Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | ISSUER DIRECT CORP | |
Entity Central Index Key | 0000843006 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Is Entity's Reporting Status Current? | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 3,772,700 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 1-10185 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 16,197 | $ 15,766 |
Accounts receivable (net of allowance for doubtful accounts of $534 and $700, respectively) | 2,172 | 2,051 |
Income tax receivable | 0 | 48 |
Other current assets | 241 | 141 |
Total current assets | 18,610 | 18,006 |
Capitalized software (net of accumulated amortization of $2,323 and $2,153, respectively) | 964 | 1,134 |
Fixed assets (net of accumulated amortization of $213 and $181, respectively) | 867 | 899 |
Right-of-use asset - leases | 2,053 | 2,127 |
Deferred tax asset | 294 | 256 |
Other long-term assets | 67 | 77 |
Goodwill | 6,376 | 6,376 |
Intangible assets (net of accumulated amortization of $5,109 and $4,937, respectively) | 3,343 | 3,515 |
Total assets | 32,574 | 32,390 |
Current liabilities: | ||
Accounts payable | 383 | 266 |
Accrued expenses | 1,060 | 1,151 |
Note payable – short-term (net of discount of $13 and $19, respectively) | 307 | 301 |
Income taxes payable | 374 | 310 |
Deferred revenue | 1,879 | 1,812 |
Total current liabilities | 4,003 | 3,840 |
Deferred income tax liability | 137 | 141 |
Lease liabilities - long term | 2,226 | 2,309 |
Total liabilities | 6,366 | 6,290 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively. | 0 | 0 |
Common stock $0.001 par value, 20,000,000 shares authorized, 3,772,700 and 3,786,398 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively. | 4 | 4 |
Additional paid-in capital | 22,117 | 22,275 |
Other accumulated comprehensive loss | 24 | (16) |
Retained earnings | 4,063 | 3,837 |
Total stockholders' equity | 26,208 | 26,100 |
Total liabilities and stockholders' equity | $ 32,574 | $ 32,390 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivables | $ 534 | $ 700 |
Accumulated amortization - capitalized software | 2,323 | 2,153 |
Accumulated depreciation - fixed assets | 213 | 181 |
Accumulated amortization - intangible assets | 5,109 | 4,937 |
Long-term notes payable discount | $ 13 | $ 19 |
Stockholders' equity: | ||
Preferred stock shares, par value | $ .001 | $ 0.001 |
Preferred stock shares, authorized | 1,000,000 | 1,000,000 |
Preferred stock shares, issued | 0 | 0 |
Preferred stock shares, outstanding | 0 | 0 |
Common stock shares, par value | $ 0.001 | $ 0.001 |
Common stock shares, authorized | 20,000,000 | 20,000,000 |
Common stock shares, issued | 3,772,700 | 3,786,398 |
Common stock shares, outstanding | 3,772,700 | 3,786,398 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 4,016 | $ 4,179 |
Cost of revenues | 1,253 | 1,302 |
Gross profit | 2,763 | 2,877 |
Operating costs and expenses: | ||
General and administrative | 1,216 | 1,361 |
Sales and marketing expenses | 896 | 820 |
Product development | 194 | 337 |
Depreciation and amortization | 209 | 212 |
Total operating costs and expenses | 2,515 | 2,730 |
Operating income | 248 | 147 |
Interest income, net | 58 | 71 |
Net income before income taxes | 306 | 218 |
Income tax expense | 80 | 13 |
Net income | $ 226 | $ 205 |
Income per share - basic | $ 0.06 | $ 0.05 |
Income per share - fully diluted | $ 0.06 | $ 0.05 |
Weighted average number of common shares outstanding - basic (in thousands) | 3,788 | 3,850 |
Weighted average number of common shares outstanding - fully diluted (in thousands) | 3,824 | 3,869 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Other Comprehensive Income [Abstract] | ||
Net income | $ 226 | $ 205 |
Foreign currency translation adjustment | 40 | (3) |
Comprehensive income | $ 266 | $ 202 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Other Accumulated Comprehensive Income (Loss) | Retained Earnings | Total |
Beginning balance, shares at Dec. 31, 2018 | 3,829,572 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 4 | $ 22,525 | $ (17) | $ 3,151 | $ 25,663 |
Stock-based compensation expense | 137 | 137 | |||
Exercise of stock awards, net of tax, shares | 24,996 | ||||
Exercise of stock awards, net of tax, amount | $ 0 | 0 | |||
Foreign currency translation | (3) | (3) | |||
Net income | 205 | 205 | |||
Ending balance, shares at Mar. 31, 2019 | 3,854,568 | ||||
Ending balance, amount at Mar. 31, 2019 | $ 4 | 22,662 | (20) | 3,356 | 26,002 |
Beginning balance, shares at Dec. 31, 2019 | 3,786,398 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 4 | 22,275 | (16) | 3,837 | 26,100 |
Stock-based compensation expense | 45 | 45 | |||
Exercise of stock awards, net of tax, shares | 8,002 | ||||
Exercise of stock awards, net of tax, amount | $ 0 | 0 | |||
Stock repurchase and retirement, shares | (21,700) | ||||
Stock repurchase and retirement, amount | $ 0 | (203) | (203) | ||
Foreign currency translation | 40 | 40 | |||
Net income | 226 | 226 | |||
Ending balance, shares at Mar. 31, 2020 | 3,772,700 | ||||
Ending balance, amount at Mar. 31, 2020 | $ 4 | $ 22,117 | $ 24 | $ 4,063 | $ 26,208 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 226 | $ 205 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 374 | 412 |
Bad debt expense | 93 | 224 |
Deferred income taxes | (42) | 6 |
Non-cash interest expense | 6 | 7 |
Stock-based compensation expense | 45 | 137 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | (219) | (869) |
Decrease (increase) in other assets | 32 | (273) |
Increase (decrease) in accounts payable | 118 | 254 |
Increase (decrease) in accrued expenses | (105) | 218 |
Increase (decrease) in deferred revenue | 74 | 215 |
Net cash provided by operating activities | 602 | 536 |
Cash flows from investing activities: | ||
Purchase of VisualWebcaster Platform | 0 | (2,788) |
Purchase of fixed assets | 0 | (6) |
Net cash used in investing activities | 0 | (2,794) |
Cash flows from financing activities: | ||
Payment for stock repurchase and retirement | (203) | 0 |
Net cash provided by (used in) financing activities | (203) | 0 |
Net change in cash | 399 | (2,258) |
Cash - beginning | 15,766 | 17,222 |
Currency translation adjustment | 32 | (3) |
Cash - ending | 16,197 | 14,961 |
Supplemental disclosures: | ||
Cash paid for income taxes | 10 | 37 |
Non-cash activities: | ||
Right-of-use assets obtained in exchange for lease liabilities | $ 0 | $ 260 |
Note 1. Basis of Presentation
Note 1. Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The unaudited interim consolidated balance sheet as of March 31, 2020 and consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2020 and 2019 included herein, have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 10 of Regulation S-X under the Exchange Act. In the opinion of management, they include all normal recurring adjustments necessary for a fair presentation of the financial statements. Results of operations reported for the interim periods are not necessarily indicative of results for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. The interim financial information should be read in conjunction with the 2019 audited financial statements of Issuer Direct Corporation (the “Company”, “We”, or “Our”) filed on Form 10-K. |
Note 2. Summary of Significant
Note 2. Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Significant intercompany accounts and transactions are eliminated in consolidation. Earnings Per Share (EPS) Earnings per share guidance requires that basic net income per common share be computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Shares issuable upon the exercise of stock options totaling 93,000 and 92,000 were excluded in the computation of diluted earnings per common share during the three-month periods ended March 31, 2020 and 2019, respectively, because their impact was anti-dilutive. Revenue Recognition Substantially all of the Company’s revenue comes from contracts with customers for subscriptions to its cloud-based products or contracts to perform compliance or other services. Customers consist primarily of corporate issuers and professional firms, such as investor relations and public relations firms. In the case of our news distribution and webcasting offerings, our customers also include private companies. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer. The Company's contracts include either a subscription to our entire platform or certain modules within our platform, or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. For these bundled contracts, the Company accounts for individual subscriptions and services as separate performance obligations if they are distinct, which is when a product or service is separately identifiable from other items in the bundled package, and a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company separates revenue from its contracts into two revenue streams: i) Platform and Technology and ii) Services. Performance obligations of Platform and Technology contracts include providing subscriptions to certain modules or the entire Platform id. The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for per release contracts and upon event completion for webcasting events. For service contracts that include stand ready obligations, revenue is recognized evenly over the contract period. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations. For bundled contracts, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the subscription or services. If a standalone selling price is not directly observable, the Company uses the residual method to allocate any remaining costs to that subscription or service. The Company regularly reviews standalone selling prices and updates these estimates if necessary. The Company invoices its customers based on the billing schedules designated in its contracts, typically upfront on either a monthly, quarterly or annual basis or per transaction at the completion of the performance obligation. Deferred revenue for the periods presented was primarily related to subscription and service contracts, which are billed upfront, quarterly or annually, however the revenue has not yet been recognized. The associated deferred revenue is generally recognized ratably over the billing period. Additionally, deferred revenue is related to pre-paid packages of press releases for which the releases have not yet been disseminated. Deferred revenue as of March 31, 2020 and December 31, 2019 was $1,879,000 and $1,812,000, respectively, and is expected to be recognized within one year. Revenue recognized for the three months ended March 31, 2020 and 2019, that was included in the deferred revenue balance at the beginning of each reporting period, was approximately $877,000 and $690,000, respectively. Accounts receivable, net of allowance for doubtful accounts, related to contracts with customers was $2,172,000 and $2,051,000 as of March 31, 2020 and December 31, 2019, respectively. Since substantially all of the contracts have terms of one year or less, the Company has elected to use the practical expedient regarding the existence of a significant financing. Costs to obtain contracts with customers consist primarily of sales commissions. As of March 31, 2020 and December 31, 2019, the Company has capitalized $21,000 of costs to obtain contracts that are expected to be amortized over more than one year. For contract costs expected to be amortized in less than one year, the Company has elected to use the practical expedient allowing the recognition of incremental costs of obtaining a contract as an expense when incurred. The Company has considered historical renewal rates, expectations of future renewals and economic factors in making these determinations. Cash Equivalents For purposes of the Company’s financial statements, the Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts The Company monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. Credit is granted on an unsecured basis. The allowance for doubtful accounts is estimated based on an assessment of the Company’s ability to collect on customer accounts receivable. There is judgment involved with estimating the allowance for doubtful accounts and if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against revenues. The Company generally writes-off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues its collection. Concentration of Credit Risk Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivables. The Company places its cash and temporary cash investments with credit quality institutions. Such cash balances are typically in excess of the FDIC insurance limit of $250,000. To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. As of March 31, 2020, the total amount exceeding such limit was $14,905,000. The Company also had cash-on-hand of $358,000 in Europe and $254,000 in Canada as of March 31, 2020. We believe we did not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk for any relevant period. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts and the valuation of goodwill, intangible assets, deferred tax assets, and stock-based compensation. Actual results could differ from those estimates. Income Taxes We comply with Financial Aaccounting Standards Board (“FASB”) ASC No. 740 – Income Taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. At the end of each interim period, we estimate the effective tax rate we expect to be applicable for the full year and this rate is applied to our results for the interim year-to-date period and then adjusted for any discrete period items. Capitalized Software Costs incurred to develop our cloud-based platform products are capitalized when the preliminary project phase is complete, management commits to fund the project and it is probable the project will be completed and used for its intended purposes. Once the software is substantially complete and ready for its intended use, the software is amortized over its estimated useful life. Costs related to design or maintenance of the software are expensed as incurred. No costs were capitalized during the three month periods ended March 31, 2020 and 2019. The Company recorded amortization expense of $170,000 and $204,000 during the three months ended March 31, 2020 and 2019, respectively. All of the amortization is included in Cost of revenues on the Consolidated Statements of Operations, with the exception of $5,000 and $4,000, which is included in Depreciation and amortization during the three months ended March 31, 2020 and 2019, respectively, as it relates to back-office supporting systems. Lease Accounting We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for office space and are included within operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets also include any lease payments made and exclude lease incentives. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Fair Value Measurements ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: ● Level 1 – Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. Our cash and cash equivalents are quoted at Level 1. ● Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Generally, this includes debt and equity securities that are not traded in an active market. ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of March 31, 2020 and December 31, 2019, we believe that the fair value of our financial instruments other than cash and cash equivalents, such as, accounts receivable, our line of credit, notes payable, and accounts payable approximate their carrying amounts. Translation of Foreign Financial Statements The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income until the entity is sold or substantially liquidated. Business Combinations, Goodwill and Intangible Assets We account for business combinations under FASB ASC No. 805 – Business Combinations and the related acquired intangible assets and goodwill under FASB ASC No. 350 – Intangibles – Goodwill and Other. The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. We record the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of client relationships, customer lists, distribution partner relationships, software, technology, non-compete agreements and trademarks that are initially measured at fair value. At the time of the business combination, trademarks are considered an indefinite-lived asset and, as such, are not amortized as there is no foreseeable limit to cash flows generated from them. The goodwill and intangible assets are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships (7-10 years), customer lists (3 years), distribution partner relationships (10 years), non-compete agreements (5 years) and software and technology (3-6 years) are amortized over their estimated useful lives. Comprehensive Income Comprehensive income consists of net income and other comprehensive income related to changes in the cumulative foreign currency translation adjustment. Advertising The Company expenses advertising costs as incurred. Stock-based compensation The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The associated cost is recognized over the period during which an employee is required to provide service in exchange for the award. Recently adopted accounting pronouncements On January 1, 2020, the Company adopted ASU 2017-04 Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment |
Note 3. Recent Acquisitions
Note 3. Recent Acquisitions | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Recent Acquisitions | Acquisition of the VisualWebcaster Platform (“VWP”) On January 3, 2019 (the “Closing Date”), the Company entered into an Asset Purchase Agreement (the “VWP Agreement”) with Onstream Media Corporation, a Florida corporation (the “Seller”), whereby the Company purchased certain assets related primarily to customer accounts, intellectual property, lease deposits and assumed certain existing contractual obligations related primarily to data processing and storage, bandwidth and facility leases relating to the Seller’s VisualWebcaster Platform ("VWP”). The accounts receivable and the accounts payable related to VWP and existing as of the Closing Date were not included as part of the VWP Agreement. The acquisition was accounted for under the acquisition method of accounting for business combinations in accordance with FASB ASC 805, Business Combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. Acquisition-related costs, which totaled approximately $155,000, are not included as a component of the acquisition accounting, but are recognized as expenses in the periods in which the costs are incurred. The Company employed a third party valuation firm to assist in determining the purchase price allocation of assets and liabilities acquired from Seller. The valuation resulted in the tangible and intangible assets and liabilities disclosed below. The income approach was used to determine the value of the customer relationships and non-compete agreement. The income approach determines the fair value for the asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a rate of return that reflects the relative risk of achieving the cash flow and the time value of money. Projected cash flows considered multiple factors, including current revenue from existing customers; analysis of expected revenue and attrition trends; reasonable contract renewal assumptions from the perspective of a marketplace participant; probability of executives competing, expected profit margins giving consideration to marketplace synergies; and required returns to contributory assets. The relief from royalty method was used to value the technology. The relief from royalty method determines the fair value by calculating what a typical license fee would be in order to obtain the same or similar license of the technology from market participants. Projected cash flows consider revenue assumptions allocated to the technology. The transaction consisted of a single cash payment to the Seller in the amount of $2,788,000. In connection with the acquisition, the Company assumed two short-term leases associated with an office and co-location for certain computer equipment in New York City, New York as well as entered into a three-year office lease in Florida. In addition to the intangible assets listed below, the purchase price included lease deposits of $13,000 and a right of use asset and corresponding lease liability for the office lease in Florida in the amount of $125,000. The preliminary identified intangible assets as a result of the acquisition are as follows (in 000’s): Customer relationships $ 865 Technology 497 Non-compete agreement 69 Goodwill 1,344 $ 2,775 |
Note 4. Equity
Note 4. Equity | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Equity | 2014 Equity Incentive Plan On May 23, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan (the “2014 Plan”). Under the terms of the 2014 Plan, the Company is authorized to issue incentive awards for common stock up to 200,000 shares to employees and other personnel. On June 10, 2016, the shareholders of the Company approved an additional 200,000 awards to be issued under the 2014 Plan, bringing the total number of shares to be awarded to 400,000. The awards may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards. The 2014 Plan is effective through March 31, 2024. As of March 31, 2020, there are 38,583 shares which remain to be granted under the 2014 Plan. The following table summarizes information about stock options outstanding and exercisable at March 31, 2020: Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life (in Years) Weighted Average Exercise Price Number $ 0.01 - 7.00 10,000 5.64 $ 6.80 10,000 $ 7.01 - 8.00 20,313 3.49 $ 7.76 20,313 $ 8.01 - 12.00 8,167 6.95 $ 9.99 4,167 $ 12.01 - 15.00 57,000 8.12 $ 13.09 44,500 $ 15.01 - 17.40 32,000 8.17 $ 17.40 32,000 Total 127,480 7.12 $ 12.63 110,980 As of March 31, 2020, the Company had unrecognized stock compensation related to the options of $75,000, which will be recognized through 2021. During the three months ended March 31, 2020, the Company did not grant any restricted stock units. During the three months ended March 31, 2020, 8,002 restricted stock units with an intrinsic value of $12.61 vested. As of March 31, 2020, there was $66,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2021. Stock repurchase and retirement On August 7, 2019, the Company publicly announced a share repurchase program under which the Company is authorized to repurchase up to $1,000,000 of its common shares. On March 16, 2020, the Company publicly announced that the Company increased the share repurchase program to repurchase up to $2,000,000 of its common shares. As of March 31, 2020, the Company repurchased a total of 97,870 shares at an aggregate cost of $972,000 (not including commissions of $4,000) as shown in the table below ($ in 000’s, except share or per share amounts): Shares Repurchased Period Total number of shares repurchased Average price paid per share Total number of shares purchased as part of publicly announced program Maximum dollar value of shares that may yet be purchased under the same program August 7 -31, 2019 22,150 $ 9.34 22,150 $ 793 September 1-30, 2019 2,830 $ 10.00 2,830 $ 765 October 1-31, 2019 39,363 $ 10.44 39,363 $ 354 November 1-30, 2019 11,827 $ 10.43 11,827 $ 231 December 1-31, 2019 — — — $ 231 January 1-31, 2020 — — — $ 231 February 1-29, 2020 — — — $ 231 March 1-31, 2020 21,700 $ 9.33 21,700 $ 1,028 Total 97,870 $ 9.93 97,870 $ 1,028 |
Note 5. Income Taxes
Note 5. Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | We recognized income tax expense of $80,000 for the three-month period ended March 31, 2020, compared to income tax expense of $13,000 during the same period of 2019. At the end of each interim period, we estimate the effective tax rate we expect to be applicable for the full fiscal year and this rate is applied to our results for the year-to-date period, and then adjusted for any discrete period items. For the three-month period ended March 31, 2020, the variance between the Company’s effective tax rate and the U.S. statutory rate of 21% is primarily attributable to state income tax. For the three-month periods ended March 31, 2019, the variance between our effective tax rate and the U.S. statutory rate, is primarily attributable to excess stock-based compensation tax benefits of $35,000, recognized in income tax expense during the period, as well as, tax credits offset by state income taxes. |
Note 6. Leases
Note 6. Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Generally, our leasing activity consists of office leases. In March 2019, we signed a new lease to move our corporate headquarters to Raleigh, North Carolina. As we continue our transition from a services-based company to a cloud-based platform company, the new lease affords us the ability to separate our warehouse from our corporate office. The new lease, which had a lease commencement date of October 2, 2019, is for 9,766 square feet and expires December 31, 2027. Minimum lease payments are $2,997,000, not including a tenant improvement allowance of $488,000, which is included in fixed assets as of March 31, 2020. We recognized a ROU asset and corresponding lease liability of $2,596,000, which represents the present value of minimum lease payments discounted at 3.77%, the Company’s incremental borrowing rate at lease inception. Additionally, we have an office in Salt Lake City, Utah, which is on a short-term lease that is less than twelve months. As a result, we have elected the short-term lease recognition exemption for our Utah office lease, which means, for those leases we do not expect to extend beyond twelve months, we will not recognize ROU assets or lease liabilities. In connection with the Company’s acquisition of VWP (See Note 4), the Company assumed two short term leases in New York City, NY and entered into a three-year office lease in Florida. We have elected the short term lease exemption for the two New York leases because we do not expect them to extend beyond twelve months. For the Florida lease, which was signed on January 4, 2019, we recognized a ROU asset and corresponding lease liability of $125,000, which represents the present value of minimum lease payments discounted at 4.25%, the Company’s incremental borrowing rate at lease inception. Lease liabilities totaled $2,610,000 as of March 31, 2020. The current portion of this liability of $384,000 is included in Accrued expenses on the Consolidated balance sheets and the long-term portion of $2,226,000 is included in Lease liabilities on the Consolidated Balance Sheets. Rent expense consists of both operating lease expense from amortization of our ROU assets as well as variable lease expense which consists of non-lease components of office leases (i.e. common area maintenance) or rent expense associated with short term leases. The components of lease expense were as follows (in 000’s): Three months ended March 31, 2020 2019 Lease expense Operating lease expense $ 87 $ 41 Variable lease expense 32 42 Rent expense $ 119 $ 83 The weighted-average remaining non-cancelable lease term for our operating leases was 4.8 years as of March 31, 2020. As of March 31, 2020, the weighted-average discount rate used to determine the lease liability was 3.8%. The future minimum lease payments to be made under non-cancelable operating leases at March 31, 2020, are as follows (in 000’s): Year Ended December 31: 2020 $ 288 2021 394 2022 359 2023 369 2024 379 Thereafter 1,201 Total lease payments $ 2,990 Present value adjustment (380 ) Lease liability 2,610 We have performed an evaluation of our other contracts with customers and suppliers in accordance with Topic 842 and have determined that, except for the leases described above, none of our contracts contain a lease. |
Note 7. Revenue
Note 7. Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | We consider ourselves to be in a single reportable segment under the authoritative guidance for segment reporting, specifically a shareholder communications and compliance company for publicly traded and private companies. The following tables present revenue disaggregated by revenue stream in (000’s): Three months ended March 31, Revenue Streams 2020 2019 Platform and Technology $ 2,685 66.9 % $ 2,665 63.8 % Services 1,331 33.1 % 1,514 36.2 % Total $ 4,016 100.0 % $ 4,179 100.0 % No customers accounted for more than 10% of the operating revenues during the three-month periods ended March 31, 2020 or 2019. |
Note 8. Line of Credit
Note 8. Line of Credit | 3 Months Ended |
Mar. 31, 2020 | |
Line of Credit Facility [Abstract] | |
Line of Credit | Effective October 3, 2019, the Company renewed its Line of Credit, which increased the term to two years, with all other provisions remaining the same. The amount of funds available for borrowing are $3,000,000 and the interest rate is LIBOR plus 1.75%. As of March 31, 2020, the interest rate was 2.74% and the Company did not owe any amounts on the Line of Credit. |
Note 9. Subsequent Events
Note 9. Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 11, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which we operate. Our offices have been ordered temporarily closed for the safety of our employees, their families and our community. While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, we could experience a material disruption of our employees and operations, a decline in revenue, a decline in value of our assets, deterioration of our customer base and the inability of our customers to pay for subscriptions or services provided. We have performed a qualitative and quantitative review of our goodwill and intangible assets as of March 31, 2020 and have determined that there has been no impairment as a result of the impact of coronavirus or other factors, however, due to the uncertainty surrounding the pandemic, we will re-evaluate its impact on goodwill and intangible assets at the end of the second quarter of 2020. On April 16, 2020, we entered into a $1,025,000 loan under the Small Business Administration’s (“SBA”) Paycheck Protection Program ("the PPP"). The loan proceeds were intended to be used for payroll, rent and utilities over the eight- week period following the date of the loan. At the time we applied for the PPP loan, we believed in good faith that the Company met all of the certification requirements for a PPP loan. However, on April 23, 2020, the SBA issued additional guidance with respect to PPP loans. We immediately evaluated this new guidance and concluded that currently we may not be able to meet all of the certification requirements. As such, the Company immediately decided to return all of the funds received under the PPP loan (including interest accrued on such funds) to the SBA as soon as possible and the funds were returned on April 28, 2020. |
Note 2. Summary of Significan_2
Note 2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Earnings per Share (EPS) | Earnings per share guidance requires that basic net income per common share be computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Shares issuable upon the exercise of stock options totaling 93,000 and 92,000 were excluded in the computation of diluted earnings per common share during the three-month periods ended March 31, 2020 and 2019, respectively, because their impact was anti-dilutive. |
Revenue Recognition | Substantially all of the Company’s revenue comes from contracts with customers for subscriptions to its cloud-based products or contracts to perform compliance or other services. Customers consist primarily of corporate issuers and professional firms, such as investor relations and public relations firms. In the case of our news distribution and webcasting offerings, our customers also include private companies. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer. The Company's contracts include either a subscription to our entire platform or certain modules within our platform, or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. For these bundled contracts, the Company accounts for individual subscriptions and services as separate performance obligations if they are distinct, which is when a product or service is separately identifiable from other items in the bundled package, and a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company separates revenue from its contracts into two revenue streams: i) Platform and Technology and ii) Services. Performance obligations of Platform and Technology contracts include providing subscriptions to certain modules or the entire Platform id. The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for per release contracts and upon event completion for webcasting events. For service contracts that include stand ready obligations, revenue is recognized evenly over the contract period. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations. For bundled contracts, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the subscription or services. If a standalone selling price is not directly observable, the Company uses the residual method to allocate any remaining costs to that subscription or service. The Company regularly reviews standalone selling prices and updates these estimates if necessary. The Company invoices its customers based on the billing schedules designated in its contracts, typically upfront on either a monthly, quarterly or annual basis or per transaction at the completion of the performance obligation. Deferred revenue for the periods presented was primarily related to subscription and service contracts, which are billed upfront, quarterly or annually, however the revenue has not yet been recognized. The associated deferred revenue is generally recognized ratably over the billing period. Additionally, deferred revenue is related to pre-paid packages of press releases for which the releases have not yet been disseminated. Deferred revenue as of March 31, 2020 and December 31, 2019 was $1,879,000 and $1,812,000, respectively, and is expected to be recognized within one year. Revenue recognized for the three months ended March 31, 2020 and 2019, that was included in the deferred revenue balance at the beginning of each reporting period, was approximately $877,000 and $690,000, respectively. Accounts receivable, net of allowance for doubtful accounts, related to contracts with customers was $2,172,000 and $2,051,000 as of March 31, 2020 and December 31, 2019, respectively. Since substantially all of the contracts have terms of one year or less, the Company has elected to use the practical expedient regarding the existence of a significant financing. Costs to obtain contracts with customers consist primarily of sales commissions. As of March 31, 2020 and December 31, 2019, the Company has capitalized $21,000 of costs to obtain contracts that are expected to be amortized over more than one year. For contract costs expected to be amortized in less than one year, the Company has elected to use the practical expedient allowing the recognition of incremental costs of obtaining a contract as an expense when incurred. The Company has considered historical renewal rates, expectations of future renewals and economic factors in making these determinations. |
Cash Equivalents | For purposes of the Company’s financial statements, the Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | The Company monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. Credit is granted on an unsecured basis. The allowance for doubtful accounts is estimated based on an assessment of the Company’s ability to collect on customer accounts receivable. There is judgment involved with estimating the allowance for doubtful accounts and if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against revenues. The Company generally writes-off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues its collection. |
Concentration of Credit Risk | Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivables. The Company places its cash and temporary cash investments with credit quality institutions. Such cash balances are typically in excess of the FDIC insurance limit of $250,000. To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. As of March 31, 2020, the total amount exceeding such limit was $14,905,000. The Company also had cash-on-hand of $358,000 in Europe and $254,000 in Canada as of March 31, 2020. We believe we did not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk for any relevant period. |
Use of Estimates | The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts and the valuation of goodwill, intangible assets, deferred tax assets, and stock-based compensation. Actual results could differ from those estimates. |
Income Taxes | We comply with Financial Aaccounting Standards Board (“FASB”) ASC No. 740 – Income Taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. At the end of each interim period, we estimate the effective tax rate we expect to be applicable for the full year and this rate is applied to our results for the interim year-to-date period and then adjusted for any discrete period items. |
Capitalized Software | Costs incurred to develop our cloud-based platform products are capitalized when the preliminary project phase is complete, management commits to fund the project and it is probable the project will be completed and used for its intended purposes. Once the software is substantially complete and ready for its intended use, the software is amortized over its estimated useful life. Costs related to design or maintenance of the software are expensed as incurred. No costs were capitalized during the three month periods ended March 31, 2020 and 2019. The Company recorded amortization expense of $170,000 and $204,000 during the three months ended March 31, 2020 and 2019, respectively. All of the amortization is included in Cost of revenues on the Consolidated Statements of Operations, with the exception of $5,000 and $4,000, which is included in Depreciation and amortization during the three months ended March 31, 2020 and 2019, respectively, as it relates to back-office supporting systems. |
Lease Accounting | We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for office space and are included within operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets also include any lease payments made and exclude lease incentives. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. |
Fair Value Measurements | ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: ● Level 1 – Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. Our cash and cash equivalents are quoted at Level 1. ● Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Generally, this includes debt and equity securities that are not traded in an active market. ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of March 31, 2020 and December 31, 2019, we believe that the fair value of our financial instruments other than cash and cash equivalents, such as, accounts receivable, our line of credit, notes payable, and accounts payable approximate their carrying amounts. |
Translation of Foreign Financial Statements | The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income until the entity is sold or substantially liquidated. |
Business Combinations, Goodwill and Intangible Assets | We account for business combinations under FASB ASC No. 805 – Business Combinations and the related acquired intangible assets and goodwill under FASB ASC No. 350 – Intangibles – Goodwill and Other. The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. We record the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of client relationships, customer lists, distribution partner relationships, software, technology, non-compete agreements and trademarks that are initially measured at fair value. At the time of the business combination, trademarks are considered an indefinite-lived asset and, as such, are not amortized as there is no foreseeable limit to cash flows generated from them. The goodwill and intangible assets are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships (7-10 years), customer lists (3 years), distribution partner relationships (10 years), non-compete agreements (5 years) and software and technology (3-6 years) are amortized over their estimated useful lives. |
Comprehensive Income | Comprehensive income consists of net income and other comprehensive income related to changes in the cumulative foreign currency translation adjustment. |
Advertising | The Company expenses advertising costs as incurred. |
Stock-based Compensation | The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The associated cost is recognized over the period during which an employee is required to provide service in exchange for the award. |
Recently Adopted Accounting Pronouncements | On January 1, 2020, the Company adopted ASU 2017-04 Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment |
Note 3. Recent Acquisitions (Ta
Note 3. Recent Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
VisualWebcaster Platform | |
Intangible assets acquired | Customer relationships $ 865 Technology 497 Non-compete agreement 69 Goodwill 1,344 $ 2,775 |
Note 4. Equity (Tables)
Note 4. Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock options outstanding and exercisable | Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life (in Years) Weighted Average Exercise Price Number $ 0.01 - 7.00 10,000 5.64 $ 6.80 10,000 $ 7.01 - 8.00 20,313 3.49 $ 7.76 20,313 $ 8.01 - 12.00 8,167 6.95 $ 9.99 4,167 $ 12.01 - 15.00 57,000 8.12 $ 13.09 44,500 $ 15.01 - 17.40 32,000 8.17 $ 17.40 32,000 Total 127,480 7.12 $ 12.63 110,980 |
Shares repurchased | Shares Repurchased Period Total number of shares repurchased Average price paid per share Total number of shares purchased as part of publicly announced program Maximum dollar value of shares that may yet be purchased under the same program August 7 -31, 2019 22,150 $ 9.34 22,150 $ 793 September 1-30, 2019 2,830 $ 10.00 2,830 $ 765 October 1-31, 2019 39,363 $ 10.44 39,363 $ 354 November 1-30, 2019 11,827 $ 10.43 11,827 $ 231 December 1-31, 2019 — — — $ 231 January 1-31, 2020 — — — $ 231 February 1-29, 2020 — — — $ 231 March 1-31, 2020 21,700 $ 9.33 21,700 $ 1,028 Total 97,870 $ 9.93 97,870 $ 1,028 |
Note 6. Leases (Tables)
Note 6. Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lease expense | Three months ended March 31, 2020 2019 Lease expense Operating lease expense $ 87 $ 41 Variable lease expense 32 42 Rent expense $ 119 $ 83 |
Future minimum lease payments | Year Ended December 31: 2020 $ 288 2021 394 2022 359 2023 369 2024 379 Thereafter 1,201 Total lease payments $ 2,990 Present value adjustment (380 ) Lease liability 2,610 |
Note 7. Revenue (Tables)
Note 7. Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated revenue | Three months ended March 31, Revenue Streams 2020 2019 Platform and Technology $ 2,685 66.9 % $ 2,665 63.8 % Services 1,331 33.1 % 1,514 36.2 % Total $ 4,016 100.0 % $ 4,179 100.0 % |
Note 2. Summary of Significan_3
Note 2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Deferred revenue | $ 1,879 | $ 1,812 | |
Revenue recognized that was included in the deferred revenue | 877 | $ 690 | |
Accounts receivable related to contracts with customers | 2,172 | 2,051 | |
Capitalized costs to obtain contracts | 21 | $ 21 | |
Total exceeding FDIC limit | 14,905 | ||
Amortization expense | 170 | $ 204 | |
Client Relationships | Minimum | |||
Amortization expense | 7 | ||
Client Relationships | Maximum | |||
Amortization expense | 10 | ||
Customer Lists | |||
Amortization expense | 3 | ||
Distribution Partner Relationships | |||
Amortization expense | 10 | ||
Non-compete Agreements | |||
Amortization expense | 5 | ||
Software and Technology | Minimum | |||
Amortization expense | 3 | ||
Software and Technology | Maximum | |||
Amortization expense | 6 | ||
Canada | |||
Cash on hand | 358 | ||
Europe | |||
Cash on hand | $ 254 | ||
Stock Options and Restricted Stock Units | |||
Antidilutive securities excluded from computation of earnings per share | 93 | 92 |
Note 3. Recent Acquisitions (De
Note 3. Recent Acquisitions (Details) - VisualWebcaster Platform $ in Thousands | Mar. 31, 2020USD ($) |
Intangible assets | $ 2,775 |
Goodwill | |
Intangible assets | 1,344 |
Customer Relationships | |
Intangible assets | 865 |
Technology | |
Intangible assets | 497 |
Non-compete Agreements | |
Intangible assets | $ 69 |
Note 4. Equity (Details 1)
Note 4. Equity (Details 1) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Option 1 | |
Exercise price range | 0.01 - 7.00 |
Number of options outstanding | 10,000 |
Weighted average remaining contractual life (in years) | 5 years 7 months 20 days |
Weighted average exercise price | $ / shares | $ 6.8 |
Number of options exercisable | 10,000 |
Option 2 | |
Exercise price range | 7.01 - 8.00 |
Number of options outstanding | 20,313 |
Weighted average remaining contractual life (in years) | 3 years 5 months 26 days |
Weighted average exercise price | $ / shares | $ 7.76 |
Number of options exercisable | 20,313 |
Option 3 | |
Exercise price range | 8.01 - 12.00 |
Number of options outstanding | 8,167 |
Weighted average remaining contractual life (in years) | 6 years 11 months 12 days |
Weighted average exercise price | $ / shares | $ 9.99 |
Number of options exercisable | 4,167 |
Option 4 | |
Exercise price range | 12.01 - 15.00 |
Number of options outstanding | 57,000 |
Weighted average remaining contractual life (in years) | 8 years 1 month 13 days |
Weighted average exercise price | $ / shares | $ 13.09 |
Number of options exercisable | 44,500 |
Option 5 | |
Exercise price range | 15.01 - 17.40 |
Number of options outstanding | 32,000 |
Weighted average remaining contractual life (in years) | 8 years 2 months 1 day |
Weighted average exercise price | $ / shares | $ 17.4 |
Number of options exercisable | 32,000 |
Total | |
Number of options outstanding | 127,480 |
Weighted average remaining contractual life (in years) | 7 years 1 month 13 days |
Weighted average exercise price | $ / shares | $ 12.63 |
Number of options exercisable | 110,980 |
Note 4. Equity (Details 2)
Note 4. Equity (Details 2) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Total number of shares repurchased | 97,870 |
Average price paid per share | $ / shares | $ 9.93 |
Total number of shares purchased as part of publicly announced program | 97,870 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 1,028 |
August 7-31, 2019 | |
Total number of shares repurchased | 22,150 |
Average price paid per share | $ / shares | $ 9.34 |
Total number of shares purchased as part of publicly announced program | 22,150 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 793 |
September 1-30, 2019 | |
Total number of shares repurchased | 2,830 |
Average price paid per share | $ / shares | $ 10 |
Total number of shares purchased as part of publicly announced program | 2,830 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 765 |
October 1-31, 2019 | |
Total number of shares repurchased | 39,363 |
Average price paid per share | $ / shares | $ 10.44 |
Total number of shares purchased as part of publicly announced program | 39,363 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 354 |
November 1-30, 2019 | |
Total number of shares repurchased | 11,827 |
Average price paid per share | $ / shares | $ 10.43 |
Total number of shares purchased as part of publicly announced program | 11,827 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 231 |
December 1-31, 2019 | |
Total number of shares repurchased | 0 |
Average price paid per share | $ / shares | $ 0 |
Total number of shares purchased as part of publicly announced program | 0 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 231 |
January 1-31, 2020 | |
Total number of shares repurchased | 0 |
Average price paid per share | $ / shares | $ 0 |
Total number of shares purchased as part of publicly announced program | 0 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 231 |
February 1-29, 2020 | |
Total number of shares repurchased | 0 |
Average price paid per share | $ / shares | $ 0 |
Total number of shares purchased as part of publicly announced program | 0 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 231 |
March 1-31, 2020 | |
Total number of shares repurchased | 21,700 |
Average price paid per share | $ / shares | $ 9.33 |
Total number of shares purchased as part of publicly announced program | 21,700 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 1,028 |
Note 4. Equity (Details Narrati
Note 4. Equity (Details Narrative) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Unrecognized compensation expense, options | $ | $ 75 |
Restricted stock units granted | 0 |
Restricted stock units granted, intrinsic value | $ / shares | $ 0 |
Restricted stock units vested | 8,002 |
Restricted stock units vested, intrinsic value | $ / shares | $ 12.61 |
Unrecognized compensation expense, restricted stock units | $ | $ 66 |
Shares repurchased | 97,870 |
Aggregate cost, shares repurchased | $ | $ 972 |
2014 Plan | |
Shares available for grant | 38,583 |
Note 5. Income Taxes (Details N
Note 5. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 80 | $ 13 |
Stock-based compensation tax benefits | $ 35 |
Note 6. Leases (Details)
Note 6. Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease expense | $ 87 | $ 41 |
Variable lease expense | 32 | 42 |
Rent expense | $ 119 | $ 83 |
Note 6. Leases (Details 1)
Note 6. Leases (Details 1) $ in Thousands | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 288 |
2021 | 394 |
2022 | 359 |
2023 | 369 |
2024 | 379 |
Thereafter | 1,201 |
Total lease payments | 2,990 |
Present value adjustment | (380) |
Lease liability | $ 2,610 |
Note 6. Leases (Details Narrati
Note 6. Leases (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Minimum lease payments | $ 2,997 | |
ROU asset and corresponding lease liability | 2,596 | |
Lease liability | 2,610 | |
Lease liability, current | 384 | |
Lease liability, noncurrent | $ 2,226 | $ 2,309 |
Weighted-average remaining non-cancelable lease term | 4 years 9 months 18 days | |
Weighted-average discount rate | 3.80% |
Note 7. Revenue (Details)
Note 7. Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | $ 4,016 | $ 4,179 |
Percentage of revenue from revenue streams | 100.00% | 100.00% |
Platform and Technology | ||
Revenues | $ 2,685 | $ 2,665 |
Percentage of revenue from revenue streams | 66.90% | 63.80% |
Services | ||
Revenues | $ 1,331 | $ 1,514 |
Percentage of revenue from revenue streams | 33.10% | 36.20% |
Note 8. Line of Credit (Details
Note 8. Line of Credit (Details Narrative) $ in Thousands | Mar. 31, 2020USD ($) |
Line of Credit Facility [Abstract] | |
Line of credit, maximum borrowing capacity | $ 3,000 |
Line of credit facility, interest rate at period end | 2.74% |
Line of credit | $ 0 |