10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 001-35164

ONVIA, INC.

(Exact name of registrant as specified in its charter)

Delaware	91-1859172
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

509 Olive Way, Suite 400, Seattle, Washington 98101

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (206) 282-5170

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [   ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  [X] Yes [ ] No 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer [   ]    Accelerated filer [   ]      Non-accelerated filer [   ]       Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

Common stock, par value $.0001 per share: 7,125,484 shares outstanding as of April 29, 2016.

ONVIA, INC.

INDEX

	Page
PART I.  FINANCIAL INFORMATION	1
Item 1.  Financial Statements	1
Condensed Consolidated Balance Sheets (Unaudited)	1
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited)	2
Condensed Consolidated Statements of Cash Flows (Unaudited)	3
Notes to Condensed Consolidated Financial Statements (Unaudited)	4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures about Market Risk	18
Item 4. Controls and Procedures	18
PART II. OTHER INFORMATION	19
Item 1.  Legal Proceedings	19
Item 1A.  Risk Factors	19
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.  Defaults Upon Senior Securities	19
Item 4.  Mine Safety Disclosure	19
Item 5.  Other Information	19
Item 6.  Exhibits	20
SIGNATURES	21

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Onvia, Inc.

Condensed Consolidated Balance Sheets

	March 31, 2016			December 31, 2015
	(Unaudited)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,450		$	1,483
Short-term investments, available-for-sale		5,552			5,275
Accounts receivable, net of allowance for doubtful accounts of $45 and $32		1,797			1,298
Prepaid expenses and other current assets		925			1,075
Total current assets		10,724			9,131
LONG TERM ASSETS:
Property and equipment, net of accumulated depreciation		963			1,036
Internal use software, net of accumulated amortization		5,177			5,091
Other long-term assets		248			260
Total long term assets		6,388			6,387
TOTAL ASSETS	$	17,112		$	15,518
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	791		$	499
Accrued expenses		753			937
Unearned revenue, current portion		10,161			8,821
Other current liabilities		116			103
					-
Total current liabilities		11,821			10,360
LONG TERM LIABILITIES:
Unearned revenue, net of current portion		315			283
Deferred rent, net of current portion		611			575
Other long-term liabilities		37			43
Total long term liabilities		963			901
TOTAL LIABILITIES		12,784			11,261
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY:
Preferred stock; $.0001 par value: 2,000,000 shares authorized; no shares issued or outstanding		-			-
Common stock; $.0001 par value: 11,000,000 shares authorized; 8,717,788 and 8,717,788 shares issued; and 7,125,484 and 7,125,484 shares outstanding		1			1
Treasury stock, at cost: 1,592,304 and 1,592,304 shares		(5,446	)		(5,446	)
Additional paid in capital		354,260			354,212
Accumulated other comprehensive gain/(loss)		1			(3	)
Accumulated deficit		(344,488	)		(344,507	)
Total stockholders’ equity		4,328			4,257
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,112		$	15,518

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

1

Onvia, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)

	Three Months Ended March 31,
	2016		2015
	(Unaudited)
	(In thousands, except per share data)
Revenue
Subscription	$	5,594	$	5,263
Content license		404		462
Management information reports		16		48
Other		48		72
Total revenue		6,062		5,845
Cost of revenue (exclusive of depreciation and amortization included below)		764		793
Gross margin		5,298		5,052
Operating expenses:
Sales and marketing		2,891		2,806
Technology and development		1,479		1,316
General and administrative		916		1,409
Total operating expenses		5,286		5,531
Income/(loss) from operations		12		(479	)
Interest and other income, net		7		2
Net income/(loss)	$	19	$	(477	)
Unrealized gain on available-for-sale securities		3		-
Comprehensive income/(loss)	$	22	$	(477	)
Basic net income/(loss) per common share	$	0.00	$	(0.06	)
Diluted net income/(loss) per common share	$	0.00	$	(0.06	)
Basic weighted average shares outstanding		7,125		7,401
Diluted weighted average shares outstanding		7,193		7,401

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

2

Onvia, Inc.

Condensed Consolidated Statements of Cash Flows

	Three Months Ended March 31,
	2016			2015
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	19		$	(477	)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation and amortization		500			649
Stock-based compensation		48			22
Loss on sale of property and equipment		-			2
Change in operating assets and liabilities:
Accounts receivable		(499	)		192
Prepaid expenses and other assets		162			(633	)
Accounts payable		171			78
Accrued expenses		(184	)		(172	)
Unearned revenue		1,373			1,035
Deferred rent		49			53
Net cash provided by operating activities		1,639			749
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(57	)		(68	)
Additions to internal use software		(341	)		(407	)
Purchases of investments		(1,878	)		(2,712	)
Maturities of investments		1,604			2,833
Proceeds from sale of equipment		-			8
Net cash used in investing activities		(672	)		(346	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		-			1
Net cash provided by financing activities		-			1
Net increase in cash and cash equivalents		967			404
Cash and cash equivalents, beginning of period		1,483			1,577
Cash and cash equivalents, end of period	$	2,450		$	1,981
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment additions in accounts payable		(18	)		-
Internal use software additions in accounts payable		(161	)		(227	)

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

3

Onvia, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Accounting Policies

Basis of Presentation

The unaudited interim Condensed Consolidated Financial Statements and related notes thereto have been prepared pursuant to generally accepted accounting principles in the United States of America, (“GAAP”), and the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying unaudited interim Condensed Consolidated Financial Statements and related notes thereto should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (“2015 Annual Report”).

The information furnished is unaudited, but reflects, in the opinion of management, all adjustments, consisting of only normal recurring items, necessary for a fair presentation of the results for the interim periods presented.

Interim results are not necessarily indicative of results for a full year.

Reclassifications

Certain amounts in sales and marketing operating expense for 2015 have been reclassified as technology and development operating expenses to conform to current period presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of stock-based compensation, allowance for doubtful accounts, capitalization of costs for internally developed software, recoverability of long-lived assets, including internally developed software, and the valuation allowance for Onvia’s net deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ significantly from the Company’s estimates. In addition, any significant unanticipated changes in any of the Company’s assumptions could have a material adverse effect on its business, financial condition, and results of operations.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance for revenue from contracts with customers, which provides a single comprehensive revenue recognition model to apply in determining how and when to recognize revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. When applying the new revenue model to contracts with customers the guidance requires five steps to be applied, which include: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires both quantitative and qualitative disclosures, which are more comprehensive than existing revenue standards. The disclosures are intended to enable financial statement users to understand the nature, timing and uncertainty of revenue and the related cash flow. This guidance will be effective for Onvia in the first quarter of 2018 and early adoption is permitted beginning in the first quarter of 2017. The Company is currently assessing the impact the guidance will have upon adoption.

4

In November 2015, the FASB issued authoritative guidance amending the accounting for income taxes and requiring all deferred tax assets and liabilities to be classified as non-current on the balance sheet. The objective of the guidance is to simplify the presentation as current GAAP requires the Company to separate the deferred tax assets into current and noncurrent amounts. The FASB concluded that the current presentation does not benefit financial statement users because the classification does not align with the time period in which the deferred tax amounts are expected to be recovered. The guidance will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The guidance may be adopted either prospectively or retrospectively. The Company is currently assessing the impact the guidance will have upon adoption but does not expect it to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued authoritative guidance which requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new guidance will require both types of leases to be recognized on the balance sheet. The guidance will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This guidance shall be applied at the beginning of the earliest period presented using the modified retrospective approach, which includes a number of practical expedients that an entity may elect to apply. Early application of the guidance is permitted. The Company is evaluating the adoption of this guidance and the potential effects on its consolidated financial statements.

In March 2016, the FASB issued authoritative guidance on accounting for share-based payment transactions. The guidance makes several modifications related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies and clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company is currently assessing how the adoption of this standard will impact the Company’s results of operations, financial condition or cash flows.

2. Stock-Based Compensation

The impact on Onvia’s results of operations of recording stock-based compensation was as follows for the three months ended March 31, 2016 and 2015, respectively (in thousands):

	Three Months Ended March 31,
	2016		2015
Sales and marketing	$	12	$	3
Technology and development		13		(7	)
General and administrative		23		26
Total stock-based compensation	$	48	$	22

3. Earnings/(Loss) per Share

Basic net income/(loss) per share is calculated by dividing the net income/(loss) for the period by the weighted average shares of common stock outstanding for the period. Diluted net income/(loss) per share is calculated by dividing the net income/(loss) per share by the weighted average common stock outstanding for the period, plus dilutive potential common shares using the treasury stock method. In periods with a net loss, basic and diluted earnings per share are identical because inclusion of potentially dilutive common shares would be anti-dilutive.

5

The following table sets forth the computation of basic and diluted net income/(loss) per share for the three months ended March 31, 2016 and 2015, (in thousands, except per share data):

	Three Months Ended March 31,
	2016		2015
Net income/(loss)	$	19	$	(477	)
Shares used to compute basic net income/(loss) per share		7,125		7,401
Dilutive potential common shares:
Stock options		68		-
Shares used to compute diluted net income/(loss) per share		7,193		7,401
Basic net income/(loss) per share	$	0.00	$	(0.06	)
Diluted net income/(loss) per share	$	0.00	$	(0.06	)

For the three months ended March 31, 2016, the weighted average effect of approximately 467,541 options to purchase shares of common stock were not included in the calculation because the effect would have been anti-dilutive.

For the three months ended March 31, 2015, the weighted average effect of approximately 879,000 options to purchase shares of common stock were not included in the calculation because the effect would have been anti-dilutive.

4. Investments

Onvia classifies investments in debt securities as available-for-sale, stated at fair value as summarized in the following tables (in thousands):

	March 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government backed securities	$	1,536	$	-	$	-	$	1,536
Certificates of Deposit  (1)		3,764		-		-		3,764
Other securities		252		-		-		252
Total Investments	$	5,552	$	-	$	-	$	5,552

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government backed securities	$	902	$	-	$	-		$	902
Certificates of Deposit  (1)		4,375	$	-	$	(2	)		4,373
Total Investments	$	5,277	$	-	$	(2	)	$	5,275

⁽¹⁾ We evaluated certificates of deposits held as of March 31, 2016 and December 31, 2015 and concluded that they meet the definition of securities as available for sale.

6

Onvia accounts for investments held as available for sale according to their fair values, which is defined as the exchange price that would be received for an asset, or paid to transfer a liability (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following are the three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Onvia uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The following tables summarize, by major security type, investments classified as available-for-sale at March 31, 2016 and at December 31, 2015, stated at fair value (in thousands):

	Fair Value Measurements as of March 31, 2016
	Level 1		Level 2		Level 3		Total
U.S. Government backed securities	$	-	$	1,536	$	-	$	1,536
Certificates of Deposit		-		3,764		-		3,764
Other securities		-		252		-		252
Total Investments	$	-	$	5,552	$	-	$	5,552

	Fair Value Measurements as of December 31, 2015
	Level 1		Level 2		Level 3		Total
U.S. Government backed securities	$	-	$	902	$	-	$	902
Certificates of Deposit		-		4,373		-		4,373
Total Investments	$	-	$	5,275	$	-	$	5,275

There were no transfers in or out of Level 2 investments during the first quarter of 2016 and fourth quarter of 2015, and there was no activity in Level 3 fair value measurements during those periods.

7

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Prepaid software maintenance agreements	$	550	$	690
Other prepaid expenses		159		175
Prepaid insurance		116		108
Other receivables		88		94
Interest receivable		12		8
	$	925	$	1,075

6. Property and Equipment

Property and equipment to be held and used consist of the following (in thousands):

	March 31, 2016			December 31, 2015
Computer equipment	$	3,995		$	3,932
Software		1,856			1,856
Furniture and fixtures		120			117
Leasehold improvements		815			815
Total cost basis		6,786			6,720
Less accumulated depreciation and amortization		(5,823	)		(5,684	)
Net book value	$	963		$	1,036

Depreciation expense was $142,000 and $164,000 for the three months ended March 31, 2016 and 2015, respectively. Depreciation expense is included in operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss).

7. Internal Use Software

Onvia capitalizes qualifying computer software costs incurred during the “application development stage” and other costs. Amortization of these costs begins once the product is ready for its intended use. These costs are amortized on a straight-line basis over the estimated useful life of the product, typically 3 to 5 years. The amount of costs capitalized within any period is dependent on the nature of software development activities and projects in each period.

Onvia periodically evaluates the remaining useful lives and carrying values of internal use software. If management determines that all or a portion of the asset will no longer be used, or the estimated remaining useful life differs from existing estimates, an abandonment will be recorded to reduce the carrying value or adjust the remaining useful life to reflect revised estimates. In addition, if the carrying value of the software exceeds the estimated future cash flows, an impairment will be recorded to reduce the carrying value to the expected realizable value. No impairment has been recorded during the three months ended March 31, 2016 and March 31, 2015.

8

The following table presents a roll-forward of capitalized internal use software for the three months ended March 31, 2016 (in thousands):

	Balance at December 31, 2015			Additions			Balance at March 31, 2016
Capitalized internal use software	$	18,812		$	444		$	19,256
Accumulated amortization		(13,721	)		(358	)		(14,079	)
	$	5,091		$	86		$	5,177

Amortization expense was $358,000 and $485,000 for the three months ended March 31, 2016 and 2015, respectively. Amortization expense is included in operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss).

8. Accrued Expenses and Other Current Liabilities

Accrued expenses consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Payroll and related liabilities	$	715	$	855
Taxes payable and other		38		82
	$	753	$	937

Other current liabilities consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Deferred rent, current portion		91		78
Obligations under capital leases, current portion	$	25	$	25
	$	116	$	103

9. Commitments and Contingencies

Operating Leases

Onvia has a lease agreement for its corporate offices located in Seattle, Washington that expires in April 2021. Onvia also has a non-cancellable operating lease for office equipment, which expires in June 2019.

The office lease contains rent escalation clauses and rent holidays. Rent expense is recorded on a straight-line basis over the lease term with the difference between the rent paid and the straight-line rent expense recorded as a deferred rent liability. Total rent expense associated with real estate operating leases was $193,000 and $192,000 for the three months ended March 31, 2016 and 2015, respectively.

9

As of March 31, 2016, remaining future minimum lease payments required on non-cancellable operating leases are as follows for the years ending December 31 (in thousands):

	Real Estate Operating Leases		Office Equipment Operating Lease		Total Operating Leases
2016	$	638	$	14	$	652
2017		873		20		893
2018		896		20		916
2019		918		10		928
2020		940		-		940
2021 and thereafter		321		-		321
	$	4,586	$	64	$	4,650

Purchase Obligations

Onvia has non-cancellable purchase obligations for software development and license agreements, co-location hosting arrangements, telecom agreements, marketing agreements and third-party content agreements. The agreements expire in dates ranging from April 2016 to 2018. Future required payments under these non-cancellable agreements are as follows for the years ending December 31 (in thousands):

	Purchase Obligations
2016	$	654
2017		336
2018		273
	$	1,263

CEO Transition Agreement

On March 28, 2016, the Company and its current President and Chief Executive Officer (“Riner”) entered into a Transition and Release Agreement (the “Transition Agreement”).

Under the terms of the Transition Agreement, Riner will transition into planned retirement and a 12-month consulting relationship with the Company effective no later than June 30, 2017, or such earlier date that Onvia selects and announces a new Chief Executive Officer (“CEO”) (the “Transition Date”). Riner will continue to serve as the Company’s President and CEO on a full-time basis through the Transition Date.

In exchange for Riner’s entry into the Transition Agreement, his covenants and promises described therein, and his entry into an additional Release of Claims Agreement on his last of date of employment with the Company, the Company has agreed to pay Riner a lump sum cash payment of $362,000 on July 8, 2017.

Legal Proceedings

From time to time, legal proceedings may arise in the ordinary course of business. Although the outcomes of legal proceedings are inherently difficult to predict, we are not currently involved in any legal proceeding in which the outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business or financial position.

10. Income Taxes

As of March 31, 2016 and December 31, 2015, Onvia has recorded a valuation allowance against its net deferred tax assets because the Company has determined it is not more likely than not that the asset will be realized. Onvia will continue to evaluate the likelihood that these tax benefits may be realized, and may reverse all or a portion of its valuation allowance in the future if it is determined that realization of these benefits is more likely than not.

10

Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), utilization of net operating loss (NOL) carryforwards to offset future taxable income are subject to substantial annual limitations if we experience a cumulative change in ownership as defined by the Code. In general, an ownership change, as defined by the Code, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period.

As of March 31, 2016 and December 31, 2015, Onvia’s Federal NOL carryforwards for income tax purposes were approximately $76.8 million.  The Federal NOL carryforwards are subject to limitations under Section 382 of the Internal Revenue Code. If not utilized, the Federal NOL carryforwards will begin to expire in 2021.  The latest date available for a portion of the Federal NOL carryforwards to be utilized to offset future income is 2033.

11. Security Deposits

Pursuant to Onvia’s lease for its current corporate office space, Onvia has established a stand by letter of credit as security to the lease in the amount of $150,000.  The letter of credit will be returned at lease termination in April 2021, or earlier, subject to certain office lease conditions. As of March 31, 2016, the stand by letter of credit is secured by a security deposit of $150,000 and included within other long-term assets on the unaudited Condensed Consolidated Balance Sheets.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT

In addition to historical information, the discussion and analysis in this report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “anticipates,” “should,” “expects,” “plans,” “intends,” “indicates” and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about our future results of operations, the progress to be made on our 2016 initiatives, Onvia’s future financial flexibility and future cash flows and Onvia’s future product and content offerings. Such statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors, which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements.

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: Onvia fails to increase and retain contract value of customers using the “target market” strategy; Onvia fails to execute properly on new products, or customers fail to adopt these products or services; Onvia’s investment in technology and new content fails to improve sales penetration and client retention rates; and changes made to Onvia’s technology infrastructure fails to handle the increased demands caused by increasing network traffic and the volume of aggregated data.

Additional information on factors that may impact these forward-looking statements can be found under “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as applicable, in this report, in our 2015 Annual Report on Form 10-K for the year ended December 31, 2015.  Onvia assumes no obligation to update forward-looking statements as a result of new information or future events or developments, except as may be required by law.  The following discussion should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and accompanying Notes thereto.

In this Report, the words “we,” “our,” “us,” “Onvia,” or the “Company” refer to Onvia, Inc. and its wholly- owned subsidiary.

Company Overview

Onvia is a leading source of insight and intelligence on government procurement within the State, Local and Education (“SLED”) market. We maintain a proprietary database of detailed procurement activity from the market of 94,000 federal and SLED government agencies across the entire United States. When available, we capture and connect the entire procurement lifecycle of a SLED procurement from the initial budget to the awarded contract. We compile and enhance more than 1.6 million procurement records covering over 600,000 of these procurement events each year, representing 95% of SLED procurement spending, to provide a comprehensive view of this market by government agency, vendor, and procurement type. Onvia intelligence is used by both SLED agencies and businesses that sell (directly or indirectly) to SLED agencies. Government agencies can use our insight to make informed and defensible purchasing decisions, identify potential vendors and meet their fiduciary responsibilities to their constituents. Businesses use our procurement intelligence to qualify short-term revenue opportunities and to obtain early insight into future potential spending for their goods and services, evaluate agency procurement trends, and identify competitor activity and potential teaming partners. Onvia intelligence helps companies identify emerging markets, allocate resources and build their long term SLED strategy.

Onvia maintains a database of proprietary public sector procurement information which includes comprehensive historical and real-time information on procurement activities unavailable elsewhere in the marketplace. We provide access to over 5.0 million procurement-related records connected to more than 400,000 companies from across approximately 86,000 procurement entities nationwide. These records are standardized, formatted and classified within our database each day. We deliver approximately 80% of our bid and RFP content on the same day we capture it from the original source.

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Onvia’s solution is used by clients for long-term strategic planning and near-term sales and marketing activities, tailored to their unique business objectives. We help our clients build specialized searches to identify relevant content and establish workflows to help the client consume the content most effectively. Over time, we expect to continue to enhance our content coverage of valuable data types to meet the business development needs of our strategic clients. Our key offerings include access to the Onvia Database, Project Center, Agency Center, Vendor Center, Spending Forecast Center, Term Contract Center, Purchase Order Analytics and the Onvia Guide.

We have a diverse client base from large Fortune 500 companies to small businesses that have been Onvia clients for many years. Onvia’s strategic target client has a long-term strategic interest in the SLED market and does business on a regional or national level. As companies expand geographically, their market becomes less transparent, and they have a greater need for business intelligence. We continue to serve a number of small businesses that have been clients since before we changed our target client profile.

Most of Onvia’s revenues are generated from sales to companies that leverage our information for their own internal use, and to businesses that license our content for redistribution. Revenue from businesses which license our content for resale is classified as Content License revenue. Content license contracts are generally multi-year arrangements and typically have higher annual contract values than our subscription-based services. Revenue from content license agreements is recognized over the term of the agreement.

Onvia was incorporated in January 2000 in the state of Delaware. Our principal corporate office is located in Seattle, Washington. Our securities trade on The NASDAQ Capital Market under the symbol ONVI.

Executive Summary of Operations and Financial Position

Our primary clients are businesses that are strategically focused on selling their goods and services into the public sector. As discussed above, we sell into this target market through two sales channels: businesses that leverage our information for their own internal use and businesses that license our content for redistribution (i.e. content license).

We measure our Strategic and Small Business clients with the following key metrics:

Annual Contract Value (“ACV”)

ACV represents the annualized aggregate revenue value of all subscription contracts as of the end of the quarter. ACV is driven by annual contract value per client and the number of clients. Most of Onvia’s revenues are generated from subscription contracts, which are typically prepaid and have a minimum term of one year, with revenues recognized ratably over the term of the subscription. Onvia also receives revenue from multi-year content distribution partnerships, stand-alone management reports, document download services, and list rental services, which are not included in the calculation of ACV. Content license contracts are excluded from ACV.

Total ACV increased slightly to $21.9 million in the first quarter of 2016 from $21.8 million for the same period one year ago. The ACV for Strategic Accounts grew 4% to $17.1 million at March 31, 2016 compared to $16.4 million at March 31, 2015. The continued growth in ACV indicates that new client acquisitions, contract expansions and improving client retention rates have more than offset the impact of client attrition. The growth rate in ACV can fluctuate from year to year based on timing in the amount of ACV available for renewal in addition to the mix of tenured and first year clients expiring in each period as tenured clients tend to renew at a higher rate than first year clients.

Number of Clients

Number of clients represents the number of individual businesses subscribing to our products.

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As of March 31, 2016, Onvia’s total client base decreased 9% to 2,950 clients compared to 3,250 clients one year ago. However, the client base for Strategic Accounts increased 2% to 1,330 compared to the same period one year ago. Onvia’s strategy is to continue to improve profitability by acquiring and managing fewer, but more strategic clients at higher ACVC. We believe that ACV is a better measure of sales effectiveness than the number of clients.

Annual Contract Value per Client (“ACVC”)

ACVC is the ACV divided by the number of clients and indicates the average value of each of our subscriptions.

Total ACVC increased 10% to $7,421 in the first quarter of 2016 compared to $6,729 in the first quarter of 2015. The ACVC for Strategic Accounts grew 2% to $12,838 as of March 31, 2016, compared to $12,619 one year ago. Management anticipates new client ACVC will fluctuate from period to period based on the mix of product levels included in acquisition bookings for a particular period. Growth in overall ACVC demonstrates that an increasing number of clients have a strategic interest in the public sector at a regional or national level. Companies within this target market typically have higher ACVC and renew at higher rates, which are key attributes of a profitable long-term client.

Dollar Retention

Dollar retention is calculated on a percentage basis by dividing the contract value of subscription contracts renewed, including the value of contract upgrades, during the most recent twelve-month period by the total value of subscription contracts expiring over the same period. Dollar retention measures the percentage of dollars retained from the population of expiring contracts over a twelve month period.

In the twelve months ended March 31, 2016, dollar retention was 87% compared to 88% in the twelve months ended March 31, 2015. Dollar retention can fluctuate from period to period due to the mix of first year and tenured clients expiring in each period. Dollar retention, in conjunction with ACV, provides insight in to our subscription retention rate and ability to generate future subscription revenue.

Adjusted EBITDA

Adjusted EBITDA is not a financial measure calculated and presented in accordance with GAAP and should not be considered as an alternative to net income, operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of the company’s liquidity. Onvia defines Adjusted EBITDA as net income/(loss) before interest expense and other non-cash financing costs; other income; taxes; depreciation; amortization; and non-cash stock-based compensation. Other companies (including Onvia’s competitors) may define Adjusted EBITDA differently. Onvia presents Adjusted EBITDA because it believes Adjusted EBITDA to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in similar industries and size. Management also uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Onvia nor is it intended to be predictive of potential future results. Investors should not consider Adjusted EBITDA in isolation or as a substitute for analysis of results as reported under GAAP.

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The following table provides a reconciliation of GAAP Net Income/(Loss) to Adjusted EBITDA for the periods indicated (in thousands of dollars):

	Three Months Ended
	March 31, 2016			March 31, 2015
GAAP net income/(loss)	$	19		$	(477	)
Reconciling items from GAAP to adjusted EBITDA
Interest and other income, net		(7	)		(2	)
Depreciation and amortization		500			649
Amortization of stock-based compensation		48			22
Adjusted EBITDA	$	560		$	192

Seasonality

Our client acquisition business is subject to some seasonal fluctuations. The second and third quarters are generally slower than the first and fourth quarters for client acquisition. Infrastructure is our single largest market and these prospects are typically engaged on projects during the spring and summer months, rather than prospecting for new work, which causes new client acquisition to decline compared to the first and fourth quarters in the year. For this reason, comparisons of the performance of our business quarter to consecutive quarter may not provide the most relevant information, and so in addition to sequential quarter comparisons, our quarterly results and metrics should be considered on the basis of results for the whole year or by comparing results in a quarter with the results in the same quarter of the previous year.

Results of Operations for the Three Months Ended March 31, 2016 Compared to the Three Months Ended March 31, 2015

Revenue and Cost of Revenue

The following table provides a breakdown of revenue for the periods presented as a percentage of total revenue:

	Three Months Ended March 31,
	2016			2015
Revenue	$	6,062		$	5,845
Revenue:
Subscription		92	%		90	%
Content license		7	%		8	%
Management information reports		0	%		1	%
Other		1	%		1	%
Total revenue		100	%		100	%

Subscription revenue for the three months ended March 31, 2016 grew 6%, to $5.6 million over the same period in 2015. The growth in subscription revenue is primarily a result of improved sales to new clients and retention of existing clients compared to the same period last year.

Total revenue for the three months ended March 31, 2016 was $6.1 million, up by 4% compared to the same period last year. In addition to subscription revenue, total revenue includes content license and report revenue.

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Cost of revenue for the three months ended March 31, 2016 and March 31, 2015 was as follows (in thousands of dollars):

							Increase / (Decrease)
	2016			2015			Amount			Percent
Three months ended March 31,	$	764		$	793		$	(29	)		(4	%)
Percentage of revenue		13	%		14	%

Our cost of revenue primarily represents payroll-related expenses associated with the research, capture and enhancement of data in our proprietary database and third-party content fees, and also includes credit card processing fees. The decrease compared to the prior year same quarter is due to a decrease in headcount and other individually immaterial changes.

Sales and Marketing

Sales and marketing expenses for the three months ended March 31, 2016 and March 31, 2015 were as follows (in thousands of dollars):

							Increase / (Decrease)
	2016			2015			Amount			Percent
Current period expenses	$	2,643		$	2,486		$	157			6	%
Depreciation and amortization		236			317			(81	)		(26	%)
Stock based compensation		12			3			9			304	%
Total for three months ended March 31,	$	2,891		$	2,806		$	85			3	%
Percentage of revenue		48	%		48	%

The increase in expenses for the comparable three month period is primarily related to the addition of sales and marketing leadership necessary to support our growth initiatives and an increase in contract labor to support our Onvia 7 migration initiative, partially offset by an $81,000 decrease in depreciation and amortization costs.

Technology and Development

Technology and development expenses for the three months ended March 31, 2016 and March 31, 2015 were as follows (in thousands of dollars):

							Increase / (Decrease)
	2016			2015			Amount			Percent
Current period expenses	$	1,253		$	1,051		$	202			19	%
Depreciation and amortization		213			272			(60	)		(22	%)
Stock based compensation		13			(7	)		20			(280	%)
Total for three months ended March 31,	$	1,479		$	1,316		$	163			12	%
Percentage of revenue		24	%		23	%

The increase in expenses for the comparable three month period is primarily related to an increase in payroll related expenses as required to support our ongoing product development effort and other individually immaterial changes, partially offset by a $60,000 decrease in depreciation and amortization costs.

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General and Administrative

General and administrative expenses for the three months ended March 31, 2016 and March 31, 2015 were as follows (in thousands of dollars):

							Increase / (Decrease)
	2016			2015			Amount			Percent
Current period expenses	$	841		$	1,324		$	(483	)		(36	%)
Depreciation and amortization		52			59			(7	)		(13	%)
Stock based compensation		23			26			(3	)		(13	%)
Total for three months ended March 31,	$	916		$	1,409		$	(493	)		(35	%)
Percentage of revenue		15	%		24	%

The decrease in expenses for the comparable three month period is primarily due to $435,000 of special project legal and consulting fees authorized by our Board of Directors in the first quarter of 2015 which were not incurred in 2016.

Interest and Other Income, Net

Net interest and other income was $7,000 for the three months ended March 31, 2016, compared to $2,000 for the same period in 2015.

Net Income/(Loss) and Net Income/(Loss) per Share

We reported net income of $19,000 for the three months ended March 31, 2016 compared to net loss of $477,000 for the same period of 2015. On a diluted per share basis, net income was $0.00 and net loss was $0.06 for the three months ended March 31, 2016 and 2015, respectively.

Critical Accounting Policies and Management Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates including, but not limited to, those affecting the fair value of stock-based compensation, allowance for doubtful accounts, capitalization of costs for internally developed software, recoverability of long-lived assets, including internally developed software, and the valuation allowance for net deferred tax assets. The brief discussion below is intended to highlight some of the judgments and uncertainties that can impact the application of these policies and the specific dollar amounts reported on our financial statements.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. Many of our estimates or judgments are based on anticipated future events or performance, and as such are forward-looking in nature, and are subject to many risks and uncertainties, including those discussed in our Annual Report on Form 10-K for the year ended December 31, 2015 and elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise required by law, we do not undertake any obligation to update or revise this discussion to reflect any future events or circumstances.

For a detailed discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, 2015.

There have been no material changes in the application of our critical accounting policies and estimates subsequent to that report.

See Note 1 to the accompanying unaudited Consolidated Financial Statements for the issuance of recent accounting pronouncements.

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Liquidity and Capital Resources

Our principal sources of liquidity are cash, cash equivalents and available for sale investments. Our combined cash and cash equivalents and available for sale investments were $8.0 million at March 31, 2016. At March 31, 2016, we held $5.5 million in available for sale investments, primarily in FDIC insured or U.S. government backed securities.

If we engage in merger or acquisition transactions or our overall operating plans change, we may require additional equity or debt financing to meet future working capital needs, which may have a dilutive effect on existing stockholders or may include securities that have rights, preferences or privileges senior to those of the rights of our common stock. We cannot make assurances that if additional financing is required, it will be available, or that such financing can be obtained on satisfactory terms.

From December 31, 2015 to March 31, 2016, cash, cash equivalents and available for sale investments increased by $1.2 million for the reasons described below.

Operating Activities

Net cash provided by operating activities was $1,639,000 for the three months ended March 31, 2016, compared to $749,000 in the same period in 2015. The increase is primarily due to the net change in operating assets and liabilities resulting from timing of cash receipts from higher client bookings and lower operating expenses compared to the same period of the prior year.

Investing Activities

Net cash used in investing activities was $672,000 in the three months ended March 31, 2016, compared to $346,000 in the same period in 2015. The increase of $326,000 in cash used in investing activities is attributable to a $395,000 decrease in cash provided by net maturities of investments partially offset by a $77,000 decrease in additions to property and equipment and internal use software.

Financing Activities

Net cash provided by financing activities was $0 in the three months ended March 31, 2016, compared to $1,000 in the same period in 2015.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The disclosures under this Item are not required for smaller reporting companies.

Item 4. Controls and Procedures

The Company conducted an evaluation (pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the "Exchange Act")), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e)) as of March 31, 2016.  Based on the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of March 31, 2016.

We made no change in our internal control over financial reporting during the fiscal quarter ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We intend to continue to refine our internal control over financial reporting on an ongoing basis, as we deem appropriate with a view towards continuous improvement.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, legal proceedings may arise in the ordinary course of business. Although the outcomes of legal proceedings are inherently difficult to predict, we are not currently involved in any legal proceeding in which the outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business or financial position.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None.

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Item 6. Exhibits

Number	Description
10.1*++	Transition and Release Agreement, dated March 28, 2016, between Onvia Inc. and Henry Riner
31.1++	Certification of Henry G. Riner, Chief Executive Officer and President of Onvia, Inc., Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2++	Certification of Cameron S. Way, Chief Financial Officer and Principal Accounting Officer of Onvia, Inc., Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1++	Certification of Henry G. Riner, Chief Executive Officer and President of Onvia, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2++	Certification of Cameron S. Way, Senior Vice President and Chief Financial Officer of Onvia, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101++	101.INS        XBRL Instance Document
	101.SCH      XBRL Taxonomy Extension Schema
	101.CAL      XBRL Taxonomy Extension Calculation Linkbase
	101.LAB      XBRL Taxonomy Extension Label Linkbase
	101.PRE      XBRL Taxonomy Extension Presentation Linkbase
	101.DEF      XBRL Taxonomy Extension Definition Linkbase

* Executive Compensation Plan or Agreement

++ Furnished Herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

ONVIA, INC.
By:	/s/ Henry G. Riner
	Henry G. Riner
	President and Chief Executive Officer
By:	/s/ Cameron S. Way
	Cameron S. Way
	Chief Financial Officer and Principal Accounting Officer

Date: May 9, 2016

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EX-10.1

Exhibit 10.1

TRANSITION AND RELEASE AGREEMENT

This Transition and Release Agreement ("Agreement") is made and entered into by and between Onvia, Inc., a Delaware limited liability Onvia ( “Onvia”) and Hank Riner, an individual (hereinafter, "Riner").

RECITALS

A. WHEREAS, Riner has been employed by Onvia as its Chief Executive Officer (“CEO”) since 2010;

B. WHEREAS, Riner and Onvia have jointly decided that Riner will transition from his role as Onvia CEO into planned retirement and a 12-month consulting relationship with Onvia no later than June 30, 2017 or on such earlier date that Onvia selects and announces a new CEO (either such date is referred to herein as the “Transition Date”);

C. WHEREAS, Riner and Onvia desire to enter into this Agreement for the purpose of setting forth the terms of Riner’s transition from active CEO to retired CEO and consultant, and for the additional purpose of avoiding any potential disputes arising out of the parties’ employment relationship or Riner’s retirement from Onvia;

NOW THEREFORE, in consideration of the above recitals and the mutual covenants set forth herein, Onvia and Riner hereby agree as follows:

AGREEMENT

1. Transition from CEO to Retirement and 12-Month Consulting Relationship

(a)    Except as otherwise provided in Section 1(c), below, Riner will continue to serve as Onvia’s CEO on a full-time basis through the Transition Date. Riner agrees that, during his remaining term as CEO, he will give his best effort to all of the duties that are customarily associated with the CEO position, and will continue his efforts to maximize the profitability and long-term success of Onvia under the direction of Onvia’s Board of Directors. Riner agrees that his Onvia employment and his term as Onvia’s CEO will end on such Transition Date as may be selected by the Board of Directors in its sole discretion, but which will be no later than June 30, 2017. Except as otherwise provided in Section 1(c), below, Onvia will continue to provide Riner with his full annual salary of $350,000 (which salary will be paid on periodic basis in accordance with Onvia’s standard payroll practices and reduced by applicable withholding) through June 30, 2017 regardless of whether his Transition Date occurs on some earlier date. Except as otherwise provided in Section 1(c), below, Riner will continue through the Transition Date to be a participant in all Onvia employee benefits programs in which he is a participant as of the date of execution of this Agreement. Unless his employment ends earlier pursuant to Section 1(c) below, Riner will continue to accrue PTO through June 30, 2017. If employment ends earlier in accordance with Section 1(c), PTO will accrue through Riner’s last day of employment. Regardless of the timing or circumstances of employment termination, Riner will receive a cash payout of any accrued but unused PTO up to a maximum of no greater than 150 hourse, with PTO payable at the rate of $182.29 per hour *but reduced by applicable withholding). In addition, and except as otherwise provided in Section 1(c) below, Riner will be eligible until September 30, 2017 to exercise any vested options on a cashless basis. Riner is also eligible to participate in Onvia’s 2016 Management Incentive Plan where Riner is eligible to earn up to 50% of base salary ($175,000) if Onvia’s 2016 corporate bookings and EBITDA objectives are achieved.

(b)   In exchange for Onvia’s entry into this Agreement and the consideration described in Paragraph 1(a), above, Riner agrees that he will make himself available as a consultant to the Onvia Board of Directors and/or the Onvia executive team as requested from time-to-time by the Board or Onvia’s new CEO for a period of 12 months after the Transition Date. Riner agrees that he will serve as a consultant for a total period of up to 40 hours during this 12-month period, and that he will receive no additional compensation for his time as a consultant because he will have already been paid for his consulting services by way of the consideration described in Paragraph 1(a).

(c)    If Riner’s employment is terminated prior to June 30, 1017 for “Cause,” as that term is defined herein, Riner will no longer be entitled to his CEO salary and will no longer be eligible to participate in the MIP or any Onvia employee benefit program after the last day of his actual Onvia employment. In addition, Riner’s right to exercise options if his employment is terminated for Cause shall expire 90 days after his last day of employment. For the purposes of this Agreement, “Cause” shall mean only the following: (a) Riner’s gross negligence, fraud, insubordination, or willful violation of any law or significant Onvia policy, committed in connection with the position and which results or could reasonably be expected to result in a material adverse effect on Onvia; or (b) Riner’s failure to substantially perform the duties reasonably assigned or appropriate to the position, in a manner reasonably consistent with prior practice. The term “Cause” shall not include poor job performance or ordinary negligence or failure to act, whether due to an error in judgment or otherwise, if Riner, as determined in good faith by Onvia in its sole discretion, has exercised substantial efforts in good faith to perform the duties reasonably assigned or appropriate to the position. Onvia has the sole discretion and authority to determine in good faith whether there is a legitimate basis by which to terminate Riner’s employment for Cause based on the criteria set forth in this Section 1(c).

(d)   Nothing in Section 1(c) will be interpreted to relieve Riner from his obligations under the remaining terms of this Agreement as set forth below, even if Riner’s employment is terminated for Cause.

(e)    Onvia agrees that any costs and expenses associated with the CEO transition, including but not limited to Riner’s transition or severance payments, wage payments for his part-time consulting arrangement, expenses incurred by Onvia for recruiting or reviewing of CEO candidates and/or executive assessment or coaching sessions, will be excluded when calculating the achievement of his previously established 2016 MIP objectives.

2. Transition Benefits

In exchange for Riner’s entry into this Agreement, his covenants and promises described herein, and his entry into an additional Release of Claims Agreement on his last day of Onvia employment, Onvia agrees to pay Riner Three Hundred Sixty Two Thousand Dollars ($362,000.00) (the “Transition Payment”) (which amount in intended to represent a $350,000 transition payment plus a $12,000 contribution to payment of COBRA continuation coverage premiums), less applicable payroll withholding except as otherwise indicated below, on July 8, 2017. The Transition Payment will be issued to Riner in a single lump-sum payment and will be reported to the Internal Revenue Service on a Form W-2. Riner acknowledges that this Transition Payment is not otherwise due to him except in connection with his entry into this Agreement and the additional Release of Claims Agreement, a copy of which is attached and incorporated as Exhibit A to this Agreement.

3. Return of Onvia Property

Riner hereby agrees to return to Onvia any and all materials and property belonging to Onvia of any type whatsoever (including without limitation any Onvia equipment, cell phones, or confidential or proprietary material) that had been in Riner’s possession or control, including office keys, on his last day of Onvia employment.

4. Full Release and Waiver of All Claims

(a) Riner and Onvia agree that the payments and agreements set forth in this Agreement are in full satisfaction of any and all compensation or benefits to which Riner may be entitled by virtue of his employment with Onvia.

(b) In exchange for Onvia’s entry into this Agreement, Riner on behalf of himself, his heirs, executors, administrators, and assigns, does hereby waive, release and discharge Onvia, its parents, subsidiaries, affiliates, and other related entities, their respective successors and assigns, present and former partners, owners, directors, officers, members, employees, and attorneys, both individually and in their respective representative capacities, from any and all claims, damages, or causes of action, whether presently known or unknown, arising on or before the Effective Date. This release includes without limitation any action arising under common law, equity, or under any federal, state, or local statute, regulation or ordinance, including but not limited to any tort claims, claims for wrongful discharge, contract breach, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Employee Retirement and Income Security Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act of 1967 (ADEA), and Washington’s Laws Against Discrimination. This release is intended to be as broad as the law allows, and includes a release of any claims for attorneys’ fees or costs.

(c) ADEA Waiver. In accordance with the Older Workers’ Benefit Protection Act, Riner hereby acknowledges that his waiver and release hereunder of any rights he may have under the Age Discrimination in Employment Act of 1967 (ADEA) is knowing and voluntary. Riner and Onvia agree that this waiver and release does not apply to any rights or claims that may arise under ADEA after the date this Agreement is executed. Riner acknowledges that he has been advised by this writing that: (a) he should consult with and obtain the advice of an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) days to consider this Agreement (although he may, by his own choice, execute this Agreement earlier); (c) he has seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (d) this Agreement shall not be effective until after the date upon which this revocation period has expired.

5. Trade Secrets and Confidential Information

Riner acknowledges that Onvia’s business and future success depends on the preservation of the trade secrets and other confidential information of Onvia and its clients and customers (the “Secrets”). The Secrets include, without limiting the generality of the foregoing, existing and to-be-developed or acquired product ideas and designs, computer software, customer lists, business information, pricing information and/or processes, product and marketing plans, advertising, research and development, financial data, personnel information, procedural and technical manuals and practices, servicing routines, specialized know-how and any other ideas, concepts, methods, inventions, procedures or information that are proprietary to Onvia or its affiliates or its actual or prospective customers or suppliers or that Onvia is required, by contract or otherwise, to keep confidential, whether wholly or partially developed by Riner or provided to Riner and whether embodied in a tangible medium or merely remembered. Riner agrees to protect and to preserve as confidential all of the Secrets at any time known to Riner or which were, at any time, in his possession or control (whether wholly or partially developed by Riner or provided to Riner, and whether embodied in a tangible medium or merely remembered), unless and until such Secrets are disclosed to the public by Onvia and are thereby no longer confidential.

6. Non-Compete and Non-Solicitation Obligations

(a)    Non-Competition. Riner agrees to the following restrictions on his post-employment activities:

                                                        i.            Restrictions on Work. For a period of twenty-four (24) months following his last day of Onvia employment, Riner agrees that he will not, without obtaining Onvia’s written permission, directly or indirectly be employed by, consult with or otherwise perform services for a Competitor (as defined below), or own any interest in, manage or participate in the management (as an officer, director, partner, member or otherwise) of a Competitor (except that Riner shall not be restricted from owning less than 1 percent of equity in a public corporation). Riner acknowledges that, due to the nature of Onvia’s business and his own role as Onvia’s CEO, there is no geographical limitation on the restrictions in this provision. For the purposes of this Paragraph 6 of this Agreement, “Competitor” will be defined as any firm, individual, or Onvia that creates, designs, analyzes, or implements business plans or business intelligence for government contractors in any industry or any other individual or entity that is directly or indirectly engaged in or is preparing to engage in any business which involves the creation, design, or implementation of business intelligence for government contractors in any industry or any other service available from Onvia at any time relevant to this Agreement.

                                                      ii.            Reasonableness of Restrictions. Riner recognizes and agrees that the restrictions in this Paragraph 6(b) are reasonable in scope, area, and duration, necessary for the protection of Onvia’s legitimate business interests, and will not result in any undue hardship for Riner.

                                                    iii.            Disclosure of Restrictions. Riner will disclose and provide a copy of this Agreement to any prospective new employer or business partner before accepting employment or engaging in any business venture during the Restricted Period. Riner authorizes Onvia to provide a copy of this Agreement to any new or prospective employer or business partner of Riner.

(b)   Non-Solicitation. For a period of twenty-four (24) months after his last day of Onvia employment, Riner will not, without express written permission from Onvia, directly or indirectly: (1) approach, initiate contact with, or engage in discussions with any then-current director, officer or employee of Onvia for the purpose or with the effect of soliciting or encouraging any such individual to terminate his or her employment with Onvia and/or to accept employment with, or otherwise provide services to, any employer other than Onvia; or (2) advise or provide information to any then-current director, officer or employee of Onvia regarding the availability or desirability of employment of that individual by any employer other than Onvia; or (3) provide any information to any employer other than Onvia regarding any Onvia officer, director or employee to the extent that any such information may assist that person or entity in (i) identifying any then-current director, officer or employee of any of Onvia as a candidate for employment; or (ii) evaluating the desirability of employing any such individual. If during this non-solicitation period Riner receives any inquiry from any then-current Onvia director, officer or employee regarding prospective employment with any employer other than Onvia, Riner agrees to respond only as follows: “I am prohibited by the terms of my agreement with Onvia from engaging in any discussion with you regarding this topic.”

7. Confidentiality

Riner agrees to keep this Agreement confidential and not to reveal the terms, conditions, or the existence of this Agreement except, in Riner’s case, to his attorneys, immediate family, tax or financial advisors or any federal or state government agency that requests a copy of the Agreement or information regarding the Agreement, and in Onvia’s case, its attorneys, necessary officers, directors, accountants, insurers or employees, with the understanding that all of those individuals or entities will also be bound by the confidentiality agreement contained in this Section 7 unless disclosure is required by law. The parties agree that the Agreement or its terms, conditions, considerations or contents may be disclosed if such disclosure is ordered by a court or arbitrator.

8. Nondisparagement

(a) Riner agrees not to make any statements, written or verbal, or cause or encourage others to make any statements, written or verbal, including but not limited to any statements made via social media, on websites or blogs, that defame, disparage or in any way criticize the business reputation, practices, or conduct of Onvia, or any of Onvia’s affiliates.

(b) Onvia agrees that the members of Onvia’s Board of Directors will not make any statements, written or verbal, or cause or encourage others to make any statements, written or verbal, including but not limited to any statements made via social media, on websites or blogs, that defame, disparage or in any way criticize the business reputation or conduct of Riner.

9. Remedies for Breach

Riner agrees that any breach of Riner’s obligations under this Agreement may cause Onvia irreparable harm for which there is no adequate remedy at law.

(a)    If Riner breaches the terms of Sections 5 or 6 of this Agreement, Onvia will be entitled to the issuance by a court of competent jurisdiction of an injunction, restraining order, or other equitable relief restraining Riner from committing or continuing to commit any such violation. Any right to obtain an injunction, restraining order, or other equitable relief under this Agreement will not be considered a waiver of any right to assert any other remedy that Onvia may have at law or equity, including the right to recover damages. In the event Riner breaches the terms of Sections 5 or 6 of this Agreement, Riner will reimburse Onvia for any payments previously made pursuant to Section 1 of this Agreement, and Onvia will have the right to withhold any payments otherwise due under this Agreement.

(b)   In the event that Riner has breached any of the other terms and conditions of this Agreement, any outstanding obligations of Onvia hereunder shall immediately terminate and Onvia shall have the right to obtain reimbursement of any payments previously made to Riner pursuant to this Agreement’s Section 1 and to seek and obtain whatever additional relief to which it may be entitled in a court of law.

10. Governing Law and Venue

This Agreement shall be construed and interpreted according to the laws of the state of Washington. In any dispute arising out of or relating to this Agreement, the parties agree that venue shall be had in King County, Washington.

11. Severability

In the event that any provision hereof or compliance by any of the parties with any provision of this Agreement shall constitute a violation of any law, then such provision, to the extent only that it so violates, shall be deemed ineffective, unenforceable, and separable from the remaining provisions of this Agreement, which provisions shall remain enforceable and binding.

12. No Admission of Wrongdoing or Liability

Nothing contained in this Agreement shall constitute, or be construed as or is intended to be an admission or an acknowledgment by either party hereto of any wrongdoing or liability, any such wrongdoing or liability being expressly denied.

13. Assignment

This Agreement will bind and inure to the benefit of Riner and Onvia, and their respective heirs, legal representatives, and permitted successors and assigns. The covenants and promises of Riner under this Agreement are unique and personal. Accordingly, Riner may not assign any of Riner’s duties under this Agreement. Onvia may assign this Agreement, without notice to Riner. Riner consents to such assignment and agrees and acknowledges that all terms and conditions of this Agreement will remain in effect after any such assignment.

14. Confirmation

This Agreement represents and contains the entire understanding between the parties in connection with the subject matter of each such agreement. Except with respect to Riner’s rights to vested benefits (if any) under Onvia’s retirement plans, all prior written or oral agreements or understandings are merged into and superseded by this Agreement. Riner acknowledges that in signing this Agreement, Riner has not relied upon any representation or statement not set forth in this Agreement which was made by Onvia or any of its representatives. Riner acknowledges that he has freely and advisedly entered into this Agreement, and has entered into this Agreement only after full reflection and analysis and after consulting with legal counsel of his choosing. No modification or waiver of this Agreement will be effective unless evidenced in a writing signed by both parties.

BY:   EMPLOYEE	BY:   ONVIA, INC.
_/s/ Hank Riner__________________________ Hank Riner	By:_/s/ D. Van Skilling________________
	Its:__Chairman______________________
Date: _3/28/2016___________________	Date: _3/28/2016_____________________

EXHIBIT A

TO THE TRANSITION AND RELEASE AGREEMENT

BETWEEN ONVIA, INC. AND HANK RINER

RELEASE OF CLAIMS AGREEMENT

This Release of Claims Agreement (“Release Agreement”) is made and entered into by and between Hank Riner (“Employee”) and Onvia, Inc. (the “Company”) effective as of the Separation Date as defined below (the “Effective Date”) and in accordance with Section 2 of the Transition and Release Agreement between the Company and Hank Riner dated March 28, 2016 (the “Transition Agreement”). In the event of any conflict between the terms of this Release Agreement and the Transition Agreement, the Transition Agreement will control.

In consideration of the mutual promises contained in this Agreement and the Transition Agreement, the parties agree as follows:

1.  Separation Date.  Employee’s last day of employment with the Company is ________________, 2017 (the “Separation Date”). Employee acknowledges that following the Separation Date, Employee will cease to be an employee of the Company and shall have no authority to bind the Company to any contract or agreement, or to act on behalf of the Company or any of its affiliates, and the Company will not have any obligation to reimburse Employee for any expenses incurred by Employee after the Separation Date except as may be otherwise agreed in writing between the parties in connection with Mr. Riner’s consulting activities as described in Section 1(b) of the Transition Agreement.

2. Transition Payment.  In exchange for the promises of Employee contained in this Release Agreement and the Transition Agreement, the Company will pay Employee Three Hundred Sixty Two Thousand Dollars ($362,000.00) (the “Transition Payment”) (which amount in intended to represent a $350,000 transition payment plus a $12,000 contribution to payment of COBRA continuation coverage premiums), less applicable payroll withholding except as otherwise indicated below, on July 8, 2017. The Transition Payment will be issued to Employee in a single lump-sum payment and will be reported to the Internal Revenue Service on a Form W-2. Employee acknowledges that this Transition Payment is not otherwise due to him except in connection with his entry into the Transition Agreement and this Release Agreement.

3. Medical Benefits/COBRA Coverage. Employee’s group health coverage (if any) with Employer will continue through the last day of the month in which the Separation Date falls or as otherwise provided under Employer’s group health plans. Pursuant to federal COBRA law, Employee and Employee’s qualified beneficiaries (if any) may elect continuation coverage in accordance with election materials and other COBRA notices to be sent to Employee by the plans’ designated administrator

4.  Full Release and Waiver of All Claims. 

(a) Employee and Company agree that the payments and agreements set forth in the Transition Agreement and in this Release Agreement are in full satisfaction of any and all compensation or benefits to which Employee may be entitled by virtue of his employment with Company.

(b) In exchange for Company’s entry into the Transition Agreement and this Release Agreement, Employee on behalf of himself, his heirs, executors, administrators, and assigns, does hereby waive, release and discharge Company, its parents, subsidiaries, affiliates, and other related entities, their respective successors and assigns, present and former partners, owners, directors, officers, members, employees, and attorneys, both individually and in their respective representative capacities, from any and all claims, damages, or causes of action, whether presently known or unknown, arising on or before the Effective Date. This release includes without limitation any action arising under common law, equity, or under any federal, state, or local statute, regulation or ordinance, including but not limited to any tort claims, claims for wrongful discharge, contract breach, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Employee Retirement and Income Security Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act of 1967 (ADEA), and Washington’s Laws Against Discrimination. This release is intended to be as broad as the law allows, and includes a release of any claims for attorneys’ fees or costs.

(c) ADEA Waiver. In accordance with the Older Workers’ Benefit Protection Act, Employee hereby acknowledges that his waiver and release hereunder of any rights he may have under the Age Discrimination in Employment Act of 1967 (ADEA) is knowing and voluntary. Employee and Company agree that this waiver and release does not apply to any rights or claims that may arise under ADEA after the date this Release Agreement is executed. Employee acknowledges that he has been advised by this writing that: (a) he should consult with and obtain the advice of an attorney prior to executing this Release Agreement; (b) he has at least twenty-one (21) days to consider this Agreement (although he may, by his own choice, execute this Agreement earlier); (c) he has seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (d) this Agreement shall not be effective until after the date upon which this revocation period has expired.

(d) The parties agree that nothing in the Transition Agreement or in this Release Agreement shall be construed to have any effect upon the rights of Employee (a) for compensation for vested benefits arising under any Company employee benefit plan, in accordance with the terms of such plans; (b) with respect to any obligation of the Company under this Release Agreement; or (c) for indemnification or defense, including attorney’s fees and costs, by the Company, to the extent such rights may arise under law, or be provided under  the Company’s Articles or Bylaws with respect to Employee’s acts or omissions while employed by the Company. 

5.  Informed Agreement.  Employee has read and fully understands the terms of this Release Agreement and its significance and consequences.   Employee acknowledges that the Company has advised Employee to review the terms of this Agreement with an attorney and that Employee has either done so or knowingly waived Employee’s right to do so.  Employee further acknowledges that this Agreement is voluntary and has not been given as a result of any coercion.

6.  Severability. If any provision or portion of this Release Agreement is held to be unenforceable or invalid, the remainder of this Agreement will nevertheless continue to be enforceable and valid.

7.  Governing Law.  This Agreement will be governed, interpreted and enforced in accordance with the laws of the State of Washington without regard to its choice of law principles. 

Employee   Signature: ________________________   Printed Name: Hank Riner         Date:____________________________   Onvia, Inc.   By: _____________________________   Printed Name:   Title:     Date: ___________________________  

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. Rule 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Henry G. Riner, certify that:

1. I have reviewed this quarterly Report on Form 10-Q for the period ending March 31, 2016 of Onvia, Inc.;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d. Disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Henry G. Riner

Henry G. Riner

President and Chief Executive Officer

May 9, 2016

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. Rule 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Cameron S. Way, certify that:

1. I have reviewed this quarterly Report on Form 10-Q for the period ending March 31, 2016 of Onvia, Inc.;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d. Disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Cameron S. Way

Cameron S. Way

Chief Financial Officer and Principal Accounting Officer

May 9, 2016

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Onvia, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Henry G. Riner, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 /s/ Henry G. Riner

Henry G. Riner

President and Chief Executive Officer

May 9, 2016

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Onvia, Inc. and will be retained by Onvia, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Onvia, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cameron S. Way, Chief Financial Officer and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 /s/ Cameron S. Way

Cameron S. Way

Chief Financial Officer and Principal Accounting Officer

May 9, 2016

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Onvia, Inc. and will be retained by Onvia, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 29, 2016
Entity Registrant Name	ONVIA INC
Entity Central Index Key	0001100917
Trading Symbol	onvi
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,125,484
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents	$ 2,450,000	$ 1,483,000
Short-term investments, available-for-sale	5,552,000	5,275,000
Accounts receivable, net of allowance for doubtful accounts of $45 and $32	1,797,000	1,298,000
Prepaid expenses and other current assets	925,000	1,075,000
Total current assets	10,724,000	9,131,000
LONG TERM ASSETS:
Property and equipment, net of accumulated depreciation	963,000	1,036,000
Internal use software, net of accumulated amortization	5,177,000	5,091,000
Other long-term assets	248,000	260,000
Total long term assets	6,388,000	6,387,000
TOTAL ASSETS	17,112,000	15,518,000
CURRENT LIABILITIES:
Accounts payable	791,000	499,000
Accrued expenses	753,000	937,000
Unearned revenue, current portion	10,161,000	8,821,000
Other current liabilities	116,000	103,000
Total current liabilities	11,821,000	10,360,000
LONG TERM LIABILITIES:
Unearned revenue, net of current portion	315,000	283,000
Deferred rent, net of current portion	611,000	575,000
Other long-term liabilities	37,000	43,000
Total long term liabilities	963,000	901,000
TOTAL LIABILITIES	12,784,000	11,261,000
STOCKHOLDERS’ EQUITY:
Preferred stock; $.0001 par value: 2,000,000 shares authorized; no shares issued or outstanding	0	0
Common stock; $.0001 par value: 11,000,000 shares authorized; 8,717,788 and 8,717,788 shares issued; and 7,125,484 and 7,125,484 shares outstanding	1,000	1,000
Treasury stock, at cost: 1,592,304 and 1,592,304 shares	(5,446,000)	(5,446,000)
Additional paid in capital	354,260,000	354,212,000
Accumulated other comprehensive gain/(loss)	1,000	(3,000)
Accumulated deficit	(344,488,000)	(344,507,000)
Total stockholders’ equity	4,328,000	4,257,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 17,112,000	$ 15,518,000

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Allowance for doubtful accounts	$ 45	$ 32
Preferred stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	11,000,000	11,000,000
Common stock, shares issued (in shares)	8,717,788	8,717,788
Common stock, shares outstanding (in shares)	7,125,484	7,125,484
Treasury stock, Shares (in shares)	1,592,304	1,592,304

XML

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Subscription	$ 5,594	$ 5,263
Content license	404	462
Management information reports	16	48
Other	48	72
Total revenue	6,062	5,845
Cost of revenue (exclusive of depreciation and amortization included below)	764	793
Gross margin	5,298	5,052
Operating expenses:
Sales and marketing	2,891	2,806
Technology and development	1,479	1,316
General and administrative	916	1,409
Total operating expenses	5,286	5,531
Income/(loss) from operations	12	(479)
Interest and other income, net	7	2
Net income/(loss)	19	$ (477)
Unrealized gain on available-for-sale securities	3
Comprehensive income/(loss)	$ 22	$ (477)
Basic net income/(loss) per common share (in dollars per share)	$ 0	$ (0.06)
Diluted net income/(loss) per common share (in dollars per share)	$ 0	$ (0.06)
Basic weighted average shares outstanding (in shares)	7,125	7,401
Diluted weighted average shares outstanding (in shares)	7,193	7,401

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$ 19,000	$ (477,000)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation and amortization	500,000	649,000
Stock-based compensation	$ 48,000	22,000
Loss on sale of property and equipment		2,000
Change in operating assets and liabilities:
Accounts receivable	$ (499,000)	192,000
Prepaid expenses and other assets	162,000	(633,000)
Accounts payable	171,000	78,000
Accrued expenses	(184,000)	(172,000)
Unearned revenue	1,373,000	1,035,000
Deferred rent	49,000	53,000
Net cash provided by operating activities	1,639,000	749,000
Additions to property and equipment	(57,000)	(68,000)
Additions to internal use software	(341,000)	(407,000)
Purchases of investments	(1,878,000)	(2,712,000)
Maturities of investments	$ 1,604,000	2,833,000
Proceeds from sale of equipment		8,000
Net cash used in investing activities	$ (672,000)	(346,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		1,000
Net cash provided by financing activities		1,000
Net increase in cash and cash equivalents	$ 967,000	404,000
Cash and cash equivalents, beginning of period	1,483,000	1,577,000
Cash and cash equivalents, end of period	2,450,000	$ 1,981,000
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment additions in accounts payable	(18,000)
Internal use software additions in accounts payable	$ (161,000)	$ (227,000)

XML

Note 1 - Accounting Policies

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Accounting Policies

Basis of Presentation

The unaudited interim Condensed Consolidated Financial Statements and related notes thereto have been prepared pursuant to generally accepted accounting principles in the United States of America, (“GAAP”), and the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying unaudited interim Condensed Consolidated Financial Statements and related notes thereto should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (“2015 Annual Report”).

The information furnished is unaudited, but reflects, in the opinion of management, all adjustments, consisting of only normal recurring items, necessary for a fair presentation of the results for the interim periods presented.

Interim results are not necessarily indicative of results for a full year.

Reclassifications

Certain amounts in sales and marketing operating expense for 2015 have been reclassified as technology and development operating expenses to conform to current period presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of stock-based compensation, allowance for doubtful accounts, capitalization of costs for internally developed software, recoverability of long-lived assets, including internally developed software, and the valuation allowance for Onvia’s net deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ significantly from the Company’s estimates. In addition, any significant unanticipated changes in any of the Company’s assumptions could have a material adverse effect on its business, financial condition, and results of operations.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance for revenue from contracts with customers, which provides a single comprehensive revenue recognition model to apply in determining how and when to recognize revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. When applying the new revenue model to contracts with customers the guidance requires five steps to be applied, which include: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires both quantitative and qualitative disclosures, which are more comprehensive than existing revenue standards. The disclosures are intended to enable financial statement users to understand the nature, timing and uncertainty of revenue and the related cash flow. This guidance will be effective for Onvia in the first quarter of 2018 and early adoption is permitted beginning in the first quarter of 2017. The Company is currently assessing the impact the guidance will have upon adoption.

In November 2015, the FASB issued authoritative guidance amending the accounting for income taxes and requiring all deferred tax assets and liabilities to be classified as non-current on the balance sheet. The objective of the guidance is to simplify the presentation as current GAAP requires the Company to separate the deferred tax assets into current and noncurrent amounts. The FASB concluded that the current presentation does not benefit financial statement users because the classification does not align with the time period in which the deferred tax amounts are expected to be recovered. The guidance will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The guidance may be adopted either prospectively or retrospectively. The Company is currently assessing the impact the guidance will have upon adoption but does not expect it to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued authoritative guidance which requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new guidance will require both types of leases to be recognized on the balance sheet. The guidance will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This guidance shall be applied at the beginning of the earliest period presented using the modified retrospective approach, which includes a number of practical expedients that an entity may elect to apply. Early application of the guidance is permitted. The Company is evaluating the adoption of this guidance and the potential effects on its consolidated financial statements.

In March 2016, the FASB issued authoritative guidance on accounting for share-based payment transactions. The guidance makes several modifications related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies and clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company is currently assessing how the adoption of this standard will impact the Company’s results of operations, financial condition or cash flows.]

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Note 2 - Stock-based Compensation

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

2. Stock-Based Compensation

The impact on Onvia’s results of operations of recording stock-based compensation was as follows for the three months ended March 31, 2016 and 2015, respectively (in thousands):

	Three Months Ended March 31,
	2016		2015
Sales and marketing	$	12	$	3
Technology and development		13		(7	)
General and administrative		23		26
Total stock-based compensation	$	48	$	22

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Note 3 - Earnings Per Share

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

3. Earnings/(Loss) per Share

Basic net income/(loss) per share is calculated by dividing the net income/(loss) for the period by the weighted average shares of common stock outstanding for the period. Diluted net income/(loss) per share is calculated by dividing the net income/(loss) per share by the weighted average common stock outstanding for the period, plus dilutive potential common shares using the treasury stock method. In periods with a net loss, basic and diluted earnings per share are identical because inclusion of potentially dilutive common shares would be anti-dilutive.

The following table sets forth the computation of basic and diluted net income/(loss) per share for the three months ended March 31, 2016 and 2015, (in thousands, except per share data):

	Three Months Ended March 31,
	2016		2015
Net income/(loss)	$	19	$	(477	)
Shares used to compute basic net income/(loss) per share		7,125		7,401
Dilutive potential common shares:
Stock options		68		-
Shares used to compute diluted net income/(loss) per share		7,193		7,401
Basic net income/(loss) per share	$	0.00	$	(0.06	)
Diluted net income/(loss) per share	$	0.00	$	(0.06	)

For the three months ended March 31, 2016, the weighted average effect of approximately 467,541 options to purchase shares of common stock were not included in the calculation because the effect would have been anti-dilutive.

For the three months ended March 31, 2015, the weighted average effect of approximately 879,000 options to purchase shares of common stock were not included in the calculation because the effect would have been anti-dilutive.

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Note 4 - Investments

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

4. Investments

Onvia classifies investments in debt securities as available-for-sale, stated at fair value as summarized in the following tables (in thousands):

	March 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government backed securities	$	1,536	$	-	$	-	$	1,536
Certificates of Deposit   (1)		3,764		-		-		3,764
Other securities		252		-		-		252
Total Investments	$	5,552	$	-	$	-	$	5,552

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government backed securities	$	902	$	-	$	-		$	902
Certificates of Deposit   (1)		4,375	$	-	$	(2	)		4,373
Total Investments	$	5,277	$	-	$	(2	)	$	5,275

(1)

We evaluated certificates of deposits held as of March 31, 2016 and December 31, 2015 and concluded that they meet the definition of securities as available for sale

.

Onvia accounts for investments held as available for sale according to their fair values, which is defined as the exchange price that would be received for an asset, or paid to transfer a liability (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following are the three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Onvia uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The following tables summarize, by major security type, investments classified as available-for-sale at March 31, 2016 and at December 31, 2015, stated at fair value (in thousands):

	Fair Value Measurements as of March 31, 2016
	Level 1		Level 2		Level 3		Total
U.S. Government backed securities	$	-	$	1,536	$	-	$	1,536
Certificates of Deposit		-		3,764		-		3,764
Other securities		-		252		-		252
Total Investments	$	-	$	5,552	$	-	$	5,552

	Fair Value Measurements as of December 31, 2015
	Level 1		Level 2		Level 3		Total
U.S. Government backed securities	$	-	$	902	$	-	$	902
Certificates of Deposit		-		4,373		-		4,373
Total Investments	$	-	$	5,275	$	-	$	5,275

There were no transfers in or out of Level 2 investments during the first quarter of 2016 and fourth quarter of 2015, and there was no activity in Level 3 fair value measurements during those periods.

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Note 5 - Prepaid Expenses and Other Current Assets

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Other Current Assets [Text Block]

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Prepaid software maintenance agreements	$	550	$	690
Other prepaid expenses		159		175
Prepaid insurance		116		108
Other receivables		88		94
Interest receivable		12		8
	$	925	$	1,075

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Note 6 - Property and Equipment

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

6. Property and Equipment

Property and equipment to be held and used consist of the following (in thousands):

	March 31, 2016			December 31, 2015
Computer equipment	$	3,995		$	3,932
Software		1,856			1,856
Furniture and fixtures		120			117
Leasehold improvements		815			815
Total cost basis		6,786			6,720
Less accumulated depreciation and amortization		(5,823	)		(5,684	)
Net book value	$	963		$	1,036

Depreciation expense was $142,000 and $164,000 for the three months ended March 31, 2016 and 2015, respectively. Depreciation expense is included in operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss).

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Note 7 - Internal Use Software

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Internal Use Software Disclosure [Text Block]

7. Internal Use Software

Onvia capitalizes qualifying computer software costs incurred during the “application development stage” and other costs. Amortization of these costs begins once the product is ready for its intended use. These costs are amortized on a straight-line basis over the estimated useful life of the product, typically 3 to 5 years. The amount of costs capitalized within any period is dependent on the nature of software development activities and projects in each period.

Onvia periodically evaluates the remaining useful lives and carrying values of internal use software. If management determines that all or a portion of the asset will no longer be used, or the estimated remaining useful life differs from existing estimates, an abandonment will be recorded to reduce the carrying value or adjust the remaining useful life to reflect revised estimates. In addition, if the carrying value of the software exceeds the estimated future cash flows, an impairment will be recorded to reduce the carrying value to the expected realizable value. No impairment has been recorded during the three months ended March 31, 2016 and March 31, 2015.

The following table presents a roll-forward of capitalized internal use software for the three months ended March 31, 2016 (in thousands):

	Balance at December 31, 2015			Additions			Balance at March 31, 2016
Capitalized internal use software	$	18,812		$	444		$	19,256
Accumulated amortization		(13,721	)		(358	)		(14,079	)
	$	5,091		$	86		$	5,177

Amortization expense was $358,000 and $485,000 for the three months ended March 31, 2016 and 2015, respectively. Amortization expense is included in operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss).

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Note 8 - Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

8. Accrued Expenses and Other Current Liabilities

Accrued expenses consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Payroll and related liabilities	$	715	$	855
Taxes payable and other		38		82
	$	753	$	937

Other current liabilities consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Deferred rent, current portion		91		78
Obligations under capital leases, current portion	$	25	$	25
	$	116	$	103

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Note 9 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

9. Commitments and Contingencies

Operating Leases

Onvia has a lease agreement for its corporate offices located in Seattle, Washington that expires in April 2021. Onvia also has a non-cancellable operating lease for office equipment, which expires in June 2019.

The office lease contains rent escalation clauses and rent holidays. Rent expense is recorded on a straight-line basis over the lease term with the difference between the rent paid and the straight-line rent expense recorded as a deferred rent liability. Total rent expense associated with real estate operating leases was $193,000 and $192,000 for the three months ended March 31, 2016 and 2015, respectively.

As of March 31, 2016, remaining future minimum lease payments required on non-cancellable operating leases are as follows for the years ending December 31 (in thousands):

	Real Estate Operating Leases		Office Equipment Operating Lease		Total Operating Leases
2016	$	638	$	14	$	652
2017		873		20		893
2018		896		20		916
2019		918		10		928
2020		940		-		940
2021 and thereafter		321		-		321
	$	4,586	$	64	$	4,650

Purchase Obligations

Onvia has non-cancellable purchase obligations for software development and license agreements, co-location hosting arrangements, telecom agreements, marketing agreements and third-party content agreements. The agreements expire in dates ranging from April 2016 to 2018. Future required payments under these non-cancellable agreements are as follows for the years ending December 31 (in thousands):

	Purchase Obligations
2016	$	654
2017		336
2018		273
	$	1,263

CEO Transition Agreement

On March 28, 2016, the Company and its current President and Chief Executive Officer (“Riner”) entered into a Transition and Release Agreement (the “Transition Agreement”).

Under the terms of the Transition Agreement, Riner will transition into planned retirement and a 12-month consulting relationship with the Company effective no later than June 30, 2017, or such earlier date that Onvia selects and announces a new Chief Executive Officer (“CEO”) (the “Transition Date”). Riner will continue to serve as the Company’s President and CEO on a full-time basis through the Transition Date.

In exchange for Riner’s entry into the Transition Agreement, his covenants and promises described therein, and his entry into an additional Release of Claims Agreement on his last of date of employment with the Company, the Company has agreed to pay Riner a lump sum cash payment of $362,000 on July 8, 2017.

Legal Proceedings

From time to time, legal proceedings may arise in the ordinary course of business. Although the outcomes of legal proceedings are inherently difficult to predict, we are not currently involved in any legal proceeding in which the outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business or financial position.

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Note 10 - Income Taxes

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

10. Income Taxes

As of March 31, 2016 and December 31, 2015, Onvia has recorded a valuation allowance against its net deferred tax assets because the Company has determined it is not more likely than not that the asset will be realized. Onvia will continue to evaluate the likelihood that these tax benefits may be realized, and may reverse all or a portion of its valuation allowance in the future if it is determined that realization of these benefits is more likely than not.

Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), utilization of net operating loss (NOL) carryforwards to offset future taxable income are subject to substantial annual limitations if we experience a cumulative change in ownership as defined by the Code. In general, an ownership change, as defined by the Code, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period.

As of March 31, 2016 and December 31, 2015, Onvia’s Federal NOL carryforwards for income tax purposes were approximately $76.8 million.  The Federal NOL carryforwards are subject to limitations under Section 382 of the Internal Revenue Code. If not utilized, the Federal NOL carryforwards will begin to expire in 2021.  The latest date available for a portion of the Federal NOL carryforwards to be utilized to offset future income is 2033.

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Note 11 - Security Deposits

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Lease Security Deposit [Text Block]

11. Security Deposits

Pursuant to Onvia’s lease for its current corporate office space, Onvia has established a stand by letter of credit as security to the lease in the amount of $150,000.  The letter of credit will be returned at lease termination in April 2021, or earlier, subject to certain office lease conditions. As of March 31, 2016, the stand by letter of credit is secured by a security deposit of $150,000 and included within other long-term assets on the unaudited Condensed Consolidated Balance Sheets.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The unaudited interim Condensed Consolidated Financial Statements and related notes thereto have been prepared pursuant to generally accepted accounting principles in the United States of America, (“GAAP”), and the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying unaudited interim Condensed Consolidated Financial Statements and related notes thereto should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (“2015 Annual Report”).

The information furnished is unaudited, but reflects, in the opinion of management, all adjustments, consisting of only normal recurring items, necessary for a fair presentation of the results for the interim periods presented.

Interim results are not necessarily indicative of results for a full year.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain amounts in sales and marketing operating expense for 2015 have been reclassified as technology and development operating expenses to conform to current period presentation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of stock-based compensation, allowance for doubtful accounts, capitalization of costs for internally developed software, recoverability of long-lived assets, including internally developed software, and the valuation allowance for Onvia’s net deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ significantly from the Company’s estimates. In addition, any significant unanticipated changes in any of the Company’s assumptions could have a material adverse effect on its business, financial condition, and results of operations.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance for revenue from contracts with customers, which provides a single comprehensive revenue recognition model to apply in determining how and when to recognize revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. When applying the new revenue model to contracts with customers the guidance requires five steps to be applied, which include: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires both quantitative and qualitative disclosures, which are more comprehensive than existing revenue standards. The disclosures are intended to enable financial statement users to understand the nature, timing and uncertainty of revenue and the related cash flow. This guidance will be effective for Onvia in the first quarter of 2018 and early adoption is permitted beginning in the first quarter of 2017. The Company is currently assessing the impact the guidance will have upon adoption.

In November 2015, the FASB issued authoritative guidance amending the accounting for income taxes and requiring all deferred tax assets and liabilities to be classified as non-current on the balance sheet. The objective of the guidance is to simplify the presentation as current GAAP requires the Company to separate the deferred tax assets into current and noncurrent amounts. The FASB concluded that the current presentation does not benefit financial statement users because the classification does not align with the time period in which the deferred tax amounts are expected to be recovered. The guidance will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The guidance may be adopted either prospectively or retrospectively. The Company is currently assessing the impact the guidance will have upon adoption but does not expect it to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued authoritative guidance which requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new guidance will require both types of leases to be recognized on the balance sheet. The guidance will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This guidance shall be applied at the beginning of the earliest period presented using the modified retrospective approach, which includes a number of practical expedients that an entity may elect to apply. Early application of the guidance is permitted. The Company is evaluating the adoption of this guidance and the potential effects on its consolidated financial statements.

In March 2016, the FASB issued authoritative guidance on accounting for share-based payment transactions. The guidance makes several modifications related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies and clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company is currently assessing how the adoption of this standard will impact the Company’s results of operations, financial condition or cash flows.]

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Note 2 - Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months Ended March 31,
	2016		2015
Sales and marketing	$	12	$	3
Technology and development		13		(7	)
General and administrative		23		26
Total stock-based compensation	$	48	$	22

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Note 3 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended March 31,
	2016		2015
Net income/(loss)	$	19	$	(477	)
Shares used to compute basic net income/(loss) per share		7,125		7,401
Dilutive potential common shares:
Stock options		68		-
Shares used to compute diluted net income/(loss) per share		7,193		7,401
Basic net income/(loss) per share	$	0.00	$	(0.06	)
Diluted net income/(loss) per share	$	0.00	$	(0.06	)

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Note 4 - Investments (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	March 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government backed securities	$	1,536	$	-	$	-	$	1,536
Certificates of Deposit   (1)		3,764		-		-		3,764
Other securities		252		-		-		252
Total Investments	$	5,552	$	-	$	-	$	5,552

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government backed securities	$	902	$	-	$	-		$	902
Certificates of Deposit   (1)		4,375	$	-	$	(2	)		4,373
Total Investments	$	5,277	$	-	$	(2	)	$	5,275

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Fair Value Measurements as of March 31, 2016
	Level 1		Level 2		Level 3		Total
U.S. Government backed securities	$	-	$	1,536	$	-	$	1,536
Certificates of Deposit		-		3,764		-		3,764
Other securities		-		252		-		252
Total Investments	$	-	$	5,552	$	-	$	5,552

	Fair Value Measurements as of December 31, 2015
	Level 1		Level 2		Level 3		Total
U.S. Government backed securities	$	-	$	902	$	-	$	902
Certificates of Deposit		-		4,373		-		4,373
Total Investments	$	-	$	5,275	$	-	$	5,275

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Note 5 - Prepaid Expenses and Other Current Assets (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block]

	March 31, 2016		December 31, 2015
Prepaid software maintenance agreements	$	550	$	690
Other prepaid expenses		159		175
Prepaid insurance		116		108
Other receivables		88		94
Interest receivable		12		8
	$	925	$	1,075

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Note 6 - Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31, 2016			December 31, 2015
Computer equipment	$	3,995		$	3,932
Software		1,856			1,856
Furniture and fixtures		120			117
Leasehold improvements		815			815
Total cost basis		6,786			6,720
Less accumulated depreciation and amortization		(5,823	)		(5,684	)
Net book value	$	963		$	1,036

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Note 7 - Internal Use Software (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Capitalized Internal Use Software Roll Forward [Table Text Block]

	Balance at December 31, 2015			Additions			Balance at March 31, 2016
Capitalized internal use software	$	18,812		$	444		$	19,256
Accumulated amortization		(13,721	)		(358	)		(14,079	)
	$	5,091		$	86		$	5,177

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Note 8 - Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	March 31, 2016		December 31, 2015
Payroll and related liabilities	$	715	$	855
Taxes payable and other		38		82
	$	753	$	937

Schedule of Other Assets and Other Liabilities [Table Text Block]

	March 31, 2016		December 31, 2015
Deferred rent, current portion		91		78
Obligations under capital leases, current portion	$	25	$	25
	$	116	$	103

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Note 9 - Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2016

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

	Real Estate Operating Leases		Office Equipment Operating Lease		Total Operating Leases
2016	$	638	$	14	$	652
2017		873		20		893
2018		896		20		916
2019		918		10		928
2020		940		-		940
2021 and thereafter		321		-		321
	$	4,586	$	64	$	4,650

Long-term Purchase Commitment [Table Text Block]

	Purchase Obligations
2016	$	654
2017		336
2018		273
	$	1,263

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Note 2 - Impact on Results of Operations of Recording Stock Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Selling and Marketing Expense [Member]
Stock-based compensation	$ 12	$ 3
Technology and Development [Member]
Stock-based compensation	13	(7)
General and Administrative Expense [Member]
Stock-based compensation	23	26
Stock-based compensation	$ 48	$ 22

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Note 3 - Earnings Per Share (Details Textual) - shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	467,541	879,000

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Note 3 - Basic and Diluted Net Loss Per Share Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Net income/(loss)	$ 19	$ (477)
Shares used to compute basic net income/(loss) per share (in shares)	7,125	7,401
Stock options (in shares)	68
Shares used to compute diluted net income/(loss) per share (in shares)	7,193	7,401
Basic net income/(loss) per share (in dollars per share)	$ 0	$ (0.06)
Diluted net income/(loss) per share (in dollars per share)	$ 0	$ (0.06)

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Note 4 - Debt Securities Available-for-sale at Fair Value (Details) - Short-term Investments [Member] - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2016	Dec. 31, 2015
US Government Agencies Debt Securities [Member]
Amortized Cost		$ 1,536	$ 902
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value		$ 1,536	$ 902
Certificate of Deposit [Member]
Amortized Cost	[1]	$ 3,764	$ 4,375
Gross Unrealized Gains	[1]
Gross Unrealized Losses	[1]		$ (2)
Fair Value	[1]	$ 3,764	4,373
Other Debt Obligations [Member]
Amortized Cost		$ 252
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value		$ 252
Amortized Cost		$ 5,552	$ 5,277
Gross Unrealized Gains
Gross Unrealized Losses			$ (2)
Fair Value		$ 5,552	$ 5,275

[1] We evaluated certificates of deposits held as of March 31, 2016 and December 31, 2015 and concluded that they meet the definition of securities as available for sale.

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Note 4 - Investments Classified as Available-for-sale Stated at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale investments
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale investments	$ 1,536	$ 902
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale investments
US Government Agencies Debt Securities [Member]
Available-for-sale investments	$ 1,536	$ 902
Certificate of Deposit [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale investments
Certificate of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale investments	$ 3,764	$ 4,373
Certificate of Deposit [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale investments
Certificate of Deposit [Member]
Available-for-sale investments	$ 3,764	$ 4,373
Other Debt Obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale investments
Other Debt Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale investments	$ 252
Other Debt Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale investments
Other Debt Obligations [Member]
Available-for-sale investments	$ 252
Fair Value, Inputs, Level 1 [Member]
Available-for-sale investments
Fair Value, Inputs, Level 2 [Member]
Available-for-sale investments	$ 5,552	$ 5,275
Fair Value, Inputs, Level 3 [Member]
Available-for-sale investments
Available-for-sale investments	$ 5,552	$ 5,275

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Note 5 - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Prepaid software maintenance agreements	$ 550	$ 690
Other prepaid expenses	159	175
Prepaid insurance	116	108
Other receivables	88	94
Interest receivable	12	8
	$ 925	$ 1,075

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Note 6 - Property and Equipment (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating Expense [Member]
Depreciation	$ 142,000	$ 164,000

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Note 6 - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Computer equipment	$ 3,995	$ 3,932
Software	1,856	1,856
Furniture and fixtures	120	117
Leasehold improvements	815	815
Total cost basis	6,786	6,720
Less accumulated depreciation and amortization	(5,823)	(5,684)
Net book value	$ 963	$ 1,036

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Note 7 - Internal Use Software (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Minimum [Member]
Capitalized Internal Use Software Usefu Life	3 years
Maximum [Member]
Capitalized Internal Use Software Usefu Life	5 years
Computer Software, Intangible Asset [Member] | Operating Expense [Member]
Amortization of Intangible Assets	$ 358,000	$ 485,000

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Note 7 - Roll-forward of Capitalized Internal Use Software (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Beginning balance	$ 18,812
Additions	444
Ending balance	19,256
Beginning balance	(13,721)
Additions	(358)
Ending balance	(14,079)
Beginning balance	5,091
Additions	86
Ending balance	$ 5,177

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Note 8 - Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Payroll and related liabilities	$ 715	$ 855
Taxes payable and other	38	82
	$ 753	$ 937

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Note 8 - Accrued Expenses and Other Current Liabilities - Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Deferred rent, current portion	$ 91	$ 78
Obligations under capital leases, current portion	25	25
	$ 116	$ 103

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Note 9 - Commitments and Contingencies (Details Textual) - USD ($)		3 Months Ended
	Mar. 28, 2016	Mar. 31, 2016	Mar. 31, 2015
President and Chief Executive Officer [Member]
Deferred Compensation Arrangement with Individual, Consulting Term	1 year
Deferred Compensation Arrangement with Individual, Cash Award Granted, Amount	$ 362,000
Operating Leases, Rent Expense		$ 193,000	$ 192,000

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Note 9 - Remaining Future Minimum Operating Lease Payments (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Real Estate Operating Leases [Member]
2016	$ 638
2017	873
2018	896
2019	918
2020	940
2021 and thereafter	321
	4,586
Office Equipment Operating Lease [Member]
2016	14
2017	20
2018	20
2019	$ 10
2020
2021 and thereafter
	$ 64
2016	652
2017	893
2018	916
2019	928
2020	940
2021 and thereafter	321
	$ 4,650

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Note 9 - Non-cancellable Purchase Obligations for Software Development and License Agreements (Details) $ in Thousands	Mar. 31, 2016 USD ($)
2016	$ 654
2017	336
2018	273
	$ 1,263

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Note 10 - Income Taxes (Details Textual) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Operating Loss Carryforwards	$ 76.8	$ 76.8

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Note 11 - Security Deposits (Details Textual) - USD ($)	Mar. 31, 2016	Jan. 31, 2015
Secured by Standby Letter of Credit [Member]
Letters of Credit Outstanding, Amount		$ 150,000
Other Noncurrent Assets [Member]
Security Deposit	$ 150,000