Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 06, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | AUDIOEYE INC | |
Entity Central Index Key | 0001362190 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Trading Symbol | AEYE | |
Title of 12(b) Security | Common Stock, par value $0.00001 per share | |
Security Exchange Name | NASDAQ | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,020,128 | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 10,295 | $ 1,972 |
Accounts receivable, net of allowance for doubtful accounts of $79 and $63, respectively | 3,457 | 2,958 |
Unbilled receivables | 34 | 160 |
Deferred costs, short term | 179 | 183 |
Debt issuance costs, net | 0 | 137 |
Prepaid expenses and other current assets | 219 | 198 |
Total current assets | 14,184 | 5,608 |
Property and equipment, net of accumulated depreciation of $179 and $124, respectively | 121 | 156 |
Right of use assets | 671 | 827 |
Deferred costs, long term | 102 | 145 |
Intangible assets, net of accumulated amortization of $4,294 and $3,710, respectively | 1,931 | 1,715 |
Goodwill | 701 | 701 |
Total assets | 17,710 | 9,152 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,588 | 973 |
Finance lease liabilities | 57 | 52 |
Operating lease liabilities | 223 | 209 |
Warrant liability | 0 | 120 |
Deferred revenue | 5,587 | 5,372 |
Total current liabilities | 7,455 | 6,726 |
Long term liabilities: | ||
Finance lease liabilities | 23 | 52 |
Operating lease liabilities | 486 | 655 |
Deferred revenue | 110 | 153 |
Term loan | 1,302 | 0 |
Total liabilities | 9,376 | 7,586 |
Stockholders' equity: | ||
Preferred stock, value | 0 | 0 |
Common stock, par value, 50,000 shares authorized, 9,921 and 8,877 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 1 | 1 |
Additional paid-in capital | 62,409 | 51,490 |
Accumulated deficit | (54,077) | (49,926) |
Total stockholders' equity | 8,334 | 1,566 |
Total liabilities and stockholders' equity | 17,710 | 9,152 |
Series A Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, value | $ 1 | $ 1 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Allowance for doubtful accounts | $ 79 | $ 63 |
Property plant and equipment, accumulated depreciation | 179 | 124 |
Intangible assets, accumulated amortization | $ 4,294 | $ 3,710 |
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 9,921,000 | 8,877,000 |
Common Stock, Shares, Outstanding | 9,921,000 | 8,877,000 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 200,000 | 200,000 |
Preferred Stock, Shares Issued | 100,000 | 105,000 |
Preferred Stock, Shares Outstanding | 100,000 | 105,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenue | $ 5,341 | $ 2,776 | $ 14,885 | $ 7,198 |
Cost of revenue | 1,551 | 1,147 | 4,478 | 3,193 |
Gross profit | 3,790 | 1,629 | 10,407 | 4,005 |
Operating expenses: | ||||
Selling and marketing | 2,028 | 1,598 | 5,551 | 4,257 |
Research and development | 203 | 149 | 801 | 442 |
General and administrative | 3,197 | 2,040 | 8,185 | 5,624 |
Total operating expenses | 5,428 | 3,787 | 14,537 | 10,323 |
Operating loss | (1,638) | (2,158) | (4,130) | (6,318) |
Other income (expense): | ||||
Change in fair value of warrant liability | 593 | 0 | 120 | 0 |
Interest expense | (35) | (37) | (141) | (39) |
Total other income (expense) | 558 | (37) | (21) | (39) |
Net loss | (1,080) | (2,195) | (4,151) | (6,357) |
Dividends on Series A Convertible Preferred Stock | (13) | (13) | (39) | (39) |
Net loss available to common stockholders | $ (1,093) | $ (2,208) | $ (4,190) | $ (6,396) |
Net loss per common share-basic and diluted | $ (0.12) | $ (0.27) | $ (0.46) | $ (0.81) |
Weighted average common shares outstanding-basic and diluted | 9,385 | 8,279 | 9,067 | 7,848 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Preferred Stock | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 1 | $ 1 | $ 48,017 | $ (42,144) | $ 5,875 |
Balance (in shares) at Dec. 31, 2018 | 7,580,000 | 105,000 | |||
Share-based compensation | 449 | 449 | |||
Common stock issued in exchange for exercise of warrants and options | 42 | 42 | |||
Common stock issued in exchange for exercise of warrants and options (in shares) | 43,000 | ||||
Net loss | (2,141) | (2,141) | |||
Balance at Mar. 31, 2019 | $ 1 | $ 1 | 48,508 | (44,285) | 4,225 |
Balance (in shares) at Mar. 31, 2019 | 7,623,000 | 105,000 | |||
Balance at Dec. 31, 2018 | $ 1 | $ 1 | 48,017 | (42,144) | 5,875 |
Balance (in shares) at Dec. 31, 2018 | 7,580,000 | 105,000 | |||
Net loss | (6,357) | ||||
Balance at Sep. 30, 2019 | $ 1 | $ 1 | 51,489 | (48,500) | 2,991 |
Balance (in shares) at Sep. 30, 2019 | 8,877,000 | 105,000 | |||
Balance at Mar. 31, 2019 | $ 1 | $ 1 | 48,508 | (44,285) | 4,225 |
Balance (in shares) at Mar. 31, 2019 | 7,623,000 | 105,000 | |||
Share-based compensation | 275 | 275 | |||
Common stock issued in exchange for exercise of warrants and options (in shares) | 33,000 | ||||
Common stock issued upon exercise of warrants and options on a cash basis | 99 | 99 | |||
Net loss | (2,020) | (2,020) | |||
Balance at Jun. 30, 2019 | $ 1 | $ 1 | 48,882 | (46,305) | 2,579 |
Balance (in shares) at Jun. 30, 2019 | 7,656,000 | 105,000 | |||
Share-based compensation | 273 | 273 | |||
Warrants issued in connection with line of credit | 219 | 219 | |||
Common stock issued in exchange for exercise of warrants and options | 2,115 | 2,115 | |||
Common stock issued in exchange for exercise of warrants and options (in shares) | 1,221,000 | ||||
Net loss | (2,195) | (2,195) | |||
Balance at Sep. 30, 2019 | $ 1 | $ 1 | 51,489 | (48,500) | 2,991 |
Balance (in shares) at Sep. 30, 2019 | 8,877,000 | 105,000 | |||
Balance at Dec. 31, 2019 | $ 1 | $ 1 | 51,490 | (49,926) | 1,566 |
Balance (in shares) at Dec. 31, 2019 | 8,877,000 | 105,000 | |||
Share-based compensation | 256 | 256 | |||
Net loss | (1,664) | (1,664) | |||
Balance at Mar. 31, 2020 | $ 1 | $ 1 | 51,746 | (51,590) | 158 |
Balance (in shares) at Mar. 31, 2020 | 8,877,000 | 105,000 | |||
Balance at Dec. 31, 2019 | $ 1 | $ 1 | 51,490 | (49,926) | 1,566 |
Balance (in shares) at Dec. 31, 2019 | 8,877,000 | 105,000 | |||
Net loss | (4,151) | ||||
Balance at Sep. 30, 2020 | $ 1 | $ 1 | 62,409 | (54,077) | 8,334 |
Balance (in shares) at Sep. 30, 2020 | 9,921,000 | 100,000 | |||
Balance at Mar. 31, 2020 | $ 1 | $ 1 | 51,746 | (51,590) | 158 |
Balance (in shares) at Mar. 31, 2020 | 8,877,000 | 105,000 | |||
Share-based compensation | 659 | 659 | |||
Common stock issued upon conversion of preferred stock (in Shares) | 14,000 | (5,000) | |||
Common stock issued in exchange for exercise of warrants and options on a cashless basis (in shares) | 177,000 | ||||
Common stock issued in exchange for options exercised on a cash basis | 44 | 44 | |||
Common stock issued in exchange for options exercised on a cash basis (in shares) | 45,000 | ||||
Net loss | (1,407) | (1,407) | |||
Balance at Jun. 30, 2020 | $ 1 | $ 1 | 52,449 | (52,997) | (546) |
Balance (in shares) at Jun. 30, 2020 | 9,113,000 | 100,000 | |||
Share-based compensation | 1,089 | 1,089 | |||
Common stock issued upon exercise of warrants and options on a cash basis | $ 0 | $ 0 | 1,047 | 0 | 1,047 |
Common stock issued upon exercise of warrants and options on a cash basis (in shares) | 225,000 | 0 | |||
Common stock issued upon settlement of restricted stock units | $ 0 | $ 0 | 0 | 0 | 0 |
Common stock issued upon settlement of restricted stock units (in shares) | 89,000 | 0 | |||
Issuance of common stock, net of transaction expenses | 7,824 | $ 7,824 | |||
Issuance of common stock, net of transaction expenses (in shares) | 473,000 | 473,239 | |||
Common stock issued in exchange for exercise of warrants and options on a cashless basis (in shares) | 21,000 | ||||
Net loss | $ 0 | $ 0 | 0 | (1,080) | $ (1,080) |
Balance at Sep. 30, 2020 | $ 1 | $ 1 | $ 62,409 | $ (54,077) | $ 8,334 |
Balance (in shares) at Sep. 30, 2020 | 9,921,000 | 100,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,151) | $ (6,357) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 639 | 534 |
Share-based compensation expense | 2,004 | 997 |
Amortization of deferred commission | 162 | 175 |
Amortization of debt issuance costs | 137 | 37 |
Amortization of right of use assets | 156 | 164 |
Change in fair value of warrant liability | (120) | 0 |
Provision for accounts receivable | 109 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable and unbilled receivables | (482) | (1,190) |
Prepaid expenses and other current assets | (136) | (393) |
Accounts payable and accruals | 615 | 576 |
Operating lease liability | (155) | (138) |
Related party payables | 0 | (10) |
Deferred revenue | 172 | 1,283 |
Related party payables | 0 | (10) |
Net cash used in operating activities | (1,050) | (4,322) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | 0 | (46) |
Software development costs | (659) | (137) |
Patent costs | (141) | 0 |
Net cash used in investing activities | (800) | (183) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from common stock offering, net of transaction costs | 7,824 | 0 |
Proceeds from term loan | 1,302 | 0 |
Proceeds from exercise of options and warrants | 1,091 | 2,256 |
Repayments of finance leases | (44) | (29) |
Net cash provided by financing activities | 10,173 | 2,227 |
Net increase (decrease) in cash | 8,323 | (2,278) |
Cash-beginning of period | 1,972 | 5,742 |
Cash-end of period | 10,295 | 3,464 |
Non cash investing and financing activities: | ||
Effect of adoption of Accounting Codification Standard 2014-09, Revenue from Contracts with Customers | 8,334 | 2,991 |
Effect of adoption of Accounting Codification Standard 2014-09, Revenue from Contracts with Customers | $ 8,334 | $ 2,991 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 1 —BASIS OF PRESENTATION The accompanying unaudited interim financial statements of AudioEye, Inc. (“we”, “our” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Form 10-K”), as filed with the SEC on March 30, 2020. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Certain information and disclosures normally contained in the audited financial statements as reported in the Company’s Annual Report on Form 10‑K have been condensed or omitted in accordance with the SEC's rules and regulations for interim reporting. Certain prior period amounts have been reclassified to conform to current period classification. Reclassifications had no material effect on prior year net loss, earnings per share, or shareholders' equity. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are presented in “Note 3 – Significant Accounting Policies” in the 2019 Form 10-K. Users of financial information for interim periods are encouraged to refer to the footnotes to the consolidated financial statements contained in the 2019 Form 10-K when reviewing interim financial results. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to share-based compensation, capitalization of software development costs, and income taxes. Actual results may differ from these estimates. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We determine revenue recognition through the following five steps: · Identify the contract with the customer; · Identify the performance obligations in the contract; · Determine the transaction price; · Allocate the transaction price to the performance obligations in the contract; and · Recognize revenue when, or as, the performance obligations are satisfied. We generate substantially all our revenue from Software as a Service (“SaaS”), which are comprised of fixed subscription fees from customer accounts on the Managed Platform. SaaS (also referred to as “subscription”) revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Certain SaaS fees are invoiced in advance on an annual, semi-annual, or quarterly basis. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when the related performance obligations have been satisfied. Non-subscription revenue consists of PDF remediation services and is recognized upon delivery. Consideration payable under these arrangements is based on usage. The following table presents our revenues disaggregated by sales channel: Nine months ended September 30, 2020 2019 (in thousands) Direct (Enterprise) $ 8,104 $ 5,135 Indirect (Vertical partners) 6,698 2,063 Other 83 — Total revenues $ 14,885 $ 7,198 The Company records accounts receivable for amounts invoiced to customers for which the Company has an unconditional right to consideration as provided under the contractual arrangement. Unbilled receivables include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. Our unbilled receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Unbilled receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. The table below summarizes our deferred revenue as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in thousands) Deferred revenue - current $ 5,587 $ 5,372 Deferred revenue - noncurrent 110 153 Total deferred revenue $ 5,697 $ 5,525 In the nine-month period ended September 30, 2020 we recognized $4,724,000, or 85%, in revenue from deferred revenue outstanding as of December 31, 2019. In the three months ended September 30, 2020, two customers (including affiliates of such customers) accounted for 15% and 11%, respectively, of our total revenue. In the nine months ended September 30, 2020 one customer accounted for 16% of our total revenue. In the three and nine months ended September 30, 2019, one customer accounted for 9% and 10% of our total revenue, respectively. Two customers represented 14% and 11%, respectively, of total accounts receivable as of September 30, 2020. At December 31, 2019, one customer represented 40% of the outstanding accounts receivable. Deferred Costs (Contract acquisition costs) The Company capitalizes initial and renewal sales commission payments in the period a customer contract is obtained and customer payment is received, and amortizes deferred commission costs on a straight-line basis over the expected period of benefit, which we have deemed to be the contract term. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs would have been less than one year. The table below summarizes the deferred commission costs as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in thousands) Deferred costs - current $ 179 $ 183 Deferred costs - noncurrent 102 145 Total deferred costs $ 281 $ 328 Amortization expense associated with sales commissions was included in selling and marketing expenses on the consolidated statements of operations and totaled $51,000 and $162,000 for the three- and nine-month periods ended September 30, 2020, respectively, and $67,000 and $175,000 for the three- and nine-month periods ended September 30, 2019, respectively. There were no impairment losses for these capitalized costs for the three and nine months ended September 30, 2020 and 2019. Share-Based Compensation The Company periodically issues options, warrants and restricted stock units (“RSUs”) as compensation for services received. The fair value of the award is measured on the grant date. The fair value amount is then recognized as expense over the requisite vesting period during which services are required to be provided in exchange for the award. The fair value of options and warrants awards is measured on the grant date using a Black-Scholes option pricing model, which includes assumptions that are subjective and are generally derived from external data (such as risk-free rate of interest) and historical data (such as volatility factor, expected term, and forfeiture rates). Future grants of equity awards accounted for as share-based compensation could have a material impact on reported expenses depending upon the number, value, and vesting period of future awards. We estimate the fair value of restricted stock unit awards with time- or performance-based vesting using the value of our common stock on the date of grant. We estimate the fair value of market-based restricted stock units using a Monte Carlo simulation model on the date of grant. We expense the compensation cost associated with time-based options, warrants and RSUs as the restriction period lapses, which is typically a one- to three-year service period with the Company. Compensation expense related to performance-based options and RSUs is recognized on a straight-line basis over the requisite service period, provided that it is probable that performance conditions will be achieved, with probability assessed on a quarterly basis and any changes in expectations recognized as an adjustment to earnings in the period of the change. Compensation cost is not recognized for service- and performance-based awards that do not vest because service or performance conditions are not satisfied and any previously recognized compensation cost is reversed. Compensation costs related to awards with market conditions are recognized on a straight-line basis over the requisite service period regardless of whether the market condition is satisfied, and is not reversed provided that the requisite service period derived from the Monte-Carlo simulation has been completed. If vesting occurs prior to the end of the requisite service period, expense is accelerated and fully recognized through the vesting date. In the three- and nine-month periods ended September 30, 2020, we awarded 89,900 and 181,092 options, respectively, and 305,145 and 659,821 RSUs, respectively, to employees, officers, and consultants of the Company, which included a grant to our Interim Chief Executive Officer of 260,000 RSUs with performance-based and market-based conditions in the third quarter of 2020. The performance condition for 105,000 of the RSUs in the CEO award is based on the achievement of Monthly Recurring Revenue (“MRR”) targets. The Company did not record any stock-based compensation expense related to these performance-based RSUs in the three months ended September 30, 2020 as the achievement of performance targets during the requisite period was not deemed probable. The Company will continue to evaluate the probability of achieving the performance conditions in future periods and record the appropriate expense if necessary. The market condition for the remaining 155,000 RSUs in the award is based on the Company’s stock price targets. The Company used a Monte Carlo simulation to determine the grant-date fair value for the market-based RSUs. The weighted-average assumptions used in the Monte-Carlo simulation were as follows: 5-year historical volatility of 136.52%, 5-year risk-free rate of 0.26%, and a performance period of 5 years. The Company recorded $464,000 in stock-based compensation expense related to these market-based RSUs in the three months ended September 30, 2020. In the three- and nine-month periods ended September 30, 2020, no warrants were issued and no stock-based compensation expense related to warrants was incurred. As of September 30, 2020, there was no remaining unamortized stock-based compensation expense related to warrants. The following table summarizes the stock-based compensation expense recorded for the three and nine months ended September 30, 2020 and 2019: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Stock Options $ 79 $ 71 $ 200 $ 237 RSUs 1,010 202 1,804 760 Total $ 1,089 $ 273 $ 2,004 $ 997 As of September 30, 2020, the outstanding unrecognized stock-based compensation expense related to options and RSUs was $1,352,000 and $6,058,000, respectively, which may be recognized through June 2025, subject to achievement of service, performance, and market conditions. Earnings (Loss) Per Share (“EPS”) Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted EPS is calculated based on the net income (loss) available to common stockholders and the weighted average number of shares of common stock outstanding during the period, adjusted for the effects of all potential dilutive common stock issuances related to options, warrants, restricted stock units and convertible preferred stock. The dilutive effect of our share-based awards and warrants is computed using the treasury stock method, which assumes all share-based awards and warrants are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (i.e., the difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock is computed using the if-converted method, which assumes conversion at the beginning of the year. However, when a net loss exists, no potential common stock equivalents are included in the computation of the diluted per-share amount because the computation would result in an anti-dilutive per-share amount. Potentially dilutive securities excluded from the computation of basic and diluted net loss per share for the nine months ended September 30, 2020 and 2019 were as follows: 2020 2019 ( in thousands) Preferred stock 290 293 Options 683 904 Warrants 85 537 Restricted stock units 846 381 Total 1,904 2,115 The following table summarizes the stock option activity for the nine months ended September 30, 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2019 965,043 $ 3.70 3.01 759,631 $ 1,666,266 Granted 181,092 10.60 5.00 Exercised (315,630) 2.12 Forfeited/Expired (147,091) 8.02 Outstanding at September 30, 2020 683,414 $ 5.33 2.48 444,329 $ 6,323,007 The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2020: Restricted stock units outstanding as of December 31, 2019 428,919 Granted 659,821 Settled (88,799) Forfeited/Canceled (154,080) Total restricted stock units outstanding at September 30, 2020 845,861 Vested at September 30, 2020 268,174 Unvested restricted stock units as of September 30, 2020 577,687 The following table summarizes the warrant activity for the nine months ended September 30, 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2019 424,708 $ 5.31 0.82 $ 189,450 Granted — — Exercised (317,467) 4.76 Forfeited/Expired (22,188) 9.59 Outstanding at September 30, 2020 85,053 $ 6.25 1.19 $ 708,917 Fair Value Measurements Fair value is an estimate of the exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction cost. Fair value measurement under U.S. GAAP provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining the fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities. The Company had no assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019. The table below provides information on our liabilities that are measured at fair value on a recurring basis: Fair Value Fair Value Hierarchy (in thousands) Liabilities Warrant liability (1), September 30, 2020 $ — Level 3 Warrant liability (1), December 31, 2019 $ 120 Level 3 (1) Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." This ASU clarifies the accounting treatment for implementation costs for cloud computing arrangements (hosting arrangements) that is a service contract. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact our financial position, results of operations or disclosures. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." This ASU adds, modifies, and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, "Fair Value Measurement." This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not impact our financial position, results of operations or disclosures. |
CAPITAL RAISE AND LIQUIDITY
CAPITAL RAISE AND LIQUIDITY | 9 Months Ended |
Sep. 30, 2020 | |
CAPITAL RAISE AND LIQUIDITY | |
CAPITAL RAISE AND LIQUIDITY | NOTE 3 — CAPITAL RAISE AND LIQUIDITY In the third quarter of 2020, we completed a public offering of common stock, whereby we issued 473,239 shares of our common stock at $17.75 per share, and raised a total of $7,824,000, net of underwriting discounts and commissions and other costs associated with the offering. As of September 30, 2020, cash and working capital totaled $10,295,000 and $6,729,000, respectively. For the nine months ended September 30, 2020, cash used in operating activities totaled $1,050,000. We have incurred net losses since inception. Our independent registered public accounting firm expressed in its report on our financial statements for the years ended December 31, 2019 and 2018 that there was substantial doubt about our ability to continue as a going concern. Following the capital raise during the third quarter of 2020, which contributed to the improvement in our cash and working capital positions as of September 30, 2020, we believe that the substantial doubt about our ability to continue as a going concern has been alleviated and that we have sufficient liquidity to continue as a going concern through the next twelve months. |
LEASE LIABILITIES AND RIGHT OF
LEASE LIABILITIES AND RIGHT OF USE ASSETS | 9 Months Ended |
Sep. 30, 2020 | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | NOTE 4 — LEASE LIABILITIES AND RIGHT OF USE ASSETS We determine whether an arrangement is a lease at inception. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Finance Leases The Company has finance leases to purchase computer equipment. The amortization expense of the leased equipment is included in depreciation expense. As of September 30, 2020 and December 31, 2019, the Company's outstanding finance lease obligations totaled $80,000 and $104,000, respectively. The effective interest rate of the finance leases is estimated at 6.0% based on the implicit rate in the lease agreements. The following summarizes the assets acquired under finance leases, included in property and equipment: September 30, December 31, 2020 2019 (in thousands) Computer equipment $ 177 $ 157 Less: accumulated depreciation (101) (60) Assets acquired under finance leases, net $ 76 $ 97 Operating Leases Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since our lease arrangements do not provide an implicit rate, we use our estimated incremental borrowing rate for the expected remaining lease term at commencement date for new leases, or as of January 1, 2019 for existing leases, in determining the present value of future lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. The Company has operating leases for office space in Tucson, Arizona and Marietta, Georgia. The company also leases office space in Scottsdale, Arizona from a company controlled by our Executive Chairman, which continues on a month-to-month basis, therefore was not measured under Topic 842. In addition, the Company entered into membership agreements to occupy shared office space in New York and Portland, Oregon. The membership agreements do not qualify as a lease under ASC 842 as the owner has substantive substitution rights, therefore the Company expenses membership fees as they are incurred. See Note 8 - Commitments and Contingencies for further details on our shared office arrangements. The Company made operating lease payments in the amount of $191,000 during the nine months ended September 30, 2020. The following summarizes the total lease liabilities and remaining future minimum lease payments at September 30, 2020 (in thousands): Year ending December 31, Finance Leases Operating Leases Total 2020 (3 months remaining) $ 16 $ 64 $ 80 2021 52 262 314 2022 17 257 274 2023 1 118 119 2024 — 81 81 Total minimum lease payments 86 782 868 Less: present value discount (6) (73) (79) Total lease liabilities 80 709 789 Current portion of lease liabilities 57 223 280 Long term portion of lease liabilities $ 23 $ 486 $ 509 The following summarizes expenses associated with our finance and operating leases for the nine months ended September 30, 2020 (in thousands): Finance lease expenses: Depreciation expense $ 41 Interest on lease liabilities 5 Total Finance lease expense 46 Operating lease expense 192 Short-term lease and related expenses 103 Total lease expenses $ 341 The following table provides information about the remaining lease terms and discount rates applied as of September 30, 2020: Weighted average remaining lease term (years) Operating Leases Finance Leases Weighted average discount rate (%) Operating Leases Finance Leases |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2020 | |
DEBT | |
DEBT | NOTE 5 — DEBT Related party credit facility On August 14, 2019, the Company entered into a Loan Agreement (the “Loan Agreement”) with Sero Capital LLC (“Sero Capital”), a stockholder who owns more than 10% of the outstanding shares of common stock of the Company. The beneficial owner of Sero Capital is David Moradi, who became a director of the Company on November 8, 2019 and was appointed the Company's Interim Chief Executive Officer and Chief Strategy Officer on August 13, 2020. The Loan Agreement provided the Company with an unsecured credit facility under which the Company may borrow up to the aggregate principal amount of $2,000,000. Any advances under the Loan Agreement would bear interest at a per annum rate of 10% (subject to increase in the event of a default). The term of the Loan Agreement extended through August 14, 2020 and provided for certain customary covenants, representations and events of default. No amounts had been drawn under the credit facility through its expiration on August 14, 2020. In consideration of the Loan Agreement, the Company issued to Sero Capital common stock warrants to acquire up to a total of 146,667 shares of the Company’s common stock at an exercise price of $6.00 per share, which were classified as a liability instrument since the holder had the option to require the Company to repurchase the warrants when certain events occurred that were considered outside of the control of the Company. In the third quarter of 2020, the Company received $880,000 in cash in connection with Sero Capital’s full exercise of these warrants. The estimated fair value of the warrants held by Sero Capital was $219,000 at the date of issuance and included in debt issuance costs on the consolidated balance sheet. Debt issuance cost was amortized as interest expense on a straight-line basis over the term of the associated credit facility. As of September 30, 2020, the unamortized balance of debt issuance costs was zero . Term loan On April 15, 2020, the Company entered into a loan agreement in the amount of $1,302,000 with Liberty Capital Bank (“Lender”) pursuant to the Paycheck Protection Program (“PPP Loan”) of the CARES Act, which is administered by the Small Business Administration (“SBA”). Pursuant to the terms of the PPP Loan, interest payments are deferred until the date on which the SBA either remits to the Lender the amount of the PPP Loan that will be forgiven by the SBA or notifies the Lender that the PPP Loan or a portion thereof will not be forgiven. The loan has a maturity of two years and an interest rate of 1.0% per annum. The PPP Loan is not collateralized and is not personally guaranteed. No fees were charged in connection with the loan. All or a portion of the PPP Loan may be forgiven upon application by the Company in accordance with the SBA requirements. As of September 30, 2020, the outstanding principal balance of the PPP Loan totaled $1,302,000 and accrued interest totaled $6,000. |
SERIES A CONVERTIBLE PREFERRED
SERIES A CONVERTIBLE PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2020 | |
Series A Preferred Stock [Member] | |
Class of Stock [Line Items] | |
SERIES A CONVERTIBLE PREFERRED STOCK | NOTE 6 — SERIES A CONVERTIBLE PREFERRED STOCK As of September 30, 2020 and December 31, 2019, the Company had 100,000 and 105,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”) outstanding, respectively, which Preferred Stock was issued at $10 per share, accrues 5% in a cumulative annual dividend, and is convertible into the Company’s common stock at a price of $4.385 per share. For the nine months ended September 30, 2020, preferred stockholders collectively earned, but were not paid, approximately $38,000 in quarterly dividends, which is equivalent to 8,709 shares of common stock based on a conversion price of $4.385 per share. As of September 30, 2020 and December 31, 2019, cumulative and unpaid dividends were approximately $271,000 and approximately $245,000, respectively, which is equivalent to 61,823 and 55,927 shares of common stock, respectively, based on a conversion price of $4.385 per share. On any matter presented to the stockholders of the Company for vote, holders of Preferred Stock are entitled to cast the number of votes equal to the number of shares of common stock into which their shares of Preferred Stock are convertible as of the record date to vote on such matter. As long as any shares of Preferred Stock are outstanding, the Company has certain restrictions on share repurchases and amendments to the Certificate of Incorporation in a manner that adversely affects any rights of the holders of Preferred Stock. In addition, the holders of Preferred Stock have a liquidation preference for purposes of which the Preferred Stock would be valued at $10 per share plus accrued cumulative annual dividends. At September 30, 2020 and December 31, 2019, the liquidation preference was valued at $1,271,000 and $1,295,000, respectively. In the event of any liquidity event, holders of Preferred Stock shall be entitled to be paid their liquidation preference out of the assets of the Company legally available before any sums shall be paid to holders of common stock. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 7 — RELATED PARTY TRANSACTIONS As discussed in Note 5 – Debt, we entered into a Loan Agreement with Sero Capital, a stockholder who owns more than 10% of the outstanding shares of common stock of the Company. The beneficial owner of Sero Capital is David Moradi, who became a director of the Company on November 8, 2019 and was appointed the Company's Interim Chief Executive Officer and Chief Strategy Officer on August 13, 2020. The Loan Agreement extended through August 14, 2020 and provided the Company with an unsecured credit facility under which we could borrow up to the aggregate principal amount of $2,000,000. No amounts had been drawn under the credit facility though its expiration on August 14, 2020. In consideration for the Loan Agreement, we issued to Sero Capital common stock warrants to acquire up to a total of 146,667 shares of the Company’s common stock at an exercise price of $6.00 per share. The warrants were fully exercised in August 2020 and the warrant liability was extinguished. See Note- 5 – Debt for additional detail on our warrant liability. As discussed in Note 4 – Lease Liabilities and Right of Use Assets, we lease office space from a company controlled by our Executive Chairman. For the three- and nine- month periods ended September 30, 2020, rent payments for this office space totaled $17,000 and $52,000, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 — COMMITMENTS AND CONTINGENCIES Membership agreement to occupy shared office space In the second quarter of 2020, the Company entered into a membership agreement to occupy shared office space in Portland, Oregon. Our new shared office arrangement commenced upon taking possession of the space and ends in August 2021. Fees due under the membership agreement are based on the number of contracted seats and the use of optional office services. As of September 30, 2020, minimum fees due under this shared office arrangement totaled $41,000. The Company also amended its original membership agreement to occupy shared office space in New York, NY through July 2021. As of September 30, 2020, minimum fees due under this shared office arrangement totaled $81,000. Litigation We may become involved in various routine disputes and allegations incidental to our business operations. While it is not possible to determine the ultimate disposition of these matters, management believes that the resolution of any such matters, should they arise, is not likely to have a material adverse effect on our financial position or results of operations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 9 — SUBSEQUENT EVENTS We have evaluated subsequent events occurring after September 30, 2020 and based on our evaluation we did not identify any events that would have required recognition or disclosure in these consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to share-based compensation, capitalization of software development costs, and income taxes. Actual results may differ from these estimates. |
Revenue Recognition | Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We determine revenue recognition through the following five steps: · Identify the contract with the customer; · Identify the performance obligations in the contract; · Determine the transaction price; · Allocate the transaction price to the performance obligations in the contract; and · Recognize revenue when, or as, the performance obligations are satisfied. We generate substantially all our revenue from Software as a Service (“SaaS”), which are comprised of fixed subscription fees from customer accounts on the Managed Platform. SaaS (also referred to as “subscription”) revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Certain SaaS fees are invoiced in advance on an annual, semi-annual, or quarterly basis. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when the related performance obligations have been satisfied. Non-subscription revenue consists of PDF remediation services and is recognized upon delivery. Consideration payable under these arrangements is based on usage. The following table presents our revenues disaggregated by sales channel: Nine months ended September 30, 2020 2019 (in thousands) Direct (Enterprise) $ 8,104 $ 5,135 Indirect (Vertical partners) 6,698 2,063 Other 83 — Total revenues $ 14,885 $ 7,198 The Company records accounts receivable for amounts invoiced to customers for which the Company has an unconditional right to consideration as provided under the contractual arrangement. Unbilled receivables include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. Our unbilled receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Unbilled receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. The table below summarizes our deferred revenue as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in thousands) Deferred revenue - current $ 5,587 $ 5,372 Deferred revenue - noncurrent 110 153 Total deferred revenue $ 5,697 $ 5,525 In the nine-month period ended September 30, 2020 we recognized $4,724,000, or 85%, in revenue from deferred revenue outstanding as of December 31, 2019. In the three months ended September 30, 2020, two customers (including affiliates of such customers) accounted for 15% and 11%, respectively, of our total revenue. In the nine months ended September 30, 2020 one customer accounted for 16% of our total revenue. In the three and nine months ended September 30, 2019, one customer accounted for 9% and 10% of our total revenue, respectively. Two customers represented 14% and 11%, respectively, of total accounts receivable as of September 30, 2020. At December 31, 2019, one customer represented 40% of the outstanding accounts receivable |
Deferred Costs (Contract acquisition costs) | Deferred Costs (Contract acquisition costs) The Company capitalizes initial and renewal sales commission payments in the period a customer contract is obtained and customer payment is received, and amortizes deferred commission costs on a straight-line basis over the expected period of benefit, which we have deemed to be the contract term. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs would have been less than one year. The table below summarizes the deferred commission costs as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in thousands) Deferred costs - current $ 179 $ 183 Deferred costs - noncurrent 102 145 Total deferred costs $ 281 $ 328 Amortization expense associated with sales commissions was included in selling and marketing expenses on the consolidated statements of operations and totaled $51,000 and $162,000 for the three- and nine-month periods ended September 30, 2020, respectively, and $67,000 and $175,000 for the three- and nine-month periods ended September 30, 2019, respectively. There were no impairment losses for these capitalized costs for the three and nine months ended September 30, 2020 and 2019 |
Stock-Based Compensation | Share-Based Compensation The Company periodically issues options, warrants and restricted stock units (“RSUs”) as compensation for services received. The fair value of the award is measured on the grant date. The fair value amount is then recognized as expense over the requisite vesting period during which services are required to be provided in exchange for the award. The fair value of options and warrants awards is measured on the grant date using a Black-Scholes option pricing model, which includes assumptions that are subjective and are generally derived from external data (such as risk-free rate of interest) and historical data (such as volatility factor, expected term, and forfeiture rates). Future grants of equity awards accounted for as share-based compensation could have a material impact on reported expenses depending upon the number, value, and vesting period of future awards. We estimate the fair value of restricted stock unit awards with time- or performance-based vesting using the value of our common stock on the date of grant. We estimate the fair value of market-based restricted stock units using a Monte Carlo simulation model on the date of grant. We expense the compensation cost associated with time-based options, warrants and RSUs as the restriction period lapses, which is typically a one- to three-year service period with the Company. Compensation expense related to performance-based options and RSUs is recognized on a straight-line basis over the requisite service period, provided that it is probable that performance conditions will be achieved, with probability assessed on a quarterly basis and any changes in expectations recognized as an adjustment to earnings in the period of the change. Compensation cost is not recognized for service- and performance-based awards that do not vest because service or performance conditions are not satisfied and any previously recognized compensation cost is reversed. Compensation costs related to awards with market conditions are recognized on a straight-line basis over the requisite service period regardless of whether the market condition is satisfied, and is not reversed provided that the requisite service period derived from the Monte-Carlo simulation has been completed. If vesting occurs prior to the end of the requisite service period, expense is accelerated and fully recognized through the vesting date. In the three- and nine-month periods ended September 30, 2020, we awarded 89,900 and 181,092 options, respectively, and 305,145 and 659,821 RSUs, respectively, to employees, officers, and consultants of the Company, which included a grant to our Interim Chief Executive Officer of 260,000 RSUs with performance-based and market-based conditions in the third quarter of 2020. The performance condition for 105,000 of the RSUs in the CEO award is based on the achievement of Monthly Recurring Revenue (“MRR”) targets. The Company did not record any stock-based compensation expense related to these performance-based RSUs in the three months ended September 30, 2020 as the achievement of performance targets during the requisite period was not deemed probable. The Company will continue to evaluate the probability of achieving the performance conditions in future periods and record the appropriate expense if necessary. The market condition for the remaining 155,000 RSUs in the award is based on the Company’s stock price targets. The Company used a Monte Carlo simulation to determine the grant-date fair value for the market-based RSUs. The weighted-average assumptions used in the Monte-Carlo simulation were as follows: 5-year historical volatility of 136.52%, 5-year risk-free rate of 0.26%, and a performance period of 5 years. The Company recorded $464,000 in stock-based compensation expense related to these market-based RSUs in the three months ended September 30, 2020. In the three- and nine-month periods ended September 30, 2020, no warrants were issued and no stock-based compensation expense related to warrants was incurred. As of September 30, 2020, there was no remaining unamortized stock-based compensation expense related to warrants. The following table summarizes the stock-based compensation expense recorded for the three and nine months ended September 30, 2020 and 2019: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Stock Options $ 79 $ 71 $ 200 $ 237 RSUs 1,010 202 1,804 760 Total $ 1,089 $ 273 $ 2,004 $ 997 As of September 30, 2020, the outstanding unrecognized stock-based compensation expense related to options and RSUs was $1,352,000 and $6,058,000, respectively, which may be recognized through June 2025, subject to achievement of service, performance, and market conditions |
Earnings (Loss) Per Share ("EPS") | Earnings (Loss) Per Share (“EPS”) Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted EPS is calculated based on the net income (loss) available to common stockholders and the weighted average number of shares of common stock outstanding during the period, adjusted for the effects of all potential dilutive common stock issuances related to options, warrants, restricted stock units and convertible preferred stock. The dilutive effect of our share-based awards and warrants is computed using the treasury stock method, which assumes all share-based awards and warrants are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (i.e., the difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock is computed using the if-converted method, which assumes conversion at the beginning of the year. However, when a net loss exists, no potential common stock equivalents are included in the computation of the diluted per-share amount because the computation would result in an anti-dilutive per-share amount. Potentially dilutive securities excluded from the computation of basic and diluted net loss per share for the nine months ended September 30, 2020 and 2019 were as follows: 2020 2019 ( in thousands) Preferred stock 290 293 Options 683 904 Warrants 85 537 Restricted stock units 846 381 Total 1,904 2,115 The following table summarizes the stock option activity for the nine months ended September 30, 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2019 965,043 $ 3.70 3.01 759,631 $ 1,666,266 Granted 181,092 10.60 5.00 Exercised (315,630) 2.12 Forfeited/Expired (147,091) 8.02 Outstanding at September 30, 2020 683,414 $ 5.33 2.48 444,329 $ 6,323,007 The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2020: Restricted stock units outstanding as of December 31, 2019 428,919 Granted 659,821 Settled (88,799) Forfeited/Canceled (154,080) Total restricted stock units outstanding at September 30, 2020 845,861 Vested at September 30, 2020 268,174 Unvested restricted stock units as of September 30, 2020 577,687 The following table summarizes the warrant activity for the nine months ended September 30, 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2019 424,708 $ 5.31 0.82 $ 189,450 Granted — — Exercised (317,467) 4.76 Forfeited/Expired (22,188) 9.59 Outstanding at September 30, 2020 85,053 $ 6.25 1.19 $ 708,917 |
Fair Value Measurements | Fair Value Measurements Fair value is an estimate of the exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction cost. Fair value measurement under U.S. GAAP provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining the fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities. The Company had no assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019. The table below provides information on our liabilities that are measured at fair value on a recurring basis: Fair Value Fair Value Hierarchy (in thousands) Liabilities Warrant liability (1), September 30, 2020 $ — Level 3 Warrant liability (1), December 31, 2019 $ 120 Level 3 (1) |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." This ASU clarifies the accounting treatment for implementation costs for cloud computing arrangements (hosting arrangements) that is a service contract. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact our financial position, results of operations or disclosures. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." This ASU adds, modifies, and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, "Fair Value Measurement." This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not impact our financial position, results of operations or disclosures |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of disaggregation of revenue | The following table presents our revenues disaggregated by sales channel: Nine months ended September 30, 2020 2019 (in thousands) Direct (Enterprise) $ 8,104 $ 5,135 Indirect (Vertical partners) 6,698 2,063 Other 83 — Total revenues $ 14,885 $ 7,198 |
Schedule of deferred revenue | The table below summarizes our deferred revenue as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in thousands) Deferred revenue - current $ 5,587 $ 5,372 Deferred revenue - noncurrent 110 153 Total deferred revenue $ 5,697 $ 5,525 |
Schedule of commission cost | The table below summarizes the deferred commission costs as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in thousands) Deferred costs - current $ 179 $ 183 Deferred costs - noncurrent 102 145 Total deferred costs $ 281 $ 328 |
Schedule of antidilutive securities excluded from computation of earnings Per share | Potentially dilutive securities excluded from the computation of basic and diluted net loss per share for the nine months ended September 30, 2020 and 2019 were as follows: 2020 2019 ( in thousands) Preferred stock 290 293 Options 683 904 Warrants 85 537 Restricted stock units 846 381 Total 1,904 2,115 |
Schedule of fair value, assets and liabilities measured on recurring basis | The table below provides information on our liabilities that are measured at fair value on a recurring basis: Fair Value Fair Value Hierarchy (in thousands) Liabilities Warrant liability (1), September 30, 2020 $ — Level 3 Warrant liability (1), December 31, 2019 $ 120 Level 3 (1) |
Schedule of stock compensation expense | The following table summarizes the stock-based compensation expense recorded for the three and nine months ended September 30, 2020 and 2019: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Stock Options $ 79 $ 71 $ 200 $ 237 RSUs 1,010 202 1,804 760 Total $ 1,089 $ 273 $ 2,004 $ 997 |
Schedule of stock option activity | The following table summarizes the stock option activity for the nine months ended September 30, 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2019 965,043 $ 3.70 3.01 759,631 $ 1,666,266 Granted 181,092 10.60 5.00 Exercised (315,630) 2.12 Forfeited/Expired (147,091) 8.02 Outstanding at September 30, 2020 683,414 $ 5.33 2.48 444,329 $ 6,323,007 |
Schedule of restricted stock unit activity | The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2020: Restricted stock units outstanding as of December 31, 2019 428,919 Granted 659,821 Settled (88,799) Forfeited/Canceled (154,080) Total restricted stock units outstanding at September 30, 2020 845,861 Vested at September 30, 2020 268,174 Unvested restricted stock units as of September 30, 2020 577,687 |
Schedule of warrants activity | The following table summarizes the warrant activity for the nine months ended September 30, 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2019 424,708 $ 5.31 0.82 $ 189,450 Granted — — Exercised (317,467) 4.76 Forfeited/Expired (22,188) 9.59 Outstanding at September 30, 2020 85,053 $ 6.25 1.19 $ 708,917 |
LEASE LIABILITIES AND RIGHT O_2
LEASE LIABILITIES AND RIGHT OF USE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
Schedule of finance leased assets included in property plant and equipment | The following summarizes the assets acquired under finance leases, included in property and equipment: September 30, December 31, 2020 2019 (in thousands) Computer equipment $ 177 $ 157 Less: accumulated depreciation (101) (60) Assets acquired under finance leases, net $ 76 $ 97 |
Schedule of total remaining future minimum lease payments for finance leases | The following summarizes the total lease liabilities and remaining future minimum lease payments at September 30, 2020 (in thousands): Year ending December 31, Finance Leases Operating Leases Total 2020 (3 months remaining) $ 16 $ 64 $ 80 2021 52 262 314 2022 17 257 274 2023 1 118 119 2024 — 81 81 Total minimum lease payments 86 782 868 Less: present value discount (6) (73) (79) Total lease liabilities 80 709 789 Current portion of lease liabilities 57 223 280 Long term portion of lease liabilities $ 23 $ 486 $ 509 |
Schedule of future minimum lease payments for operating leases | The following summarizes the total lease liabilities and remaining future minimum lease payments at September 30, 2020 (in thousands): Year ending December 31, Finance Leases Operating Leases Total 2020 (3 months remaining) $ 16 $ 64 $ 80 2021 52 262 314 2022 17 257 274 2023 1 118 119 2024 — 81 81 Total minimum lease payments 86 782 868 Less: present value discount (6) (73) (79) Total lease liabilities 80 709 789 Current portion of lease liabilities 57 223 280 Long term portion of lease liabilities $ 23 $ 486 $ 509 |
Schedule of lease expense | The following summarizes expenses associated with our finance and operating leases for the nine months ended September 30, 2020 (in thousands): Finance lease expenses: Depreciation expense $ 41 Interest on lease liabilities 5 Total Finance lease expense 46 Operating lease expense 192 Short-term lease and related expenses 103 Total lease expenses $ 341 |
Schedule of lease terms and discount rates | The following table provides information about the remaining lease terms and discount rates applied as of September 30, 2020: Weighted average remaining lease term (years) Operating Leases Finance Leases Weighted average discount rate (%) Operating Leases Finance Leases |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
BASIS OF PRESENTATION | |||
Stock Issued During Period, Shares, New Issues | 473,239 | ||
Proceeds from common stock offering, net of transaction costs | $ 7,824 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregate revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Direct (Enterprise) | $ 8,104 | $ 5,135 | ||
Indirect (Vertical partners) | 6,698 | 2,063 | ||
Other | 83 | 0 | ||
Total revenues | $ 5,341 | $ 2,776 | $ 14,885 | $ 7,198 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Revenue, by Arrangement (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Deferred revenue - current | $ 5,587 | $ 5,372 |
Deferred revenue - noncurrent | 110 | 153 |
Total deferred revenue | $ 5,697 | $ 5,525 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred commission cost (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred costs - current | $ 179 | $ 183 |
Deferred costs - noncurrent | 102 | 145 |
Accounting Standards Update 2014-09 [Member] | ||
Deferred costs - current | 179 | 183 |
Deferred costs - noncurrent | 102 | 145 |
Total deferred costs | $ 281 | $ 328 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Allocated Share-based Compensation Expense | $ 1,089 | $ 273 | $ 2,004 | $ 997 |
Stock Option | ||||
Allocated Share-based Compensation Expense | 79 | 71 | 200 | 237 |
RSU | ||||
Allocated Share-based Compensation Expense | $ 1,010 | $ 202 | $ 1,804 | $ 760 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,904 | 2,115 |
Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 290 | 293 |
Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 683 | 904 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 85 | 537 |
RSU | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 846 | 381 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock option activity (Details) - Stock Option - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Number of Options | ||
Balance at beginning of the period (in shares) | 965,043 | |
Granted | 181,092 | |
Exercised | (315,630) | |
Forfeited/Expired | (147,091) | |
Balance at end of the period (in shares) | 683,414 | 965,043 |
Exercisable (in shares) | 444,329 | 759,631 |
Weighted Average Exercise Price | ||
Outstanding at beginning of the period (in dollars per share) | $ 3.70 | |
Granted (in dollars per share) | 10.60 | |
Exercised (in dollars per share) | 2.12 | |
Forfeited/Expired | 8.02 | |
Outstanding at end of the period (in dollars per share) | $ 5.33 | $ 3.70 |
Weighted Average Remaining Term | ||
Outstanding, Weighted Average Remaining Term | 2 years 5 months 23 days | 3 years 4 days |
Granted Weighted Average Remaining Term | 5 years | |
Intrinsic Value of Options | ||
Outstanding, Intrinsic Value of Options (in dollars) | $ 1,666,266 | |
Outstanding, Intrinsic Value of Options (in dollars) | $ 6,323,007 | $ 1,666,266 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Restricted Stock Unit Activity (Details) - RSU | 9 Months Ended |
Sep. 30, 2020shares | |
Restricted stock units outstanding | 428,919 |
Granted | 659,821 |
Settled | (88,799) |
Forfeited/Cancelled | (154,080) |
Total restricted stock units outstanding | 845,861 |
Vested at September 30, 2020 | 268,174 |
Unvested restricted stock units as of September 30, 2020 | 577,687 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Warrants activity (Details) - Warrant - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Number of warrants | ||
Balance at beginning of the period (In shares) | 424,708 | |
Granted | 0 | |
Exercised | (317,467) | |
Forfeited/Expired | (22,188) | |
Balance at end of the period (In shares) | 85,053 | 424,708 |
Weighted Average Exercise Price | ||
Balance at beginning of the period (in dollars per share) | $ 5.31 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 4.76 | |
Forfeited/Expired (in dollars per share) | 9.59 | |
Balance at end of the period (in dollars per share) | $ 6.25 | $ 5.31 |
Weighted Average Remaining Term | ||
Outstanding (In years) | 1 year 2 months 9 days | 9 months 26 days |
Intrinsic Value of Warrants | ||
Balance at beginning of the period (In dollars) | $ 189,450 | |
Granted | 0 | |
Balance at end of the period (In dollars) | $ 708,917 | $ 189,450 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair value on a recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 0 | $ 120 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Deferred revenue recognized to revenue | $ 4,724,000 | ||||
Deferred revenue recognized through the period (as a percent) | 85.00% | ||||
Amortization of Deferred Sales Commissions | $ 51,000 | $ 67,000 | 162,000 | $ 175,000 | |
Impairment loss | 0 | 0 | 0 | 0 | |
Stock compensation expense | $ 1,089,000 | 273,000 | 2,004,000 | 997,000 | |
Stock Issued During Period, Shares, New Issues | 473,239 | ||||
Proceeds from Issuance of Common Stock | 7,824,000 | 0 | |||
Gain on extinguishment of liability | $ (593,000) | 0 | (120,000) | 0 | |
Stock Option | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Outstanding unamortized share-based compensation expense | 1,352,000 | 1,352,000 | |||
Stock compensation expense | $ 79,000 | 71,000 | $ 200,000 | 237,000 | |
Stock Option | Employees, Officers and Consultants | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 89,900 | 181,092 | |||
RSU | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Outstanding unamortized share-based compensation expense | $ 6,058,000 | $ 6,058,000 | |||
Stock compensation expense | $ 1,010,000 | $ 202,000 | $ 1,804,000 | $ 760,000 | |
RSU | Employees, Officers and Consultants | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 305,145 | 659,821 | |||
Performance Based Restricted Stock Units (RSUs) [Member] | Interim Chief Executive Officer | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 260,000 | ||||
Monthly Recurring Revenue Targets, Restricted Stock Units [Member] | Interim Chief Executive Officer | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 105,000 | ||||
Market based performance Restricted Stock Units [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Volatility rate | 136.52% | ||||
Risk free interest rate | 0.26% | ||||
Performance period | 5 years | ||||
Stock compensation expense | $ 464,000 | ||||
Market based performance Restricted Stock Units [Member] | Interim Chief Executive Officer | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 155,000 | ||||
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Major Customer Number One [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Concentration Risk, Percentage | 15.00% | 9.00% | 16.00% | 10.00% | |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Major Customer Number Two [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Concentration Risk, Percentage | 11.00% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Major Customer Number One [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Concentration Risk, Percentage | 14.00% | 40.00% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Major Customer Number Two [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||
Concentration Risk, Percentage | 11.00% |
CAPITAL RAISE AND LIQUIDITY (De
CAPITAL RAISE AND LIQUIDITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
CAPITAL RAISE AND LIQUIDITY | ||||
Number of shares issued (in shares) | 473,239 | |||
Issue price per share (in dollars per share) | $ 17.75 | $ 17.75 | ||
Proceeds from common stock offering, net of transaction costs | $ 7,824 | $ 0 | ||
Cash | $ 10,295 | 10,295 | $ 1,972 | |
Working capital | $ 6,729 | 6,729 | ||
Cash used in operating activities | $ (1,050) | $ (4,322) |
LEASE LIABILITIES AND RIGHT O_3
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Right to use assets under finance leases (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Lessee, Finance Lease, Description [Abstract] | ||
Computer equipment | $ 177 | $ 157 |
Less: accumulated depreciation | (101) | (60) |
Assets acquired under finance leases, net | $ 76 | $ 97 |
LEASE LIABILITIES AND RIGHT O_4
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum finance lease payments (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2020 (3 months remaining) | $ 16,000 | |
2021 | 52,000 | |
2022 | 17,000 | |
2023 | 1,000 | |
2024 | 0 | |
Total minimum lease payments | 86,000 | |
Less: present value discount | (6,000) | |
Total lease liabilities | 80,000 | $ 104,000 |
Current portion of lease liabilities | 57,000 | 52,000 |
Long term portion of lease liabilities | $ 23,000 | $ 52,000 |
LEASE LIABILITIES AND RIGHT O_5
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum operating lease payments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2020 (3 months remaining) | $ 64 | |
2021 | 262 | |
2022 | 257 | |
2023 | 118 | |
2024 | 81 | |
Total minimum lease payments | 782 | |
Less: present value discount | (73) | |
Total operating lease liabilities | 709 | |
Current portion of operating lease obligations | 223 | $ 209 |
Long term portion of lease liabilities | $ 486 | $ 655 |
LEASE LIABILITIES AND RIGHT O_6
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Finance Leases and Operating Leases (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
2020 (3 months remaining) | $ 80 |
2021 | 314 |
2022 | 274 |
2023 | 119 |
2024 | 81 |
Total minimum lease payments | 868 |
Less: present value discount | (79) |
Total lease liabilities | 789 |
Current portion of lease liabilities | 280 |
Long term portion of lease liabilities | 509 |
Operating Lease, Expense | $ 192 |
LEASE LIABILITIES AND RIGHT O_7
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Lease expenses (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Finance lease expenses: | |
Depreciation/amortization expense | $ 41 |
Interest on lease liabilities | 5 |
Finance lease expense | 46 |
Operating lease expense | 192 |
Short-term lease expense | 103 |
Total lease expenses | $ 341 |
LEASE LIABILITIES AND RIGHT O_8
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Remaining lease terms and discount rates (Details) | Sep. 30, 2020 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
Weighted average remaining lease term (years) - Operating Leases | 3 years 2 months 5 days |
Weighted average remaining lease term (years) - Finance Leases | 1 year 7 months 2 days |
Weighted average discount rate (%) - Operating Leases | 6.00% |
Weighted average discount rate (%) - Finance Leases | 6.00% |
LEASE LIABILITIES AND RIGHT O_9
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Additional Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
Total finance lease liabilities | $ 80,000 | $ 104,000 |
Debt Instrument, Interest Rate, Effective Percentage | 6.00% | |
Operating Lease, Payments | $ 191,000 |
DEBT (Details)
DEBT (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2020 | Apr. 15, 2020 | Dec. 31, 2019 | Aug. 14, 2019 | |
Line of Credit Facility [Line Items] | ||||
Amounts drawn under loan agreement | $ 0 | |||
Unamortized deferred cost of warrants included in prepaid expenses and other current assets on the balance sheet | 219,000 | |||
Outstanding principal balance | $ 1,302,000 | $ 0 | ||
PPP Loan | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate (as a percent) | 1.00% | |||
Agreement amount | $ 1,302,000 | |||
Outstanding principal balance | $ 1,302,000 | |||
Accrued interest | 6,000 | |||
Sero Capital LLC | ||||
Line of Credit Facility [Line Items] | ||||
Percentage of equity interests held by the related party | 10.00% | |||
Warrants issued | 146,667 | |||
Warrants exercise price | $ 6 | |||
Cash received in full exercise of warrants | $ 880,000 | |||
Unsecured credit facility | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 2,000,000 |
SERIES A CONVERTIBLE PREFERRE_2
SERIES A CONVERTIBLE PREFERRED STOCK - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Class of Stock [Line Items] | ||
Common stock dividends shares | 61,823 | 55,927 |
Preferred stock unpaid dividend equivalent common stock, Shares | $ 271,000 | $ 245,000 |
Preferred stock liquidation preference value | $ 1,271,000 | $ 1,295,000 |
Preferred stock liquidation preference per share | $ 10 | |
Series A Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock outstanding shares | 100,000 | 105,000 |
Preferred stock issue per share | $ 10 | $ 10 |
Preferred stock dividend rate (in percentage) | 5.00% | 5.00% |
Redemption price (in dollars per share) | $ 4.385 | |
Dividends payable | $ 38,000 | |
Common stock dividends shares | 4,385 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Aug. 14, 2019 | |
Stock Issued During Period, Shares, New Issues | 473,239 | |||
Proceeds from Issuance of Common Stock | $ 7,824,000 | $ 0 | ||
Proceeds from Lines of Credit | 0 | |||
Operating Leases, Rent Expense | $ 17,000 | $ 52,000 | ||
Unsecured credit facility | ||||
Maximum borrowing capacity | $ 2,000,000 | |||
Sero Capital LLC | ||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 146,667 | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6 | |||
Sero Capital LLC | ||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 10.00% | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 146,667 | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Shared office arrangement minimum fees due | $ 41,000 |
Minimum fees due under amended shared office arrangement | $ 81,000 |