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| June 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 2,195 | $ | 2,223 | ||||
| Restricted cash | 253 | 212 | ||||||
Trade receivables (net of allowance for doubtful accounts of $42 and $49 at June 30, 2013 and December 31, 2012, respectively) | 8,605 | 8,618 | ||||||
| Deferred tax assets | 719 | 785 | ||||||
| Other accounts receivable and prepaid expenses | 1,039 | 737 | ||||||
Total current assets | 12,811 | 12,575 | ||||||
| LONG-TERM ASSETS: | ||||||||
| Severance pay fund | 1,651 | 1,577 | ||||||
| Restricted cash | 442 | 381 | ||||||
| Non- current deferred tax assets | 452 | 438 | ||||||
| Long-term deposits and long-term assets | 40 | 66 | ||||||
| Property and equipment, net | 315 | 377 | ||||||
| Goodwill | 5,839 | 6,121 | ||||||
Total long-term assets | 8,739 | 8,960 | ||||||
Total assets | $ | 21,550 | $ | 21,535 | ||||
| June 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Unaudited | Audited | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short term bank loan | $ | 597 | $ | - | ||||
| Trade payables | 586 | 684 | ||||||
| Deferred revenues | 2,456 | 1,467 | ||||||
| Accrued expenses and other accounts payable | 2,524 | 2,750 | ||||||
Total current liabilities | 6,163 | 4,901 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Accrued severance pay | 1,869 | 1,808 | ||||||
Total long-term liabilities | 1,869 | 1,808 | ||||||
| COMMITMENTS, CONTINGENCIES AND CHARGES | ||||||||
| SHAREHOLDERS' EQUITY : | ||||||||
| Share capital - | ||||||||
| Ordinary shares of NIS 0.04 par value - | ||||||||
Authorized: 125,000,000 shares at June 30, 2013 and December 31, 2012; Issued and outstanding: 11,672,916 and 11,641,758 shares at June 30, 2013 and December 31, 2012, respectively | 129 | 129 | ||||||
| Additional paid-in capital | 36,179 | 36,033 | ||||||
| Accumulated other comprehensive loss | (1,900 | ) | (1,530 | ) | ||||
| Accumulated deficit | (20,890 | ) | (19,806 | ) | ||||
Total shareholders' equity | 13,518 | 14,826 | ||||||
Total liabilities and shareholders' equity | $ | 21,550 | $ | 21,535 | ||||
| August 8, 2013 | ||||
Date of approval of the financial statements | Gili Shalita Chief Financial Officer | Ido Schechter Chief Executive Officer |
Six months ended June 30, | Three months ended June 30, | Year ended December 31, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2012 | ||||||||||||||||
| Unaudited | Audited | |||||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Products | $ | 4,532 | $ | 7,443 | $ | 2,149 | $ | 3,688 | $ | 15,303 | ||||||||||
| Services | 8,589 | 8,265 | 4,219 | 4,336 | 16,027 | |||||||||||||||
Total revenues | 13,121 | 15,708 | 6,368 | 8,024 | 31,330 | |||||||||||||||
| Cost of revenues: | ||||||||||||||||||||
| Products | 853 | 512 | 344 | 283 | 1,218 | |||||||||||||||
| Services | 4,779 | 5,396 | 2,300 | 2,773 | 10,771 | |||||||||||||||
Total cost of revenues | 5,632 | 5,908 | 2,644 | 3,056 | 11,989 | |||||||||||||||
| Gross profit | 7,489 | 9,800 | 3,724 | 4,968 | 19,341 | |||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||
| Research and development, net | 1,460 | 1,337 | 706 | 649 | 2,609 | |||||||||||||||
| Selling and marketing | 4,726 | 4,240 | 2,552 | 2,163 | 8,733 | |||||||||||||||
| General and administrative | 2,127 | 2,884 | 1,044 | 1,260 | 5,087 | |||||||||||||||
Total operating costs and expenses | 8,313 | 8,461 | 4,302 | 4,072 | 16,429 | |||||||||||||||
| Operating income (loss) | (824 | ) | 1,339 | (578 | ) | 896 | 2,912 | |||||||||||||
| Financial expenses , net | 156 | 17 | 117 | 97 | 191 | |||||||||||||||
| Income (loss) from continuing operations before taxes on income | (980 | ) | 1,322 | (695 | ) | 799 | 2,721 | |||||||||||||
| Income tax expense (benefit) | 104 | (16 | ) | 87 | (53 | ) | 1,122 | |||||||||||||
| Net income (loss) | $ | (1,084 | ) | $ | 1,338 | $ | (782 | ) | $ | 852 | $ | 3,843 | ||||||||
Six months ended June 30, | Three months ended June 30, | Year ended December 31, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2012 | ||||||||||||||||
| Unaudited | Audited | |||||||||||||||||||
| Net earnings (loss) per share, (Note 3): | ||||||||||||||||||||
| Basic | $ | (0.09 | ) | $ | 0.12 | $ | (0.07 | ) | $ | 0.07 | $ | 0.34 | ||||||||
| Diluted | $ | (0.09 | ) | $ | 0.11 | $ | (0.07 | ) | $ | 0.07 | $ | 0.31 | ||||||||
| Other comprehensive income (loss), net of tax : | ||||||||||||||||||||
| Foreign currency translation adjustments | $ | (370 | ) | $ | (268 | ) | $ | 57 | $ | (433 | ) | $ | (80 | ) | ||||||
| Comprehensive income (loss) | $ | 1,454 | $ | 1,070 | $ | (725 | ) | $ | 419 | $ | 3,763 | |||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Ordinary shares | paid-in | comprehensive | Accumulated | |||||||||||||||||||||
| Number | Amount | capital | income (loss) | deficit | Total | |||||||||||||||||||
| Balance at January 1, 2012 | 10,873,558 | $ | 121 | $ | 34,118 | $ | (1,450 | ) | $ | (23,649 | ) | $ | 9,140 | |||||||||||
| Exercise of Warrants and stock options | 518,200 | 5 | 759 | - | - | 764 | ||||||||||||||||||
| Issuance of Ordinary shares in conjunction with consulting services | 250,000 | 3 | 810 | - | - | 813 | ||||||||||||||||||
| Change in foreign currency translation adjustments, net *) | - | - | - | (80 | ) | - | (80 | ) | ||||||||||||||||
| Net profit | - | - | - | - | 3,843 | 3,843 | ||||||||||||||||||
Stock-based compensation expenses from options granted to employees and non-employees | - | - | 346 | - | - | 346 | ||||||||||||||||||
| Balance at December 31, 2012 | 11,641,758 | 129 | 36,033 | (1,530 | ) | (19,806 | ) | 14,826 | ||||||||||||||||
| Exercise of stock options and Warrants | 31,158 | **) - | 60 | - | - | 60 | ||||||||||||||||||
| Change in foreign currency translation adjustments, net *) | - | - | - | (370 | ) | - | (370 | ) | ||||||||||||||||
| Net loss | - | - | - | - | (1,084 | ) | (1,084 | ) | ||||||||||||||||
| Stock-based compensation expenses from options granted to employees and non-employees | - | - | 86 | - | - | 86 | ||||||||||||||||||
| Balance at June 30, 2013 (unaudited) | 11,672,916 | $ | 129 | $ | 36,179 | $ | (1,900 | ) | $ | (20,890 | ) | $ | 13,518 | |||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | other | |||||||||||||||||||||||
| Ordinary shares | paid-in | comprehensive | Accumulated | |||||||||||||||||||||
| Number | Amount | capital | income (loss) | deficit | Total | |||||||||||||||||||
| Balance at January 1, 2012 | 10,873,558 | $ | 121 | $ | 34,118 | $ | (1,450 | ) | $ | (23,649 | ) | $ | 9,140 | |||||||||||
| Exercise of stock options and Warrants | 462,707 | 5 | 702 | - | - | 707 | ||||||||||||||||||
| Issuance of Ordinary shares in conjunction with consulting services | 150,000 | 2 | 494 | - | - | 496 | ||||||||||||||||||
| Change in foreign currency translation adjustments, net*) | - | - | - | (268 | ) | - | (268 | ) | ||||||||||||||||
| Net income | - | - | - | - | 1,338 | 1,338 | ||||||||||||||||||
Stock-based compensation expenses from options granted to employees and non-employees | - | - | 360 | - | - | 360 | ||||||||||||||||||
| Balance at June 30, 2012 (unaudited) | 11,486,265 | $ | 128 | $ | 33,675 | $ | (1,718 | ) | $ | (22,311 | ) | $ | 11,773 | |||||||||||
Six months ended June 30, | Three months ended June 30, | Year ended December 31, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2012 | ||||||||||||||||
| Unaudited | Audited | |||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income (loss) | $ | (1,084 | ) | $ | 1,338 | $ | (782 | ) | $ | 852 | $ | 3,843 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Stock-based compensation expenses | 86 | 168 | 43 | 84 | 346 | |||||||||||||||
| Stock-based compensation expenses to shares granted to a consultant | - | 688 | - | 212 | 813 | |||||||||||||||
| Depreciation and amortization | 103 | 119 | 52 | 55 | 240 | |||||||||||||||
| Accrued severance pay, net | (13 | ) | 8 | (27 | ) | (27 | ) | (13 | ) | |||||||||||
| Erosion of non-dollar linked restricted cash and long term assets | (12 | ) | 5 | (22 | ) | 1 | 17 | |||||||||||||
| Decrease (Increase) in deferred tax assets | 52 | - | 52 | - | (1,223 | ) | ||||||||||||||
| Increase in trade receivables, net | (137 | ) | (1,825 | ) | (330 | ) | (580 | ) | (4,190 | ) | ||||||||||
| Decrease (increase) in other accounts receivable and prepaid expenses | (296 | ) | (90 | ) | 93 | 206 | (73 | ) | ||||||||||||
| Increase (decrease) in trade payables | (78 | ) | 74 | 311 | (347 | ) | 323 | |||||||||||||
| Increase (decrease) in deferred revenues | 1,036 | 1,263 | (378 | ) | 518 | (694 | ) | |||||||||||||
| Increase (decrease) in accrued expenses and other accounts payable | (158 | ) | (382 | ) | (274 | ) | (607 | ) | 202 | |||||||||||
| Net cash provided by (used in) operating activities | (501 | ) | 1,366 | (1,262 | ) | 367 | (409 | ) | ||||||||||||
Six months ended June 30, | Three months ended June 30, | Year ended December 31, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2012 | ||||||||||||||||
| Unaudited | Audited | |||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Increase in restricted cash, net | (98 | ) | (7 | ) | (35 | ) | - | (65 | ) | |||||||||||
| Purchase of property and equipment | (44 | ) | (64 | ) | (26 | ) | (25 | ) | (119 | ) | ||||||||||
| Increase in long-term deposits | - | - | - | - | - | |||||||||||||||
| Net cash used in investing activities | (142 | ) | (71 | ) | (61 | ) | (25 | ) | (184 | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from exercise of warrants and stock options | 60 | 707 | 19 | 190 | 764 | |||||||||||||||
| Increase in short-term bank borrowings | 597 | - | 597 | - | - | |||||||||||||||
| Payment of accrued issuance expenses | (4 | ) | - | - | - | (20 | ) | |||||||||||||
| Net cash provided by (used in) financing activities | 653 | 707 | 616 | 190 | 744 | |||||||||||||||
| Effect of exchange rate on cash and cash equivalent balances | (38 | ) | (71 | ) | 26 | (121 | ) | (18 | ) | |||||||||||
| Increase in cash and cash equivalents | (28 | ) | 1,931 | (681 | ) | 411 | 133 | |||||||||||||
| Cash and cash equivalents at the beginning of the period | 2,223 | 2,090 | 2,876 | 3,610 | 2,090 | |||||||||||||||
| Cash and cash equivalents at the end of the period | $ | 2,195 | $ | 4,021 | $ | 2,195 | $ | 4,021 | $ | 2,223 | ||||||||||
| Supplemental disclosure of cash flows activities: | ||||||||||||||||||||
| Cash paid during the period for: | ||||||||||||||||||||
| Tax | $ | 65 | $ | 55 | $ | 28 | $ | 32 | $ | 152 | ||||||||||
| Interest | $ | 30 | $ | - | $ | 18 | $ | - | $ | - | ||||||||||
| Non- cash activities: | ||||||||||||||||||||
| Accrued ordinary shares issuance expenses | $ | - | $ | - | $ | - | $ | - | $ | 4 | ||||||||||
| a. | Business and organization: Top Image Systems Ltd. ("TIS" or "the Company") is engaged in the development and marketing of a variety of information recognition systems and technologies and automated document capture solutions for the efficient flow of information within and between organizations. The Company's software minimizes the need for manual data entry by automatically capturing, reading, understanding, identifying, processing, classifying and routing the information contained in documents, increasing data capture accuracy and the rate of information processing. The Company's shares are traded on The NASDAQ capital market in the United States and on the Tel-Aviv Stock Exchange ("TASE"). |
| b. | The Company's main marketing and sales activities are conducted through its subsidiaries in the United States, the United Kingdom, Germany, Japan and Singapore. |
| a. | Unaudited Interim Financial Information: The accompanying consolidated balance sheet as of June 30, 2013, consolidated statements of income for the three and six months ended June 30, 2012 and 2013 and consolidated statements of cash flows for the six and three months ended June 30, 2012 and 2013 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair presentation of the Company's consolidated financial position as of June 30, 2013, our consolidated results of operations for the three and six months ended June 30, 2012 and 2013 and our consolidated cash flows for the three and six months ended June 30, 2012 and 2012. The balance sheet at December 31, 2012 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2012 included in the Company's Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission ("SEC") on March 21, 2013. Results for the three and six months ended June 30, 2013 are not necessarily indicative of results that may be expected for the year ending December 31, 2013. Unless otherwise noted, all references to "dollars" or "$" are to United States dollars and all references to "NIS" are to New Israeli Shekels. |
| b. | Use of estimates |
| The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
| c. | Principles of consolidation: The Company's condensed consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries, referred to herein as the group. Inter-company transactions and balances, including profit from inter-company sales not yet realized outside the group, have been eliminated in consolidation. |
| d. | Basic and diluted net earnings per share: Basic net earnings per share are computed based on the weighted average number of Ordinary shares outstanding during each year. Diluted net earnings per share are computed based on the weighted average number of Ordinary shares outstanding during each year, plus the dilutive potential of Ordinary shares considered outstanding during the year. Part of the outstanding stock options has been excluded from the calculation of the diluted net earnings per share because such securities are anti-dilutive for the three and six months ended June 30, 2012 and 2013 and for the year ended December 31, 2012. The weighted average number of shares related to the outstanding options excluded from the calculations of diluted net earnings per share are detailed in the table below: |
Six months ended June 30, | Three months ended June 30, | Year ended December 31, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2012 | ||||||||||||||||
| Unaudited | Audited | |||||||||||||||||||
| 573,032 | 411,000 | 532,991 | 411,000 | 19,500 | ||||||||||||||||
| e. | Fair value of financial instruments: The following methods and assumptions were used by the Company and its subsidiaries in estimating their fair value disclosures for financial instruments: The carrying amounts of cash and cash equivalents, trade receivables and other accounts receivable, trade payables and other accounts payable approximate their fair value due to the short-term maturity of these instruments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in valuation methodologies to measure fair value: |
| Level 1 - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level 2 - | Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
| Level 3 - | Unobservable inputs which are supported by little or no market activity and significant to the overall fair value measurement. |
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
Six months ended June 30, | Three months ended June 30, | Year ended December 31, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2012 | ||||||||||||||||
| Unaudited | Audited | |||||||||||||||||||
| Numerator for basic net earnings per share - net income (loss) available to shareholders | $ | (1,084 | ) | $ | 1,338 | $ | (782 | ) | $ | 852 | $ | 3,843 | ||||||||
| Net income (loss) used for the computation of diluted net earnings per share | $ | (1,084 | ) | $ | 1,338 | $ | (782 | ) | $ | 852 | $ | 3,843 | ||||||||
| Weighted average Ordinary shares outstanding | 11,657,304 | 11,206,194 | 11,664,700 | 11,436,162 | 11,403,596 | |||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||
| Employees stock options | - | 988,009 | - | 886,751 | 774,914 | |||||||||||||||
| Warrants | - | 137,954 | - | 168,188 | 138,992 | |||||||||||||||
| - | 1,125,963 | - | 1,054,939 | 913,906 | ||||||||||||||||
| Diluted weighted average Ordinary shares outstanding | 11,657,304 | 12,332,157 | 11,644,700 | 12,491,101 | 12,317,502 | |||||||||||||||
| Net earnings (loss) per share | ||||||||||||||||||||
| Basic | $ | (0.09 | ) | $ | 0.12 | $ | (0.07 | ) | $ | 0.07 | $ | 0.34 | ||||||||
| Diluted | $ | (0.09 | ) | $ | 0.11 | $ | (0.07 | ) | $ | 0.07 | $ | 0.31 | ||||||||
