Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 12, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
Entity File Number | 001-39441 | |
Entity Registrant Name | Kubient, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-1808844 | |
Entity Address, Address Line One | 500 7th Avenue, | |
Entity Address, Adress Line Two | 8th Floor | |
Entity Address, City or Town | New York | |
Entity Address State Or Province | NY | |
Entity Address, Postal Zip Code | 10018 | |
City Area Code | 800 | |
Local Phone Number | 409-9456 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,303,743 | |
Entity Central Index Key | 0001729750 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.00001 per share | |
Trading Symbol | KBNT | |
Security Exchange Name | NASDAQ | |
Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock Purchase Warrants | |
Trading Symbol | KBNTW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 20,709,044 | $ 24,907,963 |
Accounts receivable, net | 2,352,463 | 2,291,533 |
Other receivables | 526,070 | |
Prepaid expenses and other current assets | 411,904 | 495,178 |
Total Current Assets | 23,473,411 | 28,220,744 |
Intangible assets, net | 2,789,625 | 2,946,610 |
Goodwill | 463,000 | 463,000 |
Property and equipment, net | 47,040 | 44,756 |
Deferred offering costs | 10,000 | 10,000 |
Total Assets | 26,783,076 | 31,685,110 |
Current Liabilities: | ||
Accounts payable - suppliers | 2,474,570 | 1,844,544 |
Accounts payable - trade | 1,050,395 | 659,362 |
Accrued expenses and other current liabilities | 851,800 | 2,493,287 |
Deferred revenue | 26,719 | 395,914 |
Notes payable | 42,066 | 151,336 |
Total Current Liabilities | 4,445,550 | 5,544,443 |
Contingent consideration | 23,378 | 613,000 |
Notes payable, non-current portion | 77,407 | 77,407 |
Total Liabilities | 4,546,335 | 6,234,850 |
Commitments and contingencies (Note 5) | ||
Stockholders' Equity : | ||
Preferred stock, $0.00001 par value; 5,000,000 shares authorized; No shares issued and outstanding as of March 31, 2022 and December 31, 2021 | ||
Common stock, $0.00001 par value; 95,000,000 shares authorized; 14,303,743 and 14,253,948 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 143 | 143 |
Additional paid-in capital | 52,444,880 | 52,030,907 |
Accumulated deficit | (30,208,282) | (26,580,790) |
Total Stockholders' Equity | 22,236,741 | 25,450,260 |
Total Liabilities and Stockholders' Equity | $ 26,783,076 | $ 31,685,110 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 14,303,743 | 14,253,948 |
Common stock, shares outstanding | 14,303,743 | 14,253,948 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Condensed Consolidated Statements of Operations | ||
Net Revenues | $ 1,245,304 | $ 707,757 |
Costs and Expenses: | ||
Sales and marketing | 1,333,010 | 756,950 |
Technology | 1,155,699 | 519,755 |
General and administrative | 2,182,549 | 1,255,572 |
Loss Accrual On Customer Contract | 789,605 | |
Total Costs and Expenses | 5,460,863 | 2,532,277 |
Loss From Operations | (4,215,559) | (1,824,520) |
Other (Expense) Income: | ||
Interest expense | (3,872) | (1,634) |
Interest income | 2,291 | 29,309 |
Change in fair value of contingent consideration | 589,622 | |
Other income | 26 | 233 |
Total Other Income | 588,067 | 27,908 |
Net Loss | $ (3,627,492) | $ (1,796,612) |
Net Loss Per Share - Basic | $ (0.25) | $ (0.14) |
Net Loss Per Share - Diluted | $ (0.25) | $ (0.14) |
Weighted Average Common Shares Outstanding - Basic | 14,256,159 | 12,617,171 |
Weighted Average Common Shares Outstanding - Diluted | 14,256,159 | 12,617,171 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | |
Balance at the beginning at Dec. 31, 2020 | $ 118 | $ 40,770,504 | $ (16,289,077) | $ 24,481,545 | |
Balance at the beginning (in shares) at Dec. 31, 2020 | 11,756,109 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation: Common stock | $ 1 | 513,102 | 513,103 | ||
Stock-based compensation: Common stock (in shares) | 70,040 | ||||
Stock-based compensation: Options | 2,576 | 2,576 | |||
Shares issued upon exercise of warrants, net of issuance costs | [1] | $ 20 | 9,274,891 | 9,274,911 | |
Shares issued upon exercise of warrants, net of issuance costs (in shares) | [1] | 2,047,361 | |||
Net loss | (1,796,612) | (1,796,612) | |||
Balance at the end at Mar. 31, 2021 | $ 139 | 50,561,073 | (18,085,689) | 32,475,523 | |
Balance at the end (in shares) at Mar. 31, 2021 | 13,873,510 | ||||
Balance at the beginning at Dec. 31, 2021 | $ 143 | 52,030,907 | (26,580,790) | 25,450,260 | |
Balance at the beginning (in shares) at Dec. 31, 2021 | 14,253,948 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Surrender and cancellation of common stock | (18,683) | (18,683) | |||
Surrender and cancellation of common stock (in shares) | (3,397) | ||||
Stock-based compensation: Common stock | 430,361 | 430,361 | |||
Stock-based compensation: Common stock (in shares) | 53,192 | ||||
Stock-based compensation: Options | 2,295 | 2,295 | |||
Net loss | (3,627,492) | (3,627,492) | |||
Balance at the end at Mar. 31, 2022 | $ 143 | $ 52,444,880 | $ (30,208,282) | $ 22,236,741 | |
Balance at the end (in shares) at Mar. 31, 2022 | 14,303,743 | ||||
[1] | Includes gross proceeds of $9,708,038, less issuance costs of $433,127. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Condensed Consolidated Statements of Changes in Stockholders' Equity | |
Gross proceeds from initial public offering | $ 9,708,038 |
Issuance costs on initial public offering | $ 433,127 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Cash Flows From Operating Activities: | |||
Net loss | $ (3,627,492) | $ (1,796,612) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 162,221 | 77,379 | |
Change in fair value of contingent consideration | (589,622) | ||
Stock-based compensation: Common stock | 429,811 | 2,576 | |
Stock-based compensation: Options | 2,295 | 238,638 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (60,930) | 913,623 | |
Other receivable | 507,387 | ||
Prepaid expenses and other current assets | 83,274 | (107,093) | |
Accounts payable - suppliers | 630,026 | (2,523) | |
Accounts payable - trade | 391,034 | (378,411) | |
Accrued expenses and other current liabilities | (1,532,150) | (454,018) | |
Accrued interest | 1,584 | ||
Deferred revenue | (369,195) | ||
Net Cash Used In Operating Activities | (3,973,341) | (1,504,857) | |
Cash Flows From Investing Activities: | |||
Purchase of intangible assets | (64,072) | ||
Purchase of property and equipment | (7,520) | (1,882) | |
Net Cash Used In Investing Activities | (7,520) | (65,954) | |
Cash Flows From Financing Activities: | |||
Proceeds from exercise of warrants [1] | [1] | 9,326,163 | |
Repayment of PPP loan | (109,270) | ||
Repayment of financed director and officer insurance premiums | (108,788) | ||
Net Cash (Used In) Provided By Financing Activities | (218,058) | 9,326,163 | |
Net (Decrease) Increase In Cash and Cash Equivalents | (4,198,919) | 7,755,352 | |
Cash and Cash Equivalents - Beginning of the Period | 24,907,963 | 24,782,128 | |
Cash and Cash Equivalents - End of the Period | 20,709,044 | 32,537,480 | |
Non-cash investing and financing activities: | |||
Surrender and cancellation of common stock | $ (18,683) | ||
Shares of common stock issued in satisfaction of accrued issuable equity | 500,400 | ||
Accrual of issuance costs | $ 51,252 | ||
[1] | Includes gross proceeds of $9,708,038, less issuance costs of $381,875. |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Parenthetical) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Condensed Consolidated Statements of Cash Flows | |
Gross proceeds from initial public offering | $ 9,708,038 |
Payments of offering costs for initial public offering | $ 381,875 |
BUSINESS ORGANIZATION, NATURE O
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2022 | |
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION | |
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION | NOTE 1 – BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION Organization and Operations Kubient, Inc. (“Kubient”, “we”, “our” or the “Company”), a Delaware corporation, was incorporated in May 2017 to solve some of the most significant problems facing the global digital advertising industry. The Company’s experienced team of marketing and technology veterans has developed the Audience Marketplace, a modular, highly scalable, transparent, cloud-based software platform for real-time trading of digital, Programmatic Advertising. The Company’s platform’s open marketplace gives both advertisers (ad space buyers) and Publishers (ad space sellers) the ability to use machine learning in the most critical parts of any Programmatic Advertising inventory auction, while simultaneously and significantly reducing those advertisers and Publishers’ exposure to fraud, specifically in the Pre-bid environment. The Company also provides unique capabilities with its proprietary pre-bid ad fraud detection and prevention, Kubient Artificial Intelligence (“KAI”), which has the ability to stop fraud in the critical 300 millisecond window before an advertiser spends their budget on fraudulent ad space. The technology is powered by deep learning algorithms, the latest advancement in machine learning, which allows the Company to ingest vast amounts of data, find complex patterns in the data and make accurate predictions. This provides advertisers a powerful tool capable of preventing the purchase of ad fraud. The Company believes that its Audience Marketplace technology allows advertisers to reach entire audiences rather than buying single impressions from disparate sources. By becoming a one stop shop for advertisers and publishers, providing them with the technology to deliver meaningful messages to their target audience, all in one place, on a single platform that is computationally efficient, transparent, and as safely fraud-free as possible, the Company believes that its Audience Marketplace platform (and the application of the platform’s machine learning algorithms) leads to increased publisher revenue, lower advertiser cost, reduced latency and increased economic transparency during the advertising auction process. Risks and Uncertainties The novel coronavirus (“COVID-19”) pandemic continues to impact global economic conditions, as well as the Company's operations. COVID-19 had a meaningful negative impact on our financial condition, cash flows and results of operations during 2020, as revenues declined and we reduced spending in light of COVID-19 uncertainty. Although we continued to experience disruption and volatility during 2021, which could continue to have an adverse effect on our revenues and earnings in 2022, the ultimate economic impact of the pandemic remains fluid, as there continue to be periods of COVID-19 resurgence in various parts of the world. The extent of the impact of the COVID-19 pandemic in 2022 on our operational and financial performance will depend on a variety of factors, some of which are outside our control, including the duration and spread of COVID-19 and its variants, and its impact on our clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted. Similarly, the economic uncertainty caused by the COVID-19 pandemic has made and may continue to make it difficult for us to forecast revenue and operating results and to make decisions regarding operational cost structures and investments. We have committed, and we plan to continue to commit, resources to grow our business, employee base, and technology development, and such investments may not yield anticipated returns, particularly if worldwide business activity continues to be impacted by the COVID-19 pandemic. The duration and extent of the impact from the COVID-19 pandemic depend on future developments that cannot be accurately predicted at this time, and if we are not able to respond to and manage the impact of such events effectively, our business may be harmed. There can be no assurance that precautionary measures, whether adopted by us or imposed by others, will be effective, and such measures could negatively affect our sales, marketing, and client service efforts, delay and lengthen our sales cycles, decrease our employees’, clients’, or partners’ productivity, or create operational or other challenges, any of which could harm our business and results of operations. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair statement of the unaudited condensed consolidated financial statements of the Company as of March 31, 2022 and for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures as of December 31, 2021 and 2020 and for the years then ended which are included the Annual Report filed on Form 10-K on March 31, 2022. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES There have been no material changes to the significant accounting policies included in the audited consolidated financial statements as of December 31, 2021 and 2020 and for the years then ended, which were included the Annual Report filed on Form 10-K on March 31, 2022, except as disclosed in this note. Revenue Recognition The Company maintains a contract with each customer and supplier, which specifies the terms of the relationship. The Company provides a service to its customers (the buy-side ad networks who work for advertisers) by connecting advertisers and publishers. For this service, the Company earns a percentage of the amount that is paid by the advertiser, who wants to run a digital advertising campaign, which, in some cases, is reduced by the amount paid to the publisher, who wants to sell its ad space to the advertiser. The transaction price is determined based on the consideration to which the Company expects to be entitled, including the impact of any implicit price concessions over the course of the contract. The Company’s performance obligation is to facilitate the publication of advertisements. The performance obligation is satisfied at the point in time that the ad is placed. Subsequent to a bid being won, the associated fees are generally not subject to refund or adjustment. Historically, any refunds and adjustments have not been material. The revenue recognized is the amount the Company is responsible to collect from the customer related to the placement of an ad (the “Gross Billing”), less the amount the Company remits to the supplier for the ad space (the “Supplier Cost”), if any. The determination of whether the Company is the principal or agent, and hence whether to report revenue on a gross basis equal to the Gross Billing or on a net basis for the difference between the Gross Billing and Supplier Cost, requires judgment. The Company acts as an agent in arranging via its platform for the specified good (the ad space) to be purchased by the advertiser, as it does not control the goods or services being transferred to the end customer, it does not take responsibility for the quality or acceptability of the ad space, it does not bear inventory risk, nor does it have discretion in establishing price of the ad space. As a result, the Company recognizes revenue on a net basis for the difference between the Gross Billing and the Supplier Cost. The Company invoices customers on a monthly basis for the amount of Gross Billings in the relevant period. Invoice payment terms, negotiated on a customer-by- customer basis, are typically between 45 to 90 days. However, for certain agency customers with sequential liability terms as specified by the Interactive Advertising Bureau, (i) payments are not due to the Company until such agency customers has received payment from its customers (ii) the Company is not required to make a payment to its supplier until payment is received from the Company’s customer and (iii) the supplier is responsible to pursue collection directly with the advertiser. As a result, once the Company has met the requirements of each of the five steps under ASC 606, the Company’s accounts receivable are recorded at the amount of Gross Billings which represent amounts it is responsible to collect and accounts payable, if applicable, are recorded at the amount payable to suppliers. In the event step 1 under ASC 606 is not met, the Company does not record either the accounts receivable or accounts payable. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. From time to time, the Company records loss accruals for estimated costs that exceed estimated revenue related to its contracts with customers. During the three months ended March 31, 2022, the Company recognized an estimated loss accrual on a customer contract of $789,605 related to media costs incurred associated with a contract with a customer, which was included in costs and expenses on the condensed consolidated statement of operations. As of March 31, 2022 and December 31, 2021, the Company did not have any contract assets from contracts with customers. During the three months ended March 31, 2022, the Company recognized $395,914 of revenue that was deferred as of December 31, 2021. As of March 31, 2022 and December 31, 2021, the Company had $0 and $395,914, respectively, of contract liabilities where performance obligations have not yet been satisfied. The Company expects to satisfy its remaining performance obligations and recognize the revenue within the next twelve months. During the three months ended March 31, 2022 and 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of vested common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares of options, warrants and convertible notes, if not anti-dilutive. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Three Months Ended March 31, 2022 2021 Warrants [1] 5,122,074 5,234,721 Restricted stock units 855,989 — Restricted stock awards 307,791 — Stock options 94,447 117,261 6,380,301 5,351,982 [1] The 2022 period includes shares underlying warrants that are exercisable into an aggregate of (i) 368,711 shares of common stock and (ii) five-year warrants to purchase 368,711 shares of common stock at an exercise price of $5.50 per share.The 2021 period includes shares underlying warrants that are exercisable into an aggregate of (i) 462,997 shares of common stock and (ii) five-year warrants to purchase 462,997 shares of common stock at an exercise price of $5.50 per share. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 3 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: March 31, December 31, 2022 2021 Accrued bonuses $ — $ 554,997 Accrued payroll 13,750 13,750 Financed director and officer insurance premiums 108,788 217,575 Accrued supplier expenses 96,744 67,971 Accrued legal settlement — 975,000 Accrued legal and professional fees 155,530 20,323 Accrued commissions 3,681 36,109 Accrued media commissions 47,925 138,028 Credit card payable 276,724 328,075 Accrued programming expenses — 1,750 Accrued issuable equity 708 1,258 Accrued interest 7,725 9,017 Accrued warrant exercise costs 83,519 83,519 Other 24,571 45,915 Total accrued expenses and other current liabilities $ 819,665 $ 2,493,287 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 4 – STOCKHOLDERS’ EQUITY Stock-Based Compensation For the three months ended March 31, 2022 and 2021, the Company recognized stock-based compensation expense related to stock options, restricted stock awards and restricted stock units as follows: For the Three Months Ended March 31, 2022 2021 Sales and marketing $ 35,581 $ 220,508 Technology 78,875 2,863 General and administrative 317,650 17,843 Total $ 432,106 $ 241,214 As of March 31, 2022, there was approximately $1,983,000 of unrecognized stock-based compensation expense related to awards that were determined to be probable to vest, which will be recognized over approximately 3.4 years. During the three months ended March 31, 2022, the Company granted 53,192 shares of immediately vested restricted stock awards (“RSAs”) to non-employee directors under the Kubient, Inc. 2021 Equity Incentive Plan (the “2021 Plan”) with an aggregate grant date fair value of $100,000 that was recognized immediately. During the three months ended March 31, 2022, the Company issued 100,000 RSAs, 489,990 restricted stock units (“RSUs”) and a target number of 234,376 performance stock units (“PSUs”), all issued under the 2021 Plan. The RSAs and RSUs generally vest over four years and the PSUs are earned based upon based upon actual net revenue generated by the Company during 2022 as compared to the targeted revenue specified in each award. Depending on actual net revenues generated as compared to the targeted amounts, the grantees may earn between 0% and 150% of their target award. The awards had an aggregate issuance date fair value of approximately $1,900,000. Common Stock During the three months ended March 31, 2022, the Company’s chief financial officer surrendered to the Company 3,397 shares of common stock, which were subsequently cancelled by the Company, in order to satisfy a tax withholding obligation of approximately $18,000 in connection with a previous grant. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 3 Months Ended |
Mar. 31, 2022 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 5 – FAIR VALUE MEASUREMENT On November 30, 2021, Kubient entered into and consummated an Asset Purchase Agreement (the “Purchase Agreement”) between the Company and MediaCrossing Inc., a Delaware corporation (“MediaCrossing”), pursuant to which the Company acquired certain assets and liabilities that were critical to continue to operate the business of MediaCrossing for (i) $500,000 in cash and (ii) if the acquired business achieves certain milestones in 2022, up to 822,369 shares of the Company’s common stock, par value $0.00001 per share (the “Earnout Shares”) (the “Transaction”). The Earnout Shares had a fair value of $2.55 as of the acquisition date. The Earnout Shares were measured using a Monte Carlo simulation. Key assumptions used in the fair value assessment consisted of revenue projections (which were used to estimate the number of Earnout Shares issuable), discount rate and standard deviation. The fair value measurement of the contingent consideration is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect Kubient’s own assumptions in measuring fair value. On March 31, 2022, the Company recomputed the fair value of its Earnout Shares as $26,719 using the Monte Carlo simulation. The Company recorded a gain on the change in fair value of the contingent consideration of $589,622 during the three months ended March 31, 2022. The following table sets forth a summary of the changes in the fair value of Level 3 liabilities that are measured at fair value on a recurring basis: Contingent Consideration Beginning balance as of January 1, 2022 $ 613,000 Change in fair value of contingent consideration (589,622) Ending balance as of March 31, 2022 $ 23,378 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 – COMMITMENTS AND CONTINGENCIES From time to time, the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Settlement Agreement On March 11, 2022, the Company, Aureus Holdings, LLC d/b/a Lo70s (“Lo70s”) and JPAR, LLC entered into a Settlement Agreement and Mutual Release (the “Lo70s Settlement Agreement”). Pursuant to the Lo70s Settlement Agreement, the parties agreed to dismiss the litigation (Aureus Holdings, LLC d/b/a Lo70s v. Kubient, Inc., et al., Superior Court of Delaware, Case No. N20C-07-061) and resolve all claims among them, including potential or future claims arising from the letter of intent that the Company and Lo70s had entered into in March 2019, as well as a consulting agreement entered into between the Company and an employee of Lo70s in connection with such letter of intent. Under the terms of the Lo70s Settlement Agreement, the Company made a cash payment in the three months ended March 31, 2022 of $975,000 to Lo70s in consideration of the dismissal of the ligation among the parties, as well as the releases and covenants of Lo70s and JPAR, LLC set forth in the Lo70s Settlement Agreement. During the year ended December 31, 2021, the Company recognized a loss on settlement of approximately $875,000 such that, as of December 31, 2021, it had accrued for the $975,000 cash payment. |
CONCENTRATIONS
CONCENTRATIONS | 3 Months Ended |
Mar. 31, 2022 | |
CONCENTRATIONS | |
CONCENTRATIONS | NOTE 7 – CONCENTRATIONS Customer Concentrations The following table sets forth information as to each customer that accounted for 10% or more of the Company’s net revenues for the following periods: For the Three Months Ended March 31, Customer 2022 2021 Customer A 42.02 % 102.40 % Customer B 43.25 % N/A Total 85.27 % 102.40 % * Less than 10%. From time to time, certain customers generate negative net revenues that resulted from Supplier Costs that exceeded the Gross Billing. As a result, the Company’s concentrations on net revenues may result in total percentages that exceed 100%. The following table sets forth information as to each customer that accounted for 10% or more of the Company’s gross accounts receivable as of: March 31, December 31, Customer 2022 2021 Customer A 15.98 % 22.08 % Customer B 23.13 % * Customer E 19.04 % * Customer F 27.99 % 52.18 % Total 86.13 % 74.26 % A reduction in sales from or loss of these customers would have a material adverse effect on the Company’s results of operations and financial condition. Supplier Concentrations The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s Supplier Costs for the following periods: For the Three Months Ended March 31, Supplier 2022 2021 Supplier A 18.77 % * Supplier B * 18.10 % Supplier C 23.84 % N/A Supplier D 17.56 % N/A Supplier E N/A 16.2 % Supplier F * 15.0 % Supplier G 14.40 % N/A Total 74.56 % 49.30 % * Less than 10%. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Revenue Recognition | Revenue Recognition The Company maintains a contract with each customer and supplier, which specifies the terms of the relationship. The Company provides a service to its customers (the buy-side ad networks who work for advertisers) by connecting advertisers and publishers. For this service, the Company earns a percentage of the amount that is paid by the advertiser, who wants to run a digital advertising campaign, which, in some cases, is reduced by the amount paid to the publisher, who wants to sell its ad space to the advertiser. The transaction price is determined based on the consideration to which the Company expects to be entitled, including the impact of any implicit price concessions over the course of the contract. The Company’s performance obligation is to facilitate the publication of advertisements. The performance obligation is satisfied at the point in time that the ad is placed. Subsequent to a bid being won, the associated fees are generally not subject to refund or adjustment. Historically, any refunds and adjustments have not been material. The revenue recognized is the amount the Company is responsible to collect from the customer related to the placement of an ad (the “Gross Billing”), less the amount the Company remits to the supplier for the ad space (the “Supplier Cost”), if any. The determination of whether the Company is the principal or agent, and hence whether to report revenue on a gross basis equal to the Gross Billing or on a net basis for the difference between the Gross Billing and Supplier Cost, requires judgment. The Company acts as an agent in arranging via its platform for the specified good (the ad space) to be purchased by the advertiser, as it does not control the goods or services being transferred to the end customer, it does not take responsibility for the quality or acceptability of the ad space, it does not bear inventory risk, nor does it have discretion in establishing price of the ad space. As a result, the Company recognizes revenue on a net basis for the difference between the Gross Billing and the Supplier Cost. The Company invoices customers on a monthly basis for the amount of Gross Billings in the relevant period. Invoice payment terms, negotiated on a customer-by- customer basis, are typically between 45 to 90 days. However, for certain agency customers with sequential liability terms as specified by the Interactive Advertising Bureau, (i) payments are not due to the Company until such agency customers has received payment from its customers (ii) the Company is not required to make a payment to its supplier until payment is received from the Company’s customer and (iii) the supplier is responsible to pursue collection directly with the advertiser. As a result, once the Company has met the requirements of each of the five steps under ASC 606, the Company’s accounts receivable are recorded at the amount of Gross Billings which represent amounts it is responsible to collect and accounts payable, if applicable, are recorded at the amount payable to suppliers. In the event step 1 under ASC 606 is not met, the Company does not record either the accounts receivable or accounts payable. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. From time to time, the Company records loss accruals for estimated costs that exceed estimated revenue related to its contracts with customers. During the three months ended March 31, 2022, the Company recognized an estimated loss accrual on a customer contract of $789,605 related to media costs incurred associated with a contract with a customer, which was included in costs and expenses on the condensed consolidated statement of operations. As of March 31, 2022 and December 31, 2021, the Company did not have any contract assets from contracts with customers. During the three months ended March 31, 2022, the Company recognized $395,914 of revenue that was deferred as of December 31, 2021. As of March 31, 2022 and December 31, 2021, the Company had $0 and $395,914, respectively, of contract liabilities where performance obligations have not yet been satisfied. The Company expects to satisfy its remaining performance obligations and recognize the revenue within the next twelve months. During the three months ended March 31, 2022 and 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of vested common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares of options, warrants and convertible notes, if not anti-dilutive. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Three Months Ended March 31, 2022 2021 Warrants [1] 5,122,074 5,234,721 Restricted stock units 855,989 — Restricted stock awards 307,791 — Stock options 94,447 117,261 6,380,301 5,351,982 [1] The 2022 period includes shares underlying warrants that are exercisable into an aggregate of (i) 368,711 shares of common stock and (ii) five-year warrants to purchase 368,711 shares of common stock at an exercise price of $5.50 per share.The 2021 period includes shares underlying warrants that are exercisable into an aggregate of (i) 462,997 shares of common stock and (ii) five-year warrants to purchase 462,997 shares of common stock at an exercise price of $5.50 per share. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of calculation of weighted average dilutive common shares | For the Three Months Ended March 31, 2022 2021 Warrants [1] 5,122,074 5,234,721 Restricted stock units 855,989 — Restricted stock awards 307,791 — Stock options 94,447 117,261 6,380,301 5,351,982 [1] The 2022 period includes shares underlying warrants that are exercisable into an aggregate of (i) 368,711 shares of common stock and (ii) five-year warrants to purchase 368,711 shares of common stock at an exercise price of $5.50 per share.The 2021 period includes shares underlying warrants that are exercisable into an aggregate of (i) 462,997 shares of common stock and (ii) five-year warrants to purchase 462,997 shares of common stock at an exercise price of $5.50 per share. |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: March 31, December 31, 2022 2021 Accrued bonuses $ — $ 554,997 Accrued payroll 13,750 13,750 Financed director and officer insurance premiums 108,788 217,575 Accrued supplier expenses 96,744 67,971 Accrued legal settlement — 975,000 Accrued legal and professional fees 155,530 20,323 Accrued commissions 3,681 36,109 Accrued media commissions 47,925 138,028 Credit card payable 276,724 328,075 Accrued programming expenses — 1,750 Accrued issuable equity 708 1,258 Accrued interest 7,725 9,017 Accrued warrant exercise costs 83,519 83,519 Other 24,571 45,915 Total accrued expenses and other current liabilities $ 819,665 $ 2,493,287 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
Schedule of stock based compensation expense related to stock options and common stock | For the Three Months Ended March 31, 2022 2021 Sales and marketing $ 35,581 $ 220,508 Technology 78,875 2,863 General and administrative 317,650 17,843 Total $ 432,106 $ 241,214 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
FAIR VALUE MEASUREMENT | |
Summary of changes in the fair value of Level 3 liabilities that are measured at fair value on a recurring basis | The following table sets forth a summary of the changes in the fair value of Level 3 liabilities that are measured at fair value on a recurring basis: Contingent Consideration Beginning balance as of January 1, 2022 $ 613,000 Change in fair value of contingent consideration (589,622) Ending balance as of March 31, 2022 $ 23,378 |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CONCENTRATIONS | |
Summary of customer and supplier concentrations | The following table sets forth information as to each customer that accounted for 10% or more of the Company’s net revenues for the following periods: For the Three Months Ended March 31, Customer 2022 2021 Customer A 42.02 % 102.40 % Customer B 43.25 % N/A Total 85.27 % 102.40 % The following table sets forth information as to each customer that accounted for 10% or more of the Company’s gross accounts receivable as of: March 31, December 31, Customer 2022 2021 Customer A 15.98 % 22.08 % Customer B 23.13 % * Customer E 19.04 % * Customer F 27.99 % 52.18 % Total 86.13 % 74.26 % The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s Supplier Costs for the following periods: For the Three Months Ended March 31, Supplier 2022 2021 Supplier A 18.77 % * Supplier B * 18.10 % Supplier C 23.84 % N/A Supplier D 17.56 % N/A Supplier E N/A 16.2 % Supplier F * 15.0 % Supplier G 14.40 % N/A Total 74.56 % 49.30 % * Less than 10%. |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Contract liabilities | $ 0 | $ 395,914 |
Deferred revenue recognized by the company | 395,914 | |
Loss Accrual On Customer Contract | $ 789,605 | |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Invoice payment terms | 45 days | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Invoice payment terms | 90 days |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Performance Obligation (Details) - USD ($) | Mar. 31, 2022 | Mar. 31, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue recognized from performance obligations satisfied | $ 0 | $ 0 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue recognized from performance obligations satisfaction period | 12 months |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Net Loss Per Common Share (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Net Loss Per Common Share | |||
Shares excluded from the calculation of weighted average dilutive common shares | 6,380,301 | 5,351,982 | |
Number of warrants exercisable (in shares) | 368,711 | 462,997 | |
Warrants term (in years) | 5 years | 5 years | |
Warrants to purchase shares of common stock | 368,711 | 462,997 | |
Exercise price of warrants (in dollars per share) | $ 5.50 | $ 5.50 | |
Warrants | |||
Net Loss Per Common Share | |||
Shares excluded from the calculation of weighted average dilutive common shares | 5,122,074 | 5,234,721 | |
Restricted stock units (RSUs) | |||
Net Loss Per Common Share | |||
Shares excluded from the calculation of weighted average dilutive common shares | 855,989 | ||
Restricted stock awards | |||
Net Loss Per Common Share | |||
Shares excluded from the calculation of weighted average dilutive common shares | 307,791 | ||
Stock options | |||
Net Loss Per Common Share | |||
Shares excluded from the calculation of weighted average dilutive common shares | 94,447 | 117,261 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued bonuses | $ 554,997 | |
Accrued payroll | $ 13,750 | 13,750 |
Financed director and officer insurance premiums | 108,788 | 217,575 |
Accrued supplier expenses | 96,744 | 67,971 |
Accrued legal settlement | 975,000 | |
Accrued legal and professional fees | 155,530 | 20,323 |
Accrued commissions | 3,681 | 36,109 |
Accrued media commissions | 47,925 | 138,028 |
Credit card payable | 276,724 | 328,075 |
Accrued programming expenses | 1,750 | |
Accrued issuable equity | 708 | 1,258 |
Accrued interest | 7,725 | 9,017 |
Accrued warrant exercise costs | 83,519 | 83,519 |
Other | 24,571 | 45,915 |
Total accrued expenses and other current liabilities | $ 819,665 | $ 2,493,287 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Class of Stock [Line Items] | ||
Common stock aggregate issuance date fair value | $ 430,361 | $ 513,103 |
Proceeds from exercise of stock options | 18,000 | |
Stock-based compensation expense | 432,106 | $ 241,214 |
Unrecognized stock-based compensation expense | $ 1,983,000 | |
Unrecognized stock-based compensation expense, period of recognition | 3 years 4 months 24 days | |
Issuance costs from exercise of warrants | $ 433,127 | |
Executive Officer | ||
Class of Stock [Line Items] | ||
Common Stock Surrendered | 3,397 | |
2021 Equity Incentive Plan | ||
Class of Stock [Line Items] | ||
Common stock aggregate issuance date fair value | $ 1,900,000 | |
2021 Equity Incentive Plan | Restricted stock units (RSUs) | ||
Class of Stock [Line Items] | ||
Shares of common stock granted | 489,990 | |
2021 Equity Incentive Plan | PSUs | ||
Class of Stock [Line Items] | ||
Shares of common stock granted | 234,376 | |
2021 Equity Incentive Plan | RSAs | ||
Class of Stock [Line Items] | ||
Shares of common stock granted | 100,000 | |
Common stock aggregate issuance date fair value | $ 100,000 | |
2021 Equity Incentive Plan | Non-employees | RSAs | ||
Class of Stock [Line Items] | ||
Shares of common stock granted | 53,192 | |
Minimum | 2021 Equity Incentive Plan | ||
Class of Stock [Line Items] | ||
Percentage of Earning Of Grantees | 0.00% | |
Maximum | 2021 Equity Incentive Plan | ||
Class of Stock [Line Items] | ||
Percentage of Earning Of Grantees | 150.00% |
STOCKHOLDERS' EQUITY - Stock-Ba
STOCKHOLDERS' EQUITY - Stock-Based Compensation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total | $ 432,106 | $ 241,214 |
Unrecognized stock-based compensation expense | $ 1,983,000 | |
Unrecognized stock-based compensation expense, period of recognition | 3 years 4 months 24 days | |
Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total | $ 35,581 | 220,508 |
Technology | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total | 78,875 | 2,863 |
General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total | $ 317,650 | $ 17,843 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - Fair Value, Inputs, Level 3 [Member] | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Beginning balance as of January 1, 2022 | $ 613,000 |
Change in fair value of contingent consideration | (589,622) |
Ending balance as of March 31, 2022 | $ 23,378 |
FAIR VALUE MEASUREMENT - Additi
FAIR VALUE MEASUREMENT - Additional information (Details) - USD ($) | Mar. 31, 2022 | Nov. 30, 2021 | Mar. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Change in fair value of contingent consideration | $ 589,622 | ||
MediaCrossing Inc [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash | $ 500,000 | ||
Earnout Shares Acquired By The Company | 822,369 | ||
Earnout Shares Par Value | $ 0.00001 | ||
Earnout Shares Fair Value | $ 2.55 | ||
Recomputed fair value of earnout shares | $ 26,719 | ||
Change in fair value of contingent consideration | $ 589,622 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Settlements (Details) - Settlement Agreements - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Mar. 31, 2022 | |
Loss Contingencies [Line Items] | ||
Outstanding notes payable balance | $ 975,000 | |
Loss on legal settlement | $ 875,000 |
CONCENTRATIONS - Customer Conce
CONCENTRATIONS - Customer Concentrations (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
CONCENTRATIONS | |||
Accounts receivable, net | $ 2,352,463 | $ 2,291,533 | |
Revenue | Customer Concentrations | Customer A | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 42.02% | 102.40% | |
Revenue | Customer Concentrations | Customer B | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 43.25% | ||
Revenue | Customer Concentrations | Top Five Customers | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 85.27% | 102.40% | |
Accounts Receivable | Customer Concentrations | Customer A | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 15.98% | 22.08% | |
Accounts Receivable | Customer Concentrations | Customer B | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 23.13% | ||
Accounts Receivable | Customer Concentrations | Customer E | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 19.04% | ||
Accounts Receivable | Customer Concentrations | Customer F | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 27.99% | 52.18% | |
Accounts Receivable | Customer Concentrations | Top Four Customers | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 86.13% | 74.26% |
CONCENTRATIONS - Supplier Conce
CONCENTRATIONS - Supplier Concentrations (Details) - Cost of goods sold - Supplier Concentrations | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Supplier A | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 18.77% | |
Supplier B | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 18.10% | |
Supplier C | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 23.84% | |
Supplier D | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 17.56% | |
Supplier E | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 16.20% | |
Supplier F | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 15.00% | |
Supplier G | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 14.40% | |
Top Seven Suppliers | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 74.56% | 49.30% |