Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 19, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | DATA I/O CORPORATION | ||
Entity Central Index Key | 0000351998 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | WA | ||
Entity File Number | 0-10394 | ||
Entity Public Float | $ 31,697,946 | ||
Entity Common Stock, Shares Outstanding | 8,221,447 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS (in
CONSOLIDATED BALANCE SHEETS (in thousands, except share data) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 13,936 | $ 18,343 |
Trade accounts receivable, net of allowance for doubtful accounts of $80 and $75, respectively | 4,099 | 3,771 |
Inventories | 5,020 | 5,185 |
Other current assets | 924 | 621 |
TOTAL CURRENT ASSETS | 23,979 | 27,920 |
Property, plant and equipment - net | 1,668 | 1,985 |
Income tax receivable | 640 | 598 |
Other assets | 1,994 | 220 |
TOTAL ASSETS | 28,281 | 30,723 |
Current Liabilities | ||
Accounts payable | 1,151 | 1,755 |
Accrued compensation | 1,541 | 2,872 |
Deferred revenue | 1,387 | 1,392 |
Other accrued liabilities | 1,372 | 789 |
Income taxes payable | 31 | 47 |
TOTAL CURRENT LIABILITIES | 5,482 | 6,855 |
Operating lease liabilities | 1,178 | 0 |
Long-term other payables | 91 | 511 |
COMMITMENTS | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Preferred stock - Authorized, 5,000,000 shares, including 200,000 shares of Series A Junior Participating Issued and outstanding, none | 0 | 0 |
Common stock, at stated value - Authorized, 30,000,000 shares Issued and outstanding, 8,212,748 shares as of December 31, 2019 and 8,338,628 shares as of December 31, 2018 | 18,748 | 19,254 |
Accumulated earnings | 2,508 | 3,695 |
Accumulated other comprehensive income (loss) | 274 | 408 |
TOTAL STOCKHOLDERS' EQUITY | 21,530 | 23,357 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 28,281 | $ 30,723 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Trade accounts receivable, net of allowance | $ 80 | $ 75 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, authorized shares (including Series A) | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, authorized shares | 30,000,000 | 30,000,000 |
Common stock, issued shares | 8,212,748 | 8,338,628 |
Common stock, outstanding shares | 8,212,748 | 8,338,628 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 21,568 | $ 29,224 |
Cost of goods sold | 9,018 | 11,868 |
Gross margin | 12,550 | 17,356 |
Operating expenses: | ||
Research and development | 6,451 | 7,361 |
Selling, general and administrative | 7,377 | 8,257 |
Total operating expenses | 13,828 | 15,618 |
Operating income (loss) | (1,278) | 1,738 |
Non-operating income (expense): | ||
Interest income | 53 | 37 |
Gain on sale of assets | 64 | 19 |
Foreign currency transaction gain (loss) | 5 | 103 |
Total non-operating income | 122 | 159 |
Income (loss) before income taxes | (1,156) | 1,897 |
Income tax (expense) benefit | (31) | (291) |
Net income (loss) | $ (1,187) | $ 1,606 |
Basic earnings (loss) per share | $ (0.14) | $ 0.19 |
Diluted earnings (loss) per share | $ (0.14) | $ 0.19 |
Weighted-average basic shares | 8,247 | 8,378 |
Weighted-average diluted shares | 8,247 | 8,514 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (1,187) | $ 1,606 |
Other comprehensive income: | ||
Foreign currency translation gain (loss) | (134) | (574) |
Comprehensive income (loss) | $ (1,321) | $ 1,032 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning Balance, Amount at Dec. 31, 2017 | $ 18,989 | $ 2,089 | $ 982 | $ 22,060 |
Beginning Balance, Shares at Dec. 31, 2017 | 8,276,813 | |||
Stock options exercised, Amount | $ 0 | 0 | ||
Stock options exercised, Shares | 10,052 | |||
Repurchased shares, Amount | $ (536) | (536) | ||
Repurchased shares, Shares | (101,975) | |||
Stock awards issued, net of tax withholding, Amount | $ (448) | (448) | ||
Stock awards issued, net of tax withholding, Shares | 150,726 | |||
Issuance of stock through Employee Stock Purchase Plan, Amount | $ 19 | 19 | ||
Issuance of stock through Employee Stock Purchase Plan, Shares | 3,012 | |||
Share-based compensation | $ 1,230 | 1,230 | ||
Net income (loss) | 1,606 | 1,606 | ||
Other comprehensive income gain (loss) | (574) | (574) | ||
Ending Balance, Amount at Dec. 31, 2018 | $ 19,254 | 3,695 | 408 | 23,357 |
Ending Balance, Shares at Dec. 31, 2018 | 8,338,628 | |||
Stock options exercised, Amount | 0 | |||
Repurchased shares, Amount | $ (1,464) | (1,464) | ||
Repurchased shares, Shares | (301,710) | |||
Stock awards issued, net of tax withholding, Amount | $ (243) | (243) | ||
Stock awards issued, net of tax withholding, Shares | 169,653 | |||
Issuance of stock through Employee Stock Purchase Plan, Amount | $ 30 | 30 | ||
Issuance of stock through Employee Stock Purchase Plan, Shares | 6,177 | |||
Share-based compensation | $ 1,171 | 1,171 | ||
Net income (loss) | (1,187) | (1,187) | ||
Other comprehensive income gain (loss) | (134) | (134) | ||
Ending Balance, Amount at Dec. 31, 2019 | $ 18,748 | $ 2,508 | $ 274 | $ 21,530 |
Ending Balance, Shares at Dec. 31, 2019 | 8,212,748 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (1,187) | $ 1,606 |
Adjustments to reconcile income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 867 | 955 |
Gain on sale of assets | (64) | (19) |
Equipment transferred to cost of goods sold | 63 | 423 |
Share-based compensation | 1,171 | 1,230 |
Net change in: | ||
Trade accounts receivable | (375) | (78) |
Inventories | 139 | (1,135) |
Other current assets | (307) | 72 |
Accounts payable and accrued liabilities | (2,031) | (397) |
Deferred revenue | (98) | (288) |
Other long-term liabilities | (29) | (82) |
Deposits and other long-term assets | (245) | (175) |
Net cash provided by (used in) operating activities | (2,096) | 2,112 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (612) | (907) |
Net proceeds from sale of assets | 64 | 19 |
Cash provided by (used in) investing activities | (548) | (888) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from issuance of common stock, less payments for shares withheld to cover tax | (213) | (966) |
Repurchase of common stock | (1,464) | 0 |
Cash provided by (used in) financing activities | (1,677) | (966) |
Increase (decrease) in cash and cash equivalents | (4,321) | 258 |
Effects of exchange rate changes on cash | (86) | (456) |
Cash and cash equivalents at beginning of period | 18,343 | 18,541 |
Cash and cash equivalents at end of period | 13,936 | 18,343 |
Supplemental disclosure of non-cash financing activities: | ||
Cash paid during the period for: Income taxes | $ 307 | $ 463 |
NOTE 1 - SUMMARY OF SIGNIFICANT
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Nature of Operations Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) designs, manufactures and sells programming systems used by designers and manufacturers of electronic products. Our programming system products are used to program integrated circuits (“ICs” or “devices” or “semiconductors”) with the specific unique data necessary for the ICs contained in various products, and are an important tool for the electronics industry experiencing growing use of programmable ICs. Customers for our programming system products are located around the world, primarily in Asia, Europe and the Americas. Our manufacturing operations are currently located in Redmond, Washington, United States and Shanghai, China. Principles of Consolidation The consolidated financial statements include the accounts of Data I/O Corporation and our wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include: ● Revenue Recognition ● Allowance for Doubtful Accounts ● Inventory ● Warranty Accruals ● Tax Valuation Allowances ● Share-based Compensation Foreign Currency Translation Assets and liabilities of foreign subsidiaries are translated at the exchange rate on the balance sheet date. Revenues, costs and expenses of foreign subsidiaries are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to stockholders’ equity. Realized and unrealized gains and losses resulting from the effects of changes in exchange rates on assets and liabilities denominated in foreign currencies are included in non-operating expense as foreign currency transaction gains and losses. Cash and Cash Equivalents All highly liquid investments purchased with an original maturity of 90 days or less are considered cash equivalents. We maintain our cash and cash equivalents with major financial institutions in the United States of America, which are insured by the Federal Deposit Insurance Corporation (FDIC), and in foreign jurisdictions. Deposits in U.S. banks exceed the FDIC insurance limit. We have not experienced any losses on our cash and cash equivalents. Cash and cash equivalents held in foreign bank accounts, primarily China, Germany and Canada, totaled (in millions) $8.7 at December 31, 2019 and $6.4 at December 31, 2018. Fair Value of Financial Instruments Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and other short-term liabilities. Accounts Receivable The majority of our accounts receivable are due from companies in the electronics manufacturing industries. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are typically due within 30 to 60 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine the allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the industry and geographic payment practices involved, our previous bad debt experience, the customer’s current ability to pay their obligation to us, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Interest may be charged, at the discretion of management and according to our standard sales terms, beginning on the day after the due date of the receivable. However, interest income is subsequently recognized on these accounts either to the extent cash is received, or when the future collection of interest and the receivable balance is considered probable by management. Inventories Inventories are stated at the lower of cost or net realizable value with cost being the currently adjusted standard cost, which approximates cost on a first-in, first-out basis. We estimate changes to inventory for obsolete, slow-moving, excess and non-salable inventory by reviewing current transactions and forecasted product demand. We evaluate our inventories on an item by item basis and record an adjustment (lower of cost or net realizable value) accordingly. Property, Plant and Equipment Property, plant and equipment, including leasehold improvements, are stated at cost and depreciation is calculated over the estimated useful lives of the related assets or lease terms on the straight-line basis. We depreciate substantially all manufacturing and office equipment over periods of three to seven years. We depreciate leasehold improvements over the remaining portion of the lease or over the expected life of the asset if less than the remaining term of the lease. We regularly review all of our property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the total of future undiscounted cash flows is less than the carrying amount of these assets, an impairment loss, if any, based on the excess of the carrying amount over the fair value of the assets, is recorded. Based on this evaluation, no impairment was noted for property, plant and equipment for the years ended December 31, 2019 and 2018. Patent Costs We expense external costs, such as filing fees and associated attorney fees, incurred to obtain initial patents, but capitalize patents obtained through acquisition as intangible assets. We also expense costs associated with maintaining and defending patents subsequent to their issuance. Income Taxes Income taxes are computed at current enacted tax rates, less tax credits using the asset and liability method. Deferred taxes are adjusted both for items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, and any changes in the valuation allowance caused by a change in judgment about the realization of the related deferred tax assets. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. Share-Based Compensation All stock-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line single-option method. Our share-based compensation is reduced for estimated forfeitures at the time of grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates. Revenue Recognition Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue (“Topic 606”): Revenue from Contracts with Customers, using the modified retrospective method. Topic 606 provides a single, principles-based five-step model to be applied to all contracts with customers. It generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers when control over the promised goods or services are transferred to the customer. Our basic revenue recognition remains essentially the same as it was in 2017. The adoption of Topic 606 did not have a material impact on our 2018 financial statement line items, either individually or in the aggregate, and would not have been material to 2017 financial results. We have elected the practical expedient to expense contract acquisition costs, primarily sales commissions, for contracts with terms of one year or less and will capitalize and amortize incremental costs with terms that exceed one year. During 2019, the impact of capitalization of incremental costs for obtaining contracts was immaterial. We have made a sales tax policy election to exclude sales, use, value added, some excise taxes and other similar taxes from the measurement of the transaction price. We recognize revenue upon transfer of control of the promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We have determined that our programming equipment has reached a point of maturity and stability such that product acceptance can be assured by testing at the factory prior to shipment and that the installation meets the criteria to be a separate performance obligation. These systems are standard products with published product specifications and are configurable with standard options. The evidence that these systems could be deemed as accepted was based upon having standardized factory production of the units, results from batteries of tests of product performance to our published specifications, quality inspections and installation standardization, as well as past product operation validation with the customer and the history provided by our installed base of products upon which the current versions were based. The revenue related to products requiring installation that is perfunctory is recognized upon transfer of control of the product to customers, which generally is at the time of shipment. Installation that is considered perfunctory includes any installation that is expected to be performed by other parties, such as distributors, other vendors, or the customers themselves. This takes into account the complexity, skill and training needed as well as customer expectations regarding installation. We enter into arrangements with multiple performance obligations that arise during the sale of a system that includes an installation component, a service and support component and a software maintenance component. The transaction price is allocated to the separate performance obligations on relative standalone sales price. We allocate the transaction price of each element based on relative selling prices. Relative selling price is based on the selling price of the standalone system. For the installation and service and support performance obligations, we use the value of the discount given to distributors who perform these components. For software maintenance performance obligations, we use what we charge for annual software maintenance renewals after the initial year the system is sold. Revenue is recognized on the system sale based on shipping terms, installation revenue is recognized after the installation is performed, and hardware service and support and software maintenance revenue is recognized ratably over the term of the agreement, typically one year. Deferred revenue includes service, support and maintenance contracts and represents the undelivered performance obligation of agreements that are typically for one year. When we sell software separately, we recognize revenue upon the transfer of control of the software, which is generally upon shipment, provided that only inconsequential performance obligations remain on our part and substantive acceptance conditions, if any, have been met. We recognize revenue when there is an approved contract that both parties are committed to perform, both parties rights have been identified, the contract has substance, collection of substantially all the consideration is probable, the transaction price has been determined and allocated over the performance obligations, the performance obligations including substantive acceptance conditions, if any, in the contract have been met, the obligation is not contingent on resale of the product, the buyer’s obligation would not be changed in the event of theft, physical destruction or damage to the product, the buyer acquiring the product for resale has economic substance apart from us and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. We establish a reserve for sales returns based on historical trends in product returns and estimates for new items. Payment terms are generally 30 days from shipment. We transfer certain products out of service from their internal use and make them available for sale. The products transferred are typically our standard products in one of the following areas: service loaners, rental or test units; engineering test units; or sales demonstration equipment. Once transferred, the equipment is sold by our regular sales channels as used equipment inventory. These product units often involve refurbishing and an equipment warranty, and are conducted as sales in our normal and ordinary course of business. The transfer amount is the product unit’s net book value and the sale transaction is accounted for as revenue and cost of goods sold. The following table represents our revenues by major categories: Net sales by type 2019 2018 (in thousands) Equipment Sales $ 12,553 $ 19,002 Adapter Sales 5,535 6,954 Software and Maintenance Sales 3,480 3,268 Total $ 21,568 $ 29,224 Leases - Accounting Standards Codification 842 Leases arise from contracts which convey the right to control the use of identified property or equipment for a period of time in exchange for consideration. Our leasing arrangements are primarily for office space we use to conduct our operations. In addition, there are automobiles and a small amount of office equipment leased. We determine whether contracts include a lease at the inception date, which is generally upon contract signing, considering factors such as whether the contract includes an asset which is physically distinct, which party obtains substantially all of the capacity and economic benefit of the asset, and which party directs how, and for what purpose, the asset is used during the contractual period of use. Our leases commence when the lessor makes the asset available for our use. At commencement we record a lease liability at the present value of future lease payments, net of any future lease incentives to be received. Some of our lease agreements include cancellable future periods subject to termination or extension options. We include cancellable lease periods in our future lease payments when we are reasonably certain to continue to utilize the asset for those periods. We calculate the present value of future lease payments at commencement using a discount rate which we estimate as the collateralized borrowing rate we believe that would be incurred on our future lease payments over a similar term. At commencement we also record a corresponding right-of-use asset, which is calculated based on the amount of the lease liability, adjusted for any advance lease payments paid, initial direct costs incurred or lease incentives received prior to commencement. Right-of-use assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets. Leases are classified at commencement as either operating or finance leases. As of December 31, 2019, all of our leases are classified as operating leases. Rent expense for operating leases is recognized on the straight-line method over the term of the agreement beginning on the lease commencement date. In accounting for leases, we utilize certain practical expedients and policy elections available under the lease accounting standard. For example, we do not record right-of-use assets or lease liabilities for leases with terms of 12 months or less. For contracts containing real estate leases, we do not combine lease and non-lease components. The primary impact of this policy election is that we do not include in our calculation of lease liabilities any fixed and noncancelable future payments due under the contract for items such as common area maintenance, utilities and other costs. Lease-related costs which are variable rather than fixed are expensed in the period incurred. Assumptions, judgments and estimates impacting the carrying value of our right-of-use assets and liabilities include evaluating whether an arrangement contains a lease, determining whether the lease term should include any cancellable future periods, estimating the discount rate used to calculate our lease liabilities, estimating the fair value and useful life of the leased asset for the purpose of classifying the lease as an operating or finance lease, evaluating whether a lease contract amendment represents a new lease agreement or a modification to the existing lease and evaluating our right-of-use assets for impairment. Research and Development Research and development costs are generally expensed as incurred. Advertising Expense Advertising costs are expensed as incurred. Total advertising expenses were approximately $173,000 and $174,000 in 2019 and 2018, respectively. Warranty Expense We record a liability for an estimate of costs that we expect to incur under our basic limited warranty when product revenue is recognized. Factors affecting our warranty liability include the number of units sold and historical and anticipated rates of claims and costs per claim. We normally provide a warranty for our products against defects for periods ranging from ninety days to one year. We provide for the estimated cost that may be incurred under our product warranties and periodically assess the adequacy of our warranty liability based on changes in the above factors. We record revenues on extended warranties on a straight-line basis over the term of the related warranty contracts. Service costs are expensed as incurred. Earnings (Loss) Per Share Basic earnings (loss) per share exclude any dilutive effects of stock options. Basic earnings (loss) per share are computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted-average number of common shares and common stock equivalent shares outstanding during the period. The common stock equivalent shares from equity awards used in calculating diluted earnings per share were 65,000 and 136,000 for the years ended December 31, 2019 and 2018, respectively. Options to purchase 29,752 and 25,000 shares of common stock were outstanding as of December 31, 2019 and 2018, respectively, but were excluded from the computation of diluted EPS for the period then ended because the options were anti-dilutive. Diversification of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of trade receivables. Our trade receivables are geographically dispersed and include customers in many different industries. Two customers accounted for greater than 10% of our consolidated accounts receivable balance at December 31, 2019: Flextronics and Panasonic represented 17% and 15% of that balance, respectively. As of December 31, 2018, three customers each accounted for greater than 10% of our consolidated accounts receivable balance at December 31, 2018: Systemation, Continental and Semitron. Our consolidated accounts receivable balance as of December 31, 2019 and 2018 includes foreign accounts receivable in the functional currency of our foreign subsidiaries amounting to $1,255,000 and $1,931,000, respectively. We generally do business with our foreign distributors in U.S. Dollars. We believe that risk of loss is significantly reduced due to the diversity of our end-customers and geographic sales areas. We perform on-going credit evaluations of our customers’ financial condition and require collateral, such as letters of credit and bank guarantees, or prepayment whenever deemed necessary. New Accounting Pronouncements We adopted the new lease accounting standard, ASC 842, on January 1, 2019 using the modified retrospective transition method, and recorded a balance sheet adjustment on the date of adoption. In 2018, we accounted for leases under ASC 840. In adopting ASC 842, we utilized certain practical expedients available under the standard. These practical expedients include waiving reassessment of conclusions reached under the previous lease standard as to whether contracts contain leases, not recording right-of-use assets or lease liabilities for leases with terms of 12 months or less, how to classify leases identified and how to account for initial direct costs incurred. We also utilized the practical expedient to use hindsight as of the date of adoption to determine the terms of our leases and to evaluate our right-of-use assets for impairment. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), which updates the guidance related to the measurement of credit losses on financial instruments, including trade receivables. This ASU requires the recognition of credit losses on financial instruments based on an estimate of expected losses, replacing the incurred loss model in the prior guidance. The new guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not expect the adoption of ASU 2016-13 will have a material impact on the consolidated financial statements. |
NOTE 2 - ACCOUNTS RECEIVABLE, N
NOTE 2 - ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | December 31, 2019 December 31, 2018 (in thousands) Trade accounts receivable $ 4,179 $ 3,846 Less allowance for doubtful receivables 80 75 Trade accounts receivable, net $ 4,099 $ 3,771 Changes in Data I/O’s allowance for doubtful accounts are as follow: December 31, 2019 December 31, 2018 (in thousands) Beginning balance $ 75 $ 73 Bad debt expense (reversal) 5 2 Accounts written-off - - Recoveries - - Ending balance $ 80 $ 75 |
NOTE 3 - INVENTORIES
NOTE 3 - INVENTORIES | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | December 31, 2019 December 31, 2018 (in thousands) Raw material $ 2,416 $ 2,925 Work-in-process 1,832 1,584 Finished goods 772 676 Inventories $ 5,020 $ 5,185 |
NOTE 4 - PROPERTY, PLANT AND EQ
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | December 31, 2019 December 31, 2018 (in thousands) Leasehold improvements $ 395 $ 399 Equipment 5,606 5,378 Sales demonstration equipment 778 942 6,779 6,719 Less accumulated depreciation 5,111 4,734 Property and equipment, net $ 1,668 $ 1,985 Total depreciation expense recorded for 2019 and 2018 was $867,000 and $955,000, respectively. |
NOTE 5 - INCOME TAX RECEIVABLE
NOTE 5 - INCOME TAX RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
Note 5 - Income Tax Receivable | |
INCOME TAX RECEIVABLE | On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes include the repeal of corporate Alternative Minimum Tax (AMT) for tax years after December 31, 2017. As a result, in 2017, we have recorded a long-term income tax receivable which as of December 31, 2019 has a balance of $640,000 for the refundable AMT credits. |
NOTE 6 - OTHER ACCRUED LIABILIT
NOTE 6 - OTHER ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
OTHER ACCRUED LIABILITIES | Other accrued liabilities consisted of the following components: December 31, 2019 December 31, 2018 (in thousands) Lease liability - short term $ 678 $ 0 Product warranty 367 471 Sales return reserve 77 87 Other taxes 126 102 Other 124 129 Other accrued liabilities $ 1,372 $ 789 The changes in our product warranty liability for the year ending December 31, 2019 are follows: December 31, 2019 (in thousands) Liability, beginning balance $ 471 Net expenses 736 Warranty claims (736 ) Accrual revisions (104 ) Liability, ending balance $ 367 |
NOTE 7 - OPERATING LEASE COMMIT
NOTE 7 - OPERATING LEASE COMMITMENTS | 12 Months Ended |
Dec. 31, 2019 | |
Leases, Operating [Abstract] | |
OPERATING LEASE COMMITMENTS | We have commitments under non-cancelable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as follows: For the years ending December 31: Operating Lease Commitments (in thousands) 2020 $ 755 2021 681 2022 308 2023 89 2024 82 Thereafter 141 Total $ 2,056 Less Imputed interest (200 ) Total operating lease liabilities $ 1,856 Cash paid for operating lease liabilities for the twelve months ended December 31, 2019 was $757,000. There were no new or modified leases during the twelve months ended December 31, 2019. The following table presents supplemental balance sheet information related to leases as of December 31, 2019: Balance at December 31, 2019 (in thousands) Right-of-use assets (Long-term other assets) $ 1,574 Lease liability-short term (Other accrued liabilities) 678 Lease liability-long term (Long-term other payables) 1,178 At December 31, 2019, the weighted average remaining lease term is 3.39 years and the weighted average discount rate used is 5%. The components of our lease expense for the twelve months ended December 31, 2019 include operating lease costs of $685,000, which includes short-term lease costs of $32,000. Our real estate facility leases are described below: During the third quarter of 2017, we amended our lease agreement for the Redmond, Washington headquarters facility, extending the lease to July 31, 2022, waiving a potential space give back provision and receiving lease inducement incentives. Previously on June 8, 2015 the lease had been amended to relocate our headquarters to a nearby building and lower the square footage to approximately 20,460. The lease base annual rental payments during 2019 and 2018 were approximately $351,000 and $341,000, respectively. In addition to the Redmond facility, approximately 24,000 square feet is leased at two foreign locations, including our sales, service, operations and engineering office located in Shanghai, China, and our German sales, service and engineering office located near Munich, Germany. We signed a lease agreement effective November 1, 2015 that extends through October 31, 2021 for a facility located in Shanghai, China. This lease is for approximately 19,400 square feet. The lease base annual rental payments during 2019 and 2018 were approximately $305,000 and $288,000, respectively. During the fourth quarter of 2016, we signed a lease agreement for a new facility located near Munich, Germany which was effective March 1, 2017 and extends through February 28, 2022. This lease is for approximately 4,895 square feet. The lease base annual rental payments during 2019 and 2018 were approximately $57,000 and $67,000, respectively. |
NOTE 8 - OTHER COMMITMENTS
NOTE 8 - OTHER COMMITMENTS | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
OTHER COMMITMENTS | We have purchase obligations for inventory and production costs as well as other obligations such as capital expenditures, service contracts, marketing, and development agreements. Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure and approximate timing of the transaction. Most arrangements are cancelable without a significant penalty, and with short notice, typically less than 90 days. At December 31, 2019, the purchase commitments and other obligations totaled $1,334,000 of which all but $323,000 are expected to be paid over the next twelve months. |
NOTE 9 - CONTINGENCIES
NOTE 9 - CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | As of December 31, 2019, we were not a party to any legal proceedings or aware of any indemnification agreement claims, the adverse outcome of which in management’s opinion, individually or in the aggregate, would have a material adverse effect on our results of operations or financial position. |
NOTE 10 - STOCK AND RETIREMENT
NOTE 10 - STOCK AND RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2019 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
STOCK AND RETIREMENT PLANS | Stock Option Plans At December 31, 2019, there were 687,119 shares available for future grant under Data I/O Corporation 2000 Stock Compensation Incentive Plan (“2000 Plan”). At December 31, 2019 there were shares of Common Stock reserved for issuance consisting of 561,403 under the 2000 plan. Pursuant to this 2000 Plan, options are granted to our officers and key employees with exercise prices equal to the fair market value of the Common Stock at the date of grant and generally vest over four years. Options granted under the plans have a maximum term of six years from the date of grant. Stock awards are also granted under the 2000 Plan which generally vest over four years. Employee Stock Purchase Plan Under the Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase shares of our Common Stock at six-month intervals at 95% of the fair market value on the last day of each six-month period. Employees may purchase shares having a value not exceeding ten percent of their gross compensation during an offering period. During 2019 and 2018, a total of 6,177 and 3,012 shares, respectively, were purchased under the plan at average prices of $4.88 and 7.81 per share, respectively. At December 31, 2019, a total 39,249 shares were reserved for future issuance. Stock Appreciation Rights Plan We have a Stock Appreciation Rights (“SAR”) Plan under which each director, executive officer or holder of 10% or more of our Common Stock has a SAR with respect to each exercisable stock option. The SAR entitles the SAR holder to receive cash from us for the difference between the market value of the stock and the exercise price of the option in lieu of exercising the related option. SARs are only exercisable following a tender offer or exchange offer for our stock, or following approval by shareholders of Data I/O of any merger, consolidation, reorganization or other transaction providing for the conversion or exchange of more than 50% of the common shares outstanding. As no event has occurred, which would make the SARs exercisable, and no such event is deemed probable, no compensation expense has been recorded under this plan. At December 31, 2019 there were 25,000 SARs outstanding. Director Fee Plan We have a Director Fee Plan available to compensate directors who are not employees of Data I/O Corporation with equity. No shares were issued from the plan for 2019 or 2018 board service and Retirement Savings Plan We have a savings plan that qualifies as a cash or deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the plan, participating U.S. employees may defer their pre-tax salary or post-tax salary if Roth is elected, subject to IRS limitations. In fiscal years 2019 and 2018, we contributed one dollar for each dollar contributed by a participant, with a maximum contribution of four percent of a participant’s eligible earnings. Our matching contribution expense for the savings plan, net of forfeitures, was approximately $239,000 and $237,000 in 2019 and 2018, respectively. Employer matching contributions owed to the plan were $211,000 and $271,000 at December 31, 2019 and 2018, respectively. |
NOTE 11 - SHARE-BASED COMPENSAT
NOTE 11 - SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
SHARE-BASED COMPENSATION | For share-based awards granted, we have recognized compensation expense based on the estimated grant date fair value method. For these awards we have recognized compensation expense using a straight-line amortization method and reduced for estimated forfeitures. The impact on our results of operations of recording share-based compensation for the year ended December 31, 2019 and 2018 was as follows: Year Ended December 31, 2019 2018 (in thousands) Cost of goods sold $ 28 $ 25 Research and development 288 266 Selling, general and administrative 855 939 Total share-based compensation $ 1,171 $ 1,230 An immaterial amount of share-based compensation was capitalized into inventory as overhead for the years ended December 31, 2019 and 2018, respectively. The fair values of share-based awards for employee stock option awards were estimated at the date of grant using the Black-Scholes valuation model. The volatility and expected life of the options used in calculating the fair value of share-based awards may exclude certain periods of historical data that we considered atypical and not likely to occur in future periods. The following weighted average assumptions were used to calculate the fair value of options granted during the years ended December 31: Employee Stock Options 2019 2018 Risk-free interest rates 2.31 % N/A Volatility factors 62.05 % N/A Expected life of the option in years 4.0 N/A Expected dividend yield None N/A The risk-free interest rate used in the Black-Scholes valuation method is based on the implied yield currently available in U.S. Treasury securities at maturity with an equivalent term. We have not recently declared or paid any dividends and do not currently have plans to do so in the future. The expected term of options represents the period that our stock-based awards are expected to be outstanding and has been determined based on historical weighted average holding periods and projected holding periods for the remaining unexercised shares. Consideration was given to the contractual terms of our stock-based awards, vesting schedules and expectations of future employee behavior. Expected volatility is based on the annualized daily historical volatility of our stock over a representative period. The following table summarizes stock option activity under our stock option plans for the twelve months ended December 31: 2019 2018 Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Outstanding at beginning of year 25,000 $ 8.03 40,000 $ 6.10 Granted 25,000 4.98 - - Exercised - 0.00 (15,000 ) 2.83 Cancelled, Expired or Forfeited (25,000 ) 8.03 - - Outstanding at end of year 25,000 $ 4.98 5.34 25,000 $ 8.03 4.50 Vested or expected to vest at the end of the period 24,723 $ 4.98 5.34 22,924 $ 8.03 4.50 Exercisable at end of year 12,500 $ 4.98 5.34 7,813 $ 8.03 4.50 The aggregate intrinsic value of outstanding options is $0. There were no stock option awards exercised in 2019. Restricted stock award including performance-based stock award activity under our share-based compensation plan was as follows: 2019 2018 Awards Weighted - Average Grant Date Fair Value Awards Weighted - Average Grant Date Fair Value Outstanding at beginning of year 558,856 $ 6.06 565,850 $ 5.09 Granted 276,700 4.57 206,856 7.11 Vested (224,089 ) 5.30 (213,100 ) 4.51 Cancelled (75,064 ) 7.30 (750 ) 4.24 Outstanding at end of year 536,403 $ 5.44 558,856 $ 6.06 During the years ended December 31, 2019 and 2018, 54,436 and 67,322 shares respectively were withheld from issuance related to restricted stock units vesting and stock option exercises to cover employee taxes and stock options exercise price. The remaining unamortized expected future compensation expense and remaining amortization period associated with unvested option grants and restricted stock awards are: December 31, 2019 December 31, 2018 Unamortized future compensation expense $ 2,351,324 $ 2,835,978 Remaining weighted average amortization period in years 2.40 2.63 |
NOTE 12 - SHARE REPURCHASE PROG
NOTE 12 - SHARE REPURCHASE PROGRAMS | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
SHARE REPURCHASE PROGRAMS | On October 31, 2018, our Board of Directors approved a share repurchase program with provisions to buy back up to $2.0 million of our stock during the period from November 1, 2018 through October 31, 2019. The program was established with a 10b5-1 plan under the Exchange Act to provide flexibility to make purchases throughout the period. For the quarter ended September 30, 2019, 55,904 shares of stock were repurchased at an average price of $4.37 for a total of $244,197 including $1,176 in commissions and charges. The $2.0 million buyback program was completed during the third quarter of 2019. The following is a summary of the stock repurchase program from November 1, 2018 through September 30, 2019: Repurchases by Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program Approximate Dollar Value of Shares that May Yet Be Purchased under the Program Dec. 2018 101,975 $ 5.25 101,975 $ 1,464,470 Jan. 2019 43,701 $ 5.39 43,701 $ 1,229,115 Mar. 2019 13,911 $ 5.49 13,911 $ 1,152,793 Apr. 2019 69,141 $ 5.34 69,141 $ 783,687 May 2019 69,798 $ 4.63 69,798 $ 461,417 Jun. 2019 49,255 $ 4.44 49,255 $ 244,197 Jul. 2019 55,280 $ 4.37 55,280 $ 2,798 Aug. 2019 624 $ 4.32 624 $ 3 Total 403,685 $ 4.95 403,685 |
NOTE 13 - INCOME TAXES
NOTE 13 - INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Components of income (loss) before taxes: Year Ended December 31, (in thousands) 2019 2018 U.S. operations $ (2,518 ) $ (137 ) Foreign operations 1,362 2,034 Total income (loss) before taxes $ (1,156 ) $ 1,897 Income tax expense (benefit) consists of: (in thousands) Year Ended December 31, Current tax expense (benefit) 2019 2018 U.S. federal $ (42 ) $ 5 State 8 20 Foreign 65 266 31 291 Deferred tax expense (benefit) – U.S. federal - - Total income tax expense (benefit) $ 31 $ 291 A reconciliation of our effective income tax and the U.S. federal tax rate is as follows: Year Ended December 31, 2019 2018 (in thousands) Statutory tax $ (243 ) $ 398 State and foreign income tax, net of federal income tax benefit (230 ) (159 ) Valuation allowance for deferred tax assets 568 245 Federal rate change - - Foreign sourced deemed dividend income - - Stock based compensation (177 ) (282 ) AMT credit refund - - Other 113 89 Total income tax expense (benefit) $ 31 $ 291 The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets are presented below: Year Ended December 31, 2019 2018 (in thousands) Deferred income tax assets: Allowance for doubtful accounts $ 13 $ 8 Inventory and product return reserves 464 467 Compensation accruals 1,723 1,515 Accrued liabilities 129 321 Book-over-tax depreciation and amortization 25 21 Foreign net operating loss carryforwards 3 132 U.S. net operating loss carryforwards 2,904 2,345 U.S. credit carryforwards 2,280 2,161 7,541 6,970 Valuation Allowance (7,541 ) (6,970 ) Total Deferred Income Tax Assets $ - $ - The valuation allowance for deferred tax assets increased $571,000 and $140,000 during the years ended December 31, 2019 and 2018, respectively. The net deferred tax assets have a full valuation allowance provided due to uncertainty regarding our ability to utilize such assets in future years. This full valuation allowance evaluation is based upon our volatile history of losses and the cyclical nature of our industry and capital spending. Credit carryforwards consist primarily of research and experimental and foreign tax credits. We intend to continue to reinvest foreign earnings of our operating subsidiaries. U.S. net operating loss carryforwards are $13,830,000 at December 31, 2019 with expiration years from 2022 to 2039. Utilization of net operating loss and credit carryforwards is subject to certain limitations under Section 382 of the Internal Revenue Code of 1986, as amended. The gross changes in uncertain tax positions resulting in unrecognized tax benefits are presented below: Year Ended December 31, 2019 2018 (in thousands) Unrecognized tax benefits, opening balance $ 308 $ 272 Prior period tax position increases 10 - Additions based on tax positions related to current year 30 36 Unrecognized tax benefits, ending balance $ 348 $ 308 Historically, we have incurred minimal interest expense and no penalties associated with tax matters. We have adopted a policy whereby amounts related to penalties associated with tax matters are classified as general and administrative expense when incurred and amounts related to interest associated with tax matters are classified as interest income or interest expense. Tax years that remain open for examination include 2016, 2017, 2018 and 2019 in the United States of America. In addition, various tax years from 2002 to 2015 may be subject to examination in the event that we utilize the net operating losses and credit carryforwards from those years in our current or future year tax returns. |
NOTE 14 - SEGMENT AND GEOGRAPHI
NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | We consider our operations to be a single operating segment, focused on the design, manufacturing and sale of programming systems used by designers and manufacturers of electronic products. Major operations outside the U.S. include sales, engineering and service support subsidiaries in Germany as well as in China, which also manufactures some of our products. The following tables provide summary operating information by geographic area: Year Ended December 31, (in thousands) 2019 2018 Net sales: U.S. $ 1,735 $ 3,436 Europe 8,828 13,251 Rest of World 11,005 12,537 $ 21,568 $ 29,224 Included in Europe and Rest of World net sales are the following significant balances: Germany $ 2,507 $ 4,428 China $ 2,934 $ 4,489 Operating income: U.S. $ 317 $ 802 Europe (1,108 ) 258 Rest of World (487 ) 678 $ (1,278 ) $ 1,738 Identifiable assets: U.S. $ 12,818 $ 18,976 Europe 5,917 5,279 Rest of World 9,546 6,468 $ 28,281 $ 30,723 |
NOTE 15 - SUBSEQUENT EVENTS
NOTE 15 - SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Beginning in early 2020, there has been an outbreak of coronavirus (COVID-19), initially in China and which has spread to other jurisdictions, including all locations where the Company does business. The full extent of the outbreak, related business and travel restrictions, government required closure restrictions and changes to behavior intended to reduce its spread are uncertain as of the date of the Report as this continues to evolve globally. Therefore, the full extent to which coronavirus may impact the Company’s results of operations or financial position is uncertain. This outbreak has already had a significant disruption on the operations of the Company and its suppliers and customers. To the extent that the Company’s customers and suppliers continue to be impacted by the coronavirus outbreak, this could reduce the availability, or result in delays, of materials or supplies to or from the Company, which in turn could significantly interrupt the Company’s business operations. Management continues to monitor the impact that the COVID-19 pandemic is having on the Company, our industry and the economies in which the Company operates. While we expect this matter to negatively impact our results, the related financial impact and duration of such impact cannot be reasonably estimated at this time. There were no other subsequent events which would require additional disclosures to the financial statements, except for those already disclosed throughout the Notes to Consolidated Financial Statements. |
NOTE 1 - SUMMARY OF SIGNIFICA_2
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations | Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) designs, manufactures and sells programming systems used by designers and manufacturers of electronic products. Our programming system products are used to program integrated circuits (“ICs” or “devices” or “semiconductors”) with the specific unique data necessary for the ICs contained in various products, and are an important tool for the electronics industry experiencing growing use of programmable ICs. Customers for our programming system products are located around the world, primarily in Asia, Europe and the Americas. Our manufacturing operations are currently located in Redmond, Washington, United States and Shanghai, China. |
Principles of Consolidation | The consolidated financial statements include the accounts of Data I/O Corporation and our wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include: ● Revenue Recognition ● Allowance for Doubtful Accounts ● Inventory ● Warranty Accruals ● Tax Valuation Allowances ● Share-based Compensation |
Foreign Currency Translation | Assets and liabilities of foreign subsidiaries are translated at the exchange rate on the balance sheet date. Revenues, costs and expenses of foreign subsidiaries are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to stockholders’ equity. Realized and unrealized gains and losses resulting from the effects of changes in exchange rates on assets and liabilities denominated in foreign currencies are included in non-operating expense as foreign currency transaction gains and losses. |
Cash and Cash Equivalents | All highly liquid investments purchased with an original maturity of 90 days or less are considered cash equivalents. We maintain our cash and cash equivalents with major financial institutions in the United States of America, which are insured by the Federal Deposit Insurance Corporation (FDIC), and in foreign jurisdictions. Deposits in U.S. banks exceed the FDIC insurance limit. We have not experienced any losses on our cash and cash equivalents. Cash and cash equivalents held in foreign bank accounts, primarily China, Germany and Canada, totaled (in millions) $8.7 at December 31, 2019 and $6.4 at December 31, 2018. |
Fair Value of Financial Instruments | Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and other short-term liabilities. |
Accounts Receivable | The majority of our accounts receivable are due from companies in the electronics manufacturing industries. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are typically due within 30 to 60 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine the allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the industry and geographic payment practices involved, our previous bad debt experience, the customer’s current ability to pay their obligation to us, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Interest may be charged, at the discretion of management and according to our standard sales terms, beginning on the day after the due date of the receivable. However, interest income is subsequently recognized on these accounts either to the extent cash is received, or when the future collection of interest and the receivable balance is considered probable by management. |
Inventories | Inventories are stated at the lower of cost or net realizable value with cost being the currently adjusted standard cost, which approximates cost on a first-in, first-out basis. We estimate changes to inventory for obsolete, slow-moving, excess and non-salable inventory by reviewing current transactions and forecasted product demand. We evaluate our inventories on an item by item basis and record an adjustment (lower of cost or net realizable value) accordingly. |
Property, Plant and Equipment | Property, plant and equipment, including leasehold improvements, are stated at cost and depreciation is calculated over the estimated useful lives of the related assets or lease terms on the straight-line basis. We depreciate substantially all manufacturing and office equipment over periods of three to seven years. We depreciate leasehold improvements over the remaining portion of the lease or over the expected life of the asset if less than the remaining term of the lease. We regularly review all of our property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the total of future undiscounted cash flows is less than the carrying amount of these assets, an impairment loss, if any, based on the excess of the carrying amount over the fair value of the assets, is recorded. Based on this evaluation, no impairment was noted for property, plant and equipment for the years ended December 31, 2019 and 2018. |
Patent Costs | We expense external costs, such as filing fees and associated attorney fees, incurred to obtain initial patents, but capitalize patents obtained through acquisition as intangible assets. We also expense costs associated with maintaining and defending patents subsequent to their issuance. |
Income Taxes | Income taxes are computed at current enacted tax rates, less tax credits using the asset and liability method. Deferred taxes are adjusted both for items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, and any changes in the valuation allowance caused by a change in judgment about the realization of the related deferred tax assets. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. |
Share-Based Compensation | All stock-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line single-option method. Our share-based compensation is reduced for estimated forfeitures at the time of grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates. |
Revenue Recognition | Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue (“Topic 606”): Revenue from Contracts with Customers, using the modified retrospective method. Topic 606 provides a single, principles-based five-step model to be applied to all contracts with customers. It generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers when control over the promised goods or services are transferred to the customer. Our basic revenue recognition remains essentially the same as it was in 2017. The adoption of Topic 606 did not have a material impact on our 2018 financial statement line items, either individually or in the aggregate, and would not have been material to 2017 financial results. We have elected the practical expedient to expense contract acquisition costs, primarily sales commissions, for contracts with terms of one year or less and will capitalize and amortize incremental costs with terms that exceed one year. During 2019, the impact of capitalization of incremental costs for obtaining contracts was immaterial. We have made a sales tax policy election to exclude sales, use, value added, some excise taxes and other similar taxes from the measurement of the transaction price. We recognize revenue upon transfer of control of the promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We have determined that our programming equipment has reached a point of maturity and stability such that product acceptance can be assured by testing at the factory prior to shipment and that the installation meets the criteria to be a separate performance obligation. These systems are standard products with published product specifications and are configurable with standard options. The evidence that these systems could be deemed as accepted was based upon having standardized factory production of the units, results from batteries of tests of product performance to our published specifications, quality inspections and installation standardization, as well as past product operation validation with the customer and the history provided by our installed base of products upon which the current versions were based. The revenue related to products requiring installation that is perfunctory is recognized upon transfer of control of the product to customers, which generally is at the time of shipment. Installation that is considered perfunctory includes any installation that is expected to be performed by other parties, such as distributors, other vendors, or the customers themselves. This takes into account the complexity, skill and training needed as well as customer expectations regarding installation. We enter into arrangements with multiple performance obligations that arise during the sale of a system that includes an installation component, a service and support component and a software maintenance component. The transaction price is allocated to the separate performance obligations on relative standalone sales price. We allocate the transaction price of each element based on relative selling prices. Relative selling price is based on the selling price of the standalone system. For the installation and service and support performance obligations, we use the value of the discount given to distributors who perform these components. For software maintenance performance obligations, we use what we charge for annual software maintenance renewals after the initial year the system is sold. Revenue is recognized on the system sale based on shipping terms, installation revenue is recognized after the installation is performed, and hardware service and support and software maintenance revenue is recognized ratably over the term of the agreement, typically one year. Deferred revenue includes service, support and maintenance contracts and represents the undelivered performance obligation of agreements that are typically for one year. When we sell software separately, we recognize revenue upon the transfer of control of the software, which is generally upon shipment, provided that only inconsequential performance obligations remain on our part and substantive acceptance conditions, if any, have been met. We recognize revenue when there is an approved contract that both parties are committed to perform, both parties rights have been identified, the contract has substance, collection of substantially all the consideration is probable, the transaction price has been determined and allocated over the performance obligations, the performance obligations including substantive acceptance conditions, if any, in the contract have been met, the obligation is not contingent on resale of the product, the buyer’s obligation would not be changed in the event of theft, physical destruction or damage to the product, the buyer acquiring the product for resale has economic substance apart from us and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. We establish a reserve for sales returns based on historical trends in product returns and estimates for new items. Payment terms are generally 30 days from shipment. We transfer certain products out of service from their internal use and make them available for sale. The products transferred are typically our standard products in one of the following areas: service loaners, rental or test units; engineering test units; or sales demonstration equipment. Once transferred, the equipment is sold by our regular sales channels as used equipment inventory. These product units often involve refurbishing and an equipment warranty, and are conducted as sales in our normal and ordinary course of business. The transfer amount is the product unit’s net book value and the sale transaction is accounted for as revenue and cost of goods sold. The following table represents our revenues by major categories: Net sales by type 2019 2018 (in thousands) Equipment Sales $ 12,553 $ 19,002 Adapter Sales 5,535 6,954 Software and Maintenance Sales 3,480 3,268 Total $ 21,568 $ 29,224 |
Leases - Accounting Standards Codification 842 | Leases arise from contracts which convey the right to control the use of identified property or equipment for a period of time in exchange for consideration. Our leasing arrangements are primarily for office space we use to conduct our operations. In addition, there are automobiles and a small amount of office equipment leased. We determine whether contracts include a lease at the inception date, which is generally upon contract signing, considering factors such as whether the contract includes an asset which is physically distinct, which party obtains substantially all of the capacity and economic benefit of the asset, and which party directs how, and for what purpose, the asset is used during the contractual period of use. Our leases commence when the lessor makes the asset available for our use. At commencement we record a lease liability at the present value of future lease payments, net of any future lease incentives to be received. Some of our lease agreements include cancellable future periods subject to termination or extension options. We include cancellable lease periods in our future lease payments when we are reasonably certain to continue to utilize the asset for those periods. We calculate the present value of future lease payments at commencement using a discount rate which we estimate as the collateralized borrowing rate we believe that would be incurred on our future lease payments over a similar term. At commencement we also record a corresponding right-of-use asset, which is calculated based on the amount of the lease liability, adjusted for any advance lease payments paid, initial direct costs incurred or lease incentives received prior to commencement. Right-of-use assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets. Leases are classified at commencement as either operating or finance leases. As of December 31, 2019, all of our leases are classified as operating leases. Rent expense for operating leases is recognized on the straight-line method over the term of the agreement beginning on the lease commencement date. In accounting for leases, we utilize certain practical expedients and policy elections available under the lease accounting standard. For example, we do not record right-of-use assets or lease liabilities for leases with terms of 12 months or less. For contracts containing real estate leases, we do not combine lease and non-lease components. The primary impact of this policy election is that we do not include in our calculation of lease liabilities any fixed and noncancelable future payments due under the contract for items such as common area maintenance, utilities and other costs. Lease-related costs which are variable rather than fixed are expensed in the period incurred. Assumptions, judgments and estimates impacting the carrying value of our right-of-use assets and liabilities include evaluating whether an arrangement contains a lease, determining whether the lease term should include any cancellable future periods, estimating the discount rate used to calculate our lease liabilities, estimating the fair value and useful life of the leased asset for the purpose of classifying the lease as an operating or finance lease, evaluating whether a lease contract amendment represents a new lease agreement or a modification to the existing lease and evaluating our right-of-use assets for impairment. |
Research and Development | Research and development costs are generally expensed as incurred. |
Advertising Expense | Advertising costs are expensed as incurred. Total advertising expenses were approximately $173,000 and $174,000 in 2019 and 2018, respectively. |
Warranty Expense | We record a liability for an estimate of costs that we expect to incur under our basic limited warranty when product revenue is recognized. Factors affecting our warranty liability include the number of units sold and historical and anticipated rates of claims and costs per claim. We normally provide a warranty for our products against defects for periods ranging from ninety days to one year. We provide for the estimated cost that may be incurred under our product warranties and periodically assess the adequacy of our warranty liability based on changes in the above factors. We record revenues on extended warranties on a straight-line basis over the term of the related warranty contracts. Service costs are expensed as incurred. |
Earnings (Loss) Per Share | Basic earnings (loss) per share exclude any dilutive effects of stock options. Basic earnings (loss) per share are computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted-average number of common shares and common stock equivalent shares outstanding during the period. The common stock equivalent shares from equity awards used in calculating diluted earnings per share were 65,000 and 136,000 for the years ended December 31, 2019 and 2018, respectively. Options to purchase 29,752 and 25,000 shares of common stock were outstanding as of December 31, 2019 and 2018, respectively, but were excluded from the computation of diluted EPS for the period then ended because the options were anti-dilutive. |
Diversification of Credit Risk | Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of trade receivables. Our trade receivables are geographically dispersed and include customers in many different industries. Two customers accounted for greater than 10% of our consolidated accounts receivable balance at December 31, 2019: Flextronics and Panasonic represented 17% and 15% of that balance, respectively. As of December 31, 2018, three customers each accounted for greater than 10% of our consolidated accounts receivable balance at December 31, 2018: Systemation, Continental and Semitron. Our consolidated accounts receivable balance as of December 31, 2019 and 2018 includes foreign accounts receivable in the functional currency of our foreign subsidiaries amounting to $1,255,000 and $1,931,000, respectively. We generally do business with our foreign distributors in U.S. Dollars. We believe that risk of loss is significantly reduced due to the diversity of our end-customers and geographic sales areas. We perform on-going credit evaluations of our customers’ financial condition and require collateral, such as letters of credit and bank guarantees, or prepayment whenever deemed necessary. |
New Accounting Pronouncements | We adopted the new lease accounting standard, ASC 842, on January 1, 2019 using the modified retrospective transition method, and recorded a balance sheet adjustment on the date of adoption. In 2018, we accounted for leases under ASC 840. In adopting ASC 842, we utilized certain practical expedients available under the standard. These practical expedients include waiving reassessment of conclusions reached under the previous lease standard as to whether contracts contain leases, not recording right-of-use assets or lease liabilities for leases with terms of 12 months or less, how to classify leases identified and how to account for initial direct costs incurred. We also utilized the practical expedient to use hindsight as of the date of adoption to determine the terms of our leases and to evaluate our right-of-use assets for impairment. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), which updates the guidance related to the measurement of credit losses on financial instruments, including trade receivables. This ASU requires the recognition of credit losses on financial instruments based on an estimate of expected losses, replacing the incurred loss model in the prior guidance. The new guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not expect the adoption of ASU 2016-13 will have a material impact on the consolidated financial statements. |
NOTE 1 - SUMMARY OF SIGNIFICA_3
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Disaggregation of revenue | Net sales by type 2019 2018 (in thousands) Equipment Sales $ 12,553 $ 19,002 Adapter Sales 5,535 6,954 Software and Maintenance Sales 3,480 3,268 Total $ 21,568 $ 29,224 |
NOTE 2 - ACCOUNTS RECEIVABLE,_2
NOTE 2 - ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of accounts receivable | December 31, 2019 December 31, 2018 (in thousands) Trade accounts receivable $ 4,179 $ 3,846 Less allowance for doubtful receivables 80 75 Trade accounts receivable, net $ 4,099 $ 3,771 |
Changes in allowance for doubtful accounts | December 31, 2019 December 31, 2018 (in thousands) Beginning balance $ 75 $ 73 Bad debt expense (reversal) 5 2 Accounts written-off - - Recoveries - - Ending balance $ 80 $ 75 |
NOTE 3 - INVENTORIES, NET (Tabl
NOTE 3 - INVENTORIES, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | December 31, 2019 December 31, 2018 (in thousands) Raw material $ 2,416 $ 2,925 Work-in-process 1,832 1,584 Finished goods 772 676 Inventories $ 5,020 $ 5,185 |
NOTE 4 - PROPERTY, PLANT AND _2
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment, net | December 31, 2019 December 31, 2018 (in thousands) Leasehold improvements $ 395 $ 399 Equipment 5,606 5,378 Sales demonstration equipment 778 942 6,779 6,719 Less accumulated depreciation 5,111 4,734 Property and equipment, net $ 1,668 $ 1,985 |
NOTE 6 - OTHER ACCRUED LIABIL_2
NOTE 6 - OTHER ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Other accrued liabilities | December 31, 2019 December 31, 2018 (in thousands) Lease liability - short term $ 678 $ 0 Product warranty 367 471 Sales return reserve 77 87 Other taxes 126 102 Other 124 129 Other accrued liabilities $ 1,372 $ 789 |
Product warranty liability | December 31, 2019 (in thousands) Liability, beginning balance $ 471 Net expenses 736 Warranty claims (736 ) Accrual revisions (104 ) Liability, ending balance $ 367 |
NOTE 7 - OPERATING LEASE COMM_2
NOTE 7 - OPERATING LEASE COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases, Operating [Abstract] | |
Operating lease commitments | Operating Lease Commitments (in thousands) 2020 $ 755 2021 681 2022 308 2023 89 2024 82 Thereafter 141 Total $ 2,056 Less Imputed interest (200 ) Total operating lease liabilities $ 1,856 |
Supplemental balance sheet information related to leases | Balance at December 31, 2019 (in thousands) Right-of-use assets (Long-term other assets) $ 1,574 Lease liability-short term (Other accrued liabilities) 678 Lease liability-long term (Long-term other payables) 1,178 |
NOTE 11 - SHARE-BASED COMPENS_2
NOTE 11 - SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Share-based compensation | Year Ended December 31, 2019 2018 (in thousands) Cost of goods sold $ 28 $ 25 Research and development 288 266 Selling, general and administrative 855 939 Total share-based compensation $ 1,171 $ 1,230 |
Fair value of share-based awards for employee stock options | Employee Stock Options 2019 2018 Risk-free interest rates 2.31 % N/A Volatility factors 62.05 % N/A Expected life of the option in years 4.0 N/A Expected dividend yield None N/A |
Stock option activity | 2019 2018 Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Outstanding at beginning of year 25,000 $ 8.03 40,000 $ 6.10 Granted 25,000 4.98 - - Exercised - 0.00 (15,000 ) 2.83 Cancelled, Expired or Forfeited (25,000 ) 8.03 - - Outstanding at end of year 25,000 $ 4.98 5.34 25,000 $ 8.03 4.50 Vested or expected to vest at the end of the period 24,723 $ 4.98 5.34 22,924 $ 8.03 4.50 Exercisable at end of year 12,500 $ 4.98 5.34 7,813 $ 8.03 4.50 |
Restricted stock award including performance-based stock award activity under our share-based compensation plan | 2019 2018 Awards Weighted - Average Grant Date Fair Value Awards Weighted - Average Grant Date Fair Value Outstanding at beginning of year 558,856 $ 6.06 565,850 $ 5.09 Granted 276,700 4.57 206,856 7.11 Vested (224,089 ) 5.30 (213,100 ) 4.51 Cancelled (75,064 ) 7.30 (750 ) 4.24 Outstanding at end of year 536,403 $ 5.44 558,856 $ 6.06 |
Unamortized compensation expense | December 31, 2019 December 31, 2018 Unamortized future compensation expense $ 2,351,324 $ 2,835,978 Remaining weighted average amortization period in years 2.40 2.63 |
NOTE 12 - SHARE REPURCHASE PR_2
NOTE 12 - SHARE REPURCHASE PROGRAMS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Summary of stock repurchase program | Repurchases by Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program Approximate Dollar Value of Shares that May Yet Be Purchased under the Program Dec. 2018 101,975 $ 5.25 101,975 $ 1,464,470 Jan. 2019 43,701 $ 5.39 43,701 $ 1,229,115 Mar. 2019 13,911 $ 5.49 13,911 $ 1,152,793 Apr. 2019 69,141 $ 5.34 69,141 $ 783,687 May 2019 69,798 $ 4.63 69,798 $ 461,417 Jun. 2019 49,255 $ 4.44 49,255 $ 244,197 Jul. 2019 55,280 $ 4.37 55,280 $ 2,798 Aug. 2019 624 $ 4.32 624 $ 3 Total 403,685 $ 4.95 403,685 |
NOTE 13 - INCOME TAXES (Tables)
NOTE 13 - INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of income (loss) before taxes | Year Ended December 31, (in thousands) 2019 2018 U.S. operations $ (2,518 ) $ (137 ) Foreign operations 1,362 2,034 Total income (loss) before taxes $ (1,156 ) $ 1,897 |
Components of income tax expense (benefit) | (in thousands) Year Ended December 31, Current tax expense (benefit) 2019 2018 U.S. federal $ (42 ) $ 5 State 8 20 Foreign 65 266 31 291 Deferred tax expense (benefit) – U.S. federal - - Total income tax expense (benefit) $ 31 $ 291 |
Reconciliation of effective income tax | Year Ended December 31, 2019 2018 (in thousands) Statutory tax $ (243 ) $ 398 State and foreign income tax, net of federal income tax benefit (230 ) (159 ) Valuation allowance for deferred tax assets 568 245 Federal rate change - - Foreign sourced deemed dividend income - - Stock based compensation (177 ) (282 ) AMT credit refund - - Other 113 89 Total income tax expense (benefit) $ 31 $ 291 |
Schedule of deferred tax assets and liabilities | Year Ended December 31, 2019 2018 (in thousands) Deferred income tax assets: Allowance for doubtful accounts $ 13 $ 8 Inventory and product return reserves 464 467 Compensation accruals 1,723 1,515 Accrued liabilities 129 321 Book-over-tax depreciation and amortization 25 21 Foreign net operating loss carryforwards 3 132 U.S. net operating loss carryforwards 2,904 2,345 U.S. credit carryforwards 2,280 2,161 7,541 6,970 Valuation Allowance (7,541 ) (6,970 ) Total Deferred Income Tax Assets $ - $ - |
Schedule of unrecognized tax benefits | Year Ended December 31, 2019 2018 (in thousands) Unrecognized tax benefits, opening balance $ 308 $ 272 Prior period tax position increases 10 - Additions based on tax positions related to current year 30 36 Unrecognized tax benefits, ending balance $ 348 $ 308 |
NOTE 14 - SEGMENT AND GEOGRAP_2
NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Summary of operating information by geographic area | Year Ended December 31, (in thousands) 2019 2018 Net sales: U.S. $ 1,735 $ 3,436 Europe 8,828 13,251 Rest of World 11,005 12,537 $ 21,568 $ 29,224 Included in Europe and Rest of World net sales are the following significant balances: Germany $ 2,507 $ 4,428 China $ 2,934 $ 4,489 Operating income: U.S. $ 317 $ 802 Europe (1,108 ) 258 Rest of World (487 ) 678 $ (1,278 ) $ 1,738 Identifiable assets: U.S. $ 12,818 $ 18,976 Europe 5,917 5,279 Rest of World 9,546 6,468 $ 28,281 $ 30,723 |
NOTE 1 - SUMMARY OF SIGNIFICA_4
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net sales | $ 21,568 | $ 29,224 |
Equipment Sales | ||
Net sales | 12,553 | 19,002 |
Adapter Sales | ||
Net sales | 5,535 | 6,954 |
Software and Maintenance Sales | ||
Net sales | $ 3,480 | $ 3,268 |
NOTE 1 - SUMMARY OF SIGNIFICA_5
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Cash and cash equivalents held in foreign banks | $ 8,700 | $ 6,400 |
Advertising expenses | $ 173 | $ 174 |
Common stock equivalent shares | 65,000 | 136,000 |
Options excluded from the computation of diluted EPS | 29,752 | 25,000 |
Foreign accounts receivable | $ 1,255 | $ 1,931 |
NOTE 2 - ACCOUNTS RECEIVABLE NE
NOTE 2 - ACCOUNTS RECEIVABLE NET (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 4,179 | $ 3,846 |
Less allowance for doubtful receivables | 80 | 75 |
Trade accounts receivable, net | $ 4,099 | $ 3,771 |
NOTE 2 - ACCOUNTS RECEIVABLE _2
NOTE 2 - ACCOUNTS RECEIVABLE NET (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Receivables [Abstract] | ||
Beginning balance | $ 75 | $ 73 |
Bad debt expense (reversal) | 5 | 2 |
Accounts written-off | 0 | 0 |
Recoveries | 0 | 0 |
Ending balance | $ 80 | $ 75 |
NOTE 3 - INVENTORIES (Details)
NOTE 3 - INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 2,416 | $ 2,925 |
Work-in-process | 1,832 | 1,584 |
Finished goods | 772 | 676 |
Inventories | $ 5,020 | $ 5,185 |
NOTE 4 - PROPERTY, PLANT AND _3
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 395 | $ 399 |
Equipment | 5,606 | 5,378 |
Sales demonstration equipment | 778 | 942 |
Property and equipment gross | 6,779 | 6,719 |
Less accumulated depreciation | 5,111 | 4,734 |
Property and equipment, net | $ 1,668 | $ 1,985 |
NOTE 4 - PROPERTY, PLANT AND _4
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 867 | $ 955 |
NOTE 6 - OTHER ACCRUED LIABIL_3
NOTE 6 - OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Lease liability - short term | $ 678 | $ 0 |
Product warranty | 367 | 471 |
Sales return reserve | 77 | 87 |
Other taxes | 126 | 102 |
Other | 124 | 129 |
Other accrued liabilities | $ 1,372 | $ 789 |
NOTE 6 - OTHER ACCRUED LIABIL_4
NOTE 6 - OTHER ACCRUED LIABILITIES (Details 1) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Liability, beginning balance | $ 471 |
Net expenses | 736 |
Warranty claims | (736) |
Accrual revisions | (104) |
Liability, ending balance | $ 367 |
NOTE 7 - OPERATING LEASE COMM_3
NOTE 7 - OPERATING LEASE COMMITMENTS (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases, Operating [Abstract] | |
2020 | $ 755 |
2021 | 681 |
2022 | 308 |
2023 | 89 |
2024 | 82 |
Thereafter | 141 |
Total | 2,056 |
Less: imputed interest | (200) |
Total operating lease liability | $ 1,856 |
NOTE 7 - OPERATING LEASE COMM_4
NOTE 7 - OPERATING LEASE COMMITMENTS (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Leases, Operating [Abstract] | ||
Right-of-use assets (Long-term other assets) | $ 1,574 | $ 0 |
Lease liability-short term (Other accrued liabilities) | 678 | 0 |
Lease liability-long term (Long-term other payables) | $ 1,178 | $ 0 |
NOTE 7 - OPERATING LEASE COMM_5
NOTE 7 - OPERATING LEASE COMMITMENTS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash paid for operating lease liabilities | $ 757 | |
Weighted average remaining lease term | 3 years 4 months 20 days | |
Weighted average discount rate | 5.00% | |
Operating lease costs | $ 685 | |
Short-term lease costs | 32 | |
United States | ||
Lease base annual rental payments | 351 | $ 341 |
China | ||
Lease base annual rental payments | 305 | 288 |
Germany | ||
Lease base annual rental payments | $ 57 | $ 67 |
NOTE 8 - OTHER COMMITMENTS (Det
NOTE 8 - OTHER COMMITMENTS (Details Narrative) $ in Thousands | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase and other obligations | $ 1,334 |
After 2019 | $ 323 |
NOTE 10 - STOCK AND RETIREMEN_2
NOTE 10 - STOCK AND RETIREMENT PLANS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||
401(k) Retirement Savings Plan matching contribution | $ 239 | $ 237 |
Employer matching contributions owed to the plan | $ 211 | $ 271 |
NOTE 11 - SHARE-BASED COMPENS_3
NOTE 11 - SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based compensation | $ 1,171 | $ 1,230 |
Cost Of Goods Sold | ||
Share-based compensation | 28 | 25 |
Research and Development Expense | ||
Share-based compensation | 288 | 266 |
Selling, General and Administrative Expenses | ||
Share-based compensation | $ 855 | $ 939 |
NOTE 11 - SHARE-BASED COMPENS_4
NOTE 11 - SHARE-BASED COMPENSATION (Details 1) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | [1] | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |||
Risk-free interest rates | 2.31% | ||
Volatility factors | 62.05% | ||
Expected life of the option in years | 4 years | ||
Expected dividend yield | 0.00% | ||
[1] | N/A |
NOTE 11 - SHARE-BASED COMPENS_5
NOTE 11 - SHARE-BASED COMPENSATION (Details 2) - Stock option - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number Of options | ||
Outstanding at beginning of year | 25,000 | 40,000 |
Granted | 25,000 | 0 |
Exercised | 0 | (15,000) |
Cancelled, Expired or Forfeited | (25,000) | 0 |
Outstanding at end of year | 25,000 | 25,000 |
Vested or expected to vest at the end of the period | 24,723 | 22,924 |
Exercisable at end of year | 12,500 | 7,813 |
Weighted-Average Exercise Price | ||
Outstanding at beginning of year | $ 8.03 | $ 6.10 |
Granted | 4.98 | 0 |
Exercised | .00 | 2.83 |
Cancelled, Expired or Forfeited | 8.03 | 0 |
Outstanding at end of year | 4.98 | 8.03 |
Vested or expected to vest at the end of the period | 4.98 | 8.03 |
Exercisable at end of year | $ 4.98 | $ 8.03 |
Weighted-Average Remaining Contractual Life in Years | ||
Outstanding at end of year | 5 years 4 months 2 days | 4 years 6 months |
Vested or expected to vest at the end of the period | 5 years 4 months 2 days | 4 years 6 months |
Exercisable at end of year | 5 years 4 months 2 days | 4 years 6 months |
NOTE 11 - SHARE-BASED COMPENS_6
NOTE 11 - SHARE-BASED COMPENSATION (Details 3) - Restricted Stock Award - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number Of Awards | ||
Outstanding at beginning of year | 558,856 | 565,850 |
Granted | 276,700 | 206,856 |
Vested | (224,089) | (213,100) |
Cancelled | (75,064) | (750) |
Outstanding at end of year | 536,403 | 558,856 |
Weighted-Average Grant Date Fair Value | ||
Outstanding at beginning of year | $ 6.06 | $ 5.09 |
Granted | 4.57 | 7.11 |
Vested | 5.30 | 4.51 |
Cancelled | 7.30 | 4.24 |
Outstanding at end of year | $ 5.44 | $ 6.06 |
NOTE 11 - SHARE-BASED COMPENS_7
NOTE 11 - SHARE-BASED COMPENSATION (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||
Unamortized expected future compensation expense | $ 2,351,324 | $ 2,835,978 |
Remaining weighted average amortization period | 2 years 4 months 24 days | 2 years 7 months 17 days |
NOTE 11 - SHARE-BASED COMPENS_8
NOTE 11 - SHARE-BASED COMPENSATION (Details Narrative) | Dec. 31, 2019USD ($) |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Aggregate intrinsic value of options outstanding | $ 0 |
NOTE 12 - SHARE REPURCHASE PR_3
NOTE 12 - SHARE REPURCHASE PROGRAMS (Details) | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Total number of shares purchased | 403,685 |
Average price paid per share | $ / shares | $ 4.95 |
Total number of shares purchased as part of publicly announced repurchase program | 403,685 |
Repurchase One | |
Total number of shares purchased | 101,975 |
Average price paid per share | $ / shares | $ 5.25 |
Total number of shares purchased as part of publicly announced repurchase program | 101,975 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 1,464,470 |
Repurchase Two | |
Total number of shares purchased | 43,701 |
Average price paid per share | $ / shares | $ 5.39 |
Total number of shares purchased as part of publicly announced repurchase program | 43,701 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 1,229,115 |
Repurchase Three | |
Total number of shares purchased | 13,911 |
Average price paid per share | $ / shares | $ 5.49 |
Total number of shares purchased as part of publicly announced repurchase program | 13,911 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 1,152,793 |
Repurchase Four | |
Total number of shares purchased | 69,141 |
Average price paid per share | $ / shares | $ 5.34 |
Total number of shares purchased as part of publicly announced repurchase program | 69,141 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 783,687 |
Repurchase Five | |
Total number of shares purchased | 69,798 |
Average price paid per share | $ / shares | $ 4.63 |
Total number of shares purchased as part of publicly announced repurchase program | 69,798 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 461,417 |
Repurchase Six | |
Total number of shares purchased | 49,255 |
Average price paid per share | $ / shares | $ 4.44 |
Total number of shares purchased as part of publicly announced repurchase program | 49,255 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 244,197 |
Repurchase Seven | |
Total number of shares purchased | 55,280 |
Average price paid per share | $ / shares | $ 4.37 |
Total number of shares purchased as part of publicly announced repurchase program | 55,280 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 2,798 |
Repurchase Eight | |
Total number of shares purchased | 624 |
Average price paid per share | $ / shares | $ 4.32 |
Total number of shares purchased as part of publicly announced repurchase program | 624 |
Approximate dollar value of shares that may yet be purchased under the program | $ | $ 3 |
NOTE 13 - INCOME TAXES (Details
NOTE 13 - INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
U.S. operations | $ (2,518) | $ (137) |
Foreign operations | 1,362 | 2,034 |
Total income (loss) before taxes | $ (1,156) | $ 1,897 |
NOTE 13 - INCOME TAXES (Detai_2
NOTE 13 - INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income tax expense (benefit) consists of: | ||
U.S. federal | $ (42) | $ 5 |
State | 8 | 20 |
Foreign | 65 | 266 |
Total Income tax expense (benefit) | 31 | 291 |
Deferred tax expense (benefit) - U.S. federal | 0 | 0 |
Total income tax expense (benefit) | $ 31 | $ 291 |
NOTE 13 - INCOME TAXES (Detai_3
NOTE 13 - INCOME TAXES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Statutory tax | $ (243) | $ 398 |
State and foreign income tax, net of federal income tax benefit | (230) | (159) |
Valuation allowance for deferred tax assets | 568 | 245 |
Federal rate change | 0 | 0 |
Foreign sourced deemed dividend income | 0 | 0 |
Stock based compensation | (177) | (282) |
AMT credit refund | 0 | 0 |
Other | 113 | 89 |
Total income tax expense (benefit) | $ 31 | $ 291 |
NOTE 13 - INCOME TAXES (Detai_4
NOTE 13 - INCOME TAXES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred income tax assets: | ||
Allowance for doubtful accounts | $ 13 | $ 8 |
Inventory and product return reserves | 464 | 467 |
Compensation accruals | 1,723 | 1,515 |
Accrued liabilities | 129 | 321 |
Book-over-tax depreciation and amortization | 25 | 21 |
Foreign net operating loss carryforwards | 3 | 132 |
U.S. net operating loss carryforwards | 2,904 | 2,345 |
U.S. credit carryforwards | 2,280 | 2,161 |
Deferred tax assets, gross | 7,541 | 6,970 |
Valuation allowance | (7,541) | (6,970) |
Total deferred income tax assets | $ 0 | $ 0 |
NOTE 13 - INCOME TAXES (Detai_5
NOTE 13 - INCOME TAXES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits, opening balance | $ 308 | $ 272 |
Prior period tax position increases | 10 | 0 |
Additions based on tax positions related to current year | 30 | 36 |
Unrecognized tax benefits, ending balance | $ 348 | $ 308 |
NOTE 13 - INCOME TAXES (Detai_6
NOTE 13 - INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Change in valuation allowance for deferred tax assets | $ 571 | $ 140 |
U.S. net operating loss carryforwards | $ 13,830 | |
Expiration years | 2022 to 2039 |
NOTE 14 - SEGMENT AND GEOGRAP_3
NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net sales | $ 21,568 | $ 29,224 |
Operating income | (1,278) | 1,738 |
Identifiable assets | 28,281 | 30,723 |
U.S. | ||
Net sales | 1,735 | 3,436 |
Operating income | 317 | 802 |
Identifiable assets | 12,818 | 18,976 |
Europe | ||
Net sales | 8,828 | 13,251 |
Operating income | (1,108) | 258 |
Identifiable assets | 5,917 | 5,279 |
Rest of World | ||
Net sales | 1,105 | 12,537 |
Operating income | (487) | 678 |
Identifiable assets | 9,546 | 6,468 |
Germany | ||
Net sales | 2,507 | 4,428 |
China | ||
Net sales | $ 2,934 | $ 4,489 |