Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 19, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
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, Address Line Two | 8th Floor | |
Entity Address, City or Town | New York | |
Entity Address State Or Province | NY | |
Entity Address, Postal Zip Code | 10018 | |
City Area Code | 800 | |
Local Phone Number | 409-9456 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Entity Central Index Key | 0001729750 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock, par value $0.00001 per share | ||
Document and Entity Information | ||
Title of 12(b) Security | Common Stock, par value $0.00001 per share | |
Trading Symbol | KBNT | |
Security Exchange Name | NASDAQ | |
Common Stock Purchase Warrants | ||
Document and Entity Information | ||
Title of 12(b) Security | Common Stock Purchase Warrants | |
Trading Symbol | KBNTW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 11,827,956 | $ 14,739,484 |
Accounts receivable, net | 98,132 | 135,658 |
Prepaid expenses and other current assets | 313,606 | 346,935 |
Total Current Assets | 12,239,694 | 15,222,077 |
Deferred financing costs | 10,000 | 10,000 |
Total Assets | 12,249,694 | 15,232,077 |
Current Liabilities: | ||
Accounts payable - suppliers | 386,497 | 673,781 |
Accounts payable - trade | 776,545 | 816,190 |
Accrued expenses and other current liabilities | 557,964 | 830,365 |
Deferred revenue | 567 | 28,403 |
Total Current Liabilities | 1,721,573 | 2,348,739 |
Notes payable | 78,900 | 78,900 |
Total Liabilities | 1,800,473 | 2,427,639 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $0.00001 par value; 5,000,000 shares authorized; No shares issued and outstanding as of March 31, 2023 and December 31, 2022 | ||
Common stock, $0.00001 par value; 95,000,000 shares authorized; 14,515,940 and 14,456,035 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 145 | 145 |
Additional paid-in capital | 53,115,414 | 53,004,967 |
Accumulated deficit | (42,666,338) | (40,200,674) |
Total Stockholders' Equity | 10,449,221 | 12,804,438 |
Total Liabilities and Stockholders' Equity | $ 12,249,694 | $ 15,232,077 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets(Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Condensed 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 | 14,515,940 | 14,456,035 |
Common stock, shares outstanding | 14,515,940 | 14,456,035 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Condensed Consolidated Statements of Operations | ||
Net Revenues | $ 11,748 | $ 1,245,304 |
Costs and Expenses: | ||
Sales and marketing | 735,033 | 1,333,010 |
Technology | 519,194 | 1,155,699 |
General and administrative | 1,243,384 | 2,182,549 |
Loss accrual on customer contract | 789,605 | |
Total Costs and Expenses | 2,497,611 | 5,460,863 |
Loss From Operations | (2,485,863) | (4,215,559) |
Other (Expense) Income: | ||
Interest expense | (2,446) | (3,872) |
Interest income | 4,445 | 2,291 |
Change in fair value of contingent consideration | 589,622 | |
Other income | 18,200 | 26 |
Total Other Income | 20,199 | 588,067 |
Net Loss | $ (2,465,664) | $ (3,627,492) |
Net Loss Per Share - Basic | $ (0.17) | $ (0.25) |
Net Loss Per Share - Diluted | $ (0.17) | $ (0.25) |
Weighted Average Common Shares Outstanding - Basic | 14,440,464 | 14,256,159 |
Weighted Average Common Shares Outstanding - Diluted | 14,440,464 | 14,256,159 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at the beginning at Dec. 31, 2021 | $ 143 | $ 52,030,907 | $ (26,580,790) | $ 25,450,260 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 14,253,948 | |||
Increase (decrease) in stockholders' equity | ||||
Stock-based compensation: Common stock | 430,361 | 430,361 | ||
Stock-based compensation: Common stock (in shares) | 53,192 | |||
Surrender and cancellation of common stock | (18,683) | (18,683) | ||
Surrender and cancellation of common stock (in shares) | (3,397) | |||
Stock-based compensation: Options | 2,295 | 2,295 | ||
Net loss | (3,627,492) | (3,627,492) | ||
Balance at the end at Mar. 31, 2022 | $ 143 | 52,444,880 | (30,208,282) | 22,236,741 |
Balance at the end (in shares) at Mar. 31, 2022 | 14,303,743 | |||
Balance at the beginning at Dec. 31, 2022 | $ 145 | 53,004,967 | (40,200,674) | 12,804,438 |
Balance at the beginning (in shares) at Dec. 31, 2022 | 14,456,035 | |||
Increase (decrease) in stockholders' equity | ||||
Stock-based compensation: Common stock | 108,206 | 108,206 | ||
Stock-based compensation: Common stock (in shares) | 59,905 | |||
Stock-based compensation: Options | 2,241 | 2,241 | ||
Net loss | (2,465,664) | (2,465,664) | ||
Balance at the end at Mar. 31, 2023 | $ 145 | $ 53,115,414 | $ (42,666,338) | $ 10,449,221 |
Balance at the end (in shares) at Mar. 31, 2023 | 14,515,940 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (2,465,664) | $ (3,627,492) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Provision for credit losses | 9,471 | |
Depreciation and amortization | 162,221 | |
Change in fair value of contingent consideration | (589,622) | |
Stock-based compensation Common stock | 108,206 | 429,811 |
Stock-based compensation Options | 2,241 | 2,295 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 28,055 | (60,930) |
Prepaid expenses and other current assets | 33,329 | 590,661 |
Accounts payable - suppliers | (287,284) | 630,026 |
Accounts payable - trade | (39,645) | 391,034 |
Accrued expenses and other current liabilities | (190,221) | (1,532,150) |
Deferred revenue | (27,836) | (369,195) |
Net Cash Used In Operating Activities | (2,829,348) | (3,973,341) |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (7,520) | |
Net Cash Used In Investing Activities | (7,520) | |
Cash Flows From Financing Activities: | ||
Repayment of PPP loan | (109,270) | |
Repayment of financed director and officer insurance premiums | (82,180) | (108,788) |
Net Cash Used In Financing Activities | (82,180) | (218,058) |
Net Decrease In Cash and Cash Equivalents | (2,911,528) | (4,198,919) |
Cash and Cash Equivalents - Beginning of the Period | 14,739,484 | 24,907,963 |
Cash and Cash Equivalents - End of the Period | 11,827,956 | 20,709,044 |
Cash paid during the period for: | ||
Interest | $ 3,215 | |
Non-cash investing and financing activities: | ||
Surrender and cancellation of common stock | $ (18,683) |
BUSINESS ORGANIZATION, NATURE O
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2023 | |
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 AND BASIS OF PRESENTATION Organization and Operations Kubient, Inc. (“Kubient”, “we”, “our” or the “Company”), a Delaware corporation, was incorporated in May 2017 to solve some of the most significant problems facing the global digital advertising industry. The Company’s experienced team of marketing and technology veterans has developed the Audience Marketplace, a modular, highly scalable, transparent, cloud-based software platform for real-time trading of digital, Programmatic Advertising. The Company’s platform’s open marketplace gives both advertisers (ad space buyers) and Publishers (ad space sellers) the ability to use machine learning in the most critical parts of any Programmatic Advertising inventory auction, while simultaneously and significantly reducing those advertisers and Publishers’ exposure to fraud, specifically in the pre-bid environment. The Company also provides unique capabilities with its proprietary pre-bid ad fraud detection and prevention, Kubient Artificial Intelligence (“KAI”), which has the ability to stop fraud in the critical 300 millisecond window before an advertiser spends their budget on fraudulent ad space. The technology is powered by deep learning algorithms, the latest advancement in machine learning, which allows the Company to ingest vast amounts of data, find complex patterns in the data and make accurate predictions. This provides advertisers a powerful tool capable of preventing the purchase of ad fraud. The Company believes that its Audience Marketplace technology allows advertisers to reach entire audiences rather than buying single impressions from disparate sources. By becoming a one stop shop for advertisers and Publishers, providing them with the technology to deliver meaningful messages to their target audience, all in one place, on a single platform that is computationally efficient, transparent, and as safely fraud-free as possible, the Company believes that its Audience Marketplace platform (and the application of the platform’s machine learning algorithms) leads to increased Publisher revenue, lower advertiser cost, reduced latency and increased economic transparency during the advertising auction process. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair statement of the unaudited condensed consolidated financial statements of the Company as of March 31, 2023 and for the three months ended March 31, 2023 and 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results for the full year ending December 31, 2023 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures as of December 31, 2022 and 2021 and for the years then ended which are included the Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on March 30, 2023. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES There have been no material changes to the significant accounting policies included in the audited consolidated financial statements as of December 31, 2022 and 2021 and for the years then ended, which were included the Annual Report on Form 10-K filed with the SEC on March 30, 2023, except as disclosed in this note. Liquidity As of March 31, 2023, the Company had cash and cash equivalents of $11,827,956 and working capital of $10,518,121. During the quarter ended March 31, 2023, the Company incurred a net loss of $2,465,664 and used cash in operating activities of $2,829,348. 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. 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 March 31, 2023 and December 31, 2022, the Company had cash balances of $11,827,956 and $14,739,484, 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, Silicon Valley Bank (“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. Accounts Receivable On January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, "Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," using a modified retrospective approach. The standard amends several aspects of the measurement of credit losses related to certain financial instruments, including the replacement of the existing incurred credit loss model and other models with the current expected credit losses ("CECL") model. The cumulative effect of adoption did not result in an adjustment to the allowance for credit loss, and accordingly, the Company’s accumulated deficit as of January 1, 2023. Accounts receivable are recorded at the amount the Company is responsible to collect from the customer, less an estimate for expected credit losses. 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. The Company’s allowance for credit losses on accounts receivable reflects management’s estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current conditions and forecasts that affect the collectability of the reported amount. Revenue Recognition The Company maintains a contract with each customer and supplier, which specifies the terms of the relationship. The Company provides a service to its customers (the buy-side ad networks who work for advertisers) by connecting advertisers and Publishers. For this service, the Company earns a percentage of the amount that is paid by the advertiser, who wants to run a digital advertising campaign, which, in some cases, is reduced by the amount paid to the Publisher, who wants to sell its ad space to the advertiser. The transaction price is determined based on the consideration to which the Company expects to be entitled, including the impact of any implicit price concessions over the course of the contract. The Company’s performance obligation is to facilitate the publication of advertisements. The performance obligation is satisfied at the point in time that the ad is placed. Subsequent to a bid being won, the associated fees are generally not subject to refund or adjustment. Historically, any refunds and adjustments have not been material. The revenue recognized is the amount the Company is responsible to collect from the customer related to the placement of an ad (the “Gross Billing”), less the amount the Company remits to the supplier for the ad space (the “Supplier Cost”), if any. The determination of whether the Company is the principal or agent, and hence whether to report revenue on a gross basis equal to the Gross Billing or on a net basis for the difference between the Gross Billing and Supplier Cost, requires judgment. The Company acts as an agent in arranging via its platform for the specified good (the ad space) to be purchased by the advertiser, as it does not control the goods or services being transferred to the end customer, it does not take responsibility for the quality or acceptability of the ad space, it does not bear inventory risk, nor does it have discretion in establishing price of the ad space. As a result, the Company recognizes revenue on a net basis for the difference between the Gross Billing and the Supplier Cost. The Company invoices customers on a monthly basis for the amount of Gross Billings in the relevant period. Invoice payment terms, negotiated on a customer-by- customer basis, are typically between 45 to 90 days. However, for certain agency customers with sequential liability terms as specified by the Interactive Advertising Bureau, (i) payments are not due to the Company until such agency customers has received payment from its customers (ii) the Company is not required to make a payment to its supplier until payment is received from the Company’s customer and (iii) the supplier is responsible to pursue collection directly with the advertiser. As a result, once the Company has met the requirements of each of the five steps under ASC 606, the Company’s accounts receivable are recorded at the amount of Gross Billings which represent amounts it is responsible to collect and accounts payable, if applicable, are recorded at the amount payable to suppliers. In the event step 1 under ASC 606 is not met, the Company does not record either the accounts receivable or accounts payable. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. From time to time, the Company records loss accruals for estimated costs that exceed estimated revenue related to its contracts with customers. During the three months ended March 31, 2022, the Company recognized an estimated loss accrual on a customer contract of $789,605 related to media costs incurred associated with a contract with a customer, which was included in costs and expenses on the condensed consolidated statement of operations. As of March 31, 2023 and December 31, 2022, the Company did not have any contract assets from contracts with customers. During the three months ended March 31, 2023, the Company did not recognize any revenue that was deferred as of December 31, 2022. As of March 31, 2023 and December 31, 2022, the Company had $567 and $531, respectively, of contract liabilities where performance obligations have not yet been satisfied. During the three months ended March 31, 2023 and 2022, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of vested common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares of options, warrants and convertible notes, if not anti-dilutive. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Three Months Ended March 31, 2023 2022 Warrants [1] 4,980,963 5,122,074 Restricted stock units 531,095 855,989 Restricted stock awards 52,087 307,491 Stock options 36,667 94,447 5,600,812 6,380,001 [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. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Mar. 31, 2023 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 3 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: March 31, December 31, 2023 2022 Accrued bonuses $ — $ 215,761 Accrued payroll 89,375 — Financed director and officer insurance premiums 84,240 168,480 Accrued supplier expenses 44,448 44,949 Accrued legal and professional fees 170,332 49,832 Accrued commissions 702 4,181 Credit card payable 51,650 226,679 Accrued interest 8,734 11,220 Accrued warrant exercise costs 83,519 83,519 Other 24,964 25,744 Total accrued expenses and other current liabilities $ 557,964 $ 830,365 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 4 – STOCKHOLDERS’ EQUITY Stock-Based Compensation For the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense related to stock options, restricted stock awards and restricted stock units as follows: For the Three Months Ended March 31, 2023 2022 Sales and marketing $ 23,008 $ 35,581 Technology 35,439 78,875 General and administrative 52,000 317,650 Total $ 110,447 $ 432,106 As of March 31, 2023, there was approximately $1,152,375 of unrecognized stock-based compensation expense related to awards that were determined to be probable to vest, which will be recognized over approximately 2.7 years. During the three months ended March 31, 2023, the Company issued 59,905 shares of common stock related to the previously granted restricted stock units. |
CONCENTRATIONS
CONCENTRATIONS | 3 Months Ended |
Mar. 31, 2023 | |
CONCENTRATIONS | |
CONCENTRATIONS | NOTE 5 – CONCENTRATIONS Customer Concentrations The following table sets forth information as to each customer that accounted for 10% or more of the Company’s net revenues for the following periods: For the Three Months Ended March 31, Customer 2023 2022 Customer A N/A 42.02 % Customer B N/A 43.25 % Customer C 195.31 % * Customer D 191.34 % * Customer E 59.27 % * Customer F 46.23 % N/A Customer G 52.23 % N/A Customer H 12.59 % * Customer I 84.81 % * Customer J 270.46 % * Total 912.24 % 85.27 % *Less than 10% From time to time, certain customers generate negative net revenues that resulted from supplier costs that exceeded the gross billing. As a result, the Company’s concentrations on net revenues may result in total percentages that exceed 100%. The following table sets forth information as to each customer that accounted for 10% or more of the Company’s gross accounts receivable as of: March 31, December 31, Customer 2023 2022 Customer A 14.50 % 11.72 % Customer B 24.59 % 10.25 % Customer C * 10.57 % Customer D 11.67 % * Customer E 26.52 % 35.64 % Total 77.27 % 68.18 % * 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 Three Months Ended March 31, Supplier 2023 2022 Supplier A * 18.77 % Supplier B * 23.84 % Supplier C N/A 17.56 % Supplier D * 14.40 % Supplier E 17.85 % N/A Supplier F 10.95 % N/A Supplier G 18.58 % * Total 47.38 % 74.56 % * Less than 10% |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Liquidity | Liquidity As of March 31, 2023, the Company had cash and cash equivalents of $11,827,956 and working capital of $10,518,121. During the quarter ended March 31, 2023, the Company incurred a net loss of $2,465,664 and used cash in operating activities of $2,829,348. 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. |
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 March 31, 2023 and December 31, 2022, the Company had cash balances of $11,827,956 and $14,739,484, 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, Silicon Valley Bank (“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. |
Accounts Receivable | Accounts Receivable On January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, "Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," using a modified retrospective approach. The standard amends several aspects of the measurement of credit losses related to certain financial instruments, including the replacement of the existing incurred credit loss model and other models with the current expected credit losses ("CECL") model. The cumulative effect of adoption did not result in an adjustment to the allowance for credit loss, and accordingly, the Company’s accumulated deficit as of January 1, 2023. Accounts receivable are recorded at the amount the Company is responsible to collect from the customer, less an estimate for expected credit losses. 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. The Company’s allowance for credit losses on accounts receivable reflects management’s estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current conditions and forecasts that affect the collectability of the reported amount. |
Revenue Recognition | Revenue Recognition The Company maintains a contract with each customer and supplier, which specifies the terms of the relationship. The Company provides a service to its customers (the buy-side ad networks who work for advertisers) by connecting advertisers and Publishers. For this service, the Company earns a percentage of the amount that is paid by the advertiser, who wants to run a digital advertising campaign, which, in some cases, is reduced by the amount paid to the Publisher, who wants to sell its ad space to the advertiser. The transaction price is determined based on the consideration to which the Company expects to be entitled, including the impact of any implicit price concessions over the course of the contract. The Company’s performance obligation is to facilitate the publication of advertisements. The performance obligation is satisfied at the point in time that the ad is placed. Subsequent to a bid being won, the associated fees are generally not subject to refund or adjustment. Historically, any refunds and adjustments have not been material. The revenue recognized is the amount the Company is responsible to collect from the customer related to the placement of an ad (the “Gross Billing”), less the amount the Company remits to the supplier for the ad space (the “Supplier Cost”), if any. The determination of whether the Company is the principal or agent, and hence whether to report revenue on a gross basis equal to the Gross Billing or on a net basis for the difference between the Gross Billing and Supplier Cost, requires judgment. The Company acts as an agent in arranging via its platform for the specified good (the ad space) to be purchased by the advertiser, as it does not control the goods or services being transferred to the end customer, it does not take responsibility for the quality or acceptability of the ad space, it does not bear inventory risk, nor does it have discretion in establishing price of the ad space. As a result, the Company recognizes revenue on a net basis for the difference between the Gross Billing and the Supplier Cost. The Company invoices customers on a monthly basis for the amount of Gross Billings in the relevant period. Invoice payment terms, negotiated on a customer-by- customer basis, are typically between 45 to 90 days. However, for certain agency customers with sequential liability terms as specified by the Interactive Advertising Bureau, (i) payments are not due to the Company until such agency customers has received payment from its customers (ii) the Company is not required to make a payment to its supplier until payment is received from the Company’s customer and (iii) the supplier is responsible to pursue collection directly with the advertiser. As a result, once the Company has met the requirements of each of the five steps under ASC 606, the Company’s accounts receivable are recorded at the amount of Gross Billings which represent amounts it is responsible to collect and accounts payable, if applicable, are recorded at the amount payable to suppliers. In the event step 1 under ASC 606 is not met, the Company does not record either the accounts receivable or accounts payable. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. From time to time, the Company records loss accruals for estimated costs that exceed estimated revenue related to its contracts with customers. During the three months ended March 31, 2022, the Company recognized an estimated loss accrual on a customer contract of $789,605 related to media costs incurred associated with a contract with a customer, which was included in costs and expenses on the condensed consolidated statement of operations. As of March 31, 2023 and December 31, 2022, the Company did not have any contract assets from contracts with customers. During the three months ended March 31, 2023, the Company did not recognize any revenue that was deferred as of December 31, 2022. As of March 31, 2023 and December 31, 2022, the Company had $567 and $531, respectively, of contract liabilities where performance obligations have not yet been satisfied. During the three months ended March 31, 2023 and 2022, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of vested common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares of options, warrants and convertible notes, if not anti-dilutive. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Three Months Ended March 31, 2023 2022 Warrants [1] 4,980,963 5,122,074 Restricted stock units 531,095 855,989 Restricted stock awards 52,087 307,491 Stock options 36,667 94,447 5,600,812 6,380,001 [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. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of calculation of weighted average dilutive common shares | For the Three Months Ended March 31, 2023 2022 Warrants [1] 4,980,963 5,122,074 Restricted stock units 531,095 855,989 Restricted stock awards 52,087 307,491 Stock options 36,667 94,447 5,600,812 6,380,001 [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. |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | March 31, December 31, 2023 2022 Accrued bonuses $ — $ 215,761 Accrued payroll 89,375 — Financed director and officer insurance premiums 84,240 168,480 Accrued supplier expenses 44,448 44,949 Accrued legal and professional fees 170,332 49,832 Accrued commissions 702 4,181 Credit card payable 51,650 226,679 Accrued interest 8,734 11,220 Accrued warrant exercise costs 83,519 83,519 Other 24,964 25,744 Total accrued expenses and other current liabilities $ 557,964 $ 830,365 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
Schedule of stock-based compensation expense related to stock options, restricted stock awards and restricted stock units | For the Three Months Ended March 31, 2023 2022 Sales and marketing $ 23,008 $ 35,581 Technology 35,439 78,875 General and administrative 52,000 317,650 Total $ 110,447 $ 432,106 |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
CONCENTRATIONS | |
Summary of customer and supplier concentrations | The following table sets forth information as to each customer that accounted for 10% or more of the Company’s net revenues for the following periods: For the Three Months Ended March 31, Customer 2023 2022 Customer A N/A 42.02 % Customer B N/A 43.25 % Customer C 195.31 % * Customer D 191.34 % * Customer E 59.27 % * Customer F 46.23 % N/A Customer G 52.23 % N/A Customer H 12.59 % * Customer I 84.81 % * Customer J 270.46 % * Total 912.24 % 85.27 % *Less than 10% The following table sets forth information as to each customer that accounted for 10% or more of the Company’s gross accounts receivable as of: March 31, December 31, Customer 2023 2022 Customer A 14.50 % 11.72 % Customer B 24.59 % 10.25 % Customer C * 10.57 % Customer D 11.67 % * Customer E 26.52 % 35.64 % Total 77.27 % 68.18 % * Less than 10% The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s supplier costs for the following periods: For the Three Months Ended March 31, Supplier 2023 2022 Supplier A * 18.77 % Supplier B * 23.84 % Supplier C N/A 17.56 % Supplier D * 14.40 % Supplier E 17.85 % N/A Supplier F 10.95 % N/A Supplier G 18.58 % * Total 47.38 % 74.56 % * Less than 10% |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Liquidity and Cash and Cash Equivalents (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Cash and cash equivalents | $ 11,827,956 | $ 14,739,484 | |
Working capital | 10,518,121 | ||
Net loss | 2,465,664 | $ 3,627,492 | |
Operating activities | 2,829,348 | $ 3,973,341 | |
Cash balances in excess of FDIC insured limits | $ 11,827,956 | $ 14,739,484 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Contract liabilities | $ 567 | $ 531 | |
Revenue recognized from performance obligations satisfied | $ 0 | $ 0 | |
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 - Net Loss Per Common Share (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 5,600,812 | 6,380,001 |
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 | 4,980,963 | 5,122,074 |
Restricted stock units | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 531,095 | 855,989 |
Restricted stock awards | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 52,087 | 307,491 |
Stock options | ||
SIGNIFICANT ACCOUNTING POLICIES | ||
Shares excluded from the calculation of weighted average dilutive common shares | 36,667 | 94,447 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued bonuses | $ 215,761 | |
Accrued payroll | $ 89,375 | |
Financed director and officer insurance premiums | 84,240 | 168,480 |
Accrued supplier expenses | 44,448 | 44,949 |
Accrued legal and professional fees | 170,332 | 49,832 |
Accrued commissions | 702 | 4,181 |
Credit card payable | 51,650 | 226,679 |
Accrued interest | 8,734 | 11,220 |
Accrued warrant exercise costs | 83,519 | 83,519 |
Other | 24,964 | 25,744 |
Total accrued expenses and other current liabilities | $ 557,964 | $ 830,365 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) shares | |
STOCKHOLDERS' EQUITY | |
Unrecognized stock-based compensation expense | $ | $ 1,152,375 |
Unrecognized stock-based compensation expense, period of recognition | 2 years 8 months 12 days |
2021 Equity Incentive Plan | Restricted stock awards | Non-employee directors | |
STOCKHOLDERS' EQUITY | |
Shares of common stock granted | shares | 59,905 |
STOCKHOLDERS' EQUITY - Stock-Ba
STOCKHOLDERS' EQUITY - Stock-Based Compensation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
STOCKHOLDERS' EQUITY | ||
Total | $ 110,447 | $ 432,106 |
Sales and marketing | ||
STOCKHOLDERS' EQUITY | ||
Total | 23,008 | 35,581 |
Technology | ||
STOCKHOLDERS' EQUITY | ||
Total | 35,439 | 78,875 |
General and administrative | ||
STOCKHOLDERS' EQUITY | ||
Total | $ 52,000 | $ 317,650 |
CONCENTRATIONS - Customer Conce
CONCENTRATIONS - Customer Concentrations (Details) - Customer Concentrations | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Revenue | Customer A | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 42.02% | ||
Revenue | Customer B | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 43.25% | ||
Revenue | Customer C | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 195.31% | ||
Revenue | Customer D | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 191.34% | ||
Revenue | Customer E | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 59.27% | ||
Revenue | Customer F | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 46.23% | ||
Revenue | Customer G | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 52.23% | ||
Revenue | Customer H | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 12.59% | ||
Revenue | Customer I | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 84.81% | ||
Revenue | Customer J | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 270.46% | ||
Revenue | Top Ten Customers | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 912.24% | 85.27% | |
Accounts Receivable | Customer A | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 14.50% | 11.72% | |
Accounts Receivable | Customer B | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 24.59% | 10.25% | |
Accounts Receivable | Customer C | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 10.57% | ||
Accounts Receivable | Customer D | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 11.67% | ||
Accounts Receivable | Customer E | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 26.52% | 35.64% | |
Accounts Receivable | Top Five Customers | |||
CONCENTRATIONS | |||
Concentration risk (as a percent) | 77.27% | 68.18% |
CONCENTRATIONS - Supplier Conce
CONCENTRATIONS - Supplier Concentrations (Details) - Cost of goods sold - Supplier Concentrations | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Supplier A | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 18.77% | |
Supplier B | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 23.84% | |
Supplier C | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 17.56% | |
Supplier D | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 14.40% | |
Supplier E | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 17.85% | |
Supplier F | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 10.95% | |
Supplier G | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 18.58% | |
Top Seven Suppliers | ||
CONCENTRATIONS | ||
Concentration risk (as a percent) | 47.38% | 74.56% |