Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | DATA I/O CORP | |
Entity Central Index Key | 0000351998 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
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 Common Stock, Shares Outstanding | 8,221,535 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | WA | |
Entity File Number | 0-10394 |
CONSOLIDATED BALANCE SHEETS (in
CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 13,814 | $ 13,936 |
Trade accounts receivable, net of allowance for doubtful accounts of $79 and $80, respectively | 3,107 | 4,099 |
Inventories | 4,804 | 5,020 |
Other current assets | 1,709 | 924 |
TOTAL CURRENT ASSETS | 23,434 | 23,979 |
Property, plant and equipment - net | 1,813 | 1,668 |
Income tax receivable | 0 | 640 |
Other assets | 1,850 | 1,994 |
TOTAL ASSETS | 27,097 | 28,281 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,072 | 1,151 |
Accrued compensation | 1,214 | 1,541 |
Deferred revenue | 1,421 | 1,387 |
Other accrued liabilities | 1,286 | 1,372 |
Income taxes payable | 28 | 31 |
TOTAL CURRENT LIABILITIES | 5,021 | 5,482 |
Operating lease liabilities | 1,045 | 1,178 |
Long-term other payables | 67 | 91 |
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, 8,221,447 shares as of March 31, 2020 and 8,212,748 shares as of December 31, 2019 | 19,001 | 18,748 |
Accumulated earnings | 1,954 | 2,508 |
Accumulated other comprehensive income (loss) | 9 | 274 |
TOTAL STOCKHOLDERS' EQUITY | 20,964 | 21,530 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 27,097 | $ 28,281 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Trade accounts receivable, net of allowance | $ 79 | $ 80 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, authorized shares | 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 | 8,221,447 | 8,212,748 |
Common stock, outstanding shares | 8,221,447 | 8,212,748 |
Series A Junior Participating | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, authorized shares | 200,000 | 200,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 4,785 | $ 6,058 |
Cost of goods sold | 2,001 | 2,373 |
Gross margin | 2,784 | 3,685 |
Operating expenses: | ||
Research and development | 1,582 | 1,681 |
Selling, general and administrative | 1,811 | 1,975 |
Total operating expenses | 3,393 | 3,656 |
Operating income (loss) | (609) | 29 |
Non-operating income: | ||
Interest income | 8 | 12 |
Gain on sale of assets | 0 | 60 |
Foreign currency transaction gain (loss) | 52 | (104) |
Total non-operating income | 60 | (32) |
Income (loss) before income taxes | (549) | (3) |
Income tax (expense) benefit | (5) | 29 |
Net income (loss) | $ (554) | $ 26 |
Basic earnings (loss) per share | $ (0.07) | $ 0 |
Diluted earnings (loss) per share | $ (0.07) | $ 0 |
Weighted-average basic shares | 8,219 | 8,303 |
Weighted-average diluted shares | 8,219 | 8,417 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Other Comprehensive Income [Abstract] | ||
Net income (loss) | $ (554) | $ 26 |
Other comprehensive income (loss): | ||
Foreign currency translation gain (loss) | (265) | 128 |
Comprehensive income (loss) | $ (819) | $ 154 |
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, Shares at Dec. 31, 2018 | 8,338,628 | |||
Beginning Balance, Amount at Dec. 31, 2018 | $ 19,254 | $ 3,695 | $ 408 | $ 23,357 |
Repurchased shares, Shares | (57,612) | |||
Repurchased shares, Amount | $ (313) | (313) | ||
Stock awards issued, net of tax withholding, Shares | 4,046 | |||
Stock awards issued, net of tax withholding, Amount | $ (8) | (8) | ||
Issuance of stock through Employee Stock Purchase Plan, Shares | 2,763 | |||
Issuance of stock through Employee Stock Purchase Plan, Amount | $ 15 | 15 | ||
Share-based compensation | 287 | 287 | ||
Net income (loss) | 26 | 26 | ||
Other comprehensive income (loss) | 128 | 128 | ||
Ending Balance, Shares at Mar. 31, 2019 | 8,287,825 | |||
Ending Balance, Amount at Mar. 31, 2019 | $ 19,235 | 3,721 | 536 | 23,492 |
Beginning Balance, Shares at Dec. 31, 2019 | 8,212,748 | |||
Beginning Balance, Amount at Dec. 31, 2019 | $ 18,748 | 2,508 | 274 | 21,530 |
Stock awards issued, net of tax withholding, Shares | 5,190 | |||
Stock awards issued, net of tax withholding, Amount | $ (10) | (10) | ||
Issuance of stock through Employee Stock Purchase Plan, Shares | 3,509 | |||
Issuance of stock through Employee Stock Purchase Plan, Amount | $ 14 | 14 | ||
Share-based compensation | 249 | 249 | ||
Net income (loss) | (554) | (554) | ||
Other comprehensive income (loss) | (265) | (265) | ||
Ending Balance, Shares at Mar. 31, 2020 | 8,221,447 | |||
Ending Balance, Amount at Mar. 31, 2020 | $ 19,001 | $ 1,954 | $ 9 | $ 20,964 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (554) | $ 26 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 197 | 204 |
Gain on sale of assets | 0 | (60) |
Equipment transferred to cost of goods sold | (2) | (12) |
Share-based compensation | 249 | 287 |
Net change in: | ||
Trade accounts receivable | 973 | (931) |
Inventories | 189 | (514) |
Other current assets | (792) | (234) |
Accounts payable and accrued liabilities | (468) | (2,050) |
Deferred revenue | 24 | 19 |
Other long-term liabilities | (135) | (312) |
Deposits and other long-term assets | 771 | 313 |
Net cash provided by (used in) operating activities | 452 | (3,264) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (340) | (175) |
Net proceeds from sale of assets | 0 | 60 |
Cash provided by (used in) investing activities | (340) | (115) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from issuance of common stock, less payments for shares withheld to cover tax | 4 | 6 |
Repurchase of common stock | 0 | (312) |
Cash provided by (used in) financing activities | 4 | (306) |
Increase (decrease) in cash and cash equivalents | 116 | (3,685) |
Effects of exchange rate changes on cash | (238) | 124 |
Cash and cash equivalents at beginning of period | 13,936 | 18,343 |
Cash and cash equivalents at end of period | 13,814 | 14,782 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for: income taxes | $ 63 | $ 66 |
NOTE 1 - FINANCIAL STATEMENT PR
NOTE 1 - FINANCIAL STATEMENT PREPARATION | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 1 - FINANCIAL STATEMENT PREPARATION | Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) prepared the financial statements as of March 31, 2020 and March 31, 2019 according to the rules and regulations of the Securities and Exchange Commission ("SEC"). These statements are unaudited but, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the results for the periods presented. The balance sheet at December 31, 2019 has been derived from the audited financial statements at that date. We have condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America according to such SEC rules and regulations. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These financial statements should be read in conjunction with the annual audited financial statements and the accompanying notes included in our Form 10-K for the year ended December 31, 2019. Revenue Recognition 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. 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 2020 and 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 considers 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: Three Months Ended Net sales by type March 31, 2020 Change March 31, 2019 (in thousands) Equipment Sales $ 2,587 (30.3 $ 3,711 Adapter Sales 1,345 (7.9 1,461 Software and Maintenance Sales 853 (3.7 886 Total $ 4,785 (21.0 $ 6,058 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. Income Tax 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. The CARES Act, enacted in Q1 2020, accelerated the AMT credit refund of $640,000 to be a current asset instead of non-current. Recently Adopted 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. The new lease standard requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet for operating leases, and also requires additional quantitative and qualitative disclosures to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. 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. See Note 5 of the accompanying notes to the condensed consolidated financial statements for additional information regarding our operating leases. |
NOTE 2 - INVENTORIES
NOTE 2 - INVENTORIES | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
NOTE 2 - INVENTORIES | Inventories consisted of the following components: March 31, 2020 December 31, 2019 (in thousands) Raw material $ 2,159 $ 2,416 Work-in-process 1,719 1,832 Finished goods 926 772 Inventories $ 4,804 $ 5,020 |
NOTE 3 - PROPERTY, PLANT AND EQ
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET | Property and equipment consisted of the following components: March 31, 2020 December 31, 2019 (in thousands) Leasehold improvements $ 390 $ 395 Equipment 5,575 5,606 Sales demonstration equipment 979 778 6,944 6,779 Less accumulated depreciation 5,131 5,111 Property and equipment, net $ 1,813 $ 1,668 |
NOTE 4 - OTHER ACCRUED LIABILIT
NOTE 4 - OTHER ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities [Abstract] | |
NOTE 4 - OTHER ACCRUED LIABILITIES | Other accrued liabilities consisted of the following components: March 31, 2020 December 31, 2019 (in thousands) Lease liability - short term $ 640 $ 678 Product warranty 361 367 Sales return reserve 77 77 Other taxes 90 126 Other 118 124 Other accrued liabilities $ 1,286 $ 1,372 The changes in our product warranty liability for the three months ending March 31, 2020 are as follows: March 31, 2020 (in thousands) Liability, beginning balance $ 367 Net expenses 175 Warranty claims (175 ) Accrual revisions (6 ) Liability, ending balance $ 361 |
NOTE 5 - LEASES
NOTE 5 - LEASES | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
NOTE 5 - LEASES | Our leasing arrangements are primarily for facility leases we use to conduct our operations. The following table presents our future lease payments for long-term operating leases as of March 31, 2020: Operating Lease Commitments (in thousands) 2020 (remaining) $ 570 2021 685 2022 315 2023 90 2024 82 Thereafter 139 Total $ 1,881 Less Imputed interest (196 ) Total operating lease liabilities $ 1,685 Cash paid for operating lease liabilities for the three months ended March 31, 2020 and 2019 were $185,000 and $196,000 respectively. There were two new leases during the three months ended March 31, 2020. The following table presents supplemental balance sheet information related to leases as of March 31, 2020: Balance at March 31, 2020 Balance at December 31, 2019 (in thousands) Right-of-use assets (Long-term other assets) $ 1,430 $ 1,574 Lease liability-short term (Other accrued liabilities) 640 678 Lease liability-long term (Long-term other payables) 1,045 1,178 At March 31, 2020, the weighted average remaining lease term is 3.24 and the weighted average discount rate used is 5%. The components of our lease expense for the three months ended March 31, 2020 and 2019 include operating lease costs of $163,000 and $166,000 respectively, and short-term lease costs of $7,000 and $5,000 respectively. Our real estate facility leases are described below: During the third quarter of 2017, we amended our lease agreement, extending the lease for the Redmond, Washington headquarters facility through July 31, 2022. This lease is for approximately 20,460 square feet. We signed a lease agreement effective November 1, 2015 that extends the lease for a facility located in Shanghai, China through October 31, 2021. This lease is for approximately 19,400 square feet. 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 the lease through February 28, 2022. This lease is for approximately 4,895 square feet. |
NOTE 6 - OTHER COMMITMENTS
NOTE 6 - OTHER COMMITMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 6 - 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 March 31, 2020, the purchase commitments and other obligations totaled $1.3 million of which all but $269,000 are expected to be paid over the next twelve months. |
NOTE 7 - CONTINGENCIES
NOTE 7 - CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 7 - CONTINGENCIES | As of March 31, 2020, 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 8 - EARNINGS PER SHARE
NOTE 8 - EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
NOTE 8 - EARNINGS PER SHARE | Basic earnings per share is calculated based on the weighted average number of common shares outstanding during each period. Diluted earnings per share is calculated based on these same weighted average shares outstanding plus the effect of potential shares issuable upon assumed exercise of stock options based on the treasury stock method. Potential shares issuable upon the exercise of stock options are excluded from the calculation of diluted earnings per share to the extent their effect would be anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended March 31, 2020 March 31, 2019 (in thousands except per share data) Numerator for basic and diluted earnings (loss) per share: Net income (loss) $ (554 ) $ 26 Denominator for basic earnings (loss) per share: Weighted-average shares 8,219 8,303 Employee stock options and awards 56 114 Denominator for diluted earnings (loss) per share: Adjusted weighted-average shares & assumed conversions of stock options 8,275 8,417 Basic and diluted earnings (loss) per share: Total basic earnings (loss) per share $ (0.07 ) $ 0.00 Total diluted earnings (loss) per share $ (0.07 ) $ 0.00 Options to purchase 25,000 and 25,000 shares respectively were outstanding as of March 31, 2020 and 2019, but were excluded from the computation of diluted earnings per share for the periods then ended because the options were anti-dilutive. |
NOTE 9 - SHARE-BASED COMPENSATI
NOTE 9 - SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
NOTE 9 - 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 reduced for estimated forfeitures. The impact on our results of operations of recording share-based compensation, net of forfeitures, for the three months ended March 31, 2020 and 2019, respectively, were as follows: Three Months Ended March 31, 2020 March 31, 2019 (in thousands) Cost of goods sold $ 6 $ 5 Research and development 64 63 Selling, general and administrative 179 219 Total share-based compensation $ 249 $ 287 Equity awards granted during the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended March 31, 2020 March 31, 2019 Restricted Stock Units - 500 Stock Options - - Non-employee directors Restricted Stock Units (“RSU’s”) vest over one year and options vest over three years and have a six-year exercise period. Employee RSU’s typically vest over four years and employee Non-Qualified stock options typically vest quarterly over 4 years and have a six-year exercise period. The remaining unamortized expected future equity compensation expense and remaining amortization period associated with unvested option grants, restricted stock awards and restricted stock unit awards at March 31, 2020 are: March 31, 2020 Unamortized future equity compensation expense (in thousands) $ 2,133 Remaining weighted average amortization period (in years) 2.27 |
NOTE 1 - FINANCIAL STATEMENT _2
NOTE 1 - FINANCIAL STATEMENT PREPARATION (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue Recognition | 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. 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 2020 and 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 considers 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: Three Months Ended Net sales by type March 31, 2020 Change March 31, 2019 (in thousands) Equipment Sales $ 2,587 (30.3%) $ 3,711 Adapter Sales 1,345 (7.9%) 1,461 Software and Maintenance Sales 853 (3.7%) 886 Total $ 4,785 (21.0%) $ 6,058 |
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. |
Income Tax | 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. The CARES Act, enacted in Q1 2020, accelerated the AMT credit refund of $640,000 to be a current asset instead of non-current. |
Recently Adopted 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. The new lease standard requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet for operating leases, and also requires additional quantitative and qualitative disclosures to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. 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. See Note 5 of the accompanying notes to the condensed consolidated financial statements for additional information regarding our operating leases. |
NOTE 1 - FINANCIAL STATEMENT _3
NOTE 1 - FINANCIAL STATEMENT PREPARATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Disaggregation of revenue | Three Months Ended Net sales by type March 31, 2020 Change March 31, 2019 (in thousands) Equipment Sales $ 2,587 (30.3%) $ 3,711 Adapter Sales 1,345 (7.9%) 1,461 Software and Maintenance Sales 853 (3.7%) 886 Total $ 4,785 (21.0%) $ 6,058 |
NOTE 2 - INVENTORIES (Tables)
NOTE 2 - INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | March 31, 2020 December 31, 2019 (in thousands) Raw material $ 2,159 $ 2,416 Work-in-process 1,719 1,832 Finished goods 926 772 Inventories $ 4,804 $ 5,020 |
NOTE 3 - PROPERTY, PLANT AND _2
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, plant, and equipment, net | March 31, 2020 December 31, 2019 (in thousands) Leasehold improvements $ 390 $ 395 Equipment 5,575 5,606 Sales demonstration equipment 979 778 6,944 6,779 Less accumulated depreciation 5,131 5,111 Property and equipment, net $ 1,813 $ 1,668 |
NOTE 4 - OTHER ACCRUED LIABIL_2
NOTE 4 - OTHER ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities [Abstract] | |
Other accrued liabilities | March 31, 2020 December 31, 2019 (in thousands) Lease liability - short term $ 640 $ 678 Product warranty 361 367 Sales return reserve 77 77 Other taxes 90 126 Other 118 124 Other accrued liabilities $ 1,286 $ 1,372 |
Product warranty liability | March 31, 2020 (in thousands) Liability, beginning balance $ 367 Net expenses 175 Warranty claims (175 ) Accrual revisions (6 ) Liability, ending balance $ 361 |
NOTE 5 - LEASES (Tables)
NOTE 5 - LEASES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Operating lease commitments | Operating Lease Commitments (in thousands) 2020 (remaining) $ 570 2021 685 2022 315 2023 90 2024 82 Thereafter 139 Total $ 1,881 Less Imputed interest (196 ) Total operating lease liabilities $ 1,685 |
Supplemental balance sheet information related to leases | Balance at March 31, 2020 Balance at December 31, 2019 (in thousands) Right-of-use assets (Long-term other assets) $ 1,430 $ 1,574 Lease liability-short term (Other accrued liabilities) 640 678 Lease liability-long term (Long-term other payables) 1,045 1,178 |
NOTE 8 - EARNINGS PER SHARE (Ta
NOTE 8 - EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share | Three Months Ended March 31, 2020 March 31, 2019 (in thousands except per share data) Numerator for basic and diluted earnings (loss) per share: Net income (loss) $ (554 ) $ 26 Denominator for basic earnings (loss) per share: Weighted-average shares 8,219 8,303 Employee stock options and awards 56 114 Denominator for diluted earnings (loss) per share: Adjusted weighted-average shares & assumed conversions of stock options 8,275 8,417 Basic and diluted earnings (loss) per share: Total basic earnings (loss) per share $ (0.07 ) $ 0.00 Total diluted earnings (loss) per share $ (0.07 ) $ 0.00 |
NOTE 9 - SHARE-BASED COMPENSA_2
NOTE 9 - SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Impact on operations of recording share-based compensation | Three Months Ended March 31, 2020 March 31, 2019 (in thousands) Cost of goods sold $ 6 $ 5 Research and development 64 63 Selling, general and administrative 179 219 Total share-based compensation $ 249 $ 287 |
Equity award activity | Three Months Ended March 31, 2020 March 31, 2019 Restricted Stock Units - 500 Stock Options - - |
Future equity compensation expense | March 31, 2020 Unamortized future equity compensation expense (in thousands) $ 2,133 Remaining weighted average amortization period (in years) 2.27 |
NOTE 1 - FINANCIAL STATEMENT _4
NOTE 1 - FINANCIAL STATEMENT PREPARATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | $ 4,785 | $ 6,058 |
Equipment sales | ||
Revenues | $ 2,587 | 3,711 |
Change in revenue | (30.30%) | |
Adapter sales | ||
Revenues | $ 1,345 | 1,461 |
Change in revenue | (7.90%) | |
Software and maintenance | ||
Revenues | $ 853 | 886 |
Change in revenue | (3.70%) | |
Total programming systems | ||
Revenues | $ 4,785 | $ 6,058 |
Change in revenue | (21.00%) |
NOTE 2 - INVENTORIES (Details)
NOTE 2 - INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 2,159 | $ 2,416 |
Work-in-process | 1,719 | 1,832 |
Finished goods | 926 | 772 |
Inventories | $ 4,804 | $ 5,020 |
NOTE 3 - PROPERTY, PLANT AND _3
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET (Details) (in thousands) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 390 | $ 395 |
Equipment | 5,575 | 5,606 |
Sale demonstration equipment | 979 | 778 |
Property and equipment gross | 6,944 | 6,779 |
Less accumulated depreciation | 5,131 | 5,111 |
Property and equipment, net | $ 1,813 | $ 1,668 |
NOTE 4 - OTHER ACCRUED LIABIL_3
NOTE 4 - OTHER ACCRUED LIABILITIES (Details) (in thousands) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities [Abstract] | ||
Lease liability - short term | $ 640 | $ 678 |
Product warranty | 361 | 367 |
Sales return reserve | 77 | 77 |
Other taxes | 90 | 126 |
Other | 118 | 124 |
Other accrued liabilities | $ 1,286 | $ 1,372 |
NOTE 4 - OTHER ACCRUED LIABIL_4
NOTE 4 - OTHER ACCRUED LIABILITIES (Details 1) (in thousands) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accrued Liabilities [Abstract] | |
Liability, beginning balance | $ 367 |
Net expenses | 175 |
Warranty claims | (175) |
Accrual revisions | (6) |
Liability, ending balance | $ 361 |
NOTE 5 - LEASES (Details) (in t
NOTE 5 - LEASES (Details) (in thousands) $ in Thousands | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
2020 (remaining) | $ 570 |
2021 | 685 |
2022 | 315 |
2023 | 90 |
2024 | 82 |
Thereafter | 139 |
Total | 1,881 |
Less: imputed interest | (196) |
Total operating lease liability | $ 1,685 |
NOTE 5 - LEASES (Details 1) (in
NOTE 5 - LEASES (Details 1) (in thousands) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Right-of-use assets (Long-term other assets) | $ 1,430 | $ 1,574 |
Lease liability-short term (Other accrued liabilities) | (640) | (678) |
Lease liability-long term (Long-term other payables) | $ (1,045) | $ (1,178) |
NOTE 5 - LEASES (Details Narrat
NOTE 5 - LEASES (Details Narrative) (in thousands) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Cash paid for operating lease liabilities | $ 185 | $ 196 |
Weighted average remaining lease term | 3 years 2 months 26 days | |
Weighted average discount rate | 5.00% | |
Operating lease costs | $ 163 | 166 |
Short-term lease costs | $ 7 | $ 5 |
NOTE 6 - OTHER COMMITMENTS (Det
NOTE 6 - OTHER COMMITMENTS (Details Narrative) $ in Thousands | Mar. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase and other obligations | $ 1,300 |
After 2019 | $ 269 |
NOTE 8 - EARNINGS PER SHARE (In
NOTE 8 - EARNINGS PER SHARE (In thousands, except per share data) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Numerator for basic and diluted earnings per share: Net income (loss) | $ (554) | $ 26 |
Denominator for basic earnings per share: weighted average shares | 8,219 | 8,303 |
Employee stock options and awards | 56 | 114 |
Denominator for diluted earnings per share: adjusted weighted-average shares and assumed conversions of stock options | 8,219 | 8,417 |
Total basic earnings (loss) per share | $ (0.07) | $ 0 |
Total diluted earnings (loss) per share | $ (0.07) | $ 0 |
NOTE 8 - EARNINGS PER SHARE (De
NOTE 8 - EARNINGS PER SHARE (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Anti dilutive options to purchase shares | 25,000 | 25,000 |
NOTE 9 - SHARE-BASED COMPENSA_3
NOTE 9 - SHARE-BASED COMPENSATION (Details) (in thousands, except per share data) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total share-based compensation | $ 249 | $ 287 |
Cost of Goods Sold | ||
Total share-based compensation | 6 | 5 |
Research and Development | ||
Total share-based compensation | 64 | 63 |
Selling, general and administrative | ||
Total share-based compensation | $ 179 | $ 219 |
NOTE 9 - SHARE-BASED COMPENSA_4
NOTE 9 - SHARE-BASED COMPENSATION (Details 1) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||
Restricted stock granted | 0 | 500 |
Stock options granted | 0 | 0 |
NOTE 9 - SHARE-BASED COMPENSA_5
NOTE 9 - SHARE-BASED COMPENSATION (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Unamortized future equity compensation expense | $ 2,133 |
Remaining weighted average amortization period | 2 years 3 months 7 days |