Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | OSS | |
Entity Registrant Name | One Stop Systems, Inc. | |
Entity Central Index Key | 0001394056 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,516,646 | |
Entity File Number | 001-38371 | |
Entity Tax Identification Number | 330885351 | |
Entity Address, Address Line One | 2235 Enterprise Street #110 | |
Entity Address, City or Town | Escondido | |
Entity Address, State or Province | California | |
Entity Address, Postal Zip Code | 92029 | |
City Area Code | 877 | |
Local Phone Number | 438-2724 |
UNAUDITED CONSOLIDATED BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 4,944,853 | $ 2,272,256 |
Accounts receivable, net | 8,341,412 | 10,540,150 |
Inventories, net | 8,859,281 | 6,823,930 |
Prepaid expenses and other current assets | 778,629 | 666,330 |
Total current assets | 22,924,175 | 20,302,666 |
Property and equipment, net | 2,840,239 | 1,759,086 |
Deposits and other | 42,088 | 49,966 |
Deferred tax assets, net | 3,050,854 | 2,505,632 |
Goodwill | 7,120,510 | 7,914,211 |
Intangible assets, net | 1,711,687 | 3,525,257 |
Total Assets | 37,689,553 | 36,056,818 |
Current liabilities | ||
Accounts payable | 3,143,232 | 3,708,865 |
Accrued expenses and other liabilities | 6,017,251 | 3,930,718 |
Borrowings on bank lines of credit (Note 8) | 1,062,352 | 422,960 |
Current portion of notes payable, net of debt discount of $7,019 and $0, respectively (Note 8) | 1,729,369 | 1,156,915 |
Current portion of related-party notes payable, net of debt discount of $23,061 and $0, respectively (Note 8) | 534,084 | |
Total current liabilities | 12,486,288 | 9,219,458 |
Notes payable, net of current portion and debt discount of $5,556 and $0, respectively (Note 8) | 387,066 | 265,038 |
Related-party notes payable, net of current portion and debt discount of $18,256 and $0, respectively (Note 8) | 487,595 | |
Total liabilities | 13,360,949 | 9,484,496 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity | ||
Common stock, $.0001 par value; 50,000,000 shares authorized; 14,497,647 and 14,216,328 shares issued and outstanding, respectively | 1,450 | 1,422 |
Additional paid-in capital | 27,717,796 | 27,424,113 |
Noncontrolling interest | 500 | 500 |
Accumulated other comprehensive income | 3,076 | 1,142 |
Accumulated deficit | (3,394,218) | (854,855) |
Total stockholders’ equity | 24,328,604 | 26,572,322 |
Total liabilities and stockholders' equity | $ 37,689,553 | $ 36,056,818 |
UNAUDITED CONSOLIDATED BALANC_2
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Debt discount on notes payable, current | $ 30,080 | |
Debt discount on notes payable, noncurrent | $ 23,812 | |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 14,497,647 | 14,216,328 |
Common stock, shares outstanding | 14,497,647 | 14,216,328 |
Notes Payable | ||
Debt discount on notes payable, current | $ 7,019 | $ 0 |
Debt discount on notes payable, noncurrent | 5,556 | 0 |
Related Parties | ||
Debt discount on notes payable, current | 23,061 | 0 |
Debt discount on notes payable, noncurrent | $ 18,256 | $ 0 |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 14,886,236 | $ 5,892,666 | $ 24,944,135 | $ 13,012,378 |
Cost of revenue | 9,473,078 | 4,252,484 | 17,119,354 | 9,159,330 |
Gross margin | 5,413,158 | 1,640,182 | 7,824,781 | 3,853,048 |
Operating expenses: | ||||
General and administrative | 3,931,478 | 1,097,552 | 5,975,413 | 2,170,600 |
Marketing and selling | 1,237,003 | 702,474 | 2,374,936 | 1,571,489 |
Research and development | 1,225,157 | 958,775 | 2,487,121 | 1,931,406 |
Total operating expenses | 6,393,638 | 2,758,801 | 10,837,470 | 5,673,495 |
Loss from operations | (980,480) | (1,118,619) | (3,012,689) | (1,820,447) |
Other income (expense): | ||||
Interest expense | (53,013) | (59,281) | (55,661) | |
Other, net | (3,068) | 54,430 | (11,232) | 122,039 |
Total other (expense) income, net | (56,081) | 54,430 | (70,513) | 66,378 |
Loss before income taxes | (1,036,561) | (1,064,189) | (3,083,202) | (1,754,069) |
Provision (benefit) for income taxes | 558,072 | 555,629 | (543,839) | 772,752 |
Net loss | (1,594,633) | (1,619,818) | (2,539,363) | (2,526,821) |
Net loss attributable to noncontrolling interest | (116,996) | (229,581) | ||
Net loss attributable to common stockholders | $ (1,594,633) | $ (1,502,822) | $ (2,539,363) | $ (2,297,240) |
Net loss per share attributable to common stockholders: | ||||
Basic | $ (0.11) | $ (0.12) | $ (0.18) | $ (0.20) |
Diluted | $ (0.11) | $ (0.12) | $ (0.18) | $ (0.20) |
Weighted average common shares outstanding: | ||||
Basic | 14,442,291 | 12,773,419 | 14,341,560 | 11,464,246 |
Diluted | 14,442,291 | 12,773,419 | 14,341,560 | 11,464,246 |
UNAUDITED CONSOLIDATED STATEM_2
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss attributable to common stockholders | $ (1,594,633) | $ (1,502,822) | $ (2,539,363) | $ (2,297,240) |
Other comprehensive income | ||||
Change in foreign currency translation adjustment | 43,803 | 1,934 | ||
Total other comprehensive income | 43,803 | 1,934 | ||
Comprehensive loss | $ (1,550,830) | $ (1,502,822) | $ (2,537,429) | $ (2,297,240) |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Total | Series C Preferred Stock | Series B Preferred Stock | Series A Preferred Stock | Common Stock | Additional Paid-in Capital | Noncontrolling Interest | Accumulated Other Comprehensive Income | Accumulated Deficit |
Balance at Dec. 31, 2017 | $ 6,619,771 | $ 1,604,101 | $ 697,996 | $ 114,430 | $ 551 | $ 3,484,428 | $ 436,842 | $ 281,423 | |
Balance, Shares at Dec. 31, 2017 | 1,087,006 | 1,450,000 | 500,000 | 5,514,917 | |||||
Conversion of preferred stock to common stock upon initial public offering | $ (1,604,101) | $ (697,996) | $ (114,430) | $ 304 | 2,416,223 | ||||
Conversion of preferred stock to common stock upon initial public offering, Shares | (1,087,006) | (1,450,000) | (500,000) | 3,037,006 | |||||
Stock-based compensation | 35,318 | 35,318 | |||||||
Exercise of stock options | 54,575 | $ 32 | 54,543 | ||||||
Exercise of stock options, Shares | 321,366 | ||||||||
Taxes paid on net issuance of employee stock options | (274,663) | (274,663) | |||||||
Relative fair value of warrants issued to Underwriters with IPO | 669,408 | 669,408 | |||||||
Proceeds from issuance of stock, net of issuance costs of $3,367,760 | 16,132,240 | $ 390 | 16,131,850 | ||||||
Proceeds from issuance of stock, net of issuance costs of $3,367,760, Shares | 3,900,000 | ||||||||
Noncontrolling interest in consolidated subsidiary (Note 1) | (112,585) | (112,585) | |||||||
Net loss | (794,418) | (794,418) | |||||||
Balance at Mar. 31, 2018 | 22,329,646 | $ 1,277 | 22,517,107 | 324,257 | (512,995) | ||||
Balance, Shares at Mar. 31, 2018 | 12,773,289 | ||||||||
Balance at Dec. 31, 2017 | 6,619,771 | $ 1,604,101 | $ 697,996 | $ 114,430 | $ 551 | 3,484,428 | 436,842 | 281,423 | |
Balance, Shares at Dec. 31, 2017 | 1,087,006 | 1,450,000 | 500,000 | 5,514,917 | |||||
Net loss | (2,297,240) | ||||||||
Balance at Jun. 30, 2018 | 20,839,218 | $ 1,278 | 22,646,496 | 207,261 | (2,015,817) | ||||
Balance, Shares at Jun. 30, 2018 | 12,779,210 | ||||||||
Balance at Mar. 31, 2018 | 22,329,646 | $ 1,277 | 22,517,107 | 324,257 | (512,995) | ||||
Balance, Shares at Mar. 31, 2018 | 12,773,289 | ||||||||
Stock-based compensation | 124,815 | 124,815 | |||||||
Exercise of stock options | 4,575 | $ 1 | 4,574 | ||||||
Exercise of stock options, Shares | 5,921 | ||||||||
Noncontrolling interest in consolidated subsidiary (Note 1) | (116,996) | (116,996) | |||||||
Net loss | (1,502,822) | (1,502,822) | |||||||
Balance at Jun. 30, 2018 | 20,839,218 | $ 1,278 | 22,646,496 | 207,261 | (2,015,817) | ||||
Balance, Shares at Jun. 30, 2018 | 12,779,210 | ||||||||
Balance at Dec. 31, 2018 | 26,572,322 | $ 1,422 | 27,424,113 | 500 | $ 1,142 | (854,855) | |||
Balance, Shares at Dec. 31, 2018 | 14,216,328 | ||||||||
Stock-based compensation | 167,474 | 167,474 | |||||||
Exercise of stock options, RSU's and Warrants | 14,201 | $ 5 | 14,196 | ||||||
Exercise of stock options, RSU's and Warrants, Shares | 54,098 | ||||||||
Currency translation adjustment | (41,869) | (41,869) | |||||||
Net loss | (944,730) | (944,730) | |||||||
Balance at Mar. 31, 2019 | 25,767,398 | $ 1,427 | 27,605,783 | 500 | (40,727) | (1,799,585) | |||
Balance, Shares at Mar. 31, 2019 | 14,270,426 | ||||||||
Balance at Dec. 31, 2018 | 26,572,322 | $ 1,422 | 27,424,113 | 500 | 1,142 | (854,855) | |||
Balance, Shares at Dec. 31, 2018 | 14,216,328 | ||||||||
Exercise of stock options, RSU's and Warrants, Shares | 281,319 | ||||||||
Currency translation adjustment | 1,934 | ||||||||
Net loss | (2,539,363) | ||||||||
Balance at Jun. 30, 2019 | 24,328,604 | $ 1,450 | 27,717,796 | 500 | 3,076 | (3,394,218) | |||
Balance, Shares at Jun. 30, 2019 | 14,497,647 | ||||||||
Balance at Mar. 31, 2019 | 25,767,398 | $ 1,427 | 27,605,783 | 500 | (40,727) | (1,799,585) | |||
Balance, Shares at Mar. 31, 2019 | 14,270,426 | ||||||||
Stock-based compensation | 157,809 | 157,809 | |||||||
Relative fair value of warrants issued with notes payable and notes payable to related parties | 60,158 | 60,158 | |||||||
Exercise of stock options, RSU's and Warrants | 6,948 | $ 23 | 6,925 | ||||||
Exercise of stock options, RSU's and Warrants, Shares | 227,221 | ||||||||
Taxes paid on net issuance of employee stock options | (112,879) | (112,879) | |||||||
Currency translation adjustment | 43,803 | 43,803 | |||||||
Net loss | (1,594,633) | (1,594,633) | |||||||
Balance at Jun. 30, 2019 | $ 24,328,604 | $ 1,450 | $ 27,717,796 | $ 500 | $ 3,076 | $ (3,394,218) | |||
Balance, Shares at Jun. 30, 2019 | 14,497,647 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Statement Of Stockholders Equity [Abstract] | |
Proceed from issuance of stock, issuance costs | $ 3,367,760 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (2,539,363) | $ (2,526,821) |
Net loss attributable to noncontrolling interest | (229,581) | |
Net loss attributable to common stockholders | (2,539,363) | (2,297,240) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Net loss attributable to noncontrolling interest | (229,581) | |
Deferred (benefit) provision for income taxes | (544,404) | 788,226 |
Unrealized gain on foreign currency transactions | 18,743 | |
(Gain) on disposal of property and equipment | (63,939) | |
Provision for bad debt | 1,358 | 94,431 |
Impairment of goodwill | 1,988,701 | |
Warranty reserves | 4,818 | (2,916) |
Amortization of deferred gain | (32,957) | (57,675) |
Depreciation and amortization | 886,982 | 528,494 |
Inventory reserves | 136,609 | 244,399 |
Amortization of debt discount | 6,266 | 24,830 |
Stock-based compensation expense | 325,283 | 160,133 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,185,438 | 587,587 |
Inventories | (2,118,771) | (349,512) |
Prepaid expenses and other current assets | (106,591) | (325,450) |
Accounts payable | (559,831) | (2,631,811) |
Accrued expenses and other liabilities | 2,125,542 | (382,004) |
Net cash provided by (used in) operating activities | 1,713,884 | (3,848,089) |
Cash flows from investing activities: | ||
Purchases of property and equipment, including capitalization of labor costs for test equipment and ERP, (net) | (1,356,975) | (60,210) |
Proceeds from sales of property and equipment | 1,050 | |
Net cash used in investing activities | (1,355,925) | (60,210) |
Cash flows from financing activities: | ||
Proceeds from stock options exercised | 21,149 | 59,150 |
Payment of payroll taxes on net issuance of employee stock options | (112,879) | (274,663) |
Stock issuance costs | (1,810,902) | |
Proceeds from issuance of common stock | 19,500,000 | |
Net borrowings (repayments) on bank lines of credit | 1,028,134 | (3,334,508) |
Net borrowings (repayments) on related-party notes payable | 932,762 | (163,483) |
Net borrowings (repayments) on notes payable | 454,004 | (985,692) |
Net cash provided by financing activities | 2,323,170 | 12,989,902 |
Net change in cash and cash equivalents | 2,681,129 | 9,081,603 |
Effect of exchange rates on cash | (8,532) | |
Cash and cash equivalents, beginning of period | 2,272,256 | 185,717 |
Cash and cash equivalents, end of period | 4,944,853 | 9,267,320 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 59,281 | 39,351 |
Cash paid during the period for income taxes | 4,000 | |
Supplemental disclosure of non-cash transactions: | ||
Relative fair value of warrants issued in connection with initial public offering | 669,408 | |
Relative fair value of warrants issued in connection with notes and related-party notes payable | 60,158 | |
Reclassification of prepaid IPO expenses to additional paid in capital | 887,450 | |
Reclassification of inventories to property and equipment | $ 67,948 | $ 445,366 |
The Company and Basis of Presen
The Company and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
The Company and Basis of Presentation | NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION Nature of Operations One Stop Systems, Inc. (“we,” “our,” “OSS,” or the “Company”) was originally incorporated as a California corporation in 1999 after initially being formed as a California limited liability company in 1998. On December 14, 2017, the Company was reincorporated as a Delaware corporation in connection with its initial public offering. The Company designs, manufactures and markets industrial grade computer systems and components that are based on industry standard computer architectures. The Company markets its products to manufacturers of automated equipment used for telecommunications, industrial and military applications. During the year ended December 31, 2015, the Company formed a new wholly-owned subsidiary in Germany (“OSS GmbH”). During July 2016, the Company acquired Mission Technologies Group, Inc. (“Magma”) and its operations. In April 2017, the Company and a related entity formed a joint venture named SkyScale, LLC in the State of California (“SkyScale”). In accordance with the Contribution Agreement, each member contributed $750,000 and received a 50% interest in the joint venture. The purpose of SkyScale was to engage in the business of providing high performance computing capabilities as cloud services. On December 31, 2018, as a result of changes in the competitive landscape and downward pressure on pricing from large competitors, the members to the SkyScale joint venture agreement agreed to dissolve SkyScale. As a result, it became necessary for OSS to write-off the outstanding balances of accounts and notes receivable and interest in the amount of $648,411, which write-off was offset by receipt of equipment valued at $160,000 and allocation of income from disposition of assets and liabilities of $71,502. Additional reserves for future expenses to be incurred in the process of closing SkyScale were recorded in the amount of $288,400. As a result of the above, total charges related to the dissolution of SkyScale were $705,309 during the year ended December 31, 2018. In May 2017, the Company entered into a Technology and Software License Agreement with Western Digital (“WDT”) for their Ion flash storage software. The agreement provides the Company with the Ion source code and rights to develop and market derivative products. The Company intends to develop and sell Ion flash storage software with its high-density storage arrays, as well as service existing WDT software users (Note 3). Also, in July 2017, the Company entered in to a Service Agreement with WDT to service its existing customer base that utilizes Ion flash storage software. The Company also purchased certain equipment from WDT and hired selected employees to assist in the servicing of these existing customers. Management has determined that the activities and assets acquired from WDT comprise a business as defined in ASC 805-10-55-4 through 55. Consideration paid by the Company to WDT pursuant to the arrangements described above was $67,000. In addition, the Company is required to pay prospective royalties to WDT of $2,500 or $5,000 for each sale of the Company’s products that include licensed software. WDT is obligated to pay the Company for services rendered to support existing WDT software users the amount of $1,400,000 in defined declining quarterly amounts over a three year period. Management does not believe this business acquisition meets the significance definition provided in Regulation S-X, Rule 210.1-02(w). On August 31, 2018, the Company acquired Concept Development Inc. (CDI) located in Irvine, California for cash of $646,759, and common stock valued at $4,194,673 (Note 3). CDI specializes in the design and manufacture of custom high-performance computing systems for airborne in-flight entertainment systems. On October 31, 2018, the Company’s wholly-owned German subsidiary, OSS GmbH, acquired 100% of the outstanding stock of Bressner Technology GmbH, a Germany limited liability company located near Munich, Germany, from its principal owners for cash consideration of €4,725,000 (US$5,374,582) and stock consideration of 106,463 newly-issued restricted shares of the Company’s common stock. Going Concern Considerations On February 1, 2018, the Company completed its initial public offering through the initial sale of 3,800,000 shares of common stock at a price to the public of $5.00 per share (see Note 9). Proceeds from the sale were used to retire outstanding debt obligations, complete complimentary business acquisitions, and provide the Company with working capital. The combination of continued revenue and gross profit growth, has resulted in growth of the organization as a whole, along with acquisitions of two companies, but has been offset by increased spending in all areas of operating expenses: general & administrative, marketing & selling, along with research & development. The Company is developing plans for cost containment, as well as debt and/or equity financing to ensure that liquidity will be sufficient to meet our cash requirements for current operations through at least a period of the next twelve months. As of March 20, 2019, the Company received funding commitments in the amount of $4,000,000 from members of the Board of Directors, of which $1,500,000 has been borrowed from multiple parties as of June 30, 2019. On May 15, 2019, the Company filed an S-3 prospectus with the Securities and Exchange Commission which became effective on June 19, 2019, and allows the Company to offer up to $100,000,000 aggregate dollar amount of shares of its common stock or preferred stock, debt securities, warrants to purchase its common stock, preferred stock or debt securities, subscription rights to purchase its common stock, preferred stock or debt securities and/or units consisting of some or all of these securities, in any combination, together or separately, in one or more offerings, in amounts, at prices and on the terms that the Company will determine at the time of the offering and which will be set forth in a prospectus supplement and any related free writing prospectus. On June 26, 2019, the Company filed a prospectus supplement relating to its common stock, par value $0.0001 per share, whereby under the prospectus supplement the Company may offer and sell common stock having an aggregate offering price of up to $10,000,000 through Noble Capital Markets, Inc., (“Noble”), acting as the Company’s agent. As such, the Company entered into an Equity Distribution Agreement with Noble dated as of June 26, 2019. As of July 31, 2019, the Company has sold 1,019,561shares of common stock through this offering for total gross proceeds of $1,773,332, which resulted in net proceeds to us of $1,746,046, after deducting compensation payable to Noble of $27,286. As a result, management believes that the Company has sufficient liquidity to satisfy its anticipated cash requirements for at least the next twelve months. However, there can be no assurance that our operations will become profitable or that external sources of financing, including the issuance of debt and/or equity securities, will be available at times and on terms acceptable to us, or at all. The Company’s management prepares budgets and monitors the financial results of the Company as a tool to align liquidity needs to the recurring business requirements. Basis of Presentation The accompanying financial statements have been prepared on an accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”), as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”). The unaudited consolidated financial statements herein have been prepared by the Company pursuant to the rules and regulations of the United States Securities Exchange Commission (“SEC”). The accompanying interim unaudited financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited consolidated financial statements for the latest year ended December 31, 2018. Accordingly, note disclosures which would substantially duplicate the disclosures contained in the December 31, 2018 audited consolidated financial statements have been omitted from these interim unaudited consolidated financial statements. The Company evaluated all subsequent events and transactions through the date of filing this report. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the audited consolidated financial statements and notes for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 21, 2019. Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of OSS, which include the results from the Magma acquisition, Ion business combination, and acquisition of Concept Development Inc., since their respective dates of acquisition, its wholly-owned subsidiary, OSS GmbH, which includes the acquisition of Bressner Technology GmbH on October 31, 2018 and the accounts of the joint venture, SkyScale LLC, which was approved for dissolution on December 31, 2018 (collectively referred to as the “Company”). Intercompany balances and transactions have been eliminated in consolidation. The assets and liabilities of SkyScale are as follows: June 30, December 31, 2019 2018 Cash and cash equivalents $ - $ 47,663 Receivables - - Other assets - - Fixed assets - - Total assets $ - $ 47,663 Accounts payable $ - $ 46,663 Accrued expenses - - Notes payable - - Total liabilities - 46,663 Members' equity - 1,000 Total liabilities and members' equity $ - $ 47,663 Operating results for SkyScale are as follows: For The Six Months Ended June 30, 2019 2018 Net revenue $ - $ 120,539 Cost of revenue - 148,961 Gross margin - (28,422 ) Operating expenses: General and administrative - 158,013 Marketing and selling - 40,716 Total operating expenses - 198,729 Loss from operations - (227,151 ) Other (expense) income - 1,981 Net loss $ - $ (225,170 ) The non-controlling interest attributable to SkyScale is shown as a component of equity on the consolidated balance sheets and the share of the loss attributable to the non-controlling interest is shown as a component of income (loss) in the accompanying consolidated statements of operations. Management determined that the dissolution of SkyScale did not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, it has not been reported as discontinued operations. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of consolidated 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 reported amounts of assets, liabilities, revenues and expenses, and disclosures of contingent assets, liabilities, and expenses at the date of the consolidated financial statements during the reporting period. Significant estimates made by management include, among others, the fair value of acquired net assets of CDI in August 2018, and Bressner Technology GmbH in October 2018, dissolution expenses for SkyScale, the allowance for doubtful accounts, fair value of stock options, recoverability of inventories and long-lived assets, and realizability of deferred tax assets. Actual results could differ from those estimates. Concentration Risks At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation (“FDIC”), which provides basic deposit coverage with limits up to $250,000 per owner. As of June 30, 2019, the Company had $4,062,257 in excess of the insurance limits. The Company has not experienced any such losses in these accounts. In Germany, the deposit insurance is €100,000 per bank, per customer. As of June 30, 2019, Bressner has €236,412 (US$268,798) on deposit with banks in excess of the insurance limits. In the three month periods ended June 30, 2019 and 2018, our top three customers represented approximately 52%, and 48% of sales, respectively, and approximately 44%, and 49% for the six month periods ended June 30, 2019 and 2018, respectively. The Company made purchases from three suppliers which represented approximately 20% and 48% of purchases for the three month periods ended June 30, 2019 and 2018, respectively, and approximately 29% and 45% for the six month periods ended June 30, 2019 and 2018, respectively Cash and Cash Equivalents Cash and cash equivalents consist of cash on deposit and money market accounts. The Company considers all highly liquid temporary cash investments with an initial maturity of six months or less when acquired to be cash equivalents. Management believes that the carrying amounts of cash equivalents approximate their fair value because of the short maturity period. Accounts Receivable Accounts receivable are presented at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable and unbilled receivables. Unbilled receivables include costs and gross profit earned in excess of billings. The allowance for doubtful accounts is an estimate to cover the losses resulting from the inability of customers to make payments on their outstanding balances and unbilled receivables. In estimating the required allowance, management considers the overall quality and aging of the accounts receivable, specific customer circumstances, current economic trends, and historical experience with collections. At June 30, 2019 and December 31, 2018, the allowance for doubtful accounts was $14,727 and $13,403, respectively. Revenues earned in excess of related billings are recorded as an asset on the balance sheet as unbilled receivables. Unbilled receivables as of June 30, 2019 and December 31, 2018, were $81,826 and $65,127, respectively. Inventories Inventories are valued at the lower of cost or net realizable value determined on a first-in, first-out basis. The Company uses the average cost method for purposes of determining cost, which approximates the first-in, first-out method. The Company establishes reserves on its inventories to write-down the carrying value of its estimated obsolete or excess inventories to estimated net realizable value based upon observations of historical usage and assumptions about future demand and market conditions. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory. Inventory reserves are not typically reversed until the specific inventories are sold or otherwise disposed. Actual demand, product mix and alternative usage may be lower than those that we project and this difference could have a material adverse effect on our gross margin if inventory write-downs beyond those initially recorded become necessary. Alternatively, if actual demand, product mix and alternative usage are more favorable than those we estimated at the time of such a write-down, our gross margin could be favorably impacted in future periods. Property and Equipment Property and equipment, other than leasehold improvements, are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally from three to five years. Leasehold improvements are recorded at cost and are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the related asset. Tooling and test equipment includes capitalized labor costs associated with the development of the related tooling and test equipment. Costs incurred for maintenance and repairs are expensed as incurred, and expenditures for major replacements and improvements are capitalized. Upon retirement or sale, the cost and related accumulated depreciation and amortization of disposed assets are removed from the accounts and any resulting gain or loss is included in other expense, net. Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment at least annually or when we deem that a triggering event has occurred. The Company reviews goodwill for impairment annually on December 31 st During the six month period ended June 30, 2019, the Company performed a goodwill impairment test of goodwill and as a result of a short-fall in the actual overall financial performance of CDI as compared to plan, a recurring need for working capital, and a decrease in the Company’s stock price. As a result of this interim evaluation, the Company recorded an impairment loss to goodwill of $1,988,701 which was charged to operating expenses in the current period. During the year ended December 31, 2018, the Company recognized goodwill related to two business acquisitions as described in Note 3. Intangible Assets and Long-lived Assets We evaluate our intangible and long-lived assets for impairment when events or circumstances arise that indicate our intangible and long-lived assets may be impaired. Indicators of impairment include, but are not limited to, a significant deterioration in overall economic conditions, a decline in our market capitalization, the loss of significant business, significant decreases in funding for our contracts, or other significant adverse changes in industry or market conditions. The Company completed its qualitative assessment for impairment in December 2018 and determined that there was no impairment as of December 31, 2018. There were no events or circumstances that arose during the six month period ended June 30, 2019, that gave an indication of impairment, except as discussed in Note 3. There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue, which could result in an impairment of intangible and long-lived assets in the future. Revenue Recognition On January 1, 2019, the Company adopted the new accounting standard update ASC 606, Revenue from Contracts with Customers, which superseded nearly all existing revenue recognition guidance under GAAP, to all contracts using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company’s performance obligations are satisfied over time as work is performed or at a point in time. The majority of the Company’s revenue is recognized at a point in time when products ship and control is transferred to the customer. The Company determines revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied. The Company’s contracts are executed through a combination of written agreements along with purchase orders with all customers including certain general terms and conditions. Generally, purchase orders entail products, quantities and prices, which define the performance obligations of each party and are approved and accepted by the Company. The Company’s contracts with customers do not include extended payment terms. Payment terms vary by contract type and type of customer and generally range from 30 to 60 days from invoice. Additionally, taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer and deposited with the relevant government authority, are excluded from revenue. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer adjusted for estimated variable consideration, if any. Variable consideration may include discounts, rights of return, refunds, and other similar obligations. The Company allocates the transaction price to each distinct product and service based on its relative standalone selling price. The standalone selling price for products primarily involves the cost to produce the deliverable plus the anticipated margin and for services is estimated based on the Company’s approved list price. In the normal course of business, the Company does not accept product returns unless the items are defective as manufactured. The Company establishes provisions for estimated returns and warranties. In addition, the Company does not typically provide customers with the right to a refund and does not transact for noncash consideration. Customer agreements include one vendor managed inventory program. The Company recognizes revenue under this arrangement when (i) risks of ownership have passed to the customer; (ii) the customer's commitment to purchase the goods is fixed ; ' ; ' , ' ' The Company recorded revenue from product sales that are held in vendor managed inventory under these agreements of $3,674,366 and $1,923,450, for the three month periods ended June 30, 2019 and 2018, respectively, and $5,168,444 and $2,913,851, for the six month periods ended June 30, 2019 and 2018, respectively. Revenues on certain fixed-price contracts where we provide engineering services, prototypes and completed products are recognized over the contract term based on the percentage of completion or based upon milestones delivered that are provided during the period and compared to the total estimated development and milestone goals to be provided over the entire contract. These services require that we perform significant, extensive and complex design, development, modification or implementation of our customers’ systems. Performance will often extend over long periods of time, and our right to receive future payment depends on our future performance in accordance with the agreement. Recognized revenue using the percentage of completion accounting method was $166,573 and $0 during the three month periods ended June 30, 2019 and 2018, respectively, and $201,053 and $0 during the six month periods ended June 30, 2019 and 2018, respectively. The percentage-of-completion methodology involves recognizing probable and reasonably estimable revenue using the percentage of services completed, on a current cumulative cost to estimate total cost basis, using a reasonably consistent profit margin over the period. Due to the long-term nature of these projects, developing the estimates of costs often requires significant judgment. Factors that must be considered in estimating the progress of work completed and ultimate cost of the projects include, but are not limited to, the availability of labor and labor productivity, the nature and complexity of the work to be performed and the impact of delayed performance. If changes occur in delivery, productivity or other factors used in developing the estimates of costs or revenues, we revise our cost and revenue estimates, which may result in increases or decreases in revenues and costs, and such revisions are reflected in earnings in the period in which the revision becomes known. Related billings that are in excess of revenue earned are deferred and recorded as a liability on the balance sheet until the related services are provided. Deferred revenue was $49,436 and $133,995 as of June 30, 2019 and December 31, 2018, respectively. The Company recognizes revenues for non-refundable, upfront implementation fees on a straight-line basis over the period beginning with initiation of ongoing services through the end of the contract term. The Company’s operating segment revenues disaggregated by primary geographic market, which is determined based on a customer’s geographic location, for the three and six month period ended June 30, 2019 is as follows: For The Three Month Period ended June 30, 2019 For The Six Month Period ended June 30, 2019 Entity: Domestic International Total Domestic International Total Customized computers and flash arrays $ 5,109,661 $ 4,898,143 $ 10,007,804 $ 7,152,171 $ 8,085,719 $ 15,237,890 In-flight entertainment & connectivity 881,062 13,500 894,562 1,177,591 16,425 1,194,016 Value-added reseller with minimal customization 27,851 3,956,019 3,983,870 520,830 7,991,399 8,512,229 $ 6,018,574 $ 8,867,662 $ 14,886,236 $ 8,850,592 $ 16,093,543 $ 24,944,135 During the comparative 2018 periods, the Company only had one operating segment. Warranty Reserve The Company offers product warranties that extend for one year from the date of sale. Such warranties require the Company to repair or replace defective product returned to the Company during the warranty period at While such costs have historically been within management’s expectations and the provisions established, unexpected changes in failure rates could have a material adverse impact on the Company, requiring additional warranty reserves and could adversely affect the Company’s gross profit and gross margins. The Company offers customers extended warranties beyond the standard one-year warranty on the product. The customer can purchase extended warranties from one to five years, in the bronze, silver or gold categories. The revenue that was recognized for the warranties sold for the three months periods ended June 30, 2019 and 2018 was $104,474 and $31,747, respectively, and $211,172 and $59,195 for the six months periods ended June 30, 2019 and 2018, respectively. The Company does have recourse with some of its suppliers that offer more than a one-year guarantee on parts, but this is not standard. The few that offer greater than a year warranty, the Company may be able to cover the cost of the part from the manufacturer for the failed part. The amounts of these costs vary in a wide range, but are not material, due to the infrequency of failure. The amount of liability on the Company’s books for revenue not recognized as of June 30, 2019 and December 31, 2018 were $285,298 and $409,334, respectively. Shipping and Handling Costs The Company's shipping and handling costs are included in cost of goods sold for all periods presented. Foreign Currency We operate primarily in the United States. Foreign sales of products and services are primarily denominated in U.S. dollars. We also conduct limited business outside the United States through our foreign subsidiary in Germany, where business is largely transacted in non-U.S. dollar currencies, particularly the Euro, which is subject to fluctuations due to changes in foreign currency exchange rates. Accordingly, we are subject to exposure from changes in the exchange rates of local currencies. Foreign currency transaction gains and losses are recorded in other income (expense), net in the consolidated statements of operations OSS GmbH operates as an extension of OSS’s domestic operations. The functional currency of OSS GmbH is the Euro. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the average exchange rate in effect during the period. At the end of each reporting period, monetary assets and liabilities are remeasured using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Consequently, changes in the exchange rates of the currencies may impact the translation of the foreign subsidiaries’ statements of operations into U.S. dollars, which may in turn affect our consolidated statements of operations. Derivative Financial Instruments We employ derivatives to manage certain market risks through the use of foreign exchange forward contracts. We do not use derivatives for trading or speculative purposes. Our derivatives are designated as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). We hedge a portion of the exchange risk involved in anticipation of highly probable foreign currency-denominated transactions. In anticipation of these transactions, we enter into foreign exchange contracts to provide currency at a fixed rate. As of June 30, 2019, the Company had no foreign exchange contracts outstanding. Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets, and unrealized losses on derivatives designated as cash flow hedges are recorded at fair value as liabilities. For derivative instruments designated as cash flow hedges, the effective portion is reported as a component of accumulated other comprehensive income until reclassified into interest expense in the same period the hedged transaction affects earnings. The gain or loss on the ineffective portion is recognized as “Other income (expense) – net” in the consolidated statements of income in each period. Stock-Based Compensation The Company accounts for employee and director share-based compensation in accordance with the provisions of ASC Topic 718 “Compensation – Stock Compensation” All transactions in which goods or services are the consideration received for the issuance of equity instruments to non-employees are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the estimated fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur. Employee and director stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Given that stock-based compensation expense recognized in the accompanying consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The Company’s estimated average forfeiture rates are based on historical forfeiture experience and estimated future forfeitures. Compensation cost for stock awards, which include restricted stock units (“RSUs”), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service period. The fair value of stock awards is based on the quoted price of our common stock on the grant date. The estimated fair value of common stock option awards is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions regarding future stock price volatility and expected time to exercise, along with assumptions about the risk-free interest rate and expected dividends, all of which affect the estimated fair values of the Company’s common stock option awards. The expected term of options granted is calculated using the simplified method, which is the weighted average vesting period and the contractual lives of the options. This calculation is based on a method acceptable in instances where the vesting and exercise terms of options granted meet certain conditions and where limited historical exercise data is available. The expected volatility is based on the historical volatility of the common stock of comparable public companies that operate in similar industries as the Company. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on the Company’s history and management’s expectation regarding dividend payouts. Compensation expense for common stock option awards with graded vesting schedules is recognized on a straight-line basis over the requisite service period for the last separately vesting portion of the award, provided that the accumulated cost recognized as of any date at least equals the value of the vested portion of the award. If there are any modifications or cancellations of the underlying vested or unvested stock-based awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense, or record additional expense for vested stock-based awards. Future stock-based compensation expense and unearned stock- based compensation may increase to the extent that the Company grants additional common stock options or other stock-based awards. Business Combinations We utilize the acquisition method of accounting for business combinations and allocate the purchase price of an acquisition to the various tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. We primarily establish fair value using the income approach based upon a discounted cash flow model. The income approach requires the use of many assumptions and estimates including future revenues and expenses, as well as discount factors and income tax rates. Other estimates include: • Estimated step-ups or write-downs for fixed assets and inventory; • Estimated fair values of intangible assets; and • Estimated income tax assets and liabilities assumed from the target While we use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business acquisition date, our estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally one year from the business acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. For changes in the valuation of intangible assets between preliminary and final purchase price allocation, the related amortization is adjusted in the period it occurs. Subsequent to the purchase price allocation period any adjustment to assets acquired or liabilities assumed is included in operating results in the period in which the adjustment is determined. Should we issue shares of our common stock in an acquisition, we will be required to estimate the fair value of the shares issued. See Note 3. Advertising Costs Advertising costs are expensed as incurred and included in marketing and selling expense in the accompanying consolidated statements of operations. Advertising costs for the three month periods ended June 30, 2019 and 2018 were $13,006 and $26,754, respectively, and $22,006 and $44,380 for the six month periods ended June 30, 2019 and 2018. Research and Development Expenses Research and development expenditures are expensed in the period incurred. Research and development expenses primarily consist of salaries, benefits and stock-based compensation, as well as consulting expenses and allocated facilities and other overhead costs. Research and development activities include the development of new technologies, features and functionality in support of the Company’s products and customer needs. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Under ASC Topic 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC Topic 740 provides requirements for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company files income tax returns in the U.S. federal jurisdiction, California and Germany. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act reduces the corporate tax rate to 21%, effective January 1, 2018. The Company does not foresee material changes to its gross liability of uncertain tax positions within the next twelve months. Interest Expense Interest expense consists primarily of interest associated with the Company’s issued debt including the amortization of debt discounts. The Company recognizes the amortization of debt discounts and the amortization of interest costs using a straight-line method which approximates the effective interest method. Net (Loss) Income Per Share Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted-average common shares outstanding during the period. Diluted net (loss) income per share is calculated by dividing the net (loss) income by the weighted-average shares and dilutive potential common shares outstanding during the period. Dilutive potential shares consist of dilutive shares issuable and the exercise or vesting of outstanding stock options and warrants, respectively, computed using the treasury stock method. During a period where a net loss is incurred, dilutive potential shares are excluded from the computation of dilutive net loss per share, as inclusion is anti-dilutive. On February 1, 2018, in connection with the Company’s initial public offering, the Company’s outstanding Series A, Series B, and Series C, Preferred Stock was automatically converted to common stock, par value $0.0001. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business December 31, 2019 In June 2018, the FASB issued ASU No. 2018-07, Stock-based Compensation: Improvements to Nonemployee Share-based Payment Accounting Recently implemented accounting pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Revenue Recognition In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 3 – ACQUISITIONS Concept Development Inc. On August 31, 2018, the Company acquired 100% of the outstanding common stock of Concept Development Inc. (“CDI”) from CDI’s former stockholder (“CDI Stockholder”) pursuant to an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”). CDI specializes in the design and manufacturing of custom high-performance computing systems for airborne in-flight entertainment systems. CDI is located in Southern California. The acquisition is expected to increase the Company’s access to the in-flight entertainment market and gain technical expertise in the design and manufacturing of airborne equipment. The Company paid cash of $646,759 and issued 1,266,364 shares of the Company’s common stock to the CDI Stockholder for 100% of CDI outstanding common stock. The fair value assigned to the shares of common stock was $4,194,673, which was based upon the closing price of OSS’s stock on August 31, 2018 of $3.63 less a discount of 8.75% for lack of marketability for a one year period. This transaction was accounted for using the acquisition method pursuant to ASC Topic 805, Business Combinations The allocation of the total consideration to the acquired net assets as of the acquisition date for CDI is as follows: Cash $ 139,634 Accounts receivable 489,267 Prepaid expenses 45,683 Inventories 205,635 Property and equipment 45,026 Deposits and other 12,526 Customer lists and relationships 470,000 Trade name 90,000 Non-compete 15,000 Accounts payable (91,997 ) Accrued expenses (99,711 ) Deferred revenue (95,610 ) Deferred income taxes (258,301 ) Other accrued liabilities (50,985 ) Working capital loan (370,096 ) Total fair value excluding goodwill 546,071 Goodwill 4,295,361 Total consideration $ 4,841,432 The preliminary determination of fair value for the identifiable net assets acquired in the acquisition was initially determined by management after consideration of the results of a third-party appraisal. At the time of acquisition, management assessed the value and recorded goodwill of $3,100,361 and other intangible assets of $1,770,000. Subsequently in April 2019, and within the one year finalization period prescribed by ASC Topic 805, management finalized the valuation of assets and determined that certain assumptions in the initial financial models used for the determination of intangible asset values required modification. As a result of these modifications, identified intangible assets were reduced from $1,770,000 to $575,000 with the difference of $1,195,000 being allocated to goodwill. Preliminary Valuation Revised Valuation Change Customer lists and relationships $ 1,470,000 $ 470,000 $ (1,000,000 ) Trade name 100,000 90,000 (10,000 ) Non-compete 200,000 15,000 (185,000 ) $ 1,770,000 $ 575,000 $ (1,195,000 ) If the revised valuation had been used since inception of the acquisition, the amortization expense would have been $177,778 less than what has been recognized through April 2019. Additionally, as a result of a short-fall in the actual overall financial performance of CDI as compared to plan, a recurring need for working capital, and a decrease in the Company’s stock price, the Company performed an interim test of impairment of goodwill as there was indication that the carrying value of the assets may not be recoverable. To evaluate whether goodwill is impaired, the Company compares the estimated fair value of CDI to CDI’s carrying value, including goodwill. The Company determined that the carrying value of CDI exceeded its estimated fair value thereby requiring the measurement of the impairment loss. After consideration of the results of an additional third-party appraisal, it was determined by management that the goodwill associated with CDI was impaired by $1,988,701. As a result, the Company took a charge in the current period to operating expenses which is included in the accompanying consolidated statements of operations. This business combination is considered a tax-free reorganization under Section 368(a) under the Internal Revenue Code. The Company incurred $245,028 in accounting and legal fees related to the acquisition of CDI. Bressner Technology GmbH On October 31, 2018, the Company’s wholly-owned German subsidiary, OSS GmbH, acquired 100% of the outstanding stock of Bressner Technology GmbH, a Germany limited liability company located near Munich, Germany, from its principal owners for cash consideration of €4,725,000 (US$5,374,582) and stock consideration of 106,463 newly-issued restricted shares of the Company’s common stock. The fair value assigned to the shares of common stock was $228,779, which was based upon the closing price of OSS’s stock on October 31, 2018 of $2.47 less a discount of 13.0% for lack of marketability for a two year period. This transaction was accounted for using the acquisition method pursuant to ASC Topic 805, Business Combinations The allocation of the total consideration to the acquired net assets as of the acquisition date for Bressner Technology GmbH is as follows: Cash $ 560,932 Accounts receivable 2,238,881 Inventory 3,721,685 Prepaid expenses and deposits 124,491 Fixed assets 346,637 Customer relationships 1,215,798 Trade name 329,515 Non-compete - Josef Bressner 231,797 Accounts payable and accrued expenses (2,076,450 ) Notes payable (2,536,148 ) Deferred tax liability (43,499 ) Total fair value excluding goodwill 4,113,639 Goodwill 1,489,722 Total allocated purchase price $ 5,603,361 The determination of fair value for the identifiable net assets acquired in the acquisition was determined by management and considered the results of a third-party appraisal. Management estimates that any residual value from the intangible assets listed above will not be significant. On the acquisition date, goodwill of $1,489,722 and other intangible assets of $1,777,110 were recorded. The business combination is considered a tax-free reorganization under Section 368(a) under the Internal Revenue Code. The Company incurred $419,305 in accounting and legal fees related to the acquisition of Bressner. Definite lived intangible assets related to acquisitions, after revaluation of CDI intangible assets, are as follows, as of June 30, 2019 Expected Life Remaining Months Gross Intangible Assets Accumulated Amortization Net Intangible Assets Customer lists and relationships 36 to 60 months 1 to 50 months $ 2,084,515 $ (869,893 ) $ 1,214,622 Drawings and Technology 36 months 1 month 760,207 (749,651 ) $ 10,556 Trade name, Trademarks & other 24 to 36 months 1 to 28 months 447,274 (141,052 ) 306,222 Non-compete 36 months 26 to 28 months 246,797 (66,510 ) 180,287 $ 3,538,793 $ (1,827,106 ) $ 1,711,687 Definite lived intangibles assets related to acquisitions are as follows, as of December 31, 2018: Expected Life Remaining Months Gross Intangible Assets Accumulated Amortization Net Intangible Assets Customer lists and relationships 36 to 60 months 7 to 56 months $ 3,084,515 $ (492,269 ) $ 2,592,246 Drawings and Technology 36 months 7 months 760,207 (622,949 ) $ 137,258 Trade name, Trademarks & other 24 to 36 months 7 to 34 months 457,274 (58,218 ) 399,056 Non-compete 36 months 32 to 34 months 431,797 (35,100 ) 396,697 $ 4,733,793 $ (1,208,536 ) $ 3,525,257 The amortization expense of the definite lived intangible assets for the years remaining is as follows: 2019 2020 2021 2022 2023 Total $ 365,495 $ 683,935 $ 556,872 $ 63,231 $ 42,154 $ 1,711,687 Amortization expense recognized during the three month periods ended June 30, 2019 and 2018 was $269,151 and $98,660, respectively and $618,570 and $197,326 for the six month periods ended June 30, 2019 and 2018. The amount of revenue and net loss of CDI included in the Company’s consolidated statements of operations for the three month periods ended June 30, 2019 was $894,562 and $2,109,285, respectively and $1,194,016 and $2,472,814 for the six month periods ended June 30, 2019. The amount of revenue and net loss of Bressner included in the Company’s consolidated statements of operations for the three month periods ended June 30, 2019 was $4,018,495 and $31,579, respectively, and $8,554,099 and $180,738 for the six month periods ended June 30, 2019. The following unaudited consolidated pro forma information presents the results of operations for the three and six month periods ended June 30, 2019 and 2018 as if these two acquisitions occurred on January 1, 2018. For The Three Months Ended June 30, For The Six Months Ended June 30, 2019 2018 2019 2018 Revenue $ 14,886,236 $ 11,701,055 $ 24,944,135 $ 22,670,523 Net loss $ (1,090,176 ) $ (962,168 ) $ (2,034,905 ) $ (1,864,160 ) Acquisition-related pro forma net loss per share attributable to common stockholders Basic $ (0.08 ) $ (0.08 ) $ (0.14 ) $ (0.16 ) Diluted $ (0.08 ) $ (0.08 ) $ (0.14 ) $ (0.16 ) |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2019 | |
Accounts Receivable Net Current [Abstract] | |
Accounts Receivable | NOTE 4 – ACCOUNTS RECEIVABLE Accounts receivable, net consists of the following: June 30, December 31, 2019 2018 Accounts receivable $ 8,274,313 $ 10,488,396 Unbilled receivables 81,826 65,157 8,356,139 10,553,553 Less: allowance for doubtful accounts (14,727 ) (13,403 ) $ 8,341,412 $ 10,540,150 Unbilled receivables include amounts associated with percentage-of-completion accounting, which includes cost and gross profit earned in excess of billing, not currently billable due to contractual provisions. The provision for . |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 5 – INVENTORIES Inventories, net consist of the following: June 30, December 31, 2019 2018 Raw materials $ 3,006,116 $ 2,248,520 Sub-assemblies 1,356,342 1,198,071 Work-in-process 524,211 311,072 Finished goods 4,388,052 3,466,419 9,274,721 7,224,082 Less: reserves for obsolete and slow-moving inventories (415,440 ) (400,152 ) $ 8,859,281 $ 6,823,930 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment, net consists of the following: June 30, December 31, 2019 2018 Computers and computer equipment $ 639,858 $ 609,921 Furniture and office equipment 329,519 211,759 Manufacturing equipment and engineering tools 2,439,519 2,211,080 Leasehold improvements 812,167 163,373 4,221,063 3,196,133 Less: accumulated depreciation and amortization (2,127,611 ) (1,880,167 ) 2,093,452 1,315,966 Construction in progress - facilities 4,432 197,619 Software implementation in progress - ERP 742,355 245,501 $ 2,840,239 $ 1,759,086 During the three month periods ended June 30, 2019 and 2018, the Company incurred $163,301 and $176,072 respectively, and $268,412 and $331,168 for the six month periods ended June 30, 2019 and 2018, respectively of depreciation and amortization expense related to property and equipment. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Liabilities And Other Liabilities [Abstract] | |
Accrued Expenses and Other Liabilities | NOTE 7 – ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: June 30, December 31, 2019 2018 Accrued compensation and related liabilities $ 975,858 $ 1,183,653 Deferred revenue and customer deposits 3,661,717 1,135,470 Warranty reserve 418,862 416,313 Other accrued expenses 960,814 1,195,282 $ 6,017,251 $ 3,930,718 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 8 – DEBT Bank Lines of Credit Bressner Technology GmbH has four revolving lines of credit with German institutions totaling €3,800,000 (US$4,320,562). Borrowing under the lines of credit bear interest at variable rates of Euribor plus a stated rate. Current rates are between 3.75% and 7.99%. The lines of credit are guaranteed by the managing director. Total outstanding balance as of June 30, 2019 was €934,354 (US Notes Payable In connection with July 2016 Note, the Company issued to the noteholder warrants to purchase shares of the Company’s common stock equal to 20% of the original principal at a price per share equal to $1.78 per share. Accordingly, the Company issued to the noteholder warrants to purchase 28,090 shares of the Company’s common stock at an exercise price of $1.78 per share in July 2016. The relative fair value of the warrants was $24,830. The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $1.78 per share; seven year contractual term; 54% volatility; 0% dividend rate; and a risk-free interest rate of 1.42%. In April 2019, the Company borrowed $350,000 from three individuals for a two year period at an interest rate of 9.5% which requires the Company to make monthly principal and interest payments of $16,100 per month. These loans are secured by the assets of the Company. In connection with these loans, the Company issued to the noteholders warrants to purchase shares of the Company’s common stock equal to 10% of the original principle at a price per share equal to $2.15 per share. Accordingly, the Company issued to the noteholders warrants to purchase 16,276 shares of the Company’s common stock at an exercise price of $2.15 per share. The relative fair value of each warrant was $0.89831. The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $2.15 per share; five year contractual term; 44.60% volatility; 0.0% dividend rate; and a risk-free interest rate of 2.307%. The total relative fair value of the warrants issued is $14,037. Bressner Technology GmbH has six term loans outstanding with a total balance outstanding of €1,587,734 (US$1,805,239) as follows: Bressner entered into an unsecured note payable for working capital in August 2015, in the amount of €250,000 (US$284,248) which bears interest at 2.125% which matures on August 31, 2019. Quarterly principal payments of €15,703 (US$17,618) are due at the beginning of each calendar quarter with remaining balance due at maturity. The balance outstanding as of June 30, 2019 is €17,562 (US$19,968). Bressner entered into a note payable in August 2016, in the amount of €250,000 (US$284,248) which bears interest at 2.125% which matures on September 30, 2020. The loan is guaranteed by the managing director of Bressner. Quarterly principal payments of €15,600 (US$17,504) are due at the end of each calendar quarter with remaining balance due at maturity. The balance outstanding as of June 30, 2019 is €62,800 (US$71,403). Bressner entered into a note payable in September 2017, in the amount of €400,000 (US$454,796) which bears interest at 2.125% which matures on April 30, 2020. The loan was guaranteed by the managing director of Bressner. Quarterly principal payments of €25,000 (US$28,051) are due in January, April, July and November with remaining balance of €175,000 (US$196,362) due at maturity. The balance outstanding as of June 30, 2019 is €250,000 (US$284,248). Bressner entered into a note payable in April 2019, in the amount of €500,000 (US$568,495) which bears interest at 2.25% which matures on March 30, 2021 with monthly payments of principal and interest of €21,324 (US$24,244). The balance outstanding as of June 30, 2019 is €457,372 (US$520,027). Bressner entered into a note payable in June 2019, in the amount of €500,000 (US$568,495) which bears interest at 1.7075.% which matures on June 25, 2020 with a balloon payment of principal and interest of €508,679 (US$578,362). Bressner entered into a note payable in June 2019, in the amount of €300,000 (US$341,096) which bears interest at 1.65.% which matures on March 24, 2020 with a balloon payment of principal and interest of €303,716 (US$345,322). Related-Party Notes Payable In April 2019, the Company borrowed $1,150,000 from three individuals who serve on the Company’s board of directors for a two year period at an interest rate of 9.5% which requires the Company to make monthly principal and interest payments of $52,900 per month. These loans are secured by the assets of the Company. In connection with these loans, the Company issued to the noteholders warrants to purchase shares of the Company’s common stock equal to 10% of the original principal at a price per share equal to $2.15 per share. Accordingly, the Company issued to the noteholders warrants to purchase 53,490 shares of the Company’s common stock at an exercise price of $2.15 per share. The relative fair value of each warrant was $0.89831. The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $2.15 per share; five year contractual term; 42.60% volatility; 0.0% dividend rate; and a risk-free interest rate of 2.3067%. The relative fair value of warrants issued is $46,121. Debt Discount The relative fair value of warrants were recorded as debt discount, decreasing notes payable and related-party notes payable and increasing additional paid-in-capital on the accompanying consolidated balance sheets. The debt discounts are being amortized to interest expense over the term of the corresponding notes payable using the straight-line method which approximates the effective interest method. For the three and six month periods ended June 30, 2019, total debt discount amortization was $6,266 and $6,266, respectively, and is included in interest expense in the accompanying consolidated statements of operations. Total future payments under notes payable and related-party notes payable as of June 30, 2019 are as follows: Period Ending June 30, Related Parties Third Parties Foreign Total Discount 2019 $ 557,145 $ 169,541 $ 1,566,847 $ 2,293,533 $ 30,080 2020 505,851 154,230 238,392 898,473 23,812 Total minimum payments 1,062,996 323,771 1,805,239 3,192,006 53,892 Current portion of notes payable (557,145 ) (169,541 ) (1,566,847 ) (2,293,533 ) (30,080 ) Notes payable, net of current portion $ 505,851 $ 154,230 $ 238,392 $ 898,473 $ 23,812 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity | NOTE 9 – STOCKHOLDERS’ EQUITY The Company’s amended and restated certificate of incorporation filed on December 14, 2017, authorizes the Company to issue 10,000,000 shares of preferred stock and 50,000,000 shares of common stock. On February 1, 2018, in connection with the Company’s initial public offering, each share of the Company’s outstanding Series A, Series B, and Series C, Preferred Stock was automatically converted into a share of the Company’s common stock, par value $0.0001 on a one-for-one basis. Follow-on Public Offering On May 15, 2019, the Company filed an S-3 prospectus with the Securities and Exchange Commission which became effective on June 19, 2019, and allows the Company to offer up to $100,000,000 aggregate dollar amount of shares of its common stock, preferred stock, debt securities, warrants to purchase its common stock, preferred stock or debt securities, subscription rights to purchase its common stock, preferred stock or debt securities and/or units consisting of some or all of these securities, in any combination, together or separately, in one or more offerings, in amounts, at prices and on the terms that the Company will determine at the time of the offering and which will be set forth in a prospectus supplement and any related free writing prospectus. On June 26, 2019, the Company filed a prospectus supplement relating to its common stock, par value $0.0001 per share, whereby under the prospectus supplement the Company may offer and sell common stock having an aggregate offering price of up to $10,000,000 through Noble Capital Markets, Inc., (“Noble”) acting as the Company’s agent. As such, the Company entered into an Equity Distribution Agreement with Noble dated as of June 26, 2019. As of July 31, 2019, the Company has sold 1,019,561 shares of common stock through this offering for total gross proceeds of $1,773,332, which resulted in net proceeds to us of $1,746,046, after deducting compensation payable to Noble of $27,286. Exercise of Stock Options and Warrants During the six month periods ended June 30, 2019, the Company issued 281,319 shares of common stock for proceeds of $21,149 in cash related to the exercise of stock options and warrants. Of the total shares issued, 234,619 shares of common stock were issued as a cashless exercise of stock options. Stock Options A summary of stock option activity under each of the Company’s stock option plans during the six month period ended June 30, 2019 is as follows: Stock Options Outstanding Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2019 1,968,747 $ 1.14 4.56 $ 1,469,525 Granted 56,000 $ 2.43 - - Forfeited / Cancelled (12,000 ) $ 3.02 - - Exercised (446,669 ) $ 0.48 - - Outstanding at June 30, 2019 1,566,078 $ 1.37 5.80 $ 918,390 Exercisable at June 30, 2019 1,278,291 $ 1.04 5.14 $ 918,390 Vested and expected to vest at June 30, 2019 1,559,217 $ 1.35 5.78 $ 918,390 The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company: For The Six Months Ended June 30, 2019 2018 Expected term (in years) 4.65 - 5.87 - Expected volatility 43.7 - 44.4% - Risk-free interest rate 2.49 - 2.55% - Weighted average grant date fair value per share $ 1.07 - Grant date fair value of options vested $ 574,524 $ 1,376,865 Intrinsic value of options exercised $ 551,134 $ 20,235 As of June 30, 2019, the amount of unearned stock-based compensation estimated to be expensed from 2019 through 2022 related to unvested common stock options is $263,505, net of estimated forfeitures. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is 1.88 years. If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense or calculate and record additional expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional common stock options or other stock-based awards. Restricted Stock Units Restricted stock units may be granted at the discretion of the compensation committee of the Board of Directors under the 2017 Plan in connection with the hiring and retention of personnel and are subject to certain conditions. Restricted stock units generally vest quarterly or semi-annually over a period of one to three years and are typically forfeited if employment is terminated before the restricted stock unit vest. The compensation expense related to the restricted stock units is calculated as the fair value of the common stock on the grant date and is amortized to expense over the vesting period and is adjusted for estimated forfeitures. The Company’s restricted stock unit activity for the six month period ended June 30, 2019 is as follows: Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Unvested at January 1, 2019 173,335 $ 4.13 Granted 160,000 $ 2.43 Vested (67,500 ) $ 4.15 Cancelled - $ - Unvested at June 30, 2019 265,835 $ 3.10 As of June 30, 2019, there was $652,907 of unrecognized compensation cost related to unvested restricted stock units which is expected to be recognized over a weighted average period of 1.3 years. Stock-based compensation expense for the three and six month periods ended June 30, 2019 and 2018 was comprised of the following: For The Three Months Ended June 30, For The Six Months Ended June 30, Stock-based compensation classified as: 2019 2018 2019 2018 General and administrative $ 119,231 $ 104,621 $ 244,438 $ 126,441 Production 12,146 3,273 27,044 6,463 Marketing and selling 15,067 7,866 29,460 10,815 Research and development 11,363 9,056 24,341 16,414 $ 157,807 $ 124,816 $ 325,283 $ 160,133 Warrants The following table summarizes the Company’s warrant activity during the six month period ended June 30, 2019: Number of Warrants Weighted Average Exercise Price Warrants outstanding – January 1, 2019 578,996 $ 4.32 Warrants granted 69,766 $ 2.15 Warrants exercised (17,815 ) $ 1.40 Warrants outstanding – June 30, 2019 630,947 $ 4.16 |
Employee Benefit Plan
Employee Benefit Plan | 6 Months Ended |
Jun. 30, 2019 | |
Defined Contribution Pension And Other Postretirement Plans Disclosure [Abstract] | |
Employee Benefit Plan | NOTE 10 – EMPLOYEE BENEFIT PLAN The Company has a 401(k) retirement plan. Under the terms of the plan, eligible employees may defer up to 20% of their pre-tax earnings, subject to the Internal Revenue Service annual contribution limit. Additionally, the Plan allows for discretionary matching contributions by the Company. In the six month periods ended June 30, 2019 and 2018, the matching contributions were 100% of the employee's contribution up to a maximum of 5% of the employee’s annual compensation. During the three month periods ended June 30, 2019 and 2018, the Company contributed $81,356 and $78,071, respectively, and $172,728 and $152,718 for the six month periods ended June 30, 2019 and 2018, respectively, to the 401(k) Plan. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11 – COMMITMENTS AND CONTINGENCIES Legal From time to time the Company is subject to various legal claims and proceedings arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of any such matters as of June 30, 2019 and December 31, 2018, will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. Guarantees and Indemnities The Company has made certain indemnities, under which it may be required to make payments to an indemnified party, in relation to certain transactions. The Company indemnifies its directors, officers, employees and agents to the maximum extent permitted under the laws of the State of Delaware. In connection with its facility lease, the Company has indemnified its lessor for certain claims arising from the use of the facilities. Also, in connection with its Credit Agreement (Note 8), the Company has agreed to indemnify its lender and others related to the use of the proceeds and other matters. The duration of the indemnities varies, and in many cases is indefinite. These indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities in the accompanying consolidated balance sheets. Leases The Company leases its offices, manufacturing, and warehouse facility in San Diego County under a non-cancelable operating lease. Our corporate headquarters are in a leased space comprising approximately 24,032 square feet in Escondido, California under a lease that was renewed in August 2018 and expires in August 2024. We also lease a 3,208 square foot facility in Salt Lake City, Utah that houses our Ion software development team. CDI is the lessee of approximately 12,000 square feet located in Irvine, California with the lease expiring in June 2021. Bressner Technology GmbH, which was acquired in October 2018, leases space comprising 8,073 square feet which lease expires in December 2019. For the three month periods ended June 30, 2019 and 2018, rent expense was $167,870 and $152,534, respectively. For the six month periods ended June 30, 2019 and 2018, rent expense was $339,015 and $296,462, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 – RELATED PARTY TRANSACTIONS The Company has engaged an advertising firm whose president is a member of the Board of Directors of the Company. Amounts paid to this company are included in marketing and selling expense in the accompanying consolidated statements of operations and for the three month periods ended June 30, 2019 and 2018, totaled $13,006 and $12,000, respectively and for the six month periods ended June 30, 2019 and 2018, totaled $22,006 and $ 16,000, respectively. The Company has appointed certain stockholders to the Board of Directors. Director fees paid by the Company, including stock-based compensation, for the three month periods ended June 30, 2019 and 2018 totaled $18,613 and $64,018, respectively, and for the six month periods ended June 30, 2019 and 2018 totaled $101,449 and $100,468, respectively which is included in general and administrative expenses in the accompanying consolidated statements of operations. The Company has engaged a related-party law firm (a principal of that firm owns shares in the Company) to provide legal services. Legal fees paid to this firm are included in general and administrative expenses in the accompanying consolidated statements of operations for the three month periods ended June 30, 2019 and 2018 totaled $6,000 and $32,093, respectively and $18,000 and $42,090 for the six month periods June 30, 2019 and 2018, respectively. The Company has engaged an IT network support firm whose owner is an employee of the Company. Fees paid to this firm are included in general and administrative expense in the accompanying consolidated statements of operations for the three month periods ended June 30, 2019 and 2018 totaled $516 and $3,627 and $1,176 and $6,491 for the six month periods ended June 30, 2019 and 2018, respectively. Interest expense on all related-party notes payable for the three and six month periods ended June 30, 2019 and 2018 totaled $23,223 and $23,223 and $0 and $16,599, respectively. Effective August 1, 2016, the Company entered into a management services agreement with a company owned by the former Chief Executive Officer of Magma. The agreement calls for payments of $180,000 per year for the first two years paid in monthly installments. In year three, the amount is reduced to $37,500 for the year paid in monthly installments. Additionally, the Company granted 30,000 options in conjunction with execution of this agreement. Payments for the three month periods ended June 30, 2019 and 2018 were $9,375 and $45,000, respectively and $18,750 and $90,000 for the six month periods ended June 30, 2019 and 2018, respectively. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | NOTE 13 – NET LOSS PER SHARE Basic and diluted net loss per share was calculated as follows for the three and six month periods ended June 30, 2019 and 2018: For The Three Months Ended June 30, For The Six Months Ended June 30, 2019 2018 2019 2018 Basic and diluted net loss per share attributable to common stockholders: Numerator: Net loss attributable to common stockholders $ (1,594,633 ) $ (1,502,822 ) $ (2,539,363 ) $ (2,297,240 ) Denominator: Weighted average common shares outstanding - basic 14,442,291 12,773,419 14,341,560 11,464,246 Effect of dilutive securities - - - - Weighted average common shares outstanding - diluted 14,442,291 12,773,419 14,341,560 11,464,246 Net loss per common share attributable to common stockholders: Basic $ (0.11 ) $ (0.12 ) $ (0.18 ) $ (0.20 ) Diluted $ (0.11 ) $ (0.12 ) $ (0.18 ) $ (0.20 ) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 14 – FAIR VALUE MEASUREMENTS The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. These tiers include: • Level 1, defined as quoted market prices in active markets for identical assets or liabilities; • Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3, defined as unobservable inputs that are not corroborated by market data. The carrying value of financial instruments including cash and cash equivalents accounts receivable and accounts payable and accrued expenses, lines of credit, and other liabilities approximate fair value due to the short-term nature of these instruments. Assets and liabilities assumed in the acquisition of the Ion software, Concept Development Inc., and Bressner Technology GmbH were recorded at fair value based upon the Company’s market assumptions which approximated carrying value (except for acquired intangible assets – Note 2) due to the short-term nature of the instruments. The carrying amounts of Bressner’s existing lines of credit and notes payable approximate their fair values at the stated interest rates and are reflective of the prevailing market rates. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | NOTE 15 – SEGMENT AND GEOGRAPHIC INFORMATION The Company operates in three reportable segments: the design and manufacture of high-performance customized computers and flash arrays, in-flight entertainment & connectivity and value-added reseller with minimal customization. The Company evaluates financial performance on a company-wide basis. Segment detail for the three and six month periods ended June 30, 2019 and 2018 is as follows: For The Three Month Periods ended June 30, 2019 For The Three Month Periods ended June 30, 2018 OSS CDI Bressner Total OSS CDI Bressner Total Revenues $ 10,007,804 $ 894,562 $ 3,983,870 $ 14,886,236 $ 5,892,666 $ - $ - $ 5,892,666 Cost of revenues (5,712,191 ) (717,717 ) (3,043,170 ) (9,473,078 ) (4,252,484 ) - - (4,252,484 ) Gross profit 4,295,613 176,845 940,700 5,413,158 1,640,182 - - 1,640,182 Gross profit % 42.92 % 19.77 % 23.61 % 36.36 % 27.83 % 27.83 % Total operating expenses 3,240,943 2,222,460 930,235 6,393,638 2,758,801 - - 2,758,801 Income (loss) from operations $ 1,054,670 $ (2,045,615 ) $ 10,465 $ (980,480 ) $ (1,118,619 ) $ - $ - $ (1,118,619 ) For The Six Month Periods ended June 30, 2019 For The Six Month Periods ended June 30, 2018 OSS CDI Bressner Total OSS CDI Bressner Total Revenues $ 15,237,890 $ 1,194,016 $ 8,512,229 $ 24,944,135 $ 13,012,378 $ - $ - $ 13,012,378 Cost of revenues (9,441,095 ) (1,063,444 ) (6,614,815 ) (17,119,354 ) (9,159,330 ) - - (9,159,330 ) Gross profit 5,796,795 130,572 1,897,414 7,824,781 3,853,048 - - 3,853,048 Gross profit % 38.04 % 10.94 % 22.29 % 31.37 % 29.61 % 29.61 % Total operating expenses 6,380,909 2,503,676 1,952,885 10,837,470 5,673,495 - - 5,673,495 Loss from operations $ (584,114 ) $ (2,373,104 ) $ (55,471 ) $ (3,012,689 ) $ (1,820,447 ) $ - $ - $ (1,820,447 ) Revenue from customers with non-U.S. billing addresses represented approximately 58% and 55% of the Company’s revenue during the three month periods ended June 30, 2019 and 2018, respectively and 63% and 50% for the six month periods ended June 30, 2019 and 2018, respectively As of June 30, 2019, substantially all the Company’s long-lived assets were located in the United States of America with the exception of assets of $309,348 located in Germany. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16 – SUBSEQUENT EVENTS Resulting from the follow-on public offering, as of July 31, 2019, the Company has sold 1,019,561 shares of common stock through this offering for total gross proceeds of $1,773,332, which resulted in net proceeds to us of $$1,746,046, after deducting compensation payable to Noble of $27,286. The Company has evaluated subsequent events after the consolidated balance sheet date of June 30, 2019 through the date of filing. Based upon the Company’s evaluation, management has determined that, other than as disclosed in the accompanying notes, no subsequent events have occurred that would require recognition in the accompanying consolidated financial statements or disclosure in the notes thereto. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Going Concern Considerations | Going Concern Considerations On February 1, 2018, the Company completed its initial public offering through the initial sale of 3,800,000 shares of common stock at a price to the public of $5.00 per share (see Note 9). Proceeds from the sale were used to retire outstanding debt obligations, complete complimentary business acquisitions, and provide the Company with working capital. The combination of continued revenue and gross profit growth, has resulted in growth of the organization as a whole, along with acquisitions of two companies, but has been offset by increased spending in all areas of operating expenses: general & administrative, marketing & selling, along with research & development. The Company is developing plans for cost containment, as well as debt and/or equity financing to ensure that liquidity will be sufficient to meet our cash requirements for current operations through at least a period of the next twelve months. As of March 20, 2019, the Company received funding commitments in the amount of $4,000,000 from members of the Board of Directors, of which $1,500,000 has been borrowed from multiple parties as of June 30, 2019. On May 15, 2019, the Company filed an S-3 prospectus with the Securities and Exchange Commission which became effective on June 19, 2019, and allows the Company to offer up to $100,000,000 aggregate dollar amount of shares of its common stock or preferred stock, debt securities, warrants to purchase its common stock, preferred stock or debt securities, subscription rights to purchase its common stock, preferred stock or debt securities and/or units consisting of some or all of these securities, in any combination, together or separately, in one or more offerings, in amounts, at prices and on the terms that the Company will determine at the time of the offering and which will be set forth in a prospectus supplement and any related free writing prospectus. On June 26, 2019, the Company filed a prospectus supplement relating to its common stock, par value $0.0001 per share, whereby under the prospectus supplement the Company may offer and sell common stock having an aggregate offering price of up to $10,000,000 through Noble Capital Markets, Inc., (“Noble”), acting as the Company’s agent. As such, the Company entered into an Equity Distribution Agreement with Noble dated as of June 26, 2019. As of July 31, 2019, the Company has sold 1,019,561shares of common stock through this offering for total gross proceeds of $1,773,332, which resulted in net proceeds to us of $1,746,046, after deducting compensation payable to Noble of $27,286. As a result, management believes that the Company has sufficient liquidity to satisfy its anticipated cash requirements for at least the next twelve months. However, there can be no assurance that our operations will become profitable or that external sources of financing, including the issuance of debt and/or equity securities, will be available at times and on terms acceptable to us, or at all. The Company’s management prepares budgets and monitors the financial results of the Company as a tool to align liquidity needs to the recurring business requirements. |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared on an accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”), as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”). The unaudited consolidated financial statements herein have been prepared by the Company pursuant to the rules and regulations of the United States Securities Exchange Commission (“SEC”). The accompanying interim unaudited financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited consolidated financial statements for the latest year ended December 31, 2018. Accordingly, note disclosures which would substantially duplicate the disclosures contained in the December 31, 2018 audited consolidated financial statements have been omitted from these interim unaudited consolidated financial statements. The Company evaluated all subsequent events and transactions through the date of filing this report. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the audited consolidated financial statements and notes for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 21, 2019. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of OSS, which include the results from the Magma acquisition, Ion business combination, and acquisition of Concept Development Inc., since their respective dates of acquisition, its wholly-owned subsidiary, OSS GmbH, which includes the acquisition of Bressner Technology GmbH on October 31, 2018 and the accounts of the joint venture, SkyScale LLC, which was approved for dissolution on December 31, 2018 (collectively referred to as the “Company”). Intercompany balances and transactions have been eliminated in consolidation. The assets and liabilities of SkyScale are as follows: June 30, December 31, 2019 2018 Cash and cash equivalents $ - $ 47,663 Receivables - - Other assets - - Fixed assets - - Total assets $ - $ 47,663 Accounts payable $ - $ 46,663 Accrued expenses - - Notes payable - - Total liabilities - 46,663 Members' equity - 1,000 Total liabilities and members' equity $ - $ 47,663 Operating results for SkyScale are as follows: For The Six Months Ended June 30, 2019 2018 Net revenue $ - $ 120,539 Cost of revenue - 148,961 Gross margin - (28,422 ) Operating expenses: General and administrative - 158,013 Marketing and selling - 40,716 Total operating expenses - 198,729 Loss from operations - (227,151 ) Other (expense) income - 1,981 Net loss $ - $ (225,170 ) The non-controlling interest attributable to SkyScale is shown as a component of equity on the consolidated balance sheets and the share of the loss attributable to the non-controlling interest is shown as a component of income (loss) in the accompanying consolidated statements of operations. Management determined that the dissolution of SkyScale did not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, it has not been reported as discontinued operations. |
Use of Estimates | Use of Estimates The preparation of consolidated 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 reported amounts of assets, liabilities, revenues and expenses, and disclosures of contingent assets, liabilities, and expenses at the date of the consolidated financial statements during the reporting period. Significant estimates made by management include, among others, the fair value of acquired net assets of CDI in August 2018, and Bressner Technology GmbH in October 2018, dissolution expenses for SkyScale, the allowance for doubtful accounts, fair value of stock options, recoverability of inventories and long-lived assets, and realizability of deferred tax assets. Actual results could differ from those estimates. |
Concentration Risks | Concentration Risks At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation (“FDIC”), which provides basic deposit coverage with limits up to $250,000 per owner. As of June 30, 2019, the Company had $4,062,257 in excess of the insurance limits. The Company has not experienced any such losses in these accounts. In Germany, the deposit insurance is €100,000 per bank, per customer. As of June 30, 2019, Bressner has €236,412 (US$268,798) on deposit with banks in excess of the insurance limits. In the three month periods ended June 30, 2019 and 2018, our top three customers represented approximately 52%, and 48% of sales, respectively, and approximately 44%, and 49% for the six month periods ended June 30, 2019 and 2018, respectively. The Company made purchases from three suppliers which represented approximately 20% and 48% of purchases for the three month periods ended June 30, 2019 and 2018, respectively, and approximately 29% and 45% for the six month periods ended June 30, 2019 and 2018, respectively |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash on deposit and money market accounts. The Company considers all highly liquid temporary cash investments with an initial maturity of six months or less when acquired to be cash equivalents. Management believes that the carrying amounts of cash equivalents approximate their fair value because of the short maturity period. |
Accounts Receivable | Accounts Receivable Accounts receivable are presented at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable and unbilled receivables. Unbilled receivables include costs and gross profit earned in excess of billings. The allowance for doubtful accounts is an estimate to cover the losses resulting from the inability of customers to make payments on their outstanding balances and unbilled receivables. In estimating the required allowance, management considers the overall quality and aging of the accounts receivable, specific customer circumstances, current economic trends, and historical experience with collections. At June 30, 2019 and December 31, 2018, the allowance for doubtful accounts was $14,727 and $13,403, respectively. Revenues earned in excess of related billings are recorded as an asset on the balance sheet as unbilled receivables. Unbilled receivables as of June 30, 2019 and December 31, 2018, were $81,826 and $65,127, respectively. |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value determined on a first-in, first-out basis. The Company uses the average cost method for purposes of determining cost, which approximates the first-in, first-out method. The Company establishes reserves on its inventories to write-down the carrying value of its estimated obsolete or excess inventories to estimated net realizable value based upon observations of historical usage and assumptions about future demand and market conditions. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory. Inventory reserves are not typically reversed until the specific inventories are sold or otherwise disposed. Actual demand, product mix and alternative usage may be lower than those that we project and this difference could have a material adverse effect on our gross margin if inventory write-downs beyond those initially recorded become necessary. Alternatively, if actual demand, product mix and alternative usage are more favorable than those we estimated at the time of such a write-down, our gross margin could be favorably impacted in future periods. |
Property and Equipment | Property and Equipment Property and equipment, other than leasehold improvements, are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally from three to five years. Leasehold improvements are recorded at cost and are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the related asset. Tooling and test equipment includes capitalized labor costs associated with the development of the related tooling and test equipment. Costs incurred for maintenance and repairs are expensed as incurred, and expenditures for major replacements and improvements are capitalized. Upon retirement or sale, the cost and related accumulated depreciation and amortization of disposed assets are removed from the accounts and any resulting gain or loss is included in other expense, net. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment at least annually or when we deem that a triggering event has occurred. The Company reviews goodwill for impairment annually on December 31 st During the six month period ended June 30, 2019, the Company performed a goodwill impairment test of goodwill and as a result of a short-fall in the actual overall financial performance of CDI as compared to plan, a recurring need for working capital, and a decrease in the Company’s stock price. As a result of this interim evaluation, the Company recorded an impairment loss to goodwill of $1,988,701 which was charged to operating expenses in the current period. During the year ended December 31, 2018, the Company recognized goodwill related to two business acquisitions as described in Note 3. |
Intangible Assets and Long-lived Assets | Intangible Assets and Long-lived Assets We evaluate our intangible and long-lived assets for impairment when events or circumstances arise that indicate our intangible and long-lived assets may be impaired. Indicators of impairment include, but are not limited to, a significant deterioration in overall economic conditions, a decline in our market capitalization, the loss of significant business, significant decreases in funding for our contracts, or other significant adverse changes in industry or market conditions. The Company completed its qualitative assessment for impairment in December 2018 and determined that there was no impairment as of December 31, 2018. There were no events or circumstances that arose during the six month period ended June 30, 2019, that gave an indication of impairment, except as discussed in Note 3. There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue, which could result in an impairment of intangible and long-lived assets in the future. |
Revenue Recognition | Revenue Recognition On January 1, 2019, the Company adopted the new accounting standard update ASC 606, Revenue from Contracts with Customers, which superseded nearly all existing revenue recognition guidance under GAAP, to all contracts using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company’s performance obligations are satisfied over time as work is performed or at a point in time. The majority of the Company’s revenue is recognized at a point in time when products ship and control is transferred to the customer. The Company determines revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied. The Company’s contracts are executed through a combination of written agreements along with purchase orders with all customers including certain general terms and conditions. Generally, purchase orders entail products, quantities and prices, which define the performance obligations of each party and are approved and accepted by the Company. The Company’s contracts with customers do not include extended payment terms. Payment terms vary by contract type and type of customer and generally range from 30 to 60 days from invoice. Additionally, taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer and deposited with the relevant government authority, are excluded from revenue. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer adjusted for estimated variable consideration, if any. Variable consideration may include discounts, rights of return, refunds, and other similar obligations. The Company allocates the transaction price to each distinct product and service based on its relative standalone selling price. The standalone selling price for products primarily involves the cost to produce the deliverable plus the anticipated margin and for services is estimated based on the Company’s approved list price. In the normal course of business, the Company does not accept product returns unless the items are defective as manufactured. The Company establishes provisions for estimated returns and warranties. In addition, the Company does not typically provide customers with the right to a refund and does not transact for noncash consideration. Customer agreements include one vendor managed inventory program. The Company recognizes revenue under this arrangement when (i) risks of ownership have passed to the customer; (ii) the customer's commitment to purchase the goods is fixed ; ' ; ' , ' ' The Company recorded revenue from product sales that are held in vendor managed inventory under these agreements of $3,674,366 and $1,923,450, for the three month periods ended June 30, 2019 and 2018, respectively, and $5,168,444 and $2,913,851, for the six month periods ended June 30, 2019 and 2018, respectively. Revenues on certain fixed-price contracts where we provide engineering services, prototypes and completed products are recognized over the contract term based on the percentage of completion or based upon milestones delivered that are provided during the period and compared to the total estimated development and milestone goals to be provided over the entire contract. These services require that we perform significant, extensive and complex design, development, modification or implementation of our customers’ systems. Performance will often extend over long periods of time, and our right to receive future payment depends on our future performance in accordance with the agreement. Recognized revenue using the percentage of completion accounting method was $166,573 and $0 during the three month periods ended June 30, 2019 and 2018, respectively, and $201,053 and $0 during the six month periods ended June 30, 2019 and 2018, respectively. The percentage-of-completion methodology involves recognizing probable and reasonably estimable revenue using the percentage of services completed, on a current cumulative cost to estimate total cost basis, using a reasonably consistent profit margin over the period. Due to the long-term nature of these projects, developing the estimates of costs often requires significant judgment. Factors that must be considered in estimating the progress of work completed and ultimate cost of the projects include, but are not limited to, the availability of labor and labor productivity, the nature and complexity of the work to be performed and the impact of delayed performance. If changes occur in delivery, productivity or other factors used in developing the estimates of costs or revenues, we revise our cost and revenue estimates, which may result in increases or decreases in revenues and costs, and such revisions are reflected in earnings in the period in which the revision becomes known. Related billings that are in excess of revenue earned are deferred and recorded as a liability on the balance sheet until the related services are provided. Deferred revenue was $49,436 and $133,995 as of June 30, 2019 and December 31, 2018, respectively. The Company recognizes revenues for non-refundable, upfront implementation fees on a straight-line basis over the period beginning with initiation of ongoing services through the end of the contract term. The Company’s operating segment revenues disaggregated by primary geographic market, which is determined based on a customer’s geographic location, for the three and six month period ended June 30, 2019 is as follows: For The Three Month Period ended June 30, 2019 For The Six Month Period ended June 30, 2019 Entity: Domestic International Total Domestic International Total Customized computers and flash arrays $ 5,109,661 $ 4,898,143 $ 10,007,804 $ 7,152,171 $ 8,085,719 $ 15,237,890 In-flight entertainment & connectivity 881,062 13,500 894,562 1,177,591 16,425 1,194,016 Value-added reseller with minimal customization 27,851 3,956,019 3,983,870 520,830 7,991,399 8,512,229 $ 6,018,574 $ 8,867,662 $ 14,886,236 $ 8,850,592 $ 16,093,543 $ 24,944,135 During the comparative 2018 periods, the Company only had one operating segment. |
Warranty Reserve | Warranty Reserve The Company offers product warranties that extend for one year from the date of sale. Such warranties require the Company to repair or replace defective product returned to the Company during the warranty period at While such costs have historically been within management’s expectations and the provisions established, unexpected changes in failure rates could have a material adverse impact on the Company, requiring additional warranty reserves and could adversely affect the Company’s gross profit and gross margins. The Company offers customers extended warranties beyond the standard one-year warranty on the product. The customer can purchase extended warranties from one to five years, in the bronze, silver or gold categories. The revenue that was recognized for the warranties sold for the three months periods ended June 30, 2019 and 2018 was $104,474 and $31,747, respectively, and $211,172 and $59,195 for the six months periods ended June 30, 2019 and 2018, respectively. The Company does have recourse with some of its suppliers that offer more than a one-year guarantee on parts, but this is not standard. The few that offer greater than a year warranty, the Company may be able to cover the cost of the part from the manufacturer for the failed part. The amounts of these costs vary in a wide range, but are not material, due to the infrequency of failure. The amount of liability on the Company’s books for revenue not recognized as of June 30, 2019 and December 31, 2018 were $285,298 and $409,334, respectively. |
Shipping and Handling Costs | Shipping and Handling Costs The Company's shipping and handling costs are included in cost of goods sold for all periods presented. |
Foreign Currency | Foreign Currency We operate primarily in the United States. Foreign sales of products and services are primarily denominated in U.S. dollars. We also conduct limited business outside the United States through our foreign subsidiary in Germany, where business is largely transacted in non-U.S. dollar currencies, particularly the Euro, which is subject to fluctuations due to changes in foreign currency exchange rates. Accordingly, we are subject to exposure from changes in the exchange rates of local currencies. Foreign currency transaction gains and losses are recorded in other income (expense), net in the consolidated statements of operations OSS GmbH operates as an extension of OSS’s domestic operations. The functional currency of OSS GmbH is the Euro. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the average exchange rate in effect during the period. At the end of each reporting period, monetary assets and liabilities are remeasured using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Consequently, changes in the exchange rates of the currencies may impact the translation of the foreign subsidiaries’ statements of operations into U.S. dollars, which may in turn affect our consolidated statements of operations. |
Derivative Financial Instruments | Derivative Financial Instruments We employ derivatives to manage certain market risks through the use of foreign exchange forward contracts. We do not use derivatives for trading or speculative purposes. Our derivatives are designated as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). We hedge a portion of the exchange risk involved in anticipation of highly probable foreign currency-denominated transactions. In anticipation of these transactions, we enter into foreign exchange contracts to provide currency at a fixed rate. As of June 30, 2019, the Company had no foreign exchange contracts outstanding. Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets, and unrealized losses on derivatives designated as cash flow hedges are recorded at fair value as liabilities. For derivative instruments designated as cash flow hedges, the effective portion is reported as a component of accumulated other comprehensive income until reclassified into interest expense in the same period the hedged transaction affects earnings. The gain or loss on the ineffective portion is recognized as “Other income (expense) – net” in the consolidated statements of income in each period. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for employee and director share-based compensation in accordance with the provisions of ASC Topic 718 “Compensation – Stock Compensation” All transactions in which goods or services are the consideration received for the issuance of equity instruments to non-employees are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the estimated fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur. Employee and director stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Given that stock-based compensation expense recognized in the accompanying consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The Company’s estimated average forfeiture rates are based on historical forfeiture experience and estimated future forfeitures. Compensation cost for stock awards, which include restricted stock units (“RSUs”), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service period. The fair value of stock awards is based on the quoted price of our common stock on the grant date. The estimated fair value of common stock option awards is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions regarding future stock price volatility and expected time to exercise, along with assumptions about the risk-free interest rate and expected dividends, all of which affect the estimated fair values of the Company’s common stock option awards. The expected term of options granted is calculated using the simplified method, which is the weighted average vesting period and the contractual lives of the options. This calculation is based on a method acceptable in instances where the vesting and exercise terms of options granted meet certain conditions and where limited historical exercise data is available. The expected volatility is based on the historical volatility of the common stock of comparable public companies that operate in similar industries as the Company. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on the Company’s history and management’s expectation regarding dividend payouts. Compensation expense for common stock option awards with graded vesting schedules is recognized on a straight-line basis over the requisite service period for the last separately vesting portion of the award, provided that the accumulated cost recognized as of any date at least equals the value of the vested portion of the award. If there are any modifications or cancellations of the underlying vested or unvested stock-based awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense, or record additional expense for vested stock-based awards. Future stock-based compensation expense and unearned stock- based compensation may increase to the extent that the Company grants additional common stock options or other stock-based awards. |
Business Combinations | Business Combinations We utilize the acquisition method of accounting for business combinations and allocate the purchase price of an acquisition to the various tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. We primarily establish fair value using the income approach based upon a discounted cash flow model. The income approach requires the use of many assumptions and estimates including future revenues and expenses, as well as discount factors and income tax rates. Other estimates include: • Estimated step-ups or write-downs for fixed assets and inventory; • Estimated fair values of intangible assets; and • Estimated income tax assets and liabilities assumed from the target While we use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business acquisition date, our estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally one year from the business acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. For changes in the valuation of intangible assets between preliminary and final purchase price allocation, the related amortization is adjusted in the period it occurs. Subsequent to the purchase price allocation period any adjustment to assets acquired or liabilities assumed is included in operating results in the period in which the adjustment is determined. Should we issue shares of our common stock in an acquisition, we will be required to estimate the fair value of the shares issued. See Note 3. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and included in marketing and selling expense in the accompanying consolidated statements of operations. Advertising costs for the three month periods ended June 30, 2019 and 2018 were $13,006 and $26,754, respectively, and $22,006 and $44,380 for the six month periods ended June 30, 2019 and 2018. |
Research and Development Expense | Research and Development Expenses Research and development expenditures are expensed in the period incurred. Research and development expenses primarily consist of salaries, benefits and stock-based compensation, as well as consulting expenses and allocated facilities and other overhead costs. Research and development activities include the development of new technologies, features and functionality in support of the Company’s products and customer needs. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Under ASC Topic 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC Topic 740 provides requirements for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company files income tax returns in the U.S. federal jurisdiction, California and Germany. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act reduces the corporate tax rate to 21%, effective January 1, 2018. The Company does not foresee material changes to its gross liability of uncertain tax positions within the next twelve months. |
Interest Expense | Interest Expense Interest expense consists primarily of interest associated with the Company’s issued debt including the amortization of debt discounts. The Company recognizes the amortization of debt discounts and the amortization of interest costs using a straight-line method which approximates the effective interest method. |
Net (Loss) Income Per Share | Net (Loss) Income Per Share Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted-average common shares outstanding during the period. Diluted net (loss) income per share is calculated by dividing the net (loss) income by the weighted-average shares and dilutive potential common shares outstanding during the period. Dilutive potential shares consist of dilutive shares issuable and the exercise or vesting of outstanding stock options and warrants, respectively, computed using the treasury stock method. During a period where a net loss is incurred, dilutive potential shares are excluded from the computation of dilutive net loss per share, as inclusion is anti-dilutive. On February 1, 2018, in connection with the Company’s initial public offering, the Company’s outstanding Series A, Series B, and Series C, Preferred Stock was automatically converted to common stock, par value $0.0001. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business December 31, 2019 In June 2018, the FASB issued ASU No. 2018-07, Stock-based Compensation: Improvements to Nonemployee Share-based Payment Accounting |
Recently Implemented Accounting Pronouncements | Recently implemented accounting pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Revenue Recognition In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments |
Fair Value of Financial Instruments | The carrying value of financial instruments including cash and cash equivalents accounts receivable and accounts payable and accrued expenses, lines of credit, and other liabilities approximate fair value due to the short-term nature of these instruments. Assets and liabilities assumed in the acquisition of the Ion software, Concept Development Inc., and Bressner Technology GmbH were recorded at fair value based upon the Company’s market assumptions which approximated carrying value (except for acquired intangible assets – Note 2) due to the short-term nature of the instruments. The carrying amounts of Bressner’s existing lines of credit and notes payable approximate their fair values at the stated interest rates and are reflective of the prevailing market rates. |
The Company and Basis of Pres_2
The Company and Basis of Presentation (Tables) - SkyScale, LLC | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of Assets and Liabilities | The assets and liabilities of SkyScale are as follows: June 30, December 31, 2019 2018 Cash and cash equivalents $ - $ 47,663 Receivables - - Other assets - - Fixed assets - - Total assets $ - $ 47,663 Accounts payable $ - $ 46,663 Accrued expenses - - Notes payable - - Total liabilities - 46,663 Members' equity - 1,000 Total liabilities and members' equity $ - $ 47,663 |
Schedule of Operating Results | Operating results for SkyScale are as follows: For The Six Months Ended June 30, 2019 2018 Net revenue $ - $ 120,539 Cost of revenue - 148,961 Gross margin - (28,422 ) Operating expenses: General and administrative - 158,013 Marketing and selling - 40,716 Total operating expenses - 198,729 Loss from operations - (227,151 ) Other (expense) income - 1,981 Net loss $ - $ (225,170 ) |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Operating Segment Revenues Disaggregated by Primary Geographic Market Based on Customer's Geographic Location | The Company’s operating segment revenues disaggregated by primary geographic market, which is determined based on a customer’s geographic location, for the three and six month period ended June 30, 2019 is as follows: For The Three Month Period ended June 30, 2019 For The Six Month Period ended June 30, 2019 Entity: Domestic International Total Domestic International Total Customized computers and flash arrays $ 5,109,661 $ 4,898,143 $ 10,007,804 $ 7,152,171 $ 8,085,719 $ 15,237,890 In-flight entertainment & connectivity 881,062 13,500 894,562 1,177,591 16,425 1,194,016 Value-added reseller with minimal customization 27,851 3,956,019 3,983,870 520,830 7,991,399 8,512,229 $ 6,018,574 $ 8,867,662 $ 14,886,236 $ 8,850,592 $ 16,093,543 $ 24,944,135 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of Change in Identified Intangible Assets | The change in identified intangible assets is as follows: Preliminary Valuation Revised Valuation Change Customer lists and relationships $ 1,470,000 $ 470,000 $ (1,000,000 ) Trade name 100,000 90,000 (10,000 ) Non-compete 200,000 15,000 (185,000 ) $ 1,770,000 $ 575,000 $ (1,195,000 ) |
Schedule of Definite Lived Intangible Assets | Definite lived intangible assets related to acquisitions, after revaluation of CDI intangible assets, are as follows, as of June 30, 2019 Expected Life Remaining Months Gross Intangible Assets Accumulated Amortization Net Intangible Assets Customer lists and relationships 36 to 60 months 1 to 50 months $ 2,084,515 $ (869,893 ) $ 1,214,622 Drawings and Technology 36 months 1 month 760,207 (749,651 ) $ 10,556 Trade name, Trademarks & other 24 to 36 months 1 to 28 months 447,274 (141,052 ) 306,222 Non-compete 36 months 26 to 28 months 246,797 (66,510 ) 180,287 $ 3,538,793 $ (1,827,106 ) $ 1,711,687 Definite lived intangibles assets related to acquisitions are as follows, as of December 31, 2018: Expected Life Remaining Months Gross Intangible Assets Accumulated Amortization Net Intangible Assets Customer lists and relationships 36 to 60 months 7 to 56 months $ 3,084,515 $ (492,269 ) $ 2,592,246 Drawings and Technology 36 months 7 months 760,207 (622,949 ) $ 137,258 Trade name, Trademarks & other 24 to 36 months 7 to 34 months 457,274 (58,218 ) 399,056 Non-compete 36 months 32 to 34 months 431,797 (35,100 ) 396,697 $ 4,733,793 $ (1,208,536 ) $ 3,525,257 |
Schedule of Amortization Expense of Definite Lived Intangible Assets | The amortization expense of the definite lived intangible assets for the years remaining is as follows: 2019 2020 2021 2022 2023 Total $ 365,495 $ 683,935 $ 556,872 $ 63,231 $ 42,154 $ 1,711,687 |
Bressner Technology | |
Summary of Allocation of Total Consideration to the Acquired Net Assets | The allocation of the total consideration to the acquired net assets as of the acquisition date for Bressner Technology GmbH is as follows: Cash $ 560,932 Accounts receivable 2,238,881 Inventory 3,721,685 Prepaid expenses and deposits 124,491 Fixed assets 346,637 Customer relationships 1,215,798 Trade name 329,515 Non-compete - Josef Bressner 231,797 Accounts payable and accrued expenses (2,076,450 ) Notes payable (2,536,148 ) Deferred tax liability (43,499 ) Total fair value excluding goodwill 4,113,639 Goodwill 1,489,722 Total allocated purchase price $ 5,603,361 |
CDI | |
Summary of Allocation of Total Consideration to the Acquired Net Assets | The allocation of the total consideration to the acquired net assets as of the acquisition date for CDI is as follows: Cash $ 139,634 Accounts receivable 489,267 Prepaid expenses 45,683 Inventories 205,635 Property and equipment 45,026 Deposits and other 12,526 Customer lists and relationships 470,000 Trade name 90,000 Non-compete 15,000 Accounts payable (91,997 ) Accrued expenses (99,711 ) Deferred revenue (95,610 ) Deferred income taxes (258,301 ) Other accrued liabilities (50,985 ) Working capital loan (370,096 ) Total fair value excluding goodwill 546,071 Goodwill 4,295,361 Total consideration $ 4,841,432 |
Schedule of Unaudited Consolidated Pro Forma Information | The following unaudited consolidated pro forma information presents the results of operations for the three and six month periods ended June 30, 2019 and 2018 as if these two acquisitions occurred on January 1, 2018. For The Three Months Ended June 30, For The Six Months Ended June 30, 2019 2018 2019 2018 Revenue $ 14,886,236 $ 11,701,055 $ 24,944,135 $ 22,670,523 Net loss $ (1,090,176 ) $ (962,168 ) $ (2,034,905 ) $ (1,864,160 ) Acquisition-related pro forma net loss per share attributable to common stockholders Basic $ (0.08 ) $ (0.08 ) $ (0.14 ) $ (0.16 ) Diluted $ (0.08 ) $ (0.08 ) $ (0.14 ) $ (0.16 ) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounts Receivable Net Current [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable, net consists of the following: June 30, December 31, 2019 2018 Accounts receivable $ 8,274,313 $ 10,488,396 Unbilled receivables 81,826 65,157 8,356,139 10,553,553 Less: allowance for doubtful accounts (14,727 ) (13,403 ) $ 8,341,412 $ 10,540,150 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories, Net | Inventories, net consist of the following: June 30, December 31, 2019 2018 Raw materials $ 3,006,116 $ 2,248,520 Sub-assemblies 1,356,342 1,198,071 Work-in-process 524,211 311,072 Finished goods 4,388,052 3,466,419 9,274,721 7,224,082 Less: reserves for obsolete and slow-moving inventories (415,440 ) (400,152 ) $ 8,859,281 $ 6,823,930 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment, Net | Property and equipment, net consists of the following: June 30, December 31, 2019 2018 Computers and computer equipment $ 639,858 $ 609,921 Furniture and office equipment 329,519 211,759 Manufacturing equipment and engineering tools 2,439,519 2,211,080 Leasehold improvements 812,167 163,373 4,221,063 3,196,133 Less: accumulated depreciation and amortization (2,127,611 ) (1,880,167 ) 2,093,452 1,315,966 Construction in progress - facilities 4,432 197,619 Software implementation in progress - ERP 742,355 245,501 $ 2,840,239 $ 1,759,086 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Liabilities And Other Liabilities [Abstract] | |
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consist of the following: June 30, December 31, 2019 2018 Accrued compensation and related liabilities $ 975,858 $ 1,183,653 Deferred revenue and customer deposits 3,661,717 1,135,470 Warranty reserve 418,862 416,313 Other accrued expenses 960,814 1,195,282 $ 6,017,251 $ 3,930,718 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Total Future Payments under Notes Payable and Related Party Notes Payable | Total future payments under notes payable and related-party notes payable as of June 30, 2019 are as follows: Period Ending June 30, Related Parties Third Parties Foreign Total Discount 2019 $ 557,145 $ 169,541 $ 1,566,847 $ 2,293,533 $ 30,080 2020 505,851 154,230 238,392 898,473 23,812 Total minimum payments 1,062,996 323,771 1,805,239 3,192,006 53,892 Current portion of notes payable (557,145 ) (169,541 ) (1,566,847 ) (2,293,533 ) (30,080 ) Notes payable, net of current portion $ 505,851 $ 154,230 $ 238,392 $ 898,473 $ 23,812 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders Equity Note [Abstract] | |
Summary of Stock Option Activity | A summary of stock option activity under each of the Company’s stock option plans during the six month period ended June 30, 2019 is as follows: Stock Options Outstanding Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2019 1,968,747 $ 1.14 4.56 $ 1,469,525 Granted 56,000 $ 2.43 - - Forfeited / Cancelled (12,000 ) $ 3.02 - - Exercised (446,669 ) $ 0.48 - - Outstanding at June 30, 2019 1,566,078 $ 1.37 5.80 $ 918,390 Exercisable at June 30, 2019 1,278,291 $ 1.04 5.14 $ 918,390 Vested and expected to vest at June 30, 2019 1,559,217 $ 1.35 5.78 $ 918,390 |
Schedule of Assumption to Calculate Weighted Average Grant Date Fair Value of Options Grant | The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company: For The Six Months Ended June 30, 2019 2018 Expected term (in years) 4.65 - 5.87 - Expected volatility 43.7 - 44.4% - Risk-free interest rate 2.49 - 2.55% - Weighted average grant date fair value per share $ 1.07 - Grant date fair value of options vested $ 574,524 $ 1,376,865 Intrinsic value of options exercised $ 551,134 $ 20,235 |
Schedule of Restricted Stock Unit Activity | The Company’s restricted stock unit activity for the six month period ended June 30, 2019 is as follows: Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Unvested at January 1, 2019 173,335 $ 4.13 Granted 160,000 $ 2.43 Vested (67,500 ) $ 4.15 Cancelled - $ - Unvested at June 30, 2019 265,835 $ 3.10 |
Summary of Stock-Based Compensation Expense | Stock-based compensation expense for the three and six month periods ended June 30, 2019 and 2018 was comprised of the following: For The Three Months Ended June 30, For The Six Months Ended June 30, Stock-based compensation classified as: 2019 2018 2019 2018 General and administrative $ 119,231 $ 104,621 $ 244,438 $ 126,441 Production 12,146 3,273 27,044 6,463 Marketing and selling 15,067 7,866 29,460 10,815 Research and development 11,363 9,056 24,341 16,414 $ 157,807 $ 124,816 $ 325,283 $ 160,133 |
Schedule of Warrant Activity | The following table summarizes the Company’s warrant activity during the six month period ended June 30, 2019: Number of Warrants Weighted Average Exercise Price Warrants outstanding – January 1, 2019 578,996 $ 4.32 Warrants granted 69,766 $ 2.15 Warrants exercised (17,815 ) $ 1.40 Warrants outstanding – June 30, 2019 630,947 $ 4.16 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Net Loss Per Share | Basic and diluted net loss per share was calculated as follows for the three and six month periods ended June 30, 2019 and 2018: For The Three Months Ended June 30, For The Six Months Ended June 30, 2019 2018 2019 2018 Basic and diluted net loss per share attributable to common stockholders: Numerator: Net loss attributable to common stockholders $ (1,594,633 ) $ (1,502,822 ) $ (2,539,363 ) $ (2,297,240 ) Denominator: Weighted average common shares outstanding - basic 14,442,291 12,773,419 14,341,560 11,464,246 Effect of dilutive securities - - - - Weighted average common shares outstanding - diluted 14,442,291 12,773,419 14,341,560 11,464,246 Net loss per common share attributable to common stockholders: Basic $ (0.11 ) $ (0.12 ) $ (0.18 ) $ (0.20 ) Diluted $ (0.11 ) $ (0.12 ) $ (0.18 ) $ (0.20 ) |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Income (Loss) from Operations by Reporting Segments | Segment detail for the three and six month periods ended June 30, 2019 and 2018 is as follows: For The Three Month Periods ended June 30, 2019 For The Three Month Periods ended June 30, 2018 OSS CDI Bressner Total OSS CDI Bressner Total Revenues $ 10,007,804 $ 894,562 $ 3,983,870 $ 14,886,236 $ 5,892,666 $ - $ - $ 5,892,666 Cost of revenues (5,712,191 ) (717,717 ) (3,043,170 ) (9,473,078 ) (4,252,484 ) - - (4,252,484 ) Gross profit 4,295,613 176,845 940,700 5,413,158 1,640,182 - - 1,640,182 Gross profit % 42.92 % 19.77 % 23.61 % 36.36 % 27.83 % 27.83 % Total operating expenses 3,240,943 2,222,460 930,235 6,393,638 2,758,801 - - 2,758,801 Income (loss) from operations $ 1,054,670 $ (2,045,615 ) $ 10,465 $ (980,480 ) $ (1,118,619 ) $ - $ - $ (1,118,619 ) For The Six Month Periods ended June 30, 2019 For The Six Month Periods ended June 30, 2018 OSS CDI Bressner Total OSS CDI Bressner Total Revenues $ 15,237,890 $ 1,194,016 $ 8,512,229 $ 24,944,135 $ 13,012,378 $ - $ - $ 13,012,378 Cost of revenues (9,441,095 ) (1,063,444 ) (6,614,815 ) (17,119,354 ) (9,159,330 ) - - (9,159,330 ) Gross profit 5,796,795 130,572 1,897,414 7,824,781 3,853,048 - - 3,853,048 Gross profit % 38.04 % 10.94 % 22.29 % 31.37 % 29.61 % 29.61 % Total operating expenses 6,380,909 2,503,676 1,952,885 10,837,470 5,673,495 - - 5,673,495 Loss from operations $ (584,114 ) $ (2,373,104 ) $ (55,471 ) $ (3,012,689 ) $ (1,820,447 ) $ - $ - $ (1,820,447 ) |
The Company and Basis of Pres_3
The Company and Basis of Presentation - Additional Information (Details) | Jul. 31, 2019USD ($)shares | Jun. 26, 2019USD ($)$ / shares | Oct. 31, 2018USD ($)shares | Oct. 31, 2018EUR (€)shares | Aug. 31, 2018USD ($) | Feb. 01, 2018$ / sharesshares | Apr. 30, 2017USD ($) | Jul. 31, 2017USD ($) | Mar. 31, 2018shares | Jun. 30, 2019USD ($)$ / shares | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / shares | Jun. 19, 2019USD ($) | Mar. 20, 2019USD ($) |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||
Gross proceeds from issuance of common stock | $ 19,500,000 | |||||||||||||
Compensation payable | $ 1,810,902 | |||||||||||||
Common Stock | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Common stock sold under public offering | shares | 3,900,000 | |||||||||||||
Members of Board of Directors | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Funding commitments, line of credit | $ 4,000,000 | |||||||||||||
Funding commitments, line of credit, borrowed | $ 1,500,000 | |||||||||||||
Initial Public Offering | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Common stock sold under public offering | shares | 3,800,000 | |||||||||||||
Public offering price per share | $ / shares | $ 5 | |||||||||||||
Follow-on Public Offering | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Aggregate of common stock preferred stock debt securities and warrants securities | $ 100,000,000 | |||||||||||||
Follow-on Public Offering | Noble Capital Markets, Inc | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Common stock, par value | $ / shares | $ 0.0001 | |||||||||||||
Common stock aggregate offering price | $ 10,000,000 | |||||||||||||
Follow-on Public Offering | Common Stock | Noble Capital Markets, Inc | Subsequent Event | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Common stock sold under public offering | shares | 1,019,561 | |||||||||||||
Gross proceeds from issuance of common stock | $ 1,773,332 | |||||||||||||
Net proceeds from issuance of common stock | 1,746,046 | |||||||||||||
Compensation payable | $ 27,286 | |||||||||||||
Concept Development Inc | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Business acquisition date | Aug. 31, 2018 | |||||||||||||
Cash paid to acquire businesses | $ 646,759 | |||||||||||||
Common stock shares issued, Value | $ 4,194,673 | |||||||||||||
Percentage of shares acquired | 100.00% | |||||||||||||
Bressner Technology | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Cash paid to acquire businesses | $ 5,374,582 | € 4,725,000 | ||||||||||||
Percentage of shares acquired | 100.00% | 100.00% | ||||||||||||
Bressner Technology | Restricted Stock | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Stock consideration | shares | 106,463 | 106,463 | ||||||||||||
Technology and Software License Agreement | Western Digital | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Consideration paid for assets acquired | $ 67,000 | |||||||||||||
Receivable for services rendered | $ 1,400,000 | |||||||||||||
Servicer payments period | 3 years | |||||||||||||
Technology and Software License Agreement | Minimum | Western Digital | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Prospective royalties payable | $ 2,500 | |||||||||||||
Technology and Software License Agreement | Maximum | Western Digital | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Prospective royalties payable | $ 5,000 | |||||||||||||
SkyScale, LLC | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Accounts, notes receivable and interest write-off | $ 648,411 | |||||||||||||
Accounts, notes receivable and interest write-off offset by equipment receipt | 160,000 | |||||||||||||
Income from disposition of assets and liabilities | 71,502 | |||||||||||||
Proceeds from closing of joint venture | 288,400 | |||||||||||||
Total charges related to dissolution | $ 705,309 | |||||||||||||
SkyScale, LLC | ||||||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||||||||
Member contribution to joint venture | $ 750,000 | |||||||||||||
Interest received in joint venture | 50.00% |
The Company and Basis of Pres_4
The Company and Basis of Presentation - Schedule of Assets and Liabilities (Details) - Disposal Group, Not Discontinued Operations - SkyScale, LLC | Dec. 31, 2018USD ($) |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Cash and cash equivalents | $ 47,663 |
Total assets | 47,663 |
Accounts payable | 46,663 |
Total liabilities | 46,663 |
Members' equity | 1,000 |
Total liabilities and members' equity | $ 47,663 |
The Company and Basis of Pres_5
The Company and Basis of Presentation - Schedule of Operating Results (Details) - Disposal Group, Not Discontinued Operations - SkyScale, LLC | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Net revenue | $ 120,539 |
Cost of revenue | 148,961 |
Gross margin | (28,422) |
Operating expenses: | |
General and administrative | 158,013 |
Marketing and selling | 40,716 |
Total operating expenses | 198,729 |
Loss from operations | (227,151) |
Other (expense) income | 1,981 |
Net loss | $ (225,170) |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2019USD ($)CustomerSupplier$ / shares | Jun. 30, 2018USD ($)CustomerSupplier | Jun. 30, 2019USD ($)CustomerSupplierContract$ / shares | Jun. 30, 2018USD ($)CustomerSupplier | Dec. 31, 2018USD ($)CustomerSegment$ / shares | Jun. 30, 2019EUR (€) | Feb. 01, 2018$ / shares | |
Significant Accounting Policies [Line Items] | |||||||
Maximum basic deposit coverage per owner | $ 250,000 | $ 250,000 | |||||
Aggregate amount of deposits coverage in excess of insurance limits | 4,062,257 | 4,062,257 | |||||
Allowance for doubtful accounts receivable | 14,727 | 14,727 | $ 13,403 | ||||
Unbilled receivables | 81,826 | 81,826 | 65,127 | ||||
Goodwill impairment | 1,988,701 | 0 | |||||
Impairment of intangible and long-lived assets | 0 | ||||||
Revenue from product sales | 14,886,236 | $ 5,892,666 | 24,944,135 | $ 13,012,378 | |||
Recognized revenue | 166,573 | 0 | 201,053 | 0 | |||
Deferred revenue | 49,436 | $ 49,436 | $ 133,995 | ||||
Number of operating segment | Segment | 1 | ||||||
Customers extended warranties, description | The Company offers customers extended warranties beyond the standard one-year warranty on the product. The customer can purchase extended warranties from one to five years, in the bronze, silver or gold categories. | ||||||
Term of customers product warranty | 1 year | ||||||
Amount of warranties sold | 14,886,236 | $ 24,944,135 | |||||
Purchase price allocation period | 1 year | ||||||
Advertising costs | $ 13,006 | 26,754 | $ 22,006 | 44,380 | |||
Corporate tax rate | 21.00% | ||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Series A Convertible Preferred Stock | |||||||
Significant Accounting Policies [Line Items] | |||||||
Common stock, par value | $ / shares | 0.0001 | ||||||
Series B Convertible Preferred Stock | |||||||
Significant Accounting Policies [Line Items] | |||||||
Common stock, par value | $ / shares | 0.0001 | ||||||
Series C Convertible Preferred Stock | |||||||
Significant Accounting Policies [Line Items] | |||||||
Common stock, par value | $ / shares | $ 0.0001 | ||||||
Designated as Hedging Instrument | |||||||
Significant Accounting Policies [Line Items] | |||||||
Number of foreign exchange contracts | Contract | 0 | ||||||
Product Warranty | |||||||
Significant Accounting Policies [Line Items] | |||||||
Deferred revenue | $ 285,298 | $ 285,298 | $ 409,334 | ||||
Amount of warranties sold | 7,014 | 87,137 | 93,941 | 110,125 | |||
Revenue recognized | 104,474 | 31,747 | 211,172 | 59,195 | |||
Vendor Managed Inventory Program Agreements | |||||||
Significant Accounting Policies [Line Items] | |||||||
Revenue from product sales | $ 3,674,366 | $ 1,923,450 | $ 5,168,444 | $ 2,913,851 | |||
Minimum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 3 years | ||||||
Contracts with customers payment terms | 30 days | ||||||
Term of customers product extended warranty | 1 year | ||||||
Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 5 years | ||||||
Contracts with customers payment terms | 60 days | ||||||
Term of customers product extended warranty | 5 years | ||||||
Percentage of uncertain income tax positions not recognized | 50.00% | ||||||
Sales Revenue | Customer Concentration Risk | |||||||
Significant Accounting Policies [Line Items] | |||||||
Concentration risk, number of customers | Customer | 3 | 3 | 3 | 3 | |||
Concentration risk, percentage | 52.00% | 48.00% | 44.00% | 49.00% | |||
Cost of Goods, Total | Supplier Concentration Risk | |||||||
Significant Accounting Policies [Line Items] | |||||||
Concentration risk, percentage | 20.00% | 48.00% | 29.00% | 45.00% | |||
Concentration risk, number of suppliers | Supplier | 3 | 3 | 3 | 3 | |||
Net Trade Accounts Receivable | Customer Concentration Risk | |||||||
Significant Accounting Policies [Line Items] | |||||||
Concentration risk, number of customers | Customer | 3 | 3 | |||||
Concentration risk, percentage | 57.00% | 64.00% | |||||
Bressner | |||||||
Significant Accounting Policies [Line Items] | |||||||
Maximum basic deposit coverage per owner | € | € 100,000 | ||||||
Aggregate amount of deposits coverage in excess of insurance limits | $ 268,798 | $ 268,798 | € 236,412 | ||||
Revenue from product sales | $ 4,018,495 | $ 8,554,099 |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Operating Segment Revenues Disaggregated by Primary Geographic Market Based on Customer's Geographic Location (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | $ 14,886,236 | $ 24,944,135 |
Customized Computers and Flash Arrays | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 10,007,804 | 15,237,890 |
In-flight Entertainment & Connectivity | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 894,562 | 1,194,016 |
Value-added Reseller with Minimal Customization | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 3,983,870 | 8,512,229 |
Domestic | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 6,018,574 | 8,850,592 |
Domestic | Customized Computers and Flash Arrays | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 5,109,661 | 7,152,171 |
Domestic | In-flight Entertainment & Connectivity | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 881,062 | 1,177,591 |
Domestic | Value-added Reseller with Minimal Customization | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 27,851 | 520,830 |
International | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 8,867,662 | 16,093,543 |
International | Customized Computers and Flash Arrays | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 4,898,143 | 8,085,719 |
International | In-flight Entertainment & Connectivity | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | 13,500 | 16,425 |
International | Value-added Reseller with Minimal Customization | ||
Disaggregation Of Revenue [Line Items] | ||
Operating segment revenues | $ 3,956,019 | $ 7,991,399 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) | Oct. 31, 2018USD ($)yr$ / sharesshares | Oct. 31, 2018EUR (€)yrshares | Aug. 31, 2018USD ($)yr$ / sharesshares | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Apr. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | |||||||||||
Goodwill | $ 7,120,510 | $ 7,120,510 | $ 7,914,211 | ||||||||
Amortization expense | 269,151 | $ 98,660 | 618,570 | $ 197,326 | |||||||
Goodwill impairment | 1,988,701 | $ 0 | |||||||||
Revenue | 14,886,236 | 5,892,666 | 24,944,135 | 13,012,378 | |||||||
Net loss | (1,594,633) | $ (944,730) | $ (1,502,822) | $ (794,418) | (2,539,363) | $ (2,297,240) | |||||
Concept Development Inc | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business acquisition date | Aug. 31, 2018 | ||||||||||
Percentage of shares acquired | 100.00% | ||||||||||
Cash paid to acquire businesses | $ 646,759 | ||||||||||
Common stock shares issued | shares | 1,266,364 | ||||||||||
Common stock shares issued, Value | $ 4,194,673 | ||||||||||
Share price | $ / shares | $ 3.63 | ||||||||||
Goodwill | $ 3,100,361 | 4,295,361 | 4,295,361 | $ 1,195,000 | |||||||
Identified intangible assets | 1,770,000 | 575,000 | |||||||||
Goodwill impairment | 1,988,701 | ||||||||||
Acquisition related accounting and legal fees incurred | $ 245,028 | ||||||||||
Revenue | 894,562 | 1,194,016 | |||||||||
Net loss | 2,109,285 | 2,472,814 | |||||||||
Concept Development Inc | Maximum | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Amortization expense | $ 177,778 | ||||||||||
Concept Development Inc | Discount Rate | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business combination fair value assumption equity interest measurement input | 8.75 | ||||||||||
Concept Development Inc | Lack of Marketability | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business combination fair value assumption equity interest measurement input | yr | 1 | ||||||||||
Bressner Technology | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Percentage of shares acquired | 100.00% | ||||||||||
Cash paid to acquire businesses | $ 5,374,582 | € 4,725,000 | |||||||||
Common stock shares issued | shares | 106,463 | 106,463 | |||||||||
Common stock shares issued, Value | $ 228,779 | ||||||||||
Share price | $ / shares | $ 2.47 | ||||||||||
Goodwill | $ 1,489,722 | ||||||||||
Identified intangible assets | 1,777,110 | ||||||||||
Acquisition related accounting and legal fees incurred | $ 419,305 | ||||||||||
Revenue | 4,018,495 | 8,554,099 | |||||||||
Net loss | $ 31,579 | $ 180,738 | |||||||||
Bressner Technology | Discount Rate | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business combination fair value assumption equity interest measurement input | 13 | 13 | |||||||||
Bressner Technology | Lack of Marketability | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business combination fair value assumption equity interest measurement input | yr | 2 | 2 |
Acquisitions - Summary of Alloc
Acquisitions - Summary of Allocation of Total Consideration to the Acquired Net Assets (Details) - USD ($) | Jun. 30, 2019 | Apr. 30, 2019 | Dec. 31, 2018 | Oct. 31, 2018 | Aug. 31, 2018 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 7,120,510 | $ 7,914,211 | |||
Concept Development Inc | |||||
Business Acquisition [Line Items] | |||||
Cash | 139,634 | ||||
Accounts receivable | 489,267 | ||||
Prepaid expenses | 45,683 | ||||
Inventories | 205,635 | ||||
Property and equipment | 45,026 | ||||
Deposits and other | 12,526 | ||||
Intangibles | $ 575,000 | $ 1,770,000 | |||
Accounts payable | (91,997) | ||||
Accrued expenses | (99,711) | ||||
Deferred revenue | (95,610) | ||||
Deferred income taxes | (258,301) | ||||
Other accrued liabilities | (50,985) | ||||
Working capital loan | (370,096) | ||||
Total fair value excluding goodwill | 546,071 | ||||
Goodwill | 4,295,361 | 1,195,000 | 3,100,361 | ||
Total consideration | 4,841,432 | ||||
Concept Development Inc | Customer Lists and Relationships | |||||
Business Acquisition [Line Items] | |||||
Intangibles | 470,000 | 470,000 | 1,470,000 | ||
Concept Development Inc | Trade Name | |||||
Business Acquisition [Line Items] | |||||
Intangibles | 90,000 | 90,000 | 100,000 | ||
Concept Development Inc | Non-Compete | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 15,000 | $ 15,000 | $ 200,000 | ||
Bressner Technology | |||||
Business Acquisition [Line Items] | |||||
Cash | $ 560,932 | ||||
Accounts receivable | 2,238,881 | ||||
Inventories | 3,721,685 | ||||
Prepaid expenses and deposits | 124,491 | ||||
Property and equipment | 346,637 | ||||
Intangibles | 1,777,110 | ||||
Accounts payable and accrued expenses | (2,076,450) | ||||
Notes payable | (2,536,148) | ||||
Deferred income taxes | (43,499) | ||||
Total fair value excluding goodwill | 4,113,639 | ||||
Goodwill | 1,489,722 | ||||
Total consideration | 5,603,361 | ||||
Bressner Technology | Customer Lists and Relationships | |||||
Business Acquisition [Line Items] | |||||
Intangibles | 1,215,798 | ||||
Bressner Technology | Trade Name | |||||
Business Acquisition [Line Items] | |||||
Intangibles | 329,515 | ||||
Bressner Technology | Non-Compete | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 231,797 |
Acquisitions - Schedule of Chan
Acquisitions - Schedule of Change in Identified Intangible Assets (Details) - Concept Development Inc - USD ($) | 1 Months Ended | ||
Apr. 30, 2019 | Jun. 30, 2019 | Aug. 31, 2018 | |
Business Acquisition [Line Items] | |||
Identified intangible assets | $ 575,000 | $ 1,770,000 | |
Identified intangible assets, change | (1,195,000) | ||
Customer Lists and Relationships | |||
Business Acquisition [Line Items] | |||
Identified intangible assets | 470,000 | $ 470,000 | 1,470,000 |
Identified intangible assets, change | (1,000,000) | ||
Trade Name | |||
Business Acquisition [Line Items] | |||
Identified intangible assets | 90,000 | 90,000 | 100,000 |
Identified intangible assets, change | (10,000) | ||
Non-Compete | |||
Business Acquisition [Line Items] | |||
Identified intangible assets | 15,000 | $ 15,000 | $ 200,000 |
Identified intangible assets, change | $ (185,000) |
Acquisitions - Schedule of Defi
Acquisitions - Schedule of Definite Lived Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Gross | $ 3,538,793 | $ 4,733,793 |
Definite lived intangible assets, Accumulated Amortization | (1,827,106) | (1,208,536) |
Definite lived intangible assets, Net | 1,711,687 | 3,525,257 |
Customer Lists and Relationships | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Gross | 2,084,515 | 3,084,515 |
Definite lived intangible assets, Accumulated Amortization | (869,893) | (492,269) |
Definite lived intangible assets, Net | $ 1,214,622 | $ 2,592,246 |
Customer Lists and Relationships | Minimum | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Expected Life | 36 months | 36 months |
Definite lived intangible assets, Remaining Months | 1 month | 7 months |
Customer Lists and Relationships | Maximum | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Expected Life | 60 months | 60 months |
Definite lived intangible assets, Remaining Months | 50 months | 56 months |
Drawings and Technology | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Expected Life | 36 months | 36 months |
Definite lived intangible assets, Remaining Months | 1 month | 7 months |
Definite lived intangible assets, Gross | $ 760,207 | $ 760,207 |
Definite lived intangible assets, Accumulated Amortization | (749,651) | (622,949) |
Definite lived intangible assets, Net | 10,556 | 137,258 |
Trade name, Trademarks & other | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Gross | 447,274 | 457,274 |
Definite lived intangible assets, Accumulated Amortization | (141,052) | (58,218) |
Definite lived intangible assets, Net | $ 306,222 | $ 399,056 |
Trade name, Trademarks & other | Minimum | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Expected Life | 24 months | 24 months |
Definite lived intangible assets, Remaining Months | 1 month | 7 months |
Trade name, Trademarks & other | Maximum | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Expected Life | 36 months | 36 months |
Definite lived intangible assets, Remaining Months | 28 months | 34 months |
Non-Compete | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Expected Life | 36 months | 36 months |
Definite lived intangible assets, Gross | $ 246,797 | $ 431,797 |
Definite lived intangible assets, Accumulated Amortization | (66,510) | (35,100) |
Definite lived intangible assets, Net | $ 180,287 | $ 396,697 |
Non-Compete | Minimum | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Remaining Months | 26 months | 32 months |
Non-Compete | Maximum | ||
Business Acquisition [Line Items] | ||
Definite lived intangible assets, Remaining Months | 28 months | 34 months |
Acquisitions - Schedule of Amor
Acquisitions - Schedule of Amortization Expense of Definite Lived Intangible Assets (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Business Combinations [Abstract] | ||
2019 | $ 365,495 | |
2020 | 683,935 | |
2021 | 556,872 | |
2022 | 63,231 | |
2023 | 42,154 | |
Definite lived intangible assets, Net | $ 1,711,687 | $ 3,525,257 |
Acquisitions - Schedule of Unau
Acquisitions - Schedule of Unaudited Consolidated Pro Forma Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Combinations [Abstract] | ||||
Revenue | $ 14,886,236 | $ 11,701,055 | $ 24,944,135 | $ 22,670,523 |
Net loss | $ (1,090,176) | $ (962,168) | $ (2,034,905) | $ (1,864,160) |
Acquisition-related pro forma net loss per share attributable to common stockholders | ||||
Basic | $ (0.08) | $ (0.08) | $ (0.14) | $ (0.16) |
Diluted | $ (0.08) | $ (0.08) | $ (0.14) | $ (0.16) |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable, Net (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts Notes And Loans Receivable [Line Items] | ||
Accounts receivable gross | $ 8,356,139 | $ 10,553,553 |
Less: allowance for doubtful accounts | (14,727) | (13,403) |
Accounts receivable, total | 8,341,412 | 10,540,150 |
Accounts Receivable | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Accounts receivable gross | 8,274,313 | 10,488,396 |
Unbilled Receivables | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Accounts receivable gross | $ 81,826 | $ 65,157 |
Accounts Receivable - Additiona
Accounts Receivable - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Accounts Receivable Net Current [Abstract] | ||||
Provision for bad debt expense | $ 1,446 | $ 3,304 | $ 1,358 | $ 94,431 |
Inventories - Summary of Invent
Inventories - Summary of Inventories, Net (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,006,116 | $ 2,248,520 |
Sub-assemblies | 1,356,342 | 1,198,071 |
Work-in-process | 524,211 | 311,072 |
Finished goods | 4,388,052 | 3,466,419 |
Inventory gross | 9,274,721 | 7,224,082 |
Less: reserves for obsolete and slow-moving inventories | (415,440) | (400,152) |
Inventory net | $ 8,859,281 | $ 6,823,930 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment, Net (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 4,221,063 | $ 3,196,133 |
Less: accumulated depreciation and amortization | (2,127,611) | (1,880,167) |
Property plant and equipment, net excluding construction in progress and software implementation | 2,093,452 | 1,315,966 |
Property and equipment, net | 2,840,239 | 1,759,086 |
Computers and Computer Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 639,858 | 609,921 |
Furniture and Office Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 329,519 | 211,759 |
Manufacturing Equipment and Engineering Tools | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 2,439,519 | 2,211,080 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 812,167 | 163,373 |
Facilities | ||
Property Plant And Equipment [Line Items] | ||
Construction in progress | 4,432 | 197,619 |
ERP | ||
Property Plant And Equipment [Line Items] | ||
Software implementation in progress | $ 742,355 | $ 245,501 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Property Plant And Equipment [Line Items] | ||||
Depreciation and amortization | $ 886,982 | $ 528,494 | ||
Property and Equipment | ||||
Property Plant And Equipment [Line Items] | ||||
Depreciation and amortization | $ 163,301 | $ 176,072 | $ 268,412 | $ 331,168 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities - Schedule of Accrued Expenses and Other Liabilities (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities And Other Liabilities [Abstract] | ||
Accrued compensation and related liabilities | $ 975,858 | $ 1,183,653 |
Deferred revenue and customer deposits | 3,661,717 | 1,135,470 |
Warranty reserve | 418,862 | 416,313 |
Other accrued expenses | 960,814 | 1,195,282 |
Accrued expenses and other liabilities | $ 6,017,251 | $ 3,930,718 |
Debt - Additional Information (
Debt - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||||||
Jun. 30, 2019USD ($)LineofCreditTermLoan | Jun. 30, 2019EUR (€) | Apr. 30, 2019USD ($)Individual$ / sharesshares | Apr. 30, 2019EUR (€)Individual | Sep. 30, 2017USD ($) | Sep. 30, 2017EUR (€) | Aug. 31, 2016USD ($) | Aug. 31, 2016EUR (€) | Jul. 31, 2016USD ($)$ / sharesshares | Aug. 31, 2015USD ($) | Aug. 31, 2015EUR (€) | Jun. 30, 2019USD ($)LineofCreditTermLoan | Jun. 30, 2019USD ($)LineofCreditTermLoan | Jun. 30, 2018USD ($) | Jun. 30, 2019EUR (€)LineofCreditTermLoan | Apr. 30, 2019EUR (€)shares | Sep. 30, 2017EUR (€) | Aug. 31, 2016EUR (€) | Aug. 31, 2015EUR (€) | |
Debt Instrument [Line Items] | |||||||||||||||||||
Debt discount amortization | $ | $ 6,266 | $ 6,266 | $ 24,830 | ||||||||||||||||
July 2016 Note | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Warrants to purchase common stock percentage equal to original principal | 20.00% | ||||||||||||||||||
Warrants exercise price | $ / shares | $ 1.78 | ||||||||||||||||||
Warrants to purchase common stock | shares | 28,090 | ||||||||||||||||||
Estimated fair value of warrants | $ | $ 24,830 | ||||||||||||||||||
July 2016 Note | Warrants | Exercise Price | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Warrants exercise price | $ / shares | $ 1.78 | ||||||||||||||||||
July 2016 Note | Warrants | Contractual Term | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 7 years | ||||||||||||||||||
July 2016 Note | Warrants | Volatility Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0.54 | ||||||||||||||||||
July 2016 Note | Warrants | Dividend Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0 | ||||||||||||||||||
July 2016 Note | Warrants | Risk-free Interest Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0.0142 | ||||||||||||||||||
April 2019 Related Party Notes | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Warrants to purchase common stock percentage equal to original principal | 10.00% | 10.00% | |||||||||||||||||
Warrants exercise price | $ / shares | $ 2.15 | ||||||||||||||||||
Warrants to purchase common stock | shares | 16,276 | 16,276 | |||||||||||||||||
Debt instrument, face amount | $ | $ 350,000 | ||||||||||||||||||
Number of individuals | Individual | 3 | 3 | |||||||||||||||||
Term of loan agreement | 2 years | 2 years | |||||||||||||||||
Debt instrument, accrued interest rate | 9.50% | 9.50% | |||||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ | $ 16,100 | ||||||||||||||||||
Estimated fair value of each warrants | $ / shares | $ 0.89831 | ||||||||||||||||||
April 2019 Related Party Notes | Warrants | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Estimated fair value of warrants | $ | $ 14,037 | ||||||||||||||||||
April 2019 Related Party Notes | Warrants | Exercise Price | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Warrants exercise price | $ / shares | $ 2.15 | ||||||||||||||||||
April 2019 Related Party Notes | Warrants | Contractual Term | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 5 years | 5 years | |||||||||||||||||
April 2019 Related Party Notes | Warrants | Volatility Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0.4460 | 0.4460 | |||||||||||||||||
April 2019 Related Party Notes | Warrants | Dividend Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0 | 0 | |||||||||||||||||
April 2019 Related Party Notes | Warrants | Risk-free Interest Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0.02307 | 0.02307 | |||||||||||||||||
April 2019 Related Party Notes | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Warrants to purchase common stock percentage equal to original principal | 10.00% | 10.00% | |||||||||||||||||
Warrants exercise price | $ / shares | $ 2.15 | ||||||||||||||||||
Warrants to purchase common stock | shares | 53,490 | 53,490 | |||||||||||||||||
Debt instrument, face amount | $ | $ 1,150,000 | ||||||||||||||||||
Number of individuals | Individual | 3 | 3 | |||||||||||||||||
Term of loan agreement | 2 years | 2 years | |||||||||||||||||
Debt instrument, accrued interest rate | 9.50% | 9.50% | |||||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ | $ 52,900 | ||||||||||||||||||
Estimated fair value of each warrants | $ / shares | $ 0.89831 | ||||||||||||||||||
April 2019 Related Party Notes | Warrants | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Estimated fair value of warrants | $ | $ 46,121 | ||||||||||||||||||
April 2019 Related Party Notes | Warrants | Exercise Price | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Warrants exercise price | $ / shares | $ 2.15 | ||||||||||||||||||
April 2019 Related Party Notes | Warrants | Contractual Term | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 5 years | 5 years | |||||||||||||||||
April 2019 Related Party Notes | Warrants | Volatility Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0.4260 | 0.4260 | |||||||||||||||||
April 2019 Related Party Notes | Warrants | Dividend Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0 | 0 | |||||||||||||||||
April 2019 Related Party Notes | Warrants | Risk-free Interest Rate | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Fair value assumptions | 0.023067 | 0.023067 | |||||||||||||||||
Bressner Technology GmbH | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Number of term loans outstanding | TermLoan | 6 | 6 | 6 | 6 | |||||||||||||||
Bressner Technology GmbH | Term Loans | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Total balance outstanding | $ 1,805,239 | $ 1,805,239 | $ 1,805,239 | € 1,587,734 | |||||||||||||||
Bressner Technology GmbH | Unsecured Note Payable Maturing on August 12, 2019 | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Debt instrument, face amount | $ 284,248 | € 250,000 | |||||||||||||||||
Debt instrument, accrued interest rate | 2.125% | 2.125% | |||||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ 17,618 | € 15,703 | |||||||||||||||||
Total balance outstanding | 19,968 | 19,968 | 19,968 | 17,562 | |||||||||||||||
Debt instrument, maturity date | Aug. 31, 2019 | Aug. 31, 2019 | |||||||||||||||||
Bressner Technology GmbH | Note Payable Maturing on September 30, 2020 | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Debt instrument, face amount | $ 284,248 | € 250,000 | |||||||||||||||||
Debt instrument, accrued interest rate | 2.125% | 2.125% | |||||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ 17,504 | € 15,600 | |||||||||||||||||
Total balance outstanding | 71,403 | 71,403 | 71,403 | 62,800 | |||||||||||||||
Debt instrument, maturity date | Sep. 30, 2020 | Sep. 30, 2020 | |||||||||||||||||
Bressner Technology GmbH | Note Payable Maturing on April 30, 2020 | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Debt instrument, face amount | $ 454,796 | € 400,000 | |||||||||||||||||
Debt instrument, accrued interest rate | 2.125% | 2.125% | |||||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ 28,051 | € 25,000 | |||||||||||||||||
Total balance outstanding | 284,248 | 284,248 | 284,248 | 250,000 | |||||||||||||||
Debt instrument, maturity date | Apr. 30, 2020 | Apr. 30, 2020 | |||||||||||||||||
Bressner Technology GmbH | Note Payable Maturing on April 30, 2020 | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Debt instrument, face amount | $ 568,495 | € 500,000 | |||||||||||||||||
Debt instrument, accrued interest rate | 2.25% | 2.25% | |||||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ 24,244 | € 21,324 | |||||||||||||||||
Total balance outstanding | 520,027 | 520,027 | 520,027 | 457,372 | |||||||||||||||
Debt instrument, maturity date | Mar. 30, 2021 | Mar. 30, 2021 | |||||||||||||||||
Bressner Technology GmbH | Note Payable Maturing on April 30, 2020 | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Debt instrument, face amount | $ 568,495 | $ 568,495 | $ 568,495 | € 500,000 | |||||||||||||||
Debt instrument, accrued interest rate | 1.7075% | 1.7075% | 1.7075% | 1.7075% | |||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ 578,362 | € 508,679 | |||||||||||||||||
Debt instrument, maturity date | Jun. 25, 2020 | Jun. 25, 2020 | |||||||||||||||||
Bressner Technology GmbH | Note Payable Maturing on April 30, 2020 | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Debt instrument, face amount | $ 341,096 | $ 341,096 | $ 341,096 | € 300,000 | |||||||||||||||
Debt instrument, accrued interest rate | 1.65% | 1.65% | 1.65% | 1.65% | |||||||||||||||
Debt instrument, monthly / quarterly principal and interest payments | $ 345,322 | € 303,716 | |||||||||||||||||
Debt instrument, maturity date | Mar. 24, 2020 | Mar. 24, 2020 | |||||||||||||||||
German Institutions | Revolving Credit Facility | Bressner Technology GmbH | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Number of lines of credit | LineofCredit | 4 | 4 | 4 | 4 | |||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 4,320,562 | $ 4,320,562 | $ 4,320,562 | € 3,800,000 | |||||||||||||||
Total outstanding balance | $ 1,062,352 | $ 1,062,352 | $ 1,062,352 | € 934,354 | |||||||||||||||
Minimum | German Institutions | Revolving Credit Facility | Bressner Technology GmbH | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Line of credit current rate | 3.75% | ||||||||||||||||||
Maximum | German Institutions | Revolving Credit Facility | Bressner Technology GmbH | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Line of credit current rate | 7.99% |
Debt - Schedule of Total Future
Debt - Schedule of Total Future Payments under Notes Payable and Related Party Notes Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
2019 | $ 2,293,533 | |
2020 | 898,473 | |
Total minimum payments | 3,192,006 | |
Current portion of notes payable | (2,293,533) | |
Notes payable, net of current portion | 898,473 | |
2019 | 30,080 | |
2020 | 23,812 | |
Total minimum payments | 53,892 | |
Current portion of notes payable | (30,080) | |
Debt discount on notes payable, noncurrent | 23,812 | |
Related Parties | ||
Debt Instrument [Line Items] | ||
2019 | 557,145 | |
2020 | 505,851 | |
Total minimum payments | 1,062,996 | |
Current portion of notes payable | (557,145) | |
Notes payable, net of current portion | 505,851 | |
Current portion of notes payable | (23,061) | $ 0 |
Debt discount on notes payable, noncurrent | 18,256 | $ 0 |
Third Parties | ||
Debt Instrument [Line Items] | ||
2019 | 169,541 | |
2020 | 154,230 | |
Total minimum payments | 323,771 | |
Current portion of notes payable | (169,541) | |
Notes payable, net of current portion | 154,230 | |
Foreign | ||
Debt Instrument [Line Items] | ||
2019 | 1,566,847 | |
2020 | 238,392 | |
Total minimum payments | 1,805,239 | |
Current portion of notes payable | (1,566,847) | |
Notes payable, net of current portion | $ 238,392 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) | Jul. 31, 2019 | Jun. 26, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 19, 2019 | Dec. 31, 2018 | Feb. 01, 2018 | Dec. 14, 2017 |
Class Of Stock [Line Items] | ||||||||||||
Preferred stock, shares authorized | 10,000,000 | |||||||||||
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | ||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||
Preferred stock, conversion basis | one-for-one basis | |||||||||||
Gross proceeds from issuance of common stock | $ 19,500,000 | |||||||||||
Compensation payable | $ 1,810,902 | |||||||||||
Exercise of stock options and warrants | $ 21,149 | |||||||||||
Unearned compensation cost related to unvested common stock options, net of estimated forfeitures | $ 263,505 | $ 263,505 | ||||||||||
Unearned stock-based compensation expected to be recognized | 1 year 10 months 17 days | |||||||||||
Cashless Exercise of Stock Options | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Number of common stock issued for exercise of stock options | 234,619 | |||||||||||
Restricted Stock Units (RSUs) | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Unearned compensation cost related to unvested common stock options, net of estimated forfeitures | $ 652,907 | $ 652,907 | ||||||||||
Unearned stock-based compensation expected to be recognized | 1 year 3 months 18 days | |||||||||||
Restricted Stock Units (RSUs) | 2017 Equity Incentive Plan | Minimum | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Vesting period | 1 year | 1 year | ||||||||||
Restricted Stock Units (RSUs) | 2017 Equity Incentive Plan | Maximum | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Vesting period | 3 years | 3 years | ||||||||||
Common Stock | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Common stock sold under public offering | 3,900,000 | |||||||||||
Number of common stock issued for exercise of stock options and warrants | 227,221 | 54,098 | 281,319 | |||||||||
Number of common stock issued for exercise of stock options | 5,921 | 321,366 | ||||||||||
Follow-on Public Offering | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Aggregate of common stock preferred stock debt securities and warrants securities | $ 100,000,000 | |||||||||||
Follow-on Public Offering | Noble Capital Markets, Inc | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Common stock, par value | $ 0.0001 | |||||||||||
Common stock aggregate offering price | $ 10,000,000 | |||||||||||
Follow-on Public Offering | Noble Capital Markets, Inc | Common Stock | Subsequent Event | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Common stock sold under public offering | 1,019,561 | |||||||||||
Gross proceeds from issuance of common stock | $ 1,773,332 | |||||||||||
Net proceeds from issuance of common stock | 1,746,046 | |||||||||||
Compensation payable | $ 27,286 | |||||||||||
Series A, Series B, and Series C, Preferred Stock | ||||||||||||
Class Of Stock [Line Items] | ||||||||||||
Stock split, conversion ratio | 1 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Stock Option Activity (Details) - Stock Options - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of Shares, Outstanding beginning balance | 1,968,747 | |
Number of Shares, Granted | 56,000 | |
Number of Shares, Forfeited / Cancelled | (12,000) | |
Number of Shares, Exercised | (446,669) | |
Number of Shares, Outstanding ending balance | 1,566,078 | 1,968,747 |
Number of Shares, Exercisable ending balance | 1,278,291 | |
Number of Shares, Vested and expected to vest ending balance | 1,559,217 | |
Weighted Average Exercise Price, Outstanding beginning balance | $ 1.14 | |
Weighted Average Exercise Price, Granted | 2.43 | |
Weighted Average Exercise Price, Forfeited / Cancelled | 3.02 | |
Weighted Average Exercise Price, Exercised | 0.48 | |
Weighted Average Exercise Price, Outstanding ending balance | 1.37 | $ 1.14 |
Weighted Average Exercise Price, Exercisable ending balance | 1.04 | |
Weighted Average Exercise Price, Vested and expected to vest ending balance | $ 1.35 | |
Weighted Average Remaining Contractual Life (in years), Outstanding balance | 4 years 6 months 21 days | |
Weighted Average Remaining Contractual Life (in years), Outstanding balance | 5 years 9 months 18 days | |
Weighted Average Remaining Contractual Life (in years), Exercisable balance | 5 years 1 month 20 days | |
Weighted Average Remaining Contractual Life (in years), Vested and expected to vest balance | 5 years 9 months 10 days | |
Aggregate Intrinsic Value, Outstanding balance | $ 918,390 | $ 1,469,525 |
Aggregate Intrinsic Value, Exercisable balance | 918,390 | |
Aggregate Intrinsic Value, Vested and expected to vest balance | $ 918,390 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Assumption to Calculate Weighted Average Grant Date Fair Value of Options Grant (Details) - Common Stock - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Class Of Stock [Line Items] | ||
Expected volatility, minimum | 43.70% | |
Expected volatility, maximum | 44.40% | |
Risk-free interest rate, minimum | 2.49% | |
Risk-free interest rate, maximum | 2.55% | |
Weighted average grant date fair value per share | $ 1.07 | |
Grant date fair value of options vested | $ 574,524 | $ 1,376,865 |
Intrinsic value of options exercised | $ 551,134 | $ 20,235 |
Minimum | ||
Class Of Stock [Line Items] | ||
Expected term (in years) | 4 years 7 months 24 days | |
Maximum | ||
Class Of Stock [Line Items] | ||
Expected term (in years) | 5 years 10 months 13 days |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares, Outstanding beginning balance | shares | 173,335 |
Number of Shares, Granted | shares | 160,000 |
Number of shares, Vested | shares | (67,500) |
Number of Shares, Outstanding ending balance | shares | 265,835 |
Weighted Average Grant Date Fair Value / Exercise Price, Outstanding beginning balance | $ / shares | $ 4.13 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 2.43 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 4.15 |
Weighted Average Grant Date Fair Value / Exercise Price, Outstanding ending balance | $ / shares | $ 3.10 |
Stockholders' Equity - Summar_3
Stockholders' Equity - Summary of Stock-Based Compensation Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 157,807 | $ 124,816 | $ 325,283 | $ 160,133 |
General and Administrative | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 119,231 | 104,621 | 244,438 | 126,441 |
Production | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 12,146 | 3,273 | 27,044 | 6,463 |
Marketing and Selling | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 15,067 | 7,866 | 29,460 | 10,815 |
Research and Development | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 11,363 | $ 9,056 | $ 24,341 | $ 16,414 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Warrant Activity (Details) - Warrants | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Class Of Stock [Line Items] | |
Number of Beginning Warrants outstanding | shares | 578,996 |
Number of Warrants granted | shares | 69,766 |
Number of Warrants exercised | shares | (17,815) |
Number of Ending Warrants outstanding | shares | 630,947 |
Weighted Average Grant Date Fair Value / Exercise Price, Outstanding beginning balance | $ / shares | $ 4.32 |
Weighted Average Exercise Price, Warrant granted | $ / shares | 2.15 |
Weighted Average Exercise Price, Warrant exercised | $ / shares | 1.40 |
Weighted Average Grant Date Fair Value / Exercise Price, Outstanding ending balance | $ / shares | $ 4.16 |
Employee Benefit Plan - Additio
Employee Benefit Plan - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Defined Contribution Pension And Other Postretirement Plans Disclosure [Abstract] | ||||
Defined contribution plan name | 401(k) | |||
Employee pre-tax earnings | 20.00% | |||
Maximum pretax contribution per employee | 100.00% | 100.00% | ||
Defined contribution plan, employer matching contribution, percent | 5.00% | 5.00% | ||
Contributions made by company | $ 81,356 | $ 78,071 | $ 172,728 | $ 152,718 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($)ft² | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)ft² | Jun. 30, 2018USD ($) | |
Operating Leased Assets [Line Items] | ||||
Operating lease, rent expense | $ | $ 167,870 | $ 152,534 | $ 339,015 | $ 296,462 |
Offices, Manufacturing and Warehouse Facility | Bressner Technology GmbH | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease, area | 8,073 | 8,073 | ||
Operating lease, expiration date | Dec. 31, 2019 | |||
Offices, Manufacturing and Warehouse Facility | Escondido, California | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease, area | 24,032 | 24,032 | ||
Operating lease renewal period | 2018-08 | |||
Operating lease, expiration date | Aug. 31, 2024 | |||
Offices, Manufacturing and Warehouse Facility | Salt Lake City, Utah | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease, area | 3,208 | 3,208 | ||
Offices, Manufacturing and Warehouse Facility | Irvine, California | CDI | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease, area | 12,000 | 12,000 | ||
Operating lease, expiration date | Jun. 30, 2021 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | Aug. 01, 2016 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Related Party Transaction [Line Items] | |||||
Marketing and selling | $ 1,237,003 | $ 702,474 | $ 2,374,936 | $ 1,571,489 | |
Interest expense on all the related party | 23,223 | 0 | $ 23,223 | 16,599 | |
Former Chief Executive Officer of Magma | |||||
Related Party Transaction [Line Items] | |||||
Management service, description | The agreement calls for payments of $180,000 per year for the first two years paid in monthly installments. In year three, the amount is reduced to $37,500 for the year paid in monthly installments. Additionally, the Company granted 30,000 options in conjunction with execution of this agreement. | ||||
Payments of management services for first two years | $ 180,000 | ||||
Annual management services fees reduced to amount in year three | $ 37,500 | ||||
Options granted | 30,000 | ||||
Payments of management services | 9,375 | 45,000 | $ 18,750 | 90,000 | |
Board of Directors | |||||
Related Party Transaction [Line Items] | |||||
Marketing and selling | 13,006 | 12,000 | 22,006 | 16,000 | |
Board of directors fees including stock-based Compensation | 18,613 | 64,018 | 101,449 | 100,468 | |
Related Law Firm | General and Administrative | |||||
Related Party Transaction [Line Items] | |||||
Legal Fees | 6,000 | 32,093 | 18,000 | 42,090 | |
IT Network Support Firm | General and Administrative | |||||
Related Party Transaction [Line Items] | |||||
Fees paid | $ 516 | $ 3,627 | $ 1,176 | $ 6,491 |
Net Loss Per Share - Summary of
Net Loss Per Share - Summary of Basic and Diluted Net Loss Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||||||
Net loss attributable to common stockholders | $ (1,594,633) | $ (944,730) | $ (1,502,822) | $ (794,418) | $ (2,539,363) | $ (2,297,240) |
Denominator: | ||||||
Weighted average common shares outstanding - basic | 14,442,291 | 12,773,419 | 14,341,560 | 11,464,246 | ||
Weighted average common shares outstanding - diluted | 14,442,291 | 12,773,419 | 14,341,560 | 11,464,246 | ||
Net loss per common share attributable to common stockholders: | ||||||
Basic | $ (0.11) | $ (0.12) | $ (0.18) | $ (0.20) | ||
Diluted | $ (0.11) | $ (0.12) | $ (0.18) | $ (0.20) |
Segment and Geographic Inform_3
Segment and Geographic Information - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018 | Jun. 30, 2019USD ($)Segment | Jun. 30, 2018 | |
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Number of Reportable Segments | Segment | 3 | |||
Germany | ||||
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Exception of Long-Lived Assets | $ | $ 309,348 | $ 309,348 | ||
Revenue | Customer Concentration Risk | ||||
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Concentration risk, percentage | 52.00% | 48.00% | 44.00% | 49.00% |
Revenue | Customer Concentration Risk | International | ||||
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Concentration risk, percentage | 58.00% | 55.00% | 63.00% | 50.00% |
Segment and Geographic Inform_4
Segment and Geographic Information - Schedule of Income (Loss) from Operations by Reporting Segments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Revenue | $ 14,886,236 | $ 5,892,666 | $ 24,944,135 | $ 13,012,378 |
Cost of revenues | (9,473,078) | (4,252,484) | (17,119,354) | (9,159,330) |
Gross margin | $ 5,413,158 | $ 1,640,182 | $ 7,824,781 | $ 3,853,048 |
Gross profit % | 36.36% | 27.83% | 31.37% | 29.61% |
Total operating expenses | $ 6,393,638 | $ 2,758,801 | $ 10,837,470 | $ 5,673,495 |
Loss from operations | (980,480) | (1,118,619) | (3,012,689) | (1,820,447) |
OSS Segment | ||||
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Revenue | 10,007,804 | 5,892,666 | 15,237,890 | 13,012,378 |
Cost of revenues | (5,712,191) | (4,252,484) | (9,441,095) | (9,159,330) |
Gross margin | $ 4,295,613 | $ 1,640,182 | $ 5,796,795 | $ 3,853,048 |
Gross profit % | 42.92% | 27.83% | 38.04% | 29.61% |
Total operating expenses | $ 3,240,943 | $ 2,758,801 | $ 6,380,909 | $ 5,673,495 |
Loss from operations | 1,054,670 | $ (1,118,619) | (584,114) | $ (1,820,447) |
CDI Segment | ||||
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Revenue | 894,562 | 1,194,016 | ||
Cost of revenues | (717,717) | (1,063,444) | ||
Gross margin | $ 176,845 | $ 130,572 | ||
Gross profit % | 19.77% | 10.94% | ||
Total operating expenses | $ 2,222,460 | $ 2,503,676 | ||
Loss from operations | (2,045,615) | (2,373,104) | ||
Bressner Segment | ||||
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items] | ||||
Revenue | 3,983,870 | 8,512,229 | ||
Cost of revenues | (3,043,170) | (6,614,815) | ||
Gross margin | $ 940,700 | $ 1,897,414 | ||
Gross profit % | 23.61% | 22.29% | ||
Total operating expenses | $ 930,235 | $ 1,952,885 | ||
Loss from operations | $ 10,465 | $ (55,471) |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) | Jul. 31, 2019 | Mar. 31, 2018 | Jun. 30, 2018 |
Subsequent Event [Line Items] | |||
Gross proceeds from issuance of common stock | $ 19,500,000 | ||
Compensation payable | $ 1,810,902 | ||
Common Stock | |||
Subsequent Event [Line Items] | |||
Proceeds from issuance of stock, net of issuance costs of $3,367,760, Shares | 3,900,000 | ||
Common Stock | Follow-on Public Offering | Noble Capital Markets, Inc | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Proceeds from issuance of stock, net of issuance costs of $3,367,760, Shares | 1,019,561 | ||
Gross proceeds from issuance of common stock | $ 1,773,332 | ||
Net proceeds from issuance of common stock | 1,746,046 | ||
Compensation payable | $ 27,286 |