Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Summary of Significant Accounting Policies

Summary Of Significant Accounting Policies

3.Summary of Significant Accounting Policies.

Cash and Cash Equivalents and Restricted Cash.  The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts shown in the statement of cash flows:

	June 30,		December 31,
	2023		2022
Cash and cash equivalents	$	11,419,000	$	14,439,000
Restricted cash		85,000		85,000
Total cash, cash equivalents and restricted cash	$	11,504,000	$	14,524,000

Inventories. Inventories are primarily comprised of sign cards and hardware. Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method.

Property and Equipment. During the six months ended June 30,2023, fully depreciated property and equipment in the aggregate amount of $268,000 was written off.  Property and equipment consisted of the following as of the dates indicated:

	June 30,			December 31,
	2023			2022
Property and Equipment:
Production tooling, machinery and equipment	$	-		$	27,000
Office furniture and fixtures		85,000			95,000
Computer equipment and software		531,000			771,000
Leasehold improvements		19,000			19,000
Construction in-progress		12,000			3,000
		647,000			915,000
Accumulated depreciation and amortization		(576,000	)		(844,000	)
Net Property and Equipment	$	71,000		$	71,000

Depreciation expense was approximately $12,000 and $26,000 in the three and six months ended June 30, 2023, respectively, and was $15,000 and $31,000 in the three and six months ended June 30, 2022, respectively.

Stock-Based Compensation. The Company measures and recognizes compensation expense for all stock-based payments at fair value. Restricted stock units and awards are valued at the closing market price of the Company’s stock as of the date of the grant. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

During the six-month periods ended June 30, 2023 and 2022 no equity awards were issued by the Company.

In June 2021, non-employee members of the Board of Directors received restricted stock grants totaling 5,514 shares pursuant to the 2018 Equity Incentive Plan. The shares underlying the awards were assigned a value of $8.16 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $45,000.  The shares vested on June 1, 2022.

The Company estimated the fair value of stock-based awards granted during the three and six months ended June 30, 2023, under the Company’s employee stock purchase plan using the following weighted average assumptions: expected life of 1.0 year, expected volatility of 95.2%, dividend yield of 0% and risk-free interest rate of 4.7%.

Total stock-based compensation expense recorded for the three and six months ended June 30, 2023 was $14,000 and $36,000, respectively, and for the three and six months ended June 30, 2022 was $29,000 and $59,000, respectively.

Net (Loss) Income per Share. Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average shares outstanding and excludes any potential dilutive effects of stock options and restricted stock units and awards. Diluted net (loss) income per share gives effect to all dilutive potential common shares outstanding during the period.

Due to the net loss incurred during the three months ended June 30, 2023 all outstanding stock awards were anti-dilutive for that periods. For the six months ended June 30, 2023 options to purchase approximately 14,000 shares of common stock with a weighted average exercise price of $11.74 were outstanding and were not included in the computation of common stock equivalents for the six months ended June 30, 2023 because their exercise prices were higher than the average fair market value of the common stock during the reporting period.

Due to the net loss incurred during the three and six months ended June 30, 2022 all outstanding stock awards were anti-dilutive for those periods. As of June 30, 2022, the Company had 14,086 options and 3,396 restricted units outstanding.

Weighted average common shares outstanding for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2023		2022		2023		2022
Denominator for basic net loss per share - weighted average shares		1,798,000		1,788,000		1,798,000		1,787,000
Effect of dilutive securities:
Stock options and restricted stock units		—		—		4,000		—
Denominator for diluted net loss per share - weighted average shares		1,798,000		1,788,000		1,802,000		1,787,000