00

014

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 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: 001-38107

 

ShotSpotter, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-0949915

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

7979 Gateway Blvd., Suite 210

Newark, California

94560

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (510) 794-3100

 

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

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.005 per share

SSTI

The Nasdaq Capital Market

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, 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 August 2, 2019, the registrant had 11,477,165 shares of common stock, $0.005 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

2

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018

3

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2019 and 2018

4

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018

5

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

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

16

Item 3.

Qualitative and Quantitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

53

Item 6.

Exhibits

53

Exhibit Index

54

Signatures

55

 

 

 

i


 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

ShotSpotter, Inc.

Condensed Consolidated Balance Sheets  

(In thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,432

 

 

$

10,218

 

Accounts receivable and unbilled revenue

 

 

8,967

 

 

 

15,267

 

Prepaid expenses and other current assets

 

 

2,202

 

 

 

1,527

 

Restricted cash

 

 

 

 

 

60

 

Total current assets

 

 

38,601

 

 

 

27,072

 

Property and equipment, net

 

 

16,834

 

 

 

16,504

 

Operating lease right-of-use asset

 

 

697

 

 

 

 

Goodwill

 

 

1,379

 

 

 

1,379

 

Intangible assets, net

 

 

237

 

 

 

242

 

Other assets

 

 

1,596

 

 

 

1,922

 

Total assets

 

$

59,344

 

 

$

47,119

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,099

 

 

$

1,307

 

Deferred revenue, short-term

 

 

21,988

 

 

 

23,102

 

Accrued expenses and other current liabilities

 

 

4,209

 

 

 

4,427

 

Total current liabilities

 

 

27,296

 

 

 

28,836

 

Deferred revenue, long-term

 

 

1,133

 

 

 

1,060

 

Other liabilities

 

 

467

 

 

 

76

 

Total liabilities

 

 

28,896

 

 

 

29,972

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock

 

 

57

 

 

 

55

 

Additional paid-in capital

 

 

127,870

 

 

 

114,618

 

Accumulated deficit

 

 

(97,352

)

 

 

(97,377

)

Accumulated other comprehensive loss

 

 

(127

)

 

 

(149

)

Total stockholders' equity

 

 

30,448

 

 

 

17,147

 

Total liabilities and stockholders' equity

 

$

59,344

 

 

$

47,119

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

2


 

ShotSpotter, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues

 

$

10,260

 

 

$

8,927

 

 

$

19,853

 

 

$

15,834

 

Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

4,277

 

 

 

3,589

 

 

 

8,281

 

 

 

6,897

 

Impairment of property and equipment

 

 

 

 

 

361

 

 

 

 

 

 

361

 

Total costs

 

 

4,277

 

 

 

3,950

 

 

 

8,281

 

 

 

7,258

 

     Gross profit

 

 

5,983

 

 

 

4,977

 

 

 

11,572

 

 

 

8,576

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

2,439

 

 

 

2,195

 

 

 

5,068

 

 

 

3,749

 

Research and development

 

 

1,374

 

 

 

1,255

 

 

 

2,668

 

 

 

2,491

 

General and administrative

 

 

1,880

 

 

 

1,824

 

 

 

3,866

 

 

 

3,852

 

Total operating expenses

 

 

5,693

 

 

 

5,274

 

 

 

11,602

 

 

 

10,092

 

Operating income (loss)

 

 

290

 

 

 

(297

)

 

 

(30

)

 

 

(1,516

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

171

 

 

 

22

 

 

 

204

 

 

 

49

 

Other expense, net

 

 

(52

)

 

 

(76

)

 

 

(109

)

 

 

(75

)

Total other income (expense), net

 

 

119

 

 

 

(54

)

 

 

95

 

 

 

(26

)

Income (loss) before income taxes

 

 

409

 

 

 

(351

)

 

 

65

 

 

 

(1,542

)

Provision for income taxes

 

 

22

 

 

 

18

 

 

 

40

 

 

 

44

 

Net income (loss)

 

$

387

 

 

$

(369

)

 

$

25

 

 

$

(1,586

)

Net income (loss) per share, basic

 

$

0.03

 

 

$

(0.03

)

 

$

0.00

 

 

$

(0.15

)

Net income (loss) per share, diluted

 

$

0.03

 

 

$

(0.03

)

 

$

0.00

 

 

$

(0.15

)

Weighted average shares used in computing net income (loss) per share, basic

 

 

11,365,472

 

 

 

10,589,038

 

 

 

11,186,371

 

 

 

10,329,874

 

Weighted average shares used in computing net income (loss) per share, diluted

 

 

11,973,476

 

 

 

10,589,038

 

 

 

11,857,346

 

 

 

10,329,874

 

 

See accompanying notes to condensed consolidated financial statements.

3


 

ShotSpotter, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income (loss)

 

$

387

 

 

$

(369

)

 

$

25

 

 

$

(1,586

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment, net

 

 

35

 

 

 

(133

)

 

 

23

 

 

 

(104

)

Comprehensive income (loss)

 

$

422

 

 

$

(502

)

 

$

48

 

 

$

(1,690

)

 

See accompanying notes to condensed consolidated financial statements.

4


 

ShotSpotter, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2018

 

 

10,864,722

 

 

$

55

 

 

$

114,618

 

 

$

(97,377

)

 

$

(149

)

 

$

17,147

 

Exercise of stock options

 

 

177,408

 

 

 

1

 

 

 

218

 

 

 

 

 

 

 

 

 

219

 

Issuance of common stock upon secondary offering,

   net of costs

 

 

250,000

 

 

 

1

 

 

 

10,553

 

 

 

 

 

 

 

 

 

10,554

 

Issuance of common stock from RSUs vested

 

 

28,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

754

 

 

 

 

 

 

 

 

 

754

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

(13

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(362

)

 

 

 

 

 

(362

)

Balance at March 31, 2019

 

 

11,320,920

 

 

$

57

 

 

$

126,143

 

 

$

(97,739

)

 

$

(162

)

 

$

28,299

 

Exercise of stock options

 

 

65,960

 

 

 

 

 

 

129

 

 

 

 

 

 

 

 

 

129

 

Issuance of common stock in connection

   with exercise of warrants

 

 

12,225

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

51

 

Issuance of common stock from ESPP purchase

 

 

53,508

 

 

 

 

 

 

642

 

 

 

 

 

 

 

 

 

642

 

Issuance of common stock from RSUs vested

 

 

24,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

905

 

 

 

 

 

 

 

 

 

905

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35

 

 

 

35

 

Net income

 

 

 

 

 

 

 

 

 

 

 

387

 

 

 

 

 

 

387

 

Balance at June 30, 2019

 

 

11,476,685

 

 

$

57

 

 

$

127,870

 

 

$

(97,352

)

 

$

(127

)

 

$

30,448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2017

 

 

9,827,129

 

 

$

48

 

 

$

109,708

 

 

$

(97,595

)

 

$

1

 

 

$

12,162

 

Exercise of stock options

 

 

486,588

 

 

 

3

 

 

 

340

 

 

 

 

 

 

 

 

 

343

 

Issuance of common stock in connection

   with exercise of warrants

 

 

16,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

427

 

 

 

 

 

 

 

 

 

427

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

29

 

Cumulative effect of change in accounting principle

 

 

 

 

 

 

 

 

 

 

 

3,025

 

 

 

 

 

 

3,025

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,217

)

 

 

 

 

 

(1,217

)

Balance at March 31, 2018

 

 

10,329,846

 

 

$

51

 

 

$

110,475

 

 

$

(95,787

)

 

$

30

 

 

$

14,769

 

Exercise of stock options

 

 

66,628

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

108

 

Issuance of common stock in connection

   with exercise of warrants

 

 

272,309

 

 

 

1

 

 

 

988

 

 

 

 

 

 

 

 

 

989

 

Issuance of common stock from ESPP purchase

 

 

43,624

 

 

 

1

 

 

 

420

 

 

 

 

 

 

 

 

 

421

 

Issuance of common stock from RSU's vested

 

 

47,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

648

 

 

 

 

 

 

 

 

 

648

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(133

)

 

 

(133

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(369

)

 

 

 

 

 

(369

)

Balance at June 30, 2018

 

 

10,759,719

 

 

$

53

 

 

$

112,639

 

 

$

(96,156

)

 

$

(103

)

 

$

16,433

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

5


 

ShotSpotter, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

25

 

 

$

(1,586

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,402

 

 

 

1,775

 

Impairment of property and equipment

 

 

 

 

 

361

 

Stock-based compensation

 

 

1,659

 

 

 

1,075

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

6,299

 

 

 

(2,431

)

Prepaid expenses and other assets

 

 

(621

)

 

 

(568

)

Accounts payable

 

 

(514

)

 

 

1,105

 

Accrued expenses and other current liabilities

 

 

(510

)

 

 

(702

)

Deferred revenue

 

 

(1,049

)

 

 

134

 

Net cash provided by (used in) operating activities

 

 

7,691

 

 

 

(837

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(2,363

)

 

 

(5,643

)

Investment in intangible and other assets

 

 

(39

)

 

 

(26

)

Net cash used in investing activities

 

 

(2,402

)

 

 

(5,669

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon secondary offering

 

 

11,247

 

 

 

 

Payments of offering costs

 

 

(445

)

 

 

 

Proceeds from exercise of stock options

 

 

348

 

 

 

451

 

Proceeds from exercise of warrants

 

 

51

 

 

 

989

 

Proceeds from employee stock purchase plan

 

 

642

 

 

 

421

 

Net cash provided by financing activities

 

 

11,843

 

 

 

1,861

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

17,132

 

 

 

(4,645

)

Effect of exchange rate on cash and cash equivalents

 

 

22

 

 

 

(81

)

Cash, cash equivalents and restricted cash at beginning of year

 

 

10,278

 

 

 

19,597

 

Cash, cash equivalents and restricted cash at end of period

 

$

27,432

 

 

$

14,871

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

Deferred offering costs included in other assets

 

$

 

 

$

66

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

ShotSpotter, Inc.

Notes to Condensed Consolidated Financial Statements

Note 1. Organization and Description of Business

ShotSpotter, Inc. (the “Company”) provides precision-policing solutions for law enforcement to help deter gun violence and make cities, campuses and facilities safer. The company’s flagship product, ShotSpotter Flex, is the leading outdoor gunshot detection, location and forensic system trusted by more than 100 cities. ShotSpotter Missions uses machine learning-driven analysis to help strategically plan patrol missions and tactics for maximum crime deterrence. ShotSpotter Labs is the Company’s effort to support innovative uses of its technology to help protect wildlife and the environment. The Company offers its solutions on a SaaS-based subscription model to its customers.

The Company’s principal executive offices are located in Newark, California. The Company has two wholly-owned subsidiaries, ShotSpotter (Pty) Ltd. formed in South Africa and ShotSpotter Colombia S.A.S. which was formed in Colombia in March 2019.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements include the results of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated during consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, stockholder’s equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2019 or any future period.

 

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its significant estimates including the valuation of accounts receivable, the lives of tangible and intangible assets, stock-based compensation expense, and accounting for revenue recognition and income taxes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions it believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to the Company’s financial position and results of operations.

Concentrations of Risk

Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consisted primarily of cash and cash equivalents and accounts receivable from trade customers. The Company maintains its cash deposits at one domestic and two international financial institutions. The Company is exposed to credit risk in the event of default by a financial institution to the extent that cash and cash equivalents are in excess of the amount insured by the Federal Deposit Insurance Corporation. The Company generally places its cash and cash equivalents with high-credit quality financial institutions. To date, the Company has not experienced any losses on its cash and cash equivalents.

Concentration of Accounts Receivable –As of June 30, 2019, one customer accounted for 24% of the Company’s accounts receivable. Fluctuations in accounts receivable result from timing of the Company’s execution of contracts and collection of related payments. As of December 31, 2018, one customer accounted for 77% of the Company’s accounts receivable.

7


 

Concentration of Revenues –For the three months ended June 30, 2019, two customers accounted for 20% and 14% of the Companys total revenues. For the three months ended June 30, 2018, two customers accounted for 24% and 14% of the Companys total revenues.

For the six months ended June 30, 2019, two customers accounted for 21% and 14% of the Company’s total revenues. For the six months ended June 30, 2018, two customers accounted for 22% and 16% of the Company’s total revenues.

Concentration of SuppliersThe Company relies on a limited number of suppliers and contract manufacturers. In particular, a single supplier is currently the sole manufacturer of the Company’s proprietary sensors.   

Accounting Pronouncements Recently Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). There have been further amendments, including practical expedients, with the issuance of ASU 2018-01 in January 2018, ASU 2018-11 in July 2018 and ASU 2018-20 in December 2018. The amended guidance requires the recognition of lease assets and lease liabilities on the balance sheet for those leases with terms in excess of 12 months and currently classified as operating leases. Disclosure of key information about leasing arrangements is required. Effective January 1, 2019, the Company adopted Topic 842. The Company elected the optional transition method which allows entities to continue to apply historical accounting guidance in the comparative periods presented in the year of adoption.

At transition, lessees and lessors may elect to apply a package of practical expedients permitting entities not to reassess: (i) whether any expired or existing contracts are or contain leases; (ii) lease classification for any expired or existing leases and (iii) whether initial direct costs for any expired or existing leases qualify for capitalization under the amended guidance. These practical expedients must be elected as a package and consistently applied. The Company has elected to apply the package of practical expedients upon adoption.

The Company’s operating lease for its corporate headquarters office is impacted by the new standard and upon adoption, the Company recognized a right-of-use asset of $0.9 million and related lease liabilities totaling $0.9 million. See Note 11, Leases.

         In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of ASU 2017-11 change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. The amendments in Part I of this ASU are effective for the Company as of January 1, 2019. The amendments in Part II of ASU 2017-11 replace the indefinite deferral of certain guidance in Topic 480 with a scope exception. The amendments in Part II of ASU 2017-11 do not require any transition guidance. The Company adopted Part I of this ASU as of January 1, 2019 and the adoption did not have any impact on the consolidated financial statements.

Note 3. Revenue Related Disclosures

As of December 31, 2018, the Company had total short-term and long-term deferred revenue of $24.2 million. During the three months ended June 30, 2019, the Company recognized $9.2 million in revenue from the beginning deferred revenue balance and $1.0 million from new billings, and added $8.8 million to total short-term and long-term deferred revenue from new billings. During the six months ended June 30, 2019, the Company recognized $15.7 million in revenue from the beginning deferred revenue balance and $4.0 million from new billings, and added $18.7 million to total short-term and long-term deferred revenue from new billings.

As of January 1, 2018, upon the adoption of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”), the Company had total short-term and long-term deferred revenue of $17.3 million. During the three months ended June 30, 2018, the Company recognized $6.4 million in revenue from the beginning deferred revenue balance and $2.3 million from new billings, and added $8.1 million to total short-term and long-term deferred revenue from new billings. During the six months ended June 30, 2018, the Company recognized $11.7 million in revenue from the beginning deferred revenue of $18.1 million and $3.9 million from new billings, and added $15.8 million to total short-term and long-term deferred revenue from new billings.

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As of June 30, 2019, the Company has estimated remaining performance obligations for contractually committed revenues of $17.7 million, $25.2 million, $15.5 million, and $0.9 million that will be recognized during the remainder of the year ending December 31, 2019, and years ended December 31, 2020, 2021, and 2022 through 2024, respectively. The timing of revenue recognition includes estimates of go live dates for contracts not yet live. Contractually committed revenue includes deferred revenue as of June 30, 2019 and amounts under contract that will be invoiced after June 30, 2019. 

During the three months ended June 30, 2019, the Company recognized revenues of $9.9 million from customers in the United States, $0.4 million from customers in South Africa and the Bahamas. During the six months ended June 30, 2019, the Company recognized revenues of $19.2 million from customers in the United States, $0.7 million from customers in South Africa and the Bahamas.  

During the three months ended June 30, 2018, the Company recognized revenues of $8.7 million from customers in the United States and $0.2 million from a customer in South Africa. During the six months ended June 30, 2018, the Company recognized revenues of $15.3 million from customers in the United States and $0.5 million from a customer in South Africa.  

Accounts Receivable, net and Unbilled Revenue

Accounts receivable, net consist of trade accounts receivables from the Company’s customers, net of allowance for doubtful accounts if deemed necessary. Accounts receivable are recorded as the invoiced amount. The Company does not require collateral or other security for accounts receivable. Unbilled revenue consists of revenue recognized in advance of invoicing the customer.

Note 4. Fair Value Measurements

In October 2018, upon the acquisition of certain technology, referred to as HunchLab, from Azavea, Inc., the Company recognized a contingent consideration liability classified within Level III of the fair value hierarchy because some of the inputs used in its measurement were neither directly or indirectly observable. The Company estimates the fair value of the contingent consideration based on management’s estimates of (i) the probability of achieving the relevant revenue targets and (ii) the timing of achieving such targets. There were no material changes in fair value of contingent consideration for the three and six months ended June 30, 2019.

Level III balances (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Fair value of contingent consideration

 

$

750

 

 

$

750

 

 

 

Note 5. Details of Certain Condensed Consolidated Balance Sheet Accounts

 

Prepaid expenses and other current assets (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Prepaid expenses

 

$

1,458

 

 

$

832

 

Deferred commissions

 

 

677

 

 

 

629

 

Other

 

 

67

 

 

 

66

 

 

 

$

2,202

 

 

$

1,527

 

 

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Other assets (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Deferred commissions

 

$

1,506

 

 

$

1,560

 

Other

 

 

90

 

 

 

362

 

 

 

$

1,596

 

 

$

1,922

 

 

Accrued expenses and other current liabilities (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Personnel-related accruals

 

$

2,180

 

 

$

2,603

 

Royalties payable

 

 

93

 

 

 

130

 

Professional fees

 

 

222

 

 

 

396

 

Sales/ use tax payable

 

 

216

 

 

 

273

 

Contingent consideration

 

 

750

 

 

 

750

 

Operating lease liability

 

 

289

 

 

 

 

Deferred rent

 

 

 

 

 

24

 

Other

 

 

459

 

 

 

251

 

 

 

$

4,209

 

 

$

4,427

 

 

Other liabilities (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Operating lease liability

 

$

464

 

 

$

 

Deferred rent

 

 

 

 

 

71

 

Other

 

 

3

 

 

 

5

 

 

 

$

467

 

 

$

76

 

 

Note 6. Related Party Transactions

During the six months ended June 30, 2019, the Company recognized $0.3 million in revenues from ShotSpotter Labs projects with charitable organizations that have received donations from one of the Company’s directors and from a significant shareholder of the Company.

 

Note 7. Capital Stock

Common Stock

The Company is authorized to issue 500,000,000 shares of common stock, with a par value of $0.005 and each outstanding share of common stock is entitled to one vote.

As of June 30, 2019, there were 11,476,685 shares of common stock issued and outstanding. As of December 31, 2018, there were 10,864,722 shares of common stock issued and outstanding.

Preferred Stock

The Company is authorized to issue 20,000,000 shares of preferred stock, with a par value of $0.005. As of June 30, 2019, there were no shares of preferred stock issued and outstanding.

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Note 8. Net Income (Loss) per Share

The computation of basic net income (loss) per share is based on the weighted-average number of common stock outstanding during each period. The computation of diluted net income (loss) per share is based on the weighted-average number of shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options, restricted stock units, ESPP shares and warrants.

The following table summarizes the computation of basic and diluted net income (loss) per share (in thousands, except share and per share data):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

387

 

 

$

(369

)

 

$

25

 

 

$

(1,586

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding, basic

 

 

11,365,472

 

 

 

10,589,038

 

 

 

11,186,371

 

 

 

10,329,874

 

     Dilutive effect of common stock equivalents

 

 

608,004

 

 

 

 

 

 

670,975

 

 

 

 

Weighted-average shares outstanding, diluted

 

 

11,973,476

 

 

 

10,589,038

 

 

 

11,857,346