Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 28, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 6,458,710 | ||
Entity Common Stock, Shares Outstanding | 14,515,940 | ||
Entity Central Index Key | 0001729750 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | Marcum LLP | ||
Auditor Location | Los Angeles, CA | ||
Auditor Firm ID | 688 | ||
Common Stock, par value $0.00001 per share | |||
Document and Entity Information | |||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | KBNT | ||
Security Exchange Name | NASDAQ | ||
Common Stock Purchase Warrants | |||
Document and Entity Information | |||
Title of 12(b) Security | Common Stock Purchase Warrants | ||
Trading Symbol | KBNTW | ||
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 14,739,484 | $ 24,907,963 |
Accounts receivable, net | 135,658 | 2,291,533 |
Other receivables | 526,070 | |
Prepaid expenses and other current assets | 346,935 | 495,178 |
Total Current Assets | 15,222,077 | 28,220,744 |
Intangible assets, net | 2,946,610 | |
Goodwill | 463,000 | |
Property and equipment, net | 44,756 | |
Deferred financing costs | 10,000 | 10,000 |
Total Assets | 15,232,077 | 31,685,110 |
Current Liabilities: | ||
Accounts payable - suppliers | 673,781 | 1,844,544 |
Accounts payable - trade | 816,190 | 659,362 |
Accrued expenses and other current liabilities | 830,365 | 2,493,287 |
Deferred revenue | 28,403 | 395,914 |
Current portion of notes payable | 151,336 | |
Total Current Liabilities | 2,348,739 | 5,544,443 |
Contingent consideration | 613,000 | |
Notes payable, non-current portion | 78,900 | 77,407 |
Total Liabilities | 2,427,639 | 6,234,850 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $0.00001 par value; 5,000,000 shares authorized; No shares issued and outstanding as of September 30, 2022 and December 31, 2021 | ||
Common stock, $0.00001 par value; 95,000,000 shares authorized; 14,402,500 and 14,253,948 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 145 | 143 |
Additional paid-in capital | 53,004,967 | 52,030,907 |
Accumulated deficit | (40,200,674) | (26,580,790) |
Total Stockholders' Equity | 12,804,438 | 25,450,260 |
Total Liabilities and Stockholders' Equity | $ 15,232,077 | $ 31,685,110 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 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 (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 14,456,035 | 14,253,948 |
Common stock, shares outstanding | 14,456,035 | 14,253,948 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Consolidated Statements of Operations | ||
Net Revenues | $ 2,403,408 | $ 2,737,767 |
Costs and Expenses: | ||
Sales and marketing | 3,779,509 | 3,032,133 |
Technology | 3,177,497 | 3,079,752 |
General and administrative | 6,558,052 | 6,117,601 |
Loss on legal settlement | (880,381) | |
Impairment loss on intangible assets | 2,626,974 | |
Impairment loss on property and equipment | 49,948 | |
Impairment loss on goodwill | 463,000 | |
Total Costs and Expenses | 16,654,980 | 13,109,867 |
Loss From Operations | (14,251,572) | (10,372,100) |
Other (Expense) Income: | ||
Interest expense | (10,909) | (8,383) |
Interest income | 18,597 | 88,537 |
Change in fair value of contingent consideration | 613,000 | |
Other income | 11,000 | 233 |
Total Other Income | 631,688 | 80,387 |
Net Loss | $ (13,619,884) | $ (10,291,713) |
Net Loss Per Share - Basic | $ (0.95) | $ (0.75) |
Net Loss Per Share - Diluted | $ (0.95) | $ (0.75) |
Weighted Average Common Shares Outstanding - Basic | 14,319,060 | 13,695,700 |
Weighted Average Common Shares Outstanding - Diluted | 14,319,060 | 13,695,700 |
Consolidated Statements of Chan
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 | ||||
Shares issued upon exercise of warrants, net of issuance costs | $ 21 | 9,703,609 | 9,703,630 | |
Shares issued upon exercise of warrants, net of issuance costs (in shares) | 2,156,322 | |||
Stock-based compensation: Common stock | $ 3 | 993,044 | 993,047 | |
Stock-based compensation: Common stock (in shares) | 238,702 | |||
Stock-based compensation: Options | 23,390 | 23,390 | ||
Common stock issued upon exercise of options | 8,361 | 8,361 | ||
Common stock issued upon exercise of options (in shares) | 2,815 | |||
Shares issued as partial consideration for intangible asset | $ 1 | 531,999 | 532,000 | |
Shares issued as partial consideration for intangible asset (in shares) | 100,000 | |||
Net loss | (10,291,713) | (10,291,713) | ||
Balance at the end at Dec. 31, 2021 | $ 143 | 52,030,907 | (26,580,790) | 25,450,260 |
Balance at the end (in shares) at Dec. 31, 2021 | 14,253,948 | |||
Increase (decrease) in stockholders' equity | ||||
Surrender and cancellation of common stock | (54,871) | (54,871) | ||
Surrender and cancellation of common stock (in shares) | (11,720) | |||
Stock-based compensation: Common stock | $ 2 | 1,020,091 | 1,020,093 | |
Stock-based compensation: Common stock (in shares) | 213,807 | |||
Stock-based compensation: Options | 8,840 | 8,840 | ||
Net loss | (13,619,884) | (13,619,884) | ||
Balance at the end at Dec. 31, 2022 | $ 145 | $ 53,004,967 | $ (40,200,674) | $ 12,804,438 |
Balance at the end (in shares) at Dec. 31, 2022 | 14,456,035 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Consolidated Statements of Changes in Stockholders' Equity | |
Gross proceeds from initial public offering | $ 10,169,027 |
Issuance costs on initial public offering | 381,878 |
Gross proceeds upon exercise of warrants | 10,169,027 |
Issuance costs upon exercise of warrants | $ 465,397 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Cash Flows From Operating Activities: | |||
Net loss | $ (13,619,884) | $ (10,291,713) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Bad debt expense | 7,000 | 22,698 | |
Impairment loss on intangible assets | 2,626,974 | ||
Impairment loss on property and equipment | 49,948 | ||
Impairment loss on goodwill | 463,000 | ||
Depreciation and amortization | 330,993 | 452,136 | |
Change in fair value of contingent consideration | (613,000) | ||
Common stock | 982,647 | 700,652 | |
Options | 8,840 | 23,390 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 2,148,875 | (940,477) | |
Other receivable | 505,996 | 3,955 | |
Prepaid expenses and other current assets | 507,500 | 73,491 | |
Accounts payable - suppliers | (1,170,763) | 1,508,516 | |
Accounts payable - trade | 156,828 | (447,242) | |
Accrued expenses and other current liabilities | (1,617,375) | 1,467,306 | |
Deferred revenue | (367,511) | (247,504) | |
Net Cash Used In Operating Activities | (9,599,932) | (7,674,792) | |
Cash Flows From Investing Activities: | |||
Purchase of intangible assets | (1,133,072) | ||
Purchase consideration of MediaCrossing | (500,000) | ||
Purchase of property and equipment | (16,549) | (39,414) | |
Net Cash Used In Investing Activities | (16,549) | (1,672,486) | |
Cash Flows From Financing Activities: | |||
Proceeds from exercise of warrants | [1] | 9,787,149 | |
Proceeds from exercise of options | 8,361 | ||
Repayment of PPP loan | (149,843) | (177,347) | |
Repayment of financed director and officer insurance premiums | (402,155) | (145,050) | |
Net Cash (Used In) Provided By Financing Activities | (551,998) | 9,473,113 | |
Net (Decrease) Increase In Cash and Cash Equivalents | (10,168,479) | 125,835 | |
Cash and Cash Equivalents - Beginning of the Period | 24,907,963 | 24,782,128 | |
Cash and Cash Equivalents - End of the Period | 14,739,484 | 24,907,963 | |
Cash paid during the year for: | |||
Interest | 7,291 | 7,912 | |
Non-cash investing and financing activities: | |||
Shares of common stock issued in satisfaction of accrued issuable equity | 507,044 | ||
Accrual of warrant exercise issuance costs | 83,519 | ||
Shares issued as partial consideration for intangible asset | (18,683) | 532,000 | |
Financing of insurance premiums | $ 357,866 | 362,625 | |
Contingent consideration | $ 613,000 | ||
[1]Includes gross proceeds of $10,169,027, less issuance costs of $381,878. |
BUSINESS ORGANIZATION, NATURE O
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES | |
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES | NOTE 1 – BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES 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 worldwide spread of the novel coronavirus (“COVID-19”), including the emergence of variants and subvariants, as well as rising interest rates, inflation, changes in foreign currency exchange rates and geopolitical developments (including the war in Ukraine) have resulted, and may continue to result, in a global slowdown of economic activity, which may decrease demand for a broad variety of goods and services, including those provided by the Company’s clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time until economic activity normalizes. As a result of the current uncertainty in economic activity, the Company is unable to predict the size and duration of the impact on its revenue and its results of operations. The extent of the impact of these macroeconomic factors on the Company’s operational and financial performance will depend on a variety of factors, including the duration and spread of COVID-19 and its variants and the duration and the extent of geopolitical disruption and their respective impacts on the Company’s clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted. For example, many of the Company’s employees adopted a hybrid work schedule consisting of both in-person work and working from home. Additionally, the Company began to decrease the use of its physical offices paces in order to conserve its capital for other post-COVID business development initiatives. The Company continues to monitor the effects of the COVID-19 pandemic and take steps deemed appropriate to limit the impact on its business. Similarly, the economic uncertainty caused by the COVID-19 pandemic has made and may continue to make it difficult for the Company to forecast revenue and operating results and to make decisions regarding operational cost structures and investments. The Company has committed, and the Company plans to continue to commit, resources to grow its 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 the Company is not able to respond to and manage the impact of such events effectively, its business may be harmed. There can be no assurance that precautionary measures, whether adopted by the Company or imposed by others, will be effective, and such measures could negatively affect its sales, marketing, and client service efforts, delay and lengthen its sales cycles, decrease its employees’, clients’, or partners’ productivity, or create operational or other challenges, any of which could harm its business and results of operations. See Note 2 – Significant Accounting Policies – Cash and Cash Equivalents for additional details regarding Silicon Valley Bank (“SVB”). |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of Company’s management, who is responsible for their integrity and objectivity. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates used in these financial statements include, but are not limited to, fair value calculations for equity securities, revenue recognition, stock-based compensation, useful lives of intangibles assets, the collectability of receivables, the recoverability and useful lives of long-lived assets and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and may cause actual results to differ from those estimates. Liquidity As of December 31, 2022, the Company had cash and cash equivalents of $14,739,484 and working capital of $12,873,338. During the year ended December 31, 2022, the Company incurred a net loss of $13,619,884 and used cash in operating activities of $9,599,932. The Company believes its current cash on hand is sufficient to meet its operating and capital requirements for at least the next twelve months from the date these financial statements are issued. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement the Company’s product and service offerings. Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. Principles of Consolidation The consolidated financial statements of the Company include the accounts of Fidelity Media, LLC (“Fidelity”), the Company’s wholly owned subsidiary. All intercompany transactions have been eliminated in the consolidation. Segment Reporting The Company operates a single segment business. The Company’s chief operating decision maker (“CODM”) is a group consisting of its entire management team (Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and Chief Product Officer). The CODM views the Company’s operating performance on a consolidated basis as Kubient’s only business provides advertisers and publishers with technology to execute on their digital advertising goals . Cash and Cash Equivalents The Company maintains cash and cash equivalents in bank accounts, which, at times, may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company has not experienced any losses in such accounts. As of December 31, 2022, and 2021, the Company had cash balances of $13,489,484 and $23,407,963, respectively, in excess of FDIC insured limits. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed as receiver. Thus, on March 17, 2023, the Company moved the majority of its funds on deposit at SVB to other banks, with the intention to move the remainder of its funds on deposit at SVB once the Company has transitioned all accounting and payroll functions connected to its account at SVB to accounts at other banks, such as our depository account at JP Morgan Chase. While the Company does not anticipate any losses, liquidity issues, or capital resource constraints arising as a result of the winding down of its accounts at SVB, it cannot predict at this time to what extent it or its collaborators, employees, suppliers, and/or vendors could be negatively impacted by the closure of SVB and other macroeconomic and geopolitical events. Revenue Recognition The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps: ● Identification of a contract with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when or as the performance obligations are satisfied. The Company maintains a contract with each customer and supplier, which specify the terms of the relationship and potential access to the Company’s platform. 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 it 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. As of December 31, 2022 and 2021, the Company did not have any contract assets from contracts with customers. During the year ended December 31, 2022, the Company recognized $395,914 of revenue that was deferred as of December 31, 2021. As of December 31, 2022 and 2021, the Company had $531 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 years ended December 31, 2022 and 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. Accounts Receivable and Accounts Payable Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. As of December 31, 2022 and 2021, there was an allowance for uncollectible amounts of $12,651 and $12,149, respectively. Management estimates the allowance for bad debts based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the corresponding accounts payable in the event that the Company’s contract contains sequential liability terms, with the excess receivable being written off against the allowance for bad debts only after all collection attempts have been exhausted. Accounts receivable are recorded at the amount the Company is responsible to collect from the customer. See Note 2 — Significant Accounting Policies — Revenue Recognition for additional details. In the event that the Company does not collect the Gross Billing amount from the customer, the Company generally is not contractually obligated to pay the associated Supplier Cost. Deferred Financing Costs Deferred financing costs, which consist of direct, incremental professional fees incurred in connection with the Company’s future offerings of equity and debt securities that have yet to close, are capitalized as non-current assets on the consolidated balance sheet. Upon the closing of the offering, the deferred offering costs are either (i) charged off against the offering proceeds in connection with an equity offering or (ii) reclassified such that they represent a reduction in the carrying amount of the face value of the debt security. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which is three years. Leasehold improvements are amortized over the lesser of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. See Note 4 – Intangible and Other Long-Lived Assets for disclosure of the impairment of property and equipment during the year ended December 31, 2022. Intangible Assets Intangible assets are comprised of costs to acquire and develop computer software, including (i) the costs to acquire third-party data which is used to improve the Company’s artificial intelligence platform for client use as well as (ii) the costs to acquire third-party software as well as the related source code. The intangible assets have estimated useful lives of two years for the computer software and five years for the capitalized data. Once placed into service, the Company amortizes the cost of the intangible assets over their estimated useful lives on a straight-line basis. See Note 4 – Intangible and Other Long-Lived Assets for disclosure of the impairment of intangible assets during the year ended December 31, 2022. Impairment of Long-Lived Assets The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. An impairment would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. The Company followed the accounting guidance provided by ASC 360-10 and used the fair value, quoted price from potential buyers, to measure the impairment loss. During the year ended December 31, 2022, the Company recorded an impairment loss on intangible assets of $2,626,974, an impairment loss on property and equipment Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines fair value as the exchange price that would be received for 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. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable and notes payable approximate fair value due to the short-term nature of these instruments. The carrying amounts of the Company’s short — term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates, are comparable to rates of returns for instruments of similar credit risk. Software Development Costs The Company develops and utilizes software in connection with its ability to generate customer revenue (which is further explained in Note 2 – Significant Accounting Policies – Revenue Recognition). Costs incurred in this effort are accounted for under the provisions of ASC 985-20, Software – Cost of Software to be Sold, Leased or Marketed, whereby costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized. The Company capitalizes subsequent additions, modifications, or upgrades to internally developed software only to the extent that such changes allow the software to perform a task it previously did not perform. Income Taxes The Company is subject to federal and state income taxes in the United States. The Company files income tax returns in the jurisdictions in which nexus threshold requirements are met. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidated statements of operations. Advertising Costs Advertising costs are charged to operations in the year incurred and totaled approximately $294,000 and $270,000 for the years ended December 31, 2022 and 2021, respectively, and are reflected in general and administrative expenses in the consolidated statements of operations. Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company issues new shares of common stock out of its authorized shares. The Company accrues for any equity awards at fair value that have been contractually earned but not yet issued. Fair Value of Stock Options and Warrants The Company has computed the fair value of stock options and warrants granted using the Black-Scholes option pricing model. Option forfeitures are accounted for at the time of occurrence. The expected term used for options is the estimated period of time that options granted are expected to be outstanding. The expected term used for warrants is the contractual life. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” option grants. The Company does not currently have a sufficient trading history to support its historical volatility calculations. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of 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 Years Ended December 31, 2022 2021 Warrants [1] 5,122,074 5,122,074 Restricted stock units 651,242 100,000 Restricted stock awards 58,336 166,489 Performance share units 219,376 — Stock options 36,667 94,447 6,087,695 5,483,010 [1] 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. Recently Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02“, “Leases (Topic 842)” (“ASU 2016-02”), as amended, with guidance regarding the accounting for and disclosure of leases. The update requires that a lessee recognize the assets and liabilities related to all leases, including operating leases, with a term greater than 12 months on the balance sheet. This update also requires lessees and lessors to disclose key information about their leasing transactions. In May 2020, the FASB issued ASU 2020-05 that deferred these dates one year for all other entities, including emerging growth companies. This standard is effective for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early adoption is permitted. The Company adopted ASU 2016-02 during the fiscal year ended December 31, 2022. The Company elected the practical expedient for leases with terms less than one year, such that there was not a material impact of adopting the new standard on the Company’s consolidated financial statements and disclosures. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This update for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for periods for which financial statements have not yet been made available for issuance. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company adopted ASU 2019-12 effective January 1, 2022 and its adoption did not have a material impact on the Company’s consolidated financial statements and disclosures. In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”) which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital. Under this ASU, certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost. Additionally, this ASU eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments. The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2020-06 effective January 1, 2022 which eliminated the need to assess whether a beneficial conversion feature needed to be recognized upon either (a) the future issuance of new convertible notes; or (b) the resolution of any contingent beneficial conversion features. The adoption of ASU 2020-06 on a modified retrospective basis did not have an impact on the Company’s consolidated financial statements. In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company adopted ASU 2021-04 effective January 1, 2022 and such adoption did not have a material impact on the Company’s consolidated financial statements or disclosures. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). In April 2020, the FASB issued clarification to ASU 2016-13 within ASU 2020-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. In November 2019, as a result of the issuance of ASU 2019-10, the FASB deferred the required adoption of ASC 326, such that it is now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective January 1, 2023 and such adoption did not have a material impact on the Company’s consolidated financial statements or disclosures. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805)” (“ASU 2021-08”). The ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The update is effective for annual and interim periods within the fiscal year beginning after December 15, 2022, and early adoption is permitted, including adoption in an interim period. The Company adopted ASU 2021-08 effective January 1, 2023 and such adoption did not have a material impact on the Company’s consolidated financial statements or disclosures. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | NOTE 3 – BUSINESS COMBINATION 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”). In accordance with ASC 805, the Company determined that the Transaction should be accounted for as a business combination after determining that the acquired set of assets of MediaCrossing, the fair value of which was not concentrated in a single asset or group of similar assets and included (a) cash, (b) prepaid expenses and other current assets, (c) intangible assets as detailed further below and (d) an assembled workforce, met the definition of a business. As a result, Kubient has recorded the business combination in its consolidated financial statements and has applied the acquisition method to account for MediaCrossing’s assets acquired and liabilities assumed upon completion of the Transaction. The acquisition method requires recording the identifiable assets acquired and liabilities assumed at their fair values on the acquisition date and recording goodwill for the excess of the purchase price over the aggregate fair value of the identifiable assets acquired and liabilities assumed. The Earnout Shares consist of up to 822,369 shares of the Company’s common stock, depending on the amount of revenue generated by the acquisition in 2022. Each share 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. MediaCrossing is engaged in the business of providing managed media services to agencies and direct brand advertisers, including media planning, strategy, contracting for media, developing, executing and managing campaigns, reporting and services ancillary to the foregoing. In connection with the Acquisition and pursuant to the terms of the Purchase Agreement, the Company has offered employment to ten employees of MediaCrossing, including Michael Kalman as President – Agency & Brand Partnerships. In addition, the Purchase Agreement contains customary representations, warranties, post-closing covenants and indemnification provisions. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: Purchase Consideration: Cash $ 500,000 Contingent consideration 613,000 Total Purchase Consideration 1,113,000 Less: Customer contracts and related customer relationships (1) 580,000 Restrictive covenant agreements (1) 70,000 Debt-free net working capital — Fair Value of Identified Net Assets 650,000 Remaining Unidentified Goodwill Value $ 463,000 (1) As part of the valuation analysis, the Company identified (i) customer contracts and related customer relationships and (ii) restrictive covenant agreements as intangible assets. The fair value of the identifiable intangible assets is determined using the “income approach”. The customer contracts and related customer relationships have an estimated useful life of five (5) years and the restrictive covenant agreements have an estimated useful life of three (3) years. The components of debt free net working capital deficit are as follows: Current Assets: Prepaid expenses and other current assets $ 109,083 Other receivables 526,070 Total Current Assets 635,153 Current Liabilities: Deferred revenue 628,418 Accrued expenses and other current liabilities 6,735 Total Current Liabilities 635,153 Debt-Free Net Working Capital $ — Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill is deductible for tax purposes. See Note 5 – Goodwill for additional information regarding the Company’s goodwill. The consolidated financial statements of the Company include the results of operations of MediaCrossing from November 30, 2021 to December 31, 2021. The results of operations of MediaCrossing from November 30, 2021 to December 31, 2021 included revenues of $154,954 and a net loss of $18,447. The net revenues and loss for the year ended December 31, 2021, as if the Transaction had occurred on January 1, 2021, are $5,439,093 and $12,510,391. The pro forma information is compiled from the pre-acquisition financial information of MediaCrossing and includes certain pro forma adjustments for the amortization of intangible assets and transaction costs. |
INTANGIBLE AND OTHER LONG-LIVED
INTANGIBLE AND OTHER LONG-LIVED ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE AND OTHER LONG-LIVED ASSETS | |
INTANGIBLE AND OTHER LONG-LIVED ASSETS | NOTE 4 - INTANGIBLE AND OTHER LONG-LIVED ASSETS On June 15, 2021, pursuant to an asset purchase agreement dated June 4, 2021, the Company closed on the acquisition of a customer list (the “Customer List”) and other assets of Advisio Solutions, LLC (“Advisio”) for consideration consisting of: (i) $1,050,000 paid in cash and (ii) the issuance of an aggregate of 100,000 shares of the Company’s common stock with an aggregate issuance date fair value of $532,000. Under the screen test requirements under ASC 805, the Company concluded that the Customer List represented substantially all of the fair value of the gross assets acquired and, accordingly, determined the set was not considered a business, such that the Company applied asset acquisition accounting and recorded the acquisition of the Customer List as an intangible asset in the amount of $1,582,000 that will be amortized on a straight-line basis over its useful life of seven years. During the year ended December 31, 2022, the Company identified triggering events that indicated its long-lived assets including its definite-lived intangible assets were at risk of impairment and, as such, performed a quantitative impairment assessment to evaluate recoverability and, ultimately, whether carrying value exceeded fair value. The primary triggers for the impairment review were a loss of customers as well as a reduction in the value of Kubient’s market capitalization. As a result of the quantitative assessments, the Company determined the fair value of the asset group was less than the carrying value and, accordingly, determined the Company’s long-lived assets were fully impaired. As a result, during the year ended December 31, 2022, the Company recognized an impairment loss on intangible assets and property and equipment of $2,626,974 and $49,948, respectively, in its consolidated statements of operations. Intangible assets consisted of the following: December 31, 2022 2021 Acquired data $ — $ 1,300,336 Acquired software — 183,072 Acquired customer lists — 2,162,000 Restrictive covenant agreements — 70,000 — 3,715,408 Less: accumulated amortization — (768,798) Intangible assets, net $ — $ 2,946,610 Amortization of intangible assets consisted of the following: Acquired Restrictive Acquired Acquired Customer Covenant Accumulated Data Software Lists Agreements Amortization Total Balance as of January 1, 2021 $ 1,300,336 $ 100,000 $ — $ — $ (328,486) $ 1,071,850 Additions — 83,072 2,162,000 70,000 — 2,315,072 Amortization expense — — — — (440,312) (440,312) Balance as of December 31, 2021 1,300,336 183,072 2,162,000 70,000 (768,798) 2,946,610 Additions — — — — — — Amortization expense — — — — (319,636) (319,636) Impairment loss on intangible assets (1,300,336) (183,072) (2,162,000) (70,000) 1,088,434 (2,626,974) Balance as of December 31, 2022 $ — $ — $ — $ — $ — $ — Weighted average remaining amortization period at December 31, 2022 (in years) 0.0 0.0 0.0 0.0 0.0 Acquired Restrictive Acquired Acquired Customer Covenant Accumulated Data Software Lists Agreements Amortization Balance as of January 1, 2021 $ 261,819 $ 66,667 $ — $ — $ 328,486 Amortization expense 252,081 48,538 138,528 1,165 440,312 Balance as of December 31, 2021 513,900 115,205 138,528 1,165 768,798 Amortization expense 126,040 10,929 171,000 11,667 319,636 Impairment loss on intangible assets (639,940) (126,134) (309,528) (12,832) (1,088,434) Balance as of December 31, 2022 $ — $ — $ — $ — $ — |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL | |
GOODWILL | NOTE 5 – GOODWILL During the year ended December 31, 2022, the Company identified triggering events that indicated its goodwill associated with its acquisition of MediaCrossing was at risk of impairment and, as such, performed a quantitative impairment assessment to determine whether the fair value of the reporting unit (determined to be the Company) exceeded its fair value. The primary triggers for the impairment review were a loss of customers as well as a reduction in the value of Kubient’s market capitalization. As a result of the quantitative assessments, the Company determined the fair value of the reporting unit was less than the carrying value and, accordingly, determined the Company’s goodwill was fully impaired. As a result, during the year ended December 31, 2022, the Company recognized an impairment loss on goodwill of $463,000 on its consolidated statements of operations. Changes in goodwill during the years ended December 31 2022 and 2021 were as follows: 2022 2021 Beginning balance Janaury 1, $ 463,000 $ — Acquisition of MediaCrossing — 463,000 Impairment of goodwill (463,000) — Ending balance December 31, $ — $ 463,000 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 6 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: December 31, 2022 2021 Accrued bonuses $ 215,761 $ 554,997 Accrued payroll — 13,750 Financed director and officer insurance premiums 168,480 217,575 Accrued supplier expenses 44,949 67,971 Accrued legal settlement — 975,000 Accrued legal and professional fees 49,832 20,323 Accrued commissions 4,181 36,109 Accrued media commissions — 138,028 Credit card payable 226,679 328,075 Accrued programming expenses — 1,750 Accrued issuable equity — 1,258 Accrued interest 11,220 9,017 Accrued warrant exercise costs 83,519 83,519 Other 25,744 45,915 Total accrued expenses and other current liabilities $ 830,365 $ 2,493,287 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 7 — INCOME TAXES The provision for income taxes consists of the following provisions/(benefits): For the Years Ended December 31, 2022 2021 Deferred tax benefit: Federal $ (3,109,180) $ (2,183,635) State and local (992,144) (978,739) (4,101,324) (3,162,374) Change in valuation allowance 4,101,324 3,162,374 Provision for income taxes $ — $ — The provision for income taxes differs from the statutory federal income tax rates as follows: For the Years Ended December 31, 2022 2021 Tax expense at the federal statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 8.0 % 8.7 % Permanent differences (0.0) % (0.2) % True-up 1.1 % 1.2 % Change in valuation allowance (30.1) % (30.7) % Effective income tax rate 0.0 % 0.0 % The components of deferred tax assets as of December 31, 2022 and 2021 relate to temporary differences and carryforwards as follows: December 31, 2022 2021 Net operating loss carryforwards $ 7,939,954 $ 5,383,659 Stock-based compensation expense 450,807 169,427 Deferred revenue 8,076 7,972 Accrued legal settlement — 290,948 Section 174 expenditures 549,158 — Other reserve 85,638 59,682 Intangibles 922,090 211,651 Tax credits 322,990 90,952 Deferred tax assets 10,278,713 6,214,291 Fixed assets — (36,902) Deferred tax liabilities — (36,902) Valuation allowance (10,278,713) (6,177,389) Deferred tax assets, net $ — $ — As of December 31, 2022, the Company had approximately $27,362,000 of federal net operating loss (“NOL”) carryforwards that may be available to offset future taxable income. As of that date, approximately $533,000 of federal net operating losses will expire in 2037 and approximately $26,829,000 have no expiration. In addition, the Company has approximately $323,000 of federal research and development credit carryforwards that begin to expire in 2037. The Company also had approximately $42,888,000 of state and local NOLs that begin to expire in 2037. The utilization of NOL carryforwards and research and development credits to offset future taxable income may be subject to limitations under Section 382 of the Internal Revenue Code and similar state statutes as a result of ownership changes that could occur in the future. If necessary, the deferred tax assets will be reduced by any carryforward that expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance. The Company has assessed the likelihood that deferred tax assets will be realized in accordance with the provisions of ASC 740 Income Taxes (“ASC 740”). ASC 740 requires that such a review considers all available positive and negative evidence, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. ASC 740 requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. After the performance of such reviews as of December 31, 2022 and 2021, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of those dates. Thus, the Company increased the valuation allowance by $4,101,324 and $3,162,374 during the years ended December 31, 2022 and 2021, respectively. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements as of December 31, 2022 and 2021. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company is subject to income taxes in the United States and in various state taxing jurisdictions. No tax audits were commenced or were in process during the years ended December 31, 2022 and 2021. No tax related interest or penalties were incurred during the years ended December 31, 2022 and 2021. The Company is no longer subject to U.S. federal income tax examinations for tax years before December 31, 2019. In various state and local jurisdictions, the Company is no longer subject to income tax examinations for tax years before December 31, 2018. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE 8 – NOTES PAYABLE PPP Loan On April 6, 2020, the Company received a loan in the amount of approximately $327,000 (the “PPP Loan”) from JPMorgan Chase Bank, N.A., as lender, pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief and Economic Security Act, as amended (the “CARES Act”). The PPP Loan was due on April 16, 2022 and bears interest at a rate of 0.98% per annum. Commencing May 16, 2021, the Company was required to pay the lender equal monthly payments of principal and interest as required to fully amortize by April 16, 2022 the principal amount outstanding on the PPP Loan as of the date prescribed by guidance issued by the U.S. Small Business Administration (“SBA”). The PPP Loan is evidenced by a promissory note dated April 6, 2020, which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. As of December 31, 2022 and 2021, the amount outstanding under the Company’s Paycheck Protection Program (“PPP”) loan was $0 and $149,843, respectively. EIDL Loan On June 23, 2020, the Company received a loan in the amount of approximately $79,000 (the “EIDL Loan”) from the SBA, as lender, under the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program. The EIDL Loan bears interest at 3.75% per annum. Monthly installment payments in the amount of $385 per month, including principal and interest, began December 20, 2022. The EIDL Loan matures on June 20, 2050, and is evidenced by a promissory note, loan authorization agreement, and security agreement, all dated June 20, 2020, and all of which contain customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The EIDL Loan is collateralized by the assets of the Company. Such EIDL Loan amount will reduce the Company’s PPP loan forgiveness amount described above. As of December 31, 2022 and 2021, the amount outstanding under the Economic Injury Disaster Loan (“EIDL”) was $78,900. During the years ended December 31, 2022 and 2021, the Company recorded cash interest expense of $10,909 and $8,383, respectively, which is included in interest expense on the consolidated statement of operations. As of December 31, 2022 and 2021, the Company had $11,220 and $9,017 , respectively, of accrued interest related to notes payable During the years ended December 31, 2022 and 2021, the Company made aggregate principal repayments of notes payable of $149,843 and $177,347, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 9 — STOCKHOLDERS’ EQUITY Authorized Capital The authorized capital of Kubient consists of 95,000,000 shares of common stock, par value $0.00001 per share, and 5,000,000 shares of preferred stock, par value $0.00001 per share. The holders of the Company’s common stock are entitled to one vote per share. Equity Incentive Plans The 2017 Equity Incentive Plan (the “2017 Plan”) was originally adopted by the Company’s board of directors and approved by its stockholders on September 12, 2017 and was subsequently amended and restated on June 5, 2019. The purposes of the 2017 Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to our service providers and to promote the success of the Company’s business. The Company has reserved 333,334 shares of common stock to issue awards under the 2017 Plan. As of December 31, 2022, 77,992 shares of common stock remained available for future issuance under the 2017 Plan. The 2021 Equity Incentive Plan was originally adopted by the Company’s board of directors and approved by its stockholders on June 30, 2021 (the “2021 Plan”). The purposes of the 2021 Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to our service providers and to promote the success of the Company’s business. The Company has reserved 1,500,000 shares of common stock to issue awards under the 2021 Plan. As of December 31, 2022, 466,020 shares of common stock remained available for future issuance under the 2021 Plan. Stock-Based Compensation For the years ended December 31, 2022 and 2021, the Company recognized stock-based compensation expense related to stock options and common stock as follows: For the Years Ended December 31, 2022 2021 Sales and marketing $ 119,388 $ 270,460 Technology 207,280 31,631 General and administrative 664,819 421,951 Total $ 991,487 $ 724,042 As of December 31, 2022, there was approximately $1,279,096 of unrecognized stock-based compensation expense related to awards that were determined to be probable to vest, which will be recognized over approximately 3.0 years. Stock-Based Awards A summary of the Company’s stock-based award activity, which includes restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”), during the year ended December 31, 2022 is as follows: Weighted Average Grant Date Fair Total Grant Date Number of Shares Value Fair Value Non-vested at January 1, 2022 166,489 $ 5.98 $ 995,604 Granted 1,130,095 2.28 2,576,906 Vested (167,777) 2.23 (373,516) Forfeited (117,390) 2.83 (331,748) Non-vested at December 31, 2022 1,011,417 $ 2.83 $ 2,867,246 During the year ended December 31, 2021, the Company issued an aggregate of 20,040 shares of common stock under the 2017 Plan to the four members of the Company’s Board of Directors. The shares had a grant date fair value of $60,120, which was recognized ratably from the grant date of November 5, 2020 through January 15, 2021, the date the shares were issued. During the year ended December 31, 2021, the Company issued an aggregate of 50,000 shares of immediately vested common stock (10,000 shares were issued under the Company’s 2017 Plan) to an employee and a consultant for services provided. The common stock had an aggregate issuance date fair value of $500,400 which was recognized immediately. During the year ended December 31, 2021, the Company issued an aggregate of 167,600 restricted shares of its common stock under the 2017 Plan to six employees. The restricted stock had an aggregate issuance date fair value of $963,701, of which, awards with an aggregate fair value of $957,313 vest over a period of one year and an award with an aggregate fair value of $6,388 vests immediately. The fair value of the awards is being recognized over the vesting term. During the year ended December 31, 2021, the Company issued 1,062 shares of immediately vested common stock to a former member of the Company’s Board of Directors that had an issuance date fair value of $3,282 that was recognized immediately. During the year ended December 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. During the year ended December 31, 2022, the Company granted 53,192 shares of immediately vested 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 year ended December 31, 2022, the Company granted 100,000 RSAs, 489,990 RSUs and a target number of 234,376 PSUs, all issued under the 2021 Plan. The RSAs and RSUs generally vest During the year ended December 31, 2022, the Company cancelled 8,323 shares of common stock related to the forfeiture of RSAs from a terminated employee. During the year ended December 31, 2022, the Company granted 22,917 shares of immediately vested RSAs to a former employee under the 2021 Plan with an aggregate grant date fair value of approximately $28,000 that was recognized immediately. During the year ended December 31, 2022, the Company granted 25,000 shares of RSAs to an employee under the 2021 Plan with an aggregate grant date fair value of approximately $29,000 which is being recognized over the 4-year During the year ended December 31, 2022, the Company amended the terms of RSAs granted to the Company’s chief executive officer and chief financial officer in the aggregate amount of 134,386 shares such that their vest date was changed from June 29, 2022 to June 29, 2023. Stock Options A summary of the Company’s stock option activity during the year ended December 31, 2022 is as follows: Weighted Average Number Weighted Average Remaining Term Intrinsic of Options Exercise Price (Years) Value Outstanding at January 1,2022 94,447 $ 11.56 Granted — — Forfeited (57,780) 8.19 Exercised — — Outstanding at December 31, 2022 36,667 $ 16.87 7.5 $ — Exercisable at December 31, 2022 22,892 $ 19.69 7.4 $ — The following table presents information related to stock options as of December 31, 2022: Options Outstanding Options Exercisable Weighted Outstanding Average Exercisable Number of Remaining Life Number of Exercise Price Options In Years Options $ 2.81 20,000 7.9 10,400 $ 33.75 16,667 7.0 12,492 36,667 7.4 22,892 Stock Warrants A summary of the warrant activity during the year ended December 31, 2022 is presented below: Weighted Weighted Average Average Remaining Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding, January 1, 2022 4,753,363 $ 5.42 Issued — — Exercised — — Expired — — Outstanding, December 31, 2022[1] 4,753,363 $ 5.42 2.5 $ — Exercisable, December 31, 2022 4,753,363 $ 5.35 2.5 $ — The following table presents information related to stock warrants as of December 31, 2022: Warrants Outstanding Warrants Exercisable Weighted Outstanding Average Exercisable Number of Remaining Life Number of Exercise Price Warrants In Years Warrants $ 4.20 368,711 1.7 368,711 $ 4.95 177,223 0.3 177,223 $ 5.50 3,998,459 2.7 3,998,459 $ 6.25 32,500 2.6 32,500 $ 6.38 176,470 3.0 176,470 4,753,363 2.5 4,753,363 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 — COMMITMENTS AND CONTINGENCIES Legal Proceedings 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 March 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. Obligations Arising from Employment Agreements On April 9, 2021, the Company entered into an at-will employment agreement with its new Chief Product Officer, Mr. Leon Zemel, that provides for an annual base salary of $390,000, plus annual performance bonuses with a target achievement of up to 20% of Mr. Zemel’s base salary. Subject to the approval of the board or its compensation committee, the Company agreed to take appropriate action within ninety (90) days following April 9, 2021 to make an award of 100,000 shares of common stock to Mr. Zemel, which will vest at the rate of 1/4th of the total number of shares on the first anniversary of the Effective Date and 1/36th of the total number of remaining unvested shares each month thereafter. As of September 30, 2021, the award had not been granted. Upon termination of Mr. Zemel’s employment for any reason, Mr. Zemel is entitled to (i) any portion of his base salary earned through the date of his termination date, (ii) any expenses owed to him, (iii) subject to Company policy and the law, any accrued, but unused vacation pay owed to him, pursuant to Company policy, if any, to the extent not inconsistent with applicable laws, and (iv) any amount arising from Mr. Zemel’s participation in, or benefits under, the Company’s employee benefit plans. In the event Mr. Zemel is terminated without cause or that Mr. Zemel resigns for Good Reason (as defined in his employment agreement), Mr. Zemel is entitled to receive: to six month’s salary paid in one lump sum, six months continued healthcare coverage, any pro-rated bonus amounts outstanding at the time of termination, and immediate vesting of any equity awards that would have become vested and exercisable during the three months after his termination. Mr. Zemel’s employment agreement contains an accelerated vesting provision which provides that 25% of his share award under the agreement shall vest if he is terminated before the one-year anniversary date of the agreement for good cause, or if he chooses to terminate his employment with the Company for Good Reason (as defined in the agreement), then 100% of his share award under the agreement shall vest immediately. All outstanding awards due to Mr. Zemel automatically vest upon a change in control of the Company. On June 4, 2021 (the “Effective Date”), the Company entered into two-year employment agreements with its two new Vice Presidents of Performance Media. The agreements provide for a bonus paid to each Vice President of Performance Media of (i) the issuance of up to 67,738 shares of the Company’s common stock (the “First Year Bonus”) on the 12-month anniversary of the Effective Date if as of such date the net revenue, as defined within the agreement, generated from the Customer List through the respective Vice President of Performance Media’s performance marketing is between $175,000 and an amount in excess of $350,000, which First Year Bonus shall vest in two equal equity installments, the first of which occurring on the second anniversary of the issuance thereof and the second of which occurring on the fourth anniversary of the issuance thereof (the “Year 1 Equity Grant”), and (ii) the issuance of up to 67,738 shares of the Company’s common stock (the “Second Year Bonus”) on the 24-month anniversary of the Effective Date if as of such date the net revenue, as defined within the agreement, generated from the Customer List through the respective Vice President of Performance Media’s performance marketing is between $262,000 and an amount in excess of $525,000, which Second Year Bonus shall vest in two equal equity installments, the first of which occurring on the second anniversary of the issuance thereof and the second of which occurring on the fourth anniversary of the issuance thereof (the “Year 2 Equity Grant”). If either Vice President of Performance Media ends the Term of Employment for good reason, as defined within the agreement, or the Company terminates either Vice President of Performance Media without cause, such Vice President of Performance Media shall (i) receive $150,000 prorated for two months following such termination and for an additional year for every year the Vice President of Performance Media was employed by Company, and (ii) payment of any earned, but unpaid, performance-based performances due as of the date of such termination (“Severance”). The Company determined that the First Year Bonus and Second Year Bonus to each Vice President of Performance Media represents an accounting grant with a performance-based vesting condition pursuant to Accounting Standards Codification 718. The aggregate grant date fair value of the awards of $1,400,822 will be recognized over the respective vesting term for awards that are deemed to be probable to vest. On November 29, 2021, Mitchell Berg was appointed to serve as its Chief Technology Officer of the Company. Upon joining the Company as Chief Technology Officer, Mr. Berg will receive an annual base salary of $300,000, a restricted stock unit (“RSU”) award of 80,000 shares of common stock of the Company, and a performance stock unit (“PSU”) award of 50,000 shares of common stock of the Company. Mr. Berg will also be eligible to participate in the Company’s Short Term Incentive Plan (“STIP”) and his target bonus pursuant to the STIP will be $100,000. Provided, however that any payout pursuant to the STIP will be determined by the Company and its board of directors or compensation committee, in its discretion, after considering Mr. Berg’s individual performance and the overall performance of the Company’s business. Upon a termination for any reason, Mr. Berg is entitled to any unpaid but accrued portion of his base salary earned through the date of his termination, payment for any accrued but unused vacation pay, any expenses owed to him pursuant to his employment agreement, and any amounts owed under the Company’s benefit plans. In the event Mr. Berg experiences a Covered Termination (as defined in his employment agreement), Mr. Berg shall be entitled to six month’s salary paid in one lump sum, six months continued healthcare coverage, payment of any Annual Bonus (as defined in his employment agreement) earned but that has not been paid and a pro-rata portion of any Annual Bonus earned in the fiscal year in which the Covered Termination takes place, and immediate vesting of any equity awards that would have become vested and exercisable during the three months after his termination. All outstanding RSU awards due to Mr. Berg automatically vest upon a change in control of the Company. The RSU was determined to be granted for accounting purposes on November 29, 2021 under the 2021 Plan and had a grant date fair value $216,800 that will be recognized vesting term. Given that the PSU contains performance conditions that had not been determined as of December 31, 2021, the Company determined that the PSU had not been considered granted for accounting purposes as of December 31, 2021. The PSU was deemed to be granted on January 12, 2022 and both PSU and RSU awards were issued on February 15, 2022. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 11 — FAIR VALUE MEASUREMENT On November 30, 2021, Kubient entered into and consummated a Purchase Agreement with 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 the Earnout Shares. See Note 3 – Business Combination for details. The Earnout Shares consist of up to 822,369 shares of the Company’s common stock, depending on the amount of revenue generated by the acquisition in 2022. Each share 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. As of December 31, 2021, the Earnout Shares had a fair value of $613,000. As of December 31, 2022, the Company recomputed the fair value of its Earnout Shares as $0 using the Monte Carlo simulation. As a result, the Company recorded a gain on the change in fair value of the contingent consideration of $613,000 during the year ended December 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 2022 2021 Beginning balance as of January 1, $ 613,000 $ — Issuance of contingent consideration — 613,000 Change in fair value of contingent consideration (613,000) — Ending balance as of December 31, $ — $ 613,000 |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2022 | |
CONCENTRATIONS | |
CONCENTRATIONS | NOTE 12 — 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 Years Ended December 31, Customer 2022 2021 Customer A 21.77 % 85.77 % Customer B N/A 11.56 % Customer C 27.59 % N/A Customer D 17.23 % N/A Customer E 13.76 % N/A Total 80.35 % 97.33 % 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: December 31, Customer 2022 2021 Customer A N/A 22.08 % Customer B N/A 52.18 % Customer C 11.72 % * Customer D 10.25 % N/A Customer E 10.57 % * Customer F 35.64 % * Total 68.18 % 74.26 % * Less than 10%. 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 Years Ended December 31, Supplier 2022 2021 Supplier A * 42.36 % Supplier B 10.60 % * Supplier C 23.47 % N/A Total 34.07 % 42.36 % * Less than 10%. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 13 – SUBSEQUENT EVENTS The Company has evaluated events that have occurred after the balance sheet and through the date the financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below. See Note 2 – Significant Accounting Policies – Cash and Cash Equivalents for additional details regarding Silicon Valley Bank (“SVB”). |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of Company’s management, who is responsible for their integrity and objectivity. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates used in these financial statements include, but are not limited to, fair value calculations for equity securities, revenue recognition, stock-based compensation, useful lives of intangibles assets, the collectability of receivables, the recoverability and useful lives of long-lived assets and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and may cause actual results to differ from those estimates. |
Liquidity | Liquidity As of December 31, 2022, the Company had cash and cash equivalents of $14,739,484 and working capital of $12,873,338. During the year ended December 31, 2022, the Company incurred a net loss of $13,619,884 and used cash in operating activities of $9,599,932. The Company believes its current cash on hand is sufficient to meet its operating and capital requirements for at least the next twelve months from the date these financial statements are issued. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement the Company’s product and service offerings. Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements of the Company include the accounts of Fidelity Media, LLC (“Fidelity”), the Company’s wholly owned subsidiary. All intercompany transactions have been eliminated in the consolidation. |
Segment Reporting | Segment Reporting The Company operates a single segment business. The Company’s chief operating decision maker (“CODM”) is a group consisting of its entire management team (Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and Chief Product Officer). The CODM views the Company’s operating performance on a consolidated basis as Kubient’s only business provides advertisers and publishers with technology to execute on their digital advertising goals . |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company maintains cash and cash equivalents in bank accounts, which, at times, may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company has not experienced any losses in such accounts. As of December 31, 2022, and 2021, the Company had cash balances of $13,489,484 and $23,407,963, respectively, in excess of FDIC insured limits. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed as receiver. Thus, on March 17, 2023, the Company moved the majority of its funds on deposit at SVB to other banks, with the intention to move the remainder of its funds on deposit at SVB once the Company has transitioned all accounting and payroll functions connected to its account at SVB to accounts at other banks, such as our depository account at JP Morgan Chase. While the Company does not anticipate any losses, liquidity issues, or capital resource constraints arising as a result of the winding down of its accounts at SVB, it cannot predict at this time to what extent it or its collaborators, employees, suppliers, and/or vendors could be negatively impacted by the closure of SVB and other macroeconomic and geopolitical events. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps: ● Identification of a contract with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when or as the performance obligations are satisfied. The Company maintains a contract with each customer and supplier, which specify the terms of the relationship and potential access to the Company’s platform. 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 it 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. As of December 31, 2022 and 2021, the Company did not have any contract assets from contracts with customers. During the year ended December 31, 2022, the Company recognized $395,914 of revenue that was deferred as of December 31, 2021. As of December 31, 2022 and 2021, the Company had $531 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 years ended December 31, 2022 and 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. |
Accounts Receivable and Accounts Payable | Accounts Receivable and Accounts Payable Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. As of December 31, 2022 and 2021, there was an allowance for uncollectible amounts of $12,651 and $12,149, respectively. Management estimates the allowance for bad debts based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the corresponding accounts payable in the event that the Company’s contract contains sequential liability terms, with the excess receivable being written off against the allowance for bad debts only after all collection attempts have been exhausted. Accounts receivable are recorded at the amount the Company is responsible to collect from the customer. See Note 2 — Significant Accounting Policies — Revenue Recognition for additional details. In the event that the Company does not collect the Gross Billing amount from the customer, the Company generally is not contractually obligated to pay the associated Supplier Cost. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs, which consist of direct, incremental professional fees incurred in connection with the Company’s future offerings of equity and debt securities that have yet to close, are capitalized as non-current assets on the consolidated balance sheet. Upon the closing of the offering, the deferred offering costs are either (i) charged off against the offering proceeds in connection with an equity offering or (ii) reclassified such that they represent a reduction in the carrying amount of the face value of the debt security. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which is three years. Leasehold improvements are amortized over the lesser of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. See Note 4 – Intangible and Other Long-Lived Assets for disclosure of the impairment of property and equipment during the year ended December 31, 2022. |
Intangible Assets | Intangible Assets Intangible assets are comprised of costs to acquire and develop computer software, including (i) the costs to acquire third-party data which is used to improve the Company’s artificial intelligence platform for client use as well as (ii) the costs to acquire third-party software as well as the related source code. The intangible assets have estimated useful lives of two years for the computer software and five years for the capitalized data. Once placed into service, the Company amortizes the cost of the intangible assets over their estimated useful lives on a straight-line basis. See Note 4 – Intangible and Other Long-Lived Assets for disclosure of the impairment of intangible assets during the year ended December 31, 2022. |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. An impairment would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. The Company followed the accounting guidance provided by ASC 360-10 and used the fair value, quoted price from potential buyers, to measure the impairment loss. During the year ended December 31, 2022, the Company recorded an impairment loss on intangible assets of $2,626,974, an impairment loss on property and equipment |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines fair value as the exchange price that would be received for 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. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable and notes payable approximate fair value due to the short-term nature of these instruments. The carrying amounts of the Company’s short — term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates, are comparable to rates of returns for instruments of similar credit risk. |
Software Development Costs | Software Development Costs The Company develops and utilizes software in connection with its ability to generate customer revenue (which is further explained in Note 2 – Significant Accounting Policies – Revenue Recognition). Costs incurred in this effort are accounted for under the provisions of ASC 985-20, Software – Cost of Software to be Sold, Leased or Marketed, whereby costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized. The Company capitalizes subsequent additions, modifications, or upgrades to internally developed software only to the extent that such changes allow the software to perform a task it previously did not perform. |
Income Taxes | Income Taxes The Company is subject to federal and state income taxes in the United States. The Company files income tax returns in the jurisdictions in which nexus threshold requirements are met. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidated statements of operations. |
Advertising Costs | Advertising Costs Advertising costs are charged to operations in the year incurred and totaled approximately $294,000 and $270,000 for the years ended December 31, 2022 and 2021, respectively, and are reflected in general and administrative expenses in the consolidated statements of operations. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company issues new shares of common stock out of its authorized shares. The Company accrues for any equity awards at fair value that have been contractually earned but not yet issued. |
Fair Value of Stock Options and Warrants | Fair Value of Stock Options and Warrants The Company has computed the fair value of stock options and warrants granted using the Black-Scholes option pricing model. Option forfeitures are accounted for at the time of occurrence. The expected term used for options is the estimated period of time that options granted are expected to be outstanding. The expected term used for warrants is the contractual life. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” option grants. The Company does not currently have a sufficient trading history to support its historical volatility calculations. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. |
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 common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of 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 Years Ended December 31, 2022 2021 Warrants [1] 5,122,074 5,122,074 Restricted stock units 651,242 100,000 Restricted stock awards 58,336 166,489 Performance share units 219,376 — Stock options 36,667 94,447 6,087,695 5,483,010 [1] 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. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02“, “Leases (Topic 842)” (“ASU 2016-02”), as amended, with guidance regarding the accounting for and disclosure of leases. The update requires that a lessee recognize the assets and liabilities related to all leases, including operating leases, with a term greater than 12 months on the balance sheet. This update also requires lessees and lessors to disclose key information about their leasing transactions. In May 2020, the FASB issued ASU 2020-05 that deferred these dates one year for all other entities, including emerging growth companies. This standard is effective for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early adoption is permitted. The Company adopted ASU 2016-02 during the fiscal year ended December 31, 2022. The Company elected the practical expedient for leases with terms less than one year, such that there was not a material impact of adopting the new standard on the Company’s consolidated financial statements and disclosures. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This update for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for periods for which financial statements have not yet been made available for issuance. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company adopted ASU 2019-12 effective January 1, 2022 and its adoption did not have a material impact on the Company’s consolidated financial statements and disclosures. In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”) which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital. Under this ASU, certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost. Additionally, this ASU eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments. The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2020-06 effective January 1, 2022 which eliminated the need to assess whether a beneficial conversion feature needed to be recognized upon either (a) the future issuance of new convertible notes; or (b) the resolution of any contingent beneficial conversion features. The adoption of ASU 2020-06 on a modified retrospective basis did not have an impact on the Company’s consolidated financial statements. In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company adopted ASU 2021-04 effective January 1, 2022 and such adoption did not have a material impact on the Company’s consolidated financial statements or disclosures. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). In April 2020, the FASB issued clarification to ASU 2016-13 within ASU 2020-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. In November 2019, as a result of the issuance of ASU 2019-10, the FASB deferred the required adoption of ASC 326, such that it is now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective January 1, 2023 and such adoption did not have a material impact on the Company’s consolidated financial statements or disclosures. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805)” (“ASU 2021-08”). The ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The update is effective for annual and interim periods within the fiscal year beginning after December 15, 2022, and early adoption is permitted, including adoption in an interim period. The Company adopted ASU 2021-08 effective January 1, 2023 and such adoption did not have a material impact on the Company’s consolidated financial statements or disclosures. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of calculation of weighted average dilutive common shares | The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Years Ended December 31, 2022 2021 Warrants [1] 5,122,074 5,122,074 Restricted stock units 651,242 100,000 Restricted stock awards 58,336 166,489 Performance share units 219,376 — Stock options 36,667 94,447 6,087,695 5,483,010 [1] 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. |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS COMBINATION | |
Schedule of Recognized identified assets acquired and liabilities asumed | Purchase Consideration: Cash $ 500,000 Contingent consideration 613,000 Total Purchase Consideration 1,113,000 Less: Customer contracts and related customer relationships (1) 580,000 Restrictive covenant agreements (1) 70,000 Debt-free net working capital — Fair Value of Identified Net Assets 650,000 Remaining Unidentified Goodwill Value $ 463,000 (1) As part of the valuation analysis, the Company identified (i) customer contracts and related customer relationships and (ii) restrictive covenant agreements as intangible assets. The fair value of the identifiable intangible assets is determined using the “income approach”. The customer contracts and related customer relationships have an estimated useful life of five (5) years and the restrictive covenant agreements have an estimated useful life of three (3) years. |
Schedule of Components of debt free net working capital deficit | Current Assets: Prepaid expenses and other current assets $ 109,083 Other receivables 526,070 Total Current Assets 635,153 Current Liabilities: Deferred revenue 628,418 Accrued expenses and other current liabilities 6,735 Total Current Liabilities 635,153 Debt-Free Net Working Capital $ — |
INTANGIBLE AND OTHER LONG-LIV_2
INTANGIBLE AND OTHER LONG-LIVED ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE AND OTHER LONG-LIVED ASSETS | |
Schedule of Intangible assets | Intangible assets consisted of the following: December 31, 2022 2021 Acquired data $ — $ 1,300,336 Acquired software — 183,072 Acquired customer lists — 2,162,000 Restrictive covenant agreements — 70,000 — 3,715,408 Less: accumulated amortization — (768,798) Intangible assets, net $ — $ 2,946,610 |
Schedule of Amortization of intangible assets consists | Amortization of intangible assets consisted of the following: Acquired Restrictive Acquired Acquired Customer Covenant Accumulated Data Software Lists Agreements Amortization Total Balance as of January 1, 2021 $ 1,300,336 $ 100,000 $ — $ — $ (328,486) $ 1,071,850 Additions — 83,072 2,162,000 70,000 — 2,315,072 Amortization expense — — — — (440,312) (440,312) Balance as of December 31, 2021 1,300,336 183,072 2,162,000 70,000 (768,798) 2,946,610 Additions — — — — — — Amortization expense — — — — (319,636) (319,636) Impairment loss on intangible assets (1,300,336) (183,072) (2,162,000) (70,000) 1,088,434 (2,626,974) Balance as of December 31, 2022 $ — $ — $ — $ — $ — $ — Weighted average remaining amortization period at December 31, 2022 (in years) 0.0 0.0 0.0 0.0 0.0 Acquired Restrictive Acquired Acquired Customer Covenant Accumulated Data Software Lists Agreements Amortization Balance as of January 1, 2021 $ 261,819 $ 66,667 $ — $ — $ 328,486 Amortization expense 252,081 48,538 138,528 1,165 440,312 Balance as of December 31, 2021 513,900 115,205 138,528 1,165 768,798 Amortization expense 126,040 10,929 171,000 11,667 319,636 Impairment loss on intangible assets (639,940) (126,134) (309,528) (12,832) (1,088,434) Balance as of December 31, 2022 $ — $ — $ — $ — $ — |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL | |
Schedule of changes in goodwill | 2022 2021 Beginning balance Janaury 1, $ 463,000 $ — Acquisition of MediaCrossing — 463,000 Impairment of goodwill (463,000) — Ending balance December 31, $ — $ 463,000 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 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: December 31, 2022 2021 Accrued bonuses $ 215,761 $ 554,997 Accrued payroll — 13,750 Financed director and officer insurance premiums 168,480 217,575 Accrued supplier expenses 44,949 67,971 Accrued legal settlement — 975,000 Accrued legal and professional fees 49,832 20,323 Accrued commissions 4,181 36,109 Accrued media commissions — 138,028 Credit card payable 226,679 328,075 Accrued programming expenses — 1,750 Accrued issuable equity — 1,258 Accrued interest 11,220 9,017 Accrued warrant exercise costs 83,519 83,519 Other 25,744 45,915 Total accrued expenses and other current liabilities $ 830,365 $ 2,493,287 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of provision for income taxes | For the Years Ended December 31, 2022 2021 Deferred tax benefit: Federal $ (3,109,180) $ (2,183,635) State and local (992,144) (978,739) (4,101,324) (3,162,374) Change in valuation allowance 4,101,324 3,162,374 Provision for income taxes $ — $ — |
Schedule of provision for income taxes differs from the statutory federal income tax rates | For the Years Ended December 31, 2022 2021 Tax expense at the federal statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 8.0 % 8.7 % Permanent differences (0.0) % (0.2) % True-up 1.1 % 1.2 % Change in valuation allowance (30.1) % (30.7) % Effective income tax rate 0.0 % 0.0 % |
Schedule of components of deferred tax assets relate to temporary differences and carryforwards | December 31, 2022 2021 Net operating loss carryforwards $ 7,939,954 $ 5,383,659 Stock-based compensation expense 450,807 169,427 Deferred revenue 8,076 7,972 Accrued legal settlement — 290,948 Section 174 expenditures 549,158 — Other reserve 85,638 59,682 Intangibles 922,090 211,651 Tax credits 322,990 90,952 Deferred tax assets 10,278,713 6,214,291 Fixed assets — (36,902) Deferred tax liabilities — (36,902) Valuation allowance (10,278,713) (6,177,389) Deferred tax assets, net $ — $ — |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
Schedule of stock-based compensation expense related to stock options, restricted stock awards and restricted stock units | For the Years Ended December 31, 2022 2021 Sales and marketing $ 119,388 $ 270,460 Technology 207,280 31,631 General and administrative 664,819 421,951 Total $ 991,487 $ 724,042 |
Summary of the stock-based award activity | Weighted Average Grant Date Fair Total Grant Date Number of Shares Value Fair Value Non-vested at January 1, 2022 166,489 $ 5.98 $ 995,604 Granted 1,130,095 2.28 2,576,906 Vested (167,777) 2.23 (373,516) Forfeited (117,390) 2.83 (331,748) Non-vested at December 31, 2022 1,011,417 $ 2.83 $ 2,867,246 |
Summary of stock option activity | A summary of the Company’s stock option activity during the year ended December 31, 2022 is as follows: Weighted Average Number Weighted Average Remaining Term Intrinsic of Options Exercise Price (Years) Value Outstanding at January 1,2022 94,447 $ 11.56 Granted — — Forfeited (57,780) 8.19 Exercised — — Outstanding at December 31, 2022 36,667 $ 16.87 7.5 $ — Exercisable at December 31, 2022 22,892 $ 19.69 7.4 $ — |
Summary of stock option exercise price | The following table presents information related to stock options as of December 31, 2022: Options Outstanding Options Exercisable Weighted Outstanding Average Exercisable Number of Remaining Life Number of Exercise Price Options In Years Options $ 2.81 20,000 7.9 10,400 $ 33.75 16,667 7.0 12,492 36,667 7.4 22,892 |
Summary of stock warrants | Weighted Weighted Average Average Remaining Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding, January 1, 2022 4,753,363 $ 5.42 Issued — — Exercised — — Expired — — Outstanding, December 31, 2022[1] 4,753,363 $ 5.42 2.5 $ — Exercisable, December 31, 2022 4,753,363 $ 5.35 2.5 $ — The following table presents information related to stock warrants as of December 31, 2022: Warrants Outstanding Warrants Exercisable Weighted Outstanding Average Exercisable Number of Remaining Life Number of Exercise Price Warrants In Years Warrants $ 4.20 368,711 1.7 368,711 $ 4.95 177,223 0.3 177,223 $ 5.50 3,998,459 2.7 3,998,459 $ 6.25 32,500 2.6 32,500 $ 6.38 176,470 3.0 176,470 4,753,363 2.5 4,753,363 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 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 | 2022 2021 Beginning balance as of January 1, $ 613,000 $ — Issuance of contingent consideration — 613,000 Change in fair value of contingent consideration (613,000) — Ending balance as of December 31, $ — $ 613,000 |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 12 Months Ended |
Dec. 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 Years Ended December 31, Customer 2022 2021 Customer A 21.77 % 85.77 % Customer B N/A 11.56 % Customer C 27.59 % N/A Customer D 17.23 % N/A Customer E 13.76 % N/A Total 80.35 % 97.33 % December 31, Customer 2022 2021 Customer A N/A 22.08 % Customer B N/A 52.18 % Customer C 11.72 % * Customer D 10.25 % N/A Customer E 10.57 % * Customer F 35.64 % * Total 68.18 % 74.26 % * Less than 10%. For the Years Ended December 31, Supplier 2022 2021 Supplier A * 42.36 % Supplier B 10.60 % * Supplier C 23.47 % N/A Total 34.07 % 42.36 % * Less than 10%. |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Liquidity and Cash and Cash Equivalents (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Cash and cash equivalents | $ 14,739,484 | $ 24,907,963 |
Working capital | (12,873,338) | |
Net loss | 13,619,884 | 10,291,713 |
Net Cash Used In Operating Activities | (9,599,932) | (7,674,792) |
Cash balances in excess of FDIC insured limits | $ 13,489,484 | $ 23,407,963 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Advertising costs | $ 294,000 | $ 270,000 |
Contracts with customers, revenue recognized | 395,914 | |
Contract liabilities | $ 531 | $ 395,914 |
Property and equipment estimated useful lives | 3 years | |
Minimum | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Invoice payment terms | 45 days | |
Maximum | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Invoice payment terms | 90 days |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Performance Obligation (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Revenue recognized from performance obligations satisfied | $ 0 | $ 0 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Revenue recognized from performance obligations satisfaction period | 12 months |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Accounts Payable (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for uncollectible accounts receivable | $ 12,651 | $ 12,149 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Computer software | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives, Intangible assets | 2 years |
Capitalized Software | |
SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives, Intangible assets | 5 years |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Impairment of long-lived assets (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | |
Impairment loss on intangible assets. | $ 2,626,974 |
Impairment loss on property and equipment. | $ 49,948 |
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Asset Impairment Charge |
Impairment loss on goodwill | $ 463,000 |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES - Net Loss Per Common Share (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 6,087,695 | 5,483,010 |
Number of warrants exercisable (in shares) | 368,711 | |
Warrants term (in years) | 5 years | |
Warrants to purchase shares of common stock | 368,711 | |
Exercise price of warrants (in dollars per share) | $ 5.50 | |
Warrants | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 5,122,074 | 5,122,074 |
Restricted stock units | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 651,242 | 100,000 |
Restricted stock awards | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 58,336 | 166,489 |
Performance share units | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 219,376 | |
Stock options | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 36,667 | 94,447 |
BUSINESS COMBINATION - Purchase
BUSINESS COMBINATION - Purchase consideration (Details) - USD ($) | 1 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2021 | Dec. 31, 2021 | |
BUSINESS COMBINATION | |||
Contingent consideration | $ 613,000 | ||
Remaining Unidentified Goodwill Value | $ 463,000 | ||
MediaCrossing Inc | |||
BUSINESS COMBINATION | |||
Cash consideration | $ 500,000 | $ 500,000 | |
Contingent consideration | 613,000 | 613,000 | |
Total purchase consideration | 1,113,000 | ||
Fair Value of Identified Net Assets | 650,000 | 650,000 | |
Remaining Unidentified Goodwill Value | 463,000 | 463,000 | |
MediaCrossing Inc | Customer contracts and related customer relationships | |||
BUSINESS COMBINATION | |||
Intangible assets | $ 580,000 | 580,000 | |
Estimated useful lives, Intangible assets | 5 years | ||
MediaCrossing Inc | Restrictive covenant agreements | |||
BUSINESS COMBINATION | |||
Intangible assets | $ 70,000 | $ 70,000 | |
Estimated useful lives, Intangible assets | 3 years |
BUSINESS COMBINATION - Debt-fre
BUSINESS COMBINATION - Debt-free net working capital (Details) - MediaCrossing Inc | Nov. 30, 2021 USD ($) |
Current Assets: | |
Prepaid expenses and other current assets | $ 109,083 |
Other receivables | 526,070 |
Total Current Assets | 635,153 |
Current Liabilities: | |
Deferred revenue | 628,418 |
Accrued expenses and other current liabilities | 6,735 |
Total Current Liabilities | $ 635,153 |
BUSINESS COMBINATION - Pro Form
BUSINESS COMBINATION - Pro Forma Information (Details) - MediaCrossing Inc | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
BUSINESS COMBINATION | |
Pro forma net revenues | $ 5,439,093 |
Pro forma net loss | $ 12,510,391 |
BUSINESS COMBINATION - Addition
BUSINESS COMBINATION - Additional information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Nov. 30, 2021 | Dec. 31, 2021 | Nov. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
BUSINESS COMBINATION | |||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||
Net loss | $ (13,619,884) | $ (10,291,713) | |||
MediaCrossing Inc | |||||
BUSINESS COMBINATION | |||||
Cash consideration | $ 500,000 | $ 500,000 | |||
Share price | $ 2.55 | $ 2.55 | |||
Business acquisition, Number of shares issued | 822,369 | ||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Net revenue | $ 154,954 | ||||
Net loss | $ 18,447 |
INTANGIBLE AND OTHER LONG-LIV_3
INTANGIBLE AND OTHER LONG-LIVED ASSETS (Details) - USD ($) | 12 Months Ended | ||
Jun. 04, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLE AND OTHER LONG-LIVED ASSETS | |||
Intangible asset | $ 2,946,610 | ||
Impairment loss on intangible assets. | $ 2,626,974 | ||
Impairment loss on property and equipment | 49,948 | ||
Customer list | |||
INTANGIBLE AND OTHER LONG-LIVED ASSETS | |||
Impairment loss on intangible assets. | $ 2,162,000 | ||
Advisio Solutions, LLC | |||
INTANGIBLE AND OTHER LONG-LIVED ASSETS | |||
Cash consideration | $ 1,050,000 | ||
Aggregate shares of common stock shares issued as a part of consideration | 100,000 | ||
Fair value of common stock issued as a part of consideration | $ 532,000 | ||
Advisio Solutions, LLC | Customer list | |||
INTANGIBLE AND OTHER LONG-LIVED ASSETS | |||
Intangible asset | $ 1,582,000 | ||
Estimated useful lives, Intangible assets | 7 years |
INTANGIBLE AND OTHER LONG-LIV_4
INTANGIBLE AND OTHER LONG-LIVED ASSETS - Intangible assets consist (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
INTANGIBLE AND OTHER LONG-LIVED ASSETS | ||
Intangible assets, gross | $ 3,715,408 | |
Less: accumulated amortization | (768,798) | |
Intangible assets, net | 2,946,610 | $ 1,071,850 |
Acquired data | ||
INTANGIBLE AND OTHER LONG-LIVED ASSETS | ||
Intangible assets, gross | 1,300,336 | 1,300,336 |
Less: accumulated amortization | (513,900) | (261,819) |
Acquired software | ||
INTANGIBLE AND OTHER LONG-LIVED ASSETS | ||
Intangible assets, gross | 183,072 | 100,000 |
Less: accumulated amortization | (115,205) | (66,667) |
Customer list | ||
INTANGIBLE AND OTHER LONG-LIVED ASSETS | ||
Intangible assets, gross | 2,162,000 | 0 |
Less: accumulated amortization | (138,528) | |
Restrictive covenant agreements | ||
INTANGIBLE AND OTHER LONG-LIVED ASSETS | ||
Intangible assets, gross | 70,000 | $ 0 |
Less: accumulated amortization | $ (1,165) |
INTANGIBLE AND OTHER LONG-LIV_5
INTANGIBLE AND OTHER LONG-LIVED ASSETS - Amortization of intangible assets consists (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLE ASSETS | ||
Finite-Lived Intangible Assets, Gross, Beginning Balance | $ 3,715,408 | |
Finite-Lived Intangible Assets, Net, Beginning Balance | 2,946,610 | $ 1,071,850 |
Finite-Lived Intangible Assets, Accumulated Amortization, Beginning Balance | 768,798 | |
Additions | 2,315,072 | |
Amortization expense | 319,636 | 440,312 |
Impairment loss on intangible assets. | $ (2,626,974) | |
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment loss on intangible assets | |
Impairment loss on intangible assets | $ (2,626,974) | |
Finite-Lived Intangible Assets, Gross, Ending Balance | 3,715,408 | |
Finite-Lived Intangible Assets, Net, Ending Balance | 2,946,610 | |
Finite-Lived Intangible Assets, Accumulated Amortization, Ending Balance | 768,798 | |
Acquired data | ||
INTANGIBLE ASSETS | ||
Finite-Lived Intangible Assets, Gross, Beginning Balance | 1,300,336 | 1,300,336 |
Finite-Lived Intangible Assets, Accumulated Amortization, Beginning Balance | 513,900 | 261,819 |
Amortization expense | 126,040 | 252,081 |
Impairment loss on intangible assets. | (1,300,336) | |
Impairment loss on intangible assets | $ (639,940) | |
Weighted average remaining amortization period | 0 years | |
Finite-Lived Intangible Assets, Gross, Ending Balance | 1,300,336 | |
Finite-Lived Intangible Assets, Accumulated Amortization, Ending Balance | 513,900 | |
Acquired software | ||
INTANGIBLE ASSETS | ||
Finite-Lived Intangible Assets, Gross, Beginning Balance | $ 183,072 | 100,000 |
Finite-Lived Intangible Assets, Accumulated Amortization, Beginning Balance | 115,205 | 66,667 |
Additions | 83,072 | |
Amortization expense | 10,929 | 48,538 |
Impairment loss on intangible assets. | (183,072) | |
Impairment loss on intangible assets | $ (126,134) | |
Weighted average remaining amortization period | 0 years | |
Finite-Lived Intangible Assets, Gross, Ending Balance | 183,072 | |
Finite-Lived Intangible Assets, Accumulated Amortization, Ending Balance | 115,205 | |
Customer list | ||
INTANGIBLE ASSETS | ||
Finite-Lived Intangible Assets, Gross, Beginning Balance | $ 2,162,000 | 0 |
Finite-Lived Intangible Assets, Accumulated Amortization, Beginning Balance | 138,528 | |
Additions | 2,162,000 | |
Amortization expense | 171,000 | 138,528 |
Impairment loss on intangible assets. | (2,162,000) | |
Impairment loss on intangible assets | $ (309,528) | |
Weighted average remaining amortization period | 0 years | |
Finite-Lived Intangible Assets, Gross, Ending Balance | 2,162,000 | |
Finite-Lived Intangible Assets, Accumulated Amortization, Ending Balance | 138,528 | |
Restrictive covenant agreements | ||
INTANGIBLE ASSETS | ||
Finite-Lived Intangible Assets, Gross, Beginning Balance | $ 70,000 | 0 |
Finite-Lived Intangible Assets, Accumulated Amortization, Beginning Balance | 1,165 | |
Additions | 70,000 | |
Amortization expense | 11,667 | 1,165 |
Impairment loss on intangible assets. | (70,000) | |
Impairment loss on intangible assets | $ (12,832) | |
Weighted average remaining amortization period | 0 years | |
Finite-Lived Intangible Assets, Gross, Ending Balance | 70,000 | |
Finite-Lived Intangible Assets, Accumulated Amortization, Ending Balance | 1,165 | |
Accumulated Amortization | ||
INTANGIBLE ASSETS | ||
Finite-Lived Intangible Assets, Accumulated Amortization, Beginning Balance | $ (768,798) | (328,486) |
Amortization expense | 319,636 | 440,312 |
Impairment loss on intangible assets. | 1,088,434 | |
Impairment loss on intangible assets | $ (1,088,434) | |
Weighted average remaining amortization period | 0 years | |
Finite-Lived Intangible Assets, Accumulated Amortization, Ending Balance | $ (768,798) |
GOODWILL (Details)
GOODWILL (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
GOODWILL | |
Impairment loss on goodwill | $ 463,000 |
GOODWILL - Changes in goodwill
GOODWILL - Changes in goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
GOODWILL | ||
Beginning balance | $ 463,000 | |
Acquisition of MediaCrossing | $ 463,000 | |
Impairment of goodwill | $ (463,000) | |
Ending balance | $ 463,000 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued bonuses | $ 215,761 | $ 554,997 |
Accrued payroll | 13,750 | |
Financed director and officer insurance premiums | 168,480 | 217,575 |
Accrued supplier expenses | 44,949 | 67,971 |
Accrued legal settlement | 975,000 | |
Accrued legal and professional fees | 49,832 | 20,323 |
Accrued commissions | 4,181 | 36,109 |
Accrued media commissions | 138,028 | |
Credit card payable | 226,679 | 328,075 |
Accrued programming expenses | 1,750 | |
Accrued issuable equity | 1,258 | |
Accrued interest | 11,220 | 9,017 |
Accrued warrant exercise costs | 83,519 | 83,519 |
Other | 25,744 | 45,915 |
Total accrued expenses and other current liabilities | $ 830,365 | $ 2,493,287 |
INCOME TAXES - Provision for in
INCOME TAXES - Provision for income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred tax benefit: | ||
Federal | $ (3,109,180) | $ (2,183,635) |
State and local | (992,144) | (978,739) |
Total | (4,101,324) | (3,162,374) |
Change in valuation allowance | $ 4,101,324 | $ 3,162,374 |
INCOME TAXES - Statutory federa
INCOME TAXES - Statutory federal income tax rates (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLE ASSETS | ||
Tax expense at the federal statutory rate | 21% | 21% |
State taxes, net of federal benefit | 8% | 8.70% |
Permanent differences | 0% | 0.20% |
True-up | 1.10% | 1.20% |
Change in valuation allowance | (30.10%) | (30.70%) |
Effective income tax rate | 0% | 0% |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets relate to temporary differences and carryforwards (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INCOME TAXES | ||
Net operating loss carryforwards | $ 7,939,954 | $ 5,383,659 |
Stock-based compensation expense | 450,807 | 169,427 |
Deferred Revenue | 8,076 | 7,972 |
Accrued Legal Settlement | 290,948 | |
Section 174 expenditures | 549,158 | |
Other reserve | 85,638 | 59,682 |
Intangibles | 922,090 | 211,651 |
Tax credits | 322,990 | 90,952 |
Deferred tax assets | 10,278,713 | 6,214,291 |
Fixed assets | (36,902) | |
Deferred tax liabilities | (36,902) | |
Valuation allowance | $ (10,278,713) | $ (6,177,389) |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Federal net operating loss ("NOL") carryforwards | $ 27,362,000 | |
Federal net operating losses, have expiration | 533,000 | |
Federal net operating losses, have no expiration | 26,829,000 | |
Federal research and development credit carryforwards | 323,000 | |
State and local NOLs | 42,888,000 | |
Increased the valuation allowance | 4,101,324 | $ 3,162,374 |
Tax related interest or penalties | $ 0 | $ 0 |
NOTES PAYABLE - (Details)
NOTES PAYABLE - (Details) - USD ($) | 12 Months Ended | |||
Jun. 23, 2020 | Apr. 06, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
NOTES PAYABLE | ||||
Interest expense | $ 10,909 | $ 8,383 | ||
Notes payable past due and classified as current | 11,220 | 9,017 | ||
Proceeds from repayment of notes payable | 149,843 | 177,347 | ||
Paycheck Protection Program Loan | ||||
NOTES PAYABLE | ||||
Proceeds from notes payable | $ 327,000 | |||
Interest on related party notes payable | 0.98% | |||
Outstanding loan amount | 0 | $ 149,843 | ||
EIDL Loan | ||||
NOTES PAYABLE | ||||
Outstanding loan amount | $ 78,900 | |||
Principal amount of debt | $ 79,000 | |||
Interest rate (as a percent) | 3.75% | |||
Periodic installment amount | $ 385 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | 3 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2022 USD ($) shares | Jun. 30, 2022 shares | Mar. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Jun. 30, 2021 USD ($) item shares | Mar. 31, 2021 USD ($) item shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | |
STOCKHOLDERS' EQUITY | ||||||||
Unrecognized stock-based compensation expense | $ | $ 1,279,096 | |||||||
Unrecognized stock-based compensation expense, period of recognition | 3 years | |||||||
Shares of common stock granted | 22,917 | |||||||
Common stock aggregate issuance date fair value | $ | $ 1,020,093 | $ 993,047 | ||||||
Vesting period | 4 years | |||||||
Number of common stock issued | 8,328 | |||||||
Aggregate grant date fair value | $ | $ 28,000 | |||||||
Aggregate amount of shares | 1,130,095 | |||||||
Shares of common stock related to the forfeiture | 8,323 | |||||||
Common stock, shares issued | 14,253,948 | 14,456,035 | 14,253,948 | |||||
Common Stock Voting Rights | one vote per share | |||||||
Restricted stock units | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Vesting period | 4 years | |||||||
Restricted stock awards | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Shares of common stock granted | 25,000 | |||||||
Vesting period | 4 years | |||||||
Aggregate grant date fair value | $ | $ 29,000 | |||||||
Chief financial officer | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock surrendered | 3,397 | |||||||
Stock-based compensation tax withholding obligation | $ | $ 18,000 | |||||||
Board of Directors | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock aggregate issuance date fair value | $ | $ 3,282 | |||||||
Number of shares issued under share based compensation plan | 1,062 | |||||||
Chief executive officer and chief financial officer | Restricted stock awards | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Aggregate amount of shares | 134,386 | |||||||
2017 Plan | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Number of shares issued under share based compensation plan | 10,000 | |||||||
Common stock reserved | 77,992 | |||||||
Common stock, shares issued | 333,334 | |||||||
2017 Plan | Employees | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock aggregate issuance date fair value | $ | $ 963,701 | |||||||
Number of shares issued under share based compensation plan | 167,600 | |||||||
Number of employees in a share based compensation plan | item | 6 | |||||||
2017 Plan | Tranche one | Employees | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock aggregate issuance date fair value | $ | $ 957,313 | |||||||
Vesting period | 1 year | |||||||
2017 Plan | Trance two | Employees | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock aggregate issuance date fair value | $ | $ 6,388 | |||||||
2017 Plan | Board of Directors | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock aggregate issuance date fair value | $ | $ 60,120 | |||||||
Number of shares issued under share based compensation plan | 20,040 | |||||||
Number of member of board of directors to whom shares were issued | item | 4 | |||||||
2017 Plan | Service Providers | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock aggregate issuance date fair value | $ | $ 500,400 | |||||||
Number of shares issued under share based compensation plan | 50,000 | |||||||
2021 Plan | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock reserved | 466,020 | |||||||
Common stock, shares issued | 1,500,000 | |||||||
2021 Equity Incentive Plan | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock aggregate issuance date fair value | $ | $ 1,900,000 | |||||||
2021 Equity Incentive Plan | Restricted stock units | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Warrants to purchase shares of common stock | 489,990 | |||||||
2021 Equity Incentive Plan | PSUs | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Shares of common stock granted | 234,376 | |||||||
2021 Equity Incentive Plan | Restricted stock awards | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Shares of common stock granted | 100,000 | |||||||
Common stock aggregate issuance date fair value | $ | $ 100,000 | |||||||
2021 Equity Incentive Plan | Restricted stock awards | Employees | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Shares of common stock granted | 53,192 | |||||||
Minimum | 2021 Equity Incentive Plan | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Percentage of grantees earnings | 0% | |||||||
Maximum | 2021 Equity Incentive Plan | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Percentage of grantees earnings | 150% |
STOCKHOLDERS' EQUITY - Stock-Ba
STOCKHOLDERS' EQUITY - Stock-Based Compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY | ||
Total | $ 991,487 | $ 724,042 |
Unrecognized stock-based compensation expense | $ 1,279,096 | |
Unrecognized stock-based compensation expense, period of recognition | 3 years | |
Sales and marketing | ||
STOCKHOLDERS' EQUITY | ||
Total | $ 119,388 | 270,460 |
Technology | ||
STOCKHOLDERS' EQUITY | ||
Total | 207,280 | 31,631 |
General and administrative | ||
STOCKHOLDERS' EQUITY | ||
Total | $ 664,819 | $ 421,951 |
STOCKHOLDERS' EQUITY - Stock-_2
STOCKHOLDERS' EQUITY - Stock-based award activity (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Number of Shares | |
Number of Shares, Non-vested beginning balance | shares | 166,489 |
Number of Shares, Granted | shares | 1,130,095 |
Number of Shares, Vested | shares | (167,777) |
Number of Shares, Forfeited | shares | (117,390) |
Number of Shares, Non-vested ending balance | shares | 1,011,417 |
Weighted Average Grant Date Fair Value | |
Weighted Average Grant Date Fair Value, Non-vested beginning balance | $ / shares | $ 5.98 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 2.28 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 2.23 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 2.83 |
Weighted Average Grant Date Fair Value, Non-vested ending balance | $ / shares | $ 2.83 |
Total Grant Date Fair Value | |
Total Grant Date Fair Value, Non-vested beginning balance | $ | $ 995,604 |
Total Grant Date Fair Value, Granted | $ | 2,576,906 |
Total Grant Date Fair Value, Vested | $ | (373,516) |
Total Grant Date Fair Value, Forfeited | $ | (331,748) |
Total Grant Date Fair Value, Non-vested ending balance | $ | $ 2,867,246 |
STOCKHOLDERS' EQUITY - Company'
STOCKHOLDERS' EQUITY - Company's stock option activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2022 | |
Number of Options | ||
Shares of common stock granted | 22,917 | |
Stock Options | ||
Number of Options | ||
Outstanding | 94,447 | |
Forfeited | (57,780) | |
Outstanding | 36,667 | |
Exercisable | 22,892 | |
Weighted Average Exercise Price | ||
Outstanding | $ 11.56 | |
Forfeited | 8.19 | |
Outstanding | 16.87 | |
Exercisable | $ 19.69 | |
Weighted Average Remaining Term (Years) and Intrinsic Value | ||
Outstanding (in years) | 7 years 6 months | |
Exercisable (in years) | 7 years 4 months 24 days |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Information Related to Stock Options (Details) - Stock Options | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
STOCKHOLDERS' EQUITY | |
Options Outstanding, Weighted Outstanding Number of Options | 36,667 |
Options Exercisable, Average Remaining Life In Years | 7 years 4 months 24 days |
Options Exercisable, Exercisable Number of Options | 22,892 |
Exercise Price $2.81 | |
STOCKHOLDERS' EQUITY | |
Options Outstanding, Exercise price | $ / shares | $ 2.81 |
Options Outstanding, Weighted Outstanding Number of Options | 20,000 |
Options Exercisable, Average Remaining Life In Years | 7 years 10 months 24 days |
Options Exercisable, Exercisable Number of Options | 10,400 |
Exercise Price $2.97 | |
STOCKHOLDERS' EQUITY | |
Options Outstanding, Exercise price | $ / shares | $ 33.75 |
Options Outstanding, Weighted Outstanding Number of Options | 16,667 |
Options Exercisable, Average Remaining Life In Years | 7 years |
Options Exercisable, Exercisable Number of Options | 12,492 |
STOCKHOLDERS' EQUITY - Warrant
STOCKHOLDERS' EQUITY - Warrant Activity (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Warrants | |
Outstanding | shares | 4,753,363 |
Outstanding | shares | 4,753,363 |
Exercisable (in shares) | shares | 4,753,363 |
Weighted Average Exercise Price | |
Outstanding, beginning of the period (in dollars per share) | $ / shares | $ 5.42 |
Outstanding, end of the period (in dollars per share) | $ / shares | 5.42 |
Exercisable (in dollars per share) | $ / shares | $ 5.35 |
Weighted Average Remaining Life, Outstanding (in years) | 2 years 6 months |
Weighted Average Remaining Life, Exercisable (in years) | 2 years 6 months |
Warrants term (in years) | 5 years |
STOCKHOLDERS' EQUITY - Stock Wa
STOCKHOLDERS' EQUITY - Stock Warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY | ||
Exercise Price (in dollars per share) | $ 5.42 | $ 5.42 |
Outstanding number of warrants (in shares) | 4,753,363 | 4,753,363 |
Weighted Average Remaining Life, Exercisable (in years) | 2 years 6 months | |
Exercisable number of warrants (in shares) | 4,753,363 | |
Warrant Exercise Price $ 4.20 | ||
STOCKHOLDERS' EQUITY | ||
Exercise Price (in dollars per share) | $ 4.20 | |
Outstanding number of warrants (in shares) | 368,711 | |
Weighted Average Remaining Life, Exercisable (in years) | 1 year 8 months 12 days | |
Exercisable number of warrants (in shares) | 368,711 | |
Warrant Exercise Price $ 4.95 | ||
STOCKHOLDERS' EQUITY | ||
Exercise Price (in dollars per share) | $ 4.95 | |
Outstanding number of warrants (in shares) | 177,223 | |
Weighted Average Remaining Life, Exercisable (in years) | 3 months 18 days | |
Exercisable number of warrants (in shares) | 177,223 | |
Warrant Exercise Price $ 5.50 | ||
STOCKHOLDERS' EQUITY | ||
Exercise Price (in dollars per share) | $ 5.50 | |
Outstanding number of warrants (in shares) | 3,998,459 | |
Weighted Average Remaining Life, Exercisable (in years) | 2 years 8 months 12 days | |
Exercisable number of warrants (in shares) | 3,998,459 | |
Warrant Exercise Price $ 6.25 | ||
STOCKHOLDERS' EQUITY | ||
Exercise Price (in dollars per share) | $ 6.25 | |
Outstanding number of warrants (in shares) | 32,500 | |
Weighted Average Remaining Life, Exercisable (in years) | 2 years 7 months 6 days | |
Exercisable number of warrants (in shares) | 32,500 | |
Warrant Exercise Price $ 6.38 | ||
STOCKHOLDERS' EQUITY | ||
Exercise Price (in dollars per share) | $ 6.38 | |
Outstanding number of warrants (in shares) | 176,470 | |
Weighted Average Remaining Life, Exercisable (in years) | 3 years | |
Exercisable number of warrants (in shares) | 176,470 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Settlement and Employment Agreements (Details) | 3 Months Ended | 12 Months Ended | ||||
Nov. 29, 2021 USD ($) shares | Jun. 04, 2021 USD ($) item installment shares | Apr. 09, 2021 USD ($) shares | Sep. 30, 2022 shares | Dec. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) | |
COMMITMENTS AND CONTINGENCIES | ||||||
Loss on legal settlement | $ (880,381) | |||||
Shares of common stock granted | shares | 22,917 | |||||
Mr. Leon Zemel | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Annual base salary | $ 390,000 | |||||
Annual performance bonuses with a target achievement of base salary (as a percent) | 20% | |||||
Shares of common stock granted | shares | 100,000 | |||||
Period for which employee is entitled to receive salary | 6 months | |||||
Period for continued healthcare coverage | 6 months | |||||
Period for equity awards vested and exercisable after termination | 3 months | |||||
Mr. Leon Zemel | Vesting if termination is before the one year anniversary date of the agreement | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Vesting percentage | 25% | |||||
Mr. Leon Zemel | Vesting if termination is after one year anniversary date of the agreement | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Vesting percentage | 100% | |||||
Mitchell Berg | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Annual base salary | $ 300,000 | |||||
Annual performance bonuses with a target achievement of base salary | $ 100,000 | |||||
Shares of common stock granted | shares | 50,000 | |||||
Number of shares granted | shares | 80,000 | |||||
Number of months for which termination compensation will pay after termination | 3 months | |||||
Aggregate grant date fair value of award | $ 216,800 | |||||
Settlement Agreement | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Outstanding notes payable balance | $ 975,000 | |||||
Loss on legal settlement | 875,000 | |||||
Cash payment accrued | $ 975,000 | |||||
Employment Agreements | Vice President | PSUs | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Employment Agreement Term | 2 years | |||||
Number of vice presidents in a employment agreement | item | 2 | |||||
Amount payable upon termination | $ 150,000 | |||||
Number of months for which termination compensation will pay after termination | 2 months | |||||
Aggregate grant date fair value of award | $ (1,400,822) | |||||
Employment Agreements | Vice President | PSUs | First year bonus on 12- month anniversary | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Number of shares granted | shares | 67,738 | |||||
Performance marketing condition minimum threshold limit | $ 175,000 | |||||
Performance marketing condition maximum threshold limit | $ 350,000 | |||||
Number of vesting equity installments | installment | 2 | |||||
Employment Agreements | Vice President | PSUs | Second year bonus on 24- month anniversary | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Performance marketing condition minimum threshold limit | $ 262,000 | |||||
Performance marketing condition maximum threshold limit | $ 525,000 | |||||
Number of vesting equity installments | item | 2 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
FAIR VALUE MEASUREMENT | ||
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Change In Fair Value Of Contingent Consideration | |
Fair value of Level 3 | ||
FAIR VALUE MEASUREMENT | ||
Beginning balance as of January 1, | $ 613,000 | |
Issuance of contingent consideration | $ 613,000 | |
Change in fair value of contingent consideration | $ (613,000) | |
Ending balance as of December 31, | $ 613,000 |
FAIR VALUE MEASUREMENT - Additi
FAIR VALUE MEASUREMENT - Additional information (Details) - USD ($) | 12 Months Ended | ||
Nov. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
FAIR VALUE MEASUREMENT | |||
Change in fair value of contingent consideration | $ 613,000 | ||
MediaCrossing Inc | |||
FAIR VALUE MEASUREMENT | |||
Cash | $ 500,000 | ||
Earnout shares acquired by the company | 822,369 | ||
Earnout shares fair value | $ 2.55 | ||
Earnout shares had a fair value | $ 613,000 | ||
Recomputed fair value of earnout shares | 0 | ||
Change in fair value of contingent consideration | $ 613,000 |
CONCENTRATIONS - Customer Conce
CONCENTRATIONS - Customer Concentrations (Details) - Customer Concentrations | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | Customer A | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 21.77% | 85.77% |
Revenue | Customer B | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 11.56% | |
Revenue | Customer C | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 27.59% | |
Revenue | Customer D | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 17.23% | |
Revenue | Customer E | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 13.76% | |
Revenue | Top Five Customers | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 80.35% | 97.33% |
Accounts Receivable | Customer A | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 22.08% | |
Accounts Receivable | Customer B | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 52.18% | |
Accounts Receivable | Customer C | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 11.72% | |
Accounts Receivable | Customer D | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 10.25% | |
Accounts Receivable | Customer E | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 10.57% | |
Accounts Receivable | Customer F | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 35.64% | |
Accounts Receivable | Top Six Customers | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 68.18% | 74.26% |
CONCENTRATIONS - Supplier Conce
CONCENTRATIONS - Supplier Concentrations (Details) - Cost of goods sold - Supplier Concentrations | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Supplier A | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 42.36% | |
Supplier B | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 10.60% | |
Supplier C | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 23.47% | |
Top Three Suppliers | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 34.07% | 42.36% |