Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 27, 2015 | |
Entity Registrant Name | INTERPHASE CORP | |
Entity Central Index Key | 728249 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 8,393,981 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |||
ASSETS | |||
Cash and cash equivalents | $2,295 | $3,517 | |
Marketable securities | 3,579 | ||
Trade accounts receivable, less allowances of $10 and $32, respectively | 1,767 | 1,925 | |
Inventories | 2,148 | 2,136 | |
Prepaid expenses and other current assets | 566 | 528 | |
Total current assets | 6,776 | 11,685 | |
Machinery and equipment | 6,999 | 6,992 | |
Leasehold improvements | 591 | 587 | |
Furniture and fixtures | 152 | 159 | |
7,742 | 7,738 | ||
Less-accumulated depreciation and amortization | -6,257 | -6,174 | |
Total property and equipment, net | 1,485 | 1,564 | |
Capitalized software, net | 24 | 32 | |
Other assets | 423 | 403 | |
Total assets | 8,708 | 13,684 | |
Liabilities | |||
Accounts payable | 1,197 | 1,273 | |
Deferred revenue | 115 | 44 | |
Accrued liabilities | 1,340 | 1,540 | |
Accrued compensation | 180 | 103 | |
Short-term debt | 3,500 | ||
Total current liabilities | 2,832 | 6,460 | |
Deferred lease obligations | 1,142 | 1,215 | |
Total liabilities | 3,974 | 7,675 | |
Commitments and Contingencies | |||
Shareholders’ Equity | |||
Common stock, $0.10 par value; 100,000,000 shares authorized; 8,393,981 and 8,393,981 shares issued and outstanding, respectively | 839 | 839 | |
Additional paid in capital | 50,321 | 50,157 | |
Accumulated deficit | -45,864 | -44,355 | |
Cumulative other comprehensive loss | -562 | -632 | |
Total shareholders' equity | 4,734 | 6,009 | |
Total liabilities and shareholders' equity | $8,708 | $13,684 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Trade accounts receivable, allowances | $10 | $32 |
Common stock, par value (in dollars per share) | $0.10 | $0.10 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 8,393,981 | 8,393,981 |
Common stock, shares outstanding (in shares) | 8,393,981 | 8,393,981 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues: | ||
Product | $1,579 | $1,786 |
Service | 500 | 1,647 |
Total revenues | 2,079 | 3,433 |
Cost of sales: | ||
Product | 1,121 | 907 |
Service | 331 | 1,452 |
Total cost of sales | 1,452 | 2,359 |
Gross margin | 627 | 1,074 |
Research and development | 654 | 606 |
Sales and marketing | 704 | 625 |
General and administrative | 752 | 850 |
Total operating expenses | 2,110 | 2,081 |
Loss from operations | -1,483 | -1,007 |
Other loss, net | -17 | -1 |
Loss before income tax | -1,500 | -1,008 |
Income tax provision | 9 | 8 |
Net loss | ($1,509) | ($1,016) |
Net loss per share: | ||
Basic net loss per share (in dollars per share) | ($0.18) | ($0.14) |
Diluted net loss per share (in dollars per share) | ($0.18) | ($0.14) |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive (Loss) (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Net loss | ($1,509) | ($1,016) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 71 | -1 |
Realized gain on marketable securities | -1 | |
Other comprehensive income (loss) | 70 | -1 |
Comprehensive loss | ($1,439) | ($1,017) |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net loss | ($1,509) | ($1,016) |
Allowance for doubtful accounts and returns | -21 | 14 |
Writedowns of excess and obsolete inventories | 7 | 14 |
Depreciation and amortization | 92 | 58 |
Amortization of stock-based compensation | 164 | 123 |
Loss on retirement of machinery and equipment | 14 | |
Realized gain on marketable securities | -1 | |
Trade accounts receivable | 179 | 293 |
Inventories | -19 | -251 |
Prepaid expenses and other current assets | -74 | -597 |
Other assets | -27 | -54 |
Accounts payable, deferred revenue and accrued liabilities | -92 | 123 |
Accrued compensation | 77 | -58 |
Deferred lease obligations | -73 | 568 |
Net cash used in operating activities | -1,297 | -769 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -4 | -646 |
Purchases of capitalized software | -1 | |
Proceeds from the sale of marketable securities | 3,579 | 4,514 |
Purchases of marketable securities | -4,010 | |
Net cash provided by (used in) investing activities | 3,575 | -143 |
Cash flows from financing activities: | ||
Borrowings under credit facility | 3,500 | |
Payments on credit facility | -3,500 | -3,500 |
Net cash used in financing activities | -3,500 | |
Effect of exchange rate changes on cash and cash equivalents | -1 | |
Net decrease in cash and cash equivalents | -1,222 | -913 |
Cash and cash equivalents at beginning of period | 3,517 | 1,478 |
Cash and cash equivalents at end of period | $2,295 | $565 |
Note_1_Basis_of_Presentation
Note 1 - Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 1. - BASIS OF PRESENTATION |
Company Background | |
Interphase Corporation and its subsidiaries (“Interphase” or the “Company”) is a diversified information and communications technology company, committed to innovation through the process of identifying, developing and introducing new products and services. The Company offers products and services from embedded computing solutions, engineering design services, and contract manufacturing services to a new line of embedded computer vision products. | |
Embedded solutions include communications networking products for connectivity, interworking and packet processing. Clients for this product line include Alcatel-Lucent, GENBAND, Hewlett Packard, and Samsung. | |
The engineering design and manufacturing services serve a wide variety of industries within the electronics market, from machine-to-machine (“M2M”) and Internet of Things (“IoT”) designs utilizing Cellular, GPS and Wi-Fi tracking solutions to cost-saving redesigns for manufacturability. Interphase Productization services provide customers with the full suite of rapid design and manufacturing services required to quickly take a project from design concept to full production in the marketplace. | |
The penveu® product line, from the embedded computer vision line of business, addresses both the education and enterprise markets. penveu® is a handheld device that adds interactivity to projectors and large screen displays, turning flat surfaces into an interactive display. | |
Founded in 1974, the Company is located in Carrollton, Texas, with sales offices in the United States and Europe. See Note 8 for information regarding the Company’s revenues related to North America and foreign regions. | |
Management’s Plans | |
The Company has incurred recurring losses, including a loss of $1.5 million during the three months ended March 31, 2015, has an accumulated deficit of $45.9 million as of March 31, 2015 and has used $1.3 million in net cash from operating activities for the three months ended March 31, 2015. These factors, among others, have resulted in management taking steps to reduce costs through restructuring activities and to engage in various capital generating initiatives. Increased revenue generation from penveu is critical to the Company’s future success and management’s plans and activities are focused on generating the necessary capital to allow penveu to be a success in the market. If the Company is unable to achieve sufficient near-term revenue growth, the Company could be required to make near-term decisions to provide the liquidity needed to fund marketing and product launch activities related to the introduction of penveu. However, there can be no assurance that management will be able to successfully generate sufficient capital through these activities, nor that management will be successful in commercializing existing and new product and service offerings. | |
Basis of Presentation | |
The accompanying condensed consolidated financial statements include the accounts of Interphase Corporation and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. While the accompanying condensed consolidated financial statements are unaudited, they have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, all material adjustments and disclosures necessary to fairly present the results of such periods have been made. All such adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2014. |
Note_2_Stockbased_Compensation
Note 2 - Stock-based Compensation | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 2. - | ||||||||
STOCK-BASED COMPENSATION | |||||||||
Stock Options | |||||||||
The Interphase Corporation 2014 Long-Term Stock Incentive Plan has been adopted by the Company’s Board of Directors and approved by its shareholders. Awards granted subsequent to May 5, 2014 have been made under this plan. All other awards granted before May 5, 2014 were made under the Interphase Corporation 2004 Long-Term Stock Incentive Plan, which expired on May 5, 2014 (so that no new awards could be made or granted under the Interphase Corporation 2004 Long-Term Stock Incentive Plan). | |||||||||
During the three months ended March 31, 2015 and 2014, the Company issued no stock options without performance-based vesting conditions. Compensation expense related to stock options without performance-based vesting conditions was $32,000 and $55,000 for the three months ended March 31, 2015 and 2014, respectively. | |||||||||
During the three months ended March 31, 2015 and 2014, the Company issued no stock options with performance-based vesting conditions. All stock options with performance-based conditions expire ten years from date of grant. Of the unvested stock options outstanding at March 31, 2015, 694,760 are subject to the achievement of certain performance conditions. The performance conditions related to approximately 17,721 and 18,000 of these stock options were deemed probable as of March 31, 2015 and 2014, respectively. Compensation expense related to performance-based stock options, for which vesting was deemed probable, was approximately $115,000 and $53,000 for the three months ended March 31, 2015 and 2014, respectively. The performance conditions related to the remaining options were not deemed probable at March 31, 2015; therefore no compensation expense related to these options has been recorded. | |||||||||
The weighted-average remaining contractual life of stock options outstanding and exercisable at March 31, 2015 and 2014 was 6.50 years and 6.84 years, respectively. | |||||||||
As of March 31, 2015, there were 770,385 unvested stock options expected to vest over a weighted-average period of 8.2 years. As of December 31, 2014, there were 1,166,200 unvested stock options expected to vest over a weighted-average period of 8.3 years. | |||||||||
The following table summarizes the combined stock option activity under both of the plans: | |||||||||
Number of | Weighted Average | ||||||||
Options | Option Price | ||||||||
Balance, December 31, 2014 | 1,782,749 | $ | 3.79 | ||||||
Granted | - | - | |||||||
Exercised | - | - | |||||||
Cancelled | (299,903 | ) | 4.28 | ||||||
Balance, March 31, 2015 | 1,482,846 | $ | 3.69 | ||||||
Option Valuation | |||||||||
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with weighted-average assumptions based on the grant date. | |||||||||
Restricted Stock | |||||||||
Each of the Interphase Corporation 2014 Long-Term Stock Incentive Plan and the Interphase Corporation 2004 Long-Term Stock Incentive Plan provides for grants of bonus stock awards (“restricted stock”) to the Company’s directors and certain employees at no cost to the recipient. The total amount of restricted stock with respect to which awards may be granted under the current (2014) plan is 75,000 shares. Holders of restricted stock are entitled to cash dividends, if any, and to vote their respective shares. | |||||||||
Restrictions limit the sale or transfer of these shares during a predefined vesting period, currently ranging from three to four years, and in some cases vesting is subject to the achievement of certain performance conditions. There were no shares of restricted stock issued during the three months ended | |||||||||
March 31, 2015 or 2014. Upon issuance of restricted stock under a plan, unearned compensation equivalent to the market value at the date of grant is recorded as a reduction to shareholders’ equity and subsequently amortized to expense over the respective restriction periods. Compensation expense related to previously granted restricted stock was | |||||||||
$17,000 and $15,000 for the three months ended March 31, 2015 and 2014, respectively. As of | |||||||||
March 31, 2015, there was $44,000 of total unamortized compensation cost related to unvested restricted stock remaining to be recognized. The expense is expected to be recognized over a weighted-average period of less than 1 year. As of December 31, 2014, there was $61,000 of total unamortized compensation cost related to unvested restricted stock remaining to be recognized. The expense is expected to be recognized over a weighted-average period of less than 1 year. The following table summarizes the restricted stock activity for the three months ended | |||||||||
March 31, 2015: | |||||||||
Restricted Stock Shares | Weighted Average Grant Date Value | ||||||||
Nonvested restricted stock at December 31, 2014 | 29,155 | $ | 3.29 | ||||||
Granted | - | - | |||||||
Vested | (14,155 | ) | 1.82 | ||||||
Cancelled/Forfeited | - | - | |||||||
Nonvested restricted stock at March 31, 2015 | 15,000 | $ | 4.67 |
Note_3_Marketable_Securities
Note 3 - Marketable Securities | 3 Months Ended | |||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | NOTE 3. - MARKETABLE SECURITIES | |||||||||||||||||||||||||
Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company classified the levels used to measure fair value into the following hierarchy: | ||||||||||||||||||||||||||
Level 1 – Valuations based on quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to obtain at the measurement date. This level provides the most reliable evidence of fair value. | ||||||||||||||||||||||||||
Level 2 – Valuations based on observable inputs other than Level 1, such as: quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Valuations in the category are inherently less reliable than Level 1 due to the degree of subjectivity involved in determining appropriate methodologies and the applicable observable market underlying assumptions. | ||||||||||||||||||||||||||
Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity, and significant to the overall fair value measurement. | ||||||||||||||||||||||||||
The Company’s investments in marketable securities primarily consisted of investments in debt securities, which were classified as available-for-sale and were presented as current assets on the accompanying condensed consolidated balance sheets. Earnings from debt securities were calculated on a yield to maturity basis and recorded in the results of operations. Unrealized gains or losses for the periods presented were included in other comprehensive income (loss). Realized gains and losses were computed based on the specific identification method and were reclassified from other comprehensive income (loss) to other loss, net, included in the statement of operations. Marketable securities were previously used to secure the Company’s credit facility. The Company discontinued its investment in marketable securities during the three months ended March 31, 2015, when it paid off its borrowings under the credit facility during that period (see Note 6 below). | ||||||||||||||||||||||||||
The fair values of marketable securities were estimated using the market approach using prices and other relevant information generated by market transactions involving identical or comparable assets. The Company used quoted market prices in active markets or quoted market prices in markets that are not active to measure fair value. When developing fair value estimates, the Company maximized the use of observable inputs and minimized the use of unobservable inputs. | ||||||||||||||||||||||||||
Financial assets, measured at fair value, by level within the fair value hierarchy were as follows (in thousands): | ||||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | |||||||||||||||||||||||||
Fair Value | Cost | Unrealized | Fair | Cost | Unrealized | Fair | ||||||||||||||||||||
Hierarchy | Gain | Value | Gain | Value | ||||||||||||||||||||||
Asset Backed | Level 2 | $ | - | $ | - | $ | - | $ | 96 | $ | 7 | $ | 103 | |||||||||||||
Corporate Bonds | Level 2 | - | - | - | 76 | - | 76 | |||||||||||||||||||
US Treasuries | Level 2 | - | - | - | 3,400 | - | 3,400 | |||||||||||||||||||
Total | $ | - | $ | - | $ | - | $ | 3,572 | $ | 7 | $ | 3,579 |
Note_4_Inventories
Note 4 - Inventories | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Inventory Disclosure [Text Block] | NOTE 4. - INVENTORIES | ||||||||
Inventories are valued at the lower of cost or market and include material, labor and manufacturing overhead. Cost, determined on a first-in, first-out basis, is as follows (in thousands): | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Raw Materials | $ | 1,304 | $ | 1,510 | |||||
Work-in-Process | 494 | 467 | |||||||
Finished Goods | 350 | 159 | |||||||
Total | $ | 2,148 | $ | 2,136 | |||||
Valuing inventory at the lower of cost or market involves an inherent level of risk and uncertainty due to technology trends in the industry and customer demand for the Company’s products. Future events may cause significant fluctuations in the Company’s operating results. Inventories are written down when needed to ensure the Company carries inventory at the lower of cost or market. The Company’s reserve requirements increased by $7,000 and $14,000 during the three months ended March 31, 2015 and 2014, respectively. |
Note_5_Income_Taxes
Note 5 - Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | NOTE 5. - INCOME TAXES |
The Company records a valuation allowance when it is “more likely than not” that all or a portion of a deferred tax asset will not be realized. Management reviews all available positive and negative evidence, including the Company’s current and past performance, the market environment in which the Company operates, the utilization of past tax credits, length of carry back and carry forward periods, existing contracts or sales backlog that will result in future profits, as well as other factors. The Company continues to maintain a valuation allowance on all of the net deferred tax assets for the periods presented. Until an appropriate level of profitability is sustained, the Company expects to continue to record a full valuation allowance on future tax benefits except for those that may be generated in foreign jurisdictions. The effective income tax rates for the periods presented differ from the U.S. statutory rate as the Company continues to provide a full valuation allowance for the net deferred tax assets at March 31, 2015 and 2014. |
Note_6_Credit_Facility
Note 6 - Credit Facility | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | NOTE |
6 | |
. - CREDIT FACILITY | |
The Company maintains a $5.0 million revolving bank credit facility that is scheduled to mature on December 19, 2016. The applicable interest rate on outstanding balances is LIBOR plus 1.0% to 1.5% based on certain factors included in the credit agreement. At December 31, 2014, the Company’s interest rate on the $3.5 million outstanding balance was 1.7%. The unused portion of the credit facility is subject to an unused facility fee ranging from .25% to .75% depending on total deposits with the creditor. All borrowings under this facility were secured by marketable securities. The outstanding balance of $3.5 million as of December 31, 2014 was classified as short-term debt on the Company’s condensed consolidated balance sheets. The Company did not make any borrowings under this facility in the three months ended March 31, 2015, and there was no outstanding amount due as of March 31, 2015. The Company is in the final stages of negotiating an agreement for a new revolving credit facility with another bank lender which would replace the existing credit facility and which management believes would include terms and conditions that, on the whole, are more favorable to the Company than the existing credit facility. |
Note_7_Earnings_Per_Share
Note 7 - Earnings Per Share | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Earnings Per Share [Text Block] | NOTE 7. - EARNINGS PER SHARE | ||||||||
Basic earnings per share are computed by dividing reported earnings available to common shareholders by weighted average common shares outstanding. Diluted earnings per share give effect to dilutive potential common shares. Earnings per share are calculated as follows (in thousands, except per share data): | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Basic net loss per share: | |||||||||
Net loss | $ | (1,509 | ) | $ | (1,016 | ) | |||
Weighted average common shares outstanding | 8,394 | 7,011 | |||||||
Basic net loss per share | $ | (0.18 | ) | $ | (0.14 | ) | |||
Diluted net loss per share: | |||||||||
Net loss | $ | (1,509 | ) | $ | (1,016 | ) | |||
Weighted average common shares outstanding | 8,394 | 7,011 | |||||||
Dilutive stock options | - | - | |||||||
Weighted average common shares outstanding | 8,394 | 7,011 | |||||||
– assuming dilution | |||||||||
Diluted net loss per share | $ | (0.18 | ) | $ | (0.14 | ) | |||
Outstanding stock options that were not included in the diluted calculation because their effect would be anti-dilutive | 388 | 392 |
Note_8_Segment_Information
Note 8 - Segment Information | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
Segment Reporting Disclosure [Text Block] | NOTE | ||||||||||||||||
8 | |||||||||||||||||
. - | |||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||
Interphase is a diversified information and communications technology company, committed to innovation through the process of identifying, developing and introducing new products and services. The Company offers products and services from embedded computing solutions, engineering design services, and contract manufacturing services to a new line of embedded computer vision products. | |||||||||||||||||
Except for revenues, which are monitored by product line, the chief operating decision-makers review financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. Accordingly, the Company considers itself to have only a single reporting segment. | |||||||||||||||||
Geographic revenue related to North America and foreign regions is as follows (in thousands): | |||||||||||||||||
Three months ended | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Revenues: | |||||||||||||||||
North America | $ | 999 | $ | 2,468 | |||||||||||||
Pacific Rim | 611 | 586 | |||||||||||||||
Europe | 469 | 379 | |||||||||||||||
Total | $ | 2,079 | $ | 3,433 | |||||||||||||
Additional information regarding revenue by product line is as follows (in thousands): | |||||||||||||||||
Three months ended | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Product Revenues: | |||||||||||||||||
Communications networking | $ | 1,491 | $ | 1,735 | |||||||||||||
Services | 500 | 1,647 | |||||||||||||||
Other | 88 | 51 | |||||||||||||||
Total | $ | 2,079 | $ | 3,433 |
Note_9_Recently_Issued_Account
Note 9 - Recently Issued Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | NOTE 9. - |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. The International Accounting Standards Board (“IASB”) issued International Financial Reporting Standard 15 with the same title. The standard represents the culmination of the FASB and IASB efforts to improve revenue recognition guidance. ASU 2014-09 creates a new, principles-based revenue recognition framework that will affect nearly every revenue-generating entity. ASU 2014-09 also creates a new topic in the Codification, Topic 606. Accounting Standards Codification (“ASC”) 606 establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific aspects of revenue recognition, and expands and improves disclosures about revenue. ASC 606 is effective for public business entities for annual reporting periods beginning after December 15, 2016, including interim periods therein. Early application is not permitted for public business entities. Entities are permitted to apply the new revenue standard either retrospectively, subject to some practical expedients, or through an alternative transition method. The Company is currently evaluating the impact of adopting this new accounting guidance. |
Note_10_Subsequent_Events
Note 10 - Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | NOTE |
10 | |
. - | |
SUBSEQUENT EVENTS | |
On April 10, 2015 the Company committed to a plan intended to result in savings of approximately $750,000 to $1.5 million in annualized operating costs. These actions aim to mitigate gross margin erosion by reducing manufacturing costs, streamlining research and development and sales and marketing expenses to focus remaining resources on key strategic growth areas, and reducing administrative expenses through consolidation of support functions. As part of this plan, the Company expects to reduce the number of its employees by approximately 15% to 25%. The Company expects to incur charges for one-time termination benefits in the range of $50,000 to $150,000, most of which will be cash expenditures. The Company expects to substantially complete the actions associated with this plan during the second quarter of 2015. | |
The Company is under a tax audit in France related to the years ended December 31, 2011, 2010, and 2009 and has previously recorded an uncertain tax position of $730,000 related to an exposure of $5.2 million on research and development tax credits, including estimated penalties and interest, taken in all prior years. However, based on discussions between the Company’s French tax attorneys and the French Tax Administration, the Company expects to receive a tax bill from the French Tax Administration in May 2015 that may cause a significant change to this tax position. The Company believes its tax estimates at March 31, 2015 are reasonable under ASC 740; but if the Company receives a tax bill that significantly exceeds its estimates, it may have to decide whether to institute litigation to dispute the tax bill. The final outcome of tax audits and potential related litigation is inherently uncertain. As a result, the adverse resolution of this audit or any related litigation could be significantly different from amounts reflected in the Company’s income tax provisions and accruals. |
Note_2_Stockbased_Compensation1
Note 2 - Stock-based Compensation (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes Tables | |||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of | Weighted Average | |||||||
Options | Option Price | ||||||||
Balance, December 31, 2014 | 1,782,749 | $ | 3.79 | ||||||
Granted | - | - | |||||||
Exercised | - | - | |||||||
Cancelled | (299,903 | ) | 4.28 | ||||||
Balance, March 31, 2015 | 1,482,846 | $ | 3.69 | ||||||
Nonvested Restricted Stock Shares Activity [Table Text Block] | Restricted Stock Shares | Weighted Average Grant Date Value | |||||||
Nonvested restricted stock at December 31, 2014 | 29,155 | $ | 3.29 | ||||||
Granted | - | - | |||||||
Vested | (14,155 | ) | 1.82 | ||||||
Cancelled/Forfeited | - | - | |||||||
Nonvested restricted stock at March 31, 2015 | 15,000 | $ | 4.67 |
Note_3_Marketable_Securities_T
Note 3 - Marketable Securities (Tables) | 3 Months Ended | |||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||
Notes Tables | ||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block] | 31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||
Fair Value | Cost | Unrealized | Fair | Cost | Unrealized | Fair | ||||||||||||||||||||
Hierarchy | Gain | Value | Gain | Value | ||||||||||||||||||||||
Asset Backed | Level 2 | $ | - | $ | - | $ | - | $ | 96 | $ | 7 | $ | 103 | |||||||||||||
Corporate Bonds | Level 2 | - | - | - | 76 | - | 76 | |||||||||||||||||||
US Treasuries | Level 2 | - | - | - | 3,400 | - | 3,400 | |||||||||||||||||||
Total | $ | - | $ | - | $ | - | $ | 3,572 | $ | 7 | $ | 3,579 |
Note_4_Inventories_Tables
Note 4 - Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes Tables | |||||||||
Schedule of Inventory, Current [Table Text Block] | 31-Mar-15 | 31-Dec-14 | |||||||
Raw Materials | $ | 1,304 | $ | 1,510 | |||||
Work-in-Process | 494 | 467 | |||||||
Finished Goods | 350 | 159 | |||||||
Total | $ | 2,148 | $ | 2,136 |
Note_7_Earnings_Per_Share_Tabl
Note 7 - Earnings Per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes Tables | |||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three months ended | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Basic net loss per share: | |||||||||
Net loss | $ | (1,509 | ) | $ | (1,016 | ) | |||
Weighted average common shares outstanding | 8,394 | 7,011 | |||||||
Basic net loss per share | $ | (0.18 | ) | $ | (0.14 | ) | |||
Diluted net loss per share: | |||||||||
Net loss | $ | (1,509 | ) | $ | (1,016 | ) | |||
Weighted average common shares outstanding | 8,394 | 7,011 | |||||||
Dilutive stock options | - | - | |||||||
Weighted average common shares outstanding | 8,394 | 7,011 | |||||||
– assuming dilution | |||||||||
Diluted net loss per share | $ | (0.18 | ) | $ | (0.14 | ) | |||
Outstanding stock options that were not included in the diluted calculation because their effect would be anti-dilutive | 388 | 392 |
Note_8_Segment_Information_Tab
Note 8 - Segment Information (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Notes Tables | |||||||||||||||||
Revenue from External Customers by Geographic Areas [Table Text Block] | Three months ended | ||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Revenues: | |||||||||||||||||
North America | $ | 999 | $ | 2,468 | |||||||||||||
Pacific Rim | 611 | 586 | |||||||||||||||
Europe | 469 | 379 | |||||||||||||||
Total | $ | 2,079 | $ | 3,433 | |||||||||||||
Revenue from External Customers by Products and Services [Table Text Block] | Three months ended | ||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Product Revenues: | |||||||||||||||||
Communications networking | $ | 1,491 | $ | 1,735 | |||||||||||||
Services | 500 | 1,647 | |||||||||||||||
Other | 88 | 51 | |||||||||||||||
Total | $ | 2,079 | $ | 3,433 |
Note_1_Basis_of_Presentation_D
Note 1 - Basis of Presentation (Details Textual) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Net Income (Loss) Attributable to Parent | ($1,509) | ($1,016) | |
Retained Earnings (Accumulated Deficit) | -45,864 | -44,355 | |
Net Cash Provided by (Used in) Operating Activities | ($1,297) | ($769) |
Note_2_Stockbased_Compensation2
Note 2 - Stock-based Compensation (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 1,482,846 | 1,782,749 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 770,385 | 1,166,200 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 8 years 73 days | 8 years 109 days | |
Stock Options with Performance-Based Vesting Condition [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | 0 | |
Allocated Share-based Compensation Expense | 115,000 | $53,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 694,760 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 17,721 | 18,000 | |
Remaining Stock Options [Member] | |||
Allocated Share-based Compensation Expense | 0 | ||
Stock Options without Performance-based Vesting Condition [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | 0 | |
Allocated Share-based Compensation Expense | 32,000 | 55,000 | |
Restricted Stock [Member] | 2014 Long-Term Stock Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 75,000 | ||
Restricted Stock [Member] | Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||
Restricted Stock [Member] | Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year | 1 year | |
Restricted Stock [Member] | |||
Allocated Share-based Compensation Expense | 17,000 | 15,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 | 0 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | 44,000 | 61,000 | |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 6 years 182 days | 6 years 306 days |
Note_2_Stockbased_Compensation3
Note 2 - Stock-based Compensation - Summary of Combined Stock Option Activity (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Balance, December 31, 2014 (in shares) | 1,782,749 |
Balance, December 31, 2014 (in dollars per share) | $3.79 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 |
Granted (in dollars per share) | $0 |
Exercised (in shares) | 0 |
Exercised (in dollars per share) | $0 |
Cancelled (in shares) | -299,903 |
Cancelled (in dollars per share) | $4.28 |
Balance, March 31, 2015 (in shares) | 1,482,846 |
Balance, March 31, 2015 (in dollars per share) | $3.69 |
Note_2_Stockbased_Compensation4
Note 2 - Stock-based Compensation - Nonvested Restricted Stock Units Activity (Details) (Restricted Stock [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Restricted Stock [Member] | |
Nonvested restricted stock at December 31, 2014 (in shares) | 29,155 |
Nonvested restricted stock at December 31, 2014 (in dollars per share) | $3.29 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 |
Granted (in dollars per share) | $0 |
Vested (in shares) | -14,155 |
Vested (in dollars per share) | $1.82 |
Cancelled/Forfeited (in shares) | 0 |
Cancelled/Forfeited (in dollars per share) | $0 |
Nonvested restricted stock at March 31, 2015 (in shares) | 15,000 |
Nonvested restricted stock at March 31, 2015 (in dollars per share) | $4.67 |
Note_3_Marketable_Securities_F
Note 3 - Marketable Securities - Fair Value, Financial Assets Measured by Level within the Fair Value Hierarchy (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Cost | $3,572 |
Unrealized Gain | 7 |
Fair Value | 3,579 |
Fair Value, Inputs, Level 2 [Member] | Asset-backed Securities [Member] | |
Cost | 96 |
Unrealized Gain | 7 |
Fair Value | 103 |
Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member] | |
Cost | 76 |
Fair Value | 76 |
Fair Value, Inputs, Level 2 [Member] | US Treasury Securities [Member] | |
Cost | 3,400 |
Fair Value | $3,400 |
Note_4_Inventories_Details_Tex
Note 4 - Inventories (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Inventory Valuation Reserves Increase | $7,000 | $14,000 |
Note_4_Inventories_Inventory_D
Note 4 - Inventories - Inventory (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Raw Materials | $1,304 | $1,510 |
Work-in-Process | 494 | 467 |
Finished Goods | 350 | 159 |
Total | $2,148 | $2,136 |
Note_6_Credit_Facility_Details
Note 6 - Credit Facility (Details Textual) (Revolving Credit Facility [Member], USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Long-term Line of Credit | $0 | $3,500,000 |
Proceeds from Lines of Credit | 0 | |
Line of Credit Facility, Maximum Borrowing Capacity | 5,000,000 | |
Line of Credit Facility, Interest Rate at Period End | 1.70% | |
Short-Term Borrowings [Member] | ||
Long-term Line of Credit | $3,500,000 | |
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | |
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | |
Minimum [Member] | ||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.25% | |
Maximum [Member] | ||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.75% |
Note_7_Earnings_Per_Share_Earn
Note 7 - Earnings Per Share - Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Basic net loss per share: | ||
Net loss | ($1,509) | ($1,016) |
Weighted average common shares outstanding (in shares) | 8,394,000 | 7,011,000 |
Basic net loss per share (in dollars per share) | ($0.18) | ($0.14) |
Diluted net loss per share: | ||
Net loss | ($1,509) | ($1,016) |
Weighted average common shares outstanding (in shares) | 8,394,000 | 7,011,000 |
Weighted average common shares outstanding – assuming dilution (in shares) | 8,394,000 | 7,011,000 |
Diluted net loss per share (in dollars per share) | ($0.18) | ($0.14) |
Employee Stock Option [Member] | ||
Diluted net loss per share: | ||
Dilutive stock options (in shares) | 0 | 0 |
Equity Option [Member] | ||
Diluted net loss per share: | ||
Outstanding stock options that were not included in the diluted calculation because their effect would be anti-dilutive (in shares) | 388,000 | 392,000 |
Note_8_Segment_Information_Geo
Note 8 - Segment Information - Geographic Revenue Related to North America and Foreign Regions (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues | $2,079 | $3,433 |
North America [Member] | ||
Revenues | 999 | 2,468 |
Pacific Rim [Member] | ||
Revenues | 611 | 586 |
Europe [Member] | ||
Revenues | $469 | $379 |
Note_8_Segment_Information_Rev
Note 8 - Segment Information - Revenue by Product Line (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues | $2,079 | $3,433 |
Telecommunications [Member] | ||
Revenues | 1,491 | 1,735 |
Services [Member] | ||
Revenues | 500 | 1,647 |
Other Products [Member] | ||
Revenues | $88 | $51 |
Note_10_Subsequent_Events_Deta
Note 10 - Subsequent Events (Details Textual) (USD $) | 3 Months Ended | 1 Months Ended | 0 Months Ended |
Mar. 31, 2015 | 5-May-15 | Apr. 10, 2015 | |
Liability for Uncertain Tax Positions, Current | $730,000 | ||
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount | 5,200,000 | ||
Subsequent Event [Member] | Foreign Tax Authority [Member] | Ministry of the Economy, Finance and Industry, France [Member] | Tax Year 2011 [Member] | |||
Income Tax Examination, Year under Examination | 2011 | ||
Subsequent Event [Member] | Foreign Tax Authority [Member] | Ministry of the Economy, Finance and Industry, France [Member] | Tax Year 2010 [Member] | |||
Income Tax Examination, Year under Examination | 2010 | ||
Subsequent Event [Member] | Foreign Tax Authority [Member] | Ministry of the Economy, Finance and Industry, France [Member] | Tax Year 2009 [Member] | |||
Income Tax Examination, Year under Examination | 2009 | ||
Subsequent Event [Member] | Minimum [Member] | Operating Expense [Member] | |||
Effect on Future Earnings, Amount | 750,000 | ||
Subsequent Event [Member] | Minimum [Member] | One-time Termination Benefits [Member] | |||
Restructuring and Related Cost, Expected Cost | 50,000 | ||
Subsequent Event [Member] | Minimum [Member] | |||
Restructuring and Related Cost, Expected Number of Positions Eliminated, Percent | 15.00% | ||
Subsequent Event [Member] | Maximum [Member] | Operating Expense [Member] | |||
Effect on Future Earnings, Amount | 1,500,000 | ||
Subsequent Event [Member] | Maximum [Member] | One-time Termination Benefits [Member] | |||
Restructuring and Related Cost, Expected Cost | $150,000 | ||
Subsequent Event [Member] | Maximum [Member] | |||
Restructuring and Related Cost, Expected Number of Positions Eliminated, Percent | 25.00% |