Company Quick10K Filing
Identiv
Price4.93 EPS0
Shares18 P/E131
MCap88 P/FCF64
Net Debt4 EBIT1
TEV91 TEV/EBIT95
TTM 2019-09-30, in MM, except price, ratios
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8-K 2017-12-28

INVE 10Q Quarterly Report

Part I: Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii: Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.1 inve-ex101_260.htm
EX-31.1 inve-ex311_8.htm
EX-31.2 inve-ex312_6.htm
EX-32 inve-ex32_7.htm

Identiv Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
1058463422102012201420172020
Assets, Equity
30198-3-14-252012201420172020
Rev, G Profit, Net Income
3526178-1-102012201420172020
Ops, Inv, Fin

10-Q 1 inve-10q_20210331.htm Q1'2021 10-Q inve-10q_20210331.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2021

OR

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

 

For the transition period from ______ to ______

 

Commission File Number: 000-29440

 

IDENTIV, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

DELAWARE

77-0444317

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

2201 Walnut Avenue, Suite 100

Fremont, California

94538

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (949) 250-8888

 

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of exchange on which registered

 

Common Stock, $0.001 par value per share

 

INVE

 

The Nasdaq Stock Market LLC

 

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

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

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

 

Large accelerated filer

  

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

Emerging growth company

 

 

 

 

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

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

As of May 3, 2021, the registrant had 21,983,394 shares of common stock outstanding.

 

 


 

TABLE OF CONTENTS

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements (Unaudited)

3

 

 

Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

3

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31,2021 and 2020

5

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020

6

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

 

Controls and Procedures

33

 

 

PART II. OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

34

Item 1A.

 

Risk Factors

34

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 6.

 

Exhibits

35

 

 

 

 

SIGNATURES

36

 

 

 

 

2


 

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

IDENTIV, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except par value)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,518

 

 

$

11,409

 

Accounts receivable, net of allowances of $132 and $178 as of March 31, 2021

   and December 31, 2020, respectively

 

 

18,911

 

 

 

18,927

 

Inventories

 

 

19,308

 

 

 

20,296

 

Prepaid expenses and other current assets

 

 

3,065

 

 

 

2,813

 

Total current assets

 

 

52,802

 

 

 

53,445

 

Property and equipment, net

 

 

3,768

 

 

 

2,827

 

Operating lease right-of-use assets

 

 

2,974

 

 

 

3,405

 

Intangible assets, net

 

 

7,299

 

 

 

7,563

 

Goodwill

 

 

10,281

 

 

 

10,266

 

Other assets

 

 

1,142

 

 

 

1,171

 

Total assets

 

$

78,266

 

 

$

78,677

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,217

 

 

$

10,964

 

Current portion - contractual payment obligation

 

 

788

 

 

 

1,040

 

Current portion - financial liabilities, net of debt issuance costs of $136

   and $59 as of March 31, 2021 and December 31, 2020, respectively

 

 

22,334

 

 

 

20,084

 

Operating lease liabilities

 

 

1,243

 

 

 

1,279

 

Deferred revenue

 

 

1,634

 

 

 

1,981

 

Accrued compensation and related benefits

 

 

2,858

 

 

 

2,985

 

Other accrued expenses and liabilities

 

 

3,643

 

 

 

3,240

 

Total current liabilities

 

 

42,717

 

 

 

41,573

 

Long-term operating lease liabilities

 

 

1,875

 

 

 

2,272

 

Long-term deferred revenue

 

 

331

 

 

 

385

 

Other long-term liabilities

 

 

363

 

 

 

258

 

Total liabilities

 

 

45,286

 

 

 

44,488

 

Commitments and contingencies (see Note 16)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Series B convertible preferred stock, $0.001 par value: 5,000 shares authorized; 5,000 shares

   issued and outstanding as of March 31, 2021 and December 31, 2020

 

 

5

 

 

 

5

 

Common stock, $0.001 par value: 50,000 shares authorized; 19,581 and 19,450 shares

   issued and 18,161 and 18,055 shares outstanding as of March 31, 2021 and

   December 31, 2020, respectively

 

 

19

 

 

 

19

 

Additional paid-in capital

 

 

452,921

 

 

 

452,129

 

Treasury stock, 1,420 and 1,395 shares as of March 31, 2021 and December 31, 2020,

   respectively

 

 

(10,186

)

 

 

(9,933

)

Accumulated deficit

 

 

(412,074

)

 

 

(410,609

)

Accumulated other comprehensive income

 

 

2,295

 

 

 

2,578

 

Total stockholders' equity

 

 

32,980

 

 

 

34,189

 

Total liabilities and stockholders' equity

 

$

78,266

 

 

$

78,677

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


 

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands, except per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Net revenue

 

$

22,162

 

 

$

18,120

 

Cost of revenue

 

 

14,470

 

 

 

10,620

 

Gross profit

 

 

7,692

 

 

 

7,500

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

2,337

 

 

 

2,596

 

Selling and marketing

 

 

4,064

 

 

 

4,497

 

General and administrative

 

 

2,125

 

 

 

2,191

 

Restructuring and severance

 

 

388

 

 

 

65

 

Total operating expenses

 

 

8,914

 

 

 

9,349

 

Loss from operations

 

 

(1,222

)

 

 

(1,849

)

Non-operating income (expense):

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(245

)

 

 

(252

)

Foreign currency gains (losses), net

 

 

46

 

 

 

86

 

Loss before income tax provision

 

 

(1,421

)

 

 

(2,015

)

Income tax provision

 

 

(44

)

 

 

(32

)

Net loss

 

 

(1,465

)

 

 

(2,047

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(283

)

 

 

(480

)

Comprehensive loss

 

$

(1,748

)

 

$

(2,527

)

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.09

)

 

$

(0.13

)

Diluted

 

$

(0.09

)

 

$

(0.13

)

Weighted average common shares outstanding, basic and diluted

 

 

18,443

 

 

 

17,521

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

4


 

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

 

 

 

 

Series B

Convertible Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Treasury

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Income

 

 

Equity

 

Balances, December 31, 2019

 

 

5,000

 

 

$

5

 

 

 

16,986

 

 

$

18

 

 

$

447,965

 

 

$

(9,043

)

 

$

(405,504

)

 

$

2,025

 

 

$

35,466

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,047

)

 

 

 

 

 

(2,047

)

Unrealized loss from foreign

   currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(480

)

 

 

(480

)

Issuance of common stock in connection

   with vesting of stock awards

 

 

 

 

 

 

 

 

150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640

 

 

 

 

 

 

 

 

 

 

 

 

640

 

Shares withheld in payment of taxes in

   connection with net share settlement of

   restricted stock units

 

 

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

 

 

(225

)

 

 

 

 

 

 

 

 

(225

)

Issuance of common stock in connection with

   warrant exercise

 

 

 

 

 

 

 

 

387

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Balances, March 31, 2020

 

 

5,000

 

 

$

5

 

 

 

17,475

 

 

$

19

 

 

$

448,604

 

 

$

(9,268

)

 

$

(407,551

)

 

$

1,545

 

 

$

33,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series B

Convertible Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Treasury

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Income

 

 

Equity

 

Balances, December 31, 2020

 

 

5,000

 

 

$

5

 

 

 

18,055

 

 

$

19

 

 

$

452,129

 

 

$

(9,933

)

 

$

(410,609

)

 

$

2,578

 

 

$

34,189

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,465

)

 

 

 

 

 

(1,465

)

Unrealized loss from foreign

   currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(283

)

 

 

(283

)

Issuance of common stock in connection

   with vesting of stock awards

 

 

 

 

 

 

 

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds of exercise of

   stock options

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

34

 

 

 

 

 

 

 

 

 

 

 

 

34

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

758

 

 

 

 

 

 

 

 

 

 

 

 

758

 

Shares withheld in payment of taxes in

   connection with net share settlement of

   restricted stock units

 

 

 

 

 

 

 

 

(25

)

 

 

 

 

 

 

 

 

(253

)

 

 

 

 

 

 

 

 

(253

)

Issuance of common stock in connection with

   warrant exercise

 

 

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, March 31, 2021

 

 

5,000

 

 

$

5

 

 

 

18,161

 

 

$

19

 

 

$

452,921

 

 

$

(10,186

)

 

$

(412,074

)

 

$

2,295

 

 

$

32,980

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


 

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(1,465

)

 

$

(2,047

)

Adjustments to reconcile net loss to net cash used in

   operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

466

 

 

 

847

 

Accretion of interest on contractual payment obligation

 

 

19

 

 

 

32

 

Amortization of debt issuance costs

 

 

68

 

 

 

24

 

Stock-based compensation expense

 

 

758

 

 

 

640

 

Impairment of right-of-use operating lease asset

 

 

281

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

20

 

 

 

(1,671

)

Inventories

 

 

977

 

 

 

208

 

Prepaid expenses and other assets

 

 

(223

)

 

 

(170

)

Accounts payable

 

 

(736

)

 

 

(324

)

Contractual payment obligation liability

 

 

(271

)

 

 

(319

)

Deferred revenue

 

 

(401

)

 

 

(547

)

Accrued expenses and other liabilities

 

 

96

 

 

 

(382

)

Net cash used in operating activities

 

 

(411

)

 

 

(3,709

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(1,131

)

 

 

(137

)

Net cash used in investing activities

 

 

(1,131

)

 

 

(137

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings under revolving loan facility, net of issuance costs

 

 

3,975

 

 

 

4,346

 

Repayments under revolving loan facility

 

 

(1,793

)

 

 

(209

)

Repayments under East West Bank term loan

 

 

 

 

 

(500

)

Taxes paid related to net share settlement of restricted stock units

 

 

(253

)

 

 

(225

)

Proceeds from exercise of stock options

 

 

34

 

 

 

 

Net cash provided by financing activities

 

 

1,963

 

 

 

3,412

 

Effect of exchange rates on cash and cash equivalents

 

 

(312

)

 

 

(253

)

Net increase (decrease) in cash and cash equivalents

 

 

109

 

 

 

(687

)

Cash and cash equivalents at beginning of period

 

 

11,409

 

 

 

9,383

 

Cash and cash equivalents at end of period

 

$

11,518

 

 

$

8,696

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid

 

$

170

 

 

$

228

 

Taxes paid, net

 

$

15

 

 

$

39

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


 

IDENTIV, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

 

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Identiv, Inc. and its wholly owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements have been included. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any future period. The unaudited condensed consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements at that date, but does not include all disclosures required by U.S. GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

2. Significant Accounting Policies and Recent Accounting Pronouncements

Significant Accounting Policies

No material changes have been made to the Company's significant accounting policies disclosed in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvement to Topic 326, Financial Instruments – Credit Losses, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ASU 2019-05, Financial Instruments Credit Losses (Topic 326) Targeted Transition Relief, ASU 2016-13, the FASB issued ASU 2019-10 Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU 2019-11 Codification Improvements to Topic 326, Financial Instruments-Credit Losses. The subsequent ASUs do not change the core principle of the guidance in ASU 2016-13. Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU 2016-13.

Additionally, ASU No. 2019-10 defers the effective date for the adoption of the new standard on credit losses for public filers that are considered small reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, which will be fiscal 2023 for the Company if it continues to be classified as a smaller reporting company. In February 2020, the FASB issued ASU 2020-02, which provides guidance regarding methodologies, documentation, and internal controls related to expected credit losses. The subsequent amendments will have the same effective date and transition requirements as ASU No. 2016-13. Early adoption is permitted. Topic 326 requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. While the Company is currently evaluating the impact of Topic 326, the Company does not expect the adoption of the ASU to have a material impact on its consolidated financial statements.

In December 2019, FASB issued ASU 2019-12, Income Taxes (740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for incomes taxes by removing certain exceptions to the general principles in Topic 740 and amending existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted. This standard did not have a material impact on the Company’s condensed consolidated financial statements.   

7


3. Revenue

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of its products, software licenses, and services, which are generally capable of being distinct and accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation, generally on a relative basis using its standalone selling price. The stated contract value is generally the transaction price to be allocated to the separate performance obligations. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities.

Nature of Products and Services

The Company derives revenues from sales of hardware products, software licenses, subscriptions, professional services, software maintenance and support, and extended hardware warranties.

Hardware Product Revenue The Company generally has two performance obligations in arrangements involving the sale of hardware products. The first performance obligation is to transfer the hardware product (which includes software integral to the functionality of the hardware product). The second performance obligation is to provide assurance that the product complies with its agreed-upon specifications and is free from defects in material and workmanship for a period of one to three years (i.e., assurance warranty). The entire transaction price is allocated to the hardware product and is generally recognized as revenue at the time of delivery because the customer obtains control of the product at that point in time. The Company has concluded that control generally transfers at that point in time because the customer has title to the hardware, physical possession, and a present obligation to pay for the hardware. None of the transaction price is allocated to the assurance warranty component, as the Company accounts for these product warranty costs in accordance with Accounting Standards Codification ("ASC”) 460, Guarantees (“ASC 460”).  

Software License Revenue The Company’s license arrangements grant customers the perpetual right to access and use the licensed software products at the outset of an arrangement. Technical support and software updates are generally made available throughout the term of the support agreement, which is generally one to three years. The Company accounts for these arrangements as two performance obligations: (1) the software licenses, and (2) the related updates and technical support. The software license revenue is recognized upon delivery of the license to the customer, while the software updates and technical support revenue is recognized over the term of the support contract.

Subscription Revenue  Subscription revenue consist of fees received in consideration for providing customers access to one or more of the Company’s software-as-a-service (“SaaS”) based solutions. These SaaS arrangements include access to the Company’s licensed software and, in certain arrangements, use of various hardware devices over the contract term. These SaaS arrangements do not provide the customer the right to take possession of the software supporting the subscription service, or if applicable, any hardware devices at any time during the contract period, and as such are not considered separate performance obligations. Revenue is recognized ratably on a straight-line basis over the term of the contract beginning when the service is made available to the customer. Subscription contract terms range from month-to-month to six years in length and billed monthly or annually. 

Professional Services Revenue Professional services revenue consists primarily of programming customization services performed relating to the integration of the Company’s software products with the customers other systems, such as human resources systems. Professional services contracts are generally billed on a time and materials basis and revenue is recognized as the services are performed.

Software Maintenance and Support Revenue Support and maintenance contract revenue consists of the services provided to support the specialized programming applications performed by the Company’s professional services group. Support and maintenance contracts are typically billed at inception of the contract and recognized as revenue over the contract period, typically over a one or three year period.

Extended Hardware Warranties Revenue Sales of the Company’s hardware products may also include optional extended hardware warranties, which typically provide assurance that the product will continue function as initially intended. Extended hardware warranty contracts are typically billed at inception of the contract and recognized as revenue over the respective contract period, typically over one to two year periods after the expiration of the original assurance warranty.

8


 

Performance

Obligation

 

When Performance Obligation is

Typically Satisfied

 

When Payment is

Typically Due

 

How Standalone Selling Price is

Typically Estimated

Hardware products

 

When customer obtains control of the product (point-in-time)

 

Within 30-60 days of shipment

 

Observable in transactions without multiple performance obligations

Software licenses

 

When license is delivered to customer or made available for download, and the applicable license period has begun (point-in-time)

 

Within 30-60 days of the beginning of license period

 

Established pricing practices for software licenses bundled with software maintenance, which are separately observable in renewal transactions

Subscriptions

 

Ratably over the course of the subscription term (over time)

 

In advance of subscription term

 

Contractually stated or list price

Professional services

 

As services are performed and/or when contract is fulfilled (point-in-time)

 

Within 30-60 days of delivery

 

Observable in transactions without multiple performance obligations

Software maintenance

   and support services

 

Ratably over the course of the support contract (over time)

 

Within 30-60 days of the beginning of the contract period

 

Observable in renewal transactions

Extended hardware

   warranties

 

Ratably over the course of the support contract (over time)

 

Within 30-60 days of the beginning of the contract period

 

Observable in renewal transactions

 

Significant Judgments

The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. For such arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price (“SSP”).

Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, the Company estimates SSP using historical transaction data. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product or service is not sold separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSPs reflect current information or trends.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers based on the timing of transfer of goods or services to customers (point-in-time or over time) and geographic region based on the shipping location of the customer. The geographic regions that are tracked are the Americas, Europe and the Middle East, and Asia-Pacific regions. 

Total net revenue based on the disaggregation criteria described above is as follows (in thousands):

 

 

Three Months Ended March 31,

 

 

2021

 

 

2020

 

 

Point-in-

Time

 

 

Over Time

 

 

Total

 

 

Point-in-

Time

 

 

Over Time

 

 

Total

 

Americas

$

14,396

 

 

$

752

 

 

$

15,148

 

 

$

12,705

 

 

$

1,163

 

 

$

13,868

 

Europe and the Middle East

 

2,364

 

 

 

96

 

 

 

2,460

 

 

 

2,504

 

 

 

97

 

 

 

2,601

 

Asia-Pacific

 

4,554

 

 

 

 

 

 

4,554

 

 

 

1,651

 

 

 

 

 

 

1,651

 

Total

$

21,314

 

 

$

848

 

 

$

22,162

 

 

$

16,860

 

 

$

1,260

 

 

$

18,120

 

 

9


 

Contract Balances

Amounts invoiced in advance of services being provided are accounted for as deferred revenue. Nearly all of the Company’s deferred revenue balance is related to software maintenance contracts. Payment terms and conditions vary by contract type, although payment is typically due within 30 to 90 days of contract inception. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to receive financing from its customers.

Changes in deferred revenue during the three months ended March 31, 2021 and March 2020 were as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Deferred revenue, beginning of period

 

$

2,366

 

 

$

2,833

 

Deferral of revenue billed in current period, net of recognition

 

 

392

 

 

 

384

 

Recognition of revenue deferred in prior periods

 

 

(793

)

 

 

(931

)

Deferred revenue as, end of period

 

$

1,965

 

 

$

2,286

 

 

Unsatisfied Performance Obligations

Revenue expected to be recognized in future periods related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, and contracts where revenue is recognized as invoiced, was approximately $0.8 million as of March 31, 2021. Since the Company typically invoices customers at contract inception, this amount is included in the deferred revenue balance. As of March 31, 2021, the Company expects to recognize 53% of the revenue related to these unsatisfied performance obligations during the remainder of 2021, 32% during 2022, and 15% thereafter.

Assets Recognized from the Costs to Obtain a Contract with a Customer

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs (i.e., commissions) meet the requirements to be capitalized. Capitalized incremental costs related to contracts are amortized over the respective contract periods. For the three months ended March 31, 2021, total capitalized costs to obtain contracts were immaterial.

 

 

4. Fair Value Measurements

The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. Under ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), the fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – Quoted prices (unadjusted) for identical assets and liabilities in active markets;

 

Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly; and

 

Level 3 – Unobservable inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2021 and December 31, 2020, the only assets measured and recognized at fair value on a recurring basis were nominal cash equivalents. As of March 31, 2021 and December 31, 2020, there were no liabilities measured and recognized at fair value on a recurring basis, other than contingent consideration related to prior acquisitions as of December 31, 2020 which had no fair value.

10


 Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Certain of the Company's assets, including goodwill, intangible assets, and privately-held investments, are measured at fair value on a nonrecurring basis if impairment is indicated. Purchased intangible assets are measured at fair value primarily using discounted cash flow projections. For additional discussion of measurement criteria used in evaluating potential impairment involving goodwill and intangible assets, refer to Note 5, Goodwill and Intangible Assets.

As of March 31, 2021 and December 31, 2020, the Company had $348,000 of privately-held investments measured at fair value on a nonrecurring basis, which were classified as Level 3 assets due to the absence of quoted market prices and inherent lack of liquidity. The Company reviews its investments to identify and evaluate investments that have an indication of possible impairment. The Company adjusts the carrying value for its privately-held investments for any impairment if the fair value is less than the carrying value of the respective assets on an other-than-temporary basis. The amount of privately-held investments is included in other assets in the accompanying condensed consolidated balance sheets.

As of March 31, 2021 and December 31, 2020, there were no liabilities that are measured and recognized at fair value on a non-recurring basis.

Assets and Liabilities Not Measured at Fair Value

The carrying amounts of the Company's accounts receivable, prepaid expenses and other current assets, accounts payable, and other accrued liabilities approximate fair value due to their short maturities. The carrying value of the Company’s financial liabilities approximates fair value based upon borrowing rates currently available to the Company for loans with similar terms.

5. Goodwill and Intangible Assets

Goodwill

The following table summarizes the activity in goodwill (in thousands):

 

 

 

Identity

 

 

Premises

 

 

Total

 

Balance at December 31, 2020

 

$

3,554

 

 

$

6,712

 

 

$

10,266

 

Currency translation adjustment

 

 

 

 

 

15

 

 

 

15

 

Balance at March 31, 2021

 

$

3,554

 

 

$

6,727

 

 

$

10,281

 

In accordance with ASC 350, Intangibles – Goodwill and Other, the Company tests goodwill for impairment on an annual basis, in the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company performs an initial assessment of qualitative factors to determine whether the existence of events and circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In performing the qualitative assessment, the Company identifies and considers the significance of relevant key factors, events, and circumstances that affect the fair value of its reporting units. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance. If, after assessing the totality of relevant events and circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit exceeds its carrying value and there is no indication of impairment, no further testing is performed; however, if the Company concludes otherwise, then the Company will perform the quantitative impairment test which compares the estimated fair value of the reporting unit to its carrying value, including goodwill. If the carrying amount of the reporting unit is in excess of its fair value, an impairment loss would be recorded in the consolidated statement of comprehensive loss. During the quarters ended March 31, 2021 and 2020, the Company noted no indicators of goodwill impairment and concluded no further testing was necessary.

11


Intangible Assets

The following table summarizes the gross carrying amount and accumulated amortization for intangible assets resulting from acquisitions (in thousands):

 

 

 

 

 

 

 

Developed

 

 

Customer

 

 

 

 

 

 

 

Trademarks

 

 

Technology

 

 

Relationships

 

 

Total

 

Amortization period (in years)

 

5

 

 

10 – 12

 

 

4 – 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross carrying amount at March 31, 2021

 

$

767

 

 

$

9,132

 

 

$

15,775

 

 

$

25,674

 

Accumulated amortization

 

 

(419

)

 

 

(5,878

)

 

 

(12,078