Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 24, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Current Fiscal Year End Date | --12-31 | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 000-54677 | ||
Entity Registrant Name | CV Sciences, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 80-0944974 | ||
Entity Address, Address Line One | 9530 Padgett Street, Suite 107 | ||
Entity Address, City or Town | San Diego | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92126 | ||
City Area Code | 866 | ||
Local Phone Number | 290-2157 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | 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 | $ 6 | ||
Entity Common Stock, Shares Outstanding | 152,104,789 | ||
Documents Incorporated by Reference | Certain portions of the registrant’s definitive proxy statement to be delivered to its shareholders in connection with the registrant’s 2023 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K. Such definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. | ||
Entity Central Index Key | 0001510964 | ||
Amendment Flag | false | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Firm ID | 200 |
Auditor Name | HASKELL & WHITE LLP |
Auditor Location | Irvine, California |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 611 | $ 1,375 |
Accounts receivable, net | 766 | 2,041 |
Inventory | 6,563 | 8,624 |
Prepaid expenses and other | 3,190 | 2,146 |
Total current assets | 11,130 | 14,186 |
Property and equipment, net | 575 | 1,717 |
Right of use assets | 275 | 0 |
Intangibles, net | 251 | 1,485 |
Other assets | 505 | 678 |
Total assets | 12,736 | 18,066 |
Current liabilities: | ||
Accounts payable | 2,284 | 2,624 |
Accrued expenses | 9,690 | 10,915 |
Convertible notes | 0 | 612 |
Operating lease liability - current | 117 | 0 |
Debt, net of debt discounts | 1,223 | 310 |
Total current liabilities | 13,314 | 14,461 |
Operating lease liability - net of current portion | 188 | 0 |
Deferred tax liability | 11 | 62 |
Total liabilities | 13,513 | 14,523 |
Commitments and contingencies (Note 13) | ||
Stockholders' (deficit) equity | ||
Preferred stock, par value $0.0001; 10,000 shares authorized; 1 and no shares issued as of December 31, 2022 and 2021, respectively; no shares outstanding as of December 31, 2022 and 2021 | 0 | 0 |
Common stock, par value $0.0001; 790,000 and 190,000 shares authorized as of December 31, 2022 and 2021, respectively; 152,104 and 112,482 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 15 | 11 |
Additional paid-in capital | 86,897 | 83,007 |
Accumulated deficit | (87,689) | (79,475) |
Total stockholders' (deficit) equity | (777) | 3,543 |
Total liabilities and stockholders' (deficit) equity | $ 12,736 | $ 18,066 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 1,000 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized (in shares) | 790,000,000 | 190,000,000 |
Common stock shares issued (in shares) | 152,104,000 | 112,482,000 |
Common stock shares outstanding (in shares) | 152,104,000 | 112,482,000 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Product sales, net | $ 16,205 | $ 20,048 |
Cost of goods sold | 10,655 | 11,432 |
Gross profit | 5,550 | 8,616 |
Operating expenses: | ||
Research and development | 307 | 1,185 |
Selling, general and administrative | 12,090 | 25,877 |
Total operating expenses | 12,397 | 27,062 |
Operating loss | (6,847) | (18,446) |
Gain on debt extinguishment | (127) | (2,945) |
Interest expense, net | 1,541 | 140 |
Loss before income taxes | (8,261) | (15,641) |
Income tax benefit | (47) | (87) |
Net loss | (8,214) | (15,554) |
Deemed dividend for beneficial conversion of Series A Convertible Preferred Stock | 920 | 0 |
Net loss attributable to common stockholders | (9,134) | (15,554) |
Net loss attributable to common stockholders | $ (9,134) | $ (15,554) |
Earnings Per Share: | ||
Weighted average common shares outstanding for basic (shares) | 138,034 | 107,817 |
Weighted average common shares outstanding for diluted (shares) | 138,034 | 107,817 |
Net loss per common share , basic (in USD per share) | $ (0.07) | $ (0.14) |
Net loss per common share , diluted (in USD per share) | $ (0.07) | $ (0.14) |
Revenue, Product and Service [Extensible List] | Product [Member] | Product [Member] |
STATEMENTS OF STOCKHOLDERS' (DE
STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 100,664 | |||
Beginning balance at Dec. 31, 2020 | $ 11,212 | $ 0 | $ 10 | $ 75,123 | $ (63,921) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock from exercise of stock options (in shares) | 2 | ||||
Issuance of common stock under equity commitment (in shares) | 10,022 | ||||
Issuance of common stock under equity commitment | 4,407 | $ 1 | 4,406 | ||
Issuance of common stock from note conversion (in shares) | 1,794 | ||||
Issuance of common stock from note conversion | 268 | 268 | |||
Stock-based compensation | 3,210 | 3,210 | |||
Net loss | (15,554) | (15,554) | |||
Ending balance (in shares) at Dec. 31, 2021 | 0 | 112,482 | |||
Ending balance at Dec. 31, 2021 | 3,543 | $ 0 | $ 11 | 83,007 | (79,475) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of preferred stock and common stock warrants, net of issuance costs (in shares) | 1 | ||||
Issuance of preferred stock and common stock warrants, net of issuance costs | 554 | $ 280 | 274 | ||
Conversion of preferred stock (in shares) | (1) | 10,000 | |||
Conversion of preferred stock | 0 | $ (280) | $ 1 | 279 | |
Beneficial conversion charge for preferred stock conversion | 0 | (920) | 920 | ||
Deemed dividend | 0 | $ 920 | (920) | ||
Issuance of common stock from note conversion (in shares) | 24,126 | ||||
Issuance of common stock from note conversion | 1,946 | $ 2 | 1,944 | ||
Issuance of common stock for services (in shares) | 5,496 | ||||
Issuance of common stock for services | 385 | $ 1 | 384 | ||
Stock-based compensation | 1,009 | 1,009 | |||
Net loss | (8,214) | (8,214) | |||
Ending balance (in shares) at Dec. 31, 2022 | 0 | 152,104 | |||
Ending balance at Dec. 31, 2022 | $ (777) | $ 0 | $ 15 | $ 86,897 | $ (87,689) |
STATEMENTS OF CASH FLOW
STATEMENTS OF CASH FLOW - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
OPERATING ACTIVITIES | ||
Net loss | $ (8,214,000) | $ (15,554,000) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Depreciation and amortization | 992,000 | 1,153,000 |
Stock-based compensation | 1,009,000 | 3,210,000 |
Note discount and interest expense | 1,563,000 | 72,000 |
Gain on debt extinguishment | (127,000) | (2,945,000) |
Gain on lease modification | 0 | (972,000) |
Employee retention credit benefit | (2,516,000) | 0 |
Impairment of goodwill and intangible assets | 1,234,000 | 5,033,000 |
Loss on disposal of fixed assets | 150,000 | 25,000 |
Bad debt expense | 0 | 74,000 |
Non-cash lease expense | 70,000 | 350,000 |
Deferred taxes | (51,000) | (94,000) |
Other | 449,000 | 247,000 |
Change in operating assets and liabilities: | ||
Accounts receivable, net | 1,065,000 | (989,000) |
Inventory | 2,061,000 | 216,000 |
Prepaid expenses and other | 1,680,000 | 1,045,000 |
Accounts payable and accrued expenses | (1,250,000) | 1,644,000 |
Net cash flows used in operating activities | (1,885,000) | (7,485,000) |
INVESTING ACTIVITIES | ||
Purchase of equipment | 0 | (35,000) |
Net cash flows used in investing activities | 0 | (35,000) |
FINANCING ACTIVITIES | ||
Proceeds from issuance of preferred stock and common stock warrants | 700,000 | 0 |
Issuance costs related to issuance of preferred stock and common stock warrants | (146,000) | 0 |
Proceeds from convertible notes | 1,000,000 | 1,000,000 |
Proceeds from note payable | 2,000,000 | 0 |
Proceeds from issuance of common stock | 0 | 4,407,000 |
Repayment of convertible notes | (675,000) | 0 |
Repayment of note payable | (953,000) | 0 |
Repayment of unsecured debt | (336,000) | (808,000) |
Net cash flows provided by financing activities | 1,121,000 | 4,370,000 |
Net decrease in cash | (764,000) | (3,150,000) |
Cash, beginning of year | 1,375,000 | 4,525,000 |
Cash, end of year | 611,000 | 1,375,000 |
Supplemental cash flow disclosures: | ||
Interest paid | 6,000 | 10,000 |
Income taxes paid | 2,000 | 13,000 |
Supplemental disclosure of non-cash transactions: | ||
Purchase of insurance through issuance of note payable (Note 8) | 245,000 | 397,000 |
Conversion of note into common shares | (1,284,000) | (230,000) |
Derecognition of operating ROU asset related to operating lease termination | 0 | (2,773,000) |
Forgiveness of PPP loan | 0 | (2,945,000) |
Services paid with common stock | 385,000 | 0 |
Convertible Debt | ||
FINANCING ACTIVITIES | ||
Debt issuance costs | (46,000) | (229,000) |
Unsecured Notes Payable | ||
FINANCING ACTIVITIES | ||
Debt issuance costs | $ (423,000) | $ 0 |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | ORGANIZATION AND BUSINESS CV Sciences, Inc. (the “Company”) was incorporated under the name Foreclosure Solutions, Inc. in the State of Texas on December 9, 2010. On July 25, 2013, CannaVest Corp., a Texas corporation (“CannaVest Texas”), merged with the Company, a wholly-owned Delaware subsidiary of CannaVest Texas, to effectuate a change in the Company’s state of incorporation from Texas to Delaware. On January 4, 2016, the Company filed a Certificate of Amendment of Certificate of Incorporation reflecting its corporate name change to “CV Sciences, Inc.”, effective on January 5, 2016. In addition, on January 4, 2016, the Company amended its Bylaws to reflect its corporate name change to “CV Sciences, Inc.” The Company develops, manufactures, markets and sells herbal supplements and hemp-based cannabidiol ("CBD"). The Company sells its products under tradenames, such as PlusCBD ™, PlusCBD ™ Pet , HappyLane ™, ProCBD ™, CV ™ Acute and CV ™ Defenese. The Company's products are sold in a variety of market sectors including nutraceutical, beauty care and specialty foods. In addition, the Company is developing drug candidates which use CBD as a primary active ingredient. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The Company does not have any subsidiaries. Use of Estimates – The preparation of the financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from these estimates. Significant estimates include the valuation of intangible assets, inputs for valuing equity awards, and assumptions related to revenue recognition. Concentrations of Credit Risk – As of December 31, 2022, the Federal Deposit Insurance Corporation (“FDIC”) provided insurance coverage of up to $0.3 million per depositor per bank. The Company has not experienced any losses in such accounts and does not believe that the Company is exposed to significant risks from excess deposits. The Company’s cash balance in excess of FDIC limits totaled $0.4 million as of December 31, 2022. The Company has not experienced any such losses in these accounts to date, and believes that the financial institutions at which such amounts are held are stable; however, no assurance can be provided. The Company sources its raw materials from suppliers in Europe and the U.S. One supplier of shipping and fulfillment services and one supplier for online marketing services accounted for 27% and 13% of our outstanding accounts payable as of December 31, 2022, respectively. There was no other concentration of suppliers and no concentration of accounts receivable or revenue as of and for the years ended December 31, 2022 and 2021. Fair Value Measurements – Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The carrying values of accounts receivable, other current assets, accounts payable, and certain accrued expenses as of December 31, 2022 and 2021, approximate their fair value due to the short-term nature of these items. The Company's notes payable balance also approximates fair value as of December 31, 2022, as the interest rates on the notes payable approximate the rates available to the Company as of this date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. • Level 1 - uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. The Company does not have any cash equivalents or restricted cash as of December 31, 2022 and 2021. The Company does not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of December 31, 2022 and 2021. • Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. Except as described below under the caption Goodwill and Intangible Assets, the Company did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of December 31, 2022 and 2021. • Level 3 - uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. The Company did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of December 31, 2022 and 2021. Liquidity Considerations – U.S. GAAP requires management to assess a company's ability to continue as a going concern within one year from the financial statement issuance and to provide related note disclosure in certain circumstances. The accompanying financial statements and notes have been prepared assuming the Company will continue as a going concern. For the year ended December 31, 2022, the Company generated negative cash flows from operations of $1.9 million and had an accumulated deficit of $87.7 million. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operations, growth initiatives and to continue to make and implement strategic cost reductions, including reductions in employee headcount, vendor spending, and delaying expenses related to its drug development activities. The Company intends to position itself so that it will be able to raise additional funds through the capital markets, issuance of debt, and/or securing lines of credit. In March 2022, the Company closed a second tranche of its convertible note offering and a convertible preferred stock financing, which resulted in gross proceeds to the Company before closing expenses of approximately $1.0 million and $0.7 million, respectively. In addition, in August 2022, the Company issued and sold a secured promissory note to Streeterville Capital, LLC (the "Streeterville Note"), which resulted in net proceeds to the Company of $1.6 million. In connection with the sale and issuance of the Streeterville Note, on August 18, 2022, the Company entered into a Cancellation Agreement and Mutual Release (the "Cancellation Agreement") with an institutional investor, pursuant to which the Company paid the investor a total sum of $0.7 million in full satisfaction and repayment of those convertible promissory notes issued to the investor on March 25, 2022. Upon execution of the Cancellation Agreement, these notes, including the Company's obligations thereunder, were cancelled and terminated. Under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company was eligible for a refundable employee retention tax credit subject to certain criteria. The Company determined that it qualifies for the tax credit under the CARES Act. In March and August 2022, the Company claimed employee retention tax credits, which are recognized as a reduction to general and administrative expenses of $2.5 million during the year ended December 31, 2022. The amount is included in prepaid expenses and other in the Company's balance sheet as of December 31, 2022 (Note 16). The Company's financial operating results and accumulated deficit, besides other factors, raise substantial doubt about the Company's ability to continue as a going concern. The Company will continue to pursue the actions outlined above, as well as work towards increasing revenue and operating cash flows to meet its future liquidity requirements. However, there can be no assurance that the Company will be successful in any capital-raising efforts that it may undertake, and the failure of the Company to raise additional capital could adversely affect its future operations and viability. Debt Issuance Costs – The Company presents its debt issuance costs and debt discounts as a direct deduction from the carrying amount of the related indebtedness on its balance sheet and amortizes these costs over the term of the related debt liability using the effective interest method. Amortization is recorded in interest expense in the statements of operations. Accounts Receivable – Generally, the Company requires payment prior to shipment. However, in certain circumstances, the Company extends credit to companies located throughout the U.S. Accounts receivable consist of trade accounts arising in the normal course of business. Accounts for which no payments have been received after 30 days are considered delinquent and customary collection efforts are initiated. Accounts receivable are carried at original invoice amount less a reserve made for doubtful receivables based on a review of all outstanding amounts on a quarterly basis. Management has determined the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition and credit history, and current economic conditions. As of December 31, 2022 and 2021, the Company maintained an allowance for doubtful accounts related to accounts receivable in the amount of $0.4 million and $0.5 million, respectively. Inventory – Inventory is stated at lower of cost or net realizable value, with cost being determined on an average cost basis. Cost includes costs directly related to manufacturing and distribution of the products. Primary costs include raw materials, packaging, manufacturing overhead, shipping and depreciation of manufacturing equipment and production facilities. Manufacturing overhead includes payroll, employee benefits, utilities, maintenance and property taxes. Total shipping and handling costs were $2.2 million and $1.8 million for the years ended December 31, 2022 and 2021, respectively, and are recorded in cost of goods sold. The Company performs an assessment of inventory obsolescence to measure inventory at the lower of cost or net realizable value. Factors considered in the determination of obsolescence include slow-moving or non-marketable items. The Company's inventory production process includes the processing and cultivation of botanical raw material. Because of the duration of the cultivation process, a portion of our inventory will not be sold within one year. Consistent with the practice in other industries that cultivate botanical raw materials, all inventory is classified as a current asset. Property & Equipment – Equipment is stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Depreciation is provided on a straight-line basis over the assets' estimated useful lives. Tenant improvements are amortized on a straight-line basis over the shorter of the useful life or the remaining life of the related lease. Maintenance or repairs are charged to expense as incurred. Upon sale or disposition, the historically-recorded asset cost and accumulated depreciation are removed from the respective accounts and any related gain or loss is recognized. Impairment of Long-Lived Assets – In accordance with ASC Topic 360, Accounting for the Impairment or Disposal of Long-Lived Assets , the Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of property and equipment is measured by comparing its carrying value to the undiscounted projected future cash flows that the assets are expected to generate. If the carrying amount of an asset is not recoverable, the Company recognizes an impairment loss based on the excess of the carrying amount of the long-lived asset over its respective fair value, which is generally determined as the present value of estimated future cash flows or at the appraised value. The impairment analysis is based on significant assumptions of future results made by management, including revenue and cash flow projections. Circumstances that may lead to impairment of property and equipment include a significant decrease in the market price of a long-lived asset, a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition and a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset including an adverse action or assessment by a regulator. As of December 31, 2022 and 2021, the Company determined that long-lived assets were not impaired. Segments – Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and in assessing performance. As such, the Company has one operating segment, which is the business of hemp-based CBD wellness products. All long-lived assets are located in the United States and substantially all revenue is attributed to customers and consumers based in the United States. The Company previously reported two distinct business segments: a consumer products segment in manufacturing, marketing and selling hemp-based CBD products to a range of market sectors; and a specialty pharmaceutical segment focused on developing and commercializing novel therapeutics utilizing CBD. Effective October 1, 2022, the Company no longer maintains separate financial information for which operating results are evaluated on a regular basis by the CODM in deciding how to allocate resources and in assessing performance. Goodwill and Intangible Assets – The Company evaluates the carrying value of goodwill and intangible assets annually during the fourth quarter in accordance with ASC Topic 350, Intangibles Goodwill and Other, and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may more likely than not be less than carrying amount, or if significant adverse changes in the Company's future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, management can elect to forgo the qualitative assessment and perform the quantitative test. If the qualitative assessment indicates that the quantitative analysis should be performed, or if management elects to bypass a qualitative assessment, the Company then evaluates goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount, including goodwill. The quantitative assessment for goodwill requires management to estimate the fair value of the Company's reporting units using either an income or market approach or a combination thereof. Management makes critical assumptions and estimates in completing impairment assessments of goodwill and other intangible assets. The Company's cash flow projections look several years into the future and include assumptions on variables such as future sales and operating margin growth rates, economic conditions, probability of success, market competition, inflation and discount rates. During the fourth quarter of 2021, the Company performed its annual goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C. The Company's annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, the Company reviewed events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of goodwill. The Company determined that a triggering event had occurred to necessitate performing the quantitative impairment test. After performing the quantitative impairment test in accordance with ASC 350-20-35-3C, the Company determined that goodwill was impaired by $2.8 million for the year ended December 31, 2021. The Company did not have any goodwill as of December 31, 2022 and 2021. The Company classifies intangible assets into three categories: (1) intangible assets with definite lives subject to amortization; (2) intangible assets with indefinite lives not subject to amortization; and (3) goodwill. As of December 31, 2022, the Company only has in-process research & development (" IPR&D") with an indefinite life. IPR&D is not amortized until completion and development of the project, at which time the IPR&D becomes an amortizable asset. Until such time as the projects are either completed or abandoned, the Company tests those assets for impairment at least annually at year end, or more frequently at interim periods, by evaluating qualitative factors which could be indicative of impairment. Qualitative factors being considered include, but are not limited to, macro-economic conditions, progress on drug development activities, and overall financial performance. If impairment indicators are present as a result of the Company's qualitative assessment, the Company will test those assets for impairment by comparing the fair value of the assets to their carrying value. Quantitative factors being considered include, but are not limited to, the current project status, forecasted changes in the timing or amounts required to complete the project, forecasted changes in timing or changes in the future cash flows to be generated by the completed products, a probability of success of the ultimate project and changes to other market-based assumptions, such as current Company market capitalization. Upon completion or abandonment, the value of the IPR&D assets will be amortized to expense over the anticipated useful life of the developed products, if completed, or charged to expense when abandoned if no alternative future use exists. The Company completed its annual impairment assessment during the fourth quarter of 2022 and 2021. The Company evaluated, on the basis of the weight of the evidence, the significance of all identified events and circumstances that could affect the significant inputs used to determine the fair value of the IPR&D for determining whether it is more likely than not that the IPR&D asset is impaired. After assessing the totality of events and circumstances and their potential effect on significant inputs to the fair value determination, the Company determined that it is more likely than not that the IPR&D asset is impaired. As such, the Company has estimated the fair value of the IPR&D and performed the quantitative impairment test. Based on the quantitative impairment test, the Company determined that its IPR&D is impaired by $1.2 million for the year ended December 31, 2022. An intangible asset impairment charge of $2.2 million was recorded during the year ended December 31, 2021. Revenue Recognition – The majority of the Company's revenue contracts represent a single performance obligation related to the fulfillment of customer orders for the purchase of its products. Net sales reflect the transaction prices for these contracts based on the Company's selling list price, which is then reduced by estimated costs for trade promotional programs, consumer incentives, and allowances and discounts used to incentivize sales growth and build brand awareness. The Company recognizes revenue at the point in time that control of the ordered product is transferred to the customer, which is typically upon shipment to the customer or other customer-designated delivery point. The Company accrues for estimated sales returns by customers based on historical sales return results. The computation of the sales return and other allowances require that management makes certain estimates and assumptions that effect the timing and amounts of revenue and liabilities recorded. Shipping and handling fees charged to customers are included in product sales and totaled $0.1 million for the years ended December 31, 2022 and 2021. Taxes collected from customers that are remitted to governmental agencies are accounted for on a net basis and not included as revenue. The following represents product sales by retail (B2B) and e-commerce (B2C) channels for the years ended December 31, 2022 and 2021: For the years ended December 31, 2022 2021 (in thousands) (in thousands) Amount % of product sales, net Amount % of product sales, net Retail sales (B2B) $ 9,040 55.8 % $ 12,548 62.6 % E-Commerce sales (B2C) 7,165 44.2 % 7,500 37.4 % Product sales, net $ 16,205 100.0 % $ 20,048 100.0 % Compensation and Benefits – The Company records compensation and benefits expense for all cash and deferred compensation, benefits, and related taxes as earned by its employees. Compensation and benefits expense also includes compensation earned by temporary employees and contractors who perform similar services to those performed by the Company’s employees, primarily information technology and project management activities. The Company maintains a defined contribution 401(k) plan available to eligible employees. Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amount allowable under federal tax regulations. The Company does not make matching contributions. Research and Development Expense – Research and development costs are charged to expense as incurred and include, but are not limited to, employee salaries and benefits, cost of inventory used in product development and consulting service fees. Research and development expense was $0.3 million and $1.2 million for the years ended December 31, 2022 and 2021, respectively. Advertising – The Company supports its products with advertising to build brand awareness of the Company’s various products in addition to other marketing programs executed by the Company’s marketing team. The Company believes the continual investment in advertising is critical to the development and sale of its products. Advertising costs of $1.2 million and $1.3 million were expensed as incurred during each of the years ended December 31, 2022 and 2021, respectively. Common Stock Warrants - The Company classifies as equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company assesses classification of its common stock warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company’s freestanding derivatives consist of warrants to purchase common stock that were issued in connection with its convertible preferred stock. The Company evaluated these warrants to assess their proper classification, and determined that the common stock warrants meet the criteria for equity classification in the accompanying balance sheets. Stock-Based Compensation – Certain employees, officers, directors, and consultants of the Company participate in various long-term incentive plans that provide for granting stock options, restricted stock awards, restricted stock units, stock bonus awards and performance-based awards. Stock options generally vest in equal increments over a two ten The Company recognizes stock-based compensation for equity awards granted to employees, officers and directors as compensation and benefits expense in the statements of operations. The fair value of stock options is estimated using a Black-Scholes valuation model on the date of grant. The fair value of restricted stock awards is equal to the closing price of the Company’s stock on the date of grant. Stock-based compensation is recognized over the requisite service period of the individual awards, which generally equals the vesting period. For performance-based stock options, compensation is recognized once the applicable performance condition is satisfied. Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with ASC Topic 740, Income Taxes , the Company recognizes the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which those changes in judgment occur. The Company recognizes both interest and penalties related to uncertain tax positions as part of the income tax provision. As of December 31, 2022 and 2021, the Company did not have a liability for unrecognized tax uncertainties. The Company is subject to routine audits by taxing jurisdictions. Comprehensive Loss – Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. There have been no items qualifying as other comprehensive loss and, therefore, the Company's comprehensive loss was the same as its reported net loss for the years ended December 31, 2022 and 2021. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 was to be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates, which deferred the effective dates for the Company, as a smaller reporting company, until fiscal year 2023. The Company currently plans to adopt the guidance at the beginning of fiscal 2023. The Company is currently evaluating the potential impact of Topic 326 on the Company’s financial statements. Recently Adopted Accounting Standards In August 2020, the FASB issued ASU No. 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 ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract. The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and early adoption is permitted in annual reporting periods ending after December 15, 2020. The Company adopted this guidance as of January 1, 2021, using the full retrospective method of adoption. Adoption of this guidance eliminated the presentation of the beneficial conversion feature on the statement of operations, delayed recognition of beneficial conversion amounts until they are triggered, and had no other material impact on the Company. In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory as of December 31, 2022 and 2021 was comprised of the following (in thousands): December 31, 2022 2021 Raw materials $ 3,563 $ 4,023 Work in process 1,020 1,286 Finished goods 1,980 3,315 $ 6,563 $ 8,624 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment, net, as of December 31, 2022 and 2021 were as follows (in thousands): December 31, Useful Lives 2022 2021 Office furniture and IT equipment 3 - 5 years $ 1,392 $ 2,592 Tenant improvements * — 1,967 Laboratory and other equipment 5 years — 691 1,392 5,250 Less: accumulated depreciation (817) (3,533) $ 575 $ 1,717 * Tenant improvements were amortized over the lesser of the remaining term of the related lease or the estimated useful life of the tenant improvements. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets consist of the following as of December 31, 2022 and 2021 (in thousands): Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount Useful Life (Years) Balance - December 31, 2022: In-process research and development $ 1,485 $ — $ (1,234) $ 251 — Trade names 100 (100) — — 5 Non-compete agreements 77 (77) — — 5 Intangible assets $ 1,662 $ (177) $ — $ 251 Goodwill $ — $ — $ — $ — — Balance - December 31, 2021: In-process research and development $ 3,730 $ — $ (2,245) $ 1,485 — Trade names 100 (100) — — 5 Non-compete agreements 77 (77) — — 5 Intangible assets $ 3,907 $ (177) $ — $ 1,485 Goodwill $ 2,788 $ — $ (2,788) $ — — During the year ended December 31, 2021, the Company performed an annual goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C. The Company's annual impairment analysis included a qualitative assessment to determine if it was necessary to perform the quantitative impairment test. In performing a qualitative assessment, the Company reviewed events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of goodwill. The Company determined that a triggering event had occurred to necessitate performing the quantitative impairment test. After performing the quantitative impairment test in accordance with ASC 350-20-35-3C, the Company determined that goodwill was impaired by $2.8 million. As a result, the Company recorded this impairment to reduce total goodwill on its balance sheet as of December 31, 2021 and recorded the corresponding impairment expense, which is included in selling, general and administrative expense in the Company's statements of operations for the year ended December 31, 2021. The Company did not have any goodwill as of December 31, 2022 and 2021. The Company evaluated, on the basis of the weight of the evidence, the significance of all identified events and circumstances that could affect the significant inputs used to determine the fair value of the IPR&D for determining whether it is more likely than not that the IPR&D asset is impaired. After assessing the totality of events and circumstances and their potential effect on significant inputs to the fair value determination, the Company determined that it is more likely than not that the IPR&D asset is impaired. As such, the Company has estimated the fair value of the IPR&D and performed the quantitative impairment test. Based on the quantitative impairment test, the Company determined that its IPR&D is impaired by $1.2 million. As a result, the Company recorded this impairment to reduce its intangible assets on its balance sheet as of December 31, 2022 and recorded the corresponding impairment expense, which is included in selling, general and administrative expense |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses as of December 31, 2022 and 2021 were as follows (in thousands): December 31, 2022 2021 Accrued payroll tax - Mona (Note 12) $ 6,694 $ 6,694 Accrued payroll expenses 1,447 2,329 Other accrued liabilities 1,549 1,892 $ 9,690 $ 10,915 |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES | CONVERTIBLE NOTES Convertible notes as of December 31, 2022 and 2021 were as follows (in thousands): December 31, 2022 2021 Principal amount $ 2,120 $ 1,060 Less: Original issuance discount ("OID") (120) (60) Less: Debt issuance costs (275) (229) Net proceeds 1,725 771 Default premium 179 — Conversion of note into common shares (1,514) (230) Accretion of OID and amortization of debt issuance costs 395 71 Repayment (675) — Settlement (110) — Carrying amount $ — $ 612 On November 14, 2021, the Company entered into a securities purchase agreement (the “SPA”), with an institutional investor (the “Investor”) providing for the sale and issuance in series of registered direct offerings of senior convertible notes (the “Notes”) in the aggregate original principal amount of up to $5.3 million (the “Offering”). On November 17, 2021, at the initial closing of this Offering, the Company sold and issued $1.06 million in aggregate principal amount of Notes to the Investor pursuant to a prospectus supplement to its effective shelf registration statement Form S-3 (Registration No. 333-237772) (the "Registration Statement"). The Notes had an OID of 6%, resulting in net proceeds to the Company of $1.0 million before other debt issuance costs, and mature on May 17, 2022. The Notes did not bear interest except upon the occurrence of an event of default. After the occurrence of an event of default, the Notes accrued interest at the rate of 15% per annum. The Notes were senior to other indebtedness of the Company. The Notes had an initial fixed conversion price of $0.2611 per share. The initial fixed conversion price was subject to proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination and/or similar transactions and full-ratchet adjustment in connection with a subsequent offering at a per share price less than the fixed conversion price then in effect. Upon each additional closing, the fixed conversion price of all outstanding Notes was subject to downward adjustment if greater than the lower of (i) 120% of the closing bid price of the Company's common stock on the trading day immediately preceding such additional closing date; and (ii) 120% of the arithmetic average of the volume weighted average prices of the Company's common stock on the five trading days preceding the additional closing. The holder was able to convert any part of the Notes into shares of common stock at an “Alternate Conversion Price” equal to the lesser of (i) the fixed conversion price then in effect; (ii) the greater of the floor price of $0.01 and 90% of the arithmetic average of the three lowest daily volume weighted average prices of the Company's common stock during the ten trading days immediately prior to such conversion; and (iii) the greater of the floor price and 97% of the lowest sale price of the Company's common stock on the applicable conversion date. In the event of the occurrence of an event of default, each holder of a Note could require the Company to redeem all or any portion of the Notes (including all accrued and unpaid interest and late charges thereon), in cash, at the greater of the face value and a 15% redemption premium or (10% if such event of default is a price default) to the greater of the face value and the equity value of the common stock underlying the Notes. The equity value of the common stock underlying the Notes was calculated using the greatest closing sale price of the common stock on any trading day immediately preceding such event of default and the date the entire payment is made. Additionally, the Company had the option to redeem, at any time, any portion of the outstanding Notes in cash with a 15% redemption premium to the greater of the face value of the Notes or the equity value of its common stock. On March 25, 2022, the Company sold and issued an additional $1.06 million in principal amount of the Notes under this Offering (the "Second Tranche"), which Notes were offered pursuant to a prospectus supplement to the Registration Statement. The Notes issued in the Second Tranche also had an OID of 6%, resulting in net proceeds of the Company of $1.0 million, before other debt issuance costs. The Notes issued in the Second Tranche had the same material terms as those issued in the first tranche, but were scheduled to mature on September 25, 2022. The Notes issued in the second tranche had an initial conversion price of $0.1508 per share, and pursuant to the Notes, upon closing of second tranche, the initial conversion price of the Notes issued in the first tranche in November 2021 was adjusted down from $0.2611 per share to $0.1508 per share as well. The Company did not repay the Notes issued in November in full on May 17, 2022, the maturity date, resulting in an event of default under such Notes. As a result of such default, the Notes issued in November, in the principal amount of $130,000 as of such date, began accruing interest at a rate of 15% per annum. Additionally, the default triggered the investor’s right under the Notes to require the Company to redeem all or any portion of the November Notes, in cash, at a price not less than the face value of such Notes plus a 15% redemption premium (the “Redemption Premium”). On May 18, 2022, the Company entered into a Forbearance Agreement with the investor, pursuant to which the investor agreed to forebear exercising any rights or remedies that it may have under the November Notes that arise as a result of the default until the earlier of (i) the date immediately prior to the date of occurrence of a Bankruptcy Event of Default (as defined in the Notes), (ii) the date of occurrence of any other event of default under Section 4(a) of the Notes, (iii) the time of any breach by the Company pursuant to the Forbearance Agreement, and (v) June 1, 2022 (such period, the “Forbearance Period”). In accordance with the Forbearance Agreement, the Company agreed to pay the investor the aggregate outstanding principal on the November Note at the Redemption Premium, including all accrued and unpaid interest, upon expiration of the Forbearance Period. As of May 31, 2022, prior to expiration of the Forbearance Period, the investor had converted the outstanding balance (including the Redemption Premium and accrued interest) due under the Notes issued in November, amounting to $151,772, into an aggregate of 3,751,971 shares of Company common stock at a conversion price of $0.04 per share. As a result, the Notes issued in November terminated. During the year ended December 31, 2022, the volume weighted average price ("VWAP") of the Company's common stock was below $0.10 for more than 5 days, which constituted a price default in accordance with the Notes. As a result, from the date of such default and for so long as such default remained uncured, the Notes that remained outstanding accrued interest at a rate of 15% per annum. Following such default, the holder also added a 15% per annum default premium to the outstanding balance in accordance with the Notes. During the years ended December 31, 2022 and 2021, holders of certain Notes converted amounts payable under such Notes into an aggregate of 24,126,311 and 1,794,291 shares of Company common stock at a weighted average conversion price of $0.05 and $0.13 per share, resulting in a reduction of the Note balance of $1.3 million and $0.2 million, respectively. In addition, the Company recognized additional interest expense associated with the conversion of $0.6 million and $38,000 during the years ended December 31, 2022 and 2021, respectively. On August 18, 2022, the Company entered into the Cancellation Agreement with the investor, pursuant to which the Company paid the investor a total sum of $675,000 in full satisfaction and repayment of the Notes issued in the Second Tranche. Upon execution of the Cancellation Agreement, the Notes issued in the Second Tranche, including the Company's obligations thereunder, were cancelled and terminated. As a result of the Cancellation Agreement, the Company recognized a gain on debt extinguishment of $127,000, including interest expense of $17,000, and immediately expensed unamortized debt costs of $50,000. Debt as of December 31, 2022 and 2021 was as follows (in thousands): December 31, 2022 2021 Note payable, net of discount and costs $ 1,005 $ — Insurance financing 218 310 Total debt $ 1,223 $ 310 Note Payable In August 2022, the Company entered into a note purchase agreement with Streeterville, pursuant to which the Company issued and sold to Streeterville the secured Streeterville Note in the original principal amount of $2.0 million. The Streeterville Note carries an original issuance discount of $400,000. The Company incurred additional debt issuance costs of $23,000. As a result, the Company received aggregate net proceeds of approximately $1.6 million in connection with the sale and issuance of the Streeterville Note. The Note matures on May 19, 2023 and the Company is required to make weekly repayments to Streeterville on the Note in the following amounts: (a) $40,000 for the first 8 weeks; and (b) $56,000 thereafter until the Streeterville Note is paid in full. No interest will accrue on the Streeterville Note until an occurrence of an Event of Default, as defined in Section 4 of the Streeterville Note, if ever. The Streeterville Note provides for customary events of default, including, among other things, the event of nonpayment of principal, interest, fees or other amounts, a representation or warranty proving to have been incorrect when made, failure to perform or observe covenants within a specified period of time, a cross-default to certain other indebtedness of the Company, the bankruptcy or insolvency of the Company or any significant subsidiary, monetary judgment defaults of a specified amount and other defaults resulting in liability of a specified amount. In the event of an occurrence of an Event of Default by the Company, Streeterville may declare all amounts owed under the Streeterville Note immediately due and payable. Also, a late fee and interest penalty of equal to either 22% per annum or the maximum rate allowable under law, whichever is lesser, may apply to any outstanding amount not paid when due or that remains outstanding while an Event of Default exists. The unpaid amount of the Streeterville Note, any interest, fees, charges and late fees accrued shall be due and payable in full within three (3) Trading Days of receipt by the Company of any employee retention credit funds owed to the Company under the CARES Act, provided, further, that if at least $1.0 million in CARES Act proceeds are not remitted to Streeterville within ninety days of August 19, 2022, the outstanding balance under the Streeterville Note will be increased by five percent (5%). The Company did not receive the CARES Act proceeds within ninety days of August 19, 2022; as a result, the outstanding balance of the Streeterville Note was increased by five percent (5%). The Streeterville Note is secured by all of the Company’s assets as set forth in the Security Agreement dated August 19, 2022. Insurance Financing In October 2021, the Company entered into a finance agreement with First Insurance Funding ("First Insurance") in order to fund a portion of its insurance policies. The amount financed was $0.4 million and incurred interest at a rate of 4.17%. The Company was required to make monthly payments of $45,000 from November 2021 through July 2022. There was no outstanding balance as of December 31, 2022. In November 2022, the Company entered into a financing agreement with First Insurance in order to fund a portion of its insurance policies for the upcoming policy year. The amount financed is $0.2 million and incurs interest at a rate of 6.32%. The Company is required to make monthly payments of $27,900 from November 2022 through July 2023. The outstanding balance as of December 31, 2022 was $0.2 million. Paycheck Protection Program On April 15, 2020, the Company applied for a loan from JPMorgan Chase Bank, N.A. (the "Lender"), pursuant to the Paycheck Protection Program of the CARES Act as administered by the U.S. Small Business Administration. On April 17, 2020, the loan was approved, and the Company received proceeds in the amount of $2.9 million (the “PPP Loan”). |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | CONVERTIBLE NOTES Convertible notes as of December 31, 2022 and 2021 were as follows (in thousands): December 31, 2022 2021 Principal amount $ 2,120 $ 1,060 Less: Original issuance discount ("OID") (120) (60) Less: Debt issuance costs (275) (229) Net proceeds 1,725 771 Default premium 179 — Conversion of note into common shares (1,514) (230) Accretion of OID and amortization of debt issuance costs 395 71 Repayment (675) — Settlement (110) — Carrying amount $ — $ 612 On November 14, 2021, the Company entered into a securities purchase agreement (the “SPA”), with an institutional investor (the “Investor”) providing for the sale and issuance in series of registered direct offerings of senior convertible notes (the “Notes”) in the aggregate original principal amount of up to $5.3 million (the “Offering”). On November 17, 2021, at the initial closing of this Offering, the Company sold and issued $1.06 million in aggregate principal amount of Notes to the Investor pursuant to a prospectus supplement to its effective shelf registration statement Form S-3 (Registration No. 333-237772) (the "Registration Statement"). The Notes had an OID of 6%, resulting in net proceeds to the Company of $1.0 million before other debt issuance costs, and mature on May 17, 2022. The Notes did not bear interest except upon the occurrence of an event of default. After the occurrence of an event of default, the Notes accrued interest at the rate of 15% per annum. The Notes were senior to other indebtedness of the Company. The Notes had an initial fixed conversion price of $0.2611 per share. The initial fixed conversion price was subject to proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination and/or similar transactions and full-ratchet adjustment in connection with a subsequent offering at a per share price less than the fixed conversion price then in effect. Upon each additional closing, the fixed conversion price of all outstanding Notes was subject to downward adjustment if greater than the lower of (i) 120% of the closing bid price of the Company's common stock on the trading day immediately preceding such additional closing date; and (ii) 120% of the arithmetic average of the volume weighted average prices of the Company's common stock on the five trading days preceding the additional closing. The holder was able to convert any part of the Notes into shares of common stock at an “Alternate Conversion Price” equal to the lesser of (i) the fixed conversion price then in effect; (ii) the greater of the floor price of $0.01 and 90% of the arithmetic average of the three lowest daily volume weighted average prices of the Company's common stock during the ten trading days immediately prior to such conversion; and (iii) the greater of the floor price and 97% of the lowest sale price of the Company's common stock on the applicable conversion date. In the event of the occurrence of an event of default, each holder of a Note could require the Company to redeem all or any portion of the Notes (including all accrued and unpaid interest and late charges thereon), in cash, at the greater of the face value and a 15% redemption premium or (10% if such event of default is a price default) to the greater of the face value and the equity value of the common stock underlying the Notes. The equity value of the common stock underlying the Notes was calculated using the greatest closing sale price of the common stock on any trading day immediately preceding such event of default and the date the entire payment is made. Additionally, the Company had the option to redeem, at any time, any portion of the outstanding Notes in cash with a 15% redemption premium to the greater of the face value of the Notes or the equity value of its common stock. On March 25, 2022, the Company sold and issued an additional $1.06 million in principal amount of the Notes under this Offering (the "Second Tranche"), which Notes were offered pursuant to a prospectus supplement to the Registration Statement. The Notes issued in the Second Tranche also had an OID of 6%, resulting in net proceeds of the Company of $1.0 million, before other debt issuance costs. The Notes issued in the Second Tranche had the same material terms as those issued in the first tranche, but were scheduled to mature on September 25, 2022. The Notes issued in the second tranche had an initial conversion price of $0.1508 per share, and pursuant to the Notes, upon closing of second tranche, the initial conversion price of the Notes issued in the first tranche in November 2021 was adjusted down from $0.2611 per share to $0.1508 per share as well. The Company did not repay the Notes issued in November in full on May 17, 2022, the maturity date, resulting in an event of default under such Notes. As a result of such default, the Notes issued in November, in the principal amount of $130,000 as of such date, began accruing interest at a rate of 15% per annum. Additionally, the default triggered the investor’s right under the Notes to require the Company to redeem all or any portion of the November Notes, in cash, at a price not less than the face value of such Notes plus a 15% redemption premium (the “Redemption Premium”). On May 18, 2022, the Company entered into a Forbearance Agreement with the investor, pursuant to which the investor agreed to forebear exercising any rights or remedies that it may have under the November Notes that arise as a result of the default until the earlier of (i) the date immediately prior to the date of occurrence of a Bankruptcy Event of Default (as defined in the Notes), (ii) the date of occurrence of any other event of default under Section 4(a) of the Notes, (iii) the time of any breach by the Company pursuant to the Forbearance Agreement, and (v) June 1, 2022 (such period, the “Forbearance Period”). In accordance with the Forbearance Agreement, the Company agreed to pay the investor the aggregate outstanding principal on the November Note at the Redemption Premium, including all accrued and unpaid interest, upon expiration of the Forbearance Period. As of May 31, 2022, prior to expiration of the Forbearance Period, the investor had converted the outstanding balance (including the Redemption Premium and accrued interest) due under the Notes issued in November, amounting to $151,772, into an aggregate of 3,751,971 shares of Company common stock at a conversion price of $0.04 per share. As a result, the Notes issued in November terminated. During the year ended December 31, 2022, the volume weighted average price ("VWAP") of the Company's common stock was below $0.10 for more than 5 days, which constituted a price default in accordance with the Notes. As a result, from the date of such default and for so long as such default remained uncured, the Notes that remained outstanding accrued interest at a rate of 15% per annum. Following such default, the holder also added a 15% per annum default premium to the outstanding balance in accordance with the Notes. During the years ended December 31, 2022 and 2021, holders of certain Notes converted amounts payable under such Notes into an aggregate of 24,126,311 and 1,794,291 shares of Company common stock at a weighted average conversion price of $0.05 and $0.13 per share, resulting in a reduction of the Note balance of $1.3 million and $0.2 million, respectively. In addition, the Company recognized additional interest expense associated with the conversion of $0.6 million and $38,000 during the years ended December 31, 2022 and 2021, respectively. On August 18, 2022, the Company entered into the Cancellation Agreement with the investor, pursuant to which the Company paid the investor a total sum of $675,000 in full satisfaction and repayment of the Notes issued in the Second Tranche. Upon execution of the Cancellation Agreement, the Notes issued in the Second Tranche, including the Company's obligations thereunder, were cancelled and terminated. As a result of the Cancellation Agreement, the Company recognized a gain on debt extinguishment of $127,000, including interest expense of $17,000, and immediately expensed unamortized debt costs of $50,000. Debt as of December 31, 2022 and 2021 was as follows (in thousands): December 31, 2022 2021 Note payable, net of discount and costs $ 1,005 $ — Insurance financing 218 310 Total debt $ 1,223 $ 310 Note Payable In August 2022, the Company entered into a note purchase agreement with Streeterville, pursuant to which the Company issued and sold to Streeterville the secured Streeterville Note in the original principal amount of $2.0 million. The Streeterville Note carries an original issuance discount of $400,000. The Company incurred additional debt issuance costs of $23,000. As a result, the Company received aggregate net proceeds of approximately $1.6 million in connection with the sale and issuance of the Streeterville Note. The Note matures on May 19, 2023 and the Company is required to make weekly repayments to Streeterville on the Note in the following amounts: (a) $40,000 for the first 8 weeks; and (b) $56,000 thereafter until the Streeterville Note is paid in full. No interest will accrue on the Streeterville Note until an occurrence of an Event of Default, as defined in Section 4 of the Streeterville Note, if ever. The Streeterville Note provides for customary events of default, including, among other things, the event of nonpayment of principal, interest, fees or other amounts, a representation or warranty proving to have been incorrect when made, failure to perform or observe covenants within a specified period of time, a cross-default to certain other indebtedness of the Company, the bankruptcy or insolvency of the Company or any significant subsidiary, monetary judgment defaults of a specified amount and other defaults resulting in liability of a specified amount. In the event of an occurrence of an Event of Default by the Company, Streeterville may declare all amounts owed under the Streeterville Note immediately due and payable. Also, a late fee and interest penalty of equal to either 22% per annum or the maximum rate allowable under law, whichever is lesser, may apply to any outstanding amount not paid when due or that remains outstanding while an Event of Default exists. The unpaid amount of the Streeterville Note, any interest, fees, charges and late fees accrued shall be due and payable in full within three (3) Trading Days of receipt by the Company of any employee retention credit funds owed to the Company under the CARES Act, provided, further, that if at least $1.0 million in CARES Act proceeds are not remitted to Streeterville within ninety days of August 19, 2022, the outstanding balance under the Streeterville Note will be increased by five percent (5%). The Company did not receive the CARES Act proceeds within ninety days of August 19, 2022; as a result, the outstanding balance of the Streeterville Note was increased by five percent (5%). The Streeterville Note is secured by all of the Company’s assets as set forth in the Security Agreement dated August 19, 2022. Insurance Financing In October 2021, the Company entered into a finance agreement with First Insurance Funding ("First Insurance") in order to fund a portion of its insurance policies. The amount financed was $0.4 million and incurred interest at a rate of 4.17%. The Company was required to make monthly payments of $45,000 from November 2021 through July 2022. There was no outstanding balance as of December 31, 2022. In November 2022, the Company entered into a financing agreement with First Insurance in order to fund a portion of its insurance policies for the upcoming policy year. The amount financed is $0.2 million and incurs interest at a rate of 6.32%. The Company is required to make monthly payments of $27,900 from November 2022 through July 2023. The outstanding balance as of December 31, 2022 was $0.2 million. Paycheck Protection Program On April 15, 2020, the Company applied for a loan from JPMorgan Chase Bank, N.A. (the "Lender"), pursuant to the Paycheck Protection Program of the CARES Act as administered by the U.S. Small Business Administration. On April 17, 2020, the loan was approved, and the Company received proceeds in the amount of $2.9 million (the “PPP Loan”). |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS EQUITY | STOCKHOLDERS EQUITY Common Stock On June 6, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware, pursuant to which the number of shares of all classes of the Company’s capital stock authorized for issuance was increased from 200,000,000 shares to 800,000,000 shares, and the number of shares of common stock authorized for issuance was correspondingly increased from 190,000,000 shares to 790,000,000 shares. The number of shares of preferred stock authorized for issuance was not impacted by the amendment. As of December 31, 2022 and 2021, the Company had 152,104,000 and 112,482,000 shares of common stock issued and outstanding, respectively. During the year ended December 31, 2022, the Company issued 5,496,000 shares of common stock to a vendor as compensation for $0.4 million of services provided to the Company. On December 8, 2020, the Company entered into a SPA with Tumim Stone Capital, LLC ("Tumim") to issue and sell up to $10.0 million in shares of the Company's common stock. The SPA provided, among other things, that the Company may direct, every three trading days, Tumim to purchase a number of shares not to exceed an amount determined based upon the trading volume and stock price of the Company’s shares. During the year ended December 31, 2021, the Company sold 10,021,804 shares of common stock pursuant to the SPA and recognized proceeds of $4.4 million. The Company and Tumim terminated the SPA effective November 15, 2021. Preferred Stock On March 30, 2022, the Company closed a registered direct offering with an institutional investor for the issuance and sale of an aggregate of 700 shares of the Company's Series A Convertible Preferred Stock ("Preferred Stock") and warrants to purchase up to an aggregate of 10,000,000 shares of common stock, par value $0.0001 per share, for gross proceeds of $0.7 million, or net cash proceeds of $0.6 million after deducting $0.1 million related to placement agent’s fees and other offering expenses. Shares of the Preferred Stock had a stated value of $1,000 per share and were convertible into an aggregate of 10,000,000 shares of common stock at a conversion price of $0.07 per share at any time. The warrants have an exercise price of $0.10 per share. In addition, the Company issued designees of the placement agent warrants to purchase up to 750,000 shares of common stock at an exercise price of $0.0875 per share, and their fair value of $0.1 million was recorded as an additional offering cost. In April 2022, the investor converted all of the 700 outstanding shares of Preferred Stock into an aggregate of 10,000,000 shares of common stock. The Company recognized a beneficial conversion charge of $0.9 million during the year ended December 31, 2022, which represents the in-the-money value of the conversion rate as of the date of conversion. The Preferred Stock did not have any mandatory redemption provisions, contingently redeemable redemption provisions, preferential dividend rights, or liquidation preferences. The Preferred Stock had no voting rights, other than the right to vote as a class on certain matters, except that each share of Preferred Stock had the right to cast 170,000 votes per share of Preferred Stock, voting together as a single class with holders of Company common stock, on the proposals to (i) amend the Company’s Certificate of Incorporation to increase the number of shares of capital stock authorized for issuance thereunder from 200,000,000 to 800,000,000 and the authorized number of shares of common stock from 190,000,000 to 790,000,000 shares (the “Increase in Authorized”), and (ii) authorize the Company’s board of directors, at any time or times before May 30, 2025, to amend the Company’s Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding shares of common stock in a range of not less than 1-for-10 and not greater than 1-for-400, which were presented to the Company’s shareholders for approval, and were ultimately approved by the Company's shareholders, at the Company’s 2022 annual meeting of shareholders. The Company evaluated the classification of the Preferred Stock and determined equity classification was appropriate due to no mandatory or contingently redeemable redemption features. The warrants issued to the investors in the offering were considered freestanding equity classified instruments. The Company first allocated gross proceeds from the registered direct offering between the Preferred Stock and the warrants issued to investors using a relative fair value approach, resulting in an initial allocation to the instruments of $0.4 million and $0.3 million, respectively. The issuance costs, inclusive of the fair value of the warrants issued to placement agent designees, were allocated between the Preferred Stock and the warrants issued to investors in a systematic and rational manner, resulting in an allocation to the instruments of $0.1 million and $0.1 million, for a net allocation of $0.3 million and $0.2 million, respectively. On the issuance date, the Company estimated the fair value of the warrants issued to investors and to placement agent designees using a Black-Scholes pricing model using the following assumptions: (i) contractual term of 3 years, (ii) expected volatility rate of 104.0%, (iii) risk-free interest rate of 2.5%, (iv) expected dividend rate of 0%, and (v) closing price of the Company’s common stock as of the day immediately preceding the registered direct offering. The fair value of Preferred Stock was estimated based upon equivalent common shares that Preferred Stock could have been converted into at the closing price of the day immediately preceding the purchase date. The embedded conversion feature was evaluated and bifurcation from the Preferred Stock equity host was not considered necessary. Warrants The following represents a summary of the warrants outstanding as of December 31, 2022 and 2021: Number of Shares Underlying Warrants Issue Date Classification Exercise Price Expiration Date December 31, 2022 December 31, 2021 March 30, 2022 Equity $ 0.1000 May 26, 2025 10,000,000 — March 30, 2022 Equity $ 0.0875 May 26, 2025 750,000 — 10,750,000 — |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION As of December 31, 2022, there are 30,976,000 shares authorized for issuance under the CV Sciences, Inc. Amended and Restated 2013 Equity Incentive Plan (the "2013 Plan"). As of December 31, 2022, the Company had 6,807,781 authorized unissued shares reserved and available for issuance upon exercise and conversion of outstanding awards under the Amended 2013 Plan. On June 11, 2019, the Company’s stockholders approved the addition of an automatic “evergreen” provision regarding the number of shares to be annually added to the 2013 Plan. As a result, the number of shares of common stock that may be automatically added to the 2013 Plan on January 1 of each year during the term of the plan, starting with January 1, 2020, would be the lesser of: (a) 4% of the total shares of the Company’s common stock outstanding on December 31st of the prior year, (b) 4,000,000 shares of the Company’s common stock, or (c) a lesser number of shares of the Company’s common stock as determined by the Company’s Board of Directors. After the completion of the year ended December 31, 2022, on January 1, 2023, the Company added 6,084,192 shares to the 2013 Plan pursuant to the evergreen provision. In March 2022, the Company cancelled 9,000,000 outstanding stock options. In addition, on March 30, 2022 the Company's Board of Directors reduced the shares available for issuance under the 2013 Plan by 8,000,000 shares. The stock options are exercisable at no less than the fair market value of the underlying shares on the date of grant, and restricted stock and restricted stock units are issued at a value not less than the fair market value of the common stock on the date of the grant. Generally, stock options awarded are vested in equal increments ranging from two The Company recognized stock-based compensation expense of $1.0 million and $3.2 million for the years ended December 31, 2022 and 2021, respectively. In June 2020, the Company’s board of directors approved a stock option modification that reduced certain employees’ and directors’ stock option exercise prices to $0.66. No other terms were modified. Stock options to purchase a total of 2,130,000 shares of common stock were modified. The modification to the existing stock options resulted in $0.2 million incremental value of the stock options. The incremental value associated with the modification was recognized over the life of the remaining service period of the options. During the years ended December 31, 2022 and 2021, the Company recorded $6 thousand and $41 thousand in stock-based compensation associated with the repriced options, respectively. Subsequent to December 31, 2022, the Company issued an aggregate of 7,450,000 stock options to employees, which stock options have a weighted average exercise price of $0.04 per share. As of December 31, 2022, total unrecognized compensation cost related to non-vested stock-based compensation arrangements was $0.2 million, which is expected to be recognized over a weighted-average period of 0.47 years. The following summarizes activity related to the Company's stock options (in thousands, except per share data): Number of Shares Weighted Average Weighted Average Aggregate Intrinsic Value Outstanding - December 31, 2021 30,163 $ 0.49 5.5 $ — Granted 1,000 0.04 — — Exercised — — — — Forfeited (11,332) 0.51 — — Outstanding - December 31, 2022 19,831 0.46 3.5 — Exercisable - December 31, 2022 18,163 0.48 3.0 — Vested or expected to vest - December 31, 2022 19,831 $ 0.46 3.5 $ — The Company has established performance milestones in connection with the drug development efforts for its lead drug candidate CVSI-007. The above table includes 4,250,000 vested performance-based options as of December 31, 2022, which were issued to Michael Mona Jr. ("Mona Jr.") outside of the 2013 Plan. As of December 31, 2022, there were 6,750,000 remaining unvested stock options granted to Mona Jr. outside of the 2013 Plan which are not included in the table above. These stock options vest upon the completion of future performance conditions, including those related to the Settlement Agreement with Mona Jr. (refer to Note 12). As of December 31, 2022, Mona Jr. has a total of 18,050,000 outstanding stock options with a weighted average exercise price of $0.40. There were no stock option exercises during the year ended December 31, 2022. Intrinsic value of stock options exercised during the year ended December 31, 2021 was immaterial. The following table presents the weighted average grant date fair value of stock options granted and the weighted-average assumptions used to estimate the fair value on the date of grant using the Black-Scholes valuation model: For the years ended December 31, 2022 2021 Volatility 123.5% 133.2% Risk-Free Interest Rate 3.6% 0.9% Expected Term (in years) 5.52 5.61 Dividend Rate 0.0% 0.0% Fair Value Per Share on Grant Date $0.03 $0.48 The risk-free interest rates are based on the implied yield available on U.S. Treasury constant maturities with remaining terms equivalent to the respective expected terms of the options. Expected volatility is based on the historical volatility of the Company's common stock. The Company estimates the expected term for stock options awarded to employees, non-employees, officers and directors using the simplified method in accordance with ASC Topic 718, Stock Compensation |
NET LOSS PER SHARE
NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARENet loss per common share is computed using the two-class method, which is required due to the participating nature of the Preferred Stock (as defined and discussed in Note 9). Except with respect to voting and conversion rights, the rights of the holders of the Company's common stock and the Preferred Stock are identical. Each class of shares has the same rights to dividends. Although the Preferred Stock are participating securities, such securities do not participate in net losses, and therefore, do not impact the Company's net loss per share calculation as of December 31, 2022. The Company computes basic net loss per share using the weighted-average number of common shares outstanding during the year. Diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares plus potential common shares. The Company's stock options, including those with performance conditions, are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Potential common shares are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. The following common stock equivalents were not included in the calculation of net loss per diluted share because their effect were anti-dilutive (in thousands): For the years ended December 31, 2022 2021 Stock options 15,581 25,163 Performance stock options 11,000 13,000 Warrants 10,750 — Convertible notes — 3,179 Total 37,331 41,342 |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES During the year ended December 31, 2019, the Company's former President and Chief Executive Officer, Michael Mona Jr. ("Mona Jr."), and the Company entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to which the Company agreed that Mona Jr.’s resignation from the Company on January 22, 2019 was for Good Reason (as defined in Mona Jr.’s Employment Agreement) and agreed to extend the deadline for Mona Jr.’s exercise of his stock options for a period of five years. As of December 31, 2022, Mona Jr. had 11,300,000 fully vested outstanding stock options with a weighted average exercise price of $0.42 per share. In exchange, Mona Jr. agreed that notwithstanding the terms of his Employment Agreement providing for acceleration of vesting of all stock options and RSU's upon a Good Reason resignation, certain of his unvested stock options would not immediately vest, but rather continue to vest if, and only if, certain Company milestones are achieved related to the Company’s drug development efforts. These stock options were issued in July 2016 (6,000,000 options) and March 2017 (5,000,000 options) and 6,750,000 of these stock options have not vested as of December 31, 2022. The Company and Mona Jr. also agreed to mutually release all claims arising out of and related to Mona Jr.’s resignation and separation from the Company. As a result of the Settlement Agreement, the Company recorded stock-based compensation expense related to the accelerated vesting of the RSU's of $5.1 million and the modification of certain stock options of $2.7 million during the year ended December 31, 2019. As part of the Settlement Agreement, 2,950,000 vested RSU's were issued to Mona Jr. The vesting of the RSU's and payment of shares is treated as taxable compensation to Mona Jr. and thus subject to income tax withholdings. No amounts were withheld (either in cash or the equivalent of shares of common stock from the vesting of the RSU's) or included in the original Company’s payroll tax filing. The compensation is subject to Federal and State income tax withholding and Federal Insurance Contributions Act (“FICA”) taxes withholding estimated to be $6.4 million for the employee portions. The employer portion of the FICA taxes is $0.2 million and has been recorded as a component of selling, general and administrative expenses in the statement of operations for the year ended December 31, 2019. During the year ended December 31, 2020, the Company reported the taxable compensation associated with the RSU release to the taxing authorities and included the amount in Mona Jr.'s W-2 for 2019. In addition, the Company paid the employer and employee portion of the FICA taxes of $0.2 million, respectively. Although the primary tax liability is the responsibility of the employee, the Company is secondarily liable and thus has continued to reflect this liability on its balance sheet as of December 31, 2022 in an amount of $6.7 million, which was recorded as a component of accrued expenses. The Company initially recorded an offsetting receivable of $6.2 million during the second quarter of 2019 for the total estimated Federal and State income taxes which should have been withheld in addition to the employee portion of the FICA payroll taxes as the primary liability is ultimately the responsibility of the employee. The receivable was recorded as a component of prepaid expenses and other on the balance sheet. The deadline to file and pay personal income taxes for 2019 was on October 15, 2020. To date, Mona Jr. has not provided to the Company the appropriate documentation substantiating that he properly filed and paid his taxes for 2019. As a result, the Company derecognized its previously recorded receivable of $6.2 million during the fourth quarter of 2020. The associated liability may be relieved once the tax amount is paid by Mona Jr. and the |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES On March 17, 2015, Michael Ruth filed a shareholder derivative suit in Nevada District Court alleging breach of fiduciary duty and gross mismanagement (the “Ruth Complaint”). The claims are premised on the same events that were the subject of a purported class action filed in the Southern District of New York on April 23, 2014 (the “Sallustro Case”). On July 2, 2019, the court in the Sallustro Case entered a final order dismissing the complaint with prejudice. The Company did not make any settlement payment, and at no time was there a finding of wrongdoing by the Company or any of its directors. Regarding the Ruth Complaint, the Company and Mr. Ruth previously agreed to stay the action pending the conclusion of discovery in the Sallustro Case. Now that the Sallustro Case has been dismissed, the stay has been lifted. Plaintiff’s counsel recently informed the Court that Mr. Ruth sold his shares of Company stock and thus he no longer has standing to pursue this claim. However, the Court allowed Plaintiff’s counsel to substitute Company shareholder Otilda Lamont as the named plaintiff. On September 20, 2019, the Company filed a motion to dismiss the Ruth Complaint and the Court issued a ruling denying the motion to dismiss on November 24, 2020. A Third Amended Complaint was filed on December 11, 2020 substituting Otilda Lamont as plaintiff. The Company filed an answer to the Ruth Complaint on January 11, 2021. The parties agreed to a settlement in principle in January 2022 whereby the Company agreed to make certain corporate governance reforms in exchange for dismissal of the lawsuit. Plaintiff filed a Motion for Preliminary Approval of Proposed Settlement on June 1, 2022. The Court granted preliminary approval of the Proposed Settlement on February 7, 2023. A hearing seeking Final Approval of the Proposed Settlement will be held on May 15, 2023. If the Court grants Final Approval, the Company has 60 days to implement the corporate governance reforms. It is also anticipated that Plaintiff’s counsel will file a motion seeking an award of attorney’s fees. On August 24, 2018, David Smith filed a purported class action complaint in Nevada District Court (the "Smith Complaint") alleging certain misstatements in the Company's public filings that led to stock price fluctuations and financial harm. Several additional individuals filed similar claims, and the Smith Complaint and each of the other suits all arise out of a report published by Citron Research on Twitter on August 20, 2018, suggesting that the Company misled investors by failing to disclose that the Company’s efforts to secure patent protection for CVSI-007 had been “finally rejected” by the United States Patent and Trademark Office ("USPTO"). On November 15, 2018, the Court consolidated the actions and appointed Richard Ina, Trustee for the Ina Family Trust, as Lead Plaintiff for the consolidated actions. On January 4, 2019, Counsel for Lead Plaintiff Richard Ina, Trustee for the Ina Family Trust, filed a “consolidated amended complaint”. On March 5, 2019, we filed a motion to dismiss the action. The Court denied the motion to dismiss on December 10, 2019, and the parties commenced discovery in the action. The parties attended mediation and reached a preliminary settlement to resolve this matter for a total of $712,500. The settlement payment was paid through insurance. On March 9, 2022, the Nevada District Court issued an order granting preliminary approval of the settlement. On July 22, 2022, the Nevada District Court issued an order granting final approval of the settlement. The case has now been dismissed. Arising out of the same facts and circumstances in the Smith Complaint, on June 11, 2020, Phillip Berry filed a derivative suit in the United States District Court for the Southern District of California alleging breaches of fiduciary duty against the Company and various defendants, and waste of corporate assets (the “Berry Complaint”). Defendants filed a motion to dismiss. On May 14, 2021, the District Court issued an order denying the motion to dismiss without prejudice but staying the action pending resolution of the Ina case. In addition to the Berry Complaint, five additional shareholder derivative suits have been filed which are premised on the same event as the Smith Complaint. This includes the most recent shareholder derivative action filed on April 13, 2021 by David Menna in the Superior Court of the State of California, County of San Diego. On May 19, 2020, the USPTO issued a patent pertaining to CVSI-007, which the Company believes negates and defeats any claims that the Company and the various defendants misled the market by not disclosing that the USPTO had finally rejected the patent. On July 28, 2022, the Company and the individual defendants involved in the case involving the Berry Complaint executed a global settlement agreement for the resolution of this action and the five other pending related shareholder derivative actions concerning the same underlying facts, pursuant to which neither the Company nor the individual defendants will pay any damages. The global settlement agreement contemplates the implementation by the Company of certain corporate reforms and payment of the plaintiffs' total attorneys' fees in the six related derivative actions, amounting to an aggregate of $275,000. The settlement payment was paid through insurance. On September 15, 2022, the Superior Court of the State of California issued an order granting preliminary approval of the settlement. On November 14, 2022, the Superior Court of the State of California issued an order granting final approval of the settlement. The case has now been dismissed. On December 3, 2019, Michelene Colette and Leticia Shaw filed a putative class action complaint in the Central District of California, alleging the labeling on the Company’s products violated the Food, Drug, and Cosmetic Act of 1938 (the “Colette Complaint”). On February 6, 2020, the Company filed a motion to dismiss the Colette Complaint. Instead of opposing our motion, plaintiffs elected to file an amended complaint on February 25, 2020. On March 11, 2020, we filed a motion to dismiss the amended complaint. The court issued a ruling on May 22, 2020 that stayed this proceeding in its entirety and dismissed part of the amended complaint. The portion of the proceeding that is stayed has remained stayed pending an announcement by the U.S. Food and Drug Administration promulgating rules that govern cannabidiol products (the “FDA Rules”). However, on January 26, 2023, the FDA announced that it does not intend to pursue rulemaking allowing the use of cannabidiol products in dietary supplements or conventional foods. As a result, on February 13, 2023, Plaintiffs filed a status report with the Court asking to have the stay lifted. The Company filed a written opposition. The Court will likely set a hearing on the matter. If the stay is lifted, management intends to vigorously defend the allegations. On July 22, 2020, the Company filed a complaint in the San Diego Superior Court for declaratory relief to confirm the rescission of Mona Jr.’s employment agreement, which terminated certain severance and other post-termination compensation and benefits, as well as to recover amounts owed to the Company by Mona Jr. in connection with his purchase of a personal seat license ("PSL") for the Raiders Stadium and certain advance payments made on Mona Jr.’s behalf. The case was moved to an arbitration before the American Arbitration Association pursuant to the arbitration agreement in Mona Jr.'s employment agreement. Mona Jr. is seeking to obtain the terminated severance and other post-termination compensation and benefits under his employment agreement and reimbursement of legal fees associated with this action. On April 27, 2022, the arbitrator issued a final ruling awarding the Company amounts owed by Mona Jr. related to his purchase of the PSL and other advance payments made on Mona Jr. behalf for a total of $0.3 million, including prejudgment interest. The arbitrator also awarded Mona Jr. termination severance and other post-termination compensation and benefits under his employment agreement for a total of $0.6 million, including prejudgment interest. The net amount due to Mona Jr. of $0.3 million was paid to Mona Jr., net of applicable payroll taxes, during the year ended December 31, 2022. Despite the Company's efforts to promptly pay the net amount awarded to Mona Jr., Mona Jr. filed a petition for confirmation of the arbitration award in the San Diego Superior Court case. On September 16, 2022, the court granted Mona Jr.'s petition to confirm the arbitration award. On November 18, 2022, the court entered judgment confirming the arbitration award. On December 8, 2022, Mona Jr. filed a motion for attorneys’ fees, which the Company opposed on February 9, 2023. On January 31, 2023, the Company filed a motion to tax costs that is scheduled to be heard on June 9, 2023. On November 5, 2021, Mona Jr. filed a complaint against the Company in Nevada state court seeking to recover federal and state taxes from the Company associated with the RSU release in 2019 - refer also to Note 12. Related Parties , for further information. On December 22, 2021, the Company filed a motion to dismiss the complaint. On September 12, 2022, the court denied the motion to dismiss the case. On November 3, 2022, the court ordered the case into arbitration. On December 6, 2022, Mona Jr. filed the complaint against the Company and its officers with the American Arbitration Association. On January 31, 2023, the Company and management filed a case in the San Diego Superior Court for declaratory relief, seeking to enjoin the arbitration on the grounds that Mona Jr. is barred from proceeding with the arbitration under the doctrines of res judicata and judicial estoppel based on the positions that Mona Jr. took against the Company in the case described above. Management intends to vigorously defend the allegations. In the normal course of business, the Company is a party to a variety of agreements pursuant to which they may be obligated to indemnify the other party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations, and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these types of agreements have not had a material effect on our business, results of operations or financial condition. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES In April 2022, the Company entered into a new lease agreement for its main office facility. The lease is for the Company's operations, warehouse, sales, marketing and back office functions. The facility is approximately 6,000 square feet and located in San Diego, California. The lease term is three years with a total lease obligation of approximately $0.4 million. The lease does not include an option to renew. The operating lease is included in "Right of use assets" on the Company's December 31, 2022 Balance Sheet, and represents the Company's right to use the underlying asset for the lease term. The Company's obligation to make lease payments is included in "Operating lease liability - current" and "Operating lease liability" on the Company's December 31, 2022 Balance Sheet. Based on the present value of the lease payments for the remaining lease term, the Company recognized an operating lease asset of $0.3 million and lease liabilities for operating leases of $0.4 million, respectively, on May 1, 2022. As of December 31, 2022, the Company had an operating lease obligation and operating lease asset of $0.3 million related to the new facility. Operating lease expense is recognized on a straight-line basis over the lease term. The Company recognized total lease costs of $0.1 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively. Total lease costs was mostly comprised of operating lease costs. Short-term lease costs related to short-term operating leases and variable lease costs were immaterial. Cash paid for operating lease liabilities for the years ended December 31, 2022 and 2021was $0.1 million and $0.4 million, respectively. Because the rate implicit in the lease is not readily determinable, the Company uses the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company has certain contracts for real estate which may contain lease and nonlease components which it has elected to treat as a single lease component. Information related to the Company's operating lease assets and related lease liabilities were as follows: December 31, 2022 Remaining lease term (in years) 2.42 Discount rate 7.0 % Maturities of lease liabilities as of December 31, 2022 were as follows (in thousands): Year ending December 31, 2023 $ 135 2024 139 2025 59 Total 333 Less: imputed interest 28 Total lease liabilities $ 305 Operating lease liability - current $ 117 Operating lease liability - net of current portion 188 Total operating lease liability $ 305 On July 12, 2021, the Company entered into a lease termination agreement (the "Agreement") for its main facility located in San Diego. Under the Agreement, the Company was required to vacate its facility no later than July 31, 2022. The Company recorded the transaction as a lease modification and remeasured its lease liability of $3.8 million as of July 12, 2021 to its remaining lease obligations of $0.1 million, with a corresponding adjustment to its right-of-use asset of $2.8 million. As a result, the Company recorded an associated gain from the lease modification of $0.9 million, of which $0.2 million and $0.7 million was recognized as a component of cost of goods sold and selling, general and administrative expense, respectively, in the statement of operations for the year ended December 31, 2021. The Company ceased using the facility on June 2, 2022. In accordance with the Agreement, the Company was entitled for a base rent reimbursement of $0.1 million from the landlord for the period from June 2, 2022 to July 31, 2022. The Company received the amount from its previous landlord during the year ended December 31, 2022 and recorded the amount as a reduction of "Selling, general and administrative expenses." |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company is subject to taxation in the U.S. and California state jurisdictions. The Company’s pretax loss for the years ended December 31, 2022 and 2021, were generated by domestic operations. The income tax benefit for the years ended December 31, 2022 and 2021 was comprised of the following (in thousands): For the years ended December 31, 2022 2021 Current: Federal $ — $ — State 4 7 Total current tax expense 4 7 Deferred: Federal (51) (94) State — — Total deferred tax benefit (51) (94) Income tax benefit $ (47) $ (87) A reconciliation of the expected income tax benefit at the federal statutory rate of 21% for the years ended December 31, 2022 and 2021, and the income tax benefit reported in the financial statements is as follows: For the years ended December 31, 2022 2021 Amount % of pretax income (loss) Amount % of pretax income (loss) Income tax benefit at federal statutory rate $ (1,735) 21.0 % $ (3,285) 21.0 % State taxes, net of federal effect (456) 5.5 (761) 4.9 Other permanent differences 21 (0.3) (41) — Stock-based compensation 1,795 (21.7) 236 (1.5) NOL adjustments and other true-ups 722 (8.7) — — R&D tax credits (1) — (30) 0.2 Other 14 (0.2) 1,075 (6.9) Increase (decrease) in valuation allowance (407) 4.9 2,719 (17.4) Income tax benefit $ (47) 0.5 % $ (87) 0.3 % The following table summarizes the significant components of the Company's deferred tax assets and liabilities as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 9,280 $ 8,109 Business credit carryforwards 948 948 Intangible assets 527 617 Stock-based compensation 4,416 6,364 Change to inventory 87 112 Operating lease liabilities 81 — Accruals and reserves 2,351 2,470 Other 222 — 17,912 18,620 Deferred tax liabilities: Operating lease assets (73) — Property and equipment (100) (211) CanX intangible assets (67) (384) Other — 3 (240) (592) Valuation allowance (17,683) (18,090) Net deferred tax liabilities $ (11) $ (62) The valuation allowance increased by $0.4 million for the year ended December 31, 2022 and increased by $2.7 million for the year ended December 31, 2021. Deferred tax assets and liabilities are provided for significant revenue and expense items recognized in different years for tax and financial reporting purposes. The Company periodically assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, and ongoing prudent and feasible profits. As of December 31, 2022 and 2021, the Company established valuation allowances equal to the full amount of its deferred tax assets, net of certain tax liabilities, due to the uncertainties regarding the realization of the deferred tax assets in future years. As of December 31, 2022, the Company had federal, California, and other state net operating loss (“NOL”) carryforwards of $33.6 million, $23.3 million, and $6.6 million, respectively, which are available to offset future taxable income. Federal NOL carryforwards arising after 2017 of $26.4 million do not expire. Federal NOL carryforwards arising before 2018 of $7.2 million expire from 2036 to 2037. California NOL carryforwards of $23.3 million expire from 2036 to 2041. Other state NOL carryforwards of $6.6 million have various expirations from 2038 to 2041. As of December 31, 2022, the Company had federal and California R&D credit carryforwards of approximately $0.7 million and $0.4 million, respectively, which are available to offset future taxable income. Federal R&D credit carryforwards expire from 2034 to 2041. California R&D credit carryforwards do not expire. The NOL carryforward may be subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986 (the “Code”), and similar state provisions if the Company experienced one or more ownership changes, which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from the transactions increasing ownership of certain stockholders or public groups in the stock of the corporation of more than 50% over a three-year period. The Company completed a Section 382 and 383 analysis regarding the limitation of NOL and credit carryforwards from inception in December 2010 through November 4, 2019. The Company experienced multiple ownership changes for the purposes of Section 382 and 383 of the Code with the latest change in April 2017. The ownership changes did not result in the forfeiture of any NOLs or credits generated prior to this date. If a change in ownership occurs in the future, the NOL and tax credits carryforwards could be eliminated or restricted. The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits, and uncertain income tax positions must meet a more likely than not recognition threshold to be recognized. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the statements of operations. The Company does not anticipate a significant change in its uncertain tax benefits over the next 12 months. The Company is subject to taxation in the U.S. and California state jurisdictions. Due to net operating losses all tax years since inception remain open to examination. A reconciliation of the Company's unrecognized tax benefits for the years ended December 31, 2022 and 2021 is provided in the following table (in thousands): 2022 2021 Balance as of January 1: $ 172 $ 166 Increase in current year positions — 6 Increase in prior year positions — — Decrease in prior year positions — — Balance as of December 31: $ 172 $ 172 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENTSSubsequent to December 31, 2022, the Company received cash payment related to CARES Act Employee Retention Credits of $1.1 million from the IRS. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation - The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The Company does not have any subsidiaries. |
Use of Estimates | Use of Estimates – The preparation of the financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from these estimates. Significant estimates include the valuation of intangible assets, inputs for valuing equity awards, and assumptions related to revenue recognition. |
Concentrations of Credit Risk | Concentrations of Credit Risk – As of December 31, 2022, the Federal Deposit Insurance Corporation (“FDIC”) provided insurance coverage of up to $0.3 million per depositor per bank. The Company has not experienced any losses in such accounts and does not believe that the Company is exposed to significant risks from excess deposits. The Company’s cash balance in excess of FDIC limits totaled $0.4 million as of December 31, 2022. The Company has not experienced any such losses in these accounts to date, and believes that the financial institutions at which such amounts are held are stable; however, no assurance can be provided. |
Fair Value Measurements | Fair Value Measurements – Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The carrying values of accounts receivable, other current assets, accounts payable, and certain accrued expenses as of December 31, 2022 and 2021, approximate their fair value due to the short-term nature of these items. The Company's notes payable balance also approximates fair value as of December 31, 2022, as the interest rates on the notes payable approximate the rates available to the Company as of this date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. • Level 1 - uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. The Company does not have any cash equivalents or restricted cash as of December 31, 2022 and 2021. The Company does not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of December 31, 2022 and 2021. • Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. Except as described below under the caption Goodwill and Intangible Assets, the Company did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of December 31, 2022 and 2021. • Level 3 - uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. The Company did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of December 31, 2022 and 2021. |
Accounts Receivable | Accounts Receivable – Generally, the Company requires payment prior to shipment. However, in certain circumstances, the Company extends credit to companies located throughout the U.S. Accounts receivable consist of trade accounts arising in the normal course of business. Accounts for which no payments have been received after 30 days are considered delinquent and customary collection efforts are initiated. Accounts receivable are carried at original invoice amount less a reserve made for doubtful receivables based on a review of all outstanding amounts on a quarterly basis. |
Inventory | Inventory – Inventory is stated at lower of cost or net realizable value, with cost being determined on an average cost basis. Cost includes costs directly related to manufacturing and distribution of the products. Primary costs include raw materials, packaging, manufacturing overhead, shipping and depreciation of manufacturing equipment and production facilities. Manufacturing overhead includes payroll, employee benefits, utilities, maintenance and property taxes. Total shipping and handling costs were $2.2 million and $1.8 million for the years ended December 31, 2022 and 2021, respectively, and are recorded in cost of goods sold. The Company performs an assessment of inventory obsolescence to measure inventory at the lower of cost or net realizable value. Factors considered in the determination of obsolescence include slow-moving or non-marketable items. The Company's inventory production process includes the processing and cultivation of botanical raw material. Because of the duration of the cultivation process, a portion of our inventory will not be sold within one year. Consistent with the practice in other industries that cultivate botanical raw materials, all inventory is classified as a current asset. |
Property & Equipment | Property & Equipment – Equipment is stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Depreciation is provided on a straight-line basis over the assets' estimated useful lives. Tenant improvements are amortized on a straight-line basis over the shorter of the useful life or the remaining life of the related lease. Maintenance or repairs are charged to expense as incurred. Upon sale or disposition, the historically-recorded asset cost and accumulated depreciation are removed from the respective accounts and any related gain or loss is recognized. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets – In accordance with ASC Topic 360, Accounting for the Impairment or Disposal of Long-Lived Assets , the Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of property and equipment is measured by comparing its carrying value to the undiscounted projected future cash flows that the assets are expected to generate. If the carrying amount of an asset is not recoverable, the Company recognizes an impairment loss based on the excess of the carrying amount of the long-lived asset over its respective fair value, which is generally determined as the present value of estimated future cash flows or at the appraised value. The impairment analysis is based on significant assumptions of future results made by management, including revenue and cash flow projections. Circumstances that may lead to impairment of property and equipment include a significant decrease in the market price of a long-lived asset, a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition and a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset including an adverse action or assessment by a regulator. As of December 31, 2022 and 2021, the Company determined that long-lived assets were not impaired. |
Segments | Segments – Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and in assessing performance. As such, the Company has one operating segment, which is the business of hemp-based CBD wellness products. All long-lived assets are located in the United States and substantially all revenue is attributed to customers and consumers based in the United States. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets – The Company evaluates the carrying value of goodwill and intangible assets annually during the fourth quarter in accordance with ASC Topic 350, Intangibles Goodwill and Other, and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may more likely than not be less than carrying amount, or if significant adverse changes in the Company's future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, management can elect to forgo the qualitative assessment and perform the quantitative test. If the qualitative assessment indicates that the quantitative analysis should be performed, or if management elects to bypass a qualitative assessment, the Company then evaluates goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount, including goodwill. The quantitative assessment for goodwill requires management to estimate the fair value of the Company's reporting units using either an income or market approach or a combination thereof. Management makes critical assumptions and estimates in completing impairment assessments of goodwill and other intangible assets. The Company's cash flow projections look several years into the future and include assumptions on variables such as future sales and operating margin growth rates, economic conditions, probability of success, market competition, inflation and discount rates. During the fourth quarter of 2021, the Company performed its annual goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C. The Company's annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, the Company reviewed events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of goodwill. The Company determined that a triggering event had occurred to necessitate performing the quantitative impairment test. After performing the quantitative impairment test in accordance with ASC 350-20-35-3C, the Company determined that goodwill was impaired by $2.8 million for the year ended December 31, 2021. The Company did not have any goodwill as of December 31, 2022 and 2021. |
Revenue Recognition | Revenue Recognition – The majority of the Company's revenue contracts represent a single performance obligation related to the fulfillment of customer orders for the purchase of its products. Net sales reflect the transaction prices for these contracts based on the Company's selling list price, which is then reduced by estimated costs for trade promotional programs, consumer incentives, and allowances and discounts used to incentivize sales growth and build brand awareness. The Company recognizes revenue at the point in time that control of the ordered product is transferred to the customer, which is typically upon shipment to the customer or other customer-designated delivery point. The Company accrues for estimated sales returns by customers based on historical sales return results. The computation of the sales return and other allowances require that management makes certain estimates and assumptions that effect the timing and amounts of revenue and liabilities recorded. Shipping and handling fees charged to customers are included in product sales and totaled $0.1 million for the years ended December 31, 2022 and 2021. Taxes collected from customers that are remitted to governmental agencies are accounted for on a net basis and not included as revenue. |
Compensation and Benefits | Compensation and Benefits – The Company records compensation and benefits expense for all cash and deferred compensation, benefits, and related taxes as earned by its employees. Compensation and benefits expense also includes compensation earned by temporary employees and contractors who perform similar services to those performed by the Company’s employees, primarily information technology and project management activities. The Company maintains a defined contribution 401(k) plan available to eligible employees. Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amount allowable under federal tax regulations. The Company does not make matching contributions. |
Research and Development Expense | Research and Development Expense – Research and development costs are charged to expense as incurred and include, but are not limited to, employee salaries and benefits, cost of inventory used in product development and consulting service fees. |
Advertising | Advertising – The Company supports its products with advertising to build brand awareness of the Company’s various products in addition to other marketing programs executed by the Company’s marketing team. The Company believes the continual investment in advertising is critical to the development and sale of its products. |
Common Stock Warrants | Common Stock Warrants - The Company classifies as equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company assesses classification of its common stock warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company’s freestanding derivatives consist of warrants to purchase common stock that were issued in connection with its convertible preferred stock. The Company evaluated these warrants to assess their proper classification, and determined that the common stock warrants meet the criteria for equity classification in the accompanying balance sheets. |
Stock Based Compensation | Stock-Based Compensation – Certain employees, officers, directors, and consultants of the Company participate in various long-term incentive plans that provide for granting stock options, restricted stock awards, restricted stock units, stock bonus awards and performance-based awards. Stock options generally vest in equal increments over a two ten |
Income Taxes | Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with ASC Topic 740, Income Taxes , the Company recognizes the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in |
Comprehensive Loss | Comprehensive Loss – Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. There have been no items qualifying as other comprehensive loss and, therefore, the Company's comprehensive loss was the same as its reported net loss for the years ended December 31, 2022 and 2021. |
Recent Accounting Pronouncements Not Yet Adopted and Recently Adopted Accounting Standards | Recent Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 was to be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates, which deferred the effective dates for the Company, as a smaller reporting company, until fiscal year 2023. The Company currently plans to adopt the guidance at the beginning of fiscal 2023. The Company is currently evaluating the potential impact of Topic 326 on the Company’s financial statements. Recently Adopted Accounting Standards In August 2020, the FASB issued ASU No. 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 ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract. The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and early adoption is permitted in annual reporting periods ending after December 15, 2020. The Company adopted this guidance as of January 1, 2021, using the full retrospective method of adoption. Adoption of this guidance eliminated the presentation of the beneficial conversion feature on the statement of operations, delayed recognition of beneficial conversion amounts until they are triggered, and had no other material impact on the Company. In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Revenue Product Sales by Channel | The following represents product sales by retail (B2B) and e-commerce (B2C) channels for the years ended December 31, 2022 and 2021: For the years ended December 31, 2022 2021 (in thousands) (in thousands) Amount % of product sales, net Amount % of product sales, net Retail sales (B2B) $ 9,040 55.8 % $ 12,548 62.6 % E-Commerce sales (B2C) 7,165 44.2 % 7,500 37.4 % Product sales, net $ 16,205 100.0 % $ 20,048 100.0 % |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory as of December 31, 2022 and 2021 was comprised of the following (in thousands): December 31, 2022 2021 Raw materials $ 3,563 $ 4,023 Work in process 1,020 1,286 Finished goods 1,980 3,315 $ 6,563 $ 8,624 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property and equipment, net, as of December 31, 2022 and 2021 were as follows (in thousands): December 31, Useful Lives 2022 2021 Office furniture and IT equipment 3 - 5 years $ 1,392 $ 2,592 Tenant improvements * — 1,967 Laboratory and other equipment 5 years — 691 1,392 5,250 Less: accumulated depreciation (817) (3,533) $ 575 $ 1,717 * Tenant improvements were amortized over the lesser of the remaining term of the related lease or the estimated useful life of the tenant improvements. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill and Intangible Assets | Goodwill and intangible assets consist of the following as of December 31, 2022 and 2021 (in thousands): Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount Useful Life (Years) Balance - December 31, 2022: In-process research and development $ 1,485 $ — $ (1,234) $ 251 — Trade names 100 (100) — — 5 Non-compete agreements 77 (77) — — 5 Intangible assets $ 1,662 $ (177) $ — $ 251 Goodwill $ — $ — $ — $ — — Balance - December 31, 2021: In-process research and development $ 3,730 $ — $ (2,245) $ 1,485 — Trade names 100 (100) — — 5 Non-compete agreements 77 (77) — — 5 Intangible assets $ 3,907 $ (177) $ — $ 1,485 Goodwill $ 2,788 $ — $ (2,788) $ — — |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses as of December 31, 2022 and 2021 were as follows (in thousands): December 31, 2022 2021 Accrued payroll tax - Mona (Note 12) $ 6,694 $ 6,694 Accrued payroll expenses 1,447 2,329 Other accrued liabilities 1,549 1,892 $ 9,690 $ 10,915 |
CONVERTIBLE NOTES (Tables)
CONVERTIBLE NOTES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes | Convertible notes as of December 31, 2022 and 2021 were as follows (in thousands): December 31, 2022 2021 Principal amount $ 2,120 $ 1,060 Less: Original issuance discount ("OID") (120) (60) Less: Debt issuance costs (275) (229) Net proceeds 1,725 771 Default premium 179 — Conversion of note into common shares (1,514) (230) Accretion of OID and amortization of debt issuance costs 395 71 Repayment (675) — Settlement (110) — Carrying amount $ — $ 612 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt as of December 31, 2022 and 2021 was as follows (in thousands): December 31, 2022 2021 Note payable, net of discount and costs $ 1,005 $ — Insurance financing 218 310 Total debt $ 1,223 $ 310 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Warrants Outstanding | The following represents a summary of the warrants outstanding as of December 31, 2022 and 2021: Number of Shares Underlying Warrants Issue Date Classification Exercise Price Expiration Date December 31, 2022 December 31, 2021 March 30, 2022 Equity $ 0.1000 May 26, 2025 10,000,000 — March 30, 2022 Equity $ 0.0875 May 26, 2025 750,000 — 10,750,000 — |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Option Activity | The following summarizes activity related to the Company's stock options (in thousands, except per share data): Number of Shares Weighted Average Weighted Average Aggregate Intrinsic Value Outstanding - December 31, 2021 30,163 $ 0.49 5.5 $ — Granted 1,000 0.04 — — Exercised — — — — Forfeited (11,332) 0.51 — — Outstanding - December 31, 2022 19,831 0.46 3.5 — Exercisable - December 31, 2022 18,163 0.48 3.0 — Vested or expected to vest - December 31, 2022 19,831 $ 0.46 3.5 $ — |
Fair Value Assumptions | The following table presents the weighted average grant date fair value of stock options granted and the weighted-average assumptions used to estimate the fair value on the date of grant using the Black-Scholes valuation model: For the years ended December 31, 2022 2021 Volatility 123.5% 133.2% Risk-Free Interest Rate 3.6% 0.9% Expected Term (in years) 5.52 5.61 Dividend Rate 0.0% 0.0% Fair Value Per Share on Grant Date $0.03 $0.48 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings per Share | The following common stock equivalents were not included in the calculation of net loss per diluted share because their effect were anti-dilutive (in thousands): For the years ended December 31, 2022 2021 Stock options 15,581 25,163 Performance stock options 11,000 13,000 Warrants 10,750 — Convertible notes — 3,179 Total 37,331 41,342 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Lease Information | Information related to the Company's operating lease assets and related lease liabilities were as follows: December 31, 2022 Remaining lease term (in years) 2.42 Discount rate 7.0 % |
Maturities of Lease Liabilities | Maturities of lease liabilities as of December 31, 2022 were as follows (in thousands): Year ending December 31, 2023 $ 135 2024 139 2025 59 Total 333 Less: imputed interest 28 Total lease liabilities $ 305 Operating lease liability - current $ 117 Operating lease liability - net of current portion 188 Total operating lease liability $ 305 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of Income Tax Provision | The income tax benefit for the years ended December 31, 2022 and 2021 was comprised of the following (in thousands): For the years ended December 31, 2022 2021 Current: Federal $ — $ — State 4 7 Total current tax expense 4 7 Deferred: Federal (51) (94) State — — Total deferred tax benefit (51) (94) Income tax benefit $ (47) $ (87) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the expected income tax benefit at the federal statutory rate of 21% for the years ended December 31, 2022 and 2021, and the income tax benefit reported in the financial statements is as follows: For the years ended December 31, 2022 2021 Amount % of pretax income (loss) Amount % of pretax income (loss) Income tax benefit at federal statutory rate $ (1,735) 21.0 % $ (3,285) 21.0 % State taxes, net of federal effect (456) 5.5 (761) 4.9 Other permanent differences 21 (0.3) (41) — Stock-based compensation 1,795 (21.7) 236 (1.5) NOL adjustments and other true-ups 722 (8.7) — — R&D tax credits (1) — (30) 0.2 Other 14 (0.2) 1,075 (6.9) Increase (decrease) in valuation allowance (407) 4.9 2,719 (17.4) Income tax benefit $ (47) 0.5 % $ (87) 0.3 % |
Schedule of Deferred Tax Assets | The following table summarizes the significant components of the Company's deferred tax assets and liabilities as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 9,280 $ 8,109 Business credit carryforwards 948 948 Intangible assets 527 617 Stock-based compensation 4,416 6,364 Change to inventory 87 112 Operating lease liabilities 81 — Accruals and reserves 2,351 2,470 Other 222 — 17,912 18,620 Deferred tax liabilities: Operating lease assets (73) — Property and equipment (100) (211) CanX intangible assets (67) (384) Other — 3 (240) (592) Valuation allowance (17,683) (18,090) Net deferred tax liabilities $ (11) $ (62) |
Schedule of Unrecognized Tax Benefits | A reconciliation of the Company's unrecognized tax benefits for the years ended December 31, 2022 and 2021 is provided in the following table (in thousands): 2022 2021 Balance as of January 1: $ 172 $ 166 Increase in current year positions — 6 Increase in prior year positions — — Decrease in prior year positions — — Balance as of December 31: $ 172 $ 172 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Aug. 18, 2022 USD ($) | Mar. 30, 2022 USD ($) | Aug. 31, 2022 USD ($) | Mar. 29, 2023 USD ($) | Mar. 31, 2022 USD ($) | Sep. 30, 2022 segment | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Cash in excess of FDIC limits | $ 400,000 | |||||||
Negative operating cash flow | 1,885,000 | $ 7,485,000 | ||||||
Accumulated deficit | 87,689,000 | 79,475,000 | ||||||
Proceeds from note payable | 2,000,000 | 0 | ||||||
Proceeds from issuance of preferred stock | $ 700,000 | $ 700,000 | ||||||
Repayment of note payable | (953,000) | 0 | ||||||
CARES act, tax credit received under relief provision | $ (2,500,000) | |||||||
Threshold for determining delinquent accounts receivable | 30 days | |||||||
Allowance for doubtful accounts | $ 400,000 | 500,000 | ||||||
Number of operating segments | segment | 1 | |||||||
Number of business segments | segment | 2 | |||||||
Goodwill, impairment | $ 0 | 2,788,000 | ||||||
Product sales, net | 16,205,000 | 20,048,000 | ||||||
Research and development | 307,000 | 1,185,000 | ||||||
Advertising costs | $ 1,200,000 | 1,300,000 | ||||||
Accounts Payable | One Supplier Of Shipping And Fulfillment Services | Customer Concentration Risk | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Concentration risk percentage for accounts payable | 27% | |||||||
Accounts Payable | One Supplier For Online Marketing Services | Customer Concentration Risk | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Concentration risk percentage for accounts payable | 13% | |||||||
In-process research and development | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Impairment of intangible assets, finite-lived | $ 1,234,000 | 2,245,000 | ||||||
Subsequent Event | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
CARES act, tax credit received under relief provision | $ (1,100,000) | |||||||
Equity Option | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Stock option, maximum term | 10 years | |||||||
Equity Option | Minimum | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Award vesting period | 2 years | |||||||
Equity Option | Maximum | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Award vesting period | 4 years | |||||||
Shipping and Handling | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Shipping and handling costs | $ 2,200,000 | 1,800,000 | ||||||
Product sales, net | 100,000 | 100,000 | ||||||
Convertible Debt | Convertible Debt Due 2022 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Proceeds from note payable | $ 1,000,000 | |||||||
Secured Promissory Note | Streeterville Capital, LLC | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Proceeds from secured notes payable | $ 1,600,000 | |||||||
Convertible Promissory Notes | Streeterville Capital, LLC | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Repayment of note payable | $ (700,000) | |||||||
Level 1 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Liabilities | 0 | 0 | ||||||
Level 2 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Liabilities | 0 | 0 | ||||||
Assets | 0 | 0 | ||||||
Level 3 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Liabilities | 0 | 0 | ||||||
Assets | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Product Sales by Channel (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 16,205 | $ 20,048 |
Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
% of product sales, net | 100% | 100% |
Retail sales (B2B) | ||
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 9,040 | $ 12,548 |
Retail sales (B2B) | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
% of product sales, net | 55.80% | 62.60% |
E-Commerce sales (B2C) | ||
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 7,165 | $ 7,500 |
E-Commerce sales (B2C) | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
% of product sales, net | 44.20% | 37.40% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory [Line Items] | ||
Raw materials | $ 3,563,000 | $ 4,023,000 |
Work in process | 1,020,000 | 1,286,000 |
Finished goods | 1,980,000 | 3,315,000 |
Total gross inventory | 6,563,000 | 8,624,000 |
Inventory write-down | 300,000 | 100,000 |
Outside the United States | ||
Inventory [Line Items] | ||
Total gross inventory | $ 0 | $ 0 |
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] | ||
Property and equipment, gross | $ 1,392 | $ 5,250 |
Less: accumulated depreciation | (817) | (3,533) |
Property and equipment, net | 575 | 1,717 |
Depreciation | 1,000 | 1,200 |
Property and equipment, sold or disposed | 3,900 | |
Loss on disposal of fixed assets | 150 | 25 |
Office furniture and IT equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,392 | 2,592 |
Office furniture and IT equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment useful life | 3 years | |
Office furniture and IT equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment useful life | 5 years | |
Tenant improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 0 | 1,967 |
Laboratory and other equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment useful life | 5 years | |
Property and equipment, gross | $ 0 | $ 691 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill and Intangible Asset Schedule (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,662,000 | $ 3,907,000 |
Accumulated Amortization | (177,000) | (177,000) |
Net Carrying Amount | 251,000 | 1,485,000 |
Goodwill, gross carrying amount | 0 | 2,788,000 |
Goodwill, impairment | 0 | (2,788,000) |
Goodwill, net carrying amount | 0 | 0 |
In-process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,485,000 | 3,730,000 |
Accumulated Amortization | 0 | 0 |
Impairment | (1,234,000) | (2,245,000) |
Net Carrying Amount | 251,000 | 1,485,000 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 100,000 | 100,000 |
Accumulated Amortization | (100,000) | (100,000) |
Net Carrying Amount | $ 0 | $ 0 |
Useful Life (Years) | 5 years | 5 years |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 77,000 | $ 77,000 |
Accumulated Amortization | (77,000) | (77,000) |
Net Carrying Amount | $ 0 | $ 0 |
Useful Life (Years) | 5 years | 5 years |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill, impairment | $ 0 | $ 2,788,000 |
Goodwill | 0 | 0 |
Amortization expense | 0 | $ 0 |
Future amortization expense | $ 0 | |
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, general and administrative | Selling, general and administrative |
In-process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Impairment of intangible assets, finite-lived | $ 1,234,000 | $ 2,245,000 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued payroll tax - Mona (Note 12) | $ 6,694 | $ 6,694 |
Accrued payroll expenses | 1,447 | 2,329 |
Other accrued liabilities | 1,549 | 1,892 |
Total accrued expenses | $ 9,690 | $ 10,915 |
CONVERTIBLE NOTES - Schedule of
CONVERTIBLE NOTES - Schedule of Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 18, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||
Principal amount | $ 2,120 | $ 1,060 | |
Less: Original issuance discount ("OID") | (120) | (60) | |
Less: Debt issuance costs | (275) | (229) | |
Net proceeds | 1,725 | 771 | |
Default premium | 179 | 0 | |
Conversion of note into common shares | (1,514) | (230) | |
Accretion of OID and amortization of debt issuance costs | 395 | 71 | |
Repayment | $ (675) | (675) | 0 |
Settlement | (110) | 0 | |
Carrying amount | $ 0 | $ 612 |
CONVERTIBLE NOTES - Narrative (
CONVERTIBLE NOTES - Narrative (Details) | 12 Months Ended | ||||||
Aug. 18, 2022 USD ($) | May 31, 2022 USD ($) $ / shares shares | Mar. 25, 2022 USD ($) $ / shares | Nov. 14, 2021 USD ($) day $ / shares | Dec. 31, 2022 USD ($) day $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | May 17, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||||
Conversion price (in dollars per share) | $ / shares | $ 0.04 | ||||||
Conversion of convertible debt | $ 151,772 | $ 1,284,000 | $ 230,000 | ||||
Converted instrument, shares issued (in shares) | shares | 3,751,971 | 24,126,311 | 1,794,291 | ||||
Interest expense | $ 600,000 | $ 38,000 | |||||
Gain on debt extinguishment | $ 127,000 | $ 127,000 | $ 2,945,000 | ||||
Expensed unamortized debt costs | 50,000 | ||||||
Quarter-to-Date | |||||||
Debt Instrument [Line Items] | |||||||
Conversion price (in dollars per share) | $ / shares | $ 0.05 | $ 0.13 | |||||
Convertible Debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt face value | $ 5,300,000 | ||||||
Principal amount | $ 1,060,000 | $ 1,060,000 | $ 130,000 | ||||
Discount percentage | 6% | 6% | |||||
Net proceeds | $ 1,000,000 | $ 1,000,000 | |||||
Debt interest rate percentage | 15% | ||||||
Conversion price (in dollars per share) | $ / shares | $ 0.1508 | $ 0.2611 | |||||
Threshold percentage of stock price trigger | 120% | ||||||
Threshold trading days | day | 5 | 5 | |||||
Redemption price premium, percentage | 15% | ||||||
Decrease in convertible notes | $ 1,300,000 | $ 200,000 | |||||
Interest expense | 17,000 | ||||||
Repayments of debt | $ 675,000 | $ 675,000 | $ 0 | ||||
Convertible Debt | Alternative Conversion Price, Option One | |||||||
Debt Instrument [Line Items] | |||||||
Threshold percentage of stock price trigger | 90% | ||||||
Threshold trading days | day | 10 | ||||||
Floor price (in dollars per share) | $ / shares | $ 0.01 | ||||||
Convertible Debt | Alternative Conversion Price, Option Two | |||||||
Debt Instrument [Line Items] | |||||||
Threshold percentage of stock price trigger | 97% | ||||||
Convertible Debt | Default | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price premium, percentage | 10% | ||||||
Volume weighted average price (VWAP) (in dollars per share) | $ / shares | $ 0.10 |
DEBT - Schedule of Debt (Detail
DEBT - Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Total debt | $ 1,223 | $ 310 |
Insurance financing | ||
Debt Instrument [Line Items] | ||
Total debt | 218 | 310 |
Note payable, net of discount and costs | ||
Debt Instrument [Line Items] | ||
Total debt | $ 1,005 | $ 0 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | 1 Months Ended | 12 Months Ended | |||
Apr. 17, 2020 USD ($) | Nov. 30, 2022 USD ($) | Aug. 31, 2022 USD ($) | Oct. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) tradingDay | |
Streeterville Capital, LLC | |||||
Debt Instrument [Line Items] | |||||
CARES Act, term for repayment of debt instrument after receipt of employee retention credit funds | tradingDay | 3 | ||||
CARES ACT, minimum proceeds to be remitted to lender | $ 1,000,000 | ||||
CARES Act, term for repayment of debt instrument to avoid penalty | 90 days | ||||
CARES Act, percentage increase in principal balance following delayed payment | 5% | ||||
Note payable, net of discount and costs | Streeterville Capital, LLC | |||||
Debt Instrument [Line Items] | |||||
Amount financed | $ 2,000,000 | ||||
Original issue discount | 400,000 | ||||
Additional debt issuance costs | 23,000 | ||||
Repayments of debt | $ 56,000 | ||||
Late fee percentage (as a percent) | 22% | ||||
Secured Promissory Note | Streeterville Capital, LLC | |||||
Debt Instrument [Line Items] | |||||
Proceeds from secured notes payable | $ 1,600,000 | ||||
Repayments of debt | $ 40,000 | ||||
Debt instrument, term | 56 days | ||||
Unsecured Note Payable | 2021 Premium Finance Agreement | |||||
Debt Instrument [Line Items] | |||||
Amount financed | $ 400,000 | ||||
Debt interest rate percentage | 4.17% | ||||
Monthly payment | $ 45,000 | ||||
Outstanding balance | $ 0 | ||||
Unsecured Note Payable | Insurance financing | |||||
Debt Instrument [Line Items] | |||||
Amount financed | $ 200,000 | ||||
Debt interest rate percentage | 6.32% | ||||
Monthly payment | $ 27,900 | ||||
Outstanding balance | $ 200,000 | ||||
Promissory Note | Payroll Protection Program Loan | |||||
Debt Instrument [Line Items] | |||||
Proceeds from debt | $ 2,900,000 |
STOCKHOLDERS EQUITY - Narrative
STOCKHOLDERS EQUITY - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Mar. 30, 2022 USD ($) vote $ / shares shares | Dec. 08, 2020 USD ($) day | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) yr $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Jun. 06, 2022 shares | Jun. 05, 2022 shares | Mar. 29, 2022 shares | |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Capital stock authorized (in shares) | shares | 800,000,000 | 200,000,000 | ||||||
Common stock authorized (in shares) | shares | 790,000,000 | 790,000,000 | 190,000,000 | 790,000,000 | 190,000,000 | 190,000,000 | ||
Common stock shares issued (in shares) | shares | 152,104,000 | 112,482,000 | ||||||
Common stock shares outstanding (in shares) | shares | 152,104,000 | 112,482,000 | ||||||
Issuance of common stock for services | $ 385 | |||||||
Securities called by preferred stock and warrants (in shares) | shares | 10,000,000 | |||||||
Preferred stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Proceeds from issuance of preferred stock | $ 700 | $ 700 | ||||||
Payments of stock issuance costs | 600 | |||||||
Deduction from proceeds, related to agent’s fees and other offering expenses | $ 100 | |||||||
Preferred stock, stated value, subjected to conversion (in dollars per share) | $ / shares | $ 1,000 | |||||||
Preferred stock, convertible into common stock (in shares) | shares | 10,000,000 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 0.07 | |||||||
Number of shares underlying warrants (in shares) | shares | 10,750,000 | 0 | ||||||
Fair value recorded as additional offering cost | $ 100 | |||||||
Beneficial conversion charge | $ 900 | |||||||
Number of votes per share of common stock underlying the preferred stock | vote | 170,000 | |||||||
Preferred stock authorized (in shares) | shares | 800,000,000 | 10,000,000 | 10,000,000 | 200,000,000 | ||||
Maximum | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Stock split, conversion ratio | 0.1 | |||||||
Minimum | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Stock split, conversion ratio | 0.0025 | |||||||
Warrants with $0.1000 Exercise Price | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.10 | $ 0.1000 | ||||||
Number of shares underlying warrants (in shares) | shares | 10,000,000 | 0 | ||||||
Warrants with $0.0875 Exercise Price | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.0875 | $ 0.0875 | ||||||
Number of shares underlying warrants (in shares) | shares | 750,000 | 750,000 | 0 | |||||
Contractual term | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Fair value of the warrants issued, assumptions | yr | 3 | |||||||
Expected volatility rate | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Fair value of the warrants issued, assumptions | 1.040 | |||||||
Risk-free interest rate | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Fair value of the warrants issued, assumptions | 0.025 | |||||||
Expected dividend rate | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Fair value of the warrants issued, assumptions | 0 | |||||||
Series A Preferred Stock | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Stock issued during period (in shares) | shares | 700 | |||||||
Common Stock | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Issuance of common stock for services (in shares) | shares | 5,496,000 | |||||||
Issuance of common stock for services | $ 1 | |||||||
Preferred Stock | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Proceeds from issuance of preferred stock | 400 | |||||||
Payments of stock issuance costs | 100 | |||||||
Preferred stock, net of stock issuance costs | 300 | |||||||
Warrants | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Payments of stock issuance costs | 100 | |||||||
Proceeds from warrants issued | 300 | |||||||
Warrants, net of stock issuance costs | $ 200 | |||||||
SPA | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Value of shares (up to) | $ 10,000 | |||||||
Number of specified trading days between directions to purchase stock | day | 3 | |||||||
Common stock sold (in shares) | shares | 10,021,804 | |||||||
Proceeds recognized | $ 4,400 |
STOCKHOLDERS EQUITY - Warrants
STOCKHOLDERS EQUITY - Warrants Outstanding (Details) - $ / shares shares in Thousands | Dec. 31, 2022 | Mar. 30, 2022 | Dec. 31, 2021 |
Subsidiary, Sale of Stock [Line Items] | |||
Number of Shares Underlying Warrants (in shares) | 10,750 | 0 | |
Warrants with $0.1000 Exercise Price | |||
Subsidiary, Sale of Stock [Line Items] | |||
Exercise Price (in dollars per share) | $ 0.1000 | $ 0.10 | |
Number of Shares Underlying Warrants (in shares) | 10,000 | 0 | |
Warrants with $0.0875 Exercise Price | |||
Subsidiary, Sale of Stock [Line Items] | |||
Exercise Price (in dollars per share) | $ 0.0875 | $ 0.0875 | |
Number of Shares Underlying Warrants (in shares) | 750 | 750 | 0 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2020 | Mar. 29, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 01, 2023 | Jun. 11, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unrecognized compensation cost | $ 200 | |||||||
Unrecognized weighted average period | 5 months 19 days | |||||||
Aggregate intrinsic value, exercised in period | $ 0 | |||||||
Subsequent Event | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Issued, weighted average exercise price (in dollars per share) | $ 0.04 | |||||||
Equity Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock option cancelled (in shares) | 11,332,000 | |||||||
Stock option, maximum term | 10 years | |||||||
Granted (in dollars per share) | $ 0.04 | |||||||
Unvested options granted (in shares) | 1,000,000 | |||||||
Options outstanding (in shares) | 19,831,000 | 30,163,000 | ||||||
Weighted average exercise price (in dollars per share) | $ 0.46 | $ 0.49 | ||||||
Exercised (in shares) | 0 | |||||||
Equity Option | Subsequent Event | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Issued (in shares) | 7,450,000 | |||||||
Stock Option Modification | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock based compensation expense | $ 6 | $ 41 | ||||||
Granted (in dollars per share) | $ 0.66 | |||||||
Unvested options granted (in shares) | 2,130,000 | |||||||
Unrecognized compensation cost | $ 200 | |||||||
Options Outside the Amended 2013 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options vested (in shares) | 4,250,000 | |||||||
Unvested stock options (in shares) | 6,750,000 | |||||||
Options outstanding (in shares) | 18,050,000 | |||||||
Weighted average exercise price (in dollars per share) | $ 0.40 | |||||||
Operating Income (Loss) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock based compensation expense | $ 1,000 | $ 3,200 | ||||||
Minimum | Equity Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 2 years | |||||||
Maximum | Equity Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 4 years | |||||||
Amended 2013 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares authorized under plan (in shares) | 30,976,000 | |||||||
Shares unissued and reserved for issuance (in shares) | 6,807,781 | |||||||
Annual increase in shares available for issuance as percent of total shares outstanding percentage | 4% | |||||||
Annual increase to shares authorized for issuance under the Plan (in shares) | 4,000,000 | |||||||
Stock option cancelled (in shares) | 9,000,000 | |||||||
Increase (decrease) in number of shares authorized, | (8,000,000) | |||||||
Amended 2013 Plan | Subsequent Event | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Annual increase to shares authorized for issuance under the Plan (in shares) | 6,084,192,000 | |||||||
Amended 2013 Plan | Equity Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock option, maximum term | 10 years | |||||||
Amended 2013 Plan | Minimum | Equity Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 2 years | |||||||
Amended 2013 Plan | Maximum | Equity Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 4 years |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock Options Activity (Details) - Equity Option - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Shares | ||
Outstanding beginning balance (in shares) | 30,163,000 | |
Granted (in shares) | 1,000,000 | |
Exercised (in shares) | 0 | |
Forfeited (in shares) | (11,332,000) | |
Outstanding ending balance (in shares) | 19,831,000 | 30,163,000 |
Weighted Average Exercise Price | ||
Outstanding beginning balance (in dollars per share) | $ 0.49 | |
Granted (in dollars per share) | 0.04 | |
Exercised (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 0.51 | |
Outstanding ending balance (in dollars per share) | $ 0.46 | $ 0.49 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Number of shares, Exercisable (in shares) | 18,163,000 | |
Number of shares, Vested or expected to vest (in shares) | 19,831,000 | |
Weighted average exercise price, Exercisable (in dollars per share) | $ 0.48 | |
Weighted average exercise price, Vested or expected to vest (in dollars per share) | $ 0.46 | |
Outstanding balance, weighted average remaining contract term (in years) | 3 years 6 months | 5 years 6 months |
Options exercisable, weighted average remaining contract term (in years) | 3 years | |
Options Vested or expected to vest, weighted average remaining contract term (in years) | 3 years 6 months | |
Outstanding, aggregate intrinsic value | $ 0 | $ 0 |
Options exercisable, aggregate intrinsic value | 0 | |
Options Vested or expected to vest, aggregate intrinsic value | $ 0 |
STOCK-BASED COMPENSATION - Assu
STOCK-BASED COMPENSATION - Assumptions Used to Estimate Fair Value (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Volatility | 123.50% | 133.20% |
Risk-Free Interest Rate | 3.60% | 0.90% |
Expected Term (in years) | 5 years 6 months 7 days | 5 years 7 months 9 days |
Dividend Rate | 0% | 0% |
Fair Value Per Share on Grant Date (in dollars per share) | $ 0.03 | $ 0.48 |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Shares (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 37,331 | 41,342 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 15,581 | 25,163 |
Performance stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 11,000 | 13,000 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 10,750 | 0 |
Convertible notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 0 | 3,179 |
RELATED PARTIES - Narrative (De
RELATED PARTIES - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2017 | Jul. 31, 2016 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | |
Related Party Transaction [Line Items] | ||||||||
Employee portion of payroll taxes | $ 200 | |||||||
Accrued payroll taxes | $ 6,694 | $ 6,694 | ||||||
Impairment charge related to previously recorded receivable | 0 | $ 74 | ||||||
Stock options | ||||||||
Related Party Transaction [Line Items] | ||||||||
Stock based compensation expense | $ 2,700 | |||||||
Restricted Stock Units (RSUs) | ||||||||
Related Party Transaction [Line Items] | ||||||||
Stock based compensation expense | 5,100 | |||||||
Former President and CEO | ||||||||
Related Party Transaction [Line Items] | ||||||||
Due from former President and CEO | 6,400 | |||||||
Former President and CEO | Accrued Liabilities | ||||||||
Related Party Transaction [Line Items] | ||||||||
Accrued payroll taxes | $ 6,700 | |||||||
Former President and CEO | Prepaid Expenses and Other Current Assets | ||||||||
Related Party Transaction [Line Items] | ||||||||
Due from former President and CEO | $ 6,200 | |||||||
Impairment charge related to previously recorded receivable | $ 6,200 | |||||||
Former President and CEO | Selling, General and Administrative Expenses | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payroll tax expense | $ 200 | |||||||
Former President and CEO | Stock options | ||||||||
Related Party Transaction [Line Items] | ||||||||
Stock option exercise period extension | 5 years | |||||||
Options vested (in shares) | 11,300,000 | |||||||
Weighted average exercise price of outstanding vested options (in dollars per share) | $ 0.42 | |||||||
Stock options issued (in shares) | 5,000,000 | 6,000,000 | ||||||
Unvested stock options (in shares) | 6,750,000 | |||||||
Former President and CEO | Restricted Stock Units (RSUs) | ||||||||
Related Party Transaction [Line Items] | ||||||||
Vested RSU's (in shares) | 2,950,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended | |||
Jul. 28, 2022 USD ($) lawsuitAction | Apr. 13, 2021 lawsuit | Dec. 31, 2022 USD ($) | Apr. 27, 2022 USD ($) | |
Loss Contingencies [Line Items] | ||||
Number of shareholder derivative suits filed | lawsuit | 5 | |||
Issuance of interim awarding related to purchase of PSL and other advance payments | $ 300,000 | |||
Termination severance and other post-termination compensation and benefits under his employment agreement | $ 600,000 | |||
Reduction in issuance of interim awarding | $ 300,000 | |||
Smith Complaint | ||||
Loss Contingencies [Line Items] | ||||
Preliminary settlement | $ 712,500 | |||
Berry Complaint | ||||
Loss Contingencies [Line Items] | ||||
Number of derivative actions | lawsuitAction | 6 | |||
Payment of plaintiffs' attorneys' fees for derivative legal settlement | $ 275,000 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) ft² in Thousands, $ in Thousands | 2 Months Ended | 12 Months Ended | ||||
Jul. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | May 01, 2022 USD ($) | Apr. 30, 2022 USD ($) ft² | Jul. 12, 2021 USD ($) | |
Lessee, Lease, Description [Line Items] | ||||||
Operating lease, liability | $ 305 | $ 400 | ||||
Right of use assets | 275 | $ 0 | $ 300 | |||
Lease cost | 100 | 300 | ||||
Operating lease payments | 100 | 400 | ||||
Remaining lease obligations | 28 | |||||
Gain on lease modification | $ 0 | 972 | ||||
Terminated San Diego Facility | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Area of property | ft² | 6 | |||||
Lease term | 3 years | |||||
Operating lease, liability | $ 400 | |||||
Terminated San Diego Facility | Lease Termination | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Operating lease, liability | $ 3,800 | |||||
Remaining lease obligations | 100 | |||||
Operating lease, right-of-use asset, termination adjustment | $ 2,800 | |||||
Gain on lease modification | 900 | |||||
Base rent reimbursement | $ 100 | |||||
Terminated San Diego Facility | Lease Termination | Cost Of Goods Sold | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Gain on lease modification | 200 | |||||
Terminated San Diego Facility | Lease Termination | Selling, General and Administrative Expenses | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Gain on lease modification | $ 700 |
LEASES -Information Related to
LEASES -Information Related to Operating Lease (Details) | Dec. 31, 2022 |
Leases [Abstract] | |
Remaining lease term (in years) | 2 years 5 months 1 day |
Discount rate | 7% |
LEASES - Maturity of Lease Liab
LEASES - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | May 01, 2022 | Dec. 31, 2021 |
Leases [Abstract] | |||
2023 | $ 135 | ||
2024 | 139 | ||
2025 | 59 | ||
Total | 333 | ||
Less: imputed interest | 28 | ||
Total lease liabilities | 305 | $ 400 | |
Operating lease liability - current | 117 | $ 0 | |
Operating lease liability - net of current portion | 188 | $ 0 | |
Total operating lease liability | $ 305 | $ 400 |
INCOME TAXES INCOME TAXES - Com
INCOME TAXES INCOME TAXES - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 4 | 7 |
Total current tax expense | 4 | 7 |
Deferred: | ||
Federal | (51) | (94) |
State | 0 | 0 |
Total deferred tax benefit | (51) | (94) |
Income tax benefit | $ (47) | $ (87) |
INCOME TAXES - Income Tax Provi
INCOME TAXES - Income Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Amount | ||
Income tax benefit at federal statutory rate | $ (1,735) | $ (3,285) |
State taxes, net of federal effect | (456) | (761) |
Other permanent differences | 21 | (41) |
Stock-based compensation | 1,795 | 236 |
NOL adjustments and other true-ups | 722 | 0 |
R&D tax credits | (1) | (30) |
Other | 14 | 1,075 |
Increase (decrease) in valuation allowance | (407) | 2,719 |
Income tax benefit | $ (47) | $ (87) |
% of pretax income (loss) | ||
Income tax benefit at federal statutory rate | 21% | 21% |
State taxes, net of federal effect | 5.50% | 4.90% |
Other permanent differences | (0.30%) | 0% |
Stock-based compensation | (21.70%) | (1.50%) |
NOL adjustments and other true-ups | (8.70%) | 0% |
R&D tax credits | 0% | 0.20% |
Other | (0.20%) | (6.90%) |
Increase (decrease) in valuation allowance | 4.90% | (17.40%) |
Income tax benefit | 0.50% | 0.30% |
INCOME TAXES - Deferred Income
INCOME TAXES - Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 9,280 | $ 8,109 |
Business credit carryforwards | 948 | 948 |
Intangible assets | 527 | 617 |
Stock-based compensation | 4,416 | 6,364 |
Change to inventory | 87 | 112 |
Operating lease liabilities | 81 | 0 |
Accruals and reserves | 2,351 | 2,470 |
Other | 222 | 0 |
Total deferred tax assets | 17,912 | 18,620 |
Deferred tax liabilities: | ||
Operating lease assets | (73) | 0 |
Property and equipment | (100) | (211) |
CanX intangible assets | (67) | (384) |
Other | 0 | 3 |
Total deferred tax liabilities | (240) | (592) |
Valuation allowance | (17,683) | (18,090) |
Net deferred tax liabilities | $ (11) | $ (62) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Valuation allowance increase | $ 0.4 | $ 2.7 |
Domestic Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforward | 33.6 | |
R&D credit carryforwards | 0.7 | |
Domestic Tax Authority | After 2017 | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforward | 26.4 | |
Domestic Tax Authority | Before 2018 | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforward | 7.2 | |
State and Local Jurisdiction | California Franchise Tax Board | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforward | 23.3 | |
R&D credit carryforwards | 0.4 | |
State and Local Jurisdiction | States Other than California | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforward | $ 6.6 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance as of January 1: | $ 172 | $ 166 |
Increase in current year positions | 0 | 6 |
Increase in prior year positions | 0 | 0 |
Decrease in prior year positions | 0 | 0 |
Balance as of December 31: | $ 172 | $ 172 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 29, 2023 | Dec. 31, 2022 | |
Subsequent Event [Line Items] | ||
CARES act, tax credit received under relief provision | $ 2.5 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
CARES act, tax credit received under relief provision | $ 1.1 |