iSign Solutions Inc. - Quarter Report: 2022 June (Form 10-Q)

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: June 30, 2022

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: 000-19301

iSign Solutions Inc.

(Exact name of registrant as specified in its charter)

2033 Gateway Place, Suite 662, San Jose, CA 95110

(Address of principal executive offices) (Zip Code)

(650) 802-7888

Registrant’s telephone number, including area code

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

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.

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 Section 12b-2 of the exchange Act)

Yes   ☐      No   ☒

Number of shares outstanding of the issuer’s Common Stock, as of August 15, 2022: 6,332,736

INDEX

PART I–FINANCIAL INFORMATION

Item 1. Financial Statements

iSign Solutions Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par value amounts)

See accompanying notes to these Condensed Consolidated Financial Statements

iSign Solutions Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

See accompanying notes to these Condensed Consolidated Financial Statements

iSign Solutions Inc.

Condensed Consolidated Statements of Stockholders’ Deficit

(Unaudited)

(In thousands)

See accompanying notes to these Condensed Consolidated Financial Statements

iSign Solutions Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

See accompanying notes to these Condensed Consolidated Financial Statements

iSign Solutions Inc.

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

(In thousands)

See accompanying notes to these Condensed Consolidated Financial Statements

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

Nature of Business

iSign Solutions Inc. and its subsidiary is a leading supplier of digital transaction management (DTM) software enabling the paperless, secure and cost-effective management and authentication of document-based transactions. iSign’s solutions encompass a wide array of functionality and services, including electronic signatures, simple-to-complex workflow management and various options for biometric authentication. These solutions are available across virtually all enterprise, desktop and mobile environments as a seamlessly integrated platform for both ad-hoc and fully automated transactions. iSign’s platform can be deployed both on premise and as a cloud-based (“SaaS”) service, with the ability to easily transition between deployment models. The Company is headquartered in San Jose, California. The Company’s products include SignatureOne™ Ceremony™ Server, the iSign™ suite of products and services, including iSign™ Enterprise and iSign™ Console™, and Sign-it™ programs.

In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Since March 11, 2020 states in the U.S., including California, where the Company is headquartered, have begun to open up as the result of the development of vaccines to thwart the spread of the virus. New variants of COVID-19 have surfaced around the world, including the United States which may cause additional closures of economies depending on how virulent the new strains are. New COVID-19 variant outbreaks may further disrupted supply chains and affected production and sales across a wide range of industries. The extent of the impact of new COVID-19 outbreaks on our operational and financial performance will depend on certain developments, including the duration and further spread of the outbreak, continued impact on our customers, employees and vendors all of which are uncertain and cannot be predicted.

Basis of Presentation

The financial information contained herein should be read in conjunction with the Company’s consolidated audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2021.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included in this quarterly report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of its financial position at the dates presented and the Company’s results of operations and cash flows for the periods presented. The Company’s interim results are not necessarily indicative of the results to be expected for the entire year.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant cumulative losses since its inception and, at June 30, 2022 the Company’s accumulated deficit was $136,109. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of June 30, 2022, the Company’s cash balance was $165. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

There can be no assurance that the Company will be successful in securing adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to operate as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Accounting Changes and Recent Accounting Pronouncements

Accounting Standards Update No. 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). A modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be treated as an exchange of the original instrument for a new instrument. In addition, the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity should be measured. The effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be recognize on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021. Early adoption is permitted for all entities, including adoption in an interim period.

The Company will evaluate ASU 2021-04 to determine what impact, if any, the adoption will have on the Company’s financial statements.

Other Accounting Standards Updates issued in 2021 are not currently applicable to the Company, therefore implementation would not be expected to have a material impact on the Company’s financial position, results of operations and cash flows.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Similarly, equity-classified convertible preferred stock instruments will be accounted for as single units of account in equity unless the conversion feature needs to be bifurcated under Topic 815. The new guidance also made amendments to the earnings per share guidance in Topic 260, Earnings Per Share, for convertible instruments, the most significant impact of which is requiring the use of the if-converted method for diluted earnings per share calculation. Further, ASU 2020-06 made revisions to Subtopic 815-40, which provides guidance on how an entity must determine whether a contract qualifies for a scope exception from derivative accounting. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. Effective January 1, 2022, the Company early adopted ASU 2020-06 using the modified retrospective approach. Adoption of the new standard did not have a material impact on the Company’s financial statements or disclosures. 

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

The following table summarizes accounts receivable and revenue concentrations:

The Company calculates basic net loss per share based on the weighted average number of shares outstanding, and when applicable, diluted net income per share, which is based on the weighted average number of shares and potential dilutive shares outstanding.

The following table lists shares and warrants that were excluded from the calculation of diluted earnings per share as the inclusion of shares from the assumed exercise of such options and warrants would be anti-dilutive.

Advances:

On January 19 and February 9, 2022, the Company repaid $15 and $15, respectively, of accounts receivable advances from related parties along with $2 of accrued advance fees. In addition, during February 2022, the Company repaid $100 of demand notes to an unrelated party along with 20% of accrued fees.

Notes payable:

In January 2022, the Company received, from unrelated parties, demand notes aggregating $50 in cash. The notes bear interest at the rate of 20% per annum. Principal and interest due shall be paid in full on demand, following ten (10) calendar day prior written notices starting on March 15, 2022. These note may be prepaid in whole or in part at any time without penalty, premium or other consideration by giving at least five (5) business day prior written notice to the Holder. The notes were repaid in full plus $1 of accrued interest in February 2022.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

On April 20, 2022, the Company issued an aggregate of $125 in unsecured convertible notes, $70 to related parties and $55 to other investors. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lesser of $1.00 per share or the price per share of the new financing. The notes bear interest at the rate of 10% per annum and are due December 31, 2022.

During the three and six months ended June 30, 2022, the Company accrued $89 and $180 of interest expense, $70 and $137, for notes only, associated with the outstanding secured and unsecured convertible promissory notes, of which $32 and $62 was to related parties and $38 and $75 was to other investors. For the three and six months ended June 30, 2021, the Company accrued $80 and $159 of interest expense, $68 and $136, for notes only, associated with the outstanding secured and unsecured convertible promissory notes, of which $24 and $49 was to related parties and $44 and $87 was to other investors.

Stock-based compensation expense is based on the estimated grant date fair value of the portion of stock-based payment awards that are ultimately expected to vest during the period. The grant date fair value of stock -based awards to employees and directors is calculated using the Black-Scholes-Merton valuation model.

Forfeitures of stock-based payment awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated average forfeiture rate for the six months ended June 30, 2022 and 2021, was approximately 1.73% and 4.78%, respectively, based on historical data.

Valuation and Expense Information:

The weighted-average fair value of stock-based compensation is based on the Black-Scholes-Merton valuation model. Forfeitures are estimated and it is assumed no dividends will be declared. The estimated fair value of stock-based compensation awards to employees is amortized using the accrual method over the vesting period of the options.

No options were granted during the three and six months ended June 30, 2022 and 2021. There were no stock options exercised during the three and six months ended June 30, 2022 and 2021, respectively.

The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three and six months ended June 30:

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

A summary of option activity under the Company’s plans for the six months ended June 30, 2022 and 2021 is as follows:

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2022:

A summary of the status of the Company’s non-vested shares as of June 30, 2022 is as follows:

As of June 30, 2022, there was a total of $11 of unrecognized compensation expense related to non-vested stock-based compensation arrangements granted under the plans. The unrecognized compensation expense is expected to be realized over a weighted average period of 1 year.

Warrants

The Company did not issue any warrants during the six months ended June 30, 2022 and 2021.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

A summary of the warrant activity to purchase shares of Common Stock for the six months ended June 30 is as follows:

A summary of the warrant activity for the six months ended June 30 is as follows:

A summary of the status of the warrants outstanding and exercisable as of June 30, 2022 is as follows:

On August 11, 2022, the Company issued an aggregate of $50 in unsecured convertible notes from third party investor. The unsecured notes are convertible by the holder into common stock at any time at a price per share of $1.00. Upon closing a new financing of at least $1,000 in aggregate proceeds, the Company can force conversion at a price equal to the lesser of $1.00 per share or the price per share of the new financing. The note bears interest at the rate of 10% per annum and is due December 31, 2022.

Forward Looking Statements

Certain statements contained in this quarterly report on Form 10-Q, including, without limitation, statements containing the words “believes”, “anticipates”, “hopes”, “intends”, “expects”, and other words of similar import, constitute “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause actual events to differ materially from expectations. Such factors include those set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, including the following:

Except as otherwise required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, as a result of new information, future events or otherwise.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto included in Part 1, Item 1 of this quarterly report on Form 10-Q and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in the Company’s Annual report on Form 10-K for the fiscal year ended December 31, 2021.

Overview

The Company is a leading supplier of digital transaction management (DTM) software enabling the paperless, secure and cost-effective management of document-based transactions. iSign’s solutions encompass a wide array of functionality and services, including electronic signatures, biometric authentication and simple-to-complex workflow management. These solutions are available across virtually all enterprise, desktop and mobile environments as a seamlessly integrated platform for both ad-hoc and fully automated transactions. iSign’s software platform can be deployed both on-premise and as a cloud-based service, with the ability to easily transition between deployment models.

The Company was incorporated in Delaware in October 1986. Except for the year ended December 31, 2004, in each year since its inception the Company has incurred losses. For the two-year period ended December 31, 2021, net losses aggregated approximately $1,014, and, at June 30, 2022, the Company’s accumulated deficit was approximately $136,109.

In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Since March 11, 2020 states in the U.S., including California, where the Company is headquartered, have begun to open up as the result of the development of vaccines to thwart the spread of the virus. New variants of COVID-19 have surfaced around the world, including the United States which may cause additional closures of economies depending on how virulent the new strains are. New COVID-19 variant outbreaks may further disrupted supply chains and affected production and sales across a wide range of industries. The extent of the impact of new COVID-19 outbreaks on our operational and financial performance will depend on certain developments, including the duration and further spread of the outbreak, continued impact on our customers, employees and vendors all of which are uncertain and cannot be predicted.

For the three months ended June 30, 2022, total revenue was $228, compared to total revenue of $268 in the prior year period. For the six months ended June 30, 2022, total revenue was $483, a decrease of $44, or 8%, compared to total revenue of $527 in the prior year period. The change in revenue for the six months ended June 30, 2022 is primarily due to a decrease in product revenue of $28 or 15%, compared to the prior year period. The decrease in product revenue is the result of no SOW transaction for this year. Maintenance revenue for the six months was $330, a decrease of $16, or 5% compared to $346 in the prior year.

The net loss for the three months ended June 30, 2022 was $189, an increase of $20, or 12%, compared to a net loss of $169 in the prior year period. The three month loss from operations increased by $11, or 12%, to $100 compared to $89 in the prior year period. The decrease was due to the decrease in revenue and a net decrease in overhead expenses. For the six months ended June 30, 2022 the net loss was $420, an increase of $61, or 17%, compared to a net loss of $359 in the prior year period. The six month loss from operations increased $40, or 20%, to $240 compared to $200 in the prior year period. This increase was due to the same factors described for the three month period above.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

Critical Accounting Policies and Estimates

Refer to Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2020 Form 10-K.

Effect of Recent Accounting Pronouncements

Accounting Standards Updates issued in 2021 are being evaluated by the Company, however, implementation is not expected to have a material impact on the Company’s financial position, results of operations and cash flows.

Results of Operations

Revenue

For the three months ended June 30, 2022, product revenue was $73, a decrease of $26, or 25%, compared to product revenue of $99 in the prior year period. The decrease in revenue is primarily attributable to decreases in SOW transactional revenue compared to the prior year period. For the three months ended June 30, 2022, maintenance revenue was $155, a decrease of $14, or 8%, compared to maintenance revenue of $169 in the prior year period.

For the six months ended June 30, 2022, product revenue was $153, a decrease of $28, or 15%, compared to product revenue of $181 in the prior year period. The decrease in product revenue is primarily due to the same factors for the three-month period discussed above. For the six months ended June 30, 2022, maintenance revenue was $330, a decrease of $16, or 5%, compared to maintenance revenue of $346 in the prior year period. The decrease in maintenance revenue is primarily due to less maintenance contracts.

Cost of Sales

For the three months ended June 30, 2022, cost of sales was $22, a decrease of $8, or 27%, compared to cost of sales of $30 in the prior year period. The decrease in cost of sales was due to a decrease in direct labor related to maintenance contracts during the three months ended June 30, 2022, compared to the prior year period.

For the six months ended June 30, 2022, cost of sales was $42, a decrease of $18, or 30%, compared to cost of sales of $60 in the prior year period. The decrease in cost of sales was due to a decrease in direct labor related to revenue from SOW contracts, compared to the prior year period.

Operating expenses

Research and Development Expenses

For the three months ended June 30, 2022, research and development expense was $144, an increase of $9, or 6%, compared to research and development expense of $135 in the prior year period. Research and development expenses consist primarily of salaries and related costs, outside engineering, maintenance items, and allocated facilities expenses. Total expenses, before allocations for the three months ended June 30, 2022, were $168, a decrease of $1, or 0%, compared to $169 in the prior year period. The decrease in gross expenses is primarily due to the factors discussed above and certain cost saving measures put in place in the current year to safeguard against possible negative repercussions of the COVID-19 pandemic.

For the six months ended June 30, 2022, research and development expense was $305, an increase of $26, or 9%, compared to research and development expense of $279 in the prior year period. Total expenses, before allocations to cost of sales, for the six months ended June 30, 2021, were $353, an increase of $10, or 3%, compared to $343 in the prior year period. The reasons for these increase during the six-month period ended June 30, 2022 are the same as for the three-month period discussed above. The decrease in total expenses was offset by a reduction the amount of direct labor allocated to cost of sales during the six month period.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

Sales and Marketing Expense

For the three months ended June 30, 2022, sales and marketing expense was $13, a decrease of $9, or 42%, compared to sales and marketing expense of $22 in the prior year period. For the six months ended June 30, 2022, sales and marketing expense was $67, a decrease of $4, or 6%, compared to sales and marketing expense of $71 in the prior year period. These decreases are primarily attributable to a decrease in commission expense due to low renewal of maintenance contracts.

General and Administrative Expense

For the three months ended June 30, 2021, general and administrative expense was $149, a decrease of $21, or 12%, compared to general and administrative expense of $170 in the prior year period. The decrease was primarily due to a decrease in overhead expense from period to period.

For the six months ended June 30, 2022, general and administrative expense was $309, a decrease of $8, or 3%, compared to general and administrative expense of $317 in the prior year period. The decrease was due to the reduction in accounting and auditing services and investor relations expense accounts.

Other Income and Expense

For the three and six months ended June 30, 2022, other expense was $0 and $0, respectively, an increase of $0 and $1, respectively, compared to other expense of $0 and $1 for the three and six months ended June 30, 2021

For the three months ended June 30, 2022, interest expense was $89, an increase of $9, or 11% compared to interest expense of $80 in the prior year period. For the six months ended June 30, 2022, interest expense was $180, an increase of $21, or 13%, compared to interest expense of $159 in the prior year period. The increase in interest expense is primarily due to the increase in the amount of debt outstanding for the three and six months ended June 30, 2022 compared to the prior year period.

Amortization of debt discount was $0 for the three and six month periods ended June 30, 2022 compared to $0 in the same periods of the prior year, respectively.

Income tax expense for the three and six months ended June 30, 2022 and 2021 were $0 and $1, respectively.

Liquidity and Capital Resources

At June 30, 2022, cash and cash equivalents totaled $165, compared to cash and cash equivalents of $40 at December 31, 2021. The increase in cash was due primarily to $128 provided by operating activities offset by $3 in cash used in investing activities and $0 used in financing for the six month period ended June 30, 2022. At June 30, 2022, total current assets were $285, compared to total current assets of $186 at December 31, 2021. At June 30, 2021, the Company’s principal sources of funds included its aggregated cash and cash equivalents of $165.

At June 30, 2021, accounts receivable net, was $108, a decrease of $16 or 13%, compared to accounts receivable net of $124 at December 31, 2021. The decrease is due primarily due to faster collection times for accounts receivable.

At June 30, 2022, prepaid expenses and other current assets were $12, a decrease of $10, or 45%. The Company has been working on minimizing the dollar amount of new prepaid expenses incurred during the six-month period in light of the financial uncertainty surrounding the current COVID-19 pandemic.

At June 30, 2022, total current liabilities were $5,852, an increase of $478, or 9%, compared to total current liabilities of $5,374 at December 31, 2021.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

At June 30, 2022, accounts payable was $371, a decrease of $7, or 2%, compared to accounts payable of $378 at December 31, 2021.

At June 30, 2022, accrued compensation was $74, an increase of $5, or 7%, compared to accrued compensation of $69 at December 31, 2021. The increase is due primarily to the accrual of commissions during the quarter ended June 30, 2022

At June 30, 2022, deferred revenue was $471, an increase of $275, or 140%, compared to deferred revenue of $196 at December 31, 2021. Deferred revenue primarily reflects advance payments for maintenance fees from the Company’s licensees that are generally recognized as revenue by the Company when all obligations are met or over the term of the maintenance agreement, whichever is longer. Deferred revenue is recorded when the Company receives advance payment from its customers.

In June 2022, the Company paid the second installment in the amount of $45 plus accrued interest of $4 of a note entered into associated with a settlement agreement dated July 1, 2020 with one of its vendors. The reaming $45 plus interest at the rate of 4% per annum is due in two installments, June of 2023.

The Company incurred $89 and $180, respectively, of interest expense for the three and six months ended June 30, 2022, of which was $28 and $4, respectively, was paid in cash.

The Company had no material commitments as of June 30, 2022.

The Company has experienced recurring losses from operations that raise a substantial doubt about its ability to continue as a going concern. There can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to it when needed, or if available, will be available on favorable terms or in amounts required by it. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, results of operations and ability to operate as a going concern.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

The Company did not enter into any short-term security investments during the three and six months ended June 30, 2022.

Foreign Currency Risk

From time to time, the Company makes certain capital equipment or other purchases denominated in foreign currencies. As a result, the Company’s cash flows and earnings are exposed to fluctuations in interest rates and foreign currency exchange rates. The Company attempts to limit these exposures through operational strategies and generally has not hedged currency exposures. During the three and six months ended June 30, 2022 and 2021, foreign currency translation gains and losses were insignificant.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company carried out an evaluation as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 and 15d-15 under the Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation and because of the material weaknesses in our internal control over financial reporting described below, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management identified the following control deficiencies that constitute material weaknesses that are not fully remediated as of the filing date of this report:

As a small company with limited resources that are mainly focused on the development and sales of software products and services, iSign does not employ a sufficient number of staff in its finance department to possess an optimal segregation of duties or to provide optimal levels of oversight. This has resulted in certain audit adjustments and management believes that there may be a possibility for a material misstatement to occur in future periods while it employs the current number of personnel in its finance department.

The Company does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedures are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The Company considered these limitations during the development of its disclosure controls and procedures, and will continually reevaluate them to ensure they provide reasonable assurance that such controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

Part II-Other Information

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sale of Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information.

None.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

Item 6. Exhibits.

(a) Exhibits.

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

iSign Solutions Inc.

FORM 10-Q

(In thousands, except per share amounts)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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