Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 31, 2022 | Jun. 30, 2021 | |
Document Information Line Items | |||
Entity Registrant Name | DECISIONPOINT SYSTEMS, INC. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 7,007,454 | ||
Entity Public Float | $ 20,600,000 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001505611 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Incorporation, State or Country Code | DE | ||
Entity File Number | 333-245695 | ||
Entity Tax Identification Number | 37-1644635 | ||
Entity Address, Address Line One | 1615 South Congress Avenue Suite 103 | ||
Entity Address, City or Town | Delray Beach | ||
Entity Address, State or Province | FL | ||
Entity Address, Postal Zip Code | 33445 | ||
City Area Code | (561) | ||
Local Phone Number | 900-3723 | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm ID | 200 | ||
Auditor Name | HASKELL & WHITE LLP | ||
Auditor Location | Irvine, California | ||
Security Exchange Name | NONE | ||
Title of 12(g) Security | None |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | |
ASSETS | |||
Cash | $ 2,587 | $ 2,005 | |
Accounts receivable, net | 12,302 | 16,438 | |
Inventory, net | 2,111 | 884 | |
Deferred costs | 1,998 | 1,744 | |
Prepaid expenses and other current assets | 336 | 67 | |
Total current assets | 19,334 | 21,138 | |
Operating lease assets | 329 | 583 | |
Property and equipment, net | 834 | 751 | |
Deferred costs, net of current portion | 1,492 | 2,097 | |
Deferred tax assets | 1,999 | 1,973 | |
Intangible assets, net | 3,564 | 4,663 | |
Goodwill | 8,128 | 8,128 | |
Other assets | 50 | 22 | |
Total assets | 35,730 | 39,355 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
Accounts payable | 10,273 | 12,852 | |
Accrued expenses and other current liabilities | 3,220 | 2,807 | |
Deferred revenue | 4,599 | 4,617 | |
Line of credit | 1,206 | ||
Due to related parties | 34 | ||
Current portion of long-term debt | 3 | ||
Current portion of operating lease liabilities | 257 | 261 | |
Total current liabilities | 18,352 | 21,777 | |
Deferred revenue, net of current portion | 2,510 | 3,140 | |
Long-term debt | 146 | 1,361 | |
Noncurrent portion of operating lease liabilities | 83 | 340 | |
Other liabilities | 381 | 873 | |
Total liabilities | 21,472 | 27,491 | |
Commitments and contingencies (Note 13) | |||
Stockholders’ equity: | |||
Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued or outstanding | |||
Common stock, $0.001 par value; 50,000 shares authorized; 7,007 and 6,788 shares issued and outstanding, respectively | [1] | 7 | 7 |
Additional paid-in capital | 39,216 | 38,236 | |
Accumulated deficit | (24,965) | (26,379) | |
Total stockholders’ equity | 14,258 | 11,864 | |
Total liabilities and stockholders’ equity | $ 35,730 | $ 39,355 | |
[1] | Prior period share information and balances have been retroactively adjusted to reflect a reverse stock split. See Note 11, Stockholders’ Equity for additional information. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares shares in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 7,007 | 6,788 |
Common stock, shares outstanding | 7,007 | 6,788 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Net sales: | |||
Product | $ 50,480 | $ 50,673 | |
Service | 15,463 | 12,687 | |
Net sales | 65,943 | 63,360 | |
Cost of sales: | |||
Product | 39,943 | 40,129 | |
Service | 10,696 | 8,413 | |
Cost of sales | 50,639 | 48,542 | |
Gross profit | 15,304 | 14,818 | |
Operating expenses: | |||
Sales and marketing expense | 7,354 | 5,587 | |
General and administrative expenses | 7,552 | 5,203 | |
Total operating expenses | 14,906 | 10,790 | |
Operating income | 398 | 4,028 | |
Interest expense | (79) | (319) | |
Gain on extinguishment of debt | 1,211 | ||
Other income | 213 | ||
Income before income taxes | 1,530 | 3,922 | |
Income tax expense | (116) | (1,061) | |
Net income and comprehensive income attributable to common stockholders | $ 1,414 | $ 2,861 | |
Earnings per share attributable to stockholders: (1) | |||
Basic (in Dollars per share) | [1] | $ 0.2 | $ 0.42 |
Diluted (in Dollars per share) | [1] | $ 0.19 | $ 0.37 |
Weighted average common shares outstanding (1) | |||
Basic (in Shares) | [1] | 6,947 | 6,788 |
Diluted (in Shares) | [1] | 7,593 | 7,811 |
[1] | All share and per share information has been retroactively adjusted to reflect a reverse stock split. See Note 11, Stockholders’ Equity for additional information. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total | ||
Balance at Dec. 31, 2019 | $ 7 | [1] | $ 38,149 | $ (29,240) | $ 8,916 | |
Balance (in Shares) at Dec. 31, 2019 | [1] | 6,788 | ||||
Net income | 2,861 | 2,861 | ||||
Share-based compensation expense | [1] | 87 | 87 | |||
Share-based compensation expense (in Shares) | [1] | |||||
Balance at Dec. 31, 2020 | $ 7 | [1] | 38,236 | (26,379) | 11,864 | |
Balance (in Shares) at Dec. 31, 2020 | [1] | 6,788 | ||||
Net income | 1,414 | 1,414 | ||||
Exercise of warrants | [1] | |||||
Exercise of warrants (in Shares) | [1] | 152 | ||||
Exercise of stock options (Note 9) | [1] | (23) | (23) | |||
Exercise of stock options (Note 9) (in Shares) | [1] | 67 | ||||
Share-based compensation expense | [1] | 1,003 | 1,003 | |||
Share-based compensation expense (in Shares) | [1] | |||||
Balance at Dec. 31, 2021 | $ 7 | [1] | $ 39,216 | $ (24,965) | $ 14,258 | |
Balance (in Shares) at Dec. 31, 2021 | [1] | 7,007 | ||||
[1] | All share information and balances have been retroactively adjusted to reflect a reverse stock split. See Note 11, Stockholders’ Equity, for additional information. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | ||
Net income | $ 1,414 | $ 2,861 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,387 | 891 |
Amortization of deferred financing costs and note discount | 24 | 157 |
Share-based compensation expense | 1,003 | 87 |
Acquisition earn-out adjustment | (187) | |
Gain on extinguishment of debt | (1,211) | |
Deferred income taxes, net | (26) | 686 |
Provision for doubtful accounts | 25 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 4,136 | (5,853) |
Inventory, net | (1,227) | 2,945 |
Deferred costs | 351 | (382) |
Prepaid expenses and other current assets | (294) | 254 |
Other assets, net | (28) | (8) |
Accounts payable | (2,579) | 585 |
Accrued expenses and other current liabilities | 277 | 294 |
Due to related parties | (34) | (90) |
Operating lease liabilities | (7) | 6 |
Deferred revenue | (648) | 1,738 |
Net cash provided by operating activities | 2,352 | 4,196 |
Cash flows from investing activities | ||
Purchases of property and equipment | (371) | (93) |
Cash paid for acquisitions, net of cash acquired | (170) | (3,409) |
Net cash used in investing activities | (541) | (3,502) |
Cash flows from financing activities | ||
Repayment of term debt | (646) | |
Line of credit, net | (1,206) | (1,971) |
Proceeds from issuance of term debt | 1,361 | |
Debt issuance costs | (53) | |
Taxes paid in lieu of shares issued for share-based compensation | (25) | |
Proceeds from exercise of stock options | 2 | |
Net cash used in financing activities | (1,229) | (1,309) |
Change in cash | 582 | (615) |
Cash, beginning of year | 2,005 | 2,620 |
Cash, end of year | 2,587 | 2,005 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 50 | 176 |
Cash paid for income taxes | 365 | 64 |
Supplemental disclosure of non-cash activities | ||
Earn-out related to acquisition of ExtenData | 750 | |
Leased assets obtained in exchange for new operating lease liabilities | $ 207 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Description of Business | Note 1: Description of Business DecisionPoint Systems, Inc., which we sometimes refer to as the “Company”, “we” or “us”, is an enterprise mobility systems integrator that sells, installs, deploys and repairs mobile computing and wireless systems that are used both within a company’s facilities and in the field. These systems generally include mobile computers, mobile application software, and related data capture equipment including bar code scanners and radio frequency identification (“RFID”) readers. We also provide services, consulting, staging, kitting, deployment, maintenance, proprietary and third-party software and software customization as an integral part of our customized solutions for our customers. The suite of products utilizes the latest technologies with the intent to make complex mobile technologies easy to use, understand and keep running within all vertical markets such as merchandising, sales and delivery, field service, logistics and transportation and warehouse management. In June 2018, we acquired 100% of the outstanding stock of Royce Digital Systems, Inc. (“RDS”). RDS provides innovative enterprise print and mobile technologies, deployment services and on-site maintenance. In December 2020, we acquired 100% of the issued and outstanding membership interests of ExtenData Solutions, LLC (“ExtenData”). ExtenData is focused on enterprise mobility solutions and provides software product development, mobile computing, identification and wireless tracking solutions. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2: Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements of DecisionPoint Systems, Inc. and its subsidiaries have been prepared on an accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of DecisionPoint Systems, Inc. and its wholly owned subsidiaries, DecisionPoint Systems International (“DPSI”), DecisionPoint Systems Group, Inc. (“DPS Group”), RDS and ExtenData. All our identifiable assets are in the United States and all intercompany transactions have been eliminated in consolidation. Reverse Stock Split In December 2021, we effectuated a reverse stock split of our outstanding shares of common stock at a ratio of 1-for-2. See Note 11, Stockholders’ Equity COVID-19 COVID-19 and the response to the virus have negatively impacted overall economic conditions. The potential future impacts of COVID-19, while uncertain, could materially adversely impact the Company’s results of operations. Operating Segments Under the Financial Accounting Standards Board Accounting Standards Codification 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles, if the segments have similar characteristics, and if the segments are similar in each of the following areas: (i) the nature of products and services, (ii) the nature of the production processes, (iii) the type or class of customer for their products and services, and (iv) the methods used to distribute their products or provide their services. We believe each of the Company’s segments meet these criteria as they provide similar products and services to similar customers using similar methods of production and distribution. Because we believe each of the criteria set forth above has been met and each of the Company’s segments has similar characteristics, we aggregate results of operations in one reportable operating segment. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis. Accounts Receivable Accounts receivable are stated at net realizable value, and as such, earnings are charged with a provision for doubtful accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine an allowance based on historical write-off experience and specific account information available. Accounts receivable are reflected in the accompanying consolidated balance sheets net of a valuation allowance of $20,000 and $92,000 as of December 31, 2021 and 2020, respectively. When internal collection efforts on accounts have been exhausted, the accounts are written off by reducing the allowance for doubtful accounts and the related customer receivable. Inventory Inventory consists solely of finished goods and is stated at the lower of cost or net realizable value. Cost is determined under the first-in, first-out (FIFO) method. We periodically review our inventory and make provisions as necessary for estimated obsolete and slow-moving goods. The creation of such provisions results in a reduction of inventory to net realizable value and a charge to cost of sales. Inventories are reflected in the accompanying consolidated balance sheets net of a valuation allowance of $59,000 and $41,000 as of December 31, 2021 and 2020, respectively. Deferred Costs Deferred costs consist primarily of customer-related third-party extended hardware and software maintenance services which we have paid for in advance. The costs are ratably amortized over the life of the contract, generally one to five years. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally from three to five years. Leasehold improvements are recorded at cost and amortized over the shorter of the lease term or the life of the improvements. Cost incurred for repairs and maintenance are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization of disposed assets are removed from the accounts and any resulting gain or loss is included in other income or expense. Operating Leases We recognize a right-of-use asset and lease liability for all of our long-term leases at the commencement date. Lease liabilities are measured based on the present value of the minimum lease payments discounted at our incremental borrowing rate as of the date of commencement, which is determined based on information available at lease commencement and is equal to the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. Right-of-use assets are measured based on the lease liability adjusted for any initial direct costs, prepaid rent, or lease incentives. Operating lease costs are included within general and administrative expenses on the consolidated statements of income and comprehensive income. Capitalized Software Development Costs The capitalization of software development costs for external use begins when technological feasibility has been established and ends when the software is available for sale. Software development costs are amortized on a straight-line line basis over the remaining economic life, generally three years. Amortization of the capitalized software is classified within cost of sales for services in the consolidated statements of income and comprehensive income. Intangible Assets and Long-lived Assets We evaluate our intangible and long-lived assets for impairment when events or circumstances arise that indicate intangible and long-lived assets may be impaired. Indicators of impairment include, but are not limited to, a significant deterioration in overall economic conditions, a decline in the market capitalization, the loss of significant business, or other significant adverse changes in industry or market conditions. We completed the qualitative assessment for impairment and determined that there was no impairment during the years ended December 31, 2021 and 2020. There can be no assurance, however, that market conditions will not change or demand for our products will continue, which could result in an impairment of intangible and long-lived assets in the future. Intangible assets with finite useful lives are amortized over their respective estimated useful lives using an accelerated method to their estimated residual values, if any. Our intangible assets consist of customer lists, customer relationships and trade names. Refer to Note 4 for further information on our intangible assets. Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired. Goodwill is not amortized but tested for impairment at least annually or whenever events or changes in circumstance indicate that carrying values may not be recoverable. We assess the impairment of goodwill annually at each year-end and when indicators of impairment are present. We completed our annual assessment for goodwill impairment and determined that goodwill was not impaired as of December 31, 2021 and 2020. Factors that we consider important that could trigger an impairment assessment include, but not limited to, the following: ● significant under-performance relative to historical and projected operating results; ● significant changes in the manner of use of the acquired assets or business strategy; and ● significant negative industry or general economic trends. When performing the impairment review, we determine the carrying amount of a reporting unit by assigning assets and liabilities, including the existing goodwill, to each reporting unit. To evaluate whether goodwill is impaired, we compare the estimated fair value of each reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount. If the carrying amount of a reporting unit exceeds its fair value, the amount of the impairment loss will be recognized as the difference of the estimated fair value and the carrying value of the reporting unit. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include determining enterprise fair value and the allocation of enterprise fair value to the Company’s operating segments, revenue and expense growth rates, capital expenditures and the depreciation and amortization related to capital expenditures, changes in working capital, discount rates, risk-adjusted discount rates, future economic and market conditions and the determination of appropriate comparable companies. Due to the inherent uncertainty involved in making these estimates, actual future results related to assumed variables could differ from these estimates. Fair Value Measurement Fair value is the price that would be received from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides a hierarchy for inputs used in measuring fair value that prioritize the use of observable inputs over the use of unobservable inputs when such observable inputs are available. The three levels of inputs that may be used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets or liabilities. ● Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data. ● Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by us. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses, and line of credit approximate fair value due to the short-term nature of these financial instruments. The carrying amount of our debt approximates its fair value as the credit markets have not materially changed since the original borrowing dates. Business Combinations We utilize the acquisition method of accounting for business combinations which allocates the purchase price of an acquisition to the various tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. We primarily establish fair value using the income approach based upon a discounted cash flow model. The income approach requires the use of many assumptions and estimates including future revenues and expenses, as well as discount factors and income tax rates. Other estimates include: ● Estimated step-ups or write-downs for fixed assets and inventory; ● Estimated fair values of intangible assets; and ● Estimated liabilities assumed from the target. While we use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business acquisition date, these estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally no more than one year from the business acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Revenue Recognition We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied. We combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost-plus margin approach. We estimate the amount of total contract consideration we expect to receive for variable arrangements by determining the most likely amount we expect to earn from the arrangement based on the expected quantities of services we expect to provide, and the contractual pricing based on those quantities. We only include some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is subsequently resolved. We consider the sensitivity of the estimate, our relationship and experience with our client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue. We recognize contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to our clients. Unbilled receivables are recorded when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients, or receive customer cash payments, in advance of performing the related services under the terms of a contract. Remaining performance obligations represent the transaction price allocated to the performance obligations that are unsatisfied as of the end of each reporting period. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation. As of December 31, 2021, the total aggregate transaction price allocated to the unsatisfied performance obligations was approximately $7.1 million, of which approximately $4.6 million is expected to be recognized over the next 12 months. As of December 31, 2020, the total aggregate transaction price allocated to the unsatisfied performance obligations was approximately $7.8 million. Hardware, consumables, and software products - We recognize product revenue at the point in time when a client takes control of the hardware, consumables and/or software, which typically occurs when title and risk of loss have passed to the client. Our selling terms and conditions reflect that F.O.B ‘dock’ contractual terms establish that control is transferred from us at the point in time when the product is shipped to the customer. Revenues from software license sales are recognized as a single performance obligation on a gross basis as we are acting as a principal in these transactions at the point the software license is delivered to the customer. Generally, software licenses are sold with accompanying third-party delivered software assurance, which allows customers to upgrade, at no additional cost, to the latest technology if new capabilities are introduced during the period that the software assurance is in effect. In most instances, we determined that the accompanying third-party delivered software assurance is critical or essential to the core functionality of the software license because we do not sell the software license and standard warranty on a standalone basis (which indicates that the customer cannot benefit from the software license and standard warranty on its own), the software license and the standard warranty are not separately identifiable, the software license assurance warranty are inputs of a combined item in the contract, the assurance warranty and software license are highly interdependent and interrelated because the core functionality of the license is dependent on the assurance warranty, and our promise to provide the assurance warranty that is necessary for the software license to continue to provide significant benefit to the customer. As a result, the software license and the accompanying third-party delivered software assurance are recognized as a single performance obligation. We consider several factors to determine whether we are acting as a principal or an agent, including whether we are the primary obligor to the customer, have established our own pricing and have inventory and credit risks. Our internally developed software solution generates SaaS revenues from implementation, training and subscription fees. The initial term of the SaaS agreements is generally one year. The subscription fees are recognized over the subscription period. The implementation fees are necessary and integral for the customer to utilize the software. As such, the implementation fees are deferred and amortized over the subscription period. We also offer third-party SaaS subscriptions to our customers. The third-party subscriptions are recognized on a net basis as we are acting as an agent in these transactions, whereas our internally developed software solution offering is recognized on a gross basis. We leverage drop-ship shipments with many of our partners and suppliers to deliver hardware and consumable products to our clients without having to physically hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-ship arrangements on a gross basis as the principal in the transaction when the product is received by the client because we control the product prior to transfer to the client. We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if the product is returned by the client, we set the price of the product charged to the client, we assume credit risk for nonpayment by our customer, and we work closely with clients to determine their hardware specifications. Services - We provide Services which include consulting, staging, deployment, installation, repair and customer specified software customization. The arrangement with a customer is based on either a time and material basis or a fixed fee. For our time and materials service contracts, we recognize revenues as those services are provided and consumed, as this is the best output measure of how the services are transferred to the customer. Fixed fee contracts are recognized in the period in which the services are performed or delivered using a proportional service model. Except for installation services that are recognized over the subscription period as previously described, all other Services are recognized on a gross basis in the period in which the services are performed or delivered. Maintenance services - We sell certain Original Equipment Manufacturer (“OEM”) hardware and software maintenance support arrangements to our clients. We also offer an internal maintenance agreement related to hardware. These contracts are support service agreements for the hardware and/or software products that were acquired from us and others. Although these are third-party support agreements for maintenance on the specific hardware and/or software products, our internal help desk and systems engineers assist customers by providing technical assistance on the source of or how to fix the problem. In addition, we provide a turn back feature, deploying replacements as needed while we manage the return and reverse logistics of the product back to the OEM. Revenue related to service contracts is recognized ratably over the term of the agreement, generally over one to three years. We generally act as the principal in the transaction as the primary obligor for fulfillment in the arrangement, we set the price of the service charged to the customer, and we assume credit risk for the amounts invoiced. In addition, we manage back-end warranties, service contracts and repairs for multiple products and suppliers. We leverage our knowledge base of mobility best practices by consolidating multiple supplier’s maintenance requirements under a single point in contact through us. Our internal support team assists our customers first by performing an initial technical triage to determine the source of the problem including, but not limited to, physical damage and software issues and whether they can be handled remotely by the client or returned for repair. Further, we receive the returned products, confirm that the equipment is operational or not, either repair or refurbish the equipment internally or return it to the manufacturer directly to repair. We then obtain the product turn back from the manufacturer and either send it back out to a specific customer location or place in a customer’s spare pool. As a result, we recognize the revenue on a gross basis. For certain of our agreements, the accompanying third-party delivered software assurance is recognized on a net basis when we are acting as an agent in these transactions. We defer costs to acquire contracts, including commissions, incentives and payroll taxes if they are incremental and recoverable costs of obtaining a customer contract with a term exceeding one year. Deferred contract costs are amortized to sales and marketing expense over the contract term, generally over one to three years. We have elected to recognize the incremental costs of obtaining a contract with a term of less than one year as a selling expense when incurred. We include deferred contract acquisition costs in “Prepaid expenses and other current assets” in the consolidated balance sheets. As of December 31, 2021 and December 31, 2020, we deferred $127,000 and $136,000, respectively, of related contract acquisition costs. The following table summarizes net sales by revenue source (in thousands): Year Ended 2021 2020 Hardware and software $ 44,355 $ 47,416 Consumables 6,125 3,257 Services 15,463 12,687 $ 65,943 $ 63,360 Concentration of Risk Financial instruments that potentially subject us to a concentration of credit risk consist primarily of cash and accounts receivable. All our cash balances are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor at each financial institution. As of December 31, 2021, we had approximately $2,087,000 on deposit in excess of the insurance limits. We have not experienced any such losses in these accounts. In 2021, Kaiser Permanente accounted for approximately 14%, or $9.0 million, of our net sales. No other single customer in 2021 accounted for more than 10% of net sales. Accounts receivable from Kaiser Permanente at December 31, 2021 accounted for 11% of total accounts receivable. For the year ended December 31, 2021, we had purchases from two suppliers that collectively represented 61% of total purchases and 76% of accounts payable at December 31, 2021. Loss of a significant vendor could have a material adverse effect on our operations. In 2020, Kaiser Permanente and Nordstrom accounted for approximately 20%, or $12.9 million, and 31%, or $19.6 million, of our net sales, respectively. No other single customer in 2020 accounted for more than 10% of net sales. Accounts receivable from these customers at December 31, 2020 accounted for 48% of total accounts receivable. For the year ended December 31, 2020, we had purchases from two suppliers that collectively represented 65% of total purchases and 82% of accounts payable at December 31, 2020. Loss of a significant vendor could have a material adverse effect on our operations. Share-Based Compensation We account for share-based compensation in accordance with the provisions of ASC Topic 718 “Compensation – Stock Compensation”. Under ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Share-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Given that share-based compensation expense recognized in the accompanying consolidated statements of income and comprehensive income is based on awards ultimately expected to vest. We account for forfeitures as they occur, rather than estimate expected forfeitures. Compensation cost for stock awards, which from time to time includes restricted stock units, is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service period. The fair value of stock awards is based on the estimated fair value of our common stock on the grant date. The estimated fair value of common stock option awards is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions regarding future stock price volatility and expected time to exercise, along with assumptions about the risk-free interest rate and expected dividends, all of which affect the estimated fair values of our common stock option awards. Given a lack of historical stock option exercises, the expected term of options granted is calculated as the average of the weighted vesting period and the contractual expiration date of the option. This calculation is based on a method permitted by the Securities and Exchange Commission in instances where the vesting and exercise terms of options granted meet certain conditions and where limited historical exercise data is available. The expected volatility is based on the historical volatility of the common stock of comparable public companies that operate in similar industries as us. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on our history and management’s expectation regarding dividend payouts. Compensation expense for common stock option awards with graded vesting schedules is recognized on a straight-line basis over the requisite service period for the last separately vesting portion of the award, provided that the accumulated cost recognized as of any date at least equals the value of the vested portion of the award. If there are any modifications or cancellations of the underlying vested or unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense, or record additional expense for vested stock-based awards. Future share-based compensation expense and unearned share- based compensation may increase to the extent that we grant additional common stock options or other share-based awards. Income Taxes We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Under ASC Topic 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC Topic 740 provides requirements for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. At December 31, 2021 and 2020, we had no unrecognized tax benefits that, if recognized, would affect our effective income tax rate over the next 12 months. As of December 31, 2021 and 2020, we had no accrued interest or penalties. Accounting Standards Adopted On January 1, 2021, we adopted ASU 2020-10, “Codification Improvements”. This ASU amended a variety of Topics, including presentation and disclosures of financial statements, interim reporting, accounting changes and error corrections. The adoption of this guidance did not have an impact on our consolidated financial statements. On January 1, 2021, we adopted ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,”. ASU 2019-12 removed certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. The adoption of this guidance did not have an impact on our consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and financial reporting and accounting exceptions for contracts, hedging accounting and other transactions that reference London Interbank Offered Rate (“LIBOR”) and are expected to be discontinued because of reference rate reform and will not apply to contracts entered into after December 31, 2022. In January 2021, the FASB issued ASU 2021-01, which refines the scope of Topic 848 and clarifies some of its guidance as part of the FASB’s monitoring of global reference rate activities. The new guidance was effective upon issuance, and we can elect to apply the amendments prospectively through December 31, 2022. The adoption of this guidance did not have an impact on our consolidated financial statements. Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates There are no other accounting standards that have been issued but not yet adopted that we believe could have a material impact on our consolidated financial statements. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2021 | |
Acquisitions [Abstract] | |
Acquisitions | Note 3: Acquisitions ExtenData Solutions, LLC On December 4, 2020, we entered into a Membership Unit Purchase Agreement and concurrently closed upon the acquisition of all of the issued and outstanding membership interests of ExtenData for $5,169,787. The consideration we paid was comprised of cash of $4,419,787 of which $169,787 and $4,250,000 was paid in March 2021 and December 2020, respectively, and an initial estimated earn-out obligation valued at $750,000, subject to the financial performance of ExtenData during each of the two years following the closing of the acquisition. Based on the 12-month financial performance following the acquisition, the original estimated earnout obligation was reduced to $187,500 from $375,000. As a result, we recorded a credit of $187,500 in “General and administrative expenses” in the Consolidated Statements of Income and Comprehensive Income during the year ended December 31, 2021. The earn-out obligation is recorded in “Accrued expenses and other current liabilities” and “Other liabilities” in the consolidated balance sheets as of December 31, 2021 and December 31, 2020. Royce Digital Systems In connection with the acquisition of RDS in June 2018, we estimated an earnout obligation of $500,000 for the second 12-month period post acquisition. Since the closing of the acquisition, certain disputes have arisen regarding third-party claims seeking damages potentially to be incurred by us. On September 16, 2020, in settlement of the dispute, the Company and the seller agreed to the original earnout obligation of $500,000 and that only $298,000 of the earnout shall be paid by the Company in settlement of the disputes. As a result, we recorded $202,000 in Other Income in the Consolidated Statements of Income and Comprehensive Income during the year ended December 31, 2020. AMG On January 31, 2022, we entered into a Membership Interest Purchase Agreement (“Purchase Agreement”) and concurrently therewith closed upon the acquisition of all of the issued and outstanding membership interests of Advanced Mobile Group, LLC (“AMG”). As a result of the acquisition, AMG became a wholly owned subsidiary of the Company. The purchase price for the acquisition was $4,094,700, subject to certain adjustments such as for net working capital. In addition, subject to the financial performance of AMG in 2022 and 2023, we may pay the sellers a total of up to an additional $454,967 in “true up” payments, with the first potential “true up” payment subject to acceleration in certain circumstances. The Purchase Agreement imposes various additional obligations on the parties, including restrictive covenants that are applicable to the sellers. We have not yet completed our analysis of the estimated fair value of the acquisition purchase price (including earn-outs) and the estimated fair value of the assets acquired and liabilities assumed in the acquisition. We expect that significant goodwill and definite-lived intangible assets will be recognized upon completion of the required purchase price allocation analysis. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 4: Intangible Assets Definitive lived intangible assets are as follows (in thousands): December 31, 2021 December 31, 2020 Gross Accumulated Net Gross Accumulated Net Customer lists and relationships $ 5,690 $ (2,453 ) $ 3,237 $ 5,690 $ (1,663 ) $ 4,027 Trade names 1,000 (699 ) 301 1,000 (434 ) 566 Developed technology 70 (44 ) 26 70 (3 ) 67 Backlog 60 (60 ) - 60 (57 ) 3 $ 6,820 $ (3,256 ) $ 3,564 $ 6,820 $ (2,157 ) $ 4,663 The range of useful lives and the weighted-average remaining useful life of amortizable intangible assets at December 31, 2021 is as follows: Expected Life Weighted Average Customer lists and relationships 7-15 years 11 years Trade names 3 years 2 years Developed technology 3 years 2 years The amortization expense of the definite lived intangible assets for the years remaining is as follows: Estimated (in thousands) Year ending December 31, 2022 $ 1,089 2023 895 2024 531 2025 359 2026 240 Thereafter 450 Total $ 3,564 Amortization expense recognized during the years ended December 31, 2021 and 2020 was $1.1 million and $0.8 million, respectively. Amortization expense is calculated on an accelerated basis. |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Note 5: Net Income Per Share Basic net income per common share is computed by dividing the net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted net income per share is calculated similarly to basic per share amounts, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For periods presented in which there is a net loss, potentially dilutive securities are excluded from the computation of fully diluted net loss per share as their effect is anti-dilutive. Below is a reconciliation of the fully dilutive securities effect for the years ended December 31, 2021 and 2020 (in thousands, except per share data): 2021 2020 Net income attributable to common stockholders $ 1,414 $ 2,861 Weighted average basic shares outstanding 6,947 6,788 Dilutive effect of stock options and restricted stock 646 1,023 Weighted average shares for diluted earnings per share 7,593 7,811 Basic income per share $ 0.20 $ 0.42 Diluted income per share $ 0.19 $ 0.37 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 6: Property and Equipment Property and equipment consist of the following at December 31 (in thousands): 2021 2020 Software and computer equipment $ 1,223 $ 967 Furniture and fixtures 204 112 Leasehold improvements 109 105 Equipment 25 23 Property and equipment, gross 1,561 1,207 Accumulated depreciation (727 ) (456 ) Property and equipment, net $ 834 $ 751 Depreciation and amortization expense related to property and equipment during the years ended December 31, 2021 and 2020 was $0.3 million and $0.1 million, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | Note 7: Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following at December 31 (in thousands): 2021 2020 Salaries and benefits $ 2,182 $ 1,687 Accrued earn out obligation related to acquisition 188 - Sales tax payable 366 519 Professional fees 305 294 Vendor purchases 66 72 Customer deposits 90 54 Other 23 181 Total accrued expenses and other current liabilities $ 3,220 $ 2,807 |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2021 | |
Lineof Credit [Abstract] | |
Line of Credit | Note 8: Line of Credit PWBF Line of Credit The amended and restated credit agreement with Pacific Western Business Finance (“PWBF”) provided a line of credit of $10 million with a maturity date of September 2023. Outstanding amounts incurred interest at the prime rate plus 1.25% with a floor of 4.75% and was secured by substantially all of our assets. The availability under the line of credit was determined from a borrowing base calculation on our existing accounts receivable balance. As of December 31, 2020, we had $1.2 million outstanding under the line of credit. Effective July 30, 2021, the amended and restated credit agreement between us and PWBF was terminated and we entered into a new credit facility with MUFG Union Bank, National Association as described below. No pre-payment penalty was paid in connection with the termination of the credit agreement with PWBF. MUFG Union Bank Line of Credit On July 30, 2021, we entered into a Loan and Security Agreement (the “Loan Agreement”) with MUFG Union Bank, National Association (the “Bank”). The Loan Agreement provides for a revolving line of credit of up to $9.0 million with our obligations being secured by a security interest in substantially all of our assets. Loans extended to us under the Loan Agreement are scheduled to mature on July 31, 2024. Interest and Fees Loans under the Loan Agreement with an outstanding balance of at least $150,000 bear interest, at our option, at a base interest rate equal to the London Interbank Offered Rate (“LIBOR”) plus 2.50% or a base rate equal to an index offered by the Bank for the interest period selected and is payable at the on the last day of each month commencing on August 31, 2021 (4.75% at December 31, 2021). If the LIBOR rate is selected, the interest rate on the loans adjusts at the end of each LIBOR rate period (1, 2, 3, 6, or 12 month term) selected by us. All other loan amounts bear interest at a rate equal to an index rate determined by the Bank, which shall vary when the index rate changes. We have the right to prepay variable interest rate loans, in whole or in part at any time, without penalty or premium. Amounts outstanding with a base interest rate may be prepaid in whole or in part provided we have given the Bank written notice of at least five days prior to prepayment and pay a prepayment fee. At any time prior to the maturity date, we may borrow, repay and reborrow amounts under the Loan Agreement, subject to the prepayment terms, and as long as the total outstanding does not exceed $9.0 million. The Loan Agreement requires a commitment fee of 0.25% per year, payable quarterly and in arrears, on any unused portion of the line of credit. Covenants Under the Loan Agreement, we are subject to a variety of customary affirmative and negative covenants, including that we (i) achieve a net profit of not less than $1.0 million at the end of each fiscal year, (ii) maintain a ratio of total debt to EBITDA of not greater than 3.0:1.0 measured at the end of each quarter, and (iii) not realize a net loss for more than two consecutive quarters. The Loan Agreement also prohibits us from, or otherwise imposes restrictions on us with respect to, among other things, liquidating, dissolving, entering into any consolidation, merger, division, partnership, or other combination, selling or leasing a majority of our assets or business or purchase or lease all or the greater part of the assets or business of another entity or person. As of December 31 2021, we were in compliance with all of our covenants, were eligible to borrow up to $9.0 million, and had no outstanding borrowings under the line of credit. |
Term Debt
Term Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Term Debt | Note 9: Term Debt The following table sets forth our outstanding term debt as of December 31 (in thousands): Maturity Date December 31, December 31, EIDL promissory note August 27, 2051 $ 149 $ 150 PWBF PPP loan May 4, 2022 — 471 PWBF PPP loan April 20, 2022 — 740 Total term debt $ 149 $ 1,361 PWBF PPP Loans On April 20, 2020 and May 4, 2020, we received $740,000 and $471,000, respectively, in proceeds from loans from PWBF, which were granted pursuant to the Paycheck Protection Program of the Coronavirus Aid Relief and Economic Security Act (collectively, the “PPP Loans”). Principal payments were to be due and payable in 18 consecutive payments beginning on November 1, 2020 in the amount of $41,437 for the PPP Loan received on April 20, 2020 and $26,374 beginning on December 1, 2020 for the PPP Loan received on May 4, 2020. The CARES Act provides for forgiveness of up to the full amount borrowed, subject to certain conditions, and based on the use of proceeds for qualifying expenses including payroll, benefits, rent and utilities. We used the entire PPP Loan proceeds for qualifying expenses. In December 2020, we applied for loan forgiveness, including principal and accrued interest as permitted by the CARES Act. Principal and interest payments due under the PPP Loans were deferred until the review and approval of any forgiveness is made by the Small Business Administration (“SBA”). We accounted for the PPP Loans under the ASC 740 debt model. In February and March 2021, we received SBA notices of forgiveness of the PPP Loans in whole, including all accrued interest to date. As a result, we recorded a gain on extinguishment of debt of $1.2 million in the first quarter of 2021. EIDL Promissory Note On August 27, 2020, we received $150,000 in connection with a promissory note from the SBA under the Economic Injury Disaster Loan (“EIDL”) program pursuant to the CARES Act. Under the terms of the EIDL promissory note, interest accrues on the outstanding principal at an interest rate of 3.75% per annum and with a term of 30 years with equal monthly payments of principal and interest of $731 beginning on August 27, 2021. The following table sets forth future principal payments for outstanding debt (in thousands): 2022 $ 3 2023 3 2024 3 2025 3 2026 3 Thereafter 131 Total minimum payments $ 146 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10: Income Taxes The provision for income taxes for the years ended December 31, 2021 and 2020 is as follows (in thousands): 2021 2020 Current: Federal $ 7 $ (13 ) State 135 387 142 374 Deferred: Federal 70 1,173 State (96 ) 102 (26 ) 1,275 Valuation allowance - (588 ) Total income tax expense $ 116 $ 1,061 Our deferred tax assets and liabilities are as follows (in thousands): 2021 2020 Allowance for doubtful accounts $ 5 $ 23 Inventory reserve and uniform capitalization 38 18 Accrued expenses and other liabilities 40 36 Deferred revenue 72 (140 ) Other assets 338 198 Property and equipment (158 ) (128 ) Intangibles 201 121 Goodwill (114 ) (50 ) Net operating loss carryforwards 1,577 1,895 Total deferred tax assets 1,999 1,973 Valuation allowance — — Net deferred tax assets after valuation allowance $ 1,999 $ 1,973 A reconciliation of the United States statutory income tax rate to the effective income tax rate for the years ended December 31, 2021 and 2020 is as follows (in thousands): 2021 2020 Federal taxes at statutory rate $ 321 $ 824 State and local income taxes 26 482 Permanent differences (231 ) 343 Valuation allowance — (588 ) Provision for income taxes $ 116 $ 1,061 Effective tax rate 7.6 % 27.1 % Our deferred income 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 basis. 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. F-21 We have net operating loss carryforwards available in certain jurisdictions to reduce future taxable income. Future tax benefits for net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. This determination is based on the expectation that related operations will be sufficiently profitable or various tax business and other planning strategies will enable us to utilize the net operating loss carryforwards. Our evaluation of the realizability of deferred tax assets considers both positive and negative evidence. The weight given to potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. As of December 31, 2021, we did not record a valuation allowance related to the U.S. federal and state temporary items. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code under section 382. The annual limitation may result in the expiration of net operating loss carryforwards before utilization. As of December 31, 2021, we had federal and state net operating loss carryforwards of approximately $5.9 million and $6.3 million, respectively. As of December 31, 2020, we had federal and state net operating loss carryforwards of approximately $7.4 million and $6.3 million, respectively. These loss carryforwards will expire in varying amounts beginning 2025 through 2037. We continue to remain subject to examination by U.S. federal authority for the years 2018 through 2021 and for various state authorities for the years 2017 through 2021, with few exceptions. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act permits net operating loss carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows net operating losses incurred in 2018, 2019, 2020 and 2021 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The CARES Act has also made significant changes to depreciation rules and interest deduction limitation rules, among other provision. We have evaluated the provisions of the CARES Act and we do not expect that the net operating loss carryback provision or any other tax related provisions of the CARES Act would result in a material benefit to us. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders’ Equity | Note 11: Stockholders’ Equity We are authorized to issue two classes of stock designated as common stock and preferred stock. As of December 31, 2021, we are authorized to issue 60,000,000 total shares of stock. Of this amount, 50,000,000 shares are common stock, each having a par value of $0.001 and 10,000,000 shares are preferred stock, each having a par value of $0.001. Reverse Stock Split On December 13, 2021, DecisionPoint filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of Delaware to effect a 1-for-2 reverse stock split of the outstanding shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) that were outstanding at the time the Certificate of Amendment was filed (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every two shares of issued and outstanding Common Stock were automatically combined into one issued and outstanding share of Common Stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number. The Reverse Stock Split reduced the number of shares of Common Stock outstanding however, the number of authorized shares of Common Stock under the Certificate of Incorporation remained unchanged at 50 million shares. Proportionate adjustments were made to the per share exercise price and the number of shares of Common Stock that may be purchased upon exercise of outstanding stock options granted by the Company, and the number of shares of Common Stock reserved for future issuance under the Company’s 2014 Equity Incentive Plan. Preferred Stock At December 31, 2021 and 2020, there were no shares of preferred stock outstanding. Common Stock At December 31, 2021 and 2020, there were 7,007,454 and 6,788,466 shares of common stock outstanding, respectively. Warrants The following table summarizes information about our outstanding common stock warrants as of December 31, 2021: Date Strike Total Total Weighted Issued Expiration Price Exercisable (in thousands) Price Warrants - Common Stock Jun-18 Jun-23 $ 1.00 316,800 $ 317 Warrants - Common Stock Oct-18 Oct-23 1.40 26,250 37 343,050 $ 354 $ 1.04 In February 2021, the common stock warrants issued by the Company in September 2016 were fully exercised by all of the holders on a cashless basis. As a result of the cashless exercise, 151,504 shares of common stock were issued. There were no warrants issued, exercised, forfeited, or expired in 2020. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Note 12: Share-Based Compensation Under our amended 2014 Equity Incentive Plan (the “2014 Plan”), 1,100,000 shares of our common stock are reserved for issuance under the 2014 Plan (as adjusted for the Reverse Stock Split). Under the 2014 Plan, common stock incentives may be granted to our officers, employees, directors, consultants, and advisors (and prospective directors, officers, managers, employees, consultants and advisors) and our affiliates can acquire and maintain an equity interest in us, or be paid incentive compensation, which may (but need not) be measured by reference to the value of the our common stock. The 2014 Plan permits us to provide equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock and other stock bonus awards and performance compensation awards. The 2014 Plan is administered by the Board of Directors, or a committee appointed by the Board of Directors, which determines recipients and the number of shares subject to the awards, the exercise price and the vesting schedule. The term of stock options granted under the 2014 Plan cannot exceed ten years. Options shall not have an exercise price less than 100% of the fair market value of our common stock on the grant date, and generally vest over a period of three years. If the individual possesses more than 10% of the combined voting power of all classes of our stock, the exercise price shall not be less than 110% of the fair market of a share of common stock on the date of grant. The following table summarizes stock option activity for the year ended December 31, 2021: Stock Grant Date Weighted Aggregate (in years) ($ in thousands) Outstanding at December 31, 2020 447,732 1.96 Granted 750,250 3.50 Exercised (152,691 ) 1.87 Forfeited (42,541 ) 2.94 Outstanding at December 31, 2021 1,002,750 $ 3.00 3.7 $ 8,362 Exercisable at December 31, 2021 867,372 $ 2.98 3.7 $ 7,246 Share-based compensation cost is measured at the grant date based on the fair value of the award. The fair values of stock options granted were estimated using the Black-Scholes option-pricing model with the following assumptions: 2021 2020 Weighted average grant-date fair value per option granted $ 1.58 $ 1.58 Expected option term 3.0 years 3.3 years Expected volatility factor 66.0 % 90.5 % Risk-free interest rate 0.49 % 1.5 % Expected annual dividend yield — % — % We estimate expected volatility using historical volatility of common stock of our peer group over a period equal to the expected life of the options. The expected term of the awards represents the period of time that the awards are expected to be outstanding. We considered expectations for the future to estimate employee exercise and post-vest termination behavior. We do not intend to pay common stock dividends in the foreseeable future, and therefore have assumed a dividend yield of zero. The risk-free interest rate is the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term of the awards. During the year ended December 31, 2021, certain employees and directors exercised vested stock options through a cashless exercise. The options exercised were net settled in satisfaction of the exercise price. The exercised options, utilizing a cashless exercise, are summarized in the following table: Options Weighted Shares Shares Net Shares Weighted Employee 151,441 $ 1.88 77,954 7,225 66,232 $ 3.67 $ 24,662 As of December 31, 2021, there was $182,441 of total unrecognized share-based compensation related to unvested stock options. These costs have a weighted average remaining recognition period of 1.8 years. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13: Commitments and Contingencies Operating Leases As of December 31, 2021, we have two operating leases for office and warehouse space and no financing leases. We have an operating lease for office and warehouse space in Irvine, California with fixed minimum monthly payments of $13,945, an original lease expiration of June 2023 and an incremental borrowing rate of 4.75%. This lease represents $0.3 million of the estimated future payments under operating leases shown in the table below. In February 2022, an agreement was reached with the lessor which allowed for an early termination of the operating lease expiring on February 28, 2022. The monthly payments remained unchanged through February 2022, and we did not incur an early termination liability in result of the lease modification. In connection with the closure of the office and warehouse space in Irvine, California, we entered into a new lease agreement commencing in February 2022 to relocate our office and warehouse space in Laguna Hills, California. Pursuant to the lease agreement, the base rent of $39,778 per month is due on June 1, 2022 and will increase 3% annually. The lease expires on April 30, 2029. In connection with the new lease agreement, we entered into a sublease agreement for the Laguna Hills office and warehouse location, and we will receive $24,254 per month commencing in February 2022 with a sublease expiration of October 31, 2023. We have an operating lease for office space in Centennial, Colorado with fixed minimum monthly payments of $9,984, a lease expiration of October 2022 and an incremental borrowing rate of 4.75%. This lease represents $0.1 million of the estimated future payments under operating leases shown in the table below. The maturity of operating lease liabilities as of December 31, 2021 are as follows (in thousands): 2022 267 2023 84 Total minimum lease payments 351 Less: Interest (11 ) Present value of operating lease liabilities $ 340 During the year ended December 31, 2021, cash paid for amounts included in the measurement of operating lease liabilities was $0.3 million. Employee Benefit Plan We have a 401(k)-retirement plan. Under the terms of the plan, eligible employees may defer up to 25% of their pre-tax earnings, subject to the Internal Revenue Service annual contribution limit. Additionally, the plan allows for discretionary matching contributions by us. In 2021 and 2020, the matching contributions were 100% of the employee’s contribution up to a maximum of 4% of the employee’s eligible compensation. During the years ended December 31, 2021 and 2020, we contributed $201,000 and $152,000, respectively, to the 401(k) plan. Contingencies From time to time, we are subject to litigation incidental to the conduct of our business. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in our opinion, individually or in the aggregate, no such lawsuits are expected to have a material effect on our consolidated financial position or results of operations. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements of DecisionPoint Systems, Inc. and its subsidiaries have been prepared on an accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of DecisionPoint Systems, Inc. and its wholly owned subsidiaries, DecisionPoint Systems International (“DPSI”), DecisionPoint Systems Group, Inc. (“DPS Group”), RDS and ExtenData. All our identifiable assets are in the United States and all intercompany transactions have been eliminated in consolidation. |
Reverse Stock Split | Reverse Stock Split In December 2021, we effectuated a reverse stock split of our outstanding shares of common stock at a ratio of 1-for-2. See Note 11, Stockholders’ Equity |
COVID-19 | COVID-19 COVID-19 and the response to the virus have negatively impacted overall economic conditions. The potential future impacts of COVID-19, while uncertain, could materially adversely impact the Company’s results of operations. |
Operating Segments | Operating Segments Under the Financial Accounting Standards Board Accounting Standards Codification 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles, if the segments have similar characteristics, and if the segments are similar in each of the following areas: (i) the nature of products and services, (ii) the nature of the production processes, (iii) the type or class of customer for their products and services, and (iv) the methods used to distribute their products or provide their services. We believe each of the Company’s segments meet these criteria as they provide similar products and services to similar customers using similar methods of production and distribution. Because we believe each of the criteria set forth above has been met and each of the Company’s segments has similar characteristics, we aggregate results of operations in one reportable operating segment. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at net realizable value, and as such, earnings are charged with a provision for doubtful accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine an allowance based on historical write-off experience and specific account information available. Accounts receivable are reflected in the accompanying consolidated balance sheets net of a valuation allowance of $20,000 and $92,000 as of December 31, 2021 and 2020, respectively. When internal collection efforts on accounts have been exhausted, the accounts are written off by reducing the allowance for doubtful accounts and the related customer receivable. |
Inventory | Inventory Inventory consists solely of finished goods and is stated at the lower of cost or net realizable value. Cost is determined under the first-in, first-out (FIFO) method. We periodically review our inventory and make provisions as necessary for estimated obsolete and slow-moving goods. The creation of such provisions results in a reduction of inventory to net realizable value and a charge to cost of sales. Inventories are reflected in the accompanying consolidated balance sheets net of a valuation allowance of $59,000 and $41,000 as of December 31, 2021 and 2020, respectively. |
Deferred Costs | Deferred Costs Deferred costs consist primarily of customer-related third-party extended hardware and software maintenance services which we have paid for in advance. The costs are ratably amortized over the life of the contract, generally one to five years. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally from three to five years. Leasehold improvements are recorded at cost and amortized over the shorter of the lease term or the life of the improvements. Cost incurred for repairs and maintenance are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization of disposed assets are removed from the accounts and any resulting gain or loss is included in other income or expense. |
Operating Leases | Operating Leases We recognize a right-of-use asset and lease liability for all of our long-term leases at the commencement date. Lease liabilities are measured based on the present value of the minimum lease payments discounted at our incremental borrowing rate as of the date of commencement, which is determined based on information available at lease commencement and is equal to the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. Right-of-use assets are measured based on the lease liability adjusted for any initial direct costs, prepaid rent, or lease incentives. Operating lease costs are included within general and administrative expenses on the consolidated statements of income and comprehensive income. |
Capitalized Software Development Costs | Capitalized Software Development Costs The capitalization of software development costs for external use begins when technological feasibility has been established and ends when the software is available for sale. Software development costs are amortized on a straight-line line basis over the remaining economic life, generally three years. Amortization of the capitalized software is classified within cost of sales for services in the consolidated statements of income and comprehensive income. |
Intangible Assets and Long-lived Assets | Intangible Assets and Long-lived Assets We evaluate our intangible and long-lived assets for impairment when events or circumstances arise that indicate intangible and long-lived assets may be impaired. Indicators of impairment include, but are not limited to, a significant deterioration in overall economic conditions, a decline in the market capitalization, the loss of significant business, or other significant adverse changes in industry or market conditions. We completed the qualitative assessment for impairment and determined that there was no impairment during the years ended December 31, 2021 and 2020. There can be no assurance, however, that market conditions will not change or demand for our products will continue, which could result in an impairment of intangible and long-lived assets in the future. Intangible assets with finite useful lives are amortized over their respective estimated useful lives using an accelerated method to their estimated residual values, if any. Our intangible assets consist of customer lists, customer relationships and trade names. Refer to Note 4 for further information on our intangible assets. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired. Goodwill is not amortized but tested for impairment at least annually or whenever events or changes in circumstance indicate that carrying values may not be recoverable. We assess the impairment of goodwill annually at each year-end and when indicators of impairment are present. We completed our annual assessment for goodwill impairment and determined that goodwill was not impaired as of December 31, 2021 and 2020. Factors that we consider important that could trigger an impairment assessment include, but not limited to, the following: ● significant under-performance relative to historical and projected operating results; ● significant changes in the manner of use of the acquired assets or business strategy; and ● significant negative industry or general economic trends. When performing the impairment review, we determine the carrying amount of a reporting unit by assigning assets and liabilities, including the existing goodwill, to each reporting unit. To evaluate whether goodwill is impaired, we compare the estimated fair value of each reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount. If the carrying amount of a reporting unit exceeds its fair value, the amount of the impairment loss will be recognized as the difference of the estimated fair value and the carrying value of the reporting unit. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include determining enterprise fair value and the allocation of enterprise fair value to the Company’s operating segments, revenue and expense growth rates, capital expenditures and the depreciation and amortization related to capital expenditures, changes in working capital, discount rates, risk-adjusted discount rates, future economic and market conditions and the determination of appropriate comparable companies. Due to the inherent uncertainty involved in making these estimates, actual future results related to assumed variables could differ from these estimates. |
Fair Value Measurement | Fair Value Measurement Fair value is the price that would be received from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides a hierarchy for inputs used in measuring fair value that prioritize the use of observable inputs over the use of unobservable inputs when such observable inputs are available. The three levels of inputs that may be used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets or liabilities. ● Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data. ● Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by us. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses, and line of credit approximate fair value due to the short-term nature of these financial instruments. The carrying amount of our debt approximates its fair value as the credit markets have not materially changed since the original borrowing dates. |
Business Combinations | Business Combinations We utilize the acquisition method of accounting for business combinations which allocates the purchase price of an acquisition to the various tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. We primarily establish fair value using the income approach based upon a discounted cash flow model. The income approach requires the use of many assumptions and estimates including future revenues and expenses, as well as discount factors and income tax rates. Other estimates include: ● Estimated step-ups or write-downs for fixed assets and inventory; ● Estimated fair values of intangible assets; and ● Estimated liabilities assumed from the target. While we use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business acquisition date, these estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally no more than one year from the business acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. |
Revenue Recognition | Revenue Recognition We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied. We combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost-plus margin approach. We estimate the amount of total contract consideration we expect to receive for variable arrangements by determining the most likely amount we expect to earn from the arrangement based on the expected quantities of services we expect to provide, and the contractual pricing based on those quantities. We only include some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is subsequently resolved. We consider the sensitivity of the estimate, our relationship and experience with our client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue. We recognize contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to our clients. Unbilled receivables are recorded when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients, or receive customer cash payments, in advance of performing the related services under the terms of a contract. Remaining performance obligations represent the transaction price allocated to the performance obligations that are unsatisfied as of the end of each reporting period. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation. As of December 31, 2021, the total aggregate transaction price allocated to the unsatisfied performance obligations was approximately $7.1 million, of which approximately $4.6 million is expected to be recognized over the next 12 months. As of December 31, 2020, the total aggregate transaction price allocated to the unsatisfied performance obligations was approximately $7.8 million. Hardware, consumables, and software products - We recognize product revenue at the point in time when a client takes control of the hardware, consumables and/or software, which typically occurs when title and risk of loss have passed to the client. Our selling terms and conditions reflect that F.O.B ‘dock’ contractual terms establish that control is transferred from us at the point in time when the product is shipped to the customer. Revenues from software license sales are recognized as a single performance obligation on a gross basis as we are acting as a principal in these transactions at the point the software license is delivered to the customer. Generally, software licenses are sold with accompanying third-party delivered software assurance, which allows customers to upgrade, at no additional cost, to the latest technology if new capabilities are introduced during the period that the software assurance is in effect. In most instances, we determined that the accompanying third-party delivered software assurance is critical or essential to the core functionality of the software license because we do not sell the software license and standard warranty on a standalone basis (which indicates that the customer cannot benefit from the software license and standard warranty on its own), the software license and the standard warranty are not separately identifiable, the software license assurance warranty are inputs of a combined item in the contract, the assurance warranty and software license are highly interdependent and interrelated because the core functionality of the license is dependent on the assurance warranty, and our promise to provide the assurance warranty that is necessary for the software license to continue to provide significant benefit to the customer. As a result, the software license and the accompanying third-party delivered software assurance are recognized as a single performance obligation. We consider several factors to determine whether we are acting as a principal or an agent, including whether we are the primary obligor to the customer, have established our own pricing and have inventory and credit risks. Our internally developed software solution generates SaaS revenues from implementation, training and subscription fees. The initial term of the SaaS agreements is generally one year. The subscription fees are recognized over the subscription period. The implementation fees are necessary and integral for the customer to utilize the software. As such, the implementation fees are deferred and amortized over the subscription period. We also offer third-party SaaS subscriptions to our customers. The third-party subscriptions are recognized on a net basis as we are acting as an agent in these transactions, whereas our internally developed software solution offering is recognized on a gross basis. We leverage drop-ship shipments with many of our partners and suppliers to deliver hardware and consumable products to our clients without having to physically hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-ship arrangements on a gross basis as the principal in the transaction when the product is received by the client because we control the product prior to transfer to the client. We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if the product is returned by the client, we set the price of the product charged to the client, we assume credit risk for nonpayment by our customer, and we work closely with clients to determine their hardware specifications. Services - We provide Services which include consulting, staging, deployment, installation, repair and customer specified software customization. The arrangement with a customer is based on either a time and material basis or a fixed fee. For our time and materials service contracts, we recognize revenues as those services are provided and consumed, as this is the best output measure of how the services are transferred to the customer. Fixed fee contracts are recognized in the period in which the services are performed or delivered using a proportional service model. Except for installation services that are recognized over the subscription period as previously described, all other Services are recognized on a gross basis in the period in which the services are performed or delivered. Maintenance services - We sell certain Original Equipment Manufacturer (“OEM”) hardware and software maintenance support arrangements to our clients. We also offer an internal maintenance agreement related to hardware. These contracts are support service agreements for the hardware and/or software products that were acquired from us and others. Although these are third-party support agreements for maintenance on the specific hardware and/or software products, our internal help desk and systems engineers assist customers by providing technical assistance on the source of or how to fix the problem. In addition, we provide a turn back feature, deploying replacements as needed while we manage the return and reverse logistics of the product back to the OEM. Revenue related to service contracts is recognized ratably over the term of the agreement, generally over one to three years. We generally act as the principal in the transaction as the primary obligor for fulfillment in the arrangement, we set the price of the service charged to the customer, and we assume credit risk for the amounts invoiced. In addition, we manage back-end warranties, service contracts and repairs for multiple products and suppliers. We leverage our knowledge base of mobility best practices by consolidating multiple supplier’s maintenance requirements under a single point in contact through us. Our internal support team assists our customers first by performing an initial technical triage to determine the source of the problem including, but not limited to, physical damage and software issues and whether they can be handled remotely by the client or returned for repair. Further, we receive the returned products, confirm that the equipment is operational or not, either repair or refurbish the equipment internally or return it to the manufacturer directly to repair. We then obtain the product turn back from the manufacturer and either send it back out to a specific customer location or place in a customer’s spare pool. As a result, we recognize the revenue on a gross basis. For certain of our agreements, the accompanying third-party delivered software assurance is recognized on a net basis when we are acting as an agent in these transactions. We defer costs to acquire contracts, including commissions, incentives and payroll taxes if they are incremental and recoverable costs of obtaining a customer contract with a term exceeding one year. Deferred contract costs are amortized to sales and marketing expense over the contract term, generally over one to three years. We have elected to recognize the incremental costs of obtaining a contract with a term of less than one year as a selling expense when incurred. We include deferred contract acquisition costs in “Prepaid expenses and other current assets” in the consolidated balance sheets. As of December 31, 2021 and December 31, 2020, we deferred $127,000 and $136,000, respectively, of related contract acquisition costs. The following table summarizes net sales by revenue source (in thousands): Year Ended 2021 2020 Hardware and software $ 44,355 $ 47,416 Consumables 6,125 3,257 Services 15,463 12,687 $ 65,943 $ 63,360 |
Concentration of Risk | Concentration of Risk Financial instruments that potentially subject us to a concentration of credit risk consist primarily of cash and accounts receivable. All our cash balances are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor at each financial institution. As of December 31, 2021, we had approximately $2,087,000 on deposit in excess of the insurance limits. We have not experienced any such losses in these accounts. In 2021, Kaiser Permanente accounted for approximately 14%, or $9.0 million, of our net sales. No other single customer in 2021 accounted for more than 10% of net sales. Accounts receivable from Kaiser Permanente at December 31, 2021 accounted for 11% of total accounts receivable. For the year ended December 31, 2021, we had purchases from two suppliers that collectively represented 61% of total purchases and 76% of accounts payable at December 31, 2021. Loss of a significant vendor could have a material adverse effect on our operations. In 2020, Kaiser Permanente and Nordstrom accounted for approximately 20%, or $12.9 million, and 31%, or $19.6 million, of our net sales, respectively. No other single customer in 2020 accounted for more than 10% of net sales. Accounts receivable from these customers at December 31, 2020 accounted for 48% of total accounts receivable. For the year ended December 31, 2020, we had purchases from two suppliers that collectively represented 65% of total purchases and 82% of accounts payable at December 31, 2020. Loss of a significant vendor could have a material adverse effect on our operations. |
Share-Based Compensation | Share-Based Compensation We account for share-based compensation in accordance with the provisions of ASC Topic 718 “Compensation – Stock Compensation”. Under ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Share-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Given that share-based compensation expense recognized in the accompanying consolidated statements of income and comprehensive income is based on awards ultimately expected to vest. We account for forfeitures as they occur, rather than estimate expected forfeitures. Compensation cost for stock awards, which from time to time includes restricted stock units, is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service period. The fair value of stock awards is based on the estimated fair value of our common stock on the grant date. The estimated fair value of common stock option awards is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions regarding future stock price volatility and expected time to exercise, along with assumptions about the risk-free interest rate and expected dividends, all of which affect the estimated fair values of our common stock option awards. Given a lack of historical stock option exercises, the expected term of options granted is calculated as the average of the weighted vesting period and the contractual expiration date of the option. This calculation is based on a method permitted by the Securities and Exchange Commission in instances where the vesting and exercise terms of options granted meet certain conditions and where limited historical exercise data is available. The expected volatility is based on the historical volatility of the common stock of comparable public companies that operate in similar industries as us. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on our history and management’s expectation regarding dividend payouts. Compensation expense for common stock option awards with graded vesting schedules is recognized on a straight-line basis over the requisite service period for the last separately vesting portion of the award, provided that the accumulated cost recognized as of any date at least equals the value of the vested portion of the award. If there are any modifications or cancellations of the underlying vested or unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense, or record additional expense for vested stock-based awards. Future share-based compensation expense and unearned share- based compensation may increase to the extent that we grant additional common stock options or other share-based awards. |
Income Taxes | Income Taxes We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Under ASC Topic 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC Topic 740 provides requirements for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. At December 31, 2021 and 2020, we had no unrecognized tax benefits that, if recognized, would affect our effective income tax rate over the next 12 months. As of December 31, 2021 and 2020, we had no accrued interest or penalties. |
Accounting Standards Adopted | Accounting Standards Adopted On January 1, 2021, we adopted ASU 2020-10, “Codification Improvements”. This ASU amended a variety of Topics, including presentation and disclosures of financial statements, interim reporting, accounting changes and error corrections. The adoption of this guidance did not have an impact on our consolidated financial statements. On January 1, 2021, we adopted ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,”. ASU 2019-12 removed certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. The adoption of this guidance did not have an impact on our consolidated financial statements. |
Accounting Standards Not Yet Adopted | Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates There are no other accounting standards that have been issued but not yet adopted that we believe could have a material impact on our consolidated financial statements. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of net sales by revenue | Year Ended 2021 2020 Hardware and software $ 44,355 $ 47,416 Consumables 6,125 3,257 Services 15,463 12,687 $ 65,943 $ 63,360 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of useful lives and weighted-average remaining useful life of definitive lived intangible assets | December 31, 2021 December 31, 2020 Gross Accumulated Net Gross Accumulated Net Customer lists and relationships $ 5,690 $ (2,453 ) $ 3,237 $ 5,690 $ (1,663 ) $ 4,027 Trade names 1,000 (699 ) 301 1,000 (434 ) 566 Developed technology 70 (44 ) 26 70 (3 ) 67 Backlog 60 (60 ) - 60 (57 ) 3 $ 6,820 $ (3,256 ) $ 3,564 $ 6,820 $ (2,157 ) $ 4,663 |
Schedule of useful lives and weighted-average remaining useful life of amortizable intangible assets | Expected Life Weighted Average Customer lists and relationships 7-15 years 11 years Trade names 3 years 2 years Developed technology 3 years 2 years |
Schedule of amortization expense of definite lived intangible assets | Estimated (in thousands) Year ending December 31, 2022 $ 1,089 2023 895 2024 531 2025 359 2026 240 Thereafter 450 Total $ 3,564 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the fully dilutive securities effect | 2021 2020 Net income attributable to common stockholders $ 1,414 $ 2,861 Weighted average basic shares outstanding 6,947 6,788 Dilutive effect of stock options and restricted stock 646 1,023 Weighted average shares for diluted earnings per share 7,593 7,811 Basic income per share $ 0.20 $ 0.42 Diluted income per share $ 0.19 $ 0.37 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | 2021 2020 Software and computer equipment $ 1,223 $ 967 Furniture and fixtures 204 112 Leasehold improvements 109 105 Equipment 25 23 Property and equipment, gross 1,561 1,207 Accumulated depreciation (727 ) (456 ) Property and equipment, net $ 834 $ 751 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | 2021 2020 Salaries and benefits $ 2,182 $ 1,687 Accrued earn out obligation related to acquisition 188 - Sales tax payable 366 519 Professional fees 305 294 Vendor purchases 66 72 Customer deposits 90 54 Other 23 181 Total accrued expenses and other current liabilities $ 3,220 $ 2,807 |
Term Debt (Tables)
Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding term debt | Maturity Date December 31, December 31, EIDL promissory note August 27, 2051 $ 149 $ 150 PWBF PPP loan May 4, 2022 — 471 PWBF PPP loan April 20, 2022 — 740 Total term debt $ 149 $ 1,361 |
Schedule of future principal payments for outstanding debt | 2022 $ 3 2023 3 2024 3 2025 3 2026 3 Thereafter 131 Total minimum payments $ 146 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation of the United States statutory income tax rate | 2021 2020 Current: Federal $ 7 $ (13 ) State 135 387 142 374 Deferred: Federal 70 1,173 State (96 ) 102 (26 ) 1,275 Valuation allowance - (588 ) Total income tax expense $ 116 $ 1,061 |
Schedule of our deferred tax assets and liabilities | 2021 2020 Allowance for doubtful accounts $ 5 $ 23 Inventory reserve and uniform capitalization 38 18 Accrued expenses and other liabilities 40 36 Deferred revenue 72 (140 ) Other assets 338 198 Property and equipment (158 ) (128 ) Intangibles 201 121 Goodwill (114 ) (50 ) Net operating loss carryforwards 1,577 1,895 Total deferred tax assets 1,999 1,973 Valuation allowance — — Net deferred tax assets after valuation allowance $ 1,999 $ 1,973 |
Schedule of reconciliation of the United States statutory income tax rate | 2021 2020 Federal taxes at statutory rate $ 321 $ 824 State and local income taxes 26 482 Permanent differences (231 ) 343 Valuation allowance — (588 ) Provision for income taxes $ 116 $ 1,061 Effective tax rate 7.6 % 27.1 % |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of outstanding common stock warrants | Date Strike Total Total Weighted Issued Expiration Price Exercisable (in thousands) Price Warrants - Common Stock Jun-18 Jun-23 $ 1.00 316,800 $ 317 Warrants - Common Stock Oct-18 Oct-23 1.40 26,250 37 343,050 $ 354 $ 1.04 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock option activity | Stock Grant Date Weighted Aggregate (in years) ($ in thousands) Outstanding at December 31, 2020 447,732 1.96 Granted 750,250 3.50 Exercised (152,691 ) 1.87 Forfeited (42,541 ) 2.94 Outstanding at December 31, 2021 1,002,750 $ 3.00 3.7 $ 8,362 Exercisable at December 31, 2021 867,372 $ 2.98 3.7 $ 7,246 |
Schedule of the summary of fair value using the Black-Scholes option pricing model | 2021 2020 Weighted average grant-date fair value per option granted $ 1.58 $ 1.58 Expected option term 3.0 years 3.3 years Expected volatility factor 66.0 % 90.5 % Risk-free interest rate 0.49 % 1.5 % Expected annual dividend yield — % — % |
Schedule of the exercised options, utilizing a cashless exercise | Options Weighted Shares Shares Net Shares Weighted Employee 151,441 $ 1.88 77,954 7,225 66,232 $ 3.67 $ 24,662 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of the maturity of operating lease liabilities | 2022 267 2023 84 Total minimum lease payments 351 Less: Interest (11 ) Present value of operating lease liabilities $ 340 |
Description of Business (Detail
Description of Business (Details) | Dec. 31, 2020 | Jun. 30, 2018 |
Royce Digital Systems, Inc. [Member] | ||
Description of Business (Details) [Line Items] | ||
Ownership percentage | 100.00% | |
ExtenData Solutions, LLC [Member] | ||
Description of Business (Details) [Line Items] | ||
Ownership percentage | 100.00% |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Accounts receivable valuation allowance | $ 20,000 | $ 92,000 |
Inventories valuation allowance | $ 59,000 | 41,000 |
Software development costs amortization period | 3 years | |
Unsatisfied performance obligations | $ 7,100,000 | 7,800,000 |
Total aggregate transaction price | $ 4,600,000 | |
Incremental and recoverable costs customer contract term | 1 year | |
Related contract acquisition costs | $ 127,000 | $ 136,000 |
Federal deposit insurance corporation | 250,000 | |
Deposit in excess of insurance limits | $ 2,087,000 | |
Percentage of uncertain income tax position recognized | 50.00% | |
Accounts Receivable [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of concentration of risk | 11.00% | 48.00% |
Accounts Payable [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of concentration of risk | 76.00% | 82.00% |
Number of suppliers | 2 | 2 |
Accounts Payable [Member] | Supplier Two [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of concentration of risk | 65.00% | |
Total Purchases [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of concentration of risk | 61.00% | |
Kaiser Permanente [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of concentration of risk | 14.00% | 20.00% |
Concentration risk | $ 9,000,000 | $ 12,900,000 |
Other Customer [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of concentration of risk | 10.00% | 10.00% |
Nordstrom [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of concentration of risk | 31.00% | |
Concentration risk | $ 19,600,000 | |
Minimum [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Deferred costs amortization period | 1 year | |
Property and equipment useful live | 3 years | |
Revenue related service contract agreement term | 1 year | |
Sales and marketing expense contract term | 1 year | |
Maximum [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Deferred costs amortization period | 5 years | |
Property and equipment useful live | 5 years | |
Revenue related service contract agreement term | 3 years | |
Sales and marketing expense contract term | 3 years |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of net sales by revenue - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 65,943 | $ 63,360 |
Hardware and software [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 44,355 | 47,416 |
Consumables [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 6,125 | 3,257 |
Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 15,463 | $ 12,687 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | Dec. 04, 2020 | Mar. 31, 2021 | Sep. 16, 2020 | Jun. 18, 2018 | Dec. 31, 2021 | Dec. 31, 2020 |
Acquisitions (Details) [Line Items] | ||||||
Estimate earnout obligation | $ 500,000 | $ 750,000 | ||||
General and administrative expenses | $ 187,500 | |||||
Original earnout obligation | $ 500,000 | |||||
Dispute settlement amount | $ 298,000 | |||||
Other income | 213,000 | |||||
Net working capital | 4,094,700 | |||||
Pay the sellers | 454,967 | |||||
ExtenData Solutions, LLC [Member] | ||||||
Acquisitions (Details) [Line Items] | ||||||
Issued and outstanding membership interests | $ 5,169,787 | |||||
Cash | $ 169,787 | 4,419,787 | 4,250,000 | |||
Royce Digital Systems [Member] | ||||||
Acquisitions (Details) [Line Items] | ||||||
Other income | $ 202,000 | |||||
Minimum [Member] | ||||||
Acquisitions (Details) [Line Items] | ||||||
Original estimated earnout obligation | 187,500 | |||||
Maximum [Member] | ||||||
Acquisitions (Details) [Line Items] | ||||||
Original estimated earnout obligation | $ 375,000 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expenses | $ 1.1 | $ 0.8 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of useful lives and weighted-average remaining useful life of definitive lived intangible assets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 6,820 | $ 6,820 |
Accumulated Amortization | (3,256) | (2,157) |
Net Amount | 3,564 | 4,663 |
Customer lists and relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 5,690 | 5,690 |
Accumulated Amortization | (2,453) | (1,663) |
Net Amount | 3,237 | 4,027 |
Trade names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 1,000 | 1,000 |
Accumulated Amortization | (699) | (434) |
Net Amount | 301 | 566 |
Developed technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 70 | 70 |
Accumulated Amortization | (44) | (3) |
Net Amount | 26 | 67 |
Backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 60 | 60 |
Accumulated Amortization | (60) | (57) |
Net Amount | $ 3 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of useful lives and weighted-average remaining useful life of amortizable intangible assets | 12 Months Ended |
Dec. 31, 2021 | |
Customer lists and relationships [Member] | |
Intangible Assets (Details) - Schedule of useful lives and weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Weighted Average Remaining Useful Life | 11 years |
Trade names [Member] | |
Intangible Assets (Details) - Schedule of useful lives and weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Expected Life | 3 years |
Weighted Average Remaining Useful Life | 2 years |
Developed technology [Member] | |
Intangible Assets (Details) - Schedule of useful lives and weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Expected Life | 3 years |
Weighted Average Remaining Useful Life | 2 years |
Minimum [Member] | Customer lists and relationships [Member] | |
Intangible Assets (Details) - Schedule of useful lives and weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Expected Life | 7 years |
Maximum [Member] | Customer lists and relationships [Member] | |
Intangible Assets (Details) - Schedule of useful lives and weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Expected Life | 15 years |
Intangible Assets (Details) -_3
Intangible Assets (Details) - Schedule of amortization expense of definite lived intangible assets $ in Thousands | Dec. 31, 2021USD ($) |
Schedule of amortization expense of definite lived intangible assets [Abstract] | |
2022 | $ 1,089 |
2023 | 895 |
2024 | 531 |
2025 | 359 |
2026 | 240 |
Thereafter | 450 |
Total | $ 3,564 |
Net Income Per Share (Details)
Net Income Per Share (Details) - Schedule of reconciliation of the fully dilutive securities effect - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of reconciliation of the fully dilutive securities effect [Abstract] | ||
Net income attributable to common stockholders (in Dollars) | $ 1,414 | $ 2,861 |
Weighted average basic shares outstanding | 6,947 | 6,788 |
Dilutive effect of stock options and restricted stock | 646 | 1,023 |
Weighted average shares for diluted earnings per share | 7,593 | 7,811 |
Basic income per share (in Dollars per share) | $ 0.2 | $ 0.42 |
Diluted income per share (in Dollars per share) | $ 0.19 | $ 0.37 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 0.3 | $ 0.1 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of property and equipment - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,561 | $ 1,207 |
Accumulated depreciation | (727) | (456) |
Property and equipment, net | 834 | 751 |
Software and computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,223 | 967 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 204 | 112 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 109 | 105 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 25 | $ 23 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of accrued expenses and other current liabilities - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of accrued expenses and other current liabilities [Abstract] | ||
Salaries and benefits | $ 2,182 | $ 1,687 |
Accrued earn out obligation related to acquisition | 188 | |
Sales tax payable | 366 | 519 |
Professional fees | 305 | 294 |
Vendor purchases | 66 | 72 |
Customer deposits | 90 | 54 |
Other | 23 | 181 |
Total accrued expenses and other current liabilities | $ 3,220 | $ 2,807 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Aug. 31, 2021 | Dec. 31, 2020 | |
Line of Credit (Details) [Line Items] | |||
Line of credit | $ 10,000,000 | ||
Interest rate | 1.25% | ||
Line of credit bears interest rate, percentage | 4.75% | ||
Outstanding borrowings | $ 1,200,000 | ||
Outstanding balance | $ 150,000 | ||
Total outstanding | $ 9,000,000 | ||
Commitment fee | 0.25% | ||
Loans amounts, description | Under the Loan Agreement, we are subject to a variety of customary affirmative and negative covenants, including that we (i) achieve a net profit of not less than $1.0 million at the end of each fiscal year, (ii) maintain a ratio of total debt to EBITDA of not greater than 3.0:1.0 measured at the end of each quarter, and (iii) not realize a net loss for more than two consecutive quarters. | ||
Eligible to borrow | $ 9,000,000 | ||
MUFG Union Bank Line of Credit [Member] | |||
Line of Credit (Details) [Line Items] | |||
Line of credit | $ 9,000,000 | ||
Maturity date | Jul. 31, 2024 | ||
LIBOR [Member] | |||
Line of Credit (Details) [Line Items] | |||
Offered rate | 4.75% | 2.50% |
Term Debt (Details)
Term Debt (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Aug. 27, 2021 | Feb. 28, 2021 | Dec. 31, 2021 | Aug. 27, 2020 | May 04, 2020 | Apr. 20, 2020 | |
Term Debt (Details) [Line Items] | ||||||
Gain on extinguishment of debt | $ 1,200 | |||||
PWBF PPP Loans [Member] | ||||||
Term Debt (Details) [Line Items] | ||||||
Principal amount | $ 471,000 | $ 740,000 | ||||
Description of loans | Principal payments were to be due and payable in 18 consecutive payments beginning on November 1, 2020 in the amount of $41,437 for the PPP Loan received on April 20, 2020 and $26,374 beginning on December 1, 2020 for the PPP Loan received on May 4, 2020. | |||||
EIDL Promissory Note [Member] | ||||||
Term Debt (Details) [Line Items] | ||||||
Principal amount | $ 150,000 | |||||
Interest rate | 3.75% | |||||
Maturity term | 30 years | |||||
Interest amount | $ 731 |
Term Debt (Details) - Schedule
Term Debt (Details) - Schedule of outstanding term debt - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Term Debt (Details) - Schedule of outstanding term debt [Line Items] | ||
Total term debt | $ 149 | $ 1,361 |
EIDL promissory note [Member] | ||
Term Debt (Details) - Schedule of outstanding term debt [Line Items] | ||
Maturity Date | Aug. 27, 2051 | |
Line of credit | 149 | $ 150 |
PWBF PPP loan [Member] | ||
Term Debt (Details) - Schedule of outstanding term debt [Line Items] | ||
Maturity Date | May 4, 2022 | |
Line of credit | $ 471 | |
PWBF PPP loan [Member] | ||
Term Debt (Details) - Schedule of outstanding term debt [Line Items] | ||
Maturity Date | Apr. 20, 2022 | |
Line of credit | $ 740 |
Term Debt (Details) - Schedul_2
Term Debt (Details) - Schedule of future principal payments for outstanding debt $ in Thousands | Dec. 31, 2021USD ($) |
Schedule of future principal payments for outstanding debt [Abstract] | |
2022 | $ 3 |
2023 | 3 |
2024 | 3 |
2025 | 3 |
2026 | 3 |
Thereafter | 131 |
Total minimum payments | $ 146 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Mar. 27, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes (Details) [Line Items] | |||
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent | 100.00% | ||
State [Member] | Maximum [Member] | |||
Income Taxes (Details) [Line Items] | |||
Net operating loss carryforwards | $ 5.9 | ||
State [Member] | Minimum [Member] | |||
Income Taxes (Details) [Line Items] | |||
Net operating loss carryforwards | $ 6.3 | ||
Federal and state [Member] | Maximum [Member] | |||
Income Taxes (Details) [Line Items] | |||
Net operating loss carryforwards | $ 7.4 | ||
Federal and state [Member] | Minimum [Member] | |||
Income Taxes (Details) [Line Items] | |||
Net operating loss carryforwards | $ 6.3 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of provision for income taxes - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | ||
Federal | $ 7 | $ (13) |
State | 135 | 387 |
Current total | 142 | 374 |
Deferred: | ||
Federal | 70 | 1,173 |
State | (96) | 102 |
Deferred total | (26) | 1,275 |
Valuation allowance | (588) | |
Total income tax expense | $ 116 | $ 1,061 |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of our deferred tax assets and liabilities - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of our deferred tax assets and liabilities [Abstract] | ||
Allowance for doubtful accounts | $ 5 | $ 23 |
Inventory reserve and uniform capitalization | 38 | 18 |
Accrued expenses and other liabilities | 40 | 36 |
Deferred revenue | 72 | (140) |
Other assets | 338 | 198 |
Property and equipment | (158) | (128) |
Intangibles | 201 | 121 |
Goodwill | (114) | (50) |
Net operating loss carryforwards | 1,577 | 1,895 |
Total deferred tax assets | 1,999 | 1,973 |
Valuation allowance | ||
Net deferred tax assets after valuation allowance | $ 1,999 | $ 1,973 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of reconciliation of the United States statutory income tax rate - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of reconciliation of the United States statutory income tax rate [Abstract] | ||
Federal taxes at statutory rate | $ 321 | $ 824 |
State and local income taxes | 26 | 482 |
Permanent differences | (231) | 343 |
Valuation allowance | (588) | |
Provision for income taxes | $ 116 | $ 1,061 |
Effective tax rate | 7.60% | 27.10% |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - $ / shares | 1 Months Ended | 12 Months Ended | |
Feb. 28, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stockholders’ Equity (Details) [Line Items] | |||
Total number of authorized shares | 60,000,000 | ||
Common stock outstanding | 50,000,000 | ||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | |
Preferred stock, shares authorized | 10,000,000 | ||
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $ 0.001 | $ 0.001 | |
Unchanged shares | 50,000,000 | ||
Common stock exercise | 151,504 | ||
Common Stock [Member] | |||
Stockholders’ Equity (Details) [Line Items] | |||
Common stock outstanding | 7,007,454 | 6,788,466 | |
Common stock, par value (in Dollars per share) | $ 0.001 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - Schedule of outstanding common stock warrants $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($)$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Total Warrants Outstanding and Exercisable | shares | 343,050 |
Total Exercise Price | $ | $ 354 |
Weighted Average Exercise Price | $ / shares | $ 1.04 |
Warrants - Common Stock [Member] | |
Class of Warrant or Right [Line Items] | |
Date - Issued | Jun-18 |
Date - Expiration | Jun-23 |
Strike Price | $ / shares | 1 |
Total Warrants Outstanding and Exercisable | shares | 316,800 |
Total Exercise Price | $ | $ 317 |
Warrants - Common Stock [Member] | |
Class of Warrant or Right [Line Items] | |
Date - Issued | Oct-18 |
Date - Expiration | Oct-23 |
Strike Price | $ / shares | 1.4 |
Total Warrants Outstanding and Exercisable | shares | 26,250 |
Total Exercise Price | $ | $ 37 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($)shares | |
Share-Based Compensation (Details) [Line Items] | |
Percentage of exercise price to fair market value of common stock | 100.00% |
Vest term | 3 years |
Percentage of voting power | 10.00% |
Fair market share of common stock | 110.00% |
Unrecognized share related to unvested stock options | $ | $ 182,441 |
Weighted average remaining recognition period | 1 year 9 months 18 days |
2014 Equity Incentive Plan (the “2014 Plan”) [Member] | |
Share-Based Compensation (Details) [Line Items] | |
Number of shares issuance | shares | 1,100,000 |
Term of stock option granted | 10 years |
Share-Based Compensation (Det_2
Share-Based Compensation (Details) - Schedule of stock option activity $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($)$ / sharesshares | |
Schedule of stock option activity [Abstract] | |
Outstanding, Stock options | shares | 447,732 |
Outstanding, Grant Date Weighted Average Exercise Price | $ / shares | $ 1.96 |
Granted, Stock options | shares | 750,250 |
Granted, Grant Date Weighted Average Exercise Price | $ / shares | $ 3.5 |
Exercised, Stock options | shares | (152,691) |
Exercised, Grant Date Weighted Average Exercise Price | $ / shares | $ 1.87 |
Forfeited or expired Stock options | shares | (42,541) |
Forfeited or expired Grant Date Weighted Average Exercise Price | $ / shares | $ 2.94 |
Outstanding, Stock options | shares | 1,002,750 |
Outstanding, Grant Date Weighted Average Exercise Price | $ / shares | $ 3 |
Outstanding, Weighted Average Remaining Contractual Life | 3 years 8 months 12 days |
Outstanding, Aggregate Intrinsic Value | $ | $ 8,362 |
Exercisable, Stock options | shares | 867,372 |
Exercisable, Grant Date Weighted Average Exercise Price | $ / shares | $ 2.98 |
Exercisable, Weighted Average Remaining Contractual Life | 3 years 8 months 12 days |
Exercisable, Aggregate Intrinsic Value | $ | $ 7,246 |
Share-Based Compensation (Det_3
Share-Based Compensation (Details) - Schedule of the summary of fair value using the Black-Scholes option pricing model - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of the summary of fair value using the Black-Scholes option pricing model [Abstract] | ||
Weighted average grant-date fair value per option granted (in Dollars per share) | $ 1.58 | $ 1.58 |
Expected option term | 3 years | 3 years 3 months 18 days |
Expected volatility factor | 66.00% | 90.50% |
Risk-free interest rate | 0.49% | 1.50% |
Expected annual dividend yield |
Share-Based Compensation (Det_4
Share-Based Compensation (Details) - Schedule of the exercised options, utilizing a cashless exercise | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Schedule of the exercised options, utilizing a cashless exercise [Abstract] | |
Options exercised | 151,441,000 |
Weighted Average Exercise Price (in Dollars per share) | $ / shares | $ 1.88 |
Shares Net Settled for Exercise | 77,954,000 |
Shares Withheld for Taxes | 7,225,000 |
Net Shares Issued | 66,232,000 |
Weighted Average Share Price (in Dollars per share) | $ / shares | $ 3.67 |
Employee Share-Based Tax Withholding | 24,662,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Feb. 28, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies (Details) [Line Items] | |||
Rent due date | Jun. 1, 2022 | ||
Lease agreement, the base rent | $ 39,778 | ||
Increase lease agreement base rent, percentage | 3.00% | ||
Measurement of operating lease liabilities | $ 300,000 | ||
Description of employee benefit plan | Under the terms of the plan, eligible employees may defer up to 25% of their pre-tax earnings, subject to the Internal Revenue Service annual contribution limit. Additionally, the plan allows for discretionary matching contributions by us. In 2021 and 2020, the matching contributions were 100% of the employee’s contribution up to a maximum of 4% of the employee’s eligible compensation | ||
Employee benefit plan contribution | $ 201,000 | $ 152,000 | |
Subsequent Event [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Expire date | Feb. 28, 2022 | ||
Lease agreement [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Expire date | Apr. 30, 2029 | ||
Sublease [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Expire date | Oct. 31, 2023 | ||
Commencing amount receive | $ 24,254 | ||
California [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Monthly payments | $ 13,945 | ||
Borrowing rate | 4.75% | ||
Future payment of operating lease | $ 300,000 | ||
Colorado [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Monthly payments | $ 9,984 | ||
Borrowing rate | 4.75% | ||
Future payment of operating lease | $ 100,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of the maturity of operating lease liabilities $ in Thousands | Dec. 31, 2021USD ($) |
Schedule of the maturity of operating lease liabilities [Abstract] | |
2022 | $ 267 |
2023 | 84 |
Total minimum lease payments | 351 |
Less: Interest | (11) |
Present value of operating lease liabilities | $ 340 |