Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 01, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Current Fiscal Year End Date | --12-31 | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Transition Report | false | |
Entity File Number | 001-31588 | |
Entity Registrant Name | COMMUNICATIONS SYSTEMS, INC. | |
Entity Incorporation, State or Country Code | MI | |
Entity Tax Identification Number | 41-0957999 | |
Entity Address, Address Line One | 10900 Red Circle Drive | |
Entity Address, City or Town | Minnetonka | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55343 | |
City Area Code | 952 | |
Local Phone Number | 996-1674 | |
Title of 12(b) Security | Common Stock, par value , $.05 per share | |
Trading Symbol | JCS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,720,627 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000022701 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 35,284,786 | $ 12,789,975 |
Investments | 2,861,394 | 2,759,024 |
Trade accounts receivable, less allowance for doubtful accounts of $33,000 and $14,000, respectively | 2,119,022 | 4,402,023 |
Inventories, net | 121,098 | 136,264 |
Prepaid income taxes | 15,910 | 35,948 |
Other current assets | 1,068,799 | 556,953 |
Current assets held for sale | 15,078,066 | |
TOTAL CURRENT ASSETS | 41,471,009 | 35,758,253 |
PROPERTY, PLANT AND EQUIPMENT, net | 5,800,827 | 6,087,975 |
OTHER ASSETS: | ||
Investments | 3,942,825 | 7,109,212 |
Goodwill | 2,086,393 | 2,086,393 |
Operating lease right of use asset | 191,134 | 284,251 |
Intangible assets, net | 2,440,562 | 2,775,361 |
Other assets, net | 183,373 | 171,619 |
Non-current assets held for sale | 846,000 | 1,283,261 |
TOTAL OTHER ASSETS | 9,690,287 | 13,710,097 |
TOTAL ASSETS | 56,962,123 | 55,556,325 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,716,451 | 709,283 |
Accrued compensation and benefits | 1,247,228 | 1,531,595 |
Operating lease liability | 132,690 | 127,243 |
Other accrued liabilities | 203,203 | 318,650 |
Accrued consideration | 550,000 | |
Dividends payable | 34,022,195 | 16,147 |
Deferred revenue | 608,712 | 456,912 |
Current liabilities held for sale | 3,727,821 | |
TOTAL CURRENT LIABILITIES | 37,930,479 | 7,437,651 |
LONG TERM LIABILITIES: | ||
Long-term compensation plans | 116,460 | |
Operating lease liability | 69,613 | 167,697 |
Deferred revenue | 397,076 | 310,179 |
Long term liabilities held for sale | 29,611 | |
TOTAL LONG-TERM LIABILITIES | 466,689 | 623,947 |
COMMITMENTS AND CONTINGENCIES (Footnote 9) | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock, par value $1.00 per share; 3,000,000 shares authorized; none issued | ||
Common stock, par value $0.05 per share; 30,000,000 shares authorized; 9,720,627 and 9,321,927 shares issued and outstanding, respectively | 486,031 | 466,096 |
Additional paid-in capital | 44,878,533 | 43,572,114 |
Retained earnings (accumulated deficit) | (26,815,002) | 4,135,284 |
Accumulated other comprehensive income (loss) | 15,393 | (678,767) |
TOTAL STOCKHOLDERS’ EQUITY | 18,564,955 | 47,494,727 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 56,962,123 | $ 55,556,325 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Condensed Consolidated Balance Sheets [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts | $ 33 | $ 14 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.05 | $ 0.05 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 9,720,627 | 9,321,927 |
Common stock, shares outstanding | 9,720,627 | 9,321,927 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) [Abstract] | ||||
Sales | $ 1,828,299 | $ 3,354,306 | $ 5,313,047 | $ 5,321,683 |
Cost of sales | 1,112,528 | 2,181,589 | 3,459,331 | 3,756,475 |
Gross profit | 715,771 | 1,172,717 | 1,853,716 | 1,565,208 |
Operating expenses: | ||||
Selling, general and administrative expenses | 1,687,930 | 1,959,583 | 5,566,808 | 5,016,736 |
Amortization expense | 110,489 | 106,333 | 346,277 | 106,333 |
Transaction costs | 542,509 | 71,301 | 1,854,382 | 485,886 |
Restructuring expense | 242,275 | 242,275 | ||
Total operating expenses | 2,583,203 | 2,137,217 | 8,009,742 | 5,608,955 |
Operating loss from continuing operations | (1,867,432) | (964,500) | (6,156,026) | (4,043,747) |
Other income (expenses): | ||||
Investment and other income (expense) | 67,791 | 281,794 | (178,874) | 665,158 |
Gain on sale of assets | 4,078 | 20,326 | 308,403 | |
Interest and other expense | (2,352) | (7,060) | (7,290) | (26,151) |
Other income (expense), net | 69,517 | 274,734 | (165,838) | 947,410 |
Operating loss from continuing operations before income taxes | (1,797,915) | (689,766) | (6,321,864) | (3,096,337) |
Income tax expense | 5,170 | 8,952 | 5,760 | 4,049 |
Net loss from continuing operations | (1,803,085) | (698,718) | (6,327,624) | (3,100,386) |
Net income from discontinued operations, net of tax | 10,411,404 | 961,083 | 10,835,605 | 2,931,863 |
Net income (loss) | 8,608,319 | 262,365 | 4,507,981 | (168,523) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gain (loss) on available-for-sale securities | 1,231 | (15,897) | (5,416) | (5,800) |
Foreign currency translation adjustment | 644,590 | 81,146 | 699,576 | (59,859) |
Total other comprehensive income (loss) | 645,821 | 65,249 | 694,160 | (65,659) |
Comprehensive income (loss) | $ 9,254,140 | $ 327,614 | $ 5,202,141 | $ (234,182) |
Basic net income (loss) per share: | ||||
Continuing operations | $ (0.19) | $ (0.07) | $ (0.67) | $ (0.33) |
Discontinued operations | 1.08 | 0.10 | 1.15 | 0.31 |
Basic net income (loss) per share | 0.89 | 0.03 | 0.48 | (0.02) |
Diluted net income (loss) per share: | ||||
Continuing operations | (0.18) | (0.07) | (0.65) | (0.33) |
Discontinued operations | 1.07 | 0.10 | 1.12 | 0.31 |
Diluted net income (loss) per share | $ 0.89 | $ 0.03 | $ 0.47 | $ (0.02) |
Weighted Average Basic Shares Outstanding | 9,631,064 | 9,355,425 | 9,476,264 | 9,323,902 |
Weighted Average Dilutive Shares Outstanding | 9,715,252 | 9,444,986 | 9,660,317 | 9,323,902 |
Dividends declared per share | $ 3.50 | $ 3.50 | $ 0.04 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
BALANCE at Dec. 31, 2019 | $ 462,637 | $ 42,977,914 | $ 4,649,395 | $ (697,664) | $ 47,392,282 |
BALANCE, Shares at Dec. 31, 2019 | 9,252,749 | ||||
Net income (loss) | (168,523) | (168,523) | |||
Issuance of common stock under Employee Stock Purchase Plan | $ 648 | 66,246 | 66,894 | ||
Issuance of common stock under Employee Stock Purchase Plan, Shares | 12,968 | ||||
Issuance of common stock to Employee Stock Ownership Plan | $ 3,303 | 404,281 | 407,584 | ||
Issuance of common stock to Employee Stock Ownership Plan, Shares | 66,059 | ||||
Issuance of common stock under Executive Stock Plan | $ 3,218 | 20,720 | 23,938 | ||
Issuance of common stock under Executive Stock Plan, Shares | 64,352 | ||||
Share based compensation | 319,777 | 319,777 | |||
Other share retirements | $ (4,148) | (387,265) | 37,192 | (354,221) | |
Other share retirements, Shares | (82,964) | ||||
Shareholder dividends | (380,041) | (380,041) | |||
Other comprehensive income (loss) | (65,659) | (65,659) | |||
BALANCE at Sep. 30, 2020 | $ 465,658 | 43,401,673 | 4,138,023 | (763,323) | 47,242,031 |
BALANCE, Shares at Sep. 30, 2020 | 9,313,164 | ||||
BALANCE at Jun. 30, 2020 | $ 467,573 | 43,495,046 | 3,830,132 | (828,572) | 46,964,179 |
BALANCE, Shares at Jun. 30, 2020 | 9,351,486 | ||||
Net income (loss) | 262,365 | 262,365 | |||
Issuance of common stock under Employee Stock Purchase Plan | $ 245 | 24,593 | 24,838 | ||
Issuance of common stock under Employee Stock Purchase Plan, Shares | 4,899 | ||||
Issuance of common stock under Executive Stock Plan | $ 789 | 15,540 | 16,329 | ||
Issuance of common stock under Executive Stock Plan, Shares | 15,768 | ||||
Share based compensation | 143,150 | 143,150 | |||
Other share retirements | $ (2,949) | (276,656) | 44,309 | (235,296) | |
Other share retirements, Shares | (58,989) | ||||
Shareholder dividends | 1,217 | 1,217 | |||
Other comprehensive income (loss) | 65,249 | 65,249 | |||
BALANCE at Sep. 30, 2020 | $ 465,658 | 43,401,673 | 4,138,023 | (763,323) | 47,242,031 |
BALANCE, Shares at Sep. 30, 2020 | 9,313,164 | ||||
BALANCE at Dec. 31, 2020 | $ 466,096 | 43,572,114 | 4,135,284 | (678,767) | 47,494,727 |
BALANCE, Shares at Dec. 31, 2020 | 9,321,927 | ||||
Net income (loss) | 4,507,981 | 4,507,981 | |||
Issuance of common stock under Employee Stock Purchase Plan | $ 477 | 48,532 | 49,009 | ||
Issuance of common stock under Employee Stock Purchase Plan, Shares | 9,540 | ||||
Issuance of common stock to Employee Stock Ownership Plan | $ 3,610 | 326,358 | 329,968 | ||
Issuance of common stock to Employee Stock Ownership Plan, Shares | 72,203 | ||||
Issuance of common stock under Executive Stock Plan | $ 49,699 | 3,714,658 | 3,764,357 | ||
Issuance of common stock under Executive Stock Plan, Shares | 993,977 | ||||
Share based compensation | 559,397 | 559,397 | |||
Other share retirements | $ (33,851) | (3,342,526) | (1,436,068) | (4,812,445) | |
Other share retirements, Shares | (677,020) | ||||
Shareholder dividends | (34,022,199) | (34,022,199) | |||
Other comprehensive income (loss) | 694,160 | 694,160 | |||
BALANCE at Sep. 30, 2021 | $ 486,031 | 44,878,533 | (26,815,002) | 15,393 | 18,564,955 |
BALANCE, Shares at Sep. 30, 2021 | 9,720,627 | ||||
BALANCE at Jun. 30, 2021 | $ 473,521 | 44,053,498 | (7,772) | (630,428) | 43,888,819 |
BALANCE, Shares at Jun. 30, 2021 | 9,470,424 | ||||
Net income (loss) | 8,608,319 | 8,608,319 | |||
Issuance of common stock under Executive Stock Plan | $ 44,905 | 3,714,658 | 3,759,563 | ||
Issuance of common stock under Executive Stock Plan, Shares | 898,096 | ||||
Share based compensation | 317,065 | 317,065 | |||
Other share retirements | $ (32,395) | (3,206,688) | (1,393,355) | (4,632,438) | |
Other share retirements, Shares | (647,893) | ||||
Shareholder dividends | (34,022,194) | (34,022,194) | |||
Other comprehensive income (loss) | 645,821 | 645,821 | |||
BALANCE at Sep. 30, 2021 | $ 486,031 | $ 44,878,533 | $ (26,815,002) | $ 15,393 | $ 18,564,955 |
BALANCE, Shares at Sep. 30, 2021 | 9,720,627 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes In Stockholders’ Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Consolidated Statements of Changes in Stockholders’ Equity [Abstract] | ||||
Shareholder dividends per share | $ 3.50 | $ 0 | $ 3.50 | $ 0.04 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 4,507,981 | $ (168,523) |
Net income from discontinued operations, net of tax | 10,835,605 | 2,931,863 |
Net loss from continuing operations | (6,327,624) | (3,100,386) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 643,541 | 621,363 |
Share based compensation | 559,397 | 319,777 |
Deferred taxes | 9,534 | |
Investment impairment loss | 399,829 | |
Gain on sale of assets | (20,326) | (303,899) |
Changes in assets and liabilities: | ||
Trade accounts receivables | 2,238,172 | (3,852,877) |
Inventories | 15,167 | (136,732) |
Prepaid income taxes | 20,039 | (15,587) |
Other assets, net | (507,020) | (319,063) |
Accounts payable | 1,007,228 | 1,125,157 |
Accrued compensation and benefits | (70,858) | (73,895) |
Other accrued liabilities | 123,729 | 114,762 |
Net cash used in operating activities - continuing operations | (1,918,726) | (5,611,846) |
Net cash (used in) provided by operating activities - discontinued operations | (707,243) | 32,012 |
Net cash used in operating activities | (2,625,969) | (5,579,834) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (20,264) | (101,032) |
Acquisition of business, net of cash acquired | (3,975,894) | |
Purchases of investments | (18,415,534) | |
Proceeds from the sale of property, plant and equipment | 20,326 | 420,000 |
Proceeds from the sale of investments | 2,703,601 | 15,277,710 |
Net cash provided by (used in) investing activities - continuing operations | 2,703,663 | (6,794,750) |
Net cash provided by investing activities - discontinued operations | 23,625,453 | 7,977,300 |
Net cash provided by investing activities | 26,329,116 | 1,182,550 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Cash dividends paid | (16,152) | (563,766) |
Proceeds from issuance of common stock, net of shares withheld | 3,813,366 | 90,832 |
Payment of contingent consideration related to acquisition | (550,000) | |
Purchase of common stock | (4,812,445) | (354,221) |
Net cash used in financing activities | (1,565,231) | (827,155) |
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH | 54,386 | (7,725) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 22,192,302 | (5,232,164) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 13,092,484 | 14,607,510 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | 35,284,786 | 9,375,346 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Income taxes (refunded) paid | (17,971) | 10,102 |
Interest paid | 4,639 | 25,387 |
Dividends declared not paid | $ 34,022,195 | 16,637 |
Operating right of use assets obtained in exchange for lease obligations | $ 208,650 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Communications Systems, Inc. (herein collectively referred to as “CSI,” “our,” “we” or the “Company”) is a Minnesota corporation organized in 1969 that until August 2, 2021 classified its business into two segments: (1) the Electronics & Software segment (consisting of US-based subsidiary Transition Networks and UK-based subsidiary Net2Edge) which (i) manufactures and sells solutions that provide actionable intelligence, power and connectivity at the edge of networks through PoE products, software and services as well as traditional products such as media converters, network adapters and other connectivity products and (ii) designs, develops, and sells edge network access products, TDM (time-division multiplexing) over IP and other circuit emulation solutions, along with specialized cloud-based software solutions, primarily within the telecommunications market; and (2) the Services and Support segment (consisting of subsidiaries JDL and Ecessa), which (i) provides technology solutions including virtualization, managed services, wired and wireless network design and implementation, and hybrid cloud infrastructure and deployment and (ii) designs, develops, and sells SD-WAN (software-designed wide-area network) solutions. As previously disclosed, on August 2, 2021, the Company and Lantronix, Inc. completed the sale by CSI to Lantronix of all of the issued and outstanding stock of CSI’s wholly owned subsidiary, Transition Networks, Inc., and the entire issued share capital of its wholly owned subsidiary, Transition Networks Europe Limited (collectively with Transition Networks, Inc., the “TN Companies”), pursuant to the securities purchase agreement dated April 28, 2021 (“E&S Sale Transaction”). As a result, sales and expenses related to the operations of the former Electronics & Software segment have been presented as discontinued operations in this Form 10-Q. For purposes of this Form 10-Q, the Company classifies operations from its Services & Support segment. Non-allocated general and administrative expenses are separately accounted for as “Other” in the Company’s segment reporting. Intercompany revenues are eliminated upon consolidation. Financial Statement Presentation The condensed consolidated balance sheet as of September 30, 2021, the related condensed consolidated statements of income (loss) and comprehensive income (loss), the condensed consolidated statements of changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the periods ended September 30, 2021 and 2020 have been prepared by Company management. In the opinion of management, all adjustments (which include only normal recurring adjustments, except where noted) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2021 and 2020 and for the periods then ended have been made. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. We recommend these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2020 Annual Report to Shareholders on Form 10-K (“2020 Form 10-K”). The results of operations for the period ended September 30, 2021 are not necessarily indicative of operating results for the entire year. The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. The estimates and assumptions used in the accompanying condensed consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the time of the financial statements. Actual results could differ from those estimates. Except to the extent updated or described below, the significant accounting policies set forth in Note 1 to the consolidated financial statements in the December 31, 2020 Form 10-K, appropriately represent, in all material respects, the current status of accounting policies, and are incorporated herein by reference. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, net of tax, are as follows: Accumulated Other Comprehensive Loss Other Foreign Currency Unrealized gain Comprehensive Translation (loss) on securities LossDecember 31, 2020 $ (700,000) $ 21,000 $ (679,000) Net current period change 700,000 (6,000) 694,000 September 30, 2021 $ — $ 15,000 $ 15,000 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2021 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | NOTE 2 – REVENUE RECOGNITION Services & Support The Company has determined that the following performance obligations identified in its Services & Support segment are transferred over time: managed services and professional services (time and materials (“T&M”) and fixed price) as well as services under maintenance and service contracts. The managed services performance obligation is a bundled solution consisting of a series of distinct services that are substantially the same and that have the same pattern of transfer to the customer and are therefore recognized evenly over the term of the contract. T&M professional services arrangements are recognized over time with an input method based on hours expended towards satisfying the performance obligation. Fixed price professional service arrangements under a relatively longer-term service are also recognized over time with an input method based on hours expended. Maintenance and service contracts are recognized evenly over the life of the contract. The Company has also identified the following performance obligations within its Services & Support segment that are recognized at a point in time: resale of third-party hardware and software; installation; arranging for another party to transfer services to the customer; and certain professional services. The resale of third-party hardware and software is recognized at a point in time, when the goods are shipped or delivered to the customer’s location, in accordance with the shipping terms. Installation services are recognized at a point in time when the services are completed. The service the Company provides to arrange for another party to transfer services to the customer is satisfied at a point in time after the Company has transferred control when the service is first available to the customer by the third-party vendor. The Company reports revenue from these third-party services on a net basis in its financial statements. Depending on the nature of the service, certain professional services transfer control at a point in time. The Company evaluates these circumstances on a case-by-case basis to determine if revenue should be recognized over time or at a point in time. Disaggregation of revenue Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that best reflects the consideration we expect to receive in exchange for those goods or services. In accordance with ASC 606-10-50-5, the following tables present how we disaggregate our revenues. For the Services & Support segment, we analyze revenue by customer group and type, which is as follows for the three and nine months ended September 30, 2021 and 2020: Services & Support Revenue by Customer Group Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020Financial$ 482,000 $ 117,000 $ 1,306,000 $ 314,000Healthcare 261,000 244,000 760,000 674,000Education 64,000 2,312,000 212,000 3,031,000Other commercial clients 1,021,000 682,000 3,035,000 1,302,000CSI IT operations 119,000 175,000 406,000 561,000 $ 1,947,000 $ 3,530,000 $ 5,719,000 $ 5,882,000 Services & Support Revenue by Type Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020Project & product revenue$ 297,000 $ 2,611,000 $ 927,000 $ 3,498,000Services & support revenue 1,650,000 919,000 4,792,000 2,384,000 $ 1,947,000 $ 3,530,000 $ 5,719,000 $ 5,882,000 |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | NOTE 3 – DISCONTINUED OPERATIONS On March 11, 2020, the Company sold the remainder of its Suttle business lines, including the SoHo, MediaMAX, and SpeedStar brands and inventory as well as working capital, certain capital equipment, intellectual property, and customer relationships to Oldcastle Infrastructure, Inc. (“Oldcastle”) for $8,000,000, with a working capital adjustment 90 days after close. Oldcastle will operate the majority of the acquired Suttle business through its wholly-owned subsidiary, Primex Technologies, Inc. The Company received proceeds of $8,900,000 and recorded a gain on the sale of $2,247,000 during 2020. Concurrent with the closing of the transaction, the Company and Oldcastle entered into a Transition Services Agreement (“TSA”) under which Suttle continued to manufacture products for Oldcastle for six months, to ensure seamless supply and quality assurance to the existing customer base. Concurrently with the closing of the transaction and the TSA, the Company and Oldcastle also entered into a lease agreement under which Oldcastle agreed to lease two buildings in Hector, Minnesota, where Suttle had conducted operations. Base rents under the lease agreement range from $6,970 to $7,180 per month. The presentation of discontinued operations with respect to this Suttle sale has been retrospectively applied to all prior periods presented. On August 2, 2021, the Company and Lantronix, Inc. (“Lantronix”) completed the sale by CSI to Lantronix of all of the issued and outstanding stock of CSI’s wholly owned subsidiary, Transition Networks, Inc., and the entire issued share capital of its wholly owned subsidiary, Transition Networks Europe Limited (collectively with Transition Networks, Inc., the “TN Companies”), pursuant to a securities purchase agreement dated April 28, 2021 (“E&S Sale Transaction”). The Company received net proceeds of $23,630,000, which included a working capital adjustment of $(1,376,000) and recorded a gain on sale of $13,455,000 during the third quarter of 2021. The presentation of discontinued operations with respect to this E&S Sale Transaction has been retrospectively applied to all prior periods presented.Under the securities purchase agreement, Lantronix has also agreed to pay CSI, if earned, earnout payments of up to $7.0 million payable following two successive 180-day intervals after the closing of the E&S Sale Transaction based on revenue targets for the business of the TN Companies as specified in the securities purchase agreement, subject to certain adjustments and allocations as further described in the securities purchase agreement. Concurrently with the closing of the transaction, CSI and Lantronix entered into a transition services agreement under which CSI will perform administrative and IT services, and lease office, warehouse and production space to Lantronix at CSI’s Minnetonka, Minnesota facility for a period of up to twelve months. On August 31, 2021, the Company entered into a purchase agreement with Winport Holdings, LLC for the sale of the Company’s real and personal property located in Hector, Minnesota including the lease with Oldcastle for $900,000. The Company recorded a $100,000 impairment loss on these assets in order to write down the assets to the fair value less the costs to sell and recorded the assets as held for sale at September 30, 2021. The assets of the discontinued operations classified as held for sale are as follows: September 30, 2021 December 31, 2020 Cash and cash equivalents $ — $ 303,000 Trade accounts receivable — 5,775,000 Inventories — 8,561,000 Other current assets — 439,000Total current assets $ — $ 15,078,000 Property, plant, and equipment $ 846,000 $ 1,154,000Right of use asset 129,000Total noncurrent assets $ 846,000 $ 1,283,000 Total assets held for sale $ 846,000 $ 16,361,000 Accounts payable $ — $ 1,669,000Accrued compensation and benefits — 767,000Operating lease liability — 86,000Other accrued liabilities — 1,206,000Total current liabilities $ — $ 3,728,000 Operating lease liability $ — $ 30,000Total noncurrent liabilities $ — $ 30,000 Total liabilities held for sale $ — $ 3,758,000 The financial results of the discontinued operations are as follows: Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020Sales $ 2,806,000 $ 9,067,000 $ 20,478,000 $ 30,354,000Cost of sales 1,789,000 5,027,000 11,774,000 17,894,000Selling, general and administrative expenses 1,044,000 2,848,000 7,090,000 10,310,000Transaction costs 982,000 — 2,141,000 —Impairment loss 100,000 — 100,000 —Restructuring expenses 1,287,000 194,000 1,287,000 958,000Gain on sale of assets (13,455,000) (19,000) (13,455,000) (2,057,000)Foreign currency translation loss 642,000 — 642,000 —Other expense 4,000 61,000 61,000 317,000Operating income before income taxes 10,413,000 956,000 10,838,000 2,932,000Income tax expense 2,000 (5,000) 2,000 —Income from discontinued operations $ 10,411,000 $ 961,000 $ 10,836,000 $ 2,932,000 During the three and nine months ended September 30, 2021, the Company recorded $1,529,000 in restructuring expense, with $1,287,000 in discontinued operations. This consisted of severance and related benefits costs due to the sale of the E&S segment. The Company incurred $958,000 in restructuring costs during the nine months ended September 30, 2020 related to severance and related benefits due to the sale of Suttle’s business lines. The Company paid $1,169,000 in restructuring charges during the first nine months of 2021 and had $612,000 in restructuring accruals recorded in accrued compensation and benefits at September 30, 2021 that are expected to be paid during 2021 and 2022. |
Cash Equivalents and Investment
Cash Equivalents and Investments | 9 Months Ended |
Sep. 30, 2021 | |
Cash Equivalents and Investments [Abstract] | |
Cash Equivalents and Investments | NOTE 4 – CASH EQUIVALENTS AND INVESTMENTS The following tables show the Company’s cash equivalents and available-for-sale securities’ amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- and long-term investments as of September 30, 2021 and December 31, 2020: September 30, 2021 Amortized Cost Gross UnrealizedGains Gross UnrealizedLosses Fair Value Cash Equivalents Short-TermInvestments Long-TermInvestmentsCash equivalents: Money Market funds$ 33,138,000 $ — $ — $ 33,138,000 $ 33,138,000 $ — $ —Subtotal 33,138,000 — — 33,138,000 33,138,000 — — Investments: Corporate Notes/Bonds 5,653,000 3,000 (1,000) 5,655,000 — 2,861,000 2,794,000 Convertible Debt 250,000 — — 250,000 — — 250,000 Subtotal 5,903,000 3,000 (1,000) 5,905,000 — 2,861,000 3,044,000 Total$ 39,041,000 $ 3,000 $ (1,000) $ 39,043,000 $ 33,138,000 $ 2,861,000 $ 3,044,000 December 31, 2020 Amortized Cost Gross UnrealizedGains Gross UnrealizedLosses Fair Value Cash Equivalents Short-TermInvestments Long-TermInvestmentsCash equivalents: Money Market funds$ 9,424,000 $ — $ — $ 9,424,000 $ 9,424,000 $ — $ —Subtotal 9,424,000 — — 9,424,000 9,424,000 — — Investments: Commercial Paper 700,000 — — 700,000 — 700,000 —Corporate Notes/Bonds 7,658,000 7,000 (1,000) 7,664,000 — 2,059,000 5,605,000 Convertible Debt 605,000 — — 605,000 — — 605,000 Subtotal 8,963,000 7,000 (1,000) 8,969,000 — 2,759,000 6,210,000 Total$ 18,387,000 $ 7,000 $ (1,000) $ 18,393,000 $ 9,424,000 $ 2,759,000 $ 6,210,000 The following table summarizes the estimated fair value of our investments, designated as available-for-sale and classified by the contractual maturity date of the securities as of September 30, 2021: Amortized Cost Estimated MarketValueDue within one year $ 2,860,000 $ 2,861,000Due after one year through five years 3,043,000 3,044,000 $ 5,903,000 $ 5,905,000 During the first nine months of 2021, the Company recognized a realized loss on its convertible debt investments and recorded $400,000 in expense within investment and other income (expense) in the accompanying condensed consolidated statement of income (loss) and comprehensive income (loss). The Company did not recognize any gross realized gains during either of the three or nine-month periods ending September 30, 2021. In April 2020, the Company made an $899,000 investment in the common stock of Quortus Ltd., a UK-based company that provides virtual core network software for Private LTE solutions for critical and secure communications. This investment was important for the Company’s Electronics & Software segment because this segment was partnering with Quortus to integrate the Quortus Private LTE core in existing and new products for that segment’s federal business, network extensions, and private networks for enterprises. The Company’s investment represents less than 10% of the outstanding equity of Quortus Ltd. The Company uses the cost method to account for investments in common stock of entities such as Quortus if the Company does not have the ability to exercise significant influence over the operating and financial matters of the entity. The Company also uses the cost method to account for its investments that are not in the form of common stock or in-substance common stock in entities if the Company does not have the ability to exercise significant influence over the entity’s operating and financial matters. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | NOTE 5 - STOCK-BASED COMPENSATION Employee Stock Purchase Plan Under the Company’s Employee Stock Purchase Plan (“ESPP”), employees are able to acquire shares of common stock at 85% of the price at the end of each current quarterly plan term. The ESPP is considered compensatory under current Internal Revenue Service rules. At September 30, 2021, 59,303 shares remain available for future issuance under the ESPP. The ESPP was suspended effective March 31, 2021 due to conditions of the Pineapple Merger Agreement. 2011 Executive Incentive Compensation Plan On March 28, 2011 the Board adopted and on May 19, 2011 the Company’s shareholders approved the Company’s 2011 Executive Incentive Compensation Plan (“2011 Plan”). The 2011 Plan authorizes incentive awards to officers, key employees and non-employee directors in the form of options (incentive and non-qualified), stock appreciation rights, restricted stock, restricted stock units, performance stock units (“deferred stock”), performance cash units, and other awards in stock, cash, or a combination of stock and cash. The 2011 Plan, as amended, allows the issuance of up to 2,500,000 shares of common stock. At September 30, 2021, 1,425,008 shares have been issued under the 2011 Plan, there are no shares subject to currently outstanding options, deferred stock awards, and unvested restricted stock units, and 1,074,992 shares are eligible for grant under future awards. The closing of the E&S Sale Transaction on August 2, 2021 constituted a “Change in Control” as defined in the Company’s 2011 Plan. In accordance with the determinations and approvals of the Compensation Committee, effective on August 1, 2021, each Incentive Award granted and outstanding under the 2011 Plan and not otherwise forfeited or expired in accordance with its terms was fully vested and exercisable and any restrictions lapsed. After giving effect to such acceleration and vesting, on the August 2, 2021 closing date:All then-outstanding restricted stock units (RSUs”) were settled by exchanging them for the equivalent number of shares of the Company’s common stock specified in the respective RSU award agreements, with the shares of the Company’s common stock issued on settlement of the RSUs being issued and outstanding as of the closing date.All then-outstanding stock options having an exercise price less than the Fair Market Value (as defined in the 2011 Plan) on the closing date were settled by exchanging the options for a “net” number of shares of the Company’s common stock as if exercised on a net or cashless basis as provided in the 2011 Plan (for administrative convenience, rounded up to the next whole share), with the net shares of the Company’s common stock issued on settlement of these stock options being issued and outstanding as of the closing date.Following the disposition of the outstanding RSUs and stock options as described above, these Incentive Awards were terminated and cancelled as of the closing date.All then-outstanding stock options having an exercise price equal to or greater than the Fair Market Value on the closing date were terminated and cancelled as of the closing date without any payment therefor.Due to conditions of the Pineapple Merger Agreement, no additional awards have been made under the 2011 Plan. Changes in Stock Options Outstanding The following table summarizes changes in the number of outstanding stock options under the 2011 Plan over the period December 31, 2020 to September 30, 2021: Weighted average Weighted average remaining exercise price contractual term Options per share in yearsOutstanding – December 31, 2020 1,173,190 $ 6.52 3.35Awarded — — Exercised (799,390) 4.70 Forfeited (373,800) 10.43 Outstanding – September 30, 2021 — — — Exercisable at September 30, 2021 — $ — —Expected to vest September 30, 2021 — — — Because all outstanding options were either vested and exercised or cancelled, the aggregate intrinsic value of all options (the amount by which the market price of the stock on the last day of the period exceeded the market price of the stock on the date of grant) outstanding at September 30, 2021 was $0. The intrinsic value of all options exercised during the nine months ended September 30, 2021 was $1,961,000. Net cash proceeds from the exercise of all stock options were $15,000 and $0 in each of the nine-month periods ended September 30, 2021 and 2020. Changes in Deferred Stock Outstanding The following table summarizes the changes in the number of deferred stock shares under the 2011 Plan over the period December 31, 2020 to September 30, 2021: Weighted Average Grant Date Shares Fair ValueOutstanding – December 31, 2020 272,695 $ 3.91Granted — —Vested (194,586) 4.05Forfeited (78,109) 3.56Outstanding – September 30, 2021 — — Compensation Expense Share-based compensation expense recognized for the nine months ended September 30, 2021 was $559,000 before income taxes and $442,000 after income taxes. Share-based compensation expense recognized for the nine months ended September 30, 2020 was $320,000 before income taxes and $253,000 after income taxes. There was no unrecognized compensation expense for the Company’s plans at September 30, 2021 due to the acceleration of all outstanding equity awards as part of the E&S Sale Transaction. Share-based compensation expense is recorded as a part of selling, general and administrative expenses. Employee Stock Ownership Plan (ESOP) All eligible employees of the Company participate in the ESOP after completing one year of service. Contributions are allocated to each participant based on compensation and vest 20% after two years of service and incrementally thereafter, with full vesting after six years. The Company contributed $329,968 for which the Company issued 72,203 shares in March 2021 for the 2020 ESOP contribution. Due to conditions of the Pineapple Merger Agreement, no additional contributions will be made to the ESOP. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2021 | |
Inventories [Abstract] | |
Inventories | NOTE 6 - INVENTORIES Inventories summarized below are priced at the lower of first-in, first-out cost or net realizable value: September 30 December 31 2021 2020Finished goods $ 35,000 $ 22,000Raw and processed materials 86,000 114,000 $ 121,000 $ 136,000 |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations [Abstract] | |
Business Combinations | NOTE 7 – BUSINESS COMBINATIONS On May 14, 2020, in a reverse triangular merger, the Company completed the acquisition of 100% of Ecessa Corporation. Ecessa designs and distributes software-defined wide area networking (SD-WAN) solutions for businesses through the deployment of over 10,000 field installations (since 2002) of Ecessa Edge®, PowerLink®, and WANworX® controllers. The acquisition expands the Company’s IoT intelligent edge products and services and provides opportunities to expand the Company’s services platform. The purchase price was $4,642,000, with cash acquired totaling $666,000. The purchase price includes initial consideration of $4,666,000 and $(24,000) in working capital adjustments. The assets and liabilities of Ecessa were recorded in the consolidated balance sheet within the Services & Support segment as of the acquisition date, at their respective fair values. The purchase price allocation is based on the estimated fair value of assets acquired and liabilities assumed and has been allocated as follows: May 14, 2020Current assets $ 1,101,000Property, plant, and equipment 127,000Other long-term assets 421,000Intangible assets 2,260,000Goodwill 1,341,000Total assets 5,250,000 Total liabilities 608,000 Net assets acquired $ 4,642,000 Identifiable intangible assets are definite-lived assets. These assets include trade name/trademark/internet domain assets, non-compete agreements, customer relationships, and internally developed software intangible assets, and have a weighted average amortization period of 7 years, which matches the weighted average useful life of the assets. Goodwill recorded as part of the purchase price allocation is not tax deductible. On November 3, 2020, the Company acquired the operating assets of privately held IVDesk Minnesota, Inc. (“IVDesk”) from a third-party receiver (“Receiver”). IVDesk provides private cloud services to small- and mid-size businesses (“SMB”), with a particular focus on the financial services industry. The acquisition expands the Company’s monthly recurring revenue service model, bringing additional resources and experience in cloud-delivered applications. The purchase price was $1,368,000 and includes initial consideration of $950,000, working capital adjustments of $(132,000), and $550,000 in contingent consideration, which the Company agreed to pay in additional consideration upon retaining a certain customer level 120 days after closing. During March 2021, upon meeting the requirements of the earn-out, the Company paid the Receiver the additional consideration. At September 30, 2021, the Company had no further liabilities related to the contingent consideration. The assets and liabilities of IVDesk are recorded in the consolidated balance sheet within the Services & Support segment at September 30, 2021. The purchase price allocation was based on estimates of the fair value of assets acquired and liabilities assumed, and included total assets of $1,500,000, including property, plant, and equipment of $35,000, goodwill of $745,000 and intangible assets of $720,000, and total liabilities of $132,000. Identifiable intangible assets are definite-lived assets. These assets include customer relationships and have a weighted average amortization period of 8 years, which matches the weighted average useful life of the assets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | NOTE 8 – GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the year ended December 31, 2020 and nine months ended September 30, 2021 by company are as follows: Ecessa IVDesk TotalJanuary 1, 2020 $ — $ — $ — Acquisition 1,341,000 745,000 2,086,000 December 31, 2020 $ 1,341,000 $ 745,000 $ 2,086,000 September 30, 2021 $ 1,341,000 $ 745,000 $ 2,086,000 Gross goodwill 1,341,000 745,000 2,086,000Accumulated impairment loss — — —Balance at September 30, 2021 $ 1,341,000 $ 745,000 $ 2,086,000 The Company’s identifiable intangible assets with finite lives are being amortized over their estimated useful lives and were as follows: September 30, 2021 Gross Carrying Amount Accumulated Amortization NetTrade Name/Trademark/Internet Domain Assets $ 101,000 $ (12,000) $ 89,000Non-compete Agreements 80,000 (36,000) 44,000Customer Relationships 1,010,000 (160,000) 850,000Internally Developed Software 1,800,000 (342,000) 1,458,000 $ 2,991,000 $ (550,000) $ 2,441,000 December 31, 2020 Gross Carrying Amount Accumulated Amortization NetTrade Name/Trademark/Internet Domain Assets $ 90,000 $ (5,000) $ 85,000Non-compete Agreements 80,000 (16,000) 64,000Customer Relationships 1,010,000 (34,000) 976,000Internally Developed Software 1,800,000 (150,000) 1,650,000 $ 2,980,000 $ (205,000) $ 2,775,000 Amortization expense on these identifiable intangible assets was $346,000 and $106,000 in first nine months of 2021 and 2020 respectively. The amortization expense is included in selling, general and administrative expenses. The estimated future amortization expense for identifiable intangible assets during the next five fiscal years is as follows: Year Ending December 31: Q4 2021 $ 111,0002022 442,0002023 426,0002024 415,0002025 381,000Thereafter 666,000 |
Commitments & Contingencies
Commitments & Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments & Contingencies [Abstract] | |
Commitments & Contingencies | NOTE 9 – COMMITMENTS & CONTINGENCIES In the ordinary course of business, the Company is exposed to legal actions and claims and incurs costs to defend against these actions and claims. Company management is not aware of any outstanding or pending legal actions or claims that could materially affect the Company’s financial position or results of operations. On September 15, 2021, CSI entered into an amended and restated securities purchase agreement with a group of institutional investors (the “PIPE Investors”) to make a $32.0 million private placement investment in CSI in connection with the closing of the previously announced merger transaction between CSI and Pineapple Energy, LLC (“Pineapple”). Proceeds of this investment will used primarily to fund Pineapple strategic initiatives. The closing of the financing is subject to approval of CSI’s shareholders and other customary conditions.Under the terms of the securities purchase agreement, the PIPE Investors have agreed to purchase $32.0 million in newly authorized CSI Series A Convertible Preferred Stock convertible at a price of $3.40 per share into CSI common stock, with five year warrants to purchase an additional $32.0 million of common shares at that same price (the “PIPE Offering”). The PIPE Offering is expected to close immediately following the consummation of the CSI-Pineapple merger transaction (the “Merger”). Therefore the PIPE Investors will invest in the post-Merger company, will not be entitled to receive any cash dividends paid prior to closing and will not receive the Contingent Value Rights (“CVRs”) to be issued to pre-Merger CSI shareholders.The Series A Convertible Preferred Stock will have no liquidation or dividend preference over CSI common stock and no voting rights until after converted into CSI common stock. Assuming conversion of the Series A Convertible Preferred Stock, the PIPE Investors would own approximately 9.41 million shares of the Company’s outstanding common stock immediately following the closing of the PIPE Offering, representing approximately 27% of CSI’s outstanding Common Stock after giving effect to the issuance of shares in the Merger, and approximately 18.8 million shares assuming exercise of all the warrants for cash, representing approximately 43% of CSI’s outstanding common stock after giving effect to the issuance of shares in the Merger and exercise of the warrants.The Series A Convertible Preferred Stock and warrants will have anti-dilution provisions that would increase the number of shares issuable upon conversion or exercise, and lower the conversion or exercise price, if CSI issues equity securities at a price less than the conversion or exercise price at the time of such issuance. The securities purchase agreement also prohibits the combined company from conducting a new equity offering within 30 days of the closing, gives the PIPE Investors in the aggregate the right to purchase up to 25% of the equity securities in future CSI-Pineapple offerings within one year of closing and requires 30-day lock-up agreements of CSI common stock by certain CSI-Pineapple officers, directors and major shareholders following the closing. In connection with the transaction, CSI has agreed to file a registration statement on behalf of the PIPE Investors allowing them to resell the common stock into which the Series A Convertible Preferred Stock is convertible and the warrants are exercisable immediately after issuance. Closing is subject to the effectiveness of this registration statement and other customary closing conditions.Line of Credit On August 28, 2020, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association, establishing a $5,000,000 line of credit facility agreement that replaced a prior facility. On October 29, 2020, the Company entered into a First Amendment to the Credit Agreement. Under the Credit Agreement, as amended, the Company has the ability to obtain one or more letters of credit in an aggregate amount up to $2,000,000, subject to the general terms of the credit agreement. The Company did not plan to renew the Credit Agreement upon its expiration and terminated the Credit Agreement effective August 13, 2021. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Taxes [Abstract] | |
Income Taxes | NOTE 10 – INCOME TAXES In the preparation of the Company’s consolidated financial statements, management calculates income taxes based upon the estimated effective rate applicable to operating results for the full fiscal year. This includes estimating the current tax liability as well as assessing differences resulting from different treatment of items for tax and book accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded on the balance sheet. Management analyzes these assets and liabilities regularly and assesses the likelihood that deferred tax assets will be recovered from future taxable income. At September 30, 2021 there was $117,000 of net uncertain tax benefit positions that would reduce the effective income tax rate if recognized. The Company records interest and penalties related to income taxes as income tax expense in the condensed consolidated statements of income (loss) and comprehensive income (loss). The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The tax years 2018-2020 remain open to examination by the Internal Revenue Service and the years 2017-2020 remain open to examination by various state tax departments. The tax year of 2018 remains open in Costa Rica. The Company’s effective income tax rate was (0.1%) for the first nine months of 2021. The effective tax rate differs from the federal tax rate of 21% due to state income taxes, the effect of uncertain income tax positions, stock compensation windfalls and changes in valuation allowances related to deferred tax assets. The foreign operating losses may ultimately be deductible in the countries in which they occurred; however, the Company has not recorded a deferred tax asset for these losses due to uncertainty regarding the eventual realization of the benefit. The effect of the foreign operations was an overall rate decrease of approximately 0.0% for the nine months ended September 30, 2021. There were no additional uncertain tax positions identified in the first nine months of 2021. The Company's effective income tax rate for the nine months ended September 30, 2020 was (0.1%), and differed from the federal tax rate due to state income taxes, changes in the reserve for uncertain income tax positions, provisions for interest charges for uncertain income tax positions, stock compensation windfalls and changes in valuation allowances related to deferred tax assets. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information [Abstract] | |
Segment Information | NOTE 11 – SEGMENT INFORMATION The Company classifies its business operations into one segment as follows: Services & Support: provides technology solutions that address prevalent IT challenges, including network resiliency, security products and services, network virtualization, and cloud migrations, IT managed services, wired and wireless network design and implementation, and converged infrastructure configuration, deployment and management. Management has chosen to historically organize the Company and disclose reportable segments based on our products and services. Intercompany revenues are eliminated upon consolidation. “Other” includes non-allocated corporate overhead costs. As a result of our treatment of Suttle and the E&S Segment as discontinued operations, “Other” includes amounts previously allocated to Suttle and E&S that do not meet the criteria to be included in income from discontinued operations. Information concerning the Company’s continuing operations in its S&S segment for the three and nine month periods ended September 30, 2021 and 2020 are as follows: Services & Intercompany Support Other Eliminations TotalThree Months Ended September 30, 2021 Sales $ 1,947,000 $ — $ (119,000) $ 1,828,000Cost of sales 1,113,000 — — 1,113,000Gross profit 834,000 — (119,000) 715,000Selling, general and administrative expenses 669,000 1,138,000 (119,000) 1,688,000Amortization expense 110,000 — 110,000Transaction costs — 543,000 — 543,000Restructuring expense — 242,000 — 242,000Operating income (loss) 55,000 (1,923,000) — (1,868,000)Other income 4,000 66,000 — 70,000Income (loss) before income tax $ 59,000 $ (1,857,000) $ — $ (1,798,000) Depreciation and amortization $ 133,000 $ 72,000 $ — $ 205,000 Capital expenditures $ 5,000 $ 9,000 $ — $ 14,000 Assets $ 6,776,000 $ 50,213,000 $ (27,000) $ 56,962,000 Services & Intercompany Support Other Eliminations TotalThree Months Ended September 30, 2020 Sales $ 3,530,000 $ — $ (176,000) $ 3,354,000Cost of sales 2,190,000 — (9,000) 2,181,000Gross profit 1,340,000 — (167,000) 1,173,000Selling, general and administrative expenses 803,000 1,324,000 (167,000) 1,960,000Amortization expense 106,000 — — 106,000Transaction costs — 72,000 — 72,000Operating income (loss) 431,000 (1,396,000) — (965,000)Other income — 275,000 — 275,000Income (loss) before income tax $ 431,000 $ (1,121,000) $ — $ (690,000) Depreciation and amortization $ 146,000 $ 128,000 $ — $ 274,000 Capital expenditures $ — $ 79,000 $ — $ 79,000 Assets $ 8,334,000 $ 47,410,000 $ (27,000) $ 55,717,000 Services & Intercompany Support Other Eliminations TotalNine Months Ended September 30, 2021 Sales $ 5,719,000 $ — $ (406,000) $ 5,313,000Cost of sales 3,459,000 — — 3,459,000Gross profit 2,260,000 — (406,000) 1,854,000Selling, general and administrative expenses 2,290,000 3,683,000 (406,000) 5,567,000Amortization expense 346,000 — — 346,000Transaction costs — 1,855,000 — 1,855,000Restructuring expense — 242,000 — 242,000Operating loss (376,000) (5,780,000) — (6,156,000)Other income (expense) 20,000 (186,000) — (166,000)Loss before income tax $ (356,000) $ (5,966,000) $ — $ (6,322,000) Depreciation and amortization $ 426,000 $ 218,000 $ — $ 644,000 Capital expenditures $ 11,000 $ 9,000 $ — $ 20,000 Services & Intercompany Support Other Eliminations TotalNine Months Ended September 30, 2020 Sales $ 5,882,000 $ — $ (561,000) $ 5,321,000Cost of sales 3,792,000 — (36,000) 3,756,000Gross profit 2,090,000 — (525,000) 1,565,000Selling, general and administrative expenses 1,614,000 3,928,000 (525,000) 5,017,000Amortization expense 106,000 — — 106,000Transaction costs — 486,000 — 486,000Operating income (loss) 370,000 (4,414,000) — (4,044,000)Other income — 948,000 — 948,000Income (loss) before income tax $ 370,000 $ (3,466,000) $ — $ (3,096,000) Depreciation and amortization $ 178,000 $ 443,000 $ — $ 621,000 Capital expenditures $ 1,000 $ 100,000 $ — $ 101,000 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Net Income (Loss) Per Share [Abstract] | |
Net Income (Loss) Per Share | NOTE 12 – NET INCOME (LOSS) PER SHARE Basic net income (loss) per common share is based on the weighted average number of common shares outstanding during each period and year. Diluted net income per common share takes into effect the dilutive effect of potential common shares outstanding. The Company’s only potential common shares outstanding are stock options and shares associated with the long-term incentive compensation plans, which resulted in a dilutive effect of 84,188 and 184,053 shares for the three and nine months ended September 30, 2021, respectively. The dilutive effect for the three and nine-month periods ended September 30, 2020 was 89,561 and 0 shares, respectively. The Company calculates the dilutive effect of outstanding options using the treasury stock method. There were no options or deferred stock awards excluded from the calculation of diluted earnings per share because there were no outstanding options or deferred stock awards as of September 30, 2021. Options totaling 791,415 and 727,915 were excluded from the calculation of diluted earnings per share for the three and nine months ended September 30, 2020, respectively because the exercise price was greater than the average market price of common stock during the period and deferred stock awards totaling 110,308 shares would not have been included for the three and nine months ended September 30, 2020, because of unmet performance conditions. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | NOTE 13 – FAIR VALUE MEASUREMENTS The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments. Financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020, are summarized below: September 30, 2021 Level 1 Level 2 Level 3 Total Fair ValueCash equivalents: Money Market Funds$ 33,138,000 $ — $ — $ 33,138,000Subtotal 33,138,000 — — 33,138,000 Short-term investments: Corporate Notes/Bonds — 2,861,000 — 2,861,000Subtotal — 2,861,000 — 2,861,000 Long-term investments: Corporate Notes/Bonds — 2,794,000 — 2,794,000Convertible debt — — 250,000 250,000Subtotal — 2,794,000 250,000 3,044,000 Total$ 33,138,000 $ 5,655,000 $ 250,000 $ 39,043,000 December 31, 2020 Level 1 Level 2 Level 3 Total Fair ValueCash equivalents: Money Market Funds$ 9,424,000 $ — $ — $ 9,424,000Subtotal 9,424,000 — — 9,424,000 Short-term investments: Commercial Paper — 700,000 — 700,000Corporate Notes/Bonds — 2,059,000 — 2,059,000Subtotal — 2,759,000 — 2,759,000 Long-term investments: Corporate Notes/Bonds — 5,605,000 — 5,605,000Convertible debt — — 605,000 605,000Subtotal — 5,605,000 605,000 6,210,000 Current Liabilities: Contingent Consideration — — (550,000) (550,000)Subtotal — — (550,000) (550,000) Total$ 9,424,000 $ 8,364,000 $ 55,000 $ 17,843,000 The estimated fair value of contingent consideration as of December 31, 2020 was $550,000, as noted above. The estimated fair value is considered a level 3 measurement because the probability weighted discounted cash flow methodology used to estimate fair value includes the use of significant unobservable inputs, primarily the contractual contingent consideration revenue targets and assumed probabilities. The Company paid the full amount of the contingent consideration during the first quarter of 2021 and there was no liability at September 30, 2021. We record transfers between levels of the fair value hierarchy, if necessary, at the end of the reporting period. There were no transfers between levels during the three months ended September 30, 2021. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2021 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | NOTE 14 – RECENT ACCOUNTING PRONOUNCEMENTS In June 2016, FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments." The amendments in this update replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. This ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses and is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, which for us is the first quarter ending March 31, 2023. Entities may early adopt beginning after December 15, 2018. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 15 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date of this filing. We do not believe there are any material subsequent events other than those disclosed in the footnotes to these financial statements that require further disclosure. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policy) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Description of Business | Description of Business Communications Systems, Inc. (herein collectively referred to as “CSI,” “our,” “we” or the “Company”) is a Minnesota corporation organized in 1969 that until August 2, 2021 classified its business into two segments: (1) the Electronics & Software segment (consisting of US-based subsidiary Transition Networks and UK-based subsidiary Net2Edge) which (i) manufactures and sells solutions that provide actionable intelligence, power and connectivity at the edge of networks through PoE products, software and services as well as traditional products such as media converters, network adapters and other connectivity products and (ii) designs, develops, and sells edge network access products, TDM (time-division multiplexing) over IP and other circuit emulation solutions, along with specialized cloud-based software solutions, primarily within the telecommunications market; and (2) the Services and Support segment (consisting of subsidiaries JDL and Ecessa), which (i) provides technology solutions including virtualization, managed services, wired and wireless network design and implementation, and hybrid cloud infrastructure and deployment and (ii) designs, develops, and sells SD-WAN (software-designed wide-area network) solutions. As previously disclosed, on August 2, 2021, the Company and Lantronix, Inc. completed the sale by CSI to Lantronix of all of the issued and outstanding stock of CSI’s wholly owned subsidiary, Transition Networks, Inc., and the entire issued share capital of its wholly owned subsidiary, Transition Networks Europe Limited (collectively with Transition Networks, Inc., the “TN Companies”), pursuant to the securities purchase agreement dated April 28, 2021 (“E&S Sale Transaction”). As a result, sales and expenses related to the operations of the former Electronics & Software segment have been presented as discontinued operations in this Form 10-Q. For purposes of this Form 10-Q, the Company classifies operations from its Services & Support segment. Non-allocated general and administrative expenses are separately accounted for as “Other” in the Company’s segment reporting. Intercompany revenues are eliminated upon consolidation. |
Financial Statement Presentation | Financial Statement Presentation The condensed consolidated balance sheet as of September 30, 2021, the related condensed consolidated statements of income (loss) and comprehensive income (loss), the condensed consolidated statements of changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the periods ended September 30, 2021 and 2020 have been prepared by Company management. In the opinion of management, all adjustments (which include only normal recurring adjustments, except where noted) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2021 and 2020 and for the periods then ended have been made. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. We recommend these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2020 Annual Report to Shareholders on Form 10-K (“2020 Form 10-K”). The results of operations for the period ended September 30, 2021 are not necessarily indicative of operating results for the entire year. The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. The estimates and assumptions used in the accompanying condensed consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the time of the financial statements. Actual results could differ from those estimates. Except to the extent updated or described below, the significant accounting policies set forth in Note 1 to the consolidated financial statements in the December 31, 2020 Form 10-K, appropriately represent, in all material respects, the current status of accounting policies, and are incorporated herein by reference. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, net of tax, are as follows: Accumulated Other Comprehensive Loss Other Foreign Currency Unrealized gain Comprehensive Translation (loss) on securities LossDecember 31, 2020 $ (700,000) $ 21,000 $ (679,000) Net current period change 700,000 (6,000) 694,000 September 30, 2021 $ — $ 15,000 $ 15,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Components of Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Other Foreign Currency Unrealized gain Comprehensive Translation (loss) on securities LossDecember 31, 2020 $ (700,000) $ 21,000 $ (679,000) Net current period change 700,000 (6,000) 694,000 September 30, 2021 $ — $ 15,000 $ 15,000 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue Recognition [Abstract] | |
Schedule of Disaggregation of Revenues | For the Services & Support segment, we analyze revenue by customer group and type, which is as follows for the three and nine months ended September 30, 2021 and 2020: Services & Support Revenue by Customer Group Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020Financial$ 482,000 $ 117,000 $ 1,306,000 $ 314,000Healthcare 261,000 244,000 760,000 674,000Education 64,000 2,312,000 212,000 3,031,000Other commercial clients 1,021,000 682,000 3,035,000 1,302,000CSI IT operations 119,000 175,000 406,000 561,000 $ 1,947,000 $ 3,530,000 $ 5,719,000 $ 5,882,000 Services & Support Revenue by Type Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020Project & product revenue$ 297,000 $ 2,611,000 $ 927,000 $ 3,498,000Services & support revenue 1,650,000 919,000 4,792,000 2,384,000 $ 1,947,000 $ 3,530,000 $ 5,719,000 $ 5,882,000 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations [Abstract] | |
Schedule of Discontinued Operations Assets and Liabilities Classified as Held-for-Sale | September 30, 2021 December 31, 2020 Cash and cash equivalents $ — $ 303,000 Trade accounts receivable — 5,775,000 Inventories — 8,561,000 Other current assets — 439,000Total current assets $ — $ 15,078,000 Property, plant, and equipment $ 846,000 $ 1,154,000Right of use asset 129,000Total noncurrent assets $ 846,000 $ 1,283,000 Total assets held for sale $ 846,000 $ 16,361,000 Accounts payable $ — $ 1,669,000Accrued compensation and benefits — 767,000Operating lease liability — 86,000Other accrued liabilities — 1,206,000Total current liabilities $ — $ 3,728,000 Operating lease liability $ — $ 30,000Total noncurrent liabilities $ — $ 30,000 Total liabilities held for sale $ — $ 3,758,000 |
Schedule of Financial Results of Discontinued Operations | Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020Sales $ 2,806,000 $ 9,067,000 $ 20,478,000 $ 30,354,000Cost of sales 1,789,000 5,027,000 11,774,000 17,894,000Selling, general and administrative expenses 1,044,000 2,848,000 7,090,000 10,310,000Transaction costs 982,000 — 2,141,000 —Impairment loss 100,000 — 100,000 —Restructuring expenses 1,287,000 194,000 1,287,000 958,000Gain on sale of assets (13,455,000) (19,000) (13,455,000) (2,057,000)Foreign currency translation loss 642,000 — 642,000 —Other expense 4,000 61,000 61,000 317,000Operating income before income taxes 10,413,000 956,000 10,838,000 2,932,000Income tax expense 2,000 (5,000) 2,000 —Income from discontinued operations $ 10,411,000 $ 961,000 $ 10,836,000 $ 2,932,000 |
Cash Equivalents and Investme_2
Cash Equivalents and Investments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Cash Equivalents and Investments [Abstract] | |
Schedule of Cash Equivalents and Available-for-Sale Securities | September 30, 2021 Amortized Cost Gross UnrealizedGains Gross UnrealizedLosses Fair Value Cash Equivalents Short-TermInvestments Long-TermInvestmentsCash equivalents: Money Market funds$ 33,138,000 $ — $ — $ 33,138,000 $ 33,138,000 $ — $ —Subtotal 33,138,000 — — 33,138,000 33,138,000 — — Investments: Corporate Notes/Bonds 5,653,000 3,000 (1,000) 5,655,000 — 2,861,000 2,794,000 Convertible Debt 250,000 — — 250,000 — — 250,000 Subtotal 5,903,000 3,000 (1,000) 5,905,000 — 2,861,000 3,044,000 Total$ 39,041,000 $ 3,000 $ (1,000) $ 39,043,000 $ 33,138,000 $ 2,861,000 $ 3,044,000 December 31, 2020 Amortized Cost Gross UnrealizedGains Gross UnrealizedLosses Fair Value Cash Equivalents Short-TermInvestments Long-TermInvestmentsCash equivalents: Money Market funds$ 9,424,000 $ — $ — $ 9,424,000 $ 9,424,000 $ — $ —Subtotal 9,424,000 — — 9,424,000 9,424,000 — — Investments: Commercial Paper 700,000 — — 700,000 — 700,000 —Corporate Notes/Bonds 7,658,000 7,000 (1,000) 7,664,000 — 2,059,000 5,605,000 Convertible Debt 605,000 — — 605,000 — — 605,000 Subtotal 8,963,000 7,000 (1,000) 8,969,000 — 2,759,000 6,210,000 Total$ 18,387,000 $ 7,000 $ (1,000) $ 18,393,000 $ 9,424,000 $ 2,759,000 $ 6,210,000 |
Schedule of Estimated Fair Value of Available-for-Sale Securities | Amortized Cost Estimated MarketValueDue within one year $ 2,860,000 $ 2,861,000Due after one year through five years 3,043,000 3,044,000 $ 5,903,000 $ 5,905,000 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Stock-Based Compensation [Abstract] | |
Schedule of Changes in Number of Outstanding Stock Options Under Director Plan, Stock Plan and 2011 Incentive Plan | Weighted average Weighted average remaining exercise price contractual term Options per share in yearsOutstanding – December 31, 2020 1,173,190 $ 6.52 3.35Awarded — — Exercised (799,390) 4.70 Forfeited (373,800) 10.43 Outstanding – September 30, 2021 — — — Exercisable at September 30, 2021 — $ — —Expected to vest September 30, 2021 — — — |
Schedule of Changes in the Number of Deferred Stock Shares Under the Incentive Plan | Weighted Average Grant Date Shares Fair ValueOutstanding – December 31, 2020 272,695 $ 3.91Granted — —Vested (194,586) 4.05Forfeited (78,109) 3.56Outstanding – September 30, 2021 — — |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventories [Abstract] | |
Schedule of Inventories | September 30 December 31 2021 2020Finished goods $ 35,000 $ 22,000Raw and processed materials 86,000 114,000 $ 121,000 $ 136,000 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations [Abstract] | |
Schedule Of Assets Acquired And Liabilities Assumed | May 14, 2020Current assets $ 1,101,000Property, plant, and equipment 127,000Other long-term assets 421,000Intangible assets 2,260,000Goodwill 1,341,000Total assets 5,250,000 Total liabilities 608,000 Net assets acquired $ 4,642,000 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | Ecessa IVDesk TotalJanuary 1, 2020 $ — $ — $ — Acquisition 1,341,000 745,000 2,086,000 December 31, 2020 $ 1,341,000 $ 745,000 $ 2,086,000 September 30, 2021 $ 1,341,000 $ 745,000 $ 2,086,000 Gross goodwill 1,341,000 745,000 2,086,000Accumulated impairment loss — — —Balance at September 30, 2021 $ 1,341,000 $ 745,000 $ 2,086,000 |
Schedule of Finite-Lived Intangible Assets | September 30, 2021 Gross Carrying Amount Accumulated Amortization NetTrade Name/Trademark/Internet Domain Assets $ 101,000 $ (12,000) $ 89,000Non-compete Agreements 80,000 (36,000) 44,000Customer Relationships 1,010,000 (160,000) 850,000Internally Developed Software 1,800,000 (342,000) 1,458,000 $ 2,991,000 $ (550,000) $ 2,441,000 December 31, 2020 Gross Carrying Amount Accumulated Amortization NetTrade Name/Trademark/Internet Domain Assets $ 90,000 $ (5,000) $ 85,000Non-compete Agreements 80,000 (16,000) 64,000Customer Relationships 1,010,000 (34,000) 976,000Internally Developed Software 1,800,000 (150,000) 1,650,000 $ 2,980,000 $ (205,000) $ 2,775,000 |
Schedule of Estimated Future Amortization Expense | Year Ending December 31: Q4 2021 $ 111,0002022 442,0002023 426,0002024 415,0002025 381,000Thereafter 666,000 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information [Abstract] | |
Schedule of Segment Information | Services & Intercompany Support Other Eliminations TotalThree Months Ended September 30, 2021 Sales $ 1,947,000 $ — $ (119,000) $ 1,828,000Cost of sales 1,113,000 — — 1,113,000Gross profit 834,000 — (119,000) 715,000Selling, general and administrative expenses 669,000 1,138,000 (119,000) 1,688,000Amortization expense 110,000 — 110,000Transaction costs — 543,000 — 543,000Restructuring expense — 242,000 — 242,000Operating income (loss) 55,000 (1,923,000) — (1,868,000)Other income 4,000 66,000 — 70,000Income (loss) before income tax $ 59,000 $ (1,857,000) $ — $ (1,798,000) Depreciation and amortization $ 133,000 $ 72,000 $ — $ 205,000 Capital expenditures $ 5,000 $ 9,000 $ — $ 14,000 Assets $ 6,776,000 $ 50,213,000 $ (27,000) $ 56,962,000 Services & Intercompany Support Other Eliminations TotalThree Months Ended September 30, 2020 Sales $ 3,530,000 $ — $ (176,000) $ 3,354,000Cost of sales 2,190,000 — (9,000) 2,181,000Gross profit 1,340,000 — (167,000) 1,173,000Selling, general and administrative expenses 803,000 1,324,000 (167,000) 1,960,000Amortization expense 106,000 — — 106,000Transaction costs — 72,000 — 72,000Operating income (loss) 431,000 (1,396,000) — (965,000)Other income — 275,000 — 275,000Income (loss) before income tax $ 431,000 $ (1,121,000) $ — $ (690,000) Depreciation and amortization $ 146,000 $ 128,000 $ — $ 274,000 Capital expenditures $ — $ 79,000 $ — $ 79,000 Assets $ 8,334,000 $ 47,410,000 $ (27,000) $ 55,717,000 Services & Intercompany Support Other Eliminations TotalNine Months Ended September 30, 2021 Sales $ 5,719,000 $ — $ (406,000) $ 5,313,000Cost of sales 3,459,000 — — 3,459,000Gross profit 2,260,000 — (406,000) 1,854,000Selling, general and administrative expenses 2,290,000 3,683,000 (406,000) 5,567,000Amortization expense 346,000 — — 346,000Transaction costs — 1,855,000 — 1,855,000Restructuring expense — 242,000 — 242,000Operating loss (376,000) (5,780,000) — (6,156,000)Other income (expense) 20,000 (186,000) — (166,000)Loss before income tax $ (356,000) $ (5,966,000) $ — $ (6,322,000) Depreciation and amortization $ 426,000 $ 218,000 $ — $ 644,000 Capital expenditures $ 11,000 $ 9,000 $ — $ 20,000 Services & Intercompany Support Other Eliminations TotalNine Months Ended September 30, 2020 Sales $ 5,882,000 $ — $ (561,000) $ 5,321,000Cost of sales 3,792,000 — (36,000) 3,756,000Gross profit 2,090,000 — (525,000) 1,565,000Selling, general and administrative expenses 1,614,000 3,928,000 (525,000) 5,017,000Amortization expense 106,000 — — 106,000Transaction costs — 486,000 — 486,000Operating income (loss) 370,000 (4,414,000) — (4,044,000)Other income — 948,000 — 948,000Income (loss) before income tax $ 370,000 $ (3,466,000) $ — $ (3,096,000) Depreciation and amortization $ 178,000 $ 443,000 $ — $ 621,000 Capital expenditures $ 1,000 $ 100,000 $ — $ 101,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurements [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | September 30, 2021 Level 1 Level 2 Level 3 Total Fair ValueCash equivalents: Money Market Funds$ 33,138,000 $ — $ — $ 33,138,000Subtotal 33,138,000 — — 33,138,000 Short-term investments: Corporate Notes/Bonds — 2,861,000 — 2,861,000Subtotal — 2,861,000 — 2,861,000 Long-term investments: Corporate Notes/Bonds — 2,794,000 — 2,794,000Convertible debt — — 250,000 250,000Subtotal — 2,794,000 250,000 3,044,000 Total$ 33,138,000 $ 5,655,000 $ 250,000 $ 39,043,000 December 31, 2020 Level 1 Level 2 Level 3 Total Fair ValueCash equivalents: Money Market Funds$ 9,424,000 $ — $ — $ 9,424,000Subtotal 9,424,000 — — 9,424,000 Short-term investments: Commercial Paper — 700,000 — 700,000Corporate Notes/Bonds — 2,059,000 — 2,059,000Subtotal — 2,759,000 — 2,759,000 Long-term investments: Corporate Notes/Bonds — 5,605,000 — 5,605,000Convertible debt — — 605,000 605,000Subtotal — 5,605,000 605,000 6,210,000 Current Liabilities: Contingent Consideration — — (550,000) (550,000)Subtotal — — (550,000) (550,000) Total$ 9,424,000 $ 8,364,000 $ 55,000 $ 17,843,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Narrative) (Details) - segment | 2 Months Ended | 7 Months Ended |
Sep. 30, 2021 | Aug. 02, 2021 | |
Summary of Significant Accounting Policies [Abstract] | ||
Number of segments | 1 | 2 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Components of Accumulated Other Comprehensive Loss) (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
BALANCE | $ 47,494,727 |
BALANCE | 18,564,955 |
Foreign Currency Translation [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
BALANCE | (700,000) |
Net current period change | 700,000 |
Unrealized Gain (Loss) On Securities [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
BALANCE | 21,000 |
Net current period change | (6,000) |
BALANCE | 15,000 |
Accumulated Other Comprehensive Loss [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
BALANCE | (678,767) |
Net current period change | 694,000 |
BALANCE | $ 15,393 |
Revenue Recognition (Schedule o
Revenue Recognition (Schedule of Disaggregation of Revenues) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 1,828,299 | $ 3,354,306 | $ 5,313,047 | $ 5,321,683 |
Services & Support Segment [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,947,000 | 3,530,000 | 5,719,000 | 5,882,000 |
Services & Support Segment [Member] | Financial [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 482,000 | 117,000 | 1,306,000 | 314,000 |
Services & Support Segment [Member] | Healthcare [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 261,000 | 244,000 | 760,000 | 674,000 |
Services & Support Segment [Member] | Education [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 64,000 | 2,312,000 | 212,000 | 3,031,000 |
Services & Support Segment [Member] | Other Commercial Clients [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,021,000 | 682,000 | 3,035,000 | 1,302,000 |
Services & Support Segment [Member] | CSI IT Operations [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 119,000 | 175,000 | 406,000 | 561,000 |
Services & Support Segment [Member] | Project & Product [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 297,000 | 2,611,000 | 927,000 | 3,498,000 |
Services & Support Segment [Member] | Services & Support [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 1,650,000 | $ 919,000 | $ 4,792,000 | $ 2,384,000 |
Discontinued Operations (Narrat
Discontinued Operations (Narrative) (Details) | Mar. 11, 2020USD ($)item | Sep. 30, 2021USD ($)item | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale | $ 8,900,000 | ||||
Gain on sale of business line | $ 2,247,000 | ||||
Impairment loss | $ 100,000 | $ 100,000 | |||
Number of buildings leased to purchaser | item | 2 | ||||
Restructuring expense including disposal group | 1,529,000 | 1,529,000 | |||
Restructuring expense | 242,275 | 242,275 | |||
Restructuring payments | 1,169,000 | ||||
Restructuring accrual | 612,000 | 612,000 | |||
Remainder of Suttle Business Lines [Member] | Discontinued Operations, Disposed of by Sale [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale | $ 8,000,000 | ||||
Working capital adjustment, period after close | 90 days | ||||
Restructuring expense | $ 958,000 | ||||
E&S Sale Transaction [Member] | Discontinued Operations, Disposed of by Sale [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale | 23,630,000 | ||||
Working capital adjustment | (1,376,000) | (1,376,000) | |||
Gain on sale of business line | 13,455,000 | ||||
Contingent earnout receivable | $ 7,000,000 | 7,000,000 | |||
Earnout contingency, number of successive intervals required after closing | item | 2 | ||||
Earnout contingency, successive interval period | 180 days | ||||
Service agreement period | 12 months | ||||
Restructuring expense | $ 1,287,000 | 1,287,000 | |||
Purchase Agreement with Winport Holdings, LLC [Member] | Discontinued Operations, Disposed of by Sale [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Sale price | 900,000 | $ 900,000 | |||
Impairment loss | $ 100,000 | ||||
Minimum [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Base rents | $ 6,970 | ||||
Maximum [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Base rents | $ 7,180 |
Discontinued Operations (Schedu
Discontinued Operations (Schedule of Discontinued Operations Assets and Liabilities Classified as Held-for-Sale) (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Discontinued Operations [Abstract] | ||
Cash and cash equivalents | $ 303 | |
Trade accounts receivable | 5,775 | |
Inventories | 8,561 | |
Other current assets | 439 | |
Total current assets | 15,078 | |
Property, plant, and equipment | $ 846 | 1,154 |
Right of use asset | 129 | |
Total noncurrent assets | 846 | 1,283 |
Total assets held for sale | $ 846 | 16,361 |
Accounts payable | 1,669 | |
Accrued compensation and benefits | 767 | |
Operating lease liability | 86 | |
Other accrued liabilities | 1,206 | |
Total current liabilities | 3,728 | |
Operating lease liability | 30 | |
Total noncurrent liabilities | 30 | |
Total liabilities held for sale | $ 3,758 |
Discontinued Operations (Sche_2
Discontinued Operations (Schedule of Financial Results of Discontinued Operations) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Discontinued Operations [Abstract] | ||||
Sales | $ 2,806,000 | $ 9,067,000 | $ 20,478,000 | $ 30,354,000 |
Cost of sales | 1,789,000 | 5,027,000 | 11,774,000 | 17,894,000 |
Selling, general and administrative expenses | 1,044,000 | 2,848,000 | 7,090,000 | 10,310,000 |
Transaction costs | 982,000 | 2,141,000 | ||
Impairment loss | 100,000 | 100,000 | ||
Restructuring expenses | 1,287,000 | 194,000 | 1,287,000 | 958,000 |
Gain on sale of assets | (13,455,000) | (19,000) | (13,455,000) | (2,057,000) |
Foreign currency translation loss | 642,000 | 642,000 | ||
Other expense | 4,000 | 61,000 | 61,000 | 317,000 |
Operating income before income taxes | 10,413,000 | 956,000 | 10,838,000 | 2,932,000 |
Income tax expense | 2,000 | (5,000) | 2,000 | |
Income from discontinued operations | $ 10,411,404 | $ 961,083 | $ 10,835,605 | $ 2,931,863 |
Cash Equivalents and Investme_3
Cash Equivalents and Investments (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Apr. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2021 | |
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities realized loss | $ 400,000 | ||
Debt securities realized gains | $ 0 | $ 0 | |
Common Stock [Member] | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Investment | $ 899,000 | ||
Maximum [Member] | Common Stock [Member] | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Minority investment, ownership percentage | 10.00% |
Cash Equivalents and Investme_4
Cash Equivalents and Investments (Schedule of Cash Equivalents and Available-for-Sale Securities) (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 39,041,000 | $ 18,387,000 |
Gross Unrealized Gains | 3,000 | 7,000 |
Gross Unrealized Losses | (1,000) | (1,000) |
Fair Value | 39,043,000 | 18,393,000 |
Cash Equivalents | 33,138,000 | 9,424,000 |
Short-Term Investments | 2,861,394 | 2,759,024 |
Long-Term Investments | 3,044,000 | 6,210,000 |
Cash Equivalents [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 33,138,000 | 9,424,000 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | 33,138,000 | 9,424,000 |
Cash Equivalents | 33,138,000 | 9,424,000 |
Short-Term Investments | ||
Long-Term Investments | ||
Cash Equivalents [Member] | Money Market Funds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 33,138,000 | 9,424,000 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | 33,138,000 | 9,424,000 |
Cash Equivalents | 33,138,000 | 9,424,000 |
Short-Term Investments | ||
Long-Term Investments | ||
Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 5,903,000 | 8,963,000 |
Gross Unrealized Gains | 3,000 | 7,000 |
Gross Unrealized Losses | (1,000) | (1,000) |
Fair Value | 5,905,000 | 8,969,000 |
Cash Equivalents | ||
Short-Term Investments | 2,861,000 | 2,759,000 |
Long-Term Investments | 3,044,000 | 6,210,000 |
Investments [Member] | Commercial Paper [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 700,000 | |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | 700,000 | |
Cash Equivalents | ||
Short-Term Investments | 700,000 | |
Long-Term Investments | ||
Investments [Member] | Corporate Notes/Bonds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 5,653,000 | 7,658,000 |
Gross Unrealized Gains | 3,000 | 7,000 |
Gross Unrealized Losses | (1,000) | (1,000) |
Fair Value | 5,655,000 | 7,664,000 |
Cash Equivalents | ||
Short-Term Investments | 2,861,000 | 2,059,000 |
Long-Term Investments | 2,794,000 | 5,605,000 |
Investments [Member] | Convertible Debt [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 250,000 | 605,000 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | 250,000 | 605,000 |
Cash Equivalents | ||
Short-Term Investments | ||
Long-Term Investments | $ 250,000 | $ 605,000 |
Cash Equivalents and Investme_5
Cash Equivalents and Investments (Schedule of Estimated Fair Value of Available-for-Sale Securities) (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 39,041 | $ 18,387 |
Estimated Market Value | 39,043 | 18,393 |
Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost, Due within one year | 2,860 | |
Amortized Cost, Due after one year through five years | 3,043 | |
Amortized Cost | 5,903 | 8,963 |
Estimated Market Value, Due within one year | 2,861 | |
Estimated Market Value, Due after one year through five years | 3,044 | |
Estimated Market Value | $ 5,905 | $ 8,969 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - USD ($) | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | May 19, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense related to stock options | $ 0 | ||||
Aggregate intrinsic value of options outstanding | 0 | ||||
Intrinsic value of all options exercised | 1,961,000 | ||||
Net cash proceeds from exercise of stock options | 15,000 | $ 0 | |||
Share based compensation expense before income taxes | 559,000 | 320,000 | |||
Share based compensation expense after income taxes | $ 442,000 | $ 253,000 | |||
2011 Executive Incentive Compensation Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of awards authorized | 2,500,000 | ||||
Shares issued under Plan | 1,425,008 | ||||
Number of options outstanding | 0 | 1,173,190 | |||
Awards eligible for grant | 1,074,992 | ||||
Employee Stock Purchase Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of price of common stock at which employees are able to acquire | 85.00% | ||||
Shares available | 59,303 | ||||
ESOP [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Requisite service period | 1 year | ||||
Initial award vesting period | 2 years | ||||
Award vesting period | 6 years | ||||
ESOP contributions | $ 329,968 | ||||
Shares of ESOP allocated to accounts of eligible employees | 72,203 | ||||
ESOP [Member] | Share-based Payment Arrangement, Tranche One [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 20.00% |
Stock-Based Compensation (Sched
Stock-Based Compensation (Schedule of Changes in Number of Outstanding Stock Options Under Director Plan, Stock Plan and 2011 Incentive Plan) (Details) - 2011 Executive Incentive Compensation Plan [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Share-based Payment Arrangement, Option, Activity [Line Items] | ||
Options, Outstanding – December 31, 2020 | 1,173,190 | |
Options, Awarded | ||
Options, Exercised | (799,390) | |
Options, Forfeited | (373,800) | |
Options, Outstanding – September 30, 2021 | 0 | 1,173,190 |
Options, Exercisable at September 30, 2021 | ||
Options, Expected to vest September 30, 2021 | ||
Weighted average exercise price per share, Outstanding – December 31, 2020 | $ 6.52 | |
Weighted average exercise price per share, Awarded | ||
Weighted average exercise price per share, Exercised | 4.70 | |
Weighted average exercise price per share, Forfeited | 10.43 | |
Weighted average exercise price per share, Outstanding – September 30, 2021 | $ 6.52 | |
Weighted average exercise price per share, Exercisable at September 30, 2021 | ||
Weighted average exercise price per share, Expected to vest September 30, 2021 | ||
Weighted average remaining contractual term in years, Outstanding | 3 years 4 months 6 days |
Stock-Based Compensation (Sch_2
Stock-Based Compensation (Schedule of Changes in the Number of Deferred Stock Shares Under the Incentive Plan) (Details) - 2011 Executive Incentive Compensation Plan [Member] - Performance Units [Member] | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares, Outstanding – December 31, 2020 | shares | 272,695 |
Shares, Vested | shares | (194,586) |
Shares, Forfeited | shares | (78,109) |
Weighted Average Grant Date Fair Value, Outstanding – December 31, 2020 | $ / shares | $ 3.91 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 4.05 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | $ 3.56 |
Inventories (Schedule of Invent
Inventories (Schedule of Inventories) (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Inventories [Abstract] | ||
Finished goods | $ 35,000 | $ 22,000 |
Raw and processed materials | 86,000 | 114,000 |
Inventories | $ 121,098 | $ 136,264 |
Business Combinations (Narrativ
Business Combinations (Narrative) (Details) | Nov. 03, 2020USD ($) | May 14, 2020USD ($)item | Sep. 30, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Business Acquisition [Line Items] | |||||
Goodwill | $ 2,086,393 | $ 2,086,393 | |||
Ecessa Corporation [Member] | |||||
Business Acquisition [Line Items] | |||||
Ownership acquired | 100.00% | ||||
Number of field installations | item | 10,000 | ||||
Total purchase price of acquired entity | $ 4,642,000 | ||||
Cash acquired in acquisition | 666,000 | ||||
Business acquisition, initial cash consideration paid | 4,666,000 | ||||
Business acquisition, working capital adjustment | (24,000) | ||||
Weighted average amortization period of acquired intangible assets | 7 years | ||||
Total assets | 5,250,000 | ||||
Property, plant and equipment | 127,000 | ||||
Goodwill | 1,341,000 | $ 1,341,000 | 1,341,000 | ||
Intangible assets | 2,260,000 | ||||
Total liabilities | $ 608,000 | ||||
IVDesk Minnesota, Inc. [Member] | |||||
Business Acquisition [Line Items] | |||||
Total purchase price of acquired entity | $ 1,368,000 | ||||
Business acquisition, initial cash consideration paid | 950,000 | ||||
Business acquisition, working capital adjustment | (132,000) | ||||
Contingent consideration at fair value | $ 550,000 | ||||
Contingent consideration period | 120 days | ||||
Business acquisition, liabilities arising from contingencies | 0 | ||||
Total assets | $ 1,500,000 | ||||
Property, plant and equipment | 35,000 | ||||
Goodwill | 745,000 | $ 745,000 | $ 745,000 | ||
Intangible assets | 720,000 | ||||
Total liabilities | $ 132,000 | ||||
IVDesk Minnesota, Inc. [Member] | Customer Relationships [Member] | Weighted Average [Member] | |||||
Business Acquisition [Line Items] | |||||
Amortization period | 8 years |
Business Combinations (Schedule
Business Combinations (Schedule Of Assets Acquired And Liabilities Assumed) (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | May 14, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 2,086,393 | $ 2,086,393 | ||
Ecessa Corporation [Member] | ||||
Business Acquisition [Line Items] | ||||
Current assets | $ 1,101,000 | |||
Property, plant and equipment | 127,000 | |||
Other long-term assets | 421,000 | |||
Intangible assets | 2,260,000 | |||
Goodwill | $ 1,341,000 | $ 1,341,000 | 1,341,000 | |
Total assets | 5,250,000 | |||
Total liabilities | 608,000 | |||
Net assets acquired | $ 4,642,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Goodwill and Intangible Assets [Abstract] | ||
Amortization expense | $ 346,000 | $ 106,000 |
Goodwill And Intangible Asset_3
Goodwill And Intangible Assets (Schedule of Changes in Carrying Amount of Goodwill) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Sep. 30, 2021 | Nov. 03, 2020 | May 14, 2020 | |
Goodwill [Roll Forward] | ||||
January 1, 2020 | ||||
Acquisition | 2,086,000 | |||
Ending Balance | 2,086,393 | |||
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||||
Gross goodwill | $ 2,086,000 | |||
Accumulated impairment loss | ||||
Balance at September 30, 2021 | 2,086,393 | 2,086,393 | ||
Ecessa Corporation [Member] | ||||
Goodwill [Roll Forward] | ||||
January 1, 2020 | ||||
Acquisition | 1,341,000 | |||
Ending Balance | 1,341,000 | |||
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||||
Gross goodwill | 1,341,000 | |||
Accumulated impairment loss | ||||
Balance at September 30, 2021 | 1,341,000 | 1,341,000 | $ 1,341,000 | |
IVDesk Minnesota, Inc. [Member] | ||||
Goodwill [Roll Forward] | ||||
January 1, 2020 | ||||
Acquisition | 745,000 | |||
Ending Balance | 745,000 | |||
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||||
Gross goodwill | 745,000 | |||
Accumulated impairment loss | ||||
Balance at September 30, 2021 | $ 745,000 | $ 745,000 | $ 745,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Schedule of Finite-Lived Intangible Assets) (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 2,991,000 | $ 2,980,000 |
Accumulated Amortization | (550,000) | (205,000) |
Net | 2,441,000 | 2,775,000 |
Trade Name/Trademark/Internet Domain Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 101,000 | 90,000 |
Accumulated Amortization | (12,000) | (5,000) |
Net | 89,000 | 85,000 |
Non-compete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 80,000 | 80,000 |
Accumulated Amortization | (36,000) | (16,000) |
Net | 44,000 | 64,000 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,010,000 | 1,010,000 |
Accumulated Amortization | (160,000) | (34,000) |
Net | 850,000 | 976,000 |
Internally Developed Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,800,000 | 1,800,000 |
Accumulated Amortization | (342,000) | (150,000) |
Net | $ 1,458,000 | $ 1,650,000 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets (Schedule of Estimated Future Amortization Expense) (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Goodwill and Intangible Assets [Abstract] | |
Q4 2021 | $ 111,000 |
2022 | 442,000 |
2023 | 426,000 |
2024 | 415,000 |
2025 | 381,000 |
Thereafter | $ 666,000 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) | Jun. 28, 2021USD ($)$ / sharesshares | Oct. 29, 2020USD ($)item | Sep. 30, 2021USD ($)shares | Dec. 31, 2020USD ($)shares | Aug. 28, 2020USD ($) |
Commitments and Contingencies [Line Items] | |||||
Private placement investment | $ 32,000,000 | ||||
Warrants purchase period | 5 years | ||||
Additional common shares available to purchase during warrant period | $ 32,000,000 | ||||
Preferred Stock, Value, Issued | |||||
Common stock, shares outstanding | shares | 9,720,627 | 9,321,927 | |||
Term of company prohibited from conducting new equity offering | 30 days | ||||
Convertible Preferred Stock [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Per share conversion price of preferred stock. | $ / shares | $ 3.40 | ||||
PIPE Investors [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Percentage right to purchase equity securities in future | 25.00% | ||||
Right to purchase equity securities in future, term | 1 year | ||||
Lock-up agreement term | 30 days | ||||
PIPE Investors [Member] | Assuming Conversion Of Series A Convertible Preferred Stock [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Common stock, shares outstanding | shares | 9,410,000 | ||||
Percent of outstanding common stock | 27.00% | ||||
PIPE Investors [Member] | Assuming Exercise Of All Warrants For Cash [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Common stock, shares outstanding | shares | 18,800,000 | ||||
Percent of outstanding common stock | 43.00% | ||||
Line of Credit [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Line of credit, maximum borrowing capacity | $ 5,000,000 | ||||
Letter of Credit [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Line of credit, maximum borrowing capacity | $ 2,000,000 | ||||
Ability to obtain letter of credit, number of letters of credit | item | 1 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Income Taxes [Line Items] | ||
Uncertain tax benefit positions that would reduce the effective income tax rate if recognized | $ 117,000 | |
Effective tax rate | (0.10%) | (0.10%) |
Federal tax rate | 21.00% | |
Foreign net operating loss carry-forwards and credits | $ 0 | |
Increase (decrease) in income tax rate due to the effect of foreign operations | 0.00% | |
Uncertain tax positions | $ 0 | |
Domestic Tax Authority [Member] | Earliest Tax Year [Member] | ||
Income Taxes [Line Items] | ||
Open tax year | 2018 | |
Domestic Tax Authority [Member] | Latest Tax Year [Member] | ||
Income Taxes [Line Items] | ||
Open tax year | 2020 | |
State and Local Jurisdiction [Member] | Earliest Tax Year [Member] | ||
Income Taxes [Line Items] | ||
Open tax year | 2017 | |
State and Local Jurisdiction [Member] | Latest Tax Year [Member] | ||
Income Taxes [Line Items] | ||
Open tax year | 2020 | |
Foreign Tax Authority [Member] | Earliest Tax Year [Member] | ||
Income Taxes [Line Items] | ||
Open tax year | 2018 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) - segment | 2 Months Ended | 7 Months Ended |
Sep. 30, 2021 | Aug. 02, 2021 | |
Segment Information [Abstract] | ||
Number of segments | 1 | 2 |
Segment Information (Schedule o
Segment Information (Schedule of Segment Information) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||||
Sales | $ 1,828,299 | $ 3,354,306 | $ 5,313,047 | $ 5,321,683 | |
Cost of sales | 1,112,528 | 2,181,589 | 3,459,331 | 3,756,475 | |
Gross profit | 715,771 | 1,172,717 | 1,853,716 | 1,565,208 | |
Selling, general and administrative expenses | 1,687,930 | 1,959,583 | 5,566,808 | 5,016,736 | |
Amortization expense | 110,489 | 106,333 | 346,277 | 106,333 | |
Transaction costs | 542,509 | 71,301 | 1,854,382 | 485,886 | |
Restructuring expense | 242,275 | 242,275 | |||
Operating loss from continuing operations | (1,867,432) | (964,500) | (6,156,026) | (4,043,747) | |
Other (expense) income | 69,517 | 274,734 | (165,838) | 947,410 | |
Operating loss from continuing operations before income taxes | (1,797,915) | (689,766) | (6,321,864) | (3,096,337) | |
Depreciation and amortization | 205,000 | 274,000 | 643,541 | 621,363 | |
Capital expenditures | 14,000 | 79,000 | 20,000 | 101,000 | |
Assets | 56,962,123 | 55,717,000 | 56,962,123 | 55,717,000 | $ 55,556,325 |
Intersegment Eliminations [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | (119,000) | (176,000) | (406,000) | (561,000) | |
Cost of sales | (9,000) | (36,000) | |||
Gross profit | (119,000) | (167,000) | (406,000) | (525,000) | |
Selling, general and administrative expenses | (119,000) | (167,000) | (406,000) | (525,000) | |
Depreciation and amortization | |||||
Capital expenditures | |||||
Assets | (27,000) | (27,000) | (27,000) | (27,000) | |
Services & Support Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | 1,947,000 | 3,530,000 | 5,719,000 | 5,882,000 | |
Cost of sales | 1,113,000 | 2,190,000 | 3,459,000 | 3,792,000 | |
Gross profit | 834,000 | 1,340,000 | 2,260,000 | 2,090,000 | |
Selling, general and administrative expenses | 669,000 | 803,000 | 2,290,000 | 1,614,000 | |
Amortization expense | 110,000 | 106,000 | 346,000 | 106,000 | |
Operating loss from continuing operations | 55,000 | 431,000 | (376,000) | 370,000 | |
Other (expense) income | 4,000 | 20,000 | |||
Operating loss from continuing operations before income taxes | 59,000 | 431,000 | (356,000) | 370,000 | |
Depreciation and amortization | 133,000 | 146,000 | 426,000 | 178,000 | |
Capital expenditures | 5,000 | 11,000 | 1,000 | ||
Assets | 6,776,000 | 8,334,000 | 6,776,000 | 8,334,000 | |
Other [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Selling, general and administrative expenses | 1,138,000 | 1,324,000 | 3,683,000 | 3,928,000 | |
Transaction costs | 543,000 | 72,000 | 1,855,000 | 486,000 | |
Restructuring expense | 242,000 | 242,000 | |||
Operating loss from continuing operations | (1,923,000) | (1,396,000) | (5,780,000) | (4,414,000) | |
Other (expense) income | 66,000 | 275,000 | (186,000) | 948,000 | |
Operating loss from continuing operations before income taxes | (1,857,000) | (1,121,000) | (5,966,000) | (3,466,000) | |
Depreciation and amortization | 72,000 | 128,000 | 218,000 | 443,000 | |
Capital expenditures | 9,000 | 79,000 | 9,000 | 100,000 | |
Assets | $ 50,213,000 | $ 47,410,000 | $ 50,213,000 | $ 47,410,000 |
Net Income (Loss) Per Share (Na
Net Income (Loss) Per Share (Narrative) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Stock Compensation Plan [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive effect of outstanding stock options and shares associated with long-term incentive compensation plans | 84,188 | 89,561 | 184,053 | 0 |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive effect of outstanding stock options and shares associated with long-term incentive compensation plans | 0 | |||
Shares not included in the computation of diluted earnings per share | 791,415 | 727,915 | ||
Deferred Stock Award [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive effect of outstanding stock options and shares associated with long-term incentive compensation plans | 0 | |||
Shares not included in the computation of diluted earnings per share | 110,308 | 110,308 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of accrued consideration | $ 550,000 | |
Transfers between levels | $ 0 | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of accrued consideration | 550,000 | |
Contingent Consideration [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of accrued consideration | $ 0 | 550,000 |
Contingent Consideration [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of accrued consideration | $ 550,000 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 33,138,000 | $ 9,424,000 |
Short-term investments | 2,861,000 | 2,759,000 |
Long-term investments | 3,044,000 | 6,210,000 |
Current Liabilities | (550,000) | |
Total | 39,043,000 | 17,843,000 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 33,138,000 | 9,424,000 |
Total | 33,138,000 | 9,424,000 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 2,861,000 | 2,759,000 |
Long-term investments | 2,794,000 | 5,605,000 |
Total | 5,655,000 | 8,364,000 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term investments | 250,000 | 605,000 |
Current Liabilities | (550,000) | |
Total | 250,000 | 55,000 |
Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 33,138,000 | 9,424,000 |
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 33,138,000 | 9,424,000 |
Commercial Paper [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 700,000 | |
Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 700,000 | |
Corporate Notes/Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 2,861,000 | 2,059,000 |
Long-term investments | 2,794,000 | 5,605,000 |
Corporate Notes/Bonds [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 2,861,000 | 2,059,000 |
Long-term investments | 2,794,000 | 5,605,000 |
Convertible Debt [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term investments | 250,000 | 605,000 |
Convertible Debt [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term investments | 250,000 | 605,000 |
Contingent Consideration [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current Liabilities | $ 0 | (550,000) |
Contingent Consideration [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Current Liabilities | $ (550,000) |