Astea International (ATEA) 10-Q 14 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - Jun. 30, 2015 - USD ($)	Total
Document and Entity Information:
Entity Registrant Name	Astea International Inc
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Entity Central Index Key	945,989
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	3,587,299
Entity Public Float	$ 1,257,000
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2

Consolidated Balance Sheet

Consolidated Balance Sheet - USD ($)		Jun. 30, 2015		Dec. 31, 2014
Current assets:
Cash and cash equivalents		$ 1,524,000		$ 1,349,000
Investments available for sale		13,000		13,000
Receivables, net	[1]	5,891,000	[2]	4,084,000
Prepaid expenses and other		463,000		488,000
Total current assets		7,891,000		5,934,000
Property and equipment, net		161,000		176,000
Intangibles, net		28,000		96,000
Capitalized software, net		3,589,000		4,697,000
Goodwill		1,538,000		1,538,000
Restricted cash		127,000		126,000
Other assets		97,000		98,000
Total Assets		13,431,000		12,665,000
Current liabilities:
Line of credit from director/officer, current		150,000		150,000
Accounts payable and accrued expenses		2,720,000		2,130,000
Deferred revenues		7,887,000		8,179,000
Total current liabilities		10,757,000		10,459,000
Long-term liabilities:
Line of credit from Silicon Valley Bank		1,424,000		1,004,000
Long-term accrued expenses		208,000		213,000
Deferred tax liability		393,000		374,000
Deferred revenue- long term		1,953,000		394,000
Total Liabilities		14,735,000		12,444,000
STOCKHOLDERS' EQUITY:
Convertible redeemable preferred stock,	[3]	16,000	[4],[5]	16,000
Common stock	[6]	36,000		36,000
Additional paid-in capital		32,560,000		32,716,000
Accumulated deficit		(32,547,000)		(31,481,000)
Accumulated other comprehensive loss		(1,161,000)		(858,000)
Treasury stock at cost	[7]	208,000		208,000
Total stockholders' equity		(1,304,000)		221,000
Total liabilities and stockholders' equity		$ 13,431,000		$ 12,665,000
[1]	net of allowance of $73,000
[2]	net of allowance of $93,000
[3]	$.01 par value, shares authorized 5,000,000; issued and outstanding Series A 826,000
[4]	$.01 par value, shares authorized 5,000,000; issued and outstanding Series A 826,000 and oustanding Series B 797,000
[5]	$.01 par value, shares authorized 5,000,000; issued and outstanding Series A 826,000 and outstanding Series B 797,000
[6]	$.01 par value, 25,000,000 shares authorized; issued 3,629,000 and outstanding 3,587,000
[7]	42,000 shares

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues:
Software license fees	$ 2,179,000	$ 1,187,000	$ 3,319,000	$ 1,650,000
Subscriptions	234,000	194,000	490,000	267,000
Services and maintenance	4,126,000	3,916,000	8,590,000	8,219,000
Total revenues	6,539,000	5,297,000	12,399,000	10,136,000
Costs of Revenue:
Cost of software license fees	1,177,000	811,000	2,208,000	1,667,000
Cost of subscriptions, services and maintenance	3,449,000	2,825,000	6,620,000	5,822,000
Total cost of revenues	4,626,000	3,636,000	8,828,000	7,489,000
Gross Profit	1,913,000	1,661,000	3,570,000	2,647,000
Operating Expenses:
Product Development	353,000	348,000	856,000	721,000
Sales and marketing	1,143,000	1,067,000	2,118,000	2,085,000
General and administrative	649,000	944,000	1,568,000	1,755,000
Total operating expenses	2,145,000	2,359,000	4,542,000	4,561,000
Income (Loss) from operations	(232,000)	(698,000)	(971,000)	(1,914,000)
Interest expense, net	(31,000)	(38,000)	(73,000)	(75,000)
Loss before income tax	(263,000)	(736,000)	(1,044,000)	(1,989,000)
Income tax expense	10,000	16,000	22,000	23,000
Net loss		(752,000)	(1,066,000)	(2,012,000)
Preferred Dividend	125,000	75,000	250,000	150,000
Net loss allocable to common stockholders	$ (398,000)	$ (827,000)	$ (1,316,000)	$ (2,162,000)
Basic net (loss) earingings per share allocable to common stockholders	$ (0.11)	$ (0.23)	$ (0.37)	$ (0.06)
Diluted net (loss) earnings per share allocable to common stockholders	$ (0.11)	$ (0.23)	$ (0.37)	$ (0.06)
Weighted average shares outstanding used in computing basic net (loss) earnings per share	3,587,000	3,587,000	3,587,000	3,587,000
Weighted average shares outstanding used in computing diluted net (loss) earnings per share	3,587,000	3,587,000	3,587,000	3,587,000

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income (loss)
Net loss	$ (1,066,000)	$ (2,012,000)
Other comprehensive income (loss) :
Foreign currency translation adjustment	(303,000)	(105,000)
Other Comprehensive income (loss)	$ (1,369,000)	$ (2,117,000)

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net loss	$ (1,066,000)	$ (2,012,000)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	2,251,000	1,809,000
Increase (decrease) in provision for doubtful accounts	20,000	(38,000)
Stock-based compensation	64,000	89,000
Deferred income tax	20,000	5,000
Changes in operating assets and liabilities:
Receivables	(1,800,000)	254,000
Prepaid expenses and other	12,000	92,000
Accounts payable and accrued expenses	449,000	(287,000)
Deferred revenues	1,215,000	979,000
Other assets	1,000	(2,000)
Net cash provided by operating activities	1,166,000	889,000
Cash flows from investing activities:
Proceeds from the sale of short term investments		5,000
Purchases of property and equipment	(38,000)	(37,000)
Capitalized software development costs	(1,022,000)	(1,289,000)
Change in restricted cash	(2,000)	(22,000)
Net cash used in investing activities	(1,062,000)	(1,321,000)
Cash flows from financing activities
Proceeds from line of credit from Silicon Valley Bank	420,000	690,000
Repayment on line of credit from director/officer		(250,000)
Deferred financing cost		(126,000)
Proceeds from line of credit from director/ officer		400,000
Dividend payments on preferred stock	(220,000)	(150,000)
Net cash provided by financing activities	200,000	564
Effect of exchange rate changes on cash	(129,000)	2,000
Net increase in cash and cash equivalents	175,000	134,000
Cash and cash equivalents, beginning of period	1,349,000	1,111,000
Cash and cash equivalents, end of period	$ 1,524,000	$ 1,245,000

Accounting Policies

Accounting Policies	6 Months Ended
	Jun. 30, 2015
Accounting Policies:
Basis of Presentation and Significant Accounting Policies	BASIS OF PRESENTATION The consolidated financial statements at June 30, 2015 and for the three and six month periods ended June 30, 2015 and 2014 of Astea International Inc. and subsidiaries (“Astea” or the "Company") are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The following unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules and regulations of the SEC for quarterly reports on Form 10-Q. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto, included in the Company’s latest annual report (Form 10-K) and our Form 10-Q’s for the quarters ended March 31, 2014, June 30, 2014, September 30, 2014, and March 31, 2015. The interim financial information presented is not necessarily indicative of results expected for the entire year ending December 31, 2015.
Concentration Risk, Credit Risk, Policy	1. CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to credit risk, consist of cash equivalents and accounts receivable. The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company places investments with financial institutions evaluated as being creditworthy, or investing in short-term money market which are exposed to minimal interest rate and credit risk. Cash balances are maintained with several banks. Certain operating accounts may exceed the Federal Deposit Insurance Corporation (FDIC) limits. The Company sells its products to customers involved in a variety of industries including information technology, medical devices and diagnostic systems, industrial controls and instrumentation and retail systems. While the Company does not require collateral from its customers, it does perform continuing credit evaluations of its customers’ financial condition.
Fair Value of Financial Instruments, Policy	FAIR VALUE OF FINANCIAL INSTRUMENTS The Company defines the fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: 1. Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. 2. Level 2 - 3. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The inputs reflect the Company’s assumptions about the assumptions a market participant would use in pricing the asset. The carrying amounts of cash and cash equivalents, trade accounts receivable, other assets, trade accounts payable and accrued expenses at face value approximate fair value because of the short-term nature of these instruments. Investments classified as available for sale are measured using quoted market prices multiplied by the quantity held where quoted market prices were available. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Fair value is calculated based on publicly available market information or other estimates determined by management. We employ a systematic methodology on a quarterly basis that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality, the duration and extent to which the fair value is less than cost, and for equity securities, our intent and ability to hold, or plans to sell, the investment. For fixed income securities, we also evaluate whether we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery. We also consider specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income (expense) and a new cost basis in the investment is established.
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies	Operating Matters and Liquidity The Company has a history of net losses. In the six months ended June 30, 2015, the Company generated a net loss of $1,066,000 compared to a net loss of $2,012,000 generated in the same period in 2014. Further, at June 30, 2015, the Company had a working capital ratio of .73:1, with cash and cash equivalents and investments available for sale of $1,537,000. Moreover, the Company expects to continue to incur additional operating expenses for research and development and invest in software development costs to achieve its projected revenue growth. We continually evaluate our operating cash flows which can vary subject to the actual timing of expected new sales compared to our expectations of those sales and are sensitive to many factors, including changes in working capital and our net loss. The Company believes that it has sufficient cash to meet its anticipated operating cash needs for at least the next 12 months. However, projections of future cash needs and cash flows are subject to substantial uncertainty. Because of the Company’s planned conversion to a subscription-based software delivery model, it was determined that the Company needed additional liquidity. Accordingly, in 2014, the Company entered into a new line of credit agreement, and has an existing line of credit from its Chief Executive Officer, both of which are described in Note 6. As of June 30, 2015 the Company owed $150,000 against the line of credit from its Chief Executive Officer and $1,424,000 against the line of credit from Silicon Valley Bank (“SVB”). The availability under the SVB line of credit is tied to a borrowing base formula that is based on 80% of the Company’s eligible domestic accounts receivable, and as of June 30, 2015 the availability under the line of credit was $576,000. Subsequent to the expiration of the line of credit, the CEO has committed to support the Company financially for up to $1,000,000 through April 1, 2016. The Company has projected revenues for 2015 that management believes will provide sufficient funds to sustain its continuing operations. The Company was in compliance with the financial covenants for both lines of credit with the Chief Executive Officer and SVB as of June 30, 2015. In the event the Company does not meet its financial covenants in 2015 and SVB does not extend a waiver or forbearance agreement and the Company believes that it does not have adequate liquidity to operate, if necessary, the Company will implement a cost cutting plan that reduces all its expenditures to the appropriate level that matches its operating cash flows. The Company does not plan any significant capital expenditures in 2015 other than to replace its existing capital equipment as it becomes obsolete. The Company’s plans for investment in product development are expected to be similar to prior years.

Organization, Consolidation and

Organization, Consolidation and Presentation of Financial Statements	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements:
Reclassification, Policy	Reclassification Certain reclassifications to both the balance sheet, related to long and short-term liabilities, and to the statement of operations, related to subscription revenues, were made to prior period financial statements to conform to the current presentation.
New Accounting Pronouncements, Policy	NEW ACCOUNTING GUIDANCE In May 2014, and as amended in July 2015, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards, the FASB issued a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for us beginning January 1, 2018. Early adoption as of January 1, 2017 is permitted. We anticipate this standard may have a material impact on our consolidated financial statements, and we are currently evaluating its impact. In August 2014, FASB issued Preparation of Financial Statements - Going Concern, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. Under GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Presentation of Financial Statements--Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure. We anticipate this update will not have a material impact on our consolidated financial statements.

Accounting Changes and Error Co

Accounting Changes and Error Corrections	6 Months Ended
	Jun. 30, 2015
Accounting Changes and Error Corrections:
Immaterial Error Correction	Correction of an Immaterial Error The Company identified an immaterial error related to its classification on the consolidated balance sheet for an accrued liability that is due more than a year after the balance sheet date

Investments, Debt and Equity Se

Investments, Debt and Equity Securities	6 Months Ended
	Jun. 30, 2015
Investments, Debt and Equity Securities:
Available-for-sale Securities	INVESTMENTS AVAILABLE FOR SALE Investments that the Company designated as available-for-sale are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive loss. The Company bases the cost of the investment sold on the specific identification method. The available-for-sale investments consist of mutual funds. If an available-for-sale investment is other than temporarily impaired, the loss is charged to either earnings or stockholders’ (deficit) equity depending on our intent and ability to retain the security until we recover the full cost basis and the extent of the loss attributable to the creditworthiness of the issuer. On June 30, 2015 and December 31, 2014, the fair value for all of the Company’s investments was determined based upon quoted prices in active markets for identical assets (Level 1). The carrying amount, gross unrealized holding gains, gross unrealized holding losses, and fair value of available-for-sale securities by major security type and class of security at March 31, 2015 and December 31, 2014 were as follows: Aggregate cost basis Gross unrealized holding gains Gross unrealized holding (losses) Aggregate fair value At June 30, 2015 Available-for-sale: Mutual Funds $ 13,000 $ - $ - $ 13,000 At December 31, 2014 Available-for-sale: Mutual Funds $ 13,000 $ - $ - $ 13,000 The aggregate fair value of mutual funds as of June 30, 2015 and December 31, 2014 was $13,000. As of June 30, 2015 and December 31, 2014, there were no mutual funds that had unrealized losses. The mutual funds contain investments that seek a high level of current income. The funds normally invest at least 80% of net assets, plus the amount of any borrowings for investment purposes, in floating or adjustable rate senior loans of any maturity or credit quality, including those rated below investment grade or determined by the fund's advisor to be of comparable quality.

Debt

Debt	6 Months Ended
	Jun. 30, 2015
Debt:
Debt Disclosure	LINE OF CREDIT Line of Credit from Director/ Officer-Related Party Transaction On May 29, 2013, the Company entered into a Revolving Loan Agreement and associated Revolving Promissory Note (collectively the “Loan Documents”) with Zack Bergreen, the Company’s Chief Executive Officer. Pursuant to the Loan Documents, Mr. Bergreen provided an unsecured $2,000,000 revolving line of credit to the Company (the “Line of Credit”). Amounts outstanding under the Line of Credit bear interest at a rate of 7% per annum, with interest payable monthly. The original maturity date of the Line of Credit was May 29, 2015. The Company may pay all amounts outstanding and terminate the Loan Documents prior to that time without any penalties. The Loan Documents contain customary covenants, default and other provisions. The Loan Documents were negotiated and approved by the Audit Committee of the Company’s Board of Directors. Borrowings under the Line of Credit are subject to the Audit Committee’s approval. On March 27, 2014 the Company amended its original Loan Documents with Mr. Bergreen. Pursuant to the amended Loan Documents, Mr. Bergreen provided an additional $1,000,000 unsecured revolving line of credit to the Company to increase the total available line of credit to $3,000,000. No other terms or conditions to the original agreement were changed. On June 20, 2014, the Company converted $2,000,000 of outstanding principal owed to Mr. Bergreen under the Loan Documents in exchange for 797,000 shares of Series B Preferred Stock (see Note 8). In addition, during the second quarter of 2014, the Company repaid $250,000 of principal against the line of credit owed to Mr. Bergreen. On May 28, 2015, the Company amended the original loan agreement maturity date to be October 1, 2015 and maximum principal amount to $150,000. As of June 30, 2015 and December 31, 2014, the Company owed $150,000 against the line of credit and classified it as a current liability on the balance sheet due to the date of maturity. In addition, the Company incurred $9,000 and $75,000 of interest expense on this line of credit for the six months ended June 30, 2015 and 2014, respectively. The Company was in compliance with the financial covenants of this agreement as of June 30, 2015 and December 31, 2014. Line of Credit from Silicon Valley Bank On June 13, 2014, the Company entered into a Loan and Security Agreement with SVB (the “Prior Loan Agreement”). The Prior Loan Agreement established a revolving credit facility for the Company in the principal amount of up to $3,000,000 (the “Prior Revolving Facility”). Availability under the Prior Revolving Facility was tied to a borrowing base formula that was based on 80% of the Company’s eligible accounts receivable. Advances under the Prior Revolving Facility could have been repaid and reborrowed in accordance with the Prior Loan Agreement. No advances were made at closing of the loan. Pursuant to the Prior Loan Agreement, the Company agreed to pay SVB the outstanding principal amount of all borrowings, the unpaid interest thereon, and all other obligations incurred with respect to the Prior Loan Agreement on June 13, 2016. On December 18, 2014, the Company and SVB amended and restated the Prior Loan Agreement to reduce the aggregate borrowing amount and revise certain other terms of the Prior Loan Agreement and the Prior Revolving Facility (the “Loan Agreement”). The Loan Agreement established a new revolving credit facility for the Company in the principal amount of up to $2,000,000 (the “Revolving Facility”). Availability under the Revolving Facility is tied to a borrowing base formula that is based on 80% of the Company’s eligible domestic accounts receivable. Advances under the Revolving Facility (the “Advances”) may be repaid and reborrowed in accordance with the Loan Agreement. No advances were made at closing. Pursuant to the Loan Agreement, the Company agreed to pay to SVB the outstanding principal amount of all Advances, the unpaid interest thereon, and all other obligations incurred with respect to the Loan Agreement on December 18, 2016. Interest will accrue on the unpaid principal balance of the Advances at a floating per annum rate equal to the greater of: (i) 2.25% above the prime rate (which may be reduced to 2.00% above the prime rate for every month in which the Company maintains an “adjusted quick ratio” of at least 1.50:1) or (ii) 5.25%; provided, that the minimum interest amount due per month shall not be less than $2,000. If the Company is not in compliance at the end of any month, all outstanding advances plus accrued interest are immediately due and payable. Provided that no event of default exists, SVB may, in its good faith business discretion, refinance the outstanding borrowings with Advances based on specific eligible accounts. During an event of default the rate of interest would increase 5% above the otherwise applicable rate, until such event of default is cured or waived. All accrued and unpaid interest is payable monthly on the last calendar day of each month. Subject to certain exceptions, the Loan Agreement contains covenants prohibiting the Company from, among other things: (a) conveying, selling, leasing, transferring or otherwise disposing of their properties or assets; (b) liquidating or dissolving; (c) engaging in any business other than the business currently engaged in or reasonably related thereto; (d) entering into any merger or consolidation, or acquiring all or substantially all of the capital stock or property of another entity; (e) becoming liable for any indebtedness; (f) allowing any lien or encumbrance on any of their property; and (g) paying any dividends (other than dividends on outstanding convertible preferred stock); and (i) making payment on subordinated debt. Further, the Company must maintain a minimum “adjusted quick ratio,” tested as of the last day of each month, of at least 1.25:1.00. The adjusted quick ratio is the ratio of (a) the Company’s’ consolidated, unrestricted cash plus net booked accounts receivable to (b) the Company’s liabilities to SVB plus, without duplication, the aggregate amount of the Company’s’ liabilities that mature within 1 year, minus the current portion of deferred revenue. The Revolving Facility is secured by a first priority perfected security interest in substantially all of the assets of the Company, excluding the intellectual property of the Company. The Loan Agreement contains a negative covenant prohibiting the Company from granting a security interest in their intellectual property to any party. As of June 30, 2015 and December 31, 2014 the Company borrowed $1,424,000 and $1,004,000, respectively, against the Revolving Facility and classified it as a long-term liability on the balance sheet. The Company incurred $64,000 and $0 of interest expense to SVB for the six months ended June 30, 2015 and 2014, respectively. The Company was in compliance with the covenants of this agreement as of June 30, 2015 and December 31, 2014.

Equity

Equity	6 Months Ended
	Jun. 30, 2015
Equity:
Preferred Stock	Convertible Preferred Stock Series A On September 24, 2008 the Company issued 826,000 shares of Series-A Convertible Preferred Stock (“Series A Preferred Stock”) to its Chief Executive Officer at a price of $3.63 per share for a total of $3,000,000. Dividends accrue daily on the Series A Preferred at a rate of 10% and are payable only when, and if, declared by the Company’s Board of Directors, quarterly in arrears. The Company incurred $150,000 in Series-A preferred stock dividend expense for the six months ended June 30, 2015. The Series A Preferred Stock may be converted into common stock at the rate of one share of common for each share of Series A Preferred Stock. Since September 2010, the Company has had certain rights to cause conversion of all of the shares of Series A Preferred Stock outstanding. Since September 2012, the Company may redeem, subject to board approval, all of the shares of Series A Preferred Stock then outstanding at a price equal to the greater of (i) 130% of the purchase price plus all accrued and unpaid dividends and (ii) the fair market value of such number of shares of common stock which the holder of the Series A Preferred Stock would be entitled to receive had the redeemed Series A Preferred Stock been converted immediately prior to the redemption. In the event of a liquidation of the Company, the holder of the Series A and (Series B) preferred stock shall be entitled to receive in preference to the holders of the common stock, the original amount invested in the preferred stock plus any declared but unpaid dividends. The Company reports the Series A Preferred Stock on the Company’s consolidated balance sheet within stockholders’ (deficit) equity. Series B On June 20, 2014, the Company issued 797,000 of Series-B Convertible Preferred Stock (“Series B Preferred Stock”) to its Chief Executive Officer at a price of $2.51 per share in exchange for the cancellation of $2,000,000 of outstanding principal owed to its Chief Executive Officer under a certain Revolving Promissory Note dated March 26, 2014. The Audit Committee of the Board of Directors of the Company negotiated and unanimously approved the transaction. The per share price was determined as the greater of (i) the average closing bid price of a share of the Company’s common stock reported by Nasdaq for the 30 trading days ending two trading days prior to the date of the Series B Preferred Stock agreement and (ii) 10% above the closing bid price of the Company’s common stock on the date of the Series B Preferred Stock agreement. Accordingly, the per share price was set at $2.51 (“Purchase Price”), corresponding to 10% above the closing bid price on June 20, 2014. Pursuant to the terms of the Series B Preferred Stock agreement, the Company also granted its Chief Executive Officer certain registration rights in the event the Company elects to file a registration statement with the Securities and Exchange Commission relating to an offering of its equity securities under the Securities Act of 1933, as amended. The Series B Preferred Stock may be converted into shares of common stock on a one-to-one ratio, subject to customary anti-dilution provisions. The Series B Preferred Stock pays a quarterly dividend, which accrues at an annual rate of 7%, subject to certain rate adjustments as provided for under the agreement, until June 20, 2016 and at an annual rate of 10% thereafter. The Company’s Chief Executive Officer could have converted up to 50% of the Series B shares into shares of common stock at any time until June 20, 2015, and thereafter may convert 100% of his shares of the Series B Preferred Stock into shares of common stock. Following June 20, 2016, each and every then outstanding share of Series B Preferred Stock is subject to mandatory and automatic conversion into shares of common stock if the closing price of the common stock as reported by the principal exchange or quotation system on which such common stock is traded or reported exceeds 300% of the then current conversion price for 30 consecutive trading days. The Company could have redeemed up to 50% of the shares of the outstanding Series B Preferred Stock at any time on or prior to December 17, 2014 at a price equal to 110% of the Purchase Price, plus an amount equal to any unpaid and accrued dividends. At any time after December 17, 2014 and prior to June 20, 2015, the Company could have redeemed up to 50% of the shares of the outstanding Series B Preferred Stock minus the number of shares redeemed in any First Partial Redemption, at a price equal to 130% of the Purchase Price, plus an amount equal to any unpaid and accrued dividends. Additionally, after June 20, 2015, the Company may redeem all of the outstanding shares of the Series B Preferred Stock issued at a price per share equal to 300% of the Purchase Price. The Series B Preferred Stock ranks senior to the Company’s common stock and on parity with the Company’s Series A Preferred Stock. In the event of a liquidation of the Company, the holder of the Series B and Series A Preferred Stock shall be entitled to receive in preference to the holders of the common stock, the original amount invested in the preferred stock plus any declared but unpaid dividends. The Company reports the Series B Preferred Stock on the Company’s consolidated balance sheet within stockholders’ (deficit) equity at the amount of net proceeds received less an imputed dividend cost. The imputed dividend cost of $110,000 was the result of the preferred stock having a dividend rate during the first two years after its issuance (7%) that is lower than the rate that becomes fixed (10%) after the initial two year period. The imputed dividend cost of $110,000 will be amortized over a two-year period from the date of issuance and is based upon the present value of the dividend discount using a 10% yield. The Company amortized $30,000 related to the imputed dividend cost for the six months ended June 30, 2015. The Company incurred $100,000 in Series B preferred stock dividend expense for the six months ended June 30, 2015.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2015
Income Taxes:
Income Tax Disclosure	INCOME TAX The Company has identified its federal tax return and its state returns in Pennsylvania and California as “major” tax jurisdictions. 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 2009 through 2014, the only periods subject to examination. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. The Company’s policy for recording interest and penalties associated with income taxes is to record such items as a component of income before income taxes. Penalties are recorded in general and administrative expenses and interest paid or received is recorded in interest expense or interest income, respectively, in the statement of operations. For the first six months of 2015 and 2014, there was no interest or penalties related to income taxes. At June 30, 2015, the Company maintained a 100% valuation allowance for its remaining deferred tax assets, based on the uncertainty of the realization of future taxable income.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2015
Earnings Per Share:
Earnings Per Share	LOSS PER SHARE Loss per share is computed on the basis of the weighted average number of shares and common stock equivalents outstanding during the period. In the calculation of diluted loss per share, shares outstanding are adjusted to assume conversion of the Company’s non-interest bearing convertible stock and exercise of options as if they were dilutive. In the calculation of basic loss per share, weighted average numbers of shares outstanding are used as the denominator. The Company had net loss allocable to common stockholders for the six months ended June 30, 2015 and 2014. Loss per share is computed as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Numerator: Net loss available to common shareholders $ (398,000 ) $ (827,000 ) $ (1,316,000 ) $ (2,162,000 ) Denominator: Weighted average shares used to compute net loss available to common shareholders per common share basic and dilutive 3,587,000 3,587,000 3,587,000 3,587,000 Basic and dilutive net loss per share to common shareholder $ (0.11 ) $ (0.23 ) $ (0.37 ) $ (0.60 ) All options outstanding to purchase shares of common stock and shares of common stock issuable on the assumed conversion of the eligible preferred stock were excluded from the diluted loss per common share calculation for the six months ended June 30, 2015 and 2014, as the inclusion of these options would have been antidilutive.

Segment Reporting

Segment Reporting	6 Months Ended
	Jun. 30, 2015
Segment Reporting:
Segment Reporting Disclosure	GEOGRAPHIC SEGMENT DATA The Company and its subsidiaries are engaged in the design, development, marketing and support of its service management software solutions. Substantially all revenues result from the license of the Company’s software products and related professional services and customer support services. The Company’s chief executive officer reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by geographic region for purposes of making operating decisions and assessing financial performance. Accordingly, the Company considers itself to have three reporting segments as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenues Software license fees United States $ 1,924,000 $ 847,000 $ 2,337,000 $ 867,000 Total United States software license fees 1,924,000 847,000 2,337,000 867,000 Europe 171,000 35,000 801,000 478,000 Asia Pacific 84,000 305,000 181,000 305,000 Total foreign software license fees revenue 255,000 340,000 982,000 783,000 Total software license fees 2,179,000 1,187,000 3,319,000 1,650,000 Subscriptions United States 154,000 194,000 363,000 267,000 Total United States subscriptions 154,000 194,000 363,000 267,000 Europe 9,000 - 9,000 - Asia Pacific 71,000 - 118,000 - Total foreign subscriptions 80,000 - 127,000 - Total subscription revenue 234,000 194,000 490,000 267,000 Services and maintenance United States 2,612,000 2,386,000 5,543,000 5,083,000 Total United States services and maintenance revenue 2,612,000 2,386,000 5,543,000 5,083,000 Europe 718,000 788,000 1,440,000 1,714,000 Asia Pacific 796,000 742,000 1,607,000 1,422,000 Total foreign services and maintenance revenue 1,514,000 1,530,000 3,047,000 3,136,000 Total services and maintenance revenue 4,126,000 3,916,000 8,590,000 8,219,000 Total revenue $ 6,539,000 $ 5,297,000 $ 12,399,000 $ 10,136,000 Net income (loss) United States $ 459,000 $ (183,000 ) $ 71,000 $ (1,201,000 ) Europe (704,000 ) (212,000 ) (905,000 ) (73,000 ) Asia Pacific (28,000 ) (357,000 ) (232,000 ) (738,000 ) Net loss $ (273,000 ) $ (752,000 ) $ (1,066,000 ) $ (2,012,000 )

Consolidated Statement of Stock

Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($)	Convertible redeemable preferred stock	Common stock	Additional paid-in-capital	Accumulated deficit	Accumulated other comprehensive income	Treasury Stock	Total
Stockholders' Equity at Dec. 31, 2014	$ 16,000	$ 36,000	$ 32,716,000	$ (31,481,000)	$ (858,000)	$ (208,000)	$ 221,000
Dividend payments on preferred stock			(220,000)				(220,000)
Stock-based compensation			$ 64,000				64,000
Comprehensive loss					$ (303,000)		(303,000)
Net loss				$ (1,066,000)			$ (1,066,000)

Uncategorized Items - atea-2015

Label	Element	Value
Accumulated other comprehensive income
Total stockholders' equity	us-gaap_StockholdersEquity	$ (1,161,000)
Additional paid-in-capital
Total stockholders' equity	us-gaap_StockholdersEquity	32,560,000
Common stock {1}
Total stockholders' equity	us-gaap_StockholdersEquity	36,000
Convertible redeemable preferred stock
Total stockholders' equity	us-gaap_StockholdersEquity	16,000
Accumulated deficit {1}
Total stockholders' equity	us-gaap_StockholdersEquity	(32,547,000)
Treasury Stock
Total stockholders' equity	us-gaap_StockholdersEquity	$ (208,000)