UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period
ended
OR
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name on Each Exchange on Which Registered | ||
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | Emerging growth company | ||||
| Accelerated filer | ☐ | Smaller reporting 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
The number of shares outstanding of the registrant’s Common
Stock, $0.001 par value, was
TABLE OF CONTENTS
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
DecisionPoint Systems, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
| March 31, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Deferred costs | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Operating lease assets | ||||||||
| Property and equipment, net | ||||||||
| Deferred costs, net of current portion | ||||||||
| Deferred tax assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Current portion of long-term debt | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Deferred revenue, net of current portion | ||||||||
| Long-term debt | ||||||||
| Noncurrent portion of operating lease liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See Accompanying Notes to the Condensed Consolidated Financial Statements.
1
DecisionPoint Systems, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
(Unaudited)
Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net sales: | ||||||||
| Product | $ | $ | ||||||
| Service | ||||||||
| Net sales | ||||||||
| Cost of sales: | ||||||||
| Product | ||||||||
| Service | ||||||||
| Cost of sales | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Sales and marketing expense | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Operating income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on extinguishment of debt | ||||||||
| Other, net | ||||||||
| Income before income taxes | ||||||||
| Income tax benefit (expense) | ( | ) | ||||||
| Net income and comprehensive income attributable to common shareholders | $ | $ | ||||||
| Earnings per share attributable to common shareholders (1): | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average common shares outstanding (1) | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| (1) |
See Accompanying Notes to the Condensed Consolidated Financial Statements.
2
DecisionPoint Systems, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
For the Three Months Ended March 31, 2022 and 2021
(in thousands)
(Unaudited)
| Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Share-based compensation expense | — | |||||||||||||||||||
| Cashless exercise of stock options (Note 9) | ( | ) | ( | ) | ||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common Stock (1) | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Share-based compensation expense | — | |||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| (1) |
See Accompanying Notes to the Condensed Consolidated Financial Statements.
3
DecisionPoint Systems, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Amortization of deferred financing costs | ||||||||
| Share-based compensation expense | ||||||||
| Deferred income taxes, net | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory, net | ( | ) | ||||||
| Deferred costs | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other assets, net | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Due to related parties | ||||||||
| Operating lease liabilities | ( | ) | ||||||
| Deferred revenue | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Cash paid for acquisitions, net of cash acquired | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Line of credit, net | ( | ) | ||||||
| Proceeds from exercise of stock options | ||||||||
| Net cash used in financing activities | ( | ) | ||||||
| Change in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Leased assets obtained in exchange for new operating lease liabilities | ||||||||
| Non-cash financing activities | ||||||||
| Cashless exercise of stock options | $ | $ | ||||||
See Accompanying Notes to the Condensed Consolidated Financial Statements.
4
DecisionPoint Systems, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1: Description of Business
DecisionPoint Systems, Inc., which we sometimes refer to as the “Company”, “we” or “us”, is an enterprise mobility systems integrator that sells, installs, deploys and repairs mobile computing and wireless systems that are used both within a company’s facilities and in the field. These systems generally include mobile computers, mobile application software, and related data capture equipment including bar code scanners and radio frequency identification (“RFID”) readers. We also provide services, consulting, staging, kitting, deployment, maintenance, proprietary and third-party software and software customization as an integral part of our customized solutions for our customers. The suite of products utilizes the latest technologies with the intent to make complex mobile technologies easy to use, understand and keep running within all vertical markets such as merchandising, sales and delivery, field service, logistics and transportation and warehouse management.
In June 2018, we acquired
In December 2020, we acquired
In January 2022, we acquired
Note 2: Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
We have prepared the accompanying unaudited condensed consolidated financial statements of DecisionPoint Systems, Inc. and its subsidiaries on the accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The accompanying condensed consolidated financial statements include the accounts of DecisionPoint Systems, Inc. and its wholly owned subsidiaries, DecisionPoint Systems International (“DPSI”), DecisionPoint Systems Group, Inc. (“DPS Group”), RDS, ExtenData and AMG. AMG was acquired on January 31, 2022, and as such, has been consolidated into our financial position and results of operations beginning February 1, 2022. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted from these interim financial statements as permitted by SEC rules and regulations. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the full fiscal year.
Reverse Stock Split
In December 2021, we effectuated a reverse stock split of our outstanding shares of common stock at a ratio of 1-for-2. See Note 8, Stockholders’ Equity, for additional information. As a result, the number of shares and income per share disclosed throughout these consolidated financial statements have been retrospectively adjusted to reflect the reverse stock split. All share and per share information has been retroactively adjusted to reflect the reverse stock split.
5
COVID-19
COVID-19 and the response to the pandemic have negatively impacted overall economic conditions. The potential future impacts of COVID-19, while uncertain, could materially adversely impact the Company’s results of operations.
Operating Segments
Under the Financial Accounting Standards Board Accounting Standards Codification 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles, if the segments have similar characteristics, and if the segments are similar in each of the following areas: (i) the nature of products and services, (ii) the nature of the production processes, (iii) the type or class of customer for their products and services, and (iv) the methods used to distribute their products or provide their services. We believe each of the Company’s segments meet these criteria as they provide similar products and services to similar customers using similar methods of production and distribution. Because we believe each of the criteria set forth above has been met and each of the Company’s segments has similar characteristics, we aggregate results of operations in one reportable operating segment.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis.
Income Taxes
Our quarterly provision for income taxes uses an annual effective tax
rate based on the expected annual income and statutory tax rates. Our effective tax rate, including discrete items as more fully described
below, was (
We recognize excess tax benefits (windfalls) and excess tax deficiencies
(shortfalls) as discrete items in income taxes in the period that stock options are exercised. For the three months ended March 31, 2022,
we recorded an income tax benefit and deferred tax asset of $
Operating Leases
For non-cancelable operating lease agreements, operating lease assets and operating lease liabilities are established for leases with an expected term greater than one year and we recognize lease expense on a straight-line basis.
We had an
operating lease for office and warehouse space in Irvine, California with fixed minimum monthly payments of $
In connection
with the closure of the office and warehouse space in Irvine, California, we entered into a new lease agreement commencing in February
2022 to relocate our office and warehouse space in Laguna Hills, California. Pursuant to the lease agreement, the base rent of $
During the
three months ended March 31, 2022, we also entered into several other non-cancelable operating lease agreements with terms greater than
one year and established an operating lease liability of $
6
Revenue Recognition
We recognize revenue when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue.
We recognize contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to our clients. Unbilled receivables are recorded when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients, or receive customer cash payments, in advance of performing the related services under the terms of a contract. Remaining performance obligations represent the transaction price allocated to the performance obligations that are unsatisfied as of the end of each reporting period. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.
As of March 31, 2022, the total aggregate transaction
price allocated to the unsatisfied performance obligations was approximately $
As of December 31, 2021, the total aggregate
transaction price allocated to the unsatisfied performance obligations was approximately $
We defer costs to acquire contracts, including
commissions, incentives and payroll taxes if they are incremental and recoverable costs of obtaining a customer contract with a term
exceeding
The following table summarizes net sales by revenue source (in thousands):
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Hardware and software | $ | $ | ||||||
| Consumables | ||||||||
| Services | ||||||||
| $ | $ | |||||||
7
Accounting Standards Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which, among other things, defers the effective date of ASU 2016-13 for public filers that are considered smaller reporting companies, as defined by the SEC, to fiscal years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted. Although management continues to analyze the provisions of this ASU, currently, we believe the adoption of this ASU will not significantly impact the Company’s consolidated results of operations and financial position.
There are no other accounting standards that have been issued but not yet adopted that we believe could have a material impact on our consolidated financial statements.
Note 3: Acquisition
Advanced Mobile Group, LLC
On January 31, 2022, we entered into a Membership Unit Purchase Agreement
Purchase and concurrently therewith closed upon the acquisition of all of the issued and outstanding membership interests of AMG for $
We have not yet completed our final analysis of the estimated fair value of the acquisition purchase price (including earn-outs) and the estimated fair value of the assets acquired and liabilities assumed in the acquisition. We expect that significant goodwill and definite-lived intangible assets will be recognized upon completion of the required purchase price allocation analysis. In accordance with ASC 805 Business Combinations, the provisional amounts recorded below may be adjusted in future periods as management completes its acquisition analysis.
The estimated allocation of the total consideration to the estimated fair value of acquired net assets as of the acquisition date for AMG is as follows (in thousands):
| Cash | $ | |||
| Accounts receivable | ||||
| Inventory | ||||
| Prepaids and other current assets | ||||
| Customer lists and relationships | ||||
| Trade name | ||||
| Backlog | ||||
| Accounts payable | ( | ) | ||
| Accrued expenses | ( | ) | ||
| Deferred revenue | ( | ) | ||
| Total fair value excluding goodwill | ||||
| Goodwill | ||||
| Total consideration | $ |
8
The estimated useful lives of intangible assets recorded related to the AMG acquisition are expected to be as follows (in thousands):
| Expected Life | ||
| Customer lists and relationships | ||
| Trade name | ||
| Backlog |
Other acquisition
In March 2022, we acquired the customer lists and relationships of
Boston Technologies, a provider of mobile order management and route accounting software for direct store delivery (DSD) operations,
for cash of $
Note 4: Intangible Assets
Definite lived intangible assets are as follows (in thousands):
| March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
| Gross Amount | Accumulated Amortization | Net Amount | Gross Amount | Accumulated Amortization | Net Amount | |||||||||||||||||||
| Customer lists and relationships | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Trade names | ( | ) | ( | ) | ||||||||||||||||||||
| Developed technology | ( | ) | ( | ) | ||||||||||||||||||||
| Backlog | ( | ) | ( | ) | - | |||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||
Amortization expense recognized during the three months ended March
31, 2022 and 2021 was $
Note 5: Net Income Per Share
Basic net income per common share is computed by dividing the net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted net income per share is calculated similarly to basic per share amounts, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For periods in which there is a net loss, potentially dilutive securities are excluded from the computation of fully diluted net loss per share as their effect is anti-dilutive.
Below is a reconciliation of the fully dilutive securities effect for the three months ended March 31, 2022 and 2021 (in thousands, except per share data):
| March 31, 2022 | March 31, 2021 | |||||||
| Net income attributable to common stockholders | $ | $ | ||||||
| Weighted average basic shares outstanding | ||||||||
| Dilutive effect of stock options and warrants | ||||||||
| Weighted average shares for diluted earnings per share | ||||||||
| Basic income per share | $ | $ | ||||||
| Diluted income per share | $ | $ | ||||||
9
Note 6: Line of Credit
Our Loan and Security Agreement (the “Loan
Agreement”) with MUFG Union Bank, National Association (the “Bank”) provides for a revolving line of credit of up to
$
Interest and Fees
Loans under the Loan Agreement with an outstanding balance of at least
$
Covenants
As of March 31, 2022, we were in compliance
with all of our covenants, were eligible to borrow up to $
Note 7: Term Debt
EIDL Promissory Note
On August 27, 2020, we received $
Note 8: Stockholders’ Equity
We are authorized to issue two classes of stock
designated as common stock and preferred stock. As of March 31, 2022, we are authorized to issue
10
Reverse Stock Split
On December 13, 2021, DecisionPoint filed a Certificate
of Amendment to the Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary
of State of Delaware to effect a 1-for-2 reverse stock split of the outstanding shares of the Company’s common stock, par value
$
As a result of the Reverse Stock Split, every
two shares of issued and outstanding Common Stock were automatically combined into one issued and outstanding share of Common Stock, without
any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Any fractional shares
that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number. The Reverse Stock Split reduced
the number of shares of Common Stock outstanding however, the number of authorized shares of Common Stock under the Certificate of Incorporation
remained unchanged at
Proportionate adjustments were made to the per share exercise price and the number of shares of Common Stock that may be purchased upon exercise of outstanding stock options granted by the Company, and the number of shares of Common Stock reserved for future issuance under the Company’s 2014 Equity Incentive Plan.
Warrants
The following table summarizes information about our outstanding common stock warrants as of March 31, 2022:
| Date | Strike | Total Warrants Outstanding and | Total Exercise Price | Weighted Average Exercise | ||||||||||||||||||||
| Issued | Expiration | Price | Exercisable | (in thousands) | Price | |||||||||||||||||||
| Warrants - Common Stock | $ | $ | ||||||||||||||||||||||
| Warrants - Common Stock | ||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||
In February 2021, the common stock warrants issued
by the Company in September 2016 were fully exercised by all of the holders on a cashless basis. As a result of the cashless exercise,
There were no warrants issued, exercised, forfeited, or expired during the three months ended March 31, 2022.
Note 9: Share-Based Compensation
Under our amended 2014 Equity Incentive Plan (the
“2014 Plan”),
Under the 2014 Plan, common stock incentives may be granted to our officers, employees, directors, consultants, and advisors (and prospective directors, officers, managers, employees, consultants and advisors) and our affiliates can acquire and maintain an equity interest in us, or be paid incentive compensation, which may (but need not) be measured by reference to the value of our common stock.
11
The 2014 Plan permits us to provide equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock and other stock bonus awards and performance compensation awards.
The 2014 Plan is administered by the Board of
Directors, or a committee appointed by the Board of Directors, which determines recipients and the number of shares subject to the awards,
the exercise price and the vesting schedule. The term of stock options granted under the 2014 Plan cannot exceed
The following table summarizes stock option activity under the 2014 Plan for the three months ended March 31, 2022:
| Stock Options | Grant Date Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||||
| (in years) | ($ in thousands) | |||||||||||||||
| Outstanding at January 1, 2022 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Forfeited or expired | ( | ) | ||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Outstanding at March 31, 2022 | $ | $ | ||||||||||||||
| Exercisable at March 31, 2022 | $ | $ | ||||||||||||||
For the three months ended March 31, 2022, certain employees exercised vested stock options through a cashless exercise. The options exercised were net settled in satisfaction of the exercise price and employee share-based tax withholding. The exercised options, utilizing a cashless exercise, are summarized in the following table:
| Options exercised |
Weighted Average Exercise Price |
Shares Net Settled for Exercise |
Shares Withheld for Taxes (1) |
Net Shares Issued |
Weighted Average Share Price |
Employee Share-Based Tax Withholding (1) |
||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||
| (1) | Shares withheld for employee taxes of |
12
Share-based compensation cost is measured at the grant date based on the fair value of the award. The fair values of stock options granted during the three months ended March 31, 2022 were estimated using the Black-Scholes option-pricing model with the following assumptions:
| Weighted average grant-date fair value per option granted | $ | |||
| Expected option term | ||||
| Expected volatility factor | % | |||
| Risk-free interest rate | % | |||
| Expected annual dividend yield |
We estimate expected volatility using historical volatility of common stock of our peer group over a period equal to the expected life of the options. The expected term of the awards represents the period of time that the awards are expected to be outstanding. We considered expectations for the future to estimate employee exercise and post-vest termination behavior. We do not intend to pay common stock dividends in the foreseeable future, and therefore have assumed a dividend yield of zero. The risk-free interest rate is the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term of the awards.
As of March 31, 2022, there was $
Note 10: Contingencies
Litigation
From time to time, we are subject to litigation incidental to the conduct of our business. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in our opinion, individually or in the aggregate, no such lawsuits are expected to have a material effect on our condensed consolidated financial position or results of operations.
Concentrations
Two customers accounted for more than
13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains statements that discuss future events or expectations, projections of results of operations or financial condition, trends in our business, business prospects and strategies and other “forward-looking” information. In some cases, you can identify “forward-looking statements” by words like “may,” “will,” “should,” “expects,” These statements may relate to, among other things, our expectations regarding for our financial results, revenue, operating expenses and other financial measures in future periods, and the adequacy of our sources of liquidity to satisfy our working capital needs, capital expenditures, and other liquidity requirements. Our actual results may differ materially from those anticipated in these forward-looking statements. Among the factors that could cause actual results to differ materially are the factors discussed under “Risk Factors” in documents and reports we have filed with the Securities and Exchange Commission. Some additional factors that could cause actual results to differ include:
| ● | our plans to obtain any requisite outside funding for our current and proposed operations and potential acquisition and expansion efforts; | |
| ● | the impacts from the COVID-19 pandemic, or any other health epidemic, on our business, our clientele, supply chains, the labor markets, or the global economy as a whole; | |
| ● | the concentration of our customers and the potential effect of the loss of a significant customer; | |
| ● | debt obligations of the Company arising from our line of credit or otherwise; | |
| ● | our ability to integrate the business operations of businesses that we acquire from time to time; | |
| ● | our prior history of operating losses; | |
| ● | our ability to compete with companies producing similar products and services; | |
| ● | the scope of protection we are able to establish and maintain for intellectual property rights covering our products and technology; | |
| ● | the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; | |
| ● | general economic conditions, including effects of inflation, market volatility, interest rate increases, and effects of geopolitical events domestically and abroad; | |
| ● | our ability to develop and maintain our corporate infrastructure, including our internal controls; | |
| ● | our ability to develop innovative new products; and | |
| ● | our financial performance. |
Our financial statements are stated in United States Dollars (“$”) and are prepared in accordance with U.S. GAAP. In this Quarterly Report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
Overview
DecisionPoint is a provider and integrator of mobility and wireless systems for business organizations. The Company designs, deploys and supports mobile computing systems that enable customers to access employers’ data networks at various locations (i.e. the retail selling floor, nurse workstations, warehouse and distribution centers or on the road deliveries via enterprise-grade handheld computers, printers, tablets, and smart phones). The Company also integrates data capture equipment including bar code scanners and radio frequency identification (RFID) readers.
In January 2022, we completed the acquisition of Advanced Mobile Group, LLC (“AMG”), a privately held company headquartered in Doylestown, Pennsylvania. DecisionPoint acquired AMG to expand DecisionPoint’s mobility-first enterprise solutions and service offerings and grow its capabilities in the mid-Atlantic region. AMG is a regional leader providing services, hardware, software, integration, and wireless networking solutions, with deep experience in warehousing and distribution, manufacturing, mobile workforce automation, retailing, and healthcare segments, and 600 customers.
The future impact of the COVID-19 pandemic on our business and results of operations is unknown and will depend on future developments, which fluctuate and are highly uncertain and cannot be predicted with confidence, including the duration and severity of the COVID-19 pandemic, the spread of the new variants of the virus, the effectiveness of vaccines and vaccination rates, and additional preventative and protective actions that governments, or we or our customers, may implement, which may result in an extended period of continued business disruption and reduced operations. Certain of our customers, particularly those in the retail sector, have been significantly impacted by COVID-19 and the pandemic has contributed to disruptions in supply chains and labor shortages across industries, and therefore We have experienced supplier shipment delays due to a supply chain and logistic challenges resulting in delays in product revenue recognition of approximately $10 million during the first quarter of 2022. Our results of operations during the first quarter of 2022 are not necessarily indicative of results to be expected in the remainder of 2022 in light of the uncertainties surrounding the impact of the COVID-19 pandemic and continuing issues with logistics and supply chain disruptions through the date of this report.
In addition, general economic uncertainty and volatility arising from geopolitical events and concerns, inflation, rises in energy prices, changes in interest rates and general declines in capital spending in the information technology sector make it difficult to predict changes in the purchasing requirements of our customers and the markets we serve and whether our results of operations will be materially impacted.
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Components of Results of Operations
Net Sales
Net sales reflect revenue from the sale of hardware, software, consumables and professional services (including hardware and software maintenance) to our clients, net of sales taxes.
Revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue.
Cost of Sales, Sales and Marketing Expenses, and General and Administrative Expenses
The following illustrates the primary costs classified in each major expense category:
Cost of sales, include:
| ● | Cost of goods sold for hardware, software and consumables; | |
| ● | Cost of professional services, including maintenance; | |
| ● | Markdowns of inventory; and | |
| ● | Freight expenses. |
Sales and marketing expenses, include:
| ● | Sales salaries, benefits and commissions; | |
| ● | Consulting; | |
| ● | Marketing tools; | |
| ● | Travel; and | |
| ● | Marketing promotions and trade shows. |
General and administrative expenses, include:
| ● | Corporate payroll and benefits; | |
| ● | Depreciation and amortization; | |
| ● | Rent; | |
| ● | Utilities; and | |
| ● | Other administrative costs such as maintenance of corporate offices, supplies, legal, consulting, audit and tax preparation and other professional fees. |
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Results of Operations
The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales (in thousands):
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Statements of Income Data: | ||||||||
| Net sales | $ | 19,721 | $ | 16,072 | ||||
| Cost of sales | 15,047 | 12,234 | ||||||
| Gross profit | 4,674 | 3,838 | ||||||
| Sales and marketing expenses | 2,175 | 1,889 | ||||||
| General and administrative expenses | 2,261 | 1,620 | ||||||
| Total operating expenses | 4,436 | 3,509 | ||||||
| Operating income | 238 | 329 | ||||||
| Interest expense | (25 | ) | (29 | ) | ||||
| Gain on extinguishment of debt | - | 1,211 | ||||||
| Other, net | 4 | |||||||
| Income before income taxes | 217 | 1,511 | ||||||
| Income tax benefit (expense) | 637 | (178 | ) | |||||
| Net income | $ | 854 | $ | 1,333 | ||||
| Percentage of Net Sales: | ||||||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales | 76.3 | % | 76.1 | % | ||||
| Gross profit | 23.7 | % | 23.9 | % | ||||
| Sales and marketing expenses | 11.0 | % | 11.8 | % | ||||
| General and administrative expenses | 11.5 | % | 10.1 | % | ||||
| Total operating expenses | 22.5 | % | 21.8 | % | ||||
| Operating income | 1.2 | % | 2.0 | % | ||||
| Interest expense | -0.1 | % | -0.2 | % | ||||
| Gain on extinguishment of debt | 0.0 | % | 7.5 | % | ||||
| Other, net | 0.0 | % | 0.0 | % | ||||
| Income before income taxes | 1.1 | % | 9.4 | % | ||||
| Income tax benefit (expense) | 3.2 | % | -1.1 | % | ||||
| Net income | 4.3 | % | 8.3 | % | ||||
Results of Operations for the First Quarter of 2022 compared to the First Quarter of 2021 (Unaudited)
Net sales
| Three Months Ended March 31, | Dollar | Percent | ||||||||||||||
| 2022 | 2021 | Change | Change | |||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Hardware and software | $ | 14,300 | $ | 10,466 | $ | 3,834 | 36.6 | % | ||||||||
| Consumables | 1,280 | 1,459 | (179 | ) | (12.3 | )% | ||||||||||
| Services | 4,141 | 4,147 | (6 | ) | (0.1 | )% | ||||||||||
| $ | 19,721 | $ | 16,072 | $ | 3,649 | 22.7 | % | |||||||||
Net sales increased by 22.7%, or $3.6 million, during the three months ended March 31, 2022 as compared to the same period of the prior year. The increase in net sales was driven by higher hardware sales to three of our large enterprise customers and a $2.2 million increase in overall net sales associated with sales by AMG which we acquired on January 31, 2022 (and, thus, there were not corresponding sales by AMG included in our results of operations for the comparable period in 2021).
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Cost of sales
| Three Months Ended March 31, | Dollar | Percent | ||||||||||||||
| 2022 | 2021 | Change | Change | |||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Hardware and software | $ | 11,537 | $ | 8,427 | $ | 3,110 | 36.9 | % | ||||||||
| Consumables | 885 | 1,024 | (139 | ) | (13.6 | )% | ||||||||||
| Services | 2,625 | 2,783 | (158 | ) | (5.7 | )% | ||||||||||
| $ | 15,047 | $ | 12,234 | $ | 2,813 | 23.0 | % | |||||||||
Cost of sales increased by 23.0%, or $2.8 million during the three months ended March 31, 2022 as compared to the same prior year period primarily due to higher hardware sales volume and a $1.4 million increase in overall cost of sales associated with cost of sales of AMG that we acquired on January 31, 2022 (and, thus, there were not corresponding costs of sales of AMG included in our results of operations for the comparable period in 2021).
Gross profit
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| (dollars in thousands) | ||||||||
| Gross profit: | ||||||||
| Hardware and software | $ | 2,763 | $ | 2,038 | ||||
| Consumables | 395 | 435 | ||||||
| Services | 1,516 | 1,365 | ||||||
| Total gross profit | $ | 4,674 | $ | 3,838 | ||||
| Gross profit percentage: | ||||||||
| Hardware and software | 19.3 | % | 19.5 | % | ||||
| Consumables | 30.9 | % | 29.8 | % | ||||
| Services | 36.6 | % | 32.9 | % | ||||
| Total gross profit percentage | 23.7 | % | 23.9 | % | ||||
Gross profit increased $0.8 million for the three months ended March 31, 2022 as compared to the prior year period, primarily as a result of overall higher sales volume and the other impacts noted above. Overall gross profit margin decreased 20 basis points due to a shift in mix to hardware sales with lower profit margins.
Sales and marketing expenses
| Three Months Ended March 31, | Dollar | Percent | ||||||||||||||
| 2022 | 2021 | Change | Change | |||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Sales and marketing expenses | $ | 2,175 | $ | 1,889 | $ | 286 | 15.1 | % | ||||||||
| As a percentage of sales | 11.0 | % | 11.8 | % | — | (0.7 | )% | |||||||||
Sales and marketing expenses increased $0.3 million, or 15.1%, for the three months ended March 31, 2022 as compared to the prior year period due to increased expenses for AMG operations that was acquired on January 31, 2022 (and, thus, there were not corresponding sales and marketing expenses of AMG included in our results of operations for the comparable period in 2021). As a percentage of sales, sales and marketing expenses decreased 70 basis points primarily due to incremental one-time costs associated with the sales integration efforts with ExtenData incurred for the three months ended March 31, 2021.
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General and administrative expenses
| Three Months Ended March 31, | Dollar | Percent | ||||||||||||||
| 2022 | 2021 | Change | Change | |||||||||||||
| (dollars in thousands) | ||||||||||||||||
| General and administrative expenses | $ | 2,261 | $ | 1,620 | $ | 641 | 39.6 | % | ||||||||
| As a percentage of sales | 11.5 | % | 10.1 | % | — | 1.4 | % | |||||||||
General and administrative expenses increased $0.6 million, or 39.6%, for the three months ended March 31, 2022 as compared to the same period of the prior year. The increase in costs was due to higher director, executive and employee compensation, an increase in legal and compliance costs, and a $0.1 million increase in expenses associated with the acquisition of AMG on January 31 (and, thus, there were not corresponding general and administrative expenses by AMG included in our results of operations for the comparable period in 2021). As a percentage of sales, general and administrative costs increased 140 basis points primarily due to higher fixed director and executive compensation not correlated with the higher sales volume.
Interest expense. The decrease in interest expense to $25,000 for the first quarter of 2022 from $29,000 from the same period last year was due to a decrease in debt levels as compared to the same period last year.
Income tax benefit (expense). Income tax benefit was approximately $637,000 for the three months ended March 31, 2022 and income tax expense was $178,000 for the three months ended March 31, 2021. The income tax benefit was due to lower income before income taxes and the recognition of excess tax benefits associated with stock option exercise activity in the first quarter of 2022.
Net income. Net income was $0.9 million compared to $1.3 million in the same period last year.
Liquidity and Capital Resources
As of March 31, 2022, our principal sources of liquidity were cash totaling $9.3 million and $9.0 million of availability under our line of credit. In recent years, we have financed our operations primarily through cash generated from operating activities, borrowings from term loans and our line of credit. In certain prior years, we generated operating losses and negative cash flows from operating activities as reflected in our accumulated deficit. We have generated operating income for each of the years ended December 31, 2018 through December 31, 2021. Based on our recent trends and our current projections, we expect to generate cash from operations for the year ending December 31, 2022. Given our projections, combined with our existing cash and credit facilities, we believe the Company has sufficient liquidity for at least the next 12 months.
Our ability to continue to meet our cash requirements will depend on, among other things, the effect of COVID-19 on U.S. and global economic activity, continuing disruptions in supply chains and labor shortages across industry sectors caused by the COVID-19 pandemic, our ability to achieve anticipated levels of revenues and cash flow from operations, our ability to manage costs and working capital successfully and the continued availability of financing, if needed. We cannot provide any assurance that our assumptions used to estimate our liquidity requirements will remain accurate due to, among other things, the unpredictability of the COVID-19 global pandemic and its effect on the Company and its customers and suppliers. Consequently, the duration of the pandemic and our estimates on the severity of the impact on our future earnings and cash flows could change and have a material impact on our results of operations and financial condition. In the event of a sustained market deterioration, and declines in net sales, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions. We cannot provide any assurance that we will be able to obtain any additional sources of financing or liquidity on acceptable terms, or at all.
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Working Capital (Deficit)
| March 31, 2022 | December 31, 2021 | Increase/ (Decrease) | ||||||||||
| (in thousands) | ||||||||||||
| Current assets | $ | 28,684 | $ | 19,334 | $ | 9,350 | ||||||
| Current liabilities | 33,148 | 18,352 | 14,796 | |||||||||
| Working capital (deficit) | (4,464 | ) | 982 | (5,546 | ) | |||||||
The working capital deficit as of March 31, 2022 was due to cash paid for the acquisition of AMG. Deferred revenue increased at March 31, 2022 as compared to December 31, 2021 due to a $14.0 million large enterprise retail customer order placed in January 2022, all of which was paid in cash as of March 31, 2022.
Line of Credit
On July 30, 2021, we entered into a Loan and Security Agreement (the “Loan Agreement”) with MUFG Union Bank, National Association. The Loan Agreement provides for a revolving line of credit of up to $9.0 million with our obligations being secured by a security interest in substantially all of our assets. Loans extended to us under the Loan Agreement are scheduled to mature on July 31, 2024.
As of March 31, 2022, we were eligible to borrow up to $9.0 million, and had no outstanding borrowings under the line of credit.
EIDL Promissory Note
On August 27, 2020, we received $150,000 in connection with a promissory note from the SBA under the Economic Injury Disaster Loan (“EIDL”) program pursuant to the CARES Act. Under the terms of the EIDL promissory note, interest accrues on the outstanding principal at an interest rate of 3.75% per annum and with a term of 30 years with equal monthly payments of principal and interest of $731 beginning on August 27, 2021.
Cash Flow Analysis
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| (in thousands) | ||||||||
| Net cash provided by operating activities | $ | 11,669 | $ | 1,258 | ||||
| Net cash used in investing activities | (4,907 | ) | (243 | ) | ||||
| Net cash used in financing activities | - | (1,204 | ) | |||||
| Net increase (decrease) in cash | $ | 6,762 | $ | (189 | ) | |||
Operating Activities
Net cash provided by operating activities increased to $11.7 million for the three months ended March 31, 2022 from $1.3 million for the three months ended March 31, 2021. The increase was primarily due to an increase in deferred revenue.
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Investing Activities
Net cash used in investing activities was $4.9 million for the three months ended March 31, 2022 which is comprised of cash payments in the first quarter of 2022 in connection with the acquisition of AMG and Boston Technologies and purchases of capital expenditures of property and equipment. Net cash used in investing activities was $0.2 million for the three months ended March 31, 2021 which is comprised of cash payments delivered in the first quarter of 2021 in connection with the acquisition of ExtenData and purchases of capital expenditures of property and equipment.
Financing Activities
Net cash used in financing activities was $1.2 million for the three months ended March 31, 2021 which primarily comprised of payments on the line of credit.
Stock Issuances
For the three months ended March 31, 2022, certain employees exercised vested stock options through a cashless exercise. The options exercised were net settled in satisfaction of the exercise price and employee share-based tax withholding. The exercised options, utilizing a cashless exercise, are summarized in the following table:
| Options exercised | Weighted Average Exercise Price | Shares Net Settled for Exercise | Shares Withheld for Taxes | Net Shares Issued | Weighted Average Share Price | Employee Share-Based Tax Withholding | ||||||||||||||||||||
| 550,834 | $ | 3.48 | 194,681 | 142,479 | 213,674 | $ | 9.85 | $ | 1,403,191 | |||||||||||||||||
Critical Accounting Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires the appropriate application of certain accounting policies, some of which require us to make estimates and assumptions about future events and their impact on amounts reported in our condensed consolidated financial statements. Since future events and their impact cannot be determined with absolute certainty, the actual results will inevitably differ from our estimates.
Acquisition of Advanced Mobile Group, LLC
We completed the acquisition of Advanced Mobile Group, LLC (“AMG”) for $5.0 million on January 31, 2022. We accounted for this transaction under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated, on a preliminary basis, to the assets acquired and liabilities assumed based on their respective estimated fair values, including identified intangible assets of $3.1 million and resulting goodwill of $1.0 million. Our preliminary fair value estimates of intangible assets were determined using valuation techniques based on estimates and assumptions used for similar intangible assets we acquired in connection with the acquisition of ExtenData in December 2020. Included in the purchase price of AMG, is contingent consideration of $0.5 million, subject to EBITDA results of AMG during each of the two years following the closing of the acquisition. We estimated the fair value of the contingent consideration based on the financial forecasts of AMG. The estimated fair values associated with the acquisition of AMG are subject to change during the measurement period which is not expected to exceed one year after the date of acquisition. Any adjustments to our preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined and recorded against goodwill.
For a description of other critical accounting policies and estimates, refer to Part II, Item 7, Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2021. Other than the acquisition of AMG, there have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2021.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are subject to interest rate risk in connection with borrowings, if any, under our line of credit, which bears interest at variable rates. As of March 31, 2022, we had no outstanding borrowings under our credit facility.
Impact of Inflation
Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our results of operations and financial condition have been immaterial.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our evaluation of internal controls excluded an assessment of the internal control over financial reporting for AMG, a business that we acquired on January 31, 2022. We are currently in the process of conducting an assessment of AMG’s controls and procedures and will complete our assessment within one year. Based on the evaluation of our disclosure controls and procedures as of March 31, 2022, excluding an assessment of AMG’s internal control of financial reporting, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no material changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information contained in “Note 10: Contingencies” to our condensed consolidated financial statements included in this quarterly report is incorporated by reference into this Item.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, please refer to the section titled Risk Factors in our Annual Report on Form 10-K for the years ended December 31, 2021 for a detailed discussion of certain risks that affect the Company.
Item 5. Other Information
On April 29, 2022, the Company’s common stock was authorized for listing on the NYSE American Stock Exchange, and, on May 5, 2022 the Company’s common stock began trading on that exchange.
Item 6. Exhibits
EXHIBIT INDEX
| 10.1 | Membership Interest Purchase Agreement between Decisionpoint Systems, Inc. and various sellers dated January 31, 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on February 11, 2022) | |
| 31.1* | Certification by the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification by the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Section 1350 Certifications | |
| 101 | Interactive data files from DecisionPoint Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income and Comprehensive Income; (iii) the Condensed Consolidated Statement of Stockholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows and (v) Notes to the Condensed Consolidated Financial Statements. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith |
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SIGNATURES
Under the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report was signed on behalf of the Registrant by the authorized person named below.
| DECISIONPOINT SYSTEMS, INC. | |||
| Dated: May 16, 2022 | By: | /s/ Steve Smith | |
| Name: | Steve Smith | ||
| Title: | Chief Executive Officer (Principal Executive Officer) and Director | ||
| Dated: May 16, 2022 | By: | /s/ Melinda Wohl | |
| Name: | Melinda Wohl | ||
| Title: | Vice President Finance and Administration (Principal Financial Officer and Principal Accounting Officer) | ||
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