Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 28, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Entity Registrant Name | Semler Scientific, Inc. | ||
Entity Central Index Key | 0001554859 | ||
Trading Symbol | smlr | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 6,534,076 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 171,150,529.52 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 7,741 | $ 3,284 |
Trade accounts receivable, net of allowance for doubtful accounts of $36 and $52, respectively | 3,486 | 2,801 |
Prepaid expenses and other current assets | 216 | 153 |
Total current assets | 11,443 | 6,238 |
Assets for lease, net | 2,079 | 1,243 |
Property and equipment, net | 249 | 223 |
Long-term deposits | 15 | 15 |
Long-term deferred tax assets | 4,501 | |
Total assets | 18,287 | 7,719 |
Current liabilities: | ||
Accounts payable | 338 | 280 |
Accrued expenses | 3,914 | 2,797 |
Deferred revenue | 955 | 435 |
Total current liabilities | 5,207 | 3,512 |
Long-term liabilities: | ||
Other long-term liabilities | 7 | 11 |
Total long-term liabilities | 7 | 11 |
Stockholders' equity: | ||
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,556,221, and 6,349,985 shares issued, and 6,531,221 and 6,324,985 shares outstanding (treasury shares of 25,000 and 25,000, respectively) | 7 | 6 |
Additional paid-in capital | 19,400 | 25,608 |
Accumulated deficit | (6,334) | (21,418) |
Total stockholders' equity | 13,073 | 4,196 |
Total liabilities and stockholders' equity | $ 18,287 | $ 7,719 |
Balance Sheets (Parentheticals)
Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Balance Sheets | ||
Allowance for doubtful accounts on trade accounts receivable (in dollars) | $ 36 | $ 52 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 6,556,221 | 6,349,985 |
Common stock, shares outstanding | 6,531,221 | 6,324,985 |
Treasury stock, shares | 25,000 | 25,000 |
Statements of Income
Statements of Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statements of Income | ||
Revenues | $ 32,767 | $ 21,491 |
Operating expenses: | ||
Cost of revenues | 3,661 | 2,703 |
Engineering and product development | 2,479 | 2,085 |
Sales and marketing | 8,965 | 7,202 |
General and administrative | 6,954 | 4,159 |
Total operating expenses | 22,059 | 16,149 |
Income from operations | 10,708 | 5,342 |
Interest income (expense) | 2 | (59) |
Related party interest expense | (239) | |
Other expense | (9) | (4) |
Other expense | (7) | (302) |
Pre-tax net income | 10,701 | 5,040 |
Income tax (benefit) provision | (4,383) | 26 |
Net income | $ 15,084 | $ 5,014 |
Net income per share, basic | $ 2.34 | $ 0.82 |
Weighted average number of shares used in computing basic income per share | 6,440,724 | 6,079,326 |
Net income per share, diluted | $ 1.88 | $ 0.66 |
Weighted average number of shares used in computing diluted income per share | 8,029,909 | 7,629,523 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 6 | $ 23,843 | $ (26,432) | $ (2,583) | |
Balance (in shares) at Dec. 31, 2017 | 5,902,244 | (25,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of shares to settle related party loan | 294 | 294 | |||
Issuance of shares to settle related party loan (in shares) | 12,943 | ||||
Warrant exercises | 414 | 414 | |||
Warrant exercises (in shares) | 212,517 | ||||
Stock option exercises | 456 | $ 456 | |||
Stock option exercises (in shares) | 222,281 | 222,281 | |||
Stock-based compensation | 601 | $ 601 | |||
Net income | 5,014 | 5,014 | |||
Balance at Dec. 31, 2018 | $ 6 | 25,608 | (21,418) | 4,196 | |
Balance (in shares) at Dec. 31, 2018 | 6,349,985 | (25,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Warrant Repurchase | (6,633) | (6,633) | |||
Warrant exercises (in shares) | 36,197 | ||||
Stock option exercises | $ 1 | 60 | $ 61 | ||
Stock option exercises (in shares) | 170,039 | 179,865 | |||
Stock-based compensation | 365 | $ 365 | |||
Net income | 15,084 | 15,084 | |||
Balance at Dec. 31, 2019 | $ 7 | $ 19,400 | $ (6,334) | $ 13,073 | |
Balance (in shares) at Dec. 31, 2019 | 6,556,221 | (25,000) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 15,084 | $ 5,014 |
Reconciliation of Net Income to Net Cash Provided by Operating Activities: | ||
Amortization of debt discount | 22 | |
Accretion of non-cash interest | 231 | |
Depreciation | 632 | 503 |
Deferred tax benefit | (4,501) | 0 |
Loss on disposal of assets for lease | 206 | 200 |
Allowance for doubtful accounts | 48 | 46 |
Stock-based compensation expense | 365 | 601 |
Changes in Operating Assets and Liabilities: | ||
Trade accounts receivable | (734) | (1,503) |
Prepaid expenses and other assets | (63) | (42) |
Accounts payable | 58 | (208) |
Accrued expenses | 1,113 | (71) |
Deferred revenue | 520 | (96) |
Net Cash Provided by Operating Activities | 12,728 | 4,697 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property and equipment | (174) | (138) |
Proceeds from sale of property and equipment | 1 | |
Purchase of assets for lease | (1,524) | (706) |
Net Cash Used in Investing Activities | (1,698) | (843) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repurchase of warrants | (6,633) | |
Proceeds from exercise of warrants | 414 | |
Proceeds from exercise of stock options | 60 | 456 |
Payments of loans payable | (2,897) | |
Net Cash Used in Financing Activities | (6,573) | (2,027) |
INCREASE IN CASH | 4,457 | 1,827 |
CASH, BEGINNING OF PERIOD | 3,284 | 1,457 |
CASH, END OF PERIOD | 7,741 | 3,284 |
Cash paid for interest | 575 | |
Cash paid for taxes | $ 123 | 18 |
Supplemental disclosure of noncash financing activity: | ||
Issuance of shares to settle related party loan | $ 294 |
The Company
The Company | 12 Months Ended |
Dec. 31, 2019 | |
The Company | |
The Company | 1. The Company Semler Scientific, Inc. (the “Company”) was incorporated in the State of Oregon on August 9, 2007, established C-corporation status in 2012, and reincorporated as a Delaware corporation during 2013. The Company is a company providing technology solutions to improve the clinical effectiveness and efficiency of healthcare providers. In 2011, the Company began commercializing its first patented and U.S. Food and Drug Administration (“FDA”) cleared product, which measured arterial blood flow in the extremities to aid in the diagnosis of peripheral arterial disease (“PAD”). In March 2015, the Company received FDA 510(k) clearance for the next generation version of its product, QuantaFlo ® , which the Company commercially launched in August 2015. The Company has one operating segment and generates revenues domestically primarily through direct licensing to direct customers. The Company is based in San Jose, California. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Estimates | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies and Estimates | |
Summary of Significant Accounting Policies and Estimates | 2. Summary of Significant Accounting Policies and Estimates Basis for Presentation The Company’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses, and related disclosures during the reporting period. Significant items subject to such estimates include revenue recognition, allowance for doubtful accounts, valuation of equipment on lease, deferred tax asset valuation allowance, stock-based compensation and valuation of warrants. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from these estimates. Revenue Recognition The Company generates revenues primarily from the rental or license of its vascular testing product, or providing diagnostic testing service to its customers. The Company recognizes revenues from the licensing of its vascular testing product pursuant to agreements that automatically renew each month with revenue recognized on a daily convention basis. The Company’s arrangements with customers for its vascular testing product are normally on a month-to-month basis with fees billed at the rates established in the customer agreement. The Company recognizes revenues for providing diagnostic testing services on a per test basis to customers, as earned. The Company also recognizes revenue for hardware and supplies sales as of the date of shipment. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts is based on management’s assessment of the collectability of accounts. The Company regularly reviews the adequacy of this allowance for doubtful accounts by considering historical experience, the age of the accounts receivable balances, the credit quality of the customers, current economic conditions, and other factors that may affect customers’ ability to pay to determine whether a specific allowance is appropriate. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. Assets for Lease Assets for lease are recorded at cost. At December 31, 2019 and 2018, assets for lease consisted of vascular testing devices, which are leased to customers. The cost of such assets for lease is depreciated on a straight-line basis over 36 months for the units outstanding and recorded as cost of revenues. The Company regularly reviews whether facts and circumstances exist which indicate that the carrying amounts of assets, may not be recoverable or that the useful life of assets are shorter or longer than originally estimated. The Company assesses the recoverability of its assets by comparing the projected undiscounted net cash flows associated with the related assets over their estimated remaining lives against their respective carrying amounts. The Company considers factors such as estimated usage and expected lives of its assets for lease in this analysis. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. At December 31, 2019 and 2018, there were no impairment indicators. Property and Equipment Capital assets are recorded at cost. The cost of such capital assets is depreciated on a straight-line basis over a term depending on the assigned category (described below) and recorded as depreciation for capital assets recorded in engineering and product development, sales and marketing and general and administrative expenses. At December 31, 2019 and 2018, capital assets are classified into one of the following categories: Category Name Description Machinery & Equipment Manufacturing, R&D, or other non-office equipment Computer Equipment & Software Software, computers, monitors, printers and other related equipment. Furniture & Fixtures Office equipment and furniture owned by the company At December 31, 2019 and 2018, capital assets are depreciated based on the following estimated useful life for each category: Account Name Useful Life Machinery & Equipment Five years Computer Equipment & Software Three years Furniture & Fixtures Five years The Company regularly reviews whether facts and circumstances exist which indicate that the carrying amounts of capital assets, may not be recoverable or that the useful life of assets are shorter or longer than originally estimated. The Company assesses the recoverability of its assets by comparing the projected fair value of the related asset over the estimated remaining life against the respective carrying amounts. The Company considers factors such as estimated usage and expected lives of its capital assets in this analysis. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. The Company did not have any impairments to record during either the years ended December 31, 2019 or 2018. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy under Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, are described as follows: Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 — Inputs other than quoted prices included in Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and Level 3 — Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own models. The financial instruments of the Company consist primarily of cash, accounts receivable, and accounts payable. These items are considered Level 1 due to their short term nature and their market interest rates and are therefore considered a reasonable estimate of fair value at December 31, 2019 and 2018. Deferred Revenue Deferred revenue represents amounts billed to or collected from customers for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The full amount is expected to be recognized as revenues within one year from the balance sheet date and, therefore, such deferred amounts have been classified as current liabilities in the balance sheets presented. The Company generally invoices its clients in advance of a rental period with payment due upon receipt of the invoice. Research and Development The Company expenses costs related to the research and development associated with the design, development, testing and enhancement of its products and services. Such expenses include salaries and related employee benefits, and fees paid to external service providers. Stock-Based Compensation Stock-based compensation expense is measured based on the grant-date fair value of the stock-based awards. The Company recognizes stock-based compensation expense for the portion of each option grant or stock award that is expected to vest over the estimated period of service and vesting. The Company uses the Black-Scholes option pricing model as the method for determining the estimated grant-date fair value of stock options. The Black-Scholes option pricing model requires the use of subjective assumptions which determine the fair value of stock-based awards, including the option’s expected volatility. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the grant. Employee Benefit Plan The Company has a savings plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). There were no matching or discretionary employer contributions made to this plan during the years ended December 31, 2019 and 2018. Income Taxes The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the expected tax consequences attributable to the differences between financial reporting and the tax bases of existing assets and liabilities and net operating loss (“NOL”) carry forwards, and they are measured using enacted tax rates expected to be in effect when differences are expected to reverse. The U.S. Tax Cuts & Jobs Act of 2017 reduced the U.S. corporate income tax rate to 21%, effective January 1, 2018. In addition, NOLs generated after December 31, 2017 are carried forward indefinitely with yearly NOL utilization limited to 80% of taxable income. A valuation allowance is recorded for loss carry-forwards and other deferred tax assets where it is more likely than not that such loss carry-forward and deferred tax assets will not be realized. The estimate for the valuation allowance for deferred tax assets requires management to make significant estimates and judgments about projected future operating results. If actual results differ from these projections or if management’s expectations of future results change, it may be necessary to adjust the valuation allowance Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). The amendment in this ASU provides guidance on the revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The core principle of this update provides guidance to identify the performance obligations under the contract(s) with a customer and how to allocate the transaction price to the performance obligations in the contract. It further provides guidance to recognize revenue when (or as) the entity satisfies a performance obligation. This standard replaced most existing revenue recognition guidance. On August 8, 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU No. 2014-09 by one year, and permits early adoption as long as the adoption date is not before the original public entity effective date. Since the issuance of ASU 2014-09, the FASB has issued several amendments that clarify certain points, including ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing (“Topic 606”), ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 Emerging Issues Task Force Meeting, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606. The updated revenue standard allows two methods of adoption: (1) retrospectively to each prior period presented (“full retrospective method”), or (2) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective method”). The new standard further requires new disclosures about contracts with customers, including the significant judgments the company has made when applying the guidance. The Company adopted the new standard effective January 1, 2019, using the modified retrospective method. The Company determined that the adoption of this new standard did not have a material impact on its financial statements. Topic 606 affects revenue recognition for the Company’s variably-priced (i.e., fee per test) license fee contracts and sales of hardware equipment and accessories. Total variably-priced license fees represent approximately $8,927 and $4,759 of revenues for the years ended December 31, 2019 and 2018, respectively. Total sales of hardware and equipment accessories represents approximately $927 and $386 of revenues for the years ended December 31, 2019 and 2018, respectively. Essentially all of the variably-priced license fee contracts are with large healthcare organizations. The initial contract is for a specified time period with automatic renewal each period thereafter until canceled. In case there is a violation of any term of the contract, the Company may deactivate the service remotely, so that the customer cannot continue to use the product. The reusable hardware equipment or accessories may be provided to a customer for a set price and then use of the associated software is billed to the customer monthly based on volume of use. Under this scenario, revenue is recognized when and only when the customer uses the product. The sale of the equipment or accessories is recognized as hardware sales upon shipment to the customer. It was determined that the impact of the new standard has no effect on the way revenue is currently being recognized. The remainder of the revenue is earned from leasing the Company’s testing product for a fixed monthly fee, which is not subject to Topic 606. In February 2016, the FASB issued ASU No. 2016-02, Leases. This standard, along with other guidance subsequently issued by the FASB (collectively, “ASC 842”), requires lessees to recognize lease assets and liabilities for all leases with lease terms of more than 12 months. The standard makes similar changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. Presentation of leases within the statements of operations and statements of cash flows will primarily depend on its classification as a finance or operating lease. ASC 842 is effective for the Company in the first quarter of fiscal 2020 with early adoption permitted. The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition method. Therefore, upon adoption, the Company recognized and measured leases without revising comparative period information or disclosures. The adoption of this standard did not have an impact on the Company's revenue recognition. In addition, the Company has elected to apply the package of practical expedients permitted under the transition guidance within ASC 842 which does not require reassessment of initial direct costs, classification of a lease and definition of a lease which resulted in the Company foregoing a reassessment of (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) the initial direct costs for an existing lease. See Note 7 for additional information and details of the effects of adopting the new standard. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”). This ASU requires timelier recording of credit losses on loans and other financial instruments held. Instead of reserves based on a current probability analysis, Topic 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. All organizations will now use forward-looking information to better inform their credit loss estimates. Topic 326 requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide information about the amounts recorded in the financial statements. In addition, Topic 326 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In April 2019, the FASB issued ASU2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments to introduce amendments which will affect the recognition and measurement of financial instruments, including derivatives and hedging. In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief. The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments upon adoption of Topic 326. This standard and related amendments are effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2023. The Company does not anticipate this new standard will have a material impact on its financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of costs. The ASU specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard will have a material impact on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU modify the disclosure requirements on fair value measurements removing the requirements to disclosure amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. In addition, it modified certain disclosures related to Level 3 fair value measurements and added additional disclosures regarding the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. This update is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard to have a material impact on its financial statements. In November 2019, the FASB issued ASU 2019-08 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). The amendments on this update require that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. The amount recorded as a reduction in the transaction price should be based on the grant-date fair value of the share-based payment award. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard will have a material impact on its financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. This update is effective for the Company’s annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2021. The Company does not anticipate this update to have a material impact on its financial statements. |
Assets for Lease, net
Assets for Lease, net | 12 Months Ended |
Dec. 31, 2019 | |
Assets for Lease, net | |
Assets for Lease, net | 3. Assets for Lease, net The Company provides financing of certain equipment through operating leases (see Note 7). Assets for lease consist of the following: As of December 31, 2019 2018 Assets for lease $ 3,374 $ 2,218 Less: accumulated depreciation (1,295) (975) Assets for lease, net $ 2,079 $ 1,243 Depreciation expense amounted to $483 and $395 for the years ended December 31, 2019 and 2018, respectively. Reduction to accumulated depreciation for returned items was $163 and $120 for the years ended December 31, 2019 and December 31, 2018, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $206 and $200 for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, total assets for lease, net, in use at customer locations were $849 and $640, respectively. |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment, net | |
Property and Equipment, net | 4. Property and Equipment, net Capital assets consist of the following: As of December 31, 2019 2018 Capital assets $ 636 $ 457 Less: accumulated depreciation (387) (234) Capital assets, net $ 249 $ 223 Depreciation expense amounted to $149 and $108 for the years ended December 31, 2019 and 2018, respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Expenses | |
Accrued Expenses | 5. Accrued Expenses Accrued expenses consist of the following: As of December 31, 2019 2018 Compensation $ 2,803 $ 2,442 Accrued Taxes 66 81 Miscellaneous Accruals 1,045 354 Total Accrued Expenses $ 3,914 $ 2,797 |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2019 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | 6. Concentration of Credit Risk Credit risk is the risk of loss from amounts owed by the financial counterparties. Credit risk can occur at multiple levels; as a result of broad economic conditions, challenges within specific sectors of the economy, or from issues affecting individual companies. Financial instruments that potentially subject the Company to credit risk consist of cash and accounts receivable. The Company maintains cash with major financial institutions. The Company’s cash consists of bank deposits held with banks that, at times, exceed federally insured limits. The Company limits its credit risk by dealing with counterparties that are considered to be of high credit quality and by performing periodic evaluations of the relative credit standing of these financial institutions. Management periodically monitors the creditworthiness of its customers and believes that it has adequately provided for any exposure to potential credit loss. For the year ended December 31, 2018, two customers accounted for 52.0% and 19.5% of the Company’s revenue. For the year ended December 31, 2019, three customers accounted for 49.4%, 13.2% and 12.5% of the Company’s revenue. As of December 31, 2018, two customers accounted for 43.5% and 40.4% of the Company’s accounts receivable, respectively. As of December 31, 2019, three customers accounted for 55.9%,17.6% and 12.0% of the Company’s accounts receivable, respectively. As of December 31, 2019 and 2018 the allowance for doubtful accounts was $36 and $52, respectively. As of December 31, 2018, two vendors accounted for 11.0% and 10.8% of the Company’s accounts payable, respectively. As of December 31, 2019, two vendors accounted for 15.9% and 14.1% of the Company’s accounts payable, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 7. Leases Lessee Arrangements The Company leases facilities under a long term lease arrangement that has been determined to be an operating lease under new lease accounting standard that would require the Company to reflect a right of use (“ROU”) lease asset and lease liabilities associated with this lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As of December 31, 2019, the remaining lease term is one year and two months with no options to renew. Upon adoption of ASC 2016-02, in accordance with the elected practical expedient transition rules, the ROU asset and liability related to this lease was immaterial. The Company recognized facilities lease expenses of $68 and $69 for the years ended December 31, 2019 and 2018, respectively. Future minimum rent expense for 2020 and 2021 is $64 and $11, respectively. Lessor Arrangements The Company enters into contracts with customers for the Company’s QuantaFlo ® product. The Company has determined these contracts meet the definition of a lease under Topic 842. The lease portfolio primarily consists of operating leases that are short-term in nature (monthly, quarterly or one year, all of which have renewal options). The Company allocates the consideration in a bundled contract with its customers based on relative standalone selling prices of the lease and non-lease components. The Company made an accounting policy election to apply the practical expedient to not separate lease and eligible non-lease components. The lease component is the predominant component and consists of fees charged for use of the equipment over the period of the arrangement. The nature of the eligible non-lease component is primarily software support. The assets associated with these leasing arrangements are separately identified in the Balance Sheet as Assets for Lease and separately disclosed in Note 3. During the year ended December 31, 2019, the Company recognized approximately $22,858 in lease revenue related to these arrangements, which is included in revenue on the Statements of Income. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 8 . Commitments and Contingencies Indemnification Obligations The Company enters into agreements with customers, partners, lenders, consultants, lessors, contractors, sales representatives and parties to certain transactions in the ordinary course of the Company’s business. These agreements may require the Company to indemnify the other party against third party claims alleging that its product infringes a patent or copyright. Certain of these agreements require the Company to indemnify the other party against losses arising from: a breach of representations or covenants, claims relating to property damage, personal injury or acts or omissions of the Company, its employees, agents or representatives. The Company has also agreed to indemnify the directors and certain of the officers and employees in accordance with the by-laws of the Company. These indemnification provisions will vary based upon the nature and terms of the agreements. In many cases, these indemnification provisions do not contain limits on the Company’s liability, and the occurrence of contingent events that will trigger payment under these indemnities is difficult to predict. As a result, the Company cannot estimate its potential liability under these indemnities. The Company believes that the likelihood of conditions arising that would trigger these indemnities is remote and, historically, the Company had not made any significant payment under such indemnification provisions. Accordingly, the Company has not recorded any liabilities relating to these agreements. In certain cases, the Company has recourse against third parties with respect to the aforesaid indemnities, and the Company believes it maintains adequate levels of insurance coverage to protect the Company with respect to potential claims arising from such agreements. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Stockholders’ Equity The Company has 50,000,000 authorized shares of capital stock, all of which are designated as common stock with par value of $0.001 per share. Each holder of shares of common stock is entitled to one vote for each share held. For the years ended December 31, 2019 and 2018, a total of 1,658,457 and 2,037,661 shares of common stock, respectively, were reserved for issuance upon (i) exercise of common stock warrants, and (ii) the exercise of outstanding stock options, as follows: Year ended December 31, 2019 2018 Common stock warrants 76,875 276,214 Stock options 1,581,582 1,761,447 Total 1,658,457 2,037,661 |
Warrant Repurchase - Related Pa
Warrant Repurchase - Related Party | 12 Months Ended |
Dec. 31, 2019 | |
Warrant Repurchase - Related Party | |
Warrant Repurchase - Related Party | 10. Warrant Repurchases – Related Party On May 3, 2019, the Company entered into a warrant purchase agreement (the “May Repurchase Agreement”), with the Murphy-Chutorian Family Trust U/D/T dated January 13, 1997 (the “Murphy-Chutorian Family Trust”), of which Dr. Murphy-Chutorian, the Company’s director and chief executive officer is co-Trustee with his spouse and of which he is a beneficiary. Pursuant to the May Repurchase Agreement, the Company repurchased a warrant to acquire 65,542 shares of its common stock (the “May Repurchase Warrant”), held by the Murphy-Chutorian Family Trust, which warrant had an exercise price equal to $4.50 per share and an expiration date of July 31, 2023, at an aggregate purchase price of $2,687. The purchase price reflects the difference between the aggregate exercise price of the May Repurchase Warrant and the aggregate fair market value of the shares underlying the May Repurchase Warrant, based on the last trade price of the Company’s common stock on May 3, 2019, the date of the May Repurchase Agreement. Following this repurchase, the May Repurchased Warrant was cancelled and is no longer issued and outstanding. On November 6, 2019, the Company entered into a warrant purchase agreement (the “November Repurchase Agreement”), with the Murphy-Chutorian Family Trust. Pursuant to the November Repurchase Agreement, the Company repurchased warrants to acquire an aggregate of 93,797 shares of its common stock (collectively, the “November Repurchase Warrants”), held by the Murphy-Chutorian Family Trust, which warrants had exercise prices ranging from $2.00 to $4.50 per share and an expiration date of July 31, 2023, at an aggregate purchase price of $3,946. The purchase price reflects the difference between the aggregate exercise price of the November Repurchase Warrants and the aggregate fair market value of the shares underlying the November Repurchase Warrants, based on the last trade price of the Company’s common stock on November 6, 2019, the date of the November Repurchase Agreement. Following this repurchase, the November Repurchased Warrants were cancelled and are no longer issued and outstanding. Following these repurchases, the Murphy-Chutorian Family Trust holds warrants to acquire 16,875 shares of the Company’s common stock at an exercise price of $4.00 per share, and 60,000 shares of the Company’s common stock at an exercise price of $4.50 per share, all of which are exercisable and expire July 31, 2023. |
Stock Option Plan
Stock Option Plan | 12 Months Ended |
Dec. 31, 2019 | |
Stock Option Plan | |
Stock Option Plan | 11. Stock Option Plan The Company’s stock-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of its stockholders. Stock options have been granted to employees under the stockholder-approved 2007 Key Person Stock Option Plan (“2007 Plan”) or the stockholder-approved 2014 Stock Incentive Plan (“2014 Plan”). Stockholder approval of the 2014 Plan became effective in September 2014. The 2014 Plan originally provided that the aggregate number of shares of common stock that may be issued pursuant to awards granted under the 2014 Plan may not exceed 450,000 shares (the “Share Reserve”), however in October 2015, the stockholders approved a 1,500,000 increase to the Share Reserve. In addition, the Share Reserve automatically increases on January 1st of each year, for a period of not more than 10 years, beginning on January 1st of the year following the year in which the 2014 Plan became effective and ending on (and including) January 1, 2024, in an amount equal to 4% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year. The Company’s board of directors may act prior to January 1st of a given year to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of common stock than would otherwise occur. The Share Reserve is currently 2,783,616 shares for the year ending December 31, 2019. In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of December 31, 2019, there were no shares available for future stock-based compensation grants under the 2007 Plan and 997,163 shares of an aggregate total of 2,783,616 shares available for future stock-based compensation grants under the 2014 Plan. Aggregate intrinsic value represents the difference between the closing market value as of December 31, 2019 of the underlying common stock and the exercise price of outstanding, in-the-money options. A summary of the Company’s stock option activity and related information for 2019 and 2018 is as follows: Options Outstanding Weighted Number of Weighted Average Stock Average Remaining Aggregate Options Exercise Contractual Intrinsic Value Outstanding Price Term (In Years) (In Thousands) Balance, December 31, 2017 1,855,138 $ 2.69 $ 9,850 Options granted 135,000 8.00 — — Options exercised (222,281) 2.05 — — Options forfeited/cancelled (6,410) 3.44 — — Balance, December 31, 2018 1,761,447 $ 3.18 $ 55,000 Options exercised (179,865) 2.72 — — Balance, December 31, 2019 1,581,582 $ 3.23 $ 70,827 Exercisable as of December 31, 2018 1,481,591 $ 2.83 $ 46,780 Exercisable as of December 31, 2019 1,477,020 $ 3.06 $ 66,389 The total compensation cost related to unvested stock option awards not yet recognized was $435 as of December 31, 2019. The weighted average period over which the total unrecognized compensation cost related to these unvested stock awards will be recognized is 1.03 years. The total number of unvested shares was 104,563 and 279,856 as of December 31, 2019 and 2018, respectively. The total estimated grant date fair value of unvested options was $435 and $1,038 as of December 31, 2019 and 2018, respectively. The total estimated grant date fair value of options vested during the years ended December 31, 2019 and 2018 was $365 and $601, respectively. There were no options granted or forfeited during the year ended December 31, 2019. The weighted average grant date fair value of options granted during the year ended December 31, 2018 is $5.97 per share or an aggregate grant date fair value of $806. The weighted average grant date fair value of options forfeited during the year ended December 31, 2018 was $1.42. On January 2, 2018 the Compensation Committee of the Company’s Board of Directors granted, and the full Board ratified, an option to acquire an aggregate of 125,000 shares under the 2014 Plan to the Company’s CEO. This option vests 25% on the one-year anniversary of the grant date and monthly thereafter for 36 months, such that the option is vested in full on the four-year anniversary of the grant date. On January 2, 2018 the Company’s Compensation Committee granted, and the full Board ratified, options to each of the then-seated non-employee Directors to acquire 5,000 shares, for an aggregate of 10,000 shares, under the 2014 Plan. These options vest on the one-year anniversary of their grant date. On February 28, 2018 the Compensation Committee of the Company’s Board of Directors accelerated the vesting on stock options issued to consultants such that all unvested shares were vested on that date. This resulted in a one-time expense of $49 during year ended December 31, 2018. Determining the Fair Value of Stock Options The fair value of the options granted is estimated on the date of grant using the Black-Scholes pricing model and the following assumptions for the periods presented: Year ended December 31, 2018 Expected term (in years) 5 Risk-free interest rate 2.2 % Expected volatility 99.0 % Expected dividend rate 0 % The assumptions are based on the following for each of the years presented: Valuation Method — The Company estimates the fair value of its stock options using the Black-Scholes option pricing model. Expected Term — The Company estimates the expected term consistent with the simplified method identified by the Securities and Exchange Commission (“SEC”). The Company elected to use the simplified method because of its limited history of stock option exercise activity and its stock options meet the criteria of the “plain-vanilla” options as defined by the SEC. The simplified method calculates the expected term as the average of the vesting and contractual terms of the award. Volatility — The Company derives this number from the historical stock volatilities of the Company’s stock over a period approximately equal to the expected term of the options. Risk-free Interest Rate — The risk-free interest rate is based on median U.S. Treasury zero coupon issues with remaining terms similar to the expected term on the options. Expected Dividend — The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, used an expected dividend yield of zero in the valuation model. The Company has recorded an expense of $365 and $601 as it relates to stock-based compensation for the years ended December 31, 2019 and 2018, respectively, which was allocated as follows based on the role and responsibility of the recipient in the Company: Year ended December 31, 2019 2018 Cost of Revenues $ 1 $ 2 Engineering and Product Development 16 36 Sales and Marketing 46 92 General and Administrative 302 471 Total $ 365 $ 601 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 12. Income Taxes The components of the (benefit) provision for income taxes are as follows: 2019 2018 Current tax provision: Federal $ — $ — State 118 26 Subtotal current tax expense 118 26 Deferred tax provision: Federal (3,645) — State (856) — Subtotal deferred tax (benefit) (4,501) — Total income tax (benefit) expense $ (4,383) $ 26 A summary of the differences between the Company’s effective income tax rate and the federal statutory income tax rate for the years ended December 31, 2019 and 2018 are as follows: 2019 2018 Federal statutory rate 21.00 % 21.00 % State income tax rate, net of federal benefit 1.83 % 0.95 % Change in valuation allowance (49.89) % (2.28) % Stock-based compensation (13.12) % (13.61) % Permanent Items 0.40 % 0.42 % Other (1.18) % (5.97) % Effective income tax rate (40.96) % 0.51 % Deferred tax assets are comprised of the following at December 31: 2019 2018 Net operating loss carryforwards 2,646 3,864 Deferred revenue 233 106 Depreciation and amortization 14 45 Stock based compensation 751 670 Accrual and reserves 145 119 Research and development credits, net of tax reserve 711 533 Other 1 — Total gross deferred tax assets 4,501 5,337 Less valuation allowance — (5,337) Net deferred tax assets $ 4,501 $ — The net change in the valuation allowance for December 31, 2019 was ($5,337). In assessing the realizability of deferred tax assets, management determined there was sufficient positive evidence that it was more likely than not that the federal and state NOL carryforwards and other related deferred tax assets would be realized and therefore, released the valuation allowance against the deferred tax assets. Federal and California tax laws impost significant restrictions on the utilization of NOL carryforwards in the event of a change in ownership of the Company, as defined by Internal Revenue Code Section 382 (“Section 382”). The Company has completed a formal Section 382 study for the period January 1, 2012 through June 30, 2019 and believed a change in ownership has occurred. The Company has NOL carryforwards for federal and California income tax purposes of approximately $10,256 and $5,769, respectively, as of December 31, 2019. The federal NOL carryforwards, if not utilized, will expire beginning in [2033]. The state NOL carryforwards, if not utilized, will expire beginning in [2032]. Under The U.S. Tax Cuts & Jobs Act, passed into law in December 2017, effective January 1, 2018, NOLs generated after December 31, 2017 will be carried forward indefinitely with the yearly NOL utilization limited to 80% of taxable income. The Company has research and development (“R&D”) tax credit carryforwards for federal income tax purposes of approximately $732 as of December 31, 2019. The federal R&D credit carryforward, if not utilized will expire beginning in 2032. ASC Topic No. 740. requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the financial statements. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits: Gross Gross Unrecognized Unrecognized Tax Benefits 2019 Tax Benefits 2018 Unrecognized tax benefits – January 1 $ 218 $ 29 Gross increases related to prior tax positions — 126 Gross increases related to current tax positions 77 62 Unrecognized tax benefits – December 31 $ 295 $ 218 As of December 31, 2019, and 2018, the Company had $295 and $218, respectively, unrecognized tax benefits and no adjustments to liabilities or operations that were required for uncertain tax positions under ASC 740‑10. The Company’s practice is to recognize interest and penalty expenses related to uncertain tax positions in income tax expense, which was zero for the years ended December 31, 2019 and 2018. The Company files income tax returns in the U.S. federal and several state tax jurisdictions. The Company’s tax years beginning in 2015 remain open for examination by the state tax authorities for four years. The Company's tax years beginning in 2016 remain open for examination by the federal tax authorities for three years. Tax years beginning in 2012 will remain open for examination from the date of utilization of any NOL or credits. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized tax benefits will increase or decrease within 12 months of the year-ended December 31, 2019. |
Net Income Per Share, Basic and
Net Income Per Share, Basic and Diluted | 12 Months Ended |
Dec. 31, 2019 | |
Net Income Per Share, Basic and Diluted | |
Net Income Per Share, Basic and Diluted | 13. Net Income Per Share, Basic and Diluted Basic earnings per share (“EPS”) represent net income attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents net income attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period using the treasury stock method. As of December 31, 2019, there are no warrants or options outstanding that are antidilutive. Basic and diluted net EPS is calculated as follows: For the year ended December 31, 2019 2018 Shares Net Income EPS Shares Net Income EPS Basic EPS 6,440,724 $ 15,084 $ 2.34 6,079,326 $ 5,014 $ 0.82 Common stock warrants 69,068 — — 191,445 — — Common stock options 1,520,117 — — 1,358,752 — — Diluted EPS 8,029,909 $ 15,084 $ 1.88 7,629,523 $ 5,014 $ 0.66 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Estimates (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies and Estimates | |
Basis of Presentation | Basis for Presentation The Company’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Use of Estimates | Use of Estimates The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses, and related disclosures during the reporting period. Significant items subject to such estimates include revenue recognition, allowance for doubtful accounts, valuation of equipment on lease, deferred tax asset valuation allowance, stock-based compensation and valuation of warrants. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from these estimates. |
Revenue Recognition | Revenue Recognition The Company generates revenues primarily from the rental or license of its vascular testing product, or providing diagnostic testing service to its customers. The Company recognizes revenues from the licensing of its vascular testing product pursuant to agreements that automatically renew each month with revenue recognized on a daily convention basis. The Company’s arrangements with customers for its vascular testing product are normally on a month-to-month basis with fees billed at the rates established in the customer agreement. The Company recognizes revenues for providing diagnostic testing services on a per test basis to customers, as earned. The Company also recognizes revenue for hardware and supplies sales as of the date of shipment. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts is based on management’s assessment of the collectability of accounts. The Company regularly reviews the adequacy of this allowance for doubtful accounts by considering historical experience, the age of the accounts receivable balances, the credit quality of the customers, current economic conditions, and other factors that may affect customers’ ability to pay to determine whether a specific allowance is appropriate. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. |
Assets for Lease | Assets for Lease Assets for lease are recorded at cost. At December 31, 2019 and 2018, assets for lease consisted of vascular testing devices, which are leased to customers. The cost of such assets for lease is depreciated on a straight-line basis over 36 months for the units outstanding and recorded as cost of revenues. The Company regularly reviews whether facts and circumstances exist which indicate that the carrying amounts of assets, may not be recoverable or that the useful life of assets are shorter or longer than originally estimated. The Company assesses the recoverability of its assets by comparing the projected undiscounted net cash flows associated with the related assets over their estimated remaining lives against their respective carrying amounts. The Company considers factors such as estimated usage and expected lives of its assets for lease in this analysis. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. At December 31, 2019 and 2018, there were no impairment indicators. |
Property and Equipment | Property and Equipment Capital assets are recorded at cost. The cost of such capital assets is depreciated on a straight-line basis over a term depending on the assigned category (described below) and recorded as depreciation for capital assets recorded in engineering and product development, sales and marketing and general and administrative expenses. At December 31, 2019 and 2018, capital assets are classified into one of the following categories: Category Name Description Machinery & Equipment Manufacturing, R&D, or other non-office equipment Computer Equipment & Software Software, computers, monitors, printers and other related equipment. Furniture & Fixtures Office equipment and furniture owned by the company At December 31, 2019 and 2018, capital assets are depreciated based on the following estimated useful life for each category: Account Name Useful Life Machinery & Equipment Five years Computer Equipment & Software Three years Furniture & Fixtures Five years The Company regularly reviews whether facts and circumstances exist which indicate that the carrying amounts of capital assets, may not be recoverable or that the useful life of assets are shorter or longer than originally estimated. The Company assesses the recoverability of its assets by comparing the projected fair value of the related asset over the estimated remaining life against the respective carrying amounts. The Company considers factors such as estimated usage and expected lives of its capital assets in this analysis. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. The Company did not have any impairments to record during either the years ended December 31, 2019 or 2018. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy under Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, are described as follows: Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 — Inputs other than quoted prices included in Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and Level 3 — Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own models. The financial instruments of the Company consist primarily of cash, accounts receivable, and accounts payable. These items are considered Level 1 due to their short term nature and their market interest rates and are therefore considered a reasonable estimate of fair value at December 31, 2019 and 2018. |
Deferred revenue | Deferred Revenue Deferred revenue represents amounts billed to or collected from customers for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The full amount is expected to be recognized as revenues within one year from the balance sheet date and, therefore, such deferred amounts have been classified as current liabilities in the balance sheets presented. The Company generally invoices its clients in advance of a rental period with payment due upon receipt of the invoice. |
Research and Development | Research and Development The Company expenses costs related to the research and development associated with the design, development, testing and enhancement of its products and services. Such expenses include salaries and related employee benefits, and fees paid to external service providers. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is measured based on the grant-date fair value of the stock-based awards. The Company recognizes stock-based compensation expense for the portion of each option grant or stock award that is expected to vest over the estimated period of service and vesting. The Company uses the Black-Scholes option pricing model as the method for determining the estimated grant-date fair value of stock options. The Black-Scholes option pricing model requires the use of subjective assumptions which determine the fair value of stock-based awards, including the option’s expected volatility. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the grant. |
Employee Benefit Plan | Employee Benefit Plan The Company has a savings plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). There were no matching or discretionary employer contributions made to this plan during the years ended December 31, 2019 and 2018. |
Income Taxes | Income Taxes The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the expected tax consequences attributable to the differences between financial reporting and the tax bases of existing assets and liabilities and net operating loss (“NOL”) carry forwards, and they are measured using enacted tax rates expected to be in effect when differences are expected to reverse. The U.S. Tax Cuts & Jobs Act of 2017 reduced the U.S. corporate income tax rate to 21%, effective January 1, 2018. In addition, NOLs generated after December 31, 2017 are carried forward indefinitely with yearly NOL utilization limited to 80% of taxable income. A valuation allowance is recorded for loss carry-forwards and other deferred tax assets where it is more likely than not that such loss carry-forward and deferred tax assets will not be realized. The estimate for the valuation allowance for deferred tax assets requires management to make significant estimates and judgments about projected future operating results. If actual results differ from these projections or if management’s expectations of future results change, it may be necessary to adjust the valuation allowance |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). The amendment in this ASU provides guidance on the revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The core principle of this update provides guidance to identify the performance obligations under the contract(s) with a customer and how to allocate the transaction price to the performance obligations in the contract. It further provides guidance to recognize revenue when (or as) the entity satisfies a performance obligation. This standard replaced most existing revenue recognition guidance. On August 8, 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU No. 2014-09 by one year, and permits early adoption as long as the adoption date is not before the original public entity effective date. Since the issuance of ASU 2014-09, the FASB has issued several amendments that clarify certain points, including ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing (“Topic 606”), ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 Emerging Issues Task Force Meeting, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606. The updated revenue standard allows two methods of adoption: (1) retrospectively to each prior period presented (“full retrospective method”), or (2) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective method”). The new standard further requires new disclosures about contracts with customers, including the significant judgments the company has made when applying the guidance. The Company adopted the new standard effective January 1, 2019, using the modified retrospective method. The Company determined that the adoption of this new standard did not have a material impact on its financial statements. Topic 606 affects revenue recognition for the Company’s variably-priced (i.e., fee per test) license fee contracts and sales of hardware equipment and accessories. Total variably-priced license fees represent approximately $8,927 and $4,759 of revenues for the years ended December 31, 2019 and 2018, respectively. Total sales of hardware and equipment accessories represents approximately $927 and $386 of revenues for the years ended December 31, 2019 and 2018, respectively. Essentially all of the variably-priced license fee contracts are with large healthcare organizations. The initial contract is for a specified time period with automatic renewal each period thereafter until canceled. In case there is a violation of any term of the contract, the Company may deactivate the service remotely, so that the customer cannot continue to use the product. The reusable hardware equipment or accessories may be provided to a customer for a set price and then use of the associated software is billed to the customer monthly based on volume of use. Under this scenario, revenue is recognized when and only when the customer uses the product. The sale of the equipment or accessories is recognized as hardware sales upon shipment to the customer. It was determined that the impact of the new standard has no effect on the way revenue is currently being recognized. The remainder of the revenue is earned from leasing the Company’s testing product for a fixed monthly fee, which is not subject to Topic 606. In February 2016, the FASB issued ASU No. 2016-02, Leases. This standard, along with other guidance subsequently issued by the FASB (collectively, “ASC 842”), requires lessees to recognize lease assets and liabilities for all leases with lease terms of more than 12 months. The standard makes similar changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. Presentation of leases within the statements of operations and statements of cash flows will primarily depend on its classification as a finance or operating lease. ASC 842 is effective for the Company in the first quarter of fiscal 2020 with early adoption permitted. The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition method. Therefore, upon adoption, the Company recognized and measured leases without revising comparative period information or disclosures. The adoption of this standard did not have an impact on the Company's revenue recognition. In addition, the Company has elected to apply the package of practical expedients permitted under the transition guidance within ASC 842 which does not require reassessment of initial direct costs, classification of a lease and definition of a lease which resulted in the Company foregoing a reassessment of (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) the initial direct costs for an existing lease. See Note 7 for additional information and details of the effects of adopting the new standard. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”). This ASU requires timelier recording of credit losses on loans and other financial instruments held. Instead of reserves based on a current probability analysis, Topic 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. All organizations will now use forward-looking information to better inform their credit loss estimates. Topic 326 requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide information about the amounts recorded in the financial statements. In addition, Topic 326 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In April 2019, the FASB issued ASU2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments to introduce amendments which will affect the recognition and measurement of financial instruments, including derivatives and hedging. In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief. The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments upon adoption of Topic 326. This standard and related amendments are effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2023. The Company does not anticipate this new standard will have a material impact on its financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of costs. The ASU specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard will have a material impact on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU modify the disclosure requirements on fair value measurements removing the requirements to disclosure amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. In addition, it modified certain disclosures related to Level 3 fair value measurements and added additional disclosures regarding the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. This update is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard to have a material impact on its financial statements. In November 2019, the FASB issued ASU 2019-08 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). The amendments on this update require that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. The amount recorded as a reduction in the transaction price should be based on the grant-date fair value of the share-based payment award. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard will have a material impact on its financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. This update is effective for the Company’s annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2021. The Company does not anticipate this update to have a material impact on its financial statements. |
Assets for Lease, net (Tables)
Assets for Lease, net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Assets for Lease, net | |
Schedule of assets for lease | As of December 31, 2019 2018 Assets for lease $ 3,374 $ 2,218 Less: accumulated depreciation (1,295) (975) Assets for lease, net $ 2,079 $ 1,243 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment, net | |
Schedule of capital assets | As of December 31, 2019 2018 Capital assets $ 636 $ 457 Less: accumulated depreciation (387) (234) Capital assets, net $ 249 $ 223 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Expenses | |
Schedule of accrued expenses | As of December 31, 2019 2018 Compensation $ 2,803 $ 2,442 Accrued Taxes 66 81 Miscellaneous Accruals 1,045 354 Total Accrued Expenses $ 3,914 $ 2,797 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity | |
Schedule of common stock reserved for issuance | Year ended December 31, 2019 2018 Common stock warrants 76,875 276,214 Stock options 1,581,582 1,761,447 Total 1,658,457 2,037,661 |
Stock Option Plan (Tables)
Stock Option Plan (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock Option Plan | |
Schedule of stock option activity | Options Outstanding Weighted Number of Weighted Average Stock Average Remaining Aggregate Options Exercise Contractual Intrinsic Value Outstanding Price Term (In Years) (In Thousands) Balance, December 31, 2017 1,855,138 $ 2.69 $ 9,850 Options granted 135,000 8.00 — — Options exercised (222,281) 2.05 — — Options forfeited/cancelled (6,410) 3.44 — — Balance, December 31, 2018 1,761,447 $ 3.18 $ 55,000 Options exercised (179,865) 2.72 — — Balance, December 31, 2019 1,581,582 $ 3.23 $ 70,827 Exercisable as of December 31, 2018 1,481,591 $ 2.83 $ 46,780 Exercisable as of December 31, 2019 1,477,020 $ 3.06 $ 66,389 |
Schedule of assumptions used to determining the fair value of stock options | Year ended December 31, 2018 Expected term (in years) 5 Risk-free interest rate 2.2 % Expected volatility 99.0 % Expected dividend rate 0 % |
Schedule of stock-based compensation | Year ended December 31, 2019 2018 Cost of Revenues $ 1 $ 2 Engineering and Product Development 16 36 Sales and Marketing 46 92 General and Administrative 302 471 Total $ 365 $ 601 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of components of the (benefit) provision for income taxes | 2019 2018 Current tax provision: Federal $ — $ — State 118 26 Subtotal current tax expense 118 26 Deferred tax provision: Federal (3,645) — State (856) — Subtotal deferred tax (benefit) (4,501) — Total income tax (benefit) expense $ (4,383) $ 26 |
Schedule of differences between the Company's effective income tax rate and the Federal statutory income tax rate | 2019 2018 Federal statutory rate 21.00 % 21.00 % State income tax rate, net of federal benefit 1.83 % 0.95 % Change in valuation allowance (49.89) % (2.28) % Stock-based compensation (13.12) % (13.61) % Permanent Items 0.40 % 0.42 % Other (1.18) % (5.97) % Effective income tax rate (40.96) % 0.51 % |
Schedule of deferred tax assets | 2019 2018 Net operating loss carryforwards 2,646 3,864 Deferred revenue 233 106 Depreciation and amortization 14 45 Stock based compensation 751 670 Accrual and reserves 145 119 Research and development credits, net of tax reserve 711 533 Other 1 — Total gross deferred tax assets 4,501 5,337 Less valuation allowance — (5,337) Net deferred tax assets $ 4,501 $ — |
Schedule of activity related to unrecognized tax benefits | Gross Gross Unrecognized Unrecognized Tax Benefits 2019 Tax Benefits 2018 Unrecognized tax benefits – January 1 $ 218 $ 29 Gross increases related to prior tax positions — 126 Gross increases related to current tax positions 77 62 Unrecognized tax benefits – December 31 $ 295 $ 218 |
Net Income Per Share, Basic a_2
Net Income Per Share, Basic and Diluted (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Net Income Per Share, Basic and Diluted | |
Schedule of basic and diluted net EPS | For the year ended December 31, 2019 2018 Shares Net Income EPS Shares Net Income EPS Basic EPS 6,440,724 $ 15,084 $ 2.34 6,079,326 $ 5,014 $ 0.82 Common stock warrants 69,068 — — 191,445 — — Common stock options 1,520,117 — — 1,358,752 — — Diluted EPS 8,029,909 $ 15,084 $ 1.88 7,629,523 $ 5,014 $ 0.66 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Estimates (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation method | straight-line basis | |
Description of assets for lease | assets for lease is depreciated on a straight-line basis over 36 months for the units outstanding and recorded as cost of revenues. | |
Capital assets depreciated assumed useful life | P36M | |
Corporate income tax rate effective in 2018 | 21.00% | |
Carried forward NOL utilization limit | 80% | |
Revenue from variably-priced license fees | $ 8,927 | $ 4,759 |
Revenue from sales of hardware and equipment accessories | $ 927 | $ 386 |
Machinery & Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Capital assets depreciated assumed useful life | P5Y | |
Computer Equipment & Software | ||
Property, Plant and Equipment [Line Items] | ||
Capital assets depreciated assumed useful life | P3Y | |
Furniture & Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Capital assets depreciated assumed useful life | P5Y |
Assets for Lease, net - Summary
Assets for Lease, net - Summary of assets for lease (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Assets for Lease, net | ||
Assets for lease | $ 3,374 | $ 2,218 |
Less: accumulated depreciation | (1,295) | (975) |
Assets for lease, net | $ 2,079 | $ 1,243 |
Assets for Lease, net - Additio
Assets for Lease, net - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Assets for Lease, net | ||
Depreciation expense | $ 483 | $ 395 |
Reduction to accumulated depreciation for returned items | 163 | 120 |
Loss on disposal of assets for lease | (206) | (200) |
Total assets for lease, net, in use at customer locations | $ 849 | $ 640 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property and Equipment, net | ||
Capital assets | $ 636 | $ 457 |
Less: accumulated depreciation | (387) | (234) |
Total | $ 249 | $ 223 |
Property and Equipment, net - A
Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and Equipment, net | ||
Depreciation expense | $ 149 | $ 108 |
Accrued Expenses - Summary of a
Accrued Expenses - Summary of accrued expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accrued Expenses | ||
Compensation | $ 2,803 | $ 2,442 |
Accrued Taxes | 66 | 81 |
Miscellaneous Accruals | 1,045 | 354 |
Total Accrued Expenses | $ 3,914 | $ 2,797 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)itemcustomer | Dec. 31, 2018USD ($)itemcustomer | |
Concentration of Credit Risk | ||
Allowance for doubtful accounts | $ | $ 36 | $ 52 |
Customer concentration risk | Revenue | ||
Concentration of Credit Risk | ||
Number of customers | 3 | 2 |
Customer concentration risk | Revenue | Customer one | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 49.40% | 52.00% |
Customer concentration risk | Revenue | Customer two | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 13.20% | 19.50% |
Customer concentration risk | Revenue | Customer three | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 12.50% | |
Customer concentration risk | Accounts receivable | ||
Concentration of Credit Risk | ||
Number of customers | 3 | 2 |
Customer concentration risk | Accounts receivable | Customer one | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 55.90% | 43.50% |
Customer concentration risk | Accounts receivable | Customer two | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 17.60% | 40.40% |
Customer concentration risk | Accounts receivable | Customer three | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 12.00% | |
Vendor concentration risk | Accounts payable | ||
Concentration of Credit Risk | ||
Number of vendors | item | 2 | 2 |
Vendor concentration risk | Accounts payable | Vendor one | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 15.90% | 11.00% |
Vendor concentration risk | Accounts payable | Vendor two | ||
Concentration of Credit Risk | ||
Concentration risk percentage | 14.10% | 10.80% |
Leases - Lessee Arrangements (D
Leases - Lessee Arrangements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases | ||
Remaining lease term | 1 year 2 months | |
Options to renew | false | |
Lease expenses | $ 68 | $ 69 |
Future minimum rent expense for 2020 | 64 | |
Future minimum rent expense for 2021 | $ 11 |
Leases - Lessor Arrangements (D
Leases - Lessor Arrangements (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases | |
Lease revenue | $ 22,858 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of exercise of common stock outstanding stock options (Details) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Stockholders' Equity | ||
Total | 1,658,457 | 2,037,661 |
Common stock warrants | ||
Stockholders' Equity | ||
Total | 76,875 | 276,214 |
Stock options | ||
Stockholders' Equity | ||
Total | 1,581,582 | 1,761,447 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Stockholders' Equity | ||
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Number of shares in reserve | 1,658,457 | 2,037,661 |
Warrant Repurchase - Related _2
Warrant Repurchase - Related Party (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 06, 2019 | May 03, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Warrant Repurchase | ||||
Shares of common stock held | 6,531,221 | 6,324,985 | ||
Warrant Repurchase Agreement | Murphy Chutorian Family Trust | ||||
Warrant Repurchase | ||||
Repurchase of warrant to acquire shares | 65,542 | |||
Warrant exercise price | $ 4.50 | |||
Warrant expiration date | Jul. 31, 2023 | |||
Warrant aggregate purchase price | $ 3,946 | $ 2,687 | ||
Repurchase of warrants to acquire shares | 93,797 | |||
Warrant Repurchase Agreement | Murphy Chutorian Family Trust | Warrants | ||||
Warrant Repurchase | ||||
Warrant exercise price | $ 4 | |||
Shares of common stock held | 16,875 | |||
Warrant Repurchase Agreement | Murphy Chutorian Family Trust | Common Stock | ||||
Warrant Repurchase | ||||
Warrant exercise price | $ 4.50 | |||
Shares of common stock held | 60,000 | |||
Warrant Repurchase Agreement | Murphy Chutorian Family Trust | Minimum | ||||
Warrant Repurchase | ||||
Aggregate purchase price | $ 2 | |||
Warrant Repurchase Agreement | Murphy Chutorian Family Trust | Maximum | ||||
Warrant Repurchase | ||||
Aggregate purchase price | $ 4.50 |
Stock Option Plan - Summary of
Stock Option Plan - Summary of the Company's stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Stock Options Outstanding | |||
Balance, Beginning | 1,761,447 | 1,855,138 | |
Options granted | 0 | 135,000 | |
Options exercised | (179,865) | (222,281) | |
Forfeited/Cancelled | 0 | (6,410) | |
Balance, Ending | 1,581,582 | 1,761,447 | 1,855,138 |
Exercisable, Ending | 1,477,020 | 1,481,591 | |
Weighted Average Exercise Price | |||
Balance, Beginning | $ 3.18 | $ 2.69 | |
Granted | 8 | ||
Options exercised | 2.72 | 2.05 | |
Forfeited/Cancelled | 3.44 | ||
Balance, Ending | 3.23 | 3.18 | $ 2.69 |
Exercisable, Ending | $ 3.06 | $ 2.83 | |
Weighted Average Remaining Contractual Term, Options Outstanding (in years) | 5 years 10 months 10 days | 6 years 10 months 2 days | 7 years 5 months 23 days |
Weighted Average Remaining Contractual Term, Options Exercisable (in years) | 5 years 8 months 23 days | 6 years 6 months 26 days | |
Aggregate Intrinsic Value, Options Outstanding | $ 70,827 | $ 55,000 | $ 9,850 |
Aggregate Intrinsic Value, Options Exercisable | $ 66,389 | $ 46,780 |
Stock Option Plan - Summary o_2
Stock Option Plan - Summary of assumptions fair value of the options granted is estimated on the date of grant using the Black-Scholes pricing model (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Stock Option Plan | |
Expected term (in years) | 5 years |
Risk free interest rate | 2.20% |
Expected volatility | 99.00% |
Expected dividend rate | 0.00% |
Stock Option Plan - Stock-based
Stock Option Plan - Stock-based compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 365 | $ 601 |
Cost of Revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 1 | 2 |
Engineering and Product Development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 16 | 36 |
Sales and Marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 46 | 92 |
General and Administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 302 | $ 471 |
Stock Option Plan - Additional
Stock Option Plan - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 02, 2018 | Oct. 31, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total unrecognized compensation cost related to non-vested awards | $ 435 | ||||
Weighted average period of unvested stock awards | 1 year 11 days | ||||
Total number of unvested shares | 104,563 | 279,856 | |||
Total estimated grant date fair value of options non-vested | $ 435 | $ 1,038 | |||
Total estimated grant date fair value of options vested | $ 365 | $ 601 | |||
Number of stock option granted | 0 | 135,000 | |||
Number of stock option forfeited | 0 | 6,410 | |||
Weighted average grant date fair value of options granted | $ 5.97 | ||||
Aggregate grant date fair value | $ 806 | ||||
Weighted average grant date fair value of options forfeited | $ 1.42 | ||||
One-time expense | $ 49 | ||||
Stock-based compensation expense | $ 365 | $ 601 | |||
2014 Stock Incentive Plan | Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum number of shares issued pursuant to awards granted under plan | 2,783,616 | 450,000 | |||
Number of share reserve increased | 1,500,000 | ||||
Maximum term of stock option grants | 10 years | ||||
Percentage of shares reserve increased | 4.00% | ||||
Number of shares available for future stock-based compensation grants | 997,163 | ||||
2014 Stock Incentive Plan | Options | CEO | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares available for future stock-based compensation grants | 125,000 | ||||
Percentage of shares vested on one year anniversary | 25.00% | ||||
2014 Stock Incentive Plan | Options | Non Employee Directors | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum number of shares issued pursuant to awards granted under plan | 10,000 | ||||
Number of shares available for future stock-based compensation grants | 5,000 | ||||
Number of years in options fully vested | 1 year |
Income Taxes - Summary of compo
Income Taxes - Summary of components of the (benefit) provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current tax provision: | ||
Federal | $ 0 | $ 0 |
State | 118 | 26 |
Subtotal current tax expense | 118 | 26 |
Deferred tax provision: | ||
Federal | (3,645) | 0 |
State | (856) | 0 |
Subtotal deferred tax (benefit) | (4,501) | 0 |
Total income tax (benefit) expense | $ (4,383) | $ 26 |
Income Taxes - Summary of diffe
Income Taxes - Summary of differences between the Company's effective income tax rate and the federal statutory income tax (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes | ||
Federal statutory rate | 21.00% | 21.00% |
State income tax rate, net of federal benefit | 1.83% | 0.95% |
Change in valuation allowance | (49.89%) | (2.28%) |
Stock-based compensation | (13.12%) | (13.61%) |
Permanent Items | 0.40% | 0.42% |
Other | (1.18%) | (5.97%) |
Effective income tax rate | (40.96%) | 0.51% |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 2,646 | $ 3,864 |
Deferred revenue | 233 | 106 |
Depreciation and amortization | 14 | 45 |
Stock based compensation | 751 | 670 |
Accrual and reserves | 145 | 119 |
Research and development credits, net of tax reserve | 711 | 533 |
Other | 1 | 0 |
Total gross deferred tax assets | 4,501 | 5,337 |
Less valuation allowance | 0 | (5,337) |
Net deferred tax assets | $ 4,501 | $ 0 |
Income Taxes - Summary of activ
Income Taxes - Summary of activity related to the Company's gross unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Unrecognized tax benefits: | ||
Unrecognized tax benefits - January 1 | $ 218 | $ 29 |
Gross increases related to prior tax positions | 0 | 126 |
Gross increases related to current tax positions | 77 | 62 |
Unrecognized tax benefits - December 31 | $ 295 | $ 218 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Tax Credit Carryforward [Line Items] | |||
Net change in the valuation allowance | $ (5,337) | ||
Net operating loss carryforwards for federal | 10,256 | ||
Net operating loss carryforwards for California | $ 5,769 | ||
Effective taxable rate | 80% | ||
Research and development tax credit carryforwards for federal income tax | $ 732 | ||
Unrecognized Tax Benefits | $ 295 | $ 218 | $ 29 |
Federal | |||
Tax Credit Carryforward [Line Items] | |||
Operating Loss Carryforwards Expiration Period | 2033 | ||
Income penalties expense | $ 0 | $ 0 | |
Company's tax years beginning for examination | 3 years | ||
State | |||
Tax Credit Carryforward [Line Items] | |||
Operating Loss Carryforwards Expiration Period | 2032 | ||
Company's tax years beginning for examination | 4 years |
Net Income Per Share, Basic a_3
Net Income Per Share, Basic and Diluted - Summary of Basic and diluted net EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net Income Per Share, Basic and Diluted | ||
Basic EPS (in shares) | 6,440,724 | 6,079,326 |
Common stock warrants (in shares) | 69,068 | 191,445 |
Common stock options (in shares) | 1,520,117 | 1,358,752 |
Diluted EPS (in shares) | 8,029,909 | 7,629,523 |
Net Income - Basic EPS | $ 15,084 | $ 5,014 |
Net Income - Common stock warrants | 0 | 0 |
Net Income - Common stock options | 0 | 0 |
Net Income - Diluted EPS | $ 15,084 | $ 5,014 |
Basic EPS (in dollars per share) | $ 2.34 | $ 0.82 |
Diluted EPS (in dollars per share) | $ 1.88 | $ 0.66 |
Net Income Per Share, Basic a_4
Net Income Per Share, Basic and Diluted - Computation of weighted average shares outstanding of common stock equivalents of anti-dilutive diluted net loss per share (Details) | 12 Months Ended |
Dec. 31, 2019shares | |
Warrants | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities | 0 |
Options | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities | 0 |