10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q 

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2018

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from              to

COMMISSION FILE NUMBER 000-29637 

DETERMINE, INC.

(Exact Name of Registrant as Specified in Its Charter) 

DELAWARE	77-0432030
(State of Incorporation)	(IRS Employer Identification No.)

615 West Carmel Drive, Suite 100, Carmel, IN 46032

(Address of Principal Executive Offices)

(650) 532-1500

 (Registrant’s Telephone Number, Including Area Code)

Indicate by a 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  ☒    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  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth 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	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.    YES  ☐    NO  ☒

The number of shares outstanding of the registrant’s common stock, par value $0.0001 per share, as of August 9, 2018, was 15,042,026.

FORM 10-Q

DETERMINE, INC.

INDEX

PART I FINANCIAL INFORMATION
ITEM 1: Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2018 and March 31, 2018	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended June 30, 2018 and 2017	5
	Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2018 and 2017	6
	Notes to Condensed Consolidated Financial Statements	7
ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
ITEM 3: Quantitative and Qualitative Disclosures about Market Risk		22
ITEM 4: Controls and Procedures		22
PART II OTHER INFORMATION		22
ITEM 1: Legal Proceedings		22
ITEM 1A: Risk Factors		22
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds		22
ITEM 3: Defaults Upon Senior Securities		22
ITEM 4: Mine Safety Disclosures		22
ITEM 5: Other Information		22
ITEM 6: Exhibits		23
Signatures		24

2

Cautionary Statement Pursuant to Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995

The words “Determine”, “we”, “our”, “ours”, “us”, and the “Company” refer to Determine, Inc. In addition to historical information, this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in Item 1A to Part 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018.  You should carefully review the risks described in other documents the Company files from time to time with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding the Company’s expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this quarterly report on Form 10-Q.  The Company undertakes no obligation to release publicly any updates to the forward-looking statements included herein after the date of this document.

3

DETERMINE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited) 

	June 30,			March 31,
	2018			2018
ASSETS
Current assets
Cash and cash equivalents	$	6,156		$	9,928
Accounts receivable, net of allowance for doubtful accounts of $23 and $215 as of June 30, 2018 and March 31, 2018, respectively		6,278			6,605
Restricted cash		26			28
Prepaid expenses and other current assets		1,544			1,542
Total current assets		14,004			18,103
Property and equipment, net		121			90
Capitalized software development costs, net		3,320			2,994
Goodwill		15,052			15,458
Other intangibles, net		3,361			3,952
Other assets		1,589			1,467
Total assets	$	37,447		$	42,064
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Credit facility	$	10,973		$	12,128
Accounts payable		2,479			2,371
Accrued payroll and related liabilities		2,062			1,986
Other accrued liabilities		2,313			2,239
Deferred revenue		9,247			9,487
Income tax payable		50			48
Total current liabilities		27,124			28,259
Long-term deferred revenue		27			84
Convertible note, net of debt discount		7,696			7,475
Other long-term liabilities		1,582			1,306
Total liabilities		36,429			37,124
Commitments and contingencies (Notes 6 and 7):
Stockholders' equity:
Common stock, $0.0001 par value; Authorized: 35,000 shares at June 30, 2018 and March 31, 2018; Issued: 15,080 and 15,050 shares at June 30, 2018 and March 31, 2018, respectively; Outstanding: 14,935 and 14,905 shares at June 30, 2018 and March 31, 2018, respectively		7			7
Additional paid-in capital		326,479			325,942
Treasury stock at cost - 145 shares at June 30, 2018 and March 31, 2018		(472	)		(472	)
Accumulated deficit		(325,759	)		(321,697	)
Accumulated other comprehensive income		763			1,160
Total stockholders’ equity		1,018			4,940
Total liabilities and stockholders’ equity	$	37,447		$	42,064

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

DETERMINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except for per share data)

(Unaudited)

	Three Months Ended
	June 30, 2018			June 30, 2017
Revenues:
Recurring revenues	$	5,251		$	5,300
Non-recurring revenues		789			1,688
Total revenues		6,040			6,988
Cost of revenues:
Cost of recurring revenues		2,106			1,786
Cost of non-recurring revenues		1,307			1,517
Total cost of revenues		3,413			3,303
Gross profit (loss):
Recurring gross profit		3,145			3,514
Non-recurring profit (loss)		(518	)		171
Total gross profit		2,627			3,685
Operating expenses:
Research and development		1,176			1,066
Sales and marketing		3,091			2,496
General and administrative		2,005			2,072
Total operating expenses		6,272			5,634
Loss from operations		(3,645	)		(1,949	)
Other expense, net		(336	)		(178	)
Net loss before income tax		(3,981	)		(2,127	)
(Provision for) benefit from income taxes		(88	)		17
Net loss	$	(4,069	)	$	(2,110	)
Basic and diluted net loss per share (Note 10)	$	(0.27	)	$	(0.17	)
Weighted-average shares of common stock used in computing basic and diluted net loss per share attributable to common stockholders		15,077			12,249

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(continued)

	Three Months Ended
	June 30, 2018			June 30, 2017
Statements of comprehensive loss:
Consolidated net loss	$	(4,069	)	$	(2,110	)
Foreign currency translation adjustments, net		(397	)		311
Other comprehensive loss		-			(114	)
Comprehensive loss	$	(4,466	)	$	(1,913	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

DETERMINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited) 

	Three Months Ended
	June 30,			June 30,
	2018			2017
Operating activities
Net loss	$	(4,069	)	$	(2,110	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		1,049			971
Stock-based compensation expense		543			586
Interest expense paid in kind as convertible note debt		221			219
Non-cash income tax expense (benefit)		88			(17	)
Unrealized currency translation losses (gains)		176			(252	)
Changes in assets and liabilities:
Accounts receivable, net		327			354
Prepaid expenses and other current assets		(2	)		103
Other assets		(233	)		228
Accounts payable		108			(482	)
Accrued payroll and related liabilities		76			243
Other accrued liabilities and other long-term liabilities		350			413
Deferred revenue		(297	)		(216	)
Net cash (used in) provided by operating activities		(1,663	)		40
Investing activities
Purchase of property and equipment		(44	)		(7	)
Capitalized software development costs, net		(818	)		(569	)
Net cash used in investing activities		(862	)		(576	)
Financing activities
Credit facility borrowing		10,828			-
Credit facility payment		(11,983	)		-
Proceeds from issuance of stock, net of issuance costs		-			4,909
Net employee withholding taxes paid in connection with issuance of restricted stock		(6	)		(24	)
Repayment of loan		-			(44	)
Proceeds from exercise of stock options		-			1
Net cash (used in) provided by financing activities		(1,161	)		4,842
Effect of exchange rate changes on cash		(88	)		(87	)
Net (decrease) increase in cash and cash equivalents		(3,774	)		4,219
Cash and cash equivalents at beginning of the period		9,956			9,463
Cash and cash equivalents at end of the period	$	6,182		$	13,682
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	6,156		$	13,656
Restricted cash		26			26
Total cash, cash equivalents and restricted cash	$	6,182		$	13,682
Supplemental disclosure of cash flow information:
Cash paid for interest	$	36		$	63
Cash paid for taxes	$	37		$	48
Stock issued in connection with loan guarantee extension	$	-		$	169
Stock issued upon conversion of convertible note	$	-		$	973

The accompanying notes are an integral part of these condensed consolidated financial statements. 

7

DETERMINE, INC. 

 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.  Basis of Presentation

The condensed consolidated balance sheets as of June 30, 2018 and March 31, 2018, the condensed consolidated statements of operations and comprehensive loss for the three months ended June 30, 2018 and 2017 and the condensed consolidated statements of cash flows for the three months ended June 30, 2018 and 2017 have been prepared by the Company and are unaudited. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial position at June 30, 2018, and the results of operations and cash flows for the three months ended June 30, 2018 and 2017, respectively. Interim results are not necessarily indicative of the results for a full fiscal year. The condensed consolidated balance sheet as of March 31, 2018 has been derived from the audited consolidated financial statements at that date.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018.

2.   Summary of Significant Accounting Policies

There have been no significant changes to the Company’s accounting policies since it filed its audited consolidated financial statements in its Annual Report on Form 10-K for the year ended March 31, 2018, except for the changes applied due to the adoption of Accounting Standard Codification (“ASc”) 606, Revenue from Contracts with Customers. Refer to “Recent Accounting Pronouncements.”

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Additionally, certain prior period amounts have been reclassified to conform to the current year presentation on the condensed consolidated financial statements. The reclassification of the prior period amounts was not material to the previously reported condensed consolidated financial statements.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, including, but not limited to, those related to the allowance for doubtful accounts, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of stock-based awards, standalone selling price, the benefit period of deferred commissions and income taxes. Actual results could differ from those estimates.

Revenue Recognition

The Company generates revenues by providing its software-as-a-service solutions through subscription license arrangements and related professional services, and related software maintenance. The Company presents revenue net of sales taxes and any similar assessments.

Revenue recognition. In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, the Company determines revenue recognition through the following five-step framework: (1) identification of the contract, or contracts, with a customer; (2) identification of the performance obligations in a contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, the Company satisfies a performance obligation.

Recurring revenues. Recurring revenues consist of subscription license sales and services, maintenance revenues from previously sold perpetual licenses and hosting revenues. Recurring revenues are recognized over the stated contractual period, satisfied over time.

Non-recurring revenues.  Non-recurring revenues are comprised of revenues from professional services for system implementations, enhancements and training. For professional services arrangements billed on a time-and-materials basis, services are recognized as revenue as they are rendered, at a point in time. For fixed-fee professional service arrangements, the Company recognizes revenue under the proportional performance method of accounting, using the input method, and estimates the proportional performance utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If the Company does not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion. The Company recognizes a loss for a fixed-fee professional service if the total estimated project costs exceed project revenues.

8

Reimbursements, including those related to travel and out-of-pocket expenses are included in non-recurring revenues, and an equivalent amount of reimbursable expenses are included in non-recurring cost of revenues.

Performance Obligations. The Company enters into arrangements with multiple performance obligations that generally include subscription and professional services. For these arrangements, the Company accounts for individual performance obligations separately if they are distinct. Subscription services and professional services are both distinct performance obligations that are accounted for separately. In agreements with multiple performance obligations, the transaction price is allocated to separate performance obligations on a relative standalone selling price (“SSP”) basis.

If the standalone selling price is not observable through past transactions, the Company determines the SSP based on overall pricing objectives, taking into consideration available information such as market conditions and internally approved pricing guidelines related to the performance obligations. This includes a review of historical data related to the size of arrangements, the cloud solutions being sold, customer demographics and the numbers and types of users within the arrangements. The Company uses a range of amounts to estimate SSP for performance obligations. There is typically more than one SSP for individual products and services due to the stratification of those products and services by information such as size and type of customer.

Contract Balances: The timing of revenue recognition may differ from the timing of the invoicing for contracts with customers. The Company records a receivable or contract asset when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Subscription services and certain professional services arrangements are commonly billed in advance which results in a deferred revenue balance amortized as revenue is recognized over time. However, other professional service arrangements, primarily those recognized on a time-and-materials basis, are billed in arrears following services that have been rendered. This may result in revenue recognition greater than the invoiced amounts which results in a receivable balance. Receivables represent an unconditional right to payment. Payment terms vary by contract type, however arrangements typically stipulate a requirement for the customer to pay within 60 days. As of June 30, 2018 and March 31, 2018, the balance of the accounts receivable, net of the allowance for doubtful accounts, was $6.3 million and $6.6 million, respectively. Of these balances, $0.8 million and $0.5 million represent unbilled receivable amounts as of June 30, 2018 and March 31, 2018, respectively.

At any point in the contract term, transaction price may be allocated to performance obligations that are unsatisfied or partially unsatisfied. These amounts relate to remaining performance obligations on non-cancelable contracts which include both the deferred revenue balance and amounts that will be invoiced and recognized as revenue in future periods. As of June 30, 2018, approximately $23.3 million of revenue is expected to be recognized from remaining performance obligations for subscription contracts, a majority of which is related to multi-year subscriptions. The Company expects to recognize approximately 48% of these remaining performance obligations over the remainder of the current fiscal year, with the balance recognized thereafter. All of the $0.7 million of revenue from remaining performance obligations related to professional services contracts is expected to be recognized within the current fiscal year.

Deferred Revenue. Deferred revenue consists of customer billings or payments received in advance of the recognition of revenue and is recognized as revenue as the revenue recognition criteria are met. The Company generally invoices its customers annually for the forthcoming year of service. Accordingly, the Company's deferred revenue balance does not include revenue for future years of multiple-year, non-cancellable contracts that have not yet been billed. During the three months ended June 30, 2018, the Company recognized revenue of $4.6 million that was included in the deferred revenue balance as of March 31, 2018.

Deferred Commissions. Commissions are earned by sales personnel upon the execution of the sales contract by the customer, and commission payments are made shortly after they are earned. Commissions earned by the Company's sales personnel are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over the life of the contract. The Company determined the period of benefit by taking into consideration its past experience with customers, industry peers and other available information.

The current portion of deferred commissions was $0.5 million at both June 30, 2018 and March 31, 2018, respectively, and is recorded as a component of prepaid expenses and other current assets on the condensed consolidated balance sheets. For both the three months ended June 30, 2018 and 2017, $0.2 million of deferred commissions were amortized to sales and marketing expense on the condensed consolidated statements of operations and comprehensive loss, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented.

Customer Concentrations

During the three months ended June 30, 2018 and 2017, no customer accounted for 10% or more of the Company’s consolidated revenues or consolidated net accounts receivable, respectively.

9

Disaggregation of Revenue

International revenues are attributable to countries based on the location of the customer. For the three months ended June 30, 2018 and 2017, sales to international locations were derived primarily from France, the United Kingdom, Ireland, Norway, Australia, Canada, Switzerland, Italy, Germany, Bermuda, the Netherlands, United Arab Emirates, Denmark, China, Hong Kong, Bulgaria, Finland and Belgium. 

	Three Months Ended
	June 30, 2018		June 30, 2017
	(in thousands)
International revenues
Recurring revenues	$	1,787	$	1,557
Non-recurring revenues		369		765
Total international revenues		2,156		2,322
Domestic revenues
Recurring revenues		3,464		3,743
Non-recurring revenues		420		923
Total domestic revenues		3,884		4,666
Total revenues	$	6,040	$	6,988

Recent Accounting Pronouncements

In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. The Company does not expect the adoption of ASU 2018-07 to have a material impact on its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies what constitutes a modification of a share-based payment award. This guidance is effective for fiscal years beginning after December 15, 2017. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units related to an entity’s testing of reporting units for goodwill impairment, and clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual reporting periods beginning after December 31, 2019 and interim periods within those fiscal years. The Company is currently assessing the potential impact of the adoption of ASU 2017-04 on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business. The new guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for the Company beginning April 1, 2018. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes (Topic 740): Intra-Entity Asset Transfers of Assets Other than Inventory, which removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The update is effective for the Company beginning April 1, 2018. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.

10

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and issued subsequent amendments to the initial guidance in July 2018 within ASU 2018-10 and ASU 2018-11 (ASU 2016-02, ASU 2018-10 and ASU 2018-11 collectively, “Topic 842”) which establish a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees with capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently assessing the potential impact of the adoption of Topic 842 on its consolidated financial statements. 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016, September 2017 and November 2017 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2017-13 and ASU 2017-14, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2017-13 and ASU 2017-14 collectively, “Topic 606”). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic 606 also provides guidance on the recognition of costs related to obtaining customer contracts. ASU No. 2015-14 deferred the effective date of the new revenue standard for periods beginning after December 15, 2016 to December 15, 2017. The Company has adopted the new standard for the three months ended June 30, 2018 under the full retrospective method. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.

The Company has reviewed other new accounting pronouncements that were issued as of June 30, 2018 and does not believe that these pronouncements are applicable to the Company, or that they will have a material impact on its financial position or results of operations.

3.   Goodwill and Other Intangible Assets 

The following is a summary of goodwill (in thousands): 

Balance at March 31, 2018	$	15,458
Foreign currency translation adjustment		(406	)
Balance at June 30, 2018	$	15,052

The following is a summary of other intangible assets, net (in thousands): 

	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation Adjustment		Net Carrying Value
Acquired developed technology	$	5,034	$	(3,703	)	$	156	$	1,487
Customer relationships		5,857		(4,066	)		83		1,874
	$	10,891	$	(7,769	)	$	239	$	3,361

	March 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation Adjustment		Net Carrying Value
Acquired developed technology	$	5,034	$	(3,486	)	$	219	$	1,767
Customer relationships		5,857		(3,834	)		162		2,185
	$	10,891	$	(7,320	)	$	381	$	3,952

Acquired developed technology and customer relationships are being amortized on a straight-line basis and have weighted-average remaining useful lives of 1.37 years and 1.77 years, respectively, as of June 30, 2018. Amortization expense of intangible assets was $0.5 million and $0.6 million for the three months ended June 30, 2018 and 2017, respectively.

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4. Property and Equipment, net

Property and equipment, net consist of the following:  

	June 30,			March 31,
	2018			2018
	(in thousands)
Computers and software	$	385		$	356
Furniture and equipment		232			232
Leasehold improvements		58			43
		675			631
Less: accumulated depreciation		(554	)		(541	)
Total property and equipment, net	$	121		$	90

Depreciation expense was approximately $0.01 million and $0.02 million during the three months ended June 30, 2018 and 2017, respectively.

5.  Capitalized Software Development Costs

The Company capitalizes costs for internal use software incurred during the application development stage that are included in research and development expenses. Costs related to preliminary project activities and post implementation activities are expensed as incurred. The Company capitalized $0.8 million and $0.6 million of research and development costs during the three months ended June 30, 2018 and 2017, respectively.

Capitalized software is amortized once the product is ready for its intended use, using the straight-line method over the estimated useful lives of the assets, which is three years. Amortization expense of capitalized software is included in the product cost of revenue and was $0.5 million and $0.4 million during the three months ended June 30, 2018 and 2017, respectively. The unamortized balance of capitalized software was $3.3 million and $3.0 million as of June 30, 2018 and March 31, 2018, respectively.

Management continues to evaluate the capitalized software development costs across all product lines and did not identify any indicators which required impairment to be recorded during the three months ended June 30, 2018 or 2017.

6.  Operating Lease Commitments

The Company leases office space in London, United Kingdom, Aix-en-Provence, France, Paris, France, Atlanta, Georgia, the District of Columbia and, for its headquarters, in Carmel, Indiana. The leases are non-cancelable operating leases with various expirations through July 2021. Rent expense, which is recognized on a straight-line basis over the lease term, was $0.1 million during both the three months ended June 30, 2018 and 2017, respectively. The difference between the lease payments made and the lease expense recognized to date using the straight-line method is recorded as a liability and included within other accrued liabilities in the condensed consolidated balance sheets.

During the third quarter of fiscal year 2017, the Company began subleasing a portion of its rental space in the District of Columbia to a related party associated with the Chairman of the Board of Directors. The subleases were terminated via mutual agreement during the three months ended September 30, 2017. Rental income from the subleases was recognized on a straight-line basis over the lease term. The Company recognized $0.01 million in sublease income during the three months ended June 30, 2017.

7.  Litigation and Contingencies

From time to time the Company is subject to certain routine legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of its business. The Company believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not materially affect its financial position, results of operations or liquidity. 

Warranties and Indemnifications

The Company’s products are generally warranted to perform substantially in accordance with the functional specifications set forth in the associated product documentation. In the event there is a failure of such warranties, the Company generally is obligated to correct the product to conform to the product documentation or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product or service. The Company has not provided for a warranty accrual as of June 30, 2018 or March 31, 2018.

The Company generally agrees to indemnify its customers against legal claims that the Company’s software infringes certain third-party intellectual property rights. In the event of such a claim, the Company is obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of the infringement, the Company agrees to modify or replace the infringing product, or, if those options are not reasonably possible, to refund the purchase price of the software. To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers. As such, the Company has not provided for an indemnification accrual as of June 30, 2018 or March 31, 2018.

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8. Credit Facility and Convertible Notes

The Company maintains financing facilities and convertible note purchase agreements. For a description of the Company’s debt financing, see the notes to consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018 and the summaries set forth below.

Amendments of Business Financing Agreement

On June 14, 2018, Determine and its wholly owned subsidiary, Determine Sourcing, Inc., entered into Amendment Number Eleven to the Amended and Restated Business Financing Agreement (the “Amendment”) with Western Alliance Bank, an Arizona corporation, as successor in interest to Bridge Bank, National Association (“Western Alliance”). The Amendment extended the maturity date of the underlying credit facility to July 31, 2019, revised the definition of “Prime Rate” to be 4.75% and revised certain of the financial and compliance reporting obligations.

Amendment of Limited Guaranty

In connection with the Amendment, on June 14, 2018, MILFAM II, L.P. (“MILFAM”), an affiliate of the estate of Lloyd I. Miller, III (“Mr. Miller”), the Company’s largest stockholder, entered into a Third Amended and Restated Limited Guaranty (the “Amended Guaranty”) with Western Alliance. The Amended Guaranty (i) extends the term of the Second Amended and Restated Limited Guaranty entered into by MILFAM with Western Alliance on June 1, 2017 to August 10, 2019, and (ii) terminates the Second Amended and Restated Limited Guaranty entered into by the estate of Mr. Miller with Western Alliance on June 1, 2017. The Amended Guaranty also provides that if the maturity date of the Credit Facility is subsequently amended, the term of the Amended Guaranty would automatically extend to a date ten (10) days following the extended maturity date under the Credit Facility, but no later than July 30, 2020. 

In connection with the Amended Guaranty, on June 14, 2018, the Company entered into a Guaranty Fee Agreement (the “Fee Agreement”) with MILFAM, pursuant to which the Company agreed to pay MILFAM a commitment fee of $108,000 and a monthly fee that shall accrue each calendar month during the term of the Amended Guaranty equal to ten percent of the commitment fee divided by twelve. The commitment fee and the accrued monthly fee shall be payable in cash by the Company upon the termination or expiration of the Amended Guaranty.

Amendment to Guaranty Fee Agreement

Additionally, in connection with the Amended Guaranty, on June 14, 2018, the Company entered into an Amendment to Guaranty Fee Agreement (the “Fee Agreement Amendment”) with MILFAM, Mr. Miller’s estate and Alimco Financial Corporation, an affiliate of Mr. Miller’s estate (collectively, the “Guarantors”). The Fee Agreement Amendment, among other things, amends the Guaranty Fee Agreement, dated as of June 1, 2017 (the “June 2017 Fee Agreement”), among the Company and the Guarantors, to eliminate the payment of certain shares of Company common stock in connection with any extension of the guarantees provided by the Guarantors under the June 2017 Fee Agreement and replace such payment with a cash commitment fee of $168,750 plus a monthly fee equal to ten percent of such commitment fee divided by twelve. 

As of June 30, 2018 and March 31, 2018, the Company owed $11.0 million and $12.1 million, respectively, under the Credit Facility, and $2.0 million and $0.9 million was available for future borrowings, respectively. The Company’s Credit Facility with Western Alliance contains certain financial covenants that require, among other things, the maintenance of an asset coverage ratio of not less than 2:00 to 1:00 at the end of each month. During the three months ended June 30, 2018, the Company met all the requirements and was in compliance with the financial covenants.

9.  Stockholders’ Equity

Equity Incentive Program

The Company’s equity incentive program is a broad-based, retention program comprised of stock options, restricted stock units and an employee stock purchase plan (“ESPP”) designed to align stockholder and employee interests. For a description of the Company’s equity plans, see the notes to consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018.

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Valuation Assumptions

During the three months ended June 30, 2018 and 2017, respectively, the Company calculated the fair value of its employee stock options at the date of grant with the following weighted average assumptions:  

	Three Months Ended
	June 30, 2018			June 30, 2017
Risk-free interest rate		2.77	%		1.91	%
Dividend yield		0	%		0	%
Expected volatility		61.40	%		54.00	%
Expected term in years		5.65			6.08
Weighted average fair value at grant date	$	0.80		$	1.81

The following tables summarize activity under the equity incentive plans for the three months ended June 30, 2018: 

	Options Outstanding					Restricted Stock Units Outstanding
	Number of shares (in thousands)			Weighted average exercise price		Number of shares (in thousands)			Weighted average fair value
Outstanding at April 1, 2018		4,542		$	2.83		309		$	2.17
Granted		51		$	1.41		50		$	1.41
Exercised/Released		-		$	-		(62	)	$	2.03
Cancelled		(53	)	$	2.71		-		$	-
Outstanding at June 30, 2018		4,540		$	2.82		297		$	2.08
Vested and expected to vest		4,391		$	2.84

	Shares Available for Grant
	(in thousands)
Balance at April 1, 2018		343
Options:
Granted		(51	)
Cancelled		45
Restricted Stock Units:
Granted		(50	)
Balance at June 30, 2018		287

The weighted average remaining contractual term for exercisable options is 7.19 years. The intrinsic value is calculated as the difference between the market value as of June 30, 2018 and the exercise price of the shares. The market value of the Company’s common stock as of June 30, 2018 was $1.41 as reported by the NASDAQ Capital Market. The aggregate intrinsic value of stock options outstanding at both June 30, 2018 and 2017 was zero, respectively. The aggregate intrinsic value of restricted stock units outstanding at both June 30, 2018 and 2017 was zero, respectively.

The options outstanding and exercisable at June 30, 2018 were in the following exercise price ranges:

			Options Outstanding				Options Vested
Range of Exercise Prices per share			Number of Shares (in thousands)		Weighted- Average Remaining Contractual Life (in years)		Number of Shares (in thousands)		Weighted- Average Exercise Price per Share
$1.35	—	$1.53		247		9.00		83	$	1.38
$1.64	—	$1.64		1,900		7.65		1,096	$	1.64
$1.75	—	$1.81		492		8.58		134	$	1.78
$2.00	—	$3.34		536		7.68		285	$	2.77
$3.44	—	$3.99		123		7.13		74	$	3.84
$4.32	—	$4.32		627		7.08		457	$	4.32
$5.18	—	$6.61		555		6.15		497	$	6.21
$6.83	—	$6.83		50		5.64		50	$	6.83
$7.20	—	$7.20		5		0.66		5	$	7.20
$11.40	—	$11.40		5		0.15		5	$	11.40
$1.35	—	$11.40		4,540		7.51		2,686	$	3.24

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The effect of recording stock-based compensation expense (including expense related to the ESPP discussed below) for each of the periods presented was as follows (in thousands):

	Three Months Ended
	June 30, 2018		June 30, 2017
Cost of revenues	$	42	$	28
Research and development		82		63
Sales and marketing		113		92
General and administrative		306		403
Impact on net loss	$	543	$	586

 As of June 30, 2018, the unrecorded stock-based compensation balance related to stock options and restricted stock units outstanding excluding estimated forfeitures was $2.0 million and $0.4 million, respectively, and will be recognized over an estimated weighted average amortization period of 1.98 years for stock options and 1.07 years for restricted stock units. The amortization period is based on the expected remaining vesting term of the options and restricted stock units.

1999 Employee Stock Purchase Plan (“ESPP”)

The price paid for the Company’s common stock purchased under the ESPP is equal to 85% of the lower of the fair market value of the Company’s common stock at the beginning of each offering period or at the end of each offering period. The compensation expense in connection with the ESPP for both the three months ended June 30, 2018 and 2017 was $0.02 million, respectively. During the three months ended June 30, 2018 and 2017, there were no shares issued under the ESPP.

Registered Direct Offering

On June 26, 2017, the Company, pursuant to a securities purchase agreement with certain investors, sold 2,184,000 shares of the Company’s common stock at a price of $2.50 per share for aggregate proceeds of $4.9 million, net of $0.3 million placement agency fees and $0.2 million other offering expenses.

10.  Computation of Basic and Diluted Net Loss per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of common stock outstanding during the period.

The Company excludes securities from its diluted net loss per share computation when their effect would be antidilutive to net loss per share amounts. The following common stock equivalents were excluded from the net loss per share computation:

	Three Months Ended
	June 30, 2018		June 30, 2017
	(in thousands)
Options		4,504		1,854
Unvested restricted stock units		72		69
Warrants		2,262		2,262
Total common stock equivalents excluded from diluted net loss per common share		6,838		4,185

11.  Income Taxes

The provision for income taxes is based upon loss before income taxes as follows (in thousands):

	Three Months Ended June 30, 2018
Domestic pre-tax loss	$	(4,113	)
Foreign pre-tax income		132
Total pre-tax loss	$	(3,981	)

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The components of the provision for income taxes are as follows (in thousands):

	Three Months Ended June 30, 2018
US	$	1
Foreign		(89	)
Total benefit from income taxes	$	(88	)

The Company accounts for its income taxes in accordance with ASC 740, Income Taxes. ASC 740 clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold, measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. Under ASC 740, the Company is required to recognize in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The Company policy is to record interest and penalties related to unrecognized tax benefits in income tax expense. 

At June 30, 2018, there was no material increase in the liability for unrecognized tax benefits nor any accrued interest and penalties related to uncertain tax positions.

In addition, at June 30, 2018, the Company had approximately $1.5 million of unrecognized tax benefits which were netted against deferred tax assets with a full valuation allowance. If these amounts are recognized, there will be no effect on the Company’s effective tax rate due to the full valuation allowance. ASC 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not.  Based on the weight of available evidence, which includes the Company's historical operation performance and the reported cumulative net losses in all prior years, the Company has provided a full valuation allowance against its U.S. federal and state net deferred tax assets

The Company’s Federal, state and foreign tax returns may be subject to examination by the tax authorities for fiscal years ended from 1998 to 2018 due to net operating losses and tax carryforwards unutilized from such years.  

The Tax Cuts and Jobs Act of 2017 was enacted in December 2017, which introduced the Global Low Taxed Intangible Income (“GILTI”) inclusion. Due to the losses in the foreign subsidiaries, the Company projects no GILTI income inclusion for its fiscal year ended March 31, 2019. The Company continues to evaluate its accounting policy with respect to temporary differences related to the GILTI inclusion.

12.  Related Party Transactions

Determine SAS rents its offices from SCI Donapierre, the company controlled by two of the Company’s stockholders. During both the three months ended June 30, 2018 and 2017, Determine SAS made rental payments of approximately $0.1 million, respectively, to SCI Donapierre.

The Company also maintains financing facilities and convertible note purchase agreements with related parties, as set forth in Note 8, Credit Facility and Convertible Notes, as well as subleases, as set forth in Note 6, Operating Lease Commitments, above. ALMC is a company for which Alan Howe, a director of the Company, serves as chief executive officer.

13. Subsequent Events

Amendment of Business Financing Agreement

On August 7, 2018, the Company and its wholly owned subsidiary, Determine Sourcing Inc. entered into Amendment Number Twelve to the Amended and Restated Business Financing Agreement (the “August Amendment”) with Western Alliance Bank. The August Amendment, among other things, increased the Company’s available credit under the existing facility with Western Alliance Bank (the “Credit Facility”) by $2 million (the “Additional Limit”), up to a total available credit amount of $15 million. In connection with the August Amendment, the Company agreed to pay Western Alliance Bank cash fees of $40,000 plus a one-time facility fee equal to 0.75% of the Additional Limit on the date of the August Amendment, and the Additional Limit amount was added to the calculation of the annual facility fee payable under the Credit Facility. Additionally, the definitions of “Finance Charge Percentage” and “Prime Rate” were revised to increase the respective base percentage rates to 5.00%.

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Amendment of Limited Guaranty

In order to satisfy certain conditions for Western Alliance Bank to lend additional funds under the Credit Facility and enter into the August Amendment, on August 7, 2018, MILFAM entered into a Fourth Amended and Restated Limited Guaranty (the “Fourth Amended Guaranty”) with Western Alliance Bank. The Fourth Amended Guaranty increases the amount of the limited, non-revocable guaranty of the Company’s Credit Facility provided by MILFAM by $2 million, from $2 million to $4 million.

Guaranty Fee Agreement

In connection with the Fourth Amended Guaranty, on August 7, 2018, the Company entered into a Guaranty Fee Agreement with MILFAM, pursuant to which the Company agreed to pay MILFAM a commitment fee of $108,000 and a monthly fee that shall accrue each calendar month during the term of the Fourth Amended Guaranty equal to ten percent of the commitment fee divided by twelve. The commitment fee and the accrued monthly fee shall be payable in cash by the Company upon the termination or expiration of the Fourth Amended Guaranty.

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

In addition to historical information, this quarterly report contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in the “Risk Factors” in Item 1A to Part 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (the “Form 10-K”). They include the following: the level of demand for Determine’s products and services; the intensity of competition; Determine’s ability to effectively manage product transitions and to continue to expand and improve internal infrastructure; and the impact of current economic conditions on our customers and our business. For a more detailed discussion of the risks relating to our business, readers should refer to Item 1A to Part 1 in the Form 10-K entitled “Risk Factors.” Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding our expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this quarterly report. We assume no obligation to update these forward-looking statements  

Overview

Determine, Inc. is a leading global provider of SaaS Source-to-Pay and Enterprise Contract Lifecycle Management (“ECLM”) solutions. We provide cloud-based software solutions that empower users across the full source-to-pay continuum, including sourcing, supplier management, contract management and procure-to-pay applications, to deliver efficiency and data insight for their operational business processes, third-party relationships and contractual obligations.

The Determine platform is an open technology infrastructure based on smart process application models. The goal of our platform is to establish awareness of relevant data, manage business documents, embed analytical tools, create a means for collaboration, and provide advanced process management tools for fully integrating business processes through an open application program interface (“API”) infrastructure. Built on a unified and highly scalable platform, we deliver deep and innovative capabilities in strategic sourcing, supplier management, ECLM, e-procurement, invoicing and other business operation areas.

In addition to our source to pay and enterprise contract lifecycle management solutions suite, we also provide a powerful, patented configuration engine solution, which Global 1000 companies use to increase revenue by facilitating the right combination of products, services and price.

During the three months ended June 30, 2018, our total revenues decreased by 14%, or $1.0 million, to $6.0 million compared with total revenues of $7.0 million during the three months ended June 30, 2017. Recurring revenues, comprised of subscription license sales and services, maintenance sales from previously sold perpetual licenses, application services management and hosting revenues, remained flat at $5.3 million during the three months ended June 30, 2018, compared to during the three months ended June 30, 2017. As a percent of total revenues, recurring revenues comprised 87% and 76% of total revenues during the three months ended June 30, 2018 and 2017, respectively. Non-recurring revenues, comprised of perpetual license sales and revenues from professional services for system implementations, enhancements and training, totaled $0.8 million, or 13% of total revenues, representing a decrease of $0.9 million, or 53%, over the three months ended June 30, 2017. The decrease in total revenues year over year resulted primarily from decreased professional services needed on implementations. As our customers migrate from the legacy software platform to our cloud-based solutions, which require simpler implementations, less time is billable time is incurred.

During the three months ended June 30, 2018, our net loss from operations increased $1.7 million, or 87%, to $3.6 million, compared to $1.9 million during the three months ended June 30, 2017. The increase in net loss is primarily due to decreased gross margins and increased operating expenses. See “Results of Operations” below for further discussion on the components of our net loss.

Critical Accounting Policies and Estimates

There have been no material changes to any of our critical accounting policies and estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018.

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Results of Operations:

Revenues

	Three Months Ended
	June 30, 2018			June 30, 2017
	(in thousands, except percentages)
Recurring revenues	$	5,251		$	5,300
Percentage of total revenues		87	%		76	%
Non-recurring revenues		789			1,688
Percentage of total revenues		13	%		24	%
Total revenues	$	6,040		$	6,988

Recurring revenues. Recurring revenues consist of subscription license sales and services, maintenance revenues from previously sold perpetual licenses and hosting revenues.  Recurring revenues remained flat during the three months ended June 30, 2018, in comparison to the three months ended June 30, 2017. Maintenance revenues continued to decrease, offset by increased subscription revenue growth, due primarily to new customers we entered into contract with during the current period.

Subscription revenues grew to $4.5 million during the three months ended June 30, 2018, compared to $4.4 million during the three months ended June 30, 2017, representing a 2% increase. Maintenance revenues were $0.7 million during the three months ended June 30, 2018, compared to $0.9 million during the three months ended June 30, 2017, representing a 16% decrease.

Recurring revenues continue to account for the majority of our total revenues, and we expect this trend to continue going forward as we continue to emphasize our cloud-based solutions. This will depend in part on the number of maintenance renewals and the number and size of new subscription license contracts. In addition, maintenance renewals are extremely dependent upon economic conditions, customer satisfaction and the level of need to make changes or upgrade versions of our software by our customers.

Non-recurring revenues. Non-recurring revenues are mainly comprised of revenues from professional services for system implementations, enhancements and training. Non-recurring revenues decreased by $0.9 million, or 53%, during the three months ended June 30, 2018, compared to the three months ended June 30, 2017. This decrease was primarily due to decreased time spent on implementations, as our customers migrate from the legacy software platform to our cloud-based solutions, which require simpler implementations. We expect non-recurring revenues to continue to fluctuate in future periods as a percentage of total revenues and in absolute dollars. This will depend on the number and size of new software implementations and follow-on services to our existing customers.

Fluctuations in revenue are also due to the timing of revenue recognition, achievement of milestones, customer acceptance, changes in scope or renegotiated terms and additional services. In addition, we anticipate that as we continue to transition more of our business to our cloud-based solutions, revenue from our legacy software platforms will continue to decline.

Sales to foreign customers accounted for 36% and 33% of total revenues during the three months ended June 30, 2018 and 2017, respectively. The majority of these sales were denominated in US dollars. We do not anticipate that our exposure to foreign currency fluctuations will be significant in the foreseeable future.

Cost of Revenues  

	Three Months Ended
	June 30, 2018			June 30, 2017
Cost of recurring revenues	$	2,106		$	1,786
Percentage of total cost of revenue		62	%		54	%
Cost of non-recurring revenues		1,307			1,517
Percentage of total cost of revenue		38	%		46	%
Total cost of revenues	$	3,413		$	3,303

Cost of recurring revenues. Cost of recurring revenues consists of costs associated with supporting our data center, a fixed allocation of our research and development costs and salaries and related expenses of our support organization. During the three months ended June 30, 2018, cost of recurring revenues increased $0.3 million, or 18%, compared to the three months ended June 30, 2017, driven by increased maintenance and data center costs and amortization of capitalized software.

Cost of non-recurring revenues. Cost of non-recurring revenues is comprised mainly of salaries and related expenses of our services organization, fees paid to resellers and certain allocated corporate expenses. During the three months ended June 30, 2018, cost of non-recurring revenues decreased $0.2 million, or 14%, compared to the three months ended June 30, 2017, primarily due to reduced labor costs associated with delivering our cloud-based solutions.

We expect costs of recurring and non-recurring revenues to remain relatively flat as a percentage of recurring revenues in the foreseeable future.

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Gross Profit and Margin

	Three Months Ended
	June 30, 2018			June 30, 2017
Gross margin, recurring revenues		60	%		66	%
Gross margin, non-recurring revenues		(66	)%		10	%
Gross margin, total revenues		44	%		53	%

Gross profit dollars decreased $1.1 million, or 29%, during the three months ended June 30, 2018, compared to the three months ended June 30, 2017. As we emphasize our cloud-based solutions, and move away from our legacy software platforms, our gross profit will fluctuate due to the timing between costs associated with deploying our newer solutions and the related revenue recognition.

Gross margins represent gross profit as a percentage of revenue and were affected by the factors discussed above under “Revenues” and “Costs of Revenues.” We expect that our overall gross margins will continue to fluctuate primarily due to the timing of revenue recognition. The impact on our gross margin will depend on the mix of services we provide, whether the services are performed by our professional services employees or third-party consultants and the overall utilization rates of our professional services organization.

Operating Expenses

Research and Development Expenses

	Three Months Ended
	June 30, 2018			June 30, 2017
Total research and development	$	1,176		$	1,066
Percentage of total revenues		19	%		15	%

Research and development expenses consist mainly of salaries and related costs of our engineering, quality assurance, technical publication efforts and certain allocated expenses.  During the three months ended June 30, 2018, research and development expenses increased $0.1 million, or 10%, compared to the three months ended June 30, 2017, due primarily to further development of our cloud-based solutions in line with our transition from our legacy software platforms, offset by an increase in capitalized research and development costs. We capitalized $0.8 million and $0.6 million of research and development costs during the three months ended June 30, 2018 and 2017, respectively.

We expect research and development expenditures to slightly increase in the foreseeable future. As we continue to invest in enhancements to our existing products, by adding new features, improving functionality and incorporating feedback and suggestions from our customers, the expenditures will be offset by our ability to capitalize the related allowable costs.

Sales and Marketing Expenses

	Three Months Ended
	June 30, 2018			June 30, 2017
Sales and marketing	$	3,091		$	2,496
Percentage of total revenues		51	%		36	%

Sales and marketing expenses consist primarily of salaries and related costs for our sales and marketing organization, sales commissions, expenses for travel and entertainment, sales materials, advertising and certain allocated expenses. During the three months ended June 30, 2018, sales and marketing expenses increased $0.6 million, or 24%, compared to the three months ended June 30, 2017, due primarily to increased marketing efforts, which include lead generation programs, speaking programs, creation and production of thought leadership resources, event hosting and market analyst relations.

We expect sales and marketing expenses to increase in the foreseeable future as we increase headcount and marketing efforts to promote our cloud-based solutions.

General and Administrative Expenses

	Three Months Ended
	June 30, 2018			June 30, 2017
General and administrative	$	2,005		$	2,072
Percentage of total revenues		33	%		30	%

General and administrative expenses consist mainly of personnel and related costs for general corporate functions, including finance, accounting, legal, human resources, bad debt expense and certain allocated expenses.  General and administrative expense decreased $0.1 million, or 3%, during the three months ended June 30, 2018, compared to the three months ended June 30, 2017, due primarily to decreased accounting and debt reserve activity in the current period.

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We expect general and administrative expenses to remain flat in the foreseeable future.

Other Expense, net

Other expense, net consists primarily of interest expense on the credit facility, foreign currency transaction fluctuations and other miscellaneous expenditures. During the three months ended June 30, 2018, other expenses increased $0.2 million, or 89%, when compared to the three months ended June 30, 2017, primarily due to increased interest on our convertible note debt, as interest is added to the principle balance on a quarterly basis.

Liquidity and Capital Resources

	As of
	June 30, 2018			March 31, 2018
	(in thousands)
Cash, cash equivalents and short-term investments	$	6,156		$	9,928
Working capital	$	(13,120	)	$	(10,156	)

	Three Months Ended
	June 30, 2018			June 30, 2017
	(in thousands)
Net cash (used in) provided by operating activities	$	(1,663	)	$	40
Net cash used in investing activities	$	(862	)	$	(576	)
Net cash (used in) provided by financing activities	$	(1,161	)	$	4,842

Our primary source of liquidity consisted of approximately $6.2 million in cash and cash equivalents as of June 30, 2018, which decreased compared to March 31, 2018 primarily due to payments to pay down our short-term credit facility and the normal course of operations.

Net cash used in operating activities for the three months ended June 30, 2018 resulted primarily from our net loss of $4.1 million, offset by non-cash expense adjustments of $2.1 million. Net cash provided by operating activities during the three months ended June 30, 2017 resulted primarily from our net loss of $2.1 million, offset by non-cash expense adjustments of $1.5 million. Non-cash expense adjustments typically include items such as depreciation and amortization, stock-based compensation, interest expense paid in kind as convertible note debt and income tax benefit or expense.

Net cash used in investing activities for both the three months ended June 30, 2018 and 2017 primarily consisted of capitalized software costs, which increased $0.2 million during the current period, compared to the prior period.

The increase in net cash used in financing activities during the three months ended June 30, 2018, compared to the three months ended June 30, 2017, was primarily due to $4.9 million of proceeds received from a direct registration offering, net of related costs, during the three months ended June 30, 2017 and increased payments on our credit facility during the three months ended June 30, 2018.

We expect to incur significant operating costs for the foreseeable future. We expect to fund our operating costs, as well as our future capital expenditures and liquidity needs, from a combination of available cash balances, internally generated funds, raising additional funds through the sale and issuance of additional securities, reducing expenditures and drawing on our short-term credit facility. As a result, our net cash flows will depend heavily on the level of future sales, changes in deferred revenues and our ability to manage costs.

While we have made significant progress in reducing our expenditures, our current cash on hand and future cash flows provided by operating activities may not be sufficient to fund our working capital and general corporate needs and the non-discretionary capital expenditures without increasing cash flows through our operating activities, raising additional funds through the sale and issuance of additional securities, reducing expenditures, borrowing additional funds under our credit facility or debt arrangements, or a combination of the foregoing. There can be no guarantee that additional financing will be available to us at this time or in the future, that any available financing will be on terms favorable to the Company and its stockholders or that additional funds will be available under our credit facility.  

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

ITEM 4: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management, including our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the period ending June 30, 2018. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2018.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act that was conducted during the quarter ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

Not applicable.

ITEM 1A: RISK FACTORS

Not applicable.

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

Not applicable.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4: MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5: OTHER INFORMATION

Not applicable. 

22

ITEM 6: EXHIBITS

Exhibit No.	Description
10.1(1)	Amendment Number Eleven to Amended and Restated Business Financing Agreement, dated as of June 14, 2018.
10.2(1)	Third Amended and Restated Limited Guaranty, dated June 14, 2018, between Western Alliance Bank and MILFAM II, L.P.
10.3(1)	Guaranty Fee Agreement, dated June 14, 2018.
10.4(1)	Amendment to Guaranty Fee Agreement, dated June 14, 2018.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS** XBRL Instance
	101.SCH** XBRL Taxonomy Extension Schema
	101.CAL** XBRL Taxonomy Extension Calculation
	101.DEF** XBRL Taxonomy Extension Definition
	101.LAB** XBRL Taxonomy Extension Labels
	101.PRE** XBRL Taxonomy Extension Presentation
	(1) Previously filed in the Company’s report on Form 8-K on June 20, 2018.
	** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purpose of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

23

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.

Date: August 14, 2018	By:	/s/ JOHN NOLAN
		John Nolan
		Chief Financial Officer

24

EXHIBIT INDEX

Exhibit No. Description

10.1(1)	Amendment Number Eleven to Amended and Restated Business Financing Agreement, dated as of June 14, 2018.
10.2(1)	Third Amended and Restated Limited Guaranty, dated June 14, 2018, between Western Alliance Bank and MILFAM II, L.P.
10.3(1)	Guaranty Fee Agreement, dated June 14, 2018.
10.4(1)	Amendment to Guaranty Fee Agreement, dated June 14, 2018.

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS** XBRL Instance
	101.SCH** XBRL Taxonomy Extension Schema
	101.CAL** XBRL Taxonomy Extension Calculation
	101.DEF** XBRL Taxonomy Extension Definition
	101.LAB** XBRL Taxonomy Extension Labels
	101.PRE** XBRL Taxonomy Extension Presentation

(1) Previously filed in the Company’s report on Form 8-K on June 20, 2018.

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purpose of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

25

EX-31.1

EXHIBIT 31.1

DETERMINE, INC.

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Patrick Stakenas, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Determine, 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(s) 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(s) 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 the registrant’s board of directors (or persons performing the equivalent functions):

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: August 14, 2018

/s/ PATRICK STAKENAS

Patrick Stakenas

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

DETERMINE, INC.

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, John Nolan, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Determine, 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(s) 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(s) 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 the registrant’s board of directors (or persons performing the equivalent functions):

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: August 14, 2018

/s/ JOHN NOLAN

John Nolan

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

DETERMINE, INC.

CERTIFICATION 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 Determine, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick Stakenas, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted 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.
	This Certificate has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date: August 14, 2018

/s/ PATRICK STAKENAS

Patrick Stakenas

Chief Executive Officer

 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be returned to the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

DETERMINE, INC.

CERTIFICATION 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 Determine, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Nolan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted 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.
	This Certificate has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date: August 14, 2018

/s/ John Nolan

John Nolan

Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be returned to the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Jun. 30, 2018	Aug. 09, 2018
Document Information [Line Items]
Entity Registrant Name	DETERMINE, INC.
Entity Central Index Key	0001090908
Trading Symbol	dtrm
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		15,042,026
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018
ASSETS
Cash and cash equivalents	$ 6,156	$ 9,928
Accounts receivable, net of allowance for doubtful accounts of $23 and $215 as of June 30, 2018 and March 31, 2018, respectively	6,278	6,605
Restricted cash	26	28
Prepaid expenses and other current assets	1,544	1,542
Total current assets	14,004	18,103
Property and equipment, net	121	90
Capitalized software development costs, net	3,320	2,994
Goodwill	15,052	15,458
Other intangibles, net	3,361	3,952
Other assets	1,589	1,467
Total assets	37,447	42,064
Current liabilities
Credit facility	10,973	12,128
Accounts payable	2,479	2,371
Accrued payroll and related liabilities	2,062	1,986
Other accrued liabilities	2,313	2,239
Deferred revenue	9,247	9,487
Income tax payable	50	48
Total current liabilities	27,124	28,259
Long-term deferred revenue	27	84
Convertible note, net of debt discount	7,696	7,475
Other long-term liabilities	1,582	1,306
Total liabilities	36,429	37,124
Commitments and contingencies (Notes 6 and 7):
Stockholders' equity:
Common stock, $0.0001 par value; Authorized: 35,000 shares at June 30, 2018 and March 31, 2018; Issued: 15,080 and 15,050 shares at June 30, 2018 and March 31, 2018, respectively; Outstanding: 14,935 and 14,905 shares at June 30, 2018 and March 31, 2018, respectively	7	7
Additional paid-in capital	326,479	325,942
Treasury stock at cost - 145 shares at June 30, 2018 and March 31, 2018	(472)	(472)
Accumulated deficit	(325,759)	(321,697)
Accumulated other comprehensive income	763	1,160
Total stockholders’ equity	1,018	4,940
Total liabilities and stockholders’ equity	$ 37,447	$ 42,064

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2018	Mar. 31, 2018
Accounts receivable, allowance for doubtful accounts	$ 23	$ 215
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	35,000	35,000
Common stock, shares issued (in shares)	15,080	15,050
Common stock, shares outstanding (in shares)	14,935	14,905
Treasury stock, shares (in shares)	145	145

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Revenues	$ 6,040	$ 6,988
Cost of revenues:
Cost of revenues	3,413	3,303
Gross profit (loss):
Gross profit	2,627	3,685
Operating expenses:
Research and development	1,176	1,066
Sales and marketing	3,091	2,496
General and administrative	2,005	2,072
Total operating expenses	6,272	5,634
Loss from operations	(3,645)	(1,949)
Other expense, net	(336)	(178)
Net loss before income tax	(3,981)	(2,127)
(Provision for) benefit from income taxes	(88)	17
Net loss	$ (4,069)	$ (2,110)
Basic and diluted net loss per share (Note 10) (in dollars per share)	$ (0.27)	$ (0.17)
Weighted-average shares of common stock used in computing basic and diluted net loss per share attributable to common stockholders (in shares)	15,077	12,249
Statements of comprehensive loss:
Consolidated net loss	$ (4,069)	$ (2,110)
Foreign currency translation adjustments, net	(397)	311
Other comprehensive loss		(114)
Comprehensive loss	(4,466)	(1,913)
Fair Value, Measurements, Recurring [Member]
Revenues:
Revenues	5,251	5,300
Cost of revenues:
Cost of revenues	2,106	1,786
Gross profit (loss):
Gross profit	3,145	3,514
Fair Value, Measurements, Nonrecurring [Member]
Revenues:
Revenues	789	1,688
Cost of revenues:
Cost of revenues	1,307	1,517
Gross profit (loss):
Gross profit	$ (518)	$ 171

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (4,069)	$ (2,110)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	1,049	971
Stock-based compensation expense	543	586
Interest expense paid in kind as convertible note debt	221	219
Non-cash income tax expense (benefit)	88	(17)
Unrealized currency translation losses (gains)	176	(252)
Changes in assets and liabilities:
Accounts receivable, net	327	354
Prepaid expenses and other current assets	(2)	103
Other assets	(233)	228
Accounts payable	108	(482)
Accrued payroll and related liabilities	76	243
Other accrued liabilities and other long-term liabilities	350	413
Deferred revenue	(297)	(216)
Net cash (used in) provided by operating activities	(1,663)	40
Investing activities
Purchase of property and equipment	(44)	(7)
Capitalized software development costs, net	(818)	(569)
Net cash used in investing activities	(862)	(576)
Financing activities
Credit facility borrowing	10,828
Credit facility payment	(11,983)
Proceeds from issuance of stock, net of issuance costs		4,909
Net employee withholding taxes paid in connection with issuance of restricted stock	(6)	(24)
Repayment of loan		(44)
Proceeds from exercise of stock options		1
Net cash (used in) provided by financing activities	(1,161)	4,842
Effect of exchange rate changes on cash	88	87
Net (decrease) increase in cash and cash equivalents	(3,774)	4,219
Cash and cash equivalents at beginning of the period	9,956	9,463
Cash and cash equivalents at end of the period	6,182	13,682
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Total cash, cash equivalents and restricted cash	9,956	9,463
Supplemental disclosure of cash flow information:
Cash paid for interest	36	63
Cash paid for taxes	37	48
Stock Issued in Connection with Loan Guarantee Extension [Member]
Supplemental disclosure of cash flow information:
Stock issued		169
Stock Issued Upon Conversion of Convertible Note [Member]
Supplemental disclosure of cash flow information:
Stock issued		$ 973

XML

Note 1 - Basis of Presentation

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Basis of Accounting [Text Block]

1.

 Basis of Presentation

The condensed consolidated balance sheets as of

June 30, 2018

and

March 31, 2018,

the condensed consolidated statements of operations and comprehensive loss for the

three

months ended

June 30, 2018

and

2017

and the condensed consolidated statements of cash flows for the

three

months ended

June 30, 2018

and

2017

have been prepared by the Company and are unaudited. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial position at

June 30, 2018,

and the results of operations and cash flows for the

three

months ended

June 30, 2018

and

2017,

respectively. Interim results are

not

necessarily indicative of the results for a full fiscal year. The condensed consolidated balance sheet as of

March 31, 2018

has been derived from the audited consolidated financial statements at that date.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form

10

-K for the year ended

March 31, 2018.

XML

Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2.

   Summary of Significant Accounting Policies

There have been

no

significant changes to the Company’s accounting policies since it filed its audited consolidated financial statements in its Annual Report on Form

10

-K for the year ended

March 31, 2018,

except for the changes applied due to the adoption of Accounting Standard Codification (“ASc”)

606,

Revenue from Contracts with Customers

. Refer to “Recent Accounting Pronouncements.”

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Additionally, certain prior period amounts have been reclassified to conform to the current year presentation on the condensed consolidated financial statements. The reclassification of the prior period amounts was

not

material to the previously reported condensed consolidated financial statements.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, including, but

not

limited to, those related to the allowance for doubtful accounts, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of stock-based awards, standalone selling price, the benefit period of deferred commissions and income taxes. Actual results could differ from those estimates.

Revenue Recognition

The Company generates revenues by providing its software-as-a-service solutions through subscription license arrangements and related professional services, and related software maintenance. The Company presents revenue net of sales taxes and any similar assessments.

Revenue recognition

. In accordance with Accounting Standards Codification (“ASC”) Topic

606,

Revenue from Contracts with Customers

, the Company determines revenue recognition through the following

five

-step framework: (

1

) identification of the contract, or contracts, with a customer; (

2

) identification of the performance obligations in a contract; (

3

) determination of the transaction price; (

4

) allocation of the transaction price to the performance obligations in the contract; and (

5

) recognition of revenue when, or as, the Company satisfies a performance obligation.

Recurring revenues.

 Recurring revenues consist of subscription license sales and services, maintenance revenues from previously sold perpetual licenses and hosting revenues. Recurring revenues are recognized over the stated contractual period, satisfied over time.

Non-recurring revenues.

  Non-recurring revenues are comprised of revenues from professional services for system implementations, enhancements and training. For professional services arrangements billed on a time-and-materials basis, services are recognized as revenue as they are rendered, at a point in time. For fixed-fee professional service arrangements, the Company recognizes revenue under the proportional performance method of accounting, using the input method, and estimates the proportional performance utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If the Company does

not

have a sufficient basis to measure progress toward completion, revenue is recognized upon completion. The Company recognizes a loss for a fixed-fee professional service if the total estimated project costs exceed project revenues.

Reimbursements, including those related to travel and out-of-pocket expenses are included in non-recurring revenues, and an equivalent amount of reimbursable expenses are included in non-recurring cost of revenues.

Performance Obligations

.

The Company enters into arrangements with multiple performance obligations that generally include subscription and professional services. For these arrangements, the Company accounts for individual performance obligations separately if they are distinct. Subscription services and professional services are both distinct performance obligations that are accounted for separately. In agreements with multiple performance obligations, the transaction price is allocated to separate performance obligations on a relative standalone selling price (“SSP”) basis.

If the standalone selling price is

not

observable through past transactions, the Company determines the SSP based on overall pricing objectives, taking into consideration available information such as market conditions and internally approved pricing guidelines related to the performance obligations. This includes a review of historical data related to the size of arrangements, the cloud solutions being sold, customer demographics and the numbers and types of users within the arrangements. The Company uses a range of amounts to estimate SSP for performance obligations. There is typically more than

one

SSP for individual products and services due to the stratification of those products and services by information such as size and type of customer.

Contract Balances:

The timing of revenue recognition

may

differ from the timing of the invoicing for contracts with customers. The Company records a receivable or contract asset when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Subscription services and certain professional services arrangements are commonly billed in advance which results in a deferred revenue balance amortized as revenue is recognized over time. However, other professional service arrangements, primarily those recognized on a time-and-materials basis, are billed in arrears following services that have been rendered. This

may

result in revenue recognition greater than the invoiced amounts which results in a receivable balance. Receivables represent an unconditional right to payment. Payment terms vary by contract type, however arrangements typically stipulate a requirement for the customer to pay within

60

days. As of

June 30, 2018

and

March 31, 2018,

the balance of the accounts receivable, net of the allowance for doubtful accounts, was

$6.3

million and

$6.6

million, respectively. Of these balances,

$0.8

million and

$0.5

million represent unbilled receivable amounts as of

June 30, 2018

and

March 31, 2018,

respectively.

At any point in the contract term, transaction price

may

be allocated to performance obligations that are unsatisfied or partially unsatisfied. These amounts relate to remaining performance obligations on non-cancelable contracts which include both the deferred revenue balance and amounts that will be invoiced and recognized as revenue in future periods. As of

June 30, 2018,

approximately

$23.3

million of revenue is expected to be recognized from remaining performance obligations for subscription contracts, a majority of which is related to multi-year subscriptions. The Company expects to recognize approximately

48%

of these remaining performance obligations over the remainder of the current fiscal year, with the balance recognized thereafter. All of the

$0.7

million of revenue from remaining performance obligations related to professional services contracts is expected to be recognized within the current fiscal year.

Deferred Revenue

. Deferred revenue consists of customer billings or payments received in advance of the recognition of revenue and is recognized as revenue as the revenue recognition criteria are met. The Company generally invoices its customers annually for the forthcoming year of service. Accordingly, the Company's deferred revenue balance does

not

include revenue for future years of multiple-year, non-cancellable contracts that have

not

yet been billed. During the

three

months ended

June 30, 2018,

the Company recognized revenue of

$4.6

million that was included in the deferred revenue balance as of

March 31, 2018.

Deferred Commissions

. Commissions are earned by sales personnel upon the execution of the sales contract by the customer, and commission payments are made shortly after they are earned. Commissions earned by the Company's sales personnel are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over the life of the contract. The Company determined the period of benefit by taking into consideration its past experience with customers, industry peers and other available information.

The current portion of deferred commissions was

$0.5

million at both

June 30, 2018

and

March 31, 2018,

respectively, and is recorded as a component of prepaid expenses and other current assets on the condensed consolidated balance sheets. For both the

three

months ended

June 30, 2018

and

2017,

$0.2

million of deferred commissions were amortized to sales and marketing expense on the condensed consolidated statements of operations and comprehensive loss, respectively. There was

no

impairment loss in relation to the costs capitalized for the periods presented.

Customer Concentrations

During the

three

months ended

June 30, 2018

and

2017,

no

customer accounted for

10%

or more of the Company’s consolidated revenues or consolidated net accounts receivable, respectively.

Disaggregation of Revenue

International revenues are attributable to countries based on the location of the customer. For the

three

months ended

June 30, 2018

and

2017,

sales to international locations were derived primarily from France, the United Kingdom, Ireland, Norway, Australia, Canada, Switzerland, Italy, Germany, Bermuda, the Netherlands, United Arab Emirates, Denmark, China, Hong Kong, Bulgaria, Finland and Belgium. 

	Three Months Ended
	June 30, 2018		June 30, 2017
	(in thousands)
International revenues
Recurring revenues	$	1,787	$	1,557
Non-recurring revenues		369		765
Total international revenues		2,156		2,322
Domestic revenues
Recurring revenues		3,464		3,743
Non-recurring revenues		420		923
Total domestic revenues		3,884		4,666
Total revenues	$	6,040	$	6,988

Recent Accounting Pronouncements

In

June 2018,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2018

-

07,

Compensation – Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting

, which allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those annual periods. The Company does

not

expect the adoption of ASU

2018

-

07

to have a material impact on its consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

 

Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting,

 which clarifies what constitutes a modification of a share-based payment award. This guidance is effective for fiscal years beginning after

December 15, 2017.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment

, which simplifies the accounting for goodwill impairments by eliminating step

two

from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. ASU

2017

-

04

also clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units related to an entity’s testing of reporting units for goodwill impairment, and clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual reporting periods beginning after

December 31, 2019

and interim periods within those fiscal years. The Company is currently assessing the potential impact of the adoption of ASU

2017

-

04

on its consolidated financial statements.

In

January 2017,

the FASB issued ASU

2017

-

01,

Clarifying the Definition of a Business

. The new guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is

not

a business. The guidance also requires a business to include at least

one

substantive process and narrows the definition of outputs. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2017.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

November 2016,

the FASB issued ASU

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash

, which requires restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for the Company beginning

April 1, 2018.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

October 2016,

the FASB issued ASU

2016

-

16,

Accounting for Income Taxes (Topic

740

): Intra-Entity Asset Transfers of Assets Other than Inventory

, which removes the prohibition in ASC

740

against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The update is effective for the Company beginning

April 1, 2018.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases

(Topic

842

)

,

and issued subsequent amendments to the initial guidance in

July 2018

within ASU

2018

-

10

and ASU

2018

-

11

(ASU

2016

-

02,

ASU

2018

-

10

and ASU

2018

-

11

collectively, “Topic

842”

) which establish a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees with capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently assessing the potential impact of the adoption of Topic

842

on its consolidated financial statements. 

In

May 2014,

the FASB issued ASU

2014

-

09,

 

Revenue from Contracts with Customers: Topic 

606

 and issued subsequent amendments to the initial guidance in

August 2015, 

March 2016,

April 2016,

May 2016,

September 2017

and

November 2017

within ASU

2015

-

14,

ASU 

2016

-

08,

ASU

2016

-

10,

ASU

2016

-

12,

ASU

2017

-

13

and ASU

2017

-

14,

respectively (ASU 

2014

-

09,

 ASU

2015

-

14,

ASU

2016

-

08,

ASU

2016

-

10,

ASU

2016

-

12,

ASU

2017

-

13

and ASU

2017

-

14

collectively, “Topic

606”

). Topic

606

supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic

606

is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic

606

defines a

five

-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates

may

be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic

606

also provides guidance on the recognition of costs related to obtaining customer contracts. ASU

No.

2015

-

14

deferred the effective date of the new revenue standard for periods beginning after

December 15, 2016

to

December 15, 2017.

The Company has adopted the new standard for the

three

months ended

June 30, 2018

under the full retrospective method. The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

The Company has reviewed other new accounting pronouncements that were issued as of

June 30, 2018

and does

not

believe that these pronouncements are applicable to the Company, or that they will have a material impact on its financial position or results of operations.

XML

Note 3 - Goodwill and Other Intangible Assets

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

3

.   Goodwill and Other Intangible Assets

 

The following is a summary of goodwill (in thousands): 

Balance at March 31, 2018	$	15,458
Foreign currency translation adjustment		(406	)
Balance at June 30, 2018	$	15,052

The following is a summary of other intangible assets, net (in thousands): 

	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation Adjustment		Net Carrying Value
Acquired developed technology	$	5,034	$	(3,703	)	$	156	$	1,487
Customer relationships		5,857		(4,066	)		83		1,874
	$	10,891	$	(7,769	)	$	239	$	3,361

	March 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation Adjustment		Net Carrying Value
Acquired developed technology	$	5,034	$	(3,486	)	$	219	$	1,767
Customer relationships		5,857		(3,834	)		162		2,185
	$	10,891	$	(7,320	)	$	381	$	3,952

Acquired developed technology and customer relationships are being amortized on a straight-line basis and have weighted-average remaining useful lives of

1.37

years and

1.77

years, respectively, as of

June 30, 2018.

Amortization expense of intangible assets was

$0.5

 million and

$0.6

million for the

three

months ended

June 30, 2018

and

2017,

respectively.

XML

Note 4 - Property and Equipment, Net

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

4

. Property and Equipment, net

Property and equipment, net consist of the following:  

	June 30,			March 31,
	2018			2018
	(in thousands)
Computers and software	$	385		$	356
Furniture and equipment		232			232
Leasehold improvements		58			43
		675			631
Less: accumulated depreciation		(554	)		(541	)
Total property and equipment, net	$	121		$	90

Depreciation expense was approximately

$0.01

million and

$0.02

million during the

three

months ended

June 30, 2018

and

2017,

respectively.

XML

Note 5 - Capitalized Software Development Costs

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Research, Development, and Computer Software Disclosure [Text Block]

5

.  Capitalized Software Development Costs

The Company capitalizes costs for internal use software incurred during the application development stage that are included in research and development expenses. Costs related to preliminary project activities and post implementation activities are expensed as incurred. The Company capitalized

$0.8

million and

$0.6

million of research and development costs during the

three

months ended

June 30, 2018

and

2017,

respectively.

Capitalized software is amortized once the product is ready for its intended use, using the straight-line method over the estimated useful lives of the assets, which is

three

years. Amortization expense of capitalized software is included in the product cost of revenue and was

$0.5

million and

$0.4

million during the

three

months ended

June 30, 2018

and

2017,

respectively. The unamortized balance of capitalized software was

$3.3

million and

$3.0

million as of

June 30, 2018

and

March 31, 2018,

respectively.

Management continues to evaluate the capitalized software development costs across all product lines and did

not

identify any indicators which required impairment to be recorded during the

three

months ended

June 30, 2018

or

2017.

XML

Note 6 - Operating Lease Commitments

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

6

.  Operating Lease Commitments

The Company leases office space in London, United Kingdom, Aix-en-Provence, France, Paris, France, Atlanta, Georgia, the District of Columbia and, for its headquarters, in Carmel, Indiana. The leases are non-cancelable operating leases with various expirations through

July 2021.

Rent expense, which is recognized on a straight-line basis over the lease term, was

$0.1

million during both the

three

months ended

June 30, 2018

and

2017,

respectively. The difference between the lease payments made and the lease expense recognized to date using the straight-line method is recorded as a liability and included within other accrued liabilities in the condensed consolidated balance sheets.

During the

third

quarter of fiscal year

2017,

the Company began subleasing a portion of its rental space in the District of Columbia to a related party associated with the Chairman of the Board of Directors. The subleases were terminated via mutual agreement during the

three

months ended

September 30, 2017.

Rental income from the subleases was recognized on a straight-line basis over the lease term. The Company recognized

$0.01

million in sublease income during the

three

months ended

June 30, 2017.

XML

Note 7 - Litigation and Contingencies

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

7

.  Litigation and Contingencies

From time to time the Company is subject to certain routine legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of its business. The Company believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will

not

materially affect its financial position, results of operations or liquidity. 

Warranties and Indemnifications

The Company’s products are generally warranted to perform substantially in accordance with the functional specifications set forth in the associated product documentation. In the event there is a failure of such warranties, the Company generally is obligated to correct the product to conform to the product documentation or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product or service. The Company has

not

provided for a warranty accrual as of

June 30, 2018

or

March 31, 2018.

The Company generally agrees to indemnify its customers against legal claims that the Company’s software infringes certain

third

-party intellectual property rights. In the event of such a claim, the Company is obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the

third

-party claimant. In addition, in the event of the infringement, the Company agrees to modify or replace the infringing product, or, if those options are

not

reasonably possible, to refund the purchase price of the software. To date, the Company has

not

been required to make any payment resulting from infringement claims asserted against its customers. As such, the Company has

not

provided for an indemnification accrual as of

June 30, 2018

or

March 31, 2018.

XML

Note 8 - Credit Facility and Convertible Notes

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

8

. Credit Facility

and

Convertible

Notes

The Company maintains financing facilities and convertible note purchase agreements. For a description of the Company’s debt financing, see the notes to consolidated financial statements contained in the Company’s Annual Report on Form

10

-K for the year ended

March 31, 2018

and the summaries set forth below.

Amendment

s

of Business Financing Agreement

On

June 14, 2018,

Determine and its wholly owned subsidiary, Determine Sourcing, Inc., entered into Amendment Number Eleven to the Amended and Restated Business Financing Agreement (the “Amendment”) with Western Alliance Bank, an Arizona corporation, as successor in interest to Bridge Bank, National Association (“Western Alliance”). The Amendment extended the maturity date of the underlying credit facility to

July 31, 2019,

revised the definition of “Prime Rate” to be

4.75%

and revised certain of the financial and compliance reporting obligations.

Amendment of Limited Guaranty

In connection with the Amendment, on

June 14, 2018,

MILFAM II, L.P. (“MILFAM”), an affiliate of the estate of Lloyd I. Miller, III (“Mr. Miller”), the Company’s largest stockholder, entered into a Third Amended and Restated Limited Guaranty (the “Amended Guaranty”) with Western Alliance. The Amended Guaranty (i) extends the term of the Second Amended and Restated Limited Guaranty entered into by MILFAM with Western Alliance on

June 1, 2017

to

August 10, 2019,

and (ii) terminates the Second Amended and Restated Limited Guaranty entered into by the estate of Mr. Miller with Western Alliance on

June 1, 2017.

The Amended Guaranty also provides that if the maturity date of the Credit Facility is subsequently amended, the term of the Amended Guaranty would automatically extend to a date

ten

(

10

) days following the extended maturity date under the Credit Facility, but

no

later than

July 30, 2020. 

In connection with the Amended Guaranty, on

June 14, 2018,

the Company entered into a Guaranty Fee Agreement (the “Fee Agreement”) with MILFAM, pursuant to which the Company agreed to pay MILFAM a commitment fee of

$108,000

and a monthly fee that shall accrue each calendar month during the term of the Amended Guaranty equal to

ten

percent of the commitment fee divided by twelve. The commitment fee and the accrued monthly fee shall be payable in cash by the Company upon the termination or expiration of the Amended Guaranty.

Amendment to Guaranty Fee Agreement

Additionally, in connection with the Amended Guaranty, on

June 14, 2018,

the Company entered into an Amendment to Guaranty Fee Agreement (the “Fee Agreement Amendment”) with MILFAM, Mr. Miller’s estate and Alimco Financial Corporation, an affiliate of Mr. Miller’s estate (collectively, the “Guarantors”). The Fee Agreement Amendment, among other things, amends the Guaranty Fee Agreement, dated as of

June 1, 2017 (

the

“June 2017

Fee Agreement”), among the Company and the Guarantors, to eliminate the payment of certain shares of Company common stock in connection with any extension of the guarantees provided by the Guarantors under the

June 2017

Fee Agreement and replace such payment with a cash commitment fee of

$168,750

plus a monthly fee equal to

ten

percent of such commitment fee divided by twelve. 

As of

June 30, 2018

and

March 31, 2018,

the Company owed

$11.0

million and

$12.1

million, respectively, under the Credit Facility, and

$2.0

million and

$0.9

million was available for future borrowings, respectively. The Company’s Credit Facility with Western Alliance contains certain financial covenants that require, among other things, the maintenance of an asset coverage ratio of

not

less than

2:00

to

1:00

 at the end of each month. During the

three

months ended

June 30, 2018,

the Company met all the requirements and was in compliance with the financial covenants.

XML

Note 9 - Stockholders' Equity

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

9

.  Stockholders’ Equity

Equity Incentive Program

The Company’s equity incentive program is a broad-based, retention program comprised of stock options, restricted stock units and an employee stock purchase plan (“ESPP”) designed to align stockholder and employee interests. For a description of the Company’s equity plans, see the notes to consolidated financial statements contained in the Company’s Annual Report on Form

10

-K for the year ended

March 31, 2018.

Valuation Assumptions

During the

three

months ended

June 30, 2018

and

2017,

respectively, the Company calculated the fair value of its employee stock options at the date of grant with the following weighted average assumptions:  

	Three Months Ended
	June 30, 2018			June 30, 2017
Risk-free interest rate		2.77	%		1.91	%
Dividend yield		0	%		0	%
Expected volatility		61.40	%		54.00	%
Expected term in years		5.65			6.08
Weighted average fair value at grant date	$	0.80		$	1.81

The following tables summarize activity under the equity incentive plans for the

three

months ended

June 30, 2018: 

	Options Outstanding					Restricted Stock Units Outstanding
	Number of shares (in thousands)			Weighted average exercise price		Number of shares (in thousands)			Weighted average fair value
Outstanding at April 1, 2018		4,542		$	2.83		309		$	2.17
Granted		51		$	1.41		50		$	1.41
Exercised/Released		-		$	-		(62	)	$	2.03
Cancelled		(53	)	$	2.71		-		$	-
Outstanding at June 30, 2018		4,540		$	2.82		297		$	2.08
Vested and expected to vest		4,391		$	2.84

	Shares Available for Grant
	(in thousands)
Balance at April 1, 2018		343
Options:
Granted		(51	)
Cancelled		45
Restricted Stock Units:
Granted		(50	)
Balance at June 30, 2018		287

The weighted average remaining contractual term for exercisable options is

7.19

years. The intrinsic value is calculated as the difference between the market value as of

June 30, 2018

and the exercise price of the shares. The market value of the Company’s common stock as of

June 30, 2018

was

$1.41

as reported by the NASDAQ Capital Market. The aggregate intrinsic value of stock options outstanding at both

June 30, 2018

and

2017

was

zero

, respectively. The aggregate intrinsic value of restricted stock units outstanding at both

June 30, 2018

and

2017

was

zero

, respectively.

The options outstanding and exercisable at

June 30, 2018

were in the following exercise price ranges:

			Options Outstanding				Options Vested
Range of Exercise Prices per share			Number of Shares (in thousands)		Weighted- Average Remaining Contractual Life (in years)		Number of Shares (in thousands)		Weighted- Average Exercise Price per Share
$1.35	—	$1.53		247		9.00		83	$	1.38
$1.64	—	$1.64		1,900		7.65		1,096	$	1.64
$1.75	—	$1.81		492		8.58		134	$	1.78
$2.00	—	$3.34		536		7.68		285	$	2.77
$3.44	—	$3.99		123		7.13		74	$	3.84
$4.32	—	$4.32		627		7.08		457	$	4.32
$5.18	—	$6.61		555		6.15		497	$	6.21
$6.83	—	$6.83		50		5.64		50	$	6.83
$7.20	—	$7.20		5		0.66		5	$	7.20
$11.40	—	$11.40		5		0.15		5	$	11.40
$1.35	—	$11.40		4,540		7.51		2,686	$	3.24

The effect of recording stock-based compensation expense (including expense related to the ESPP discussed below) for each of the periods presented was as follows (in thousands):

	Three Months Ended
	June 30, 2018		June 30, 2017
Cost of revenues	$	42	$	28
Research and development		82		63
Sales and marketing		113		92
General and administrative		306		403
Impact on net loss	$	543	$	586

 As of

June 30, 2018,

the unrecorded stock-based compensation balance related to stock options and restricted stock units outstanding excluding estimated forfeitures was

$2.0

million and

$0.4

million, respectively, and will be recognized over an estimated weighted average amortization period of

1.98

years for stock options and

1.07

years for restricted stock units. The amortization period is based on the expected remaining vesting term of the options and restricted stock units.

1999

Employee Stock Purchase Plan (“ESPP”)

The price paid for the Company’s common stock purchased under the ESPP is equal to

85%

of the lower of the fair market value of the Company’s common stock at the beginning of each offering period or at the end of each offering period. The compensation expense in connection with the ESPP for both the

three

months ended

June 30, 2018

and

2017

was

$0.02

million, respectively. During the

three

months ended

June 30, 2018

and

2017,

there were

no

shares issued under the ESPP.

Registered Direct Offering

On

June 26, 2017,

the Company, pursuant to a securities purchase agreement with certain investors, sold

2,184,000

shares of the Company’s common stock at a price of

$2.50

per share for aggregate proceeds of

$4.9

million, net of

$0.3

million placement agency fees and

$0.2

million other offering expenses.

XML

Note 10 - Computation of Basic and Diluted Net Loss Per Share

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

10

.  Computation of Basic and Diluted Net Loss per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of common stock outstanding during the period.

The Company excludes securities from its diluted net loss per share computation when their effect would be antidilutive to net loss per share amounts. The following common stock equivalents were excluded from the net loss per share computation:

	Three Months Ended
	June 30, 2018		June 30, 2017
	(in thousands)
Options		4,504		1,854
Unvested restricted stock units		72		69
Warrants		2,262		2,262
Total common stock equivalents excluded from diluted net loss per common share		6,838		4,185

XML

Note 11 - Income Taxes

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

1

1

.  Income Taxes

The provision for income taxes is based upon loss before income taxes as follows (in thousands):

	Three Months Ended June 30, 2018
Domestic pre-tax loss	$	(4,113	)
Foreign pre-tax income		132
Total pre-tax loss	$	(3,981	)

The components of the provision for income taxes are as follows (in thousands):

	Three Months Ended June 30, 2018
US	$	1
Foreign		(89	)
Total benefit from income taxes	$	(88	)

The Company accounts for its income taxes in accordance with ASC

740,

Income Taxes. ASC

740

clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold, measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. Under ASC

740,

the Company is required to recognize in the financial statements the impact of a tax position, if that position is more likely than

not

of being sustained on audit, based on the technical merits of the position. ASC

740

also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The Company policy is to record interest and penalties related to unrecognized tax benefits in income tax expense. 

At

June 30, 2018,

there was

no

material increase in the liability for unrecognized tax benefits nor any accrued interest and penalties related to uncertain tax positions.

In addition, at

June 30, 2018,

the Company had approximately

$1.5

million of unrecognized tax benefits which were netted against deferred tax assets with a full valuation allowance. If these amounts are recognized, there will be

no

effect on the Company’s effective tax rate due to the full valuation allowance. ASC

740

provides for the recognition of deferred tax assets if realization of such assets is more likely than

not.

  Based on the weight of available evidence, which includes the Company's historical operation performance and the reported cumulative net losses in all prior years, the Company has provided a full valuation allowance against its U.S. federal and state net deferred tax assets

The Company’s Federal, state and foreign tax returns

may

be subject to examination by the tax authorities for fiscal years ended from

1998

to

2018

due to net operating losses and tax carryforwards unutilized from such years.  

The Tax Cuts and Jobs Act of

2017

was enacted in

December 2017,

which introduced the Global Low Taxed Intangible Income (“GILTI”) inclusion. Due to the losses in the foreign subsidiaries, the Company projects

no

GILTI income inclusion for its fiscal year ended

March 31, 2019.

The Company continues to evaluate its accounting policy with respect to temporary differences related to the GILTI inclusion.

XML

Note 12 - Related Party Transactions

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

1

2

.  Related Party Transactions

Determine SAS rents its offices from SCI Donapierre, the company controlled by

two

of the Company

’

s stockholders. During both the

three

months ended

June 30, 2018

and

2017,

Determine SAS made rental payments of approximately

$0.1

million, respectively, to SCI Donapierre.

The Company also maintains financing facilities and convertible note purchase agreements with related parties, as set forth in Note

8,

Credit Facility and Convertible Notes

, as well as subleases, as set forth in Note

6,

Operating Lease Commitments

, above. ALMC is a company for which Alan Howe, a director of the Company, serves as chief executive officer.

XML

Note 13 - Subsequent Event

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

13.

Subsequent Events

Amendment of Business Financing Agreement

On

August 7, 2018,

the Company and its wholly owned subsidiary, Determine Sourcing Inc. entered into Amendment Number Twelve to the Amended and Restated Business Financing Agreement (the

“August

Amendment”) with Western Alliance Bank. The

August

Amendment, among other things, increased the Company’s available credit under the existing facility with Western Alliance Bank (the “Credit Facility”) by

$2

million (the “Additional Limit”), up to a total available credit amount of

$15

million. In connection with the

August

Amendment, the Company agreed to pay Western Alliance Bank cash fees of

$40,000

plus a

one

-time facility fee equal to

0.75%

of the Additional Limit on the date of the

August

Amendment, and the Additional Limit amount was added to the calculation of the annual facility fee payable under the Credit Facility. Additionally, the definitions of “Finance Charge Percentage” and “Prime Rate” were revised to increase the respective base percentage rates to

5.00%.

Amendment of Limited Guaranty

In order to satisfy certain conditions for Western Alliance Bank to lend additional funds under the Credit Facility and enter into the

August

Amendment, on

August 7, 2018,

MILFAM entered into a Fourth Amended and Restated Limited Guaranty (the “Fourth Amended Guaranty”) with Western Alliance Bank. The Fourth Amended Guaranty increases the amount of the limited, non-revocable guaranty of the Company’s Credit Facility provided by MILFAM by

$2

million, from

$2

million to

$4

million.

Guaranty Fee Agreement

In connection with the Fourth Amended Guaranty, on

August 7, 2018,

the Company entered into a Guaranty Fee Agreement with MILFAM, pursuant to which the Company agreed to pay MILFAM a commitment fee of

$108,000

and a monthly fee that shall accrue each calendar month during the term of the Fourth Amended Guaranty equal to

ten

percent of the commitment fee divided by twelve. The commitment fee and the accrued monthly fee shall be payable in cash by the Company upon the termination or expiration of the Fourth Amended Guaranty.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Additionally, certain prior period amounts have been reclassified to conform to the current year presentation on the condensed consolidated financial statements. The reclassification of the prior period amounts was

not

material to the previously reported condensed consolidated financial statements.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, including, but

not

limited to, those related to the allowance for doubtful accounts, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of stock-based awards, standalone selling price, the benefit period of deferred commissions and income taxes. Actual results could differ from those estimates.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company generates revenues by providing its software-as-a-service solutions through subscription license arrangements and related professional services, and related software maintenance. The Company presents revenue net of sales taxes and any similar assessments.

Revenue recognition

. In accordance with Accounting Standards Codification (“ASC”) Topic

606,

Revenue from Contracts with Customers

, the Company determines revenue recognition through the following

five

-step framework: (

1

) identification of the contract, or contracts, with a customer; (

2

) identification of the performance obligations in a contract; (

3

) determination of the transaction price; (

4

) allocation of the transaction price to the performance obligations in the contract; and (

5

) recognition of revenue when, or as, the Company satisfies a performance obligation.

Recurring revenues.

 Recurring revenues consist of subscription license sales and services, maintenance revenues from previously sold perpetual licenses and hosting revenues. Recurring revenues are recognized over the stated contractual period, satisfied over time.

Non-recurring revenues.

  Non-recurring revenues are comprised of revenues from professional services for system implementations, enhancements and training. For professional services arrangements billed on a time-and-materials basis, services are recognized as revenue as they are rendered, at a point in time. For fixed-fee professional service arrangements, the Company recognizes revenue under the proportional performance method of accounting, using the input method, and estimates the proportional performance utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If the Company does

not

have a sufficient basis to measure progress toward completion, revenue is recognized upon completion. The Company recognizes a loss for a fixed-fee professional service if the total estimated project costs exceed project revenues.

Reimbursements, including those related to travel and out-of-pocket expenses are included in non-recurring revenues, and an equivalent amount of reimbursable expenses are included in non-recurring cost of revenues.

Performance Obligations

.

The Company enters into arrangements with multiple performance obligations that generally include subscription and professional services. For these arrangements, the Company accounts for individual performance obligations separately if they are distinct. Subscription services and professional services are both distinct performance obligations that are accounted for separately. In agreements with multiple performance obligations, the transaction price is allocated to separate performance obligations on a relative standalone selling price (“SSP”) basis.

If the standalone selling price is

not

observable through past transactions, the Company determines the SSP based on overall pricing objectives, taking into consideration available information such as market conditions and internally approved pricing guidelines related to the performance obligations. This includes a review of historical data related to the size of arrangements, the cloud solutions being sold, customer demographics and the numbers and types of users within the arrangements. The Company uses a range of amounts to estimate SSP for performance obligations. There is typically more than

one

SSP for individual products and services due to the stratification of those products and services by information such as size and type of customer.

Contract Balances:

The timing of revenue recognition

may

differ from the timing of the invoicing for contracts with customers. The Company records a receivable or contract asset when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Subscription services and certain professional services arrangements are commonly billed in advance which results in a deferred revenue balance amortized as revenue is recognized over time. However, other professional service arrangements, primarily those recognized on a time-and-materials basis, are billed in arrears following services that have been rendered. This

may

result in revenue recognition greater than the invoiced amounts which results in a receivable balance. Receivables represent an unconditional right to payment. Payment terms vary by contract type, however arrangements typically stipulate a requirement for the customer to pay within

60

days. As of

June 30, 2018

and

March 31, 2018,

the balance of the accounts receivable, net of the allowance for doubtful accounts, was

$6.3

million and

$6.6

million, respectively. Of these balances,

$0.8

million and

$0.5

million represent unbilled receivable amounts as of

June 30, 2018

and

March 31, 2018,

respectively.

At any point in the contract term, transaction price

may

be allocated to performance obligations that are unsatisfied or partially unsatisfied. These amounts relate to remaining performance obligations on non-cancelable contracts which include both the deferred revenue balance and amounts that will be invoiced and recognized as revenue in future periods. As of

June 30, 2018,

approximately

$23.3

million of revenue is expected to be recognized from remaining performance obligations for subscription contracts, a majority of which is related to multi-year subscriptions. The Company expects to recognize approximately

48%

of these remaining performance obligations over the remainder of the current fiscal year, with the balance recognized thereafter. All of the

$0.7

million of revenue from remaining performance obligations related to professional services contracts is expected to be recognized within the current fiscal year.

Deferred Revenue

. Deferred revenue consists of customer billings or payments received in advance of the recognition of revenue and is recognized as revenue as the revenue recognition criteria are met. The Company generally invoices its customers annually for the forthcoming year of service. Accordingly, the Company's deferred revenue balance does

not

include revenue for future years of multiple-year, non-cancellable contracts that have

not

yet been billed. During the

three

months ended

June 30, 2018,

the Company recognized revenue of

$4.6

million that was included in the deferred revenue balance as of

March 31, 2018.

Deferred Commissions

. Commissions are earned by sales personnel upon the execution of the sales contract by the customer, and commission payments are made shortly after they are earned. Commissions earned by the Company's sales personnel are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over the life of the contract. The Company determined the period of benefit by taking into consideration its past experience with customers, industry peers and other available information.

The current portion of deferred commissions was

$0.5

million at both

June 30, 2018

and

March 31, 2018,

respectively, and is recorded as a component of prepaid expenses and other current assets on the condensed consolidated balance sheets. For both the

three

months ended

June 30, 2018

and

2017,

$0.2

million of deferred commissions were amortized to sales and marketing expense on the condensed consolidated statements of operations and comprehensive loss, respectively. There was

no

impairment loss in relation to the costs capitalized for the periods presented.

Customer Concentration Risk, Policy [Policy Text Block]

Customer Concentrations

During the

three

months ended

June 30, 2018

and

2017,

no

customer accounted for

10%

or more of the Company’s consolidated revenues or consolidated net accounts receivable, respectively.

Geographic Information, Policy [Policy Text Block]

Disaggregation of Revenue

International revenues are attributable to countries based on the location of the customer. For the

three

months ended

June 30, 2018

and

2017,

sales to international locations were derived primarily from France, the United Kingdom, Ireland, Norway, Australia, Canada, Switzerland, Italy, Germany, Bermuda, the Netherlands, United Arab Emirates, Denmark, China, Hong Kong, Bulgaria, Finland and Belgium. 

	Three Months Ended
	June 30, 2018		June 30, 2017
	(in thousands)
International revenues
Recurring revenues	$	1,787	$	1,557
Non-recurring revenues		369		765
Total international revenues		2,156		2,322
Domestic revenues
Recurring revenues		3,464		3,743
Non-recurring revenues		420		923
Total domestic revenues		3,884		4,666
Total revenues	$	6,040	$	6,988

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

June 2018,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2018

-

07,

Compensation – Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting

, which allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those annual periods. The Company does

not

expect the adoption of ASU

2018

-

07

to have a material impact on its consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

 

Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting,

 which clarifies what constitutes a modification of a share-based payment award. This guidance is effective for fiscal years beginning after

December 15, 2017.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment

, which simplifies the accounting for goodwill impairments by eliminating step

two

from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. ASU

2017

-

04

also clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units related to an entity’s testing of reporting units for goodwill impairment, and clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual reporting periods beginning after

December 31, 2019

and interim periods within those fiscal years. The Company is currently assessing the potential impact of the adoption of ASU

2017

-

04

on its consolidated financial statements.

In

January 2017,

the FASB issued ASU

2017

-

01,

Clarifying the Definition of a Business

. The new guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is

not

a business. The guidance also requires a business to include at least

one

substantive process and narrows the definition of outputs. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2017.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

November 2016,

the FASB issued ASU

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash

, which requires restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for the Company beginning

April 1, 2018.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

October 2016,

the FASB issued ASU

2016

-

16,

Accounting for Income Taxes (Topic

740

): Intra-Entity Asset Transfers of Assets Other than Inventory

, which removes the prohibition in ASC

740

against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The update is effective for the Company beginning

April 1, 2018.

The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases

(Topic

842

)

,

and issued subsequent amendments to the initial guidance in

July 2018

within ASU

2018

-

10

and ASU

2018

-

11

(ASU

2016

-

02,

ASU

2018

-

10

and ASU

2018

-

11

collectively, “Topic

842”

) which establish a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees with capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently assessing the potential impact of the adoption of Topic

842

on its consolidated financial statements. 

In

May 2014,

the FASB issued ASU

2014

-

09,

 

Revenue from Contracts with Customers: Topic 

606

 and issued subsequent amendments to the initial guidance in

August 2015, 

March 2016,

April 2016,

May 2016,

September 2017

and

November 2017

within ASU

2015

-

14,

ASU 

2016

-

08,

ASU

2016

-

10,

ASU

2016

-

12,

ASU

2017

-

13

and ASU

2017

-

14,

respectively (ASU 

2014

-

09,

 ASU

2015

-

14,

ASU

2016

-

08,

ASU

2016

-

10,

ASU

2016

-

12,

ASU

2017

-

13

and ASU

2017

-

14

collectively, “Topic

606”

). Topic

606

supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic

606

is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic

606

defines a

five

-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates

may

be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic

606

also provides guidance on the recognition of costs related to obtaining customer contracts. ASU

No.

2015

-

14

deferred the effective date of the new revenue standard for periods beginning after

December 15, 2016

to

December 15, 2017.

The Company has adopted the new standard for the

three

months ended

June 30, 2018

under the full retrospective method. The adoption of this update did

not

have a material impact on the Company’s consolidated financial statements.

The Company has reviewed other new accounting pronouncements that were issued as of

June 30, 2018

and does

not

believe that these pronouncements are applicable to the Company, or that they will have a material impact on its financial position or results of operations.

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended
	June 30, 2018		June 30, 2017
	(in thousands)
International revenues
Recurring revenues	$	1,787	$	1,557
Non-recurring revenues		369		765
Total international revenues		2,156		2,322
Domestic revenues
Recurring revenues		3,464		3,743
Non-recurring revenues		420		923
Total domestic revenues		3,884		4,666
Total revenues	$	6,040	$	6,988

XML

Note 3 - Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Goodwill [Table Text Block]

Balance at March 31, 2018	$	15,458
Foreign currency translation adjustment		(406	)
Balance at June 30, 2018	$	15,052

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation Adjustment		Net Carrying Value
Acquired developed technology	$	5,034	$	(3,703	)	$	156	$	1,487
Customer relationships		5,857		(4,066	)		83		1,874
	$	10,891	$	(7,769	)	$	239	$	3,361

	March 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation Adjustment		Net Carrying Value
Acquired developed technology	$	5,034	$	(3,486	)	$	219	$	1,767
Customer relationships		5,857		(3,834	)		162		2,185
	$	10,891	$	(7,320	)	$	381	$	3,952

XML

Note 4 - Property and Equipment, Net (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30,			March 31,
	2018			2018
	(in thousands)
Computers and software	$	385		$	356
Furniture and equipment		232			232
Leasehold improvements		58			43
		675			631
Less: accumulated depreciation		(554	)		(541	)
Total property and equipment, net	$	121		$	90

XML

Note 9 - Stockholders' Equity (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended
	June 30, 2018			June 30, 2017
Risk-free interest rate		2.77	%		1.91	%
Dividend yield		0	%		0	%
Expected volatility		61.40	%		54.00	%
Expected term in years		5.65			6.08
Weighted average fair value at grant date	$	0.80		$	1.81

Share-based Compensation, Activity [Table Text Block]

	Options Outstanding					Restricted Stock Units Outstanding
	Number of shares (in thousands)			Weighted average exercise price		Number of shares (in thousands)			Weighted average fair value
Outstanding at April 1, 2018		4,542		$	2.83		309		$	2.17
Granted		51		$	1.41		50		$	1.41
Exercised/Released		-		$	-		(62	)	$	2.03
Cancelled		(53	)	$	2.71		-		$	-
Outstanding at June 30, 2018		4,540		$	2.82		297		$	2.08
Vested and expected to vest		4,391		$	2.84

Schedule of Share-based Compensation, Shares Available for Grant [Table Text Block]

	Shares Available for Grant
	(in thousands)
Balance at April 1, 2018		343
Options:
Granted		(51	)
Cancelled		45
Restricted Stock Units:
Granted		(50	)
Balance at June 30, 2018		287

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

			Options Outstanding				Options Vested
Range of Exercise Prices per share			Number of Shares (in thousands)		Weighted- Average Remaining Contractual Life (in years)		Number of Shares (in thousands)		Weighted- Average Exercise Price per Share
$1.35	—	$1.53		247		9.00		83	$	1.38
$1.64	—	$1.64		1,900		7.65		1,096	$	1.64
$1.75	—	$1.81		492		8.58		134	$	1.78
$2.00	—	$3.34		536		7.68		285	$	2.77
$3.44	—	$3.99		123		7.13		74	$	3.84
$4.32	—	$4.32		627		7.08		457	$	4.32
$5.18	—	$6.61		555		6.15		497	$	6.21
$6.83	—	$6.83		50		5.64		50	$	6.83
$7.20	—	$7.20		5		0.66		5	$	7.20
$11.40	—	$11.40		5		0.15		5	$	11.40
$1.35	—	$11.40		4,540		7.51		2,686	$	3.24

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months Ended
	June 30, 2018		June 30, 2017
Cost of revenues	$	42	$	28
Research and development		82		63
Sales and marketing		113		92
General and administrative		306		403
Impact on net loss	$	543	$	586

XML

Note 10 - Computation of Basic and Diluted Net Loss Per Share (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three Months Ended
	June 30, 2018		June 30, 2017
	(in thousands)
Options		4,504		1,854
Unvested restricted stock units		72		69
Warrants		2,262		2,262
Total common stock equivalents excluded from diluted net loss per common share		6,838		4,185

XML

Note 11 - Income Taxes (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

	Three Months Ended June 30, 2018
Domestic pre-tax loss	$	(4,113	)
Foreign pre-tax income		132
Total pre-tax loss	$	(3,981	)

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	Three Months Ended June 30, 2018
US	$	1
Foreign		(89	)
Total benefit from income taxes	$	(88	)

XML

Note 2 - Summary of Significant Accounting Policies 1 (Details Textual) $ in Thousands	3 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2018 USD ($)
Receivables, Net, Current, Total	$ 6,278		$ 6,605
Unbilled Receivables, Current	800		500
Deferred Revenue, Revenue Recognized	4,600
Deferred Sales Commission	500		$ 500
Amortization of Deferred Sales Commissions	200	$ 200
Capitalized Computer Software, Impairments	$ 0	$ 0
Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Number of Major Customers	0	0

XML

Note 2 - Summary of Significant Accounting Policies 2 (Details Textual) $ in Thousands	Jun. 30, 2018 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Amount	$ 23,300
Revenue, Remaining Performance Obligation, Percentage	48.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | Professional Services [Member]
Revenue, Remaining Performance Obligation, Amount	$ 700

XML

Note 2 - Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenues	$ 6,040	$ 6,988
Fair Value, Measurements, Recurring [Member]
Revenues	5,251	5,300
Fair Value, Measurements, Nonrecurring [Member]
Revenues	789	1,688
International [Member]
Revenues	2,156	2,322
International [Member] | Fair Value, Measurements, Recurring [Member]
Revenues	1,787	1,557
International [Member] | Fair Value, Measurements, Nonrecurring [Member]
Revenues	369	765
UNITED STATES
Revenues	3,884	4,666
UNITED STATES | Fair Value, Measurements, Recurring [Member]
Revenues	3,464	3,743
UNITED STATES | Fair Value, Measurements, Nonrecurring [Member]
Revenues	$ 420	$ 923

XML

Note 3 - Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Amortization of Intangible Assets, Total	$ 0.5	$ 0.6
Developed Technology Rights [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	1 year 135 days
Customer Relationships [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	1 year 281 days

XML

Note 3 - Goodwill and Other Intangible Assets - Summary of Goodwill (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2018 USD ($)
Balance	$ 15,458
Foreign currency translation adjustment	(406)
Balance	$ 15,052

XML

Note 3 - Goodwill and Other Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2018	Mar. 31, 2018
Gross Carrying Amount	$ 10,891	$ 10,891
Accumulated Amortization	(7,769)	(7,320)
Foreign Currency Translation Adjustment	239	381
Net Carrying Value	3,361	3,952
Developed Technology Rights [Member]
Gross Carrying Amount	5,034	5,034
Accumulated Amortization	(3,703)	(3,486)
Foreign Currency Translation Adjustment	156	219
Net Carrying Value	1,487	1,767
Customer Relationships [Member]
Gross Carrying Amount	5,857	5,857
Accumulated Amortization	(4,066)	(3,834)
Foreign Currency Translation Adjustment	83	162
Net Carrying Value	$ 1,874	$ 2,185

XML

Note 4 - Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Depreciation, Total	$ 10	$ 20

XML

Note 4 - Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018
Property and equipment, gross	$ 675	$ 631
Less: accumulated depreciation	(554)	(541)
Total property and equipment, net	121	90
Computer Equipment [Member]
Property and equipment, gross	385	356
Furniture and Equipment [Member]
Property and equipment, gross	232	232
Leasehold Improvements [Member]
Property and equipment, gross	$ 58	$ 43

XML

Note 5 - Capitalized Software Development Costs (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018
Capitalized Computer Software, Period Increase (Decrease), Total	$ 800	$ 600
Capitalized Computer Software, Amortization	500	400
Capitalized Computer Software, Net, Ending Balance	3,320		$ 2,994
Capitalized Computer Software, Impairments	$ 0	$ 0
Capitalized Software Development Costs [Member]
Finite-Lived Intangible Asset, Useful Life	3 years

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Note 6 - Operating Lease Commitments (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating Leases, Rent Expense, Total	$ 100	$ 100
Operating Leases, Income Statement, Sublease Revenue		$ 10

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Note 7 - Litigation and Contingencies (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Mar. 31, 2018
Standard and Extended Product Warranty Accrual, Ending Balance	$ 0	$ 0
Standard and Extended Product Warranty Accrual, Decrease for Payments, Total	0
Indemnification Agreement [Member]
Loss Contingency Accrual, Ending Balance	$ 0	$ 0

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Note 8 - Credit Facility and Convertible Notes (Details Textual)		3 Months Ended
	Jun. 14, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)
Long-term Line of Credit, Total		$ 11,000,000	$ 12,100,000
Line of Credit Facility, Remaining Borrowing Capacity		$ 2,000,000	$ 900,000
Line of Credit Facility Current Ratio Covenant		2
MILFAM II L.P. [Member] | Credit Facility Guarantee [Member]
Guarantor Obligations, Fees	$ 108,000
Guarantee Agreement, Monthly Fee, Percentage	10.00%
The Guarantors [Member] | Credit Facility Guarantee [Member]
Guarantor Obligations, Fees	$ 168,750
Guarantee Agreement, Monthly Fee, Percentage	10.00%
Western Alliance Bank [Member] | Line of Credit [Member]
Debt Instrument, Interest Rate, Maximum Interest Rate Before Basis Spread	4.75%

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Note 9 - Stockholders' Equity (Details Textual) - USD ($)		3 Months Ended
	Jun. 26, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term		7 years 69 days
Share Price		$ 1.41
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value		$ 0	$ 0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options		2,000,000
Allocated Share-based Compensation Expense, Total		$ 543,000	$ 586,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans		0	0
Proceeds from Issuance of Common Stock			$ 4,909,000
June 2017 Direct Offering [Member]
Share Price	$ 2.50
Stock Issued During Period, Shares, New Issues	2,184,000
Proceeds from Issuance of Common Stock	$ 4,900,000
June 2017 Direct Offering [Member] | Placement Agency Fees [Member]
Payments of Stock Issuance Costs	300,000
June 2017 Direct Offering [Member] | Other Offering Expenses [Member]
Payments of Stock Issuance Costs	$ 200,000
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Offering Date		85.00%
Allocated Share-based Compensation Expense, Total		$ 20,000	0.02
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Outstanding		0	$ 0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options		$ 400,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		1 year 25 days
Employee Stock Option [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		1 year 357 days

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Note 9 - Stockholders' Equity - Valuation Assumptions of Stock Options (Details) - Employee Stock Option [Member] - $ / shares	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Risk-free interest rate	2.77%	1.91%
Dividend yield	0.00%	0.00%
Expected volatility	61.40%	54.00%
Expected term (Year)	5 years 237 days	6 years 29 days
Weighted average fair value at grant date (in dollars per share)	$ 0.80	$ 1.81

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Note 9 - Stockholders' Equity - Activity Under the Equity Incentive Plans (Details) shares in Thousands	3 Months Ended
	Jun. 30, 2018 $ / shares shares
Outstanding, beginning balance (in shares)	4,542
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 2.83
Granted (in shares)	51
Granted (in dollars per share) | $ / shares	$ 1.41
Exercised/Released (in shares)
Exercised/Released (in dollars per share) | $ / shares
Cancelled (in shares)	(53)
Cancelled (in dollars per share) | $ / shares	$ 2.71
Outstanding, ending balance (in shares)	4,540
Outstanding, ending balance (in dollars per share) | $ / shares	$ 2.82
Vested and expected to vest (in shares)	4,391
Vested and expected to vest (in dollars per share) | $ / shares	$ 2.84
Restricted Stock Units (RSUs) [Member]
Outstanding, beginning balance (in shares)	309
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 2.17
Granted (in shares)	50
Granted (in dollars per share) | $ / shares	$ 1.41
Exercised/Released (in shares)	(62)
Exercised/Released (in dollars per share) | $ / shares	$ 2.03
Cancelled (in shares)
Outstanding, ending balance (in shares)	297
Outstanding, ending balance (in dollars per share) | $ / shares	$ 2.08

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Note 9 - Stockholders' Equity - Summary of Shares Available for Grant (Details) shares in Thousands	3 Months Ended
	Jun. 30, 2018 shares
Beginning balance (in shares)	343
Granted (in shares)	(51)
Cancelled (in shares)	45
Ending balance (in shares)	287
Restricted Stock Units (RSUs) [Member]
Granted (in shares)	(50)

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Note 9 - Stockholders' Equity - Options Outstanding and Exercisable, by Exercise Range (Details) shares in Thousands	3 Months Ended
	Jun. 30, 2018 $ / shares shares
Lower range of exercise price (in dollars per share)	$ 1.35
Upper range of exercise price (in dollars per share)	$ 11.40
Options outstanding, number of shares (in shares) | shares	4,540
Options outstanding, weighted-average remaining contractual life (Year)	7 years 186 days
Options vested, number of shares (in shares) | shares	2,686
Options vested, weighted-average exercise price per share (in dollars per share)	$ 3.24
Range 1 [Member]
Lower range of exercise price (in dollars per share)	1.35
Upper range of exercise price (in dollars per share)	$ 1.53
Options outstanding, number of shares (in shares) | shares	247
Options outstanding, weighted-average remaining contractual life (Year)	9 years
Options vested, number of shares (in shares) | shares	83
Options vested, weighted-average exercise price per share (in dollars per share)	$ 1.38
Range 2 [Member]
Lower range of exercise price (in dollars per share)	1.64
Upper range of exercise price (in dollars per share)	$ 1.64
Options outstanding, number of shares (in shares) | shares	1,900
Options outstanding, weighted-average remaining contractual life (Year)	7 years 237 days
Options vested, number of shares (in shares) | shares	1,096
Options vested, weighted-average exercise price per share (in dollars per share)	$ 1.64
Range 3 [Member]
Lower range of exercise price (in dollars per share)	1.75
Upper range of exercise price (in dollars per share)	$ 1.81
Options outstanding, number of shares (in shares) | shares	492
Options outstanding, weighted-average remaining contractual life (Year)	8 years 211 days
Options vested, number of shares (in shares) | shares	134
Options vested, weighted-average exercise price per share (in dollars per share)	$ 1.78
Range 4 [Member]
Lower range of exercise price (in dollars per share)	2.59
Upper range of exercise price (in dollars per share)	$ 3.34
Options outstanding, number of shares (in shares) | shares	536
Options outstanding, weighted-average remaining contractual life (Year)	7 years 248 days
Options vested, number of shares (in shares) | shares	285
Options vested, weighted-average exercise price per share (in dollars per share)	$ 2.77
Range 5 [Member]
Lower range of exercise price (in dollars per share)	4.32
Upper range of exercise price (in dollars per share)	$ 3.99
Options outstanding, number of shares (in shares) | shares	123
Options outstanding, weighted-average remaining contractual life (Year)	7 years 47 days
Options vested, number of shares (in shares) | shares	74
Options vested, weighted-average exercise price per share (in dollars per share)	$ 3.84
Range 6 [Member]
Lower range of exercise price (in dollars per share)	5.18
Upper range of exercise price (in dollars per share)	$ 4.32
Options outstanding, number of shares (in shares) | shares	627
Options outstanding, weighted-average remaining contractual life (Year)	7 years 29 days
Options vested, number of shares (in shares) | shares	457
Options vested, weighted-average exercise price per share (in dollars per share)	$ 4.32
Range 7 [Member]
Lower range of exercise price (in dollars per share)	6.83
Upper range of exercise price (in dollars per share)	$ 6.61
Options outstanding, number of shares (in shares) | shares	555
Options outstanding, weighted-average remaining contractual life (Year)	6 years 54 days
Options vested, number of shares (in shares) | shares	497
Options vested, weighted-average exercise price per share (in dollars per share)	$ 6.21
Range 8 [Member]
Lower range of exercise price (in dollars per share)	7.20
Upper range of exercise price (in dollars per share)	$ 6.83
Options outstanding, number of shares (in shares) | shares	50
Options outstanding, weighted-average remaining contractual life (Year)	5 years 233 days
Options vested, number of shares (in shares) | shares	50
Options vested, weighted-average exercise price per share (in dollars per share)	$ 6.83
Range 9 [Member]
Lower range of exercise price (in dollars per share)	11.40
Upper range of exercise price (in dollars per share)	$ 7.20
Options outstanding, number of shares (in shares) | shares	5
Options outstanding, weighted-average remaining contractual life (Year)	240 days
Options vested, number of shares (in shares) | shares	5
Options vested, weighted-average exercise price per share (in dollars per share)	$ 7.20
Range 10 [Member]
Lower range of exercise price (in dollars per share)	18.90
Upper range of exercise price (in dollars per share)	$ 11.40
Options outstanding, number of shares (in shares) | shares	5
Options outstanding, weighted-average remaining contractual life (Year)	54 days
Options vested, number of shares (in shares) | shares	5
Options vested, weighted-average exercise price per share (in dollars per share)	$ 11.40

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Note 9 - Stockholders' Equity - Effect of Recording Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Share-based compensation expense	$ 543	$ 586
Cost of Sales [Member]
Share-based compensation expense	42	28
Research and Development Expense [Member]
Share-based compensation expense	82	63
Sales and Marketing [Member]
Share-based compensation expense	113	92
General and Administrative [Member]
Share-based compensation expense	$ 306	$ 403

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Note 10 - Computation of Basic and Diluted Net Loss Per Share - Antidilutive Securities Excluded From the Computation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Antidilutive securities (in shares)	6,838	4,185
Employee Stock Option [Member]
Antidilutive securities (in shares)	4,504	1,854
Restricted Stock Units (RSUs) [Member]
Antidilutive securities (in shares)	72	69
Warrant [Member]
Antidilutive securities (in shares)	2,262	2,262

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Note 11 - Income Taxes (Details Textual) $ in Millions	3 Months Ended
	Jun. 30, 2018 USD ($)
Unrecognized Tax Benefits, Ending Balance	$ 1.5
Earliest Tax Year [Member]
Open Tax Year	1998
Latest Tax Year [Member]
Open Tax Year	2018

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Note 11 - Income Taxes - Income (Loss) Before Income Taxes (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2018 USD ($)
Domestic pre-tax loss	$ (4,113)
Foreign pre-tax income	132
Total pre-tax loss	$ (3,981)

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Note 11 - Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
US	$ 1
Foreign	(89)
Total benefit from income taxes	$ (88)	$ 17

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Note 12 - Related Party Transactions (Details Textual) $ in Millions	3 Months Ended
	Jun. 30, 2018 USD ($)
Rental Payments [Member] | SCI Donapierre [Member]
Related Party Transaction, Amounts of Transaction	$ 0.1

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Note 13 - Subsequent Event (Details Textual) - USD ($)	Aug. 07, 2018	Jun. 14, 2018	Aug. 06, 2018
MILFAM II L.P. [Member] | Credit Facility Guarantee [Member]
Guarantor Obligations, Fees		$ 108,000
Guarantee Agreement, Monthly Fee, Percentage		10.00%
Subsequent Event [Member] | MILFAM II L.P. [Member] | Credit Facility Guarantee [Member]
Guarantor Obligations, Increase in Maximum Exposure, Undiscounted	$ 2,000,000
Guarantor Obligations, Maximum Exposure, Undiscounted	4,000,000		$ 2,000,000
Guarantor Obligations, Fees	$ 108,000
Guarantee Agreement, Monthly Fee, Percentage	10.00%
Western Alliance Bank [Member] | Line of Credit [Member]
Debt Instrument, Interest Rate, Maximum Interest Rate Before Basis Spread		4.75%
Western Alliance Bank [Member] | Subsequent Event [Member] | Line of Credit [Member]
Line of Credit Facility, Additional Borrowing Capacity	$ 2,000,000
Line of Credit Facility, Maximum Borrowing Capacity	15,000,000
Line of Credit Facility, Additional Limit Fees, Cash	40,000
Line of Credit Facility, Additional Limit Fees, Percentage of Additional Limit	$ 0.75
Debt Instrument, Interest Rate, Maximum Interest Rate Before Basis Spread	5.00%