Document And Entity Information
Document And Entity Information | 9 Months Ended |
Sep. 30, 2018shares | |
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 | 17,968,268 |
Amendment Flag | false |
Entity Central Index Key | 1,112,920 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Document Period End Date | Sep. 30, 2018 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q3 |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Ex Transition Period | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 9,630 | $ 11,583 |
Certificates of deposit, short term | 1,530 | 4,291 |
Accounts receivable, net | 4,853 | 5,925 |
Federal income tax receivable | 740 | 822 |
Prepaid and other current assets | 3,173 | 675 |
Total current assets | 19,926 | 23,296 |
Certificates of deposit, long term | 0 | 11,503 |
Capitalized software development costs, net | 3,384 | 3,786 |
Goodwill | 12,712 | 12,712 |
Deferred tax asset, net | 330 | 651 |
Property and equipment, net | 442 | 481 |
Other assets | 577 | 84 |
Total assets | 37,371 | 52,513 |
Current liabilities: | ||
Accounts payable | 1,982 | 1,900 |
Accrued expenses | 3,378 | 1,671 |
Deferred revenue | 12,341 | 13,315 |
Total current liabilities | 17,701 | 16,886 |
Deferred revenue, non-current portion | 2,795 | 3,735 |
Other long term liabilities | 128 | 176 |
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, 22,382,862 and 22,196,712 shares issued: 17,968,268 and 21,793,131 outstanding at September 30, 2018 and December 31, 2017, respectively | 22 | 22 |
Additional paid-in capital | 25,106 | 23,793 |
Treasury stock, 4,414,594 and 403,581 shares, at cost, at September 30, 2018 and December 31, 2017, respectively | (18,714) | (1,452) |
Retained earnings | 10,333 | 9,353 |
Total stockholders’ equity | 16,747 | 31,716 |
Total liabilities and stockholders’ equity | $ 37,371 | $ 52,513 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
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 | 22,382,862 | 22,196,712 |
Treasury stock, shares | 4,414,594 | 403,581 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Revenues: | ||||
Total Revenues | $ 8,980 | $ 8,216 | $ 25,147 | $ 25,122 |
Cost of revenues: | ||||
Total cost of revenues | 1,499 | 1,573 | 4,679 | 4,637 |
Gross profit | 7,481 | 6,643 | 20,468 | 20,485 |
Operating expenses: | ||||
Sales and marketing | 2,261 | 3,079 | 8,229 | 9,564 |
General and administrative | 1,589 | 1,573 | 4,883 | 4,607 |
Legal and professional | 1,510 | 1,002 | 4,235 | 1,550 |
Severance | 381 | 0 | 488 | 21 |
Research and development | 368 | 594 | 1,654 | 2,530 |
Total operating expenses | 6,109 | 6,248 | 19,489 | 18,272 |
Income (loss) from operations | 1,372 | 395 | 979 | 2,213 |
Interest income (expense), net | (93) | 75 | 63 | 221 |
Income (loss) before income taxes | 1,279 | 470 | 1,042 | 2,434 |
Income tax expense (benefit) | 281 | 194 | 386 | 870 |
Net income (loss) | 998 | 276 | 656 | 1,564 |
Comprehensive income (loss) | $ 998 | $ 276 | $ 656 | $ 1,564 |
Basic (in Dollars per share) | $ 0.05 | $ 0.01 | $ 0.03 | $ 0.07 |
Diluted (in Dollars per share) | $ 0.05 | $ 0.01 | $ 0.03 | $ 0.07 |
Basic (in Shares) | 21,688 | 21,792 | 21,746 | 21,672 |
Diluted (in Shares) | 21,940 | 22,247 | 22,044 | 22,145 |
Software and Licenses [Member] | ||||
Operating Revenues: | ||||
Revenues | $ 2,843 | $ 2,488 | $ 7,726 | $ 7,768 |
Cost of revenues: | ||||
Cost of revenues | 721 | 725 | 2,225 | 2,234 |
Maintenance [Member] | ||||
Operating Revenues: | ||||
Revenues | 5,488 | 5,360 | 15,872 | 15,702 |
Cost of revenues: | ||||
Cost of revenues | 514 | 446 | 1,574 | 1,283 |
Professional Services [Member] | ||||
Operating Revenues: | ||||
Revenues | 649 | 368 | 1,549 | 1,652 |
Cost of revenues: | ||||
Cost of revenues | $ 264 | $ 402 | $ 880 | $ 1,120 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Net income | $ 656,000 | $ 1,564,000 |
Items not involving cash at the time they are recorded in the statement of operations: | ||
Provision (recoveries) for doubtful accounts receivable | (64,000) | 15,000 |
Depreciation and amortization | 1,641,000 | 1,604,000 |
Share-based compensation | 972,000 | 1,053,000 |
Deferred taxes | 61,000 | 28,000 |
Subtotal before changes in operating assets and liabilities | 3,266,000 | 4,264,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,136,000 | 1,798,000 |
Prepaid and other current assets | (1,868,000) | 163,000 |
Deferred revenue | (1,914,000) | (1,526,000) |
Accounts payable | 82,000 | 448,000 |
Accrued expenses | 1,707,000 | 404,000 |
Other assets | 116,000 | 154,000 |
Accrued interest receivable | 0 | (195,000) |
Other long-term liabilities | (48,000) | 22,000 |
Federal income tax receivable | 82,000 | (759,000) |
Net cash provided by operating activities | 2,559,000 | 4,773,000 |
Investing Activities: | ||
Software development costs capitalized | (1,057,000) | (1,464,000) |
Purchase of property and equipment | (143,000) | (249,000) |
Redemption of Certificates of Deposit | 14,264,000 | 0 |
Net cash provided by (used in) investing activities | 13,064,000 | (1,713,000) |
Financing Activities: | ||
Proceeds from exercise of stock options | 341,489 | 471,789 |
Purchase of Treasury Stock | (17,262,000) | 0 |
Dividends paid | (655,000) | (979,000) |
Net cash used in financing activities | (17,576,000) | (508,000) |
Net increase (decrease) in cash | (1,953,000) | 2,552,000 |
Cash at beginning of period | 11,583,000 | 8,895,000 |
Cash at end of period | 9,630,000 | 11,447,000 |
Cash paid during the period for: | ||
Interest | 0 | 0 |
Income tax payments | $ 238,000 | $ 1,616,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2016 | $ 22 | $ 21,756 | $ (1,452) | $ 9,289 | $ 29,615 |
Balance (in Shares) at Dec. 31, 2016 | 21,920,912 | ||||
Shares issued upon exercise of stock options | 458 | 458 | |||
Shares issued upon exercise of stock options (in Shares) | 191,500 | ||||
Stock-based compensation expense | |||||
Stock options | 533 | 533 | |||
Restricted stock | 138 | 138 | |||
Restricted stock (in Shares) | 80,000 | ||||
Common stock cash dividends | (652) | (652) | |||
Net income | 1,288 | 1,288 | |||
Balance at Jun. 30, 2017 | $ 22 | 22,885 | (1,452) | 9,925 | 31,380 |
Balance (in Shares) at Jun. 30, 2017 | 22,192,412 | ||||
Balance at Dec. 31, 2016 | $ 22 | 21,756 | (1,452) | 9,289 | 29,615 |
Balance (in Shares) at Dec. 31, 2016 | 21,920,912 | ||||
Stock-based compensation expense | |||||
Net income | 1,564 | ||||
Balance at Sep. 30, 2017 | $ 22 | 23,280 | (1,452) | 9,874 | 31,724 |
Balance (in Shares) at Sep. 30, 2017 | 22,196,712 | ||||
Balance at Jun. 30, 2017 | $ 22 | 22,885 | (1,452) | 9,925 | 31,380 |
Balance (in Shares) at Jun. 30, 2017 | 22,192,412 | ||||
Shares issued upon exercise of stock options | 14 | 14 | |||
Shares issued upon exercise of stock options (in Shares) | 4,300 | ||||
Stock-based compensation expense | |||||
Stock options | 296 | 296 | |||
Restricted stock | 85 | 85 | |||
Common stock cash dividends | (327) | (327) | |||
Net income | 276 | 276 | |||
Balance at Sep. 30, 2017 | $ 22 | 23,280 | (1,452) | 9,874 | 31,724 |
Balance (in Shares) at Sep. 30, 2017 | 22,196,712 | ||||
Stock-based compensation expense | |||||
Stock options | 428 | 428 | |||
Restricted stock | 85 | 85 | |||
Common stock cash dividends | (328) | (328) | |||
Net income | (193) | (193) | |||
Balance at Dec. 31, 2017 | $ 22 | 23,793 | (1,452) | 9,353 | 31,716 |
Balance (in Shares) at Dec. 31, 2017 | 22,196,712 | ||||
Retained Earnings Adjustment due to ASC 606 | 979 | 979 | |||
Stock-based compensation expense | |||||
Stock options | 742 | 742 | |||
Restricted stock | 120 | 120 | |||
Restricted stock (in Shares) | 80,000 | ||||
Common stock cash dividends | (655) | (655) | |||
Net income | (342) | (342) | |||
Balance at Jun. 30, 2018 | $ 22 | 24,655 | (1,452) | 9,335 | 32,560 |
Balance (in Shares) at Jun. 30, 2018 | 22,276,712 | ||||
Balance at Dec. 31, 2017 | $ 22 | 23,793 | (1,452) | 9,353 | $ 31,716 |
Balance (in Shares) at Dec. 31, 2017 | 22,196,712 | ||||
Shares issued upon exercise of stock options (in Shares) | 146,150 | ||||
Stock-based compensation expense | |||||
Net income | $ 656 | ||||
Balance at Sep. 30, 2018 | $ 22 | 25,106 | (18,714) | 10,333 | 16,747 |
Balance (in Shares) at Sep. 30, 2018 | 22,382,862 | ||||
Balance at Jun. 30, 2018 | $ 22 | 24,655 | (1,452) | 9,335 | 32,560 |
Balance (in Shares) at Jun. 30, 2018 | 22,276,712 | ||||
Purchase of Treasury Stock | (17,262) | (17,262) | |||
Cancellation of Restricted Stock (in Shares) | (40,000) | ||||
Shares issued upon exercise of stock options | 341 | 341 | |||
Shares issued upon exercise of stock options (in Shares) | 146,150 | ||||
Stock-based compensation expense | |||||
Stock options | 110 | 110 | |||
Net income | 998 | 998 | |||
Balance at Sep. 30, 2018 | $ 22 | $ 25,106 | $ (18,714) | $ 10,333 | $ 16,747 |
Balance (in Shares) at Sep. 30, 2018 | 22,382,862 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Stockholders' Equity (Parentheticals) - $ / shares | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Common stock cash dividends per share | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.030 | $ 0.030 |
1. Nature of Business
1. Nature of Business | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Text Block [Abstract] | |
Nature of Operations [Text Block] | 1. Nature of Business GlobalSCAPE, Inc., together with its wholly-owned subsidiary (collectively referred to as the “Company”, “GlobalSCAPE”, “we”, “us” or “our”), 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. We experienced issues with the third-party technology and suspended marketing of the product. We have settled the dispute with the third-party and have accrued a liability in these financial statements in the amount of the settlement, including any anticipated settlement fees. We also market other products that are synergistic to EFT including Mail Express, WAFS, and CuteFTP. Collectively, these products aimed at consumers and small businesses, constitute less than 5% of our total revenue. Throughout these notes unless otherwise noted, our references to the 2018 quarter and the 2017 quarter refer to the three months ended September 30, 2018 and 2017, respectively. Our references to the 2018 nine months and the 2017 nine months refer to the nine months ended September 30, 2018 and 2017, respectively. |
2. Basis of Presentation
2. Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
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 Quarterly Report on Form 10-Q, or this Report, should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on June 14, 2018, which we refer to as the 2017 Form 10-K, 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, 2018 | |
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. Reclassification of Expenses We have revised the classification of certain of our operating expenses. To ensure comparability between periods, we revised the previous period financial statements presented to conform to the method of presentation in the current period financial statements. These reclassifications had no impact on the net income for the periods presented or total stockholders’ equity at September 30, 2018. Revenue Recognition Products and Services We earn revenue by delivering the following software products and services: ● Perpetual software licenses under which customers install our products in their information systems environment on computers they manage, own or otherwise procure from a cloud services provider. Customers also deploy our products with cloud services providers in a BYOL environment. ● Cloud-based, hosted SaaS solutions that we sell on an ongoing subscription basis resulting in our earning recurring, monthly subscription and usage fees to access the service. ● Maintenance and support services, or M&S, that generally consist of telephone support and access to unspecified future software upgrades. ● Professional services for product integration and configuration that generally do not significantly modify our software products. We earn the majority of our revenue from the sale of perpetual software licenses and associated contracts for M&S. We recognize revenue when we have satisfied a performance obligation by transferring control over a product or delivering a service to a customer. We measure revenue based upon the consideration set forth in an arrangement or contract with a customer. The revenue recognition criteria we apply to each of our software products and services are as follows: ● Perpetual software licenses – These licenses grant a right to use our functional intellectual property. We recognize revenue at the point in time when we electronically deliver to our customer the software license key that provides the ability to access and use our product. If our customer is a reseller who will further transfer the ability to access and use our product to a third party under a separate arrangement that the reseller has with that third party, we recognize revenue at the time we deliver the software license key to the reseller since our contract is with the reseller. ● Cloud-based, hosted SaaS solutions – These solutions grant a right to access our functional intellectual property. We recognize revenue over time on a monthly basis as we deliver the services to which our customers subscribe. Revenue can include basic monthly fees to access the software and usage fees based upon the volume of certain resources the customer consumes (such as volumes of storage or bandwidth). We are generally paid for these services on a month-to-month basis, but if a customer pays us in advance for services we will deliver in the future, we record as deferred revenue the amount of such payment related to services we have not yet delivered. ● M&S – We provide these services to purchasers of perpetual software licenses under agreements 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 as deferred revenue amounts paid that relate to future periods during which we will provide the M&S service. We reduce deferred revenue and recognize revenue ratably in future periods as we deliver the M&S service. ● Professional services – We recognize revenue from these services when the services are completed. If we are paid in advance for these services, we record such payment as deferred revenue until we complete the services. The delivery of our software products and services generally does not involve any variable consideration, financing components or consideration payable to a customer such as rebates or other incentives that reduce amounts owed to us by customers. Deferred Revenue Classification and Activity Deferred revenue related to services we will deliver within one year is presented as a current liability. Deferred revenue related to services that we will deliver more than one year into the future is presented as a non-current liability. The activity in our deferred revenue balances has been as follows ($in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Deferred revenue, beginning of period $ 16,013 $ 16,160 $ 17,050 $ 17,445 Deferred revenue resulting from new contracts with customers 4,764 4,769 14,321 14,214 Deferred revenue at the beginning of the period that was amortized to revenue (5,113 ) (4,554 ) (14,727 ) (14,370 ) Deferred revenue arising during the period that was amortized to revenue (528 ) (456 ) (1,508 ) (1,370 ) Deferred revenue, end of period $ 15,136 $ 15,919 $ 15,136 $ 15,919 Multi-Element Transactions At the time customers purchase perpetual software licenses, they also typically purchase M&S although it is not mandatory. We do not sell separate M&S to subscribers to our SaaS solutions as M&S is provided as part of their SaaS subscription. Customers may also purchase professional services at the time they purchase perpetual software licenses or a SaaS subscription. Each of the components of these multi-element transactions is a separately identifiable performance obligation. For multi-element transactions, we allocate the transaction price to each performance obligation on a relative stand-alone selling price basis. We determine that stand-alone selling price for each item at the inception of the transaction involving these multiple elements. We sell, as stand-alone transactions, renewals of pre-existing M&S contracts, professional services to customers seeking assistance with products they have previously purchased from us, or SaaS subscriptions to customers not requiring any of our other products or services. Accordingly, we are able to estimate the stand-alone selling price of these items based upon our observation of those transactions. Since most of our sales of perpetual software licenses are part of multi-element transactions that also involve M&S and/or professional services, and because the selling price of those licenses can vary significantly among customers, we use the residual approach under FASB Accounting Standards Codification Top 606, or ASC 606, to estimate the selling price of perpetual software licenses in a multi-element transaction by reference to the total transaction price less the sum of the observable stand-alone selling prices of M&S and/or professional services. We allocate discounts proportionally to all of the components of a multi-element transaction. Sale s Tax We collect sales tax on many of our transactions with customers as required under applicable law. We do not include sales tax collected in our revenue. We record it as a liability payable to taxing authorities. Allowance for Sales Returns We provide an allowance for sales returns. We estimate this allowance based upon our historical experience and the nature of recent transactions with customers. This amount is included in accrued liabilities in our condensed consolidated balance sheet. Contract Assets We generally bill customers for professional services when we have fully delivered the services specified in the contract. We may incur costs in delivering the services prior to that time. Such costs are generally not material. Accordingly, we do not record a contract asset for professional service engagements in process but not yet billed. Incremental Costs of Obtaining a Contract to Deliver Goods and Services We incur incremental costs in the form of sales commissions paid to our sales personnel and royalties on certain products paid to third parties. These are costs we would not incur if we did not obtain a contract to deliver our goods and services. We account for these costs as follows: ● If the costs are associated with products and services for which we recognize revenue at a fixed point in time (primarily sales of perpetual software licenses and professional services), we expense these costs in full at the time we recognize that revenue. ● If the 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 record these costs as a 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 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 recognize expense ratably monthly over the estimated life of the customer relationship. Our activity in deferred costs of obtaining a contract to deliver goods and services has been as follows ($in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2018 Deferred expense, beginning of period $ 1,172 $ 1,240 Deferred expense resulting from new contracts with customers 149 496 Deferred expense amortized to expense (216 ) (631 ) Deferred expense, end of period $ 1,105 $ 1,105 At September 30, 2018, $598,000 was recorded in prepaid and current other assets and $507,000 was recorded in other assets in our condensed consolidated balance sheet. The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method: GlobalSCAPE, Inc. Condensed Consolidated Balance Sheet (in thousands) As of September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Assets Current assets: Cash and cash equivalents $ 9,630 $ 9,630 Certificates of deposit, short term 1,530 1,530 Accounts receivable, net 4,853 (75 ) 4,778 Federal income tax receivable 740 50 790 Prepaid and other current assets 3,173 (598 ) 2,575 Total current assets 19,926 (623 ) 19,303 Capitalized software development costs, net 3,384 3,384 Goodwill 12,712 12,712 Deferred tax asset, net 330 161 491 Property and equipment, net 442 442 Other assets 577 (508 ) 69 Total assets $ 37,371 $ (970 ) $ 36,401 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 1,982 1,982 Accrued expenses 3,378 (75 ) 3,303 Deferred revenue 12,341 12,341 Total current liabilities 17,701 (75 ) 17,626 Deferred revenue, non-current portion 2,795 2,795 Other long term liabilities 128 128 Stockholders' Equity: Preferred stock - - Common stock 22 22 Additional paid-in capital 25,106 25,106 Treasury stock (18,714 ) (18,714 ) Retained earnings 10,333 (895 ) 9,438 Total stockholders’ equity 16,747 (895 ) 15,852 Total liabilities and stockholders’ equity $ 37,371 $ (970 ) $ 36,401 GlobalSCAPE, Inc. Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Three Months Ended September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Operating revenues: Software licenses $ 2,843 $ 2,843 Maintenance and support 5,488 5,488 Professional services 649 649 Total revenues 8,980 - 8,980 Costs of revenues Software licenses 721 (28 ) 693 Maintenance and support 514 514 Professional services 264 264 Total costs of revenues 1,499 (28 ) 1,471 Gross Profit 7,481 28 7,509 Operating expenses Sales and marketing 2,261 (23 ) 2,238 General and administrative 1,589 1,589 Legal and professional 1,510 1,510 Severance 381 381 Research and development 368 368 Total operating expenses 6,109 (23 ) 6,086 Income from operations 1,372 51 1,423 Interest income (expense), net (93 ) (93 ) Income before income taxes 1,279 51 1,330 Income tax expense 281 11 292 Net income $ 998 $ 40 $ 1,038 Comprehensive income $ 998 $ 40 $ 1,038 Net income per common share - basic $ 0.05 $ 0.00 $ 0.05 Net income per common share - diluted $ 0.05 $ 0.00 $ 0.05 GlobalSCAPE, Inc. Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Nine Months Ended September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Operating revenues: Software licenses $ 7,726 $ 7,726 Maintenance and support 15,872 15,872 Professional services 1,549 1,549 Total revenues 25,147 - 25,147 Costs of revenues Software licenses 2,225 (42 ) 2,183 Maintenance and support 1,574 1,574 Professional services 880 880 Total costs of revenues 4,679 (42 ) 4,637 Gross Profit 20,468 42 20,510 Operating expenses Sales and marketing 8,229 (92 ) 8,137 General and administrative 4,883 4,883 Legal and professional 4,235 4,235 Severance 488 488 Research and development 1,654 1,654 Total operating expenses 19,489 (92 ) 19,397 Income from operations 979 134 1,113 Interest income (expense), net 63 63 Income before income taxes 1,042 134 1,176 Income tax expense 386 50 436 Net income $ 656 $ 84 $ 740 Comprehensive income $ 656 $ 84 $ 740 Net income per common share - basic $ 0.03 $ 0.00 $ 0.03 Net income per common share - diluted $ 0.03 $ 0.00 $ 0.03 GlobalSCAPE, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) For the Nine Months Ended September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Operating Activities: Net Income $ 656 84 $ 740 Items not involving cash at the time they are recorded in the statement of operations: Provision (recoveries) for doubtful accounts receivable (64 ) (64 ) Depreciation and amortization 1,641 1,641 Share-based compensation 972 972 Deferred taxes 61 61 Subtotal before changes in operating assets and liabilities 3,266 84 3,350 Changes in operating assets and liabilities: Accounts receivable 1,136 (75 ) 1,061 Prepaid and other current assets (1,868 ) (134 ) (2,002 ) Deferred revenues (1,914 ) (1,914 ) Accounts payable 82 82 Accrued expenses 1,707 75 1,782 Other assets 116 116 Accrued interest receivable - - Other long-term liabilities (48 ) (48 ) Federal income tax receivable 82 50 132 Net cash provided by operating activities 2,559 - 2,559 Investing Activities: Software development costs (1,057 ) (1,057 ) Purchase of property and equipment (143 ) (143 ) Redemption of Certificates of Deposit 14,264 14,264 Net cash provided by investing activities 13,064 - 13,064 Financing Activities: Proceeds from exercise of stock options 341 341 Purchase of treasury stock (17,262 ) (17,262 ) Dividends paid (655 ) (655 ) Net cash used in financing activities (17,576 ) - (17,576 ) Net increase in cash (1,953 ) (1,953 ) Cash at beginning of period 11,583 - 11,583 Cash at end of period $ 9,630 $ - $ 9,630 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income tax payments $ 238 $ 238 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. At least annually, 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, 2017, 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, have in place a program plan and a detailed 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 $172,000 and $480,000 in the 2018 quarter and the 2017 quarter, respectively, and $750,000 and $1,508,000 in the 2018 nine months and 2017 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 primarily use 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 condensed 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. Recently Issued Accounting Pronouncements FASB has issued the Accounting Standard Updates, or ASU described below that we believe may be relevant to our business and to the preparation of our condensed consolidated 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 2016-02, Leases (issued February 2016) - ASU 2014-09, Revenue from Contracts with Customers (issued May 2014) ● 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 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 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. We have reviewed all recently issued accounting pronouncements. The pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof. |
4. Certificates of Deposit
4. Certificates of Deposit | 9 Months Ended |
Sep. 30, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents Disclosure [Text Block] | 4. Certificates of Deposit Our certificate of deposit is held at a bank and will mature in October 2018. 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 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, 2018 | |
Receivables [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 5. Accounts Receivable, Net We bill customers and issue invoices when we have delivered goods or services. In addition, when customers agree to purchase or renew M&S services, we bill and invoice 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 condensed 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, 2018 December 31, 2017 Total invoices issued and unpaid $ 5,324 $ 6,644 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (371 ) (441 ) Gross accounts receivable 4,953 6,203 Allowance for doubtful accounts (100 ) (278 ) Accounts receivable, net $ 4,853 $ 5,925 |
6. Capitalized Software Develop
6. Capitalized Software Development Costs, Net | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 Gross capitalized cost $ 10,235 $ 9,179 Accumulated amortization (6,851 ) (5,393 ) Capitalized software development costs, net $ 3,384 $ 3,786 Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Amount capitalized $ 264 $ 527 $ 1,057 $ 1,464 Amortization expense (460 ) (484 ) (1,459 ) (1,404 ) Released Unreleased Products Products Gross capitalized amount at September 30, 2018 $ 9,624 $ 611 Accumulated amortization (6,851 ) - Net capitalized cost at September 30, 2018 $ 2,773 $ 611 Future amortization expense: Three months ending December 31, 2018 431 Year ending December 31, 2019 1,367 2020 857 2021 118 Total $ 2,773 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, 2018 | |
Disclosure Text Block [Abstract] | |
Deferred Revenue Disclosure [Text Block] | 7. Deferred Revenue As described in Note 5 regarding accounts receivable, when 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, 2018 December 31, 2017 Total invoiced for M&S contracts for which revenue will be recognized in future periods $ 15,507 $ 17,491 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (371 ) (441 ) Total deferred revenue $ 15,136 $ 17,050 Deferred revenue, current portion $ 12,341 $ 13,315 Deferred revenue, non-current portion 2,795 3,735 Total deferred revenue $ 15,136 $ 17,050 |
8. Stock Options, Restricted St
8. Stock Options, Restricted Stock and Share-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
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 Stock -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 our Board of Directors. Our stock-based compensation expense was as follows ($ in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Share-based compensation expense $ 110 $ 381 $ 972 $ 1,053 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 2018 quarter, we granted stock options only under the 2016 Employee Long-Term Equity Incentive Plan (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 our 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, 2018, stock-based incentives for up to 3,955,830 shares remained available for issuance in the future under the 2016 Plan. We have not previously issued any restricted stock under any of the Company’s 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, 2017 2,585,210 $ 3.34 6.77 $ 1,015 Granted 504,737 $ 3.67 Forfeited (809,142 ) $ 3.56 Exercised (146,150 ) $ 2.34 Outstanding at September 30, 2018 2,134,655 $ 3.40 6.59 $ 1,413 Exercisable at September 30, 2018 1,163,958 $ 3.09 4.60 $ 1,115 Additional information about our stock options is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Weighted average fair value of options granted $ 1.57 $ 1.94 $ 1.56 $ 1.67 Intrinsic value of options exercised $ 205,111 $ 9,284 $ 205,111 $ 351,893 Cash received from stock options exercised $ 341,489 $ 13,440 $ 341,489 $ 471,789 Number of options that vested 72,748 28,570 511,900 430,724 Fair value of options that vested $ 139,406 $ 44,843 $ 861,904 $ 698,442 Unrecognized compensation expense related to non-vested options at end of period $ 1,286,260 $ 1,994,289 $ 1,286,260 $ 1,994,289 Weighted average years over which non-vested option expense will be recognized 2.15 2.11 2.15 2.11 Plan Shares outstanding 2000 Stock Option Plan 25,000 2010 Employee LT Equity Incentive Plan 1,066,319 2016 Employee LT Equity Incentive Plan 1,043,336 Total shares outstanding at September 30, 2018 2,134,655 As of September 30, 2018 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 $1.43 - $2.32 289,350 2.14 $ 1.86 289,350 $ 1.86 $2.34 - $3.52 708,636 5.77 $ 3.29 506,860 $ 3.23 $3.53 - $5.30 1,135,002 8.25 $ 3.86 366,081 $ 3.85 $5.44 - $5.44 1,667 0.24 $ 5.44 1,667 $ 5.44 Total options 2,134,655 1,163,958 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, 2018 2017 2018 2017 Expected volatility 48 % 50 % 48 % 49 % Expected annual dividend yield 1.50 % 1.50 % 1.50 % 1.50 % Risk free rate of return 2.80 % 1.95 % 2.75 % 1.94 % 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 (the “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 our 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, 2018, stock based incentives for up to 280,000 shares remained available for issuance in the future under the 2015 Directors Plan. |
9. Income Taxes
9. Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 2018 2017 Current Deferred Total Current Deferred Total Current Deferred Total Current Deferred Total Federal $ 166 $ 43 $ 209 $ 29 $ 146 $ 175 $ 243 $ 51 $ 294 $ 733 $ 33 $ 766 State 67 5 72 10 9 19 82 10 92 109 (5 ) $ 104 Total $ 233 $ 48 $ 281 $ 39 $ 155 $ 194 $ 325 $ 61 $ 386 $ 842 $ 28 $ 870 Deferred income taxes on our consolidated 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, 2018 2017 Deferred tax assets: Deferred revenue $ 829 $ 775 Share-based compensation 302 351 Compensation and benefits 55 111 Texas franchise tax R&D credit 189 185 Prepaid expenses not deductible for tax - 84 Allowance for doubtful accounts 37 58 Net operating loss carryforward 5 20 Deferred state income taxes 51 61 Federal R&D credits - - Accrued expenses not deducted for tax 5 9 Valuation allowance (189 ) (185 ) Total deferred tax assets 1,284 1,469 Deferred tax liabilities: Intangible assets 721 805 Book expenses deductible for tax purposes 232 - Depreciable Assets 1 13 Total gross deferred tax liabilities 954 818 Net deferred tax assets $ 330 $ 651 In assessing the realizability of deferred tax assets, we consider whether it is more-likely-than-not that some portion or all the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We have concluded it is more-likely-than-not that our ability to generate future taxable income will allow us to realize those deferred tax assets. As of September 30, 2018, we had federal income tax net operating loss carryforwards of $23,000 available to offset future federal taxable income. We expect to fully utilize this net operating loss in 2018. If not used, this net operating loss expires in 2038. As of September 30, 2018, we had Texas Research and Development tax credit carryforwards of $189,000. We believe it is uncertain that we will have sufficient Texas Franchise Tax in the future to support utilization of these carryforward credits. Accordingly, we have provided a valuation allowance for the full amount of these credit carryforwards. These carryforwards expire in years 2034 through 2038. The aggregate changes in the balance of our gross unrecognized tax benefits were as follows ($ in thousands): Nine Months Ended September 30, 2018 2017 Balance at beginning of period $ 158 $ 121 Increases for tax positions related to the current year 10 16 Increases for tax positions related to prior years - 16 Decreases for tax positions where the statue has expired (48 ) - Balance at end of period $ 120 $ 153 Our unrecognized tax benefit is related to research and development credits taken on our U.S. income tax returns in 2012, 2013, 2015, 2016, and 2017 and the uncertainty related to the realization of a portion of those credits based on prior experience. We believe it reasonably possible that we will not recognize any of our unrecognized tax benefits at least through December 31, 2018. If we realized and recognized any of our unrecognized tax benefits, such benefits would reduce our effective tax rate in the year of recognition. We record interest and penalty expense related to income taxes as interest and other expense, respectively. At September 30, 2018, no interest or penalties had been or were required to be accrued. We file income tax returns in the US and in various state jurisdictions with varying statues of limitations. We are no longer subject to income tax examination by tax authorities for years prior to 2011 with respect to our federal income tax returns and years prior to 2013 with respect to most of our state income tax returns. We do not file, and are not required to file, any foreign income tax returns. Our income tax expense (benefit) reconciles to an income tax expense resulting from applying an assumed statutory federal income rate of 21% for the 2018 quarter and 2018 nine months and 34% for the 2017 quarter and 2017 nine months to income before income taxes as follows ($ in thousands): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Income tax expense at federal statutory rate $ 269 $ 160 $ 219 $ 828 Increase (decrease) in taxes resulting from: State taxes, net of federal benefit 58 16 89 67 Stock based compensation 14 37 164 121 Other 2 7 7 19 R&D tax credit uncertain tax position (net) (45 ) 6 (38 ) 32 Research and development credit (17 ) (30 ) (55 ) (177 ) Domestic production activities deduction - (2 ) - (20 ) Income tax expense per the statements of operations $ 281 $ 194 $ 386 $ 870 On June 21, 2018, in South Dakota v Wayfair Inc . |
10. Earnings per Common Share
10. Earnings per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 2018 2017 Numerator for basic and diluted earnings per share: Net income $ 998 $ 276 $ 656 $ 1,564 Denominators Denominators for basic and diluted earnings per share: Weighted average shares outstanding - basic 21,688 21,792 21,746 21,672 Dilutive potential common shares Stock options and awards 252 455 298 473 Denominator for diluted earnings per share 21,940 22,247 22,044 22,145 Net income per common share - basic $ 0.05 $ 0.01 $ 0.03 $ 0.07 Net income per common share – diluted $ 0.05 $ 0.01 $ 0.03 $ 0.07 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, 2018 | |
Dividends [Abstract] | |
Dividends [Text Block] | 11. Dividends We paid dividends during the 2018 nine months and 2017 nine months as follows: Three Months Ended March 31, 2018 March 31, 2017 June 30, 2018 June 30, 2017 September 30, 2017 Dividend per share of common stock $ 0.015 $ 0.015 $ 0.015 $ 0.015 $ 0.015 Dividend record date March 9, 2018 February 23, 2017 June 8, 2018 May 23, 2017 August 23, 2017 Dividend payment date March 23, 2018 March 8, 2017 June 22, 2018 June 8, 2017 September 8, 2017 |
12. Commitments and Contingenci
12. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
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 approximately $1.3 million. 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 On October 12, 2018, the Company received a letter from a stockholder demanding that the Company take action to remedy alleged harm caused to the Company, including to remedy alleged breaches of fiduciary duties by certain current and/or former directors and executive officers of the Company (“the Derivative Demand”). The stockholder alleges, 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, the Section 220 Demand, and the Derivative 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, 2018 | |
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 2018 quarter and 2017 quarter, we earned approximately 12% and 14%, respectively, of our revenue from such sales through our largest third-party channel distributor. During the 2018 nine months and 2017 nine months, we earned approximately 13% and 14%, respectively, of our revenue from such sales through our largest, third-party channel distributor. As of September 30, 2018, approximately 17% 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, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | 14. Segment and Geographic Disclosures In accordance with ASC 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% of our total revenues in the 2018 quarter and 2017 quarter, and 29% and 26% for the 2018 nine months and 2017 nine months, respectively. Revenue derived from customers and partners in the United Kingdom were 13% of our revenue in the 2017 quarter. Each individual foreign country accounts for less than 10% of total revenue in the 2018 quarter. 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, 2018. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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] | Reclassification of Expenses We have revised the classification of certain of our operating expenses. To ensure comparability between periods, we revised the previous period financial statements presented to conform to the method of presentation in the current period financial statements. These reclassifications had no impact on the net income for the periods presented or total stockholders’ equity at September 30, 2018. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Products and Services We earn revenue by delivering the following software products and services: ● Perpetual software licenses under which customers install our products in their information systems environment on computers they manage, own or otherwise procure from a cloud services provider. Customers also deploy our products with cloud services providers in a BYOL environment. ● Cloud-based, hosted SaaS solutions that we sell on an ongoing subscription basis resulting in our earning recurring, monthly subscription and usage fees to access the service. ● Maintenance and support services, or M&S, that generally consist of telephone support and access to unspecified future software upgrades. ● Professional services for product integration and configuration that generally do not significantly modify our software products. We earn the majority of our revenue from the sale of perpetual software licenses and associated contracts for M&S. We recognize revenue when we have satisfied a performance obligation by transferring control over a product or delivering a service to a customer. We measure revenue based upon the consideration set forth in an arrangement or contract with a customer. The revenue recognition criteria we apply to each of our software products and services are as follows: ● Perpetual software licenses – These licenses grant a right to use our functional intellectual property. We recognize revenue at the point in time when we electronically deliver to our customer the software license key that provides the ability to access and use our product. If our customer is a reseller who will further transfer the ability to access and use our product to a third party under a separate arrangement that the reseller has with that third party, we recognize revenue at the time we deliver the software license key to the reseller since our contract is with the reseller. ● Cloud-based, hosted SaaS solutions – These solutions grant a right to access our functional intellectual property. We recognize revenue over time on a monthly basis as we deliver the services to which our customers subscribe. Revenue can include basic monthly fees to access the software and usage fees based upon the volume of certain resources the customer consumes (such as volumes of storage or bandwidth). We are generally paid for these services on a month-to-month basis, but if a customer pays us in advance for services we will deliver in the future, we record as deferred revenue the amount of such payment related to services we have not yet delivered. ● M&S – We provide these services to purchasers of perpetual software licenses under agreements 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 as deferred revenue amounts paid that relate to future periods during which we will provide the M&S service. We reduce deferred revenue and recognize revenue ratably in future periods as we deliver the M&S service. ● Professional services – We recognize revenue from these services when the services are completed. If we are paid in advance for these services, we record such payment as deferred revenue until we complete the services. The delivery of our software products and services generally does not involve any variable consideration, financing components or consideration payable to a customer such as rebates or other incentives that reduce amounts owed to us by customers. Deferred Revenue Classification and Activity Deferred revenue related to services we will deliver within one year is presented as a current liability. Deferred revenue related to services that we will deliver more than one year into the future is presented as a non-current liability. The activity in our deferred revenue balances has been as follows ($in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Deferred revenue, beginning of period $ 16,013 $ 16,160 $ 17,050 $ 17,445 Deferred revenue resulting from new contracts with customers 4,764 4,769 14,321 14,214 Deferred revenue at the beginning of the period that was amortized to revenue (5,113 ) (4,554 ) (14,727 ) (14,370 ) Deferred revenue arising during the period that was amortized to revenue (528 ) (456 ) (1,508 ) (1,370 ) Deferred revenue, end of period $ 15,136 $ 15,919 $ 15,136 $ 15,919 Multi-Element Transactions At the time customers purchase perpetual software licenses, they also typically purchase M&S although it is not mandatory. We do not sell separate M&S to subscribers to our SaaS solutions as M&S is provided as part of their SaaS subscription. Customers may also purchase professional services at the time they purchase perpetual software licenses or a SaaS subscription. Each of the components of these multi-element transactions is a separately identifiable performance obligation. For multi-element transactions, we allocate the transaction price to each performance obligation on a relative stand-alone selling price basis. We determine that stand-alone selling price for each item at the inception of the transaction involving these multiple elements. We sell, as stand-alone transactions, renewals of pre-existing M&S contracts, professional services to customers seeking assistance with products they have previously purchased from us, or SaaS subscriptions to customers not requiring any of our other products or services. Accordingly, we are able to estimate the stand-alone selling price of these items based upon our observation of those transactions. Since most of our sales of perpetual software licenses are part of multi-element transactions that also involve M&S and/or professional services, and because the selling price of those licenses can vary significantly among customers, we use the residual approach under FASB Accounting Standards Codification Top 606, or ASC 606, to estimate the selling price of perpetual software licenses in a multi-element transaction by reference to the total transaction price less the sum of the observable stand-alone selling prices of M&S and/or professional services. We allocate discounts proportionally to all of the components of a multi-element transaction. Sale s Tax We collect sales tax on many of our transactions with customers as required under applicable law. We do not include sales tax collected in our revenue. We record it as a liability payable to taxing authorities. Allowance for Sales Returns We provide an allowance for sales returns. We estimate this allowance based upon our historical experience and the nature of recent transactions with customers. This amount is included in accrued liabilities in our condensed consolidated balance sheet. Contract Assets We generally bill customers for professional services when we have fully delivered the services specified in the contract. We may incur costs in delivering the services prior to that time. Such costs are generally not material. Accordingly, we do not record a contract asset for professional service engagements in process but not yet billed. Incremental Costs of Obtaining a Contract to Deliver Goods and Services We incur incremental costs in the form of sales commissions paid to our sales personnel and royalties on certain products paid to third parties. These are costs we would not incur if we did not obtain a contract to deliver our goods and services. We account for these costs as follows: ● If the costs are associated with products and services for which we recognize revenue at a fixed point in time (primarily sales of perpetual software licenses and professional services), we expense these costs in full at the time we recognize that revenue. ● If the 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 record these costs as a 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 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 recognize expense ratably monthly over the estimated life of the customer relationship. Our activity in deferred costs of obtaining a contract to deliver goods and services has been as follows ($in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2018 Deferred expense, beginning of period $ 1,172 $ 1,240 Deferred expense resulting from new contracts with customers 149 496 Deferred expense amortized to expense (216 ) (631 ) Deferred expense, end of period $ 1,105 $ 1,105 At September 30, 2018, $598,000 was recorded in prepaid and current other assets and $507,000 was recorded in other assets in our condensed consolidated balance sheet. The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method: GlobalSCAPE, Inc. Condensed Consolidated Balance Sheet (in thousands) As of September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Assets Current assets: Cash and cash equivalents $ 9,630 $ 9,630 Certificates of deposit, short term 1,530 1,530 Accounts receivable, net 4,853 (75 ) 4,778 Federal income tax receivable 740 50 790 Prepaid and other current assets 3,173 (598 ) 2,575 Total current assets 19,926 (623 ) 19,303 Capitalized software development costs, net 3,384 3,384 Goodwill 12,712 12,712 Deferred tax asset, net 330 161 491 Property and equipment, net 442 442 Other assets 577 (508 ) 69 Total assets $ 37,371 $ (970 ) $ 36,401 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 1,982 1,982 Accrued expenses 3,378 (75 ) 3,303 Deferred revenue 12,341 12,341 Total current liabilities 17,701 (75 ) 17,626 Deferred revenue, non-current portion 2,795 2,795 Other long term liabilities 128 128 Stockholders' Equity: Preferred stock - - Common stock 22 22 Additional paid-in capital 25,106 25,106 Treasury stock (18,714 ) (18,714 ) Retained earnings 10,333 (895 ) 9,438 Total stockholders’ equity 16,747 (895 ) 15,852 Total liabilities and stockholders’ equity $ 37,371 $ (970 ) $ 36,401 GlobalSCAPE, Inc. Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Three Months Ended September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Operating revenues: Software licenses $ 2,843 $ 2,843 Maintenance and support 5,488 5,488 Professional services 649 649 Total revenues 8,980 - 8,980 Costs of revenues Software licenses 721 (28 ) 693 Maintenance and support 514 514 Professional services 264 264 Total costs of revenues 1,499 (28 ) 1,471 Gross Profit 7,481 28 7,509 Operating expenses Sales and marketing 2,261 (23 ) 2,238 General and administrative 1,589 1,589 Legal and professional 1,510 1,510 Severance 381 381 Research and development 368 368 Total operating expenses 6,109 (23 ) 6,086 Income from operations 1,372 51 1,423 Interest income (expense), net (93 ) (93 ) Income before income taxes 1,279 51 1,330 Income tax expense 281 11 292 Net income $ 998 $ 40 $ 1,038 Comprehensive income $ 998 $ 40 $ 1,038 Net income per common share - basic $ 0.05 $ 0.00 $ 0.05 Net income per common share - diluted $ 0.05 $ 0.00 $ 0.05 GlobalSCAPE, Inc. Condensed Consolidated Statement of Operations and Comprehensive Income (in thousands, except per share amounts) For the Nine Months Ended September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Operating revenues: Software licenses $ 7,726 $ 7,726 Maintenance and support 15,872 15,872 Professional services 1,549 1,549 Total revenues 25,147 - 25,147 Costs of revenues Software licenses 2,225 (42 ) 2,183 Maintenance and support 1,574 1,574 Professional services 880 880 Total costs of revenues 4,679 (42 ) 4,637 Gross Profit 20,468 42 20,510 Operating expenses Sales and marketing 8,229 (92 ) 8,137 General and administrative 4,883 4,883 Legal and professional 4,235 4,235 Severance 488 488 Research and development 1,654 1,654 Total operating expenses 19,489 (92 ) 19,397 Income from operations 979 134 1,113 Interest income (expense), net 63 63 Income before income taxes 1,042 134 1,176 Income tax expense 386 50 436 Net income $ 656 $ 84 $ 740 Comprehensive income $ 656 $ 84 $ 740 Net income per common share - basic $ 0.03 $ 0.00 $ 0.03 Net income per common share - diluted $ 0.03 $ 0.00 $ 0.03 GlobalSCAPE, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) For the Nine Months Ended September 30, 2018 (unaudited) As Reported Effect of ASC 606 ASC 605 Historical Operating Activities: Net Income $ 656 84 $ 740 Items not involving cash at the time they are recorded in the statement of operations: Provision (recoveries) for doubtful accounts receivable (64 ) (64 ) Depreciation and amortization 1,641 1,641 Share-based compensation 972 972 Deferred taxes 61 61 Subtotal before changes in operating assets and liabilities 3,266 84 3,350 Changes in operating assets and liabilities: Accounts receivable 1,136 (75 ) 1,061 Prepaid and other current assets (1,868 ) (134 ) (2,002 ) Deferred revenues (1,914 ) (1,914 ) Accounts payable 82 82 Accrued expenses 1,707 75 1,782 Other assets 116 116 Accrued interest receivable - - Other long-term liabilities (48 ) (48 ) Federal income tax receivable 82 50 132 Net cash provided by operating activities 2,559 - 2,559 Investing Activities: Software development costs (1,057 ) (1,057 ) Purchase of property and equipment (143 ) (143 ) Redemption of Certificates of Deposit 14,264 14,264 Net cash provided by investing activities 13,064 - 13,064 Financing Activities: Proceeds from exercise of stock options 341 341 Purchase of treasury stock (17,262 ) (17,262 ) Dividends paid (655 ) (655 ) Net cash used in financing activities (17,576 ) - (17,576 ) Net increase in cash (1,953 ) (1,953 ) Cash at beginning of period 11,583 - 11,583 Cash at end of period $ 9,630 $ - $ 9,630 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income tax payments $ 238 $ 238 |
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. At least annually, 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, 2017, 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, have in place a program plan and a detailed 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 $172,000 and $480,000 in the 2018 quarter and the 2017 quarter, respectively, and $750,000 and $1,508,000 in the 2018 nine months and 2017 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 primarily use 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 condensed 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] | Recently Issued Accounting Pronouncements FASB has issued the Accounting Standard Updates, or ASU described below that we believe may be relevant to our business and to the preparation of our condensed consolidated 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 2016-02, Leases (issued February 2016) - ASU 2014-09, Revenue from Contracts with Customers (issued May 2014) ● 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 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 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. We have reviewed all recently issued accounting pronouncements. The pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof. |
3. Significant Accounting Pol_2
3. Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
3. Significant Accounting Policies (Tables) [Line Items] | |
Deferred Revenue, by Arrangement, Disclosure [Table Text Block] | Accordingly, we determine our deferred revenue as follows ($ in thousands): September 30, 2018 December 31, 2017 Total invoiced for M&S contracts for which revenue will be recognized in future periods $ 15,507 $ 17,491 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (371 ) (441 ) Total deferred revenue $ 15,136 $ 17,050 Deferred revenue, current portion $ 12,341 $ 13,315 Deferred revenue, non-current portion 2,795 3,735 Total deferred revenue $ 15,136 $ 17,050 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | Released Unreleased Products Products Gross capitalized amount at September 30, 2018 $ 9,624 $ 611 Accumulated amortization (6,851 ) - Net capitalized cost at September 30, 2018 $ 2,773 $ 611 |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method: As Reported Effect of ASC 606 ASC 605 Historical Assets Current assets: Cash and cash equivalents $ 9,630 $ 9,630 Certificates of deposit, short term 1,530 1,530 Accounts receivable, net 4,853 (75 ) 4,778 Federal income tax receivable 740 50 790 Prepaid and other current assets 3,173 (598 ) 2,575 Total current assets 19,926 (623 ) 19,303 Capitalized software development costs, net 3,384 3,384 Goodwill 12,712 12,712 Deferred tax asset, net 330 161 491 Property and equipment, net 442 442 Other assets 577 (508 ) 69 Total assets $ 37,371 $ (970 ) $ 36,401 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 1,982 1,982 Accrued expenses 3,378 (75 ) 3,303 Deferred revenue 12,341 12,341 Total current liabilities 17,701 (75 ) 17,626 Deferred revenue, non-current portion 2,795 2,795 Other long term liabilities 128 128 Stockholders' Equity: Preferred stock - - Common stock 22 22 Additional paid-in capital 25,106 25,106 Treasury stock (18,714 ) (18,714 ) Retained earnings 10,333 (895 ) 9,438 Total stockholders’ equity 16,747 (895 ) 15,852 Total liabilities and stockholders’ equity $ 37,371 $ (970 ) $ 36,401 As Reported Effect of ASC 606 ASC 605 Historical Operating revenues: Software licenses $ 2,843 $ 2,843 Maintenance and support 5,488 5,488 Professional services 649 649 Total revenues 8,980 - 8,980 Costs of revenues Software licenses 721 (28 ) 693 Maintenance and support 514 514 Professional services 264 264 Total costs of revenues 1,499 (28 ) 1,471 Gross Profit 7,481 28 7,509 Operating expenses Sales and marketing 2,261 (23 ) 2,238 General and administrative 1,589 1,589 Legal and professional 1,510 1,510 Severance 381 381 Research and development 368 368 Total operating expenses 6,109 (23 ) 6,086 Income from operations 1,372 51 1,423 Interest income (expense), net (93 ) (93 ) Income before income taxes 1,279 51 1,330 Income tax expense 281 11 292 Net income $ 998 $ 40 $ 1,038 Comprehensive income $ 998 $ 40 $ 1,038 Net income per common share - basic $ 0.05 $ 0.00 $ 0.05 Net income per common share - diluted $ 0.05 $ 0.00 $ 0.05 As Reported Effect of ASC 606 ASC 605 Historical Operating revenues: Software licenses $ 7,726 $ 7,726 Maintenance and support 15,872 15,872 Professional services 1,549 1,549 Total revenues 25,147 - 25,147 Costs of revenues Software licenses 2,225 (42 ) 2,183 Maintenance and support 1,574 1,574 Professional services 880 880 Total costs of revenues 4,679 (42 ) 4,637 Gross Profit 20,468 42 20,510 Operating expenses Sales and marketing 8,229 (92 ) 8,137 General and administrative 4,883 4,883 Legal and professional 4,235 4,235 Severance 488 488 Research and development 1,654 1,654 Total operating expenses 19,489 (92 ) 19,397 Income from operations 979 134 1,113 Interest income (expense), net 63 63 Income before income taxes 1,042 134 1,176 Income tax expense 386 50 436 Net income $ 656 $ 84 $ 740 Comprehensive income $ 656 $ 84 $ 740 Net income per common share - basic $ 0.03 $ 0.00 $ 0.03 Net income per common share - diluted $ 0.03 $ 0.00 $ 0.03 As Reported Effect of ASC 606 ASC 605 Historical Operating Activities: Net Income $ 656 84 $ 740 Items not involving cash at the time they are recorded in the statement of operations: Provision (recoveries) for doubtful accounts receivable (64 ) (64 ) Depreciation and amortization 1,641 1,641 Share-based compensation 972 972 Deferred taxes 61 61 Subtotal before changes in operating assets and liabilities 3,266 84 3,350 Changes in operating assets and liabilities: Accounts receivable 1,136 (75 ) 1,061 Prepaid and other current assets (1,868 ) (134 ) (2,002 ) Deferred revenues (1,914 ) (1,914 ) Accounts payable 82 82 Accrued expenses 1,707 75 1,782 Other assets 116 116 Accrued interest receivable - - Other long-term liabilities (48 ) (48 ) Federal income tax receivable 82 50 132 Net cash provided by operating activities 2,559 - 2,559 Investing Activities: Software development costs (1,057 ) (1,057 ) Purchase of property and equipment (143 ) (143 ) Redemption of Certificates of Deposit 14,264 14,264 Net cash provided by investing activities 13,064 - 13,064 Financing Activities: Proceeds from exercise of stock options 341 341 Purchase of treasury stock (17,262 ) (17,262 ) Dividends paid (655 ) (655 ) Net cash used in financing activities (17,576 ) - (17,576 ) Net increase in cash (1,953 ) (1,953 ) Cash at beginning of period 11,583 - 11,583 Cash at end of period $ 9,630 $ - $ 9,630 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income tax payments $ 238 $ 238 |
Incremental Costs of Obtaining a Contract to Deliver Goods and Services [Member] | |
3. Significant Accounting Policies (Tables) [Line Items] | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | Our activity in deferred costs of obtaining a contract to deliver goods and services has been as follows ($in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2018 Deferred expense, beginning of period $ 1,172 $ 1,240 Deferred expense resulting from new contracts with customers 149 496 Deferred expense amortized to expense (216 ) (631 ) Deferred expense, end of period $ 1,105 $ 1,105 |
Software License Arrangement [Member] | |
3. Significant Accounting Policies (Tables) [Line Items] | |
Deferred Revenue, by Arrangement, Disclosure [Table Text Block] | The activity in our deferred revenue balances has been as follows ($in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Deferred revenue, beginning of period $ 16,013 $ 16,160 $ 17,050 $ 17,445 Deferred revenue resulting from new contracts with customers 4,764 4,769 14,321 14,214 Deferred revenue at the beginning of the period that was amortized to revenue (5,113 ) (4,554 ) (14,727 ) (14,370 ) Deferred revenue arising during the period that was amortized to revenue (528 ) (456 ) (1,508 ) (1,370 ) Deferred revenue, end of period $ 15,136 $ 15,919 $ 15,136 $ 15,919 |
5. Accounts Receivable, Net (Ta
5. Accounts Receivable, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 December 31, 2017 Total invoices issued and unpaid $ 5,324 $ 6,644 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (371 ) (441 ) Gross accounts receivable 4,953 6,203 Allowance for doubtful accounts (100 ) (278 ) Accounts receivable, net $ 4,853 $ 5,925 |
6. Capitalized Software Devel_2
6. Capitalized Software Development Costs, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 Gross capitalized cost $ 10,235 $ 9,179 Accumulated amortization (6,851 ) (5,393 ) Capitalized software development costs, net $ 3,384 $ 3,786 |
Finite-lived Intangible Assets Amortization Expense [Table Text Block] | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Amount capitalized $ 264 $ 527 $ 1,057 $ 1,464 Amortization expense (460 ) (484 ) (1,459 ) (1,404 ) |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | Released Unreleased Products Products Gross capitalized amount at September 30, 2018 $ 9,624 $ 611 Accumulated amortization (6,851 ) - Net capitalized cost at September 30, 2018 $ 2,773 $ 611 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Future amortization expense: Three months ending December 31, 2018 431 Year ending December 31, 2019 1,367 2020 857 2021 118 Total $ 2,773 |
7. Deferred Revenue (Tables)
7. Deferred Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Text Block [Abstract] | |
Deferred Revenue, by Arrangement, Disclosure [Table Text Block] | Accordingly, we determine our deferred revenue as follows ($ in thousands): September 30, 2018 December 31, 2017 Total invoiced for M&S contracts for which revenue will be recognized in future periods $ 15,507 $ 17,491 Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date (371 ) (441 ) Total deferred revenue $ 15,136 $ 17,050 Deferred revenue, current portion $ 12,341 $ 13,315 Deferred revenue, non-current portion 2,795 3,735 Total deferred revenue $ 15,136 $ 17,050 |
8. Stock Options, Restricted _2
8. Stock Options, Restricted Stock and Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 stock-based compensation expense was as follows ($ in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Share-based compensation expense $ 110 $ 381 $ 972 $ 1,053 |
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, 2017 2,585,210 $ 3.34 6.77 $ 1,015 Granted 504,737 $ 3.67 Forfeited (809,142 ) $ 3.56 Exercised (146,150 ) $ 2.34 Outstanding at September 30, 2018 2,134,655 $ 3.40 6.59 $ 1,413 Exercisable at September 30, 2018 1,163,958 $ 3.09 4.60 $ 1,115 |
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, 2018 2017 2018 2017 Weighted average fair value of options granted $ 1.57 $ 1.94 $ 1.56 $ 1.67 Intrinsic value of options exercised $ 205,111 $ 9,284 $ 205,111 $ 351,893 Cash received from stock options exercised $ 341,489 $ 13,440 $ 341,489 $ 471,789 Number of options that vested 72,748 28,570 511,900 430,724 Fair value of options that vested $ 139,406 $ 44,843 $ 861,904 $ 698,442 Unrecognized compensation expense related to non-vested options at end of period $ 1,286,260 $ 1,994,289 $ 1,286,260 $ 1,994,289 Weighted average years over which non-vested option expense will be recognized 2.15 2.11 2.15 2.11 |
Schedule of Share-based Compensation, Shares Outstanding under Stock Option Plans [Table Text Block] | Plan Shares outstanding 2000 Stock Option Plan 25,000 2010 Employee LT Equity Incentive Plan 1,066,319 2016 Employee LT Equity Incentive Plan 1,043,336 Total shares outstanding at September 30, 2018 2,134,655 |
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] | As of September 30, 2018 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 $1.43 - $2.32 289,350 2.14 $ 1.86 289,350 $ 1.86 $2.34 - $3.52 708,636 5.77 $ 3.29 506,860 $ 3.23 $3.53 - $5.30 1,135,002 8.25 $ 3.86 366,081 $ 3.85 $5.44 - $5.44 1,667 0.24 $ 5.44 1,667 $ 5.44 Total options 2,134,655 1,163,958 |
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, 2018 2017 2018 2017 Expected volatility 48 % 50 % 48 % 49 % Expected annual dividend yield 1.50 % 1.50 % 1.50 % 1.50 % Risk free rate of return 2.80 % 1.95 % 2.75 % 1.94 % Expected option term (years) 6.00 6.00 6.00 6.00 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 2018 2017 Current Deferred Total Current Deferred Total Current Deferred Total Current Deferred Total Federal $ 166 $ 43 $ 209 $ 29 $ 146 $ 175 $ 243 $ 51 $ 294 $ 733 $ 33 $ 766 State 67 5 72 10 9 19 82 10 92 109 (5 ) $ 104 Total $ 233 $ 48 $ 281 $ 39 $ 155 $ 194 $ 325 $ 61 $ 386 $ 842 $ 28 $ 870 |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | Deferred income taxes on our consolidated 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, 2018 2017 Deferred tax assets: Deferred revenue $ 829 $ 775 Share-based compensation 302 351 Compensation and benefits 55 111 Texas franchise tax R&D credit 189 185 Prepaid expenses not deductible for tax - 84 Allowance for doubtful accounts 37 58 Net operating loss carryforward 5 20 Deferred state income taxes 51 61 Federal R&D credits - - Accrued expenses not deducted for tax 5 9 Valuation allowance (189 ) (185 ) Total deferred tax assets 1,284 1,469 Deferred tax liabilities: Intangible assets 721 805 Book expenses deductible for tax purposes 232 - Depreciable Assets 1 13 Total gross deferred tax liabilities 954 818 Net deferred tax assets $ 330 $ 651 |
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 30, 2018 2017 Balance at beginning of period $ 158 $ 121 Increases for tax positions related to the current year 10 16 Increases for tax positions related to prior years - 16 Decreases for tax positions where the statue has expired (48 ) - Balance at end of period $ 120 $ 153 |
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 21% for the 2018 quarter and 2018 nine months and 34% for the 2017 quarter and 2017 nine months to income before income taxes as follows ($ in thousands): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Income tax expense at federal statutory rate $ 269 $ 160 $ 219 $ 828 Increase (decrease) in taxes resulting from: State taxes, net of federal benefit 58 16 89 67 Stock based compensation 14 37 164 121 Other 2 7 7 19 R&D tax credit uncertain tax position (net) (45 ) 6 (38 ) 32 Research and development credit (17 ) (30 ) (55 ) (177 ) Domestic production activities deduction - (2 ) - (20 ) Income tax expense per the statements of operations $ 281 $ 194 $ 386 $ 870 |
10. Earnings per Common Share (
10. Earnings per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 2018 2017 Numerator for basic and diluted earnings per share: Net income $ 998 $ 276 $ 656 $ 1,564 Denominators Denominators for basic and diluted earnings per share: Weighted average shares outstanding - basic 21,688 21,792 21,746 21,672 Dilutive potential common shares Stock options and awards 252 455 298 473 Denominator for diluted earnings per share 21,940 22,247 22,044 22,145 Net income per common share - basic $ 0.05 $ 0.01 $ 0.03 $ 0.07 Net income per common share – diluted $ 0.05 $ 0.01 $ 0.03 $ 0.07 |
11. Dividends (Tables)
11. Dividends (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Dividends [Abstract] | |
Schedule of Dividends Payable [Table Text Block] | We paid dividends during the 2018 nine months and 2017 nine months as follows: Three Months Ended March 31, 2018 March 31, 2017 June 30, 2018 June 30, 2017 September 30, 2017 Dividend per share of common stock $ 0.015 $ 0.015 $ 0.015 $ 0.015 $ 0.015 Dividend record date March 9, 2018 February 23, 2017 June 8, 2018 May 23, 2017 August 23, 2017 Dividend payment date March 23, 2018 March 8, 2017 June 22, 2018 June 8, 2017 September 8, 2017 |
3. Significant Accounting Pol_3
3. Significant Accounting Policies (Details) - USD ($) | Jan. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 |
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Deferred Costs, Current | $ 598,000 | $ 598,000 | ||||
Deferred Costs, Noncurrent | 507,000 | 507,000 | ||||
Goodwill, Impairment Loss | 0 | |||||
Advertising Expense | $ 172,000 | $ 480,000 | $ 750,000 | $ 1,508,000 | ||
Probability of occurrence of event | 50.00% | |||||
Cumulative Effect on Retained Earnings, Net of Tax | $ 979,000 | $ 979,000 | ||||
Contract with Customer, Deferred Expense | $ 1,200,000 | |||||
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 | |||||
Minimum [Member] | Furniture and Fixtures [Member] | ||||||
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||
Maximum [Member] | Furniture and Fixtures [Member] | ||||||
3. Significant Accounting Policies (Details) [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 7 years |
3. Significant Accounting Poli
3. Significant Accounting Policies (Details) - Deferred Revenue, by Arrangement, Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Deferred Revenue, by Arrangement, Disclosure [Abstract] | ||||
Deferred revenue, beginning of period | $ 16,013 | $ 16,160 | $ 17,050 | $ 17,445 |
Deferred revenue resulting from new contracts with customers | 4,764 | 4,769 | 14,321 | 14,214 |
Deferred revenue at the beginning of the period that was amortized to revenue | (5,113) | (4,554) | (14,727) | (14,370) |
Deferred revenue arising during the period that was amortized to revenue | (528) | (456) | (1,508) | (1,370) |
Deferred revenue, end of period | $ 15,136 | $ 15,919 | $ 15,136 | $ 15,919 |
3. Significant Accounting Po_2
3. Significant Accounting Policies (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets [Abstract] | ||
Deferred expense, beginning of period | $ 1,172 | $ 1,240 |
Deferred expense resulting from new contracts with customers | 149 | 496 |
Deferred expense amortized to expense | (216) | (631) |
Deferred expense, end of period | $ 1,105 | $ 1,105 |
3. Significant Accounting Po_3
3. Significant Accounting Policies (Details) - Schedule of New Accounting Pronouncements and Changes in Accounting Principles - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Current assets: | |||||||||||
Cash and cash equivalents | $ 9,630,000 | $ 11,583,000 | $ 11,447,000 | $ 11,583,000 | $ 8,895,000 | $ 9,630,000 | $ 8,895,000 | $ 9,630,000 | $ 11,583,000 | $ 11,447,000 | $ 8,895,000 |
Certificates of deposit, long term | 1,530,000 | 4,291,000 | |||||||||
Accounts receivable, net | 4,853,000 | 5,925,000 | |||||||||
Federal income tax receivable | 740,000 | 822,000 | |||||||||
Prepaid and other current assets | 3,173,000 | ||||||||||
Total current assets | 19,926,000 | 23,296,000 | |||||||||
Capitalized software development costs, net | 3,384,000 | 3,786,000 | |||||||||
Goodwill | 12,712,000 | 12,712,000 | |||||||||
Deferred tax asset, net | 330,000 | ||||||||||
Property and equipment, net | 442,000 | 481,000 | |||||||||
Other assets | 577,000 | 84,000 | |||||||||
Total assets | 37,371,000 | 52,513,000 | |||||||||
Current liabilities: | |||||||||||
Accounts payable | 1,982,000 | 1,900,000 | |||||||||
Accrued expenses | 3,378,000 | 1,671,000 | |||||||||
Deferred revenue | 12,341,000 | 13,315,000 | |||||||||
Total current liabilities | 17,701,000 | 16,886,000 | |||||||||
Deferred revenue, non-current portion | 2,795,000 | 3,735,000 | |||||||||
Other long term liabilities | 128,000 | 176,000 | |||||||||
Stockholders' Equity: | |||||||||||
Preferred stock | 0 | 0 | |||||||||
Common stock | 22,000 | 22,000 | |||||||||
Additional paid-in capital | 25,106,000 | 23,793,000 | |||||||||
Treasury stock | (18,714,000) | (1,452,000) | |||||||||
Retained earnings | 10,333,000 | 9,353,000 | |||||||||
Total stockholders’ equity | 32,560,000 | 31,380,000 | 16,747,000 | 31,716,000 | $ 31,724,000 | $ 29,615,000 | |||||
Total liabilities and stockholders’ equity | 37,371,000 | 52,513,000 | |||||||||
Operating revenues: | |||||||||||
Total revenues | 8,980,000 | 8,216,000 | 25,147,000 | 25,122,000 | |||||||
Costs of revenues | |||||||||||
Total costs of revenues | 1,499,000 | 1,573,000 | 4,679,000 | 4,637,000 | |||||||
Gross profit | 7,481,000 | 6,643,000 | 20,468,000 | 20,485,000 | |||||||
Operating expenses | |||||||||||
Sales and marketing | 2,261,000 | 3,079,000 | 8,229,000 | 9,564,000 | |||||||
General and administrative | 1,589,000 | 1,573,000 | 4,883,000 | 4,607,000 | |||||||
Legal and professional | 1,510,000 | 1,002,000 | 4,235,000 | 1,550,000 | |||||||
381,000 | 0 | 488,000 | 21,000 | ||||||||
Research and development | 368,000 | 594,000 | 1,654,000 | 2,530,000 | |||||||
Total operating expenses | 6,109,000 | 19,489,000 | |||||||||
Income (loss) from operations | 1,372,000 | 395,000 | 979,000 | 2,213,000 | |||||||
Interest income (expense), net | (93,000) | 75,000 | 63,000 | 221,000 | |||||||
Income (loss) before income taxes | 1,279,000 | 470,000 | 1,042,000 | 2,434,000 | |||||||
Income tax expense | 281,000 | 194,000 | 386,000 | 870,000 | |||||||
Net income (loss) | 998,000 | (193,000) | 276,000 | (342,000) | 1,288,000 | 656,000 | 1,564,000 | ||||
Items not involving cash at the time they are recorded in the statement of operations: | |||||||||||
Provision (recoveries) for doubtful accounts receivable | (64,000) | 15,000 | |||||||||
Depreciation and amortization | 1,641,000 | 1,604,000 | |||||||||
Share-based compensation | 110,000 | 381,000 | 972,000 | 1,053,000 | |||||||
Deferred taxes | 48,000 | 155,000 | 61,000 | 28,000 | |||||||
Subtotal before changes in operating assets and liabilities | 3,266,000 | 4,264,000 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 1,136,000 | 1,798,000 | |||||||||
Prepaid and other current assets | (1,868,000) | ||||||||||
Deferred revenues | (1,914,000) | (1,526,000) | |||||||||
Accounts payable | 82,000 | 448,000 | |||||||||
Accrued expenses | 1,707,000 | 404,000 | |||||||||
Other assets | 116,000 | 154,000 | |||||||||
Other long-term liabilities | (48,000) | 22,000 | |||||||||
Federal income tax receivable | 82,000 | (759,000) | |||||||||
Comprehensive income (loss) | $ 998,000 | $ 276,000 | $ 656,000 | $ 1,564,000 | |||||||
Net income (loss) per common share - basic (in Dollars per share) | $ 0.05 | $ 0.01 | $ 0.03 | $ 0.07 | |||||||
Net income (loss) per common share - diluted (in Dollars per share) | $ 0.05 | $ 0.01 | $ 0.03 | $ 0.07 | |||||||
Net loss | $ 998,000 | (193,000) | $ 276,000 | (342,000) | 1,288,000 | $ 656,000 | $ 1,564,000 | ||||
Net cash provided by operating activities | 2,559,000 | 4,773,000 | |||||||||
Investing Activities: | |||||||||||
Software development costs | (1,057,000) | (1,464,000) | |||||||||
Purchase of property and equipment | (143,000) | (249,000) | |||||||||
Redemption of Certificates of Deposit | 14,264,000 | 0 | |||||||||
Net cash provided by (used in) investing activities | 13,064,000 | (1,713,000) | |||||||||
Financing Activities: | |||||||||||
Proceeds from exercise of stock options | 341,489 | 13,440 | 341,489 | 471,789 | |||||||
Purchase of treasury stock | (17,262,000) | 0 | |||||||||
Dividends paid | (655,000) | (979,000) | |||||||||
Net cash used in financing activities | (17,576,000) | (508,000) | |||||||||
Net increase (decrease) in cash | (1,953,000) | 2,552,000 | |||||||||
Cash at beginning of period | 11,447,000 | 11,583,000 | $ 8,895,000 | 11,583,000 | 8,895,000 | ||||||
Cash at end of period | 9,630,000 | 11,583,000 | 11,447,000 | 9,630,000 | 11,447,000 | ||||||
Interest | 0 | 0 | |||||||||
Income tax payments | 238,000 | 1,616,000 | |||||||||
Software and Licenses [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 2,843,000 | 2,488,000 | 7,726,000 | 7,768,000 | |||||||
Costs of revenues | |||||||||||
Costs of revenues | 721,000 | 725,000 | 2,225,000 | 2,234,000 | |||||||
Maintenance [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 5,488,000 | 5,360,000 | 15,872,000 | 15,702,000 | |||||||
Costs of revenues | |||||||||||
Costs of revenues | 514,000 | 446,000 | 1,574,000 | 1,283,000 | |||||||
Professional Services [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 649,000 | 368,000 | 1,549,000 | 1,652,000 | |||||||
Costs of revenues | |||||||||||
Costs of revenues | 264,000 | $ 402,000 | 880,000 | $ 1,120,000 | |||||||
License and Service [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 7,726,000 | ||||||||||
Costs of revenues | |||||||||||
Costs of revenues | 2,225,000 | ||||||||||
ASC 605 Historical [Member] | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | 9,630,000 | 11,583,000 | 11,583,000 | 9,630,000 | 9,630,000 | $ 11,583,000 | |||||
Certificates of deposit, long term | 1,530,000 | ||||||||||
Accounts receivable, net | 4,778,000 | ||||||||||
Federal income tax receivable | 790,000 | ||||||||||
Prepaid and other current assets | 2,575,000 | ||||||||||
Total current assets | 19,303,000 | ||||||||||
Capitalized software development costs, net | 3,384,000 | ||||||||||
Goodwill | 12,712,000 | ||||||||||
Deferred tax asset, net | 491,000 | ||||||||||
Property and equipment, net | 442,000 | ||||||||||
Other assets | 69,000 | ||||||||||
Total assets | 36,401,000 | ||||||||||
Current liabilities: | |||||||||||
Accounts payable | 1,982,000 | ||||||||||
Accrued expenses | 3,303,000 | ||||||||||
Deferred revenue | 12,341,000 | ||||||||||
Total current liabilities | 17,626,000 | ||||||||||
Deferred revenue, non-current portion | 2,795,000 | ||||||||||
Other long term liabilities | 128,000 | ||||||||||
Stockholders' Equity: | |||||||||||
Preferred stock | 0 | ||||||||||
Common stock | 22,000 | ||||||||||
Additional paid-in capital | 25,106,000 | ||||||||||
Treasury stock | (18,714,000) | ||||||||||
Retained earnings | 9,438,000 | ||||||||||
Total stockholders’ equity | 15,852,000 | ||||||||||
Total liabilities and stockholders’ equity | 36,401,000 | ||||||||||
Operating revenues: | |||||||||||
Total revenues | 8,980,000 | 25,147,000 | |||||||||
Costs of revenues | |||||||||||
Total costs of revenues | 1,471,000 | 4,637,000 | |||||||||
Gross profit | 7,509,000 | 20,510,000 | |||||||||
Operating expenses | |||||||||||
Sales and marketing | 2,238,000 | 8,137,000 | |||||||||
General and administrative | 1,589,000 | 4,883,000 | |||||||||
Legal and professional | 1,510,000 | 4,235,000 | |||||||||
381,000 | 488,000 | ||||||||||
Research and development | 368,000 | 1,654,000 | |||||||||
Total operating expenses | 6,086,000 | 19,397,000 | |||||||||
Income (loss) from operations | 1,423,000 | 1,113,000 | |||||||||
Interest income (expense), net | (93,000) | 63,000 | |||||||||
Income (loss) before income taxes | 1,330,000 | 1,176,000 | |||||||||
Income tax expense | 292,000 | 436,000 | |||||||||
Net income (loss) | 1,038,000 | 740,000 | |||||||||
Items not involving cash at the time they are recorded in the statement of operations: | |||||||||||
Provision (recoveries) for doubtful accounts receivable | (64,000) | ||||||||||
Depreciation and amortization | 1,641,000 | ||||||||||
Share-based compensation | 972,000 | ||||||||||
Deferred taxes | 61,000 | ||||||||||
Subtotal before changes in operating assets and liabilities | 3,350,000 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 1,061,000 | ||||||||||
Prepaid and other current assets | (2,002,000) | ||||||||||
Deferred revenues | (1,914,000) | ||||||||||
Accounts payable | 82,000 | ||||||||||
Accrued expenses | 1,782,000 | ||||||||||
Other assets | 116,000 | ||||||||||
Other long-term liabilities | (48,000) | ||||||||||
Federal income tax receivable | 132,000 | ||||||||||
Comprehensive income (loss) | $ 1,038,000 | $ 740,000 | |||||||||
Net income (loss) per common share - basic (in Dollars per share) | $ 0.05 | $ 0.03 | |||||||||
Net income (loss) per common share - diluted (in Dollars per share) | $ 0.05 | $ 0.03 | |||||||||
Net loss | $ 1,038,000 | $ 740,000 | |||||||||
Net cash provided by operating activities | 2,559,000 | ||||||||||
Investing Activities: | |||||||||||
Software development costs | (1,057,000) | ||||||||||
Purchase of property and equipment | (143,000) | ||||||||||
Redemption of Certificates of Deposit | 14,264,000 | ||||||||||
Net cash provided by (used in) investing activities | 13,064,000 | ||||||||||
Financing Activities: | |||||||||||
Proceeds from exercise of stock options | 341,000 | ||||||||||
Purchase of treasury stock | (17,262,000) | ||||||||||
Dividends paid | (655,000) | ||||||||||
Net cash used in financing activities | (17,576,000) | ||||||||||
Net increase (decrease) in cash | (1,953,000) | ||||||||||
Cash at beginning of period | $ 11,583,000 | 11,583,000 | |||||||||
Cash at end of period | 9,630,000 | $ 11,583,000 | 9,630,000 | ||||||||
Interest | 0 | ||||||||||
Income tax payments | 238,000 | ||||||||||
ASC 605 Historical [Member] | Software and Licenses [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 2,843,000 | ||||||||||
Costs of revenues | |||||||||||
Costs of revenues | 693,000 | ||||||||||
ASC 605 Historical [Member] | Maintenance [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 5,488,000 | 15,872,000 | |||||||||
Costs of revenues | |||||||||||
Costs of revenues | 514,000 | 1,574,000 | |||||||||
ASC 605 Historical [Member] | Professional Services [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 649,000 | 1,549,000 | |||||||||
Costs of revenues | |||||||||||
Costs of revenues | 264,000 | 880,000 | |||||||||
ASC 605 Historical [Member] | License and Service [Member] | |||||||||||
Operating revenues: | |||||||||||
Revenues | 7,726,000 | ||||||||||
Costs of revenues | |||||||||||
Costs of revenues | 2,183,000 | ||||||||||
Effect of ASC 606 [Member] | |||||||||||
Current assets: | |||||||||||
Accounts receivable, net | (75,000) | ||||||||||
Federal income tax receivable | 50,000 | ||||||||||
Prepaid and other current assets | (598,000) | ||||||||||
Total current assets | (623,000) | ||||||||||
Deferred tax asset, net | 161,000 | ||||||||||
Other assets | (508,000) | ||||||||||
Total assets | (970,000) | ||||||||||
Current liabilities: | |||||||||||
Accrued expenses | (75,000) | ||||||||||
Total current liabilities | (75,000) | ||||||||||
Stockholders' Equity: | |||||||||||
Retained earnings | (895,000) | ||||||||||
Total stockholders’ equity | (895,000) | ||||||||||
Total liabilities and stockholders’ equity | $ (970,000) | ||||||||||
Costs of revenues | |||||||||||
Total costs of revenues | (28,000) | (42,000) | |||||||||
Gross profit | 28,000 | 42,000 | |||||||||
Operating expenses | |||||||||||
Sales and marketing | (23,000) | (92,000) | |||||||||
Total operating expenses | (23,000) | (92,000) | |||||||||
Income (loss) from operations | 51,000 | 134,000 | |||||||||
Income (loss) before income taxes | 51,000 | 134,000 | |||||||||
Income tax expense | 11,000 | 50,000 | |||||||||
Net income (loss) | 40,000 | 84,000 | |||||||||
Items not involving cash at the time they are recorded in the statement of operations: | |||||||||||
Subtotal before changes in operating assets and liabilities | 84,000 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (75,000) | ||||||||||
Prepaid and other current assets | (134,000) | ||||||||||
Accrued expenses | 75,000 | ||||||||||
Federal income tax receivable | 50,000 | ||||||||||
Comprehensive income (loss) | $ 40,000 | $ 84,000 | |||||||||
Net income (loss) per common share - basic (in Dollars per share) | $ 0 | $ 0 | |||||||||
Net income (loss) per common share - diluted (in Dollars per share) | $ 0 | $ 0 | |||||||||
Net loss | $ 40,000 | $ 84,000 | |||||||||
Effect of ASC 606 [Member] | Software and Licenses [Member] | |||||||||||
Costs of revenues | |||||||||||
Costs of revenues | $ (28,000) | ||||||||||
Effect of ASC 606 [Member] | License and Service [Member] | |||||||||||
Costs of revenues | |||||||||||
Costs of revenues | $ (42,000) |
5. Accounts Receivabl
5. Accounts Receivable, Net (Details) - Schedule of Accounts, Notes, Loans and Financing Receivable - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Schedule of Accounts, Notes, Loans and Financing Receivable [Abstract] | ||
Total invoices issued and unpaid | $ 5,324 | $ 6,644 |
Less: Unpaid invoices relating to M&S contracts with a start date subsequent to the balance sheet date | (371) | (441) |
Gross accounts receivable | 4,953 | 6,203 |
Allowance for doubtful accounts | (100) | (278) |
Accounts receivable, net | $ 4,853 | $ 5,925 |
6. Capitalized Softw
6. Capitalized Software Development Costs, Net (Details) - Schedule of Finite-Lived Intangible Assets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Schedule of Finite-Lived Intangible Assets [Abstract] | ||
Gross capitalized cost | $ 10,235 | $ 9,179 |
Accumulated amortization | (6,851) | (5,393) |
Capitalized software development costs, net | $ 3,384 | $ 3,786 |
6. Capitalized Sof_2
6. Capitalized Software Development Costs, Net (Details) - Finite-lived Intangible Assets Amortization Expense - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Finite-lived Intangible Assets Amortization Expense [Abstract] | ||||
Amount capitalized | $ 264 | $ 527 | $ 1,057 | $ 1,464 |
Amortization expense | $ (460) | $ (484) | $ (1,459) | $ (1,404) |
6. Capitalized Sof_3
6. Capitalized Software Development Costs, Net (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure - Computer Software, Intangible Asset [Member] $ in Thousands | Sep. 30, 2018USD ($) |
Released Products [Member] | |
6. Capitalized Software Development Costs, Net (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | |
Gross capitalized amount at September 30, 2018 | $ 9,624 |
Accumulated amortization | (6,851) |
Total | 2,773 |
Unreleased Products [Member] | |
6. Capitalized Software Development Costs, Net (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | |
Gross capitalized amount at September 30, 2018 | 611 |
Accumulated amortization | 0 |
Total | $ 611 |
6. Capitalized Sof_4
6. Capitalized Software Development Costs, Net (Details) - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense $ in Thousands | Sep. 30, 2018USD ($) |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] | |
Three months ending December 31, 2018 | $ 431 |
2,019 | 1,367 |
2,020 | 857 |
2,021 | 118 |
Total | $ 2,773 |
7. Deferred Revenue (D
7. Deferred Revenue (Details) - Schedule of Deferred Revenue, by Arrangement, Disclosure - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Deferred Revenue, by Arrangement, Disclosure [Abstract] | ||||||
Total invoiced for M&S contracts for which revenue will be recognized in future periods | $ 15,507 | $ 17,491 | ||||
Less: Unpaid invoices relating to M&S agreements with a start date subsequent to the balance sheet date | (371) | (441) | ||||
Total deferred revenue | 15,136 | $ 16,013 | 17,050 | $ 15,919 | $ 16,160 | $ 17,445 |
Deferred revenue, current portion | 12,341 | 13,315 | ||||
Deferred revenue, non-current portion | $ 2,795 | $ 3,735 |
8. Stock Options, Restricted _3
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) | 9 Months Ended |
Sep. 30, 2018shares | |
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 | 3,955,830 |
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 | 280,000 |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Abstract] | ||||
Share-based compensation expense | $ 110 | $ 381 | $ 972 | $ 1,053 |
8. Stock Options, _2
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, 2018 | Dec. 31, 2017 | |
Schedule of Share-based Compensation, Stock Options, Activity [Abstract] | ||
Number of Shares, Outstanding | 2,585,210 | |
Weighted Average Exercise Price, Outstanding | $ 3.34 | |
Weighted Average Remaining Contractual Term, Outstanding | 6 years 215 days | 6 years 281 days |
Aggregate Intrinsic Value, Outstanding | $ 1,015 | |
Number of Shares, Exercisable | 1,163,958 | |
Weighted Average Exercise Price, Exercisable | $ 3.09 | |
Weighted Average Remaining Contractual Term, Exercisable | 4 years 219 days | |
Aggregate Intrinsic Value, Exercisable | $ 1,115 | |
Number of Shares, Granted | 504,737 | |
Weighted Average Exercise Price, Granted | $ 3.67 | |
Number of Shares, Forfeitures | (809,142) | |
Weighted Average Exercise Price, Forfeitures | $ 3.56 | |
Number of Shares, Exercised | (146,150) | |
Weighted Average Exercise Price, Exercised | $ 2.34 | |
Number of Shares, Outstanding | 2,134,655 | |
Weighted Average Exercise Price, Outstanding | $ 3.40 | |
Aggregate Intrinsic Value, Outstanding | $ 1,413 |
8. Stock Options, _3
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
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) | $ 1.57 | $ 1.94 | $ 1.56 | $ 1.67 |
Intrinsic value of options exercised | $ 205,111 | $ 9,284 | $ 205,111 | $ 351,893 |
Cash received from stock options exercised | $ 341,489 | $ 13,440 | $ 341,489 | $ 471,789 |
Number of options that vested (in Shares) | 72,748 | 28,570 | 511,900 | 430,724 |
Fair value of options that vested | $ 139,406 | $ 44,843 | $ 861,904 | $ 698,442 |
Unrecognized compensation expense related to non-vested options at end of period | $ 1,286,260 | $ 1,994,289 | $ 1,286,260 | $ 1,994,289 |
Weighted average years over which non-vested option expense will be recognized | 2 years 54 days | 2 years 40 days | 2 years 54 days | 2 years 40 days |
8. Stock Options, _4
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Compensation, Shares Outstanding under Stock Option Plan - shares | Sep. 30, 2018 | Dec. 31, 2016 |
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Compensation, Shares Outstanding under Stock Option Plan [Line Items] | ||
Options Outstanding | 2,134,655 | 2,585,210 |
2000 Stock Option Plan [Member] | ||
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Compensation, Shares Outstanding under Stock Option Plan [Line Items] | ||
Options Outstanding | 25,000 | |
2010 Employee LT Equity Incentive Plan [Member] | ||
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Compensation, Shares Outstanding under Stock Option Plan [Line Items] | ||
Options Outstanding | 1,066,319 | |
2016 Employee LT Equity Incentive Plan [Member] | ||
8. Stock Options, Restricted Stock and Share-Based Compensation (Details) - Schedule of Share-based Compensation, Shares Outstanding under Stock Option Plan [Line Items] | ||
Options Outstanding | 1,043,336 |
8. Stock Options, _5
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 - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2016 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Underlying Shares Outstanding (in Shares) | 2,134,655 | 2,585,210 |
Options Outstanding, Weighted Average Exercise Price | $ 3.40 | $ 3.34 |
Options Exercisable, Number of Underlying Shares (in Shares) | 1,163,958 | |
$1.43 - $2.32 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Exercise Price Range, Lower Range Limit | $ 1.43 | |
Exercise Price Range, Upper Range Limit | $ 2.32 | |
Underlying Shares Outstanding (in Shares) | 289,350 | |
Options Outstanding, Weighted Average Remaining Contractual Life | 2 years 51 days | |
Options Outstanding, Weighted Average Exercise Price | $ 1.86 | |
Options Exercisable, Number of Underlying Shares (in Shares) | 289,350 | |
Options Exercisable, Weighted Average Exercise Price | $ 1.86 | |
$2.34 - $3.52 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Exercise Price Range, Lower Range Limit | 2.34 | |
Exercise Price Range, Upper Range Limit | $ 3.52 | |
Underlying Shares Outstanding (in Shares) | 708,636 | |
Options Outstanding, Weighted Average Remaining Contractual Life | 5 years 281 days | |
Options Outstanding, Weighted Average Exercise Price | $ 3.29 | |
Options Exercisable, Number of Underlying Shares (in Shares) | 506,860 | |
Options Exercisable, Weighted Average Exercise Price | $ 3.23 | |
$3.53 - $5.30 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Exercise Price Range, Lower Range Limit | 3.53 | |
Exercise Price Range, Upper Range Limit | $ 5.30 | |
Underlying Shares Outstanding (in Shares) | 1,135,002 | |
Options Outstanding, Weighted Average Remaining Contractual Life | 8 years 3 months | |
Options Outstanding, Weighted Average Exercise Price | $ 3.86 | |
Options Exercisable, Number of Underlying Shares (in Shares) | 366,081 | |
Options Exercisable, Weighted Average Exercise Price | $ 3.85 | |
$5.44 - $5.44 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Exercise Price Range, Lower Range Limit | 5.44 | |
Exercise Price Range, Upper Range Limit | $ 5.44 | |
Underlying Shares Outstanding (in Shares) | 1,667 | |
Options Outstanding, Weighted Average Remaining Contractual Life | 87 days | |
Options Outstanding, Weighted Average Exercise Price | $ 5.44 | |
Options Exercisable, Number of Underlying Shares (in Shares) | 1,667 | |
Options Exercisable, Weighted Average Exercise Price | $ 5.44 |
8. Stock Options, _6
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Abstract] | ||||
Expected volatility | 48.00% | 50.00% | 48.00% | 49.00% |
Expected annual dividend yield | 1.50% | 1.50% | 1.50% | 1.50% |
Risk free rate of return | 2.80% | 1.95% | 2.75% | 1.94% |
Expected option term (years) | 6 years | 6 years | 6 years | 6 years |
9. Income Taxes (Details)
9. Income Taxes (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
9. Income Taxes (Details) [Line Items] | |||
Operating Loss Carryforwards | $ 23,000 | ||
Deferred Tax Assets, Tax Credit Carryforwards, Research | $ 0 | $ 0 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 34.00% | |
Research Tax Credit Carryforward [Member] | |||
9. Income Taxes (Details) [Line Items] | |||
Deferred Tax Assets, Tax Credit Carryforwards, Research | $ 189,000 | ||
Research Tax Credit Carryforward [Member] | Minimum [Member] | |||
9. Income Taxes (Details) [Line Items] | |||
Franchise Tax Credit Carryforwards Expiration Date | 2,034 | ||
Research Tax Credit Carryforward [Member] | Maximum [Member] | |||
9. Income Taxes (Details) [Line Items] | |||
Franchise Tax Credit Carryforwards Expiration Date | 2,038 |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Schedule of Components of Income Tax Expense (Benefit) [Abstract] | ||||
Federal | $ 166 | $ 29 | $ 243 | $ 733 |
Federal | 43 | 146 | 51 | 33 |
Federal | 209 | 175 | 294 | 766 |
State | 67 | 10 | 82 | 109 |
State | 5 | 9 | 10 | (5) |
State | 72 | 19 | 92 | 104 |
Total | 233 | 39 | 325 | 842 |
Total | 48 | 155 | 61 | 28 |
Total | $ 281 | $ 194 | $ 386 | $ 870 |
9. Income Taxes (_2
9. Income Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Deferred revenue | $ 829 | $ 775 |
Share-based compensation | 302 | 351 |
Compensation and benefits | 55 | 111 |
Texas franchise tax R&D credit | 189 | 185 |
Prepaid expenses not deductible for tax | 0 | 84 |
Allowance for doubtful accounts | 37 | 58 |
Net operating loss carryforward | 5 | 20 |
Deferred state income taxes | 51 | 61 |
Federal R&D credits | 0 | 0 |
Accrued expenses not deducted for tax | 5 | 9 |
Valuation allowance | (189) | (185) |
Total deferred tax assets | 1,284 | 1,469 |
Deferred tax liabilities: | ||
Intangible assets | 721 | 805 |
Book expenses deductible for tax purposes | 232 | 0 |
Depreciable Assets | 1 | 13 |
Total gross deferred tax liabilities | 954 | 818 |
Net deferred tax assets | $ 330 | $ 651 |
9. Income Taxes (_3
9. Income Taxes (Details) - Schedule of Unrecognized Tax Benefits Roll Forward - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Schedule of Unrecognized Tax Benefits Roll Forward [Abstract] | ||
Balance at beginning of period | $ 158 | $ 121 |
Balance at end of period | 120 | 153 |
Increases for tax positions related to the current year | 10 | 16 |
Increases for tax positions related to prior years | 0 | 16 |
Decreases for tax positions where the statue has expired | $ (48) | $ 0 |
9. Income Taxes (_4
9. Income Taxes (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||||
Income tax expense at federal statutory rate | $ 269 | $ 160 | $ 219 | $ 828 |
Increase (decrease) in taxes resulting from: | ||||
State taxes, net of federal benefit | 58 | 16 | 89 | 67 |
Stock based compensation | 14 | 37 | 164 | 121 |
Other | 2 | 7 | 7 | 19 |
R&D tax credit uncertain tax position (net) | (45) | 6 | (38) | 32 |
Research and development credit | (17) | (30) | (55) | (177) |
Domestic production activities deduction | 0 | (2) | 0 | (20) |
Income tax expense per the statements of operations | $ 281 | $ 194 | $ 386 | $ 870 |
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 | 6 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator for basic and diluted earnings per share: | |||||||
Net income (in Dollars) | $ 998 | $ (193) | $ 276 | $ (342) | $ 1,288 | $ 656 | $ 1,564 |
Denominators for basic and diluted earnings per share: | |||||||
Weighted average shares outstanding - basic | 21,688 | 21,792 | 21,746 | 21,672 | |||
Dilutive potential common shares | |||||||
Stock options and awards | 252 | 455 | 298 | 473 | |||
Denominator for diluted earnings per share | 21,940 | 22,247 | 22,044 | 22,145 | |||
Net income per common share - basic (in Dollars per share) | $ 0.05 | $ 0.01 | $ 0.03 | $ 0.07 | |||
Net income per common share – diluted (in Dollars per share) | $ 0.05 | $ 0.01 | $ 0.03 | $ 0.07 |
11. Dividends (De
11. Dividends (Details) - Schedule of Dividends Payable - $ / shares | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Schedule of Dividends Payable [Abstract] | ||||||||
Dividend per share of common stock | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.015 | $ 0.030 | $ 0.030 |
Dividend record date | Jun. 8, 2018 | Mar. 9, 2018 | Aug. 23, 2017 | May 23, 2017 | Feb. 23, 2017 | |||
Dividend payment date | Jun. 22, 2018 | Mar. 23, 2018 | Sep. 8, 2017 | Jun. 8, 2017 | Mar. 8, 2017 |
12. Commitments and Contingen_2
12. Commitments and Contingencies (Details) - USD ($) | Sep. 13, 2018 | Sep. 30, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Other Commitment | $ 1,300,000 | |
Loss Contingency, Damages Awarded, Value | $ 1,400,000 | |
Estimated Litigation Liability, Current | 1,400,000 | |
Nontrade Receivables, Current | $ 1,400,000 |
13. Concentration of Business_2
13. Concentration of Business Volume and Credit Risk (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | ||||
13. Concentration of Business Volume and Credit Risk (Details) [Line Items] | ||||
Concentration Risk, Percentage | 12.00% | 14.00% | 13.00% | 14.00% |
Accounts Receivable [Member] | Credit Concentration Risk [Member] | ||||
13. Concentration of Business Volume and Credit Risk (Details) [Line Items] | ||||
Concentration Risk, Percentage | 17.00% |
14. Segment and Geographic Di_2
14. Segment and Geographic Disclosures (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Number of Operating Segments | 1 | |||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | ||||
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Concentration Risk, Percentage | 12.00% | 14.00% | 13.00% | 14.00% |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Outside the United States [Member] | ||||
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Concentration Risk, Percentage | 30.00% | 29.00% | 26.00% | 26.00% |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | UNITED KINGDOM | ||||
14. Segment and Geographic Disclosures (Details) [Line Items] | ||||
Concentration Risk, Percentage | 13.00% |