Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Apr. 30, 2017 | Jun. 08, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | ARI NETWORK SERVICES INC /WI | |
Entity Filer Category | Smaller Reporting Company | |
Entity Central Index Key | 879,796 | |
Trading Symbol | aris | |
Amendment Flag | false | |
Document Type | 10-Q | |
Document Fiscal Period Focus | Q3 | |
Document Period End Date | Apr. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Current Fiscal Year End Date | --07-31 | |
Entity Common Stock, Shares Outstanding | 17,423,219 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 30, 2017 | Jul. 31, 2016 |
ASSETS | ||
Cash and cash equivalents | $ 5,555 | $ 5,118 |
Trade receivables, less allowance for doubtful accounts of $225 and $211 at April 30, 2017 and July 31, 2016, respectively | 2,944 | 1,942 |
Work in process | 199 | 132 |
Prepaid expenses and other | 829 | 781 |
Deferred income taxes | 3,259 | 3,182 |
Total current assets | 12,786 | 11,155 |
Equipment and leasehold improvements: | ||
Computer equipment and software for internal use | 3,693 | 3,575 |
Leasehold improvements | 724 | 639 |
Furniture and equipment | 2,717 | 2,544 |
Total equipment and leasehold improvements | 7,134 | 6,758 |
Less accumulated depreciation and amortization | (4,874) | (4,237) |
Net equipment and leasehold improvements | 2,260 | 2,521 |
Capitalized software product costs: | ||
Amounts capitalized for software product costs | 28,235 | 24,774 |
Less accumulated amortization | (21,526) | (19,743) |
Net capitalized software product costs | 6,709 | 5,031 |
Deferred income taxes | 664 | 1,112 |
Other intangible assets | 9,702 | 7,890 |
Goodwill | 28,037 | 21,634 |
Total non-current assets | 47,372 | 38,188 |
Total assets | 60,158 | 49,343 |
LIABILITIES | ||
Current portion of long-term debt | 2,940 | 2,417 |
Current portion of contingent liabilities | 325 | 331 |
Accounts payable | 832 | 718 |
Deferred revenue | 6,381 | 6,763 |
Accrued payroll and related liabilities | 2,370 | 1,817 |
Accrued sales, use and income taxes | 326 | 297 |
Other accrued liabilities | 899 | 677 |
Current portion of capital lease obligations | 47 | 50 |
Total current liabilities | 14,120 | 13,070 |
Long-term debt | 12,588 | 6,658 |
Long-term portion of contingent liabilities | 1,244 | 60 |
Capital lease obligations | 28 | 63 |
Other long-term liabilities | 130 | 166 |
Total non-current liabilities | 13,990 | 6,947 |
Total liabilities | 28,110 | 20,017 |
SHAREHOLDERS' EQUITY | ||
Common stock, par value $.001 per share, 25,000,000 shares authorized; 17,421,719 and 17,310,763 shares issued and outstanding at April 30, 2017 and July 31, 2016, respectively | 17 | 17 |
Additional paid-in capital | 116,062 | 115,364 |
Accumulated deficit | (84,027) | (86,050) |
Other accumulated comprehensive income | (4) | (5) |
Total shareholders' equity | 32,048 | 29,326 |
Total liabilities and shareholders' equity | 60,158 | 49,343 |
Cumulative Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock | ||
Junior Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Apr. 30, 2017 | Jul. 31, 2016 |
ASSETS | ||
Trade receivables, allowance for doubtful accounts | $ 225 | $ 211 |
SHAREHOLDERS' EQUITY | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 17,421,719 | 17,310,763 |
Common stock, shares outstanding | 17,421,719 | 17,310,763 |
Cumulative Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
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] | ||
SHAREHOLDERS' EQUITY | ||
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 ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Consolidated Statements Of Operations [Abstract] | ||||
Net revenue | $ 13,425 | $ 11,984 | $ 38,941 | $ 35,473 |
Cost of revenue | 2,612 | 2,334 | 7,504 | 6,467 |
Gross profit | 10,813 | 9,650 | 31,437 | 29,006 |
Operating expenses: | ||||
Sales and marketing | 2,595 | 2,801 | 8,104 | 8,314 |
Customer operations and support | 2,618 | 2,374 | 8,258 | 7,248 |
Software development and technical support (net of capitalized software product costs) | 1,505 | 1,221 | 4,321 | 3,795 |
General and administrative | 1,864 | 1,732 | 5,770 | 5,247 |
Depreciation and amortization (exclusive of amortization of software product costs included in cost of revenue) | 744 | 601 | 2,057 | 1,800 |
Net operating expenses | 9,326 | 8,729 | 28,510 | 26,404 |
Operating income | 1,487 | 921 | 2,927 | 2,602 |
Other income (expense): | ||||
Interest expense | (200) | (118) | (526) | (350) |
Other, net | 9 | 13 | 11 | 5 |
Total other income (expense) | (191) | (105) | (515) | (345) |
Income before provision for income tax | 1,296 | 816 | 2,412 | 2,257 |
Income tax benefit (expense) | 129 | (368) | (389) | (972) |
Net income | $ 1,425 | $ 448 | $ 2,023 | $ 1,285 |
Weighted average common shares outstanding: | ||||
Basic | 17,493 | 17,258 | 17,461 | 17,199 |
Diluted | 18,010 | 17,769 | 17,960 | 17,689 |
Net income per common share: | ||||
Basic | $ 0.08 | $ 0.03 | $ 0.12 | $ 0.07 |
Diluted | $ 0.08 | $ 0.03 | $ 0.11 | $ 0.07 |
Consolidated Statements Of Comp
Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Consolidated Statements Of Comprehensive Income [Abstract] | ||||
Net income | $ 1,425 | $ 448 | $ 2,023 | $ 1,285 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (4) | (18) | 1 | (20) |
Total other comprehensive income (loss) | (4) | (18) | 1 | (20) |
Comprehensive income | $ 1,421 | $ 430 | $ 2,024 | $ 1,265 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Operating activities: | ||
Net income | $ 2,023 | $ 1,285 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of software products | 1,783 | 1,571 |
Amortization of deferred loan fees and imputed interest expense | 59 | 34 |
Depreciation and other amortization | 2,057 | 1,800 |
Gain on change in fair value of earn-out receivable and payable | (5) | |
Provision for bad debt allowance | 11 | 80 |
Deferred income taxes | 371 | 860 |
Stock based compensation | 476 | 316 |
Net change in assets and liabilities: | ||
Trade receivables | (130) | (308) |
Work in process, prepaid expenses and other | (77) | (51) |
Accounts payable | 59 | (145) |
Deferred revenue | (425) | (252) |
Accrued payroll and related liabilities | 608 | 342 |
Accrued taxes and other accrued liabilities | 217 | 16 |
Net cash provided by operating activities | 7,032 | 5,543 |
Investing activities: | ||
Purchase of equipment, software and leasehold improvements | (235) | (557) |
Cash paid for net assets related to acquisitions | (11,066) | |
Cash paid for contingent liabilities related to acquisitions | (261) | (505) |
Software development costs capitalized | (1,521) | (1,310) |
Net cash used in investing activities | (13,083) | (2,372) |
Financing activities: | ||
Payments on long-term debt | (1,658) | (912) |
Borrowings under long-term debt | 8,081 | |
Payments of capital lease obligations | (38) | (165) |
Proceeds from exercise of common stock options and warrants | 117 | 66 |
Net cash provided by (used in) financing activities | 6,502 | (1,011) |
Effect of foreign currency exchange rate changes on cash | (14) | (4) |
Net change in cash and cash equivalents | 437 | 2,156 |
Cash and cash equivalents at beginning of period | 5,118 | 2,284 |
Cash and cash equivalents at end of period | 5,555 | 4,440 |
Cash paid for interest | 392 | 338 |
Cash paid for income taxes | $ 106 | $ 45 |
Description Of The Business And
Description Of The Business And Significant Accounting Policies | 9 Months Ended |
Apr. 30, 2017 | |
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. offers an award-winning suite of Lead Generation and eCommerce Websites, eCatalog Solutions, Business Management Systems and Digital Marketing Services that help dealers, equipment manufacturers and distributors in select vertical markets Sell More Stuff!™ – online and in-store. Our innovative products are powered by a proprietary library of enriched electronic product content including OEM parts, aftermarket parts, garments and accessories (PG&A) and whole goods from more than 1,800 manufacturers. Business is complicated, but we believe our customers’ technology tools don’t have to be. We remove the complexity of selling and servicing new and used whole goods inventory and PG&A. More than 25,000 equipment dealers, distributors and manufacturers worldwide leverage our solutions to Sell More Stuff!™ We go to market under the “ARI Network Services, Inc.” brand name in the powersports, outdoor power equipment (OPE), marine, home medical equipment (HME), recreational vehicles (RV) and appliance industries. We service customers in the automotive dealer market under the “Auction123, an ARI Company” brand name, the customers in the automotive tire and wheel aftermarket (ATW) under the “TCS Technologies, an ARI Company” brand name; and we service the automotive aftermarket (AA) market under the “DCi, an ARI Company” brand name. 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; Cookeville, Tennessee; Salt Lake City, Utah; Weston, Florida; Leiden, The Netherlands; and Gurgaon, India. Basis of Presentation These consolidated financial statements include the consolidated financial statements of ARI and its wholly-owned subsidiaries, ARI Europe B.V. and ARI Network Services Pvt. Ltd. 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 other adjustments that, in the opinion of management, are necessary for a fair presentation of 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 2017, for example, refer to the fiscal year ending July 31, 2017, and references to fiscal 2016 refer to the fiscal year ended July 31, 2016. 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 the 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 or nine months ended April 30, 2017 or 201 6 . 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 collected. Management individually reviews receivable balances that exceed ninety (90) days from the invoice date and, based on an assessment of current creditworthiness, 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 consolidated 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 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. 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 2 to 14 years. Amortization starts when the product is available for general release to customers. 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 the 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. 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 may periodically be 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 estimable, in accordance with GAAP. We had no legal provisions during the three or nine months ended April 30, 2017 or 201 6 and management believes that the results of any outstanding litigation will not have a material impact on the Company’s financial condition or results of operations . Supplemental Cash Flow Information The following table shows cash flow information related to non-cash investing and financing activities (in thousands): Nine months ended April 30 2017 2016 Non-cash investing and financing activities Issuance of common stock related to payment of contingent liabilities $ - $ 60 Cashless exercise of common stock warrants - 46 Current assets acquired in connection with acquisitions - 36 Accrued liabilities assumed in connection with acquisitions - 58 Contingent liabilities incurred in connection with acquisition 1,410 62 |
Basic And Diluted Net Income Pe
Basic And Diluted Net Income Per Common Share | 9 Months Ended |
Apr. 30, 2017 | |
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 April 30 Nine months ended April 30 2017 2016 2017 2016 Net income $ 1,425 $ 448 $ 2,023 $ 1,285 Weighted-average common shares outstanding 17,493 17,258 17,461 17,199 Effect of dilutive stock options and warrants 517 511 499 490 Diluted weighted-average common shares outstanding 18,010 17,769 17,960 17,689 Net income per share Basic $ 0.08 $ 0.03 $ 0.12 $ 0.07 Diluted $ 0.08 $ 0.03 $ 0.11 $ 0.07 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 | 9 Months Ended |
Apr. 30, 2017 | |
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 include d credit facilities consisting of a $3,000,000 revolving credit facility with a maturity date of November 30, 2016 and a $6,050,000 term loan with a maturity date of September 30, 2019 . On November 1, 2016, in connection with the Company’s acquisition of Auction 123, Inc. (“Auction 123”), the Company entered into the Second Loan Modification Agreement with SVB. The Second Modification Agreement includes credit facilities consisting of $3,000,000 revolving credit facility with a maturity date of September 30, 2018 and a $13,000,000 term loan with a maturity date of November 1, 2021 . This term loan is an amendment to the existing $6,050,000 term loan with a maturity date of September 30, 2019 . 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 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 4.50% at April 30, 2017 , based upon a prime rate of 4.00% . Applicable Margin Total Leverage Ratio for Prime Rate Loans >= 2.50 to 1.0: 1.50 % > 1.75 to 1.00 but < 2.50 to 1.00: 1.00 % <= 1.75 to 1.00: 0.50 % Principal in respect of any loans made under the revolving facility is required to be paid in its entirety on or before September 30, 2018. 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: $325,000 which commenc ed on February 1, 2017 and will continue through November 1, 2018; $487,500 commencing on February 1, 2019 through November 1, 2019; and $650,000 commencing on February 1, 2020 through August 1, 2021 . All remaining principal in respect of the term loan is due and payable on November 1, 2021. The Company is permitted to prepay all of, but not less than all of, the outstanding principal amount of the term loan upon certain notice to SVB and, in certain circumstances, the payment of a prepayment penalty of up to $260,000 . Following July 31, 2018, the Second Modification agreement requires the Company to make additional payments in the amount of 50% of excess cash flow until the Company’s Total Leverage Ratio is less than 2.00 to 1.00 and 25% of excess cash flow until the Company’s Total Leverage Ratio is less than 1.25 to 1.00. The Second 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 through the period ending December 31, 2017 and 2.50 to 1.00 thereafter, and the maintenance of a Fixed Charge Coverage Ratio (as defined in the Agreement) equal to or greater than 1.25 to 1.00. The Agreement also contains customary events of default that, if triggered, could result in an acceleration of the Company’s obligations under the 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 “TCS Notes”) in the aggregate principal amount of $3,000,000 to the former owners of TCS. In February 2015, the principal amount of the TCS Notes was reduced by approximately $67,000 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 TCS 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 TCS 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 TCS Notes is due and payable quarterly 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 TCS Notes were interest-only payments, and payments of principal and interest commenced on December 29, 2015. The payments are subject to acceleration upon certain Events of Default, as defined in the TCS 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. The principal amount of the DCi Note was reduced by approximately $64, 000 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 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 we re interest only payments, and payments of principal and interest commence d on October 13, 2016. The payments are subject to acceleration upon certain Events of Default, as defined in the DCi Note. The Company did not trigger any Events of Default and was in compliance with its debt covenants as of April 30, 2017. The following table sets forth certain information related to the Company’s long-term debt as of April 30, 2017 and July 31, 201 6 (in thousands): April 30 July 31 2017 2016 Notes payable principal $ 15,670 $ 9,168 Less debt issuance costs (142) (93) Less current maturities (2,940) (2,417) Notes payable - non-current $ 12,588 $ 6,658 Minimum principal payments due on the SVB Term Note, the TCS Notes and the DCi Note as of April 30, 2017 we re as follows for the fiscal years ending (in thousands): Fiscal year ending July 31: SVB Term Note TCS Notes DCi Notes Total Notes Payable 2017 $ 325 $ 246 $ 157 $ 728 2018 1,300 1,014 645 2,959 2019 1,625 262 671 2,558 2020 2,275 — — 2,275 2021 2,600 — — 2,600 2022 4,550 — — 4,550 $ 12,675 $ 1,522 $ 1,473 $ 15,670 |
Contingent Liabilities
Contingent Liabilities | 9 Months Ended |
Apr. 30, 2017 | |
Contingent Liabilities [Abstract] | |
Contingent Liabilities | 4. Contingent Liabilities Consideration for the November 1, 2016 acquisition of Auction 123 included a contingent earn-out purchase price . The earn-out is contingent upon the attainme nt of revenue goals related to specific customer s, which is measured on the two subsequent anniversaries and paid in quarterly installments. The fair value of the earn-out was originally estimated at $1,410,000 and has a maximum payout of $1,500,000 . Consideration for the Septemb er 2014 TCS acquisition included a contingent earn-out purchase price, originally contingent upon the attainment of specific revenue goals. The fair value of the earn-out was originally estimated at $711,000 . The first q uarterly payment of $120,905 commenced on December 31, 2015 . On March 7, 2016, the TCS Asset Purchase Agreement was amended in relation to the contingent earn-out, whereas, the Company made the remaining three quarterly payments of $120,905, followed by four quarterly payments of $70,000 , which commenc ed on December 31, 2016. The following table shows changes in the earn-out payable related to the TCS and Auction 123 acquisition s (in thousands): Nine months ended April 30 2017 2016 Beginning balance $ 391 $ 1,116 Additions 1,410 - Adjustments - (62) Payments (261) (565) Imputed interest recognized 29 22 Gain on change in fair value of earn-out - (5) Ending balance $ 1,569 $ 506 Less current portion $ (325) $ (382) Ending balance, long-term $ 1,244 $ 124 The following table shows the remaining estimated payments of contingent liabilities related to the TCS and Auction 123 acquisition s at April 30, 2017 , (in thousands) for the fiscal years ending July 31 : 2017 $ 70 2018 633 2019 750 2020 188 Total estimated payments 1,641 Less imputed interest (72) Present value of contingent liabilities $ 1,569 |
Other Intangible Assets
Other Intangible Assets | 9 Months Ended |
Apr. 30, 2017 | |
Other Intangible Assets [Abstract] | |
Other Intangible Assets | 5 . 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 April 30, 2017 and 201 6 (in thousands): Nine months ended April 30, 2016 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ 11,947 $ (4,418) $ 7,529 Activity (220) (853) (1,073) Ending balance $ 11,727 $ (5,271) $ 6,456 11.98 Other intangibles Beginning balance $ 3,203 $ (616) $ 2,587 Activity (467) (301) (768) Ending balance $ 2,736 $ (917) $ 1,819 8.73 Total intangibles Beginning balance $ 15,150 $ (5,034) $ 10,116 Activity (687) (1,154) (1,841) Ending balance $ 14,463 $ (6,188) $ 8,275 11.26 Nine months ended April 30, 2017 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ 11,727 $ (5,558) $ 6,169 Activity 2,540 (1,062) 1,478 Ending balance $ 14,267 $ (6,620) $ 7,647 11.69 Other intangibles Beginning balance $ 2,739 $ (1,018) $ 1,721 Activity 690 (356) 334 Ending balance $ 3,429 $ (1,374) $ 2,055 9.40 Total intangibles Beginning balance $ 14,466 $ (6,576) $ 7,890 Activity 3,230 (1,418) 1,812 Ending balance $ 17,696 $ (7,994) $ 9,702 11.20 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 9 Months Ended |
Apr. 30, 2017 | |
Stock-Based Compensation Plans [Abstract] | |
Stock-Based Compensation Plans | 6 . Stock-based Compensation Plans The Company uses the Black-Scholes model to value stock options granted. Volatility is calculated as management’s 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. T he Company recognized stock option compensation expense of $7,000 and $59,000 during the nine months ended April 30, 2017, and 2016, respectively. There was approximately $8,000 and $61,000 of total unrecognized compensation costs related to non-vested options granted under the Company’s stock option plans as of April 30, 2017 and 2016 , 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: Nine months ended April 30, 2017 Expected life (years) n/a Risk-free interest rate n/a Expected volatility n/a Expected forfeiture rate 11.3 % Expected dividend yield - Weighted-average estimated fair value per share of options granted during the year n/a Cash received from the exercise of stock options $ 51,000 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 except 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 nine months ended April 30, 2017 were as follows: Number of Options Wtd. Avg. Exercise Price Wtd. Avg. Remaining Contractual Period (Years) Aggregate Intrinsic Value Outstanding at 7/31/2016 384,750 $ 1.46 1.89 $ 1,408,027 Granted - n/a n/a n/a Exercised (17,250) 1.40 n/a n/a Forfeited (125) 1.94 n/a n/a Outstanding at 4/30/2017 367,375 $ 1.46 1.14 $ 1,387,529 Exercisable at 4/30/2017 367,375 $ 1.46 1.14 $ 1,387,529 The range of exercise prices for options outstanding under the 2000 Plan was $0.49 to $1.85 at April 30, 2017 . 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 and January 2017 . The 2010 Plan is the successor to the Company’s 2000 Plan. There are 3,050,000 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 appreciation rights (“SARs), and shares of common stock. Up to 2,725,000 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 nine months ended April 30, 2017 were as follows: Number of Options Wtd. Avg. Exercise Price Wtd. Avg. Remaining Contractual Period (Years) Aggregate Intrinsic Value Outstanding at 7/31/2016 357,626 $ 2.52 6.95 $ 930,816 Granted - n/a n/a n/a Exercised (25,750) 2.12 n/a n/a Forfeited (16,250) 3.29 n/a n/a Outstanding at 4/30/2017 315,626 $ 2.51 6.10 $ 861,662 Exercisable at 4/30/2017 269,376 $ 2.38 5.97 $ 771,599 The range of exercise prices for options outstanding under the 2010 Plan was $0.59 to $3.54 at April 30, 2017 . Changes in the 2010 Plan's non-vested option shares included in the outstanding shares above during the nine months ended April 30, 2017 were as follows: Number of Options Wtd. Avg. Exercise Price Non-vested at 7/31/2016 70,000 $ 3.29 Granted - n/a Vested (7,500) 3.26 Forfeited (16,250) 3.29 Non-vested at 4/30/2017 46,250 $ 3.29 The weighted average remaining vesting period was 0. 54 years at April 30 , 2017. 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 338,689 and 300,280 of the shares have been issued as of April 30, 2017 and 201 6 , respectively. All employees with at least six 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 $75,000 and $29,000 during the nine months ended April 30, 2017 , and 2016 related to the ESPP discount. Restricted Stock The Company grants restricted stock to its directors as an annual retainer, 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 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 -day trading period (the “30-day VWAP”) equals or exceeds $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. Restricted stock granted under the 2010 plan during fiscal 2017 was valued using the market price on the date of grant. The Company recognized compensation expense of $395,000 and $227,000 during the nine months ended April 30, 2017 and 2016 , respectively, related to all restricted stock. The remaining balance of unrecognized compensation expense related to restricted stock was $566,000 and $467,000 at April 30, 2017 and 201 6 , respectively. Changes in unvested restricted shares of common stock under the 2010 Plan during the nine months ended April 30, 2017 and 2016 were as follows: Nine months ended April 30 2017 2016 Beginning balance unvested restricted stock 657,912 671,211 Granted 131,222 42,359 Vested (51,745) (33,060) Forfeited (124,184) (10,292) Ending balance unvested restricted stock 613,205 670,218 |
Income Taxes
Income Taxes | 9 Months Ended |
Apr. 30, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | 7 . Income Taxes The provision for income taxes for the three and nine months ended April 30, 2017 and 2 016 is composed of the following (in thousands): Three months ended April 30 Nine months ended April 30 2017 2016 2017 2016 Current: Federal $ (51) $ (40) $ (51) $ (40) State 54 (64) 36 (76) Deferred, net 126 (264) (374) (856) Income tax expense $ 129 $ (368) $ (389) $ (972) 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 basis 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 sheets. We had unused net operating loss carry forwards ("NOLs") for federal income tax purposes, and as a result, we generally only incurred alternative minimum taxes at the federal level. During fiscal 2017, we estimate that the remaining federal NOL’s will be fully utilized. We have unused NOLs and credits for state income tax p urposes of $8,238,000 and $316,000 , respectively, m ost of which have a valuation allowance. 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 of $466,000 and $585,000 is recorded, resulting in $0 net deferred tax assets related to the Netherlands operation at April 30, 2017 and 201 6, respectively . The Company also has an NOL related to tax losses incurred by its India operation, which began operations in the second quarter of fiscal 2016. Under tax laws in India, NOLs are able to be carried forward for a period of eight years. The Company has determined that it is not likely that the net operating loss will be utilized by the Company primarily based on the start-up nature of this operation. Therefore, a full valuation allowance of $57,000 was recorded, resulting in $0 net deferred tax assets related to the India operation at April 30, 2017. During the quarter ended April 30, 2017, the Company recorded an income tax benefit of approximately $595,000 , net of an unrecognized tax benefit and valuation allowance, associated with US research and development (“R&D”) credits related to fiscal year 2013 through the third quarter of fiscal 2017. As of April 30, 2017 , the Company had accumulated R&D credits for federal and state purposes of approximately $449,000 and $316,000 , respectively . We perform an evaluation of uncertain tax positions as a component of income tax expense on an annual basis and determined that the only significant income tax risk that exists is related to the recoverability of certain R&D credits. The Company reserved approximately $172,000 for these uncertain tax positions as of April 30, 2017. 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 2012 remain open and subject to examination by state tax jurisdictions and the United States federal tax authorities. |
Business Combinations
Business Combinations | 9 Months Ended |
Apr. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combinations | 8 . Business Combinations Acquisition of Auction 123 , Inc. On November 1, 2016, the Company acquired substantially all of the assets of Auction 123 , Inc., a leading provider of software and services to help dealers in selected vertical markets manage and feed inventory information to online marketplaces to drive more sales and leads . Auction 123 serves several vertical markets including automotive dealers, powersports, recreational vehicles and marine . Consideration for the acquisition (the "Company Purchase Price") included, ( i ) a cash payment equal to $10,250,000 ; (ii) a $250,000 cash hold-back, subject to post-closing adjustments based upon the net assets acquired pursuant to the terms of the asset purchase agreement; and (iii) a contingent earn-out purchase price payable in two installments and contingent upon the attainment of specific revenue goals related to a specific customer . The earn-out has a maximum payou t of $1,500,000 , which was rec orded at an estimated fair value of $1,410,000 at the time of close . The hold-back was increased by post-closing adjustments of approximately $611,000 based on the net asset value on the closing balance sheet being above or below the targeted amount. Founded in 2001, Auction 123 has been a leader in online marketing solutions, inventory management and website development solutions for dealers in selected vertical markets. Their award-winning web-based software offers tight and seamless integration between the dealer management system (DMS), the dealer’s website, eBay Motors, Craigslist, Facebook and other third-party classified websites. The acquisition eliminated elements of ARI’s cost of revenue from a third party vendor and introduce d ARI into the automotive dealer market . The acquisition is also expected to accelerate ARI’s opportunity to drive organic growth through the cross‐selling of new products. 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 and a contingent earn-out. The following tables show the preliminary allocation of the purchase price (in thousands): Preliminary Purchase Price Cash $ 2,090 Bank note 8,160 Holdback payment 861 Contingent earn-out 1,410 Purchase price $ 12,521 Preliminary Purchase Price Allocation Cash $ 45 Trade receivables 883 Work in process 48 Prepaid expense and other 17 Assumed liabilities (188) Furniture and equipment 143 Software product costs 1,940 Intangible assets 3,230 Goodwill 6,403 Purchase price allocation $ 12,521 Estimated intangible assets include the fair value of tradenames and customer relationships. Estimated goodwill represents the additional benefits provided to the Company by the acquisition of Auction 123 through operational synergies. The Company cannot determine revenue and expenses specifically related to the Auction 123 operation since the date of acquisition, as we have begun integration of the businesses. The Company acquired approximately $6,600,000 of tax deductible goodwill, inclusive of over $170,000 of acquisition closing costs, related to the Auction 123 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 contingent earn-out. The final valuation is expected to be completed as soon as is practicable but no later than November 1, 2017 and could have a material impact on the preliminary purchase price allocation disclosed above. The following preliminary unaudited pro forma combined financial information presents the Company's results as if the Company had acquired Auction 123 on August 1, 2015. 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 and Auction 123’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 Auction 123’s financial position or results of operation for any future date or period. Three months ended April 30 Nine months ended April 30 2017 2016 2017 2016 Revenue $ 13,425 $ 13,139 $ 40,123 $ 38,881 Net income $ 1,425 $ 522 $ 2,205 $ 1,392 Net income per common share: Basic $ 0.08 $ 0.03 $ 0.13 $ 0.08 Diluted $ 0.08 $ 0.03 $ 0.12 $ 0.08 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 Auction 123, and the tax effect of the historical Auction 123 results of operations and the pro forma adjustments at an estimated tax rate of 40% as follows: Three months ended April 30 Nine months ended April 30 2017 2016 2017 2016 Amortization of intangible assets - 228 194 684 Acquisition-related professional fees - - (121) - Interest expense - 82 82 246 Income tax benefit (expense) - 49 121 71 Total adjustments - 359 276 1,001 |
Description Of The Business A15
Description Of The Business And Significant Accounting Policies (Policies) | 9 Months Ended |
Apr. 30, 2017 | |
Description Of The Business And Significant Accounting Policies [Abstract] | |
Description Of The Business | Description of the Business ARI Network Services, Inc. offers an award-winning suite of Lead Generation and eCommerce Websites, eCatalog Solutions, Business Management Systems and Digital Marketing Services that help dealers, equipment manufacturers and distributors in select vertical markets Sell More Stuff!™ – online and in-store. Our innovative products are powered by a proprietary library of enriched electronic product content including OEM parts, aftermarket parts, garments and accessories (PG&A) and whole goods from more than 1,800 manufacturers. Business is complicated, but we believe our customers’ technology tools don’t have to be. We remove the complexity of selling and servicing new and used whole goods inventory and PG&A. More than 25,000 equipment dealers, distributors and manufacturers worldwide leverage our solutions to Sell More Stuff!™ We go to market under the “ARI Network Services, Inc.” brand name in the powersports, outdoor power equipment (OPE), marine, home medical equipment (HME), recreational vehicles (RV) and appliance industries. We service customers in the automotive dealer market under the “Auction123, an ARI Company” brand name, the customers in the automotive tire and wheel aftermarket (ATW) under the “TCS Technologies, an ARI Company” brand name; and we service the automotive aftermarket (AA) market under the “DCi, an ARI Company” brand name. 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; Cookeville, Tennessee; Salt Lake City, Utah; Weston, Florida; Leiden, The Netherlands; and Gurgaon, India. |
Basis Of Presentation | Basis of Presentation These consolidated financial statements include the consolidated financial statements of ARI and its wholly-owned subsidiaries, ARI Europe B.V. and ARI Network Services Pvt. Ltd. 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 other adjustments that, in the opinion of management, are necessary for a fair presentation of 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 2017, for example, refer to the fiscal year ending July 31, 2017, and references to fiscal 2016 refer to the fiscal year ended July 31, 2016. |
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 the 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 or nine months ended April 30, 2017 or 201 6 . |
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 collected. Management individually reviews receivable balances that exceed ninety (90) days from the invoice date and, based on an assessment of current creditworthiness, 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 consolidated 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 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. 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 2 to 14 years. Amortization starts when the product is available for general release to customers. |
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 the 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. 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 may periodically be 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 estimable, in accordance with GAAP. We had no legal provisions during the three or nine months ended April 30, 2017 or 201 6 and management believes that the results of any outstanding litigation will not have a material impact on the Company’s financial condition or results of operations . |
Description Of The Business A16
Description Of The Business And Significant Accounting Policies (Tables) | 9 Months Ended |
Apr. 30, 2017 | |
Description Of The Business And Significant Accounting Policies [Abstract] | |
Schedule Of Supplemental Cash Flow Information | Nine months ended April 30 2017 2016 Non-cash investing and financing activities Issuance of common stock related to payment of contingent liabilities $ - $ 60 Cashless exercise of common stock warrants - 46 Current assets acquired in connection with acquisitions - 36 Accrued liabilities assumed in connection with acquisitions - 58 Contingent liabilities incurred in connection with acquisition 1,410 62 |
Basic And Diluted Net Income 17
Basic And Diluted Net Income Per Common Share (Tables) | 9 Months Ended |
Apr. 30, 2017 | |
Basic And Diluted Net Income Per Common Share [Abstract] | |
Schedule Of Basic And Diluted Net Income Per Common Share | Three months ended April 30 Nine months ended April 30 2017 2016 2017 2016 Net income $ 1,425 $ 448 $ 2,023 $ 1,285 Weighted-average common shares outstanding 17,493 17,258 17,461 17,199 Effect of dilutive stock options and warrants 517 511 499 490 Diluted weighted-average common shares outstanding 18,010 17,769 17,960 17,689 Net income per share Basic $ 0.08 $ 0.03 $ 0.12 $ 0.07 Diluted $ 0.08 $ 0.03 $ 0.11 $ 0.07 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) | 9 Months Ended |
Apr. 30, 2017 | |
Debt [Abstract] | |
Schedule Of Leverage Ratios And Applicable Margins | Applicable Margin Total Leverage Ratio for Prime Rate Loans >= 2.50 to 1.0: 1.50 % > 1.75 to 1.00 but < 2.50 to 1.00: 1.00 % <= 1.75 to 1.00: 0.50 % |
Schedule Of Long-Term Debt | April 30 July 31 2017 2016 Notes payable principal $ 15,670 $ 9,168 Less debt issuance costs (142) (93) Less current maturities (2,940) (2,417) Notes payable - non-current $ 12,588 $ 6,658 |
Schedule Of Minimum Principal Payments | Fiscal year ending July 31: SVB Term Note TCS Notes DCi Notes Total Notes Payable 2017 $ 325 $ 246 $ 157 $ 728 2018 1,300 1,014 645 2,959 2019 1,625 262 671 2,558 2020 2,275 — — 2,275 2021 2,600 — — 2,600 2022 4,550 — — 4,550 $ 12,675 $ 1,522 $ 1,473 $ 15,670 |
Contingent Liabilities (Tables)
Contingent Liabilities (Tables) | 9 Months Ended |
Apr. 30, 2017 | |
Contingent Liabilities [Abstract] | |
Schedule Of Changes In Holdback And Earn-Out Payable | Nine months ended April 30 2017 2016 Beginning balance $ 391 $ 1,116 Additions 1,410 - Adjustments - (62) Payments (261) (565) Imputed interest recognized 29 22 Gain on change in fair value of earn-out - (5) Ending balance $ 1,569 $ 506 Less current portion $ (325) $ (382) Ending balance, long-term $ 1,244 $ 124 |
Schedule Of Estimated Contingent Liability Payments | 2017 $ 70 2018 633 2019 750 2020 188 Total estimated payments 1,641 Less imputed interest (72) Present value of contingent liabilities $ 1,569 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 9 Months Ended |
Apr. 30, 2017 | |
Other Intangible Assets [Abstract] | |
Schedule Of Amortizable Intangible Assets | Nine months ended April 30, 2016 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ 11,947 $ (4,418) $ 7,529 Activity (220) (853) (1,073) Ending balance $ 11,727 $ (5,271) $ 6,456 11.98 Other intangibles Beginning balance $ 3,203 $ (616) $ 2,587 Activity (467) (301) (768) Ending balance $ 2,736 $ (917) $ 1,819 8.73 Total intangibles Beginning balance $ 15,150 $ (5,034) $ 10,116 Activity (687) (1,154) (1,841) Ending balance $ 14,463 $ (6,188) $ 8,275 11.26 Nine months ended April 30, 2017 Wtd. avg. Cost Accumulated Net remaining Customer relationships Basis Amortization Value life Beginning balance $ 11,727 $ (5,558) $ 6,169 Activity 2,540 (1,062) 1,478 Ending balance $ 14,267 $ (6,620) $ 7,647 11.69 Other intangibles Beginning balance $ 2,739 $ (1,018) $ 1,721 Activity 690 (356) 334 Ending balance $ 3,429 $ (1,374) $ 2,055 9.40 Total intangibles Beginning balance $ 14,466 $ (6,576) $ 7,890 Activity 3,230 (1,418) 1,812 Ending balance $ 17,696 $ (7,994) $ 9,702 11.20 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 9 Months Ended |
Apr. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule Of Fair Value Weighted Average Assumptions Of Options Granted | Nine months ended April 30, 2017 Expected life (years) n/a Risk-free interest rate n/a Expected volatility n/a Expected forfeiture rate 11.3 % Expected dividend yield - Weighted-average estimated fair value per share of options granted during the year n/a Cash received from the exercise of stock options $ 51,000 |
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 7/31/2016 384,750 $ 1.46 1.89 $ 1,408,027 Granted - n/a n/a n/a Exercised (17,250) 1.40 n/a n/a Forfeited (125) 1.94 n/a n/a Outstanding at 4/30/2017 367,375 $ 1.46 1.14 $ 1,387,529 Exercisable at 4/30/2017 367,375 $ 1.46 1.14 $ 1,387,529 |
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 7/31/2016 357,626 $ 2.52 6.95 $ 930,816 Granted - n/a n/a n/a Exercised (25,750) 2.12 n/a n/a Forfeited (16,250) 3.29 n/a n/a Outstanding at 4/30/2017 315,626 $ 2.51 6.10 $ 861,662 Exercisable at 4/30/2017 269,376 $ 2.38 5.97 $ 771,599 |
Schedule Of Changes In Non-Vested Option Shares | Number of Options Wtd. Avg. Exercise Price Non-vested at 7/31/2016 70,000 $ 3.29 Granted - n/a Vested (7,500) 3.26 Forfeited (16,250) 3.29 Non-vested at 4/30/2017 46,250 $ 3.29 |
Schedule Of Changes In Unvested Restricted Shares | Nine months ended April 30 2017 2016 Beginning balance unvested restricted stock 657,912 671,211 Granted 131,222 42,359 Vested (51,745) (33,060) Forfeited (124,184) (10,292) Ending balance unvested restricted stock 613,205 670,218 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Apr. 30, 2017 | |
Income Taxes [Abstract] | |
Provision For Income Taxes | Three months ended April 30 Nine months ended April 30 2017 2016 2017 2016 Current: Federal $ (51) $ (40) $ (51) $ (40) State 54 (64) 36 (76) Deferred, net 126 (264) (374) (856) Income tax expense $ 129 $ (368) $ (389) $ (972) |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Apr. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule Of Purchase Price Allocation | Preliminary Purchase Price Cash $ 2,090 Bank note 8,160 Holdback payment 861 Contingent earn-out 1,410 Purchase price $ 12,521 Preliminary Purchase Price Allocation Cash $ 45 Trade receivables 883 Work in process 48 Prepaid expense and other 17 Assumed liabilities (188) Furniture and equipment 143 Software product costs 1,940 Intangible assets 3,230 Goodwill 6,403 Purchase price allocation $ 12,521 |
Schedule Of Unaudited Pro Forma Financial Information | Three months ended April 30 Nine months ended April 30 2017 2016 2017 2016 Revenue $ 13,425 $ 13,139 $ 40,123 $ 38,881 Net income $ 1,425 $ 522 $ 2,205 $ 1,392 Net income per common share: Basic $ 0.08 $ 0.03 $ 0.13 $ 0.08 Diluted $ 0.08 $ 0.03 $ 0.12 $ 0.08 |
Schedule Of Pro Forma Adjustments | Three months ended April 30 Nine months ended April 30 2017 2016 2017 2016 Amortization of intangible assets - 228 194 684 Acquisition-related professional fees - - (121) - Interest expense - 82 82 246 Income tax benefit (expense) - 49 121 71 Total adjustments - 359 276 1,001 |
Description Of The Business A24
Description Of The Business And Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017USD ($)customer | Apr. 30, 2016USD ($)customer | Apr. 30, 2017USD ($)customeritem | Apr. 30, 2016USD ($)customer | |
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Number of manufacturers | item | 1,800 | |||
Number of equipment dealers, distributors and manufacturers | 25,000 | |||
Estimated economic life | 11 years 2 months 12 days | 11 years 3 months 4 days | ||
Legal provisions | $ | $ 0 | $ 0 | $ 0 | $ 0 |
Minimum [Member] | Software Products [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Estimated economic life | 2 years | |||
Maximum [Member] | Software Products [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Estimated economic life | 14 years | |||
Customer Concentration Risk [Member] | Revenue [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Number of customers accounting for ten percent or more of revenue | 0 | 0 | 0 | 0 |
Customer Concentration Risk [Member] | Minimum [Member] | Revenue [Member] | ||||
Description Of Business And Significant Accounting Policies [Line Items] | ||||
Percentage of revenue | 10.00% | 10.00% | 10.00% | 10.00% |
Description Of The Business A25
Description Of The Business And Significant Accounting Policies (Schedule Of Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Description Of The Business And Significant Accounting Policies [Abstract] | ||
Issuance of common stock related to payment of contingent liabilities | $ 60 | |
Cashless exercise of common stock warrants | 46 | |
Current assets acquired in connection with acquisitions | 36 | |
Accrued liabilities assumed in connection with acquisitions | 58 | |
Contingent liabilities incurred in connection with acquisition | $ 1,410 | $ 62 |
Basic And Diluted Net Income 26
Basic And Diluted Net Income Per Common Share (Schedule Of Basic And Diluted Net Income Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Basic And Diluted Net Income Per Common Share [Abstract] | ||||
Net income | $ 1,425 | $ 448 | $ 2,023 | $ 1,285 |
Weighted-average common shares outstanding | 17,493 | 17,258 | 17,461 | 17,199 |
Effect of dilutive stock options and warrants | 517 | 511 | 499 | 490 |
Diluted weighted-average common shares outstanding | 18,010 | 17,769 | 17,960 | 17,689 |
Basic | $ 0.08 | $ 0.03 | $ 0.12 | $ 0.07 |
Diluted | $ 0.08 | $ 0.03 | $ 0.11 | $ 0.07 |
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 (Narrative) (Details)
Debt (Narrative) (Details) | Jul. 13, 2015USD ($) | Sep. 30, 2014USD ($)loan | Feb. 28, 2015USD ($) | Apr. 30, 2017USD ($) | Nov. 01, 2016USD ($) | Jul. 31, 2016USD ($) | Apr. 26, 2013USD ($) |
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 15,670,000 | $ 9,168,000 | |||||
SVB Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Issuance date | Apr. 26, 2013 | ||||||
SVB Agreement [Member] | Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Term loan | $ 4,500,000 | ||||||
Maturity date | Apr. 26, 2018 | ||||||
SVB Agreement [Member] | Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility | $ 3,000,000 | ||||||
Revolving credit facility maturity date | Apr. 26, 2015 | ||||||
SVB 2014 Modification Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Effective interest rate | 4.50% | ||||||
SVB 2014 Modification Agreement [Member] | Prime Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Effective interest rate | 4.00% | ||||||
SVB 2014 Modification Agreement [Member] | Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Term loan | $ 6,050,000 | ||||||
Maturity date | Sep. 30, 2019 | ||||||
SVB 2014 Modification Agreement [Member] | Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility | 3,000,000 | ||||||
Revolving credit facility maturity date | Nov. 30, 2016 | ||||||
Revolving credit facility outstanding | $ 0 | ||||||
SVB 2016 Modification Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Minimum fixed charge coverage ratio | 125.00% | ||||||
SVB 2016 Modification Agreement [Member] | Through December 31, 2017 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum leverage ratio | 300.00% | ||||||
SVB 2016 Modification Agreement [Member] | After December 31, 2017 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum leverage ratio | 250.00% | ||||||
SVB 2016 Modification Agreement [Member] | Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility | $ 3,000,000 | ||||||
Maturity date | Sep. 30, 2018 | ||||||
SVB 2016 Modification Agreement [Member] | Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Term loan | $ 13,000,000 | ||||||
Maturity date | Nov. 1, 2021 | ||||||
SVB 2016 Modification Agreement [Member] | Term Loan [Member] | Quarterly, February 1, 2017 Through November 1, 2018 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Principal payments | $ 325,000 | ||||||
SVB 2016 Modification Agreement [Member] | Term Loan [Member] | Quarterly, February 1, 2019 Through November 1, 2019 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Principal payments | 487,500 | ||||||
SVB 2016 Modification Agreement [Member] | Term Loan [Member] | Quarterly, February 1, 2020 Through August 1, 2021 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Principal payments | $ 650,000 | ||||||
SVB 2016 Modification, Leverage Ratio 2.00 to 1.00 [Member] | Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Additional payments required as percentage of excess cash flow | 50.00% | ||||||
Total leverage ratio threshold | 2 | ||||||
SVB 2016 Modification, Leverage Ratio 1.25 to 1.00 [Member] | Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Additional payments required as percentage of excess cash flow | 25.00% | ||||||
Total leverage ratio threshold | 1.25 | ||||||
TCS Notes [Member] | Promissory Note [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Term loan | $ 3,000,000 | ||||||
Maturity date | Sep. 30, 2018 | ||||||
Debt instrument valuation adjustment | $ (67,000) | ||||||
Interest rate | 5.00% | ||||||
Default interest rate | 7.50% | ||||||
DCi Notes [Member] | Promissory Note [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Term loan | $ 2,000,000 | ||||||
Maturity date | Jul. 13, 2019 | ||||||
Debt instrument valuation adjustment | $ (64,000) | ||||||
Interest rate | 4.00% | ||||||
Maximum [Member] | SVB 2016 Modification Agreement [Member] | Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Term loan prepayment penalty | $ 260,000 | ||||||
TCS [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Acquisition date | Sep. 30, 2014 | ||||||
Number of notes issued in connection with acquisition | loan | 2 | ||||||
DCi [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Acquisition date | Jul. 13, 2015 |
Debt (Schedule Of Leverage Rati
Debt (Schedule Of Leverage Ratios And Applicable Margins) (Details) | 9 Months Ended |
Apr. 30, 2017 | |
Range 1 [Member] | Prime Rate [Member] | |
Debt Instrument [Line Items] | |
Applicable Margin for Prime Rate Loans | 1.50% |
Range 2 [Member] | Prime Rate [Member] | |
Debt Instrument [Line Items] | |
Applicable Margin for Prime Rate Loans | 1.00% |
Range 3 [Member] | Prime Rate [Member] | |
Debt Instrument [Line Items] | |
Applicable Margin for Prime Rate Loans | 0.50% |
Minimum [Member] | Range 1 [Member] | |
Debt Instrument [Line Items] | |
Total Leverage Ratio | 2.50 |
Minimum [Member] | Range 2 [Member] | |
Debt Instrument [Line Items] | |
Total Leverage Ratio | 1.75 |
Maximum [Member] | Range 2 [Member] | |
Debt Instrument [Line Items] | |
Total Leverage Ratio | 2.50 |
Maximum [Member] | Range 3 [Member] | |
Debt Instrument [Line Items] | |
Total Leverage Ratio | 1.75 |
Debt (Schedule Of Long-Term Deb
Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands | Apr. 30, 2017 | Jul. 31, 2016 |
Debt [Abstract] | ||
Notes payable principal | $ 15,670 | $ 9,168 |
Less debt issuance costs | (142) | (93) |
Less current maturities | (2,940) | (2,417) |
Notes payable - non-current | $ 12,588 | $ 6,658 |
Debt (Schedule Of Minimum Princ
Debt (Schedule Of Minimum Principal Payments) (Details) - USD ($) $ in Thousands | Apr. 30, 2017 | Jul. 31, 2016 |
Debt [Abstract] | ||
Notes payable principal | $ 15,670 | $ 9,168 |
Contingent Liabilities (Narrati
Contingent Liabilities (Narrative) (Details) - USD ($) | 9 Months Ended | |||
Apr. 30, 2017 | Nov. 01, 2016 | Oct. 31, 2016 | Sep. 30, 2014 | |
Auction123 [Member] | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Earn out period | 2 years | |||
Earn-out payment | $ 1,410,000 | |||
TCS [Member] | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Earnout payable | $ 711,000 | |||
TCS [Member] | Four Quarters, Commencing December 31, 2015 [Member] | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Earn-out payment amount | $ 120,905 | |||
TCS [Member] | Four Quarters, Commencing December 31, 2016 [Member] | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Earn-out payment | $ 70,000 | |||
Maximum [Member] | Auction123 [Member] | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Earnout payable | $ 1,500,000 | $ 1,500,000 |
Contingent Liabilities (Schedul
Contingent Liabilities (Schedule Of Changes In Holdback And Earn-Out Payable) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Jul. 31, 2016 | |
Contingent Liabilities [Abstract] | |||
Beginning balance | $ 391 | $ 1,116 | |
Additions | 1,410 | ||
Adjustments | (62) | ||
Payments | (261) | (565) | |
Imputed interest recognized | 29 | 22 | |
Gain on change in fair value of earn-out | (5) | ||
Ending balance | 1,569 | 506 | |
Less current portion | (325) | (382) | $ (331) |
Ending balance, long-term | $ 1,244 | $ 124 | $ 60 |
Contingent Liabilities (Sched33
Contingent Liabilities (Schedule Of Estimated Contingent Liability Payments) (Details) - USD ($) $ in Thousands | Apr. 30, 2017 | Jul. 31, 2016 | Apr. 30, 2016 | Jul. 31, 2015 |
Contingent Liabilities [Abstract] | ||||
2,017 | $ 70 | |||
2,018 | 633 | |||
2,019 | 750 | |||
2,020 | 188 | |||
Total estimated payments | 1,641 | |||
Less imputed interest | (72) | |||
Present value of contingent liabilities | $ 1,569 | $ 391 | $ 506 | $ 1,116 |
Other Intangible Assets (Schedu
Other Intangible Assets (Schedule Of Amortizable Intangible Assets) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Apr. 30, 2017 | Apr. 30, 2016 | Jul. 31, 2016 | Jul. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortizable Intangible Assets, Cost Basis | $ 17,696 | $ 14,463 | $ 14,466 | $ 15,150 |
Amortizable Intangible Assets, Accumulated Amortization | (7,994) | (6,188) | (6,576) | (5,034) |
Amortizable Intangible Assets, Net Value | 9,702 | 8,275 | 7,890 | 10,116 |
Activity, Cost Basis | 3,230 | (687) | ||
Activity, Accumulated Amortization | (1,418) | (1,154) | ||
Activity, Net Value | $ 1,812 | $ (1,841) | ||
Weighted average remaining useful life | 11 years 2 months 12 days | 11 years 3 months 4 days | ||
Customer Relationships [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortizable Intangible Assets, Cost Basis | $ 14,267 | $ 11,727 | 11,727 | 11,947 |
Amortizable Intangible Assets, Accumulated Amortization | (6,620) | (5,271) | (5,558) | (4,418) |
Amortizable Intangible Assets, Net Value | 7,647 | 6,456 | 6,169 | 7,529 |
Activity, Cost Basis | 2,540 | (220) | ||
Activity, Accumulated Amortization | (1,062) | (853) | ||
Activity, Net Value | $ 1,478 | $ (1,073) | ||
Weighted average remaining useful life | 11 years 8 months 9 days | 11 years 11 months 23 days | ||
Other Intangibles [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortizable Intangible Assets, Cost Basis | $ 3,429 | $ 2,736 | 2,739 | 3,203 |
Amortizable Intangible Assets, Accumulated Amortization | (1,374) | (917) | (1,018) | (616) |
Amortizable Intangible Assets, Net Value | 2,055 | 1,819 | $ 1,721 | $ 2,587 |
Activity, Cost Basis | 690 | (467) | ||
Activity, Accumulated Amortization | (356) | (301) | ||
Activity, Net Value | $ 334 | $ (768) | ||
Weighted average remaining useful life | 9 years 4 months 24 days | 8 years 8 months 23 days |
Stock-Based Compensation Plan35
Stock-Based Compensation Plans (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2015 | Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | Jul. 31, 2016 | |
Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total stock compensation expense recognized | $ 7,000 | $ 59,000 | ||||
Unrecognized compensation costs | $ 8,000 | $ 61,000 | 8,000 | 61,000 | ||
Capitalized stock-based compensation costs | $ 0 | 0 | $ 0 | 0 | ||
2000 Plan [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock authorized for issuance | 1,950,000 | 1,950,000 | ||||
Expiration term | 5 years | |||||
Shareholder percent ownership of the company | 10.00% | |||||
Exercise prices for options outstanding | $ 1.46 | $ 1.46 | $ 1.46 | |||
2000 Plan [Member] | Maximum [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expiration term | 10 years | |||||
Exercise prices for options outstanding | 1.85 | $ 1.85 | ||||
2000 Plan [Member] | Minimum [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Exercise prices for options outstanding | $ 0.49 | $ 0.49 | ||||
2010 Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock authorized for issuance | 3,050,000 | 3,050,000 | ||||
2010 Plan [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expiration term | 10 years | |||||
Exercise prices for options outstanding | $ 2.51 | $ 2.51 | $ 2.52 | |||
Weighted-average remaining vesting period | 6 months 15 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 | 2,725,000 | 2,725,000 | ||||
2010 Plan [Member] | Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total stock compensation expense recognized | $ 395,000 | 227,000 | ||||
Unrecognized compensation expense | $ 566,000 | $ 467,000 | $ 566,000 | 467,000 | ||
2010 Plan [Member] | Maximum [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Exercise prices for options outstanding | $ 3.54 | $ 3.54 | ||||
2010 Plan [Member] | Minimum [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Exercise prices for options outstanding | $ 0.59 | $ 0.59 | ||||
Purchase price as percent of market value | 100.00% | |||||
2000 ESPP [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total stock compensation expense recognized | $ 75,000 | $ 29,000 | ||||
Purchase price as percent of market value | 85.00% | |||||
Common stock reserved for issuance | 575,000 | 575,000 | ||||
Shares issued | 338,689 | 300,280 | 338,689 | 300,280 | ||
Maximum number of shares per employee per year | 5,000 | |||||
2000 ESPP [Member] | Minimum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Service period | 6 months | |||||
Tranche One [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25.00% | |||||
Tranche Two [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25.00% | |||||
Vesting period | 3 years | |||||
Directors [Member] | Tranche One [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Directors [Member] | Tranche Two [Member] | Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Executive Officers [Member] | 2010 Plan [Member] | Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 4 years | |||||
Shares of restricted stock | 550,000 | |||||
Common stock granted | $ 350,000 | |||||
Volatility rate | 46.00% | |||||
Risk-free interest rate | 1.34% | |||||
Executive Officers [Member] | Tranche One [Member] | 2010 Plan [Member] | Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 30.00% | |||||
Vesting threshold, consecutive trading days | 30 days | |||||
Market price threshold | $ 6 | |||||
Executive Officers [Member] | Tranche Two [Member] | 2010 Plan [Member] | Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 20.00% | |||||
Vesting threshold, consecutive trading days | 30 days | |||||
Market price threshold | $ 7 | |||||
Executive Officers [Member] | Tranche Three [Member] | 2010 Plan [Member] | Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 20.00% | |||||
Vesting threshold, consecutive trading days | 30 days | |||||
Market price threshold | $ 8 | |||||
Executive Officers [Member] | Tranche Four [Member] | 2010 Plan [Member] | Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 30.00% | |||||
Vesting threshold, consecutive trading days | 30 days | |||||
Market price threshold | $ 9 |
Stock-Based Compensation Plan36
Stock-Based Compensation Plans (Schedule Of Fair Value Weighted Average Assumptions Of Options Granted) (Details) - Stock Options [Member] | 9 Months Ended |
Apr. 30, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected life (years) | 0 years |
Expected forfeiture rate | 11.30% |
Expected dividend yield | |
Cash received from the exercise of stock options | $ 51,000 |
Stock-Based Compensation Plan37
Stock-Based Compensation Plans (Schedule Of Changes In Option Shares) (Details) - Stock Options [Member] - USD ($) | 9 Months Ended | 12 Months Ended |
Apr. 30, 2017 | Jul. 31, 2016 | |
2000 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Options, Outstanding, Beginning Balance | 384,750 | |
Number of Options, Granted | ||
Number of Options, Exercised | (17,250) | |
Number of Options, Forfeited | (125) | |
Number of Options, Outstanding, Ending Balance | 367,375 | 384,750 |
Number of Options, Exercisable | 367,375 | |
Weighted Average Exercise Price (per share), Outstanding, Beginning Balance | $ 1.46 | |
Weighted Average Exercise Price (per share), Granted | ||
Weighted Average Exercise Price (per share), Exercised | 1.40 | |
Weighted Average Exercise Price (per share), Forfeited | 1.94 | |
Weighted Average Exercise Price (per share), Outstanding, Ending Balance | 1.46 | $ 1.46 |
Weighted Average Exercise Price (per share), Exercisable | $ 1.46 | |
Weighted Average Remaining Contractual Period (Years), Outstanding | 1 year 1 month 21 days | 1 year 10 months 21 days |
Weighted Average Remaining Contractual Period (Years), Exercisable | 1 year 1 month 21 days | |
Aggregate Intrinsic Value, Outstanding | $ 1,387,529 | $ 1,408,027 |
Aggregate Intrinsic Value, Exercisable | $ 1,387,529 | |
2010 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Options, Outstanding, Beginning Balance | 357,626 | |
Number of Options, Granted | ||
Number of Options, Exercised | (25,750) | |
Number of Options, Forfeited | (16,250) | |
Number of Options, Outstanding, Ending Balance | 315,626 | 357,626 |
Number of Options, Exercisable | 269,376 | |
Weighted Average Exercise Price (per share), Outstanding, Beginning Balance | $ 2.52 | |
Weighted Average Exercise Price (per share), Granted | ||
Weighted Average Exercise Price (per share), Exercised | 2.12 | |
Weighted Average Exercise Price (per share), Forfeited | 3.29 | |
Weighted Average Exercise Price (per share), Outstanding, Ending Balance | 2.51 | $ 2.52 |
Weighted Average Exercise Price (per share), Exercisable | $ 2.38 | |
Weighted Average Remaining Contractual Period (Years), Outstanding | 6 years 1 month 6 days | 6 years 11 months 12 days |
Weighted Average Remaining Contractual Period (Years), Exercisable | 5 years 11 months 19 days | |
Aggregate Intrinsic Value, Outstanding | $ 861,662 | $ 930,816 |
Aggregate Intrinsic Value, Exercisable | $ 771,599 |
Stock-Based Compensation Plan38
Stock-Based Compensation Plans (Schedule Of Changes In Non-Vested Option Shares) (Details) - 2010 Plan [Member] - Stock Options [Member] | 9 Months Ended |
Apr. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Options, Non-vested, Beginning Balance | shares | 70,000 |
Number of Options, Granted | shares | |
Number of Options, Vested | shares | (7,500) |
Number of Options, Forfeited | shares | (16,250) |
Number of Options, Non-vested, Ending Balance | shares | 46,250 |
Weighted Average Exercise Price, Non-vested, Beginning Balance | $ / shares | $ 3.29 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Vested | $ / shares | 3.26 |
Weighted Average Exercise Price, Forfeited | $ / shares | 3.29 |
Weighted Average Exercise Price, Non-vested, Ending Balance | $ / shares | $ 3.29 |
Stock-Based Compensation Plan39
Stock-Based Compensation Plans (Schedule Of Changes In Unvested Restricted Shares) (Details) - Restricted Stock [Member] - 2010 Plan [Member] - shares | 9 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance unvested restricted stock | 657,912 | 671,211 |
Granted | 131,222 | 42,359 |
Vested | (51,745) | (33,060) |
Forfeited | (124,184) | (10,292) |
Ending balance unvested restricted stock | 613,205 | 670,218 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | $ 8,238,000 | $ 8,238,000 | ||
Income tax benefit (expense) | (129,000) | $ 368,000 | 389,000 | $ 972,000 |
Research And Development [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Income tax benefit (expense) | 595,000 | |||
Federal [Member] | Research And Development [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax credit | 449,000 | 449,000 | ||
State [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 316,000 | 316,000 | ||
State [Member] | Research And Development [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax credit | 316,000 | $ 316,000 | ||
International [Member] | Netherlands [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards expiration period | 9 years | |||
NOL valuation allowance | 466,000 | 585,000 | $ 466,000 | 585,000 |
Net deferred tax assets | 0 | $ 0 | 0 | $ 0 |
International [Member] | India [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
NOL valuation allowance | 57,000 | 57,000 | ||
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes (Provision For Inc
Income Taxes (Provision For Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Income Taxes [Abstract] | ||||
Current: Federal | $ (51) | $ (40) | $ (51) | $ (40) |
Current: State | 54 | (64) | 36 | (76) |
Deferred, net | 126 | (264) | (374) | (856) |
Income tax expense | $ 129 | $ (368) | $ (389) | $ (972) |
Business Combinations (Narrativ
Business Combinations (Narrative) (Details) | Nov. 01, 2016USD ($)item | Apr. 30, 2017USD ($) | Apr. 30, 2017USD ($) | Apr. 30, 2016USD ($) | Jul. 31, 2016USD ($) | Jul. 31, 2015USD ($) |
Business Acquisition [Line Items] | ||||||
Estimated fair value | $ 1,569,000 | $ 1,569,000 | $ 506,000 | $ 391,000 | $ 1,116,000 | |
Gain on change in fair value of contingent liabilities | $ (5,000) | |||||
Auction123 [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Cash consideration | $ 10,250,000 | |||||
Holdback payment | $ 250,000 | $ 861,000 | ||||
Number of installments | item | 2 | |||||
Estimated fair value | $ 1,410,000 | |||||
Gain on change in fair value of contingent liabilities | $ 611,000 | |||||
Goodwill acquired | 6,600,000 | |||||
Acquisition costs | 170,000 | |||||
Estimated tax rate | 40.00% | 40.00% | ||||
Liabilities incurred | $ 8,160,000 | |||||
Maximum [Member] | Auction123 [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Earnout payable | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 |
Business Combinations (Schedule
Business Combinations (Schedule Of Purchase Price Allocation) (Details) - USD ($) $ in Thousands | Nov. 01, 2016 | Apr. 30, 2017 | Jul. 31, 2016 |
Business Acquisition [Line Items] | |||
Goodwill | $ 28,037 | $ 21,634 | |
Auction123 [Member] | |||
Business Acquisition [Line Items] | |||
Cash | 2,090 | ||
Bank note | 8,160 | ||
Holdback payment | $ 250 | 861 | |
Contingent earn-out | 1,410 | ||
Purchase price | 12,521 | ||
Cash | 45 | ||
Trade receivables | 883 | ||
Work in process | 48 | ||
Prepaid expense and other | 17 | ||
Assumed liabilities | (188) | ||
Furniture and equipment | 143 | ||
Software product costs | 1,940 | ||
Intangible assets | 3,230 | ||
Goodwill | 6,403 | ||
Purchase price allocation | $ 12,521 |
Business Combinations (Schedu44
Business Combinations (Schedule Of Unaudited Pro Forma Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Business Combinations [Abstract] | ||||
Revenue | $ 13,425 | $ 13,139 | $ 40,123 | $ 38,881 |
Net income | $ 1,425 | $ 522 | $ 2,205 | $ 1,392 |
Net income per common share: Basic | $ 0.08 | $ 0.03 | $ 0.13 | $ 0.08 |
Net income per common share: Diluted | $ 0.08 | $ 0.03 | $ 0.12 | $ 0.08 |
Business Combinations (Schedu45
Business Combinations (Schedule Of Pro Forma Adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Amortization of intangible assets | $ 1,418 | $ 1,154 | ||
Interest expense | $ 200 | $ 118 | 526 | 350 |
Income tax benefit (expense) | $ (129) | 368 | 389 | 972 |
Acquisition-related Costs [Member] | ||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Amortization of intangible assets | 228 | 194 | 684 | |
Acquisition-related professional fees | (121) | |||
Interest expense | 82 | 82 | 246 | |
Income tax benefit (expense) | 49 | 121 | 71 | |
Total adjustments | $ 359 | $ 276 | $ 1,001 |