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 June 30, 2013

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: 7,329,405 shares outstanding as of July 31, 2013.

ONVIA, INC.

INDEX

	Page
PART I.  FINANCIAL INFORMATION	1
Item 1.  Unaudited Condensed Consolidated Financial Statements	1
Condensed Consolidated Balance Sheets (Unaudited)	1
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)	2
Condensed Consolidated Statements of Cash Flows (Unaudited)	3
Condensed Consolidated Statement of Stockholders’ Equity	4
Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Company Overview	14
Executive Summary of Operations and Financial Position	21
Seasonality	22
Results of Operations for the Three and Six Months Ended June 30, 2013 Compared to the Three and Six Months Ended June 30, 2012	22
Critical Accounting Policies and Management Estimates	24
Liquidity and Capital Resources	27
Item 3. Quantitative and Qualitative Disclosures about Market Risk	27
Item 4. Controls and Procedures	27
PART II. OTHER INFORMATION	28
Item 1.  Legal Proceedings	28
Item 1A.  Risk Factors	28
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.  Defaults Upon Senior Securities	28
Item 4.  Mine Safety Disclosure	28
Item 5.  Other Information	28
Item 6.  Exhibits	29
SIGNATURES	30

PART I.  FINANCIAL INFORMATION

Item 1.  Unaudited Condensed Consolidated Financial Statements

Onvia, Inc.

Condensed Consolidated Balance Sheets

	June 30, 2013			December 31, 2012 (1)
	(Unaudited)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,902		$	3,888
Short-term investments, available-for-sale		5,908			8,435
Accounts receivable, net of allowance for doubtful accounts of $32 and $42		1,051			1,278
Prepaid expenses and other current assets		557			581
Total current assets		9,418			14,182
LONG TERM ASSETS:
Property and equipment, net of accumulated depreciation		1,589			1,729
Internal use software, net of accumulated amortization		5,490			5,540
Long-term investments		90			-
Deferred tax assets, net of current portion		2,203			2,175
Other long-term assets		152			92
Total long term assets		9,524			9,536
TOTAL ASSETS	$	18,942		$	23,718
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	776		$	855
Accrued expenses		699			823
Unearned revenue, current portion		7,588			7,535
Other current liabilities		354			631
Total current liabilities		9,417			9,844
LONG TERM LIABILITIES:
Unearned revenue, net of current portion		715			728
Deferred rent, net of current portion		607			394
Other long-term liabilities		63			242
Total long term liabilities		1,385			1,364
TOTAL LIABILITIES		10,802			11,208
COMMITMENTS AND CONTINGENCIES (Note 10)
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; 8,572,212 and 8,528,307 shares issued; and 7,329,405 and 8,528,281 shares outstanding		1			1
Treasury stock, at cost: 1,242,807 and 26 shares		(4,398	)		-
Additional paid in capital		353,315			353,077
Accumulated other comprehensive gain		(1	)		1
Accumulated deficit		(340,777	)		(340,569	)
Total stockholders’ equity		8,140			12,510
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,942		$	23,718

(1) Derived from audited financial statements included in the 2012 Annual Report.

See accompanying notes to the unaudited condensed consolidated financial statements.

1

Onvia, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
	(Unaudited)					(Unaudited)
	(In thousands, except per share data)					(In thousands, except per share data)
Revenue
Subscription	$	4,817		$	4,694	$	9,578		$	9,397
Content license		506			553		999			1,090
Management information reports		106			196		272			341
Other		75			103		153			214
Total revenue		5,504			5,546		11,002			11,042
Cost of revenue (exclusive of depreciation and amortization included below)		966			849		1,889			1,709
Gross margin		4,538			4,697		9,113			9,333
Operating expenses:
Sales and marketing		2,688			2,678		5,547			5,425
Technology and development		1,066			1,070		2,064			2,112
General and administrative		878			885		1,725			1,688
Total operating expenses		4,632			4,633		9,336			9,225
(Loss) / Income from operations		(94	)		64		(223	)		108
Interest and other income, net		6			8		15			24
Net (loss) / income	$	(88	)	$	72	$	(208	)	$	132
Unrealized loss on available-for-sale securities		(2	)		-		(2	)		(1	)
Comprehensive (loss) / income	$	(90	)	$	72	$	(210	)	$	131
Basic net (loss) / income per common share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.02
Diluted net (loss) / income per common share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01
Basic weighted average shares outstanding		7,367			8,520		7,957			8,513
Diluted weighted average shares outstanding		7,367			8,852		7,957			8,836

See accompanying notes to the unaudited condensed consolidated financial statements.

2

Onvia, Inc.

Condensed Consolidated Statements of Cash Flows

	Six Months Ended June 30,
	2013			2012
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) / income	$	(208	)	$	132
Adjustments to reconcile net (loss) / income to net cash provided by operating activities:
Depreciation and amortization		1,515			1,369
Idle lease accrual		(74	)		(34	)
Stock-based compensation		138			92
Change in operating assets and liabilities:
Accounts receivable		227			76
Prepaid expenses and other assets		24			34
Accounts payable		(28	)		227
Accrued expenses		(73	)		(27	)
Unearned revenue		40			(470	)
Deferred rent		65			(72	)
Net cash provided by operating activities		1,626			1,327
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(422	)		(233	)
Additions to internal use software		(1,066	)		(593	)
Purchases of investments		(5,362	)		(8,539	)
Sales of investments		2,881			2,273
Maturities of investments		5,006			5,799
Return of security deposits		(150	)		45
Net cash provided by / (used in) investing activities		887			(1,248	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations		(201	)		(24	)
Repurchase of stock		(4,398	)		-
Proceeds from exercise of stock options		100			59
Net cash (used in) / provided by financing activities		(4,499	)		35
Net (decrease) / increase in cash and cash equivalents		(1,986	)		114
Cash and cash equivalents, beginning of period		3,888			3,378
Cash and cash equivalents, end of period	$	1,902		$	3,492
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain on available-for-sale investments	$	(2	)	$	(1	)
Purchases under capital lease obligations		(1	)		(118	)
Property and equipment additions in accounts payable		(6	)		(5	)
Internal use software additions in accounts payable		(220	)		(164	)

See accompanying notes to the unaudited condensed consolidated financial statements.

3

Onvia, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

	Common stock					Treasury stock					Additional		Accumulated other			Accumulated
	Shares			Amount		Shares		Amount			paid in capital		comprehensive loss			deficit			Total
BALANCE, January 1, 2013		8,528,281		$	1		26	$	-		$	353,077	$	1		$	(340,569	)	$	12,510
Exercise of stock options		40,648			-							90								90
Purchases under Employee Stock Purchase Plan		3,257			-							10								10
Stock repurchase		(1,242,781	)		-		1,242,781		(4,398	)										(4,398	)
Stock-based compensation												138								138
Unrealized loss on available-for-sale investments														(2	)					(2	)
Net loss		-			-		-		-			-		-			(208	)		(208	)
BALANCE, June 30, 2013		7,329,405		$	1		1,242,807	$	(4,398	)	$	353,315	$	(1	)	$	(340,777	)	$	8,140

See accompanying notes to the unaudited condensed consolidated financial statements.

4

Onvia, Inc.

Notes To Condensed Consolidated Financial Statements (Unaudited)

1.   Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Onvia, Inc. and its wholly owned subsidiary, collectively referred to as "Onvia" or the ”Company.”  There was no business activity in the subsidiary in the three and six month periods ended June 30, 2013 or 2012.  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, or 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 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, 2012 (“2012 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.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or 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, recoverability of long-lived assets, idle lease accrual and the valuation allowance for Onvia’s net operating losses.  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

There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2013, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, that are of significance, or potential significance to us.

2.   Revenue Recognition

Onvia’s revenues are primarily generated from client subscriptions, content licenses and management reports.  Onvia’s subscriptions are generally annual contracts; however, the Company also offers extended multi-year contracts to its subscription clients, and content licenses are generally multi-year agreements.  Subscription fees and content licenses are recognized ratably over the term of the agreement.  Onvia also generates revenue from fees charged for management reports, document download services, and other services; revenue from these types of services is recognized upon delivery, or, if report refreshes are included, ratably over the service period.

Onvia’s subscription services and management reports are also sold together as a bundled offering.  The Company allocates revenue from these bundled sales ratably between the subscription services and the management reports based on established list prices for those offerings.  The Company measures and allocates arrangement consideration to one or more units of accounting for separate deliverables.  The Company also establishes a selling price hierarchy for determining the selling price of a deliverable.

5

Unearned revenue consists of payments received for prepaid subscriptions, as well as the invoiced, but unpaid, portion of subscriptions and content licenses whose terms extend into periods beyond the balance sheet date.

3.   Stock-Based Compensation and Stock Option Activity

The impact on Onvia’s results of operations of recording stock-based compensation was as follows for the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Cost of sales	$	2	$	1	$	4	$	-
Sales and marketing		8		10		18		(25	)
Technology and development		12		13		25		25
General and administrative		43		48		91		92
Total stock-based compensation	$	65	$	72	$	138	$	92

Stock-based compensation for the six months of 2012 includes the impact of options forfeited upon the departure of our Vice President of Sales and Vice President of Content, which resulted in the reversal of approximately $62,000 in previously recognized expenses on forfeited options.

Valuation Assumptions

Stock Options

Onvia calculated the fair value of each option award on the date of grant using the Black-Scholes valuation model. The following weighted average assumptions were used for options granted in each respective period:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Risk-free interest rate		0.61	%		0.58	%		0.98	%		1.05	%
Expected volatility		49	%		58	%		53	%		51	%
Expected dividends		0	%		0	%		0	%		0	%
Expected life (in years)		2.5			4.4			5.3			4.6

6

Employee Stock Purchase Plan (“ESPP”)

The fair value of each employee purchase under Onvia’s ESPP is estimated on the first day of each purchase period using the Black-Scholes valuation model. Purchase periods begin on May 1 and November 1 of each year.  The following weighted average assumptions were used for the purchase periods beginning during the three and six months ended June 30, 2013 and 2012.

	Three and Six Months Ended June 30,
	2013			2012
Risk-free interest rate		0.08	%		0.15	%
Expected volatility		29	%		53	%
Expected dividends		0	%		0	%
Expected life (in years)		0.5			0.5

Stock Option Activity

The following table summarizes stock option activity under Onvia’s equity incentive plan for the three and six months ended June 30, 2013:

	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (1)
Total options outstanding at January 1, 2013		1,097,236		$	4.58
Options granted		80,000			3.56
Options exercised		(53,829	)		2.56
Options forfeited and cancelled		(29,925	)		3.54
Total options outstanding at March 31, 2013		1,093,482		$	4.63
Options granted		6,000			4.60
Options exercised		(2,666	)		4.40
Options forfeited and cancelled		(10,007	)		3.69
Total options outstanding at June 30		1,086,809		$	4.65
Options exercisable at June 30, 2013		692,968		$	5.33		4.41	$	415,623
Options vested and expected to vest at June 30, 2013		1,056,219		$	4.68		5.78	$	901,674

 (1) Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of Onvia’s common stock of $4.65 at June 30, 2013 for options that were in-the-money at June 30, 2013.  The number of in-the-money options outstanding and exercisable at June 30, 2013 was 693,125 and 314,728, respectively.

The weighted average grant date fair value of options granted during the three and six month periods ended June 30, 2013 was $1.42 and $1.66 per option, respectively, and $1.82 and $1.32 per option, respectively, for the same periods in 2012.

As of June 30, 2013, there was approximately $283,000 of unrecognized compensation cost related to unvested stock options and estimated purchases under the ESPP.  That cost is expected to be recognized over a weighted average period of 1.55 years.

During the six months ended June 30, 2013, approximately $100,000 was received for exercises of stock options and purchases under the employee stock purchase plan, compared to $59,000 for the same periods of 2012.

7

Restricted Stock Units

The following table summarizes changes in non-vested restricted stock units (“RSUs”) for the six months ended June 30, 2013:

	Number of shares		Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2013		13,954	$	4.12
Granted		-		-
Vested		-		-
Forfeited / Expired		-		-
Non-vested balance at June 30, 2013		13,954	$	4.12

RSUs granted during the first quarter of 2011 were valued on the grant date based upon the fair value of the underlying common stock on the grant date.  Prior to the first quarter of 2011 no RSUs had been granted.  The value of the RSUs granted is recognized as compensation expense over the applicable vesting period.  The RSUs granted during the first quarter of 2011 have a three year vesting period and were subject to accelerated vesting based upon achievement of 2011 financial targets.  The 2011 financial targets were not achieved and therefore these RSU’s will fully vest over three years on December 31, 2013.  As of June 30, 2013 there was $10,000 of total unrecognized compensation cost related to non-vested RSU’s and remaining unrecognized compensation cost associated with these RSUs is expected to be recognized over a weighted average period of 0.51 years.

4.   Earnings per Share

Basic earnings per share are calculated by dividing the net income or loss for the period by the weighted average shares of common stock outstanding for the period.  Diluted earnings per share are calculated by dividing the net income or 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 or loss per share for the three and six months ended June 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Net (loss) / income	$	(88	)	$	72	$	(208	)	$	132
Shares used to compute basic net (loss) / income per share		7,367			8,520		7,957			8,513
Dilutive potential common shares:
Stock options		-			332		-			323
Shares used to compute diluted net (loss) / income per share		7,367			8,852		7,957			8,836
Basic net (loss) / income per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.02
Diluted net (loss) / income per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01

For the three months ended June 30, 2013, approximately 445,000 options to purchase shares of common stock with exercise prices greater than the average fair market value of our stock of $4.44, were not included in the calculation because the effect would have been anti-dilutive.  For the six months ended June 30, 2013, approximately 478,000 options to purchase shares of common stock were not included in the calculation because the effect would have been anti-dilutive.

8

For the three months ended June 30, 2012, approximately 507,000 options to purchase shares of common stock with exercise prices greater than the average fair market value of our stock of $3.85, were not included in the calculation because the effect would have been anti-dilutive.  For the six months ended June 30, 2012, approximately 530,000 options to purchase shares of common stock were not included in the calculation because the effect would have been anti-dilutive.

5.   Short-Term Investments

Onvia classifies short-term investments in debt securities as available-for-sale at June 30, 2013, stated at fair value as summarized in the following table (in thousands):

	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government backed securities	$	2,606	$	-	$	(1	)	$	2,605
Certificate of Deposit  (1)		3,303		-		-			3,303
	$	5,909	$	-	$	(1	)	$	5,908

(1) We evaluated certificates of deposits held as of June 30, 2013 and concluded that they meet the definition of securities as available for sale.

Onvia accounts for short-term and long-term investments 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.

9

The following table summarizes, by major security type, short-term investments classified as available-for-sale at June 30, 2013, stated at fair value (in thousands):

	Fair Value Measurements as of June 30, 2013
	Level 1		Level 2		Level 3		Balance as of June 30, 2013
Description
U.S. Government backed securities	$	-	$	2,605	$	-	$	2,605
Certificate of Deposit		-		3,303		-		3,303
	$	-	$	5,908	$	-	$	5,908

There were no transfers in or out of Level 1 or Level 2 investments during the first six months of 2013, and there was no activity in Level 3 fair value measurements during that period.

6.   Prepaid Expenses and Other Current Assets

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

	June 30, 2013		December 31, 2012
Prepaid expenses	$	493	$	529
Interest receivable		27		36
Other receivables		37		16
	$	557	$	581

7.   Property and Equipment

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

	June 30, 2013			December 31, 2012
Computer equipment	$	4,111		$	3,981
Software		1,746			1,694
Furniture and fixtures		107			107
Leasehold improvements		883			883
Total cost basis		6,847			6,665
Less accumulated depreciation and amortization		(5,258	)		(4,936	)
Net book value	$	1,589		$	1,729

During the first six months of 2013, Onvia disposed of fully depreciated computer equipment valued at $43,000. During the first six months of 2012, Onvia disposed of fully depreciated computer equipment valued at $207,000.

Depreciation expense was $175,000 and $365,000 for the three and six months ended June 30, 2013, respectively, compared to $195,000 and $378,000, respectively, for the same periods of 2012.

10

8.   Internal Use Software

Onvia capitalizes qualifying computer software costs incurred during the “application development stage” and other costs as permitted by GAAP.  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 evaluates on annual basis 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 six months ended June 30, 2013 and June 30, 2012.

The following table presents a roll-forward of capitalized internal use software for the six months ended June 30, 2013 (in thousands):

	Balance at December 31, 2012			Additions			Balance at June 30, 2013
Capitalized Internal Use Software	$	12,905		$	1,100		$	14,005
Accumulated amortization		(7,365	)		(1,150	)		(8,515	)
	$	5,540		$	(50	)	$	5,490

9.   Accrued Expenses

Accrued expenses consist of the following (in thousands):

	June 30, 2013		December 31, 2012
Payroll and related liabilities	$	559	$	587
Taxes payable and other		140		236
	$	699	$	823

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

	June 30, 2013		December 31, 2012
Idle lease accrual, current portion	$	-	$	21
Obligations under capital leases, current portion		47		94
Deferred rent, current portion		27		174
Deferred tax liabilities		28		-
Other current liabilities		252		342
	$	354	$	631

11

10.   Commitments and Contingencies

Operating Leases

During the first quarter of 2013, Onvia entered into the first amendment to lease agreement for its corporate offices located in Seattle, Washington.  The Amendment, among other things, extends the lease term for an additional sixty-five (65) months with a new expiration date of April 30, 2021.  In addition, the Amendment reduces the rental area of the premises to approximately 29,606 square feet, after surrender of 5,394 square feet after the execution of the Amendment.  Onvia has an additional right to surrender up to 8,898 square feet on or after November 30, 2014 in exchange for reimbursement of unamortized landlord incentives.  In addition to base rent, Onvia will be responsible for its proportionate share of annual incremental increases in the building’s operating expenses, insurance, and real estate taxes over the 2013 base year.  Onvia has a one-time right to terminate the amended lease in its entirety on or after December 1, 2017 in exchange for payment of a termination fee.

Rent expense is being recognized on a straight-line basis over the term of the lease.  Onvia also has a non-cancellable operating lease for office equipment, which expires in July 2014.

As of June 30, 2013, 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
2013	$	392	$	9	$	401
2014		740		11		751
2015		760				760
2016 and thereafter		4,727		-		4,727
	$	6,619	$	20	$	6,639

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 2011 to 2016.  Future required payments under these non-cancellable agreements are as follows for the years ending December 31 (in thousands):

	Purchase Obligations
2013	$	552
2014		742
2015		438
Thereafter		305
	$	2,037

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.

12

11.   Provision for Income Taxes

Onvia has recorded a valuation allowance for the majority of its net deferred tax assets because it has a history of net operating losses (“NOLs”). As of December 31, 2012, the Company has recognized net deferred tax benefits in the amount of $2,175,000.  No additional deferred tax benefits were recognized in the first two quarters of 2013.  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 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. Onvia’s stock repurchase transaction does not have any impact on Onvia’s cumulative change in ownership (see Note 13 “Stock Repurchase” of the notes to our unaudited condensed consolidated financial statements of this Report).

As of June 30, 2013, Onvia’s federal NOL carryforwards for income tax purposes were approximately $72.7 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 2022.  The latest date available for a portion of the federal NOL carryforwards to be utilized to offset future income is 2030.

12.   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 increasing from $100,000 in April 2013, to $125,000 in January 2014 and to $150,000 on January 2015.  The letter of credit will be returned at lease termination in April 2021 or earlier as discussed above, subject to standard office lease conditions. As of June 30, 2013, the stand by letter of credit is secured by a security deposit of $150,000.

13.   Stock Repurchase

On April 2, 2013, Onvia entered into a stock purchase agreement with Symphony Technology Group, LLC and certain of its affiliates (the “Repurchase Stockholders”) to repurchase shares of Onvia’s common stock, par value $0.0001 directly from the Repurchase Stockholders in a private, non-underwritten transaction. Under the terms of the agreement, Onvia has repurchased from the Repurchase Stockholders 1,242,781 shares of common stock at a price of $3.50 per share for a total purchase price of approximately $4.3 million, excluding transaction fees. These shares were repurchased at discount to market price.This transaction does not have any impact on Onvia’s Section 382 tax benefits preservation plan.

13

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

CAUTIONARY STATEMENT

In addition to the historical information contained herein, the discussion and analysis in this report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding expected increases in clients, contracts and contract value, cash flow, profitability and stockholder value and expected stabilization of Annual Contract Value, or ACV. When used in this discussion, the words “believes,” “anticipates,” “may,” “will,” “should,” “expects,” “plans,” “estimates,” “predicts,” “potential,” “continue,” “intends,” “indicates” or the negative of these and similar expressions are intended to identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not a forward-looking statement. Forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations, intentions, Onvia’s future results of operations, the progress to be made by Onvia’s transformation plan, the amount of cash and cash equivalents held by Onvia after the share repurchase, 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the factors described under “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as applicable, in this report, in our 2012 Annual Report on Form 10-K for the year ended December 31, 2012 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2013. Onvia undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated events, except as may be required by law. Readers are urged, however, to review the factors and risks described in reports Onvia files from time to time with the Securities and Exchange Commission. The following discussion should also be read in conjunction with the 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 provider of business information and research solutions that help companies plan, market and sell to government agencies throughout the United States (or U.S.).  Onvia’s business solutions provide clients online access to proprietary information about government procurement activity across local, state, and federal government agencies.  The business intelligence derived from our solutions allows clients to identify and research new market opportunities, analyze market trends, and obtain valuable insights about their competitors and channel partners.  We believe our business solutions provide clients with a distinct competitive advantage, increased revenue opportunities, and strategic insight into the public sector market.

The Company’s procurement solutions include proprietary content and analytical tools that deliver essential insight and intelligence necessary to win more business with state, local and federal governments.  Onvia targets a market of companies that have a long term strategic interest in the public sector, and for which the government market is a core part of their business.  All three sales channels, Small and Medium Business (or SMB), Enterprise, and Content Licensing, focus on this market.  We believe this model will produce higher margins, providing the flexibility to price products based upon the value that we create for clients, not based upon the cost of fulfillment.

We developed a three-year business transformation plan and product roadmap in 2011 to leverage the Company’s investment in a rich public sector procurement database and execute on a strategy of transitioning the business from a low cost provider of government procurement information targeted at a large market of casual users to a high value and trusted partner to clients with a long-term strategic interest in the public sector.   We achieved the first product milestone to execute this shift in business strategy in February 2012 with the launch of “Onvia 5,” which improved the usability and “find-ability” features of the database.  In July 2012, Onvia launched a new solution, Term Contract Center, to provide clients maximum visibility into over 150,000 recurring contracts.  Term Contract Center helps clients identify which contracts to pursue, including the incumbent vendor and the price the agency has paid for the contract.   In December 2012, we launched the first update to Spending Forecast Center with Project Previews, a data mining tool that helps clients focus on those future business opportunities from budgets and capital improvement plans where they have the greatest probability of winning.  We believe all of these investments are changing Onvia’s value proposition from an aggregator of public procurement documents to a robust, enhanced database of public procurement intelligence.

14

In 2012, we completed the first phase of the transformation plan evidenced by the stabilization of Annual Contract Value, or ACV, and subscription revenue and we are starting to leverage the foundation we have built over the last two years and grow the business.  In 2013 we are executing four initiatives to grow subscription revenue and Adjusted EBITDA in 2013 compared to 2012.  These four initiatives are:

·   Successfully expand the SMB acquisition sales team by 40%,

·   Maximize contract value growth within the SMB client base,

·   Strengthen the value of our database and continue to add solutions to help customers win more government business,

·   Develop and begin to execute a strategy for Enterprise sales that is scalable for 2014.

We continue to invest in new analytic tools in 2013 and 2014.  In the first quarter of 2013 we launched Onvia 6 with a workflow user interface which is another step in improving the usability of our solutions.  In the second quarter of 2013, we improved the content delivery process and clients now receive over 90% of their actionable content on the same day the content is captured from the original source.  Our broad and deep coverage delivered in nearly real time we believe represents a strong competitive advantage for Onvia in the marketplace.

In the fourth quarter of 2013, we expect to launch Vendor Center, an analytical tool designed to help our customers evaluate competitors and channel partners in the public sector.  This solution represents another important step in our strategy to move from lead distribution into public sector intelligence.

Onvia’s solution includes access to the Onvia Database, Spending Forecast Center, Term Contract Center, and the Onvia Guide.  These services are sometimes bundled with management information reports in multiple elements arrangements.  Refer to the discussions below under “Products and Services” for a description of these products and services, and under “Critical Accounting Policies and Management Estimates??for a discussion of how sales price is allocated between the elements in a multiple elements arrangement and how revenue is recognized on each element.  Subscriptions to the Onvia Database are typically prepaid, have a minimum term of one year and revenues are recognized ratably over the term of the subscription.  Subscriptions are priced based upon the geographic range, nature of content purchased, and the number of users accessing the database.

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 who license our content for resale to their own clients 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.

Industry Background

Selling to the public sector is highly competitive and insight into this market is extremely valuable.  The variety, volume and unstructured nature of public sector procurement information make it difficult for businesses to analyze, evaluate and target the market for their goods and services.   The agency self- reporting process provides short term visibility into specific government contracting information and events, but does not provide businesses the value added  business  intelligence to strategically maximize their public sector business.  There is a strong need for a strategic business partner that provides deep market intelligence as a key resource for decision making.   This ideal partner will provide impactful insight that drives companies to select the right target market, allocate internal resources toward the most profitable segments, maximize public sector margins through intelligent pricing and develop strategic public sector relationships all with the long term objective of winning more government business.

15

The procurement capture process is complicated and comprised of multiple elements and information types.   Businesses must evaluate a variety of different sources of procurement information and activities to understand their individual markets and to make strategic decisions.  These data types include:

·Annual Budgets ·Capital Improvement Plans ·Requests for Quotes ·Requests for Proposals ·Amendments ·Term contracts ·Plan holders Lists ·Bidders Lists ·Bid Results ·Awards ·Advance Notices ·Subcontractor Solicitations ·Other trigger events, such as City Council Minutes

The aggregation of these public procurement events provides little value.  This data must be normalized, enhanced, structured and classified to become business intelligence to help companies approach the public sector market strategically with the goal of winning more government business.

We have spent the last twenty four months building this structured and enhanced public procurement database.  We believe the combination of this database and the new analytical tools we plan to release to the market during the next 24 months will position Onvia as the preferred business intelligence provider for those companies that have a strategic long term interest in the public sector market.

The Onvia Solution

Onvia’s solution includes tools to access a database of proprietary public sector information which has been built over more than 11 years, and includes comprehensive, historical and real-time information on public sector activities unavailable elsewhere in the marketplace.  Our solution provides access to information on over 5.0 million procurement-related records connected to over 400,000 companies from across approximately 86,000 procurement entities nationwide.  Thousands of records are standardized, added, formatted and classified within our database each day.

Information related to each stage of the procurement cycle is linked together to provide a comprehensive view of each project including:

·   Advance Notices – alerts businesses of projects in the early stages of the development process, before the bid or request for proposal is released in its final form, or before final zoning and planning board approval;

·   Bids, Request for proposals, request for quotes, cancellations, and related amendments;

·   Plan holders and Bidders Lists – provides competitive intelligence by presenting a list of competitors that have acquired plans, specifications, bidding documents and/or proposals for specific projects in the active bid or proposal stage, and a list of competitors who submit bids for prime contracts with the owner of the project;

·   Bid Results and Awards Information – notifies businesses of awarded bids, providing information for use in their own sales and marketing activities;

·   Grants – supplies federal grant information critical to businesses tracking or applying for publicly-funded projects; and

16

·   Project Previews – proprietary summaries of future infrastructure and technology investments excerpted from a constantly updated library of capital improvement plans and agency budgets.

The database can be analyzed using many different search filters including:

·Industry Vertical ·State ·Publication Date ·Submittal Date ·Procurement Type ·Level of Government ·Agency Function ·Set Aside Requirements ·Awarded Contract Value

Our database includes many important data fields to further qualify opportunities as available, including:

·Request for Proposal/Bid Information oDocument title and extract oPublication date oPre-bid meeting date oSubmittal date oProduct documents oContract term oNIGP code oPlan price ·Planholders/Bidders lists oVendor name oVendor address oContact name and title oContact email ·Award Information oAwarded vendors oContract value ·Agency Information oAgency name oAgency function oAgency bid number oAddress oPhone number oWebsite link ·Buyer information oBuyer name oBuyer address oBuyer email oBuyer phone number oBuyer fax number  

Our government procurement solutions provide clients with the information necessary to make good business decisions.  Through our end-to-end solutions, we provide market intelligence a business needs to design and manage a public sector strategy, build relationships with agency buyers and private sector contractors, and target more qualified revenue opportunities.  The confluence of these activities should help clients create more winning proposals, increase close rates, increase contract size and, ultimately, increase public sector revenues.

Products and Services

Onvia’s business solutions are tailored to the business objectives of each client, and support both strategic planning and sales and marketing activities.  We offer our clients public sector business intelligence through specialized self-service analytical tools that help our clients aggregate, analyze, identify and quality, evaluate  and influence historical, real-time, and future spending information within local, state, and federal government agencies across the United States.  Over time, we expect to continue to enhance our existing information, marketing and analytic services and develop additional services that make use of our comprehensive database to meet the needs of our existing clients as well as potential new categories of clients.  Our key offerings are described below.

Onvia Database is Onvia’s flagship solution which provides rich search functionality on our proprietary analytics platform of local, state and federal government agency purchasing information.  Our solution provides public sector business intelligence to customers across agencies, vendors, projects, and term contracts over a historical, real-time and future spending timeline.

17

Project Center provides our clients with a complete view of individual public sector procurement projects at each stage of the purchasing cycle.  Project Center makes it easier for clients to identify and qualify opportunities to sell their goods and services into the public sector.  Project Center is designed to help our clients:

·   Analyze purchasing trends to refine existing target markets and identify new geographic markets

·   Identify and qualify projects or purchases for specific goods and services nationwide

·   Identify and monitor potential competitors using plan holders lists and bidder lists

·   Identify potential  subcontracting opportunities on major projects

·   Evaluate awards for pricing analyses

·   Identify and build relationships with the agency buyers of specific goods and services

·   Understand agency relationships with existing vendors

·   Build marketing lists of agency buyers and potential vendor partners

·   Obtain bid documents, plans and specification documents to qualify projects

Agency Center provides users with agencies’ procurement histories, current projects, and spending forecasts in a single application.  Agency Center helps businesses identify and qualify government agencies, agency buyers and procurement opportunities within their target markets.  By developing agency relationships, users can identify government purchases that never go out to formal bid.  Four out of five government purchases never go out to formal bid, because they fall below agencies’ purchasing thresholds.  Agency Center is included with standard access to the Onvia Online Database.

Spending Forecast Center provides insight into budgets and capital improvement plans of agencies within the top 366 Metropolitan Statistical Areas in the United States.  Spending Forecast Center provides valuable, strategic information on future capital spending used by larger corporations to execute their public sector strategies.  Most governmental bodies, such as departments of transportation, city and county governments, and boards of education publish a plan that maps out their major initiatives and forecasts spending over the next 3-6 years.  These spending forecasts generally include the name of the initiative or type of expense, project timing, the funding source and the budget amount. Businesses can use spending forecasts to inform business development, evaluate and target markets, and for short to mid-term business planning.  We collect plans from state, county and city government agencies, representing over 85% of all government spending.  We add a powerful search tool that allows users to find plans based on keywords, as well as type of agency, location, spending focus, and other plan details.  In December 2012, we launched the first update to Spending Forecast Center with Project Previews, which summarize individual projects extracted from the vast library of budgets and capital improvement plans.  The project summaries are delivered directly to the end user, providing significant time savings to clients, enabling them to allocate resources to higher value activities.

Term Contract Center helps Onvia’s clients take advantage of the growing trend by government agencies to make purchases using term contracts, or recurring contracts.  We significantly increased our coverage and collection of term contracts and awards to provide clients with a single source they can rely on to grow revenues.  Term Contract Center is designed to help clients identify and prioritize which contracts to pursue, including the competitor and partner information needed to qualify these opportunities.

Using Term Contract Center, our clients can:

·   Search over 150,000 active state and local term contracts to create a pipeline of upcoming renewal opportunities;

·   Analyze term-contract buying trends to identify the right agencies to build relationships with;

·   Track competitors by searching for vendors who currently hold these contracts; and

·   Locate potential teaming and subcontracting partners by accessing information about vendor representatives on term contracts and how to contact them.

The Onvia Guide provides clients with frequent information about procurement activity of agencies, industries and markets customized for each client.  Clients receive their tailored Onvia Guide delivered to their inbox every day.  Daily use of the Onvia Guide provides clients with next day notification of key events and updates within their public sector market.  The Onvia Guide can be purchased separately or comes bundled with a subscription to the Onvia Online Database.

18

Management Reports provide our clients with customized management reports to help target upcoming contract renewals, identify agency buyers, and inform the proposal development process.  These solutions include:

·   Contact Lists – Provide clients a comprehensive list of decision makers, agency procurement officers and zoning officials that can be used to develop relationships and identify potential business partners.

·   Winning Proposals Library – Compare and contrast winning proposals submitted by competing firms in order to gain competitive insights.  Provides insight into how other companies position their qualifications and personnel, structure and format persuasive proposals, incorporate supporting materials, price goods and services, and differentiate themselves from their competitors.

Strategy

Our mission is to deliver essential, actionable business intelligence that our clients rely upon to win more government business.  We intend to achieve this mission by delivering exceptional solutions that offer our clients significant value in defining and targeting their public sector market, identifying current and future public sector business opportunities, intelligently pricing their products in the competitive public sector market, and developing strategic relationships and partners required of a successful public sector strategy.  If we are able to effectively achieve this mission, we believe we should see increased retention rates and, ultimately, increased stockholder value.  Key elements of our strategy include:

·   Target the right customer for Onvia, those companies with long term strategic interest in the public sector.We will focus our sales and marketing efforts on the prospects that fit the profile of our most valuable clients with highest contract value. During the last two years we have learned under the new business model, that companies with certain characteristics need the most services from Onvia, have the highest contract value and the highest client retention.  We believe, these companies will also have the greatest need for the additional services we are planning in our future product roadmap.  Using our own database we identify these companies that have a strategic, long-term interest in the public sector market based on the volume of their bidding activity and the geographical scope of their marketing program to the government.  If we are effective in targeting these companies, we expect that retention rates and the long-term profitability of our clients will improve.

Our business solutions support the largest industry verticals, with a focus on the infrastructure verticals, which include:

o   Architecture and Engineering

o   Construction and Building Supplies

o   Financial Services

o   IT / Telecommunications

o   Professional Services

o   Operations and Maintenance Services

o   Transportation

o   Healthcare

o   Water and Energy / Alternative Energy

Our marketing to our target market improved significantly in 2012.  We re-launched our brand “as intelligence to win more government business” reflecting the future direction of our product roadmap.  We revamped our lead generation program to the point where an increasing portion of SMB sales now come from marketing generated activities such as trade shows, webinars, email campaigns, and white papers.

19

·   Enhance our value proposition to our target customer:Historically, our clients have used Onvia for public sector sales leads notifications.  While this will continue to be a major part of our value proposition, our product roadmap is built to transform Onvia into a technology enabled business intelligence provider that helps our clients win more government business.  Our content and technology platform are key assets that can be leveraged to deliver additional, more strategic applications for our clients.  These future applications include competitive analysis, channel partner selection and evaluation, market sizing, allocation of marketing spend, and pricing analyses.  We utilize a Customer Advisory Board of ten of our largest clients to give us feedback on the strategic direction of our product roadmap.  We also reach out to our clients with quarterly surveys, and obtain their feedback on strategic product prototypes before they are launched.  By focusing on the right target market and by forming a closer connection with our clients, we believe we can deliver strategic products that offer our clients significant value in maximizing their business in the public sector market.

In 2012, we launched Onvia 5 which improved the customer experience and user navigation.  In July 2012, we introduced Term Contract Center by publishing over 150,000 active term contracts.  In December 2012, we launched the first update to Spending Forecast Center providing project previews, a data mining tool, to allow our customers greater “find-ability” in searching the vast library of budgets and capital improvement plans.

Equally important we continue to invest in our database to build the required foundation to launch several analytical solutions in 2013 and 2014.  All of these investments have started to change our value proposition from an aggregator of public procurement documents to a robust, enhanced database of public procurement intelligence.

·   Use consultative selling as our “go to market” strategy:We market to a select group of companies that have a strategic, long term interest in the public sector.  Our sales organization (SMB and Enterprise) is organized by industry and sub-vertical market.  A central part of our value proposition is the knowledge our sales people have of their clients and the industries of their clients.  We strive to become “trusted partners” in helping our clients secure more public sector business.  We identify our clients’ key business objectives, quantify and prioritize them, offer optimal solutions and finally measure our ability to deliver on these solutions during the course of the clients’ subscription with us.  Our strategy is to stay focused on these key objectives throughout our engagement with the client.

The consultative selling strategy is beginning to change our culture and our organization.  We have become culturally more client-focused and organizationally more in alignment with the key business objectives of our clients.  Every major investment (product, content, technology and marketing) is evaluated and prioritized against our clients’ key objectives and our current and future value proposition in meeting and exceeding these objectives.

2013 Initiatives

In 2012 we stabilized the business, and we have identified four initiatives to accelerate growth in subscription revenue and Adjusted EBITDA throughout 2013.   As indicated by first half results, subscription revenue and Adjusted EBITDA are continuing to grow but not as quickly as planned.  We have made adjustments to improve execution and we believe that subscription revenue and Adjusted EBITDA will continue to grow in the second half of 2013.

·   Our first initiative is to successfully expand the SMB acquisition sales team by 40%.  We measure the success of this initiative by improving new client Annual Contract Value per Client, or ACVC, and the growth rate in SMB acquisition sales year over year.  In the first half of 2013, SMB acquisition bookings increased by 19%, however growth slowed to 5% in the second quarter of 2013 compared to the same periods of 2012.  The quality of client acquisitions is improving; new client ACVC increased to $9,042 from $8,585 in the second quarter of 2012, but number of client acquisitions is not scaling as quickly as anticipated.  The rapid investment in SMB acquisition revealed weaknesses in the execution of our go-to-market strategy.  We have taken a number of steps to get this initiative back on track by the end of 2013.

20

We hired Jennifer Bascom as Vice President of Sales and Marketing.  We believe Ms. Bascom’s 20 years of senior leadership will help us accelerate growth by driving better sales execution, sharing best practices and developing sales talent.  We are refocusing client acquisition efforts on prospects who serve a national market of state and local government customers.  We will adjust our marketing programs to nurture these national prospects to build interest in our solutions with the appropriate decision makers.  We believe that new senior sales leadership, a focus on national prospects and redirecting marketing dollars to a nurture program for these national prospects should increase our growth rate for SMB Acquisition bookings in the second half of 2013.

·   Our second initiative is to maximize growth with our SMB customer base.  We believe that many of our clients do not receive the optimal Onvia solution for their public sector business objectives.  The success of this initiative will be measured by the growth in contract value of existing contracts in 2013 when compared with 2012.  In the second quarter of 2013, the contract value growth rate increased by 8% compared to the same year ago period.

·   Our third initiative is to strengthen the value of our database and add solutions to help our customers win more government business.  In the second quarter of 2013, we improved the content delivery process and clients now receive over 90% of their actionable content on the same day the content is captured from the original source.  We believe our broad and deep coverage delivered in nearly real time represents a strong competitive advantage for Onvia in the marketplace.

In the fourth quarter of 2013, we expect to launch Vendor Center, an analytical tool designed to help our customers evaluate competitors and channel partners in the public sector.  This solution represents another important step in our strategy to move from lead distribution into public sector intelligence.  The success of this initiative will be measured by our ability to deliver the roadmap on schedule and within budget.

·   Our fourth initiative is to develop and begin to execute a strategy for Enterprise sales that is scalable for 2014.  Our objective is to be in a position by the end of 2013 to scale Enterprise in 2014 with the right people, process and solutions.  The success of this initiative will be measured by the development of this plan by the end of 2013.

Executive Summary of Operations and Financial Position

Our clients are businesses that are strategically focused on selling their goods and services into the public sector.  We sell into this target market through three distribution channels:  Small/Medium Business (SMB), Enterprise, and Content Licenses.  Our Enterprise sales channel targets the largest prospects within our target market.  Content license clients incorporate our data into their own products, or resell our business intelligence directly to their clients.

Prior to 2011, our target market was extremely broad, and we acquired a large number of non-strategic clients which were not adequately profitable.  We no longer invest in acquiring non-strategic clients, and our client base has declined as a result of this decision to transition to our more profitable target market.

We manage the business using the following key client metrics:

Annual Contract Value, or ACV

Annual contract value is the aggregate annual revenue value of our client base.  Growth in ACV demonstrates our success in increasing the number of high value clients and upgrading existing clients to new and higher valued products. Content licenses contracts are excluded from ACV.

21

At the end of the second quarter, Onvia’s total client base decreased 10% to 3,800 clients compared to 4,200 clients in the same year-ago period.  Our strategy is to continue to improve profitability by acquiring and managing fewer strategic clients at a higher ACVC.  We expect this trend to continue until new client acquisitions and improving retention rates offset client attrition.

Number of Clients

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

ACV for the second quarter of 2013 increased by 1% to $19.0 million compared to the first quarter of 2013 and increased by 2% compared to the same quarter of the previous year.  Growth in ACV indicates that client retention rates are improving and new client acquisitions are beginning to scale.

Annual Contract Value per Client, or ACVC

Annual contract value per client is the annual contract value divided by the number of clients and indicates the average value of each of our subscriptions.

ACVC for the second quarter of 2013 grew 2% from the previous quarter, 13% from the same year-ago period, and 29% from the same two year-ago period to an average of $5,002 per client.  Growth in ACVC demonstrates that an increasing number of our clients have a strategic interest in the public sector. Companies within this target market typically have higher ACVC and renew at higher rates, which we believe are key attributes of a profitable long-term client.

Adjusted EBITDA

Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (“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; 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.  See “Reconciliation of GAAP Net (Loss) / Income to Adjusted EBITDA” below for further information on this non-GAAP measure and for a reconciliation of GAAP Net (Loss) / Income to Adjusted EBITDA for the periods indicated.

Onvia, Inc.

Reconciliation of GAAP Net (Loss) / Income to Adjusted EBITDA

(in thousands)

(unaudited)

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2013			2013			2012			2013			2012
GAAP net (loss) / income	$	(88	)	$	(120	)	$	72		$	(208	)	$	132
Reconciling items from GAAP to adjusted EBITDA
Interest and other income, net		(6	)		(9	)		(8	)		(15	)		(24	)
Depreciation and amortization		755			760			710			1,515			1,369
Amortization of stock-based compensation		65			73			72			138			92
Adjusted EBITDA	$	726		$	704		$	846		$	1,430		$	1,569

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.  The construction industry is our single largest market and these prospects are typically engaged on projects during the spring and summer months, not 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.

22

Results of Operations for the Three and Six Months Ended June 30, 2013 Compared to the Three and Six Months Ended June 30, 2012

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 June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Revenue	$	5,504		$	5,546		$	11,002		$	11,042
Revenue:
Subscription		88	%		85	%		87	%		85	%
Content license		9	%		10	%		9	%		10	%
Management information reports		2	%		3	%		3	%		3	%
Other		1	%		2	%		1	%		2	%
Total revenue		100.0	%		100.0	%		100.0	%		100.0	%

In the second quarter of 2013, subscription revenue grew by 3% to $4.8 million over the second quarter of 2012, compared to 1% growth in first quarter of 2013 over the same quarter of 2012. Subscription revenues grew for the second straight quarter primarily due to 2% increase in ACV and we generated our second positive growth rate since early 2010.  The 2013 operating initiatives are intended to drive subscription revenue growth.

Total revenue was flat year over year because growth in subscription revenue was offset by decline in revenue from management information reports in the second quarter of 2013 compared to the prior year.  Report revenue is not expected to increase in the foreseeable future because the content previously delivered as a one-time report is now included in the subscription solutions launched in the second half of 2012.  This is consistent with our objective of driving the majority of our business toward recurring revenue.

Cost of revenue for the three and six months ended June 30, 2013 and June 30, 2012 was as follows (in thousands of dollars):

							Increase / (Decrease)
	2013			2012			Amount		Percent
Three months ended June 30,	$	966		$	849		$	117		14	%
Percentage of Revenue		18	%		15	%
Six months ended June 30,		1,889			1,709		$	180		11	%
Percentage of Revenue		17	%		15	%

Our cost of revenue primarily represents payroll-related expenses associated with the research and aggregation of the data in our proprietary database and third-party content fees, and also includes credit card processing fees.  The increase for the comparable three month periods was primarily due to a $94,000 increase in payroll related costs primarily due to adding an executive position to the team and salary increases and a $25,000 increase in third party content costs primarily due to investment in content for the Vendor Center release planned in October this year, and other individually immaterial changes.

The increase for the comparable six month periods was primarily due to a $174,000 increase in payroll related costs primarily due to adding an executive position to the team and salary increases and a $25,000 increase in third party content costs and other individually immaterial changes.

Sales and Marketing

Sales and marketing expenses for the three and six months ended June 30, 2013 and June 30, 2012 were as follows (in thousands of dollars):

							Increase / (Decrease)
	2013			2012			Amount		Percent
Three months ended June 30,	$	2,688		$	2,678		$	10		0	%
Percentage of Revenue		49	%		48	%
Six months ended June 30,		5,547			5,425		$	122		2	%
Percentage of Revenue		50	%		49	%

The decrease in expenses for the comparable three month periods was due to individually immaterial changes.

The increase in expenses for the comparable six month periods is primarily comprised of $198,000 increase in payroll-related expenses and offset by $97,000 reduction allocated facilities costs and other individually immaterial changes.

23

Technology and Development

Technology and development expenses for the three and six months ended June 30, 2013 and June 30, 2012 were as follows (in thousands of dollars):

							Increase / (Decrease)
	2013			2012			Amount			Percent
Three months ended June 30,	$	1,066		$	1,070		$	(4	)		(0	%)
Percentage of Revenue		19	%		19	%
Six months ended June 30,		2,064			2,112		$	(48	)		(2	%)
Percentage of Revenue		19	%		19	%

Technology and development expenses remained stable for the comparable three months periods.

The decrease in expenses for the comparable six month periods is primarily attributed to a $114,000 decrease in amortization of licensed software and a $64,000 decrease in co-location costs offset by a $105,000 decrease in allocated facilities costs and other individually immaterial changes.

General and Administrative

General and administrative expenses for the three and six months ended June 30, 2013 and June 30, 2012 were as follows (in thousands of dollars):

							Increase / (Decrease)
	2013			2012			Amount			Percent
Three months ended June 30,	$	878		$	885		$	(7	)		(1	%)
Percentage of Revenue		16	%		16	%
Six months ended June 30,		1,725			1,688		$	37			2	%
Percentage of Revenue		16	%		15	%

The decrease in expenses for the comparable three month periods was due to individually immaterial changes.

The increase in expenses for the comparable six month periods is primarily related to a $71,000 increase in bad debt expenses and a $46,000 increase in payroll related costs offset by a $118,000 decrease in professional services costs due to lower proxy related costs and legal costs in the six months of 2013 and other individually immaterial changes.

Interest and Other Income, Net

Net interest and other income was $6,000 and $15,000 for the three and six months ended June 30, 2013, respectively, compared to $8,000 and $24,000, respectively, for the same periods in 2012. Interest expense is immaterial for the three and six months ended June 30, 2013 and 2012.

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

Net loss for the three months and six months ended June 30, 2013 was $88,000 and $208,000, respectively compared to net income of $72,000 and $132,000, respectively, for the same periods in 2012.   On a diluted per share basis, net loss was $0.01 and $0.03 for the three and six months ended June 30, 2013, respectively compared to net income of $0.01for the three and six months ended June 30, 2012.

Critical Accounting Policies and Management Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires our 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, recoverability of long-lived assets, idle lease accrual and the valuation allowance for Onvia’s net operating losses.  We base our estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances.  Actual results may differ significantly from our estimates.  In addition, any significant unanticipated changes in any of our assumptions could have a material adverse effect on its business, financial condition, and results of operations.

24

Revenue Recognition

Our revenues are primarily generated from client subscriptions, content licenses and management reports.  Our subscriptions are generally annual contracts; however, we also offers extended multi-year contracts to its subscription clients, and content licenses are generally multi-year agreements.  Subscription fees and content licenses are recognized ratably over the term of the agreement.  We also generate revenue from fees charged for management reports, document download services, and other services; revenue from these types of services is recognized upon delivery, or, if report refreshes are included, ratably over the service period.

Our subscription services and management reports are also sold together as a bundled offering.  We allocate revenue from these bundled sales ratably between the subscription services and the management reports based on established list prices for those offerings.  We measure and allocate arrangement consideration to one or more units of accounting for separate deliverables.  We also establish a selling price hierarchy for determining the selling price of a deliverable.

Unearned revenue consists of payments received for prepaid subscriptions, as well as the invoiced, but unpaid, portion of subscriptions and content licenses whose terms extend into periods beyond the balance sheet date.

Stock-Based Compensation

We account for stock-based compensation by measuring compensation cost for all stock-based awards at fair value on the date of grant and recognition of stock-based compensation cost over the requisite service period for awards expected to vest.  The fair value of our stock options is determined using the Black-Scholes valuation model.  Such value is recognized as expense over the service period, net of estimated forfeitures.  The estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised.  We consider many factors when estimating expected forfeitures, including employee class and historical experience.  There is also significant judgment required in the estimation of the valuation assumptions used to determine the fair value of options granted.  Please refer to the discussion of valuation assumptions in Note 3 of the “Notes to Condensed Consolidated Financial Statements” of this Report for additional information on the estimation of these variables.  Actual results, and future changes in estimates, may differ substantially from our current estimates.

Property and Equipment

Equipment and leasehold improvements are stated at cost, net of accumulated depreciation.  Depreciation expense on software, furniture and equipment is recorded using the straight-line method over estimated useful lives of three to five years. Leasehold improvements are depreciated over the shorter of their useful lives or the term of the underlying lease.

We periodically evaluate our long-lived assets for impairment. An impairment loss is required to be recognized for assets to be disposed of or held-for-use when the carrying amount of an asset is deemed to not be recoverable.  If events or circumstances indicate that any of our long-lived assets might be impaired, we will analyze the estimated undiscounted future cash flows to be generated from the applicable asset and will record an impairment loss to the extent that the carrying value of the asset exceeds the fair value of the asset.  Fair value is generally determined using an estimate of undiscounted future net cash flows from operating activities or upon disposal of the asset.  No property and equipment was impaired during the three months ended June 30, 2013 or 2012.

25

Internal Use Software

We account for the costs to develop or obtain software for internal use in accordance with GAAP, whereby we capitalize qualifying computer software costs incurred during the “application development stage.”  Amortization of these costs begins once the product is ready for its intended use.  These capitalized software 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.

We periodically evaluate the remaining useful lives and recoverability of internal use software and will record an impairment or abandonment if management determines that all or a portion of the asset will no longer be used or is no longer recoverable based on the estimated future cash flow, or will adjust the remaining useful life to reflect revised estimates as described above under “Property and Equipment”.

Income taxes

We account for income taxes using the asset and liability method.  Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and for net operating loss, or NOL, carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  A valuation allowance has been established for the majority of the net deferred tax assets as we have determined that the recognition criteria for realization have not been met.  The deferred tax asset has been reduced by a valuation allowance that reduces the amount of our deferred tax asset to a level that is more-than-likely-than-not to be recognized.  In determining the amount of the valuation allowance we consider whether it is more likely that some portion or all of the deferred tax assets will not be realized.

Utilization of the NOL carryforwards may be subject to a substantial annual limitation due to an ownership change that could occur in the future provided by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).  These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax, respectively.  In general, an ownership change, as defined by Section 382 of 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.

We performed a Section 382 analysis and identified an ownership change that occurred in September 2001.  We believe that, as a result of the annual Section 382 limitation that resulted from the change in control that occurred in September 2001, we permanently will be unable to use a significant portion of our NOL carryforwards that arose before the change in control to offset future taxable income.  As such, we reduced our NOL deferred tax asset by the amount of NOLs that we will permanently be unable to utilize, which in turn resulted in a reduction to our valuation allowance.

Our valuation allowance reduces our deferred tax assets to a level that is more-than-likely-than-not to be recognized.  In determining the amount of the valuation allowance we consider whether it is more likely that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are expected to be deductible.  We will continue to review the estimate of future taxable income and will adjust the valuation allowance accordingly as new information becomes available.

Accounts Receivable and Allowance for Doubtful Accounts

We record accounts receivable for the invoiced portion of our contracts once we have a signed agreement and amounts are billable under the contract.  All of our subscription contracts are non-cancellable upon activation. We do not record an asset for the unbilled or unearned portion of our contracts.  Accounts receivable are recorded at their net realizable value, after deducting an allowance for doubtful accounts.  Such allowances are determined based on a review of an aging of accounts and reflect either specific accounts or estimates based on historical incurred losses.  If the financial condition of our clients were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required, and our ability to recognize sales to certain clients may be affected.

26

Liquidity and Capital Resources

Our principal sources of liquidity are cash, cash equivalents and short-term investments.  Our combined cash and cash equivalents and short term investments were $7.8 million at June 30, 2013.  At June 30, 2013 we held $5.9 million in FDIC insured or U.S. government backed short-term investments.  From December 31, 2012 to June 30, 2013, our cash, cash equivalents and short-term investments decreased by $4.5 million for the reasons described below under operating, investing and financing activities.

On April 2, 2013, we repurchased 1.2 million shares of our outstanding common stock from a third party at $3.50 per share as described in the Note 13 “Stock Repurchase” of the notes to our unaudited condensed consolidated financial statements of this Report.  Cash on hand was reduced by $4.3 million to $8.1 million.  We believe that the remaining cash balance is adequate to fund operations until Adjusted EBITDA and free cash flow accelerate in the future.

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.

Operating Activities

Net cash provided by operating activities was $1.6 million for the six months ended June 30, 2013, compared to $1.3 million in the same period in the prior year. The increase in operating cash flow is due primarily to the decrease in unearned revenue and deferred rent partially offset by a decrease in net income and all other cash from operations activities.

Investing Activities

Net cash provided by investing activities was $887,000 in the six months ended June 30, 2013, compared to $1.2 million of net cash used in investing activities in the same period in 2012.  The increase of $2.1 million in cash provided is attributable to a $3.2 million reduction in purchases of investments and an $608,000 increase in sales of investments, offset by a decrease of $662,000 in additions to property and equipment and internal use software and a $793,000 decrease in maturities of investments.  In addition, there was an increase of our security deposit for the lease of our corporate headquarters.

Financing Activities

Net cash used in financing activities was $4.5 million in the six months ended June 30, 2013, compared to $35,000 of net cash provided by financing activities in the same period of 2012.  The decrease in cash used in financing activities is due to $4.4 million of stock repurchase and $177,000 increase in principal payments on capital lease offset by a $41,000 increase in proceeds from stock options exercises.

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

Disclosure 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 June 30, 2013.  Based on the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of June 30, 2013.

27

Changes in Internal Control over Financial Reporting

There were no other changes in our internal control over financial reporting during the quarter ended June 30, 2013 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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, 2012.

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

Share repurchase activity during the three months ended June 30, 2013 was as follows:

Period	Total Number of Shares Repurchased		Averge Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
April 2, 2013  (1)		1,242,781	$	3.50		1,242,781
Total		1,242,781				1,242,781

(1) On April 2, 2013, we repurchased 1,242,781 shares of our outstanding common stock from a third party at $3.50 per share as described in the Note 13 “Stock Repurchase” of the notes to our unaudited condensed consolidated financial statements of this Report.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable

Item 5.  Other Information

None.

28

Item 6.  Exhibits

Number	Description
10.1	First Amendment to Lease, dated as of April 4, 2013, by and between Onvia, Inc. and GRE 509 Olive LLC (incorporated by reference to Exhibit 10.1 to the Report on Form 8-K filed on April 4, 2013)
10.2	Stock Purchase Agreement, dated as of April 2, 2013, by and among Onvia, Inc., Symphony Technology Group, LLC and certain affiliates of Symphony Technology Group, LLC. (incorporated by reference to Exhibit 10.1 to the Report on Form 8-K filed on April 2, 2013)
23.1++	Concent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
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++	The following financial information from Onvia’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 is formatted in XBRL: (i) the  Audited Condensed Consolidated Balance Sheets, (ii) the Audited Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) the Audited Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Audited Condensed Consolidated Financial Statements, tagged as blocks of text.

++  Furnished herewith

29

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:  August 14, 2013

 30

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 June 30, 2013 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)) 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; and

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

August 14, 2013

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 June 30, 2013 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)) 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; and

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

August 14, 2013

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 June 30, 2013 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

August 14, 2013

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 June 30, 2013 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

August 14, 2013

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

Note 11 - Provision for Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

11.   Provision for Income Taxes

Onvia has recorded a valuation allowance for the majority of its net deferred tax assets because it has a history of net operating losses (“NOLs”). As of December 31, 2012, the Company has recognized net deferred tax benefits in the amount of $2,175,000.  No additional deferred tax benefits were recognized in the first two quarters of 2013.  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 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. Onvia’s stock repurchase transaction does not have any impact on Onvia’s cumulative change in ownership (see Note 13 “Stock Repurchase” of the notes to our unaudited condensed consolidated financial statements of this Report).

As of June 30, 2013, Onvia’s federal NOL carryforwards for income tax purposes were approximately $72.7 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 2022.  The latest date available for a portion of the federal NOL carryforwards to be utilized to offset future income is 2030.

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue
Subscription	$ 4,817	$ 4,694	$ 9,578	$ 9,397
Content license	506	553	999	1,090
Management information reports	106	196	272	341
Other	75	103	153	214
Total revenue	5,504	5,546	11,002	11,042
Cost of revenue (exclusive of depreciation and amortization included below)	966	849	1,889	1,709
Gross margin	4,538	4,697	9,113	9,333
Operating expenses:
Sales and marketing	2,688	2,678	5,547	5,425
Technology and development	1,066	1,070	2,064	2,112
General and administrative	878	885	1,725	1,688
Total operating expenses	4,632	4,633	9,336	9,225
(Loss) / Income from operations	(94)	64	(223)	108
Interest and other income, net	6	8	15	24
Net (loss) / income	(88)	72	(208)	132
Unrealized loss on available-for-sale securities	(2)	0	(2)	(1)
Comprehensive (loss) / income	$ (90)	$ 72	$ (210)	$ 131
Basic net (loss) / income per common share (in Dollars per share)	$ (0.01)	$ 0.01	$ (0.03)	$ 0.02
Diluted net (loss) / income per common share (in Dollars per share)	$ (0.01)	$ 0.01	$ (0.03)	$ 0.01
Basic weighted average shares outstanding (in Shares)	7,367	8,520	7,957	8,513
Diluted weighted average shares outstanding (in Shares)	7,367	8,852	7,957	8,836

XML

Note 4 - Earnings per Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

4.   Earnings per Share

Basic earnings per share are calculated by dividing the net income or loss for the period by the weighted average shares of common stock outstanding for the period.  Diluted earnings per share are calculated by dividing the net income or 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 or loss per share for the three and six months ended June 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Net (loss) / income	$	(88	)	$	72	$	(208	)	$	132
Shares used to compute basic net (loss) / income per share		7,367			8,520		7,957			8,513
Dilutive potential common shares:
Stock options		-			332		-			323
Shares used to compute diluted net (loss) / income per share		7,367			8,852		7,957			8,836
Basic net (loss) / income per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.02
Diluted net (loss) / income per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01

For the three months ended June 30, 2013, approximately 445,000 options to purchase shares of common stock with exercise prices greater than the average fair market value of our stock of $4.44, were not included in the calculation because the effect would have been anti-dilutive.  For the six months ended June 30, 2013, approximately 478,000 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 June 30, 2012, approximately 507,000 options to purchase shares of common stock with exercise prices greater than the average fair market value of our stock of $3.85, were not included in the calculation because the effect would have been anti-dilutive.  For the six months ended June 30, 2012, approximately 530,000 options to purchase shares of common stock were not included in the calculation because the effect would have been anti-dilutive.

XML

Note 6 - Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure Text Block Supplement [Abstract]

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

	June 30, 2013		December 31, 2012
Prepaid expenses	$	493	$	529
Interest receivable		27		36
Other receivables		37		16
	$	557	$	581

XML

Note 12 - Security Deposits

6 Months Ended

Jun. 30, 2013

Lease Security Deposit [Abstract]

Lease Security Deposit [Text Block]

12.   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 increasing from $100,000 in April 2013, to $125,000 in January 2014 and to $150,000 on January 2015.  The letter of credit will be returned at lease termination in April 2021 or earlier as discussed above, subject to standard office lease conditions. As of June 30, 2013, the stand by letter of credit is secured by a security deposit of $150,000.

XML

Note 11 - Provision for Income Taxes (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2003
Income Tax Disclosure [Abstract]
Deferred Tax Assets, Net		$ 2,175,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners			50.00%
Operating Loss Carryforwards	$ 72,700,000

XML

Note 6 - Prepaid Expenses and Other Current Assets (Details) - Prepaid Expenses and Other Current Assets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Prepaid Expenses and Other Current Assets [Abstract]
Prepaid expenses	$ 493	$ 529
Interest receivable	27	36
Other receivables	37	16
	$ 557	$ 581	[1]

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 9 - Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2013

Payables and Accruals [Abstract]

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

	June 30, 2013		December 31, 2012
Payroll and related liabilities	$	559	$	587
Taxes payable and other		140		236
	$	699	$	823

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

	June 30, 2013		December 31, 2012
Idle lease accrual, current portion	$	-	$	21
Obligations under capital leases, current portion		47		94
Deferred rent, current portion		27		174
Deferred tax liabilities		28		-
Other current liabilities		252		342
	$	354	$	631

XML

Note 8 - Internal Use Software (Tables)

6 Months Ended

Jun. 30, 2013

Internal Use Software Disclosure [Abstract]

Capitalized Internal Use Software Roll Forward [Table Text Block]

	Balance at December 31, 2012			Additions			Balance at June 30, 2013
Capitalized Internal Use Software	$	12,905		$	1,100		$	14,005
Accumulated amortization		(7,365	)		(1,150	)		(8,515	)
	$	5,540		$	(50	)	$	5,490

XML

Note 10 - Commitments and Contingencies (Details) - Remaining Future Minimum Operating Lease Payments (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Note 10 - Commitments and Contingencies (Details) - Remaining Future Minimum Operating Lease Payments [Line Items]
2013	$ 401
2014	751
2015	760
2016 and thereafter	4,727
	6,639
Real Estate Operating Leases [Member]
Note 10 - Commitments and Contingencies (Details) - Remaining Future Minimum Operating Lease Payments [Line Items]
2013	392
2014	740
2015	760
2016 and thereafter	4,727
	6,619
Office Equipment Operating Lease [Member]
Note 10 - Commitments and Contingencies (Details) - Remaining Future Minimum Operating Lease Payments [Line Items]
2013	9
2014	11
	$ 20

XML

Note 4 - Earnings per Share (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	445,000	507,000	478,000	530,000
Exercise Share Price Greater Than Average Fair Market Value Share Price (in Dollars per share)	$ 4.44	$ 3.85

XML

Note 7 - Property and Equipment (Details) - Property and Equipment (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Property and Equipment [Abstract]
Computer equipment	$ 4,111	$ 3,981
Software	1,746	1,694
Furniture and fixtures	107	107
Leasehold improvements	883	883
Total cost basis	6,847	6,665
Less accumulated depreciation and amortization	(5,258)	(4,936)
Net book value	$ 1,589	$ 1,729	[1]

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 12 - Security Deposits (Details) (USD $)	1 Months Ended
	Jan. 31, 2015	Jan. 31, 2014	Apr. 30, 2013	Jun. 30, 2013
Lease Security Deposit [Abstract]
Increase (Decrease) in Deposit Assets	$ 150,000	$ 125,000	$ 100,000
Security Deposit				$ 150,000

XML

Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Weighted Average Assumptions Used For The Black-Scholes Valuation Mode	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Stock Option [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Weighted Average Assumptions Used For The Black-Scholes Valuation Mode [Line Items]
Risk-free interest rate	0.61%	0.58%	0.98%	1.05%
Expected volatility	49.00%	58.00%	53.00%	51.00%
Expected dividends	0.00%	0.00%	0.00%	0.00%
Expected life (in years)	2 years 6 months	4 years 146 days	5 years 109 days	4 years 219 days
Employee Stock Purchase Plan [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Weighted Average Assumptions Used For The Black-Scholes Valuation Mode [Line Items]
Risk-free interest rate			0.08%	0.15%
Expected volatility			29.00%	53.00%
Expected dividends			0.00%	0.00%
Expected life (in years)			6 months	6 months

XML

Note 9 - Accrued Expenses (Details) - Accrued Expenses (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accrued Expenses [Abstract]
Payroll and related liabilities	$ 559	$ 587
Taxes payable and other	140	236
	$ 699	$ 823	[1]

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 7 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	June 30, 2013			December 31, 2012
Computer equipment	$	4,111		$	3,981
Software		1,746			1,694
Furniture and fixtures		107			107
Leasehold improvements		883			883
Total cost basis		6,847			6,665
Less accumulated depreciation and amortization		(5,258	)		(4,936	)
Net book value	$	1,589		$	1,729

XML

Condensed Consolidated Statement of Stockholders’ Equity (USD $) In Thousands, except Share data	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]	Total
BALANCE at Dec. 31, 2012	$ 1		$ 353,077	$ 1	$ (340,569)	$ 12,510	[1]
BALANCE (in Shares) at Dec. 31, 2012	8,528,281	26
Exercise of stock options			90			90
Exercise of stock options (in Shares)	40,648
Purchases under Employee Stock Purchase Plan			10			10
Purchases under Employee Stock Purchase Plan (in Shares)	3,257
Stock repurchase		(4,398)				(4,398)
Stock repurchase (in Shares)	(1,242,781)	1,242,781				1,242,781
Stock-based compensation			138			138
Unrealized loss on available-for-sale investments				(2)		(2)
Net loss					(208)	(208)
BALANCE at Jun. 30, 2013	$ 1	$ (4,398)	$ 353,315	$ (1)	$ (340,777)	$ 8,140
BALANCE (in Shares) at Jun. 30, 2013	7,329,405	1,242,807

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 2 - Revenue Recognition

6 Months Ended

Jun. 30, 2013

Revenue Recognition [Abstract]

Revenue Recognition [Text Block]

2.   Revenue Recognition

Onvia’s revenues are primarily generated from client subscriptions, content licenses and management reports.  Onvia’s subscriptions are generally annual contracts; however, the Company also offers extended multi-year contracts to its subscription clients, and content licenses are generally multi-year agreements.  Subscription fees and content licenses are recognized ratably over the term of the agreement.  Onvia also generates revenue from fees charged for management reports, document download services, and other services; revenue from these types of services is recognized upon delivery, or, if report refreshes are included, ratably over the service period.

Onvia’s subscription services and management reports are also sold together as a bundled offering.  The Company allocates revenue from these bundled sales ratably between the subscription services and the management reports based on established list prices for those offerings.  The Company measures and allocates arrangement consideration to one or more units of accounting for separate deliverables.  The Company also establishes a selling price hierarchy for determining the selling price of a deliverable.

Unearned revenue consists of payments received for prepaid subscriptions, as well as the invoiced, but unpaid, portion of subscriptions and content licenses whose terms extend into periods beyond the balance sheet date.

XML

Note 5 - Short-Term Investments

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

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

5.   Short-Term Investments

Onvia classifies short-term investments in debt securities as available-for-sale at June 30, 2013, stated at fair value as summarized in the following table (in thousands):

	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government backed securities	$	2,606	$	-	$	(1	)	$	2,605
Certificate of Deposit  (1)		3,303		-		-			3,303
	$	5,909	$	-	$	(1	)	$	5,908

(1) We evaluated certificates of deposits held as of June 30, 2013 and concluded that they meet the definition of securities as available for sale.

Onvia accounts for short-term and long-term investments 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 table summarizes, by major security type, short-term investments classified as available-for-sale at June 30, 2013, stated at fair value (in thousands):

	Fair Value Measurements as of June 30, 2013
	Level 1		Level 2		Level 3		Balance as of June 30, 2013
Description
U.S. Government backed securities	$	-	$	2,605	$	-	$	2,605
Certificate of Deposit		-		3,303		-		3,303
	$	-	$	5,908	$	-	$	5,908

There were no transfers in or out of Level 1 or Level 2 investments during the first six months of 2013, and there was no activity in Level 3 fair value measurements during that period.

XML

Note 3 - Stock-Based Compensation and Stock Option Activity

6 Months Ended

Jun. 30, 2013

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

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

3.   Stock-Based Compensation and Stock Option Activity

The impact on Onvia’s results of operations of recording stock-based compensation was as follows for the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Cost of sales	$	2	$	1	$	4	$	-
Sales and marketing		8		10		18		(25	)
Technology and development		12		13		25		25
General and administrative		43		48		91		92
Total stock-based compensation	$	65	$	72	$	138	$	92

Stock-based compensation for the six months of 2012 includes the impact of options forfeited upon the departure of our Vice President of Sales and Vice President of Content, which resulted in the reversal of approximately $62,000 in previously recognized expenses on forfeited options.

Valuation Assumptions

Stock Options

Onvia calculated the fair value of each option award on the date of grant using the Black-Scholes valuation model. The following weighted average assumptions were used for options granted in each respective period:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Risk-free interest rate		0.61	%		0.58	%		0.98	%		1.05	%
Expected volatility		49	%		58	%		53	%		51	%
Expected dividends		0	%		0	%		0	%		0	%
Expected life (in years)		2.5			4.4			5.3			4.6

Employee Stock Purchase Plan (“ESPP”)

The fair value of each employee purchase under Onvia’s ESPP is estimated on the first day of each purchase period using the Black-Scholes valuation model. Purchase periods begin on May 1 and November 1 of each year.  The following weighted average assumptions were used for the purchase periods beginning during the three and six months ended June 30, 2013 and 2012.

	Three and Six Months Ended June 30,
	2013			2012
Risk-free interest rate		0.08	%		0.15	%
Expected volatility		29	%		53	%
Expected dividends		0	%		0	%
Expected life (in years)		0.5			0.5

Stock Option Activity

The following table summarizes stock option activity under Onvia’s equity incentive plan for the three and six months ended June 30, 2013:

	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (1)
Total options outstanding at January 1, 2013		1,097,236		$	4.58
Options granted		80,000			3.56
Options exercised		(53,829	)		2.56
Options forfeited and cancelled		(29,925	)		3.54
Total options outstanding at March 31, 2013		1,093,482		$	4.63
Options granted		6,000			4.60
Options exercised		(2,666	)		4.40
Options forfeited and cancelled		(10,007	)		3.69
Total options outstanding at June 30		1,086,809		$	4.65
Options exercisable at June 30, 2013		692,968		$	5.33		4.41	$	415,623
Options vested and expected to vest at June 30, 2013		1,056,219		$	4.68		5.78	$	901,674

 (1) Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of Onvia’s common stock of $4.65 at June 30, 2013 for options that were in-the-money at June 30, 2013.  The number of in-the-money options outstanding and exercisable at June 30, 2013 was 693,125 and 314,728, respectively.

The weighted average grant date fair value of options granted during the three and six month periods ended June 30, 2013 was $1.42 and $1.66 per option, respectively, and $1.82 and $1.32 per option, respectively, for the same periods in 2012.

As of June 30, 2013, there was approximately $283,000 of unrecognized compensation cost related to unvested stock options and estimated purchases under the ESPP.  That cost is expected to be recognized over a weighted average period of 1.55 years.

During the six months ended June 30, 2013, approximately $100,000 was received for exercises of stock options and purchases under the employee stock purchase plan, compared to $59,000 for the same periods of 2012.

Restricted Stock Units

The following table summarizes changes in non-vested restricted stock units (“RSUs”) for the six months ended June 30, 2013:

	Number of shares		Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2013		13,954	$	4.12
Granted		-		-
Vested		-		-
Forfeited / Expired		-		-
Non-vested balance at June 30, 2013		13,954	$	4.12

RSUs granted during the first quarter of 2011 were valued on the grant date based upon the fair value of the underlying common stock on the grant date.  Prior to the first quarter of 2011 no RSUs had been granted.  The value of the RSUs granted is recognized as compensation expense over the applicable vesting period.  The RSUs granted during the first quarter of 2011 have a three year vesting period and were subject to accelerated vesting based upon achievement of 2011 financial targets.  The 2011 financial targets were not achieved and therefore these RSU’s will fully vest over three years on December 31, 2013.  As of June 30, 2013 there was $10,000 of total unrecognized compensation cost related to non-vested RSU’s and remaining unrecognized compensation cost associated with these RSUs is expected to be recognized over a weighted average period of 0.51 years.

XML

Note 8 - Internal Use Software (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Note 8 - Internal Use Software (Details) [Line Items]
Asset Impairment Charges (in Dollars)	$ 0	$ 0
Minimum [Member]
Note 8 - Internal Use Software (Details) [Line Items]
Capitalized Internal Use Software Useful Life	3 years
Maximum [Member]
Note 8 - Internal Use Software (Details) [Line Items]
Capitalized Internal Use Software Useful Life	5 years

XML

Note 10 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

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

	Real Estate Operating Leases		Office Equipment Operating Lease		Total Operating Leases
2013	$	392	$	9	$	401
2014		740		11		751
2015		760				760
2016 and thereafter		4,727		-		4,727
	$	6,619	$	20	$	6,639

Long-term Purchase Commitment [Table Text Block]

	Purchase Obligations
2013	$	552
2014		742
2015		438
Thereafter		305
	$	2,037

XML

Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Stock Option Activity Under Equity Incentive Plan (USD $)	3 Months Ended
	Jun. 30, 2013		Mar. 31, 2013
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Stock Option Activity Under Equity Incentive Plan [Line Items]
Total options outstanding			1,097,236
Total options outstanding (in Dollars per share)			$ 4.58
Options granted	6,000		80,000
Options granted (in Dollars per share)	$ 4.60		$ 3.56
Options exercised			(53,829)
Options exercised (in Dollars per share)			$ 2.56
Options forfeited and cancelled	(10,007)		(29,925)
Options forfeited and cancelled (in Dollars per share)	$ 3.69		$ 3.54
Total options outstanding	1,086,809
Total options outstanding (in Dollars per share)	$ 4.65
Options Outstanding [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Stock Option Activity Under Equity Incentive Plan [Line Items]
Total options outstanding			1,093,482
Total options outstanding (in Dollars per share)			$ 4.63
Options Exercisable [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Stock Option Activity Under Equity Incentive Plan [Line Items]
Options exercisable at June 30, 2013	692,968
Options exercisable at June 30, 2013 (in Dollars per share)	$ 5.33
Options exercisable at June 30, 2013	4 years 149 days
Options exercisable at June 30, 2013 (in Dollars)	$ 415,623	[1]
Options vested and expected to vest at June 30, 2013	4 years 149 days
Options exercised	(2,666)
Options exercised (in Dollars per share)	$ 4.40
Options Vested And Expected To Vest [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Stock Option Activity Under Equity Incentive Plan [Line Items]
Options exercisable at June 30, 2013	5 years 284 days
Options vested and expected to vest at June 30, 2013	1,056,219
Options vested and expected to vest at June 30, 2013 (in Dollars per share)	$ 4.68
Options vested and expected to vest at June 30, 2013	5 years 284 days
Options vested and expected to vest at June 30, 2013 (in Dollars)	$ 901,674	[1]

[1] Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of Onvia's common stock of $4.65 at June 30, 2013 for options that were in-the-money at June 30, 2013. The number of in-the-money options outstanding and exercisable at June 30, 2013 was 693,125 and 314,728, respectively.

XML

Note 5 - Short-Term Investments (Details) - Short-term Investments Classified as Available-for-sale Stated At Fair Value (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Note 5 - Short-Term Investments (Details) - Short-term Investments Classified as Available-for-sale Stated At Fair Value [Line Items]
Available For Sale Investments	$ 5,908
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Note 5 - Short-Term Investments (Details) - Short-term Investments Classified as Available-for-sale Stated At Fair Value [Line Items]
Available For Sale Investments	2,605
US Government Agencies Debt Securities [Member]
Note 5 - Short-Term Investments (Details) - Short-term Investments Classified as Available-for-sale Stated At Fair Value [Line Items]
Available For Sale Investments	2,605
Certificate Of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Note 5 - Short-Term Investments (Details) - Short-term Investments Classified as Available-for-sale Stated At Fair Value [Line Items]
Available For Sale Investments	3,303
Certificate Of Deposit [Member]
Note 5 - Short-Term Investments (Details) - Short-term Investments Classified as Available-for-sale Stated At Fair Value [Line Items]
Available For Sale Investments	3,303	[1]
Fair Value, Inputs, Level 2 [Member]
Note 5 - Short-Term Investments (Details) - Short-term Investments Classified as Available-for-sale Stated At Fair Value [Line Items]
Available For Sale Investments	$ 5,908

[1] We evaluated certificates of deposits held as of June 30, 2013 and concluded that they meet the definition of securities as available for sale.

XML

Note 13 - Stock Repurchase (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	6 Months Ended
	Apr. 02, 2013	Jun. 30, 2013	Dec. 31, 2012
Note 13 - Stock Repurchase (Details) [Line Items]
Investment Repurchase Agreement Name of Party	Symphony Technology Group, LLC
Common Stock, Par or Stated Value Per Share		$ 0.0001	$ 0.0001	[1]
Stock Repurchased During Period, Shares (in Shares)		1,242,781
StockRepurchasedDuringPeriodPricePerShare		$ 3.50
Stock Repurchased During Period, Value (in Dollars)		$ (4,398)
Par Value Of Shares To Be Repurchased [Member]
Note 13 - Stock Repurchase (Details) [Line Items]
Common Stock, Par or Stated Value Per Share	$ 0.0001
Repurchase Stockholders [Member]
Note 13 - Stock Repurchase (Details) [Line Items]
Stock Repurchased During Period, Value (in Dollars)		$ 4,300

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 10 - Commitments and Contingencies (Details)	3 Months Ended
	Mar. 31, 2013 sqft	Mar. 31, 2013 Area Surrenderd After Execution Of Amendment [Member] sqft	Nov. 30, 2014 Right To Surrender Additional Area [Member] sqft
Note 10 - Commitments and Contingencies (Details) [Line Items]
Period Of Lease	65 months
Area of Real Estate Property	29,606	5,394	8,898

XML

Condensed Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Allowance for doubtful accounts (in Dollars)	$ 32	$ 42	[1]
Preferred stock par value (in Dollars per share)	$ 0.0001	$ 0.0001	[1]
Preferred stock, shares authorized	2,000,000	2,000,000	[1]
Preferred stock, shares issued	0	0	[1]
Preferred stock, shares outstanding	0	0	[1]
Common stock par value (in Dollars per share)	$ 0.0001	$ 0.0001	[1]
Common stock, shares authorized	11,000,000	11,000,000	[1]
Common stock, shares issued	8,572,212	8,528,307	[1]
Common stock, shares outstanding	7,329,405	8,528,281	[1]
Treasury stock, Shares	1,242,807	26	[1]

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 8 - Internal Use Software

6 Months Ended

Jun. 30, 2013

Internal Use Software Disclosure [Abstract]

Internal Use Software Disclosure [Text Block]

8.   Internal Use Software

Onvia capitalizes qualifying computer software costs incurred during the “application development stage” and other costs as permitted by GAAP.  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 evaluates on annual basis 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 six months ended June 30, 2013 and June 30, 2012.

The following table presents a roll-forward of capitalized internal use software for the six months ended June 30, 2013 (in thousands):

	Balance at December 31, 2012			Additions			Balance at June 30, 2013
Capitalized Internal Use Software	$	12,905		$	1,100		$	14,005
Accumulated amortization		(7,365	)		(1,150	)		(8,515	)
	$	5,540		$	(50	)	$	5,490

XML

Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) / income	$ (208)		$ 132
Adjustments to reconcile net (loss) / income to net cash provided by operating activities:
Depreciation and amortization	1,515		1,369
Idle lease accrual	(74)		(34)
Stock-based compensation	138		92
Change in operating assets and liabilities:
Accounts receivable	227		76
Prepaid expenses and other assets	24		34
Accounts payable	(28)		227
Accrued expenses	(73)		(27)
Unearned revenue	40		(470)
Deferred rent	65		(72)
Net cash provided by operating activities	1,626		1,327
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(422)		(233)
Additions to internal use software	(1,066)		(593)
Purchases of investments	(5,362)		(8,539)
Sales of investments	2,881		2,273
Maturities of investments	5,006		5,799
Return of security deposits	(150)		45
Net cash provided by / (used in) investing activities	887		(1,248)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations	(201)		(24)
Repurchase of stock	(4,398)
Proceeds from exercise of stock options	100		59
Net cash (used in) / provided by financing activities	(4,499)		35
Net (decrease) / increase in cash and cash equivalents	(1,986)		114
Cash and cash equivalents, beginning of period	3,888	[1]	3,378
Cash and cash equivalents, end of period	1,902		3,492
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain on available-for-sale investments	2		1
Purchases under capital lease obligations	(1)		(118)
Property and equipment additions in accounts payable	(6)		(5)
Internal use software additions in accounts payable	$ (220)		$ (164)

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
CURRENT ASSETS:
Cash and cash equivalents	$ 1,902	$ 3,888	[1]
Short-term investments, available-for-sale	5,908	8,435	[1]
Accounts receivable, net of allowance for doubtful accounts of $32 and $42	1,051	1,278	[1]
Prepaid expenses and other current assets	557	581	[1]
Total current assets	9,418	14,182	[1]
LONG TERM ASSETS:
Property and equipment, net of accumulated depreciation	1,589	1,729	[1]
Internal use software, net of accumulated amortization	5,490	5,540	[1]
Long-term investments	90
Deferred tax assets, net of current portion	2,203	2,175	[1]
Other long-term assets	152	92	[1]
Total long term assets	9,524	9,536	[1]
TOTAL ASSETS	18,942	23,718	[1]
CURRENT LIABILITIES:
Accounts payable	776	855	[1]
Accrued expenses	699	823	[1]
Unearned revenue, current portion	7,588	7,535	[1]
Other current liabilities	354	631	[1]
Total current liabilities	9,417	9,844	[1]
LONG TERM LIABILITIES:
Unearned revenue, net of current portion	715	728	[1]
Deferred rent, net of current portion	607	394	[1]
Other long-term liabilities	63	242	[1]
Total long term liabilities	1,385	1,364	[1]
TOTAL LIABILITIES	10,802	11,208	[1]
COMMITMENTS AND CONTINGENCIES (Note 10)			[1]
STOCKHOLDERS’ EQUITY:
Preferred stock; $.0001 par value: 2,000,000 shares authorized; no shares issued or outstanding	0	0	[1]
Common stock; $.0001 par value: 11,000,000 shares authorized; 8,572,212 and 8,528,307 shares issued; and 7,329,405 and 8,528,281 shares outstanding	1	1	[1]
Treasury stock, at cost: 1,242,807 and 26 shares	(4,398)	0	[1]
Additional paid in capital	353,315	353,077	[1]
Accumulated other comprehensive gain	(1)	1	[1]
Accumulated deficit	(340,777)	(340,569)	[1]
Total stockholders’ equity	8,140	12,510	[1]
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 18,942	$ 23,718	[1]

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 3 - Stock-Based Compensation and Stock Option Activity (Details) (USD $)	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Mar. 31, 2011	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2013
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) [Line Items]
Stock Issued During Period, Value, Share-based Compensation, Forfeited (in Dollars)					$ 62,000
Share Price	$ 4.65			$ 4.65
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 1.42	$ 1.82		$ 1.66	$ 1.32
Proceeds from Stock Options Exercised (in Dollars)				100,000	59,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			3 years			3 years
In The Money Options Outstanding [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number (in Shares)	693,125			693,125
In The Money Options Exercisable [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number (in Shares)	314,728			314,728
Employee Stock Option [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)	283,000			283,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				1 year 200 days
Restricted Stock Units (RSUs) [Member]
Note 3 - Stock-Based Compensation and Stock Option Activity (Details) [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)	$ 10,000			$ 10,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				186 days

XML

Note 5 - Short-Term Investments (Tables)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

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

	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government backed securities	$	2,606	$	-	$	(1	)	$	2,605
Certificate of Deposit  (1)		3,303		-		-			3,303
	$	5,909	$	-	$	(1	)	$	5,908

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

	Fair Value Measurements as of June 30, 2013
	Level 1		Level 2		Level 3		Balance as of June 30, 2013
Description
U.S. Government backed securities	$	-	$	2,605	$	-	$	2,605
Certificate of Deposit		-		3,303		-		3,303
	$	-	$	5,908	$	-	$	5,908

XML

Note 9 - Accrued Expenses (Details) - Other Current Liabilities (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Other Current Liabilities [Abstract]
Idle lease accrual, current portion		$ 21
Obligations under capital leases, current portion	47	94
Deferred rent, current portion	27	174
Deferred tax liabilities	28
Other current liabilities	252	342
	$ 354	$ 631	[1]

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 7 - Property and Equipment (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Note 7 - Property and Equipment (Details) [Line Items]
Depreciation	$ 175,000	$ 195,000	$ 365,000	$ 378,000
Computer Equipment [Member]
Note 7 - Property and Equipment (Details) [Line Items]
Non Monitory Disposal Of Property Plant And Equipment			$ 43,000	$ 207,000

XML

Note 4 - Earnings per Share (Details) - Basic and Diluted Net Income Per Share Calculation (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Basic and Diluted Net Income Per Share Calculation [Abstract]
Net (loss) / income (in Dollars)	$ (88)	$ 72	$ (208)	$ 132
Shares used to compute basic net (loss) / income per share	7,367	8,520	7,957	8,513
Stock options		332		323
Shares used to compute diluted net (loss) / income per share	7,367	8,852	7,957	8,836
Basic net (loss) / income per share (in Dollars per share)	$ (0.01)	$ 0.01	$ (0.03)	$ 0.02
Diluted net (loss) / income per share (in Dollars per share)	$ (0.01)	$ 0.01	$ (0.03)	$ 0.01

XML

Note 5 - Short-Term Investments (Details) - Short-term Investments in Debt Securities as Available-For-Sale at Fair Value (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Note 5 - Short-Term Investments (Details) - Short-term Investments in Debt Securities as Available-For-Sale at Fair Value [Line Items]
Amortized Cost	$ 5,909
Gross Unrealized Losses	5,908
Fair Value	(1)
US Government Agencies Debt Securities [Member]
Note 5 - Short-Term Investments (Details) - Short-term Investments in Debt Securities as Available-For-Sale at Fair Value [Line Items]
Amortized Cost	2,606
Gross Unrealized Losses	2,605
Fair Value	(1)
Certificate Of Deposit [Member]
Note 5 - Short-Term Investments (Details) - Short-term Investments in Debt Securities as Available-For-Sale at Fair Value [Line Items]
Amortized Cost	3,303	[1]
Gross Unrealized Gains		[1]
Gross Unrealized Losses	3,303	[1]
Fair Value		[1]

[1] We evaluated certificates of deposits held as of June 30, 2013 and concluded that they meet the definition of securities as available for sale.

XML

Note 7 - Property and Equipment

6 Months Ended

Jun. 30, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

7.   Property and Equipment

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

	June 30, 2013			December 31, 2012
Computer equipment	$	4,111		$	3,981
Software		1,746			1,694
Furniture and fixtures		107			107
Leasehold improvements		883			883
Total cost basis		6,847			6,665
Less accumulated depreciation and amortization		(5,258	)		(4,936	)
Net book value	$	1,589		$	1,729

During the first six months of 2013, Onvia disposed of fully depreciated computer equipment valued at $43,000. During the first six months of 2012, Onvia disposed of fully depreciated computer equipment valued at $207,000.

Depreciation expense was $175,000 and $365,000 for the three and six months ended June 30, 2013, respectively, compared to $195,000 and $378,000, respectively, for the same periods of 2012.

XML

Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Impact On Results of Operations of Recording Stock Based Compensation (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based Compensation Allocation of Recognized Period Costs	$ 65	$ 72	$ 138	$ 92
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based Compensation Allocation of Recognized Period Costs	2	1	4
Selling and Marketing Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based Compensation Allocation of Recognized Period Costs	8	10	18	(25)
Technology And Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based Compensation Allocation of Recognized Period Costs	12	13	25	25
General and Administrative Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based Compensation Allocation of Recognized Period Costs	$ 43	$ 48	$ 91	$ 92

XML

Note 8 - Internal Use Software (Details) - Roll-forward of Capitalized Internal Use Software (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Note 8 - Internal Use Software (Details) - Roll-forward of Capitalized Internal Use Software [Line Items]
Capitalized Internal Use Software	$ 1,100
Accumulated amortization	(1,150)
	5,540	[1]
	(50)
	5,490
Begining Balance [Member]
Note 8 - Internal Use Software (Details) - Roll-forward of Capitalized Internal Use Software [Line Items]
Capitalized Internal Use Software	12,905
Accumulated amortization	(7,365)
Accumulated amortization	(7,365)
	5,540
Ending Balance [Member]
Note 8 - Internal Use Software (Details) - Roll-forward of Capitalized Internal Use Software [Line Items]
Capitalized Internal Use Software	14,005
Accumulated amortization	(8,515)
Accumulated amortization	(8,515)
	$ 5,490

[1] Derived from audited financial statements included in the 2012 Annual Report.

XML

Note 10 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

10.   Commitments and Contingencies

Operating Leases

During the first quarter of 2013, Onvia entered into the first amendment to lease agreement for its corporate offices located in Seattle, Washington.  The Amendment, among other things, extends the lease term for an additional sixty-five (65) months with a new expiration date of April 30, 2021.  In addition, the Amendment reduces the rental area of the premises to approximately 29,606 square feet, after surrender of 5,394 square feet after the execution of the Amendment.  Onvia has an additional right to surrender up to 8,898 square feet on or after November 30, 2014 in exchange for reimbursement of unamortized landlord incentives.  In addition to base rent, Onvia will be responsible for its proportionate share of annual incremental increases in the building’s operating expenses, insurance, and real estate taxes over the 2013 base year.  Onvia has a one-time right to terminate the amended lease in its entirety on or after December 1, 2017 in exchange for payment of a termination fee.

Rent expense is being recognized on a straight-line basis over the term of the lease.  Onvia also has a non-cancellable operating lease for office equipment, which expires in July 2014.

As of June 30, 2013, 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
2013	$	392	$	9	$	401
2014		740		11		751
2015		760				760
2016 and thereafter		4,727		-		4,727
	$	6,619	$	20	$	6,639

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 2011 to 2016.  Future required payments under these non-cancellable agreements are as follows for the years ending December 31 (in thousands):

	Purchase Obligations
2013	$	552
2014		742
2015		438
Thereafter		305
	$	2,037

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.

XML

Note 6 - Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2013

Disclosure Text Block Supplement [Abstract]

Other Current Assets [Text Block]

6.   Prepaid Expenses and Other Current Assets

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

	June 30, 2013		December 31, 2012
Prepaid expenses	$	493	$	529
Interest receivable		27		36
Other receivables		37		16
	$	557	$	581

XML

Note 1 - Accounting Policies

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

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

1.   Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Onvia, Inc. and its wholly owned subsidiary, collectively referred to as "Onvia" or the ”Company.”  There was no business activity in the subsidiary in the three and six month periods ended June 30, 2013 or 2012.  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, or 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 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, 2012 (“2012 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.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or 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, recoverability of long-lived assets, idle lease accrual and the valuation allowance for Onvia’s net operating losses.  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

There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2013, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, that are of significance, or potential significance to us.

XML

Note 10 - Commitments and Contingencies (Details) - Non-Cancellable Purchase Obligations For Software Development And License Agreements (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Non-Cancellable Purchase Obligations For Software Development And License Agreements [Abstract]
2013	$ 552
2014	742
2015	438
Thereafter	305
	$ 2,037

XML

Note 3 - Stock-Based Compensation and Stock Option Activity (Details) - Changes In Non-Vested Restricted Stock Units (USD $)	Jun. 30, 2013	Dec. 31, 2012
Changes In Non-Vested Restricted Stock Units [Abstract]
Non Vested Balance	13,954	13,954
Non Vested Balance (in Dollars per share)	$ 4.12	$ 4.12
Non Vested Balance	13,954	13,954
Non Vested Balance (in Dollars per share)	$ 4.12	$ 4.12

XML

Note 13 - Stock Repurchase

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Repurchase Agreements, Resale Agreements, Securities Borrowed, and Securities Loaned Disclosure [Text Block]

13.   Stock Repurchase

On April 2, 2013, Onvia entered into a stock purchase agreement with Symphony Technology Group, LLC and certain of its affiliates (the “Repurchase Stockholders”) to repurchase shares of Onvia’s common stock, par value $0.0001 directly from the Repurchase Stockholders in a private, non-underwritten transaction. Under the terms of the agreement, Onvia has repurchased from the Repurchase Stockholders 1,242,781 shares of common stock at a price of $3.50 per share for a total purchase price of approximately $4.3 million, excluding transaction fees. These shares were repurchased at discount to market price.This transaction does not have any impact on Onvia’s Section 382 tax benefits preservation plan.

XML

Note 9 - Accrued Expenses

6 Months Ended

Jun. 30, 2013

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

9.   Accrued Expenses

Accrued expenses consist of the following (in thousands):

	June 30, 2013		December 31, 2012
Payroll and related liabilities	$	559	$	587
Taxes payable and other		140		236
	$	699	$	823

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

	June 30, 2013		December 31, 2012
Idle lease accrual, current portion	$	-	$	21
Obligations under capital leases, current portion		47		94
Deferred rent, current portion		27		174
Deferred tax liabilities		28		-
Other current liabilities		252		342
	$	354	$	631

XML

Note 4 - Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

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

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Net (loss) / income	$	(88	)	$	72	$	(208	)	$	132
Shares used to compute basic net (loss) / income per share		7,367			8,520		7,957			8,513
Dilutive potential common shares:
Stock options		-			332		-			323
Shares used to compute diluted net (loss) / income per share		7,367			8,852		7,957			8,836
Basic net (loss) / income per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.02
Diluted net (loss) / income per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01

XML

Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Onvia, Inc. and its wholly owned subsidiary, collectively referred to as "Onvia" or the ”Company.”  There was no business activity in the subsidiary in the three and six month periods ended June 30, 2013 or 2012.  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, or 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 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, 2012 (“2012 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.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or 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, recoverability of long-lived assets, idle lease accrual and the valuation allowance for Onvia’s net operating losses.  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]

New Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2013, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, that are of significance, or potential significance to us.

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	ONVIA INC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		7,329,405
Amendment Flag	false
Entity Central Index Key	0001100917
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

XML

Note 3 - Stock-Based Compensation and Stock Option Activity (Tables)

6 Months Ended

Jun. 30, 2013

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

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Cost of sales	$	2	$	1	$	4	$	-
Sales and marketing		8		10		18		(25	)
Technology and development		12		13		25		25
General and administrative		43		48		91		92
Total stock-based compensation	$	65	$	72	$	138	$	92

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Risk-free interest rate		0.61	%		0.58	%		0.98	%		1.05	%
Expected volatility		49	%		58	%		53	%		51	%
Expected dividends		0	%		0	%		0	%		0	%
Expected life (in years)		2.5			4.4			5.3			4.6

	Three and Six Months Ended June 30,
	2013			2012
Risk-free interest rate		0.08	%		0.15	%
Expected volatility		29	%		53	%
Expected dividends		0	%		0	%
Expected life (in years)		0.5			0.5

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (1)
Total options outstanding at January 1, 2013		1,097,236		$	4.58
Options granted		80,000			3.56
Options exercised		(53,829	)		2.56
Options forfeited and cancelled		(29,925	)		3.54
Total options outstanding at March 31, 2013		1,093,482		$	4.63
Options granted		6,000			4.60
Options exercised		(2,666	)		4.40
Options forfeited and cancelled		(10,007	)		3.69
Total options outstanding at June 30		1,086,809		$	4.65
Options exercisable at June 30, 2013		692,968		$	5.33		4.41	$	415,623
Options vested and expected to vest at June 30, 2013		1,056,219		$	4.68		5.78	$	901,674

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

	Number of shares		Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2013		13,954	$	4.12
Granted		-		-
Vested		-		-
Forfeited / Expired		-		-
Non-vested balance at June 30, 2013		13,954	$	4.12