Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | FALCONSTOR SOFTWARE INC | |
Entity Central Index Key | 0000922521 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 591,871,719 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 2,400,953 | $ 3,059,677 |
Accounts receivable, net of allowances of $191,458 and $162,112, respectively | 1,706,141 | 3,605,411 |
Prepaid expenses and other current assets | 1,736,775 | 1,909,846 |
Contract assets | 838,273 | 637,179 |
Inventory | 104,737 | 14,885 |
Total current assets | 6,786,879 | 9,226,998 |
Property and equipment, net of accumulated depreciation of $18,250,566 and $18,194,827, respectively | 484,588 | 433,935 |
Operating lease right-of-use assets | 2,454,349 | 0 |
Deferred tax assets, net | 553,738 | 545,044 |
Software development costs, net | 46,136 | 88,769 |
Other assets | 1,037,877 | 919,609 |
Goodwill | 4,150,339 | 4,150,339 |
Other intangible assets, net | 85,746 | 91,334 |
Contract assets, net of current portion | 222,825 | 516,643 |
Total assets | 15,822,477 | 15,972,671 |
Current liabilities: | ||
Accounts payable | 1,109,862 | 551,389 |
Accrued expenses | 2,284,591 | 2,879,473 |
Operating lease liabilities, net | 1,753,015 | 0 |
Deferred revenue | 5,071,197 | 6,859,592 |
Total current liabilities | 10,218,665 | 10,290,454 |
Other long-term liabilities | 760,574 | 1,549,692 |
Notes payable, net | 2,746,419 | 3,124,827 |
Operating lease liabilities, net of current portion | 1,281,804 | 0 |
Deferred tax liabilities, net of current portion | 297,715 | 297,890 |
Deferred revenue, net | 3,615,556 | 2,506,898 |
Total liabilities | 18,920,733 | 17,769,761 |
Commitments and contingencies (Note 11) | ||
Series A redeemable convertible preferred stock, $.001 par value, 2,000,000 shares authorized, 900,000 shares issued and outstanding, redemption value of $11,671,866 and $11,104,923, respectively | 10,523,748 | 9,756,706 |
Stockholders' deficit: | ||
Common stock - $.001 par value, 800,000,000 shares authorized, 5,887,733 shares and 5,872,552 shares issued and outstanding, respectively | 5,888 | 5,873 |
Additional paid-in capital | 112,501,652 | 113,243,227 |
Accumulated deficit | (124,204,424) | (122,907,794) |
Accumulated other comprehensive loss, net | (1,925,120) | (1,895,102) |
Total stockholders' deficit | (13,622,004) | (11,553,796) |
Total liabilities and stockholders' deficit | $ 15,822,477 | $ 15,972,671 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowances on accounts receivable | $ 191,458 | $ 162,112 |
Accumulated depreciation | $ 18,250,566 | $ 18,194,827 |
Series A Redeemable convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Series A Redeemable convertible preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Series A Redeemable convertible preferred stock, shares issued (in shares) | 900,000 | 900,000 |
Series A Redeemable convertible preferred stock, shares outstanding (in shares) | 900,000 | 900,000 |
Series A redeemable convertible preferred stock, redemption value | $ 11,671,866 | $ 11,104,923 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 5,887,733 | 5,872,552 |
Common stock, shares outstanding (in shares) | 5,887,733 | 5,872,552 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue: | ||||
Total revenue | $ 3,999,389 | $ 4,011,581 | $ 8,492,367 | $ 9,005,530 |
Cost of revenue: | ||||
Total cost of revenue | 1,292,901 | 630,049 | 1,943,060 | 1,385,087 |
Gross profit | 2,706,488 | 3,381,532 | 6,549,307 | 7,620,443 |
Operating expenses: | ||||
Research and development costs | 764,276 | 928,097 | 1,720,847 | 1,932,795 |
Selling and marketing | 1,296,909 | 872,109 | 2,369,347 | 2,065,659 |
General and administrative | 1,397,886 | 1,451,884 | 2,826,085 | 3,106,824 |
Restructuring costs | 202,679 | 809,245 | 360,372 | 635,982 |
Total operating expenses | 3,661,750 | 4,061,335 | 7,276,651 | 7,741,260 |
Operating loss | (955,262) | (679,803) | (727,344) | (120,817) |
Interest and other loss, net | (80,217) | (323,750) | (345,456) | (313,420) |
Loss before income taxes | (1,035,479) | (1,003,553) | (1,072,800) | (434,237) |
Income tax expense | 136,244 | 551 | 223,830 | 62,990 |
Net loss | (1,171,723) | (1,004,104) | (1,296,630) | (497,227) |
Less: Accrual of Series A redeemable convertible preferred stock dividends | 256,553 | 214,963 | 503,580 | 458,130 |
Less: Deemed dividend on Series A redeemable convertible preferred stock | 0 | 0 | 0 | 2,269,042 |
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | 134,223 | 77,645 | 263,462 | 115,750 |
Net loss attributable to common stockholders | $ (1,562,499) | $ (1,296,712) | $ (2,063,672) | $ (3,340,149) |
Basic net loss per share attributable to common stockholders (in dollars per share) | $ (0.27) | $ (1.54) | $ (0.35) | $ (5.17) |
Diluted net loss per share attributable to common stockholders (in dollars per share) | $ (0.27) | $ (1.54) | $ (0.35) | $ (5.17) |
Weighted average basic shares outstanding (in shares) | 5,879,225 | 844,482 | ||
Weighted average diluted shares outstanding (in shares) | 5,879,225 | 844,482 | 5,875,907 | 646,163 |
Product revenue | ||||
Revenue: | ||||
Total revenue | $ 1,470,430 | $ 983,645 | $ 3,216,214 | $ 2,917,589 |
Cost of revenue: | ||||
Total cost of revenue | 755,796 | 39,740 | 835,470 | 65,890 |
Support and services revenue | ||||
Revenue: | ||||
Total revenue | 2,528,959 | 3,027,936 | 5,276,153 | 6,087,941 |
Cost of revenue: | ||||
Total cost of revenue | $ 537,105 | $ 590,309 | $ 1,107,590 | $ 1,319,197 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (1,171,723) | $ (1,004,104) | $ (1,296,630) | $ (497,227) |
Other comprehensive income (loss), net of applicable taxes: | ||||
Foreign currency translation | (49,410) | 129,956 | (30,018) | 44,712 |
Total other comprehensive income (loss), net of applicable taxes: | (49,410) | 129,956 | (30,018) | 44,712 |
Total comprehensive loss | (1,221,133) | (874,148) | (1,326,648) | (452,515) |
Less: Accrual of Series A redeemable convertible preferred stock dividends | 256,553 | 214,963 | 503,580 | 458,130 |
Less: Deemed dividend on Series A redeemable convertible preferred stock | 0 | 0 | 0 | 2,269,042 |
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | 134,223 | 77,645 | 263,462 | 115,750 |
Total comprehensive loss attributable to common stockholders | $ (1,611,909) | $ (1,166,756) | $ (2,093,690) | $ (3,295,437) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (Unaudited) Statement - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | AOCI Attributable to Parent [Member] |
Beginning balance at Dec. 31, 2017 | $ (21,224,797) | $ 601 | $ 112,234,058 | $ (130,930,284) | $ (570,329) | $ (1,958,843) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | 506,877 | 506,877 | ||||
Share-based compensation to employees | (22,895) | (22,895) | ||||
Accretion of Series A redeemable convertible preferred stock | (38,105) | (38,105) | ||||
Dividends on Series A redeemable convertible preferred stock | (243,167) | (243,167) | ||||
Deemed dividends on Series A redeemable convertible preferred stock | (2,269,042) | (2,269,042) | ||||
Foreign currency translation | (85,245) | (85,245) | ||||
Cumulative effect of adoption of ASC 606 | 8,929,204 | 8,929,204 | ||||
Ending balance at Mar. 31, 2018 | (14,447,170) | 601 | 109,660,849 | (121,494,203) | (570,329) | (2,044,088) |
Beginning balance at Dec. 31, 2017 | (21,224,797) | 601 | 112,234,058 | (130,930,284) | (570,329) | (1,958,843) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (497,227) | |||||
Accretion of Series A redeemable convertible preferred stock | (115,750) | |||||
Dividends on Series A redeemable convertible preferred stock | (458,130) | |||||
Foreign currency translation | 44,712 | |||||
Ending balance at Jun. 30, 2018 | (11,441,407) | 979 | 112,970,053 | (122,498,307) | 0 | (1,914,132) |
Beginning balance at Mar. 31, 2018 | (14,447,170) | 601 | 109,660,849 | (121,494,203) | (570,329) | (2,044,088) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (1,004,104) | (1,004,104) | ||||
Adjustments to Additional Paid in Capital, Warrant Issued | 4,143,000 | 4,143,000 | ||||
Stock Issued During Period, Value, New Issues | 0 | 378 | (570,707) | 570,329 | ||
Share-based compensation to employees | 29,519 | 29,519 | ||||
Accretion of Series A redeemable convertible preferred stock | (77,645) | (77,645) | ||||
Dividends on Series A redeemable convertible preferred stock | (214,963) | (214,963) | ||||
Foreign currency translation | 129,956 | 129,956 | ||||
Ending balance at Jun. 30, 2018 | (11,441,407) | 979 | 112,970,053 | (122,498,307) | $ 0 | (1,914,132) |
Beginning balance at Dec. 31, 2018 | (11,553,796) | 5,873 | 113,243,227 | (122,907,794) | (1,895,102) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (124,907) | (124,907) | ||||
Share-based compensation to employees | 9,251 | 9,251 | ||||
Accretion of Series A redeemable convertible preferred stock | (129,239) | (129,239) | ||||
Dividends on Series A redeemable convertible preferred stock | (247,027) | (247,027) | ||||
Foreign currency translation | 19,392 | 19,392 | ||||
Ending balance at Mar. 31, 2019 | (12,026,326) | 5,873 | 112,876,212 | (123,032,701) | (1,875,710) | |
Beginning balance at Dec. 31, 2018 | (11,553,796) | 5,873 | 113,243,227 | (122,907,794) | (1,895,102) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (1,296,630) | |||||
Accretion of Series A redeemable convertible preferred stock | (263,462) | |||||
Dividends on Series A redeemable convertible preferred stock | (503,580) | |||||
Foreign currency translation | (30,018) | |||||
Ending balance at Jun. 30, 2019 | (13,622,004) | 5,888 | 112,501,652 | (124,204,424) | (1,925,120) | |
Beginning balance at Mar. 31, 2019 | (12,026,326) | $ 5,873 | 112,876,212 | (123,032,701) | (1,875,710) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (1,171,723) | (1,171,723) | ||||
Stock Issued During Period, Value, New Issues | (15) | |||||
Share-based compensation to employees | $ 16,231 | 16,231 | ||||
Stock Issued During Period, Shares, New Issues | 0 | 15 | ||||
Accretion of Series A redeemable convertible preferred stock | $ (134,223) | (134,223) | ||||
Dividends on Series A redeemable convertible preferred stock | (256,553) | (256,553) | ||||
Foreign currency translation | (49,410) | (49,410) | ||||
Ending balance at Jun. 30, 2019 | $ (13,622,004) | $ 5,888 | $ 112,501,652 | $ (124,204,424) | $ (1,925,120) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (1,296,630) | $ (497,227) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 223,783 | 346,346 |
Share-based payment compensation | 25,482 | 6,624 |
Provision for (recovery of) returns and doubtful accounts | 29,346 | (146,052) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,915,823 | 2,248,771 |
Prepaid expenses and other current assets | 181,764 | 425,718 |
Contract assets | 92,724 | 219,141 |
Inventory | (90,045) | 0 |
Other assets | (114,198) | 7,572 |
Accounts payable | 527,623 | (300,168) |
Accrued expenses and other long-term liabilities | (719,819) | (260,174) |
Deferred revenue | (699,893) | (1,350,095) |
Net cash provided by operating activities | 75,960 | 700,456 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (179,048) | (28,408) |
Capitalized software development costs | 0 | (23,599) |
Security deposits | (6,398) | 33,845 |
Purchase of intangible assets | (41,736) | (39,861) |
Net cash used in investing activities | (227,182) | (58,023) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt, net of issuance costs | 0 | 2,354,727 |
Payments of long term-debt | (489,321) | 0 |
Net cash provided by (used in) financing activities | (489,321) | 2,354,727 |
Effect of exchange rate changes on cash and cash equivalents | (18,181) | 35,036 |
Net increase (decrease) in cash and cash equivalents | (658,724) | 3,032,196 |
Cash and cash equivalents, beginning of period | 3,059,677 | 1,011,472 |
Cash and cash equivalents, end of period | 2,400,953 | 4,043,668 |
Supplemental disclosures: | ||
Cash paid for interest | 119,040 | 34,724 |
Cash paid for income taxes, net | 0 | 0 |
Non-cash investing and financing activities: | ||
Undistributed Series A redeemable convertible preferred stock dividends | 503,580 | 573,880 |
Warrants Issued | 0 | 4,143,000 |
Deemed dividend | 0 | 2,269,042 |
Discount on preferred stock | 0 | 1,602,428 |
Discount on notes payable | 0 | 288,504 |
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | $ 263,462 | $ 115,750 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | (a) The Company and Nature of Operations FalconStor Software, Inc., a Delaware Corporation (the "Company" or "FalconStor"), is a leading storage software company offering a converged data services software platform that is hardware agnostic. The Company develops, manufactures and sells data migration, business continuity, disaster recovery, optimized backup and de-duplication solutions and provides the related maintenance, implementation and engineering services. (b) Liquidity As of June 30, 2019 , we had a working capital deficiency of $3.4 million , which is inclusive of current deferred revenue of $5.1 million , and a stockholders' deficit of $13.6 million . During the three months ended June 30, 2019 , we had a net loss of $1.2 million . During the six months ended June 30, 2019 , we had a net loss of $1.3 million and positive cash flow from operations of $0.1 million . Our cash and cash equivalents at June 30, 2019 was $2.4 million , a decrease of $0.7 million as compared to December 31, 2018 . We believe that our cash flows from future operations and existing cash on hand are sufficient to conduct our planned operations and meet our contractual requirements for at least one year from the date of issuance of the accompanying consolidated financial statements. (c) Stock Split On August 8, 2019, the Company effected a 100-for-1 reverse stock split of its issued and outstanding common stock. In connection with the reverse stock split, the Company also decreased its authorized capital to 32,000,000 shares, consisting of 30,000,000 shares of common stock and 2,000,000 shares of preferred stock. The par value of the Company's common stock was not adjusted as a result of the reverse stock split. All of the share and per share information presented in the accompanying financial statements have been adjusted to reflect, unless otherwise indicated, the reverse common stock split on a retroactive basis for all periods and as of all dates presented. (d) Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. (e) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("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 financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, accounts receivable allowances, share-based payment compensation, valuation of derivatives, capitalizable software development costs, valuation of goodwill and other intangible assets and income taxes. During the first quarter of 2018, the Company also had significant estimates in the determination of the fair value of Series A Preferred Stock, notes payable and warrants issued. Actual results could differ from those estimates. The financial market volatility in many countries where the Company operates has impacted and may continue to impact the Company’s business. Such conditions could have a material impact on the Company’s significant accounting estimates discussed above. (f) Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2019 , and the results of its operations for the three and six months ended June 30, 2019 and 2018 . The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 (" 2018 Form 10-K"). (g) Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2016-02, which establishes a right-of-use (ROU) model that requires a lessee to record a right of use (ROU) asset and a lease liability on the balance sheet for most leases. In July 2018, the FASB issued ASU No. 2018-11, which amends the guidance to add a method of adoption whereby the issuer may elect to recognize a cumulative effect adjustment at the beginning of the period of adoption. ASU No. 2018-11 does not require comparative period financial information to be adjusted. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. To determine whether a contract conveys the right to control the use of the identified asset for a period of time, the customer has to have both (1) the right to obtain substantially all of the economic benefits from the use of the identified asset and (2) the right to direct the use of the identified asset, a contract does not contain an identified asset if the supplier has a substantive right to substitute such asset ("the leasing criteria"). We have determined that our real estate leases with terms in excess of one year and which do not include an option to purchase the underlying asset, meet the leasing criteria. On January 1, 2019, we adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby we elected to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. We elected to apply the transition provisions as of January 1, 2019, the date of adoption, and we recorded lease ROU assets of $2.9 million and related liabilities of $3.6 million million on our balance sheet related to our operating leases. We have no financing leases. There was no change to our condensed consolidated statements of operations or cash flows. In July 2018, the FASB issued ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 affect a wide variety of Topics in the FASB Codification and apply to all reporting entities within the scope of the affected accounting guidance. The Company has evaluated ASU 2018-09 in its entirety and determined that the amendments related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, are the only provisions that currently apply to the Company. The amendments in ASU 2018-09 related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, clarify that an entity should recognize excess tax benefits related to stock compensation transactions in the period in which the amount of the deduction is determined. On January 1, 2019, we adopted ASU 2018-09 and it did not have a material impact on the Company's Condensed Consolidated Financial Statements. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees . Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date. The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. On January 1, 2019, we adopted ASU 2018-07 and it did not have a material impact on the Company's Condensed Consolidated Financial Statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which provides entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the 2017 Tax Cuts and Jobs Act (“the Tax Act”) to retained earnings. On January 1, 2019, we adopted ASU 2018-02 and it did not have a material impact on the Company's Condensed Consolidated Financial Statements. (h) Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans . The objective of the guidance is to improve the effectiveness of disclosure requirements on defined benefit pension plans and other postretirement plans. The guidance is effective for fiscal years beginning after December 15, 2020. The Company does not expect adoption of the new standard to have a material impact on its Condensed Consolidated Financial Statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | The Company's significant accounting policies were described in Note (1) Summary of Significant Accounting Policies of the 2018 Form 10-K. There have been no significant changes in the Company's significant accounting policies since December 31, 2018 , other than those noted below. For a description of the Company's other significant accounting policies refer to the 2018 Form 10-K. Revenue from Contracts with Customers and Associated Balances Nature of Products and Services Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises licenses is recognized upfront at the point in time when the software is made available to the customer. Revenue allocated to software maintenance and support services is recognized ratably over the contractual support period. Hardware products consist primarily of servers and associated components and function independently of the software products and as such are accounted for as separate performance obligations. Revenue allocated to hardware maintenance and support services is recognized ratably over the contractual support period. Professional services are primarily related to software implementation services and associated revenue is recognized upon customer acceptance. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a contract asset or receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For perpetual licenses with multi-year product maintenance agreements, the Company generally invoices customers at the beginning of the coverage period. For multi-year subscription licenses, the Company generally invoices customers annually at the beginning of each annual coverage period. The Company records a contract asset related to revenue recognized for multi-year on-premises licenses as its right to payment is conditioned upon providing product support and services in future years. As of June 30, 2019 and December 31, 2018 , accounts receivable, net of allowance for doubtful accounts, was $1.7 million and $3.6 million , respectively. As of June 30, 2019 and December 31, 2018 , short and long-term contract assets, net of allowance for doubtful accounts, was $1.1 million and $1.2 million , respectively. Deferred revenue is comprised mainly of unearned revenue related maintenance and technical support on term and perpetual licenses. Maintenance and technical support revenue is recognized ratably over the coverage period. Deferred revenue also includes contracts for professional services to be performed in the future which are recognized as revenue when the company delivers the related service pursuant to the terms of the customer arrangement. Changes in deferred revenue were as follows: Six Months Ended June 30, 2019 Balance at December 31, 2018 $ 9,366,490 Deferral of revenue 7,812,630 Recognition of revenue (8,492,367 ) Balance at June 30, 2019 $ 8,686,753 Deferred revenue includes invoiced revenue allocated to remaining performance obligations that has not yet been recognized and will be recognized as revenue in future periods. Deferred revenue was $8.7 million as of June 30, 2019 , of which the Company expects to recognize approximately 58% of the revenue over the next 12 months and the remainder thereafter. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its products and services, not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with maintenance and support revenue recognized ratably over the contract period, and multi-year on-premises licenses that are invoiced annually with product revenue recognized upon delivery. Significant Judgments The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. For products and services aside from maintenance and support, the Company estimates SSP by adjusting the list price by historical discount percentages. SSP for software and hardware maintenance and support fees is based on the stated percentages of the fees charged for the respective products. The Company’s perpetual and term software licenses have significant standalone functionality and therefore revenue allocated to these performance obligations are recognized at a point in time upon electronic delivery of the download link and the license keys. Product maintenance and support services are satisfied over time as they are stand-ready obligations throughout the support period. As a result, revenues associated with maintenance services are deferred and recognized as revenue ratably over the term of the contract. Revenues associated with professional services are recognized at a point in time upon customer acceptance. Disaggregation of Revenue Please refer to the condensed consolidated statements of operations and note 16 , segment reporting and concentrations, for discussion on revenue disaggregation by product type and by geography. The Company believes this level of disaggregation sufficiently depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Assets Recognized from Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that its sales commission program meets the requirements for cost capitalization. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our consolidated balance sheets. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. Leases We have entered into operating leases for our various facilities. We determine if an arrangement is a lease at inception. Operating leases are included in ROU assets, and lease liability obligations in our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liability obligations represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We have lease agreements with lease and non-lease components and account for such components as a single lease component. As most of our leases do not provide an implicit rate, we estimated our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. Our lease terms may include options to extend or terminate the lease. Such extended terms have been considered in determining the ROU assets and lease liability obligations when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Right of Use Assets and Liabilities We have various operating leases for office facilities that expire through 2021. Below is a summary of our right of use assets and liabilities as of June 30, 2019 . Right of use assets $ 2,454,349 Lease liability obligations, current 1,753,015 Lease liability obligations, less current portion 1,281,804 Total lease liability obligations $ 3,034,819 Weighted-average remaining lease term 1.83 Weighted-average discount rate 6.04 % During the three months ended June 30, 2019 and June 30, 2018 , we recognized approximately $0.4 million and $1.0 million , respectively, in total operating lease costs. During the six months ended June 30, 2019 and June 30, 2018 , we recognized approximately $0.8 million and $1.5 million , respectively, in total operating lease costs. During the three months ended June 30, 2019 and June 30, 2018 , operating cash flows from operating leases was approximately $0.5 million and $0.5 million , respectively. During the six months ended June 30, 2019 and June 30, 2018 , operating cash flows from operating leases was approximately $1.0 million and $1.1 million , respectively. During the three and six months ended June 30, 2019 , we recognized sublease income of approximately $0.2 million and $0.3 million , respectively. We recorded $35,683 in sublease income during the three and six months ended June 30, 2018 . Approximate future minimum lease payments for our right of use assets over the remaining lease periods as of June 30, 2019, are as follows: Remainder of 2019 947,848 2020 1,788,450 2021 639,526 Thereafter — Total minimum lease payments 3,375,824 Less interest (341,005 ) Present value of lease liabilities 3,034,819 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share ("EPS") is computed based on the weighted average number of shares of common stock outstanding. Diluted EPS is computed based on the weighted average number of common shares outstanding increased by dilutive common stock equivalents, attributable to stock option awards, restricted stock awards, warrants and the Series A Preferred Stock outstanding. The following represents the common stock equivalents that were excluded from the computation of diluted shares outstanding because their effect would have been anti-dilutive for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Stock options and restricted stock 11,855 3,702,398 11,855 3,702,398 Series A redeemable convertible preferred stock 87,815 87,815 87,815 87,815 Total anti-dilutive common stock equivalents 99,670 3,790,213 99,670 3,790,213 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment The gross carrying amount and accumulated depreciation of property and equipment as of June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Gross carrying amount $ 18,735,154 $ 18,628,762 Accumulated depreciation (18,250,566 ) (18,194,827 ) Property and Equipment, net $ 484,588 $ 433,935 For the three months ended June 30, 2019 and 2018 , depreciation expense was $61,612 and $71,441 , respectively. For the six months ended June 30, 2019 and 2018 , depreciation expense was $133,826 and $158,310 , respectively. |
Software Development Costs
Software Development Costs | 6 Months Ended |
Jun. 30, 2019 | |
Research and Development [Abstract] | |
Software Development Costs | Software Development Costs The gross carrying amount and accumulated amortization of software development costs as of June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Gross carrying amount $ 2,950,132 $ 2,950,132 Accumulated amortization (2,903,996 ) (2,861,363 ) Software development costs, net $ 46,136 $ 88,769 During the three months ended June 30, 2019 and 2018 , the Company recorded $11,560 and $58,609 , respectively, of amortization expense related to capitalized software costs. During the six months ended June 30, 2019 and 2018 , the Company recorded $42,633 and $117,216 , respectively, of amortization expense related to capitalized software costs. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The gross carrying amount and accumulated amortization of goodwill and other intangible assets as of June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Goodwill $ 4,150,339 $ 4,150,339 Other intangible assets: Gross carrying amount $ 3,932,976 $ 3,891,241 Accumulated amortization (3,847,230 ) (3,799,907 ) Net carrying amount $ 85,746 $ 91,334 For the three months ended June 30, 2019 and 2018 , amortization expense was $22,740 and $36,541 , respectively. For the six months ended June 30, 2019 and 2018 , amortization expense was $47,324 and 70,820 , respectively. |
Share-Based Payment Arrangement
Share-Based Payment Arrangements | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Payment Arrangements | Share-Based Payment Arrangements On June 22, 2018, the Company's stockholders adopted the FalconStor Software, Inc. 2018 Incentive Stock Plan (the "2018 Plan"). The 2018 Plan is administered by the Compensation Committee and provides for the issuance of up to 1,471,997 shares of the Company's common stock upon the grant of shares with such restrictions as determined by the Compensation Committee to the employees and directors of, and consultants providing services to, the Company or its affiliates. Exercise prices of the options will be determined by the Compensation Committee, subject to the consent of Hale Capital Partners, LP ("Hale Capital"). The vesting terms shall be performance based and determined by the Compensation Committee, subject to the consent of Hale Capital, based on various factors, including (i) the return of capital to the holders of the Series A Preferred Stock and the Company’s Common Stock in the event of a Change of Control, (ii) the repayment of the Company’s obligations under its senior secured debt, and (iii) the Company’s free cash flow. The 2016 Incentive Stock Plan (the "2016 Plan") was terminated in April 2018. The following table summarizes the 2018 Plan, which was the only plan under which the Company was able to grant equity compensation as of June 30, 2019 : Shares Shares Available Shares Name of Plan Authorized for Grant Outstanding FalconStor Software, Inc. 2018 Incentive Stock Plan 1,471,997 220,843 — The following table summarizes the Company’s equity plans that have terminated or expired but that still have equity awards outstanding as of June 30, 2019 : Name of Plan Shares Available for Grant Shares Outstanding FalconStor Software, Inc., 2016 Incentive Stock Plan — 4,000 FalconStor Software, Inc., 2006 Incentive Stock Plan — 7,855 FalconStor Software, Inc., 2000 Stock Option Plan — — Related to the 2016 Plan, many share-based compensation awards were forfeited and the related expense reversed accordingly, resulting in negative expense for the six months ended June 30, 2018. The following table summarizes the share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Cost of revenue - Support and Service 449 4,875 2,042 13,575 Research and development costs 861 18,744 5,606 41,350 Selling and marketing 1,248 4,525 3,658 12,457 General and administrative 13,673 1,375 14,176 (60,758 ) $ 16,231 $ 29,519 $ 25,482 $ 6,624 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income taxes consists principally of state and local, and foreign taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. For the six months ended June 30, 2019 , the Company recorded an income tax provision of $223,830 . The effective tax rate for the six months ended June 30, 2019 was (20.9%) . The effective tax rate differs from the statutory rate of 21% due to the mix of foreign and domestic earnings as no tax expense or benefit is being recognized on domestic earnings or losses. As of June 30, 2019 , the Company’s conclusion did not change with respect to the realizability of its domestic deferred tax assets and therefore, the Company has not recorded any income tax benefit as such amounts are fully offset with a valuation allowance. For the six months ended June 30, 2018 , the Company recorded an income tax provision of $62,990 . The effective tax rate for the six months ended June 30, 2018 was (14.5%) . The effective tax rate differs from the statutory rate of 21% due to the mix of foreign and domestic earnings as no tax expense or benefit is being recognized on domestic earnings or losses. As of June 30, 2018, the Company’s conclusion did not change with respect to the realizability of its domestic deferred tax assets and therefore, the Company has not recorded any income tax expense as such amounts are fully offset with a valuation allowance. The Company’s total unrecognized tax benefits, excluding interest, at June 30, 2019 and December 31, 2018 were $134,246 and $134,246 , respectively. As of June 30, 2019 and December 31, 2018 , the Company had $63,404 and $57,860 , respectively, of accrued interest reflected in accrued expenses. The Company expects to recognize approximately $80,000 of tax benefits in the next twelve months due to expiring statute of limitations, and the recognition will impact the Company's effective tax rate. |
Notes Payable and Stock Warrant
Notes Payable and Stock Warrants | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Notes Payable and Stock Warrants | Notes Payable and Stock Warrants The notes payable balance consists of the following: Notes payable principal balance $ 3,000,000 Deferred issuance costs (254,247 ) Discount (288,504 ) Total notes payable, net at inception on February 23, 2018 2,457,249 Proceeds from issuance of long-term debt 1,000,000 Revaluation of long-term debt (447,008 ) Accretion of discount 202,195 Deferred issuance costs (87,609 ) Total notes payable, net at December 31, 2018 $ 3,124,827 Repayment of long-term debt (489,321 ) Accretion of discount 110,913 Total notes payable, net at June 30, 2019 $ 2,746,419 The notes bear interest at prime plus 0.75% and mature on June 30, 2021. As of June 30, 2019 , the Company was in compliance with the financial covenants contained in the Amended and Restated Term Loan Credit Agreement. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company measures its cash equivalents and derivative instruments at fair value. Fair value is an exit price, representing the amount that would be received on the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. The methodology for measuring fair value specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the Company’s own assumptions of market participant valuation (unobservable inputs). As a result, observable and unobservable inputs have created the following fair value hierarchy: • Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities. At June 30, 2019 , the Company did not have any Level 1 category assets included in the condensed consolidated balance sheets. • Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly. At June 30, 2019 and December 31, 2018 , the Company did not have any Level 2 category assets included in the condensed consolidated balance sheets. • Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. At June 30, 2019 and December 31, 2018 , the Level 3 category included derivatives, which are included within other long-term liabilities in the condensed consolidated balance sheets. The Company did not hold any cash and cash equivalents categorized as Level 3 as of June 30, 2019 or December 31, 2018 . The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2019 : Fair Value Measurements at Reporting Date Using Total Quoted Prices in Active Markets for Identical Assets Significant other Inputs Significant Unobservable Inputs Derivative liabilities: Derivative Instruments 489,489 — — 489,489 Total derivative liabilities 489,489 — — 489,489 Total assets and liabilities measured at fair value $ 489,489 $ — $ — $ 489,489 The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2018 : Fair Value Measurements at Reporting Date Using Total Quoted Prices in Active Markets for Identical Assets Significant other Inputs Significant Unobservable Inputs Derivative liabilities: Derivative Instruments 498,086 — — 498,086 Total derivative liabilities 498,086 — — 498,086 Total assets and liabilities measured at fair value $ 498,086 $ — $ — $ 498,086 The fair value of the Company’s derivatives were valued using the Black-Scholes pricing model adjusted for probability assumptions, with all significant inputs, except for the probability and volatility assumptions, derived from or corroborated by observable market data such as stock price and interest rates. The probability and volatility assumptions are both significant to the fair value measurement and unobservable. These embedded derivatives are included in Level 3 of the fair value hierarchy. The fair value of the Company's Series A Redeemable Convertible Preferred Stock ("Series A Preferred Stock") is based on its future cash flows discounted at a 15% yield. The fair value of the Company's note payable is based on its future cash flows discounted at 12% . The fair value of the Backstop Warrants and Financing Warrants to purchase approximately 422 million shares of the Company's common stock, was based on the enterprise value of the Company calculated by a third party appraiser less the preferred stock and preferred stock accrued dividends that have a preference over common shares. These warrants were then valued based on a Black Scholes value using volatility of 60% and resulted in a fair value of approximately $0.01 per share. The following table presents a reconciliation of the beginning and ending balances of the Company's liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2019 and June 30, 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Beginning Balance $ 492,327 $ 445,838 $ 498,086 $ 445,838 Total income (loss) recognized in earnings (2,838 ) 37,033 (8,597 ) 37,033 Ending Balance $ 489,489 $ 482,871 $ 489,489 $ 482,871 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company’s headquarters are located in Austin, Texas. The Company has an operating lease covering its Melville, N.Y. office facility that expires in April 2021. The Company has sublet a portion of this lease. The Company also has several additional operating leases related to offices in foreign countries. The expiration dates for these leases range from 2018 through 2021. The following is a schedule of future minimum lease payments as well as sublease income for all operating leases as of June 30, 2019 : Payments Sublease Income Net Commitments 2019 $ 947,848 $ (311,888 ) $ 635,960 2020 1,788,450 (623,776 ) 1,164,674 2021 639,526 (65,194 ) 574,332 2022 — — — Thereafter — — — $ 3,375,824 $ (1,000,858 ) $ 2,374,966 The Company typically provides its customers a warranty on its software products for a period of no more than 90 days. Such warranties are accounted for in accordance with the authoritative guidance issued by the FASB on contingencies. For the three and six months ended June 30, 2019 , the Company has not incurred any costs related to warranty obligations. Under the terms of substantially all of its software license agreements, the Company indemnifies its customers for all costs and damages arising from claims against such customers based on, among other things, allegations that the Company’s software infringes on the intellectual property rights of a third party. In most cases, in the event of an infringement claim, the Company retains the right to (i) procure for the customer the right to continue using the software; (ii) replace or modify the software to eliminate the infringement while providing substantially equivalent functionality; or (iii) if neither (i) nor (ii) can be reasonably achieved, the Company may terminate the license agreement and refund to the customer a pro-rata portion of the license fee paid to the Company. Such indemnification provisions are accounted for in accordance with the authoritative guidance issued by the FASB on guarantees. From time to time, in the ordinary course of business, the Company receives claims for indemnification, typically from OEMs. The Company is not currently aware of any material claims for indemnification. As described under Note 12 , the holders of the Series A Preferred Stock have redemption rights upon certain triggering events. As of June 30, 2019 , the Company did not fail any non-financial covenants related to the Company's Series A Preferred Stock. In connection with the appointment of Todd Brooks as Chief Executive Officer, the Board approved an offer letter to Mr. Brooks (the “Brooks Agreement”), which was executed on August 14, 2017. The Brooks Offer Letter provides that Mr. Brooks is entitled to receive an annualized base salary of $350,000 , payable in regular installments in accordance with the Company’s general payroll practices. Mr. Brooks will also be eligible for a cash bonus of $17,500 for any quarter that is free cash flow positive on an operating basis and additional incentive compensation of an annual bonus of up to $200,000 , subject to attainment of performance objectives to be mutually agreed upon and established. Pursuant to the Brooks Agreement, the Company created the 2018 Plan, which was adopted by the Company's stockholders on June 22, 2018. The 2018 Plan provides for the issuance of up to 1,471,997 shares which is based on up to 15% of the equity of the Company on a fully diluted basis, plus potentially two additional tranches of 2.5% of the equity of the Company on a fully diluted basis. Mr. Brooks’ employment can be terminated at will. If Mr. Brooks’ employment is terminated by the Company other than for cause he is entitled to receive severance equal to twelve ( 12 ) months of his base salary if (i) he has been employed by the Company for at least twelve ( 12 ) months at the time of termination or (ii) a change of control has occurred within six ( 6 ) months of Mr. Brooks’ employment. Except as set forth in the preceding sentence, Mr. Brooks is entitled to receive severance equal to six ( 6 ) months of his base salary if he has been employed by the Company for less than six ( 6 ) months and his employment was terminated by the Company without cause. Mr. Brooks is also entitled to vacation and other employee benefits in accordance with the Company’s policies as well as reimbursement for an apartment. In connection with the appointment of Brad Wolfe as the Company's Chief Financial Officer, the Board approved an offer letter to Mr. Wolfe (the “Wolfe Offer Letter”), which was executed on April 4, 2018. The Wolfe Offer Letter provides that Mr. Wolfe is entitled to receive an annualized base salary of $240,000 , payable in regular installments in accordance with the Company’s general payroll practices. Mr. Wolfe will also be eligible for a cash bonus of $10,000 for any quarter which has net working capital cash in excess of $27,500 and additional incentive compensation of an annual bonus of up to $70,000 , subject to attainment of performance objectives to be mutually agreed upon and established. As described under Note 17, the Company has incurred certain restructuring costs in connection with restructuring plans adopted in 2013 and 2017. In addition, as of June 30, 2019 , the Company's liability for uncertain tax positions totaled $197,650 . At this time, the settlement period for this liability, including related accrued interest, cannot be determined. |
Series A Redeemable Convertible
Series A Redeemable Convertible Preferred Stock | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Series A Redeemable Convertible Preferred Stock | Series A Redeemable Convertible Preferred Stock The Company has 900,000 shares of Series A Preferred Stock outstanding . Pursuant to the Amended and Restated Certificate of Designations, Preferences and Rights for the Series A Preferred Stock (the ”Certificate of Designations”), each share of Series A Preferred Stock can be converted into shares of the Company’s Common Stock, at an initial conversion price of $1.02488 per share, subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction, (i) at any time at the option of the holder or (ii) by the Company if, following the first anniversary of the issuance of the Series A Preferred Stock (subject to extension under certain circumstances), the volume weighted average trading price per share of the Company’s Common Stock for sixty ( 60 ) consecutive trading days exceeds 250% of the conversion price and continues to exceed 225% of the conversion price through the conversion date, subject at all times to the satisfaction of, and the limitations imposed by, the equity conditions set forth in the Certificate of Designations (including, without limitation, the volume limitations set forth therein). In connection with the consummation of the reverse stock split, on August 8, 2019, as described in Note ( 18 ), Subsequent Events, the conversion price is changing to $102.488 per share. Pursuant to the Certificate of Designations, the holders of the Series A Preferred Stock are entitled to receive quarterly dividends at the prime rate (provided in the Wall Street Journal Eastern Edition) plus 5% (up to a maximum dividend rate of 10% ), payable in cash or in kind (i.e., through the issuance of additional shares of Series A Preferred Stock), except that the Company is not permitted to pay such dividends in cash while any indebtedness under the Company’s Amended and Restated Loan Agreement remains outstanding without the consent of the holders of the Series A Preferred Stock. In addition, the declaration and payment of dividends is subject to compliance with applicable law and unpaid dividends will accrue. A holder’s right to convert its shares of Series A Preferred Stock and receive dividends in the form of Common Stock is subject to certain limitations including, among other things, that the shares of Common Stock issuable upon conversion or as dividends will not, prior to receipt of stockholder approval, result in any holder beneficially owning greater than 19.99% of the Company’s currently outstanding shares of Common Stock. The Series A Preferred dividends shall accrue whether or not the declaration or payment of such Series A Preferred dividends are prohibited by applicable law, whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are authorized or declared. Upon certain triggering events, such as bankruptcy, insolvency or a material adverse effect or failure of the Company to issue shares of Common Stock upon conversion of the Series A Preferred Stock in accordance with its obligations, the holders may require the Company to redeem all or some of the Series A Preferred Stock at a price per share equal to the greater of (i) the sum of 100% of the stated value of a share of Series A Preferred Stock plus accrued and unpaid dividends with respect thereto, and (ii) the product of the number of shares of Common Stock underlying a share of Series A Preferred Stock and the closing price as of the occurrence of the triggering event. On or after July 30, 2021, each holder of Series A Preferred Stock can also require the Company to redeem its Series A Preferred Stock in cash at a per share price equal to 100% of the stated value of a share of Series A Preferred Stock plus accrued and unpaid dividends with respect thereto. Notwithstanding the forgoing, no holder of Series A Preferred Stock is permitted to exercise any rights or remedies upon a Breach Event or to exercise any redemption rights under the Certificate of Designations, unless approved by the holders of a majority of the then outstanding shares of Series A Preferred Stock. Upon consummation of a fundamental sale transaction, the Series A Preferred Stock shall be redeemed at a per share redemption price equal to the greater of (y) 250% of the per share purchase price of the Series A Preferred Stock and (z) the price payable in respect of such share of Series A Preferred Stock if such share of Series A Preferred Stock had been converted into such number of shares of Common Stock in accordance with the Certificate of Designations (but without giving effect to any limitations or restrictions contained therein) immediately prior to such fundamental sale transaction; provided however that the 250% threshold is changed to 100% if the fundamental sale transaction is approved by the two Series A Directors (as defined in the Certificate of Designations). In addition, if the Company consummates an equity or debt financing that results in more than $5.0 million of net proceeds to the Company and/or its subsidiaries, the holders of Series A Preferred Stock will have the right, but not the obligation, to require the Company to use the net proceeds in excess of $5.0 million to repurchase all or a portion of the Series A Preferred Stock at a per share price equal to the greater of (i) the sum of 100% of the stated value of such share of Series A Preferred Stock plus accrued and unpaid dividends with respect thereto, and (ii) the number of shares of Common Stock into which such share of Series A Preferred Stock is then convertible multiplied by the greater of (y) the closing price of the Common Stock on the date of announcement of such financing or (z) the closing price of the Common Stock on the date of consummation of such financing. Each holder of Series A Preferred Stock has a vote equal to the number of shares of Common Stock into which its Series A Preferred Stock would be convertible as of the record date. In addition, the holders of a majority of the Series A Preferred Stock must approve certain actions, including approving any amendments to the Company’s Charter or Bylaws that adversely affects the voting powers, preferences or other rights of the Series A Preferred Stock; payment of dividends or distributions; any liquidation, capitalization, reorganization or any other fundamental transaction of the Company; issuance of any equity security senior to or on parity with the Series A Preferred Stock as to dividend rights, redemption rights, liquidation preference and other rights; issuances of equity below the conversion price; any liens or borrowings other than non-convertible indebtedness from standard commercial lenders which does not exceed 80% of the Company’s accounts receivable; and the redemption or purchase of any of the capital stock of the Company. The Company has classified the Series A Preferred Stock as temporary equity in the financial statements as it is subject to redemption at the option of the holder under certain circumstances. As a result of the Company’s analysis of all the embedded conversion and put features within the Series A Preferred Stock, the contingent redemption put options in the Series A Preferred Stock were determined to not be clearly and closely related to the debt-type host and also did not meet any other scope exceptions for derivative accounting. Therefore, the contingent redemption put options are being accounted for as derivative instruments and the fair value of these derivative instruments was bifurcated from the Series A Preferred Stock and recorded as a liability. As of June 30, 2019 and December 31, 2018 , the fair value of these derivative instruments was $489,489 and $498,086 , respectively, and were included in "other long-term liabilities" within the consolidated balance sheets. The loss on the change in fair value of these derivative instruments for the six months ended June 30, 2019 and June 30, 2018 of $(8,597) and $37,033 , respectively, were included in “interest and other loss, net” within the consolidated statement of operations. The fair value of these derivative instruments and the loss recorded on the change in the fair value of these derivative instruments, which was included in “Interest and other income, net” within the condensed consolidated statement of operations, for the three and six months ended June 30, 2019 and 2018 , were as follows: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Beginning Balance $ 492,327 $ 445,838 $ 498,086 $ 445,838 Total income (loss) recognized in earnings (2,838 ) 37,033 (8,597 ) 37,033 Ending Balance $ 489,489 $ 482,871 $ 489,489 $ 482,871 At the time of issuance, the Company recorded transaction costs, a beneficial conversion feature and the fair value allocated to the embedded derivatives as discounts to the Series A Preferred Stock. These costs were being accreted to the Series A Preferred Stock using the effective interest method through the stated redemption date of August 5, 2017, which represents the earliest redemption date of the instrument. This accretion was accelerated as of December 31, 2016 due to the failure of the financial covenants and the redemption right of the holders at that time. In connection with the Commitment, Hale Capital agreed to the Series A mandatory extension and waived prior breaches of the terms of the Series A Preferred Stock. The Company included deductions for accretion, deemed and accrued dividends on the Series A Preferred Stock as adjustments to net loss attributable to common stockholders on the statement of operations and in determining loss per share for the three and six months ended June 30, 2019 and 2018 , respectively. The following represents a reconciliation of net loss attributable to common stockholders for the three and six months ended June 30, 2019 and 2018 , respectively: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net loss $ (1,171,723 ) $ (1,004,104 ) $ (1,296,630 ) $ (497,227 ) Effects of Series A redeemable convertible preferred stock: Less: Accrual of Series A redeemable convertible preferred stock dividends 256,553 214,963 503,580 458,130 Less: Deemed dividend on Series A redeemable convertible preferred stock — — — 2,269,042 Less: Accretion to redemption value of Series A redeemable convertible preferred stock 134,223 77,645 263,462 115,750 Net loss attributable to common stockholders $ (1,562,499 ) $ (1,296,712 ) $ (2,063,672 ) $ (3,340,149 ) The Series A Preferred Stock consists of the following: Series A redeemable convertible preferred stock principal balance $ 9,000,000 Accrued dividends 1,312,112 Discount (1,602,428 ) Total Series A redeemable convertible preferred stock, net at inception on February 23, 2018 8,709,684 Accrued dividends 683,742 Accretion of preferred stock 363,280 Total Series A redeemable convertible preferred stock, net at December 31, 2018 $ 9,756,706 Accrued dividends 503,580 Accretion of preferred stock 263,462 Total Series A redeemable convertible preferred stock, net at June 30, 2019 $ 10,523,748 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended June 30, 2019 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at March 31, 2019 $ (1,902,513 ) $ 26,803 $ (1,875,710 ) Other comprehensive income (loss) Other comprehensive loss before reclassifications (49,410 ) — (49,410 ) Total other comprehensive loss (49,410 ) — (49,410 ) Accumulated other comprehensive income (loss) at June 30, 2019 $ (1,951,923 ) $ 26,803 $ (1,925,120 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended June 30, 2018 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at March 31, 2018 $ (2,066,185 ) $ 22,097 $ (2,044,088 ) Other comprehensive income (loss) Other comprehensive income before reclassifications 129,956 — 129,956 Total other comprehensive income 129,956 — 129,956 Accumulated other comprehensive income (loss) at June 30, 2018 $ (1,936,229 ) $ 22,097 $ (1,914,132 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the six months ended June 30, 2019 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2018 $ (1,921,905 ) $ 26,803 $ (1,895,102 ) Other comprehensive income (loss) Other comprehensive loss before reclassifications (30,018 ) — (30,018 ) Total other comprehensive loss (30,018 ) — (30,018 ) Accumulated other comprehensive income (loss) at June 30, 2019 $ (1,951,923 ) $ 26,803 $ (1,925,120 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the six months ended June 30, 2018 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2017 $ (1,980,940 ) $ 22,097 $ (1,958,843 ) Other comprehensive income (loss) Other comprehensive income before reclassifications 44,711 — 44,711 Total other comprehensive income (loss) 44,711 — 44,711 Accumulated other comprehensive income (loss) at June 30, 2018 $ (1,936,229 ) $ 22,097 $ (1,914,132 ) |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Amendments to Articles of Incorporation On August 8, 2019, following stockholder approval, the Company filed a certificate of amendment to the Company’s Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State to reduce the authorized shares of common stock, $.001 par value per share, to 30,000,000 . In connection with this event, the Company effected a 100-for-1 reverse stock split of its issued and outstanding common stock. The par value of common stock was not adjusted as a result of the reverse stock split. Unless otherwise indicated, all of the share and per share information presented in the accompanying financial statements have been adjusted to reflect the reverse common stock split on a retroactive basis for all periods and as of all dates presented. See "Subsequent Events" under Note 18. On June 22, 2018, following stockholder approval, the Company filed a certificate of amendment to the Company’s Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State to increase the authorized shares of common stock, $.001 par value per share, to 800,000,000 and filed an Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock with the Delaware Secretary of State to implement certain modifications to the terms of the Company’s Series A Preferred Stock. Stock Repurchase Activity During the three and six months ended June 30, 2019 and 2018 , the Company did not repurchase any shares of its common stock. As of June 30, 2019 , the Company had the authorization under previous Board approved stock repurchase plans to repurchase 4,907,839 shares of its common stock based upon its judgment and market conditions. |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | In view of the inherent difficulty of predicting the outcome of litigation, particularly where the claimants seek very large or indeterminate damages, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. In accordance with the authoritative guidance issued by the FASB on contingencies, the Company accrues anticipated costs of settlement, damages and losses for claims to the extent specific losses are probable and estimable. The Company records a receivable for insurance recoveries when such amounts are probable and collectable. In such cases, there may be an exposure to loss in excess of any amounts accrued. If, at the time of evaluation, the loss contingency related to a litigation is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable and, the Company will expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, the Company will accrue the minimum amount of the range. The Company is subject to various legal proceedings and claims, asserted or unasserted, which arise in the ordinary course of business. While the outcome of any such matters cannot be predicted with certainty, such matters are not expected to have a material adverse effect on the Company’s financial condition or operating results. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting and Concentrations The Company is organized in a single operating segment for purposes of making operating decisions and assessing performance. Revenue from the United States to customers in the following geographical areas for the three and six months ended June 30, 2019 and 2018 , and the location of long-lived assets as of June 30, 2019 and December 31, 2018 , are summarized as follows: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Revenue: Americas $ 1,496,988 $ 931,246 $ 2,497,805 $ 2,062,895 Asia Pacific 194,074 1,631,910 2,267,388 3,580,334 Europe, Middle East, Africa and Other 2,308,327 1,448,425 3,727,174 3,362,301 Total Revenue $ 3,999,389 $ 4,011,581 $ 8,492,367 $ 9,005,530 June 30, 2019 December 31, 2018 Long-lived assets: Americas $ 7,646,573 $ 5,852,995 Asia Pacific 1,226,438 736,970 Europe, Middle East, Africa and Other 162,587 155,708 Total long-lived assets $ 9,035,598 $ 6,745,673 For the three and six months ended June 30, 2019 , the Company had two and one customers that accounted for 10% or more of total revenue, respectively. For the three and six months ended June 30, 2018 , the Company had one customer that accounted for 10% of total revenue. As of June 30, 2019 , the Company had two customers that accounted for 10% or more of the gross accounts receivable balance. As of December 31, 2018 , the Company had one customer that accounted for 10% or more of the gross accounts receivable balance. |
Restructuring Costs
Restructuring Costs | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | In the third quarter of 2013, the Company adopted a plan to better align the Company’s cost structure with the skills and resources required to more effectively execute the Company’s long-term growth strategy and to support revenue levels the Company expected to achieve on a go forward basis (the "2013 Plan"). In connection with the 2013 Plan, the Company eliminated over 100 positions worldwide, implemented tighter expense controls, ceased non-core activities and closed or downsized several facilities. The 2013 Plan was substantially completed by December 31, 2014; however, we expect the majority of the remaining severance related costs to be paid once final settlement litigation is completed, which can be at various times over the next twelve months . In June 2017, the Board approved a comprehensive plan to increase operating performance (the “2017 Plan”). The 2017 Plan resulted in a realignment and reduction in workforce. The 2017 Plan was substantially completed by the end of the Company’s fiscal year ended December 31, 2017, and when combined with previous workforce reductions in the second quarter of Fiscal 2017 reduced the Company’s workforce to approximately 86 employees at December 31, 2018 . In connection with the 2017 Plan, the Company incurred severance expense of $1.2 million for the fiscal year ended December 31, 2017. In making these changes, the Company prioritized customer support and development while consolidating operations and streamlining direct sales resources, allowing the Company to focus on the install base and develop alternate channels to the market. As part of this consolidation effort the Company vacated a portion of the Mellville, NY office space during the three months ended June 30, 2018. In accordance with accounting standards governing costs associated with exit or disposal activities, expenses related to future rental payments for which the Company no longer intends to receive any economic benefit are accrued, net of any anticipated sublease income, when the Company ceases use of the leased space. During the six months ended June 30, 2019 , the Company incurred lease disposal-related costs for this property of $0.4 million . The following table summarizes the activity during 2018 and 2019 related to restructuring liabilities recorded in connection with the 2013 and 2017 Plans: Severance Related Costs Facility and Other Costs Total Balance at December 31, 2017 $ 648,399 $ — $ 648,399 Additions (Reductions) (173,263 ) — (173,263 ) Utilized/Paid (13,774 ) — (13,774 ) Balance at March 31, 2018 $ 461,362 $ — $ 461,362 Additions (Reductions) — 809,245 809,245 Utilized/Paid — (312,507 ) (312,507 ) Balance at June 30, 2018 $ 461,362 $ 496,738 $ 958,100 Additions (Reductions) — 315,283 315,283 Utilized/Paid — (331,405 ) (331,405 ) Balance at September 30, 2018 $ 461,362 $ 480,616 $ 941,978 Additions (Reductions) — 310,314 310,314 Utilized/Paid — (337,484 ) (337,484 ) Balance at December 31, 2018 $ 461,362 $ 453,446 $ 914,808 Additions (Reductions) — 157,693 157,693 Utilized/Paid — (187,833 ) (187,833 ) Balance at March 31, 2019 $ 461,362 $ 423,306 $ 884,668 Additions (Reductions) — 202,679 202,679 Utilized/Paid — (238,090 ) (238,090 ) Balance at June 30, 2019 $ 461,362 $ 387,895 $ 849,257 The severance and facility related liabilities are included within “accrued expenses” in the accompanying condensed consolidated balance sheets. The expenses under the 2013 and 2017 Plans are included within “restructuring costs” in the accompanying condensed consolidated statements of operations. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On August 6, 2019, following stockholder approval, the Company filed a certificate of amendment (which was effective August 8, 2019) to the Company’s Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State to reduce the authorized shares of common stock, $.001 par value per share, to 30,000,000 . In connection with this event, the Company effected a 100-for-1 reverse stock split of its issued and outstanding common stock. The par value of common stock was not adjusted as a result of the reverse stock split. Unless otherwise indicated, all of the share and per share information presented in the accompanying unaudited condensed consolidated financial statements have been adjusted to reflect the reverse common stock split on a retroactive basis for all periods and as of all dates presented. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue from Contracts with Customers and Associated Balances | Revenue from Contracts with Customers and Associated Balances Nature of Products and Services Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises licenses is recognized upfront at the point in time when the software is made available to the customer. Revenue allocated to software maintenance and support services is recognized ratably over the contractual support period. Hardware products consist primarily of servers and associated components and function independently of the software products and as such are accounted for as separate performance obligations. Revenue allocated to hardware maintenance and support services is recognized ratably over the contractual support period. Professional services are primarily related to software implementation services and associated revenue is recognized upon customer acceptance. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a contract asset or receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For perpetual licenses with multi-year product maintenance agreements, the Company generally invoices customers at the beginning of the coverage period. For multi-year subscription licenses, the Company generally invoices customers annually at the beginning of each annual coverage period. The Company records a contract asset related to revenue recognized for multi-year on-premises licenses as its right to payment is conditioned upon providing product support and services in future years. As of June 30, 2019 and December 31, 2018 , accounts receivable, net of allowance for doubtful accounts, was $1.7 million and $3.6 million , respectively. As of June 30, 2019 and December 31, 2018 , short and long-term contract assets, net of allowance for doubtful accounts, was $1.1 million and $1.2 million , respectively. Deferred revenue is comprised mainly of unearned revenue related maintenance and technical support on term and perpetual licenses. Maintenance and technical support revenue is recognized ratably over the coverage period. Deferred revenue also includes contracts for professional services to be performed in the future which are recognized as revenue when the company delivers the related service pursuant to the terms of the customer arrangement. Deferred revenue includes invoiced revenue allocated to remaining performance obligations that has not yet been recognized and will be recognized as revenue in future periods. Deferred revenue was $8.7 million as of June 30, 2019 , of which the Company expects to recognize approximately 58% of the revenue over the next 12 months and the remainder thereafter. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its products and services, not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with maintenance and support revenue recognized ratably over the contract period, and multi-year on-premises licenses that are invoiced annually with product revenue recognized upon delivery. Significant Judgments The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. For products and services aside from maintenance and support, the Company estimates SSP by adjusting the list price by historical discount percentages. SSP for software and hardware maintenance and support fees is based on the stated percentages of the fees charged for the respective products. The Company’s perpetual and term software licenses have significant standalone functionality and therefore revenue allocated to these performance obligations are recognized at a point in time upon electronic delivery of the download link and the license keys. Product maintenance and support services are satisfied over time as they are stand-ready obligations throughout the support period. As a result, revenues associated with maintenance services are deferred and recognized as revenue ratably over the term of the contract. Revenues associated with professional services are recognized at a point in time upon customer acceptance. Disaggregation of Revenue Please refer to the condensed consolidated statements of operations and note 16 , segment reporting and concentrations, for discussion on revenue disaggregation by product type and by geography. The Company believes this level of disaggregation sufficiently depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Assets Recognized from Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that its sales commission program meets the requirements for cost capitalization. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our consolidated balance sheets. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. |
The Company and Nature of Operations | The Company and Nature of Operations FalconStor Software, Inc., a Delaware Corporation (the "Company" or "FalconStor"), is a leading storage software company offering a converged data services software platform that is hardware agnostic. The Company develops, manufactures and sells data migration, business continuity, disaster recovery, optimized backup and de-duplication solutions and provides the related maintenance, implementation and engineering services. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("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 financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, accounts receivable allowances, share-based payment compensation, valuation of derivatives, capitalizable software development costs, valuation of goodwill and other intangible assets and income taxes. During the first quarter of 2018, the Company also had significant estimates in the determination of the fair value of Series A Preferred Stock, notes payable and warrants issued. Actual results could differ from those estimates. The financial market volatility in many countries where the Company operates has impacted and may continue to impact the Company’s business. Such conditions could have a material impact on the Company’s significant accounting estimates discussed above. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2019 , and the results of its operations for the three and six months ended June 30, 2019 and 2018 . The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 (" 2018 Form 10-K"). |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2016-02, which establishes a right-of-use (ROU) model that requires a lessee to record a right of use (ROU) asset and a lease liability on the balance sheet for most leases. In July 2018, the FASB issued ASU No. 2018-11, which amends the guidance to add a method of adoption whereby the issuer may elect to recognize a cumulative effect adjustment at the beginning of the period of adoption. ASU No. 2018-11 does not require comparative period financial information to be adjusted. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. To determine whether a contract conveys the right to control the use of the identified asset for a period of time, the customer has to have both (1) the right to obtain substantially all of the economic benefits from the use of the identified asset and (2) the right to direct the use of the identified asset, a contract does not contain an identified asset if the supplier has a substantive right to substitute such asset ("the leasing criteria"). We have determined that our real estate leases with terms in excess of one year and which do not include an option to purchase the underlying asset, meet the leasing criteria. On January 1, 2019, we adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby we elected to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. We elected to apply the transition provisions as of January 1, 2019, the date of adoption, and we recorded lease ROU assets of $2.9 million and related liabilities of $3.6 million million on our balance sheet related to our operating leases. We have no financing leases. There was no change to our condensed consolidated statements of operations or cash flows. In July 2018, the FASB issued ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 affect a wide variety of Topics in the FASB Codification and apply to all reporting entities within the scope of the affected accounting guidance. The Company has evaluated ASU 2018-09 in its entirety and determined that the amendments related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, are the only provisions that currently apply to the Company. The amendments in ASU 2018-09 related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, clarify that an entity should recognize excess tax benefits related to stock compensation transactions in the period in which the amount of the deduction is determined. On January 1, 2019, we adopted ASU 2018-09 and it did not have a material impact on the Company's Condensed Consolidated Financial Statements. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees . Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date. The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. On January 1, 2019, we adopted ASU 2018-07 and it did not have a material impact on the Company's Condensed Consolidated Financial Statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which provides entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the 2017 Tax Cuts and Jobs Act (“the Tax Act”) to retained earnings. On January 1, 2019, we adopted ASU 2018-02 and it did not have a material impact on the Company's Condensed Consolidated Financial Statements. (h) Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans . The objective of the guidance is to improve the effectiveness of disclosure requirements on defined benefit pension plans and other postretirement plans. The guidance is effective for fiscal years beginning after December 15, 2020. The Company does not expect adoption of the new standard to have a material impact on its Condensed Consolidated Financial Statements. |
Leases | Leases We have entered into operating leases for our various facilities. We determine if an arrangement is a lease at inception. Operating leases are included in ROU assets, and lease liability obligations in our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liability obligations represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We have lease agreements with lease and non-lease components and account for such components as a single lease component. As most of our leases do not provide an implicit rate, we estimated our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. Our lease terms may include options to extend or terminate the lease. Such extended terms have been considered in determining the ROU assets and lease liability obligations when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Changes in Deferred Revenue | Changes in deferred revenue were as follows: Six Months Ended June 30, 2019 Balance at December 31, 2018 $ 9,366,490 Deferral of revenue 7,812,630 Recognition of revenue (8,492,367 ) Balance at June 30, 2019 $ 8,686,753 |
Assets And Liabilities, Lessee | We have various operating leases for office facilities that expire through 2021. Below is a summary of our right of use assets and liabilities as of June 30, 2019 . Right of use assets $ 2,454,349 Lease liability obligations, current 1,753,015 Lease liability obligations, less current portion 1,281,804 Total lease liability obligations $ 3,034,819 Weighted-average remaining lease term 1.83 Weighted-average discount rate 6.04 % |
Operating Leases Maturity | Approximate future minimum lease payments for our right of use assets over the remaining lease periods as of June 30, 2019, are as follows: Remainder of 2019 947,848 2020 1,788,450 2021 639,526 Thereafter — Total minimum lease payments 3,375,824 Less interest (341,005 ) Present value of lease liabilities 3,034,819 The following is a schedule of future minimum lease payments as well as sublease income for all operating leases as of June 30, 2019 : Payments Sublease Income Net Commitments 2019 $ 947,848 $ (311,888 ) $ 635,960 2020 1,788,450 (623,776 ) 1,164,674 2021 639,526 (65,194 ) 574,332 2022 — — — Thereafter — — — $ 3,375,824 $ (1,000,858 ) $ 2,374,966 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following represents the common stock equivalents that were excluded from the computation of diluted shares outstanding because their effect would have been anti-dilutive for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Stock options and restricted stock 11,855 3,702,398 11,855 3,702,398 Series A redeemable convertible preferred stock 87,815 87,815 87,815 87,815 Total anti-dilutive common stock equivalents 99,670 3,790,213 99,670 3,790,213 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | The gross carrying amount and accumulated depreciation of property and equipment as of June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Gross carrying amount $ 18,735,154 $ 18,628,762 Accumulated depreciation (18,250,566 ) (18,194,827 ) Property and Equipment, net $ 484,588 $ 433,935 |
Software Development Costs (Tab
Software Development Costs (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Research and Development [Abstract] | |
Summary of Software Development Costs | The gross carrying amount and accumulated amortization of software development costs as of June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Gross carrying amount $ 2,950,132 $ 2,950,132 Accumulated amortization (2,903,996 ) (2,861,363 ) Software development costs, net $ 46,136 $ 88,769 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The gross carrying amount and accumulated amortization of goodwill and other intangible assets as of June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Goodwill $ 4,150,339 $ 4,150,339 Other intangible assets: Gross carrying amount $ 3,932,976 $ 3,891,241 Accumulated amortization (3,847,230 ) (3,799,907 ) Net carrying amount $ 85,746 $ 91,334 |
Share-Based Payment Arrangeme_2
Share-Based Payment Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Details of Stock Option Plan | The following table summarizes the 2018 Plan, which was the only plan under which the Company was able to grant equity compensation as of June 30, 2019 : Shares Shares Available Shares Name of Plan Authorized for Grant Outstanding FalconStor Software, Inc. 2018 Incentive Stock Plan 1,471,997 220,843 — |
Schedule of Equity Awards Outstanding | The following table summarizes the Company’s equity plans that have terminated or expired but that still have equity awards outstanding as of June 30, 2019 : Name of Plan Shares Available for Grant Shares Outstanding FalconStor Software, Inc., 2016 Incentive Stock Plan — 4,000 FalconStor Software, Inc., 2006 Incentive Stock Plan — 7,855 FalconStor Software, Inc., 2000 Stock Option Plan — — |
Schedule Of Share Based Compensation Recognized | The following table summarizes the share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Cost of revenue - Support and Service 449 4,875 2,042 13,575 Research and development costs 861 18,744 5,606 41,350 Selling and marketing 1,248 4,525 3,658 12,457 General and administrative 13,673 1,375 14,176 (60,758 ) $ 16,231 $ 29,519 $ 25,482 $ 6,624 |
Notes Payable and Stock Warra_2
Notes Payable and Stock Warrants (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Notes Payable | The notes payable balance consists of the following: Notes payable principal balance $ 3,000,000 Deferred issuance costs (254,247 ) Discount (288,504 ) Total notes payable, net at inception on February 23, 2018 2,457,249 Proceeds from issuance of long-term debt 1,000,000 Revaluation of long-term debt (447,008 ) Accretion of discount 202,195 Deferred issuance costs (87,609 ) Total notes payable, net at December 31, 2018 $ 3,124,827 Repayment of long-term debt (489,321 ) Accretion of discount 110,913 Total notes payable, net at June 30, 2019 $ 2,746,419 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Assets Measured On Recurring Basis | The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2019 : Fair Value Measurements at Reporting Date Using Total Quoted Prices in Active Markets for Identical Assets Significant other Inputs Significant Unobservable Inputs Derivative liabilities: Derivative Instruments 489,489 — — 489,489 Total derivative liabilities 489,489 — — 489,489 Total assets and liabilities measured at fair value $ 489,489 $ — $ — $ 489,489 The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2018 : Fair Value Measurements at Reporting Date Using Total Quoted Prices in Active Markets for Identical Assets Significant other Inputs Significant Unobservable Inputs Derivative liabilities: Derivative Instruments 498,086 — — 498,086 Total derivative liabilities 498,086 — — 498,086 Total assets and liabilities measured at fair value $ 498,086 $ — $ — $ 498,086 |
Fair Value Measurements using Significant Unobservable Inputs | The following table presents a reconciliation of the beginning and ending balances of the Company's liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2019 and June 30, 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Beginning Balance $ 492,327 $ 445,838 $ 498,086 $ 445,838 Total income (loss) recognized in earnings (2,838 ) 37,033 (8,597 ) 37,033 Ending Balance $ 489,489 $ 482,871 $ 489,489 $ 482,871 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Payments for Operating Leases | Approximate future minimum lease payments for our right of use assets over the remaining lease periods as of June 30, 2019, are as follows: Remainder of 2019 947,848 2020 1,788,450 2021 639,526 Thereafter — Total minimum lease payments 3,375,824 Less interest (341,005 ) Present value of lease liabilities 3,034,819 The following is a schedule of future minimum lease payments as well as sublease income for all operating leases as of June 30, 2019 : Payments Sublease Income Net Commitments 2019 $ 947,848 $ (311,888 ) $ 635,960 2020 1,788,450 (623,776 ) 1,164,674 2021 639,526 (65,194 ) 574,332 2022 — — — Thereafter — — — $ 3,375,824 $ (1,000,858 ) $ 2,374,966 |
Series A Redeemable Convertib_2
Series A Redeemable Convertible Preferred Stock (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Embedded Derivative Instruments Rollforward | The fair value of these derivative instruments and the loss recorded on the change in the fair value of these derivative instruments, which was included in “Interest and other income, net” within the condensed consolidated statement of operations, for the three and six months ended June 30, 2019 and 2018 , were as follows: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Beginning Balance $ 492,327 $ 445,838 $ 498,086 $ 445,838 Total income (loss) recognized in earnings (2,838 ) 37,033 (8,597 ) 37,033 Ending Balance $ 489,489 $ 482,871 $ 489,489 $ 482,871 |
Reconciliation of net (loss) income attributable to common stockholders | The following represents a reconciliation of net loss attributable to common stockholders for the three and six months ended June 30, 2019 and 2018 , respectively: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net loss $ (1,171,723 ) $ (1,004,104 ) $ (1,296,630 ) $ (497,227 ) Effects of Series A redeemable convertible preferred stock: Less: Accrual of Series A redeemable convertible preferred stock dividends 256,553 214,963 503,580 458,130 Less: Deemed dividend on Series A redeemable convertible preferred stock — — — 2,269,042 Less: Accretion to redemption value of Series A redeemable convertible preferred stock 134,223 77,645 263,462 115,750 Net loss attributable to common stockholders $ (1,562,499 ) $ (1,296,712 ) $ (2,063,672 ) $ (3,340,149 ) |
Schedule of Components of Series A Preferred Stock | The Series A Preferred Stock consists of the following: Series A redeemable convertible preferred stock principal balance $ 9,000,000 Accrued dividends 1,312,112 Discount (1,602,428 ) Total Series A redeemable convertible preferred stock, net at inception on February 23, 2018 8,709,684 Accrued dividends 683,742 Accretion of preferred stock 363,280 Total Series A redeemable convertible preferred stock, net at December 31, 2018 $ 9,756,706 Accrued dividends 503,580 Accretion of preferred stock 263,462 Total Series A redeemable convertible preferred stock, net at June 30, 2019 $ 10,523,748 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive loss | The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended June 30, 2019 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at March 31, 2019 $ (1,902,513 ) $ 26,803 $ (1,875,710 ) Other comprehensive income (loss) Other comprehensive loss before reclassifications (49,410 ) — (49,410 ) Total other comprehensive loss (49,410 ) — (49,410 ) Accumulated other comprehensive income (loss) at June 30, 2019 $ (1,951,923 ) $ 26,803 $ (1,925,120 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended June 30, 2018 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at March 31, 2018 $ (2,066,185 ) $ 22,097 $ (2,044,088 ) Other comprehensive income (loss) Other comprehensive income before reclassifications 129,956 — 129,956 Total other comprehensive income 129,956 — 129,956 Accumulated other comprehensive income (loss) at June 30, 2018 $ (1,936,229 ) $ 22,097 $ (1,914,132 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the six months ended June 30, 2019 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2018 $ (1,921,905 ) $ 26,803 $ (1,895,102 ) Other comprehensive income (loss) Other comprehensive loss before reclassifications (30,018 ) — (30,018 ) Total other comprehensive loss (30,018 ) — (30,018 ) Accumulated other comprehensive income (loss) at June 30, 2019 $ (1,951,923 ) $ 26,803 $ (1,925,120 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the six months ended June 30, 2018 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2017 $ (1,980,940 ) $ 22,097 $ (1,958,843 ) Other comprehensive income (loss) Other comprehensive income before reclassifications 44,711 — 44,711 Total other comprehensive income (loss) 44,711 — 44,711 Accumulated other comprehensive income (loss) at June 30, 2018 $ (1,936,229 ) $ 22,097 $ (1,914,132 ) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Revenues And Long Lived Assets By Geographical Areas | The Company is organized in a single operating segment for purposes of making operating decisions and assessing performance. Revenue from the United States to customers in the following geographical areas for the three and six months ended June 30, 2019 and 2018 , and the location of long-lived assets as of June 30, 2019 and December 31, 2018 , are summarized as follows: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Revenue: Americas $ 1,496,988 $ 931,246 $ 2,497,805 $ 2,062,895 Asia Pacific 194,074 1,631,910 2,267,388 3,580,334 Europe, Middle East, Africa and Other 2,308,327 1,448,425 3,727,174 3,362,301 Total Revenue $ 3,999,389 $ 4,011,581 $ 8,492,367 $ 9,005,530 June 30, 2019 December 31, 2018 Long-lived assets: Americas $ 7,646,573 $ 5,852,995 Asia Pacific 1,226,438 736,970 Europe, Middle East, Africa and Other 162,587 155,708 Total long-lived assets $ 9,035,598 $ 6,745,673 |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule Of Restructuring Costs | The following table summarizes the activity during 2018 and 2019 related to restructuring liabilities recorded in connection with the 2013 and 2017 Plans: Severance Related Costs Facility and Other Costs Total Balance at December 31, 2017 $ 648,399 $ — $ 648,399 Additions (Reductions) (173,263 ) — (173,263 ) Utilized/Paid (13,774 ) — (13,774 ) Balance at March 31, 2018 $ 461,362 $ — $ 461,362 Additions (Reductions) — 809,245 809,245 Utilized/Paid — (312,507 ) (312,507 ) Balance at June 30, 2018 $ 461,362 $ 496,738 $ 958,100 Additions (Reductions) — 315,283 315,283 Utilized/Paid — (331,405 ) (331,405 ) Balance at September 30, 2018 $ 461,362 $ 480,616 $ 941,978 Additions (Reductions) — 310,314 310,314 Utilized/Paid — (337,484 ) (337,484 ) Balance at December 31, 2018 $ 461,362 $ 453,446 $ 914,808 Additions (Reductions) — 157,693 157,693 Utilized/Paid — (187,833 ) (187,833 ) Balance at March 31, 2019 $ 461,362 $ 423,306 $ 884,668 Additions (Reductions) — 202,679 202,679 Utilized/Paid — (238,090 ) (238,090 ) Balance at June 30, 2019 $ 461,362 $ 387,895 $ 849,257 |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) | Aug. 08, 2019shares | Jun. 30, 2019USD ($)shares | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019USD ($)shares | Jun. 30, 2018USD ($) | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($)shares | Jun. 22, 2018shares | Dec. 31, 2017USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||
Working Capital Deficiency | $ (3,400,000) | $ (3,400,000) | |||||||||
Deferred revenue | 5,071,197 | 5,071,197 | $ 6,859,592 | ||||||||
Total Stockholders' Deficit | (13,622,004) | (13,622,004) | (11,553,796) | ||||||||
Net loss | (1,171,723) | $ (124,907) | $ (1,004,104) | $ 506,877 | (1,296,630) | $ (497,227) | |||||
Net cash used in operating activities | 75,960 | 700,456 | |||||||||
Cash and cash equivalents | 2,400,953 | $ 4,043,668 | $ 2,400,953 | $ 4,043,668 | $ 3,059,677 | $ 1,011,472 | |||||
Cash Period Decrease | $ (700,000) | ||||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common stock, shares authorized (in shares) | shares | 800,000,000 | 800,000,000 | 800,000,000 | 800,000,000 | |||||||
Preferred Stock, Shares Authorized | shares | 2,000,000 | 2,000,000 | 2,000,000 | ||||||||
Operating lease right-of-use assets | $ 2,454,349 | $ 2,454,349 | $ 2,900,000 | $ 0 | |||||||
Operating Lease, Liability | $ 3,034,819 | $ 3,034,819 | $ 3,600,000 | ||||||||
Subsequent Event | |||||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common and temporary equity shares authorized (in shares) | shares | 32,000,000 | ||||||||||
Common stock, shares authorized (in shares) | shares | 30,000,000 | ||||||||||
Preferred Stock, Shares Authorized | shares | 2,000,000 | ||||||||||
Redeemable Convertible Preferred Stock [Member] | Subsequent Event | |||||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 0.01 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Accounts receivable, net of allowances | $ 1,706,141 | $ 3,605,411 |
Contract assets | 1,100,000 | 1,200,000 |
Deferred revenue | $ 8,686,753 | $ 9,366,490 |
Revenue expected to be recognized during next 12 months | 58.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Changes in Deferred Revenue (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
Balance at December 31, 2018 | $ 9,366,490 |
Deferral of revenue | 7,812,630 |
Recognition of revenue | (8,492,367) |
Balance at June 30, 2019 | $ 8,686,753 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Right of Use Assets and Liabilities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||||||
Operating Lease, Cost | $ 400,000 | $ 1,000,000 | $ 800,000 | $ 1,500,000 | ||
Accounts receivable, net of allowances of $191,458 and $162,112, respectively | 1,706,141 | 1,706,141 | $ 3,605,411 | |||
Operating lease right-of-use assets | 2,454,349 | 2,454,349 | $ 2,900,000 | 0 | ||
Operating lease liabilities, net | 1,753,015 | 1,753,015 | 0 | |||
Operating lease liabilities, net of current portion | $ 1,281,804 | $ 1,281,804 | $ 0 | |||
Weighted-average remaining lease term | 1 year 9 months 28 days | 1 year 9 months 28 days | ||||
Weighted-average discount rate | 6.04% | 6.04% | ||||
Operating Lease, Payments | $ 500,000 | 500,000 | $ 1,000,000 | 1,100,000 | ||
Sublease Income | 200,000 | $ 35,683 | 300,000 | $ 35,683 | ||
Remainder of 2019 | 947,848 | 947,848 | ||||
Lessee, Operating Lease, Liability, Payments, Due Year Two | 1,788,450 | 1,788,450 | ||||
Lessee, Operating Lease, Liability, Payments, Due Year Three | 639,526 | 639,526 | ||||
Thereafter | 0 | 0 | ||||
Total minimum lease payments | 3,375,824 | 3,375,824 | ||||
Less interest | (341,005) | (341,005) | ||||
Present value of lease liabilities | $ 3,034,819 | $ 3,034,819 | $ 3,600,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive common stock equivalents | 99,670 | 3,790,213 | 99,670 | 3,790,213 |
Stock options and restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive common stock equivalents | 11,855 | 3,702,398 | 11,855 | 3,702,398 |
Series A redeemable convertible preferred stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive common stock equivalents | 87,815 | 87,815 | 87,815 | 87,815 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |||||
Gross carrying amount | $ 18,735,154 | $ 18,735,154 | $ 18,628,762 | ||
Accumulated depreciation | (18,250,566) | (18,250,566) | (18,194,827) | ||
Property and Equipment, net | 484,588 | 484,588 | $ 433,935 | ||
Depreciation expense | $ 61,612 | $ 71,441 | $ 133,826 | $ 158,310 |
Software Development Costs (Det
Software Development Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Research and Development [Abstract] | |||||
Gross carrying amount | $ 2,950,132 | $ 2,950,132 | $ 2,950,132 | ||
Accumulated amortization | (2,903,996) | (2,903,996) | (2,861,363) | ||
Software development costs, net | 46,136 | 46,136 | $ 88,769 | ||
Capitalized computer software amortization | $ 11,560 | $ 58,609 | $ 42,633 | $ 117,216 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 4,150,339 | $ 4,150,339 | $ 4,150,339 | ||
Other intangible assets: | |||||
Gross carrying amount | 3,932,976 | 3,932,976 | 3,891,241 | ||
Accumulated amortization | (3,847,230) | (3,847,230) | (3,799,907) | ||
Net carrying amount | 85,746 | 85,746 | $ 91,334 | ||
Amortization of intangible assets | $ 22,740 | $ 36,541 | $ 47,324 | $ 70,820 |
Share-Based Payment Arrangeme_3
Share-Based Payment Arrangements (Details) - FalconStor Software, Inc., 2018 Incentive Stock Plan | Jun. 30, 2019shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Authorized (in shares) | 1,471,997 |
Shares Available for Grant (in shares) | 220,843 |
Shares Outstanding (in shares) | 0 |
Share-Based Payment Arrangeme_4
Share-Based Payment Arrangements - Equity Plans Terminated or Expired (Details) | Jun. 30, 2019shares |
FalconStor Software, Inc., 2016 Incentive Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Available for Grant (in shares) | 0 |
Shares Outstanding (in shares) | 4,000 |
FalconStor Software, Inc., 2006 Incentive Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Available for Grant (in shares) | 0 |
Shares Outstanding (in shares) | 7,855 |
FalconStor Software, Inc., 2000 Stock Option Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Available for Grant (in shares) | 0 |
Shares Outstanding (in shares) | 0 |
Share-Based Payment Arrangeme_5
Share-Based Payment Arrangements - Share-Based Compensation Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 16,231 | $ 29,519 | $ 25,482 | $ 6,624 |
Cost of revenue - Support and Service | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 449 | 4,875 | 2,042 | 13,575 |
Research and development costs | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 861 | 18,744 | 5,606 | 41,350 |
Selling and marketing | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 1,248 | 4,525 | 3,658 | 12,457 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 13,673 | $ 1,375 | $ 14,176 | $ (60,758) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Income tax provision | $ 136,244 | $ 551 | $ 223,830 | $ 62,990 | |
Effective income tax rate | (20.90%) | (14.50%) | |||
Unrecognized tax benefits | 134,246 | $ 134,246 | $ 134,246 | ||
Unrecognized tax benefits, interest on income taxes accrued | 63,404 | 63,404 | $ 57,860 | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 80,000 | $ 80,000 |
Notes Payable and Stock Warra_3
Notes Payable and Stock Warrants - Components of Notes Payable (Details) - USD ($) | Feb. 23, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||||
Notes payable principal balance | $ 3,000,000 | |||
Deferred issuance costs | (254,247) | |||
Discount | (288,504) | |||
Total notes payable, net at inception on February 23, 2018 | $ 3,124,827 | $ 2,457,249 | ||
Movement In Notes Payable [Roll Forward] | ||||
Proceeds from issuance of long-term debt, net of issuance costs | 0 | $ 2,354,727 | 1,000,000 | |
Reevaluation Of Long-Term Debt | (447,008) | |||
Accretion of discount | 110,913 | 202,195 | ||
Deferred issuance costs | (87,609) | |||
Payments of long term-debt | (489,321) | $ 0 | ||
Total notes payable, net at December 31, 2018 | $ 2,457,249 | $ 2,746,419 | $ 3,124,827 | |
Debt Instrument, Basis Spread on Variable Rate | 0.75% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Derivative liabilities: | ||
Derivative Instruments | $ 489,489 | $ 498,086 |
Total derivative liabilities | 498,086 | |
Total assets and liabilities measured at fair value | 489,489 | 498,086 |
Fair Value, Inputs, Level 1 | ||
Derivative liabilities: | ||
Derivative Instruments | 0 | 0 |
Total derivative liabilities | 0 | 0 |
Total assets and liabilities measured at fair value | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Derivative liabilities: | ||
Derivative Instruments | 0 | 0 |
Total derivative liabilities | 0 | 0 |
Total assets and liabilities measured at fair value | 0 | 0 |
Fair Value, Inputs, Level 3 | ||
Derivative liabilities: | ||
Derivative Instruments | 489,489 | 498,086 |
Total derivative liabilities | 489,489 | 498,086 |
Total assets and liabilities measured at fair value | $ 489,489 | $ 498,086 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | Jun. 30, 2019$ / sharesshares | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Common stock issued for warrants (in shares) | 0 | |
Fair value per share (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 |
Initial Backstop And Additional Backstop Warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Common stock issued for warrants (in shares) | 422,000,000 | |
Volatility Rate | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Volatility rate to value warrants | 0.60 | 0.60 |
Future Cash Flows | Discount Rate | Preferred Stock | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Discount yield of preferred equity | 0.15 | 0.15 |
Future Cash Flows | Discount Rate | Notes Payable | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value discount yield of note payable | 0.12 | 0.12 |
Fair Value Measurements - Rollf
Fair Value Measurements - Rollforward (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning Balance | $ 492,327 | $ 445,838 | $ 498,086 | $ 445,838 |
Total income (loss) recognized in earnings | (2,838) | 37,033 | (8,597) | 37,033 |
Ending Balance | $ 489,489 | $ 482,871 | $ 489,489 | $ 482,871 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Jun. 30, 2019USD ($) |
Payments | |
2018 | $ 947,848 |
2019 | 1,788,450 |
2020 | 639,526 |
2021 | 0 |
Thereafter | 0 |
Total minimum lease payments | 3,375,824 |
Sublease Income | |
2018 | (311,888) |
2019 | (623,776) |
2020 | (65,194) |
2021 | 0 |
Thereafter | 0 |
Total Sublease Income | (1,000,858) |
Net Commitments | |
2018 | 635,960 |
2019 | 1,164,674 |
2020 | 574,332 |
2021 | 0 |
Thereafter | 0 |
Total minimum lease payments | $ 2,374,966 |
Commitments and Contingencies_3
Commitments and Contingencies (Narrative) (Details) | Apr. 05, 2018USD ($) | Aug. 14, 2017USD ($)tranche | Jun. 30, 2019USD ($)shares |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Maximum length of warranty on software products | 90 days | ||
Uncertainty in income tax liability | $ 197,650 | ||
Chief Executive Officer | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Salary and Wage, NonOfficer, Excluding Cost of Good and Service Sold | $ 350,000 | ||
Accrued bonuses | $ 17,500 | ||
Percentage of outstanding stock, threshold | 15.00% | ||
Severance payment period | 6 months | ||
Award requisite period | 6 months | ||
Chief Financial Officer [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Salary and Wage, NonOfficer, Excluding Cost of Good and Service Sold | $ 240,000 | ||
Accrued bonuses | 10,000 | ||
Deferred Bonus | Chief Executive Officer | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Accrued bonuses | $ 200,000 | ||
Deferred Bonus | Chief Financial Officer [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Accrued bonuses | 70,000 | ||
Excess Capital | $ 27,500 | ||
Upon Stockholder Approval | Chief Executive Officer | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Percentage of outstanding stock, threshold | 2.50% | ||
Number of tranches | tranche | 2 | ||
Upon Termination | Chief Executive Officer | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Severance payment period | 12 months | ||
Award requisite period | 12 months | ||
Change of control period | 6 months | ||
FalconStor Software, Inc., 2018 Incentive Stock Plan | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Shares Authorized (in shares) | shares | 1,471,997 |
Series A Redeemable Convertib_3
Series A Redeemable Convertible Preferred Stock (Details Narrative) | 3 Months Ended | 6 Months Ended | ||||||||
Jun. 30, 2019USD ($)shares | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019USD ($)Integershares | Jun. 30, 2018USD ($) | Aug. 08, 2019$ / shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($) | Sep. 16, 2013$ / sharesshares | |
Class of Stock [Line Items] | ||||||||||
Series A Redeemable convertible preferred stock, shares outstanding (in shares) | shares | 900,000 | 900,000 | 900,000 | |||||||
Consecutive trading days, convertible debt threshold | Integer | 60 | |||||||||
Series A redeemable convertible preferred stock redemption price upon fundamental sale, percentage of per share purchase price | 250.00% | |||||||||
Threshold of stock price trigger, percentage | 225.00% | |||||||||
Upon certain triggering events holders can redeem | 100.00% | |||||||||
Series A redeemable convertible preferred stock, financing proceeds threshold | $ 5,000,000 | |||||||||
Percentage of accounts receivable | 80.00% | |||||||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis with Unobservable Inputs | $ 489,489 | $ 492,327 | $ 482,871 | $ 445,838 | $ 489,489 | $ 482,871 | $ 498,086 | $ 445,838 | ||
Loss on change in fair value | (2,838) | 37,033 | (8,597) | 37,033 | ||||||
Undistributed Series A redeemable convertible preferred stock dividends | 256,553 | $ 247,027 | $ 214,963 | $ 243,167 | $ 503,580 | $ 458,130 | ||||
Series A redeemable convertible preferred stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Series A redeemable convertible preferred stock, conversion price | $ / shares | $ 1.02488 | |||||||||
Series A redeemable convertible preferred stock | Prime rate | ||||||||||
Class of Stock [Line Items] | ||||||||||
Basis spread on Series A redeemable convertible preferred stock dividend, percentage | 5.00% | |||||||||
Series A redeemable convertible preferred stock, basis spread of dividend | 10.00% | |||||||||
Maximum | ||||||||||
Class of Stock [Line Items] | ||||||||||
Potential ownership percentage by controlling owners (greater than) | 19.99% | |||||||||
Recurring | ||||||||||
Class of Stock [Line Items] | ||||||||||
Fair value of derivative instruments | $ 489,489 | $ 489,489 | $ 498,086 | |||||||
HCP-FVA, LLC | Series A redeemable convertible preferred stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Series A Redeemable convertible preferred stock, shares outstanding (in shares) | shares | 900,000 | |||||||||
Subsequent Event | Series A redeemable convertible preferred stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Series A redeemable convertible preferred stock, conversion price | $ / shares | $ 102.488 |
Series A Redeemable Convertib_4
Series A Redeemable Convertible Preferred Stock - Rollforward (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Equity [Abstract] | ||||
Beginning Balance | $ 492,327 | $ 445,838 | $ 498,086 | $ 445,838 |
Total income (loss) recognized in earnings | (2,838) | 37,033 | (8,597) | 37,033 |
Ending Balance | $ 489,489 | $ 482,871 | $ 489,489 | $ 482,871 |
Series A Redeemable Convertib_5
Series A Redeemable Convertible Preferred Stock - Reconciliation of Net Loss Attributable to Common Stockholders (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Equity [Abstract] | ||||||
Net income (loss) | $ (1,171,723) | $ (124,907) | $ (1,004,104) | $ 506,877 | $ (1,296,630) | $ (497,227) |
Less: Accrual of Series A redeemable convertible preferred stock dividends | 256,553 | 247,027 | 214,963 | 243,167 | 503,580 | 458,130 |
Less: Deemed dividend on Series A redeemable convertible preferred stock | 0 | 0 | 0 | 2,269,042 | ||
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | 134,223 | $ 129,239 | 77,645 | $ 38,105 | 263,462 | 115,750 |
Net loss attributable to common stockholders | $ (1,562,499) | $ (1,296,712) | $ (2,063,672) | $ (3,340,149) |
Series A Redeemable Convertib_6
Series A Redeemable Convertible Preferred Stock Series A Redeemable Convertible Preferred Stock - Components of Preferred Stock (Details) - USD ($) | 2 Months Ended | 6 Months Ended | 10 Months Ended |
Feb. 23, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Beginning balance | $ 11,104,923 | ||
Ending balance | 11,671,866 | $ 11,104,923 | |
Redeemable Preferred Stock [Member] | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Beginning balance | $ 9,000,000 | 9,756,706 | 8,709,684 |
Accrued dividends | 1,312,112 | 503,580 | 683,742 |
Discount | (1,602,428) | ||
Accretion of preferred stock | 263,462 | 363,280 | |
Ending balance | $ 8,709,684 | $ 10,523,748 | $ 9,756,706 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Other comprehensive income (loss) | ||||
Accumulated other comprehensive (loss) income, beginning balance | $ (11,553,796) | |||
Total other comprehensive income (loss), net of applicable taxes: | $ (49,410) | $ 129,956 | (30,018) | $ 44,712 |
Accumulated other comprehensive (loss) income, ending balance | (13,622,004) | (13,622,004) | ||
Foreign Currency Translation | ||||
Other comprehensive income (loss) | ||||
Accumulated other comprehensive (loss) income, beginning balance | (1,902,513) | (2,066,185) | (1,921,905) | (1,980,940) |
Other comprehensive income | (49,410) | 129,956 | (30,018) | 44,711 |
Total other comprehensive income (loss), net of applicable taxes: | (49,410) | 129,956 | (30,018) | 44,711 |
Accumulated other comprehensive (loss) income, ending balance | (1,951,923) | (1,936,229) | (1,951,923) | (1,936,229) |
Net Minimum Pension Liability | ||||
Other comprehensive income (loss) | ||||
Accumulated other comprehensive (loss) income, beginning balance | 26,803 | 22,097 | 26,803 | 22,097 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss), net of applicable taxes: | 0 | 0 | 0 | 0 |
Accumulated other comprehensive (loss) income, ending balance | 26,803 | 22,097 | 26,803 | 22,097 |
Accumulated Other Comprehensive loss, net | ||||
Other comprehensive income (loss) | ||||
Accumulated other comprehensive (loss) income, beginning balance | (1,875,710) | (2,044,088) | (1,895,102) | (1,958,843) |
Other comprehensive income | (49,410) | 129,956 | (30,018) | 44,711 |
Total other comprehensive income (loss), net of applicable taxes: | (49,410) | 129,956 | (30,018) | 44,711 |
Accumulated other comprehensive (loss) income, ending balance | $ (1,925,120) | $ (1,914,132) | $ (1,925,120) | $ (1,914,132) |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | Aug. 08, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 22, 2018 |
Equity [Abstract] | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Stockholders' Equity [Line Items] | ||||
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 | 800,000,000 | |
Remaining number of shares authorized for repurchased | 4,907,839 | |||
Subsequent Event | ||||
Stockholders' Equity [Line Items] | ||||
Common stock, shares authorized (in shares) | 30,000,000 |
Segment Reporting - Schedule Of
Segment Reporting - Schedule Of Segment Reporting By Geographical Areas (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($)customer | Jun. 30, 2018USD ($)customer | Jun. 30, 2019USD ($)customer | Jun. 30, 2018USD ($)customer | Dec. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of Customers Accounting for More than 10 Percent of Revenue | customer | 2 | 1 | 1 | 1 | |
Revenue: | |||||
Total revenue | $ 3,999,389 | $ 4,011,581 | $ 8,492,367 | $ 9,005,530 | |
Long-lived assets: | |||||
Total long-lived assets | 9,035,598 | 9,035,598 | $ 6,745,673 | ||
Americas | |||||
Revenue: | |||||
Total revenue | 1,496,988 | 931,246 | 2,497,805 | 2,062,895 | |
Long-lived assets: | |||||
Total long-lived assets | 7,646,573 | 7,646,573 | 5,852,995 | ||
Asia Pacific | |||||
Revenue: | |||||
Total revenue | 194,074 | 1,631,910 | 2,267,388 | 3,580,334 | |
Long-lived assets: | |||||
Total long-lived assets | 1,226,438 | 1,226,438 | 736,970 | ||
Europe, Middle East, Africa and Other | |||||
Revenue: | |||||
Total revenue | 2,308,327 | $ 1,448,425 | 3,727,174 | $ 3,362,301 | |
Long-lived assets: | |||||
Total long-lived assets | $ 162,587 | $ 162,587 | $ 155,708 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019customerInteger | Jun. 30, 2018customer | Jun. 30, 2019customerInteger | Jun. 30, 2018customer | Dec. 31, 2018Integer | |
Segment Reporting [Abstract] | |||||
Number Of Customers With Significant Accounts Receivable Balance | Integer | 2 | 2 | 1 | ||
Number of Customers Accounting for More than 10 Percent of Revenue | customer | 2 | 1 | 1 | 1 |
Restructuring Costs (Details Na
Restructuring Costs (Details Narrative) $ in Millions | 6 Months Ended | 12 Months Ended | 18 Months Ended | |
Jun. 30, 2019USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2014position | Dec. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||||
Entity number of employees | 86 | |||
Lease Disposal Costs | $ 0.4 | |||
2017 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance expense | $ 1.2 | |||
Restructuring Costs Under the 2013 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of positions eliminated, worldwide (over 100) | position | 100 |
Restructuring Costs - Schedule
Restructuring Costs - Schedule Of Restructuring Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Restructuring Reserve [Roll Forward] | ||||||||
Beginning Balance | $ 884,668 | $ 914,808 | $ 941,978 | $ 958,100 | $ 461,362 | $ 648,399 | $ 914,808 | $ 648,399 |
Provisions/Additions | 202,679 | 157,693 | 310,314 | 315,283 | 809,245 | (173,263) | 360,372 | 635,982 |
Utilized/Paid | (238,090) | (187,833) | (337,484) | (331,405) | (312,507) | (13,774) | ||
Ending Balance | 849,257 | 884,668 | 914,808 | 941,978 | 958,100 | 461,362 | 849,257 | 958,100 |
Severance Related Costs | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Beginning Balance | 461,362 | 461,362 | 461,362 | 461,362 | 461,362 | 648,399 | 461,362 | 648,399 |
Provisions/Additions | 0 | 0 | 0 | 0 | 0 | (173,263) | ||
Utilized/Paid | 0 | 0 | 0 | 0 | 0 | (13,774) | ||
Ending Balance | 461,362 | 461,362 | 461,362 | 461,362 | 461,362 | 461,362 | 461,362 | 461,362 |
Facility and Other Costs | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Beginning Balance | 423,306 | 453,446 | 480,616 | 496,738 | 0 | 0 | 453,446 | 0 |
Provisions/Additions | 202,679 | 157,693 | 310,314 | 315,283 | 809,245 | 0 | ||
Utilized/Paid | (238,090) | (187,833) | (337,484) | (331,405) | (312,507) | 0 | ||
Ending Balance | $ 387,895 | $ 423,306 | $ 453,446 | $ 480,616 | $ 496,738 | $ 0 | $ 387,895 | $ 496,738 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Aug. 08, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 22, 2018 |
Subsequent Events [Abstract] | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Subsequent Event [Line Items] | ||||
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 | 800,000,000 | |
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Common stock, shares authorized (in shares) | 30,000,000 |