Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2021 | |
Entity File Number | 000-23970 | |
Entity Registrant Name | FALCONSTOR SOFTWARE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0216135 | |
Entity Address, Address Line One | 701 Brazos Street | |
Entity Address, Address Line Two | Suite 400 | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78701 | |
City Area Code | 631 | |
Local Phone Number | 777-5188 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 5,949,463 | |
Entity Central Index Key | 0000922521 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 2,020,989 | $ 1,920,656 |
Accounts receivable, net of allowances | 2,954,033 | 2,836,571 |
Prepaid expenses and other current assets | 2,063,111 | 1,837,596 |
Contract assets | 380,119 | 254,483 |
Inventory | 15,061 | 15,275 |
Total current assets | 7,433,313 | 6,864,581 |
Property and equipment, net of accumulated depreciation and amortization | 196,630 | 197,020 |
Right of use assets | 202,495 | 536,272 |
Deferred tax assets, net | 312,342 | 330,552 |
Software development costs, net | 17,639 | 19,278 |
Other assets | 862,515 | 863,964 |
Goodwill | 4,150,339 | 4,150,339 |
Other intangible assets, net | 84,052 | 100,134 |
Long-term contract assets | 188,119 | 343,934 |
Total assets | 13,447,444 | 13,406,074 |
Current liabilities: | ||
Accounts payable | 917,570 | 453,791 |
Accrued expenses | 2,374,705 | 2,293,765 |
Lease liability obligations, current | 235,962 | 665,074 |
Short-term loan, net of debt issuance costs and discounts | 3,396,568 | 3,320,863 |
Deferred revenue | 4,151,083 | 4,603,270 |
Total current liabilities | 11,075,888 | 11,336,763 |
Other long-term liabilities | 698,323 | 703,889 |
Notes payable, net of debt issuance costs and discounts | 0 | 754,000 |
Deferred tax liabilities | 520,905 | 513,027 |
Deferred revenue, net of current portion | 2,303,675 | 1,765,859 |
Total liabilities | 14,598,791 | 15,073,538 |
Commitments and contingencies (Note 11) | ||
Series A redeemable convertible preferred stock, $0.001 par value, 2,000,000 shares authorized, 900,000 shares issued and outstanding, redemption value of $13,623,747 and $13,346,577, respectively | 13,415,006 | 12,940,722 |
Stockholders' deficit: | ||
Common stock - $0.001 par value, 30,000,000 shares authorized, 5,949,463 shares and 5,949,463 shares issued and outstanding, respectively | 5,949 | 5,949 |
Additional paid-in capital | 109,637,357 | 110,107,170 |
Accumulated deficit | (122,308,096) | (122,733,344) |
Accumulated other comprehensive loss, net | (1,901,563) | (1,987,961) |
Total stockholders' deficit | (14,566,353) | (14,608,186) |
Total liabilities and stockholders' deficit | $ 13,447,444 | $ 13,406,074 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
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 | $ 13,623,747 | $ 13,346,577 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 5,949,463 | 5,949,463 |
Restricted stock issued | 5,949,463 | 5,949,463 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue: | ||
Total revenue | $ 3,828,326 | $ 3,180,187 |
Cost of revenue: | ||
Total cost of revenue | 649,007 | 547,380 |
Gross profit | 3,179,319 | 2,632,807 |
Operating expenses: | ||
Research and development costs | 659,940 | 674,924 |
Selling and marketing | 1,396,640 | 981,191 |
General and administrative | 837,867 | 1,093,169 |
Restructuring costs | 302,313 | 287,460 |
Total operating expenses | 3,196,760 | 3,036,744 |
Operating income (loss) | (17,441) | (403,937) |
Gain on debt extinguishment | 754,000 | 0 |
Interest and other expense | (266,695) | (245,839) |
Income (loss) before income taxes | 469,864 | (649,776) |
Income tax expense (benefit) | 44,616 | 70,064 |
Net income (loss) | 425,248 | (719,840) |
Less: Accrual of Series A redeemable convertible preferred stock dividends | 277,170 | 285,760 |
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | 197,114 | 26,090 |
Net income (loss) attributable to common stockholders | $ (49,036) | $ (1,031,690) |
Basic net income (loss) per share attributable to common stockholders | $ (0.01) | $ (0.17) |
Diluted net income (loss) per share attributable to common stockholders | $ (0.01) | $ (0.17) |
Weighted average basic shares outstanding | 5,949,463 | 5,919,643 |
Weighted average diluted shares outstanding | 5,949,463 | 5,919,643 |
Product revenue | ||
Revenue: | ||
Total revenue | $ 2,139,729 | $ 1,048,963 |
Cost of revenue: | ||
Total cost of revenue | 222,834 | 139,460 |
Support and services revenue | ||
Revenue: | ||
Total revenue | 1,688,597 | 2,131,224 |
Cost of revenue: | ||
Total cost of revenue | $ 426,173 | $ 407,920 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 425,248 | $ (719,840) |
Other comprehensive income (loss), net of applicable taxes | ||
Foreign currency translation | 86,398 | (13,153) |
Total other comprehensive income (loss), net of applicable taxes: | 86,398 | (13,153) |
Total comprehensive income (loss) | 511,646 | (732,993) |
Less: Accrual of Series A redeemable convertible preferred stock dividends | 277,170 | 285,760 |
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | 197,114 | 26,090 |
Total comprehensive income (loss) attributable to common stockholders | $ 37,362 | $ (1,044,843) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (Unaudited) Statement - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | AOCI Attributable to Parent [Member] |
Beginning balance (shares) at Dec. 31, 2019 | 5,918,733 | ||||
Ending balance (shares) at Mar. 31, 2020 | 5,919,837 | ||||
Beginning balance at Dec. 31, 2019 | $ (14,031,306) | $ 5,919 | $ 111,727,888 | $ (123,871,853) | $ (1,893,260) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (719,840) | (719,840) | |||
Share-based compensation to employees | 4,510 | 4,510 | |||
Restricted stock issued (shares) | 1,104 | ||||
Restricted stock issued | 0 | $ 1 | (1) | ||
Accretion of Series A redeemable convertible preferred stock | (26,090) | (26,090) | |||
Dividends on Series A redeemable convertible preferred stock | (285,760) | (285,760) | |||
Foreign currency translation | (13,153) | (13,153) | |||
Ending balance at Mar. 31, 2020 | (15,071,639) | $ 5,920 | 111,420,547 | (124,591,693) | (1,906,413) |
Beginning balance (shares) at Dec. 31, 2020 | 5,949,463 | ||||
Ending balance (shares) at Mar. 31, 2021 | 5,949,463 | ||||
Beginning balance at Dec. 31, 2020 | (14,608,186) | $ 5,949 | 110,107,170 | (122,733,344) | (1,987,961) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | 425,248 | 425,248 | |||
Share-based compensation to employees | 4,471 | 4,471 | |||
Restricted stock issued (shares) | |||||
Restricted stock issued | 0 | 0 | |||
Accretion of Series A redeemable convertible preferred stock | (197,114) | (197,114) | |||
Dividends on Series A redeemable convertible preferred stock | (277,170) | (277,170) | |||
Foreign currency translation | 86,398 | 86,398 | |||
Ending balance at Mar. 31, 2021 | $ (14,566,353) | $ 5,949 | $ 109,637,357 | $ (122,308,096) | $ (1,901,563) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 425,248 | $ (719,840) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 57,486 | 33,563 |
Amortization of debt discount on notes payable | 75,705 | 109,861 |
Amortization of right of use assets | 333,777 | 353,715 |
Gain on debt extinguishment | (754,000) | 0 |
Share-based payment compensation | 4,471 | 4,510 |
Provision for (recovery of) returns and doubtful accounts | 0 | (81,244) |
Deferred income taxes (benefit) | 7,878 | 24,545 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (129,714) | 1,720,163 |
Prepaid expenses and other current assets | (250,034) | 121,591 |
Contract assets | 30,179 | 229,042 |
Inventory | 0 | 15,539 |
Other assets | (1,031) | (51) |
Accounts payable | 536,721 | (433,791) |
Accrued expenses and other long-term liabilities | 114,335 | (171,461) |
Operating lease liabilities | (429,112) | (403,100) |
Deferred revenue | 115,750 | (1,201,373) |
Net cash provided by (used in) operating activities | 137,659 | (398,331) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (41,121) | |
Security deposits | 1,588 | (82,908) |
Purchase of intangible assets | 0 | (11,360) |
Net cash provided by (used in) investing activities | (39,533) | (94,268) |
Cash flows from financing activities: | ||
Effect of exchange rate changes on cash and cash equivalents | 2,207 | (6,446) |
Net increase (decrease) in cash and cash equivalents | 100,333 | (499,045) |
Cash and cash equivalents, beginning of period | 1,920,656 | 1,475,166 |
Cash and cash equivalents, end of period | 2,020,989 | 976,121 |
Supplemental disclosures: | ||
Cash paid for interest | 75,816 | 52,546 |
Non-cash investing and financing activities: | ||
Undistributed Series A redeemable convertible preferred stock dividends | 277,170 | 285,760 |
Accretion of Series A redeemable convertible preferred stock | $ 197,114 | $ 26,090 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation (a) The Company and Nature of Operations FalconStor Software, Inc., a Delaware corporation ("we", the "Company" or "FalconStor"), is a leading storage software company offering a converged data services software platform that is hardware agnostic. The Company develops 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 March 31, 2021, the Company had a working capital deficiency of $3.6 million, which is inclusive of current deferred revenue of $4.2 million, and a stockholders' deficit of $14.6 million. During the three months ended March 31, 2021, the Company had net income of $0.4 million and positive cash flow from operations of $0.1 million. The Company's total cash balance at March 31, 2021 was $2.0 million, an increase of $100,333 compared to December 31, 2020. The Company’s principal sources of liquidity at March 31, 2021 consisted of cash and future cash anticipated to be generated from operations. The Company generated positive net income and cash flows from operations during the three months ended March 31, 2021. Although the Company reported negative working capital as of March 31, 2021, it was primarily due to notes payable and deferred revenue. The Company is currently a party to the Amended and Restated Term Loan Credit Agreement, dated as of February 23, 2018, as amended December 27, 2019, by and among the company, HCP-FVA, LLC (“HCP-FVA”), EW Capital, LLC, the lenders party thereto and the other loan parties named therein (the “Amended and Restated Loan Agreement”). The maturity date of the Company’s obligations under the Amended and Restated Loan Agreement is June 30, 2021 and as of March 31, 2021, the Company is obligated to repay the loan parties $3.5 million, of which $2.2 million is owed to HCP-FVA. The Company also has outstanding Series A Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”) which currently can be redeemed by the holders of the Series A Preferred Stock at July 30, 2021. If such Series A Preferred Stock was redeemed at March 31, 2021, the Company would be required to pay the holders of the Series A Preferred Stock $13.6 million. HCP-FVA is the majority holder of the Series A Preferred Stock and no Series A Preferred Stock can be redeemed without the consent of HCP-FVA. HCP-FVA is an affiliated party of Hale Capital Partners and Hale Capital Partners and affiliated entities (“HCP”) have agreed if necessary to extend the maturity date of the indebtedness owed to HCP-FVA under the Amended and Restated Loan Agreement from June 30, 2021 to at least July 1, 2022. Similarly, HCP has agreed if necessary to extend the commencement of the optional redemption date of the Series A Preferred Stock from July 30, 2021 to at least July 1, 2022. The Company believes its current cash balances together with anticipated cash flows from operating activities, and its plans to extend the maturity of its borrowings from HCP-FVA and commencement of the optional redemption date of the Series A Preferred Stock will be sufficient to meet its working capital requirements for at least one year from the date the consolidated financial statements were available to be issued. (c) Impact of the COVID-19 Pandemic We are continuing to monitor the impact of COVID-19, on all aspects of our business. The outbreak of COVID-19 has caused and may continue to cause travel bans or disruptions, and in some cases, prohibitions of non-essential activities, disruption and shutdown of businesses and greater uncertainty in global financial markets. The impact of COVID-19 is fluid and uncertain, but it has caused and may continue to cause various negative effects, including an inability to meet with actual or potential customers, our end customers deciding to delay or abandon their planned purchases or failing to make payments, and delays or disruptions in our or our partners’ supply chains. As a result, we may experience extended sales cycles, our ability to close transactions with new and existing customers and partners may be negatively impacted, our ability to recognize revenue from software transactions we do close may be negatively impacted, our demand generation activities, and the efficiency and effect of those activities, may be negatively affected, and it has been and, until the COVID-19 outbreak is contained, will continue to be more difficult for us to forecast our operating results. These uncertainties have, and may continue to, put pressure on global economic conditions and overall IT spending and may cause our end customers to modify spending priorities or delay or abandon purchasing decisions, thereby lengthening sales cycles and potentially lowering prices for our solutions, and may make it difficult for us to forecast our sales and operating results and to make decisions about future investments, any of which could materially harm our business, operating results and financial condition. Further, our management team is focused on addressing the impacts of COVID-19 on our business, which has required and will continue to require, a large investment of their time and resources and may distract our management team or disrupt our 2021 operating plans. The extent to which COVID-19 ultimately impacts our results of operations, cash flow and financial position will depend on future developments, which are uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions taken by governments and authorities to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including as a result of any recession that may occur. (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 Redeemable Convertible Preferred Stock ("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 fairly state the financial position of the Company at March 31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020. 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, 2020 ("2020 Form 10-K"). (g) Recently Issued Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. Adoption of this new standard did not have a significant impact to our disclosures. In December 2019, the FASB released ASU 2019-12, which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019-12 are meant to simplify and reduce the cost of accounting for income taxes. The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. Adoption of this new standard did not have a material impact on the Company. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The Company's significant accounting policies were described in Note (1) Summary of Significant Accounting Policies of the 2020 Form 10-K. There have been no significant changes in the Company's significant accounting policies since December 31, 2020. For a description of the Company's significant accounting policies refer to the 2020 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 when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For perpetual licenses with multi-year maintenance agreements, the company invoices the license and generally one year of maintenance with future maintenance generally invoiced annually. 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 March 31, 2021 and December 31, 2020, accounts receivable, net of allowance for doubtful accounts, was $3.0 million and $2.8 million, respectively. As of both March 31, 2021 and December 31, 2020, short and long-term contract assets, net of allowance for doubtful accounts, was $0.6 million. 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: Three Months Ended March 31, 2021 Balance at December 31, 2020 $ 6,369,129 Deferral of revenue 3,915,390 Recognition of revenue (3,828,326) Change in reserves (1,435) Balance at March 31, 2021 $ 6,454,758 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 $6.5 million as of March 31, 2021, of which the Company expects to recognize approximately 64% of such amount as revenue over the next 12 months and the remainder thereafter. Approximately $2.0 million of revenue is expected to be recognized from remaining performance obligations for unbilled support and services as of March 31, 2021. We expect to recognize revenue on approximately 39% of these remaining performance obligations over the next twelve months, with the balance recognized 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 Right-of-Use ("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 ROU assets and liabilities as of March 31, 2021. Right of use assets $ 202,495 Lease liability obligations, current 235,962 Lease liability obligations, less current portion — Total lease liability obligations $ 235,962 Weighted-average remaining lease term 0.54 Weighted-average discount rate 5.74 % Three Months Ended March 31, 2021 2020 Components of lease expense: Operating lease cost $ 414,351 $ 489,043 Sublease income (75,314) (199,055) Net lease cost $ 339,037 $ 289,988 During the three months ended March 31, 2021 and 2020, operating cash flows from operating leases were approximately $354,968 and $547,623, respectively. Approximate future minimum lease payments for our ROU assets over the remaining lease periods as of March 31, 2021, are as follows: 2021 237,525 Total minimum lease payments 237,525 Less interest 1,563 Present value of lease liabilities 235,962 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2021 | |
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 months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 Stock options and restricted stock 1,395,993 1,178,974 Series A redeemable convertible preferred stock 87,815 87,815 Total anti-dilutive common stock equivalents 1,483,808 1,266,789 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment The gross carrying amount and accumulated depreciation of property and equipment as of March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Gross carrying amount $ 18,813,944 $ 18,791,841 Accumulated depreciation (18,617,314) (18,594,821) Property and Equipment, net $ 196,630 $ 197,020 For the three months ended March 31, 2021 and 2020, depreciation expense was $39,765 and $45,943, respectively. |
Software Development Costs
Software Development Costs | 3 Months Ended |
Mar. 31, 2021 | |
Research and Development [Abstract] | |
Software Development Costs | Software Development Costs The gross carrying amount and accumulated amortization of software development costs as of March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Gross carrying amount $ 2,950,132 $ 2,950,132 Accumulated amortization (2,932,493) (2,930,854) Software development costs, net $ 17,639 $ 19,278 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Goodwill $ 4,150,339 $ 4,150,339 Other intangible assets: Gross carrying amount $ 4,027,912 $ 4,027,912 Accumulated amortization (3,943,860) (3,927,778) Net carrying amount $ 84,052 $ 100,134 For the three months ended March 31, 2021 and 2020, amortization expense was $16,082 and $(15,171), respectively. |
Share-Based Payment Arrangement
Share-Based Payment Arrangements | 3 Months Ended |
Mar. 31, 2021 | |
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 of the Company's Board of Directors, subject to the consent of Hale Capital Partners, LP. The vesting terms shall be performance based and determined by the Compensation Committee, subject to the consent of Hale Capital Partners, LP, 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 following table summarizes the 2018 Plan, which was the only plan under which the Company was able to grant equity compensation as of March 31, 2021: Shares Shares Available Shares Name of Plan Authorized for Grant Outstanding FalconStor Software, Inc. 2018 Incentive Stock Plan 1,471,997 (31,368) 1,442,828 The following table summarizes the Company’s equity plans that have terminated or expired but that still have equity awards outstanding as of March 31, 2021: Name of Plan Shares Available for Grant Shares Outstanding FalconStor Software, Inc., 2016 Incentive Stock Plan — 3,850 FalconStor Software, Inc., 2006 Incentive Stock Plan — 5,930 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 months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 Cost of revenue - Product $ 227 $ — Cost of revenue - support and service 181 103 Research and development costs — 428 Selling and marketing 2,677 184 General and administrative 1,386 3,795 $ 4,471 $ 4,510 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
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 three months ended March 31, 2021, the Company recorded an income tax provision of $44,616. The effective tax rate for the three months ended March 31, 2021 was 7.0%. The effective tax rate differs from the statutory rate of 21% due to the mix of foreign and domestic earnings and the application of valuation allowances. As of March 31, 2021, 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. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Notes Payable | Notes Payable The notes payable balance consists of the following: Total notes payable, net at December 31, 2020 $ 4,074,863 Accretion of discount 75,705 PPP loan forgiveness (754,000) Total notes payable, net at March 31, 2021 $ 3,396,568 Senior Secured Debt The $4 million senior secured debt bears interest at prime plus 0.75% and matures on June 30, 2021. As of March 31, 2021, the Company was in compliance with the financial covenants contained in the Amended and Restated Term Loan Credit Agreement. Loan under the Paycheck Protection Program On April 28, 2020, the Company entered into a loan with Peapack-Gladstone Bank in an aggregate principal amount of $754,000, pursuant to the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The PPP Loan is evidenced by a promissory note dated April 28, 2020. The PPP Loan matures two years from the disbursement date and bears interest at a rate of 1.000% per annum, with the first six months of interest deferred. Principal and interest are payable monthly commencing six months after the disbursement date and may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. The PPP Loan is subject to forgiveness to the extent proceeds are used for payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage interest expenses (collectively, “Qualifying Expenses”), pursuant to the terms and limitations of the PPP. The Company has used a significant majority of the Loan amount for Qualifying Expenses. The PPP Loan was forgiven on March 30, 2021. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021, 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 March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020, 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 March 31, 2021 or December 31, 2020. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2021: 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 470,222 — — 470,222 Total derivative liabilities 470,222 — — 470,222 Total assets and liabilities measured at fair value $ 470,222 $ — $ — $ 470,222 The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2020: 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 472,851 — — 472,851 Total derivative liabilities 472,851 — — 472,851 Total assets and liabilities measured at fair value $ 472,851 $ — $ — $ 472,851 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 Preferred Stock is based on its future cash flows discounted at a 14% yield. The fair value of the Company's note payable is based on its future cash flows discounted at a 17% yield. 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 months ended March 31, 2021 and March 31, 2020: Three Months Ended March 31, 2021 2020 Beginning Balance $ 472,851 $ 483,804 Total income recognized in earnings (2,629) (2,752) Ending Balance $ 470,222 $ 481,052 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
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, New York 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 occur in 2021. The following is a schedule of future minimum lease payments as well as sublease income for all operating leases as of March 31, 2021: Payments Sublease Income Net Commitments 2021 237,525 (25,105) 212,420 $ 237,525 $ (25,105) $ 212,420 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 months ended March 31, 2021, 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 March 31, 2021, 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 Agreement 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. Mr. Brooks' employment can be terminated at will. Pursuant to the Brooks Agreement and the 2018 Plan, Mr. Brooks received 735,973 shares of restricted stock. 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 that exceeds the prior quarter 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 2017 and 2019. In addition, as of March 31, 2021, the Company's liability for uncertain tax positions totaled $112,712. 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 | 3 Months Ended |
Mar. 31, 2021 | |
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 $102.488 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). 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 Term Loan and Credit 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 9.99% of the Company’s currently outstanding shares of common stock. The Series A Preferred Stock dividends shall accrue whether or not the declaration or payment of such Series A Preferred Stock 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, subject to the approval of HCP-FVA, 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. As described under Note (1), HCP-FVA has agreed to extend if necessary the commencement of the optional redemption date of the Series A Preferred Stock from July 30, 2021 to July 1, 2022. 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 Restated Certificate of Incorporation as amended or Amended and Restated 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 March 31, 2021 and December 31, 2020, the fair value of these derivative instruments was $470,222 and $472,851, 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 three months ended March 31, 2021 and March 31, 2020 of $2,629 and 2,752, 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 months ended March 31, 2021 and 2020, were as follows: Three Months Ended March 31, 2021 2020 Beginning Balance $ 472,851 $ 483,804 Total income recognized in earnings (2,629) (2,752) Ending Balance $ 470,222 $ 481,052 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 as follows: Probability of redemption as part of a fundamental sale transaction 0.5% Probability of redemption absent a fundamental sale transaction 4.75% Annual volatility 65% 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 Partners, LP, which was the sole holder of the Series A Preferred Stock, agreed to the Series A mandatory extension of the mandatory redemption right 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 income (loss) attributable to common stockholders on the statement of operations and in determining income (loss) per share for the three months ended March 31, 2021 and 2020, respectively. The following represents a reconciliation of net loss attributable to common stockholders for the three months ended March 31, 2021 and 2020, respectively: Three Months Ended March 31, 2021 2020 Net income (loss) $ 425,248 $ (719,840) Effects of Series A redeemable convertible preferred stock: Less: Accrual of Series A redeemable convertible preferred stock dividends 277,170 285,760 Less: Accretion to redemption value of Series A redeemable convertible preferred stock 197,114 26,090 Net income (loss) attributable to common stockholders $ (49,036) $ (1,031,690) The Series A Preferred Stock consists of the following: Total Series A redeemable convertible preferred stock, net at December 31, 2020 $ 12,940,722 Accrued dividends $ 277,170 Accretion of preferred stock $ 197,114 Total Series A redeemable convertible preferred stock, net at March 31, 2021 $ 13,415,006 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2020 $ (1,995,680) $ 7,719 $ (1,987,961) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications 86,398 — 86,398 Total other comprehensive income (loss) 86,398 — 86,398 Accumulated other comprehensive income (loss) at March 31, 2021 $ (1,909,282) $ 7,719 $ (1,901,563) The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended March 31, 2020 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2019 $ (1,926,826) $ 33,566 $ (1,893,260) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications (13,153) — (13,153) Total other comprehensive income (loss) (13,153) — (13,153) Accumulated other comprehensive income (loss) at March 31, 2020 $ (1,939,979) $ 33,566 $ (1,906,413) |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Stock Repurchase Activity |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | 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 and Concentra
Segment Reporting and Concentrations | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Reporting and Concentrations | 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 months ended March 31, 2021 and 2020, and the location of long-lived assets as of March 31, 2021 and December 31, 2020, are summarized as follows: Three Months Ended March 31, 2021 2020 Revenue: Americas $ 1,708,177 $ 1,094,904 Asia Pacific 509,293 983,795 Europe, Middle East, Africa and Other 1,610,856 1,101,488 Total Revenue $ 3,828,326 $ 3,180,187 March 31, 2021 December 31, 2020 Long-lived assets: Americas $ 1,253,841 $ 1,735,986 Asia Pacific 485,147 502,344 Europe, Middle East, Africa and Other 40,752 52,690 Total long-lived assets $ 1,779,740 $ 2,291,020 For the three months ended March 31, 2021, the Company had two customers that accounted for 10% or more of total revenue, respectively. For the three months ended March 31, 2020, the Company had two customers that accounted for 10% or more of total revenue, respectively. As of March 31, 2021, the Company had two customers that accounted for 10% or more of the gross accounts receivable balance. As of December 31, 2020, the Company had one customer that accounted for 10% or more of the gross accounts receivable balance. |
Restructuring Costs
Restructuring Costs | 3 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs In June 2017, the Board approved a comprehensive plan to increase operating performance (the “2017 Plan”). 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 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 Melville, 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 three months ended March 31, 2021, the Company incurred lease disposal-related costs for this property of $0.3 million. As of March 31, 2021, $20,595 of the Company's remaining accrued lease disposal cost has been recorded as a component of operating lease liabilities. The Company expects the remaining accrued severance-related costs of $229,051 at March 31, 2021 to be paid once final settlement litigation is completed, which is expected to occur by December 31, 2021. In the third quarter of 2019, the Company adopted an expense control plan (the "2019 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. In connection with the 2019 Plan, the Company eliminated 23 positions worldwide, implemented tighter expense controls, ceased non-core activities and downsized several facilities. During the three months ended March 31, 2020, the Company incurred $0.1 million in severance expense as a result of this action. The 2019 Plan was substantially completed as of March 31, 2020. Given the commercial uncertainty caused by the novel coronavirus pandemic, or COVID-19, the Company developed and implemented an even more aggressive expense control plan in March 2020, that it is prepared to keep in place for the remainder of 2020 (the "2020 Plan"). The 2020 Plan reduced the Company's annual cash expense run rate by $4.0 million or 29%. The Company has furloughed 21 positions worldwide, and 20 of these positions were reinstated by December 31, 2020. During the three months ended March 31, 2021, the Company has not yet incurred severance expense as a result of this action. The following table summarizes the activity during 2020 and 2021 related to restructuring liabilities recorded in connection with the 2017, 2019 and 2020 Plans: Severance Related Costs Facility and Other Costs Total Balance at December 31, 2019 $ 293,799 $ 237,493 $ 531,292 Additions (Reductions) 76,708 210,752 287,460 Utilized/Paid (156,415) (225,835) (382,250) Balance at March 31, 2020 $ 214,092 $ 222,410 $ 436,502 Additions (Reductions) — 153,685 153,685 Translation Adjustment 4,674 — 4,674 Utilized/Paid — (201,211) (201,211) Balance at June 30, 2020 $ 218,766 $ 174,884 $ 393,650 Additions (Reductions) — 317,595 317,595 Translation Adjustment 9,554 — 9,554 Utilized/Paid — (366,562) (366,562) Balance at September 30, 2020 $ 228,320 $ 125,917 $ 354,237 Additions (Reductions) — 274,086 274,086 Translation Adjustment 11,124 — 11,124 Utilized/Paid — (324,537) (324,537) Balance at December 31, 2020 $ 239,444 $ 75,466 $ 314,910 Additions (Reductions) — 302,313 302,313 Translation Adjustment (10,393) — (10,393) Utilized/Paid — (357,184) (357,184) Balance at March 31, 2021 $ 229,051 $ 20,595 $ 249,646 The severance and facility related liabilities are included within “accrued expenses” in the accompanying condensed consolidated balance sheets. The expenses under the 2017, 2019 and 2020 Plans are included within “restructuring costs” in the accompanying condensed consolidated statements of operations. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Nature of Operations | The Company and Nature of Operations FalconStor Software, Inc., a Delaware corporation ("we", the "Company" or "FalconStor"), is a leading storage software company offering a converged data services software platform that is hardware agnostic. The Company develops 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 Redeemable Convertible Preferred Stock ("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 fairly state the financial position of the Company at March 31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020. 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, 2020 ("2020 Form 10-K"). |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. Adoption of this new standard did not have a significant impact to our disclosures. In December 2019, the FASB released ASU 2019-12, which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019-12 are meant to simplify and reduce the cost of accounting for income taxes. The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. Adoption of this new standard did not have a material impact on the Company. |
Revenue from Contract 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 when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For perpetual licenses with multi-year maintenance agreements, the company invoices the license and generally one year of maintenance with future maintenance generally invoiced annually. 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 March 31, 2021 and December 31, 2020, accounts receivable, net of allowance for doubtful accounts, was $3.0 million and $2.8 million, respectively. As of both March 31, 2021 and December 31, 2020, short and long-term contract assets, net of allowance for doubtful accounts, was $0.6 million. 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. Approximately $2.0 million of revenue is expected to be recognized from remaining performance obligations for unbilled support and services as of March 31, 2021. We expect to recognize revenue on approximately 39% of these remaining performance obligations over the next twelve months, with the balance recognized 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 | 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 Right-of-Use ("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 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Changes in Deferred Revenue | Changes in deferred revenue were as follows: Three Months Ended March 31, 2021 Balance at December 31, 2020 $ 6,369,129 Deferral of revenue 3,915,390 Recognition of revenue (3,828,326) Change in reserves (1,435) Balance at March 31, 2021 $ 6,454,758 |
Assets And Liabilities, Lessee | We have various operating leases for office facilities that expire through 2021. Below is a summary of our ROU assets and liabilities as of March 31, 2021. Right of use assets $ 202,495 Lease liability obligations, current 235,962 Lease liability obligations, less current portion — Total lease liability obligations $ 235,962 Weighted-average remaining lease term 0.54 Weighted-average discount rate 5.74 % |
Lease Cost | Three Months Ended March 31, 2021 2020 Components of lease expense: Operating lease cost $ 414,351 $ 489,043 Sublease income (75,314) (199,055) Net lease cost $ 339,037 $ 289,988 |
Operating Leases Maturity | Approximate future minimum lease payments for our ROU assets over the remaining lease periods as of March 31, 2021, are as follows: 2021 237,525 Total minimum lease payments 237,525 Less interest 1,563 Present value of lease liabilities 235,962 Payments Sublease Income Net Commitments 2021 237,525 (25,105) 212,420 $ 237,525 $ (25,105) $ 212,420 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 Stock options and restricted stock 1,395,993 1,178,974 Series A redeemable convertible preferred stock 87,815 87,815 Total anti-dilutive common stock equivalents 1,483,808 1,266,789 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | The gross carrying amount and accumulated depreciation of property and equipment as of March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Gross carrying amount $ 18,813,944 $ 18,791,841 Accumulated depreciation (18,617,314) (18,594,821) Property and Equipment, net $ 196,630 $ 197,020 |
Software Development Costs (Tab
Software Development Costs (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Research and Development [Abstract] | |
Summary of Software Development Costs | The gross carrying amount and accumulated amortization of software development costs as of March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Gross carrying amount $ 2,950,132 $ 2,950,132 Accumulated amortization (2,932,493) (2,930,854) Software development costs, net $ 17,639 $ 19,278 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Goodwill $ 4,150,339 $ 4,150,339 Other intangible assets: Gross carrying amount $ 4,027,912 $ 4,027,912 Accumulated amortization (3,943,860) (3,927,778) Net carrying amount $ 84,052 $ 100,134 |
Share-Based Payment Arrangeme_2
Share-Based Payment Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021: Shares Shares Available Shares Name of Plan Authorized for Grant Outstanding FalconStor Software, Inc. 2018 Incentive Stock Plan 1,471,997 (31,368) 1,442,828 |
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 March 31, 2021: Name of Plan Shares Available for Grant Shares Outstanding FalconStor Software, Inc., 2016 Incentive Stock Plan — 3,850 FalconStor Software, Inc., 2006 Incentive Stock Plan — 5,930 |
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 months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 Cost of revenue - Product $ 227 $ — Cost of revenue - support and service 181 103 Research and development costs — 428 Selling and marketing 2,677 184 General and administrative 1,386 3,795 $ 4,471 $ 4,510 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Notes Payable | The notes payable balance consists of the following: Total notes payable, net at December 31, 2020 $ 4,074,863 Accretion of discount 75,705 PPP loan forgiveness (754,000) Total notes payable, net at March 31, 2021 $ 3,396,568 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021: 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 470,222 — — 470,222 Total derivative liabilities 470,222 — — 470,222 Total assets and liabilities measured at fair value $ 470,222 $ — $ — $ 470,222 The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2020: 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 472,851 — — 472,851 Total derivative liabilities 472,851 — — 472,851 Total assets and liabilities measured at fair value $ 472,851 $ — $ — $ 472,851 |
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 months ended March 31, 2021 and March 31, 2020: Three Months Ended March 31, 2021 2020 Beginning Balance $ 472,851 $ 483,804 Total income recognized in earnings (2,629) (2,752) Ending Balance $ 470,222 $ 481,052 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Payments for Operating Leases | Approximate future minimum lease payments for our ROU assets over the remaining lease periods as of March 31, 2021, are as follows: 2021 237,525 Total minimum lease payments 237,525 Less interest 1,563 Present value of lease liabilities 235,962 Payments Sublease Income Net Commitments 2021 237,525 (25,105) 212,420 $ 237,525 $ (25,105) $ 212,420 |
Series A Redeemable Convertib_2
Series A Redeemable Convertible Preferred Stock (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 months ended March 31, 2021 and 2020, were as follows: Three Months Ended March 31, 2021 2020 Beginning Balance $ 472,851 $ 483,804 Total income recognized in earnings (2,629) (2,752) Ending Balance $ 470,222 $ 481,052 |
Derivative Probability and Volatility Assumptions | The probability and volatility assumptions are as follows: Probability of redemption as part of a fundamental sale transaction 0.5% Probability of redemption absent a fundamental sale transaction 4.75% Annual volatility 65% |
Reconciliation of net (loss) income attributable to common stockholders | The following represents a reconciliation of net loss attributable to common stockholders for the three months ended March 31, 2021 and 2020, respectively: Three Months Ended March 31, 2021 2020 Net income (loss) $ 425,248 $ (719,840) Effects of Series A redeemable convertible preferred stock: Less: Accrual of Series A redeemable convertible preferred stock dividends 277,170 285,760 Less: Accretion to redemption value of Series A redeemable convertible preferred stock 197,114 26,090 Net income (loss) attributable to common stockholders $ (49,036) $ (1,031,690) |
Schedule of Components of Series A Preferred Stock | The Series A Preferred Stock consists of the following: Total Series A redeemable convertible preferred stock, net at December 31, 2020 $ 12,940,722 Accrued dividends $ 277,170 Accretion of preferred stock $ 197,114 Total Series A redeemable convertible preferred stock, net at March 31, 2021 $ 13,415,006 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive loss | The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended March 31, 2021 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2020 $ (1,995,680) $ 7,719 $ (1,987,961) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications 86,398 — 86,398 Total other comprehensive income (loss) 86,398 — 86,398 Accumulated other comprehensive income (loss) at March 31, 2021 $ (1,909,282) $ 7,719 $ (1,901,563) The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended March 31, 2020 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at December 31, 2019 $ (1,926,826) $ 33,566 $ (1,893,260) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications (13,153) — (13,153) Total other comprehensive income (loss) (13,153) — (13,153) Accumulated other comprehensive income (loss) at March 31, 2020 $ (1,939,979) $ 33,566 $ (1,906,413) |
Segment Reporting and Concent_2
Segment Reporting and Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 months ended March 31, 2021 and 2020, and the location of long-lived assets as of March 31, 2021 and December 31, 2020, are summarized as follows: Three Months Ended March 31, 2021 2020 Revenue: Americas $ 1,708,177 $ 1,094,904 Asia Pacific 509,293 983,795 Europe, Middle East, Africa and Other 1,610,856 1,101,488 Total Revenue $ 3,828,326 $ 3,180,187 March 31, 2021 December 31, 2020 Long-lived assets: Americas $ 1,253,841 $ 1,735,986 Asia Pacific 485,147 502,344 Europe, Middle East, Africa and Other 40,752 52,690 Total long-lived assets $ 1,779,740 $ 2,291,020 |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Schedule Of Restructuring Costs | The following table summarizes the activity during 2020 and 2021 related to restructuring liabilities recorded in connection with the 2017, 2019 and 2020 Plans: Severance Related Costs Facility and Other Costs Total Balance at December 31, 2019 $ 293,799 $ 237,493 $ 531,292 Additions (Reductions) 76,708 210,752 287,460 Utilized/Paid (156,415) (225,835) (382,250) Balance at March 31, 2020 $ 214,092 $ 222,410 $ 436,502 Additions (Reductions) — 153,685 153,685 Translation Adjustment 4,674 — 4,674 Utilized/Paid — (201,211) (201,211) Balance at June 30, 2020 $ 218,766 $ 174,884 $ 393,650 Additions (Reductions) — 317,595 317,595 Translation Adjustment 9,554 — 9,554 Utilized/Paid — (366,562) (366,562) Balance at September 30, 2020 $ 228,320 $ 125,917 $ 354,237 Additions (Reductions) — 274,086 274,086 Translation Adjustment 11,124 — 11,124 Utilized/Paid — (324,537) (324,537) Balance at December 31, 2020 $ 239,444 $ 75,466 $ 314,910 Additions (Reductions) — 302,313 302,313 Translation Adjustment (10,393) — (10,393) Utilized/Paid — (357,184) (357,184) Balance at March 31, 2021 $ 229,051 $ 20,595 $ 249,646 |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||
Working Capital Deficiency | $ (3,600,000) | ||
Deferred revenue | 4,151,083 | $ 4,603,270 | |
Total Stockholders' Deficit | (14,566,353) | (14,608,186) | |
Net income (loss) | 425,248 | $ (719,840) | |
Net cash used in operating activities | 137,659 | $ (398,331) | |
Cash and cash equivalents | 2,020,989 | 1,920,656 | |
Cash Period Change | 100,333 | ||
Series A redeemable convertible preferred stock, redemption value | 13,623,747 | $ 13,346,577 | |
Amended and Restated Loan Agreement [Member] | |||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||
Notes payable | 3,500,000 | ||
Amended and Restated Loan Agreement [Member] | HCP-FVA, LLC | |||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||
Notes payable | $ 2,200,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Accounts receivable, net of allowances | $ 2,954,033 | $ 2,836,571 |
Contract with Customer, Asset, after Allowance for Credit Loss | 600,000 | 600,000 |
Deferred revenue | $ 6,454,758 | $ 6,369,129 |
Revenue expected to be recognized during next 12 months (percent) | 64.00% | |
Remaining performance obligation | $ 2,000,000 | |
Remaining performance obligation expected to be recognized over next 12 months (percent) | 39.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Changes in Deferred Revenue (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
Balance at December 31, 2020 | $ 6,369,129 |
Deferral of revenue | 3,915,390 |
Recognition of revenue | (3,828,326) |
Change in reserves | (1,435) |
Balance at March 31, 2021 | $ 6,454,758 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Right of Use Assets and Liabilities (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Right of use assets | $ 202,495 | $ 536,272 | |
Lease liability obligations, current | 235,962 | $ 665,074 | |
Lease liability obligations, less current portion | 0 | ||
Present value of lease liabilities | $ 235,962 | ||
Weighted-average remaining lease term | 6 months 14 days | ||
Weighted-average discount rate | 5.74% | ||
Operating lease cost | $ 414,351 | $ 489,043 | |
Sublease income | (75,314) | (199,055) | |
Net lease cost | 339,037 | 289,988 | |
Operating Lease, Payments | $ 354,968 | $ 547,623 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Lease Maturities (Details) | Mar. 31, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 237,525 |
Total minimum lease payments | 237,525 |
Less interest | (1,563) |
Present value of lease liabilities | $ 235,962 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common stock equivalents | 1,483,808 | 1,266,789 |
Stock options and restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common stock equivalents | 1,395,993 | 1,178,974 |
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 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Gross carrying amount | $ 18,813,944 | $ 18,791,841 | |
Accumulated depreciation | (18,617,314) | (18,594,821) | |
Property and Equipment, net | 196,630 | $ 197,020 | |
Depreciation expense | $ 39,765 | $ 45,943 |
Software Development Costs (Det
Software Development Costs (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Research and Development [Abstract] | |||
Gross carrying amount | $ 2,950,132 | $ 2,950,132 | |
Accumulated amortization | (2,932,493) | (2,930,854) | |
Software development costs, net | 17,639 | $ 19,278 | |
Capitalized Computer Software, Amortization | $ 1,639 | $ 2,791 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 4,150,339 | $ 4,150,339 | |
Other intangible assets: | |||
Gross carrying amount | 4,027,912 | 4,027,912 | |
Accumulated amortization | (3,943,860) | (3,927,778) | |
Net carrying amount | 84,052 | $ 100,134 | |
Amortization of intangible assets | $ 16,082 | $ (15,171) |
Share-Based Payment Arrangeme_3
Share-Based Payment Arrangements (Detail Narrative) | Mar. 31, 2021shares |
FalconStor Software, Inc., 2018 Incentive Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Authorized (in shares) | 1,471,997 |
Share-Based Payment Arrangeme_4
Share-Based Payment Arrangements (Details) - FalconStor Software, Inc., 2018 Incentive Stock Plan | Mar. 31, 2021shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares Authorized (in shares) | 1,471,997 |
Shares Available for Grant (in shares) | (31,368) |
Shares Outstanding (in shares) | 1,442,828 |
Share-Based Payment Arrangeme_5
Share-Based Payment Arrangements - Equity Plans Terminated or Expired (Details) | Mar. 31, 2021shares |
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) | 3,850 |
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) | 5,930 |
Share-Based Payment Arrangeme_6
Share-Based Payment Arrangements - Share-Based Compensation Expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 4,471 | $ 4,510 |
Cost of revenue - Product | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 227 | 0 |
Cost of revenue - support and service | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 181 | 103 |
Research and development costs | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 0 | 428 |
Selling and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 2,677 | 184 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 1,386 | $ 3,795 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Income tax provision | $ 44,616 | $ 70,064 | |
Effective income tax rate | 7.00% | (10.80%) | |
Unrecognized tax benefits | $ 75,506 | $ 75,506 | |
Unrecognized tax benefits, interest on income taxes accrued | 37,207 | $ 35,340 | |
Recognized tax benefits | $ 8,000 |
Notes Payable - Components of N
Notes Payable - Components of Notes Payable (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Movement In Notes Payable [Roll Forward] | |
Total notes payable, beginning | $ 4,074,863 |
Accretion of discount | 75,705 |
Total notes payable, ending | 3,396,568 |
Paycheck Protection Program [Member] | |
Movement In Notes Payable [Roll Forward] | |
PPP loan forgiveness | $ (754,000) |
Notes Payable - Additional Info
Notes Payable - Additional Information (Details) - USD ($) | Apr. 28, 2020 | Feb. 23, 2018 |
Paycheck Protection Program [Member] | ||
Debt Instrument [Line Items] | ||
Proceeds from Notes Payable | $ 754,000 | |
Long-term Debt, Term | 2 years | |
Debt Instrument, Interest Rate, Stated Percentage | 1.00% | |
Note Payable, Interest Deferral Period | 6 months | |
Debt Instrument, Prepayment Penalties | $ 0 | |
Senior Secured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Face Amount | $ 4,000,000 | |
Debt Instrument, Basis Spread on Variable Rate | 0.75% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative liabilities: | ||
Derivative Instruments | $ 470,222 | $ 472,851 |
Total derivative liabilities | 470,222 | 472,851 |
Total assets and liabilities measured at fair value | 470,222 | 472,851 |
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 | 470,222 | 472,851 |
Total derivative liabilities | 470,222 | 472,851 |
Total assets and liabilities measured at fair value | $ 470,222 | $ 472,851 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - Future Cash Flows - Discount Rate | Mar. 31, 2021 |
Preferred Stock | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Discount yield of preferred equity | 0.14 |
Notes Payable | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Fair value discount yield of note payable | 0.17 |
Fair Value Measurements - Rollf
Fair Value Measurements - Rollforward (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | $ 472,851 | $ 483,804 |
Total income recognized in earnings | (2,629) | (2,752) |
Ending Balance | $ 470,222 | $ 481,052 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Mar. 31, 2021USD ($) |
Payments | |
2021 | $ 237,525 |
Total minimum lease payments | 237,525 |
Sublease Income | |
2021 | (25,105) |
Total Sublease Income | (25,105) |
Net Commitments | |
2021 | 212,420 |
Total minimum lease payments | $ 212,420 |
Commitments and Contingencies_3
Commitments and Contingencies (Narrative) (Details) - USD ($) | Apr. 05, 2018 | Aug. 14, 2017 | Mar. 31, 2021 |
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 | $ 112,712 | ||
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 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 735,973 | ||
Severance payment period | 6 months | ||
Award requisite period | 6 months | ||
Chief Financial 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 | $ 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 | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Accrued bonuses | $ 70,000 | ||
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 |
Series A Redeemable Convertib_3
Series A Redeemable Convertible Preferred Stock (Details Narrative) | 3 Months Ended | ||||
Mar. 31, 2021USD ($)Integershares | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | Sep. 16, 2013$ / sharesshares | |
Class of Stock [Line Items] | |||||
Series A Redeemable convertible preferred stock, shares outstanding (in shares) | shares | 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 | $ 470,222 | $ 481,052 | $ 472,851 | $ 483,804 | |
Loss on change in fair value | $ (2,629) | $ (2,752) | |||
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 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) | 9.99% | ||||
Recurring | |||||
Class of Stock [Line Items] | |||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | $ 470,222 | $ 472,851 | |||
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 |
Series A Redeemable Convertib_4
Series A Redeemable Convertible Preferred Stock - Rollforward (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Equity [Abstract] | ||
Beginning Balance | $ 472,851 | $ 483,804 |
Total income recognized in earnings | (2,629) | (2,752) |
Ending Balance | $ 470,222 | $ 481,052 |
Series A Redeemable Convertib_5
Series A Redeemable Convertible Preferred Stock - Probability and Volatility Assumptions (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Probability of redemption as part of a fundamental sale transaction | 0.50% |
Probability of redemption absent a fundamental sale transaction | 4.75% |
Annual volatility | 65.00% |
Series A Redeemable Convertib_6
Series A Redeemable Convertible Preferred Stock - Reconciliation of Net Loss Attributable to Common Stockholders (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Equity [Abstract] | ||
Net income (loss) | $ 425,248 | $ (719,840) |
Less: Accrual of Series A redeemable convertible preferred stock dividends | 277,170 | 285,760 |
Less: Accretion to redemption value of Series A redeemable convertible preferred stock | 197,114 | 26,090 |
Net loss attributable to common stockholders | $ (49,036) | $ (1,031,690) |
Series A Redeemable Convertib_7
Series A Redeemable Convertible Preferred Stock - Components of Preferred Stock (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |
Beginning balance | $ 12,940,722 |
Ending balance | 13,415,006 |
Redeemable Preferred Stock [Member] | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |
Beginning balance | 12,940,722 |
Accrued dividends | 277,170 |
Accretion of preferred stock | 197,114 |
Ending balance | $ 13,415,006 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Stockholders' Deficit | $ (14,566,353) | $ (14,608,186) | ||
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 86,398 | $ (13,153) | ||
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Stockholders' Deficit | (1,909,282) | (1,939,979) | (1,995,680) | $ (1,926,826) |
Other comprehensive income | 86,398 | (13,153) | ||
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 86,398 | (13,153) | ||
Net Minimum Pension Liability | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Stockholders' Deficit | 7,719 | 33,566 | 7,719 | 33,566 |
Other comprehensive income | 0 | 0 | ||
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 0 | 0 | ||
AOCI Attributable to Parent [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Stockholders' Deficit | (1,901,563) | (1,906,413) | $ (1,987,961) | $ (1,893,260) |
Other comprehensive income | 86,398 | (13,153) | ||
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | $ 86,398 | $ (13,153) |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Equity [Abstract] | ||
Stock repurchased during period (shares) | 0 | 0 |
Remaining number of shares authorized for repurchased | 49,078 |
Segment Reporting and Concent_3
Segment Reporting and Concentrations - Schedule Of Segment Reporting By Geographical Areas (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Revenue: | |||
Total revenue | $ 3,828,326 | $ 3,180,187 | |
Long-lived assets: | |||
Total long-lived assets | 1,779,740 | $ 2,291,020 | |
Americas | |||
Revenue: | |||
Total revenue | 1,708,177 | 1,094,904 | |
Long-lived assets: | |||
Total long-lived assets | 1,253,841 | 1,735,986 | |
Asia Pacific | |||
Revenue: | |||
Total revenue | 509,293 | 983,795 | |
Long-lived assets: | |||
Total long-lived assets | 485,147 | 502,344 | |
Europe, Middle East, Africa and Other | |||
Revenue: | |||
Total revenue | 1,610,856 | $ 1,101,488 | |
Long-lived assets: | |||
Total long-lived assets | $ 40,752 | $ 52,690 |
Segment Reporting and Concent_4
Segment Reporting and Concentrations (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2021customerInteger | Mar. 31, 2020customer | Dec. 31, 2020Integer | |
Segment Reporting [Abstract] | |||
Number of Customers Accounting for More than 10 Percent of Revenue | customer | 2 | 2 | |
Number Of Customers With Significant Accounts Receivable Balance | Integer | 2 | 1 |
Restructuring Costs (Details Na
Restructuring Costs (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2021USD ($)position | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | |||||||
Entity number of employees | 86 | ||||||
Restructuring costs | $ 302,313 | $ 274,086 | $ 153,685 | $ 287,460 | $ 317,595 | ||
Restructuring Costs Under 2019 Plan | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 100,000 | ||||||
Number of positions eliminated, worldwide | position | 23 | ||||||
Restructuring Costs Under 2020 Plan | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Annual Expense Run Rate Reduction | $ 4,000,000 | ||||||
Annual Expense Run Rate Reduction Percentage | 29.00% | ||||||
Number of positions furloughed | position | 21 | ||||||
Number of furloughed positions reinstated | position | 20 | ||||||
Lease-Disposal Related Costs | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | $ 302,313 | $ 274,086 | $ 153,685 | $ 210,752 | $ 317,595 |
Restructuring Costs - Schedule
Restructuring Costs - Schedule Of Restructuring Costs (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | |
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | $ 314,910 | $ 354,237 | $ 436,502 | $ 531,292 | $ 531,292 |
Provisions/Additions | 302,313 | 274,086 | 153,685 | 287,460 | 317,595 |
Translation Adjustment | (10,393) | 11,124 | 4,674 | 9,554 | |
Utilized/Paid | (357,184) | (324,537) | (201,211) | (382,250) | (366,562) |
Ending Balance | 249,646 | 314,910 | 393,650 | 436,502 | 354,237 |
Restructuring Costs Under 2019 Plan | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 239,444 | 228,320 | 214,092 | 293,799 | 293,799 |
Provisions/Additions | 0 | 0 | 0 | 76,708 | 0 |
Translation Adjustment | (10,393) | 11,124 | 4,674 | 9,554 | |
Utilized/Paid | 0 | 0 | 0 | (156,415) | 0 |
Ending Balance | 229,051 | 239,444 | 218,766 | 214,092 | 228,320 |
Facility and Other Costs | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning Balance | 75,466 | 125,917 | 222,410 | 237,493 | 237,493 |
Provisions/Additions | 302,313 | 274,086 | 153,685 | 210,752 | 317,595 |
Translation Adjustment | 0 | 0 | 0 | 0 | |
Utilized/Paid | (357,184) | (324,537) | (201,211) | (225,835) | (366,562) |
Ending Balance | $ 20,595 | $ 75,466 | $ 174,884 | $ 222,410 | $ 125,917 |