blin20160901

Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company’s fiscal year end is

September 30.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant inter company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain 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 revenue and expenses during the reported periods. The most significant estimates included in these financial statements are the valuation of accounts receivable and long term assets, including intangibles, goodwill and deferred tax assets, stock based compensation, amounts of revenue to be recognized on service contracts in progress, unbilled receivables, and deferred revenue. Actual results could differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturity of

three

months or less from the date of purchase to be cash equivalents.

Concentration of Credit Risk, Significant Customers, and Off Balance Sheet Risk

may

exceed the federally insured limits. Management believes that the financial institutions that hold the Company’s deposits are financially sound and have minimal credit risk. Risks associated with cash and cash equivalents are mitigated by the Company’s investment policy, which limits the Company’s investing of excess cash into only money market mutual funds.

one

customer that contributed

10.2%

of revenue for fiscal

2016.

No customer contributed more than

10%

of total revenue in fiscal

2015.

The Company has no significant off balance sheets risks such as foreign exchange contracts, interest rate swaps, option contracts or other foreign hedging agreements.

Allowance for Doubtful Accounts

may

be required. The Company had

two

customers that had an accounts receivable balance of greater than

10%

of total accounts receivable at

September 30, 2016.

There were no customers that had an accounts receivable balance greater than

10%

September 30, 2015.

Revenue Recognition

Overview

The Company recognizes revenue as required by the

Revenue Recognition

Topic of the Codification. Revenue is generally recognized when all of the following conditions are satisfied:

(1)

there is persuasive evidence of an arrangement;

(2)

delivery has occurred or the services have been provided to the customer;

(3)

the amount of fees to be paid by the customer is fixed or determinable; and

(4)

the collection of the fees is reasonably assured. Billings made or payments received in advance of providing services are deferred until the period these services are provided.

The Company maintains a reseller channel to supplement our direct sales force for our iAPPS platform. Resellers are generally located in territories where the Company does not have a direct sales force. Customers generally sign a license agreement directly with the Company. Revenue from perpetual licenses sold through resellers is recognized upon delivery to the end user as long as evidence of an arrangement exists, collectability is probable, and the fee is fixed and determinable. Revenue for subscription licenses is recognized monthly as the services are delivered.

Digital Engagement

Services

Digital engagement services also include retained professional services contracted for on an “on call” basis or for a certain amount of hours each month. Such arrangements generally provide for a guaranteed availability of a number of professional services hours each month on a “use it or lose it” basis. For retained professional services sold on a stand alone basis the Company recognizes revenue as the services are delivered or over the term of the contractual retainer period. These arrangements do not require formal customer acceptance and do not grant any future right to labor hours contracted for but not used.

Managed Service Hosting

days’ notice. Revenue is recognized monthly as the hosting services are delivered. Set up fees paid by customers in connection with managed hosting services are deferred and recognized ratably over the longer of the life of the hosting period or the expected lives of customer relationships. The Company will continue to evaluate the length of the amortization period of the set up fees as the Company gains more experience with customer contract renewals.

Subscriptions and Perpetual Licenses

The Company licenses its software on either a perpetual or subscription basis. Customers who license the software on a perpetual basis receive rights to use the software for an indefinite time period and an option to purchase post customer support (“PCS”). For arrangements that consist of a perpetual license and PCS, as long as Vendor Specific Objective Evidence (“VSOE”) exists for the PCS, then PCS revenue is recognized ratably on a straight line basis over the period of performance and the perpetual license is recognized on a residual basis. Under the residual method, the fair value of the undelivered elements are deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and recognized as revenue, assuming all other revenue recognition criteria have been met.

Customers

may

also license the software on a subscription basis, which can be described as “Software as a Service” or “SaaS”. SaaS is a model of software deployment where an application is hosted as a service provided to customers across the Internet. Subscription agreements include access to the Company’s software application via an internet connection, the related hosting of the application, and PCS. Customers receive automatic updates and upgrades, and new releases of the products as soon as they become available. Customers cannot take possession of the software. Subscription agreements are either annual or month to month arrangements that provide for termination for convenience by either party upon

days’ notice. Revenue is recognized monthly as the services are delivered. Set up fees paid by customers in connection with subscription services are deferred and recognized ratably over the longer of the life of subscription period or the expected lives of customer relationships. The Company continues to evaluate the length of the amortization period of the set up fees as the Company gains more experience with customer contract renewals.

Multiple Element Arrangements

In accounting for multiple element arrangements, we follow either ASC Topic

605

985

Revenue Recognition Software

or ASC Topic

605

Revenue Recognition Multiple Element Arrangements

, as applicable.

In accordance with

Revenue Recognition: Multiple Deliverable Revenue Arrangement.

, each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met

(1)

the delivered item has value to the customer on a standalone basis and

(2)

for an arrangement that includes a right of return relative to the delivered item, delivery or performance of the delivered item is considered probable and within our control. If the deliverables do not meet the criteria for being a separate unit of accounting then they are combined with a deliverable that does meet that criterion. The accounting guidance also requires that arrangement consideration be allocated at the inception of an arrangement to all deliverables using the relative selling price method. The accounting guidance also establishes a selling price hierarchy for determining the selling price of a deliverable.

We determine selling price using VSOE, if it exists; otherwise, we use Third party Evidence (“TPE”). If neither VSOE nor TPE of selling price exists for a unit of accounting, we use Estimated Selling Price (“ESP”).

VSOE is generally limited to the price at which we sell the element in a separate stand alone transaction. TPE is determined based on the prices charged by the Company’s competitors for a similar deliverable when sold separately. It is difficult for us to obtain sufficient information on competitor pricing, so we

may

not be able to substantiate TPE. If we cannot establish selling price based on VSOE or TPE then we will use ESP. ESP is derived by considering the selling price for similar services and our ongoing pricing strategies. The selling prices used in the Company’s allocations of arrangement consideration are analyzed at minimum on an annual basis and more frequently if our business necessitates a more timely review. The Company has determined that the Company has VSOE on our SaaS offerings, certain application development services, managed hosting services, and PCS because we have evidence of these elements sold on a stand alone basis.

605

985,

when perpetual licenses are sold in multiple element arrangements including application development services where VSOE for the services has not been established, the license revenue is deferred and recognized using contract accounting. The Company has determined that services are not essential to the functionality of the software and it has the ability to make estimates necessary to apply proportional performance method. In those cases where perpetual licenses are sold in a multiple element arrangement that includes application development services where VSOE for the services has been established, the license revenue is recognized under the residual method and the application services are recognized upon delivery.

The Company also considers the categorization of the services, the timing of when the services contract was signed in relation to the signing of the perpetual license contract and delivery of the software, and whether the services can be performed by others. The Company has concluded that its application development services are not required for the customer to use the product but, rather enhance the benefits that the software can bring to the customer. In addition, the services provided do not result in significant customization or modification of the software and are not essential to its functionality, and can also be performed by the customer or a

third

party. If an application development services arrangement does qualify for separate accounting, the Company recognizes the perpetual license on a residual basis. If an application development services arrangement does not qualify for separate accounting, the Company recognizes the perpetual license under the proportional performance model as described above.

two

elements cannot be separated and must be recognized as

one

unit over the applicable service period. Set up fees paid by customers in connection with subscription arrangements are deferred and recognized ratably over the longer of the life of the hosting period or the expected lives of customer relationships, which generally range from

two

three

years. The Company continues to evaluate the length of the amortization period of the set up fees as we gain more experience with customer contract renewals and our newer product offerings.

Customer Payment Terms

Payment terms with customers typically require payment

days from invoice date. Payment terms

may

vary by customer but generally do not exceed

days from invoice date. Invoicing for digital engagement services are either monthly or upon achievement of milestones and payment terms for such billings are within the standard terms described above. Invoicing for subscriptions and hosting are typically issued monthly and are generally due in the month of service.

Warranty

Certain arrangements include a warranty period, which is generally

days from the completion of work. In hosting arrangements, the Company provides warranties of up time reliability. The Company continues to monitor the conditions that are subject to the warranties to identify if a warranty claim

may

arise. If it is determined that a warranty claim is probable, then any related cost to satisfy the warranty obligation is estimated and accrued. Warranty claims to date have been immaterial.

Reimbursable Expenses

In connection with certain arrangements, reimbursable expenses are incurred and billed to customers and such amounts are recognized as both revenue and cost of revenue.

Equipment and Improvements

The components of equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight line method over the estimated useful lives of the related assets

(three

five

years). Leasehold improvements are amortized using the straight line method over the lesser of the estimated useful life of the asset or the lease term. Repairs and maintenance costs are expensed as incurred.

Internal Use Software

Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditures will result in additional functionality. Capitalized costs are recorded as part of equipment and improvements. Training costs are expensed as incurred. Internal use software is amortized on a straight line basis over its estimated useful life, generally

three

years.

Research and Development and Software Development Costs

Software development costs that are capitalized are amortized to cost of sales over the estimated useful life of the software, typically

three

years. Capitalization ceases when a product is available for general release to customers. Capitalization costs are included in other assets in the consolidated financial statements. The Company capitalized

$142

and

$63

of costs in fiscal

2016

and fiscal

2015,

respectively.

Intangible Assets

All intangible assets have finite lives and are stated at cost, net of amortization. Amortization is computed over the estimated useful life of the related assets on a straight line method as follows:

Description	Estimated Useful Life (in years)
Developed and core technology		3
Non-compete agreements	3	-	6
Customer relationships	5	-	6
Trademarks and trade names	1	-	10

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of the business acquired. Goodwill is tested for impairment annually during the

fourth

quarter of every year and more frequently if events and circumstances indicate that the asset might be impaired. Goodwill is assessed at the consolidated level as

one

reporting unit. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. If this is the case, then performing the quantitative

two

step goodwill impairment test is unnecessary. An entity can choose not to perform a qualitative assessment for any or all of its reporting units, and proceed directly to the use of the

two

step impairment test. In assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the relevant events and circumstances that

may

impact the fair value and the carrying amount of a reporting unit are assessed. The identification of relevant events and circumstances and how these

may

impact a reporting unit’s fair value or carrying amount involve significant judgments by management. These judgments include the consideration of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, events which are specific to the company, and trends in the market price of our common stock. Each factor is assessed to determine whether it impacts the impairment test positively or negatively, and the magnitude of any such impact.

For fiscal

2016,

the Company performed the annual assessment of goodwill during the

fourth

quarter of

2016

and concluded that goodwill was not impaired. In estimating fair value, the Company performed a discounted cash flow analysis on the reporting unit to determine fair value. The inputs to the discounted cash flow model are considered level

in the fair value hierarchy. The impairment test performed by the Company indicated that the estimated fair value of the reporting unit was more than its corresponding carrying amount. As a result of the analyses performed, the Company assessed that goodwill was not impaired.

For fiscal

2015,

the Company performed the annual assessment of goodwill during the

fourth

quarter of

2015.

In estimating fair value, the Company performed a discounted cash flow analysis on the reporting unit to determine fair value. The inputs to the discounted cash flow model are considered level

in the fair value hierarchy. The impairment test performed by the Company indicated that the estimated fair value of the reporting unit was less than its corresponding carrying amount. As a result of the analyses performed, the Company recorded goodwill impairment charges of

$10.5

million

in 2015.

The Company records contingent consideration payments as additional purchase price and goodwill at the acquisition date. Any adjustments made within

one

year from the acquisition date are charged to goodwill. Any adjustment made after the

one

year refinement period will be charged to the consolidated statement of operations.

Valuation of Long Lived Assets

The Company periodically reviews its long lived assets, which consist primarily of property and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate the carrying amount of such assets

may

exceed their fair value. Recoverability of these assets is assessed using a number of factors including operating results, business plans, budgets, economic projections and undiscounted cash flows.

In addition, the Company’s evaluation considers non financial data such as market trends, product development cycles and changes in management’s market emphasis. For the definite lived intangible asset impairment review, the carrying value of the intangible assets is compared against the estimated undiscounted cash flows to be generated over the remaining life of the intangible assets. To the extent that the undiscounted future cash flows are less than the carrying value, the fair value of the asset is determined and impairment is recognized. If such fair value is less than the current carrying value, the asset is written down to the estimated fair value. There were no impairments in fiscal

2016

2015.

Deferred Revenue

months. Payments made for PCS fees are generally made in advance and are nonrefundable. Revenue from consulting and training services is recognized as the related services are performed, using a proportional performance model.

Fair Value of Financial Instruments

The Company believes the recorded values for accounts receivable and accounts payable approximate current fair values as of

September 30, 2016

and

September 30, 2015

because of their nature and durations. The carrying value of debt instruments also approximates fair value as of

September 30, 2016

and

September 30, 2015

based on acceptable valuation methodologies which use market data of similar size and situated debt issues.

ir Value Measurement

three

level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The hierarchy established under the Codification gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level

and the lowest priority to unobservable inputs (Level

3).

Level

–Quoted prices in active markets for identical assets or liabilities;

Level

– Observable inputs other than Level

prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level

– Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Foreign Currency

2016

and

2015

were

and

$(23),

respectively. Translation gains and losses related to monetary assets and liabilities denominated in a currency different from a subsidiary’s functional currency are included in the consolidated statements of operations.

Segment Information

The Company has sales offices in the United States that operate internally as

one

reportable operating segment because all of these locations have similar economic characteristics.

Stock Based Compensation

The Company accounts for stock based compensation in the consolidated statements of operations based on their fair values of the awards on the date of grant on a straight line basis over their vesting term. Compensation expense is recognized only for share based payments expected to vest. The Company estimates forfeitures at the date of grant based on the Company’s historical experience and future expectations.

Valuation of Stock Options and Warrants Issued to Non Employees

The Company measures expense for non employee stock based compensation and the estimated fair value of options exchanged in business combinations and warrants issued for services using the fair value method for services received or the equity instruments issued, whichever is more readily measured. The Company estimated the fair value of stock options issued to non employees using the Black Scholes Merton option valuation model.

The Company estimated the fair value of common stock warrants issued to non employees using the binomial options pricing model. The Company evaluates common stock warrants as they are issued to determine whether they should be classified as an equity instrument or a liability. Those warrants that are classified as a liability are carried at fair value at each reporting date, with changes in their fair value recorded in other income (expense) in the consolidated statements of operation.

Advertising Costs

Advertising costs are expensed when incurred. Such costs were

$621

and

$461

for fiscal

2016

and

2015,

respectively.

Employee Benefits

The Company sponsors a contributory

401(k)

plan allowing all full time employees who meet prescribed service requirements to participate. The Company is not required to make matching contributions, although the plan provides for discretionary contributions by the Company. The Company made no contributions in either fiscal

2016

or fiscal

2015.

Income Taxes

The Company does not provide for U.S. income taxes on the undistributed earnings of its Indian subsidiary, which the Company considers to be permanent investments.

Net Los

Per Share

Recent Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No.

2014

09,

Revenue from Contracts with Customers: Topic

606

(ASU

2014

09),

to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU

2014

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. ASU

2014

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 required under existing U.S. 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. In

July 2015,

the FASB approved a

one

year delay in the effective date. ASU

2014

is effective for annual reporting periods beginning after

December 15, 2017,

including interim reporting periods within that reporting period. Management is currently evaluating the impact of the adoption of ASU

2014

on its consolidated financial statements.

November 2015,

the FASB issued ASU

2015

17,

Balance Sheet Classification of Deferred Taxes, (the “Update”), which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. The Update is effective for financial statements issued for annual periods beginning after

December 15, 2016

and interim periods within those annual periods. Management does not expect the adoption of this Update to have a material impact on its consolidated financial position, results of operations or cash flows.

February 2016,

the FASB issued ASU No.

2016

02,

which is guidance on accounting for leases. ASU No,

2016

requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after

December 15, 2018.

Early adoption is permitted. The guidance requires the use of a modified retrospective approach. The Company is evaluating the impact of the guidance on its consolidated financial position, results of operations and related disclosures.

March 2016,

the FASB issued ASU No.

2016

09,

which amended guidance related to employee share based payment accounting. The new guidance simplifies several aspects of the accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public companies, the amendments in this standard are effective for annual periods beginning after

December 15, 2016,

and interim periods within those annual periods. Early adoption is permitted. Management does not expect the adoption of this Standard to have a material impact on our consolidated financial position, results of operations or cash flows.

April 2016,

the FASB issued ASU No.

2016

10,

which adds further guidance on identifying performance obligations and improves the operability and understanding of the licensing implementation guidance.

May 2016,

the FASB issued ASU

2016

12,

which addresses narrow scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. Management is evaluating the new guidelines to determine if they will have a significant impact on consolidated results of operation, financial condition or cash flows.

August 2016,

the FASB issued ASU

2016

15,

which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows, specifically certain cash receipts and cash payments. The standard is effective for public business entities financial statements issued for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective method.

Management does not expect the adoption of this Standard to have a material impact on our consolidated cash flows.

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Note 3 - Accounts Receivable and Unbilled Receivables

12 Months Ended

Sep. 30, 2016

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Accounts Receivable and Unbilled Receivables

Accounts receivable and unbilled receivables consists of the following:

	As of September 30,
	2016			2015
Accounts receivable	$	2,627		$	2,228
Unbilled receivables		60			306
Subtotal		2,687			2,534
Allowance for doubtful accounts		(138	)		(71	)
Accounts receivable and unbilled receivables, net	$	2,549		$	2,463

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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Note 4 - Equpment and Improvements

12 Months Ended

Sep. 30, 2016

Property, Plant and Equipment Disclosure [Text Block]

Equipment and Improvements

Equipment and improvements consists of the following:

	As of September 30,
	2016			2015
Furniture and fixtures	$	713		$	1,208
Purchased software		1,043			1,119
Computers and equipment		4,080			4,254
Leasehold improvements		1,223			1,555
Total cost		7,059			8,136
Less accumulated depreciation		(6,547	)		(6,821	)
Equipment and improvements, net	$	512		$	1,315

Depreciation and amortization on the above assets was

$707

and

$1.1

million in fiscal

2016

and

2015,

respectively. During fiscal

2016

and

2015,

the Company disposed of

$1.1

million and

$598,

respectively, of fixed assets related to the downsizing of offices, of which

$67

and

$161,

respectively, were recorded as restructuring expenses in the consolidated statement of operations.

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Note 5 - Fair Value Measurement and Fair Value of Financial Instruments

12 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Text Block]

Fair Value Measurement and Fair Value of Financial Instruments

September 30, 2016

and

2015

because of their short term nature and durations. The carrying value of debt instruments also approximates fair value as of

September 30, 2016

and

2015

based on acceptable valuation methodologies which use market data of similar size and situated debt issues.

Assets and liabilities of the Company measured at fair value on a recurring basis as of

September 30, 2016

and

2015

are as follows:

	As of September 30, 2016
	Level 1		Level 2		Level 3		Total

Liabilities:
Contingent acquisition consideration	$	-	$	-	$	75	$	75
Total Liabilities	$	-	$	-	$	75	$	75

	As of September 30, 2015
	Level 1		Level 2		Level 3		Total

Liabilities:
Contingent acquisition consideration	$	-	$	-	$	468	$	468
Total Liabilities	$	-	$	-	$	468	$	468

The Company determines the fair value of acquisition related contingent consideration based on assessment of the probability that the Company would be required to make such future payments. Changes to the fair value of contingent consideration are recorded in general and administrative expenses. The following table provides a rollforward of the fair value, as determined by Level

inputs, of the contingent consideration.

The following table summarizes the changes in contingent consideration for the fiscal year ended

September 30, 2016

and

2015.

	Year Ended September 30,
	2016			2015
Balance at beginning of period	$	468		$	868
Additions		-			136
Payments		(393	)		(509	)
Other adjustments		-			(27	)
Balance at end of period	$	75		$	468

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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Note 6 - Intangible Assets

12 Months Ended

Sep. 30, 2016

Intangible Assets Disclosure [Text Block]

. Intangible Assets

Intangible assets are comprised as follows:

	As of September 30,
	2016		2015
Domain and trade names	$	10	$	10
Customer related		392		802
Non-compete agreements		146		216
Balance at end of period	$	548	$	1,028

Total amortization expense of

$480

and

$554

related to intangible assets for the years ended

September 30, 2016

and

2015,

respectively, is reflected in the consolidated statements of operations in depreciation and amortization

The estimated amortization expense for fiscal years

2017,

2018, 2019,

and

2020

is:

$285,

$242,

$11,

$10,

respectively.

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Note 7 - Goodwill

12 Months Ended

Sep. 30, 2016

Goodwill Disclosure [Text Block]

Goodwill

Changes in the carrying amount of goodwill are as follows:

	As of September 30,
	2016		2015
Balance at beginning of period	$	12,641	$	23,141
Impairment		-		(10,500	)
Balance at end of period	$	12,641	$	12,641

September 30, 2016.

As of

September 30, 2015,

the Company concluded that goodwill was impaired and recorded a

$10.5

million goodwill impairment loss. In fiscal

2015,

the fair value of our reporting unit was impacted by lower than forecasted revenues, volatility of the Company’s common stock, longer sales cycles, and higher operating losses. A comparison to the implied fair value of goodwill to its carrying value resulted in the impairment charge.

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Note 8 - Accrued Liabilities

12 Months Ended

Sep. 30, 2016

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

. Accrued Liabilities

Accrued liabilities consist of the following:

	As of September 30,
	2016		2015
Accrued interest	$	-	$	144
Accrued taxes		44		67
Compensation and benefits		194		167
Deferred rent (1)		141		174
Professional fees		133		145
Restructuring expenses		331		114
Other		103		235
Total	$	946	$	1,046

(1)

The deferred rent liability is being amortized as a reduction of rent expense over the lives of the leases. As of

September 30, 2016,

$141

was reflected in Accrued Liabilities and

$197

is reflected in Other Long Term Liabilities on the Consolidated Balance Sheet

deferred rent liabilities.

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Note 9 - Debt

12 Months Ended

Sep. 30, 2016

Debt Disclosure [Text Block]

. Debt

Debt consists of the following:

	As of September 30,
	2016		2015
Line of credit borrowings	$	2,115	$	2,695
Bank term loan		-		250
Secured subordinated convertible debt		-		3,000
Term notes from shareholders		-		2,000
Subtotal debt	$	2,115	$	7,945
Other (debt discount warrants)	$	-	$	(158	)
Total debt	$	2,115	$	7,787
Less current portion	$	-	$	92
Long term debt, net of current portion	$	2,115	$	7,695

Line of Credit

and Bank Term Loan

June 2016,

the Company replaced its Loan and Security Agreement with BridgeBank (the “Bridgebank Agreement”) with a new Loan and Security Agreement with Heritage Bank of Commerce (“Heritage Agreement” or “Loan Agreement”). The Heritage Agreement has a term of

months and will expire on

June 9, 2018.

The Company will pay an annual commitment fee of

0.4%

of the commitment amount in the

first

year and

0.2%

in the

second

year. Borrowings are secured by all of the Company’s assets and all of the Company’s intellectual property. The Company will be required to comply with certain financial and reporting covenants including an Asset Coverage Ratio and an Adjusted EBITDA metric. The Heritage Agreement provides for up to

million of revolving credit advances which

may

be used for acquisitions and working capital purposes. Borrowings are limited to the lesser of (i)

million and (ii)

75%

of eligible receivables as defined. The Company can borrow up to

$1.0

million in out of formula borrowings for specified periods of time. The borrowings or credit advances

may

not exceed the monthly borrowing base capacity, which will fluctuate based on monthly accounts receivable balances. The Company

may

request credit advances if the borrowing capacity is more than the current outstanding loan advance, and must pay down the outstanding loan advance if it exceeds the borrowing capacity. Borrowings accrue interest at Wall Street Journal Prime Rate plus

1.75%,

(currently

5.25%).

An amendment to the Heritage Agreement (“First Amendment”) was executed on

August 15, 2016

and included a waiver for the Adjusted EBITDA metric for the quarter ended

June 30, 2016.

The First Amendment also included a decrease in the revolving line of credit from

$3.0

million to

$2.5

million and the Adjusted EBITDA metric for the quarter ended

September 30, 2016.

The First Amendment also included a minimum cash requirement of

$500

in the Company’s accounts at Heritage, which was waived for the period ended

September 30, 2016.

December 14, 2016,

second

amendment to the Heritage Agreement (“Second Amendment”) was executed. The Second Amendment includes a minimum cash requirement of

$250

in its accounts at Heritage and the Adjusted EBITDA metrics for fiscal

2017.

As of

September 30, 2016,

the Company had an outstanding balance under the Loan Agreement of

$2.1

million.

million in connection with the out of formula borrowings. Under the terms of the Guaranty, the Guarantor authorizes Lender, without notice or demand and without affecting its liability hereunder, from time to time to: (a) renew, compromise, extend, accelerate, or otherwise change the time for payment, or otherwise change the terms, of the Indebtedness or any part thereof, including increase or decrease of the rate of interest thereon, or otherwise change the terms of the Indebtedness; (b) receive and hold security for the payment of this Guaranty or any Indebtedness and exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any such security; (c) apply such security and direct the order or manner of sale thereof as Lender in its discretion

may

determine; and (d) release or substitute any Guarantor or any

one

or more of any endorsers or other guarantors of any of the Indebtedness.

may

apply any deposit account to reduce the Indebtedness, and

may

foreclose any collateral as provided in the Uniform Commercial Code and in any security agreements between Lender and Guarantor.

The Bridgebank Agreement had an original term of

months and was extended to a maturity date of

March 31, 2017.

The Bridgebank Agreement provided for up to

million of revolving credit advances which could be used for acquisitions and working capital purposes. Borrowings were limited to the lesser of (i)

million and (ii)

80%

of eligible receivables as defined. The Company could borrow up to

$1.0

million in out of formula borrowings for specified periods of time. Borrowings accrued interest at BridgeBank’s prime plus

1.00%

(4.25%)

through

June 1, 2015

and then increased to prime plus

5.00%

(8.25%)

in accordance with an amendment to the Loan and Security Agreement (see below). The prime rate increased to

3.50%

December 17, 2015.

The Company paid an annual commitment fee of

0.25%. Borrowings

were secured by all of the Company’s assets and all of the Company’s intellectual property. The Company was also required to comply with certain financial and reporting covenants including an Asset Coverage Ratio.

December 2014,

the Company signed an Amendment to its Loan and Security Agreement with BridgeBank (the “Amendment”). As part of the Amendment Mr. Michael Taglich, a member of the Board of Directors, signed an unconditional guaranty (the “Guaranty”) and promise to pay the Company’s lender, BridgeBank, N.A all indebtedness in an amount not to exceed

million in connection with the out of formula borrowings. The Amendment also modified certain monthly financial reporting requirements and financial covenants on a prospective basis commencing as of the effective date of the Amendment. In

July 2015,

the Company further amended its Loan and Security Agreement with BridgeBank which further extended the Guaranty from Mr. Taglich to an amount not to exceed

million in connection with the out of formula borrowings.

September 30, 2015,

the Company had an outstanding short term bank term loan with BridgeBank of

$250

which was repaid in

October 2015.

Term Notes from Shareholder

The Company issued term notes to certain officers and directors of the Company. Term notes totaling

$2.45

million were issued to Michael Taglich from the period of

January 7, 2015

through

February 2016.

Term notes totaling

$450

were issued to Robert Taglich on

December 3, 2015

and

February 2016.

Michael Taglich and Robert Taglich are both shareholders and directors of the Company. In

February 2016,

Bridgeline issued a term note to Roger Kahn in the amount of

$100.

Roger Kahn is the Company’s President and Chief Executive Officer.

April 29, 2016,

the shareholders of the Company approved the proposal for

the issuance of up to

4,700,000

shares of the Company’s common stock upon conversion of the above outstanding term notes totaling

million. In

May 2016,

each of the holders of the outstanding term notes converted all outstanding principal and accrued but unpaid interest due under such outstanding term notes into shares of common stock of the Company at a conversion price of

$0.75

per share. In connection with the conversion, a total of

4,338,822

shares of common stock was issued. Michael Taglich received

3,576,045

shares of common stock, Robert Taglich received

626,599

shares of common stock and Roger Kahn received

136,178

shares of common stock. The Taglich Brothers, Inc acted as the Placement Agent for the conversion of these notes and were granted warrants to purchase

433,883

shares of common stock at a price of

$0.75

per share.

bordinated Convertible Debt

September 30, 2013

and

November 6, 2013,

Bridgeline Digital entered into Note Purchase Agreements with accredited investors pursuant to which Bridgeline Digital sold an aggregate of

$3.0

million of secured subordinated convertible notes (the "Convertible Notes"). The Convertible Notes were convertible at the election of the holder into shares of common stock of Bridgeline Digital at a conversion price equal to

$6.50

per share at any time prior to the maturity date, provided that no holder could convert the Convertible Notes if such conversion would result in the holder

beneficially owning more than

4.99%

of the number of shares of Bridgeline Digital common stock outstanding at the time of conversion.

April 29, 2016,

the shareholders of the Company approved a proposal for

issuance of up to

4,000,000

shares of the Company’s Common Stock upon conversion of the outstanding Convertible Notes with a new conversion price of

$0.75.

The conversion price to

$0.75

per share was provided as an incentive to the holders of such Convertible Notes to convert the outstanding principal into shares of Common Stock. As of

September 30, 2016,

all of the shares converted and a total of

4,000,000

shares of common stock was issued. Due to the reduction in the conversion price from

$6.50

per share to

$0.75

per share, the Company recorded an inducement charge of

$3.4

million in fiscal

2016.

The charge was recorded as a non operating expense in the Consolidated Income Statement with a corresponding credit to additional paid in capital.

Minimum Debt Obligations

As of

September 30, 2016,

the Company had minimum debt obligations of

$2,115,

related to the Heritage Bank line of credit, which has a maturity date of

June 2018.

XML 33 R19.htm IDEA: XBRL DOCUMENT

Note 10 - Restructuring Charges

12 Months Ended

Sep. 30, 2016

Restructuring and Related Activities Disclosure [Text Block]

Restructuring Charges

During the

second

half of fiscal

2015

and through fiscal

2016,

the Company’s management approved, committed to and initiated plans to restructure and further improve efficiencies by implementing cost reductions in line with the recent decrease in revenue. The Company renegotiated several office leases and relocated to smaller space, while also negotiating sub leases for the original space. In addition, the Company executed a general work force reduction and recognized costs for severance and termination benefits. These restructuring charges and accruals require estimates and assumptions, including contractual rental commitments or lease buy outs for vacated office space and related costs, and estimated sub lease income. The Company’s sub lease assumptions include the rates to be charged to a sub

tenant

and the timing of the sub lease arrangement. All of the vacated lease space is currently contractually occupied by a new sub

tenant

for the remaining life of the lease. These estimates and assumptions will be monitored on a quarterly basis for changes in circumstances with the corresponding adjustments reflected in the consolidated statement of operations.

In total, a charge of

$879

and

$496

was recorded to restructuring expenses for fiscal

2016

and fiscal

2015

in the consolidated statement of operations for the total lease expenses less sub lease rental income, other miscellaneous lease termination costs, loss on disposal of fixed assets, and costs for severance and termination benefits.

The following table summarizes the restructuring charges reserve activity:

	Employee Severence and Benefits			Facility Related and Other Costs			Total
Balance at beginning of period, October 1, 2014	$	-		$	-		$	-
Charges to operations		-			307			307
Cash disbursements		-			-			-
Changes in estimates		-			-			-
Balance at end of period, September 30, 2015	$	-		$	307		$	307
Charges to operations		505			158			663
Cash disbursements		(311	)		(223	)		(534	)
Changes in estimates		(1	)		5			4
Balance at end of period, September 30, 2016	$	193		$	247		$	440

As of

September 30, 2016

and

2015,

$331

and

$114,

respectively, is reflected in Accrued Liabilities and

$109

and

$193,

respectively, is reflected in Other Long Term Liabilities.

Accrued restructuring liabilities is comprised of the following:

	As of September 30,
	2016		2015

Facilities and related	$	195	$	259
Employee related		193		-
Other		52		48
Total	$	440	$	307

XML 34 R20.htm IDEA: XBRL DOCUMENT

Note 11 - Commitments and Contingencies

12 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Text Block]

. Commitments and Contingencies

Operating Lease Commitments

The Company leases facilities in the United States and India.

Future minimum rental commitments under non cancelable operating leases with initial or remaining terms in excess of

one

year at

September 30, 2016

were as follows:

Years Ending September 30,	Gross Amount		Sublease Income Amount			Net
2017	$	778	$	(214	)	$	564
2018		579		(105	)		474
2019		286		(108	)		178
2020		138		(73	)		65
Total	$	1,781	$	(500	)	$	1,281

The Company has no lease commitments that extend past fiscal

2020.

Rent expense for fiscal

2016

and

2015

was

$976

and

$1,500,

inclusive of sublease income

$70

for fiscal

2015.

Capital Lease Obligation

	As of September 30,
	2016			2015
Capital Lease Obligations	$	45		$	320
Less: Current portion		(45	)		(320	)
Capital Lease obligations	$	-		$	-

As of

September 30, 2016,

the Company’s future minimum lease payments due under capitalized lease obligations due in fiscal

2017

consist of

$45.

Other Commitments, Guarantees, and Indemnification Obligations

The Company frequently warrants that the technology solutions it develops for its clients will operate in accordance with the project specifications without defects for a specified warranty period, subject to certain limitations that the Company believes are standard in the industry. In the event that defects are discovered during the warranty period, and none of the limitations apply, the Company is obligated to remedy the defects until the solution that the Company provided operates within the project specifications. The Company is not typically obligated by contract to provide its clients with any refunds of the fees they have paid, although a small number of its contracts provide for the payment of liquidated damages upon default. The Company has purchased insurance policies covering professional errors and omissions, property damage and general liability that reduce its monetary exposure for warranty related claims and enable it to recover a portion of any future amounts paid.

The Company’s contracts typically provide for testing and client acceptance procedures that are designed to mitigate the likelihood of warranty related claims, although there can be no assurance that such procedures will be effective for each project. The Company has not paid any material amounts related to warranties for its solutions. The Company sometimes commits unanticipated levels of effort to projects to remedy defects covered by its warranties. The Company’s estimate of its exposure to warranties on contracts is immaterial as of

September 30, 2016.

The Company’s agreements with customers generally require the Company to indemnify the customer against claims in which the Company’s products infringe

third

party patents, copyrights, or trademarks and indemnify against product liability matters. As of

September 30, 2016

and

2015,

respectively, the Company has not experienced any losses related to the indemnification obligations and no significant claims with respect thereto were outstanding. The Company does not expect significant claims related to the indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Litigation

The Company is subject to ordinary routine litigation and claims incidental to its business. As of

September 30, 2016,

Bridgeline was not engaged with any material legal proceedings.

XML 35 R21.htm IDEA: XBRL DOCUMENT

Note 12 - Stockholders' Equity

12 Months Ended

Sep. 30, 2016

Stockholders' Equity Note Disclosure [Text Block]

2. Stock

holders

’

Equity

Preferred Stock

October 27, 2014,

the Company sold

200,000

shares of Series A convertible preferred stock (the “Preferred Stock”) at a purchase price of

$10.00

per share for gross proceeds of

$2.0

million in a private placement. Net proceeds to the Company after offering expenses were approximately

$1.8

million. The shares of Preferred Stock

may

be converted, at the option of the holder at any time, into such number of shares of common stock (“Conversion Shares”) equal (i) to the number of shares of Preferred Stock to be converted, multiplied by the stated value of

$10.00

(the “Stated Value”) and (ii) divided by the conversion price in effect at the time of conversion. The initial conversion price is

$3.25,

and is subject to adjustment in the event of stock splits or stock dividends. Any accrued but unpaid dividends on the shares of Preferred Stock to be converted shall also be converted in common stock at the conversion price. A mandatory provision also

may

provide that the Company will have the right to require the holders to convert shares of Preferred Stock into Conversion Shares if (i) the Company’s common stock has closed at or above

$6.50

per share for

ten

consecutive trading days and (ii) the Conversion Shares are (A) registered for resale on an effective registration statement or (B)

may

be resold pursuant to Rule

144.

Cumulative dividends are payable at a rate of

per year. If the Company does not pay the dividends in cash, then the Company

may

pay dividends in any quarter by delivery of additional shares of Preferred Stock (“PIK Election”).

If the Company shall make the PIK Election with respect to the dividend payable, it shall deliver a number of shares of Preferred Stock equal to (A) the aggregate dividend payable to such holder as of the end of the quarter

divided by

(B) the lesser of (x) the then effective Conversion Price or (y) the average VWAP for the

five (5)

consecutive Trading Days prior to such dividend payment date. If, after

two

years, any Preferred Stock are outstanding the cash dividend rate will increase to

12.0%

per year. The Company shall have the right to force conversion of the Preferred Stock into shares of Common Stock at any time after the Common Stock trades in excess of

$6.50

per share. The Preferred Shares shall vote with the Common on an as converted basis.

The company has paid all dividends to date as stock dividends. A total of

21,092

shares of preferred convertible stock has been issued to preferred shareholders, of which

8,222

were issued in fiscal

2015

and

12,870

were issued in fiscal

2016.

September 2016,

the Company elected to declare a stock dividend (PIK election) for the dividend payment date of

October 1, 2016.

The total stock dividend declared was in the amount of

3,366

shares.

Common

tock

March 2015,

the Company issued

40,834

shares of restricted common stock at

$2.40

four

members of its Board of Directors in lieu of cash payments for their services as board members. The shares vested in equal installments on a monthly basis through the end of the service period of

September 30, 2015.

The aggregate fair value of the shares is

$98

and was expensed over the service period.

October 2015,

the Company sold

680,000

shares of common stock at

$1.00

per share for gross proceeds of

$680

in a private placement. Net proceeds to the Company after offering expenses were approximately

$669.

February 2016,

the Company issued

107,692

shares of restricted common stock at

$0.91

four

members of its Board of Directors in lieu of cash payments for their services as board members. The shares vested in equal installments on a monthly basis through the end of the service period of

September 30, 2016.

The aggregate fair value of the shares is

$98

and was being expensed over the service period.

May 2016,

the Company issued

1,806,680

shares of common stock for net proceeds of

$1.2

million for the

first

closing in connection with the conversion of term notes issued to accredited investors, as approved by the shareholders on

April 29, 2016.

June 2016,

the Company issued an additional

860,005

shares of common stock for net proceeds of

$400

for the

second

closing in connection with the conversion of these term notes.

May 2016,

each of Michael Taglich, Robert Taglich, and Roger Kahn, holders of outstanding term notes, converted all outstanding principal and accrued but unpaid interest due under such outstanding term notes into shares of Common Stock of the Company at a conversion price of

$0.75

per share. In connection with the conversion, a total of

4,338,822

shares of common stock were issued. (See Term Notes from Shareholders.)

July 2016,

the Company sold

2,200,000

shares of common stock at

$0.75

per share for gross proceeds of

$1.7

million in a private placement. Net proceeds to the Company after offering expenses were approximately

$1.5

million.

Contingent Consideration

In connection with the acquisition of ElementsLocal on

August 1, 2013,

the Company issued

105,288

common shares to the sellers of ElementsLocal. In addition, contingent consideration not to exceed

67,693

shares of Bridgeline Digital common stock is contingently issuable to the sellers of ElementsLocal. The contingent consideration is payable quarterly over the

consecutive calendar quarters following the acquisition, contingent upon the acquired business achieving certain revenue targets.

As of

September 30, 2016,

the stockholders of ElementsLocal earned the full earnout of

67,693

shares of common stock, of which the final earnout shares totaling

5,642

were was issued in

November 2016.

In connection with the acquisition of MarketNet on

May 31, 2012,

contingent consideration of

40,867

shares of Bridgeline Digital common stock is contingently issuable to the sole stockholder of MarketNet. The contingent consideration is payable quarterly over the

consecutive calendar quarters following the acquisition, contingent upon the acquired business achieving certain operating and revenue targets. The common stock has been issued and is being held in escrow pending satisfaction of the applicable earnout targets. The full earnout of

40,867

shares of common stock was achieved as of

September 30, 2015.

In connection with the acquisition of Magnetic Corporation on

October 3, 2011,

contingent consideration of

33,334

shares of Bridgeline Digital common stock was contingently issuable to the sole stockholder of Magnetic. The contingent consideration was payable quarterly over the

consecutive calendar quarters following the acquisition, contingent upon the acquired business achieving certain operating and revenue targets. The full earnout of

33,334

shares of common stock was achieved as of

September 30, 2015.

Amended and Restated Stock Incentive Plan

1,250,000 shares

of common stock. This Plan expired in

August 2016.

A total of

1,248,089

shares of common stock were issued under the Plan, leaving a balance of

1,911

expired at the end of

August 2016.

April 29, 2016,

the stockholders approved a new plan, The

2016

Stock Incentive Plan (the

“2016

Plan”). The

2016

Plan authorizes the award of incentive stock options, non statutory stock options, restricted stock, unrestricted stock, performance shares, stock appreciation rights and any combination thereof to employees, officers, directors, consultants, independent contractors and advisors of the Company. Initially, a total of

2,500,000

shares of the Company’s Common Stock will be reserved for issuance under this new plan. There were

2,242,919

options outstanding reserved under both plans as of

September 30, 2016.

As of

September 30, 2016,

there are

1,505,170

shares available for future issuance.

Common Stock Warrants

may

also be issued to individuals or companies in exchange for services provided for the company. The warrants are typically exercisable

six

months after the issue date, expire in

five

years, and contain a cashless exercise provision and piggyback registration rights.

In fiscal

2015

and

2016,

the Company issued

401,539

and

950,551

to investors and placements agents, respectively. In fiscal

2015,

the

401,539

warrants were issued as follows:

61,539

warrants to the placement agent in connection with the private placement of series A convertible preferred stock and

340,000

to an investor shareholder in connection with

$2.0

million of term notes. In fiscal

2016,

the warrants were issued as follows:

486,668

warrants were issued to the placement agents in connection with private placements,

433,883

warrants were issued in connection with the conversion of term notes to shareholders, and

30,000

warrants were issued to an investor shareholder.

Stock warrants outstanding at

September 30, 2016

are as follows:

	Issue
Type	Date	Shares		Price		Expiration
Placement Agent	5/31/2012		43,479	$	7.00	5/31/2017
Investor	6/19/2013		92,000	$	6.25	6/19/2018
Placement Agent	6/19/2013		46,000	$	6.25	6/19/2018
Placement Agent	9/30/2013		30,770	$	6.50	9/30/2018
Placement Agent	11/6/2013		15,385	$	6.50	11/6/2018
Placement Agent	3/28/2014		64,000	$	5.25	3/28/2019
Placement Agent	10/28/2014		61,539	$	3.25	10/28/2019
Investor	12/31/2014		60,000	$	4.00	12/31/2019
Investor	2/12/2015		60,000	$	4.00	2/12/2020
Investor	5/12/2015		60,000	$	4.00	5/12/2020
Investor	7/21/2015		160,000	$	1.75	7/21/2018
Investor	12/31/2015		30,000	$	4.00	12/31/2020
Placement Agent	5/17/2016		433,883	$	0.73	5/17/2021
Placement Agent	5/11/2016		266,668	$	0.75	5/11/2021
Placement Agent	7/15/2016		220,000	$	0.92	7/15/2021
Total			1,643,724

Stock Option and Warrant Activity and Outstanding Shares

A summary of combined option and warrant activity follows:

	Stock Options					Stock Warrants
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
	Options			Price		Warrants			Price

Outstanding, September 30, 2014		707,128		$	4.90		301,740		$	6.25
Granted		339,300		$	1.81		401,541		$	2.99
Forfeited or expired		(170,451	)	$	4.89		-		$	-
Outstanding, September 30, 2015		875,977		$	3.68		703,281		$	4.38
Granted		1,688,789		$	0.84		950,551		$	0.88
Forfeited or expired		(321,847	)	$	3.95		(10,108	)	$	7.42
Outstanding, September 30, 2016		2,242,919		$	1.51		1,643,724		$	2.34

There were no options exercised during fiscal

2016

and

2015.

There were

345,111

and

441,502

options vested and exercisable as of

September 30, 2016

and

September 30, 2015,

respectively.

A summary of the status of nonvested shares is as follows:

			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Nonvested at September 30, 2015	434,475		$	1.99
Granted	1,688,789			0.60
Vested	(162,561	)		2.64
Forfeited	(62,895	)		2.38
Nonvested at September 30, 2016	1,897,808		$	0.70

Price ranges of outstanding and exercisable options as of

September 30, 2016

are summarized below:

Outstanding Options									Exercisable Options
					Weighted
					Average		Weighted		Number		Weighted
			Number		Remaining		Average		of		Average
Exercise			of		Contractual		Exercise		Options		Exercise
Price			Options		Life (Years)		Price		Exercisable		Price
$0.01	to	$1.00		1,583,789		9.88	$	0.82		-	$	-
$1.01	to	$3.00		387,067		8.71		1.49		106,468		1.77
$3.01	to	$5.00		94,463		4.17		3.96		90,464		3.93
$5.01	to	$8.20		177,600		6.18		6.33		148,179		6.45
				2,242,919		9.14	$	1.51		345,111	$	4.35

Compensation Expense

The Company estimates the fair value of stock options using the Black Scholes Merton option valuation model (the “Model”). The assumptions used to calculate compensation expense is as follows:

	Year Ended September 30,
	2016			2015
Expected option life in years		6.0			6.0
Expected volatility		84.12%			87.08%
Expected dividend rate		0.00%			0.00%
Risk free interest rate		1.33%			1.68%
Option exercise prices	$0.73	to	$1.21	$1.15	to	$3.25
Weighted average fair value of options granted during the year		$0.60			$1.30

Compensation expense is generally recognized on a graded accelerated basis over the vesting period of grants. During the years ended

September 30, 2016

and

2015,

the Company recognized

$214

and

$216,

respectively, as compensation expense related to share based payments. As of

September 30, 2016,

the Company had approximately

$836

of unrecognized compensation costs related to unvested options which the Company expects to recognize through fiscal

2019.

Employee Stock Purchase Plan

April 12, 2012,

the Company’s stockholders approved and adopted the Bridgeline Digital, Inc.

2012

Employee Stock Purchase Plan (the “ESPP”). Under the terms of the ESPP, the Company granted eligible employees the right to purchase shares of Bridgeline common stock through payroll deductions at a price equal to

85%

of the fair market value of Bridgeline common stock on the purchase termination date of defined offering or purchase periods. Each offering period was

six

months in duration. The ESPP permits the Company to offer up to

60,000

shares of common stock. The maximum number of shares of common stock that

may

be purchased by all participants in any purchase period

may

not exceed

30,000

shares. As of

September 30, 2015,

19,977

shares were issued under the ESPP plan. The ESPP Plan was cancelled in fiscal

2016

and no shares were issued under this plan in fiscal

2016.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.E)
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+ Details

XML 36 R22.htm IDEA: XBRL DOCUMENT

Note 13 - Income Taxes

12 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Text Block]

13.

Income Taxes

The components of the Company’s tax provision as of

September 30, 2016

and

2015

is as follows:

	Year Ended September 30,
	2016			2015
Currently payable:
Federal	$	-		$	-
State		(47	)		75
Foreign		-			20
Total current		(47	)		95

Federal		-			(248	)
State		-			(73	)
Total deferred		-			(321	)
Grand Total	$	(47	)	$	(226	)

	Year Ended September 30,
	2016			2015
Income tax benefit at the federal statutory rate of 34%	$	(2,606	)	$	(5,700	)
Permanent differences, net		494			2,733
State income tax benefit, net of federal tax		(475	)		(822	)
Change in valuation allowance		1,964			2,917
Foreign Taxes		-			20
Other		576			626
Total	$	(47	)	$	(226	)

As of

September 30, 2016,

the Company has a federal net operating loss (NOL) carryforward of approximately

$26

million that expires on various dates through

2036.

Internal Revenue Code Section

382

places a limitation on the amount of taxable income which can be offset by NOL carryforwards after a change in control of a loss corporation. Due to these “change of ownership” provisions, utilization of NOL carryforwards

may

be subject to an annual limitation in future periods. The Company has not performed a Section

382

analysis. However, if performed, Section

382

may

be found to limit potential future utilization of the Company’s NOL carryforwards. The Company also has approximately

$22

million in state NOLs which expire on various dates through

2036.

September 30, 2016

and

2015.

For the years ended

September 30, 2016

and

2015,

the valuation allowance for deferred tax assets increased

$1,964

and

$2,917,

respectively, which was mainly due to the increases in the net operating losses.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, are recognized as a component of tax expense.

2013

2016

generally remain open to examination by the IRS and state authorities.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	As of September 30,
	2016			2015
Deferred tax assets:
Current:
Bad debt reserve	$	54		$	28
Deferred revenue		489			563
Accrued vacation		3			8
Long-term
AMT carryforward		9			9
Net operating loss carryforwards		9,770			7,624
Depreciation		152			65
Intangibles		967			1,184
Contribution carryforward		28			27
Total deferred tax assets		11,472			9,508
Deferred tax liabilities:
Current:
Contract loss reserve		-			-
Long-term:
Intangibles		-			-
Depreciation		-			-
Total deferred tax liabilities		-			-
Total deferred tax assets, net, before valuation allowance		11,472			9,508
Valuation allowance		(11,472	)		(9,508	)
Net deferred tax assets	$	-		$	-

Undistributed losses of the Company’s foreign subsidiary amounted to approximately

$(415)

and

$(184)

September 30, 2016

and

2015,

respectively. These earnings are considered to be indefinitely reinvested; accordingly, no provision for US federal and state income taxes has been provided thereon. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company would be subject to both US income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the applicable foreign tax authority. Determination of the amount of unrecognized deferred US income tax liability is not material and the detailed calculations have not been performed. As of

September 30, 2016,

there would be minimal withholding taxes upon remittance of all previously unremitted earnings.

September 30, 2016

and

2015.

XML 37 R23.htm IDEA: XBRL DOCUMENT

Note 14 - Net Loss Per Share	12 Months Ended
Note 14 - Net Loss Per Share	Sep. 30, 2016
Notes to Financial Statements
Earnings Per Share [Text Block]	1 4 . Net Loss per Share For fiscal 2016 and 2015, all outstanding options to purchase shares of the Company’s common stock totaling 2,424,919 and 875,977, respectively, were considered as anti dilutive, as the options were all valued at more than the current market price. Common stock warrants of 1,643,724 and 703,281 for fiscal 2016 and fiscal 2015 were also excluded due to their anti dilutive nature. Also, excluded were contingent shares issuable in connection with the Magnetic, MarketNet and ElementsLocal acquisitions for fiscal 2015 and contingent shares issuable in connection with ElementsLocal acquisition for fiscal 2016.

XML 38 R24.htm IDEA: XBRL DOCUMENT

Note 15 - Related Party Transactions	12 Months Ended
Note 15 - Related Party Transactions	Sep. 30, 2016
Notes to Financial Statements
Related Party Transactions Disclosure [Text Block]	1 5 . Related Party Transactions In October 2013, Mr. Michael Taglich joined the Board of Directors. Michael Taglich is the Chairman and President of Taglich Brothers, Inc. a New York based securities firm. Taglich Brothers, Inc were the Placement Agents for many of the Company’s private offerings in 2012, 2013, 2014, and 2016. They were also the Placement Agent for the Company’s $3 million subordinated debt offering in 2013 and the Series A Preferred stock sale in 2015. Michael Taglich beneficially owns approximately 24% of Bridgeline stock. Michael Taglich has also guaranteed $2 million in connection with the Company’s out of formula borrowings on its credit facility with Heritage Bank. In consideration of previous loans by Michael Taglich and a personal guaranty delivered by Michael Taglich to BridgeBank, N.A. for the benefit of Bridgeline on December 19, 2014 (the “Guaranty”), on January 7, 2015 the Company issued Michael Taglich a warrant to purchase 60,000 shares of Common Stock of the Company at a price equal to $4.00 per share. On January 7, 2015, Bridgeline also entered into a side letter with Michael Taglich pursuant to which Bridgeline agreed in the event the Guaranty remains outstanding for a period of more than 12 months, on each anniversary of the date of issuance of the Guaranty while the Guaranty remains outstanding Bridgeline will issue Michael Taglich a warrant to purchase 30,000 shares of common stock, which warrant shall contain the same terms as the warrant issued to Michael Taglich on January 7, 2015. Since the Guaranty did remain outstanding for a period of more than 12 months, a warrant to purchase 30,000 shares of common stock was issued to Michael Taglich in January 2016 at a price of $4.00. Mr. Taglich was also issued warrants in fiscal 2015 in connection with shareholder term notes issued to him, which subsequently converted to shares of common stock in May 2016. He was issued three warrants totaling 180,000 shares at an exercise price of $4.00 and one warrant for 160,000 shares at an exercise price of $1.75 in connection with these notes. The warrants have a term of five years and are exercisable six months after the date of issuance. A fair market value of $270 was assigned to the warrants and recorded as a debt discount in current liabilities with the offsetting amount recorded to additional paid in capital in the Consolidated Balance Sheet. The fair market value of the warrants was being amortized on a straight line basis over their expected life. H owever, when the Company converted these term notes in May 2016, the remaining unamortized value was recorded as amortization expense. Total amortization expense of $158 was recorded in fiscal 2016 related to the warrants. Robert Taglich was appointed to the Company’s Board of Directors in May 2016. Robert Taglich beneficially owns approximately 8% of Bridgeline stock. Mr. Taglich was a consultant to the Company prior to his appointment to the Board of Directors. As compensation for his consulting services, Robert Taglich was granted 15,000 options to purchase the Company’s common stock at a price of $1.21. The fair value of the options at the time of grant was $0.83 per share. In connection with the equity conversion of the $3 million in term notes from shareholders that was completed in May 2016, the Taglich Brothers, Inc were granted Placement Agent warrants to purchase 433,883 shares of common stock at a price of $0.75 per share. Included in the distribution were 175,600 warrants to Michael Taglich and 142,758 warrants to Robert Taglich. The warrants expire in five years. In connection with the private offering in July 2016, the Taglich Brothers, Inc were granted Placement Agent warrants to purchase 220,000 shares of common stock at a price of $0.92 per share. Included in the distribution were 44,320 warrants to Michael Taglich and 36,180 warrants to Robert Taglich. The warrants expire in five years. The Company also had an annual service contract for $18 for fiscal 2016 and 2015 with Taglich Brothers, Inc to perform market research and many of the employees of Taglich Brothers, Inc are investors of the Company.

XML 39 R25.htm IDEA: XBRL DOCUMENT

Note 16 - Subsequent Events	12 Months Ended
Note 16 - Subsequent Events	Sep. 30, 2016
Notes to Financial Statements
Subsequent Events [Text Block]	16. Subsequent Events November Private Placement On November 3, 2016, the Company entered into Securities Purchase Agreements (“Purchase Agreements”) with certain institutional and accredited investors (the “Purchasers”) to sell an aggregate total of 2,135,362 shares of common stock for $0.48 per share (the “Purchaser Shares”) (the “November Private Placement. In total, the Company received net proceeds of $987. As additional consideration, the Company issued to the Purchasers warrants to purchase an aggregate total of 1,067,681 shares common stock (the “Purchaser Warrant Shares”). Each Purchaser Warrant expires five and one half years from the date of issuance and is exercisable for $0.70 per share beginning six months from the date of issuance, or May 9, 2017. The Company’s President and CEO (Roger Kahn) and two of the Company’s directors (Michael Taglich and Robert Taglich) purchased shares of common stock in this private offering. Roger Kahn purchased 86,000 common shares and Michael and Robert Taglich each purchased 153,846 common shares. Purchasers Warrant Shares were also issued as follows: 43,000 to Roger Kahn and 76,923 each to Michael and Robert Taglich. The Company and the Purchasers also entered into a Registration Rights Agreement (the “Registration Rights Agreement”), wherein the Company agreed to file a registration statement to register the Purchaser Shares and Purchaser Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”). The registration statement was filed with the SEC on November 14, 2016 to satisfy our obligations under the Registration Rights Agreement. Piggyback Registration Rights Prior to the November Private Placement, the Company completed several private placements of our securities, including equity and debt issuances. As a part of these transactions, the Company offered certain investors piggyback registration rights such that, in the event the Company filed a registration statement to register its securities under the Securities Act, the shares of common stock issued or issuable to those investors would be eligible to also be included in the registration statement to be registered under the Securities Act. Accordingly, in addition to the Purchaser Shares, a total of 3,778,747 shares are included in the registration statement pursuant to these previously granted piggyback registration rights. The Company completed the November Private Placement and the issuances of the Piggyback Shares, the Notes and the Piggyback Warrants in reliance on an exemption to registration afforded by Section 4(a)(2) of the Securities Act and rules promulgated thereunder, including Regulation D. Each of the selling stockholders has represented that they qualify as an “accredited investor” as defined in Rule 501(a) under the Securities Act. Bank Line of Credit On December 14, 2016, a second amendment to the Heritage Agreement (“Second Amendment”) was executed. The Second Amendment includes a minimum cash requirement of $250 in the Company’s accounts at Heritage and Adjusted EBITDA metrics for fiscal 2017.

XML 40 R26.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Basis of Presentation and Principles of Consolidation

The Company’s fiscal year end is

September 30.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain 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 revenue and expenses during the reported periods. The most significant estimates included in these financial statements are the valuation of accounts receivable and long term assets, including intangibles, goodwill and deferred tax assets, stock based compensation, amounts of revenue to be recognized on service contracts in progress, unbilled receivables, and deferred revenue. Actual results could differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturity of

three

months or less from the date of purchase to be cash equivalents.

Concentration of Credit Risk, Significant Customers, and Off Balance Sheet Risk

may

one

customer that contributed

10.2%

of revenue for fiscal

2016.

No customer contributed more than

10%

of total revenue in fiscal

2015.

The Company has no significant off balance sheets risks such as foreign exchange contracts, interest rate swaps, option contracts or other foreign hedging agreements.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Allowance for Doubtful Accounts

may

be required. The Company had

two

customers that had an accounts receivable balance of greater than

10%

of total accounts receivable at

September 30, 2016.

There were no customers that had an accounts receivable balance greater than

10%

September 30, 2015.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Overview

The Company recognizes revenue as required by the

Revenue Recognition

Topic of the Codification. Revenue is generally recognized when all of the following conditions are satisfied:

(1)

there is persuasive evidence of an arrangement;

(2)

delivery has occurred or the services have been provided to the customer;

(3)

the amount of fees to be paid by the customer is fixed or determinable; and

(4)

the collection of the fees is reasonably assured. Billings made or payments received in advance of providing services are deferred until the period these services are provided.

The Company maintains a reseller channel to supplement our direct sales force for our iAPPS platform. Resellers are generally located in territories where the Company does not have a direct sales force. Customers generally sign a license agreement directly with the Company. Revenue from perpetual licenses sold through resellers is recognized upon delivery to the end user as long as evidence of an arrangement exists, collectability is probable, and the fee is fixed and determinable. Revenue for subscription licenses is recognized monthly as the services are delivered.

Revenue Recognition, Sales of Services [Policy Text Block]

Digital Engagement

Services

Digital engagement services also include retained professional services contracted for on an “on call” basis or for a certain amount of hours each month. Such arrangements generally provide for a guaranteed availability of a number of professional services hours each month on a “use it or lose it” basis. For retained professional services sold on a stand alone basis the Company recognizes revenue as the services are delivered or over the term of the contractual retainer period. These arrangements do not require formal customer acceptance and do not grant any future right to labor hours contracted for but not used.

Managed Service Hosting

Revenue Recognition, Software [Policy Text Block]

Subscriptions and Perpetual Licenses

The Company licenses its software on either a perpetual or subscription basis. Customers who license the software on a perpetual basis receive rights to use the software for an indefinite time period and an option to purchase post customer support (“PCS”). For arrangements that consist of a perpetual license and PCS, as long as Vendor Specific Objective Evidence (“VSOE”) exists for the PCS, then PCS revenue is recognized ratably on a straight line basis over the period of performance and the perpetual license is recognized on a residual basis. Under the residual method, the fair value of the undelivered elements are deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and recognized as revenue, assuming all other revenue recognition criteria have been met.

Customers

may

Revenue Recognition, Multiple-deliverable Arrangements, Description [Policy Text Block]

Multiple Element Arrangements

In accounting for multiple element arrangements, we follow either ASC Topic

605

985

Revenue Recognition Software

or ASC Topic

605

Revenue Recognition Multiple Element Arrangements

, as applicable.

In accordance with

Revenue Recognition: Multiple Deliverable Revenue Arrangement.

, each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met

(1)

the delivered item has value to the customer on a standalone basis and

(2)

may

605

985,

third

two

elements cannot be separated and must be recognized as

one

two

three

years. The Company continues to evaluate the length of the amortization period of the set up fees as we gain more experience with customer contract renewals and our newer product offerings.

Receivables, Policy [Policy Text Block]

Customer Payment Terms

Payment terms with customers typically require payment

days from invoice date. Payment terms

may

vary by customer but generally do not exceed

Standard Product Warranty, Policy [Policy Text Block]

Warranty

Certain arrangements include a warranty period, which is generally

may

arise. If it is determined that a warranty claim is probable, then any related cost to satisfy the warranty obligation is estimated and accrued. Warranty claims to date have been immaterial.

Reimbursable Expenses, Policy [Policy Text Block]

Reimbursable Expenses

In connection with certain arrangements, reimbursable expenses are incurred and billed to customers and such amounts are recognized as both revenue and cost of revenue.

Property, Plant and Equipment, Policy [Policy Text Block]

Equipment and Improvements

The components of equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight line method over the estimated useful lives of the related assets

(three

five

Internal Use Software

Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditures will result in additional functionality. Capitalized costs are recorded as part of equipment and improvements. Training costs are expensed as incurred. Internal use software is amortized on a straight line basis over its estimated useful life, generally

three

years.

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

Research and Development and Software Development Costs

Software development costs that are capitalized are amortized to cost of sales over the estimated useful life of the software, typically

three

$142

and

$63

of costs in fiscal

2016

and fiscal

2015,

respectively.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Intangible Assets

Description	Estimated Useful Life (in years)
Developed and core technology		3
Non-compete agreements	3	-	6
Customer relationships	5	-	6
Trademarks and trade names	1	-	10

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of the business acquired. Goodwill is tested for impairment annually during the

fourth

quarter of every year and more frequently if events and circumstances indicate that the asset might be impaired. Goodwill is assessed at the consolidated level as

one

two

step goodwill impairment test is unnecessary. An entity can choose not to perform a qualitative assessment for any or all of its reporting units, and proceed directly to the use of the

two

may

impact the fair value and the carrying amount of a reporting unit are assessed. The identification of relevant events and circumstances and how these

may

For fiscal

2016,

the Company performed the annual assessment of goodwill during the

fourth

quarter of

2016

For fiscal

2015,

the Company performed the annual assessment of goodwill during the

fourth

quarter of

2015.

In estimating fair value, the Company performed a discounted cash flow analysis on the reporting unit to determine fair value. The inputs to the discounted cash flow model are considered level

$10.5

million

in 2015.

The Company records contingent consideration payments as additional purchase price and goodwill at the acquisition date. Any adjustments made within

one

year from the acquisition date are charged to goodwill. Any adjustment made after the

one

year refinement period will be charged to the consolidated statement of operations.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Valuation of Long Lived Assets

may

exceed their fair value. Recoverability of these assets is assessed using a number of factors including operating results, business plans, budgets, economic projections and undiscounted cash flows.

2016

2015.

Revenue Recognition, Deferred Revenue [Policy Text Block]

Deferred Revenue

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The Company believes the recorded values for accounts receivable and accounts payable approximate current fair values as of

September 30, 2016

and

September 30, 2015

because of their nature and durations. The carrying value of debt instruments also approximates fair value as of

September 30, 2016

and

September 30, 2015

based on acceptable valuation methodologies which use market data of similar size and situated debt issues.

Fair Value Measurement, Policy [Policy Text Block]

ir Value Measurement

three

level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The hierarchy established under the Codification gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level

and the lowest priority to unobservable inputs (Level

3).

Level

–Quoted prices in active markets for identical assets or liabilities;

Level

– Observable inputs other than Level

Level

– Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency

2016

and

2015

were

and

$(23),

Segment Reporting, Policy [Policy Text Block]

Segment Information

The Company has sales offices in the United States that operate internally as

one

reportable operating segment because all of these locations have similar economic characteristics.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock Based Compensation

Valuation of Stock Options and Warrants Issued to Non-employees, Policy [Policy Text Block]

Valuation of Stock Options and Warrants Issued to Non Employees

Advertising Costs, Policy [Policy Text Block]

Advertising Costs

Advertising costs are expensed when incurred. Such costs were

$621

and

$461

for fiscal

2016

and

2015,

respectively.

Pension and Other Postretirement Plans, Policy [Policy Text Block]

Employee Benefits

The Company sponsors a contributory

401(k)

2016

or fiscal

2015.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company does not provide for U.S. income taxes on the undistributed earnings of its Indian subsidiary, which the Company considers to be permanent investments.

Earnings Per Share, Policy [Policy Text Block]

Net Los

Per Share

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No.

2014

09,

Revenue from Contracts with Customers: Topic

606

(ASU

2014

09),

to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU

2014

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. ASU

2014

defines a

five

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

may

July 2015,

the FASB approved a

one

year delay in the effective date. ASU

2014

is effective for annual reporting periods beginning after

December 15, 2017,

including interim reporting periods within that reporting period. Management is currently evaluating the impact of the adoption of ASU

2014

on its consolidated financial statements.

November 2015,

the FASB issued ASU

2015

17,

December 15, 2016

February 2016,

the FASB issued ASU No.

2016

02,

which is guidance on accounting for leases. ASU No,

2016

December 15, 2018.

March 2016,

the FASB issued ASU No.

2016

09,

December 15, 2016,

April 2016,

the FASB issued ASU No.

2016

10,

which adds further guidance on identifying performance obligations and improves the operability and understanding of the licensing implementation guidance.

May 2016,

the FASB issued ASU

2016

12,

August 2016,

the FASB issued ASU

2016

15,

December 15, 2017,

Management does not expect the adoption of this Standard to have a material impact on our consolidated cash flows.

XML 41 R27.htm IDEA: XBRL DOCUMENT

Note 2 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Sep. 30, 2016

Schedule Of Estimated Useful Life of Intangible Assets [Table Text Block]

Description	Estimated Useful Life (in years)
Developed and core technology		3
Non-compete agreements	3	-	6
Customer relationships	5	-	6
Trademarks and trade names	1	-	10

XML 42 R28.htm IDEA: XBRL DOCUMENT

Note 3 - Accounts Receivable and Unbilled Receivables (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	As of September 30,
	2016			2015
Accounts receivable	$	2,627		$	2,228
Unbilled receivables		60			306
Subtotal		2,687			2,534
Allowance for doubtful accounts		(138	)		(71	)
Accounts receivable and unbilled receivables, net	$	2,549		$	2,463

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Note 4 - Equpment and Improvements (Tables)

12 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Table Text Block]

	As of September 30,
	2016			2015
Furniture and fixtures	$	713		$	1,208
Purchased software		1,043			1,119
Computers and equipment		4,080			4,254
Leasehold improvements		1,223			1,555
Total cost		7,059			8,136
Less accumulated depreciation		(6,547	)		(6,821	)
Equipment and improvements, net	$	512		$	1,315

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Note 5 - Fair Value Measurement and Fair Value of Financial Instruments (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	As of September 30, 2016
	Level 1		Level 2		Level 3		Total

Liabilities:
Contingent acquisition consideration	$	-	$	-	$	75	$	75
Total Liabilities	$	-	$	-	$	75	$	75

	As of September 30, 2015
	Level 1		Level 2		Level 3		Total

Liabilities:
Contingent acquisition consideration	$	-	$	-	$	468	$	468
Total Liabilities	$	-	$	-	$	468	$	468

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Year Ended September 30,
	2016			2015
Balance at beginning of period	$	468		$	868
Additions		-			136
Payments		(393	)		(509	)
Other adjustments		-			(27	)
Balance at end of period	$	75		$	468

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Note 6 - Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2016

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

	As of September 30,
	2016		2015
Domain and trade names	$	10	$	10
Customer related		392		802
Non-compete agreements		146		216
Balance at end of period	$	548	$	1,028

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Note 7 - Goodwill (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Goodwill [Table Text Block]

	As of September 30,
	2016		2015
Balance at beginning of period	$	12,641	$	23,141
Impairment		-		(10,500	)
Balance at end of period	$	12,641	$	12,641

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Note 8 - Accrued Liabilities (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Accrued Liabilities [Table Text Block]

	As of September 30,
	2016		2015
Accrued interest	$	-	$	144
Accrued taxes		44		67
Compensation and benefits		194		167
Deferred rent (1)		141		174
Professional fees		133		145
Restructuring expenses		331		114
Other		103		235
Total	$	946	$	1,046

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Note 9 - Debt (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Debt [Table Text Block]

	As of September 30,
	2016		2015
Line of credit borrowings	$	2,115	$	2,695
Bank term loan		-		250
Secured subordinated convertible debt		-		3,000
Term notes from shareholders		-		2,000
Subtotal debt	$	2,115	$	7,945
Other (debt discount warrants)	$	-	$	(158	)
Total debt	$	2,115	$	7,787
Less current portion	$	-	$	92
Long term debt, net of current portion	$	2,115	$	7,695

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Note 10 - Restructuring Charges (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

	Employee Severence and Benefits			Facility Related and Other Costs			Total
Balance at beginning of period, October 1, 2014	$	-		$	-		$	-
Charges to operations		-			307			307
Cash disbursements		-			-			-
Changes in estimates		-			-			-
Balance at end of period, September 30, 2015	$	-		$	307		$	307
Charges to operations		505			158			663
Cash disbursements		(311	)		(223	)		(534	)
Changes in estimates		(1	)		5			4
Balance at end of period, September 30, 2016	$	193		$	247		$	440

Restructuring and Related Costs [Table Text Block]

	As of September 30,
	2016		2015

Facilities and related	$	195	$	259
Employee related		193		-
Other		52		48
Total	$	440	$	307

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Note 11 - Commitments and Contingencies (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Years Ending September 30,	Gross Amount		Sublease Income Amount			Net
2017	$	778	$	(214	)	$	564
2018		579		(105	)		474
2019		286		(108	)		178
2020		138		(73	)		65
Total	$	1,781	$	(500	)	$	1,281

Schedule of Capital Leased Assets [Table Text Block]

	As of September 30,
	2016			2015
Capital Lease Obligations	$	45		$	320
Less: Current portion		(45	)		(320	)
Capital Lease obligations	$	-		$	-

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Note 12 - Stockholders' Equity (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

	Issue
Type	Date	Shares		Price		Expiration
Placement Agent	5/31/2012		43,479	$	7.00	5/31/2017
Investor	6/19/2013		92,000	$	6.25	6/19/2018
Placement Agent	6/19/2013		46,000	$	6.25	6/19/2018
Placement Agent	9/30/2013		30,770	$	6.50	9/30/2018
Placement Agent	11/6/2013		15,385	$	6.50	11/6/2018
Placement Agent	3/28/2014		64,000	$	5.25	3/28/2019
Placement Agent	10/28/2014		61,539	$	3.25	10/28/2019
Investor	12/31/2014		60,000	$	4.00	12/31/2019
Investor	2/12/2015		60,000	$	4.00	2/12/2020
Investor	5/12/2015		60,000	$	4.00	5/12/2020
Investor	7/21/2015		160,000	$	1.75	7/21/2018
Investor	12/31/2015		30,000	$	4.00	12/31/2020
Placement Agent	5/17/2016		433,883	$	0.73	5/17/2021
Placement Agent	5/11/2016		266,668	$	0.75	5/11/2021
Placement Agent	7/15/2016		220,000	$	0.92	7/15/2021
Total			1,643,724

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

	Stock Options					Stock Warrants
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
	Options			Price		Warrants			Price

Outstanding, September 30, 2014		707,128		$	4.90		301,740		$	6.25
Granted		339,300		$	1.81		401,541		$	2.99
Forfeited or expired		(170,451	)	$	4.89		-		$	-
Outstanding, September 30, 2015		875,977		$	3.68		703,281		$	4.38
Granted		1,688,789		$	0.84		950,551		$	0.88
Forfeited or expired		(321,847	)	$	3.95		(10,108	)	$	7.42
Outstanding, September 30, 2016		2,242,919		$	1.51		1,643,724		$	2.34

Schedule of Nonvested Share Activity [Table Text Block]

			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Nonvested at September 30, 2015	434,475		$	1.99
Granted	1,688,789			0.60
Vested	(162,561	)		2.64
Forfeited	(62,895	)		2.38
Nonvested at September 30, 2016	1,897,808		$	0.70

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

Outstanding Options									Exercisable Options
					Weighted
					Average		Weighted		Number		Weighted
			Number		Remaining		Average		of		Average
Exercise			of		Contractual		Exercise		Options		Exercise
Price			Options		Life (Years)		Price		Exercisable		Price
$0.01	to	$1.00		1,583,789		9.88	$	0.82		-	$	-
$1.01	to	$3.00		387,067		8.71		1.49		106,468		1.77
$3.01	to	$5.00		94,463		4.17		3.96		90,464		3.93
$5.01	to	$8.20		177,600		6.18		6.33		148,179		6.45
				2,242,919		9.14	$	1.51		345,111	$	4.35

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

	Year Ended September 30,
	2016			2015
Expected option life in years		6.0			6.0
Expected volatility		84.12%			87.08%
Expected dividend rate		0.00%			0.00%
Risk free interest rate		1.33%			1.68%
Option exercise prices	$0.73	to	$1.21	$1.15	to	$3.25
Weighted average fair value of options granted during the year		$0.60			$1.30

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details

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Note 13 - Income Taxes (Tables)

12 Months Ended

Sep. 30, 2016