Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 24, 2023 | Jun. 30, 2022 | |
Document Information Line Items | |||
Entity Registrant Name | DECISIONPOINT SYSTEMS, INC. | ||
Trading Symbol | DPSI | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 7,417,342 | ||
Entity Public Float | $ 23.5 | ||
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, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
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 | ||
Title of 12(b) Security | Common Stock | ||
Security Exchange Name | NYSEAMER | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm ID | 200 | ||
Auditor Name | HASKELL & WHITE LLP | ||
Auditor Location | Irvine, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash | $ 7,642 | $ 2,587 |
Accounts receivable, net | 17,085 | 12,302 |
Inventory, net | 4,417 | 2,111 |
Deferred costs | 2,729 | 1,998 |
Prepaid expenses and other current assets | 399 | 336 |
Total current assets | 32,272 | 19,334 |
Operating lease assets | 2,681 | 329 |
Property and equipment, net | 1,817 | 834 |
Deferred costs, net of current portion | 2,868 | 1,492 |
Deferred tax assets | 848 | 1,999 |
Intangible assets, net | 4,531 | 3,564 |
Goodwill | 10,499 | 8,128 |
Other assets | 41 | 50 |
Total assets | 55,557 | 35,730 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Accounts payable | 19,755 | 10,273 |
Accrued expenses and other current liabilities | 5,357 | 3,220 |
Deferred revenue | 6,021 | 4,599 |
Current portion of long-term debt | 3 | 3 |
Current portion of operating lease liabilities | 529 | 257 |
Total current liabilities | 31,665 | 18,352 |
Deferred revenue, net of current portion | 4,331 | 2,510 |
Long-term debt | 143 | 146 |
Noncurrent portion of operating lease liabilities | 2,706 | 83 |
Other liabilities | 130 | 381 |
Total liabilities | 38,975 | 21,472 |
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; 7,416 and 7,007 shares issued and outstanding, respectively | 7 | 7 |
Additional paid-in capital | 38,429 | 39,216 |
Accumulated deficit | (21,854) | (24,965) |
Total stockholders’ equity | 16,582 | 14,258 |
Total liabilities and stockholders’ equity | $ 55,557 | $ 35,730 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares shares in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
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 | 7,416 | 7,007 |
Common stock, shares outstanding | 7,416 | 7,007 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net sales: | ||
Product | $ 79,079 | $ 50,480 |
Service | 18,336 | 15,463 |
Net sales | 97,415 | 65,943 |
Cost of sales: | ||
Product | 62,214 | 39,943 |
Service | 12,106 | 10,696 |
Cost of sales | 74,320 | 50,639 |
Gross profit | 23,095 | 15,304 |
Operating expenses: | ||
Sales and marketing expense | 9,218 | 7,354 |
General and administrative expenses | 9,430 | 7,552 |
Total operating expenses | 18,648 | 14,906 |
Operating income | 4,447 | 398 |
Interest expense | (56) | (79) |
Gain on extinguishment of debt | 1,211 | |
Other expense | (15) | |
Income before income taxes | 4,376 | 1,530 |
Income tax expense | (1,265) | (116) |
Net income and comprehensive income attributable to common stockholders | $ 3,111 | $ 1,414 |
Earnings per share attributable to stockholders: | ||
Basic (in Dollars per share) | $ 0.43 | $ 0.2 |
Diluted (in Dollars per share) | $ 0.41 | $ 0.19 |
Weighted average common shares outstanding | ||
Basic (in Shares) | 7,261 | 6,947 |
Diluted (in Shares) | 7,562 | 7,593 |
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, 2020 | $ 7 | $ 38,236 | $ (26,379) | $ 11,864 |
Balance (in Shares) at Dec. 31, 2020 | 6,788 | |||
Net income | 1,414 | 1,414 | ||
Share-based compensation expense | 1,003 | 1,003 | ||
Exercise of warrants | ||||
Exercise of warrants (in Shares) | 152 | |||
Exercise of stock options | (23) | (23) | ||
Exercise of stock options (in Shares) | 67 | |||
Balance at Dec. 31, 2021 | $ 7 | 39,216 | (24,965) | 14,258 |
Balance (in Shares) at Dec. 31, 2021 | 7,007 | |||
Net income | 3,111 | 3,111 | ||
Share-based compensation expense | 577 | 577 | ||
Exercise of stock options | 154 | 154 | ||
Exercise of stock options (in Shares) | 79 | |||
Cashless exercise of warrants | ||||
Cashless exercise of warrants (in Shares) | 98 | |||
Cashless exercise of stock options | (1,518) | (1,518) | ||
Cashless exercise of stock options (in Shares) | 232 | |||
Balance at Dec. 31, 2022 | $ 7 | $ 38,429 | $ (21,854) | $ 16,582 |
Balance (in Shares) at Dec. 31, 2022 | 7,416 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net income | $ 3,111 | $ 1,414 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,465 | 1,387 |
Amortization of deferred financing costs and note discount | 24 | |
Loss on fixed asset disposal | 22 | |
Share-based compensation expense | 577 | 1,003 |
Acquisition earn-out adjustment | (187) | |
Gain on extinguishment of debt | (1,211) | |
Deferred income taxes, net | 254 | (26) |
Provision for doubtful accounts | 249 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,630) | 4,136 |
Inventory, net | (2,177) | (1,227) |
Deferred costs | (1,984) | 351 |
Prepaid expenses and other current assets | (54) | (294) |
Other assets, net | (28) | |
Accounts payable | 8,924 | (2,579) |
Accrued expenses and other current liabilities | 914 | 278 |
Due to related parties | (34) | |
Operating lease liabilities | 543 | (7) |
Deferred revenue | 3,095 | (648) |
Net cash provided by operating activities | 12,309 | 2,352 |
Cash flows from investing activities | ||
Purchases of property and equipment | (1,477) | (371) |
Cash paid for acquisitions, net of cash acquired | (4,525) | (170) |
Net cash used in investing activities | (6,002) | (541) |
Cash flows from financing activities | ||
Repayment of term debt | (3) | |
Line of credit, net | (1,206) | |
Taxes paid in lieu of shares issued for share-based compensation | (1,403) | (25) |
Proceeds from exercise of stock options | 154 | 2 |
Net cash used in financing activities | (1,252) | (1,229) |
Change in cash | 5,055 | 582 |
Cash, beginning of year | 2,587 | 2,005 |
Cash, end of year | 7,642 | 2,587 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 45 | 50 |
Cash paid for income taxes | 1,065 | 365 |
Supplemental disclosure of non-cash activities | ||
Leased assets obtained in exchange for new operating lease liabilities | 3,211 | |
Disposals of depreciated property and equipment | 420 | |
Cashless exercise of stock options | $ 115 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Description of Business [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, POS equipment 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. In January 2022, we acquired 100% of the issued and outstanding membership interests of Advanced Mobile Group, LLC (“AMG”). AMG provides services, hardware, software, integration, and wireless networking solutions, with deep experience in warehousing and distribution, manufacturing, mobile workforce automation, retailing, and healthcare segments. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Description of Business [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, ExtenData and AMG. AMG was acquired on January 31, 2022, and as such, has been consolidated into our financial position and results of operations beginning February 1, 2022. 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 pandemic have, at times, negatively impacted overall economic conditions (including contributing to supply chain disruptions, labor shortages and an inflationary economic environment). 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 $262,000 and $20,000 as of December 31, 2022 and 2021, 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 $42,000 and $59,000 as of December 31, 2022 and 2021, 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, 2022 and 2021. 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, 2022 and 2021. 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, 2022, the total aggregate transaction price allocated to the unsatisfied performance obligations was approximately $10.4 million, of which approximately $6.0 million is expected to be recognized over the next 12 months. 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. 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, 2022 and December 31, 2021, we deferred $204,000 and $136,000, respectively, of related contract acquisition costs. The following table summarizes net sales by revenue source (in thousands): Year Ended 2022 2021 Hardware and software $ 71,774 $ 44,355 Consumables 7,305 6,125 Services 18,336 15,463 $ 97,415 $ 65,943 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, 2022, we had approximately $6,741,000 on deposit in excess of the insurance limits. We have not experienced any such losses in these accounts. In 2022, two customers accounted for approximately 17% and 11%, or $16.2 million and $8.3 million, of our net sales. No single customer in 2022 accounted for more than 10% of net sales. Accounts receivable from one of these two customers at December 31, 2022 accounted for 27% of total accounts receivable. For the year ended December 31, 2022, we had purchases from three suppliers that collectively represented 78% of total purchases and 75% of accounts payable at December 31, 2022. Loss of a significant vendor could have a material adverse effect on our operations. In 2021, one customer 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 this one customer 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. 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, 2022 and 2021, 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, 2022 and 2021, 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, 2022 | |
Acquisitions [Abstract] | |
Acquisitions | Note 3: Acquisitions Advanced Mobile Group, LLC On January 31, 2022, we entered into a Membership Unit Purchase Agreement and concurrently closed upon the acquisition of all of the issued and outstanding membership interests of AMG for $5.1 million. The consideration we paid is comprised of cash of $4.6 million, of which $4.4 million was paid as of December 31, 2022, and an estimated earn-out obligation valued at $0.5 million, subject to the financial performance of AMG during each of the two years following the closing of the acquisition. As a result of the acquisition, AMG became a wholly owned subsidiary of the Company. In the fourth quarter of 2022, we finalized 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. Relative to the provisional amounts recorded as of March 31, 2022, changes to the fair value of assets and liabilities assumed at the date of AMG acquisition were a result of updating the purchase price allocation and were comprised of (i) $0.5 million decrease in customer lists and relationships, (ii) a $0.1 million decrease in the trade name, (iii) a $0.1 million increase in backlog, (iv) a $0.1 million increase in developed technology, (v) a $0.1 million decrease in deferred revenue, (vi) a $0.9 million decrease in deferred tax assets and (vii) a $1.4 million increase in goodwill. As of December 31, 2022, the allocation of the total consideration to the estimated fair value of acquired net assets as of the acquisition date for AMG is as follows (in thousands): Cash $ 170 Accounts receivable 1,402 Inventory 129 Prepaids and other current assets 123 Customer lists and relationships 1,930 Trade name 360 Backlog 280 Developed technology 70 Accounts payable (558 ) Accrued expenses (152 ) Deferred tax assets (897 ) Deferred revenue (148 ) Total fair value excluding goodwill 2,709 Goodwill 2,371 Total consideration $ 5,080 The estimated useful lives of intangible assets recorded related to the AMG acquisition are as follows (in thousands): Expected Life Customer lists and relationships 7 years Trade name 3 years Backlog 11 months Developed technology 3 years Other acquisition In March 2022, we acquired the customer lists and relationships of Boston Technologies, a provider of mobile order management and route accounting software for direct store delivery (DSD) operations, for cash of $0.3 million. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 4: Intangible Assets Definitive lived intangible assets are as follows (in thousands): December 31, 2022 December 31, 2021 Gross Accumulated Net Gross Accumulated Net Customer lists and relationships $ 7,940 $ (3,850 ) $ 4,090 $ 5,690 $ (2,453 ) $ 3,237 Trade names 1,360 (973 ) 387 1,000 (699 ) 301 Developed technology 140 (86 ) 54 70 (44 ) 26 Backlog 340 (340 ) - 60 (60 ) - $ 9,780 $ (5,249 ) $ 4,531 $ 6,820 $ (3,256 ) $ 3,564 The range of useful lives and the weighted-average remaining useful life of amortizable intangible assets at December 31, 2022 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, 2023 $ 1,395 2024 951 2025 647 2026 517 2027 446 Thereafter 575 Total $ 4,531 Amortization expense recognized during the years ended December 31, 2022 and 2021 was $2.0 million and $1.1 million, respectively. Amortization expense is calculated on an accelerated basis. |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 (in thousands, except per share data): 2022 2021 Net income attributable to common stockholders $ 3,111 $ 1,414 Weighted average basic shares outstanding 7,261 6,947 Dilutive effect of stock options and restricted stock 301 646 Weighted average shares for diluted earnings per share 7,562 7,593 Basic income per share $ 0.43 $ 0.20 Diluted income per share $ 0.41 $ 0.19 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
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): 2022 2021 Software and computer equipment $ 1,502 $ 1,223 Furniture and fixtures 176 204 Leasehold improvements 643 109 Equipment 311 25 Property and equipment, gross 2,632 1,561 Accumulated depreciation (815 ) (727 ) Property and equipment, net $ 1,817 $ 834 Depreciation and amortization expense related to property and equipment during the years ended December 31, 2022 and 2021 was $0.5 million and $0.3 million, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
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): 2022 2021 Salaries and benefits $ 2,743 $ 2,182 Accrued earn out obligation related to acquisitions 829 188 Sales tax payable 1,016 366 Professional fees 188 305 Vendor purchases 44 66 Customer deposits 265 90 Other 272 23 Total accrued expenses and other current liabilities $ 5,357 $ 3,220 |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2022 | |
Lineof Credit [Abstract] | |
Line of Credit | Note 8: 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 (7.50% at December 31, 2022). 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, 2022, 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, 2022 | |
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 $ 146 $ 149 Total term debt $ 146 $ 149 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): 2023 $ 3 2024 3 2025 4 2026 4 2027 4 Thereafter 128 Total minimum payments $ 146 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10: Income Taxes The provision for income taxes for the years ended December 31, 2022 and 2021 is as follows (in thousands): 2022 2021 Current: Federal $ 910 $ 7 State 101 135 1,011 142 Deferred: Federal (39 ) 70 State 293 (96 ) 254 (26 ) Valuation allowance — — Total income tax expense $ 1,265 $ 116 Our deferred tax assets and liabilities are as follows (in thousands): 2022 2021 Allowance for doubtful accounts $ 68 $ 5 Inventory reserve and uniform capitalization 57 38 Accrued expenses and other liabilities 269 40 Deferred revenue 46 72 Other assets 41 338 Property and equipment (364 ) (158 ) Intangibles (150 ) 201 Goodwill (121 ) (114 ) Net operating loss carryforwards 1,002 1,577 Total deferred tax assets 848 1,999 Valuation allowance — — Net deferred tax assets after valuation allowance $ 848 $ 1,999 A reconciliation of the United States statutory income tax rate to the effective income tax rate for the years ended December 31, 2022 and 2021 is as follows (in thousands): 2022 2021 Federal taxes at statutory rate $ 919 $ 321 State and local income taxes 295 26 Permanent differences 51 (231 ) Valuation allowance — — Provision for income taxes $ 1,265 $ 116 Effective tax rate 28.9 % 7.6 % 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-20 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, 2022, 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, 2022, we had federal net operating loss carryforwards of approximately $4.8 million. As of December 31, 2021, we had federal and state net operating loss carryforwards of approximately $6.0 million and $5.1 million, respectively. These loss carryforwards will expire in varying amounts beginning 2033. We continue to remain subject to examination by U.S. federal authority for the years 2019 through 2021 and for various state authorities for the years 2018 through 2021, with few exceptions. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, 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, 2022 and 2021, there were no shares of preferred stock outstanding. Common Stock At December 31, 2022 and 2021, there were 7,416,071 and 7,007,454 shares of common stock outstanding, respectively. Warrants The following table summarizes information about our outstanding common stock warrants as of December 31, 2022: Date Strike Total Total Weighted Issued Expiration Price Exercisable (in thousands) Price Warrants - Common Stock Jun-18 Jun-23 $ 1.00 207,665 $ 208 Warrants - Common Stock Oct-18 Oct-23 1.40 21,000 29 228,665 $ 237 $ 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. In September 2022, a portion of the common stock warrants issued by the Company in 2018 were exercised by certain of the holders on a cashless basis. As a result of the cashless exercise, 97,408 shares of common stock were issued. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment [Abstract] | |
Share-Based Compensation | Note 12: Share-Based Compensation Under our amended 2014 Equity Incentive Plan (the “2014 Plan”), 1,600,000 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 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, 2022: Stock Grant Date Weighted Aggregate (in years) ($ in thousands) Outstanding at December 31, 2021 1,002,750 $ 3.00 Granted 229,750 5.57 Exercised (675,626 ) 3.29 Forfeited (97,917 ) 2.01 Outstanding at December 31, 2022 458,957 $ 4.08 $ 1,902,337 Exercisable at December 31, 2022 291,978 $ 4.21 $ 1,565,437 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: 2022 2021 Weighted average grant-date fair value per option granted $ 3.13 $ 1.58 Expected option term 2.5 years 3.0 years Expected volatility factor 83.0 % 66.0 % Risk-free interest rate 4.27 % 0.49 % 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. As of December 31, 2022, there was $235,177 of total unrecognized share-based compensation related to unvested stock options. These costs have a weighted average remaining recognition period of 1.6 years. During the year ended December 31, 2022, certain employees exercised vested stock options through a cashless exercise. The options exercised were net settled in satisfaction of the exercise price and employee share-based tax withholding. These shares were issued pursuant to an S-8 Registration Statement dated July 7, 2021 with respect to shares issuable pursuant to the 2014 Plan. The exercised options, utilizing a cashless exercise, are summarized in the following table: Options Weighted Shares Shares Net Shares Weighted Employee 596,668 $ 3.46 210,117 154,320 232,231 $ 9.84 $ 1,517,823 (1) Shares withheld for employee taxes of 154,320 represents the equivalent shares for employee tax withholding of $1.5 million. The employee tax withholding is based on the statutory rates for each employee on the date of exercise. ASU 2016-09 clarifies that employee taxes paid in lieu of shares issued for share-based compensation should be considered similar to a share repurchase. Accordingly, employee taxes paid by us are recorded as a reduction to stockholders’ equity on the date of exercise and classified as a financing activity on the statement of cash flows when taxes are paid to the taxing authorities. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13: Commitments and Contingencies Operating Leases As of December 31, 2022, we have four operating leases for office and warehouse space and one financing lease. We have an operating lease for office and warehouse space in Irvine, California with fixed minimum monthly payments of $39,778 per month which 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 also have operating leases for office space in Delray Beach, Florida, Southbury, Connecticut, and Doylestown, Pennsylvania with various fixed minimum monthly payments totaling $5,840, lease expirations thru March 2024 and incremental borrowing rates of 4.75%. These leases represent $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, 2022 are as follows (in thousands): 2023 $ 659 2024 608 2025 598 2026 536 2027 552 Thereafter 759 Total minimum lease payments 3,711 Less: interest (476 ) Present value of operating lease liabilities $ 3,235 During the year ended December 31, 2022, cash paid for amounts included in the measurement of operating lease liabilities was $0.4 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 2022 and 2021, 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, 2022 and 2021, we contributed $255,000 and $201,000, 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. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 14: Subsequent Event Effective March 27, 2023, we entered into an amendment letter (“Amendment”) with MUFG Union Bank, National Association (the “Bank”) that served to amend certain terms of the Business Loan Agreement dated July 30, 2021, between the parties (the “Loan Agreement”). In connection with entering into the Amendment, the revolving line of credit available to us was increased from $9.0 million to $10.0 million. The Amendment also served to modify certain covenants in the original agreement. We also entered into a $5.0 million promissory note agreement, effective March 27, 2023, with the Bank. Principal and interest payments on this note are due in quarterly installments of $250,000 on the last day of each quarter commencing June 30, 2023, with an interest rate based on Term SOFR (secured overnight financing rate) as administered by the Federal Reserve Bank of New York. This note matures March 31, 2028. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Description of Business [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, ExtenData and AMG. AMG was acquired on January 31, 2022, and as such, has been consolidated into our financial position and results of operations beginning February 1, 2022. 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 pandemic have, at times, negatively impacted overall economic conditions (including contributing to supply chain disruptions, labor shortages and an inflationary economic environment). 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 $262,000 and $20,000 as of December 31, 2022 and 2021, 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 $42,000 and $59,000 as of December 31, 2022 and 2021, 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, 2022 and 2021. 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, 2022 and 2021. 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, 2022, the total aggregate transaction price allocated to the unsatisfied performance obligations was approximately $10.4 million, of which approximately $6.0 million is expected to be recognized over the next 12 months. 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. 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, 2022 and December 31, 2021, we deferred $204,000 and $136,000, respectively, of related contract acquisition costs. The following table summarizes net sales by revenue source (in thousands): Year Ended 2022 2021 Hardware and software $ 71,774 $ 44,355 Consumables 7,305 6,125 Services 18,336 15,463 $ 97,415 $ 65,943 |
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, 2022, we had approximately $6,741,000 on deposit in excess of the insurance limits. We have not experienced any such losses in these accounts. In 2022, two customers accounted for approximately 17% and 11%, or $16.2 million and $8.3 million, of our net sales. No single customer in 2022 accounted for more than 10% of net sales. Accounts receivable from one of these two customers at December 31, 2022 accounted for 27% of total accounts receivable. For the year ended December 31, 2022, we had purchases from three suppliers that collectively represented 78% of total purchases and 75% of accounts payable at December 31, 2022. Loss of a significant vendor could have a material adverse effect on our operations. In 2021, one customer 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 this one customer 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. |
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, 2022 and 2021, 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, 2022 and 2021, 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. 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 | 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, 2022 | |
Description of Business [Abstract] | |
Schedule of net sales by revenue | Year Ended 2022 2021 Hardware and software $ 71,774 $ 44,355 Consumables 7,305 6,125 Services 18,336 15,463 $ 97,415 $ 65,943 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Acquisitions [Abstract] | |
Schedule of estimated fair value of acquired net assets | Cash $ 170 Accounts receivable 1,402 Inventory 129 Prepaids and other current assets 123 Customer lists and relationships 1,930 Trade name 360 Backlog 280 Developed technology 70 Accounts payable (558 ) Accrued expenses (152 ) Deferred tax assets (897 ) Deferred revenue (148 ) Total fair value excluding goodwill 2,709 Goodwill 2,371 Total consideration $ 5,080 |
Schedule of estimated useful lives of intangible assets | Expected Life Customer lists and relationships 7 years Trade name 3 years Backlog 11 months Developed technology 3 years |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of definitive lived intangible assets | December 31, 2022 December 31, 2021 Gross Accumulated Net Gross Accumulated Net Customer lists and relationships $ 7,940 $ (3,850 ) $ 4,090 $ 5,690 $ (2,453 ) $ 3,237 Trade names 1,360 (973 ) 387 1,000 (699 ) 301 Developed technology 140 (86 ) 54 70 (44 ) 26 Backlog 340 (340 ) - 60 (60 ) - $ 9,780 $ (5,249 ) $ 4,531 $ 6,820 $ (3,256 ) $ 3,564 |
Schedule of useful lives and the 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 the definite lived intangible assets | Estimated (in thousands) Year ending December 31, 2023 $ 1,395 2024 951 2025 647 2026 517 2027 446 Thereafter 575 Total $ 4,531 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the fully dilutive securities effect | 2022 2021 Net income attributable to common stockholders $ 3,111 $ 1,414 Weighted average basic shares outstanding 7,261 6,947 Dilutive effect of stock options and restricted stock 301 646 Weighted average shares for diluted earnings per share 7,562 7,593 Basic income per share $ 0.43 $ 0.20 Diluted income per share $ 0.41 $ 0.19 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | 2022 2021 Software and computer equipment $ 1,502 $ 1,223 Furniture and fixtures 176 204 Leasehold improvements 643 109 Equipment 311 25 Property and equipment, gross 2,632 1,561 Accumulated depreciation (815 ) (727 ) Property and equipment, net $ 1,817 $ 834 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | 2022 2021 Salaries and benefits $ 2,743 $ 2,182 Accrued earn out obligation related to acquisitions 829 188 Sales tax payable 1,016 366 Professional fees 188 305 Vendor purchases 44 66 Customer deposits 265 90 Other 272 23 Total accrued expenses and other current liabilities $ 5,357 $ 3,220 |
Term Debt (Tables)
Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding term debt | Maturity Date December 31, December 31, EIDL promissory note August 27, 2051 $ 146 $ 149 Total term debt $ 146 $ 149 |
Schedule of future principal payments for outstanding debt | 2023 $ 3 2024 3 2025 4 2026 4 2027 4 Thereafter 128 Total minimum payments $ 146 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation of the United States statutory income tax rate | 2022 2021 Current: Federal $ 910 $ 7 State 101 135 1,011 142 Deferred: Federal (39 ) 70 State 293 (96 ) 254 (26 ) Valuation allowance — — Total income tax expense $ 1,265 $ 116 |
Schedule of our deferred tax assets and liabilities | 2022 2021 Allowance for doubtful accounts $ 68 $ 5 Inventory reserve and uniform capitalization 57 38 Accrued expenses and other liabilities 269 40 Deferred revenue 46 72 Other assets 41 338 Property and equipment (364 ) (158 ) Intangibles (150 ) 201 Goodwill (121 ) (114 ) Net operating loss carryforwards 1,002 1,577 Total deferred tax assets 848 1,999 Valuation allowance — — Net deferred tax assets after valuation allowance $ 848 $ 1,999 |
Schedule of reconciliation of the United States statutory income tax rate | 2022 2021 Federal taxes at statutory rate $ 919 $ 321 State and local income taxes 295 26 Permanent differences 51 (231 ) Valuation allowance — — Provision for income taxes $ 1,265 $ 116 Effective tax rate 28.9 % 7.6 % |
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 $ 1.00 207,665 $ 208 Warrants - Common Stock Oct-18 Oct-23 1.40 21,000 29 228,665 $ 237 $ 1.04 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Compensation [Abstract] | |
Schedule of stock option activity | Stock Grant Date Weighted Aggregate (in years) ($ in thousands) Outstanding at December 31, 2021 1,002,750 $ 3.00 Granted 229,750 5.57 Exercised (675,626 ) 3.29 Forfeited (97,917 ) 2.01 Outstanding at December 31, 2022 458,957 $ 4.08 $ 1,902,337 Exercisable at December 31, 2022 291,978 $ 4.21 $ 1,565,437 |
Schedule of the fair values of stock options granted were estimated using the Black-Scholes option-pricing model | 2022 2021 Weighted average grant-date fair value per option granted $ 3.13 $ 1.58 Expected option term 2.5 years 3.0 years Expected volatility factor 83.0 % 66.0 % Risk-free interest rate 4.27 % 0.49 % Expected annual dividend yield — % — % |
Schedule of the exercised options, utilizing a cashless exercise | Options Weighted Shares Shares Net Shares Weighted Employee 596,668 $ 3.46 210,117 154,320 232,231 $ 9.84 $ 1,517,823 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of the maturity of operating lease liabilities | 2023 $ 659 2024 608 2025 598 2026 536 2027 552 Thereafter 759 Total minimum lease payments 3,711 Less: interest (476 ) Present value of operating lease liabilities $ 3,235 |
Description of Business (Detail
Description of Business (Details) | Jan. 31, 2022 | Dec. 31, 2020 | Jun. 30, 2018 |
Royce Digital Systems, Inc. [Member] | |||
Description of Business (Details) [Line Items] | |||
Ownership percentage | 100% | 100% | |
Advanced Mobile Group, LLC [Member] | |||
Description of Business (Details) [Line Items] | |||
Ownership percentage | 100% |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Accounts receivable valuation allowance | $ 262,000 | $ 20,000 |
Inventories valuation allowance | $ 42,000 | 59,000 |
Software development costs amortization period | 3 years | |
Unsatisfied performance obligations | $ 10,400,000 | 7,100,000 |
Total aggregate transaction price | $ 6,000,000 | 4,600,000 |
Incremental and recoverable costs customer contract term | 1 year | |
Related contract acquisition costs | $ 204,000 | $ 136,000 |
Federal deposit insurance corporation | 250,000 | |
Deposit in excess of insurance limits | $ 6,741,000 | |
Percentage of accounts receivable | 27% | |
Net sales | $ 8,300,000 | |
Percentage of uncertain income tax position recognized | 50% | |
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 | |
Kaiser Permanente [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of accounts receivable | 2% | 14% |
Concentration risk | $ 17,000,000 | $ 9,000,000 |
Nordstrom [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of accounts receivable | 11% | |
Concentration risk | $ 16,200,000 | |
Other Customer [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of accounts receivable | 10% | 10% |
Accounts Payable [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of accounts receivable | 75% | 76% |
Number of suppliers | 3 | 2 |
Accounts Payable [Member] | Supplier Two [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of accounts receivable | 78% | |
Accounts Receivable [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of accounts receivable | 11% | |
Total Purchases [Member] | ||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
Percentage of accounts receivable | 61% |
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, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 97,415 | $ 65,943 |
Hardware and software [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 71,774 | 44,355 |
Consumables [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 7,305 | 6,125 |
Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 18,336 | $ 15,463 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2022 | Dec. 31, 2022 | Mar. 31, 2022 | |
Acquisitions (Details) [Line Items] | |||
Consideration paid cash amount | $ 4.4 | ||
Cash | $ 0.3 | ||
Business Acquisition [Member] | |||
Acquisitions (Details) [Line Items] | |||
Acquisition description | In the fourth quarter of 2022, we finalized 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. Relative to the provisional amounts recorded as of March 31, 2022, changes to the fair value of assets and liabilities assumed at the date of AMG acquisition were a result of updating the purchase price allocation and were comprised of (i) $0.5 million decrease in customer lists and relationships, (ii) a $0.1 million decrease in the trade name, (iii) a $0.1 million increase in backlog, (iv) a $0.1 million increase in developed technology, (v) a $0.1 million decrease in deferred revenue, (vi) a $0.9 million decrease in deferred tax assets and (vii) a $1.4 million increase in goodwill. | ||
Advanced Mobile Group, LLC [Member] | |||
Acquisitions (Details) [Line Items] | |||
Issued and outstanding membership interests | $ 5.1 | ||
Consideration paid cash amount | $ 4.6 | ||
Estimate earnout obligation | $ 0.5 |
Acquisitions (Details) - Schedu
Acquisitions (Details) - Schedule of estimated fair value of acquired net assets $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Schedule of Estimated Fair Value of Acquired Net Assets [Abstract] | |
Cash | $ 170 |
Accounts receivable | 1,402 |
Inventory | 129 |
Prepaids and other current assets | 123 |
Customer lists and relationships | 1,930 |
Trade name | 360 |
Backlog | 280 |
Developed technology | 70 |
Accounts payable | (558) |
Accrued expenses | (152) |
Deferred tax assets | (897) |
Deferred revenue | (148) |
Total fair value excluding goodwill | 2,709 |
Goodwill | 2,371 |
Total consideration | $ 5,080 |
Acquisitions (Details) - Sche_2
Acquisitions (Details) - Schedule of estimated useful lives of intangible assets | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of Estimated Useful Lives of Intangible Assets [Abstract] | |
Customer lists and relationships | 7 years |
Trade name | 3 years |
Backlog | 11 years |
Developed technology | 3 years |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expenses | $ 2 | $ 1.1 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of definitive lived intangible assets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 9,780 | $ 6,820 |
Accumulated Amortization | (5,249) | (3,256) |
Net Amount | 4,531 | 3,564 |
Customer lists and relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 7,940 | 5,690 |
Accumulated Amortization | (3,850) | (2,453) |
Net Amount | 4,090 | 3,237 |
Trade names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 1,360 | 1,000 |
Accumulated Amortization | (973) | (699) |
Net Amount | 387 | 301 |
Developed technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 140 | 70 |
Accumulated Amortization | (86) | (44) |
Net Amount | 54 | 26 |
Backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 340 | 60 |
Accumulated Amortization | (340) | (60) |
Net Amount |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of useful lives and the weighted-average remaining useful life of amortizable intangible assets | 12 Months Ended |
Dec. 31, 2022 | |
Customer lists and relationships [Member] | |
Intangible Assets (Details) - Schedule of useful lives and the weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Weighted Average Remaining Useful Life | 11 years |
Customer lists and relationships [Member] | Minimum [Member] | |
Intangible Assets (Details) - Schedule of useful lives and the weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Expected Life | 7 years |
Customer lists and relationships [Member] | Maximum [Member] | |
Intangible Assets (Details) - Schedule of useful lives and the weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Expected Life | 15 years |
Trade names [Member] | |
Intangible Assets (Details) - Schedule of useful lives and the 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 the weighted-average remaining useful life of amortizable intangible assets [Line Items] | |
Expected Life | 3 years |
Weighted Average Remaining Useful Life | 2 years |
Intangible Assets (Details) -_3
Intangible Assets (Details) - Schedule of amortization expense of the definite lived intangible assets $ in Thousands | Dec. 31, 2022 USD ($) |
Schedule of Amortization Expense of the Definite Lived Intangible Assets [Abstract] | |
2023 | $ 1,395 |
2024 | 951 |
2025 | 647 |
2026 | 517 |
2027 | 446 |
Thereafter | 575 |
Total | $ 4,531 |
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, 2022 | Dec. 31, 2021 | |
Schedule Of Reconciliation Of The Fully Dilutive Securities Effect Abstract | ||
Net income attributable to common stockholders (in Dollars) | $ 3,111 | $ 1,414 |
Weighted average basic shares outstanding | 7,261 | 6,947 |
Dilutive effect of stock options and restricted stock | 301 | 646 |
Weighted average shares for diluted earnings per share | 7,562 | 7,593 |
Basic income per share (in Dollars per share) | $ 0.43 | $ 0.2 |
Diluted income per share (in Dollars per share) | $ 0.41 | $ 0.19 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 0.5 | $ 0.3 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of property and equipment - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,632 | $ 1,561 |
Accumulated depreciation | (815) | (727) |
Property and equipment, net | 1,817 | 834 |
Software and computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,502 | 1,223 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 176 | 204 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 643 | 109 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 311 | $ 25 |
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, 2022 | Dec. 31, 2021 |
Schedule of Accrued Expenses and Other Current Liabilities [Abstract] | ||
Salaries and benefits | $ 2,743 | $ 2,182 |
Accrued earn out obligation related to acquisitions | 829 | 188 |
Sales tax payable | 1,016 | 366 |
Professional fees | 188 | 305 |
Vendor purchases | 44 | 66 |
Customer deposits | 265 | 90 |
Other | 272 | 23 |
Total accrued expenses and other current liabilities | $ 5,357 | $ 3,220 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jul. 30, 2021 | Dec. 31, 2022 | Aug. 31, 2021 | |
Line of Credit (Details) [Line Items] | |||
Outstanding balance | $ 150,000 | ||
Total outstanding | $ 9,000,000 | ||
Commitment fee | 0.25% | ||
Loan agreement, 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 [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 | 7.50% | 2.50% |
Term Debt (Details)
Term Debt (Details) - EIDL Promissory Note [Member] - USD ($) $ in Thousands | 1 Months Ended | |
Aug. 27, 2021 | Aug. 27, 2020 | |
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, 2022 | Dec. 31, 2021 | |
Term Debt (Details) - Schedule of outstanding term debt [Line Items] | ||
Total term debt | $ 146 | $ 149 |
EIDL promissory note [Member] | ||
Term Debt (Details) - Schedule of outstanding term debt [Line Items] | ||
Maturity Date | Aug. 27, 2051 | |
Line of credit | $ 146 | $ 149 |
Term Debt (Details) - Schedul_2
Term Debt (Details) - Schedule of future principal payments for outstanding debt $ in Thousands | Dec. 31, 2022 USD ($) |
Schedule Of Future Principal Payments For Outstanding Debt Abstract | |
2023 | $ 3 |
2024 | 3 |
2025 | 4 |
2026 | 4 |
2027 | 4 |
Thereafter | 128 |
Total minimum payments | $ 146 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Federal and state [Member] | Maximum [Member] | ||
Income Taxes (Details) [Line Items] | ||
Net operating loss carryforwards | $ 4.8 | |
State [Member] | Maximum [Member] | ||
Income Taxes (Details) [Line Items] | ||
Net operating loss carryforwards | $ 6 | |
State [Member] | Minimum [Member] | ||
Income Taxes (Details) [Line Items] | ||
Net operating loss carryforwards | $ 5.1 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of provision for income taxes - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | ||
Federal | $ 910 | $ 7 |
State | 101 | 135 |
Current total | 1,011 | 142 |
Deferred: | ||
Federal | (39) | 70 |
State | 293 | (96) |
Deferred total | 254 | (26) |
Valuation allowance | ||
Total income tax expense | $ 1,265 | $ 116 |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of our deferred tax assets and liabilities - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule Of Our Deferred Tax Assets And Liabilities Abstract | ||
Allowance for doubtful accounts | $ 68 | $ 5 |
Inventory reserve and uniform capitalization | 57 | 38 |
Accrued expenses and other liabilities | 269 | 40 |
Deferred revenue | 46 | 72 |
Other assets | 41 | 338 |
Property and equipment | (364) | (158) |
Intangibles | (150) | 201 |
Goodwill | (121) | (114) |
Net operating loss carryforwards | 1,002 | 1,577 |
Total deferred tax assets | 848 | 1,999 |
Valuation allowance | ||
Net deferred tax assets after valuation allowance | $ 848 | $ 1,999 |
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, 2022 | Dec. 31, 2021 | |
Schedule Of Reconciliation Of The United States Statutory Income Tax Rate Abstract | ||
Federal taxes at statutory rate | $ 919 | $ 321 |
State and local income taxes | 295 | 26 |
Permanent differences | 51 | (231) |
Valuation allowance | ||
Provision for income taxes | $ 1,265 | $ 116 |
Effective tax rate | 28.90% | 7.60% |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - $ / shares | 12 Months Ended | ||||
Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 13, 2021 | Feb. 28, 2021 | |
Stockholders’ Equity (Details) [Line Items] | |||||
Total number of authorized shares | 60,000,000 | ||||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | |||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | |||
Unchanged shares | 50,000,000 | ||||
Shares of common stock | 7,416,000 | 7,007,000 | |||
Common Stock [Member] | |||||
Stockholders’ Equity (Details) [Line Items] | |||||
Shares of common stock | 50,000,000 | ||||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | |||
Common stock outstanding | 7,416,071 | 7,007,454 | |||
Shares of common stock | 97,408 | 151,504 | |||
Preferred Stock [Member] | |||||
Stockholders’ Equity (Details) [Line Items] | |||||
Preferred stock, shares authorized | 10,000,000 | ||||
Preferred stock, par value (in Dollars per share) | $ 0.001 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - Schedule of outstanding common stock warrants $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Class of Warrant or Right [Line Items] | |
Total Warrants Outstanding and Exercisable | shares | 228,665 |
Total Exercise Price | $ | $ 237 |
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 | 207,665 |
Total Exercise Price | $ | $ 208 |
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 | 21,000 |
Total Exercise Price | $ | $ 29 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) shares | |
Share-Based Compensation (Details) [Line Items] | |
Term of stock option granted | 10 years |
Fair market value, percentage | 100% |
Vesting period | 3 years |
Voting power, percentage | 10% |
Fair market share, percentage | 110% |
Unrecognized share-based compensation | $ | $ 235,177 |
Weighted average remaining recognition period | 1 year 7 months 6 days |
Shares withheld for employee taxes. | shares | 154,320 |
Employee tax withholding | $ | $ 1,500,000 |
2014 Equity Incentive Plan [Member] | |
Share-Based Compensation (Details) [Line Items] | |
Number of shares issuance | shares | 1,600,000 |
Share-Based Compensation (Det_2
Share-Based Compensation (Details) - Schedule of stock option activity | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Schedule of Stock Option Activity [Abstract] | |
Stock Options,Outstanding | shares | 1,002,750 |
Grant Date Weighted Average Exercise Price, Outstanding | $ / shares | $ 3 |
Weighted Average Remaining Contractual Life,Outstanding | |
Stock Options, Granted, Stock options | shares | 229,750 |
Grant Date Weighted Average Exercise Price, Granted | $ / shares | $ 5.57 |
Stock Options, Exercised, Stock options | shares | (675,626) |
Grant Date Weighted Average Exercise Price, Exercised | $ / shares | $ 3.29 |
Stock Options, Forfeited or expired Stock options | shares | (97,917) |
Grant Date Weighted Average Exercise Price, Forfeited | $ / shares | $ 2.01 |
Stock Options,Outstanding | shares | 458,957 |
Grant Date Weighted Average Exercise Price, Outstanding | $ / shares | $ 4.08 |
Weighted Average Remaining Contractual Life, Outstanding | 1902337 years |
Stock Options, Exercisable | shares | 291,978 |
Grant Date Weighted Average Exercise Price, Exercisable | $ / shares | $ 4.21 |
Aggregate Intrinsic Value, Exercisable | $ | $ 1,565,437 |
Share-Based Compensation (Det_3
Share-Based Compensation (Details) - Schedule of the fair values of stock options granted were estimated using the Black-Scholes option-pricing model - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of the Fair Values of Stock Options Granted were Estimated Using the Black-Scholes Option-Pricing Model [Abstract] | ||
Weighted average grant-date fair value per option granted (in Dollars per share) | $ 3.13 | $ 1.58 |
Expected option term | 2 years 6 months | 3 years |
Expected volatility factor | 83% | 66% |
Risk-free interest rate | 4.27% | 0.49% |
Expected annual dividend yield |
Share-Based Compensation (Det_4
Share-Based Compensation (Details) - Schedule of the exercised options, utilizing a cashless exercise $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Schedule of the Exercised Options, Utilizing a Cashless Exercise [Abstract] | |
Options exercised | 596,668 |
Weighted Average Exercise Price (in Dollars per share) | $ / shares | $ 3.46 |
Shares Net Settled for Exercise | 210,117 |
Shares Withheld for Taxes | 154,320 |
Net Shares Issued | 232,231 |
Weighted Average Share Price (in Dollars per share) | $ / shares | $ 9.84 |
Employee Share-Based Tax Withholding (in Dollars) | $ | $ 1,517,823 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies (Details) [Line Items] | ||
Lease agreement, the base rent | $ 39,778 | |
Increase lease agreement base rent, percentage | 3% | |
Measurement of operating lease liabilities | $ 400,000 | |
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 2022 and 2021, 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 | $ 255,000 | $ 201,000 |
Colorado [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Monthly payments | $ 5,840 | |
Borrowing rate | 4.75% | |
California [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Future payment of operating lease | $ 100,000 | |
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 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of the maturity of operating lease liabilities $ in Thousands | Dec. 31, 2022 USD ($) |
Schedule Of The Maturity Of Operating Lease Liabilities [Abstract] | |
2023 | $ 659 |
2024 | 608 |
2025 | 598 |
2026 | 536 |
2027 | 552 |
Thereafter | 759 |
Total minimum lease payments | 3,711 |
Less: interest | (476) |
Present value of operating lease liabilities | $ 3,235 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | 1 Months Ended | |
Jun. 30, 2023 | Mar. 27, 2023 | |
Subsequent Event [Member] | ||
Subsequent Event (Details) [Line Items] | ||
Promissory note agreement | $ 5,000,000 | |
Subsequent Event [Member] | Minimum [Member] | ||
Subsequent Event (Details) [Line Items] | ||
Revolving line of credit | 9,000,000 | |
Subsequent Event [Member] | Maximum [Member] | ||
Subsequent Event (Details) [Line Items] | ||
Revolving line of credit | $ 10,000,000 | |
Forecast [Member] | ||
Subsequent Event (Details) [Line Items] | ||
Principal interest payments | $ 250,000 |