Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 23, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | DATA I/O CORPORATION | ||
Entity Central Index Key | 351,998 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 61,047,382 | ||
Entity Common Stock, Shares Outstanding | 8,293,267 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS (in
CONSOLIDATED BALANCE SHEETS (in thousands, except share data) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 18,541 | $ 11,571 |
Trade accounts receivable, net of allowance for doubtful accounts of $73 and $96, respectively | 3,769 | 4,725 |
Inventories | 4,168 | 4,059 |
Other current assets | 708 | 483 |
TOTAL CURRENT ASSETS | 27,186 | 20,838 |
Property, plant and equipment - net | 2,458 | 1,875 |
Income tax receivable | 598 | 0 |
Other assets | 45 | 63 |
TOTAL ASSETS | 30,287 | 22,776 |
Current Liabilities | ||
Accounts payable | 1,301 | 1,428 |
Accrued compensation | 3,536 | 2,208 |
Deferred revenue | 1,787 | 1,926 |
Other accrued liabilities | 858 | 667 |
Income taxes payable | 218 | 36 |
TOTAL CURRENT LIABILITIES | 7,700 | 6,265 |
Long-term other payables | 527 | 479 |
COMMITMENTS | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Preferred stock - Authorized, 5,000,000 shares, including 200,000 shares of Series A Junior Participating Issued and outstanding, none | 0 | 0 |
Common stock, at stated value - Authorized, 30,000,000 shares Issued and outstanding, 8,276,813 shares as of December 31,2017 and 8,015,746 shares as of December 31, 2016 | 18,989 | 19,204 |
Accumulated earnings (deficit) | 2,089 | (3,360) |
Accumulated other comprehensive income | 982 | 188 |
TOTAL STOCKHOLDERS' EQUITY | 22,060 | 16,032 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 30,287 | $ 22,776 |
CONSOLIDATED BALANCE SHEETS (i3
CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Trade accounts receivable, net of allowance | $ 73 | $ 96 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, authorized shares (including Series A) | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, authorized shares | 30,000,000 | 30,000,000 |
Common stock, issued shares | 8,276,813 | 8,015,746 |
Common stock, outstanding shares | 8,276,813 | 8,015,746 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Net Sales | $ 34,051 | $ 23,413 |
Cost of goods sold | 13,992 | 10,545 |
Gross margin | 20,059 | 12,868 |
Operating expenses: | ||
Research and development | 6,896 | 5,065 |
Selling, general and administrative | 8,116 | 6,376 |
Total operating expenses | 15,012 | 11,441 |
Operating income | 5,047 | 1,427 |
Non-operating income (expense): | ||
Interest income | 29 | 44 |
Gain on sale of assets | 366 | 140 |
Foreign currency transaction gain (loss) | (281) | 81 |
Total non-operating income (expense) | 114 | 265 |
Income before income taxes | 5,161 | 1,692 |
Income tax (expense) benefit | 288 | (36) |
Net income | $ 5,449 | $ 1,656 |
Basic earnings per share | $ 0.67 | $ 0.21 |
Diluted earnings per share | $ 0.65 | $ 0.20 |
Weighted-average basic shares | 8,149 | 7,968 |
Weighted-average diluted shares | 8,436 | 8,132 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements Of Comprehensive Income Loss In Thousands | ||
Net Income | $ 5,449 | $ 1,656 |
Other comprehensive income: | ||
Foreign currency translation gain (loss) | 794 | (471) |
Comprehensive income | $ 6,243 | $ 1,185 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning Balance, Amount at Dec. 31, 2015 | $ 19,051 | $ (5,016) | $ 659 | $ 14,694 |
Beginning Balance, Shares at Dec. 31, 2015 | 7,943,720 | |||
Stock options exercised, Amount | $ (81) | (81) | ||
Stock options exercised, Shares | 30,948 | |||
Repurchased shares, Amount | $ (191) | (191) | ||
Repurchased shares, Shares | (80,345) | |||
Stock awards issued, net of tax withholding, Amount | $ (87) | (87) | ||
Stock awards issued, net of tax withholding, Shares | 118,737 | |||
Issuance of stock through Employee Stock Purchase Plan, Amount | $ 6 | 6 | ||
Issuance of stock through Employee Stock Purchase Plan, Shares | 2,686 | |||
Share-based compensation | $ 506 | 506 | ||
Net income | 1,656 | 1,656 | ||
Other comprehensive income (loss) | (471) | (471) | ||
Ending Balance, Amount at Dec. 31, 2016 | $ 19,204 | (3,360) | 188 | 16,032 |
Ending Balance, Shares at Dec. 31, 2016 | 8,015,746 | |||
Stock options exercised, Amount | $ (549) | (549) | ||
Stock options exercised, Shares | 131,065 | |||
Stock awards issued, net of tax withholding, Amount | $ (401) | (401) | ||
Stock awards issued, net of tax withholding, Shares | 128,262 | |||
Issuance of stock through Employee Stock Purchase Plan, Amount | $ 12 | 12 | ||
Issuance of stock through Employee Stock Purchase Plan, Shares | 1,740 | |||
Share-based compensation | $ 723 | 723 | ||
Net income | 5,449 | 5,449 | ||
Other comprehensive income (loss) | 794 | 794 | ||
Ending Balance, Amount at Dec. 31, 2017 | $ 18,989 | $ 2,089 | $ 982 | $ 22,060 |
Ending Balance, Shares at Dec. 31, 2017 | 8,276,813 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 5,449 | $ 1,656 |
Adjustments to reconcile income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 822 | 602 |
Gain on sale of assets | (366) | (140) |
Equipment transferred to cost of goods sold | 749 | 882 |
Share-based compensation | 714 | 520 |
Net change in: | ||
Trade accounts receivable | 1,215 | (2,051) |
Inventories | 59 | (452) |
Other current assets | (198) | 73 |
Accounts payable and accrued liabilities | 1,520 | 869 |
Deferred revenue | (247) | 951 |
Other long-term liabilities | (11) | 48 |
Deposits and other long-term assets | (580) | 0 |
Net cash provided by (used in) operating activities | 9,126 | 2,958 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (2,154) | (2,122) |
Proceeds from sale of assets | 366 | 140 |
Cash provided by (used in) investing activities | (1,788) | (1,982) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from issuance of common stock, less payments for shares withheld to cover tax | (939) | (163) |
Repurchase of common stock | 0 | (191) |
Cash provided by (used in) financing activities | (939) | (354) |
Increase in cash and cash equivalents | 6,399 | 622 |
Effects of exchange rate changes on cash | 571 | (319) |
Cash and cash equivalents at beginning of period | 11,571 | 11,268 |
Cash and cash equivalents at end of period | 18,541 | 11,571 |
Supplemental disclosure of non-cash financing activities: | ||
Cash paid (received) during the year for: Income Taxes | $ 127 | $ 7 |
NOTE 1 - SUMMARY OF SIGNIFICANT
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Nature of Operations Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) designs, manufactures and sells programming systems used by designers and manufacturers of electronic products. Our programming system products are used to program integrated circuits (“ICs” or “devices” or “semiconductors”) with the specific unique data necessary for the ICs contained in various products, and are an important tool for the electronics industry experiencing growing use of programmable ICs. Customers for our programming system products are located around the world, primarily in the Far East, Europe and the Americas. Our manufacturing operations are currently located in Redmond, Washington, United States and Shanghai, China. Principles of Consolidation The consolidated financial statements include the accounts of Data I/O Corporation and our wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include: Revenue Recognition Allowance for Doubtful Accounts Inventory Warranty Accruals Tax Valuation Allowances Share-based Compensation Foreign Currency Translation Assets and liabilities of foreign subsidiaries are translated at the exchange rate on the balance sheet date. Revenues, costs and expenses of foreign subsidiaries are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to stockholders’ equity, net of taxes recognized. Realized and unrealized gains and losses resulting from the effects of changes in exchange rates on assets and liabilities denominated in foreign currencies are included in non-operating expense as foreign currency transaction gains and losses. Cash and Cash Equivalents All highly liquid investments purchased with an original maturity of 90 days or less are considered cash equivalents. We maintain our cash and cash equivalents with major financial institutions in the United States of America, which are insured by the Federal Deposit Insurance Corporation (FDIC), and foreign jurisdictions. Deposits in U.S. banks exceed the FDIC insurance limit. We have not experienced any losses on our cash and cash equivalents. Cash and cash equivalents held in foreign bank accounts, primarily China, Germany and Canada, totaled (in millions) $6.2 at December 31, 2017 and $5.6 at December 31, 2016. Fair Value of Financial Instruments Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and other short-term liabilities. Accounts Receivable The majority of our accounts receivable are due from companies in the electronics manufacturing industries. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are typically due within 30 to 60 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine the allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the industry and geographic payment practices involved, our previous bad debt experience, the customer’s current ability to pay their obligation to us, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Interest may be accrued, at the discretion of management and according to our standard sales terms, beginning on the day after the due date of the receivable. However, interest income is subsequently recognized on these accounts either to the extent cash is received, or when the future collection of interest and the receivable balance is considered probable by management. Inventories Inventories are stated at the lower of cost or net realizable value with cost being the currently adjusted standard cost, which approximates cost on a first-in, first-out basis. We estimate changes to inventory for obsolete, slow-moving, excess and non-salable inventory by reviewing current transactions and forecasted product demand. We evaluate our inventories on an item by item basis and record an adjustment (lower of cost or market) accordingly. Property, Plant and Equipment Property, plant and equipment, including leasehold improvements, are stated at cost and depreciation is calculated over the estimated useful lives of the related assets or lease terms on the straight-line basis. We depreciate substantially all manufacturing and office equipment over periods of three to seven years. We depreciate leasehold improvements over the remaining portion of the lease or over the expected life of the asset if less than the remaining term of the lease. We regularly review all of our property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the total of future undiscounted cash flows is less than the carrying amount of these assets, an impairment loss, if any, based on the excess of the carrying amount over the fair value of the assets, is recorded. Based on this evaluation, no impairment was noted for property, plant and equipment for the years ended December 31, 2017 and 2016. Patent Costs We expense external costs, such as filing fees and associated attorney fees, incurred to obtain initial patents, but capitalize patents obtained through acquisition as intangible assets. We also expense costs associated with maintaining and defending patents subsequent to their issuance. Income Taxes Income taxes are computed at current enacted tax rates, less tax credits using the asset and liability method. Deferred taxes are adjusted both for items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, and any changes in the valuation allowance caused by a change in judgment about the reliability of the related deferred tax assets. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. Tax reform and the effect of the “Deemed Repatriation” have been included in our 2017 financial statements. Share-Based Compensation All stock-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line single-option method. Our share-based compensation is reduced for estimated forfeitures at the time of grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates. Revenue Recognition We recognize revenue at the time the product is shipped or when the service is delivered. We have determined that our programming equipment has reached a point of maturity and stability such that product acceptance can be assured by testing at the factory prior to shipment and that the installation meets the criteria to be considered a separate element. These systems are standard products with published product specifications and are configurable with standard options. The evidence that these systems could be deemed as accepted was based upon having standardized factory production of the units, results from batteries of tests of product performance to our published specifications, quality inspections and installation standardization, as well as past product operation validation with the customer and the history provided by our installed base of products upon which the current versions were based. The revenue related to products requiring installation that is perfunctory is recognized at the time of shipment. Installation that is considered perfunctory includes any installation that can be performed by other parties, such as distributors, other vendors, or the customers themselves. This takes into account the complexity, skill and training needed as well as customer expectations regarding installation. We enter into multiple deliverable arrangements that arise during the sale of a system that includes an installation component, a service and support component and a software maintenance component. We allocate the value of each element based on relative selling prices. Relative selling price is based on the selling price of the standalone system. For the installation and service and support components, we use the value of the discount given to distributors who perform these components. For software maintenance components, we use what we charge for annual software maintenance renewals after the initial year the system is sold. Revenue is recognized on the system sale based on shipping terms, installation revenue is recognized after the installation is performed, and hardware service and support and software maintenance revenue is recognized ratably over the term of the agreement, typically one year. When we sell software separately, we recognize software revenue upon shipment, provided that only inconsequential obligations remain on our part and substantive acceptance conditions, if any, have been met. We recognize revenue when persuasive evidence of an arrangement exists, shipment has occurred, the price is fixed or determinable, the buyer has paid or is obligated to pay, collectability is reasonably assured, substantive acceptance conditions, if any, have been met, the obligation is not contingent on resale of the product, the buyer’s obligation would not be changed in the event of theft, physical destruction or damage to the product, the buyer acquiring the product for resale has economic substance apart from us and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. We establish a reserve for sales returns based on historical trends in product returns and estimates for new items. Sales were recorded net of actual sales returns and changes to the associated sales return reserve. Sales return reserves were $80,000 and $50,000 at December 31, 2017 and 2016, respectively. We transfer certain products out of service from their internal use and make them available for sale. The products transferred are our standard products in one of the following areas: service loaners, rental or test units; engineering test units; or sales demonstration equipment. Once transferred, the equipment is sold by our regular sales channels as used equipment inventory. These product units often involve refurbishing and an equipment warranty, and are conducted as sales in our normal and ordinary course of business. The transfer amount is the product unit’s net book value and the sale transaction is accounted for as revenue and cost of goods sold. Research and Development Research and development costs are generally expensed as incurred. Advertising Expense Advertising costs are expensed as incurred. Total advertising expenses were approximately $154,000 and $108,000 in 2017 and 2016, respectively. Warranty Expense We record a liability for an estimate of costs that we expect to incur under our basic limited warranty when product revenue is recognized. Factors affecting our warranty liability include the number of units sold and historical and anticipated rates of claims and costs per claim. We normally provide a warranty for our products against defects for periods ranging from ninety days to one year. We provide for the estimated cost that may be incurred under our product warranties and periodically assess the adequacy of our warranty liability based on changes in the above factors. We record revenues on extended warranties on a straight-line basis over the term of the related warranty contracts. Service costs are expensed as incurred. Earnings (Loss) Per Share Basic earnings (loss) per share exclude any dilutive effects of stock options. Basic earnings (loss) per share are computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted-average number of common shares and common stock equivalent shares outstanding during the period. The common stock equivalent shares from equity awards used in calculating diluted earnings per share were 287,000 and 164,000 for the years ended December 31, 2017 and 2016, respectively. Options to purchase 12,603 and 117,352 shares of common stock were outstanding as of December 31, 2017 and 2016, respectively, but were excluded from the computation of diluted EPS for the period then ended because the options were anti-dilutive. Diversification of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of trade receivables. Our trade receivables are geographically dispersed and include customers in many different industries. As of December 31, 2017, one customer, Data Copy Limited, our distributor in China, accounted for greater than 10% of our consolidated accounts receivable balance at December 31, 2017. Our consolidated accounts receivable balance as of December 31, 2017 and 2016 includes foreign accounts receivable in the functional currency of our foreign subsidiaries amounting to $1,228,000 and $2,554,000, respectively. We generally do business with our foreign distributors in U.S. Dollars. We believe that risk of loss is significantly reduced due to the diversity of our end-customers and geographic sales areas. We perform on-going credit evaluations of our customers’ financial condition and require collateral, such as letters of credit and bank guarantees, or prepayment whenever deemed necessary. New Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (ASU 2016-09), “Improvements to Employee Share-Based Payment Accounting”. ASU 2016-09 requires excess tax benefits to be recognized in the statement of operations as an income tax expense and is applied prospectively by means of a cumulative-effect adjustment of excess tax benefits from equity in the period of adoption. The standard establishes an alternative practical expedient for estimating the expected term of an award by recognizing the effects of forfeitures in compensation cost when the forfeitures occur. We have continued to estimate forfeitures, and excess tax benefits have not been allocated to equity, as they are all in net operating losses, that have a full valuation allowance. Adoption of the alternative practical expedient is applied prospectively on an entity-wide basis. The standard requires that amounts paid to a taxing authority on the employee’s behalf as a result of directly withholding shares for tax-withholding purposes are to be presented on a retrospective basis as a financing activity on the statement of cash flows. The standard was adopted effective beginning January 1, 2017 and did not have a material impact on our financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 provides companies with a single model for accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers” (ASU 2015-14), deferring the effective date of the new revenue recognition standard by one year and now takes effect for public entities in fiscal years beginning after December 15, 2017. We expect to adopt the revenue standard as of January 1, 2018 and do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements including the potential impact of the additional disclosures. We are implementing changes to our accounting policies, internal controls, and disclosures to support the new standard, however, these changes are not expected to be material. |
NOTE 2 - ACCOUNTS RECEIVABLE, N
NOTE 2 - ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | December 31, December 31, (in thousands) Trade accounts receivable $ 3,842 $ 4,821 Less allowance for doubtful receivables 73 96 Trade accounts receivable, net $ 3,769 $ 4,725 Changes in Data I/O’s allowance for doubtful accounts are as follow: December 31, December 31, (in thousands) Beginning balance $ 96 $ 43 Bad debt expense (reversal) (24 ) 55 Accounts written-off — (2 ) Recoveries 1 — Ending balance $ 73 $ 96 |
NOTE 3 - INVENTORIES
NOTE 3 - INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | December 31, December 31, (in thousands) Raw material $ 2,392 $ 2,402 Work-in-process 1,091 1,226 Finished goods 685 431 Inventories $ 4,168 $ 4,059 |
NOTE 4 - PROPERTY, PLANT AND EQ
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | December 31, December 31, (in thousands) Leasehold improvements $ 416 $ 376 Equipment 5,279 4,449 Sales demonstration equipment 1,315 1,158 7,010 5,983 Less accumulated depreciation 4,552 4,108 Property and equipment, net $ 2,458 $ 1,875 Total depreciation expense recorded for 2017 and 2016 was $822,000 and $602,000, respectively. |
NOTE 5 - INCOME TAX RECEIVABLE
NOTE 5 - INCOME TAX RECEIVABLE | 12 Months Ended |
Dec. 31, 2017 | |
Note 5 - Income Tax Receivable | |
INCOME TAX RECEIVABLE | On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes include the repeal of corporate Alternative Minimum Tax (AMT) for tax years after December 31, 2017. As a result, we have recorded a long-term income tax receivable of $598,000 for the refundable AMT credits net of sequestration. |
NOTE 6 - OTHER ACCRUED LIABILIT
NOTE 6 - OTHER ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
OTHER ACCRUED LIABILITIES | Other accrued liabilities consisted of the following components: December 31, December 31, (in thousands) Product warranty $ 530 $ 371 Sales return reserve 80 50 Other taxes 109 149 Other 139 97 Other accrued liabilities $ 858 $ 667 The changes in our product warranty liability for the year ending December 31, 2017 are follows: December 31, (in thousands) Liability, beginning balance $ 371 Net expenses 941 Warranty claims (941 ) Accrual revisions 159 Liability, ending balance $ 530 |
NOTE 7 - OPERATING LEASE COMMIT
NOTE 7 - OPERATING LEASE COMMITMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
OPERATING LEASE COMMITMENTS | We have commitments under non-cancelable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as follows: For the years ending December 31: Operating (in thousands) 2018 $ 922 2019 946 2020 933 2021 759 2022 232 Thereafter — Total $ 3,792 Lease and rental expense was $862,000 and $927,000 in 2017 and 2016, respectively. Rent expense is recorded on a straight line basis, over the term of the lease, for leases that contain fixed escalation clauses. During the third quarter of 2017, we amended our lease agreement for the Redmond, Washington headquarters facility effective September 12, 2017, extending the lease to July 31, 2022, waiving a potential space give back provision and receiving lease inducement incentives. Previously on June 8, 2015 the lease had been amended to relocate our headquarters to a nearby building and lower the square footage to approximately 20,460. The lease base annual rental payments during 2017 and 2016 were approximately $303,000 and $200,000, respectively. In addition to the Redmond facility, approximately 24,000 square feet is leased at two foreign locations, including our sales, service, operations and engineering office located in Shanghai, China, and our German sales, service and engineering office located near Munich, Germany. We signed a lease agreement effective November 1, 2015 that extends through October 31, 2021 for a new facility located in Shanghai, China which we moved into during the first quarter of 2016. The new lease approximately doubled our space to 19,400 square feet at approximately 54% of the prior lease rental rate. The lease base annual rental payments during 2017 and 2016 were approximately $276,000 and $233,000, respectively. During the fourth quarter of 2016, we signed a lease agreement for a new facility located near Munich, Germany which was effective March 1, 2017 and extends through February 28, 2022. The new lease slightly increased our space to 4,895 square feet at approximately the same cost per square foot as the prior lease. The lease base annual rental payments during 2017 and 2016 were approximately $64,000 and $61,000, respectively. |
NOTE 8 - OTHER COMMITMENTS
NOTE 8 - OTHER COMMITMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
OTHER COMMITMENTS | We have purchase obligations for inventory and production costs as well as other obligations such as capital expenditures, service contracts, marketing, and development agreements. Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure and approximate timing of the transaction. Most arrangements are cancelable without a significant penalty, and with short notice, typically less than 90 days. At December 31, 2017, the purchase commitments and other obligations totaled $1,962,000 of which all but $12,000 are expected to be paid over the next twelve months. |
NOTE 9 - CONTINGENCIES
NOTE 9 - CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | As of December 31, 2017, we were not a party to any legal proceedings or aware of any indemnification agreement claims, the adverse outcome of which in management’s opinion, individually or in the aggregate, would have a material adverse effect on our results of operations or financial position. |
NOTE 10 - STOCK AND RETIREMENT
NOTE 10 - STOCK AND RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Note 10 - Stock And Retirement Plans | |
STOCK AND RETIREMENT PLANS | Stock Option Plans At December 31, 2017, there were 244,861 shares available for future grant under Data I/O Corporation 2000 Stock Compensation Incentive Plan (“2000 Plan”). At December 31, 2017 there were shares of Common Stock reserved for issuance consisting of 605,850 under the 2000 plan. Pursuant to this 2000 Plan, options are granted to our officers and key employees with exercise prices equal to the fair market value of the Common Stock at the date of grant and generally vest over four years. Options granted under the plans have a maximum term of six years from the date of grant. Stock awards are also granted under the 2000 Plan which generally vest over four years. Employee Stock Purchase Plan Under the Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase shares of our Common Stock at six-month intervals at 95% of the fair market value on the last day of each six-month period. Employees may purchase shares having a value not exceeding ten percent of their gross compensation during an offering period. During 2017 and 2016, a total of 1,740 and 2,686 shares, respectively, were purchased under the plan at average prices of $5.78 and $2.63 per share, respectively. At December 31, 2017, a total of 51,947 shares were reserved for future issuance. Stock Appreciation Rights Plan We have a Stock Appreciation Rights (“SAR”) Plan under which each director, executive officer or holder of 10% or more of our Common Stock has a SAR with respect to each exercisable stock option. The SAR entitles the SAR holder to receive cash from us for the difference between the market value of the stock and the exercise price of the option in lieu of exercising the related option. SARs are only exercisable following a tender offer or exchange offer for our stock, or following approval by shareholders of Data I/O of any merger, consolidation, reorganization or other transaction providing for the conversion or exchange of more than 50% of the common shares outstanding. As no event has occurred, which would make the SARs exercisable, and no such event is deemed probable, no compensation expense has been recorded under this plan. At December 31, 2017 there were 40,000 SARs outstanding. Director Fee Plan We have a Director Fee Plan available to compensate directors who are not employees of Data I/O Corporation with equity. No shares were issued from the plan for 2017 or 2016 board service and 151,322 shares remain available in the plan as of December 31, 2017. Retirement Savings Plan We have a savings plan that qualifies as a cash or deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the plan, participating U.S. employees may defer their pre-tax salary or post-tax salary if Roth is elected, subject to IRS limitations. In fiscal years 2017 and 2016, we contributed one dollar for each dollar contributed by a participant, with a maximum contribution of four percent of a participant’s eligible earnings. Our matching contribution expense for the savings plan, net of forfeitures, was approximately $232,000 and $129,000 in 2017 and 2016, respectively. Employer matching contributions owed to the plan were $251,000 and $181,000 at December 31, 2017 and 2016, respectively. |
NOTE 11 - SHARE-BASED COMPENSAT
NOTE 11 - SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
SHARE-BASED COMPENSATION | For share-based awards granted, we have recognized compensation expense based on the estimated grant date fair value method. For these awards we have recognized compensation expense using a straight-line amortization method and reduced for estimated forfeitures. The impact on our results of operations of recording share-based compensation for the year ended December 31, 2017 and 2016 was as follows: Year Ended December 31, 2017 2016 (in thousands) Cost of goods sold $ 18 $ 13 Research and development 164 106 Selling, general and administrative 532 401 Total share-based compensation $ 714 $ 520 An immaterial amount of share-based compensation was capitalized into inventory as overhead for the years ended December 31, 2017 and 2016, respectively. The fair values of share-based awards for employee stock option awards were estimated at the date of grant using the Black-Scholes valuation model. The volatility and expected life of the options used in calculating the fair value of share-based awards may exclude certain periods of historical data that we considered atypical and not likely to occur in future periods. The following weighted average assumptions were used to calculate the fair value of options granted during the years ended December 31: Employee Stock Options 2017 2016 Risk-free interest rates 1.72 % N/A Volatility factors 0.62 N/A Expected life of the option in years 4.0 N/A Expected dividend yield None N/A The risk-free interest rate used in the Black-Scholes valuation method is based on the implied yield currently available in U.S. Treasury securities at maturity with an equivalent term. We have not recently declared or paid any dividends and do not currently have plans to do so in the future. The expected term of options represents the period that our stock-based awards are expected to be outstanding and has been determined based on historical weighted average holding periods and projected holding periods for the remaining unexercised shares. Consideration was given to the contractual terms of our stock-based awards, vesting schedules and expectations of future employee behavior. Expected volatility is based on the annualized daily historical volatility of our stock over a representative period. The following table summarizes stock option activity under our stock option plans for the twelve months ended December 31: 2017 2016 Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Outstanding at beginning of year 376,000 $ 2.95 574,000 $ 2.97 Granted 25,000 8.03 — 0.00 Exercised (346,000 ) 2.83 (130,000 ) 2.38 Cancelled, Expired or Forfeited (15,000 ) 6.01 (68,000 ) 4.25 Outstanding at end of year 40,000 $ 6.10 3.60 376,000 $ 2.95 1.67 Vested or expected to vest at the end of the period 34,460 $ 5.79 3.29 375,055 $ 2.96 1.67 Exercisable at end of year 16,563 $ 3.37 0.91 357,250 $ 3.00 1.62 The aggregate intrinsic value of outstanding options is $242,553. This represents the total pretax intrinsic value, based on the closing stock price of $12.04 at December 31, 2017, which would have been received by award holders had all award holders exercised their stock options that were in-the-money as of that date. The aggregate intrinsic value of awards exercised during the twelve month period ended December 31, 2017 was $1,730,249. Restricted stock award including performance-based stock award activity under our share-based compensation plan was as follows: 2017 2016 Awards Weighted - Average Grant Date Fair Value Awards Weighted - Average Grant Date Fair Value Outstanding at beginning of year 464,850 $ 2.78 389,100 $ 2.86 Granted 287,600 7.29 227,100 2.61 Vested (181,725 ) 2.72 (148,100 ) 2.72 Cancelled (4,875 ) 3.06 (3,250 ) 2.73 Outstanding at end of year 565,850 $ 5.09 464,850 $ 2.78 The remaining unamortized expected future compensation expense and remaining amortization period associated with unvested option grants and restricted stock awards are: December 31, December 31, Unamortized future compensation expense $ 2,560,844 $ 1,093,144 Remaining weighted average amortization period in years 2.98 2.53 |
NOTE 12 - SHARE REPURCHASE PROG
NOTE 12 - SHARE REPURCHASE PROGRAMS | 12 Months Ended |
Dec. 31, 2017 | |
Note 12 - Share Repurchase Programs | |
SHARE REPURCHASE PROGRAMS | On February 24, 2016, our Board of Directors approved a share repurchase program with provisions to buy back up to $1 million of our stock during the period from March 2, 2016 through March 31, 2017. The program was established with a 10b5-1 plan under the Exchange Act to provide flexibility to make purchases throughout the period. For the year ended December 31, 2016, 80,345 shares of stock have been repurchased at an average price of $2.36 for a total of $189,360 plus $1,649 in commissions and charges. There were no stock repurchases made under this program during the twelve month period ending December 31, 2017. There were no new stock repurchase programs in effect during the twelve month period ending December 31, 2017. The following is a summary of the stock repurchase program from March 2, 2016 through December 31, 2016: Repurchases by Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program Approximate Dollar Value of Shares that May Yet Be Purchased under the Program March 2016 42,515 $ 2.26 42,515 $ 903,161 April 2016 8,480 $ 2.35 8,480 $ 883,064 May 2016 7,650 $ 2.52 7,650 $ 863,602 June 2016 15,200 $ 2.45 15,200 $ 826,078 July 2016 6,500 $ 2.61 6,500 $ 808,991 Total 80,345 $ 2.36 80,345 |
NOTE 13 - INCOME TAXES
NOTE 13 - INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Components of income (loss) before taxes: Year Ended December 31, (in thousands) 2017 2016 U.S. operations $ 3,817 $ 1,401 Foreign operations 1,344 291 Total income (loss) before taxes $ 5,161 $ 1,692 Income tax expense (benefit) consists of: (in thousands) Year Ended December 31, Current tax expense (benefit) 2017 2016 U.S. federal $ (494 ) $ 25 State 8 6 Foreign 198 5 (288 ) 36 Deferred tax expense (benefit) – U.S. federal — — Total income tax expense (benefit) $ (288 ) $ 36 A reconciliation of our effective income tax and the U.S. federal tax rate is as follows: Year Ended December 31, 2017 2016 (in thousands) Statutory tax $ 1,755 $ 575 State and foreign income tax, net of federal income tax benefit 83 259 Valuation allowance for deferred tax assets (4,800 ) (603 ) Federal rate change 2,979 — Foreign sourced deemed dividend income 1,145 — Stock based compensation (970 ) (184 ) AMT credit refund (494 ) — Other 14 (11 ) Total income tax expense (benefit) $ (288 ) $ 36 The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets are presented below: Year Ended December 31, 2017 2016 (in thousands) Deferred income tax assets: Allowance for doubtful accounts $ 11 $ 17 Inventory and product return reserves 406 632 Compensation accruals 1,233 1,726 Accrued liabilities 236 524 Book-over-tax depreciation and amortization 33 93 Foreign net operating loss carryforwards 133 550 U.S. net operating loss carryforwards 2,761 6,419 U.S. credit carryforwards 2,017 1,287 6,830 11,248 Valuation Allowance (6,830 ) (11,248 ) Total Deferred Income Tax Assets $ — $ — The valuation allowance for deferred tax assets decreased $4,418,000 and 421,000 during the years ended December 31, 2017 and 2016, respectively. The net deferred tax assets have a full valuation allowance provided due to uncertainty regarding our ability to utilize such assets in future years. This full valuation allowance evaluation is based upon our volatile history of losses and the cyclical nature of our industry and capital spending. Credit carryforwards consist primarily of research and experimental and foreign tax credits. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. We have completed our accounting for the effects of the Act during the period ending December 31, 2017. The changes that impact our 2017 financial statements include: a federal corporate tax rate decrease from 34% to 21% for tax years beginning after December 31, 2017, the repeal of corporate Alternative Minimum Tax (AMT) for tax years after December 31, 2017, and a one-time tax on the mandatory deemed repatriation of cumulative foreign earnings of “post 1986 Earnings & Profits”. We have computed our provision for income taxes in accordance with the Act and guidance available as of the date of this filing and as a result have recorded a net tax benefit of $531,000 on our income statement in the fourth quarter of 2017, the period in which the legislation was enacted, made up of $67,000 of additional tax relating to the “deemed repatriation” and recognizing a tax benefit of $598,000 related to refundable “Alternative Minimum Tax Credits” in carryforward. We have estimated that the deemed repatriation tax will result in the utilization of $3.4 million of net operating loss carryforwards against which we maintain a corresponding valuation allowance. As a result of the corporate income tax rate reduction from 34% to 21%, we have revalued our net deferred tax assets at December 31, 2017, which resulted in a decrease of the net deferred tax assets and corresponding valuation allowance balance of $3.0 million. U.S. net operating loss carryforwards are $13,147,000 at December 31, 2017 with expiration years from 2022 to 2034. Utilization of net operating loss and credit carryforwards is subject to certain limitations under Section 382 of the Internal Revenue Code of 1986, as amended. The gross changes in uncertain tax positions resulting in unrecognized tax benefits are presented below: Year Ended December 31, 2017 2016 (in thousands) Unrecognized tax benefits, opening balance $ 226 $ 210 Prior period tax position increases 10 — Additions based on tax positions related to current year 36 16 Unrecognized tax benefits, ending balance $ 272 $ 226 Historically, we have incurred minimal interest expense and no penalties associated with tax matters. We have adopted a policy whereby amounts related to penalties associated with tax matters are classified as general and administrative expense when incurred and amounts related to interest associated with tax matters are classified as interest income or interest expense. Tax years that remain open for examination include 2014, 2015, 2016 and 2017 in the United States of America. In addition, various tax years from 2000 to 2013 may be subject to examination in the event that we utilize the net operating losses and credit carryforwards from those years in our current or future year tax returns. |
NOTE 14 - SEGMENT AND GEOGRAPHI
NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | We consider our operations to be a single operating segment, focused on the design, manufacturing and sale of programming systems used by designers and manufacturers of electronic products. Major operations outside the U.S. include sales, engineering and service support subsidiaries in Germany as well as in China, which also manufactures some of our products. The following tables provide summary operating information by geographic area: Year Ended December 31, (in thousands) 2017 2016 Net sales: U.S. $ 2,874 $ 2,936 Europe 14,899 8,730 Rest of World 16,278 11,747 $ 34,051 $ 23,413 Included in Europe and Rest of World net sales are the following significant balances: Germany $ 7,982 $ 4,482 China $ 5,865 $ 3,824 Operating income: U.S. $ 499 $ 669 Europe 2,171 132 Rest of World 2,377 626 $ 5,047 $ 1,427 Identifiable assets: U.S. $ 18,340 $ 11,346 Europe 5,001 4,993 Rest of World 6,946 6,437 $ 30,287 $ 22,776 |
NOTE 1 - SUMMARY OF SIGNIFICA22
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Nature of Operations | Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) designs, manufactures and sells programming systems used by designers and manufacturers of electronic products. Our programming system products are used to program integrated circuits (“ICs” or “devices” or “semiconductors”) with the specific unique data necessary for the ICs contained in various products, and are an important tool for the electronics industry experiencing growing use of programmable ICs. Customers for our programming system products are located around the world, primarily in the Far East, Europe and the Americas. Our manufacturing operations are currently located in Redmond, Washington, United States and Shanghai, China. |
Principles of Consolidation | The consolidated financial statements include the accounts of Data I/O Corporation and our wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include: Revenue Recognition Allowance for Doubtful Accounts Inventory Warranty Accruals Tax Valuation Allowances Share-based Compensation |
Foreign Currency Translation | Assets and liabilities of foreign subsidiaries are translated at the exchange rate on the balance sheet date. Revenues, costs and expenses of foreign subsidiaries are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to stockholders’ equity, net of taxes recognized. Realized and unrealized gains and losses resulting from the effects of changes in exchange rates on assets and liabilities denominated in foreign currencies are included in non-operating expense as foreign currency transaction gains and losses. |
Cash and Cash Equivalents | All highly liquid investments purchased with an original maturity of 90 days or less are considered cash equivalents. We maintain our cash and cash equivalents with major financial institutions in the United States of America, which are insured by the Federal Deposit Insurance Corporation (FDIC), and foreign jurisdictions. Deposits in U.S. banks exceed the FDIC insurance limit. We have not experienced any losses on our cash and cash equivalents. Cash and cash equivalents held in foreign bank accounts, primarily China, Germany and Canada, totaled (in millions) $6.2 at December 31, 2017 and $5.6 at December 31, 2016. |
Fair Value of Financial Instruments | Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and other short-term liabilities. |
Accounts Receivable | The majority of our accounts receivable are due from companies in the electronics manufacturing industries. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are typically due within 30 to 60 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine the allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the industry and geographic payment practices involved, our previous bad debt experience, the customer’s current ability to pay their obligation to us, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Interest may be accrued, at the discretion of management and according to our standard sales terms, beginning on the day after the due date of the receivable. However, interest income is subsequently recognized on these accounts either to the extent cash is received, or when the future collection of interest and the receivable balance is considered probable by management. |
Inventories | Inventories are stated at the lower of cost or net realizable value with cost being the currently adjusted standard cost, which approximates cost on a first-in, first-out basis. We estimate changes to inventory for obsolete, slow-moving, excess and non-salable inventory by reviewing current transactions and forecasted product demand. We evaluate our inventories on an item by item basis and record an adjustment (lower of cost or market) accordingly. |
Property, Plant and Equipment | Property, plant and equipment, including leasehold improvements, are stated at cost and depreciation is calculated over the estimated useful lives of the related assets or lease terms on the straight-line basis. We depreciate substantially all manufacturing and office equipment over periods of three to seven years. We depreciate leasehold improvements over the remaining portion of the lease or over the expected life of the asset if less than the remaining term of the lease. We regularly review all of our property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the total of future undiscounted cash flows is less than the carrying amount of these assets, an impairment loss, if any, based on the excess of the carrying amount over the fair value of the assets, is recorded. Based on this evaluation, no impairment was noted for property, plant and equipment for the years ended December 31, 2017 and 2016. |
Patent Costs | We expense external costs, such as filing fees and associated attorney fees, incurred to obtain initial patents, but capitalize patents obtained through acquisition as intangible assets. We also expense costs associated with maintaining and defending patents subsequent to their issuance. |
Income Taxes | Income taxes are computed at current enacted tax rates, less tax credits using the asset and liability method. Deferred taxes are adjusted both for items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, and any changes in the valuation allowance caused by a change in judgment about the reliability of the related deferred tax assets. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. Tax reform and the effect of the “Deemed Repatriation” have been included in our 2017 financial statements. |
Share-Based Compensation | All stock-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line single-option method. Our share-based compensation is reduced for estimated forfeitures at the time of grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates. |
Revenue Recognition | We recognize revenue at the time the product is shipped or when the service is delivered. We have determined that our programming equipment has reached a point of maturity and stability such that product acceptance can be assured by testing at the factory prior to shipment and that the installation meets the criteria to be considered a separate element. These systems are standard products with published product specifications and are configurable with standard options. The evidence that these systems could be deemed as accepted was based upon having standardized factory production of the units, results from batteries of tests of product performance to our published specifications, quality inspections and installation standardization, as well as past product operation validation with the customer and the history provided by our installed base of products upon which the current versions were based. The revenue related to products requiring installation that is perfunctory is recognized at the time of shipment. Installation that is considered perfunctory includes any installation that can be performed by other parties, such as distributors, other vendors, or the customers themselves. This takes into account the complexity, skill and training needed as well as customer expectations regarding installation. We enter into multiple deliverable arrangements that arise during the sale of a system that includes an installation component, a service and support component and a software maintenance component. We allocate the value of each element based on relative selling prices. Relative selling price is based on the selling price of the standalone system. For the installation and service and support components, we use the value of the discount given to distributors who perform these components. For software maintenance components, we use what we charge for annual software maintenance renewals after the initial year the system is sold. Revenue is recognized on the system sale based on shipping terms, installation revenue is recognized after the installation is performed, and hardware service and support and software maintenance revenue is recognized ratably over the term of the agreement, typically one year. When we sell software separately, we recognize software revenue upon shipment, provided that only inconsequential obligations remain on our part and substantive acceptance conditions, if any, have been met. We recognize revenue when persuasive evidence of an arrangement exists, shipment has occurred, the price is fixed or determinable, the buyer has paid or is obligated to pay, collectability is reasonably assured, substantive acceptance conditions, if any, have been met, the obligation is not contingent on resale of the product, the buyer’s obligation would not be changed in the event of theft, physical destruction or damage to the product, the buyer acquiring the product for resale has economic substance apart from us and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. We establish a reserve for sales returns based on historical trends in product returns and estimates for new items. Sales were recorded net of actual sales returns and changes to the associated sales return reserve. Sales return reserves were $80,000 and $50,000 at December 31, 2017 and 2016, respectively. We transfer certain products out of service from their internal use and make them available for sale. The products transferred are our standard products in one of the following areas: service loaners, rental or test units; engineering test units; or sales demonstration equipment. Once transferred, the equipment is sold by our regular sales channels as used equipment inventory. These product units often involve refurbishing and an equipment warranty, and are conducted as sales in our normal and ordinary course of business. The transfer amount is the product unit’s net book value and the sale transaction is accounted for as revenue and cost of goods sold. |
Research and Development | Research and development costs are generally expensed as incurred. |
Advertising Expense | Advertising costs are expensed as incurred. Total advertising expenses were approximately $154,000 and $108,000 in 2017 and 2016, respectively. |
Warranty Expense | We record a liability for an estimate of costs that we expect to incur under our basic limited warranty when product revenue is recognized. Factors affecting our warranty liability include the number of units sold and historical and anticipated rates of claims and costs per claim. We normally provide a warranty for our products against defects for periods ranging from ninety days to one year. We provide for the estimated cost that may be incurred under our product warranties and periodically assess the adequacy of our warranty liability based on changes in the above factors. We record revenues on extended warranties on a straight-line basis over the term of the related warranty contracts. Service costs are expensed as incurred. |
Earnings (Loss) Per Share | Basic earnings (loss) per share exclude any dilutive effects of stock options. Basic earnings (loss) per share are computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted-average number of common shares and common stock equivalent shares outstanding during the period. The common stock equivalent shares from equity awards used in calculating diluted earnings per share were 287,000 and 164,000 for the years ended December 31, 2017 and 2016, respectively. Options to purchase 12,603 and 117,352 shares of common stock were outstanding as of December 31, 2017 and 2016, respectively, but were excluded from the computation of diluted EPS for the period then ended because the options were anti-dilutive. |
Diversification of Credit Risk | Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of trade receivables. Our trade receivables are geographically dispersed and include customers in many different industries. As of December 31, 2017, one customer, Data Copy Limited, our distributor in China, accounted for greater than 10% of our consolidated accounts receivable balance at December 31, 2017. Our consolidated accounts receivable balance as of December 31, 2017 and 2016 includes foreign accounts receivable in the functional currency of our foreign subsidiaries amounting to $1,228,000 and $2,554,000, respectively. We generally do business with our foreign distributors in U.S. Dollars. We believe that risk of loss is significantly reduced due to the diversity of our end-customers and geographic sales areas. We perform on-going credit evaluations of our customers’ financial condition and require collateral, such as letters of credit and bank guarantees, or prepayment whenever deemed necessary. |
New Accounting Pronouncements | In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (ASU 2016-09), “Improvements to Employee Share-Based Payment Accounting”. ASU 2016-09 requires excess tax benefits to be recognized in the statement of operations as an income tax expense and is applied prospectively by means of a cumulative-effect adjustment of excess tax benefits from equity in the period of adoption. The standard establishes an alternative practical expedient for estimating the expected term of an award by recognizing the effects of forfeitures in compensation cost when the forfeitures occur. We have continued to estimate forfeitures, and excess tax benefits have not been allocated to equity, as they are all in net operating losses, that have a full valuation allowance. Adoption of the alternative practical expedient is applied prospectively on an entity-wide basis. The standard requires that amounts paid to a taxing authority on the employee’s behalf as a result of directly withholding shares for tax-withholding purposes are to be presented on a retrospective basis as a financing activity on the statement of cash flows. The standard was adopted effective beginning January 1, 2017 and did not have a material impact on our financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 provides companies with a single model for accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers” (ASU 2015-14), deferring the effective date of the new revenue recognition standard by one year and now takes effect for public entities in fiscal years beginning after December 15, 2017. We expect to adopt the revenue standard as of January 1, 2018 and do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements including the potential impact of the additional disclosures. We are implementing changes to our accounting policies, internal controls, and disclosures to support the new standard, however, these changes are not expected to be material. |
NOTE 2 - ACCOUNTS RECEIVABLE,23
NOTE 2 - ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | December 31, December 31, (in thousands) Trade accounts receivable $ 3,842 $ 4,821 Less allowance for doubtful receivables 73 96 Trade accounts receivable, net $ 3,769 $ 4,725 |
Changes in allowance for doubtful accounts | December 31, December 31, (in thousands) Beginning balance $ 96 $ 43 Bad debt expense (reversal) (24 ) 55 Accounts written-off — (2 ) Recoveries 1 — Ending balance $ 73 $ 96 |
NOTE 3 - INVENTORIES, NET (Tabl
NOTE 3 - INVENTORIES, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Note 3 - Inventories Net Tables | |
Inventories | December 31, December 31, (in thousands) Raw material $ 2,392 $ 2,402 Work-in-process 1,091 1,226 Finished goods 685 431 Inventories $ 4,168 $ 4,059 |
NOTE 4 - PROPERTY, PLANT AND 25
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Note 4 - Property Plant And Equipment Net Tables | |
Property, Plant And Equipment, Net | December 31, December 31, (in thousands) Leasehold improvements $ 416 $ 376 Equipment 5,279 4,449 Sales demonstration equipment 1,315 1,158 7,010 5,983 Less accumulated depreciation 4,552 4,108 Property and equipment, net $ 2,458 $ 1,875 |
NOTE 6 - OTHER ACCRUED LIABIL26
NOTE 6 - OTHER ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Note 6 - Other Accrued Liabilities Tables | |
Other accrued liabilities | December 31, December 31, (in thousands) Product warranty $ 530 $ 371 Sales return reserve 80 50 Other taxes 109 149 Other 139 97 Other accrued liabilities $ 858 $ 667 |
Product warranty liability | December 31, (in thousands) Liability, beginning balance $ 371 Net expenses 941 Warranty claims (941 ) Accrual revisions 159 Liability, ending balance $ 530 |
NOTE 7 - OPERATING LEASE COMM27
NOTE 7 - OPERATING LEASE COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Note 7 - Operating Lease Commitments Tables | |
Operating Lease Commitments | Operating (in thousands) 2018 $ 922 2019 946 2020 933 2021 759 2022 232 Thereafter — Total $ 3,792 |
NOTE 11 - SHARE-BASED COMPENS28
NOTE 11 - SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Note 11 - Share-based Compensation Tables | |
Impact on operations of recording share-based compensation | Year Ended December 31, 2017 2016 (in thousands) Cost of goods sold $ 18 $ 13 Research and development 164 106 Selling, general and administrative 532 401 Total share-based compensation $ 714 $ 520 |
Fair value of share-based awards for employee stock options | Employee Stock Options 2017 2016 Risk-free interest rates 1.72 % N/A Volatility factors 0.62 N/A Expected life of the option in years 4.0 N/A Expected dividend yield None N/A |
Stock option grants | 2017 2016 Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Outstanding at beginning of year 376,000 $ 2.95 574,000 $ 2.97 Granted 25,000 8.03 — 0.00 Exercised (346,000 ) 2.83 (130,000 ) 2.38 Cancelled, Expired or Forfeited (15,000 ) 6.01 (68,000 ) 4.25 Outstanding at end of year 40,000 $ 6.10 3.60 376,000 $ 2.95 1.67 Vested or expected to vest at the end of the period 34,460 $ 5.79 3.29 375,055 $ 2.96 1.67 Exercisable at end of year 16,563 $ 3.37 0.91 357,250 $ 3.00 1.62 |
Restricted stock award including performance-based stock award activity under our share-based compensation plan | 2017 2016 Awards Weighted - Average Grant Date Fair Value Awards Weighted - Average Grant Date Fair Value Outstanding at beginning of year 464,850 $ 2.78 389,100 $ 2.86 Granted 287,600 7.29 227,100 2.61 Vested (181,725 ) 2.72 (148,100 ) 2.72 Cancelled (4,875 ) 3.06 (3,250 ) 2.73 Outstanding at end of year 565,850 $ 5.09 464,850 $ 2.78 |
Unvested options grants and restricted stock awards | December 31, December 31, Unamortized future compensation expense $ 2,560,844 $ 1,093,144 Remaining weighted average amortization period in years 2.98 2.53 |
NOTE 12 - SHARE REPURCHASE PR29
NOTE 12 - SHARE REPURCHASE PROGRAMS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Note 12 - Share Repurchase Programs Tables | |
Summary of share repurchase activity | Repurchases by Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program Approximate Dollar Value of Shares that May Yet Be Purchased under the Program March 2016 42,515 $ 2.26 42,515 $ 903,161 April 2016 8,480 $ 2.35 8,480 $ 883,064 May 2016 7,650 $ 2.52 7,650 $ 863,602 June 2016 15,200 $ 2.45 15,200 $ 826,078 July 2016 6,500 $ 2.61 6,500 $ 808,991 Total 80,345 $ 2.36 80,345 |
NOTE 13 - INCOME TAXES (Tables)
NOTE 13 - INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of income (loss) before taxes | Year Ended December 31, (in thousands) 2017 2016 U.S. operations $ 3,817 $ 1,401 Foreign operations 1,344 291 Total income (loss) before taxes $ 5,161 $ 1,692 |
Schedule of Components of Income Tax Expense (Benefit) | (in thousands) Year Ended December 31, Current tax expense (benefit) 2017 2016 U.S. federal $ (494 ) $ 25 State 8 6 Foreign 198 5 (288 ) 36 Deferred tax expense (benefit) – U.S. federal — — Total income tax expense (benefit) $ (288 ) $ 36 |
Schedule of Effective Income Tax Rate Reconciliation | Year Ended December 31, 2017 2016 (in thousands) Statutory tax $ 1,755 $ 575 State and foreign income tax, net of federal income tax benefit 83 259 Valuation allowance for deferred tax assets (4,800 ) (603 ) Federal rate change 2,979 — Foreign sourced deemed dividend income 1,145 — Stock based compensation (970 ) (184 ) AMT credit refund (494 ) — Other 14 (11 ) Total income tax expense (benefit) $ (288 ) $ 36 |
Schedule of Deferred Tax Assets and Liabilities | Year Ended December 31, 2017 2016 (in thousands) Deferred income tax assets: Allowance for doubtful accounts $ 11 $ 17 Inventory and product return reserves 406 632 Compensation accruals 1,233 1,726 Accrued liabilities 236 524 Book-over-tax depreciation and amortization 33 93 Foreign net operating loss carryforwards 133 550 U.S. net operating loss carryforwards 2,761 6,419 U.S. credit carryforwards 2,017 1,287 6,830 11,248 Valuation Allowance (6,830 ) (11,248 ) Total Deferred Income Tax Assets $ — $ — |
Schedule of Unrecognized Tax Benefits | Year Ended December 31, 2017 2016 (in thousands) Unrecognized tax benefits, opening balance $ 226 $ 210 Prior period tax position increases 10 — Additions based on tax positions related to current year 36 16 Unrecognized tax benefits, ending balance $ 272 $ 226 |
NOTE 14 - SEGMENT AND GEOGRAP31
NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Summary of operating information by geographic area | Year Ended December 31, (in thousands) 2017 2016 Net sales: U.S. $ 2,874 $ 2,936 Europe 14,899 8,730 Rest of World 16,278 11,747 $ 34,051 $ 23,413 Included in Europe and Rest of World net sales are the following significant balances: Germany $ 7,982 $ 4,482 China $ 5,865 $ 3,824 Operating income: U.S. $ 499 $ 669 Europe 2,171 132 Rest of World 2,377 626 $ 5,047 $ 1,427 Identifiable assets: U.S. $ 18,340 $ 11,346 Europe 5,001 4,993 Rest of World 6,946 6,437 $ 30,287 $ 22,776 |
NOTE 1 - SUMMARY OF SIGNIFICA32
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 1 - Summary Of Significant Accounting Policies Details Narrative | ||
Cash and cash equivalents held in foreign banks | $ 6,200 | $ 5,600 |
Sales return reserves | 80 | 50 |
Advertising expenses | $ 154 | $ 108 |
Common stock equivalent shares | 287,000 | 164,000 |
Options excluded from the computation of diluted EPS | 12,603 | 117,352 |
Foreign accounts receivable | $ 1,228 | $ 2,554 |
NOTE 2 - ACCOUNTS RECEIVABLE NE
NOTE 2 - ACCOUNTS RECEIVABLE NET (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Note 2 - Accounts Receivable Net Details | ||
Trade accounts receivable | $ 3,842 | $ 4,821 |
Less allowance for doubtful receivables | 73 | 96 |
Trade accounts receivable, net | $ 3,769 | $ 4,725 |
NOTE 2 - ACCOUNTS RECEIVABLE 34
NOTE 2 - ACCOUNTS RECEIVABLE NET (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 2 - Accounts Receivable Net Details 1 | ||
Beginning balance | $ 96 | $ 43 |
Bad debt expense (reversal) | (24) | 55 |
Accounts written-off | 0 | (2) |
Recoveries | 1 | 0 |
Ending balance | $ 73 | $ 96 |
NOTE 3 - INVENTORIES (Details)
NOTE 3 - INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 2,392 | $ 2,402 |
Work-in-process | 1,091 | 1,226 |
Finished goods | 685 | 431 |
Inventories | $ 4,168 | $ 4,059 |
NOTE 4 - PROPERTY, PLANT AND 36
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 416 | $ 376 |
Equipment | 5,279 | 4,449 |
Sales demonstration equipment | 1,315 | 1,158 |
Property and equipment gross | 7,010 | 5,983 |
Less accumulated depreciation | 4,552 | 4,108 |
Property and equipment, net | $ 2,458 | $ 1,875 |
NOTE 4 - PROPERTY, PLANT AND 37
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 4 - Property Plant And Equipment Net Details Narrative | ||
Depreciation expense | $ 822 | $ 602 |
NOTE 6 - OTHER ACCRUED LIABIL38
NOTE 6 - OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Product warranty | $ 530 | $ 371 |
Sales return reserve | 80 | 50 |
Other taxes | 109 | 149 |
Other | 139 | 97 |
Other accrued liabilities | $ 858 | $ 667 |
NOTE 6 - OTHER ACCRUED LIABIL39
NOTE 6 - OTHER ACCRUED LIABILITIES (Details 1) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Payables and Accruals [Abstract] | |
Liability, beginning balance | $ 371 |
Net expenses | 941 |
Warranty claims | (941) |
Accrual revisions | 159 |
Liability, ending balance | $ 530 |
NOTE 7 - OPERATING LEASE COMM40
NOTE 7 - OPERATING LEASE COMMITMENTS (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,018 | $ 922 |
2,019 | 946 |
2,020 | 933 |
2,021 | 759 |
2,022 | 232 |
Thereafter | 0 |
Total | $ 3,792 |
NOTE 7 - OPERATING LEASE COMM41
NOTE 7 - OPERATING LEASE COMMITMENTS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Lease and rental expense | $ 862 | $ 927 |
United States | ||
Lease base annual rental payments | 303 | 200 |
China | ||
Lease base annual rental payments | 276 | 233 |
Germany | ||
Lease base annual rental payments | $ 64 | $ 61 |
NOTE 8 - OTHER COMMITMENTS (Det
NOTE 8 - OTHER COMMITMENTS (Details Narrative) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase and other obligations | $ 1,962 |
After 2,017 | $ 12 |
NOTE 10 - STOCK AND RETIREMEN43
NOTE 10 - STOCK AND RETIREMENT PLANS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 10 - Stock And Retirement Plans Details Narrative | ||
401(k) Retirement Savings Plan matching contribution | $ 232 | $ 129 |
Employer matching contributions owed to the plan | $ 251 | $ 181 |
NOTE 11 - SHARE-BASED COMPENS44
NOTE 11 - SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based compensation | $ 714 | $ 520 |
Cost Of Goods Sold | ||
Share-based compensation | 18 | 13 |
Research and Development Expense | ||
Share-based compensation | 164 | 106 |
Selling, General and Administrative Expenses | ||
Share-based compensation | $ 532 | $ 401 |
NOTE 11 - SHARE-BASED COMPENS45
NOTE 11 - SHARE-BASED COMPENSATION (Details 1) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 11 - Share-based Compensation Details 1 | ||
Risk-free interest rates | 1.72% | |
Volatility factors | 0.62% | |
Expected life of the option in years | 4 years | |
Expected dividend yield | 0.00% |
NOTE 11 - SHARE-BASED COMPENS46
NOTE 11 - SHARE-BASED COMPENSATION (Details 2) - Stock option - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number Of options | ||
Outstanding at beginning of year | 376,000 | 574,000 |
Granted | 25,000 | 0 |
Exercised | (346,000) | (130,000) |
Cancelled, Expired or Forfeited | (15,000) | (68,000) |
Outstanding at end of year | 40,000 | 376,000 |
Vested or expected to vest at the end of the period | 34,460 | 375,055 |
Exercisable at end of year | 16,563 | 357,250 |
Weighted-Average Exercise Price | ||
Outstanding at beginning of year | $ 2.95 | $ 2.97 |
Granted | 8.03 | 0 |
Exercised | 2.83 | 2.38 |
Cancelled, Expired or Forfeited | 6.01 | 4.25 |
Outstanding at end of year | 6.10 | 2.95 |
Vested or expected to vest at the end of the period | 5.79 | 2.96 |
Exercisable at end of year | $ 3.37 | $ 3 |
Weighted-Average Remaining Contractual Life in Years | ||
Outstanding at end of year | 3 years 7 months 6 days | 1 year 8 months 1 day |
Vested or expected to vest at the end of the period | 3 years 3 months 14 days | 1 year 8 months 1 day |
Exercisable at end of year | 10 months 28 days | 1 year 7 months 13 days |
NOTE 11 - SHARE-BASED COMPENS47
NOTE 11 - SHARE-BASED COMPENSATION (Details 3) - Restricted Stock Award - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number Of Awards | ||
Outstanding at beginning of year | 464,850 | 398,100 |
Granted | 287,600 | 227,100 |
Vested | (181,725) | (148,100) |
Cancelled | (4,875) | (3,250) |
Outstanding at end of year | 565,850 | 464,850 |
Weighted-Average Grant Date Fair Value | ||
Outstanding at beginning of year | $ 2.78 | $ 2.86 |
Granted | 7.29 | 2.61 |
Vested | 2.72 | 2.72 |
Cancelled | 3.06 | 2.73 |
Outstanding at end of year | $ 5.09 | $ 2.78 |
NOTE 11 - SHARE-BASED COMPENS48
NOTE 11 - SHARE-BASED COMPENSATION (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 11 - Share-based Compensation Details 4 | ||
Unamortized expected future compensation expense | $ 2,560,844 | $ 1,093,144 |
Remaining weighted average amortization period | 2 years 11 months 23 days | 2 years 6 months 11 days |
NOTE 11 - SHARE-BASED COMPENS49
NOTE 11 - SHARE-BASED COMPENSATION (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($)$ / shares | |
Note 11 - Share-based Compensation Details Narrative | |
Aggregate intrinsic value of options outstanding | $ 242,553 |
Closing stock price at December 31, 2017 | $ / shares | $ 12.04 |
Aggregate intrinsic value of awards exercised | $ 1,730,249 |
NOTE 12 - SHARE REPURCHASE PR50
NOTE 12 - SHARE REPURCHASE PROGRAMS (Details) | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Total Number of Shares Purchased | 80,345 |
Average Price Paid per Share | $ / shares | $ 2.36 |
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program | 80,345 |
March 2,016 | |
Total Number of Shares Purchased | 42,515 |
Average Price Paid per Share | $ / shares | $ 2.26 |
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program | 42,515 |
Approximate Dollar Value of Shares that May Yet Be Purchased under the Program | $ | $ 903,161 |
April 2,016 | |
Total Number of Shares Purchased | 8,480 |
Average Price Paid per Share | $ / shares | $ 2.35 |
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program | 8,480 |
Approximate Dollar Value of Shares that May Yet Be Purchased under the Program | $ | $ 883,064 |
May 2,016 | |
Total Number of Shares Purchased | 7,650 |
Average Price Paid per Share | $ / shares | $ 2.52 |
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program | 7,650 |
Approximate Dollar Value of Shares that May Yet Be Purchased under the Program | $ | $ 863,602 |
June 2,016 | |
Total Number of Shares Purchased | 15,200 |
Average Price Paid per Share | $ / shares | $ 2.45 |
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program | 15,200 |
Approximate Dollar Value of Shares that May Yet Be Purchased under the Program | $ | $ 826,078 |
July 2,016 | |
Total Number of Shares Purchased | 6,500 |
Average Price Paid per Share | $ / shares | $ 2.61 |
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program | 6,500 |
Approximate Dollar Value of Shares that May Yet Be Purchased under the Program | $ | $ 808,991 |
NOTE 13 - INCOME TAXES (Details
NOTE 13 - INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
U.S. operations | $ 3,817 | $ 1,401 |
Foreign operations | 1,344 | 291 |
Total income (loss) before taxes | $ 5,161 | $ 1,692 |
NOTE 13 - INCOME TAXES (Detai52
NOTE 13 - INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income tax expense (benefit) consists of: | ||
U.S. federal | $ (494) | $ 25 |
State | 8 | 6 |
Foreign | 198 | 5 |
Total Income tax expense (benefit) | (288) | 36 |
Deferred tax expense (benefit) U.S. federal | 0 | 0 |
Total income tax expense (benefit) | $ (288) | $ 36 |
NOTE 13 - INCOME TAXES (Detai53
NOTE 13 - INCOME TAXES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Statutory tax | $ 1,755 | $ 575 |
State and foreign income tax, net of federal income tax benefit | 83 | 259 |
Valuation allowance for deferred tax assets | (4,800) | (603) |
Federal rate change | 2,979 | 0 |
Foreign sourced deemed dividend income | 1,145 | 0 |
Stock based compensation | (970) | (184) |
AMT credit refund | (494) | 0 |
Other | 14 | (11) |
Total income tax expense (benefit) | $ (288) | $ 36 |
NOTE 13 - INCOME TAXES (Detai54
NOTE 13 - INCOME TAXES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred income tax assets: | ||
Allowance for doubtful accounts | $ 11 | $ 17 |
Inventory and product return reserves | 406 | 632 |
Compensation accruals | 1,233 | 1,726 |
Accrued liabilities | 236 | 524 |
Book-over-tax depreciation and amortization | 33 | 93 |
Foreign net operating loss carryforwards | 133 | 550 |
U.S. net operating loss carryforwards | 2,761 | 6,419 |
U.S. credit carryforwards | 2,017 | 1,287 |
Deferred Tax Assets Gross | 6,830 | 11,248 |
Valuation Allowance | (6,830) | (11,248) |
Total Deferred Income Tax Assets | $ 0 | $ 0 |
NOTE 13 - INCOME TAXES (Detai55
NOTE 13 - INCOME TAXES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 13 - Income Taxes Details 4 | ||
Unrecognized tax benefits, opening balance | $ 226 | $ 210 |
Prior period tax position increases | 10 | 0 |
Additions based on tax positions related to current year | 36 | 16 |
Unrecognized tax benefits, ending balance | $ 272 | $ 226 |
NOTE 13 - INCOME TAXES (Detai56
NOTE 13 - INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note 13 - Income Taxes Details Narrative | ||
Change in valuation allowance for deferred tax assets | $ 4,418 | $ (421) |
U.S. net operating loss carryforwards | $ 13,147 | |
Expiration years | 2022 to 2034 |
NOTE 14 - SEGMENT AND GEOGRAP57
NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Net sales | $ 34,051 | $ 23,413 |
Operating income | 5,047 | 1,427 |
Identifiable assets | 30,287 | 22,776 |
US | ||
Net sales | 2,874 | 2,936 |
Operating income | 499 | 669 |
Identifiable assets | 18,340 | 11,346 |
Europe | ||
Net sales | 14,899 | 8,730 |
Operating income | 2,171 | 132 |
Identifiable assets | 5,001 | 4,993 |
Rest Of World | ||
Net sales | 16,278 | 11,747 |
Operating income | 2,377 | 626 |
Identifiable assets | 6,946 | 6,437 |
Germany | ||
Net sales | 7,982 | 4,482 |
China | ||
Net sales | $ 5,865 | $ 3,824 |