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
|
· |
Part
I - Item 1 - Financial Statements
|
· |
Part
I - Item 2 - Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
Page
No.
|
||
1
|
||
2
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
13
|
||
18
|
||
18
|
||
20
|
||
20
|
||
20
|
||
21
|
March
31, 2006
|
December
31, 2005
|
||||||
Restated
|
Restated
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
7,100,000
|
$
|
9,484,000
|
|||
Restricted
cash
|
225,000
|
225,000
|
|||||
Receivables,
net of reserves of $234,000 and $310,000
|
4,483,000
|
5,037,000
|
|||||
Prepaid
expenses and other
|
628,000
|
485,000
|
|||||
Total
current assets
|
12,436,000
|
15,231,000
|
|||||
Property
and equipment, net
|
865,000
|
1,038,000
|
|||||
Intangibles,
net
|
1,929,000
|
1,999,000
|
|||||
Capitalized
software, net
|
2,466,000
|
2,055,000
|
|||||
Goodwill
|
1,083,000
|
1,100,000
|
|||||
Other
assets
|
170,000
|
189,000
|
|||||
Total
assets
|
$
|
18,949,000
|
$
|
21,612,000
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
3,054,000
|
$
|
3,969,000
|
|||
Deferred
revenues
|
6,126,000
|
5,767,000
|
|||||
Total
current liabilities
|
9,180,000
|
9,736,000
|
|||||
|
|||||||
Long-term
liabilities:
|
|||||||
Deferred
revenue
|
1,257,000
|
1,221,000
|
|||||
Deferred
income taxes
|
7,000
|
7,000
|
|||||
Total
long-term liabilities
|
1,264,000
|
1,228,000
|
|||||
Stockholders’
equity:
|
|||||||
Common
stock, $.01 par value, 25,000,000 shares
authorized
issued 3,585,000 and 3,585,000.
|
36,000
|
36,000
|
|||||
Additional
paid-in capital
|
27,140,000
|
27,116,000
|
|||||
Cumulative
translation adjustment
|
(823,000
|
)
|
(935,000
|
)
|
|||
Accumulated
deficit
|
(17,640,000
|
)
|
(15,361,000
|
)
|
|||
Less:
treasury stock at cost, 42,000 and 42,000 shares
respectfully
|
(208,000
|
)
|
(208,000
|
)
|
|||
Total
stockholders’ equity
|
8,505,000
|
10,648,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
18,949,000
|
$
|
21,612,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months Ended
March
31,
|
|||||||
2006
(Restated)
|
2005
(Restated)
|
||||||
Revenues:
|
|||||||
Software
license fees
|
$
|
125,000
|
$
|
598,000
|
|||
Services
and maintenance
|
3,718,000
|
3,011,000
|
|||||
Total
revenues
|
3,843,000
|
3,609,000
|
|||||
Costs
and expenses:
|
|||||||
Cost
of software license fees
|
316,000
|
265,000
|
|||||
Cost
of services and maintenance
|
2,835,000
|
1,840,000
|
|||||
Product
development
|
893,000
|
608,000
|
|||||
Sales
and marketing
|
1,248,000
|
1,249,000
|
|||||
General
and administrative
|
907,000
|
583,000
|
|||||
Total
costs and expenses
|
6,199,000
|
4,545,000
|
|||||
Loss
from operations
|
(2,356,000
|
)
|
(936,000
|
)
|
|||
Interest
income, net
|
77,000
|
26,000
|
|||||
Loss
before income taxes
|
(2,279,000
|
)
|
(910,000
|
)
|
|||
Income
tax expense
|
-
|
-
|
|||||
Net
loss
|
$
|
(2,279,000
|
)
|
$
|
(910,000
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.64
|
)
|
$
|
(0.31
|
)
|
|
Shares
outstanding used in computing basic and
diluted
loss per share
|
3,543,000
|
2,960,000
|
|||||
Shares
outstanding used in computing
diluted
loss per share
|
3,543,000
|
2,960,000
|
|||||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months Ended
March
31,
|
|||||||
2006
(Restated)
|
2005
(Restated)
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(2,279,000
|
)
|
$
|
(910,000
|
)
|
|
Adjustments
to reconcile net loss to net cash (used) provided by
operating
activities:
|
|||||||
Depreciation
and amortization
|
539,000
|
351,000
|
|||||
Increase
in allowance for doubtful accounts
|
55,000
|
120,000
|
|||||
Stock
based compensation
|
24,000
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Receivables
|
597,000
|
1,241,000
|
|||||
Prepaid
expenses and other
|
(143,000
|
)
|
(101,000
|
)
|
|||
Accounts
payable and accrued expenses
|
(919,000
|
)
|
(405,000
|
)
|
|||
Deferred
revenues
|
412,000
|
138,000
|
|||||
Other
long term assets
|
19,000
|
(6,000
|
)
|
||||
Net
cash (used) provided by operating activities
|
(1,695,000
|
)
|
428,000
|
||||
Cash
flows from investing activities:
|
|||||||
Purchases
of property and equipment
|
(59,000
|
)
|
(85,000
|
)
|
|||
Capitalized
software development costs
|
(651,000
|
)
|
(219,000
|
)
|
|||
Adjustment
to Goodwill
|
17,000
|
-
|
|||||
Net
cash used in investing activities
|
(693,000
|
)
|
(304,000
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from issuance of stock through employee stock purchase
plan
|
-
|
1,000
|
|||||
Effect
of exchange rate changes on cash
|
4,000
|
(27,000
|
)
|
||||
Net
(decrease) increase in cash and cash equivalents
|
(2,384,000
|
)
|
98,000
|
||||
Cash,
beginning of period
|
9,484,000
|
4,483,000
|
|||||
Cash,
end of period
|
$
|
7,100,000
|
$
|
4,581,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
|||||||
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Net
(loss), as previously reported
|
$
|
(2,243,000
|
)
|
$
|
(749,000
|
)
|
|
Adjustment
(pre-tax):
|
|||||||
Service
and maintenance revenue
|
(36,000
|
)
|
(161,000
|
)
|
|||
Tax
effect of restatement adjustment
|
-
|
-
|
|||||
Net
(loss) restated
|
$
|
(2,279,000
|
)
|
$
|
(910,000
|
)
|
March
31, 2006
|
December
31, 2005
|
||||||||||||
As
previously reported
|
As
Restated
|
As
previously reported
|
As
Restated
|
||||||||||
ASSETS
|
|||||||||||||
Current
assets:
|
|||||||||||||
Cash
and cash equivalents
|
$
|
7,100,000
|
$
|
7,100,000
|
$
|
9,484,000
|
$
|
9,484,000
|
|||||
Restricted
cash
|
225,000
|
225,000
|
225,000
|
225,000
|
|||||||||
Receivables,
net of reserves of $234,000 and
$310,000
|
4,483,000
|
4,483,000
|
5,037,000
|
5,037,000
|
|||||||||
Prepaid
expenses and other
|
628,000
|
628,000
|
485,000
|
485,000
|
|||||||||
Total
current assets
|
12,436,000
|
12,436,000
|
15,231,000
|
15,231,000
|
|||||||||
Property
and equipment, net
|
865,000
|
865,000
|
1,038,000
|
1,038,000
|
|||||||||
Intangibles,
net
|
1,929,000
|
1,929,000
|
1,999,000
|
1,999,000
|
|||||||||
Capitalized
software, net
|
2,466,000
|
2,466,000
|
2,055,000
|
2,055,000
|
|||||||||
Goodwill
|
1,083,000
|
1,083,000
|
1,100,000
|
1,100,000
|
|||||||||
Other
assets
|
170,000
|
170,000
|
189,000
|
189,000
|
|||||||||
Total
assets
|
$
|
18,949,000
|
$
|
18,949,000
|
$
|
21,612,000
|
$
|
21,612,000
|
|||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||||||||
Current
liabilities:
|
|||||||||||||
Accounts
payable and accrued expenses
|
$
|
3,054,000
|
$
|
3,054,000
|
$
|
3,969,000
|
$
|
3,969,000
|
|||||
Deferred
revenues
|
6,126,000
|
6,126,000
|
5,767,000
|
5,767,000
|
|||||||||
Total
current liabilities
|
9,180,000
|
9,180,000
|
9,736,000
|
9,736,000
|
|||||||||
|
|||||||||||||
Long-term
liabilities:
|
|||||||||||||
Deferred
revenue
|
-
|
1,257,000
|
-
|
1,221,000
|
|||||||||
Deferred
income taxes
|
7,000
|
7,000
|
7,000
|
7,000
|
|||||||||
Total
long-term liabilities
|
7,000
|
1,264,000
|
7,000
|
1,228,000
|
|||||||||
Stockholders’
equity:
|
|||||||||||||
Common
stock, $.01 par value, 25,000,000
share
authorized issued 3,585,000 and
3,585,000
|
36,000
|
36,000
|
36,000
|
36,000
|
|||||||||
Additional
paid-in capital
|
27,140,000
|
27,140,000
|
27,116,000
|
27,116,000
|
|||||||||
Cumulative
translation adjustment
|
(823,000
|
)
|
(823,000
|
)
|
(935,000
|
)
|
(935,000
|
)
|
|||||
Accumulated
deficit
|
(16,383,000
|
)
|
(17,640,000
|
)
|
(14,140,000
|
)
|
(15,361,000
|
)
|
|||||
Less:
treasury stock at cost, 42,000 and
42,000
shares respectfully
|
(208,000
|
)
|
(208,000
|
)
|
(208,000
|
)
|
(208,000
|
)
|
|||||
Total
stockholders’ equity
|
9,762,000
|
8,505,000
|
11,869,000
|
10,648,000
|
|||||||||
Total
liabilities and stockholders’ equity
|
$
|
18,949,000
|
$
|
18,949,000
|
$
|
21,612,000
|
$
|
21,612,000
|
|||||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months Ended
March
31,
|
|||||||||||||
2006
|
2005
|
||||||||||||
As
previously reported
|
As
restated
|
As
previously reported
|
As
restated
|
||||||||||
Revenues:
|
|||||||||||||
Software
license fees
|
$
|
125,000
|
$
|
125,000
|
$
|
598,000
|
$
|
598,000
|
|||||
Services
and maintenance
|
3,754,000
|
3,718,000
|
3,172,000
|
3,011,000
|
|||||||||
Total
revenues
|
3,879,000
|
3,843,000
|
3,770,000
|
3,609,000
|
|||||||||
Costs
and expenses:
|
|||||||||||||
Cost
of software license fees
|
316,000
|
316,000
|
265,000
|
265,000
|
|||||||||
Cost
of services and maintenance
|
2,835,000
|
2,835,000
|
1,840,000
|
1,840,000
|
|||||||||
Product
development
|
893,000
|
893,000
|
608,000
|
608,000
|
|||||||||
Sales
and marketing
|
1,248,000
|
1,248,000
|
1,249,000
|
1,249,000
|
|||||||||
General
and administrative
|
907,000
|
907,000
|
583,000
|
583,000
|
|||||||||
Total
costs and expenses
|
6,199,000
|
6,199,000
|
4,545,000
|
4,545,000
|
|||||||||
Loss
from operations
|
(2,320,000
|
)
|
(2,356,000
|
)
|
(775,000
|
)
|
(936,000
|
)
|
|||||
Interest
income, net
|
77,000
|
77,000
|
26,000
|
26,000
|
|||||||||
Loss
before income taxes
|
(2,243,000
|
)
|
(2,279,000
|
)
|
(749,000
|
)
|
(910,000
|
)
|
|||||
Income
tax expense
|
-
|
-
|
-
|
-
|
|||||||||
Net
loss
|
$
|
(2,243,000
|
)
|
$
|
(2,279,000
|
)
|
$
|
(749,000
|
)
|
$
|
(910,000
|
)
|
|
Basic
and diluted (loss) per share
|
$
|
(0.63
|
)
|
$
|
(0.64
|
)
|
$
|
(0.25
|
)
|
$
|
(0.31
|
)
|
|
Shares
outstanding used in computing
basic
and diluted (loss) per share
|
3,543,000
|
3,543,000
|
2,960,000
|
2,960,000
|
|||||||||
Common
Stock
|
Treasury
Stock
|
Additional
Paid-In
Capital
|
Translation
|
Retained
Earnings
|
Total
Stock-holders Equity
|
Compre-
hensive
Income (loss)
|
||||||||||||||||
Balance
at December 31, 2005 (restated)
|
$
|
36,000
|
$
|
(208,000
|
)
|
$
|
27,116,000
|
$
|
(935,000
|
)
|
$
|
(15,361,000
|
)
|
$
|
10,648,000
|
$
|
-
|
|||||
Stock
based compensation
|
24,000
|
24,000
|
||||||||||||||||||||
Cumulative
translation
adjustment
|
112,000
|
112,000
|
112,000
|
|||||||||||||||||||
Net
(loss) - restated
|
(2,279,000
|
)
|
(2,279,000
|
)
|
(2,279,000
|
)
|
||||||||||||||||
Balance
at March 31, 2006 (restated)
|
$
|
36,000
|
$
|
(208,000
|
)
|
$
|
27,140,000
|
$
|
(823,000
|
)
|
$
|
(17,640,000
|
)
|
$
|
8,505,000
|
$
|
(2,167,000
|
)
|
Three
Months Ended
|
||||
March
31, 2006
|
||||
Weighted-average
fair value of options granted
|
$
|
15.00
|
||
Risk-free
interest rate
|
4.79
|
%
|
||
Expected
life (in years)
|
6
|
|||
Volatility
|
117
|
%
|
||
Expected
Dividends
|
-
|
Three
Months Ended
|
||||
March
31, 2005
(Restated)
|
||||
Net
(loss) - as restated
|
$
|
(910,000
|
)
|
|
Less:
Stock-based compensation expense under the
fair
value based methods
|
(37,000
|
)
|
||
Net
(loss) - pro forma
|
$
|
(947,000
|
)
|
|
Net
loss per share:
|
||||
Basic
and diluted (loss) per share - as restated
|
$
|
(0.31
|
)
|
|
Basic
and diluted (loss) per share - pro forma
|
$
|
(0.32
|
)
|
Three
Months Ended
|
||||
March
31, 2005
|
||||
Weighted-average
fair value of options
|
$
|
7.03
|
||
Risk-free
interest rate
|
4.53
|
%
|
||
Expected
life (in years)
|
6
|
|||
Volatility
|
128
|
%
|
||
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
|
-
|
-
|
-
|
|||||||
Options
granted
|
(7,500
|
)
|
7,500
|
$
|
17.52
|
|||||
Options
exercised
|
-
|
-
|
-
|
|||||||
Options
cancelled:
|
||||||||||
Options
forfeited
|
51,250
|
(51,250
|
)
|
$
|
6.58
|
|||||
Options
expired
|
-
|
-
|
-
|
|||||||
Balance
at March 31, 2006
|
79,572
|
247,914
|
$
|
6.85
|
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)
|
247,914
|
$
|
6.85
|
7.68
|
$
|
1,668,207
|
|||||||
|
|||||||||||||
Options
Exercisable
|
87,591
|
$
|
7.23
|
6.96
|
$
|
390,039
|
|||||||
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
· |
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.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
|
CONTROLS
AND PROCEDURES
|
Item
1.
|
Legal
Proceedings
|
Risk
Factors
|
Exhibits
|
31.1
|
31.2
|
ASTEA
INTERNATIONAL INC.
|
|
By:
|
/s/Zack
B. Bergreen
|
Zack
B. Bergreen
|
|
Chief
Executive Officer
|
|
(Principal
Executive Officer)
|
|
By:
|
/s/Rick
Etskovitz
|
Rick
Etskovitz
|
|
Chief
Financial Officer
|
|
(Principal
Financial and Chief
|
|
Accounting
Officer)
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|