Aware (AWRE) 10-Q 29 Oct 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 21, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	AWARE INC /MA/
Entity Central Index Key	1015739
Trading Symbol	awre
Current Fiscal Year End Date	-19
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		22,570,794
Document Type	10-Q
Document Period End Date	30-Sep-13
Amendment Flag	FALSE
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified
Current assets:
Cash and cash equivalents	$75,418	$71,074
Accounts receivable, net	2,754	3,457
Receivable from patent arrangement		1,121
Deferred tax assets	916	817
Prepaid expenses and other current assets	1,093	528
Total current assets	80,181	76,997
Property and equipment, net	5,644	5,904
Investments	2,962	2,010
Intangible assets	201
Long term deferred tax assets	659	943
Total assets	89,647	85,854
Current liabilities:
Accounts payable	243	328
Accrued expenses	101	148
Accrued compensation	589	817
Accrued professional	156	142
Due to customers	3,732
Deferred revenue	1,529	2,204
Total current liabilities	6,350	3,639
Long-term deferred revenue	40	319
Stockholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized, none outstanding
Common stock, $.01 par value; 70,000,000 shares authorized; issued and outstanding 22,570,794 as of September 30, 2013 and 22,509,518 as of December 31, 2012	226	225
Additional paid-in capital	100,917	100,561
Accumulated other comprehensive loss	-57	-50
Accumulated deficit	-17,829	-18,840
Total stockholders' equity	83,257	81,896
Total liabilities and stockholders' equity	$89,647	$85,854

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$1	$1
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)	$0.01	$0.01
Common stock, shares authorized	70,000,000	70,000,000
Common stock, shares issued	22,570,794	22,509,518
Common stock, shares outstanding	22,570,794	22,509,518

CONSOLIDATED_STATEMENTS_OF_COM

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenue:
Software licenses	$2,334	$3,387	$7,704	$8,070
Software maintenance	1,023	661	3,187	2,471
Services	943	724	2,179	2,100
Hardware sales			1,129
Royalties	170	484	737	1,599
Total revenue	4,470	5,256	14,936	14,240
Costs and expenses:
Cost of hardware sales			813
Cost of services	494	421	1,075	1,138
Research and development	1,452	1,466	4,504	4,431
Selling and marketing	931	1,069	2,998	3,143
General and administrative	922	854	2,580	2,915
Exit costs	2,832		2,832
Total costs and expenses;	6,631	3,810	14,802	11,627
Operating income (loss) before patent related income	-2,161	1,446	134	2,613
Gain on sale of patent assets		15,167		86,394
Income from patent arrangement			780
Operating income (loss) after patent related income	-2,161	16,613	914	89,007
Other income	27		27	85
Interest income	80	45	239	137
Income (loss) from continuing operations before income taxes	-2,054	16,658	1,180	89,229
Provision for (benefit from) income taxes	-901	6,578	169	23,248
Income (loss) from continuing operations	-1,153	10,080	1,011	65,981
Income from discontinued operations, net of income taxes		217		360
Net income (loss)	-1,153	10,297	1,011	66,341
Basic net income (loss) per share:
Basic net income (loss) per share from continuing operations (in dollars per share)	($0.05)	$0.45	$0.04	$3.05
Basic net income per share from discontinued operations (in dollars per share)	$0	$0.01	$0	$0.02
Basic net income (loss) per share (in dollars per share)	($0.05)	$0.46	$0.04	$3.07
Diluted net income (loss) per share:
Diluted net income (loss) per share from continuing operations (in dollars per share)	($0.05)	$0.45	$0.04	$3.01
Diluted net income per share from discontinued operations (in dollars per share)	$0	$0.01	$0	$0.02
Diluted net income (loss) per share (in dollars per share)	($0.05)	$0.46	$0.04	$3.03
Weighted-average shares - basic (in shares)	22,571	22,339	22,533	21,609
Weighted-average shares - diluted (in shares)	22,571	22,501	22,623	21,888
Comprehensive income (loss):
Net income (loss)	-1,153	10,297	1,011	66,341
Other comprehensive income:
Unrealized gains (losses) on available for sale securities	-26	-4	-6	16
Comprehensive income (loss)	($1,179)	$10,293	$1,005	$66,357

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income	$1,011	$66,341
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	325	343
Stock-based compensation	445	299
Gain on sale of patent assets		-86,394
Amortization of premium (discount) on investments	13	-24
Gain on sale of investments	-27	-85
Loss on disposal of property and equipment	27
Provision for doubtful accounts		4
Changes in assets and liabilities:
Accounts receivable	703	-277
Receivable from patent arrangement	1,121
Inventories		538
Prepaid expenses and other current assets	-565	-210
Deferred tax assets	185
Accounts payable	-85	-1
Accrued expenses, compensation, and professional	-261	-90
Accrued income taxes		5,339
Due to customers	3,732
Deferred revenue	-954	112
Net cash provided by (used in) operating activities	5,670	-14,105
Cash flows from investing activities:
Purchases of property and equipment	-117	-90
Proceeds from sale of property and equipment	24
Purchases of investments	-2,008	-1,017
Sales of investments	1,064	855
Purchase of intangible assets	-201
Proceeds from sale of patent assets, net		86,394
Net cash provided by (used in) investing activities	-1,238	86,142
Cash flows from financing activities:
Proceeds from issuance of common stock	46	5,896
Payment of dividends		-25,506
Excess tax benefits from stock-based compensation	-63	15,761
Payments made for taxes of employees who surrendered shares related to unrestricted stock	-71	-174
Net cash used in financing activities	-88	-4,023
Increase in cash and cash equivalents	4,344	68,014
Cash and cash equivalents, beginning of period	71,074	46,577
Cash and cash equivalents, end of period	75,418	114,591
Supplemental disclosure:
Cash paid for income taxes	$535	$2,388

Basis_of_Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2013
Basis Of Accounting [Abstract]
Basis of Presentation	A)	Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include all information and notes necessary for a complete presentation of our financial position, results of operations and cash flows, in conformity with generally accepted accounting principles.  We filed audited financial statements which included all information and notes necessary for such presentation for the three years ended December 31, 2012 in conjunction with our 2012 Annual Report on Form 10-K. This Form 10-Q should be read in conjunction with that Form 10-K.
	The accompanying unaudited consolidated balance sheets, statements of comprehensive income, and statements of cash flows reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of financial position at September 30, 2013, and of operations and cash flows for the interim periods ended September 30, 2013 and 2012.
	The results of operations for the interim period ended September 30, 2013 are not necessarily indicative of the results to be expected for the year.

Fair_Value_Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2013
Fair Value Disclosures [Abstract]
Fair Value Measurements	B)	Fair Value Measurements. The Financial Accounting Standards Board (“FASB”) Codification defines fair value, and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to the unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the FASB Codification are: i) Level 1 – valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; ii) Level 2 – valuations that are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and iii) Level 3 – valuations that require inputs that are both significant to the fair value measurement and unobservable.
	Cash and cash equivalents, which primarily include money market mutual funds, were $75.4 million and $71.1 million as of September 30, 2013 and December 31, 2012, respectively. We classified our cash equivalents of $70.4 million and $67.1 million as of September 30, 2013 and December 31, 2012, respectively, within Level 1 of the fair value hierarchy because they are valued using quoted market prices.
	Our investments, which consist of high yield corporate debt securities, are also classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. We categorize our investments as available-for-sale securities, and carry them at fair value in our financial statements.  We had $3.0 million and $2.0 million of available-for-sale investments as of September 30, 2013 and December 31, 2012, respectively.
	As of September 30, 2013, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands):
			Fair Value Measurement at September 30, 2013 Using:
			Quoted Prices in Active Markets for		Significant Other Observable Inputs		Significant Unobservable Inputs
			Identical Assets
			(Level 1)		(Level 2)		(Level 3)
	Corporate debt securities		$	2,962	$	-	$	-
	Money market funds (included in cash and cash equivalents)			70,408		-		-
	Total		$	73,370	$	-	$	-
	As of December 31, 2012, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands):
			Fair Value Measurement at December 31, 2012 Using:
			Quoted Prices in Active Markets for		Significant Other Observable Inputs		Significant Unobservable Inputs
			Identical Assets
			(Level 1)		(Level 2)		(Level 3)
	Corporate debt securities		$	2,010	$	-	$	-
	Money market funds (included in cash and cash equivalents)			67,050		-		-
	Total		$	69,060	$	-	$	-

Computation_of_Earnings_per_Sh

Computation of Earnings per Share	9 Months Ended
	Sep. 30, 2013
Earnings Per Share [Abstract]
Computation of Earnings per Share	C)	Computation of Earnings per Share. Basic earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding.  Diluted earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued.  For the purposes of this calculation, stock options are considered common stock equivalents in periods in which they have a dilutive effect.  Stock options that are anti-dilutive are excluded from the calculation.
	Net income per share is calculated as follows (in thousands, except per share data):
			Three Months Ended					Nine Months Ended
			September 30,					September 30,
			2013			2012		2013		2012
	Net income (loss):
	Income (loss) from continuing operations		($	1,153	)	$	10,080	$	1,011	$	65,981
	Income from discontinued operations			-			217		-		360
	Net income (loss)		($	1,153	)	$	10,297	$	1,011	$	66,341
	Shares outstanding:
	Weighted-average common shares outstanding			22,571			22,339		22,533		21,609
	Additional dilutive common stock equivalents			-			162		90		279
	Diluted shares outstanding			22,571			22,501		22,623		21,888
	Basic net income (loss) per share:
	Basic net income (loss) per share from continuing operations		($	0.05	)	$	0.45	$	0.04	$	3.05
	Basic net income per share from discontinued operations			0			0.01		0		0.02
	Basic net income (loss) per share		($	0.05	)	$	0.46	$	0.04	$	3.07
	Diluted net income (loss) per share:
	Diluted net income(loss) per share from continuing operations		($	0.05	)	$	0.45	$	0.04	$	3.01
	Diluted net income per share from discontinued operations			0			0.01		0		0.02
	Diluted net income (loss) per share		($	0.05	)	$	0.46	$	0.04	$	3.03
	For the three months ended September 30, 2013, common stock equivalents of 111,349 were not included in the per share calculation for diluted EPS, because we had a net loss and the effect of their inclusion would be anti-dilutive.
	For the three month periods ended September 30, 2013 and 2012, options to purchase 825,338 and 25,000 shares of common stock, respectively, were outstanding, but were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common stock and thus would be anti-dilutive.
	For the nine month periods ended September 30, 2013 and 2012, options to purchase 825,338 and 829,504 shares of common stock, respectively, were outstanding, but were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common stock and thus would be anti-dilutive.

StockBased_Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2013
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]
Stock-Based Compensation	D)	Stock-Based Compensation.  The following table presents stock-based employee compensation expenses included in our unaudited consolidated statements of comprehensive income (in thousands):
			Three Months Ended				Nine Months Ended
			September 30,				September 30,
			2013		2012		2013		2012
	Cost of services		$	12	$	2	$	23	$	14
	Research and development			26		6		53		68
	Selling and marketing			5		-		10		134
	General and administrative			174		13		359		70
	Income from discontinued operations			-		-		-		13
	Stock-based compensation expense		$	217	$	21	$	445	$	299
	Stock Option Grants. We grant stock options under our 2001 Nonqualified Stock Plan. We estimate the fair value of stock options using the Black-Scholes valuation model. This valuation model takes into account the exercise price of the award, as well as a variety of significant assumptions. The assumptions used to estimate the fair value of stock options include the expected term, the expected volatility of our stock over the expected term, the risk-free interest rate over the expected term, and our expected annual dividend yield. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of our stock options.  Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.
	Unrestricted Stock Grants. We also grant unrestricted shares of stock under our 2001 Nonqualified Stock Plan. Stock-based compensation expense for stock grants is determined based on the fair market value of our stock on the date of grant, provided the number of shares in the grant is fixed on the grant date.
	The following summarizes stock-based grants during 2013 and 2012:
		●	Stock Option Grants – We did not grant any stock options in the three and nine month periods ended September 30, 2013. We granted stock options for 0 shares and 50,000 shares in the three and nine month periods ended September 30, 2012, respectively.
		●	Unrestricted Stock Grants – We granted shares of unrestricted stock in July 2010 and April 2013.  The following summarizes those grants and their related impact on results of operations for the three and nine months ended September 30, 2013 and 2012:
	July 2010 Unrestricted Stock Grant.  In July 2010, we granted 575,443 shares of stock to directors, officers and employees. There was no stock-based compensation expense related to this grant in the three and nine month periods ended September 30, 2013. We expensed $0 and $189,000 of stock-based compensation expense related to this grant in the three and nine month periods ended September 30, 2012, respectively.
	April 2013 Unrestricted Stock Grant. In April 2013, we granted 130,000 shares of unrestricted stock to directors, officers and employees. The shares are to be issued in two equal installments shortly after June 30, 2013 and December 31, 2013, provided each grantee is serving as a director, officer or employee on those dates. We expensed $208,000 and $415,000 of stock-based compensation expense related to this grant in the three and nine months ended September 30, 2013, respectively.   The unamortized stock-based compensation charge associated with this grant as of September 30, 2013 is $208,000, which we anticipate will be charged to expense in the fourth quarter of 2013.

Business_Segments

Business Segments	9 Months Ended
	Sep. 30, 2013
Segment Reporting [Abstract]
Business Segments	E)	Business Segments. We organize ourselves into multiple segments reporting to the chief operating decision makers.  The following table provides reportable segment financial data for the three and nine month periods ended September 30, 2013 and 2012 (in thousands):
			Segments
			Biometrics		DSL Service						Total
			& Imaging		Assurance			Corporate			Company
	Three Months Ended September 30, 2013
	Revenue		$	4,144	$	156		$	170		$	4,470
	Operating income (loss) before patent related income			1,515		(3,457	)		(219	)		(2,161	)
	Other income								27			27
	Interest income								80			80
	Loss from continuing operations before taxes											(2,054	)
	Benefit from income taxes								(901	)		(901	)
	Loss from continuing operations											(1,153	)
	Income from discontinued operations, net of tax											-
	Net loss										($	1,153	)
	Three Months Ended September 30, 2012
	Revenue		$	4,287	$	485		$	484		$	5,256
	Operating income (loss) before patent related income			2,111		(446	)		(219	)		1,446
	Gain on sale of patent assets								15,167			15,167
	Interest income								45			45
	Income from continuing operations before taxes											16,658
	Provision for income taxes								6,578			6,578
	Income from continuing operations											10,080
	Income from discontinued operations, net of tax											217
	Net income										$	10,297
	Nine Months Ended September 30, 2013
	Revenue		$	12,982	$	1,217		$	737		$	14,936
	Operating income (loss) before patent related income			4,848		(4,266	)		(448	)		134
	Income from patent arrangement								780			780
	Other income								27			27
	Interest income								239			239
	Income from continuing operations before taxes											1,180
	Provision for income taxes								169			169
	Income from continuing operations											1,011
	Income from discontinued operations, net of tax											-
	Net income										$	1,011
	Nine Months Ended September 30, 2012
	Revenue		$	10,847	$	1,794		$	1,599		$	14,240
	Operating income (loss) before patent related income			4,725		(1,062	)		(1,050	)		2,613
	Gain on sale of patent assets								86,394			86,394
	Other income								85			85
	Interest income								137			137
	Income from continuing operations before taxes											89,229
	Provision for income taxes								23,248			23,248
	Income from continuing operations											65,981
	Income from discontinued operations, net of tax											360
	Net income										$	66,341
	We conduct our operations in the United States and sell our products and services to domestic and  international customers.  Revenues were generated from the following geographic regions (in thousands):
			Three Months Ended					Nine Months Ended
			September 30,					September 30,
			2013		2012			2013			2012
	United States		$	2,588	$	3,350		$	9,944		$	9,302
	Saudi Arabia			524		338			613			360
	Rest of World			1,358		1,568			4,379			4,578
			$	4,470	$	5,256		$	14,936		$	14,240

Recent_Accounting_Pronouncemen

Recent Accounting Pronouncements	9 Months Ended
	Sep. 30, 2013
Accounting Changes and Error Corrections [Abstract]
Recent Accounting Pronouncements	F)	Recent Accounting Pronouncements.  There are no recently issued accounting pronouncements applicable to the Company that have not been adopted as of September 30, 2013.

Gain_on_Sale_of_Patent_Assets

Gain on Sale of Patent Assets	9 Months Ended
	Sep. 30, 2013
Gain On Sale Of Patent Assets [Abstract]
Gain on Sale of Patent Assets	G)	Gain on Sale of Patent Assets.  We recorded a $15.2 million gain on the sale of patent assets in the three months ended September 30, 2012. This gain relates to a transaction we completed in September 2012 in which we sold a portion of our patent portfolio pertaining to digital subscriber line (“DSL”) technology for $16.0 million. The proceeds from the sale were reduced by $0.8 million of transaction costs.
	We recorded an $86.4 million gain on the sale of patent assets in the nine months ended September 30, 2012. This gain includes the $15.2 million gain described in the previous paragraph and a $71.2 million gain on the sale of patent assets that occurred in the second quarter of 2012.  In June 2012, we completed a transaction to sell patents pertaining to wireless technology for $75 million. The proceeds from that sale were reduced by $3.8 million of transaction costs.

Income_from_patent_arrangement

Income from patent arrangement	9 Months Ended
	Sep. 30, 2013
Income From Patent Arrangement [Abstract]
Income from patent arrangement	H)	Income from patent arrangement. We entered into an arrangement with an unaffiliated third party in 2010 under which we assigned patents in return for royalties on proceeds from patent monetization efforts by the third party.  We recorded $0 and $0.8 million of income from this patent arrangement in the three and nine months ended September 30, 2013, respectively.

Income_Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Income Taxes	I)	Income Taxes.  Income tax expense for the three ended September 30, 2013 was a tax benefit of $901,000.  Income tax expense for the nine months ended September 30, 2013 was $169,000.  Income tax expense for 2013 was based on the U.S. statutory rate of 34%, increased by state income taxes.  Year-to-date tax expense also reflects two items related to 2012, including:
		1	a tax benefit of $95,000 related to the 2012 research tax credit. This credit was extended retroactively back to January 1, 2012, by the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013; and
		2	a tax benefit of $148,000 related to a reduction in the estimate of the 2012 tax expense recorded in our 2012 financial statements.
	As of September 30, 2013, we had a total of $1.6 million of deferred tax assets for which we had recorded no valuation allowance.  We will continue to assess the level of valuation allowance in future periods.  Should evidence regarding the realizability of tax assets change at a future point in time, the valuation allowance will be adjusted accordingly.
	In addition to deferred tax assets carried on our balance sheet, we also had net federal and state research and development credit carryforwards available at December 31, 2012 of $5.1 million and $0.7 million. These credits were not recorded as tax assets as they relate to excess stock compensation deductions that may not be recorded as tax assets under generally accepted accounting principles until the amounts have been utilized to reduce our tax liability. To the extent that these assets are used to reduce future taxes, the benefit will be recorded as a reduction to additional paid-in capital.
	As a result of exit costs related to our DSL service assurance software business, we have revised our estimate of 2013 taxable income.  As a result, we do not expect to utilize any of our excess stock compensation benefits to reduce our tax liability in 2013. Accordingly, we have not recorded any tax benefit to additional paid-in capital in 2013.  As a separate matter, we reduced the benefit we recorded to additional paid-in capital in 2012 as a result of the reduction of our actual 2012 tax liability. The amount of the reduction to additional paid-in capital in 2013 related to 2012 was $63,000.
	Income tax expense related to continuing operations was $6.6 million and $23.2 million for the three and nine months ended September 30, 2012, respectively. Income tax expense in 2012 was driven by an $86.4 million gain on sale of patent assets. Income tax expense of $23.2 million for the nine months ended September 30, 2012 consisted of a $7.5 million current income tax liability plus a $15.8 million non-cash adjustment related to cumulative deduction for stock options in excess of book expense that was recorded to equity.

Discontinued_Operations

Discontinued Operations	9 Months Ended
	Sep. 30, 2013
Discontinued Operations and Disposal Groups [Abstract]
Discontinued Operations	J)	Discontinued Operations.  In January 2012, our Board of Directors approved the shutdown of our DSL service assurance hardware product line which was previously a component of our DSL Service Assurance Segment. We completed the shutdown in 2012 and no longer have any continuing involvement with or cash flows from this product line. The results of our DSL service assurance hardware product line have been included in discontinued operations in the consolidated statements of comprehensive income. Income from discontinued operations attributable to the DSL service assurance hardware product line was (in thousands):
			Three Months Ended
			September 30,				Nine Months Ended
							September 30,
			2013		2012		2013		2012
	Revenue		$	-	$	724	$	-	$	2,809
	Expenses			-		364		-		2,206
	Income before income taxes			-		360		-		603
	Income taxes			-		143		-		243
	Income from discontinued operations		$	-	$	217	$	-	$	360

DSL_Service_Assurance_Software

DSL Service Assurance Software Exit	9 Months Ended
	Sep. 30, 2013
Digital Subscriber Line Service Assurance Software Exit [Abstract]
DSL Service Assurance Software Exit	M)	DSL Service Assurance Software Exit.  In August 2013, our Board of Directors approved the shutdown of our DSL service assurance software product line, which is the remaining component of our DSL Service Assurance Segment.  We intend to provide limited support to customers until December 31, 2013 at which point we expect to complete the shutdown.  The results of operations for the DSL service assurance software product line have been reported in continuing operations for the three and nine month periods ended September 30, 2013 and 2012.  We anticipate the results of operations for this product line will be reported in discontinued operations commencing next quarter.
	We estimate our total shutdown costs to date to be approximately $3.0 million. Such costs comprise: i) $3.7 million of payments to customers to terminate contracts, which were offset by $1.2 million of deferred revenue obligations that were relieved as a result of such contract terminations; ii) $397,000 of severance and employee-related costs; and iii) $47,000 of asset write-offs.  We recorded $2.8 million of those costs in “Exit costs” in the consolidated statements of comprehensive income for the three months ended September 30, 2013. The remaining $165,000 of costs represents employee severance and retention bonuses for employees who have been retained to support customers through December 31, 2013.  We intend to charge those costs to expense in the three months ended December 31, 2013, if earned by employees.
	We may incur additional costs or receive additional income related to the termination of customer contracts, however we are unable to estimate those amounts at this time.
	At September 30, 2013, we recorded a liability for exit costs of $3.8 million. This liability comprises: i) $3.7 million of payments due to customers for contract terminations; and ii) $232,000 of severance and employee related costs earned by employees through September 30, 2013, less $176,000 of payments made to such employees before the end of the quarter.
	The following table is a rollforward of our exit costs liability accounts.  Customer contract termination costs were included in “Due to customers” and severance and employee-related costs were included in “Accrued compensation” in the consolidated balance sheets. (in thousands):
			Customer		Severance			Other			Total
			Contract		and Employee-Related Costs			Costs
			Termination Costs
	Balance at June 30, 2013		$	-	$	-		$	-		$	-
	Amount charged to expense			2,553		232			47			2,832
	Deferred revenue offset			1,179		-			-			1,179
	Payments/write-offs			-		(176	)		(47	)		(223	)
	Balance at September 30, 2013		$	3,732	$	56		$	-		$	3,788

Fair_Value_Measurements_Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2013
Fair Value Disclosures [Abstract]
Schedule of assets that are measured at fair value on a recurring basis
		Fair Value Measurement at September 30, 2013 Using:
		Quoted Prices in Active Markets for		Significant Other Observable Inputs		Significant Unobservable Inputs
		Identical Assets
		(Level 1)		(Level 2)		(Level 3)
	Corporate debt securities	$	2,962	$	-	$	-
	Money market funds (included in cash and cash equivalents)		70,408		-		-
	Total	$	73,370	$	-	$	-
		Fair Value Measurement at December 31, 2012 Using:
		Quoted Prices in Active Markets for		Significant Other Observable Inputs		Significant Unobservable Inputs
		Identical Assets
		(Level 1)		(Level 2)		(Level 3)
	Corporate debt securities	$	2,010	$	-	$	-
	Money market funds (included in cash and cash equivalents)		67,050		-		-
	Total	$	69,060	$	-	$	-

Computation_of_Earnings_per_Sh1

Computation of Earnings per Share (Tables)	9 Months Ended
	Sep. 30, 2013
Earnings Per Share [Abstract]
Schedule of net income per share
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2013			2012		2013		2012
	Net income (loss):
	Income (loss) from continuing operations	($	1,153	)	$	10,080	$	1,011	$	65,981
	Income from discontinued operations		-			217		-		360
	Net income (loss)	($	1,153	)	$	10,297	$	1,011	$	66,341
	Shares outstanding:
	Weighted-average common shares outstanding		22,571			22,339		22,533		21,609
	Additional dilutive common stock equivalents		-			162		90		279
	Diluted shares outstanding		22,571			22,501		22,623		21,888
	Basic net income (loss) per share:
	Basic net income (loss) per share from continuing operations	($	0.05	)	$	0.45	$	0.04	$	3.05
	Basic net income per share from discontinued operations		0			0.01		0		0.02
	Basic net income (loss) per share	($	0.05	)	$	0.46	$	0.04	$	3.07
	Diluted net income (loss) per share:
	Diluted net income(loss) per share from continuing operations	($	0.05	)	$	0.45	$	0.04	$	3.01
	Diluted net income per share from discontinued operations		0			0.01		0		0.02
	Diluted net income (loss) per share	($	0.05	)	$	0.46	$	0.04	$	3.03

StockBased_Compensation_Tables

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2013
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]
Schedule of stock-based employee compensation expense included in statements of comprehensive income		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2013		2012		2013		2012
	Cost of services	$	12	$	2	$	23	$	14
	Research and development		26		6		53		68
	Selling and marketing		5		-		10		134
	General and administrative		174		13		359		70
	Income from discontinued operations		-		-		-		13
	Stock-based compensation expense	$	217	$	21	$	445	$	299

Business_Segments_Tables

Business Segments (Tables)	9 Months Ended
	Sep. 30, 2013
Segment Reporting [Abstract]
Schedule of results of operations for reportable segments
		Segments
		Biometrics		DSL Service						Total
		& Imaging		Assurance			Corporate			Company
	Three Months Ended September 30, 2013
	Revenue	$	4,144	$	156		$	170		$	4,470
	Operating income (loss) before patent related income		1,515		(3,457	)		(219	)		(2,161	)
	Other income							27			27
	Interest income							80			80
	Loss from continuing operations before taxes										(2,054	)
	Benefit from income taxes							(901	)		(901	)
	Loss from continuing operations										(1,153	)
	Income from discontinued operations, net of tax										-
	Net loss									($	1,153	)
	Three Months Ended September 30, 2012
	Revenue	$	4,287	$	485		$	484		$	5,256
	Operating income (loss) before patent related income		2,111		(446	)		(219	)		1,446
	Gain on sale of patent assets							15,167			15,167
	Interest income							45			45
	Income from continuing operations before taxes										16,658
	Provision for income taxes							6,578			6,578
	Income from continuing operations										10,080
	Income from discontinued operations, net of tax										217
	Net income									$	10,297
	Nine Months Ended September 30, 2013
	Revenue	$	12,982	$	1,217		$	737		$	14,936
	Operating income (loss) before patent related income		4,848		(4,266	)		(448	)		134
	Income from patent arrangement							780			780
	Other income							27			27
	Interest income							239			239
	Income from continuing operations before taxes										1,180
	Provision for income taxes							169			169
	Income from continuing operations										1,011
	Income from discontinued operations, net of tax										-
	Net income									$	1,011
	Nine Months Ended September 30, 2012
	Revenue	$	10,847	$	1,794		$	1,599		$	14,240
	Operating income (loss) before patent related income		4,725		(1,062	)		(1,050	)		2,613
	Gain on sale of patent assets							86,394			86,394
	Other income							85			85
	Interest income							137			137
	Income from continuing operations before taxes										89,229
	Provision for income taxes							23,248			23,248
	Income from continuing operations										65,981
	Income from discontinued operations, net of tax										360
	Net income									$	66,341
Schedule of revenues generated from geographic regions
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2013		2012			2013			2012
	United States	$	2,588	$	3,350		$	9,944		$	9,302
	Saudi Arabia		524		338			613			360
	Rest of World		1,358		1,568			4,379			4,578
		$	4,470	$	5,256		$	14,936		$	14,240

Discontinued_Operations_Tables

Discontinued Operations (Tables)	9 Months Ended
	Sep. 30, 2013
Discontinued Operations and Disposal Groups [Abstract]
Schedule of income (loss) from discontinued operations		Three Months Ended
		September 30,				Nine Months Ended
						September 30,
		2013		2012		2013		2012
	Revenue	$	-	$	724	$	-	$	2,809
	Expenses		-		364		-		2,206
	Income before income taxes		-		360		-		603
	Income taxes		-		143		-		243
	Income from discontinued operations	$	-	$	217	$	-	$	360

DSL_Service_Assurance_Software1

DSL Service Assurance Software Exit (Tables)	9 Months Ended
	Sep. 30, 2013
Digital Subscriber Line Service Assurance Software Exit [Abstract]
Schedule of roll forward of exit costs liability
		Customer		Severance			Other			Total
		Contract		and Employee-Related Costs			Costs
		Termination Costs
	Balance at June 30, 2013	$	-	$	-		$	-		$	-
	Amount charged to expense		2,553		232			47			2,832
	Deferred revenue offset		1,179		-			-			1,179
	Payments/write-offs		-		(176	)		(47	)		(223	)
	Balance at September 30, 2013	$	3,732	$	56		$	-		$	3,788

Fair_Value_Measurements_Assets

Fair Value Measurements - Assets measured at fair value on a recurring basis and whose carrying values approximate their respective fair values (Details) (Fair value on recurring basis, USD $)	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified
Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	$73,370	$69,060
Fair Value Measurement, Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value
Fair Value Measurement, Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value
Corporate debt securities | Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debt securities, fair value	2,962	2,010
Corporate debt securities | Fair Value Measurement, Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debt securities, fair value
Corporate debt securities | Fair Value Measurement, Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debt securities, fair value
Money market funds (included in cash and cash equivalents) | Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds (included in cash and cash equivalents)	70,408	67,050
Money market funds (included in cash and cash equivalents) | Fair Value Measurement, Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds (included in cash and cash equivalents)
Money market funds (included in cash and cash equivalents) | Fair Value Measurement, Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds (included in cash and cash equivalents)

Fair_Value_Measurements_Detail

Fair Value Measurements (Detail Textuals) (USD $)	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
In Thousands, unless otherwise specified
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, primarily include money market funds	$75,418	$71,074	$114,591	$46,577
Corporate debt securities | Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	2,962	2,010
Money market funds (included in cash and cash equivalents) | Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents, primarily include money market funds	$70,408	$67,050

Computation_of_Earnings_per_Sh2

Computation of Earnings per Share - Summary of net income per share (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net income (loss):
Income (loss) from continuing operations	($1,153)	$10,080	$1,011	$65,981
Income from discontinued operations		217		360
Net income (loss)	($1,153)	$10,297	$1,011	$66,341
Shares outstanding:
Weighted-average common shares outstanding (in shares)	22,571	22,339	22,533	21,609
Additional dilutive common stock equivalents (in shares)		162	90	279
Diluted shares outstanding (in shares)	22,571	22,501	22,623	21,888
Basic net income (loss) per share:
Basic net income (loss) per share from continuing operations (in dollars per share)	($0.05)	$0.45	$0.04	$3.05
Basic net income per share from discontinued operations (in dollars per share)	$0	$0.01	$0	$0.02
Basic net income (loss) per share (in dollars per share)	($0.05)	$0.46	$0.04	$3.07
Diluted net income (loss) per share:
Diluted net income (loss) per share from continuing operations (in dollars per share)	($0.05)	$0.45	$0.04	$3.01
Diluted net income per share from discontinued operations (in dollars per share)	$0	$0.01	$0	$0.02
Diluted net income (loss) per share (in dollars per share)	($0.05)	$0.46	$0.04	$3.03

Computation_of_Earnings_per_Sh3

Computation of Earnings per Share (Detail Textuals)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Common stock equivalents
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock Share purchase (in shares)	111,349
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock Share purchase (in shares)	825,338	25,000	825,338	829,504

StockBased_Compensation_Summar

Stock-Based Compensation - Summary of stock-based employee compensation expenses (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$217	$21	$445	$299
Cost of services
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	12	2	23	14
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	26	6	53	68
Selling and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	5		10	134
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	174	13	359	70
Income from discontinued operations
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense				$13

StockBased_Compensation_Detail

Stock-Based Compensation (Detail Textuals) (USD $)	1 Months Ended		3 Months Ended		9 Months Ended
	Apr. 30, 2013	Jul. 31, 2010	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$217,000	$21,000	$445,000	$299,000
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted Stock options (in shares)				0		50,000
Unrestricted Stock Grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted Stock options (in shares)	130,000	575,443
Stock-based compensation expense			208,000	0	415,000	189,000
Unamortized stock-based compensation			$208,000		$208,000

Business_Segment_Results_of_op

Business Segment - Results of operations for reportable segments (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Revenue	$4,470	$5,256	$14,936	$14,240
Operating income (loss) before patent related income	-2,161	1,446	134	2,613
Gain on sale of patent assets		15,167		86,394
Income from patent arrangement			780
Other income	27		27	85
Interest income	80	45	239	137
Income (loss) from continuing operations before taxes	-2,054	16,658	1,180	89,229
Provision for (benefit from) income taxes	-901	6,578	169	23,248
Income (loss) from continuing operations	-1,153	10,080	1,011	65,981
Income from discontinued operations, net of tax		217		360
Net income (loss)	-1,153	10,297	1,011	66,341
Reportable Segment | Biometrics & Imaging
Segment Reporting Information [Line Items]
Revenue	4,144	4,287	12,982	10,847
Operating income (loss) before patent related income	1,515	2,111	4,848	4,725
Reportable Segment | DSL Service Assurance
Segment Reporting Information [Line Items]
Revenue	156	485	1,217	1,794
Operating income (loss) before patent related income	-3,457	-446	-4,266	-1,062
Corporate
Segment Reporting Information [Line Items]
Revenue	170	484	737	1,599
Operating income (loss) before patent related income	-219	-219	-448	-1,050
Gain on sale of patent assets		15,167		86,394
Income from patent arrangement			780
Other income	27		27	85
Interest income	80	45	239	137
Provision for (benefit from) income taxes	($901)	$6,578	$169	$23,248

Business_Segments_Revenues_wer

Business Segments - Revenues were generated from following geographic regions (Details 1) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Revenue	$4,470	$5,256	$14,936	$14,240
United States
Segment Reporting Information [Line Items]
Revenue	2,588	3,350	9,944	9,302
Saudi Arabia
Segment Reporting Information [Line Items]
Revenue	524	338	613	360
Rest of World
Segment Reporting Information [Line Items]
Revenue	$1,358	$1,568	$4,379	$4,578

Gain_on_Sale_of_Patent_Assets_

Gain on Sale of Patent Assets (Detail Textuals) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Jun. 30, 2012	Sep. 30, 2012
			Wireless patent	DSL patent
Finite-Lived Intangible Assets [Line Items]
Gain on sale of patent assets	$15,167,000	$86,394,000	$71,200,000	$15,200,000
Sale of patent			75,000,000	16,000,000
Transaction cost			$3,800,000	$800,000

Income_from_patent_arrangement1

Income from patent arrangement (Detail Textuals) (USD $)	3 Months Ended	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Income From Patent Arrangement [Abstract]
Income from patent arrangement		$780

Income_Taxes_Detail_Textuals

Income Taxes (Detail Textuals) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income tax expense	($901,000)	$6,578,000	$169,000	$23,248,000
Income tax U.S. statutory rate			34.00%
Tax benefit related to research tax credit				95,000
Tax benefit related to a reduction in the estimate of tax expense				148,000
Deferred tax assets	1,600,000		1,600,000
Total deferred tax assets of federal research and development credit carryforwards					5,100,000
Total deferred tax assets of state research and development credit carryforwards					700,000
Equity adjustment to additional paid-in capital			63,000
Gain on sale of patent assets				86,400,000
Current income tax liability		7,500,000		7,500,000
Non cash adjustment related to cumulative deduction for stock options in excess of book expense		$15,800,000		$15,800,000

Discontinued_Operations_Income

Discontinued Operations - Income from discontinued operations attributable to the DSL service assurance hardware product line (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Discontinued Operations and Disposal Groups [Abstract]
Revenue		$724		$2,809
Expenses		364		2,206
Income before income taxes		360		603
Income taxes		143		243
Income from discontinued operations		$217		$360

DSL_Service_Assurance_Software2

DSL Service Assurance Software Exit - A rollforward of our exit costs liability accounts (Details) (USD $)	3 Months Ended	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2013
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	2,832	2,832
Deferred revenue obligations	1,179
Payments/write-offs	-223
Balance at September 30, 2013	3,788	3,788
Customer Contract Termination Costs
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	2,553
Deferred revenue obligations	1,179
Payments/write-offs
Balance at September 30, 2013	3,732	3,732
Severance and Employee-Related Costs
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	232
Deferred revenue obligations
Payments/write-offs	-176
Balance at September 30, 2013	56	56
Other Costs
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	47
Deferred revenue obligations
Payments/write-offs	-47
Balance at September 30, 2013

DSL_Service_Assurance_Software3

DSL Service Assurance Software Exit (Detail Textuals) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
Estimated shutdown cost	$3,000,000
Liability for exit costs	3,788,000	3,788,000
Deferred revenue obligations	1,179,000
Amount charged to expense	2,832,000	2,832,000
Asset write-offs	47,000
Payments to employees	176,000
Severance and Employee-Related Costs
Restructuring Cost and Reserve [Line Items]
Liability for exit costs	56,000	56,000
Deferred revenue obligations
Amount charged to expense	232,000
Severance and employee-related costs	397,000
Customer Contract Termination Costs
Restructuring Cost and Reserve [Line Items]
Liability for exit costs	3,732,000	3,732,000
Deferred revenue obligations	1,179,000
Amount charged to expense	2,553,000
Employee Severance And Retention Bonus
Restructuring Cost and Reserve [Line Items]
Employee severance and retention bonuses	$165,000