| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2:- SIGNIFICANT
ACCOUNTING POLICIES
a. Interim
Financial Statements The accompanying consolidated
balance sheet as of March 31, 2019, the consolidated statements of operations, the consolidated statements of comprehensive loss
and the consolidated statements of cash flows for the three months ended March 31, 2019 and 2018, as well as the statement of
changes in shareholders' equity for the three months ended March 31, 2019, are unaudited. These unaudited interim consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S.
GAAP") and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting.
In management's opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring
nature necessary for the fair presentation of the Company's financial position as of March 31, 2019, as well as its results
of operations and cash flows for the three months ended March 31, 2019 and 2018. The results of operations for the three months
ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or
for other interim periods or for future years.
b. Over the past
several years, the Company has devoted substantially most of its effort to research and
development, product development and increasing revenues through additional investments
in sales & marketing. The Company generated a loss of 4,576 and negative cash flow
of 1,329 from operating activities in the three month period ended March 31, 2019, and
has an accumulated deficit of 217,800 as of March 31, 2019. The Company is planning to
finance its operations from its existing and future working capital resources and to
continue to evaluate additional sources of capital and financing. However, there is no
assurance that additional capital and/or financing will be available to the Company,
and even if available, whether it will be on terms acceptable to the Company or in amounts
required. Accordingly, the Company's Board approved a contingency plan, to be effected
if needed, in whole or in part, at its discretion, to allow the Company to continue its
operations and meet its cash obligations. The contingency plan consists of cost reduction,
which include mainly the following steps: reduction in consultants' expenses, headcount,
compensation paid to key management personnel and capital expenditures. The Company and
the Board believe that its existing capital resources and other future measures that
may be implemented, if so required, will be adequate to satisfy its expected liquidity
requirements for at least twelve months from the filing date.
c. Significant
accounting policies The accompanying unaudited interim
financial statements should be read in conjunction with the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission (the "SEC") on March 29, 2019. Other than the change described
below, there have been no changes to the significant accounting policies described in the Annual Report on Form 10-K for the fiscal
year ended December 31, 2018 that have had a material impact on the unaudited interim consolidated financial statements and related
notes.
d. Use
of estimates: The preparation of consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company's
management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the
time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company's
management evaluates estimates, including those related to fair value and useful lives of intangible assets, fair value of earn-out
liabilities, valuation allowance on deferred tax assets, income tax uncertainties, fair values of stock-based awards, other contingent
liabilities and estimates used in applying the revenue recognition policy. Such estimates are based on historical experience and
on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about
the carrying values of assets and liabilities.
e. Recently
issued and adopted pronouncements: In June 2018, the FASB issued
ASU No. 2018-07, "Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment
Accounting." These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only
includes stock-based payments to employees) to include stock-based payments issued to nonemployees for goods or services. Consequently,
the accounting for stock-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic
505-50, Equity - Equity-Based Payments to Non-Employees. Adoption of this standard had an immaterial impact on the Company's
consolidated financial statements. In February 2016, the FASB issued
ASU 2016-02, "Leases", on the recognition, measurement, presentation and disclosure of leases for both parties to
a contract (i.e., lessees and lessors). The new standard supersedes the lease requirements in Accounting Standards Codification
(ASC) Topic 840, "Leases" and requires lessees, to classify leases as either finance or operating leases based on
the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine
whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease,
respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater
than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a manner similar
to the accounting under existing guidance for operating leases today. The new standard requires lessors to account for leases
using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating
leases. In July 2018, the FASB also issued ASU 2018-11, Targeted Improvements to Topic 842, which provides an alternative transition
method at the transition date, allowing entities to recognize a cumulative effect adjustment to the opening balance of retained
earnings upon adoption. The guidance is effective for the interim and annual periods beginning on or after December 15, 2018,
and early adoption is permitted. The Company adopted ASU 2016-02 as of January 1, 2019.
f. New accounting pronouncements
not yet adopted: In January 2017, the FASB issued
ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates
step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value
of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero
or negative carrying amount of net assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment
tests performed in fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company is currently assessing
the impact of the adoption of this standard on its consolidated financial statements and footnote disclosures. In August 2018, the FASB issued
ASU No. 2018-15, Customer's Accounting for implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract ("ASU 2018-15"). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a
hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop
or obtain internal-use software. The update to the standard is effective for interim an annual periods beginning after December
15, 2019, with early adoption permitted. Entities can choose to adopt the ASU 2018-15 prospectively or retrospectively. The Company
is currently assessing the impact of the adoption of this standard on its consolidated financial statements and
footnote disclosures.
g. Leases: The Company adopted the new standard
as of January 1, 2019, using the modified retrospective approach. The modified retrospective approach provides a method for recording
existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. The Company
has elected to utilize the available package of practical expedients permitted under the transition guidance within the new standard
which does not require it to reassess the prior conclusions about lease identification, lease classification and initial direct
costs. In addition, the Company has elected
the short-term lease exception for leases with a term of 12 months or less. As part of this election it will not recognize right-of-use
assets and lease liabilities on the balance sheet for leases with terms less than 12 months. The Company also elected the practical
expedient to not separate lease and non-lease components for all our leases. This will result in the initial and subsequent measurement
of the balances of the right-of-use asset and lease liability being greater than if the policy election was not applied. Some leases include one or more
options to extend the lease. The exercise of options to extend the lease is typically at the Company's sole discretion; therefore,
the majority of renewals to extend the lease terms are included in our right of use assets and lease liabilities as they are reasonably
certain of exercise. The Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will
include the renewal period in its lease term. Lease modifications result in remeasurement of the lease liability. The right-of-use asset and lease
liability are initially measured at the present value of the lease payments, discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate based on the information available
at the date of adoption in determining the present value of the lease payments. Some of the real estate leases
contain variable lease payments, including payments based on an index or rate. Variable lease payments based on an index or rate
are initially measured using the index or rate in effect at lease adoption. Additional payments based on the change in an index
or rate are recorded as a period expense when incurred. The Company has various operating
leases for office space, vehicles that expire through 2030. Below is a summary of our operating right-of-use assets and operating
lease liabilities as of March 31, 2019:
Operating lease right-of-use assets $ 9,675
Operating lease liabilities, current $ 1,277
Operating lease liabilities long-term 8,724
Total operating lease liabilities $ 10,001 The short term lease liabilities
is included within accrued expenses and other short term liabilities in the consolidated balance sheet. Minimum lease payments for our
right of use assets over the remaining lease periods as of March 31, 2019, are as follows:
Year ended December 31,
2019 $ 1,403
2020 1,854
2021 1,752
2022 1,207
2023 1,055
Thereafter 4,298
Total undiscounted lease payments $ 11,569
Less: Interest 1,568
Present value of lease liabilities 10,001 Premises rent expense was $467 and $441 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, the Company
had an additional operating lease that had not yet commenced in the amount of $3,675. This operating lease will commence in the
first quarter of 2020 with a lease term through 2029. The weighted average remaining
lease terms and discount rates for all of operating leases were as follows as of March 31, 2019:
Remaining lease term and discount rate:
Weighted average remaining lease term (years) 3.5
Weighted average discount rate 4.16 % |
