Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 30, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Transition Report | false | |
Entity File Number | 001-14785 | |
Entity Registrant Name | GSE Systems, Inc. | |
Entity Central Index Key | 0000944480 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 52-1868008 | |
Entity Address, Address Line One | 6940 Columbia Gateway Dr. | |
Entity Address, Address Line Two | Suite 470 | |
Entity Address, City or Town | Columbia | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 21046 | |
City Area Code | 410 | |
Local Phone Number | 970-7800 | |
Title of 12(b) Security | Common Stock, $0.01 Par Value | |
Trading Symbol | GVP | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 3,239,832 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 1,360 | $ 2,250 |
Restricted cash, current | 379 | 378 |
Contract receivables, net of allowance for credit loss | 9,178 | 10,166 |
Prepaid expenses and other current assets | 792 | 879 |
Total current assets | 11,709 | 13,673 |
Equipment, software and leasehold improvements, net | 700 | 754 |
Software development costs, net | 697 | 750 |
Goodwill | 4,908 | 4,908 |
Intangible assets, net | 1,080 | 1,179 |
Restricted cash - long term | 1,084 | 1,083 |
Operating lease right-of-use assets, net | 364 | 413 |
Other assets | 45 | 45 |
Total assets | 20,587 | 22,805 |
Current liabilities: | ||
Current portion of long-term note | 1,054 | 810 |
Accounts payable | 2,181 | 3,300 |
Accrued expenses | 1,487 | 1,053 |
Accrued legal settlements | 774 | 1,010 |
Accrued compensation | 1,721 | 1,086 |
Billings in excess of revenue earned | 5,181 | 5,119 |
Accrued warranty | 181 | 176 |
Income taxes payable | 1,710 | 1,701 |
Derivative liabilities | 1,153 | 1,132 |
Other current liabilities | 643 | 956 |
Total current liabilities | 16,085 | 16,343 |
Long-term note, less current portion | 277 | 637 |
Operating lease liabilities, noncurrent | 322 | 357 |
Other noncurrent liabilities | 67 | 126 |
Total liabilities | 16,751 | 17,463 |
Commitments and contingencies (Note 15) | ||
Stockholders' equity: | ||
Preferred stock $0.01 par value; 2,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock $0.01 par value; 60,000,000 shares authorized, 3,399,723 and 3,194,030 shares issued, 3,239,832 and 3,034,139 shares outstanding, respectively | 34 | 32 |
Additional paid-in capital | 87,440 | 86,983 |
Accumulated deficit | (80,700) | (78,708) |
Accumulated other comprehensive income | 61 | 34 |
Treasury stock at cost, 159,891 shares | (2,999) | (2,999) |
Total stockholders' equity | 3,836 | 5,342 |
Total liabilities and stockholders' equity | $ 20,587 | $ 22,805 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock, shares issued (in shares) | 3,399,723 | 3,194,030 |
Common stock, shares outstanding (in shares) | 3,239,832 | 3,034,139 |
Treasury stock at cost (in shares) | 159,891 | 159,891 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
Revenue | $ 11,283 | $ 10,873 |
Cost of revenue | 8,067 | 8,478 |
Gross profit | 3,216 | 2,395 |
Operating expenses: | ||
Selling, general and administrative | 4,360 | 4,788 |
Research and development | 229 | 181 |
Depreciation | 58 | 48 |
Amortization of intangible assets | 99 | 161 |
Total operating expenses | 4,746 | 5,178 |
Operating loss | (1,530) | (2,783) |
Interest expense, net | (459) | (286) |
Change in fair value of derivative instruments, net | (17) | 69 |
Other loss, net | 54 | 10 |
Loss before income taxes | (1,952) | (2,990) |
Expense (benefit) from income taxes | 40 | (39) |
Net loss | $ (1,992) | $ (2,951) |
Net loss per common share - basic (in dollars per share) | $ (0.63) | $ (1.29) |
Net loss per common share - diluted (in dollars per share) | $ (0.63) | $ (1.29) |
Weighted average shares outstanding used to compute net loss per share - basic (in shares) | 3,148,806 | 2,293,389 |
Weighted average shares outstanding used to compute net loss per share - diluted (in shares) | 3,148,806 | 2,293,389 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | ||
Net loss | $ (1,992) | $ (2,951) |
Cumulative translation adjustment | 27 | (10) |
Comprehensive loss | $ (1,965) | $ (2,961) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Common Stock [Member] Cumulative Effect, Period of Adoption, Adjustment [Member] | Common Stock [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] Cumulative Effect, Period of Adoption, Adjustment [Member] | Additional Paid-in Capital [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Accumulated Deficit [Member] | Accumulated Deficit [Member] Cumulative Effect, Period of Adoption, Adjustment [Member] | Accumulated Deficit [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Other Comprehensive Loss [Member] Cumulative Effect, Period of Adoption, Adjustment [Member] | Accumulated Other Comprehensive Loss [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Treasury Stock [Member] | Treasury Stock [Member] Cumulative Effect, Period of Adoption, Adjustment [Member] | Treasury Stock [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Total | Cumulative Effect, Period of Adoption, Adjustment [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member] |
Balance at Dec. 31, 2022 | $ 24 | $ 0 | $ 24 | $ 82,911 | $ 0 | $ 82,911 | $ (69,927) | $ (57) | $ (69,984) | $ 6 | $ 0 | $ 6 | $ (2,999) | $ 0 | $ (2,999) | $ 10,231 | $ (57) | $ 10,174 |
Balance (in shares) at Dec. 31, 2022 | 2,405,000 | 0 | 2,405,000 | |||||||||||||||
Balance (in shares) at Dec. 31, 2022 | (160,000) | 0 | (160,000) | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||
Accounting Standards Update [Extensible Enumeration] | ASC 326 [Member] | ASC 326 [Member] | ||||||||||||||||
Stock-based compensation expense | $ 0 | 274 | 0 | 0 | $ 0 | 274 | ||||||||||||
Common stock issued for RSUs vested | $ 0 | (2) | 0 | 0 | 0 | (2) | ||||||||||||
Common stock issued for RSUs vested (in shares) | 12,000 | |||||||||||||||||
Shares withheld to pay taxes | $ 0 | (58) | 0 | 0 | 0 | (58) | ||||||||||||
Foreign currency translation adjustment | 0 | 0 | 0 | (10) | 0 | (10) | ||||||||||||
Repayment of convertible note in shares | $ 1 | 735 | 0 | 0 | 0 | 736 | ||||||||||||
Repayment of convertible note in shares (in shares) | 99,000 | |||||||||||||||||
Net loss | $ 0 | 0 | (2,951) | 0 | 0 | (2,951) | ||||||||||||
Balance at Mar. 31, 2023 | $ 25 | 83,860 | (72,935) | (4) | $ (2,999) | 8,163 | ||||||||||||
Balance (in shares) at Mar. 31, 2023 | 2,516,000 | |||||||||||||||||
Balance (in shares) at Mar. 31, 2023 | (160,000) | |||||||||||||||||
Balance at Dec. 31, 2023 | $ 32 | 86,983 | (78,708) | 34 | $ (2,999) | $ 5,342 | ||||||||||||
Balance (in shares) at Dec. 31, 2023 | 3,194,000 | 3,194,030 | ||||||||||||||||
Balance (in shares) at Dec. 31, 2023 | (160,000) | (159,891) | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||
Stock-based compensation expense | $ 0 | 292 | 0 | 0 | $ 0 | $ 292 | ||||||||||||
Common stock issued for RSUs vested | $ 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||
Common stock issued for RSUs vested (in shares) | 45,000 | |||||||||||||||||
Shares withheld to pay taxes | $ 0 | (65) | 0 | 0 | 0 | (65) | ||||||||||||
Foreign currency translation adjustment | 0 | 0 | 0 | 27 | 0 | 27 | ||||||||||||
Repayment of convertible note in shares | $ 2 | 230 | 0 | 0 | 0 | 232 | ||||||||||||
Repayment of convertible note in shares (in shares) | 161,000 | |||||||||||||||||
Net loss | $ 0 | 0 | (1,992) | 0 | 0 | (1,992) | ||||||||||||
Balance at Mar. 31, 2024 | $ 34 | $ 87,440 | $ (80,700) | $ 61 | $ (2,999) | $ 3,836 | ||||||||||||
Balance (in shares) at Mar. 31, 2024 | 3,400,000 | 3,399,723 | ||||||||||||||||
Balance (in shares) at Mar. 31, 2024 | (160,000) | (159,891) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net loss | $ (1,992) | $ (2,951) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 58 | 48 |
Amortization of intangible assets | 99 | 161 |
Amortization of capitalized software development costs | 102 | 84 |
Amortization of deferred financing costs | 19 | 7 |
Amortization of debt discount | 443 | 303 |
Loss on debt settled in shares | 46 | 106 |
Stock-based compensation expense | 294 | 285 |
Credit loss expense | 56 | 32 |
Change in fair value of derivative instruments, net | 17 | (69) |
Deferred income taxes | (1) | 2 |
Changes in assets and liabilities: | ||
Contract receivables | 924 | (486) |
Prepaid expenses and other assets | 78 | 876 |
Accounts payable, accrued compensation and accrued expenses | 3 | 1,252 |
Billings in excess of revenue earned | 66 | (61) |
Accrued warranty | (52) | (94) |
Other liabilities | (547) | (336) |
Net cash used in operating activities | (387) | (841) |
Cash flows from investing activities: | ||
Capital expenditures | (3) | 0 |
Capitalized software development costs | (49) | (77) |
Net cash used in investing activities | (52) | (77) |
Cash flows from financing activities: | ||
Repayment of insurance premium financing | (221) | (243) |
Principal repayment of convertible note | (141) | (319) |
Tax paid for shares withheld | (65) | (58) |
Net cash used in financing activities | (427) | (620) |
Effect of exchange rate changes on cash | (22) | 5 |
Net decrease in cash, cash equivalents and restricted cash | (888) | (1,533) |
Cash, cash equivalents and restricted cash at beginning of the period | 3,711 | 4,376 |
Cash, cash equivalents and restricted cash at the end of the period | 2,823 | 2,843 |
Cash and cash equivalents | 1,360 | 1,265 |
Restricted cash, current | 379 | 500 |
Restricted cash included in other long-term assets | 1,084 | 1,078 |
Total cash, cash equivalents and restricted cash | 2,823 | 2,843 |
Non-cash financing activities | ||
Repayment of convertible note in shares | $ 232 | $ 736 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 1 - Summary of Significant Accounting Policies Basis of Presentation GSE Systems, Inc. is a leading provider of professional and technical engineering, staffing services and simulation software to clients in the power and process industries. References in this report to “GSE” or “we” or “our” or “the Company” are to GSE Systems, Inc. and our subsidiaries, collectively. The consolidated interim financial statements included herein have been prepared by GSE and are unaudited. In the opinion of our management, all adjustments and reclassifications of a normal and recurring nature necessary to present fairly the financial position, results of operations and cash flows for the periods presented, have been made. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The accompanying balance sheet data as of December 31, 2023 was derived from our audited financial statements, but it does not include all disclosures required by U.S. GAAP. The results of operations for interim periods are not necessarily an indication of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission on April 2, 2024. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates 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, as well as reported amounts of revenues and expenses during the reporting period. Our most significant estimates relate to revenue recognition on contracts with customers, product warranties, valuation of goodwill and intangible assets acquired including the determination of fair value in impairment tests, valuation of long-lived assets, valuation of stock-based compensation awards, the recoverability of deferred tax assets, and valuation of warrants and derivative liabilities related to our convertible notes. Actual results of these and other items not listed could differ from these estimates and those differences could be material. Reverse Stock Split On October 30, 2023, the Company effected a ten-for-one reverse stock split of the Company’s common stock whereby each ten shares of the Company’s authorized and outstanding common stock were replaced with one share of common stock. The par value of the common stock was not adjusted. Liquidity and Going Concern The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and satisfy its liabilities and commitments in the normal course of business. Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, are only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management determined that the implemented plans to mitigate relevant conditions may not alleviate management’s concerns that raise substantial doubt about the Company’s ability to continue as a going concern within the twelve months ended May 15, 2025. The Company has incurred operating losses and has not demonstrated an ability to generate cash in excess of its operating expenses for a sustained period of time. During the year ended December 31, 2023 and the three months ended March 31, 2024, the Company generated a loss from operations of $6.8 million and $1.5 million, respectively. The 2023 loss from operations included non-cash impairment charges of goodwill from our Workforce Solutions segment totaling $1.4 million. As of March 31, 2024, the Company had domestic unrestricted cash and cash equivalents of $0.4 million which is not sufficient to fund the Company’s planned operations through one year after the date the consolidated financial statements are issued. The Company has not achieved its forecast for several periods and there is no assurance that it will achieve its forecast over the twelve months ending May 15, 2025. These factors create substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date that our audited consolidated financial statements are issued. In making this assessment we performed a comprehensive analysis of our current circumstances and to alleviate these conditions, management is monitoring the Company’s performance and evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, restructuring of operations to grow revenues and decrease expenses, obtaining equity financing, issuing debt, or entering into other financing arrangements. The analysis used to determine the Company’s ability to continue as a going concern does not include cash sources outside the Company’s direct control that management expects to be available within the next twelve months ending May 15, 2025. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2024 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | Note 2 - Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that adoption of this accounting standard will have on its financial disclosures. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures. |
Basic and Diluted Loss per Shar
Basic and Diluted Loss per Share | 3 Months Ended |
Mar. 31, 2024 | |
Basic and Diluted Loss per Share [Abstract] | |
Basic and Diluted Loss per Share | Note 3 - Basic and Diluted Loss per Share Basic earnings per share is based on the weighted average number of outstanding common shares for the period. Diluted earnings per share adjusts the weighted average shares outstanding for the potential dilution that could occur if outstanding RSU’s, The number of common shares and common share equivalents used in the determination of basic and diluted loss per common share were as follows: (in thousands, except for share data) Three months ended March 31, 2024 2023 Numerator: Net loss attributed to common stockholders $ (1,992 ) $ (2,951 ) Denominator: Weighted-average shares outstanding for basic earnings per share 3,148,806 2,293,389 Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share 3,148,806 2,293,389 Total shares considered for dilution 1,195,249 511,178 |
Contract Receivables
Contract Receivables | 3 Months Ended |
Mar. 31, 2024 | |
Contract Receivables [Abstract] | |
Contract Receivables | Note 4 - Contract Receivables Contract receivables represent our unconditional rights to consideration due from our domestic and international customers. We expect to collect all contract receivables within the next twelve months. The components of contract receivables were as follows: (in thousands) March 31, 2024 December 31, 2023 Billed receivables $ 4,275 $ 5,720 Unbilled receivables 5,242 4,729 Allowance for credit loss (339 ) (283 ) Total contract receivables, net $ 9,178 $ 10,166 As of March 31, 2024, one customer has a balance that represents 13% of our contract receivable balance. During the month of April 2024, we invoiced $3.8 million of the unbilled receivables as of March 31, 2024. Our foreign currency denominated contract receivables, billings in excess of revenue earned and subcontractor accruals that are related to the outstanding foreign exchange contracts are remeasured at the end of each reporting period into our functional currency, using the current exchange rate at the end of the period. The gain or loss resulting from such remeasurement is included in other income, net in the consolidated statements of operations. During the three months ended March 31, 2024 and 2023, we recognized a gain on remeasurement of these foreign exchange contracts of $74 thousand and $72 thousand, respectively. During the three months ended March 31, 2024 and 2023, we recorded credit loss expense of $56 thousand, and $32 thousand respectively. The following table sets forth the activity in the allowance for credit losses for the three months ended March 31, 2024. (in thousands) Beginning balance at January 1, 2024 $ 283 Current period provision for expected credit (recovery) loss 57 Write-offs charged against the allowance, net of recoveries - Currency adjustment (1 ) Balance at March 31 2024 $ 339 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | Note 5 - Goodwill and Intangible Assets The Company monitors operating results and events and circumstances that may indicate potential impairment of intangible assets . Management concluded that no triggering events had occurred during the three months ended March and As management determined no triggering event occurred during the three months ended March 31, 2024, no interim impairment analysis was performed in accordance with ASC 350 & ASC 360. Goodwill The following table shows the gross carrying amount and impairment of goodwill: (in thousands) Goodwill Accumulated Impairment Net Engineering $ 8,278 $ (3,370 ) $ 4,908 Workforce Solutions 8,431 (8,431 ) - Net book value at March 31, 2024 $ 16,709 $ (11,801 ) $ 4,908 (in thousands) Goodwill Accumulated Impairment Net Engineering $ 8,278 $ (3,370 ) $ 4,908 Workforce Solutions 8,431 (8,431 ) - Net book value at December 31, 2023 $ 16,709 $ (11,801 ) $ 4,908 Intangible assets The following table shows the gross carrying amount and accumulated amortization of definite-lived intangible assets: (in thousands) As of March 31, 2024 Gross Carrying Amount Accumulated Amortization Impairment Net Amortized intangible assets: Customer relationships $ 8,628 $ (7,468 ) $ (464 ) $ 696 Trade names 1,689 (1,305 ) - 384 Developed technology 471 (471 ) - - Non-contractual customer relationships 433 (433 ) - - Noncompete agreement 527 (527 ) - - Alliance agreement 527 (527 ) - - Others 167 (167 ) - - Total $ 12,442 $ (10,898 ) $ (464 ) $ 1,080 (in thousands) As of December 31, 2023 Gross Carrying Amount Accumulated Amortization Impairment Net Amortized intangible assets: Customer relationships $ 8,628 $ (7,395 ) $ (464 ) $ 769 Trade names 1,689 (1,283 ) - 406 Developed technology 471 (471 ) - - Non-contractual customer relationships 433 (433 ) - - Noncompete agreement 527 (523 ) - 4 Alliance agreement 527 (527 ) - - Others 167 (167 ) - - Total $ 12,442 $ (10,799 ) $ (464 ) $ 1,179 Amortization expense related to definite-lived intangible assets totaled $0.1 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively. The following table shows the estimated amortization expense of the definite-lived intangible assets for the next five years and thereafter: (in thousands) Years ended December 31: 2024 remainder $ 233 2025 255 2026 204 2027 169 2028 109 Thereafter 110 Total $ 1,080 |
Equipment, Software and Leaseho
Equipment, Software and Leasehold Improvements | 3 Months Ended |
Mar. 31, 2024 | |
Equipment, Software and Leasehold Improvements [Abstract] | |
Equipment, Software and Leasehold Improvements | Note 6 - Equipment, Software and Leasehold Improvements Equipment, software and leasehold improvements, net consist of the following: (in thousands) March 31, 2024 December 31, 2023 Computer and equipment $ 2,383 $ 2,381 Software 2,292 2,292 Leasehold improvements 805 805 Furniture and fixtures 840 840 6,320 6,318 Accumulated depreciation (5,620 ) (5,564 ) Equipment, software and leasehold improvements, net $ 700 $ 754 Depreciation expense was $58 thousand and $48 thousand for the three months ended March 31, 2024 and 2023, respectively |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Note 7 - Fair Value of Financial Instruments ASC 820, Fair Value Measurement The levels of the fair value hierarchy established by ASC 820 are: Level 1: inputs are quoted prices, unadjusted, in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability. Level 3: inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. As of March 31, 2024 and December 31, 2023, we considered the recorded value of certain of our financial assets and liabilities, which consist primarily of cash and cash equivalents, contract receivable and accounts payable, to approximate fair value based upon their short-term nature. Our convertible debt issued in February 2022, amended in June 2023 and our new convertible debt issued in June 2023 (see Note 9) includes certain embedded redemption features that are required to be bifurcated as embedded derivatives and measured at fair value on a recurring basis. We estimate the fair value using a Monte Carlo simulation based on estimates of our future stock price and assumptions about the possible redemption scenarios. The Company used the Monte Carlo simulation model to determine the fair value of the Warrants (see Note 9) and Cash-Settled PRSUs, which required the input of subjective assumptions. The fair value of the Warrants as of March 31, 2024 was estimated with the following assumptions. Amended 2022 Convertible Note The “2022 2023 Convertible Note The “2023 Warrants” Exercise Price $ 19.40 19.40 $ 5.00 5.00 Common Stock Price $ 2.34 $ 2.34 2.34 2.34 Risk Free Rate 5.2 % 4.31 % 4.91 % 4.21 % Volatility 95.0 % 95.0 % 95.0 % 95.0 % Term (in years) 0.2 yrs. 2.9 yrs. 1.2 yrs. 4.2 yrs. The following table presents assets and liabilities measured at fair value at March 31, 2024 (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Derivative liability $ - $ - $ 469 $ 469 Warrant liability - - 656 656 Cash settled performance-vesting restricted stock units - - 28 28 Total liabilities $ - $ - $ 1,153 $ 1,153 The following table presents assets and liabilities measured at fair value at December 31, 2023 (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Derivative liability $ - $ - $ 588 $ 588 Warrant liability - - 520 520 Cash settled performance-vesting restricted stock units - - 24 24 Total liabilities $ - $ - $ 1,132 $ 1,132 The following table summarizes changes in the fair value of our Level 3 liabilities during the three months ended March 31, 2024 (in thousands) Embedded Redemption Features Warrant Cash Settled PRSUs Level 3 Total Balance at December 31, 2023 $ 588 $ 520 $ 24 $ 1,132 Change in FV included in gain on derivative instruments, net (119 ) 136 - 17 Stock compensation less payments made - - 4 4 Balance at March 31, 2024 $ 469 $ 656 $ 28 $ 1,153 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Note 8 - Stock-Based Compensation During the three months ended March 31, 2024 and 2023, we recognized $0.3 million of stock-based compensation expense related to RSU and PRSU awards under the fair value method. During the three months ended March 31, 2024, we granted approximately 56,259 time-based restricted stock units (“RSUs”) with an aggregate fair value of approximately $0.1 million. During the three months ended March 31, 2023, we granted approximately 4,500 $33 thousand 31, 2024 and 2023 Typically, RSU’s vest quarterly in equal amounts over the course of one During the three months ended March 31, 2024 and March 31, 2023, no PRSU’s were granted three months ended March 31 , 2024 and March 31, 2023 As of March 31, 2024, we have 90,942 unvested PRSUs, of which, 35,000 have met the performance obligation and are expected to vest over the next 7 quarters . We did not grant any stock options for the three months ended March |
Debt
Debt | 3 Months Ended |
Mar. 31, 2024 | |
Debt [Abstract] | |
Debt | Note 9 - Debt Convertible Note On February 23, 2022, we entered into a Securities Purchase Agreement, as amended, with Lind Global, pursuant to which we issued to Lind Global the 2022 Convertible Note and a common stock purchase warrant to acquire 128,373 shares of our Common Stock (the “2022 Warrant”). The 2022 Convertible Note does not bear interest but was issued at a $0.75 million discount (“OID”). We received proceeds of approximately $4.8 million net of the OID and expenses. On June 23, 2023, the Company entered into a second Securities Purchase Agreement (the “2023 Purchase Agreement”) with Lind Global, pursuant to which we issued to Lind Global that certain Senior Convertible Promissory Note, dated February 23, 2022 (the “2023 Convertible Note” and, together with the 2022 Convertible Note, the “Convertible Notes”) and a common stock purchase warrant to acquire 426,427 shares of our Common Stock (the “2023 Warrant”). The 2023 Convertible Note does not bear interest but was issued at a $0.3 million discount (“OID”). We received proceeds of approximately $1.4 million net of the OID and expenses. (in thousands) 2022 Convertible Note 2023 Convertible Note Total Convertible Notes Amount Amount Amount Convertible Note issued $ 5,750 $ 1,800 $ 7,550 Debt discount (750 ) (300 ) (1,050 ) Issuance cost: Commitment fee (175 ) (52 ) (227 ) Balance of investor’s counsel fees (43 ) (34 ) (77 ) Net proceeds of Convertible Note $ 4,782 $ 1,414 $ 6,196 Additional OID costs not in original funds flow (121 ) (15 ) (136 ) Fair value of Warrant Liabilities on issuance (724 ) (1,119 ) (1,843 ) Fair value of Conversion Feature on issuance (306 ) (286 ) (592 ) A 25 30 55 A dditional OID costs not in original funds flow (660 ) 660 - Interest expense accrued on Convertible Note as of March 31, 2024 3,213 459 3,672 Principal and interest payments through March 31, 2024 (6,021 ) - (6,021 ) Balance of Convertible Note as of March 31, 2024 $ 188 $ 1,143 $ 1,331 The Convertible Notes provide for variable monthly principal repayments beginning 180 days from issuance (with respect to the 2022 Convertible Note) and 12 months from issuance (with respect to the 2023 Convertible Note). Remaining monthly principal payments range from $0.1 to $0.2 million and can be made in the form of cash, shares, or a combination of both at the discretion of GSE. The following table details the future principal payments of the Convertible Note, gross of debt discounts: (in thousands) Years ended December 31: 2024 $ 1,290 2025 750 Thereafter - $ 2,040 P rior to the June 2023 amendments, described below, the 2024 one third The 2022 Convertible Note is guaranteed by each of our subsidiaries and is secured by a first priority lien on all of our assets. The 2022 Convertible Note is not subject to any financial covenants and events of default under the 2022 Convertible Note are limited to events related to payment, market capitalization, certain events pertaining to conversion and the underlying shares of Common Stock and other customary events including, but not limited to, bankruptcy or insolvency. Upon the occurrence of an event of default, the 2022 Convertible Note will become immediately due and payable at an amount equal to 120% of the outstanding principal, subject to any cure periods described in the 2022 Convertible Note, and the lender may demand that all or a portion of the outstanding principal amount be converted into shares of common stock at the lower of the then current conversion price and 80% of the average of the three lowest daily volume-weighted average price (“VWAPs”) during the twenty days prior to delivery of the conversion notice. If there is a change of control of the Company, Lind Global has the right to require us to prepay the outstanding principal amount of the 2022 Convertible Note. On June 23, 2023, the Company and Lind Global agreed to amend and restate the 2022 Convertible Note. The 2022 Convertible Note, as now amended, is now secured, interest free convertible promissory note in the principal amount of $2,747,228, such amount being the outstanding balance of the 2022 Convertible Note as of June 23, 2023. The 2022 Convertible Note now has a maturity date of August 23, 2024 was payable, commencing on July 23, 2023, in twelve (12) consecutive monthly payments of $186,343 each and two (2) final payments of $255,556 each. The remainder of the terms of the 2022 Convertible Note, including terms around payment, prepayment, default and conversion, are unchanged. On October 6, 2023, the Company and Lind Global entered into that certain First Amendment to the 2022 Convertible Note (“A&R Note Amendment”), amending the 2022 Convertible Note to extend the beginning period of required compliance with certain default provisions until January 31, 2024 ten ten There was no accounting impact related to this amendment as conversion options are already bifurcated as an embedded derivative and recorded at fair value at each reporting period. The 2022 Warrant entitles Lind Global to purchase up to 128,373 shares of our Common Stock until February 23, 2027, at an exercise price of $19.40 per share, subject to customary adjustments described therein. The Warrant is recorded at fair value upon issuance of $0.7 million and is classified as a current liability to be remeasured at each reporting period (see Note 7). The discount created by allocating proceeds to the Warrant results in a debt discount to be amortized as additional interest expense over the term of the Convertible Note. On June 23, 2023, in connection with the 2022 amended and restated Convertible Note transaction, the Company evaluated the amendment and concluded it qualified as a troubled debt restructuring. The restructuring did not result in a gain or loss but revised the effective interest rate used to amortize the note going forward. On June 23, 2023, the Company entered into a second Securities Purchase Agreement (the “2023 Purchase Agreement”) with Lind Global, pursuant to which the Company issued to Lind Global the 2023 Convertible Note at the same time that the Company and Lind Global amended and restated the 2022 Convertible Note. The closing occurred on June 23, 2023, and consisted of the issuance of a secured, two-year interest free convertible promissory note with a funding amount of $1,500,000 and a principal amount of $1,800,000 (as defined above, the “2023 Convertible Note”) and the issuance of common stock purchase warrant to acquire 426,427 shares of the Company’s common stock (the “2023 Warrant” and, together with the 2022 Warrant, the “Warrants”). The proceeds from the transactions contemplated by the 2023 Purchase Agreement were for general working capital purposes and other corporate purposes. On October 6, 2023, the Company and Lind Global entered into that certain First Amendment to Senior Convertible Promissory Note, amending the Company’s 2023 Convertible Note (the “Note Amendment”) to extend the beginning period of required compliance with certain default provisions until January 31, 2024 ten ten Commencing one year after the issuance of the 2023 Convertible Note, the Company shall pay the outstanding principal amount of the 2023 Convertible Note in twelve (12) consecutive monthly payments of $150,000 each. At the option of the Company, the monthly payment can be made in cash, shares of the common stock of the Company (the “Repayment Shares”) at a price based on 90% of the average five (5) consecutive daily VWAPs during the twenty (20) days prior to the payment date, or a combination of cash and Repayment Shares, subject to the terms of the 2023 Convertible Note. The Repayment Shares must either be eligible for immediate resale under Rule 144 or be registered. The number of Repayment Shares is limited such that, when added to the number of shares of common stock issued and issuable pursuant to the transactions contemplated by the 2023 Purchase Agreement, it may not exceed 493,727 shares of common stock unless the Company obtains stockholder approval to issue additional Repayment Shares. The holder of the 2023 Convertible Note may elect with respect to no more than two (2) of the above described monthly payments to increase the amount of such monthly payment up to $300,000 each in Repayment Shares upon notice to the Company. Any such increased payment shall be deducted from the amount of the last monthly payment owed under the 2023 Convertible Note. The Company can prepay Lind Global all the outstanding principal amount of the 2023 Convertible Note, provided that Lind Global shall have the option to convert up to one third Upon the occurrence of an event of default as described in the 2023 Convertible Note, the 2023 Convertible Note will become immediately due and payable at the default premium described in the 2023 Convertible Note, subject to any cure periods described in the 2023 Convertible Note. Events of default include, but are not limited to, a payment default on any other indebtedness in excess of $250,000; the shares no longer publicly being traded or cease to be listed on a trading market; if after six months, the shares are not available for immediate resale under Rule 144; and the Company’s market capitalization is below $7,000,000 for ten six The 2023 Warrant entitles Lind Global to purchase up to 426,427 shares of common stock of the Company until the earlier of (a) June 23, 2028 and (b) a merger, sale event or other reclassification of the Company’s common stock, at an exercise price of $5.00 per share, subject to customary adjustments described therein. Additionally, in the event of a sale of all or substantially all of the assets of the Company or a merger, tender offer or certain other change of control events involving the Company, the Company shall, at the holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the transaction, purchase the 2023 Warrant from the holder by paying to the holder an amount of cash equal to (i) if the price per share of Common Stock payable in such transaction is in excess of $10.00, the Adjusted Black Scholes Value, or (ii) if the price per share of Common Stock payable in such transaction is equal to or less than $10.00, the Black Scholes Value, of the remaining unexercised portion of the 2023 Warrant on the date of the consummation of such transaction. “Adjusted Black Scholes Value” means the lesser of (i) the Black Scholes Value and (ii) the price per share of Common Stock payable in the transaction minus the exercise price multiplied by the then amount of unexercised 2023 Warrant shares. “Black Scholes Value” means the value the 2023 Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable transaction and the final day of the exercise period, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non- cash consideration, if any, being offered in such transaction and (ii) the greater of (x) the last volume weighted average price immediately prior to the public announcement of such transaction and (y) the last volume weighted average price immediately prior to the consummation of such transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable transaction and the final day of the exercise period. The 2023 Warrant is in addition to the 2022 Warrant. The Company evaluated the 2022 Convertible Note and concluded that certain embedded redemption features are required to be accounted for as a derivative liability. Embedded redemption features were recorded at fair value upon issuance of $0.3 million and are classified as current liabilities to be remeasured at each reporting period ( see Upon issuance of the 2023 Convertible Note, the Company re-evaluated the 2022 Convertible Note, in accordance with ASC 815-40-25-10 and its sequencing policy, and concluded that the embedded conversion option was required to be bifurcated and accounted for as a derivative liability as a result of the Company not being able to assert that it would have sufficient shares in all cases to be able to settle the conversion of the 2022 Convertible Note. The embedded conversion option will be combined with the bifurcated redemption features as a single derivative and is classified as a current liability to be remeasured at each reporting period. The discount resulting from bifurcating the embedded conversion option will be amortized as additional interest expense over the term of the 2022 Convertible Note. The direct and incremental costs incurred are allocated to the Convertible Note and the Warrant based on a systematic and rational approach. The costs allocated to the Warrants have been expensed as incurred while those allocated to the Convertible Note have been capitalized and will be amortized as interest expense over the life of the Convertible Notes based on the effective interest rate. The Company will record ongoing changes to the fair value of the derivative liabilities as other non-operating income (expense). The Convertible Notes are evaluated as a potentially dilutive security in both periods of loss and income for diluted earnings per share purposes. The Warrants are considered a participating security and were not included in the calculation of basic earnings per share for the three months ended March 31, 2024 and the year ended December 31, 2023 as Company reflected net loss for the respective periods. The Warrant will be included in the calculation of diluted earnings per share in periods of net income. The issuance costs with respect to the Convertible Notes, which are recorded as a debt discount, are deferred and amortized using the effective interest method as additional interest expense over the terms of the Convertible Note at an effective interest rate of 68.6%. The Company incurred total interest expense related to the Convertible Notes of $0.4 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively. On February 12, 2024, the Company and Lind Global entered into an agreement to amend certain provisions of the Convertible Notes (as amended) to extend the beginning period of required compliance with certain default provisions until June 1, 2024. The agreement amended Section 2.1 pertaining to events of default, to extend the period in which an event of default would occur, as defined above, to any time after June 1, 2024, previously any time after January 31, 2024 as provided in the October 6th amendment defined above. But for the amendment, the Company would have incurred an event of default after the tenth (10 th At March 31, 2024, the outstanding debt under the Convertible Note agreement was as follows: (in thousands) Principal Debt Discounts Net Current portion of Long-Term Debt $ 1,740 $ (686 ) $ 1,054 Long-Term Debt less current portion 300 (23 ) 277 Balance of Convertible Notes as of March 31, 2024 $ 2,040 $ (709 ) $ 1,331 At December 31, 2023, the outstanding debt under was as follows: (in thousands) Principal Debt Discounts Net Current portion of Long-Term Debt $ 1,849 $ (1,039 ) $ 810 Long-Term Debt less current portion 750 (113 ) 637 Balance of Convertible Notes as of December 31, 2023 $ 2,599 $ (1,152 ) $ 1,447 Letters of Credit We maintain certain letters of credit with Citizens Bank, N.A. (“Citizens”) . As of March 31, 2024, we had four letters of credit totaling $1.1 million outstanding to certain customers which were secured with restricted cash. |
Product Warranty
Product Warranty | 3 Months Ended |
Mar. 31, 2024 | |
Product Warranty [Abstract] | |
Product Warranty | Note 10 - Product Warranty We accrue estimated warranty costs at the time the related revenue is recognized and based on historical experience and projected claims. Our System Design and Build contracts generally include a one year base warranty on the systems. The portion of our warranty provision expected to be incurred within twelve months is classified as current within accrued warranty and the remaining is classified as long-term within other non-current liabilities. As of March 31, 2024 and December 31, 2023 $181 thousand and $176 thousand were classified as current, respectively, and $50 thousand and $108 thousand were classified as long-term as of March 31, 2024 and December 31, 2023, respectively. The activity in the accrued warranty accounts during the current period is as follows: (in thousands) Balance at January 1, 2024 $ 284 Current period recovery (28 ) Current period claims (24 ) Currency adjustment (1 ) Balance at March 31, 2024 $ 231 |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2024 | |
Revenue [Abstract] | |
Revenue | Note 11 - Revenue We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers The following table represents a disaggregation of revenue by type of goods or services for the three months ended March 31, 2024 and 2023, along with the reporting segment for each category: Three months ended (in thousands) March 31, 2024 March 31, 2023 Engineering System Design and Build $ 2,127 $ 1,470 Over time 2,127 1,470 Software and Support 866 1,189 Point in time 5 313 Over time 861 876 Training and Consulting Services 5,736 4,282 Point in time 82 196 Over time 5,654 4,086 Workforce Solutions Training and Consulting Services 2,554 3,932 Point in time 93 119 Over time 2,461 3,813 Total revenue $ 11,283 $ 10,873 The following table reflects revenue recognized in the reporting periods that was included in contract liabilities from contracts with customers as of the beginning of the periods presented (in thousands) Three months ended March 31, 2024 March 31, 2023 Revenue recognized in the period from amounts included in billings in excess of revenue earned at the beginning of the period $ 2,077 $ 1,850 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Taxes [Abstract] | |
Income Taxes | Note 12 - Income Taxes The following table presents the provision for income taxes and our effective tax rates: (in thousands) Three months ended March 31, 2024 March 31, 2023 Loss before income taxes $ (1,952 ) $ (2,990 ) Expense (benefit) from income taxes 40 (39 ) Effective tax rate (2.0 )% 1.3 % Our income tax expense or benefit for the interim periods presented is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. Total income tax expense for the three months ended March 31, 2024 was comprised mainly of current state and foreign Our effective income tax rate was (2.0)% and 1.3% for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, the difference between our income tax expense at an effective tax rate of (2.0)% and a benefit at the U.S. statutory federal income tax rate of 21% was primarily due to accruals related to uncertain tax positions for certain foreign tax contingencies, a change in valuation allowance in our U.S. entity, the permanent disallowance of interest expense related to disqualified debt, and discrete item adjustments for U.S. taxes. For the three months ended March 31, 2023, the difference between our income tax benefit at an effective tax rate of 1.3% and a benefit at the U.S. statutory federal income tax rate of 21% was primarily due to accruals related to uncertain tax positions for certain foreign tax contingencies, a change in tax valuation allowance in our U.S. entity, the permanent disallowance of interest expense related to disqualified debt, and discrete item adjustments for U.S. Because of our net operating loss carryforwards, we are subject to U.S. federal and state income tax examinations from the year 2003 2018 An uncertain tax position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Interest and penalties related to income taxes are accounted for as income tax expense. We recognize deferred tax assets to the extent that it is believed that these assets are more likely than not to be realized. We have evaluated all positive and negative evidence and determined that we will continue to assess a full valuation allowance on our U.S., China, and Slovakia net deferred assets as of March 31, 2024. We have determined that it is not more likely than not that the Company will realize the benefits of its deferred taxes in the U.S. and foreign jurisdictions. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | Note 13 - Leases We have lease agreements with lease and non-lease components, which are accounted for as a single lease. We apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities. The operating lease ROU amortization was Lease contracts are evaluated at inception to determine whether they contain a lease and whether we obtain the right to control an identified asset. The following table summarizes the classification of operating ROU assets and lease liabilities on the consolidated balance sheets: (in thousands) As of Operating Leases Classification March 31, December 31, 2023 Leased Assets Operating lease - right of use assets Long term assets $ 364 $ 413 Lease Liabilities Operating lease liabilities - Current Other current liabilities 193 234 Operating lease liabilities Long term liabilities 322 357 $ 515 $ 591 On June 7, 2023 we entered into an office lease agreement to lease 2,704 square feet in Fort Worth, Texas for an initial lease term ending November 7, 2030. We entered into a lease agreement to lease 2,200 square feet of office space in Columbia, Maryland on September 26, 2022, through November 30, 2024 . The table below summarizes lease income and expense recorded in the consolidated statements of operations incurred during three months ended March 31, 2024 and 2023, ( in thousands Three months ended Lease Cost Classification March 31, 2024 March 31, 2023 Operating lease cost (1) Selling, general and administrative expenses $ 76 $ 128 Short-term leases costs (2) Selling, general and administrative expenses 2 15 Net lease cost $ 78 $ 143 (1) Includes variable lease costs which are immaterial. ( 2 ) Includes leases maturing less than twelve months from the report date. The Company is obligated under certain noncancelable operating leases for office facilities and equipment. Future minimum lease payments under noncancelable operating leases as of March 31, 2024 are as follows: (in thousands) Gross Future Minimum Lease Payments 2024 $ 180 2025 150 2026 96 2027 89 2028 60 Thereafter - Total lease payments $ 575 Less: Interest 60 Present value of lease payments $ 515 We calculated the weighted-average remaining lease term, presented in years below and the weighted-average discount rate for our operating leases, and we use the incremental borrowing rate as the lease discount rate. Lease Term and Discount Rate March 31, 2024 December 31, 2023 Weighted-average remaining lease term (years) Operating leases 3.35 3.38 Weighted-average discount rate Operating leases 6.21 % 6.10 % The table below sets out the classification of lease payments in the consolidated statements of cash flows. (in thousands) Three months ended Cash paid for amounts included in measurement of liabilities March 31, 2024 March 31, 2023 Operating cash flows used in operating leases $ 88 $ 169 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2024 | |
Segment Information [Abstract] | |
Segment Information | Note 14 - Segment Information We have two reportable business segments for which the Company’s president and CEO is the chief operating decision maker (CODM) for both. The Engineering segment provides simulation, training and engineering products and services delivered across the breadth of industries we serve. Solutions include simulation for both training and engineering applications. Example engineering services include, but are not limited to, plant design verification and validation, thermal performance evaluation and optimization programs, and engineering programs for plants for American Society of Mechanical Engineers (“ASME”) code and ASME Section XI. The Company provides these services across all market segments through our Performance (now doing business as - “GSE Systems & Simulation” or “Systems & Simulation”), True North consulting (now doing business as - “GSE Programs & Performance” or “Programs & Performance”), and DP Engineering (now doing business as - “GSE Design & Analysis” or “Design & Analysis”) subsidiaries. Example training applications include turnkey and custom training services. Contract terms are typically less than Workforce Solutions segment provides specialized workforce solutions primarily to the nuclear industry, working at clients’ facilities. This business is managed through our Hyperspring (now doing business as - “GSE Training Services” or “Training Services”) and Absolute (now doing business as - “GSE Technical Staffing” or “Technical Staffing”) subsidiaries. The business model, management focus, margins and other factors clearly separate this business line from the rest of the GSE product and service portfolio. The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income taxes. Inter-segment revenue is eliminated in consolidation and is not significant. Three months ended (in thousands) March 31, 2024 March 31, 2023 Revenue: Engineering $ 8,729 $ 6,942 Workforce Solutions 2,554 3,931 Total revenue $ 11,283 $ 10,873 Gross Profit Engineering $ 2,905 $ 1,880 Workforce Solutions 311 515 Total gross profit $ 3,216 $ 2,395 Operating loss Engineering $ (1,398 ) $ (2,424 ) Workforce Solutions (132 ) (359 ) Operating loss $ (1,530 ) $ (2,783 ) Interest expense, net (459 ) (286 ) Change in fair value of derivative instruments, net (17 ) 69 Other loss, net 54 10 Loss before income taxes $ (1,952 ) $ (2,990 ) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 15 - Commitments and Contingencies Three former employees of Absolute Consulting, Inc. and Hyperspring, LLC, filed putative class action lawsuits against the Company, alleging that the Company failed to pay overtime wages as required by the Fair Labor Standards Act and state law. The three cases Natalie Adams v. Absolute Consulting, Inc., Case No. 6:20-cv-01099, Matthew Waldecker v. Hyperspring, LLC, Case No. 2:20-cv-1948, Don Pharr v. Absolute Consulting, Inc., Case No. 23-cv-01558-JRR were filed on December 2, 2020, December 15, 2020, and June 8, 2023, respectively. On August 22, 2023, Plaintiffs in Adams, Waldecker and Pharr and GSE Systems, Inc., Hyperspring and Absolute participated in private mediation. The mediation was successful and an agreement in principle was reached before the conclusion of the mediation to resolve and dismiss all three pending matters in exchange for a settlement payment. The parties’ settlement agreement was executed on October 30, 2023, and resulted in the dismissal of all three cases. In addition to customary terms, GSE Systems, Hyperspring and Absolute are obligated to make a series of payments in 2024, eventually totaling $750 thousand inclusive of attorneys’ fees and costs. As this amount was included in accrued legal settlements as of December 31, 2023, and included as a part of selling, general and administrative costs for the year ended December 31, 2023. On December 4, 2020, Hyperspring, LLC filed a Verified Complaint and Motion for Temporary Restraining Order (“TRO”) against a former Hyperspring employee in the Chancery Court of Loudon County, Tennessee, related to her retention of confidential and proprietary information belonging to Hyperspring following the termination of her employment. On January 25, 2021, the employee filed a counterclaim against Hyperspring, seeking payment for alleged unpaid commissions and expenses. On December 19, 2023, the former employee filed a complaint in the United States Eastern District of Tennessee against GSE Systems, Inc and its subsidiaries. On or about February 29, 2024, a settlement agreement was executed by the parties, which resulted in the dismissal of both cases with Hyperspring incurring an obligation to pay approximately $260 thousand inclusive of attorneys’ fees. As amount was probable and estimable, it was included in accrued legal settlements as of December 31, 2023, and included as a part of selling, general and administrative costs for the year ended December 31, 2023. There is a remaining accrued legal settlement amount of $774 thousand at March 31, 2024 associated with these legal matters. Per ASC 450 Accounting for Contingencies, the Company reviews potential items and areas where a loss contingency could arise. In the opinion of management, we are not a party to any legal proceeding, the outcome of which, in management’s opinion, individually or in the aggregate, would have a material effect on our consolidated results of operations, financial position or cash flows, other than as noted above. We expense legal defense costs as incurred. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation GSE Systems, Inc. is a leading provider of professional and technical engineering, staffing services and simulation software to clients in the power and process industries. References in this report to “GSE” or “we” or “our” or “the Company” are to GSE Systems, Inc. and our subsidiaries, collectively. The consolidated interim financial statements included herein have been prepared by GSE and are unaudited. In the opinion of our management, all adjustments and reclassifications of a normal and recurring nature necessary to present fairly the financial position, results of operations and cash flows for the periods presented, have been made. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The accompanying balance sheet data as of December 31, 2023 was derived from our audited financial statements, but it does not include all disclosures required by U.S. GAAP. The results of operations for interim periods are not necessarily an indication of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission on April 2, 2024. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates 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, as well as reported amounts of revenues and expenses during the reporting period. Our most significant estimates relate to revenue recognition on contracts with customers, product warranties, valuation of goodwill and intangible assets acquired including the determination of fair value in impairment tests, valuation of long-lived assets, valuation of stock-based compensation awards, the recoverability of deferred tax assets, and valuation of warrants and derivative liabilities related to our convertible notes. Actual results of these and other items not listed could differ from these estimates and those differences could be material. |
Reverse Stock Split | Reverse Stock Split On October 30, 2023, the Company effected a ten-for-one reverse stock split of the Company’s common stock whereby each ten shares of the Company’s authorized and outstanding common stock were replaced with one share of common stock. The par value of the common stock was not adjusted. |
Liquidity and Going Concern | Liquidity and Going Concern The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and satisfy its liabilities and commitments in the normal course of business. Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, are only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management determined that the implemented plans to mitigate relevant conditions may not alleviate management’s concerns that raise substantial doubt about the Company’s ability to continue as a going concern within the twelve months ended May 15, 2025. The Company has incurred operating losses and has not demonstrated an ability to generate cash in excess of its operating expenses for a sustained period of time. During the year ended December 31, 2023 and the three months ended March 31, 2024, the Company generated a loss from operations of $6.8 million and $1.5 million, respectively. The 2023 loss from operations included non-cash impairment charges of goodwill from our Workforce Solutions segment totaling $1.4 million. As of March 31, 2024, the Company had domestic unrestricted cash and cash equivalents of $0.4 million which is not sufficient to fund the Company’s planned operations through one year after the date the consolidated financial statements are issued. The Company has not achieved its forecast for several periods and there is no assurance that it will achieve its forecast over the twelve months ending May 15, 2025. These factors create substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date that our audited consolidated financial statements are issued. In making this assessment we performed a comprehensive analysis of our current circumstances and to alleviate these conditions, management is monitoring the Company’s performance and evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, restructuring of operations to grow revenues and decrease expenses, obtaining equity financing, issuing debt, or entering into other financing arrangements. The analysis used to determine the Company’s ability to continue as a going concern does not include cash sources outside the Company’s direct control that management expects to be available within the next twelve months ending May 15, 2025. |
Basic and Diluted Loss per Sh_2
Basic and Diluted Loss per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Basic and Diluted Loss per Share [Abstract] | |
Loss Per Share, Basic and Diluted | The number of common shares and common share equivalents used in the determination of basic and diluted loss per common share were as follows: (in thousands, except for share data) Three months ended March 31, 2024 2023 Numerator: Net loss attributed to common stockholders $ (1,992 ) $ (2,951 ) Denominator: Weighted-average shares outstanding for basic earnings per share 3,148,806 2,293,389 Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share 3,148,806 2,293,389 Total shares considered for dilution 1,195,249 511,178 |
Contract Receivables (Tables)
Contract Receivables (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Contract Receivables [Abstract] | |
Contract Receivables | The components of contract receivables were as follows: (in thousands) March 31, 2024 December 31, 2023 Billed receivables $ 4,275 $ 5,720 Unbilled receivables 5,242 4,729 Allowance for credit loss (339 ) (283 ) Total contract receivables, net $ 9,178 $ 10,166 |
Allowance For Doubtful Account Rollforward | The following table sets forth the activity in the allowance for credit losses for the three months ended March 31, 2024. (in thousands) Beginning balance at January 1, 2024 $ 283 Current period provision for expected credit (recovery) loss 57 Write-offs charged against the allowance, net of recoveries - Currency adjustment (1 ) Balance at March 31 2024 $ 339 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets [Abstract] | |
Net Carrying Amount of Goodwill | The following table shows the gross carrying amount and impairment of goodwill: (in thousands) Goodwill Accumulated Impairment Net Engineering $ 8,278 $ (3,370 ) $ 4,908 Workforce Solutions 8,431 (8,431 ) - Net book value at March 31, 2024 $ 16,709 $ (11,801 ) $ 4,908 (in thousands) Goodwill Accumulated Impairment Net Engineering $ 8,278 $ (3,370 ) $ 4,908 Workforce Solutions 8,431 (8,431 ) - Net book value at December 31, 2023 $ 16,709 $ (11,801 ) $ 4,908 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The following table shows the gross carrying amount and accumulated amortization of definite-lived intangible assets: (in thousands) As of March 31, 2024 Gross Carrying Amount Accumulated Amortization Impairment Net Amortized intangible assets: Customer relationships $ 8,628 $ (7,468 ) $ (464 ) $ 696 Trade names 1,689 (1,305 ) - 384 Developed technology 471 (471 ) - - Non-contractual customer relationships 433 (433 ) - - Noncompete agreement 527 (527 ) - - Alliance agreement 527 (527 ) - - Others 167 (167 ) - - Total $ 12,442 $ (10,898 ) $ (464 ) $ 1,080 (in thousands) As of December 31, 2023 Gross Carrying Amount Accumulated Amortization Impairment Net Amortized intangible assets: Customer relationships $ 8,628 $ (7,395 ) $ (464 ) $ 769 Trade names 1,689 (1,283 ) - 406 Developed technology 471 (471 ) - - Non-contractual customer relationships 433 (433 ) - - Noncompete agreement 527 (523 ) - 4 Alliance agreement 527 (527 ) - - Others 167 (167 ) - - Total $ 12,442 $ (10,799 ) $ (464 ) $ 1,179 |
Finite-Lived Intangible Assets, Future Amortization Expense | The following table shows the estimated amortization expense of the definite-lived intangible assets for the next five years and thereafter: (in thousands) Years ended December 31: 2024 remainder $ 233 2025 255 2026 204 2027 169 2028 109 Thereafter 110 Total $ 1,080 |
Equipment, Software and Lease_2
Equipment, Software and Leasehold Improvements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equipment, Software and Leasehold Improvements [Abstract] | |
Equipment, Software and Leasehold Improvements | Equipment, software and leasehold improvements, net consist of the following: (in thousands) March 31, 2024 December 31, 2023 Computer and equipment $ 2,383 $ 2,381 Software 2,292 2,292 Leasehold improvements 805 805 Furniture and fixtures 840 840 6,320 6,318 Accumulated depreciation (5,620 ) (5,564 ) Equipment, software and leasehold improvements, net $ 700 $ 754 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value of Financial Instruments [Abstract] | |
Level 3 Fair Value Measurement Inputs | The Company used the Monte Carlo simulation model to determine the fair value of the Warrants (see Note 9) and Cash-Settled PRSUs, which required the input of subjective assumptions. The fair value of the Warrants as of March 31, 2024 was estimated with the following assumptions. Amended 2022 Convertible Note The “2022 2023 Convertible Note The “2023 Warrants” Exercise Price $ 19.40 19.40 $ 5.00 5.00 Common Stock Price $ 2.34 $ 2.34 2.34 2.34 Risk Free Rate 5.2 % 4.31 % 4.91 % 4.21 % Volatility 95.0 % 95.0 % 95.0 % 95.0 % Term (in years) 0.2 yrs. 2.9 yrs. 1.2 yrs. 4.2 yrs. |
Assets and Liabilities Measured at Fair Value | The following table presents assets and liabilities measured at fair value at March 31, 2024 (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Derivative liability $ - $ - $ 469 $ 469 Warrant liability - - 656 656 Cash settled performance-vesting restricted stock units - - 28 28 Total liabilities $ - $ - $ 1,153 $ 1,153 The following table presents assets and liabilities measured at fair value at December 31, 2023 (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Derivative liability $ - $ - $ 588 $ 588 Warrant liability - - 520 520 Cash settled performance-vesting restricted stock units - - 24 24 Total liabilities $ - $ - $ 1,132 $ 1,132 |
Changes in Fair Value of Level 3 Liabilities | The following table summarizes changes in the fair value of our Level 3 liabilities during the three months ended March 31, 2024 (in thousands) Embedded Redemption Features Warrant Cash Settled PRSUs Level 3 Total Balance at December 31, 2023 $ 588 $ 520 $ 24 $ 1,132 Change in FV included in gain on derivative instruments, net (119 ) 136 - 17 Stock compensation less payments made - - 4 4 Balance at March 31, 2024 $ 469 $ 656 $ 28 $ 1,153 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt [Abstract] | |
Convertible Note | On June 23, 2023, the Company entered into a second Securities Purchase Agreement (the “2023 Purchase Agreement”) with Lind Global, pursuant to which we issued to Lind Global that certain Senior Convertible Promissory Note, dated February 23, 2022 (the “2023 Convertible Note” and, together with the 2022 Convertible Note, the “Convertible Notes”) and a common stock purchase warrant to acquire 426,427 shares of our Common Stock (the “2023 Warrant”). The 2023 Convertible Note does not bear interest but was issued at a $0.3 million discount (“OID”). We received proceeds of approximately $1.4 million net of the OID and expenses. (in thousands) 2022 Convertible Note 2023 Convertible Note Total Convertible Notes Amount Amount Amount Convertible Note issued $ 5,750 $ 1,800 $ 7,550 Debt discount (750 ) (300 ) (1,050 ) Issuance cost: Commitment fee (175 ) (52 ) (227 ) Balance of investor’s counsel fees (43 ) (34 ) (77 ) Net proceeds of Convertible Note $ 4,782 $ 1,414 $ 6,196 Additional OID costs not in original funds flow (121 ) (15 ) (136 ) Fair value of Warrant Liabilities on issuance (724 ) (1,119 ) (1,843 ) Fair value of Conversion Feature on issuance (306 ) (286 ) (592 ) A 25 30 55 A dditional OID costs not in original funds flow (660 ) 660 - Interest expense accrued on Convertible Note as of March 31, 2024 3,213 459 3,672 Principal and interest payments through March 31, 2024 (6,021 ) - (6,021 ) Balance of Convertible Note as of March 31, 2024 $ 188 $ 1,143 $ 1,331 At March 31, 2024, the outstanding debt under the Convertible Note agreement was as follows: (in thousands) Principal Debt Discounts Net Current portion of Long-Term Debt $ 1,740 $ (686 ) $ 1,054 Long-Term Debt less current portion 300 (23 ) 277 Balance of Convertible Notes as of March 31, 2024 $ 2,040 $ (709 ) $ 1,331 At December 31, 2023, the outstanding debt under was as follows: (in thousands) Principal Debt Discounts Net Current portion of Long-Term Debt $ 1,849 $ (1,039 ) $ 810 Long-Term Debt less current portion 750 (113 ) 637 Balance of Convertible Notes as of December 31, 2023 $ 2,599 $ (1,152 ) $ 1,447 |
Future Principal Payments of Convertible Note | The following table details the future principal payments of the Convertible Note, gross of debt discounts: (in thousands) Years ended December 31: 2024 $ 1,290 2025 750 Thereafter - $ 2,040 |
Product Warranty (Tables)
Product Warranty (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Product Warranty [Abstract] | |
Activities in the Accrued Warranty Accounts | The activity in the accrued warranty accounts during the current period is as follows: (in thousands) Balance at January 1, 2024 $ 284 Current period recovery (28 ) Current period claims (24 ) Currency adjustment (1 ) Balance at March 31, 2024 $ 231 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue [Abstract] | |
Disaggregation of Revenue | The following table represents a disaggregation of revenue by type of goods or services for the three months ended March 31, 2024 and 2023, along with the reporting segment for each category: Three months ended (in thousands) March 31, 2024 March 31, 2023 Engineering System Design and Build $ 2,127 $ 1,470 Over time 2,127 1,470 Software and Support 866 1,189 Point in time 5 313 Over time 861 876 Training and Consulting Services 5,736 4,282 Point in time 82 196 Over time 5,654 4,086 Workforce Solutions Training and Consulting Services 2,554 3,932 Point in time 93 119 Over time 2,461 3,813 Total revenue $ 11,283 $ 10,873 |
Balance of Contract Liabilities and Revenue Recognized in Reporting Period | The following table reflects revenue recognized in the reporting periods that was included in contract liabilities from contracts with customers as of the beginning of the periods presented (in thousands) Three months ended March 31, 2024 March 31, 2023 Revenue recognized in the period from amounts included in billings in excess of revenue earned at the beginning of the period $ 2,077 $ 1,850 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Income Taxes [Abstract] | |
Provision for Income Taxes and Effective Tax Rates | The following table presents the provision for income taxes and our effective tax rates: (in thousands) Three months ended March 31, 2024 March 31, 2023 Loss before income taxes $ (1,952 ) $ (2,990 ) Expense (benefit) from income taxes 40 (39 ) Effective tax rate (2.0 )% 1.3 % |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Classification of Operating ROU Assets and Lease Liabilities on the Balance Sheet | Lease contracts are evaluated at inception to determine whether they contain a lease and whether we obtain the right to control an identified asset. The following table summarizes the classification of operating ROU assets and lease liabilities on the consolidated balance sheets: (in thousands) As of Operating Leases Classification March 31, December 31, 2023 Leased Assets Operating lease - right of use assets Long term assets $ 364 $ 413 Lease Liabilities Operating lease liabilities - Current Other current liabilities 193 234 Operating lease liabilities Long term liabilities 322 357 $ 515 $ 591 |
Lease Income and Expenses | The table below summarizes lease income and expense recorded in the consolidated statements of operations incurred during three months ended March 31, 2024 and 2023, ( in thousands Three months ended Lease Cost Classification March 31, 2024 March 31, 2023 Operating lease cost (1) Selling, general and administrative expenses $ 76 $ 128 Short-term leases costs (2) Selling, general and administrative expenses 2 15 Net lease cost $ 78 $ 143 (1) Includes variable lease costs which are immaterial. ( 2 ) Includes leases maturing less than twelve months from the report date. |
Future Minimum Lease Payments | The Company is obligated under certain noncancelable operating leases for office facilities and equipment. Future minimum lease payments under noncancelable operating leases as of March 31, 2024 are as follows: (in thousands) Gross Future Minimum Lease Payments 2024 $ 180 2025 150 2026 96 2027 89 2028 60 Thereafter - Total lease payments $ 575 Less: Interest 60 Present value of lease payments $ 515 |
Operating Lease Weighted Average Remaining Lease Term And Discount Rate | We calculated the weighted-average remaining lease term, presented in years below and the weighted-average discount rate for our operating leases, and we use the incremental borrowing rate as the lease discount rate. Lease Term and Discount Rate March 31, 2024 December 31, 2023 Weighted-average remaining lease term (years) Operating leases 3.35 3.38 Weighted-average discount rate Operating leases 6.21 % 6.10 % |
Classification of Lease Payments in the Statement of Cash Flows | The table below sets out the classification of lease payments in the consolidated statements of cash flows. (in thousands) Three months ended Cash paid for amounts included in measurement of liabilities March 31, 2024 March 31, 2023 Operating cash flows used in operating leases $ 88 $ 169 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Information [Abstract] | |
Reconciliation of Segment Revenue to Consolidated Revenue and Operating Results to Consolidated Income Before Income Taxes | The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income taxes. Inter-segment revenue is eliminated in consolidation and is not significant. Three months ended (in thousands) March 31, 2024 March 31, 2023 Revenue: Engineering $ 8,729 $ 6,942 Workforce Solutions 2,554 3,931 Total revenue $ 11,283 $ 10,873 Gross Profit Engineering $ 2,905 $ 1,880 Workforce Solutions 311 515 Total gross profit $ 3,216 $ 2,395 Operating loss Engineering $ (1,398 ) $ (2,424 ) Workforce Solutions (132 ) (359 ) Operating loss $ (1,530 ) $ (2,783 ) Interest expense, net (459 ) (286 ) Change in fair value of derivative instruments, net (17 ) 69 Other loss, net 54 10 Loss before income taxes $ (1,952 ) $ (2,990 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Oct. 30, 2023 | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Reverse Stock Split [Abstract] | ||||
Reverse stock split | 10 | |||
Liquidity and Going Concern [Abstract] | ||||
Operating loss | $ (1,530) | $ (2,783) | $ (6,800) | |
Long-lived assets and goodwill impairment | $ 1,400 | |||
Unrestricted cash | $ 400 |
Basic and Diluted Loss per Sh_3
Basic and Diluted Loss per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator [Abstract] | ||
Net loss attributed to common stockholders | $ (1,992) | $ (2,951) |
Denominator [Abstract] | ||
Weighted-average shares outstanding for basic earnings per share (in shares) | 3,148,806 | 2,293,389 |
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share (in shares) | 3,148,806 | 2,293,389 |
Total shares considered for dilution (in shares) | 1,195,249 | 511,178 |
Contract Receivables (Details)
Contract Receivables (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2024 USD ($) | Mar. 31, 2024 USD ($) Customer | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Contract Receivables [Abstract] | ||||
Maximum term of contract receivables | 12 months | |||
Components of contract receivables [Abstract] | ||||
Billed receivables | $ 4,275 | $ 5,720 | ||
Unbilled receivables | 5,242 | 4,729 | ||
Allowance for credit loss | (339) | (283) | ||
Total contract receivables, net | 9,178 | $ 10,166 | ||
Unbilled Contract Receivables [Abstract] | ||||
Gain on foreign exchange contracts | 74 | $ 72 | ||
Credit loss expense | 56 | $ 32 | ||
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning balance | $ 339 | 283 | ||
Current period provision for expected credit (recovery) loss | 57 | |||
Write-offs charged against the allowance, net of recoveries | 0 | |||
Currency adjustment | (1) | |||
Ending balance | $ 339 | |||
Subsequent Event [Member] | ||||
Unbilled Contract Receivables [Abstract] | ||||
Subsequent billing | $ 3,800 | |||
Contract Receivables [Member] | Customer Concentration Risk [Member] | ||||
Unbilled Contract Receivables [Abstract] | ||||
Number of major customers | Customer | 1 | |||
Contract Receivables [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||
Unbilled Contract Receivables [Abstract] | ||||
Percentage contributed by major customers | 13% |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Goodwill, Impaired [Abstract] | |||
Goodwill | $ 16,709 | $ 16,709 | |
Accumulated Impairment | (11,801) | (11,801) | |
Net | 4,908 | 4,908 | |
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 12,442 | 12,442 | |
Accumulated amortization | (10,898) | (10,799) | |
Impairment | (464) | (464) | |
Total | 1,080 | 1,179 | |
Amortization of intangible assets | 99 | $ 161 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2024 remainder | 233 | ||
2025 | 255 | ||
2026 | 204 | ||
2027 | 169 | ||
2028 | 109 | ||
Thereafter | 110 | ||
Total | 1,080 | 1,179 | |
Engineering [Member] | |||
Goodwill, Impaired [Abstract] | |||
Goodwill | 8,278 | 8,278 | |
Accumulated Impairment | (3,370) | (3,370) | |
Net | 4,908 | 4,908 | |
Workforce Solutions [Member] | |||
Goodwill, Impaired [Abstract] | |||
Goodwill | 8,431 | 8,431 | |
Accumulated Impairment | (8,431) | (8,431) | |
Net | 0 | 0 | |
Customer Relationships [Member] | |||
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 8,628 | 8,628 | |
Accumulated amortization | (7,468) | (7,395) | |
Impairment | (464) | (464) | |
Total | 696 | 769 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 696 | 769 | |
Trade Names [Member] | |||
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 1,689 | 1,689 | |
Accumulated amortization | (1,305) | (1,283) | |
Impairment | 0 | 0 | |
Total | 384 | 406 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 384 | 406 | |
Developed Technology [Member] | |||
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 471 | 471 | |
Accumulated amortization | (471) | (471) | |
Impairment | 0 | 0 | |
Total | 0 | 0 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 0 | 0 | |
Non-Contractual Customer Relationships [Member] | |||
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 433 | 433 | |
Accumulated amortization | (433) | (433) | |
Impairment | 0 | 0 | |
Total | 0 | 0 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 0 | 0 | |
Noncompete Agreement [Member] | |||
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 527 | 527 | |
Accumulated amortization | (527) | (523) | |
Impairment | 0 | 0 | |
Total | 0 | 4 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 0 | 4 | |
Alliance Agreement [Member] | |||
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 527 | 527 | |
Accumulated amortization | (527) | (527) | |
Impairment | 0 | 0 | |
Total | 0 | 0 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 0 | 0 | |
Others [Member] | |||
Amortized Intangible Assets [Abstract] | |||
Gross carrying amount | 167 | 167 | |
Accumulated amortization | (167) | (167) | |
Impairment | 0 | 0 | |
Total | 0 | 0 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | $ 0 | $ 0 |
Equipment, Software and Lease_3
Equipment, Software and Leasehold Improvements (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Equipment, Software and Leasehold Improvements, Net [Abstract] | |||
Equipment, software and leasehold improvements | $ 6,320 | $ 6,318 | |
Accumulated depreciation | (5,620) | (5,564) | |
Equipment, software and leasehold improvements, net | 700 | 754 | |
Depreciation expense | 58 | $ 48 | |
Computer and Equipment [Member] | |||
Equipment, Software and Leasehold Improvements, Net [Abstract] | |||
Equipment, software and leasehold improvements | 2,383 | 2,381 | |
Software [Member] | |||
Equipment, Software and Leasehold Improvements, Net [Abstract] | |||
Equipment, software and leasehold improvements | 2,292 | 2,292 | |
Leasehold Improvements [Member] | |||
Equipment, Software and Leasehold Improvements, Net [Abstract] | |||
Equipment, software and leasehold improvements | 805 | 805 | |
Furniture and Fixtures [Member] | |||
Equipment, Software and Leasehold Improvements, Net [Abstract] | |||
Equipment, software and leasehold improvements | $ 840 | $ 840 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 USD ($) $ / shares | Dec. 31, 2023 USD ($) | Jun. 23, 2023 | |
Fair Value Measurements [Abstract] | |||
Measurement input | 1 | ||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | $ 1,153 | $ 1,132 | |
Changes in Fair Value of Level 3 Liabilities [Abstract] | |||
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | $ 0 | 0 | |
Significant Other Observable Inputs (Level 2) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 0 | 0 | |
Significant Unobservable Inputs (Level 3) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 1,153 | 1,132 | |
Changes in Fair Value of Level 3 Liabilities [Abstract] | |||
Balance, Beginning Period | 1,132 | ||
Change in FV included in gain on derivative instruments, net | 17 | ||
Stock compensation less payments made | 4 | ||
Balance, Ending Period | 1,153 | ||
Embedded Redemption Features [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Changes in Fair Value of Level 3 Liabilities [Abstract] | |||
Balance, Beginning Period | 588 | ||
Change in FV included in gain on derivative instruments, net | (119) | ||
Stock compensation less payments made | 0 | ||
Balance, Ending Period | 469 | ||
Cash Settled PRSUs [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 28 | 24 | |
Cash Settled PRSUs [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 0 | 0 | |
Cash Settled PRSUs [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 0 | 0 | |
Cash Settled PRSUs [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 28 | 24 | |
Changes in Fair Value of Level 3 Liabilities [Abstract] | |||
Balance, Beginning Period | 24 | ||
Change in FV included in gain on derivative instruments, net | 0 | ||
Stock compensation less payments made | 4 | ||
Balance, Ending Period | 28 | ||
Derivative Liability [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 469 | 588 | |
Derivative Liability [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 0 | 0 | |
Derivative Liability [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 0 | 0 | |
Derivative Liability [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 469 | 588 | |
Warrant Liability [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 656 | 520 | |
Warrant Liability [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 0 | 0 | |
Warrant Liability [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 0 | 0 | |
Warrant Liability [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Assets and Liabilities Measured at Fair Value [Abstract] | |||
Total liabilities | 656 | $ 520 | |
Changes in Fair Value of Level 3 Liabilities [Abstract] | |||
Balance, Beginning Period | 520 | ||
Change in FV included in gain on derivative instruments, net | 136 | ||
Stock compensation less payments made | 0 | ||
Balance, Ending Period | $ 656 | ||
Warrant Liability [Member] | Amended 2022 Convertible Notes [Member] | |||
Fair Value Measurements [Abstract] | |||
Term (in years) | 2 months 12 days | ||
Warrant Liability [Member] | The "2022 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Term (in years) | 2 years 10 months 24 days | ||
Warrant Liability [Member] | 2023 Convertible Note [Member] | |||
Fair Value Measurements [Abstract] | |||
Term (in years) | 1 year 2 months 12 days | ||
Warrant Liability [Member] | The "2023 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Term (in years) | 4 years 2 months 12 days | ||
Warrant Liability [Member] | Exercise Price [Member] | Amended 2022 Convertible Notes [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 19.4 | ||
Warrant Liability [Member] | Exercise Price [Member] | The "2022 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 19.4 | ||
Warrant Liability [Member] | Exercise Price [Member] | 2023 Convertible Note [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 5 | ||
Warrant Liability [Member] | Exercise Price [Member] | The "2023 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 5 | ||
Warrant Liability [Member] | Common Stock Price [Member] | Amended 2022 Convertible Notes [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 2.34 | ||
Warrant Liability [Member] | Common Stock Price [Member] | The "2022 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 2.34 | ||
Warrant Liability [Member] | Common Stock Price [Member] | 2023 Convertible Note [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 2.34 | ||
Warrant Liability [Member] | Common Stock Price [Member] | The "2023 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | $ / shares | 2.34 | ||
Warrant Liability [Member] | Risk Free Rate [Member] | Amended 2022 Convertible Notes [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.052 | ||
Warrant Liability [Member] | Risk Free Rate [Member] | The "2022 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.0431 | ||
Warrant Liability [Member] | Risk Free Rate [Member] | 2023 Convertible Note [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.0491 | ||
Warrant Liability [Member] | Risk Free Rate [Member] | The "2023 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.0421 | ||
Warrant Liability [Member] | Volatility [Member] | Amended 2022 Convertible Notes [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.95 | ||
Warrant Liability [Member] | Volatility [Member] | The "2022 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.95 | ||
Warrant Liability [Member] | Volatility [Member] | 2023 Convertible Note [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.95 | ||
Warrant Liability [Member] | Volatility [Member] | The "2023 Warrants" [Member] | |||
Fair Value Measurements [Abstract] | |||
Measurement input | 0.95 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) qtr shares | Mar. 31, 2023 USD ($) shares | |
Share-based Compensation [Abstract] | ||
Stock options granted (in shares) | 0 | 0 |
Time-Based RSUs [Member] | ||
Share-based Compensation [Abstract] | ||
RSUs granted (in shares) | 56,259 | 4,500 |
RSUs vested (in shares) | 68,766 | 184,949 |
Restricted Stock Units [Member] | ||
Share-based Compensation [Abstract] | ||
Aggregate fair value for time-based RSUs | $ | $ 100 | $ 33 |
Period to fully vest performance RSUs | qtr | 7 | |
Restricted Stock Units [Member] | Minimum [Member] | ||
Share-based Compensation [Abstract] | ||
Period in which time-based RSU's will vest annually in equal amounts | 1 year | |
Restricted Stock Units [Member] | Maximum [Member] | ||
Share-based Compensation [Abstract] | ||
Period in which time-based RSU's will vest annually in equal amounts | 3 years | |
PRSUs [Member] | ||
Share-based Compensation [Abstract] | ||
RSUs granted (in shares) | 0 | 0 |
RSUs vested (in shares) | 5,000 | 5,000 |
RSUs unvested (in shares) | 90,942 | |
Cash Settled PRSUs [Member] | ||
Share-based Compensation [Abstract] | ||
RSUs vested (in shares) | 1,250 | 1,250 |
RSU and PRSU [Member] | ||
Share-based Compensation [Abstract] | ||
Stock-based compensation expense | $ | $ 300 | $ 300 |
Performance Obligation [Member] | ||
Share-based Compensation [Abstract] | ||
RSUs unvested (in shares) | 35,000 |
Debt, Convertible Note (Details
Debt, Convertible Note (Details) | 3 Months Ended | ||||||
Jan. 24, 2024 USD ($) $ / shares | Oct. 06, 2023 $ / shares | Jun. 23, 2023 USD ($) $ / shares shares | Feb. 23, 2022 USD ($) $ / shares shares | Mar. 31, 2024 USD ($) d Repayment | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Threshold period for warrants exercisable | 30 days | ||||||
Expected volatility | 1 | ||||||
Term of volatility period | 100 days | ||||||
Amortization of debt discount | $ 443,000 | $ 303,000 | |||||
Maximum number of monthly repayments | Repayment | 2 | ||||||
Minimum market capitalization requirement amount | $ 7,000,000 | ||||||
Number of consecutive trading days | 10 days | ||||||
Percentage of outstanding principal required to be prepaid | 105% | ||||||
Maximum beneficial ownership percentage | 50% | ||||||
Maximum percentage of beneficial ownership of outstanding shares of common stock | 4.99% | ||||||
Minimum [Member] | |||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Common stock share price (in dollars per share) | $ / shares | $ 10 | ||||||
Maximum [Member] | |||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Common stock share price (in dollars per share) | $ / shares | $ 10 | ||||||
Indebtedness to be maintained in event of default to avoid triggering of default terms | $ 250,000 | ||||||
Convertible Note [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Convertible Note issued | 2,040,000 | $ 2,599,000 | |||||
Debt discount | (709,000) | (1,152,000) | |||||
Balance of Convertible Notes | $ 1,331,000 | $ 1,447,000 | |||||
Period for repayment of convertible note from issuance | 180 days | ||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
2024 | $ 1,290,000 | ||||||
2025 | 750,000 | ||||||
Thereafter | 0 | ||||||
Long-term debt | $ 2,040,000 | ||||||
Effective interest rate | 68.60% | ||||||
Amortization of debt discount | $ 400,000 | $ 300,000 | |||||
Convertible Note [Member] | Minimum [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Monthly principal repayments | 100,000 | ||||||
Convertible Note [Member] | Maximum [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Monthly principal repayments | 200,000 | ||||||
2022 Convertible Note [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Purchase of warrant to acquire shares of common stock (in shares) | shares | 128,373 | ||||||
Convertible Note issued | 5,750,000 | ||||||
Debt discount | (750,000) | ||||||
Balance of Convertible Notes | 4,782,000 | ||||||
Additional OID costs not in original funds flow | (121,000) | ||||||
Allocated OID costs to Warrants | 25,000 | ||||||
Additional OID costs not in original funds flow | (660,000) | ||||||
Interest expense accrued on Convertible Note | 3,213,000 | ||||||
Principal and interest payments | (6,021,000) | ||||||
Balance of Convertible Note | $ 188,000 | ||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Period for conversion | 6 months | ||||||
Conversion price (in dollars per share) | $ / shares | $ 19.4 | ||||||
Debt Instrument, Debt Default, Percentage | 20% | ||||||
Maturity date | Feb. 29, 2024 | ||||||
Conversion ratio | 0.33 | ||||||
Percentage of outstanding principal amount to become due | 120% | ||||||
Percentage of volume-weighted average price | 80% | ||||||
Average of trading days | d | 3 | ||||||
Number of trading days | d | 20 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 19.4 | ||||||
Fair value | $ 700,000 | ||||||
Net proceeds from issuance of convertible note | $ 4,800,000 | ||||||
2022 Convertible Note [Member] | Embedded Redemption Features [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Fair value of Conversion Features on issuance | $ (306,000) | ||||||
2022 Convertible Note [Member] | Warrant Liability [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Fair value of Warrant Liabilities on issuance | (724,000) | ||||||
2022 Convertible Note [Member] | Commitment Fee [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Issuance cost | (175,000) | ||||||
2022 Convertible Note [Member] | Investor's Counsel Fees [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Issuance cost | $ (43,000) | ||||||
Amended Convertible Note 2022 [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Balance of Convertible Notes | $ 2,747,228 | ||||||
Number of monthly payments | Repayment | 12 | ||||||
Monthly principal repayments | $ 186,343 | ||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Maturity date | Aug. 23, 2024 | ||||||
Number of final payments | Repayment | 2 | ||||||
Amended Convertible Note 2022 [Member] | Payment One [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Monthly principal repayments | 255,556 | ||||||
Amended Convertible Note 2022 [Member] | Payment Two [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Monthly principal repayments | $ 255,556 | ||||||
A&R Note Amendment [Member] | |||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Conversion price (in dollars per share) | $ / shares | $ 19.4 | ||||||
Percentage of volume-weighted average price | 85% | ||||||
Average of trading days | d | 3 | ||||||
Number of trading days | d | 20 | ||||||
Minimum market capitalization requirement amount | $ 7,000,000 | ||||||
Number of consecutive trading days | 10 days | ||||||
Note Amendment [Member] | |||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Conversion price (in dollars per share) | $ / shares | $ 5 | ||||||
Percentage of volume-weighted average price | 85% | ||||||
Average of trading days | d | 3 | ||||||
Number of trading days | d | 20 | ||||||
Minimum market capitalization requirement amount | $ 7,000,000 | $ 7,000,000 | |||||
Number of consecutive trading days | 10 days | ||||||
2023 Convertible Note [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Purchase of warrant to acquire shares of common stock (in shares) | shares | 426,427 | ||||||
Convertible Note issued | $ 1,800,000 | $ 1,800,000 | |||||
Debt discount | (300,000) | ||||||
Balance of Convertible Notes | 1,500,000 | 1,414,000 | |||||
Additional OID costs not in original funds flow | (15,000) | ||||||
Allocated OID costs to Warrants | 30,000 | ||||||
Additional OID costs not in original funds flow | 660,000 | ||||||
Interest expense accrued on Convertible Note | 459,000 | ||||||
Principal and interest payments | 0 | ||||||
Balance of Convertible Note | $ 1,143,000 | ||||||
Number of monthly payments | Repayment | 12 | ||||||
Monthly principal repayments | $ 150,000 | ||||||
Long-Term Debt, Rolling Maturity [Abstract] | |||||||
Period for conversion | 1 year | ||||||
Conversion price (in dollars per share) | $ / shares | $ 5 | ||||||
Conversion ratio | 0.33 | ||||||
Percentage of volume-weighted average price | 90% | 85% | |||||
Average of trading days | d | 5 | ||||||
Number of trading days | d | 20 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 5 | ||||||
Debt instrument term | 2 years | ||||||
Number of repayment shares issued and issuable (in shares) | shares | 493,727 | ||||||
Threshold period for shares available for resale | 6 months | ||||||
Lowest trading days | d | 3 | ||||||
2023 Convertible Note [Member] | Embedded Redemption Features [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Fair value of Conversion Features on issuance | $ (286,000) | ||||||
2023 Convertible Note [Member] | Warrant Liability [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Fair value of Warrant Liabilities on issuance | (1,119,000) | ||||||
2023 Convertible Note [Member] | Commitment Fee [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Issuance cost | (52,000) | ||||||
2023 Convertible Note [Member] | Investor's Counsel Fees [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Issuance cost | (34,000) | ||||||
2023 Convertible Note [Member] | Payment One [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Monthly principal repayments | $ 300,000 | ||||||
2023 Convertible Note [Member] | Payment Two [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Monthly principal repayments | $ 300,000 | ||||||
Total Convertible Notes [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Convertible Note issued | 7,550,000 | ||||||
Debt discount | (1,050,000) | ||||||
Balance of Convertible Notes | 6,196,000 | ||||||
Additional OID costs not in original funds flow | (136,000) | ||||||
Allocated OID costs to Warrants | 55,000 | ||||||
Additional OID costs not in original funds flow | 0 | ||||||
Interest expense accrued on Convertible Note | 3,672,000 | ||||||
Principal and interest payments | (6,021,000) | ||||||
Balance of Convertible Note | 1,331,000 | ||||||
Total Convertible Notes [Member] | Embedded Redemption Features [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Fair value of Conversion Features on issuance | (592,000) | ||||||
Total Convertible Notes [Member] | Warrant Liability [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Fair value of Warrant Liabilities on issuance | (1,843,000) | ||||||
Total Convertible Notes [Member] | Commitment Fee [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Issuance cost | (227,000) | ||||||
Total Convertible Notes [Member] | Investor's Counsel Fees [Member] | |||||||
Convertible Debt [Abstract] | |||||||
Issuance cost | $ (77,000) |
Debt, Outstanding Debt under Co
Debt, Outstanding Debt under Convertible Debt Agreement (Details) - Convertible Note [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Convertible Debt [Abstract] | ||
Current portion of Long-Term Debt, Principal | $ 1,740 | $ 1,849 |
Long-Term Debt less current portion, Principal | 300 | 750 |
Balance of Convertible Notes, Principal | 2,040 | 2,599 |
Current portion of Long-Term Debt, Debt Discounts | (686) | (1,039) |
Long-Term Debt less current portion, Debt Discount | (23) | (113) |
Balance of Convertible Notes, Debt Discount | (709) | (1,152) |
Current portion of Long-Term Debt, Net | 1,054 | 810 |
Long-Term Debt less current portion, Net | 277 | 637 |
Balance of Convertible Notes | $ 1,331 | $ 1,447 |
Debt, Letter of Credit (Details
Debt, Letter of Credit (Details) - Letter of Credit [Member] $ in Millions | Mar. 31, 2024 USD ($) Letter |
Line of Credit Facility [Abstract] | |
Number of letters of credit | Letter | 4 |
Outstanding letter of credit balance | $ | $ 1.1 |
Product Warranty (Details)
Product Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Product warranty provision [Abstract] | ||
Warranty terms for SDB contracts | 1 year | |
Accrued warranty, current | $ 181 | $ 176 |
Accrued warranty, noncurrent | 50 | $ 108 |
Activities in product warranty account [Abstract] | ||
Balance at beginning of period | 284 | |
Current period recovery | (28) | |
Current period claims | (24) | |
Currency adjustment | (1) | |
Balance at end of period | $ 231 |
Revenue (Details)
Revenue (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) Stream | Mar. 31, 2023 USD ($) | |
Disaggregation of Revenue [Abstract] | ||
Number of distinct revenue streams | Stream | 3 | |
Revenue | $ 11,283 | $ 10,873 |
Contract with Customer, Asset and Liability [Abstract] | ||
Revenue recognized in the period from amounts included in billings in excess of revenue earned at the beginning of the period | 2,077 | 1,850 |
Engineering [Member] | System Design and Build [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 2,127 | 1,470 |
Engineering [Member] | System Design and Build [Member] | Over Time [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 2,127 | 1,470 |
Engineering [Member] | Software and Support [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 866 | 1,189 |
Engineering [Member] | Software and Support [Member] | Point in Time [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 5 | 313 |
Engineering [Member] | Software and Support [Member] | Over Time [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 861 | 876 |
Engineering [Member] | Training and Consulting Services [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 5,736 | 4,282 |
Engineering [Member] | Training and Consulting Services [Member] | Point in Time [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 82 | 196 |
Engineering [Member] | Training and Consulting Services [Member] | Over Time [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 5,654 | 4,086 |
Workforce Solutions [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 2,554 | 3,931 |
Workforce Solutions [Member] | Training and Consulting Services [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 2,554 | 3,932 |
Workforce Solutions [Member] | Training and Consulting Services [Member] | Point in Time [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | 93 | 119 |
Workforce Solutions [Member] | Training and Consulting Services [Member] | Over Time [Member] | ||
Disaggregation of Revenue [Abstract] | ||
Revenue | $ 2,461 | $ 3,813 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Taxes [Abstract] | ||
Loss before income taxes | $ (1,952) | $ (2,990) |
Expense (benefit) from income taxes | $ 40 | $ (39) |
Effective tax rate | (2.00%) | 1.30% |
Statutory federal income tax rate | 21% | 21% |
Income Tax Examination [Abstract] | ||
Probability of uncertain tax position to be recognized | 50% | |
Percentage of tax position realized upon ultimate settlement | 50% | |
Federal [Member] | ||
Income Tax Examination [Abstract] | ||
Income tax examination, year under examination | 2003 | |
State [Member] | ||
Income Tax Examination [Abstract] | ||
Income tax examination, year under examination | 2003 | |
Foreign [Member] | ||
Income Tax Examination [Abstract] | ||
Income tax examination, year under examination | 2018 |
Leases (Details)
Leases (Details) $ in Thousands | 3 Months Ended | |||||
Jun. 07, 2023 ft² | Sep. 26, 2022 ft² | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | ||
Lessee, Lease, Description [Line Items] | ||||||
Operating lease ROU amortization | $ 49 | $ 120 | ||||
Leased Assets [Abstract] | ||||||
Operating lease - right of use assets | $ 364 | $ 413 | ||||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Operating lease - right of use assets | Operating lease - right of use assets | ||||
Lease Liabilities [Abstract] | ||||||
Operating lease liabilities - current | $ 193 | $ 234 | ||||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities | ||||
Operating lease liabilities | $ 322 | $ 357 | ||||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Operating lease liabilities | Operating lease liabilities | ||||
Lease liabilities | $ 515 | $ 591 | ||||
Consolidated Statement of Operations Information [Abstract] | ||||||
Operating lease cost | [1] | 76 | 128 | |||
Short-term leases costs | [2] | 2 | 15 | |||
Net lease cost | 78 | 143 | ||||
Minimum Lease Payments [Abstract] | ||||||
2024 remainder | 180 | |||||
2025 | 150 | |||||
2026 | 96 | |||||
2027 | 89 | |||||
2028 | 60 | |||||
Thereafter | 0 | |||||
Total lease payments | 575 | |||||
Less: Interest | 60 | |||||
Lease liabilities | $ 515 | $ 591 | ||||
Lease Term and Discount Rate [Abstract] | ||||||
Weighted-average remaining lease term (in years) | 3 years 4 months 6 days | 3 years 4 months 17 days | ||||
Weighted-average discount rate | 6.21% | 6.10% | ||||
Cash paid for amounts included in measurement of liabilities [Abstract] | ||||||
Operating cash flows used in operating leases | $ 88 | $ 169 | ||||
Fort Worth, Texas [Member] | ||||||
Lease Liabilities [Abstract] | ||||||
Area of office space leased | ft² | 2,704 | |||||
Lease expiration date | Nov. 07, 2030 | |||||
Columbia, Maryland [Member] | ||||||
Lease Liabilities [Abstract] | ||||||
Area of office space leased | ft² | 2,200 | |||||
Lease agreement date | Sep. 26, 2022 | |||||
Lease expiration date | Nov. 30, 2024 | |||||
[1] Includes variable lease costs which are immaterial. Includes leases maturing less than twelve months from the report date. |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 USD ($) Segment | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||
Number of reportable business segments | Segment | 2 | ||
Contract term | 2 years | ||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Revenue | $ 11,283 | $ 10,873 | |
Gross profit | 3,216 | 2,395 | |
Operating loss | (1,530) | (2,783) | $ (6,800) |
Interest expense, net | (459) | (286) | |
Change in fair value of derivative instruments, net | (17) | 69 | |
Other loss, net | 54 | 10 | |
Loss before income taxes | (1,952) | (2,990) | |
Engineering [Member] | |||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Revenue | 8,729 | 6,942 | |
Gross profit | 2,905 | 1,880 | |
Operating loss | (1,398) | (2,424) | |
Workforce Solutions [Member] | |||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Revenue | 2,554 | 3,931 | |
Gross profit | 311 | 515 | |
Operating loss | $ (132) | $ (359) |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | 30 Months Ended | |
Oct. 30, 2023 USD ($) Case | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | Jun. 08, 2023 Employee Case | |
Litigation Settlement [Abstract] | ||||
Number of former employees in subsidiaries that filed lawsuits | Employee | 3 | |||
Number of cases filed | Case | 3 | |||
Number of cases dismissed | Case | 3 | |||
Damages awarded value | $ | $ 750 | |||
Selling, General and Administrative Expenses [Member] | ||||
Litigation Settlement [Abstract] | ||||
Accrued litigation expenses | $ | $ 774 | $ 260 |