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)
|
Page
No.
|
||
|
||
PART
I - FINANCIAL INFORMATION
|
||
Item
1.
|
Consolidated
Financial Statements
|
|
Item
2.
|
||
Item
3.
|
||
Item
4.
|
||
PART
II - OTHER INFORMATION
|
||
Item
1.
|
||
Item
1A.
|
||
Item
6.
|
||
June
30,
|
December
31,
|
||||||
2006
(Unaudited)
|
2005
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
6,082,000
|
$
|
9,484,000
|
|||
Restricted
cash
|
225,000
|
225,000
|
|||||
Receivables,
net of reserves of $147,000 and $310,000
|
4,959,000
|
5,037,000
|
|||||
Prepaid
expenses and other
|
557,000
|
485,000
|
|||||
Total
current assets
|
11,823,000
|
15,231,000
|
|||||
Property
and equipment, net
|
669,000
|
1,038,000
|
|||||
Intangibles,
net
|
1,859,000
|
1,999,000
|
|||||
Capitalized
software, net
|
2,853,000
|
2,055,000
|
|||||
Goodwill
|
1,146,000
|
1,100,000
|
|||||
Other
assets
|
194,000
|
189,000
|
|||||
|
$
|
18,544,000
|
$
|
21,612,000
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
3,473,000
|
$
|
3,976,000
|
|||
Deferred
revenues
|
7,150,000
|
5,767,000
|
|||||
Total
current liabilities
|
10,623,000
|
9,743,000
|
|||||
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 and
3,585,000
|
36,000
|
36,000
|
|||||
Additional
paid-in capital
|
27,260,000
|
27,116,000
|
|||||
Cumulative
translation adjustment
|
(875,000
|
)
|
(935,000
|
)
|
|||
Accumulated
deficit
|
(18,292,000
|
)
|
(14,140,000
|
)
|
|||
Less:
treasury stock at cost, 42,000 and 42,000 shares
|
(208,000
|
)
|
(208,000
|
)
|
|||
Total
stockholders’ equity
|
7,921,000
|
11,869,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
18,544,000
|
$
|
21,612,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months
|
Six
Months
|
||||||||||||
Ended
June 30,
|
Ended
June 30,
|
||||||||||||
2006
|
2005
(Restated)
|
2006
|
2005
(Restated)
|
||||||||||
|
|||||||||||||
Revenues:
|
|||||||||||||
Software
license fees
|
$
|
997,000
|
$
|
2,068,000
|
$
|
1,122,000
|
$
|
2,666,000
|
|||||
Services
and maintenance
|
3,528,000
|
3,291,000
|
7,282,000
|
6,463,000
|
|||||||||
Total
revenues
|
4,525,000
|
5,359,000
|
8,404,000
|
9,129,000
|
|||||||||
Costs
and expenses:
|
|||||||||||||
Cost
of software license fees
|
398,000
|
318,000
|
678,000
|
583,000
|
|||||||||
Cost
of services and maintenance
|
2,468,000
|
1,939,000
|
5,303,000
|
3,779,000
|
|||||||||
Product
development
|
1,008,000
|
667,000
|
1,937,000
|
1,275,000
|
|||||||||
Sales
and marketing
|
1,367,000
|
1,413,000
|
2,615,000
|
2,663,000
|
|||||||||
General
and administrative
|
1,251,000
|
614,000
|
2,158,000
|
1,196,000
|
|||||||||
Total
costs and expenses
|
6,492,000
|
4,951,000
|
12,691,000
|
9,496,000
|
|||||||||
Income
(loss) from operations
|
(1,967,000
|
)
|
408,000
|
(4,287,000
|
)
|
(367,000
|
)
|
||||||
Interest
income, net
|
58,000
|
23,000
|
135,000
|
49,000
|
|||||||||
Income
(loss) before income taxes
|
(1,909,000
|
)
|
431,000
|
(4,152,000
|
)
|
(318,000
|
)
|
||||||
Income
tax expense
|
-
|
-
|
-
|
-
|
|||||||||
Net
income (loss)
|
$
|
(1,909,000
|
)
|
$
|
431,000
|
$
|
(4,152,000
|
)
|
$
|
(318,000
|
)
|
||
Basic
income (loss) per share
|
$
|
(0.54
|
)
|
$
|
0.15
|
$
|
(1.17
|
)
|
$
|
(0.10
|
)
|
||
Diluted
income (loss) per share
|
$
|
(0.54
|
)
|
$
|
0.14
|
$
|
(1.17
|
)
|
$
|
(0.10
|
)
|
||
Shares
outstanding used in
computing
basic income
(loss)
per share
|
3,547,000
|
2,962,000
|
3,545,000
|
2,961,000
|
|||||||||
Shares
outstanding used in
computing
diluted income (loss)
per
share
|
3,547,000
|
3,056,000
|
3,545,000
|
2,961,000
|
|||||||||
See
accompanying notes to the consolidated financial
statements.
|
|||||||||||||
For
the Six Months
Ended
June 30,
|
|||||||
2006
|
2005
(Restated)
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
(loss)
|
$
|
(4,152,000
|
)
|
$
|
(318,000
|
)
|
|
Adjustments
to reconcile net (loss) to net cash (used) provided by
operating
activities:
|
|||||||
Depreciation
and amortization
|
1,194,000
|
673,000
|
|||||
Increase
in allowance for doubtful accounts
|
189,000
|
232,000
|
|||||
Compensation
expense FAS 123(R)
|
125,000
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Receivables
|
(28,000
|
)
|
22,000
|
||||
Prepaid
expenses and other
|
(65,000
|
)
|
(54,000
|
)
|
|||
Accounts
payable and accrued expenses
|
(477,000
|
)
|
(256,000
|
)
|
|||
Deferred
revenues
|
1,403,000
|
80,000
|
|||||
Other
long term assets
|
(5,000
|
)
|
(8,000
|
)
|
|||
Net
cash (used) provided by operating activities
|
(1,816,000
|
)
|
371,000
|
||||
Cash
flows from investing activities:
|
|||||||
Purchases
of property and equipment
|
(66,000
|
)
|
(166,000
|
)
|
|||
Capitalized
software development costs
|
(1,402,000
|
)
|
(389,000
|
)
|
|||
Increase
in Goodwill
|
(47,000
|
)
|
-
|
||||
Net
cash used in investing activities
|
(1,515,000
|
)
|
(555,000
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from exercise of stock options and employee stock purchase
plan
|
19,000
|
23,000
|
|||||
Cash
flows from financing activities
|
19,000
|
23,000
|
|||||
Effect
of exchange rate changes on cash
|
(90,000
|
)
|
12,000
|
||||
Net
(decrease) in cash and cash equivalents
|
(3,402,000
|
)
|
(149,000
|
)
|
|||
Cash,
beginning of period
|
9,484,000
|
4,483,000
|
|||||
Cash,
end of period
|
$
|
6,082,000
|
$
|
4,334,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
Common
Stock
|
Additional
Paid-In
Capital
|
Cumulative
Translation Adjustment
|
Accumulated
Deficit
|
Treasury
Stock
|
Comprehensive
Income
(Loss)
|
||||||||||||||
Balance
at December 31, 2005
|
$
|
36,000
|
$
|
27,116,000
|
$
|
(935,000
|
)
|
$
|
(14,140,000
|
)
|
$
|
(208,000
|
)
|
$
|
-
|
||||
Exercise
of stock options
|
19,000
|
-
|
-
|
-
|
|||||||||||||||
Compensation
costs
FAS123(R)
|
-
|
125,000
|
-
|
-
|
-
|
-
|
|||||||||||||
Cumulative
translation
adjustment
|
-
|
-
|
60,000
|
-
|
-
|
60,000
|
|||||||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
(4,152,000
|
)
|
-
|
(4,152,000
|
)
|
|||||||||||
Balance
at June 30, 2006
|
$
|
36,000
|
$
|
27,260,000
|
$
|
(875,000
|
)
|
$
|
(18,292,000
|
)
|
$
|
(208,000
|
)
|
$
|
(4,092,000
|
)
|
Six
Months Ended
|
||||
June
30, 2006
|
||||
Weighted-average
fair value
|
$
|
9.48
|
||
Risk-free
interest rate
|
5.04
|
%
|
||
Expected
life (in years)
|
6
|
|||
Volatility
|
116
|
%
|
||
Expected
dividends
|
-
|
Three
Months Ended
|
Six
Months Ended
|
||||||
June
30, 2005
(as
Restated)
|
June
30, 2005
(as
Restated)
|
||||||
Net
income(loss) - as reported
|
$
|
431,000
|
$
|
(318,000
|
)
|
||
Add:
Stock-based compensation
included
in net income as
reported,
net or related tax effects
|
-
|
-
|
|||||
Deduct
stock-based compensation
determined
under fair value based
methods
for all awards, net of
related
tax effects
|
(56,000
|
)
|
(115,000
|
)
|
|||
Net
income (loss) - pro forma
|
$
|
375,000
|
$
|
(433,000
|
)
|
||
Basic
income (loss) per share -
as
reported
|
$
|
0.15
|
$
|
(0.10
|
)
|
||
Diluted
income (loss) per share as
reported
|
$
|
0.14
|
$
|
(0.10
|
)
|
||
Basic
income (loss) per share -
pro
forma
|
$
|
0.13
|
$
|
(0.15
|
)
|
||
Diluted
income (loss) per share pro
forma
|
$
|
0.12
|
$
|
(0.15
|
)
|
Six
Months Ended
|
||||
June
30, 2005
|
||||
Weighted-average
fair value
|
$
|
6.17
|
||
Risk-free
interest rate
|
4.00
|
%
|
||
Expected
life (in years)
|
6
|
|||
Volatility
|
119
|
%
|
||
Expected
Dividends
|
-
|
Options
Available for Grant
|
Number
of Options Outstanding
|
Weighted
Average Price per Share
|
||||||||
Balance
at December 31, 2005
|
35,822
|
291,664
|
$
|
7.04
|
||||||
Options
authorized
|
350,000
|
-
|
||||||||
Options
granted
|
(29,500
|
)
|
29,500
|
$
|
11.07
|
|||||
Options
exercised
|
-
|
(6,000
|
)
|
$
|
3.23
|
|||||
Options
cancelled:
|
||||||||||
Options
forfeited
|
55,050
|
(57,050
|
)
|
$
|
6.97
|
|||||
Options
expired
|
(800
|
)
|
-
|
-
|
||||||
Balance
at June 30, 2006
|
410,572
|
258,114
|
$
|
7.08
|
Number
of Shares
|
Weighted
Average Price Per Share
|
Weighted
Average Remaining Contractual Term (in years)
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding
Options (vested
and
expected to vest)
|
258,114
|
$
|
7.03
|
7.69
|
$
|
1,835,319
|
|||||||
|
|||||||||||||
Options
Exercisable
|
90,541
|
$
|
7.08
|
6.04
|
$
|
455,208
|
|||||||
|
· |
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.
|
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)
|
|