Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | GLOBALSCAPE INC | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 21,793,131 | |
Amendment Flag | false | |
Entity Central Index Key | 1,112,920 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 11,447 | $ 8,895 |
Certificates of deposit, short term | 2,768 | 2,754 |
Accounts receivable, net | 4,475 | 6,288 |
Federal income tax receivable | 1,051 | 292 |
Prepaid and other expenses | 368 | 531 |
Total current assets | 20,109 | 18,760 |
Certificates of deposit, long term | 12,960 | 12,779 |
Capitalized software development costs, net | 3,803 | 3,743 |
Goodwill | 12,712 | 12,712 |
Deferred tax asset, net | 1,022 | 1,050 |
Property and equipment, net | 505 | 456 |
Other assets | 91 | 245 |
Total assets | 51,202 | 49,745 |
Current liabilities: | ||
Accounts payable | 1,378 | 930 |
Accrued expenses | 2,007 | 1,603 |
Deferred revenue | 12,012 | 13,655 |
Total current liabilities | 15,397 | 16,188 |
Deferred revenue, non-current portion | 3,907 | 3,790 |
Other long term liabilities | 174 | 152 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, par value $0.001 per share, 10,000,000 authorized, no shares issued or outstanding | 0 | 0 |
Common stock, par value $0.001 per share, 40,000,000 authorized, 22,196,712 and 21,920,912 shares issued at September 30, 2017, and December 31, 2016, respectively | 22 | 22 |
Additional paid-in capital | 23,280 | 21,756 |
Treasury stock, 403,581 shares, at cost, at September 30, 2017 and December 31, 2016 | (1,452) | (1,452) |
Retained earnings | 9,874 | 9,289 |
Total stockholders’ equity | 31,724 | 29,615 |
Total liabilities and stockholders’ equity | $ 51,202 | $ 49,745 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Preferred stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 40,000,000 | 40,000,000 |
Common stock, issued | 22,196,712 | 21,920,912 |
Treasury stock, shares | 403,581 | 403,581 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating Revenues: | ||||
Software licenses | $ 2,488 | $ 3,322 | $ 7,768 | $ 8,381 |
Maintenance and support | 5,360 | 4,637 | 15,702 | 13,635 |
Professional services | 368 | 702 | 1,652 | 2,107 |
Total Revenues | 8,216 | 8,661 | 25,122 | 24,123 |
Cost of revenues | ||||
Software licenses | 725 | 862 | 2,234 | 2,284 |
Maintenance and support | 446 | 362 | 1,283 | 1,142 |
Professional services | 402 | 393 | 1,120 | 1,269 |
Total cost of revenues | 1,573 | 1,617 | 4,637 | 4,695 |
Gross profit | 6,643 | 7,044 | 20,485 | 19,428 |
Operating expenses | ||||
Sales and marketing | 3,079 | 2,880 | 9,564 | 8,765 |
General and administrative | 2,575 | 1,634 | 6,178 | 5,046 |
Research and development | 594 | 519 | 2,530 | 1,750 |
Total operating expenses | 6,248 | 5,033 | 18,272 | 15,561 |
Income from operations | 395 | 2,011 | 2,213 | 3,867 |
Interest income (expense), net | 75 | 28 | 221 | 88 |
Income before income taxes | 470 | 2,039 | 2,434 | 3,955 |
Income tax expense | 194 | 705 | 870 | 1,397 |
Net income | 276 | 1,334 | 1,564 | 2,558 |
Comprehensive Income | $ 276 | $ 1,334 | $ 1,564 | $ 2,558 |
Net income per common share - | ||||
Basic (in Dollars per share) | $ 0.01 | $ 0.06 | $ 0.07 | $ 0.12 |
Diluted (in Dollars per share) | $ 0.01 | $ 0.06 | $ 0.07 | $ 0.12 |
Weighted average shares outstanding: | ||||
Basic (in Shares) | 21,792 | 21,122 | 21,672 | 21,061 |
Diluted (in Shares) | 22,247 | 21,674 | 22,145 | 21,640 |
Cash dividends declared per share (in Dollars per share) | $ 0.015 | $ 0.015 | $ 0.045 | $ 0.045 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating Activities: | ||
Net income | $ 1,564,000 | $ 2,558,000 |
Items not involving cash at the time they are recorded in the statement of operations: | ||
Provision for sales returns and doubtful accounts receivable | 15,000 | 58,000 |
Depreciation and amortization | 1,604,000 | 1,522,000 |
Share-based compensation | 1,053,000 | 753,000 |
Deferred taxes | 28,000 | (36,000) |
Excess tax benefit from share-based compensation | 0 | 5,000 |
Subtotal before changes in operating assets and liabilities | 4,264,000 | 4,860,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,798,000 | (2,249,000) |
Prepaid expenses | 163,000 | 86,000 |
Deferred revenue | (1,526,000) | 770,000 |
Accounts payable | 448,000 | (237,000) |
Accrued expenses | 404,000 | (197,000) |
Other assets | 154,000 | 30,000 |
Accrued interest receivable | (195,000) | (49,000) |
Other long-term liabilities | 22,000 | 10,000 |
Income tax receivable and payable | (759,000) | 600,000 |
Net cash provided by operating activities | 4,773,000 | 3,624,000 |
Investing Activities: | ||
Software development costs capitalized | (1,464,000) | (1,298,000) |
Purchase of property and equipment | (249,000) | (168,000) |
Net cash (used in) investing activities | (1,713,000) | (1,466,000) |
Financing Activities: | ||
Proceeds from exercise of stock options | 471,789 | 333,329 |
Excess tax benefit from share-based compensation | 0 | (5,000) |
Dividends paid | (979,000) | (950,000) |
Net cash (used in) financing activities | (508,000) | (622,000) |
Net increase in cash | 2,552,000 | 1,536,000 |
Cash at beginning of period | 8,895,000 | 15,885,000 |
Cash at end of period | 11,447,000 | 17,421,000 |
Cash paid during the period for: | ||
Interest | 0 | 0 |
Income taxes | $ 1,616,000 | $ 776,000 |
1. Nature of Business
1. Nature of Business | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Nature of Operations [Text Block] | 1. Nature of Business GlobalSCAPE, Inc., and its wholly-owned subsidiary (together referred to as the “Company”, “GlobalSCAPE”, or “we”) provides secure information exchange capabilities for enterprises and consumers through the development and distribution of software, delivery of managed and hosted solutions, and provisioning of associated services. Our solution portfolio facilitates transmission of critical information such as financial data, medical records, customer files, vendor files, personnel files, transaction activity, and other similar documents between diverse and geographically separated network infrastructures while supporting a range of information protection approaches to meet privacy and other security requirements. In addition to enabling secure, flexible transmission of critical information using servers, desktop and notebook computers, and a wide range of network-enabled mobile devices, our products also provide customers with the ability to monitor and audit file transfer activities. Our primary product is Enhanced File Transfer, or EFT. We have other products that complement our EFT product. In June 2017, we introduced a data integration product that we planned to sell under the brand name Kenetix. We licensed the technology for this product from a third party. This product is a cloud-based, integration-as-a-service, or iPaaS, solution used to connect applications, microservices, application program interfaces (or API’s), data and processes within and between organizations. We have experienced issues with the third-party technology and have determined to suspend marketing of the product as we evaluate options and determine whether the licensor can effectively address the issues. We also sell other products that are synergistic to EFT including Mail Express, WAFS, and CuteFTP. Collectively, these products constitute less than 10% of our total revenue. Throughout these notes unless otherwise noted, our references to the 2017 quarter and the 2016 quarter refer to the three months ended September 30, 2017 and 2016, respectively. Our references to the 2017 nine months and the 2016 nine months refer to the nine months ended September 30, 2017 and 2016, respectively. |
2. Basis of Presentation
2. Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Basis of Accounting [Text Block] | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X, “Interim Financial Statements”, as prescribed by the United States Securities and Exchange Commission, or SEC. Accordingly, they do not include all information and footnotes required under United States generally accepted accounting principles, or GAAP, for complete financial statements. In the opinion of management, all accounting entries necessary for a fair presentation of our financial position and results of operations have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. The information included in this Form 10-Q should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2016, filed with the SEC on June 14, 2018, which we refer to as the 2016 Form 10-K/A, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations We follow accounting standards set by the Financial Accounting Standards Board, or FASB. This board sets GAAP, which we follow in preparing financial statements that report our financial position, results of operations, and sources and uses of cash. We also follow the reporting regulations of the SEC. The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our financial statements. It is possible the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of our financial position and results of operations. |
3. Significant Accounting Polic
3. Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | 3. Significant Accounting Policies Principles of Consolidation The accompanying condensed consolidated financial statements are prepared in conformity with GAAP. All intercompany accounts and transactions have been eliminated. Changes in Accounting Methods, Reclassifications and Revisions As part of our ongoing enhancement and refinement of our financial reporting to fairly present our results of operations and financial position, we may make changes from time-to-time in accounting methods and in the classification and presentation of our business activities in our financial statements. To ensure comparability between periods, we revise previous period financial statements presented to conform them to the method of presentation in our current period financial statements. If the changes increase or decrease previously reported amounts of revenue or expenses, we adjust retained earnings as of the beginning of the earliest period presented for the cumulative effect, if any, on that balance. If these changes affect our financial statements for previously reported interim periods not presented herein, we present revised financial statements for those periods when they are reported in the future. Method of Amortization of Deferred Revenue Related to M&S Contracts In previously issued financial statements for our fiscal years prior to 2016 and for the first three quarters of 2016, we amortized deferred revenue related to maintenance and support, or M&S, contracts by recording a full month of amortization in the first month of a contract. We used that method based on our intent to match revenue from our M&S contracts to the expense we incur when delivering M&S services. We acknowledge that the more common and widespread practice is to amortize deferred revenue based upon the specific number of days the M&S contract is in place during that month. Both methods result in the recognition of the same amount of revenue over the term of the M&S contract but yield differing amounts of revenue being recognized in the first month and last month of an M&S contract. Commencing with the issuance of our financial statements as of December 31, 2016, and for the year then ended, we changed our method of amortizing deferred revenue related to M&S contracts such that our condensed consolidated statements of operations and balance sheets included herein are now prepared using the specific number of days method. This change decreased M&S revenue and net income for the three months and nine months ended September 30, 2016, as reported herein by immaterial amounts relative to amounts previously reported for that period. This change increased deferred revenue as of September 30, 2016, by an immaterial amount relative to the amount previously reported as of that date. This change has no effect on the total amount of revenue we will realize from our M&S contracts. Method of Recording M&S Billings We may invoice a customer for M&S to be provided commencing on a date in a month subsequent to the month in which we invoice the customer. We typically receive a purchase order from our customers for M&S prior to invoicing them, and it is not uncommon for a customer to pay us in advance of that M&S commencement date either on their own or when we request such payment. Accordingly, in our consolidated balance sheets issued prior to 2016 and for the first three quarters of 2016, we recorded an account receivable and deferred revenue for these invoices as of the date of the invoice. Commencing with the preparation and issuance of our consolidated financial statements as of December 31, 2016, we determined that a reasonable, alternate and more conservative method would be to wait until the commencement date of the M&S contract had arrived to record the account receivable and deferred revenue for any such invoices for which we have not been paid as of the balance sheet date. This change had the effect of decreasing our reported amounts of accounts receivable and deferred revenue relative to the method we previously used but does not affect any of our reported amounts of revenue or net income. Reclassification of Sales Engineer Expenses We employ sales engineers who assist our sales staff in addressing technical considerations by our customers prior to their purchasing our product. Our use of sales engineers has expanded in recent quarters. Prior to 2016 and for the first three quarters of 2016, we classified the expense of sales engineers as part of costs of revenue – professional services. Commencing with the preparation and issuance of our financial statements as of December 31, 2016, we began classifying these expenses as part of sales and marketing expense to more appropriately present the current nature of the activities of our sales engineers. This change has the effect of decreasing cost of revenue – professional services and increasing sales and marketing expense. It does not affect any of our reported amounts of revenue or net income. Reclassification of Reserve for Uncertain Tax Position As described in Note 9, we maintain a reserve for uncertain tax positions. Prior to 2016 and for the first three quarters of 2016, we classified that reserve as a current liability since it was not material to our financial statements taken as a whole. Commencing with the preparation of our financial statements as of December 31, 2016, we determined it appropriate to classify it as a component of other long term liabilities. This change has the effect of decreasing current income taxes payable and increasing other long term liabilities. Reclassification of Professional Services Revenue In preparing our condensed consolidated statement of operations and comprehensive income for the 2017 quarter and 2017 nine months, we classified as professional services certain revenue that had been previously reported as M&S revenue for 2016. We made that change to better reflect the nature of that revenue. We have made the same reclassification in our condensed consolidated statement of operations and comprehensive income for the 2016 quarter and 2016 nine months presented herein. Adjustments Related to the Audit Committee Investigation and Audit of 2016 Financial Statements The Company has concluded that its previously issued consolidated financial statements for the year ended December 31, 2016 should be restated due to misstatements related to certain revenue transactions incorrectly recognized during the year ended December 31, 2016 as well as other transactions identified during the Audit Committee’s investigation and management’s analysis and for the changes in the Company’s accounting methods, reclassifications and revisions described above in this Note 3. The impact of all of the misstatements described above on the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2016 are as follows: Condensed Consolidated Balance Sheet (in thousands) As of September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Assets Current assets: Cash and cash equivalents $ 17,421 $ 17,421 Short term investments 3,303 3,303 Accounts receivable, net 8,870 (741 ) 8,129 Federal income tax receivable 104 (104 ) - Prepaid and other expenses 425 425 Total current assets 30,123 (845 ) 29,278 Long term investments Property and equipment, net 463 463 Capitalized software development costs, net 3,961 3,961 Goodwill 12,712 12,712 Deferred tax asset, net 976 976 Other assets 30 30 Total assets $ 48,265 $ (845 ) $ 47,420 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 622 (20 ) 602 Accrued expenses 1,841 (145 ) 1,696 Deferred revenue 13,005 219 13,224 Income taxes payable 517 (457 ) 60 Total current liabilities 15,985 (403 ) 15,582 Deferred revenue, non-current portion 3,688 126 3,814 Other long term liabilities 34 110 144 - Stockholders’ Equity: - Preferred stock - - Common stock 21 21 Additional paid-in capital 20,632 96 20,728 Treasury stock (1,452 ) (1,452 ) Retained earnings 9,357 (774 ) 8,583 Total stockholders’ equity 28,558 (678 ) 27,880 Total liabilities and stockholders’ equity $ 48,265 $ (845 ) $ 47,420 Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Three Months Ended September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Operating revenues: Software licenses $ 3,373 (51 ) $ 3,322 Maintenance and support 4,713 (76 ) 4,637 Professional services 667 35 702 Total revenues 8,753 (92 ) 8,661 Costs of revenues Software licenses 873 (11 ) 862 Maintenance and support 363 (1 ) 362 Professional services 534 (141 ) 393 Total costs of revenues 1,770 (153 ) 1,617 Gross Profit 6,983 61 7,044 Operating expenses Sales and marketing 2,759 121 2,880 General and administrative 1,638 (4 ) 1,634 Research and development 528 (9 ) 519 Total operating expenses 4,925 108 5,033 Income from operations 2,058 (47 ) 2,011 Interest income (expense), net 28 28 Income before income taxes 2,086 (47 ) 2,039 Income tax expense 687 18 705 Net income $ 1,399 $ (65 ) $ 1,334 Comprehensive income $ 1,399 $ (65 ) $ 1,334 Net income per common share - basic $ 0.07 $ (0.00 ) $ 0.06 Net income per common share - diluted $ 0.06 $ (0.00 ) $ 0.06 Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Nine Months Ended September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Operating revenues: Software licenses $ 8,565 (184 ) $ 8,381 Maintenance and support 13,843 (208 ) 13,635 Professional services 2,013 94 2,107 Total revenues 24,421 (298 ) 24,123 Costs of revenues Software licenses 2,303 (19 ) 2,284 Maintenance and support 1,145 (3 ) 1,142 Professional services 1,689 (420 ) 1,269 Total costs of revenues 5,137 (442 ) 4,695 Gross Profit 19,284 144 19,428 Operating expenses Sales and marketing 8,453 312 8,765 General and administrative 5,083 (37 ) 5,046 Research and development 1,727 23 1,750 Total operating expenses 15,263 298 15,561 Income from operations 4,021 (154 ) 3,867 Interest income (expense), net 88 88 Income before income taxes 4,109 (154 ) 3,955 Income tax expense 1,348 49 1,397 Net income $ 2,761 $ (203 ) $ 2,558 Comprehensive income $ 2,761 $ (203 ) $ 2,558 Net income per common share - basic $ 0.13 $ (0.01 ) $ 0.12 Net income per common share - diluted $ 0.13 $ (0.01 ) $ 0.12 Condensed Consolidated Statements of Cash Flows (in thousands) For the Nine Months Ended September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Operating Activities: Net income $ 2,761 (203 ) $ 2,558 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense 67 (9 ) 58 Depreciation and amortization 1,522 1,522 Share-based compensation 721 32 753 Deferred taxes (36 ) (36 ) Excess tax deficiency from exercise of share based compensation 5 5 Subtotal before changes in operating assets and liabilities 5,040 (180 ) 4,860 Changes in operating assets and liabilities: Accounts receivable (2,856 ) 607 (2,249 ) Prepaid expenses 86 86 Deferred revenues 1,081 (311 ) 770 Accounts payable (217 ) (20 ) (237 ) Accrued expenses (52 ) (145 ) (197 ) Other assets 30 30 Accrued interest receivable (49 ) (49 ) Other long-term liabilities (10 ) 20 10 Income tax receivable and payable 571 29 600 Net cash provided by (used in) operating activities 3,624 - 3,624 Investing Activities: Software development costs (1,298 ) (1,298 ) Purchase of property and equipment (168 ) (168 ) Net cash provided by (used in) investing activities (1,466 ) - (1,466 ) Financing Activities: Proceeds from exercise of stock options 333 333 Tax deficiency (benefit) from stock-based compensation (5 ) (5 ) Dividends paid (950 ) (950 ) Net cash provided by (used in) financing activities (622 ) - (622 ) Net increase (decrease) in cash 1,536 1,536 Cash at beginning of period 15,885 - 15,885 Cash at end of period $ 17,421 $ - $ 17,421 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income taxes $ 776 $ 776 Revenue Recognition We develop, market and sell software products. We recognize revenue from a sale transaction when the following conditions are met: · Persuasive evidence of an arrangement exists. · Delivery has occurred or services have been rendered. · The amount of the sale is fixed or determinable. · Collection of the sale amount is reasonably assured. For a sale transaction not meeting any one of these four criteria, we defer recognition of revenue related to that transaction until all the criteria are met. We earn the majority of our software license revenue from software products sold under perpetual software license agreements. At the time our customers purchase these products, they typically also purchase an M&S contract. These transactions are multiple element software sales for which we assess the presence of vendor specific objective evidence (“VSOE”) of the fair value of the undelivered elements to determine the portion of these sales to recognize as revenue upon delivery of the software product and the portion of these sales to record as deferred revenue at the time the product is delivered. We amortize the deferred revenue component to revenue in future periods on a straight-line method as we deliver the related future services to the customer. For transactions, if any, for which we cannot establish VSOE of the fair value of the undelivered elements, we initially record the entire transaction as deferred revenue and amortize that amount to revenue in future periods as we deliver the related future services to the customer. We provide services under M&S contracts with terms generally ranging from one to three years. We require up-front payment of our M&S fee in an amount that covers the entire term of the agreement. We record deferred revenue at the commencement date of the contract or when we receive payment, whichever occurs first. We amortize the related deferred revenue over the term of the contract, based upon the specific number of days method. Deferred revenue related to services we will deliver within one year is presented as a current liability while deferred revenue related to services that we will deliver more than one year into the future is presented as a non-current liability. We reduce deferred revenue and recognize revenue ratably in future periods on a straight-line method as we deliver the M&S service. For our products licensed and delivered on a monthly or other periodic subscription or software-as-a-service, or SaaS basis, we recognize subscription revenue, including initial setup fees, on a monthly basis ratably over the contractual term of the customer contract as we deliver our products and services. Amounts paid prior to this revenue recognition are presented as deferred revenue until earned. We provide professional services to our customers consisting primarily of software installation support, operations support and training. We recognize revenue from these services as they are completed and accepted by our customers. We collect sales tax on many of our sales. We do not include sales tax collected in our revenue. We record it as a liability payable to taxing authorities. Cash and cash equivalents Cash and cash equivalents includes all cash and highly liquid investments with original maturities of three months or less. Property and Equipment Property and equipment is comprised of furniture and fixtures, software, computer equipment and leasehold improvements which are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Furniture, fixtures and equipment have a useful life of five to seven years, computer equipment and software have a useful life of three years and leasehold improvements have a useful life that is the shorter of the term of the lease under which the improvements were made or the estimated useful life of the asset. Expenditures for maintenance and repairs are expensed as incurred. Goodwill Goodwill is not amortized. On at least an annual basis, we test goodwill for impairment at the reporting unit level using December 31 as the measurement date. We operate as a single reporting unit. When testing goodwill, we first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of our reporting unit is less than its carrying amount, including goodwill. In performing this qualitative assessment, we assess events and circumstances relevant to us including, but not limited to: • Macroeconomic conditions. • Industry and market considerations. • Cost factors and trends for labor and other expenses of operating our business. • Our overall financial performance and outlook for the future. • Trends in the quoted market value and trading of our common stock. In considering these and other factors, we consider the extent to which any adverse events and circumstances identified could affect the comparison of our reporting unit’s fair value with its carrying amount. We place more weight on events and circumstances that most affect our reporting unit’s fair value or the carrying amount of our net assets. We consider positive and mitigating events and circumstances that may affect our determination of whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. We evaluate, on the basis of the weight of the evidence, the significance of all identified events and circumstances in the context of determining whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If, after assessing the totality of these qualitative events and circumstances, we determine it is not more likely than not that the fair value of our reporting unit is less than its carrying amount, we conclude there is no impairment of goodwill and perform no further testing, in accordance with GAAP. If we conclude otherwise, we proceed with performing the first step, and if necessary, the second step, of the two-step goodwill impairment test prescribed by GAAP. As of December 31, 2016, after assessing the totality of the relevant events and circumstances, we determined it not more likely than not that the fair value of our reporting unit was less than its carrying amount. Accordingly, we concluded there was no impairment of goodwill as of that date. There have been no material events or changes in circumstances since that time indicating that the carrying amount of goodwill may exceed its fair market value and that interim testing needed to be performed. Capitalized Software Development Costs When we complete research and development for a software product and have in place a program plan and a detail program design or a working model of that software product, we capitalize production costs incurred for that software product from that point forward until it is ready for general release to the public. Thereafter, we amortize capitalized software production costs to expense using the straight-line method over the estimated useful life of that product, which is generally three years. We periodically assess the carrying value of capitalized software development costs and our method of amortizing them relative to our estimates of realizability through sales of products in the marketplace. Research and Development We expense research and development costs as incurred. Advertising Expense We expense advertising costs as incurred as a component of our sales and marketing expenses. Advertising expense was approximately $480,277 and $480,315 in the 2017 quarter and the 2016 quarter, respectively, and $1,508,114 and $1,447,774 in the 2017 nine months and 2016 nine months, respectively. Share-Based Compensation We measure the cost of share-based payment transactions at the grant date based on the calculated fair value of the award. We recognize this cost as an expense ratably over the recipient’s requisite service period during which that award vests or becomes unrestricted. For stock option awards, we estimate their fair value at the grant date using the Black-Scholes option-pricing model considering the following factors: • We estimate expected volatility based on historical volatility of our common stock. • We use primarily the simplified method to derive an expected term which represents an estimate of the time options are expected to remain outstanding. We use this method because our options are plain-vanilla options, and we believe our historical option exercise experience is not adequately indicative of our future expectations. • We base the risk-free rate for periods within the contractual life of the option on the U.S. treasury yield curve in effect at the time of grant. • We estimate a dividend yield based on our historical and expected future dividend payments. For restricted stock awards, we use the quoted price of our common stock on the grant date as the fair value of the award. Income Taxes We account for income taxes using the asset and liability method. We record deferred tax assets and liabilities based on the difference between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes, as measured by the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets and liabilities are carried on the balance sheet with the presumption that they will be realizable in future periods in which we generate taxable income. We assess the likelihood that deferred tax assets will be realized from future taxable income. Based on this assessment, we provide any necessary valuation allowance on our balance sheet with a corresponding increase in the tax provision on our statement of operations. Any valuation allowances we establish are determined based upon a number of assumptions, judgments, and estimates, including forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic jurisdictions in which we operate. We account for uncertainty in income taxes using a two-step process to determine the amount of tax benefit to be recognized. First, we evaluate the tax position to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, we assess the tax position to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit we recognize is the largest amount that we believe has a greater than 50 percent likelihood of being realized upon ultimate settlement. Unrecognized tax benefits represent tax positions for which reserves have been established. Earnings Per Share We compute basic earnings per share using the weighted-average number of common shares outstanding during the periods. We compute diluted earnings per share using the weighted-average number of common shares outstanding plus the number of common shares that would be issued assuming conversion of all potentially dilutive common shares outstanding. Awards of non-vested restricted stock and options are considered potentially dilutive common shares for the purpose of computing earnings per common share. We apply the treasury stock method to non-vested options under which the assumed proceeds include the amount the employee must pay to exercise the option plus the amount of unrecognized cost attributable to future periods less any expected tax benefits. Recent accounting pronouncements The Financial Accounting Standards Board, or FASB, has issued the Accounting Standard Updates (ASU) described below that we believe may be relevant to our business and to the preparation of our financial statements. ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (issued September 2017) ASU 2017-04, Intangibles – Goodwill and Other (issued January 2017) - ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments (issued June 2016) - ASU 2016-13, Financial Instruments – Credit Losses (issued June 2016) ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (issued March 2016) – This standard also permits an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures may be either estimated (as has been the requirement in the past) or recognized when they occur. We elected to continue estimating forfeitures consistent with our existing practices thereby resulting in no change to our application of GAAP for this aspect of computing share-based compensation. ASU 2016-02, Leases (issued February 2016) - ASU 2015-17, Income Tax: Balance Sheet Classification of Deferred Taxes (issued November 2015) ASU 2014-09, Revenue from Contracts with Customers (issued May 2014) We have assessed the effect of ASU 2014-09 on the amount and timing of revenue we expect to recognize from our business activities in 2018 and later. We do not expect there to be material differences in the amount and timing of revenue we recognize from similar business activities in future periods determined by applying ASU 2014-09 as compared to revenue we would have otherwise recognized by applying GAAP as it existed prior to 2018. We have determined that the application of ASU 2014-09 will have a material effect on the timing of our recording of expenses resulting from the incremental costs we incur to obtain a contract with a customer to deliver goods and services. These incremental costs consist primarily of sales commissions paid to our sales people and royalties on certain of our products paid to third parties. For periods ended September 30, 2017, and earlier, we recorded the full amount of the sales commission and royalties paid on the full value of an M&S or SaaS contract as an expense on the inception date of the M&S contract. Under ASU 2014-09, we will account for such costs we incur in 2018 and later as follows: · If these costs are associated with products and services for which we recognize revenue at a point in time (primarily sales of perpetual software licenses and professional services), we will expense these costs in full at the time we recognize that revenue. · If these costs are associated with services for which we recognize revenue over time (primarily sales of M&S and SaaS subscriptions) for which we believe it is likely that the contract for those services will be renewed for additional terms in the future, provided we deem these costs to be recoverable, we will record these costs as deferred expense asset and amortize that cost to expense as follows: o For the portion of the cost that we determine benefits us primarily only over the term of the specific underlying contract currently in force (such as the term of an M&S contract), we will recognize expense ratably each month over that term. o For the portion of the cost that we determine benefits us over an overall customer relationship that is likely to span a period of time that is longer than an initial contract term (for example, an M&S contract renewed for multiple terms in the future), we will recognize expense ratably monthly over the estimated life of the customer relationship. Our application of ASU 2014-09 to incremental costs we incur to obtain a contract with a customer will result in us recording, as an asset as of January 1, 2018, a deferred expense of $1.2 million applicable to contracts with customers in effect as of that date. We previously reported this amount as an expense in our consolidated financial statements for periods ending on and before December 31, 2017. We estimate that we will amortize this amount to expense at the rate of approximately $186,000 per quarter beginning in 2018. The incremental costs we incur to obtain contracts with customers during 2018 and later years, and the amount of such costs we record as a deferred expense and amortize to expense in subsequent periods, will depend upon the nature and scope of our future business activities, the nature and mix of the products and services we sell, the compensation plans we have in place for our sales people, and the royalty arrangements we enter into with third parties. |
4. Certificates of Deposit
4. Certificates of Deposit | 9 Months Ended |
Sep. 30, 2017 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents Disclosure [Text Block] | 4. Certificates of Deposit Our certificates of deposit are held at a bank and mature at various dates through December 2021. Certificates of deposit with contractual maturity dates less than one year from the balance sheet date are presented as current assets. Certificates of deposit with contractual maturity dates beyond one year from the balance sheet date are presented as non-current assets. We have the ability to hold these certificates of deposit until their maturity dates and as of the date of this report intend to do so. We measure these investments on a recurring basis using Level 1 of the fair value hierarchy prescribed by GAAP which results in them being presented at original cost plus accrued interest earned. There is no amortization of original cost associated with our certificates of deposit. |
5. Accounts Receivable, Net
5. Accounts Receivable, Net | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 5. Accounts Receivable, Net We bill our customers and issue them an invoice when we have delivered our goods or services to them. In addition, when our customers agree to purchase or renew M&S services, we bill and invoice our customers at that time, which could be before the date we begin delivering those services. In that event, we exclude from accounts receivable (and from the related deferred revenue, see Note 3) the invoices we have issued for which the M&S services commencement date is in the future and which have not been paid by the customer as of the date of our consolidated financial statements. We continually assess the collectability of our accounts receivable. If we deem it less than probable that we will collect an amount due us, we write-off that balance against our allowance for doubtful accounts. Accordingly, we determine our accounts receivable, net, as follows ($ in thousands): September 30, 2017 December 31, 2016 Total invoices issued and unpaid $ 5,111 $ 6,932 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (358 ) (381 ) Gross accounts receivable 4,753 6,551 Allowance for sales returns and doubtful accounts (278 ) (263 ) Accounts receivable, net $ 4,475 $ 6,288 |
6. Capitalized Software Develop
6. Capitalized Software Development Costs, Net | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Intangible Assets Disclosure [Text Block] | 6. Capitalized Software Development Costs, Net Our capitalized software development costs balances and activities were as follows ($ in thousands): September 30, December 31, 2017 2016 Gross capitalized cost $ 8,716 $ 7,252 Accumulated amortization (4,913 ) (3,509 ) Capitalized software development costs, net $ 3,803 $ 3,743 Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Amount capitalized $ 527 $ 452 $ 1,464 $ 1,298 Amortization expense 484 450 1,404 1,319 Released Unreleased Products Products Gross capitalized amount at September 30, 2017 $ 7,866 $ 850 Accumulated amortization (4,913 ) - Net $ 2,953 $ 850 Future amortization expense: Three months ending December 31, 2017 465 Year ending December 31, 2018 1,421 2019 781 2020 286 Total $ 2,953 The future amortization expense of the gross capitalized software development costs related to unreleased products will be determinable at a future date when those products are ready for general release to the public. |
7. Deferred Revenue
7. Deferred Revenue | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue Disclosure [Text Block] | 7. Deferred Revenue As described in Note 5 regarding accounts receivable, when our customers agree to purchase or renew M&S services, we bill and invoice our customers at that time which could be before the date we begin delivering those services. In that event, we exclude from deferred revenue (and from the related accounts receivable) the invoices we have issued for which the M&S services commencement date is in the future and which have not been paid by the customer as of the date of our financial statements. Accordingly, we determine our deferred revenue as follows ($ in thousands): September 30, 2017 December 31, 2016 Total invoiced for M&S contracts for which revenue will be recognized in future periods $ 16,277 $ 17,826 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (358 ) (381 ) Total deferred revenue $ 15,919 $ 17,445 Deferred revenue, current portion $ 12,012 $ 13,655 Deferred revenue, non-current portion 3,907 3,790 Total deferred revenue $ 15,919 $ 17,445 |
8. Stock Options, Restricted St
8. Stock Options, Restricted Stock and Share-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 8. Stock Options, Restricted Stock and Share-Based Compensation We have stock-based compensation plans under which we have granted, and may grant in the future, incentive stock options, non-qualified stock options, and restricted stock to employees and non-employee members of the Board of Directors. Our share-based compensation expense was as follows ($ in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Share-based compensation expense $ 381 $ 231 $ 1,053 $ 753 Stock Options We have granted stock options to our officers and employees under long-term equity incentive plans that originated in 2000, 2010 and 2016. During the 2017 quarter and nine months, we granted stock options only under the 2016 plan. Provisions and characteristics of the options granted to our officers and employees under our long-term equity incentive plans include the following: · The exercise price, term and other conditions applicable to each stock option or stock award granted are determined by the Compensation Committee of the Board of Directors. · The exercise price of stock options is set on the grant date and may not be less than the fair market value per share of our stock at market close on that date. · Stock options we issue generally become exercisable ratably over a three-year period, expire ten years from the date of grant, and are exercisable for a period of ninety days after the end of employment. · Upon exercise of a stock option, we issue new shares from the shares of common stock we are authorized to issue. We currently issue stock-based awards to our officers and employees only under the 2016 plan which authorizes the issuance of up to 5,000,000 shares of common stock for stock-based incentives including stock options and restricted stock awards. As of September 30, 2017, stock-based incentives for up to 4,187,000 shares remained available for issuance in the future under this plan. We have not previously issued any restricted stock under any of these plans. Our stock option activity has been as follows: Weighted Average Weighted Average Aggregate Exercise Remaining Intrinsic Number of Price Contractual Value Shares Per Share Term in Years (000’s) Outstanding at December 31, 2016 2,407,005 $ 3.00 7.19 $ 2,574 Granted 935,000 $ 3.98 Forfeited (394,990 ) $ 3.73 Exercised (195,800 ) $ 2.41 Outstanding at September 30, 2017 2,751,215 $ 3.27 6.60 $ 1,756 Exercisable at September 30, 2017 1,197,204 $ 2.65 3.64 $ 1,445 Additional information about our stock options is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average fair value of options granted $ 1.94 $ 1.59 $ 1.67 $ 1.65 Intrinsic value of options exercised $ 9,284 $ 78,607 $ 351,893 $ 261,061 Cash received from stock options exercised $ 13,440 $ 70,320 $ 471,789 $ 333,329 Number of options that vested 28,570 42,390 430,724 308,736 Fair value of options that vested $ 44,843 $ 48,374 $ 698,442 $ 469,423 Unrecognized compensation expense related to non-vested options at end of period $ 1,994,289 $ 1,671,434 $ 1,994,289 $ 1,671,434 Weighted average years over which non-vested option expense will be recognized 2.11 2.27 2.11 2.27 As of September 30, 2017 Options Outstanding Options Exercisable Weighted Average Weighted Weighted Underlying Remaining Average Number of Average Range of Shares Contractual Exercise Underlying Exercise Exercise Prices Outstanding Life Price Shares Price $ 0.85 - $1.43 74,100 2.00 $ 1.09 74,100 $ 1.09 $ 1.47 - $2.32 450,245 2.17 $ 1.83 448,885 $ 1.83 $ 2.34 - $3.52 936,580 6.68 $ 3.27 466,999 $ 3.13 $ 3.53 - $5.30 1,283,290 8.35 $ 3.90 207,220 $ 3.92 $ 5.44 - $5.44 7,000 9.80 $ 5.44 - $ - Total options 2,751,215 1,197,204 We used the following assumptions to determine compensation expense for our stock options using the Black-Scholes option-pricing model: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Expected volatility 50 % 53 % 49 % 56 % Expected annual dividend yield 1.50 % 1.50 % 1.50 % 1.50 % Risk free rate of return 1.95 % 1.18 % 1.94 % 1.46 % Expected option term (years) 6.00 6.00 6.00 6.00 Restricted Stock Awards Our 2015 Non-Employee Directors Long-Term Equity Incentive Plan (“2015 Directors Plan”) provides for the issuance of either stock options or restricted stock awards for up to 500,000 shares of our common stock. Provisions and characteristics of this plan include the following: · The exercise price, term and other conditions applicable to each stock option or stock award granted are determined by the Compensation Committee of the Board of Directors. · Restricted stock awards are initially issued as restricted shares with a legend restricting transferability of the shares until the recipient satisfies the vesting provision of the award, which is generally continuing service for one year subsequent to the date of the award, after which time the restrictive legend is removed from the shares. · Restricted shares participate in dividend payments and may be voted. · As of September 30, 2017, stock based incentives for up to 260,000 shares remained available for issuance in the future under this plan. Our restricted stock awards activity has been as follows: Total Grant Date Fair Value of Number of Fair Value Shares That Shares Per Share Vested Restricted shares outstanding at December 31, 2016 80,000 $ 3.31 Shares granted with restrictions 80,000 $ 4.24 Shares vested and restrictions removed (80,000 ) $ 3.31 $ 320,000 Restricted shares outstanding at September 30, 2017 80,000 $ 4.24 Unrecognized compensation expense for non-vested shares as of September 30, 2017 Expense to be recognized in future periods $ 205,744 Weighted average number of months over which expense is expected to be recognized 7.3 |
9. Income Taxes
9. Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | 9. Income Taxes The components of our income tax expense (benefit) are as follows ($ in thousands): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Current Deferred Total Current Deferred Total Current Deferred Total Current Deferred Total Federal $ 29 $ 146 $ 175 $ 715 $ (78 ) $ 637 $ 733 $ 33 $ 766 $ 1,300 $ (21 ) $ 1,279 State 10 9 19 72 (4 ) 68 109 (5 ) 104 133 (15 ) $ 118 Total $ 39 $ 155 $ 194 $ 787 $ (82 ) $ 705 $ 842 $ 28 $ 870 $ 1,433 $ (36 ) $ 1,397 Deferred income taxes on our balance sheet reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows ($ in thousands): September 30 December 31, 2017 2016 Deferred tax assets: Deferred revenue $ 1,094 $ 1,229 Capital loss carryforward 1,099 1,099 Share-based compensation 619 578 Compensation and benefits 284 278 Texas franchise tax R&D credit 168 153 Allowance for doubtful accounts 94 114 Net operating loss carryforward 47 91 Prepaid expenses not deductible 136 - Accrued expenses not deductible 64 56 Less Valuation Allowances: Capital loss carryforward (1,099 ) (1,099 ) Texas franchise tax R&D credit (168 ) (153 ) Total deferred tax assets 2,338 2,346 Deferred tax liabilities: Intangible assets 1,310 1,289 Depreciation 6 7 Total gross deferred tax liabilities 1,316 1,296 Net deferred tax assets $ 1,022 $ 1,050 In assessing the realizability of deferred tax assets, we consider whether it is more-likely-than-not that a deferred tax asset will not be realized. Our assessment of the likelihood of having sufficient taxable income in the future to support deduction or utilization of the items giving rise to our deferred tax assets indicates it is more-likely-than-not that we will realize the deferred tax assets listed in the table above. As of September 30, 2017, we had federal income tax net operating loss carryforwards of $137,000 available to offset future federal taxable income, if any. These carryforwards became available through our acquisition of TappIn, Inc. in 2011. These carryforwards expire in 2030 and 2031. As of September 30, 2017, we have a federal income tax capital loss carryforward of $3,231,000 which resulted from the reduction of our investments in and notes receivable from CoreTrace Corporation in 2012. We can realize this carryforward to the extent we have capital gains in future periods against which this capital loss can be deducted. We believe it uncertain that we will have sufficient capital gains in the future to support this deduction and accordingly have provided a valuation allowance for the full amount of this carryforward. This carryforward expires in 2017. As of September 30, 2017, we had Texas R&D tax credit carryforwards of $168,000. We can realize Texas R&D tax credit carryforwards to the extent we have sufficient Texas Franchise Tax in future years. We believe it is uncertain that we will have sufficient Texas Franchise Tax in the future to support utilization of these credits and, accordingly, have provided a valuation allowance for the full amount of these carryforwards. These carryforwards expire in 2034 through 2038. We claim research and experimentation tax credits, or R&D tax credits, on certain of our tax returns and have included the effect of those credits in our provision for income taxes. A routine examination of our 2008, 2009 and 2010 federal income tax returns conducted and completed by the Internal Revenue Service resulted in the amount of the R&D tax credits allowed for those years being less than the amounts we claimed on those federal income tax returns. If the Internal Revenue Service examines our federal income tax returns for 2011 and later years, we believe they may apply their same criteria to the R&D tax credits we claimed on those tax returns. Accordingly, we believed it more-likely-than-not that the R&D tax credit allowed for those years may be less than the amounts we have claimed. As a result, we maintain a reserve for an uncertain tax position for this matter in the amount of $153,000 as of September 30, 2017. The aggregate changes in the balance of our gross unrecognized tax benefits were as follows ($ in thousands): Nine Months Ended September, 2017 2016 Balance at beginning of period $ 121 $ 90 Increases for tax positions related to the current year 16 9 Increases for tax positions related to prior years 16 11 Balance at end of period $ 153 $ 110 We believe it reasonably possible that we will not recognize any of our unrecognized tax benefits at least through September 30, 2017. If we realized and recognized any of our gross unrecognized tax benefits, such benefits would reduce our effective tax rate in the year of recognition. We are subject to taxation in the United States and in multiple state jurisdictions. Our federal income tax returns for 2016, 2015, 2014 and 2013 are subject to examination by the Internal Revenue Service. Our amended federal income tax returns for 2012 and 2011 are subject to examination with the amount of any claim for payment of additional taxes limited to the amount by which the tax due on those amended returns was less than the tax due on the returns for those years as originally filed. Our state tax returns are subject to examination for varying periods of time by numerous state taxing authorities. Currently, none of our federal or state income tax returns are under examination. To the extent they arise, we record interest and penalty expenses related to income taxes as components of other expense in our statement of operations. We incurred no such expenses in the 2017 quarter or the 2016 quarter. We file state tax returns in various states. The taxes resulting from these filings are included in income tax expense. Our income tax expense (benefit) reconciles to an income tax expense resulting from applying an assumed statutory federal income rate of 34% to income before income taxes as follows ($ in thousands): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Income tax expense (benefit) at federal statutory rate $ 160 $ 693 $ 828 $ 1,345 Increase (decrease) in taxes resulting from: State taxes, net of federal benefit 16 52 67 97 Stock based compensation 37 25 121 60 Other 7 5 19 37 R&D tax credit uncertain tax position (net) 6 10 32 20 Research and development credit (30 ) (55 ) (177 ) (119 ) Domestic production activities deduction (2 ) (25 ) (20 ) (43 ) Income tax expense (benefit) per the statements of operations $ 194 $ 705 $ 870 $ 1,397 |
10. Earnings per Common Share
10. Earnings per Common Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | 10. Earnings per Common Share Earnings per share for the periods indicated were as follows ($ in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerators Numerator for basic and diluted earnings per share: Net income $ 276 $ 1,334 $ 1,564 $ 2,558 Denominators Denominators for basic and diluted earnings per share: Weighted average shares outstanding - basic 21,792 21,122 21,672 21,061 Dilutive potential common shares Stock options and awards 455 552 473 579 Denominator for diluted earnings per share 22,247 21,674 22,145 21,640 Net income per common share - basic $ 0.01 $ 0.06 $ 0.07 $ 0.12 Net income per common share – diluted $ 0.01 $ 0.06 $ 0.07 $ 0.12 As a result of our implementation of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (issued March 2016), |
11. Dividends
11. Dividends | 9 Months Ended |
Sep. 30, 2017 | |
Dividends [Abstract] | |
Dividends [Text Block] | 11. Dividends We paid dividends as follows: Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 Three Months Ended June 30, 2017 Three Months Ended June 30, 2016 Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Dividend per share of common stock $ 0.015 $ 0.015 $ 0.015 $ 0.015 $ 0.015 $ 0.015 Dividend record date February 23, 2017 February 23, 2016 May 23, 2017 May 23, 2016 August 23, 2017 August 23, 2016 Dividend payment date March 8, 2017 March 8, 2016 June 8, 2017 June 8, 2016 September 8, 2017 September 8, 2016 |
12. Commitments and Contingenci
12. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | 12. Commitments and Contingencies Severance Payments We have agreements with key personnel that provide for severance payments to them in the event of a change in control of the Company, as defined in those agreements, and their employment is terminated in connection with that change in control. In such event, our aggregate severance payments to those employees would be $2.0 million. Contractual Obligations We have an obligation under a contract with a third party to prepay future minimum royalty payments in the amount of $800,000 in September 2018 and $1.2 million in November 2019. Legal and Regulatory Matters As previously disclosed in the Company’s Current Report on Form 8-K filed on November 15, 2017, on August 9, 2017, a securities class action complaint, Anthony Giovagnoli v. GlobalSCAPE, Inc. inter alia On October 20, 2017, the Company received a demand letter from a stockholder seeking the inspection of books and records of the Company pursuant to Section 220 of the Delaware General Corporation Law (the “Section 220 Demand”). This stockholder’s stated purpose for the demand is, inter alia The Board has established a special litigation committee (“Special Litigation Committee”) consisting of Dr. Thomas Hicks and Frank Morgan to analyze and investigate claims that could potentially be asserted in stockholder derivative litigation related to facts connected to the claims and allegations asserted in the litigation related to the Restatement and the Section 220 Demand (the “Potential Derivative Litigation”). The Special Litigation Committee will determine what actions are appropriate and in the best interests of the Company, and decide whether it is in the best interests of the Company to pursue, dismiss, or consensually resolve any claims that may be asserted in the Potential Derivative Litigation. The Board determined that each member of the Special Litigation Committee is disinterested and independent with respect to the Potential Derivative Litigation. Among other things, the Special Litigation Committee has the power to retain counsel and advisors, as appropriate, to assist it in the investigation, to gather and review relevant documents relating to the claims, to interview persons who may have knowledge of the relevant information, to prepare a report setting forth its conclusions and recommended course of action with respect to the Potential Derivative Litigation, and to take any actions, including, without limitation, directing the filing and prosecution of litigation on behalf of the Company, as the Special Litigation Committee in its sole discretion deems to be in the best interests of the Company in connection with the Potential Derivative Litigation. The Special Litigation Committee’s findings and determinations shall be final and not subject to review by the Board and in all respects shall be binding upon the Company. As disclosed in a Current Report on Form 8-K filed on March 16, 2018, the Fort Worth, Texas Regional Office of the SEC has opened a formal investigation of issues relating to the Restatement, with which the Company is cooperating fully. At this time, the Company is unable to predict the duration, scope, result or related costs associated with the SEC’s investigation. The Company is also unable to predict what, if any, action may be taken by the SEC, or what penalties or remedial actions the SEC may seek. Any determination by the SEC that the Company’s activities were not in compliance with existing laws or regulations, however, could result in the imposition of fines, penalties, disgorgement, equitable relief, or other losses, which could have a material adverse effect on the Company’s financial position, liquidity, or results of operations. On May 31, 2018, the Company was served with a subpoena issued by a grand jury sitting in the United States District Court for the Western District of Texas (the “Grand Jury Subpoena”). The Grand Jury Subpoena requests all documents and emails relating to the Company’s investigation of the potential improper recognition of software license revenue. The Company intends to fully cooperate with the Grand Jury Subpoena and related investigation being conducted by the United States Attorney’s Office for the Western District of Texas (the “U.S. Attorney’s Investigation”). At this time, the Company is unable to predict the duration, scope, result or related costs of the U.S. Attorney’s Investigation. The Company is also unable to predict what, if any, further action may be taken in connection with the Grand Jury Subpoena and the U.S. Attorney’s Investigation, or what, if any, penalties, sanctions or remedial actions may be sought. Any determination by the U.S. Attorney’s office that the Company’s activities were not in compliance with existing laws or regulations, however, could result in the imposition of fines, penalties, disgorgement, equitable relief, or other losses, which could have a material adverse effect on the Company’s consolidated financial position, liquidity, or results of operations. |
13. Concentration of Business V
13. Concentration of Business Volume and Credit Risk | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | 13. Concentration of Business Volume and Credit Risk In order to leverage the resources of third parties, we make our products available for purchase by end users through third-party channel distributors even though those end users can also purchase those products directly from us. In the 2017 quarter and 2016 quarter, we earned approximately 14% and 17%, respectively, of our revenue from such sales through our largest, third-party channel distributor. During the 2017 nine months and 2016 nine months, we earned approximately 14% of our revenue from such sales through our largest, third-party channel distributor. As of September 30, 2017, approximately 15% of our accounts receivable were due from this channel distributor with payment for substantially all such amounts having been received subsequent to that date. |
14. Segment and Geographic Disc
14. Segment and Geographic Disclosures | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | 14. Segment and Geographic Disclosures In accordance with FASB ASC Topic 280, Segment Reporting, we view our operations and manage our business as principally one segment. As a result, the financial information disclosed herein represents all of the material financial information related to our principal operating segment. Revenues derived from customers and partners located outside the United States accounted for approximately 30% and 17% of our total revenues in the 2017 and 2016 quarters, respectively, and 26% and 22% for the 2017 nine months and 2016 nine months respectively. Revenue derived from customers and partners in the United Kingdom were 13% of our revenue during the 2017 quarter. For the 2017 nine months, the 2016 nine months and the 2016 quarter, no individual foreign country accounted for 10% or more of total revenues. We attribute revenues to countries based on the country in which the customer or partner is located. None of our property and equipment was located in a foreign country as of September 30, 2017. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation The accompanying condensed consolidated financial statements are prepared in conformity with GAAP. All intercompany accounts and transactions have been eliminated. |
Reclassification, Policy [Policy Text Block] | Changes in Accounting Methods, Reclassifications and Revisions As part of our ongoing enhancement and refinement of our financial reporting to fairly present our results of operations and financial position, we may make changes from time-to-time in accounting methods and in the classification and presentation of our business activities in our financial statements. To ensure comparability between periods, we revise previous period financial statements presented to conform them to the method of presentation in our current period financial statements. If the changes increase or decrease previously reported amounts of revenue or expenses, we adjust retained earnings as of the beginning of the earliest period presented for the cumulative effect, if any, on that balance. If these changes affect our financial statements for previously reported interim periods not presented herein, we present revised financial statements for those periods when they are reported in the future. Method of Amortization of Deferred Revenue Related to M&S Contracts In previously issued financial statements for our fiscal years prior to 2016 and for the first three quarters of 2016, we amortized deferred revenue related to maintenance and support, or M&S, contracts by recording a full month of amortization in the first month of a contract. We used that method based on our intent to match revenue from our M&S contracts to the expense we incur when delivering M&S services. We acknowledge that the more common and widespread practice is to amortize deferred revenue based upon the specific number of days the M&S contract is in place during that month. Both methods result in the recognition of the same amount of revenue over the term of the M&S contract but yield differing amounts of revenue being recognized in the first month and last month of an M&S contract. Commencing with the issuance of our financial statements as of December 31, 2016, and for the year then ended, we changed our method of amortizing deferred revenue related to M&S contracts such that our condensed consolidated statements of operations and balance sheets included herein are now prepared using the specific number of days method. This change decreased M&S revenue and net income for the three months and nine months ended September 30, 2016, as reported herein by immaterial amounts relative to amounts previously reported for that period. This change increased deferred revenue as of September 30, 2016, by an immaterial amount relative to the amount previously reported as of that date. This change has no effect on the total amount of revenue we will realize from our M&S contracts. Method of Recording M&S Billings We may invoice a customer for M&S to be provided commencing on a date in a month subsequent to the month in which we invoice the customer. We typically receive a purchase order from our customers for M&S prior to invoicing them, and it is not uncommon for a customer to pay us in advance of that M&S commencement date either on their own or when we request such payment. Accordingly, in our consolidated balance sheets issued prior to 2016 and for the first three quarters of 2016, we recorded an account receivable and deferred revenue for these invoices as of the date of the invoice. Commencing with the preparation and issuance of our consolidated financial statements as of December 31, 2016, we determined that a reasonable, alternate and more conservative method would be to wait until the commencement date of the M&S contract had arrived to record the account receivable and deferred revenue for any such invoices for which we have not been paid as of the balance sheet date. This change had the effect of decreasing our reported amounts of accounts receivable and deferred revenue relative to the method we previously used but does not affect any of our reported amounts of revenue or net income. Reclassification of Sales Engineer Expenses We employ sales engineers who assist our sales staff in addressing technical considerations by our customers prior to their purchasing our product. Our use of sales engineers has expanded in recent quarters. Prior to 2016 and for the first three quarters of 2016, we classified the expense of sales engineers as part of costs of revenue – professional services. Commencing with the preparation and issuance of our financial statements as of December 31, 2016, we began classifying these expenses as part of sales and marketing expense to more appropriately present the current nature of the activities of our sales engineers. This change has the effect of decreasing cost of revenue – professional services and increasing sales and marketing expense. It does not affect any of our reported amounts of revenue or net income. Reclassification of Reserve for Uncertain Tax Position As described in Note 9, we maintain a reserve for uncertain tax positions. Prior to 2016 and for the first three quarters of 2016, we classified that reserve as a current liability since it was not material to our financial statements taken as a whole. Commencing with the preparation of our financial statements as of December 31, 2016, we determined it appropriate to classify it as a component of other long term liabilities. This change has the effect of decreasing current income taxes payable and increasing other long term liabilities. Reclassification of Professional Services Revenue In preparing our condensed consolidated statement of operations and comprehensive income for the 2017 quarter and 2017 nine months, we classified as professional services certain revenue that had been previously reported as M&S revenue for 2016. We made that change to better reflect the nature of that revenue. We have made the same reclassification in our condensed consolidated statement of operations and comprehensive income for the 2016 quarter and 2016 nine months presented herein. |
Adjustments to Financial Statements, Policy [Policy Text Block] | Adjustments Related to the Audit Committee Investigation and Audit of 2016 Financial Statements The Company has concluded that its previously issued consolidated financial statements for the year ended December 31, 2016 should be restated due to misstatements related to certain revenue transactions incorrectly recognized during the year ended December 31, 2016 as well as other transactions identified during the Audit Committee’s investigation and management’s analysis and for the changes in the Company’s accounting methods, reclassifications and revisions described above in this Note 3. The impact of all of the misstatements described above on the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2016 are as follows: Condensed Consolidated Balance Sheet (in thousands) As of September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Assets Current assets: Cash and cash equivalents $ 17,421 $ 17,421 Short term investments 3,303 3,303 Accounts receivable, net 8,870 (741 ) 8,129 Federal income tax receivable 104 (104 ) - Prepaid and other expenses 425 425 Total current assets 30,123 (845 ) 29,278 Long term investments Property and equipment, net 463 463 Capitalized software development costs, net 3,961 3,961 Goodwill 12,712 12,712 Deferred tax asset, net 976 976 Other assets 30 30 Total assets $ 48,265 $ (845 ) $ 47,420 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 622 (20 ) 602 Accrued expenses 1,841 (145 ) 1,696 Deferred revenue 13,005 219 13,224 Income taxes payable 517 (457 ) 60 Total current liabilities 15,985 (403 ) 15,582 Deferred revenue, non-current portion 3,688 126 3,814 Other long term liabilities 34 110 144 - Stockholders’ Equity: - Preferred stock - - Common stock 21 21 Additional paid-in capital 20,632 96 20,728 Treasury stock (1,452 ) (1,452 ) Retained earnings 9,357 (774 ) 8,583 Total stockholders’ equity 28,558 (678 ) 27,880 Total liabilities and stockholders’ equity $ 48,265 $ (845 ) $ 47,420 Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Three Months Ended September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Operating revenues: Software licenses $ 3,373 (51 ) $ 3,322 Maintenance and support 4,713 (76 ) 4,637 Professional services 667 35 702 Total revenues 8,753 (92 ) 8,661 Costs of revenues Software licenses 873 (11 ) 862 Maintenance and support 363 (1 ) 362 Professional services 534 (141 ) 393 Total costs of revenues 1,770 (153 ) 1,617 Gross Profit 6,983 61 7,044 Operating expenses Sales and marketing 2,759 121 2,880 General and administrative 1,638 (4 ) 1,634 Research and development 528 (9 ) 519 Total operating expenses 4,925 108 5,033 Income from operations 2,058 (47 ) 2,011 Interest income (expense), net 28 28 Income before income taxes 2,086 (47 ) 2,039 Income tax expense 687 18 705 Net income $ 1,399 $ (65 ) $ 1,334 Comprehensive income $ 1,399 $ (65 ) $ 1,334 Net income per common share - basic $ 0.07 $ (0.00 ) $ 0.06 Net income per common share - diluted $ 0.06 $ (0.00 ) $ 0.06 Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Nine Months Ended September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Operating revenues: Software licenses $ 8,565 (184 ) $ 8,381 Maintenance and support 13,843 (208 ) 13,635 Professional services 2,013 94 2,107 Total revenues 24,421 (298 ) 24,123 Costs of revenues Software licenses 2,303 (19 ) 2,284 Maintenance and support 1,145 (3 ) 1,142 Professional services 1,689 (420 ) 1,269 Total costs of revenues 5,137 (442 ) 4,695 Gross Profit 19,284 144 19,428 Operating expenses Sales and marketing 8,453 312 8,765 General and administrative 5,083 (37 ) 5,046 Research and development 1,727 23 1,750 Total operating expenses 15,263 298 15,561 Income from operations 4,021 (154 ) 3,867 Interest income (expense), net 88 88 Income before income taxes 4,109 (154 ) 3,955 Income tax expense 1,348 49 1,397 Net income $ 2,761 $ (203 ) $ 2,558 Comprehensive income $ 2,761 $ (203 ) $ 2,558 Net income per common share - basic $ 0.13 $ (0.01 ) $ 0.12 Net income per common share - diluted $ 0.13 $ (0.01 ) $ 0.12 Condensed Consolidated Statements of Cash Flows (in thousands) For the Nine Months Ended September 30, 2016 (unaudited) As Previously Reported Adjustments As Revised Operating Activities: Net income $ 2,761 (203 ) $ 2,558 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense 67 (9 ) 58 Depreciation and amortization 1,522 1,522 Share-based compensation 721 32 753 Deferred taxes (36 ) (36 ) Excess tax deficiency from exercise of share based compensation 5 5 Subtotal before changes in operating assets and liabilities 5,040 (180 ) 4,860 Changes in operating assets and liabilities: Accounts receivable (2,856 ) 607 (2,249 ) Prepaid expenses 86 86 Deferred revenues 1,081 (311 ) 770 Accounts payable (217 ) (20 ) (237 ) Accrued expenses (52 ) (145 ) (197 ) Other assets 30 30 Accrued interest receivable (49 ) (49 ) Other long-term liabilities (10 ) 20 10 Income tax receivable and payable 571 29 600 Net cash provided by (used in) operating activities 3,624 - 3,624 Investing Activities: Software development costs (1,298 ) (1,298 ) Purchase of property and equipment (168 ) (168 ) Net cash provided by (used in) investing activities (1,466 ) - (1,466 ) Financing Activities: Proceeds from exercise of stock options 333 333 Tax deficiency (benefit) from stock-based compensation (5 ) (5 ) Dividends paid (950 ) (950 ) Net cash provided by (used in) financing activities (622 ) - (622 ) Net increase (decrease) in cash 1,536 1,536 Cash at beginning of period 15,885 - 15,885 Cash at end of period $ 17,421 $ - $ 17,421 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income taxes $ 776 $ 776 |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition We develop, market and sell software products. We recognize revenue from a sale transaction when the following conditions are met: · Persuasive evidence of an arrangement exists. · Delivery has occurred or services have been rendered. · The amount of the sale is fixed or determinable. · Collection of the sale amount is reasonably assured. For a sale transaction not meeting any one of these four criteria, we defer recognition of revenue related to that transaction until all the criteria are met. We earn the majority of our software license revenue from software products sold under perpetual software license agreements. At the time our customers purchase these products, they typically also purchase an M&S contract. These transactions are multiple element software sales for which we assess the presence of vendor specific objective evidence (“VSOE”) of the fair value of the undelivered elements to determine the portion of these sales to recognize as revenue upon delivery of the software product and the portion of these sales to record as deferred revenue at the time the product is delivered. We amortize the deferred revenue component to revenue in future periods on a straight-line method as we deliver the related future services to the customer. For transactions, if any, for which we cannot establish VSOE of the fair value of the undelivered elements, we initially record the entire transaction as deferred revenue and amortize that amount to revenue in future periods as we deliver the related future services to the customer. We provide services under M&S contracts with terms generally ranging from one to three years. We require up-front payment of our M&S fee in an amount that covers the entire term of the agreement. We record deferred revenue at the commencement date of the contract or when we receive payment, whichever occurs first. We amortize the related deferred revenue over the term of the contract, based upon the specific number of days method. Deferred revenue related to services we will deliver within one year is presented as a current liability while deferred revenue related to services that we will deliver more than one year into the future is presented as a non-current liability. We reduce deferred revenue and recognize revenue ratably in future periods on a straight-line method as we deliver the M&S service. For our products licensed and delivered on a monthly or other periodic subscription or software-as-a-service, or SaaS basis, we recognize subscription revenue, including initial setup fees, on a monthly basis ratably over the contractual term of the customer contract as we deliver our products and services. Amounts paid prior to this revenue recognition are presented as deferred revenue until earned. We provide professional services to our customers consisting primarily of software installation support, operations support and training. We recognize revenue from these services as they are completed and accepted by our customers. We collect sales tax on many of our sales. We do not include sales tax collected in our revenue. We record it as a liability payable to taxing authorities. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and cash equivalents Cash and cash equivalents includes all cash and highly liquid investments with original maturities of three months or less. |
Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment Property and equipment is comprised of furniture and fixtures, software, computer equipment and leasehold improvements which are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Furniture, fixtures and equipment have a useful life of five to seven years, computer equipment and software have a useful life of three years and leasehold improvements have a useful life that is the shorter of the term of the lease under which the improvements were made or the estimated useful life of the asset. Expenditures for maintenance and repairs are expensed as incurred. |
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill Goodwill is not amortized. On at least an annual basis, we test goodwill for impairment at the reporting unit level using December 31 as the measurement date. We operate as a single reporting unit. When testing goodwill, we first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of our reporting unit is less than its carrying amount, including goodwill. In performing this qualitative assessment, we assess events and circumstances relevant to us including, but not limited to: • Macroeconomic conditions. • Industry and market considerations. • Cost factors and trends for labor and other expenses of operating our business. • Our overall financial performance and outlook for the future. • Trends in the quoted market value and trading of our common stock. In considering these and other factors, we consider the extent to which any adverse events and circumstances identified could affect the comparison of our reporting unit’s fair value with its carrying amount. We place more weight on events and circumstances that most affect our reporting unit’s fair value or the carrying amount of our net assets. We consider positive and mitigating events and circumstances that may affect our determination of whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. We evaluate, on the basis of the weight of the evidence, the significance of all identified events and circumstances in the context of determining whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If, after assessing the totality of these qualitative events and circumstances, we determine it is not more likely than not that the fair value of our reporting unit is less than its carrying amount, we conclude there is no impairment of goodwill and perform no further testing, in accordance with GAAP. If we conclude otherwise, we proceed with performing the first step, and if necessary, the second step, of the two-step goodwill impairment test prescribed by GAAP. As of December 31, 2016, after assessing the totality of the relevant events and circumstances, we determined it not more likely than not that the fair value of our reporting unit was less than its carrying amount. Accordingly, we concluded there was no impairment of goodwill as of that date. There have been no material events or changes in circumstances since that time indicating that the carrying amount of goodwill may exceed its fair market value and that interim testing needed to be performed. |
Research, Development, and Computer Software, Policy [Policy Text Block] | Capitalized Software Development Costs When we complete research and development for a software product and have in place a program plan and a detail program design or a working model of that software product, we capitalize production costs incurred for that software product from that point forward until it is ready for general release to the public. Thereafter, we amortize capitalized software production costs to expense using the straight-line method over the estimated useful life of that product, which is generally three years. We periodically assess the carrying value of capitalized software development costs and our method of amortizing them relative to our estimates of realizability through sales of products in the marketplace. |
Research and Development Expense, Policy [Policy Text Block] | Research and Development We expense research and development costs as incurred. |
Advertising Costs, Policy [Policy Text Block] | Advertising Expense We expense advertising costs as incurred as a component of our sales and marketing expenses. Advertising expense was approximately $480,277 and $480,315 in the 2017 quarter and the 2016 quarter, respectively, and $1,508,114 and $1,447,774 in the 2017 nine months and 2016 nine months, respectively. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Share-Based Compensation We measure the cost of share-based payment transactions at the grant date based on the calculated fair value of the award. We recognize this cost as an expense ratably over the recipient’s requisite service period during which that award vests or becomes unrestricted. For stock option awards, we estimate their fair value at the grant date using the Black-Scholes option-pricing model considering the following factors: • We estimate expected volatility based on historical volatility of our common stock. • We use primarily the simplified method to derive an expected term which represents an estimate of the time options are expected to remain outstanding. We use this method because our options are plain-vanilla options, and we believe our historical option exercise experience is not adequately indicative of our future expectations. • We base the risk-free rate for periods within the contractual life of the option on the U.S. treasury yield curve in effect at the time of grant. • We estimate a dividend yield based on our historical and expected future dividend payments. For restricted stock awards, we use the quoted price of our common stock on the grant date as the fair value of the award. |
Income Tax, Policy [Policy Text Block] | Income Taxes We account for income taxes using the asset and liability method. We record deferred tax assets and liabilities based on the difference between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes, as measured by the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets and liabilities are carried on the balance sheet with the presumption that they will be realizable in future periods in which we generate taxable income. We assess the likelihood that deferred tax assets will be realized from future taxable income. Based on this assessment, we provide any necessary valuation allowance on our balance sheet with a corresponding increase in the tax provision on our statement of operations. Any valuation allowances we establish are determined based upon a number of assumptions, judgments, and estimates, including forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic jurisdictions in which we operate. We account for uncertainty in income taxes using a two-step process to determine the amount of tax benefit to be recognized. First, we evaluate the tax position to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, we assess the tax position to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit we recognize is the largest amount that we believe has a greater than 50 percent likelihood of being realized upon ultimate settlement. Unrecognized tax benefits represent tax positions for which reserves have been established. |
Earnings Per Share, Policy [Policy Text Block] | Earnings Per Share We compute basic earnings per share using the weighted-average number of common shares outstanding during the periods. We compute diluted earnings per share using the weighted-average number of common shares outstanding plus the number of common shares that would be issued assuming conversion of all potentially dilutive common shares outstanding. Awards of non-vested restricted stock and options are considered potentially dilutive common shares for the purpose of computing earnings per common share. We apply the treasury stock method to non-vested options under which the assumed proceeds include the amount the employee must pay to exercise the option plus the amount of unrecognized cost attributable to future periods less any expected tax benefits. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent accounting pronouncements The Financial Accounting Standards Board, or FASB, has issued the Accounting Standard Updates (ASU) described below that we believe may be relevant to our business and to the preparation of our financial statements. ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (issued September 2017) ASU 2017-04, Intangibles – Goodwill and Other (issued January 2017) - ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments (issued June 2016) - ASU 2016-13, Financial Instruments – Credit Losses (issued June 2016) ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (issued March 2016) – This standard also permits an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures may be either estimated (as has been the requirement in the past) or recognized when they occur. We elected to continue estimating forfeitures consistent with our existing practices thereby resulting in no change to our application of GAAP for this aspect of computing share-based compensation. ASU 2016-02, Leases (issued February 2016) - ASU 2015-17, Income Tax: Balance Sheet Classification of Deferred Taxes (issued November 2015) ASU 2014-09, Revenue from Contracts with Customers (issued May 2014) We have assessed the effect of ASU 2014-09 on the amount and timing of revenue we expect to recognize from our business activities in 2018 and later. We do not expect there to be material differences in the amount and timing of revenue we recognize from similar business activities in future periods determined by applying ASU 2014-09 as compared to revenue we would have otherwise recognized by applying GAAP as it existed prior to 2018. We have determined that the application of ASU 2014-09 will have a material effect on the timing of our recording of expenses resulting from the incremental costs we incur to obtain a contract with a customer to deliver goods and services. These incremental costs consist primarily of sales commissions paid to our sales people and royalties on certain of our products paid to third parties. For periods ended September 30, 2017, and earlier, we recorded the full amount of the sales commission and royalties paid on the full value of an M&S or SaaS contract as an expense on the inception date of the M&S contract. Under ASU 2014-09, we will account for such costs we incur in 2018 and later as follows: · If these costs are associated with products and services for which we recognize revenue at a point in time (primarily sales of perpetual software licenses and professional services), we will expense these costs in full at the time we recognize that revenue. · If these costs are associated with services for which we recognize revenue over time (primarily sales of M&S and SaaS subscriptions) for which we believe it is likely that the contract for those services will be renewed for additional terms in the future, provided we deem these costs to be recoverable, we will record these costs as deferred expense asset and amortize that cost to expense as follows: o For the portion of the cost that we determine benefits us primarily only over the term of the specific underlying contract currently in force (such as the term of an M&S contract), we will recognize expense ratably each month over that term. o For the portion of the cost that we determine benefits us over an overall customer relationship that is likely to span a period of time that is longer than an initial contract term (for example, an M&S contract renewed for multiple terms in the future), we will recognize expense ratably monthly over the estimated life of the customer relationship. Our application of ASU 2014-09 to incremental costs we incur to obtain a contract with a customer will result in us recording, as an asset as of January 1, 2018, a deferred expense of $1.2 million applicable to contracts with customers in effect as of that date. We previously reported this amount as an expense in our consolidated financial statements for periods ending on and before December 31, 2017. We estimate that we will amortize this amount to expense at the rate of approximately $186,000 per quarter beginning in 2018. The incremental costs we incur to obtain contracts with customers during 2018 and later years, and the amount of such costs we record as a deferred expense and amortize to expense in subsequent periods, will depend upon the nature and scope of our future business activities, the nature and mix of the products and services we sell, the compensation plans we have in place for our sales people, and the royalty arrangements we enter into with third parties. |
3. Significant Accounting Pol21
3. Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Reclassification Adjustments [Table Text Block] | The impact of all of the misstatements described above on the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2016 are as follows: As Previously Reported Adjustments As Revised Assets Current assets: Cash and cash equivalents $ 17,421 $ 17,421 Short term investments 3,303 3,303 Accounts receivable, net 8,870 (741 ) 8,129 Federal income tax receivable 104 (104 ) - Prepaid and other expenses 425 425 Total current assets 30,123 (845 ) 29,278 Long term investments Property and equipment, net 463 463 Capitalized software development costs, net 3,961 3,961 Goodwill 12,712 12,712 Deferred tax asset, net 976 976 Other assets 30 30 Total assets $ 48,265 $ (845 ) $ 47,420 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 622 (20 ) 602 Accrued expenses 1,841 (145 ) 1,696 Deferred revenue 13,005 219 13,224 Income taxes payable 517 (457 ) 60 Total current liabilities 15,985 (403 ) 15,582 Deferred revenue, non-current portion 3,688 126 3,814 Other long term liabilities 34 110 144 - Stockholders’ Equity: - Preferred stock - - Common stock 21 21 Additional paid-in capital 20,632 96 20,728 Treasury stock (1,452 ) (1,452 ) Retained earnings 9,357 (774 ) 8,583 Total stockholders’ equity 28,558 (678 ) 27,880 Total liabilities and stockholders’ equity $ 48,265 $ (845 ) $ 47,420 As Previously Reported Adjustments As Revised Operating revenues: Software licenses $ 3,373 (51 ) $ 3,322 Maintenance and support 4,713 (76 ) 4,637 Professional services 667 35 702 Total revenues 8,753 (92 ) 8,661 Costs of revenues Software licenses 873 (11 ) 862 Maintenance and support 363 (1 ) 362 Professional services 534 (141 ) 393 Total costs of revenues 1,770 (153 ) 1,617 Gross Profit 6,983 61 7,044 Operating expenses Sales and marketing 2,759 121 2,880 General and administrative 1,638 (4 ) 1,634 Research and development 528 (9 ) 519 Total operating expenses 4,925 108 5,033 Income from operations 2,058 (47 ) 2,011 Interest income (expense), net 28 28 Income before income taxes 2,086 (47 ) 2,039 Income tax expense 687 18 705 Net income $ 1,399 $ (65 ) $ 1,334 Comprehensive income $ 1,399 $ (65 ) $ 1,334 Net income per common share - basic $ 0.07 $ (0.00 ) $ 0.06 Net income per common share - diluted $ 0.06 $ (0.00 ) $ 0.06 As Previously Reported Adjustments As Revised Operating revenues: Software licenses $ 8,565 (184 ) $ 8,381 Maintenance and support 13,843 (208 ) 13,635 Professional services 2,013 94 2,107 Total revenues 24,421 (298 ) 24,123 Costs of revenues Software licenses 2,303 (19 ) 2,284 Maintenance and support 1,145 (3 ) 1,142 Professional services 1,689 (420 ) 1,269 Total costs of revenues 5,137 (442 ) 4,695 Gross Profit 19,284 144 19,428 Operating expenses Sales and marketing 8,453 312 8,765 General and administrative 5,083 (37 ) 5,046 Research and development 1,727 23 1,750 Total operating expenses 15,263 298 15,561 Income from operations 4,021 (154 ) 3,867 Interest income (expense), net 88 88 Income before income taxes 4,109 (154 ) 3,955 Income tax expense 1,348 49 1,397 Net income $ 2,761 $ (203 ) $ 2,558 Comprehensive income $ 2,761 $ (203 ) $ 2,558 Net income per common share - basic $ 0.13 $ (0.01 ) $ 0.12 Net income per common share - diluted $ 0.13 $ (0.01 ) $ 0.12 As Previously Reported Adjustments As Revised Operating Activities: Net income $ 2,761 (203 ) $ 2,558 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense 67 (9 ) 58 Depreciation and amortization 1,522 1,522 Share-based compensation 721 32 753 Deferred taxes (36 ) (36 ) Excess tax deficiency from exercise of share based compensation 5 5 Subtotal before changes in operating assets and liabilities 5,040 (180 ) 4,860 Changes in operating assets and liabilities: Accounts receivable (2,856 ) 607 (2,249 ) Prepaid expenses 86 86 Deferred revenues 1,081 (311 ) 770 Accounts payable (217 ) (20 ) (237 ) Accrued expenses (52 ) (145 ) (197 ) Other assets 30 30 Accrued interest receivable (49 ) (49 ) Other long-term liabilities (10 ) 20 10 Income tax receivable and payable 571 29 600 Net cash provided by (used in) operating activities 3,624 - 3,624 Investing Activities: Software development costs (1,298 ) (1,298 ) Purchase of property and equipment (168 ) (168 ) Net cash provided by (used in) investing activities (1,466 ) - (1,466 ) Financing Activities: Proceeds from exercise of stock options 333 333 Tax deficiency (benefit) from stock-based compensation (5 ) (5 ) Dividends paid (950 ) (950 ) Net cash provided by (used in) financing activities (622 ) - (622 ) Net increase (decrease) in cash 1,536 1,536 Cash at beginning of period 15,885 - 15,885 Cash at end of period $ 17,421 $ - $ 17,421 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income taxes $ 776 $ 776 |
5. Accounts Receivable, Net (Ta
5. Accounts Receivable, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | Accordingly, we determine our accounts receivable, net, as follows ($ in thousands): September 30, 2017 December 31, 2016 Total invoices issued and unpaid $ 5,111 $ 6,932 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (358 ) (381 ) Gross accounts receivable 4,753 6,551 Allowance for sales returns and doubtful accounts (278 ) (263 ) Accounts receivable, net $ 4,475 $ 6,288 |
6. Capitalized Software Devel23
6. Capitalized Software Development Costs, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | Our capitalized software development costs balances and activities were as follows ($ in thousands): September 30, December 31, 2017 2016 Gross capitalized cost $ 8,716 $ 7,252 Accumulated amortization (4,913 ) (3,509 ) Capitalized software development costs, net $ 3,803 $ 3,743 |
Finite-lived Intangible Assets Amortization Expense [Table Text Block] | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Amount capitalized $ 527 $ 452 $ 1,464 $ 1,298 Amortization expense 484 450 1,404 1,319 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | Released Unreleased Products Products Gross capitalized amount at September 30, 2017 $ 7,866 $ 850 Accumulated amortization (4,913 ) - Net $ 2,953 $ 850 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Future amortization expense: Three months ending December 31, 2017 465 Year ending December 31, 2018 1,421 2019 781 2020 286 Total $ 2,953 |
7. Deferred Revenue (Tables)
7. Deferred Revenue (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue, by Arrangement, Disclosure [Table Text Block] | Accordingly, we determine our deferred revenue as follows ($ in thousands): September 30, 2017 December 31, 2016 Total invoiced for M&S contracts for which revenue will be recognized in future periods $ 16,277 $ 17,826 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (358 ) (381 ) Total deferred revenue $ 15,919 $ 17,445 Deferred revenue, current portion $ 12,012 $ 13,655 Deferred revenue, non-current portion 3,907 3,790 Total deferred revenue $ 15,919 $ 17,445 |
8. Stock Options, Restricted 25
8. Stock Options, Restricted Stock and Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block] | Our share-based compensation expense was as follows ($ in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Share-based compensation expense $ 381 $ 231 $ 1,053 $ 753 |
Share-based Compensation, Stock Options, Activity [Table Text Block] | Our stock option activity has been as follows: Weighted Average Weighted Average Aggregate Exercise Remaining Intrinsic Number of Price Contractual Value Shares Per Share Term in Years (000’s) Outstanding at December 31, 2016 2,407,005 $ 3.00 7.19 $ 2,574 Granted 935,000 $ 3.98 Forfeited (394,990 ) $ 3.73 Exercised (195,800 ) $ 2.41 Outstanding at September 30, 2017 2,751,215 $ 3.27 6.60 $ 1,756 Exercisable at September 30, 2017 1,197,204 $ 2.65 3.64 $ 1,445 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block] | Additional information about our stock options is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average fair value of options granted $ 1.94 $ 1.59 $ 1.67 $ 1.65 Intrinsic value of options exercised $ 9,284 $ 78,607 $ 351,893 $ 261,061 Cash received from stock options exercised $ 13,440 $ 70,320 $ 471,789 $ 333,329 Number of options that vested 28,570 42,390 430,724 308,736 Fair value of options that vested $ 44,843 $ 48,374 $ 698,442 $ 469,423 Unrecognized compensation expense related to non-vested options at end of period $ 1,994,289 $ 1,671,434 $ 1,994,289 $ 1,671,434 Weighted average years over which non-vested option expense will be recognized 2.11 2.27 2.11 2.27 |
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] | As of September 30, 2017 Options Outstanding Options Exercisable Weighted Average Weighted Weighted Underlying Remaining Average Number of Average Range of Shares Contractual Exercise Underlying Exercise Exercise Prices Outstanding Life Price Shares Price $ 0.85 - $1.43 74,100 2.00 $ 1.09 74,100 $ 1.09 $ 1.47 - $2.32 450,245 2.17 $ 1.83 448,885 $ 1.83 $ 2.34 - $3.52 936,580 6.68 $ 3.27 466,999 $ 3.13 $ 3.53 - $5.30 1,283,290 8.35 $ 3.90 207,220 $ 3.92 $ 5.44 - $5.44 7,000 9.80 $ 5.44 - $ - Total options 2,751,215 1,197,204 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | We used the following assumptions to determine compensation expense for our stock options using the Black-Scholes option-pricing model: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Expected volatility 50 % 53 % 49 % 56 % Expected annual dividend yield 1.50 % 1.50 % 1.50 % 1.50 % Risk free rate of return 1.95 % 1.18 % 1.94 % 1.46 % Expected option term (years) 6.00 6.00 6.00 6.00 |
Nonvested Restricted Stock Shares Activity [Table Text Block] | Our restricted stock awards activity has been as follows: Total Grant Date Fair Value of Number of Fair Value Shares That Shares Per Share Vested Restricted shares outstanding at December 31, 2016 80,000 $ 3.31 Shares granted with restrictions 80,000 $ 4.24 Shares vested and restrictions removed (80,000 ) $ 3.31 $ 320,000 Restricted shares outstanding at September 30, 2017 80,000 $ 4.24 Unrecognized compensation expense for non-vested shares as of September 30, 2017 Expense to be recognized in future periods $ 205,744 Weighted average number of months over which expense is expected to be recognized 7.3 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | The components of our income tax expense (benefit) are as follows ($ in thousands): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Current Deferred Total Current Deferred Total Current Deferred Total Current Deferred Total Federal $ 29 $ 146 $ 175 $ 715 $ (78 ) $ 637 $ 733 $ 33 $ 766 $ 1,300 $ (21 ) $ 1,279 State 10 9 19 72 (4 ) 68 109 (5 ) 104 133 (15 ) $ 118 Total $ 39 $ 155 $ 194 $ 787 $ (82 ) $ 705 $ 842 $ 28 $ 870 $ 1,433 $ (36 ) $ 1,397 |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | Significant components of our deferred tax assets and liabilities are as follows ($ in thousands): September 30 December 31, 2017 2016 Deferred tax assets: Deferred revenue $ 1,094 $ 1,229 Capital loss carryforward 1,099 1,099 Share-based compensation 619 578 Compensation and benefits 284 278 Texas franchise tax R&D credit 168 153 Allowance for doubtful accounts 94 114 Net operating loss carryforward 47 91 Prepaid expenses not deductible 136 - Accrued expenses not deductible 64 56 Less Valuation Allowances: Capital loss carryforward (1,099 ) (1,099 ) Texas franchise tax R&D credit (168 ) (153 ) Total deferred tax assets 2,338 2,346 Deferred tax liabilities: Intangible assets 1,310 1,289 Depreciation 6 7 Total gross deferred tax liabilities 1,316 1,296 Net deferred tax assets $ 1,022 $ 1,050 |
Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block] | The aggregate changes in the balance of our gross unrecognized tax benefits were as follows ($ in thousands): Nine Months Ended September, 2017 2016 Balance at beginning of period $ 121 $ 90 Increases for tax positions related to the current year 16 9 Increases for tax positions related to prior years 16 11 Balance at end of period $ 153 $ 110 |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | Our income tax expense (benefit) reconciles to an income tax expense resulting from applying an assumed statutory federal income rate of 34% to income before income taxes as follows ($ in thousands): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Income tax expense (benefit) at federal statutory rate $ 160 $ 693 $ 828 $ 1,345 Increase (decrease) in taxes resulting from: State taxes, net of federal benefit 16 52 67 97 Stock based compensation 37 25 121 60 Other 7 5 19 37 R&D tax credit uncertain tax position (net) 6 10 32 20 Research and development credit (30 ) (55 ) (177 ) (119 ) Domestic production activities deduction (2 ) (25 ) (20 ) (43 ) Income tax expense (benefit) per the statements of operations $ 194 $ 705 $ 870 $ 1,397 |
10. Earnings per Common Share (
10. Earnings per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Earnings per share for the periods indicated were as follows ($ in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerators Numerator for basic and diluted earnings per share: Net income $ 276 $ 1,334 $ 1,564 $ 2,558 Denominators Denominators for basic and diluted earnings per share: Weighted average shares outstanding - basic 21,792 21,122 21,672 21,061 Dilutive potential common shares Stock options and awards 455 552 473 579 Denominator for diluted earnings per share 22,247 21,674 22,145 21,640 Net income per common share - basic $ 0.01 $ 0.06 $ 0.07 $ 0.12 Net income per common share – diluted $ 0.01 $ 0.06 $ 0.07 $ 0.12 |
11. Dividends (Tables)
11. Dividends (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Dividends [Abstract] | |
Schedule of Dividends Payable [Table Text Block] | We paid dividends as follows: Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 Three Months Ended June 30, 2017 Three Months Ended June 30, 2016 Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Dividend per share of common stock $ 0.015 $ 0.015 $ 0.015 $ 0.015 $ 0.015 $ 0.015 Dividend record date February 23, 2017 February 23, 2016 May 23, 2017 May 23, 2016 August 23, 2017 August 23, 2016 Dividend payment date March 8, 2017 March 8, 2016 June 8, 2017 June 8, 2016 September 8, 2017 September 8, 2016 |
3. Significant Accounting Pol29
3. Significant Accounting Policies (Details) - USD ($) | Jan. 01, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Goodwill, Impairment Loss | $ 0 | |||||
Advertising Expense | $ 480,277 | $ 480,315 | $ 1,508,114 | $ 1,447,774 | ||
Probability of occurrence of event | 50.00% | |||||
Contract With Customer, Deferred Expense | $ 1,200,000 | |||||
Contract With Customer, Amortization Expense | $ 186,000 | |||||
Furniture and Fixtures [Member] | Minimum [Member] | ||||||
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||
Furniture and Fixtures [Member] | Maximum [Member] | ||||||
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||
Computer Equipment [Member] | ||||||
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||
Software and Software Development Costs [Member] | ||||||
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Finite-Lived Intangible Asset, Useful Life | 3 years |
3. Significant Accounting Pol
3. Significant Accounting Policies (Details) - Schedule of Reclassification Adjustments - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | |
Current assets: | |||||||
Cash and cash equivalents | $ 11,447,000 | $ 17,421,000 | $ 11,447,000 | $ 15,885,000 | $ 11,447,000 | $ 8,895,000 | $ 17,421,000 |
Short term investments | 2,768,000 | 2,754,000 | 3,303,000 | ||||
Accounts receivable, net | 4,475,000 | 6,288,000 | 8,129,000 | ||||
Federal income tax receivable | 1,051,000 | 292,000 | |||||
Prepaid and other expenses | 368,000 | 531,000 | 425,000 | ||||
Total current assets | 20,109,000 | 18,760,000 | 29,278,000 | ||||
Property and equipment, net | 505,000 | 456,000 | 463,000 | ||||
Capitalized software development costs, net | 3,803,000 | 3,743,000 | 3,961,000 | ||||
Goodwill | 12,712,000 | 12,712,000 | 12,712,000 | ||||
Deferred tax asset, net | 976,000 | ||||||
Other assets | 91,000 | 245,000 | 30,000 | ||||
Total assets | 51,202,000 | 49,745,000 | 47,420,000 | ||||
Current liabilities: | |||||||
Accounts payable | 1,378,000 | 930,000 | 602,000 | ||||
Accrued expenses | 2,007,000 | 1,603,000 | 1,696,000 | ||||
Deferred revenue | 12,012,000 | 13,655,000 | 13,224,000 | ||||
Income taxes payable | 60,000 | ||||||
Total current liabilities | 15,397,000 | 16,188,000 | 15,582,000 | ||||
Deferred revenue, non-current portion | 3,907,000 | 3,790,000 | 3,814,000 | ||||
Other long term liabilities | 174,000 | 152,000 | 144,000 | ||||
Common stock | 22,000 | 22,000 | 21,000 | ||||
Additional paid-in capital | 23,280,000 | 21,756,000 | 20,728,000 | ||||
Treasury stock | (1,452,000) | (1,452,000) | (1,452,000) | ||||
Retained earnings | 9,874,000 | 9,289,000 | 8,583,000 | ||||
Total stockholders’ equity | 31,724,000 | 29,615,000 | 27,880,000 | ||||
Total liabilities and stockholders’ equity | $ 51,202,000 | $ 49,745,000 | 47,420,000 | ||||
Operating revenues: | |||||||
Software licenses | 2,488,000 | 3,322,000 | 7,768,000 | 8,381,000 | |||
Maintenance and support | 5,360,000 | 4,637,000 | 15,702,000 | 13,635,000 | |||
Professional services | 368,000 | 702,000 | 1,652,000 | 2,107,000 | |||
Total Revenues | 8,216,000 | 8,661,000 | 25,122,000 | 24,123,000 | |||
Costs of revenues | |||||||
Software licenses | 725,000 | 862,000 | 2,234,000 | 2,284,000 | |||
Maintenance and support | 446,000 | 362,000 | 1,283,000 | 1,142,000 | |||
Professional services | 402,000 | 393,000 | 1,120,000 | 1,269,000 | |||
Total cost of revenues | 1,573,000 | 1,617,000 | 4,637,000 | 4,695,000 | |||
Gross profit | 6,643,000 | 7,044,000 | 20,485,000 | 19,428,000 | |||
Operating expenses | |||||||
Sales and marketing | 3,079,000 | 2,880,000 | 9,564,000 | 8,765,000 | |||
General and administrative | 2,575,000 | 1,634,000 | 6,178,000 | 5,046,000 | |||
Research and development | 594,000 | 519,000 | 2,530,000 | 1,750,000 | |||
Total operating expenses | 6,248,000 | 5,033,000 | 18,272,000 | 15,561,000 | |||
Income from operations | 395,000 | 2,011,000 | 2,213,000 | 3,867,000 | |||
Interest income (expense), net | 75,000 | 28,000 | 221,000 | 88,000 | |||
Income before income taxes | 470,000 | 2,039,000 | 2,434,000 | 3,955,000 | |||
Income tax expense | 194,000 | 705,000 | 870,000 | 1,397,000 | |||
Net income | 276,000 | 1,334,000 | 1,564,000 | 2,558,000 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Bad debt expense | 15,000 | 58,000 | |||||
Depreciation and amortization | 1,604,000 | 1,522,000 | |||||
Stock-based compensation | 381,000 | 231,000 | 1,053,000 | 753,000 | |||
Deferred taxes | 155,000 | (82,000) | 28,000 | (36,000) | |||
Excess tax deficiency from exercise of share based compensation | 0 | 5,000 | |||||
Subtotal before changes in operating assets and liabilities | 4,264,000 | 4,860,000 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 1,798,000 | (2,249,000) | |||||
Prepaid expenses | 163,000 | 86,000 | |||||
Deferred revenues | (1,526,000) | 770,000 | |||||
Accounts payable | 448,000 | (237,000) | |||||
Accrued expenses | 404,000 | (197,000) | |||||
Other assets | 154,000 | 30,000 | |||||
Accrued interest receivable | (195,000) | (49,000) | |||||
Other long-term liabilities | 22,000 | 10,000 | |||||
Income tax receivable and payable | (759,000) | 600,000 | |||||
Comprehensive income | $ 276,000 | $ 1,334,000 | $ 1,564,000 | $ 2,558,000 | |||
Net income per common share - basic (in Dollars per share) | $ 0.01 | $ 0.06 | $ 0.07 | $ 0.12 | |||
Net income per common share - diluted (in Dollars per share) | $ 0.01 | $ 0.06 | $ 0.07 | $ 0.12 | |||
Net income | $ 276,000 | $ 1,334,000 | $ 1,564,000 | $ 2,558,000 | |||
Net cash provided by operating activities | 4,773,000 | 3,624,000 | |||||
Investing Activities: | |||||||
Software development costs | (1,464,000) | (1,298,000) | |||||
Purchase of property and equipment | (249,000) | (168,000) | |||||
Net cash (used in) investing activities | (1,713,000) | (1,466,000) | |||||
Financing Activities: | |||||||
Proceeds from exercise of stock options | 13,440 | 70,320 | 471,789 | 333,329 | |||
Tax deficiency (benefit) from stock-based compensation | 0 | (5,000) | |||||
Dividends paid | (979,000) | (950,000) | |||||
Net cash (used in) financing activities | (508,000) | (622,000) | |||||
Net increase in cash | 2,552,000 | 1,536,000 | |||||
Cash at beginning of period | 8,895,000 | 15,885,000 | |||||
Cash at end of period | $ 11,447,000 | 17,421,000 | 11,447,000 | 17,421,000 | |||
Income taxes | $ 1,616,000 | 776,000 | |||||
Scenario, Previously Reported [Member] | |||||||
Current assets: | |||||||
Cash and cash equivalents | 17,421,000 | 17,421,000 | 17,421,000 | ||||
Short term investments | 3,303,000 | ||||||
Accounts receivable, net | 8,870,000 | ||||||
Federal income tax receivable | 104,000 | ||||||
Prepaid and other expenses | 425,000 | ||||||
Total current assets | 30,123,000 | ||||||
Property and equipment, net | 463,000 | ||||||
Capitalized software development costs, net | 3,961,000 | ||||||
Goodwill | 12,712,000 | ||||||
Deferred tax asset, net | 976,000 | ||||||
Other assets | 30,000 | ||||||
Total assets | 48,265,000 | ||||||
Current liabilities: | |||||||
Accounts payable | 622,000 | ||||||
Accrued expenses | 1,841,000 | ||||||
Deferred revenue | 13,005,000 | ||||||
Income taxes payable | 517,000 | ||||||
Total current liabilities | 15,985,000 | ||||||
Deferred revenue, non-current portion | 3,688,000 | ||||||
Other long term liabilities | 34,000 | ||||||
Common stock | 21,000 | ||||||
Additional paid-in capital | 20,632,000 | ||||||
Treasury stock | (1,452,000) | ||||||
Retained earnings | 9,357,000 | ||||||
Total stockholders’ equity | 28,558,000 | ||||||
Total liabilities and stockholders’ equity | 48,265,000 | ||||||
Operating revenues: | |||||||
Software licenses | 3,373,000 | 8,565,000 | |||||
Maintenance and support | 4,713,000 | 13,843,000 | |||||
Professional services | 667,000 | 2,013,000 | |||||
Total Revenues | 8,753,000 | 24,421,000 | |||||
Costs of revenues | |||||||
Software licenses | 873,000 | 2,303,000 | |||||
Maintenance and support | 363,000 | 1,145,000 | |||||
Professional services | 534,000 | 1,689,000 | |||||
Total cost of revenues | 1,770,000 | 5,137,000 | |||||
Gross profit | 6,983,000 | 19,284,000 | |||||
Operating expenses | |||||||
Sales and marketing | 2,759,000 | 8,453,000 | |||||
General and administrative | 1,638,000 | 5,083,000 | |||||
Research and development | 528,000 | 1,727,000 | |||||
Total operating expenses | 4,925,000 | 15,263,000 | |||||
Income from operations | 2,058,000 | 4,021,000 | |||||
Interest income (expense), net | 28,000 | 88,000 | |||||
Income before income taxes | 2,086,000 | 4,109,000 | |||||
Income tax expense | 687,000 | 1,348,000 | |||||
Net income | 1,399,000 | 2,761,000 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Bad debt expense | 67,000 | ||||||
Depreciation and amortization | 1,522,000 | ||||||
Stock-based compensation | 721,000 | ||||||
Deferred taxes | (36,000) | ||||||
Excess tax deficiency from exercise of share based compensation | 5,000 | ||||||
Subtotal before changes in operating assets and liabilities | 5,040,000 | ||||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (2,856,000) | ||||||
Prepaid expenses | 86,000 | ||||||
Deferred revenues | 1,081,000 | ||||||
Accounts payable | (217,000) | ||||||
Accrued expenses | (52,000) | ||||||
Other assets | 30,000 | ||||||
Accrued interest receivable | (49,000) | ||||||
Other long-term liabilities | (10,000) | ||||||
Income tax receivable and payable | 571,000 | ||||||
Comprehensive income | $ 1,399,000 | $ 2,761,000 | |||||
Net income per common share - basic (in Dollars per share) | $ 0.07 | $ 0.13 | |||||
Net income per common share - diluted (in Dollars per share) | $ 0.06 | $ 0.13 | |||||
Net income | $ 1,399,000 | $ 2,761,000 | |||||
Net cash provided by operating activities | 3,624,000 | ||||||
Investing Activities: | |||||||
Software development costs | (1,298,000) | ||||||
Purchase of property and equipment | (168,000) | ||||||
Net cash (used in) investing activities | (1,466,000) | ||||||
Financing Activities: | |||||||
Proceeds from exercise of stock options | 333,000 | ||||||
Tax deficiency (benefit) from stock-based compensation | (5,000) | ||||||
Dividends paid | (950,000) | ||||||
Net cash (used in) financing activities | (622,000) | ||||||
Net increase in cash | 1,536,000 | ||||||
Cash at beginning of period | 15,885,000 | ||||||
Cash at end of period | 17,421,000 | 17,421,000 | |||||
Income taxes | 776,000 | ||||||
Restatement Adjustment [Member] | |||||||
Current assets: | |||||||
Accounts receivable, net | (741,000) | ||||||
Federal income tax receivable | (104,000) | ||||||
Total current assets | (845,000) | ||||||
Total assets | (845,000) | ||||||
Current liabilities: | |||||||
Accounts payable | (20,000) | ||||||
Accrued expenses | (145,000) | ||||||
Deferred revenue | 219,000 | ||||||
Income taxes payable | (457,000) | ||||||
Total current liabilities | (403,000) | ||||||
Deferred revenue, non-current portion | 126,000 | ||||||
Other long term liabilities | 110,000 | ||||||
Additional paid-in capital | 96,000 | ||||||
Retained earnings | (774,000) | ||||||
Total stockholders’ equity | (678,000) | ||||||
Total liabilities and stockholders’ equity | $ (845,000) | ||||||
Operating revenues: | |||||||
Software licenses | (51,000) | (184,000) | |||||
Maintenance and support | (76,000) | (208,000) | |||||
Professional services | 35,000 | 94,000 | |||||
Total Revenues | (92,000) | (298,000) | |||||
Costs of revenues | |||||||
Software licenses | (11,000) | (19,000) | |||||
Maintenance and support | (1,000) | (3,000) | |||||
Professional services | (141,000) | (420,000) | |||||
Total cost of revenues | (153,000) | (442,000) | |||||
Gross profit | 61,000 | 144,000 | |||||
Operating expenses | |||||||
Sales and marketing | 121,000 | 312,000 | |||||
General and administrative | (4,000) | (37,000) | |||||
Research and development | (9,000) | 23,000 | |||||
Total operating expenses | 108,000 | 298,000 | |||||
Income from operations | (47,000) | (154,000) | |||||
Income before income taxes | (47,000) | (154,000) | |||||
Income tax expense | 18,000 | 49,000 | |||||
Net income | (65,000) | (203,000) | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Bad debt expense | (9,000) | ||||||
Stock-based compensation | 32,000 | ||||||
Subtotal before changes in operating assets and liabilities | (180,000) | ||||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 607,000 | ||||||
Deferred revenues | (311,000) | ||||||
Accounts payable | (20,000) | ||||||
Accrued expenses | (145,000) | ||||||
Other long-term liabilities | 20,000 | ||||||
Income tax receivable and payable | 29,000 | ||||||
Comprehensive income | $ (65,000) | $ (203,000) | |||||
Net income per common share - basic (in Dollars per share) | $ 0 | $ (0.01) | |||||
Net income per common share - diluted (in Dollars per share) | $ 0 | $ (0.01) | |||||
Net income | $ (65,000) | $ (203,000) |
5. Accounts Receivabl
5. Accounts Receivable, Net (Details) - Schedule of Accounts, Notes, Loans and Financing Receivable - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Schedule of Accounts, Notes, Loans and Financing Receivable [Abstract] | |||
Total invoices issued and unpaid | $ 5,111 | $ 6,932 | |
Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date | (358) | (381) | |
Gross accounts receivable | 4,753 | 6,551 | |
Allowance for sales returns and doubtful accounts | (278) | (263) | |
Accounts receivable, net | $ 4,475 | $ 6,288 | $ 8,129 |
6. Capitalized Softw
6. Capitalized Software Development Costs, Net (Details) - Schedule of Finite-Lived Intangible Assets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of Finite-Lived Intangible Assets [Abstract] | ||
Gross capitalized cost | $ 8,716 | $ 7,252 |
Accumulated amortization | (4,913) | (3,509) |
Capitalized software development costs, net | $ 3,803 | $ 3,743 |
6. Capitalized Sof33
6. Capitalized Software Development Costs, Net (Details) - Finite-lived Intangible Assets Amortization Expense - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Finite-lived Intangible Assets Amortization Expense [Abstract] | ||||
Amount capitalized | $ 527 | $ 452 | $ 1,464 | $ 1,298 |
Amortization expense | $ 484 | $ 450 | $ 1,404 | $ 1,319 |
6. Capitalized Sof34
6. Capitalized Software Development Costs, Net (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
6. Capitalized Software Development Costs, Net (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||
Gross capitalized amount at September 30, 2017 | $ 8,716 | $ 7,252 |
Accumulated amortization | (4,913) | (3,509) |
Net | 3,803 | $ 3,743 |
Released Products [Member] | Computer Software, Intangible Asset [Member] | ||
6. Capitalized Software Development Costs, Net (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||
Gross capitalized amount at September 30, 2017 | 7,866 | |
Accumulated amortization | (4,913) | |
Net | 2,953 | |
Unreleased Products [Member] | Computer Software, Intangible Asset [Member] | ||
6. Capitalized Software Development Costs, Net (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||
Gross capitalized amount at September 30, 2017 | 850 | |
Accumulated amortization | 0 | |
Net | $ 850 |
6. Capitalized Sof35
6. Capitalized Software Development Costs, Net (Details) - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense $ in Thousands | Sep. 30, 2017USD ($) |
Future amortization expense: | |
Three months ending December 31, 2017 | $ 465 |
Year ending December 31, | |
2,018 | 1,421 |
2,019 | 781 |
2,020 | 286 |
Total | $ 2,953 |
7. Deferred Revenue (D
7. Deferred Revenue (Details) - Schedule of Deferred Revenue, by Arrangement, Disclosure - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Schedule of Deferred Revenue, by Arrangement, Disclosure [Abstract] | |||
Total invoiced for M&S contracts for which revenue will be recognized in future periods | $ 16,277 | $ 17,826 | |
Less: Unpaid invoices relating to M&S agreements with a start date subsequent to the balance sheet date | (358) | (381) | |
Total deferred revenue | 15,919 | 17,445 | |
Deferred revenue, current portion | 12,012 | 13,655 | $ 13,224 |
Deferred revenue, non-current portion | $ 3,907 | $ 3,790 | $ 3,814 |
8. Stock Options, Restricted 37
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) | 9 Months Ended |
Sep. 30, 2017shares | |
Stock-Based Awards [Member] | |
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 5,000,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 4,187,000 |
Long-Term Equity Incentive Plans [Member] | Employee Stock Option [Member] | |
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years |
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 90 days |
2015 Directors Plan [Member] | |
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 1 year |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 500,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 260,000 |
8. Stock Options, Re
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Abstract] | ||||
Share-based compensation expense | $ 381 | $ 231 | $ 1,053 | $ 753 |
8. Stock Options, 39
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Compensation, Stock Options, Activity - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Schedule of Share-based Compensation, Stock Options, Activity [Abstract] | ||
Number of Shares, Outstanding | 2,407,005 | |
Weighted Average Exercise Price, Outstanding | $ 3 | |
Weighted Average Remaining Contractual Term, Outstanding | 6 years 219 days | 7 years 69 days |
Aggregate Intrinsic Value, Outstanding | $ 2,574 | |
Number of Shares, Exercisable | 1,197,204 | |
Weighted Average Exercise Price, Exercisable | $ 2.65 | |
Weighted Average Remaining Contractual Term, Exercisable | 3 years 233 days | |
Aggregate Intrinsic Value, Exercisable | $ 1,445 | |
Number of Shares, Granted | 935,000 | |
Weighted Average Exercise Price, Granted | $ 3.98 | |
Number of Shares, Forfeitures | (394,990) | |
Weighted Average Exercise Price, Forfeitures | $ 3.73 | |
Number of Shares, Exercised | (195,800) | |
Weighted Average Exercise Price, Exercised | $ 2.41 | |
Number of Shares, Outstanding | 2,751,215 | |
Weighted Average Exercise Price, Outstanding | $ 3.27 | |
Aggregate Intrinsic Value, Outstanding | $ 1,756 |
8. Stock Options, 40
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Abstract] | ||||
Weighted average fair value of options granted (in Dollars per share) | $ 1.94 | $ 1.59 | $ 1.67 | $ 1.65 |
Intrinsic value of options exercised | $ 9,284 | $ 78,607 | $ 351,893 | $ 261,061 |
Cash received from stock options exercised | $ 13,440 | $ 70,320 | $ 471,789 | $ 333,329 |
Number of options that vested (in Shares) | 28,570 | 42,390 | 430,724 | 308,736 |
Fair value of options that vested | $ 44,843 | $ 48,374 | $ 698,442 | $ 469,423 |
Unrecognized compensation expense related to non-vested options at end of period | $ 1,994,289 | $ 1,671,434 | $ 1,994,289 | $ 1,671,434 |
Weighted average years over which non-vested option expense will be recognized | 2 years 40 days | 2 years 98 days | 2 years 40 days | 2 years 98 days |
8. Stock Options, 41
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding, Underlying Shares Outstanding (in Shares) | shares | 2,751,215 |
Options Exercisable, Underlying Shares (in Shares) | shares | 1,197,204 |
$0.85 - $1.43 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, Lower Limit | $ 0.85 |
Range of Exercise Prices, Upper Limit | $ 1.43 |
Options Outstanding, Underlying Shares Outstanding (in Shares) | shares | 74,100 |
Options Outstanding, Weighted Average Remaining Contractual Life | 2 years |
Options Outstanding, Weighted Average Exercise Price | $ 1.09 |
Options Exercisable, Underlying Shares (in Shares) | shares | 74,100 |
Options Exercisable, Weighted Average Exercise Price | $ 1.09 |
$1.47 - $2.32 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, Lower Limit | 1.47 |
Range of Exercise Prices, Upper Limit | $ 2.32 |
Options Outstanding, Underlying Shares Outstanding (in Shares) | shares | 450,245 |
Options Outstanding, Weighted Average Remaining Contractual Life | 2 years 62 days |
Options Outstanding, Weighted Average Exercise Price | $ 1.83 |
Options Exercisable, Underlying Shares (in Shares) | shares | 448,885 |
Options Exercisable, Weighted Average Exercise Price | $ 1.83 |
$2.34 - $3.52 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, Lower Limit | 2.34 |
Range of Exercise Prices, Upper Limit | $ 3.52 |
Options Outstanding, Underlying Shares Outstanding (in Shares) | shares | 936,580 |
Options Outstanding, Weighted Average Remaining Contractual Life | 6 years 248 days |
Options Outstanding, Weighted Average Exercise Price | $ 3.27 |
Options Exercisable, Underlying Shares (in Shares) | shares | 466,999 |
Options Exercisable, Weighted Average Exercise Price | $ 3.13 |
$3.53 - $5.30 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, Lower Limit | 3.53 |
Range of Exercise Prices, Upper Limit | $ 5.30 |
Options Outstanding, Underlying Shares Outstanding (in Shares) | shares | 1,283,290 |
Options Outstanding, Weighted Average Remaining Contractual Life | 8 years 127 days |
Options Outstanding, Weighted Average Exercise Price | $ 3.90 |
Options Exercisable, Underlying Shares (in Shares) | shares | 207,220 |
Options Exercisable, Weighted Average Exercise Price | $ 3.92 |
$5.44 - $5.44 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices, Lower Limit | 5.44 |
Range of Exercise Prices, Upper Limit | $ 5.44 |
Options Outstanding, Underlying Shares Outstanding (in Shares) | shares | 7,000 |
Options Outstanding, Weighted Average Remaining Contractual Life | 9 years 292 days |
Options Outstanding, Weighted Average Exercise Price | $ 5.44 |
Options Exercisable, Underlying Shares (in Shares) | shares | 0 |
Options Exercisable, Weighted Average Exercise Price | $ 0 |
8. Stock Options, 42
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Abstract] | ||||
Expected volatility | 50.00% | 53.00% | 49.00% | 56.00% |
Expected annual dividend yield | 1.50% | 1.50% | 1.50% | 1.50% |
Risk free rate of return | 1.95% | 1.18% | 1.94% | 1.46% |
Expected option term (years) | 6 years | 6 years | 6 years | 6 years |
8. Stock Options, 43
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Nonvested Restricted Stock Shares Activity - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Unrecognized compensation expense for non-vested shares as of September 30, 2017 | ||||
Weighted average number of months over which expense is expected to be recognized | 2 years 40 days | 2 years 98 days | 2 years 40 days | 2 years 98 days |
Restricted Stock [Member] | ||||
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Nonvested Restricted Stock Shares Activity [Line Items] | ||||
Number of shares, restricted shares outstanding | 80,000 | |||
Grant date fair value per share, restricted shares outstanding | $ 3.31 | |||
Unrecognized compensation expense for non-vested shares as of September 30, 2017 | ||||
Expense to be recognized in future periods | $ 205,744 | $ 205,744 | ||
Weighted average number of months over which expense is expected to be recognized | 7 years 109 days | |||
Number of shares, shares granted with restrictions | 80,000 | |||
Grant date fair value per share, shares granted with restrictions | $ 4.24 | |||
Number of shares, shares vested and restrictions eliminated | (80,000) | |||
Grant date fair value per share, shares vested and restrictions eliminated | $ 3.31 | |||
Total fair value of shares that vested, shares vested and restrictions eliminated | $ 320,000 | |||
Number of shares, restricted shares outstanding | 80,000 | 80,000 | ||
Grant date fair value per share, restricted shares outstanding | $ 4.24 | $ 4.24 |
9. Income Taxes (Details)
9. Income Taxes (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
9. Income Taxes (Details) [Line Items] | ||||
Deferred Tax Assets, Capital Loss Carryforwards | $ 1,099,000 | $ 1,099,000 | ||
Unrecognized Tax Benefits | $ 153,000 | $ 110,000 | $ 121,000 | $ 90,000 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 34.00% | 34.00% | ||
Research Tax Credit Carryforward [Member] | ||||
9. Income Taxes (Details) [Line Items] | ||||
Tax Credit Carryforward, Amount | $ 168,000 | |||
Domestic Tax Authority [Member] | ||||
9. Income Taxes (Details) [Line Items] | ||||
Operating Loss Carryforwards | 137,000 | |||
Deferred Tax Assets, Capital Loss Carryforwards | $ 3,231,000 | |||
Minimum [Member] | Research Tax Credit Carryforward [Member] | ||||
9. Income Taxes (Details) [Line Items] | ||||
Franchise Tax Credit Carryforwards Expiration Date | 2,034 | |||
Minimum [Member] | Domestic Tax Authority [Member] | ||||
9. Income Taxes (Details) [Line Items] | ||||
Federal Net Operating Loss Carryforwards Expiration Year | 2,030 | |||
Maximum [Member] | Research Tax Credit Carryforward [Member] | ||||
9. Income Taxes (Details) [Line Items] | ||||
Franchise Tax Credit Carryforwards Expiration Date | 2,038 | |||
Maximum [Member] | Domestic Tax Authority [Member] | ||||
9. Income Taxes (Details) [Line Items] | ||||
Federal Net Operating Loss Carryforwards Expiration Year | 2,031 |
9. Income Taxes (De
9. Income Taxes (Details) - Schedule of Components of Income Tax Expense (Benefit) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Components of Income Tax Expense (Benefit) [Abstract] | ||||
Federal | $ 29 | $ 715 | $ 733 | $ 1,300 |
Federal | 146 | (78) | 33 | (21) |
Federal | 175 | 637 | 766 | 1,279 |
State | 10 | 72 | 109 | 133 |
State | 9 | (4) | (5) | (15) |
State | 19 | 68 | 104 | 118 |
Total | 39 | 787 | 842 | 1,433 |
Total | 155 | (82) | 28 | (36) |
Total | $ 194 | $ 705 | $ 870 | $ 1,397 |
9. Income Taxes (46
9. Income Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Deferred revenue | $ 1,094 | $ 1,229 |
Capital loss carryforward | 1,099 | 1,099 |
Share-based compensation | 619 | 578 |
Compensation and benefits | 284 | 278 |
Texas franchise tax R&D credit | 168 | 153 |
Allowance for doubtful accounts | 94 | 114 |
Net operating loss carryforward | 47 | 91 |
Prepaid expenses not deductible | 136 | 0 |
Accrued expenses not deductible | 64 | 56 |
Less Valuation Allowances: | ||
Capital loss carryforward | (1,099) | (1,099) |
Texas franchise tax R&D credit | (168) | (153) |
Total deferred tax assets | 2,338 | 2,346 |
Deferred tax liabilities: | ||
Intangible assets | 1,310 | 1,289 |
Depreciation | 6 | 7 |
Total gross deferred tax liabilities | 1,316 | 1,296 |
Net deferred tax assets | $ 1,022 | $ 1,050 |
9. Income Taxes (47
9. Income Taxes (Details) - Schedule of Unrecognized Tax Benefits Roll Forward - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Unrecognized Tax Benefits Roll Forward [Abstract] | ||
Balance at beginning of period | $ 121,000 | $ 90,000 |
Increases for tax positions related to the current year | 16,000 | 9,000 |
Increases for tax positions related to prior years | 16,000 | 11,000 |
Balance at end of period | $ 153,000 | $ 110,000 |
9. Income Taxes (48
9. Income Taxes (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||||
Income tax expense (benefit) at federal statutory rate | $ 160 | $ 693 | $ 828 | $ 1,345 |
Increase (decrease) in taxes resulting from: | ||||
State taxes, net of federal benefit | 16 | 52 | 67 | 97 |
Stock based compensation | 37 | 25 | 121 | 60 |
Other | 7 | 5 | 19 | 37 |
R&D tax credit uncertain tax position (net) | 6 | 10 | 32 | 20 |
Research and development credit | (30) | (55) | (177) | (119) |
Domestic production activities deduction | (2) | (25) | (20) | (43) |
Income tax expense (benefit) per the statements of operations | $ 194 | $ 705 | $ 870 | $ 1,397 |
10. Earnings per C
10. Earnings per Common Share (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator for basic and diluted earnings per share: | ||||
Net income (in Dollars) | $ 276 | $ 1,334 | $ 1,564 | $ 2,558 |
Denominators for basic and diluted earnings per share: | ||||
Weighted average shares outstanding - basic | 21,792 | 21,122 | 21,672 | 21,061 |
Dilutive potential common shares | ||||
Stock options and awards | 455 | 552 | 473 | 579 |
Denominator for diluted earnings per share | 22,247 | 21,674 | 22,145 | 21,640 |
Net income per common share - basic (in Dollars per share) | $ 0.01 | $ 0.06 | $ 0.07 | $ 0.12 |
Net income per common share – diluted (in Dollars per share) | $ 0.01 | $ 0.06 | $ 0.07 | $ 0.12 |
11. Dividends (De
11. Dividends (Details) - Schedule of Dividends Payable - $ / shares | 3 Months Ended | |||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | |
Schedule of Dividends Payable [Abstract] | ||||||
Dividend per share of common stock | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 |
Dividend record date | Aug. 23, 2017 | May 23, 2017 | Feb. 23, 2017 | Aug. 23, 2016 | May 23, 2016 | Feb. 23, 2016 |
Dividend payment date | Sep. 8, 2017 | Jun. 8, 2017 | Mar. 8, 2017 | Sep. 8, 2016 | Jun. 8, 2016 | Mar. 8, 2016 |
12. Commitments and Contingen51
12. Commitments and Contingencies (Details) | Sep. 30, 2017USD ($) |
Severance Payments [Member] | |
12. Commitments and Contingencies (Details) [Line Items] | |
Other Commitment | $ 2,000,000 |
License Fees Due in September 2018 [Member] | |
12. Commitments and Contingencies (Details) [Line Items] | |
Other Commitment | 800,000 |
License Fees Due in November 2019 [Member] | |
12. Commitments and Contingencies (Details) [Line Items] | |
Other Commitment | $ 1,200,000 |
13. Concentration of Business52
13. Concentration of Business Volume and Credit Risk (Details) - Customer Concentration Risk [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Sales Revenue, Net [Member] | ||||
13. Concentration of Business Volume and Credit Risk (Details) [Line Items] | ||||
Concentration Risk, Percentage | 14.00% | 17.00% | 14.00% | 14.00% |
Accounts Receivable [Member] | ||||
13. Concentration of Business Volume and Credit Risk (Details) [Line Items] | ||||
Concentration Risk, Percentage | 15.00% |
14. Segment and Geographic Di53
14. Segment and Geographic Disclosures (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Number of Operating Segments | 1 | |||
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | ||||
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Concentration Risk, Percentage | 14.00% | 17.00% | 14.00% | 14.00% |
Sales Revenue, Net [Member] | UNITED KINGDOM | Customer Concentration Risk [Member] | ||||
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Concentration Risk, Percentage | 13.00% | |||
Sales Revenue, Net [Member] | Geographic Distribution, Foreign [Member] | Customer Concentration Risk [Member] | ||||
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Concentration Risk, Percentage | 30.00% | 17.00% | 26.00% | 22.00% |