F5, Inc 8-K/A, filed Apr 9, 2020

About this 8-K/A

Items reported

F5, Inc. (FFIV)

8-K/A 2020-04-09 For: 2020-01-24

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Added on April 09, 2026

F5, Inc filed this 8-K/A on April 9, 2020, reporting on events of January 24, 2020.

801 5th Avenue

(Address of principal executive offices)

(Zip Code)

Item 9.01: Financial statements and exhibits

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Washington	000-26041	91-1714307

(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	FFIV	NASDAQ Global Select Market




Exhibit No.		Description
23.1		Consent of KPMG LLP, Independent Registered Public Accounting Firm.

99.1		The audited consolidated financial statements of Shape as of and for the years ended January 31, 2019 and December 31, 2017, as well as the accompanying notes and independent auditors’ report.

99.2		The unaudited consolidated financial statements of Shape for the three and nine months ended October 31, 2019 and 2018, as well as the accompanying notes.

99.3		The following unaudited pro forma financial information:

		Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2019;

		Unaudited Pro Forma Condensed Combined Income Statement for the three months ended December 31, 2019;

		Unaudited Pro Forma Condensed Combined Income Statement for the year ended September 30, 2019;

		Notes to Unaudited Pro Forma Condensed Combined Financial Statements.




	F5 NETWORKS, INC. (Registrant)
Date: April 8, 2020	By:	/s/ François Locoh-Donou
		François Locoh-Donou
		President and Chief Executive Officer



	Page(s)
Independent Auditors’ Report	1
Consolidated Balance Sheets	2
Consolidated Statements of Operations and Comprehensive Loss	3
Consolidated Statements of Changes in Stockholders’ Deficit	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6 –18



Assets	January 31, 2019			December 31, 2017
Current assets:

Cash	$	21,006,605		$	8,818,573
Accounts receivable	12,960,777			9,554,221
Inventory	552,062			314,748
Prepaid expenses and other current assets	4,427,338			2,590,083
Total current assets	38,946,782			21,277,625
Restricted cash	—			125,337
Property and equipment, net	3,559,858			2,018,881
Deposits and other	250,593			140,429
Total assets	$	42,757,233		$	23,562,272
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	2,197,002		$	888,847
Accrued liabilities	1,080,747			624,234
Accrued compensation	3,511,981			2,612,638
Deferred rent	—			63,740
Unvested stock options subject to repurchase	39,864			87,676
Deferred revenue	34,857,163			24,269,187
Short-term portion of bank loan	2,800,000			1,400,000
Short-term portion of equipment leases and tenant improvement loans	666,904			—
Total current liabilities	45,153,661			29,946,322
Long-term portion of bank loan	12,235,438			5,507,602
Long-term portion of deferred rent	216,709			141,300
Long-term portion of unvested stock options subject to repurchase	20,552			72,007
Long-term portion of deferred revenue	685,611			625,000
Long-term portion of equipment leases and tenant improvement loans	1,204,759			—
Total liabilities	59,516,730			36,292,231
Stockholders’ deficit:
Series A convertible preferred stock (par value: $0.001 per share, 37,733,410 shares authorized, issued and outstanding at January 31, 2019 and December 31, 2017)	5,724,309			5,724,309
Series B convertible preferred stock (par value: $0.001 per share, 36,818,852 shares authorized, issued and outstanding at January 31, 2019 and December 31, 2017)	19,916,657			19,916,657
Series C convertible preferred stock (par value: $0.001 per share, 27,440,594 shares authorized, issued and outstanding at January 31, 2019 and December 31, 2017)	39,873,636			39,873,636
Series D convertible preferred stock (par value: $0.001 per share, 24,648,748 shares authorized, issued and outstanding at January 31, 2019 and December 31, 2017)	39,757,386			39,757,386
Series E convertible preferred stock (par value: $0.001 per share, 13,780,240 shares authorized, 13,649,000 and 0 shares issued and outstanding at January 31, 2019 and December 31, 2017)	25,817,397			—
Common stock (par value: $0.001 per share, 262,489,196 and 221,100,000 shares authorized at January 31, 2019 and December 31, 2017 respectively; 65,768,545 and 63,751,802 shares issued and outstanding at January 31, 2019 and December 31, 2017, respectively)	20,768			18,751
Additional paid-in capital	11,583,529			5,511,486
Cumulative Translation Adjustment	(16,735		)	—
Accumulated deficit	(159,436,444		)	(123,532,184		)
Total stockholders’ deficit	(16,759,497		)	(12,729,959		)
Total liabilities and stockholders’ deficit	$	42,757,233		$	23,562,272



	2019			2017
Revenue	$	45,854,379		$	21,732,556
Cost of revenue	20,013,889			13,682,839
Gross profit	25,840,490			8,049,717
Operating expenses:
Sales and marketing	22,157,962			11,429,663
Research and development	23,157,800			18,288,355
General and administrative	12,885,356			7,008,440
Total operating expenses	58,201,118			36,726,458
Operating loss	(32,360,628		)	(28,676,741		)
Other income (expense):
Interest income	61,696			13,815
Interest and other expense	(1,451,572		)	(204,597		)
Other expense	(1,389,876		)	(190,782		)
Loss before income taxes	(33,750,504		)	(28,867,523		)
Provision for income taxes	27,578			900
Net loss	$	(33,778,082	)	$	(28,868,423	)
Other comprehensive loss:
Foreign currency translation loss	(16,735		)	—
Comprehensive loss	$	(33,794,817	)	$	(28,868,423	)



	Convertible preferred stock
	Series Preferred A			Series Preferred B			Series Preferred C			Series Preferred D			Series Preferred E			Common Stock					Additional paid-in capital			Accumulated deficit			Cumulative Translation Adjustment			Total stockholders' Deficit
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares		Amount			Additional paid-in capital			Accumulated deficit			Cumulative Translation Adjustment			Total stockholders' Deficit
Balance, December 31, 2016	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386	—	$	—	62,010,309		$	17,010		$	3,504,893		$	(94,663,761	)	$	—		$	14,130,130
Exercise of common stock options	—	—		—	—		—	—		—	—		—	—		809,105		809			439,079			—			—			439,888
Repurchase of exercised common	—	—		—	—		—	—		—	—		—	—		(734,517	)	(735		)	(404,672		)	—			—			(405,407		)
Change in early exercise liability	—	—		—	—		—	—		—	—		—	—		1,666,905		1,667			717,551			—			—			719,218
Issuance of preferred stock, net of	—	—		—	—		—	—		—	—		—	—		—		—			—			—			—			—
Issuance of common stock warrants	—	—		—	—		—	—		—	—		—	—		—		—			92,398			—			—			92,398
Stock-based compensation expense	—	—		—	—		—	—		—	—		—	—		—		—			1,162,237			—			—			1,162,237
Net loss	—	—		—	—		—	—		—	—		—	—		—		—			—			(28,868,423		)	—			(28,868,423		)
Balance, December 31, 2017	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386	—	$	—	63,751,802		$	18,751		$	5,511,486		$	(123,532,184	)	$	—		$	(12,729,959	)
Balance, February 1, 2018	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386	—	$	—	63,961,036		$	18,961		$	5,866,690		$	(125,658,362	)	$	—		$	(14,500,723	)
Exercise of common stock options	—	—		—	—		—	—		—	—		—	—		2,082,692		2,083			1,082,637			—			—			1,084,720
Repurchase of exercised common	—	—		—	—		—	—		—	—		—	—		(396,732	)	(397		)	(289,090		)	—			—			(289,487		)
Change in early exercise liability	—	—		—	—		—	—		—	—		—	—		121,549		121			71,634			—			—			71,755
Issuance of preferred stock, net of	—	—		—	—		—	—		—	—		13,649,000	25,817,397		—		—			—			—			—			25,817,397
Issuance of common stock warrants	—	—		—	—		—	—		—	—		—	—		—		—			334,787			—			—			334,787
Stock-based compensation expense	—	—		—	—		—	—		—	—		—	—		—		—			4,516,871			—			—			4,516,871
Cumulative translation adjustment	—	—		—	—		—	—		—	—		—	—		—		—			—			—			(16,735		)	(16,735		)
Net loss	—	—		—	—		—	—		—	—		—	—		—		—			—			(33,778,082		)	—			(33,778,082		)
Balance, January 31, 2019	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386	13,649,000	$	25,817,397	65,768,545		$	20,768		$	11,583,529		$	(159,436,444	)	$	(16,735	)	$	(16,759,497	)



	2019			2017
Cash flows from operating activities:
Net loss	$	(33,778,082	)	$	(28,868,423	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,602,893			943,803
Stock-based compensation	4,516,871			1,162,237
Amortization of warrant	95,956			—
Changes in operating assets and liabilities:
Accounts receivable	(286,001		)	(4,684,623		)
Inventory	966,556			(229,653		)
Prepaid expenses and other current assets	(1,365,331		)	(1,196,686		)
Deposits and other assets	(110,163		)	6,141
Accounts payable and accrued liabilities and accrued compensation	2,822,125			1,314,624
Deferred revenue	8,469,938			14,748,395
Deferred rent	19,673			33,784
Unrealized currency translation	(16,735		)	—
Net cash used in operating activities	(17,062,300		)	(16,770,401		)
Cash flows from investing activities:
Purchase of property and equipment	(2,234,571		)	(1,374,797		)
Change in restricted cash	125,342			(63		)
Net cash used in investing activities	(2,109,229		)	(1,374,860		)
Cash flows from financing activities:
Net proceeds from issuance of preferred stock	25,817,397			—
Proceeds from exercise of stock options	1,084,720			439,889
Repurchase of exercised common stock options	(289,487		)	(405,407		)
Repayments under equipment leases and tenant improvements	(257,906		)	—
Borrowings under bank loan	10,000,000			7,000,000
Repayments under bank loan	(1,633,333		)	—
Net cash provided by financing activities	34,721,391			7,034,482
Net increase (decrease) in cash	15,549,862			(11,110,779		)
Cash at beginning of year	5,456,743			19,929,352
Cash at end of year	$	21,006,605		$	8,818,573
Supplemental cash flow disclosure:
Cash paid during the year for income taxes	$	4,973		$	900
Cash paid during the year for interest	1,476,080			149,576
Noncash financing activities:
Amount financed under equipment leases and tenant improvements	$	2,129,569		$	—
Change in liability for early exercised stock-based awards	(71,755		)	(719,218		)
Issuance of common stock warrant	334,787			92,398


•	the service has been or is being provided to the customer;


•	the amount of fees to be paid by the customer is fixed or determinable.


•	Level 1 – Observable inputs that include unadjusted quoted prices in active markets for identical assets or liabilities.


•	Level 2 – Observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


•	Level 3 – Unobservable inputs that are supported by little or no market activity and that are based on management’s assumptions, including fair value measurements determined by using pricing models, discounted cash flow methodologies, or similar techniques.



Item 9.01	Financial Statements and Exhibits


(a)	Financial Statements of business acquired.


(c)	Not applicable.


(d)	Exhibits.


(3)	Significant Risks and Uncertainties including Business Concentrations



	Estimated useful life in years	2019			2017
Computer equipment	3	$	2,440,597		$	1,693,197
Data center equipment	3	4,190,997			1,987,579
Office furniture and equipment	7	366,746			273,482
Domain name	15	5,163			5,163
Leasehold improvements	Remaining life of lease	774,097			570,986
Computer software	3	55,571			55,571
Total property and equipment		7,833,171			4,585,978
Less accumulated depreciation and amortization		(4,273,313		)	(2,567,097		)
Property and equipment, net		$	3,559,858		$	2,018,881



Year ending January 31:
2020	$	3,513,783
2021	3,466,359
2022	3,068,047
2023	2,225,250
2024	938,578
Total lease payments	$	13,212,707



	Equipment leases		Tenant improvement		Total
Year ending January 31:
2020	$	639,137	$	27,768	$	666,905
2021	672,822		29,188		702,010
2022	423,077		30,681		453,758
2023	—		32,251		32,251
2024	—		16,739		16,739
Total lease payments	$	1,735,036	$	136,627	$	1,871,663



	Authorized shares	Outstanding shares	Liquidation amount
Year ending January 31, 2019:
Series A	37,733,410	37,733,410	$	5,859,998
Series B	36,818,852	36,818,852	20,000,000
Series C	27,440,594	27,440,594	40,000,154
Series D	24,648,748	24,648,748	39,999,990
Series E	13,780,240	13,649,000	52,499,958
Total	140,421,844	140,290,604	$	158,360,100



Convertible Series A preferred stock	37,733,410
Convertible Series B preferred stock	36,818,852
Convertible Series C preferred stock	27,440,594
Convertible Series D preferred stock	24,648,748
Convertible Series E preferred stock	13,780,240
Stock options outstanding	29,478,973
Shares reserved for future stock option issuance	12,929,935
Common stock warrants outstanding	1,316,872
Total common stock reserved for future issuance	184,147,624



	2019	2017

Valuation assumptions:
Expected dividend yield	—	—
Expected volatility	39.06–40.15%	43.03–50.16%
Expected term (years)	6.0	6.25
Risk-free interest rate	2.43–2.86%	2.04–2.16%

	Number of shares	Weighted average exercise price		Weighted average remaining contractual term
Balance at December 31, 2016	17,142,356	$	0.46	8.36
Granted	13,196,268	0.63
Exercised	(809,105)	0.52
Canceled, forfeited, or expired	(4,066,340)	0.59
Balance at December 31, 2017	25,463,179	0.53		8.31
Balance at February 1, 2018	27,906,678
Granted	9,937,840	0.68
Exercised	(2,082,692)	0.53
Canceled, forfeited, or expired	(6,282,853)	0.63
Balance at January 31, 2019	29,478,973	0.57		7.7

	Number of shares	Average exercise price		Contractual term
Vested and expected to vest:
As of January 31, 2019	29,577,511	$	0.57	7.70 years
Vested and expected to vest:
As of December 31, 2017	20,294,537	0.51		8.13 years
Vested and expected to vest:
As of January 31, 2019	29,478,973	0.57		7.70 years
Vested and expected to vest:
As of December 31, 2017	25,463,179	0.53		8.13 years



	2019		2017
Cost of sales	$	225,106	$	225,240
Research and development	602,620		479,249
Sales and marketing	519,108		216,770
General and administrative	3,170,037		240,978
	$	4,516,871	$	1,162,237



	2019			2017
U.S.	$	(33,848,064	)	$	(28,867,523	)
Foreign	97,560			—
Total	$	(33,750,504	)	$	(28,867,523	)



	2019		2017
Current:
Federal	$	—	$	—
State	9,041		900
Foreign	18,537		—

Deferred:
Federal	—		—
State	—		—
Foreign	—		—
Total	$	27,578	$	900



	2019			2017
Assets:
Federal and state net operating loss carryforwards	$	36,065,984		$	30,818,502
Accruals and reserves	403,410			59,267
Stock based compensation	333,491			169,213
Fixed Assets	357,805			203,488
Credits	—			—
Gross deferred tax assets	37,160,690			31,250,470
Valuation allowance	(37,160,690		)	31,250,470
Net deferred tax assets	$	—		$	—



	Page No.
Unaudited Condensed Consolidated Balance Sheets
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
Unaudited Condensed Consolidated Statements of Shareholders' Deficit
Unaudited Condensed Consolidated Statements of Cash Flows
Unaudited Notes to Condensed Consolidated Financial Statements



	October 31, 2019		January 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	52,694,304	$	21,006,605
Accounts receivable	8,299,714		12,960,777
Inventory	972,142		552,062
Prepaid expenses and other current assets	7,339,120		4,427,338
Total current assets	69,305,280		38,946,782
Restricted cash	3,325,668		—
Property and equipment, net	6,739,504		3,559,858
Deposits and other	7,167,789		250,593
Total assets	$	86,538,241	$	42,757,233

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	2,083,456	$	2,197,002
Accrued liabilities	6,385,377		4,592,728
Unvested stock options subject to repurchase	762,319		39,864
Deferred revenue	28,241,283		34,857,163
Short term portion of bank loan	2,800,000		2,800,000
Short term portion of equipment leases and tenant improvement loans	2,354,148		666,904
Total current liabilities	42,626,583		45,153,661
Long term portion of bank loan	29,767,944		12,235,438
Long term portion of equipment leases and tenant improvement loans	3,188,517		1,204,759
Long term portion of unvested stock options subject to repurchase	774,802		20,552
Long term portion of deferred revenue	2,268,392		685,611
Long term portion of other liabilities	1,937,261		216,709
Total liabilities	80,563,499		59,516,730
Shareholders' equity (deficit):
Preferred stock (par value: $0.001 per share: 37,733,410 Series A shares authorized, issued and outstanding at October 31, 2019 and January 31, 2019; 36,818,852 Series B shares authorized, issued, and outstanding at October 31, 2019 and January 31, 2019; 27,440,594 Series C shares authorized, issued, and outstanding at October 31, 2019 and January 31, 2019; 24,648,748 Series D shares authorized, issued, and outstanding at October 31, 2019 and January 31, 2019; 13,649,000 Series E shares authorized, issued, and outstanding at October 31, 2019 and January 31, 2019; and 13,075,240 and 0 Series F shares authorized issued, and outstanding at October 31, 2019 and January 31, 2019, respectively.	181,977,629		131,089,385
Common stock (par value: $0.001 per share, 285,000,000 and 262,489,196 shares authorized at October 31, 2019 and January 31, 2019 respectively; 70,930,978 and 65,768,545 shares issued and outstanding at October 31, 2019 January 31, 2019, respectively)	25,968		20,768
Additional paid-in capital	16,717,487		11,583,529
Cumulative translation	(35,819)		(16,735)
Accumulated deficit	(192,710,523)		(159,436,444)
Total shareholders’ equity (deficit)	5,974,742		(16,759,497)
Total liabilities and shareholders’ equity	$	86,538,241	$	42,757,233



	Three months ended October 31,						Nine months ended October 31,
	2019			2018			2019			2018

Revenue	$	16,508,619		$	12,191,320		$	46,697,545		$	32,898,227
Cost of revenue	7,984,240			5,431,657			22,489,515			14,101,518
Gross profit	8,524,379			6,759,663			24,208,030			18,796,709
Operating expenses:
Sales and marketing	7,625,079			5,226,338			20,626,105			15,831,954
Research and development	7,994,579			6,024,215			23,376,468			16,097,272
General and administrative	6,995,700			2,584,914			14,675,882			7,804,896
Total operating expenses	22,615,358			13,835,467			58,678,455			39,734,122
Operating loss	(14,090,979		)	(7,075,804		)	(34,470,425		)	(20,937,413		)
Other income (expense):
Interest income	28,443			10,544			78,171			17,200
Interest and other expense	(914,781		)	(486,191		)	(2,216,750		)	(916,488		)
Other expense	(886,338		)	(475,647		)	(2,138,579		)	(899,288		)
Loss before income taxes	(14,977,317		)	(7,551,451		)	(36,609,004		)	(21,836,701		)
Provision for income taxes	15,016			11,043			42,763			19,075
Net loss	$	(14,992,333	)	$	(7,562,494	)	$	(36,651,767	)	$	(21,855,776	)
Other comprehensive loss:
Foreign currency translation loss	595			439			19,084			8,712
Comprehensive loss	$	(14,992,928	)	$	(7,562,933	)	$	(36,670,851	)	$	(21,864,488	)



	Convertible Preferred Stock
	Shares Preferred A			Shares Preferred B			Shares Preferred C			Shares Preferred D
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount

Balance, July 31, 2018	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386
Exercise of common stock options and stock warrants	—	—		—	—		—	—		—	—
Repurchase of exercise of common stock options	—	—		—	—		—	—		—	—
Change in early exercise liability	—	—		—	—		—	—		—	—
Issuance of preferred stock, net of expenses	—	—		—	—		—	—		—	—
Stock-based compensation expense	—	—		—	—		—	—		—	—
Cumulative translation adjustment	—	—		—	—		—	—		—	—
Net Loss	—	—		—	—		—	—		—	—
Balance, October 31, 2018	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386

Balance, July 31, 2019	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386
Exercise of common stock options and stock warrants	—	—		—	—		—	—		—	—
Repurchase of exercise of common stock options	—	—		—	—		—	—		—	—
Change in early exercise liability	—	—		—	—		—	—		—	—
Issuance of preferred stock, net of expenses	—	—		—	—		—	—		—	—
Stock-based compensation expense	—	—		—	—		—	—		—	—
Cumulative translation adjustment	—	—		—	—		—	—		—	—
Net Loss	—	—		—	—		—	—		—	—
Balance, October 31, 2019	37,733,410	$	5,724,309	36,818,852	$	19,916,657	27,440,594	$	39,873,636	24,648,748	$	39,757,386



	Convertible Preferred Stock
	Shares Preferred E			Shares Preferred F			Common Stock					Additional Paid in Capital			Accumulated Deficit			Currency Translation Adjustment			Total Shareholders' Deficit
	Shares	Amount		Shares	Amount		Shares		Amount			Additional Paid in Capital			Accumulated Deficit			Currency Translation Adjustment			Total Shareholders' Deficit

Balance, July 31, 2018	—	$	—	—	$	—	64,524,256		$	19,728		$	7,478,694		$	(137,287,045	)	$	(8,273	)	$	(24,524,908	)
Exercise of common stock options and stock warrants	—	—		—	—		1,137,418		1,175			561,750			—			—			562,925
Repurchase of exercise of common stock options	—	—		—	—		(329,544	)	(330		)	(246,828		)	—			—			(247,158		)
Change in early exercise liability	—	—		—	—		(185,361	)	(185		)	(31,470		)	—			—			(31,655		)
Issuance of preferred stock, net of expenses	13,649,000	25,940,845		—	—		—		—			—			—			—			25,940,845
Stock-based compensation expense	—	—		—	—		—		—			245,815			—			—			245,815
Cumulative translation adjustment	—	—		—	—		—		—			—			—			(439		)	(439		)
Net loss	—	—		—	—		—		—			—			(7,562,494		)	—			(7,562,494		)
Balance, October 31, 2018	13,649,000	$	25,940,845	—	$	—	65,146,769		$	20,388		$	8,007,961		$	(144,849,539	)	$	(8,712	)	$	(5,617,069	)

Balance, July 31, 2019	13,649,000	$	25,838,666	—	$	—	70,578,297		$	25,651		$	15,905,033		$	(177,718,190	)	$	(35,224	)	$	(30,712,076	)
Exercise of common stock options and stock warrants	—	—		—	—		829,285		794			514,672			—			—			515,466
Repurchase of exercise of common stock options	—	—		—	—		—		—			—			—			—			—
Change in early exercise liability	—	—		—	—		(476,604	)	(477		)	(316,246		)	—			—			(316,723		)
Issuance of preferred stock, net of expenses	—	—		13,075,240	50,866,975		—		—			—			—			—			50,866,975
Stock-based compensation expense	—	—		—	—		—		—			614,028			—			—			614,028
Cumulative translation adjustment	—	—		—	—		—		—			—			—			(595		)	(595		)
Net loss	—	—		—	—		—		—			—			(14,992,333		)	—			(14,992,333		)
Balance, October 31, 2019	13,649,000	$	25,838,666	13,075,240	$	50,866,975	70,930,978		$	25,968		$	16,717,487		$	(192,710,523	)	$	(35,819	)	$	5,974,742


•	Identify the contract(s) with a customer. Evidence of a contract generally consists of a master service agreement in conjunction with a statement of work as the specific terms and conditions of the arrangement are outlined in these agreements.


•	Identify the performance obligations in the contract. Performance obligations are explicitly identified in the Company's contracts and include hardware-based software, software-only solutions, cloud-based subscription services as well as a broad range of service performance obligations including consulting, training, installation and maintenance.


•	Determine the transaction price. The purchase price stated in a contract is generally representative of the transaction price. The Company does not offer discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or other similar items in its contracts, except for certain fixed early payment discounts.


•	Allocate the transaction price to the performance obligations in the contract. The transaction price in a contract is allocated based upon the relative standalone selling price of each distinct performance obligation identified in the contract.