Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies (Policies)

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Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company's significant estimates consist of:

 

  the valuation of stock-based compensation;
     
  the valuation of the assets and liabilities acquired in connection with certain recent acquisitions as described in Notes 4, 5, 6, 7 and 8, as well as the valuation of the Company's common stock issued in the transactions, as applicable;
     
  the allowance for doubtful accounts;
     
  the valuation of loans receivable;
     
  the valuation allowance for deferred tax assets; and
     
  the impairment of long-lived assets and goodwill.
Restricted Cash

Restricted Cash

 

In connection with certain transactions, the Company may be required to deposit assets, including cash or shares, in escrow accounts. The assets held in escrow are subject to various contingencies that may exist with respect to such transactions. Upon resolution of those contingencies or the expiration of the escrow period, some or all the escrow amounts may be used and the balance released to the Company. As of September 30, 2020 and 2019, the Company had $0 and $71,000, respectively, deposited in escrow as restricted cash for the Shoom acquisition, of which any amounts not subject to claims were to be released to the pre-acquisition stockholders of Shoom pro-rata on the anniversary dates of the closing date of the Shoom acquisition. As of September 30, 2019, $71,000 was current and included in Prepaid Assets and Other Current Assets on the condensed consolidated balance sheet. As of September 30, 2020, the final escrowed amount had been released and the restricted cash balance was $0. 

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the balance sheets that sum to the total of the same amounts shown in the statement of cash flows.

 

    As of September 30,  
(in thousands)   2020     2019  
Cash and cash equivalents   $ 31,376     $ 494  
Restricted cash, current included in prepaid assets and other current assets     --       71  
Total cash, cash equivalents, and restricted cash in the balance sheets   $ 31,376     $ 565  
Revenue Recognition

Revenue Recognition

 

The Company reports revenues under Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers" and all the related amendments (Topic 606). The Company recognizes revenue after applying the following five steps:

 

1) identification of the contract, or contracts, with a customer;

 

2) identification of the performance obligations in the contract, including whether they are distinct within the context of the contract;

 

3) determination of the transaction price, including the constraint on variable consideration;

 

4) allocation of the transaction price to the performance obligations in the contract; and

 

5) recognition of revenue when, or as, performance obligations are satisfied.

 

Software As A Service Revenue Recognition

 

With respect to sales of the Company's maintenance, consulting and other service agreements including the Company's digital tear-sheets, customers pay fixed monthly fees in exchange for the Company's services. The Company's performance obligation is satisfied over time as the digital tear-sheets are provided continuously throughout the service period. The Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous access to its services.  

 

 Mapping Services Revenue Recognition

 

Mapping services revenue is accounted for using the percentage of completion method. As soon as the outcome of a contract can be estimated reliably, contract revenue is recognized in the condensed consolidated statement of operations in proportion to the stage of completion of the contract. Contract costs are expensed as incurred. Contract costs include all amounts that relate directly to the specific contract, are attributable to contract activity, and are specifically chargeable to the customer under the terms of the contract.

 

Professional Services Revenue Recognition

 

The Company's professional services include fixed fee and time and materials contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company's time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company's right to consideration corresponds directly with the value to the customer of the performance completed to date. For fixed fee contracts including maintenance service provided by in house personnel, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Because the Company's contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known. For the three and nine months ended September 30, 2020 and 2019, the Company did not incur any such losses. These amounts are based on known and estimated factors.

 

Contract Balances

 

The timing of the Company's revenue recognition may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $1,842,000 and $912,000 as of September 30, 2020 and December 31, 2019, respectively, related to cash received in advance for product maintenance services and professional services provided by the Company's technical staff. The Company expects to satisfy its remaining performance obligations for these product maintenance services and professional services and recognize the deferred revenue and related contract costs over the next twelve months. The Company's contract balances as of September 30, 2020 and December 31, 2019 were deemed immaterial.

 

Disaggregation of Revenue

 

Revenues consisted of the following (in thousands):

 

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
Recurring revenue   $ 1,182     $ 754     $ 2,883     $ 1,968  
Non-recurring revenue     1,372       780       2,551       2,419  
Totals   $ 2,554     $ 1,534     $ 5,434     $ 4,387  
Stock-Based Compensation

Stock-Based Compensation

 

The Company accounts for options granted to employees by measuring the cost of services received in exchange for the award of equity instruments based upon the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as an expense over the period during which the recipient is required to provide services in exchange for that award. 

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and recognized over the period services are required to be provided in exchange for the award, usually the vesting period. Forfeitures of unvested stock options are recorded when they occur.

  

The Company incurred stock-based compensation charges of $256,000 and $871,000 for the three months ended September 30, 2020 and 2019, respectively, and $941,000 and $2,618,000 for the nine months ended September 30, 2020 and 2019, respectively, which are included in general and administrative expenses. The following table summarizes the nature of such charges for the periods then ended (in thousands):

 

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
Compensation and related benefits   $ 256     $ 871     $ 941     $ 2,376  
Professional and legal fees     --       --       --       242  
Totals   $ 256     $ 871     $ 941     $ 2,618  
Net Loss Per Share

Net Loss Per Share

 

The Company computes basic and diluted earnings per share by dividing net loss by the weighted average number of common shares outstanding during the period. Basic and diluted net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options and warrants in the calculation of diluted net loss per common shares would have been anti-dilutive.

 

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the nine months ended September 30, 2020 and 2019:

 

    For the Nine Months Ended
September 30,
 
    2020     2019  
Options     5,544,594       124,099  
Warrants     93,252       162,646  
Convertible preferred stock     846       846  
Reserved for service providers     --       25  
Common stock issuable pursuant to Jibestream acquisition share purchase agreement     --       63,645  
Totals     5,638,692       351,261  
Preferred Stock

Preferred Stock

 

The Company applies the accounting standards for distinguishing liabilities from equity under GAAP when determining the classification and measurement of its convertible preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control) are classified as temporary equity. At all other times, preferred shares are classified as permanent equity.

Recently Issued and Adopted Accounting Standards

Recently Issued and Adopted Accounting Standards

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. ASU 2016-13 also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. In November 2019, the FASB issued ASU No. 2019-10 Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) clarifying effective dates for the impacted ASUs. For public business entities that meet the definition of an SEC filer and smaller reporting company, ASU 2016-13 is effective for annual and interim reporting periods beginning after December 15, 2022, and the guidance is to be applied using the modified retrospective approach. Earlier adoption is permitted for annual and interim reporting periods beginning after December 15, 2018. The Company has adopted this standard and the adoption of this standard did not have a material impact on its condensed consolidated financial statements or disclosures.

 

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement,” (“ASU 2018-13”). ASU 2018-13 requires application of the prospective method of transition (for only the most recent interim or annual period presented in the initial fiscal year of adoption) to the new disclosure requirements for (1) changes in unrealized gains and losses included in other comprehensive income and (2) the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 also requires prospective application to any modifications to disclosures made because of the change to the requirements for the narrative description of measurement uncertainty. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. The Company has adopted these ASU’s and the adoption of these ASU’s did not have a material impact on its condensed consolidated financial statements or disclosures.

 

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”) and in May 2019, the FASB issued Accounting Standards Update No. 2019-05, Financial Instruments--Credit Losses (Topic 326) (“ASU 2019-05”). These amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years with early application permitted. The Company has adopted this standard and the adoption of this standard did not have a material impact on its condensed consolidated financial statements or disclosures.

 

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) (“ASU 2019-12”): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning January 1, 2021. The Company does not expect this ASU will have a material effect on its condensed consolidated financial statements or disclosures.

 

In February 2020, the FASB issued ASU 2020-02, “Financial Statements - Credit losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Relating to Accounting Standards Update No. 2016-02, Leases (Topic 842)” (“ASU 2020-02”), which provides guidance on the measurement and requirements related to credit losses. The new guidance was effective upon issuance of this final accounting standards update. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements or disclosures. 

Reverse Stock Split

Reverse Stock Split

 

On January 7, 2020, the Company effected a 1-for-45 reverse stock split of its outstanding common stock. The condensed consolidated financial statements and accompanying notes give effect to the stock split as if it occurred at the beginning of the first period presented.  There was no change to the previously reported net loss.

Subsequent Events

Subsequent Events

 

The Company evaluates events and/or transactions occurring after the balance sheet date and before the issue date of the condensed consolidated financial statements to determine if any of those events and/or transactions requires adjustment to or disclosure in the condensed consolidated financial statements.