x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2016 |
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
New York | 11-2160665 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
135 Fell Court, Hauppauge, New York | 11788 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company x | |
(Do not check if a smaller reporting company) |
Page Number | ||
Three Months Ended | Nine Months Ended | ||||||||||||||
6/30/2016 | 6/30/2015 | 6/30/2016 | 6/30/2015 | ||||||||||||
Net sales | $ | 9,526,764 | $ | 11,701,030 | $ | 28,405,444 | $ | 32,146,605 | |||||||
Cost of sales | 5,718,851 | 7,017,300 | 17,687,386 | 19,787,165 | |||||||||||
Gross profit | 3,807,913 | 4,683,730 | 10,718,058 | 12,359,440 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expense | 3,333,045 | 4,158,176 | 10,989,395 | 12,372,692 | |||||||||||
Engineering and development expense | 1,292,446 | 1,325,877 | 3,950,500 | 4,025,913 | |||||||||||
Goodwill writedown | — | — | 6,016,469 | — | |||||||||||
Restructuring charges | — | — | — | 572,913 | |||||||||||
4,625,491 | 5,484,053 | 20,956,364 | 16,971,518 | ||||||||||||
Operating loss | (817,578 | ) | (800,323 | ) | (10,238,306 | ) | (4,612,078 | ) | |||||||
Other income (expense): | |||||||||||||||
Gain on sale of building | — | — | 784,896 | — | |||||||||||
Interest income | 164 | 161 | 488 | 1,533 | |||||||||||
Interest expense | (25,403 | ) | — | (25,403 | ) | — | |||||||||
Other expense | — | — | — | (140,853 | ) | ||||||||||
Loss before income taxes | (842,817 | ) | (800,162 | ) | (9,478,325 | ) | (4,751,398 | ) | |||||||
Income tax expense | — | — | — | — | |||||||||||
Net loss | $ | (842,817 | ) | $ | (800,162 | ) | $ | (9,478,325 | ) | $ | (4,751,398 | ) | |||
Loss per share: | |||||||||||||||
Basic | $ | (.09 | ) | $ | (.09 | ) | $ | (1.01 | ) | $ | (.52 | ) | |||
Diluted | $ | (.09 | ) | $ | (.09 | ) | $ | (1.01 | ) | $ | (.52 | ) | |||
Weighted average shares outstanding: | |||||||||||||||
Basic | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 | |||||||||||
Diluted | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
6/30/2016 | 6/30/2015 | 6/30/2016 | 6/30/2015 | ||||||||||||
Net loss | $ | (842,817 | ) | $ | (800,162 | ) | $ | (9,478,325 | ) | $ | (4,751,398 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on securities | 74 | (168 | ) | 148 | 2,826 | ||||||||||
Foreign currency translation adjustment | (249,648 | ) | 95,025 | (276,730 | ) | (112,722 | ) | ||||||||
Other comprehensive income (loss) | (249,574 | ) | 94,857 | (276,582 | ) | (109,896 | ) | ||||||||
Comprehensive loss | $ | (1,092,391 | ) | $ | (705,305 | ) | $ | (9,754,907 | ) | $ | (4,861,294 | ) |
ASSETS | 6/30/2016 | 9/30/2015 | |||||
(Unaudited) | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 1,995,504 | $ | 2,390,409 | |||
Marketable securities | 13,448 | 13,047 | |||||
Accounts receivable, net | 7,497,630 | 10,816,348 | |||||
Inventories: | |||||||
Parts, components, and materials | 1,723,553 | 2,074,389 | |||||
Work-in-process | 1,054,661 | 981,878 | |||||
Finished products | 5,481,294 | 5,557,556 | |||||
8,259,508 | 8,613,823 | ||||||
Prepaid expenses and other current assets | 721,561 | 501,497 | |||||
Assets held for sale | — | 800,902 | |||||
TOTAL CURRENT ASSETS | 18,487,651 | 23,136,026 | |||||
Property, plant and equipment | 5,835,401 | 5,812,517 | |||||
Less accumulated depreciation and amortization | (5,248,392 | ) | (5,117,570 | ) | |||
587,009 | 694,947 | ||||||
Goodwill | — | 6,016,469 | |||||
Intangible assets, net | 3,214,917 | 3,602,667 | |||||
Other assets | 725,886 | 722,022 | |||||
TOTAL ASSETS | $ | 23,015,463 | $ | 34,172,131 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | 3,642,557 | $ | 5,688,424 | ||||
Accrued compensation and employee benefits | 1,956,574 | 2,923,474 | |||||
Accrued expenses | 1,555,039 | 1,653,333 | |||||
Unearned revenue | 400,221 | 829,138 | |||||
TOTAL CURRENT LIABILITIES | 7,554,391 | 11,094,369 | |||||
Revolving credit borrowings | 1,750,000 | — | |||||
Unearned revenue - non current | 65,662 | 104,779 | |||||
Other long-term liabilities | 1,489,218 | 1,508,801 | |||||
TOTAL LIABILITIES | 10,859,271 | 12,707,949 | |||||
Commitments and contingencies | |||||||
SHAREHOLDERS’ EQUITY | |||||||
Common stock, par value $.01 per share authorized - 25,000,000 shares issued - 10,044,827 and 10,010,995 shares | 100,448 | 100,109 | |||||
Capital in excess of par value | 40,876,574 | 40,972,206 | |||||
Accumulated deficit | (24,829,300 | ) | (15,350,975 | ) | |||
Treasury stock at cost, 696,439 and 806,198 shares, respectively | (3,437,643 | ) | (3,979,852 | ) | |||
Accumulated other comprehensive loss | (553,887 | ) | (277,306 | ) | |||
TOTAL SHAREHOLDERS’ EQUITY | 12,156,192 | 21,464,182 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 23,015,463 | $ | 34,172,131 |
Nine Months Ended | |||||||
6/30/2016 | 6/30/2015 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (9,478,325 | ) | $ | (4,751,398 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Goodwill impairment | 6,016,469 | — | |||||
Gain on sale of building | (784,896 | ) | — | ||||
Depreciation and amortization | 636,306 | 512,645 | |||||
Amortization of deferred compensation | 1,111 | 2,539 | |||||
Stock compensation expense | 440,621 | 468,063 | |||||
Change in assets and liabilities: | |||||||
Accounts receivable, net | 3,023,170 | (1,064,427 | ) | ||||
Inventories, net | 160,437 | 443,648 | |||||
Prepaid expenses and other current assets | (251,428 | ) | (88,588 | ) | |||
Other assets | (3,864 | ) | 203,444 | ||||
Accounts payable | (1,929,100 | ) | (921,548 | ) | |||
Accrued compensation and employee benefits | (944,254 | ) | (336,369 | ) | |||
Accrued expenses | (78,378 | ) | (390,680 | ) | |||
Unearned revenue | (468,034 | ) | 184,641 | ||||
Other liabilities | (10,918 | ) | (33,024 | ) | |||
Net cash used in operating activities | (3,671,083 | ) | (5,771,054 | ) | |||
Cash flows from investing activities: | |||||||
Proceeds from sale of building, net | 1,512,320 | 3,325,000 | |||||
Net decrease (increase) in marketable securities | (253 | ) | 110,239 | ||||
Capital expenditures | (159,643 | ) | (112,284 | ) | |||
Net cash provided by investing activities | 1,352,424 | 3,322,955 | |||||
Cash flows from financing activities: | |||||||
Revolving credit borrowings | 1,750,000 | — | |||||
Proceeds from exercise of stock options | 5,184 | 48,106 | |||||
Net cash provided by financing activities | 1,755,184 | 48,106 | |||||
Effect of exchange rate changes on cash | 168,570 | (93,075 | ) | ||||
Net decrease in cash | (394,905 | ) | (2,493,068 | ) | |||
Cash and cash equivalents at beginning of year | 2,390,409 | 4,751,270 | |||||
Cash and cash equivalents at end of period | $ | 1,995,504 | $ | 2,258,202 |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Basic EPS Computation | |||||||||||||||
Net loss | $ | (842,817 | ) | $ | (800,162 | ) | $ | (9,478,325 | ) | $ | (4,751,398 | ) | |||
Weighted average shares outstanding | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 | |||||||||||
Basic loss per share | $ | (.09 | ) | $ | (.09 | ) | $ | (1.01 | ) | $ | (.52 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Diluted EPS Computation | |||||||||||||||
Net loss | $ | (842,817 | ) | $ | (800,162 | ) | $ | (9,478,325 | ) | $ | (4,751,398 | ) | |||
Weighted average shares outstanding | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 | |||||||||||
Stock options | — | — | — | — | |||||||||||
Stock compensation arrangements | — | — | — | — | |||||||||||
Diluted shares outstanding | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 | |||||||||||
Diluted loss per share | $ | (.09 | ) | $ | (.09 | ) | $ | (1.01 | ) | $ | (.52 | ) |
June 30, 2016 | September 30, 2015 | ||||||
Foreign currency translation adjustment | $ | (553,727 | ) | $ | (276,998 | ) | |
Unrealized loss on marketable securities | (160 | ) | (308 | ) | |||
Accumulated other comprehensive loss | $ | (553,887 | ) | $ | (277,306 | ) |
June 30, 2016 | September 30, 2015 | ||||||||||||||||
Gross Amount | Accumulated Amortization | Gross Amount | Accumulated Amortization | Estimated Useful Life | |||||||||||||
Definite-lived intangibles: | |||||||||||||||||
Technology | $ | 2,500,000 | $ | 458,333 | $ | 2,500,000 | $ | 270,833 | 10 years | ||||||||
Customer relationships | 910,000 | 316,083 | 910,000 | 148,833 | 7 years | ||||||||||||
Tradenames | 660,000 | 80,667 | 660,000 | 47,667 | 15 years | ||||||||||||
$ | 4,070,000 | $ | 855,083 | $ | 4,070,000 | $ | 467,333 |
Balance at October 1, 2013 | $ | — | |
Acquisition of IQinVision | 6,016,469 | ||
Balance at September 30, 2014 | 6,016,469 | ||
Changes in Goodwill | — | ||
Balance at September 30, 2015 | 6,016,469 | ||
Goodwill impairment | (6,016,469 | ) | |
Balance at June 30, 2016 | $ | — |
Fiscal Year | Amount | ||
Remainder of 2016 | $ | 129,250 | |
2017 | 518,000 | ||
2018 | 427,000 | ||
2019 | 373,000 | ||
2020 | 341,000 | ||
Thereafter | $ | 1,426,667 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Balance at beginning of period | $ | 650,000 | $ | 836,000 | $ | 650,000 | $ | 849,000 | ||||||||
Provision for warranties | 106,000 | 117,000 | 324,000 | 366,000 | ||||||||||||
Expenses incurred | (106,000 | ) | (120,000 | ) | (324,000 | ) | (382,000 | ) | ||||||||
Balance at end of period | $ | 650,000 | $ | 833,000 | $ | 650,000 | $ | 833,000 |
Exhibit Number | Description |
10.1 | Amended and Restated Credit Agreement between the Company and NIL Funding Corporation, dated as of August 18, 2016 |
10.2 | Amended and Restated Revolving Line of Credit Note (Facility A) between the Company and NIL Funding Corporation, dated as of August 18, 2016 |
10.3 | Revolving Line of Credit Note (Facility B) between the Company and NIL Funding Corporation, dated as of August 18, 2016 |
31 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document* |
101.SCH | XBRL Taxonomy Extension Schema Document* |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* |
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.” |
/s/ John M. Badke |
John M. Badke |
Interim Chief Executive Officer, |
Senior Vice President, Finance and |
Chief Financial Officer |
Borrowing Base Certificate | ||||||
Lender | NIL Funding Corporation | |||||
Borrower: | Vicon Industries, Inc. | |||||
Credit Agreement Date | ||||||
Facility A Line of Credit | $4,000,000 | |||||
For the Month ending | ||||||
Dilution | ||||||
Gross Sales (preceding 3 months) | 1 | |||||
Sales reductions (preceding 3 months) | ||||||
Returns | a | |||||
Rebates | b | |||||
Discounts | c | |||||
Credits | d | |||||
Allowances | e | |||||
2 | 0 | |||||
Dilution as a % of sales. Should not exceed 5% | 3 | |||||
Accounts Receivable | ||||||
Gross Accounts Receivable: | 4 | |||||
(net of distribution channel contractual rebates) | ||||||
Ineligibles, as defined in Section 1.1 (b) | ||||||
i. | Accounts over 90 days | a | ||||
ii. | Setoff, defense or discounts | b | ||||
iii. | U.S. Government accounts (50% ineligible) | c | ||||
iv. | Foreign Accounts Receivable (50% ineligible) | d | ||||
v. | Related affiliate/Employee | e | ||||
vi. | Interim or progress billings | f | ||||
vii. | Cross aging 90 days over 20% | g | ||||
viii. | Excess 25% concentration | h | ||||
ix. | Deemed ineligible by lender | i | ||||
Total ineligibles | 5 | 0 | ||||
Total Eligible Accounts Receivable, as defined in Section 1.1 (b) | 6 | 0 | ||||
Funds available | ||||||
Eligible Accounts Receivable less than 60 days old | a | |||||
85% | 7 | 0 | ||||
Eligible Accounts Receivable between 60 and 90 days old | b | |||||
60% | 8 | 0 | ||||
US Government Receivables less than 90 days (50% eligible) | ||||||
c | 50% | 9 | 0 | |||
Receivables from foreign accounts less than 90 days (50% eligible) | ||||||
d | 50% | 10 | 0 | |||
Total Eligible for borrowing | 11 | 0 |
Maximum borrowing (not to exceed $4,000,000) | 12 | 0 | ||||
Facility A Line of credit outstanding | 13 | |||||
Borrowing availability (Facility A Line of Credit) | 14 | 0 | ||||
Additional borrowing Requested (not to exceed line 14) | 15 | 0 | ||||
Tangible Net Worth as of month end date (minimum $5,000,000) | 16 | |||||
Covenant met? | ||||||
For purposes of securitizing credit from NIL Funding Corporation, we hereby certify that the above schedules are complete and correct. | ||||||
Signature | Date | |||||
Document and Entity Information Document - shares |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 19, 2016 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | VICON INDUSTRIES INC /NY/ | |
Entity Central Index Key | 0000310056 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 9,348,388 |
Condensed Consolidated Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Document Period End Date | Jun. 30, 2016 | |||
Net sales | $ 9,526,764 | $ 11,701,030 | $ 28,405,444 | $ 32,146,605 |
Cost of sales | 5,718,851 | 7,017,300 | 17,687,386 | 19,787,165 |
Gross profit | 3,807,913 | 4,683,730 | 10,718,058 | 12,359,440 |
Operating expenses: | ||||
Selling, general and administrative expense | 3,333,045 | 4,158,176 | 10,989,395 | 12,372,692 |
Engineering & development expense | 1,292,446 | 1,325,877 | 3,950,500 | 4,025,913 |
Goodwill, Impairment Loss | 0 | 0 | 6,016,469 | 0 |
Restructuring Charges | 0 | 0 | 0 | 572,913 |
Operating Expenses | 4,625,491 | 5,484,053 | 20,956,364 | 16,971,518 |
Operating loss | (817,578) | (800,323) | (10,238,306) | (4,612,078) |
Gain (Loss) on Disposition of Assets | 0 | 0 | 784,896 | 0 |
Interest income | 164 | 161 | 488 | 1,533 |
Interest expense | (25,403) | 0 | (25,403) | 0 |
Other expense | 0 | 0 | 0 | (140,853) |
Loss before income taxes | (842,817) | (800,162) | (9,478,325) | (4,751,398) |
Income tax expense | 0 | 0 | 0 | 0 |
Net loss | $ (842,817) | $ (800,162) | $ (9,478,325) | $ (4,751,398) |
Loss per share: | ||||
Earnings Per Share, Basic | $ (0.09) | $ (0.09) | $ (1.01) | $ (0.52) |
Earnings Per Share, Diluted | $ (0.09) | $ (0.09) | $ (1.01) | $ (0.52) |
Weighted average shares outstanding: | ||||
Basic | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 |
Diluted | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Net loss | $ (842,817) | $ (800,162) | $ (9,478,325) | $ (4,751,398) |
Other comprehensive income (loss): | ||||
Unrealized loss on securities, net of tax | 74 | (168) | 148 | 2,826 |
Foreign currency translation adjustment | (249,648) | (95,025) | 276,730 | 112,722 |
Other comprehensive loss | (249,574) | 94,857 | (276,582) | (109,896) |
Comprehensive loss | $ (1,092,391) | $ (705,305) | $ (9,754,907) | $ (4,861,294) |
Basis of Presentation |
9 Months Ended |
---|---|
Jun. 30, 2016 | |
Basis of Presentation [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 2016. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2015. |
Marketable Securities |
9 Months Ended |
---|---|
Jun. 30, 2016 | |
Marketable Securities [Abstract] | |
Cash, Cash Equivalents, and Marketable Securities [Text Block] | Marketable Securities Marketable securities consist of mutual fund investments principally in federal, state and local government debt securities of $13,448 as of June 30, 2016. Such mutual fund investments are stated at market value based on quoted market prices (Level 1 inputs) and are classified as available-for-sale under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 320, with unrealized gains and losses reported in accumulated other comprehensive loss as a component of shareholders’ equity. The cost of such securities at June 30, 2016 was $13,608, with $160 of cumulative unrealized losses reported at June 30, 2016. |
Accounts Receivable |
9 Months Ended |
---|---|
Jun. 30, 2016 | |
Accounts Receivable [Abstract] | |
Schedule of Valuation and Qualifying Accounts Disclosure [Text Block] | Accounts Receivable Accounts receivable is stated net of an allowance for uncollectible accounts of $979,000 and $993,000 as of June 30, 2016 and September 30, 2015, respectively. |
Loss per Share |
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Loss per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | Loss per Share Basic loss per share (EPS) is computed based on the weighted average number of common shares outstanding for the period. Diluted EPS reflects the maximum dilution that would have resulted from incremental common shares issuable upon the exercise of stock options and under deferred compensation agreements. The following tables provide the components of the basic and diluted EPS computations for the three and nine month periods ended June 30, 2016 and 2015:
For the for the three and nine month periods ended June 30, 2016 and 2015, all outstanding stock options and shares issuable under stock compensation arrangements totaling 643,533 and 604,082 shares, respectively, have been omitted from the calculation of diluted EPS as their effect would have been antidilutive. The actual effect of these stock options and shares, if any, on the diluted earnings per share calculation will vary significantly depending on fluctuations in the market price of the Company's stock. |
Accumulated Other Comprehensive Loss |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | Accumulated Other Comprehensive Loss The Company's accumulated other comprehensive loss balances at June 30, 2016 and September 30, 2015 consisted of the following:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | The Company’s goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired in the August 29, 2014 IQinVision business combination. Goodwill is not amortized and is tested for impairment on an annual basis during the Company's fourth quarter, or more frequently if circumstances indicate impairment might exist. Goodwill is evaluated for impairment through the comparison of fair value of reporting units to their carrying values. When evaluating goodwill for impairment, the Company may first perform an assessment of qualitative factors to determine if the fair value of the reporting unit is more-likely-than-not greater than its carrying amount. This qualitative assessment is referred to as a "step zero" approach. If, based on the review of the qualitative factors, the Company determines it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying value, the required two-step impairment test can be bypassed. If the Company does not perform a qualitative assessment or if the fair value of the reporting unit is not more-likely-than-not greater than its carrying value, the Company must perform the first step of the two-step impairment test, and calculate the estimated fair value of the reporting unit. If the carrying value of the reporting unit exceeds the estimated fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment. The amount of impairment is determined by comparing the implied fair value of the reporting unit goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill is less than the recorded goodwill, an impairment loss for the difference would be recorded. In considering the step zero approach to testing goodwill for impairment, a qualitative analysis is performed evaluating factors including, but not limited to, macro-economic conditions, market and industry conditions, internal cost factors, competitive environment, share price fluctuations, results of past impairment tests, and the operational stability and the overall financial performance of the reporting units. The Company conducted an impairment test at March 31, 2016 using the income approach and determined that its goodwill carrying value was fully impaired. As a result, the Company recorded an impairment charge of $6.0 million in the quarter ended March 31, 2016. This noncash charge was principally based upon an updated assessment of the Company's continuing depressed market valuation and operating losses. The components and estimated useful lives of intangible assets as of June 30, 2016 and September 30, 2015 are stated below. Amortization is provided on a straight line method, or in the case of customer relationships, on an accelerated method, over the following estimated useful lives:
The activity in the goodwill balance consists of the following:
Amortization expense was $129,250 and $387,750 for the three and nine month periods ended June 30, 2016. Future amortization expense for intangible assets over the next five years ending September 30 and thereafter is summarized as follows:
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Stock Based Compensation |
9 Months Ended |
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Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Stock-Based Compensation The Company maintains stock option plans that include both incentive and non-qualified options reserved for issuance to key employees, including officers and directors. All options are issued at fair market value at the grant date and are exercisable in varying installments according to the plans. The plans allow for the payment of option exercises through the surrender of previously owned mature shares based on the fair market value of such shares at the date of surrender. The Company follows ASC 718 (“Share-Based Payment”), which requires that all share based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their grant date fair values and over the requisite service period. For the three month periods ended June 30, 2016 and 2015, the Company recorded non-cash compensation expense of $141,843 and $156,718, respectively ($.02 and $.02 per basic and diluted share, respectively), relating to stock compensation. For the nine month periods ended June 30, 2016 and 2015, the Company recorded non-cash compensation expense of $440,621 and $468,063, respectively ($.05 and $.05 per basic and diluted share, respectively), relating to stock compensation. |
Recent Accounting Pronouncements |
9 Months Ended |
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Jun. 30, 2016 | |
Recent Accounting Pronouncements [Abstract] | |
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | Recent Accounting Pronouncements In May 2014, the FASB issued guidance on revenue from contracts with customers. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved, in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. This guidance permits the use of either the retrospective or cumulative effect transition method and is effective for the Company beginning in 2019; early adoption is not permitted prior to 2018. The Company has not yet evaluated the impact of this guidance on the Company's financial condition, results of operations and related disclosures. In August 2014, the FASB issued guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and related footnote disclosures. Management will be required to evaluate, at each reporting period, whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. This guidance is effective prospectively for annual and interim reporting period beginning in 2017. The Company has not yet evaluated the impact of this guidance on the Company’s financial condition, results of operations and related disclosures. In February 2016, the FASB issued guidance on lease accounting requiring lessees to recognize a right-of-use asset and a lease liability for long-term leases. The liability will be equal to the present value of lease payments. This guidance must be applied using a modified retrospective transition approach to all annual and interim periods presented and is effective for the Company beginning in fiscal 2019. The Company has not yet evaluated the impact of this guidance on the Company's financial condition, results of operations and related disclosures. In March 2016, the FASB issued guidance on simplifying several aspects of accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance requires a mix of prospective, modified retrospective, and retrospective transition to all annual and interim periods presented and is effective for the Company beginning in fiscal 2018. The Company has not yet evaluated the impact of this guidance on the Company's financial condition, results of operations and related disclosures. |
Income Taxes |
9 Months Ended |
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Jun. 30, 2016 | |
Income Taxes [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns for which a tax benefit has been recorded in the income statement. The Company has a valuation allowance against its deferred tax assets due to the uncertainty of future realization. The full valuation allowance is determined to be appropriate due to the Company's operating losses since fiscal year 2010 and the inherent uncertainties of predicting future operating results in periods over which such net tax differences become deductible. At September 30, 2015, the Company had $11.1 million of unrecognized net deferred tax assets available, which includes approximately $7.0 million of tax effected U.S. and foreign net operating loss carryforwards. On August 29, 2014, the Company merged with IQinVision, Inc. In connection with this merger, the Company's ability to utilize pre-merger net operating losses and tax credit carryforwards in the future is subject to certain limitations pursuant to Section 382 of the Internal Revenue Code. The annual limitation on utilization of the Company's U.S. net operating loss carryforwards is presently estimated at $500,000 based on a preliminary entity valuation. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company files U.S. Federal and State income tax returns and foreign tax returns in the United Kingdom, Germany and Israel. The Company is generally no longer subject to tax examinations in such jurisdictions for fiscal years prior to 2011 in the U.S. and 2009 in the U.K., Germany and Israel. |
Fair Value |
9 Months Ended |
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Jun. 30, 2016 | |
Fair Value [Abstract] | |
Fair Value Disclosures [Text Block] | Fair Value The majority of the Company’s non-financial assets and liabilities are not required to be carried at fair value on a recurring basis, but the Company is required on a non-recurring basis to use fair value measurements when analyzing asset impairment as it relates to long-lived assets. The carrying amounts for trade accounts and other receivables and accounts payable approximate fair value due to the short-term maturity of these instruments. As the Revolving Loan Facility is a revolving credit agreement, the carrying amount approximates fair value. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Restructuring Charges (Notes) |
9 Months Ended |
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Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Activities Disclosure [Text Block] | Restructuring Charges Pursuant to the August 29, 2014 IQinVision merger, the Company initiated certain integration and restructuring activities pursuant to an approved plan (the "Plan"). For the nine month period ended June 30, 2015, the Company recognized $573,000 of severance charges in connection with the Plan pursuant to notification of termination benefits to fourteen affected employees. As of June 30, 2016, the Company had paid out approximately $486,000 of such severance. Accounting for restructuring activities, as compared to regular operating cost management activities, requires an evaluation of formally committed and approved plans. Restructuring activities have comparatively greater strategic significance and materiality and may involve exit activities, whereas regular cost containment activities are more tactical in nature and are rarely characterized by formal and integrated action plans or exiting a particular product, facility or service. |
Product Warranties (Notes) |
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Standard Product Warranty, Policy [Policy Text Block] | Product Warranties The Company provides for the estimated cost of product warranties at the time revenue is recognized. While the Company engages in product quality programs and processes, including monitoring and evaluating the quality of its component suppliers, its warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from its estimates, revisions to the estimated warranty liability may be required. Changes in the Company's warranty liability (included in accrued expenses) for the three and nine month periods ended June 30, 2016 and 2015 were as follows:
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Operating Facility Sale (Notes) |
9 Months Ended |
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Jun. 30, 2016 | |
Gain (Loss) on Disposition of Property Plant Equipment [Abstract] | |
Schedule of Realized Gain (Loss) [Table Text Block] | Operating Facility Sale In January 2016, the Company sold its United Kingdom based operating facility at a gross sales price of $1.5 million. The facility was classified as an asset held for sale in the accompanying consolidated balance sheets as of September 30, 2015. A gain of approximately $785,000 was recognized on the sale in the March 31, 2016 quarter after factoring in selling and transaction costs. |
Credit Agreement (Notes) |
9 Months Ended |
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Jun. 30, 2016 | |
Line of Credit Facility [Line Items] | |
Schedule of Line of Credit Facilities [Table Text Block] | Credit Agreement On March 4, 2016, the Company entered into a Credit Agreement (the “Agreement”) with NIL Funding Corporation to provide a $3 million revolving line of credit for working capital purposes. The Agreement provides for a borrowing formula based upon eligible accounts receivable and is secured by a first priority security interest in substantially all of the Company’s assets. Borrowings under the Agreement bear interest at a rate of 6.75% per annum. The Agreement also provides for an initial commitment fee of $37,500, which was paid at closing, as well as an unused commitment fee equal to .5% per annum. The Agreement includes provisions that are customarily found in similar financing agreements, but does not include any financial covenants. NIL Funding Corporation is an affiliate of The InterTech Group, whose Executive Vice President and Chief Operating Officer, Julian A. Tiedemann, serves as the Chairman of the Company’s Board of Directors. As of June 30, 2016, outstanding borrowings under the Agreement were $1,750,000. On August 18, 2016, the Company entered into an Amended and Restated Credit Agreement (the “Amended Agreement”) with NIL Funding Corporation which increased the $3 million revolving line of credit to $6 million. This facility, as amended, matures on October 2, 2018 and consists of two credit lines of $4 million and $2 million which bear interest at rates of 6.95% per annum and 8.25% per annum, respectively. The $4 million line of credit is subject to a borrowing formula based upon eligible accounts receivable. The Amended Agreement also provides for an initial commitment fee of $60,000, which was paid at closing, as well as an unused commitment fee equal to .5% per annum. The Amended Agreement includes a financial covenant that requires the Company to maintain a specified minimum tangible net worth, and is otherwise substantially similar to the original Agreement with NIL Funding Corporation. |
Loss per Share (Tables) |
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Loss per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following tables provide the components of the basic and diluted EPS computations for the three and nine month periods ended June 30, 2016 and 2015:
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Accumulated Other Comprehensive Loss (Tables) |
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Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The Company's accumulated other comprehensive loss balances at June 30, 2016 and September 30, 2015 consisted of the following:
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Goodwill and Intangible Assets (Tables) |
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Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | The activity in the goodwill balance consists of the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Future amortization expense for intangible assets over the next five years ending September 30 and thereafter is summarized as follows:
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Schedule of Finite-Lived Intangible Assets [Table Text Block] | The components and estimated useful lives of intangible assets as of June 30, 2016 and September 30, 2015 are stated below. Amortization is provided on a straight line method, or in the case of customer relationships, on an accelerated method, over the following estimated useful lives:
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Product Warranties (Tables) |
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Product Warranties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability [Table Text Block] | Changes in the Company's warranty liability (included in accrued expenses) for the three and nine month periods ended June 30, 2016 and 2015 were as follows:
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Marketable Securities (Details) - USD ($) |
Jun. 30, 2016 |
Sep. 30, 2015 |
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Marketable Securities [Abstract] | ||
Available-for-sale Securities, Amortized Cost Basis | $ 13,608 | |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | 160 | $ 308 |
Available-for-sale Securities, Debt Securities | $ 13,448 |
Accounts Receivable (Details) - USD ($) |
Jun. 30, 2016 |
Sep. 30, 2015 |
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Accounts Receivable [Abstract] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 979,000 | $ 993,000 |
Loss per Share (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Net Income (Loss) Attributable to Parent | $ (842,817) | $ (800,162) | $ (9,478,325) | $ (4,751,398) |
Weighted Average Number of Shares Outstanding, Basic | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 |
Earnings Per Share, Basic | $ (0.09) | $ (0.09) | $ (1.01) | $ (0.52) |
Loss per Share schedule of earnings per share diluted (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 643,533 | 604,082 | ||
Net Income (Loss) Attributable to Parent | $ (842,817) | $ (800,162) | $ (9,478,325) | $ (4,751,398) |
Weighted Average Number of Shares Outstanding, Basic | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 |
Incremental Common Shares Attributable to Call Options and Warrants | 0 | 0 | 0 | 0 |
Incremental Common Shares Attributable to Share-based Payment Arrangements | 0 | 0 | 0 | 0 |
Weighted Average Number of Shares Outstanding, Diluted | 9,343,946 | 9,154,797 | 9,338,559 | 9,135,987 |
Earnings Per Share, Diluted | $ (0.09) | $ (0.09) | $ (1.01) | $ (0.52) |
Accumulated Other Comprehensive Loss (Details) - USD ($) |
Jun. 30, 2016 |
Sep. 30, 2015 |
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Comprehensive Loss [Abstract] | ||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ (553,727) | $ (276,998) |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (160) | (308) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (553,887) | $ (277,306) |
Stock Based Compensation (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation | $ 141,843 | $ 156,718 | $ 440,621 | $ 468,063 |
Share Based Compensation per share | $ 0.02 | $ 0.05 | $ 0.05 |
Income Taxes (Details) $ in Millions |
Sep. 30, 2015
USD ($)
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Valuation Allowance [Line Items] | |
Deferred tax assets net of liabilities before valuation allowance | $ 11.1 |
Deferred Tax Assets, Operating Loss Carryforwards | $ 7.0 |
Product Warranties (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
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Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Mar. 31, 2015 |
Sep. 30, 2014 |
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Product Warranties [Abstract] | ||||||||
Balance at beginning of period | $ 650,000 | $ 833,000 | $ 650,000 | $ 833,000 | $ 650,000 | $ 650,000 | $ 836,000 | $ 849,000 |
Provision for warranties | 106,000 | 117,000 | 324,000 | 366,000 | ||||
Expenses incurred | $ (106,000) | $ (120,000) | $ (324,000) | $ (382,000) |
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