UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended:
OR
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Markets Group Inc. OTC Pink |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| large accelerated filer | ☐ | 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 Section 12b-2 of the exchange Act)
Yes ☐
No
Number of shares outstanding of the issuer’s Common Stock, par
value $0.01, as of November 15, 2021:
INDEX
i
PART I–FINANCIAL INFORMATION
Item 1. Financial Statements
iSign Solutions Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value amounts)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Assets | Unaudited | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Short-term debt - related party | ||||||||
| Short-term debt – other | ||||||||
| Paycheck Protection Program | ||||||||
| Accrued compensation | ||||||||
| Deferred compensation | ||||||||
| Other accrued liabilities | ||||||||
| Deferred revenue, current portion | ||||||||
| Total current liabilities | ||||||||
| Long-term debt - other | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $ | ||||||||
| Treasury shares, | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to these Unaudited Condensed Consolidated Financial Statements
-1-
iSign Solutions Inc.
Condensed Consolidated Statements of Operations
Unaudited
(In thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product | $ | $ | $ | $ | ||||||||||||
| Maintenance | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of sales: | ||||||||||||||||
| Product | ||||||||||||||||
| Maintenance | ||||||||||||||||
| Research and development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating costs and expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense), net | ||||||||||||||||
| Interest expense: | ||||||||||||||||
| Related party | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of debt discount: | ||||||||||||||||
| Related party | ( | ) | ( | ) | ||||||||||||
| Other | ( | ) | ||||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding basic and diluted | ||||||||||||||||
See accompanying notes to these Unaudited Condensed Consolidated Financial Statements
-2-
iSign Solutions Inc.
Condensed Consolidated Statements of Stockholders’ Deficit
Unaudited
(In thousands)
| Common Stock | Treasury Stock | Additional Paid-in | Accumulated | Total Stockholders ’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance January 1, 2021 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Stock-based compensation | ─ | ─ | ||||||||||||||||||||||||||
| Net loss | ─ | ─ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Stock-based compensation | ─ | ─ | ||||||||||||||||||||||||||
| Settlement of deferred salary | ||||||||||||||||||||||||||||
| Net loss | ─ | ─ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Stock based compensation | ─ | ─ | ||||||||||||||||||||||||||
| Net loss | ─ | ─ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in | Accumulated | Total Stockholders ’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance January 1, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Stock-based compensation | ─ | ─ | ||||||||||||||||||||||||||
| Net loss | ─ | ─ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Stock-based compensation | ─ | ─ | ||||||||||||||||||||||||||
| Warrant issued for services | ─ | ─ | ||||||||||||||||||||||||||
| Net loss | ─ | ─ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Stock-based compensation | ─ | ─ | ||||||||||||||||||||||||||
| Warrants issued associated with other long-term liabilities |
─ |
─ | ||||||||||||||||||||||||||
| Warrants issued in settlement of debt | ─ | ─ | ||||||||||||||||||||||||||
| Net loss | ─ | ─ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
See accompanying notes to these Unaudited Condensed Consolidated Financial Statements
-3-
iSign Solutions Inc.
Condensed Consolidated Statements of Cash Flows
Unaudited
(In thousands)
Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Debt discount amortization | ||||||||
| Warrant issued for services | ||||||||
| Stock-based compensation | ||||||||
| Forgiveness of debt related to Paycheck Protection Program plus accrued interest | ( | ) | ||||||
| Forgiveness of debt related to accounts payable | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued compensation | ( | ) | ||||||
| Other accrued and long-term liabilities | ||||||||
| Deferred revenue | ( | ) | ||||||
| Net cash provided by (used) in operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the issuance of short-term debt -related party | ||||||||
| Proceeds from the issuance of short-term debt -other | ||||||||
| Proceeds from the issuance of long-term debt –Paycheck Protection Program | ||||||||
| Payment on short term debt - related party | ( | ) | ||||||
| Payment on short term debt - other | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash and cash equivalents | - | |||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
See accompanying notes to these Unaudited Condensed Consolidated Financial Statements
-4-
iSign Solutions Inc.
Condensed Consolidated Statements of Cash Flows (Continued)
Unaudited
(In thousands)
| Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Supplementary disclosure of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income tax paid | $ | $ | ||||||
| Non-cash financing and investing transactions: | ||||||||
| Value of warrants issued on other long-term liabilities | $ | $ | - | |||||
| Settlement of accounts payable for issuance of short-term debt and long-term debt, other | $ | $ | ||||||
See accompanying notes to these Unaudited Condensed Consolidated Financial Statements
-5-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| 1. | Nature of business and summary of significant accounting policies |
Nature of Business
iSign Solutions Inc. and its subsidiary is a leading supplier of digital transaction management (DTM) software enabling the paperless, secure and cost-effective management and authentication of document-based transactions. iSign’s solutions encompass a wide array of functionality and services, including electronic signatures, simple-to-complex workflow management and various options for biometric authentication. These solutions are available across virtually all enterprise, desktop and mobile environments as a seamlessly integrated platform for both ad-hoc and fully automated transactions. iSign’s platform can be deployed both on premise and as a cloud-based (“SaaS”) service, with the ability to easily transition between deployment models. The Company is headquartered in San Jose, California. The Company’s products include SignatureOne® Ceremony™ Server, the iSign® suite of products and services, and Sign-it® programs.
In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Since March 11, 2020 states in the U.S., including California, where the Company is headquartered, have begun to open up as the result of the development of vaccines to thwart the spread of the virus. New variants of COVID-19 have surfaced around the world, including the United States which may cause additional closures of economies depending on how virulent the new strains are. New COVID-19 variant outbreaks may further disrupted supply chains and affected production and sales across a wide range of industries. The extent of the impact of new COVID-19 outbreaks on our operational and financial performance will depend on certain developments, including the duration and further spread of the outbreak, continued impact on our customers, employees and vendors all of which are uncertain and cannot be predicted.
Basis of Presentation
The financial information contained herein should be read in conjunction with the Company’s consolidated audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2020.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included in this quarterly report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of its financial position at the dates presented and the Company’s results of operations and cash flows for the periods presented. The Company’s interim results are not necessarily indicative of the results to be expected for the entire year.
Going Concern
The accompanying unaudited condensed
consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred
significant cumulative losses since its inception and, at September 30, 2021, the Company’s accumulated deficit was $
-6-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| 1. | Nature of Business and Summary of Significant Accounting Policies (continued) |
There can be no assurance that the Company will be successful in securing adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to operate as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Accounting Changes and Recent Accounting Pronouncements
Accounting Standards Update No. 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). A modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be treated as an exchange of the original instrument for a new instrument. In addition, the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity should be measured. The effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be recognize on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021. Early adoption is permitted for all entities, including adoption in an interim period.
The Company will evaluate ASU 2021-04 to determine what impact, if any, the adoption will have on the Company’s financial statements.
Other Accounting Standards Updates issued in 2021 are not currently applicable to the Company, therefore implementation would not be expected to have a material impact on the Company’s financial position, results of operations and cash flows.
| 2. | Concentrations |
The following table summarizes accounts receivable and revenue concentrations:
| Accounts Receivable As of September 30, | Total Revenue for the three months ended September 30, | Total Revenue for the nine months ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Customer #1 | % | % | % | % | % | % | ||||||||||||||||||
| Customer #2 | % | % | ||||||||||||||||||||||
| Customer #3 | % | % | ||||||||||||||||||||||
| Customer #4 | % | % | % | % | ||||||||||||||||||||
| Customer #5 | % | % | % | |||||||||||||||||||||
| Total concentration | % | % | % | % | % | % | ||||||||||||||||||
-7-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| 3. | Net loss per share |
The Company calculates basic net loss per share based on the weighted average number of shares outstanding, and when applicable, diluted net income per share, which is based on the weighted average number of shares and potential dilutive shares outstanding.
The following table lists shares and warrants that were excluded from the calculation of diluted earnings per share as the exercise of such options and warrants would be antidilutive:
| For the Three and Nine Months Ended | ||||
| September 30, 2021 | September 30, 2020 | |||
| Common Stock subject to outstanding options | ||||
| Common Stock subject to outstanding warrants | ||||
| Common stock subject to outstanding convertible debt plus accrued interest | ||||
| 4. | Debt |
Advances
On February 17 and February 22, 2021,
the Company repaid $
In March 2021, the Company received,
from related parties, advances aggregating $
In July 2021, the Company received
$
In August and September 2021, the
Company received $
Notes payable:
| On May 6, 2020, |
-8-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| 4. | Debt (continued) |
The Company applied for full loan
and interest forgiveness. In September 2021 the Company received notification that the loan related to the Paycheck Protection Program
had been forgiven in full. The Company record $
On February 28, 2021,
In April 2021, the Company re-paid
$
In June 2021, the Company paid the
first installment in the amount of $
On September 30, 2021 the Company
issued a note to one an affiliate investor and received $
During the three and nine months ended
September 30, 2021, the Company accrued $
| 5. | Stockholders’ Deficit |
Stock-based compensation expense is based on the estimated grant date fair value of the portion of stock-based payment awards that are ultimately expected to vest during the period. The grant date fair value of stock-based awards to employees and directors is calculated using the Black-Scholes-Merton valuation model.
Forfeitures of stock-based payment
awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
The estimated average forfeiture rate for the three months ended September 30, 2021 and 2020, was approximately
-9-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| 5. | Stockholders’ Deficit (continued) |
Valuation and Expense Information:
The weighted-average fair value of stock-based compensation is based on the Black-Scholes-Merton valuation model. Forfeitures are estimated and it is assumed no dividends will be declared. The estimated fair value of stock-based compensation awards to employees is amortized using the accrual method over the vesting period of the options.
No options were granted during the three and nine months ended September 30, 2021 and 2020. There were no stock options exercised during the three and nine months ended September 30, 2021 and 2020, respectively.
The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three and nine-month periods ended September 30, 2021 and 2020.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Research and development | $ | $ | $ | - | $ | |||||||
| General and administrative | ||||||||||||
| Director options | ||||||||||||
| Stock-based compensation | ||||||||||||
| expense | $ | $ | $ | $ | ||||||||
A summary of option activity under the Company’s plans as of September 30, 2021 and 2020 is as follows:
| 2021 | 2020 | |||||||||||||||||||||||||||||||
| Options | Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||||||
| Outstanding at January 1, | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Granted | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Forfeited or expired | $ | ─ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Outstanding at September 30 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Vested and expected to vest at September 30 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Exercisable at September 30 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
-10-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| 5. | Stockholders’ Deficit (continued) |
The following table summarizes significant ranges of outstanding and exercisable options as of September 30, 2021:
| Options Outstanding | Options Exercisable | |||||||||||||||||||
| Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Life (in years) | Weighted Average Exercise Price Per Share | Number Outstanding | Weighted Average Exercise Price Per Share | |||||||||||||||
| $0.01 – $25.00 | $ | $ | ||||||||||||||||||
| $0.25.01 – $625 | $ | |||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
The following table summarizes the Company’s non-vested option shares as of September 30, 2021:
| Non-vested Option Shares | Shares | Weighted Average Grant-Date Fair Value | ||||||
| Non-vested at January 1, 2020 | $ | |||||||
| Vested | ( | ) | $ | |||||
| Non-vested at September 30, 2020 | $ | |||||||
As of September 30, 2021, there was $
In June 2021, the Company, with approval of the Board of
Directors, reallocated all of the $
Warrants
The Company did not issue any warrants during the three
and six month periods ended June 30, 2021. The Company issued
In June 2021, the Company transferred from SGP to Andrea Goren the Common Stock Purchase Warrant numbers 19-01 and 20-2, respectively dated February 6, 2019 and August 11, 2020 (the “SGP Warrants”) to purchase Seven Hundred Thousand (700,000) and Two hundred Fifty Thousand (250,000) shares of Company common stock, respectively.
-11-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| 5. | Stockholders’ Deficit (continued) |
A summary of the warrant activity for the nine months ended September 30 is as follows:
| September 30, 2021 | September 30, 2020 | |||||||||||
| Shares | Weighted Average Exercise Price Per Share | Shares | Weighted Average Exercise Price Per Share | |||||||||
| Outstanding at beginning of period | $ | $ | ||||||||||
| Issued | $ | |||||||||||
| Expired | ( | ) | $ | $ | ||||||||
| Outstanding at end of period | $ | $ | ||||||||||
| Exercisable at end of period | $ | $ | ||||||||||
A summary of the status of the warrants outstanding and exercisable as of September 30, 2021 is as follows:
| Number of Shares Issuable Under Warrants | Weighted Average Remaining Life (years) | Weighted Average Exercise Price per share | ||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| 6. | Subsequent Event |
The Company has evaluated subsequent events for potential recognition or disclosure for the period from September 30, 2021 through November 15, 2021, the date the financial statements were issued.
Forward Looking Statements
Certain statements contained in this quarterly report on Form 10-Q, including, without limitation, statements containing the words “believes”, “anticipates”, “hopes”, “intends”, “expects”, and other words of similar import, constitute “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause actual events to differ materially from expectations. Such factors include those set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, including the following:
| ● | Technological, engineering, manufacturing, quality control or other circumstances that could delay the sale or shipment of products; | |
| ● | Economic, business, market and competitive conditions in the software industry and technological innovations that could affect the Company’s business; | |
| ● | The Company’s inability to protect its trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and | |
| ● | General economic and business conditions and the availability of sufficient financing. |
Except as otherwise required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, as a result of new information, future events or otherwise.
-12-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto included in Part 1, Item 1 of this quarterly report on Form 10-Q and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in the Company’s Annual report on Form 10-K for the fiscal year ended December 31, 2020.
Overview
The Company is a leading supplier of digital transaction management (DTM) software enabling the paperless, secure and cost-effective management of document-based transactions. iSign’s solutions encompass a wide array of functionality and services, including electronic signatures, biometric authentication and simple-to-complex workflow management. These solutions are available across virtually all enterprise, desktop and mobile environments as a seamlessly integrated platform for both ad-hoc and fully automated transactions. iSign’s software platform can be deployed both on-premise and as a cloud-based service, with the ability to easily transition between deployment models.
The Company was incorporated in Delaware in October 1986. Except for the year ended December 31, 2004, in each year since its inception the Company has incurred losses. For the two-year period ended December 31, 2020, net losses aggregated $1,614, and, at September 30, 2021, the Company’s accumulated deficit was $135,564.
In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Since March 11, 2020 states in the U.S., including California, where the Company is headquartered, have begun to open up as the result of the development of vaccines to thwart the spread of the virus. New variants of COVID-19 have surfaced around the world, including the United States which may cause additional closures of economies depending on how virulent the new strains are. New COVID-19 variant outbreaks may further disrupted supply chains and affected production and sales across a wide range of industries. The extent of the impact of new COVID-19 outbreaks on our operational and financial performance will depend on certain developments, including the duration and further spread of the outbreak, continued impact on our customers, employees and vendors all of which are uncertain and cannot be predicted.
For the three months ended September 30, 2021, total revenue was $282, an increase of $40, or 17%, compared to total revenue of $242 in the prior year period. For the nine months ended September 30, 2021, total revenue was $810, an increase of $151, or 23%, compared to total revenue of $659 in the prior year period. The increases in revenue for the three and nine months ended September 30, 2021 are due primarily to increases in product revenue compared to the prior year periods.
For the three and nine months ended September 30, 2021, the Company recorded a net loss of $2 and $361, a decrease of $28 and $189, or 93% and 34%, respectfully, compared to a net loss of $30 and $550, respectively, in the prior year period. The reduction in the net loss was due to the increase in revenues, the decrease in operating costs offset by reduction in other income compared to the prior year periods.
-13-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
Critical Accounting Policies and Estimates
Refer to Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2020 Form 10-K.
Effect of Recent Accounting Pronouncements
Accounting Standards Updates issued in 2021 are being evaluated by the Company, however, implementation is not expected to have a material impact on the Company’s financial position, results of operations and cash flows.
Results of Operations
Revenue
For the three months ended September 30, 2021, product revenue was $101, an increase of $57, or 130%, compared to product revenue of $44 in the prior year period. The increase was primarily due to the increase in engineering service and transactional revenue received in the quarter. For the three months ended September 30, 2021, maintenance revenue was $181, a decrease of $17, or 9%, compared to maintenance revenue of $198 in the prior year period. The decrease is due to the change in certain maintenance contract from an annual to a time and material bases and the timing of certain contract renewals.
For the nine months ended September 30, 2021, product revenue was $282, an increase of $148, or 110%, compared to product revenue of $134 in the prior year period. The increase in product revenue is primarily attributable to the factors discussed for the three-month period above. For the nine months ended September 30, 2021, maintenance revenue was $528, an increase of $3, or 1%, compared to maintenance revenue of $525 in the prior year period. The increase in maintenance revenue is primarily due to the timing of certain contract renewals.
Cost of Sales
For the three months ended September 30, 2021, cost of sales was $23, a decrease of $6, or 21%, compared to cost of sales of $29 in the prior year period. The decrease in cost of sales was primarily due to a decrease in direct labor costs associated with billable engineering revenue and a decrease in labor related to maintenance contracts during the three months ended September 30, 2021, compared to the prior year period.
For the nine months ended September 30, 2021, cost of sales was $83, a decrease of $3, or 3%, compared to cost of sales of $86 in the prior year period. The decrease in cost of sales was due to a decrease in direct labor related to maintenance contracts offset by an increase in direct labor associated with billable engineering revenue compared to the prior year period.
Operating expenses
Research and Development Expenses
For the three months ended September 30, 2021, research and development expense was $156, an increase of $30, or 24%, compared to research and development expense of $126 in the prior year period. Research and development expenses consist primarily of salaries and related costs, outside engineering, maintenance items, and allocated facilities expenses. Research and development expenses increase is primarily due to an bonus and dues & subscriptions increase the current quarter. Total expenses, before allocations for the three months ended September 30, 2021, were $183, an increase of $11, or 6%, compared to $172 in the prior year period. The increase was primarily due to the factors discussed above.
For the nine months ended September 30, 2021, research and development expense was $436, a decrease of $10, or 2%, compared to research and development expense of $446 in the prior year period. The most significant factors in the decrease include a decrease in professional services expense and other overhead expense, including outside engineering offset by a reduction in allocated engineering expense to cost of sales. Total expenses, before allocations to cost of sales, for the nine months ended September 30, 2021, were $528, a decrease of $18, or 3%, compared to $545 in the prior year period. The decrease in total engineering expense is primarily due to the factors discussed for the three month period above.
-14-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
Sales and Marketing Expense
For the three months ended September 30, 2021, sales and marketing expense was $15, an increase of $5, or 50%, compared to sales and marketing expense of $10 in the prior year period. For the nine months ended September 30, 2021, sales and marketing expense was $86, an increase of $24, or 39%, compared to sales and marketing expense of $62 in the prior year period. These increase was primarily attributable to an increase in commissions due to the increase in revenue compared to the prior year periods.
General and Administrative Expense
For the three months ended September 30, 2021, general and administrative expense was $130, a decrease of $268 or 67%, compared to general and administrative expense of $397 in the prior year period. The decrease was primarily due to $288 in stock based compensation expense recorded in the prior year partially offset by decreases in other general overhead expenses.
For the nine months ended September 30, 2021, general and administrative expense was $446, a decrease of $370, or 45%, compared to general and administrative expense of $816 in the prior year period. The decrease in total general and administrative expense is primarily due to the factors discussed for the three month period above.
Other Income and Expense, net
For the three and nine months ended September 30, 2021, other income was $125, respectively, a decrease of $248 and $300, respectively, compared to other income of $373 and $425 for the three and nine months ended September 30, 2020. The decrease in other income and expense is due primarily to the forgiveness of the $125 loan plus accrued interest in September 2021 related to the Paycheck Protection Program, compared to $373 and $425, respectively, of accounts payable forgiveness during the three and nine months ended September 30, 2020. Such accounts payable forgiveness during the three and nine months ended September 30, 2020 was generated in conjunction with cash payments of approximately $287. Other income for the three and nine months ended June 30 2019 also included the collection of $14 of accounts receivable written off in the prior year.
For the three months ended September 30, 2021, interest expense was $85, an increase of $3, or 4% compared to interest expense of $82 in the prior year period. For the nine months ended September 30, 2021, interest expense was $244, an increase of $23, or 10%, compared to interest expense of $221 in the prior year period. The increase in interest expense is primarily due to the increase in the amount of debt outstanding for the three and nine months ended September 30, 2021 compared to the prior year period.
Amortization of debt discount was $0 for the three and nine month periods ended September 30, 2021 compared to $1 and $1 in the same periods of the prior year, respectively. The debt discount was fully amortized by December 31, 2020.
-15-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
Liquidity and Capital Resources
At September 30, 2021, cash and cash equivalents totaled $108, compared to cash and cash equivalents of $26 at December 31, 2020. Net cash provided by operating activities was $62. Cash of $23 was provided by financing activities, offset by $3 used in investing activities. At September 30, 2021, total current assets were $248, compared to total current assets of $136 at December 31, 2020. At September 30, 2021, the Company’s principal sources of funds included its aggregated cash and cash equivalents of $108.
At September 30, 2021, accounts receivable, net was $128, an increase of $28, or 28%, compared to accounts receivable, net of $100 at December 31, 2020. The increase is due primarily to the timing of billings and collections during the nine months ended September 30, 2021.
At September 30, 2021, prepaid expenses and other current assets were $12, an increase of $2, or 20%, compared to prepaid expenses and other current assets of $10 at December 31, 2020. The increase is due primarily to an increase of prepaids associated with engineering activities during the period.
At September 30, 2021, accounts payable was $402, an increase of $49, or 14%, compared to accounts payable of $353 at December 31, 2020. The increase is due primarily to an increase in outstating trade payables for professional services.
At September 30, 2021, accrued compensation was $77, a decrease of $5, or 6%, compared to accrued compensation of $82 at December 31, 2020. The decrease is due primarily to a decrease in accrued vacation expense. Other accrued liabilities were $1,381, an increase of $240, or 21%, from $1,141 at December 31, 2020 due primarily to the accrual of interest on the Company’s short –term debt and deferred professional services.
At September 30, 2021, deferred revenue was $339, an increase of $124, or 58%, compared to deferred revenue of $215 at December 31, 2020. Deferred revenue primarily reflects advance payments for maintenance fees from the Company’s licensees that are generally recognized as revenue by the Company when all obligations are met or over the term of the maintenance agreement, whichever is longer. Deferred revenue is recorded when the Company receives advance payment from its customers.
At September 30, 2021, total current liabilities were $5,358, an increase of $353, or 7%, compared to total current liabilities of $5,005 at December 31, 2020.
On February 28, 2021, the Company issued an aggregate of $75 in unsecured notes to affiliates and other investors. The Company received $60 in cash and $15 in exchange for advances received in the prior year. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $0.50. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lesser of $0.50 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2021.
In March 2021, the Company received, from related parties, advances aggregating $25 in cash against certain accounts receivable of the Company. Upon collection of an invoice, the Company agreed to repay the advance to the lenders on a pro rata basis together with a 5% advance fee. The Company accrued $1 in advance fees recorded as interest expense on the Statement of Operations.
In April 2021, the Company re-paid $49 of Accounts Receivable Advances and $6 in accrued but unpaid 5% advance fees to an affiliate. In addition the Company repaid to another affiliate $64 of Accounts Receivable Advances and $4 in accrued but unpaid 5% advance fees.
In June 2021, the Company paid the first installment in the amount of $40 plus accrued interest of $5 of a note entered into associated with a settlement agreement dated July 1, 2020 with one of its vendors. The reaming $90 plus interest at the rate of 4% per annum is due in two installments, June of 2022 and June of 2023.
-16-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
Liquidity and Capital Resources (continued)
In July 2021, the Company received $10,000 in cash from an affiliate as an advance against certain accounts receivable. The company accrued a 5% advance fee and recorded $500 as interest expense during the three months ended September 30, 2021. Upon collection of the accounts receivable the Company will repay the advance plus the 5% fee.
In August and September 2021, the Company received $50,000 and $36,000, respectively in cash from an affiliate as advances against certain accounts receivable. The company accrued a 5% advance fees in August and September 2021, and recorded $4 as interest expense during the three months ended September 30, 2021. Upon collection of the accounts receivable the Company will repay the advances plus the 5% fee.
In September 2021 the Company received notification that the loan related to the Paycheck Protection Program had been forgiven in full. The Company record $125 of other income on the Statement of Operations related to the forgiveness of the debt plus accrued interest.
On September 30, 2021 the Company issued a note to an affiliate investor and received $75 in cash. The note bears interest at the rate of 20% per annum and is due upon demand.
The Company incurred $85 and $244, respectively, of interest expense for the three and nine months ended September 30, 2021, of which was $1 and $17, respectively, was paid in cash.
The Company had no material commitments as of June 30, 2021.
The Company has experienced recurring losses from operations that raise a substantial doubt about its ability to continue as a going concern. There can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to it when needed, or if available, will be available on favorable terms or in amounts required by it. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to operate as a going concern.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Interest Rate Risk
The Company did not enter into any short-term security investments during the three and nine months ended September 30, 2021.
Foreign Currency Risk
From time to time, the Company makes certain capital equipment or other purchases denominated in foreign currencies. As a result, the Company’s cash flows and earnings are exposed to fluctuations in interest rates and foreign currency exchange rates. The Company attempts to limit these exposures through operational strategies and generally has not hedged currency exposures. During the three and nine months ended September 30, 2021 and 2020, foreign currency translation gains and losses were insignificant.
-17-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Company carried out an evaluation as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 and
15d-15 under the Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation and because of the material weaknesses in our internal control over financial reporting described below, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Management identified the following control deficiencies that constitute material weaknesses that are not fully remediated as of the filing date of this report:
As a small company with limited resources that are mainly focused on the development and sales of software products and services, iSign does not employ a sufficient number of staff in its finance department to possess an optimal segregation of duties or to provide optimal levels of oversight. This has resulted in certain audit adjustments and management believes that there may be a possibility for a material misstatement to occur in future periods while it employs the current number of personnel in its finance department.
The Company does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedures are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The Company considered these limitations during the development of its disclosure controls and procedures, and will continually reevaluate them to ensure they provide reasonable assurance that such controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
-18-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
Part II-Other Information
| Item 1. | Legal Proceedings. |
None.
| Item 1A. | Risk Factors |
Not applicable.
| Item 2. | Unregistered Sale of Securities and Use of Proceeds |
None.
| Item 3. | Defaults upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
None.
| Item 6. | Exhibits. |
| (a) | Exhibits. |
-19-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
-20-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
-21-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
-22-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
| * | Filed herewith |
-23-
iSign Solutions Inc.
(In thousands, except per share amounts)
FORM 10-Q
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.
| iSign Solutions Inc. | |
| Registrant |
| November 15, 2021 | /s/ Michael Engmann | |
| Date | Michael Engmann | |
| (Principal
Financial Officer and Officer Duly Authorized to Sign on Behalf of the Registrant) |
-24-
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Philip Sassower, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of iSign Solutions Inc.;
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.
Date: November 15, 2021
| /s/ Philip Sassower | |
| Chairman and Chief Executive Officer | |
| (Principal Executive Officer of Registrant) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Engmann, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of iSign Solutions Inc.;
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.
Date: November 15, 2021
| //Michael Engmann | |
| Chief Financial Officer | |
| (Principal Financial Officer of Registrant) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Philip S. Sassower, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of iSign Solutions Inc. on Form 10-Q for the quarterly period ended September 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of iSign Solutions Inc.
Date: November 15, 2021
| By: /s/ Philip S. Sassower | |
| Chairman and Chief Executive Officer | |
| (Principal Executive Officer) |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to iSign Solutions Inc. and will be retained by iSign Solutions Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by iSign Solutions Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that iSign Solutions Inc. specifically incorporates it by reference.
Exhibit 32.2
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Engmann, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of iSign Solutions Inc. on Form 10-Q for the quarterly period ended September 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of iSign Solutions Inc..
Date: November 15, 2021
| By: /s/ Michael Engmann | |
| Chief Financial Officer | |
| (Principal Financial Officer |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to iSign Solutions Inc. and will be retained by iSign Solutions Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by iSign Solutions Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that iSign Solutions Inc. specifically incorporates it by reference.
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, net of allowance (in Dollars) | $ 0 | $ 0 |
| Common stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 2,000,000 | 2,000,000 |
| Common stock, shares issued | 6,322 | 5,762 |
| Common stock, shares outstanding | 6,322 | 5,762 |
| Treasury shares | 5 | 5 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Revenue: | ||||
| Product | $ 101 | $ 44 | $ 282 | $ 134 |
| Maintenance | 181 | 198 | 528 | 525 |
| Total revenue | 282 | 242 | 810 | 659 |
| Cost of sales: | ||||
| Product | 2 | 2 | 32 | 23 |
| Maintenance | 21 | 27 | 51 | 63 |
| Research and development | 156 | 126 | 436 | 446 |
| Sales and marketing | 15 | 10 | 86 | 62 |
| General and administrative | 130 | 397 | 446 | 816 |
| Total operating costs and expenses | 324 | 562 | 1,051 | 1,410 |
| Loss from operations | (42) | (320) | (241) | (751) |
| Other income (expense), net | 125 | 373 | 125 | 425 |
| Interest expense: | ||||
| Related party | (35) | (30) | (97) | (77) |
| Other | (50) | (52) | (147) | (144) |
| Amortization of debt discount: | ||||
| Related party | (1) | (1) | ||
| Other | (1) | |||
| Loss before income tax expense | (2) | (30) | (360) | (549) |
| Income tax expense | (1) | (1) | ||
| Net loss | $ (2) | $ (30) | $ (361) | $ (550) |
| Basic and diluted net loss per common share (in Dollars per share) | $ 0 | $ (0.01) | $ (0.06) | $ (0.1) |
| Weighted average common shares outstanding basic and diluted (in Shares) | 6,322 | 5,762 | 5,956 | 5,762 |
Nature of Business and Summary of Significant Accounting Policies |
9 Months Ended | |||
|---|---|---|---|---|
Sep. 30, 2021 | ||||
| Accounting Policies [Abstract] | ||||
| Nature of Business and Summary of Significant Accounting Policies |
Nature of Business
iSign Solutions Inc. and its subsidiary is a leading supplier of digital transaction management (DTM) software enabling the paperless, secure and cost-effective management and authentication of document-based transactions. iSign’s solutions encompass a wide array of functionality and services, including electronic signatures, simple-to-complex workflow management and various options for biometric authentication. These solutions are available across virtually all enterprise, desktop and mobile environments as a seamlessly integrated platform for both ad-hoc and fully automated transactions. iSign’s platform can be deployed both on premise and as a cloud-based (“SaaS”) service, with the ability to easily transition between deployment models. The Company is headquartered in San Jose, California. The Company’s products include SignatureOne® Ceremony™ Server, the iSign® suite of products and services, and Sign-it® programs.
In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Since March 11, 2020 states in the U.S., including California, where the Company is headquartered, have begun to open up as the result of the development of vaccines to thwart the spread of the virus. New variants of COVID-19 have surfaced around the world, including the United States which may cause additional closures of economies depending on how virulent the new strains are. New COVID-19 variant outbreaks may further disrupted supply chains and affected production and sales across a wide range of industries. The extent of the impact of new COVID-19 outbreaks on our operational and financial performance will depend on certain developments, including the duration and further spread of the outbreak, continued impact on our customers, employees and vendors all of which are uncertain and cannot be predicted.
Basis of Presentation
The financial information contained herein should be read in conjunction with the Company’s consolidated audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2020.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included in this quarterly report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of its financial position at the dates presented and the Company’s results of operations and cash flows for the periods presented. The Company’s interim results are not necessarily indicative of the results to be expected for the entire year.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant cumulative losses since its inception and, at September 30, 2021, the Company’s accumulated deficit was $135,564. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of September 30, 2021, the Company’s cash balance was $108. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
There can be no assurance that the Company will be successful in securing adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to operate as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Accounting Changes and Recent Accounting Pronouncements
Accounting Standards Update No. 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). A modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be treated as an exchange of the original instrument for a new instrument. In addition, the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity should be measured. The effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be recognize on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021. Early adoption is permitted for all entities, including adoption in an interim period.
The Company will evaluate ASU 2021-04 to determine what impact, if any, the adoption will have on the Company’s financial statements.
Other Accounting Standards Updates issued in 2021 are not currently applicable to the Company, therefore implementation would not be expected to have a material impact on the Company’s financial position, results of operations and cash flows. |
Concentrations |
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| Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Concentrations |
The following table summarizes accounts receivable and revenue concentrations:
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Net Loss Per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||
| Net loss per share |
The Company calculates basic net loss per share based on the weighted average number of shares outstanding, and when applicable, diluted net income per share, which is based on the weighted average number of shares and potential dilutive shares outstanding.
The following table lists shares and warrants that were excluded from the calculation of diluted earnings per share as the exercise of such options and warrants would be antidilutive:
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Debt |
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Sep. 30, 2021 | |||||||
| Debt Disclosure [Abstract] | |||||||
| Debt |
Advances
On February 17 and February 22, 2021, the Company repaid $30 and $30, respectively, of accounts receivable advances from unrelated parties along with $4 of accrued but unpaid advance fees. In addition, on March 31, 2021, the Company repaid $20 in accounts receivable advances to a related party. The advance fee of $1 was repaid on April 1, 2021.
In March 2021, the Company received, from related parties, advances aggregating $25 in cash against certain accounts receivable of the Company. Upon collection of an invoice, the Company agreed to repay the advance to the lenders on a pro rata basis together with a 5% advance fee. The Company accrued $1 in advance fees recorded as interest expense on the Statement of Operations.
In July 2021, the Company received $10,000 in cash from an affiliate as an advance against certain accounts receivable. The company accrued a 5% advance fee and recorded $500 as interest expense during the three months ended September 30, 2021. Upon collection of the accounts receivable the Company will repay the advance plus the 5% fee.
In August and September 2021, the Company received $50,000 and $36,000, respectively in cash from an affiliate as advances against certain accounts receivable. The company accrued a 5% advance fees in August and September 2021, and recorded $4 as interest expense during the three months ended September 30, 2021. Upon collection of the accounts receivable the Company will repay the advances plus the 5% fee.
Notes payable:
The Company applied for full loan and interest forgiveness. In September 2021 the Company received notification that the loan related to the Paycheck Protection Program had been forgiven in full. The Company record $125 of other income on the Statement of Operations related to the forgiveness of the debt plus accrued interest.
On February 28, 2021, the Company issued an aggregate of $75 in unsecured notes, $30 to related parties and $45 to other investors. The Company received $15 in cash and $15 in exchange for an account receivable advance, received in the prior year, from related parties, and $45 in cash from other investors. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $0.50. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lesser of $0.50 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2021.
In April 2021, the Company re-paid $49 of Accounts Receivable Advances and $6 in accrued but unpaid 5% advance fees to an affiliate. In addition the Company repaid to another affiliate $64 of Accounts Receivable Advances and $4 in accrued but unpaid 5% advance fees.
In June 2021, the Company paid the first installment in the amount of $40 plus accrued interest of $5 of a note entered into associated with a settlement agreement dated July 1, 2020 with one of its vendors. The remaining $90 plus interest at the rate of 4% per annum is due in two installments, June of 2022 and June of 2023.
On September 30, 2021 the Company issued a note to one an affiliate investor and received $75 in cash. The note bears interest at the rate of 20% per annum and is due upon demand.
During the three and nine months ended September 30, 2021, the Company accrued $84 and $243 of interest expense, $75 and $211, respectively, associated with the outstanding secured and unsecured convertible promissory notes, of which $35 and $97 was to related parties and $40 and $114 was to other investors. For the three and nine months ended September 30, 2020, the Company accrued $83 and $221 of interest expense, $73 and $194, respectively, associated with the outstanding secured and unsecured convertible promissory notes, of which $28 and $76 was to related parties and $45 and $118 was to other investors. |
Stockholders' Deficit |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Deficit |
Stock-based compensation expense is based on the estimated grant date fair value of the portion of stock-based payment awards that are ultimately expected to vest during the period. The grant date fair value of stock-based awards to employees and directors is calculated using the Black-Scholes-Merton valuation model.
Forfeitures of stock-based payment awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated average forfeiture rate for the three months ended September 30, 2021 and 2020, was approximately 11.2% and 13.4%, respectively, based on historical data.
Valuation and Expense Information:
The weighted-average fair value of stock-based compensation is based on the Black-Scholes-Merton valuation model. Forfeitures are estimated and it is assumed no dividends will be declared. The estimated fair value of stock-based compensation awards to employees is amortized using the accrual method over the vesting period of the options.
No options were granted during the three and nine months ended September 30, 2021 and 2020. There were no stock options exercised during the three and nine months ended September 30, 2021 and 2020, respectively.
The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three and nine-month periods ended September 30, 2021 and 2020.
A summary of option activity under the Company’s plans as of September 30, 2021 and 2020 is as follows:
The following table summarizes significant ranges of outstanding and exercisable options as of September 30, 2021:
The following table summarizes the Company’s non-vested option shares as of September 30, 2021:
As of September 30, 2021, there was $33 of total unrecognized compensation expense related to non-vested stock-based compensation arrangements granted under the plans. The unrecognized compensation expense is expected to be realized over a weighted average period of 1.19 years.
In June 2021, the Company, with approval of the Board of Directors, reallocated all of the $560,000 of accrued compensation owed to SG Phoenix in equal parts to Mr. Sassower and Mr. Goren, according to their respective ownership in SG Phoenix. Mr. Sassower settled $280,000 of Accrued Long -term deferred salary allocated to him into 560,000 shares of the Company’s Common Stock at a price of $0.50 per share, which was substantially above the then current market price of the company’s common stock.
Warrants
The Company did not issue any warrants during the three and six month periods ended June 30, 2021. The Company issued 30,000 warrants during the three and six months ended June 30, 2020 to a consultant for services. The warrants are exercisable for three years with an exercise price of $0.50 per share. The Company ascribed a value of $13 to the warrants which is based on the Black-Scholes-Merton valuation model.
In June 2021, the Company transferred from SGP to Andrea Goren the Common Stock Purchase Warrant numbers 19-01 and 20-2, respectively dated February 6, 2019 and August 11, 2020 (the “SGP Warrants”) to purchase Seven Hundred Thousand (700,000) and Two hundred Fifty Thousand (250,000) shares of Company common stock, respectively.
A summary of the warrant activity for the nine months ended September 30 is as follows:
A summary of the status of the warrants outstanding and exercisable as of September 30, 2021 is as follows:
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Subsequent Event |
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| Subsequent Events [Abstract] | |||||||||||||||||||||||||
| Subsequent Event |
The Company has evaluated subsequent events for potential recognition or disclosure for the period from September 30, 2021 through November 15, 2021, the date the financial statements were issued.
Forward Looking Statements
Certain statements contained in this quarterly report on Form 10-Q, including, without limitation, statements containing the words “believes”, “anticipates”, “hopes”, “intends”, “expects”, and other words of similar import, constitute “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause actual events to differ materially from expectations. Such factors include those set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, including the following:
Except as otherwise required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, as a result of new information, future events or otherwise. |
Accounting Policies, by Policy (Policies) |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Accounting Policies [Abstract] | |
| Nature of Business | Nature of Business
iSign Solutions Inc. and its subsidiary is a leading supplier of digital transaction management (DTM) software enabling the paperless, secure and cost-effective management and authentication of document-based transactions. iSign’s solutions encompass a wide array of functionality and services, including electronic signatures, simple-to-complex workflow management and various options for biometric authentication. These solutions are available across virtually all enterprise, desktop and mobile environments as a seamlessly integrated platform for both ad-hoc and fully automated transactions. iSign’s platform can be deployed both on premise and as a cloud-based (“SaaS”) service, with the ability to easily transition between deployment models. The Company is headquartered in San Jose, California. The Company’s products include SignatureOne® Ceremony™ Server, the iSign® suite of products and services, and Sign-it® programs.
In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Since March 11, 2020 states in the U.S., including California, where the Company is headquartered, have begun to open up as the result of the development of vaccines to thwart the spread of the virus. New variants of COVID-19 have surfaced around the world, including the United States which may cause additional closures of economies depending on how virulent the new strains are. New COVID-19 variant outbreaks may further disrupted supply chains and affected production and sales across a wide range of industries. The extent of the impact of new COVID-19 outbreaks on our operational and financial performance will depend on certain developments, including the duration and further spread of the outbreak, continued impact on our customers, employees and vendors all of which are uncertain and cannot be predicted.
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| Basis of Presentation | Basis of Presentation
The financial information contained herein should be read in conjunction with the Company’s consolidated audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2020.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included in this quarterly report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of its financial position at the dates presented and the Company’s results of operations and cash flows for the periods presented. The Company’s interim results are not necessarily indicative of the results to be expected for the entire year.
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| Going Concern | Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant cumulative losses since its inception and, at September 30, 2021, the Company’s accumulated deficit was $135,564. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of September 30, 2021, the Company’s cash balance was $108. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
There can be no assurance that the Company will be successful in securing adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to operate as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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| Accounting Changes and Recent Accounting Pronouncements | Accounting Changes and Recent Accounting Pronouncements
Accounting Standards Update No. 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). A modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be treated as an exchange of the original instrument for a new instrument. In addition, the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity should be measured. The effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be recognize on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021. Early adoption is permitted for all entities, including adoption in an interim period.
The Company will evaluate ASU 2021-04 to determine what impact, if any, the adoption will have on the Company’s financial statements.
Other Accounting Standards Updates issued in 2021 are not currently applicable to the Company, therefore implementation would not be expected to have a material impact on the Company’s financial position, results of operations and cash flows. |
Concentrations (Tables) |
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| Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts receivable and revenue concentrations |
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Net Loss Per Share (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||
| Schedule of options and warrants would be antidilutive |
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Stockholders' Deficit (Tables) |
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| Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of stock-based compensation expense |
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| Schedule of option activity under the Company's plans |
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| Schedule of significant ranges of outstanding and exercisable options |
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| Schedule of the company's non-vested shares |
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| Schedule of warrant activity |
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| Schedule of warrants outstanding and exercisable |
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Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Accumulated deficit | $ (135,564) | $ (135,203) |
| Cash | $ 108 |
Net Loss Per Share (Details) - Schedule of options and warrants would be antidilutive - shares shares in Thousands |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Schedule of options and warrants would be antidilutive [Abstract] | ||
| Common Stock subject to outstanding options | 1,338 | 1,338 |
| Common Stock subject to outstanding warrants | 1,450 | 3,001 |
| Common stock subject to outstanding convertible debt plus accrued interest | 7,290 | 6,608 |
Debt (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 06, 2020 |
Sep. 30, 2021 |
Aug. 31, 2021 |
Jul. 31, 2021 |
Jun. 30, 2021 |
Apr. 30, 2021 |
Feb. 28, 2021 |
Feb. 22, 2021 |
Feb. 17, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Apr. 01, 2021 |
Mar. 31, 2021 |
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| Debt Disclosure [Abstract] | |||||||||||||||
| Advance accounts receivable | $ 49 | $ 30 | $ 30 | $ 64 | |||||||||||
| Accrued advances unpaid | $ 6 | $ 4 | $ 4 | ||||||||||||
| Accounts receivable advances repaid | $ 20 | ||||||||||||||
| Advance fee | $ 1 | 1 | |||||||||||||
| Accounts receivable advances in cash | $ 25 | ||||||||||||||
| Advance fee, percentage | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | ||||||||||
| Received cash from affiliates | $ 36,000 | $ 50,000 | $ 10,000 | ||||||||||||
| Account receivable description | The company accrued a 5% advance fee and recorded $500 as interest expense during the three months ended September 30, 2021. Upon collection of the accounts receivable the Company will repay the advance plus the 5% fee. | ||||||||||||||
| Interest expense | $ 4 | ||||||||||||||
| Advance fees | 5.00% | ||||||||||||||
| Notes payable, description | the Company received loan proceeds in the amount of approximately $123 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The Company may apply for the loans and accrued interest forgiven after a period of either eight or twenty-four weeks, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the period in question. Under the terms of the related promissory note, the unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. | the Company issued an aggregate of $75 in unsecured notes, $30 to related parties and $45 to other investors. The Company received $15 in cash and $15 in exchange for an account receivable advance, received in the prior year, from related parties, and $45 in cash from other investors. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $0.50. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lesser of $0.50 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2021. | |||||||||||||
| Other income | $ 125 | ||||||||||||||
| Accrued unpaid percentage | 5.00% | 5.00% | |||||||||||||
| First installment | $ 40 | ||||||||||||||
| Accrued interest expense | $ 5 | $ 84 | $ 83 | $ 221 | |||||||||||
| Interest rate percentage | 4.00% | 4.00% | 4.00% | ||||||||||||
| Cash received from investor | $ 75 | $ 75 | $ 75 | ||||||||||||
| Interest rate | 20.00% | 20.00% | 20.00% | ||||||||||||
| Accrued interest expense | $ 243 | ||||||||||||||
| Interest expense | $ 75 | 73 | 211 | 194 | |||||||||||
| Convertible promissory notes | 35 | 28 | 97 | 76 | |||||||||||
| Outstanding to related parties | $ 40 | $ 45 | $ 114 | $ 118 | |||||||||||
Stockholders' Deficit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Stockholders' Equity Note [Abstract] | |||||
| Percentage of estimated average forfeiture rate | 11.20% | 13.40% | |||
| Total unrecognized compensation expense | $ 33 | ||||
| Weighted average period | 1 year 2 months 8 days | ||||
| Accrued Compensation amount | $ 560,000 | ||||
| Accrued long term deferred salary | $ 280,000 | ||||
| Number of share (in Shares) | 560,000 | ||||
| Common stock price per share (in Dollars per share) | $ 0.5 | ||||
| Issued warrants (in Shares) | 30,000 | 30,000 | |||
| Warrants exercisable years | 3 years | ||||
| Exercise price (in Dollars per share) | $ 0.5 | ||||
| Warrants amount | $ 13 | ||||
Stockholders' Deficit (Details) - Schedule of stock-based compensation expense - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Stockholders' Deficit (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total expense | $ 13 | $ 30 | $ 53 | $ 69 |
| Stock-Based Compensation [Member] | ||||
| Stockholders' Deficit (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total expense | 4 | 15 | ||
| Research and Development [Member] | ||||
| Stockholders' Deficit (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total expense | 1 | 7 | ||
| General and Administrative [Member] | ||||
| Stockholders' Deficit (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total expense | 21 | 49 | ||
| Director Options [Member] | ||||
| Stockholders' Deficit (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total expense | $ 9 | $ 8 | $ 38 | $ 13 |
Stockholders' Deficit (Details) - Schedule of the company's non-vested shares |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
$ / shares
shares
| |
| Schedule of the company's non-vested shares [Abstract] | |
| Shares, Non-vested at beginning | shares | 381,000 |
| Weighted Average Grant-Date Fair Value, Shares | $ / shares | $ 0.57 |
| Shares, Vested | shares | (181,000) |
| Weighted Average Grant-Date Fair Value, Vested | $ / shares | $ 0.57 |
| Shares, Non-vested at ending | shares | 200,000 |
| Weighted Average Grant-Date Fair Value, Non-vested at ending | $ / shares | $ 0.5 |
Stockholders' Deficit (Details) - Schedule of warrant activity - Warrant [Member] - $ / shares shares in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Stockholders' Deficit (Details) - Schedule of warrant activity [Line Items] | ||
| Shares Outstanding at beginning of period | 3,001 | 2,536 |
| Weighted Average Exercise Price Per Share, Outstanding at beginning of period | $ 1.52 | $ 1.52 |
| Shares, Issued | 465 | |
| Weighted Average Exercise Price Per Share, Issued | $ 0.5 | |
| Shares, Expired | (1,551) | |
| Weighted Average Exercise Price Per Share, Expired | $ 2.18 | |
| Shares, Outstanding at end of period | 1,450 | 3,001 |
| Weighted Average Exercise Price Per Share, Outstanding at end of period | $ 0.5 | $ 1.37 |
| Shares, Exercisable at end of period | 1,450 | 3,001 |
| Weighted Average Exercise Price Per Share, Exercisable at end of period | $ 0.5 | $ 1.37 |