10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO THE SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-31265

Rand Worldwide, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	84-1035353
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)
161 Worcester Road, Suite 401, Framingham, MA	01701
(Address of Principal Executive Offices)	(Zip Code)

(508) 663-1400

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: as of November 9, 2012, there were 53,990,589 shares of common stock, par value $.01 per share, outstanding.

RAND WORLDWIDE, INC. AND SUBSIDIARIES

INDEX

		Page
PART I	FINANCIAL INFORMATION		4
ITEM 1.	Financial Statements
	Consolidated Balance Sheets – September 30, 2012 and June 30, 2012 (Unaudited)		4
	Consolidated Statements of Operations – Three months ended September 30, 2012 and 2011 (Unaudited)		6
	Consolidated Statements of Cash Flows – Three months ended September 30, 2012 and 2011 (Unaudited)		7
	Notes to Consolidated Financial Statements (Unaudited)		8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
ITEM 4.	Controls and Procedures		21
PART II	OTHER INFORMATION		21
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		22
ITEM 6.	Exhibits		22
SIGNATURES			23
EXHIBIT INDEX			24

PART I. FINANCIAL INFORMATION

Rand Worldwide, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)

	September 30, 2012			June 30, 2012
Assets
Current assets:
Cash	$	2,292,000		$	1,680,000
Accounts receivable, less allowance of $359,000 as of September 30, 2012 and $405,000 as of June 30, 2012		12,489,000			18,099,000
Income tax receivable		649,000			281,000
Other receivables		769,000			994,000
Inventory		156,000			107,000
Prepaid expenses and other current assets		2,013,000			2,084,000
Deferred tax assets		114,000			78,000
Total current assets		18,482,000			23,323,000
Property and equipment:
Computer software and equipment		8,873,000			8,231,000
Office furniture and equipment		2,038,000			1,974,000
Leasehold improvements		724,000			699,000
		11,635,000			10,904,000
Less accumulated depreciation and amortization		(8,460,000	)		(8,193,000	)
		3,175,000			2,711,000
Customer list, net of accumulated amortization of $6,202,000 as of September 30, 2012 and $6,105,000 as of June 30, 2012		4,032,000			3,290,000
Goodwill		17,837,000			15,954,000
Trade name, net of accumulated amortization of $1,020,000 as of September 30, 2012 and $945,000 as of June 30, 2012		2,911,000			2,986,000
Deferred income taxes		2,174,000			2,576,000
Other assets		339,000			370,000
Total assets	$	48,950,000		$	51,210,000

See accompanying notes.

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Rand Worldwide, Inc. and Subsidiaries

Consolidated Balance Sheets (continued)

(unaudited)

	September 30, 2012			June 30, 2012
Liabilities and Stockholders’ Equity
Current liabilities:
Borrowings under line of credit	$	2,435,000		$	3,140,000
Accounts payable and accrued expenses		7,074,000			9,850,000
Accrued compensation and related benefits		1,395,000			1,804,000
Deferred revenue		4,090,000			4,666,000
Obligations under capital leases		292,000			290,000
Total current liabilities		15,286,000			19,750,000
Long-term liabilities:
Obligations under capital leases		541,000			614,000
Other long term liabilities		1,071,000			—
Total liabilities		16,898,000			20,364,000
Stockholders’ equity:
Convertible Preferred Stock, $0.01 par value; 1,300,537 shares authorized, 1,298,728 shares issued; 385,357 shares outstanding with an aggregate liquidation preference of $1,093,000 at September 30, 2012 and June 30, 2012 (note 10)		4,000			4,000
Common stock, $0.01 par value; 80,000,000 shares authorized; issued and outstanding shares of 53,990,589 and 53,493,077 at September 30, 2012 and June 30, 2012, respectively		540,000			535,000
Additional paid-in capital		65,377,000			64,947,000
Accumulated deficit		(35,124,000	)		(35,700,000	)
Accumulated other comprehensive income		1,255,000			1,060,000
Total stockholders’ equity		32,052,000			30,846,000
Total liabilities and stockholders’ equity	$	48,950,000		$	51,210,000

See accompanying notes.

5

Rand Worldwide, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)

	Three Months Ended September 30,
	2012			2011
Revenues:
Product sales	$	11,515,000		$	13,277,000
Service revenue		5,374,000			4,802,000
Commission revenue		4,712,000			3,865,000
		21,601,000			21,944,000
Cost of revenue:
Cost of product sales		7,331,000			9,302,000
Cost of service revenue		3,695,000			3,132,000
		11,026,000			12,434,000
Gross margin		10,575,000			9,510,000
Other operating expenses:
Selling, general and administrative		9,198,000			8,518,000
Depreciation and amortization		433,000			396,000
		9,631,000			8,914,000
Operating income		944,000			596,000
Other expense, net		(20,000	)		(142,000	)
Income before income taxes		924,000			454,000
Income tax expense		348,000			52,000
Net income	$	576,000		$	402,000
Preferred stock dividends		(28,000	)		(39,000	)
Net income available to common stockholders	$	548,000		$	363,000
Income per common share, basic	$	0.01		$	0.01
Income per common share, diluted	$	0.01		$	0.01
Shares used in computing income per common share:
Weighted average shares used in computation - basic		53,821,435			51,921,676
Weighted average shares used in computation - diluted		54,890,749			52,138,108

See accompanying notes.

6

Rand Worldwide, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

	Three Months Ended September 30,
	2012			2011
Cash flows from operating activities
Net income	$	576,000		$	402,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Loss on sale of property and equipment		—			9,000
Bad debt expense (recoveries)		33,000			(85,000	)
Depreciation and amortization		433,000			396,000
Stock-based compensation		63,000			41,000
Deferred income taxes		366,000			(2,000	)
Changes in operating assets and liabilities net of those acquired:
Accounts receivable and other receivables		5,802,000			4,925,000
Income tax receivable		(368,000	)		27,000
Inventory		(49,000	)		44,000
Prepaid expenses and other current assets		71,000			(46,000	)
Other assets		31,000			7,000
Accounts payable and accrued expenses		(3,414,000	)		(3,585,000	)
Accrued compensation and related benefits		(409,000	)		(1,043,000	)
Deferred revenue		(576,000	)		9,000
Net cash provided by operating activities		2,559,000			1,099,000
Cash flows from investing activities
Purchase of Informative Design Partners, Inc. (Note 4)		(600,000	)		—
Purchases of property and equipment		(704,000	)		(131,000	)
Net cash used in by investing activities		(1,304,000	)		(131,000	)
Cash flows from financing activities
Proceeds from borrowings under line of credit		17,581,000			32,205,000
Repayment of borrowings under line of credit		(18,286,000	)		(32,978,000	)
Payments of obligations under capital leases		(71,000	)		—
Proceeds from the issuance of common stock to employees		—			36,000
Payment of preferred stock dividends		(28,000	)		(39,000	)
Net cash used in financing activities		(804,000	)		(776,000	)
Effect of exchange rate changes on cash		161,000			(287,000	)
Net change in cash		612,000			(95,000	)
Cash - beginning of period		1,680,000			2,631,000
Cash - end of period	$	2,292,000		$	2,536,000

See accompanying notes.

7

Rand Worldwide, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

1. Organization and Basis of Presentation

Rand Worldwide Inc. (“Rand Worldwide”) is a leading supplier in the design automation, facilities and data management software marketplace. Rand Worldwide also provides value-added services, such as training, technical support and other consulting and professional services to corporations, government agencies and educational institutions worldwide.

References in these Notes to “Rand Worldwide”, “the Company”, “us”, “we”, “our” are references to Rand Worldwide, Inc. and, unless the context clearly contemplated otherwise, its consolidated subsidiaries.

The Company is organized into three divisions: IMAGINiT Technologies (“IMAGINiT”), Enterprise Applications and ASCENT—Center for Technical Knowledge (“ASCENT”).

The IMAGINiT division is one of the largest value-added resellers of Autodesk, Inc. (“Autodesk”) products in the world, providing Autodesk solutions and value-added services to customers in the manufacturing, infrastructure, building, and media and entertainment industries. IMAGINiT also specializes in computational fluid dynamics analysis consulting and thermal simulation services and sells its own proprietary software products and related services, enhancing its total client solution offerings. IMAGINiT operates from locations across North America, Australia, Singapore and Malaysia.

The Enterprise Applications division is the non-Autodesk component of the business and offers various products and services including data archiving solutions, facilities management solutions, as well as training for Dassault Systèmes and PTC (Parametric Technology Corporation) products including CATIA, ENOVIA and Pro/ENGINEER.

ASCENT is the courseware division of Rand Worldwide and is a leading developer of professional training materials and knowledge products for engineering software tools. Executive management performs their primary analyses based upon geographic location and operations by geographic segment are disclosed within Note 11.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Article 8 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules or regulations. The interim financial statements are unaudited, and reflect all adjustments (consisting of normal recurring accruals) which are, in management’s opinion, necessary to present a fair statement of results of the interim periods presented. These financial statements should be read in conjunction with the audited financial statements and the notes thereto in Rand Worldwide Inc.’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012. Operating results for the three months ended September 30, 2012 are not necessarily indicative of results for the full fiscal year or any future interim period.

The books of the Company are maintained in United States dollars and this is the Company’s functional reporting currency. Translations denominated in other than the United States dollar are translated as follows with the related transaction gains and losses being recorded in the Statement of Operations:

• Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;

• Non-monetary items including equity are recorded at the historical rate of exchange; and

• Revenues and expenses are recorded at the period average in which the transaction occurred.

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2. Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board issued Accounting Standards Update 2012-02 (“ASU 2012-02”), Intangibles – Goodwill and Other, Testing Indefinite-Lived Intangible Assets for Impairment. The amendments in the Update are intended to reduce cost and complexity by providing an entity the option to make a qualitative assessment about the likelihood that an indefinite-lived intangible asset, other than goodwill, is impaired to determine whether it should perform a qualitative impairment test. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The amendments of ASU 2012-02 are not expected to have a material impact on the Company’s consolidated financial statements.

3. Supplemental Disclosure of Cash Flow Information

The Company paid interest of approximately $24,000 and $61,000 during the three months ended September 30, 2012 and 2011, respectively. The Company also paid federal and state income taxes of approximately $0 and $100,000 during the three months ended September 30, 2012 and 2011, respectively.

In connection with the acquisition of Informative Design Partners on July 31, 2012, the Company issued 497,512 shares of its common stock for $400,000.

4. Business Combinations

Acquisition of Informative Design Partners

On July 31, 2012, the Company acquired certain assets of Informative Design Partners (“IDP”) for an initial payment of $1 million, comprised of $600,000 in cash and $400,000 in common stock, plus contingent consideration of $2.0 million to be paid over three years based on the earnings achieved from the acquired business.

5. Employee Stock Compensation Plans

The Board of Directors may grant options under the Avatech Solutions, Inc. 2002 Stock Option Plan (the “Plan”) to purchase shares of the Company’s common stock at an exercise price of not less than the fair market value of the common stock on the date of grant. The Plan provided for the granting of either incentive or non-qualified stock options to purchase an aggregate of up to 7,800,000 shares of common stock to eligible employees, officers, and directors of the Company. Stock options generally expire after 10 years. Options generally vest ratably over three or four years, depending on the specific grant award. For the three months ended September 30, 2012, total stock compensation expense charged against income for this Plan was $63,000.

Expected volatilities are based on historical volatility of the Company’s common stock. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

A summary of stock option activity during the three months ended September 30, 2012 and related information is included in the table below:

	Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Outstanding at July 1, 2012		3,481,900	$	0.76
Granted		—		—
Exercised		—		—
Forfeited		—		—
Expired		—		—

9

Outstanding at September 30, 2012	3,481,900	$	0.76	$	411,000
Exercisable at September 30, 2012	1,206,100	$	0.81	$	160,000
Weighted-average remaining contractual life	3.4 Years

All options granted have an exercise price equal to the fair market value of the Company’s common stock on the date of grant. Exercise prices for options outstanding as of September 30, 2012 ranged from $0.30 to $1.71 as follows:

Range of Exercise Prices	Options Outstanding		Weighted Average Exercise Prices of Options Outstanding		Weighted Average Remaining Contractual Life of Options Outstanding	Options Exercisable		Weighted Average Exercise Prices of Options Exercisable		Weighted Average Remaining Contractual Life of Options Exercisable
$  0.30 – 0.50		170,120	$	0.42	2.0 years		170,120	$	0.42	2.0 years
0.60 – 0.71		1,883,920		0.70	8.5 years		529,480		0.69	8.0 years
0.76 – 0.90		1,189,360		0.81	8.5 years		268,000		0.86	4.4 years
1.05 – 1.71		238,500		1.29	3.4 years		238,500		1.29	3.4 years
		3,481,900					1,206,100

Assuming that no additional share-based payments are granted after September 30, 2012, $723,000 of compensation expense will be recognized in the consolidated statement of operations over a weighted-average period of 3.0 years.

6. Borrowings Under Line of Credit

On February 29, 2012, certain subsidiaries of the Company entered into an $8 million line of credit facility, including a $1,000,000 sublimit for the issuance of standby or trade letters of credit with PNC Bank, National Association. The interest rate is the “Eurodollar Rate”, which is calculated by using the LIBOR rate, plus a margin of 2.0%. The interest rate as of September 30, 2012 was 2.2%. The Company had outstanding borrowings from the bank under its credit line of approximately $2.4 million as of September 30, 2012 and had $3.1 million outstanding as of June 30, 2012. The line expires on February 28, 2014.

7. Obligations Under Capital Leases

The Company has incurred various capital lease obligations for computer equipment purchased in prior years. This capital lease obligation totaled $833,000 and $904,000 as of September 30, 2012 and June 30, 2012, respectively.

8. Income Taxes

Income taxes are accounted for under the liability method, under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against the net deferred tax assets is recorded if based upon the weight of available evidence it is more likely than not that some or all of the deferred tax assets will not be realized. The Company records liabilities for income tax contingencies if it is probable that the Company has incurred a tax liability and the liability or range of loss can be reasonably estimated.

During the fourth quarter of fiscal year 2012, the Company recognized the realizable portion of the Company’s U.S. net operating loss carryforwards as a deferred tax asset. The Company previously had created a valuation allowance against the entire amount of net operating loss carryforwards, recognizing no deferred tax asset because it did not have a sufficient history of profitable operations to support the recognition of the asset. Since the Company established a sufficient history of consecutive profitable quarters, and projects continuing profits, the valuation allowance against the U.S. net operating loss carryforwards was reduced in the fourth quarter of fiscal year 2012 by $4.3 million to recognize the portion

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of the net operating loss carryforwards projected to be utilized prior to expiration. The Company continues to maintain a valuation allowance on the entirety of its U.S. capital loss carryforwards and state net operating loss carryforwards due to uncertainty about its ability to utilize such carryforwards.

The Company believes that its income tax filing positions taken or expected to be taken in its tax returns will more likely than not be sustained upon audit by the taxing authorities and does not anticipate any adjustments that will result in a material adverse impact on the Company’s financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded. The Company’s income tax returns for the past three years are subject to examination by tax authorities, and may change upon examination.

The Company records interest related to taxes in other expense and records penalties in operating expenses.

9. Earnings (Loss) Per Share

Basic earnings (loss) per common share is computed by dividing net earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per common share include the potential dilution that would occur from common shares issuable upon the exercise of outstanding stock options and warrants and the conversion of preferred stock. There is no dilutive effect on earnings (loss) per share during loss periods. As of September 30, 2012, 5,577,684 shares of common stock were issuable upon the conversion or exercise of options, warrants and preferred stock. For the three months ended September 30, 2012 and 2011, there were 2,724,011 and 4,174,448 shares of common stock equivalents, respectively, excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

The following summarizes the computations of basic and diluted earnings per common share for the three months ended September 30, 2012 and 2011:

	Three Months Ended September 30,
	2012			2011
Numerator for basic and diluted earnings per share:
Net income	$	576,000		$	402,000
Payment and/or accretion of preferred stock dividends		(28,000	)		(39,000	)
Net income available to common stockholders	$	548,000		$	363,000
Weighted average shares used in computing basic net income per share:		53,821,435			51,921,676
Effect of dilutive securities		1,069,314			216,432
Weighted average shares used in computing diluted net income per share:		54,890,749			52,138,108
Income per common share, basic	$	0.01		$	0.01
Income per common share, diluted	$	0.01		$	0.01

10. Preferred Stock

Convertible Preferred Stock

At September 30, 2012, 384,495 shares of Series D Convertible Preferred Stock (the “Series D shares”) were outstanding with the following terms:

Redemption Feature- The Series D shares are redeemable in the event that the Company is engaged in certain business combinations that are approved by the Board of Directors and subsequently submitted and approved by a vote of the Company’s stockholders. Any director who holds shares of Series D is not eligible to vote on the proposed business combination. The redemption price is $0.30 (upon conversion) per

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share plus an amount equal to all declared and unpaid dividends accrued on such shares since the original issue date.

Voting Rights- Each holder of the Series D shares shall vote together with all other classes and series of stock of the Company as a single class on all actions. Each share shall entitle the holder to one vote per share of common stock into which the preferred stock is then convertible on each such action. In addition, these holders have special voting rights in connection with certain matters, including the issuance of senior stock or debentures, certain mergers, the dissolution of the Company and any amendment to the charter or the terms of the securities that would impair their rights.

Dividend Rate- The holders of the Series D shares are entitled to receive cumulative dividends at a rate of 10% per annum when and as declared by the Board of Directors. Dividends are paid quarterly to preferred stockholders.

Conversion Feature- The Series D shares are convertible at any time beginning 120 days after the original issuance date at the option of the holder and automatically converts into common stock if the common stock trades for more than $2.25 per share for 60 consecutive trading days. Each Series D share is convertible into shares of common stock by multiplying the appropriate conversion rate in effect by the number of shares of preferred stock being converted. As of September 30, 2012, the conversion rate would yield two shares of common stock for each share of Series D share; however, this rate may be adjusted due to stock splits, dividends, and other events defined in the stock purchase agreement between the Company and the holders of the Series D shares.

Liquidation Preference- In the event of a liquidation, dissolution or winding up of the Company, the holders of Series D shares are entitled to receive for each share, prior and in preference to any distribution of any of the assets or surplus funds to the holders of common stock, an amount equal to $0.60 per share plus all accumulated but unpaid dividends. If upon the occurrence of such event, the assets and funds thus distributed among the holders are insufficient to permit the payment of the preferential amount, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the preferred stockholders.

At September 30, 2012, 862 shares of Series E Convertible Preferred Stock (the “Series E shares”) were outstanding with the following terms:

Redemption Feature- The Series E shares are redeemable in the event that the Company is engaged in certain business combinations that are approved by the Board of Directors and subsequently submitted and approved by a vote of the Company’s stockholders. Any director who holds shares of Series E is not eligible to vote on the proposed business combination. The redemption price is $0.65 per share (upon conversion) plus an amount equal to all declared and unpaid dividends accrued on such shares since the original issue date.

Voting Rights- Each holder of the Series E shares shall vote together with all other classes and series of stock of the Company as a single class on all actions. Each share shall entitle the holder to one vote per share of common stock into which the preferred stock is then convertible on each such action. In addition, these holders have special voting rights in connection with certain matters, including the issuance of senior stock or debentures, certain mergers, the dissolution of the Company and any amendment to the charter or the terms of the securities that would impair their rights.

Dividend Rate- The holders of the Series E shares are entitled to receive cumulative dividends at a rate of 10% per annum when and as declared by the Board of Directors. Dividends are paid quarterly to preferred stockholders.

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Conversion Feature- The Series E shares are convertible at any time beginning 120 days after the original issuance date at the option of the holder and automatically converts into common stock if the common stock trades for more than $2.25 per share for 60 consecutive trading days. Each Series E share is convertible into shares of common stock by multiplying the appropriate conversion rate in effect by the number of shares of preferred stock being converted. As of September 30, 2012 the conversion rate would yield 1,538.5 shares of common stock for each share of Series E; however, this rate may be adjusted due to stock splits, dividends, and other events defined in the stock purchase agreements between the Company and the holders of the Series E shares.

Liquidation Preference- In the event of a liquidation, dissolution or winding up of the Company, the holders of Series E shares are entitled to receive for each share, prior and in preference to any distribution of any of the assets or surplus funds to the holders of common stock, an amount equal to $0.65 per share (upon conversion) plus all accumulated but unpaid dividends. If upon the occurrence of such event, the assets and funds thus distributed among the holders are insufficient to permit the payment of the preferential amount, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the preferred stockholders.

11. Segment Information

The Company’s operations include business in North America, Singapore/Malaysia and Australia. Revenue for any particular geographic region is determined by sales made by the Company to the customers in that particular region. The Company’s chief operating decision maker and CEO evaluates business results based primarily on these geographic regions. The following table illustrates certain financial information about these geographies in the corresponding fiscal periods:

Three Months Ended September 30, 2012

	North America			Singapore/ Malaysia			Australia		Total
Revenue-
Product sales	$	10,050,000		$	1,003,000		$	462,000	$	11,515,000
Service revenue		4,960,000			118,000			296,000		5,374,000
Commission revenue		4,342,000			54,000			316,000		4,712,000
Total revenue		19,352,000			1,175,000			1,074,000		21,601,000
Cost of revenue-
Cost of product sales		6,194,000			817,000			320,000		7,331,000
Cost of service revenue		3,445,000			79,000			171,000		3,695,000
Total cost of revenue		9,639,000			896,000			491,000		11,026,000
Gross margin		9,713,000			279,000			583,000		10,575,000
Total operating expenses		8,810,000			313,000			508,000		9,631,000
Operating income (loss)		903,000			(34,000	)		75,000		944,000
Other expense, net		(29,000	)		2,000			7,000		(20,000	)
Income (loss) before income taxes	$	874,000		$	(32,000	)	$	82,000	$	924,000

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Three Months Ended September 30, 2011

	North America			Singapore/ Malaysia			Australia		Total
Revenue-
Product sales	$	11,297,000		$	781,000		$	1,199,000	$	13,277,000
Service revenue		4,348,000			194,000			260,000		4,802,000
Commission revenue		3,635,000			21,000			209,000		3,865,000
Total revenue		19,280,000			996,000			1,668,000		21,944,000
Cost of revenue-
Cost of product sales		7,870,000			566,000			866,000		9,302,000
Cost of service revenue		2,879,000			122,000			131,000		3,132,000
Total cost of revenue		10,749,000			688,000			997,000		12,434,000
Gross margin		8,531,000			308,000			671,000		9,510,000
Total operating expenses		8,224,000			242,000			448,000		8,914,000
Operating income		307,000			66,000			223,000		596,000
Other expense, net		(131,000	)		(15,000	)		4,000		(142,000	)
Income before income taxes	$	176,000		$	51,000		$	227,000	$	454,000

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

This report contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Readers of this report should be aware of the speculative nature of “forward-looking statements.” Statements that are not historical in nature, including those that include the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions, are based on current expectations, estimates and projections about, among other things, the industry and the markets in which Rand Worldwide, Inc. operates, and they are not guarantees of future performance. Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties, including risks and uncertainties discussed in this report; general economic, market, or business conditions; changes in interest rates, the cost of funds, and demand for the Company’s products and services; changes in the Company’s competitive position or competitive actions by other companies; the Company’s ability to manage growth; changes in laws or regulations or policies of federal and state regulators and agencies; ability to successfully integrate acquired businesses; and other circumstances beyond the Company’s control. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results anticipated will be realized or, if substantially realized, will have the expected consequences on the Company’s business or operations. Except as required by applicable laws, the Company does not intend to publish updates or revisions of any forward-looking statements to reflect new information, future events or otherwise.

When used throughout this report, the terms “Rand Worldwide”, “the Company”, “we”, “us” and “our” refer to Rand Worldwide, Inc. and, unless the context clearly indicates otherwise, its consolidated subsidiaries.

Overview

Rand Worldwide is a leader in design, engineering, data archiving solutions, and facilities management technology solutions with expertise in computer aided design (“CAD”) software, computational fluid dynamics (“CFD”), data management, facilities management, and process optimization for the manufacturing, engineering, and building design industries. The Company specializes in software resale, technology consulting, implementation, integration, training, data archiving, CFD analysis consulting and thermal simulation services and technical support solutions that enable clients to more effectively design, develop, and manage projects, products, and facilities. The Company is globally diversified with offices in the United States, Canada, Australia, Malaysia and Singapore. Rand Worldwide has over 25 years of industry experience and expertise, an extensive list of training and implementation services and longstanding relationships with design technology leaders including Autodesk, Archibus and Autonomy. The Company’s clients include businesses, government agencies, and educational institutions.

The Company’s business strategy is built on three core principles designed to leverage its existing strengths with expected market opportunities:

• Maintain and profitably grow its strong position in the Autodesk software market;

• Profitably grow its consulting and services business by leveraging its experts in design engineering; and

• Acquire or license and integrate diverse, yet complementary, software and services businesses to extend its product offerings to its large customer base and expand its market potential.

This strategy was designed to match the Company’s product and service offerings more precisely with the needs of its customers, while providing avenues of growth and diversification.

Product Sales- Product sales consist primarily of the resale of packaged design software, including:

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• Autodesk 2D and 3D computer aided design software for customers in the mechanical, architectural and civil engineering sectors, as well as visualization and animation technology to companies in the media and entertainment industry;

• Autodesk data management software;

• Archibus facilities management software for space planning, strategic planning, and lease/property administration;

• Leica 3D laser scanning equipment for the Architectural, Engineering and Construction sector;

• ASCENT internally developed courseware for a variety of engineering applications; and

• Autonomy data archiving solutions

Service Revenue- The Company provides services in the form of project-focused software implementations, training, consulting services, software development, software customization, data migration, supplemental design staffing, drawing digitization, symbol library development, custom courseware development, technical support and hosted data archiving solutions to its customers. The Company employs a technical staff of over 100 personnel associated with these types of services. The Company also offers support and implementation services to complement the data archive solutions provided and sold through its Rand Secure Archive Division.

Commission Revenue- The Company offers Autodesk’s subscription programs, which entitle subscribers to receive software upgrades, web support and eLearning lessons directly from Autodesk. Because Rand Worldwide does not participate in the delivery of these subscription products or the web support and eLearning lesson benefits, the Company records the gross profit from the sale of Autodesk software subscriptions as commission revenue. In addition, the Company sells technology upgrades to existing Autodesk customers through the Autodesk Subscription program where the customers receive the latest releases of Autodesk software, incremental product enhancements, and personalized web support direct from Autodesk.

Based on its analysis of the Autodesk Subscription program, Rand Worldwide records the net proceeds that it receives from Autodesk for subscription sales in accordance with the provisions of FASB Accounting Standards Codification (“ASC”) 605 (previously EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent).

The Company also generates commission revenue from the resale of Autodesk software to various customers, a number of which Autodesk considers major and government accounts. Autodesk designates customers as major accounts based on specific criteria, primarily sales volume, and typically gives these customers volume discounts. The Company is responsible for managing and reselling Autodesk products to a number of these major and government account customers; however, software products are shipped directly from Autodesk to the customers. The Company receives commissions upon shipment of the products from Autodesk to the customer based on a percentage of the sales price.

Cost of Product Sales- The cost of product sales consists of the cost of purchasing products from software suppliers or hardware manufacturers as well as the associated shipping and handling costs. The Company earns a volume incentive rebate from its primary supplier, Autodesk, paid monthly as a percentage of qualifying purchases. The rebate percentage is established based on quarterly purchasing volume. These rebates serve to reduce the cost of product sales. The Company accrues its rebates the month the underlying sales are posted, in accordance with ASC 605-50, Customer Payments and Incentives. The Company has generally been able to focus its sales efforts in a manner to achieve margins on its product sales that are within a relatively narrow range period to period.

Cost of Service Revenue- Cost of service revenue includes the direct costs associated with the implementation of software and hardware solutions as well as training, support services, and professional services. These costs consist primarily of compensation, travel, literature, and the costs of third-party contractors engaged by the Company. The cost of service revenue does not include an allocation of overhead costs.

Selling, General and Administrative Expense- Selling, general and administrative expenses consist primarily of compensation and other expenses associated with the Company’s sales force, management, finance, human resources, and information systems. Advertising and public relations expenses and

16

expenses for facilities, such as rent and utilities, are also included in selling, general and administrative expenses.

Depreciation and Amortization Expense- Depreciation expense represents the period costs associated with our investment in property and equipment, consisting principally of computer equipment, software, furniture and fixtures, and leasehold improvements. Amortization expense represents the period costs of the acquired customer list and trade name intangible assets. The Company computes depreciation and amortization expenses using the straight-line method. The Company leases all of its facilities and depreciates leasehold improvements over the lesser of the lease term or the estimated useful life of the asset.

Interest Expense- Interest expense consists of interest on capital lease obligations and borrowings from lines of credit.

Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011

The following tables set forth a comparison of the Company’s results of operations for the three-month periods ended September 30, 2012 and September 30, 2011. The amounts are derived from selected items reflected in the Company’s unaudited Consolidated Statements of Operations included elsewhere in this report. The three-month financial results are not necessarily indicative of future results.

Revenues

	Three Months Ended September 30,
	2012		2011		% change
Revenues:
Product sales	$	11,515,000	$	13,277,000		(13.3	)%
Service revenue		5,374,000		4,802,000		11.9	%
Commission revenue		4,712,000		3,865,000		21.9	%
Total revenues	$	21,601,000	$	21,944,000		(1.6	)%

Revenues. Total revenues for the three months ended September 30, 2012 decreased by $343,000, or 1.6%, when compared to the same period in the prior fiscal year.

Product sales decreased $1,762,000, or 13.3% for the three months ended September 30, 2012 when compared to the same period in the prior fiscal year. During the prior fiscal year, product sales included a single sale of $700,000 from the Company’s Australian operations. The Company was still experiencing the effects of a shortfall in experienced sales professionals which resulted in decreased product sales during the current fiscal quarter.

Service revenues increased $572,000, or 11.9%, for the three months ended September 30, 2012 when compared with the same period in the prior fiscal year. The increase in service revenues included $170,000 of revenues from the acquired CFD business, $117,000 in increased data archiving services, and $285,000 in increased training and consulting services. The Company has made progress in developing its Rand Secure Archive business and has also expanded its sales team who are dedicated to selling our training offerings.

Commission revenues increased $847,000, or 21.9%, for the three months ended September 30, 2012 when compared with the same period in the prior fiscal year. The increased commission revenues were primarily due to a few key customers renewing their multi-year subscription contracts for another three years during the current fiscal quarter.

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Cost of Revenues and Gross Margin

	Three Months Ended September 30,
	2012		2011		% change
Cost of revenue:
Cost of product sales	$	7,331,000	$	9,302,000		(21.2	)%
Cost of service revenue		3,695,000		3,132,000		18.0	%
Total cost of revenue	$	11,026,000	$	12,434,000		(11.3	)%
Gross margin	$	10,575,000	$	9,510,000

Cost of revenue. The total cost of revenue decreased $1,408,000, or 11.3%, for the three months ended September 30, 2012 when compared to the same period in the prior fiscal year.

Cost of product sales decreased 21.2% during the three months ended September 30, 2012 when compared with the same period in the prior fiscal year, while product revenue decreased 13.3%. Cost of product sales decreased to a larger extent than did product revenues primarily due to increased sales rebates from the Company’s principal supplier, Autodesk, which are applied to the cost of product sales. For its new fiscal year beginning February 1, 2012, Autodesk ended most of its target-based rebates and began a new volume-based rebate which resulted in a larger rebate earned for the months following this change. Furthermore, sales of proprietary products such as Revit Clarity and licenses for ASCENT courseware titles increased nearly threefold over last year, resulting in decreased product cost relative to product revenue as the development costs for such proprietary products was expensed when incurred.

Cost of service revenue increased 18.0% for the three months ended September 30, 2012 when compared to the same period in the prior fiscal year, while service revenues increased 11.9%. The Company hired additional technical staff since the prior fiscal year resulting in increased cost of service revenue. Cost of service revenue as a percentage of related revenue increased to 68.8% during the three months ended September 30, 2011 from 65.2% during the same period in the prior fiscal year for the reasons explained above.

Gross margin. The Company’s overall gross margin percentage of 49.0% for the three months ended September 30, 2012 was higher than the 43.3% gross margin in the same period in the prior fiscal year due primarily to the decreased product costs.

Other Operating Expenses

	Three Months Ended September 30,
	2012		2011		% change
Other operating expenses:
Selling, general and administrative	$	9,198,000	$	8,518,000		8.0	%
Depreciation and amortization		433,000		396,000		9.3	%
Total other operating expenses	$	9,631,000	$	8,914,000		8.0	%

Selling, General and Administrative Expense. Selling, general and administrative expenses increased 8.0% for the three months ended September 30, 2012 when compared to the same period in the prior fiscal year. Selling, general and administrative expense as a percent of total revenues was 42.6% for the three months ended September 30, 2012, an increase from 38.8% for the same period in the prior fiscal year. The increase in these expenses was primarily the result of new employees including those related to our recent acquisitions of IDP and Inlet as well as our expansion of the Rand Secure Archive team and our team dedicated to selling our training offerings.

Depreciation and Amortization. Depreciation and amortization expenses increased $37,000, or 9.3%, for the three months ended September 30, 2012 when compared to the same period in the prior fiscal year.

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The increase was due primarily to the additional depreciation expense associated with hardware and software acquired for its data archiving division.

Other (Expense) Income, net

	Three Months Ended September 30,
	2012			2011			% change
Other expense, net	$	(20,000	)	$	(142,000	)		(85.9	)%

Other (Expense) Income, net. The Company incurred $20,000 in other expense, net, during the three months ended September 30, 2012, compared to $142,000 during the same period in the prior fiscal year. The decrease is primarily due to having foreign exchange gains during the current fiscal year while having foreign exchange losses during the prior fiscal year. Interest expense, when netted with foreign exchange gains and losses, resulted in net expense in both periods presented.

Income Tax Expense

	Three Months Ended September 30,
	2012		2011		% Change
Income tax expense	$	348,000	$	52,000		569.2	%

Income Tax Expense. The Company recorded $348,000 of income tax expense during the three months ended September 30, 2012, compared to $52,000 in income tax expense recorded for the same period in the prior fiscal year. The Company’s effective tax rate was 38% during the three months ended September 30, 2012, compared to 11% during the same period in the prior fiscal year.

In the prior year, the Company had a valuation allowance against its net operating loss carryforwards, and was able to offset most of its income tax expense against its net operating loss carryforwards. During the quarter ended June 30, 2012, the Company recognized as an asset its US net operating loss carryforwards that it expects will be realizable, and as a result, the Company’s income tax expense is no longer offset against large unrecognized US net operating loss carryforwards. Consequently income tax expense is significantly higher.

As of September 30, 2012, the Company had U.S. federal net operating loss carryforwards available to reduce future taxable income of approximately $38.0 million, however, $25.3 million of these carryforwards were not recognized because they are subject to annual limitations under Internal Revenue Code Section 382 and are expected to expire before being utilized. These carryforwards expire between 2013 and 2029. In addition, as of September 30, 2012, the Company had foreign net operating loss carryforwards of approximately $19.6 million available to reduce future taxable income, and net deferred tax assets of $6.8 million. The carryforwards expire between 2012 and 2029 for some jurisdictions and, for other jurisdictions, the losses may be carried forward indefinitely. The Company maintains a valuation allowance on the entire amount of its foreign deferred tax assets due to insufficient history of profitable operations.

The Company’s Canadian subsidiary, Rand A Technology Corporation, is currently being audited by the Canada Revenue Agency for tax years 2005 through 2009. Management believes that it has properly recorded the tax expense for the periods under review and expects no material adjustments to the respective returns or to its financial statements.

Liquidity and Capital Resources

Historically, the Company has financed its operations and met its capital expenditure requirements primarily through cash flows provided by operations and borrowings under short-term debt arrangements.

On February 29, 2012, the Company entered into an $8 million line of credit facility, including a $1,000,000 sublimit for the issuance of standby or trade letters of credit with PNC Bank, National

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Association. The interest rate is the “Eurodollar Rate”, which is calculated by using the LIBOR rate, plus a margin of 2.0%. The interest rate as of September 30, 2012 was 2.2%. The Company had outstanding borrowings from the bank under its credit line of approximately $2.4 million as of September 30, 2012 and had $3.1 million outstanding as of June 30, 2012. The line expires on February 28, 2014.

The Company’s operating assets and liabilities consist primarily of accounts receivable, cash, borrowings under line of credit, accounts payable, and deferred revenue. Changes in these balances are affected principally by the timing of sales, collections and vendor payments. The Company purchases approximately 97% of its product from one principal supplier that provides it with credit to finance those purchases.

For the three months ended September 30, 2012, net cash provided by operating activities was $2,559,000, compared with net cash provided by operating activities of $1,099,000 during the three months ended September 30, 2011. The increase in cash provided by operating activities from the three months ended September 30, 2012 when compared to the three months ended September 30, 2011 was due mainly to increased collections of accounts receivable, decreased payouts of accrued compensation and increased profitability of the Company, with some offsetting changes such as increased deferred revenues resulting from the expanded Rand Secure Archive services.

The Company’s investing activities consist principally of investments in computer and office equipment. In July 2012, the Company acquired Informative Design Partners for $600,000 in cash, $400,000 in stock and potential future earnout payments. Compared to the same period in the prior fiscal year, cash purchases of equipment for the three months ended September 30, 2012 increased to $702,000 from $131,000 mainly as the result of purchases of software and hardware for the Rand Secure Archive business and, to a lesser degree, normal periodic replacement of computer equipment.

For the three months ended September 30, 2012, net cash used in financing activities was $804,000 compared to $776,000 for the three months ended September 30, 2011.

The Company had a working capital surplus of 3,196,000 as of September 30, 2012.

Because the Company is one of the largest resellers of Autodesk software and because Autodesk has continued to state its intention to continue to strengthen its relationships with its resellers, the Company expects to continue to be a leading seller of Autodesk software. The Company is a party to a Value Added Reseller Agreement with Autodesk effective February 1, 2010. The agreement provides for an initial term of twelve months that, subject to certain requirements and termination rights of the parties, automatically renews on an annual basis for two additional twelve-month periods. The agreement designates the Company as an authorized reseller of Autodesk software and prescribes the authorized sales territories, authorized products and services, rebate and incentive program details and marketing support.

Operating Leases

The Company leases certain office space and equipment under noncancellable operating lease agreements that expire in various years through 2019 and that, generally, do not contain significant renewal options. Future minimum payments under all noncancellable operating leases with initial terms of one year or more consisted of the following at September 30, 2012:

Twelve months ending September 30:
2013	$	2,562,000
2014		2,144,000
2015		1,776,000
2016		1,077,000
2017		650,000
Thereafter		502,000
Total minimum lease payments	$	8,711,000

Capital Leases

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The Company has various computer equipment used in training facilities and by employees throughout its office locations. These capital lease obligations totaled $833,000 as of September 30, 2012 with approximately $292,000 representing the short-term balance of the lease and shown as Obligations under capital leases in the accompanying balance sheets. Payments for the leases are made either monthly or quarterly through September 2016 and depreciation expense on this equipment was approximately $62,000 as of September 30, 2012. Future minimum payments consisted of the following at September 30, 2012:

Twelve months ending September 30:
2013	$	346,000
2014		331,000
2015		161,000
2016		125,000
Total minimum lease payments		963,000
Less:
Taxes		47,000
Imputed interest		83,000
Present value of future minimum lease payments	$	833,000

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports filed under the Securities Exchange Act of 1934 with the Securities and Exchange Commission, such as this Quarterly Report, is recorded, processed, summarized and reported within the periods specified in those rules and forms, and that such information is accumulated and communicated to management, including its principal executive officer (“CEO”) and its principal financial and accounting officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

An evaluation of the effectiveness of these disclosure controls as of September 30, 2012 was carried out under the supervision and with the participation of management, including the CEO and the CFO. Based on that evaluation, management, including the CEO and the CFO, has concluded that, as of that date, the Company’s disclosure controls and procedures were, in fact, effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the fiscal quarter covered by this report that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

PART II. OTHER INFORMATION

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 31, 2012, the Company issued 497,512 shares of its common stock to Informative Design Partners as part of the purchase price of certain assets acquired from them. The aggregate consideration received by the Company for these shares was $400,000, or $.804 per share. These shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended, as a transaction not involving a public offering.

ITEM 6. EXHIBITS

The exhibits filed or furnished with this report are listed in the Exhibit Index that immediately follows the Signatures to this report, which list is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RAND WORLDWIDE, INC.
Date: November 14, 2012	By:	/s/ Marc L. Dulude
	Marc L. Dulude
	Chief Executive Officer
	(Principal Executive Officer)
Date: November 14, 2012	By:	/s/ Lawrence Rychlak
	Lawrence Rychlak
	President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

23

EXHIBIT INDEX

Exhibit	Description
31.1	Rule 15d-14(a) Certification of Principal Executive Officer†
31.2	Rule 15d-14(a) Certification of Principal Financial and Accounting Officer†
32.1	Section 1350 Certifications††
101.INS	XBRL Instance Document. ††
101.SCH	XBRL Taxonomy Extension Schema Document. ††
101.CAL	XBRL Taxonomy Calculation Linkbase Document. ††
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. ††
101.LAB	XBRL Taxonomy Label Linkbase Document. ††
101.PRE	XBRL Taxonomy Presentation Linkbase Document. ††

^†  Filed herewith.

^††  Furnished herewith.

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EX-31.1

Exhibit 31.1

Certifications of the Principal Executive Officer

Pursuant to Securities Exchange Act Rules 13a-1 and 15d-14

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Marc L. Dulude, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rand Worldwide, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2012	/s/ Marc L. Dulude
	Marc L. Dulude
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certifications of the Principal Financial and Accounting Officer

Pursuant to Securities Exchange Act Rules 13a-1 and 15d-14

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Lawrence Rychlak, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rand Worldwide, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2012	/s/ Lawrence Rychlak
	Lawrence Rychlak
	President and Chief Financial Officer
	(Principal Accounting Officer)

EX-32.1

Exhibit 32.1

Certifications of Periodic Report by the Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Rand Worldwide, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission and to which this Certification is an exhibit (the “Report”), the undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company for the periods reflected therein.

Date: November 14, 2012	/s/ Marc L. Dulude
	Marc L. Dulude
	Chief Executive Officer
	(Principal Executive Officer)
	/s/ Lawrence Rychlak
	Lawrence Rychlak
	President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

XML

Note 5 - Employee Stock Compensation Plans (Detail) - Exercise Prices for Options Outstanding and Related Information: (USD $)	3 Months Ended
	Sep. 30, 2012	Jun. 30, 2012
Range of Exercise Prices	$ 0.30
Range of Exercise Prices	$ 1.71
Options Outstanding (in Shares)	3,481,900	3,481,900
Weighted Average Exercise Prices of Options Outstanding	$ 0.76	$ 0.76
Weighted Average Remaining Contractual Life of Options Outstanding (years	3 years 146 days
Options Exercisable (in Shares)	1,206,100
Weighted Average Exercise Prices of Options Exercisable	$ 0.81
0.30 - 0.50 [Member]
Range of Exercise Prices	$ 0.30
Range of Exercise Prices	$ 0.50
Options Outstanding (in Shares)	170,120
Weighted Average Exercise Prices of Options Outstanding	$ 0.42
Weighted Average Remaining Contractual Life of Options Outstanding (years	2 years
Options Exercisable (in Shares)	170,120
Weighted Average Exercise Prices of Options Exercisable	$ 0.42
Weighted Average Remaining Contractual Life of Options Exercisable (years	2 years
0.60 - 0.71 [Member]
Range of Exercise Prices	$ 0.60
Range of Exercise Prices	$ 0.71
Options Outstanding (in Shares)	1,883,920
Weighted Average Exercise Prices of Options Outstanding	$ 0.70
Weighted Average Remaining Contractual Life of Options Outstanding (years	8 years 6 months
Options Exercisable (in Shares)	529,480
Weighted Average Exercise Prices of Options Exercisable	$ 0.69
Weighted Average Remaining Contractual Life of Options Exercisable (years	8 years
0.76 - 0.90 [Member]
Range of Exercise Prices	$ 0.76
Range of Exercise Prices	$ 0.90
Options Outstanding (in Shares)	1,189,360
Weighted Average Exercise Prices of Options Outstanding	$ 0.81
Weighted Average Remaining Contractual Life of Options Outstanding (years	8 years 6 months
Options Exercisable (in Shares)	268,000
Weighted Average Exercise Prices of Options Exercisable	$ 0.86
Weighted Average Remaining Contractual Life of Options Exercisable (years	4 years 146 days
1.05 - 1.71 [Member]
Range of Exercise Prices	$ 1.05
Range of Exercise Prices	$ 1.71
Options Outstanding (in Shares)	238,500
Weighted Average Exercise Prices of Options Outstanding	$ 1.29
Weighted Average Remaining Contractual Life of Options Outstanding (years	3 years 146 days
Options Exercisable (in Shares)	238,500
Weighted Average Exercise Prices of Options Exercisable	$ 1.29
Weighted Average Remaining Contractual Life of Options Exercisable (years	3 years 146 days

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Note 4 - Business Combinations

3 Months Ended

Sep. 30, 2012

Business Combination Disclosure [Text Block]

4. Business Combinations

Acquisition of Informative Design Partners

On July 31, 2012, the Company acquired certain assets of Informative Design Partners (“IDP”) for an initial payment of $1 million, comprised of $600,000 in cash and $400,000 in common stock, plus contingent consideration of $2.0 million to be paid over three years based on the earnings achieved from the acquired business.

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Note 9 - Earnings (Loss) Per Share (Detail)	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Number of Common Shares Issuable Upon the Conversion or Exercise of Options, Warrants, and Preferred Stock	5,577,684
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,724,011	4,174,448

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Note 8 - Income Taxes (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2012
Valuation Allowances and Reserves, Period Increase (Decrease)	$ 4.3

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Note 9 - Earnings (Loss) Per Share (Detail) - Computations of Basic and Diluted Loss Per Common Share: (USD $)	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Net income (in Dollars)	$ 576,000	$ 402,000
Payment and/or accretion of preferred stock dividends (in Dollars)	(28,000)	(39,000)
Net income available to common stockholders (in Dollars)	$ 548,000	$ 363,000
Weighted average shares used in computing basic net income per share:	53,821,435	51,921,676
Effect of dilutive securities	1,069,314	216,432
Weighted average shares used in computing diluted net income per share:	54,890,749	52,138,108
Income per common share, basic (in Dollars per share)	$ 0.01	$ 0.01
Income per common share, diluted (in Dollars per share)	$ 0.01	$ 0.01

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Note 10 - Preferred Stock (Detail) (USD $)	3 Months Ended
	Sep. 30, 2012
Series D Preferred Stock [Member]
Preferred Stock, Shares Outstanding	384,495
Preferred Stock, Redemption Price Per Share (in Dollars per share)	$ 0.30
Preferred Stock, Dividend Rate, Percentage	10.00%
Convertible Preferred Stock, Shares Issued upon Conversion	2
Preferred Stock, Liquidation Preference Per Share (in Dollars per share)	$ 0.60
Series E Preferred Stock [Member]
Preferred Stock, Shares Outstanding	862
Preferred Stock, Redemption Price Per Share (in Dollars per share)	$ 0.65
Preferred Stock, Dividend Rate, Percentage	10.00%
Convertible Preferred Stock, Shares Issued upon Conversion	1,538.5
Preferred Stock, Liquidation Preference Per Share (in Dollars per share)	$ 0.65

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Note 3 - Supplemental Disclosure of Cash Flow Information

3 Months Ended

Sep. 30, 2012

Cash Flow, Supplemental Disclosures [Text Block]

3. Supplemental Disclosure of Cash Flow Information

The Company paid interest of approximately $24,000 and $61,000 during the three months ended September 30, 2012 and 2011, respectively. The Company also paid federal and state income taxes of approximately $0 and $100,000 during the three months ended September 30, 2012 and 2011, respectively.

In connection with the acquisition of Informative Design Partners on July 31, 2012, the Company issued 497,512 shares of its common stock for $400,000.

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Note 11 - Segment Information (Detail) - Financial Information by Geographic Segment: (USD $)	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Revenue-
Product sales	$ 11,515,000	$ 13,277,000
Service revenue	5,374,000	4,802,000
Commission revenue	4,712,000	3,865,000
Total revenue	21,601,000	21,944,000
Cost of revenue-
Cost of product sales	7,331,000	9,302,000
Cost of service revenue	3,695,000	3,132,000
Total cost of revenue	11,026,000	12,434,000
Gross margin	10,575,000	9,510,000
Total operating expenses	9,631,000	8,914,000
Operating income (loss)	944,000	596,000
Other expense, net	(20,000)	(142,000)
Income (loss) before income taxes	924,000	454,000
North America [Member]
Revenue-
Product sales	10,050,000	11,297,000
Service revenue	4,960,000	4,348,000
Commission revenue	4,342,000	3,635,000
Total revenue	19,352,000	19,280,000
Cost of revenue-
Cost of product sales	6,194,000	7,870,000
Cost of service revenue	3,445,000	2,879,000
Total cost of revenue	9,639,000	10,749,000
Gross margin	9,713,000	8,531,000
Total operating expenses	8,810,000	8,224,000
Operating income (loss)	903,000	307,000
Other expense, net	(29,000)	(131,000)
Income (loss) before income taxes	874,000	176,000
Singapore/Malaysia [Member]
Revenue-
Product sales	1,003,000	781,000
Service revenue	118,000	194,000
Commission revenue	54,000	21,000
Total revenue	1,175,000	996,000
Cost of revenue-
Cost of product sales	817,000	566,000
Cost of service revenue	79,000	122,000
Total cost of revenue	896,000	688,000
Gross margin	279,000	308,000
Total operating expenses	313,000	242,000
Operating income (loss)	(34,000)	66,000
Other expense, net	2,000	(15,000)
Income (loss) before income taxes	(32,000)	51,000
Australia [Member]
Revenue-
Product sales	462,000	1,199,000
Service revenue	296,000	260,000
Commission revenue	316,000	209,000
Total revenue	1,074,000	1,668,000
Cost of revenue-
Cost of product sales	320,000	866,000
Cost of service revenue	171,000	131,000
Total cost of revenue	491,000	997,000
Gross margin	583,000	671,000
Total operating expenses	508,000	448,000
Operating income (loss)	75,000	223,000
Other expense, net	7,000	4,000
Income (loss) before income taxes	$ 82,000	$ 227,000

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Consolidated Balance Sheets (unaudited) (USD $)	Sep. 30, 2012	Jun. 30, 2012
Assets
Cash	$ 2,292,000	$ 1,680,000
Accounts receivable, less allowance of $359,000 as of September 30, 2012 and $405,000 as of June 30, 2012	12,489,000	18,099,000
Income tax receivable	649,000	281,000
Other receivables	769,000	994,000
Inventory	156,000	107,000
Prepaid expenses and other current assets	2,013,000	2,084,000
Deferred tax assets	114,000	78,000
Total current assets	18,482,000	23,323,000
Computer software and equipment	8,873,000	8,231,000
Office furniture and equipment	2,038,000	1,974,000
Leasehold improvements	724,000	699,000
	11,635,000	10,904,000
Less accumulated depreciation and amortization	(8,460,000)	(8,193,000)
	3,175,000	2,711,000
Deferred income taxes	2,174,000	2,576,000
Other assets	339,000	370,000
Total assets	48,950,000	51,210,000
Goodwill	17,837,000	15,954,000
Liabilities and Stockholders’ Equity
Borrowings under line of credit	2,435,000	3,140,000
Accounts payable and accrued expenses	7,074,000	9,850,000
Accrued compensation and related benefits	1,395,000	1,804,000
Deferred revenue	4,090,000	4,666,000
Obligations under capital leases	292,000	290,000
Total current liabilities	15,286,000	19,750,000
Obligations under capital leases	541,000	614,000
Other long term liabilities	1,071,000
Total liabilities	16,898,000	20,364,000
Convertible Preferred Stock, $0.01 par value; 1,300,537 shares authorized, 1,298,728 shares issued; 385,357 shares outstanding with an aggregate liquidation preference of $1,093,000 at September 30, 2012 and June 30, 2012 (note 10)	4,000	4,000
Common stock, $0.01 par value; 80,000,000 shares authorized; issued and outstanding shares of 53,990,589 and 53,493,077 at September 30, 2012 and June 30, 2012, respectively	540,000	535,000
Additional paid-in capital	65,377,000	64,947,000
Accumulated deficit	(35,124,000)	(35,700,000)
Accumulated other comprehensive income	1,255,000	1,060,000
Total stockholders’ equity	32,052,000	30,846,000
Total liabilities and stockholders’ equity	48,950,000	51,210,000
Customer Lists [Member]
Assets
Finite Lived Intangible Assets, Net	4,032,000	3,290,000
Trade Names [Member]
Assets
Finite Lived Intangible Assets, Net	$ 2,911,000	$ 2,986,000

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Note 1 - Organization and Basis of Presentation

3 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Organization and Basis of Presentation

Rand Worldwide Inc. ("Rand Worldwide”) is a leading supplier in the design automation, facilities and data management software marketplace. Rand Worldwide also provides value-added services, such as training, technical support and other consulting and professional services to corporations, government agencies and educational institutions worldwide.

References in these Notes to “Rand Worldwide”, “the Company”, “us”, “we”, “our” are references to Rand Worldwide, Inc. and, unless the context clearly contemplated otherwise, its consolidated subsidiaries.

The Company is organized into three divisions: IMAGINiT Technologies (“IMAGINiT”), Enterprise Applications and ASCENT—Center for Technical Knowledge (“ASCENT”).

The IMAGINiT division is one of the largest value-added resellers of Autodesk, Inc. (“Autodesk”) products in the world, providing Autodesk solutions and value-added services to customers in the manufacturing, infrastructure, building, and media and entertainment industries.  IMAGINiT also specializes in computational fluid dynamics analysis consulting and thermal simulation services and sells its own proprietary software products and related services, enhancing its total client solution offerings. IMAGINiT operates from locations across North America, Australia, Singapore and Malaysia.

The Enterprise Applications division is the non-Autodesk component of the business and offers various products and services including data archiving solutions, facilities management solutions, as well as training for Dassault Systèmes and PTC (Parametric Technology Corporation) products including CATIA, ENOVIA and Pro/ENGINEER.

ASCENT is the courseware division of Rand Worldwide and is a leading developer of professional training materials and knowledge products for engineering software tools. Executive management performs their primary analyses based upon geographic location and operations by geographic segment are disclosed within Note 11.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Article 8 of Regulation S-X.  Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules or regulations. The interim financial statements are unaudited, and reflect all adjustments (consisting of normal recurring accruals) which are, in management’s opinion, necessary to present a fair statement of results of the interim periods presented. These financial statements should be read in conjunction with the audited financial statements and the notes thereto in Rand Worldwide Inc.’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012. Operating results for the three months ended September 30, 2012 are not necessarily indicative of results for the full fiscal year or any future interim period.

The books of the Company are maintained in United States dollars and this is the Company’s functional reporting currency.  Translations denominated in other than the United States dollar are translated as follows with the related transaction gains and losses being recorded in the Statement of Operations:

· Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;

· Non-monetary items including equity are recorded at the historical rate of exchange; and

· Revenues and expenses are recorded at the period average in which the transaction occurred.

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Note 4 - Business Combinations (Detail) (USD $)	1 Months Ended
	Jul. 31, 2012
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 400,000
Informative Design Partners [Member]
Business Acquisition, Cost of Acquired Entity, Purchase Price	1,000,000
Business Acquisition, Cost of Acquired Entity, Cash Paid	600,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	400,000
Business Acquisition, Contingent Consideration, Potential Cash Payment	$ 2,000,000
Business Acquisition Contingent Consideration Payment Term	3 years

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Note 5 - Employee Stock Compensation Plans (Detail) - Summary of Stock Option Activity and Related Information: (USD $)	3 Months Ended
	Sep. 30, 2012
Outstanding at July 1, 2012	3,481,900
Outstanding at July 1, 2012 (in Dollars per share)	$ 0.76
Outstanding at September 30, 2012	3,481,900
Outstanding at September 30, 2012 (in Dollars per share)	$ 0.76
Outstanding at September 30, 2012 (in Dollars)	$ 411,000
Exercisable at September 30, 2012	1,206,100
Exercisable at September 30, 2012 (in Dollars per share)	$ 0.81
Exercisable at September 30, 2012 (in Dollars)	$ 160,000
Weighted-average remaining contractual life	3 years 146 days

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Note 2 - Recent Accounting Pronouncements

3 Months Ended

Sep. 30, 2012

New Accounting Pronouncements, Policy [Policy Text Block]

2. Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board issued Accounting Standards Update 2012-02 (“ASU 2012-02”), Intangibles – Goodwill and Other, Testing Indefinite-Lived Intangible Assets for Impairment. The amendments in the Update are intended to reduce cost and complexity by providing an entity the option to make a qualitative assessment about the likelihood that an indefinite-lived intangible asset, other than goodwill, is impaired to determine whether it should perform a qualitative impairment test. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The amendments of ASU 2012-02 are not expected to have a material impact on the Company’s consolidated financial statements.

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Consolidated Balance Sheets (unaudited) (Parentheticals) (USD $)	Sep. 30, 2012	Jun. 30, 2012
Accounts receivable, allowance (in Dollars)	$ 359,000	$ 405,000
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	53,990,589	53,493,077
Common stock, shares outstanding	53,990,589	53,493,077
Convertible Preferred Stock [Member]
Convertible Preferred Stock, shares authorized	1,300,537	1,300,537
Convertible Preferred Stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Convertible Preferred Stock, shares issued	1,298,728	1,298,728
Convertible Preferred Stock, shares outstanding	385,357	385,357
Convertible Preferred Stock, aggregate liquidation preference (in Dollars)	1,093,000	1,093,000
Customer Lists [Member]
Accumulated Depreciation on Finite Lived Intangible Assets (in Dollars)	6,202,000	6,105,000
Trade Names [Member]
Accumulated Depreciation on Finite Lived Intangible Assets (in Dollars)	$ 1,020,000	$ 945,000

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Note 5 - Employee Stock Compensation Plans (Tables)

3 Months Ended

Sep. 30, 2012

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Options		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at July 1, 2012		3,481,900	$	0.76
Granted		–		–
Exercised		–		–
Forfeited		–		–
Expired		–		–
Outstanding at September 30, 2012		3,481,900	$	0.76	$	411,000
Exercisable at September 30, 2012		1,206,100	$	0.81	$	160,000
Weighted-average remaining contractual life	3.4 Years

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

Range of Exercise Prices			Options Outstanding		Weighted Average Exercise Prices of Options Outstanding		Weighted Average Remaining Contractual Life of Options Outstanding (in years)	Options Exercisable		Weighted Average Exercise Prices of Options Exercisable		Weighted Average Remaining Contractual Life of Options Exercisable (in years)
$0.30	–	0.50		170,120	$	0.42	2.0		170,120	$	0.42	2.0
0.60	–	0.71		1,883,920		0.70	8.5		529,480		0.69	8.0
0.76	–	0.90		1,189,360		0.81	8.5		268,000		0.86	4.4
1.05	–	1.71		238,500		1.29	3.4		238,500		1.29	3.4
				3,481,900					1,206,100

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Document And Entity Information	3 Months Ended
	Sep. 30, 2012	Nov. 09, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	RAND WORLDWIDE INC
Document Type	10-Q
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		53,990,589
Amendment Flag	false
Entity Central Index Key	0000852437
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

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Note 9 - Earnings (Loss) Per Share (Tables)

3 Months Ended

Sep. 30, 2012

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended September 30,
	2012			2011
Numerator for basic and diluted earnings per share:
Net income	$	576,000		$	402,000
Payment and/or accretion of preferred stock dividends		(28,000	)		(39,000	)
Net income available to common stockholders	$	548,000		$	363,000
Weighted average shares used in computing basic net income per share:		53,821,435			51,921,676
Effect of dilutive securities		1,069,314			216,432
Weighted average shares used in computing diluted net income per share:		54,890,749			52,138,108
Income per common share, basic	$	0.01		$	0.01
Income per common share, diluted	$	0.01		$	0.01

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Consolidated Statements of Operations (unaudited) (USD $)	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Product sales	$ 11,515,000	$ 13,277,000
Service revenue	5,374,000	4,802,000
Commission revenue	4,712,000	3,865,000
	21,601,000	21,944,000
Cost of revenue:
Cost of product sales	7,331,000	9,302,000
Cost of service revenue	3,695,000	3,132,000
	11,026,000	12,434,000
Gross margin	10,575,000	9,510,000
Other operating expenses:
Selling, general and administrative	9,198,000	8,518,000
Depreciation and amortization	433,000	396,000
	9,631,000	8,914,000
Operating income	944,000	596,000
Other expense, net	(20,000)	(142,000)
Income before income taxes	924,000	454,000
Income tax expense	348,000	52,000
Net income	576,000	402,000
Preferred stock dividends	(28,000)	(39,000)
Net income available to common stockholders	$ 548,000	$ 363,000
Income per common share, basic (in Dollars per share)	$ 0.01	$ 0.01
Income per common share, diluted (in Dollars per share)	$ 0.01	$ 0.01
Weighted average shares used in computation - basic (in Shares)	53,821,435	51,921,676
Weighted average shares used in computation - diluted (in Shares)	54,890,749	52,138,108

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Note 7 - Obligations Under Capital Lease

3 Months Ended

Sep. 30, 2012

Debt and Capital Leases Disclosures [Text Block]

7. Obligations Under Capital Leases

The Company has incurred various capital lease obligations for computer equipment purchased in prior years.  This capital lease obligation totaled $833,000 and $904,000 as of September 30, 2012 and June 30, 2012, respectively.

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Note 6 - Borrowings Under Line of Credit

3 Months Ended

Sep. 30, 2012

Debt Disclosure [Text Block]

6.  Borrowings Under Line of Credit

On February 29, 2012, certain subsidiaries of the Company entered into an $8 million line of credit facility, including a $1,000,000 sublimit for the issuance of standby or trade letters of credit with PNC Bank, National Association. The interest rate is the “Eurodollar Rate”, which is calculated by using the LIBOR rate, plus a margin of 2.0%. The interest rate as of September 30, 2012 was 2.2%. The Company had outstanding borrowings from the bank under its credit line of approximately $2.4 million as of September 30, 2012 and had $3.1 million outstanding as of June 30, 2012. The line expires on February 28, 2014.

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Note 5 - Employee Stock Compensation Plans (Detail) (USD $)	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation (in Dollars)	$ 63,000	$ 41,000
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit (in Dollars per share)	$ 0.30
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit (in Dollars per share)	$ 1.71
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options (in Dollars)	723,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	3 years
Minimum [Member] | Avatech Solutions, Inc. 2002 Stock Option Plan (the "Plan") [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Maximum [Member] | Avatech Solutions, Inc. 2002 Stock Option Plan (the "Plan") [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Avatech Solutions, Inc. 2002 Stock Option Plan (the "Plan") [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)	7,800,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Expiration Period	10 years
Share-based Compensation (in Dollars)	$ 63,000

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Note 11 - Segment Information (Tables)

3 Months Ended

Sep. 30, 2012

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	North America			Singapore/Malaysia			Australia		Total
Revenue-
Product sales	$	10,050,000		$	1,003,000		$	462,000	$	11,515,000
Service revenue		4,960,000			118,000			296,000		5,374,000
Commission  revenue		4,342,000			54,000			316,000		4,712,000
Total revenue		19,352,000			1,175,000			1,074,000		21,601,000
Cost of revenue-
Cost of product sales		6,194,000			817,000			320,000		7,331,000
Cost of service revenue		3,445,000			79,000			171,000		3,695,000
Total cost of revenue		9,639,000			896,000			491,000		11,026,000
Gross margin		9,713,000			279,000			583,000		10,575,000
Total operating expenses		8,810,000			313,000			508,000		9,631,000
Operating income (loss)		903,000			(34,000	)		75,000		944,000
Other expense, net		(29,000	)		2,000			7,000		(20,000	)
Income (loss) before income taxes	$	874,000		$	(32,000	)	$	82,000	$	924,000

	North America			Singapore/Malaysia			Australia		Total
Revenue-
Product sales	$	11,297,000		$	781,000		$	1,199,000	$	13,277,000
Service revenue		4,348,000			194,000			260,000		4,802,000
Commission revenue		3,635,000			21,000			209,000		3,865,000
Total revenue		19,280,000			996,000			1,668,000		21,944,000
Cost of revenue-
Cost of product sales		7,870,000			566,000			866,000		9,302,000
Cost of service revenue		2,879,000			122,000			131,000		3,132,000
Total cost of revenue		10,749,000			688,000			997,000		12,434,000
Gross margin		8,531,000			308,000			671,000		9,510,000
Total operating expenses		8,224,000			242,000			448,000		8,914,000
Operating income		307,000			66,000			223,000		596,000
Other expense, net		(131,000	)		(15,000	)		4,000		(142,000	)
Income before income taxes	$	176,000		$	51,000		$	227,000	$	454,000

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Note 10 - Preferred Stock

3 Months Ended

Sep. 30, 2012

Preferred Stock [Text Block]

10.  Preferred Stock

Convertible Preferred Stock

At September 30, 2012, 384,495 shares of Series D Convertible Preferred Stock (the “Series D shares”) were outstanding with the following terms:

Redemption Feature- The Series D shares are redeemable in the event that the Company is engaged in certain business combinations that are approved by the Board of Directors and subsequently submitted and approved by a vote of the Company’s stockholders. Any director who holds shares of Series D is not eligible to vote on the proposed business combination. The redemption price is $0.30 (upon conversion) per share plus an amount equal to all declared and unpaid dividends accrued on such shares since the original issue date.

Voting Rights- Each holder of the Series D shares shall vote together with all other classes and series of stock of the Company as a single class on all actions. Each share shall entitle the holder to one vote per share of common stock into which the preferred stock is then convertible on each such action. In addition, these holders have special voting rights in connection with certain matters, including the issuance of senior stock or debentures, certain mergers, the dissolution of the Company and any amendment to the charter or the terms of the securities that would impair their rights.

Dividend Rate- The holders of the Series D shares are entitled to receive cumulative dividends at a rate of 10% per annum when and as declared by the Board of Directors. Dividends are paid quarterly to preferred stockholders.

Conversion Feature- The Series D shares are convertible at any time beginning 120 days after the original issuance date at the option of the holder and automatically converts into common stock if the common stock trades for more than $2.25 per share for 60 consecutive trading days. Each Series D share is convertible into shares of common stock by multiplying the appropriate conversion rate in effect by the number of shares of preferred stock being converted. As of September 30, 2012, the conversion rate would yield two shares of common stock for each share of Series D share; however, this rate may be adjusted due to stock splits, dividends, and other events defined in the stock purchase agreement between the Company and the holders of the Series D shares.

Liquidation Preference- In the event of a liquidation, dissolution or winding up of the Company, the holders of Series D shares are entitled to receive for each share, prior and in preference to any distribution of any of the assets or surplus funds to the holders of common stock, an amount equal to $0.60 per share plus all accumulated but unpaid dividends. If upon the occurrence of such event, the assets and funds thus distributed among the holders are insufficient to permit the payment of the preferential amount, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the preferred stockholders.

At September 30, 2012, 862 shares of Series E Convertible Preferred Stock (the “Series E shares”) were outstanding with the following terms:

Redemption Feature- The Series E shares are redeemable in the event that the Company is engaged in certain business combinations that are approved by the Board of Directors and subsequently submitted and approved by a vote of the Company’s stockholders. Any director who holds shares of Series E is not eligible to vote on the proposed business combination. The redemption price is $0.65 per share (upon conversion) plus an amount equal to all declared and unpaid dividends accrued on such shares since the original issue date.

Voting Rights- Each holder of the Series E shares shall vote together with all other classes and series of stock of the Company as a single class on all actions. Each share shall entitle the holder to one vote per share of common stock into which the preferred stock is then convertible on each such action. In addition, these holders have special voting rights in connection with certain matters, including the issuance of senior stock or debentures, certain mergers, the dissolution of the Company and any amendment to the charter or the terms of the securities that would impair their rights.

Dividend Rate- The holders of the Series E shares are entitled to receive cumulative dividends at a rate of 10% per annum when and as declared by the Board of Directors. Dividends are paid quarterly to preferred stockholders.

Conversion Feature- The Series E shares are convertible at any time beginning 120 days after the original issuance date at the option of the holder and automatically converts into common stock if the common stock trades for more than $2.25 per share for 60 consecutive trading days. Each Series E share is convertible into shares of common stock by multiplying the appropriate conversion rate in effect by the number of shares of preferred stock being converted. As of September 30, 2012 the conversion rate would yield 1,538.5 shares of common stock for each share of Series E; however, this rate may be adjusted due to stock splits, dividends, and other events defined in the stock purchase agreements between the Company and the holders of the Series E shares.

Liquidation Preference- In the event of a liquidation, dissolution or winding up of the Company, the holders of Series E shares are entitled to receive for each share, prior and in preference to any distribution of any of the assets or surplus funds to the holders of common stock, an amount equal to $0.65 per share (upon conversion) plus all accumulated but unpaid dividends. If upon the occurrence of such event, the assets and funds thus distributed among the holders are insufficient to permit the payment of the preferential amount, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the preferred stockholders.

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Note 8 - Income Taxes

3 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

8.  Income Taxes

Income taxes are accounted for under the liability method, under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.  A valuation allowance against the net deferred tax assets is recorded if based upon the weight of available evidence it is more likely than not that some or all of the deferred tax assets will not be realized.  The Company records liabilities for income tax contingencies if it is probable that the Company has incurred a tax liability and the liability or range of loss can be reasonably estimated.

During the fourth quarter of fiscal year 2012, the Company recognized the realizable portion of the Company’s U.S. net operating loss carryforwards as a deferred tax asset. The Company previously had created a valuation allowance against the entire amount of net operating loss carryforwards, recognizing no deferred tax asset because it did not have a sufficient history of profitable operations to support the recognition of the asset. Since the Company established a sufficient history of consecutive profitable quarters, and projects continuing profits, the valuation allowance against the U.S. net operating loss carryforwards was reduced in the fourth quarter of fiscal year 2012 by $4.3 million to recognize the portion of the net operating loss carryforwards projected to be utilized prior to expiration. The Company continues to maintain a valuation allowance on the entirety of its U.S. capital loss carryforwards and state net operating loss carryforwards due to uncertainty about its ability to utilize such carryforwards.

The Company believes that its income tax filing positions taken or expected to be taken in its tax returns will more likely than not be sustained upon audit by the taxing authorities and does not anticipate any adjustments that will result in a material adverse impact on the Company’s financial condition, results of operations, or cash flow.  Therefore, no reserves for uncertain income tax positions have been recorded.  The Company’s income tax returns for the past three years are subject to examination by tax authorities, and may change upon examination.

The Company records interest related to taxes in other expense and records penalties in operating expenses.

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Note 9 - Earnings (Loss) Per Share

3 Months Ended

Sep. 30, 2012

Earnings Per Share [Text Block]

9.  Earnings (Loss) Per Share

Basic earnings (loss) per common share is computed by dividing net earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per common share include the potential dilution that would occur from common shares issuable upon the exercise of outstanding stock options and warrants and the conversion of preferred stock.  There is no dilutive effect on earnings (loss) per share during loss periods.  As of September 30, 2012, 5,577,684 shares of common stock were issuable upon the conversion or exercise of options, warrants and preferred stock.  For the three months ended September 30, 2012 and 2011, there were 2,724,011 and 4,174,448 shares of common stock equivalents, respectively, excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

The following summarizes the computations of basic and diluted earnings per common share for the three months ended September 30, 2012 and 2011:

	Three Months Ended September 30,
	2012			2011
Numerator for basic and diluted earnings per share:
Net income	$	576,000		$	402,000
Payment and/or accretion of preferred stock dividends		(28,000	)		(39,000	)
Net income available to common stockholders	$	548,000		$	363,000
Weighted average shares used in computing basic net income per share:		53,821,435			51,921,676
Effect of dilutive securities		1,069,314			216,432
Weighted average shares used in computing diluted net income per share:		54,890,749			52,138,108
Income per common share, basic	$	0.01		$	0.01
Income per common share, diluted	$	0.01		$	0.01

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Note 11 - Segment Information

3 Months Ended

Sep. 30, 2012

Segment Reporting Disclosure [Text Block]

11. Segment Information

The Company’s operations include business in North America, Singapore/Malaysia and Australia. Revenue for any particular geographic region is determined by sales made by the Company to the customers in that particular region.  The Company’s chief operating decision maker and CEO evaluates business results based primarily on these geographic regions.  The following table illustrates certain financial information about these geographies in the corresponding fiscal periods:

Three Months Ended September 30, 2012

	North America			Singapore/Malaysia			Australia		Total
Revenue-
Product sales	$	10,050,000		$	1,003,000		$	462,000	$	11,515,000
Service revenue		4,960,000			118,000			296,000		5,374,000
Commission  revenue		4,342,000			54,000			316,000		4,712,000
Total revenue		19,352,000			1,175,000			1,074,000		21,601,000
Cost of revenue-
Cost of product sales		6,194,000			817,000			320,000		7,331,000
Cost of service revenue		3,445,000			79,000			171,000		3,695,000
Total cost of revenue		9,639,000			896,000			491,000		11,026,000
Gross margin		9,713,000			279,000			583,000		10,575,000
Total operating expenses		8,810,000			313,000			508,000		9,631,000
Operating income (loss)		903,000			(34,000	)		75,000		944,000
Other expense, net		(29,000	)		2,000			7,000		(20,000	)
Income (loss) before income taxes	$	874,000		$	(32,000	)	$	82,000	$	924,000

Three Months Ended September 30, 2011

	North America			Singapore/Malaysia			Australia		Total
Revenue-
Product sales	$	11,297,000		$	781,000		$	1,199,000	$	13,277,000
Service revenue		4,348,000			194,000			260,000		4,802,000
Commission revenue		3,635,000			21,000			209,000		3,865,000
Total revenue		19,280,000			996,000			1,668,000		21,944,000
Cost of revenue-
Cost of product sales		7,870,000			566,000			866,000		9,302,000
Cost of service revenue		2,879,000			122,000			131,000		3,132,000
Total cost of revenue		10,749,000			688,000			997,000		12,434,000
Gross margin		8,531,000			308,000			671,000		9,510,000
Total operating expenses		8,224,000			242,000			448,000		8,914,000
Operating income		307,000			66,000			223,000		596,000
Other expense, net		(131,000	)		(15,000	)		4,000		(142,000	)
Income before income taxes	$	176,000		$	51,000		$	227,000	$	454,000

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Note 3 - Supplemental Disclosure of Cash Flow Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	Jul. 31, 2012	Sep. 30, 2012	Sep. 30, 2011
Interest Paid		$ 24,000	$ 61,000
Income Taxes Paid		0	100,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)	497,512
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 400,000

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Note 6 - Borrowings Under Line of Credit (Detail) (PNC Bank, National Association [Member], USD $)	3 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Feb. 29, 2012
Line of Credit Facility, Maximum Borrowing Capacity			$ 8,000,000
Line of Credit Facility, Interest Rate at Period End	2.20%
Line of Credit Facility, Amount Outstanding	2,400,000	3,100,000
Line of Credit Facility, Expiration Date	Feb. 28, 2014
Sublimit For The Issuance of Standy Or Trade Letters Of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity			$ 1,000,000
Credit Facility [Member]
Debt Instrument, Basis Spread on Variable Rate			2.00%

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Consolidated Statements of Cash Flows (unaudited) (USD $)	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities
Net income	$ 576,000	$ 402,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Loss on sale of property and equipment		9,000
Bad debt expense (recoveries)	33,000	(85,000)
Depreciation and amortization	433,000	396,000
Stock-based compensation	63,000	41,000
Deferred income taxes	366,000	(2,000)
Changes in operating assets and liabilities net of those acquired:
Accounts receivable and other receivables	5,802,000	4,925,000
Income tax receivable	(368,000)	27,000
Inventory	(49,000)	44,000
Prepaid expenses and other current assets	71,000	(46,000)
Other assets	31,000	7,000
Accounts payable and accrued expenses	(3,414,000)	(3,585,000)
Accrued compensation and related benefits	(409,000)	(1,043,000)
Deferred revenue	(576,000)	9,000
Net cash provided by operating activities	2,559,000	1,099,000
Cash flows from investing activities
Purchase of Informative Design Partners, Inc. (Note 4)	(600,000)
Purchases of property and equipment	(704,000)	(131,000)
Net cash used in by investing activities	(1,304,000)	(131,000)
Proceeds from borrowings under line of credit	17,581,000	32,205,000
Repayment of borrowings under line of credit	(18,286,000)	(32,978,000)
Payments of obligations under capital leases	(71,000)
Proceeds from the issuance of common stock to employees		36,000
Payment of preferred stock dividends	(28,000)	(39,000)
Net cash used in financing activities	(804,000)	(776,000)
Effect of exchange rate changes on cash	161,000	(287,000)
Net change in cash	612,000	(95,000)
Cash - beginning of period	1,680,000	2,631,000
Cash - end of period	$ 2,292,000	$ 2,536,000

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Note 5 - Employee Stock Compensation Plans

3 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

5. Employee Stock Compensation Plans

The Board of Directors may grant options under the Avatech Solutions, Inc. 2002 Stock Option Plan (the “Plan”) to purchase shares of the Company’s common stock at an exercise price of not less than the fair market value of the common stock on the date of grant.  The Plan provided for the granting of either incentive or non-qualified stock options to purchase an aggregate of up to 7,800,000 shares of common stock to eligible employees, officers, and directors of the Company.  Stock options generally expire after 10 years. Options generally vest ratably over three or four years, depending on the specific grant award.  For the three months ended September 30, 2012, total stock compensation expense charged against income for this Plan was $63,000.

Expected volatilities are based on historical volatility of the Company’s common stock.  The expected term of options granted represents the period of time that options granted are expected to be outstanding.  The Company uses historical data to estimate option exercise and employee termination within the valuation model.  The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

A summary of stock option activity during the three months ended September 30, 2012 and related information is included in the table below:

	Options		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at July 1, 2012		3,481,900	$	0.76
Granted		–		–
Exercised		–		–
Forfeited		–		–
Expired		–		–
Outstanding at September 30, 2012		3,481,900	$	0.76	$	411,000
Exercisable at September 30, 2012		1,206,100	$	0.81	$	160,000
Weighted-average remaining contractual life	3.4 Years

All options granted have an exercise price equal to the fair market value of the Company’s common stock on the date of grant.  Exercise prices for options outstanding as of September 30, 2012 ranged from $0.30 to $1.71 as follows:

Range of Exercise Prices			Options Outstanding		Weighted Average Exercise Prices of Options Outstanding		Weighted Average Remaining Contractual Life of Options Outstanding (in years)	Options Exercisable		Weighted Average Exercise Prices of Options Exercisable		Weighted Average Remaining Contractual Life of Options Exercisable (in years)
$0.30	–	0.50		170,120	$	0.42	2.0		170,120	$	0.42	2.0
0.60	–	0.71		1,883,920		0.70	8.5		529,480		0.69	8.0
0.76	–	0.90		1,189,360		0.81	8.5		268,000		0.86	4.4
1.05	–	1.71		238,500		1.29	3.4		238,500		1.29	3.4
				3,481,900					1,206,100

Assuming that no additional share-based payments are granted after September 30, 2012, $723,000 of compensation expense will be recognized in the consolidated statement of operations over a weighted-average period of 3.0 years.

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Note 7 - Obligations Under Capital Lease (Detail) (Computer Equipment [Member], USD $)	Sep. 30, 2012	Jun. 30, 2012
Computer Equipment [Member]
Capital Lease Obligations	$ 833,000	$ 904,000

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Note 1 - Organization and Basis of Presentation (Detail)	3 Months Ended
	Sep. 30, 2012
Number of Operating Segments	3