Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 25, 2022 | Jun. 30, 2021 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity File Number | 333-177463 | ||
Entity Registrant Name | AudioEye, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 20-2939845 | ||
Entity Address, Address Line One | 5210 E. Williams Circle | ||
Entity Address, Address Line Two | Suite 750 | ||
Entity Address, City or Town | Tucson | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85711 | ||
City Area Code | 866 | ||
Local Phone Number | 331-5324 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Trading Symbol | AEYE | ||
Security Exchange Name | NASDAQ | ||
Entity Central Index Key | 0001362190 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Title of 12(b) Security | Common Stock, par value $0.00001 per share | ||
Amendment Flag | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Common Stock, Shares Outstanding | 11,437,484 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 118,178,850 | ||
Auditor Name | MaloneBailey, LLP | ||
Auditor Location | Houston, Texas | ||
Auditor Firm ID | 206 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 18,966 | $ 9,095 |
Accounts receivable, net of allowance for doubtful accounts of $157 and $79, respectively | 5,311 | 5,096 |
Deferred costs, short term | 103 | 152 |
Prepaid expenses and other current assets | 451 | 288 |
Total current assets | 24,831 | 14,631 |
Property and equipment, net of accumulated depreciation of $210 and $209, respectively | 196 | 91 |
Right of use assets | 834 | 617 |
Deferred costs, long term | 34 | 77 |
Intangible assets, net of accumulated amortization of $5,285 and $4,328, respectively | 2,622 | 2,137 |
Goodwill | 701 | 701 |
Other | 95 | 0 |
Total assets | 29,313 | 18,254 |
Current liabilities: | ||
Accounts payable and accrued expenses | 3,542 | 2,190 |
Finance lease liabilities | 57 | 49 |
Operating lease liabilities | 415 | 229 |
Deferred revenue | 7,068 | 6,328 |
Contingent consideration | 134 | 0 |
Term loan, short term | 0 | 219 |
Total current liabilities | 11,216 | 9,015 |
Long term liabilities: | ||
Finance lease liabilities | 45 | 12 |
Operating lease liabilities | 450 | 427 |
Deferred revenue | 5 | 83 |
Term loan, long term | 0 | 1,083 |
Total liabilities | 11,716 | 10,620 |
Stockholders' equity: | ||
Preferred stock, value | ||
Common stock, $0.00001 par value, 50,000 shares authorized, 11,435 and 10,130 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 1 | 1 |
Additional paid-in capital | 88,889 | 64,716 |
Accumulated deficit | (71,293) | (57,084) |
Total stockholders' equity | 17,597 | 7,634 |
Total liabilities and stockholders' equity | 29,313 | 18,254 |
Series A Preferred Stock | ||
Stockholders' equity: | ||
Preferred stock, value | $ 0 | $ 1 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Allowance for doubtful accounts | $ 157,000 | $ 79,000 |
Property plant and equipment, accumulated depreciation | 210,000 | 209,000 |
Intangible assets, accumulated amortization | $ 5,285,000 | $ 4,328,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 11,435,000 | 10,130,000 |
Common Stock, Shares, Outstanding | 11,435,000 | 10,130,000 |
Series A Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 200,000 | 200,000 |
Preferred Stock, Shares Issued | 0 | 90,000 |
Preferred Stock, Shares Outstanding | 0 | 90,000 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
STATEMENTS OF OPERATIONS | ||
Revenue | $ 24,503 | $ 20,475 |
Cost of revenue | 6,121 | 5,961 |
Gross profit | 18,382 | 14,514 |
Operating expenses: | ||
Selling and marketing | 14,621 | 8,472 |
Research and development | 5,304 | 1,230 |
General and administrative | 13,970 | 11,945 |
Total operating expenses | 33,895 | 21,647 |
Operating loss | (15,513) | (7,133) |
Other income (expense): | ||
Gain on loan forgiveness | 1,316 | 0 |
Change in fair value of warrant liability | 0 | 120 |
Interest expense | (12) | (145) |
Total other income (expense) | 1,304 | (25) |
Net loss | (14,209) | (7,158) |
Dividends on Series A Convertible Preferred Stock | (69) | (51) |
Net loss available to common stockholders | $ (14,278) | $ (7,209) |
Net loss per common share-basic | $ (1.29) | $ (0.77) |
Net loss per common share-diluted | $ (1.29) | $ (0.77) |
Weighted average common shares outstanding-basic | 11,040 | 9,313 |
Weighted average common shares outstanding-diluted | 11,040 | 9,313 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2019 | $ 1 | $ 1 | $ 51,490 | $ (49,926) | $ 1,566 |
Balance (in shares) at Dec. 31, 2019 | 8,877 | 105 | |||
Common stock issued upon exercise of warrants and options on a cashless basis (in shares) | 267 | ||||
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 | ||||
Common stock issued upon conversion of preferred stock (in shares) | 43 | (15) | |||
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 | ||||
Stock-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 | |||
Common stock issued upon exercise of warrants and options on a cashless basis (in shares) | 156 | ||||
Common stock issued upon exercise of warrants and options on a cash basis | 644 | 644 | |||
Common stock issued upon exercise of warrants and options on a cash basis (in shares) | 126 | ||||
Common stock issued upon settlement of restricted stock units (in shares) | 283 | ||||
Common stock issued upon conversion of preferred stock | $ (1) | 1 | |||
Common stock issued upon conversion of preferred stock (in shares) | 279 | (90) | |||
Issuance of common stock for cash, net of transaction expenses | 16,534 | 16,534 | |||
Issuance of common stock for cash, net of transaction expenses (in shares) | 472 | ||||
Stock-based compensation | 7,616 | 7,616 | |||
Net loss | (14,209) | (14,209) | |||
Issuance of common stock for services (in shares) | 32 | ||||
Surrender of stock to cover tax liability on settlement of employee stock-based awards | (622) | (622) | |||
Surrender of stock to cover tax liability on settlement of employee stock-based awards (in share) | (43) | ||||
Balance at Dec. 31, 2021 | $ 1 | $ 88,889 | $ (71,293) | $ 17,597 | |
Balance (in shares) at Dec. 31, 2021 | 11,435 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (14,209,000) | $ (7,158,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,322,000 | 963,000 |
Gain on loan forgiveness | (1,316,000) | 0 |
Loss on impairment of long-lived assets | 10,000 | 0 |
Loss on disposal of property and equipment | 12,000 | 0 |
Stock-based compensation expense | 7,616,000 | 4,138,000 |
Amortization of deferred commissions | 189,000 | 250,000 |
Amortization of debt issuance costs | 0 | 137,000 |
Amortization of right of use assets | 265,000 | 210,000 |
Change in fair value of warrant liability | 0 | (120,000) |
Provision for accounts receivable | 73,000 | 128,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable and unbilled receivables | (288,000) | (2,106,000) |
Prepaid expenses and other assets | (355,000) | (241,000) |
Accounts payable and accruals | 1,312,000 | 1,215,000 |
Operating lease liability | (273,000) | (208,000) |
Deferred revenue | 662,000 | 886,000 |
Net cash used in operating activities | (4,980,000) | (1,906,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | (82,000) | 0 |
Software development costs | (1,425,000) | (1,157,000) |
Patent costs | (64,000) | (141,000) |
Payment for acquisition | (53,000) | 0 |
Net cash used in investing activities | (1,624,000) | (1,298,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from common stock offering, net of transaction costs | 16,534,000 | 7,824,000 |
Proceeds from term loan | 0 | 1,302,000 |
Proceeds from exercise of options and warrants | 644,000 | 1,264,000 |
Payments related to settlement of employee stock-based awards | (622,000) | 0 |
Repayments of finance leases | (81,000) | (63,000) |
Net cash provided by financing activities | 16,475,000 | 10,327,000 |
Net increase in cash and cash equivalents | 9,871,000 | 7,123,000 |
Cash and cash equivalents-beginning of period | 9,095,000 | 1,972,000 |
Cash and cash equivalents-end of period | 18,966,000 | 9,095,000 |
Cash and cash equivalents-end of period | 18,966,000 | 9,095,000 |
SUPPLEMENTAL CASH FLOW DISCLOSURES | ||
Interest paid | (8,000) | (6,000) |
Income taxes paid | 7,000 | 0 |
Non cash investing and financing activities: | ||
Right-of-use assets and operating lease obligations recognized during the year | 482,000 | 0 |
Contingent consideration recorded in connection with acquisition | 134,000 | 0 |
Equipment acquired from finance leases | $ 122,000 | $ 20,000 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2021 | |
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. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — 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. 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, allowance for doubtful accounts, and intangible assets. 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 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. 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 PDF remediation and Mobile App report services arrangements is based on usage and fixed fee, respectively. The following table presents our revenues disaggregated by sales channel: Year ended December 31, (in thousands) 2021 2020 Partner and Marketplace $ 13,638 $ 9,740 Enterprise 10,865 10,735 Total revenues $ 24,503 $ 20,475 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. Deferred revenue includes payments received in advance of performance under the contract and is reported on an individual contract basis at the end of each reporting period. 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, 2021 and 2020: As of December 31, (in thousands) 2021 2020 Deferred revenue - current $ 7,068 $ 6,328 Deferred revenue - noncurrent 5 83 Total deferred revenue $ 7,073 $ 6,411 In the year ended December 31, 2021 we recognized $6,241,000, or 97%, in revenue from deferred revenue outstanding as of December 31, 2020. We had two major customers (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 20% and 10%, respectively, of our revenue in the year ended December 31, 2021, and one major customer which generated approximately 16.7% of our revenue in the fiscal year ended December 31, 2020. Three customers with long standing relationships with the Company represented 21%, 15% and 10%, respectively, of total accounts receivable as of December 31, 2021. Three customers represented 25%, 13% and 13%, respectively, of total accounts receivable as of December 31,2020. Deferred Costs (Contract acquisition costs) We capitalize initial and renewal sales commission payments in the period the commission is earned, which generally occurs when a customer contract is obtained, 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. 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, 2021 and 2020: As of December 31, (in thousands) 2021 2020 Deferred costs – current $ 103 $ 152 Deferred costs - noncurrent 34 77 Total deferred costs $ 137 $ 229 Amortization expense associated with sales commissions was included in selling and marketing expenses on the statements of operations and totaled $189,000 and $250,000 for the years ended December 31, 2021 and 2020, respectively. 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 $157,000 and $79,000 at December 31, 2021 and 2020, respectively. The Company believes that its reserve is adequate, however results may differ in future periods. For the years ended December 31, 2021 and 2020, bad debt expense totaled $73,000 and $128,000, 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. Upon disposition of property and equipment, the cost and the related accumulated depreciation associated with the disposed asset are removed from the accounts and any gain or loss on disposition is included in the results of operations in the year of disposal. Total property and equipment acquired by cash and through finance leases totaled $92,000 and $122,000, respectively, in the year ended December 31, 2021,and zero and $20,000, respectively, in the year ended December 31, 2020. Depreciation expense was $97,000 and $86,000 for the years ended December 31, 2021 and 2020, 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, until the software is available for general release. 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 $845,000 and $449,000 for the years ended December 31, 2021 and 2020, 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, 2021 and 2020. 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 based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market participant assumptions in the absence of observable market information. Assets and liabilities required to be measured at fair value are categorized based upon the level of judgment associated with the inputs used to measure their value in one of the following three categories: 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. 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. The table below provides information on our assets and liabilities that are measured at fair value on a recurring basis: Fair Value (in thousands) Fair Value Hierarchy Contingent consideration (1), December 31, 2021 $ 134 Level 3 (1) Contingent consideration is a liability recorded in connection with the acquisition of substantially all of the assets of Square ADA LLC (“Square ADA”) in the fourth quarter of 2021(refer to Note 3 – Acquisitions for additional information on the Square ADA acquisition). The fair value of the contingent consideration was determined by management based on the estimated monthly recurring revenue from converted customers as of the sixth month anniversary of the closing date. Stock-Based Compensation The Company periodically issues options, warrants, restricted stock units (“RSUs”), and shares of its common stock, as compensation for services received from its employees, directors, and consultants. 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. We recognize forfeitures as they occur. Stock-based compensation expense is recorded 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. 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 grant date. We estimate the fair value of market-based restricted stock unit awards as of the grant date using the Monte Carlo simulation model. We expense the compensation cost associated with time-based options, warrants and RSUs as the restriction period lapses, which is typically a one 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, 2021 and 2020, 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) 2021 2020 Preferred stock — 263 Options 191 517 Warrants 30 81 Restricted stock units 1,033 958 Total 1,254 1,819 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 December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. This ASU simplifies accounting guidance for intraperiod allocations, deferred tax liabilities, year-to-date losses in interim periods, franchise taxes, step-up in tax basis of goodwill, separate entity financial statements and interim recognition of tax laws or rate changes. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. We adopted this guidance effective January 1, 2021. The adoption of this guidance did not have a material impact our financial position, results of operations or disclosures. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. This ASU requires that contract assets and contract liabilities acquired in a business combination be recognized and measured in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within that fiscal year. Early adoption of the amendments is permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. We are currently evaluating the impact of the new standard on our financial statements and related disclosures. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2021 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 3 — ACQUISITIONS On December 28, 2021, the Company completed the acquisition of substantially all of the assets of Square ADA LLC (“Square ADA”), a provider of accessibility solution to websites built or hosted by Squarespace, Inc. The aggregate consideration for the purchase of Square ADA was approximately $187,000 (at fair value) consisting of (i) $53,000 in cash, and (ii) contingent consideration estimated at $134,000 at December 31, 2021. We accounted for the acquisition of Square ADA as an asset acquisition in accordance with FASB ASC 805, “Business Combinations”, and ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. Based on our assessment of the screen test as required by ASU 2017-01, the transaction does not meet the definition of a business as substantially all the fair value of the gross assets acquired is concentrated in one single identifiable intangible asset, the acquired customer relationships. Accordingly, we allocated the total cost of the acquisition to customer relationships following the cost accumulation model. No external direct transaction costs were incurred in connection with Square ADA’s acquisition. The operating results of Square ADA are not material for purposes of proforma disclosure. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 4 — INTANGIBLE ASSETS Intangible assets as of December 31, 2021 and 2020 consisted of the following: December 31, (in thousands) 2021 2020 Finite-lived assets: Patents $ 3,887 $ 3,779 Capitalized software development costs 3,833 2,676 Customer Relationships 187 — Accumulated amortization (5,285) (4,328) Finite-lived assets, net 2,622 2,127 Indefinite-lived assets: Domain name — 10 Intangible assets, net $ 2,622 $ 2,137 As of December 31, 2021 and 2020, capitalized cost associated with pending patents totaled $53,000 and 141,000, respectively. For the years ended December 31, 2021 and 2020, software development costs capitalized totaled $1,425,000 and $1,157,000, respectively. In 2021, we recorded $187,000 in customer relationships in connection with acquisition of Square ADA. We amortize our customer relationships on a straight-line basis over the estimated useful life of two years. Refer to Note 3 – Acquisitions for additional information on the Square ADA acquisition. for Refer to Note 2 – 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, 2021 and 2020: Year ended December 31, (in thousands) 2021 2020 Patents $ 379 $ 428 Capitalized software development costs 845 449 Customer Relationships 1 — Total amortization expense $ 1,225 $ 877 The weighted average remaining useful life of our finite-lived intangible assets (in years) as of December 31, 2021 are as follows: Weighted average remaining amortization period (in years) Patents 2.2 Capitalized software development costs 2.3 Customer Relationships 2.0 No loss on impairment of long-lived assets was recorded for the years ended December 31, 2021 and 2020. |
LEASE LIABILITIES AND RIGHT OF
LEASE LIABILITIES AND RIGHT OF USE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 and 2020, the Company’s outstanding finance lease obligations totaled $102,000 and $61,000, 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, net of disposals: As of December 31, (in thousands) 2021 2020 Computer equipment $ 256 $ 177 Less: accumulated depreciation (156) (116) Assets acquired under finance leases, net $ 100 $ 61 Operating Leases Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since our lease arrangements do not provide an implicit rate, we use our estimated incremental borrowing rate for the expected remaining lease term at commencement date 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, Marietta, Georgia, and Miami Beach, Florida. 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. In the second quarter of 2021, we terminated the lease with a company controlled by our Executive Chairman and closed our Scottsdale, Arizona office. In October 2021, the Company entered into a lease agreement for new office space in Miami Beach, Florida, consisting of approximately 2,739 square feet. The new lease commenced on October 5, 2021 and will expire in May 2024. Upon commencement of the new lease, we recorded a right-of-use asset and corresponding operating lease liability of $482,000. Refer to Note 8 – Related Party Transactions for additional information on this office lease. In addition, the Company entered into membership agreements to occupy shared office space in Austin, Texas, Portland, Oregon, and Seattle, Washington. The membership agreements do not qualify as a lease under ASC 842, therefore the Company expenses membership fees as they are incurred. Refer to Note 9 – Commitments and Contingencies for further details on our shared office arrangements which provide for a minimum term. The Company made operating lease payments in the amount of $310,000 and $255,000 during the years ended December 31, 2021 and 2020, respectively. The following summarizes the total lease liabilities and remaining future minimum lease payments at December 31, 2021 (in thousands): Finance Operating Year ending December 31, Leases Leases Total 2022 $ 61 $ 456 $ 517 2023 40 322 362 2024 7 149 156 Total minimum lease payments 108 927 1,035 Less: present value discount (6) (62) (68) Total lease liabilities $ 102 $ 865 $ 967 Current portion of lease liabilities $ 57 $ 415 $ 472 Long term portion of lease liabilities $ 45 $ 450 $ 495 The following summarizes expenses associated with our finance and operating leases for the years ended December 31, 2021 and 2020: Year ended December 31, (in thousands) 2021 2020 Finance lease expenses: Depreciation expense $ 77 $ 56 Interest on lease liabilities 8 6 Total Finance lease expense 85 62 Operating lease expense 304 292 Short-term lease and related expenses 217 155 Total lease expenses $ 606 $ 509 The following table provides information about the remaining lease terms and discount rates applied as of December 31, 2021 and 2020: As of December 31, 2021 2021 Weighted average remaining lease term (years) Operating leases 2.27 2.95 Finance leases 1.92 1.44 Weighted average discount rate (%) Operating leases 6.00 6.00 Finance leases 6.00 6.00 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2021 | |
DEBT | |
DEBT | NOTE 6 — DEBT As of December 31, 2021, the Company had no debt outstanding. 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”). The loan had a maturity of two years and bore an interest rate of 1.0% per annum. In the second quarter of 2021, the SBA approved the Company’s PPP Loan forgiveness application and paid to the Lender the full amount of the PPP Loan and accrued interest thereon on the Company’s behalf, releasing AudioEye from any obligations. In connection with the full forgiveness of the outstanding principal and interest on our PPP Loan, we recorded a $1,316,000 gain on loan forgiveness in the twelve months ended December 31, 2021. |
REDEMPTION OF SERIES A CONVERTI
REDEMPTION OF SERIES A CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2021 | |
Series A Preferred Stock | |
Class of Stock [Line Items] | |
SERIES A CONVERTIBLE PREFERRED STOCK | NOTE 7 — REDEMPTION OF SERIES A CONVERTIBLE PREFERRED STOCK In the second quarter of 2021, all 90,000 shares of the outstanding Series A Convertible Preferred Stock (the “Preferred Stock”) were converted to common stock prior to their authorized redemption date of May 25, 2021. These shares of Preferred Stock were issued at $10 per share, accrued 5% in cumulative annual dividends, and were convertible into the Company’s common stock at a price of $4.385 per share. In connection with the conversion of the 90,000 shares of Preferred Stock in 2021, we issued 279,137 shares of our common stock. As of December 31, 2021 and 2020, the Company had zero and 90,000 shares of Preferred Stock outstanding, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 8 — RELATED PARTY TRANSACTIONS Office leases As discussed in Note 5 – Lease Liabilities and Right of Use Assets, in the fourth quarter of 2021 we assumed two lease agreements for office space in Miami Beach, Florida, from Sero Capital, LLC (“Sero Capital”), a stockholder who owns more than 10% of the outstanding shares of common stock of the Company. The sole member of Sero Capital is David Moradi, a director and the Company’s Chief Executive Officer. Because the office space is predominately used by Mr. Moradi and other key company executives for their work with the Company, the audit committee deemed the assumption of the lease from Sero Capital and the related expense to be appropriately borne by the Company. The audit committee also determined that the material terms of the lease were market and no less favorable than the Company could have received on an arm’s length basis. The lease agreements assigned to the Company expire in May 2024 and provide for aggregate future lease payments totaling $554,000. In connection with the assignment of the leases, the Company paid Sero Capital $32,000 for the assignment of its rights to the security deposit. In the second quarter of 2021, we terminated a lease with a company controlled by our Executive Chairman and closed our Scottsdale, AZ office. For the years ended December 31, 2021 and 2020, rent payments for this office space totaled $24,000 and $70,000, respectively. Related party credit facility On August 14, 2019, we entered into a Loan Agreement with Sero Capital. 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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 — COMMITMENTS AND CONTINGENCIES Membership agreement to occupy shared office space The Company occupies shared office space in Austin, TX, and Seattle, WA under membership agreements which end in May 2022 and July 2022, respectively. Fees due under these membership agreements are based on the number of contracted seats and the use of optional office services. As of December 31, 2021, minimum fees due under these shared office arrangements totaled $54,000. 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. On October 26, 2020, AudioEye filed a complaint (amended on December 29, 2020) against accessiBe Ltd. (“accessiBe”) in District Court in the Western District of Texas, Waco Division. The complaint alleges infringement of nine of AudioEye’s patents and various claims under the Lanham Act and New York law and seeks damages, costs, and injunctive relief. On November 1, 2021, accessiBe answered denying infringement, alleging invalidity of the patents at issue and counterclaimed with similar claims and remedies. On July 14, 2021, AudioEye filed a second complaint (amended on August 4, 2021) against accessiBe in the same court alleging infringement of six of AudioEye’s patents and seeking damages, costs, and injunctive relief. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 and 2020: Year ended December 31, (in thousands) 2021 2020 Stock Options $ 634 $ 300 RSUs 6,509 3,789 Unrestricted Shares of Common Stock 473 49 Total $ 7,616 $ 4,138 As of December 31, 2021, the outstanding unrecognized stock-based compensation expense related to options and restricted stock units (“RSUs”) was $859,000 and $7,449,000, respectively, which may be recognized through August 2025, subject to achievement of service, performance, and market conditions. As of December 31, 2021, 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, 2021 and 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2019 965,043 $ 3.70 3.01 759,631 $ 1,666,000 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 Granted 39,186 24.78 4.93 Exercised (268,836) 3.73 Forfeited/Expired (95,921) 12.88 Outstanding at December 31, 2021 191,340 $ 12.94 3.96 83,070 $ 71,000 Exercisable as of December 31, 2021 83,070 $ 9.78 3.90 $ 44,000 The 2021 and 2020 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: 2021 2020 Expected life 3.25 years 3.16 years Risk-free interest rate 0.34 % 0.19 % Weighted average volatility factor 100.60 % 107.28 % 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 year ended December 31, 2021: Weighted Average Number of Grant Date RSUs Fair Value Vested Unvested Restricted stock units outstanding as of December 31, 2020 958,378 $ 11.57 285,108 673,270 Granted 648,226 19.44 Settled (283,568) 15.24 Forfeited/Canceled (289,796) 19.92 Restricted stock units outstanding at December 31, 2021 1,033,240 $ 13.10 340,539 692,701 In the third quarter of 2020, we granted 260,000 RSUs with performance-based and market-based conditions to our Chief Executive Officer (“CEO”). The performance condition for 105,000 of such RSUs is based on the achievement of Monthly Recurring Revenue (“MRR”) targets. For the years ended December 31, 2021 and 2020, we recorded $471,000 and $314,000, respectively, 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. For the years ended December 31, 2021 and 2020, we recorded $1,141,000 and $1,506,000, respectively, in stock-based compensation expense related to these market-based RSUs. In the first quarter of 2021, we granted 100,000 RSUs with performance-based and market-based conditions to our CEO. The performance condition for 50,000 of such RSUs is based on the achievement of an MRR targets. The market condition for the remaining 50,000 RSUs in the award is based on a target for the Company’s stock price. 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 116.95%, 5-year risk-free rate of 0.79%, and a performance period of 5 years. In the fourth quarter for 2021, all 100,000 RSUs were cancelled for no consideration to replenish the shares available under the 2020 Plan for additional awards to Company employees. In connection with the award cancellation, we accelerated the stock compensation expense associated with the 50,000 market-based RSUs and recognized its full grant date fair value of $1,311,000 as stock-based compensation expense in the year ended December 31, 2021. Warrants The following table summarizes the warrant activity for the years ended December 31, 2021 and 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2019 424,708 $ 5.31 0.82 $ 189,000 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 Exercised (38,880) 6.25 Forfeited/Expired (12,000) 6.25 Outstanding at December 31, 2021 30,173 $ 6.25 0.71 $ 23,000 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 8 – Related Party Transactions for additional information on these warrants. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 — INCOME TAXES For the years ended December 31, 2021 and 2020, federal and state income tax expense totaled zero. The Company has net operating loss carryforwards available to reduce future taxable income. At December 31, 2021, the Company had U.S. federal net operating loss carry forwards of $58,569,000 , of which (i) $25,202,000 expire at various dates through fiscal 2038, (ii) $17,477,000 can be carried forward indefinitely under the provisions of the Tax Cuts and Jobs Act (TCJA) and are able to offset 100% of taxable income due to the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), and (iii) $15,890,000 were generated in 2021 and can be carried forward indefinitely but will only be able to offset up to 80% of taxable income in any given year. 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 carryforwards, 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, 2021 and 2020 as the Company established a full valuation allowance of $17,319,000 and $13,304,000, respectively. Significant components of our deferred tax assets and liabilities as of December 31, 2021 and 2020 consist of the following: December 31, (in thousands) 2021 2020 Deferred tax assets: Intangible assets $ 295 $ 269 Bad debt expense 41 21 Accrued compensation expense 15 83 Deferred revenue and costs — 2 Stock-based compensation 1,789 1,494 Operating lease liability 255 193 State NOL carryforwards 3,122 2,516 Federal NOL carryforwards 12,299 8,954 Total Deferred Tax Assets 17,816 13,532 Valuation allowance (17,319) (13,304) Net deferred tax assets 497 228 Deferred tax liabilities: Property and equipment (270) (62) Deferred revenue and costs (8) — Right of use assets (219) (166) Total deferred tax liabilities (497) (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, 2017. All material state and local income tax matters have been concluded for years through December 31, 2016. The Company is no longer subject to IRS examination for the tax years ended on or before December 31, 2017; however, carryforward losses that were generated through the tax year ended December 31, 2017 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, 2021 and 2020. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 12 — SUBSEQUENT EVENTS We have evaluated subsequent events occurring after December 31, 2021 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. We entered into lease agreement to occupy office space in New York City, New York, which commenced in January 2022. The lease agreement expires in December 2026 and provides for aggregate future lease payments totaling $1,020,000. On March 9, 2022, we entered into a Stock Purchase Agreement (“Purchase Agreement”) to acquire all the outstanding equity interests of Bureau of Internet Accessibility Inc. (“BOIA”), a Delaware corporation which provides web accessibility services including audits, training, remediation and implementation support. The acquisition represents another step forward in strengthening our suite of products and services by adding additional capabilities for enterprise accessibility compliance. The aggregate cash purchase price paid at closing was $5,000,000, and is subject to net working capital and other customary adjustments. Additionally, the Purchase Agreement provides for contingent earn out payments in cash based on BOIA’s revenues for 2022 and 2023. Due to the timing of the BOIA acquisition relative to the date of this report, our initial accounting for the BOIA acquisition is incomplete. We have not completed our provisional valuation of net tangible and identifiable intangible assets acquired and liabilities assumed. We will recognize and disclose our provisional allocation of the purchase consideration in the fiscal quarter ending on March 31, 2022. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
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. 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, allowance for doubtful accounts, and intangible assets. 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 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. 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 PDF remediation and Mobile App report services arrangements is based on usage and fixed fee, respectively. The following table presents our revenues disaggregated by sales channel: Year ended December 31, (in thousands) 2021 2020 Partner and Marketplace $ 13,638 $ 9,740 Enterprise 10,865 10,735 Total revenues $ 24,503 $ 20,475 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. Deferred revenue includes payments received in advance of performance under the contract and is reported on an individual contract basis at the end of each reporting period. 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, 2021 and 2020: As of December 31, (in thousands) 2021 2020 Deferred revenue - current $ 7,068 $ 6,328 Deferred revenue - noncurrent 5 83 Total deferred revenue $ 7,073 $ 6,411 In the year ended December 31, 2021 we recognized $6,241,000, or 97%, in revenue from deferred revenue outstanding as of December 31, 2020. We had two major customers (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 20% and 10%, respectively, of our revenue in the year ended December 31, 2021, and one major customer which generated approximately 16.7% of our revenue in the fiscal year ended December 31, 2020. Three customers with long standing relationships with the Company represented 21%, 15% and 10%, respectively, of total accounts receivable as of December 31, 2021. Three customers represented 25%, 13% and 13%, respectively, of total accounts receivable as of December 31,2020. |
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 $157,000 and $79,000 at December 31, 2021 and 2020, respectively. The Company believes that its reserve is adequate, however results may differ in future periods. For the years ended December 31, 2021 and 2020, bad debt expense totaled $73,000 and $128,000, 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. Upon disposition of property and equipment, the cost and the related accumulated depreciation associated with the disposed asset are removed from the accounts and any gain or loss on disposition is included in the results of operations in the year of disposal. Total property and equipment acquired by cash and through finance leases totaled $92,000 and $122,000, respectively, in the year ended December 31, 2021,and zero and $20,000, respectively, in the year ended December 31, 2020. Depreciation expense was $97,000 and $86,000 for the years ended December 31, 2021 and 2020, 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, until the software is available for general release. 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 $845,000 and $449,000 for the years ended December 31, 2021 and 2020, 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, 2021 and 2020. |
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 based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market participant assumptions in the absence of observable market information. Assets and liabilities required to be measured at fair value are categorized based upon the level of judgment associated with the inputs used to measure their value in one of the following three categories: 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. 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. The table below provides information on our assets and liabilities that are measured at fair value on a recurring basis: Fair Value (in thousands) Fair Value Hierarchy Contingent consideration (1), December 31, 2021 $ 134 Level 3 (1) Contingent consideration is a liability recorded in connection with the acquisition of substantially all of the assets of Square ADA LLC (“Square ADA”) in the fourth quarter of 2021(refer to Note 3 – Acquisitions for additional information on the Square ADA acquisition). The fair value of the contingent consideration was determined by management based on the estimated monthly recurring revenue from converted customers as of the sixth month anniversary of the closing date. |
Stock-Based Compensation | (1) Contingent consideration is a liability recorded in connection with the acquisition of substantially all of the assets of Square ADA LLC (“Square ADA”) in the fourth quarter of 2021(refer to Note 3 – Acquisitions for additional information on the Square ADA acquisition). The fair value of the contingent consideration was determined by management based on the estimated monthly recurring revenue from converted customers as of the sixth month anniversary of the closing 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, 2021 and 2020, 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) 2021 2020 Preferred stock — 263 Options 191 517 Warrants 30 81 Restricted stock units 1,033 958 Total 1,254 1,819 |
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 December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. This ASU simplifies accounting guidance for intraperiod allocations, deferred tax liabilities, year-to-date losses in interim periods, franchise taxes, step-up in tax basis of goodwill, separate entity financial statements and interim recognition of tax laws or rate changes. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. We adopted this guidance effective January 1, 2021. 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, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of disaggregation of revenue | Year ended December 31, (in thousands) 2021 2020 Partner and Marketplace $ 13,638 $ 9,740 Enterprise 10,865 10,735 Total revenues $ 24,503 $ 20,475 |
Schedule of deferred revenue | The table below summarizes our deferred revenue as of December 31, 2021 and 2020: As of December 31, (in thousands) 2021 2020 Deferred revenue - current $ 7,068 $ 6,328 Deferred revenue - noncurrent 5 83 Total deferred revenue $ 7,073 $ 6,411 |
Schedule of commission cost | The table below summarizes the deferred commission costs as of December 31, 2021 and 2020: As of December 31, (in thousands) 2021 2020 Deferred costs – current $ 103 $ 152 Deferred costs - noncurrent 34 77 Total deferred costs $ 137 $ 229 |
Schedule of our liabilities that are measured at fair value on a recurring basis | The table below provides information on our assets and liabilities that are measured at fair value on a recurring basis: Fair Value (in thousands) Fair Value Hierarchy Contingent consideration (1), December 31, 2021 $ 134 Level 3 (1) Contingent consideration is a liability recorded in connection with the acquisition of substantially all of the assets of Square ADA LLC (“Square ADA”) in the fourth quarter of 2021(refer to Note 3 – Acquisitions for additional information on the Square ADA acquisition). The fair value of the contingent consideration was determined by management based on the estimated monthly recurring revenue from converted customers as of the sixth month anniversary of the closing date. |
Schedule of antidilutive securities outstanding excluded from computation of earnings Per share | Potentially dilutive securities outstanding as of December 31, 2021 and 2020, 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) 2021 2020 Preferred stock — 263 Options 191 517 Warrants 30 81 Restricted stock units 1,033 958 Total 1,254 1,819 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INTANGIBLE ASSETS | |
Schedule of finite-Lived intangible assets | Intangible assets as of December 31, 2021 and 2020 consisted of the following: December 31, (in thousands) 2021 2020 Finite-lived assets: Patents $ 3,887 $ 3,779 Capitalized software development costs 3,833 2,676 Customer Relationships 187 — Accumulated amortization (5,285) (4,328) Finite-lived assets, net 2,622 2,127 Indefinite-lived assets: Domain name — 10 Intangible assets, net $ 2,622 $ 2,137 |
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, 2021 and 2020: Year ended December 31, (in thousands) 2021 2020 Patents $ 379 $ 428 Capitalized software development costs 845 449 Customer Relationships 1 — Total amortization expense $ 1,225 $ 877 |
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, 2021 are as follows: Weighted average remaining amortization period (in years) Patents 2.2 Capitalized software development costs 2.3 Customer Relationships 2.0 |
LEASE LIABILITIES AND RIGHT O_2
LEASE LIABILITIES AND RIGHT OF USE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, net of disposals: As of December 31, (in thousands) 2021 2020 Computer equipment $ 256 $ 177 Less: accumulated depreciation (156) (116) Assets acquired under finance leases, net $ 100 $ 61 |
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, 2021 (in thousands): Finance Operating Year ending December 31, Leases Leases Total 2022 $ 61 $ 456 $ 517 2023 40 322 362 2024 7 149 156 Total minimum lease payments 108 927 1,035 Less: present value discount (6) (62) (68) Total lease liabilities $ 102 $ 865 $ 967 Current portion of lease liabilities $ 57 $ 415 $ 472 Long term portion of lease liabilities $ 45 $ 450 $ 495 |
Schedule of lease expense | The following summarizes expenses associated with our finance and operating leases for the years ended December 31, 2021 and 2020: Year ended December 31, (in thousands) 2021 2020 Finance lease expenses: Depreciation expense $ 77 $ 56 Interest on lease liabilities 8 6 Total Finance lease expense 85 62 Operating lease expense 304 292 Short-term lease and related expenses 217 155 Total lease expenses $ 606 $ 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, 2021 and 2020: As of December 31, 2021 2021 Weighted average remaining lease term (years) Operating leases 2.27 2.95 Finance leases 1.92 1.44 Weighted average discount rate (%) Operating leases 6.00 6.00 Finance leases 6.00 6.00 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
STOCK-BASED COMPENSATION | |
Schedule of stock-based compensation expense | Year ended December 31, (in thousands) 2021 2020 Stock Options $ 634 $ 300 RSUs 6,509 3,789 Unrestricted Shares of Common Stock 473 49 Total $ 7,616 $ 4,138 |
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, 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 Granted 39,186 24.78 4.93 Exercised (268,836) 3.73 Forfeited/Expired (95,921) 12.88 Outstanding at December 31, 2021 191,340 $ 12.94 3.96 83,070 $ 71,000 Exercisable as of December 31, 2021 83,070 $ 9.78 3.90 $ 44,000 |
Schedule of weighted average assumptions for estimating the stock-based compensation | 2021 2020 Expected life 3.25 years 3.16 years Risk-free interest rate 0.34 % 0.19 % Weighted average volatility factor 100.60 % 107.28 % Dividend yield — — |
Schedule of non-vested restricted stock shares activity | Weighted Average Number of Grant Date RSUs Fair Value Vested Unvested Restricted stock units outstanding as of December 31, 2020 958,378 $ 11.57 285,108 673,270 Granted 648,226 19.44 Settled (283,568) 15.24 Forfeited/Canceled (289,796) 19.92 Restricted stock units outstanding at December 31, 2021 1,033,240 $ 13.10 340,539 692,701 |
Schedule of other share-based compensation, activity | The following table summarizes the warrant activity for the years ended December 31, 2021 and 2020: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2019 424,708 $ 5.31 0.82 $ 189,000 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 Exercised (38,880) 6.25 Forfeited/Expired (12,000) 6.25 Outstanding at December 31, 2021 30,173 $ 6.25 0.71 $ 23,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Schedule of deferred tax assets and liabilities | December 31, (in thousands) 2021 2020 Deferred tax assets: Intangible assets $ 295 $ 269 Bad debt expense 41 21 Accrued compensation expense 15 83 Deferred revenue and costs — 2 Stock-based compensation 1,789 1,494 Operating lease liability 255 193 State NOL carryforwards 3,122 2,516 Federal NOL carryforwards 12,299 8,954 Total Deferred Tax Assets 17,816 13,532 Valuation allowance (17,319) (13,304) Net deferred tax assets 497 228 Deferred tax liabilities: Property and equipment (270) (62) Deferred revenue and costs (8) — Right of use assets (219) (166) Total deferred tax liabilities (497) (228) Net deferred tax asset (liability) $ — $ — |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) | 12 Months Ended |
Dec. 31, 2021segment | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
Number of operating segments | 1 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Disaggregate revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Partner and Marketplace | $ 13,638 | $ 9,740 |
Enterprise | 10,865 | 10,735 |
Total revenues | $ 24,503 | $ 20,475 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Deferred Revenue, by Arrangement (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Deferred revenue - current | $ 7,068 | $ 6,328 |
Deferred revenue - noncurrent | 5 | 83 |
Total deferred revenue | $ 7,073 | $ 6,411 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Deferred commission cost (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Deferred costs - current | $ 103 | $ 152 |
Deferred costs - noncurrent | 34 | 77 |
Total deferred costs | $ 137 | $ 229 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Fair value on a recurring basis (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 134 | $ 0 |
Fair Value, Inputs, Level 3 | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 134 |
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, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,254 | 1,819 |
Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 263 | |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 191 | 517 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 30 | 81 |
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,033 | 958 |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | |
Summary Of Significant Accounting Policies | ||
Total revenue recognized from both the beginning balance and current period increase in contract liability | $ 6,241,000 | |
Deferred revenue recognized through the period (as a percent) | 97.00% | |
Amortization of Deferred Sales Commissions | $ 189,000 | $ 250,000 |
Allowance for doubtful accounts | 157,000 | 79,000 |
Bad debt expense | $ 73,000 | 128,000 |
Property, Plant and Equipment, Useful Life | 3 years | |
Property and equipment acquired by cash | $ 92,000 | 0 |
Equipment acquired from finance leases | 122,000 | 20,000 |
Depreciation | 97,000 | 86,000 |
Amortization expense | 1,225,000 | 877,000 |
Impairment loss on intangibles | $ 0 | 0 |
Number of Reportable Segments | segment | 1 | |
Capitalized software development | ||
Summary Of Significant Accounting Policies | ||
Amortization expense | $ 845,000 | 449,000 |
Useful life | 3 years | |
Patents | ||
Summary Of Significant Accounting Policies | ||
Amortization expense | $ 379,000 | $ 428,000 |
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 | 20.00% | 16.70% |
Major Customer Number One [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||
Summary Of Significant Accounting Policies | ||
Concentration Risk, Percentage | 21.00% | 25.00% |
Major Customer Number Two [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | ||
Summary Of Significant Accounting Policies | ||
Concentration Risk, Percentage | 10.00% | |
Major Customer Number Two [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||
Summary Of Significant Accounting Policies | ||
Concentration Risk, Percentage | 15.00% | 13.00% |
Major Customer Number Three [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||
Summary Of Significant Accounting Policies | ||
Concentration Risk, Percentage | 10.00% | 13.00% |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 28, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | |||
Contingent consideration | $ 134,000 | $ 0 | |
Square ADA | |||
Business Acquisition [Line Items] | |||
Aggregate Consideration for acquisition | 187,000 | ||
Consideration in the form of Cash | 53,000 | ||
Contingent consideration | $ 134,000 | ||
External direct transaction costs | $ 0 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets | ||
Accumulated amortization | $ (5,285,000) | $ (4,328,000) |
Finite-lived assets, net | 2,622,000 | 2,127,000 |
Intangible assets, net | 2,622,000 | 2,137,000 |
Domain name | ||
Intangible Assets | ||
Indefinite-lived assets | 10,000 | |
Patents | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | 3,887,000 | 3,779,000 |
Capitalized Costs | $ 53,000 | 141,000 |
Weighted average remaining amortization period (in years) | 2 years 2 months 12 days | |
Capitalized software development | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | $ 3,833,000 | 2,676,000 |
Capitalized Costs | $ 1,425,000 | $ 1,157,000 |
Weighted average remaining amortization period (in years) | 2 years 3 months 18 days | |
Customer Relationships | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | $ 187,000 | |
Weighted average remaining amortization period (in years) | 2 years |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization expense | $ 1,225,000 | $ 877,000 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization expense | 379,000 | 428,000 |
Capitalized software development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization expense | 845,000 | $ 449,000 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization expense | $ 1,000 |
INTANGIBLE ASSETS - Weighted av
INTANGIBLE ASSETS - Weighted average remaining useful life (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
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 2 months 12 days | |
Capitalized software development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 2 years 3 months 18 days | |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 2 years |
LEASE LIABILITIES AND RIGHT O_3
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Right to use assets under finance leases (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Lessee, Finance Lease, Description [Abstract] | ||
Computer equipment | $ 256 | $ 177 |
Less: accumulated depreciation | (156) | (116) |
Assets acquired under finance leases, net | $ 100 | $ 61 |
LEASE LIABILITIES AND RIGHT O_4
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum finance lease payments (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2022 | $ 61,000 | |
2023 | 40,000 | |
2024 | 7,000 | |
Total minimum lease payments | 108,000 | |
Less: present value discount | (6,000) | |
Total lease liabilities | 102,000 | $ 61,000 |
Current portion of lease liabilities | 57,000 | 49,000 |
Long term portion of lease liabilities | $ 45,000 | $ 12,000 |
LEASE LIABILITIES AND RIGHT O_5
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum operating lease payments (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2022 | $ 456 | |
2023 | 322 | |
2024 | 149 | |
Total minimum lease payments | 927 | |
Less: present value discount | (62) | |
Total lease liabilities | 865 | |
Current portion of lease obligations | 415 | $ 229 |
Long term portion of lease liabilities | $ 450 | $ 427 |
LEASE LIABILITIES AND RIGHT O_6
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Finance Leases and Operating Leases (Details) $ in Thousands | Dec. 31, 2021USD ($) |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
2022 | $ 517 |
2023 | 362 |
2024 | 156 |
Total minimum lease payments | 1,035 |
Less: present value discount | (68) |
Total lease liabilities | 967 |
Current portion of lease liabilities | 472 |
Long term portion of lease liabilities | $ 495 |
LEASE LIABILITIES AND RIGHT O_7
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Lease expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finance lease expenses: | ||
Depreciation expense | $ 77 | $ 56 |
Interest on lease liabilities | 8 | 6 |
Total Finance lease expense | 85 | 62 |
Operating lease expense | 304 | 292 |
Short-term lease and related expenses | 217 | 155 |
Total lease expenses | $ 606 | $ 509 |
LEASE LIABILITIES AND RIGHT O_8
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Remaining lease terms and discount rates (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
Weighted average remaining lease term (years) - Operating leases | 2 years 3 months 7 days | 2 years 11 months 12 days |
Weighted average remaining lease term (years) - Finance leases | 1 year 11 months 1 day | 1 year 5 months 8 days |
Weighted average discount rate (%) - Operating leases | 6.00% | 6.00% |
Weighted average discount rate (%) - Finance leases | 6.00% | 6.00% |
LEASE LIABILITIES AND RIGHT O_9
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Additional Information (Details) | 12 Months Ended | |||
Dec. 31, 2021USD ($)ft² | Dec. 31, 2020USD ($) | Oct. 31, 2021USD ($)ft² | Jun. 30, 2019ft² | |
Total finance lease liabilities | $ 102,000 | $ 61,000 | ||
Effective interest rate of the finance leases (Percentage) | 6.00% | |||
Operating lease payments | $ 310,000,000 | $ 255,000,000 | ||
Operating Lease, Liability | $ 865,000 | |||
Marietta Georgia | ||||
Area of Land | ft² | 2,739 | 6,700 | ||
Operating Lease, Liability | $ 482,000 | |||
Georgia | ||||
Area of Land | ft² | 5,200 |
DEBT (Details)
DEBT (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Apr. 15, 2020 | |
Line of Credit Facility [Line Items] | |||
Gain on loan forgiveness | $ 1,316,000 | $ 0 | |
PPP Loan | |||
Line of Credit Facility [Line Items] | |||
Maturity term of loan | 2 years | ||
Interest rate (as a percent) | 1.00% | ||
Agreement amount | $ 1,302,000 | ||
Gain on loan forgiveness | $ 1,316,000 |
REDEMPTION OF SERIES A CONVER_2
REDEMPTION OF SERIES A CONVERTIBLE PREFERRED STOCK - Additional Information (Details) - Series A Preferred Stock - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Class of Stock [Line Items] | |||
Preferred stock issue per share | $ 10 | ||
Preferred stock dividend rate (in percentage) | 5.00% | ||
Redemption price (in dollars per share) | $ 4.385 | ||
Preferred stock outstanding shares | 0 | 90,000 | 90,000 |
Preferred stock issued on conversion | 90,000 | ||
Common stock, shares converted | 279,137 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Aug. 14, 2020 | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Aug. 14, 2019 |
Proceeds from Lines of Credit | $ 0 | ||||
Total rent payments for office space | $ 24,000 | $ 70,000 | |||
Aggregate future lease payments | 310,000,000 | $ 255,000,000 | |||
Unsecured credit facility | |||||
Maximum borrowing capacity | $ 2,000,000 | ||||
Sero Capital Llc | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 146,667 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6 | ||||
Sero Capital LLC | |||||
Interest rate | 10.00% | ||||
Aggregate future lease payments | $ 554,000 | ||||
Security deposit | $ 32,000 | $ 32,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Shared office arrangement minimum fees due | $ 54,000 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - 2020 Equity Incentive Plan - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 7,616 | $ 4,138 |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 634 | 300 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 6,509 | 3,789 |
Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 473 | $ 49 |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock option Activity (Details) - Stock Options - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | |||
Balance at beginning of the period (in shares) | 516,911 | 965,043 | |
Granted | 39,186 | 220,267 | |
Exercised/Settled | (268,836) | (433,180) | |
Forfeited/Expired | (95,921) | (235,219) | |
Balance at end of the period (in shares) | 191,340 | 516,911 | 965,043 |
Vested (in shares) | 83,070 | 294,894 | 759,631 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 83,070 | 294,894 | 759,631 |
Weighted Average Exercise Price | |||
Outstanding at beginning of the period (in dollars per share) | $ 7.24 | $ 3.70 | |
Granted (in dollars per share) | 24.78 | 12.31 | |
Exercised (in dollars per share) | 3.73 | 2.07 | |
Forfeited/Expired | 12.88 | 7 | |
Outstanding at end of the period (in dollars per share) | 12.94 | $ 7.24 | $ 3.70 |
Exercisable (in dollars per share) | $ 9.78 | ||
Weighted Average Remaining Term | |||
Outstanding, Weighted Average Remaining Term | 3 years 11 months 15 days | 2 years 8 months 12 days | 3 years 3 days |
Granted Weighted Average Remaining Term | 4 years 11 months 4 days | 5 years | |
Exercised Weighted Average Remaining Term | 3 years 10 months 24 days | ||
Intrinsic Value of Options | |||
Outstanding, Intrinsic Value of Options (in dollars) | $ 9,610,000 | $ 1,666,000 | |
Outstanding, Intrinsic Value of Options (in dollars) | 71,000 | $ 9,610,000 | $ 1,666,000 |
Exercisable as of December 31, 2020 | $ 44,000 |
STOCK-BASED COMPENSATION - St_3
STOCK-BASED COMPENSATION - Stock-based compensation, weighted average assumptions (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
STOCK-BASED COMPENSATION | ||
Expected life | 3 years 3 months | 3 years 1 month 28 days |
Risk-free interest rate (as a percent) | 0.34% | 0.19% |
Weighted average volatility factor (as a percent) | 100.60% | 107.28% |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Unit Activity (Details) - Restricted Stock Units - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Number of RSUs | ||
Balance at beginning of the period (In shares) | 958,378 | |
Granted | 648,226 | |
Settled | (283,568) | |
Forfeited/Cancelled | (289,796) | |
Balance at end of the period (In shares) | 1,033,240 | 958,378 |
Weighted Average Grant Date Fair Value | ||
Balance at beginning of the period (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 19.44 | |
Settled (in dollars per share) | 15.24 | |
Forfeited/Expired (in dollars per share) | 19.92 | |
Balance at end of the period (in dollars per share) | $ 0 | $ 0 |
Vested (in shares) | 340,539 | 285,108 |
Unvested (in shares) | 692,701 | 673,270 |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted stock units, Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 7,616,000 | $ 4,138,000 | |||
Weighted average volatility factor (as a percent) | 100.60% | 107.28% | |||
Risk-free interest rate (as a percent) | 0.34% | 0.19% | |||
Performance period | 3 years 3 months | 3 years 1 month 28 days | |||
Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted | 100,000 | 100,000 | 260,000 | ||
Performance-based | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted | 50,000 | 105,000 | 55,000 | ||
Stock-based compensation expense | $ 471,000 | $ 314,000 | |||
Market-based | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted | 50,000 | 155,000 | 50,000 | ||
Stock-based compensation expense | $ 1,141,000 | $ 1,506,000 | |||
Weighted average volatility factor (as a percent) | 116.95% | 136.52% | |||
Risk-free interest rate (as a percent) | 0.79% | 0.26% | |||
Performance period | 5 years | 5 years |
STOCK-BASED COMPENSATION - Warr
STOCK-BASED COMPENSATION - Warrants activity (Details) - Warrants - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of warrants | |||
Balance at beginning of the period (In shares) | 81,053 | 424,708 | |
Exercised/Settled | (38,880) | (321,467) | |
Forfeited/Expired | (12,000) | (22,188) | |
Balance at end of the period (In shares) | 30,173 | 81,053 | 424,708 |
Weighted Average Exercise Price | |||
Balance at beginning of the period (in dollars per share) | $ 6.25 | $ 5.31 | |
Exercised (in dollars per share) | 6.25 | 4.77 | |
Forfeited/Expired (in dollars per share) | 6.25 | 9.59 | |
Balance at end of the period (in dollars per share) | $ 6.25 | $ 6.25 | $ 5.31 |
Weighted Average Remaining Term | |||
Outstanding (In years) | 8 months 15 days | 11 months 8 days | 9 months 25 days |
Intrinsic Value of Warrants | |||
Balance at beginning of the period (In dollars) | $ 1,587,000 | $ 189,000 | |
Balance at end of the period (In dollars) | $ 23,000 | $ 1,587,000 | $ 189,000 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 09, 2020 | |
Class of Stock [Line Items] | ||||
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 | ||
2020 Equity Incentive Plan | ||||
Class of Stock [Line Items] | ||||
Common Stock, Shares Authorized | 1,000,000 | |||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Issuance of common stock for services (in shares) | 32,000 | |||
Sero Capital Llc | ||||
Class of Stock [Line Items] | ||||
Cash received in full exercise of warrants | $ 880,000 | |||
Warrants | ||||
Class of Stock [Line Items] | ||||
Class Of Warrant Or Right Grant Date Fair Value | $ 146,667 | |||
Number of shares, exercised | 38,880 | 321,467 | ||
Stock Options | ||||
Class of Stock [Line Items] | ||||
Unrecognized stock-based compensation expense | $ 859,000 | |||
Restricted Stock Units | ||||
Class of Stock [Line Items] | ||||
Unrecognized stock-based compensation expense | 7,449,000 | |||
Market based RSU's Grant date fair value | 1,311,000 | |||
Warrants | ||||
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% | |||
Common stock, shares converted | 279,137 | |||
Preferred stock issued on conversion | 90,000 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Federal and state income tax expense | $ 0 | $ 0 |
Operating Loss Carryforwards | 58,569,000 | |
Deferred Tax Assets, Net | 0 | 0 |
Deferred Tax Assets, Valuation Allowance | 17,319,000 | 13,304,000 |
U S Federal Net operating loss carryforward | 58,569,000 | |
Net Operating Loss, Set off (CARES ACT) | 17,477,000 | |
Income Tax Expense (Benefit), Net Operating Loss, CARES Act | 15,890,000 | |
Reserve For Uncertain Tax Positions | 0 | $ 0 |
2038 | ||
Operating Loss Carryforwards | 25,202,000 | |
U S Federal Net operating loss carryforward | $ 25,202,000 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets and liabilities (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Intangible assets | $ 295,000 | $ 269,000 |
Bad debt expense | 41,000 | 21,000 |
Accrued compensation expense | 15,000 | 83,000 |
Deferred revenue and costs | 2,000 | |
Stock-based compensation | 1,789,000 | 1,494,000 |
Operating lease liability | 255,000 | 193,000 |
State NOL carryforwards | 3,122,000 | 2,516,000 |
Federal NOL carryforwards | 12,299,000 | 8,954,000 |
Total Deferred Tax Assets | 17,816,000 | 13,532,000 |
Valuation allowance | (17,319,000) | (13,304,000) |
Net deferred tax assets | 497,000 | 228,000 |
Deferred tax liabilities: | ||
Property and equipment | (270,000) | (62,000) |
Deferred revenue and costs | (8,000) | |
Right of use assets | (219,000) | (166,000) |
Total deferred tax liabilities | (497,000) | (228,000) |
Net deferred tax asset (liability) | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Mar. 09, 2022 | Jan. 31, 2022 | Dec. 31, 2021 |
Subsequent Event [Line Items] | |||
Aggregate future lease payments | $ 108,000 | ||
Subsequent event | BOIA | |||
Subsequent Event [Line Items] | |||
Aggregate cash purchase price | $ 5,000,000 | ||
Subsequent event | NEW YORK | |||
Subsequent Event [Line Items] | |||
Aggregate future lease payments | $ 1,020,000 |