized and reported at the net realizable value of the related product. Typically the period between achieving technological feasibility of the Company’s products and the general availability of the products has been short. Consequently, software development costs qualifying for capitalization are typically immaterial and are generally expensed to research and development costs, as incurred. Upon product release, the amortization of software development costs is determined annually as the greater of the amount computed using the ratio of current gross revenues for the products to their total of current and anticipated future gross revenues, or the straight-line method over the estimated economic life of the products, expected to be three years . |
Fair Value of Financial Instruments | Financial Instruments Not Measured at Fair Value The Company's other financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and debt instruments, excluding the PFG debt. The book values of cash and cash equivalents, accounts receivable, debt (excluding the PFG debt) and accounts payable are considered to be representative of their respective fair values. The carrying value of capital lease obligations and debt (excluding the PFG debt), including the current portion, approximates fair market value as the variable and fixed rate approximates the current market rate of interest available to the Company. Fair Value of Financial Instruments Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis The Company’s goodwill, intangible assets and other long-lived assets are nonfinancial assets that were acquired either as part of a business combination, individually or with a group of other assets. These nonfinancial assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition. Fair value measurements of reporting units are estimated using an income approach involving discounted or undiscounted cash flow models and the public company guideline method that contain certain Level 3 inputs requiring management judgment, including projections of economic conditions and customer demand, revenue and margins, changes in competition, operating costs, working capital requirements, and new product introductions. Fair value measurements of the reporting units associated with the Company’s goodwill balances are estimated at least annually at the beginning of the fourth quarter of each fiscal year for purposes of impairment testing. Fair value measurements associated with the Company’s intangible assets and other long-lived assets are estimated when events or changes in circumstances such as market value, asset utilization, physical change, legal factors, or other matters indicate that the carrying value may not be recoverable. In determining the fair value of financial assets and liabilities, the Company currently utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market, and adjusts for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1 Inputs: Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible to the Company at the measurement date. Level 2 Inputs: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3. Financial Liabilities Measured at Fair Value on Recurring Basis The initial fair values of PFG debt and warrant debt (see Note 4) were based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3). The fair value of the bifurcated conversion feature represented by the warrant derivative liability which is measured at fair value on a recurring basis is based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described for share-based compensation which were generally observable (Level 2). |
Commitments and Contingencies | Legal Contingencies When legal proceedings are brought or claims are made against the Company and the outcome is uncertain, we are required to determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probably and the amount of loss can be reasonably estimated, the loss must be charged to earnings. When it is considered probable that a loss has been incurred, but the amount of loss cannot be estimated, disclosure but not accrual of the probable loss is required. Disclosure of a loss contingency is also required when it is reasonably possible, but not probable, that a loss has been incurred and there is a possibility the loss could be material. |
Stock Based Compensation | Stock Based Compensation The Company uses a lattice valuation model to account for all employee stock options granted. The lattice valuation model is a more flexible analysis to value options because of its ability to incorporate inputs that change over time, such as actual exercise behavior of option holders. The Company uses historical data to estimate the option exercise and employee departure behavior in the lattice valuation model. Expected volatility is based on historical volatility of the Company’s stock. The Company considers all employees to have similar exercise behavior and therefore has not identified separate homogeneous groups for valuation. The expected term of options granted is derived from the output of the option pricing model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods the options are expected to be outstanding is based on the U.S. Treasury yields in effect at the time of grant. Forfeitures are based on actual behavior patterns. |
Common Stock Warrants | The fair value of the warrants was determined using the lattice model and the same inputs as those used for valuing the Company’s stock option fair value. The fair value of the warrants was $133 thousand at the date of issuance. The Company determined that the warrants are freestanding and do not fall within the scope of ASC 480 or ASC 815. The warrants were recorded in conjunction with the stock issued. |
Per share computation | Per share computation Basic loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period, less shares that may be repurchased, and excludes any dilutive effects of options and warrants. In periods where the Company reports net income, diluted net income per share is computed using common equivalent shares related to outstanding options and warrants to purchase common stock. The numerator for the calculation of basic and diluted earnings per share is net loss. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The guidance substantially converges final standards on revenue recognition between the FASB and the International Accounting Standards Board providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all exiting revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The FASB subsequently issued a one-year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, the guidance is effective for annual reporting periods beginning after December 15, 2017. We are currently evaluating the impact of adopting ASU 2014-09 to determine the impact, if any, it may have on our financial statements. In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which amends the current presentation of debt issuance costs in the financial statements. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, instead of as an asset. The amendments are to be applied retrospectively and are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015, but early adoption is permitted. The adoption of the new guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”). The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. The amendments in ASU 2015-05 are effective for fiscal years beginning after December 15, 2015, and interim periods within those years. Early adoption is permitted. The guidance may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330)" ("ASU 2015-11"). The amendments in ASU 2015-11 require an entity to measure inventory at the lower of cost and net realizable value. The amendments in ASU 2015-11 are effective for fiscal years beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic 805)" ("ASU 2015-16"). ASU 2015-16 simplifies the accounting for measurement-period adjustments. The amendments in ASU 2015-16 are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of the ASU with earlier application permitted for financial statements that have not been issued. The Company is currently evaluating this guidance, but it does not have an impact on previous acquisitions. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740)", ("ASU 2015-17"). ASU 2015-17 simplifies the presentation of deferred income taxes. The amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, including interims periods within those annual periods. The amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10)", ("ASU 2016-01"). ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values should be applied prospectively to equity investments that exist at the date of the adoption. The Company is currently evaluating this guidance and its impact to the financial statements. Accounting standards that have been issued but are not yet effective by the FASB or other standards-setting bodies that do not require adoption until a future date, which are not discussed above, are not expected to have a material impact on the Company’s financial statements upon adoption. |
Basis of Presentation and Sig14
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Inventory | Inventory consists of the following (in thousands): December 31, September 30, Raw materials and supplies $ 219 $ 254 Finished goods 2,316 2,131 $ 2,535 $ 2,385 |
Fair Value, Liabilities Measured on Recurring Basis | Financial liabilities measured at fair value are summarized below (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Total Fair Value Derivative liability — 63 — 63 $ — $ 63 $ — $ 63 September 30, 2015 Level 1 Level 2 Level 3 Total Fair Value PFG debt, net of discount $ — $ — $ 1,347 $ 1,347 Warrant debt — — 63 63 Derivative liability — 109 — 109 $ — $ 109 $ 1,410 $ 1,519 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Included below is a summary of the changes in our Level 3 fair value measurements (in thousands): PFG Debt, net of discount Warrant Debt Balance as of September 30, 2015 $ 1,347 $ 63 Activity during the current period: Disbursement of Tranche 2, net of discount 462 22 Payments to PFG (50 ) — Change in fair value 15 3 Balance as of December 31, 2015 $ 1,774 $ 88 |
Fair Value Assumptions for Stock Options Granted | The fair value of each option grant is estimated using the assumptions in the following table: Three Months Ended 2015 2014 Expected life 4.9 years 5.0 years Risk-free interest rate 1.23% 0.98% Expected volatility 53.75% 45.46% Expected forfeiture rate 11.76% 10.72% Expected exercise factor 1.43 1.43 Expected dividend yield 0% 0% |
Summary of Option Activity | A summary of option activity as of December 31, 2015 and changes during the three months then ended is presented below: Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Period in Years Outstanding at October 1, 2015 1,449,409 $ 10.03 6.6 Granted 223,631 7.25 9.8 Exercised — — — Forfeited (23,285 ) 10.41 2.0 Outstanding at December 31, 2015 1,649,755 9.65 6.9 Exercisable at December 31, 2015 1,109,713 10.16 5.8 |
Summary of Status of Company's Non-vested Shares | A summary of the status of the Company’s non-vested shares and changes during the three month period ended December 31, 2015 is presented below: 2015 Non-vested Shares Shares Weighted-Average Grant Date Fair Value Non-vested at October 1, 2015 563,632 $ 4.46 Granted 223,631 2.79 Vested (243,386 ) 3.06 Forfeited (3,835 ) 3.43 Non-vested at December 31, 2015 540,042 $ 3.26 |
Computation of Basic and Diluted Weighted Average Shares Used in Earnings Per Share Calculations | The following table sets forth the computation of basic and diluted weighted average shares used in the earnings per share calculations: Three Months Ended 2015 2014 Denominator for basic loss per share - weighted average common shares 4,363,740 4,271,885 Effect of dilutive options (treasury method) — — Denominator for diluted loss per share - adjusted weighted average common shares 4,363,740 4,271,885 Options and warrants outstanding during each period, but not included in the computation of diluted loss per share because they are antidilutive 1,773,057 1,579,564 |
Goodwill and Other Intangible15
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three months ended December 31, 2015 are as follows: Balance as of September 30, 2015 $ 10,853 Foreign currency translation adjustment (36 ) Balance as of December 31, 2015 $ 10,817 |
Basis of Presentation and Sig16
Basis of Presentation and Significant Accounting Policies - Inventory (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Inventory, Net [Abstract] | ||
Raw materials and supplies | $ 219 | $ 254 |
Finished goods | 2,316 | 2,131 |
Inventory, Net | $ 2,535 | $ 2,385 |
Basis of Presentation and Sig17
Basis of Presentation and Significant Accounting Policies - Summary of Financial Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 14, 2015 | Sep. 30, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative liability | $ 63 | $ 109 | |
Financial liabilities | 63 | 1,519 | |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative liability | 63 | 109 | |
Financial liabilities | 63 | 109 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial liabilities | 0 | 1,410 | |
PFG Debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
PFG debt, net of discount | $ 1,784 | 1,347 | |
PFG Debt | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
PFG debt, net of discount | 1,347 | ||
Warrant Debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant debt | 63 | ||
Derivative liability | $ 136 | ||
Warrant Debt | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant debt | $ 63 |
Basis of Presentation and Sig18
Basis of Presentation and Significant Accounting Policies - Summary of Changes in Level 3 Fair Value Measurements (Details) - Level 3 $ in Thousands | 3 Months Ended |
Dec. 31, 2015USD ($) | |
PFG Debt | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of September 30, 2015 | $ 1,347 |
Disbursement of Tranche 2, net of discount | 462 |
Payments to PFG | (50) |
Change in fair value | 15 |
Balance as of December 31, 2015 | 1,774 |
Warrant Debt | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of September 30, 2015 | 63 |
Disbursement of Tranche 2, net of discount | 22 |
Payments to PFG | 0 |
Change in fair value | 3 |
Balance as of December 31, 2015 | $ 88 |
Basis of Presentation and Sig19
Basis of Presentation and Significant Accounting Policies - Fair Value Assumptions for Stock Options Granted (Detail) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||
Expected life | 4 years 11 months | 5 years |
Risk-free interest rate | 1.23% | 0.98% |
Expected volatility | 53.75% | 45.46% |
Expected forfeiture rate | 11.76% | 10.72% |
Expected exercise factor | 1.4300 | 1.4300 |
Expected dividend yield | 0.00% | 0.00% |
Basis of Presentation and Sig20
Basis of Presentation and Significant Accounting Policies - Summary of Option Activity (Detail) - $ / shares | 3 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Options, Outstanding Beginning Balance (in shares) | 1,449,409 | |
Options, Granted (in shares) | 223,631 | |
Options, Exercised (in shares) | 0 | |
Options, Forfeited (in shares) | (23,285) | |
Options, Outstanding Ending Balance (in shares) | 1,649,755 | 1,449,409 |
Options, Exercisable Ending Balance (in shares) | 1,109,713 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Weighted Average Exercise Price, Outstanding Beginning Balance (in usd per share) | $ 10.03 | |
Weighted Average Exercise Price, Granted (in usd per share) | 7.25 | |
Weighted Average Exercise Price, Exercised (in usd per share) | 0 | |
Weighted Average Exercise Price, Forfeited (in usd per share) | 10.41 | |
Weighted Average Exercise Price, Outstanding Ending Balance (in usd per share) | 9.65 | $ 10.03 |
Weighted Average Exercise Price, Exercisable Ending Balance | $ 10.16 | |
Weighted Average Remaining Contractual Period in Years, Granted | 9 years 10 months | |
Weighted Average Remaining Contractual Period in Years, Exercised | 0 years | |
Weighted Average Remaining Contractual Period in Years, Forfeited | 2 years | |
Weighted Average Remaining Contractual Period in Years, Outstanding Ending Balance | 6 years 11 months | 6 years 7 months |
Weighted Average Remaining Contractual Period in Years, Exercisable Ending Balance | 5 years 10 months |
Basis of Presentation and Sig21
Basis of Presentation and Significant Accounting Policies - Summary of Status of Company's Non-Vested Shares (Detail) | 3 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options, Outstanding Beginning Balance (in shares) | 1,449,409 |
Shares, Granted (in shares) | 223,631 |
Options, Forfeited (in shares) | (23,285) |
Options, Outstanding Ending Balance (in shares) | 1,649,755 |
Weighted-Average Grant Date Fair Value, Granted (in usd per share) | $ / shares | $ 2.79 |
Non-Vested Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options, Outstanding Beginning Balance (in shares) | 563,632 |
Shares, Granted (in shares) | 223,631 |
Shares, Vested (in shares) | (243,386) |
Options, Forfeited (in shares) | (3,835) |
Options, Outstanding Ending Balance (in shares) | 540,042 |
Weighted-Average Grant Date Fair Value, Non-vested Beginning Balance (in usd per share) | $ / shares | $ 4.46 |
Weighted-Average Grant Date Fair Value, Granted (in usd per share) | $ / shares | 2.79 |
Weighted-Average Grant Date Fair Value, Vested (in usd per share) | $ / shares | 3.06 |
Weighted-Average Grant Date Fair Value, Forfeited (in usd per share) | $ / shares | 3.43 |
Weighted-Average Grant Date Fair Value, Non-vested Ending Balance (in usd per share) | $ / shares | $ 3.26 |
Basis of Presentation and Sig22
Basis of Presentation and Significant Accounting Policies - Additional Information (Detail) | Dec. 22, 2014USD ($)Individual$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($) | Sep. 30, 2015USD ($) |
Basis of Presentation and Significant Accounting Policies [Line Items] | ||||
Estimated economic life of the product | 3 years | |||
Total amortization expense of software development costs | $ 45,000 | $ 45,000 | ||
Capitalized internal and external development costs, gross | $ 533,000 | $ 533,000 | ||
Legal contingency settlement terms | The key terms of the agreement were 1) a grant of a non-revocable license of Astute patents to the Company; 2) a grant of a fully paid, non-refundable license of certain Sonic Foundry patents to Astute; 3) both Astute and our customer agreed to identify three meetings they currently capture that the other party will not seek or respond to any request for proposal; and 4) a payment of $1.35 million to Astute. | |||
Legal contingencies amount | $ 0 | 0 | ||
Weighted average grant date fair value of options granted (in usd per share) | $ / shares | $ 2.79 | |||
Unrecognized non vested stock based compensation | $ 959,000 | |||
Estimated forfeitures for unrecognized non vested stock based compensation | $ 759,000 | |||
Expected weighted average life of forfeited cost | 2 years 9 months 25 days | |||
Stock-based compensation | $ 334,000 | 317,000 | ||
Tax benefits realized for tax deductions from option exercises | $ 0 | 0 | ||
Expected shares issued | shares | 150,000 | |||
Shares available to issue | shares | 31,516 | |||
Stock-based compensation | $ 7,000 | 6,000 | ||
Selling and Marketing Expenses | ||||
Basis of Presentation and Significant Accounting Policies [Line Items] | ||||
Stock-based compensation | 205,000 | 196,000 | ||
General and Administrative Expenses | ||||
Basis of Presentation and Significant Accounting Policies [Line Items] | ||||
Stock-based compensation | 36,000 | 84,000 | ||
Product Development Expenses | ||||
Basis of Presentation and Significant Accounting Policies [Line Items] | ||||
Stock-based compensation | $ 93,000 | $ 37,000 | ||
Warrant | ||||
Basis of Presentation and Significant Accounting Policies [Line Items] | ||||
Warrants issued to individuals (in shares) | shares | 74,802 | |||
Number of individual issued warrants | Individual | 2 | |||
Warrants expiration period | 5 years | |||
Exercise price of warrant (in usd per share) | $ / shares | $ 14 | |||
Remaining contractual life of warrants outstanding | 3 years 11 months 23 days | |||
Fair value of warrants | $ 133,000 |
Basis of Presentation and Sig23
Basis of Presentation and Significant Accounting Policies - Computation of Basic and Diluted Weighted Average Shares Used in Earnings per Share Calculations (Detail) - shares | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||
Denominator for basic earnings per share - weighted average common shares (in shares) | 4,363,740 | 4,271,885 |
Effect of dilutive options (treasury method) (in shares) | 0 | 0 |
Denominator for diluted earnings per share - adjusted weighted average common shares (in shares) | 4,363,740 | 4,271,885 |
Options and warrants outstanding during each period, but not included in the computation of diluted earnings per share because they are antidilutive (in shares) | 1,773,057 | 1,579,564 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Related Party Transaction [Line Items] | |||
Fees incurred to law firm | $ 32 | $ 35 | |
Accrued liabilities for unbilled services | 25 | $ 25 | |
Outstanding loan amount | 26 | 26 | |
MediaMission Holding B.V. | |||
Related Party Transaction [Line Items] | |||
Amount payable, total | $ 97 | $ 114 |
Commitments - Additional Inform
Commitments - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 28, 2011 |
Commitments and Contingencies Disclosure [Abstract] | |||
Purchase which is not recorded on Company's Balance Sheet | $ 776 | ||
Leasehold improvement liability | $ 613 | ||
Unamortized balance of lease | $ 248 | $ 270 |
Credit Arrangements - Additiona
Credit Arrangements - Additional Information (Detail) | Dec. 14, 2015USD ($) | Oct. 05, 2015USD ($) | May. 13, 2015USD ($)$ / sharesshares | Jan. 27, 2015USD ($) | Dec. 31, 2015USD ($)Installment | Dec. 31, 2014USD ($) | Sep. 30, 2015USD ($) | Aug. 12, 2015$ / shares |
Line of Credit Facility [Line Items] | ||||||||
Warrant debt expiration date | May 14, 2020 | |||||||
Derivative fair value | $ 63,000 | $ 109,000 | ||||||
Fair value of the derivative liability | 63,000 | 109,000 | ||||||
Change in the fair value of the derivative liability, gain recorded | 62,000 | $ 0 | ||||||
Amortization of debt discount | 18,000 | 0 | ||||||
Subordinated note payable | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Gain (loss) on foreign currency | $ 6,000 | 179,000 | ||||||
Silicon Valley Bank | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Adjusted quick ratio as above Silicon Valley Bank's prime rate | 1.25% | |||||||
Foreign receivables accounts | $ 1,000,000 | |||||||
Adjusted quick ratio | 1.5 | 1.35 | ||||||
Notes payable outstanding | 1,900,000 | |||||||
Silicon Valley Bank | Last Day Of Fiscal Quarter | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Adjusted quick ratio | 1.50 | |||||||
Partners for Growth IV, L.P. | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Carrying value of debt | $ 2,000,000 | |||||||
Warrant issued to purchase shares of common stock | shares | 50,000 | |||||||
Exercise price of warrant (in usd per share) | $ / shares | $ 9.66 | $ 6.80 | ||||||
Exchange price of warrants | $ 200,000 | |||||||
Warrant exercise term | 5 years | |||||||
Change in the fair value of the derivative liability, gain recorded | $ 62,000 | |||||||
Secured Revolving Line of Credit | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Borrowing capacity under secured revolving line of credit | $ 4,000,000 | |||||||
Interest rate payable on subordinate note | 6.25% | |||||||
Notes payable outstanding | $ 1,300,000 | 1,400,000 | ||||||
Annual interest rate | 4.75% | |||||||
Secured Revolving Line of Credit | Silicon Valley Bank | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Credit facility for advances | $ 1,400,000 | |||||||
Secured Revolving Line of Credit | Silicon Valley Bank | For the Quarters Ending June 30, 2015 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt service ratio | 1 | |||||||
Secured Revolving Line of Credit | Silicon Valley Bank | For the Quarter Ending September 30, 2015 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt service ratio | 1.25 | |||||||
Secured Revolving Line of Credit | Silicon Valley Bank | For the Quarters Ending December 31, 2015 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt service ratio | 1.50 | |||||||
Second Amended Agreement | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Interest accrued on revolving line of credit | 4.75% | |||||||
Percentage of advance rate on domestic receivables | 80.00% | |||||||
Advance rate on foreign receivables | 75.00% | |||||||
Total term loan | $ 2,500,000 | |||||||
Amortization period of term loan | 36 months | |||||||
Tranche One | Partners for Growth IV, L.P. | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Carrying value of debt | $ 1,500,000 | |||||||
Term loan interest rate | 10.75% | |||||||
Number of monthly installments | Installment | 30 | |||||||
Debt instrument, maturity date | May 1, 2018 | |||||||
Term loan payment terms | 30 equal monthly principal installments, plus accrued interest, beginning December 1, 2015 and continuing until May 1, 2018 | |||||||
Warrant issued to purchase shares of common stock | shares | 37,500 | |||||||
Tranche One | Partners for Growth IV, L.P. | First Year | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Term loan prepayment fee percentage | 1.00% | |||||||
Tranche Two | Partners for Growth IV, L.P. | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Carrying value of debt | $ 500,000 | |||||||
Warrant issued to purchase shares of common stock | shares | 12,500 | |||||||
Term Loan | Silicon Valley Bank | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Notes payable outstanding | $ 1,700,000 | |||||||
Annual interest rate | 6.25% | |||||||
Minimum | Second Amended Agreement | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt instrument net change in deferred revenue | $ 1 | |||||||
Warrant | Partners for Growth IV, L.P. | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Fair value of the derivative liability | $ 63,000 | |||||||
PFG Debt | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Carrying value of debt | $ 1,784,000 | 1,347,000 | ||||||
Debt instrument, debt default, amount | $ 1,950,000 | 1,500,000 | ||||||
Debt interest expense term | 3 years | |||||||
Accretion of discount expense | $ 3,000 | 0 | ||||||
Amortization of debt discount | 15,000 | $ 0 | ||||||
Fair value of warrants | 1,774,000 | |||||||
Warrant Debt | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Warrant debt fair value | 63,000 | |||||||
Derivative fair value | $ 136,000 | |||||||
Warrant debt interest rate | 0.00% | |||||||
Fair value of the derivative liability | $ 80,000 | |||||||
Debt discount accreted as interest expense | $ 216,000 | |||||||
Debt interest expense term | 5 years | |||||||
Fair value of warrants | $ 176,000 | |||||||
MediaMission Holding B.V. | Subordinated note payable | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Notes payable outstanding | $ 90,000 | 278,000 | ||||||
Annual interest rate | 6.50% | |||||||
Mitsui Sumitomo Bank | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Notes payable outstanding | 418,000 | |||||||
Annual interest rate | 1.575% | |||||||
Mitsui Sumitomo Bank | Notes Payable | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Notes payable outstanding | $ 18,000 | $ 25,000 | ||||||
Mitsui Sumitomo Bank | Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Notes payable outstanding | $ 416,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||
Accruals of interest and penalties | $ 0 | $ 0 | |
Recognized interest or penalties | $ 0 | $ 0 |
Goodwill and Other Intangible28
Goodwill and Other Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill (Detail) $ in Thousands | 3 Months Ended |
Dec. 31, 2015USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 10,853 |
Foreign currency translation adjustment | (36) |
Goodwill, ending balance | $ 10,817 |