Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 03, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NUMEREX CORP /PA/ | |
Entity Central Index Key | 870,753 | |
Trading Symbol | nmrx | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,437,322 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 11,220 | $ 16,237 |
Restricted cash | 221 | |
Accounts receivable, less allowance for doubtful accounts of $716 and $618 | 8,794 | $ 9,237 |
Financing receivables, current | 1,917 | 1,780 |
Inventory, net of reserves | 7,995 | 7,617 |
Prepaid expenses and other current assets | 2,373 | 1,887 |
Deferred tax assets, current | 603 | 603 |
TOTAL CURRENT ASSETS | 33,123 | 37,361 |
Financing receivables, less current portion | 2,457 | 2,330 |
Property and equipment, net of accumulated depreciation and amortization of $7,253 and $6,632 | 4,863 | 4,795 |
Software, net of accumulated amortization | 7,247 | 7,146 |
Other intangible assets, net of accumulated amortization | 15,261 | 15,722 |
Goodwill | 43,424 | 43,424 |
Other assets | 421 | 409 |
TOTAL ASSETS | 106,796 | 111,187 |
CURRENT LIABILITIES | ||
Accounts payable | 10,768 | 11,390 |
Accrued expenses and other current liabilities | 3,544 | 2,864 |
Deferred revenues | 1,789 | 1,942 |
Current maturities of long-term debt, net of debt issuance costs | 3,600 | |
TOTAL CURRENT LIABILITIES | 16,101 | 19,796 |
Long-term debt, net of debt issuance costs, less current maturities | 15,956 | 15,309 |
Deferred tax liabilities, noncurrent | 1,655 | 1,595 |
Other liabilities | 1,873 | 1,891 |
TOTAL LIABILITIES | $ 35,585 | $ 38,591 |
COMMITMENTS AND CONTINGENCIES (NOTE H) | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, no par value; 3,000 authorized; none issued | ||
Common stock value | ||
Additional paid-in capital | $ 103,034 | $ 102,108 |
Treasury stock, at cost, 1,316 shares | (5,444) | (5,444) |
Accumulated other comprehensive loss | (102) | (117) |
Accumulated deficit | (26,277) | (23,951) |
TOTAL SHAREHOLDERS' EQUITY | 71,211 | 72,596 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 106,796 | $ 111,187 |
Class A Common Stock | ||
SHAREHOLDERS' EQUITY | ||
Common stock value | ||
Class B Common Stock | ||
SHAREHOLDERS' EQUITY | ||
Common stock value |
UNAUDITED CONDENSED CONSOLIDAT3
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 716 | $ 618 |
Accumulated depreciation and amortization | $ 7,253 | $ 6,632 |
Preferred stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 3,000 | 3,000 |
Preferred stock, shares issued | 0 | 0 |
Treasury stock, at cost, shares | 1,316 | 1,316 |
Class A Common Stock | ||
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 30,000 | 30,000 |
Common stock, shares issued | 20,752 | 20,652 |
Common stock, shares outstanding | 19,434 | 19,177 |
Class B Common Stock | ||
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 5,000 | 5,000 |
Common stock, shares issued | 0 | 0 |
UNAUDITED CONDENSED CONSOLIDAT4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net revenues: | ||
Subscription and support revenues | $ 14,984 | $ 16,529 |
Embedded devices and hardware | 3,066 | 5,149 |
Total net revenues | 18,050 | 21,678 |
Cost of sales, exclusive of a portion of depreciation and amortization shown below: | ||
Subscription and support revenues | 5,701 | 6,719 |
Embedded devices and hardware | 3,118 | 4,853 |
Gross profit | 9,231 | 10,106 |
Operating expenses: | ||
Sales and marketing | 2,945 | 3,064 |
General and administrative | 4,129 | 3,929 |
Engineering and development | 2,247 | 2,293 |
Depreciation and amortization | 1,658 | 1,654 |
Operating loss | (1,748) | (834) |
Interest expense | 267 | $ 210 |
Loss on extinguishment of debt | 290 | |
Other income, net | (43) | $ (38) |
Loss before income taxes | (2,262) | (1,006) |
Income tax expense (benefit) | 64 | (386) |
Net loss | (2,326) | (620) |
Other items of comprehensive (income) loss, net of income taxes: | ||
Foreign currency translation adjustment | (15) | 25 |
Comprehensive loss | $ (2,311) | $ (645) |
Basic and diluted loss per share (in dollars per share) | $ (0.12) | $ (0.03) |
Weighted average shares outstanding used in computing basic and diluted loss per share (in shares) | 19,377 | 18,993 |
UNAUDITED CONDENSED CONSOLIDAT5
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands | Common Shares | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 102,108 | $ (5,444) | $ (117) | $ (23,951) | $ 72,596 | |
Balance (in shares) at Dec. 31, 2015 | 20,652 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation expense | 621 | 621 | ||||
Equity-based compensation expense (in shares) | ||||||
Exercises, vesting and other equity- based compensation plan activity, net | 300 | 300 | ||||
Exercises, vesting and other equity- based compensation plan activity, net (in shares) | 99 | |||||
Other | 5 | 5 | ||||
Other (in shares) | 1 | |||||
Foreign currency translation adjustment | 15 | (15) | ||||
Net loss | (2,326) | (2,326) | ||||
Balance at Mar. 31, 2016 | $ 103,034 | $ (5,444) | $ (102) | $ (26,277) | $ 71,211 | |
Balance (in shares) at Mar. 31, 2016 | 20,752 |
UNAUDITED CONDENSED CONSOLIDAT6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (2,326) | $ (620) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 1,965 | 1,881 |
Equity-based compensation expense | 621 | $ 784 |
Loss on extinguishment of debt | 289 | |
Deferred income taxes | 60 | $ (351) |
Bad debt expense | 120 | 140 |
Inventory reserves | 27 | 134 |
Other non-cash expense | 21 | 21 |
Changes in assets and liabilities: | ||
Accounts and financing receivables | 59 | (1,094) |
Inventory, net | (953) | 185 |
Accounts payable | (680) | (657) |
Deferred revenue | (150) | 51 |
Other | 107 | (154) |
Net cash (used in) provided by operating activities | (840) | 320 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (297) | (554) |
Capitalized software development and purchases of software | (983) | (1,119) |
Net cash (used in) investing activities | (1,280) | $ (1,673) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 17,000 | |
Principal payments on debt | $ (19,349) | $ (1,121) |
Principal payments on capital lease obligations | (90) | |
Exercises, vesting and other equity-based compensation plan activity, net | $ 300 | 1 |
Payment of taxes on equity-based awards | $ (2) | |
Deferred financing costs paid | $ (848) | |
Net cash (used in) financing activities | (2,897) | $ (1,212) |
Net decrease in cash and cash equivalents | (5,017) | (2,565) |
Cash and cash equivalents at beginning of period | 16,237 | 17,270 |
Cash and cash equivalents at end of period | 11,220 | 14,705 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 251 | 191 |
Net cash (refunded) paid for income taxes | (350) | 28 |
Disclosure of non-cash investing and financing activities: | ||
Capital expenditures in accounts payable | 286 | $ 407 |
Deferred financing costs in accounts payable | $ 213 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Numerex Corp. (NASDAQ: NMRX) is a holding company and, through its subsidiaries, is a single source, leading provider of managed enterprise solutions enabling the Internet of Things (IoT). An IoT solution is generally viewed as a combination of devices, software and services that operate with little or no human interaction. Our managed IoT solutions are simple, innovative, scalable and secure. Our solutions incorporate each of the four key IoT building blocks – Device, Network, Application and Platform. We provide our technology and service solutions through our integrated IoT horizontal platforms, which are generally sold on a subscription basis. We are ISO 27001 information security-certified, highlighting our focus on IoT data security, service reliability and around-the-clock support of our customers’ IoT solutions. Foreign operations were not significant to us for the three months ended March 31, 2016 or 2015. Basis of Presentation We prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, referred to as GAAP, for interim financial information and the Rules and Regulations issued by the Securities Exchange Commission, or SEC, as applicable. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated intercompany transactions and balances in consolidation. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management, the accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, considered necessary for a fair presentation of our financial position as of March 31, 2016 and our operating results and cash flows for the interim periods presented. The accompanying condensed consolidated balance sheet as of December 31, 2015 was derived from our audited financial statements, but does not include all disclosures required by GAAP. The financial information presented herein should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015 which includes information and disclosures not included in this quarterly report. Estimates and Assumptions The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. Operating results for the three months ended March 31, 2016 may not be indicative of the results that may be expected for the year ending December 31, 2016 or any future periods. Restricted Cash As of March 31, 2016, cash of $0.2 million was held in escrow related to certain vendor obligations as a result of entering into our new loan agreement. See Note E – Debt. There was no restricted cash at December 31, 2015. Reclassifications As a result of the adoption of a recent accounting pronouncement, see Note G – Recent Accounting Pronouncements, the balance sheet as of December 31, 2015 reflects the following reclassifications (dollars in thousands): Historical Reclassi- Presentation fication As Adjusted Prepaid expenses and other current assets $ 2,037 $ (150 ) $ 1,887 Other assets 699 (290 ) 409 Current portion of long-term debt 3,750 (150 ) 3,600 Long-term debt, less current portion 15,599 (290 ) 15,309 |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2016 | |
Inventory [Abstract] | |
INVENTORY | NOTE B – INVENTORY Inventory consisted of the following as of the dates below (in thousands): March 31, December 31, 2016 2015 Raw materials $ 2,032 $ 1,903 Finished goods 8,678 8,420 Inventory reserves (2,715 ) (2,706 ) $ 7,995 $ 7,617 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2016 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | NOTE C – INTANGIBLE ASSETS Intangible Assets Other Than Goodwill Intangible assets other than goodwill are summarized as follows (dollars in thousands): As of March 31, 2016 As of December 31, 2015 Remaining Gross Accumulated Net Book Gross Accumulated Net Book Purchased and developed software 1.2 $ 16,128 $ (10,369 ) $ 5,759 $ 15,399 $ (9,503 ) $ 5,896 Software in development n/a 1,488 - 1,488 1,250 - 1,250 Total software 17,616 (10,369 ) 7,247 16,649 (9,503 ) 7,146 Licenses 0.4 13,215 (12,259 ) 956 13,215 (12,167 ) 1,048 Customer relationships 7.4 8,167 (2,478 ) 5,689 8,167 (2,285 ) 5,882 Technologies 12.1 4,316 (680 ) 3,636 4,316 (595 ) 3,721 Patents and trademarks 2.8 4,251 (2,243 ) 2,008 4,236 (2,137 ) 2,099 Trade names Indefinite 2,972 - 2,972 2,972 - 2,972 Total other intangible assets 32,921 (17,660 ) 15,261 32,906 (17,184 ) 15,722 $ 50,537 $ (28,029 ) $ 22,508 $ 49,555 $ (26,687 ) $ 22,868 Remaining useful lives in the preceding table were calculated on a weighted average basis as of March 31, 2016. Amortization expense related to intangible assets was $1.3 million and $1.2 million for the three months ended March 31, 2016 and 2015, respectively. Amortization expense recorded in cost of subscription revenues in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss was $0.3 million and $0.2 million for the three months ended March 31, 2016 and 2015, respectively. Additionally, we have capitalized approximately $0.3 million and $0.4 million of internally generated software development costs for the three months ended March 31, 2016 and 2015 respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
INCOME TAXES | NOTE D – INCOME TAXES We calculate our interim income tax provision in accordance with the accounting guidance for income taxes in interim periods. At the end of each interim period, we make our best estimate of the annual expected effective tax rate and apply that rate to our ordinary year-to-date income or loss. In addition, we calculate a year-to-date adjustment to increase or decrease our income tax provision to take into account our current expected effective tax rate. The tax or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets 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 consider projections of future taxable income, tax planning strategies and the reversal of temporary differences in making this assessment. During 2015, we determined that we would not meet the criteria of “more likely than not” that the cumulative federal net operating losses and certain other deferred tax assets would be recoverable. This determination was based on our cumulative loss over the past three years. Accordingly, we recorded a valuation allowance against these items. The deferred tax assets consist of federal net operating losses, state net operating losses, tax credits, and other deferred tax assets, most of which expire between 2016 and 2036. We will maintain the valuation allowance against the net deferred tax assets until sufficient positive evidence outweighs any negative evidence to support reversal. We recorded deferred income tax expense of less than $0.1 million, representing an effective tax rate of (2.8%), for the three months ended March 31, 2016. The difference in the effective tax rate compared to the federal statutory rate, and the reason we recorded deferred income tax expense while generating a net loss before income taxes, are due primarily to the book and tax basis and accounting differences for certain long and indefinite lived intangible assets. We have also recognized a provision for income tax expense for certain state income taxes that cannot utilize offsetting net operating losses. Income tax expense recorded in the future will be reduced or increased to the extent of offsetting decreases or increases to the valuation allowance. For the three months ended March 31, 2015, we recorded income tax benefit of $0.4 million representing an effective tax rate of 38.4%. The effective tax rate for the three months ended March 31, 2015 differed from the federal statutory rate primarily as a result of (1) the effect of expenses that are not deductible for income tax purposes, (2) state income taxes, including the tax effect of changes in effective state income tax rates, and (3) a partially offsetting benefit from disqualifying dispositions of incentive stock options. We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitation. The 2012 through 2015 tax years generally remain subject to examination by federal and most state tax authorities. However, certain returns from years in which net operating losses have arisen are still open for examination by the tax authorities. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE E – DEBT Debt consisted of the following (dollars in thousands): March 31, December 31, 2016 2015 Note payable to Crystal Financial LLC, with interest at LIBOR plus margin $ 17,000 $ - Note payable to Silicon Valley Bank, repaid in 2016 - 19,349 Less long-term deferred financing costs (1,044 ) (440 ) 15,956 18,909 Less current portion of long-term debt - (3,600 ) Noncurrent portion of long-term debt $ 15,956 $ 15,309 On March 9, 2016, we and certain of our wholly-owned, consolidated subsidiaries entered into a new term loan agreement with Crystal Financial LLC as Term Agent, and the term lenders party thereto (the “Crystal Loan Agreement”) pursuant to which the term lenders made a term loan to us in the amount of $17.0 million. The net proceeds from the term loan (after payment of the fees and expenses of the Term Agent), along with $2.9 million of cash on hand, were used to repay the $19.4 million outstanding debt under the Silicon Valley Bank (SVB) Loan Agreement and pay related transaction fees. We recorded a charge of $0.3 million to loss on extinguishment of debt for unamortized deferred financing costs related to the SVB Loan Agreement during the three months ended March 31, 2016. The maturity date of the term loan is March 9, 2020. We are required to make regular quarterly principal payments of $637,500 beginning September 1, 2017 with the balance due on the maturity date, if not otherwise repaid earlier by way of voluntary prepayments, or upon the occurrence of certain Prepayment Events or Excess Cash Flow (as defined in the Crystal Loan Agreement), or as a result of acceleration of the loan as a result of an event of default. Prepayments of the loan are subject to a prepayment penalty of 3% of the amount prepaid if prepayment occurs prior to the first anniversary of the closing date and 2% of the amount prepaid if the prepayment occurs on or after the first anniversary of the closing date but prior to the second anniversary date of the closing date. There is no prepayment penalty for prepayments that occur on or after the second anniversary of the closing date. The interest rate payable on the outstanding loan amount is determined by reference to LIBOR plus a margin established in the agreement. At March 31, 2016, the applicable interest rate was 9.1%. Our obligations under the Crystal Loan Agreement are secured by a first priority security interest in substantially all of our assets and the assets of our subsidiaries. In addition, we are required to meet certain financial and other restrictive covenants customary with this type of facility, including maintaining a minimum Adjusted EBITDA, minimum Consolidated Fixed Charge Coverage Ratio, maximum Consolidated Total Net Leverage, maximum subscriber Churn, and minimum Liquidity, all of which are defined in the Crystal Loan Agreement. We are also prohibited from incurring indebtedness, disposing of or permitting liens on our assets and making restricted payments, including cash dividends on shares of our common stock, except as expressly permitted under the Crystal Loan Agreement. The agreement contains customary events of default. If a default occurs and is not cured within the applicable cure period or is not waived, any outstanding obligations under the agreement may be accelerated. As of March 31, 2016, we were in compliance with all covenants. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NOTE F – NET LOSS PER SHARE Basic net loss per share attributable to common shareholders is based on the weighted-average number of common shares outstanding excluding the dilutive impact of common stock equivalents. Diluted net loss per share is not presented separately because there are no adjustments to the numerator in calculating dilutive net loss per share and all potentially dilutive common stock equivalents would be antidilutive. Potentially dilutive common stock equivalents included 1.8 million shares as of both March 31, 2016 and 2015 for outstanding equity-based compensation. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Recent Accounting Pronouncements [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE G – RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Guidance In March 2015, the Financial Accounting Standards Board (FASB) issued guidance about simplifying the presentation of deferred financing costs. The guidance was intended to help clarify deferred financing costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for deferred financing costs were not affected. The guidance was effective January 1, 2016 and, in accordance with the guidance, $1.0 million of deferred financing costs is included in long-term debt as of March 31, 2016 and $0.4 million of deferred financing costs was reclassified from current and noncurrent other assets to the current and noncurrent portions long-term debt as of December 31, 2015. In September 2015, the FASB issued guidance to simplify the accounting for measurement-period adjustments for an acquirer in a business combination. The update requires an acquirer to recognize any adjustments to provisional amounts of the initial accounting for a business combination with a corresponding adjustment to goodwill in the reporting period in which the adjustments are determined in the measurement period, as opposed to revising prior periods presented in financial statements. Thus, an acquirer shall adjust its financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. This update was effective January 1, 2016 and the adoption of this guidance did not have a material impact on our financial statements. Recently Issued Accounting Guidance In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payments transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 31, 2016. Early adoption is permitted for any entity in any interim or annual period. We are currently evaluating the effect that the updated standard will have on our financial statements, but expect the guidance will add modest volatility in our equity-based compensation expense, provision for income taxes, and net income (loss). In February 2016, the FASB issued guidance that requires lessees to recognize most leases as assets and liabilities on the balance sheet. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing and uncertainty of cash flows arising from leases. The guidance is effective for annual and interim periods beginning after December 31, 2018. The updated standard mandates a modified retrospective transition method with early adoption permitted. We are currently evaluating the effect that the updated standard will have on our financial statements. In November 2015, the FASB issued guidance requiring all deferred tax assets and liabilities to be classified as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. In addition, valuation allowance allocations between current and non-current deferred tax assets are no longer required because those allowances also will be classified as non-current. This standard is effective for public companies for annual periods beginning after December 15, 2016. We do not expect the adoption of this guidance to have a material impact on our financial statements. In July 2015, the FASB issued guidance intended to simplify the presentation of applicable inventory at the lower of cost or net realizable value. The new guidance clarifies that net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The new guidance will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In May 2014, the FASB issued new accounting guidance for revenue recognized from contracts with customers. The core principle of the guidance is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The guidance will become effective for us for fiscal years, and interim reporting periods within those years, beginning January 1, 2018 and will require retrospective application. We are evaluating the effect that this amendment will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENT | 3 Months Ended |
Mar. 31, 2016 | |
Commitments Contingencies And Subsequent Event [Abstract] | |
COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENT | NOTE H – COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENT In March 2016, we entered into a commitment for a 60 month lease arrangement for computer and network equipment, software and related costs having a value of $1.2 million. The lease commenced in April 2016 and will be accounted for as a capital lease, reflecting the corresponding assets and related obligations in the subsequent balance sheet. |
SUMMARY OF SIGNIFICANT ACCOUN15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation We prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, referred to as GAAP, for interim financial information and the Rules and Regulations issued by the Securities Exchange Commission, or SEC, as applicable. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated intercompany transactions and balances in consolidation. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management, the accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, considered necessary for a fair presentation of our financial position as of March 31, 2016 and our operating results and cash flows for the interim periods presented. The accompanying condensed consolidated balance sheet as of December 31, 2015 was derived from our audited financial statements, but does not include all disclosures required by GAAP. The financial information presented herein should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015 which includes information and disclosures not included in this quarterly report. |
Estimates and Assumptions | Estimates and Assumptions The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. Operating results for the three months ended March 31, 2016 may not be indicative of the results that may be expected for the year ending December 31, 2016 or any future periods. |
Restricted Cash | Restricted Cash As of March 31, 2016, cash of $0.2 million was held in escrow related to certain vendor obligations as a result of entering into our new loan agreement. See Note E – Debt. There was no restricted cash at December 31, 2015. |
Reclassifications | Reclassifications As a result of the adoption of a recent accounting pronouncement, see Note G – Recent Accounting Pronouncements, the balance sheet as of December 31, 2015 reflects the following reclassifications (dollars in thousands): Historical Reclassi- Presentation fication As Adjusted Prepaid expenses and other current assets $ 2,037 $ (150 ) $ 1,887 Other assets 699 (290 ) 409 Current portion of long-term debt 3,750 (150 ) 3,600 Long-term debt, less current portion 15,599 (290 ) 15,309 |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of reclassifications | Historical Reclassi- Presentation fication As Adjusted Prepaid expenses and other current assets $ 2,037 $ (150 ) $ 1,887 Other assets 699 (290 ) 409 Current portion of long-term debt 3,750 (150 ) 3,600 Long-term debt, less current portion 15,599 (290 ) 15,309 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventory [Abstract] | |
Schedule of inventory | March 31, December 31, 2016 2015 Raw materials $ 2,032 $ 1,903 Finished goods 8,678 8,420 Inventory reserves (2,715 ) (2,706 ) $ 7,995 $ 7,617 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets other than goodwill | As of March 31, 2016 As of December 31, 2015 Remaining Gross Accumulated Net Book Gross Accumulated Net Book Purchased and developed software 1.2 $ 16,128 $ (10,369 ) $ 5,759 $ 15,399 $ (9,503 ) $ 5,896 Software in development n/a 1,488 - 1,488 1,250 - 1,250 Total software 17,616 (10,369 ) 7,247 16,649 (9,503 ) 7,146 Licenses 0.4 13,215 (12,259 ) 956 13,215 (12,167 ) 1,048 Customer relationships 7.4 8,167 (2,478 ) 5,689 8,167 (2,285 ) 5,882 Technologies 12.1 4,316 (680 ) 3,636 4,316 (595 ) 3,721 Patents and trademarks 2.8 4,251 (2,243 ) 2,008 4,236 (2,137 ) 2,099 Trade names Indefinite 2,972 - 2,972 2,972 - 2,972 Total other intangible assets 32,921 (17,660 ) 15,261 32,906 (17,184 ) 15,722 $ 50,537 $ (28,029 ) $ 22,508 $ 49,555 $ (26,687 ) $ 22,868 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of debt | March 31, December 31, 2016 2015 Note payable to Crystal Financial LLC, with interest at LIBOR plus margin $ 17,000 $ - Note payable to Silicon Valley Bank, repaid in 2016 - 19,349 Less long-term deferred financing costs (1,044 ) (440 ) 15,956 18,909 Less current portion of long-term debt - (3,600 ) Noncurrent portion of long-term debt $ 15,956 $ 15,309 |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Summary Of Significant Accounting Policies [Line Items] | ||
Prepaid expenses and other current assets | $ 2,373 | $ 1,887 |
Other assets | 421 | 409 |
Current portion of long-term debt | 3,600 | |
Long-term debt, less current portion | $ 15,956 | 15,309 |
Historical presentation | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Prepaid expenses and other current assets | 2,037 | |
Other assets | 699 | |
Current portion of long-term debt | 3,750 | |
Long-term debt, less current portion | 15,599 | |
Reclassification | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Prepaid expenses and other current assets | (150) | |
Other assets | (290) | |
Current portion of long-term debt | (150) | |
Long-term debt, less current portion | $ (290) |
INVENTORY - Summary of inventor
INVENTORY - Summary of inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory [Abstract] | ||
Raw materials | $ 2,032 | $ 1,903 |
Finished goods | 8,678 | 8,420 |
Inventory reserves | (2,715) | (2,706) |
Inventory, net | $ 7,995 | $ 7,617 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of intangible assets other than goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 50,537 | $ 49,555 |
Accumulated Amortization | (28,029) | (26,687) |
Net Book Value | $ 22,508 | 22,868 |
Purchased and developed software | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 1 year 2 months 12 days | |
Gross Carrying Amount | $ 16,128 | 15,399 |
Accumulated Amortization | (10,369) | (9,503) |
Net Book Value | 5,759 | 5,896 |
Software in development | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,488 | $ 1,250 |
Accumulated Amortization | ||
Net Book Value | $ 1,488 | $ 1,250 |
Total software | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 17,616 | 16,649 |
Accumulated Amortization | (10,369) | (9,503) |
Net Book Value | $ 7,247 | 7,146 |
Licenses | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 4 months 24 days | |
Gross Carrying Amount | $ 13,215 | 13,215 |
Accumulated Amortization | (12,259) | (12,167) |
Net Book Value | $ 956 | 1,048 |
Customer relationships | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 7 years 4 months 24 days | |
Gross Carrying Amount | $ 8,167 | 8,167 |
Accumulated Amortization | (2,478) | (2,285) |
Net Book Value | $ 5,689 | 5,882 |
Technologies | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 12 years 1 month 6 days | |
Gross Carrying Amount | $ 4,316 | 4,316 |
Accumulated Amortization | (680) | (595) |
Net Book Value | $ 3,636 | 3,721 |
Patents and trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 2 years 9 months 18 days | |
Gross Carrying Amount | $ 4,251 | 4,236 |
Accumulated Amortization | (2,243) | (2,137) |
Net Book Value | $ 2,008 | 2,099 |
Trade names | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Weighted Remaining Average Useful Lives | Indefinite | |
Gross Carrying Amount | $ 2,972 | 2,972 |
Net Book Value | 2,972 | 2,972 |
Total Other Intangibles | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 32,921 | 32,906 |
Accumulated Amortization | (17,660) | (17,184) |
Net Book Value | $ 15,261 | $ 15,722 |
INTANGIBLE ASSETS (Detail Textu
INTANGIBLE ASSETS (Detail Textuals) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Intangible Assets [Abstract] | ||
Amortization expense of intangible assets | $ 1.3 | $ 1.2 |
Amortization of intangible assets recorded in cost of subscription revenue | 0.3 | 0.2 |
Internally generated software development costs | $ 0.3 | $ 0.4 |
INCOME TAXES (Detail Textuals)
INCOME TAXES (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes [Abstract] | ||
Deferred tax expense | $ 60 | $ (351) |
Percentage of tax expense effective tax rate | 2.80% | 38.40% |
DEBT - Summary of debt (Details
DEBT - Summary of debt (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Less long-term deferred financing costs | $ 1,044 | $ 440 |
Long-term debt, total | 15,956 | 18,909 |
Less current portion of long-term debt | (3,600) | |
Noncurrent portion of long-term debt | 15,956 | 15,309 |
Note payable to Crystal Financial LLC, with interest at LIBOR plus margin | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 17,000 | |
Note payable to Silicon Valley Bank, repaid in 2016 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 19,349 |
DEBT (Detail Textuals)
DEBT (Detail Textuals) - USD ($) $ in Thousands | Mar. 09, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Debt Instrument [Line Items] | |||
Loss on extinguishment of debt | $ (290) | ||
Note payable to Crystal Financial LLC, with interest at LIBOR plus margin | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 17,000 | ||
Note payable to Crystal Financial LLC, with interest at LIBOR plus margin | Term loan | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 17,000 | ||
Debt Instrument, Periodic Payment, Principal | $ 637,500 | ||
Prepayment penalty percentage Prior to First anniversary | 3.00% | ||
Prepayment penalty percentage after First anniversary and before second anniversary | 2.00% | ||
Interest rate applicable to amounts drawn | 9.10% | ||
Note payable to Crystal Financial LLC, with interest at LIBOR plus margin | Silicon Valley Bank | Term loan | |||
Debt Instrument [Line Items] | |||
Repayment of long-term debt from cash on hand | $ 2,900 | ||
Repayments of Long-term Debt | $ 19,400 | ||
Loss on extinguishment of debt | $ 290 |
NET LOSS PER SHARE (Detail Text
NET LOSS PER SHARE (Detail Textuals) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Potentially dilutive common stock equivalents for outstanding equity-based compensation | 1.8 | 1.8 |
RECENT ACCOUNTING PRONOUNCEME28
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Recent Accounting Pronouncements [Line Items] | ||
Deferred financing costs | $ 1,044 | $ 440 |
Deferred financing costs reclassified from assets to liabilities | 440 | |
Long-term debt | ||
Recent Accounting Pronouncements [Line Items] | ||
Deferred financing costs | $ 1,044 |
COMMITMENTS, CONTINGENCIES AN29
COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENT (Details) - Subsequent Event - Computer And Network Equipment Software - Capital Lease Obligations $ in Millions | 3 Months Ended |
Apr. 30, 2016USD ($) | |
Commitments, Contingencies And Subsequent Event [Line Items] | |
Lease amount | $ 1.2 |
Lease term | 60 months |