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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sonic Foundry Inc (CE) | USOTC:SOFO | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0003 | 0.00 | 01:00:00 |
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|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
MARYLAND
|
|
39-1783372
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|
|
|
Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
¨
|
Class
|
|
Outstanding
April 29, 2019
|
Common Stock, $0.01 par value
|
|
6,006,933
|
|
|
|
PAGE NO.
|
PART I
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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||
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||
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Item 2.
|
||
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Item 3.
|
||
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Item 4.
|
||
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|
PART II
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 6.
|
||
|
|
|
Total stockholders’ deficit
|
(7,098
|
)
|
|
(6,458
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
13,324
|
|
|
$
|
13,583
|
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product and other
|
$
|
1,796
|
|
|
$
|
2,690
|
|
|
3,547
|
|
|
$
|
5,713
|
|
|
Services
|
6,201
|
|
|
5,770
|
|
|
11,952
|
|
|
11,642
|
|
||||
Total revenue
|
7,997
|
|
|
8,460
|
|
|
15,499
|
|
|
17,355
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product and other
|
645
|
|
|
1,203
|
|
|
1,296
|
|
|
2,426
|
|
||||
Services
|
1,359
|
|
|
1,328
|
|
|
2,550
|
|
|
2,530
|
|
||||
Total cost of revenue
|
2,004
|
|
|
2,531
|
|
|
3,846
|
|
|
4,956
|
|
||||
Gross margin
|
5,993
|
|
|
5,929
|
|
|
11,653
|
|
|
12,399
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
3,836
|
|
|
3,867
|
|
|
7,779
|
|
|
7,977
|
|
||||
General and administrative
|
1,345
|
|
|
1,509
|
|
|
2,883
|
|
|
3,082
|
|
||||
Product development
|
1,935
|
|
|
1,812
|
|
|
3,768
|
|
|
3,565
|
|
||||
Total operating expenses
|
7,116
|
|
|
7,188
|
|
|
14,430
|
|
|
14,624
|
|
||||
Loss from operations
|
(1,123
|
)
|
|
(1,259
|
)
|
|
(2,777
|
)
|
|
(2,225
|
)
|
||||
Non-operating income (expenses):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(227
|
)
|
|
(103
|
)
|
|
(381
|
)
|
|
(195
|
)
|
||||
Other income (expense), net
|
(11
|
)
|
|
19
|
|
|
(3
|
)
|
|
10
|
|
||||
Total non-operating expenses
|
(238
|
)
|
|
(84
|
)
|
|
(384
|
)
|
|
(185
|
)
|
||||
Loss before income taxes
|
(1,361
|
)
|
|
(1,343
|
)
|
|
(3,161
|
)
|
|
(2,410
|
)
|
||||
Benefit (provision) for income taxes
|
(125
|
)
|
|
(106
|
)
|
|
(113
|
)
|
|
1,281
|
|
||||
Net loss
|
$
|
(1,486
|
)
|
|
$
|
(1,449
|
)
|
|
$
|
(3,274
|
)
|
|
(1,129
|
)
|
|
Dividends on preferred stock
|
(45
|
)
|
|
(50
|
)
|
|
(98
|
)
|
|
(122
|
)
|
||||
Net loss attributable to common stockholders
|
$
|
(1,531
|
)
|
|
$
|
(1,499
|
)
|
|
$
|
(3,372
|
)
|
|
$
|
(1,251
|
)
|
Loss per common share
|
|
|
|
|
|
|
|
||||||||
– basic
|
$
|
(0.29
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.28
|
)
|
– diluted
|
$
|
(0.29
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.28
|
)
|
Weighted average common shares
|
|
|
|
|
|
|
|
||||||||
– basic
|
5,278,500
|
|
|
4,461,310
|
|
|
5,232,449
|
|
|
4,459,675
|
|
||||
– diluted
|
5,278,500
|
|
|
4,461,310
|
|
|
5,232,449
|
|
|
4,459,675
|
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(1,486
|
)
|
|
$
|
(1,449
|
)
|
|
$
|
(3,274
|
)
|
|
$
|
(1,129
|
)
|
Foreign currency translation adjustment
|
(18
|
)
|
|
309
|
|
|
45
|
|
|
329
|
|
||||
Comprehensive loss
|
$
|
(1,504
|
)
|
|
$
|
(1,140
|
)
|
|
$
|
(3,229
|
)
|
|
$
|
(800
|
)
|
|
Six Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(3,274
|
)
|
|
$
|
(1,129
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Amortization of other intangibles
|
97
|
|
|
268
|
|
||
Depreciation and amortization of property and equipment
|
516
|
|
|
536
|
|
||
Provision for doubtful accounts - including financing receivables
|
26
|
|
|
175
|
|
||
Deferred taxes
|
—
|
|
|
(1,361
|
)
|
||
Stock-based compensation expense related to stock options and warrants
|
219
|
|
|
320
|
|
||
Remeasurement gain on derivative liability
|
(7
|
)
|
|
(9
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
1,354
|
|
|
995
|
|
||
Financing receivables
|
(2
|
)
|
|
1,525
|
|
||
Inventories
|
(612
|
)
|
|
(59
|
)
|
||
Capitalized commissions
|
105
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
(25
|
)
|
|
381
|
|
||
Other long-term assets
|
—
|
|
|
—
|
|
||
Accounts payable and accrued liabilities
|
89
|
|
|
700
|
|
||
Other long-term liabilities
|
(33
|
)
|
|
(101
|
)
|
||
Unearned revenue
|
(1,704
|
)
|
|
(2,789
|
)
|
||
Net cash used in operating activities
|
(3,251
|
)
|
|
(548
|
)
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(222
|
)
|
|
(238
|
)
|
||
Net cash used in investing activities
|
(222
|
)
|
|
(238
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from notes payable
|
4,500
|
|
|
1,000
|
|
||
Proceeds from revolving lines of credit
|
8,748
|
|
|
10,822
|
|
||
Payments on notes payable
|
(333
|
)
|
|
(681
|
)
|
||
Payments on revolving lines of credit
|
(9,186
|
)
|
|
(10,743
|
)
|
||
Payment of debt issuance costs
|
(110
|
)
|
|
(20
|
)
|
||
Proceeds from issuance of preferred stock and common stock
|
5
|
|
|
508
|
|
||
Payments on capital lease and financing arrangements
|
(134
|
)
|
|
(159
|
)
|
||
Net cash provided by financing activities
|
3,490
|
|
|
727
|
|
||
Changes in cash and cash equivalents due to changes in foreign currency
|
(24
|
)
|
|
28
|
|
||
Net decrease in cash and cash equivalents
|
(7
|
)
|
|
(31
|
)
|
||
Cash and cash equivalents at beginning of year
|
1,189
|
|
|
1,211
|
|
||
Cash and cash equivalents at end of year
|
$
|
1,182
|
|
|
$
|
1,180
|
|
Supplemental cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
264
|
|
|
$
|
169
|
|
Income taxes paid, foreign
|
160
|
|
|
43
|
|
||
Non-cash financing and investing activities:
|
|
|
|
||||
Property and equipment financed by capital lease or accounts payable
|
112
|
|
|
256
|
|
||
Debt discount
|
676
|
|
|
—
|
|
||
Deemed dividend for beneficial conversion feature of preferred stock
|
—
|
|
|
28
|
|
||
Preferred stock dividends paid in additional shares
|
98
|
|
|
50
|
|
||
Conversion of preferred shares
|
563
|
|
|
—
|
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
|
March 31, 2019
|
|
September 30, 2018
|
||||
Customer support contracts, current and long-term, gross
|
$
|
290
|
|
|
$
|
281
|
|
Product receivables, gross
|
526
|
|
|
526
|
|
||
Allowance for losses on financing receivables
|
(526
|
)
|
|
(526
|
)
|
||
|
$
|
290
|
|
|
$
|
281
|
|
|
March 31, 2019
|
|
September 30, 2018
|
||||
Investment in sales-type lease
|
$
|
413
|
|
|
$
|
399
|
|
|
$
|
413
|
|
|
$
|
399
|
|
|
March 31,
2019 |
|
September 30, 2018
|
||||
Raw materials and supplies
|
$
|
438
|
|
|
$
|
358
|
|
Finished goods
|
1,203
|
|
|
669
|
|
||
|
$
|
1,641
|
|
|
$
|
1,027
|
|
March 31, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||||||
Derivative liability
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
10
|
|
September 30, 2018
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||||||
Derivative liability
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
|
PFG V Debt, Net of Discount
|
|
Warrant Debt, PFG V
|
|
Burish Notes, Net of Discount
|
||||||
Balance as of September 30, 2018
|
|
$
|
1,905
|
|
|
$
|
103
|
|
|
$
|
—
|
|
Activity during the period:
|
|
|
|
|
|
|
||||||
Disbursement of Tranche 2, net of discount
|
|
471
|
|
|
26
|
|
|
—
|
|
|||
Disbursement of Tranches 1-4
|
|
—
|
|
|
—
|
|
|
4,000
|
|
|||
Disbursement of warrants
|
|
—
|
|
|
—
|
|
|
(674
|
)
|
|||
Payments
|
|
(333
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization and accretion expense
|
|
51
|
|
|
9
|
|
|
13
|
|
|||
Balance as of March 31, 2019
|
|
$
|
2,094
|
|
|
$
|
138
|
|
|
$
|
3,339
|
|
|
Options
|
|
Weighted-
Average
Exercise Price
|
|
Weighted-
Average
Remaining
Contractual
Period in
Years
|
|||
Outstanding at October 1, 2018
|
2,029,741
|
|
|
$
|
7.04
|
|
|
5.0
|
Granted
|
199,850
|
|
|
0.67
|
|
|
9.8
|
|
Exercised
|
—
|
|
|
—
|
|
|
0.0
|
|
Forfeited
|
(523,668
|
)
|
|
8.93
|
|
|
4.6
|
|
Outstanding at March 31, 2019
|
1,705,923
|
|
|
5.71
|
|
|
6.4
|
|
Exercisable at March 31, 2019
|
1,144,326
|
|
|
|
|
|
5.4
|
|
2019
|
|||||
Non-vested Shares
|
Shares
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
Non-vested at October 1, 2018
|
680,720
|
|
|
$
|
1.46
|
|
Granted
|
199,850
|
|
|
2.23
|
|
|
Vested
|
(289,836
|
)
|
|
2.02
|
|
|
Forfeited
|
(29,137
|
)
|
|
1.22
|
|
|
Non-vested at March 31, 2019
|
561,597
|
|
|
$
|
0.94
|
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Denominator for basic net income (loss) per share - weighted average common shares
|
5,278,500
|
|
|
4,461,310
|
|
|
5,232,449
|
|
|
4,459,675
|
|
Effect of dilutive options (treasury method)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Denominator for diluted net income (loss) per share - adjusted weighted average common shares
|
5,278,500
|
|
|
4,461,310
|
|
|
5,232,449
|
|
|
4,459,675
|
|
Options, warrants and convertible shares outstanding during each period, but not included in the computation of diluted net income (loss) per share because they are antidilutive
|
2,076,083
|
|
|
2,242,269
|
|
|
2,076,083
|
|
|
2,242,269
|
|
1.
|
Identify the contract with a customer.
A contract with a customer exists when: (1) we and the customer have approved the contract and both parties are committed to perform their respective obligations; (2) we can identify each party’s rights regarding the products or services to be transferred; (3) we can identify the payment terms for the products or services to be transferred; (4) the contract has commercial substance as our future cash flows are expected to change; and (5) it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the products or services. Any subsequent contract modifications are analyzed to determine the treatment of the contract modification as a separate contract, prospectively or through a cumulative catch-up adjustment.
|
2.
|
Identify the performance obligations in the contract.
P
erformance obligations are promises to transfer a good or service to the customer. Performance obligations may be each individual promise in a contract, or may be groups of promises within a contract that significantly affect one another. To the extent a contract includes multiple promises, we must apply judgment to determine whether promises are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promises are accounted for as a combined performance obligation.
|
3.
|
Determine the transaction price.
The transaction price is the total amount of consideration to which we expect to be entitled in exchange for transferring promised products and services to a customer.
|
4.
|
Allocate the transaction price to performance obligations in the contract.
The allocation of the transaction price to performance obligations is generally done in proportion to their standalone selling prices (“SSP”). SSP is the price that
|
5.
|
Recognize revenues when or as the company satisfies a performance obligation.
We recognize revenues when, or as, distinct performance obligations are satisfied by transferring control of the product or service to the customer. A performance obligation is considered transferred when the customer obtains control of the product or service. Transfer of control is typically evaluated from the customer's perspective. At contract inception, we determine whether we satisfy the performance obligation over time or at a point in time.Revenue is recognized when performance obligations are satisfied.
|
|
Three Months Ended March 31, 2019
|
||||||||||||||
|
SOFO
|
SFI
|
MSKK
|
Eliminations
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
||||||||||
Hardware
|
$
|
784
|
|
$
|
35
|
|
$
|
376
|
|
$
|
(189
|
)
|
$
|
1,006
|
|
Software
|
618
|
|
124
|
|
120
|
|
(159
|
)
|
703
|
|
|||||
Shipping
|
87
|
|
—
|
|
—
|
|
—
|
|
87
|
|
|||||
|
|
|
|
|
|
||||||||||
Product and other total
|
1,489
|
|
159
|
|
496
|
|
(348
|
)
|
1,796
|
|
|||||
|
|
|
|
|
|
||||||||||
Support
|
1,961
|
|
145
|
|
976
|
|
(241
|
)
|
2,841
|
|
|||||
Hosting
|
1,062
|
|
115
|
|
513
|
|
—
|
|
1,690
|
|
|||||
Events
|
850
|
|
38
|
|
742
|
|
—
|
|
1,630
|
|
|||||
Installs and training
|
29
|
|
11
|
|
—
|
|
—
|
|
40
|
|
|||||
|
|
|
|
|
|
||||||||||
Services total
|
3,902
|
|
309
|
|
2,231
|
|
(241
|
)
|
6,201
|
|
|||||
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
5,391
|
|
$
|
468
|
|
$
|
2,727
|
|
$
|
(589
|
)
|
$
|
7,997
|
|
|
Six Months Ended March 31, 2019
|
||||||||||||||
|
SOFO
|
SFI
|
MSKK
|
Eliminations
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
||||||||||
Hardware
|
$
|
1,598
|
|
$
|
174
|
|
$
|
385
|
|
$
|
(300
|
)
|
$
|
1,857
|
|
Software
|
1,260
|
|
239
|
|
318
|
|
(276
|
)
|
1,541
|
|
|||||
Shipping
|
148
|
|
1
|
|
—
|
|
—
|
|
149
|
|
|||||
|
|
|
|
|
|
||||||||||
Product and other total
|
3,006
|
|
414
|
|
703
|
|
(576
|
)
|
3,547
|
|
|||||
|
|
|
|
|
|
||||||||||
Support
|
3,948
|
|
334
|
|
1,222
|
|
(472
|
)
|
5,032
|
|
|||||
Hosting
|
2,116
|
|
264
|
|
866
|
|
—
|
|
3,246
|
|
|||||
Events
|
2,081
|
|
76
|
|
1,394
|
|
—
|
|
3,551
|
|
|||||
Installs & training
|
108
|
|
15
|
|
—
|
|
—
|
|
123
|
|
|||||
|
|
|
|
|
|
||||||||||
Services total
|
8,253
|
|
689
|
|
3,482
|
|
(472
|
)
|
11,952
|
|
|||||
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
11,259
|
|
$
|
1,103
|
|
$
|
4,185
|
|
$
|
(1,048
|
)
|
$
|
15,499
|
|
|
As reported
|
|
ASC 606 adoption
|
|
Adjusted
|
||||||
|
September 30, 2018
|
|
adjustments
|
|
October 1, 2018
|
||||||
Capitalized commissions, current
|
$
|
—
|
|
|
$
|
580
|
|
|
$
|
580
|
|
Total current assets
|
10,825
|
|
|
580
|
|
|
11,405
|
|
|||
|
|
|
|
|
|
||||||
Capitalized commissions, long-term
|
—
|
|
|
112
|
|
|
112
|
|
|||
Total assets
|
$
|
13,583
|
|
|
$
|
692
|
|
|
$
|
14,275
|
|
|
|
|
|
|
|
||||||
Accrued liabilities
|
1,609
|
|
|
2
|
|
|
1,611
|
|
|||
Unearned revenue
|
11,645
|
|
|
(924
|
)
|
|
10,721
|
|
|||
Total current liabilities
|
16,590
|
|
|
(922
|
)
|
|
15,668
|
|
|||
|
|
|
|
|
|
||||||
Other long-term liabilities
|
202
|
|
|
(2
|
)
|
|
200
|
|
|||
Long-term portion of unearned revenue
|
1,691
|
|
|
(75
|
)
|
|
1,616
|
|
|||
Total liabilities
|
20,041
|
|
|
(999
|
)
|
|
19,042
|
|
|||
|
|
|
|
|
|
||||||
Accumulated deficit
|
(207,419
|
)
|
|
1,691
|
|
|
(205,728
|
)
|
|||
Total stockholders' equity (deficit)
|
(6,458
|
)
|
|
1,691
|
|
|
(4,767
|
)
|
|||
Total liabilities and stockholders' equity (deficit)
|
$
|
13,583
|
|
|
$
|
692
|
|
|
$
|
14,275
|
|
|
|
|
|
|
Amounts without
|
||||||
|
As reported
|
|
ASC 606 adoption
|
|
ASC 606 impact
|
||||||
|
March 31, 2019
|
|
impact
|
|
March 31, 2019
|
||||||
Capitalized commissions, current
|
$
|
459
|
|
|
$
|
(459
|
)
|
|
$
|
—
|
|
Prepaid expenses and other current assets
|
968
|
|
|
—
|
|
|
968
|
|
|||
Total current assets
|
10,600
|
|
|
(459
|
)
|
|
10,141
|
|
|||
|
|
|
|
|
|
||||||
Capitalized commissions, long-term
|
129
|
|
|
(129
|
)
|
|
—
|
|
|||
Total assets
|
$
|
13,324
|
|
|
$
|
(588
|
)
|
|
$
|
12,736
|
|
|
|
|
|
|
|
||||||
Accrued liabilities
|
1,595
|
|
|
(2
|
)
|
|
1,593
|
|
|||
Unearned revenue
|
8,301
|
|
|
777
|
|
|
9,078
|
|
|||
Total current liabilities
|
13,154
|
|
|
775
|
|
|
13,929
|
|
|||
|
|
|
|
|
|
||||||
Other long-term liabilities
|
174
|
|
|
2
|
|
|
176
|
|
|||
Long-term portion of unearned revenue
|
2,329
|
|
|
74
|
|
|
2,403
|
|
|||
Total liabilities
|
20,422
|
|
|
851
|
|
|
21,273
|
|
|||
|
|
|
|
|
|
||||||
Accumulated deficit
|
(209,002
|
)
|
|
(1,439
|
)
|
|
(210,441
|
)
|
|||
Total stockholders' equity (deficit)
|
(7,098
|
)
|
|
(1,439
|
)
|
|
(8,537
|
)
|
|||
Total liabilities and stockholders' equity (deficit)
|
$
|
13,324
|
|
|
$
|
(588
|
)
|
|
$
|
12,736
|
|
|
As reported
|
|
|
|
Amounts without
|
||||||
|
Three Months Ended
|
|
ASC 606 adoption
|
|
ASC 606 impact
|
||||||
|
March 31, 2019
|
|
impact
|
|
March 31, 2019
|
||||||
Product and other revenue
|
$
|
1,796
|
|
|
$
|
20
|
|
|
$
|
1,816
|
|
Total revenue
|
7,997
|
|
|
20
|
|
|
8,017
|
|
|||
|
|
|
|
|
|
||||||
Product and other cost of revenue
|
645
|
|
|
—
|
|
|
645
|
|
|||
Total cost of revenue
|
2,004
|
|
|
—
|
|
|
2,004
|
|
|||
|
|
|
|
|
|
||||||
Gross margin
|
5,993
|
|
|
20
|
|
|
6,013
|
|
|||
|
|
|
|
|
|
||||||
Selling and marketing (operating expenses)
|
3,836
|
|
|
(35
|
)
|
|
3,801
|
|
|||
Loss from operations
|
(1,123
|
)
|
|
55
|
|
|
(1,068
|
)
|
|||
Loss before income taxes
|
(1,361
|
)
|
|
55
|
|
|
(1,306
|
)
|
|||
Net loss
|
$
|
(1,486
|
)
|
|
$
|
55
|
|
|
$
|
(1,431
|
)
|
Net loss attributable to common stockholders
|
$
|
(1,531
|
)
|
|
$
|
55
|
|
|
$
|
(1,476
|
)
|
|
|
|
|
|
|
||||||
Loss per common share
|
|
|
|
|
|
||||||
-basic
|
$
|
(0.29
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.28
|
)
|
-diluted
|
$
|
(0.29
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.28
|
)
|
|
As reported
|
|
|
|
Amounts without
|
||||||
|
Six Months Ended
|
|
ASC 606 adoption
|
|
ASC 606 impact
|
||||||
|
March 31, 2019
|
|
impact
|
|
March 31, 2019
|
||||||
Product and other revenue
|
$
|
3,547
|
|
|
$
|
146
|
|
|
$
|
3,693
|
|
Total revenue
|
15,499
|
|
|
146
|
|
|
15,645
|
|
|||
|
|
|
|
|
|
||||||
Product and other cost of revenue
|
1,296
|
|
|
—
|
|
|
1,296
|
|
|||
Total cost of revenue
|
3,846
|
|
|
—
|
|
|
3,846
|
|
|||
|
|
|
|
|
|
||||||
Gross margin
|
11,653
|
|
|
146
|
|
|
11,799
|
|
|||
|
|
|
|
|
|
||||||
Selling and marketing (operating expenses)
|
7,779
|
|
|
(105
|
)
|
|
7,674
|
|
|||
Loss from operations
|
(2,777
|
)
|
|
251
|
|
|
(2,526
|
)
|
|||
Loss before income taxes
|
(3,161
|
)
|
|
251
|
|
|
(2,910
|
)
|
|||
Net loss
|
$
|
(3,274
|
)
|
|
$
|
251
|
|
|
$
|
(3,023
|
)
|
Net loss attributable to common stockholders
|
$
|
(3,372
|
)
|
|
$
|
251
|
|
|
$
|
(3,121
|
)
|
|
|
|
|
|
|
||||||
Loss per common share
|
|
|
|
|
|
||||||
-basic
|
$
|
(0.64
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.59
|
)
|
-diluted
|
$
|
(0.64
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.59
|
)
|
|
|
|
|
|
Amounts without
|
||||||
|
As reported
|
|
ASC 606 adoption
|
|
ASC 606 impact
|
||||||
|
March 31, 2019
|
|
impact
|
|
March 31, 2019
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(3,274
|
)
|
|
$
|
251
|
|
|
$
|
(3,023
|
)
|
|
|
|
|
|
|
||||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Capitalized commissions
|
105
|
|
|
(105
|
)
|
|
—
|
|
|||
Prepaid expenses and other current assets
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|||
Unearned revenue
|
(1,704
|
)
|
|
(146
|
)
|
|
(1,850
|
)
|
|||
Net cash used in operating activities
|
$
|
(3,251
|
)
|
|
$
|
—
|
|
|
$
|
(3,251
|
)
|
•
|
Product and other revenue from sale of Mediasite recorder units and server software was
$1.8 million
in
Q2-2019
and
$2.7 million
in
Q2-2018
. Average selling price was up in
Q2-2019
as compared to
Q2-2018
primarily as a result of a higher proportion of higher-end recorders being sold compared to the same period last year. Recorders sold were substantially less than Q1-2018, partially as a result of the Company's planned reduction of distribution inventory which had an impact of
$557 thousand
.
|
|
Q2-2019
|
|
Q2-2018
|
||||
Recorders sold
|
131
|
|
|
282
|
|
||
Rack units to mobile units ratio
|
3.4 to 1
|
|
|
34.3 to 1
|
|
||
Average sales price, excluding service (000’s)
|
$
|
7.5
|
|
|
$
|
6.3
|
|
Refresh Units
|
70
|
|
|
61
|
|
•
|
Services revenue represents the portion of fees charged for Mediasite customer support contracts amortized over the length of the contract, typically 12 months, as well as training, installation, event and content hosting services. Services revenue
increased
$431 thousand
or
7%
from
$5.8 million
in
Q2-2018
to
$6.2 million
in
Q2-2019
primarily due to an increase in support contract and hosting revenue.
|
•
|
At
March 31, 2019
,
$10.6 million
of revenue was deferred, of which we expect to recognize
$8.3 million
in the next twelve months, including approximately
$3.5 million
in the quarter ending June 30, 2019. At
September 30, 2018
,
$13.3 million
of revenue was deferred. The decrease in deferred revenue is largely a result of the ASC 606 adjustment upon adoption. See Note 6 - Revenue for further details.
|
•
|
Other revenue relates to freight charges billed separately to our customers.
|
•
|
$3.5 million
product and other revenue from the sale of
235
Mediasite recorders and software during YTD-
2019
versus
$5.7 million
from the delivery of
638
Mediasite recorders and software in YTD-
2018
. Recorders sold were substantially less than YTD-
2018
, partially as a result of the Company's planned reduction of distribution inventory which had an impact of
$1.2 million
.
|
•
|
$12.0 million
from Mediasite customer support contracts, installation, training, event and hosting services versus
$11.6 million
in
2018
. Services revenue increased primarily due to an increase in support & hosting contract billings.
|
•
|
Material and freight costs for the Mediasite recorders.
Costs for
Q2-2019
Mediasite recorder hardware and other costs totaled
$233 thousand
, along with
$50 thousand
of freight costs, and
$383 thousand
of labor and allocated costs, compared to
Q2-2018
Mediasite recorder costs of
$588 thousand
for hardware and other costs,
$59 thousand
for freight and
$385 thousand
of labor and allocated costs. Gross margin on products increased to
64%
in
Q2-2019
compared to
55%
in
Q2-2018
, mainly as a result of reducing inventory sold through distribution.
|
•
|
Services costs.
Staff wages and other costs allocated to cost of service revenue were
$1.4 million
in
Q2-2019
and
$1.3 million
in
Q2-2018
, resulting in gross margin on services of
78%
in
Q2-2019
and
77%
in
Q2-2018
.
|
•
|
Material and freight costs for the Mediasite recorders.
Costs for YTD-
2019
Mediasite recorder hardware and other costs totaled
$491 thousand
, along with
$103 thousand
of freight costs, and
$775 thousand
of labor and allocated costs, compared to YTD-
2018
Mediasite recorder costs of
$1.3 million
for hardware and other costs,
$125 thousand
for freight and
$770 thousand
of labor and allocated costs. This resulted in gross margin on products of
63%
in YTD-
2019
and
58%
in YTD-
2018
.
|
•
|
Service costs.
Staff wages and other costs allocated to cost of service revenue were
$2.6 million
in YTD-
2019
and
$2.5 million
in YTD-
2018
, resulting in gross margin on services of
79%
in YTD-
2019
and
78%
in YTD-
2018
.
|
•
|
Salary, commissions, and benefits expense
decreased
by
$48 thousand
as a result of reduced headcount.
|
•
|
Travel expenses, including entertainment and meals,
decreased
by
$57 thousand
.
|
•
|
Costs related to advertising and tradeshows
increased
by
$57 thousand
.
|
•
|
Selling and marketing expenses for Sonic Foundry International and Mediasite KK accounted for
$150 thousand
and
$659 thousand
respectively, an aggregate
increase
of
$27 thousand
from
Q2-2018
.
|
•
|
Salary, commissions, and benefits expense
decreased
by
$198 thousand
as a result of reduced headcount.
|
•
|
Advertising & tradeshow expenses
decreased
by
$70 thousand
.
|
•
|
Selling and marketing expenses for Sonic Foundry International and Mediasite KK accounted for
$281 thousand
and
$1.3 million
respectively, an aggregate
increase
of
$98 thousand
from YTD-
2018
.
|
•
|
Decrease in compensation and benefits of
$48 thousand
due to reduced headcount.
|
•
|
Increase in supplies expense of
$16 thousand
.
|
•
|
Professional services increased by
$105 thousand
primarily due to an increase in audit and legal fees.
|
•
|
Decrease in bad debt expense of
$176 thousand
due to decreased allowance for doubtful accounts.
|
•
|
G&A expenses for Sonic Foundry International and Mediasite KK accounted for
$31 thousand
and
$245 thousand
respectively, which is consistent with expenses during
Q2-2018
.
|
•
|
Decrease
in bad debt expense of
$174 thousand
due to decreased allowance for doubtful accounts.
|
•
|
Increase in compensation and benefits of
$18 thousand
.
|
•
|
G&A expenses for Sonic Foundry International and Mediasite KK accounted for
$56 thousand
and
$470 thousand
respectively, which is consistent with expenses during YTD-
2018
.
|
•
|
Increase
in compensation and benefits of
$112 thousand
related primarily to an increase in compensation rates and the cost of benefits.
|
•
|
Decrease
in professional services of
$49 thousand
.
|
•
|
Recruiting costs increased by
$15 thousand
.
|
•
|
Product development expense for Sonic Foundry International and Mediasite KK accounted for
$135 thousand
and
$72 thousand
respectively, an aggregate
increase
of
$36 thousand
compared to
Q2-2018
.
|
•
|
Increase
in compensation and benefits of
$181 thousand
related primarily to an increase in compensation rates and the cost of benefits.
|
•
|
Decrease in professional services of
$35 thousand
, due to decreased use of outsourced development.
|
•
|
Product development expense for Sonic Foundry International and Mediasite KK accounted for
$251 thousand
and
$152 thousand
respectively, an aggregate
increase
of
$69 thousand
compared to YTD-
2018
.
|
NUMBER
|
|
DESCRIPTION
|
|
3.1
|
|
|
|
|
|
|
|
3.2
|
|
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3.3
|
|
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|
|
|
|
|
3.4
|
|
|
|
|
|
|
|
3.5
|
|
|
|
|
|
|
|
3.6
|
|
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
|
|
10.5
|
|
|
|
|
|
|
|
10.6
|
|
|
|
|
|
|
|
10.7
|
|
|
|
|
|
|
|
10.8
|
|
|
|
|
|
|
|
10.9*
|
|
|
10.10*
|
|
|
|
|
|
|
|
10.11
|
|
|
|
|
|
|
|
10.12
|
|
|
Forms of
Subscription
Agreements,
Lock-Up
Agreements and
Warrant
Agreements dated December 22, 2014 among Sonic Foundry, Inc. and Mark Burish, and Sonic Foundry, Inc. and Andrew Burish, filed as Exhibits 10.1, 10.2, and 10.3 to the Form 8-K filed on December 30, 2014 and hereby incorporated by reference.
|
|
|
|
|
10.13
|
|
|
|
|
|
|
|
10.14
|
|
|
|
|
|
|
|
10.15
|
|
|
|
|
|
|
|
10.16
|
|
|
|
|
|
|
|
10.17
|
|
|
|
|
|
|
|
10.18
|
|
|
|
|
|
|
|
10.19
|
|
|
|
|
|
|
|
10.20
|
|
|
|
|
|
|
|
10.21
|
|
|
|
|
|
|
|
10.22
|
|
|
|
10.23
|
|
|
|
|
|
|
|
10.24
|
|
|
|
|
|
|
|
10.25
|
|
|
|
|
|
|
|
10.26
|
|
|
|
|
|
|
|
10.27
|
|
|
|
|
|
|
|
10.28
|
|
|
|
|
|
|
|
10.29
|
|
|
|
|
|
|
|
10.30
|
|
|
|
|
|
|
10.31
|
|
|
|
|
|
|
|
10.32
|
|
|
|
|
|
|
|
10.33
|
|
|
|
|
|
|
|
10.34
|
|
|
|
|
|
|
|
10.35
|
|
|
|
|
|
|
|
10.36
|
|
|
|
|
|
|
|
10.37
|
|
|
|
|
|
|
|
10.38
|
|
|
|
|
|
|
|
10.39
|
|
|
|
|
|
|
|
10.40
|
|
|
|
|
|
|
|
10.41
|
|
|
|
|
|
|
|
10.42
|
|
|
|
|
|
|
|
10.43
|
|
|
|
|
|
|
|
10.44
|
|
|
|
|
|
|
|
10.45
|
|
|
|
|
|
|
|
10.46
|
|
|
|
|
|
|
|
10.47
|
|
|
|
|
|
|
|
10.47
|
|
|
|
|
|
|
|
10.48
|
|
|
|
|
|
|
|
10.49
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
101
|
|
|
The following materials from the Sonic Foundry, Inc. Form 10-Q for the quarter ended March 31, 2019 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statement of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.
|
*
|
Compensatory Plan or Arrangement
|
|
|
|
|
|
May 17, 2019
|
|
By:
|
|
/s/ Michael Norregaard
|
|
|
|
|
Michael Norregaard
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
May 17, 2019
|
|
By:
|
|
/s/ Kenneth A. Minor
|
|
|
|
|
Kenneth A. Minor
|
|
|
|
|
Chief Financial Officer and Secretary
|
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