| Document and Entity Information - USD ($) | 9 Months Ended | |
| Sep. 30, 2016 | Jun. 30, 2016 | |
| Document and Entity Information: | ||
| Entity Registrant Name | Astea International Inc. | |
| Document Type | 10-Q | |
| Document Period End Date | Sep. 30, 2016 | |
| Trading Symbol | atea | |
| 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 | $ 784,089 | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Current Reporting Status | No | |
| Entity Voluntary Filers | No | |
| Entity Well-known Seasoned Issuer | No | |
| Document Fiscal Year Focus | 2,016 | |
| Document Fiscal Period Focus | Q3 |
| Consolidated Balance Sheet - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | |||
| Current assets: | |||||
| Cash and cash equivalents | $ 878,000 | $ 1,663,000 | |||
| Investments available for sale | 39,000 | 13,000 | |||
| Receivables, net | 5,342,000 | [1] | 5,597,000 | [2] | |
| Prepaid expenses and other | 364,000 | 368,000 | |||
| Total current assets | 6,623,000 | 7,641,000 | |||
| Property and equipment, net | 146,000 | 173,000 | |||
| Capitalized software, net | 4,181,000 | 3,381,000 | |||
| Restricted cash | 73,000 | 128,000 | |||
| Other assets | 141,000 | 98,000 | |||
| Total noncurrent assets | 4,541,000 | 3,780,000 | |||
| Total Assets | 11,164,000 | 11,421,000 | |||
| Current liabilities: | |||||
| Accounts payable and accrued expenses | 2,342,000 | 2,580,000 | |||
| Deferred revenues | 10,366,000 | 10,693,000 | |||
| Total current liabilities | 12,708,000 | 13,273,000 | |||
| Long-term liabilities: | |||||
| Line of credit from Silicon Valley Bank | 1,826,000 | 1,374,000 | |||
| Long-term accrued expenses | 354,000 | 237,000 | |||
| Deferred tax liability | 41,000 | 29,000 | |||
| Deferred revenue- long term | 2,549,000 | 1,045,000 | |||
| Total noncurrent liabilities | 4,770,000 | 2,685,000 | |||
| Total Liabilities | 17,478,000 | 15,958,000 | |||
| STOCKHOLDERS' EQUITY: | |||||
| Convertible redeemable preferred stock, | [3] | 16,000 | 16,000 | ||
| Common stock | [4] | 36,000 | 36,000 | ||
| Additional paid-in capital | 32,159,000 | 32,417,000 | |||
| Accumulated deficit | (37,445,000) | (35,847,000) | |||
| Accumulated other comprehensive loss | (872,000) | (951,000) | |||
| Treasury stock at cost | [5] | 208,000 | 208,000 | ||
| Total stockholders' equity | (6,314,000) | (4,537,000) | |||
| Total liabilities and stockholders' equity | $ 11,164,000 | $ 11,421,000 | |||
| [1] | net of allowance of $63,000 | ||||
| [2] | net of allowance of $68,000 | ||||
| [3] | $.01 par value, shares authorized 5,000,000; issued and outstanding Series A 826,000 and outstanding Series B 797,000 | ||||
| [4] | $.01 par value, 25,000,000 shares authorized; issued 3,629,000 and outstanding 3,587,000 | ||||
| [5] | 42,000 shares | ||||
| Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
| Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
| Revenues: | ||||
| Software license fees | $ 648,000 | $ 589,000 | $ 1,740,000 | $ 3,908,000 |
| Subscriptions | 663,000 | 299,000 | 2,231,000 | 789,000 |
| Services and maintenance | 4,377,000 | 4,340,000 | 12,751,000 | 12,930,000 |
| Total revenues | 5,688,000 | 5,228,000 | 16,722,000 | 17,627,000 |
| Costs of Revenue: | ||||
| Cost of software license fees | 408,000 | 1,131,000 | 1,576,000 | 3,339,000 |
| Cost of subscriptions | 195,000 | 178,000 | 664,000 | 483,000 |
| Cost of services and maintenance | 3,148,000 | 3,042,000 | 10,051,000 | 9,357,000 |
| Total cost of revenues | 3,751,000 | 4,351,000 | 12,291,000 | 13,179,000 |
| Gross Profit | 1,937,000 | 877,000 | 4,431,000 | 4,448,000 |
| Operating Expenses: | ||||
| Product Development | 215,000 | 267,000 | 610,000 | 1,123,000 |
| Sales and marketing | 948,000 | 994,000 | 3,166,000 | 3,112,000 |
| General and administrative | 590,000 | 804,000 | 2,147,000 | 2,372,000 |
| Total operating expenses | 1,753,000 | 2,065,000 | 5,923,000 | 6,607,000 |
| Income (Loss) from operations | 184,000 | (1,188,000) | (1,492,000) | (2,159,000) |
| Interest expense, net | 30,000 | 44,000 | 76,000 | 117,000 |
| Loss before income tax | 154,000 | (1,232,000) | (1,568,000) | (2,276,000) |
| Income tax expense | 6,000 | 83,000 | 30,000 | 105,000 |
| Net loss | 148,000 | (1,315,000) | (1,598,000) | (2,381,000) |
| Preferred Dividend | 125,000 | 125,000 | 375,000 | 375,000 |
| Net loss allocable to common stockholders | $ 23,000 | $ (1,440,000) | $ (1,973,000) | $ (2,756,000) |
| Basic net (loss) earingings per share allocable to common stockholders | $ 0.01 | $ (0.40) | $ (0.55) | $ (0.77) |
| Diluted net (loss) earnings per share allocable to common stockholders | $ 0.01 | $ (0.40) | $ (0.55) | $ (0.77) |
| 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 | 3,615,000 | 3,587,000 | 3,587,000 | 3,587,000 |
| Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 9 Months Ended | |
| Sep. 30, 2016 | Sep. 30, 2015 | |
| Statement of Comprehensive Income (loss) | ||
| Net loss | $ (1,598,000) | $ (2,381,000) |
| Other comprehensive income (loss) : | ||
| Foreign currency translation adjustment | 79,000 | (91,000) |
| Comprehensive income (loss) | $ (1,519,000) | $ (2,472,000) |
| Consolidated Statement of Stockholders' Equity - 9 months ended Sep. 30, 2016 - USD ($) | Convertible redeemable preferred stock | Common stock | Additional paid-in-capital | Accumulated deficit | Accumulated other comprehensive income | Treasury Stock | Total |
| Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 31, 2015 | $ 16,000 | $ 36,000 | $ 32,417,000 | $ (951,000) | $ (35,847,000) | $ (208,000) | $ (4,537,000) |
| Dividend payments on preferred stock | (345,000) | (330,000) | |||||
| Stock-based compensation | 87,000 | 87,000 | |||||
| Other Comprehensive income | 79,000 | 79,000 | |||||
| Net loss | (1,598,000) | (1,598,000) | |||||
| Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2016 | $ 16,000 | $ 36,000 | $ 32,159,000 | $ (872,000) | $ (37,445,000) | $ (208,000) | $ (6,314,000) |
| CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
| Sep. 30, 2016 | Sep. 30, 2015 | |
| Cash flows from operating activities: | ||
| Net loss | $ (1,598,000) | $ (2,381,000) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||
| Depreciation and amortization | 1,600,000 | 3,393,000 |
| Amortization of deferred financing cost | 45,000 | 34,000 |
| Increase in allowance for doubtful accounts | (5,000) | (5,000) |
| Stock-based compensation | 87,000 | 104,000 |
| Changes in operating assets and liabilities: | ||
| Receivables | 370,000 | (1,685,000) |
| Prepaid expenses and other | (55,000) | 26,000 |
| Accounts payable and accrued expenses | (202,000) | 525,000 |
| Deferred revenues | 1,186,000 | 1,892,000 |
| Other assets | (44,000) | |
| Net cash provided by operating activities | 1,396,000 | 1,933,000 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (48,000) | (75,000) |
| Purchase of investments available for sale | (26,000) | |
| Capitalized software development costs | (2,323,000) | (1,723,000) |
| Change in restricted cash | 54,000 | (4,000) |
| Net cash used in investing activities | (2,343,000) | (1,802,000) |
| Cash flows from financing activities | ||
| Proceeds from line of credit from Silicon Valley Bank | 500,000 | 822,000 |
| Repayment on line of credit from Silicon Valley Bank | (48,000) | (150,000) |
| Repayment of line of credit with director/officer | (400,000) | (400,000) |
| Dividend payments on preferred stock | (330,000) | (330,000) |
| Net cash provided by financing activities | 122,000 | (58,000) |
| Effect of exchange rate changes on cash | 40,000 | (105,000) |
| Net increase in cash and cash equivalents | (785,000) | (32,000) |
| Cash and cash equivalents, beginning of period | $ 1,663,000 | $ 1,349,000 |
| Organization, Consolidation and Presentation of Financial Statements | 9 Months Ended |
| Sep. 30, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements: | |
| Reclassifications | Reclassification Certain reclassifications to the statement of operations, related to subscription costs, and to the statement of cash flows, related to amortization of deferred financing costs, were made to prior period financial statements to conform to the current presentation. |
| Nature of Operations | Operating Matters and Liquidity The Company has a history of net losses. In the first nine months of 2016, the Company generated a net loss of $1,598,000 compared to a net loss of $2,381,000 in the same period in 2015. Further, at September 30, 2016, the Company had a working capital ratio of .52:1, with cash and cash equivalents and investments available for sale of $917,000. The Company expects to continue to incur additional operating expenses for research and development and investment in software development to achieve its projected revenue growth. We continually evaluate our operating cash flows which can vary subject to the actual timing of new sales closing compared to our projection of those sales closing and are sensitive to many factors, including changes in working capital and our net loss. However, projections of future cash needs and cash flows are subject to substantial uncertainty. As of September 30, 2016, the Company owed $1,826,000 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 Companys eligible domestic accounts receivable. As of September 30, 2016, the availability under the line of credit was $174,000. The Company has projected revenues that management believes will provide sufficient funds along with cash on hand and available borrowings under its line of credit to sustain its continuing operations for at least the next twelve months. The Company does not plan any significant capital expenditures in 2016 other than to replace its existing capital equipment as it becomes obsolete. The Companys plans for investment in product development and capitalized software development costs are expected to be similar to prior years. |
| Accounting Changes and Error Corrections | 9 Months Ended |
| Sep. 30, 2016 | |
| Accounting Changes and Error Corrections: | |
| New Accounting Pronouncements and Changes in Accounting Principles | NEW ACCOUNTING PRONOUNCEMENTS In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (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 is permitted only as of annual reporting periods beginning after December 15, 2016. 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 us on January 1, 2017. Early application is permitted. We anticipate this update will not have a material impact on our consolidated financial statements. In November 2015, the FASB issued Income Taxes: Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The updated standard is effective for us beginning on January 1, 2017 with early application permitted as of the beginning of any interim or annual reporting period. We anticipate that this standard will not have a material impact on our consolidated financial statements. In February 2016, the FASB completed its leases project by issuing Accounting Standards Update No. 2016-02, Leases Results in a more faithful representation of the rights and obligations arising from leases by requiring lessees to recognize the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions, such as information about variable lease payments and options to renew and terminate leases, Improves understanding and comparability of lessees' financial commitments regardless of the manner they choose to finance the assets used in their businesses, Clarifies the definition of a lease to address practice issues that were raised about the previous definition of a lease and to align the concept of control, as it is used in the definition of a lease, more closely with the control principle in consolidation. The updated guidance is effective for us beginning January 1, 2019. Early adoption of the update is permitted. The Company is evaluating the impact of this updated guidance on its consolidated financial statements and related disclosures. |
| Accounting Policies | 9 Months Ended |
| Sep. 30, 2016 | |
| Accounting Policies: | |
| Basis of Presentation and Significant Accounting Policies | BASIS OF PRESENTATION The consolidated financial statements at September 30, 2016 and for the three and nine month periods ended September 30, 2016 and 2015 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 accompanying 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 Companys latest annual report (Form 10-K) and our Form 10-Qs for the quarters ended March 31, 2015, June 30, 2015, September 30, 2015, March 31, 2016 and June 30, 2016. The interim financial information presented is not necessarily indicative of results expected for the entire year ending December 31, 2016. |
| 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 Companys 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 funds which are exposed to minimal interest rate and credit risk. Cash balances are maintained with several banks. Certain operating accounts may exceed insured 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. |
| Share-based Compensation, Option and Incentive Plans Policy | Share-Based Awards The Company estimates the fair value of stock options granted using the Black-Scholes-Merton (Black-Scholes) option-pricing formula and amortizes the estimated option value using an accelerated amortization method where each option grant is split into tranches based on vesting periods. The Companys expected term represents the period that the Companys share-based awards are expected to be outstanding and was determined based on historical experience regarding similar awards, giving consideration to the contractual terms of the share-based awards and employee termination data. Executive level employees who hold a majority of options outstanding, and non-executive level employees each have similar historical option exercise and termination behavior and thus were grouped for valuation purposes. The Companys expected volatility is based on the historical volatility of its traded common stock and places exclusive reliance on historical volatilities to estimate stock volatility over the expected term of its awards. The Company has historically not paid dividends to common stockholders and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from the U.S. Treasury zero-coupon bonds with an equivalent term. As of September 30, 2016, the total unrecognized compensation cost related to non-vested options amounted to $175,000, which is expected to be recognized over the options average remaining vesting period of 2.5 years. Under the Companys stock option plans, option awards generally vest over a four year period of continuous service and have a 10 year contractual term. The fair value of each option is amortized on a straight-line basis over the options vesting period. The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model. There were 115,000 and 136,000 options granted during the nine months ended September 30, 2016 and 2015, respectively. Activity under the Companys stock option plans for the nine months ended September 30, 2016 is as follows: OPTIONS OUTSTANDING Shares Weighted Average Exercise Price Per Share Balance, December 31, 2015 738,000 $ 3.06 Granted 115,000 1.91 Forfeited (65,000 ) 2.11 Expired (12,000 ) 7.48 Balance, September 30, 2016 776,000 $ 2.90 The following table summarizes outstanding options under the Companys stock option plans as of September 30, 2016: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding Options 776,000 $2.90 5.27 $53,000 Ending Vested and Exercisable 548,000 $3.31 3.89 $16,000 Options Vested and Expected to Vest 714,000 $2.99 4.96 $43,000 Convertible Preferred Stock |
| Income Tax, Policy | NCOME TAX The Company has identified its federal tax return and its state returns in Pennsylvania and California as major tax jurisdictions. Based on the Companys evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Companys financial statements. The Companys evaluation was performed for tax years ended 2012 through 2015, the only periods subject to examination. The Company believes that its income tax positions and deductions will be sustained on a tax authority audit and does not anticipate any adjustments that will result in a material change to its financial position, results of operations or cash flows. The Companys policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of income before income taxes. Penalties are recorded in general and administrative expenses and interest accrued or receivable is recorded in interest expense or interest income, respectively, in the statement of operations. For the first nine months of 2016 and 2015, there were no interest or penalties related to uncertain tax positions. At September 30, 2016, the Company maintained a 100% valuation allowance for its remaining deferred tax assets, based on the uncertainty of the realization of the deferred tax assets due to the uncertainty of future taxable income. |
| Earnings Per Share, Policy | INCOME (LOSS) PER SHARE Income (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 income (loss) per share, shares outstanding are adjusted to assume conversion of the Companys non-interest bearing convertible stock and exercise of options as if they were dilutive. In the calculation of basic income (loss) per share, weighted average numbers of shares outstanding are used as the denominator. The Company had net income allocable to the common stockholders for the three months ended September 30, 2016 and a net loss allocable to stockholders of the nine months ended September 30, 2016 and the three and nine months ended September 30, 2015. In the three months ended September 30, 2016 there were 28,000 net additional dilutive stock options assumed to be converted into common stock shares and in the nine months ended September 30, 2016 and the three and nine months ended September 30, 2015, the outstanding stock options would have been antidilutive due to the net loss incurred during those periods. In addition, 100% of the outstanding convertible preferred stock, 1,623,000 shares, were eligible to be converted into common stock. For purpose of this calculation, if converted, it was assumed that upon conversion, the related dividends were not paid. However, as of the three and ninth months ended September 30, 2016 and 2015 shares of common stock issued on the assumed conversion of the eligible preferred stock were excluded from the diluted income (loss) per common shares calculation as the inclusion of these shares would have been antidilutive. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Numerator: Net income (loss) $ 148,000 $ (1,315,000 ) $ (1,598,000 ) $ (2,381,000 ) Preferred dividend 125,000 125,000 375,000 375,000 Net income (loss) available to common shareholders $ 23,000 $ (1,440,000 ) $ (1,973,000 ) $ (2,756,000 ) Denominator: Basic weighted average number of common shares outstanding 3,587,000 3,587,000 3,587,000 3,587,000 Effect of dilutive stock options 28,000 - - - Diluted weighted average number of common shares outstanding 3,615,000 3,587,000 3,587,000 3,587,000 Basic income (loss) per common share $ 0.01 $ (0.40 ) $ (0.55 ) $ (0.77 ) Diluted income (loss) per common share $ 0.01 $ (0.40 ) $ (0.55 ) $ (0.77 ) |
| Segment Reporting, Policy | 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 Companys software products and related professional services and customer support services. The Companys 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 September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenues Software license fees United States $ 212,000 $ 322,000 $ 793,000 $ 2,659,000 Total United States software license fees 212,000 322,000 793,000 2,659,000 Europe 81,000 241,000 581,000 1,043,000 Asia Pacific 355,000 26,000 366,000 206,000 Total foreign software license fees revenue 436,000 267,000 947,000 1,249,000 Total software license fees 648,000 589,000 1,740,000 3,908,000 Subscriptions United States 332,000 188,000 1,187,000 551,000 Total United States subscriptions 332,000 188,000 1,187,000 551,000 Europe 276,000 6,000 859,000 15,000 Asia Pacific 55,000 105,000 185,000 223,000 Total foreign subscriptions 331,000 111,000 1,044,000 238,000 Total subscription revenue 663,000 299,000 2,231,000 789,000 Services and maintenance United States 2,477,000 2,908,000 7,668,000 8,451,000 Total United States services and maintenance revenue 2,477,000 2,908,000 7,668,000 8,451,000 Europe 1,029,000 740,000 2,620,000 2,179,000 Asia Pacific 871,000 692,000 2,463,000 2,300,000 Total foreign services and maintenance revenue 1,900,000 1,432,000 5,083,000 4,479,000 Total services and maintenance revenue 4,377,000 4,340,000 12,751,000 12,930,000 Total revenue $ 5,688,000 $ 5,228,000 $ 16,722,000 $ 17,627,000 Net income (loss) United States $ (166,000 ) $ (982,000 ) $ (1,534,000 ) $ (911,000 ) Europe 235,000 (325,000 ) (21,000 ) (1,230,000 ) Asia Pacific 79,000 (8,000 ) (43,000 ) (240,000 ) Net income (loss) $ 148,000 $ (1,315,000 ) $ (1,598,000 ) $ (2,381,000 ) |
| Debt | 9 Months Ended |
| Sep. 30, 2016 | |
| Debt: | |
| Debt Disclosure | LINE OF CREDIT FROM SILICON VALLEY BANK On December 18, 2014, the Company and SVB amended and restated the Prior Loan Agreement (the Loan Agreement) and 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 Companys eligible domestic accounts receivable. Advances under the Revolving Facility (the Advances) may be repaid and reborrowed in accordance with the Loan Agreement. Interest, which is payable monthly, accrues 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. On January 14, 2016, the Company and SVB amended and restated the Loan Agreement to extend the maturity date of the credit facility through April 2018 and revised and clarified certain covenants and other terms of the credit facility ("Loan Modification Agreement"). If the Company is not in compliance with the terms of the Loan Modification Agreement 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. Subject to certain exceptions, the Loan Modification 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 Companys consolidated, unrestricted cash plus net booked accounts receivable to (b) the Companys liabilities to SVB plus, without duplication, the aggregate amount of the Companys 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 September 30, 2016 and December 31, 2015, the Company owed $1,826,000 and $1,374,000, respectively, against the Revolving Facility. The Company incurred $76,000 and $117,000 of interest expense to SVB for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, the availability under the line of credit was $174,000. The Company was in compliance with the covenants of the Loan Agreement as of September 30, 2016 and December 31, 2015. |
| Equity | 9 Months Ended |
| Sep. 30, 2016 | |
| Equity: | |
| Stockholders' Equity Note Disclosure | 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 Companys Board of Directors, quarterly in arrears. The Company accrued $75,000 at September 30, 2016 and 2015 and paid $225,000 in Series-A preferred stock dividends for both the nine months ended September 30, 2016 and 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. The Company has rights to cause conversion of all of the shares of Series A Preferred Stock outstanding. 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 Companys consolidated balance sheet within stockholders deficit. Series B On June 20, 2014, the Company issued 797,000 shares 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 Revolving Promissory Note dated March 26, 2014. Dividends accrue daily on the Series B Preferred at a rate of 10% and are payable only when, and if, declared by the Companys Board of Directors, quarterly in arrears. The Company accrued $50,000 and $35,000 at September 30, 2016 and 2015 respectively and paid $105,000 in Series-B preferred stock dividends for both the nine months ended September 30, 2016 and 2015. 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 accrued at an annual rate of 10%, subject to certain rate adjustments as provided for under the agreement, until June 20, 2016 and at an annual rate of 10% thereafter. The Companys Chief Executive Officer may convert 100% of his shares of the Series B Preferred Stock into shares of common stock. Each and every 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 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 common stock and on parity with the Companys 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 unpaid and accrued dividends. Preferred stock dividends on the Series B are declared quarterly by the Board of Directors. The Company reports the Series B Preferred Stock on the Companys consolidated balance sheet within stockholders deficit 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 was being amortized over the first two years from the date of issuance and was based upon the present value of the dividend discount using a 10% yield. The Company amortized $30,000 and $45,000, respectively, related to the imputed dividend cost for the nine months ended September 30, 2016 and 2015. The imputed dividend was fully amortized as of September 30, 2016. |
| Fair Value Measures and Disclosures | 9 Months Ended |
| Sep. 30, 2016 | |
| Fair Value Measures and Disclosures: | |
| Fair Value Disclosures | 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 Companys assumptions about the assumptions a market participant would use in pricing the asset. The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable and accrued expenses and the line of credit 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. The Company is currently invested in mutual funds. The aggregate fair value of mutual funds as of September 30, 2016 and 2015 was $39,000 and $13,000, respectively. The mutual funds are valued using Level 1 inputs and contain investments that seek high level of current income. There were no impairments of investments as of September 30, 2016 and 2015. 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. |
