[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
|
|
·
|
Part
I – Item 1 – Financial Statements
|
|
·
|
Part
I – Item 2 – Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
Page No. | ||
Facing Sheet | 1 | |
Explanatory Note | 2 | |
Index | 3 | |
PART I - FINANCIAL INFORMATION | ||
Item
1.
|
Consolidated
Financial Statements
|
|
Item
2.
|
||
Item
3.
|
||
Item
4T.
|
||
PART II - OTHER
INFORMATION
|
||
Item
1.
|
||
Item
1A.
|
||
Item
6.
|
||
March
31,
2007
|
December
31,
2006
|
||||||
Unaudited
(Restated)
|
(Restated)
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,248,000
|
$
|
3,120,000
|
|||
Restricted
cash
|
225,000
|
225,000
|
|||||
Receivables,
net of reserves of $204,000 and $163,000
|
6,555,000
|
6,860,000
|
|||||
Prepaid
expenses and other
|
545,000
|
423,000
|
|||||
Total
current assets
|
11,573,000
|
10,628,000
|
|||||
Property
and equipment, net
|
611,000
|
648,000
|
|||||
Intangibles,
net
|
1,649,000
|
1,719,000
|
|||||
Capitalized
software, net
|
3,810,000
|
3,636,000
|
|||||
Goodwill
|
1,523,000
|
1,253,000
|
|||||
Other
assets
|
171,000
|
175,000
|
|||||
Total
assets
|
$
|
19,337,000
|
$
|
18,059,000
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
4,424,000
|
$
|
3,930,000
|
|||
Deferred
revenues
|
7,882,000
|
10,278,000
|
|||||
Total
current liabilities
|
12,306,000
|
14,208,000
|
|||||
Long-term
liabilities:
|
|||||||
Deferred
tax liability
|
36,000
|
36,000
|
|||||
Stockholders’
equity:
|
|||||||
Common
stock, $.01 par value, 25,000,000 shares
authorized
issued 3,591,000 and 3,591,000.
|
36,000
|
36,000
|
|||||
Additional
paid-in capital
|
27,736,000
|
27,532,000
|
|||||
Cumulative
translation adjustment
|
(887,000
|
)
|
(911,000
|
)
|
|||
Accumulated
deficit
|
(19,682,000
|
)
|
(22,634,000
|
)
|
|||
Less:
treasury stock at cost, 42,000 and 42,000 shares
respectfully
|
(208,000
|
)
|
(208,000
|
)
|
|||
Total
stockholders’ equity
|
6,995,000
|
3,815,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
19,337,000
|
$
|
18,059,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months Ended
March
31,
|
|||||||
2007
(Restated)
|
2006
(Restated)
|
||||||
Revenues:
|
|||||||
Software
license fees
|
$
|
2,805,000
|
$
|
125,000
|
|||
Services
and maintenance
|
6,712,000
|
3,671,000
|
|||||
Total
revenues
|
9,517,000
|
3,796,000
|
|||||
Costs
and expenses:
|
|||||||
Cost
of software license fees
|
461,000
|
316,000
|
|||||
Cost
of services and maintenance
|
2,647,000
|
2,835,000
|
|||||
Product
development
|
1,260,000
|
893,000
|
|||||
Sales
and marketing
|
1,313,000
|
1,248,000
|
|||||
General
and administrative
|
910,000
|
907,000
|
|||||
Total
costs and expenses
|
6,591,000
|
6,199,000
|
|||||
Income
(loss) from operations
|
2,926,000
|
(2,403,000
|
)
|
||||
Interest
income, net
|
26,000
|
77,000
|
|||||
Income
(loss) before income taxes
|
2,952,000
|
(2,326,000
|
)
|
||||
Income
tax expense
|
-
|
-
|
|||||
Net
income (loss)
|
$
|
2,952,000
|
$
|
(2,326,000
|
)
|
||
Comprehensive
income (loss):
|
|||||||
Net
income (loss)
|
$
|
2,952,000
|
$
|
(2,326,000
|
)
|
||
Cumulative
translation adjustment
|
25,000
|
112,000
|
|||||
$
|
2,977,000
|
(2,214,000
|
)
|
||||
Basic
net income (loss) per share
|
$
|
0.83
|
$
|
(0.66
|
)
|
||
Diluted
net income (loss) per share
|
$
|
0.83
|
$
|
(0.66
|
)
|
||
Shares
outstanding used in computing basic income (loss) per
share
|
3,549,000
|
3,543,000
|
|||||
Shares
outstanding used in computing diluted income (loss)
per
share
|
3,576,000
|
3,543,000
|
|||||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months Ended
March
31,
|
|||||||
2007
(Restated)
|
2006
(Restated)
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
2,952,000
|
$
|
(2,326,000
|
)
|
||
Adjustments
to reconcile net income (loss) to net cash provided (used) by
operating
activities:
|
|||||||
Depreciation
and amortization
|
533,000
|
539,000
|
|||||
Increase
in allowance for doubtful accounts
|
60,000
|
55,000
|
|||||
Stock
based compensation
|
204,000
|
24,000
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Receivables
|
277,000
|
597,000
|
|||||
Prepaid
expenses and other
|
(123,000
|
)
|
(143,000
|
)
|
|||
Accounts
payable and accrued expenses
|
254,000
|
(919,000
|
)
|
||||
Deferred
revenues
|
(2,391,000
|
)
|
459,000
|
||||
Other
long term assets
|
5,000
|
19,000
|
|||||
Net
cash provided (used) by operating activities
|
1,771,000
|
(1,695,000
|
)
|
||||
Cash
flows from investing activities:
|
|||||||
Purchases
of property and equipment
|
(56,000
|
)
|
(59,000
|
)
|
|||
Capitalized
software development costs
|
(539,000
|
)
|
(651,000
|
)
|
|||
Earnout
payment
|
(26,000
|
)
|
17,000
|
||||
Net
cash used in investing activities
|
(621,000
|
)
|
(693,000
|
)
|
|||
Effect
of exchange rate changes on cash
|
(22,000
|
)
|
4,000
|
||||
Net
increase (decrease) in cash and cash equivalents
|
1,128,000
|
(2,384,000
|
)
|
||||
Cash,
beginning of period
|
3,120,000
|
9,484,000
|
|||||
Cash,
end of period
|
$
|
4,248,000
|
$
|
7,100,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
|||||||
Three
Months Ended
|
||||
March
31,
|
||||
2007
|
2006
|
|||
Net
income (loss), as previously reported
|
$
|
1,284,000
|
$
|
(2,279,000)
|
Adjustment
(pre-tax):
|
||||
License
revenue
Service
and maintenance revenue
|
1,088,000
580,000
|
-
(47,000)
|
||
Tax
effect of restatement adjustment
|
-
|
-
|
||
Net
income (loss) restated
|
$
|
2,952,000
|
$
|
(2,326,000)
|
Basic
income (loss) per share–as restated
|
$
|
.83
|
$
|
(.66)
|
Diluted
income (loss) per share–as
restated
|
$
|
.83
|
$
|
(.66)
|
March
31, 2007
(Unaudited)
|
December
31, 2006
|
||||||||||||
As
previously reported
|
As
Restated
|
As
previously reported
|
As
Restated
|
||||||||||
ASSETS
|
|||||||||||||
Current
assets:
|
|||||||||||||
Cash
and cash equivalents
|
$
|
4,248,000
|
$
|
4,248,000
|
$
|
3,120,000
|
$
|
3,120,000
|
|||||
Restricted
cash
|
225,000
|
225,000
|
225,000
|
225,000
|
|||||||||
Receivables,
net of reserves of $204,000 and
$163,000
|
6,555,000
|
6,555,000
|
6,860,000
|
6,860,000
|
|||||||||
Prepaid
expenses and other
|
545,000
|
545,000
|
423,000
|
423,000
|
|||||||||
Total
current assets
|
11,573,000
|
11,573,000
|
10,628,000
|
10,628,000
|
|||||||||
Property
and equipment, net
|
611,000
|
611,000
|
648,000
|
648,000
|
|||||||||
Intangibles,
net
|
1,649,000
|
1,649,000
|
1,719,000
|
1,719,000
|
|||||||||
Capitalized
software, net
|
3,810,000
|
3,810,000
|
3,636,000
|
3,636,000
|
|||||||||
Goodwill
|
1,523,000
|
1,523,000
|
1,253,000
|
1,253,000
|
|||||||||
Other
assets
|
171,000
|
171,000
|
175,000
|
175,000
|
|||||||||
Total
assets
|
$
|
19,337,000
|
$
|
19,337,000
|
$
|
18,059,000
|
$
|
18,059,000
|
|||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||||||||
Current
liabilities:
|
|||||||||||||
Accounts
payable and accrued expenses
|
$
|
4,424,000
|
$
|
4,424,000
|
$
|
3,930,000
|
$
|
3,930,000
|
|||||
Deferred
revenues
|
7,259,000
|
7,882,000
|
7,987,000
|
10,278,000
|
|||||||||
Total
current liabilities
|
11,683,000
|
12,306,000
|
11,917,000
|
14,208,000
|
|||||||||
Long-term
liabilities:
|
|||||||||||||
Deferred
tax liability
|
36,000
|
36,000
|
36,000
|
36,000
|
|||||||||
Stockholders’
equity:
|
|||||||||||||
Common
stock, $.01 par value, 25,000,000
share
authorized issued 3,591,000 and
3,591,000
|
36,000
|
36,000
|
36,000
|
36,000
|
|||||||||
Additional
paid-in capital
|
27,736,000
|
27,736,000
|
27,532,000
|
27,532,000
|
|||||||||
Cumulative
translation adjustment
|
(887,000
|
)
|
(887,000
|
)
|
(911,000
|
)
|
(911,000
|
)
|
|||||
Accumulated
deficit
|
(19,059,000
|
)
|
(19,682,000
|
)
|
(20,343,000
|
)
|
(22,634,000
|
)
|
|||||
Less:
treasury stock at cost, 42,000 and
42,000
shares respectfully
|
(208,000
|
)
|
(208,000
|
)
|
(208,000
|
)
|
(208,000
|
)
|
|||||
Total
stockholders’ equity
|
7,618,000
|
6,995,000
|
6,106,000
|
3,815,000
|
|||||||||
Total
liabilities and stockholders’ equity
|
$
|
19,337,000
|
$
|
19,337,000
|
$
|
18,059,000
|
$
|
18,059,000
|
|||||
See
accompanying notes to the consolidated financial
statements.
|
For
the Three Months ended March 31,
|
2007
(Unaudited)
|
2006
(Unaudited)
|
||||||||||
As
previously
|
As
previously
|
|||||||||||
reported
|
As
restated
|
reported
|
As
restated
|
|||||||||
Revenues:
|
||||||||||||
Software
license fees
|
$
|
1,717,000
|
$
|
2,805,000
|
$
|
125,000
|
125,000
|
|||||
Services
and maintenance
|
6,132,000
|
6,712,000
|
3,718,000
|
3,671,000
|
||||||||
Total
revenues
|
7,849,000
|
9,517,000
|
3,843,000
|
3,796,000
|
||||||||
Costs
and expenses:
|
||||||||||||
Cost
of software license fees
|
461,000
|
461,000
|
316,000
|
316,000
|
||||||||
Cost
of services and maintenance
|
2,647,000
|
2,647,000
|
2,835,000
|
2,835,000
|
||||||||
Product
development
|
1,260,000
|
1,260,000
|
893,000
|
893,000
|
||||||||
Sales
and marketing
|
1,313,000
|
1,313,000
|
1,248,000
|
1,248,000
|
||||||||
General
and administrative
|
910,000
|
910,000
|
907,000
|
907,000
|
||||||||
Total
costs and expenses
|
6,591,000
|
6,591,000
|
6,199,000
|
6,199,000
|
||||||||
Income
(loss) from operations
|
1,258,000
|
2,926,000
|
(2,356,000
|
)
|
(2,403,000
|
)
|
||||||
Interest
income, net
|
26,000
|
26,000
|
77,000
|
77,000
|
||||||||
Income
(loss) before income taxes
|
1,284,000
|
2,952,000
|
(2,279,000
|
)
|
(2,326,000
|
)
|
||||||
Income
tax expense
|
-
|
-
|
-
|
-
|
||||||||
Net
income (loss)
|
$
|
1,284,000
|
$
|
2,952,000
|
$
|
(2,279,000
|
)
|
$
|
(2,326,000
|
)
|
||
Basic
and diluted income (loss)
per
share
|
$
|
0.36
|
$
|
0.83
|
$
|
(.64
|
)
|
$
|
(0.66
|
)
|
||
Shares
outstanding used in computing
basic
and diluted income (loss) per share
|
3,549,000
|
3,549,000
|
3,543,000
|
3,543,000
|
||||||||
Three
Months Ended
|
Three
Months Ended
|
|||||||
March
31, 2007
|
March
31, 2006
|
|||||||
Risk-free
interest rate
|
4.51 | % | 4.79 | % | ||||
Expected
life (in years)
|
6.15 | 6.00 | ||||||
Volatility
|
106 | % | 117 | % | ||||
Expected
Dividends
|
- | - | ||||||
Forfeiture
rate
|
19.45 | % | - |
OPTIONS
OUTSTANDING
|
||||||||
Shares
|
Wtd.
Avg.
Exercise
Price
|
|||||||
Balance,
December 31, 2006
|
427,000 | $ | 6.71 | |||||
Authorized
|
- | - | ||||||
Granted
|
5,000 | 5.99 | ||||||
Cancelled
|
(39,000 | ) | 7.42 | |||||
Exercised
|
- | - | ||||||
Expired
|
(2,000 | ) | 6.90 | |||||
Balance,
March 31, 2007
|
391,000 | $ | 6.63 |
Number
of Shares
|
Weighted
Average
Exercise
Price Per
Share
|
Weighted
Average
Remaining
Contractual
Term
(in years)
|
Aggregate
Intrinsic
Value
|
|
Outstanding
Options
|
391,000
|
$6.63
|
7.90
|
$200,953
|
Ending
Vested and Expected
to
Vest
|
316,000
|
$6.64
|
0.86
|
$179,103
|
Options
Exercisable
|
134,000
|
$6.61
|
5.93
|
$
118,824
|
Three
Months Ended March 31,
|
||||||||
2007
(restated)
|
2006
(restated)
|
|||||||
Numerator:
|
||||||||
Net
income (loss) available to common shareholders
|
$ | 2,952,000 | $ | (2,326,000 | ) | |||
Denominator:
|
||||||||
Weighted
average shares used to compute net income
available
to common shareholders per common share-basic
|
3,549,000 | 3,543,000 | ||||||
Effect
of dilutive stock options
|
27,000 | - | ||||||
Weighted
average shares used to compute net income available
to
common shareholders per common share-dilutive
|
3,576,000 | 3,545,000 | ||||||
Basic
net income (loss) per share to common shareholder
|
$ | .83 | $ | (0.66 | ) | |||
Dilutive
net income (loss) per share to common shareholder
|
$ | .83 | $ | (0.66 | ) |
8.
|
SUPPLEMENTAL CASH FLOW
INFORMATION
|
Three
Months Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
Non-cash
transactions
|
||||||||
Increase(decrease)
in earnout payable
|
$ | 270,000 | $ | - | ||||
(Increase)decrease
in goodwill due to earnout
|
(270,000 | ) | - | |||||
Net
cash flow
|
$ | - | $ | - |
For
the Three Months Ended March 31,
|
2007
|
2006
|
|||||||||
Revenues:
|
|
||||||||||
Software license fees
|
|
||||||||||
United States
|
|
||||||||||
Domestic
|
$
|
2,231,000
|
$ |
91,000
|
|||||||
Export
|
-
|
-
|
|||||||||
Total United States
|
|||||||||||
software
license fees
|
2,231,000
|
91,000
|
|||||||||
United Kingdom
|
525,000
|
33,000
|
|||||||||
Other foreign
|
49,000
|
1,000
|
|||||||||
Total foreign software license fees
|
574,000
|
34,000
|
|||||||||
Total software license fees
|
2,805,000
|
125,000
|
|||||||||
Services
and maintenance
|
|||||||||||
United States
|
|||||||||||
Domestic
|
3,934,000
|
2,219,000
|
|||||||||
Export
|
89,000
|
175,000
|
|||||||||
Total United States service
|
|||||||||||
and maintenance revenue
|
4,023,000
|
2,394,000
|
|||||||||
United Kingdom
|
2,080,000
|
581,000
|
|||||||||
Other foreign
|
609,000
|
696,000
|
|||||||||
Total foreign service and
|
|||||||||||
maintenance revenue
|
2,689,000
|
1,277,000
|
|||||||||
Total service and
|
|||||||||||
maintenance revenue
|
6,712,000
|
3,671,000
|
|||||||||
Total
revenue
|
$
|
9,517,000
|
$ |
3,796,000
|
|||||||
Net
income (loss) from operations
|
|||||||||||
United States
|
$
|
1,206,000
|
$ |
(1,873,000
|
)
|
||||||
United Kingdom
|
1,686,000
|
(526,000
|
)
|
||||||||
Other foreign
|
60,000
|
73,000
|
|||||||||
Net
income (loss)
|
$
|
2,952,000
|
$ |
(2,326,000
|
)
|
Item
2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Three
Months Ended March 31,
|
||||||||
2007
(restated)
|
2006
(restated)
|
|||||||
Numerator:
|
||||||||
Net
income (loss) available to common shareholders
|
$ | 2,952,000 | $ | (2,326,000 | ) | |||
Denominator:
|
||||||||
Weighted
average shares used to compute net income
available
to common shareholders per common share-basic
|
3,549,000 | 3,543,000 | ||||||
Effect
of dilutive stock options
|
27,000 | - | ||||||
Weighted
average shares used to compute net income available
to
common shareholders per common share-dilutive
|
3,576,000 | 3,545,000 | ||||||
Basic
net income (loss) per share to common shareholder
|
$ | .83 | $ | (0.66 | ) | |||
Dilutive
net income (loss) per share to common shareholder
|
$ | .83 | $ | (0.66 | ) |
·
|
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 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)
|
|