Company Quick10K Filing
Solbright
Price0.89 EPS-0
Shares219 P/E-4
MCap195 P/FCF-19
Net Debt-1 EBIT-47
TEV194 TEV/EBIT-4
TTM 2019-05-31, in MM, except price, ratios
10-Q 2019-11-30 Filed 2020-01-22
10-Q 2019-08-31 Filed 2019-10-15
10-K 2019-05-31 Filed 2019-09-13
10-Q 2019-02-28 Filed 2019-05-20
10-Q 2018-11-30 Filed 2019-04-15
10-Q 2018-08-31 Filed 2018-10-19
10-K 2018-05-31 Filed 2018-09-18
10-Q 2018-02-28 Filed 2018-04-20
S-1 2018-02-27 Public Filing
10-Q 2017-11-30 Filed 2018-01-16
10-Q 2017-08-31 Filed 2017-10-24
10-K 2017-05-31 Filed 2017-09-14
10-Q 2017-02-28 Filed 2017-04-21
10-Q 2016-11-30 Filed 2017-01-23
10-Q 2016-08-31 Filed 2016-10-17
10-K 2016-05-31 Filed 2016-09-21
10-Q 2016-02-29 Filed 2016-04-20
10-Q 2015-11-30 Filed 2016-01-19
10-Q 2015-08-31 Filed 2015-10-15
10-K 2015-05-31 Filed 2015-08-27
10-Q 2015-02-28 Filed 2015-04-14
10-Q 2014-11-30 Filed 2015-01-14
10-Q 2014-08-31 Filed 2014-10-14
10-K 2014-05-31 Filed 2014-08-27
10-Q 2014-02-28 Filed 2014-04-14
10-Q 2013-11-30 Filed 2014-01-15
10-Q 2013-08-31 Filed 2013-10-11
10-Q 2013-02-28 Filed 2013-09-16
10-Q 2012-11-30 Filed 2013-09-13
10-Q 2012-08-31 Filed 2013-09-12
10-K 2012-05-31 Filed 2013-08-30
10-Q 2011-02-28 Filed 2011-04-19
10-Q 2010-11-30 Filed 2011-01-12
10-Q 2010-08-31 Filed 2010-10-19
10-K 2010-05-31 Filed 2010-09-14
10-Q 2010-02-28 Filed 2010-04-02
8-K 2020-06-30
8-K 2020-05-08
8-K 2020-05-04
8-K 2020-04-24
8-K 2020-04-14
8-K 2020-03-04
8-K 2019-12-31
8-K 2019-12-09
8-K 2019-11-15
8-K 2019-05-20
8-K 2019-03-07
8-K 2019-01-08
8-K 2018-11-26
8-K 2018-10-31
8-K 2018-10-01
8-K 2018-09-05
8-K 2018-07-30
8-K 2018-06-28
8-K 2018-05-31
8-K 2018-04-30

SBRT 10Q Quarterly Report

Part I – Financial Information
Item 1. Financial Statements
Note 1 – Description of Business and Basis of Presentation
Note 2 - Summary of Significant Accounting Policies
Note 3 - Acquisitions
Note 4 –Other Current Assets
Note 5 - Property and Equipment
Note 6 - Intangible Assets
Note 7 – Accounts Payable and Accrued Expenses
Note 8 – Warranty Reserve
Note 9 – Convertible Debentures and Notes Payable
Note 10 – Revenue - Based Notes and Accrued Interest
Note 11 - Notes Payable To Officer
Note 12 – Notes Payable To Related Parties and Related Party Transactions
Note 13 - Asset Retirement Obligations
Note 14 - Stockholders’ Equity
Note 15 – Stock - Based Compensation
Note 16 – Commitments and Contingencies
Note 17 - Leases
Note 18 - Concentrations of Credit Risk
Note 19 - Business Segment Information
Note 20 – Revision of Prior Period Immaterial Misstatements
Note 21 – Subsequent Events
Part II – Other Information
EX-4.5 iotc_ex45.htm
EX-4.6 iotc_ex46.htm
EX-4.7 iotc_ex47.htm
EX-4.8 iotc_ex48.htm
EX-4.9 iotc_ex49.htm
EX-4.10 iotc_ex410.htm
EX-4.11 iotc_ex411.htm
EX-4.12 iotc_ex412.htm
EX-4.13 iotc_ex413.htm
EX-4.14 iotc_ex414.htm
EX-4.15 iotc_ex415.htm
EX-10.9 iotc_ex109.htm
EX-10.10 iotc_ex1010.htm
EX-10.11 iotc_ex1011.htm
EX-10.12 iotc_ex1012.htm
EX-10.13 iotc_ex1013.htm
EX-10.14 iotc_ex1014.htm
EX-10.19 iotc_ex1019.htm
EX-10.20 iotc_ex1020.htm
EX-10.21 iotc_ex1021.htm
EX-31.1 iotc_ex311.htm
EX-31.2 iotc_ex312.htm
EX-32.1 iotc_ex321.htm
EX-32.2 iotc_ex322.htm

Solbright Earnings 2019-11-30

Balance SheetIncome StatementCash Flow
251-23-47-71-952012201420172020
Assets, Equity
65483114-3-202012201420172020
Rev, G Profit, Net Income
10.06.02.0-2.0-6.0-10.02012201420172020
Ops, Inv, Fin

10-Q 1 iotc_10q.htm FORM 10-Q Blueprint
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended November 30, 2019
 
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: 000-27587
 
IOTA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
22-3586087
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
600 Hamilton Street, Suite 1010
Allentown, PA
 
18101
(Address of principal executive offices)
 
(Zip Code)
 
(855) 743-6478
(Registrant’s telephone number, including area code)
 
N/A
 (Former name, former address and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
N/A
N/A
 
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, or a small reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, a “smaller reporting company” and an “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 January 20, 2020, there were 253,892,778 shares of the registrant’s common stock outstanding.
 

 
 
 
IOTA COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2019
 
TABLE OF CONTENTS
 
 
 
Page
 
 
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
 
3
 
 
 
 
3
 
 
 
 
4
 
 
 
 
5
 
 
 
 
7
 
 
 
 
8
 
 
 
 
56
 
 
 
 
74
 
 
 
 
74
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
 
 
76
 
 
 
 
77
 
 
 
 
77
 
 
 
 
80
 
 
 
 
80
 
 
 
 
80
 
 
 
 
81
 
 
 
SIGNATURES
 
84
 
 
2
 
 
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
 
IOTA COMMUNICATIONS, INC.
(F/K/A SOLBRIGHT GROUP, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
 
November 30,
 
 
May 31,
 
 
 
2019
 
 
2019
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Cash
 $203,675 
 $788,502 
Accounts receivable, net of allowances for doubtful accounts of $1,007,036 and $810,132, respectively
  534,404 
  507,345 
Contract assets
  171,492 
  435,788 
Other current assets
  599,349 
  635,746 
Total Current Assets
  1,508,920 
  2,367,381 
 
    
    
Property and equipment, net of accumulated depreciation of $4,156,990 and $3,759,229, respectively
  11,890,089 
  10,124,763 
ROU Asset
  17,926,862 
  - 
Intangible assets, net of accumulated amortization of $18,153 and $90,750, respectively
  4,423,720 
  286,538 
Other assets
  169,076 
  198,946 
 
    
    
Total Assets
 $35,918,667 
 $12,977,628 
 
    
    
LIABILITIES AND DEFICIT
    
    
 
    
    
Current Liabilities:
    
    
Accounts payable and accrued expenses
  6,712,696 
  18,563,550 
Payroll liability
  1,200,249 
  1,276,333 
Service obligations
  97,900 
  331,280 
Current portion of lease liabilities
  1,179,155 
  - 
Deferred revenue
  303,269 
  228,893 
Contract liabilities
  205,245 
  188,738 
Warranty reserve
  150,000 
  313,881 
Convertible debentures, net of debt discount of $1,028,192 and $312,902, respectively
  905,637 
  4,450,296 
Contingent liability
  3,000,000 
  - 
Notes payable - related party
  911,459 
  - 
Notes payable - officers
  - 
  173,769 
Notes payable, net of debt discount of $730,008 and $0, respectively
  4,331,943 
  479,102 
Total Current Liabilities
  18,997,553 
  26,005,842 
 
    
    
Deferred rent liability
  - 
  1,975,815 
Lease liabilities, net of current portion
  17,729,382 
  - 
Revenue-based notes, net of financing costs of $765,822 and $914,408
  75,409,098 
  76,489,220 
Long-term notes payable - related party
  1,176,596 
  666,154 
Long-term notes payable - officer
  - 
  827,348 
Asset retirement obligations
  1,737,378 
  1,771,227 
 
    
    
Total Liabilities
  115,050,007 
  107,735,606 
 
    
    
Commitments and Contingencies
    
    
 
    
    
Deficit:
    
    
Convertible preferred stock, $.0001 par value; 5,000,000 shares authorized, no shares issued and outstanding
  - 
  - 
Common stock, $.0001 par value; 600,000,000 shares authorized; 247,893,229 and 219,205,439 shares issued and outstanding, respectively
  24,790 
  21,921 
Additional paid-in capital
  37,486,851 
  24,029,008 
Accumulated deficit
  (119,964,868)
  (118,808,907)
 
    
    
Total Iota Communications, Inc. Deficit
  (82,453,227)
  (94,757,978)
 
    
    
Non-controlling Interest in Variable Interest Entity
  3,321,887 
  - 
 
    
    
Total Deficit
  (79,131,340)
  (94,757,978)
 
    
    
Total Liabilities and Deficit
 $35,918,667 
 $12,977,628 
 
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
 
 
3
 
 
IOTA COMMUNICATIONS, INC.
(F/K/A SOLBRIGHT GROUP, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
For the Three Months Ended
 
 
For the Six Months Ended  
 
 
 
November 30,
2019
 
 
November 30,
2018
 
 
November 30,
2019
 
 
November 30,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 $257,605 
 $835,869 
 $1,015,566 
 $885,665 
 
    
    
    
    
Cost of sales
  102,033 
  730,398 
  816,916 
  763,375 
 
    
    
    
    
Gross profit
  155,572 
  105,471 
  198,650 
  122,290 
 
    
    
    
    
Operating expenses:
    
    
    
    
Network site expenses
  1,120,412 
  1,656,535 
  2,378,103 
  2,827,682 
Research and development
  1,144 
  671,544 
  3,288 
  2,064,234 
Selling, general and administrative
  572,318 
  3,902,845 
  5,147,867 
  9,639,176 
Depreciation and amortization
  283,912 
  299,720 
  556,829 
  554,398 
Stock based compensation
  597,573 
  10,521,482 
  1,299,986 
  10,521,482 
Gain on settlement of past due lease obligations
  (11,167,962)
  - 
  (11,167,962)
  - 
Total operating expenses
  (8,592,603)
  17,052,126 
  (1,781,889)
  25,606,972 
 
    
    
    
    
Income (loss) from operations
  8,748,175 
  (16,946,655)
  1,980,539 
  (25,484,682)
 
    
    
    
    
Other income (expense):
    
    
    
    
Interest expense, net
  (1,897,898)
  (172,242)
  (3,161,077)
  (177,322)
Other income (expense)
  (39,384)
  (33,172)
  (32,867)
  (33,172)
 
    
    
    
    
Total other income (expense)
  (1,897,898)
  (172,242)
  (3,161,077)
  (177,322)
 
    
    
    
    
Income (loss) before provision for income taxes
  6,850,277 
  (17,118,897)
  (1,180,538)
  (25,662,004)
 
    
    
    
    
Provision for income taxes
  - 
  - 
  - 
  - 
 
    
    
    
    
Net income/(loss)
  6,850,277 
  (17,118,897)
  (1,180,538)
  (25,662,004)
 
    
    
    
    
Net loss attributable to non-controlling interest
  (24,577)
  - 
  (24,577)
  - 
 
    
    
    
    
Net income/(loss) attributable to Iota Communications, Inc.
 $6,874,854 
 $(17,118,897)
 $(1,155,961)
 $(25,662,004)
 
    
    
    
    
Net income/(loss) per common share - basic
 $0.03 
 $(0.11)
 $(0.01)
 $(0.18)
Net income/(loss) per common share - diluted
 $0.03 
 $(0.11)
 $(0.01)
 $(0.18)
 
    
    
    
    
Weighted average shares outstanding - basic
  230,721,378 
  161,245,806 
  225,778,381 
  145,372,474 
Weighted average shares outstanding - diluted
  234,052,033 
  161,245,806 
  225,778,381 
  145,372,474 
 
 The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.
 
 
4
 
 
IOTA COMMUNICATIONS, INC.
(F/K/A SOLBRIGHT GROUP, INC.)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2019
(Unaudited)
 
 
 
Preferred Stock
 
 
Common Stock  
 
 
Additional Paid-in
 
 
 Accumulated
 
 
Total Iota
Communications, Inc.
 
 
 Non-Controlling
 
 
Total
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Deficit
 
 
Deficit
 
 
Interest
 
 
Deficit
 
Balance at June 1, 2019
  - 
 $- 
  219,205,439 
 $21,921 
 $24,029,008 
 $(118,808,907)
 $(94,757,978)
 $- 
 $(94,757,978)
 
    
    
    
    
    
    
    
    
    
Stock based compensation - stock options
  - 
  - 
  - 
  - 
  202,782 
  - 
  202,782 
  - 
  202,782 
Stock based compensation - common stock
  - 
  - 
  445,000 
  45 
  189,506 
  - 
  189,551 
  - 
  189,551 
Common stock issued for the settlement of liabilities
  - 
  - 
  300,000 
  30 
  188,970 
  - 
  189,000 
  - 
  189,000 
Warrants issued to investors
  - 
  - 
  - 
  - 
  310,081 
  - 
  310,081 
  - 
  310,081 
Common stock issued for exercise of warrants
  - 
  - 
  408,736 
  41 
  807 
  - 
  848 
  - 
  848 
Common stock issued for inducement of convertible debt holders
  - 
  - 
  2,100,000 
  210 
  882,790 
  - 
  883,000 
  - 
  883,000 
Common stock issued for services
  - 
  - 
  1,133,334 
  113 
  759,887 
  - 
  760,000 
  - 
  760,000 
Net loss
  - 
  - 
  - 
  - 
  - 
  (8,030,815)
  (8,030,815)
  - 
  (8,030,815)
 Balance as of August 31, 2019
  - 
 $- 
  223,592,509 
 $22,360 
 $26,563,831 
 $(126,839,722)
 $(100,253,531)
 $- 
 $(100,253,531)
 
    
    
    
    
    
    
    
    
    
Stock based compensation - stock options
  - 
  - 
  - 
  - 
  202,782 
  - 
  202,782 
  - 
  202,782 
Conversion of revenue based notes
  - 
  - 
  - 
  - 
  410,703 
  - 
  410,703 
  3,322,964 
  3,733,667 
Iota Spectrum Partners, LP limited partnership interests issued for cash
  - 
  - 
  - 
  - 
  76,500 
  - 
  76,500 
  23,500 
  100,000 
Common stock issued in connection with private placement, net
  - 
  - 
  6,919,782 
  692 
  2,213,638 
  - 
  2,214,330 
  - 
  2,214,330 
Warrants issued to investors
  - 
  - 
  - 
  - 
  394,791 
  - 
  394,791 
  - 
  394,791 
Common stock issued for settlement of liability
  - 
  - 
  2,500,000 
  250 
  849,750 
  - 
  850,000 
  - 
  850,000 
Common stock issued for purchase of Link Labs assets
  - 
  - 
  12,146,241 
  1,214 
  3,764,121 
  - 
  3,765,335 
  - 
  3,765,335 
Common stock issued for inducement and issuances of convertible debt holders
  - 
  - 
  2,219,697 
  222 
  730,384 
  - 
  730,606 
  - 
  730,606 
Common stock issued for services
  - 
  - 
  515,000 
  52 
  156,448 
  - 
  156,500 
  - 
  156,500 
Beneficial conversion feature on convertible debt and warrant
  - 
  - 
  - 
  - 
  2,123,903 
  - 
  2,123,903 
  - 
  2,123,903 
Net income (loss)
  - 
  - 
  - 
  - 
  - 
  6,874,854 
  6,874,854 
  (24,577)
  6,850,277 
 Balance as of November 30, 2019
  - 
 $- 
  247,893,229 
 $24,790 
 $37,486,851 
 $(119,964,868)
 $(82,453,227)
 $3,321,887 
 $(79,131,340)
 
The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.
 
 
5
 
 
IOTA COMMUNICATIONS, INC.
(F/K/A SOLBRIGHT GROUP, INC.)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2018
(Unaudited) 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock
 
 
Common Stock
 
 
Additional Paid-in
 
 
 Accumulated
 
 
Total Iota Communications, Inc. Stockholders'
 
 
 Non-Controlling
 
 
Stockholders'
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Deficit
 
 
Deficit
 
 
Interest
 
 
(Deficit)
 
Balance at June 1, 2018
  - 
 $- 
  129,671,679 
 $12,967 
 $- 
 $(62,541,502)
 $(62,528,535)
 $- 
 $(62,528,535)
 
    
    
    
    
    
    
    
    
    
Net loss
  - 
  - 
  - 
  - 
  - 
  (8,543,107)
  (8,543,107)
  - 
  (8,543,107)
 Balance as of August 31, 2018
  - 
 $- 
  129,671,679 
 $12,967 
 $- 
 $(71,084,609)
 $(71,071,642)
 $- 
 $(71,071,642)
 
    
    
    
    
    
    
    
    
    
Stock based compensation - stock options
  - 
  - 
  - 
  - 
  202,782 
  - 
  202,782 
  - 
  202,782 
Advance payments converted to members equity prior to merger
  - 
  - 
  7,266,499 
  727 
  2,391,714 
  - 
  2,392,441 
  - 
  2,392,441 
Distribution to M2M's former parent company
  - 
  - 
  - 
  - 
  (5,061,334)
  - 
  (5,061,334)
  - 
  (5,061,334)
Recapitalization under reverse merger on September 1, 2018
  - 
  - 
  43,434,034 
  4,343 
  876,259 
  - 
  880,602 
  - 
  880,602 
Warrants issued in connection with reverse merger
  - 
  - 
  - 
  - 
  3,992,000 
  - 
  3,992,000 
  - 
  3,992,000 
Common stock issued for PPUs in connection with reverse merger
  - 
  - 
  15,906,864 
  1,591 
  5,965,409 
  - 
  5,967,000 
  - 
  5,967,000 
Common stock issued for inducement of convertible debt holders
  - 
  - 
  300,000 
  30 
  277,170 
  - 
  277,200 
  - 
  277,200 
Common stock issued for services
  - 
  - 
  250,000 
  25 
  82,475 
  - 
  82,500 
  - 
  82,500 
Beneficial conversion feature on convertible debt and warrants
  - 
  - 
  - 
  - 
  816,667 
  - 
  816,667 
  - 
  816,667 
Net loss
  - 
  - 
  - 
  - 
  - 
  (17,118,897)
  (17,118,897)
  - 
  (17,118,897)
 Balance as of November 30, 2018
  - 
 $- 
  196,829,076 
 $19,683 
 $9,543,142 
 $(88,203,506)
 $(78,640,681)
 $- 
 $(78,640,681)
 
The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.
 
 
6
 
 
IOTA COMMUNICATIONS, INC.
(F/K/A SOLBRIGHT GROUP, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
 
 For the Six Months Ended
 
 
 
November 30,
2019
 
 
November 30,
2018
 
 Cash flows from operating activities:
 
 
 
 
 
 
 Net loss
 $(1,180,538)
 $(25,662,004)
 Adjustments to reconcile net loss to net cash used in operating activities:
    
    
 Provision for doubtful accounts
  196,904 
  - 
 Stock based compensation - stock options
  405,564 
  202,782 
 Stock based compensation - common stock
  189,551 
  - 
 Loss on sale of property and equipment
  311,895 
  36,053 
 Warrants issued in connection with reverse merger
  - 
  3,992,000 
 Common stock issued for PPU's in connection with reverse merger
  - 
  5,967,000 
 Write off of asset retirement obligation due to tower decommissioning
  (69,684)
  - 
 Loss on settlement of liabilities
  146,508 
  - 
 Gain on settlement of past due lease obligations
  (11,167,962)
  - 
 Gain on lease terminations and decommissioning of towers
  (1,100,435)
  - 
 Warrants issued to investors
  704,872 
  - 
 Depreciation and amortization
  556,829 
  556,802 
 Amortization of debt discount and deferred finance costs
  917,838 
  223,516 
 Issuance of common stock for inducement of convertible debt holders
  1,613,606 
  277,200 
 Issuance of common stock for services
  916,500 
  82,500 
 Issuance of common stock for the exercise of warrants
  848 
  - 
 Accretion of asset retirement obligations
  26,279 
  26,401 
 Amortization of financing costs (revenue based notes)
  148,586 
  - 
 Provision for warranty claims
  (163,881)
  39,122 
 Non-cash lease impact
  91,733 
  - 
 Changes in operating assets and liabilities:
    
    
 Accounts receivable, net
  (223,963)
  (280,614)
 Contract assets
  301,714 
  153,155 
 Other current assets
  36,397 
  (338,723)
 Due from related party
  - 
  (42,315)
 Accounts payable and accrued expenses
  454,983 
  1,770,701 
 Payroll liability
  (76,084)
  709,787 
 Lease liability
  169,321 
  - 
 Deferred revenue
  74,376 
  (5,746)
 Deferred rent
  - 
  106,492 
 Service obligations
  (233,380)
  - 
 Contract liabilities
  16,507 
  34,439 
 Accrued interest on revenue-based notes
  97,452 
  63,952 
 
    
    
 Net cash used in operating activities
  (6,837,664)
  (12,087,500)
 
    
    
 Cash flows from investing activities:
    
    
 
    
    
 Purchases of property and equipment
  (33,759)
  (76,575)
 Purchase of note receivable - Solbright
  - 
  (5,038,712)
 Advances to Solbright
  - 
  (827,700)
 Security deposit
  29,870 
  172,326 
 Cash acquired in merger
  - 
  72,059 
 
    
    
 Net cash used in investing activities
  (3,889)
  (5,698,602)
 
    
    
 Cash flows from financing activities:
    
    
   Proceeds from common stock issuance
  2,375,968 
  - 
   Common stock issuance costs
  (161,638)
  - 
   Proceeds from revenue based notes, net
  2,407,505 
  14,452,871 
   Proceeds from convertible notes payable, net
  1,964,320 
  2,600,616 
   Proceeds from note payable - officer
  - 
  150,000 
   Proceeds from note payable - related party
  140,000 
  - 
   Proceeds from issuance of limited partnership interests in Iota Spectrum Partners, LP
  100,000 
  - 
   Payments on convertible notes
  (433,197)
  (69,300)
   Payments on notes payable
  (17,131)
  (50,000)
   Payment on notes payable, related party
  (119,101)
  (101,933)
 
    
    
 Net cash provided by financing activities
  6,256,726 
  16,982,254 
 
    
    
 Net decrease in cash
  (584,827)
  (803,848)
 
    
    
 Cash - beginning of period
  788,502 
  1,492,784 
 
    
    
 Cash - end of period
 $203,675 
 $688,936 
 
    
    
 Supplemental cash flow information:
    
    
 Cash paid for:
    
    
 Interest
 $343,667 
 $223,325 
 Income taxes
 $- 
 $- 
 Non-cash investing and financing activities:
    
    
 Additions to asset retirement costs
 $8,774 
 $26,920 
     Non-cash distribution to M2M's former parent company
 $- 
 $5,061,334 
 Common stock issued for purchase of Link Labs assets
 $3,765,335 
 $- 
 Common stock issued for settlement of accounts payable
 $887,692 
 $- 
 Original issue discount in connection with convertible debt issued
 $118,830 
 $- 
 Deferred finance costs in connection with convertible debt issued
 $85,680 
 $- 
 Debt discount in connection with restricted shares issued with convertible debt
 $212,815 
    
 Beneficial conversion feature in connection with issued and Black-Scholes market value of warrants
 $2,123,903 
 $816,667 
 Software acquired in connection with Link Labs acquisition
 $2,610,000 
 $- 
 Intangible assets acquired in connection with Link Labs acquisition
 $4,155,335 
 $- 
 Contingent liabilities incurred in connection with Link Labs asset acquisition
 $(3,000,000)
 $- 
 Note payable - related party
 $911,459 
 $- 
 Fair value of revenue-based notes transferred to Iota Spectrum Partners, LP
 $3,733,667 
 $- 
 Right of Use asset recorded upon adoption of ASC 842
 $19,867,608 
 $- 
 Lease Liability recorded upon adoption of ASC 842
 $(21,843,423)
 $- 
 Deferred rent reclassified to ROU asset upon adoption of ASC 842
 $1,975,815 
 $- 
 Advance payments converted to equity
 $- 
 $2,392,441 
 
The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.
 
 
7
 
   
IOTA COMMUNICATIONS, INC. AND SUBSIDIARIES
(F/K/A SOLBRIGHT GROUP, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
 
Description of Business
 
Iota Communications, Inc., (f/k/a Solbright Group, Inc.) (the “Parent” or “Iota Communications”), was formed in the State of Delaware on May 7, 1998. Iota Communications conducts business activities principally through its three wholly-owned subsidiaries and one consolidated variable interest entity, Iota Networks, LLC (f/k/a M2M Spectrum Networks, LLC (“M2M”)) (“Iota Networks”), an Arizona limited liability company, Iota Commercial Solutions, LLC (f/k/a SolBright Energy Solutions, LLC) (“ICS” or “Iota Commercial Solutions”), a Delaware limited liability company, Iota Spectrum Holdings, LLC, an Arizona limited liability company (“Iota Holdings”), and Iota Spectrum Partners, LP, an Arizona limited partnership (“Iota Partners”), a consolidated variable-interest entity (collectively, the “Company”).
 
On July 30, 2018, Iota Communications, entered into an Agreement and Plan of Merger and Reorganization (as amended on September 5, 2018, the “Merger Agreement”) with its newly-formed, wholly owned Arizona subsidiary (“Merger Sub”), Iota Networks, and Spectrum Networks Group, LLC, an Arizona limited liability company and the majority member of M2M. Upon closing, Merger Sub merged into and with Iota Networks, with Iota Networks continuing as the surviving entity and a wholly owned subsidiary of Iota Communications (the “Merger”) (See Note 3).
 
In connection with the Merger, on November 26, 2018, a Certificate of Amendment was filed with the State of Delaware to amend the name of the Company from “Solbright Group, Inc.” to “Iota Communications, Inc.” In addition, as of November 28, 2018, our trading symbol changed from “SBRT” to “IOTC”.
 
Immediately following the Merger, the Company had 196,279,076 shares of common stock issued and outstanding. The pre-Merger stockholders of the Company retained an aggregate of 43,434,034 shares of common stock of the Company, representing approximately 22.1% ownership of the post-Merger Company. Therefore, upon consummation of the Merger, there was a change in control of the Company, with the former owners of Iota Networks effectively acquiring control of the Company. The Merger was treated as a recapitalization and reverse acquisition of the Company for financial reporting purposes. Iota Networks is considered the acquirer for accounting purposes, and the Company’s historical financial statements before the Merger have been replaced with the historical financial statements of Iota Networks before the Merger in future filings with the SEC.
 
The Company is a vertically integrated wireless network carrier and software-as-a-service (“SaaS”) company dedicated to the Internet of Things (“IoT”). The Company combines long range wireless connectivity with software applications to provide commercial customers turn-key services to optimize energy efficiency, sustainability and operations for their facilities. The Company’s value proposition is to provide turn-key services to its commercial customers, focusing on the development of IoT solutions around Smart Buildings, and its related services including energy management, asset tracking, and predictive maintenance. In order to be turn-key, our business strategy aims to bundle connectivity with data aggregation and analysis into an “as-a-service” offering with a focus on Smart Buildings and Smart Cities.
 
The Company operates its business across four segments: (1) Iota Communications, (2) Iota Networks, (3) Iota Commercial Solutions and (4) Iota Holdings. Operating activities related to the parent company are classified within Iota Communications.
 
Iota Communications
 
The parent company operations are primarily related to running the operations of the public Company. The Company re-organized its operating segments in September 2018 in conjunction with the Merger with M2M. The significant expenses included within the parent company are executive and employee salaries, stock-based compensation, professional and service fees, rent, and interest on convertible and other notes.
 
 
8
 
 
Iota Networks
 
Iota Networks is the network and research and development segment of the business where all activities related to the development of the network and application technology are conducted.
 
Iota Commercial Solutions 
 
The ICS business segment is the sales and marketing segment of our business focusing on the commercialization of applications that leverage our connectivity and analytics to reduce costs, optimize operations and advance sustainability. Data collected from sensors and other advanced end point devices as well as other external data, such as weather patterns and utility pricing, is run through a data analysis engine to yield actionable insights for our commercial customers. Additionally, ICS may act as a general contractor for energy management-related services, such as solar photovoltaic system installation and LED lighting retrofits.
 
Iota Holdings
 
Iota Holdings was formed to act as the general partner for Iota Partners. Iota Partners is a variable interest entity of Iota Holdings (“Iota Partners”). The purpose of Iota Partners is to own spectrum licenses that Iota Networks uses to operate its network. Upon approval by the FCC, Iota Networks will contribute the licenses it owns to Iota Partners in exchange for General Partnership Units issued to Iota Holdings, then lease back those licenses pursuant to a master lease agreement covering all licenses owned by Iota Partners. Through November 30, 2019, Iota Networks has transferred licenses representing 16,246,612 MHz-POPs, or $3,733,667 in revenue-based notes, to Iota Partners for 4,873,984 LP units. In addition, and through November 30, 2019, Iota Networks transferred licenses representing 1,922,474 MHz-POPs to Iota Partners for 576,742 GP Units. Additionally, three investors purchased a total of 30,000 LP Units for an aggregate total of $100,000. At November 30, 2019, Iota owns 11% of the outstanding LP Units resulting in a noncontrolling interest of 89%.
 
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted pursuant to such rules and regulations. These financial statements and the information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited financial statements and explanatory notes for the year ended May 31, 2019 as disclosed in our Form 10-K filed on September 13, 2019. The results of the six months ended November 30, 2019 (unaudited) are not necessarily indicative of the results to be expected for the pending full year ending May 31, 2020.
 
Liquidity and Going Concern
 
The Company’s primary need for liquidity is to fund the working capital needs of the business. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred net losses of approximately $120 million since inception, including a net loss of approximately $1.2 million for the six months ended November 30, 2019. Additionally, the Company had negative working capital of approximately $17.5 million and $23.6 million at November 30, 2019 and May 31, 2019, respectively, and has negative cash flows from operations of approximately $6.8 million for the six months ended November 30, 2019. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management expects to incur additional losses in the foreseeable future and recognizes the need to raise capital to remain viable. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
 
The Company’s plan, through potential acquisitions and the continued promotion of its services to existing and potential customers, is to generate sufficient revenues to cover its anticipated expenses. The Company believes it can raise additional capital to meet its short-term cash requirements, including an equity raise and debt funding from third parties.
 
 
9
 
 
Subsequent to November 30, 2019, and in connection with the September 23, 2019 private placement offering, the Company received cash proceeds of $1,620,767, net of $128,078 in equity issuance fees. The cumulative equity raise under the September 23, 2019 private placement offering through the date of this report is $3,835,097, net of $289,926 in equity issuance fees. In addition, and subsequent to November 30, 2019, there were 48,158,215 MHz-POPs transferred to Iota Partners, from Iota Networks, resulting in the termination of $11,076,435 of revenue-based notes. The MHz-POPs transferred represent 14,447,465 LP Units. As of the date of this report, the Company owns 3% of the outstanding LP Units of Iota Partners with a corresponding non-controlling interest of 97%. On December 20, 2019, the Company entered into a secured non-convertible note with AIP totaling $1,400,000, with a maturity date of June 20, 2020. The principal on the note bears an interest rate of LIBOR + 10% per annum, which, along with required monthly principal payments of $50,000, is payable monthly. On January 16, 2020, the Company entered into a Promissory Note in the principal amount of $320,000. The principal bears interest at 3% per annum and has a maturity date of February 29, 2020. As an inducement to enter into the Note, the Company will issue 1,000,000 shares of the Company’s common stock to the buyer (See Note 21).
 
Although no assurances can be given as to the Company’s ability to deliver on its revenue or capital raise plans, or that unforeseen expenses may arise, management believes that the revenue to be generated from operations together with potential equity and debt financing or other potential financing will provide the necessary funding for the Company to continue as a going concern.  However, management cannot guarantee any potential equity or debt financing will be available on favorable terms. Without raising additional capital, there is substantial doubt about the Company’s ability to continue as a going concern through January 21, 2021. As such, management does not believe they have sufficient cash for 12 months from the date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
 
The unaudited condensed consolidated financial statements include the accounts of Iota Communications, its three wholly owned subsidiaries, Iota Networks, ICS, and Iota Holdings, and Iota Partners, a variable interest entity controlled by the Company. Intercompany accounts and transactions have been eliminated in consolidation.
 
Reclassifications
 
The following reclassifications have been made to conform the prior period data to the current presentation: (i) for the fiscal year ended May 31, 2019, $110,451 was reclassed from Other Current Assets to Other Assets on the consolidated balance sheet, (ii) for the three and six months ended November 30, 2018, we renamed “Network related costs” on the consolidated statement of operations to “Network site expenses”, (iii) for the six months ended November 30, 2019, $38,719 was reclassed from Interest income to Interest expense, net, (iv) for the three and six months ended November 30, 2018, $403,508 and $782,523, respectively, was reclassed from Network site expense to Research and development, and (v) for the three and six months ended November 30, 2018, $(33,172) was reclassed from Other income (expense) to Selling, general and administrative.
 
Use of Estimates
 
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions, and disclosure of contingent liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the accompanying unaudited consolidated financial statements. Significant estimates include revenue recognition, the allowance for doubtful accounts, the useful life of property and equipment, valuation of long-lived assets for impairment, deferred tax asset and valuation allowance, accounting for variable interest entities, and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.
 
Noncontrolling Interests in Consolidated Financial Statements
 
The Company follows Accounting Standards Codification (“ASC”) Topic 810-10-65, Noncontrolling Interests in Consolidated Financial Statements. This statement clarifies that a noncontrolling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the unaudited consolidated financial statements. It also requires consolidated net income (loss) to include the amounts attributable to both the parent and the noncontrolling interest, with disclosure on the face of the consolidated statement of operations of the amounts attributed to the parent and to the noncontrolling interest. In accordance with ASC Topic 810-10-45-21, the losses attributable to the parent and the noncontrolling interest in subsidiary may exceed the parent’s interest in the subsidiary’s equity. The excess and any further losses attributable to the parent and the noncontrolling interest shall be attributable to those interests even if that attribution results in a deficit of noncontrolling interest balance. As of November 30, 2019 and May 31, 2019, the Company reflected a noncontrolling interest of $3,321,887 and $0 in connection with its variable interest entity, Iota Partners, as reflected in the accompanying November 30, 2019 unaudited consolidated balance sheet and May 31, 2019 consolidated balance sheet, respectively.
 
 
10
 
 
Variable Interest Entities
 
The Company follows ASC Topic 810-10-15 guidance with respect to accounting for variable interest entities (“VIEs”). VIEs do not have sufficient equity at risk to finance their activities without additional subordinated financial support from other parties or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and change with changes in the fair value of the entity’s net assets. A reporting entity is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable interests, that provide it with a controlling financial interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE. The VIE model requires an ongoing reconsideration of whether a reporting entity is the primary beneficiary of the VIE due to changes in facts and circumstances.
 
The Company currently consolidates one VIE, Iota Partners, as of November 30, 2019. The Company is the primary beneficiary due to its ability to direct the activities of Iota Partners through its wholly owned subsidiary, Iota Holdings.
 
Revenue
 
The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which the Company adopted beginning June 1, 2016. The Company did not record a retrospective adjustment upon adoption, and instead opted to apply the full retrospective method for all customer contracts.
 
As part of ASC Topic 606, the Company adopted several practical expedients including that the Company has determined that it need not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised service to the customer and when the customer pays for that service will be one year or less.
 
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Amounts received prior to being earned are recognized as deferred revenue on the accompanying unaudited condensed consolidated balance sheets.
 
For purposes of this presentation, activities related to the Company’s wireless network carrier and application technology segment are classified under Iota Networks, activities related to the Company’s Energy as a Service “EaaS” subscriptions and solar energy, LED lighting, and HVAC implementation services are classified under ICS, activities related to the parent company are classified under Iota Communications, and activities related to the spectrum licenses owned by Iota Partners that Iota Networks uses to operate its networks are classified under Iota Holdings.
 
Iota Networks
 
Iota Networks derives revenues in part from FCC license services provided to customers who have already obtained an FCC spectrum license from other service providers. Additionally, owners of granted, but not yet operational, licenses (termed “FCC Construction Permits” or “Permits”) can pay an upfront fee to Iota Networks to construct the facilities for the customer’s licenses and activate their licenses operationally, thus converting the customer’s ownership of the FCC Construction Permits into a fully-constructed license (“FCC License Authorization”). Once the construction certification is obtained from the FCC, Iota Networks may enter into an agreement with the customer to lease the spectrum. Once perfected in this manner, Iota Networks charges the customer a recurring annual license and equipment administration fee of 10% of the original payment amount. Collectively, these services constitute Iota Networks’ Network Hosting Services. In addition, owners of already perfected licenses can pay an upfront fee and Iota Networks charges an annual renewal fee of 10% of the upfront application fee for maintaining the customer’s license and equipment and allowing the customer access to its license outside of the nationwide network. For the purposes of clarification, these spectrum licenses are not part of the Iota Partners spectrum pool.
 
 
11
 
 
The Company has determined there are three performance obligations related to the Network Hosting Services agreements. The first performance obligation arises from the services related to obtaining FCC license perfection; the second performance obligation arises from maintaining the license in compliance with regulatory affairs, and the third performance obligation arises from the services related to acting as a future sales or lease agent for the customer. Given the nature of the service in the first performance obligation, Iota Networks recognizes revenue from the upfront fees at the point in time that the license is perfected. Iota Networks recognizes the annual fee revenue related to the second performance obligation ratably over the contract term as the services are transferred to and performed for the customer. Pursuant to its Network Hosting Services agreements, Iota Networks also derives revenues from annual renewal fees from its customers for the purpose of covering costs associated with maintaining and operating the customer licenses. Annual renewal fee revenue is recognized ratably over the renewal period as the services are performed. The third performance obligation is for future possible services and is recognized when and if the performance obligation is satisfied.
 
Iota Commercial Solutions
 
ICS derives revenues through both Energy as a Service (“EaaS”) recurring subscriptions and solar energy, LED lighting, and HVAC implementation services. Revenues for EaaS offerings sold on a subscription basis are generally recognized ratably over the contract term commencing with the date the service is made available to customers. Revenues from the sale of hardware products are generally recognized upon delivery of the hardware product to the customer provided all other revenue recognition criteria are satisfied. Sales of services are recognized as the performance obligations are fulfilled, and the customer takes risk of ownership and assumes the risk of loss. Service revenue is recognized as the service is completed under ASC Topic 606.
 
Most ICS customer contracts have a single performance obligation which is not separately identifiable from other promises in the contracts and is, therefore is, not distinct. Payment is generally due within 30 to 45 days of invoicing. There is no financing or variable component. ICS serves as the principal in its customer contracts.
 
ICS recognizes solar panel and LED lighting system design, construction, and installation services revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. ICS has determined that individual contracts at a single location are generally accounted for as a single performance obligation and are not segmented between types of services provided on these contracts. ICS recognizes revenue on these contracts using the cost to cost percentage of completion method, based primarily on contract costs incurred to date compared to total estimated contract costs. The percentage of completion method (an input method) is the most accurate depiction of ICS’s performance because it directly measures the value of the services transferred to the customer, and the consideration that is required to be paid by the customer based on the contract.
 
Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless they are expected to be recovered from the client. Customer payments on solar and LED lighting system contracts are typically billed upon the successful completion of milestones written into the contract and are due within 30 to 45 days of billing, depending on the contract.
 
 
12
 
 
Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables (typically for cost reimbursable contracts). Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. ICS has recorded a loss reserve on contract assets of $0 as of November 30, 2019 and $71,624 as of May 31, 2019.
 
The nature of ICS’s solar panel and LED lighting system design, construction, and installation services contracts gives rise to several types of variable consideration, including claims and unpriced change orders. ICS recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. ICS estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the revenue amount. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in ICS’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been incurred. Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery of such cost is probable, and the amounts can be reliably estimated. Disputed back charges are recognized when the same requirements described above for claims accounting have been satisfied.
 
Change orders are modifications of an original contract. Either ICS or its customer may initiate change orders. They may include changes in specifications or design, manner of performance, facilities, equipment, materials, sites and period of completion of the work. ICS evaluates when a change order is probable based upon its experience in negotiating change orders, the customer’s written approval of such changes, or separate documentation of change order costs that are identifiable. Change orders may take time to be formally documented and terms of such change orders are agreed with the customer before the work is performed. Sometimes circumstances require that work progresses before an agreement is reached with the customer. If ICS is having difficulties in renegotiating the change order, it will stop work, record all costs incurred to date, and determine, on a project by project basis, the appropriate final revenue recognition.
 
ICS generally provides limited warranties for work performed under its solar and LED lighting system contracts. The warranty periods typically extend for a limited duration following substantial completion of ICS’s work on a project. ICS does not charge customers for or sell warranties separately, and as such, warranties are not considered a separate performance obligation. Most warranties are guaranteed by subcontractors. ICS has recognized a warranty reserve of approximately $150,000 as of November 30, 2019, and approximately $314,000 as of May 31, 2019.
 
ICS’s remaining unsatisfied performance obligations as of November 30, 2019 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. ICS had $1,455,771 in remaining unsatisfied performance obligations as of November 30, 2019. ICS expects to satisfy its remaining unsatisfied performance obligations as of November 30, 2019 over the following twelve months. Although the remaining unsatisfied performance obligations reflects business that is considered to be firm; cancellations, deferrals, or scope adjustments may occur. The remaining unsatisfied performance obligations is adjusted to reflect any known project cancellations, revisions to project scope and cost, and project deferrals, as appropriate.
 
 
13
 
  
Disaggregated Revenues
 
Revenue consists of the following by service offering for the six months ended November 30, 2019:
 
 
 Solar Energy, LED
Lighting, and HVAC
Implementation
Service Revenues(a)
 
 
Network Hosting Services(b)
 
 
Subscription Revenues(a)
 
 
Total
 
 $833,182
 $156,506
 $25,878
 $1,015,566
 
Revenue consists of the following by service offering for the six months ended November 30, 2018:
 
 
Solar Energy, LED
Lighting, and HVAC
Implementation
Service Revenues(a)
 
 
Network Hosting Services(b)
 
 
Subscription Revenues(a)
 
 
Total
 
 $775,500 
 $104,913
 $5,252
 $885,665 
 
Revenue consists of the following by service offering for the three months ended November 30, 2019:
 
 
Solar Energy, LED Lighting, and HVAC Implementation Service Revenues(a)
 
 
Network Hosting Services(b)
 
 
Subscription Revenues(a)
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 $117,910 
 $129,067 
 $10,628 
 $257,605 
 
  Revenue consists of the following by service offering for the three months ended November 30, 2018:
 
 
Solar Energy, LED
Lighting, and HVAC
Implementation
Service Revenues(a)
 
 
Network Hosting Services(b)
 
 
Subscription Revenues(a)
 
 
Total
 
 $772,570 
 $58,047
 $5,252
 $835,869 
 
(a)           Included in Iota Commercial Solutions segment
(b)           Included in Iota Networks segment
 
Cash
 
The Company considers all highly liquid short-term instruments that are purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of November 30, 2019 and May 31, 2019.
 
 
14
 
 
Accounts Receivable
 
Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded. The Company provides for allowances for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of November 30, 2019, and May 31, 2019, the Company’s allowance for doubtful accounts was $1,007,036 and $810,132, respectively.
 
Other receivables are included in other assets on the balance sheet and include amounts due under the various Iota Networks programs including Network Hosting, Spectrum Partners, and Reservation Programs services (See Note 10).
 
Contract Assets
 
The Company records capitalized job costs on the balance sheet and expenses the costs upon completion of related jobs based on when revenue is earned. At November 30, 2019 and May 31, 2019, the Company had $171,492 and $435,788, respectively, of contract assets.
 
Property and Equipment
 
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally three to fifteen years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated.
 
All network site setup costs are capitalized as construction-in-progress ("CIP"), as incurred. As tower and billboard sites become operational and are placed in service as radios are installed, the Company transfers site specific CIP to capitalized tower and billboard site equipment costs and begins to depreciate those assets on a straight-line basis over ten years. Network equipment costs for hardware are capitalized, as incurred, and depreciated on a straight-line basis over five years. Furniture, fixtures, and equipment are capitalized at cost and depreciated on a straight-line basis over useful lives ranging from five to seven years. Software costs are capitalized at cost and depreciated on a straight-line basis over three to five years.
 
Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.
 
Software Development Costs
 
The Company is developing application platforms that will utilize the spectrum network and other leased network availability, to provide solutions for customers. The Company follows the guidance of ASC Topic 985-20, Costs of software to be sold, leased, or marketed, which calls for the expense of costs until technical feasibility is established. Any costs the Company had incurred during planning, designing, coding, and testing activities that are necessary to establish that the product can be produced to meet its design specifications are expensed as incurred. Once technical feasibility of the product has been established, the Company capitalizes the costs until the product is available for general release to customers. The capitalized costs are amortized on a product-by-product basis over the estimated economic life of the product. When conditions indicate a potential impairment, the Company compares the unamortized capitalized costs to the estimated net realizable value, and if the unamortized costs are greater than the expected future revenues, the excess is written down to the net realizable value.
 
On November 15, 2019, the Company entered into an asset purchase agreement with Link Labs, Inc. to purchase certain assets, including and not limited to, all work product, know-how, work in process, developments, and deliverables related to Iota Link and the Conductor system, as well as certain software, including source code that is used in connection with the development and operation of dedicated network technology using FCC Parts 22, 24, 90 and 101 spectrum for bi-directional wireless data transmission including the Conductor platform modified for provisioning and managing the Iota Link system and related intellectual property (See Note 3).
 
As of November 30, 2019, Iota Link and the Conductor system have reached technological feasibility and as such appropriate costs have been capitalized.
 
 
15
 
 
As of November 30, 2019, there were no other software or related products that have reached technical feasibility. For the three and six months ending November 30, 2019 and 2018, approximately $1,144 and $3,288 and $403,509 and $782,524, respectively, in software development costs have been expensed within research and development costs in the statement of operations.
 
Impairment of Long-Lived Assets and Right of Use Asset
 
The Company reviews long-lived assets, including definite-lived intangible assets and right of use (“ROU”) lease assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the six months ending November 30, 2019 and 2018, there were no impairment losses recognized for long-lived assets.