| Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (āGAAPā) for interim financial information. Certain information and disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (āSECā) on February 18, 2022. The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2022. ā Certain reclassifications have been made to conform to current period presentation. These reclassifications include the presentation of the gain on extinguishment of debt and the proceeds from the disposal of fixed assets. There was no impact to net loss or net change in cash and cash equivalents, respectively. Principles of Consolidation The condensed consolidated financial statements include all accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying condensed consolidated financial statements. Use of Estimates The preparation of the condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheets and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include revenue recognition, the carrying value of goodwill, the fair value of acquired intangibles, the capitalization of software development costs, the useful lives of intangible assets, share-based compensation, right of use assets, warrant liability, financing and operating lease liabilities, contingent consideration and the valuation allowance of deferred tax assets resulting from net operating losses. COVID-19 Update The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause customer slowdowns or shutdowns, depress demand, and adversely impact results of operations. During the quarter ended March 31, 2022, the Company faced significant uncertainties and continues to expect uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic . Estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in the consolidated financial statements. Significant Accounting Policies There have been no material changes to the Companyās significant accounting policies previously disclosed in the Companyās Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as filed with the SEC on February 18, 2022. ā Fair Value The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value . ā ā Level 1 ā uses quoted prices in active markets for identical assets or liabilities. ā Level 2 ā uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ā Level 3 ā uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. The Companyās only material financial instruments carried at fair value as of March 31, 2022 and December 31, 2021, with changes in fair value flowing through current earnings, consist of contingent consideration liabilities recorded in conjunction with business combinations and the fair value of its warrant liabilities are as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Fair Value Measurement at ā ā ā ā ā Reporting Date Using ā ā ā Quoted Prices in Significant ā ā ā ā ā ā ā Active Markets ā Other ā Significant ā ā Balance as of ā for Identical ā Observable ā Unobservable ā ā March 31, ā Assets ā Inputs ā Inputs ā ā 2022 ā (Level 1) ā (Level 2) ā (Level 3) Contingent consideration ā current ā $ 547 ā $ ā ā $ ā ā $ 547 Contingent consideration ā long term ā 40,807 ā ā ā ā ā 40,807 Warrant liability ā ā 1,912 ā ā ā ā ā ā ā ā 1,912 Total liabilities measured at fair value ā $ 43,266 ā $ ā ā $ ā ā $ 43,266 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Fair Value Measurement at ā ā ā ā ā Reporting Date Using ā ā ā Quoted Prices in Significant ā ā ā ā ā ā ā Active Markets ā Other ā Significant ā ā Balance as of ā for Identical ā Observable ā Unobservable ā ā December 31, ā Assets ā Inputs ā Inputs ā ā 2021 ā (Level 1) ā (Level 2) ā (Level 3) Contingent consideration ā current ā $ 13 ā $ ā ā $ ā ā $ 13 Contingent consideration ā long term ā 43,032 ā ā ā ā ā 43,032 Warrant liability ā ā 4,868 ā ā ā ā ā ā ā ā 4,868 Total liabilities measured at fair value ā $ 47,913 ā $ ā ā $ ā ā $ 47,913 ā There were no transfers made among the three levels in the fair value hierarchy during the three months ended March 31, 2022. The following tables present additional information about Level 3 liabilities measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains and losses for liabilities within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Changes in contingent consideration liabilities measured at fair value from December 31, 2021 to March 31, 2022 were as follows: ā ā ā ā ā Contingent consideration ā December 31, 2021 $ 43,045 Change in fair value of contingent consideration ā (1,677) Payments of contingent consideration ā ā (14) Contingent consideration ā March 31, 2022 ā $ 41,354 ā On February 19, 2019, the Company consummated several acquisitions (collectively, the āAcquisitionā), pursuant to which it acquired each of Bonfire Questica The fair value of the Companyās contingent consideration liabilities recorded as part of the Acquisition has been classified within Level 3 in the fair value hierarchy. The contingent consideration represents the estimated fair value of future payments due to the sellers based on each companyās achievement of annual earnings targets in certain years and other events considered in certain transaction documents. The fair values of the contingent consideration were calculated through the use of either Monte Carlo simulation or modified Black-Scholes analyses based on earnings projections for the respective earn-out periods, corresponding earnings thresholds, and approximate timing of payments as outlined in the purchase agreements for each of the Acquired Companies. The analyses utilized the following assumptions: (i) expected term; (ii) risk-adjusted net sales or earnings; (iii) risk-free interest rate; and (iv) expected volatility of earnings. Estimated payments, as determined through the respective models, were further discounted by a credit spread assumption to account for credit risk. The contingent consideration is revalued to fair value each period, and any increase or decrease is recorded in operating income (loss). The fair value of the contingent consideration may be impacted by certain unobservable inputs, most significantly with regard to discount rates, expected volatility and historical and projected performance. Significant changes to these inputs in isolation could result in a significantly different fair value measurement. As of March 31, 2022, the contingent consideration liability consists of consideration due to former shareholders of CityBase and shareholders associated with an asset purchase by eCivis prior to the Acquisition. Shareholders associated with CityBase may receive, upon CityBaseās trailing twelve-month net revenue exceeding $37.0 million, or the CityBase threshold, on or prior to December 31, 2048, an earnout payment equal to a number of shares (or, in the case of certain individuals associated with CityBase who are not accredited investors, the cash value thereof) of our common stock calculated by dividing $54.5 million by the greater of (x) $10.00 or (y) the volume-weighted average closing price for the shares of our common stock for the 30 trading days immediately preceding the payment date. The fair value of contingent consideration as of March 31, 2022 is $40.8 million. The valuation of contingent consideration as of March 31, 2022 was derived from a Monte Carlo simulation of payout patterns from revenue estimates provided by the Company. ā Pursuant to the terms of a 2018 asset purchase agreement by eCivis, shareholders associated with the purchase may receive cash consideration equal to 7.5% of new revenue between $500,000 and 999,999.99, 10% of new revenue above $1,000,000, 2% of renewal revenue up to 249,999.99 3% of renewal revenue between $250,000.00 to $749,999.99 and 5% above $750,000.00 in each earn-out year beginning in 2018 and ending in 2022. Only revenue derived from the acquired assets is eligible. The potential undiscounted amount of all future payments that the Company could be required to make is unlimited. The total fair value of the associated contingent liability as of March 31, 2022 is approximately $0.5 million. The valuation of contingent consideration as of March 31, 2022 was derived from a discounted cash flow model based on expected payment amounts estimated by the Company. ā Changes in the warrant liability measured at fair value from December 31, 2021 to March 31, 2022 were as follows: ā ā ā ā ā Warrant liability ā December 31, 2021 ā $ 4,868 Change in fair value of warrant liability ā (2,956) Warrant liability ā March 31, 2022 ā $ 1,912 ā ā ā ā ā The warrant liability was estimated using a Black-Scholes model derived from a Monte Carlo simulation of the Companyās outstanding public warrants. These inputs were primarily derived from the implied volatility of the traded public warrant price. The warrant liability is revalued to fair value each period, and any increase or decrease is recorded in other income (expense). The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and term loans approximates fair value because of the short-term nature of these instruments. The Company measures certain assets at fair value on a non-recurring basis, generally annually or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include goodwill and other intangible assets. A financial instrumentās categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Disaggregation of Revenues ā ā ā ā ā ā ā ā ā ā ā Three Months Ended ā Three Months Ended ā ā ā March 31, ā March 31, ā ā 2022 2021 ā Subscriptions, support and maintenance ā $ 12,545 $ 10,165 ā Professional services ā 3,012 2,941 ā License ā 39 63 ā Asset sales ā 304 90 ā Total revenues ā $ 15,900 $ 13,259 ā ā ā ā ā ā ā ā ā ā Revenues Subscription, support and maintenance The Companyās contracts may include variable consideration in the form of usage fees, which are constrained and recognized once the uncertainties associated with the constraint are resolved, which is when usage occurs and the fee is known. Subscription, support and maintenance revenues also includes kiosk rentals and support or maintenance pertaining to license sales. Revenues from kiosk rentals and support are recognized on a straight-line basis over the support period. Revenues from subscription, support and maintenance comprised approximately 79% and 77% of total revenues for the three months ended March 31, 2022 and 2021, respectively. Professional services License. Asset sales. Net Loss per Share Net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share of common stock is computed similarly to basic net income per share of common stock except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. Due to the net loss for the three months ended March 31, 2022 and 2021, diluted and basic loss per share are the same. Securities that could potentially dilute net loss per share in the future that were not included in the computation of diluted loss per share at March 31, 2022 and 2021 are as follows: ā ā ā ā ā ā ā ā 2022 ā 2021 Warrants to purchase common stock 27,093,316 ā 27,093,334 Unvested restricted stock units 2,900,250 ā 3,173,584 Options to purchase common stock 239,088 ā 245,112 Total 30,232,654 ā 30,512,030 ā Income Taxes In determining the quarterly benefit from income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date loss, adjusted for discrete items arising in that quarter. The Companyās annual estimated effective tax rate differs from the U.S. federal statutory rate of 21% as a result of state taxes, foreign taxes and changes in the Companyās valuation allowance for domestic income taxes. For the three months ended March 31, 2022 and 2021, the Company recorded a $0.7 million and $0.2 million benefit from income taxes, respectively. ā Recently Adopted Accounting Pronouncements On January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies various aspects related to accounting for income taxes, removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. Accounting Pronouncements Not Yet Adopted In November 2021, the Financial Accounting Standards Board issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance |
