Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-15465 | |
Entity Registrant Name | Intellicheck, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 11-3234779 | |
Entity Address, Address Line One | 200 Broadhollow Road | |
Entity Address, Address Line Two | Suite 207 | |
Entity Address, City or Town | Melville | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11747 | |
City Area Code | (516) | |
Local Phone Number | 992-1900 | |
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 (in shares) | 18,950,812 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001040896 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 11,775 | $ 13,651 |
Accounts receivable, net of allowance of $9 and $3 at September 30, 2022 and December 31, 2021, respectively | 2,635 | 2,192 |
Other current assets | 467 | 643 |
Total current assets | 14,877 | 16,486 |
PROPERTY AND EQUIPMENT, net | 772 | 737 |
GOODWILL | 8,102 | 8,102 |
INTANGIBLE ASSETS, net | 299 | 378 |
OTHER ASSETS | 8 | 8 |
Total assets | 24,058 | 25,711 |
CURRENT LIABILITIES: | ||
Accounts payable | 614 | 368 |
Accrued expenses | 2,036 | 2,870 |
Equity awards liability | 100 | 378 |
Liability for shares withheld | 1,244 | 1,244 |
Deferred revenue, current portion | 1,730 | 1,266 |
Total current liabilities | 5,724 | 6,126 |
OTHER LIABILITIES: | ||
Deferred revenue, long-term portion | 2 | 8 |
Total liabilities | 5,726 | 6,134 |
COMMITMENTS AND CONTINGENCIES (Note 9) | ||
STOCKHOLDERS’ EQUITY: | ||
Common stock - $.001 par value; 40,000,000 shares authorized; 18,930,512 and 18,660,369 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 19 | 19 |
Additional paid-in capital | 148,500 | 146,455 |
Accumulated deficit | (130,187) | (126,897) |
Total stockholders’ equity | 18,332 | 19,577 |
Total liabilities and stockholders’ equity | $ 24,058 | $ 25,711 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 9 | $ 3 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 18,930,512 | 18,660,369 |
Common stock, shares outstanding (in shares) | 18,930,512 | 18,660,369 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
REVENUES | $ 4,012 | $ 4,831 | $ 11,415 | $ 12,491 |
COST OF REVENUES | (358) | (1,510) | (1,038) | (3,200) |
Gross profit | 3,654 | 3,321 | 10,377 | 9,291 |
OPERATING EXPENSES | ||||
Selling, general and administrative | 2,917 | 2,930 | 8,985 | 11,688 |
Research and development | 1,461 | 1,416 | 4,682 | 4,105 |
Total operating expenses | 4,378 | 4,346 | 13,667 | 15,793 |
Loss from operations | (724) | (1,025) | (3,290) | (6,502) |
OTHER INCOME | ||||
Gain on forgiveness of unsecured promissory note | 0 | 0 | 0 | 10 |
Interest and other income | 0 | (1) | 0 | 6 |
Total other income | 0 | (1) | 0 | 16 |
Net loss | $ (724) | $ (1,026) | $ (3,290) | $ (6,486) |
Loss per common share - | ||||
Basic (in dollars per share) | $ (0.04) | $ (0.06) | $ (0.17) | $ (0.35) |
Diluted (in dollars per share) | $ (0.04) | $ (0.06) | $ (0.17) | $ (0.35) |
Weighted average common shares used in computing per share amounts - | ||||
Basic (in shares) | 18,918,596 | 18,642,463 | 18,802,892 | 18,580,012 |
Diluted (in shares) | 18,918,596 | 18,642,463 | 18,802,892 | 18,580,012 |
CONDENSED STATEMENTS OF STOCKHO
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2020 | 18,410,458 | |||
Beginning balance at Dec. 31, 2020 | $ 22,211 | $ 18 | $ 141,612 | $ (119,419) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 2,270 | 2,270 | ||
Exercise of stock options, net of cashless exercise of 58,122 shares and 92,634 shares withheld (in shares) | 206,545 | |||
Exercise of stock options, net of cashless exercise of 58,122 shares and 92,634 shares withheld | 1,756 | $ 1 | 1,755 | |
Exercise of warrants (in shares) | 9,000 | |||
Exercise of warrants | 20 | 20 | ||
Issuance of shares for vested restricted stock grants (in shares) | 17,278 | |||
Net loss | (6,486) | (6,486) | ||
Ending balance (in shares) at Sep. 30, 2021 | 18,643,281 | |||
Ending balance at Sep. 30, 2021 | 19,771 | $ 19 | 145,657 | (125,905) |
Beginning balance (in shares) at Jun. 30, 2021 | 18,634,918 | |||
Beginning balance at Jun. 30, 2021 | 20,158 | $ 19 | 145,018 | (124,879) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 639 | 639 | ||
Issuance of shares for vested restricted stock grants (in shares) | 8,363 | |||
Net loss | (1,026) | (1,026) | ||
Ending balance (in shares) at Sep. 30, 2021 | 18,643,281 | |||
Ending balance at Sep. 30, 2021 | 19,771 | $ 19 | 145,657 | (125,905) |
Beginning balance (in shares) at Dec. 31, 2021 | 18,660,369 | |||
Beginning balance at Dec. 31, 2021 | 19,577 | $ 19 | 146,455 | (126,897) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 2,045 | 2,045 | ||
Issuance of shares for vested restricted stock grants (in shares) | 270,143 | |||
Net loss | (3,290) | (3,290) | ||
Ending balance (in shares) at Sep. 30, 2022 | 18,930,512 | |||
Ending balance at Sep. 30, 2022 | 18,332 | $ 19 | 148,500 | (130,187) |
Beginning balance (in shares) at Jun. 30, 2022 | 18,875,580 | |||
Beginning balance at Jun. 30, 2022 | 18,360 | $ 19 | 147,804 | (129,463) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 696 | 696 | ||
Issuance of shares for vested restricted stock grants (in shares) | 54,932 | |||
Net loss | (724) | (724) | ||
Ending balance (in shares) at Sep. 30, 2022 | 18,930,512 | |||
Ending balance at Sep. 30, 2022 | $ 18,332 | $ 19 | $ 148,500 | $ (130,187) |
CONDENSED STATEMENTS OF STOCK_2
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) | 9 Months Ended |
Sep. 30, 2021 shares | |
Statement of Stockholders' Equity [Abstract] | |
Exercise of stock options, cashless exercise (in shares) | 58,122 |
Exercise of stock options, shares withheld (in shares) | 92,634 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,290) | $ (6,486) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities | ||
Depreciation and amortization | 209 | 126 |
Stock-based compensation | 1,768 | 6,006 |
Bad debt expense | (9) | (3) |
Forgiveness of unsecured promissory note | 0 | (10) |
Changes in assets and liabilities: | ||
Increase in accounts receivable | (434) | (654) |
Decrease (increase) in other current assets and long term assets | 176 | (534) |
(Decrease) increase in accounts payable and accrued expenses | (588) | 991 |
Increase in deferred revenue | 457 | 971 |
Net cash (used in) provided by operating activities | (1,711) | 407 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (165) | (339) |
Net cash used in investing activities | (165) | (339) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Return of repayment on unsecured promissory note | 0 | 10 |
Net proceeds from issuance of common stock from exercise of stock options | 0 | 46 |
Proceeds from issuance of common stock from exercise of warrants | 0 | 20 |
Net cash provided by financing activities | 0 | 76 |
Net (decrease) increase in cash | (1,876) | 145 |
CASH, beginning of period | 13,651 | 13,121 |
CASH, end of period | 11,775 | 13,266 |
Supplemental disclosure of noncash investing and financing activities: | ||
Reclassification of stock option awards | $ 0 | $ 1,411 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS | NATURE OF BUSINESS Business Intellicheck, Inc. (the “Company” or “Intellicheck”) is a prominent technology company that is engaged in developing, integrating and marketing identity verification solutions to address challenges that include commercial retail and banking fraud prevention. Intellicheck’s products include solutions for preventing identity fraud across any industry delivered via smartphone, tablet, POS ("Point of Sale") integration or other electronic devices. Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of seventeen (17) U.S. and one Canadian patents, as well as two U.S. patents pending. Liquidity For the nine months ended September 30, 2022, the Company incurred a net loss of $3,290 and used cash in operations of $1,711. As of September 30, 2022, the Company had cash and cash equivalents of $11,775, working capital of $9,153 and an accumulated deficit of $130,187. Based on the Company’s business plan and cash resources, Intellicheck expects its existing and future resources and revenues generated from operations to satisfy its working capital requirements for at least the next 12 months from the date of filing. As of the filing of this Form 10-Q, the COVID-19 pandemic, which first began affecting the Company in the first quarter of 2020, has impacted the Company’s business by a temporary decline in revenues from its customers. The Company’s total revenues decreased for the nine months ended September 30, 2022 compared to the same period of 2021, primarily due to lower equipment revenues in the current period. Though the Company has had an increase in SaaS revenues for the nine months ended September 30, 2022 compared to the same period of 2021, the COVID-19 pandemic may continue to impact our business directly and/or indirectly for the foreseeable future. Although most of the restrictions previously imposed by local and national governmental authorities have been lifted or eased, should cases increase, these restrictions could be re-implemented, especially given the emergence of more transmissible variants such as Omicron BA.5 and BQ.1. The Company is further unable to accurately predict the full impact that the COVID-19 pandemic will have on its results of operations or financial condition due to numerous factors that are not within its control, including the duration and severity of further outbreaks together with any potential statewide or local closures or restrictions if cases increase, the spread of COVID-19 variants, including, but not limited to, BA.5 and BQ.1 variants, and the widespread adoption of vaccination measures including booster regimens and the effectiveness of preventing further spread or limiting acute sickness or hospitalizations. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States of America for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2022 and the results of operations, stockholders’ equity and cash flows for the nine months ended September 30, 2022 and 2021. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the nine-month period ended September 30, 2022, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2022. The balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. References in this Quarterly Report on Form 10-Q to “authoritative guidance” is to the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”). For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2021. Stock-Based Compensation The Company determined that a cashless withholding to satisfy personal income tax obligations from certain option awards for a single individual exercised in the third quarter of 2020 and the first quarter of 2021, caused the underlying options to no longer qualify as equity awards and should have instead been classified as liability awards commencing on the date of exercise. The change in the classification of these specific awards to liability classified awards requires the Company to remeasure the fair value of the awards at the end of each reporting period they remain outstanding, with the increase or decrease in fair value correspondingly charged or credited to selling, general and administrative expenses in arriving at net income. Separately, the Company failed to sell a group of surrendered shares and did not remit the equivalent amount of funds to the tax authorities for the 2021 exercise. To date, the Company has not returned the shares or otherwise reimbursed the effected individuals for the shares withheld during 2021. The Company is currently in the process of arranging payment to individuals, which is shown as the liability for shares withheld on the condensed balance sheet and income statements, and is expected to be completed during the fourth quarter of 2022. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments to measure credit losses on financial instruments, including trade receivables. The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. The guidance is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. The Company does not expect this standard will have a material impact on its financial statements because of the short-term nature of it's outstanding accounts receivable. Use of Estimates The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, deferred tax valuation allowances, allowance for doubtful accounts, revenue recognition (including breakage revenue) and the fair value of stock options under the Company’s stock-based compensation plan. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates. Research and Development The Company’s research and development efforts are mainly concentrated in the area of identify verification. Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include consulting fees, software and subscription services, and third-party cloud infrastructure expenses incurred in maintaining our platform. Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay. Cash and Cash Equivalents We classify as cash equivalents time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase. Our cash and cash equivalents consist primarily of cash on deposits with banks and is maintained with major financial institutions in the United States. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, however amounts may exceed FDIC insured limits. Property and Equipment Property and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three Goodwill Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter on December 31st, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform step one of the quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. The Company performed its annual impairment test of goodwill in the fourth quarter for the year ended December 31, 2021. For the three and nine months ended September 30, 2022 and 2021, the Company determined no impairment charge was required. Intangible Assets Intangible assets include patents, copyrights, and developed technology. The Company amortizes these assets on a straight-line basis over their estimated useful lives, as it represents the pattern of economic benefits consumed. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. There were no impairment charges recognized during the three and nine months ended September 30, 2022 and 2021. Advertising Costs Advertising costs, which are charged to expense as incurred, were $545 and $486 for the nine months ended September 30, 2022 and 2021, respectively. Advertising costs were $155 and $245 for the three months ended September 30, 2022 and 2021, respectively. These costs are recorded as a component of selling, general and administrative expenses on the Statements of Operations. Retirement Plan The Company has a retirement savings 401(k) plan. The plan permits eligible employees to make voluntary contributions to a trust, up to a maximum of 35% of compensation, subject to certain limitations. The Company has elected to contribute a matching contribution equal to 50% of the first 6% of an eligible employee’s deferral election. The Company’s matching contributions were $90 and $73 for the nine months ended September 30, 2022 and 2021, respectively. The Company’s matching contributions were $30 and $29 for the three months ended September 30, 2022 and 2021, respectively. These costs were recorded as a component of selling, general and administrative expenses on the Statements of Operations. Shipping Costs The Company’s shipping and handling costs related to sales are included in cost of revenues for all periods presented. All other shipping and handling costs are included as a component of selling, general and administrative expenses on the Statements of Operations. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company has recorded a full valuation allowance for its net deferred tax assets as of September 30, 2022 and December 31, 2021, as it is more likely than not these assets may not be fully realized due to the uncertainty of the realizability of those assets. Fair Value of Financial Instruments The Company adheres to the provisions of ASC 820, “Fair Value Measurement” which requires the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value of those financial instruments is different than the book value. The Company’s financial instruments include cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses. At September 30, 2022 and December 31, 2021, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature. Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: • Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. With the exception of the Company’s liability classified stock options, all of the Company’s financial instruments are categorized as Level 1 within the fair value hierarchy. • Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company had $100 and $378 of Level 2 liabilities as of September 30, 2022 and December 31, 2021 respectively, for the liability classified stock options. • Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company had no Level 3 assets or liabilities as of September 30, 2022 and December 31, 2021. Revenue Recognition and Deferred Revenue General Most license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. During 2021, the Company adopted an additional revenue model where customers purchase a predetermined number of transactions for the term of the contract. Revenue for these transactions is recognized on a per transaction basis. The Company estimates the number of transactions that will be unused by the end of each contract period and recognizes a portion of that revenue as breakage revenue each reporting period. If the Company expects the customer to use all transactions in the specified service period, the Company will recognize the transaction price as revenue in the specified service period as the promised units of service are transferred to the customer. Alternatively, if the Company expects that the customer cannot or will not use all transactions in the specified service period (referred to as “breakage”), the Company will recognize the estimated breakage amount as revenue ratably over the service period in proportion to the revenue that the Company will recognize for actual transactions used by the customer in the service period. Actual results could differ from estimates and as such differences may be material to the financial statements. Invoicing is based on schedules established in customer contracts. Payment terms are generally established from 30 to 60 days from the invoice date. Product returns are recorded as a reduction to revenue as they are returned. Revenue is measured based on the consideration specified in a contract with a customer. Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: Software as a Service (SaaS) Software as a service (SaaS) for hosted subscription services allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time, under the fixed pricing model, based on the usage of the hosted subscription services, which can vary from month to month. Under the per-scan revenue model, the customer requires access to our hosted subscription service but revenue is recognized each time the customer scans an identity document. Equipment Revenue Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received. When sales of equipment occur we recognize shipping and handling costs with the sales of equipment that are recognized as revenue. Other Revenue Other Revenues, which historically have not been material, consist primarily of revenues from other subscription and support services, non-recurring services, and extended warranties. The Company’s revenues from other subscription and support services includes jurisdictional updates to certain commercial customers and support services particularly to its Defense ID® customers. These subscriptions require continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of locations in a given month multiplied by a fee per location. Non-recurring services include items such as training, installation, customization, and configuration. The Company recognizes revenue from non-recurring services contracts ratably over the service contract period as the customer consumes the benefit as it is provided, and the Company’s performance obligation has been satisfied. Extended warranty revenues are generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate to the Company’s standard warranty of usually one year that it receives from its vendor. Disaggregation of revenue In the following tables, revenue is disaggregated by product and service and the timing of revenue recognition. For the Three Months Ended September 30, 2022 2021 Products and services Software as a Service (SaaS) $ 3,970 $ 3,245 Equipment 39 1,470 Other 3 116 $ 4,012 $ 4,831 Timing of revenue recognition Products transferred at a point in time $ 42 $ 1,569 Services transferred over time 3,970 3,262 $ 4,012 $ 4,831 For the Nine Months Ended September 30, 2022 2021 Products and services Software as a Service (SaaS) $ 11,249 $ 9,255 Equipment 155 2,932 Other 11 304 $ 11,415 $ 12,491 Timing of revenue recognition Products transferred at a point in time $ 166 $ 3,142 Services transferred over time 11,249 9,349 $ 11,415 $ 12,491 Contract balances The current portion of deferred revenue at September 30, 2022, December 31, 2021 and December 31, 2020 was $1,730, $1,266 and $403, respectively, and primarily consists of revenue that is recognized over time for software license contracts and hosted subscription services. The changes in these balances are related to purchases of a predetermined number of transactions, partially offset by the satisfaction or partial satisfaction of these contracts. Of the December 31, 2021 balance, $102 and $1,226 was recognized as revenue in the three and nine months ended September 30, 2022, respectively. The noncurrent deferred revenue balances were $2, $8 and $9 as of September 30, 2022, December 31, 2021 and December 31, 2020, respectively. Accounts Receivable Accounts Receivable, net of allowance for doubtful accounts, at September 30, 2022, December 31, 2021 and January 1, 2020 was $2,635, $2,192, and $1,633, respectively. The allowance for doubtful accounts at September 30, 2022, December 31, 2021 and January 1, 2020 was $9, $3 and $42, respectively. Transaction price allocated to the remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: Remainder 2023 2024 Total Software as a Service (SaaS) $ 790 $ 906 $ 1 $ 1,697 Other 33 1 1 35 $ 823 $ 907 $ 2 $ 1,732 All consideration from contracts with customers is included in the amounts presented above. Business Concentrations and Credit Risk During the three and nine-month periods ended September 30, 2022, the Company made sales to three customers that accounted for approximately 51% and 52% and of total revenues, respectively. The revenue was primarily associated with commercial identity sales customers. These three customers, in addition to two other customers, represented 70% of total accounts receivable at September 30, 2022. During the three and nine-month periods ended September 30, 2021, the Company made sales to two customers that accounted for approximately 60% and 58% of total revenues, respectively. That revenue was associated with commercial identity sales customers. Net Loss Per Share Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period. The dilutive effect of outstanding options, warrants and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares. In periods of a net loss, all common stock equivalents are considered anti-dilutive. Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net Loss $ (724) $ (1,026) $ (3,290) $ (6,486) Denominator: Weighted average common shares – Basic/Diluted 18,918,596 18,642,463 18,802,892 18,580,012 Net Loss per share – Basic/Diluted $ (0.04) $ (0.06) $ (0.17) $ (0.35) The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Stock options 1,164,676 502,424 1,164,676 502,424 Restricted stock 203,492 408,657 203,492 408,657 Performance stock units 177,688 228,498 177,688 228,498 1,545,856 1,139,579 1,545,856 1,139,579 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment is summarized as follows: September 30, December 31, Computer equipment and software $ 1,784 $ 1,708 Furniture and fixtures 139 139 Leasehold improvements 55 55 Office equipment 600 599 2,578 2,501 Less – Accumulated depreciation (1,806) (1,764) $ 772 $ 737 Depreciation expense for the nine months ended September 30, 2022 and 2021 amounted to $130 and $47. Depreciation expense for the three months ended September 30, 2022 and 2021 amounted to $44 and $16 respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS The changes in the carrying amount of intangible assets for the nine months ended September 30, 2022 were as follows: Net balance at December 31, 2021 $ 378 Deduction: Amortization expense (79) Net balance at September 30, 2022 $ 299 The following tables set forth the components of intangible assets as of September 30, 2022 and December 31, 2021: As of September 30, 2022 Estimated Adjusted Accumulated Net Patents and copyrights 2-17 years $ 375 $ (269) $ 106 Developed technology 5 years 400 (207) 193 $ 775 $ (476) $ 299 As of December 31, 2021 Estimated Adjusted Accumulated Net Patents and copyrights 2-17 years $ 375 $ (250) $ 125 Developed technology 5 years 400 (147) 253 $ 775 $ (397) $ 378 The following summarizes amortization of intangible assets included in the accompanying statements of operations: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Cost of sales $ 23 $ 23 $ 71 $ 71 General and administrative 3 3 8 8 $ 26 $ 26 $ 79 $ 79 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Promissory Note On April 15, 2020 the Company received an advance of $10 from the U.S. Small Business Administration (“SBA”) as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company repaid this Economic Injury Disaster Loan program (“EIDL”) advance on December 7, 2020. The Company has not imputed interest on this advance as the rate was determined to be a below-market rate due to the scope exception in ASC 835-30-15-3(e) for government-mandated interest rates. On December 27, 2020, Congress passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (“the Economic Aid Act”) which relieves companies of their obligations to repay EIDL advances. As a result of this ruling, the SBA returned this advance to the Loan Servicer on February 18, 2021, which was immediately returned to the Company and included in Other Income on the Statements of Operations. Revolving Line of Credit On February 6, 2019, the Company entered into a revolving credit facility with Citi Personal Wealth Management that allows for borrowings up to the lesser of (i) $2,000 or (ii) the collateralized balance in the Company’s existing fixed income investment account with Citi Personal Wealth Management subject to certain limitations. The facility bears interest at a rate consistent of Citi Personal Wealth Management’s Base Rate (7.75% and 4.75% at September 30, 2022 and December 31, 2021, respectively) minus 2%. Interest is payable monthly and as of September 30, 2022 and December 31, 2021, there were no amounts outstanding and unused availability under this facility was $2,000. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses are comprised of the following: September 30, December 31, Professional fees $ 143 $ 127 Payroll and related 971 1,100 Incentive bonuses 893 1,565 Other 29 78 $ 2,036 $ 2,870 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESOur available net operating loss (“NOL”) as of December 31, 2021 was approximately $23.4 million, of which $10.9 million expires between 2035 and 2037. In accordance with the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), U.S. NOLs arising in a tax year ending after 2017 will not expire. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company accounts for the issuance of stock-based awards to employees in accordance with ASC Topic 718, which requires that the cost resulting from all stock-based compensation payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for stock-based compensation payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all stock-based compensation payment transactions with employees. All stock-based compensation is included in operating expenses as follows: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Compensation cost recognized: Selling, general & administrative $ 561 $ 614 $ 1,270 $ 5,536 Research & development 168 98 498 470 $ 729 $ 712 $ 1,768 $ 6,006 Stock Options The Company uses the Black-Scholes option pricing model to value the stock options on the grant date. The table below presents the weighted average expected life of the stock options in years. The Company uses the simplified method for all grants to estimate the expected life of the option and assumes that stock options will be exercised evenly over the period from vesting until the awards expire. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect on the grant date. Options, generally, vest from one As noted in Note 2, certain option awards no longer qualify as equity awards and instead are classified as liability awards. The fair value of these awards are determined at each reporting period utilizing a Black-Scholes option pricing model, and the associated compensation expense for the reporting period is recorded. The Company increased stock-based compensation expense by approximately $33 and decreased by approximately $277 for the three and nine months ended September 30, 2022 and increased stock-based compensation by approximately $73 and $3,736 for the three and nine months ended September 30, 2021 as a result of the change in fair value of these awards. Stock option activity under the 2015 Stock Option Plan (the “Plan”) during the period indicated below were as follows: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2021 496,424 $ 6.13 3.03 years $ 528 Granted 732,228 2.14 – – Forfeited (63,976) 4.40 – – Outstanding at September 30, 2022 1,164,676 $ 3.72 3.77 years $ 337 Exercisable at September 30, 2022 232,739 $ 6.77 1.30 years $ – The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2022. This amount changes based upon the fair market value of the Company’s stock. Restricted Stock Units The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. During the nine months ended September 30, 2022, the Company issued RSUs to certain directors as compensation. RSU agreements can vest immediately or with the passage of time. The vesting of all RSUs is contingent on continued board and employment services. The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant, is amortized on a straight-line basis over the requisite service period and charged to operating expenses with a corresponding increase to additional paid-in capital, reduced by forfeitures when they occur. Number of Weighted Outstanding at December 31, 2021 408,376 $ 10.43 Granted 90,458 2.36 Forfeited (25,199) 11.50 Vested and settled in shares (270,143) 8.56 Outstanding at September 30, 2022 203,492 $ 9.19 Performance Stock Units On August 7, 2020, the Company issued 265,942 Performance Stock Units (PSUs) to its officers and certain employees as compensation. 50% of the PSUs were to vest based on the Company’s market price and 50% were to vest based on the Company’s Adjusted EBITDA. Both the conditions were to occur over a specified time and were contingent on continued employment services. On November 4, 2021, the Company amended its PSU Plan so that 100% of the PSUs will be subject to vesting based on the Company’s market price as the sole vesting criteria. As a result of this amendment, the adjusted EBITDA performance metric from the previous plan is no longer a criteria performance metric. Compensation expense is based on a Geometric Brownian Motion valuation model based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite period. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for this performance metric is amortized over the anticipated service period. Compensation expense is charged to operating expenses with a corresponding increase to additional paid-in capital. Number of Weighted Outstanding at December 31, 2021 228,498 $ 7.91 Forfeited (50,810) 7.91 Outstanding at September 30, 2022 177,688 $ 7.91 As of September 30, 2022, total unrecognized compensation cost was $2,775, net of estimated forfeitures, related to all unvested stock options, RSUs and PSUs, which is expected to be recognized over a weighted average period of approximately 1.64 years. The Company had 1,239,387 shares available for future grants under the Plan at September 30, 2022. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company is not aware of any infringement by the Company’s products or technology on the proprietary rights of others. The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material effect on its business. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSThe Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States of America for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2022 and the results of operations, stockholders’ equity and cash flows for the nine months ended September 30, 2022 and 2021. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the nine-month period ended September 30, 2022, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2022. The balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. References in this Quarterly Report on Form 10-Q to “authoritative guidance” is to the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, deferred tax valuation allowances, allowance for doubtful accounts, revenue recognition (including breakage revenue) and the fair value of stock options under the Company’s stock-based compensation plan. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates. |
Research and Development | Research and Development The Company’s research and development efforts are mainly concentrated in the area of identify verification. Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include consulting fees, software and subscription services, and third-party cloud infrastructure expenses incurred in maintaining our platform. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay. |
Cash and Cash Equivalents | Cash and Cash Equivalents We classify as cash equivalents time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase. Our cash and cash equivalents consist primarily of cash on deposits with banks and is maintained with major financial institutions in the United States. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, however amounts may exceed FDIC insured limits. |
Property and Equipment | Property and EquipmentProperty and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three |
Goodwill | Goodwill Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter on December 31st, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform step one of the quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. |
Intangible Assets | Intangible AssetsIntangible assets include patents, copyrights, and developed technology. The Company amortizes these assets on a straight-line basis over their estimated useful lives, as it represents the pattern of economic benefits consumed. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. |
Advertising Costs | Advertising Costs Advertising costs, which are charged to expense as incurred, were $545 and $486 for the nine months ended September 30, 2022 and 2021, respectively. Advertising costs were $155 and $245 for the three months ended September 30, 2022 and 2021, respectively. These costs are recorded as a component of selling, general and administrative expenses on the Statements of Operations. |
Retirement Plan | Retirement Plan The Company has a retirement savings 401(k) plan. The plan permits eligible employees to make voluntary contributions to a trust, up to a maximum of 35% of compensation, subject to certain limitations. The Company has elected to contribute a matching contribution equal to 50% of the first 6% of an eligible employee’s deferral election. The Company’s matching contributions were $90 and $73 for the nine months ended September 30, 2022 and 2021, |
Shipping Costs and Revenue Recognition and Deferred Revenue | Shipping Costs The Company’s shipping and handling costs related to sales are included in cost of revenues for all periods presented. All other shipping and handling costs are included as a component of selling, general and administrative expenses on the Statements of Operations. Revenue Recognition and Deferred Revenue General Most license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. During 2021, the Company adopted an additional revenue model where customers purchase a predetermined number of transactions for the term of the contract. Revenue for these transactions is recognized on a per transaction basis. The Company estimates the number of transactions that will be unused by the end of each contract period and recognizes a portion of that revenue as breakage revenue each reporting period. If the Company expects the customer to use all transactions in the specified service period, the Company will recognize the transaction price as revenue in the specified service period as the promised units of service are transferred to the customer. Alternatively, if the Company expects that the customer cannot or will not use all transactions in the specified service period (referred to as “breakage”), the Company will recognize the estimated breakage amount as revenue ratably over the service period in proportion to the revenue that the Company will recognize for actual transactions used by the customer in the service period. Actual results could differ from estimates and as such differences may be material to the financial statements. Invoicing is based on schedules established in customer contracts. Payment terms are generally established from 30 to 60 days from the invoice date. Product returns are recorded as a reduction to revenue as they are returned. Revenue is measured based on the consideration specified in a contract with a customer. Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: Software as a Service (SaaS) Software as a service (SaaS) for hosted subscription services allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time, under the fixed pricing model, based on the usage of the hosted subscription services, which can vary from month to month. Under the per-scan revenue model, the customer requires access to our hosted subscription service but revenue is recognized each time the customer scans an identity document. Equipment Revenue Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received. When sales of equipment occur we recognize shipping and handling costs with the sales of equipment that are recognized as revenue. Other Revenue Other Revenues, which historically have not been material, consist primarily of revenues from other subscription and support services, non-recurring services, and extended warranties. The Company’s revenues from other subscription and support services includes jurisdictional updates to certain commercial customers and support services particularly to its Defense ID® customers. These subscriptions require continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of locations in a given month multiplied by a fee per location. Non-recurring services include items such as training, installation, customization, and configuration. The Company recognizes revenue from non-recurring services contracts ratably over the service contract period as the customer consumes the benefit as it is provided, and the Company’s performance obligation has been satisfied. Extended warranty revenues are generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate to the Company’s standard warranty of usually one year that it receives from its vendor. |
Income Taxes | Income TaxesThe Company accounts for income taxes in accordance with ASC Topic 740, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adheres to the provisions of ASC 820, “Fair Value Measurement” which requires the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value of those financial instruments is different than the book value. The Company’s financial instruments include cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses. At September 30, 2022 and December 31, 2021, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature. Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: • Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. With the exception of the Company’s liability classified stock options, all of the Company’s financial instruments are categorized as Level 1 within the fair value hierarchy. • Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company had $100 and $378 of Level 2 liabilities as of September 30, 2022 and December 31, 2021 respectively, for the liability classified stock options. • Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company had no Level 3 assets or liabilities as of September 30, 2022 and December 31, 2021. |
Business Concentrations and Credit Risk | Business Concentrations and Credit Risk During the three and nine-month periods ended September 30, 2022, the Company made sales to three customers that accounted for approximately 51% and 52% and of total revenues, respectively. The revenue was primarily associated with commercial identity sales customers. These three customers, in addition to two other customers, represented 70% of total accounts receivable at September 30, 2022. During the three and nine-month periods ended September 30, 2021, the Company made sales to two customers that accounted for approximately 60% and 58% of total revenues, respectively. That revenue was associated with commercial identity sales customers. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period. The dilutive effect of outstanding options, warrants and restricted stock is reflected in diluted earnings |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Revenue Disaggregated by Product and Service and Timing of Revenue Recognition | In the following tables, revenue is disaggregated by product and service and the timing of revenue recognition. For the Three Months Ended September 30, 2022 2021 Products and services Software as a Service (SaaS) $ 3,970 $ 3,245 Equipment 39 1,470 Other 3 116 $ 4,012 $ 4,831 Timing of revenue recognition Products transferred at a point in time $ 42 $ 1,569 Services transferred over time 3,970 3,262 $ 4,012 $ 4,831 For the Nine Months Ended September 30, 2022 2021 Products and services Software as a Service (SaaS) $ 11,249 $ 9,255 Equipment 155 2,932 Other 11 304 $ 11,415 $ 12,491 Timing of revenue recognition Products transferred at a point in time $ 166 $ 3,142 Services transferred over time 11,249 9,349 $ 11,415 $ 12,491 |
Scheduled of Revenue Expected to be Recognized Related to Performance Obligations | The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: Remainder 2023 2024 Total Software as a Service (SaaS) $ 790 $ 906 $ 1 $ 1,697 Other 33 1 1 35 $ 823 $ 907 $ 2 $ 1,732 |
Schedule of Basic and Diluted Earnings Per Share | Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net Loss $ (724) $ (1,026) $ (3,290) $ (6,486) Denominator: Weighted average common shares – Basic/Diluted 18,918,596 18,642,463 18,802,892 18,580,012 Net Loss per share – Basic/Diluted $ (0.04) $ (0.06) $ (0.17) $ (0.35) |
Summary of Common Stock Equivalents Excluded from Loss Per Diluted Share | The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Stock options 1,164,676 502,424 1,164,676 502,424 Restricted stock 203,492 408,657 203,492 408,657 Performance stock units 177,688 228,498 177,688 228,498 1,545,856 1,139,579 1,545,856 1,139,579 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment is summarized as follows: September 30, December 31, Computer equipment and software $ 1,784 $ 1,708 Furniture and fixtures 139 139 Leasehold improvements 55 55 Office equipment 600 599 2,578 2,501 Less – Accumulated depreciation (1,806) (1,764) $ 772 $ 737 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Intangible Assets | The changes in the carrying amount of intangible assets for the nine months ended September 30, 2022 were as follows: Net balance at December 31, 2021 $ 378 Deduction: Amortization expense (79) Net balance at September 30, 2022 $ 299 |
Schedule of Components of Intangible Assets | The following tables set forth the components of intangible assets as of September 30, 2022 and December 31, 2021: As of September 30, 2022 Estimated Adjusted Accumulated Net Patents and copyrights 2-17 years $ 375 $ (269) $ 106 Developed technology 5 years 400 (207) 193 $ 775 $ (476) $ 299 As of December 31, 2021 Estimated Adjusted Accumulated Net Patents and copyrights 2-17 years $ 375 $ (250) $ 125 Developed technology 5 years 400 (147) 253 $ 775 $ (397) $ 378 |
Schedule of Amortization Expense of Intangible Assets | The following summarizes amortization of intangible assets included in the accompanying statements of operations: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Cost of sales $ 23 $ 23 $ 71 $ 71 General and administrative 3 3 8 8 $ 26 $ 26 $ 79 $ 79 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses are comprised of the following: September 30, December 31, Professional fees $ 143 $ 127 Payroll and related 971 1,100 Incentive bonuses 893 1,565 Other 29 78 $ 2,036 $ 2,870 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Stock-Based Compensation Included in Operating Expenses | All stock-based compensation is included in operating expenses as follows: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Compensation cost recognized: Selling, general & administrative $ 561 $ 614 $ 1,270 $ 5,536 Research & development 168 98 498 470 $ 729 $ 712 $ 1,768 $ 6,006 |
Schedule of Stock Option Activity | Stock option activity under the 2015 Stock Option Plan (the “Plan”) during the period indicated below were as follows: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2021 496,424 $ 6.13 3.03 years $ 528 Granted 732,228 2.14 – – Forfeited (63,976) 4.40 – – Outstanding at September 30, 2022 1,164,676 $ 3.72 3.77 years $ 337 Exercisable at September 30, 2022 232,739 $ 6.77 1.30 years $ – |
Schedule of Restricted Stock Unit (RSU) Activity | Number of Weighted Outstanding at December 31, 2021 408,376 $ 10.43 Granted 90,458 2.36 Forfeited (25,199) 11.50 Vested and settled in shares (270,143) 8.56 Outstanding at September 30, 2022 203,492 $ 9.19 |
Schedule of Performance Stock Unit (PSU) Activity | Number of Weighted Outstanding at December 31, 2021 228,498 $ 7.91 Forfeited (50,810) 7.91 Outstanding at September 30, 2022 177,688 $ 7.91 |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net loss | $ 724 | $ 1,026 | $ 3,290 | $ 6,486 | |
Net cash used in operating activities | 1,711 | $ (407) | |||
Cash and cash equivalents | 11,775 | 11,775 | |||
Working capital | 9,153 | 9,153 | |||
Accumulated deficit | $ 130,187 | $ 130,187 | $ 126,897 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2020 | |
Product Information [Line Items] | |||||||
Goodwill, impairment charges | $ 0 | $ 0 | $ 0 | $ 0 | |||
Intangible assets, impairment charges | 0 | 0 | 0 | 0 | |||
Advertising costs | 155,000 | 245,000 | $ 545,000 | 486,000 | |||
Retirement plan, maximum employee contribution, percent | 35% | ||||||
Retirement plan, matching contributions | 30,000 | $ 29,000 | $ 90,000 | $ 73,000 | |||
Equity awards liability | 100,000 | 100,000 | $ 378,000 | ||||
Deferred revenue, current portion | 1,730,000 | 1,730,000 | 1,266,000 | $ 403,000 | |||
Revenue recognized | 102,000 | 1,226,000 | |||||
Deferred revenue, long-term portion | 2,000 | 2,000 | 8,000 | $ 9,000 | |||
Accounts receivable, net of allowance for doubtful accounts | 2,635,000 | 2,635,000 | 2,192,000 | $ 1,633,000 | |||
Accounts receivable, allowance for doubtful accounts | $ 9,000 | $ 9,000 | 3,000 | $ 42,000 | |||
Three Customers | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||||||
Product Information [Line Items] | |||||||
Business concentration risk, percent | 51% | 52% | |||||
Three Customers | Accounts Receivable | Customer Concentration Risk | |||||||
Product Information [Line Items] | |||||||
Business concentration risk, percent | 70% | ||||||
Two Customers | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||||||
Product Information [Line Items] | |||||||
Business concentration risk, percent | 60% | 58% | |||||
Fair Value, Inputs, Level 2 | |||||||
Product Information [Line Items] | |||||||
Equity awards liability | $ 100,000 | $ 100,000 | $ 378,000 | ||||
Retirement Savings 401k Plan | |||||||
Product Information [Line Items] | |||||||
Retirement plan, employer matching contribution, percent of eligible employee's deferral election | 50% | ||||||
Retirement plan, percent of eligible employee's deferral election used for employer matching contribution | 6% | ||||||
Minimum | |||||||
Product Information [Line Items] | |||||||
Property and equipment, useful life | 3 years | ||||||
Maximum | |||||||
Product Information [Line Items] | |||||||
Property and equipment, useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Product Information [Line Items] | ||||
Revenue | $ 4,012 | $ 4,831 | $ 11,415 | $ 12,491 |
Products transferred at a point in time | ||||
Product Information [Line Items] | ||||
Revenue | 42 | 1,569 | 166 | 3,142 |
Services transferred over time | ||||
Product Information [Line Items] | ||||
Revenue | 3,970 | 3,262 | 11,249 | 9,349 |
Software as a Service (SaaS) | ||||
Product Information [Line Items] | ||||
Revenue | 3,970 | 3,245 | 11,249 | 9,255 |
Equipment | ||||
Product Information [Line Items] | ||||
Revenue | 39 | 1,470 | 155 | 2,932 |
Other | ||||
Product Information [Line Items] | ||||
Revenue | $ 3 | $ 116 | $ 11 | $ 304 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Schedule of Revenue Performance Obligations (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,732 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 823 |
Revenue, remaining performance obligation, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 907 |
Revenue, remaining performance obligation, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 2 |
Revenue, remaining performance obligation, period | 12 months |
Software as a Service (SaaS) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,697 |
Software as a Service (SaaS) | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 790 |
Revenue, remaining performance obligation, period | 3 months |
Software as a Service (SaaS) | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 906 |
Revenue, remaining performance obligation, period | 12 months |
Software as a Service (SaaS) | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1 |
Revenue, remaining performance obligation, period | 12 months |
Other | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 35 |
Other | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 33 |
Revenue, remaining performance obligation, period | 3 months |
Other | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1 |
Revenue, remaining performance obligation, period | 12 months |
Other | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1 |
Revenue, remaining performance obligation, period | 12 months |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net Loss | $ (724) | $ (1,026) | $ (3,290) | $ (6,486) |
Denominator: | ||||
Weighted average common shares - Basic (in shares) | 18,918,596 | 18,642,463 | 18,802,892 | 18,580,012 |
Weighted average common shares - Diluted (in shares) | 18,918,596 | 18,642,463 | 18,802,892 | 18,580,012 |
Net Loss per share – | ||||
Basic (in dollars per share) | $ (0.04) | $ (0.06) | $ (0.17) | $ (0.35) |
Diluted (in dollars per share) | $ (0.04) | $ (0.06) | $ (0.17) | $ (0.35) |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Summary of Common Stock Equivalents Excluded from Loss Per Diluted Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from loss per diluted share (in shares) | 1,545,856 | 1,139,579 | 1,545,856 | 1,139,579 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from loss per diluted share (in shares) | 1,164,676 | 502,424 | 1,164,676 | 502,424 |
Restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from loss per diluted share (in shares) | 203,492 | 408,657 | 203,492 | 408,657 |
Performance stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from loss per diluted share (in shares) | 177,688 | 228,498 | 177,688 | 228,498 |
PROPERTY AND EQUIPMENT - Schedu
PROPERTY AND EQUIPMENT - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,578 | $ 2,501 |
Less – Accumulated depreciation | (1,806) | (1,764) |
Property and equipment, net | 772 | 737 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,784 | 1,708 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 139 | 139 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 55 | 55 |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 600 | $ 599 |
PROPERTY AND EQUIPMENT - Narrat
PROPERTY AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 44 | $ 16 | $ 130 | $ 47 |
INTANGIBLE ASSETS - Schedule of
INTANGIBLE ASSETS - Schedule of Changes in Carrying Amount of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill [Roll Forward] | ||||
Beginning balance | $ 378 | |||
Deduction: Amortization expense | $ (26) | $ (26) | (79) | $ (79) |
Ending balance | $ 299 | $ 299 |
INTANGIBLE ASSETS - Schedule _2
INTANGIBLE ASSETS - Schedule of Intangible Asset Components (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||
Adjusted Carrying Amount | $ 775 | $ 775 | |
Accumulated Amortization | (476) | (397) | |
Net | 299 | 378 | |
Patents and copyrights | |||
Finite-Lived Intangible Assets [Line Items] | |||
Adjusted Carrying Amount | 375 | 375 | |
Accumulated Amortization | (250) | $ (269) | |
Net | $ 106 | $ 125 | |
Patents and copyrights | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 2 years | 2 years | |
Patents and copyrights | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 17 years | 17 years | |
Developed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 5 years | 5 years | |
Adjusted Carrying Amount | $ 400 | $ 400 | |
Accumulated Amortization | (207) | (147) | |
Net | $ 193 | $ 253 |
INTANGIBLE ASSETS - Schedule _3
INTANGIBLE ASSETS - Schedule of Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill [Line Items] | ||||
Amortization expense | $ 26 | $ 26 | $ 79 | $ 79 |
Cost of sales | ||||
Goodwill [Line Items] | ||||
Amortization expense | 23 | 23 | 71 | 71 |
General and administrative | ||||
Goodwill [Line Items] | ||||
Amortization expense | $ 3 | $ 3 | $ 8 | $ 8 |
DEBT (Details)
DEBT (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Apr. 15, 2020 | Sep. 30, 2022 | Dec. 31, 2021 | Feb. 06, 2019 | |
U.S. Small Business Administration | CARES Act | ||||
Line of Credit Facility [Line Items] | ||||
Notes payable, advance | $ 10,000 | |||
Citi Bank | Revolving Credit Facility | Line of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity (up to) | $ 2,000,000 | |||
Amount outstanding | $ 0 | $ 0 | ||
Unused availability | $ 2,000,000 | $ 2,000,000 | ||
Citi Bank | Revolving Credit Facility | Line of Credit | Base Rate | Variable Rate Component One | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate, basis spread | 7.75% | 4.75% | ||
Citi Bank | Revolving Credit Facility | Line of Credit | Base Rate | Variable Rate Component Two | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate, basis spread | (2.00%) |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Professional fees | $ 143 | $ 127 |
Payroll and related | 971 | 1,100 |
Incentive bonuses | 893 | 1,565 |
Other | 29 | 78 |
Accrued expenses | $ 2,036 | $ 2,870 |
INCOME TAXES (Details)
INCOME TAXES (Details) $ in Millions | Dec. 31, 2021 USD ($) |
Income Tax Disclosure [Abstract] | |
Available net operating loss | $ 23.4 |
Available net operating loss, expires between 2035 and 2037 | $ 10.9 |
STOCK-BASED COMPENSATION - Sche
STOCK-BASED COMPENSATION - Schedule of Stock-Based Compensation Included in Operating Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Compensation cost recognized | $ 729 | $ 712 | $ 1,768 | $ 6,006 |
Selling, general & administrative | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Compensation cost recognized | 561 | 614 | 1,270 | 5,536 |
Research & development | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Compensation cost recognized | $ 168 | $ 98 | $ 498 | $ 470 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Aug. 07, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Nov. 04, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Increased (decrease) in stock-based compensation | $ 33 | $ 73 | $ 277 | $ 3,736 | ||
Shares available for future grants (in shares) | 1,239,387 | 1,239,387 | ||||
Stock options | Minimum | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Vesting period | 1 year | |||||
Stock options | Maximum | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Vesting period | 4 years | |||||
Performance Stock Units | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Issued in period (in shares) | 265,942 | |||||
Vesting percentage, based on company's market price percentage | 50% | 100% | ||||
Vesting percentage, based on company's adjusted EBITDA | 50% | |||||
Unrecognized compensation cost | $ 2,775 | $ 2,775 | ||||
Weighted average period of recognition | 1 year 7 months 20 days |
STOCK-BASED COMPENSATION - Sc_2
STOCK-BASED COMPENSATION - Schedule of Stock Option Activity (Details) - Stock Option Plans - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Number of Shares Subject to Issuance | ||
Outstanding, beginning balance (in shares) | 496,424 | |
Granted (in shares) | 732,228 | |
Forfeited (in shares) | (63,976) | |
Outstanding, ending balance (in shares) | 1,164,676 | 496,424 |
Exercisable at end of period (in shares) | 232,739 | |
Weighted- average Exercise Price | ||
Outstanding, beginning balance (in dollars per share) | $ 6.13 | |
Granted (in dollars per share) | 2.14 | |
Forfeited (in dollars per share) | 4.40 | |
Outstanding, ending balance (in dollars per share) | 3.72 | $ 6.13 |
Exercisable at end of period (in dollars per share) | $ 6.77 | |
Weighted- average Remaining Contractual Term | ||
Outstanding | 3 years 9 months 7 days | 3 years 10 days |
Exercisable at end of period | 1 year 3 months 18 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ 337 | $ 528 |
Exercisable at end of period | $ 0 |
STOCK-BASED COMPENSATION - Sc_3
STOCK-BASED COMPENSATION - Schedule of Restricted Stock Unit (RSU) and Performance Stock Unit (PSU) Activity (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Restricted Stock Units (RSUs) | |
Number of Shares | |
Outstanding, beginning balance (in shares) | shares | 408,376 |
Granted (in shares) | shares | 90,458 |
Forfeited (in shares) | shares | (25,199) |
Vested and settled in shares (in shares) | shares | (270,143) |
Outstanding, ending balance (in shares) | shares | 203,492 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 10.43 |
Granted (in dollars per share) | $ / shares | 2.36 |
Forfeited (in dollars per share) | $ / shares | 11.50 |
Vested and settled in shares (in dollars per share) | $ / shares | 8.56 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 9.19 |
Performance Stock Units | |
Number of Shares | |
Outstanding, beginning balance (in shares) | shares | 228,498 |
Forfeited (in shares) | shares | (50,810) |
Outstanding, ending balance (in shares) | shares | 177,688 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 7.91 |
Forfeited (in dollars per share) | $ / shares | 7.91 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 7.91 |