Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 29, 2024 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Transition Report | false | ||
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, Postal Zip Code | 85711 | ||
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 | ||
City Area Code | 866 | ||
Local Phone Number | 331-5324 | ||
Title of 12(b) Security | Common Stock, par value $0.00001 per share | ||
Trading Symbol | AEYE | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Document Financial Statement Error Correction [Flag] | false | ||
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 | ||
Entity Common Stock, Shares Outstanding | 11,695,373 | ||
Entity Central Index Key | 0001362190 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 35,807,812 | ||
Auditor Name | MaloneBailey, LLP | ||
Auditor Location | Houston, Texas | ||
Auditor Firm ID | 206 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 9,236 | $ 6,904 |
Accounts receivable, net of allowance for doubtful accounts of $496 and $468, respectively | 4,828 | 5,418 |
Prepaid expenses and other current assets | 712 | 644 |
Total current assets | 14,776 | 12,966 |
Property and equipment, net of accumulated depreciation of $251 and $254, respectively | 218 | 161 |
Right of use assets | 611 | 1,154 |
Intangible assets, net of accumulated amortization of $7,423 and $5,978, respectively | 5,783 | 6,041 |
Goodwill | 4,001 | 4,001 |
Other | 106 | 105 |
Total assets | 25,495 | 24,428 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,339 | 2,452 |
Operating lease liabilities | 312 | 468 |
Finance lease liabilities | 7 | 38 |
Deferred revenue | 6,472 | 7,125 |
Contingent consideration | 2,399 | 979 |
Total current liabilities | 11,529 | 11,062 |
Long term liabilities: | ||
Term loan, net | 6,727 | 0 |
Operating lease liabilities | 417 | 745 |
Finance lease liabilities | 0 | 7 |
Deferred revenue | 10 | 73 |
Contingent consideration, long term | 0 | 1,952 |
Other | 105 | 0 |
Total liabilities | 18,788 | 13,839 |
Stockholders' equity: | ||
Preferred stock, $0.00001 par value, 10,000 shares authorized | ||
Common stock, $0.00001 par value, 50,000 shares authorized, 11,711 and 11,551 shares issued and outstanding as of December 31, 2023 and 2022, respectively | 1 | 1 |
Additional paid-in capital | 96,182 | 93,070 |
Accumulated deficit | (89,476) | (82,482) |
Total stockholders' equity | 6,707 | 10,589 |
Total liabilities and stockholders' equity | $ 25,495 | $ 24,428 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 496,000 | $ 468,000 |
Property and equipment, accumulated depreciation | 251,000 | 254,000 |
Intangible assets, accumulated amortization | $ 7,423,000 | $ 5,978,000 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 11,711 | 11,551 |
Common stock, shares outstanding | 11,711 | 11,551 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenue | $ 31,316 | $ 29,913 |
Cost of revenue | 6,974 | 7,219 |
Gross profit | 24,342 | 22,694 |
Operating expenses: | ||
Selling and marketing | 11,781 | 13,657 |
Research and development | 6,989 | 6,085 |
General and administrative | 11,537 | 13,381 |
Total operating expenses | 30,307 | 33,123 |
Operating loss | (5,965) | (10,429) |
Other income (expense): | ||
Interest income (expense), net | 93 | (4) |
Net loss | $ (5,872) | $ (10,433) |
Net loss per common share-basic (in dollars per share) | $ (0.50) | $ (0.91) |
Net loss per common share-diluted (in dollars per share) | $ (0.50) | $ (0.91) |
Weighted average common shares outstanding-basic (in shares) | 11,766 | 11,477 |
Weighted average common shares outstanding-diluted (in shares) | 11,766 | 11,477 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 1 | $ 88,889 | $ (71,293) | $ 17,597 |
Balance (in shares) at Dec. 31, 2021 | 11,435 | |||
Common stock issued upon settlement of restricted stock units (in shares) | 285 | |||
Issuance of common stock for services (in shares) | 43 | |||
Surrender of stock to cover tax liability on settlement of employee stock-based awards | (385) | (385) | ||
Surrender of stock to cover tax liability on settlement of employee stock-based awards (in shares) | (73) | |||
Common stock repurchased for retirement | (756) | (756) | ||
Common stock repurchased for retirement (in shares) | (139) | |||
Stock-based compensation | 4,566 | 4,566 | ||
Net loss | (10,433) | (10,433) | ||
Balance at Dec. 31, 2022 | $ 1 | 93,070 | (82,482) | 10,589 |
Balance (in shares) at Dec. 31, 2022 | 11,551 | |||
Common stock issued upon settlement of restricted stock units (in shares) | 483 | |||
Issuance of common stock for services (in shares) | 41 | |||
Common stock issued pursuant to employee stock purchase plan | 67 | 67 | ||
Common stock issued pursuant to employee stock purchase plan (in shares) | 15 | |||
Surrender of stock to cover tax liability on settlement of employee stock-based awards | (653) | (653) | ||
Surrender of stock to cover tax liability on settlement of employee stock-based awards (in shares) | (131) | |||
Common stock repurchased for retirement | (1,122) | (1,122) | ||
Common stock repurchased for retirement (in shares) | (248) | |||
Stock-based compensation | 3,698 | 3,698 | ||
Net loss | (5,872) | (5,872) | ||
Balance at Dec. 31, 2023 | $ 1 | $ 96,182 | $ (89,476) | $ 6,707 |
Balance (in shares) at Dec. 31, 2023 | 11,711 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (5,872,000) | $ (10,433,000) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 2,268,000 | 2,111,000 |
Loss on disposal or impairment of long-lived assets | 235,000 | 51,000 |
Stock-based compensation expense | 3,698,000 | 4,566,000 |
Amortization of deferred commissions | 60,000 | 113,000 |
Amortization of debt discount and issuance costs | 8,000 | |
Amortization of right-of-use assets | 358,000 | 556,000 |
Change in fair value of contingent consideration | 442,000 | 346,000 |
Provision for accounts receivable | 61,000 | 356,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable and unbilled receivables | 529,000 | (26,000) |
Prepaid expenses and other assets | (119,000) | (151,000) |
Accounts payable and accruals | (190,000) | (1,045,000) |
Operating lease liability | (444,000) | (528,000) |
Deferred revenue | (716,000) | (915,000) |
Net cash provided by (used in) operating activities | 318,000 | (4,999,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | (171,000) | (72,000) |
Software development costs | (1,946,000) | (1,160,000) |
Patent costs | (39,000) | (17,000) |
Payment for acquisition | (4,484,000) | |
Net cash used in investing activities | (2,156,000) | (5,733,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from term loan, net of lender fees | 6,895,000 | |
Payments for costs directly attributable to the issuance of term loan | (71,000) | |
Repurchase of common stock | (1,122,000) | (756,000) |
Proceeds from employee stock purchase plan | 67,000 | |
Settlement of contingent consideration | (908,000) | (132,000) |
Payments related to settlement of employee stock-based awards | (653,000) | (385,000) |
Repayments of finance leases | (38,000) | (57,000) |
Net cash provided by (used in) financing activities | 4,170,000 | (1,330,000) |
Net increase (decrease) in cash and cash equivalents | 2,332,000 | (12,062,000) |
Cash and cash equivalents-beginning of period | 6,904,000 | 18,966,000 |
Cash and cash equivalents-end of period | 9,236,000 | 6,904,000 |
SUPPLEMENTAL CASH FLOW DISCLOSURES | ||
Interest paid | 4,000 | 4,000 |
Income taxes paid | (8,000) | |
Non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable | 15,000 | 3,000 |
Reduction in right-of-use asset in connection with a partial lease termination | 38,000 | |
Reduction in lease liability in connection with a partial lease termination | 40,000 | |
Debt discount included in long term liabilities | $ 105,000 | |
Right-of-use assets and operating lease obligations recognized during the year | 876,000 | |
Contingent consideration recorded in connection with acquisition | $ 2,585,000 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2023 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS AudioEye, Inc. and its wholly-owned subsidiary, Springtime, 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, and other media to all people regardless of their 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, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF 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 consolidated 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 consolidated financial statements. The Company has a fiscal year ending on December 31. All amounts in the consolidated 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 consolidated 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 consolidated 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 revenue is comprised of fixed subscription fees from customer accounts on our platform. Our support revenue is comprised of subscription fees for customers which are not on our SaaS platform but receive other customer support services. SaaS and support (also referred to as “subscription”) revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Certain SaaS and support 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 primarily of PDF remediation, and Website and Mobile App report services, and is recognized upon delivery. Consideration payable under PDF remediation arrangements is based on usage. Consideration payable under Website and Mobile App report services arrangements is based on fixed fees. The following table presents our revenues disaggregated by sales channel: Year ended December 31, (in thousands) 2023 2022 Partner and Marketplace $ 18,027 $ 15,972 Enterprise 13,289 13,941 Total revenues $ 31,316 $ 29,913 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, 2023 and 2022: As of December 31, (in thousands) 2023 2022 Deferred revenue - current $ 6,472 $ 7,125 Deferred revenue - noncurrent 10 73 Total deferred revenue $ 6,482 $ 7,198 In the year ended December 31, 2023 we recognized $7,100,000, or 99%, in revenue from deferred revenue outstanding as of December 31, 2022. We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 17% of our revenue in each of the years ended December 31, 2023 and 2022. One customer represented 16% and 22%, respectively, of total accounts receivable as of December 31, 2023 and 2022. Deferred Costs (Contract acquisition costs) We capitalize initial and renewal sales commissions 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, 2023 and 2022: As of December 31, (in thousands) 2023 2022 Deferred costs – current $ 20 $ 49 Deferred costs - noncurrent 2 12 Total deferred costs $ 22 $ 61 Amortization expense associated with sales commissions was included in selling and marketing expenses on the statements of operations and totaled $60,000 and $113,000 for the years ended December 31, 2023 and 2022, 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 and 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 $496,000 and $468,000 at December 31, 2023 and 2022, respectively. The Company believes that its reserve is adequate, however results may differ in future periods. For the years ended December 31, 2023 and 2022, bad debt expense totaled $61,000 and $356,000, respectively. Property and Equipment Property and equipment includes office and computer equipment. 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. Property and equipment acquired in the years ended December 31, 2023 and 2022 totaled $183,000 and $64,000, respectively. Depreciation expense was $98,000 and $86,000 for the years ended December 31, 2023 and 2022, 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 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 consolidated 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 $1,510,000 and $1,201,000 for the years ended December 31, 2023 and 2022, 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 consolidated balance sheet. We amortize capitalized patent costs on a straight-line basis over their estimated useful lives, which is generally 5 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 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 associated with goodwill or intangible assets were incurred during the years ended December 31, 2023 and 2022. 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, 2023 $ 2,399 Level 3 Contingent consideration (2), December 31, 2022 $ 2,931 Level 3 (1) Contingent consideration is a liability recorded in connection with the acquisition of the Bureau of Internet Accessibility Inc. (“BOIA”) in the first quarter of 2022 (refer to Note 3 – Acquisitions for additional information on the BOIA acquisition). The fair value of the contingent consideration was determined by management based on revenues from BOIA’s offering for 2022 and 2023. We made a $974,000 payment towards the contingent consideration liability in 2023 and expect to settle the remaining liability in the second quarter of 2024. (2) Contingent consideration is a liability recorded in connection with the acquisition of BOIA acquisition. The fair value of the contingent consideration was determined by management with the assistance of an independent third-party valuation specialist using the Monte-Carlo simulation. Debt Discount and Debt Issuance Costs Costs related to the issuance of debt due to the lender (debt discount) or to third parties (debt issuance costs) are capitalized and amortized to interest expense based on the effective interest method over the term of the related debt. Debt discount and debt issuance costs are presented on the Company’s consolidated balance sheets as a direct deduction from the carrying amount of our term loan. Business Combinations The assets acquired, liabilities assumed and contingent consideration are recorded at their estimated fair value on the acquisition date with subsequent changes recognized in earnings. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as a part of the purchase price allocation process to value the assets acquired and liabilities assumed as of the business combination date. As a result, the Company may recognize adjustments to provisional amounts of assets acquired or liabilities assumed in earnings in the reporting period in which the adjustments are determined. Acquisition-related expenses primarily consist of legal, accounting, and other advisory fees associated and are recorded in the period in which they are incurred. Stock-Based Compensation The Company periodically issues options, 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 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). 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 and RSUs as the restriction period lapses, which is typically a one 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 and restricted stock. The dilutive effect of our stock-based awards is computed using the treasury stock method, which assumes all stock-based awards 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. 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, 2023 and 2022, 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) 2023 2022 Options 112 156 Restricted stock units 1,707 1,803 Total 1,819 1,959 Stock Repurchases In the fourth quarter of 2023, the Board of Directors of the Company approved a program to repurchase up to $5 million of its outstanding shares of common stock through December 31, 2025. In the twelve months ended December 31, 2023, we used $1.12 million of the program in repurchasing shares. As of December 31, 2023, we had $3.88 million remaining for the repurchase of shares. In the second quarter of 2022, the Board of Directors of the Company approved a program to repurchase up to $3 million of its outstanding shares of common stock. In the twelve months ended December 31, 2023 and 2022, we used zero and $0.8 million, respectively, of the program in repurchasing shares. In August 2023, the 2022 share repurchase program was terminated. Shares repurchased by the Company are immediately retired. The Company made an accounting policy election to charge the excess of repurchase price over par value entirely to retained earnings. Employee Stock Purchase Plan In May 2022, the stockholders of the Company approved the Company’s Employee Stock Purchase Plan (the “ESPP”), which provides for the issuance of up to 500,000 shares of common stock. Eligible employees may elect to have a percentage of eligible compensation withheld to purchase shares of our common stock at the end of each purchase period. The Company expects each purchase period to be the six-month periods ending on June 30 or December 31 of each calendar year. The purchase price per share is expected to equal 85% of the fair market value of our common stock on the last trading day of the purchase period. Under the ESPP, a participant may not be granted rights to purchase more than $25,000 worth of common stock for each calendar year and no participant may purchase more than 1,500 shares of our common stock (or such other number as the Compensation Committee may designate) on any one purchase date. As of December 31, 2023, 15,484 shares had been issued under the ESPP and 484,516 shares remained available under the plan. Loss Contingencies We are subject to the possibility of various loss contingencies arising in the normal course of business. In determining loss contingencies, we consider the likelihood of the loss or impairment of an asset and the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss. 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. 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. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2023 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 3 — ACQUISITIONS Bureau of Internet Accessibility Inc. 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 aggregate consideration for the purchase of BOIA was approximately $7.5 million (at fair value), consisting of $5.1 million cash payment at closing, $0.2 million cash received in the third quarter of 2022 resulting from net working capital adjustments, and an estimated $2.6 million in aggregate contingent consideration to be paid in cash following the one We accounted for the acquisition of BOIA as business combination in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”). Accordingly, under the acquisition method of accounting, the purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date as follows: (in thousands) Balance at March 9, 2022 Assets purchased: Cash $ 398 Accounts receivable 437 Other assets 29 Customer relationships (1) 3,600 Internally-developed software (1) 700 Trade name (1) 50 Goodwill (2) 3,300 Total assets purchased 8,514 Liabilities assumed: Accounts payable and accrued liabilities 7 Deferred revenue 1,040 Total liabilities assumed 1,047 Net assets acquired 7,467 Consideration: Cash paid, net of proceeds from working capital adjustment 4,882 Contingent consideration liability (3) 2,585 Total consideration $ 7,467 (1) Acquired intangible assets will be amortized on a straight-line basis over their estimated useful lives of 2 to 7 years . In the twelve months ended December 31, 2023, amortization expense associated with these acquired intangible assets totaled $714,000 . (2) Goodwill represents the excess of purchase price over the estimated fair value of net tangible and intangible assets acquired. (3) The fair value of the contingent consideration liability was determined using the Monte-Carlo simulation. The key assumptions used in the Monte-Carlo simulation were as follows: non-recurring and recurring revenue metrics for the earn-out periods, non-recurring revenue discount rate of 11.5% , recurring revenue discount rate of 10.5% , expected revenue volatility of 24.65% , risk-free rate of 1.58% , buyer specific discount rate of 9.0% , and discount periods of 1.01 year and 2.22 year. For the twelve months ended December 31, 2023 and 2022, we recorded $442,000 and $346,000, respectively, in change in the fair value of contingent consideration, which is included in General and administrative in the accompanying Consolidated Statement of Operations. In the first quarter of 2023, we made a $974,000 cash payment towards the contingent consideration liability. As of December 31, 2023, contingent consideration totaled $2,399,000, which represents the estimated fair value of the second anniversary payment expected to be settled in the second quarter of 2024. In the twelve months ended December 31, 2023 and 2022, the Company incurred zero and $247,000, respectively, in transaction costs related to the acquisition of BOIA, which is included on our Consolidated Statement of Operations within General and administrative expenses. Pro Forma Financials The following unaudited pro forma results of operations for the year ended December 31, 2022 assumes BOIA had been acquired on January 1, 2022. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the acquisition had been completed on January 1, 2022, nor does it purport to project the results of operations of the combined Company in future periods. The pro forma financial information does not give effect to any anticipated integration costs savings or expenses related to the acquired company. Pro Forma Combined Financials (unaudited) (in thousands) Year ended December 31, 2022 Revenue $ 30,576 Net loss attributed to common shareholders (9,688) For purposes of the pro forma disclosures above, results for the year ended December 31, 2022 exclude $247,000 in acquisition expense and $346,000 in expense related to change in the fair value of contingent consideration. Square ADA LLC 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 $185,000, consisting of (i) $53,000 paid in cash upon closing, and (ii) $132,000 in contingent consideration paid in cash in the second quarter of 2022. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 4 — INTANGIBLE ASSETS Intangible assets as of December 31, 2023 and 2022 consisted of the following: December 31, (in thousands) 2023 2022 Finite-lived assets: Patents $ 3,899 $ 3,860 Capitalized software development costs 5,657 4,324 Customer relationships 3,600 3,785 Trade name 50 50 Accumulated amortization (7,423) (5,978) Intangible assets, net $ 5,783 $ 6,041 As of December 31, 2023 and 2022, capitalized cost associated with pending patents totaled $47,000 and 26,000, respectively. For the year ended December 31, 2023, software development costs capitalized totaled $1,946,000. For the year ended December 31, 2022, software development costs capitalized totaled $1,160,000. In addition, we recorded $700,000 in internally-developed software costs in connection with the BOIA acquisition. In 2022, we recorded $3,600,000 in customer relationships in connection with the acquisition of BOIA. We amortize our customer relationships on a straight-line basis over the estimated useful lives. Refer to Note 3 – Acquisitions for additional information on the BOIA acquisition. 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, 2023 and 2022: Year ended December 31, (in thousands) 2023 2022 Patents $ 29 $ 295 Capitalized software development costs 1,510 1,201 Customer relationships 606 509 Trade name 25 20 Total amortization expense $ 2,170 $ 2,025 The weighted average remaining useful life of our finite-lived intangible assets (in years) as of December 31, 2023 are as follows: Weighted average remaining amortization period (in years) Patents 3.6 Capitalized software development costs 2.2 Customer relationships 5.2 Trade name 0.2 For the years ended December 31, 2023 and 2022, loss on impairment of intangible assets totaled zero. |
LEASE LIABILITIES AND RIGHT OF
LEASE LIABILITIES AND RIGHT OF USE ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 and 2022, the Company’s outstanding finance lease obligations totaled $7,000 and $45,000, 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) 2023 2022 Computer equipment $ 162 $ 214 Less: accumulated depreciation (156) (172) Assets acquired under finance leases, net $ 6 $ 42 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, New York, New York, and Miami Beach, Florida. The lease for the principal office located in Tucson consists of approximately 627 square feet and ends in October 2024. The lease for the New York office, which consists of approximately 5,000 square feet, commenced in January 2022 and will expire in December 2026. Upon commencement of the New York lease, we recorded a right-of-use asset and corresponding operating lease liability of $876,000. In the second quarter of 2023, we terminated one of the leases for the Miami Beach office, reducing the leased space to approximately 2,000 square feet. The remaining lease will expire in May 2024. In connection with the early termination of this lease, the right-of-use asset and lease liability were reduced by $38,000 and $40,000, respectively. In the first quarter of 2023, we closed our Marietta, Georgia office. As a result of abandoning the office space prior to its lease expiration in August 2024, we wrote off the associated right-of-use asset in full and recognized a $146,000 loss on impairment, which is included in General and administrative in the accompanying Consolidated Statement of Operations. As of December 31, 2023, the lease liability related to the Marietta, GA office was $79,000. In addition, the Company entered into membership agreements to occupy shared office space in Lehi, Utah, Portland, Oregon, and Seattle, Washington. Because the membership agreements do not qualify as a lease under ASC 842, we expense the membership fees as they are incurred. The Company made operating lease payments in the amount of $520,000 and $614,000 during the years ended December 31, 2023 and 2022, respectively. The following summarizes the total lease liabilities and remaining future minimum lease payments at December 31, 2023 (in thousands): Finance Operating Year ending December 31, Leases Leases Total 2024 $ 7 $ 345 $ 352 2025 — 219 219 2026 — 225 225 Total minimum lease payments 7 789 796 Less: present value discount — (60) (60) Total lease liabilities $ 7 $ 729 $ 736 Current portion of lease liabilities $ 7 $ 312 $ 319 Long term portion of lease liabilities $ — $ 417 $ 417 The following summarizes expenses associated with our finance and operating leases for the years ended December 31, 2023 and 2022: Year ended December 31, (in thousands) 2023 2022 Finance lease expenses: Depreciation expense $ 31 $ 52 Interest on lease liabilities 2 4 Total Finance lease expense 33 56 Operating lease expense 434 642 Short-term lease and related expenses 283 188 Total lease expenses $ 750 $ 886 The following table provides information about the remaining lease terms and discount rates applied as of December 31, 2023 and 2022: As of December 31, 2023 2022 Weighted average remaining lease term (years) Operating leases 2.58 3.12 Finance leases 0.35 1.17 Weighted average discount rate (%) Operating leases 6.00 6.00 Finance leases 6.00 6.00 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2023 | |
DEBT | |
DEBT | NOTE 6 — DEBT On November 30, 2023, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with SG Credit Partners, Inc., a Delaware corporation (the “Lender”). The Loan Agreement provides for a $7.0 million term loan, which is due and payable on the maturity date of November 30, 2026. The interest rate is 6.25% in excess of the base rate, which is defined as the greater of the prime rate and 7.00% per annum, payable in cash on a monthly basis. In the event of default under the Loan Agreement, the Company would be required to pay interest on principal and all other due and unpaid obligations at the current rate in effect plus 3.00%. The proceeds of the term loan may be used to repurchase shares of the Company’s common stock, to fund the contingent consideration associated with the BOIA acquisition, and for working capital and general corporate purposes. The term loan has a prepayment fee for payments made (i) on or before the 1st anniversary of the closing date equal to a make-whole amount plus 3% of the outstanding principal balance, (ii) after the 1st anniversary of the closing date but before the 2nd anniversary of the closing date equal to 2.00%, and (iii) after the 2nd anniversary of the closing date but before the maturity date equal to 1.00%. The Company paid a commitment fee equal to $105,000 on the closing date and is required to pay an exit fee equal to $105,000 upon the earlier of repayment in full of the obligations, the maturity date and the occurrence of a liquidity event. The commitment and exit fees payable to the lender were recorded as debt discount. The exit fee was included within long term liabilities on our consolidated balance sheet as of December 31, 2023. The Company also incurred $71,000 in third-party expenses in connection with the term loan, which were recorded as debt issuance costs. Debt discount and debt issuance costs are presented as a direct deduction from the carrying amount of our term loan and are amortized to interest expense over the term of the loan using the effective interest method. In 2023, amortization of debt discount and debt issuance costs totaled $6,000 and $2,000, respectively. The Loan Agreement secured by substantially all of our assets and contains certain customary financial covenants, including the requirements that the Company maintain (i) minimum liquidity of $2.0 million (plus, prior to the payment in full of the contingent consideration associated with the BOIA acquisition, an amount equal to the greater of $2.1 million or the expected amount of the contingent consideration) and (ii) minimum monthly recurring revenue levels measured on a trailing three month average basis as of the last day of each calendar month. The minimum monthly recurring revenue levels commence at $2.3 million and increase for each month after the month ending November 30, 2024 to the greater of $2.3 million and 105% of Borrowers’ monthly recurring revenue for the applicable month in the prior year. The Company was in compliance with the applicable financial loan covenants at December 31, 2023. As of December 31, 2023, outstanding principal balance of the term loan totaled $7,000,000 and accrued interest thereon totaled $89,000. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 — COMMITMENTS AND CONTINGENCIES Membership agreement to occupy shared office space The Company occupies shared office space in Lehi, UT, and Seattle, WA under membership agreements which end in August 2024 and January 2024, 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, 2023, minimum fees due under these shared office arrangements totaled $179,000. Litigation We may become involved in various routine disputes and allegations incidental to our business operations. While it is not possible to determine the ultimate disposition of these matters, management believes that the resolution of any such matters, should they arise, is not likely to have a material adverse effect on our financial position or results of operations. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 8 — 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, as amended on May 20, 2022, provides for the issuance of up to 2,500,000 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, 2023 and 2022: Year ended December 31, (in thousands) 2023 2022 Stock Options $ 157 $ 403 RSUs 3,310 3,934 Unrestricted Shares of Common Stock 219 229 Employee stock purchase plan 12 — Total $ 3,698 $ 4,566 As of December 31, 2023, the outstanding unrecognized stock-based compensation expense related to stock options and restricted stock units (“RSUs”) was $5,000 and $4,186,000, respectively, which may be recognized through December 2026, subject to achievement of service, performance, and market conditions. 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, 2023 and 2022: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2021 191,340 $ 12.94 3.96 83,070 $ 71,000 Forfeited/Expired (35,286) 13.53 Outstanding at December 31, 2022 156,054 $ 12.81 3.01 108,460 $ — Forfeited/Expired (43,775) 19.57 Outstanding at December 31, 2023 112,279 $ 10.17 1.98 110,570 $ 13,262 Exercisable as of December 31, 2023 110,570 $ 9.94 1.97 $ 13,262 There were no options granted or exercised in 2023 and 2022. 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 The following table summarizes the RSU activity for year ended December 31, 2023: Weighted Average Number of Grant Date RSUs Fair Value Vested Unvested Restricted stock units outstanding as of December 31, 2022 1,802,655 $ 6.92 411,668 1,390,987 Granted 728,803 5.12 Settled (482,854) 6.59 Forfeited/Canceled (341,346) 5.28 Restricted stock units outstanding at December 31, 2023 1,707,258 $ 6.54 477,898 1,229,360 In the second quarter of 2022, we granted 400,000 time-based RSUs to our CEO, which will vest over four different dates through August 20, 2025, subject to his continued employment with the Company. For the year ended December 31, 2023 and 2022, we recorded $370,000 and $331,000, respectively, in stock-based compensation expense related to these time-based RSUs. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 9 — INCOME TAXES For the years ended December 31, 2023 and 2022, federal and state income tax expense totaled zero. The Company has net operating loss carryforwards available to reduce future taxable income. At December 31, 2023, the Company had U.S. federal net operating loss carry forwards of $58,094,000 , of which (i) $25,202,000 expire at various dates through fiscal 2035, and (ii) $32,892,000 were generated in or after 2018 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, utilization of the U.S. federal and state NOL carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income or tax liabilities. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. Accordingly, our net deferred tax asset was zero as of December 31, 2023 and 2022 as the Company established a full valuation allowance of $19,544,000 and $18,938,000, respectively. Significant components of our deferred tax assets and liabilities as of December 31, 2023 and 2022 consist of the following: December 31, (in thousands) 2023 2022 Deferred tax assets: Intangible assets $ — $ — Bad debt expense 130 123 Accrued compensation expense 19 36 Deferred revenue and costs 2 223 Capitalized research and development costs 2,756 1,442 Stock-based compensation 2,598 2,523 Interest expense — 1 Operating lease liability 192 331 State NOL carryforwards 2,630 3,085 Federal NOL carryforwards 12,200 12,155 State tax credit carryforwards 71 71 Federal tax credit carryforwards 57 57 Total Deferred Tax Assets 20,655 20,047 Valuation allowance (19,544) (18,938) Net deferred tax assets 1,111 1,109 Deferred tax liabilities: Property and equipment (439) (141) Intangible assets (512) (665) Deferred revenue and costs — — Right of use assets (160) (303) Total deferred tax liabilities (1,111) (1,109) 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, 2019. All material state and local income tax matters have been concluded for years through December 31, 2018. The Company is no longer subject to IRS examination for the tax years ended on or before December 31, 2019; however, carryforward losses that were generated through the tax year ended December 31, 2019 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, 2023 and 2022. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 10 — SUBSEQUENT EVENTS We have evaluated subsequent events occurring after December 31, 2023 and based on our evaluation we did not identify any events that would have required recognition or disclosure in these consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation This summary of significant accounting policies is presented to assist in understanding the Company’s consolidated 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 consolidated financial statements. The Company has a fiscal year ending on December 31. All amounts in the consolidated 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 consolidated 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 consolidated 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 revenue is comprised of fixed subscription fees from customer accounts on our platform. Our support revenue is comprised of subscription fees for customers which are not on our SaaS platform but receive other customer support services. SaaS and support (also referred to as “subscription”) revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Certain SaaS and support 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 primarily of PDF remediation, and Website and Mobile App report services, and is recognized upon delivery. Consideration payable under PDF remediation arrangements is based on usage. Consideration payable under Website and Mobile App report services arrangements is based on fixed fees. The following table presents our revenues disaggregated by sales channel: Year ended December 31, (in thousands) 2023 2022 Partner and Marketplace $ 18,027 $ 15,972 Enterprise 13,289 13,941 Total revenues $ 31,316 $ 29,913 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, 2023 and 2022: As of December 31, (in thousands) 2023 2022 Deferred revenue - current $ 6,472 $ 7,125 Deferred revenue - noncurrent 10 73 Total deferred revenue $ 6,482 $ 7,198 In the year ended December 31, 2023 we recognized $7,100,000, or 99%, in revenue from deferred revenue outstanding as of December 31, 2022. We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 17% of our revenue in each of the years ended December 31, 2023 and 2022. One customer represented 16% and 22%, respectively, of total accounts receivable as of December 31, 2023 and 2022. |
Deferred Costs (Contract acquisition costs) | Deferred Costs (Contract acquisition costs) We capitalize initial and renewal sales commissions 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, 2023 and 2022: As of December 31, (in thousands) 2023 2022 Deferred costs – current $ 20 $ 49 Deferred costs - noncurrent 2 12 Total deferred costs $ 22 $ 61 Amortization expense associated with sales commissions was included in selling and marketing expenses on the statements of operations and totaled $60,000 and $113,000 for the years ended December 31, 2023 and 2022, respectively. |
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 and 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 $496,000 and $468,000 at December 31, 2023 and 2022, respectively. The Company believes that its reserve is adequate, however results may differ in future periods. For the years ended December 31, 2023 and 2022, bad debt expense totaled $61,000 and $356,000, respectively. |
Property and Equipment | Property and Equipment Property and equipment includes office and computer equipment. 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. Property and equipment acquired in the years ended December 31, 2023 and 2022 totaled $183,000 and $64,000, respectively. Depreciation expense was $98,000 and $86,000 for the years ended December 31, 2023 and 2022, respectively. |
Capitalized 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 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 consolidated 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 $1,510,000 and $1,201,000 for the years ended December 31, 2023 and 2022, 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 consolidated balance sheet. We amortize capitalized patent costs on a straight-line basis over their estimated useful lives, which is generally 5 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 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 associated with goodwill or intangible assets were incurred during the years ended December 31, 2023 and 2022. |
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, 2023 $ 2,399 Level 3 Contingent consideration (2), December 31, 2022 $ 2,931 Level 3 (1) Contingent consideration is a liability recorded in connection with the acquisition of the Bureau of Internet Accessibility Inc. (“BOIA”) in the first quarter of 2022 (refer to Note 3 – Acquisitions for additional information on the BOIA acquisition). The fair value of the contingent consideration was determined by management based on revenues from BOIA’s offering for 2022 and 2023. We made a $974,000 payment towards the contingent consideration liability in 2023 and expect to settle the remaining liability in the second quarter of 2024. (2) Contingent consideration is a liability recorded in connection with the acquisition of BOIA acquisition. The fair value of the contingent consideration was determined by management with the assistance of an independent third-party valuation specialist using the Monte-Carlo simulation. |
Debt Discount and Debt Issuance Costs | Debt Discount and Debt Issuance Costs Costs related to the issuance of debt due to the lender (debt discount) or to third parties (debt issuance costs) are capitalized and amortized to interest expense based on the effective interest method over the term of the related debt. Debt discount and debt issuance costs are presented on the Company’s consolidated balance sheets as a direct deduction from the carrying amount of our term loan. |
Business Combinations | Business Combinations The assets acquired, liabilities assumed and contingent consideration are recorded at their estimated fair value on the acquisition date with subsequent changes recognized in earnings. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as a part of the purchase price allocation process to value the assets acquired and liabilities assumed as of the business combination date. As a result, the Company may recognize adjustments to provisional amounts of assets acquired or liabilities assumed in earnings in the reporting period in which the adjustments are determined. Acquisition-related expenses primarily consist of legal, accounting, and other advisory fees associated and are recorded in the period in which they are incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company periodically issues options, 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 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). 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 and RSUs as the restriction period lapses, which is typically a one |
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 and restricted stock. The dilutive effect of our stock-based awards is computed using the treasury stock method, which assumes all stock-based awards 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. 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, 2023 and 2022, 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) 2023 2022 Options 112 156 Restricted stock units 1,707 1,803 Total 1,819 1,959 |
Stock Repurchases | Stock Repurchases In the fourth quarter of 2023, the Board of Directors of the Company approved a program to repurchase up to $5 million of its outstanding shares of common stock through December 31, 2025. In the twelve months ended December 31, 2023, we used $1.12 million of the program in repurchasing shares. As of December 31, 2023, we had $3.88 million remaining for the repurchase of shares. In the second quarter of 2022, the Board of Directors of the Company approved a program to repurchase up to $3 million of its outstanding shares of common stock. In the twelve months ended December 31, 2023 and 2022, we used zero and $0.8 million, respectively, of the program in repurchasing shares. In August 2023, the 2022 share repurchase program was terminated. Shares repurchased by the Company are immediately retired. The Company made an accounting policy election to charge the excess of repurchase price over par value entirely to retained earnings. |
Employee Stock Purchase Plan | Employee Stock Purchase Plan In May 2022, the stockholders of the Company approved the Company’s Employee Stock Purchase Plan (the “ESPP”), which provides for the issuance of up to 500,000 shares of common stock. Eligible employees may elect to have a percentage of eligible compensation withheld to purchase shares of our common stock at the end of each purchase period. The Company expects each purchase period to be the six-month periods ending on June 30 or December 31 of each calendar year. The purchase price per share is expected to equal 85% of the fair market value of our common stock on the last trading day of the purchase period. Under the ESPP, a participant may not be granted rights to purchase more than $25,000 worth of common stock for each calendar year and no participant may purchase more than 1,500 shares of our common stock (or such other number as the Compensation Committee may designate) on any one purchase date. As of December 31, 2023, 15,484 shares had been issued under the ESPP and 484,516 shares remained available under the plan. |
Loss Contingencies | Loss Contingencies We are subject to the possibility of various loss contingencies arising in the normal course of business. In determining loss contingencies, we consider the likelihood of the loss or impairment of an asset and the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss. 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. |
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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Summary of revenues disaggregation by sales channel | Year ended December 31, (in thousands) 2023 2022 Partner and Marketplace $ 18,027 $ 15,972 Enterprise 13,289 13,941 Total revenues $ 31,316 $ 29,913 |
Summary of deferred revenue | As of December 31, (in thousands) 2023 2022 Deferred revenue - current $ 6,472 $ 7,125 Deferred revenue - noncurrent 10 73 Total deferred revenue $ 6,482 $ 7,198 |
Summary of deferred commission costs | As of December 31, (in thousands) 2023 2022 Deferred costs – current $ 20 $ 49 Deferred costs - noncurrent 2 12 Total deferred costs $ 22 $ 61 |
Summary of 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, 2023 $ 2,399 Level 3 Contingent consideration (2), December 31, 2022 $ 2,931 Level 3 (1) Contingent consideration is a liability recorded in connection with the acquisition of the Bureau of Internet Accessibility Inc. (“BOIA”) in the first quarter of 2022 (refer to Note 3 – Acquisitions for additional information on the BOIA acquisition). The fair value of the contingent consideration was determined by management based on revenues from BOIA’s offering for 2022 and 2023. We made a $974,000 payment towards the contingent consideration liability in 2023 and expect to settle the remaining liability in the second quarter of 2024. (2) Contingent consideration is a liability recorded in connection with the acquisition of BOIA acquisition. The fair value of the contingent consideration was determined by management with the assistance of an independent third-party valuation specialist using the Monte-Carlo simulation. |
Summary of antidilutive securities outstanding excluded from computation of basic and diluted net loss per share | December 31, (in thousands) 2023 2022 Options 112 156 Restricted stock units 1,707 1,803 Total 1,819 1,959 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
ACQUISITIONS | |
Summary of fair value of tangible and intangible assets acquired and liabilities assumed | (in thousands) Balance at March 9, 2022 Assets purchased: Cash $ 398 Accounts receivable 437 Other assets 29 Customer relationships (1) 3,600 Internally-developed software (1) 700 Trade name (1) 50 Goodwill (2) 3,300 Total assets purchased 8,514 Liabilities assumed: Accounts payable and accrued liabilities 7 Deferred revenue 1,040 Total liabilities assumed 1,047 Net assets acquired 7,467 Consideration: Cash paid, net of proceeds from working capital adjustment 4,882 Contingent consideration liability (3) 2,585 Total consideration $ 7,467 (1) Acquired intangible assets will be amortized on a straight-line basis over their estimated useful lives of 2 to 7 years . In the twelve months ended December 31, 2023, amortization expense associated with these acquired intangible assets totaled $714,000 . (2) Goodwill represents the excess of purchase price over the estimated fair value of net tangible and intangible assets acquired. (3) The fair value of the contingent consideration liability was determined using the Monte-Carlo simulation. The key assumptions used in the Monte-Carlo simulation were as follows: non-recurring and recurring revenue metrics for the earn-out periods, non-recurring revenue discount rate of 11.5% , recurring revenue discount rate of 10.5% , expected revenue volatility of 24.65% , risk-free rate of 1.58% , buyer specific discount rate of 9.0% , and discount periods of 1.01 year and 2.22 year. |
Summary of unaudited pro forma results of operations | Pro Forma Combined Financials (unaudited) (in thousands) Year ended December 31, 2022 Revenue $ 30,576 Net loss attributed to common shareholders (9,688) |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INTANGIBLE ASSETS | |
Schedule of finite-Lived intangible assets | December 31, (in thousands) 2023 2022 Finite-lived assets: Patents $ 3,899 $ 3,860 Capitalized software development costs 5,657 4,324 Customer relationships 3,600 3,785 Trade name 50 50 Accumulated amortization (7,423) (5,978) Intangible assets, net $ 5,783 $ 6,041 |
Schedule of amortization expense associated with intangible assets | Year ended December 31, (in thousands) 2023 2022 Patents $ 29 $ 295 Capitalized software development costs 1,510 1,201 Customer relationships 606 509 Trade name 25 20 Total amortization expense $ 2,170 $ 2,025 |
Schedule of weighted average remaining useful life of finite-lived intangible assets | The weighted average remaining useful life of our finite-lived intangible assets (in years) as of December 31, 2023 are as follows: Weighted average remaining amortization period (in years) Patents 3.6 Capitalized software development costs 2.2 Customer relationships 5.2 Trade name 0.2 |
LEASE LIABILITIES AND RIGHT O_2
LEASE LIABILITIES AND RIGHT OF USE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
Summary of finance leases included in property and equipment | As of December 31, (in thousands) 2023 2022 Computer equipment $ 162 $ 214 Less: accumulated depreciation (156) (172) Assets acquired under finance leases, net $ 6 $ 42 |
Summary of total lease liabilities remaining future minimum lease payments | The following summarizes the total lease liabilities and remaining future minimum lease payments at December 31, 2023 (in thousands): Finance Operating Year ending December 31, Leases Leases Total 2024 $ 7 $ 345 $ 352 2025 — 219 219 2026 — 225 225 Total minimum lease payments 7 789 796 Less: present value discount — (60) (60) Total lease liabilities $ 7 $ 729 $ 736 Current portion of lease liabilities $ 7 $ 312 $ 319 Long term portion of lease liabilities $ — $ 417 $ 417 |
Summary of finance and operating lease liabilities | Year ended December 31, (in thousands) 2023 2022 Finance lease expenses: Depreciation expense $ 31 $ 52 Interest on lease liabilities 2 4 Total Finance lease expense 33 56 Operating lease expense 434 642 Short-term lease and related expenses 283 188 Total lease expenses $ 750 $ 886 |
Summary of lease terms and discount rates | As of December 31, 2023 2022 Weighted average remaining lease term (years) Operating leases 2.58 3.12 Finance leases 0.35 1.17 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, 2023 | |
STOCK-BASED COMPENSATION | |
Summary of stock-based compensation expense | Year ended December 31, (in thousands) 2023 2022 Stock Options $ 157 $ 403 RSUs 3,310 3,934 Unrestricted Shares of Common Stock 219 229 Employee stock purchase plan 12 — Total $ 3,698 $ 4,566 |
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, 2021 191,340 $ 12.94 3.96 83,070 $ 71,000 Forfeited/Expired (35,286) 13.53 Outstanding at December 31, 2022 156,054 $ 12.81 3.01 108,460 $ — Forfeited/Expired (43,775) 19.57 Outstanding at December 31, 2023 112,279 $ 10.17 1.98 110,570 $ 13,262 Exercisable as of December 31, 2023 110,570 $ 9.94 1.97 $ 13,262 |
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, 2022 1,802,655 $ 6.92 411,668 1,390,987 Granted 728,803 5.12 Settled (482,854) 6.59 Forfeited/Canceled (341,346) 5.28 Restricted stock units outstanding at December 31, 2023 1,707,258 $ 6.54 477,898 1,229,360 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Schedule of deferred tax assets and liabilities | December 31, (in thousands) 2023 2022 Deferred tax assets: Intangible assets $ — $ — Bad debt expense 130 123 Accrued compensation expense 19 36 Deferred revenue and costs 2 223 Capitalized research and development costs 2,756 1,442 Stock-based compensation 2,598 2,523 Interest expense — 1 Operating lease liability 192 331 State NOL carryforwards 2,630 3,085 Federal NOL carryforwards 12,200 12,155 State tax credit carryforwards 71 71 Federal tax credit carryforwards 57 57 Total Deferred Tax Assets 20,655 20,047 Valuation allowance (19,544) (18,938) Net deferred tax assets 1,111 1,109 Deferred tax liabilities: Property and equipment (439) (141) Intangible assets (512) (665) Deferred revenue and costs — — Right of use assets (160) (303) Total deferred tax liabilities (1,111) (1,109) Net deferred tax asset (liability) $ — $ — |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
BASIS OF PRESENTATION | |
Number of operating segments | 1 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES - Disaggregated by sales (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Partner and Marketplace | $ 18,027 | $ 15,972 |
Enterprise | 13,289 | 13,941 |
Total revenues | $ 31,316 | $ 29,913 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Deferred revenue (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Deferred revenue - current | $ 6,472 | $ 7,125 |
Deferred revenue - noncurrent | 10 | 73 |
Total deferred revenue | $ 6,482 | $ 7,198 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Deferred commission costs (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Deferred costs - current | $ 20 | $ 49 |
Deferred costs - noncurrent | 2 | 12 |
Total deferred costs | $ 22 | $ 61 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Fair value on a recurring basis (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Contingent consideration | $ 2,399 | $ 979 |
Level 3 | Recurring | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Contingent consideration | $ 2,399 | $ 2,931 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Potentially dilutive securities excluded from computation of earnings per share (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Dilutive securities outstanding | 1,819 | 1,959 |
Options | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Dilutive securities outstanding | 112 | 156 |
Restricted stock units | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Dilutive securities outstanding | 1,707 | 1,803 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
May 31, 2022 USD ($) shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) segment customer shares | Dec. 31, 2022 USD ($) customer | Jun. 30, 2022 USD ($) | Mar. 09, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Deferred revenue outstanding | $ 7,100,000 | |||||
Deferred revenue outstanding (as a percent) | 99% | |||||
Amortization of deferred sales commissions | $ 60,000 | $ 113,000 | ||||
Allowance for doubtful accounts | 496,000 | 468,000 | ||||
Bad debt expense | $ 61,000 | 356,000 | ||||
Estimated useful life of property and equipment | 3 years | |||||
Property and equipment acquired by cash | $ 183,000 | 64,000 | ||||
Depreciation expense | 98,000 | 86,000 | ||||
Amortization expense | $ 2,170,000 | 2,025,000 | ||||
Number of reportable segments | segment | 1 | |||||
Impairment losses | $ 0 | 0 | ||||
Repurchase of common stock | $ 1,122,000 | 756,000 | ||||
Maximum number of shares issuance of common stock under ESPP | shares | 500,000 | |||||
Maximum percentage of base compensation on payroll deductions | 85% | |||||
Maximum value of shares for each employee under ESPP | $ 25,000 | |||||
Maximum number of shares for each employee under ESPP | shares | 1,500 | |||||
Shares issued under the ESPP | shares | 15,484 | |||||
Shares remained available under the ESPP | shares | 484,516 | |||||
Stock Repurchase Program, 2023 | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Repurchase of common stock | $ 1,120,000 | |||||
Number of remaining for repurchase of shares | 3,880,000 | |||||
Stock Repurchase Program, 2022 | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Repurchase of common stock | 0 | 800,000 | ||||
Bureau of internet accessibility Inc | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Payment towards the contingent consideration liability | $ 974,000 | $ 974,000 | ||||
Software and Software Development Costs | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Useful life | 3 years | |||||
Amortization expense | $ 1,510,000 | 1,201,000 | ||||
Patents | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Useful life | 5 years | |||||
Amortization expense | $ 29,000 | $ 295,000 | ||||
Maximum | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Service period for compensation cost expense | 3 years | |||||
Maximum | Stock Repurchase Program, 2023 | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Repurchase of outstanding shares of common stock | $ 5,000,000 | |||||
Maximum | Stock Repurchase Program, 2022 | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Repurchase of outstanding shares of common stock | $ 3,000,000 | |||||
Maximum | Bureau of internet accessibility Inc | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Useful life | 7 years | |||||
Minimum | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Service period for compensation cost expense | 1 year | |||||
Minimum | Bureau of internet accessibility Inc | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Useful life | 2 years | |||||
Customer concentration risk | Sales revenue, net | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Number of customer | customer | 1 | 1 | ||||
Customer concentration risk | Accounts receivable | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Number of customer | customer | 1 | 1 | ||||
One customer | Customer concentration risk | Sales revenue, net | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Concentration risk percentage | 17% | 17% | ||||
One customer | Customer concentration risk | Accounts receivable | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Concentration risk percentage | 16% | 22% |
ACQUISITIONS - Bureau of Intern
ACQUISITIONS - Bureau of Internet Accessibility Inc (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 09, 2023 | Mar. 09, 2022 | Dec. 28, 2021 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
ACQUISITIONS | ||||||
Contingent consideration | $ 2,399,000 | $ 979,000 | ||||
Transaction costs | 247,000 | |||||
Bureau of internet accessibility Inc | ||||||
ACQUISITIONS | ||||||
Aggregate consideration | $ 7,467,000 | $ 7,500,000 | ||||
Cash payment | 5,100,000 | |||||
Cash received from net working capital adjustments | $ 200,000 | |||||
Term for first aggregate contingent consideration to be paid in cash | 1 year | |||||
Term for second aggregate contingent consideration to be paid in cash | 2 years | |||||
Change in the fair value of contingent consideration | $ 2,585,000 | $ 2,600,000 | 2,399,000 | |||
Cash payment towards the contingent consideration liability | $ 974,000 | 974,000 | ||||
Transaction costs | 0 | 247,000 | ||||
Bureau of internet accessibility Inc | General and Administrative Expense | ||||||
ACQUISITIONS | ||||||
Change in the fair value of contingent consideration | $ 442,000 | $ 346,000 | ||||
Square ADA | ||||||
ACQUISITIONS | ||||||
Aggregate consideration | $ 185,000 | |||||
Cash payment | 53,000 | |||||
Contingent consideration | $ 132,000 |
ACQUISITIONS - Bureau of Inte_2
ACQUISITIONS - Bureau of Internet Accessibility Inc - Tangible and intangible assets acquired and liabilities assumed (Details) - USD ($) | 12 Months Ended | |||
Mar. 09, 2023 | Mar. 09, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Assets purchased: | ||||
Goodwill | $ 4,001,000 | $ 4,001,000 | ||
Bureau of internet accessibility Inc | ||||
Assets purchased: | ||||
Cash | $ 398,000 | |||
Accounts receivable | 437,000 | |||
Other assets | 29,000 | |||
Goodwill | 3,300,000 | |||
Total assets purchased | 8,514,000 | |||
Liabilities assumed: | ||||
Accounts payable and accrued liabilities | 7,000 | |||
Deferred revenue | 1,040,000 | |||
Total liabilities assumed | 1,047,000 | |||
Net assets acquired | 7,467,000 | |||
Consideration: | ||||
Cash paid, net of proceeds from working capital adjustment | 4,882,000 | |||
Contingent consideration liability | 2,585,000 | $ 2,600,000 | $ 2,399,000 | |
Total consideration | 7,467,000 | $ 7,500,000 | ||
Bureau of internet accessibility Inc | Customer relationships | ||||
Assets purchased: | ||||
Intangible assets | 3,600,000 | |||
Bureau of internet accessibility Inc | Internally developed software | ||||
Assets purchased: | ||||
Intangible assets | 700,000 | |||
Bureau of internet accessibility Inc | Trade name | ||||
Assets purchased: | ||||
Intangible assets | $ 50,000 |
ACQUISITIONS - Bureau of Inte_3
ACQUISITIONS - Bureau of Internet Accessibility Inc - Tangible and intangible assets acquired and liabilities assumed (parenthetical) (Details) - Bureau of internet accessibility Inc | Dec. 31, 2023 USD ($) | Mar. 09, 2022 Y |
ACQUISITIONS | ||
Amortization expense | $ | $ 714,000 | |
Discount rate | ||
ACQUISITIONS | ||
Fair value of the contingent consideration liability, Measurement input | 9 | |
Discount rate | Recurring | ||
ACQUISITIONS | ||
Fair value of the contingent consideration liability, Measurement input | 10.5 | |
Discount rate | Non-recurring | ||
ACQUISITIONS | ||
Fair value of the contingent consideration liability, Measurement input | 11.5 | |
Volatility rate | ||
ACQUISITIONS | ||
Fair value of the contingent consideration liability, Measurement input | 24.65 | |
Risk-free interest rate | ||
ACQUISITIONS | ||
Fair value of the contingent consideration liability, Measurement input | 1.58 | |
Discount periods | Recurring | ||
ACQUISITIONS | ||
Fair value of the contingent consideration liability, Measurement input | 2.22 | |
Discount periods | Non-recurring | ||
ACQUISITIONS | ||
Fair value of the contingent consideration liability, Measurement input | 1.01 | |
Maximum | ||
ACQUISITIONS | ||
Useful life | 7 years | |
Minimum | ||
ACQUISITIONS | ||
Useful life | 2 years |
ACQUISITIONS - Pro Forma Financ
ACQUISITIONS - Pro Forma Financials (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Pro Forma Financials | |
Revenue | $ 30,576 |
Net loss attributed to common shareholders | (9,688) |
Acquisition expense | 247,000 |
Expense related to change in the fair value of contingent consideration | $ 346,000 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2023 | |
INTANGIBLE ASSETS | ||
Accumulated amortization | $ (5,978,000) | $ (7,423,000) |
Intangible assets, net | 6,041,000 | 5,783,000 |
Capitalized software development cost | 1,160,000 | 1,946,000 |
Internally developed software cost | 700,000 | |
Patents | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | 3,860,000 | 3,899,000 |
Capitalized costs | 26,000 | 47,000 |
Capitalized software development costs | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | 4,324,000 | 5,657,000 |
Customer relationships | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | 3,785,000 | 3,600,000 |
Trade name | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | 50,000 | $ 50,000 |
Bureau of internet accessibility Inc | Customer relationships | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | $ 3,600,000 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INTANGIBLE ASSETS | ||
Total amortization expense | $ 2,170,000 | $ 2,025,000 |
Patents | ||
INTANGIBLE ASSETS | ||
Total amortization expense | 29,000 | 295,000 |
Capitalized software development costs | ||
INTANGIBLE ASSETS | ||
Total amortization expense | 1,510,000 | 1,201,000 |
Customer relationships | ||
INTANGIBLE ASSETS | ||
Total amortization expense | 606,000 | 509,000 |
Trade name | ||
INTANGIBLE ASSETS | ||
Total amortization expense | $ 25,000 | $ 20,000 |
INTANGIBLE ASSETS - Weighted av
INTANGIBLE ASSETS - Weighted average remaining useful life (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INTANGIBLE ASSETS | ||
Impairment loss on intangibles | $ 0 | $ 0 |
Patents | ||
INTANGIBLE ASSETS | ||
Weighted average remaining amortization period (in years) | 3 years 7 months 6 days | |
Capitalized software development costs | ||
INTANGIBLE ASSETS | ||
Weighted average remaining amortization period (in years) | 2 years 2 months 12 days | |
Customer relationships | ||
INTANGIBLE ASSETS | ||
Weighted average remaining amortization period (in years) | 5 years 2 months 12 days | |
Trade name | ||
INTANGIBLE ASSETS | ||
Weighted average remaining amortization period (in years) | 2 months 12 days |
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, 2023 | Dec. 31, 2022 |
Lessee finance Lease description | ||
Computer equipment | $ 162 | $ 214 |
Less: accumulated depreciation | (156) | (172) |
Assets acquired under finance leases, net | $ 6 | $ 42 |
LEASE LIABILITIES AND RIGHT O_4
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum finance leases payments (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2024 | $ 7,000 | |
Total minimum lease payments | 7,000 | |
Total lease liabilities | 7,000 | $ 45,000 |
Current portion of lease liabilities | 7,000 | 38,000 |
Long term portion of lease liabilities | $ 0 | $ 7,000 |
LEASE LIABILITIES AND RIGHT O_5
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum operating leases payments (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2024 | $ 345 | |
2025 | 219 | |
2026 | 225 | |
Total minimum lease payments | 789 | |
Less: present value discount | (60) | |
Total lease liabilities | 729 | |
Current portion of lease liabilities | 312 | $ 468 |
Long term portion of lease liabilities | $ 417 | $ 745 |
LEASE LIABILITIES AND RIGHT O_6
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Finance Leases and Operating Leases (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
2024 | $ 352 |
2025 | 219 |
2026 | 225 |
Total minimum lease payments | 796 |
Less: present value discount | (60) |
Total lease liabilities | 736 |
Current portion of lease liabilities | 319 |
Long term portion of lease liabilities | $ 417 |
LEASE LIABILITIES AND RIGHT O_7
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Lease expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finance lease expenses: | ||
Depreciation expense | $ 31 | $ 52 |
Interest on lease liabilities | 2 | 4 |
Total Finance lease expense | 33 | 56 |
Operating lease expense | 434 | 642 |
Short-term lease and related expenses | 283 | 188 |
Total lease expenses | $ 750 | $ 886 |
LEASE LIABILITIES AND RIGHT O_8
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Remaining lease terms and discount rates (Details) | Dec. 31, 2023 | Dec. 31, 2022 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
Weighted average remaining lease term (years) - Operating leases | 2 years 6 months 29 days | 3 years 1 month 13 days |
Weighted average remaining lease term (years) - Finance leases | 4 months 6 days | 1 year 2 months 1 day |
Weighted average discount rate (%) - Operating leases | 6% | 6% |
Weighted average discount rate (%) - Finance leases | 6% | 6% |
LEASE LIABILITIES AND RIGHT O_9
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Additional information (Details) | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2023 USD ($) ft² | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Oct. 31, 2024 ft² | Jan. 31, 2022 USD ($) ft² | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||||||
Total finance lease liabilities | $ 7,000 | $ 45,000 | ||||
Effective interest rate of finance leases | 6% | |||||
Operating lease liability | $ 729,000 | |||||
Reduced lease space | ft² | 2,000 | |||||
Decrease in right of use asset | $ 38,000 | |||||
Lease liability | $ 40,000 | (444,000) | (528,000) | |||
Operating lease payments | 520,000 | $ 614,000 | ||||
Marietta Georgia | ||||||
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||||||
Area of land | ft² | 5,000 | |||||
Operating lease liability | $ 79,000 | $ 876,000 | ||||
Marietta Georgia | General and Administrative Expense | ||||||
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||||||
Operating lease, loss on impairment | $ 146,000 | |||||
Georgia | ||||||
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||||||
Area of land | ft² | 627 |
DEBT (Details)
DEBT (Details) - USD ($) | 12 Months Ended | |
Nov. 30, 2023 | Dec. 31, 2023 | |
DEBT | ||
Debt issuance cost | $ 71,000 | |
Amortization of debt discounts | 6,000 | |
Amortization of debt issuance costs | 2,000 | |
Loan and Security Agreement with SG Credit Partner | ||
DEBT | ||
Term loan | $ 7,000,000 | |
Reference rate | 7% | |
Debt instrument rate in default | 3% | |
Commitment fee | $ 105,000 | |
Exit fee | 105,000 | |
Debt issuance cost | 71,000 | |
Minimum liquidity amount | 2,000,000 | |
Prior to payment of contingent consideration | 2,100,000 | |
Minimum monthly revenue | $ 2,300,000 | |
Outstanding principal balance | 7,000,000 | |
Accrued interest | $ 89,000 | |
Loan and Security Agreement with SG Credit Partner | Maximum | ||
DEBT | ||
Monthly recurring revenue, percentage | 105% | |
Loan and Security Agreement with SG Credit Partner | Minimum | ||
DEBT | ||
Monthly increase in recurring revenue | $ 2,300,000 | |
Loan and Security Agreement with SG Credit Partner | If payment Made On Or Before First Anniversary | ||
DEBT | ||
Prepayment fee | 3% | |
Loan and Security Agreement with SG Credit Partner | If Payment Made After First Anniversary But Before Second Anniversary | ||
DEBT | ||
Prepayment fee | 2% | |
Loan and Security Agreement with SG Credit Partner | If Payment Made After Second Anniversary But Before Maturity | ||
DEBT | ||
Prepayment fee | 1% | |
Loan and Security Agreement with SG Credit Partner | Prime Rate | ||
DEBT | ||
Interest rate | 6.25% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Shared office arrangement minimum fees due | $ 179,000 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Employee Stock Purchase Plan | ||
STOCK-BASED COMPENSATION | ||
Stock-based compensation expense | $ 12 | |
2020 | ||
STOCK-BASED COMPENSATION | ||
Stock-based compensation expense | 3,698 | $ 4,566 |
Employee Stock Option | 2020 | ||
STOCK-BASED COMPENSATION | ||
Stock-based compensation expense | 157 | 403 |
RSUs | 2020 | ||
STOCK-BASED COMPENSATION | ||
Stock-based compensation expense | 3,310 | 3,934 |
Unrestricted Shares of Common Stock | 2020 | ||
STOCK-BASED COMPENSATION | ||
Stock-based compensation expense | $ 219 | $ 229 |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock option activity (Details) - Options - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Options | |||
Balance at beginning of the period (in shares) | 156,054 | 191,340 | |
Forfeited/Expired | (43,775) | (35,286) | |
Balance at end of the period (in shares) | 112,279 | 156,054 | 191,340 |
Vested (in shares) | 110,570 | 108,460 | 83,070 |
Weighted Average Exercise Price | |||
Outstanding at beginning of the period (in dollars per share) | $ 12.81 | $ 12.94 | |
Forfeited/Expired | 19.57 | 13.53 | |
Outstanding at end of the period (in dollars per share) | 10.17 | $ 12.81 | $ 12.94 |
Exercisable (in dollars per share) | $ 9.94 | ||
Weighted Average Remaining Term | |||
Outstanding, Weighted Average Remaining Term | 1 year 11 months 23 days | 3 years 3 days | 3 years 11 months 15 days |
Exercised Weighted Average Remaining Term | 1 year 11 months 19 days | ||
Intrinsic Value of Options | |||
Outstanding, Intrinsic Value of Options (in dollars) | $ 71,000 | ||
Outstanding, Intrinsic Value of Options (in dollars) | $ 13,262 | $ 71,000 | |
Exercisable as of December 31, 2020 | $ 13,262 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted stock unit activity (Details) - RSUs - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Number of RSUs | ||
Balance at beginning of the period (In shares) | 1,802,655 | |
Granted | 728,803 | |
Settled | (482,854) | |
Forfeited/Cancelled | (341,346) | |
Balance at end of the period (In shares) | 1,707,258 | 1,802,655 |
Weighted Average Grant Date Fair Value | ||
Balance at beginning of the period (in dollars per share) | $ 6.92 | |
Granted (in dollars per share) | 5.12 | |
Settled (in dollars per share) | 6.59 | |
Forfeited/Expired (in dollars per share) | 5.28 | |
Balance at end of the period (in dollars per share) | $ 6.54 | $ 6.92 |
Vested (in shares) | 477,898 | 411,668 |
Unvested (in shares) | 1,229,360 | 1,390,987 |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted stock units (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
STOCK-BASED COMPENSATION | |||
Stock-based compensation expense | $ 3,698,000 | $ 4,566,000 | |
Time-based RSU | |||
STOCK-BASED COMPENSATION | |||
Granted | 400,000 | ||
Stock-based compensation expense | $ 370,000 | $ 331,000 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 09, 2020 | |
STOCK-BASED COMPENSATION | |||
Common stock, shares authorized | 50,000,000 | 50,000,000 | |
2020 | |||
STOCK-BASED COMPENSATION | |||
Common stock, shares authorized | 2,500,000 | ||
Employee Stock Option | |||
STOCK-BASED COMPENSATION | |||
Unrecognized stock-based compensation expense | $ 5,000 | ||
Share-based compensation options granted period | 5 years | ||
Share-based compensation options exercisable period | 3 years | ||
RSUs | |||
STOCK-BASED COMPENSATION | |||
Unrecognized stock-based compensation expense | $ 4,186,000 | ||
RSUs | Minimum | |||
STOCK-BASED COMPENSATION | |||
Share-based compensation options granted period | 1 year | ||
RSUs | Maximum | |||
STOCK-BASED COMPENSATION | |||
Share-based compensation options granted period | 3 years |
INCOME TAXES - Additional infor
INCOME TAXES - Additional information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INCOME TAXES | ||
Federal and state income tax expense | $ 0 | $ 0 |
U S Federal net operating loss carryforward | 58,094,000 | |
Net deferred tax assets | 0 | 0 |
Valuation allowance | 19,544,000 | 18,938,000 |
Income tax expense (Benefit), CARES Act | 32,892,000 | |
Reserve for uncertain tax positions | 0 | $ 0 |
2035 | ||
INCOME TAXES | ||
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, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Intangible assets | $ 0 | $ 0 |
Bad debt expense | 130,000 | 123,000 |
Accrued compensation expense | 19,000 | 36,000 |
Deferred revenue and costs | 2,000 | 223,000 |
Capitalized research and development costs | 2,756,000 | 1,442,000 |
Stock-based compensation | 2,598,000 | 2,523,000 |
Interest expense | 1,000 | |
Operating lease liability | 192,000 | 331,000 |
State NOL carryforwards | 2,630,000 | 3,085,000 |
Federal NOL carryforwards | 12,200,000 | 12,155,000 |
State tax credit carryforwards | 71,000 | 71,000 |
Federal tax credit carryforwards | 57,000 | 57,000 |
Total Deferred Tax Assets | 20,655,000 | 20,047,000 |
Valuation allowance | (19,544,000) | (18,938,000) |
Net deferred tax assets | 1,111,000 | 1,109,000 |
Deferred tax liabilities: | ||
Property and equipment | (439,000) | (141,000) |
Intangible assets | (512,000) | (665,000) |
Right of use assets | (160,000) | (303,000) |
Total deferred tax liabilities | (1,111,000) | (1,109,000) |
Net deferred tax asset (liability) | $ 0 | $ 0 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (5,872) | $ (10,433) |
Insider Trading Arrangements
Insider Trading Arrangements | 12 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |