Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Oct. 31, 2015 | Dec. 04, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | ARI NETWORK SERVICES INC /WI | |
Entity Central Index Key | 879,796 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | aris | |
Entity Common Stock, Shares Outstanding | 17,173,273 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 31, 2015 | Jul. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 3,179 | $ 2,284 |
Trade receivables, less allowance for doubtful accounts of $335 and $372 at October 31, 2015 and July 31 2015, respectively | 2,147 | 2,046 |
Work in process | 136 | 165 |
Prepaid expenses and other | 736 | 820 |
Deferred income taxes | 3,305 | 3,092 |
Total current assets | 9,503 | 8,407 |
Equipment and leasehold improvements: | ||
Computer equipment and software for internal use | 2,936 | 2,800 |
Leasehold improvements | 629 | 629 |
Furniture and equipment | 3,012 | 2,981 |
Total equipment and leasehold improvements | 6,577 | 6,410 |
Less accumulated depreciation and amortization | (4,202) | (3,989) |
Net equipment and leasehold improvements | 2,375 | 2,421 |
Capitalized software product costs: | ||
Amounts capitalized for software product costs | 25,836 | 25,463 |
Less accumulated amortization | (20,833) | (20,337) |
Net capitalized software product costs | 5,003 | 5,126 |
Deferred income taxes | 1,892 | 2,398 |
Other intangible assets | 9,719 | 10,116 |
Goodwill | 21,066 | 21,168 |
Total non-current assets | 40,055 | 41,229 |
Total assets | 49,558 | 49,636 |
LIABILITIES | ||
Current portion of long-term debt | 1,693 | 1,338 |
Current portion of contingent liabilities | 639 | 754 |
Accounts payable | 785 | 708 |
Deferred revenue | 6,674 | 7,327 |
Accrued payroll and related liabilities | 2,207 | 1,752 |
Accrued sales, use and income taxes | 167 | 140 |
Other accrued liabilities | 696 | 748 |
Current portion of capital lease obligations | 121 | 174 |
Total current liabilities | 12,982 | 12,941 |
Long-term debt | 8,510 | 9,079 |
Long-term portion of contingent liabilities | 245 | 362 |
Capital lease obligations | 94 | 106 |
Other long-term liabilities | 199 | 199 |
Total non-current liabilities | 9,048 | 9,746 |
Total liabilities | 22,030 | 22,687 |
SHAREHOLDERS' EQUITY | ||
Common stock, par value $.001 per share, 25,000,000 shares authorized; 17,169,523 and 17,097,426 shares issued and outstanding at October 31, 2015 and July 31, 2015, respectively | 17 | 17 |
Additional paid-in capital | 114,892 | 114,700 |
Accumulated deficit | (87,404) | (87,793) |
Other accumulated comprehensive income | 23 | 25 |
Total shareholders' equity | 27,528 | 26,949 |
Total liabilities and shareholders' equity | $ 49,558 | $ 49,636 |
Cumulative Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, value | ||
Junior Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, value |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2015 | Jul. 31, 2015 |
Trade receivables, allowance for doubtful accounts | $ 335 | $ 372 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 17,169,523 | 17,097,426 |
Common stock, shares outstanding | 17,169,523 | 17,097,426 |
Cumulative Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Junior Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Consolidated Statements Of Operations [Abstract] | ||
Net revenue | $ 11,737 | $ 9,112 |
Cost of revenue | 2,069 | 1,749 |
Gross profit | 9,668 | 7,363 |
Operating expenses: | ||
Sales and marketing | 2,765 | 2,542 |
Customer operations and support | 2,446 | 1,690 |
Software development and technical support (net of capitalized software product costs) | 1,255 | 872 |
General and administrative | 1,785 | 1,604 |
Depreciation and amortization (exclusive of amortization of software product costs included in cost of revenue) | 609 | 372 |
Net operating expenses | 8,860 | 7,080 |
Operating income | 808 | 283 |
Other income (expense): | ||
Interest expense | (112) | (89) |
Gain on change in fair value of estimated contingent earn-out payable | (8) | |
Other, net | (1) | |
Total other income (expense) | (120) | (90) |
Income before provision for income tax | 688 | 193 |
Income tax expense | (299) | (89) |
Net income | $ 389 | $ 104 |
Weighted average common shares outstanding: | ||
Basic | 17,152 | 13,693 |
Diluted | 17,604 | 14,014 |
Net income per common share: | ||
Basic | $ 0.02 | $ 0.01 |
Diluted | $ 0.02 | $ 0.01 |
Consolidated Statements Of Comp
Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Consolidate Statements of Comprehensive Income (Loss) [Abstract] | ||
Net income | $ 389 | $ 104 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | (2) | 9 |
Total other comprehensive income (loss) | (2) | 9 |
Comprehensive loss | $ 387 | $ 113 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Operating activities: | ||
Net income | $ 389 | $ 104 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of software products | 496 | 549 |
Net non-cash interest expense | 5 | 17 |
Depreciation and other amortization | 610 | 371 |
Gain on change in fair value of earn-out payable | 8 | |
Provision for bad debt allowance | 25 | 51 |
Deferred income taxes | 293 | 69 |
Stock based compensation | 90 | 68 |
Stock based director fees | 25 | 35 |
Net change in assets and liabilities: | ||
Trade receivables | (102) | (224) |
Work in process | 29 | (22) |
Prepaid expenses and other | 86 | 185 |
Other long-term assets | (39) | |
Accounts payable | 71 | 226 |
Deferred revenue | (700) | (130) |
Accrued payroll and related liabilities | 435 | 230 |
Accrued sales, use and income taxes | 27 | |
Other accrued liabilities | (52) | 144 |
Net cash provided by operating activities | 1,735 | 1,634 |
Investing activities: | ||
Purchase of equipment, software and leasehold improvements | (167) | (21) |
Cash paid for contingent liabilities related to acquisitions | (125) | (249) |
Cash paid for net assets related to acquisitions | (4,200) | |
Software development costs capitalized | (373) | (341) |
Net cash used in investing activities | (665) | (4,811) |
Financing activities: | ||
Borrowings under line of credit, net | 1,000 | |
Payments on long-term debt | (151) | (168) |
Borrowings under long-term debt | 2,168 | |
Payments of capital lease obligations | (65) | (55) |
Proceeds from exercise of common stock options | 43 | 16 |
Net cash provided by (used in) financing activities | (173) | 2,961 |
Effect of foreign currency exchange rate changes on cash | (2) | 5 |
Net change in cash and cash equivalents | 895 | (211) |
Cash and cash equivalents at beginning of period | 2,284 | 1,808 |
Cash and cash equivalents at end of period | 3,179 | 1,597 |
Cash paid for interest | 113 | 74 |
Cash paid for income taxes | 64 | 20 |
Non-cash investing and financing activities | ||
Issuance of common stock in connection with acquisitions | 1,980 | |
Debt issued in connection with acquisition | 3,000 | |
Capital leases acquired in connection with acquisitions | 109 | |
Current assets acquired in connection with acquisitions | 32 | 634 |
Accrued liabilities assumed in connection with acquisitions | 53 | |
Issuance of common stock related to payment of contingent liabilities | 60 | 42 |
Cashless exercise of common stock warrants | 46 | |
Issuance of common stock related to payment of director compensation | 31 | |
Issuance of common stock related to payment of employee compensation | 97 | |
Contingent liabilities incurred in connection with acquisition | $ (62) | $ 761 |
Description Of The Business And
Description Of The Business And Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2015 | |
Description Of The Business And Significant Accounting Policies [Abstract] | |
Description Of The Business And Significant Accounting Policies | 1. Description of the Business and Significant Accounting Policies Description of the Business ARI Network Services, Inc. (“ARI” or “the Company”) creates software-as-a-service (“SaaS”), data-as-a-service (“DaaS”) and other solutions that help equipment manufacturers, distributors and dealers in selected vertical markets to Sell More Stuff!™ – online and in-store. We remove the complexity of selling and servicing new and used whole goods inventory and PG&A for customers in the automotive tire and wheel aftermarket (“ATW”), automotive aftermarket parts and service (“AAPS”), powersports, outdoor power equipment (“OPE”), marine, home medical equipment (“HME”), recreational vehicles (“RV”) and appliance industries. Our innovative products are powered by a proprietary library of enriched original equipment and aftermarket content from over 1,800 manufacturers. More than 23,500 equipment dealers, distributors and manufacturers worldwide leverage our web and eCatalog platforms to Sell More Stuff! ™ We were incorporated in Wisconsin in 1981. Our principal executive office and headquarters is located in Milwaukee, Wisconsin. The office address is 10850 West Park Place, Suite 1200, Milwaukee, WI 53224, and our telephone number at that location is (414) 973-4300. Our principal website address is www.arinet.com . ARI also maintains operations in Cypress, California; Floyds Knobs, Indiana; Des Moines, Iowa; Duluth, Minnesota; Wexford, Pennsylvania; Cookeville, Tennessee; Salt Lake City, Utah; and Leiden, The Netherlands. Basis of Presentation These consolidated financial statements include the consolidated financial statements of ARI and its wholly-owned subsidiary, ARI Europe B.V. and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). We eliminated all significant intercompany balances and transactions in consolidation. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected as required by Regulation S-X, Rule 10-01. Fiscal Year Our fiscal year ends on July 31. References to fiscal 2016, for example, refer to the fiscal year ended July 31, 2016, and references to fiscal 2015 refer to the fiscal year ended July 31, 2015. Revenue Recognition Revenues from subscription fees for use of our software, access to our catalog content, and software maintenance and support fees are all recognized ratably over the contractual term of the arrangement. The Company has customer contracts with multiple services or elements, which may be delivered at different times. The Company accounts for delivered elements in accordance with the selling price when arrangements include multiple product components or other elements and vendor-specific objective evidence exists for the value of all undelivered elements. Revenue on undelivered elements is recognized when the elements are delivered. ARI considers all arrangements with payment terms extending beyond 12 months not to be fixed or determinable and evaluates other arrangements with payment terms longer than normal to determine whether the arrangement is fixed or determinable. If the fee is not fixed or determinable, revenue is recognized as payments become due from the customer. Arrangements that include acceptance terms beyond the standard terms are not recognized until acceptance has occurred. If collectability is not considered probable, revenue is recognized when the fee is collected. For software license arrangements that do not require significant modification or customization of the underlying software, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenues for professional services to customize complex features and functionality in a product’s base software code or develop complex interfaces within a customer’s environment are recognized as the services are performed if they are determined to have standalone value to the customer or if all of following conditions are met i) the customer has a contractual right to take possession of the software; ii) the customer will not incur significant penalty if it exercises this right; and iii) it is feasible for the customer to either run the software on its own hardware or contract with another unrelated party to host the software. When the current estimates of total contract revenue for professional services and the total related costs indicate a loss, a provision for the entire loss on the contract is made in the period the amount is determined. Professional service revenues for set-up and integration of hosted websites, or other services considered essential to the functionality of other elements of the arrangement, are amortized over the term of the contract. Revenue for variable transaction fees, primarily for use of the shopping cart feature of our websites, is recognized as it is earned. Amounts received for shipping and handling fees are reflected in revenue. Costs incurred for shipping and handling are reported in cost of revenue. Amounts invoiced to customers prior to recognition as revenue, as discussed above, are reflected in the accompanying balance sheets as deferred revenue. No single customer accounted for 10% or more of ARI’s revenue during the three months ended October 31, 2015 or 2014. Trade Receivables, Credit Policy and Allowance for Doubtful Accounts Trade receivables are uncollateralized customer obligations due on normal trade terms, most of which require payment within thirty (30) days from the invoice date. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of trade receivables is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collecte d. Management individually reviews receivable balances that exceed ninety (90) days from the invoice date and, based on an assessment of current creditworthiness and estimates the portion of the balance that will not be collected. The allowance for potential doubtful accounts is reflected as an offset to trade receivables in the accompanying balance sheets. Capitalized and Purchased Software Product Costs Certain software development and acquisition costs are capitalized when incurred. Capitalization of these costs begins upon the establishment of technological feasibility. The establishment of technological feasibility and the on-going assessment of recoverability of software costs require considerable judgment by management with respect to certain external factors, including, but not limited to, the determination of technological feasibility, anticipated future gross revenue, estimated economic life and changes in software and hardware technologies. The annual amortization of software products is computed using the straight-line method over the estimated economic life of the product, which currently ranges from two to nine years. Amortization starts when the product is available fo r general release to customers. The Company capitalizes software enhancements on an on-going basis and all other software development and support expenditures are charged to expense in the period incurred. Deferred Loan Fees and Debt Discounts Fees associated with securing debt are capitalized and shown as contra-debt, reducing the carrying amount of long term debt on t he consolidated balance sheet. Deferred loan fees and debt discounts are amortized to interest expense over the life of the debt using the effective interest method. Deferred Income Taxes The tax effect of the temporary differences between the book and tax bases of assets and liabilities and the estimated tax benefit from tax net operating losses is reported as deferred tax assets and liabilities in the consolidated balance sheets. An assessment of the likelihood that net deferred tax assets will be realized from future taxable income is performed at each reporting date or when events or changes in circumstances indicate that there may be a change in the valuation allowance. Because the ultimate realizability of deferred tax assets is highly subject to the outcome of future events, the amount established as a valuation allowance is considered to be a significant estimate that is subject to change in the near term. To the extent a valuation allowance is established or there is a change in the allowance during a period, the change is reflected with a corresponding increase or decrease in income tax expense in the consolidated statements of operations . Legal Provisions ARI is periodically involved in legal proceedings arising from contracts, patents or other matters in the normal course of business. We reserve for any material estimated losses if the outcome is probable and reasonably estima ble, in accordance with GAAP. We had no provisions for legal proceedings during the three months ended October 31, 2015 or 2014. Recently Adopted Accounting Standards On August 1, 2015, the Company retrospectively adopted Accounting Standards Update (“ASU”) 2015-03 related to the presentation of debt issuance costs. Debt issuance costs of $29,000 , previously recorded to prepaid expenses and other, and $84,000 , previously recorded to other long-term assets as of July 31, 2015, are now presented as a direct deduction from the carrying amount of long-term debt on the balance sheet as of October 31, 2015. |
Basic And Diluted Net Income Pe
Basic And Diluted Net Income Per Common Share | 3 Months Ended |
Oct. 31, 2015 | |
Basic And Diluted Net Income Per Common Share [Abstract] | |
Basic And Diluted Net Income Per Common Share | 2. Basic and Diluted Net Income per Common Share Basic net income per common share is computed by dividing net income by the basic weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period and reflects the potential dilution that could occur if all of ARI’s outstanding stock options and warrants that are in the money were exercised (calculated using the treasury stock method). The following table is a reconciliation of basic and diluted net income per common share (in thousands, except per share data): Three months ended October 31 2015 2014 Net income $ $ Weighted-average common shares outstanding Effect of dilutive stock options and warrants Diluted weighted-average common shares outstanding Net income per share Basic $ $ Diluted $ $ Options and warrants that could potentially dilute net income per share in the future that are not included in the computation of diluted net income per share, as their impact is anti-dilutive - |
Debt
Debt | 3 Months Ended |
Oct. 31, 2015 | |
Debt [Abstract] | |
Debt | 3. Debt Silicon Valley Bank On April 26, 2013, the Company entered into a Loan and Security Agreement (the “Agreement”) with Silicon Valley Bank (“SVB”), pursuant to which SVB extended to the Company credit facilities consisting of a $3,000,000 revolving credit facility with a maturity date of April 26, 2015 and a $4,500,000 term loan with a maturity date of April 26, 2018. On September 30, 2014, in connection with the Company’s acquisition of Tire Company Solutions, LLC (“TCS”), the Company entered into the First Loan Modification Agreement (the “Modification Agreement”) with SVB, which contained substantial amendments to the terms of the Agreement. The Modification Agreement includes credit facilities consisting of a $3,000,000 revolving credit facility with a maturity date of September 30, 2016 and a $6,050,000 term loan with a maturity date of September 30, 2019. This term loan is an amendment to the existing $4,500,000 term loan with an original maturity date of April 26, 2018. The term loan and any loans made under the SVB revolving credit facility accrue interest at a per annum rate equal to the Prime rate plus the Applicable Margin for Prime Rate Loans set forth in the chart below determined based on the Total Leverage Ratio, as defined in the Modification Agreement. The Company had $0 outstanding on the revolving credit facility and the effective interest rate was 3.75% at October 31, 2015. Applicable Margin Total Leverage Ratio for Prime Rate Loans >= 2.50 to 1.0: % > 1.75 to 1.00 but <2.50 to 1.00: % <= 1.75 to 1.00: % Principal in respect of any loans made under the revolving facility is required to be paid in its entirety on or before September 30, 2016. Principal in respect of the term loan is required to be paid in quarterly installments on the first day of each fiscal quarter of the Company as follows: $151,250 commenced on November 1, 2014 through August 1, 2016; $226,875 commencing on November 1, 2016 through August 1, 2017; and $302,500 commencing on November 1 , 2017 through August 1, 2019. All remaining principal in respect of the term loan is due and payable on September 30, 2019. The Company is permitted to prepay all of, but not less than all of, the outstanding principal amount of the term loan upon notice to SVB and, in certain circumstances, the payment of a prepayment penalty of up to $61,000 . Following July 31, 2015, the Modification Agreement requires the Company to make additional payments in the amount of 25% of excess cash flow, as defined in the agreement, until the Company’s Total Leverage Ratio is less than 2.00 to 1.00 . The Modification Agreement contains covenants that restrict, among other things and subject to certain conditions, the ability of the Company to permit a change of control, incur debt, create liens on its assets, make certain investments, enter into merger or acquisition transactions and make distributions to its shareholders. Financial covenants include the maintenance of a minimum Total Leverage Ratio equal to or less than 3.00 to 1.00 and the maintenance of a Fixed Charge Coverage Ratio (as defined in the Modification Agreement) equal to or greater than 1.25 to 1.00. The Total Leverage Ratio was 1.34 and the Fixed Charge Ratio was 4.37 for the twelve months ended October 31, 2015. The Modification Agreement also contains customary events of default that, if triggered, could result in an acceleration of the Company’s obligations un der the Modification Agreement. The loans are secured by a first priority security interest in substantially all assets of the Company. TCS Promissory Notes In connection with the acquisition of TCS, on September 30, 2014, the Company issued two promissory notes (the “Notes”) in the aggregate principal amount of $3,000,000 to the former owners of TCS. In February 2015, the principal amount of the Notes was reduced by $66,575 as a result of post-closing adjustments to the valuation of the net assets acquired, pursuant to the terms of the asset purchase agreement. The Notes initially accrue interest on the outstanding unpaid principal balance at a rate per annum equal to 5.0% ; however, if any amount payable under a Note is not paid when due, such overdue amount will bear interest at the default rate of 7.5% from the date of such non-payment until such amount is paid in full. Accrued interest on the Notes will be due and payable quarterly commencing on December 29, 2014 and continuing on each 90th calendar day thereafter, until September 30, 2018, at which time all accrued interest and outstanding principal balance will be due and payable in full. The first four payments due and payable under the Notes will be interest only payments, and payments of principal and interest shall not commence until the payment due on December 29, 2015. The payments are subject to acceleration upon certain Events of Default, as defined in the Notes. DCi Promissory Note In connection with the acquisition of Direct Communications Inc. (“DCi”), on July 13, 2015, the Company issued a promissory note (the “DCi Note”) in the aggregate principal amount of $2,000,000 to the former owners of DCi. In October 2015, the principal amount of the DCi Notes was reduced by $61,038 as a result of post-closing adjustments to the estimated valuation of the net assets acquired, pursuant to the terms of the asset purchase agreement. The DCi Note initially accrues interest on the outstanding unpaid principal balance at a rate per annum equal to 4.0% . Accrued interest on the DCi Note is due and payable quarterly commencing on October 13, 2015 and continuing on each 90th calendar day thereafter, until July 13, 2019, at which time all accrued interest and outstanding principal balance will be due and payable in full. The first four payments due and payable under the DCi Note are interest only payments, and payments of principal and interest shall not commence until the payment due on October 13, 2016. The payments are subject to acceleration upon certain Events of Default, as defined in the DCI Note. The following table sets forth certain information related to the Company’s long-term debt as of October 31, 2015 and July 31, 2015 (in thousands): October 31 July 31 2015 2015 Notes payable principal $ $ Less debt issuance costs Less current maturities Notes payable - non-current $ $ Minimum principal payments due on the SVB Term Note and the TCS Notes are as follows for the fiscal years ending (in thousands): SVB Term Note TCS Notes DCi Notes Total Notes Payable 2016 $ $ $ — $ 2017 2018 2019 2020 — — $ $ $ $ |
Business Combinations
Business Combinations | 3 Months Ended |
Oct. 31, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | 4. Business Combinations DCi Acquisition On July 13, 2015, the Company acquired substantially all of the assets of DCi, a leading provider of differentiated product content and electronic catalog software serving manufacturers, distributors, jobbers and independent retailers in the AAPS. Consideration for the acquisition included: (1) a cash payment equal to $3,750,000 ; (2) 159,795 shares of the Company’s common stock; and (3) the issuance of a promissory note in principal amount of $2,000,000 to DCi . The principal amount of the Notes was reduced by $61,038 as a result of post-closing adjustments to the estimated valuation of the net assets acquired, pursuant to the terms of the asset purchase agreement. The Company expects the DCi acquisition to accelerate its growth in the AAPS and provide a platform to further expand the reach of ARI’s data-driven eCommerce websites and automotive point-of-sale software. The combined customer benefits and operational efficiencies are expected to result in a stronger organization that can create more value for our customers, shareholders and employees. The following tables show the preliminary allocation of the preliminary DCi purchase price (in thousands): Preliminary Purchase Price Cash $ Financed by note payable Issuance of common stock Purchase price $ Preliminary Purchase Allocation Trade receivables $ Prepaid expense and other Assumed liabilities Furniture and equipment Software product costs Intangible assets Goodwill Purchase price allocation $ Intangible assets include the fair value of tradenames, customer relationships, and non-competition agreements. Estimated goodwill represents the additional benefits provided to the Company by the acquisition of DCi operational synergies. The Company acquired approximately $2,900,000 of tax deductible goodwill related to the DCi acquisition. The final purchase price, as well as the purchase price allocation, is subject to the completion of the final valuation of the net assets acquired and the calculation of the working capital adjustment as set forth in the asset purchase agreement. The final valuation is expected to be completed as soon as is practicable but no later than July 13, 2016 and could have a material impact on the preliminary purchase price allocation disclosed above. TASCO Acquisition On April 27, 2015, the Company acquired substantially all of the assets of TASCO Corporation and its affiliated company Signal Extraprise Corporation (collectively “TASCO”), a leading provider of business management software designed exclusively for the automotive tire and wheel aftermarket industry. Consideration for the acquisition included: (1) a cash payment at the closing of the transaction equal to $1,750,000 , which was funded through a borrowing on the Company’s revolving credit facility; (2) 242,424 shares of the Company’s common stock; and (3) a $200,000 holdback payable on April 27, 2016. In October 2015, the holdback amount was reduced by $61,922 as a result of post-closing adjustments to the valuation of the net assets acquired, pursuant to the terms of the asset purchase agreement. The Company determined that the TASCO assets acquired did not constitute a business that is “significant” as defined in the applicable SEC regulations. The following tables show the preliminary allocation of the purchase price (in thousands): Preliminary Purchase Price Cash Issuance of common stock Contingent holdback Purchase price Preliminary Purchase Allocation Trade receivables Assumed liabilities Software product costs Intangible assets Goodwill Purchase price allocation The final purchase price, as well as the purchase price allocation, is subject to the completion of the final valuation of the net assets acquired and the calculation of the holdback payment, which is subject to set-off and a working capital adjustment as set forth in the asset purchase agreement. The final valuation is expected to be completed as soon as is practicable but no later than April 27, 2016 and could have a material impact on the preliminary purchase price allocation disclosed above. TCS Acquisition On September 30, 2014, the Company acquired substantially all of the assets of TCS, a leading provider of software, websites and digital marketing services designed exclusively for dealers, wholesalers, retreaders and manufacturers within the automotive tire and wheel industries. Consideration for the acquisition included (1) a cash payment equal to $4,200,000 ; (2) 618,744 shares of the Company's common stock; (3) the issuance of two promissory notes in aggregate principal amount of $2,933,000 (as adjusted) to the former owners of TCS; and (4) a contingent earn-out purchase price contingent upon the attainment of specific revenue goals over the first three years following the acquisition. The TCS acquisition increased the Company’s portfolio of ATW dealer websites by more than 30% . The acquisition is expected to accelerate ARI’s opportunity to drive organic growth through the cross‐selling of new products. It also provides solutions for the entire ATW supply chain, including wholesalers, retreaders and manufacturers. The TCS business offers a business management solution for ATW dealers as well as for auto repair shops. The combined customer benefits and operational efficiencies are expected to result in a stronger organization that can create more value for our customers, shareholders and employees. The acquisition was funded from cash on hand, an increase in our SVB Term Loan, funds available on our revolving credit facility seller financing and the Company’s common stock. The following tables show the allocation of the purchase price (in thousands): Purchase Price Cash $ Financed by note payable Issuance of common stock Contingent earn-out Purchase price $ Purchase Allocation Trade receivables $ Prepaid expense and other Assumed liabilities Furniture and equipment Software product costs Intangible assets Goodwill 4,836 Purchase price allocation $ Intangible assets include the fair value of tradenames, customer relationships, and non-competition agreements. Estimated goodwill represents the additional benefits provided to the Company by the acquisition of TCS operational synergies. The Company cannot determine revenue and expenses specifically related to the TCS operation since the date of acquisition, as we have begun integration of the businesses. The Company acquired approximately $5,200,000 of tax deductible goodwill related to the TCS acquisition. Pro Forma Information The following unaudited pro forma combined financial information presents the Company's results as if the Company had acquired TCS and DCi on August 1, 2014. The unaudited pro forma information has been prepared with the following considerations: i. The unaudited pro forma condensed consolidated financial information has been prepared using the acquisition method of accounting under existing GAAP. The Company is the acquirer for accounting purposes. ii. The pro forma combined financial information does not reflect any operating cost synergy savings that the combined company may achieve as a result of the acquisition, the costs necessary to achieve these operating synergy savings or additional charges necessary as a result of the acquisition. The unaudited pro forma financial information presented is for information purposes only and does not purport to represent what the Company's , TCS’s or DCi’s financial position or results of operations would have been had the acquisition in fact occurred on such date or at the beginning of the period indicated, nor does it project the Company's and TCS’s financial position or results of operation for any future date or period. Three months ended October 31 2015 2014 Revenue $ $ Net income $ $ Net income per common share: Basic $ $ Diluted $ $ Pro forma adjustments to net income include amortization costs related to the acquired intangible assets, acquisition-related professional fees, interest expense on the debt incurred to acquire the assets of TCS and DCi , and the tax effect of the historical TCS and DCi results of operations and the pro forma adjustments at an estimated tax rate of 40% as follows: Three months ended October 31 2015 2014 Amortization of intangible assets - Acquisition-related professional fees - Interest expense - Income tax benefit (expense) - The Company reduced goodwill by approximately $100,000 during the quarter ended October 31, 2015, as a result of adjustments to the preliminary purchase price allocation of the TCS, TASCO and DCi acquisitions. The Company cannot determine revenue and expenses specifically related to its acquisitions since the date of acquisition, as we begin integrating these operations into our business upon closing of the acquisitions. |
Contingent Liabilities
Contingent Liabilities | 3 Months Ended |
Oct. 31, 2015 | |
Contingent Liabilities [Abstract] | |
Contingent Liabilities | 5. Contingent Liabilities Consideration for the April 2015 TASCO acquisition includes a $138,078 (as adjusted) holdback payable on April 27, 2016, contingent on the final working capital balance of TASCO as of the transaction close date. Consideration for the September 2014 TCS acquisition includes a contingent earn-out purchase price payable in three potential payments and contingent upon the attainment of specific revenue goals. The earn-out does not have an upper range, however, the payout at 100% per the asset purchase agreement is $933,000 and the estimated fair value is $711,000 at July 31, 2015. Consideration for the 2012 Ready2Ride acquisition included a contingent hold-back purchase price of up to $250,000 and contingent earn-out payments as follows: (i) the first earn-out payment, composed of $125,000 was paid in October 2013 and 10,000 shares of common stock issued in November 2013; (ii) the second earn-out payment, composed of $125,000 and 15,000 shares of common stock, was paid in September 2014; and (iii) the third earn-out payment, composed of $125,000 and 15,000 shares of common stock, was paid in August 2015. The following table shows changes in the holdback and earn-out payable related to the Ready2Ride, TCS and TASCO acquisitions (in thousands): Three months ended October 31 2015 2014 Beginning balance $ $ Additions — Adjustments — Payments Imputed interest recognized Loss on change in fair value of earn-out - Ending balance $ $ Less current portion $ $ Ending balance, long-term $ $ The following table shows the remaining estimated payments of contingent liabilities related to the TCS and TASCO acquisitions at October 31, 2015, (in thousands): 2016 $ 2017 2018 2019 Total estimated payments Less imputed interest Present value of contingent liabilities $ |
Other Intangible Assets
Other Intangible Assets | 3 Months Ended |
Oct. 31, 2015 | |
Other Intangible Assets [Abstract] | |
Other Intangible Assets | 6. Other Intangible Assets Amortizable intangible assets include customer relationships and other intangibles including trade names and non-compete agreements. Amortizable intangible assets are composed of the following at October 31, 2015 and 2014 (in thousands): Three months ended October 31, 2014 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ $ $ Activity Ending balance $ $ $ 9.00 Other intangibles Beginning balance $ $ $ Activity Ending balance $ $ $ 4.86 Total intangibles Beginning balance $ $ $ Activity Ending balance $ $ $ 8.20 Three months ended October 31, 2015 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ $ $ Activity — Ending balance $ $ $ 11.84 Other intangibles Beginning balance $ $ $ Activity — Ending balance $ $ $ 3.09 Total intangibles Beginning balance $ $ $ Activity — Ending balance $ $ $ 11.13 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 3 Months Ended |
Oct. 31, 2015 | |
Stock-Based Compensation Plans [Abstract] | |
Stock-Based Compensation Plans | 7. Stock-based Compensation Plans The Company uses the Black-Scholes model to value stock options granted. Volatility is calculated as managements’ estimate of future volatility over the expected term of the option based on historical volatility of the Company’s stock. The expected life of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual term of the options is based on the United States Treasury yields in effect at the time of grant. Stock options granted to employees under the Company’s stock option plan typically vest 25% on the first anniversary of the grant and 25% on the one year anniversary of each of the three following years. Stock options granted to non-employee directors under the Company’s stock option plan typically vest 50% on the first anniversary of the grant and 50% on the next one year anniversary. The Company recognizes stock option expense over the vesting period for each vesting tranche. As recognizing stock-based compensation expense is based on awards ultimately expected to vest, the amount of recognized expense has been reduced for estimated forfeitures based on the Company’s historical experience. Total stock option compensation expense recognized by the Company was approximately $24,000 and $29,000 during the three month periods ended October 31, 2015 and 2014, respectively. There was approximately $112,000 and $276,000 of total unrecognized compensation costs related to non-vested options granted under the Company’s stock option plans as of October 31, 2015 and 2014, respectively. Total unrecognized compensation cost will be adjusted for any future changes in estimated and actual forfeitures. There were no capitalized stock-based compensation costs during the periods presented. The following table shows the weighted average assumptions used to estimate the fair value of options granted: Three months ended October 31 2015 2014 Expected life (years) n/a Risk-free interest rate n/a % Expected volatility n/a % Expected forfeiture rate % % Expected dividend yield n/a - Weighted-average estimated fair value of options granted during the year n/a $ Cash received from the exercise of stock options $ $ 2000 Stock Option Plan The Company’s 2000 Stock Option Plan (the “2000 Plan”) had 1,950,000 shares of common stock authorized for issuance. Each incentive stock option that was granted under the 2000 Plan is exercisable for a period of not more than ten years from the date of grant ( five years in the case of a participant who is a 10% shareholder of the Company, unless the stock options are nonqualified), or such shorter period as determined by the Compensation Committee, and shall lapse upon the expiration of said period, or earlier upon termination of the participant’s employment with the Company. The 2000 Plan expired on December 13, 2010, at which time it was terminated e xcept for outstanding options. While options previously granted under the 2000 Plan will continue to be effective through the remainder of their terms or until exercised, no new options may be granted under the 2000 Plan. Changes in option shares under the 2000 Plan during the three months ended October 31, 2015 were as follows: Number of Options Wtd. Avg. Exercise Price Wtd. Avg. Remaining Contractual Period (Years) Aggregate Intrinsic Value Outstanding at 7/31/15 $ $ Granted - n/a n/a n/a Exercised n/a n/a Forfeited - n/a n/a n/a Outstanding at 10/31/15 $ $ Exercisable at 10/31/15 $ $ The range of exercise prices for options outstanding under the 2000 Plan was $0.49 to $2.275 at October 31, 2015. 2010 Equity Incentive Plan The Board of Directors adopted the ARI Network Services, Inc. 2010 Equity Incentive Plan (as amended, the “2010 Plan”) on November 9, 2010. The plan was approved by the Company's shareholders in December 2010, and amendments to the 2010 Plan were approved by the Company’s shareholders in January 2014. The 2010 Plan is the successor to the Company’s 2000 Plan. There are 1,850,000 shares of Company common stock authorized for issuance under the 2010 Plan. Potential awards under the 2010 Plan include incentive stock options and non-statutory stock options, shares of restricted stock or restricted stock units, stock a ppreciation rights (“SARs), and shares of common stock. Up to 1,525,000 of the shares authorized for issuance under the 2010 Plan may be used for common stock, restricted stock or restricted stock unit awards. The exercise price for options and SARs under the 2010 Plan cannot be less than 100% of the fair market value of the Company’s common stock on the date of grant, and the exercise prices for options and SARs cannot be repriced without shareholder approval, except to reflect changes to the capital structure of the Company as described in the 2010 Plan. The maximum term of options and SARs under the 2010 Plan is 10 years. The 2010 Plan does not have liberal share counting provisions (such as provisions that would permit shares withheld for payment of taxes or the exercise price of stock options to be re-granted under the plan). Changes in option shares under the 2010 Plan during the three months ended October 31, 2015 were as follows: Number of Options Wtd. Avg. Exercise Price Wtd. Avg. Remaining Contractual Period (Years) Aggregate Intrinsic Value Outstanding at 7/31/15 $ $ Granted - n/a n/a n/a Exercised n/a n/a Forfeited n/a n/a Outstanding at 10/31/15 $ $ Exercisable at 10/31/15 $ $ The range of exercise prices for options outstanding under the 2010 Plan was $0.59 to $3.61 at October 31, 2015. Changes in the 2010 Plan's non-vested option shares included in the outstanding shares above during the nine months ended October 31, 2015 were as follows: Number of Options Wtd. Avg. Exercise Price Non-vested at 7/31/15 $ Granted - n/a Vested Forfeited Non-vested at 10/31/15 $ The weighted average remaining vesting period was 2.05 years at October 31, 2015. Employee Stock Purchase Plan The Company’s 2000 Employee Stock Purchase Plan, as amended, (“ESPP”) has 575,000 shares of common stock reserved for issuance, of which 263,97 4 and 224,955 of the shares have been issued as of October 31, 2015 and 2014, respectively. All employees with at least nine months of service are eligible to participate. Shares may be purchased at the end of a specified period at the lower of 85% of the market value at the beginning or end of the specified period through accumulation of payroll deductions, not to exceed 5,000 shares per employee per year. The Company expensed $20,000 and $0 related to the ESPP discount during the three months ended October 31, 2015 and 2014, respectively. Restricted Stock Up to 1,525,000 of the shares authorized for issuance under the 2010 Plan may be granted in the form of shares of common stock, restricted stock or restricted stock units. The Company grants restricted stock to its directors as an annual retainer, its officers under the LTEB and from time to time to directors, officers or employees as incentive compensation or as discretionary compensation in place of cash. The Compensation Committee adopted the Long-Term Executive Bonus Plan (“LTEB”) for eligible executive officers of the Company effec tive beginning in fiscal 2013. In March 2015, the Compensation Committee issued 550,000 shares of restricted stock under the LTEB, which will vest according to the following schedule: · 30% when the volume weighted average price of the Company’s common stock for the previous 30 trading day period (the “30-day VWAP”) equals or exceeds trades at or above $6.00 · 20% when the 30-day VWAP equals or exceeds $7.00 · 20% when the 30-day VWAP equals or exceeds $8.00 · 30% when the 30-day VWAP equals or exceeds $9.00 Under the plan described above, a target price must be reached within a four -year period starting on the date of grant for any restricted stock to vest. All unvested restricted stock will be forfeited when the four-year period expires. The initial value of the common stock granted under the LTEB was approximately $350,000 , valued using a Monte Carlo Simulation with a 46% volatility rate and a 1.34% risk free interest rate, and is expensed over the vesting period. The remaining balance of unrecognized compensation expense related to the fiscal 2015 LTEB is $282,000. The Company recognized compensation expense of $73,000 and $74,000 during the three months ended October 31, 2015 and 2014, respectively related to restricted stock expensed over the vesting period. The remaining balance of unrecognized compensation expense related to restricted stock was $462,000 at October 31, 2015. Changes in unvested restricted shares of common stock under the 2010 Plan during the three months ended October 31, 2015 and 2014 were as follows: Three months ended October 31 2015 2014 Beginning balance unvested restricted stock Granted - Vested Forfeited - Ending balance unvested restricted stock |
Income Taxes
Income Taxes | 3 Months Ended |
Oct. 31, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | 8. Income Taxes The unaudited provision for income taxes for the three months ended October 31, 2015 and 2014 is composed of the following (in thousands): Three months ended October 31 2015 2014 Current: Federal $ — $ State Change in valuation allowance — — Deferred, net Income tax expense $ $ The provision for income taxes is based on taxes payable under currently enacted tax laws and an analysis of temporary differences between the book and tax bases of the Company’s assets and liabilities, including various accruals, allowances, depreciation and amortization, and does not represent current taxes due. The tax effect of these temporary differences and the estimated benefit from tax net operating losses are reported as deferred tax assets and liabilities in the consolidated balance sheet. We have unused net operating loss carry forwards ("NOLs") for federal income tax purposes, and as a result, we generally only pay alternative minimum taxes at the federal level. The Company also has NOLs related to tax losses incurred by its Netherlands operation. Under tax laws in the Netherlands, NOLs are able to be carried forward for a period of nine years. The Company has determined that, consistent with prior periods, it is not likely that the net operating losses will be utilized by the Company. This conclusion was primarily based on the negative evidence of a history of losses and expired NOLs related to this entity. In the opinion of the management of the Company, there is not enough positive evidence to overcome this negative evidence. Therefore, a full valuation allowance is recorded, resulting in $0 net deferred tax assets related to the Netherlands operation at October 31, 2015 and 2014. As of October 31, 2015, the Company had accumulated NOLs for federal, state and international tax purposes of approximately $4,401,000, $12,144,000 and $2,081,000 , respectively. We perform an evaluation of uncertain tax positions as a component of income tax expense on an annual basis. We determined that ARI did not have any significant risk related to income tax expense and therefore no amounts were reserved for uncertain tax positions as of October 31, 2015 and 2014. We will accrue and recognize interest and penalties related to uncertain tax positions as a component of income tax expense if it becomes necessary. Fiscal years subsequent to 2011 remain open and subject to examination by state tax jurisdictions and the United States federal tax authorities. |
Description Of The Business A15
Description Of The Business And Significant Accounting Policies (Policy) | 3 Months Ended |
Oct. 31, 2015 | |
Description Of The Business And Significant Accounting Policies [Abstract] | |
Description Of the Business | Description of the Business ARI Network Services, Inc. (“ARI” or “the Company”) creates software-as-a-service (“SaaS”), data-as-a-service (“DaaS”) and other solutions that help equipment manufacturers, distributors and dealers in selected vertical markets to Sell More Stuff!™ – online and in-store. We remove the complexity of selling and servicing new and used whole goods inventory and PG&A for customers in the automotive tire and wheel aftermarket (“ATW”), automotive aftermarket parts and service (“AAPS”), powersports, outdoor power equipment (“OPE”), marine, home medical equipment (“HME”), recreational vehicles (“RV”) and appliance industries. Our innovative products are powered by a proprietary library of enriched original equipment and aftermarket content from over 1,800 manufacturers. More than 23,500 equipment dealers, distributors and manufacturers worldwide leverage our web and eCatalog platforms to Sell More Stuff! ™ We were incorporated in Wisconsin in 1981. Our principal executive office and headquarters is located in Milwaukee, Wisconsin. The office address is 10850 West Park Place, Suite 1200, Milwaukee, WI 53224, and our telephone number at that location is (414) 973-4300. Our principal website address is www.arinet.com . ARI also maintains operations in Cypress, California; Floyds Knobs, Indiana; Des Moines, Iowa; Duluth, Minnesota; Wexford, Pennsylvania; Cookeville, Tennessee; Salt Lake City, Utah; and Leiden, The Netherlands. |
Basis Of Presentation | Basis of Presentation These consolidated financial statements include the consolidated financial statements of ARI and its wholly-owned subsidiary, ARI Europe B.V. and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). We eliminated all significant intercompany balances and transactions in consolidation. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected as required by Regulation S-X, Rule 10-01. |
Fiscal Year | Fiscal Year Our fiscal year ends on July 31. References to fiscal 2016, for example, refer to the fiscal year ended July 31, 2016, and references to fiscal 2015 refer to the fiscal year ended July 31, 2015. |
Revenue Recognition | Revenue Recognition Revenues from subscription fees for use of our software, access to our catalog content, and software maintenance and support fees are all recognized ratably over the contractual term of the arrangement. The Company has customer contracts with multiple services or elements, which may be delivered at different times. The Company accounts for delivered elements in accordance with the selling price when arrangements include multiple product components or other elements and vendor-specific objective evidence exists for the value of all undelivered elements. Revenue on undelivered elements is recognized when the elements are delivered. ARI considers all arrangements with payment terms extending beyond 12 months not to be fixed or determinable and evaluates other arrangements with payment terms longer than normal to determine whether the arrangement is fixed or determinable. If the fee is not fixed or determinable, revenue is recognized as payments become due from the customer. Arrangements that include acceptance terms beyond the standard terms are not recognized until acceptance has occurred. If collectability is not considered probable, revenue is recognized when the fee is collected. For software license arrangements that do not require significant modification or customization of the underlying software, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenues for professional services to customize complex features and functionality in a product’s base software code or develop complex interfaces within a customer’s environment are recognized as the services are performed if they are determined to have standalone value to the customer or if all of following conditions are met i) the customer has a contractual right to take possession of the software; ii) the customer will not incur significant penalty if it exercises this right; and iii) it is feasible for the customer to either run the software on its own hardware or contract with another unrelated party to host the software. When the current estimates of total contract revenue for professional services and the total related costs indicate a loss, a provision for the entire loss on the contract is made in the period the amount is determined. Professional service revenues for set-up and integration of hosted websites, or other services considered essential to the functionality of other elements of the arrangement, are amortized over the term of the contract. Revenue for variable transaction fees, primarily for use of the shopping cart feature of our websites, is recognized as it is earned. Amounts received for shipping and handling fees are reflected in revenue. Costs incurred for shipping and handling are reported in cost of revenue. Amounts invoiced to customers prior to recognition as revenue, as discussed above, are reflected in the accompanying balance sheets as deferred revenue. No single customer accounted for 10% or more of ARI’s revenue during the three months ended October 31, 2015 or 2014. |
Trade Receivables, Credit Policy And Allowance For Doubtful Accounts | Trade Receivables, Credit Policy and Allowance for Doubtful Accounts Trade receivables are uncollateralized customer obligations due on normal trade terms, most of which require payment within thirty (30) days from the invoice date. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of trade receivables is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collecte d. Management individually reviews receivable balances that exceed ninety (90) days from the invoice date and, based on an assessment of current creditworthiness and estimates the portion of the balance that will not be collected. The allowance for potential doubtful accounts is reflected as an offset to trade receivables in the accompanying balance sheets. |
Capitalized And Purchased Software Product Costs | Capitalized and Purchased Software Product Costs Certain software development and acquisition costs are capitalized when incurred. Capitalization of these costs begins upon the establishment of technological feasibility. The establishment of technological feasibility and the on-going assessment of recoverability of software costs require considerable judgment by management with respect to certain external factors, including, but not limited to, the determination of technological feasibility, anticipated future gross revenue, estimated economic life and changes in software and hardware technologies. The annual amortization of software products is computed using the straight-line method over the estimated economic life of the product, which currently ranges from two to nine years. Amortization starts when the product is available fo r general release to customers. The Company capitalizes software enhancements on an on-going basis and all other software development and support expenditures are charged to expense in the period incurred. |
Deferred Loan Fees And Debt Discounts | Deferred Loan Fees and Debt Discounts Fees associated with securing debt are capitalized and shown as contra-debt, reducing the carrying amount of long term debt on t he consolidated balance sheet. Deferred loan fees and debt discounts are amortized to interest expense over the life of the debt using the effective interest method. |
Deferred Income Taxes | Deferred Income Taxes The tax effect of the temporary differences between the book and tax bases of assets and liabilities and the estimated tax benefit from tax net operating losses is reported as deferred tax assets and liabilities in the consolidated balance sheets. An assessment of the likelihood that net deferred tax assets will be realized from future taxable income is performed at each reporting date or when events or changes in circumstances indicate that there may be a change in the valuation allowance. Because the ultimate realizability of deferred tax assets is highly subject to the outcome of future events, the amount established as a valuation allowance is considered to be a significant estimate that is subject to change in the near term. To the extent a valuation allowance is established or there is a change in the allowance during a period, the change is reflected with a corresponding increase or decrease in income tax expense in the consolidated statements of operations |
Legal Provisions | Legal Provisions ARI is periodically involved in legal proceedings arising from contracts, patents or other matters in the normal course of business. We reserve for any material estimated losses if the outcome is probable and reasonably estima ble, in accordance with GAAP. We had no provisions for legal proceedings during the three months ended October 31, 2015 or 2014. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards On August 1, 2015, the Company retrospectively adopted Accounting Standards Update (“ASU”) 2015-03 related to the presentation of debt issuance costs. Debt issuance costs of $29,000 , previously recorded to prepaid expenses and other, and $84,000 , previously recorded to other long-term assets as of July 31, 2015, are now presented as a direct deduction from the carrying amount of long-term debt on the balance sheet as of October 31, 2015. |
Basic And Diluted Net Income 16
Basic And Diluted Net Income Per Common Share (Tables) | 3 Months Ended |
Oct. 31, 2015 | |
Basic And Diluted Net Income Per Common Share [Abstract] | |
Basic And Diluted Net Income Per Common Share | Three months ended October 31 2015 2014 Net income $ $ Weighted-average common shares outstanding Effect of dilutive stock options and warrants Diluted weighted-average common shares outstanding Net income per share Basic $ $ Diluted $ $ Options and warrants that could potentially dilute net income per share in the future that are not included in the computation of diluted net income per share, as their impact is anti-dilutive - |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Oct. 31, 2015 | |
Debt [Abstract] | |
Schedule Of Leverage Ratios And Applicable Margins | Applicable Margin Total Leverage Ratio for Prime Rate Loans >= 2.50 to 1.0: % > 1.75 to 1.00 but <2.50 to 1.00: % <= 1.75 to 1.00: % |
Schedule Of Long-term Debt | October 31 July 31 2015 2015 Notes payable principal $ $ Less debt issuance costs Less current maturities Notes payable - non-current $ $ |
Schedule Of Minimum Principal Payments | SVB Term Note TCS Notes DCi Notes Total Notes Payable 2016 $ $ $ — $ 2017 2018 2019 2020 — — $ $ $ $ |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Oct. 31, 2015 | |
Business Acquisition [Line Items] | |
Schedule Of Unaudited Pro Forma Financial Information | Three months ended October 31 2015 2014 Revenue $ $ Net income $ $ Net income per common share: Basic $ $ Diluted $ $ |
Schedule Of Pro Forma Adjustments | Three months ended October 31 2015 2014 Amortization of intangible assets - Acquisition-related professional fees - Interest expense - Income tax benefit (expense) - |
DCi [Member] | |
Business Acquisition [Line Items] | |
Schedule Of Purchase Price Allocation | Preliminary Purchase Price Cash $ Financed by note payable Issuance of common stock Purchase price $ Preliminary Purchase Allocation Trade receivables $ Prepaid expense and other Assumed liabilities Furniture and equipment Software product costs Intangible assets Goodwill Purchase price allocation $ |
TASCO[Member] | |
Business Acquisition [Line Items] | |
Schedule Of Purchase Price Allocation | Preliminary Purchase Price Cash Issuance of common stock Contingent holdback Purchase price Preliminary Purchase Allocation Trade receivables Assumed liabilities Software product costs Intangible assets Goodwill Purchase price allocation |
TCS [Member] | |
Business Acquisition [Line Items] | |
Schedule Of Purchase Price Allocation | Purchase Price Cash $ Financed by note payable Issuance of common stock Contingent earn-out Purchase price $ Purchase Allocation Trade receivables $ Prepaid expense and other Assumed liabilities Furniture and equipment Software product costs Intangible assets Goodwill 4,836 Purchase price allocation $ |
Contingent Liabilities (Tables)
Contingent Liabilities (Tables) | 3 Months Ended |
Oct. 31, 2015 | |
Contingent Liabilities [Abstract] | |
Schedule Of Changes In Holdback And Earn-Out Payable | Three months ended October 31 2015 2014 Beginning balance $ $ Additions — Adjustments — Payments Imputed interest recognized Loss on change in fair value of earn-out - Ending balance $ $ Less current portion $ $ Ending balance, long-term $ $ |
Schedule Of Estimated Contingent Liability Payments | 2016 $ 2017 2018 2019 Total estimated payments Less imputed interest Present value of contingent liabilities $ |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 3 Months Ended |
Oct. 31, 2015 | |
Other Intangible Assets [Abstract] | |
Schedule Of Amortizable Intangible Assets | Three months ended October 31, 2014 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ $ $ Activity Ending balance $ $ $ 9.00 Other intangibles Beginning balance $ $ $ Activity Ending balance $ $ $ 4.86 Total intangibles Beginning balance $ $ $ Activity Ending balance $ $ $ 8.20 Three months ended October 31, 2015 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ $ $ Activity — Ending balance $ $ $ 11.84 Other intangibles Beginning balance $ $ $ Activity — Ending balance $ $ $ 3.09 Total intangibles Beginning balance $ $ $ Activity — Ending balance $ $ $ 11.13 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 3 Months Ended |
Oct. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule Of Fair Value Weighted Average Assumptions Of Options Granted | Three months ended October 31 2015 2014 Expected life (years) n/a Risk-free interest rate n/a % Expected volatility n/a % Expected forfeiture rate % % Expected dividend yield n/a - Weighted-average estimated fair value of options granted during the year n/a $ Cash received from the exercise of stock options $ $ |
2000 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule Of Changes In Option Shares | Number of Options Wtd. Avg. Exercise Price Wtd. Avg. Remaining Contractual Period (Years) Aggregate Intrinsic Value Outstanding at 7/31/15 $ $ Granted - n/a n/a n/a Exercised n/a n/a Forfeited - n/a n/a n/a Outstanding at 10/31/15 $ $ Exercisable at 10/31/15 $ $ |
2010 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule Of Changes In Option Shares | Number of Options Wtd. Avg. Exercise Price Wtd. Avg. Remaining Contractual Period (Years) Aggregate Intrinsic Value Outstanding at 7/31/15 $ $ Granted - n/a n/a n/a Exercised n/a n/a Forfeited n/a n/a Outstanding at 10/31/15 $ $ Exercisable at 10/31/15 $ $ |
Schedule Of Changes In Non-Vested Option Shares | Number of Options Wtd. Avg. Exercise Price Non-vested at 7/31/15 $ Granted - n/a Vested Forfeited Non-vested at 10/31/15 $ |
Schedule Of Changes In Unvested Restricted Shares | Three months ended October 31 2015 2014 Beginning balance unvested restricted stock Granted - Vested Forfeited - Ending balance unvested restricted stock |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Oct. 31, 2015 | |
Income Taxes [Abstract] | |
Provision For Income Taxes | Three months ended October 31 2015 2014 Current: Federal $ — $ State Change in valuation allowance — — Deferred, net Income tax expense $ $ |
Description Of The Business A23
Description Of The Business And Significant Accounting Policies (Details) | Aug. 01, 2015USD ($) | Oct. 31, 2015USD ($)customeritem | Oct. 31, 2014USD ($)customer | Jul. 31, 2015USD ($) |
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Equipment dealers, distributors and manufacturers | item | 23,500 | |||
Debt Issuance Cost | $ 114,000 | $ 112,000 | ||
Deduction from the carrying amount of long-term debt | $ (10,317,000) | $ (10,529,000) | ||
Number of customer accounted for ten or more percent of revenue | customer | 0 | 0 | ||
Provision for legal proceedings | $ 0 | $ 0 | ||
Change in Accounting Method Accounted for as Change in Estimate [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Debt Issuance Cost | $ 29,000 | |||
Deduction from the carrying amount of long-term debt | $ 84,000 | |||
Maximum [Member] | Computer Products [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Useful life | 9 years | |||
Minimum [Member] | Computer Products [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Useful life | 2 years | |||
Manufacturers [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Number of manufacturers | item | 1,800 |
Basic And Diluted Net Income 24
Basic And Diluted Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Basic And Diluted Net Income Per Common Share [Abstract] | ||
Net income | $ 389 | $ 104 |
Weighted - average common shares outstanding | 17,152 | 13,693 |
Effect of dilutive stock options and warrants | 452 | 321 |
Diluted weighted - average common shares outstanding | 17,604 | 14,014 |
Basic | $ 0.02 | $ 0.01 |
Diluted | $ 0.02 | $ 0.01 |
Options and warrants that could potentially dilute net income per share in the future that are not included in the computation of diluted net income per share, as their impact is anti-dilutive | 226 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | Jul. 13, 2015USD ($) | Sep. 30, 2014USD ($)loan | Sep. 30, 2014USD ($) | Feb. 28, 2015USD ($) | Oct. 31, 2015USD ($) | Oct. 31, 2015USD ($) | Apr. 26, 2013USD ($) |
Debt Instrument [Line Items] | |||||||
Leverage ratio | 1.34 | ||||||
Fixed charge coverage ratio | 4.37% | ||||||
SVB Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Note payable | $ 4,500,000 | ||||||
Revolving credit facility, maximum borrowing capacity | $ 3,000,000 | ||||||
SVB Modification Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Note payable | $ 6,050,000 | $ 6,050,000 | |||||
Revolving credit facility, maximum borrowing capacity | $ 3,000,000 | 3,000,000 | |||||
Amount outstanding | $ 0 | $ 0 | |||||
Effective rate | 3.75% | 3.75% | |||||
Prepayment penalty | $ 61,000 | ||||||
Additional payment required as percentage of excess cash flow | 25.00% | ||||||
Leverage ratio threshold | 2.00% | ||||||
SVB Modification Agreement [Member] | November 1, 2014 through August 1, 2016 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed monthly principal installments | $ 151,250 | ||||||
SVB Modification Agreement [Member] | November 1, 2016 through August 1, 2017 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed monthly principal installments | 226,875 | ||||||
SVB Modification Agreement [Member] | November 1, 2017 through August 1, 2019 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed monthly principal installments | $ 302,500 | ||||||
Minimum [Member] | SVB Modification Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed charge coverage ratio | 1.25% | ||||||
Maximum [Member] | SVB Modification Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Leverage ratio | 3 | ||||||
TCS [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of notes issued in connection with acquisition | loan | 2 | ||||||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 2,933,000 | $ 2,933,000 | |||||
Debt instrument valuation adjustment | $ (66,575) | ||||||
Interest rate | 5.00% | 5.00% | |||||
Default interest rate | 7.50% | 7.50% | |||||
DCi [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 1,939,000 | ||||||
Debt instrument valuation adjustment | $ 61,038 | ||||||
Interest rate | 4.00% |
Debt (Schedule Of Leverage Rati
Debt (Schedule Of Leverage Ratios And Applicable Margins) (Details) | 3 Months Ended | 12 Months Ended |
Oct. 31, 2015 | Oct. 31, 2015 | |
Debt Instrument [Line Items] | ||
Leverage ratio | 1.34 | |
Range 1 [Member] | Prime Rate [Member] | ||
Debt Instrument [Line Items] | ||
Libor rate | 1.50% | 1.50% |
Range 2 [Member] | Prime Rate [Member] | ||
Debt Instrument [Line Items] | ||
Libor rate | 1.00% | 1.00% |
Range 3 [Member] | Prime Rate [Member] | ||
Debt Instrument [Line Items] | ||
Libor rate | 0.50% | 0.50% |
Leverate Ratio Range One [Member] | ||
Debt Instrument [Line Items] | ||
Leverage ratio | 2.50 | |
Leverate Ratio Range Three [Member] | ||
Debt Instrument [Line Items] | ||
Leverage ratio | 1.75 | |
Minimum [Member] | Leverate Ratio Range Two [Member] | ||
Debt Instrument [Line Items] | ||
Leverage ratio | 1.75 | |
Maximum [Member] | Leverate Ratio Range Two [Member] | ||
Debt Instrument [Line Items] | ||
Leverage ratio | 2.50 |
Debt (Schedule Of Long-Term Deb
Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Oct. 31, 2015 | Jul. 31, 2015 | |
Debt [Abstract] | ||
Notes payable principal | $ 10,317 | $ 10,529 |
Less debt issuance cost | (114) | (112) |
Less current maturities | (1,693) | (1,338) |
Notes payable - non-current | $ 8,510 | $ 9,079 |
Debt (Schedule Of Minimum Princ
Debt (Schedule Of Minimum Principal Payments) (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Jul. 31, 2015 |
Debt Instrument [Line Items] | ||
2,016 | $ 1,147 | |
2,017 | 2,440 | |
2,018 | 2,817 | |
2,019 | 2,098 | |
2,020 | 1,815 | |
Notes payable principal | 10,317 | $ 10,529 |
SVB Term Note [Member] | ||
Debt Instrument [Line Items] | ||
2,016 | 454 | |
2,017 | 832 | |
2,018 | 1,134 | |
2,019 | 1,210 | |
2,020 | 1,815 | |
Notes payable principal | 5,445 | |
TCS Note [Member] | ||
Debt Instrument [Line Items] | ||
2,016 | 693 | |
2,017 | 965 | |
2,018 | 1,014 | |
2,019 | 261 | |
Notes payable principal | 2,933 | |
DCI Notes [Member] | ||
Debt Instrument [Line Items] | ||
2,017 | 643 | |
2,018 | 669 | |
2,019 | 627 | |
Notes payable principal | $ 1,939 |
Business Combinations (Narrativ
Business Combinations (Narrative) (Details) | Jul. 13, 2015USD ($) | Jul. 13, 2015USD ($)shares | Apr. 27, 2015USD ($)shares | Apr. 27, 2015USD ($) | Sep. 30, 2014USD ($)loanshares | Sep. 30, 2014USD ($) | Oct. 31, 2015USD ($) | Feb. 28, 2015USD ($) | Oct. 31, 2015USD ($) |
DCi [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration, cash | $ 3,750,000 | $ 3,750,000 | |||||||
Consideration, shares | shares | 159,795 | ||||||||
Debt instrument valuation adjustment | 61,038 | ||||||||
Financed by note payable | 1,939,000 | ||||||||
Liabilities incurred | 1,939,000 | ||||||||
Goodwill expected to be tax deductible | $ 2,900,000 | $ 2,900,000 | |||||||
TASCO[Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration, cash | $ 1,750,000 | $ 1,750,000 | |||||||
Consideration, shares | shares | 242,424 | ||||||||
Debt instrument valuation adjustment | $ 61,922 | ||||||||
Consideration, holdback payable | $ 200,000 | $ 138,000 | |||||||
TCS [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration, cash | $ 4,200,000 | $ 4,200,000 | |||||||
Consideration, shares | shares | 618,744 | ||||||||
Debt instrument valuation adjustment | $ (66,575) | ||||||||
Financed by note payable | $ 2,933,000 | 2,933,000 | |||||||
Number of notes issued in connection with acquisition | loan | 2 | ||||||||
Liabilities incurred | $ 2,933,000 | 2,933,000 | |||||||
Earn-out period | 3 years | ||||||||
Percentage increase in equipment dealer websites portfolio | 30.00% | ||||||||
Goodwill expected to be tax deductible | $ 5,200,000 | 5,200,000 | |||||||
Contingent earn-out | $ 711,000 | ||||||||
Estimated tax rate | 40.00% | ||||||||
TCS, TASCO, DCi [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Goodwill reduction | $ (100,000) |
Business Combinations (Schedule
Business Combinations (Schedule Of Purchase Price Allocation) (Details) - USD ($) | Jul. 13, 2015 | Jul. 13, 2015 | Apr. 27, 2015 | Apr. 27, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Oct. 31, 2015 | Jul. 31, 2015 |
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 21,066,000 | $ 21,168,000 | ||||||
DCi [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash | $ 3,750,000 | $ 3,750,000 | ||||||
Financed by note payable | 1,939,000 | |||||||
Issuance of common stock | 500,000 | |||||||
Purchase price | 6,189,000 | |||||||
Trade receivables | 425,000 | 425,000 | ||||||
Prepaid expense and other | 30,000 | 30,000 | ||||||
Assumed liabilities | (255,000) | (255,000) | ||||||
Furniture and equipment | 512,000 | 512,000 | ||||||
Software product costs | 607,000 | 607,000 | ||||||
Intangible assets | 2,126,000 | 2,126,000 | ||||||
Goodwill | 2,744,000 | 2,744,000 | ||||||
Purchase price allocation | $ 6,189,000 | $ 6,189,000 | ||||||
TASCO[Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash | $ 1,750,000 | $ 1,750,000 | ||||||
Issuance of common stock | 800,000 | |||||||
Contingent holdback | 200,000 | 138,000 | ||||||
Purchase price | 2,688,000 | |||||||
Trade receivables | 120,000 | 120,000 | ||||||
Assumed liabilities | (227,000) | (227,000) | ||||||
Software product costs | 291,000 | 291,000 | ||||||
Intangible assets | 1,387,000 | 1,387,000 | ||||||
Goodwill | 1,117,000 | 1,117,000 | ||||||
Purchase price allocation | $ 2,688,000 | $ 2,688,000 | ||||||
TCS [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash | $ 4,200,000 | $ 4,200,000 | ||||||
Financed by note payable | 2,933,000 | 2,933,000 | ||||||
Issuance of common stock | 1,980,000 | |||||||
Contingent earn-out | 711,000 | |||||||
Purchase price | 9,824,000 | |||||||
Trade receivables | 606,000 | 606,000 | ||||||
Prepaid expense and other | 33,000 | 33,000 | ||||||
Assumed liabilities | (668,000) | (668,000) | ||||||
Furniture and equipment | 117,000 | 117,000 | ||||||
Software product costs | 820,000 | 820,000 | ||||||
Intangible assets | 4,080,000 | 4,080,000 | ||||||
Goodwill | 4,836,000 | 4,836,000 | ||||||
Purchase price allocation | $ 9,824,000 | $ 9,824,000 |
Business Combinations (Schedu31
Business Combinations (Schedule Of Unaudited Pro Forma Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Business Combinations [Abstract] | ||
Revenue | $ 11,737 | $ 10,972 |
Net income | $ 389 | $ 203 |
Basic | $ 0.02 | $ 0.01 |
Diluted | $ 0.02 | $ 0.01 |
Business Combinations (Schedu32
Business Combinations (Schedule Of Pro Forma Adjustments) (Details) $ in Thousands | 3 Months Ended |
Oct. 31, 2014USD ($) | |
Business Combinations [Abstract] | |
Amortization of intangible assets | $ 126 |
Acquisition-related professional fees | (210) |
Interest expense | 65 |
Income tax benefit (expense ) | $ 66 |
Contingent Liabilities (Narrati
Contingent Liabilities (Narrative) (Details) - USD ($) | Apr. 27, 2015 | Sep. 30, 2014 | Aug. 31, 2015 | Sep. 30, 2014 | Nov. 30, 2013 | Oct. 31, 2015 | Jul. 31, 2015 | Oct. 31, 2013 | Jul. 31, 2012 |
Business Acquisition, Contingent Consideration [Line Items] | |||||||||
Contingent liabilities | $ 884,000 | ||||||||
TASCO[Member] | |||||||||
Business Acquisition, Contingent Consideration [Line Items] | |||||||||
Adjusted holdback payable | $ 138,078 | ||||||||
Shares of common stock issued concurrent with earn-out payment | 242,424 | ||||||||
TCS [Member] | |||||||||
Business Acquisition, Contingent Consideration [Line Items] | |||||||||
Earn-out per asset purchase agreement | $ 933,000 | $ 933,000 | |||||||
Business combination contingent consideration at fair value | $ 711,000 | ||||||||
Shares of common stock issued concurrent with earn-out payment | 618,744 | ||||||||
Ready2Ride [Member] | |||||||||
Business Acquisition, Contingent Consideration [Line Items] | |||||||||
Earn-out payment | $ 125,000 | $ 125,000 | $ 125,000 | $ 125,000 | |||||
Shares of common stock issued concurrent with earn-out payment | 15,000 | 15,000 | 10,000 | ||||||
Maximum [Member] | Ready2Ride [Member] | |||||||||
Business Acquisition, Contingent Consideration [Line Items] | |||||||||
Contingent hold-back purchase price | $ 250,000 |
Contingent Liabilities (Schedul
Contingent Liabilities (Schedule Of Changes In Holdback And Earn-Out Payable) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2015 | |
Contingent Liabilities [Abstract] | |||
Beginning balance | $ 1,116 | $ 448 | |
Additions | 761 | ||
Adjustments | (62) | ||
Payments | (186) | (292) | |
Imputed interest recognized | 8 | 9 | |
Loss on change in fair value of earn-out | 8 | ||
Ending balance | 884 | 926 | |
Less current portion | (639) | (165) | $ (754) |
Ending balance, long-term | $ 245 | $ 761 | $ 362 |
Contingent Liabilities (Sched35
Contingent Liabilities (Schedule Of Estimated Contingent Liability Payments) (Details) $ in Thousands | Oct. 31, 2015USD ($) |
Contingent Liabilities [Abstract] | |
2,016 | $ 514 |
2,017 | 268 |
2,018 | 114 |
2,019 | 22 |
Total estimated payments | 918 |
Less imputed interest | (34) |
Present value of contingent liabilities | $ 884 |
Other Intangible Assets (Schedu
Other Intangible Assets (Schedule Of Amortizable Intangible Assets) (Details) - USD ($) | 3 Months Ended | |||
Oct. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2015 | Jul. 31, 2014 | |
Customer Relationships [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortizable Intangible Assets, Cost Basis | $ 11,947 | $ 9,444 | $ 11,947 | $ 7,174 |
Amortizable Intangible Assets, Accumulated Amortization | (4,418) | (3,584) | ||
Amortizable Intangible Assets, Net Value | 7,244 | 5,661 | 7,529 | 3,590 |
Amortization | (4,703) | (3,783) | ||
Activity, Cost Basis | 2,270 | |||
Activity, Accumulated Amortization | (285) | (199) | ||
Activity, Net Value | $ (285) | $ 2,071 | ||
Weighted average remaining life | 11 years 10 months 2 days | 9 years | ||
Other Intangibles [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortizable Intangible Assets, Cost Basis | $ 3,203 | $ 1,773 | 3,203 | 383 |
Amortizable Intangible Assets, Accumulated Amortization | (616) | (361) | ||
Amortizable Intangible Assets, Net Value | 2,475 | 1,396 | 2,587 | 22 |
Amortization | (728) | (377) | ||
Activity, Cost Basis | 1,390 | |||
Activity, Accumulated Amortization | (112) | (16) | ||
Activity, Net Value | $ (112) | $ 1,374 | ||
Weighted average remaining life | 3 years 1 month 2 days | 4 years 10 months 10 days | ||
Total Intangibles [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortizable Intangible Assets, Cost Basis | $ 15,150 | $ 11,217 | 15,150 | 7,557 |
Amortizable Intangible Assets, Accumulated Amortization | (5,034) | (3,945) | ||
Amortizable Intangible Assets, Net Value | 9,719 | 7,057 | $ 10,116 | $ 3,612 |
Amortization | (5,431) | (4,160) | ||
Activity, Cost Basis | 3,660 | |||
Activity, Accumulated Amortization | (397) | (215) | ||
Activity, Net Value | $ (397) | $ 3,445 | ||
Weighted average remaining life | 11 years 1 month 17 days | 8 years 2 months 12 days |
Stock-Based Compensation Plan37
Stock-Based Compensation Plans (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2015 | Oct. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation costs | $ 112,000 | $ 276,000 | ||
Capitalized stock-based compensation costs | 0 | 0 | ||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense recognized | 73,000 | 74,000 | ||
Unrecognized compensation expense | 462,000 | |||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense recognized | $ 24,000 | 29,000 | ||
2000 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock authorized for issuance | 1,950,000 | |||
Stock option grants exercisable period | 5 years | |||
Shareholder percent ownership of the company | 10.00% | |||
Exercise prices for options outstanding | $ 1.56 | $ 1.52 | ||
2000 Plan [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock option grants exercisable period | 10 years | |||
Exercise prices for options outstanding | $ 2.275 | |||
2000 Plan [Member] | Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise prices for options outstanding | $ 0.49 | |||
2010 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock authorized for issuance | 1,850,000 | |||
Maximum term | 10 years | |||
Exercise prices for options outstanding | $ 2.42 | $ 2.34 | ||
Weighted-average remaining vesting period | 2 years 18 days | |||
2010 Plan [Member] | Common Stock, Restricted Stock And Restricted Stock Unit Awards [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock authorized for issuance | 1,525,000 | |||
2010 Plan [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise prices for options outstanding | $ 3.61 | |||
2010 Plan [Member] | Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise prices for options outstanding | $ 0.59 | |||
2000 ESPP [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense recognized | $ 20,000 | $ 0 | ||
Employee Stock Purchase Plan common stock reserved for issuance | 575,000 | |||
Employee Stock Purchase Plan shares issued | 263,974 | 224,955 | ||
Purchase price as percent of market value | 85.00% | |||
Maximum number of shares per employee per year | 5,000 | |||
Executive Bonus Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 282,000 | |||
Shares of restricted stock under the LTEB | 550,000 | |||
Market price measurement period | 4 years | |||
Common stock granted under the LTEB | $ 350,000 | |||
Volatility rate | 46.00% | |||
Risk free interest rate | 1.34% | |||
Tranche One [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Tranche Two [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 25.00% | |||
Tranche Three [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Tranche Four [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Vesting Scenario One [Member] | Executive Bonus Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 30.00% | |||
Market price threshold | $ 6 | |||
Vesting Scenario Two [Member] | Executive Bonus Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20.00% | |||
Market price threshold | $ 7 | |||
Vesting Scenario Three [Member] | Executive Bonus Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20.00% | |||
Market price threshold | $ 8 | |||
Vesting Scenario Four [Member] | Executive Bonus Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 30.00% | |||
Market price threshold | $ 9 |
Stock-Based Compensation Plan38
Stock-Based Compensation Plans (Schedule Of Fair Value Weighted Average Assumptions Of Options Granted) (Details) - USD ($) | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Stock-Based Compensation Plans [Abstract] | ||
Expected life (years) | 5 years 1 month 6 days | |
Risk-free interest rate | 1.70% | |
Expected volatility | 65.20% | |
Expected forfeiture rate | 9.40% | 8.40% |
Expected dividend yield | ||
Weighted-average estimated fair value of options granted during the year | $ 1.78 | |
Cash received from the exercise of stock options | $ 44,000 | $ 24,500 |
Stock-Based Compensation Plan39
Stock-Based Compensation Plans (Schedule Of Changes In Option Shares) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Oct. 31, 2015 | Jul. 31, 2015 | |
2000 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Options, Outstanding, Beginning Balance | 472,250 | |
Number of Options, Granted | ||
Number of Options, Exercised | (20,000) | |
Number of Options, Forfeited | ||
Number of Options, Outstanding, Ending Balance | 452,250 | 472,250 |
Number of Options, Exercisable | 452,250 | |
Weighted Average Exercise Price, Outstanding, Beginning Balance | $ 1.52 | |
Weighted Average Exercise Price, Exercised | 0.65 | |
Weighted Average Exercise Price, Outstanding, Ending Balance | 1.56 | $ 1.52 |
Weighted Average Exercise Price, Exercisable | $ 1.56 | |
Weighted Average Remaining Contractual Period (Years), Outstanding | 2 years 4 months 10 days | 2 years 6 months 7 days |
Weighted Average Remaining Contractual Period (Years), Exercisable | 2 years 4 months 10 days | |
Aggregate Intrinsic Value, Outstanding, Beginning Balance | $ 783,174 | |
Aggregate Intrinsic Value, Outstanding, Ending Balance | 963,184 | $ 783,174 |
Aggregate Intrinsic Value, Exercisable | $ 963,184 | |
2010 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Options, Outstanding, Beginning Balance | 434,751 | |
Number of Options, Granted | ||
Number of Options, Exercised | (25,000) | |
Number of Options, Forfeited | (2,500) | |
Number of Options, Outstanding, Ending Balance | 407,251 | 434,751 |
Number of Options, Exercisable | 257,003 | |
Weighted Average Exercise Price, Outstanding, Beginning Balance | $ 2.34 | |
Weighted Average Exercise Price, Exercised | 1.23 | |
Weighted Average Exercise Price, Forfeited | 1 | |
Weighted Average Exercise Price, Outstanding, Ending Balance | 2.42 | $ 2.34 |
Weighted Average Exercise Price, Exercisable | $ 2.07 | |
Weighted Average Remaining Contractual Period (Years), Outstanding | 7 years 6 months 15 days | 7 years 5 months 19 days |
Weighted Average Remaining Contractual Period (Years), Exercisable | 7 years 1 month 2 days | |
Aggregate Intrinsic Value, Outstanding, Beginning Balance | $ 387,964 | |
Aggregate Intrinsic Value, Outstanding, Ending Balance | 518,887 | $ 387,964 |
Aggregate Intrinsic Value, Exercisable | $ 415,897 |
Stock-Based Compensation Plan40
Stock-Based Compensation Plans (Schedule Of Changes In Non-Vested Option Shares) (Details) - 2010 Plan [Member] | 3 Months Ended |
Oct. 31, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Options, Non-vested, Beginning Balance | 161,498 |
Number of Options, Granted | |
Number of Options, Vested | (8,750) |
Number of Options, Forfeited | (2,500) |
Number of Options, Non-vested, Ending Balance | 150,248 |
Weighted Average Exercise Price, Non-vested, Beginning Balance | $ / shares | $ 2.99 |
Weighted Average Exercise Price, Vested | $ / shares | 3.22 |
Weighted Average Exercise Price, Forfeited | $ / shares | 1 |
Weighted Average Exercise Price, Non-vested, Ending Balance | $ / shares | $ 3 |
Stock-Based Compensation Plan41
Stock-Based Compensation Plans (Schedule Of Changes In Unvested Restricted Shares) (Details) - Restricted Stock [Member] - shares | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance unvested restricted stock | 671,211 | 93,704 |
Granted | 29,819 | |
Vested | (10,995) | (28,610) |
Forfeited | (939) | |
Ending balance unvested restricted stock | 659,277 | 94,913 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | Oct. 31, 2015 | Oct. 31, 2014 |
Netherlands [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net deferred tax assets | $ 0 | $ 0 |
Federal [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 4,401,000 | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 12,144,000 | |
International [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 2,081,000 |
Income Taxes (Provision For Inc
Income Taxes (Provision For Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Income Taxes [Abstract] | ||
Current: Federal | $ (2) | |
Current: State | $ (6) | $ (18) |
Change in valuation allowance | ||
Deferred, net | $ (293) | $ (69) |
Income tax expense | $ (299) | $ (89) |