[X]
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
Delaware
|
23-2119058
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
240
Gibraltar Road, Horsham, PA
|
|
19044
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer __
|
Accelerated
filer __
|
Non-accelerated
filer X
|
Page
No.
|
||
Facing
Sheet
|
||
Index
|
||
PART
I - FINANCIAL INFORMATION
|
||
Item
1.
|
Consolidated
Financial Statements
|
|
Consolidated
Balance Sheets
|
||
Consolidated
Statements of Operations (Unaudited)
|
||
Consolidated
Statements of Cash Flows (Unaudited)
|
||
Notes
to Unaudited Consolidated Financial Statements
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial
|
|
Condition
and Results of Operations
|
||
Item
3.
|
Quantitative
and Qualitative Disclosure About Market Risk
|
|
Item
4T.
|
Controls
and Procedures
|
|
PART
II - OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
|
Item
1A.
|
Risk
Factors
|
|
Item
6.
|
Exhibits
|
|
Signatures
|
September
30,
|
December
31,
|
|||||||
2007
(Unaudited)
|
2006
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
2,100,000
|
$ |
3,120,000
|
||||
Restricted
cash
|
150,000
|
225,000
|
||||||
Receivables,
net of reserves of $268,000 (unaudited) and
$163,000
|
7,459,000
|
6,860,000
|
||||||
Prepaid
expenses and other
|
422,000
|
423,000
|
||||||
Total
current assets
|
10,131,000
|
10,628,000
|
||||||
Property
and equipment, net
|
484,000
|
648,000
|
||||||
Intangibles,
net
|
1,509,000
|
1,719,000
|
||||||
Capitalized
software, net
|
3,470,000
|
3,636,000
|
||||||
Goodwill
|
1,540,000
|
1,253,000
|
||||||
Other
assets
|
171,000
|
175,000
|
||||||
$ |
17,305,000
|
$ |
18,059,000
|
|||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ |
4,022,000
|
$ |
3,930,000
|
||||
Deferred
revenues
|
5,382,000
|
7,987,000
|
||||||
Total
current liabilities
|
9,404,000
|
11,917,000
|
||||||
Long-term
liabilities:
|
||||||||
Deferred
tax liability
|
36,000
|
36,000
|
||||||
Commitments
|
-
|
-
|
||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, $.01 par value, 5,000,000 shares
authorized,
none issued
|
-
|
-
|
||||||
Common
stock $.01 par value, 25,000,000 shares
authorized;
issued 3,591,000 (unaudited) and
3,591,000
|
36,000
|
36,000
|
||||||
Additional
paid-in capital
|
27,951,000
|
27,532,000
|
||||||
Cumulative
translation adjustment
|
(825,000 | ) | (911,000 | ) | ||||
Accumulated
deficit
|
(19,089,000 | ) | (20,343,000 | ) | ||||
Less: treasury
stock at cost, 42,000 shares
|
(208,000 | ) | (208,000 | ) | ||||
Total
stockholders’ equity
|
7,865,000
|
6,106,000
|
||||||
Total
liabilities and stockholders’ equity
|
$ |
17,305,000
|
$ |
18,059,000
|
||||
See
accompanying notes to the consolidated financial
statements.
|
|
|
Three
Months
|
|
|
Nine
Months
|
|||||||||||
|
|
Ended
September 30,
|
|
|
Ended
September 30,
|
|||||||||||
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
2006
|
||||||
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software
license fees
|
|
$
|
2,793,000
|
|
|
$
|
2,212,000
|
|
|
$
|
5,499,000
|
|
$
|
3,334,000
|
|
|
Services
and maintenance
|
|
|
5,060,000
|
|
|
|
4,137,000
|
|
|
|
16,457,000
|
|
|
|
11,256,000
|
|
Total
revenues
|
|
|
7,853,000
|
|
|
|
6,349,000
|
|
|
|
21,956,000
|
|
|
|
14,590,000
|
|
Costs
and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of software license fees
|
|
|
861,000
|
|
|
|
422,000
|
|
|
|
1,967,000
|
|
|
|
1,172,000
|
|
Cost
of services and maintenance
|
|
|
3,140,000
|
|
|
|
2,418,000
|
|
|
|
8,771,000
|
|
|
|
7,721,000
|
|
Product
development
|
|
|
823,000
|
|
|
|
896,000
|
|
|
|
3,364,000
|
|
|
|
2,761,000
|
|
Sales
and marketing
|
|
|
1,368,000
|
|
|
|
1,881,000
|
|
|
|
3,951,000
|
|
|
|
4,496,000
|
|
General
and administrative
|
|
|
791,000
|
|
|
|
735,000
|
|
|
|
2,736,000
|
|
|
|
2,893,000
|
|
Total
costs and expenses
|
|
|
6,983,000
|
|
|
|
6,352,000
|
|
|
|
20,789,000
|
|
|
|
19,043,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
|
|
870,000
|
|
|
(3,000
|
)
|
|
|
1,167,000
|
|
|
|
(4,453,000
|
)
|
|
Interest
income, net
|
|
|
22,000
|
|
|
|
48,000
|
|
|
|
87,000
|
|
|
|
183,000
|
|
Income
(loss) before income taxes
|
|
|
892,000
|
|
|
45,000
|
|
|
1,254,000
|
|
|
|
(4,270,000
|
)
|
||
Income
tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net
income (loss)
|
|
$
|
892,000
|
|
$
|
45,000
|
|
$
|
1,254,000
|
|
$
|
(4,270,000
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
net income(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
892,000
|
|
$
|
45,000
|
|
$
|
1,254,000
|
|
$
|
(4,270,000
|
)
|
|||
Cumulative
translation adjustment
|
|
|
41,000
|
|
|
|
(2,000
|
)
|
|
|
86,000
|
|
|
|
(58,000
|
)
|
Comprehensive
net income (loss)
|
|
$
|
933,000
|
|
$
|
43,000
|
|
$
|
1,340,000
|
|
$
|
(4,328,000
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
income (loss) per share
|
|
$
|
0.25
|
|
$
|
0.01
|
|
$
|
0.35
|
|
$
|
(1.20
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
income (loss) per share
|
|
$
|
0.25
|
|
$
|
0.01
|
|
$
|
0.35
|
|
$
|
(1.20
|
)
|
|||
Shares
outstanding used in computing basic income (loss)
per
share
|
|
|
3,549,000
|
|
|
|
3,549,000
|
|
|
|
3,549,000
|
|
|
|
3,546,000
|
|
Shares
outstanding used in computing diluted income (loss)
per
share
|
|
|
3,551,000
|
|
|
|
3,567,000
|
|
|
|
3,559,000
|
|
|
|
3,546,000
|
|
See
accompanying notes to the consolidated financial
statements.
|
|
For
the Nine Months
Ended
September 30,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
|
|
|
|
|
|
||
Net
income (loss)
|
|
$
|
1,254,000
|
|
|
$
|
(4,270,000
|
)
|
Adjustments
to reconcile net income (loss) to net cash provided by (used
in)
operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,149,000
|
|
|
|
1,737,000
|
|
Increase
in allowance for doubtful accounts
|
|
|
182,000
|
|
|
|
209,000
|
|
Stock
based compensation
|
|
|
419,000
|
|
|
|
233,000
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(643,000
|
)
|
|
|
(955,000
|
)
|
Accounts
payable and accrued expenses
|
|
|
106,000
|
|
|
|
(77,000
|
)
|
Deferred
revenues
|
|
|
(2,603,000
|
)
|
|
|
483,000
|
|
Other
long term assets
|
|
|
5,000
|
|
|
|
2,000
|
|
Net
cash provided by (used in) operating activities
|
|
|
869,000
|
|
|
|
(2,638,000
|
)
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Release
of restricted cash
|
|
|
75,000
|
|
|
|
-
|
|
Purchase
of short term investments
|
(500,000
|
)
|
-
|
|||||
Sale
of short term investments
|
500,000
|
-
|
||||||
Purchases
of property and equipment
|
|
|
(153,000
|
)
|
|
|
(106,000
|
)
|
Capitalized
software development costs
|
|
|
(1,450,000
|
)
|
|
|
(2,139,000
|
)
|
Earnout
payment
|
|
|
(287,000
|
)
|
|
|
(133,000
|
)
|
Net
cash used in investing activities
|
|
|
(1,815,000
|
)
|
|
|
(2,378,000
|
)
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from exercise of stock options
|
|
|
-
|
|
|
|
19,000
|
|
Cash
flows provided by financing activities
|
|
|
-
|
|
|
|
19,000
|
|
Effect
of exchange rate changes on cash
|
|
|
(74,000
|
)
|
|
|
(126,000
|
)
|
Net
decrease in cash and cash equivalents
|
|
|
(1,020,000
|
)
|
|
|
(5,123,000
|
)
|
Cash
and cash equivalents, beginning of period
|
|
|
3,120,000
|
|
|
|
9,484,000
|
|
Cash
and cash equivalents, end of period
|
|
$
|
2,100,000
|
|
|
$
|
4,361,000
|
|
See
accompanying notes to the consolidated financial
statements.
|
Three
Months
|
Nine
Months
|
|||||||||||||
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||
Risk
free interest rate
|
4.74%
|
4.86%
|
4.67%
|
4.86%
|
||||||||||
Expected
life (in years)
|
6.15
|
6.15
|
5.91
|
6.15
|
||||||||||
Volatility
|
101%
|
113%
|
103%
|
113%
|
||||||||||
Expected
dividends
|
-
|
-
|
-
|
-
|
OPTIONS
OUTSTANDING
|
||||||||
Shares
|
Wtd.
Avg. Exercise Price
|
|||||||
Balance,
December 31, 2006
|
427,000
|
$ |
6.71
|
|||||
Authorized
|
-
|
-
|
||||||
Granted
|
113,000
|
5.44
|
||||||
Cancelled
|
(108,000 | ) |
7.33
|
|||||
Exercised
|
-
|
-
|
||||||
Expired
|
(5,000 | ) |
11.09
|
|||||
Balance,
September 30, 2007
|
427,000
|
$ |
6.17
|
Number
of
Shares
|
Weighted
Average
Exercise
Price Per
Share
|
Weighted
Average
Remaining
Contractual
Term
(in years)
|
Aggregate
Intrinsic
Value
|
|
Outstanding
Options
|
427,000
|
$6.17
|
7.64
|
$55,000
|
Ending
Vested and Expected to Vest
|
336,000
|
$6.22
|
7.27
|
$53,000
|
Options
Exercisable
|
167,000
|
$6.63
|
5.60
|
$42,000
|
Three
Months
|
Nine
Months
|
|
||||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
|
||||||||||||||||
2007
|
2006
|
2007
|
2006
|
|
||||||||||||||
Numerator:
|
||||||||||||||||||
Net
income(loss) available to common shareholders
|
$ |
892,000
|
$ |
45,000
|
$ |
1,254,000
|
$ | (4,270,000 | ) | |||||||||
Denominator:
|
||||||||||||||||||
Weighted
average shares used to compute net income
available
to common shareholders per common share-basic
|
3,549,000
|
3,549,000
|
3,549,000
|
3,546,000
|
||||||||||||||
Effect
of dilutive stock options
|
2,000
|
18,000
|
20,000
|
-
|
||||||||||||||
Weighted
average shares used to compute net income
available
to common shareholders per common share-dilutive
|
3,551,000
|
3,567,000
|
3,559,000
|
3,546,000
|
||||||||||||||
Basic
net income (loss) per share to common shareholder
|
$ |
.25
|
$ |
.01
|
$ |
.35
|
$ | (1.20 | ) | |||||||||
Dilutive
net income (loss) per share to common shareholder
|
$ |
.25
|
$ |
.01
|
$ |
.35
|
$ | (1.20 | ) |
Three
Months
Ended
September 30,
|
Nine
Months
Ended
September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenues:
|
||||||||||||||||
Software license fees
|
||||||||||||||||
United States
|
||||||||||||||||
Domestic
|
$ |
2,520,000
|
$ |
2,194,000
|
$ |
4,261,000
|
$ |
2,854,000
|
||||||||
Export
|
-
|
-
|
-
|
-
|
||||||||||||
Total
United States
software
license fees
|
2,520,000
|
2,194,000
|
4,261,000
|
2,854,000
|
||||||||||||
Europe
|
-
|
-
|
711,000
|
93,000
|
||||||||||||
Other
Foreign
|
273,000
|
18,000
|
527,000
|
387,000
|
||||||||||||
Total
foreign software
license
fees
|
273,000
|
18,000
|
1,238,000
|
480,000
|
||||||||||||
Total
software license fees
|
2,793,000
|
2,212,000
|
5,499,000
|
3,334,000
|
||||||||||||
Service
and maintenance
|
||||||||||||||||
United
States
|
||||||||||||||||
Domestic
|
3,290,000
|
2,873,000
|
9,990,000
|
7,571,000
|
||||||||||||
Export
|
48,000
|
152,000
|
149,000
|
503,000
|
||||||||||||
Total
United States service
and
maintenance revenue
|
3,338,000
|
3,025,000
|
10,139,000
|
8,074,000
|
||||||||||||
Europe
|
1,295,000
|
436,000
|
5,140,000
|
2,077,000
|
||||||||||||
Other
foreign
|
427,000
|
676,000
|
1,178,000
|
1,105,000
|
||||||||||||
Total
foreign service and
maintenance
revenue
|
1,722,000
|
1,112,000
|
6,318,000
|
3,182,000
|
||||||||||||
Total
service and
maintenance
revenue
|
5,060,000
|
4,137,000
|
16,457,000
|
11,256,000
|
||||||||||||
Total
revenue
|
7,853,000
|
6,349,000
|
21,956,000
|
14,590,000
|
||||||||||||
Net
income(loss) from operations
|
||||||||||||||||
United
States
|
547,000
|
309,000
|
(1,418,000 | ) | (3,205,000 | ) | ||||||||||
Europe
|
115,000
|
(355,000 | ) |
2,229,000
|
(1,351,000 | ) | ||||||||||
Other
foreign
|
230,000
|
91,000
|
443,000
|
286,000
|
||||||||||||
Net
income(loss) from
operations
|
892,000
|
45,000
|
1,254,000
|
(4,270,000 | ) |
Three
Months
Ended
September 30,
|
Nine
Months
Ended
September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net
income(loss) available to common shareholders
|
$ |
892,000
|
$ |
45,000
|
$ |
1,254,000
|
$ | (4,270,000 | ) | |||||||
Denominator:
|
||||||||||||||||
Weighted
average shares used to compute net income
available
to common shareholders per common share-basic
|
3,549,000
|
3,549,000
|
3,549,000
|
3,546,000
|
||||||||||||
Effect
of dilutive stock options
|
2,000
|
18,000
|
20,000
|
-
|
||||||||||||
Weighted
average shares used to compute net income
available
to common shareholders per common share-dilutive
|
3,551,000
|
3,567,000
|
3,559,000
|
3,546,000
|
||||||||||||
Basic
net income (loss) per share to common shareholder
|
$ |
.25
|
$ |
.01
|
$ |
.35
|
$ | (1.20 | ) | |||||||
Dilutive
net income (loss) per share to common shareholder
|
$ |
.25
|
$ |
.01
|
$ |
.35
|
$ | (1.20 | ) |
·
|
The
Company’s quarterly operating results have in the past varied and may in
the future vary significantly depending on factors such as the size,
timing and recognition of revenue from significant orders, the timing
of
new product releases and product enhancements, and market acceptance
of
these new releases and enhancements, increases in operating expenses,
and
seasonality of its business.
|
·
|
The
market price of the Company’s common stock could be subject to significant
fluctuations in response to, and may be adversely affected by, variations
in quarterly operating results, changes in earnings estimates by
analysts,
developments in the software industry, adverse earnings or other
financial
announcements of the Company’s customers and general stock market
conditions, as well as other
factors.
|
|
31.1
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – CEO and
Principal Executive Officer
|
31.2
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – CFO and
Principal Financial and Chief Accounting
Officer
|
|
32.1
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – President and
Principal Executive Officer
|
|
32.2
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – CFO and
Principal Financial and Chief Accounting
Officer
|
ASTEA INTERNATIONAL INC. | |
By:
|
/s/Zack
Bergreen
|
Zack
Bergreen
|
|
Chief
Executive Officer
|
|
(Principal
Executive Officer)
|
|
By:
|
/s/Rick
Etskovitz
|
Rick
Etskovitz
|
|
Chief
Financial Officer
|
|
(Principal
Financial and Chief
|
|
Accounting
Officer)
|
|