Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 13, 2017 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Paybox Corp. | ||
Entity Central Index Key | 879,703 | ||
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 | $ 4,931,412 | ||
Entity Common Stock, Shares Outstanding | 13,153,160 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,346 | $ 2,375 |
Accounts receivable | 1,275 | 1,444 |
Prepaid expenses and other current assets | 395 | 405 |
Total current assets | 4,016 | 4,224 |
Property and equipment, net | 876 | 934 |
Deferred tax assets | 280 | 1,195 |
Other assets | 225 | 247 |
Total noncurrent assets | 1,381 | 2,376 |
Total assets | 5,397 | 6,600 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,613 | 1,468 |
Current portion of capital lease obligations | 0 | 11 |
Deferred rent | 26 | 37 |
Total current liabilities | 1,639 | 1,516 |
Total liabilities | 1,639 | 1,516 |
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; 13,138,007 and 12,979,536 shares issued and 13,098,080 and 12,939,609 shares outstanding in 2016 and 2015, respectively | 1 | 1 |
Additional paid-in capital | 116,623 | 116,478 |
Accumulated deficit | (112,538) | (111,067) |
Common stock in treasury, at cost; 24,371 shares in 2016 and 2015 | (328) | (328) |
Total stockholders' equity | 3,758 | 5,084 |
Total liabilities and stockholders' equity | $ 5,397 | $ 6,600 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
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) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, issued (in shares) | 13,138,007 | 12,979,536 |
Common stock, outstanding (in shares) | 13,098,080 | 12,939,609 |
Treasury stock, at cost (in shares) | 24,371 | 24,371 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | ||
Recurring | $ 5,303 | $ 6,745 |
Non-recurring | 1,209 | 1,266 |
Total revenues | 6,512 | 8,011 |
Operating costs and expenses: | ||
Operations, research and development | 3,015 | 3,389 |
Sales and marketing | 1,468 | 1,417 |
General and administrative | 2,091 | 2,321 |
Amortization and depreciation | 230 | 289 |
Total operating costs and expenses | 6,804 | 7,416 |
Operating income (loss) | (292) | 595 |
Other expense | (263) | (4) |
Income (loss) before provision for income taxes | (555) | 591 |
Provision for income taxes | (916) | (23) |
Net income (loss) | $ (1,471) | $ 568 |
Basic income (loss) per share | $ (0.11) | $ 0.04 |
Diluted income (loss) per share | $ (0.11) | $ 0.04 |
Basic weighted average common stock outstanding | 12,989,000 | 12,846,000 |
Diluted weighted average common stock outstanding | 12,989,000 | 12,865,000 |
STATEMENT OF STOCKHOLDERS_ EQUI
STATEMENT OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 12,720,000 | ||||
Beginning Balance, Amount at Dec. 31, 2014 | $ 1 | $ 116,161 | $ (111,635) | $ (328) | $ 4,199 |
Issuance of common stock in settlement of accrued directors' fees, Shares | 112,000 | ||||
Issuance of common stock in settlement of accrued directors' fees, Amount | $ 0 | 104 | 104 | ||
Employee stock based compensation expense | 126 | 126 | |||
Common stock issued or issuable for directors' fees, Shares | 108,000 | ||||
Common stock issued or issuable for directors' fees, Amount | $ 0 | 87 | 87 | ||
Net income | 568 | 568 | |||
Ending Balance, Shares at Dec. 31, 2015 | 12,940,000 | ||||
Ending Balance, Amount at Dec. 31, 2015 | $ 1 | 116,478 | (111,067) | (328) | 5,084 |
Employee stock based compensation expense | 37 | 37 | |||
Common stock issued or issuable for directors' fees, Shares | 158,000 | ||||
Common stock issued or issuable for directors' fees, Amount | $ 0 | 108 | 108 | ||
Net income | (1,471) | (1,471) | |||
Ending Balance, Shares at Dec. 31, 2016 | 13,098,000 | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 1 | $ 116,623 | $ (112,538) | $ (328) | $ 3,758 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | ||
Net income (loss) | $ (1,471) | $ 568 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Amortization and depreciation | 230 | 289 |
Deferred taxes | 916 | 0 |
Stock-based compensation expense | 145 | 213 |
Deferred rent expense | (11) | (7) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 169 | 963 |
Prepaid expenses and other current assets | 32 | (25) |
Accounts payable and accrued expenses | 144 | (217) |
Deferred revenue | 0 | (52) |
Total adjustments | 1,625 | 1,164 |
Net cash provided by operating activities | 154 | 1,732 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (65) | (9) |
Capitalization of internally developed software | (107) | (194) |
Net cash used in investing activities | (172) | (203) |
Cash flows from financing activities: | ||
Repayment of capital lease obligations | (11) | (25) |
Net cash used in financing activities | (11) | (25) |
Net increase (decrease) in cash and cash equivalents | (29) | 1,504 |
Cash and cash equivalents - beginning | 2,375 | 871 |
Cash and cash equivalents - ending | 2,346 | 2,375 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 3 | 5 |
Cash paid for income taxes | 0 | 23 |
Schedule of non-cash investing and financing activities: | ||
Issuance of common stock in settlement of accrued directors' fees | $ 0 | $ 104 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS | Paybox Corp (“Paybox” 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, Paybox’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. On September 26, 2016, the Company changed its name from Direct Insite Corp. to Paybox Corp to align the corporate name and brand with the Company’s globally deployed Working Capital Management Platform, PAYBOX®. 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 four major customers (one of which had separate contracts with multiple companies) that accounted for 88.0% and 88.3% of the Company’s revenue for the years ended December 31, 2016 and 2015, respectively. Loss of any of these customers, or any of the separate contracts under a main customer, could have a material effect on the Company. In November 2015, the Company was notified by HP Enterprise Services (“HPE”) that one of its clients, representing approximately 3.0% and 14.7% of our revenue for the years ended December 31, 2016 and 2015, respectively, was terminating its contract with HPE effective February 23, 2016. Despite efforts to negotiate a direct contractual agreement with this client, the client ultimately decided to terminate its use of the Company’s services, and accordingly, the Company has not recorded revenue from this client after February 2016. The Company was further notified by HPE in August 2016 that another of its clients, representing 4.5% and 6.3% of our revenue for the years ended December 31, 2016 and 2015, respectively, was terminating its contract with HPE effective August 15, 2016, and accordingly, the Company has not recorded revenue from this client after August 2016. In February 2017, the Company was notified by International Business Machine Corporation (“IBM”) that IBM was terminating the larger of two agreements with the Company effective September 1, 2017. The agreement had been scheduled to expire on December 31, 2017, and IBM exercised its right under the agreement to terminate on 180 days advance notice. Approximately 35.1% and 31.3% of the Company’s revenue in 2016 and 2015, respectively, was attributable to this agreement. Although there can be no assurances, it is possible that the Company may continue to provide certain services in this agreement on a month-to-month basis following termination. During 2016 and the early part of 2017, the Company has signed several contracts to provide its services to new customers. Management believes that our current cash balance along with cash generated from operations, will meet our liquidity needs for a minimum of the next twelve months from the filing of this annual report. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
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 (“GAAP”), 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 Revenue Recognition in Financial Statements ● ● ● ● 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 operations 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. The Company expenses research and development costs as incurred except for costs in connection with the internally developed software, which are capitalized during the application development stage. For the years ended December 31, 2016 and 2015, research and development expenses were approximately $1,367,000 and $1,560,000, respectively. 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. Capital lease assets are amortized over the shorter of the lease term or the service life of the related assets. 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 Impairment of Long-Lived Assets ASC 360, Property, Plant and Equipment 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. There were no impairment charges recognized during the years ended December 31, 2016 and 2015. 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 operations, 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 For the year ended December 31, 2016, the Company’s potentially dilutive securities were not included in the computation of diluted loss per share because their impact was anti-dilutive due to the net loss for the year. The computation of basic and diluted EPS for the year ended December 31, 2015 (in thousands, except per share amounts) is as follows: Net Income Shares Per Share Numerator Denominator Amount Basic Earnings Per Share Net income $ 568 12,846 $ 0.04 Effect of Dilutive Securities Options — 2 Restricted stock — 17 Diluted Earnings Per Share $ 568 12,865 $ 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): Year Ended December 31, Anti-Dilutive Potential Common Shares 2016 2015 Options 503 575 Restricted stock 124 8 Total Anti-Dilutive Potential Common Shares 627 583 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, 2016 and 2015, 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 The fair value of the Company’s common stock options is 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 indicates 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 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, 2016. 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 In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting Several ASUs were issued that modified ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”) During 2016 we began discussions that addressed the potential impact Topic 606 would have on the financial statements. Assessment to the impact on the financial statements will include an evaluation of the five steps outlined in ASC 606-10-05-4 (a) through (e) of 2016 along with enhancement of disclosures that will be required under paragraphs 606-10-50-1 through 50-21. We are still evaluating the overall effect the standard will have on the financial statements and related disclosures. Topic 606 is effective for Paybox on January 1, 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment consist of the following as of December 31, 2016 and 2015: 2016 2015 (in thousands) Computer equipment and purchased software (3 years) $ 1,434 $ 1,378 Internally developed software either placed or not yet placed in service (3 - 5 years) 1,208 1,101 Furniture and fixtures and leasehold improvements (5 – 7 years) 168 159 2,810 2,638 Less: accumulated depreciation and amortization (1,934 ) (1,704 ) Property and equipment, net $ 876 $ 934 Depreciation and amortization expense related to property and equipment for the years ended December 31, 2016 and 2015 was approximately $230,000 and $289,000, respectively. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expenses consist of the following as of December 31, 2016 and 2015: 2016 2015 (in thousands) Trade accounts payable $ 361 $ 262 Sales taxes payable 539 539 Accrued directors’ fees 407 377 Other payables and accrued expenses 306 290 Total Accounts Payable and Accrued Expenses $ 1,613 $ 1,468 |
CAPITAL LEASE OBLIGATIONS
CAPITAL LEASE OBLIGATIONS | 12 Months Ended |
Dec. 31, 2016 | |
Capital Lease Obligations [Abstract] | |
CAPITAL LEASE OBLIGATIONS | The Company had equipment under two capital lease obligations which expired at various times through June 2016. At December 31, 2015, the Company had outstanding future minimum payments of approximately $11,000 that were paid off in 2016. The implied annual interest rates related to these capital leases ranged from 7.4% to 8.9%. Amortization of assets under capital leases is included in depreciation expense. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | Preferred Stock The Company has 2,000,000 authorized preferred shares of which none were issued and outstanding at December 31, 2016 and 2015. Common Stock, Options and Stock Grants Year Ended December 31, 2016 During the year ended December 31, 2016, 161,812 restricted common shares were granted to Directors with an aggregate grant date fair value of approximately $100,000. During the year ended December 31, 2016, approximately 158,471 restricted common shares with an aggregate grant date fair value of approximately $108,000 vested. During the year ended December 31, 2016, no options were awarded. During the year December 31, 2016, the Company recognized approximately $37,000 of expense related to the vesting of outstanding stock options. For the year ended December 31, 2016, options to acquire 20,000 shares of common stock with a weighted average exercise price of $1.20 expired unexercised, and options to acquire 110,000 shares of common stock with a weighted average exercise price of $1.60 were forfeited. Year Ended December 31, 2015 During the year ended December 31, 2015, 135,136 restricted common shares were granted to Directors with an aggregate grant date fair value of approximately $100,000. During the year ended December 31, 2015, approximately 108,064 restricted common shares with an aggregate grant date fair value of approximately $87,000 vested. During the year ended December 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. These shares were issued to settle approximately $104,000 of accrued directors’ fees to two former directors for past services. During the year ended December 31, 2015, 90,000 options were awarded to an officer. These options vest over three years with one-third vesting at the end of each of the three years. These options expire after a five-year term. The Company estimated the grant date fair value of the stock options 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. During the year ended December 31, 2015, the Company recognized approximately $126,000 of expense related to the vesting of outstanding stock options. For the year ended December 31, 2015, options to acquire 20,980 shares of common stock with a weighted average exercise price of $1.16 expired unexercised, and options to acquire 18,020 shares of common stock with a weighted average exercise price of $1.34 were forfeited. 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. There are 606,067 shares available for issue under the 2014 plan. Awards that expire or are cancelled without delivery of shares generally become available for issuance under the plans. Shares (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2016 600 $ 1.24 2.10 $ — Expired (20 ) $ 1.20 — $ — Forfeited (110 ) $ 1.60 — $ — Outstanding at December 31, 2016 470 $ 1.16 1.03 $ — Exercisable at December 31, 2016 390 $ 1.16 0.39 $ — The following is a summary of stock option activity for the year ended December 31, 2016, relating to all of the Company’s common stock option plans (share amounts are in thousands): 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 year ended December 31, 2015: 2015 Expected term 3.75 years Expected volatility 90 % Expected dividend yield — Risk-free interest rate 0.9 % The following table summarizes stock option information as of December 31, 2016: Weighted Average Number Outstanding Remaining Options Exercisable Exercise Prices (in thousands) Contractual Life (in thousands) $ 0.90 90 3.25 years 30 $ 1.15 300 0.12 years 300 $ 1.50 80 1.97 years 60 Total 470 1.03 years 390 As of December 31, 2016, there was approximately $30,000 of unrecognized compensation costs related to stock options outstanding that will be recognized as expense over a weighted average period of 1.17 years. Restricted Stock Grants A summary of activity related to the Company’s non-vested stock grants for the year ended December 31, 2016 is presented below: Non-Vested Shares Shares (in thousands) Weighted-Average Grant Date Fair Value Non-Vested at January 1, 2016 78 $ 0.74 Granted 162 $ 0.62 Vested (159 ) $ 0.68 Non-Vested at December 31, 2016 81 $ 0.64 The future expected expense for non-vested shares is approximately $75,000 and will be recognized on a straight-line basis over the period from January 1, 2017 through December 31, 2017. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
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, 2016 and 2015. 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 The following table summarizes components of the provision for (benefit from) current and deferred income taxes for the years ended December 31, 2016 and 2015: 2016 2015 (in thousands) Current Federal $ 0 $ 0 State and other 1 25 Total Current 1 25 Deferred Federal 827 (2 ) State and other 88 (0 ) Total Deferred 915 (2 ) Provision for Income Taxes $ 916 $ 23 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, 2016 and 2015: 2016 2015 U.S. Federal Statutory Tax Rate 34.0 % 34.0 % Permanent items (19.0 )% 2.0 % State taxes 2.0 % 4.0 % Expiration of capital loss carryforward (93.0 )% (0.0 )% Impact of change in state tax laws on net operating losses (165.0 )% — Change in valuation allowance 76.0 % (36.0 )% Totals (165.0 )% 4.0 % The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2016 and 2015 are summarized as follows: 2016 2015 (in thousands) Deferred Tax Assets Net operating loss carryforwards $ 8,622 $ 9,410 Tax credit carryforwards 347 347 Fixed and intangible assets (182 ) (92 ) Charitable contributions 1 — Value of stock options and stock compensation 501 453 Deferred rent 10 14 Capital loss carryforward — 517 Accruals 153 142 9,452 10,791 Valuation Allowance (9,172 ) (9,596 ) Deferred Tax Assets, Net $ 280 $ 1,195 The change in the valuation allowance for deferred tax assets for the years ended December 31, 2016 and 2015 are summarized as follows: 2016 2015 (in thousands) Beginning Balance $ 9,596 $ 9,824 Change in Allowance (424 ) (228 ) Ending Balance $ 9,172 $ 9,596 As of December 31, 2016, the Company has federal and state net operating loss carryforward (“NOLs”) remaining of approximately $25 million and $329,000, respectively, which may be available to reduce taxable income, if any. Due to changes in certain state tax laws, the previous state NOL of $20 million may no longer be utilized by the Company. None of the federal NOLs expired in 2016 or 2015. The remaining federal net operating loss carryforwards expire from 2019 through 2036. However, Internal Revenue Code Section 382 rules limit the utilization of NOLs upon an ownership change of a company. During 2016, 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, 2016 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 2016, 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 $280,000 of tax benefits relating to NOLs will be utilized. |
COMMITMENT AND CONTINGENCIES
COMMITMENT AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT 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, effective February 8, 2013, for 5,806 square feet of office space in downtown Ft. Lauderdale, Florida. At December 31, 2016, the future minimum lease payments under operating leases are summarized as follows: Year Ending December 31, Amount 2017 $ 496,000 2018 225,000 Total $ 721,000 Rent expense approximated $444,000 and $510,000 for the years ended December 31, 2016 and 2015, respectively. Employment Agreements 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, 2016. On February 20, 2016, 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 provide corporate lodging to Mr. Oakes through the term of his agreement. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2016 | |
MAJOR CUSTOMERS [Abstract] | |
MAJOR CUSTOMERS | Four customers, HP Enterprise Services (“HPE”), International Business Machines Corp. (“IBM”), Saint Gobain Shared Services Corp. (“SGSS”) and one other customer, accounted for a significant portion of the Company’s revenues as follows (see Note 1): % of Total Revenues Year Ended December 31, 2016 2015 HPE Customer A 3.0 % 14.7 % HPE Customer B 14.0 11.9 HPE Customer C 4.5 6.3 Total HPE 21.5 % 32.9 % IBM 42.5 37.3 SGSS 10.1 7.8 Other Major Customer 13.9 % 10.3 % Total Major Customers 88.0 % 88.3 % Others 12.0 11.7 Total 100.0 % 100.0 % As of December 31, 2016 and 2015, HPE and IBM, along with two other major customers, accounted for a significant portion of the Company’s accounts receivable as follows (in thousands): December 31, 2016 2015 Total HPE $ 225 $ 389 IBM 453 467 Two Other Major Customers 321 395 Total $ 999 $ 1,251 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company’s management evaluated subsequent events through the time of the filing of this report on Form 10-K. Other than information disclosed in Note 1 to the financial statements, the Company’s management is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on its financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
USE OF ESTIMATES | In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), 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 Revenue Recognition in Financial Statements ● ● ● ● 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 operations 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. The Company expenses research and development costs as incurred except for costs in connection with the internally developed software, which are capitalized during the application development stage. For the years ended December 31, 2016 and 2015, research and development expenses were approximately $1,367,000 and $1,560,000, respectively. |
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. Capital lease assets are amortized over the shorter of the lease term or the service life of the related assets. |
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 |
IMPAIRMENT OF LONG-LIVED ASSETS | ASC 360, Property, Plant and Equipment 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. There were no impairment charges recognized during the years ended December 31, 2016 and 2015. |
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 operations, 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 For the year ended December 31, 2016, the Company’s potentially dilutive securities were not included in the computation of diluted loss per share because their impact was anti-dilutive due to the net loss for the year. The computation of basic and diluted EPS for the year ended December 31, 2015 (in thousands, except per share amounts) is as follows: Net Income Shares Per Share Numerator Denominator Amount Basic Earnings Per Share Net income $ 568 12,846 $ 0.04 Effect of Dilutive Securities Options — 2 Restricted stock — 17 Diluted Earnings Per Share $ 568 12,865 $ 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): Year Ended December 31, Anti-Dilutive Potential Common Shares 2016 2015 Options 503 575 Restricted stock 124 8 Total Anti-Dilutive Potential Common Shares 627 583 |
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, 2016 and 2015, 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 The fair value of the Company’s common stock options is 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 indicates 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 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, 2016. 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 | In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting Several ASUs were issued that modified ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”) During 2016 we began discussions that addressed the potential impact Topic 606 would have on the consolidated financial statements. Assessment to the impact on the financial statements will include an evaluation of the five steps outlined in ASC 606-10-05-4 (a) through (e) of 2016 along with enhancement of disclosures that will be required under paragraphs 606-10-50-1 through 50-21. We are still evaluating the overall effect the standard will have on the financial statements and related disclosures. Topic 606 is effective for Paybox on January 1, 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Computation of basic and diluted earnings per share | Net Income Shares Per Share Numerator Denominator Amount Basic Earnings Per Share Net income $ 568 12,846 $ 0.04 Effect of Dilutive Securities Options — 2 Restricted stock — 17 Diluted Earnings Per Share $ 568 12,865 $ 0.04 |
Antidilutive securities excluded from computation of earnings per share | Year Ended December 31, Anti-Dilutive Potential Common Shares 2016 2015 Options 503 575 Restricted stock 124 8 Total Anti-Dilutive Potential Common Shares 627 583 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 2016 2015 (in thousands) Computer equipment and purchased software (3 years) $ 1,434 $ 1,378 Internally developed software either placed or not yet placed in service (3 - 5 years) 1,208 1,101 Furniture and fixtures and leasehold improvements (5 – 7 years) 168 159 2,810 2,638 Less: accumulated depreciation and amortization (1,934 ) (1,704 ) Property and equipment, net $ 876 $ 934 |
ACCOUNTS PAYABLE AND ACCRUED 20
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 2016 2015 (in thousands) Trade accounts payable $ 361 $ 262 Sales taxes payable 539 539 Accrued directors’ fees 407 377 Other payables and accrued expenses 306 290 Total Accounts Payable and Accrued Expenses $ 1,613 $ 1,468 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stock Option Activity | Shares (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2016 600 $ 1.24 2.10 $ — Expired (20 ) $ 1.20 — $ — Forfeited (110 ) $ 1.60 — $ — Outstanding at December 31, 2016 470 $ 1.16 1.03 $ — Exercisable at December 31, 2016 390 $ 1.16 0.39 $ — |
Weighted-Average Assumptions | 2015 Expected term 3.75 years Expected volatility 90 % Expected dividend yield — Risk-free interest rate 0.9 % |
Stock Option Information | Weighted Average Number Outstanding Remaining Options Exercisable Exercise Prices (in thousands) Contractual Life (in thousands) $ 0.90 90 3.25 years 30 $ 1.15 300 0.12 years 300 $ 1.50 80 1.97 years 60 Total 470 1.03 years 390 |
Non-vested Stock Grants | Non-Vested Shares Shares (in thousands) Weighted-Average Grant Date Fair Value Non-Vested at January 1, 2016 78 $ 0.74 Granted 162 $ 0.62 Vested (159 ) $ 0.68 Non-Vested at December 31, 2016 81 $ 0.64 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes Tables | |
Provision (Benefit) for Deferred Income Taxes | 2016 2015 (in thousands) Current Federal $ 0 $ 0 State and other 1 25 Total Current 1 25 Deferred Federal 827 (2 ) State and other 88 (0 ) Total Deferred 915 (2 ) Provision for Income Taxes $ 916 $ 23 |
Schedule of Effective Income Tax Rate Reconciliation | 2016 2015 U.S. Federal Statutory Tax Rate 34.0 % 34.0 % Permanent items (19.0 )% 2.0 % State taxes 2.0 % 4.0 % Expiration of capital loss carryforward (93.0 )% (0.0 )% Impact of change in state tax laws on net operating losses (165.0 )% — Change in valuation allowance 76.0 % (36.0 )% Totals (165.0 )% 4.0 % |
Components of Deferred Taxes | 2016 2015 (in thousands) Deferred Tax Assets Net operating loss carryforwards $ 8,622 $ 9,410 Tax credit carryforwards 347 347 Fixed and intangible assets (182 ) (92 ) Charitable contributions 1 — Value of stock options and stock compensation 501 453 Deferred rent 10 14 Capital loss carryforward — 517 Accruals 153 142 9,452 10,791 Valuation Allowance (9,172 ) (9,596 ) Deferred Tax Assets, Net $ 280 $ 1,195 |
Change in the Valuation Allowance for Deferred Tax Assets | 2016 2015 (in thousands) Beginning Balance $ 9,596 $ 9,824 Change in Allowance (424 ) (228 ) Ending Balance $ 9,172 $ 9,596 |
COMMITMENT AND CONTINGENCIES (T
COMMITMENT AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitment And Contingencies Tables | |
Schedule of Future Minimum Lease Payments | Year Ending December 31, Amount 2017 $ 496,000 2018 225,000 Total $ 721,000 |
MAJOR CUSTOMERS (Tables)
MAJOR CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Revenues [Member] | |
Concentration Risk [Line Items] | |
Customers Accounted for Significant Portion of Revenues and Accounts Receivable | % of Total Revenues Year Ended December 31, 2016 2015 HPE Customer A 3.0 % 14.7 % HPE Customer B 14.0 11.9 HPE Customer C 4.5 6.3 Total HPE 21.5 % 32.9 % IBM 42.5 37.3 SGSS 10.1 7.8 Other Major Customer 13.9 % 10.3 % Total Major Customers 88.0 % 88.3 % Others 12.0 11.7 Total 100.0 % 100.0 % |
Accounts Receivable [Member] | |
Concentration Risk [Line Items] | |
Customers Accounted for Significant Portion of Revenues and Accounts Receivable | December 31, 2016 2015 Total HPE $ 225 $ 389 IBM 453 467 Two Other Major Customers 321 395 Total $ 999 $ 1,251 |
NATURE OF BUSINESS (Details Nar
NATURE OF BUSINESS (Details Narrative) - Customer | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration Risk [Line Items] | ||
Number of major customers | 4 | |
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) | 88.00% | 88.30% |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Basic Earnings Per Share | ||
Numerator: Net Income | $ (1,471) | $ 568 |
Denominator: Basic weighted average shares outstanding | 12,989,000 | 12,846,000 |
Basic Earnings Per Share | $ (0.11) | $ 0.04 |
Effect of Dilutive Securities | ||
Options, Amount | $ 0 | |
Options, Shares | 2,000 | |
Restricted stock, Amount | $ 0 | |
Restricted stock, Shares | 17,000 | |
Numerator: Net Income | $ (1,471) | $ 568 |
Denominator: Diluted weighted average shares outstanding | 12,989,000 | 12,865,000 |
Diluted Earnings Per Share | $ (0.11) | $ 0.04 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Anti-Dilutive Potential Common Shares | 627,000 | 583,000 |
Stock Options [Member] | ||
Anti-Dilutive Potential Common Shares | 503,000 | 575,000 |
Restricted Stock [Member] | ||
Anti-Dilutive Potential Common Shares | 124,000 | 8,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,810 | $ 2,638 |
Less: accumulated depreciation and amortization | (1,934) | (1,704) |
Property and equipment, net | 876 | 934 |
Computer Equipments And Purchased Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,434 | 1,378 |
Estimated useful lives | 3 years | |
Internally Developed Software Development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,208 | 1,101 |
Internally Developed Software Development [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 3 years | |
Internally Developed Software Development [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 5 years | |
Furnitures and fixtures and leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 168 | $ 159 |
Furnitures and fixtures and leasehold improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 5 years | |
Furnitures and fixtures and leasehold improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 7 years |
PROPERTY AND EQUIPMENT (Detai29
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 230 | $ 289 |
ACCOUNTS PAYABLE AND ACCRUED 30
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Trade accounts payable | $ 361 | $ 262 |
Sales taxes payable | 539 | 539 |
Accrued directors' fees | 407 | 377 |
Other payables and accrued expenses | 306 | 290 |
Total accounts payable and accrued expenses | $ 1,613 | $ 1,468 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Shares | |
Outstanding at January 1, 2016 | shares | 600,000 |
Expired | shares | (20,000) |
Forfeited | shares | (110,000) |
Outstanding at December 31, 2016 | shares | 470,000 |
Exercisable at December 31, 2016 | shares | 390,000 |
Weighted Average Exercise Price | |
Outstanding at January 1, 2016 | $ / shares | $ 1.24 |
Expired | $ / shares | 1.20 |
Forfeited | $ / shares | 1.60 |
Outstanding at December 31, 2016 | $ / shares | 1.16 |
Exercisable at December 31, 2016 | $ / shares | $ 1.16 |
Weighted Average Remaining Contractual Term (in years) | |
Outstanding at January 1, 2016 | 2 years 1 month 6 days |
Outstanding at December 31, 2016 | 1 year 11 days |
Exercisable at December 31, 2016 | 4 months 20 days |
Aggregate Intrinsic Value (in thousands) | $ | $ 0 |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders Equity Details 1 | |
Expected term (years) | 3 years 9 months |
Expected volatility | 90.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 0.90% |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number Outstanding | 470,000 | 600,000 |
Weighted Average Remaining Contractual Life | 1 year 11 days | |
Options Exercisable | 390,000 | |
Exercise Prices 0.90 [Member] | ||
Number Outstanding | 90,000 | |
Weighted Average Remaining Contractual Life | 3 years 3 months | |
Options Exercisable | 30,000 | |
Exercise Price 1.15 [Member] | ||
Number Outstanding | 300,000 | |
Weighted Average Remaining Contractual Life | 1 month 13 days | |
Options Exercisable | 300,000 | |
Exercise Price 1.50 [Member] | ||
Number Outstanding | 80,000 | |
Weighted Average Remaining Contractual Life | 1 year 11 months 19 days | |
Options Exercisable | 60,000 |
STOCKHOLDERS' EQUITY (Details 3
STOCKHOLDERS' EQUITY (Details 3) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Non-Vested Shares | |
Non-Vested at January 1, 2016 | shares | 78,000 |
Granted | shares | 162,000 |
Vested | shares | (159,000) |
Non-vested at December 31, 2016 | shares | 81,000 |
Weighted-Average Grant Date Fair Value | |
Non-Vested at January 1, 2016 | $ / shares | $ .74 |
Granted | $ / shares | .62 |
Vested | $ / shares | .68 |
Non-vested at December 31, 2016 | $ / shares | $ .64 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | ||
Federal | $ 0 | $ 0 |
State and other | 1 | 25 |
Total Current | 1 | 25 |
Deferred: | ||
Federal | 827 | (2) |
State and other | 88 | 0 |
Total Deferred | 915 | (2) |
Provision for income taxes | $ 916 | $ 23 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes Details 1 | ||
U.S. Federal Statutory Tax Rate | 34.00% | 34.00% |
Permanent items | (19.00%) | 2.00% |
State taxes | 2.00% | 4.00% |
Expiration of capital loss carryforward | (93.00%) | 0.00% |
Obsolete state net operating losses | (165.00%) | 0.00% |
Change in valuation allowance | 76.00% | (36.00%) |
Totals | (165.00%) | 4.00% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Tax Assets | ||
Net operating loss carryforwards | $ 8,622 | $ 9,410 |
Tax credit carryforwards | 347 | 347 |
Fixed and intangible assets | (182) | (92) |
Charitable contributions | 1 | 0 |
Value of stock options and stock compensation | 501 | 453 |
Deferred rent | 10 | 14 |
Capital loss carryforward | 0 | 517 |
Accruals | 153 | 142 |
Deferred Tax Assets, Gross | 9,452 | 10,791 |
Valuation allowance | (9,172) | (9,596) |
Deferred Tax Assets, Net | $ 280 | $ 1,195 |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Income Taxes Details 3 | ||
Beginning Balance | $ 9,596 | $ 9,824 |
Change in Allowance | (424) | (228) |
Ending Balance | $ 9,172 | $ 9,596 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) $ in Thousands | Dec. 31, 2016USD ($) |
Net operating loss carryforwards related to tax benefit | $ 280 |
Federal Tax Authority [Member] | |
Operating loss carryforwards | 25,000 |
State and Local Jurisdiction [Member] | |
Operating loss carryforwards | $ 329 |
COMMITMENT AND CONTINGENCIES (D
COMMITMENT AND CONTINGENCIES (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitment And Contingencies Details | |
2,017 | $ 496 |
2,018 | 225 |
Total | $ 721 |
COMMITMENT AND CONTINGENCIES 41
COMMITMENT AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 444 | $ 510 |
MAJOR CUSTOMERS (Details)
MAJOR CUSTOMERS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 100.00% | 100.00% |
Revenues [Member] | HPE Customer A [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 3.00% | 14.70% |
Revenues [Member] | HPE Customer B [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 14.00% | 11.90% |
Revenues [Member] | HPE Customer C [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 4.50% | 6.30% |
Revenues [Member] | HPE [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 21.50% | 32.90% |
Revenues [Member] | IBM [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 42.50% | 37.30% |
Revenues [Member] | SGSS [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 10.10% | 7.80% |
Revenues [Member] | Other Major Customers [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 13.90% | 10.30% |
Revenues [Member] | Total Major Customers [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 88.00% | 88.30% |
Revenues [Member] | Others [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, revenues (in hundredths) | 12.00% | 11.70% |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, accounts receivable | $ 999 | $ 1,251 |
Accounts Receivable [Member] | HPE [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, accounts receivable | 225 | 389 |
Accounts Receivable [Member] | IBM [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, accounts receivable | 453 | 467 |
Accounts Receivable [Member] | Two Other Major Customers [Member] | ||
Concentration Risk [Line Items] | ||
Major customer, accounts receivable | $ 321 | $ 395 |