Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 6-May-15 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DIRECT INSITE CORP | |
Entity Central Index Key | 879703 | |
Current Fiscal Year End Date | -19 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 12,869,309 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 |
CONDENSED_BALANCE_SHEETS_Unaud
CONDENSED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $1,343 | $871 |
Accounts receivable | 1,921 | 2,407 |
Prepaid expenses and other current assets | 413 | 383 |
Deferred tax assets - current | 234 | 234 |
Total current assets | 3,911 | 3,895 |
Property and equipment, net | 977 | 1,020 |
Deferred tax assets | 961 | 961 |
Other assets | 231 | 244 |
Total assets | 6,080 | 6,120 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,553 | 1,789 |
Current portion of capital lease obligations | 29 | 27 |
Deferred rent | 43 | 44 |
Deferred revenue | 21 | 52 |
Total current liabilities | 1,646 | 1,912 |
Capital lease obligations, net of current portion | 2 | 9 |
Total liabilities | 1,648 | 1,921 |
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; 12,898,488 and 12,759,870 shares issued and 12,858,561 and 12,719,943 shares outstanding in 2015 and 2014, respectively | 1 | 1 |
Additional paid-in capital | 116,314 | 116,161 |
Accumulated deficit | -111,555 | -111,635 |
Common stock in treasury, at cost; 24,371 shares in 2015 and 2014 | -328 | -328 |
Total stockholders' equity | 4,432 | 4,199 |
Total liabilities and stockholders' equity | $6,080 | $6,120 |
CONDENSED_BALANCE_SHEETS_Unaud1
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
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) | 12,898,488 | 12,759,870 |
Common stock, outstanding (in shares) | 12,858,561 | 12,719,943 |
Treasury stock, at cost (in shares) | 24,371 | 24,371 |
CONDENSED_STATEMENTS_OF_OPERAT
CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues: | ||
Recurring | $1,707 | $1,618 |
Non-recurring | 353 | 352 |
Total revenues | 2,060 | 1,970 |
Operating costs and expenses: | ||
Operations, research and development | 893 | 900 |
General and administrative | 617 | 592 |
Sales and marketing | 385 | 474 |
Amortization and depreciation | 80 | 83 |
Total operating costs and expenses | 1,975 | 2,049 |
Operating income (loss) | 85 | -79 |
Other expense, net | 1 | 4 |
Income (loss) before provision for income taxes | 84 | -83 |
Provision for income taxes | 4 | 3 |
Net income (loss) | $80 | ($86) |
Basic income (loss) per share attributable to common stockholders (in dollars per share) | $0.01 | ($0.01) |
Diluted income (loss) per share attributable to common stockholders (in dollars per share) | $0.01 | ($0.01) |
Basic weighted average common stock outstanding (in shares) | 12,792 | 12,622 |
Diluted weighted average common stock outstanding (in shares) | 12,802 | 12,622 |
CONDENSED_STATEMENTS_OF_CASH_F
CONDENSED 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 income (loss) | $80 | ($86) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: | ||
Amortization and depreciation | 80 | 83 |
Stock-based compensation expense | 50 | 44 |
Deferred rent expense | -1 | 8 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 486 | -290 |
Prepaid expenses and other current assets | -15 | 58 |
Accounts payable and accrued expenses | -135 | -67 |
Deferred revenue | -31 | 88 |
Total adjustments | 434 | -76 |
Net cash provided by (used in) operating activities | 514 | -162 |
Cash flows from investing activities: | ||
Expenditures for property and equipment | 0 | -3 |
Capitalization of internally developed software | -37 | -167 |
Net cash used in investing activities | -37 | -170 |
Cash flows used in financing activities: | ||
Repayment of capital lease obligations | -5 | -55 |
Net increase (decrease) increase in cash and cash equivalents | 472 | -387 |
Cash and cash equivalents - beginning | 871 | 1,371 |
Cash and cash equivalents - ending | 1,343 | 984 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 1 | 2 |
Cash paid for income taxes | 0 | 3 |
Issuance of common stock in settlement of accrued directors' fees | $103 | $0 |
NATURE_OF_BUSINESS
NATURE OF BUSINESS | 3 Months Ended |
Mar. 31, 2015 | |
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 Amsterdam, Netherlands. | |
As described in Note 9, the Company has two major customers that accounted for 71.3% and 72.2% of the Company’s revenue for the three months ended March 31, 2015 and 2014, respectively. Loss of either of these customers would have a material effect on the Company. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2 - Summary of Significant Accounting Policies | ||||||||||||
Interim Financial Information | |||||||||||||
The accompanying unaudited condensed interim financial statements include the accounts of Direct Insite. The condensed balance sheet as of March 31, 2015, and the statements of operations and cash flows for the three months ended March 31, 2015 and 2014 have not been audited. These unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to quarterly report on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The December 31, 2014 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. These interim condensed financial statements include all adjustments which management considers necessary for a fair presentation of the financial statements and consist of normal recurring items. The results of operations for the three months ended March 31, 2015, are not necessarily indicative of results that may be expected for any other interim period or for the full year. | |||||||||||||
These unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 25, 2015. | |||||||||||||
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 condensed 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. | |||||||||||||
Internally Developed Software | |||||||||||||
The Company released the first phase of PAYBOX™, a next generation version of its accounts receivable platform in November 2014. It was designed for a global bank and is available to all Order-to-Cash process customers. According to ASC 350-40, Intangibles-Goodwill and Other-Internal-Use Software, the Company is able to capitalize the costs associated with the application development stage of a project. The Company started amortizing capitalized costs when the software was ready for use and placed in service in November 2014. The capitalized costs are being amortized on a straight-line basis over the estimated five year useful life of the software. As additional functionality is added, costs incurred are capitalized in accordance with ASC 350-40. | |||||||||||||
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. | |||||||||||||
For the three months ended March 31, 2014, all potentially dilutive securities were excluded from the computation of diluted earnings per share because their impact was anti-dilutive. | |||||||||||||
The computation of basic and diluted earnings per share for the three months ended March 31, 2015 is as follows (in thousands, except per share amounts): | |||||||||||||
Net Income Numerator | Shares Denominator | Per Share Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 80 | 12,792 | $ | 0.01 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Restricted stock | -- | 10 | 0 | ||||||||||
Diluted Earnings Per Share | $ | 80 | 12,802 | $ | 0.01 | ||||||||
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): | |||||||||||||
March 31, | |||||||||||||
Anti-Dilutive Potential Common Shares | 2015 | 2014 | |||||||||||
Options to purchase common stock | 629 | 646 | |||||||||||
Unvested stock grants | 14 | 95 | |||||||||||
Total Anti-Dilutive Potential Common Shares | 643 | 741 | |||||||||||
Concentration of Credit Risk | |||||||||||||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. The Company has cash deposits in excess of the maximum amounts insured by the Federal Depository Insurance Corporation at March 31, 2015 and December 31, 2014. | |||||||||||||
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 | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
PROPERTY AND EQUIPMENT [Abstract] | |||||||||
PROPERTY AND EQUIPMENT | Note 3 – Property and Equipment | ||||||||
Property and equipment consist of the following at March 31, 2015 and December 31, 2014: | |||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Computer equipment and purchased software (3 years) | $ | 1,329 | $ | 1,372 | |||||
Internally developed software either placed or not yet placed in service (5 years) | 989 | 907 | |||||||
Furniture and fixtures and leasehold improvements (5 – 7 years) | 154 | 156 | |||||||
2,472 | 2,435 | ||||||||
Less: accumulated depreciation and amortization | (1,495 | ) | (1,415 | ) | |||||
Property and equipment, net | $ | 977 | $ | 1,020 | |||||
Depreciation and amortization expense related to property and equipment for the three months ended March 31, 2015 and 2014 was approximately $80,000 and $83,000, respectively. |
ACCOUNTS_PAYABLE_AND_ACCRUED_E
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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 at March 31, 2015 and December 31, 2014 as follows: | |||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Trade accounts payable | $ | 431 | $ | 355 | |||||
Sales taxes payable | 539 | 539 | |||||||
Accrued directors’ fees | 357 | 453 | |||||||
Other accrued expenses | 226 | 442 | |||||||
Total accounts payable and accrued expenses | $ | 1,553 | $ | 1,789 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2015 | |
DEBT [Abstract] | |
DEBT | Note 5 – Debt |
Capital Lease Obligations | |
The Company has equipment under two 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. | |
The implied interest rates related to these capital leases range from 7.4% to 8.9%. The gross book value and the net book value of the related assets are approximately $77,000 and $34,000, respectively, as of March 31, 2015, and $646,000 and $94,000, respectively, as of December 31, 2014. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||
STOCKHOLDERS' EQUITY | Note 6 – Stockholders’ Equity | ||||||||||||||||
Preferred Stock | |||||||||||||||||
The Company is authorized to issue 2,000,000 shares of preferred stock, of which none were issued or outstanding as of March 31, 2015 and December 31, 2014. | |||||||||||||||||
Common Stock, Options and Stock Grants | |||||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||||
During the three months ended March 31, 2015, 135,000 restricted common shares were granted with an aggregate grant date fair value of approximately $100,000. During the three months ended March 31, 2015, approximately 27,000 restricted common shares with an aggregate grant date fair value of approximately $22,000 vested. | |||||||||||||||||
During the quarter ended March 31, 2015, the Company issued 111,602 shares of restricted common stock pursuant to the Company’s Directors’ Deferred Compensation Plan dated January 1, 2008 (the “Directors’ Deferred Compensation Plan”). These shares were issued to settle approximately $103,175 of accrued directors’ fees to two former directors for past services. | |||||||||||||||||
During the three months ended March 31, 2015, 41,557 stock options with an aggregate grant date fair value of approximately $28,000 vested. During this same period 90,000 options were awarded to employees. Outstanding 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 options granted in this quarter vest over three years with 33% vesting at the end of each of the three years. These options have a five year term. The Company estimates the grant date fair value of the stock option using the Black-Scholes-Merton option model and the following assumptions: volatility of 90%, risk free rate of 0.89%, dividend rate of zero, and expected term of 3.75 years. The grant date fair value of the stock options issued was determined to be approximately $44,100. | |||||||||||||||||
Three Months Ended March 31, 2014 | |||||||||||||||||
During the three months ended March 31, 2014, 66,000 restricted common shares were granted with an aggregate grant date fair value of approximately $80,000. During the three months ended March 31, 2014, approximately 20,000 restricted common shares with an aggregate grant date fair value of approximately $20,000 vested. | |||||||||||||||||
During the three months ended March 31, 2014, 29,511 stock options with an aggregate grant date fair value of approximately $24,000 vested. During this same period no options were awarded to employees. Outstanding 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 Company estimates the grant date fair value of the stock option using the Black-Scholes-Merton option model. | |||||||||||||||||
Stock Option Plans | |||||||||||||||||
The Company has granted 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 June 3, 2014, the Company’s stockholders approved the adoption of the 2014 Stock Incentive Plan (the “2014 Plan”). The 2014 Plan replaces the 2004 Stock Option/Stock Issuance Plan which expired on August 20, 2014. The 2014 Plan provides for the grant of non-qualified stock options, incentive stock options, and stock appreciation rights, shares of restricted stock, stock units and shares of unrestricted stock. Eligible participants include officers, employees and directors. The aggregate number of shares authorized for issuance under the 2014 Plan is 1,200,000, and is subject to adjustment as described in the 2014 Plan. As of March 31, 2015, 851,660 shares were available for issuance under the 2014 plan. Awards that expire or are cancelled without delivery of shares generally become available for issuance under the plans. | |||||||||||||||||
The following is a summary of stock option activity for three months ended March 31, 2015, relating to all of the Company’s common stock plans: | |||||||||||||||||
Shares | Weighted | Weighted | Aggregate | ||||||||||||||
(in thousands) | Average Exercise | Average | Intrinsic Value | ||||||||||||||
Price | Remaining | (in thousands) | |||||||||||||||
Contractual | |||||||||||||||||
Term | |||||||||||||||||
(in years) | |||||||||||||||||
Outstanding at January 1, 2015 | 549 | $ | 1.3 | 2.72 | $ | -- | |||||||||||
Granted | 90 | $ | 0.9 | 5 | $ | -- | |||||||||||
Forfeited | (10 | ) | $ | 1.5 | |||||||||||||
Outstanding at March 31, 2015 | 629 | $ | 1.24 | 2.81 | $ | -- | |||||||||||
Exercisable at March 31, 2015 | 315 | $ | 1.24 | 2.18 | $ | -- | |||||||||||
The following table summarizes stock option information as of March 31, 2015: | |||||||||||||||||
Outstanding Options | |||||||||||||||||
Exercise Prices | Number Outstanding | Weighted Average | Options Exercisable | ||||||||||||||
(in thousands) | Remaining | (in thousands) | |||||||||||||||
Contractual Life | |||||||||||||||||
$0.90 | 90 | 5.00 Years | 0 | ||||||||||||||
$1.15 | 335 | 1.90 years | 231 | ||||||||||||||
$1.20 | 24 | 1.23 years | 24 | ||||||||||||||
$1.50 | 80 | 3.72 years | 25 | ||||||||||||||
$1.65 | 100 | 3.54 years | 35 | ||||||||||||||
Total | 629 | 2.81 years | 315 | ||||||||||||||
As of March 31, 2015, there was approximately $206,000 of unrecognized compensation costs related to stock options outstanding. | |||||||||||||||||
Restricted Stock Grants | |||||||||||||||||
A summary of the status of the Company’s non-vested stock grants as of March 31, 2015 and changes during the three months ended March 31, 2015 is presented below: | |||||||||||||||||
Non-Vested Shares | Shares | Weighted-Average | |||||||||||||||
(in thousands) | Grant Date Fair Value | ||||||||||||||||
Non-Vested at January 1, 2015 | 51 | $ | 0.89 | ||||||||||||||
Granted | 135 | $ | 0.74 | ||||||||||||||
Vested | (27 | ) | $ | 0.81 | |||||||||||||
Non-Vested at March 31, 2015 | 159 | $ | 0.78 | ||||||||||||||
A summary of the status of the Company’s non-vested stock grants as of March 31, 2014 and changes during the three months ended March 31, 2014 is presented below: | |||||||||||||||||
Non-Vested Shares | Shares | Weighted-Average | |||||||||||||||
(in thousands) | Grant Date Fair Value | ||||||||||||||||
Non-Vested at January 1, 2014 | 49 | $ | 0.82 | ||||||||||||||
Granted | 66 | $ | 1.21 | ||||||||||||||
Vested | (20 | ) | $ | 0.98 | |||||||||||||
Non-Vested at March 31, 2014 | 95 | $ | 1.06 | ||||||||||||||
The future expected expense as of March 31, 2015 for non-vested shares is approximately $123,000 and will be recognized as expense through December 31, 2016. |
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2015 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | Note 7 – Income Taxes |
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, 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 March 31, 2015 and December 31, 2014. | |
The Company has identified its federal tax return and its state tax return in Florida as “major” tax jurisdictions, as defined in ASC 740. 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 2011 through 2014, the only periods subject to examination. The Company believes that its income tax positions and deductions would be sustained upon audit and does not anticipate any adjustments that would 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 three months ended March 31, 2015 and 2014. 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. | |
As of March 31, 2015, the Company has federal and state net operating loss carryforwards (“NOLs”) remaining of approximately $25 million and $20 million, respectively, which may be available to reduce taxable income, if any. Remaining federal and state net operating loss carry forwards expire from 2019 through 2034. However, Internal Revenue Code Section 382 rules limit the utilization of NOLs upon a change in control of a company. During 2014, the Company performed an evaluation as to whether a change in control had taken place. Management believes that there has been no change in control in accordance with Section 382. However, if it is determined that an ownership change has taken place, either historically or in the future, utilization of its NOLs could be subject to severe limitations, which could eliminate a substantial portion of the future income tax benefits of the NOLs. The NOL carryforward as of March 31, 2015 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. |
COMMITMENT_AND_CONTINGENCIES
COMMITMENT AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2015 | |
COMMITMENT AND CONTINGENCIES [Abstract] | |
COMMITMENT AND CONTINGENCIES | Note 8 – Commitment and Contingencies |
The Company had an employment agreement with Matthew E. Oakes, Chief Executive Officer and Chairman of the Board of Directors, for a term effective June 1, 2013 through December 31, 2015. On February 20, 2015, Mr. Oakes’ employment agreement was superseded by a new employment agreement extending the term through December 31, 2017. The agreement provides for a base salary of $24,583 per month, discretionary and annual incentive bonuses based on the Company’s performance in achieving prescribed revenue and earnings before interest and taxes (“EBIT”) targets. 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. The Company shall continue to make lease payments on the corporate apartment located in Fort Lauderdale, Florida and utilized by Mr. Oakes through the date of termination of such lease on December 31, 2017. |
MAJOR_CUSTOMERS
MAJOR CUSTOMERS | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
MAJOR CUSTOMERS [Abstract] | |||||||||
MAJOR CUSTOMERS | Note 9 – Major Customers | ||||||||
Two customers, HP Enterprise Services (“HP”), inclusive of its underlying customers, and International Business Machines Corp. (“IBM”) accounted for a significant portion of the Company’s revenues as follows: | |||||||||
% of Total Revenues | |||||||||
Three Months Ended | |||||||||
31-Mar | |||||||||
2015 | 2014 | ||||||||
HP Customer A | 14.2 | % | 14.9 | % | |||||
HP Customer B | 11.2 | 13 | |||||||
HP Customer C | 6.2 | 8.6 | |||||||
Total HP | 31.6 | % | 36.5 | % | |||||
IBM | 39.7 | 35.7 | |||||||
Total Major Customers | 71.3 | % | 72.2 | % | |||||
Others | 28.7 | 27.8 | |||||||
Total | 100 | % | 100 | % | |||||
As of March 31, 2015, two customers accounted for a significant portion of the Company’s accounts receivable as follows (in thousands): | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
HP | $ | 629 | $ | 1,037 | |||||
IBM | 737 | 784 | |||||||
Total | $ | 1,366 | $ | 1,821 |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2015 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | Note 10 – Subsequent Events |
The Company evaluates events that have 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 condensed financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||
INTERIM FINANCIAL INFORMATION | Interim Financial Information | ||||||||||||
The accompanying unaudited condensed interim financial statements include the accounts of Direct Insite. The condensed balance sheet as of March 31, 2015, and the statements of operations and cash flows for the three months ended March 31, 2015 and 2014 have not been audited. These unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to quarterly report on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The December 31, 2014 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. These interim condensed financial statements include all adjustments which management considers necessary for a fair presentation of the financial statements and consist of normal recurring items. The results of operations for the three months ended March 31, 2015, are not necessarily indicative of results that may be expected for any other interim period or for the full year. | |||||||||||||
These unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 25, 2015. | |||||||||||||
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 condensed 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. | |||||||||||||
INTERNALLY DEVELOPED SOFTWARE | Internally Developed Software | ||||||||||||
The Company released the first phase of PAYBOX™, a next generation version of its accounts receivable platform in November 2014. It was designed for a global bank and is available to all Order-to-Cash process customers. According to ASC 350-40, Intangibles-Goodwill and Other-Internal-Use Software, the Company is able to capitalize the costs associated with the application development stage of a project. The Company started amortizing capitalized costs when the software was ready for use and placed in service in November 2014. The capitalized costs are being amortized on a straight-line basis over the estimated five year useful life of the software. As additional functionality is added, costs incurred are capitalized in accordance with ASC 350-40. | |||||||||||||
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. | |||||||||||||
For the three months ended March 31, 2014, all potentially dilutive securities were excluded from the computation of diluted earnings per share because their impact was anti-dilutive. | |||||||||||||
The computation of basic and diluted earnings per share for the three months ended March 31, 2015 is as follows (in thousands, except per share amounts): | |||||||||||||
Net Income Numerator | Shares Denominator | Per Share Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 80 | 12,792 | $ | 0.01 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Restricted stock | -- | 10 | 0 | ||||||||||
Diluted Earnings Per Share | $ | 80 | 12,802 | $ | 0.01 | ||||||||
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): | |||||||||||||
March 31, | |||||||||||||
Anti-Dilutive Potential Common Shares | 2015 | 2014 | |||||||||||
Options to purchase common stock | 629 | 646 | |||||||||||
Unvested stock grants | 14 | 95 | |||||||||||
Total Anti-Dilutive Potential Common Shares | 643 | 741 | |||||||||||
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 cash equivalents, and accounts receivable. The Company has cash deposits in excess of the maximum amounts insured by the Federal Depository Insurance Corporation at March 31, 2015 and December 31, 2014. | |||||||||||||
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) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||
Computation of basic and diluted earnings per share | The computation of basic and diluted earnings per share for the three months ended March 31, 2015 is as follows (in thousands, except per share amounts): | ||||||||||||
Net Income Numerator | Shares Denominator | Per Share Amount | |||||||||||
Basic Earnings Per Share | |||||||||||||
Net income attributable to common stockholders | $ | 80 | 12,792 | $ | 0.01 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Restricted stock | -- | 10 | 0 | ||||||||||
Diluted Earnings Per Share | $ | 80 | 12,802 | $ | 0.01 | ||||||||
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): | ||||||||||||
March 31, | |||||||||||||
Anti-Dilutive Potential Common Shares | 2015 | 2014 | |||||||||||
Options to purchase common stock | 629 | 646 | |||||||||||
Unvested stock grants | 14 | 95 | |||||||||||
Total Anti-Dilutive Potential Common Shares | 643 | 741 |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
PROPERTY AND EQUIPMENT [Abstract] | |||||||||
Property and Equipment | Property and equipment consist of the following at March 31, 2015 and December 31, 2014: | ||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Computer equipment and purchased software (3 years) | $ | 1,329 | $ | 1,372 | |||||
Internally developed software either placed or not yet placed in service (5 years) | 989 | 907 | |||||||
Furniture and fixtures and leasehold improvements (5 – 7 years) | 154 | 156 | |||||||
2,472 | 2,435 | ||||||||
Less: accumulated depreciation and amortization | (1,495 | ) | (1,415 | ) | |||||
Property and equipment, net | $ | 977 | $ | 1,020 |
ACCOUNTS_PAYABLE_AND_ACCRUED_E1
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES [Abstract] | |||||||||
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following at March 31, 2015 and December 31, 2014 as follows: | ||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Trade accounts payable | $ | 431 | $ | 355 | |||||
Sales taxes payable | 539 | 539 | |||||||
Accrued directors’ fees | 357 | 453 | |||||||
Other accrued expenses | 226 | 442 | |||||||
Total accounts payable and accrued expenses | $ | 1,553 | $ | 1,789 |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||
Stock Option Activity | The following is a summary of stock option activity for three months ended March 31, 2015, relating to all of the Company’s common stock plans: | ||||||||||||||||
Shares | Weighted | Weighted | Aggregate | ||||||||||||||
(in thousands) | Average Exercise | Average | Intrinsic Value | ||||||||||||||
Price | Remaining | (in thousands) | |||||||||||||||
Contractual | |||||||||||||||||
Term | |||||||||||||||||
(in years) | |||||||||||||||||
Outstanding at January 1, 2015 | 549 | $ | 1.3 | 2.72 | $ | -- | |||||||||||
Granted | 90 | $ | 0.9 | 5 | $ | -- | |||||||||||
Forfeited | (10 | ) | $ | 1.5 | |||||||||||||
Outstanding at March 31, 2015 | 629 | $ | 1.24 | 2.81 | $ | -- | |||||||||||
Exercisable at March 31, 2015 | 315 | $ | 1.24 | 2.18 | $ | -- | |||||||||||
Stock Option Information | The following table summarizes stock option information as of March 31, 2015: | ||||||||||||||||
Outstanding Options | |||||||||||||||||
Exercise Prices | Number Outstanding | Weighted Average | Options Exercisable | ||||||||||||||
(in thousands) | Remaining | (in thousands) | |||||||||||||||
Contractual Life | |||||||||||||||||
$0.90 | 90 | 5.00 Years | 0 | ||||||||||||||
$1.15 | 335 | 1.90 years | 231 | ||||||||||||||
$1.20 | 24 | 1.23 years | 24 | ||||||||||||||
$1.50 | 80 | 3.72 years | 25 | ||||||||||||||
$1.65 | 100 | 3.54 years | 35 | ||||||||||||||
Total | 629 | 2.81 years | 315 | ||||||||||||||
Non-vested Stock Grants | A summary of the status of the Company’s non-vested stock grants as of March 31, 2015 and changes during the three months ended March 31, 2015 is presented below: | ||||||||||||||||
Non-Vested Shares | Shares | Weighted-Average | |||||||||||||||
(in thousands) | Grant Date Fair Value | ||||||||||||||||
Non-Vested at January 1, 2015 | 51 | $ | 0.89 | ||||||||||||||
Granted | 135 | $ | 0.74 | ||||||||||||||
Vested | (27 | ) | $ | 0.81 | |||||||||||||
Non-Vested at March 31, 2015 | 159 | $ | 0.78 | ||||||||||||||
A summary of the status of the Company’s non-vested stock grants as of March 31, 2014 and changes during the three months ended March 31, 2014 is presented below: | |||||||||||||||||
Non-Vested Shares | Shares | Weighted-Average | |||||||||||||||
(in thousands) | Grant Date Fair Value | ||||||||||||||||
Non-Vested at January 1, 2014 | 49 | $ | 0.82 | ||||||||||||||
Granted | 66 | $ | 1.21 | ||||||||||||||
Vested | (20 | ) | $ | 0.98 | |||||||||||||
Non-Vested at March 31, 2014 | 95 | $ | 1.06 |
MAJOR_CUSTOMERS_Tables
MAJOR CUSTOMERS (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Revenues [Member] | |||||||||
Concentration Risk [Line Items] | |||||||||
Customers Accounted for Significant Portion of Revenues and Accounts Receivable | Two customers, HP Enterprise Services (“HP”), inclusive of its underlying customers, and International Business Machines Corp. (“IBM”) accounted for a significant portion of the Company’s revenues as follows: | ||||||||
% of Total Revenues | |||||||||
Three Months Ended | |||||||||
31-Mar | |||||||||
2015 | 2014 | ||||||||
HP Customer A | 14.2 | % | 14.9 | % | |||||
HP Customer B | 11.2 | 13 | |||||||
HP Customer C | 6.2 | 8.6 | |||||||
Total HP | 31.6 | % | 36.5 | % | |||||
IBM | 39.7 | 35.7 | |||||||
Total Major Customers | 71.3 | % | 72.2 | % | |||||
Others | 28.7 | 27.8 | |||||||
Total | 100 | % | 100 | % | |||||
Accounts Receivable [Member] | |||||||||
Concentration Risk [Line Items] | |||||||||
Customers Accounted for Significant Portion of Revenues and Accounts Receivable | As of March 31, 2015, two customers accounted for a significant portion of the Company’s accounts receivable as follows (in thousands): | ||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
HP | $ | 629 | $ | 1,037 | |||||
IBM | 737 | 784 | |||||||
Total | $ | 1,366 | $ | 1,821 |
NATURE_OF_BUSINESS_Details
NATURE OF BUSINESS (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Concentration Risk [Line Items] | ||
Number of major customers | 2 | |
Revenues [Member] | ||
Concentration Risk [Line Items] | ||
Ratio of revenues from major customers to total revenues (in hundredths) | 100.00% | 100.00% |
Revenues [Member] | Customers One [Member] | ||
Concentration Risk [Line Items] | ||
Ratio of revenues from major customers to total revenues (in hundredths) | 71.30% | 72.20% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Net Income Numerator [Abstract] | ||
Net income attributable to common stockholders | $80 | |
Effect of Dilutive Securities | 0 | |
Diluted Earnings Per Share | $80 | |
Shares Denominator [Abstract] | ||
Net income attributable to common stockholders (in shares) | 12,792 | 12,622 |
Effect of Dilutive Securities (in shares) | 10 | |
Diluted Earnings Per Share (in shares) | 12,802 | 12,622 |
Per Share Amount [Abstract] | ||
Net income attributable to common stockholders (in dollars per share) | $0.01 | ($0.01) |
Diluted Earnings Per Share (in dollars per share) | $0.01 | ($0.01) |
Summary of antidilutive securities excluded from computation of earnings per share [Abstract] | ||
Total Anti-Dilutive Potential Common Shares (in shares) | 643 | 741 |
Stock Options [Member] | ||
Summary of antidilutive securities excluded from computation of earnings per share [Abstract] | ||
Total Anti-Dilutive Potential Common Shares (in shares) | 629 | 646 |
Restricted Stock [Member] | ||
Summary of antidilutive securities excluded from computation of earnings per share [Abstract] | ||
Total Anti-Dilutive Potential Common Shares (in shares) | 14 | 95 |
Internally Developed Software [Member] | ||
Property and Equipment [Line Items] | ||
Internally developed software, useful life | 5 years |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Summary of property and equipment [Abstract] | |||
Property and equipment, gross | $2,472 | $2,435 | |
Less: accumulated depreciation and amortization | -1,495 | -1,415 | |
Property and equipment, net | 977 | 1,020 | |
Depreciation and amortization | 80 | 83 | |
Computer Equipment and Purchased Software [Member] | |||
Summary of property and equipment [Abstract] | |||
Property and equipment, gross | 1,329 | 1,372 | |
Estimated useful lives | 3 years | ||
Internally Developed Software Not Yet Placed in Service [Member] | |||
Summary of property and equipment [Abstract] | |||
Property and equipment, gross | 989 | 907 | |
Estimated useful lives | 5 years | ||
Furniture and Fixtures and Leasehold Improvements [Member] | |||
Summary of property and equipment [Abstract] | |||
Property and equipment, gross | $154 | $156 | |
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 $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Summary of Accounts Payable and Accrued Expenses [Abstract] | ||
Trade accounts payable | $431 | $355 |
Sales taxes payable | 539 | 539 |
Accrued directors' fees | 357 | 453 |
Other accrued expenses | 226 | 442 |
Total accounts payable and accrued expenses | $1,553 | $1,789 |
DEBT_Details
DEBT (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Lease | ||
Capital Leased Assets [Line Items] | ||
Number of capital lease equipments obligation | 2 | |
Expiration period of capital lease obligations | 30-Jun-16 | |
Gross book value of capital leased assets | $77,000 | $646,000 |
Net book value of capital leased assets | $34,000 | $94,000 |
Minimum [Member] | ||
Capital Leased Assets [Line Items] | ||
Interest rate capital leases (in hundredths) | 7.40% | |
Maximum [Member] | ||
Capital Leased Assets [Line Items] | ||
Interest rate capital leases (in hundredths) | 8.90% |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
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 fourth anniversary (in hundredths) | 75.00% | 75.00% | |
Percentage of stock options vesting for first three years (in hundredths) | 33.00% | ||
Percentage of stock options vesting for second three years (in hundredths) | 33.00% | ||
Percentage of stock options vesting for third three years (in hundredths) | 33.00% | ||
Summary of stock option information [Abstract] | |||
Number Outstanding (in shares) | 629,000 | ||
Weighted Average Remaining Contractual Life | 2 years 9 months 22 days | ||
Options Exercisable (in shares) | 315,000 | ||
Unrecognized compensation costs related to stock options | $206,000 | ||
$0.90 [Member] | |||
Summary of stock option information [Abstract] | |||
Exercise Prices (in dollars per share) | $0.90 | ||
Number Outstanding (in shares) | 90,000 | ||
Weighted Average Remaining Contractual Life | 5 years | ||
Options Exercisable (in shares) | 0 | ||
$1.15 [Member] | |||
Summary of stock option information [Abstract] | |||
Exercise Prices (in dollars per share) | $1.15 | ||
Number Outstanding (in shares) | 335,000 | ||
Weighted Average Remaining Contractual Life | 1 year 10 months 24 days | ||
Options Exercisable (in shares) | 231,000 | ||
$1.20 [Member] | |||
Summary of stock option information [Abstract] | |||
Exercise Prices (in dollars per share) | $1.20 | ||
Number Outstanding (in shares) | 24,000 | ||
Weighted Average Remaining Contractual Life | 1 year 2 months 23 days | ||
Options Exercisable (in shares) | 24,000 | ||
$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 | 3 years 8 months 19 days | ||
Options Exercisable (in shares) | 25,000 | ||
$1.65 [Member] | |||
Summary of stock option information [Abstract] | |||
Exercise Prices (in dollars per share) | $1.65 | ||
Number Outstanding (in shares) | 100,000 | ||
Weighted Average Remaining Contractual Life | 3 years 6 months 14 days | ||
Options Exercisable (in shares) | 35,000 | ||
Director [Member] | |||
Common Stock, Options and Stock Grants [Abstract] | |||
Shares issued under deferred compensation plan (in shares) | 111,602 | ||
Value of stock issued during the period | 103,175 | ||
Employee [Member] | |||
Common Stock, Options and Stock Grants [Abstract] | |||
Stock option vested during the period (in shares) | 90,000 | ||
Restricted Stock Grants [Member] | |||
Common Stock, Options and Stock Grants [Abstract] | |||
Aggregate grant date fair value of restricted common shares | 100,000 | 80,000 | |
Grant date fair value of vested stock option | 22,000 | 20,000 | |
Shares [Abstract] | |||
Non-Vested, beginning balance (in shares) | 51,000 | 49,000 | 49,000 |
Granted (in shares) | 135,000 | 66,000 | |
Vested (in shares) | -27,000 | -20,000 | |
Non-Vested, ending balance (in shares) | 159,000 | 95,000 | |
Weighted-Average Grant Date Fair Value [Abstract] | |||
Non-Vested, beginning balance (in dollars per share) | $0.89 | $0.82 | $0.82 |
Granted (in dollars per share) | $0.74 | $1.21 | |
Vested (in dollars per share) | $0.81 | $0.98 | |
Non-Vested, ending balance (in dollars per share) | $0.78 | $1.06 | |
Future expected expense for non-vested shares to be recognized | 123,000 | ||
Stock Options [Member] | |||
Common Stock, Options and Stock Grants [Abstract] | |||
Grant date fair value of vested stock option | 28,000 | 24,000 | |
Stock option vested during the period (in shares) | 41,557 | 29,511 | |
Vesting period of stock option | 4 years | 4 years | |
Grant date fair value of option | 44,100 | ||
Expected volatility (in hundredths) | 90.00% | ||
Risk free interest rate (in hundredths) | 0.89% | ||
Expected dividend rate (in hundredths) | 0.00% | ||
Expected term | 3 years 9 months | ||
Stock Option Plans [Abstract] | |||
Number of shares authorized (in shares) | 1,200,000 | ||
Expiration period of stock option | 5 years | ||
Number of shares available for issuance under stock option plans (in shares) | 851,660 | ||
Shares [Abstract] | |||
Outstanding, beginning balance (in shares) | 549,000 | ||
Granted (in shares) | 90,000 | ||
Forfeited (in shares) | -10,000 | ||
Outstanding, ending balance (in shares) | 629,000 | 549,000 | |
Exercisable, ending balance (in shares) | 315,000 | ||
Weighted Average Exercise Price [Abstract] | |||
Outstanding, beginning balance (in dollars per share) | $1.30 | ||
Granted (in dollars per share) | $0.90 | ||
Forfeited (in dollars per share) | $1.50 | ||
Outstanding, ending balance (in dollars per share) | $1.24 | $1.30 | |
Exercisable, ending balance (in dollars per share) | $1.24 | ||
Weighted Average Remaining Contractual Term [Abstract] | |||
Outstanding, beginning balance | 2 years 9 months 22 days | 2 years 8 months 19 days | |
Granted | 5 years | ||
Outstanding, ending balance | 2 years 9 months 22 days | 2 years 8 months 19 days | |
Exercisable, ending balance | 2 years 2 months 5 days | ||
Aggregate Intrinsic Value [Abstract] | |||
Outstanding, beginning balance | 0 | ||
Granted | 0 | ||
Outstanding, ending balance | 0 | 0 | |
Exercisable, ending balance | $0 | ||
Minimum [Member] | Stock Options [Member] | |||
Common Stock, Options and Stock Grants [Abstract] | |||
Vesting period of stock option | 3 years | ||
Maximum [Member] | Stock Options [Member] | |||
Common Stock, Options and Stock Grants [Abstract] | |||
Vesting period of stock option | 4 years |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
INCOME TAXES [Abstract] | |||
Unrecognized tax benefits | $0 | $0 | |
Unrecognized tax benefits, interest and penalties | 0 | 0 | |
Period for which the position in unrecognized tax benefit is not expected to change | 12 months | ||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards related to tax benefit | 1,193,000 | ||
Minimum [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards, expiration dates | 31-Dec-19 | ||
Maximum [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards, expiration dates | 31-Dec-34 | ||
Federal Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 25,000,000 | ||
State Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $20,000,000 |
COMMITMENT_AND_CONTINGENCIES_D
COMMITMENT AND CONTINGENCIES (Details) (Chief Executive Officer [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Chief Executive Officer [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Base salary per month as per employment agreements | $24,583 |
MAJOR_CUSTOMERS_Details
MAJOR CUSTOMERS (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Customer | |||
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 | 1,366 | $1,821 | |
HP Customer A [Member] | Revenues [Member] | |||
Summary of customers accounted for significant portion of revenues [Abstract] | |||
Major customer, revenues (in hundredths) | 14.20% | 14.90% | |
HP Customer B [Member] | Revenues [Member] | |||
Summary of customers accounted for significant portion of revenues [Abstract] | |||
Major customer, revenues (in hundredths) | 11.20% | 13.00% | |
HP Customer C [Member] | Revenues [Member] | |||
Summary of customers accounted for significant portion of revenues [Abstract] | |||
Major customer, revenues (in hundredths) | 6.20% | 8.60% | |
HP [Member] | Revenues [Member] | |||
Summary of customers accounted for significant portion of revenues [Abstract] | |||
Major customer, revenues (in hundredths) | 31.60% | 36.50% | |
HP [Member] | Accounts Receivable [Member] | |||
Summary of customers accounted for significant portion of accounts receivable [Abstract] | |||
Major customer, accounts receivable | 629 | 1,037 | |
IBM [Member] | Revenues [Member] | |||
Summary of customers accounted for significant portion of revenues [Abstract] | |||
Major customer, revenues (in hundredths) | 39.70% | 35.70% | |
IBM [Member] | Accounts Receivable [Member] | |||
Summary of customers accounted for significant portion of accounts receivable [Abstract] | |||
Major customer, accounts receivable | 737 | $784 | |
Total major customers [Member] | Revenues [Member] | |||
Summary of customers accounted for significant portion of revenues [Abstract] | |||
Major customer, revenues (in hundredths) | 71.30% | 72.20% | |
Others [Member] | Revenues [Member] | |||
Summary of customers accounted for significant portion of revenues [Abstract] | |||
Major customer, revenues (in hundredths) | 28.70% | 27.80% |