Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 15, 2014 | Jun. 30, 2013 | |
Document and Entity Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'DIRECT INSITE CORP | ' | ' |
Entity Central Index Key | '0000879703 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $8,969,843 |
Entity Common Stock, Shares Outstanding | ' | 12,723,460 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Type | '10-K | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $1,371 | $1,098 |
Accounts receivable | 1,522 | 1,689 |
Prepaid expenses and other current assets | 368 | 261 |
Deferred tax assets - current | 318 | 305 |
Total current assets | 3,579 | 3,353 |
Property and equipment, net | 852 | 615 |
Deferred tax assets | 874 | 869 |
Other assets | 257 | 324 |
Total assets | 5,562 | 5,161 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 1,402 | 1,165 |
Current portion of capital lease obligations | 187 | 198 |
Notes payable | 0 | 32 |
Deferred rent | 23 | 22 |
Deferred revenue | 0 | 41 |
Total current liabilities | 1,612 | 1,458 |
Capital lease obligations, net of current portion | 36 | 162 |
Total liabilities | 1,648 | 1,620 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, $0.0001 par value; 2,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock, $0.0001 par value; 50,000,000 shares authorized; 12,687,921 and 12,507,870 shares issued and 12,647,994 and 12,467,943 shares outstanding in 2013 and 2012, respectively | 1 | 1 |
Additional paid-in capital | 115,982 | 115,773 |
Accumulated deficit | -111,741 | -111,905 |
Common stock in treasury, at cost; 24,371 shares in 2013 and 2012 | -328 | -328 |
Total stockholders' equity | 3,914 | 3,541 |
Total liabilities and stockholders' equity | $5,562 | $5,161 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' equity: | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, issued (in shares) | 12,687,921 | 12,507,870 |
Common stock, outstanding (in shares) | 12,647,994 | 12,467,943 |
Treasury stock, at cost (in shares) | 24,371 | 24,371 |
STATEMENTS_OF_INCOME
STATEMENTS OF INCOME (USD $) | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | ' | ' |
Recurring | $7,426 | $7,374 |
Non-recurring | 1,555 | 1,440 |
Total revenues | 8,981 | 8,814 |
Operating costs and expenses: | ' | ' |
Operations, research and development | 3,626 | 3,783 |
Sales and marketing | 2,360 | 2,365 |
General and administrative | 2,451 | 1,965 |
Amortization and depreciation | 394 | 375 |
Total operating costs and expenses | 8,831 | 8,488 |
Operating income | 150 | 326 |
Other income (expense) | 18 | -35 |
Income before provision for income taxes | 168 | 291 |
Provision for (benefit from) income taxes | 4 | -174 |
Net income | $164 | $465 |
Basic income per share attributable to common stockholders (in dollars per share) | $0.01 | $0.04 |
Diluted income per share attributable to common stockholders (in dollars per share) | $0.01 | $0.04 |
Basic weighted average common shares outstanding (in shares) | 12,519 | 12,321 |
Diluted weighted average common shares outstanding (in shares) | 12,635 | 12,328 |
STATEMENT_OF_STOCKHOLDERS_EQUI
STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Treasury Stock [Member] | Total |
Balance at Dec. 31, 2011 | $1,000 | $115,333,000 | ($112,370,000) | ($328,000) | $2,636,000 |
Balance (in shares) at Dec. 31, 2011 | 12,117,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Issuance of common stock in settlement of accrued directors' fees | 0 | 277,000 | 0 | 0 | 277,000 |
Issuance of common stock in settlement of accrued directors' fees (in shares) | 261,000 | ' | ' | ' | ' |
Employee stock based compensation expense | 0 | 98,000 | 0 | 0 | 98,000 |
Employee stock based compensation expense (in shares) | 0 | ' | ' | ' | ' |
Common stock issued or issuable for directors' fees | 0 | 65,000 | 0 | 0 | 65,000 |
Common stock issued or issuable for directors' fees (in shares) | 90,000 | ' | ' | ' | ' |
Net income | 0 | 0 | 465,000 | 0 | 465,000 |
Balance at Dec. 31, 2012 | 1,000 | 115,773,000 | -111,905,000 | -328,000 | 3,541,000 |
Balance (in shares) at Dec. 31, 2012 | 12,468,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Issuance of common stock in settlement of accrued directors' fees | 0 | 20,000 | 0 | 0 | 20,000 |
Issuance of common stock in settlement of accrued directors' fees (in shares) | 21,000 | ' | ' | ' | ' |
Common stock issued on cashless exercise of options | 0 | 0 | 0 | 0 | 0 |
Common stock issued on cashless exercise of options (in shares) | 50,000 | ' | ' | ' | ' |
Employee stock based compensation expense | 0 | 109,000 | 0 | 0 | 109,000 |
Employee stock based compensation expense (in shares) | 0 | ' | ' | ' | ' |
Common stock issued or issuable for directors' fees | 0 | 80,000 | 0 | 0 | 80,000 |
Common stock issued or issuable for directors' fees (in shares) | 109,000 | ' | ' | ' | ' |
Net income | 0 | 0 | 164,000 | 0 | 164,000 |
Balance at Dec. 31, 2013 | $1,000 | $115,982,000 | ($111,741,000) | ($328,000) | $3,914,000 |
Balance (in shares) at Dec. 31, 2013 | 12,648,000 | ' | ' | ' | ' |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | ' | ' |
Net income | $164 | $465 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Amortization and depreciation | 394 | 375 |
Deferred taxes | -18 | -147 |
Stock-based compensation expense | 189 | 163 |
Deferred rent expense | 1 | -8 |
Gain on sale of property and equipment | -8 | 0 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 167 | -121 |
Prepaid expenses and other current assets | 9 | -104 |
Accounts payable and accrued expenses | 208 | 58 |
Deferred revenue | -41 | 41 |
Total adjustments | 901 | 257 |
Net cash provided by operating activities | 1,065 | 722 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -121 | -70 |
Capitalization of internally developed software | -433 | 0 |
Proceeds from the sale of property and equipment | 8 | 0 |
Net cash used in investing activities | -546 | -70 |
Cash flows from financing activities: | ' | ' |
Repayment of long-term debt | -32 | -63 |
Repayment of capital lease obligations | -214 | -178 |
Net cash used in financing activities | -246 | -241 |
Net increase in cash and cash equivalents | 273 | 411 |
Cash and cash equivalents - beginning | 1,098 | 687 |
Cash and cash equivalents - ending | 1,371 | 1,098 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 19 | 11 |
Cash paid for income taxes | 21 | 8 |
Schedule of non-cash investing and financing activities: | ' | ' |
Issuance of common stock in settlement of accrued directors' fees | 20 | 277 |
Equipment acquired by capital lease | $77 | $155 |
NATURE_OF_BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2013 | |
NATURE OF BUSINESS [Abstract] | ' |
NATURE OF BUSINESS | ' |
NOTE 1 – NATURE OF BUSINESS | |
Direct Insite Corp. (“Direct Insite” or the “Company”) operates as a Software as a Service provider (“SaaS”), providing financial supply chain automation and workflow efficiencies within the Procure-to-Pay and Order-to-Cash processes. Specifically, Direct Insite’s global electronic invoice (“e-invoice”) management services automate complex manual business processes such as invoice validation, order matching, consolidation, dispute handling, and e-payment processing in a business-to-business transaction based “fee for services” business model. | |
The Company’s revenue comes from (i) recurring, on-going services that are billed monthly and (ii) non-recurring, professional services derived from the configuration of the Company’s software platform. | |
Throughout the year, the Company operated redundant data centers in Miami, Florida, and Santa Clara, California. | |
As described in Note 9, the Company has two major customers (one of which has separate contracts with multiple companies) that accounted for 77.4% and 82.4% of the Company’s revenue for the years ended December 31, 2013 and 2012, respectively. Loss of either of these customers, or any of the separate contracts under a main customer, could have a material effect on the Company. | |
In February 2013, the Company was notified by HP Enterprise Services (“HP”), that one of its customers (“HP Customer A”) was terminating its contract effective March 31, 2013. Despite the Company’s efforts to negotiate a direct contractual agreement with this customer, HP Customer A ultimately decided to sunset its use of the Company’s services. As such, the Company did not record any revenue from HP Customer A after June 30, 2013. This customer comprised 8.5% of the Company’s revenues for the year ended December 31, 2013, and 13.9% for the year ended December 31, 2012. See Note 9. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||
USE OF ESTIMATES | |||||||||||||
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. | |||||||||||||
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The most significant estimates are used in the accounting related to stock based compensation, the valuation allowance on deferred tax assets and capitalized internally developed software. | |||||||||||||
Actual results could differ from those estimates. | |||||||||||||
REVENUE RECOGNITION | |||||||||||||
The Company records revenue in accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“ASC 605”), and SEC Staff Accounting Bulletin Topic 13, Revenue Recognition in Financial Statements. Revenue is recognized when it is both earned and realizable, that is, when the following criteria are met: | |||||||||||||
• | persuasive evidence of arrangements exist; | ||||||||||||
• | delivery has occurred or services have been rendered; | ||||||||||||
• | the seller’s price is fixed and determinable; and | ||||||||||||
• | collectability is reasonably assured. | ||||||||||||
The following are the specific revenue recognition policies for each major category of revenue. | |||||||||||||
Recurring (Ongoing Services) | |||||||||||||
The Company provides transactional data processing services through its SaaS software solutions to its customers. The customer is charged a monthly fixed rate on a per transaction basis or a fixed fee based on monthly transaction volumes. Revenue is recognized as the services are provided. | |||||||||||||
Non-Recurring (Professional Services) | |||||||||||||
The Company provides non-recurring engineering services to its customers, which may include initial or additional development, modification, and customization services to the Company’s software platform. Such services are billed based on: (i) hourly rates; or (ii) milestone billings. For hourly billed services, revenue is recognized when work is performed. For milestone billed services, revenue is recognized when the project milestone has been accepted by the customer. The Company does not sell software licenses, upgrades or enhancements, or post-contract customer services. | |||||||||||||
COST OF REVENUE | |||||||||||||
Cost of revenue in the statements of income is included in operations, research and development costs and exclusive of amortization and depreciation which is shown separately. Professional Service costs related to uncompleted milestones are deferred and included in other current assets, when applicable. | |||||||||||||
PROPERTY AND EQUIPMENT | |||||||||||||
Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the terms of the respective leases or the service lives of the related assets, whichever is shorter. | |||||||||||||
Capitalized lease assets are amortized over the shorter of the lease term or the service life of the related assets. | |||||||||||||
INTERNALLY DEVELOPED SOFTWARE | |||||||||||||
The Company is in the process of developing a next generation version of its accounts receivable platform. It is being designed for one of the Company’s clients and will be available to all order-to-cash process customers. According to ASC 350-40, Intangibles-Goodwill and Other-Internal-Use Software, the Company capitalizes the costs associated with the application development stage of a project. The Company will start amortizing capitalized costs when the software is ready for use and placed in service. The capitalized costs will be amortized on a straight-line basis over the estimated three year useful life of the software. | |||||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS | |||||||||||||
ASC 360, Property, Plant and Equipment (“ASC 360”) requires management judgments regarding the future operating and disposition plans for marginally performing assets, and estimates of expected realizable values for assets to be sold. The Company accounts for its long-lived assets in accordance with ASC 360 for purposes of determining and measuring impairment. It is the Company’s policy to review the value assigned to its long lived assets, to determine if they have been permanently impaired by adverse conditions whenever events or circumstances indicate the related carrying amount may not be recoverable. If required, an impairment charge would be recorded based on an estimate of future discounted cash flows. In order to test for recoverability, the Company would compare the sum of an undiscounted cash flow projection from the related long-lived assets to the net carrying amount of such assets. Considerable management judgment is necessary to estimate undiscounted future operating cash flows and fair values and, accordingly, actual results could vary significantly from such estimates. No impairment charges were recognized during the years ended December 31, 2013 and 2012. | |||||||||||||
INCOME TAXES | |||||||||||||
The Company accounts for income taxes using the asset and liability method. This method requires the determination of deferred tax assets and liabilities based on the differences between the financial statement and income tax basis of assets and liabilities, using enacted tax rates. Additionally, net deferred tax assets are adjusted by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized. In addition, the Company expects to provide a valuation allowance on the remaining future tax benefits until it can sustain a level of profitability that demonstrates its ability to utilize the remaining assets, or other significant positive evidence arises that suggests its ability to utilize the remaining assets. The future realization of a portion of its reserved deferred tax assets related to tax benefits associated with the exercise of stock options, if and when realized, will not result in a tax benefit in the statement of income, but rather will result in an increase in additional paid-in capital. The Company will continue to re-assess its reserves on deferred income tax assets in future periods on a quarterly basis. | |||||||||||||
EARNINGS PER SHARE | |||||||||||||
The Company displays earnings per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). ASC 260 requires dual presentation of basic and diluted earnings per share (“EPS”). Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. | |||||||||||||
The computation of basic and diluted earnings per share is as follows: | |||||||||||||
For the year ended December 31, 2013 (in thousands, except per share amounts) | |||||||||||||
Net Income | Shares | Per Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 164 | 12,519 | $ | 0.01 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Options | – | 87 | |||||||||||
Restricted stock | – | 29 | |||||||||||
Diluted Earnings Per Share | $ | 164 | 12,635 | $ | 0.01 | ||||||||
For the year ended December 31, 2012 (in thousands, except per share amounts) | |||||||||||||
Net Income | Shares | Per Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 465 | 12,321 | $ | 0.04 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Options | – | – | |||||||||||
Restricted stock | – | 7 | |||||||||||
Diluted Earnings Per Share | $ | 465 | 12,328 | $ | 0.04 | ||||||||
Securities that could potentially dilute basic EPS in the future, that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following (in thousands): | |||||||||||||
December 31, | |||||||||||||
Anti-Dilutive Potential Common Shares | 2013 | 2012 | |||||||||||
Options to purchase common stock | 333 | 906 | |||||||||||
Unvested stock grants | – | 53 | |||||||||||
Total Anti-Dilutive Potential Common Shares | 333 | 959 | |||||||||||
CASH AND CASH EQUIVALENTS | |||||||||||||
The Company considers all investments with original maturities of three months or less to be cash equivalents. | |||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |||||||||||||
The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the accounts receivable balance. Management determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. Management performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. At December 31, 2013 and 2012, an allowance for doubtful accounts is not provided since, in the opinion of management, all accounts are deemed collectible. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, allowances may be required. | |||||||||||||
STOCK-BASED COMPENSATION | |||||||||||||
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant) using the straight-line method. | |||||||||||||
The fair value of the Company’s common stock options are estimated using the Black Scholes-Merton option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate; and the expected life. The Company calculates the expected volatility using the historical volatility over the most recent period equal to the expected term and evaluates the extent to which available information indicate that future volatility may differ from historical volatility. The expected dividend rate is zero as the Company does not expect to pay or declare any cash dividends on common stock. The risk-free rates for the expected terms of the stock options are based on the U.S. Treasury yield curve in effect at the time of the grant. | |||||||||||||
The Company has not experienced significant exercise activity on stock options. The Company determines the expected term of its stock option awards issued using the simplified method. The simplified method assumes each vesting tranche of the award has a term equal to the midpoint between when the award vests and when the award expires. | |||||||||||||
In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid-in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. | |||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||
The carrying value of the Company’s accounts receivable and accounts payable approximates their fair value due to the short-term maturity of such instruments. The carrying value of capital lease obligations and notes payable approximate their fair value because the terms of these instruments approximate prevailing market rates. | |||||||||||||
CONCENTRATION OF CREDIT RISK | |||||||||||||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company has cash deposits in excess of the maximum amounts insured by FDIC at December 31, 2013. | |||||||||||||
The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. Concentrations of credit risk with respect to accounts receivable and revenue are disclosed in Note 9. | |||||||||||||
RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS | |||||||||||||
Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the financial statements. |
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
PROPERTY AND EQUIPMENT [Abstract] | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
NOTE 3 – PROPERTY AND EQUIPMENT | |||||||||
Property and equipment consist of the following as of December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Computer equipment and purchased software (3 years) | $ | 1,361 | $ | 5,056 | |||||
Internally developed software not yet placed in service (3 years) | 433 | – | |||||||
Furniture and fixtures and leasehold improvements (5 – 7 years) | 146 | 91 | |||||||
1,940 | 5,147 | ||||||||
Less: accumulated depreciation and amortization | (1,088 | ) | (4,532 | ) | |||||
Property and equipment, net | $ | 852 | $ | 615 | |||||
Depreciation and amortization expense related to property and equipment for the years ended December 31, 2013 and 2012 was approximately $394,000 and $375,000, respectively. |
ACCOUNTS_PAYABLE_AND_ACCRUED_E
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES [Abstract] | ' | ||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ' | ||||||||
NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |||||||||
Accounts payable and accrued expenses consist of the following as of December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
(in thousands) | |||||||||
Trade accounts payable | $ | 324 | $ | 141 | |||||
Sales taxes payable | 539 | 539 | |||||||
Accrued directors’ fees | 377 | 261 | |||||||
Other accrued expenses | 162 | 224 | |||||||
Total Accounts Payable and Accrued Expenses | $ | 1,402 | $ | 1,165 |
DEBT
DEBT | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
DEBT [Abstract] | ' | ||||
DEBT | ' | ||||
NOTE 5 – DEBT | |||||
NOTES PAYABLE | |||||
At December 31, 2012, notes payable consisted of approximately $32,000 of borrowings for the purchase of equipment. These notes, which were paid in full during the year ended December 31, 2013, bore interest at rates ranging from 8.0% to 9.5% per year and matured in August 2013. | |||||
CAPITAL LEASE OBLIGATIONS | |||||
The Company has equipment under six capital lease obligations expiring at various times through June 2016. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair values of the assets. | |||||
At December 31, 2013, future minimum payments under these capital leases are: | |||||
Year Ending | Amount | ||||
31-Dec | (in thousands) | ||||
2014 | $ | 198 | |||
2015 | 31 | ||||
2016 | 10 | ||||
Total minimum lease payments | 239 | ||||
Less: amounts representing interest | (16 | ) | |||
Net minimum lease payments | 223 | ||||
Current portion | 187 | ||||
Long-term portion | $ | 36 | |||
The implied annual interest rates related to these capital leases range from 0.0% to 9.0%. As of December 31, 2013, the gross book value and the net book value of the related assets included in property and equipment is approximately $646,000 and $241,000, respectively. | |||||
Amortization of assets under capital leases is included in depreciation expense. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | ' | ||||||||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||||||||
NOTE 6 – STOCKHOLDERS’ EQUITY | |||||||||||||||||
PREFERRED STOCK | |||||||||||||||||
The Company has 2,000,000 authorized preferred shares of which none were issued and outstanding at December 31, 2013 and 2012. | |||||||||||||||||
COMMON STOCK, OPTIONS AND STOCK GRANTS | |||||||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||
During the year ended December 31, 2013, 98,000 restricted common shares were granted with an aggregate grant date fair value of approximately $80,000. During the year ended December 31, 2013, approximately 109,000 restricted common shares with an aggregate grant date fair value of approximately $80,000 vested. | |||||||||||||||||
During the year ended December 31, 2013, the Company issued 55,181 shares of restricted common stock with a grant date fair value of approximately $42,000, pursuant to the Company’s Directors’ Deferred Compensation Plan dated January 1, 2008 (the “Directors’ Deferred Compensation Plan”), to a former director for past services. 20,595 of the 55,181 shares of restricted common stock were issued to settle approximately by $20,000 of accrued directors’ fees recorded on the Company’s balance sheet. | |||||||||||||||||
During the year ended December 31, 2013, the Company granted, to employees of the Company, options to acquire 360,909 shares of common stock with exercise prices of $1.15 (for a grant of 15,000 options), $1.25 per share (for grants of 75,000 options), $1.50 (for a grant of 80,000 options), and $1.65 per share (for grants of 190,909 options), exercisable over a term of five years from the date of grant. The options vest over a four year period, with 25% vesting on the first anniversary of the grant date and the remaining 75% vesting in equal monthly amounts through the fourth anniversary of the grant date. The grant date fair value of the stock options issued was determined to be approximately $330,000. During the year ended December 31, 2013, the Company recognized approximately $109,000 of expense related to the vesting of outstanding stock options. For the year ended December 31, 2013, options to acquire 56,500 shares of common stock with a weighted average exercise price of $1.43 expired unexercised, and options to acquire 236,875 shares of common stock with a weighted average exercise price of $1.14 were forfeited. On September 5, 2013, Matthew E. Oakes, the Company’s President and Chief Executive Officer, received 50,348 shares of the Company’s common stock in a cashless exercise of 172,500 stock options that had an exercise price of $1.15 per share. | |||||||||||||||||
Year Ended December 31, 2012 | |||||||||||||||||
During the year ended December 31, 2012, 150,000 restricted common shares were granted with an aggregate grant date fair value of approximately $99,000. During the year ended December 31, 2012, 89,607 restricted common shares with an aggregate grant date fair value of approximately $65,000 vested, and 35,000 of unvested restricted common shares with an aggregate grant date fair value of approximately $26,000 were forfeited. | |||||||||||||||||
During the year ended December 31, 2012, the Company granted, to certain employees of the Company, options to acquire an aggregate of 875,000 shares of common stock for an exercise price of $1.15 per share, exercisable over a term of five years from the date of grant. The options vest over a four year period, with 25% vesting on the first anniversary of the grant date and the remaining 75% vesting in equal monthly amounts through the fourth anniversary of the grant date. The grant date fair value of the stock options granted during the year ended December 31, 2012 was determined to be approximately $527,000, of which approximately $98,000 was recognized as stock compensation expense for the year ended December 31, 2012. During the year ended December 31, 2012, options to acquire 17,000 shares of common stock with a grant date fair value of approximately $12,000 expired unexercised and options to acquire 80,000 shares of common stock with a grant date fair value of approximately $46,000 were forfeited. On April 5, 2012, the Company issued 261,503 shares of common stock with a grant date fair value of approximately $277,000, pursuant to the Direct Insite Corp. Directors’ Deferred Compensation Plan dated January 1, 2008, to two former Directors for past services. | |||||||||||||||||
STOCK OPTION PLANS | |||||||||||||||||
The Company grants options under multiple stock-based compensation plans that do not differ substantially in the characteristics of the awards. Nonqualified and incentive stock options have been granted to directors, officers and employees of the Company under the Company’s stock option plans. Options generally vest over three to four years and expire five years from the date of the grant. On April 1, 2013, the Company’s 2003 Stock Option/Stock Issuance Plan and its 2003-A Stock Option/Stock Issuance Plan expired resulting in the expiration of 278,532 and 37,325 options, respectively, available for issuance. As of December 31, 2013, 12,894 shares were available for issuance under the Company’s 2004 Stock Option/Stock Issuance Plan, its sole remaining plan under which options may be issued. | |||||||||||||||||
The following is a summary of stock option activity for the year ended December 31, 2013, relating to all of the Company’s common stock plans (share amounts are in thousands): | |||||||||||||||||
Weighted Average | |||||||||||||||||
Weighted | Remaining | ||||||||||||||||
Shares | Average Exercise | Contractual Term | Aggregate Intrinsic Value | ||||||||||||||
(in thousands) | Price | (in years) | (in thousands) | ||||||||||||||
Outstanding at January 1, 2013 | 906 | $ | 1.17 | 3.9 | $ | -- | |||||||||||
Granted | 361 | $ | 1.51 | $ | 2 | ||||||||||||
Expired | (57 | ) | $ | 1.43 | $ | 1 | |||||||||||
Exercised | (173 | ) | $ | 1.15 | $ | 19 | |||||||||||
Forfeited | (237 | ) | $ | 1.14 | $ | 26 | |||||||||||
Outstanding at December 31, 2013 | 800 | $ | 1.31 | 3.77 | $ | 57 | |||||||||||
Exercisable at December 31, 2013 | 188 | $ | 1.16 | 3.06 | $ | 19 | |||||||||||
During the year ended December 31, 2013, Company granted approximately 361,000 stock options with weighted average grant date fair values of $0.91 per share. During the year ended December 31, 2012, Company granted approximately 875,000 stock options with weighted average grant date fair values of $0.60 per share. The fair values of the stock options granted were estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses the following weighted-average assumptions for the years ended December 31, 2013 and 2012: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected term | 3.75 years | 3.75 years | |||||||||||||||
Expected volatility | 91% - 97 | % | 154% - 175 | % | |||||||||||||
Expected dividend yield | -- | -- | |||||||||||||||
Risk-free interest rate | 0.6% - 0.8 | % | 0.36% - 0.74 | % | |||||||||||||
The following table summarizes stock option information as of December 31, 2013: | |||||||||||||||||
Weighted Average | |||||||||||||||||
Number Outstanding | Remaining | Options Exercisable | |||||||||||||||
Exercise Prices | (in thousands) | Contractual Life | (in thousands) | ||||||||||||||
$ | 1.15 | 498 | 3.29 years | 157 | |||||||||||||
$ | 1.2 | 31 | 2.48 years | 31 | |||||||||||||
$ | 1.5 | 80 | 4.97 years | - | |||||||||||||
$ | 1.65 | 191 | 4.74 years | - | |||||||||||||
Total | 800 | 3.77 years | 188 | ||||||||||||||
As of December 31, 2013, there was approximately $299,000 of unrecognized compensation costs related to stock options outstanding that will be recognized as expense over a weighted average period of 3.15 years. | |||||||||||||||||
RESTRICTED STOCK GRANT | |||||||||||||||||
A summary of activity related to the Company’s non-vested stock grants for the year ended December 31, 2013 is presented below: | |||||||||||||||||
Non-Vested Shares | Shares | Weighted-Average | |||||||||||||||
(in thousands) | Grant Date Fair Value | ||||||||||||||||
Non-Vested at January 1, 2013 | 60 | $ | 0.66 | ||||||||||||||
Granted | 98 | $ | 0.82 | ||||||||||||||
Vested | (109 | ) | $ | 0.73 | |||||||||||||
Non-Vested at December 31, 2013 | 49 | $ | 0.82 | ||||||||||||||
The future expected expense for non-vested shares is approximately $40,000 and will be recognized on a straight-line basis over the period from January 1, 2014 through December 31, 2014. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
INCOME TAXES [Abstract] | ' | ||||||||
INCOME TAXES | ' | ||||||||
NOTE 7 – INCOME TAXES | |||||||||
The Company accounts for income taxes in accordance with ASC 740 which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition. There were no unrecognized tax benefits as of December 31, 2013 and 2012. | |||||||||
The Company has identified its federal tax return and its state tax return in Florida as “major” tax jurisdictions, as defined in ASC 740, Income Taxes. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company’s evaluation was performed for tax years ended 2010 through 2013, the only periods subject to examination. The Company believes that its income tax positions and deductions will be sustained upon audit and does not anticipate any adjustments that will result in a material change to its financial position. The Company has elected to classify interest and penalties incurred on income taxes, if any, as income tax expense. No interest or penalties on income taxes have been recorded during the years ended December 31, 2013 and 2012. The Company does not expect its unrecognized tax benefit position to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. | |||||||||
The following table summarizes components of the provision for (benefit from) current and deferred income taxes for the years ended December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
(in thousands) | |||||||||
Current | |||||||||
Federal | $ | 0 | $ | (30 | ) | ||||
State and other | 22 | 3 | |||||||
Total Current | 22 | (27 | ) | ||||||
Deferred | |||||||||
Federal | (15 | ) | (125 | ) | |||||
State and other | (3 | ) | (22 | ) | |||||
Total Deferred | (18 | ) | (147 | ) | |||||
Provision for (Benefit from) Income Taxes | $ | 4 | $ | (174 | ) | ||||
The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
U.S. Federal Statutory Tax Rate | 34 | % | 34 | % | |||||
Permanent items | 13 | % | 9 | % | |||||
State taxes | 5 | % | 3 | % | |||||
Other | 0 | % | (2.0 | )% | |||||
Decrease in valuation allowance | -50 | % | (104.0 | )% | |||||
Totals | 2 | % | (60.0 | )% | |||||
The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2013 and 2012 are summarized as follows: | |||||||||
2013 | 2012 | ||||||||
(in thousands) | |||||||||
Deferred Tax Assets | |||||||||
Net operating loss carryforwards | $ | 9,670 | $ | 9,816 | |||||
Tax credit carryforwards | 347 | 347 | |||||||
Fixed and intangible assets | 43 | 30 | |||||||
Deferred revenue | 0 | 1 | |||||||
Value of stock options and stock compensation | 338 | 298 | |||||||
Deferred rent | 9 | 8 | |||||||
Capital loss carryforward | 517 | 517 | |||||||
Accruals | 142 | 114 | |||||||
11,066 | 11,131 | ||||||||
Valuation Allowance | (9,874 | ) | (9,957 | ) | |||||
Deferred Tax Assets, Net | $ | 1,192 | $ | 1,174 | |||||
The change in the valuation allowance for deferred tax assets for the years ended December 31, 2013 and 2012 are summarized as follows: | |||||||||
2013 | 2012 | ||||||||
Beginning Balance | $ | 9,957 | $ | 13,827 | |||||
Change in Allowance | -83 | (3,870 | ) | ||||||
Ending Balance | $ | 9,874 | $ | 9,957 | |||||
At December 31, 2013, the Company has federal and state net operating loss carryforwards (“NOLs”) remaining of approximately $26 million and $20 million, respectively, which may be available to reduce taxable income, if any. Approximately $0 and $9.1 million of federal NOLs expired in 2013 and 2012, respectively. Remaining federal and state net operating loss carryforwards expire from 2019 through 2033. However, Internal Revenue Code Section 382 rules limit the utilization of NOLs upon an ownership change of a company. During 2013, the Company performed an evaluation as to whether an ownership change had taken place. Management believes that there has been no ownership change as such applies to Section 382. However, if it is determined that an ownership change has taken place, either historically or in the future, utilization of its NOLs will be subject to limitations, which could eliminate a substantial portion of the future income tax benefits of the NOLs. The NOL carryforward as of December 31, 2013 included approximately $1,193,000 related to windfall tax benefits for which a benefit would be recorded in additional paid-in capital if and when realized. | |||||||||
During 2013, the Company reviewed previous positive and negative evidence and also reviewed its expected taxable income for future periods and concluded it is more likely than not that approximately $1,192,000 of tax benefits relating to NOLs will be utilized. Accordingly, the Company recorded a tax benefit in the amount of $18,000 during the year ended December 31, 2013, reflecting the change from December 31, 2012. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | ' | ||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
NOTE 8 – COMMITMENTS AND CONTINGENCIES | |||||
OPERATING LEASES | |||||
Operating leases are primarily for office space, data centers, equipment and automobiles. | |||||
On October 24, 2012, the Company entered into a 66-month lease for 5,806 square feet of office space in downtown Ft. Lauderdale, Florida. The Company relocated its corporate headquarters from Sunrise, Florida to the new location upon the termination of the lease in February 2013. | |||||
At December 31, 2013, the future minimum lease payments under operating leases are summarized as follows: | |||||
Year Ending December 31, | Amount | ||||
2014 | $ | 533,000 | |||
2015 | 503,000 | ||||
2016 | 109,000 | ||||
2017 | 112,000 | ||||
2018 | 77,000 | ||||
Total | $ | 1,334,000 | |||
Rent expense approximated $558,000 and $529,000 for the years ended December 31, 2013 and 2012, respectively. | |||||
EMPLOYMENT AGREEMENTS | |||||
The Company has an employment agreement with Mr. Oakes for a term effective June 1, 2013 through December 31, 2015. The agreement provides for a base salary of $24,583 per month for 2014 and 2015, annual incentive bonuses based on the Company’s performance in achieving prescribed revenue and earnings before interest and taxes (“EBIT”) targets, and discretionary bonuses. The agreement also provides for reimbursement of all out-of-pocket expenses reasonably incurred by him in the performance of his duties hereunder and certain severance benefits in the event of termination prior to the expiration date. If Mr. Oakes is terminated without cause or resigns from employment for “good reason” (as defined within Mr. Oakes’ employment agreement), he would receive one-year of base salary and COBRA coverage at the Company’s expense for the number of months he receives severance payments. | |||||
The Company shall continue to make lease payments on the corporate apartment located in Ft. Lauderdale, Florida and utilized by Mr. Oakes through the date of termination of such lease on December 31, 2015, in lieu of the Company’s reimbursement of up to $25,000 of relocation expenses as originally provided in the Agreement. |
MAJOR_CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
MAJOR CUSTOMERS [Abstract] | ' | ||||||||
MAJOR CUSTOMERS | ' | ||||||||
NOTE 9 – MAJOR CUSTOMERS | |||||||||
Two customers, HP Enterprise Services (“HP”) and International Business Machines Corp. (“IBM”), accounted for a significant portion of the Company’s revenues as follows: | |||||||||
% of Total Revenues | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
HP Customer A | 8.5 | % | 13.9 | % | |||||
HP Customer B | 13.8 | 14.6 | |||||||
HP Customer C | 12.2 | 15.1 | |||||||
HP Customer D | 10.6 | 5.5 | |||||||
Total HP | 45.1 | % | 49.1 | % | |||||
IBM | 32.3 | 33.3 | |||||||
Total Major Customers | 77.4 | % | 82.4 | % | |||||
Others | 22.6 | 17.6 | |||||||
Total | 100 | % | 100 | % | |||||
As of December 31, 2013 and 2012, HP and IBM accounted for a significant portion of the Company’s accounts receivable as follows (in thousands): | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Total HP | $ | 519 | $ | 827 | |||||
IBM | 505 | 552 | |||||||
Total | $ | 1,024 | $ | 1,379 |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
SUBSEQUENT EVENTS [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
NOTE 10 – SUBSEQUENT EVENTS | |
The Company evaluates events that occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||||||||||
USE OF ESTIMATES | ' | ||||||||||||
USE OF ESTIMATES | |||||||||||||
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. | |||||||||||||
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The most significant estimates are used in the accounting related to stock based compensation, the valuation allowance on deferred tax assets and capitalized internally developed software. | |||||||||||||
Actual results could differ from those estimates. | |||||||||||||
REVENUE RECOGNITION | ' | ||||||||||||
REVENUE RECOGNITION | |||||||||||||
The Company records revenue in accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“ASC 605”), and SEC Staff Accounting Bulletin Topic 13, Revenue Recognition in Financial Statements. Revenue is recognized when it is both earned and realizable, that is, when the following criteria are met: | |||||||||||||
• | persuasive evidence of arrangements exist; | ||||||||||||
• | delivery has occurred or services have been rendered; | ||||||||||||
• | the seller’s price is fixed and determinable; and | ||||||||||||
• | collectability is reasonably assured. | ||||||||||||
The following are the specific revenue recognition policies for each major category of revenue. | |||||||||||||
Recurring (Ongoing Services) | |||||||||||||
The Company provides transactional data processing services through its SaaS software solutions to its customers. The customer is charged a monthly fixed rate on a per transaction basis or a fixed fee based on monthly transaction volumes. Revenue is recognized as the services are provided. | |||||||||||||
Non-Recurring (Professional Services) | |||||||||||||
The Company provides non-recurring engineering services to its customers, which may include initial or additional development, modification, and customization services to the Company’s software platform. Such services are billed based on: (i) hourly rates; or (ii) milestone billings. For hourly billed services, revenue is recognized when work is performed. For milestone billed services, revenue is recognized when the project milestone has been accepted by the customer. The Company does not sell software licenses, upgrades or enhancements, or post-contract customer services. | |||||||||||||
COST OF REVENUE | ' | ||||||||||||
OF REVENUE | |||||||||||||
Cost of revenue in the statements of income is included in operations, research and development costs and exclusive of amortization and depreciation which is shown separately. Professional Service costs related to uncompleted milestones are deferred and included in other current assets, when applicable. | |||||||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||||||
PROPERTY AND EQUIPMENT | |||||||||||||
Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the terms of the respective leases or the service lives of the related assets, whichever is shorter. | |||||||||||||
Capitalized lease assets are amortized over the shorter of the lease term or the service life of the related assets. | |||||||||||||
INTERNALLY DEVELOPED SOFTWARE | ' | ||||||||||||
INTERNALLY DEVELOPED SOFTWARE | |||||||||||||
The Company is in the process of developing a next generation version of its accounts receivable platform. It is being designed for one of the Company’s clients and will be available to all order-to-cash process customers. According to ASC 350-40, Intangibles-Goodwill and Other-Internal-Use Software, the Company capitalizes the costs associated with the application development stage of a project. The Company will start amortizing capitalized costs when the software is ready for use and placed in service. The capitalized costs will be amortized on a straight-line basis over the estimated three year useful life of the software. | |||||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS | ' | ||||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS | |||||||||||||
ASC 360, Property, Plant and Equipment (“ASC 360”) requires management judgments regarding the future operating and disposition plans for marginally performing assets, and estimates of expected realizable values for assets to be sold. The Company accounts for its long-lived assets in accordance with ASC 360 for purposes of determining and measuring impairment. It is the Company’s policy to review the value assigned to its long lived assets, to determine if they have been permanently impaired by adverse conditions whenever events or circumstances indicate the related carrying amount may not be recoverable. If required, an impairment charge would be recorded based on an estimate of future discounted cash flows. In order to test for recoverability, the Company would compare the sum of an undiscounted cash flow projection from the related long-lived assets to the net carrying amount of such assets. Considerable management judgment is necessary to estimate undiscounted future operating cash flows and fair values and, accordingly, actual results could vary significantly from such estimates. No impairment charges were recognized during the years ended December 31, 2013 and 2012. | |||||||||||||
INCOME TAXES | ' | ||||||||||||
INCOME TAXES | |||||||||||||
The Company accounts for income taxes using the asset and liability method. This method requires the determination of deferred tax assets and liabilities based on the differences between the financial statement and income tax basis of assets and liabilities, using enacted tax rates. Additionally, net deferred tax assets are adjusted by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized. In addition, the Company expects to provide a valuation allowance on the remaining future tax benefits until it can sustain a level of profitability that demonstrates its ability to utilize the remaining assets, or other significant positive evidence arises that suggests its ability to utilize the remaining assets. The future realization of a portion of its reserved deferred tax assets related to tax benefits associated with the exercise of stock options, if and when realized, will not result in a tax benefit in the statement of income, but rather will result in an increase in additional paid-in capital. The Company will continue to re-assess its reserves on deferred income tax assets in future periods on a quarterly basis. | |||||||||||||
EARNINGS PER SHARE | ' | ||||||||||||
EARNINGS PER SHARE | |||||||||||||
The Company displays earnings per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). ASC 260 requires dual presentation of basic and diluted earnings per share (“EPS”). Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. | |||||||||||||
The computation of basic and diluted earnings per share is as follows: | |||||||||||||
For the year ended December 31, 2013 (in thousands, except per share amounts) | |||||||||||||
Net Income | Shares | Per Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 164 | 12,519 | $ | 0.01 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Options | – | 87 | |||||||||||
Restricted stock | – | 29 | |||||||||||
Diluted Earnings Per Share | $ | 164 | 12,635 | $ | 0.01 | ||||||||
For the year ended December 31, 2012 (in thousands, except per share amounts) | |||||||||||||
Net Income | Shares | Per Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 465 | 12,321 | $ | 0.04 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Options | – | – | |||||||||||
Restricted stock | – | 7 | |||||||||||
Diluted Earnings Per Share | $ | 465 | 12,328 | $ | 0.04 | ||||||||
Securities that could potentially dilute basic EPS in the future, that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following (in thousands): | |||||||||||||
December 31, | |||||||||||||
Anti-Dilutive Potential Common Shares | 2013 | 2012 | |||||||||||
Options to purchase common stock | 333 | 906 | |||||||||||
Unvested stock grants | – | 53 | |||||||||||
Total Anti-Dilutive Potential Common Shares | 333 | 959 | |||||||||||
CASH AND CASH EQUIVALENTS | ' | ||||||||||||
CASH AND CASH EQUIVALENTS | |||||||||||||
The Company considers all investments with original maturities of three months or less to be cash equivalents. | |||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | ' | ||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |||||||||||||
The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the accounts receivable balance. Management determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. Management performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. At December 31, 2013 and 2012, an allowance for doubtful accounts is not provided since, in the opinion of management, all accounts are deemed collectible. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, allowances may be required. | |||||||||||||
STOCK-BASED COMPENSATION | ' | ||||||||||||
STOCK-BASED COMPENSATION | |||||||||||||
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant) using the straight-line method. | |||||||||||||
The fair value of the Company’s common stock options are estimated using the Black Scholes-Merton option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate; and the expected life. The Company calculates the expected volatility using the historical volatility over the most recent period equal to the expected term and evaluates the extent to which available information indicate that future volatility may differ from historical volatility. The expected dividend rate is zero as the Company does not expect to pay or declare any cash dividends on common stock. The risk-free rates for the expected terms of the stock options are based on the U.S. Treasury yield curve in effect at the time of the grant. | |||||||||||||
The Company has not experienced significant exercise activity on stock options. The Company determines the expected term of its stock option awards issued using the simplified method. The simplified method assumes each vesting tranche of the award has a term equal to the midpoint between when the award vests and when the award expires. | |||||||||||||
In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid-in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. | |||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||
The carrying value of the Company’s accounts receivable and accounts payable approximates their fair value due to the short-term maturity of such instruments. The carrying value of capital lease obligations and notes payable approximate their fair value because the terms of these instruments approximate prevailing market rates. | |||||||||||||
CONCENTRATION OF CREDIT RISK | ' | ||||||||||||
CONCENTRATION OF CREDIT RISK | |||||||||||||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company has cash deposits in excess of the maximum amounts insured by FDIC at December 31, 2013. | |||||||||||||
The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. Concentrations of credit risk with respect to accounts receivable and revenue are disclosed in Note 9. | |||||||||||||
RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS | ' | ||||||||||||
RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS | |||||||||||||
Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||||||||||
Computation of basic and diluted earnings per share | ' | ||||||||||||
The computation of basic and diluted earnings per share is as follows: | |||||||||||||
For the year ended December 31, 2013 (in thousands, except per share amounts) | |||||||||||||
Net Income | Shares | Per Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 164 | 12,519 | $ | 0.01 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Options | – | 87 | |||||||||||
Restricted stock | – | 29 | |||||||||||
Diluted Earnings Per Share | $ | 164 | 12,635 | $ | 0.01 | ||||||||
For the year ended December 31, 2012 (in thousands, except per share amounts) | |||||||||||||
Net Income | Shares | Per Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 465 | 12,321 | $ | 0.04 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Options | – | – | |||||||||||
Restricted stock | – | 7 | |||||||||||
Diluted Earnings Per Share | $ | 465 | 12,328 | $ | 0.04 | ||||||||
Antidilutive securities excluded from computation of earnings per share | ' | ||||||||||||
Securities that could potentially dilute basic EPS in the future, that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following (in thousands): | |||||||||||||
December 31, | |||||||||||||
Anti-Dilutive Potential Common Shares | 2013 | 2012 | |||||||||||
Options to purchase common stock | 333 | 906 | |||||||||||
Unvested stock grants | – | 53 | |||||||||||
Total Anti-Dilutive Potential Common Shares | 333 | 959 |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
PROPERTY AND EQUIPMENT [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Property and equipment consist of the following as of December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Computer equipment and purchased software (3 years) | $ | 1,361 | $ | 5,056 | |||||
Internally developed software not yet placed in service (3 years) | 433 | – | |||||||
Furniture and fixtures and leasehold improvements (5 – 7 years) | 146 | 91 | |||||||
1,940 | 5,147 | ||||||||
Less: accumulated depreciation and amortization | (1,088 | ) | (4,532 | ) | |||||
Property and equipment, net | $ | 852 | $ | 615 |
ACCOUNTS_PAYABLE_AND_ACCRUED_E1
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES [Abstract] | ' | ||||||||
Accounts Payable and Accrued Expenses | ' | ||||||||
Accounts payable and accrued expenses consist of the following as of December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
(in thousands) | |||||||||
Trade accounts payable | $ | 324 | $ | 141 | |||||
Sales taxes payable | 539 | 539 | |||||||
Accrued directors’ fees | 377 | 261 | |||||||
Other accrued expenses | 162 | 224 | |||||||
Total Accounts Payable and Accrued Expenses | $ | 1,402 | $ | 1,165 |
DEBT_Tables
DEBT (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
DEBT [Abstract] | ' | ||||
Future Minimum Payments Under Capital Leases | ' | ||||
At December 31, 2013, future minimum payments under these capital leases are: | |||||
Year Ending | Amount | ||||
31-Dec | (in thousands) | ||||
2014 | $ | 198 | |||
2015 | 31 | ||||
2016 | 10 | ||||
Total minimum lease payments | 239 | ||||
Less: amounts representing interest | (16 | ) | |||
Net minimum lease payments | 223 | ||||
Current portion | 187 | ||||
Long-term portion | $ | 36 |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | ' | ||||||||||||||||
Stock Option Activity | ' | ||||||||||||||||
The following is a summary of stock option activity for the year ended December 31, 2013, relating to all of the Company’s common stock plans (share amounts are in thousands): | |||||||||||||||||
Weighted Average | |||||||||||||||||
Weighted | Remaining | ||||||||||||||||
Shares | Average Exercise | Contractual Term | Aggregate Intrinsic Value | ||||||||||||||
(in thousands) | Price | (in years) | (in thousands) | ||||||||||||||
Outstanding at January 1, 2013 | 906 | $ | 1.17 | 3.9 | $ | -- | |||||||||||
Granted | 361 | $ | 1.51 | $ | 2 | ||||||||||||
Expired | (57 | ) | $ | 1.43 | $ | 1 | |||||||||||
Exercised | (173 | ) | $ | 1.15 | $ | 19 | |||||||||||
Forfeited | (237 | ) | $ | 1.14 | $ | 26 | |||||||||||
Outstanding at December 31, 2013 | 800 | $ | 1.31 | 3.77 | $ | 57 | |||||||||||
Exercisable at December 31, 2013 | 188 | $ | 1.16 | 3.06 | $ | 19 | |||||||||||
Stock Options Granted Assumptions | ' | ||||||||||||||||
The fair values of the stock options granted were estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses the following weighted-average assumptions for the years ended December 31, 2013 and 2012: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected term | 3.75 years | 3.75 years | |||||||||||||||
Expected volatility | 91% - 97 | % | 154% - 175 | % | |||||||||||||
Expected dividend yield | -- | -- | |||||||||||||||
Risk-free interest rate | 0.6% - 0.8 | % | 0.36% - 0.74 | % | |||||||||||||
Stock Option Information | ' | ||||||||||||||||
The following table summarizes stock option information as of December 31, 2013: | |||||||||||||||||
Weighted Average | |||||||||||||||||
Number Outstanding | Remaining | Options Exercisable | |||||||||||||||
Exercise Prices | (in thousands) | Contractual Life | (in thousands) | ||||||||||||||
$ | 1.15 | 498 | 3.29 years | 157 | |||||||||||||
$ | 1.2 | 31 | 2.48 years | 31 | |||||||||||||
$ | 1.5 | 80 | 4.97 years | - | |||||||||||||
$ | 1.65 | 191 | 4.74 years | - | |||||||||||||
Total | 800 | 3.77 years | 188 | ||||||||||||||
Non-vested Stock Grants | ' | ||||||||||||||||
A summary of activity related to the Company’s non-vested stock grants for the year ended December 31, 2013 is presented below: | |||||||||||||||||
Non-Vested Shares | Shares | Weighted-Average | |||||||||||||||
(in thousands) | Grant Date Fair Value | ||||||||||||||||
Non-Vested at January 1, 2013 | 60 | $ | 0.66 | ||||||||||||||
Granted | 98 | $ | 0.82 | ||||||||||||||
Vested | (109 | ) | $ | 0.73 | |||||||||||||
Non-Vested at December 31, 2013 | 49 | $ | 0.82 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
INCOME TAXES [Abstract] | ' | ||||||||
Provision for Current and Deferred Income Tax | ' | ||||||||
The following table summarizes components of the provision for (benefit from) current and deferred income taxes for the years ended December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
(in thousands) | |||||||||
Current | |||||||||
Federal | $ | 0 | $ | (30 | ) | ||||
State and other | 22 | 3 | |||||||
Total Current | 22 | (27 | ) | ||||||
Deferred | |||||||||
Federal | (15 | ) | (125 | ) | |||||
State and other | (3 | ) | (22 | ) | |||||
Total Deferred | (18 | ) | (147 | ) | |||||
Provision for (Benefit from) Income Taxes | $ | 4 | $ | (174 | ) | ||||
Significant Differences Between U.S. Federal Statutory Tax Rate and Effective Tax Rate | ' | ||||||||
The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
U.S. Federal Statutory Tax Rate | 34 | % | 34 | % | |||||
Permanent items | 13 | % | 9 | % | |||||
State taxes | 5 | % | 3 | % | |||||
Other | 0 | % | (2.0 | )% | |||||
Decrease in valuation allowance | -50 | % | (104.0 | )% | |||||
Totals | 2 | % | (60.0 | )% | |||||
Deferred Tax Assets and Liabilities | ' | ||||||||
The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2013 and 2012 are summarized as follows: | |||||||||
2013 | 2012 | ||||||||
(in thousands) | |||||||||
Deferred Tax Assets | |||||||||
Net operating loss carryforwards | $ | 9,670 | $ | 9,816 | |||||
Tax credit carryforwards | 347 | 347 | |||||||
Fixed and intangible assets | 43 | 30 | |||||||
Deferred revenue | 0 | 1 | |||||||
Value of stock options and stock compensation | 338 | 298 | |||||||
Deferred rent | 9 | 8 | |||||||
Capital loss carryforward | 517 | 517 | |||||||
Accruals | 142 | 114 | |||||||
11,066 | 11,131 | ||||||||
Valuation Allowance | (9,874 | ) | (9,957 | ) | |||||
Deferred Tax Assets, Net | $ | 1,192 | $ | 1,174 | |||||
Change in Valuation Allowance for Deferred Tax Assets | ' | ||||||||
The change in the valuation allowance for deferred tax assets for the years ended December 31, 2013 and 2012 are summarized as follows: | |||||||||
2013 | 2012 | ||||||||
Beginning Balance | $ | 9,957 | $ | 13,827 | |||||
Change in Allowance | -83 | (3,870 | ) | ||||||
Ending Balance | $ | 9,874 | $ | 9,957 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | ' | ||||
Future Minimum Lease Payments Under Operating Leases | ' | ||||
At December 31, 2013, the future minimum lease payments under operating leases are summarized as follows: | |||||
Year Ending December 31, | Amount | ||||
2014 | $ | 533,000 | |||
2015 | 503,000 | ||||
2016 | 109,000 | ||||
2017 | 112,000 | ||||
2018 | 77,000 | ||||
Total | $ | 1,334,000 |
MAJOR_CUSTOMERS_Tables
MAJOR CUSTOMERS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Revenues [Member] | ' | ||||||||
Concentration Risk [Line Items] | ' | ||||||||
Customers Accounted for Significant Portion of Revenues and Accounts Receivable | ' | ||||||||
Two customers, HP Enterprise Services (“HP”) and International Business Machines Corp. (“IBM”), accounted for a significant portion of the Company’s revenues as follows: | |||||||||
% of Total Revenues | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
HP Customer A | 8.5 | % | 13.9 | % | |||||
HP Customer B | 13.8 | 14.6 | |||||||
HP Customer C | 12.2 | 15.1 | |||||||
HP Customer D | 10.6 | 5.5 | |||||||
Total HP | 45.1 | % | 49.1 | % | |||||
IBM | 32.3 | 33.3 | |||||||
Total Major Customers | 77.4 | % | 82.4 | % | |||||
Others | 22.6 | 17.6 | |||||||
Total | 100 | % | 100 | % | |||||
Accounts Receivable [Member] | ' | ||||||||
Concentration Risk [Line Items] | ' | ||||||||
Customers Accounted for Significant Portion of Revenues and Accounts Receivable | ' | ||||||||
As of December 31, 2013 and 2012, HP and IBM accounted for a significant portion of the Company’s accounts receivable as follows (in thousands): | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Total HP | $ | 519 | $ | 827 | |||||
IBM | 505 | 552 | |||||||
Total | $ | 1,024 | $ | 1,379 |
NATURE_OF_BUSINESS_Details
NATURE OF BUSINESS (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Concentration Risk [Line Items] | ' | ' |
Number of major customers | 2 | ' |
Revenues [Member] | Customers One [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Ratio of revenues from major customers to total revenues (in hundredths) | 77.40% | 82.40% |
Revenues [Member] | Customers Two [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Ratio of revenues from major customers to total revenues (in hundredths) | 8.50% | 13.90% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
Share data in Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract] | ' | ' |
Impairment charges | $0 | $0 |
Net Income Numerator [Abstract] | ' | ' |
Net income attributable to common stockholders | 164,000 | 465,000 |
Diluted Earnings Per Share | 164,000 | 465,000 |
Shares Denominator [Abstract] | ' | ' |
Net income attributable to common stockholders (in shares) | 12,519 | 12,321 |
Diluted Earnings Per Share (in shares) | 12,635 | 12,328 |
Per Share Amount [Abstract] | ' | ' |
Net income attributable to common stockholders (in dollars per share) | $0.01 | $0.04 |
Diluted Earnings Per Share (in dollars per share) | $0.01 | $0.04 |
Summary of antidilutive securities excluded from computation of earnings per share [Abstract] | ' | ' |
Total Anti-Dilutive Potential Common Shares (in shares) | 333 | 959 |
Stock Options [Member] | ' | ' |
Net Income Numerator [Abstract] | ' | ' |
Effect of Dilutive Securities | 0 | 0 |
Shares Denominator [Abstract] | ' | ' |
Effect of Dilutive Securities (in shares) | 87 | 0 |
Summary of antidilutive securities excluded from computation of earnings per share [Abstract] | ' | ' |
Total Anti-Dilutive Potential Common Shares (in shares) | 333 | 906 |
Restricted Stock [Member] | ' | ' |
Net Income Numerator [Abstract] | ' | ' |
Effect of Dilutive Securities | $0 | $0 |
Shares Denominator [Abstract] | ' | ' |
Effect of Dilutive Securities (in shares) | 29 | 7 |
Summary of antidilutive securities excluded from computation of earnings per share [Abstract] | ' | ' |
Total Anti-Dilutive Potential Common Shares (in shares) | 0 | 53 |
Internally Developed Software [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Internally developed software, useful life | '3 years | ' |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Summary of property and equipment [Abstract] | ' | ' |
Property and equipment, gross | $1,940 | $5,147 |
Less: accumulated depreciation and amortization | -1,088 | -4,532 |
Property and equipment, net | 852 | 615 |
Depreciation and amortization | 394 | 375 |
Computer Equipment and Purchased Software [Member] | ' | ' |
Summary of property and equipment [Abstract] | ' | ' |
Property and equipment, gross | 1,361 | 5,056 |
Estimated useful lives | '3 years | ' |
Internally Developed Software [Member] | ' | ' |
Summary of property and equipment [Abstract] | ' | ' |
Property and equipment, gross | 433 | 0 |
Estimated useful lives | '3 years | ' |
Furniture and Fixtures and Leasehold Improvements [Member] | ' | ' |
Summary of property and equipment [Abstract] | ' | ' |
Property and equipment, gross | $146 | $91 |
Furniture and Fixtures and Leasehold Improvements [Member] | Minimum [Member] | ' | ' |
Summary of property and equipment [Abstract] | ' | ' |
Estimated useful lives | '5 years | ' |
Furniture and Fixtures and Leasehold Improvements [Member] | Maximum [Member] | ' | ' |
Summary of property and equipment [Abstract] | ' | ' |
Estimated useful lives | '7 years | ' |
ACCOUNTS_PAYABLE_AND_ACCRUED_E2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Summary of Accounts Payable and Accrued Expenses [Abstract] | ' | ' |
Trade accounts payable | $324 | $141 |
Sales taxes payable | 539 | 539 |
Accrued directors' fees | 377 | 261 |
Other accrued expenses | 162 | 224 |
Total Accounts Payable and Accrued Expenses | $1,402 | $1,165 |
DEBT_Details
DEBT (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Lease | ||
Capital Leased Assets [Line Items] | ' | ' |
Number of capital lease obligations equipments | 6 | ' |
Expiry period of capital lease obligations | 'June 30, 2016 | ' |
Summary of Future Minimum Payments Under Capital Lease [Abstract] | ' | ' |
2014 | $198,000 | ' |
2015 | 31,000 | ' |
2016 | 10,000 | ' |
Total minimum lease payments | 239,000 | ' |
Less: amounts representing interest | -16,000 | ' |
Net minimum lease payments | 223,000 | ' |
Current portion | 187,000 | 198,000 |
Long-term portion | 36,000 | 162,000 |
Gross book value of capital leased assets | 646,000 | ' |
Net book value of capital leased assets | 241,000 | ' |
Minimum [Member] | ' | ' |
Summary of Future Minimum Payments Under Capital Lease [Abstract] | ' | ' |
Interest rate capital leases (in hundredths) | 0.00% | ' |
Maximum [Member] | ' | ' |
Summary of Future Minimum Payments Under Capital Lease [Abstract] | ' | ' |
Interest rate capital leases (in hundredths) | 9.00% | ' |
Notes Payable [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable | ' | $32,000 |
Interest rate of notes, minimum (in hundredths) | 8.00% | ' |
Interest rate of notes, maximum (in hundredths) | 9.50% | ' |
Maturity date of notes | 31-Aug-13 | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Preferred Stock [Abstract] | ' | ' |
Preferred stock, authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common Stock, Options and Stock Grants [Abstract] | ' | ' |
Percentage of stock options vesting up-to first anniversary (in hundredths) | 25.00% | 25.00% |
Percentage of stock options vesting from year two to fifth anniversary (in hundredths) | 75.00% | 75.00% |
Value of stock issued during the period | $109,000 | $98,000 |
Summary of stock option information [Abstract] | ' | ' |
Number Outstanding (in shares) | 800,000 | ' |
Weighted Average Remaining Contractual Life | '3 years 9 months 7 days | ' |
Options Exercisable (in shares) | 188,000 | ' |
Unrecognized compensation costs related to stock options | 299,000 | ' |
Unrecognized compensation weighted average period | '3 years 1 month 24 days | ' |
$1.15 [Member] | ' | ' |
Summary of stock option information [Abstract] | ' | ' |
Exercise Prices (in dollars per share) | $1.15 | $1.15 |
Number Outstanding (in shares) | 498,000 | ' |
Weighted Average Remaining Contractual Life | '3 years 3 months 14 days | ' |
Options Exercisable (in shares) | 157,000 | ' |
$1.20 [Member] | ' | ' |
Summary of stock option information [Abstract] | ' | ' |
Exercise Prices (in dollars per share) | $1.20 | ' |
Number Outstanding (in shares) | 31,000 | ' |
Weighted Average Remaining Contractual Life | '2 years 5 months 23 days | ' |
Options Exercisable (in shares) | 31,000 | ' |
$1.50 [Member] | ' | ' |
Summary of stock option information [Abstract] | ' | ' |
Exercise Prices (in dollars per share) | $1.50 | ' |
Number Outstanding (in shares) | 80,000 | ' |
Weighted Average Remaining Contractual Life | '4 years 11 months 19 days | ' |
Options Exercisable (in shares) | 0 | ' |
$1.65 [Member] | ' | ' |
Summary of stock option information [Abstract] | ' | ' |
Exercise Prices (in dollars per share) | $1.65 | ' |
Number Outstanding (in shares) | 191,000 | ' |
Weighted Average Remaining Contractual Life | '4 years 8 months 26 days | ' |
Options Exercisable (in shares) | 0 | ' |
$1.25 [Member] | ' | ' |
Summary of stock option information [Abstract] | ' | ' |
Exercise Prices (in dollars per share) | $1.25 | ' |
Director [Member] | ' | ' |
Common Stock, Options and Stock Grants [Abstract] | ' | ' |
Shares issued under deferred compensation plan (in shares) | 55,181 | 261,503 |
Shares issued under deferred compensation plan | 42,000 | 277,000 |
Number of employees to whom shares issued under deferred compensation arrangement | ' | 2 |
Stock issued during the period (in shares) | 20,595 | ' |
Value of stock issued during the period | 20,000 | ' |
Restricted Stock Grants [Member] | ' | ' |
Common Stock, Options and Stock Grants [Abstract] | ' | ' |
Aggregate grant date fair value of restricted common shares | 80,000 | 99,000 |
Grant date fair value of vested stock option | 80,000 | 65,000 |
Aggregate grant date fair value of unvested restricted common shares forfeited | ' | 26,000 |
Shares [Abstract] | ' | ' |
Non-Vested, beginning balance (in shares) | 60,000 | ' |
Granted (in shares) | 98,000 | 150,000 |
Vested (in shares) | -109,000 | -89,607 |
Forfeited (in shares) | ' | -35,000 |
Non-Vested, ending balance (in shares) | 49,000 | 60,000 |
Weighted-Average Grant Date Fair Value [Abstract] | ' | ' |
Non-Vested, beginning balance (in dollars per share) | $0.66 | ' |
Granted (in dollars per share) | $0.82 | ' |
Vested (in dollars per share) | $0.73 | ' |
Non-Vested, ending balance (in dollars per share) | $0.82 | $0.66 |
Future expected expense for non-vested shares to be recognized | 40,000 | ' |
Stock Options [Member] | ' | ' |
Common Stock, Options and Stock Grants [Abstract] | ' | ' |
Term of stock option grant | '5 | '5 |
Vesting period of stock option | '4 years | '4 years |
Grant date fair value of option | 330,000 | 527,000 |
Recognized stock compensation expense | 109,000 | 98,000 |
Grant date fair value of options expired | 12,000 | ' |
Grant date fair value of options forfeited | 46,000 | ' |
Stock Option Plans [Abstract] | ' | ' |
Expiration period of stock option | '5 years | ' |
Number of shares available for issuance under stock option plans (in shares) | 12,894 | ' |
Number of shares no longer available due to expiration of plan (in shares) | 278,532 | ' |
Shares [Abstract] | ' | ' |
Outstanding, beginning balance (in shares) | 906,000 | ' |
Granted (in shares) | 361,000 | 875,000 |
Expired (in shares) | -57,000 | ' |
Exercised (in shares) | -173,000 | ' |
Forfeited (in shares) | -237,000 | ' |
Outstanding, ending balance (in shares) | 800,000 | 906,000 |
Exercisable, ending balance (in shares) | 188,000 | ' |
Weighted Average Exercise Price [Abstract] | ' | ' |
Outstanding, beginning balance (in dollars per share) | $1.17 | ' |
Granted (in dollars per share) | $1.51 | ' |
Expired (in dollars per share) | $1.43 | ' |
Exercised (in dollars per share) | $1.15 | ' |
Forfeited (in dollars per share) | $1.14 | ' |
Outstanding, ending balance (in dollars per share) | $1.31 | $1.17 |
Exercisable, ending balance (in dollars per share) | $1.16 | ' |
Weighted Average Remaining Contractual Term (in years) [Abstract] | ' | ' |
Outstanding, beginning balance | '3 years 9 months 7 days | '3 years 10 months 24 days |
Outstanding, ending balance | '3 years 9 months 7 days | '3 years 10 months 24 days |
Exercisable, ending balance | '3 years 0 months 22 days | ' |
Aggregate Intrinsic Value [Abstract] | ' | ' |
Outstanding, beginning balance | 0 | ' |
Granted | 2,000 | ' |
Expired | 1,000 | ' |
Exercised | 19,000 | ' |
Forfeited | 26,000 | ' |
Outstanding, ending balance | 57,000 | 0 |
Exercisable, ending balance | $19,000 | ' |
Weighted average grant date fair value (in dollars per share) | $0.91 | $0.60 |
Schedule of stock option granted assumptions [Abstract] | ' | ' |
Expected term | '3 years 9 months | '3 years 9 months |
Expected dividend rate (in hundredths) | 0.00% | 0.00% |
Shares [Abstract] | ' | ' |
Expired (in shares) | ' | -17,000 |
Forfeited (in shares) | ' | -80,000 |
Stock Options [Member] | $1.15 [Member] | ' | ' |
Shares [Abstract] | ' | ' |
Granted (in shares) | 15,000 | 875,000 |
Stock Options [Member] | $1.50 [Member] | ' | ' |
Shares [Abstract] | ' | ' |
Granted (in shares) | 80,000 | ' |
Stock Options [Member] | $1.65 [Member] | ' | ' |
Shares [Abstract] | ' | ' |
Granted (in shares) | 190,909 | ' |
Stock Options [Member] | $1.25 [Member] | ' | ' |
Shares [Abstract] | ' | ' |
Granted (in shares) | 75,000 | ' |
Stock Options [Member] | President and Chief Executive Officer [Member] | ' | ' |
Common Stock, Options and Stock Grants [Abstract] | ' | ' |
Shares issued under deferred compensation plan (in shares) | 50,348 | ' |
Stock Issuance Plan [Member] | ' | ' |
Stock Option Plans [Abstract] | ' | ' |
Number of shares no longer available due to expiration of plan (in shares) | 37,325 | ' |
Minimum [Member] | Stock Options [Member] | ' | ' |
Common Stock, Options and Stock Grants [Abstract] | ' | ' |
Vesting period of stock option | '3 years | ' |
Schedule of stock option granted assumptions [Abstract] | ' | ' |
Expected volatility (in hundredths) | 91.00% | 154.00% |
Risk free interest rate (in hundredths) | 0.60% | 0.36% |
Maximum [Member] | Stock Options [Member] | ' | ' |
Common Stock, Options and Stock Grants [Abstract] | ' | ' |
Vesting period of stock option | '4 years | ' |
Schedule of stock option granted assumptions [Abstract] | ' | ' |
Expected volatility (in hundredths) | 97.00% | 175.00% |
Risk free interest rate (in hundredths) | 0.80% | 0.74% |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
INCOME TAXES [Abstract] | ' | ' |
Unrecognized tax benefits, interest and penalties | $0 | $0 |
Unrecognized tax benefits | 0 | 0 |
Period for which the position in unrecognized tax benefit is not expected to change | '12 months | ' |
Current [Abstract] | ' | ' |
Federal | 0 | -30,000 |
State and other | 22,000 | 3,000 |
Total Current | 22,000 | -27,000 |
Deferred [Abstract] | ' | ' |
Federal | -15,000 | -125,000 |
State and other | -3,000 | -22,000 |
Total Deferred | -18,000 | -147,000 |
Provision for (Benefit from) Income Taxes | 4,000 | -174,000 |
Significant difference between U.S. Federal statutory tax rate and effective tax rate for financial statement [Abstract] | ' | ' |
U.S. Federal Statutory Tax Rate (in hundredths) | 34.00% | 34.00% |
Permanent items (in hundredths) | 13.00% | 9.00% |
State taxes (in hundredths) | 5.00% | 3.00% |
Other (in hundredths) | 0.00% | -2.00% |
Decrease in valuation allowance | -50.00% | -104.00% |
Totals (in hundredths) | 2.00% | -60.00% |
Deferred Tax Assets [Abstract] | ' | ' |
Net operating loss carryforwards | 9,670,000 | 9,816,000 |
Tax credit carryforwards | 347,000 | 347,000 |
Fixed and intangible assets | 43,000 | 30,000 |
Deferred revenue | 0 | 1,000 |
Value of stock options and stock compensation | 338,000 | 298,000 |
Deferred rent | 9,000 | 8,000 |
Capital loss carryforward | 517,000 | 517,000 |
Accruals | 142,000 | 114,000 |
Deferred Tax Assets, Gross | 11,066,000 | 11,131,000 |
Valuation Allowance | -9,874,000 | -9,957,000 |
Deferred Tax Assets, Net | 1,192,000 | 1,174,000 |
Change in valuation allowance for deferred tax assets [Abstract] | ' | ' |
Beginning Balance | 9,957,000 | 13,827,000 |
Change in Allowance | -83,000 | -3,870,000 |
Ending Balance | 9,874,000 | 9,957,000 |
Operating Loss Carryforwards [Line Items] | ' | ' |
Amount of federal net operating loss expired | 0 | 9,100,000 |
Operating loss carryforwards, expiration dates | '2019 through 2033 | ' |
Net operating loss carryforwards related to tax benefit | 1,193,000 | ' |
Federal Tax Authority [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Operating loss carryforwards | 26,000,000 | ' |
State Tax Authority [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Operating loss carryforwards | $20,000,000 | ' |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
sqft | ||
Operating Leases [Abstract] | ' | ' |
Duration of lease agreement | '66 months | ' |
Operating Lease for office space (in square foot) | 5,806 | ' |
Summary of future minimum lease payments under operating leases [Abstract] | ' | ' |
2014 | $533,000 | ' |
2015 | 503,000 | ' |
2016 | 109,000 | ' |
2017 | 112,000 | ' |
2018 | 77,000 | ' |
Total | 1,334,000 | ' |
Rent expense | 558,000 | 529,000 |
President and Chief Executive Officer [Member] | ' | ' |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ' | ' |
Base salary per month as per employment agreements | 24,583 | ' |
Expenses incurred in connection with relocation | $25,000 | ' |
MAJOR_CUSTOMERS_Details
MAJOR CUSTOMERS (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
MAJOR CUSTOMERS [Abstract] | ' | ' |
Number of major customers | 2 | ' |
Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 100.00% | 100.00% |
Accounts Receivable [Member] | ' | ' |
Summary of customers accounted for significant portion of accounts receivable [Abstract] | ' | ' |
Major customer, accounts receivable | 1,024 | 1,379 |
HP Customer A [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 8.50% | 13.90% |
HP Customer B [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 13.80% | 14.60% |
HP Customer C [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 12.20% | 15.10% |
HP Customer D [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 10.60% | 5.50% |
Total HP [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 45.10% | 49.10% |
Total HP [Member] | Accounts Receivable [Member] | ' | ' |
Summary of customers accounted for significant portion of accounts receivable [Abstract] | ' | ' |
Major customer, accounts receivable | 519 | 827 |
IBM [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 32.30% | 33.30% |
IBM [Member] | Accounts Receivable [Member] | ' | ' |
Summary of customers accounted for significant portion of accounts receivable [Abstract] | ' | ' |
Major customer, accounts receivable | 505 | 552 |
Total Major Customers [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 77.40% | 82.40% |
Others [Member] | Revenues [Member] | ' | ' |
Summary of customers accounted for significant portion of revenues [Abstract] | ' | ' |
Major customer, revenues (in hundredths) | 22.60% | 17.60% |