Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 05, 2021 | Jun. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Common Stock, Shares Outstanding | 10,705,684 | ||
Entity Interactive Data Current | Yes | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 52,997,510 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 9,095 | $ 1,972 |
Accounts receivable, net of allowance for doubtful accounts of $79 and $63, respectively | 5,096 | 2,958 |
Unbilled receivables | 160 | |
Deferred costs, short term | 152 | 183 |
Debt issuance costs, net | 137 | |
Prepaid expenses and other current assets | 288 | 198 |
Total current assets | 14,631 | 5,608 |
Property and equipment, net of accumulated depreciation of $209 and $124, respectively | 91 | 156 |
Right of use assets | 617 | 827 |
Deferred costs, long term | 77 | 145 |
Intangible assets, net of accumulated amortization of $4,238 and $3,710, respectively | 2,137 | 1,715 |
Goodwill | 701 | 701 |
Total assets | 18,254 | 9,152 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,190 | 973 |
Finance lease liabilities | 49 | 52 |
Operating lease liabilities | 229 | 209 |
Warrant liability | 120 | |
Deferred revenue | 6,328 | 5,372 |
Term loan, short term | 219 | 0 |
Total current liabilities | 9,015 | 6,726 |
Long term liabilities: | ||
Finance lease liabilities | 12 | 52 |
Operating lease liabilities | 427 | 655 |
Deferred revenue | 83 | 153 |
Term loan, long term | 1,083 | 0 |
Total liabilities | 10,620 | 7,586 |
Stockholders' equity: | ||
Preferred stock, value | ||
Common stock, $0.00001 par value, 50,000 shares authorized, 10,130 and 8,877 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 1 | 1 |
Additional paid-in capital | 64,716 | 51,490 |
Accumulated deficit | (57,084) | (49,926) |
Total stockholders' equity | 7,634 | 1,566 |
Total liabilities and stockholders' equity | 18,254 | 9,152 |
Series A Preferred Stock | ||
Stockholders' equity: | ||
Preferred stock, value | $ 1 | $ 1 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Allowance for doubtful accounts | $ 79 | $ 63 |
Property plant and equipment, accumulated depreciation | 209 | 124 |
Intangible assets, accumulated amortization | $ 4,328 | $ 3,710 |
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | |
Preferred Stock, Shares Authorized | 10,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | |
Common Stock, Shares Authorized | 50,000,000 | |
Common Stock, Shares, Issued | 10,130,000 | 8,877,000 |
Common Stock, Shares, Outstanding | 10,130,000 | 8,877,000 |
Series A Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | |
Preferred Stock, Shares Authorized | 200,000 | |
Preferred Stock, Shares Issued | 90,000 | 105,000 |
Preferred Stock, Shares Outstanding | 90,000 | 105,000 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
STATEMENTS OF OPERATIONS | ||
Revenue | $ 20,475 | $ 10,765 |
Cost of revenue | 5,961 | 4,406 |
Gross profit | 14,514 | 6,359 |
Operating expenses: | ||
Selling and marketing | 8,472 | 5,708 |
Research and development | 1,230 | 636 |
General and administrative | 11,945 | 7,833 |
Total operating expenses | 21,647 | 14,177 |
Operating loss | (7,133) | (7,818) |
Other income (expense): | ||
Other income | 12 | |
Change in fair value of warrant liability | 120 | 99 |
Interest expense | (145) | (76) |
Total other income (expense) | (25) | 35 |
Net loss | (7,158) | (7,783) |
Dividends on Series A Convertible Preferred Stock | (51) | (52) |
Net loss available to common stockholders | $ (7,209) | $ (7,835) |
Net loss per common share-basic and diluted | $ (0.77) | $ (0.97) |
Weighted average common shares outstanding-basic and diluted | 9,313 | 8,107 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Unrestricted Shares of Common Stock | Preferred Stock | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 1 | $ 1 | $ 48,017 | $ (42,143) | $ 5,876 |
Balance (in shares) at Dec. 31, 2018 | 7,580 | 105 | |||
Common stock issued in exchange for exercise of options and warrants | 2,257 | 2,257 | |||
Common stock issued in exchange for exercise of options and warrants (in shares) | 1,297 | ||||
Common stock issued in exchange for exercise of options on a cashless basis | 1,216 | 1,216 | |||
Share-based compensation | 1,216 | 1,216 | |||
Net loss | (7,783) | (7,783) | |||
Balance at Dec. 31, 2019 | $ 1 | $ 1 | 51,490 | (49,926) | 1,566 |
Balance (in shares) at Dec. 31, 2019 | 8,877 | 105 | |||
Issuance of common stock for cash, net of transaction expenses | 7,824 | 7,824 | |||
Issuance of common stock for cash, net of transaction expenses (in shares) | 473 | ||||
Common stock issued upon conversion of preferred stock (in shares) | 43 | (15) | |||
Common stock issued in exchange for exercise of warrants on a cashless basis (in shares) | 267 | ||||
Common stock issued in exchange for exercise of options on a cashless basis | 4,138 | 4,138 | |||
Common stock issued upon exercise of warrants and options on a cash basis | 1,264 | 1,264 | |||
Common stock issued upon exercise of warrants and options on a cash basis (in shares) | 353 | ||||
Common stock issued upon settlement of restricted stock units (in shares) | 117 | ||||
Share-based compensation | 4,138 | 4,138 | |||
Net loss | (7,158) | (7,158) | |||
Balance at Dec. 31, 2020 | $ 1 | $ 1 | $ 64,716 | $ (57,084) | $ 7,634 |
Balance (in shares) at Dec. 31, 2020 | 10,130 | 90 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (7,158,000) | $ (7,783,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 963,000 | 723,000 |
Stock-based compensation expense | 4,138,000 | 1,216,000 |
Amortization of deferred commissions | 250,000 | 240,000 |
Amortization of debt issuance costs | 137,000 | 82,000 |
Amortization of right of use assets | 210,000 | 214,000 |
Change in fair value of warrant liability | (120,000) | (99,000) |
Provision for accounts receivable | 128,000 | 13,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable and unbilled receivables | (2,106,000) | (2,959,000) |
Prepaid expenses and other assets | (241,000) | (447,000) |
Accounts payable and accruals | 1,215,000 | 879,000 |
Operating lease liability | (208,000) | (179,000) |
Related party payables | (14,000) | |
Deferred revenue | 886,000 | 2,497,000 |
Net cash used in operating activities | (1,906,000) | (5,617,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | 0 | (56,000) |
Software development costs | (1,157,000) | (307,000) |
Patent costs | (141,000) | 0 |
Net cash used in investing activities | (1,298,000) | (363,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from common stock offering, net of transaction costs | 7,824,000 | 0 |
Proceeds from term loan | 1,302,000 | 0 |
Proceeds from exercise of options and warrants | 1,264,000 | 2,257,000 |
Repayments of finance leases | (63,000) | (47,000) |
Net cash provided by financing activities | 10,327,000 | 2,210,000 |
Net increase (decrease) in cash and cash equivalents | 7,123,000 | (3,770,000) |
Cash and cash equivalents-beginning of period | 1,972,000 | 5,742,000 |
Cash and cash equivalents-end of period | 9,095,000 | 1,972,000 |
SUPPLEMENTAL CASH FLOW DISCLOSURES | ||
Interest paid | (6,000) | (6,000) |
Income taxes paid | 0 | 0 |
Non cash investing and financing activities: | ||
Right-of-use assets and operating lease obligations recognized during the year | 484,000 | |
Debt issuance costs originated from issuance of warrant in connection with credit facility | 219,000 | |
Equipment acquired from finance leases | $ 20,000 | 61,000 |
Accounting Standards Update 2016-02 [Member] | ||
Non cash investing and financing activities: | ||
Right-of-use assets and operating lease obligations recognized upon adoption of ASU 2016-02 | $ 568,000 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2020 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS AudioEye, Inc. (“we”, “us”, “our”, “AudioEye” or the “Company”) operates in one segment as a provider of patented, Internet content publication and distribution software and related services that enables conversion of digital content into accessible formats and allows for real time distribution to end users on any Internet connected device. The Company’s focus is to create more comprehensive access to Internet, print, broadcast and other media to all people regardless of their network connection, device, location, or disabilities. Our common stock is listed on The Nasdaq Capital Market under the symbol “AEYE” since September 4, 2018. Prior to September 4, 2018, our common stock was listed on the OTCQB and the OTC Bulletin Board since April 15, 2013 under the same symbol. |
CAPITAL RAISE AND LIQUIDITY
CAPITAL RAISE AND LIQUIDITY | 12 Months Ended |
Dec. 31, 2020 | |
CAPITAL RAISE AND LIQUIDITY | |
CAPITAL RAISE AND LIQUIDITY | NOTE 2 — 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 December 31, 2020, cash and working capital totaled $9,095,000 and $5,616,000, respectively. For the year ended December 31, 2020, cash used in operating activities totaled $1,906,000. 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 December 31, 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 after the date that the financial statements are issued. Refer to Note 12 – Subsequent Events for information regarding additional capital raised from a common stock offering after December 31, 2020. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”), and have been consistently applied in the preparation of the financial statements. The Company has a fiscal year ending on December 31. Certain prior period amounts have been reclassified to conform to current period classification. All amounts in the financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated. 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 stock-based compensation, capitalization of software development costs, allowance for doubtful accounts, and impairment of long-lived assets and goodwill. Actual results may differ from these estimates. Revenue Recognition We derive our revenue primarily from the sale of internally-developed software by a software-as-a-service (“SaaS”) delivery model, as well as from professional services, through our direct sales force or through third-party resellers. Our SaaS fees include support and maintenance. 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. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If we determine that we have not satisfied a performance obligation, we will defer recognition of the revenue until the performance obligation is deemed to be satisfied. SaaS agreements are generally non-cancelable, although clients typically have the right to terminate their contracts for cause if we fail to perform material obligations. We may execute more than one contract with a single customer. We evaluate whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements. Our SaaS (also referred to as “subscription”) revenue is comprised of fixed subscription fees from customer accounts on our platform. SaaS 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 and Mobile App report 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: Year ended December 31, (in thousands) 2020 2019 Enterprise $ 10,735 $ 7,252 Partner and Marketplace 9,740 3,513 Total revenues $ 20,475 $ 10,765 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 December 31, 2020 and 2019: As of December 31, (in thousands) 2020 2019 Deferred revenue - current $ 6,328 $ 5,372 Deferred revenue - noncurrent 83 153 Total deferred revenue $ 6,411 $ 5,525 In the year ended December 31, 2020 we recognized $5,269,000, or 95%, in revenue from deferred revenue outstanding as of December 31, 2019. We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 16.7% of our revenue in the year ended December 31, 2020 and one major customer which generated approximately 10% of our revenue in the fiscal year ended December 31, 2019. Three customers with long standing relationships with the Company represented 25%, 13% and 13%, respectively, of total accounts receivable as of December 31, 2020. At December 31, 2019, one customer represented 40% of the outstanding accounts receivable. Deferred Costs (Contract acquisition costs) Our sales commission plans may provide for multiple commission payments, including an initial payment in the period a customer contract is obtained , or the first invoice is paid, and deferred payments over the life of the contract as future payments are collected from the customers. We capitalize initial and renewal sales commission payments in the period the commission is earned, which generally occurs when a customer contract is obtained or when the customer is billed, and amortize deferred commission costs on a straight-line basis over the expected period of benefit, which we have deemed to be the contract term, except when the commission payment is expected to provide economic benefit for a period longer than the contract term, such as for new customer or incremental sales where renewals are expected, and renewal commissions are not commensurate with initial commissions. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs would have been one year or less. The table below summarizes the deferred commission costs as of December 31, 2020 and 2019: As of December 31, (in thousands) 2020 2019 Deferred costs – current $ 152 $ 183 Deferred costs - noncurrent 77 145 Total deferred costs $ 229 $ 328 Amortization expense associated with sales commissions was included in selling and marketing expenses on the statements of operations and totaled $250,000 and $240,000 for the year ended December 31, 2020 and 2019, respectively. There were no impairment losses for these capitalized costs for the years ended December 31, 2020 and 2019. Cost of Revenue Cost of revenue consists primarily of employee-related costs, including payroll, benefits and stock-based compensation expense for our technology operations and customer experience teams, fees paid to our managed hosting providers and other third-party service providers, amortization of capitalized software development costs and acquired technology, and allocated overhead costs. Cash and Cash Equivalents The Company considers cash in savings accounts to be cash equivalents. The Company considers any short-term, highly liquid investments with maturities of three months or less as cash and cash equivalents. Allowance for Doubtful Accounts The Company adjusts accounts receivable down to net realizable value with its allowance methodology. In determining the allowance for doubtful accounts for estimated losses, aged receivables are analyzed periodically by management. Each identified receivable is reviewed based upon historical collection experience, financial condition of the client and the status of any open or unresolved issues with the client preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolve open issues related to unpaid receivables. The allowance for doubtful accounts was $79,000 and $63,000 at December 31, 2020 and 2019, respectively. The Company believes that its reserve is adequate, however results may differ in future periods. For the years ended December 31, 2020 and 2019, bad debt expense totaled $128,000 and $13,000, respectively. Property and Equipment Property and equipment includes office and computer equipment, as well as furniture and fixtures. Property and equipment are carried at the cost of acquisition, and depreciated using the straight-line method over their estimated useful lives, which typically is 3 years. Costs associated with repairs and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of the Company’s property and equipment are capitalized and depreciated over the remaining life of the related asset. Any gain or losses on disposition of property and equipment is included in the results of operations in the year of disposal. Total property and equipment acquired by cash and through finance leases totaled zero and $20,000, respectively, in the year ended December 31, 2020, and $56,000 and $61,000, respectively, in the year ended December 31, 2019. Depreciation expense was $86,000 and $69,000 for the years ended December 31, 2020 and 2019, respectively. Capitalized Software Development Costs In accordance with ASC 350-40, the Company capitalizes certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use when both the preliminary project stage is completed, and it is probable that the software will be used as intended. Capitalized software costs include (i) external direct costs of materials and services utilized in developing or obtaining computer software, and (ii) compensation and related benefits for employees who are directly associated with the software project. Capitalized software costs are included in intangible assets on our balance sheet and amortized on a straight-line basis when placed into service over the estimated useful lives of the software, which is typically three years. Amortization expense is included in cost of revenue on the statements of operations and totaled $449,000 and $279,000 for the years ended December 31, 2020 and 2019, respectively. The Company reviews the carrying value for impairment whenever facts and circumstances exist that would suggest that assets might be impaired or that the useful lives should be modified. Refer to Note 4 – Intangible Assets for additional information regarding our Capitalized Software Development Costs. Patents We capitalize patent application costs, including registration, documentation, and other legal fees associated with the application, which are incurred through the months the patent application is filed. Costs associated with provisional application filings are expensed as incurred. Costs incurred to renew or extend the term of recognized intangible assets, including patent annuities and fees, and costs incurred in prosecuting alleged infringements of our patents are expensed as incurred. Patents are included in intangible assets on our balance sheet. We amortize capitalized patent costs on a straight-line basis over their estimated useful lives, which generally ranges from 5 to 10 years, beginning with the date the patents are issued. We evaluate the capitalized costs for impairment and write off the carrying value of abandoned patents or patent applications. We also write off capitalized costs associated to patents not granted. Refer to Note 4 – Intangible Assets for additional information regarding our patents. Goodwill, Intangible Assets and Long-Lived Assets Goodwill is tested for impairment at least annually, and more frequently upon the occurrence of certain events that may indicate that the carrying value of goodwill may not be recoverable. Events or circumstances that could trigger an impairment test include, but are not limited to, a significant adverse change in the business climate or in legal factors, an adverse action or assessment by a regulator, a loss of key personnel, significant changes in the strategy for our overall business, significant negative industry or economic trends, significant underperformance relative to operating performance indicators, a significant decline in market capitalization and significant changes in competition. We complete our annual impairment test during the fourth quarter of each year, at the reporting unit level, which is at the company level as a whole, since we operate in one single reporting segment. Intangible assets with a finite life are amortized over their estimated useful lives. We evaluate the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We consider the following to be some examples of indicators that may trigger an impairment review: (i) actual undiscounted cash flows significantly below historical or projected future undiscounted cash flows for the associated assets; (ii) significant changes in the manner or use of the assets or in our overall strategy with respect to the manner or use of the assets or changes in our overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) a significant decline in our stock price for a sustained period of time. Once we determine that a potential impairment indicator exists, we perform the test for recoverability by comparing the estimated future undiscounted cash flows associated with the intangible assets with the intangible asset’s carrying amount. Where the carrying value of the intangible asset exceeds the future undiscounted cash flows associated with the intangible assets, it is determined that the value of those intangible assets cannot be recovered. For an intangible asset failing the recoverability test, an impairment charge is recorded for the difference between the carrying value and the estimated fair value. No impairment losses were incurred during the years ended December 31, 2020 and 2019. Fair Value of Financial Instruments 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 carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments. Cash and cash equivalents are classified as Level 1. Long-term debt is classified as Level 2. The Company had no assets measured at fair value on a recurring basis as of December 31, 2020 and 2019. The table below provides information on our liabilities that are measured at fair value on a recurring basis: Fair Value (in thousands) Fair Value Hierarchy Warrant liability (1), December 31, 2020 $ — Level 3 Warrant liability (1), December 31, 2019 $ 120 Level 3 (1) In the third quarter of 2020, the warrant liability was extinguished upon full exercise of the warrants, which were issued in connection with our credit facility (see Note 6 – Debt for additional information on our credit facility and related warrant liability). The fair value of the warrant liability was determined using the Black-Scholes pricing model. For the years ended December 31, 2020 and 2019, gains on fair value adjustments totaling $120,000 and $99,000, respectively, were included in the statements of operations within change in fair value of warrant liability. Stock-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. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash. 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 stock-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 unit awards 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. Income Taxes We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. The Company has net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established. 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 outstanding as of December 31, 2020 and 2019, which were excluded from the computation of basic and diluted net loss per share for the years then ended, are as follows: December 31, (in thousands) 2020 2019 Preferred stock 263 295 Options 517 965 Warrants 81 425 Restricted stock units 958 429 Total 1,819 2,114 Loss Contingencies We are subject to the possibility of various loss contingencies arising in the normal course of business. We consider the likelihood of the loss or impairment of an asset or the incurrence of a liability as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether to accrue for a loss contingency and adjust any previous accrual. 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 have a material impact our financial position, results of operations or disclosures. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 4 — INTANGIBLE ASSETS Intangible assets as of December 31, 2020 and 2019 consisted of the following: December 31, (in thousands) 2020 2019 Finite-lived assets: Patents $ 3,779 $ 3,698 Capitalized software development costs 2,676 1,717 Accumulated amortization (4,328) (3,710) Finite-lived assets, net 2,127 1,705 Indefinite-lived assets: Domain name 10 10 Intangible assets, net $ 2,137 $ 1,715 As of December 31, 2020 and 2019, capitalized cost associated with pending patents totaled $141,000 and zero, respectively. For the years ended December 31, 2020 and 2019, software development costs capitalized totaled $1,157,000 and $307,000, respectively. Refer to Note 3 – Significant Accounting Policies for additional information regarding our intangible assets, including specific information on our patents and capitalized software development costs. The following table summarizes amortization expense associated with intangible assets for the fiscal years ended December 31, 2020 and 2019: Year ended December 31, (in thousands) 2020 2019 Patents $ 428 $ 375 Capitalized software development costs 449 279 Total amortization expense $ 877 $ 654 The weighted average remaining useful life of our finite-lived intangible assets (in years) as of December 31, 2020 are as follows: Weighted average remaining amortization period (in years) Patents 2.1 Capitalized software development costs 2.4 No loss on impairment of long-lived assets was recorded for the years ended December 31, 2020 and 2019. |
LEASE LIABILITIES AND RIGHT OF
LEASE LIABILITIES AND RIGHT OF USE ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | NOTE 5 — 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 December 31, 2020 and 2019, the Company’s outstanding finance lease obligations totaled $61,000 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: As of December 31, (in thousands) 2020 2019 Computer equipment $ 177 $ 157 Less: accumulated depreciation (116) (60) Assets acquired under finance leases, net $ 61 $ 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. 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. 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 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 lease for the principal office located in Tucson consists of approximately 5,200 square feet and ends in October 2022. The lease for the Marietta office, which consists of approximately 6,700 square feet, commenced in June 2019 and expires in August 2024. 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 ASC 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 9 – Commitments and Contingencies for further details on our shared office arrangements. The Company made operating lease payments in the amount of $255,000 and $231,000 during the years ended December 31, 2020 and 2019, respectively. The following summarizes the total lease liabilities and remaining future minimum lease payments at December 31, 2020 (in thousands): Finance Operating Year ending December 31, Leases Leases Total 2021 $ 50 $ 262 $ 312 2022 14 257 271 2023 1 118 119 2024 — 81 81 Total minimum lease payments 65 718 783 Less: present value discount (4) (62) (66) Total lease liabilities $ 61 $ 656 $ 717 Current portion of lease liabilities $ 49 $ 229 $ 278 Long term portion of lease liabilities $ 12 $ 427 $ 439 The following summarizes expenses associated with our finance and operating leases for the year ended December 31, 2020 (in thousands): Finance lease expenses: Depreciation expense $ 56 Interest on lease liabilities 6 Total Finance lease expense 62 Operating lease expense 292 Short-term lease and related expenses 155 Total lease expenses $ 509 The following table provides information about the remaining lease terms and discount rates applied as of December 31, 2020: Weighted average remaining lease term (years) Operating Leases 2.95 Finance Leases 1.44 Weighted average discount rate (%) Operating Leases 6.00 Finance Leases 6.00 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2020 | |
DEBT | |
DEBT | NOTE 6 — 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 could have borrowed 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 were 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 was included in debt issuance costs on the balance sheets. Debt issuance cost was amortized as interest expense on a straight-line basis over the term of the associated credit facility. As of December 31, 2020 and 2019, the unamortized balance of debt issuance costs was zero and $137,000, respectively. 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, principal and 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 bears 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 SBA’s approval of the Company’s pending forgiveness application. As of December 31, 2020 the outstanding principal balance of the PPP Loan totaled $1,302,000 and accrued interest thereon totaled $9,000. Outstanding principal balances on debt consisted of the following: (in thousands) December 31, 2020 Term Loan $ 1,302 Less: Short term portion (219) Long term portion of debt $ 1,083 |
SERIES A CONVERTIBLE PREFERRED
SERIES A CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2020 | |
Series A Preferred Stock | |
Class of Stock [Line Items] | |
SERIES A CONVERTIBLE PREFERRED STOCK | NOTE 7 — SERIES A CONVERTIBLE PREFERRED STOCK As of December 31, 2020 and 2019, the Company had 90,000 and 105,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”) outstanding, respectively. These shares of Preferred Stock were issued at $10 per share (the “stated value”) , accrue 5% in cumulative annual dividends, and are convertible into the Company’s common stock at a price of $4.385 per share. For the year ended December 31, 2020, preferred stockholders collectively earned, but were not paid, dividends totaling approximately $51,000, which were equivalent to 11,574 shares of common stock based on a conversion price of $4.385 per share. As of December 31, 2020 and 2019, cumulative and unpaid dividends were approximately $255,000 and $245,000, respectively, which is equivalent to 58,288 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 December 31, 2020 and 2019, the liquidation preference was valued at $1,155,000 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. The Company is entitled to redeem any or all of the outstanding shares of Preferred Stock at a per share price equal to 125% of the stated value, plus accumulated dividends, payable in cash. As of December 31, 2020, the aggregate amount to redeem all outstanding shares of Preferred Stock was $1,380,000. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 8 — RELATED PARTY TRANSACTIONS As discussed in Note 6 – 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 have borrowed up to the aggregate principal amount of $2,000,000. No amounts were 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- 6 – Debt for additional detail on our warrant liability. As discussed in Note 5 – Lease Liabilities and Right of Use Assets, we lease office space from a company controlled by our Executive Chairman. For the year ended December 31, 2020, rent payments for this office space totaled $70,000. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 — 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. The membership agreement ends in August 2021 and provides for fees which are based on the number of contracted seats and the use of optional office services. As of December 31, 2020, minimum fees due under this shared office arrangement totaled $31,000. The Company also entered into a membership agreement to occupy shared office space in New York, NY through July 2021. As of December 31, 2020, minimum fees due under this shared office arrangement totaled $59,000. 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. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2020 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 10 — STOCK-BASED COMPENSATION On December 9, 2020, the 2020 Equity Incentive Plan (the “2020 Plan”) was approved, replacing the 2019 Equity Incentive Plan. The 2020 Plan provides for the issuance of up to 1,000,000 shares of the Company’s common stock to the Company’s employees, non-employee directors, consultants and advisors. Awards under the 2020 Plan can be granted in the form of stock options, stock appreciation rights, restricted stock, stock units, other stock-based awards and cash incentive awards. Outstanding awards issued under previous equity incentive plans will continue to be governed by their respective terms until exercised, expired or otherwise terminated or canceled, but no further equity awards will be made under those plans. The following table summarizes the stock-based compensation expense recorded for the years ended December 31, 2020 and 2019: Year ended December 31, (in thousands) 2020 2019 Stock Options $ 300 $ 322 Restricted Stock Units 3,789 894 Unrestricted Shares of Common Stock 49 — Total $ 4,138 $ 1,216 As of December 31, 2020, the outstanding unrecognized stock-based compensation expense related to options and restricted stock units (“RSUs”) was $1,373,000 and $6,413,000, respectively, which may be recognized through August 2025, subject to achievement of service, performance, and market conditions. As of December 31, 2020, there was no remaining unamortized stock-based compensation expense related to warrants. Stock Options Options granted under our equity incentive plans generally have terms of five years, and typically vest and become fully exercisable ratably over three years of continuous service to the Company from the date of grant. The following table summarizes the stock option activity for the years ended December 31, 2020 and 2019: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2018 997,989 $ 4.67 2.14 925,545 $ 4,705,000 Granted 189,599 6.54 9.25 Exercised (37,528) 1.75 Forfeited/Expired (185,017) 11.83 Outstanding at December 31, 2019 965,043 $ 3.70 3.01 759,631 $ 1,666,000 Granted 220,267 12.31 5.00 Exercised (433,180) 2.07 Forfeited/Expired (235,219) 7.00 Outstanding at December 31, 2020 516,911 $ 7.24 2.70 294,894 $ 9,610,000 Exercisable as of December 31, 2020 294,894 $ 3.95 1.02 $ 6,452,000 The 2020 and 2019 stock-based compensation was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for each fiscal year: 2020 2019 Expected life 3.16 years 4.70 years Risk-free interest rate 0.19 % 1.87 % Weighted average volatility factor 107.28 % 148.41 % Dividend yield — — Restricted Stock Units We issue RSUs to employees, officers, directors, and consultants of the Company. The restrictions on time-based RSUs generally lapse over a one- to three-year term of continuous service from the date of grant. The following table summarizes the RSU activity for years ended December 31, 2020 and 2019: Restricted stock units outstanding as of December 31, 2018 222,514 Granted 206,405 Forfeited/Canceled — Restricted stock units outstanding as of December 31, 2019 428,919 Granted 800,695 Settled (116,656) Forfeited/Canceled (154,580) Total restricted stock units outstanding at December 31, 2020 958,378 Vested restricted stock units at December 31, 2020 285,108 Unvested restricted stock units as of December 31, 2020 673,270 In the third quarter of 2020, we granted 260,000 RSUs with performance-based and market-based conditions to our Interim Chief Executive Officer. The performance condition for 105,000 of such RSUs is based on the achievement of Monthly Recurring Revenue (“MRR”) targets. In 2020, we recorded $314,000 in stock-based compensation expense associated with 55,000 RSUs, the performance target for which achievement during the requisite period was deemed probable. The Company will continue to reassess 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 $1,506,000 in stock-based compensation expense related to these market-based RSUs in 2020. Warrants The following table summarizes the warrant activity for the years ended December 31, 2020 and 2019: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2018 1,781,715 $ 4.2 2.23 $ 8,930,000 Granted 146,667 6.00 0.62 Exercised (1,279,550) 1.85 Forfeited/Expired (224,124) 5.33 Outstanding at December 31, 2019 424,708 5.31 0.82 189,000 Granted — — Exercised (321,467) 4.77 Forfeited/Expired (22,188) 9.59 Outstanding at December 31, 2020 81,053 $ 6.25 0.94 $ 1,587,000 In August 2019, the Company negotiated with holders of certain warrants to purchase the Company’s common stock with respect to a transaction in which the Company and the holders agreed to amend certain warrant agreements to provide that, from the date of amendment through August 16, 2019, the exercise price was reduced from $2.50 to $1.63 per share for warrants to purchase an aggregate of 1,194,990 shares and from $6.25 to $4.07 per share for warrants to purchase an aggregate of 85,719 shares, provided that any exercise during such period was in full and the exercise price was paid in cash. In August 2019, an aggregate of 1,212,136 warrants to purchase the Company’s common stock were exercised for net proceeds of $2,115,000. In the third quarter of 2020, the Company received $880,000 in cash in connection with the exercise of 146,667 stock warrants by a related party. Refer to Note 6 – Debt and Note 8 – Related Party Transactions for additional information on these warrants. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 — INCOME TAXES For the years ended December 31, 2020 and 2019, federal and state income tax expense totaled zero. The Company has net operating loss carryforwards available to reduce future taxable income. As of December 31, 2020, net operating loss carry forwards totaled $42,636,000 and will expire at various dates through 2040. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established. At this time, the Company is unable to determine if it will be able to benefit from its deferred tax asset. There are limitations on the utilization of net operating loss carry forwards, including a requirement that losses be offset against future taxable income, if any. In addition, there are limitations imposed by certain transactions, which are deemed to be ownership changes. Accordingly, our net deferred tax asset was zero as of December 31, 2020 and 2019 as the Company established a full valuation allowance of $ 13,304,000 and $7,758,000, respectively. Significant components of our deferred tax assets and liabilities as of December 31, 2020 and 2019 consist of the following: December 31, (in thousands) 2020 2019 Deferred tax assets: Intangible assets $ 269 $ — Bad debt expense 21 — Accrued compensation expense 83 — Deferred revenue and costs 2 — Stock-based compensation 1,494 — Operating lease liability 193 — State NOL carryforwards 2,516 1,380 Federal NOL carryforwards 8,954 6,378 Total Deferred Tax Assets 13,532 7,758 Valuation allowance (13,304) (7,758) Net deferred tax assets 228 — Deferred tax liabilities: Property and equipment (62) — Right of use assets (166) — Total deferred tax liabilities (228) — Net deferred tax asset (liability) $ — $ — The Company is subject to U.S. federal income tax as well as income taxes in multiple state and local jurisdictions. The Company has concluded all U.S. federal tax matters for years through December 31, 2016. All material state and local income tax matters have been concluded for years through December 31, 2015. The Company is no longer subject to IRS examination the tax years ended on or before December 31, 2016; however, carryforward losses that were generated through the tax year ended December 31, 2016 may still be adjusted by the IRS if they are used in a future period. The Company had no reserve for uncertain tax positions as of December 31, 2020 and 2019. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 12 — SUBSEQUENT EVENTS We have evaluated subsequent events occurring after December 31, 2020 and based on our evaluation we did not identify any events that would have required recognition or disclosure in these financial statements, except for the following. On February 11, 2021, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (“Agent”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock to or through the Agent as its sales agent, having an aggregate offering price of up to $30,000,000. As of March 8, 2021, we had sold a total of 378,108 shares of common stock under this Sales Agreement for total proceeds of approximately $14.1 million, net of estimated transaction costs . In the first quarter of 2021, our Interim Chief Executive Officer vested in 55,000 RSUs with market conditions based on the Company’s stock price targets. In connection with the settlement of these RSUs, the Company paid $373,000 in taxes on behalf of our Interim Chief Executive Officer in exchange for the surrender of 15,651 shares of the Company’s common stock. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”), and have been consistently applied in the preparation of the financial statements. The Company has a fiscal year ending on December 31. Certain prior period amounts have been reclassified to conform to current period classification. All amounts in the financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated. |
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 stock-based compensation, capitalization of software development costs, allowance for doubtful accounts, and impairment of long-lived assets and goodwill. Actual results may differ from these estimates. |
Revenue Recognition | Revenue Recognition We derive our revenue primarily from the sale of internally-developed software by a software-as-a-service (“SaaS”) delivery model, as well as from professional services, through our direct sales force or through third-party resellers. Our SaaS fees include support and maintenance. 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. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. If we determine that we have not satisfied a performance obligation, we will defer recognition of the revenue until the performance obligation is deemed to be satisfied. SaaS agreements are generally non-cancelable, although clients typically have the right to terminate their contracts for cause if we fail to perform material obligations. We may execute more than one contract with a single customer. We evaluate whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements. Our SaaS (also referred to as “subscription”) revenue is comprised of fixed subscription fees from customer accounts on our platform. SaaS 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 and Mobile App report 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: Year ended December 31, (in thousands) 2020 2019 Enterprise $ 10,735 $ 7,252 Partner and Marketplace 9,740 3,513 Total revenues $ 20,475 $ 10,765 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 December 31, 2020 and 2019: As of December 31, (in thousands) 2020 2019 Deferred revenue - current $ 6,328 $ 5,372 Deferred revenue - noncurrent 83 153 Total deferred revenue $ 6,411 $ 5,525 In the year ended December 31, 2020 we recognized $5,269,000, or 95%, in revenue from deferred revenue outstanding as of December 31, 2019. We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 16.7% of our revenue in the year ended December 31, 2020 and one major customer which generated approximately 10% of our revenue in the fiscal year ended December 31, 2019. Three customers with long standing relationships with the Company represented 25%, 13% and 13%, respectively, of total accounts receivable as of December 31, 2020. At December 31, 2019, one customer represented 40% of the outstanding accounts receivable. |
Deferred Costs (Contract acquisition costs) | Deferred Costs (Contract acquisition costs) Our sales commission plans may provide for multiple commission payments, including an initial payment in the period a customer contract is obtained , or the first invoice is paid, and deferred payments over the life of the contract as future payments are collected from the customers. We capitalize initial and renewal sales commission payments in the period the commission is earned, which generally occurs when a customer contract is obtained or when the customer is billed, and amortize deferred commission costs on a straight-line basis over the expected period of benefit, which we have deemed to be the contract term, except when the commission payment is expected to provide economic benefit for a period longer than the contract term, such as for new customer or incremental sales where renewals are expected, and renewal commissions are not commensurate with initial commissions. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs would have been one year or less. The table below summarizes the deferred commission costs as of December 31, 2020 and 2019: As of December 31, (in thousands) 2020 2019 Deferred costs – current $ 152 $ 183 Deferred costs - noncurrent 77 145 Total deferred costs $ 229 $ 328 Amortization expense associated with sales commissions was included in selling and marketing expenses on the statements of operations and totaled $250,000 and $240,000 for the year ended December 31, 2020 and 2019, respectively. There were no impairment losses for these capitalized costs for the years ended December 31, 2020 and 2019. |
Cost Of Revenue | Cost of Revenue Cost of revenue consists primarily of employee-related costs, including payroll, benefits and stock-based compensation expense for our technology operations and customer experience teams, fees paid to our managed hosting providers and other third-party service providers, amortization of capitalized software development costs and acquired technology, and allocated overhead costs. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash in savings accounts to be cash equivalents. The Company considers any short-term, highly liquid investments with maturities of three months or less as cash and cash equivalents. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company adjusts accounts receivable down to net realizable value with its allowance methodology. In determining the allowance for doubtful accounts for estimated losses, aged receivables are analyzed periodically by management. Each identified receivable is reviewed based upon historical collection experience, financial condition of the client and the status of any open or unresolved issues with the client preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolve open issues related to unpaid receivables. The allowance for doubtful accounts was $79,000 and $63,000 at December 31, 2020 and 2019, respectively. The Company believes that its reserve is adequate, however results may differ in future periods. For the years ended December 31, 2020 and 2019, bad debt expense totaled $128,000 and $13,000, respectively. |
Property and Equipment | Property and Equipment Property and equipment includes office and computer equipment, as well as furniture and fixtures. Property and equipment are carried at the cost of acquisition, and depreciated using the straight-line method over their estimated useful lives, which typically is 3 years. Costs associated with repairs and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of the Company’s property and equipment are capitalized and depreciated over the remaining life of the related asset. Any gain or losses on disposition of property and equipment is included in the results of operations in the year of disposal. Total property and equipment acquired by cash and through finance leases totaled zero and $20,000, respectively, in the year ended December 31, 2020, and $56,000 and $61,000, respectively, in the year ended December 31, 2019. Depreciation expense was $86,000 and $69,000 for the years ended December 31, 2020 and 2019, respectively. |
Capitalization Software Development Costs | Capitalized Software Development Costs In accordance with ASC 350-40, the Company capitalizes certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use when both the preliminary project stage is completed, and it is probable that the software will be used as intended. Capitalized software costs include (i) external direct costs of materials and services utilized in developing or obtaining computer software, and (ii) compensation and related benefits for employees who are directly associated with the software project. Capitalized software costs are included in intangible assets on our balance sheet and amortized on a straight-line basis when placed into service over the estimated useful lives of the software, which is typically three years. Amortization expense is included in cost of revenue on the statements of operations and totaled $449,000 and $279,000 for the years ended December 31, 2020 and 2019, respectively. The Company reviews the carrying value for impairment whenever facts and circumstances exist that would suggest that assets might be impaired or that the useful lives should be modified. Refer to Note 4 – Intangible Assets for additional information regarding our Capitalized Software Development Costs. |
Patents | Patents We capitalize patent application costs, including registration, documentation, and other legal fees associated with the application, which are incurred through the months the patent application is filed. Costs associated with provisional application filings are expensed as incurred. Costs incurred to renew or extend the term of recognized intangible assets, including patent annuities and fees, and costs incurred in prosecuting alleged infringements of our patents are expensed as incurred. Patents are included in intangible assets on our balance sheet. We amortize capitalized patent costs on a straight-line basis over their estimated useful lives, which generally ranges from 5 to 10 years, beginning with the date the patents are issued. We evaluate the capitalized costs for impairment and write off the carrying value of abandoned patents or patent applications. We also write off capitalized costs associated to patents not granted. Refer to Note 4 – Intangible Assets for additional information regarding our patents. |
Goodwill, Intangible Assets and Long-Lived Assets | Goodwill, Intangible Assets and Long-Lived Assets Goodwill is tested for impairment at least annually, and more frequently upon the occurrence of certain events that may indicate that the carrying value of goodwill may not be recoverable. Events or circumstances that could trigger an impairment test include, but are not limited to, a significant adverse change in the business climate or in legal factors, an adverse action or assessment by a regulator, a loss of key personnel, significant changes in the strategy for our overall business, significant negative industry or economic trends, significant underperformance relative to operating performance indicators, a significant decline in market capitalization and significant changes in competition. We complete our annual impairment test during the fourth quarter of each year, at the reporting unit level, which is at the company level as a whole, since we operate in one single reporting segment. Intangible assets with a finite life are amortized over their estimated useful lives. We evaluate the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We consider the following to be some examples of indicators that may trigger an impairment review: (i) actual undiscounted cash flows significantly below historical or projected future undiscounted cash flows for the associated assets; (ii) significant changes in the manner or use of the assets or in our overall strategy with respect to the manner or use of the assets or changes in our overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) a significant decline in our stock price for a sustained period of time. Once we determine that a potential impairment indicator exists, we perform the test for recoverability by comparing the estimated future undiscounted cash flows associated with the intangible assets with the intangible asset’s carrying amount. Where the carrying value of the intangible asset exceeds the future undiscounted cash flows associated with the intangible assets, it is determined that the value of those intangible assets cannot be recovered. For an intangible asset failing the recoverability test, an impairment charge is recorded for the difference between the carrying value and the estimated fair value. No impairment losses were incurred during the years ended December 31, 2020 and 2019 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments 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 carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments. Cash and cash equivalents are classified as Level 1. Long-term debt is classified as Level 2. The Company had no assets measured at fair value on a recurring basis as of December 31, 2020 and 2019. The table below provides information on our liabilities that are measured at fair value on a recurring basis: Fair Value (in thousands) Fair Value Hierarchy Warrant liability (1), December 31, 2020 $ — Level 3 Warrant liability (1), December 31, 2019 $ 120 Level 3 (1) In the third quarter of 2020, the warrant liability was extinguished upon full exercise of the warrants, which were issued in connection with our credit facility (see Note 6 – Debt for additional information on our credit facility and related warrant liability). The fair value of the warrant liability was determined using the Black-Scholes pricing model. For the years ended December 31, 2020 and 2019, gains on fair value adjustments totaling $120,000 and $99,000, respectively, were included in the statements of operations within change in fair value of warrant liability. |
Stock-Based Compensation | Stock-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. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash. 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 stock-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 unit awards 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. |
Income Taxes | Income Taxes We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. The Company has net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established. |
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 outstanding as of December 31, 2020 and 2019, which were excluded from the computation of basic and diluted net loss per share for the years then ended, are as follows: December 31, (in thousands) 2020 2019 Preferred stock 263 295 Options 517 965 Warrants 81 425 Restricted stock units 958 429 Total 1,819 2,114 |
Loss Contingencies | Loss Contingencies We are subject to the possibility of various loss contingencies arising in the normal course of business. We consider the likelihood of the loss or impairment of an asset or the incurrence of a liability as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether to accrue for a loss contingency and adjust any previous accrual. |
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 have a material impact our financial position, results of operations or disclosures. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of disaggregation of revenue | Year ended December 31, (in thousands) 2020 2019 Enterprise $ 10,735 $ 7,252 Partner and Marketplace 9,740 3,513 Total revenues $ 20,475 $ 10,765 |
Schedule of deferred revenue | The table below summarizes our deferred revenue as of December 31, 2020 and 2019: As of December 31, (in thousands) 2020 2019 Deferred revenue - current $ 6,328 $ 5,372 Deferred revenue - noncurrent 83 153 Total deferred revenue $ 6,411 $ 5,525 |
Schedule of commission cost | The table below summarizes the deferred commission costs as of December 31, 2020 and 2019: As of December 31, (in thousands) 2020 2019 Deferred costs – current $ 152 $ 183 Deferred costs - noncurrent 77 145 Total deferred costs $ 229 $ 328 |
Schedule of our liabilities that are measured at fair value on a recurring basis | The table below provides information on our liabilities that are measured at fair value on a recurring basis: Fair Value (in thousands) Fair Value Hierarchy Warrant liability (1), December 31, 2020 $ — Level 3 Warrant liability (1), December 31, 2019 $ 120 Level 3 (1) In the third quarter of 2020, the warrant liability was extinguished upon full exercise of the warrants, which were issued in connection with our credit facility (see Note 6 – Debt for additional information on our credit facility and related warrant liability). The fair value of the warrant liability was determined using the Black-Scholes pricing model. For the years ended December 31, 2020 and 2019, gains on fair value adjustments totaling $120,000 and $99,000, respectively, were included in the statements of operations within change in fair value of warrant liability. |
Schedule of antidilutive securities excluded from computation of earnings Per share | Potentially dilutive securities outstanding as of December 31, 2020 and 2019, which were excluded from the computation of basic and diluted net loss per share for the years then ended, are as follows: December 31, (in thousands) 2020 2019 Preferred stock 263 295 Options 517 965 Warrants 81 425 Restricted stock units 958 429 Total 1,819 2,114 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS | |
Schedule of finite-Lived intangible assets | Intangible assets as of December 31, 2020 and 2019 consisted of the following: December 31, (in thousands) 2020 2019 Finite-lived assets: Patents $ 3,779 $ 3,698 Capitalized software development costs 2,676 1,717 Accumulated amortization (4,328) (3,710) Finite-lived assets, net 2,127 1,705 Indefinite-lived assets: Domain name 10 10 Intangible assets, net $ 2,137 $ 1,715 |
Summary of amortization expense associated with intangible assets | The following table summarizes amortization expense associated with intangible assets for the fiscal years ended December 31, 2020 and 2019: Year ended December 31, (in thousands) 2020 2019 Patents $ 428 $ 375 Capitalized software development costs 449 279 Total amortization expense $ 877 $ 654 |
Schedule of weighted average remaining useful life of finite-lived intangible assets (in years) | The weighted average remaining useful life of our finite-lived intangible assets (in years) as of December 31, 2020 are as follows: Weighted average remaining amortization period (in years) Patents 2.1 Capitalized software development costs 2.4 |
LEASE LIABILITIES AND RIGHT O_2
LEASE LIABILITIES AND RIGHT OF USE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 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: As of December 31, (in thousands) 2020 2019 Computer equipment $ 177 $ 157 Less: accumulated depreciation (116) (60) Assets acquired under finance leases, net $ 61 $ 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 December 31, 2020 (in thousands): Finance Operating Year ending December 31, Leases Leases Total 2021 $ 50 $ 262 $ 312 2022 14 257 271 2023 1 118 119 2024 — 81 81 Total minimum lease payments 65 718 783 Less: present value discount (4) (62) (66) Total lease liabilities $ 61 $ 656 $ 717 Current portion of lease liabilities $ 49 $ 229 $ 278 Long term portion of lease liabilities $ 12 $ 427 $ 439 |
Schedule of lease expense | The following summarizes expenses associated with our finance and operating leases for the year ended December 31, 2020 (in thousands): Finance lease expenses: Depreciation expense $ 56 Interest on lease liabilities 6 Total Finance lease expense 62 Operating lease expense 292 Short-term lease and related expenses 155 Total lease expenses $ 509 |
Schedule of lease terms and discount rates | The following table provides information about the remaining lease terms and discount rates applied as of December 31, 2020: Weighted average remaining lease term (years) Operating Leases 2.95 Finance Leases 1.44 Weighted average discount rate (%) Operating Leases 6.00 Finance Leases 6.00 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DEBT | |
Summary of outstanding principal balances on debt | (in thousands) December 31, 2020 Term Loan $ 1,302 Less: Short term portion (219) Long term portion of debt $ 1,083 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
STOCK-BASED COMPENSATION | |
Schedule of stock-based compensation expense | Year ended December 31, (in thousands) 2020 2019 Stock Options $ 300 $ 322 Restricted Stock Units 3,789 894 Unrestricted Shares of Common Stock 49 — Total $ 4,138 $ 1,216 |
Schedule of share-based compensation, stock options, activity | Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2018 997,989 $ 4.67 2.14 925,545 $ 4,705,000 Granted 189,599 6.54 9.25 Exercised (37,528) 1.75 Forfeited/Expired (185,017) 11.83 Outstanding at December 31, 2019 965,043 $ 3.70 3.01 759,631 $ 1,666,000 Granted 220,267 12.31 5.00 Exercised (433,180) 2.07 Forfeited/Expired (235,219) 7.00 Outstanding at December 31, 2020 516,911 $ 7.24 2.70 294,894 $ 9,610,000 Exercisable as of December 31, 2020 294,894 $ 3.95 1.02 $ 6,452,000 |
Schedule of weighted average assumptions for estimating the stock-based compensation | 2020 2019 Expected life 3.16 years 4.70 years Risk-free interest rate 0.19 % 1.87 % Weighted average volatility factor 107.28 % 148.41 % Dividend yield — — |
Schedule of non-vested restricted stock shares activity | Restricted stock units outstanding as of December 31, 2018 222,514 Granted 206,405 Forfeited/Canceled — Restricted stock units outstanding as of December 31, 2019 428,919 Granted 800,695 Settled (116,656) Forfeited/Canceled (154,580) Total restricted stock units outstanding at December 31, 2020 958,378 Vested restricted stock units at December 31, 2020 285,108 Unvested restricted stock units as of December 31, 2020 673,270 |
Schedule of other share-based compensation, activity | The following table summarizes the warrant activity for the years ended December 31, 2020 and 2019: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2018 1,781,715 $ 4.2 2.23 $ 8,930,000 Granted 146,667 6.00 0.62 Exercised (1,279,550) 1.85 Forfeited/Expired (224,124) 5.33 Outstanding at December 31, 2019 424,708 5.31 0.82 189,000 Granted — — Exercised (321,467) 4.77 Forfeited/Expired (22,188) 9.59 Outstanding at December 31, 2020 81,053 $ 6.25 0.94 $ 1,587,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
Schedule of deferred tax assets and liabilities | December 31, (in thousands) 2020 2019 Deferred tax assets: Intangible assets $ 269 $ — Bad debt expense 21 — Accrued compensation expense 83 — Deferred revenue and costs 2 — Stock-based compensation 1,494 — Operating lease liability 193 — State NOL carryforwards 2,516 1,380 Federal NOL carryforwards 8,954 6,378 Total Deferred Tax Assets 13,532 7,758 Valuation allowance (13,304) (7,758) Net deferred tax assets 228 — Deferred tax liabilities: Property and equipment (62) — Right of use assets (166) — Total deferred tax liabilities (228) — Net deferred tax asset (liability) $ — $ — |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) | 12 Months Ended |
Dec. 31, 2020segment | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
Number of operating segments | 1 |
CAPITAL RAISE AND LIQUIDITY (De
CAPITAL RAISE AND LIQUIDITY (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2020 | 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 | ||
Proceeds from common stock offering, net of transaction costs | $ 7,824,000 | $ 0 | |
Cash | 9,095,000 | ||
Working capital | 5,616,000 | ||
Cash used in operating activities | $ (1,906,000) | $ (5,617,000) |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Disaggregate revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Enterprise | $ 10,735 | $ 7,252 |
Partner and Marketplace | 9,740 | 3,513 |
Total revenues | $ 20,475 | $ 10,765 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Deferred Revenue, by Arrangement (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Deferred revenue - current | $ 6,328,000 | $ 5,372,000 |
Deferred revenue - noncurrent | 83,000 | 153,000 |
Total deferred revenue | $ 6,411 | $ 5,525 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Deferred commission cost (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred costs - current | $ 152 | $ 183 |
Deferred costs - noncurrent | 77 | 145 |
Accounting Standards Update 2014-09 [Member] | ||
Deferred costs - current | 152 | 183 |
Deferred costs - noncurrent | 77 | 145 |
Total deferred costs | $ 229 | $ 328 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Fair value on a recurring basis (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Fair Value, Inputs, Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Warrant liability | $ 120 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,819 | 2,114 |
Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 263 | 295 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 517 | 965 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 81 | 425 |
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 958 | 429 |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | |
Summary Of Significant Accounting Policies | |||
Total revenue recognized from both the beginning balance and current period increase in contract liability | $ 5,269,000 | ||
Deferred revenue recognized through the period (as a percent) | 95.00% | ||
Amortization of Deferred Sales Commissions | $ 250,000 | $ 240,000 | |
Impairment loss | $ 0 | ||
Allowance for doubtful accounts | 79,000 | 63,000 | 79,000 |
Bad debt expense | 128,000 | 13,000 | |
Additional operating lease liabilities | $ 656,000 | $ 656,000 | |
Property, Plant and Equipment, Useful Life | 3 years | ||
Property and equipment acquired by cash | $ 0 | 56,000 | |
Equipment acquired from finance leases | 20,000 | 61,000 | |
Depreciation | 86,000 | 69,000 | |
Amortization expense | $ 877,000 | 654,000 | |
Number of Reportable Segments | 1 | ||
Gains on fair value adjustments | $ (120,000) | (99,000) | |
Capitalized software development | |||
Summary Of Significant Accounting Policies | |||
Amortization expense | $ 449,000 | 279,000 | |
Useful life | 3 years | ||
Patents | |||
Summary Of Significant Accounting Policies | |||
Amortization expense | $ 428,000 | $ 375,000 | |
Maximum | |||
Summary Of Significant Accounting Policies | |||
Service period for compensation cost expense | 3 years | ||
Maximum | Patents | |||
Summary Of Significant Accounting Policies | |||
Useful life | 10 years | ||
Minimum | |||
Summary Of Significant Accounting Policies | |||
Service period for compensation cost expense | 1 year | ||
Minimum | Patents | |||
Summary Of Significant Accounting Policies | |||
Useful life | 5 years | ||
Major Customer Number One [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | |||
Summary Of Significant Accounting Policies | |||
Concentration Risk, Percentage | 16.70% | 10.00% | |
Major Customer Number One [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||
Summary Of Significant Accounting Policies | |||
Concentration Risk, Percentage | 25.00% | 40.00% | |
Major Customer Number Two [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||
Summary Of Significant Accounting Policies | |||
Concentration Risk, Percentage | 13.00% | ||
Major Customer Number Three [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||
Summary Of Significant Accounting Policies | |||
Concentration Risk, Percentage | 13.00% |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Intangible Assets | ||
Accumulated amortization | $ (4,328,000) | $ (3,710,000) |
Finite-lived assets, net | 2,127,000 | 1,705,000 |
Intangible assets, net | 2,137,000 | 1,715,000 |
Domain name | ||
Intangible Assets | ||
Indefinite-lived assets | 10,000 | 10,000 |
Patents | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | 3,779,000 | 3,698,000 |
Capitalized Costs | 141,000 | 0 |
Capitalized software development | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | 2,676,000 | 1,717,000 |
Capitalized Costs | $ 1,157,000 | $ 307,000 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization expense | $ 877,000 | $ 654,000 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization expense | 428,000 | 375,000 |
Capitalized software development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization expense | $ 449,000 | $ 279,000 |
INTANGIBLE ASSETS - Weighted av
INTANGIBLE ASSETS - Weighted average remaining useful life (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Loss on impairment of long-lived assets | $ 0 | $ 0 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 2 years 1 month 6 days | |
Capitalized software development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 2 years 4 months 24 days |
LEASE LIABILITIES AND RIGHT O_3
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Right to use assets under finance leases (Details) - Computer Equipment [Member] - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Lessee, Finance Lease, Description [Abstract] | ||
Computer equipment | $ 177 | $ 157 |
Less: accumulated depreciation | (116) | (60) |
Assets acquired under finance leases, net | $ 61 | $ 97 |
LEASE LIABILITIES AND RIGHT O_4
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum finance lease payments (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2021 | $ 50,000 | |
2022 | 14,000 | |
2023 | 1,000 | |
Total minimum lease payments | 65,000 | |
Less: present value discount | (4,000) | |
Total lease liabilities | 61,000 | $ 104,000 |
Current portion of lease liabilities | 49,000 | 52,000 |
Long term portion of lease liabilities | $ 12,000 | $ 52,000 |
LEASE LIABILITIES AND RIGHT O_5
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum operating lease payments (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2021 | $ 262 | |
2022 | 257 | |
2023 | 118 | |
2024 | 81 | |
Total minimum lease payments | 718 | |
Less: present value discount | (62) | |
Total operating lease liabilities | 656 | |
Current portion of operating lease obligations | 229 | $ 209 |
Long term portion of lease liabilities | $ 427 | $ 655 |
LEASE LIABILITIES AND RIGHT O_6
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Finance Leases and Operating Leases (Details) $ in Thousands | Dec. 31, 2020USD ($) |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
2021 | $ 312 |
2022 | 271 |
2023 | 119 |
2024 | 81 |
Total minimum lease payments | 783 |
Less: present value discount | (66) |
Total lease liabilities | 717 |
Current portion of lease liabilities | 278 |
Long term portion of lease liabilities | $ 439 |
LEASE LIABILITIES AND RIGHT O_7
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Lease expenses (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Finance lease expenses: | |
Depreciation expense | $ 56 |
Interest on lease liabilities | 6 |
Total Finance lease expense | 62 |
Operating lease expense | 292 |
Short-term lease and related expenses | 155 |
Total lease expenses | $ 509 |
LEASE LIABILITIES AND RIGHT O_8
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Remaining lease terms and discount rates (Details) | Dec. 31, 2020 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
Weighted average remaining lease term (years) - Operating Leases | 2 years 11 months 12 days |
Weighted average remaining lease term (years) - Finance Leases | 1 year 5 months 9 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) | 12 Months Ended | ||
Dec. 31, 2020USD ($)ft² | Dec. 31, 2019USD ($) | Jun. 30, 2019ft² | |
Total finance lease liabilities | $ | $ 61,000 | $ 104,000 | |
Debt Instrument, Interest Rate, Effective Percentage | 6.00% | ||
Operating Lease, Payments | $ | $ 255,000,000 | $ 231,000,000 | |
Marietta Georgia | |||
Area of Land | ft² | 6,700 | ||
Georgia [Member] | |||
Area of Land | ft² | 5,200 |
DEBT - Outstanding principal ba
DEBT - Outstanding principal balances (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Less: Short term portion | $ (219,000) | $ 0 |
Long term portion of debt | 1,083,000 | $ 0 |
PPP Loan | ||
Debt Instrument [Line Items] | ||
Term Loan | 1,302,000 | |
Less: Short term portion | (219,000) | |
Long term portion of debt | $ 1,083,000 |
DEBT (Details)
DEBT (Details) - USD ($) | Dec. 31, 2020 | Aug. 14, 2020 | Aug. 31, 2019 | Sep. 30, 2020 | Apr. 15, 2020 | Dec. 31, 2019 | Aug. 14, 2019 |
Line of Credit Facility [Line Items] | |||||||
Amounts drawn under loan agreement | $ 0 | ||||||
Cash received in full exercise of warrants | $ 2,115,000 | ||||||
Fair value of warrants | $ 219,000 | ||||||
Unamortized deferred cost of warrants included in prepaid expenses and other current assets on the balance sheet | $ 0 | $ 137,000 | |||||
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 | $ 9,000 | ||||||
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 ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Class of Stock [Line Items] | ||
Preferred stock issue per share | $ 10 | |
Preferred stock dividend rate (in percentage) | 125.00% | |
Common stock dividends shares | 58,288 | 55,927 |
Preferred stock unpaid dividend equivalent common stock, Shares | $ 255,000 | $ 245,000 |
Preferred stock liquidation preference value | 1,155,000 | $ 1,295,000 |
Aggregate amount to redemption | $ 1,380,000 | |
Preferred stock liquidation preference per share | $ 4.385 | |
Series A Preferred Stock | ||
Class of Stock [Line Items] | ||
Preferred stock outstanding shares | 90,000 | 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 | $ 51,000 | |
Common stock dividends shares | 11,574 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Aug. 14, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Aug. 14, 2019 |
Due to Related Parties | $ 70,000 | ||||
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 | ||||
Unsecured credit facility | |||||
Maximum borrowing capacity | $ 2,000,000 | ||||
Sero Capital LLC | |||||
Interest rate | 10.00% | ||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,000,000 | ||||
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) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Shared office arrangement minimum fees due | $ 31,000 |
Minimum fees due under amended shared office arrangement | $ 59,000 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - 2020 Equity Incentive Plan - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 4,138 | $ 1,216 |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 300 | 322 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 3,789 | $ 894 |
Unrestricted Shares of Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 49 |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock option Activity (Details) - Stock Options - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Options | |||
Balance at beginning of the period (in shares) | 965,043 | 997,989 | |
Number of options granted | 220,267 | 189,599 | |
Exercised | (433,180) | (37,528) | |
Forfeited/Expired | (235,219) | (185,017) | |
Balance at end of the period (in shares) | 516,911 | 965,043 | 997,989 |
Exercisable (in shares) | 294,894 | 759,631 | 925,545 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 294,894 | 759,631 | 925,545 |
Weighted Average Exercise Price | |||
Outstanding at beginning of the period (in dollars per share) | $ 3.70 | $ 4.67 | |
Granted (in dollars per share) | 12.31 | 6.54 | |
Exercised (in dollars per share) | 2.07 | 1.75 | |
Forfeited/Expired | 7 | 11.83 | |
Outstanding at end of the period (in dollars per share) | 7.24 | $ 3.70 | $ 4.67 |
Exercisable (in dollars per share) | $ 3.95 | ||
Weighted Average Remaining Term | |||
Outstanding, Weighted Average Remaining Term | 2 years 8 months 12 days | 3 years 4 days | 2 years 1 month 21 days |
Granted Weighted Average Remaining Term | 5 years | 9 years 3 months | |
Exercised Weighted Average Remaining Term | 1 year 7 days | ||
Intrinsic Value of Options | |||
Outstanding, Intrinsic Value of Options (in dollars) | $ 1,666,000 | $ 4,705,000 | |
Outstanding, Intrinsic Value of Options (in dollars) | 9,610,000 | $ 1,666,000 | $ 4,705,000 |
Exercisable as of December 31, 2020 | $ 6,452,000 |
STOCK-BASED COMPENSATION - St_3
STOCK-BASED COMPENSATION - Stock-based compensation, weighted average assumptions (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
STOCK-BASED COMPENSATION | ||
Expected life | 3 years 1 month 28 days | 4 years 8 months 12 days |
Risk-free interest rate (as a percent) | 0.19% | 1.87% |
Weighted average volatility factor (as a percent) | 107.28% | 148.41% |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Unit Activity (Details) - Restricted Stock Units - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restricted stock units outstanding | 428,919 | 222,514 |
Granted | 800,695 | 206,405 |
Settled | (116,656) | |
Forfeited/Cancelled | (154,580) | |
Total restricted stock units outstanding | 958,378 | 428,919 |
Vested restricted stock units at December 31, 2020 | 285,108 | |
Unvested restricted stock units as of December 31, 2020 | 673,270 |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted stock units, Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 4,138,000 | $ 1,216,000 | |
Weighted average volatility factor (as a percent) | 107.28% | 148.41% | |
Risk-free interest rate (as a percent) | 0.19% | 1.87% | |
Performance period | 3 years 1 month 28 days | 4 years 8 months 12 days | |
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options granted | 260,000 | ||
Performance-based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options granted | 105,000 | 55,000 | |
Stock-based compensation expense | $ 314,000 | ||
Market-based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options granted | 155,000 | ||
Stock-based compensation expense | $ 1,506,000 | ||
Weighted average volatility factor (as a percent) | 136.52% | ||
Risk-free interest rate (as a percent) | 0.26% | ||
Performance period | 5 years |
STOCK-BASED COMPENSATION - Warr
STOCK-BASED COMPENSATION - Warrants activity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2017 | |
Number of warrants | ||||
Exercised | (1,212,136) | |||
Warrant | ||||
Number of warrants | ||||
Balance at beginning of the period (In shares) | 424,708 | |||
Granted | 146,667 | |||
Exercised | (321,467) | (1,279,550) | ||
Forfeited/Expired | (22,188) | (224,124) | ||
Balance at end of the period (In shares) | 81,053 | 424,708 | 1,781,715 | |
Weighted Average Exercise Price | ||||
Balance at beginning of the period (in dollars per share) | $ 5.31 | |||
Granted (in dollars per share) | $ 6 | |||
Exercised (in dollars per share) | 4.77 | 1.85 | ||
Forfeited/Expired (in dollars per share) | 9.59 | 5.33 | ||
Balance at end of the period (in dollars per share) | $ 6.25 | $ 5.31 | $ 4.20 | |
Weighted Average Remaining Term | ||||
Outstanding (In years) | 11 months 9 days | 9 months 26 days | 2 years 2 months 23 days | |
Granted | 7 months 13 days | |||
Intrinsic Value of Warrants | ||||
Balance at beginning of the period (In dollars) | $ 189,000 | |||
Balance at end of the period (In dollars) | $ 1,587,000 | $ 189,000 | $ 8,930,000 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Aug. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 09, 2020 | Aug. 16, 2019 | Aug. 15, 2019 | Sep. 26, 2018 | |
Class of Stock [Line Items] | ||||||||
Common Stock, Shares Authorized | 50,000,000 | |||||||
Preferred stock dividend rate (in percentage) | 125.00% | |||||||
Cash received in full exercise of warrants | $ 2,115,000 | |||||||
Number of shares, exercised | 1,212,136 | |||||||
2020 Equity Incentive Plan | ||||||||
Class of Stock [Line Items] | ||||||||
Common Stock, Shares Authorized | 1,000,000 | |||||||
Warrant | ||||||||
Class of Stock [Line Items] | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.50 | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,194,990 | |||||||
Warrant two | ||||||||
Class of Stock [Line Items] | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 4.07 | $ 6.25 | ||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 85,719 | |||||||
Sero Capital LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Cash received in full exercise of warrants | $ 880,000 | |||||||
Warrant | ||||||||
Class of Stock [Line Items] | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.63 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 146,667 | |||||||
Class Of Warrant Or Right Grant Date Fair Value | $ 146,667 | |||||||
Number of shares, exercised | 321,467 | 1,279,550 | ||||||
Warrant | Alexandre Zyngier | ||||||||
Class of Stock [Line Items] | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6 | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 146,667 | |||||||
Stock Options | ||||||||
Class of Stock [Line Items] | ||||||||
Unrecognized stock-based compensation expense | $ 1,373,000 | |||||||
Restricted Stock Units | ||||||||
Class of Stock [Line Items] | ||||||||
Unrecognized stock-based compensation expense | 6,413,000 | |||||||
Warrant | ||||||||
Class of Stock [Line Items] | ||||||||
Unrecognized stock-based compensation expense | $ 0 | |||||||
Series A Preferred Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock dividend rate (in percentage) | 5.00% | 5.00% |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
INCOME TAXES | ||
Federal and state income tax expense | $ 0 | $ 0 |
Operating Loss Carryforwards | 42,636,000 | |
Deferred Tax Assets, Net | 0 | 0 |
Deferred Tax Assets, Valuation Allowance | $ 13,304,000 | $ 7,758,000 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets and liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Intangible assets | $ 269,000 | |
Accrued compensation expense | 83,000 | |
Bad debt expense | 21,000 | |
Deferred revenue and costs | 2,000 | |
Stock-based compensation | 1,494,000 | |
Operating lease liability | 193,000 | |
State NOL carryforwards | 2,516,000 | $ 1,380,000 |
Federal NOL carryforwards | 8,954,000 | 6,378,000 |
Total Deferred Tax Assets | 13,532,000 | 7,758,000 |
Valuation allowance | (13,304,000) | (7,758,000) |
Net deferred tax assets | 228,000 | |
Deferred tax liabilities: | ||
Property and equipment | (62,000) | |
Right of use assets | (166,000) | |
Total deferred tax liabilities | (228,000) | |
Net deferred tax asset (liability) | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Mar. 08, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Feb. 11, 2021 |
Subsequent Event [Line Items] | ||||||
Number of shares sold | 473,239 | |||||
Proceeds from common stock offering, net of transaction costs | $ 7,824,000 | $ 0 | ||||
Restricted Stock Units | ||||||
Subsequent Event [Line Items] | ||||||
Number of RSUs vested during the period | 285,108 | |||||
Subsequent Event | Interim Chief Executive Officer | Restricted Stock Units | ||||||
Subsequent Event [Line Items] | ||||||
Number of RSUs vested during the period | 55,000 | |||||
Taxes paid in connection with settlement of RSUs | $ 373,000 | |||||
Number of shares surrendered | 15,651 | |||||
Subsequent Event | Sales agreement with B. Riley Securities, Inc. | ||||||
Subsequent Event [Line Items] | ||||||
Maximum aggregate offering price | $ 30,000,000 | |||||
Number of shares sold | 378,108 | |||||
Proceeds from common stock offering, net of transaction costs | $ 14,100,000 |