Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Apr. 14, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-33720 | ||
Entity Registrant Name | Remark Holdings, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 33-1135689 | ||
Entity Address, Address Line One | 800 S. Commerce St. | ||
Entity Address, City or Town | Las Vegas | ||
Entity Address, State or Province | NV | ||
Entity Address, Postal Zip Code | 89106 | ||
City Area Code | 702 | ||
Local Phone Number | 701-9514 | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | ||
Trading Symbol | MARK | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 43.7 | ||
Entity Common Stock, Shares Outstanding | 13,633,992 | ||
Entity Central Index Key | 0001368365 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Firm ID | 572 |
Auditor Name | Weinberg & Company, P.A. |
Auditor Location | Los Angeles, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash | $ 52 | $ 14,187 |
Trade accounts receivable, net | 3,091 | 10,267 |
Inventory, net | 308 | 1,346 |
Investment in marketable securities | 0 | 42,349 |
Deferred cost of revenue | 7,463 | 589 |
Prepaid expense and other current assets | 1,374 | 5,774 |
Total current assets | 12,288 | 74,512 |
Property and equipment, net | 1,699 | 357 |
Operating lease assets | 180 | 194 |
Other long-term assets | 269 | 440 |
Total assets | 14,436 | 75,503 |
Liabilities | ||
Accounts payable | 9,602 | 10,094 |
Advances from related parties | 1,174 | 0 |
Liability related to convertible debenture | 1,892 | 0 |
Accrued expense and other current liabilities | 7,222 | 5,963 |
Contract liability | 308 | 576 |
Notes payable, net of unamortized discount and debt issuance cost of $0 and $2,189 at December 31, 2022 and 2021, respectively | 14,607 | 27,811 |
Total current liabilities | 34,805 | 44,444 |
Operating lease liabilities, long-term | 56 | 25 |
Total liabilities | 34,861 | 44,469 |
Commitments and contingencies | ||
Stockholders’ Equity (Deficit) | ||
Preferred stock, $0.001 par value; 1,000,000 shares authorized; zero issued | 0 | 0 |
Common stock, $0.001 par value; 175,000,000 shares authorized; 11,539,564 and 10,515,777 shares issued and outstanding at December 31, 2022 and 2021, respectively | 12 | 11 |
Additional paid-in-capital | 368,945 | 364,333 |
Accumulated other comprehensive loss | (859) | (270) |
Accumulated deficit | (388,523) | (333,040) |
Total stockholders’ equity (deficit) | (20,425) | 31,034 |
Total liabilities and stockholders’ equity (deficit) | $ 14,436 | $ 75,503 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Unamortized discount and debt issuance cost | $ 0 | $ 2,189 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 175,000,000 | 175,000,000 |
Common stock, shares, issued (in shares) | 11,539,564 | 10,515,777 |
Common stock, shares, outstanding (in shares) | 11,539,564 | 10,515,777 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Revenue, including amounts from China Business Partner (See Note 19) | $ 11,666 | $ 15,990 | |
Cost and expense | |||
Cost of revenue (excluding depreciation and amortization) | 11,331 | 11,455 | |
Sales and marketing | [1] | 971 | 971 |
Recovery of marketing expense - China Business Partner activity | 0 | (1,530) | |
Technology and development | [1] | 2,101 | 4,692 |
General and administrative | [1] | 18,399 | 14,120 |
Depreciation and amortization | 166 | 191 | |
Total cost and expense | 32,968 | 29,899 | |
Operating loss | (21,302) | (13,909) | |
Other income (expense) | |||
Interest expense | (6,073) | (2,308) | |
Finance cost on liability related to convertible debenture | (1,422) | 0 | |
Change in fair value of warrant liability | 0 | 123 | |
Gain (loss) on investment | (26,356) | 43,642 | |
Gain on debt extinguishment | 0 | 425 | |
Other loss, net | (339) | (492) | |
Total other income (expense), net | (34,190) | 41,390 | |
Income (loss) from before income taxes | (55,492) | 27,481 | |
Benefit from (provision for) income taxes | 9 | (9) | |
Net income (loss) | (55,483) | 27,472 | |
Other comprehensive loss | |||
Foreign currency translation adjustments | (589) | (44) | |
Comprehensive income (loss) | $ (56,072) | $ 27,428 | |
Weighted-average shares outstanding, basic (in shares) | 10,630,771 | 10,136,210 | |
Weighted-average shares outstanding, diluted (in shares) | 10,630,771 | 10,171,924 | |
Net income (loss) per share, basic (in dollars per share) | $ (5.22) | $ 2.71 | |
Net income (loss) per share, diluted (in dollars per share) | $ (5.22) | $ 2.70 | |
Share-based compensation expense | $ 1,697 | $ 4,060 | |
Sales and marketing | |||
Other comprehensive loss | |||
Share-based compensation expense | 3 | 147 | |
Technology and development | |||
Other comprehensive loss | |||
Share-based compensation expense | (267) | 293 | |
General and administrative | |||
Other comprehensive loss | |||
Share-based compensation expense | $ 1,961 | $ 3,620 | |
[1] 1 Includes share-based compensation as follows: Sales and marketing $ 3 $ 147 Technology and development (267) 293 General and administrative 1,961 3,620 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2020 | 9,950,504 | ||||
Beginning balance at Dec. 31, 2020 | $ (9,092) | $ 100 | $ 351,546 | $ (226) | $ (360,512) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 27,472 | 27,472 | |||
Share-based compensation | 4,300 | 4,300 | |||
Common stock and stock warrants issued for cash (in shares) | 423,729 | ||||
Common stock and stock warrants issued for cash | 4,614 | $ 4 | 4,610 | ||
Equity instrument exercises (in shares) | 54,795 | ||||
Equity instrument exercises | 1,077 | 1,077 | |||
Common stock issuance upon note payable conversion (in shares) | 87,649 | ||||
Common stock issuance upon note payable conversion | 1,105 | $ 1 | 1,104 | ||
Reclassification of warrant liability to equity | 1,602 | 1,602 | |||
Foreign currency translation | (44) | (44) | |||
Other (in shares) | (900) | ||||
Other | 0 | ||||
Adjustment for reverse stock split | $ 0 | $ (94) | 94 | ||
Ending balance (in shares) at Dec. 31, 2021 | 10,515,777 | 10,515,777 | |||
Ending balance at Dec. 31, 2021 | $ 31,034 | $ 11 | 364,333 | (270) | (333,040) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (55,483) | (55,483) | |||
Share-based compensation | 2,104 | 2,104 | |||
Common stock issued as service compensation (in shares) | 125,000 | ||||
Common stock issued as service compensation | 500 | 500 | |||
Common stock issuance upon note payable conversion (in shares) | 898,854 | ||||
Common stock issuance upon note payable conversion | 2,004 | $ 1 | 2,003 | ||
Foreign currency translation | (589) | (589) | |||
Adjustments for reverse stock split (in shares) | (67) | ||||
Adjustment for reverse stock split | $ 5 | 5 | |||
Ending balance (in shares) at Dec. 31, 2022 | 11,539,564 | 11,539,564 | |||
Ending balance at Dec. 31, 2022 | $ (20,425) | $ 12 | $ 368,945 | $ (859) | $ (388,523) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (55,483) | $ 27,472 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of warrant liability | 0 | (123) |
Depreciation, amortization and impairments | 166 | 191 |
Share-based compensation | 1,697 | 4,060 |
Amortization of debt issuance costs and discount | 2,189 | 880 |
Cost of extending note payable | 283 | 0 |
Finance cost on liability related to convertible debenture | 1,422 | 0 |
Stock issuances for services performed | 500 | 0 |
Loss (gain) on investment | 26,356 | (43,642) |
Gain on debt extinguishment | 0 | (425) |
Finance cost of converting note payable to common stock | 0 | 44 |
Provision for doubtful accounts | 2,882 | 297 |
Other | (182) | 30 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,650 | (5,733) |
Inventory | 1,033 | (473) |
Deferred cost of revenue | (6,874) | (488) |
Prepaid expense and other assets | 4,213 | (3,632) |
Operating lease assets | 1 | 293 |
Accounts payable, accrued expense and other liabilities | 1,745 | 967 |
Contract liability | (251) | 277 |
Operating lease liabilities | 37 | (169) |
Net cash used in operating activities | (16,616) | (20,174) |
Cash flows from investing activities: | ||
Proceeds from sale of investment | 6,332 | 2,322 |
Purchases of property, equipment and software | (448) | (223) |
Payment of amounts capitalized to software in progress | (1,063) | 0 |
Net cash provided by investing activities | 4,821 | 2,099 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net | 0 | 5,692 |
Proceeds from debt issuance | 2,703 | 32,216 |
Advances from related parties | 3,256 | 0 |
Repayments of debt | (6,217) | (6,500) |
Repayments of Related Party Debt | (2,082) | 0 |
Net cash provided by (used in) financing activities | (2,340) | 31,408 |
Net change in cash | (14,135) | 13,333 |
Cash: | ||
Beginning of period | 14,187 | 854 |
End of period | 52 | 14,187 |
Supplemental cash flow information: | ||
Cash paid for interest | 3,238 | 1,414 |
Supplemental schedule of non-cash investing and financing activities: | ||
Issuance of common stock upon note payable conversion | 2,804 | 1,105 |
Transfer of marketable securities to partially settle debt | 9,662 | 0 |
Reclassification of warrant liability to equity | 0 | 1,602 |
Reclassification of investment to marketable securities | $ 0 | $ 1,030 |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | NOTE 1. ORGANIZATION AND BUSINESS Organization and Business Remark Holdings, Inc. and its subsidiaries (“Remark”, “we”, “us”, or “our”) constitute a diversified global technology business with leading artificial intelligence (“AI”) and data-analytics solutions, as well as a portfolio of digital media properties. The common stock of Remark Holdings, Inc. is listed on the Nasdaq Capital Market under the ticker symbol MARK. We primarily sell AI-based products and services. We currently recognize substantially all of our revenue from China, with additional revenue from sales in the U.S. On December 21, 2022, we effected a 1-for-10 reverse split of our common stock (the “Reverse Split”). All references made to share or per share amounts in these financial statements have been retroactively adjusted to reflect the effects of the Reverse Split. Corporate Structure We are a holding company incorporated in Delaware and not a Chinese operating company. As a holding company, we conduct most of our operations through our subsidiaries, each of which is wholly owned. We have historically conducted a significant part of our operations through contractual arrangements between our wholly-foreign-owned enterprise (“WFOE”) and certain variable interest entities (“VIEs”) based in China to address challenges resulting from laws, policies and practices that may disfavor foreign-owned entities that operate within industries deemed sensitive by the Chinese government. We were the primary beneficiary of the VIEs because the contractual arrangements governing the relationship between the VIEs and our WFOE, which included an exclusive call option agreement, exclusive business cooperation agreement, a proxy agreement and an equity pledge agreement, enabled us to (i) exercise effective control over the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive call option to purchase, at any time, all or part of the equity interests in and/or assets of the VIEs to the extent permitted by Chinese laws. Because we were the primary beneficiary of the VIEs, we consolidated the financial results of the VIEs in our consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”). We terminated all of the contractual arrangements between the WFOE and the VIEs and exercised our rights under the exclusive call option agreements between the WFOE and the VIEs such that, effective as of September 19, 2022, we obtained 100% of the equity ownership of the entities we formerly consolidated as VIEs and which we now consolidate as wholly-owned subsidiaries. The following diagram illustrates our corporate structure, including our significant subsidiaries, as of the date of this Form 10-K. The diagram omits certain entities which are immaterial to our results of operations and financial condition. We are subject to certain legal and operational risks associated with having a significant portion of our operations in China. Chinese laws and regulations governing our current business operations, including the enforcement of such laws and regulations, are sometimes vague and uncertain and can change quickly with little advance notice. The Chinese government may intervene in or influence the operations of our China-based subsidiaries at any time and may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our securities. In addition, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or become worthless. In recent years, the Chinese government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to the use of variable interest entities, cybersecurity, data security, export control and anti-monopoly concerns. As of the date of this Form 10-K, we have neither been involved in any investigations on cybersecurity review initiated by any Chinese regulatory authority, nor received any inquiry, notice or sanction. As of the date of this Form 10-K, no relevant laws or regulations in China explicitly require us to seek approval from the China Securities Regulatory Commission (the “CSRC”) for any securities listing. As of the date of this Form 10-K, we have not received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other Chinese governmental authorities relating to securities listings. However, since these statements and regulatory actions are newly published, official guidance and related implementation rules have not all been issued. It is highly uncertain what potential impact such modified or new laws and regulations will have on our ability to conduct our business, accept investments or list or maintain a listing on a U.S. or foreign exchange. As of the date of this Form 10-K, we are not required to seek permissions from the CSRC, the Cyberspace Administration of China (the “CAC”), or any other entity that is required to approve our operations in China. Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us or our subsidiaries to obtain permissions from such regulatory authorities to approve our operations or any securities listing. Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCA Act”) was enacted on December 18, 2020. The HFCA Act states that if the Securities and Exchange Commission (the “SEC”) determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the Public Company Accounting Oversight Board (the “PCAOB”) for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over the counter trading market in the United States. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction. The Consolidated Appropriations Act, 2023, which was signed into law on December 29, 2022, amended the HFCA Act to reduce the number of consecutive non-inspection years required to trigger the trading prohibition under the HFCA Act from three years to two years. On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, taking the first step toward opening access for the PCAOB to completely inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. On December 15, 2022, the PCAOB vacated its 2021 determination that the positions taken by authorities in mainland China and Hong Kong prevented it from inspecting and investigating completely registered public accounting firms headquartered in those jurisdictions. In view of the PCAOB’s decision to vacate its 2021 determination and until such time as the PCAOB issues any new adverse determination, the SEC has stated that there are no issuers at risk of having their securities subject to a trading prohibition under the HFCA Act. Each year, the PCAOB will reassess its determinations on whether it can inspect and investigation completely audit firms in China, and if, in the future, the PCAOB determines it cannot do so, or if Chinese authorities do not allow the PCAOB complete access for inspections and investigations for two consecutive years, companies engaging China-based public accounting firms would be delisted pursuant to the HFCA Act. Our auditor, Weinberg & Company, an independent registered public accounting firm headquartered in the United States, is currently subject to PCAOB inspections and has been inspected by the PCAOB on a regular basis. However, if the PCAOB is unable to inspect the work papers of our accounting firm in the future, such lack of inspection could cause trading in our common stock to be prohibited under the HFCA Act, and as a result, an exchange may determine to delist our common stock. The delisting and the cessation of trading of our common stock, or the threat of our common stock being delisted and prohibited from being traded, may materially and adversely affect the value of our common stock. Transfer of Cash or Assets Dividend Distributions As of the date of this Form 10-K, none of our subsidiaries have made any dividends or distributions to the parent company. We have never declared or paid dividends or distributions on our common equity. We currently intend to retain all available funds and any future consolidated earnings to fund our operations and continue the development and growth of our business; therefore, we do not anticipate paying any cash dividends. Under Delaware law, a Delaware corporation’s ability to pay cash dividends on its capital stock requires the corporation to have either net profits or positive net assets (total assets less total liabilities) over its capital. If we determine to pay dividends on any of our common stock in the future, as a holding company, we may rely on dividends and other distributions on equity from our subsidiaries for cash requirements, including the funds necessary to pay dividends and other cash contributions to our stockholders. Our WFOE’s ability to distribute dividends is based upon its distributable earnings. Current Chinese regulations permit our WFOE to pay dividends to its shareholder only out of its registered capital amount, if any, as determined in accordance with Chinese accounting standards and regulations, and then only after meeting the requirement regarding statutory reserve. If our WFOE incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. In addition, any cash dividends or distributions of assets by our WFOE to its stockholder are subject to a Chinese withholding tax of as much as 10%. The Chinese government also imposes controls on the conversion of Chinese Renminbi (“RMB”) into foreign currencies and the remittance of currencies out of China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive all of the revenues from our operations through our China-based subsidiaries, we may be unable to pay dividends on our common stock. COVID-19 Our consolidated financial statements for the year ended December 31, 2022 were impacted by the effects of the COVID-19 pandemic. The response to COVID-19 will likely continue to adversely affect our business and financial results, as could economic and geopolitical conditions in some international regions, and we do not yet know what will be the ultimate effects on our business. The COVID-19 pandemic caused a broad shift towards remote working arrangements for many businesses worldwide and injected uncertainty and delay into decision-making processes for such businesses. Varying degrees of preventative measures are still in place in China and other parts of the world, including city-wide lockdowns, travel restrictions, closures of non-essential businesses and other quarantine measures. In particular, the preventative measures in China as a result of the Chinese government’s former “Zero-COVID” policy significantly limited the operational capabilities of our China-based subsidiaries. Many cities across large swaths of China were fully or partially locked down for weeks or even months, including economically significant regions such as Shanghai. Such lockdowns have had a material adverse impact on our business, including on the collection of our accounts receivable, and we expect them to continue to have a material adverse impact on our business until their imposition is ceased. The full extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including resurgences and further spread of existing or new COVID-19 variants, the duration of any remaining preventative measures implemented by domestic and foreign governments, the impact on capital and financial markets and the related impact on the financial circumstances of our customers, all of which are highly uncertain and cannot be predicted. The pandemic-related situation continues to change rapidly, and additional impacts of which we are not currently aware may arise. We are closely monitoring worldwide developments and are continually assessing the potential impact on our business. Going Concern During the year ended December 31, 2022, and in each fiscal year since our inception, we have incurred operating losses which have resulted in a stockholders’ deficit as of December 31, 2022. Additionally, our operations have historically used more cash than they have provided. We did not make the required repayment of the outstanding loans under the Original Mudrick Loan Agreements by October 31, 2022, the maturity date, resulting in an event of default which was only cured subsequent to the balance sheet date. Net cash used in operating activities was $16.6 million during the year ended December 31, 2022. As of December 31, 2022, our cash balance was $0.1 million. Our history of recurring operating losses, working capital deficiencies and negative cash flows from operating activities give rise to, and management has concluded that there is, substantial doubt regarding our ability to continue as a going concern. Our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended December 31, 2022, has also expressed substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. We intend to fund our future operations and meet our financial obligations through revenue growth from our AI and data analytics offerings. We cannot, however, provide assurance that revenue, income and cash flows generated from our businesses will be sufficient to sustain our operations in the twelve months following the filing of this Form 10-K. As a result, we are actively evaluating strategic alternatives including debt and equity financings. Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions (in particular, as a result of the COVID-19 pandemic, global supply chain disruptions, inflation and other cost increases, and the geopolitical conflict in Ukraine), will play primary roles in determining whether we can successfully obtain additional capital. We cannot be certain that we will be successful at raising additional capital. A variety of factors, many of which are outside of our control, affect our cash flow; those factors include the effects of the COVID-19 pandemic, regulatory issues, competition, financial markets and other general business conditions. Based on financial projections, we believe that we will be able to meet our ongoing requirements for at least the next 12 months with existing cash and based on the probable success of one or more of the following plans: • develop and grow new product line(s) • obtain additional capital through debt and/or equity issuances. However, projections are inherently uncertain and the success of our plans is largely outside of our control. As a result, there is substantial doubt regarding our ability to continue as a going concern, and we may fully utilize our cash resources prior to June 30, 2023. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation We include all of our subsidiaries in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation. Use of Estimates We prepare our consolidated financial statements in conformity with GAAP. While preparing our financial statements, we make estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, deferred cost of revenue, share-based compensation, deferred income taxes, and inventory reserve, among other items. The impact of the COVID-19 pandemic continues to unfold. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. Cash Our cash consists of funds held in bank accounts. We maintain cash balances in United States dollars (“USD”) and British pounds (“GBP”), while the VIEs maintain cash balances in USD, Chinese Renminbi (“RMB”) and Hong Kong dollars (“HKD”). The following table, reported in USD, disaggregates our cash balances by currency denomination (in thousands): December 31, 2022 2021 Cash denominated in: USD $ 11 $ 13,278 RMB 19 259 GBP 17 644 HKD 5 6 Total cash $ 52 $ 14,187 We maintain substantially all of our USD-denominated cash at a U.S. financial institution where the balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, however, our cash balances may exceed the FDIC-insured limit. As of December 31, 2022, we do not believe we have any significant concentrations of credit risk. Cash held by our non-U.S. subsidiaries subject to foreign currency fluctuations against the USD, although such risk is somewhat mitigated because we transfer U.S. funds to our non-U.S. subsidiaries to fund local operations. If, however, the USD is devalued significantly against the RMB, our cost to further expand our business in China could exceed original estimates. Marketable Securities Investment in marketable securities consisted of marketable equity securities. We classify marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations. Marketable securities are stated at fair value with all realized and unrealized gains and losses recognized in our Statement of Operations. The realized and unrealized gains and losses on marketable securities are determined using the specific identification method and quoted prices in an active market. Leases We adopted Accounting Standards Codification Topic 842, Leases (“ASC 842”), as of January 1, 2019. When adopting ASC 842 we elected several practical expedients permitted under the transition guidance within ASC 842, which, among other things, allowed us to carry forward the historical lease classification and to avoid recording leases that had expired prior to the date of adoption. We also elected to combine the lease and non-lease components of our leases for office space (which represent the largest portion of our operating lease assets and liabilities) and not to record leases with initial terms of 12 months or less (short-term leases) on the balance sheet. We amortize the cost of short-term leases on a straight-line basis over the lease term. Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). When reporting the fair values of our financial instruments, we prioritize those fair value measurements into one of three levels based on the nature of the inputs, as follows: Level 1: Valuations based on quoted prices in active markets for identical assets and liabilities; Level 2: Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and observable market data for similar, but not identical instruments; and Level 3: Valuations based on unobservable inputs, which are based upon the best available information when external market data is limited or unavailable. The fair value hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. For some products or in certain market conditions, observable inputs may not be available. We believe the reported carrying amounts for cash, marketable securities, receivables, prepaids and other current assets, accounts payable, accrued expense and other current liabilities, and short-term debt approximate their fair values because of the short-term nature of these financial instruments. Foreign Currency Translation We report all currency amounts in USD. Our China subsidiaries, however, maintain their books and records in their functional currency, which is RMB. In general, when consolidating our subsidiaries with non-USD functional currencies, we translate the amounts of assets and liabilities into USD using the exchange rate on the balance sheet date, and the amounts of revenue and expense are translated at the average exchange rate prevailing during the period. The gains and losses resulting from translation of financial statement amounts into USD are recorded as a separate component of accumulated other comprehensive loss within stockholders’ deficit. We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted: 2022 2021 Exchange rates at December 31st: GBP:USD 1.209 1.351 RMB:USD 0.145 0.157 HKD:USD 0.128 0.128 Average exchange rate during the twelve months ended December 31st: RMB:USD 0.149 0.155 Revenue Recognition AI-Based Products We generate revenue by developing AI-based products, including fully-integrated AI solutions which combine our proprietary technology with third-party hardware and software products to meet end-user specifications. Under one type of contract for our AI-based products, we provide a single, continuous service to customers who control the assets as we create them. Accordingly, we recognize the revenue over the period of time during which we provide the service. Under another type of contract, we have performance obligations to provide fully-integrated AI solutions to our customer and we recognize revenue at the point in time when each performance obligation is completed and delivered to, tested by and accepted by our customer. We recognize revenue when we transfer control of the promised goods or services to our customers, and we recognize an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. If there is uncertainty related to the timing of collections from our customer, which may be the case if our customer is not the ultimate end user of our goods, we consider this to be uncertainty of the customer’s ability and intention to pay us when consideration is due. Accordingly, we recognize revenue only when we have transferred control of the goods or services and collectability of consideration from the customer is probable. When customers pay us prior to when we satisfy our obligation to transfer control of promised goods or services, we record the amount that reflects the consideration to which we expect to be entitled as a contract liability until such time as we satisfy our performance obligation. For our contracts with customers, we generally extend short-term credit policies to our customers, typically up to one year for large-scale projects. We record the incremental costs of obtaining contracts as an expense when incurred. We offer extended warranties on our products for periods of one Other We generate revenue from other sources, such as from advertising and marketing services, e-commerce activity in which we sell goods to our customers, or media production which involves the production of video or Internet-based content for our customers. We recognize the revenue from these contracts at the point in time when we transfer control of the goods sold to the customer or when we deliver the promised promotional materials or media content. Substantially all of our contracts with customers that generate Other revenue are completed within one year or less. Share-Based Compensation For grants of restricted stock or restricted stock units, we measure fair value using the closing price of our stock on the measurement date, while we use the Black-Scholes-Merton option pricing model (the “BSM Model”) to estimate the fair value of stock options and similar instruments awarded. The BSM Model requires the following inputs: • Expected volatility of our stock price. We analyze the historical volatility of our stock price utilizing daily stock price returns, and we also review the stock price volatility of certain peers. Using the information developed from such analysis and our judgment, we estimate how volatile our stock price will be over the period we expect the stock options will remain outstanding. • Risk-free interest rate. We estimate the risk-free interest rate using data from the Federal Reserve Treasury Constant Maturity Instruments H.15 Release (a table of rates downloaded from the Federal Reserve website) as of the valuation date for a security with a remaining term that approximates the period over which we expect the stock options will remain outstanding. • Stock price, exercise price and expected term. We use an estimate of the fair value of our common stock on the measurement date, the exercise price of the option, and the period over which we expect the stock options will remain outstanding. We do not currently issue dividends, but if we did so, then we would also include an estimated dividend rate as an input to the BSM model. Generally speaking, the BSM model tends to be most sensitive to changes in stock price, volatility or expected term. We measure compensation expense as of the grant date for granted equity-classified instruments and as of the settlement date for granted liability-classified instruments (meaning that we re-measure compensation expense at each balance sheet date until the settlement date occurs). Once we measure compensation expense, we recognize it over the requisite service period (generally the vesting period) of the grant, net of forfeitures as they occur. Accounts Receivable We regularly evaluate the collectability of trade receivable balances based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns. If we determine that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing, severe limitations on its operational capability as a result of COVID-19-related restrictions or other material events impacting its business, a specific reserve for bad debt will be recorded to reduce the related receivable to the amount expected to be recovered. Income Taxes We recognize deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) to account for the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets, using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled. Any effect on DTAs or DTLs resulting from a change in enacted tax rates is included in income during the period that includes the enactment date. We reduce the carrying amounts of DTAs by a valuation allowance if, based upon all available evidence (both positive and negative), we determine that it is more likely than not that such DTAs will not be realizable. Such assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, our forecasts of future profitability, tax planning strategies, the duration of statutory carryforward periods, and our experience with the utilization of operating loss and tax credit carryforwards before expiration. We apply a recognition threshold and measurement attribute related to uncertain tax positions taken or expected to be taken on our tax returns. We recognize a tax benefit for financial reporting of an uncertain income tax position when it has a greater than 50% likelihood of being sustained upon examination by the taxing authorities. We measure the tax benefit of an uncertain tax position based on the largest benefit that has a greater than 50% likelihood of being ultimately realized, including evaluation of settlements. Inventory We use the first-in first-out method to determine the cost of our inventory, then we report inventory at the lower of cost or net realizable value. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated sales forecasts. At December 31, 2022 and 2021, reserve for inventory was $2.2 million and $1.0 million, respectively. Advertising Expense Advertising expense is recorded during the period in which it is incurred. We did not incur a material amount of advertising expense during the years ended December 31, 2022 or 2021. Research and Development Engineering cost is recorded as technology and development expense during the period in which it is incurred. Product Warranties We offer extended warranties on our products for periods of one and 2021 . Property, Equipment and Software We state property and equipment at cost and depreciate such assets using the straight-line method over the estimated useful lives of each asset category. For leasehold improvements, we determine amortization using the straight-line method over the shorter of the lease term or estimated useful life of the asset. We expense repairs and maintenance costs as incurred, while capitalizing betterments and capital improvements and depreciating such costs over the remaining useful life of the related asset. We capitalize qualifying costs of computer software that we incur during the application development stage, as well as the cost of upgrades and enhancements that result in additional functionality, and we amortize such costs using the straight-line method over a period of three years, the expected period of the benefit. Net Income (Loss) per Share We calculate basic net income (loss) per share using the weighted-average number of common stock shares outstanding during the period. For the calculation of diluted net income (loss) per share, we give effect to all the shares of common stock that were outstanding during the period plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation when their effect is anti-dilutive. Dilutive potential shares of common stock consist of incremental shares of common stock issuable upon exercise of stock options and warrants. For the years ended December 31, 2022 and 2021, there were no reconciling items related to the numerators of the net income (loss) per share calculations. The following table presents a reconciliation of the denominator of the basic net income (loss) per share calculation to that of the diluted net income (loss) per share calculation (in thousands): Year Ended December 31, 2022 2021 Weighted-average shares outstanding, basic 10,630,771 10,136,210 Incremental shares resulting from assumed exercises of in-the-money stock options — 35,714 Weighted-average shares outstanding, diluted 10,630,771 10,171,924 Securities which may have affected the calculation of diluted earnings per share for the years ended December 31, 2022 and 2021 if their effect had been dilutive include 1,626,631 total options outstanding and 1,435,471 outstanding out-of-the-money stock options, respectively, and 1,011,441 outstanding stock warrants in both years. Segments Existing GAAP, which establishes a management approach to segment reporting, defines operating segments as components of an entity about which separate, discrete financial information is available for evaluation by the chief operating decision maker. We have identified our Chief Executive Officer as our chief operating decision maker, who reviews operating results to make decisions about allocating resources and assessing performance based upon only one operating segment. Commitments and Contingencies We record a liability for a loss contingency when we determine that it is probable that we have incurred such liability and we can reasonably estimate the amount. Impairments Long-Lived Assets Other Than Indefinite-Lived Intangible Assets When events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, we evaluate long-lived assets for potential impairment, basing our testing method upon whether the assets are held for sale or held for use. For assets classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets held and used, we estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, we recognize an impairment loss for the difference between the carrying value of the asset and its fair value. Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06 (“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 . The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. With regard to our financial reporting, ASU 2020-06 will be effective January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. We are currently evaluating what effect(s) the adoption of ASU 2020-06 may have on our consolidated financial statements, but we do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) . The ASU requires entities to use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments, including trade receivables, which may result in the earlier recognition of allowances for losses. With regard to our financial reporting, ASU 2016-13 will be effective beginning January 1, 2023, and early adoption is permitted. We do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. We have reviewed all accounting pronouncements recently issued by the FASB and the SEC. The authoritative pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the authoritative |
CONCENTRATIONS OF RISK
CONCENTRATIONS OF RISK | 12 Months Ended |
Dec. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF RISK | NOTE 3. CONCENTRATIONS OF RISK Revenue and Accounts Receivable The disaggregation of revenue tables in Note 4 demonstrate the concentration in our revenue from certain products and the geographic concentration of our business. We also have a concentration in the volume of business we transacted with customers, as during the year ended December 31, 2022, two of our customers represented 46% and 20%, respectively, of our revenue, while during the year ended December 31, 2021, three of our customers represented about 24%, 18% and 12%, respectively, of our revenue. At December 31, 2022, accounts receivable from three of our customers represented about 23%, 16%, and 10%, respectively, while at December 31, 2021, accounts receivable from three of our customers represented about 25%, 24% and 10%, respectively. Deferred Cost of Revenue See Note 8 for a discussion of a risk concentration regarding our deferred cost of revenue. Cost of Sales and Accounts Payable The various hardware we purchase to fulfill our contracts with customers is not especially unique in nature. Based on our analysis, we believe that should any disruption in our current supply chain occur, a sufficient number of alternative vendors is available to us, at reasonably comparable specifications and price, such that we would not experience a material negative impact on our ability to procure the hardware we need to operate our business. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 4. REVENUE We primarily sell AI-based products and services. In the U.S., that has included our Remark AI Thermal Kits and rPads, while in China we sell various customized products based upon computer vision and other technologies. We do not include disclosures related to remaining performance obligations because substantially all our contracts with customers have an original expected duration of one year or less or, with regard to our stand-ready obligations, the amounts involved are not material. Disaggregation of Revenue The following table presents a disaggregation of our revenue by category of products and services (in thousands): Year Ended December 31, 2022 2021 AI-based products and services, including $5.4 million and $3.8 million, respectively, from China Business Partner (See Note 19 ) $ 10,964 $ 14,792 Other 702 1,198 Revenue $ 11,666 $ 15,990 The following table presents a disaggregation of our revenue by country (in thousands): Year Ended December 31, 2022 2021 China $ 11,402 $ 12,218 United States 264 3,772 Revenue $ 11,666 $ 15,990 Significant Judgments When accounting for revenue we make certain judgments, such as whether we act as a principal or as an agent in transactions or whether our contracts with customers fall within the scope of current GAAP regarding revenue, that affect the determination of the amount and timing of our revenue from contracts with customers. Based on the current facts and circumstances related to our contracts with customers, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted in terms of their potential impact on the amount and timing of our revenue. Contract Assets and Contract Liabilities We do not currently generate material contract assets. During the year ended December 31, 2022, our contract liability changed only as a result of routine business activity. During the years ended December 31, 2022 and 2021, the amount of revenue we recognized that was included in the beginning balance of Contract liability was not material. During the years ended December 31, 2022 and 2021, we did not recognize revenue from performance obligations that were satisfied in previous periods. NOTE 8. DEFERRED COST OF REVENUE Deferred cost of revenue during years ended December 31, 2022 and 2021 of $7.5 million and $0.6 million, respectively, represents amounts we have paid in advance of the vendor providing services to us in relation to various projects in China. Specifically, the deferred cost of revenue balance during year ended December 31, 2022, a large percentage of which was related to project installations we expected would be provided to us through our China Business Partner (described in more detail in Note 19 ), was paid almost entirely to a single vendor which will be visiting numerous sites across various regions of China to install our software solutions and/or hardware for our customers and perform other services for us pursuant to customer requirements. Because most of the projects for which we have engaged the vendor require purchases of hardware, equipment and/or supplies in advance of site visits, we made the prepayments during 2022 in anticipation of what we expected would be several large batches of project installations so that we would be ready to meet customer expectations. The lengthy COVID-19-related lockdowns that occurred in various regions in China, however, prevented us and the vendor from being able to complete as many projects as originally expected and they caused customers to delay installations. Given that the delays were related to COVID-19-related lockdowns that had ended by December 31, 2022 and were not a result of the vendor’s inability to either perform the services or refund the amounts we advanced, we believe the balance at December 31, 2022 will be fully recovered. |
LIABILITIES RELATED TO WARRANTS
LIABILITIES RELATED TO WARRANTS TO PURCHASE COMMON STOCK | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
LIABILITIES RELATED TO WARRANTS TO PURCHASE COMMON STOCK | NOTE 5. LIABILITIES RELATED TO WARRANTS TO PURCHASE COMMON STOCK At the end of each reporting period through June 30, 2021, we had been using an option pricing model to estimate and report the fair value of liabilities related to warrants to purchase an aggregate of 575,000 shares of our common stock, consisting of a warrant to purchase 4,000 of our common stock that we issued and warrants to purchase 571,000 shares of our common stock that we were obligated to issue as part of the consideration for our acquisition (the “CBG Acquisition”) of assets of China Branding Group Limited (“CBG”) in September 2016. On August 31, 2021 (the “CBG Settlement Effective Date”), we entered into a settlement agreement (the “CBG Settlement Agreement”) with CBG and its joint official liquidators to settle the parties’ claims against each other in the legal proceeding we filed arising from the CBG Acquisition (the “CBG Litigation”). Pursuant to the terms of the CBG Settlement Agreement, in consideration for a settlement of the parties’ claims and a mutual release, we released to CBG the $375,000 held in escrow in connection with the CBG Acquisition and issued to CBG, as of the CBG Settlement Effective Date, warrants to purchase as many as 571,000 shares of our common stock at a per share exercise price of $60.00 (the “CBG Settlement Warrants”), which warrants are exercisable for a period of five years from the CBG Settlement Effective Date. Additionally, if the closing price of our common stock is $80.00 or greater for any five days (which may be non-consecutive) in any consecutive 30-day trading period, we have the right to cause the holder of the CBG Settlement Warrants to exercise, at our election, all or any portion of the CBG Settlement Warrants on a cashless basis at a deemed exercise price of $80.00 per share. We evaluated the terms of the CBG Settlement Warrants and determined that they should now be classified as equity. As a result, there is no longer a liability associated with any of our outstanding warrants. When reclassifying the previously liability-classified warrants as equity on August 31, 2021, we used Level 3 inputs to our model consisting of an expected volatility of 85%, a risk-free interest rate of 0.77%, and an expected remaining term of five years. The following table presents the change in the liability balance associated with our liability-classified warrants (in thousands) during the prior year ended December 31, 2021: Balance at beginning of period $ 1,725 Expiration of warrants — Increase (decrease) in fair value of liability (123) Fair value of warrants reclassified to equity (1,602) Balance at end of period $ — |
TRADE ACCOUNTS RECEIVABLE
TRADE ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
TRADE ACCOUNTS RECEIVABLE | NOTE 6. TRADE ACCOUNTS RECEIVABLE December 31, 2022 2021 Gross accounts receivable balance $ 7,213 $ 11,551 Allowance for bad debt (4,122) (1,284) Accounts receivable, net $ 3,091 $ 10,267 Generally, it is not unusual for Chinese entities to pay their vendors on longer timelines than the timelines typically observed in U.S. commerce. Trade receivables related to our China AI projects in the years ended December 31, 2022 and 2021; including $1.1 million and $2.7 million, respectively, of trade receivables from projects related to work with our China Business Partner (see Note 19 for more information regarding our China Business Partner and related accounting), respectively; represented essentially all our gross trade receivables in each such period. Despite the longer collection timelines normally observed with Chinese entities, we have noted that the COVID-19-related lockdowns that persisted in China for most of 2022 have caused further delay in our ability to collect all balances due from some of our customers in China. As a result of our inability to assure collection of all amounts due from such customers within a short period of time, we recorded a reserve for bad debt of approximately $2.8 million for all accounts receivable from China customers that are more than one year past due. |
INVESTMENT
INVESTMENT | 12 Months Ended |
Dec. 31, 2022 | |
Noncontrolling Interest [Abstract] | |
INVESTMENT | NOTE 7. INVESTMENT In 2009, we co-founded a U.S.-based venture, Sharecare, Inc. (“Legacy Sharecare”), to build a web-based platform that simplifies the search for health and wellness information. The other co-founders of Legacy Sharecare were Dr. Mehmet Oz, HARPO Productions, Discovery Communications, Jeff Arnold and Sony Pictures Television. At December 31, 2021, we reported our $1.0 million investment in Legacy Sharecare as an investment in unconsolidated affiliate. On July 1, 2021, Legacy Sharecare completed a business combination with Falcon Capital Acquisition Corp., a special purpose acquisition company, as a result of which the common stock of the surviving entity of such business combination (“New Sharecare”) became listed on the Nasdaq Stock Market LLC. In connection with the completion of such business combination, the shares of common stock of Legacy Sharecare that we held immediately prior to the business combination converted into approximately $2.3 million in cash and approximately 9.4 million shares of common stock of New Sharecare. We do not maintain a seat on the board of directors of New Sharecare. The cash received was recorded as a realized gain on the investment, and the investment is revalued at fair value at the end of each reporting period using the closing sales price of the shares on the principal securities exchange on which such shares are then traded. As of December 31, 2021, the value of our 9,431,920 shares of common stock of New Sharecare was $42.3 million based upon the closing stock price of New Sharecare, an input we classify in Level 1 of the fair value hierarchy. We sold 3,181,920 shares of New Sharecare during the year ended December 31, 2022 for cash of $6.3 million. On July 2, 2022, we received a Notice of Trigger Event and Mandatory Payment from our senior lenders, which required that we make a prepayment of our senior secured loans (which are described in Note 14 ) by delivering to each lender shares of common stock of New Sharecare in the fair market amount applicable to each such lender to prepay our senior secured loans. On July 11, 2022, we delivered our remaining 6,250,000 shares of New Sharecare, which reduced the outstanding principal amount on our senior secured loans by approximately $9.7 million, and as a result, we no longer own any equity interests in New Sharecare as of such date. The total net loss on investment during the year ended December 31, 2022 was $26.4 million. |
DEFERRED COST OF REVENUE
DEFERRED COST OF REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
DEFERRED COST OF REVENUE | NOTE 4. REVENUE We primarily sell AI-based products and services. In the U.S., that has included our Remark AI Thermal Kits and rPads, while in China we sell various customized products based upon computer vision and other technologies. We do not include disclosures related to remaining performance obligations because substantially all our contracts with customers have an original expected duration of one year or less or, with regard to our stand-ready obligations, the amounts involved are not material. Disaggregation of Revenue The following table presents a disaggregation of our revenue by category of products and services (in thousands): Year Ended December 31, 2022 2021 AI-based products and services, including $5.4 million and $3.8 million, respectively, from China Business Partner (See Note 19 ) $ 10,964 $ 14,792 Other 702 1,198 Revenue $ 11,666 $ 15,990 The following table presents a disaggregation of our revenue by country (in thousands): Year Ended December 31, 2022 2021 China $ 11,402 $ 12,218 United States 264 3,772 Revenue $ 11,666 $ 15,990 Significant Judgments When accounting for revenue we make certain judgments, such as whether we act as a principal or as an agent in transactions or whether our contracts with customers fall within the scope of current GAAP regarding revenue, that affect the determination of the amount and timing of our revenue from contracts with customers. Based on the current facts and circumstances related to our contracts with customers, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted in terms of their potential impact on the amount and timing of our revenue. Contract Assets and Contract Liabilities We do not currently generate material contract assets. During the year ended December 31, 2022, our contract liability changed only as a result of routine business activity. During the years ended December 31, 2022 and 2021, the amount of revenue we recognized that was included in the beginning balance of Contract liability was not material. During the years ended December 31, 2022 and 2021, we did not recognize revenue from performance obligations that were satisfied in previous periods. NOTE 8. DEFERRED COST OF REVENUE Deferred cost of revenue during years ended December 31, 2022 and 2021 of $7.5 million and $0.6 million, respectively, represents amounts we have paid in advance of the vendor providing services to us in relation to various projects in China. Specifically, the deferred cost of revenue balance during year ended December 31, 2022, a large percentage of which was related to project installations we expected would be provided to us through our China Business Partner (described in more detail in Note 19 ), was paid almost entirely to a single vendor which will be visiting numerous sites across various regions of China to install our software solutions and/or hardware for our customers and perform other services for us pursuant to customer requirements. Because most of the projects for which we have engaged the vendor require purchases of hardware, equipment and/or supplies in advance of site visits, we made the prepayments during 2022 in anticipation of what we expected would be several large batches of project installations so that we would be ready to meet customer expectations. The lengthy COVID-19-related lockdowns that occurred in various regions in China, however, prevented us and the vendor from being able to complete as many projects as originally expected and they caused customers to delay installations. Given that the delays were related to COVID-19-related lockdowns that had ended by December 31, 2022 and were not a result of the vendor’s inability to either perform the services or refund the amounts we advanced, we believe the balance at December 31, 2022 will be fully recovered. |
PREPAID EXPENSE AND OTHER CURRE
PREPAID EXPENSE AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSE AND OTHER CURRENT ASSETS | NOTE 9. PREPAID EXPENSE AND OTHER CURRENT ASSETS The following table presents the components of prepaid expense and other current assets (in thousands): December 31, 2022 2021 Receivable from China Business Partner $ — $ 3,980 Other receivables 23 9 Prepaid expense 1,144 1,558 Deposits 201 221 Other current assets 6 6 Total $ 1,374 $ 5,774 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 10. PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands, except estimated lives): December 31, Estimated Life 2022 2021 Vehicles 3 153 — Computers and equipment 3 1,170 1,133 Furniture and fixtures 3 42 42 Software 3 5,160 5,055 Leasehold improvements 3 204 196 Software development in progress 1,199 128 Total property, equipment and software $ 7,928 $ 6,554 Less accumulated depreciation (6,229) (6,197) Total property, equipment and software, net $ 1,699 $ 357 For the years ended December 31, 2022 and 2021, depreciation (and amortization of software) expense was $0.2 million and $0.2 million, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 11. LEASES We lease office space under contracts we classify as operating leases. None of our leases are financing leases. The following table presents the detail of our lease expense, which is reported in General and administrative expense (in thousands): Year Ended December 31, 2022 2021 Operating lease expense $ 287 $ 304 Short-term lease expense 1,343 982 Lease expense $ 1,630 $ 1,286 We reported within operating cash flows for the years ended December 31, 2022 and 2021, $0.2 million and $0.2 million, respectively, of cash paid for amounts included in the measurement of operating lease liabilities. As of December 31, 2022, our operating leases had a weighted-average remaining lease term of approximately 12 months, and we used a weighted-average discount rate of approximately 13%, which approximates our incremental borrowing rate, to measure our operating lease liabilities. Maturity of Lease Liabilities The following table presents information regarding the maturities of undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented in our December 31, 2022 Consolidated Balance Sheet (in thousands): Operating lease liabilities maturing during the next: One year $ 155 Two years 60 Total undiscounted cash flows $ 215 Present value of cash flows $ 194 Lease liabilities on balance sheet: Short-term (included in accrued expenses $ 138 Long-term 56 Total lease liabilities $ 194 Significant Judgments When accounting for our leases, we make certain judgments, such as whether a contract contains a lease or what discount rate to use, that affect the determination of the amount of our lease assets and liabilities. Based on the current facts and circumstances related to our contracts, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12. INCOME TAX For the years ended December 31, 2022 and 2021, we did not have a material tax provision or a tax benefit to report, as we only had a de minimis foreign income tax expense for the year ended December 31, 2021, which amount was refunded to us during the year ended December 31, 2022. The following table presents a reconciliation between the income tax benefit computed by applying the federal statutory rate and our actual income tax expense: Year Ended December 31, 2022 2021 Income tax benefit (provision) at federal statutory rate $ (11,653) $ 5,771 Change in deferred tax asset valuation allowance 10,611 (5,241) Tax impact of warrants — (26) Tax effects of: Statutory differences 883 327 R&D expense (280) (210) Foreign tax rates different than U.S. federal statutory rate (123) 68 Other permanent items (42) (331) Deferred adjustments 404 99 Other 209 (466) Income tax benefit (provision) as reported $ 9 $ (9) Our 2022 and 2021 effective tax rates were significantly impacted by maintaining a valuation allowance against net deferred tax assets in all jurisdictions, both domestic and foreign, as well as permanent book-tax adjustments in foreign jurisdictions and the fact that our earnings are generated in jurisdictions with rates that differ from the US federal statutory rate. The following table presents loss before income tax attributable to domestic and to foreign operations (in thousands): Year Ended December 31, 2022 2021 Domestic $ (49,297) $ 28,036 Foreign (6,195) (555) Loss before income taxes $ (55,492) $ 27,481 Deferred Tax Assets and Liabilities We assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing DTAs in each jurisdiction. The realization of DTAs is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considered the scheduled reversal of existing deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company evaluated both positive and negative evidence in determining the need for a valuation allowance. The Company continues to assess the realizability of DTAs and concluded that in each jurisdiction, it has not met the “more likely than not” threshold. As of December 31, 2022, the Company continues to provide a valuation allowance against its DTAs that cannot be offset by existing deferred tax liabilities. In accordance with ASC Topic 740, this assessment has taken into consideration the jurisdictions in which these DTAs reside. The following table presents the components of our DTAs and DTLs (in thousands): December 31, 2022 2021 Deferred Tax Assets Net operating loss carryforwards $ 42,744 $ 43,375 Amortization of intangibles 2,371 1,979 Share-based compensation expense 7,865 7,423 Depreciation of fixed assets 33 — Other 5,427 3,503 Gross deferred tax assets $ 58,440 $ 56,280 Valuation allowance (58,440) (47,857) Deferred tax assets, net of valuation allowance $ — $ 8,423 Deferred Tax Liabilities Deferred gain — (8,444) Depreciation of fixed assets — 21 Gross deferred tax liabilities — (8,423) Net deferred tax liability $ — $ — Net operating losses available at December 31, 2022 to offset future taxable income in the U.S. federal, U.S. state, Hong Kong and China jurisdictions are $177.8 million, $33.1 million, $1.7 million and $11.7 million, respectively. The statutory income tax rates in Hong Kong, China and the United Kingdom are 16.5%, 25% and 19%, respectively. The U.S. net operating losses generated prior to 2018 expire between 2027 and 2037. The US net operating losses generated in 2018 to 2022 have no expiration date and carry forward indefinitely. The net operating losses generated in Hong Kong and United Kingdom have no expiration date and carry forward indefinitely, while the net operating losses generated in China have a five-year carryforward period. We file income tax returns in various domestic and foreign tax jurisdictions with varying statutes of limitation. We are generally not subject to examinations in the U.S. for periods prior to 2019. However, as we utilize our net operating losses prior periods can be subject to examination. In significant foreign jurisdictions, we are generally not subject to examination for periods prior to 2019. Under the Internal Revenue Code of 1986, as amended (the “Code”), if an ownership change (as defined for income tax purposes) occurs, §382 of the Code imposes an annual limitation on the amount of a corporation’s taxable income that can be offset by net operating loss carryforwards. During our 2014 tax year, we analyzed recent acquisitions and ownership changes and determined that certain of such transactions qualified as an ownership change under §382. As a result, we will likely not be able to use a portion of our net operating loss carryforwards. For the years ended December 31, 2022 and 2021, we have no unrecognized tax benefits, and we have not taken any tax positions which we expect might significantly change unrecognized tax benefits during the 12 months following December 31, 2022. The 2017 Tax Cuts and Jobs Act requires taxpayers to capitalize research and experimental (“R&E”) expenditures effective for taxable years beginning after December 31, 2021. Any R&E expenditures attributable to U.S.-based research must be amortized over a period of 5 years and R&E expenditures attributable to research conducted outside of the U.S. must be amortized over a period of 15 years. |
ACCRUED EXPENSE AND OTHER CURRE
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES | NOTE 13. ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES The following table presents the components of Accrued expense and other current liabilities (in thousands): December 31, 2022 2021 Accrued compensation and benefit-related expense $ 1,448 $ 821 Accrued interest 769 385 Other accrued expense 2,393 1,673 Other payables 2,234 2,324 Operating lease liability - current 138 187 China Cash Bonuses 32 439 Other current liabilities 208 134 Total $ 7,222 $ 5,963 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 14. DEBT The following table presents our notes payable (in thousands) as of: December 31, 2022 2021 Principal balance of Original Mudrick Loans $ 14,418 $ 30,000 Other notes payable 189 — Unamortized discount and debt issuance cost — (2,189) Notes payable, net of unamortized discount and debt issuance cost $ 14,607 $ 27,811 On December 3, 2021, we entered into senior secured loan agreements (the “Original Mudrick Loan Agreements”) with certain of our subsidiaries as guarantors (the “Guarantors”) and certain institutional lenders affiliated with Mudrick Capital Management, LP (collectively, “Mudrick”), pursuant to which Mudrick extended credit to us consisting of term loans in the aggregate principal amount of $30.0 million (the “Original Mudrick Loans”). The Original Mudrick Loans bore interest at 16.5% per annum until the original maturity date of July 31, 2022 and, following an amendment we entered into with Mudrick in August 2022, bore interest at 18.5% per annum. The amendment also extended the maturity date of the Original Mudrick Loans from July 31, 2022 to October 31, 2022. However, we did not make the required repayment of the Original Mudrick Loans by October 31, 2022, which constituted an event of default under the Original Mudrick Loans and triggered an increase in the interest rate under the Original Mudrick Loans to 20.5%. To secure the payment and performance of the obligations under the Original Mudrick Loan Agreements, we, together with the Guarantors, have granted to TMI Trust Company, as the collateral agent for the benefit of Mudrick, a first priority lien on, and security interest in, all assets of Remark and the Guarantors, subject to certain customary exceptions. In connection with our entry into the Original Mudrick Loan Agreements, we paid to Mudrick an upfront fee equal to 5.0% of the amount of the Original Mudrick Loans, which amount was netted against the drawdown of the Original Mudrick Loans. We recorded the upfront fee as a debt discount of $1.5 million, and recorded debt issuance cost totaling $1.1 million. We amortized the discount on the Original Mudrick Loans and the debt issuance cost over the life of the Original Mudrick Loans and, during the year ended December 31, 2022, we amortized $2.2 million of such discount and debt issuance cost. In consideration for the amendment we entered into with Mudrick in August 2022, we paid Mudrick an amendment and extension payment in the amount of 2.0% of the then unpaid principal balance of the Original Mudrick Loans, or approximately $0.3 million, by adding such amount to the principal balance of the Original Mudrick Loans. See Note 20 for more information regarding further developments involving the Original Mudrick Loans. During the year ended December 31, 2022, we repaid $6.2 million of principal and, as described in more detail in Note 7 , we delivered all remaining shares of New Sharecare to Mudrick on July 11, 2022, in partial settlement of the Original Mudrick Loans, resulting in a reduction of approximately $9.7 million of principal. Other Notes Payable The Other notes payable in the table above represent individually immaterial notes payable issued for the purchase of operating assets. Such notes payable bear interest at a weighted-average interest rate of approximately 6.2% and have a weighted-average remaining term of approximately 5.1 years. Effective August 5, 2021 (the “Conversion Date”), pursuant to an amendment on such date to a promissory note with a private lender that we originally executed on December 30, 2020 (the “Private Lender Loan”), the outstanding $1.0 million principal amount of the Private Lender Loan plus all accrued but unpaid interest of approximately $0.1 million thereon through the Conversion Date was automatically converted into shares of our common stock at a conversion price of $1.21 per share, resulting in the issuance of 876,493 shares of our common stock with a fair value of $1.1 million and the recording of less than $0.1 million of additional interest expense. NOTE 15. TRANSACTIONS WITH IONIC Liability Related to Convertible Debenture On October 6, 2022, we entered into a debenture purchase agreement (the “2022 Debenture Purchase Agreement”) with Ionic Ventures, LLC (“Ionic”), pursuant to which we issued a convertible subordinated debenture in the original principal amount of $2.8 million (the “2022 Debenture”) to Ionic for a purchase price of $2.5 million. The 2022 Debenture automatically converted into shares of our common stock (the “Settlement Shares”) on November 17, 2022 upon the effectiveness of a registration statement we filed pursuant to a registration rights agreement we executed with Ionic. As of December 31, 2022, because the measurement period for determining the final conversion price pursuant to the 2022 Debenture Purchase Agreement was still ongoing, the number of Settlement Shares was estimated by dividing the outstanding balance under the 2022 Debenture (including accrued and unpaid interest) by a conversion price that was 80% of the average of the 10 lowest volume-weighted average prices (“VWAPs”) during the period from November 18, 2022 through December 31, 2022. The VWAPs used to estimate the number of Settlement Shares for purposes of estimating the fair value of the liability related to the convertible debenture are classified as Level 3 inputs. Using the guidance in ASC Topic 480, Distinguishing Liabilities from Equity , we evaluated the convertible debenture and determined that it represented an obligation that must or may be settled with a variable number of shares, the monetary value of which was based solely or predominantly on a fixed monetary amount known at inception. We, therefore, recorded a liability for the 2022 Debenture on October 6, 2022, by estimating the number of Settlement Shares and multiplying by the market price of the stock on such date, resulting in an initial liability of approximately $3.6 million. We recorded the $1.1 million excess of the initial liability amount over the purchase price as finance cost. The liability is being remeasured at each balance sheet date with the change in the liability also being reflected as finance cost. During the fourth quarter of 2022, we issued 898,854 Settlement Shares, with the $2.0 million fair value of such issued Settlement Shares reducing the liability. At December 31, 2022, we estimated that another 1,720,349 Settlement Shares would need to be issued, representing a liability of approximately $1.9 million. During the fourth quarter of 2022, we also recorded $0.3 million of finance cost related to changes in the fair value of the liability during the period. Equity Line of Credit Also, on October 6, 2022, we entered into a purchase agreement (the “ELOC Purchase Agreement”) with Ionic, which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Ionic to purchase up to an aggregate of $50.0 million of shares of our common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the Resale Registration Statement and that the 2022 Debenture shall have been fully converted into shares of common stock or shall otherwise have been fully redeemed and settled in all respects in accordance with the terms of the 2022 Debenture, we have the right to present Ionic with a purchase notice (each, a “Purchase Notice”) directing Ionic to purchase any amount up to $3.0 million of our common stock per trading day, at a per share price equal to 90% (or 80% if our common stock is not then trading on Nasdaq) of the average of the five lowest VWAPs over a specified measurement period. With each purchase under the ELOC Purchase Agreement, we are required to deliver to Ionic an additional number of shares equal to 2.5% of the number of shares of common stock deliverable upon such purchase. The number of shares that we can issue to Ionic from time to time under the ELOC Purchase Agreement shall be subject to the condition that we will not sell shares to Ionic to the extent that Ionic, together with its affiliates, would beneficially own more than 4.99% of the outstanding shares of our common stock immediately after giving effect to such sale (the “Beneficial Ownership Limitation”). In addition, Ionic will not be required to buy any shares of our common stock pursuant to a Purchase Notice on any trading day on which the closing trade price of our common stock is below $0.25. We will control the timing and amount of sales of our common stock to Ionic. Ionic has no right to require any sales by us, and is obligated to make purchases from us as directed solely by us in accordance with the ELOC Purchase Agreement. The ELOC Purchase Agreement provides that we will not be required or permitted to issue, and Ionic will not be required to purchase, any shares under the ELOC Purchase Agreement if such issuance would violate Nasdaq rules, and we may, in our sole discretion, determine whether to obtain stockholder approval to issue shares in excess of 19.99% of our outstanding shares of common stock if such issuance would require stockholder approval under Nasdaq rules. Ionic has agreed that neither it nor any of its agents, representatives and affiliates will engage in any direct or indirect short-selling or hedging our common stock during any time prior to the termination of the ELOC Purchase Agreement. The ELOC Purchase Agreement may be terminated by us at any time after commencement, at our discretion; provided, however, that if we sold less than $25.0 million to Ionic (other than as a result of our inability to sell shares to Ionic as a result of the Beneficial Ownership Limitation, our failure to have sufficient shares authorized or our failure to obtain stockholder approval to issue more than 19.99% of our outstanding shares), we will pay to Ionic a termination fee of $0.5 million, which is payable, at our option, in cash or in shares of common stock at a price equal to the closing price on the day immediately preceding the date of receipt of the termination notice. Further, the ELOC Purchase Agreement will automatically terminate on the date that we sell, and Ionic purchases, the full $50.0 million amount under the agreement or, if the full amount has not been purchased, on the expiration of the 36-month term of the ELOC Purchase Agreement. (See Note 20 for additional detail regarding certain amendments to the ELOC Purchase Agreement.) On November 7, 2022, we entered into an amendment to the 2022 Debenture Purchase Agreement with Ionic, pursuant to which we and Ionic agreed to amend and restate the 2022 Debenture to provide that (i) in no event will the conversion price under the 2022 Debenture be below a floor price of $0.10 (such price, as may be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction, the “Floor Price”), and (ii) in the event the actual conversion price is less than the Floor Price, (A) Ionic will be entitled to that number of settlement conversion shares issuable with an assumed conversion price equal to the Floor Price, and (B) we will be required to make a cash payment to Ionic on or prior to the maturity date of an amount that is calculated by subtracting the number of shares of common stock issuable at an assumed conversion price equal to the Floor Price from the number of shares of common stock issuable at the actual conversion price, multiplied by a price equal to the average of the ten lowest VWAPs during the specified measurement period. |
TRANSACTIONS WITH IONIC
TRANSACTIONS WITH IONIC | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
TRANSACTIONS WITH IONIC | NOTE 14. DEBT The following table presents our notes payable (in thousands) as of: December 31, 2022 2021 Principal balance of Original Mudrick Loans $ 14,418 $ 30,000 Other notes payable 189 — Unamortized discount and debt issuance cost — (2,189) Notes payable, net of unamortized discount and debt issuance cost $ 14,607 $ 27,811 On December 3, 2021, we entered into senior secured loan agreements (the “Original Mudrick Loan Agreements”) with certain of our subsidiaries as guarantors (the “Guarantors”) and certain institutional lenders affiliated with Mudrick Capital Management, LP (collectively, “Mudrick”), pursuant to which Mudrick extended credit to us consisting of term loans in the aggregate principal amount of $30.0 million (the “Original Mudrick Loans”). The Original Mudrick Loans bore interest at 16.5% per annum until the original maturity date of July 31, 2022 and, following an amendment we entered into with Mudrick in August 2022, bore interest at 18.5% per annum. The amendment also extended the maturity date of the Original Mudrick Loans from July 31, 2022 to October 31, 2022. However, we did not make the required repayment of the Original Mudrick Loans by October 31, 2022, which constituted an event of default under the Original Mudrick Loans and triggered an increase in the interest rate under the Original Mudrick Loans to 20.5%. To secure the payment and performance of the obligations under the Original Mudrick Loan Agreements, we, together with the Guarantors, have granted to TMI Trust Company, as the collateral agent for the benefit of Mudrick, a first priority lien on, and security interest in, all assets of Remark and the Guarantors, subject to certain customary exceptions. In connection with our entry into the Original Mudrick Loan Agreements, we paid to Mudrick an upfront fee equal to 5.0% of the amount of the Original Mudrick Loans, which amount was netted against the drawdown of the Original Mudrick Loans. We recorded the upfront fee as a debt discount of $1.5 million, and recorded debt issuance cost totaling $1.1 million. We amortized the discount on the Original Mudrick Loans and the debt issuance cost over the life of the Original Mudrick Loans and, during the year ended December 31, 2022, we amortized $2.2 million of such discount and debt issuance cost. In consideration for the amendment we entered into with Mudrick in August 2022, we paid Mudrick an amendment and extension payment in the amount of 2.0% of the then unpaid principal balance of the Original Mudrick Loans, or approximately $0.3 million, by adding such amount to the principal balance of the Original Mudrick Loans. See Note 20 for more information regarding further developments involving the Original Mudrick Loans. During the year ended December 31, 2022, we repaid $6.2 million of principal and, as described in more detail in Note 7 , we delivered all remaining shares of New Sharecare to Mudrick on July 11, 2022, in partial settlement of the Original Mudrick Loans, resulting in a reduction of approximately $9.7 million of principal. Other Notes Payable The Other notes payable in the table above represent individually immaterial notes payable issued for the purchase of operating assets. Such notes payable bear interest at a weighted-average interest rate of approximately 6.2% and have a weighted-average remaining term of approximately 5.1 years. Effective August 5, 2021 (the “Conversion Date”), pursuant to an amendment on such date to a promissory note with a private lender that we originally executed on December 30, 2020 (the “Private Lender Loan”), the outstanding $1.0 million principal amount of the Private Lender Loan plus all accrued but unpaid interest of approximately $0.1 million thereon through the Conversion Date was automatically converted into shares of our common stock at a conversion price of $1.21 per share, resulting in the issuance of 876,493 shares of our common stock with a fair value of $1.1 million and the recording of less than $0.1 million of additional interest expense. NOTE 15. TRANSACTIONS WITH IONIC Liability Related to Convertible Debenture On October 6, 2022, we entered into a debenture purchase agreement (the “2022 Debenture Purchase Agreement”) with Ionic Ventures, LLC (“Ionic”), pursuant to which we issued a convertible subordinated debenture in the original principal amount of $2.8 million (the “2022 Debenture”) to Ionic for a purchase price of $2.5 million. The 2022 Debenture automatically converted into shares of our common stock (the “Settlement Shares”) on November 17, 2022 upon the effectiveness of a registration statement we filed pursuant to a registration rights agreement we executed with Ionic. As of December 31, 2022, because the measurement period for determining the final conversion price pursuant to the 2022 Debenture Purchase Agreement was still ongoing, the number of Settlement Shares was estimated by dividing the outstanding balance under the 2022 Debenture (including accrued and unpaid interest) by a conversion price that was 80% of the average of the 10 lowest volume-weighted average prices (“VWAPs”) during the period from November 18, 2022 through December 31, 2022. The VWAPs used to estimate the number of Settlement Shares for purposes of estimating the fair value of the liability related to the convertible debenture are classified as Level 3 inputs. Using the guidance in ASC Topic 480, Distinguishing Liabilities from Equity , we evaluated the convertible debenture and determined that it represented an obligation that must or may be settled with a variable number of shares, the monetary value of which was based solely or predominantly on a fixed monetary amount known at inception. We, therefore, recorded a liability for the 2022 Debenture on October 6, 2022, by estimating the number of Settlement Shares and multiplying by the market price of the stock on such date, resulting in an initial liability of approximately $3.6 million. We recorded the $1.1 million excess of the initial liability amount over the purchase price as finance cost. The liability is being remeasured at each balance sheet date with the change in the liability also being reflected as finance cost. During the fourth quarter of 2022, we issued 898,854 Settlement Shares, with the $2.0 million fair value of such issued Settlement Shares reducing the liability. At December 31, 2022, we estimated that another 1,720,349 Settlement Shares would need to be issued, representing a liability of approximately $1.9 million. During the fourth quarter of 2022, we also recorded $0.3 million of finance cost related to changes in the fair value of the liability during the period. Equity Line of Credit Also, on October 6, 2022, we entered into a purchase agreement (the “ELOC Purchase Agreement”) with Ionic, which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Ionic to purchase up to an aggregate of $50.0 million of shares of our common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the Resale Registration Statement and that the 2022 Debenture shall have been fully converted into shares of common stock or shall otherwise have been fully redeemed and settled in all respects in accordance with the terms of the 2022 Debenture, we have the right to present Ionic with a purchase notice (each, a “Purchase Notice”) directing Ionic to purchase any amount up to $3.0 million of our common stock per trading day, at a per share price equal to 90% (or 80% if our common stock is not then trading on Nasdaq) of the average of the five lowest VWAPs over a specified measurement period. With each purchase under the ELOC Purchase Agreement, we are required to deliver to Ionic an additional number of shares equal to 2.5% of the number of shares of common stock deliverable upon such purchase. The number of shares that we can issue to Ionic from time to time under the ELOC Purchase Agreement shall be subject to the condition that we will not sell shares to Ionic to the extent that Ionic, together with its affiliates, would beneficially own more than 4.99% of the outstanding shares of our common stock immediately after giving effect to such sale (the “Beneficial Ownership Limitation”). In addition, Ionic will not be required to buy any shares of our common stock pursuant to a Purchase Notice on any trading day on which the closing trade price of our common stock is below $0.25. We will control the timing and amount of sales of our common stock to Ionic. Ionic has no right to require any sales by us, and is obligated to make purchases from us as directed solely by us in accordance with the ELOC Purchase Agreement. The ELOC Purchase Agreement provides that we will not be required or permitted to issue, and Ionic will not be required to purchase, any shares under the ELOC Purchase Agreement if such issuance would violate Nasdaq rules, and we may, in our sole discretion, determine whether to obtain stockholder approval to issue shares in excess of 19.99% of our outstanding shares of common stock if such issuance would require stockholder approval under Nasdaq rules. Ionic has agreed that neither it nor any of its agents, representatives and affiliates will engage in any direct or indirect short-selling or hedging our common stock during any time prior to the termination of the ELOC Purchase Agreement. The ELOC Purchase Agreement may be terminated by us at any time after commencement, at our discretion; provided, however, that if we sold less than $25.0 million to Ionic (other than as a result of our inability to sell shares to Ionic as a result of the Beneficial Ownership Limitation, our failure to have sufficient shares authorized or our failure to obtain stockholder approval to issue more than 19.99% of our outstanding shares), we will pay to Ionic a termination fee of $0.5 million, which is payable, at our option, in cash or in shares of common stock at a price equal to the closing price on the day immediately preceding the date of receipt of the termination notice. Further, the ELOC Purchase Agreement will automatically terminate on the date that we sell, and Ionic purchases, the full $50.0 million amount under the agreement or, if the full amount has not been purchased, on the expiration of the 36-month term of the ELOC Purchase Agreement. (See Note 20 for additional detail regarding certain amendments to the ELOC Purchase Agreement.) On November 7, 2022, we entered into an amendment to the 2022 Debenture Purchase Agreement with Ionic, pursuant to which we and Ionic agreed to amend and restate the 2022 Debenture to provide that (i) in no event will the conversion price under the 2022 Debenture be below a floor price of $0.10 (such price, as may be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction, the “Floor Price”), and (ii) in the event the actual conversion price is less than the Floor Price, (A) Ionic will be entitled to that number of settlement conversion shares issuable with an assumed conversion price equal to the Floor Price, and (B) we will be required to make a cash payment to Ionic on or prior to the maturity date of an amount that is calculated by subtracting the number of shares of common stock issuable at an assumed conversion price equal to the Floor Price from the number of shares of common stock issuable at the actual conversion price, multiplied by a price equal to the average of the ten lowest VWAPs during the specified measurement period. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 16. COMMITMENTS AND CONTINGENCIES At December 31, 2022, we had no material commitments outside the normal course of business. Contingencies As of December 31, 2022, we were neither a defendant in any material pending legal proceeding nor are we aware of any material threatened claims against us and, therefore, we have not accrued any contingent liabilities. Registration Rights Agreement On September 27, 2021, we entered into a securities purchase agreement (the “Armistice Purchase Agreement”) with Armistice Capital Master Fund Ltd. (“Armistice Capital”) pursuant to which we issued shares of our common stock together with warrants to purchase our common stock, subject to certain customary anti-dilution adjustments (the “Armistice Warrants”). In connection with our entry into the Armistice Purchase Agreement, we also entered into a registration rights agreement with Armistice Capital, pursuant to which we were obligated to file one or more registration statements, as necessary, to register under the Securities Act of 1933, as amended, the resale of the shares we issued to Armistice Capital and the shares underlying the Armistice Warrants (collectively, the “Armistice Registrable Securities”) and to obtain effectiveness of such registration statement no later than 90 days following September 27, 2021. The agreement provided that if we failed to satisfy our obligation to timely obtain effectiveness, we would incur a $0.1 million monthly penalty (up to a maximum of $1.0 million) until we achieved effectiveness. The registration statement to register the resale of the Armistice Registrable Securities was declared effective on October 31, 2022. As of December 31, 2021, we had accrued $0.6 million as an initial estimate of the penalty liability. During the year ended December 31, 2022, we accrued an additional $0.4 million to accrue for the maximum penalty, of which we paid $0.2 million of this amount, resulting in an unpaid amount of $0.8 million that is included in other accrued expense at December 31, 2022. |
STOCKHOLDERS' EQUITY, SHARE-BAS
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE | NOTE 17. STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE Equity Issuances On September 29, 2021, we issued and sold to Armistice Capital 423,729 shares of our common stock at a purchase price of $11.80 per share together with the Armistice Warrants to purchase as many as 423,729 shares of our common stock at an exercise price of $13.50 per share, subject to certain customary anti-dilution adjustments, pursuant to the terms of the Armistice Purchase Agreement. We received net proceeds of $4.6 million from such sale. Concurrently with the entry into the Purchase Agreement, we also entered into a financial advisor agreement (the “Financial Advisor Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”), pursuant to which we agreed to pay A.G.P. a cash fee of approximately $0.4 million and to reimburse A.G.P. for certain legal and escrow expenses. In addition, pursuant to the terms of the Financial Advisor Agreement, on September 29, 2021, we issued to A.G.P. and its designees warrants (the “Financial Advisor Warrants” and together with the Armistice Warrants, the “Private Placement Warrants”) to purchase as many as an aggregate of 12,712 shares of our common stock at an exercise price of $13.50 per share, subject to certain customary anti-dilution adjustments. Based on the terms of the Private Placement Warrants, we recorded such warrants as equity instruments. Warrants The following table summarizes information related to our equity-classified stock warrant issuances as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 4,000 $ 100.00 Granted 1 1,007,441 39.90 Exercised — — Forfeited, cancelled or expired — Outstanding at December 31, 2021 1,011,441 $ 40.10 4.7 $ — Granted — — Exercised — — Forfeited, cancelled or expired — — Outstanding at December 31, 2022 1,011,441 $ 40.10 3.7 $ — 1 Includes the 0.6 million warrants to purchase our common stock that we issued to CBG (see Note 5 ). Share-Based Compensation On September 2, 2022, we issued 125,000 shares of our common stock with a fair value of $0.5 million to a vendor in exchange for services performed. We are authorized to issue equity-based awards under our 2014 Incentive Plan, our 2017 Incentive Plan and our 2022 Incentive Plan, each of which our stockholders have approved. We also award cash bonuses (“China Cash Bonuses”) to our employees in China, which grants are not subject to a formal incentive plan and which can only be settled in cash. We grant such awards to attract, retain and motivate eligible officers, directors, employees and consultants. Under each of the plans, we have granted shares of restricted stock and options to purchase common stock to our officers and employees with exercise prices equal to or greater than the fair value of the underlying shares on the grant date. Stock options and China Cash Bonuses generally expire 10 years from the grant date. All forms of equity awards and China Cash Bonuses vest upon the passage of time, the attainment of performance criteria, or both. When participants exercise stock options, we issue any shares of our common stock resulting from such exercise from new authorized and unallocated shares available at the time of exercise. We estimate the fair value of our stock option awards and China Cash Bonuses using the BSM Model. During the year ended December 31, 2022 and 2021, we applied the following weighted-average inputs, which we classify in Level 3 of the fair value hierarchy, to the BSM Model for our stock option awards: Year Ended December 31, 2022 2021 Expected term in years 6.0 6.0 Expected volatility 101.27 % 85 % Expected dividends — % — % Risk-free interest rate 3.56 % 0.40 % During the year ended December 31, 2021 (we did not issue any China Cash Bonuses during 2022), we applied the following weighted-average inputs, which we classify in Level 3 of the fair value hierarchy, to the BSM Model for our China Cash Bonuses: Expected remaining term in years 4.71 Expected volatility 110.14 % Expected dividends — % Risk-free interest rate 1.06 % We estimated the expected term based upon historical data. The risk-free interest rate is based on the U.S. Treasury yield curve appropriate for the expected term on the date of grant, and we estimate the expected volatility primarily using the historical volatility of our common stock. Actual compensation, if any, ultimately realized may differ significantly from the amount estimated using an option-pricing model. The following table summarizes activity under our equity incentive plans related to equity-classified stock option grants as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 994,234 $ 42.90 Granted 546,350 13.70 Exercised (54,794) 19.70 Forfeited, cancelled or expired (1,888) 15.50 Outstanding at December 31, 2021 1,483,902 $ 33.00 6.1 $ 159 Granted 152,731 2.66 Exercised — — Forfeited, cancelled or expired (10,002) 14.11 Outstanding at December 31, 2022 1,626,631 $ 30.31 5.5 $ 1 Exercisable at December 31, 2021 1,277,652 36.20 5.7 $ 957 Exercisable at December 31, 2022 1,549,681 31.41 5.3 $ 1 The following table summarizes the status of non-vested stock options as of and for the dates and periods noted: Shares Weighted-Average Non-vested at December 31, 2020 16,088 $ 68 Vested (354,788) 3,512 Forfeited, cancelled or expired (1,400) 17 Non-vested at December 31, 2021 206,250 2,063 Granted 37,000 51 Vested (160,100) 1,852 Forfeited, cancelled or expired (6,200) 72 Non-vested at December 31, 2022 76,950 $ 529 No stock options were exercised during year ended December 31, 2022. We received proceeds from stock option exercises during the year ended December 31, 2021 totaling approximately $1.1 million, while the total intrinsic value on such stock option exercises was $1.0 million. The following table summarizes activity related to our liability-classified China Cash Bonuses as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 105,500 $ 40.10 Granted — — Forfeited, cancelled or expired (1,900) 63.10 Outstanding at December 31, 2021 103,600 $ 39.70 6.1 $ 159 Forfeited, cancelled or expired (32,150) 47.99 Outstanding at December 31, 2022 71,450 $ 35.99 6.1 $ — Exercisable at December 31, 2021 88,600 44.10 4.9 $ — Exercisable at December 31, 2022 68,450 36.97 6.1 $ — The following table presents the change in the liability associated with our China Cash Bonuses included in Accrued expense and other current liabilities (in thousands): Year Ended December 31, 2022 2021 Balance at beginning of period $ 439 $ 679 Share-based compensation expense related to China Cash Bonuses (407) (240) Balance at end of period $ 32 $ 439 On July 27, 2020, the compensation committee of our board of directors approved grants to employees, directors and other service providers, excluding our CEO, of options to purchase approximately 5.4 million shares of our common stock. The option agreements governing the grants contain a stipulation that, regardless of vesting, such options do not become exercisable unless and until stockholders approve an amendment to our Amended and Restated Certificate of Incorporation to increase in the number of authorized shares of our common stock in an amount sufficient to allow for the exercise of the options and we have filed a corresponding Certificate of Amendment to our Amended and Restated Certificate of Incorporation reflecting such increase in the number of authorized shares of our common stock. On July 8, 2021, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of our common stock to 175,000,000, and we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation (the “Charter Amendment”) with the Secretary of State of the State of Delaware on July 9, 2021 to reflect this amendment, which became effective immediately upon filing. As a result of the increase in the number of authorized shares of our common stock, we determined that July 8, 2021 was the grant date for accounting purposes of the stock options we originally issued on July 27, 2020. The grant date fair value of the options granted on July 27, 2020 was approximately $6.3 million. To estimate the fair value of the options with an accounting grant date of July 8, 2021, we used the Black-Scholes-Merton option pricing model with an expected volatility of 85%, a risk-free interest rate of 0.34%, and expected term of six years and no expected dividends. The following table presents a breakdown of share-based compensation cost included in operating expense (in thousands): Year Ended December 31, 2022 2021 Stock options $ 2,104 $ 4,300 China Cash Bonuses (407) (240) Total $ 1,697 $ 4,060 We record share-based compensation expense in the books of the subsidiary that incurs the expense, while for equity-classified stock options we record the change in additional paid-in capital on the corporate entity because the corporate entity’s equity underlies such stock options. The following table presents information regarding unrecognized share-based compensation cost associated with stock options and China Cash Bonuses: December 31, 2022 Unrecognized share-based compensation cost for non-vested awards (in thousands): Stock options 198 China Cash Bonuses — Weighted-average years over which unrecognized share-based compensation expense will be recognized: Stock options 1.1 China Cash Bonuses 0.1 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 18. RELATED PARTY TRANSACTIONS As of December 31, 2022, we owed approximately $1.2 million to members of management representing various operating expense payments made on our behalf. Approximately $0.4 million was repaid during the first quarter of 2023. |
CHINA BUSINESS PARTNER
CHINA BUSINESS PARTNER | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
CHINA BUSINESS PARTNER | NOTE 19. CHINA BUSINESS PARTNER We interact with an unrelated entity (the “China Business Partner”) in more than one capacity. First, since 2020, we have been working with the China Business Partner to earn revenue by obtaining business from some of the largest companies in China. Secondly, prior to the year ended December 31, 2022, our artificial intelligence business in the U.S. purchased substantially all of its inventory from a subsidiary of the China Business Partner which manufactures certain equipment to our specifications; during the year ended December 31, 2022, we did not make any inventory purchases. In addition, a member of our senior leadership team maintains a role in the senior management structure of the China Business Partner. During the year ended December 31, 2020, we advanced $1.5 million to the China Business Partner pursuant to an agreement between the two entities. Under the executed agreement, we had an obligation to advance as much as an aggregate amount of $5.1 million over the loan term of five years, and we could elect to convert amounts due to us under the agreement into equity of the China Business Partner upon any equity financing the China Business Partner undertook during the term of the agreement. The business purpose for the advances was to allow the China Business Partner to purchase and modify hardware to integrate with our software and market such integrated product to potential customers, including some of the largest companies in China. During the year ended December 31, 2021, we advanced another $2.4 million to the China Business Partner pursuant to the agreement entered into in 2020. We initially determined that such advances by the VIE were effectively marketing costs because realizability of the advanced amounts was uncertain given the lack of a formalized business relationship with the China Business Partner and the nature of the use of funds. As a result, we initially recorded the advances to our China Business Partner in Sales and marketing expense. As of December 31, 2021, as a result of the China Business Partner’s repayment on January 25, 2022 of the $3.9 million we advanced to it, we recorded such amount in Other receivables, with $2.4 million of the repayment reducing sales and marketing expense for the 2021 advances and $1.5 million of the repayment shown as a recovery of marketing expense initially incurred during 2020 related to that year’s advances. Also, for the years ended December 31, 2022 and 2021, we recognized approximately $5.4 million and $3.8 million of revenue from the relationship with the China Business Partner. At December 31, 2022 and 2021, in addition to the outstanding accounts receivable balances from the China Business Partner described in Note 6 , we had outstanding accounts payable to the China Business Partner of $0.7 million and $0.8 million, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20. SUBSEQUENT EVENTS Letter Agreement with Ionic On January 5, 2023, we and Ionic entered into a letter agreement (the “Letter Agreement”) which amended the ELOC Purchase Agreement. Under the Letter Agreement, the parties agreed, among other things, to (i) amend the floor price below which Ionic will not be required to buy any shares of our common stock under the ELOC Purchase Agreement from $0.25 to $0.20, determined on a post-reverse split basis, (ii) amend the per share purchase price for purchases under the ELOC Purchase Agreement to 90% of the average of the two lowest daily VWAPs over a specified measurement period, which will commence at the conclusion of the applicable measurement period related to the 2022 Debenture and (iii) waive certain requirements in the ELOC Purchase Agreement to allow for a one-time $0.5 million purchase under the ELOC Purchase Agreement. As partial consideration for the waiver to allow for the $0.5 million purchase by Ionic, Remark agreed to issue to Ionic that number of shares equal to the difference between (x) the variable conversion price in the 2022 Debenture, and (y) the calculation achieved as a result of the following formula: 80% (or 70% if our common stock is not then trading on Nasdaq) of the lowest VWAP starting on the trading day immediately following the receipt of pre-settlement conversion shares following the date on which the 2022 Debenture automatically converts or other relevant date of determination and ending the later of (a) 10 consecutive trading days after (and not including) the Automatic Conversion Date (as defined in the ELOC Agreement) or such other relevant date of determination and (b) the trading day immediately after shares of our common stock in the aggregate amount of at least $13.9 million shall have traded on Nasdaq. Issuances of Shares to Ionic On January 19, 2023, we determined the final number of Settlement Shares related to the conversion of the 2022 Debenture to be 3,129,668. We had already issued 898,854 Settlement Shares during the year ended December 31, 2022, and during the quarter ended March 31, 2023, we issued another 2,094,428 Settlement Shares, resulting in 136,386 Settlement Shares yet to be issued to Ionic as of March 31, 2023. The difference between the $1.9 million fair value of the liability at December 31, 2022 and the $0.2 million fair value of the liability at March 31, 2023 will be reflected as a finance cost of approximately $1.7 million in the March 31, 2023 statement of operations. New Convertible Subordinated Debentures On March 14, 2023, we entered into a debenture purchase agreement (the “2023 Debenture Purchase Agreement”) with Ionic pursuant to which we authorized the issuance and sale of two convertible subordinated debentures in the aggregate principal amount of $2.8 million for an aggregate purchase price of $2.5 million. The first debenture is in the original principal amount of $1.7 million for a purchase price of $1.5 million (the “First Debenture”), which was issued on March 14, 2023, and the second debenture is in the original principal amount of $1.1 million for a purchase price of $1.0 million (the “Second Debenture” and collectively with the First Debenture, the “2023 Debentures”), which was issued on April 12, 2022. The 2023 Debentures accrue interest at a rate of 10% per annum, of which two years of interest is guaranteed and deemed earned in full on the first day following the issuance date. The interest rate on the 2023 Debentures increases to a rate of 15% per annum if the 2023 Debentures are not fully paid, converted or redeemed by the second anniversary of each debenture (each, a “Maturity Date”) or upon the occurrence of certain trigger events, including, but not limited to, the suspension from trading or the delisting of our common stock from the Nasdaq Capital Market (“Nasdaq”) for three consecutive trading days. If the 2023 Debentures are not fully paid or converted by their respective Maturity Dates, the original aggregate principal amount of the 2023 Debentures will be deemed to have been $3.3 million from their issuance dates. The 2023 Debentures automatically convert into shares of common stock at the earlier of (i) the effectiveness of the initial registration statement registering the resale of certain Registrable Securities as such term is defined in the Registration Rights Agreement (as defined below) including, without limitation, the shares issuable upon conversion of the 2023 Debentures (the “Conversion Shares”) (such registration statement, the “Resale Registration Statement”), and (ii) 181 days after the issuance date of each 2023 Debenture. The number of shares of common stock issuable upon conversion of each 2023 Debenture shall be determined by dividing the outstanding balance under each 2023 Debenture (including all accrued and unpaid interest and accrued and unpaid late charges, if any) by a conversion price that is the lower of (x) 80% (or 70% if our common stock is not then trading on Nasdaq) of the average of the two lowest VWAPs over a specified measurement period following the conversion date (the “Variable Conversion Price”), and (y) $1.40 (the “Fixed Conversion Price”), subject to full ratchet anti-dilution protection in the event we issue certain equity securities at a price below the then Fixed Conversion Price. The 2023 Debentures are unsecured and expressly junior to any of our existing or future debt obligations. Notwithstanding anything to the contrary, under no circumstances shall the Variable Conversion Price be less than the floor price of $0.20 as specified in the 2023 Debentures. Additionally, in the event of a bankruptcy, we are required to redeem the 2023 Debentures in cash in an amount equal to the then outstanding balance of the 2023 Debentures multiplied by 120%. The 2023 Debentures further provide that we will not effect the conversion of any portion of the 2023 Debentures, and the holder thereof will not have the right to a conversion of any portion of the 2023 Debentures, to the extent that after giving effect to such conversion, the holder together with its affiliates would beneficially own more than 4.99% of the outstanding shares of our common stock immediately after giving effect to such conversion. Furthermore, we may not issue shares of common stock underlying the 2023 Debentures if such issuance would require us to obtain stockholder approval under the Nasdaq rules or until such stockholder approval has been obtained. Concurrently with entering into the 2023 Debenture Purchase Agreement, we also entered into a registration rights agreement with Ionic (the “2023 Registration Rights Agreement”), in which we agreed to file with the SEC one or more registration statements, as necessary, and to the extent permissible and subject to certain exceptions, to register under the Securities Act of 1933, as amended, the resale of the shares of our common stock issuable upon conversion of the 2023 Debentures and the shares of common stock that may be issued to Ionic if we fail to comply with our obligations in the 2023 Registration Rights Agreement. The 2023 Registration Rights Agreement requires that we file, within 15 calendar days after we file our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Resale Registration Statement and use commercially reasonable efforts to have the Resale Registration Statement declared effective by the SEC on or before the earlier of (i) 90 days after signing of the 2023 Registration Rights Agreement (or 120 days if such registration statement is subject to full review by the SEC) and (ii) the 2nd business day after we are notified we will not be subject to further SEC review. If we fail to file or have the Resale Registration Statement declared effective by the specified deadlines, then in each instance, we will issue to Ionic 150,000 shares of our common stock within two trading days after such failure, and with respect to the Conversion Shares, we will additionally pay in cash, as liquidated damages, an amount equal to 2% of the amount then currently outstanding under the 2023 Debentures for failure to file and have the Resale Registration Statement declared effective by the same deadlines set forth above for each 30-day period after each such failure. Mudrick Note Purchase Agreement On March 14, 2023, we also entered into a Note Purchase Agreement (the “New Mudrick Loan Agreement”) with Mudrick, pursuant to which all of the Original Mudrick Loans were cancelled in exchange for new notes payable to Mudrick (the “New Mudrick Notes”) in the aggregate principal amount of $16.2 million. The New Mudrick Notes bear interest at a rate of 20.5% per annum, which shall be payable on the last business day of each month commencing on May 31, 2023. The interest rate will increase by 2% and the principal amount outstanding under the New Mudrick Notes and any unpaid interest thereon may become immediately due and payable upon the occurrence of any event of default under the New Mudrick Loan Agreement. All amounts outstanding under the New Mudrick Notes, including all accrued and unpaid interest, will be due and payable in full on October 31, 2023. To secure the payment and performance of our obligations under the New Mudrick Loan Agreement, we have granted to TMI Trust Company, as the collateral agent on behalf of the holders of the New Mudrick Notes, a continuing security interest in all assets of Remark, subject to certain exceptions as set forth in the New Mudrick Loan Agreement. In connection with our entry into the New Mudrick Loan Agreement, we agreed to an extension fee of $0.8 million, which amount was paid in kind by capitalizing it to the principal of the New Mudrick Notes. All unpaid interest which had accrued under the Original Mudrick Loan Agreement to, but not including, March 14, 2023 was capitalized to the principal of the New Mudrick Notes. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation We include all of our subsidiaries in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation. |
Use of Estimates | Use of Estimates We prepare our consolidated financial statements in conformity with GAAP. While preparing our financial statements, we make estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, deferred cost of revenue, share-based compensation, deferred income taxes, and inventory reserve, among other items. |
Cash | Cash Our cash consists of funds held in bank accounts. |
Marketable Securities | Marketable Securities Investment in marketable securities consisted of marketable equity securities. We classify marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations. Marketable securities are stated at fair value with all realized and unrealized gains and losses recognized in our Statement of Operations. The realized and unrealized gains and losses on marketable securities are determined using the specific identification method and quoted prices in an active market. |
Leases | Leases We adopted Accounting Standards Codification Topic 842, Leases (“ASC 842”), as of January 1, 2019. When adopting ASC 842 we elected several practical expedients permitted under the transition guidance within ASC 842, which, among other things, allowed us to carry forward the historical lease classification and to avoid recording leases that had expired prior to the date of adoption. We also elected to combine the lease and non-lease components of our leases for office space (which represent the largest portion of our operating lease assets and liabilities) and not to record leases with initial terms of 12 months or less (short-term leases) on the balance sheet. We amortize the cost of short-term leases on a straight-line basis over the lease term. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). When reporting the fair values of our financial instruments, we prioritize those fair value measurements into one of three levels based on the nature of the inputs, as follows: Level 1: Valuations based on quoted prices in active markets for identical assets and liabilities; Level 2: Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and observable market data for similar, but not identical instruments; and Level 3: Valuations based on unobservable inputs, which are based upon the best available information when external market data is limited or unavailable. The fair value hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. For some products or in certain market conditions, observable inputs may not be available. We believe the reported carrying amounts for cash, marketable securities, receivables, prepaids and other current assets, accounts payable, accrued expense and other current liabilities, and short-term debt approximate their fair values because of the short-term nature of these financial instruments. |
Foreign Currency Translation | Foreign Currency Translation We report all currency amounts in USD. Our China subsidiaries, however, maintain their books and records in their functional currency, which is RMB. In general, when consolidating our subsidiaries with non-USD functional currencies, we translate the amounts of assets and liabilities into USD using the exchange rate on the balance sheet date, and the amounts of revenue and expense are translated at the average exchange rate prevailing during the period. The gains and losses resulting from translation of financial statement amounts into USD are recorded as a separate component of accumulated other comprehensive loss within stockholders’ deficit. |
Revenue Recognition | Revenue Recognition AI-Based Products We generate revenue by developing AI-based products, including fully-integrated AI solutions which combine our proprietary technology with third-party hardware and software products to meet end-user specifications. Under one type of contract for our AI-based products, we provide a single, continuous service to customers who control the assets as we create them. Accordingly, we recognize the revenue over the period of time during which we provide the service. Under another type of contract, we have performance obligations to provide fully-integrated AI solutions to our customer and we recognize revenue at the point in time when each performance obligation is completed and delivered to, tested by and accepted by our customer. We recognize revenue when we transfer control of the promised goods or services to our customers, and we recognize an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. If there is uncertainty related to the timing of collections from our customer, which may be the case if our customer is not the ultimate end user of our goods, we consider this to be uncertainty of the customer’s ability and intention to pay us when consideration is due. Accordingly, we recognize revenue only when we have transferred control of the goods or services and collectability of consideration from the customer is probable. When customers pay us prior to when we satisfy our obligation to transfer control of promised goods or services, we record the amount that reflects the consideration to which we expect to be entitled as a contract liability until such time as we satisfy our performance obligation. For our contracts with customers, we generally extend short-term credit policies to our customers, typically up to one year for large-scale projects. We record the incremental costs of obtaining contracts as an expense when incurred. We offer extended warranties on our products for periods of one Other We generate revenue from other sources, such as from advertising and marketing services, e-commerce activity in which we sell goods to our customers, or media production which involves the production of video or Internet-based content for our customers. We recognize the revenue from these contracts at the point in time when we transfer control of the goods sold to the customer or when we deliver the promised promotional materials or media content. Substantially all of our contracts with customers that generate Other revenue are completed within one year or less. |
Share-Based Compensation | Share-Based Compensation For grants of restricted stock or restricted stock units, we measure fair value using the closing price of our stock on the measurement date, while we use the Black-Scholes-Merton option pricing model (the “BSM Model”) to estimate the fair value of stock options and similar instruments awarded. The BSM Model requires the following inputs: • Expected volatility of our stock price. We analyze the historical volatility of our stock price utilizing daily stock price returns, and we also review the stock price volatility of certain peers. Using the information developed from such analysis and our judgment, we estimate how volatile our stock price will be over the period we expect the stock options will remain outstanding. • Risk-free interest rate. We estimate the risk-free interest rate using data from the Federal Reserve Treasury Constant Maturity Instruments H.15 Release (a table of rates downloaded from the Federal Reserve website) as of the valuation date for a security with a remaining term that approximates the period over which we expect the stock options will remain outstanding. • Stock price, exercise price and expected term. We use an estimate of the fair value of our common stock on the measurement date, the exercise price of the option, and the period over which we expect the stock options will remain outstanding. We do not currently issue dividends, but if we did so, then we would also include an estimated dividend rate as an input to the BSM model. Generally speaking, the BSM model tends to be most sensitive to changes in stock price, volatility or expected term. We measure compensation expense as of the grant date for granted equity-classified instruments and as of the settlement date for granted liability-classified instruments (meaning that we re-measure compensation expense at each balance sheet date until the settlement date occurs). Once we measure compensation expense, we recognize it over the requisite service period (generally the vesting period) of the grant, net of forfeitures as they occur. |
Accounts Receivable | Accounts Receivable We regularly evaluate the collectability of trade receivable balances based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns. If we determine that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing, severe limitations on its operational capability as a result of COVID-19-related restrictions or other material events impacting its business, a specific reserve for bad debt will be recorded to reduce the related receivable to the amount expected to be recovered. |
Income Taxes | Income Taxes We recognize deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) to account for the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets, using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled. Any effect on DTAs or DTLs resulting from a change in enacted tax rates is included in income during the period that includes the enactment date. We reduce the carrying amounts of DTAs by a valuation allowance if, based upon all available evidence (both positive and negative), we determine that it is more likely than not that such DTAs will not be realizable. Such assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, our forecasts of future profitability, tax planning strategies, the duration of statutory carryforward periods, and our experience with the utilization of operating loss and tax credit carryforwards before expiration. We apply a recognition threshold and measurement attribute related to uncertain tax positions taken or expected to be taken on our tax returns. We recognize a tax benefit for financial reporting of an uncertain income tax position when it has a greater than 50% likelihood of being sustained upon examination by the taxing authorities. We measure the tax benefit of an uncertain tax position based on the largest benefit that has a greater than 50% likelihood of being ultimately realized, including evaluation of settlements. |
Inventory | InventoryWe use the first-in first-out method to determine the cost of our inventory, then we report inventory at the lower of cost or net realizable value. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated sales forecasts. |
Advertising Expense | Advertising Expense Advertising expense is recorded during the period in which it is incurred. We did not incur a material amount of advertising expense during the years ended December 31, 2022 or 2021. |
Research and Development | Research and Development Engineering cost is recorded as technology and development expense during the period in which it is incurred. |
Product Warranties | Product Warranties We offer extended warranties on our products for periods of one and 2021 . |
Property, Equipment and Software | Property, Equipment and Software We state property and equipment at cost and depreciate such assets using the straight-line method over the estimated useful lives of each asset category. For leasehold improvements, we determine amortization using the straight-line method over the shorter of the lease term or estimated useful life of the asset. We expense repairs and maintenance costs as incurred, while capitalizing betterments and capital improvements and depreciating such costs over the remaining useful life of the related asset. We capitalize qualifying costs of computer software that we incur during the application development stage, as well as the cost of upgrades and enhancements that result in additional functionality, and we amortize such costs using the straight-line method over a period of three years, the expected period of the benefit. |
Net Income (Loss) per Share | Net Income (Loss) per Share We calculate basic net income (loss) per share using the weighted-average number of common stock shares outstanding during the period. For the calculation of diluted net income (loss) per share, we give effect to all the shares of common stock that were outstanding during the period plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation when their effect is anti-dilutive. Dilutive potential shares of common stock consist of incremental shares of common stock issuable upon exercise of stock options and warrants. |
Segments | Segments Existing GAAP, which establishes a management approach to segment reporting, defines operating segments as components of an entity about which separate, discrete financial information is available for evaluation by the chief operating decision maker. We have identified our Chief Executive Officer as our chief operating decision maker, who reviews operating results to make decisions about allocating resources and assessing performance based upon only one operating segment. |
Commitments and Contingencies | Commitments and Contingencies We record a liability for a loss contingency when we determine that it is probable that we have incurred such liability and we can reasonably estimate the amount. |
Impairments | Impairments Long-Lived Assets Other Than Indefinite-Lived Intangible Assets When events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, we evaluate long-lived assets for potential impairment, basing our testing method upon whether the assets are held for sale or held for use. For assets classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets held and used, we estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, we recognize an impairment loss for the difference between the carrying value of the asset and its fair value. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06 (“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 . The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. With regard to our financial reporting, ASU 2020-06 will be effective January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. We are currently evaluating what effect(s) the adoption of ASU 2020-06 may have on our consolidated financial statements, but we do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) . The ASU requires entities to use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments, including trade receivables, which may result in the earlier recognition of allowances for losses. With regard to our financial reporting, ASU 2016-13 will be effective beginning January 1, 2023, and early adoption is permitted. We do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. We have reviewed all accounting pronouncements recently issued by the FASB and the SEC. The authoritative pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the authoritative |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table, reported in USD, disaggregates our cash balances by currency denomination (in thousands): December 31, 2022 2021 Cash denominated in: USD $ 11 $ 13,278 RMB 19 259 GBP 17 644 HKD 5 6 Total cash $ 52 $ 14,187 |
Schedule of Exchange Rates | We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted: 2022 2021 Exchange rates at December 31st: GBP:USD 1.209 1.351 RMB:USD 0.145 0.157 HKD:USD 0.128 0.128 Average exchange rate during the twelve months ended December 31st: RMB:USD 0.149 0.155 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents a reconciliation of the denominator of the basic net income (loss) per share calculation to that of the diluted net income (loss) per share calculation (in thousands): Year Ended December 31, 2022 2021 Weighted-average shares outstanding, basic 10,630,771 10,136,210 Incremental shares resulting from assumed exercises of in-the-money stock options — 35,714 Weighted-average shares outstanding, diluted 10,630,771 10,171,924 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Major Category | The following table presents a disaggregation of our revenue by category of products and services (in thousands): Year Ended December 31, 2022 2021 AI-based products and services, including $5.4 million and $3.8 million, respectively, from China Business Partner (See Note 19 ) $ 10,964 $ 14,792 Other 702 1,198 Revenue $ 11,666 $ 15,990 |
Schedule of Disaggregation of Revenue by Country | The following table presents a disaggregation of our revenue by country (in thousands): Year Ended December 31, 2022 2021 China $ 11,402 $ 12,218 United States 264 3,772 Revenue $ 11,666 $ 15,990 |
LIABILITIES RELATED TO WARRAN_2
LIABILITIES RELATED TO WARRANTS TO PURCHASE COMMON STOCK (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Reconciliation of Liabilities of Warrants | The following table presents the change in the liability balance associated with our liability-classified warrants (in thousands) during the prior year ended December 31, 2021: Balance at beginning of period $ 1,725 Expiration of warrants — Increase (decrease) in fair value of liability (123) Fair value of warrants reclassified to equity (1,602) Balance at end of period $ — |
TRADE ACCOUNTS RECEIVABLE (Tabl
TRADE ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
Schedule of Components of Prepaid Expense and Other Current Assets | December 31, 2022 2021 Gross accounts receivable balance $ 7,213 $ 11,551 Allowance for bad debt (4,122) (1,284) Accounts receivable, net $ 3,091 $ 10,267 |
PREPAID EXPENSE AND OTHER CUR_2
PREPAID EXPENSE AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expense and Other Current Assets | The following table presents the components of prepaid expense and other current assets (in thousands): December 31, 2022 2021 Receivable from China Business Partner $ — $ 3,980 Other receivables 23 9 Prepaid expense 1,144 1,558 Deposits 201 221 Other current assets 6 6 Total $ 1,374 $ 5,774 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following (in thousands, except estimated lives): December 31, Estimated Life 2022 2021 Vehicles 3 153 — Computers and equipment 3 1,170 1,133 Furniture and fixtures 3 42 42 Software 3 5,160 5,055 Leasehold improvements 3 204 196 Software development in progress 1,199 128 Total property, equipment and software $ 7,928 $ 6,554 Less accumulated depreciation (6,229) (6,197) Total property, equipment and software, net $ 1,699 $ 357 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of Lease Expense, Net of Sublease Income | The following table presents the detail of our lease expense, which is reported in General and administrative expense (in thousands): Year Ended December 31, 2022 2021 Operating lease expense $ 287 $ 304 Short-term lease expense 1,343 982 Lease expense $ 1,630 $ 1,286 |
Schedule of Maturity of Lease Liabilities | The following table presents information regarding the maturities of undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented in our December 31, 2022 Consolidated Balance Sheet (in thousands): Operating lease liabilities maturing during the next: One year $ 155 Two years 60 Total undiscounted cash flows $ 215 Present value of cash flows $ 194 Lease liabilities on balance sheet: Short-term (included in accrued expenses $ 138 Long-term 56 Total lease liabilities $ 194 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation Between Income Tax Benefit Computed by Applying Federal Statutory Rate and Actual Income Tax Expense | The following table presents a reconciliation between the income tax benefit computed by applying the federal statutory rate and our actual income tax expense: Year Ended December 31, 2022 2021 Income tax benefit (provision) at federal statutory rate $ (11,653) $ 5,771 Change in deferred tax asset valuation allowance 10,611 (5,241) Tax impact of warrants — (26) Tax effects of: Statutory differences 883 327 R&D expense (280) (210) Foreign tax rates different than U.S. federal statutory rate (123) 68 Other permanent items (42) (331) Deferred adjustments 404 99 Other 209 (466) Income tax benefit (provision) as reported $ 9 $ (9) |
Schedule of Loss Before Income Tax Attributable to Domestic and Foreign Operations | The following table presents loss before income tax attributable to domestic and to foreign operations (in thousands): Year Ended December 31, 2022 2021 Domestic $ (49,297) $ 28,036 Foreign (6,195) (555) Loss before income taxes $ (55,492) $ 27,481 |
Schedule of Components of Deferred Tax Assets and Liabilities | The following table presents the components of our DTAs and DTLs (in thousands): December 31, 2022 2021 Deferred Tax Assets Net operating loss carryforwards $ 42,744 $ 43,375 Amortization of intangibles 2,371 1,979 Share-based compensation expense 7,865 7,423 Depreciation of fixed assets 33 — Other 5,427 3,503 Gross deferred tax assets $ 58,440 $ 56,280 Valuation allowance (58,440) (47,857) Deferred tax assets, net of valuation allowance $ — $ 8,423 Deferred Tax Liabilities Deferred gain — (8,444) Depreciation of fixed assets — 21 Gross deferred tax liabilities — (8,423) Net deferred tax liability $ — $ — |
ACCRUED EXPENSE AND OTHER CUR_2
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Accrued Expense and Other Current Liabilities | The following table presents the components of Accrued expense and other current liabilities (in thousands): December 31, 2022 2021 Accrued compensation and benefit-related expense $ 1,448 $ 821 Accrued interest 769 385 Other accrued expense 2,393 1,673 Other payables 2,234 2,324 Operating lease liability - current 138 187 China Cash Bonuses 32 439 Other current liabilities 208 134 Total $ 7,222 $ 5,963 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | The following table presents our notes payable (in thousands) as of: December 31, 2022 2021 Principal balance of Original Mudrick Loans $ 14,418 $ 30,000 Other notes payable 189 — Unamortized discount and debt issuance cost — (2,189) Notes payable, net of unamortized discount and debt issuance cost $ 14,607 $ 27,811 |
STOCKHOLDERS' EQUITY, SHARE-B_2
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Equity Stock Warrant Issuances | The following table summarizes information related to our equity-classified stock warrant issuances as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 4,000 $ 100.00 Granted 1 1,007,441 39.90 Exercised — — Forfeited, cancelled or expired — Outstanding at December 31, 2021 1,011,441 $ 40.10 4.7 $ — Granted — — Exercised — — Forfeited, cancelled or expired — — Outstanding at December 31, 2022 1,011,441 $ 40.10 3.7 $ — 1 Includes the 0.6 million warrants to purchase our common stock that we issued to CBG (see Note 5 ). |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | We estimate the fair value of our stock option awards and China Cash Bonuses using the BSM Model. During the year ended December 31, 2022 and 2021, we applied the following weighted-average inputs, which we classify in Level 3 of the fair value hierarchy, to the BSM Model for our stock option awards: Year Ended December 31, 2022 2021 Expected term in years 6.0 6.0 Expected volatility 101.27 % 85 % Expected dividends — % — % Risk-free interest rate 3.56 % 0.40 % During the year ended December 31, 2021 (we did not issue any China Cash Bonuses during 2022), we applied the following weighted-average inputs, which we classify in Level 3 of the fair value hierarchy, to the BSM Model for our China Cash Bonuses: Expected remaining term in years 4.71 Expected volatility 110.14 % Expected dividends — % Risk-free interest rate 1.06 % |
Schedule of Stock Option Activity Under Equity Incentive Plans | The following table summarizes activity under our equity incentive plans related to equity-classified stock option grants as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 994,234 $ 42.90 Granted 546,350 13.70 Exercised (54,794) 19.70 Forfeited, cancelled or expired (1,888) 15.50 Outstanding at December 31, 2021 1,483,902 $ 33.00 6.1 $ 159 Granted 152,731 2.66 Exercised — — Forfeited, cancelled or expired (10,002) 14.11 Outstanding at December 31, 2022 1,626,631 $ 30.31 5.5 $ 1 Exercisable at December 31, 2021 1,277,652 36.20 5.7 $ 957 Exercisable at December 31, 2022 1,549,681 31.41 5.3 $ 1 The following table summarizes the status of non-vested stock options as of and for the dates and periods noted: Shares Weighted-Average Non-vested at December 31, 2020 16,088 $ 68 Vested (354,788) 3,512 Forfeited, cancelled or expired (1,400) 17 Non-vested at December 31, 2021 206,250 2,063 Granted 37,000 51 Vested (160,100) 1,852 Forfeited, cancelled or expired (6,200) 72 Non-vested at December 31, 2022 76,950 $ 529 The following table summarizes activity related to our liability-classified China Cash Bonuses as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 105,500 $ 40.10 Granted — — Forfeited, cancelled or expired (1,900) 63.10 Outstanding at December 31, 2021 103,600 $ 39.70 6.1 $ 159 Forfeited, cancelled or expired (32,150) 47.99 Outstanding at December 31, 2022 71,450 $ 35.99 6.1 $ — Exercisable at December 31, 2021 88,600 44.10 4.9 $ — Exercisable at December 31, 2022 68,450 36.97 6.1 $ — |
Schedule of Change in Liability Balance Associated with China Cash Bonuses | The following table presents the change in the liability associated with our China Cash Bonuses included in Accrued expense and other current liabilities (in thousands): Year Ended December 31, 2022 2021 Balance at beginning of period $ 439 $ 679 Share-based compensation expense related to China Cash Bonuses (407) (240) Balance at end of period $ 32 $ 439 |
Schedule of Share-based Compensation Cost | The following table presents a breakdown of share-based compensation cost included in operating expense (in thousands): Year Ended December 31, 2022 2021 Stock options $ 2,104 $ 4,300 China Cash Bonuses (407) (240) Total $ 1,697 $ 4,060 |
Schedule of Unrecognized Share-based Compensation Cost | The following table presents information regarding unrecognized share-based compensation cost associated with stock options and China Cash Bonuses: December 31, 2022 Unrecognized share-based compensation cost for non-vested awards (in thousands): Stock options 198 China Cash Bonuses — Weighted-average years over which unrecognized share-based compensation expense will be recognized: Stock options 1.1 China Cash Bonuses 0.1 |
ORGANIZATION AND BUSINESS (Deta
ORGANIZATION AND BUSINESS (Details) $ in Thousands | 12 Months Ended | ||
Dec. 21, 2022 | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Reverse stock split ratio | 0.1 | ||
Net cash used in operating activities | $ 16,600 | ||
Cash and cash equivalents | $ 52 | $ 14,187 | |
WFOE | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership percentage by parent | 100% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and cash equivalents (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | $ 52 | $ 14,187 |
USD | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | 11 | 13,278 |
RMB | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | 19 | 259 |
GBP | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | 17 | 644 |
HKD | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | $ 5 | $ 6 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 USD ($) segment shares | Dec. 31, 2021 USD ($) shares | |
Disaggregation of Revenue [Line Items] | ||
Term of contract | 1 year | |
Reserve for inventory | $ | $ 2.2 | $ 1 |
Number of reportable segments | segment | 1 | |
Computers and equipment | ||
Disaggregation of Revenue [Line Items] | ||
Estimated Life (Years) | 3 years | |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Extended warranty period | 1 year | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Extended warranty period | 3 years | |
Stock options | ||
Disaggregation of Revenue [Line Items] | ||
Anti-dilutive securities (in shares) | 1,435,471 | |
Warrant | ||
Disaggregation of Revenue [Line Items] | ||
Anti-dilutive securities (in shares) | 1,011,441 | 1,011,441 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Performance period (or less) | 1 year |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency Translation (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Weighted Average | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 0.149 | 0.155 |
GBP | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 1.209 | 1.351 |
RMB | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 0.145 | 0.157 |
HKD | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 0.128 | 0.128 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation Of Denominator Of Basic Net Income (Loss) (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Weighted-average shares outstanding, basic (in shares) | 10,630,771 | 10,136,210 |
Incremental shares resulting from assumed exercises of in-the-money stock options (in shares) | 0 | 35,714 |
Weighted-average shares outstanding, diluted (in shares) | 10,630,771 | 10,171,924 |
CONCENTRATIONS OF RISK (Details
CONCENTRATIONS OF RISK (Details) - Customer Concentration Risk | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Customer A | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 46% | 24% |
Customer A | Gross Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 23% | 25% |
Customer B | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 20% | 18% |
Customer B | Gross Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 16% | 24% |
Customer C | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 12% | |
Customer C | Gross Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 10% | 10% |
REVENUE - Disaggregated by Majo
REVENUE - Disaggregated by Major Category (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 11,666 | $ 15,990 |
AI-based products and services, including amounts from China Business Partner | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 10,964 | 14,792 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 702 | $ 1,198 |
REVENUE - Disaggregation by Cou
REVENUE - Disaggregation by Country (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 11,666 | $ 15,990 |
China | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 11,402 | 12,218 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 264 | $ 3,772 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized on liability balances | $ 0 | $ 0 |
Revenue recognized from performance obligations satisfied in previous periods | $ 0 | $ 0 |
LIABILITIES RELATED TO WARRAN_3
LIABILITIES RELATED TO WARRANTS TO PURCHASE COMMON STOCK - Narrative (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Aug. 31, 2021 USD ($) yr day $ / shares shares | Jun. 30, 2021 shares | |
Class of Warrant or Right [Line Items] | ||
Warrants issued (in shares) | 4,000 | |
Settlement Warrants | Fair Value, Inputs, Level 3 | Expected volatility | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | 0.85 | |
Settlement Warrants | Fair Value, Inputs, Level 3 | Risk-free interest rate | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | 0.0077 | |
Settlement Warrants | Fair Value, Inputs, Level 3 | Expected remaining term | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | yr | 5 | |
China Branding Group Limited | Settlement Warrants | ||
Class of Warrant or Right [Line Items] | ||
Warrants issued (in shares) | 571,000 | 571,000 |
Payments for legal settlements | $ | $ 375 | |
Exercise price of warrants (in dollars per share) | $ / shares | $ 60 | |
Warrant exercise term | 5 years | |
Threshold minimum stock price trigger for exercise of warrants (usd per share) | $ / shares | $ 80 | |
Threshold non-consecutive trading day window | 5 days | |
Consecutive trading day window | day | 30 | |
Valuation Technique, Option Pricing Model | ||
Class of Warrant or Right [Line Items] | ||
Warrants outstanding (in shares) | 575,000 |
LIABILITIES RELATED TO WARRAN_4
LIABILITIES RELATED TO WARRANTS TO PURCHASE COMMON STOCK - Change in Fair Value of Warrants Accounted for as Derivative Liabilities (Details) - Warrant liabilities $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Change in the Fair Value of Warrants | |
Balance at beginning of period | $ 1,725 |
Expiration of warrants | 0 |
Increase (decrease) in fair value of liability | (123) |
Fair value of warrants reclassified to equity | (1,602) |
Balance at end of period | $ 0 |
TRADE ACCOUNTS RECEIVABLE (Deta
TRADE ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross accounts receivable balance | $ 7,213 | $ 11,551 |
Allowance for bad debt | (4,122) | (1,284) |
Accounts receivable, net | 3,091 | 10,267 |
Provision for doubtful accounts | 2,882 | 297 |
China | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | 1,100 | $ 2,700 |
Provision for doubtful accounts | $ 2,800 | |
Accounts receivable, past due | 1 year |
INVESTMENT (Details)
INVESTMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jul. 11, 2022 | Jul. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Noncontrolling Interest [Line Items] | ||||
Investment in marketable securities | $ 0 | $ 42,349 | ||
Proceeds from sale of investment | 6,332 | 2,322 | ||
Loss on investment in marketable securities | $ 26,356 | (43,642) | ||
Mudrick Loan | ||||
Noncontrolling Interest [Line Items] | ||||
Principal balance of Original Mudrick Loans | $ 9,700 | |||
Sharecare | ||||
Noncontrolling Interest [Line Items] | ||||
Noncontrolling interest | $ 1,000 | |||
Cash received upon conversion | $ 2,300 | |||
Common stock owned upon conversion (in shares) | 9,400,000 | 9,431,920 | ||
Investment in marketable securities | $ 42,300 | |||
Sale of New Sharecare (in shares) | 3,181,920 | |||
Proceeds from sale of investment | $ 6,300 | |||
Loss on investment in marketable securities | $ 26,400 | |||
Sharecare | Mudrick Loan | ||||
Noncontrolling Interest [Line Items] | ||||
Stock Issued | $ 6,250 |
DEFERRED COST OF REVENUE (Detai
DEFERRED COST OF REVENUE (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Deferred cost of revenue | $ 7,463 | $ 589 |
PREPAID EXPENSE AND OTHER CUR_3
PREPAID EXPENSE AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Prepaid Expense and Other Current Assets | ||
Receivable from China Business Partner | $ 0 | $ 3,980 |
Other receivables | 23 | 9 |
Prepaid expense | 1,144 | 1,558 |
Deposits | 201 | 221 |
Other current assets | 6 | 6 |
Total | $ 1,374 | $ 5,774 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | $ 7,928 | $ 6,554 |
Less accumulated depreciation | (6,229) | (6,197) |
Total property, equipment and software, net | 1,699 | 357 |
Depreciation (and amortization of software) expense | $ 200 | 200 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 153 | 0 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 1,170 | 1,133 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 42 | 42 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 5,160 | 5,055 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 204 | 196 |
Software development in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | $ 1,199 | $ 128 |
LEASES - Lease Expense (Details
LEASES - Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease expense | $ 287 | $ 304 |
Short-term lease expense | 1,343 | 982 |
Lease expense | $ 1,630 | $ 1,286 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Cash paid for operating lease liabilities | $ 0.2 | $ 0.2 |
Weighted-average remaining lease term (in months) | 12 months | |
Weighted-average discount rate (as percent) | 13% |
LEASES - Maturity of Lease Liab
LEASES - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating lease liabilities maturing during the next: | ||
One year | $ 155 | |
Two years | 60 | |
Total undiscounted cash flows | 215 | |
Present value of cash flows | $ 194 | |
Lease liabilities on balance sheet: | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities, Current | Accrued Liabilities, Current |
Short-term (included in accrued expenses) | $ 138 | $ 187 |
Long-term | 56 | $ 25 |
Total lease liabilities | $ 194 |
INCOME TAX - Reconciliation Bet
INCOME TAX - Reconciliation Between Income Tax Benefit Computed by Applying Federal Statutory Rate and Actual Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit (provision) at federal statutory rate | $ (11,653) | $ 5,771 |
Change in deferred tax asset valuation allowance | 10,611 | (5,241) |
Tax impact of warrants | 0 | (26) |
Tax effects of: | ||
Statutory differences | 883 | 327 |
R&D expense | (280) | (210) |
Foreign tax rates different than U.S. federal statutory rate | (123) | 68 |
Other permanent items | (42) | (331) |
Deferred adjustments | 404 | 99 |
Other | 209 | (466) |
Income tax benefit (provision) as reported | $ 9 | $ (9) |
INCOME TAXES - Loss Before Inco
INCOME TAXES - Loss Before Income Tax Attributable to Domestic and Foreign Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (49,297) | $ 28,036 |
Foreign | (6,195) | (555) |
Income (loss) from before income taxes | $ (55,492) | $ 27,481 |
INCOME TAXES - Components of De
INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets | ||
Net operating loss carryforwards | $ 42,744 | $ 43,375 |
Amortization of intangibles | 2,371 | 1,979 |
Share-based compensation expense | 7,865 | 7,423 |
Depreciation of fixed assets | 33 | 0 |
Other | 5,427 | 3,503 |
Gross deferred tax assets | 58,440 | 56,280 |
Valuation allowance | (58,440) | (47,857) |
Deferred tax assets, net of valuation allowance | 0 | 8,423 |
Deferred Tax Liabilities | ||
Deferred gain | 0 | (8,444) |
Depreciation of fixed assets | 0 | 21 |
Gross deferred tax liabilities | 0 | (8,423) |
Net deferred tax liability | $ 0 | $ 0 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Unrecognized tax benefits | $ 0 | $ 0 |
U.S. Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 177,800,000 | |
U.S. State | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 33,100,000 | |
Hong Kong | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 1,700,000 | |
Federal income tax rate (as a percent) | 16.50% | |
China | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 11,700,000 | |
Federal income tax rate (as a percent) | 25% | |
Carryover period (in years) | 5 years | |
United Kingdom | ||
Operating Loss Carryforwards [Line Items] | ||
Federal income tax rate (as a percent) | 19% |
ACCRUED EXPENSE AND OTHER CUR_3
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Other Liabilities Disclosure [Abstract] | ||
Accrued compensation and benefit-related expense | $ 1,448 | $ 821 |
Accrued interest | 769 | 385 |
Other accrued expense | 2,393 | 1,673 |
Other payables | 2,234 | 2,324 |
Operating lease liability - current | 138 | 187 |
China Cash Bonuses | 32 | 439 |
Other current liabilities | 208 | 134 |
Total | $ 7,222 | $ 5,963 |
DEBT - Notes Payable (Details)
DEBT - Notes Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Short-term Debt [Line Items] | ||
Other notes payable | $ 189 | $ 0 |
Unamortized discount and debt issuance cost | 0 | (2,189) |
Notes payable, net of unamortized discount and debt issuance cost | 14,607 | 27,811 |
Principal balance of Original Mudrick Loans | Notes Payable | ||
Short-term Debt [Line Items] | ||
Principal balance of Original Mudrick Loans | $ 14,418 | $ 30,000 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) | 12 Months Ended | ||||||
Dec. 03, 2021 | Aug. 05, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 31, 2022 | Aug. 03, 2022 | Jul. 11, 2022 | |
Debt Instrument [Line Items] | |||||||
Amortization of debt issuance costs and discount | $ 2,189,000 | $ 880,000 | |||||
Common stock issuance upon note payable conversion | 2,004,000 | 1,105,000 | |||||
Mudrick Lenders | |||||||
Debt Instrument [Line Items] | |||||||
Original principal amount | $ 300,000 | ||||||
Debt interest rate percentage | 2% | ||||||
Short-term note payable to private lender | |||||||
Debt Instrument [Line Items] | |||||||
Note repayment of debt | $ 6,200,000 | ||||||
Weighted-average interest rate (in percent) | 6.20% | ||||||
Weighted-average remaining term | 5 years 1 month 6 days | ||||||
Mudrick Loan | |||||||
Debt Instrument [Line Items] | |||||||
Original principal amount | $ 9,700,000 | ||||||
Mudrick Loan | Loans Payable | |||||||
Debt Instrument [Line Items] | |||||||
Original principal amount | $ 30,000,000 | ||||||
Debt interest rate percentage | 16.50% | 18.50% | |||||
Increase, interest rate | 20.50% | ||||||
Upfront fee (in percent) | 5% | ||||||
Debt instrument, unamortized discount | $ 1,500,000 | ||||||
Additional closing cost | $ 1,100,000 | ||||||
Amortization of debt issuance costs and discount | $ 2,200,000 | ||||||
Private Lender Loan | Short-term note payable to private lender | |||||||
Debt Instrument [Line Items] | |||||||
Original principal amount | $ 14,418,000 | $ 30,000,000 | |||||
Private Lender Loan | Loans Payable | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount and accrued interest converted | $ 1,000,000 | ||||||
Unpaid interest amount | $ 100,000 | ||||||
Conversion price (in usd per share) | $ 1.21 | ||||||
Common stock issuance upon note payable conversion (in shares) | 876,493 | ||||||
Common stock issuance upon note payable conversion | $ 1,100,000 | ||||||
Interest expense | $ 100,000 |
TRANSACTIONS WITH IONIC (Detail
TRANSACTIONS WITH IONIC (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2022 | Nov. 07, 2022 | Oct. 06, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||||||
Other current liabilities | $ 208,000 | $ 208,000 | $ 208,000 | $ 134,000 | ||
Ionic Ventures, LLC | ||||||
Debt Instrument [Line Items] | ||||||
Settlement shares (in shares) | 1,720,349 | 898,854 | 898,854 | |||
Settlement Shares | $ 2,000,000 | |||||
Interest expense | $ 300,000 | |||||
Ionic Ventures, LLC | ELOC Purchase Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Shares authorized for purchase | $ 50,000,000 | |||||
Period of purchase (in months) | 36 months | |||||
Consideration received | $ 3,000,000 | |||||
Sale of stock, additional number of shares issued in percentage | 2.50% | |||||
Required minimum closing trading price (in usd per share) | $ 0.25 | |||||
Stockholder approval, outstanding percentage of common stock percentage | 19.99% | |||||
Payable termination fee | $ 500,000 | |||||
Ionic Ventures, LLC | ELOC Purchase Agreement | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Sale of stock, purchase price, percentage | 90% | |||||
Ionic Ventures, LLC | ELOC Purchase Agreement | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Shares authorized for purchase | $ 25,000,000 | |||||
Sale of stock, purchase price, percentage | 80% | |||||
Debenture Purchase Agreement | Ionic Ventures, LLC | ||||||
Debt Instrument [Line Items] | ||||||
Initial liability amount | $ 3,600,000 | |||||
Excess initial liability amount | 1,100,000 | |||||
Debenture Purchase Agreement | Ionic Ventures, LLC | Convertible Subordinated Debt | ||||||
Debt Instrument [Line Items] | ||||||
Original principal amount | 2,800,000 | |||||
Repurchase amount | $ 2,500,000 | |||||
Debt conversion percentage | 80% | |||||
Debenture Purchase Agreement Amendment | Ionic Ventures, LLC | Convertible Subordinated Debt | ||||||
Debt Instrument [Line Items] | ||||||
Beneficial ownership limitation percentage | 4.99% | |||||
Debenture Purchase Agreement Amendment | Ionic Ventures, LLC | Convertible Subordinated Debt | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Conversion price (in usd per share) | $ 0.10 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 21, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Monthly penalty incur | $ 0.1 | ||
Maximum monthly penalty incur | $ 1 | ||
Accrued penalty liability | $ 0.6 | ||
Additional accrued penalty liability | $ 0.4 | ||
Payment of registration rights agreement penalty | 0.2 | ||
Unpaid amount included in other accrued expense | $ 0.8 |
STOCKHOLDERS' EQUITY, SHARE-B_3
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |||||
Sep. 02, 2022 | Sep. 29, 2021 | Jul. 08, 2021 | Jul. 27, 2020 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Warrants issued (in shares) | 4,000 | ||||||
Proceeds from issuance of common stock, net | $ 0 | $ 5,692 | |||||
Exercised (in shares) | 0 | ||||||
Exercises of stock options received proceeds | 1,100 | ||||||
Intrinsic value of options exercised | $ 1,000 | ||||||
Shares granted in period (in shares) | 37,000 | ||||||
Common stock, shares authorized (in shares) | 175,000,000 | 175,000,000 | 175,000,000 | ||||
Granted, fair value | $ 6,300 | ||||||
Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares issued (in shares) | 125,000 | ||||||
Common stock with fair value | $ 500 | ||||||
Option award expiration period (in years) | 10 years | ||||||
Exercised (in shares) | 0 | 54,794 | |||||
Shares granted in period (in shares) | 152,731 | 546,350 | |||||
Expected volatility | 85% | 101.27% | 85% | ||||
Risk-free interest rate | 0.34% | 3.56% | 0.40% | ||||
Expected term in years | 6 years | 6 years | 6 years | ||||
China Cash Bonuses | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares granted in period (in shares) | 5,400,000 | 0 | |||||
Expected volatility | 110.14% | ||||||
Risk-free interest rate | 1.06% | ||||||
Expected term in years | 4 years 8 months 15 days | ||||||
Armistice Capital | Investor Warrant | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Warrants issued (in shares) | 423,729 | ||||||
Exercise price of warrants (in dollars per share) | $ 13.50 | ||||||
Armistice Capital | Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares issued (in shares) | 423,729 | ||||||
Sale of stock, price per share (in dollars per share) | $ 11.80 | ||||||
Proceeds from issuance of common stock, net | $ 4,600 | ||||||
A.G.P. | Private Placement Warrants | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Warrants issued (in shares) | 12,712 | ||||||
Exercise price of warrants (in dollars per share) | $ 13.50 | ||||||
Cash fee | $ 400 |
STOCKHOLDERS' EQUITY, SHARE-B_4
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Equity Stock Warrant Issuances (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Settlement Warrants | ||
Aggregate Intrinsic Value (in thousands) | ||
Warrants to purchase our common stock | $ 600 | |
Warrant | ||
Shares | ||
Outstanding at beginning of period (in dollars per share) | 1,011,441 | 4,000 |
Granted (in shares) | 0 | 1,007,441 |
Exercised (in shares) | 0 | 0 |
Forfeited, cancelled or expired (in shares) | 0 | 0 |
Outstanding at end of period (in shares) | 1,011,441 | 1,011,441 |
Weighted Average Exercise Price Per Share | ||
Outstanding at beginning of period (in dollars per share) | $ 40.10 | $ 100 |
Granted (in dollars per share) | 0 | 39.90 |
Exercised (in dollars per share) | 0 | 0 |
Forfeited, cancelled or expired (in dollars per share) | 0 | |
Outstanding at end of period (in dollars per share) | $ 40.10 | $ 40.10 |
Weighted-Average Remaining Contractual Term | ||
Outstanding (term) | 3 years 8 months 12 days | 4 years 8 months 12 days |
Aggregate Intrinsic Value (in thousands) | ||
Outstanding | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY, SHARE-B_5
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Valuation Assumptions (Details) | 12 Months Ended | ||
Jul. 08, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term in years | 6 years | 6 years | 6 years |
Expected volatility | 85% | 101.27% | 85% |
Expected dividends | 0% | 0% | |
Risk-free interest rate | 0.34% | 3.56% | 0.40% |
China Cash Bonuses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term in years | 4 years 8 months 15 days | ||
Expected volatility | 110.14% | ||
Expected dividends | 0% | ||
Risk-free interest rate | 1.06% |
STOCKHOLDERS' EQUITY, SHARE-B_6
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jul. 27, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Shares | |||
Granted (in shares) | 37,000 | ||
Exercised (in shares) | 0 | ||
Stock options | |||
Shares | |||
Outstanding at beginning of period (in shares) | 1,483,902 | 994,234 | |
Granted (in shares) | 152,731 | 546,350 | |
Exercised (in shares) | 0 | (54,794) | |
Forfeited, cancelled or expired (in shares) | (10,002) | (1,888) | |
Outstanding at end of period (in shares) | 1,626,631 | 1,483,902 | |
Options exercisable (in shares) | 1,549,681 | 1,277,652 | |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 33 | $ 42.90 | |
Granted (in dollars per share) | 2.66 | 13.70 | |
Exercised (in dollars per share) | 0 | 19.70 | |
Forfeited, cancelled or expired (in dollars per share) | 14.11 | 15.50 | |
Outstanding at end of period (in dollars per share) | 30.31 | 33 | |
Options exercisable (in dollars per share) | $ 31.41 | $ 36.20 | |
Weighted-Average Remaining Contractual Term | |||
Outstanding (term) | 5 years 6 months | 6 years 1 month 6 days | |
Options exercisable (term) | 5 years 3 months 18 days | 5 years 8 months 12 days | |
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 1 | $ 159 | |
Options exercisable | $ 1 | $ 957 | |
China Cash Bonuses | |||
Shares | |||
Outstanding at beginning of period (in shares) | 103,600 | 105,500 | |
Granted (in shares) | 5,400,000 | 0 | |
Forfeited, cancelled or expired (in shares) | (32,150) | (1,900) | |
Outstanding at end of period (in shares) | 71,450 | 103,600 | |
Options exercisable (in shares) | 68,450 | 88,600 | |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 39.70 | $ 40.10 | |
Granted (in dollars per share) | 0 | ||
Forfeited, cancelled or expired (in dollars per share) | 47.99 | 63.10 | |
Outstanding at end of period (in dollars per share) | 35.99 | 39.70 | |
Options exercisable (in dollars per share) | $ 36.97 | $ 44.10 | |
Weighted-Average Remaining Contractual Term | |||
Outstanding (term) | 6 years 1 month 6 days | 6 years 1 month 6 days | |
Options exercisable (term) | 6 years 1 month 6 days | 4 years 10 months 24 days | |
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 0 | $ 159 | |
Options exercisable | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY, SHARE-B_7
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Nonvested Options Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Shares | ||
Non-vested, beginning of period (in shares) | 206,250 | 16,088 |
Granted (in shares) | 37,000 | |
Vested (in shares) | (160,100) | (354,788) |
Forfeited, cancelled or expired (in shares) | (6,200) | (1,400) |
Non-vested, end of period (in shares) | 76,950 | 206,250 |
Weighted-Average Grant-Date Fair Value | ||
Non-vested, beginning of period | $ 2,063 | $ 68 |
Granted (in dollar per share) | 51 | |
Exercised (in dollars per share) | 1,852 | 3,512 |
Forfeited, cancelled or expired (in dollars per share) | 72 | 17 |
Non-vested, end of period | $ 529 | $ 2,063 |
STOCKHOLDERS' EQUITY, SHARE-B_8
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Liability Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Payment Award Liability [Roll Forward] | |||
Balance at beginning of period | $ 439 | $ 439 | |
Share-based compensation expense related to China Cash Bonuses | 1,697 | $ 4,060 | |
Balance at end of period | 32 | 439 | |
China Cash Bonuses | |||
Share-based Payment Award Liability [Roll Forward] | |||
Balance at beginning of period | 439 | 439 | 679 |
Share-based compensation expense related to China Cash Bonuses | $ (240) | (407) | (240) |
Balance at end of period | $ 32 | $ 439 |
STOCKHOLDERS' EQUITY, SHARE-B_9
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 1,697 | $ 4,060 | |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 2,104 | 4,300 | |
China Cash Bonuses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ (240) | $ (407) | $ (240) |
STOCKHOLDERS' EQUITY, SHARE-_10
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Unrecognized Compensation Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized share-based compensation cost for non-vested awards (in thousands): | $ 198 |
Weighted-average years over which unrecognized share-based compensation expense will be recognized: | 1 year 1 month 6 days |
China Cash Bonuses | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized share-based compensation cost for non-vested awards (in thousands): | $ 0 |
Weighted-average years over which unrecognized share-based compensation expense will be recognized: | 1 month 6 days |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Management - Advances To Senior Management - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Amount owed to members of management | $ 1.2 | |
Subsequent Event | ||
Related Party Transaction [Line Items] | ||
Related party transaction, purchase repaid | $ 0.4 |
CHINA BUSINESS PARTNER (Details
CHINA BUSINESS PARTNER (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jan. 25, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | ||||
Prepayment of debt | $ 6,217 | $ 6,500 | ||
Trade accounts receivable, net | 3,091 | 10,267 | ||
China Branding Group Limited | VIEs | ||||
Business Acquisition [Line Items] | ||||
Loan to unrelated entity | 2,400 | $ 1,500 | ||
Aggregate potential loan amount | $ 5,100 | |||
Loan receivable term (in years) | 5 years | |||
Prepayment of debt | $ 3,900 | |||
Other receivables and in recovery of marketing costs | 2,400 | $ 1,500 | ||
Revenues | 5,400 | 3,800 | ||
Trade accounts receivable, net | $ 700 | $ 800 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 3 Months Ended | 12 Months Ended | |||||||
Mar. 14, 2023 USD ($) day price debenture $ / shares shares | Jan. 19, 2023 shares | Jan. 05, 2023 USD ($) day $ / shares | Dec. 31, 2022 USD ($) shares | Oct. 06, 2022 USD ($) | Mar. 31, 2023 USD ($) shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) | |
Subsequent Event [Line Items] | |||||||||
Finance cost | $ 1,422,000 | $ 0 | |||||||
Ionic Ventures, LLC | |||||||||
Subsequent Event [Line Items] | |||||||||
Settlement shares (in shares) | shares | 1,720,349 | 898,854 | 898,854 | ||||||
Fair value of liability | $ 1,900,000 | $ 1,900,000 | $ 1,900,000 | ||||||
Ionic Ventures, LLC | ELOC Purchase Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Consideration received | $ 3,000,000 | ||||||||
Ionic Ventures, LLC | Debenture Purchase Agreement | New Convertible Subordinated Debt | |||||||||
Subsequent Event [Line Items] | |||||||||
Debt conversion percentage | 80% | ||||||||
Original principal amount | $ 2,800,000 | ||||||||
Repurchase amount | $ 2,500,000 | ||||||||
Subsequent Event | Mudrick Note Purchase Agreement | Mudrick Lenders | |||||||||
Subsequent Event [Line Items] | |||||||||
Original principal amount | $ 16,200,000 | ||||||||
Debt interest rate percentage | 20.50% | ||||||||
Increase, interest rate | 2% | ||||||||
Extension fee | $ 800,000 | ||||||||
Subsequent Event | Ionic Ventures, LLC | |||||||||
Subsequent Event [Line Items] | |||||||||
Settlement shares (in shares) | shares | 3,129,668 | 2,094,428 | |||||||
Settlement shares yet to be issued (in shares) | shares | 136,386 | ||||||||
Fair value of liability | $ 200,000 | ||||||||
Finance cost | $ 1,700,000 | ||||||||
Subsequent Event | Ionic Ventures, LLC | Letter Agreement with Ionic | ELOC Purchase Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Debt conversion percentage | 90% | ||||||||
Consideration received | $ 500,000 | ||||||||
Consecutive trading days | day | 10 | ||||||||
Automatic conversion date, minimum trading amount | $ 13,900,000 | ||||||||
Subsequent Event | Ionic Ventures, LLC | Letter Agreement with Ionic | ELOC Purchase Agreement | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Conversion price (in usd per share) | $ / shares | $ 0.25 | ||||||||
Debt conversion percentage | 80% | ||||||||
Subsequent Event | Ionic Ventures, LLC | Letter Agreement with Ionic | ELOC Purchase Agreement | Minimum | |||||||||
Subsequent Event [Line Items] | |||||||||
Conversion price (in usd per share) | $ / shares | $ 0.20 | ||||||||
Debt conversion percentage | 70% | ||||||||
Subsequent Event | Ionic Ventures, LLC | Debenture Purchase Agreement | New Convertible Subordinated Debt | |||||||||
Subsequent Event [Line Items] | |||||||||
Conversion price (in usd per share) | $ / shares | $ 1.40 | ||||||||
Consecutive trading days | day | 3 | ||||||||
Number of convertible subordinated debentures | debenture | 2 | ||||||||
Original principal amount | $ 2,800,000 | ||||||||
Repurchase amount | $ 2,500,000 | ||||||||
Debt interest rate percentage | 10% | ||||||||
Interest guaranteed period | 2 years | ||||||||
Increase, interest rate | 15% | ||||||||
Covenant, conversion period | day | 181 | ||||||||
Number of lowest volume-weighted average prices | price | 2 | ||||||||
Conversion percentage, bankruptcy multiplier | 120% | ||||||||
Beneficial ownership limitation percentage | 4.99% | ||||||||
Subsequent Event | Ionic Ventures, LLC | Debenture Purchase Agreement | New Convertible Subordinated Debt | Debt Instrument, Redemption, Period One | |||||||||
Subsequent Event [Line Items] | |||||||||
Original principal amount | $ 3,300,000 | ||||||||
Subsequent Event | Ionic Ventures, LLC | Debenture Purchase Agreement | New Convertible Subordinated Debt | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Debt conversion percentage | 80% | ||||||||
Subsequent Event | Ionic Ventures, LLC | Debenture Purchase Agreement | New Convertible Subordinated Debt | Minimum | |||||||||
Subsequent Event [Line Items] | |||||||||
Conversion price (in usd per share) | $ / shares | $ 0.20 | ||||||||
Debt conversion percentage | 70% | ||||||||
Subsequent Event | Ionic Ventures, LLC | Debenture Purchase Agreement | ELOC Purchase Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Shares required to issue | shares | 150,000 | ||||||||
Shares required to issue, period | day | 2 | ||||||||
Liquidated damages percentage | 2% | ||||||||
Liquidated damages period | day | 30 | ||||||||
Subsequent Event | Ionic Ventures, LLC | Debenture Purchase Agreement | ELOC Purchase Agreement | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Effective declaration period | 120 days | ||||||||
Subsequent Event | Ionic Ventures, LLC | Debenture Purchase Agreement | ELOC Purchase Agreement | Minimum | |||||||||
Subsequent Event [Line Items] | |||||||||
Filing period | day | 15 | ||||||||
Effective declaration period | 90 days | ||||||||
Subsequent Event | Ionic Ventures, LLC | First Debenture Purchase Agreement | New Convertible Subordinated Debt | First Debenture | |||||||||
Subsequent Event [Line Items] | |||||||||
Original principal amount | $ 1,700,000 | ||||||||
Repurchase amount | 1,500,000 | ||||||||
Subsequent Event | Ionic Ventures, LLC | Second Debenture Purchase Agreement | New Convertible Subordinated Debt | Second Debenture | |||||||||
Subsequent Event [Line Items] | |||||||||
Original principal amount | 1,100,000 | ||||||||
Repurchase amount | $ 1,000,000 |