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)
|
· |
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
|
|
Consolidated
Balance Sheets (Unaudited)
|
4
|
|
Consolidated
Statements of Operations (Unaudited)
|
5
|
|
Consolidated
Statements of Cash Flows (Unaudited)
|
6
|
|
Notes
to Unaudited Consolidated Financial Statements
|
7
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial
|
|
Condition
and Results of Operations
|
12
|
|
Item
3.
|
Quantitative
and Qualitative Disclosure About Market Risk
|
16
|
Item
4.
|
Controls
and Procedures
|
16
|
PART
II - OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
17
|
Item
2.
|
Changes
in Securities and Use of Proceeds
|
17
|
Item
3.
|
Defaults
upon Senior Securities
|
17
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
17
|
Item
5.
|
Other
Information
|
17
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
17
|
Signatures
|
18
|
|
Certificates
|
|
March
31, 2005
|
|||||||
(Unaudited)
(Restated)
|
December
31, 2004
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,581,000
|
$
|
4,483,000
|
|||
Restricted
cash
|
300,000
|
300,000
|
|||||
Receivables,
net of reserves of $348,000 and $411,000
|
5,061,000
|
6,428,000
|
|||||
Prepaid
expenses and other
|
542,000
|
441,000
|
|||||
Total
current assets
|
10,484,000
|
11,652,000
|
|||||
Property
and equipment, net
|
540,000
|
548,000
|
|||||
Capitalized
software, net
|
1,487,000
|
1,520,000
|
|||||
Other
assets
|
40,000
|
34,000
|
|||||
Total
assets
|
$
|
12,551,000
|
$
|
13,754,000
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
2,790,000
|
$
|
3,194,000
|
|||
Deferred
revenues
|
4,464,000
|
4,489,000
|
|||||
Total
current liabilities
|
7,254,000
|
7,683,000
|
|||||
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.01 par value, 5,000,000 shares
authorized,
none issued
|
-
|
-
|
|||||
Common
stock, $.01 par value, 25,000,000 shares
authorized,
3,002,000 issued
|
30,000
|
30,000
|
|||||
Additional
paid-in capital
|
22,997,000
|
22,997,000
|
|||||
Cumulative
translation adjustment
|
(806,000
|
)
|
(779,000
|
)
|
|||
Accumulated
deficit
|
(16,716,000
|
)
|
(15,967,000
|
)
|
|||
Less:
treasury stock at cost, 42,000 and 43,000 shares
respectfully
|
(208,000
|
)
|
(210,000
|
)
|
|||
Total
stockholders’ equity
|
5,297,000
|
6,071,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
12,551,000
|
$
|
13,754,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months Ended
March
31,
|
|||||||
2005
(Restated)
|
2004
|
||||||
Revenues:
|
|||||||
Software
license fees
|
$
|
598,000
|
$
|
2,896,000
|
|||
Services
and maintenance
|
3,172,000
|
2,988,000
|
|||||
Total
revenues
|
3,770,000
|
5,884,000
|
|||||
Costs
and expenses:
|
|||||||
Cost
of software license fees
|
265,000
|
410,000
|
|||||
Cost
of services and maintenance
|
1,840,000
|
1,547,000
|
|||||
Product
development
|
608,000
|
408,000
|
|||||
Sales
and marketing
|
1,249,000
|
1,489,000
|
|||||
General
and administrative
|
583,000
|
555,000
|
|||||
Total
costs and expenses
|
4,545,000
|
4,409,000
|
|||||
Income
(loss) from operations
|
(775,000
|
)
|
1,475,000
|
||||
Interest
income, net
|
26,000
|
8,000
|
|||||
Income
(loss) before income taxes
|
(749,000
|
)
|
1,483,000
|
||||
Income
tax expense
|
-
|
-
|
|||||
Net
(loss) income
|
$
|
(749,000
|
)
|
$
|
1,483,000
|
||
Basic
and diluted (loss) income per share:
|
|||||||
Net
(loss) income per share
|
$
|
(0.25
|
)
|
$
|
0.51
|
||
Shares
outstanding used in computing basic (loss)
income
per share
|
2,960,000
|
2,922,000
|
|||||
Shares
outstanding used in computing diluted
(loss)
income per share
|
2,960,000
|
2,923,000
|
|||||
See
accompanying notes to the consolidated financial
statements.
|
Three
Months Ended
March
31,
|
|||||||
2005
(Restated)
|
2004
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
(loss) income
|
$
|
(749,000
|
)
|
$
|
1,483,000
|
||
Adjustments
to reconcile net income (loss) to net cash provided by
operating
activities:
|
|||||||
Depreciation
and amortization
|
351,000
|
299,000
|
|||||
Increase
in allowance for doubtful accounts
|
120,000
|
22,000
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Receivables
|
1,241,000
|
(2,362,000
|
)
|
||||
Prepaid
expenses and other
|
(101,000
|
)
|
(2,000
|
)
|
|||
Other
assets
|
-
|
1,000
|
|||||
Accounts
payable and accrued expenses
|
(405,000
|
)
|
401,000
|
||||
Deferred
revenues
|
(23,000
|
)
|
505,000
|
||||
Other
long term assets
|
(6,000
|
)
|
-
|
||||
Net
cash provided by operating activities
|
428,000
|
347,000
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchases
of property and equipment
|
(85,000
|
)
|
(19,000
|
)
|
|||
Capitalized
software development costs
|
(219,000
|
)
|
(217,000
|
)
|
|||
Net
cash used in investing activities
|
(304,000
|
)
|
(236,000
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from issuance of stock through the employee stock purchase
plan
|
1,000
|
1,000
|
|||||
Effect
of exchange rate changes on cash
|
(27,000
|
)
|
(7,000
|
)
|
|||
Net
increase in cash and cash equivalents
|
98,000
|
105,000
|
|||||
Cash,
beginning of period
|
4,483,000
|
3,480,000
|
|||||
Cash,
end of period
|
$
|
4,581,000
|
$
|
3,585,000
|
|||
See
accompanying notes to the consolidated financial
statements.
|
|||||||
Three
Months Ended
March
31, 2005
|
||
Net
(loss), as previously reported
|
(618,000)
|
|
Adjustment
(pre-tax):
|
||
Development
costs
|
131,000
|
|
Tax
effect of restatement adjustment
|
-
|
|
Net
(loss), restated
|
(749,000)
|
|
March
31, 2005
|
|||||||
|
As
previously reported
|
As
restated
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,581,000
|
$
|
4,581,000
|
|||
Restricted
cash
|
300,000
|
300,000
|
|||||
Receivables,
net of reserves
|
5,061,000
|
5,061,000
|
|||||
Prepaid
expenses and other
|
542,000
|
542,000
|
|||||
Total
current assets
|
10,484,000
|
10,484,000
|
|||||
Property
and equipment, net
|
540,000
|
540,000
|
|||||
Capitalized
software, net
|
1,618,000
|
1,487,000
|
|||||
Other
assets
|
40,000
|
40,000
|
|||||
Total
assets
|
$
|
12,682,000
|
$
|
12,551,000
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
2,790,000
|
$
|
2,790,000
|
|||
Deferred
revenues
|
4,464,000
|
4,464,000
|
|||||
Total
current liabilities
|
7,254,000
|
7,254,000
|
|||||
Stockholders’
equity:
|
|||||||
Preferred
stock
|
-
|
-
|
|||||
Common
stock
|
30,000
|
30,000
|
|||||
Additional
paid-in capital
|
22,997,000
|
22,997,000
|
|||||
Cumulative
translation adjustment
|
(806,000
|
)
|
(806,000
|
)
|
|||
Accumulated
deficit
|
(16,585,000
|
)
|
(16,716,000
|
)
|
|||
Less:
Treasury stock
|
(208,000
|
)
|
(208,000
|
)
|
|||
Total
stockholders’ equity
|
5,428,000
|
5,297,000
|
|||||
Total
liabilities and stockholders' equity
|
$
|
12,682,000
|
$
|
12,551,000
|
Three
Months Ended
March
31, 2005
|
|||||||
As
previously reported
|
As
restated
|
||||||
Revenues:
|
|||||||
Software
license fees
|
$
|
598,000
|
$
|
598,000
|
|||
Services
and maintenance
|
3,172,000
|
3,172,000
|
|||||
Total
revenues
|
3,770,000
|
3,770,000
|
|||||
Costs
and expenses:
|
|||||||
Cost
of software license fees
|
265,000
|
265,000
|
|||||
Cost
of services and maintenance
|
1,840,000
|
1,840,000
|
|||||
Product
development
|
477,000
|
608,000
|
|||||
Sales
and marketing
|
1,249,000
|
1,249,000
|
|||||
General
and administrative
|
583,000
|
583,000
|
|||||
Total
costs and expenses
|
4,414,000
|
4,545,000
|
|||||
(Loss)
from operations
|
(644,000
|
)
|
(775,000
|
)
|
|||
Interest
income, net
|
26,000
|
26,000
|
|||||
(Loss)
before income taxes
|
(618,000
|
)
|
(749,000
|
)
|
|||
Income
tax expense
|
-
|
-
|
|||||
Net
(Loss)
|
$
|
(618,000
|
)
|
$
|
(749,000
|
)
|
Common
Stock
|
Additional
Paid-In Capital
|
Cumulative
Currency Translation Adjustment
|
Accumulated
Deficit
|
Treasury
Stock
|
Comprehensive
Income
|
||||||||||||||
Balance
at December 31, 2004
|
$
|
30,000
|
$
|
22,997,000
|
$
|
(779,000
|
)
|
$
|
(15,967,000
|
)
|
$
|
(210,000
|
)
|
|
|||||
Issuance
of common stock
under
employee stock
purchase
plan
|
-
|
-
|
-
|
2,000
|
|||||||||||||||
Cumulative
translation
adjustment
|
-
|
-
|
(27,000
|
)
|
-
|
-
|
$
|
(27,000
|
)
|
||||||||||
Net
(loss)
|
-
|
-
|
-
|
(749,000
|
)
|
-
|
$
|
(749,000
|
)
|
||||||||||
Balance
at March 31, 2005
|
$
|
30,000
|
$
|
22,997,000
|
$
|
(806,000
|
)
|
$
|
(16,716,000
|
)
|
$
|
(208,000
|
)
|
$
|
(776,000
|
)
|
March
31, 2005
|
March
31, 2004
|
||||||
(Unaudited)
(Restated)
|
(Unaudited)
|
||||||
Net
(loss) income - as reported
|
$
|
(749,000
|
)
|
$
|
1,483,000
|
||
Add:
Stock-based compensation included in net (loss)
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
|
(37,000
|
)
|
(32,000
|
)
|
|||
Net
(loss) income - pro forma
|
$
|
(786,000
|
)
|
$
|
1,451,000
|
||
Basic
and diluted (loss) income per share - as reported
|
$
|
(0.25
|
)
|
$
|
0.51
|
||
Basic
and diluted (loss) income per share - pro forma
|
$
|
(0.27
|
)
|
$
|
0.50
|
· |
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
Company’s future success will depend in part on its ability to increase
licenses of AllianceEnterprise and other new product offerings, and
to
develop new products and product enhancements to complement its existing
field service, sales automation and customer support offerings.
|
· |
The
enterprise software market is intensely
competitive.
|
· |
International
sales for the Company’s products and services, and the Company’s expenses
related to these sales, continue to be a substantial component of
the
Company’s operations. International sales are subject to a variety of
risks, including difficulties in establishing and managing international
operations and in translating products into foreign
languages.
|
· |
The
market price of the 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.
|
(A) |
Exhibits
|
31.1
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - President
and
Chief Executive Officer
|
31.2
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief
Financial Officer
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 - President and Chief Executive
Officer
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 - Chief Financial
Officer
|
(B) |
Reports
on Form 8-K
|
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)
|
|