February 11, 2016 (February 11, 2016) Date of Report (Date of earliest event reported) | ||||
Sonic Foundry, Inc. (Exact name of registrant as specified in its charter) | ||||
Maryland (State or other jurisdiction of incorporation) | 000-30407 (Commission File Number) | 39-1783372 (IRS Employer Identification No.) |
222 W. Washington Ave Madison, WI 53703 (Address of principal executive offices) | (608) 443-1600 (Registrant's telephone number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
(a) | Exhibits |
99.1 | Press release concerning financial results for the fiscal quarter ended December 31, 2015. |
99.1 | Press release concerning financial results for the fiscal quarter ended December 31, 2015. |
By: | /s/ Kenneth A. Minor | |
By: | Kenneth A. Minor | |
Title: | Chief Financial Officer | |
• | Billings grew 12% to $8.6 million, compared to $7.7 million in the first quarter of 2015, led by a 55% increase in billings from markets outside of North America |
• | Revenue of $9.1 million represented an increase of 4% over $8.7 million in the first quarter of 2015 |
• | Gross margin increased to $6.4 million, or 70% of sales compared to $6.1 million, or 69% of sales for the first quarter of 2015 |
• | Net loss of $1.2 million or $(0.28) per basic share compared to a net loss of $1.0 million or $(0.24) per basic share in the first quarter of 2015 |
• | Adjusted EBITDA loss of $(182) thousand was in-line with adjusted EBITDA loss of $(181) thousand in the first quarter of 2015 |
• | The company finished the quarter with cash of $2.7 million, compared to $2.0 million as of September 30, 2015, and had an additional $1.4 million available on its line of credit at December 31, 2015 |
• | Unearned revenue from services and products increased $3.2 million, or 36% to $12.2 million as of the end of the first quarter 2016, compared to $9.0 million for the same period last year |
December 31, 2015 | September 30, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,666 | $ | 1,976 | |||
Accounts receivable, net of allowances of $100 and $150 | 9,257 | 12,659 | |||||
Inventories | 2,535 | 2,385 | |||||
Prepaid expenses and other current assets | 833 | 927 | |||||
Total current assets | 15,291 | 17,947 | |||||
Property and equipment: | |||||||
Leasehold improvements | 915 | 904 | |||||
Computer equipment | 6,098 | 5,852 | |||||
Furniture and fixtures | 950 | 837 | |||||
Total property and equipment | 7,963 | 7,593 | |||||
Less accumulated depreciation and amortization | 5,231 | 4,785 | |||||
Property and equipment, net | 2,732 | 2,808 | |||||
Other assets: | |||||||
Goodwill | 10,817 | 10,853 | |||||
Customer relationships, net of amortization of $524 and $457 | 1,796 | 1,872 | |||||
Software development costs, net of amortization of $474 and $429 | 59 | 104 | |||||
Product rights, net of amortization of $195 and $164 | 477 | 508 | |||||
Other intangibles, net of amortization of $207 and $190 | 104 | 112 | |||||
Other long-term assets | 608 | 599 | |||||
Total assets | $ | 31,884 | $ | 34,803 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Revolving line of credit | $ | 1,716 | $ | 1,818 | |||
Accounts payable | 1,072 | 2,026 | |||||
Accrued liabilities | 1,105 | 1,666 | |||||
Unearned revenue | 10,964 | 11,359 | |||||
Current portion of capital lease and financing arrangements | 272 | 211 | |||||
Current portion of notes payable, net of discounts | 1,583 | 1,299 | |||||
Current portion of subordinated note payable | 90 | 186 | |||||
Total current liabilities | 16,802 | 18,565 | |||||
Long-term portion of unearned revenue | 1,191 | 1,325 | |||||
Long-term portion of capital lease and financing arrangements | 277 | 196 | |||||
Long-term portion of notes payable and warrant debt, net of discounts | 2,033 | 2,080 | |||||
Long-term portion of subordinated note payable | — | 92 | |||||
Derivative liability, at fair value | 63 | 109 | |||||
Other liabilities | 289 | 311 | |||||
Deferred tax liability | 4,353 | 4,322 | |||||
Total liabilities | 25,008 | 27,000 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $.01 par value, authorized 500,000 shares; none issued | — | — | |||||
5% preferred stock, Series B, voting, cumulative, convertible, $.01 par value (liquidation preference at par), authorized 1,000,000 shares, none issued | — | — | |||||
Common stock, $.01 par value, authorized 10,000,000 shares; 4,376,456 shares issued and 4,363,740 shares outstanding, respectively | 44 | 44 | |||||
Additional paid-in capital | 196,307 | 195,973 | |||||
Accumulated deficit | (188,104 | ) | (186,897 | ) | |||
Accumulated other comprehensive loss | (1,176 | ) | (1,122 | ) | |||
Receivable for common stock issued | (26 | ) | (26 | ) | |||
Treasury stock, at cost, 12,716 shares | (169 | ) | (169 | ) | |||
Total stockholders’ equity | 6,876 | 7,803 | |||||
Total liabilities and stockholders’ equity | $ | 31,884 | $ | 34,803 |
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Revenue: | |||||||
Product | $ | 3,791 | $ | 3,374 | |||
Services | 5,199 | 5,244 | |||||
Other | 101 | 123 | |||||
Total revenue | 9,091 | 8,741 | |||||
Cost of revenue: | |||||||
Product | 1,865 | 1,536 | |||||
Services | 846 | 1,135 | |||||
Total cost of revenue | 2,711 | 2,671 | |||||
Gross margin | 6,380 | 6,070 | |||||
Operating expenses: | |||||||
Selling and marketing | 4,412 | 4,394 | |||||
General and administrative | 1,471 | 1,370 | |||||
Product development | 1,614 | 1,533 | |||||
Total operating expenses | 7,497 | 7,297 | |||||
Loss from operations | (1,117 | ) | (1,227 | ) | |||
Non-operating income (expenses): | |||||||
Interest expense, net | (149 | ) | (63 | ) | |||
Other income, net | 65 | 168 | |||||
Total non-operating income (expenses) | (84 | ) | 105 | ||||
Loss before income taxes | (1,201 | ) | (1,122 | ) | |||
Benefit (provision) for income taxes | (6 | ) | 90 | ||||
Net loss | $ | (1,207 | ) | $ | (1,032 | ) | |
Loss per common share: | |||||||
– basic | $ | (0.28 | ) | $ | (0.24 | ) | |
– diluted | $ | (0.28 | ) | $ | (0.24 | ) | |
Weighted average common shares | |||||||
– basic | 4,363,740 | 4,271,885 | |||||
– diluted | 4,363,740 | 4,271,885 |
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Net loss | $ | (1,207 | ) | $ | (1,032 | ) | |
Add: | |||||||
Depreciation and amortization | 536 | 561 | |||||
Income tax expense | 6 | (90 | ) | ||||
Interest expense | 149 | 63 | |||||
Stock-based compensation expense | 334 | 317 | |||||
Adjusted EBITDA | $ | (182 | ) | $ | (181 | ) | |
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Operating activities | |||||||
Net loss | $ | (1,207 | ) | $ | (1,032 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Amortization of other intangibles | 85 | 104 | |||||
Amortization of software development costs | 45 | 44 | |||||
Amortization of product rights | 31 | 31 | |||||
Amortization of debt discount | 18 | — | |||||
Depreciation and amortization of property and equipment | 394 | 382 | |||||
Provision for doubtful accounts | (50 | ) | — | ||||
Deferred taxes | 6 | 15 | |||||
Stock-based compensation expense related to stock options | 334 | 317 | |||||
Remeasurement gain on subordinated debt | (6 | ) | (179 | ) | |||
Remeasurement gain on derivative liability | (62 | ) | — | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 3,426 | 1,044 | |||||
Inventories | (152 | ) | (223 | ) | |||
Prepaid expenses and other current assets | 61 | 233 | |||||
Accounts payable and accrued liabilities | (1,492 | ) | (967 | ) | |||
Other long-term liabilities | (22 | ) | (21 | ) | |||
Unearned revenue | (510 | ) | (979 | ) | |||
Net cash provided by (used in) operating activities | 899 | (1,231 | ) | ||||
Investing activities | |||||||
Purchases of property and equipment | (77 | ) | (109 | ) | |||
Net cash used in investing activities | (77 | ) | (109 | ) | |||
Financing activities | |||||||
Proceeds from notes payable | 500 | — | |||||
Proceeds from line of credit | 2,300 | — | |||||
Payments on notes payable | (447 | ) | (550 | ) | |||
Payments on line of credit | (2,400 | ) | — | ||||
Payment of debt issuance costs | (10 | ) | — | ||||
Proceeds from issuance of common stock and warrants | — | 625 | |||||
Payments on capital lease and financing arrangements | (65 | ) | (53 | ) | |||
Net cash provided by (used in) financing activities | (122 | ) | 22 | ||||
Changes in cash and cash equivalents due to changes in foreign currency | (10 | ) | (215 | ) | |||
Net increase (decrease) in cash and cash equivalents | 690 | (1,533 | ) | ||||
Cash and cash equivalents at beginning of period | 1,976 | 4,344 | |||||
Cash and cash equivalents at end of period | $ | 2,666 | $ | 2,811 |