Derivatives:The Company follows the relevant accounting guidance and records derivative instruments (including certain derivative instruments embedded in other contracts) in the consolidated balance sheet as either an asset or a liability measured at their fair value, with changes in the derivative’s fair value recognized currently in earnings. The Company values these derivative securities under the fair value method at the end of each reporting period (quarter), and their value is marked-to-market at the end of each reporting period with the gain or loss recorded in earnings. The Company continues to revalue these instruments each quarter to reflect their current value in light of the current market price of our Common Stock. The Company used a simulated probability valuation model to value warrants containing embedded derivative instruments. Determining the appropriate fair-value model and calculating the fair value of such warrants requires considerable judgment. Any change in the estimates (specifically, probabilities) used may cause the value to be higher or lower than that reported. The assumptions used in the model require significant judgment by management and include the following: volatility, expected term, risk-free interest rate, dividends, and warrant holders’ expected rate of return, reset provisions based on expected future financings, projected stock prices, and probability of exercise.

The conversion option included within the unsecured convertible promissory notes is accounted for as a derivative liability at its estimated fair value. The derivative is subject to re-measurement at the end of each reporting period, with changes in fair value recognized as a component of interest and other income, in the consolidated statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the conversion or maturity of the unsecured convertible promissory note purchase agreements.

Revenue:The Company’s principal sources of revenues are from the sale of software products, SOW (engineering services), annual software product, and software maintenance contracts. The Company also derives revenue from customers based on the numbers of signatures produced by the Company’s signature software solutions imbedded within the customer’s product.

Revenue from contracts with customers is recognized using the following five steps:

a) Identify the contract(s) with a customer;

b) Identify the performance obligations (a good or service) in the contract;

c) Determine the transaction price; for each performance obligation within the contract

d) Allocate the transaction price to the performance obligations in the contract; and

e) Recognize revenue when (or as) the Company satisfies a performance obligation.

Contracts contain performance obligation(s) for the transfer goods or services to a customer. The performance obligations are a promise (or a group of promises) that are distinct. The transaction price is the amount of consideration a Company expects to receive from a customer in exchange for satisfying the performance obligations specified in the contract.

Contracts may contain one or more performance obligations (a good or service). Performance obligations are accounted for separately if they are distinct. A good or service is distinct if the customer can benefit from the good or service either on its own or together with other resources readily available to the customer, and the good or service is distinct in the context of the contract. Otherwise, performance obligations will be combined with other promised goods or services until the Company identifies a bundle of goods or services that is distinct.

The transaction price is allocated to all separate performance obligations within the contract based on their relative standalone selling prices (“SSP”). The best evidence for SSP is the price the Company would charge for that good or service when sold separately in similar circumstances to similar customers. If goods or services are not always sold separately, the Company would use the best estimate of SSP in the allocation of transaction price.

The transaction price reflects the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services, which may include an estimate of variable consideration to the extent that it is probable of not being subject to significant reversals in the future based on the Company’s experience with similar arrangements. The transaction price also reflects the impact of the time value of money if there is a significant financing component present in an arrangement. The transaction price excludes amounts collected on behalf of third parties, such as sales taxes.

Revenue is recognized when the Company satisfies each performance obligation identified within the contract by transferring control of the promised goods or services to the customer. Goods or services can transfer at a point in time or over time depending on the nature of the arrangement.

Deferred revenue represents the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration from the customer. Our payment terms do not vary by the type of products or services offered. The term between invoicing and when payment is due is not significant. During the year ended December 31, 2019,2022, the Company recognized $387$195 of revenue that was included in deferred revenue at the beginning of the period.

Contract assets exist when the Company has satisfied a performance obligation but does not have an unconditional right to consideration (e.g., because the entity first must satisfy another performance obligation in the contract before it is entitled to invoice the customer).

The Company transfers all of its goods and services electronically with the associated costs recorded in cost of sales in the Company’s Condensed Consolidated Statements of Operations.

Software. Revenue from the sale of software products is recognized when the control is transferred. For most of the Company’s software product sales, the control is transferred at the time the product is electronically transferred because the customer has significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time.

Statement of Work (SOW). Revenue from SOW (engineering services) is recognized upon completion, transfer and satisfaction of the performance obligations identified with in the contract by the customer.

Transactional revenue. For transactional type contracts, the Company’s performance obligations are met upon transfer of the software master to the customer. Revenue from transactional customers is recognized as the customer reports the number of units (signatures) rendered over the specified reporting period, generally three months.

Recurring Product revenue. The company has revenue contracts that allow the customer to utilize the Company’s signature software on an annual basis. Maintenance and support costs are included in the annual price to the customer. The customer has the right to renew or cancel the contract on an annual basis. Recurring revenue is recognized on a straight linestraight-line basis over the contract period, generally one year.

Maintenance and support. Maintenance and support services are satisfied ratably over time as the customer simultaneously receives and consumes the benefits of the services. As a result, support and maintenance revenue is recognized on a straight linestraight-line basis over the period of the contract.

Arrangements with Multiple Performance Obligations. The Company has, from time to time, revenue arrangements that include multiple performance obligations. The Company allocates transaction price to all separate performance obligations based on their relative standalone selling prices (“SSP”). The Company’s best evidence for SSP is the price the Company would charge for that good or service when the Company sells it separately in similar circumstances to similar customers. If goods or services are not always sold separately, the Company uses the best estimate of SSP in the allocation of transaction price. The Company’s process for determining best estimate of SSP involves management’s judgment, and considers multiple factors including, but not limited to, major product groupings, gross margin objectives and pricing practices. Pricing practices may vary over time, depending upon the unique facts and circumstances related to each deliverable. If the facts and circumstances underlying the factors considered change or should future facts and circumstances lead the Company to consider additional factors, the Company’s best estimate of SSP may also change.

Contract costs. The incremental costs of obtaining a contract are capitalized if the costs are expected to be recovered. Costs that are recognized as assets are amortized straight-line over the period as the related goods or services transfer to the customer. Costs incurred to fulfill a contract are capitalized if they are not covered by other relevant guidance, relate directly to a contract, will be used to satisfy future performance obligations, and are expected to be recovered.

There was no adjustment to the opening balance of accumulated deficit as of January 1, 2018 from adopting Topic 606.

Significant Judgments. The Company may exercise significant judgment when determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together.

Practical Expedients and Exemptions. Under Topic 606, incremental costs of obtaining a contract, such as sales commissions, are capitalized if they are expected to be recovered. Expensing these costs as they are incurred is not permitted unless they qualify for the practical expedient. The Company elected the practical expedient to expense the costs to obtain a contract as incurred when the expected amortization period is one year or less.

The Company elected the practical expedient under Topic 606 to not disclose the transaction price allocated to remaining performance obligations, since the majority of the Company’s arrangements have original expected durations of one year or less, or the invoicing corresponds to the value of the Company’s performance completed to date.

The Company elected the practical expedient that allows the Company to not assess a contract for a significant financing component if the period between the customer’s payment and the transfer of the goods or services is one year or less.

Allowance for Doubtful Accounts: The allowance for doubtful accounts is based on the Company’s assessment of the collectability of specific customer accounts and an assessment of international, political and economic risk as well as the aging of the accounts receivable. If there is a change in actual defaults from the Company’s historical experience, the Company’s estimates of recoverability of amounts due could be affected and the Company would adjust the allowance accordingly.

Long-lived assets: The Company evaluates the recoverability of its long-lived assets, including intangible assets at least annually or whenever circumstances or events indicate such assets might be impaired. The Company would recognize an impairment charge in the event the net book value of such assets exceeded the future undiscounted cash flows attributable to such assets. Estimation of future cash flows from the products considers the following additional factors:

Customer Base: To date, the Company’s electronic signature revenue has been derived primarily from financial service industry end-users and from resellers and channel partners serving the financial service industry primarily in North America, the ASEAN Region and Europe. The Company performs periodic credit evaluations of its customers and does not require collateral. The Company maintains reserves for potential credit losses. Historically, such losses have been within the range of management’s expectations.

Cost of sales:Cost of sales includes direct engineering labor and overhead for specific revenue based projects initiated by customers and maintenance projects specific to customer needs, along with third party services related to the Company’s transactional based revenues.

Research and Development Costs: development:

Research and development costs are charged asto expense as incurred.

Marketing:

The Company expenses advertising (marketing) costs as incurred. These expenses are outbound marketing expenses associated with participation in industry events, related sales collateral and email campaigns aimed at generating customer participation in webinars. There were no advertising expenses for the years ended December 31, 2022, and 2021, respectively.

Net Operating Loss Carry-forwards: Utilizationloss per share:

The Company calculates net loss per share under the provisions of the Company'srelevant accounting guidance. That guidance requires the disclosure of both basic net operating losses may beloss per share, which is based on the weighted average number of shares outstanding, and diluted loss per share, which is based on the weighted average number of shares and dilutive potential shares outstanding.

The number of shares of Common Stock subject to an annual limitation dueoutstanding options and shares issuable upon exercise of warrants excluded from the calculation of loss per share as their inclusion would be anti-dilutive are as follows:

Foreign currency assets and liabilities are translated into U.S. dollars at the end-of-period exchange rates except for long-term assets and liabilities, which are translated at historical exchange rates. Revenue and expenses are translated at the average exchange rates in effect during each period except for those expenses related to consolidated balance sheet amounts which are translated at historical exchange rates.

Net foreign currency transaction gains and losses are included in interest and other income, net in the ownership change limitations under Section 382accompanying consolidated statements of operations. Foreign currency transaction gains and losses in 2022 and 2021 were insignificant.

Income taxes:

Deferred tax assets and liabilities are recognized for the Internal Revenue Codeexpected tax consequences of temporary differences between the tax bases of assets and similar state provisions. As a result, a portion of the Company's net operatingliabilities and their financial statement reported amounts and for tax loss carry-forwards may not be available to offset future taxable income. The Company has provided a fulland credit carry-forwards. A valuation allowance foris provided against deferred tax assets at December 31, 2019 of approximately $16,858 based uponwhen it is determined to be more likely than not that the Company's history of losses.deferred tax asset will not be realized.

Segments:The Company reports its financial results in one segment.

Results of Operations – Years Ended December 31, 20192022, and December 31, 20182021

Revenue

For the year ended December 31, 2019,2022, total revenue was $844,$987, a decrease of $73,$91, or 8%, compared to total revenue of $917$1,078 in the prior year. For the year ended December 31, 2019,2022, software product revenue was $195,$332, a decrease of $10,$41, or 5%11%, compared to product revenue of $205$373 in the prior year. Maintenance revenue for the year ended December 31, 2019,2022, was $649,$655, a decrease of $63,$50, or 9%7%, compared to maintenance revenue of $712$705 in the prior year. The decrease in product revenue is primarily attributable to the Company’s effortsdecrease in SOW revenue in the year ended December 31, 2022. The decrease in maintenance revenue is primarily attributable to restructure its operations in favor of partner-generated recurring revenue, while existing customers continue to renew ongoingrenewing maintenance on new and previously purchased products.contracts at higher price points.

Cost of Sales

For the year ended December 31, 2019,2022, cost of sales was $121,$117, a decrease of $20,$17, or 14%13%, compared to cost of sales of $141$134 in the prior year. The decrease was primarily due to a decrease in direct engineering costs associated with the mix of engineering Statement of Work (“SOW”)service and software product revenue during the year ended December 31, 20192022, compared to the prior year.

Operating Expenses

Research and Development Expenses

For the year ended December 31, 2019,2022, research and development expenses were $630,$590, a decrease of $124,$43, or 16%8%, compared to research and development expenses of $754$547 in the prior year. Research and development expenses consist primarily of salaries and related costs, outside contract engineering, maintenance items, and allocated facility expenses. The most significant factors contributing to the decrease in research and development expenses was a decrease in stock option expense, a reduction in outside engineering expense and the reduction in allocated facilities expenses due to the move to smaller facilities half way through the prior year. These reductions were partially offset by a decrease in direct labor transfers to cost of sales due to the decrease in revenues. For the year ended December 31, 2019,2022, total research and development expenses before IT and cost of sales allocations were $750, a decrease$719, an increase of $184,$26, or 20%4%, compared to $934$693 of total research and development expenses before allocations in the prior year.

Sales and Marketing Expenses

For the year ended December 31, 2019,2022, sales and marketing expenses were $109, an increase$75, a decrease of $10,$21, or 10%22%, compared to sales and marketing expenses of $99$96 in the prior year. The increasedecrease was primarily attributable to an increasea decrease in commissions related to the renewalsales of certain maintenance contracts during the year.commissionable customer accounts.

General and Administrative Expenses

For the year ended December 31, 2019,2022, administrative expenses were $702, an increase$544, a decrease of $7,$18, or 1%3%, compared to administrative expenses of $695$562 in the prior year. Salaries andThe decrease was mainly due to a decrease in stock related expenses increased $22, or 3%, compared to the prior year. All other overhead expenses incurred duringcompensation expense the year decreased $15, or 3%.ended December 31, 2022. The decreases were offset by increases in other overhead.

Other Income (Expense), Net

Other income (expense), net, for the year ended December 31, 2019,2022, was an expense$0, a decrease of $63, an increase of $109,$125, or 237%100%, compared to income of $46$125 in the prior year. The increasedecrease in other income and expense is due primarily to $65 in amortization expensethe forgiveness of warrants issued in February 2019 related to long term deferred compensation.the paycheck protection program amount of $125.

Interest Expense

For the year ended December 31, 2019,2022, related party interest expense was $74,$161, an increase of $40,$34, or 118%27%, compared to related party interest expense of $34$127 in the prior year. For the year ended December 31, 2019,2022, other interest expense was $194, an increase$211, a decrease of $54,$11, or 39%5%, compared to other interest expense of $140$222 in the prior year. The increase in interest expense is primarily due to the increase in borrowings initiated during the last six months ofand interest associated with increases in foreign revenues compared to the prior year accruing interest for the full twelve months ended December 31, 2019, and an increase in the interest rate on unsecured notes from 6% to 10% for the year ended December 31, 2019.period.

For the year ended December 31, 2019,2022, the Company recorded $36$0 in debt discount amortization associated with its short-term borrowings. For the year ended December 31, 2022, the Company recorded $0 in debt discount amortization associated with its short-term borrowings, $10$0 of which is attributable to related parties and $26 of which is attributable to other investors, compared to $125 in the prior year, $35 of which is attributable to related parties and $90$0 of which is attributable to other investors. The decrease inAs of December 31, 2022, the entire amount of debt discount amortization was primarily due to the extension of the due date of the notes from December 31, 2018 to December 31, 2019. has been fully amortized.

The due date of the notes was extended again in November 20192022 to December 31, 2020.2023.

Liquidity and Capital Resources

CashAt December 31, 2022, cash and cash equivalents totaled $25$68, compared to cash and cash equivalents of $40 at December 31, 2019,2021. Net cash used by operating activities was $172. Cash of $203 was provided by financing activities, offset by $3 used in investing activities. At December 31, 2022, total current assets were $195, compared to $335total current assets of $186 at December 31, 2018.

The2021. At December 31, 2022, the Company’s principal sources of funds included its aggregated cash used in operations was primarily attributable to the net lossand cash equivalents of $1,086. This amount was partially offset by non-cash depreciation and amortization charges of $104 and stock-based employee compensation of $189.$68.

Cash out flows for the acquisition of property and equipment for the year ended December 31, 2019 was $9.

The Company received an advance of $33 in October 2019 against certain accounts receivable. The advance was repaid upon collection of the receivable in November of 2019 along with an advance fee of $2. The advance fee was charged to interest expense in November 2019.

Accounts receivable were $61$108 at December 31, 2019,2022, a decrease of $23,$16, or 27%13%, compared to accounts receivable of $84$124 at December 31, 2018. Accounts receivable at December 31, 2018 was net of $1 in allowances provided for potentially uncollectible accounts.2021. The decrease in accounts receivable is primarily attributable to a lower numbercollection of orders billedthe bills in the fourth quarteryear ended December 31, 20192022, compared to the prior year.

Prepaid expenses and other current assets were $22$19 at December 31, 2019,2022, a decrease of $24,$3, or 52%14%, compared to prepaid expenses and other current assets of $46$22 at December 31, 2018.2021. The decrease is primarilywas due to the transfer to cost of salesNormal amortization of prepaid engineering expense associated with current year revenue.insurance amounts.

Short-term debt was $2,246 net of $3 in discounts$3,272 at December 31, 2019.2022, an increase of $248, or 8%, compared to $3,024 in the prior year. See financing transactions below. Short term debt includes principal amount on notes for $3,046, accounts receivable advances of $181, and a vendor note of $45. The Company negotiated an extension of the due date of the notes to December 31, 2020.2023.

Accounts payable were $1,196$371 at December 31, 2019,2022, a decrease of $84,$7, or 7%2%, compared to $1,280$378 at December 31, 2018.2021. The decrease is due primarily to cost cutting efforts bya decrease in professional services compared to the Company.prior year.

AccruedThere was no change in the amount of accrued compensation was $71of $69 and deferred compensation of $219 at December 31, 2019, a decrease of $10 or 12%,2022, compared to $81 at December 31, 2018.the prior year. The decrease was due primarilydeferred compensation amount represents amounts owed to the payout of deferred compensation.former employees.

Other accrued liabilities including the long termlong-term portion were $1,483$2,608 at December 31, 2019,2022, compared to $1,189$2,096 at December 31, 2018,2021, an increase of $294,512, or 25%24%. The increase is primarily attributable to the accrual of certain franchise taxes and professional service fees, partially offset by the unamortized value of warrants issued associated with the long term deferred compensation of $146.fees.

Deferred revenue including the long-term portion, was $416$185 at December 31, 2019, an increase2022, a decrease of $99,$11, or 31%6%, compared to deferred revenue, of $317$196 at December 31, 2018.2021. The increasedecrease is primarily due to one customer renewing their maintenance contract on a time and material basis rather than an annual basis. The Company records deferred maintenance when the increase in the collection of maintenance billed in the fourth quarter of 2019.billing is collected.

Financing Transactions

Advances:

In October 2019,January 2022, the Company received, from unrelated parties, demand notes aggregating $50 in cash. The notes bear interest at the rate of 20% per annum. Principal and interest due shall be paid in full on demand, following ten (10) calendar day prior written notices starting on March 15, 2022. These notes may be prepaid in whole or in part at any time without penalty, premium or other consideration by giving at least five (5) business day prior written notice to the Holder.

On January 19 and February 9, 2022, the Company repaid $15 and $15, respectively, of accounts receivable advances from related parties along with $2 of accrued advance fees. In addition, during February 2022, the Company repaid $100 of demand notes to an investor, an advance inunrelated party along with 20% of accrued fees.

In October 2022, the amount of $33Company received, from related parties, advances aggregating $6 in cash against certain accounts receivable of the Company. Upon collection of thean invoice, the Company wouldagreed to repay the advance to the lenders on a pro rata basis together with a 3% advance fee.

Debt:

In March 2021, the Company received, from related parties, advances aggregating $25 in cash against certain accounts receivable of the Company. Upon collection of an invoice, the Company agreed to repay the advance to the lenders on a pro rata basis together with a 5% advance fee. The receivable was collected and $33 of the advances were repaid in November 2019, along with $2Company accrued $1 in advance fees per the agreement. The advance fee was recorded as interest expense on the Statement of Operations.

In April 2021, the Company re-paid $49 of Accounts Receivable Advances and $6 in accrued but unpaid 5% advance fees to an affiliate. In addition, the Company repaid to another affiliate $64 of Accounts Receivable Advances and $4 in accrued but unpaid 5% advance fees.

In July 2021, the Company received $10,000 in cash from an affiliate as an advance against certain accounts receivable. The company accrued a 5% advance fee and recorded $500 as interest expense during the three months ended September 30, 2021. Upon collection of the accounts receivable the Company will repay the advance plus the 5% fee.

In August and September 2021, the Company received $50,000 and $36,000, respectively in cash from an affiliate as advances against certain accounts receivable. The company accrued a 5% advance fees in August and September 2021, and recorded $4 as interest expense during the three months ended September 30, 2021. Upon collection of the accounts receivable the Company will repay the advances plus the 5% fee.

In December 2021, the Company re-paid $66 in Accounts Receivable Advances and $3 in accrued but unpaid 5% advance fees to two related parties.

In June 2022, the Company paid the second installment in the fourth quarter ended December 31, 2019.amount of $45 plus accrued interest of $4 of a note entered into associated with a settlement agreement dated July 1, 2020, with one of its vendors. The remaining $45 plus interest at the rate of 4% per annum is due in June of 2023

The interest rate on the Company’s unsecured notes was increased from 6% to 10% for the year ended December 31, 2019. During the twelve months ended December 31, 2019,On April 20, 2022, the Company accrued $268issued an aggregate of interest expense, $226 associated with the$125 in unsecured convertible notes, of which $74 was$70 to related parties and $152 was$55 to other investors.

The unsecured notes are convertible by the holder into common stock at any time at a price per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company recorded $36 in debt discount amortization forcan force conversion at a price equal to the twelve months endedlesser of $1.00 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2019 related2022.

On August 2022, the Company issued an aggregate of $50 in unsecured convertible notes to other investors. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the above debt financings, $10 waslesser of $1.00 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2022.

On November 2022, the Company issued an aggregate of $75 in unsecured convertible notes, $35 to related parties and $26 was$40 to other investors. In additionThe unsecured notes are convertible by the holder into common stock at any time at a price per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company recorded $65can force conversion at a price equal to the lesser of $1.00 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2023.

On December 2022, the Company issued an aggregate of $72 in amortization expense on warrants issued associated with long-term deferred compensation.unsecured convertible notes, $35 to related parties and $37 to other investors. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lesser of $1.00 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2023.

Contractual Obligations

The Company had no material commitments as of December 31, 2019.2022.

Item 7A.Quantitative and Qualitative Disclosures Aboutabout Market Risk

Interest Rate Risk. Any investments in fixed income securities are subject to interest rate risk and will fall in value if the market interest rates increase. The Company attempts to limit this exposure by investing primarily in short-term securities.

Foreign Currency Risk. The Company operates a joint venture in China and from time-to-time could make certain capital equipment or other purchases denominated in foreign currencies. As a result, the Company’s cash flows and earnings could be exposed to fluctuations in interest rates and foreign currency exchange rates. The Company would attempt to limit any such exposure through operational strategies and generally has not hedged currency exposure.

Future Results and Stock Price Risk. The Company’s stock price may be subject to significant volatility. The public stock markets have experienced significant volatility in stock prices in recent years. The stock prices of technology companies have experienced particularly high volatility, including, at times, severe price changes that are unrelated or disproportionate to the operating performance of such companies. The trading price of the Company’s Common Stock could be subject to wide fluctuations in response to, among other factors, quarter-to-quarter variations in operating results, announcements of technological innovations or new products by the Company or its competitors, competitor consolidation in the industry, announcements of new strategic relationships by the Company or its competitors, general conditions in the computer software industry or the global economy generally, or market volatility unrelated to the Company’s business and operating results. The impact and severity of the above factors could be exacerbated by the Company’s small size, public float and a lack of market liquidity for its Common Stock.

Risks and Uncertainties.In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S.  On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.  In addition, several states in the U.S., including California, where the Company is headquartered, have declared a state of emergency.  The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a wide range of industries.  The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and cannot be predicted.  At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain.

Item 8.Financial Statements and Supplementary Data

The Company’s audited consolidated financial statements for the years ended December 31, 20192022, and 2018,2021, and for each of the years in the two-year period ended December 31, 2019,2022, begin on page F-1 of this Annual Report on Form 10-K, and are incorporated into this item by reference.

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None

Item 9A.Controls and Procedures

Disclosure Controls and Procedures

The Company carried out an evaluation as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 and 15d-15 under the Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation the Chief Executive Officer and the Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that the information required to be disclosed in reports we file or submit under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The Company does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedures are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The Company considered these limitations during the development of its disclosure controls and procedures, and will continually reevaluate them to ensure they provide reasonable assurance that such controls and procedures are effective.

Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Management has assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria established in “Internal Control, Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In performing this assessment, management identified the following material weaknesses:

As a small company with limited resources that are mainly focused on the development and sales of software products and services, iSign does not employ a sufficient number of staff in its finance department to possess an optimal segregation of duties or to provide optimal levels of oversight. This has resulted in certain audit adjustments and management believes that there may be a possibility for a material misstatement to occur in future periods while it employs the current number of personnel in its finance department.

Based on its assessment, our management concluded that, as of December 31, 2019,2021, our internal control over financial reporting was not effective. Management believes that the identified weaknesses have not affected our ability to present GAAP-compliant financial statements in this Form 10-K. During the year-end financial statement close the Company was able to adjust its financial records to properly present its financial statements and we were therefore able to present GAAP-compliant financial statements. Management does not believe that its weakness with respect to its procedures and controls have had a pervasive effect upon our financial reporting due to our ability to make the necessary reconciling adjustments to our financial statements.

Management’s Remediation Initiatives

Management conducts a number of activities to address the material weaknesses noted above, including but not limited to the following:

Elements of our remediation plan can only be accomplished over time, and we can offer no assurances that those initiatives will ultimately have the intended effects. Ultimately, revenue growth and performance improvements are the most likely avenue to greater resources that will improve the Company’s internal controls.

Management will continue the process of reviewing existing controls, procedures and responsibilities to more closely identify financial reporting risks and the required controls to address them. Key control and compensating control procedures will be developed to ensure that material weaknesses are properly addressed and related financial reporting risks are mitigated. Periodic control validation and testing will also be implemented to ensure that controls continue to operate consistently and as designed.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 20192021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.reporting.

Item 9B.Other Information

None.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

PART III

Item 10.Directors, Executive Officers, and Corporate Governance

Directors and Executive Officers

The following table sets forth certain information concerning the Company’s directors and executive officers:

The business experience of each of the directors and executive officers for at least the past five years includes the following:

Philip S. Sassower has served as the Company’s Chairman and Chief Executive Officer since August 2010, and Co-Chairman since October 2015. Mr. Sassower is a Managing Director of SG Phoenix LLC, a private equity firm, and has served in that capacity since May 2003. Mr. Sassower has also been Chief Executive Officer of Phoenix Enterprises LLC, a private equity firm, and has served in that capacity since 1996. In addition, and until his retirement in October 2017, Mr. Sassower served as Chief Executive Officer of Xplore Technologies Corp. (NASDAQ:XPLR) from February 2006 and as a director of Xplore Technologies Corp. and served as Chairman of its board of directors since December 2004. Mr. Sassower also served as Chairman of the Board of The Fairchild Corporation (NYSE: FA), a motorcycle accessories and aerospace parts and services company. Mr. Sassower also served as Chairman of the Board of the Company from 1998 to 2002 and as Co-Chief Executive Officer of the Company from 1997 to 1998. Mr. Sassower is co-manager of the managing member of Phoenix Venture Fund LLC. Mr. Sassower’s qualifications to serve on the Board of Directors include more than 40 years of business and investment experience. Mr. Sassower was elected to be the Chairman of the Board of Birch Wathen Lenox School, NY, NY in May 2022. Mr. Sassower has developed extensive experience working with management teams and boards of directors, and in acquiring, investing in, and building companies and implementing changes.

Michael Engmannhas served as the Company’s CFO since July 2021, Co-Chairman since October 2015, and as the Company’s Chief Operating Officer since May 2017. Mr. Engmann is Chairman of Engmann Options,Options; a family trading and investment holding company and has served in that capacity since 1978. Mr. Engmann has approximately 40 years of experience in building successful financial service companies. He began his career as a trader and was one of the early market-makers in the Pacific Stock Exchange’s options program. He (i) founded, in 1980, Sage Clearing Corporation, a stock and options clearing company for professional traders, which was sold to ABN Amro Inc. in 1988, (ii) founded, in 1982, Preferred Trade, Inc., a broker-dealer providing research and trade execution services, which was sold to Fimat in May 2005, and (iii) acquired in 2001 Revere Data LLC, a global financial and market data company, which was sold to Factset in 2013.in2013. Mr. Engmann’s qualifications to serve on the Board of Directors include more than 40 years of business and investment experience.

Andrea Gorenhas served as a director since August 2010. Mr. Goren was appointedheld the office of the Company’s Chief Financial Officer infrom December 2010.2010 to June of 2021. Mr. Goren was named Chief Financial Officer of INVO Bioscience, Inc. (NASDAQ: INVO), a medical device company, in June 2021 and is a Managing Director of SG Phoenix LLC, a private equity firm, and has served in that capacity since May 2003. Mr. Goren is co-manager of the managing member of Phoenix Venture Fund LLC, the Company’s largest shareholder. Prior to that, Mr. Goren served as Vice President of Shamrock International, Ltd., a private equity firm. Mr. Goren has beenwas a director of Xplore Technologies Corp. (NASDAQ:XPLR) sincefrom December 2004 to July 2018, and a director of The Fairchild Corporation (NYSE: FA) from May 2008 to January 2010. Mr. Goren’s qualifications to serve on the Board of Directors include his experience and knowledge acquired in approximately 20over 23 years of private equity investing and his extensive experience working with management teams and boards of directors.

Francis J. Elenio has served as a director since November 2015, after having served as a director of the Company from August 2010 to October 2011. Since November 2005, Mr. Elenio has served as Managing Director of Reeff Consulting LLC, a financial and business advisory firm providing outsourced accounting and consulting services for start-up to midsized companies. Mr. Elenio also served as Chief Financial Officer of Signal Point Communications Corp. from February 2011 to October 2013. Mr. Elenio has over 25 years of experience working with corporations as a strategic, solution-driven professional focused on finance and accounting, operations and turn-around management. Mr. Elenio has served at the CFO level at numerous public and private companies, including Wilshire Enterprises, Inc., a real estate investment and management company, WebCollage,Web Collage, Inc., an internet content integrator for manufacturers, GoAmerica,Go America, Inc., a wireless internet service provider and Roomlinx, Inc., a provider of wireless high speed internet access to hotels and conference centers. Mr. Elenio is a CPA and received an MBA. Since September 2007, Mr. Elenio has also been an Adjunct Professor of Finance at Seton Hall University. Mr. Elenio serves on the Company’s audit committee. Mr. Elenio’s qualifications to serve on the Board of Directors and Audit Committee include his experience as a CFO working with technology companies like iSign.

Stanley L. Gilberthas served as a director since October 2011. Mr. Gilbert has more than 4556 years of experience as a lawyer with primary specialties in wills, trusts, estate planning and administration, as well as tax planning. Mr. Gilbert is Founder and has been President of Stanley L. Gilbert PC since 1982. Mr. Gilbert has also been a partner of a number of law firms, including Nager Korobow, Bell Kallnick Klee and Green, and Migdal Pollack Rosenkrantz and Sherman. Mr. Gilbert has served as a Director of Planned Giving at Columbia University Medical Center’s Nathaniel Wharton Fund, which supports a broad variety of projects in basic research, clinical care and teaching since 2001. Mr. Gilbert was elected by a majority of iSign’s Series B Preferred Stock and Series C Preferred stockholders voting together as a separate class on an as converted to Common Stock basis and serves on iSign’s audit and compensation committees. Mr. Gilbert’s qualifications to serve on the Board of Directors include his significant tax and accounting expertise acquired through his years of practicing law.

Jeffrey Holtmeier has served as a director since August 2011. Mr. HoltmeierJeff has more than 2530 years of successful entrepreneurship inentrepreneurial track record and was awarded the technology and communications fields. As CEO of GENext from 2001 to present, and through its subsidiary China US Business Development, LLC, Mr. Holtmeier has assisted many US companies in establishing relationships in China, where he also co-founded Koncept International, Inc., a Chinese-based VoIP and digital media technology company. Prior to his involvement in the Chinese market, Mr. Holtmeier founded, built over seventeen years and successfully sold InfiNET in 2001 to Teligent, a NASDAQ listed company. Mr. Holtmeier was a recipient of the prestigious coveted USA Today/NASDAQ/Ernst & Young NASDAQ/USA Today “EntrepreneurEntrepreneur of the Year” award in 1999,Year honor and was a finalist for the International Business Award. Jeff also has served on the boards of numerous corporations and non-profit organizations. He serves on iSign’s audit and compensation committees. Mr. Holtmeier’s qualifications to serve on the Board of Directors include hisdeep boardroom experience as a successful entrepreneurresult of service on the Boards of Directors of several U.S. and Chinese companies, both public and private. He is also a significant contributor in the non-profit world in his experience in establishing business relationships in China.local community, with over thirty years of board leadership and service for programs addressing homelessness and people with special needs.

David E. Welchhas served as a director since March 2004. From July 2002 to present Mr. Welch has been the principal of David E. Welch Consulting, a financial consulting firm. Mr. Welch has also been Vice President of Operations at Vertex Innovations, Inc., from June 2015 to April 2017. Mr. Welch was Vice President and Chief Financial Officer of American Millennium Corporation, Inc., a provider of satellite-based asset tracking and reporting equipment, from April 2004 to September 2014. Mr. Welch was Vice President and Chief Financial Officer of Active Link Communications, a manufacturer of telecommunications equipment, from 1999 to 2002. Mr. Welch has held positions as Director of Management Information Systems and Chief Information Officer with Micromedex, Inc. and Language Management International from 1995 through 1998. Mr. Welch other directorships have been with AspenBioAspen Bio Pharma, Inc., from 2004 to 2017, PepperBallPepper Ball Technologies, Inc. from January 2007 to January 2009 and Advanced Nutraceuticals, Inc., from 2003 to 2006. Mr. Welch is a Certified Public Accountant licensed in the state of Colorado. He serves on iSign’s audit and compensation committees. Mr. Welch’s qualifications to serve on the Board of Directors include his significant accounting and financial expertise.expertise.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s officers, directors and persons who own more than ten percent of a registered class of the Company’s equity securities to file certain reports with the SEC regarding ownership of, and transactions in, the Company’s securities. These officers, directors and stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) reports that are filed with the SEC. The following individuals Section 16 filings of Form 4’s dated February 6, 2019 were not timely filed for the year ended December 31, 2019: Messrs. Elenio, Engmann, Gilbert, Goren, Holtmeier, Sassower and Welch.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics, referred to as our Code of Business Conduct and Ethics, which applies to all of our directors, officers, and employees, including our principal executive officer, our principal financial and accounting officer, and our Chief Technology officer. A copy of the Code of Business Conduct and Ethics is posted on the Company’s web site, at www.isignnow.com.

Audit Committee Financial Expert

Mr. Welch serves as the Audit Committee’s financial expert. Each member of the Audit Committee is independent as defined under the applicable rules and regulations of the SEC and the director independence standards of the NASDAQ Stock Market, as currently in effect.

Item 11.Executive Compensation

Summary Compensation Table (in dollars)

Mr. Engmann is retained by the Company without an agreement. Mr. Engmann’s service as Chief Financial Officer and Co-Chairman and Chief Operating Officer is month to month. Mr. Engmann is currently entitled to receive a cash sum payment of $5,000$6,500 per month. The Company has agreed to pay Mr. Engmann for reasonable and documented out of pocket expenses incurred for Services rendered by him, as long as he obtains written approval of the Company prior to incurring any significant expense.

Mr. Goren isand Mr. Sassower are retained by the Company through an Advisory Services Agreement (the “SGP Agreement”) with SG Phoenix LLC (“SGP”). Mr. Goren and Mr. Sassower are managing members of SGP. The initial term of the SGP Agreement was two years and it automatically renews for additional one year periods upon the same terms and conditions unless either party notifies the other in writing of its intent to terminate at least 90 days prior to the then-current term. SGP currently is entitled to receive a cash sum payment of $7,500$6,500 (“SGP Fee”) per month. In addition, SGP is eligible for, but not entitled to receive, an annual cash performance fee of up to thirty-five percent (35%) of the SGP Fee during a given year or prorated portion thereof. Such performance fee, if any, would be awarded based upon the sole discretion of the Company’s Board of Directors. No performance fee was paid to SGP in 2019.2020. Under the SGP Agreement, SGP furnishes, at its own expense, all materials and equipment necessary to carry out the terms of the SGP Agreement. The Company has agreed to pay SGP for reasonable and documented out of pocket expenses incurred for services rendered by SGP during the term of the SGP Agreement, as long as SGP obtains written approval of the Company prior to incurring any significant expense.

Outstanding Equity Awards at December 31, 20192022

The following table summarizes the outstanding equity award holdings held by our named executive officers. The amounts are not stated in thousands.

Option Exercises and Stock Vested

There were no stock options exercised during the twelve months ended December 31, 20192022, and 2018.2021.

Director Compensation

The following table provides information regarding the compensationnon-employee directors of the Company’s non-employee directorsreceived no compensation for the year ended December 31, 2019:2022:

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information as of March 20, 2019,December 31, 2022, with respect to the beneficial ownership of (i) any person known to be the beneficial owner of more than 5% of any class of voting securities of the Company, (ii) each director and director nominee of the Company, (iii) each of the current executive officers of the Company named in the Summary Compensation Table under the heading “Executive Compensation” and (iv) all directors and executive officers of the Company as a group. Except as indicated in the footnotes to this table (i) each person has sole voting and investment power with respect to all shares attributable to such person and (ii) each person’s address is c/o iSign Solutions, Inc., 2033 Gateway Place, Suite 659,662, San Jose California 95110-1413. The amounts are not stated in thousands.

* Less than 1%.

Equity Compensation Plan Information

The following table provides information as of December 31, 2019,2022, regarding our compensation plans (including individual compensation arrangements) under which equity securities are authorized for issuance:

Item 13.Certain Relationships and Related Transactions, and Director Independence

Procedures for Approval of Related Person Transactions

In accordance with our Code of Business Conduct and Ethics, we submit all proposed transactions involving our officers and directors and related parties, and other transactions involving conflicts of interest, to the Board of Directors or the Audit Committee for approval. Each of the related party transactions listed below that were submitted to our board were approved by a disinterested majority of our Board of Directors after full disclosure of the interest of the related party in the transaction.

Director Independence

The Board of Directors has determined that Messrs. Gilbert, Holtmeier, Elenio and Welch are “independent,” as defined under the rules of the NASDAQ Stock Market relating to director independence, and Messrs. Sassower, Engmann and Goren are not independent under such rules. Messrs. Welch, Gilbert, and Holtmeier serve on the Compensation Committee of the Board of Directors. Each of the members of the Compensation Committee is independent under the rules of the NASDAQ Stock Market relating to director independence. Messrs. Welch, Elenio and Holtmeier serve on the Audit Committee of the Board of Directors. Under the applicable rules of the NASDAQ Stock Market and the SEC relating to independence of Audit Committee members, the Board of Directors has determined that Messrs. Welch, Holtmeier and Elenio are independent.

Related Party Transactions

Phoenix is the beneficial owner of approximately 18.2%16.9% of the Common Stock of the Company when calculated in accordance with Rule 13d-3.13d-3

In October 2019,On April 20, 2022, the Company received from Michael Engmann,issued an aggregate of $70 in unsecured convertible notes to related parties. The unsecured notes are convertible by the holder into common stock at any time at a related party, an advanceprice per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the amountCompany can force conversion at a price equal to the lesser of $33 in cash against certain accounts receivable$1.00 per share or the price per share of the Company.new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2022.

On November 2022, the Company issued an aggregate of $35 in unsecured convertible notes to related parties. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $1.00. Upon collectionclosing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lesser of $1.00 per share or the price per share of the invoice,new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2023.

On December 2022, the Company would repayissued an aggregate of $35 in unsecured convertible notes to related parties. and $37 to other investors. The unsecured notes are convertible by the advanceholder into common stock at any time at a price per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lender on a pro rata basis together with a 5% advance fee. The receivable was collected and $33lesser of $1.00 per share or the price per share of the advances were repaid in November 2019, along with $2 in advance feesnew financing. The notes bear interest at the rate of 10% per the agreement. The advance fee was recorded as interest expense in the fourth quarter endedannum and are due December 31, 2019.2023.

The table below reflects the February 6, 2019There were no stock option grants to the named affiliates of the Company. The options have a seven year life and vest quarterly over three years.Company during the twelve months ended December 31, 2022.

Debt discount amortization associated with the Company’s indebtedness for the years ended December 31, 20192022, and 2018,2021, was $36$0 and $125,$0, respectively, of which $10$0 and $35,$0, respectively, was related party expense.

Interest expense associated with the Company’s indebtedness for the years ended December 31, 20192022, and 2018,2021, was $268$372 and $174,$267 respectively, of which $74$161 and $34,$122, respectively, was related party expense.

Item 14.Principal Accounting Fees and Services

Audit and other Fees. Armanino LLPM&K, PLLC has been the Company’s auditors since June 2020. Armanino LLP was the Company’s auditors since from August 2014. During fiscal years 20192022 and 2018,2021, the fees for audit and other services performed by M&K PLLC and Armanino LLP for the Company were as follows: