Item
1. Financial Statements
iSign
Solutions Inc.
Condensed
Consolidated Balance Sheets
(In
thousands, except par value amounts)
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
Assets
|
|
Unaudited
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
320
|
|
|
$
|
25
|
|
Accounts
receivable, net of allowance of $10 at June 30, 2020 and $0 at December 31, 2019, respectively
|
|
|
73
|
|
|
|
61
|
|
Prepaid
expenses and other current assets
|
|
|
13
|
|
|
|
22
|
|
Total
current assets
|
|
|
406
|
|
|
|
108
|
|
Property
and equipment, net
|
|
|
6
|
|
|
|
8
|
|
Other
assets
|
|
|
5
|
|
|
|
5
|
|
Total
assets
|
|
$
|
417
|
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,056
|
|
|
$
|
1,196
|
|
Short-term
debt- related party
|
|
|
941
|
|
|
|
841
|
|
Short-term
debt – other
|
|
|
1,706
|
|
|
|
1,405
|
|
Short-term
debt – Paycheck Protection Program
|
|
|
62
|
|
|
|
-
|
|
Accrued
compensation
|
|
|
90
|
|
|
|
71
|
|
Other
accrued liabilities
|
|
|
961
|
|
|
|
814
|
|
Deferred
revenue
|
|
|
529
|
|
|
|
346
|
|
Total
current liabilities
|
|
|
5,345
|
|
|
|
4,673
|
|
Long-term
debt – Paycheck Protection Program
|
|
|
61
|
|
|
|
-
|
|
Deferred
revenue long-term
|
|
|
-
|
|
|
|
70
|
|
Other
long-term liabilities
|
|
|
770
|
|
|
|
669
|
|
Total
liabilities
|
|
|
6,176
|
|
|
|
5,412
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
Common
stock, $0.01 par value; 2,000,000 shares authorized; 5,762 shares issued and outstanding at June 30, 2020 and December 31,
2019, respectively
|
|
|
58
|
|
|
|
58
|
|
Treasury
shares, 5 at June 30, 2020 and December 31, 2019, respectively
|
|
|
(325
|
)
|
|
|
(325
|
)
|
Additional
paid-in capital
|
|
|
129,703
|
|
|
|
129,651
|
|
Accumulated
deficit
|
|
|
(135,195
|
)
|
|
|
(134,675
|
)
|
Total
stockholders’ deficit
|
|
|
(5,759
|
)
|
|
|
(5,291
|
)
|
Total
liabilities and stockholders’ deficit
|
|
$
|
417
|
|
|
$
|
121
|
|
See
accompanying notes to these Condensed Consolidated Financial Statements
iSign
Solutions Inc.
Condensed
Consolidated Statements of Operations
(Unaudited)
(In
thousands, except per share amounts)
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
59
|
|
|
$
|
41
|
|
|
$
|
90
|
|
|
$
|
81
|
|
Maintenance
|
|
|
168
|
|
|
|
186
|
|
|
|
327
|
|
|
|
344
|
|
Total
revenue
|
|
|
227
|
|
|
|
227
|
|
|
|
417
|
|
|
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
19
|
|
|
|
1
|
|
|
|
21
|
|
|
|
2
|
|
Maintenance
|
|
|
27
|
|
|
|
17
|
|
|
|
36
|
|
|
|
33
|
|
Research
and development
|
|
|
144
|
|
|
|
181
|
|
|
|
320
|
|
|
|
352
|
|
Sales
and marketing
|
|
|
25
|
|
|
|
27
|
|
|
|
52
|
|
|
|
53
|
|
General
and administrative
|
|
|
173
|
|
|
|
190
|
|
|
|
419
|
|
|
|
395
|
|
Total
operating costs and expenses
|
|
|
388
|
|
|
|
416
|
|
|
|
848
|
|
|
|
835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(161
|
)
|
|
|
(189
|
)
|
|
|
(431
|
)
|
|
|
(410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense), net
|
|
|
51
|
|
|
|
15
|
|
|
|
52
|
|
|
|
14
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related
party
|
|
|
(23
|
)
|
|
|
(14
|
)
|
|
|
(47
|
)
|
|
|
(27
|
)
|
Other
|
|
|
(47
|
)
|
|
|
(49
|
)
|
|
|
(92
|
)
|
|
|
(96
|
)
|
Amortization
of debt discount:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related
party
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
(6
|
)
|
Other
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
|
(1
|
)
|
|
|
(14
|
)
|
Loss
before income tax expense
|
|
|
(181
|
)
|
|
|
(247
|
)
|
|
|
(519
|
)
|
|
|
(539
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Net
loss
|
|
$
|
(181
|
)
|
|
$
|
(248
|
)
|
|
$
|
(520
|
)
|
|
$
|
(540
|
)
|
Basic
and diluted net loss per common share
|
|
$
|
(0.03
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
Weighted
average common shares outstanding, basic and diluted
|
|
|
5,762
|
|
|
|
5,762
|
|
|
|
5,762
|
|
|
|
5,762
|
|
See
accompanying notes to these Condensed Consolidated Financial Statements
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, 2020
|
|
|
5,762
|
|
|
$
|
58
|
|
|
|
5
|
|
|
$
|
(325
|
)
|
|
$
|
129,651
|
|
|
$
|
(134,675
|
)
|
|
$
|
(5,291
|
)
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22
|
|
|
|
-
|
|
|
|
22
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(339
|
)
|
|
|
(339
|
)
|
Balance,
March 31, 2020
|
|
|
5,762
|
|
|
$
|
58
|
|
|
|
5
|
|
|
$
|
(325
|
)
|
|
$
|
129,673
|
|
|
$
|
(135,014
|
)
|
|
$
|
(5,608
|
)
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17
|
|
|
|
-
|
|
|
|
17
|
|
Warrant
issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13
|
|
|
|
-
|
|
|
|
-
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(181
|
)
|
|
|
(184
|
)
|
Balance,
June 30, 2020
|
|
|
5,762
|
|
|
$
|
58
|
|
|
|
5
|
|
|
$
|
(325
|
)
|
|
|
129,703
|
|
|
|
(135,195
|
)
|
|
|
(5,759
|
)
|
|
|
Common
Stock
|
|
|
Treasury
Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance
January 1, 2019
|
|
|
5,762
|
|
|
$
|
58
|
|
|
|
5
|
|
|
$
|
(325
|
)
|
|
$
|
129,251
|
|
|
$
|
(133,589
|
)
|
|
$
|
(4,605
|
)
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59
|
|
|
|
-
|
|
|
|
59
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(291
|
)
|
|
|
(291
|
)
|
Balance,
March 31, 2019
|
|
|
5,762
|
|
|
$
|
58
|
|
|
|
5
|
|
|
|
(325
|
)
|
|
$
|
129,310
|
|
|
$
|
(133,880
|
)
|
|
$
|
(4,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48
|
|
|
|
-
|
|
|
|
48
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(249
|
)
|
|
|
(249
|
)
|
Balance,
June 30, 2019
|
|
|
5,762
|
|
|
|
58
|
|
|
|
5
|
|
|
|
(325
|
)
|
|
|
129,358
|
|
|
|
(134,129
|
)
|
|
|
(5,038
|
)
|
See
accompanying notes to these Condensed Consolidated Financial Statements
iSign
Solutions Inc.
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
(In
thousands)
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(520
|
)
|
|
$
|
(540
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
2
|
|
|
|
2
|
|
Debt discount amortization
|
|
|
1
|
|
|
|
20
|
|
Amortization of Warrants
|
|
|
36
|
|
|
|
-
|
|
Warrants issued for services
|
|
|
13
|
|
|
|
-
|
|
Stock-based compensation
|
|
|
39
|
|
|
|
107
|
|
Forgiveness of debt related to accounts payable
|
|
|
(52
|
)
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(12
|
)
|
|
|
37
|
|
Prepaid expenses and other assets
|
|
|
9
|
|
|
|
13
|
|
Accounts payable
|
|
|
(88
|
)
|
|
|
(13
|
)
|
Accrued compensation
|
|
|
19
|
|
|
|
(6
|
)
|
Other accrued and long-term liabilities
|
|
|
212
|
|
|
|
217
|
|
Deferred revenue
|
|
|
113
|
|
|
|
109
|
|
Net cash used in operating activities
|
|
|
(228
|
)
|
|
|
(54
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
-
|
|
|
|
(3
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of short-term debt
– related party
|
|
|
100
|
|
|
|
-
|
|
Proceeds from the issuance of short-term debt – other
|
|
|
300
|
|
|
|
-
|
|
Proceeds from Short-term
debt - Paycheck Protection Program
|
|
|
123
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
523
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
295
|
|
|
|
(57
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
25
|
|
|
|
335
|
|
Cash and cash equivalents at end of period
|
|
$
|
320
|
|
|
$
|
278
|
|
See
accompanying notes to these Condensed Consolidated Financial Statements
iSign
Solutions Inc.
Condensed
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
(In
thousands)
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Supplementary disclosure of cash flow information
|
|
|
|
|
|
|
Interest paid
|
|
$
|
5
|
|
|
$
|
-
|
|
Income taxes paid
|
|
$
|
1
|
|
|
$
|
1
|
|
See
accompanying notes to these Condensed Consolidated Financial Statements
iSign
Solutions Inc.
Notes
to Unaudited Condensed Consolidated Financial Statements
(In
thousands, except per share amounts)
|
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, including iSign™ Enterprise and iSign™ Console™, 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.
In addition, several states in the U.S., including California, where the Company is headquartered, have experienced an increase
in new cases of COVID-19. The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a wide range
of industries. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments,
including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and
cannot be predicted. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is
uncertain.
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, 2019.
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 June 30, 2020 the Company’s
accumulated deficit was $135,195. The Company has primarily met its working capital needs through the sale of debt and equity
securities. As of June 30, 2020, the Company’s cash balance was $320. These factors raise substantial doubt about the Company’s
ability to continue as a going concern.
iSign
Solutions Inc.
Notes
to Unaudited Condensed Consolidated Financial Statements
(In
thousands, except per share amounts)
|
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. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures
(Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interaction between Topic 321, Topic 323 and Topic 815. The
amended guidance in this update was issued to clarify the interaction of the accounting for equity securities under Topic 321, Investments—Equity
Securities; investments accounted for under the equity method of accounting in Topic 323, Investments—Equity Method
and Joint Ventures; and the accounting for certain forward contracts and purchased options accounted for under Topic 815, Derivatives
and Hedging. The amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years.
The
Company will evaluate ASU 2020-01. The Company believes the adoption of ASU 2020-01 will have no impact on the Company’s
financial statements.
Accounting
Standards Update No. 2020-03, Codification Improvements to Financial Instruments. The Board decided to issue a separate update
to improve various financial instruments Topics in the Codification to increase stakeholder awareness of the amendments and to
clarify and improve the understandability of the guidance of Topics. The amendments are effective immediately.
The
Company believes the adoption of ASU 2020-03 will have no impact on the Company’s financial statements.
The
following table summarizes accounts receivable and revenue concentrations:
|
|
Accounts Receivable
as of June 30,
|
|
|
Total Revenue
for the three months
ended
June 30,
|
|
|
Total Revenue
for the six months
ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Customer #1
|
|
|
88
|
%
|
|
|
70
|
%
|
|
|
28
|
%
|
|
|
17
|
%
|
|
|
23
|
%
|
|
|
16
|
%
|
Customer #2
|
|
|
-
|
|
|
|
-
|
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
11
|
%
|
Customer #3
|
|
|
-
|
|
|
|
-
|
|
|
|
24
|
%
|
|
|
33
|
%
|
|
|
25
|
%
|
|
|
29
|
%
|
Customer #4
|
|
|
-
|
|
|
|
-
|
|
|
|
21
|
%
|
|
|
15
|
%
|
|
|
20
|
%
|
|
|
16
|
%
|
Customer #5
|
|
|
12
|
%
|
|
|
21
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total concentration
|
|
|
100
|
%
|
|
|
91
|
%
|
|
|
83
|
%
|
|
|
75
|
%
|
|
|
79
|
%
|
|
|
72
|
%
|
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.
iSign
Solutions Inc.
Notes
to Unaudited Condensed Consolidated Financial Statements
(In
thousands, except per share amounts)
|
3.
|
Net
Loss per Share (continued)
|
The
following table lists shares and warrants that were excluded from the calculation of diluted earnings per share as the inclusion
of shares from the assumed exercise of such options and warrants would be anti-dilutive.
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
2020
|
|
|
June 30,
2019
|
|
|
June 30,
2020
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
1,067
|
|
|
|
1,077
|
|
|
|
1,067
|
|
|
|
1,077
|
|
Warrants
|
|
|
2,566
|
|
|
|
2,813
|
|
|
|
2,566
|
|
|
|
2,813
|
|
Advances:
In
January and March 2020, the Company received, from affiliates, advances aggregating $75 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. On March 25, 2020, the affiliates converted their advances into unsecured notes. The Company paid the advance
fees of $4 in cash, and recorded them as interest expense in the quarter ended March 31, 2020.
Notes
payable:
On March 25, 2020,
the Company issued an aggregate of $150 in unsecured notes to affiliates and other investors. The Company received $75 in cash
and $75 in exchange for the advances discussed above. 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, holders of such notes
can elect to convert 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, 2020.
On
May 6, 2020, 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 to be 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 intends to use the proceeds for purposes consistent with the PPP. While the Company
currently believes that its use of the loan proceeds, for the most part, will meet the conditions for forgiveness of the
loan, we cannot assure you that we will not take actions that could cause the Company to be ineligible for forgiveness of the
loan, in whole or in part.
On
June 19, 2020, iSign Solutions Inc. (the “Company”) entered into a Note Purchase Agreement (the “Purchase Agreement”)
with an investor. Under the terms of the Purchase Agreement, the Company received a cash loan in the aggregate amount of $250,000
(the “Loan”) from the Investor in exchange for the Company’s issuance of an unsecured convertible promissory
note equal to the amount of such Investor’s loan contribution to the Company. The Note bears interest at the rate of 10%
per annum, and has a maturity date the earlier of December 31, 2021, or the date on which the Company’s other outstanding
unsecured convertible promissory notes are due. Principal and interest due under the Note may be converted by the investor into
shares of the Company’s common stock at a price of $0.50 per share, or, in the event the Company consummates a financing
of at least $1,000, at the price per share of such financing, if lower than $0.50 per share.
iSign
Solutions Inc.
Notes
to Unaudited Condensed Consolidated Financial Statements
(In
thousands, except per share amounts)
The
Company accrued $69 and $139 of interest expense during the three and six months ended June 30, 2020, $60 and $120, respectively,
associated with the outstanding secured and unsecured convertible promissory notes, of which $23 and $47, respectively,
was to related parties and $38 and $74, respectively, was to other investors. For the three and six months ended June 30, 2019,
the Company accrued $63 and $123 of interest expense,
$54 and $107, respectively, associated with its outstanding notes, of which $13 and $27, respectively, was to related parties
and $40 and $40, respectively, was to other investors.
The
Company recorded $0 and $1 in debt discount amortization for the three and six months ended June 30, 2020. For the three and six
months ended June 30, 2019 the Company recorded $10 and $20 of debt discount
|
5.
|
Stockholders’
Equity (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 six months ended June 30, 2020 and 2019, was approximately
13.59% 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 six months ended June 30, 2020. The Company granted stock options to purchase 40,000
shares of common stock during the six months ended June30, 2019. There were no stock options exercised during the three and six
months ended June 30, 2020 and 2019, respectively.
The
fair value calculations for the stock options granted are based on the following assumptions:
|
|
Six Months Ended
June 30,
2019
|
|
Risk free interest rate
|
|
|
2.30
|
%
|
Expected life (years)
|
|
|
6.1
|
|
Expected volatility
|
|
|
191.65
|
%
|
Expected dividend yield
|
|
|
None
|
|
The
following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three and
six months ended June 30:
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Research and development
|
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
17
|
|
General and administrative
|
|
$
|
12
|
|
|
$
|
32
|
|
|
$
|
28
|
|
|
$
|
73
|
|
Director and consultant options
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
17
|
|
Total stock-based compensation expense
|
|
$
|
17
|
|
|
$
|
48
|
|
|
$
|
39
|
|
|
$
|
107
|
|
iSign
Solutions Inc.
Notes
to Unaudited Condensed Consolidated Financial Statements
(In
thousands, except per share amounts)
|
5.
|
Stockholders’
Equity (Deficit) (continued)
|
A
summary of option activity under the Company’s plans for the six months ended June 30, 2020 and 2019 is as follows:
|
|
2020
|
|
|
2019
|
|
Options
|
|
Shares
|
|
|
Weighted
Average Exercise Price Per Share
|
|
|
Weighted
Average Remaining Contractual Life (Years)
|
|
|
Aggregate
Intrinsic Value
|
|
|
Shares
|
|
|
Weighted
Average Exercise Price Per Share
|
|
|
Weighted
Average Remaining Contractual Life (Years)
|
|
|
Aggregate
Intrinsic Value
|
|
Outstanding at January 1,
|
|
|
1,077
|
|
|
$
|
1.59
|
|
|
|
-
|
|
|
$
|
|
|
|
|
1,037
|
|
|
$
|
1.65
|
|
|
|
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
|
|
|
|
40
|
|
|
$
|
0.50
|
|
|
|
|
|
|
$
|
-
|
|
Forfeited
or expired
|
|
|
10
|
|
|
$
|
56.10
|
|
|
|
-
|
|
|
$
|
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
Outstanding at June
30
|
|
|
1,067
|
|
|
$
|
1.07
|
|
|
|
5.50
|
|
|
$
|
|
|
|
|
1,070
|
|
|
$
|
1.61
|
|
|
|
5.50
|
|
|
$
|
-
|
|
Vested
and expected to vest at June 30
|
|
|
1,067
|
|
|
$
|
1.07
|
|
|
|
4.52
|
|
|
$
|
-
|
|
|
|
1,070
|
|
|
$
|
1.61
|
|
|
|
5.50
|
|
|
$
|
-
|
|
Exercisable at June
30
|
|
|
822
|
|
|
$
|
1.18
|
|
|
|
4.38
|
|
|
$
|
-
|
|
|
|
489
|
|
|
$
|
2.77
|
|
|
|
5.16
|
|
|
$
|
-
|
|
The
following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2020:
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
Range of Exercise Prices
|
|
Number Outstanding
|
|
|
Weighted Average Remaining Contractual Term
(in years)
|
|
|
Weighted Average Exercise Price per share
|
|
|
Number Outstanding
|
|
|
Weighted Average Exercise Price per Share
|
|
$0.01 – $0.50
|
|
|
655
|
|
|
|
4.24
|
|
|
$
|
0.50
|
|
|
|
574
|
|
|
$
|
0.50
|
|
$0.51 – $625.00
|
|
|
412
|
|
|
|
4.92
|
|
|
$
|
1.97
|
|
|
|
229
|
|
|
$
|
9.20
|
|
Total
|
|
|
1,067
|
|
|
|
4.52
|
|
|
$
|
1.07
|
|
|
|
822
|
|
|
$
|
2.77
|
|
A
summary of the status of the Company’s non-vested shares as of June 30, 2020 is as follows:
Non-vested Shares
|
|
Shares
|
|
|
Weighted Average
Grant-Date
Fair Value
per share
|
|
Non-vested at January 1, 2020
|
|
|
417
|
|
|
$
|
0.65
|
|
Vested
|
|
|
(172
|
)
|
|
$
|
0.69
|
|
Non-vested at June 30, 2020
|
|
|
245
|
|
|
$
|
0.69
|
|
As
of June 30, 2020, there was a total of $30 of 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 0.86 years.
iSign
Solutions Inc.
Notes
to Unaudited Condensed Consolidated Financial Statements
(In
thousands, except per share amounts)
|
5.
|
Stockholders’
Equity (Deficit) (continued)
|
Warrants
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
February 2019, the Company issued warrants to purchase 985,000 shares of common stock to 4 consultants and an employee in connection
with the accrued compensation owed by the Company to the employee and consultants. The warrants are exercisable for three years
with an exercise price of $0.50 per share. The warrants may not be exercised for cash or on a cashless basis, and may solely be
exercised using the holder’s outstanding accrued compensation on the date of exercise.
A
summary of the warrant activity for the six months ended June 30 is as follows:
|
|
2020
|
|
|
2019
|
|
|
|
Shares
|
|
|
Weighted Average Exercise Price Per Share
|
|
|
Shares
|
|
|
Weighted Average Exercise Price Per Share
|
|
Outstanding at beginning of period
|
|
|
2,536
|
|
|
$
|
1.52
|
|
|
|
1,828
|
|
|
$
|
2.08
|
|
Issued
|
|
|
30
|
|
|
$
|
-
|
|
|
|
985
|
|
|
$
|
0.50
|
|
Expired
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Outstanding at end of period
|
|
|
2,566
|
|
|
$
|
1.52
|
|
|
|
2,813
|
|
|
$
|
1.58
|
|
Exercisable at end of period
|
|
|
2,566
|
|
|
$
|
1.52
|
|
|
|
2,813
|
|
|
$
|
1.58
|
|
A
summary of the status of the warrants outstanding and exercisable as of June 30, 2020 is as follows:
Number of Warrants
|
|
|
Weighted Average Remaining Life (years)
|
|
|
Weighted Average Exercise Price per share
|
|
|
|
|
|
|
|
|
|
|
1,551
|
|
|
|
0.89
|
|
|
$
|
2.18
|
|
|
985
|
|
|
|
1.63
|
|
|
$
|
0.50
|
|
|
30
|
|
|
|
2.61
|
|
|
$
|
0.50
|
|
|
2,566
|
|
|
|
1.20
|
|
|
$
|
1.51
|
|
In July 2020, the Company booked
$307 in forgiven accounts payable. In exchange for the forgiveness the Company made cash payments of $150, issued a 3-year note
for $130 bearing 4% interest per annum, and issued of a 5-year warrant to purchase 10,000 shares of the Company’s common
stock at a price of $0.50 per share.
iSign
Solutions Inc.
FORM
10-Q
(In
thousands, except per share amounts)
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, 2019, 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.
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, 2019.
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, 2019, net losses aggregated approximately $2,113,
and, at June 30, 2020, the Company’s accumulated deficit was approximately $135,195.
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.
In addition, several states in the U.S., including California, where the Company is headquartered, have experienced an increase
in new cases of COVID-19. The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a wide range
of industries. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments,
including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and
cannot be predicted. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is
uncertain.
iSign
Solutions Inc.
FORM
10-Q
(In
thousands, except per share amounts)
In
May 2020, 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”).
In
June 2020, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with an investor. Under the
terms of the Purchase Agreement, the Company received a cash loan in the aggregate amount of $250,000 (the “Loan”)
from the Investor in exchange for the Company’s issuance of an unsecured convertible promissory note equal to the amount
of such Investor’s loan contribution to the Company.
For the three months
ended June 30, 2020, total revenue was $227, compared to total revenue of $227 in the prior year period. For the six months ended
June 30, 2020, total revenue was $417, a decrease of $8, or 2%, compared to total revenue of $425 in the prior year period. The
change in revenue for the six months ended June 30, 2020 is due primarily to a decrease in maintenance revenue of $17 or 5%, compared
to the prior year period offset by an increase in product revenue of $9, or 11%, compared to the prior year. The increase in product
revenue is the result of timing issues related to new orders while the decrease in maintenance is due to the loss of two customers.
The net loss for the
three months ended June 30, 2020 was $181, a decrease of $67, or 27%, compared to a net loss of $248 in the prior year period.
The three month loss from operations decreased $27, or 14%, to $162 compared to $189 in the prior year period. The decrease was
due to a net decrease in overhead expenses. For the six months ended June 30, 2020 the net loss was $520, a decrease of $20, or
4%, compared to a net loss of $540 in the prior year period. The six month loss from operations increased $21, or 5%, to $431 compared
to $410 in the prior year period. This increase was due to an increase in warrant expense issued for services and other overhead
costs compared to the prior year.
Critical
Accounting Policies and Estimates
Refer
to Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s
2019 Form 10-K.
Effect
of Recent Accounting Pronouncements
Accounting
Standards Updates issued in 2020 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 June 30, 2020, product revenue was $59, an increase of $18, or 44%, compared to product revenue of $41
in the prior year period. The increase in revenue is primarily attributable to increases in one time revenue transactions compared
to the prior year period. For the three months ended June 30, 2020, maintenance revenue was $168, a decrease of $18, or 10%, compared
to maintenance revenue of $186 in the prior year period. The decrease is primarily due to a decrease in net maintenance fee renewals
in the first calendar quarter of 2020.
For
the six months ended June 30, 2020, product revenue was $90, an increase of $9, or 11%, compared to product revenue of $81 in
the prior year period. The increase in product revenue is primarily due to the same factors for the three-month period discussed
above. For the six months ended June 30, 2020, maintenance revenue was $327, a decrease of $17, or 5%, compared to maintenance
revenue of $344 in the prior year period. The decrease in maintenance revenue is primarily due to the factors discussed for the
three-month period above.
Cost
of Sales
For the three months
ended June 30, 2020, cost of sales was $46, an increase of $28, or 156%, compared to cost of sales of $18 in the prior year period.
The increase in cost of sales was due to an increase in direct labor related to revenue from non-recurring engineering (“SOW”)
and maintenance contracts during the three months ended June 30, 2020, compared to the prior year period.
iSign
Solutions Inc.
FORM
10-Q
(In
thousands, except per share amounts)
For the six months
ended June 30, 2020, cost of sales was $57, an increase of $22, or 63%, compared to cost of sales of $35 in the prior year period.
The increase in cost of sales was due to an increase in direct labor related to revenue from SOW and maintenance contracts, compared
to the prior year period.
Operating
expenses
Research
and Development Expenses
For
the three months ended June 30, 2020, research and development expense was $144, a decrease of $37, or 20%, compared to research
and development expense of $181 in the prior year period. Research and development expenses consist primarily of salaries and
related costs, outside engineering, maintenance items, and allocated facilities expenses. Other general expenses decreased $16,
or 8%, due to reductions in professional services and facilities costs compared to the prior year. The reductions in overhead
expenses were supplemented by an increase of $20 in allocated labor costs to cost of sales. Total expenses, before allocations
for the three months ended June 30, 2020, were $186, a decrease of $16, or 8%, compared to $202 in the prior year period. The
decrease in gross expenses is primarily due to the factors discussed above and certain cost saving measures put in place
in the current year to safeguard against possible negative repercussions of the COVID-19 pandemic.
For the six months
ended June 30, 2020, research and development expense was $320, a decrease of $32, or 9%, compared to research and development
expense of $352 in the prior year period. Total expenses, before allocations to cost of sales, for the six months ended June 30,
2020, were $373, a decrease of $20, or 5%, compared to $394 in the prior year period. The reasons for these decreases during the
six-month period ended June 30, 2020 are the same as for the three-month period discussed above.
Sales
and Marketing Expense
For the three months
ended June 30, 2020, sales and marketing expense was $25, a decrease of $2, or 7%, compared to sales and marketing expense of
$27 in the prior year period. For the six months ended June 30, 2020, sales and marketing expense was $52, a decrease of $1, or
2%, compared to sales and marketing expense of $53 in the prior year period. These decreases were primarily attributable to reductions
in allocated expenses.
General
and Administrative Expense
For the three months
ended June 30, 2020, general and administrative expense was $173, a decrease of $17, or 9%, compared to general and administrative
expense of $190 in the prior year period. The decrease was primarily due to a decrease in stock option compensation of $20 or
62%. Other general administrative expenses decreased $28, or 22%, compared to the prior year period. The decreases were offset
by the issuance of 30,000 warrants to a consultant for services. The company ascribed a value of $13 to the warrants based on
the Black-Scholes-Merton valuation model and warrant expense related to deferred compensation issued in the prior year.
For
the six months ended June 30, 2020, general and administrative expense was $370, a decrease of $25, or 6%, compared to general
and administrative expense of $395 in the prior year period. The decrease was primarily due to the same factors discussed for
the three-month period ended June 30, 2020, partially offset by an increase in the allowance for doubtful accounts.
Other
Income and Expense
For the three and
six months ended June 30, 2020, other income was $51 and $52, respectively, an increase of $36 and $38, respectively, compared
to other income of $15 and $14 for the three and six months ended June 30, 2019. The change in other income and expense is due
primarily to the forgiveness of $52 of accounts payable during the three months ended June 30, 2020. Such forgiveness was generated
from related cash payments of approximately $88. Other income for the three and six months ended June 30 2019 included the collection
of $12 of accounts receivable written off in the prior year.
iSign
Solutions Inc.
FORM
10-Q
(In
thousands, except per share amounts)
For the three months
ended June 30, 2020, interest expense was $70, an increase of $7, or 11% compared to interest expense of $63 in the prior year
period. For the six months ended June 30, 2020, interest expense was $139, an increase of $16, or 13%, compared to interest expense
of $123 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 six months ended June 30, 2020 compared to the prior year period.
Amortization
of debt discount was $1 and $1 for the three and six month periods ended June 30, 2020 compared to $10 and $20 in the same periods
of the prior year, respectively. The decrease was due to the extension of the maturity date of the Company’s debt to December
31, 2020.
Liquidity
and Capital Resources
At June 30, 2020,
cash and cash equivalents totaled $320, compared to cash and cash equivalents of $25 at December 31, 2019. The increase in cash
was due primarily to $523 provided by financing activities offset by net cash used in operating activities of $228 for the six
month period ended June 30, 2020. At June 30, 2020, total current assets were $406, compared to total current assets of $108 at
December 31, 2019. At June 30, 2020, the Company’s principal sources of funds included its aggregated cash and cash equivalents
of $320.
At
June 30, 2020, accounts receivable net, was $73, an increase of $12, or 20%, compared to accounts receivable net of $61 at December
31, 2019. The increase is due primarily to the timing of billings during the six months ended June 30, 2020.
At
June 30, 2020, and December 31, 2019, prepaid expenses and other current assets were $13. The Company has been working on minimizing
the dollar amount of new prepaid expenses incurred during the six-month period in light of the financial uncertainty surrounding
the current COVID-19 pandemic.
At
June 30, 2020, total current liabilities were $5,406, an increase of $733, or 16%, compared to total current liabilities of $4,673
at December 31, 2019. At June 30, 2020, accounts payable was $1,056, a decrease of $140, or 12%, compared to accounts payable
of $1,196 at December 31, 2019. The decrease is due to the forgiveness of $51 of accounts payable during the three months ended
June 30, 2020, in connection with cash payments of approximately $89.
At
June 30, 2020, accrued compensation was $90, an increase of $19, or 27%, compared to accrued compensation of $71 at December 31,
2019. The increase is due primarily to accrued commissions on certain maintenance renewals during the six month period. Other
accrued liabilities were $961, an increase of $147, or 18%, from $814 at December 31, 2019 primarily due to the accrual of additional
interest expense on the Company’s debt and certain franchise taxes.
On March 25, 2020, the
Company issued an aggregate of $150 in unsecured notes to affiliates and other investors. The Company received $75 in cash and
$75 in exchange for the advances discussed above. 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, holders of such notes can
elect to convert 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, 2020.
On May 6, 2020, 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 to be 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 intends to use the proceeds for purposes
consistent with the PPP. While the Company currently believes that its use of the loan proceeds, for the most part, will meet the
conditions for forgiveness of the loan, we cannot assure you that we will not take actions that could cause the Company to be ineligible
for forgiveness of the loan, in whole or in part.
On June 19, 2020,
iSign Solutions Inc. (the “Company”) entered into a Note Purchase Agreement (the “Purchase Agreement”)
with an investor. Under the terms of the Purchase Agreement, the Company received a cash loan in the aggregate amount of $250,000
(the “Loan”) from the Investor in exchange for the Company’s issuance of an unsecured convertible promissory
note equal to the amount of such Investor’s loan contribution to the Company. The Note bears interest at the rate of 10%
per annum, and has a maturity date the earlier of December 31, 2021, or the date on which the Company’s other outstanding
unsecured convertible promissory notes are due. Principal and interest due under the Note may be converted by the investor into
shares of the Company’s common stock at a price of $0.50 per share, or, in the event the Company consummates a financing
of at least $1,000, at the price per share of such financing, if lower than $0.50 per share.
At
June 30, 2020, current deferred revenue was $529, an increase of $113, or 27%, compared to current deferred revenue of $416 at
December 31, 2019. 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.
The
Company recorded $1 and $1 in debt discount amortization for the three and six months ended June 30, 2020, respectively, related
to the 2016 debt financings.
iSign
Solutions Inc.
FORM
10-Q
(In
thousands, except per share amounts)
The
Company incurred $69 and $139, respectively, of interest expense for the three and six months ended June 30, 2020, of which was
$5 was paid in cash.
The
Company had no material commitments as of June 30, 2020.
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.