COVER
COVER - shares | 3 Months Ended | |
Mar. 31, 2023 | May 10, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
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 | 80-0944970 | |
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 Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 152,104,789 | |
Entity Central Index Key | 0001510964 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 |
CONDENSED BALANCE SHEETS (UNAUD
CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 714 | $ 611 |
Accounts receivable, net | 657 | 766 |
Inventory | 6,526 | 6,563 |
Prepaid expenses and other | 2,103 | 3,190 |
Total current assets | 10,000 | 11,130 |
Property and equipment, net | 516 | 575 |
Right of use assets | 249 | 275 |
Intangibles, net | 251 | 251 |
Other assets | 452 | 505 |
Total assets | 11,468 | 12,736 |
Current liabilities: | ||
Accounts payable | 2,441 | 2,284 |
Accrued expenses | 3,241 | 9,690 |
Operating lease liability - current | 120 | 117 |
Debt, net of discounts | 451 | 1,223 |
Total current liabilities | 6,253 | 13,314 |
Operating lease liability - net of current portion | 157 | 188 |
Deferred tax liability | 11 | 11 |
Total liabilities | 6,421 | 13,513 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity (deficit) | ||
Preferred stock, par value $0.0001; 10,000 shares authorized; 1 share issued as of March 31, 2023 and December 31, 2022; and no shares outstanding as of March 31, 2023 and December 31, 2022 | 0 | 0 |
Common stock, par value $0.0001; 790,000 shares authorized as of March 31, 2023 and December 31, 2022; 152,104 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 15 | 15 |
Additional paid-in capital | 87,015 | 86,897 |
Accumulated deficit | (81,983) | (87,689) |
Total stockholders' equity (deficit) | 5,047 | (777) |
Total liabilities and stockholders' equity (deficit) | $ 11,468 | $ 12,736 |
CONDENSED BALANCE SHEETS (UNA_2
CONDENSED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Preferred stock authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock issued (in shares) | 1,000 | 1,000 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (in shares) | 790,000,000 | 790,000,000 |
Common stock issued (in shares) | 152,104,000 | 152,104,000 |
Common stock outstanding (in shares) | 152,104,000 | 152,104,000 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Product sales, net | $ 4,148 | $ 4,447 |
Cost of goods sold | 2,366 | 3,291 |
Gross profit | 1,782 | 1,156 |
Operating expenses: | ||
Research and development | 35 | 121 |
Selling, general and administrative | 2,156 | 2,550 |
Benefit from reversal of accrued payroll taxes (Note 11) | (6,171) | 0 |
Total operating expenses | (3,980) | 2,671 |
Operating income (loss) | 5,762 | (1,515) |
Interest expense, net | 56 | 702 |
Net income (loss) | $ 5,706 | $ (2,217) |
Weighted average common shares outstanding, basic (in shares) | 152,104 | 116,834 |
Weighted average common shares outstanding, diluted (in shares) | 152,104 | 116,834 |
Net income (loss) per common share, basic (in USD per share) | $ 0.04 | $ (0.02) |
Net income (loss) per common share, diluted (in USD per share) | $ 0.04 | $ (0.02) |
Revenue, product and service [Extensible List] | Product [Member] | Product [Member] |
CONDENSED STATEMENTS OF STOCKHO
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2021 | 0 | 112,482,000 | |||
Beginning balance at Dec. 31, 2021 | $ 3,543 | $ 0 | $ 11 | $ 83,007 | $ (79,475) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under equity commitment (shares) | 1,000 | ||||
Issuance of common stock under equity commitment | 554 | $ 280 | 274 | ||
Issuance of common stock from note conversion (in shares) | 6,804,000 | ||||
Issuance of common stock from note conversion | 1,229 | $ 1 | 1,228 | ||
Common stock issued for services (in shares) | 3,496,000 | ||||
Common stock issued for services | 384 | $ 400 | 384 | ||
Stock-based compensation | 516 | 516 | |||
Net income (loss) | (2,217) | (2,217) | |||
Ending balance (in shares) at Mar. 31, 2022 | 1,000 | 122,782,000 | |||
Ending balance at Mar. 31, 2022 | 4,009 | $ 280 | $ 12 | 85,409 | (81,692) |
Beginning balance (in shares) at Dec. 31, 2022 | 0 | 152,104,000 | |||
Beginning balance at Dec. 31, 2022 | (777) | $ 0 | $ 15 | 86,897 | (87,689) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued for services (in shares) | 0 | ||||
Stock-based compensation | 118 | 118 | |||
Net income (loss) | 5,706 | 5,706 | |||
Ending balance (in shares) at Mar. 31, 2023 | 0 | 152,104,000 | |||
Ending balance at Mar. 31, 2023 | $ 5,047 | $ 0 | $ 15 | $ 87,015 | $ (81,983) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
OPERATING ACTIVITIES | |||
Net income (loss) | $ 5,706 | $ (2,217) | |
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities: | |||
Depreciation and amortization | 59 | 517 | |
Stock-based compensation | 118 | 516 | |
Loss on disposal of fixed assets | 0 | 99 | |
Note discount and interest expense | 100 | 699 | |
Employee retention credit benefit | 0 | (1,993) | |
Non-cash lease expense, net | 26 | 0 | |
Benefit from reversal of accrued payroll taxes (Note 11) | (6,171) | 0 | |
Other | 59 | 98 | |
Change in operating assets and liabilities: | |||
Accounts receivable, net | 102 | 1,096 | |
Inventory | 37 | 387 | |
Prepaid expenses and other | 1,087 | 690 | |
Accounts payable and accrued expenses | (148) | (271) | |
Net cash flows provided by (used in) operating activities | 975 | (379) | $ (1,900) |
FINANCING ACTIVITIES | |||
Proceeds from issuance of preferred stock and common stock warrants, net of issuance costs | 0 | 605 | |
Proceeds from issuance of convertible notes, net of issuance costs | 0 | 970 | |
Repayment of note payable | (764) | 0 | |
Repayment of unsecured debt | (108) | (132) | |
Net cash flows (used in) provided by financing activities | (872) | 1,443 | |
Net increase in cash | 103 | 1,064 | |
Cash, beginning of period | 611 | 1,375 | 1,375 |
Cash, end of period | 714 | 2,439 | $ 611 |
Supplemental cash flow disclosure: | |||
Interest paid | 3 | 3 | |
Supplemental disclosures of non-cash transactions: | |||
Convertible note principal conversion into shares of common stock | 0 | (675) | |
Services paid with common stock | 0 | 384 | |
Issuance cost in accounts payable and accrued expenses | $ 0 | $ (68) |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | ORGANIZATION AND BUSINESS Historical Information - CV Sciences, Inc. (the “Company”) was incorporated under the name Foreclosure Solutions, Inc. in the State of Texas on December 9, 2010. The Company subsequently changed its name to CannaVest Corp. (Texas) on January 29, 2013. On July 25, 2013, the Company merged with and into its wholly-owned Delaware subsidiary, CannaVest Corp (Delaware), 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.” Description of Business - 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 ™ Defense . The Company's products are sold in a variety of market sectors including nutraceutical, beauty care and specialty foods. In addition, the Company is pursuing drug candidates which use CBD as a primary active ingredient. Basis of Presentation - The unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These condensed financial statements are unaudited and should be read in conjunction with the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 2022. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. Liquidity Considerations - U.S. GAAP requires management to assess a company's ability to continue as a going concern for a period of one year from the financial statement issuance date 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 $82.0 million as of March 31, 2023. 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 General 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 canceled 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 credit subject to certain criteria. The Company determined that it qualifies for the tax credit under the CARES Act. In March 2022, the Company claimed employee retention credits, which are recognized as a reduction to general and administrative expenses of $2.0 million during the three months ended March 31, 2023. In addition, in August 2022, the Company claimed additional employee retention credits of $0.5 million for a total of $2.5 million. During the three months ended March 31, 2023, the Company received cash payment related to the employee retention credits of $1.1 million. The remaining amount of $1.4 million is included in prepaid expenses and other in the Company's condensed balance sheet as of March 31, 2023. Subsequent to March 31, 2023, the Company received the remaining employee retention credits from the IRS of $1.4 million. In connection with Company’s sale and issuance of the Streeterville Note, the Company made principal payments to Streeterville of $0.8 million during the three months ended March 31, 2023. Subsequent to March 31, 2023, the Company fully repaid the entire remaining outstanding amount to Streeterville of $0.4 million. The Company's financial operating results and accumulated deficit, amongst 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. Use of Estimates - The preparation of the condensed financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the condensed 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, valuation of inventory and assumptions related to revenue recognition. 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 March 31, 2023 and December 31, 2022, approximate their fair value due to the short-term nature of these items. The Company's note payable balance also approximates fair value as of March 31, 2023 and December 31, 2022, as the interest rate on the note payable approximates the rates available to the Company as of such dates. 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 assets or liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2023 and December 31, 2022. • 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 Intangibles, Net, the Company did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2023 and December 31, 2022. • 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 March 31, 2023 and December 31, 2022. Revenues - The following presents product sales by retail (B2B) and e-commerce (B2C) channels for the three months ended March 31, 2023 and 2022: Three months ended March 31, 2023 Three months ended March 31, 2022 Amount % of product sales, net Amount % of product sales, net (in thousands) (in thousands) Retail sales (B2B) $ 2,439 58.8 % $ 2,559 57.5 % E-Commerce sales (B2C) 1,709 41.2 % 1,888 42.5 % Product sales, net $ 4,148 100.0 % $ 4,447 100.0 % 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 balance sheets. Recent Accounting Pronouncements Not Yet Adopted There are accounting standards that have been issued by the Financial Accounting Standards Board ("FASB") but are not yet effective. These standards are not expected to have a material impact on the Company's results of operations, financial condition or cash flows. Recent Adopted Pronouncements |
BALANCE SHEET DETAILS
BALANCE SHEET DETAILS | 3 Months Ended |
Mar. 31, 2023 | |
Condensed Financial Information Disclosure [Abstract] | |
BALANCE SHEET DETAILS | BALANCE SHEET DETAILS Inventory Inventory as of March 31, 2023 and December 31, 2022 was comprised of the following (in thousands): March 31, December 31, Raw materials $ 3,424 $ 3,563 Work in process 1,150 1,020 Finished goods 1,952 1,980 $ 6,526 $ 6,563 During the three months ended March 31, 2022, the Company recorded additions to the inventory provision of $0.1 million. Additions to the inventory provision for the three months ended March 31, 2023 were immaterial. Intangibles, net Intangible assets consisted of in-process research and development with an indefinite life of $0.3 million as of March 31, 2023 and December 31, 2022. No indicators of impairment were identified during the three months ended March 31, 2023. Accrued expenses Accrued expenses as of March 31, 2023 and December 31, 2022 were as follows (in thousands): March 31, December 31, Accrued payroll taxes (Note 11) $ 522 $ 6,694 Accrued payroll expenses 1,350 1,447 Other accrued liabilities 1,369 1,549 $ 3,241 $ 9,690 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 Condensed 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 March 31, 2023 Condensed 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 March 31, 2023, the Company had an operating lease obligation and operating lease asset of $0.2 million related to the new facility. Operating lease expense is recognized on a straight-line basis over the lease term. During the three months ended March 31, 2023, the Company's total lease cost was immaterial. 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 in an amount equal to the lease payments in a similar economic environment. Information related to the Company's operating lease assets and related lease liabilities were as follows: March 31, 2023 Remaining lease term (in months) 26 Discount rate 7.0 % Maturities of lease liabilities as of March 31, 2023 were as follows (in thousands): Year ending December 31, 2023 (remaining nine months) $ 102 2024 139 2025 59 300 Less imputed interest (23) Total lease liabilities $ 277 Current operating lease liabilities $ 120 Non-current operating lease liabilities 157 Total lease liabilities $ 277 |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES | CONVERTIBLE NOTES 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 a series of registered direct offerings of senior convertible notes (“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. 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 have 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 three months ended March 31, 2022, holders of certain Notes converted amounts payable under such Notes into an aggregate of 6,804,281 shares of Company common stock at a weighted average conversion price of $0.10 per share, resulting in a reduction of the Note balance of $0.7 million. In addition, the Company recognized additional interest expense associated with the conversion of $0.6 million during the three months ended March 31, 2022. 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 March 31, 2023 and December 31, 2022 is all current and was as follows (in thousands): March 31, 2023 December 31, 2022 Note payable $ 341 $ 1,005 Insurance financing 110 218 Total debt $ 451 $ 1,223 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 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 90 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. The Company made principal payments to Streeterville of $0.8 million during the three months ended March 31, 2023. Subsequent to March 31, 2023, the Company fully repaid the entire remaining outstanding balance to Streeterville of $0.4 million. As a result, the Streeterville Note has been fully repaid and satisfied, and the Company's obligations thereunder, were cancelled and terminated. Insurance Financing In October 2021, the Company entered into a financing agreement with First Insurance Funding 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 March 31, 2023. In November 2022, the Company entered into a finance agreement with First Insurance Funding in order to fund a portion of its insurance policies for the upcoming policy year. The amount financed was $0.2 million and incurred 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 March 31, 2023 was $0.1 million. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | CONVERTIBLE NOTES 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 a series of registered direct offerings of senior convertible notes (“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. 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 have 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 three months ended March 31, 2022, holders of certain Notes converted amounts payable under such Notes into an aggregate of 6,804,281 shares of Company common stock at a weighted average conversion price of $0.10 per share, resulting in a reduction of the Note balance of $0.7 million. In addition, the Company recognized additional interest expense associated with the conversion of $0.6 million during the three months ended March 31, 2022. 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 March 31, 2023 and December 31, 2022 is all current and was as follows (in thousands): March 31, 2023 December 31, 2022 Note payable $ 341 $ 1,005 Insurance financing 110 218 Total debt $ 451 $ 1,223 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 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 90 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. The Company made principal payments to Streeterville of $0.8 million during the three months ended March 31, 2023. Subsequent to March 31, 2023, the Company fully repaid the entire remaining outstanding balance to Streeterville of $0.4 million. As a result, the Streeterville Note has been fully repaid and satisfied, and the Company's obligations thereunder, were cancelled and terminated. Insurance Financing In October 2021, the Company entered into a financing agreement with First Insurance Funding 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 March 31, 2023. In November 2022, the Company entered into a finance agreement with First Insurance Funding in order to fund a portion of its insurance policies for the upcoming policy year. The amount financed was $0.2 million and incurred 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 March 31, 2023 was $0.1 million. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Common Stock During the three months ended March 31, 2022, the Company issued 3,496,000 shares of common stock to a vendor as compensation for $0.4 million of services provided to the Company. There were no issuances of Company common stock during the three months ended March 31, 2023. 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. 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 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 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 at each of the dates identified: Number of Shares Underlying Warrants Issue Date Classification Exercise Price Expiration Date March 31, 2023 December 31, 2022 March 30, 2022 Equity $ 0.1000 May 26, 2025 10,000,000 10,000,000 March 30, 2022 Equity $ 0.0875 May 26, 2025 750,000 750,000 10,750,000 10,750,000 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION As of December 31, 2022, there were 30,976,000 shares of Company common stock authorized for issuance under the CV Sciences, Inc. Amended and Restated 2013 Equity Incentive Plan (the "2013 Plan"). On June 11, 2019, the Company’s stockholders approved an amendment to the 2013 Plan to add 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 will be automatically added to the 2013 Plan on January 1st of each year during the term of the plan, starting with January 1, 2020, will 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. On January 1, 2023, the Company added 4,000,000 shares of the Company's common stock to the 2013 Plan pursuant to the evergreen provision, resulting in a total of 34,976,000 shares authorized for issuance under the 2013 Plan as of March 31, 2023. As of March 31, 2023, the Company had approximately 5,908,000 authorized but unissued shares reserved and available for issuance under the 2013 Plan. The 2013 Plan is scheduled to automatically terminate pursuant to its terms on June 3, 2024, after which no additional awards may be granted under the 2013 Plan. On March 15, 2023, the Company’s board of directors approved, subject to shareholder approval, the adoption of a new 2023 Equity Incentive Plan (the “2023 Plan”), under which 34,976,000 shares of Company common stock will be authorized for issuance, if the 2023 Plan is approved by the Company’s shareholders. The 2023 Plan will be presented to the Company’s shareholders for approval at its 2023 Annual Meeting of shareholders, to be held on June 1, 2023. If the 2023 Plan is approved at the 2023 Annual Meeting, no further grants of awards will be made under the Company’s 2013 Plan, and any awards that are cancelled or expire under the 2013 Plan will not be reissued. If the Company’s shareholders do not approve the 2023 Plan, the 2023 Plan will not be effective and the 2013 Plan will remain in effect in accordance with its terms until its expiration. As of March 31, 2023, total unrecognized compensation cost related to non-vested stock-based compensation arrangements was $0.3 million, which is expected to be recognized over a weighted-average period of 2.8 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, 2022 19,831 $ 0.46 3.5 $ — Granted 7,450 0.04 — — Exercised — — — — Cancelled (2,550) 0.45 — — Outstanding - March 31, 2023 24,731 0.33 5.1 4 Exercisable - March 31, 2023 16,318 0.48 2.7 — Vested or expected to vest - March 31, 2023 24,731 $ 0.33 5.1 $ 4 The Company has established performance milestones in connection with drug development efforts for its lead drug candidate CVSI-007. The above table includes 4,250,000 vested performance-based options as of March 31, 2023, which were issued to Michael Mona Jr. ("Mona Jr.") outside of the 2013 Plan. As of March 31, 2023, there were 6,750,000 remaining unvested stock options granted to Mona Jr. outside of the 2013 Plan which are not included in the above table. These stock options vest upon the completion of future performance conditions (refer to Note 11). There were no stock options exercised during the three months ended March 31, 2023 and 2022. 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: Three months ended March 31, 2023 2022 Volatility 132.0% * Risk-Free Interest Rate 3.8% * Expected Term (in years) 5.77 * Dividend Rate —% * Fair Value Per Share on Grant Date $0.04 * * There were no grants during the three months ended March 31, 2022. 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, officers and directors using the simplified method in accordance with ASC Topic 718, Stock Compensation, because the Company does not have sufficient relevant historical information to develop reasonable expectations about future exercise patterns. In the future, as the Company gains historical data for the actual term over which stock options are held, the expected term may change, which could substantially change the grant-date fair value of future stock option awards, and, consequently, compensation of future grants. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE The Company computes basic net income (loss) per share using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) 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 income (loss) per share using the treasury stock method when their effect is dilutive. Potential common shares are excluded from the calculation of diluted net income (loss) per share when their effect is anti-dilutive. The following common stock equivalents were not included in the calculation of net income (loss) per diluted share because their effect were anti-dilutive (in thousands): Three months ended March 31, 2023 2022 Stock options 20,481 18,041 Performance stock options 11,000 11,000 Warrants 10,750 10,750 Convertible notes — 7,623 Convertible preferred shares — 10,000 Total 42,231 57,414 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
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 were 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 parties previously agreed to stay the action pending the conclusion of discovery in the Sallustro Case. Once the Sallustro Case was dismissed, the stay was lifted. Plaintiff’s counsel later informed the Court that Mr. Ruth sold his shares of CVSI stock and thus he no longer had standing to pursue this claim. However, the Court allowed Plaintiff’s counsel to substitute CVSI shareholder Otilda Lamont as the named plaintiff. On September 20, 2019, defendants 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 will have 60 days to implement the corporate governance reforms. Subsequent to the quarter ended March 31, 2023, on April 17, 2023, Plaintiff’s counsel filed a motion seeking an award of attorney's fees. Plaintiff is entitled to an award of attorney's fees under law, the final award amount is yet to be determined. 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 will remain stayed until the U.S. Food and Drug Administration promulgates 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.'s 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, which was originally scheduled to be heard on June 9, 2023. On March 24, 2023, the court issued an order on Mona Jr.'s motion for attorney' fees and awarded $17,481 in attorneys' fees and costs. The ruling effectively granted the Company's motion to tax costs and, consequently, the court vacated the June 9, 2023 hearing date. 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 11. 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 a demand for arbitration 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 position that Mona Jr. took against the Company in the case described above. On February 2, 2023, the American Arbitration Association stayed the arbitration for 60 days. On February 14, 2023, the Company filed a motion for preliminary injunction to enjoin Mona Jr. from proceeding with the arbitration. The preliminary injunction motion is scheduled for hearing on October 20, 2023. On March 20, 2023, the Company sought a temporary restraining order to enjoin Mona Jr. from proceeding with the arbitration, which the court denied. On April 5, 2023, the American Arbitration Association informed the parties that the stay issued on February 2, 2023 had been lifted. 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. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESFor the three months ended March 31, 2023 and 2022, the Company generated taxable losses for which no tax benefit has been recognized due to uncertainties regarding the future realization of the tax benefit. The tax effects of the taxable losses will be recognized when realization of the tax benefit becomes more likely than not or the tax effects of the previous interim losses are utilized. |
RELATED PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES During the year ended December 31, 2019, the Company's former President and Chief Executive Officer, 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 March 31, 2023, Mona Jr. has 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 March 31, 2023. 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 of the RSU's previously issued to Mona Jr. vested. 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 was 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 was $0.2 million and was recorded as a component of selling, general and administrative expenses during 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. 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 through 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 expense and other on the condensed balance sheet. The deadline to file and |
ORGANIZATION AND BUSINESS (Poli
ORGANIZATION AND BUSINESS (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation - The unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These condensed financial statements are unaudited and should be read in conjunction with the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 2022. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. |
Use of Estimates | Use of Estimates - The preparation of the condensed financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the condensed 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, valuation of inventory and assumptions related to revenue recognition. |
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 March 31, 2023 and December 31, 2022, approximate their fair value due to the short-term nature of these items. The Company's note payable balance also approximates fair value as of March 31, 2023 and December 31, 2022, as the interest rate on the note payable approximates the rates available to the Company as of such dates. 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 assets or liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2023 and December 31, 2022. • 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 Intangibles, Net, the Company did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2023 and December 31, 2022. • 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 March 31, 2023 and December 31, 2022. |
Recent Accounting Pronouncements Not Yet Adopted and Recent Adopted Pronouncements | Recent Accounting Pronouncements Not Yet Adopted There are accounting standards that have been issued by the Financial Accounting Standards Board ("FASB") but are not yet effective. These standards are not expected to have a material impact on the Company's results of operations, financial condition or cash flows. Recent Adopted Pronouncements |
ORGANIZATION AND BUSINESS (Tabl
ORGANIZATION AND BUSINESS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue Product Sales by Channel | The following presents product sales by retail (B2B) and e-commerce (B2C) channels for the three months ended March 31, 2023 and 2022: Three months ended March 31, 2023 Three months ended March 31, 2022 Amount % of product sales, net Amount % of product sales, net (in thousands) (in thousands) Retail sales (B2B) $ 2,439 58.8 % $ 2,559 57.5 % E-Commerce sales (B2C) 1,709 41.2 % 1,888 42.5 % Product sales, net $ 4,148 100.0 % $ 4,447 100.0 % |
BALANCE SHEET DETAILS (Tables)
BALANCE SHEET DETAILS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of Inventory | Inventory as of March 31, 2023 and December 31, 2022 was comprised of the following (in thousands): March 31, December 31, Raw materials $ 3,424 $ 3,563 Work in process 1,150 1,020 Finished goods 1,952 1,980 $ 6,526 $ 6,563 |
Schedule of Accrued Expenses | Accrued expenses as of March 31, 2023 and December 31, 2022 were as follows (in thousands): March 31, December 31, Accrued payroll taxes (Note 11) $ 522 $ 6,694 Accrued payroll expenses 1,350 1,447 Other accrued liabilities 1,369 1,549 $ 3,241 $ 9,690 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Lease Information | Information related to the Company's operating lease assets and related lease liabilities were as follows: March 31, 2023 Remaining lease term (in months) 26 Discount rate 7.0 % |
Maturities of Lease Liabilities | Maturities of lease liabilities as of March 31, 2023 were as follows (in thousands): Year ending December 31, 2023 (remaining nine months) $ 102 2024 139 2025 59 300 Less imputed interest (23) Total lease liabilities $ 277 Current operating lease liabilities $ 120 Non-current operating lease liabilities 157 Total lease liabilities $ 277 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt as of March 31, 2023 and December 31, 2022 is all current and was as follows (in thousands): March 31, 2023 December 31, 2022 Note payable $ 341 $ 1,005 Insurance financing 110 218 Total debt $ 451 $ 1,223 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Schedule of Warrants Outstanding | The following represents a summary of the warrants outstanding at each of the dates identified: Number of Shares Underlying Warrants Issue Date Classification Exercise Price Expiration Date March 31, 2023 December 31, 2022 March 30, 2022 Equity $ 0.1000 May 26, 2025 10,000,000 10,000,000 March 30, 2022 Equity $ 0.0875 May 26, 2025 750,000 750,000 10,750,000 10,750,000 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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, 2022 19,831 $ 0.46 3.5 $ — Granted 7,450 0.04 — — Exercised — — — — Cancelled (2,550) 0.45 — — Outstanding - March 31, 2023 24,731 0.33 5.1 4 Exercisable - March 31, 2023 16,318 0.48 2.7 — Vested or expected to vest - March 31, 2023 24,731 $ 0.33 5.1 $ 4 |
Schedule of Share-based Payment Award, Stock Options, Valuation 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: Three months ended March 31, 2023 2022 Volatility 132.0% * Risk-Free Interest Rate 3.8% * Expected Term (in years) 5.77 * Dividend Rate —% * Fair Value Per Share on Grant Date $0.04 * * There were no grants during the three months ended March 31, 2022. |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following common stock equivalents were not included in the calculation of net income (loss) per diluted share because their effect were anti-dilutive (in thousands): Three months ended March 31, 2023 2022 Stock options 20,481 18,041 Performance stock options 11,000 11,000 Warrants 10,750 10,750 Convertible notes — 7,623 Convertible preferred shares — 10,000 Total 42,231 57,414 |
ORGANIZATION AND BUSINESS - Nar
ORGANIZATION AND BUSINESS - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Aug. 18, 2022 | Mar. 30, 2022 | May 15, 2023 | Aug. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Negative operating cash flow | $ (975,000) | $ 379,000 | $ 1,900,000 | |||||
Retained earnings (accumulated deficit) | (81,983,000) | (87,689,000) | ||||||
Proceeds from issuance of preferred stock | $ 700,000 | $ 700,000 | ||||||
Repayment of note payable | 764,000 | $ 0 | ||||||
CARES Act, tax credit received under relief provision | $ 500,000 | 2,000,000 | ||||||
CARES Act, total tax credit received under relief provision | 2,500,000 | |||||||
CARES Act, proceeds received under relief provision | 1,100,000 | |||||||
Assets | 0 | 0 | ||||||
Subsequent Event | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
CARES Act, proceeds received under relief provision | $ 1,400,000 | |||||||
Prepaid Expenses and Other | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
CARES Act, tax credit under relief provision receivable | 1,400,000 | |||||||
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] | ||||||||
Assets | 0 | 0 | ||||||
Liabilities | 0 | 0 | ||||||
Level 3 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Assets | 0 | 0 | ||||||
Liabilities | 0 | $ 0 | ||||||
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] | ||||||||
Principal payments | $ 800,000 | |||||||
Convertible Promissory Notes | Streeterville Capital, LLC | Subsequent Event | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Repayment of note payable | $ 400,000 | |||||||
Convertible Promissory Notes | Streeterville Capital, LLC | Investor | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Repayment of note payable | $ 700,000 | |||||||
Convertible Debt Due 2022 | Convertible Debt | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Proceeds from debt | $ 1,000,000 |
ORGANIZATION AND BUSINESS - Rev
ORGANIZATION AND BUSINESS - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 4,148 | $ 4,447 |
Concentration Risk, Product | Revenue Benchmark | ||
Disaggregation of Revenue [Line Items] | ||
% of product sales, net | 100% | 100% |
Retail sales (B2B) | ||
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 2,439 | $ 2,559 |
Retail sales (B2B) | Concentration Risk, Product | Revenue Benchmark | ||
Disaggregation of Revenue [Line Items] | ||
% of product sales, net | 58.80% | 57.50% |
E-Commerce sales (B2C) | ||
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 1,709 | $ 1,888 |
E-Commerce sales (B2C) | Concentration Risk, Product | Revenue Benchmark | ||
Disaggregation of Revenue [Line Items] | ||
% of product sales, net | 41.20% | 42.50% |
BALANCE SHEET DETAILS - Invento
BALANCE SHEET DETAILS - Inventory (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |||
Raw materials | $ 3,424 | $ 3,563 | |
Work in process | 1,150 | 1,020 | |
Finished goods | 1,952 | 1,980 | |
Inventory | 6,526 | $ 6,563 | |
Addition to inventory provision | $ 0 | $ 100 |
BALANCE SHEET DETAILS - Narrati
BALANCE SHEET DETAILS - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangibles, net | $ 251 | $ 251 |
In-Process Research and Development | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangibles, net | $ 300 | $ 300 |
BALANCE SHEET DETAILS - Accrued
BALANCE SHEET DETAILS - Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Condensed Financial Information Disclosure [Abstract] | ||
Accrued payroll taxes (Note 11) | $ 522 | $ 6,694 |
Accrued payroll expenses | 1,350 | 1,447 |
Other accrued liabilities | 1,369 | 1,549 |
Total accrued expenses | $ 3,241 | $ 9,690 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | May 01, 2022 USD ($) | Apr. 30, 2022 USD ($) ft² | |
Lessee, Lease, Description [Line Items] | ||||
Lease liabilities for operating leases | $ 277 | $ 400 | ||
Right of use assets | 249 | $ 275 | $ 300 | |
Lease cost | $ 0 | |||
Terminated San Diego Facility | ||||
Lessee, Lease, Description [Line Items] | ||||
Area of property leased | ft² | 6 | |||
Lease term | 3 years | |||
Lease liabilities for operating leases | $ 400 |
LEASES -Information Related to
LEASES -Information Related to Operating Lease (Details) | Mar. 31, 2023 |
Leases [Abstract] | |
Remaining lease term (in months) | 26 months |
Discount rate | 7% |
LEASES - Maturity of Lease Liab
LEASES - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | May 01, 2022 |
Leases [Abstract] | |||
2023 (remaining nine months) | $ 102 | ||
2024 | 139 | ||
2025 | 59 | ||
Total lease payments due | 300 | ||
Less imputed interest | (23) | ||
Total lease liabilities | 277 | $ 400 | |
Current operating lease liabilities | 120 | $ 117 | |
Non-current operating lease liabilities | 157 | $ 188 | |
Total lease liabilities | $ 277 | $ 400 |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) | 3 Months Ended | 12 Months Ended | |||||||
Aug. 18, 2022 USD ($) | May 31, 2022 USD ($) $ / shares shares | Mar. 25, 2022 USD ($) $ / shares | Nov. 17, 2021 USD ($) | Nov. 14, 2021 USD ($) day $ / shares | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2022 d $ / shares | May 17, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||||||
Conversion price (in USD per share) | $ / shares | $ 0.04 | ||||||||
Conversion of convertible debt | $ 151,772 | ||||||||
Converted instrument, shares issued (in shares) | shares | 3,751,971 | 6,804,281 | |||||||
Decrease in convertible note | $ 0 | $ 675,000 | |||||||
Interest expense | $ 600,000 | ||||||||
Gain on debt extinguishment | $ 127,000 | ||||||||
Expense of unamortized debt costs | 50,000 | ||||||||
QTD | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price (in USD per share) | $ / shares | $ 0.10 | ||||||||
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 | |||||||
Stated interest rate | 15% | ||||||||
Conversion price (in USD per share) | $ / shares | $ 0.1508 | $ 0.2611 | |||||||
Threshold percentage of stock price trigger | 120% | ||||||||
Threshold trading days | 5 | 5 | |||||||
Redemption price premium, percentage | 15% | ||||||||
Decrease in convertible note | $ 700,000 | ||||||||
Interest expense | 17,000 | ||||||||
Total debt | $ 675,000 | ||||||||
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 USD 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% | ||||||||
VWAP of common stock, constitutes price default (in USD per share) | $ / shares | $ 0.10 |
DEBT - Schedule of Debt (Detail
DEBT - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total debt | $ 451 | $ 1,223 |
Insurance financing | ||
Debt Instrument [Line Items] | ||
Total debt | 110 | 218 |
Note payable | ||
Debt Instrument [Line Items] | ||
Total debt | $ 341 | $ 1,005 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | 1 Months Ended | 3 Months Ended | |||||
May 15, 2023 USD ($) | Nov. 30, 2022 USD ($) | Aug. 31, 2022 USD ($) | Oct. 31, 2021 USD ($) | Mar. 31, 2023 USD ($) tradingDay | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||||
CARES ACT, minimum proceeds to be remitted to lender | $ 1,000,000 | ||||||
Repayment of note payable | 764,000 | $ 0 | |||||
Outstanding balance | $ 451,000 | $ 1,223,000 | |||||
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, term for repayment of promissory note to avoid penalty | 90 days | ||||||
CARES Act, percentage increase in promissory note balance following delayed payment | 5% | ||||||
Note payable | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding balance | $ 341,000 | $ 1,005,000 | |||||
Note payable | 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 | ||||||
Debt instrument, term | 56 days | ||||||
Repayments of debt | $ 40,000 | ||||||
Convertible Promissory Notes | Streeterville Capital, LLC | |||||||
Debt Instrument [Line Items] | |||||||
Principal payments | 800,000 | ||||||
Convertible Promissory Notes | Streeterville Capital, LLC | Subsequent Event | |||||||
Debt Instrument [Line Items] | |||||||
Repayment of note payable | $ 400,000 | ||||||
Unsecured Note Payable | 2021 Premium Finance Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Amount financed | $ 400,000 | ||||||
Stated interest rate | 4.17% | ||||||
Monthly payment | $ 45,000 | ||||||
Outstanding balance | $ 0 | ||||||
Unsecured Note Payable | 2020 Premium Finance Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Amount financed | $ 200,000 | ||||||
Stated interest rate | 6.32% | ||||||
Monthly payment | $ 27,900 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||||||
Mar. 30, 2022 USD ($) vote $ / shares shares | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) yr $ / shares shares | Mar. 31, 2022 USD ($) shares | Dec. 31, 2022 $ / shares shares | Jun. 06, 2022 shares | Jun. 05, 2022 shares | Mar. 29, 2022 shares | |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common stock issued for services | $ 384 | |||||||
Capital stock authorized (in shares) | shares | 800,000,000 | 200,000,000 | ||||||
Common stock authorized (in shares) | shares | 790,000,000 | 790,000,000 | 790,000,000 | 790,000,000 | 190,000,000 | 190,000,000 | ||
Securities called by preferred stock and warrants (in shares) | shares | 10,000,000 | |||||||
Preferred stock par value (in USD 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 USD per share) | $ / shares | $ 1,000 | |||||||
Preferred stock, convertible into common stock (in shares) | shares | 10,000,000 | |||||||
Preferred stock conversion price (in USD per share) | $ / shares | $ 0.07 | |||||||
Number of shares underlying warrants (in shares) | shares | 10,750,000 | 10,750,000 | ||||||
Fair value recorded as additional offering cost | $ 100 | |||||||
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 USD per share) | $ / shares | $ 0.10 | $ 0.1000 | ||||||
Number of shares underlying warrants (in shares) | shares | 10,000,000 | 10,000,000 | ||||||
Warrants with $0.0875 Exercise Price | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Exercise price (in USD per share) | $ / shares | $ 0.0875 | $ 0.0875 | ||||||
Number of shares underlying warrants (in shares) | shares | 750,000 | 750,000 | 750,000 | |||||
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 | |||||||
Convertible preferred shares | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Stock issued during period (in shares) | shares | 700 | |||||||
Common Stock | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common stock issued for services (in shares) | shares | 0 | 3,496,000 | ||||||
Common stock issued for services | $ 400 | |||||||
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 |
STOCKHOLDERS' EQUITY - Warrants
STOCKHOLDERS' EQUITY - Warrants Outstanding (Details) - $ / shares shares in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 30, 2022 |
Subsidiary, Sale of Stock [Line Items] | |||
Number of Shares Underlying Warrants (in shares) | 10,750 | 10,750 | |
Warrants with $0.1000 Exercise Price | |||
Subsidiary, Sale of Stock [Line Items] | |||
Exercise price (in USD per share) | $ 0.1000 | $ 0.10 | |
Number of Shares Underlying Warrants (in shares) | 10,000 | 10,000 | |
Warrants with $0.0875 Exercise Price | |||
Subsidiary, Sale of Stock [Line Items] | |||
Exercise price (in USD per share) | $ 0.0875 | $ 0.0875 | |
Number of Shares Underlying Warrants (in shares) | 750 | 750 | 750 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |||||
Jan. 01, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | Mar. 15, 2023 | Dec. 31, 2022 | Jun. 11, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation cost | $ 0.3 | |||||
Unrecognized weighted average period | 2 years 9 months 18 days | |||||
Performance-based options outstanding (in shares) | 24,731,000 | 19,831,000 | ||||
Issuance of common stock from net exercise of stock options (in shares) | 0 | |||||
Options Outside the Amended 2013 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance-based options outstanding (in shares) | 4,250,000 | |||||
Unvested stock options outstanding (in shares) | 6,750,000 | |||||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Issuance of common stock from net exercise of stock options (in shares) | 0 | 0 | ||||
2013 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares authorized under plan (in shares) | 34,976,000 | 30,976,000 | ||||
Annual increase to shares authorized for issuance under the Plan as percent of common stock outstanding percentage | 4% | |||||
Annual increase to shares authorized for issuance under the Plan (in shares) | 4,000,000,000 | |||||
Additional shares authorized (in shares) | 4,000,000 | |||||
Authorized unissued shares reserved and available for issuance upon exercise and conversion of outstanding awards (in shares) | 5,908,000 | |||||
2023 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares to be authorized, if approved by shareholders (in shares) | 34,976,000 |
STOCK-BASED COMPENSATION - Opti
STOCK-BASED COMPENSATION - Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Number of Shares | ||
Options outstanding, beginning balance (in shares) | 19,831 | |
Granted (in shares) | 7,450 | |
Exercised (in shares) | 0 | |
Cancelled (in shares) | (2,550) | |
Options outstanding, ending balance (in shares) | 24,731 | 19,831 |
Options outstanding, exercisable (in shares) | 16,318 | |
Options outstanding, vested or expected to vest (in shares) | 24,731 | |
Weighted Average Exercise Price | ||
Beginning balance (in USD per share) | $ 0.46 | |
Granted (in USD per share) | 0.04 | |
Exercised (in USD per share) | 0 | |
Cancelled (in USD per share) | 0.45 | |
Ending balance (in USD per share) | 0.33 | $ 0.46 |
Weighted average exercise price, exercisable (in USD per share) | 0.48 | |
Weighted average exercise price, vested or expected to vest (in USD per share) | $ 0.33 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Weighted average remaining contract term (in years) | 5 years 1 month 6 days | 3 years 6 months |
Weighted average remaining contract term, exercisable (in years) | 2 years 8 months 12 days | |
Weighted average remaining contract term, vested or expected to vest (in years) | 5 years 1 month 6 days | |
Aggregate intrinsic value | $ 4 | $ 0 |
Aggregate intrinsic value, exercisable | 0 | |
Aggregate intrinsic value, vested or expected to vest | $ 4 |
STOCK-BASED COMPENSATION - Assu
STOCK-BASED COMPENSATION - Assumptions (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares | |
Share-Based Payment Arrangement [Abstract] | |
Volatility | 132% |
Risk-Free Interest Rate | 3.80% |
Expected Term (in years) | 5 years 9 months 7 days |
Dividend Rate | 0% |
Fair Value Per Share on Grant Date (in USD per share) | $ 0.04 |
NET INCOME (LOSS) PER SHARE - A
NET INCOME (LOSS) PER SHARE - Antidilutive Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 42,231 | 57,414 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 20,481 | 18,041 |
Performance stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 11,000 | 11,000 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 10,750 | 10,750 |
Convertible notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 0 | 7,623 |
Convertible preferred shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 0 | 10,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Mar. 24, 2023 | Dec. 31, 2022 | Apr. 27, 2022 |
Commitments and Contingencies Disclosure [Abstract] | |||
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 | ||
Net amount due to Mona Jr. included in accrued expenses | $ 300,000 | ||
Damages awarded | $ 17,481 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss, tax benefit recognized | $ 0 | $ 0 |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2017 | Jul. 31, 2016 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2022 | Jun. 30, 2019 | |
Related Party Transaction [Line Items] | ||||||||
Weighted average exercise price of outstanding vested options (in USD per share) | $ 0.33 | |||||||
Employer portion of FICA taxes | $ (6,171) | $ 0 | ||||||
Accrued payroll tax | 522 | $ 6,694 | ||||||
Reversal of accrued payroll tax | 6,171 | $ 0 | ||||||
Former President and CEO | ||||||||
Related Party Transaction [Line Items] | ||||||||
Due from former President and CEO | 6,400 | |||||||
Former President and CEO | Accrued Expenses | ||||||||
Related Party Transaction [Line Items] | ||||||||
Accrued payroll tax | $ 500 | $ 6,700 | ||||||
Former President and CEO | Prepaid Expenses and Other | ||||||||
Related Party Transaction [Line Items] | ||||||||
Due from former President and CEO | $ 6,200 | |||||||
Write-off of previously recorded receivable | $ 6,200 | |||||||
Former President and CEO | Selling, General and Administrative Expenses | ||||||||
Related Party Transaction [Line Items] | ||||||||
Employer portion of FICA taxes | $ 200 | |||||||
Reversal of accrued payroll tax | $ (200) | |||||||
Stock options | Former President and CEO | ||||||||
Related Party Transaction [Line Items] | ||||||||
Extension of period to exercise stock options | 5 years | |||||||
Unvested options vested (in shares) | 11,300,000 | |||||||
Weighted average exercise price of outstanding vested options (in USD per share) | $ 0.42 | |||||||
Stock options issued (in shares) | 5,000,000 | 6,000,000 | ||||||
Unvested stock options outstanding (in shares) | 6,750,000 | |||||||
Stock based compensation expense | $ 2,700 | |||||||
Restricted Stock Units (RSUs) | Former President and CEO | ||||||||
Related Party Transaction [Line Items] | ||||||||
Stock based compensation expense | $ 5,100 | |||||||
Vested RSU's (in shares) | 2,950,000 |