10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021 

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 000-27687

BSQUARE CORPORATION

(Exact name of registrant as specified in its charter)

Washington	91-1650880
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1415 Western Ave, Suite 700, Seattle, WA	98101
(Address of principal executive offices)	(Zip Code)

(425) 519-5900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	BSQR	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of common stock outstanding as of October 31, 2021: 20,357,099

BSQUARE CORPORATION

FORM 10-Q

For the Quarterly Period Ended September 30, 2021

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4	Controls and Procedures	21
	PART II. OTHER INFORMATION
Item 1A	Risk Factors	22
Item 6	Exhibits	23
	Signatures	24

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BSQUARE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	September 30, 2021			December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	41,030		$	12,623
Restricted cash		337			337
Accounts receivable, net of allowance for doubtful accounts of $50 and $50 at September 30, 2021 and December 31, 2020, respectively		5,992			6,177
Contract assets		33			456
Prepaid expenses and other current assets		562			409
Total current assets		47,954			20,002
Property and equipment, net of accumulated depreciation		705			322
Deferred tax assets		—			7
Intangible assets, net of accumulated amortization		—			71
Right-of-use lease asset, net		1,660			1,853
Other non-current assets		24			27
Total assets	$	50,343		$	22,282
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Third-party software fees payable	$	6,407		$	6,458
Accounts payable		400			489
Paycheck Protection Program loan		—			950
Accrued compensation		424			717
Other accrued expenses		147			216
Deferred revenue		1,098			2,088
Operating lease		354			344
Total current liabilities		8,830			11,262
Deferred revenue, long-term		247			28
Operating lease, long-term		1,430			1,630
Paycheck Protection Program loan, long-term		—			634
Shareholders' equity:
Preferred stock, no par: 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, no par: 37,500,000 shares authorized: 20,357,099 and 13,235,038 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		172,318			139,726
Accumulated other comprehensive loss		(1,014	)		(992	)
Accumulated deficit		(131,468	)		(130,006	)
Total shareholders' equity		39,836			8,728
Total liabilities and shareholders' equity	$	50,343		$	22,282

See notes to condensed consolidated financial statements.

3

BSQUARE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue:
Partner Solutions	$	9,638		$	9,145		$	28,393		$	33,160
Edge to Cloud		1,008			1,275			2,896			2,913
Total revenue		10,646			10,420			31,289			36,073
Cost of revenue:
Partner Solutions		8,491			7,402			24,528			27,502
Edge to Cloud		827			1,128			2,648			3,050
Total cost of revenue		9,318			8,530			27,176			30,552
Gross profit		1,328			1,890			4,113			5,521
Operating expenses:
Selling, general and administrative		1,786			1,987			6,209			6,951
Research and development		408			41			941			222
Total operating expenses		2,194			2,028			7,150			7,173
Loss from operations		(866	)		(138	)		(3,037	)		(1,652	)
Other (loss) income, net		(29	)		2			1,575			(31	)
Loss before income taxes		(895	)		(136	)		(1,462	)		(1,683	)
Income taxes		—			—			—			—
Net loss	$	(895	)	$	(136	)	$	(1,462	)	$	(1,683	)
Basic loss per share	$	(0.05	)	$	(0.01	)	$	(0.09	)	$	(0.13	)
Diluted loss per share	$	(0.05	)	$	(0.01	)	$	(0.09	)	$	(0.13	)
Shares used in per share calculations:
Basic		19,603			13,165			15,419			13,205
Diluted		19,603			13,165			15,419			13,205
Net loss	$	(895	)	$	(136	)	$	(1,462	)	$	(1,683	)
Other comprehensive gain (loss)
Foreign currency translation, net of tax		37			11			(30	)		(27	)
Unrealized loss on investments, net of tax		—			(3	)		—			(3	)
Total other comprehensive gain (loss)		37			8			(30	)		(30	)
Comprehensive loss	$	(858	)	$	(128	)	$	(1,492	)	$	(1,713	)

See notes to condensed consolidated financial statements.

4

BSQUARE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(1,462	)	$	(1,683	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		409			494
Stock-based compensation		596			601
Gain on extinguishment of PPP loan		(1,584)			—
Changes in operating assets and liabilities:
Accounts receivable, net		185			3,702
Contract assets		(33	)		123
Prepaid expenses and other assets		(33	)		(342	)
Third-party software fees payable		(51	)		(1,502	)
Accounts payable and accrued expenses		(451	)		(314	)
Operating lease		3			(15	)
Deferred revenue		(771	)		(310	)
Net cash (used in) provided by operating activities		(3,192	)		754
Cash flows from investing activities:
Additions to property and equipment		(375	)		(374	)
Proceeds from maturities of short-term investments		—			2,250
Net cash (used in) provided by investing activities		(375	)		1,876
Cash flows from financing activities:
Proceeds from Paycheck Protection Program loan		—			1,580
Proceeds from sale of common stock, net of issuance fees		31,936			—
Proceeds from exercise of stock options		68			—
Net cash provided by financing activities		32,004			1,580
Effect of exchange rate changes on cash and cash equivalents		(30	)		50
Net increase in cash and cash equivalents		28,407			4,260
Cash, restricted cash, and cash equivalents, beginning of period		12,960			8,312
Cash, restricted cash, and cash equivalents, end of period	$	41,367		$	12,572

See notes to condensed consolidated financial statements.

5

BSQUARE CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

									Accumulated
									Other						Total
	Preferred Stock				Common Stock				Comprehensive			Accumulated			Shareholders'
For the Three Months Ended September 30, 2021	Shares		Amount		Shares		Amount		Income (Loss)			Deficit			Equity
Balance as of June 30, 2021		—	$	—		13,479,220	$	140,494	$	(1,035	)	$	(130,573	)	$	8,886
Exercise of stock options		—		—		11,875		14		—			—			14
Vesting of restricted stock awards		—		—		72,206		—		—			—			—
Sale of common stock		—		—		6,793,798		31,576		—			—			31,576
Share-based compensation, including issuance of restricted stock		—		—		—		218		—			—			218
Net loss		—		—		—		—		—			(895	)		(895	)
Foreign currency translation adjustment, net of tax		—		—		—		16		21			—			37
Balance as of September 30, 2021		—	$	—		20,357,099	$	172,318	$	(1,014	)	$	(131,468	)	$	39,836

										Accumulated
										Other						Total
	Preferred Stock				Common Stock					Comprehensive			Accumulated			Shareholders'
For the Nine Months Ended September 30, 2021	Shares		Amount		Shares		Amount			Income (Loss)			Deficit			Equity
Balance as of December 31, 2020		—	$	—		13,235,038	$	139,726		$	(992	)	$	(130,006	)	$	8,728
Exercise of stock options		—		—		37,380		68			—			—			68
Vesting of restricted stock awards		—		—		182,004		—			—			—			—
Sale of common stock		—		—		6,902,677		31,936			—			—			31,936
Share-based compensation, including issuance of restricted stock		—		—		—		596			—			—			596
Net loss		—		—		—		—			—			(1,462	)		(1,462	)
Foreign currency translation adjustment, net of tax		—		—		—		(8	)		(22	)		—			(30	)
Balance as of September 30, 2021		—	$	—		20,357,099	$	172,318		$	(1,014	)	$	(131,468	)	$	39,836

See notes to condensed consolidated financial statements

6

BSQUARE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business and Summary of Significant Accounting Policies

Description of Business

BSQUARE Corporation (“Bsquare,” “we,” “us” and “our”) builds technology that is powering the next generation of connected devices and intelligent systems. We help companies realize the promise of the Internet of Things ("IoT") through the development of devices and systems that are cloud-enabled, share data seamlessly, facilitate distributed learning and control, and operate securely at scale. We believe that IoT-enabled systems can not only deliver value to our customers but also help people make better use of the resources of our planet. Bsquare's suite of services and software components create new revenue streams and operating models for our customers while providing opportunities for lowering costs and improving operations.

Since our founding in 1994, Bsquare has been at the intersection of hardware and software. Today that intersection is the "edge" where cloud-enabled devices connect to create intelligent systems that share data, facilitate distributed control and machine learning, and operate securely at scale. We believe that our expertise, products, and services are applicable in customer projects and initiatives ranging from device hardware, to the operating system, to IoT software solutions, and cloud services that make intelligent systems possible.

Our business has largely been focused on providing software solutions (including reselling software from Microsoft) and related engineering services to businesses that develop, market and sell dedicated-purpose standalone intelligent systems. Examples of dedicated-purpose standalone intelligent systems include smart, connected computing devices such as point-of-sale terminals, kiosks, tablets and handheld devices, as well as smart vending machines, ATM machines, digital signs, smart phones, set-top boxes and in-vehicle telematics and entertainment devices.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Bsquare have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting and include the accounts of Bsquare and our wholly owned subsidiaries. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the unaudited condensed consolidated financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2021 and our operating results and cash flows for the nine months ended September 30, 2021 and 2020. The accompanying financial information as of December 31, 2020 is derived from our audited financial statements as of that date.

These unaudited condensed financial statements and related notes should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 18, 2021.

Basis of consolidation

The consolidated financial statements include the accounts of Bsquare and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Revision of prior period financial statements

In connection with the preparation of our condensed consolidated financial statements, we identified an immaterial error related to the recognition of certain revenues in our Edge to Cloud segment in the third quarter of 2019 that had a rollforward effect on consolidated equity and deferred revenue in all quarterly and annual periods through the first quarter of fiscal year 2021. In accordance with SEC Staff Accounting Bulletin ("SAB") No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” we evaluated the error and determined that the related impact was not material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be material to the results of operations for the three months ended June 30, 2021. Accordingly, we revised our consolidated balance sheets and statements of shareholder’s equity as of September 31, 2019, December 31, 2019, and December 31, 2020 and condensed consolidated statements of operations and comprehensive loss and cash flows for the year-ended December 31, 2019 and the three and nine months ended September 30, 2019. A summary of revisions to certain previously reported financial information presented herein for comparative purposes is included in Note 12 – Revision of Prior Period Financial Statements.

Use of estimates

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Examples include provisions for bad debts and income taxes, estimates of progress on professional engineering service arrangements, bonus accruals, useful lives of intangible assets and property and equipment, fair values of stock-based awards, and assumptions used to determine the net present value of operating lease liabilities, among other estimates and assumptions. Actual results may differ from these estimates and assumptions.

Income (loss) per share

We compute basic income (loss) per share using the weighted average number of shares of common stock outstanding during the period. We consider restricted stock units as outstanding shares of common stock and include them in the computation of basic loss per share only when vested. We compute diluted loss per share using the weighted average number of shares of common stock outstanding and common stock equivalent shares outstanding during the period using the treasury stock method. We exclude common stock equivalent shares from the computation if their effect is anti-dilutive.

7

The following potentially dilutive weighted shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options		384,444		1,796,478		317,909		1,769,556
Restricted stock units		35,275		35,123		68,341		46,851

2. Revenue Recognition 

Disaggregation of revenue

The following table provides information about disaggregated revenue by primary geographical area and includes a reconciliation of the disaggregated revenue with reportable segments (in thousands):

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
	Partner		Edge to				Partner		Edge to
	Solutions		Cloud		Total		Solutions		Cloud		Total
Primary geographic area:
North America	$	8,294	$	964	$	9,258	$	7,819	$	1,100	$	8,919
Europe		68		44		112		613		172		785
Asia		1,276		—		1,276		713		3		716
Total	$	9,638	$	1,008	$	10,646	$	9,145	$	1,275	$	10,420

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
	Partner		Edge to				Partner		Edge to
	Solutions		Cloud		Total		Solutions		Cloud		Total
Primary geographic area:
North America	$	23,372	$	2,695	$	26,067	$	28,104	$	2,345	$	30,449
Europe		275		201		476		1,344		475		1,819
Asia		4,746		—		4,746		3,712		93		3,805
Total	$	28,393	$	2,896	$	31,289	$	33,160	$	2,913	$	36,073

Contract balances

We receive payments from customers based upon contractual billing schedules; accounts receivable is recorded when the right to consideration becomes unconditional. Contract assets include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Contract liabilities, presented as deferred revenue on our condensed consolidated balance sheets, include payments received in advance of performance under the contract and are realized when the associated revenue is recognized. We had no asset impairment charges related to contract assets for each of the three and nine months ended September 30, 2021 and 2020. 

Significant changes in the contract assets and the deferred revenue balances during the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Contract		Contract
	Assets		Assets
Transferred to receivables from contract assets outstanding at December 31, 2020		—		—

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Deferred		Deferred
	Revenue		Revenue
Revenue recognized that was included in deferred revenue at December 31, 2020	$	435,835	$	1,515,077

Contract acquisition costs

We capitalize contract acquisition costs for contracts with a life exceeding one year. Amortization of contract acquisition costs was $4,000 and $23,000 for the three months ended September 30, 2021 and 2020, respectively, and was $57,000 and $68,000 for the nine months ended September 30, 2021 and 2020, respectively. There were no asset impairment charges for contract acquisition costs for any of the periods noted above. 

Transaction price allocated to the remaining performance obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The estimated revenue does not include contracts with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that were unexercised as of September 30, 2021:

	Remainder of
	2021		2022		After 2022
Edge to Cloud		315,944		1,419,096		466,287

8

Practical expedients and exemptions

We generally expense sales commissions when incurred because the amortization period would have been less than one year. We record these costs within selling, general and administrative expenses.

When applicable and appropriate, the Company utilizes the ‘as-invoiced’ practical expedient which permits revenue recognition upon invoicing.

3. Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following (in thousands):

	September 30, 2021		December 31, 2020
Cash	$	3,925	$	6,509
Cash equivalents (see detail in Note 4)		37,105		6,114
Restricted cash		337		337
Total cash and cash equivalents		41,367		12,960

4. Fair Value Measurements

We measure our cash equivalents and restricted cash at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Directly or indirectly observable market-based inputs or unobservable inputs used in models or other valuation methodologies.

Level 3: Unobservable inputs that are not corroborated by market data. The inputs require significant management judgment or estimation.

We classify our cash equivalents and restricted cash within Level 1 or Level 2 because our cash equivalents and restricted cash are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

Assets measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 are summarized below (in thousands):

	September 30, 2021						December 31, 2020
	Quoted Prices in		Direct or				Quoted Prices in		Direct or
	Active Markets		Indirect				Active Markets		Indirect
	for Identical		Observable				for Identical		Observable
	Assets (Level 1)		Inputs (Level 2)		Total		Assets (Level 1)		Inputs (Level 2)		Total
Assets
Cash equivalents:
Money market funds	$	37,105	$	—	$	37,105	$	6,114	$	—	$	6,114
Total cash equivalents		37,105		—		37,105		6,114		—		6,114
Restricted cash:
Money market funds		337		—		337		337		—		337
Total assets measured at fair value	$	37,442	$	—	$	37,442	$	6,451	$	—	$	6,451

5. Intangible Assets

Intangible assets related to customer relationships that we acquired from TestQuest, Inc. in November 2008 and from the acquisition of Bsquare EMEA, Ltd. in September 2011 and were as follows (in thousands):

	September 30, 2021							December 31, 2020
	Gross							Gross
	Carrying		Accumulated			Net Book		Carrying		Accumulated			Net Book
	Amount		Amortization			Value		Amount		Amortization			Value
Customer relationships	$	982	$	(982	)	$	—	$	982	$	(911	)	$	71

Amortization expense was $22,000 and $25,000 for the three months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, the gross carrying amount of the intangible assets has been fully amortized.

 

9

6. Leases

We determine if an arrangement is a lease at inception. On our balance sheet, our office leases are included in right-of-use (“ROU”) lease asset, net and related lease liabilities are included in operating lease and operating lease, long-term. We determined that we do not currently have any leases that we are required to classify as finance leases.

ROU assets represent our right to use the underlying assets for the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease agreements. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the term of the lease. For leases that do not provide an implicit rate, we use an incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments. We use the implicit rate in the lease when readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

In November 2020, we renewed the lease for our office facility in the UK. The term of the lease is 120 months, with rent payments starting on November 30, 2020 and the lease term ending on November 8, 2030. The Company has an opportunity to break the lease at the five-year mark in November 2025. As it is reasonably certain that we will utilize this option, the accounting for this lease utilized November 2025 as the end date. The lease commencement date was November 9, 2020. As a result of entering into this lease agreement, we recorded additional ROU assets and net lease liabilities of $365,559 on our consolidated balance sheet as of December 31, 2020. There was no material impact to our statement of operations or statement of cash flows as a result of entering into this lease.

Our leases have remaining terms of five to seven years. The only leases that contain renewal options are for office space leases at our Seattle and Trowbridge locations. In the fourth quarter of 2019, we made the decision not to renew our Bellevue lease, which expired at the end of May 2020, and we made the decision not to renew our Taiwan lease, exiting that facility in February 2020. Because of changes in our business, we are not able to determine with reasonable certainty whether we will renew our Seattle lease. As a result, we have not considered renewal options when recording ROU assets, lease liabilities or lease expense.

The following tables present the components of our lease expense and supplemental cash flow information related to our leases for the nine months ended September 30, 2021 (in thousands):

	Nine Months Ended
Total component lease expense was as follows:	September 30, 2021
Operating leases	$	311
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities	$	311

The following table presents supplemental balance sheet information related to our operating leases as of September 30, 2021 (dollars in thousands):

	September 30, 2021
Right-of-use lease assets	$	1,660
Current portion of operating lease liability	$	354
Operating lease liability, net of current portion		1,430
Total operating lease liabilities	$	1,784
Weighted average remaining lease term (years)		5.4
Weighted average discount rate		8.5	%

The following table presents the amounts we are obligated to pay, by maturity, under our operating leases liabilities as of September 30, 2021 (in thousands):

Years Ending December 31,
2021, remainder of year	$	78
2022		315
2023		322
2024		329
2025		325
After 2025		440
Total minimum lease payments		1,809
Less: amount representing interest		(25	)
Present value of lease liabilities	$	1,784

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7. Shareholders’ Equity

Equity Compensation Plans

We have a stock plan (the “Stock Plan”) and an inducement stock plan for newly hired employees (together with the Stock Plan, the “Plans”). Under the Plans, stock options to purchase shares of our common stock may be granted with a fixed exercise price that is equal to the fair market value of our common stock on the date of grant. These options have a term of up to 10 years and vest over a predetermined period, generally four years. Incentive stock options granted under the Stock Plan may only be granted to our employees. The Plans also allow for awards of non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, and restricted stock units (“RSUs”).

Stock-Based Compensation

The estimated fair value of stock-based awards is recognized as compensation expense over the vesting period of the award, net of estimated forfeitures. We estimate forfeitures based on historical experience and expected future activities. The fair value of RSUs is determined based on the number of shares granted and the quoted price of our common stock on the date of grant. The fair value of stock option awards is estimated at the grant date based on the fair value of each vesting tranche as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. The BSM model requires various highly judgmental assumptions including expected volatility and option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. The fair values of our stock option grants and RSUs were estimated with the following weighted average assumptions:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Dividend yield		0	%		0	%		0	%		0	%
Expected life (years)		4.9			4.9			4.9			4.9
Expected volatility		111	%		63	%		111	%		63	%
Risk-free interest rate		0.6	%		0.2	%		0.6	%		0.5	%

The impact on our results of operations from stock-based compensation expense was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue — Edge to Cloud	$	6	$	26	$	30	$	50
Selling, general and administrative		188		250		515		536
Research and development		24		5		51		15
Total stock-based compensation expense	$	218	$	281	$	596	$	601

Stock Option Activity

The following table summarizes stock option activity under the Plans:

						Weighted
						Average
						Remaining
				Weighted		Contractual
	Number of			Average		Life		Aggregate
	Shares			Exercise Price		(in years)		Intrinsic Value
Balance at December 31, 2020		1,786,891		$	2.04		7.75	$	330,831
Granted		175,000			2.88
Exercised		(36,130	)		1.88
Forfeited		(74,759	)		1.34
Expired		(62,750	)		2.62
Balance at September 30, 2021		1,788,252			1.92		7.15		1,220,636
Vested and expected to vest at September 30, 2021		1,670,375			2.17		7.06		1,122,212
Exercisable at September 30, 2021		934,877		$	2.58		6.10	$	496,868

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At September 30, 2021, total compensation cost related to stock options granted but not yet recognized, net of estimated forfeitures, was $393,969. This cost will be amortized on the straight-line method over a weighted-average period of approximately 1.2 years. The following table summarizes certain information about stock options:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Weighted average grant-date fair value of options granted during the period	$	2.75	$	1.37	$	2.88	$	1.03
Options in-the-money (in shares)		629,272		59,201		629,272		59,201
Aggregate intrinsic value of options exercised during the period	$	1.20	$	1.35	$	1.88	$	1.35

The aggregate intrinsic value represents the difference between the exercise price of the underlying options and the quoted price of our common stock for the number of options exercised during the periods indicated. We issue new shares of common stock upon exercise of stock options.

Restricted Stock Unit Activity

The following table summarizes RSU activity under the Plans:

	Number of			Weighted Average
	Shares			Award Price
Unvested at December 31, 2020		164,697		$	1.48
Granted		90,343			2.72
Vested		(182,004	)		1.74
Forfeited		(21,115	)		1.48
Unvested at September 30, 2021		51,921			2.72
Expected to vest after September 30, 2021		49,112		$	2.72

At September 30, 2021, total compensation cost not yet recognized related to granted RSUs was approximately $78,656, net of estimated forfeitures. This cost will be amortized on the straight-line method over a weighted-average period of approximately 0.4 years.

Performance Stock Units

In January 2021 we issued 500,000 performance stock units (PSUs) to our executives. The PSUs vest based on a combination of Bsquare's stock price performance and executive service (continued employment). The first vesting measurement date is January 5, 2022 and the final measurement date is July 5, 2025. We estimated the fair value of the awards utilizing Monte Carlo simulations. Based on the Monte Carlo model, expense of approximately $17,000 and $51,000 was recorded in the selling, general and administrative line of our statement of operations for the three and nine months ended September 30, 2021, respectively. The PSUs had no impact on our cash flow statement. 

Award Modifications 

In June 2021, the outstanding RSU and non-qualified stock option awards of two Board members were modified. In accordance with ASC 718, we recorded incremental expense of $41,000 during the period related to the revaluation of these modified awards.

Common Stock Reserved for Future Issuance

The following table summarizes our shares of common stock reserved for future issuance under the Plans as of September 30, 2021:

	September 30, 2021
Stock options outstanding		1,788,252
Restricted stock units and performance stock units outstanding		551,921
Stock options and restricted stock units available for future grant		1,115,772
Common stock reserved for future issuance		3,455,945

Common Stock Sales 

In the second and third quarters of 2021, we sold 108,879 and 6,793,798 shares of our common stock, respectively, pursuant to a registration statement on Form S-3 under the Securities Act of 1933, as amended (the "Securities Act") filed in March 2021. We received proceeds of approximately $31,936,000, net of issuance costs of $1,157,000. The issued shares and total paid-in capital are reflected in the consolidated statement of shareholder’s equity for the three and nine months ended September 30, 2021.

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8. Commitments and Contingencies

Lease and rent obligations

Our commitments include obligations outstanding under operating leases, which expire through 2027. We have lease commitments for office space in Seattle, Washington and Trowbridge, UK. See Note 6 - Leases.

Loss Contingencies

From time to time, we are subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including tax assessments. We defend ourselves vigorously against any such claims. When (i) it is probable that an asset has been impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best information available at the time, which can be highly subjective. As of September 30, 2021, we have not recorded any loss contingency accruals. 

9. Information about Geographic Areas and Operating Segments

Our chief operating decision-makers (i.e. our Chief Executive Officer and certain direct reports) review financial information presented on a consolidated basis, accompanied by disaggregated information for purposes of allocating resources and evaluating financial performance. There are no segment managers who are held accountable by our chief operating decision-makers, or anyone else, for operations, operating results, or planning for levels or components below the consolidated unit level. We operate within a single industry segment of computer software and services.

We have two major product lines, Partner Solutions and Edge to Cloud, each of which we consider to be operating and reportable segments. We do not allocate costs other than direct cost of goods sold to the segments or produce segment income statements, and we do not produce asset information by reportable segment. The following table sets forth profit and loss information about our segments (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Partner Solutions:
Revenue	$	9,638		$	9,145		$	28,393		$	33,160
Cost of revenue		8,491			7,402			24,528			27,502
Gross profit		1,147			1,743			3,865			5,658
Edge to Cloud:
Revenue		1,008			1,275			2,896			2,913
Cost of revenue		827			1,128			2,648			3,050
Gross profit		181			147			248			(137	)
Total gross profit		1,328			1,890			4,113			5,521
Operating expenses		2,194			2,028			7,150			7,173
Other (expense) income, net		(29	)		2			1,575			(31	)
Income tax benefit (expense)		—			—			—			—
Net loss	$	(895	)	$	(136	)	$	(1,462	)	$	(1,683	)

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Revenue by geographic area is based on the sales region of the customer. The following tables set forth total revenue and long-lived assets by geographic area (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total revenue:
North America	$	9,258	$	8,919	$	26,067	$	30,449
Europe		112		785		476		1,819
Asia		1,276		716		4,746		3,805
Total revenue	$	10,646	$	10,420	$	31,289	$	36,073

	September 30, 2021		December 31, 2020
Long-lived assets:
North America	$	1,780	$	1,179
Europe		176		179
Total long-lived assets	$	1,956	$	1,358

Long-lived assets increased due to additions of internally developed software throughout the year in North America.

10. Significant Risk Concentrations

Significant Customers

GES Manufacturing Services (M) Sdn. Bhd. accounted for $1.1 million or approximately 11% of our total revenue for the three months ended September 30, 2021. No other customers accounted for 10% or more of total revenue for the three months ended September 30, 2020 or the nine months ended September 30, 2021 and 2020. 

GES Manufacturing Services (M) Sdn. Bhd. had accounts receivable balances of $958,000 or approximately 16% of our total accounts receivable at September 30, 2021. Honeywell International, Inc. and affiliated entities ("Honeywell") had accounts receivable balances of $680,000 or approximately 12% of our total accounts receivable at December 31, 2020. Kodak Alaris had accounts receivable balances of $866,000 or approximately 15% of our total accounts receivable at December 31, 2020.

Significant Supplier

We are authorized to sell Windows IoT operating systems in Canada, the United States, Argentina, Brazil, Chile, Mexico, Peru, Venezuela, Puerto Rico, Columbia, and several Caribbean countries. Our distribution agreement for sales of Windows IoT operating systems in the European Union (“E.U.”), the European Free Trade Association, Turkey and Africa, expired on June 30, 2019 and was not renewed thereafter. 

We have also entered into Original Equipment Manufacturer Distribution Agreements ("ODAs") with Microsoft pursuant to which we are licensed to sell Microsoft Windows Mobile operating systems to customers in North America, South America, Central America (excluding Cuba), Japan, Taiwan, Europe, the Middle East, and Africa. The ODAs to sell Windows Mobile operating systems are effective through April 30, 2022.

There is no automatic renewal provision in any of these agreements, and these agreements can be terminated unilaterally by Microsoft at any time.

The majority of our revenue continues to be derived from reselling Microsoft Windows Embedded and IoT operating system software to device makers. The sale of Microsoft operating systems has historically accounted for substantially all of our Partner Solutions revenue.

Microsoft currently offers a distributor incentives program through which we earn rebates pursuant to predefined objectives related to sales of Microsoft Windows IoT operating systems. In accordance with program rules, we allocate a portion of the incentive earnings to reduce cost of revenue with the remaining portion utilized to offset qualified marketing expenses in the period the expenditures are claimed and approved. During the second quarter of 2020 the program allocation was changed by Microsoft to a 50/50 split between the two components.

Under this rebate program, we recorded rebate credits as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Reductions to cost of revenue	$	26	$	500	$	236	$	654
Reductions to marketing expense		110		123		287		1,026

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11. Paycheck Protection Program (PPP) loan

We obtained a $1.6 million loan (the "PPP Loan") from JPMorgan Chase Bank, N.A. (the “Lender”) under the Paycheck Protection Program ("PPP") on April 7, 2020 (the “Note”). The Note had a two-year term, bore interest at the rate of 0.98% per annum, and could be prepaid at any time without payment of any premium or penalty. The principal and accrued interest under the Note was forgivable after an eight- or 24-week period if we used the PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise comply with PPP requirements. In April 2021, we applied for forgiveness of this loan in accordance with the program, and in June 2021, we received confirmation that the loan principal (and related accrued interest) was forgiven in its entirety. The gain on loan forgiveness is included in other income (loss), net on the statement of operations for the nine months ended September 30, 2021, and as a gain on extinguishment of debt in the statement of cash flows for the nine months ended September 30, 2021.

At September 30, 2021 and December 31, 2020, the PPP Loan balance was as follows (in thousands):

	September 30, 2021		December 31, 2020
PPP Loan, .98%, due April 2022:
Principal	$	—	$	1,572
Accrued interest		—		12
	$	—	$	1,584
PPP Loan payable:
Current portion	$	—		950
Long-term portion		—		634
	$	—	$	1,584

12. Revision of Prior Period Financial Statements

We revised certain prior period financial statements due to a $77,000 error related to the recognition of certain revenues in our Edge to Cloud segment. The error occurred in the third quarter of 2019 and had a rollforward effect on consolidated equity and deferred revenue in all quarterly and annual periods through the first quarter of 2021. See Note 1 - Description of Business and Summary of Significant Accounting Policies. A summary of the revisions to our previously reported financial statements is presented below (in thousands).

Revised Consolidated Balance Sheets

	As of December 31, 2019
	As reported			Adjustment			As revised
Deferred revenue, current portion	$	1,559		$	(77	)	$	1,482
Total current liabilities		11,200			(77	)		11,123
Accumulated deficit		(128,194	)		77			(128,117	)
Total shareholders' equity		9,696			77			9,773

	As of December 31, 2020
	As reported			Adjustment			As revised
Deferred revenue, current portion	$	2,165		$	(77	)	$	2,088
Total current liabilities		11,339			(77	)		11,262
Accumulated deficit		(130,083	)		77			(130,006	)
Total shareholders' equity		8,651			77			8,728

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Revised Consolidated Statement of Shareholders’ Equity

	Year Ended
	December 31, 2019
	As reported			Adjustment		As revised
Net loss	$	(9,181	)	$	77	$	(9,104	)
Accumulated deficit		(128,194	)		77		(128,117	)

	Three Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Net loss	$	(1,107	)	$	77	$	(1,030	)
Accumulated deficit		(126,834	)		77		(126,757	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Net loss	$	(7,821	)	$	77	$	(7,744	)
Accumulated deficit		(126,834	)		77		(126,757	)

	Year Ended
	December 31, 2020
	As reported			Adjustment		As revised
Accumulated deficit	$	(130,083	)	$	77	$	(130,006	)

Revised Condensed Consolidated Statements of Operations and Comprehensive Loss

	Year Ended
	As of December 31, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	8,655		$	77	$	8,732
Total revenue		59,283			77		59,360
Gross profit		10,096			77		10,173
Loss from operations		(9,314	)		77		(9,237	)
Loss before income taxes		(9,165	)		77		(9,088	)
Net loss		(9,181	)		77		(9,104	)
Basic loss per share		(0.71	)		—		(0.71	)
Diluted loss per share		(0.71	)		—		(0.71	)
Comprehensive loss		(9,242	)		77		(9,165	)

	Three Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	2,085		$	77	$	2,162
Total revenue		14,641			77		14,718
Gross profit		2,632			77		2,709
Loss from operations		(1,129	)		77		(1,052	)
Loss before income taxes		(1,107	)		77		(1,030	)
Net loss		(1,107	)		77		(1,030	)
Basic loss per share		(0.09	)		0.01		(0.08	)
Diluted loss per share		(0.09	)		0.01		(0.08	)
Comprehensive loss		(1,111	)		77		(1,034	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	6,576		$	77	$	6,653
Total revenue		43,917			77		43,994
Gross profit		7,446			77		7,523
Loss from operations		(7,937	)		77		(7,860	)
Loss before income taxes		(7,821	)		77		(7,744	)
Net loss		(7,821	)		77		(7,744	)
Basic loss per share		(0.60	)		—		(0.60	)
Diluted loss per share		(0.60	)		—		(0.60	)
Comprehensive loss		(7,899	)		77		(7,822	)

16

Revised Condensed Consolidated Statements of Cash Flows

We revised our condensed consolidated statements of cash flows for the year ended December 31, 2019 and the nine months ended  September 31, 2019 for this correction, which had no impact to net cash used by operating activities in each such period.

	Year Ended
	December 31, 2019
	As reported			Adjustment			As revised
Cash flows from operating activities:
Net loss	$	(9,181	)	$	77		$	(9,104	)
Deferred revenue		(227	)		(77	)		(304	)
Net cash used by operating activities		(5,995	)		—			(5,995	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment			As revised
Cash flows from operating activities:
Net loss	$	(7,821	)	$	77		$	(7,744	)
Deferred revenue		(48	)		(77	)		(125	)
Net cash used in operating activities		(4,994	)		—			(4,994	)

Revised Segment Information

Edge to Cloud revenue and gross profit were impacted for each of the applicable prior periods by the same amount as consolidated revenue and gross profit for the respective periods.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes. Some statements and information contained in this discussion are not historical facts but are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, readers can identify forward- looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology, which when used are meant to signify the statement as forward-looking. These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements that are not historical facts. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and situations that are difficult to predict and that may cause our own, or our industry’s actual results, to be materially different from the future results that are expressed or implied by these statements. Accordingly, actual results may differ materially from those anticipated or expressed in such statements as a result of a variety of factors, including those discussed in the sections entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2020 as well as similar discussions contained in our periodic reports, and other documents or filings and documents that we may from time to time file or furnish with the SEC. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Overview

Bsquare is a software and services company that designs, configures, and deploys technologies that solve difficult problems for manufacturers and operators of connected devices. Our customers choose Bsquare to help realize the promise of the Internet of Things (IoT) to transform their businesses. Our products include software that connects devices to create intelligent systems that are cloud-enabled, contribute critical data, and facilitate distributed control and decision making. Our services include 24/7 IoT operations that allow our customers to focus on their businesses while we take care of security, monitoring, and general technology updates. The opportunity to help companies explore and capture the value of IoT is attractive and growing. In the last two years alone, we helped hundreds of companies deploy and manage over two million devices. We operate large IoT systems for our customers with device fleets that range in size and complexity. We believe we offer a unique combination of expertise in device-level solutions, embedded operating systems, and IoT services and software that is valued by a global customer base, from start-ups to Fortune 100 companies, across a diverse set of industries.

During 2021, we have continued our ongoing initiatives to strategically build our business at the intersection of our two business segments. In the Partner Solutions segment, customers who have been purchasing Operating System (OS) software from us are recognizing that their products, essentially interconnected devices and associated software, cannot be sold, installed, and then forgotten. For these customers, we offer software-based solutions that address the operational headaches caused by this relatively new and increasingly complex business requirement.  In the Edge to Cloud segment, customers are relying on Bsquare for a complete solution, ranging from OS configuration to 24/7 support, dev/ops, and cloud management – the services that are critical when a customer puts an IoT solution into production. Experience with those customers has shown that Bsquare’s role can last well beyond the development phase and continue into their on-going operations. Our software and edge expertise combined with our position as a supply chain partner makes us uniquely suited to address these complex requirements, in both business segments.

Revenue

The COVID-19 pandemic, including its impact on the microchip supply chain, continues to affect our Partner Solutions customer ordering patterns and has caused ongoing disruptions and revenue variability in the Partner Solutions segment. Second quarter 2021 revenue was the highest since the onset of the COVID pandemic and third quarter 2021, while a decrease from second quarter, was the second highest. Nevertheless, revenue in 2021 lags pre-COVID-19 results and the moderate recovery experienced in 2021 has been inconsistent. We believe our Partner Solutions revenue is also affected by other Microsoft distributors offering deep discounts on Windows IoT OS software as part of hardware / software bundles. We expect this market trend may continue in future quarters. We are working to retain and attract customers with superior service and technical support, pricing that rewards loyalty, and a path to IoT operations.

In our Edge to Cloud segment, investments made to ensure we were meeting our operating commitments, while re-tooling and addressing issues with software previously delivered to some of our larger IoT customers, started to generate revenue for us in 2021. In the first quarter of 2021, we worked closely with Itron, Inc. to help them build their intelligent utility grid. Beyond gaining credibility as a reliable technology partner, we believe the experience we have gained serving Itron and our other large IoT customers positions us to improve our IoT software and services in 2021 and beyond.

Expenses

Our work in 2019 and 2020 to reduce our operating expense structure has provided a foundation from which we are strategically building our business. Our selling, general and administrative expenses in the first nine months of 2021 were nearly $740,000 less than similar expenses in the first nine months of 2020.

We have strategically invested in the development of new product offerings for our customers. Year-to-date 2021, that investment has totaled over $1.0 million. We are in the process of taking these products to market and are looking to reap a financial return on our R&D investment in 2022 and beyond.

Cash and Liquidity

Our cash, cash equivalents and restricted cash increased by $28.4 million in the first nine months of 2021. This increase in cash was driven by the receipt of net proceeds of $31.9 million from the sale of our common stock. This increase was partially offset by the use of cash stemming from R&D investments, operational results (primarily soft Partner Solutions revenue) and variations in working capital items.

Cash will be invested strategically to grow our business and enhance our value proposition to customers.

18

Critical Accounting Judgments

Our condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales, cost of sales and expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable in the circumstances, which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant changes to our critical accounting judgments, policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Results of Operations

The following table presents our summarized results of operations for the periods indicated. Our historical operating results are not necessarily indicative of the results for any future period.

	Three Months Ended September 30,												Nine Months Ended September 30,
(In thousands, except percentages)	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Total revenue	$	10,646		$	10,420		$	226			2	%	$	31,289		$	36,073		$	(4,784	)		(13	)%
Total cost of revenue		9,318			8,530			788			9			27,176			30,552			(3,376	)		(11	)
Gross profit		1,328			1,890			(562	)		(30	)		4,113			5,521			(1,408	)		(26	)
Operating expenses		2,194			2,028			166			8			7,150			7,173			(23	)		(0	)
Loss from operations		(866	)		(138	)		(728	)		528			(3,037	)		(1,652	)		(1,385	)		84
Other (loss) income, net		(29	)		2			(31	)		(1,550	)		1,575			(31	)		1,606			(5,180	)
Loss before income taxes		(895	)		(136	)		(759	)		558			(1,462	)		(1,683	)		221			(13	)
Income tax benefit		—			—			—			—			—			—			—			—
Net loss	$	(895	)	$	(136	)	$	(759	)		558	%	$	(1,462	)	$	(1,683	)	$	221			(13	)%

Revenue

We generate revenue from the sale of software, both embedded operating system software that we resell and our own proprietary software, and related professional services.

Total revenue for the three months ended September 30, 2021 increased compared to the same period in 2020, primarily due to increased sales in our Partner Solutions segment in North America and Asia, slightly offset by lower revenue in our Edge to Cloud segment.

Total revenue for the nine months ended September 30, 2021 decreased compared to the same period in 2020, primarily due to decreased sales in our Partner Solutions segment in North America and Europe, and a small decrease in our Edge to Cloud segment.

Additional revenue details are as follows:

	Three Months Ended September 30,												Nine Months Ended September 30,
(In thousands, except percentages)	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Revenue
Partner Solutions	$	9,638		$	9,145		$	493			5	%	$	28,393		$	33,160		$	(4,767	)		(14	)%
Edge to Cloud		1,008			1,275			(267	)		(21	)		2,896			2,913			(17	)		(1	)
Total revenue	$	10,646		$	10,420		$	226			2	%	$	31,289		$	36,073		$	(4,784	)		(13	)%
As a percentage of total revenue:
Partner Solutions		91	%		88	%								91	%		92	%
Edge to Cloud		9	%		12	%								9	%		8	%

Partner Solutions revenue

Partner Solutions revenue increased $493,000 or 5% for the quarterly period ended September 30, 2021 compared to the same period in 2020.

While revenue has not returned to pre-COVID levels, these results reflect some moderate recovery.

Partner Solutions revenue decreased $4.8 million or 14% for the nine months ended September 30, 2021 compared to the same period in 2020. The results were largely driven by first quarter 2021 results which accounted for a $7.1 million decrease. The second and third quarters of 2021 have both compared favorably to last year.

Edge to Cloud revenue

Edge to Cloud revenue decreased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to a decrease in professional services revenue driven by continued purchasing delays from one of our large customers as well as the conclusion of our relationships with some smaller customers as we have strategically shifted our focus to larger customers and product development opportunities. Edge to Cloud revenue for the nine months ended September 30, 2021 was in-line with revenue recognized compared to the same period in 2020. We expect Edge to Cloud revenue will continue to vary in timing and amount.

19

Gross profit and gross margin

Cost of revenue for the Partner Solutions segment consists primarily of embedded operating system software product costs payable to third-party vendors, net of rebate credits earned through Microsoft’s distributor incentive program. Cost of revenue for the Edge to Cloud segment consists primarily of salaries and benefits and re-billable expenses, and amortization of certain intangible assets. Gross profit and gross margin were as follows:

	Three Months Ended September 30,												Nine Months Ended September 30,
(In thousands, except percentages)	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Partner Solutions	$	1,147		$	1,743		$	(596	)		(34	)%	$	3,865		$	5,658		$	(1,793	)		(32	)%
Partner Solutions gross margin		12	%		19	%					(7.0	)		14	%		17	%					(3.0	)
Edge to Cloud	$	181		$	147		$	34			23	%	$	248		$	(137	)	$	385			(281	)%
Edge to Cloud gross margin		18	%		12	%					6.0			9	%		(5	)%					13.0
Total gross profit	$	1,328		$	1,890		$	(562	)		(30	)%	$	4,113		$	5,521		$	(1,408	)		(26	)%
Total gross margin		12	%		18	%					(6.0	)		13	%		15	%					(2.0	)

Partner Solutions gross profit and gross margin

Partner Solutions gross profit dollars and gross margin rate decreased for the three and nine month periods ended September 30, 2021 due to lower Microsoft rebates and variation in customer and product mix.

Gross profit on Partner Solutions is impacted by rebate credits earned through Microsoft’s distributor incentives program. In accordance with program rules, we allocate a portion of the incentive earnings to reduce cost of revenue with the remaining portion utilized to offset qualified marketing expenses in the period the expenditures are claimed and approved. For the three and nine month periods ended September 30, 2021, we allocated 50% of rebates to reduce cost of sales and 50% to marketing expenses. During the first half of 2020, we allocated 20% of rebates to reduce cost of sales and 80% to marketing expenses. In the second half of 2020, we began allocating the rebates 50/50 as we do now. See Footnote 10 – Significant Risk Concentrations for further information about these rebates.

Edge to Cloud gross profit and gross margin

Edge to Cloud gross profit dollars and gross margin rate increased for the three and nine months ended September 30, 2021 primarily due to reduced cost of revenue.

Operating expenses

The following table presents our operating expenses for the periods indicated:

	Three Months Ended September 30,												Nine Months Ended September 30,
(In thousands, except percentages)	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Operating expenses:
Selling, general and administrative	$	1,786		$	1,987		$	(201	)		(10	)%	$	6,209		$	6,951		$	(742	)		(11	)%
Research and development		408			41			367			895	%		941			222			719			324	%
Total operating expenses	$	2,194		$	2,028		$	166			8	%	$	7,150		$	7,173		$	(23	)		(0	)%
As a percentage of total revenue:
Selling, general and administrative		17	%		19	%								20	%		19	%
Research and development		4	%		0	%								3	%		1	%

Selling, general and administrative

Selling, general and administrative (“SG&A”) expenses consist primarily of salaries and related benefits, commissions and bonuses for our sales, marketing and administrative personnel, facilities and depreciation costs, as well as professional services fees (e.g., consulting, legal, audit and tax). SG&A expenses for the three months ended September 30, 2021 were in-line with SG&A expenses for the three months ended September 30, 2020.

SG&A expenses decreased for the nine months ended September 30, 2021 primarily due to labor and benefit savings resulting from our prior restructuring efforts, partially offset by a reduction in the incentive program rebates from Microsoft.

Research and development

Research and development (“R&D”) expenses consist primarily of salaries and related benefits for software development and quality assurance personnel, contractor and consultant costs. R&D expenses increased for the three and nine months ended September 30, 2021 primarily due to higher salaries and related benefits and other costs related to product development.

Other income (loss), net

Other income (loss), net consists primarily of interest income on our cash and investments, gains and losses we may recognize on our investments, and gains and losses on foreign exchange transactions and other items. During the second quarter of 2021 this line-item also included a $1.6 million gain on extinguishment of debt related to the forgiveness of our loan under the Paycheck Protection Program. See Footnote 11 – Paycheck Protection Program Loan for additional information.

20

Income taxes

Income taxes were not recorded for the quarterly periods ended September 30, 2021 and September 30, 2020, respectively.

Liquidity and Capital Resources

As of September 30, 2021, we had $41.4 million of cash, cash equivalents, and restricted cash. During the nine month period ended September 30, 2021, we received net cash proceeds of $31.9 million from the sale of our common stock. We generally invest our excess cash in high quality marketable investments. These investments typically include corporate notes and bonds, commercial paper, and money market funds, although specific holdings can vary from period to period depending upon our cash requirements. There were no investments held at September 30, 2021.

We believe that our existing cash and cash equivalents will be sufficient to meet our needs for working capital and capital expenditures for at least the next 12 months.

Cash Flows from Operating Activities

Operating activities used cash of approximately $3.2 million for the nine months ended September 30, 2021, which included our net loss increased by a net non-cash adjustment of $0.6 million and changes to our operating assets and liabilities of $1.2 million. The non-cash adjustment included a $1.6 million gain on the extinguishment of our PPP loan that was partially offset by stock-based compensation and depreciation and amortization add-backs of approximately $1.0 million. The changes to our operating assets and liabilities primarily included $0.8 million in deferred revenue, reflecting payments made to us during the nine months ended September 30, 2021 in advance of our performance, and $0.5 million in accounts payable and accrued expenses, reflecting our use of cash for operating expenses.

Cash Flows from Investing Activities

Investing activities used cash of approximately $0.4 million for the nine months ended September 30, 2021. The cash used relates to additions to our property, plant and equipment in the form of internally-developed software.

Cash Flows from Financing Activities

Financing activities provided cash of approximately $32.0 million for the nine months ended September 30, 2021. This cash is related primarily to the sale of our common stock during April and July 2021, in addition to employee stock options exercised throughout 2021. See Note 7 - Shareholders’ Equity for more information about the sale of our common stock.

Cash Commitments

Our future or potential cash commitments relate to minimum rents payable under operating leases, which total $80,000 for the remainder of 2021, $0.3 million in 2022, $0.3 million in 2023, $0.3 million in 2024, $0.3 million in 2025, and $0.4 million thereafter.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There were no changes in our internal control over financial reporting during the three months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

21

PART II. OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, other than as listed below.

If we are unable to attract, hire, and retain employees with the skills and experience required by our business, our ability to compete may be harmed.

Competition for qualified personnel in the technology industry has historically been intense, particularly for software engineers and other technical staff. Recently, that competition has surpassed even historical norms and the fight for talent has expanded beyond technical roles and into virtually all areas of our company. The loss to competitors of any of our executive officers or other key employees, or the inability to hire, train, retain, motivate, and manage qualified personnel, could harm our business. Recruiting efforts, particularly for senior employees or employees with specialized skills, may be time-consuming, which may delay the execution of our plans. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees who do depart could hinder our strategic planning and execution. If we are not successful in managing these risks, our business, financial condition, and operating results may be harmed. 

Our customers face manufacturing and supply chain risks that could reduce demand for our products, harming our financial condition, operating results, and prospects.

Our customers purchase software products from us that are incorporated with other components into finished goods for sale into their own markets. They rely on a variety of third-party suppliers, contract manufacturers and service providers to provide raw materials, parts and sub-systems. Recent global shortages in energy, raw materials, and labor have harmed our customers' ability to acquire the necessary components for their products, which have in turn caused them to delay or cancel some of their orders with us. If our customers experience ongoing supply shortages and price increases driven by raw material shortages, part availability, manufacturing capacity, labor shortages, industry allocations, tariffs, trade barriers, natural disasters, and/or pandemics (including COVID-19), their buying patterns and volumes may continue to be volatile. As a result, our revenue, overall financial condition, and operating results could be harmed. 

22

Item 6. Exhibits

(b) Exhibits
		Filed or	Incorporated by Reference
Exhibit		Furnished
Number	Description	Herewith	Form	Filing Date	Exhibit		File No.
3.1	Amended and Restated Articles of Incorporation		S-1	August 17, 1999	3.1	(a)	333-85351
3.1(a)	Articles of Amendment to Amended and Restated Articles of Incorporation		10-Q	August 7, 2000	3.1		000-27687
3.1(b)	Articles of Amendment to Amended and Restated Articles of Incorporation		8-K	October 11, 2005	3.1		000-27687
3.2	Amended and Restated Bylaws, effective August 6, 2020		8-K	August 10, 2020	3.1		000-27687
10.1	Side Letter, dated July 6, 2021 between Bsquare Corporation and B. Riley Securities, Inc.		8-K	July 7, 2021	10.1		000-27687
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) under the Securities and Exchange Act of 1934	X
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) under the Securities and Exchange Act of 1934	X
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	Inline XBRL Instance Document - the instance does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Document	X
104	Cover Page Interactive Data File (formatted in Inline XBRL and included in Exhibit 101)	X

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BSQUARE CORPORATION (Registrant)
Date: November 10, 2021	By:	/s/ Christopher Wheaton
		Christopher Wheaton
		Chief Financial and Operating Officer, Secretary and Treasurer (Principal Financial and Accounting Officer and Duly Authorized Signatory)

24

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

RULE 13(a)-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Ralph C. Derrickson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BSQUARE Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 10, 2021	/s/ Ralph C. Derrickson
	Ralph C. Derrickson President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13(a)-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Christopher Wheaton, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BSQUARE Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 10, 2021	/s/ Christopher Wheaton
	Christopher Wheaton Chief Financial and Operating Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

I, Ralph C. Derrickson, President and Chief Executive Officer, certify that:

1. To my knowledge, this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. To my knowledge, the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of BSQUARE Corporation.

Dated: November 10, 2021	/s/ Ralph C. Derrickson
	Ralph C. Derrickson
	President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

I, Christopher Wheaton, Chief Financial and Operating Officer, Secretary and Treasurer, certify that:

1. To my knowledge, this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. To my knowledge, the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of BSQUARE Corporation.

Dated: November 10, 2021	/s/ Christopher Wheaton
	Christopher Wheaton
	Chief Financial and Operating Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Oct. 31, 2021
Document Information [Line Items]
Entity Central Index Key	0001054721
Entity Registrant Name	BSQUARE CORP /WA
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2021
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	000-27687
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1650880
Entity Address, Address Line One	1415 Western Ave, Suite 700
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98101
City Area Code	425
Local Phone Number	519-5900
Title of 12(b) Security	Common stock, no par value
Trading Symbol	BSQR
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		20,357,099

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 41,030	$ 12,623
Restricted cash	337	337
Accounts receivable, net of allowance for doubtful accounts of $50 and $50 at September 30, 2021 and December 31, 2020, respectively	5,992	6,177
Contract assets	33	456
Prepaid expenses and other current assets	562	409
Total current assets	47,954	20,002
Property and equipment, net of accumulated depreciation	705	322
Deferred tax assets	0	7
Intangible assets, net of accumulated amortization	0	71
Right-of-use lease asset, net	1,660	1,853
Other non-current assets	24	27
Total assets	50,343	22,282
Current liabilities:
Third-party software fees payable	6,407	6,458
Accounts payable	400	489
Paycheck Protection Program loan	0	950
Accrued compensation	424	717
Other accrued expenses	147	216
Deferred revenue	1,098	2,088
Operating lease	354	344
Total current liabilities	8,830	11,262
Deferred revenue, long-term	247	28
Operating lease, long-term	1,430	1,630
Paycheck Protection Program loan, long-term	0	634
Shareholders' equity:
Preferred stock, no par: 10,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, no par: 37,500,000 shares authorized: 20,357,099 and 13,235,038 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	172,318	139,726
Accumulated other comprehensive loss	(1,014)	(992)
Accumulated deficit	(131,468)	(130,006)
Total shareholders' equity	39,836	8,728
Total liabilities and shareholders' equity	$ 50,343	$ 22,282

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands, $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Accounts receivable, allowance for doubtful accounts	$ 50	$ 50
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	37,500,000	37,500,000
Common stock, shares issued (in shares)	20,357,099	13,235,038
Common stock, shares outstanding (in shares)	20,357,099	13,235,038

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenue:
Total revenue	$ 10,646	$ 10,420	$ 31,289	$ 36,073
Cost of revenue:
Total cost of revenue	9,318	8,530	27,176	30,552
Gross profit	1,328	1,890	4,113	5,521
Operating expenses:
Selling, general and administrative	1,786	1,987	6,209	6,951
Research and development	408	41	941	222
Total operating expenses	2,194	2,028	7,150	7,173
Loss from operations	(866)	(138)	(3,037)	(1,652)
Other (loss) income, net	(29)	2	1,575	(31)
Loss before income taxes	(895)	(136)	(1,462)	(1,683)
Income taxes	0	0	0	0
Net loss	$ (895)	$ (136)	$ (1,462)	$ (1,683)
Basic loss per share (in dollars per share)	$ (0.05)	$ (0.01)	$ (0.09)	$ (0.13)
Diluted loss per share (in dollars per share)	$ (0.05)	$ (0.01)	$ (0.09)	$ (0.13)
Shares used in per share calculations:
Basic (in shares)	19,603	13,165	15,419	13,205
Diluted (in shares)	19,603	13,165	15,419	13,205
Net loss	$ (895)	$ (136)	$ (1,462)	$ (1,683)
Other comprehensive gain (loss)
Foreign currency translation, net of tax	37	11	(30)	(27)
Unrealized loss on investments, net of tax	0	(3)	0	(3)
Total other comprehensive gain (loss)	37	8	(30)	(30)
Comprehensive loss	(858)	(128)	(1,492)	(1,713)
Partner Solutions [Member]
Revenue:
Total revenue	9,638	9,145	28,393	33,160
Cost of revenue:
Total cost of revenue	8,491	7,402	24,528	27,502
Gross profit	1,147	1,743	3,865	5,658
Edge to Cloud [Member]
Revenue:
Total revenue	1,008	1,275	2,896	2,913
Cost of revenue:
Total cost of revenue	827	1,128	2,648	3,050
Gross profit	$ 181	$ 147	$ 248	$ (137)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net loss	$ (895,000)	$ (136,000)		$ (1,462,000)	$ (1,683,000)	$ (9,104,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization				409,000	494,000
Stock-based compensation				596,000	601,000
Gain on extinguishment of PPP loan				(1,584,000)
Changes in operating assets and liabilities:
Accounts receivable, net				185,000	3,702,000
Contract assets				(33,000)	123,000
Prepaid expenses and other assets				(33,000)	(342,000)
Third-party software fees payable				(51,000)	(1,502,000)
Accounts payable and accrued expenses				(451,000)	(314,000)
Operating lease				3,000	(15,000)
Deferred revenue				(771,000)	(310,000)	(304,000)
Net cash (used in) provided by operating activities				(3,192,000)	754,000	(5,995,000)
Cash flows from investing activities:
Additions to property and equipment				(375,000)	(374,000)
Proceeds from maturities of short-term investments				0	2,250,000
Net cash (used in) provided by investing activities				(375,000)	1,876,000
Cash flows from financing activities:
Proceeds from Paycheck Protection Program loan					1,580,000
Proceeds from sale of common stock, net of issuance fees			$ 31,936,000	31,936,000
Proceeds from exercise of stock options				68,000	0
Net cash provided by financing activities				32,004,000	1,580,000
Effect of exchange rate changes on cash and cash equivalents				(30,000)	50,000
Net increase in cash and cash equivalents				28,407,000	4,260,000
Cash, restricted cash, and cash equivalents, beginning of period				12,960,000	8,312,000
Cash, restricted cash, and cash equivalents, end of period	$ 41,367,000	$ 12,572,000	$ 41,367,000	$ 41,367,000	$ 12,572,000	$ 8,312,000

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Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2020	13,235,038
Balance at Dec. 31, 2020	$ 139,726	$ (992)	$ (130,006)	$ 8,728
Exercise of stock options (in shares)	37,380			36,130
Exercise of stock options	$ 68			$ 68
Vesting of restricted stock awards (in shares)	182,004
Sale of common stock (in shares)	6,902,677
Sale of common stock	$ 31,936			31,936
Share-based compensation, including issuance of restricted stock	596			596
Net loss			(1,462)	(1,462)
Foreign currency translation, net of tax	$ (8)	(22)		(30)
Balance (in shares) at Sep. 30, 2021	20,357,099
Balance at Sep. 30, 2021	$ 172,318	(1,014)	(131,468)	39,836
Balance (in shares) at Jun. 30, 2021	13,479,220
Balance at Jun. 30, 2021	$ 140,494	(1,035)	(130,573)	8,886
Exercise of stock options (in shares)	11,875
Exercise of stock options	$ 14			$ 14
Vesting of restricted stock awards (in shares)	72,206
Sale of common stock (in shares)	6,793,798			6,793,798
Sale of common stock	$ 31,576			$ 31,576
Share-based compensation, including issuance of restricted stock	218			218
Net loss			(895)	(895)
Foreign currency translation, net of tax	$ 16	21		37
Balance (in shares) at Sep. 30, 2021	20,357,099
Balance at Sep. 30, 2021	$ 172,318	$ (1,014)	$ (131,468)	$ 39,836

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Note 1 - Description of Business and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Business Description and Accounting Policies [Text Block]

1. Description of Business and Summary of Significant Accounting Policies

Description of Business

BSQUARE Corporation (“Bsquare,” “we,” “us” and “our”) builds technology that is powering the next generation of connected devices and intelligent systems. We help companies realize the promise of the Internet of Things ("IoT") through the development of devices and systems that are cloud-enabled, share data seamlessly, facilitate distributed learning and control, and operate securely at scale. We believe that IoT-enabled systems can not only deliver value to our customers but also help people make better use of the resources of our planet. Bsquare's suite of services and software components create new revenue streams and operating models for our customers while providing opportunities for lowering costs and improving operations.

Since our founding in 1994, Bsquare has been at the intersection of hardware and software. Today that intersection is the "edge" where cloud-enabled devices connect to create intelligent systems that share data, facilitate distributed control and machine learning, and operate securely at scale. We believe that our expertise, products, and services are applicable in customer projects and initiatives ranging from device hardware, to the operating system, to IoT software solutions, and cloud services that make intelligent systems possible.

Our business has largely been focused on providing software solutions (including reselling software from Microsoft) and related engineering services to businesses that develop, market and sell dedicated-purpose standalone intelligent systems. Examples of dedicated-purpose standalone intelligent systems include smart, connected computing devices such as point-of-sale terminals, kiosks, tablets and handheld devices, as well as smart vending machines, ATM machines, digital signs, smart phones, set-top boxes and in-vehicle telematics and entertainment devices.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Bsquare have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting and include the accounts of Bsquare and our wholly owned subsidiaries. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the unaudited condensed consolidated financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2021 and our operating results and cash flows for the nine months ended September 30, 2021 and 2020. The accompanying financial information as of December 31, 2020 is derived from our audited financial statements as of that date.

These unaudited condensed financial statements and related notes should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 18, 2021.

Basis of consolidation

The consolidated financial statements include the accounts of Bsquare and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Revision of prior period financial statements

In connection with the preparation of our condensed consolidated financial statements, we identified an immaterial error related to the recognition of certain revenues in our Edge to Cloud segment in the third quarter of 2019 that had a rollforward effect on consolidated equity and deferred revenue in all quarterly and annual periods through the first quarter of fiscal year 2021. In accordance with SEC Staff Accounting Bulletin ("SAB") No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” we evaluated the error and determined that the related impact was not material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be material to the results of operations for the three months ended June 30, 2021. Accordingly, we revised our consolidated balance sheets and statements of shareholder’s equity as of September 31, 2019, December 31, 2019, and December 31, 2020 and condensed consolidated statements of operations and comprehensive loss and cash flows for the year-ended December 31, 2019 and the three and nine months ended September 30, 2019. A summary of revisions to certain previously reported financial information presented herein for comparative purposes is included in Note 12 – Revision of Prior Period Financial Statements.

Use of estimates

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Examples include provisions for bad debts and income taxes, estimates of progress on professional engineering service arrangements, bonus accruals, useful lives of intangible assets and property and equipment, fair values of stock-based awards, and assumptions used to determine the net present value of operating lease liabilities, among other estimates and assumptions. Actual results may differ from these estimates and assumptions.

Income (loss) per share

We compute basic income (loss) per share using the weighted average number of shares of common stock outstanding during the period. We consider restricted stock units as outstanding shares of common stock and include them in the computation of basic loss per share only when vested. We compute diluted loss per share using the weighted average number of shares of common stock outstanding and common stock equivalent shares outstanding during the period using the treasury stock method. We exclude common stock equivalent shares from the computation if their effect is anti-dilutive.

The following potentially dilutive weighted shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options		384,444		1,796,478		317,909		1,769,556
Restricted stock units		35,275		35,123		68,341		46,851

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Note 2 - Revenue Recognition

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

2. Revenue Recognition 

Disaggregation of revenue

The following table provides information about disaggregated revenue by primary geographical area and includes a reconciliation of the disaggregated revenue with reportable segments (in thousands):

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
	Partner		Edge to				Partner		Edge to
	Solutions		Cloud		Total		Solutions		Cloud		Total
Primary geographic area:
North America	$	8,294	$	964	$	9,258	$	7,819	$	1,100	$	8,919
Europe		68		44		112		613		172		785
Asia		1,276		—		1,276		713		3		716
Total	$	9,638	$	1,008	$	10,646	$	9,145	$	1,275	$	10,420

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
	Partner		Edge to				Partner		Edge to
	Solutions		Cloud		Total		Solutions		Cloud		Total
Primary geographic area:
North America	$	23,372	$	2,695	$	26,067	$	28,104	$	2,345	$	30,449
Europe		275		201		476		1,344		475		1,819
Asia		4,746		—		4,746		3,712		93		3,805
Total	$	28,393	$	2,896	$	31,289	$	33,160	$	2,913	$	36,073

Contract balances

We receive payments from customers based upon contractual billing schedules; accounts receivable is recorded when the right to consideration becomes unconditional. Contract assets include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Contract liabilities, presented as deferred revenue on our condensed consolidated balance sheets, include payments received in advance of performance under the contract and are realized when the associated revenue is recognized. We had no asset impairment charges related to contract assets for each of the three and nine months ended September 30, 2021 and 2020. 

Significant changes in the contract assets and the deferred revenue balances during the three and nine months ended September 30, 2021 were as follows:

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Contract		Contract
	Assets		Assets
Transferred to receivables from contract assets outstanding at December 31, 2020		—		—

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Deferred		Deferred
	Revenue		Revenue
Revenue recognized that was included in deferred revenue at December 31, 2020	$	435,835	$	1,515,077

Contract acquisition costs

We capitalize contract acquisition costs for contracts with a life exceeding one year. Amortization of contract acquisition costs was $4,000 and $23,000 for the three months ended September 30, 2021 and 2020, respectively, and was $57,000 and $68,000 for the nine months ended September 30, 2021 and 2020, respectively. There were no asset impairment charges for contract acquisition costs for any of the periods noted above. 

Transaction price allocated to the remaining performance obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The estimated revenue does not include contracts with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that were unexercised as of September 30, 2021:

	Remainder of
	2021		2022		After 2022
Edge to Cloud		315,944		1,419,096		466,287

Practical expedients and exemptions

We generally expense sales commissions when incurred because the amortization period would have been less than one year. We record these costs within selling, general and administrative expenses.

When applicable and appropriate, the Company utilizes the ‘as-invoiced’ practical expedient which permits revenue recognition upon invoicing.

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Note 3 - Cash, Cash Equivalents and Restricted Cash

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Cash, Cash Equivalents, and Short-term Investments [Text Block]

3. Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following (in thousands):

	September 30, 2021		December 31, 2020
Cash	$	3,925	$	6,509
Cash equivalents (see detail in Note 4)		37,105		6,114
Restricted cash		337		337
Total cash and cash equivalents		41,367		12,960

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Note 4 - Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

4. Fair Value Measurements

We measure our cash equivalents and restricted cash at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Directly or indirectly observable market-based inputs or unobservable inputs used in models or other valuation methodologies.

Level 3: Unobservable inputs that are not corroborated by market data. The inputs require significant management judgment or estimation.

We classify our cash equivalents and restricted cash within Level 1 or Level 2 because our cash equivalents and restricted cash are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

Assets measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 are summarized below (in thousands):

	September 30, 2021						December 31, 2020
	Quoted Prices in		Direct or				Quoted Prices in		Direct or
	Active Markets		Indirect				Active Markets		Indirect
	for Identical		Observable				for Identical		Observable
	Assets (Level 1)		Inputs (Level 2)		Total		Assets (Level 1)		Inputs (Level 2)		Total
Assets
Cash equivalents:
Money market funds	$	37,105	$	—	$	37,105	$	6,114	$	—	$	6,114
Total cash equivalents		37,105		—		37,105		6,114		—		6,114
Restricted cash:
Money market funds		337		—		337		337		—		337
Total assets measured at fair value	$	37,442	$	—	$	37,442	$	6,451	$	—	$	6,451

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Note 5 - Intangible Assets

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

5. Intangible Assets

Intangible assets related to customer relationships that we acquired from TestQuest, Inc. in November 2008 and from the acquisition of Bsquare EMEA, Ltd. in September 2011 and were as follows (in thousands):

	September 30, 2021							December 31, 2020
	Gross							Gross
	Carrying		Accumulated			Net Book		Carrying		Accumulated			Net Book
	Amount		Amortization			Value		Amount		Amortization			Value
Customer relationships	$	982	$	(982	)	$	—	$	982	$	(911	)	$	71

Amortization expense was $22,000 and $25,000 for the three months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, the gross carrying amount of the intangible assets has been fully amortized.

 

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Note 6 - Leases

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

6. Leases

We determine if an arrangement is a lease at inception. On our balance sheet, our office leases are included in right-of-use (“ROU”) lease asset, net and related lease liabilities are included in operating lease and operating lease, long-term. We determined that we do not currently have any leases that we are required to classify as finance leases.

ROU assets represent our right to use the underlying assets for the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease agreements. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the term of the lease. For leases that do not provide an implicit rate, we use an incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments. We use the implicit rate in the lease when readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

In November 2020, we renewed the lease for our office facility in the UK. The term of the lease is 120 months, with rent payments starting on November 30, 2020 and the lease term ending on November 8, 2030. The Company has an opportunity to break the lease at the five-year mark in November 2025. As it is reasonably certain that we will utilize this option, the accounting for this lease utilized November 2025 as the end date. The lease commencement date was November 9, 2020. As a result of entering into this lease agreement, we recorded additional ROU assets and net lease liabilities of $365,559 on our consolidated balance sheet as of December 31, 2020. There was no material impact to our statement of operations or statement of cash flows as a result of entering into this lease.

Our leases have remaining terms of five to seven years. The only leases that contain renewal options are for office space leases at our Seattle and Trowbridge locations. In the fourth quarter of 2019, we made the decision not to renew our Bellevue lease, which expired at the end of May 2020, and we made the decision not to renew our Taiwan lease, exiting that facility in February 2020. Because of changes in our business, we are not able to determine with reasonable certainty whether we will renew our Seattle lease. As a result, we have not considered renewal options when recording ROU assets, lease liabilities or lease expense.

The following tables present the components of our lease expense and supplemental cash flow information related to our leases for the nine months ended September 30, 2021 (in thousands):

	Nine Months Ended
Total component lease expense was as follows:	September 30, 2021
Operating leases	$	311
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities	$	311

The following table presents supplemental balance sheet information related to our operating leases as of September 30, 2021 (dollars in thousands):

	September 30, 2021
Right-of-use lease assets	$	1,660
Current portion of operating lease liability	$	354
Operating lease liability, net of current portion		1,430
Total operating lease liabilities	$	1,784
Weighted average remaining lease term (years)		5.4
Weighted average discount rate		8.5	%

The following table presents the amounts we are obligated to pay, by maturity, under our operating leases liabilities as of September 30, 2021 (in thousands):

Years Ending December 31,
2021, remainder of year	$	78
2022		315
2023		322
2024		329
2025		325
After 2025		440
Total minimum lease payments		1,809
Less: amount representing interest		(25	)
Present value of lease liabilities	$	1,784

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Note 7 - Shareholders' Equity

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Shareholders' Equity and Share-based Payments [Text Block]

7. Shareholders’ Equity

Equity Compensation Plans

We have a stock plan (the “Stock Plan”) and an inducement stock plan for newly hired employees (together with the Stock Plan, the “Plans”). Under the Plans, stock options to purchase shares of our common stock may be granted with a fixed exercise price that is equal to the fair market value of our common stock on the date of grant. These options have a term of up to 10 years and vest over a predetermined period, generally four years. Incentive stock options granted under the Stock Plan may only be granted to our employees. The Plans also allow for awards of non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, and restricted stock units (“RSUs”).

Stock-Based Compensation

The estimated fair value of stock-based awards is recognized as compensation expense over the vesting period of the award, net of estimated forfeitures. We estimate forfeitures based on historical experience and expected future activities. The fair value of RSUs is determined based on the number of shares granted and the quoted price of our common stock on the date of grant. The fair value of stock option awards is estimated at the grant date based on the fair value of each vesting tranche as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. The BSM model requires various highly judgmental assumptions including expected volatility and option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. The fair values of our stock option grants and RSUs were estimated with the following weighted average assumptions:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Dividend yield		0	%		0	%		0	%		0	%
Expected life (years)		4.9			4.9			4.9			4.9
Expected volatility		111	%		63	%		111	%		63	%
Risk-free interest rate		0.6	%		0.2	%		0.6	%		0.5	%

The impact on our results of operations from stock-based compensation expense was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue — Edge to Cloud	$	6	$	26	$	30	$	50
Selling, general and administrative		188		250		515		536
Research and development		24		5		51		15
Total stock-based compensation expense	$	218	$	281	$	596	$	601

Stock Option Activity

The following table summarizes stock option activity under the Plans:

						Weighted
						Average
						Remaining
				Weighted		Contractual
	Number of			Average		Life		Aggregate
	Shares			Exercise Price		(in years)		Intrinsic Value
Balance at December 31, 2020		1,786,891		$	2.04		7.75	$	330,831
Granted		175,000			2.88
Exercised		(36,130	)		1.88
Forfeited		(74,759	)		1.34
Expired		(62,750	)		2.62
Balance at September 30, 2021		1,788,252			1.92		7.15		1,220,636
Vested and expected to vest at September 30, 2021		1,670,375			2.17		7.06		1,122,212
Exercisable at September 30, 2021		934,877		$	2.58		6.10	$	496,868

At September 30, 2021, total compensation cost related to stock options granted but not yet recognized, net of estimated forfeitures, was $393,969. This cost will be amortized on the straight-line method over a weighted-average period of approximately 1.2 years. The following table summarizes certain information about stock options:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Weighted average grant-date fair value of options granted during the period	$	2.75	$	1.37	$	2.88	$	1.03
Options in-the-money (in shares)		629,272		59,201		629,272		59,201
Aggregate intrinsic value of options exercised during the period	$	1.20	$	1.35	$	1.88	$	1.35

The aggregate intrinsic value represents the difference between the exercise price of the underlying options and the quoted price of our common stock for the number of options exercised during the periods indicated. We issue new shares of common stock upon exercise of stock options.

Restricted Stock Unit Activity

The following table summarizes RSU activity under the Plans:

	Number of			Weighted Average
	Shares			Award Price
Unvested at December 31, 2020		164,697		$	1.48
Granted		90,343			2.72
Vested		(182,004	)		1.74
Forfeited		(21,115	)		1.48
Unvested at September 30, 2021		51,921			2.72
Expected to vest after September 30, 2021		49,112		$	2.72

At September 30, 2021, total compensation cost not yet recognized related to granted RSUs was approximately $78,656, net of estimated forfeitures. This cost will be amortized on the straight-line method over a weighted-average period of approximately 0.4 years.

Performance Stock Units

In January 2021 we issued 500,000 performance stock units (PSUs) to our executives. The PSUs vest based on a combination of Bsquare's stock price performance and executive service (continued employment). The first vesting measurement date is January 5, 2022 and the final measurement date is July 5, 2025. We estimated the fair value of the awards utilizing Monte Carlo simulations. Based on the Monte Carlo model, expense of approximately $17,000 and $51,000 was recorded in the selling, general and administrative line of our statement of operations for the three and nine months ended September 30, 2021, respectively. The PSUs had no impact on our cash flow statement. 

Award Modifications 

In June 2021, the outstanding RSU and non-qualified stock option awards of two Board members were modified. In accordance with ASC 718, we recorded incremental expense of $41,000 during the period related to the revaluation of these modified awards.

Common Stock Reserved for Future Issuance

The following table summarizes our shares of common stock reserved for future issuance under the Plans as of September 30, 2021:

	September 30, 2021
Stock options outstanding		1,788,252
Restricted stock units and performance stock units outstanding		551,921
Stock options and restricted stock units available for future grant		1,115,772
Common stock reserved for future issuance		3,455,945

Common Stock Sales 

In the second and third quarters of 2021, we sold 108,879 and 6,793,798 shares of our common stock, respectively, pursuant to a registration statement on Form S-3 under the Securities Act of 1933, as amended (the "Securities Act") filed in March 2021. We received proceeds of approximately $31,936,000, net of issuance costs of $1,157,000. The issued shares and total paid-in capital are reflected in the consolidated statement of shareholder’s equity for the three and nine months ended September 30, 2021.

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Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8. Commitments and Contingencies

Lease and rent obligations

Our commitments include obligations outstanding under operating leases, which expire through 2027. We have lease commitments for office space in Seattle, Washington and Trowbridge, UK. See Note 6 - Leases.

Loss Contingencies

From time to time, we are subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including tax assessments. We defend ourselves vigorously against any such claims. When (i) it is probable that an asset has been impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best information available at the time, which can be highly subjective. As of September 30, 2021, we have not recorded any loss contingency accruals. 

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Note 9 - Information About Geographic Areas and Operating Segments

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

9. Information about Geographic Areas and Operating Segments

Our chief operating decision-makers (i.e. our Chief Executive Officer and certain direct reports) review financial information presented on a consolidated basis, accompanied by disaggregated information for purposes of allocating resources and evaluating financial performance. There are no segment managers who are held accountable by our chief operating decision-makers, or anyone else, for operations, operating results, or planning for levels or components below the consolidated unit level. We operate within a single industry segment of computer software and services.

We have two major product lines, Partner Solutions and Edge to Cloud, each of which we consider to be operating and reportable segments. We do not allocate costs other than direct cost of goods sold to the segments or produce segment income statements, and we do not produce asset information by reportable segment. The following table sets forth profit and loss information about our segments (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Partner Solutions:
Revenue	$	9,638		$	9,145		$	28,393		$	33,160
Cost of revenue		8,491			7,402			24,528			27,502
Gross profit		1,147			1,743			3,865			5,658
Edge to Cloud:
Revenue		1,008			1,275			2,896			2,913
Cost of revenue		827			1,128			2,648			3,050
Gross profit		181			147			248			(137	)
Total gross profit		1,328			1,890			4,113			5,521
Operating expenses		2,194			2,028			7,150			7,173
Other (expense) income, net		(29	)		2			1,575			(31	)
Income tax benefit (expense)		—			—			—			—
Net loss	$	(895	)	$	(136	)	$	(1,462	)	$	(1,683	)

Revenue by geographic area is based on the sales region of the customer. The following tables set forth total revenue and long-lived assets by geographic area (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total revenue:
North America	$	9,258	$	8,919	$	26,067	$	30,449
Europe		112		785		476		1,819
Asia		1,276		716		4,746		3,805
Total revenue	$	10,646	$	10,420	$	31,289	$	36,073

	September 30, 2021		December 31, 2020
Long-lived assets:
North America	$	1,780	$	1,179
Europe		176		179
Total long-lived assets	$	1,956	$	1,358

Long-lived assets increased due to additions of internally developed software throughout the year in North America.

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Note 10 - Significant Risk Concentrations

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

10. Significant Risk Concentrations

Significant Customers

GES Manufacturing Services (M) Sdn. Bhd. accounted for $1.1 million or approximately 11% of our total revenue for the three months ended September 30, 2021. No other customers accounted for 10% or more of total revenue for the three months ended September 30, 2020 or the nine months ended September 30, 2021 and 2020. 

GES Manufacturing Services (M) Sdn. Bhd. had accounts receivable balances of $958,000 or approximately 16% of our total accounts receivable at September 30, 2021. Honeywell International, Inc. and affiliated entities ("Honeywell") had accounts receivable balances of $680,000 or approximately 12% of our total accounts receivable at December 31, 2020. Kodak Alaris had accounts receivable balances of $866,000 or approximately 15% of our total accounts receivable at December 31, 2020.

Significant Supplier

We are authorized to sell Windows IoT operating systems in Canada, the United States, Argentina, Brazil, Chile, Mexico, Peru, Venezuela, Puerto Rico, Columbia, and several Caribbean countries. Our distribution agreement for sales of Windows IoT operating systems in the European Union (“E.U.”), the European Free Trade Association, Turkey and Africa, expired on June 30, 2019 and was not renewed thereafter. 

We have also entered into Original Equipment Manufacturer Distribution Agreements ("ODAs") with Microsoft pursuant to which we are licensed to sell Microsoft Windows Mobile operating systems to customers in North America, South America, Central America (excluding Cuba), Japan, Taiwan, Europe, the Middle East, and Africa. The ODAs to sell Windows Mobile operating systems are effective through April 30, 2022.

There is no automatic renewal provision in any of these agreements, and these agreements can be terminated unilaterally by Microsoft at any time.

The majority of our revenue continues to be derived from reselling Microsoft Windows Embedded and IoT operating system software to device makers. The sale of Microsoft operating systems has historically accounted for substantially all of our Partner Solutions revenue.

Microsoft currently offers a distributor incentives program through which we earn rebates pursuant to predefined objectives related to sales of Microsoft Windows IoT operating systems. In accordance with program rules, we allocate a portion of the incentive earnings to reduce cost of revenue with the remaining portion utilized to offset qualified marketing expenses in the period the expenditures are claimed and approved. During the second quarter of 2020 the program allocation was changed by Microsoft to a 50/50 split between the two components.

Under this rebate program, we recorded rebate credits as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Reductions to cost of revenue	$	26	$	500	$	236	$	654
Reductions to marketing expense		110		123		287		1,026

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Note 11 - Paycheck Protection Program (PPP) Loan

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

11. Paycheck Protection Program (PPP) loan

We obtained a $1.6 million loan (the "PPP Loan") from JPMorgan Chase Bank, N.A. (the “Lender”) under the Paycheck Protection Program ("PPP") on April 7, 2020 (the “Note”). The Note had a two-year term, bore interest at the rate of 0.98% per annum, and could be prepaid at any time without payment of any premium or penalty. The principal and accrued interest under the Note was forgivable after an eight- or 24-week period if we used the PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise comply with PPP requirements. In April 2021, we applied for forgiveness of this loan in accordance with the program, and in June 2021, we received confirmation that the loan principal (and related accrued interest) was forgiven in its entirety. The gain on loan forgiveness is included in other income (loss), net on the statement of operations for the nine months ended September 30, 2021, and as a gain on extinguishment of debt in the statement of cash flows for the nine months ended September 30, 2021.

At September 30, 2021 and December 31, 2020, the PPP Loan balance was as follows (in thousands):

	September 30, 2021		December 31, 2020
PPP Loan, .98%, due April 2022:
Principal	$	—	$	1,572
Accrued interest		—		12
	$	—	$	1,584
PPP Loan payable:
Current portion	$	—		950
Long-term portion		—		634
	$	—	$	1,584

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Note 12 - Revision of Prior Period Financial Statements

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Error Correction [Text Block]

12. Revision of Prior Period Financial Statements

We revised certain prior period financial statements due to a $77,000 error related to the recognition of certain revenues in our Edge to Cloud segment. The error occurred in the third quarter of 2019 and had a rollforward effect on consolidated equity and deferred revenue in all quarterly and annual periods through the first quarter of 2021. See Note 1 - Description of Business and Summary of Significant Accounting Policies. A summary of the revisions to our previously reported financial statements is presented below (in thousands).

Revised Consolidated Balance Sheets

	As of December 31, 2019
	As reported			Adjustment			As revised
Deferred revenue, current portion	$	1,559		$	(77	)	$	1,482
Total current liabilities		11,200			(77	)		11,123
Accumulated deficit		(128,194	)		77			(128,117	)
Total shareholders' equity		9,696			77			9,773

	As of December 31, 2020
	As reported			Adjustment			As revised
Deferred revenue, current portion	$	2,165		$	(77	)	$	2,088
Total current liabilities		11,339			(77	)		11,262
Accumulated deficit		(130,083	)		77			(130,006	)
Total shareholders' equity		8,651			77			8,728

Revised Consolidated Statement of Shareholders’ Equity

	Year Ended
	December 31, 2019
	As reported			Adjustment		As revised
Net loss	$	(9,181	)	$	77	$	(9,104	)
Accumulated deficit		(128,194	)		77		(128,117	)

	Three Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Net loss	$	(1,107	)	$	77	$	(1,030	)
Accumulated deficit		(126,834	)		77		(126,757	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Net loss	$	(7,821	)	$	77	$	(7,744	)
Accumulated deficit		(126,834	)		77		(126,757	)

	Year Ended
	December 31, 2020
	As reported			Adjustment		As revised
Accumulated deficit	$	(130,083	)	$	77	$	(130,006	)

Revised Condensed Consolidated Statements of Operations and Comprehensive Loss

	Year Ended
	As of December 31, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	8,655		$	77	$	8,732
Total revenue		59,283			77		59,360
Gross profit		10,096			77		10,173
Loss from operations		(9,314	)		77		(9,237	)
Loss before income taxes		(9,165	)		77		(9,088	)
Net loss		(9,181	)		77		(9,104	)
Basic loss per share		(0.71	)		—		(0.71	)
Diluted loss per share		(0.71	)		—		(0.71	)
Comprehensive loss		(9,242	)		77		(9,165	)

	Three Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	2,085		$	77	$	2,162
Total revenue		14,641			77		14,718
Gross profit		2,632			77		2,709
Loss from operations		(1,129	)		77		(1,052	)
Loss before income taxes		(1,107	)		77		(1,030	)
Net loss		(1,107	)		77		(1,030	)
Basic loss per share		(0.09	)		0.01		(0.08	)
Diluted loss per share		(0.09	)		0.01		(0.08	)
Comprehensive loss		(1,111	)		77		(1,034	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	6,576		$	77	$	6,653
Total revenue		43,917			77		43,994
Gross profit		7,446			77		7,523
Loss from operations		(7,937	)		77		(7,860	)
Loss before income taxes		(7,821	)		77		(7,744	)
Net loss		(7,821	)		77		(7,744	)
Basic loss per share		(0.60	)		—		(0.60	)
Diluted loss per share		(0.60	)		—		(0.60	)
Comprehensive loss		(7,899	)		77		(7,822	)

Revised Condensed Consolidated Statements of Cash Flows

We revised our condensed consolidated statements of cash flows for the year ended December 31, 2019 and the nine months ended  September 31, 2019 for this correction, which had no impact to net cash used by operating activities in each such period.

	Year Ended
	December 31, 2019
	As reported			Adjustment			As revised
Cash flows from operating activities:
Net loss	$	(9,181	)	$	77		$	(9,104	)
Deferred revenue		(227	)		(77	)		(304	)
Net cash used by operating activities		(5,995	)		—			(5,995	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment			As revised
Cash flows from operating activities:
Net loss	$	(7,821	)	$	77		$	(7,744	)
Deferred revenue		(48	)		(77	)		(125	)
Net cash used in operating activities		(4,994	)		—			(4,994	)

Revised Segment Information

Edge to Cloud revenue and gross profit were impacted for each of the applicable prior periods by the same amount as consolidated revenue and gross profit for the respective periods.

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Description of Business [Policy Text Block]

Description of Business

BSQUARE Corporation (“Bsquare,” “we,” “us” and “our”) builds technology that is powering the next generation of connected devices and intelligent systems. We help companies realize the promise of the Internet of Things ("IoT") through the development of devices and systems that are cloud-enabled, share data seamlessly, facilitate distributed learning and control, and operate securely at scale. We believe that IoT-enabled systems can not only deliver value to our customers but also help people make better use of the resources of our planet. Bsquare's suite of services and software components create new revenue streams and operating models for our customers while providing opportunities for lowering costs and improving operations.

Since our founding in 1994, Bsquare has been at the intersection of hardware and software. Today that intersection is the "edge" where cloud-enabled devices connect to create intelligent systems that share data, facilitate distributed control and machine learning, and operate securely at scale. We believe that our expertise, products, and services are applicable in customer projects and initiatives ranging from device hardware, to the operating system, to IoT software solutions, and cloud services that make intelligent systems possible.

Our business has largely been focused on providing software solutions (including reselling software from Microsoft) and related engineering services to businesses that develop, market and sell dedicated-purpose standalone intelligent systems. Examples of dedicated-purpose standalone intelligent systems include smart, connected computing devices such as point-of-sale terminals, kiosks, tablets and handheld devices, as well as smart vending machines, ATM machines, digital signs, smart phones, set-top boxes and in-vehicle telematics and entertainment devices.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Bsquare have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting and include the accounts of Bsquare and our wholly owned subsidiaries. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the unaudited condensed consolidated financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2021 and our operating results and cash flows for the nine months ended September 30, 2021 and 2020. The accompanying financial information as of December 31, 2020 is derived from our audited financial statements as of that date.

These unaudited condensed financial statements and related notes should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 18, 2021.

Consolidation, Policy [Policy Text Block]

Basis of consolidation

The consolidated financial statements include the accounts of Bsquare and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates, Policy [Policy Text Block]

Use of estimates

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Examples include provisions for bad debts and income taxes, estimates of progress on professional engineering service arrangements, bonus accruals, useful lives of intangible assets and property and equipment, fair values of stock-based awards, and assumptions used to determine the net present value of operating lease liabilities, among other estimates and assumptions. Actual results may differ from these estimates and assumptions.

Earnings Per Share, Policy [Policy Text Block]

Income (loss) per share

We compute basic income (loss) per share using the weighted average number of shares of common stock outstanding during the period. We consider restricted stock units as outstanding shares of common stock and include them in the computation of basic loss per share only when vested. We compute diluted loss per share using the weighted average number of shares of common stock outstanding and common stock equivalent shares outstanding during the period using the treasury stock method. We exclude common stock equivalent shares from the computation if their effect is anti-dilutive.

The following potentially dilutive weighted shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options		384,444		1,796,478		317,909		1,769,556
Restricted stock units		35,275		35,123		68,341		46,851

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Note 1 - Description of Business and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options		384,444		1,796,478		317,909		1,769,556
Restricted stock units		35,275		35,123		68,341		46,851

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Note 2 - Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
	Partner		Edge to				Partner		Edge to
	Solutions		Cloud		Total		Solutions		Cloud		Total
Primary geographic area:
North America	$	8,294	$	964	$	9,258	$	7,819	$	1,100	$	8,919
Europe		68		44		112		613		172		785
Asia		1,276		—		1,276		713		3		716
Total	$	9,638	$	1,008	$	10,646	$	9,145	$	1,275	$	10,420

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
	Partner		Edge to				Partner		Edge to
	Solutions		Cloud		Total		Solutions		Cloud		Total
Primary geographic area:
North America	$	23,372	$	2,695	$	26,067	$	28,104	$	2,345	$	30,449
Europe		275		201		476		1,344		475		1,819
Asia		4,746		—		4,746		3,712		93		3,805
Total	$	28,393	$	2,896	$	31,289	$	33,160	$	2,913	$	36,073

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Contract		Contract
	Assets		Assets
Transferred to receivables from contract assets outstanding at December 31, 2020		—		—

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
	Deferred		Deferred
	Revenue		Revenue
Revenue recognized that was included in deferred revenue at December 31, 2020	$	435,835	$	1,515,077

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

	Remainder of
	2021		2022		After 2022
Edge to Cloud		315,944		1,419,096		466,287

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Note 3 - Cash, Cash Equivalents and Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Cash, Cash Equivalents and Investments [Table Text Block]

	September 30, 2021		December 31, 2020
Cash	$	3,925	$	6,509
Cash equivalents (see detail in Note 4)		37,105		6,114
Restricted cash		337		337
Total cash and cash equivalents		41,367		12,960

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Note 4 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	September 30, 2021						December 31, 2020
	Quoted Prices in		Direct or				Quoted Prices in		Direct or
	Active Markets		Indirect				Active Markets		Indirect
	for Identical		Observable				for Identical		Observable
	Assets (Level 1)		Inputs (Level 2)		Total		Assets (Level 1)		Inputs (Level 2)		Total
Assets
Cash equivalents:
Money market funds	$	37,105	$	—	$	37,105	$	6,114	$	—	$	6,114
Total cash equivalents		37,105		—		37,105		6,114		—		6,114
Restricted cash:
Money market funds		337		—		337		337		—		337
Total assets measured at fair value	$	37,442	$	—	$	37,442	$	6,451	$	—	$	6,451

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Note 5 - Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	September 30, 2021							December 31, 2020
	Gross							Gross
	Carrying		Accumulated			Net Book		Carrying		Accumulated			Net Book
	Amount		Amortization			Value		Amount		Amortization			Value
Customer relationships	$	982	$	(982	)	$	—	$	982	$	(911	)	$	71

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Note 6 - Leases (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Lease, Cost [Table Text Block]

	Nine Months Ended
Total component lease expense was as follows:	September 30, 2021
Operating leases	$	311
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities	$	311

Lessee, Operating Leases, Supplemental Balance Sheet Information [Table Text Block]

	September 30, 2021
Right-of-use lease assets	$	1,660
Current portion of operating lease liability	$	354
Operating lease liability, net of current portion		1,430
Total operating lease liabilities	$	1,784
Weighted average remaining lease term (years)		5.4
Weighted average discount rate		8.5	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Years Ending December 31,
2021, remainder of year	$	78
2022		315
2023		322
2024		329
2025		325
After 2025		440
Total minimum lease payments		1,809
Less: amount representing interest		(25	)
Present value of lease liabilities	$	1,784

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Note 7 - Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Dividend yield		0	%		0	%		0	%		0	%
Expected life (years)		4.9			4.9			4.9			4.9
Expected volatility		111	%		63	%		111	%		63	%
Risk-free interest rate		0.6	%		0.2	%		0.6	%		0.5	%

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue — Edge to Cloud	$	6	$	26	$	30	$	50
Selling, general and administrative		188		250		515		536
Research and development		24		5		51		15
Total stock-based compensation expense	$	218	$	281	$	596	$	601

Share-based Payment Arrangement, Option, Activity [Table Text Block]

						Weighted
						Average
						Remaining
				Weighted		Contractual
	Number of			Average		Life		Aggregate
	Shares			Exercise Price		(in years)		Intrinsic Value
Balance at December 31, 2020		1,786,891		$	2.04		7.75	$	330,831
Granted		175,000			2.88
Exercised		(36,130	)		1.88
Forfeited		(74,759	)		1.34
Expired		(62,750	)		2.62
Balance at September 30, 2021		1,788,252			1.92		7.15		1,220,636
Vested and expected to vest at September 30, 2021		1,670,375			2.17		7.06		1,122,212
Exercisable at September 30, 2021		934,877		$	2.58		6.10	$	496,868

Schedule of Share Based Compensation Additional Stock Options Activity [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Weighted average grant-date fair value of options granted during the period	$	2.75	$	1.37	$	2.88	$	1.03
Options in-the-money (in shares)		629,272		59,201		629,272		59,201
Aggregate intrinsic value of options exercised during the period	$	1.20	$	1.35	$	1.88	$	1.35

Share-based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]

	Number of			Weighted Average
	Shares			Award Price
Unvested at December 31, 2020		164,697		$	1.48
Granted		90,343			2.72
Vested		(182,004	)		1.74
Forfeited		(21,115	)		1.48
Unvested at September 30, 2021		51,921			2.72
Expected to vest after September 30, 2021		49,112		$	2.72

Schedule of Common Stock Reserved For Future Issuance [Table Text Block]

	September 30, 2021
Stock options outstanding		1,788,252
Restricted stock units and performance stock units outstanding		551,921
Stock options and restricted stock units available for future grant		1,115,772
Common stock reserved for future issuance		3,455,945

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Note 9 - Information About Geographic Areas and Operating Segments (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Partner Solutions:
Revenue	$	9,638		$	9,145		$	28,393		$	33,160
Cost of revenue		8,491			7,402			24,528			27,502
Gross profit		1,147			1,743			3,865			5,658
Edge to Cloud:
Revenue		1,008			1,275			2,896			2,913
Cost of revenue		827			1,128			2,648			3,050
Gross profit		181			147			248			(137	)
Total gross profit		1,328			1,890			4,113			5,521
Operating expenses		2,194			2,028			7,150			7,173
Other (expense) income, net		(29	)		2			1,575			(31	)
Income tax benefit (expense)		—			—			—			—
Net loss	$	(895	)	$	(136	)	$	(1,462	)	$	(1,683	)

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total revenue:
North America	$	9,258	$	8,919	$	26,067	$	30,449
Europe		112		785		476		1,819
Asia		1,276		716		4,746		3,805
Total revenue	$	10,646	$	10,420	$	31,289	$	36,073

	September 30, 2021		December 31, 2020
Long-lived assets:
North America	$	1,780	$	1,179
Europe		176		179
Total long-lived assets	$	1,956	$	1,358

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Note 10 - Significant Risk Concentrations (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Rebate Credit [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Reductions to cost of revenue	$	26	$	500	$	236	$	654
Reductions to marketing expense		110		123		287		1,026

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Note 11 - Paycheck Protection Program (PPP) Loan (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Debt [Table Text Block]

	September 30, 2021		December 31, 2020
PPP Loan, .98%, due April 2022:
Principal	$	—	$	1,572
Accrued interest		—		12
	$	—	$	1,584
PPP Loan payable:
Current portion	$	—		950
Long-term portion		—		634
	$	—	$	1,584

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Note 12 - Revision of Prior Period Financial Statements (Tables)

9 Months Ended

Sep. 30, 2021

Notes Tables

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	As of December 31, 2019
	As reported			Adjustment			As revised
Deferred revenue, current portion	$	1,559		$	(77	)	$	1,482
Total current liabilities		11,200			(77	)		11,123
Accumulated deficit		(128,194	)		77			(128,117	)
Total shareholders' equity		9,696			77			9,773

	As of December 31, 2020
	As reported			Adjustment			As revised
Deferred revenue, current portion	$	2,165		$	(77	)	$	2,088
Total current liabilities		11,339			(77	)		11,262
Accumulated deficit		(130,083	)		77			(130,006	)
Total shareholders' equity		8,651			77			8,728

	Year Ended
	December 31, 2019
	As reported			Adjustment		As revised
Net loss	$	(9,181	)	$	77	$	(9,104	)
Accumulated deficit		(128,194	)		77		(128,117	)

	Three Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Net loss	$	(1,107	)	$	77	$	(1,030	)
Accumulated deficit		(126,834	)		77		(126,757	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Net loss	$	(7,821	)	$	77	$	(7,744	)
Accumulated deficit		(126,834	)		77		(126,757	)

	Year Ended
	December 31, 2020
	As reported			Adjustment		As revised
Accumulated deficit	$	(130,083	)	$	77	$	(130,006	)

	Year Ended
	As of December 31, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	8,655		$	77	$	8,732
Total revenue		59,283			77		59,360
Gross profit		10,096			77		10,173
Loss from operations		(9,314	)		77		(9,237	)
Loss before income taxes		(9,165	)		77		(9,088	)
Net loss		(9,181	)		77		(9,104	)
Basic loss per share		(0.71	)		—		(0.71	)
Diluted loss per share		(0.71	)		—		(0.71	)
Comprehensive loss		(9,242	)		77		(9,165	)

	Three Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	2,085		$	77	$	2,162
Total revenue		14,641			77		14,718
Gross profit		2,632			77		2,709
Loss from operations		(1,129	)		77		(1,052	)
Loss before income taxes		(1,107	)		77		(1,030	)
Net loss		(1,107	)		77		(1,030	)
Basic loss per share		(0.09	)		0.01		(0.08	)
Diluted loss per share		(0.09	)		0.01		(0.08	)
Comprehensive loss		(1,111	)		77		(1,034	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment		As revised
Edge to Cloud revenue	$	6,576		$	77	$	6,653
Total revenue		43,917			77		43,994
Gross profit		7,446			77		7,523
Loss from operations		(7,937	)		77		(7,860	)
Loss before income taxes		(7,821	)		77		(7,744	)
Net loss		(7,821	)		77		(7,744	)
Basic loss per share		(0.60	)		—		(0.60	)
Diluted loss per share		(0.60	)		—		(0.60	)
Comprehensive loss		(7,899	)		77		(7,822	)

	Year Ended
	December 31, 2019
	As reported			Adjustment			As revised
Cash flows from operating activities:
Net loss	$	(9,181	)	$	77		$	(9,104	)
Deferred revenue		(227	)		(77	)		(304	)
Net cash used by operating activities		(5,995	)		—			(5,995	)

	Nine Months Ended
	September 30, 2019
	As reported			Adjustment			As revised
Cash flows from operating activities:
Net loss	$	(7,821	)	$	77		$	(7,744	)
Deferred revenue		(48	)		(77	)		(125	)
Net cash used in operating activities		(4,994	)		—			(4,994	)

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Note 1 - Description of Business and Summary of Significant Accounting Policies - Potentially Dilutive Shares Excluded From Calculation of Diluted Net Loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Payment Arrangement, Option [Member]
Stock options (in shares)	384,444	1,796,478	317,909	1,769,556
Restricted stock units (in shares)	384,444	1,796,478	317,909	1,769,556
Restricted Stock Units (RSUs) [Member]
Stock options (in shares)	35,275	35,123	68,341	46,851
Restricted stock units (in shares)	35,275	35,123	68,341	46,851

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Note 2 - Revenue Recognition (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Contract with Customer, Asset, Credit Loss Expense (Reversal)	$ 0	$ 0	$ 0	$ 0
Capitalized Contract Cost, Amortization	4,000	23,000	57,000	68,000
Capitalized Contract Cost, Impairment Loss	$ 0	$ 0	$ 0	$ 0

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Note 2 - Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Total revenue	$ 10,646	$ 10,420	$ 14,718	$ 31,289	$ 36,073	$ 43,994	$ 59,360
North America [Member]
Total revenue	9,258	8,919		26,067	30,449
Europe [Member]
Total revenue	112	785		476	1,819
Asia [Member]
Total revenue	1,276	716		4,746	3,805
Partner Solutions [Member]
Total revenue	9,638	9,145		28,393	33,160
Partner Solutions [Member] | North America [Member]
Total revenue	8,294	7,819		23,372	28,104
Partner Solutions [Member] | Europe [Member]
Total revenue	68	613		275	1,344
Partner Solutions [Member] | Asia [Member]
Total revenue	1,276	713		4,746	3,712
Edge to Cloud [Member]
Total revenue	1,008	1,275	$ 2,162	2,896	2,913	$ 6,653	$ 8,732
Edge to Cloud [Member] | North America [Member]
Total revenue	964	1,100		2,695	2,345
Edge to Cloud [Member] | Europe [Member]
Total revenue	44	172		201	475
Edge to Cloud [Member] | Asia [Member]
Total revenue	$ 0	$ 3		$ 0	$ 93

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Note 2 - Revenue Recognition - Significant Changes in Contract Assets and Deferred Revenue (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021
Transferred to receivables from contract assets	$ 0	$ 0
Revenue recognized that was included in deferred revenue	$ 435,835	$ 1,515,077

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Note 2 - Revenue Recognition - Transaction Price Allocated to the Remaining Performance Obligations 2 (Details) - Edge to Cloud [Member] $ in Thousands	Sep. 30, 2021 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01
Remaining Performance Obligation	$ 315,944
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Remaining Performance Obligation	1,419,096
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Remaining Performance Obligation	$ 466,287

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Note 2 - Revenue Recognition - Transaction Price Allocated to the Remaining Performance Obligations (Details) (Parentheticals) - Edge to Cloud [Member]	Sep. 30, 2021
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01
Remaining Performance Obligation, Period (Year)	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Remaining Performance Obligation, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Remaining Performance Obligation, Period (Year)	1 year

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Note 3 - Cash, Cash Equivalents and Restricted Cash - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Cash	$ 3,925	$ 6,509
Cash equivalents (see detail in Note 4)	37,105	6,114
Restricted cash	337	337
Total cash and cash equivalents	$ 41,367	$ 12,960

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Note 4 - Fair Value Measurements - Assets Measured at Fair Value on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Total cash equivalents	$ 37,105	$ 6,114
Restricted cash	337	337
Total assets measured at fair value	37,442	6,451
Money Market Funds [Member]
Total cash equivalents	37,105	6,114
Fair Value, Inputs, Level 1 [Member]
Total cash equivalents	37,105	6,114
Restricted cash	337	337
Total assets measured at fair value	37,442	6,451
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member]
Total cash equivalents	37,105	6,114
Fair Value, Inputs, Level 2 [Member]
Total cash equivalents	0	0
Restricted cash	0	0
Total assets measured at fair value	0	0
Fair Value, Inputs, Level 2 [Member] | Money Market Funds [Member]
Total cash equivalents	$ 0	$ 0

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Note 5 - Intangible Assets (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Amortization of Intangible Assets, Total	$ 22,000	$ 25,000

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Note 5 - Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Intangible assets, net of accumulated amortization	$ 0	$ 71
Customer Relationships [Member]
Customer relationships, gross carrying amount	982	982
Customer relationships, accumulated amortization	(982)	(911)
Intangible assets, net of accumulated amortization	$ 0	$ 71

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Note 6 - Leases (Details Textual) - USD ($)	Nov. 09, 2020	Sep. 30, 2021	Dec. 31, 2020
Operating Lease, Right-of-Use Asset		$ 1,660,000	$ 1,853,000
Operating Lease, Liability, Total		$ 1,784,000
Minimum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)		5 years
Maximum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)		7 years
Office Facility in the UK [Member]
Lessee, Operating Lease, Renewal Term (Month)	120 months
Lessee Operating Lease, Termination Option Term (Year)	5 years
Operating Lease, Right-of-Use Asset			$ 365,559

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Note 6 - Leases - Components of Lease Expense and Supplemental Cash Flow Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Operating leases	$ 311
Cash paid for amounts included in the measurement of lease liabilities	$ 311

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Note 6 - Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Operating Lease, Right-of-Use Asset	$ 1,660	$ 1,853
Current portion of operating lease liability	354	344
Operating lease liability, net of current portion	1,430	$ 1,630
Total operating lease liabilities	$ 1,784
Weighted average remaining lease term (years) (Year)	5 years 4 months 24 days
Weighted average discount rate	8.50%

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Note 6 - Leases - Amounts Obligated to Pay, by Maturity, Under Operating Leases Liabilities (Details) $ in Thousands	Sep. 30, 2021 USD ($)
2021, remainder of year	$ 78
2022	315
2023	322
2024	329
2025	325
After 2025	440
Total minimum lease payments	1,809
Less: amount representing interest	(25)
Operating Lease, Liability, Total	$ 1,784

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Note 7 - Shareholders' Equity (Details Textual) - USD ($)	1 Months Ended		3 Months Ended			6 Months Ended		9 Months Ended
	Jun. 30, 2021	Jan. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Jun. 30, 2021	Sep. 30, 2021	Sep. 30, 2020
Share-based Payment Arrangement, Expense			$ 218,000		$ 281,000			$ 596,000	$ 601,000
Share-based Payment Arrangement, Plan Modification, Incremental Cost	$ 41,000
Stock Issued During Period, Shares, New Issues (in shares)			6,793,798	108,879
Proceeds from Issuance of Common Stock						$ 31,936,000		31,936,000
Payments of Stock Issuance Costs						1,157,000
Selling, General and Administrative Expenses [Member]
Share-based Payment Arrangement, Expense			$ 188,000		$ 250,000			515,000	$ 536,000
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)							10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)							4 years
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount			393,969			393,969		$ 393,969
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)								1 year 2 months 12 days
Restricted Stock Units (RSUs) [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)								4 months 24 days
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount			78,656			$ 78,656		$ 78,656
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)								90,343
Performance Stock Units [Member] | Selling, General and Administrative Expenses [Member]
Share-based Payment Arrangement, Expense			$ 17,000					$ 51,000
Performance Stock Units [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		500,000

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Note 7 - Shareholders' Equity - Weighted Average Assumptions of Stock Options (Details) - Share-based Payment Arrangement, Option [Member]	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Dividend yield	0.00%	0.00%	0.00%	0.00%
Expected life (years) (Year)	4 years 10 months 24 days	4 years 10 months 24 days	4 years 10 months 24 days	4 years 10 months 24 days
Expected volatility	111.00%	63.00%	111.00%	63.00%
Risk-free interest rate	0.60%	0.20%	0.60%	0.50%

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Note 7 - Shareholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Total stock-based compensation expense	$ 218	$ 281	$ 596	$ 601
Cost of Sales [Member] | Edge to Cloud [Member]
Total stock-based compensation expense	6	26	30	50
Selling, General and Administrative Expenses [Member]
Total stock-based compensation expense	188	250	515	536
Research and Development Expense [Member]
Total stock-based compensation expense	$ 24	$ 5	$ 51	$ 15

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Note 7 - Shareholders' Equity - Stock Option Activity (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares
Balance, number of shares (in shares) | shares	1,786,891
Balance, weighted average exercise price (in dollars per share) | $ / shares	$ 2.04
Balance, weighted average remaining contractual life (Year)	7 years 1 month 24 days	7 years 9 months
Balance, aggregate intrinsic value | $	$ 1,220,636	$ 330,831
Granted, number of shares (in shares) | shares	175,000
Granted, weighted average exercise price (in dollars per share) | $ / shares	$ 2.88
Exercised, number of shares (in shares) | shares	(36,130)
Exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 1.88
Forfeited, number of shares (in shares) | shares	(74,759)
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 1.34
Expired, number of shares (in shares) | shares	(62,750)
Expired, weighted average exercise price (in dollars per share) | $ / shares	$ 2.62
Balance, number of shares (in shares) | shares	1,788,252	1,786,891
Balance, weighted average exercise price (in dollars per share) | $ / shares	$ 1.92	$ 2.04
Vested and expected to vest, number of shares (in shares) | shares	1,670,375
Vested and expected to vest, weighted average exercise price (in dollars per share) | $ / shares	$ 2.17
Vested and expected to vest, weighted average remaining contractual life (Year)	7 years 21 days
Vested and expected to vest, aggregate intrinsic value | $	$ 1,122,212
Exercisable, number of shares (in shares) | shares	934,877
Exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 2.58
Exercisable, weighted average remaining contractual life (Year)	6 years 1 month 6 days
Exercisable, aggregate intrinsic value | $	$ 496,868

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Note 7 - Shareholders' Equity - Summary of Certain Additional Information about Stock Options (Details) - Share-based Payment Arrangement, Option [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Weighted average grant-date fair value of options granted during the period (in dollars per share)	$ 2.75	$ 1.37	$ 2.88	$ 1.03
Options in-the-money (in shares) (in shares)	629,272	59,201	629,272	59,201
Aggregate intrinsic value of options exercised during the period	$ 1,200	$ 1,350	$ 1,880	$ 1,350

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Note 7 - Shareholders' Equity - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member]	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Unvested, number of shares (in shares) | shares	164,697
Unvested, weighted average award price (in dollars per share) | $ / shares	$ 1.48
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | shares	90,343
Granted, weighted average award price (in dollars per share) | $ / shares	$ 2.72
Vested, number of shares (in shares) | shares	(182,004)
Vested, weighted average award price (in dollars per share) | $ / shares	$ 1.74
Forfeited, number of shares (in shares) | shares	(21,115)
Forfeited, weighted average award price (in dollars per share) | $ / shares	$ 1.48
Unvested, number of shares (in shares) | shares	51,921
Unvested, weighted average award price (in dollars per share) | $ / shares	$ 2.72
Expected to vest, number of shares (in shares) | shares	49,112
Expected to vest, weighted average award price (in dollars per share) | $ / shares	$ 2.72

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Note 7 - Shareholders' Equity - Common Stock Reserved for Future Issuance (Details) - shares	Sep. 30, 2021	Dec. 31, 2020
Stock options outstanding (in shares)	1,788,252	1,786,891
Stock options and restricted stock units available for future grant (in shares)	1,115,772
Common stock reserved for future issuance (in shares)	3,455,945
Restricted Stock Units and Performance Stock Units [Member]
Restricted stock units and performance stock units outstanding (in shares)	551,921

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Note 9 - Information About Geographic Areas and Operating Segments (Details Textual)	9 Months Ended
	Sep. 30, 2021
Number of Operating Segments	2
Number of Reportable Segments	2

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Note 9 - Information About Geographic Areas and Operating Segments - Profit and Loss Information (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Revenue	$ 10,646	$ 10,420	$ 14,718	$ 31,289	$ 36,073	$ 43,994	$ 59,360
Cost of revenue	9,318	8,530		27,176	30,552
Gross profit	1,328	1,890	2,709	4,113	5,521	7,523	10,173
Operating expenses	2,194	2,028		7,150	7,173
Other (loss) income, net	(29)	2		1,575	(31)
Income taxes	0	0		0	0
Net loss	(895)	(136)	(1,030)	(1,462)	(1,683)	(7,744)	(9,104)
Partner Solutions [Member]
Revenue	9,638	9,145		28,393	33,160
Cost of revenue	8,491	7,402		24,528	27,502
Gross profit	1,147	1,743		3,865	5,658
Edge to Cloud [Member]
Revenue	1,008	1,275	$ 2,162	2,896	2,913	$ 6,653	$ 8,732
Cost of revenue	827	1,128		2,648	3,050
Gross profit	$ 181	$ 147		$ 248	$ (137)

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Note 9 - Information About Geographic Areas and Operating Segments - Revenue and Long-lived Assets by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2020
Total revenue	$ 10,646	$ 10,420	$ 14,718	$ 31,289	$ 36,073	$ 43,994	$ 59,360
Total long-lived assets	1,956			1,956				$ 1,358
North America [Member]
Total revenue	9,258	8,919		26,067	30,449
Total long-lived assets	1,780			1,780				1,179
Europe [Member]
Total revenue	112	785		476	1,819
Total long-lived assets	176			176				$ 179
Asia [Member]
Total revenue	$ 1,276	$ 716		$ 4,746	$ 3,805

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Note 10 - Significant Risk Concentrations (Details Textual) - USD ($)	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2020	Dec. 31, 2019
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 10,646,000	$ 10,420,000	$ 14,718,000	$ 31,289,000	$ 36,073,000	$ 43,994,000		$ 59,360,000
Accounts Receivable, after Allowance for Credit Loss, Current, Total	5,992,000			5,992,000			$ 6,177,000
GES Singapore Pte, LTD [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	1,100,000
Accounts Receivable, after Allowance for Credit Loss, Current, Total	$ 958,000			$ 958,000
GES Singapore Pte, LTD [Member] | Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member]
Concentration Risk, Percentage	11.00%
GES Singapore Pte, LTD [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage				16.00%
Honeywell International, Inc [Member]
Accounts Receivable, after Allowance for Credit Loss, Current, Total							$ 680,000
Honeywell International, Inc [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage							12.00%
Kodak Alaris, Inc [Member]
Accounts Receivable, after Allowance for Credit Loss, Current, Total							$ 866,000
Kodak Alaris, Inc [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage							15.00%

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Note 10 - Significant Risk Concentrations - Rebate Credits (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Cost of Sales [Member]
Reductions	$ 26	$ 500	$ 236	$ 654
Selling and Marketing Expense [Member]
Reductions	$ 110	$ 123	$ 287	$ 1,026

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Note 11 - Paycheck Protection Program (PPP) Loan (Details Textual) - USD ($) $ in Thousands		9 Months Ended
	Apr. 07, 2020	Sep. 30, 2021	Sep. 30, 2020
Proceeds from Notes Payable, Total	$ 1,600		$ 1,580

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Note 11 - Paycheck Protection Program (PPP) Loan - PPP Loan Balance (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Notes Payable, Total	$ 0	$ 1,584
Current portion	0	950
Long-term portion	0	634
Paycheck Protection Program CARES Act [Member]
Principal	0	1,572
Accrued interest	0	12
Notes Payable, Total	0	1,584
Current portion	0	950
Long-term portion	$ 0	$ 634

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Note 12 - Revision of Prior Period Financial Statements (Details Textual) - USD ($)	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 10,646,000	$ 10,420,000	$ 14,718,000	$ 31,289,000	$ 36,073,000	$ 43,994,000	$ 59,360,000
Revision of Prior Period, Error Correction, Adjustment [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total			77,000			$ 77,000	$ 77,000
Error Related to Recognition of Certain Revenues in Edge to Cloud Segment [Member] | Revision of Prior Period, Error Correction, Adjustment [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total			$ (77,000)

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Note 12 - Revision of Prior Period Financial Statements - Error Correction and Prior Period Adjustments (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Jun. 30, 2021	Dec. 31, 2020
Deferred revenue, current portion	$ 1,098			$ 1,098			$ 1,482		$ 2,088
Total current liabilities	8,830			8,830			11,123		11,262
Accumulated deficit	(131,468)		$ (126,757)	(131,468)		$ (126,757)	(128,117)		(130,006)
Total shareholders' equity	39,836			39,836			9,773	$ 8,886	8,728
Net loss	(895)	$ (136)	(1,030)	(1,462)	$ (1,683)	(7,744)	(9,104)
Total revenue	10,646	10,420	14,718	31,289	36,073	43,994	59,360
Gross profit	1,328	1,890	2,709	4,113	5,521	7,523	10,173
Loss from operations	(866)	(138)	(1,052)	(3,037)	(1,652)	(7,860)	(9,237)
Loss before income taxes	(895)	(136)	(1,030)	(1,462)	(1,683)	(7,744)	(9,088)
Net loss	$ (895)	$ (136)	$ (1,030)	$ (1,462)	$ (1,683)	$ (7,744)	$ (9,104)
Basic loss per share (in dollars per share)	$ (0.05)	$ (0.01)	$ (0.08)	$ (0.09)	$ (0.13)	$ (0.60)	$ (0.71)
Diluted loss per share (in dollars per share)	$ (0.05)	$ (0.01)	$ (0.08)	$ (0.09)	$ (0.13)	$ (0.60)	$ (0.71)
Comprehensive loss	$ (858)	$ (128)	$ (1,034)	$ (1,492)	$ (1,713)	$ (7,822)	$ (9,165)
Deferred revenue				(771)	(310)	(125)	(304)
Net cash used by operating activities				(3,192)	754	(4,994)	(5,995)
Edge to Cloud [Member]
Total revenue	1,008	1,275	2,162	2,896	2,913	6,653	8,732
Gross profit	$ 181	$ 147		$ 248	$ (137)
Previously Reported [Member]
Deferred revenue, current portion							1,559		2,165
Total current liabilities							11,200		11,339
Accumulated deficit			(126,834)			(126,834)	(128,194)		(130,083)
Total shareholders' equity							9,696		8,651
Net loss			(1,107)			(7,821)	(9,181)
Total revenue			14,641			43,917	59,283
Gross profit			2,632			7,446	10,096
Loss from operations			(1,129)			(7,937)	(9,314)
Loss before income taxes			(1,107)			(7,821)	(9,165)
Net loss			$ (1,107)			$ (7,821)	$ (9,181)
Basic loss per share (in dollars per share)			$ (0.09)			$ (0.60)	$ (0.71)
Diluted loss per share (in dollars per share)			$ (0.09)			$ (0.60)	$ (0.71)
Comprehensive loss			$ (1,111)			$ (7,899)	$ (9,242)
Deferred revenue						(48)	(227)
Net cash used by operating activities						(4,994)	(5,995)
Previously Reported [Member] | Edge to Cloud [Member]
Total revenue			2,085			6,576	8,655
Revision of Prior Period, Error Correction, Adjustment [Member]
Deferred revenue, current portion							(77)		(77)
Total current liabilities							(77)		(77)
Accumulated deficit			77			77	77		77
Total shareholders' equity							77		$ 77
Net loss			77			77	77
Total revenue			77			77	77
Gross profit			77			77	77
Loss from operations			77			77	77
Loss before income taxes			77			77	77
Net loss			$ 77			$ 77	$ 77
Basic loss per share (in dollars per share)			$ 0.01			$ 0	$ 0
Diluted loss per share (in dollars per share)			$ 0.01			$ 0	$ 0
Comprehensive loss			$ 77			$ 77	$ 77
Deferred revenue						(77)	(77)
Net cash used by operating activities						0	0
Revision of Prior Period, Error Correction, Adjustment [Member] | Edge to Cloud [Member]
Total revenue			$ 77			$ 77	$ 77