Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 28, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-33720 | ||
Entity Registrant Name | Remark Holdings, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 33-1135689 | ||
Entity Address, Address Line One | 800 S. Commerce St. | ||
Entity Address, City or Town | Las Vegas | ||
Entity Address, State or Province | NV | ||
Entity Address, Postal Zip Code | 89106 | ||
City Area Code | 702 | ||
Local Phone Number | 701-9514 | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | ||
Trading Symbol | MARK | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 175 | ||
Entity Common Stock, Shares Outstanding | 105,157,769 | ||
Entity Central Index Key | 0001368365 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Firm ID | 572 |
Auditor Name | Weinberg & Company, P.A. |
Auditor Location | Los Angeles, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash | $ 14,187 | $ 854 |
Trade accounts receivable, net | 10,267 | 5,027 |
Inventory, net | 1,346 | 874 |
Investment in marketable securities | 42,349 | 0 |
Prepaid expense and other current assets | 6,363 | 2,043 |
Total current assets | 74,512 | 8,798 |
Property and equipment, net | 357 | 321 |
Operating lease assets | 194 | 492 |
Investment in unconsolidated affiliate | 0 | 1,030 |
Other long-term assets | 440 | 670 |
Total assets | 75,503 | 11,311 |
Liabilities | ||
Accounts payable | 10,094 | 8,589 |
Accrued expense and other current liabilities | 5,963 | 6,660 |
Contract liability | 576 | 310 |
Notes payable, net of unamortized discount and debt issuance cost of $2,189 and zero at December 31, 2021 and 2020, respectively | 27,811 | 1,500 |
Total current liabilities | 44,444 | 17,059 |
Long-term debt | 0 | 1,425 |
Operating lease liabilities, long-term | 25 | 194 |
Warrant liability | 0 | 1,725 |
Total liabilities | 44,469 | 20,403 |
Commitments and contingencies | ||
Preferred stock, $0.001 par value; 1,000,000 shares authorized; zero issued | 0 | 0 |
Common stock, $0.001 par value; 175,000,000 shares authorized; 105,157,769 and 99,505,041 shares issued and outstanding at December 31, 2021 and 2020, respectively | 105 | 100 |
Additional paid-in-capital | 364,239 | 351,546 |
Accumulated other comprehensive income | (270) | (226) |
Accumulated deficit | (333,040) | (360,512) |
Total stockholders’ equity (deficit) | 31,034 | (9,092) |
Total liabilities and stockholders’ equity (deficit) | $ 75,503 | $ 11,311 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Unamortized discount and debt issuance cost | $ 2,189 | $ 0 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 175,000,000 | 175,000,000 |
Common stock, shares, issued (in shares) | 105,157,769 | 99,505,041 |
Common stock, shares, outstanding (in shares) | 105,157,769 | 99,505,041 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Revenue, including $3.8 million from China Business Partner (See Note 17) | $ 15,990 | $ 10,145 | |
Cost and expense | |||
Cost of revenue (excluding depreciation and amortization) | 11,455 | 6,422 | |
Sales and marketing | [1] | 971 | 1,848 |
Marketing expense (recovery) - China Business Partner activity | (1,530) | 1,530 | |
Technology and development | 4,692 | 4,142 | |
General and administrative | 14,120 | 9,368 | |
Depreciation and amortization | 191 | 308 | |
Impairments | 0 | 772 | |
Other operating expense | 0 | 0 | |
Total cost and expense | 29,899 | 24,390 | |
Operating loss | (13,909) | (14,245) | |
Other income (expense) | |||
Interest expense | (2,308) | (1,342) | |
Other income (expense), net | (592) | 0 | |
Change in fair value of warrant liability | 123 | (1,610) | |
Gain on investment revaluation | 43,642 | 0 | |
Gain on debt extinguishment | 425 | 0 | |
Gain on lease termination | 0 | 3,582 | |
Other gain (loss), net | 100 | (70) | |
Total other income, net | 41,390 | 560 | |
Income (loss) from before income taxes | 27,481 | (13,685) | |
Provision for income taxes | (9) | 0 | |
Net income (loss) | 27,472 | (13,685) | |
Other comprehensive loss | |||
Foreign currency translation adjustments | (44) | 1 | |
Comprehensive income (loss) | $ 27,428 | $ (13,684) | |
Weighted-average shares outstanding, basic (in shares) | 101,362 | 85,578 | |
Weighted-average shares outstanding, diluted (in shares) | 101,719 | 85,578 | |
Net income (loss) per share, basic (in dollars per share) | $ 0.27 | $ (0.16) | |
Net income (loss) per share, diluted (in dollars per share) | $ 0.27 | $ (0.16) | |
Share-based compensation expense | $ 4,060 | $ 797 | |
Sales and marketing | |||
Other comprehensive loss | |||
Share-based compensation expense | 147 | 164 | |
Technology and development | |||
Other comprehensive loss | |||
Share-based compensation expense | 293 | 484 | |
General and administrative | |||
Other comprehensive loss | |||
Share-based compensation expense | $ 3,620 | $ 149 | |
[1] | 1 Includes share-based compensation as follows: Sales and marketing $ 147 $ 164 Technology and development 293 484 General and administrative 3,620 149 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Revenue | $ 15,990 |
China Business Partner | |
Revenue | $ 3,800 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2019 | 51,055,159 | ||||
Beginning balance at Dec. 31, 2019 | $ (27,728) | $ 51 | $ 319,275 | $ (227) | $ (346,827) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (13,685) | (13,685) | |||
Share-based compensation | 160 | 160 | |||
Common stock issued (in shares) | 48,298,893 | ||||
Common stock issued | 32,030 | $ 48 | 31,982 | ||
Equity instrument exercises (in shares) | 150,989 | ||||
Equity instrument exercises | 130 | $ 1 | 129 | ||
Foreign currency translation | 1 | ||||
Other | $ 1 | 1 | |||
Ending balance (in shares) at Dec. 31, 2020 | 99,505,041 | 99,505,041 | |||
Ending balance at Dec. 31, 2020 | $ (9,092) | $ 100 | 351,546 | (226) | (360,512) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 27,472 | 27,472 | |||
Share-based compensation | 4,300 | 4,300 | |||
Common stock and stock warrants issued for cash (in shares) | 4,237,290 | ||||
Common stock issued | 4,614 | $ 4 | 4,610 | ||
Equity instrument exercises (in shares) | 547,945 | ||||
Equity instrument exercises | 1,077 | 1,077 | |||
Common stock issuance upon note payable conversion (in shares) | 876,493 | ||||
Common stock issuance upon note payable conversion | 1,105 | $ 1 | 1,104 | ||
Reclassification of warrant liability to equity | 1,602 | 1,602 | |||
Foreign currency translation | $ (44) | (44) | |||
Other (in shares) | (9,000) | ||||
Ending balance (in shares) at Dec. 31, 2021 | 105,157,769 | 105,157,769 | |||
Ending balance at Dec. 31, 2021 | $ 31,034 | $ 105 | $ 364,239 | $ (270) | $ (333,040) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 27,472 | $ (13,685) |
Change in fair value of warrant liability | (123) | 1,610 |
Depreciation, amortization and impairments | 191 | 308 |
Share-based compensation | 4,060 | 797 |
Amortization of debt issuance costs and discount | 880 | 0 |
Gain on lease termination | 0 | (3,582) |
Gain on investment revaluation | (43,642) | 0 |
Gain on debt extinguishment | (425) | 0 |
Loss on disposal of long-lived assets | 0 | 77 |
Loss on impairment of intangible assets, including goodwill | 0 | 772 |
Financing cost of converting note payable to common stock | 44 | 0 |
Provision for doubtful accounts | 297 | 24 |
Other | 30 | 269 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,733) | (2,849) |
Inventory | (473) | (874) |
Prepaid expense and other assets | (4,120) | 95 |
Operating lease assets | 293 | 73 |
Accounts payable, accrued expense and other liabilities | 967 | (920) |
Contract liability | 277 | (27) |
Operating lease liabilities | (169) | (135) |
Net cash used in operating activities | (20,174) | (18,047) |
Cash flows from investing activities: | ||
Proceeds from investment | 2,322 | 0 |
Purchases of property, equipment and software | (223) | (290) |
Net cash provided by (used in) investing activities | 2,099 | (290) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net | 5,692 | 32,135 |
Proceeds from debt issuance | 32,216 | 1,425 |
Repayments of debt | (6,500) | (13,781) |
Payment of contingent consideration in business acquisitions | 0 | (860) |
Net cash provided by financing activities | 31,408 | 18,919 |
Net change in cash | 13,333 | 582 |
Cash: | ||
Beginning of period | 854 | 272 |
End of period | 14,187 | 854 |
Cash paid for interest | 1,414 | 0 |
Supplemental schedule of non-cash investing and financing activities: | ||
Issuance of common stock upon note payable conversion | 1,105 | 0 |
Reclassification of warrant liability to equity | 1,602 | 0 |
Reclassification of investment to marketable securities | 1,030 | 0 |
Offsetting of other receivables against other current liabilities | $ 0 | $ 3,060 |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | NOTE 1. ORGANIZATION AND BUSINESS Organization and Business Remark Holdings, Inc. and its subsidiaries (“Remark”, “we”, “us”, or “our”), and the variable-interest entities (“VIEs”) that Remark consolidates, constitute a diversified global technology business with leading artificial intelligence (“AI”) and data-analytics, as well as a portfolio of digital media properties. The common stock of Remark Holdings, Inc. is listed on the Nasdaq Capital Market under the ticker symbol MARK. We and the VIEs primarily sell AI-based products and services. We recognize revenue from sales in the U.S., while the VIEs generate substantially all of their revenue from China. Corporate Structure We are a holding company incorporated in Delaware and not a Chinese operating company. As a holding company, we conduct a significant part of our operations through our subsidiaries and through contractual arrangements with the VIEs based in China. We use the VIE structure to address challenges resulting from laws, policies and practices that may disfavor foreign-owned entities that operate within industries deemed sensitive by the Chinese government. We own 100% of the equity of a WFOE, which has entered into contractual arrangements with the VIEs, which are owned by members of our management team in China and/or by third parties. We fund the registered capital and operating expenses of the VIEs on behalf of the shareholders of the VIEs by making advances to the VIEs. We believe that we are the primary beneficiary of the VIEs because the contractual arrangements governing the relationship between the VIEs and our WFOE, which include an exclusive call option agreement, exclusive business cooperation agreement, a proxy agreement and an equity pledge agreement, enable us to (i) exercise effective control over the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive call option to purchase, at any time, all or part of the equity interests in and/or assets of the VIEs to the extent permitted by Chinese laws. Because these contractual arrangements with the VIEs provide us with the power to direct the activities of the VIEs, for accounting purposes we are the primary beneficiary of the VIEs and we have consolidated the financial results of the VIEs in our consolidated financial statements in accordance with U.S. GAAP. The agreements governing the VIE contractual arrangements have not been tested in a court of law. However, an article published in China Business Law Journal indicated that a China International Economic and Trade Arbitration Commission (“CIETAC”) Shanghai tribunal ruled in 2010 and 2011 in two related cases involving the contractual arrangement of an online game operating company that the contractual arrangement was void on the grounds that such arrangement violated the mandatory administrative regulations prohibiting foreign investors from investing in the online game operation business and constituted “concealing illegal intentions with a lawful form.” According to publicly available information, while the agreements entered into by the parties in the aforementioned CIETAC cases are typical VIE agreements, the PRC domestic company involved in such cases was mainly engaged in online game operation. Although the PRC foreign investment regime restricts or prohibits foreign investment in certain industries, online game operation is one of few industries where there are rules specifically prohibiting foreign investors from controlling and participating in the business indirectly through contractual or technical support arrangements. Though the agreements in the CIETAC cases are similar to our contractual arrangements with the VIEs, we and the VIEs do not operate in the online game operation industry and, to our knowledge, the business conducted by the VIEs is not prohibited from investment from foreign investors in China. We also note that the rulings in the CIETAC cases are not binding on Chinese courts or other arbitration tribunals. The following diagram illustrates our corporate structure, including our significant subsidiaries, and the relationship between our WFOE and the VIEs as of the date of this Form 10-K. The diagram omits certain entities which are immaterial to our results of operations and financial condition. Equity interests depicted in this diagram are 100% owned. The relationships between each of Chengdu Remark Technology Co., Ltd., Hangzhou Shufeng Technology Co., Ltd., Remark Data Technology Co., Ltd. and Bonet (Beijing) Technology LLC, which constitute the VIEs, on the one hand, and KanKan Technology (Shanghai) Co., Ltd., our WFOE, on the other hand, as illustrated in the following diagram are governed by contractual arrangements and do not constitute equity ownership. Because we do not directly hold equity interests in the VIEs, we are subject to risks and uncertainties of the interpretations and applications of Chinese laws and regulations, including but not limited to, the validity and enforcement of the contractual arrangements among the WFOE, the VIEs and the shareholders of the VIEs. We are also subject to the risks and uncertainties about any future actions of the Chinese government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations and may cause the value of our common stock to depreciate significantly or become worthless. The contractual arrangements may not be as effective as direct ownership in providing operational control and we face contractual exposure in such arrangements. For instance, the VIEs and their shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. The shareholders of the VIEs may not act in the best interests of our Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the contractual arrangements with the VIEs. In the event that the VIEs or their shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. In addition, even if legal actions are taken to enforce such arrangements, there is uncertainty as to whether Chinese courts would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. Risks of Doing Business in China We are subject to certain legal and operational risks associated with having a significant portion of our operations in China. Chinese laws and regulations governing our current business operations, including the enforcement of such laws and regulations, are sometimes vague and uncertain and can change quickly with little advance notice. The Chinese government may intervene or influence our operations and the operations of the VIEs at any time and may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our securities. In addition, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significant limit or completely hinder our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or become worthless. Recently, the Chinese government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to the use of variable interest entities, data security and anti-monopoly concerns. As of the date of this Form 10-K, neither we nor the VIEs have been involved in any investigations on cybersecurity review initiated by any Chinese regulatory authority, nor has any of them received any inquiry, notice or sanction. As of the date of this Form 10-K, no relevant laws or regulations in China explicitly require us to seek approval from the China Securities Regulatory Commission (the “CSRC”) for any securities listing. As of the date of this Form 10-K, neither we nor the VIEs have received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other Chinese governmental authorities relating to securities listings. However, since these statements and regulatory actions are newly published, official guidance and related implementation rules have not been issued. It is highly uncertain what potential impact such modified or new laws and regulations will have on our ability to conduct our business, accept investments or list or maintain a listing on a U.S. or foreign exchange. As of the date of this Form 10-K, we and the VIEs are not required to seek permissions from the CSRC, the Cyberspace Administration of China (the “CAC”), or any other entity that is required to approve of the operations of the VIEs. Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us, our subsidiaries or the VIEs to obtain permissions from such regulatory authorities to approve the operations of the VIEs or any securities listing. Transfer of Cash or Assets Dividend Distributions As of the date of this Form 10-K, none of our subsidiaries or any of the consolidated VIEs have made any dividends or distributions to us. We have never declared or paid dividends or distributions on our common equity. We currently intend to retain all available funds and any future consolidated earnings to fund our operations and continue the development and growth of our business; therefore, we do not anticipate paying any cash dividends. Under Delaware law, a Delaware corporation’s ability to pay cash dividends on its capital stock requires the corporation to have either net profits or positive net assets (total assets less total liabilities) over its capital. If we determine to pay dividends on any of our common stock in the future, as a holding company, we may rely on dividends and other distributions on equity from our WFOE for cash requirements, including the funds necessary to pay dividends and other cash contributions to our stockholders. Our WFOE’s ability to distribute dividends is based upon its distributable earnings. Current Chinese regulations permit our WFOE to pay dividends to their shareholders only out of its registered capital amount, if any, as determined in accordance with Chinese accounting standards and regulations, and then only after meeting the statutory reserve equal to 50% of registered capital. If our WFOE incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. In addition, any cash dividends or distributions of assets by our WFOE to its stockholder are subject to a Chinese withholding tax of as much as 10%. The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive all of the revenues from our operations through the current VIE contractual arrangements, we may be unable to pay dividends on our common stock. For us to pay dividends to our stockholders, we will rely on payments made from the VIEs to our WFOE in accordance with the VIE contractual arrangements, and the distribution of payments from the WFOE to the Delaware holding company as dividends. Certain payments from the VIEs to the WFOE pursuant to the VIE contractual arrangements are subject to Chinese taxes, including a 6% VAT and 25% enterprise income tax. Our Company’s Ability to Settle Amounts Owed under the VIE Contractual Arrangements Under the VIE contractual arrangements, the VIEs are obligated to make payments to our WFOE, in cash or in kind, at the WFOE’s request. We will be able to settle amounts owed under the VIE contractual arrangements through dividends paid by our WFOE to our Company. Such ability may be restricted or limited as follows: First, any payments from the VIEs to our WFOE are subject to Chinese taxes, including a 6% VAT and 25% enterprise income tax. Second, current Chinese regulations permit our WFOE to pay dividends to their shareholders only out of its registered capital amount, if any, as determined in accordance with Chinese accounting standards and regulations, and then only after meeting the statutory reserve equal to 50% of registered capital. In addition, if our WFOE incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to the Delaware holding company. Third, the Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from profits, if any. COVID-19 Our consolidated financial statements for the year ended December 31, 2021 were impacted by the effects of the COVID-19 pandemic, which has caused a broad shift towards remote working arrangements for many businesses worldwide and injected uncertainty and delay into decision-making processes for such businesses. Varying degrees of preventative measures are still in place in China and some other parts of the world, including travel restrictions, closures of non-essential businesses and other quarantine measures. The preventative measures have limited the operational capabilities of the VIEs, which could have a material adverse impact on our business and which have created significant uncertainties, such as the potential adverse effect of the pandemic on the economy, our vendors, our employees and customers and customer sentiment in general. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the duration and severity of the pandemic, the duration of any remaining preventative measures implemented by domestic and foreign governments, the impact on capital and financial markets and the related impact on the financial circumstances of our customers, all of which are highly uncertain and cannot be predicted. The pandemic-related situation continues to change rapidly, and additional impacts of which we are not currently aware may arise. We are closely monitoring worldwide developments and are continually assessing the potential impact on our business. Going Concern During the year ended December 31, 2021, and in each fiscal year since our inception, we have incurred operating losses which have resulted in an accumulated deficit of $333.0 million within stockholders’ equity as of December 31, 2021. Additionally, our operations have historically used more cash than they have provided. Net cash used in operating activities was $20.2 million during the year ended December 31, 2021. As of December 31, 2021, our cash balance was $14.2 million. Our history of recurring operating losses, working capital deficiencies and negative cash flows from operating activities give rise to, and management has concluded that there is, substantial doubt regarding our ability to continue as a going concern. Our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended December 31, 2021, has also expressed substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. We intend to fund our future operations and meet our financial obligations through revenue growth from our AI offerings, as well as through sales of our thermal-imaging products. We cannot, however, provide assurance that revenue, income and cash flows generated from our businesses will be sufficient to sustain our operations in the twelve months following the filing of this Form 10-K. As a result, we are actively evaluating strategic alternatives including debt and equity financings and potential sales of investment assets or operating businesses. Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions (in particular, as a result of the COVID-19 pandemic global supply chain disruptions, inflation and other cost increases, and the geopolitical conflict in Ukraine), will play primary roles in determining whether we can successfully obtain additional capital. We cannot be certain that we will be successful at raising additional capital. A variety of factors, many of which are outside of our control, affect our cash flow; those factors include the effects of the COVID-19 pandemic, regulatory issues, competition, financial markets and other general business conditions. Based on financial projections, we believe that we will be able to meet our ongoing requirements for at least the next 12 months with existing cash, cash equivalents and cash resources, and based on the probable success of one or more of the following plans: • develop and grow new product line(s) • monetize existing assets • obtain additional capital through debt and/or equity issuances. However, projections are inherently uncertain and the success of our plans is largely outside of our control. As a result, there is substantial doubt regarding our ability to continue as a going concern, and we may fully utilize our cash resources prior to March 31, 2023. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation We include all of our subsidiaries and the VIEs in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation. Use of Estimates We prepare our consolidated financial statements in conformity with GAAP. While preparing our financial statements, we make estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, share-based compensation, deferred income taxes, and inventory reserve, among other items. The impact of the COVID-19 pandemic continues to unfold. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. Cash Our cash consists of funds held in bank accounts. We maintain cash balances in United States dollars (“USD”) and British pounds (“GBP”), while the VIEs maintain cash balances in USD, Chinese Renminbi (“RMB”) and Hong Kong dollars (“HKD”). The following table, reported in USD, disaggregates our cash balances by currency denomination (in thousands): December 31, 2021 2020 Cash denominated in: USD $ 13,278 $ 563 RMB 259 283 GBP 644 — HKD 6 8 Total cash $ 14,187 $ 854 We maintain substantially all of our USD-denominated cash at a U.S. financial institution where the balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, however, our cash balances may exceed the FDIC-insured limit. As of December 31, 2021, we do not believe we have any significant concentrations of credit risk, although approximately $13.0 million of our USD-denominated cash balance exceeded the FDIC-insured limit. Cash held by our non-U.S. subsidiaries and the VIEs is subject to foreign currency fluctuations against the USD, although such risk is somewhat mitigated because we transfer U.S. funds to China to fund local operations. If, however, the USD is devalued significantly against the RMB, our cost to further develop our business in China could exceed original estimates. Marketable Securities Investment in marketable securities consists of marketable equity securities. We classify marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations. Marketable securities are stated at fair value with all realized and unrealized gains and losses recognized in our Statement of Operations. The realized and unrealized gains and losses on marketable securities are determined using the specific identification method and quoted prices in an active market. Leases We adopted Accounting Standards Codification Topic 842, Leases (“ASC 842”), as of January 1, 2019. When adopting ASC 842 we elected several practical expedients permitted under the transition guidance within ASC 842, which, among other things, allowed us to carry forward the historical lease classification and to avoid recording leases that had expired prior to the date of adoption. We also elected to combine the lease and non-lease components of our leases for office space (which represent the largest portion of our operating lease assets and liabilities) and not to record leases with initial terms of 12 months or less (short-term leases) on the balance sheet. We amortize the cost of short-term leases on a straight-line basis over the lease term. Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). When reporting the fair values of our financial instruments, we prioritize those fair value measurements into one of three levels based on the nature of the inputs, as follows: Level 1: Valuations based on quoted prices in active markets for identical assets and liabilities; Level 2: Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and observable market data for similar, but not identical instruments; and Level 3: Valuations based on unobservable inputs, which are based upon the best available information when external market data is limited or unavailable. The fair value hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. For some products or in certain market conditions, observable inputs may not be available. We believe the reported carrying amounts for cash, marketable securities, receivables, prepaids and other current assets, accounts payable, accrued expense and other current liabilities, and short-term debt approximate their fair values because of the short-term nature of these financial instruments. Foreign Currency Translation We report all currency amounts in USD. The VIEs, however, maintain their books and records in their functional currency, which is RMB. In general, when consolidating our subsidiaries or the VIEs with non-USD functional currencies, we translate the amounts of assets and liabilities into USD using the exchange rate on the balance sheet date, and the amounts of revenue and expense are translated at the average exchange rate prevailing during the period. The gains and losses resulting from translation of financial statement amounts into USD are recorded as a separate component of accumulated other comprehensive loss within stockholders’ deficit. We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted: 2021 2020 Exchange rates at December 31st: GBP:USD 1.351 — RMB:USD 0.157 0.153 HKD:USD 0.128 0.129 Average exchange rate during the twelve months ended December 31st: RMB:USD 0.155 0.143 Revenue Recognition AI-Based Products We and the VIEs generate revenue by developing AI-based products, including fully-integrated AI solutions which combine our proprietary technology with third-party hardware and software products to meet end-user specifications. Under one type of contract for our AI-based products, we provide a single, continuous service to clients who control the assets as we create them. Accordingly, we recognize the revenue over the period of time during which we provide the service. Under another type of contract, we have performance obligations to provide fully-integrated AI solutions to our customer and we recognize revenue at the point in time when each performance obligation is completed and delivered to, tested by and accepted by our customer. We recognize revenue when we transfer control of the promised goods or services to our customers, and we recognize an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. If there is uncertainty related to the timing of collections from our customer, which may be the case if our customer is not the ultimate end user of our goods, we consider this to be uncertainty of the customer’s ability and intention to pay us when consideration is due. Accordingly, we recognize revenue only when we have transferred control of the goods or services and collectability of consideration from the customer is probable. When customers pay us prior to when we satisfy our obligation to transfer control of promised goods or services, we record the amount that reflects the consideration to which we expect to be entitled as a contract liability until such time as we satisfy our performance obligation. For our contracts with customers, we generally extend short-term credit policies to our customers, typically up to one year for large-scale projects. We record the incremental costs of obtaining contracts as an expense when incurred. We and the VIEs offer extended warranties on our products for periods of one Other We generate revenue from other sources, such as from advertising and marketing services, e-commerce activity in which we sell goods to our customers, or media production which involves the production of video or Internet-based content for our customers. We recognize the revenue from these contracts at the point in time when we transfer control of the good sold to the customer or when we deliver the promised promotional materials or media content. Substantially all of our contracts with customers that generate Other revenue are completed within one year or less. Share-Based Compensation For grants of restricted stock or restricted stock units, we measure fair value using the closing price of our stock on the measurement date, while we use the Black-Scholes-Merton option pricing model (the “BSM Model”) to estimate the fair value of stock options and similar instruments awarded. The BSM Model requires the following inputs: • Expected volatility of our stock price. We analyze the historical volatility of our stock price utilizing daily stock price returns, and we also review the stock price volatility of certain peers. Using the information developed from such analysis and our judgment, we estimate how volatile our stock price will be over the period we expect the stock options will remain outstanding. • Risk-free interest rate. We estimate the risk-free interest rate using data from the Federal Reserve Treasury Constant Maturity Instruments H.15 Release (a table of rates downloaded from the Federal Reserve website) as of the valuation date for a security with a remaining term that approximates the period over which we expect the stock options will remain outstanding. • Stock price, exercise price and expected term. We use an estimate of the fair value of our common stock on the measurement date, the exercise price of the option, and the period over which we expect the stock options will remain outstanding. We do not currently issue dividends, but if we did so, then we would also include an estimated dividend rate as an input to the BSM model. Generally speaking, the BSM model tends to be most sensitive to changes in stock price, volatility or expected term. We measure compensation expense as of the grant date for granted equity-classified instruments and as of the settlement date for granted liability-classified instruments (meaning that we re-measure compensation expense at each balance sheet date until the settlement date occurs). Once we measure compensation expense, we recognize it over the requisite service period (generally the vesting period) of the grant, net of forfeitures as they occur. Accounts Receivable We and the VIEs regularly evaluate the collectability of trade receivable balances based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns. If we determine that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material events impacting its business, a specific reserve for bad debt will be recorded to reduce the related receivable to the amount expected to be recovered. Income Taxes We recognize deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) to account for the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets, using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled. Any effect on DTAs or DTLs resulting from a change in enacted tax rates is included in income during the period that includes the enactment date. We reduce the carrying amounts of DTAs by a valuation allowance if, based upon all available evidence (both positive and negative), we determine that it is more likely than not that such DTAs will not be realizable. Such assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, our forecasts of future profitability, tax planning strategies, the duration of statutory carryforward periods, and our experience with the utilization of operating loss and tax credit carryforwards before expiration. We apply a recognition threshold and measurement attribute related to uncertain tax positions taken or expected to be taken on our tax returns. We recognize a tax benefit for financial reporting of an uncertain income tax position when it has a greater than 50% likelihood of being sustained upon examination by the taxing authorities. We measure the tax benefit of an uncertain tax position based on the largest benefit that has a greater than 50% likelihood of being ultimately realized, including evaluation of settlements. Inventory We and the VIEs use the first-in first-out method to determine the cost of our inventory, then we report inventory at the lower of cost or net realizable value. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated sales forecasts. At December 31, 2021 and 2020, reserve for inventory was $1.0 million and $0.5 million, respectively. Advertising Expense Advertising expense is recorded during the period in which it is incurred. We did not incur a material amount of advertising expense during the year ended December 31, 2021, but we incurred $0.2 million during the year ended December 31, 2020. Research and Development Engineering cost is recorded as technology and development expense during the period in which it is incurred. Product Warranties We and the VIEs offer extended warranties on our products for periods of one and 2020 . Property, Equipment and Software We and the VIEs state property and equipment at cost and depreciate such assets using the straight-line method over the estimated useful lives of each asset category. For leasehold improvements, we determine amortization using the straight-line method over the shorter of the lease term or estimated useful life of the asset. We expense repairs and maintenance costs as incurred, while capitalizing betterments and capital improvements and depreciating such costs over the remaining useful life of the related asset. We capitalize qualifying costs of computer software that we incur during the application development stage, as well as the cost of upgrades and enhancements that result in additional functionality, and we amortize such costs using the straight-line method over a period of three years, the expected period of the benefit. Net Income (Loss) per Share We calculate basic net income (loss) per share using the weighted-average number of common stock shares outstanding during the period. For the calculation of diluted net income (loss) per share, we give effect to all the shares of common stock that were outstanding during the period plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation when their effect is anti-dilutive. Dilutive potential shares of common stock consist of incremental shares of common stock issuable upon exercise of stock options and warrants. For the years ended December 31, 2021 and 2020, there were no reconciling items related to the numerators of the net income (loss) per share calculations. The following table presents a reconciliation of the denominator of the basic net income (loss) per share calculation to that of the diluted net income (loss) per share calculation (in thousands): Year Ended December 31, 2021 2020 Weighted-average shares outstanding, basic 101,362 85,578 Incremental shares resulting from assumed exercises of in-the-money stock options 357 — Weighted-average shares outstanding, diluted 101,719 85,578 Securities which may have affected the calculation of diluted earnings per share for the years ended December 31, 2021 and 2020 if their effect had been dilutive include 14,354,708 and 9,942,341 outstanding stock options, respectively, and 10,114,408 and 40,000 outstanding stock warrants, respectively. Segments Existing GAAP, which establishes a management approach to segment reporting, defines operating segments as components of an entity about which separate, discrete financial information is available for evaluation by the chief operating decision maker. We have identified our Chief Executive Officer as our chief operating decision maker, who reviews operating results to make decisions about allocating resources and assessing performance based upon only one operating segment. Commitments and Contingencies We record a liability for a loss contingency when we determine that it is probable that we have incurred such liability and we can reasonably estimate the amount. Impairments Long-Lived Assets Other Than Indefinite-Lived Intangible Assets When events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, we evaluate long-lived assets for potential impairment, basing our testing method upon whether the assets are held for sale or held for use. For assets classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets held and used, we estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, we recognize an impairment loss for the difference between the carrying value of the asset and its fair value. Liabilities Related to Warrants Issued We recorded certain common stock warrants we issued at fair value and recognize the change in the fair value of such warrants as a gain or loss which we reported in the Other income (expense) section in our consolidated statement of operations. We estimated the fair value of the warrants using an option pricing model. Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06 (“ASU 2020-06”), Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. With regard to our financial reporting, ASU 2020-06 will be effective January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. We are currently evaluating what effect(s) the adoption of ASU 2020-06 may have on our consolidated financial statements, but we do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) . The ASU requires entities to use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments, including trade receivables, which may result in the earlier recognition of allowances for losses. With regard to our financial reporting, ASU 2016-13 will be effective beginning January 1, 2023, and early adoption is permitted. We do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. We have reviewed all accounting pronouncements recently issued by the FASB and the SEC. The authoritative pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the authoritative pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof. |
CONCENTRATION OF RISK
CONCENTRATION OF RISK | 12 Months Ended |
Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF RISK | NOTE 3. CONCENTRATIONS OF RISK Revenue and Accounts Receivable The disaggregation of revenue tables in Note 4 demonstrate the concentration in our revenue from certain products and the geographic concentration of our business. We also have a concentration in the volume of business we transacted with customers, as during the year ended December 31, 2021, three of our customers represented about 24%, 18% and 12%, respectively, of our revenue, while during year ended December 31, 2020, our two largest customers represented about 31% and 11%, respectively, of our revenue. At December 31, 2021, accounts receivable from three of our customers represented about 25%, 24% and 10%, respectively, of our gross accounts receivable, while at December 31, 2020, accounts receivable from our largest customer represented about 38% of our gross accounts receivable. Cost of Sales and Accounts Payable The various hardware we purchase to fulfill our contracts with customers is not especially unique in nature. Based on our analysis, we believe that should any disruption in our current supply chain occur, a sufficient number of alternative vendors is available to us, at reasonably comparable specifications and price, such that we would not experience a material negative impact on our ability to procure the hardware we need to operate our business. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 4. REVENUE We and the VIEs primarily sell AI-based products and services. In the U.S., that includes our Remark AI Thermal Kits and rPads, while the VIEs sell various customized products in China based upon computer vision and other technologies. We do not include disclosures related to remaining performance obligations because substantially all our contracts with customers have an original expected duration of one year or less or, with regard to our stand-ready obligations, the amounts involved are not material. Disaggregation of Revenue The following table presents a disaggregation of our revenue by category of products and services (in thousands): Year Ended December 31, 2021 2020 AI-based products and services, including $3.8 million from China Business Partner (See Note 17 ) $ 14,792 $ 9,597 Other 1,198 548 Revenue $ 15,990 $ 10,145 The following table presents a disaggregation of our revenue by country (in thousands): Year Ended December 31, 2021 2020 China $ 12,218 $ 7,901 United States 3,772 2,244 Revenue $ 15,990 $ 10,145 The VIEs generated substantially all of the revenue from China noted in the table above, though one of our subsidiaries generated amounts of revenue from China that were not material in each period. Significant Judgments When accounting for revenue we make certain judgments, such as whether we act as a principal or as an agent in transactions or whether our contracts with customers fall within the scope of current GAAP regarding revenue, that affect the determination of the amount and timing of our revenue from contracts with customers. Based on the current facts and circumstances related to our contracts with customers, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted in terms of their potential impact on the amount and timing of our revenue. Contract Assets and Contract Liabilities We do not currently generate material contract assets. During the year ended December 31, 2021, our contract liability changed only as a result of routine business activity. During the year ended December 31, 2021 and 2020, the amount of revenue we recognized that was included in the beginning balance of Contract liability was not material. During the year ended December 31, 2021 and 2020, we did not recognize revenue from performance obligations that were satisfied in previous periods. |
FAIR VALUE MEASUREMENTS OF CERT
FAIR VALUE MEASUREMENTS OF CERTAIN LIABILITIES | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS OF CERTAIN LIABILITIES | NOTE 5. FAIR VALUE MEASUREMENTS OF CERTAIN LIABILITIES Liabilities Related to Warrants to Purchase Common Stock At the end of each reporting period through June 30, 2021, we had been using an option pricing model to estimate and report the fair value of liabilities related to warrants to purchase an aggregate of 5,750,000 shares of our common stock, consisting of a warrant to purchase 40,000 of our common stock that we issued and warrants to purchase 5,710,000 shares of our common stock that we were obligated to issue as part of the consideration for our acquisition (the “CBG Acquisition”) of assets of China Branding Group Limited (“CBG”) in September 2016. On August 31, 2021 (the “CBG Settlement Effective Date”), we entered into a settlement agreement (the “CBG Settlement Agreement”) with CBG and its joint official liquidators to settle the parties’ claims against each other in the legal proceeding we filed arising from the CBG Acquisition (the “CBG Litigation”). See Note 14 for a description of the parties’ claims in the CBG Litigation. Pursuant to the terms of the CBG Settlement Agreement, in consideration for a settlement of the parties’ claims and a mutual release, we released to CBG the $375,000 held in escrow in connection with the CBG Acquisition and issued to CBG, as of the CBG Settlement Effective Date, warrants to purchase as many as 5,710,000 shares of our common stock at a per share exercise price of $6.00 (the “CBG Settlement Warrants”), which warrants are exercisable for a period of five years from the CBG Settlement Effective Date. Additionally, if the closing price of our common stock is $8.00 or greater for any five days (which may be non-consecutive) in any consecutive 30-day trading period, we have the right to cause the holder of the CBG Settlement Warrants to exercise, at our election, all or any portion of the CBG Settlement Warrants on a cashless basis at a deemed exercise price of $8.00 per share. We evaluated the terms of the CBG Settlement Warrants and determined that they should now be classified as equity. As a result, there is no longer a liability associated with any of our outstanding warrants. The following table presents the quantitative inputs, which we classify in Level 3 of the fair value hierarchy, used in estimating the fair value of the liability associated with the warrants issued in connection with the CBG Acquisition as of the date noted: December 31, 2020 Expected volatility 85.00 % Risk-free interest rate 0.18 % Expected remaining term (years) 2.73 When reclassifying the previously liability-classified warrants as equity on August 31, 2021, we used Level 3 inputs to our model consisting of an expected volatility of 85%, a risk-free interest rate of 0.77%, and an expected remaining term of five years. The following table presents the change in the liability balance associated with our liability-classified warrants (in thousands): Year Ended December 31, 2021 2020 Balance at beginning of period $ 1,725 $ 115 Expiration of warrants — (115) Increase (decrease) in fair value of liability (123) 1,725 Fair value of warrants reclassified to equity (1,602) — Balance at end of period $ — $ 1,725 |
TRADE ACCOUNTS RECEIVABLE
TRADE ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
TRADE ACCOUNTS RECEIVABLE | NOTE 6. TRADE ACCOUNTS RECEIVABLE December 31, 2021 2020 Gross accounts receivable balance $ 11,551 $ 5,988 Allowance for bad debt (1,284) (961) Accounts receivable, net $ 10,267 $ 5,027 Generally, it is not unusual for Chinese entities to pay their vendors on longer timelines than the timelines typically observed in U.S. commerce. Trade receivables related to the VIEs’ AI projects, including $2.7 million of trade receivables from projects related to work with our China Business Partner (see Note 17 for more information regarding our China Business Partner and related accounting), represent 99% of our gross trade receivables. |
INVESTMENT
INVESTMENT | 12 Months Ended |
Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
INVESTMENT | NOTE 7. INVESTMENT In 2009, we co-founded a U.S.-based venture, Sharecare, Inc. (“Legacy Sharecare”), to build a web-based platform that simplifies the search for health and wellness information. The other co-founders of Legacy Sharecare were Dr. Mehmet Oz, HARPO Productions, Discovery Communications, Jeff Arnold and Sony Pictures Television. At December 31, 2020, we reported our $1.0 million investment in Legacy Sharecare as an investment in unconsolidated affiliate. On July 1, 2021, Legacy Sharecare completed a business combination with Falcon Capital Acquisition Corp., a special purpose acquisition company, as a result of which the common stock of the surviving entity of such business combination (“New Sharecare”) became listed on the Nasdaq Stock Market LLC. In connection with the completion of such business combination, the shares of common stock of Legacy Sharecare that we held immediately prior to the business combination converted into approximately $2.3 million in cash and approximately 9.4 million shares of common stock of New Sharecare. We do not maintain a seat on the board of directors of New Sharecare. The cash received was recorded as a realized gain on the investment as shown in the table below, and the investment is revalued at fair value at the end of each reporting period using the closing sales price of the shares on the principal securities exchange on which such shares are then traded. As of December 31, 2021, the value of our investment in New Sharecare was $42.3 million based upon the closing stock price of New Sharecare, an input we classify in Level 1 of the fair value hierarchy, on such date. We recorded a gain on the investment during the year ended December 31, 2021 as follows: 2021 Realized gain $ 2,322 Unrealized gain 41,320 Total gain $ 43,642 |
PREPAID EXPENSE AND OTHER CURRE
PREPAID EXPENSE AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSE AND OTHER CURRENT ASSETS | NOTE 8. PREPAID EXPENSE AND OTHER CURRENT ASSETS The following table presents the components of prepaid expense and other current assets (in thousands): December 31, 2021 2020 Receivable from China Business Partner $ 3,980 $ — Other receivables 9 8 Prepaid expense 1,558 1,877 Deposits 221 50 Other current assets 595 108 Total $ 6,363 $ 2,043 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 9. PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands, except estimated lives): December 31, Estimated Life 2021 2020 Computers and equipment 3 1,133 1,097 Furniture and fixtures 3 42 42 Software 3 5,055 5,006 Leasehold improvements 3 196 174 Software development in progress 128 — Total property, equipment and software $ 6,554 $ 6,319 Less accumulated depreciation (6,197) (5,998) Total property, equipment and software, net $ 357 $ 321 For the year ended December 31, 2021 and 2020, depreciation (and amortization of software) expense was $0.2 million and $0.2 million, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
LEASES | NOTE 10. LEASES We and the VIEs lease office space under contracts we classify as operating leases. None of our leases are financing leases. The following table presents the detail of our lease expense, which is reported in General and administrative expense (in thousands): Year Ended December 31, 2021 2020 Operating lease expense $ 304 $ 640 Short-term lease expense 982 291 Lease expense $ 1,286 $ 931 We reported within operating cash flows for the year ended December 31, 2021 and 2020, $0.2 million and $0.6 million, respectively, of cash paid for amounts included in the measurement of operating lease liabilities. As of December 31, 2021, our operating leases had a weighted-average remaining lease term of approximately 12 months, and we used a weighted-average discount rate of approximately 13% to measure our operating lease liabilities. Maturity of Lease Liabilities The following table presents information regarding the maturities of undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented in our December 31, 2021 Consolidated Balance Sheet (in thousands): Operating lease liabilities maturing during the next: One year $ 201 Two years 25 Total undiscounted cash flows $ 226 Present value of cash flows $ 212 Lease liabilities on balance sheet: Short-term (included in accrued expenses $ 187 Long-term 25 Total lease liabilities $ 212 Termination of Lease and Related Landlord Actions Beginning approximately July 2019, we were not able to pay our obligations under the office lease for our former office located at 3960 Howard Hughes Parkway in Las Vegas, Nevada. On March 5, 2020, our former landlord, BRE/HC Las Vegas Property Holdings, L.L.C (the “Hughes Center Landlord”), exercised its right to terminate the lease as of such date as a result of the ongoing payment default. When we derecognized the right-of-use asset and the portion of the operating lease liability related to the original schedule of future amounts due to the Hughes Center Landlord in March 2020, we recognized a gain on lease termination of slightly more than $1.5 million. On April 9, 2020, the Hughes Center Landlord filed suit against us in Nevada to recover the approximately $1.1 million of rent owed through March 5, 2020, plus damages resulting from the early termination of the lease. As of December 31, 2019, we had accrued approximately $2.3 million for settlement of the legal action filed by the Hughes Center Landlord. During the first quarter of 2020, prior to the Hughes Center Landlord’s termination of the lease agreement, we accrued an additional $0.3 million, resulting in total liabilities related to this matter of $2.6 million. On August 3, 2020, we entered into a settlement agreement with the Hughes Center Landlord (the “Hughes Center Lease Settlement”), pursuant to which we paid only $0.6 million to the Hughes Center Landlord in full settlement of our obligations with respect to such office lease. On November 5, 2020, the Hughes Center Landlord filed a Notice of Voluntary Dismissal with Prejudice with the District Court of Clark County, Nevada dismissing their legal action against us. The slightly more than $2.0 million gain related to the Hughes Center Lease Settlement, in addition to the slightly more than $1.5 million gain on lease termination we recorded in March 2020, resulted in a total gain on lease termination of approximately $3.6 million. Significant Judgments When accounting for our leases, we make certain judgments, such as whether a contract contains a lease or what discount rate to use, that affect the determination of the amount of our lease assets and liabilities. Based on the current facts and circumstances related to our contracts, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11. INCOME TAX For the year ended December 31, 2021, and 2020, we did not have a tax provision or a tax benefit to report. The following table presents a reconciliation between the income tax benefit computed by applying the federal statutory rate and our actual income tax expense: Year Ended December 31, 2021 2020 Income tax benefit at federal statutory rate $ 5,771 $ (2,874) Change in deferred tax asset valuation allowance (5,241) 1,670 Tax impact of warrants (26) 338 Tax effects of: Statutory differences 327 1,014 R&D expense (210) (202) Foreign tax rates different than U.S. federal statutory rate 68 (96) Other permanent items (331) 155 Deferred adjustments 99 86 Other (466) (91) Income tax provision (benefit) as reported $ (9) $ — Our 2021 and 2020 effective tax rates were significantly impacted by maintaining a valuation allowance against net deferred tax asset in all jurisdictions, both domestic and foreign, as well as permanent book-tax adjustments in foreign jurisdictions and the fact that our earnings are generated in jurisdictions with rates that differ from the US federal statutory rate. The following table presents loss before income tax attributable to domestic and to foreign operations (in thousands): Year Ended December 31, 2021 2020 Domestic $ 28,036 $ (11,289) Foreign (555) (2,396) Loss before income taxes $ 27,481 $ (13,685) Deferred Tax Assets and Liabilities We assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing DTAs in each jurisdiction. The realization of DTAs is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We considered the scheduled reversal of existing deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. We evaluated both positive and negative evidence in determining the need for a valuation allowance. Additionally, we continue to assess the realizability of DTAs and we have concluded that in each jurisdiction, we have not met the “more likely than not” threshold. As of December 31, 2021, we continue to provide a valuation allowance against the DTAs that cannot be offset by existing deferred tax liabilities. In accordance with Accounting Standards Codification 740 (“ASC 740”), this assessment has taken into consideration the jurisdictions in which these DTAs reside. We intend to continue maintaining a full valuation allowance on these DTAs until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings in the US, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion or all of the valuation allowance in the U.S. federal jurisdiction will no longer be needed. Release of the valuation allowance would result in the recognition of certain DTAs and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve. The following table presents the components of our DTAs and DTLs (in thousands): December 31, 2021 2020 Deferred Tax Assets Net operating loss carryforwards $ 43,375 $ 41,061 Amortization of intangibles 1,979 2,167 Share-based compensation expense 7,423 6,876 Other 3,503 3,000 Gross deferred tax assets $ 56,280 $ 53,104 Valuation allowance (47,857) (53,117) Deferred tax assets, net of valuation allowance $ 8,423 $ (13) Deferred Tax Liabilities Deferred gain (8,444) — Depreciation of fixed assets 21 13 Gross deferred tax liabilities (8,423) 13 Net deferred tax liability $ — $ — Net operating losses available at December 31, 2021 to offset future taxable income in the U.S. federal, U.S. state, Hong Kong and China jurisdictions are $181.1 million, $32.9 million, $1.7 million and $11.2 million, respectively. The statutory income tax rates in Hong Kong and China are 16.5% and 25%, respectively. The U.S. net operating losses generated prior to 2018 expire between 2021 and 2038. The US net operating losses generated in 2018 to 2021 have no expiration date and carry forward indefinitely. The net operating losses generated in Hong Kong have no expiration date and carry forward indefinitely, while the net operating losses generated in China have a five-year carryforward period. We file income tax returns in various domestic and foreign tax jurisdictions with varying statutes of limitation. We are generally not subject to examinations in the U.S. for periods prior to 2018. However, as we utilize our net operating losses prior periods can be subject to examination. In significant foreign jurisdictions, we are generally not subject to examination for periods prior to 2018. Under the Internal Revenue Code of 1986, as amended (the “Code”), if an ownership change (as defined for income tax purposes) occurs, §382 of the Code imposes an annual limitation on the amount of a corporation’s taxable income that can be offset by net operating loss carryforwards. During our 2014 tax year, we analyzed recent acquisitions and ownership changes and determined that certain of such transactions qualified as an ownership change under §382. As a result, we will likely not be able to use a portion of our net operating loss carryforwards. For the years ended December 31, 2021 and 2020, we have no unrecognized tax benefits, and we have not taken any tax positions which we expect might significantly change unrecognized tax benefits during the 12 months following December 31, 2021. In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 and American Rescue Plan Act, which was enacted on March 11, 2021 in the U.S., includes measures to assist |
ACCRUED EXPENSE AND OTHER CURRE
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES | NOTE 12. ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES The following table presents the components of Accrued expense and other current liabilities (in thousands): December 31, 2021 2020 Accrued compensation and benefit-related expense $ 821 $ 1,151 Accrued interest 385 485 Other accrued expense 1,673 721 Other payables 2,324 3,048 Operating lease liability - current 187 382 China Cash Bonuses 439 679 Other current liabilities 134 194 Total $ 5,963 $ 6,660 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 13. DEBT Short-Term Debt The following table presents our notes payable (in thousands) as of: December 31, 2021 2020 Note payable to private lender $ — $ 1,500 Mudrick Loans 30,000 — Principal balance of notes payable 30,000 1,500 Unamortized discount and debt issuance cost (2,189) — Notes payable, net of unamortized discount and debt issuance cost $ 27,811 $ 1,500 On April 12, 2017, we issued a short-term note payable in the principal amount of $3.0 million to a private lender in exchange for cash in the same amount. The agreement, which did not have a stated interest rate, required us to repay the note plus a fee of $115 thousand on the maturity date of June 30, 2017. The note was accruing interest at $500 per day on the unpaid principal until we repaid the note in full. As of December 31, 2020, the remaining principal balance of $1.5 million was past due and accrued interest thereon was $0.4 million. On February 10, 2021, we entered into a senior secured promissory note with Jefferson Remark Funding LLC (“JRF”), pursuant to which JRF extended credit to us consisting of a one-year term loan in the principal amount of $5.0 million. The note bore interest at 15% per annum and was due and payable in full on February 10, 2022. During the year ended December 31, 2021, we incurred $0.2 million original issue discount on the promissory note, as well as debt issuance cost of $0.3 million. On December 3, 2021, we entered into senior secured loan agreements (the “Mudrick Loan Agreements”) with certain of our subsidiaries as guarantors (the “Guarantors”) and certain institutional lenders affiliated with Mudrick Capital Management, LP (collectively “Mudrick”), pursuant to which Mudrick extended credit to us consisting of term loans in the aggregate principal amount of $30.0 million (the “Mudrick Loans”). The Mudrick Loans bear interest at 16.5% per annum, which shall be payable on the last business day of each month commencing on December 31, 2021. All amounts outstanding under the Mudrick Loans, including all accrued and unpaid interest, will be due and payable in full on July 31, 2022. To secure the payment and performance of the obligations under the Mudrick Loan Agreements, we, together with the Guarantors, have granted to TMI Trust Company, as the collateral agent for the benefit of Mudrick, a first priority lien on, and security interest in, all assets of Remark and the Guarantors, subject to certain customary exceptions. The Mudrick Loan Agreements contain representations, warranties, events of default, indemnifications and other provisions customary for financings of this type. The occurrence of any event of default under the Mudrick Loan Agreements may result in the principal amount outstanding and unpaid interest thereon becoming immediately due and payable. In connection with our entry into the Mudrick Loan Agreements, we paid to Mudrick an upfront fee equal to 5.0% of the amount of the Mudrick Loans, which was netted against the drawdown of the Mudrick Loans and recorded as a discount of $1.5 million, and recorded debt issuance cost totaling $1.1 million. We are amortizing the discount on the Mudrick Loans and the debt issuance cost over the life of the Mudrick Loans and, during the year ended December 31, 2021, we amortized $0.4 million of such discount and debt issuance cost. On December 6, 2021, we repaid in full the remaining outstanding principal amount of $1.5 million, plus accrued interest of $0.6 million on the note payable we entered into on April 12, 2017, and we also repaid in full the outstanding principal amount of $5.0 million, plus accrued interest of $0.6 million on the note payable we entered into with JRF. Long-Term Debt On April 15, 2020, we entered into a loan agreement (the “PPP Loan”) with our bank under the U.S. Small Business Administration’s Paycheck Protection Program. Under the PPP Loan, we borrowed $0.4 million with a stated interest rate of one percent for a term of two years from the initial disbursement date of April 15, 2020. On July 23, 2021, the lender of our PPP Loan notified us that the U.S. Small Business Administration had forgiven our $0.4 million PPP Loan, plus a de minimis amount of accrued interest thereon, effective as of July 21, 2021. On December 30, 2020, we executed a promissory note with a private lender (the “Private Lender Loan”) under which we borrowed $1.0 million. The Private Lender Loan bore interest at 10% per annum. Effective August 5, 2021, we entered into an amendment (the “Loan Amendment”) to the Private Lender Loan. The Loan Amendment provided that effective as of August 5, 2021 (the “Conversion Date”), the outstanding principal amount of the Private Lender Loan plus all accrued but unpaid interest of approximately $0.1 million thereon through the Conversion Date was automatically converted into shares of our common stock at a conversion price of $1.21 per share, resulting in the issuance of 876,493 shares of our common stock with a fair value of $1.1 million and the recording of less than $0.1 million of additional interest expense. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14. COMMITMENTS AND CONTINGENCIES At December 31, 2021, we had no material commitments outside the normal course of business. Contingencies As of December 31, 2021, we were neither a defendant in any material pending legal proceeding nor are we aware of any material threatened claims against us and, therefore, we have not accrued any contingent liabilities. CBG Litigation On February 21, 2018, we initiated a legal proceeding (the “CBG Litigation”) against China Branding Group Limited (“CBG”), Adam Roseman, and CBG’s Joint Official Liquidators (the “JOLs”) arising from the CBG Acquisition. The CBG Litigation was filed in the United States District Court for the District of Nevada and is captioned as Remark Holdings, Inc., et al. v. China Branding Group, Limited (In Official Liquidation), et al. , Case No. 2:18-cv-00322. In the CBG Litigation, we sought a declaration from the court that we are entitled to rescission of the purchase agreement relating to the CBG Acquisition and all transactions related to the CBG Acquisition, a declaration that such purchase agreement and the transactions consummated pursuant thereto be rescinded and void ab initio, a declaration that we are not required to deliver the remaining CBG Acquisition Warrants allowing for the purchase of 5,710,000 shares of common stock at a per-share exercise price of $10.00, an order directing release to us of any consideration held in escrow in connection with the CBG Acquisition, and disgorgement of all consideration paid by us in connection with the CBG Acquisition. We alleged that the defendants fraudulently mispresented and concealed material information regarding the companies we acquired in the CBG Acquisition. We entered into a settlement agreement with Mr. Roseman to settle all claims against him, and we dismissed those claims on May 13, 2019. We entered into a Stipulation for Settlement dated January 15, 2019 with CBG and the JOLs, which sets forth the binding terms of their settlement agreement (the “Stipulation for Settlement”). Pursuant to the Stipulation for Settlement, we will issue fully-transferable warrants on a non-diluted basis allowing for the purchase of 5,710,000 shares of our common stock at a per-share exercise price of $6.00, which warrants are exercisable for a period of 5 years from the date of the Stipulation for Settlement, and which we have the right to cause the warrant holders to exercise if the closing price of our common stock is $8.00 or greater on any 5 non-consecutive days in any consecutive 30-day trading window. The parties to the Stipulation for Settlement also agreed to negotiate anti-dilution provisions for the warrants. In exchange for the foregoing consideration, the parties to the Stipulation for Settlement agreed to release their claims against each other and enter into a written definitive settlement agreement. After entering into the Stipulation for Settlement, the JOLs demanded the warrants also include an exchange right. We rejected this request and filed a motion to enforce the Stipulation for Settlement on March 12, 2019. The Nevada court issued a report and recommendation on August 2, 2019, which was affirmed on September 24, 2019, requiring the JOLs to submit the written definitive settlement agreement (without an exchange right) to the Grand Court of the Cayman Islands overseeing CBG’s liquidation for approval. An application for sanction to enter the settlement agreement was filed with the Grand Court on December 3, 2019. One month later, on or about January 2, 2020, the Grand Court approved the application, authorizing CBG and the JOLs to enter into the settlement. On August 31, 2021, we entered into the settlement agreement with CBG and the JOLs that is described in more detail in Note 5 . Registration Rights Agreement As described in more detail in Note 15 , on September 27, 2021, we entered into a securities purchase agreement (the “Armistice Purchase Agreement”) with Armistice Capital Master Fund Ltd. (“Armistice Capital”) pursuant to which we issued shares of our common stock together with warrants to purchase our common stock, subject to certain customary anti-dilution adjustments (the “Armistice Warrants”). In connection with our entry into the Armistice Purchase Agreement, we also entered into a registration rights agreement with Armistice Capital, pursuant to which we are obligated to file one or more registration statements, as necessary, to register under the Securities Act of 1933, as amended, the resale of the shares we issued to Armistice Capital and the shares underlying the Armistice Warrants (collectively, the “Armistice Registrable Securities”) and to obtain effectiveness of such registration statement no later than 90 days following September 27, 2021. While we have filed a registration statement to register the resale of the Armistice Registrable Securities (the “Armistice Resale Registration Statement”), we are currently in a comment letter process with the SEC staff with respect to such registration statement and have not been able to achieve effectiveness of the Armistice Resale Registration Statement. As a result, we have accrued $0.6 million, representing our best estimate of the liquidated damages we will be required to pay until the SEC declares the Armistice Resale Registration Statement effective or until our registration obligations in the Armistice Registration Rights Agreement terminate. The Armistice Registration Rights Agreement caps such liquidated damages at $1.0 million. |
STOCKHOLDERS' EQUITY, SHARE-BAS
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE | NOTE 15. STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE Equity Issuances On March 3, 2020, we entered into a common stock purchase agreement (“the 2020 Aspire Purchase Agreement”) with Aspire Capital Fund, LLC (“Aspire Capital”) which provided that, upon the terms and subject to the conditions and limitations set forth therein, we had the right to direct Aspire Capital to purchase as much as an aggregate of $30.0 million of shares of our common stock over the 30-month term of the 2020 Aspire Purchase Agreement. The 2020 Aspire Purchase Agreement replaced a prior common stock purchase agreement we had entered into with Aspire Capital in 2019 (“the 2019 Aspire Purchase Agreement”), which terminated under the terms of the 2020 Aspire Purchase Agreement. In consideration for entering into the 2020 Aspire Purchase Agreement, we issued to Aspire Capital 2,374,545 shares of our common stock. As of December 31, 2020, we had issued to Aspire Capital a total of 44,227,890 shares of our common stock under the 2020 Aspire Purchase Agreement. During the year ended December 31, 2020, we issued a total of 48,238,893 shares of our common stock to Aspire Capital under the 2019 Aspire Purchase Agreement and the 2020 Aspire Purchase Agreement in exchange for in exchange for $32.0 million plus Aspire Capital’s commitment to participate in the 2020 Aspire Purchase Agreement. On September 29, 2021, we issued and sold to Armistice Capital 4,237,290 shares of our common stock at a purchase price of $1.18 per share together with the Armistice Warrants to purchase as many as 4,237,290 shares of our common stock at an exercise price of $1.35 per share, subject to certain customary anti-dilution adjustments, pursuant to the terms of the Armistice Purchase Agreement. We received net proceeds of $4.6 million from such sale. Concurrently with the entry into the Purchase Agreement, we also entered into a financial advisor agreement (the “Financial Advisor Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”), pursuant to which we agreed to pay A.G.P. a cash fee of approximately $0.4 million and to reimburse A.G.P. for certain legal and escrow expenses. In addition, pursuant to the terms of the Financial Advisor Agreement, on September 29, 2021, we issued to A.G.P. and its designees warrants (the “Financial Advisor Warrants” and together with the Armistice Warrants, the “Private Placement Warrants”) to purchase as many as an aggregate of 127,118 shares of our common stock at an exercise price of $1.35 per share, subject to certain customary anti-dilution adjustments. Based on the terms of the Private Placement Warrants, we recorded such warrants as equity instruments. Warrants The following table summarizes information related to our equity-classified stock warrant issuances as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 40,000 $ 10.00 2.8 $ — Granted 1 10,074,408 3.99 Exercised — — Forfeited, cancelled or expired — — Outstanding at December 31, 2021 10,114,408 $ 4.01 4.7 $ — 1 Includes the 5.7 million warrants to purchase our common stock that we issued to CBG (see N ote 5 ). Share-Based Compensation We are authorized to issue equity-based awards under our 2014 Incentive Plan and our 2017 Incentive Plan, each of which our stockholders have approved. We also award cash bonuses (“China Cash Bonuses”) to our employees in China, which grants are not subject to a formal incentive plan and which can only be settled in cash. We grant such awards to attract, retain and motivate eligible officers, directors, employees and consultants. Under each of the plans, we have granted shares of restricted stock and options to purchase common stock to our officers and employees with exercise prices equal to or greater than the fair value of the underlying shares on the grant date. Stock options and China Cash Bonuses generally expire 10 years from the grant date. All forms of equity awards and China Cash Bonuses vest upon the passage of time, the attainment of performance criteria, or both. When participants exercise stock options, we issue any shares of our common stock resulting from such exercise from new authorized and unallocated shares available at the time of exercise. We estimate the fair value of our stock option awards and China Cash Bonuses using the BSM Model. During the year ended December 31, 2021 (we did not grant any stock options during the year ended December 31, 2020), we applied the following weighted-average inputs, which we classify in Level 3 of the fair value hierarchy, to the BSM Model for our stock option awards: Expected term in years 6.0 Expected volatility 85 % Expected dividends — % Risk-free interest rate 0.40 % During the years noted in the table, we applied the following weighted-average inputs, which we classify in Level 3 of the fair value hierarchy, to the BSM Model for our China Cash Bonuses: December 31, 2021 2020 Expected remaining term in years 4.71 4.99 Expected volatility 110.14 % 85.00 % Expected dividends — % — % Risk-free interest rate 1.06 % 0.44 % We estimated the expected term based upon historical data. The risk-free interest rate is based on the U.S. Treasury yield curve appropriate for the expected term on the date of grant, and we estimate the expected volatility primarily using the historical volatility of our common stock. Actual compensation, if any, ultimately realized may differ significantly from the amount estimated using an option-pricing model. The following table summarizes activity under our equity incentive plans related to equity-classified stock option grants as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2019 10,359,079 $ 4.20 Granted — — Exercised (150,989) 0.87 Forfeited, cancelled or expired (265,749) 2.77 Outstanding at December 31, 2020 9,942,341 $ 4.29 5.7 $ 709 Granted 5,463,500 1.37 Exercised (547,945) 1.97 Forfeited, cancelled or expired (18,876) 1.55 Outstanding at December 31, 2021 14,839,020 $ 3.30 6.1 $ 159 Exercisable at December 31, 2020 9,781,466 4.35 5.7 $ 509 Exercisable at December 31, 2021 12,776,520 3.62 5.7 $ 957 The following table summarizes the status of non-vested stock options as of and for the dates and periods noted: Shares Weighted-Average Non-vested at December 31, 2019 610,187 $ 241 Exercised (399,188) 168 Forfeited, cancelled or expired (50,124) 53 Non-vested at December 31, 2020 160,875 68 Granted 5,463,500 4,972 Exercised (3,547,875) 3,512 Forfeited, cancelled or expired (14,000) 17 Non-vested at December 31, 2021 2,062,500 $ 2,063 We received proceeds from stock option exercises during the years ended December 31, 2021 and 2020 totaling approximately $1.1 million and $0.1 million, respectively, while the total intrinsic value on such stock option exercises was $1.0 million and $0.1 million, respectively. The following table summarizes activity related to our liability-classified China Cash Bonuses as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2019 1,098,750 $ 5.20 Granted 300,000 1.37 Forfeited, cancelled or expired (343,750) 5.52 Outstanding at December 31, 2020 1,055,000 $ 4.01 5.7 $ 709 Forfeited, cancelled or expired (19,000) 6.31 Outstanding at December 31, 2021 1,036,000 $ 3.97 6.1 $ 159 Exercisable at December 31, 2020 775,000 4.97 5.3 $ 51 Exercisable at December 31, 2021 886,000 4.41 4.9 $ — The following table presents the change in the liability associated with our China Cash Bonuses included in Accrued expense and other current liabilities (in thousands): Year Ended December 31, 2021 2020 Balance at beginning of period $ 679 $ 43 Share-based compensation expense related to China Cash Bonuses (240) 636 Balance at end of period $ 439 $ 679 On July 27, 2020, the compensation committee of our board of directors approved grants to employees, directors and other service providers, excluding our CEO, of options to purchase approximately 5.4 million shares of our common stock. The option agreements governing the grants contain a stipulation that, regardless of vesting, such options do not become exercisable unless and until stockholders approve an amendment to our Amended and Restated Certificate of Incorporation to increase in the number of authorized shares of our common stock in an amount sufficient to allow for the exercise of the options and we have filed a corresponding Certificate of Amendment to our Amended and Restated Certificate of Incorporation reflecting such increase in the number of authorized shares of our common stock. On July 8, 2021, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of our common stock to 175,000,000, and we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation (the “Charter Amendment”) with the Secretary of State of the State of Delaware on July 9, 2021 to reflect this amendment, which became effective immediately upon filing. As a result of the increase in the number of authorized shares of our common stock, we determined that July 8, 2021 was the grant date for accounting purposes of the stock options we originally issued on July 27, 2020. The grant date fair value of the options granted on July 27, 2020 was approximately $6.3 million. To estimate the fair value of the options with an accounting grant date of July 8, 2021, we used the Black-Scholes-Merton option pricing model with an expected volatility of 85%, a risk-free interest rate of 0.34%, and expected term of six years and no expected dividends. The following table presents a breakdown of share-based compensation cost included in operating expense (in thousands): Year Ended December 31, 2021 2020 Stock options $ 4,300 $ 160 China Cash Bonuses (240) 637 Total $ 4,060 $ 797 We record share-based compensation expense in the books of the subsidiary that incurs the expense, while for equity-classified stock options we record the change in additional paid-in capital on the corporate entity because the corporate entity’s equity underlies such stock options. The following table presents information regarding unrecognized share-based compensation cost associated with stock options and China Cash Bonuses: December 31, 2021 Unrecognized share-based compensation cost for non-vested awards (in thousands): Stock options 2,062 China Cash Bonuses 103 Weighted-average years over which unrecognized share-based compensation expense will be recognized: Stock options 1.1 China Cash Bonuses 1.1 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 16. RELATED PARTY TRANSACTIONS On July 27, 2020, we collected approximately $0.5 million of receivables from related parties. The receivables represented cash advances in excess of expense reimbursements to senior management. The cash received from these receivables was subsequently injected as additional capital into the VIEs in China. |
CHINA BUSINESS PARTNER
CHINA BUSINESS PARTNER | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
CHINA BUSINESS PARTNER | NOTE 17. CHINA BUSINESS PARTNER We and the VIEs interact with an unrelated entity (the “China Business Partner”) in more than one capacity. Firstly, since 2020, one of the VIEs has been working with the China Business Partner to earn revenue by obtaining business from some of the largest companies in China. Secondly, our artificial intelligence business in the U.S. has, to date, purchased substantially all of its inventory from a subsidiary of the China Business Partner which manufactures certain equipment to our specifications; during the year ended December 31, 2021, such purchases totaled approximately $1.3 million. In addition, a member of our senior leadership team maintains a role in the senior management structure of the China Business Partner. During the year ended December 31, 2020, one of the VIEs advanced $1.5 million to the China Business Partner pursuant to an agreement between the two entities. Under the executed agreement, the VIE had an obligation to advance as much as an aggregate amount of $5.1 million over the loan term of five years, and the VIE could elect to convert amounts due to it under the agreement into equity of the China Business Partner upon any equity financing the China Business Partner undertook during the term of the agreement. The business purpose for the advances was to allow the China Business Partner to purchase and modify hardware to integrate with our software and market such integrated product to potential customers, including some of the largest companies in China. The VIEs did not recognize any revenue during 2020 from the relationship with the China Business Partner. During the year ended December 31, 2021, the same VIE advanced another $2.4 million to the China Business Partner pursuant to the agreement entered into in 2020. We initially determined that such advances by the VIE were effectively marketing costs because realizability of the advanced amounts was uncertain given the lack of a formalized business relationship with the China Business Partner and the nature of the use of funds. As a result, the VIE initially recorded the advances to our China Business Partner in Sales and marketing expense. As of December 31, 2021, as a result of the China Business Partner’s repayment of the amounts we advanced to it (see Note 19 ), the VIE recorded the $3.9 million repayment received subsequent to December 31, 2021 in Other receivables, with $2.4 million of the repayment reducing sales and marketing expense for the 2021 advances and $1.5 million of the repayment shown as a recovery of marketing expense initially incurred during 2020 related to that year’s advances. Also, for the year ended December 31, 2021, the VIEs recognized approximately $3.8 million of revenue from the relationship with the China Business Partner. |
CONSOLIDATING FINANCIAL SCHEDUL
CONSOLIDATING FINANCIAL SCHEDULES | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CONSOLIDATING FINANCIAL SCHEDULES | NOTE 18. CONSOLIDATING FINANCIAL SCHEDULES Please see Note 1 for information regarding our corporate structure and our relationship to the VIEs. Consolidating Balance Sheets (Unaudited) December 31, 2021 ($ in thousands) Corporate & Non-VIE Entities VIEs Eliminating Entries Consolidated Total Assets Cash $ 13,947 $ 240 $ — $ 14,187 Trade accounts receivable, net 33 10,234 — 10,267 Inventory, net 1,288 58 — 1,346 Investment in marketable securities 42,349 — — 42,349 Prepaid expense and other current assets 1,838 4,525 — 6,363 Total current assets 59,455 15,057 — 74,512 Property and equipment, net 357 — — 357 Operating lease assets 113 81 — 194 Investment in VIEs 7,182 — (7,182) — Investment in unconsolidated affiliate — — — — Other long-term assets 416 24 — 440 Total assets $ 67,523 $ 15,162 $ (7,182) $ 75,503 Liabilities Accounts payable $ 3,619 $ 6,475 $ — $ 10,094 Accrued expense and other current liabilities 3,380 2,583 — 5,963 Contract liability 411 165 — 576 Notes payable, net of unamortized discount and debt issuance cost 27,811 — — 27,811 Total current liabilities 35,221 9,223 — 44,444 Operating lease liabilities, long-term 25 — — 25 Total liabilities 35,246 9,223 — 44,469 Stockholders’ Equity (Deficit) Preferred stock — — — — Common stock 105 163 (163) 105 Additional paid-in-capital 364,239 28,310 (28,310) 364,239 Accumulated other comprehensive income 973 (1,268) 25 (270) Accumulated deficit (333,040) (21,266) 21,266 (333,040) Total stockholders’ equity (deficit) 32,277 5,939 (7,182) 31,034 Total liabilities and stockholders’ equity (deficit) $ 67,523 $ 15,162 $ (7,182) $ 75,503 Consolidating Statement of Operations (Unaudited) Year Ended December 31, 2021 ($ in thousands) Corporate & Non-VIE Entities VIEs Eliminating Entries Consolidated Total Revenue $ 4,040 $ 11,950 $ — $ 15,990 Cost and expense Cost of revenue (excluding depreciation and amortization) 2,185 9,270 — 11,455 Sales and marketing 690 281 — 971 Recovery of marketing expense — (1,530) (1,530) Technology and development 2,918 1,774 — 4,692 General and administrative 13,323 797 — 14,120 Depreciation and amortization 143 48 — 191 Total cost and expense 19,259 10,640 — 29,899 Operating loss (15,219) 1,310 — (13,909) Other income (expense) Interest expense (2,298) (10) — (2,308) Other income (expense), net (598) 6 — (592) Change in fair value of warrant liability 123 — — 123 Gain on investment revaluation 43,642 — — 43,642 Gain on debt extinguishment 425 — — 425 Gain on lease termination — — — — Other gain (loss), net 90 10 — 100 Share in income (loss) of VIEs 1,307 — (1,307) — Total other income, net 42,691 6 (1,307) 41,390 Income (loss) from operations $ 27,472 $ 1,316 $ (1,307) $ 27,481 Provision for income taxes — (9) — (9) Net income (loss) $ 27,472 $ 1,307 $ (1,307) $ 27,472 Consolidating Statement of Cash Flows (Unaudited) Year Ended December 31, 2021 ($ in thousands) Corporate & Non-VIE Entities VIEs Eliminating Entries Consolidated Total Cash flows from operating activities: Net income (loss) $ 27,472 $ 1,307 $ (1,307) $ 27,472 Adjustments to reconcile net loss to net cash used in operating activities: Change in fair value of warrant liability (123) — — (123) Depreciation, amortization and impairments 143 48 — 191 Share-based compensation 4,060 — — 4,060 Amortization of debt issuance costs and discount 880 — — 880 Gain on investment revaluation (43,642) — — (43,642) Gain on debt extinguishment (425) — — (425) Share in net loss (income) of VIEs (1,307) — 1,307 — Financing cost of converting note payable to common stock 44 — — 44 Provision for doubtful accounts — 297 — 297 Other 314 (284) — 30 Changes in operating assets and liabilities: Accounts receivable 144 (5,877) — (5,733) Inventory (527) 54 — (473) Prepaid expenses and other assets 140 (4,260) — (4,120) Operating lease assets 98 195 — 293 Accounts payable, accrued expense and other liabilities (865) 1,832 — 967 Contract liability 256 21 — 277 Operating lease liabilities (90) (79) — (169) Net cash used in operating activities $ (13,428) $ (6,746) $ — $ (20,174) Cash flows from investing activities: Proceeds from investment 2,322 — — 2,322 Purchases of property, equipment and software (223) — — (223) Other cash outflows from VIEs, net (6,710) — 6,710 — Net cash provided by (used in) investing activities (4,611) — 6,710 2,099 Cash flows from financing activities: Proceeds from issuance of common stock, net 5,692 — — 5,692 Proceeds from debt issuance 32,216 — — 32,216 Repayments of debt (6,500) — — (6,500) Other cash inflows from non-VIEs, net — 6,710 (6,710) — Net cash provided by financing activities 31,408 6,710 (6,710) 31,408 Net change in cash 13,369 (36) — 13,333 Cash: Beginning of period 578 276 — 854 End of period $ 13,947 $ 240 $ — $ 14,187 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 19. SUBSEQUENT EVENTS On January 4, 2022, we repaid $3.7 million of principal, plus $0.4 million of accrued interest, on the Mudrick Loans. On January 25, 2022, our China Business Partner repaid the entire $3.9 million that had been advanced by one of the VIEs pursuant to the agreement such VIE had executed with the China Business Partner in 2020. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation We include all of our subsidiaries and the VIEs in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation. |
Use of Estimates | Use of Estimates We prepare our consolidated financial statements in conformity with GAAP. While preparing our financial statements, we make estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, share-based compensation, deferred income taxes, and inventory reserve, among other items. The impact of the COVID-19 pandemic continues to unfold. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. |
Cash | Cash Our cash consists of funds held in bank accounts. |
Marketable Securities | Marketable SecuritiesInvestment in marketable securities consists of marketable equity securities. We classify marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations. Marketable securities are stated at fair value with all realized and unrealized gains and losses recognized in our Statement of Operations. The realized and unrealized gains and losses on marketable securities are determined using the specific identification method and quoted prices in an active market |
Leases | Leases We adopted Accounting Standards Codification Topic 842, Leases (“ASC 842”), as of January 1, 2019. When adopting ASC 842 we elected several practical expedients permitted under the transition guidance within ASC 842, which, among other things, allowed us to carry forward the historical lease classification and to avoid recording leases that had expired prior to the date of adoption. We also elected to combine the lease and non-lease components of our leases for office space (which represent the largest portion of our operating lease assets and liabilities) and not to record leases with initial terms of 12 months or less (short-term leases) on the balance sheet. We amortize the cost of short-term leases on a straight-line basis over the lease term. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). When reporting the fair values of our financial instruments, we prioritize those fair value measurements into one of three levels based on the nature of the inputs, as follows: Level 1: Valuations based on quoted prices in active markets for identical assets and liabilities; Level 2: Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and observable market data for similar, but not identical instruments; and Level 3: Valuations based on unobservable inputs, which are based upon the best available information when external market data is limited or unavailable. The fair value hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. For some products or in certain market conditions, observable inputs may not be available. We believe the reported carrying amounts for cash, marketable securities, receivables, prepaids and other current assets, accounts payable, accrued expense and other current liabilities, and short-term debt approximate their fair values because of the short-term nature of these financial instruments. |
Foreign Currency Translation | Foreign Currency Translation We report all currency amounts in USD. The VIEs, however, maintain their books and records in their functional currency, which is RMB. In general, when consolidating our subsidiaries or the VIEs with non-USD functional currencies, we translate the amounts of assets and liabilities into USD using the exchange rate on the balance sheet date, and the amounts of revenue and expense are translated at the average exchange rate prevailing during the period. The gains and losses resulting from translation of financial statement amounts into USD are recorded as a separate component of accumulated other comprehensive loss within stockholders’ deficit. |
Revenue Recognition | Revenue Recognition AI-Based Products We and the VIEs generate revenue by developing AI-based products, including fully-integrated AI solutions which combine our proprietary technology with third-party hardware and software products to meet end-user specifications. Under one type of contract for our AI-based products, we provide a single, continuous service to clients who control the assets as we create them. Accordingly, we recognize the revenue over the period of time during which we provide the service. Under another type of contract, we have performance obligations to provide fully-integrated AI solutions to our customer and we recognize revenue at the point in time when each performance obligation is completed and delivered to, tested by and accepted by our customer. We recognize revenue when we transfer control of the promised goods or services to our customers, and we recognize an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. If there is uncertainty related to the timing of collections from our customer, which may be the case if our customer is not the ultimate end user of our goods, we consider this to be uncertainty of the customer’s ability and intention to pay us when consideration is due. Accordingly, we recognize revenue only when we have transferred control of the goods or services and collectability of consideration from the customer is probable. When customers pay us prior to when we satisfy our obligation to transfer control of promised goods or services, we record the amount that reflects the consideration to which we expect to be entitled as a contract liability until such time as we satisfy our performance obligation. For our contracts with customers, we generally extend short-term credit policies to our customers, typically up to one year for large-scale projects. We record the incremental costs of obtaining contracts as an expense when incurred. We and the VIEs offer extended warranties on our products for periods of one Other We generate revenue from other sources, such as from advertising and marketing services, e-commerce activity in which we sell goods to our customers, or media production which involves the production of video or Internet-based content for our customers. We recognize the revenue from these contracts at the point in time when we transfer control of the good sold to the customer or when we deliver the promised promotional materials or media content. Substantially all of our contracts with customers that generate Other revenue are completed within one year or less. |
Share-Based Compensation | Share-Based Compensation For grants of restricted stock or restricted stock units, we measure fair value using the closing price of our stock on the measurement date, while we use the Black-Scholes-Merton option pricing model (the “BSM Model”) to estimate the fair value of stock options and similar instruments awarded. The BSM Model requires the following inputs: • Expected volatility of our stock price. We analyze the historical volatility of our stock price utilizing daily stock price returns, and we also review the stock price volatility of certain peers. Using the information developed from such analysis and our judgment, we estimate how volatile our stock price will be over the period we expect the stock options will remain outstanding. • Risk-free interest rate. We estimate the risk-free interest rate using data from the Federal Reserve Treasury Constant Maturity Instruments H.15 Release (a table of rates downloaded from the Federal Reserve website) as of the valuation date for a security with a remaining term that approximates the period over which we expect the stock options will remain outstanding. • Stock price, exercise price and expected term. We use an estimate of the fair value of our common stock on the measurement date, the exercise price of the option, and the period over which we expect the stock options will remain outstanding. We do not currently issue dividends, but if we did so, then we would also include an estimated dividend rate as an input to the BSM model. Generally speaking, the BSM model tends to be most sensitive to changes in stock price, volatility or expected term. We measure compensation expense as of the grant date for granted equity-classified instruments and as of the settlement date for granted liability-classified instruments (meaning that we re-measure compensation expense at each balance sheet date until the settlement date occurs). Once we measure compensation expense, we recognize it over the requisite service period (generally the vesting period) of the grant, net of forfeitures as they occur. |
Accounts Receivable | Accounts Receivable We and the VIEs regularly evaluate the collectability of trade receivable balances based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns. If we determine that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material events impacting its business, a specific reserve for bad debt will be recorded to reduce the related receivable to the amount expected to be recovered. |
Income Taxes | Income Taxes We recognize deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) to account for the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets, using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled. Any effect on DTAs or DTLs resulting from a change in enacted tax rates is included in income during the period that includes the enactment date. We reduce the carrying amounts of DTAs by a valuation allowance if, based upon all available evidence (both positive and negative), we determine that it is more likely than not that such DTAs will not be realizable. Such assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, our forecasts of future profitability, tax planning strategies, the duration of statutory carryforward periods, and our experience with the utilization of operating loss and tax credit carryforwards before expiration. We apply a recognition threshold and measurement attribute related to uncertain tax positions taken or expected to be taken on our tax returns. We recognize a tax benefit for financial reporting of an uncertain income tax position when it has a greater than 50% likelihood of being sustained upon examination by the taxing authorities. We measure the tax benefit of an uncertain tax position based on the largest benefit that has a greater than 50% likelihood of being ultimately realized, including evaluation of settlements. |
Inventory | InventoryWe and the VIEs use the first-in first-out method to determine the cost of our inventory, then we report inventory at the lower of cost or net realizable value. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated sales forecasts. |
Advertising Expense | Advertising Expense Advertising expense is recorded during the period in which it is incurred. We did not incur a material amount of advertising expense during the year ended December 31, 2021, but we incurred $0.2 million during the year ended December 31, 2020. |
Research and Development | Research and Development Engineering cost is recorded as technology and development expense during the period in which it is incurred. |
Product Warranties | Product Warranties We and the VIEs offer extended warranties on our products for periods of one and 2020 . |
Property, Equipment and Software | Property, Equipment and Software We and the VIEs state property and equipment at cost and depreciate such assets using the straight-line method over the estimated useful lives of each asset category. For leasehold improvements, we determine amortization using the straight-line method over the shorter of the lease term or estimated useful life of the asset. We expense repairs and maintenance costs as incurred, while capitalizing betterments and capital improvements and depreciating such costs over the remaining useful life of the related asset. We capitalize qualifying costs of computer software that we incur during the application development stage, as well as the cost of upgrades and enhancements that result in additional functionality, and we amortize such costs using the straight-line method over a period of three years, the expected period of the benefit. |
Net Income (Loss) per Share | Net Income (Loss) per Share We calculate basic net income (loss) per share using the weighted-average number of common stock shares outstanding during the period. For the calculation of diluted net income (loss) per share, we give effect to all the shares of common stock that were outstanding during the period plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation when their effect is anti-dilutive. Dilutive potential shares of common stock consist of incremental shares of common stock issuable upon exercise of stock options and warrants. |
Segments | Segments Existing GAAP, which establishes a management approach to segment reporting, defines operating segments as components of an entity about which separate, discrete financial information is available for evaluation by the chief operating decision maker. We have identified our Chief Executive Officer as our chief operating decision maker, who reviews operating results to make decisions about allocating resources and assessing performance based upon only one operating segment. |
Commitments and Contingencies | Commitments and Contingencies We record a liability for a loss contingency when we determine that it is probable that we have incurred such liability and we can reasonably estimate the amount. |
Impairments | Impairments Long-Lived Assets Other Than Indefinite-Lived Intangible Assets When events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, we evaluate long-lived assets for potential impairment, basing our testing method upon whether the assets are held for sale or held for use. For assets classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets held and used, we estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, we recognize an impairment loss for the difference between the carrying value of the asset and its fair value. |
Liabilities Related to Warrants Issued | Liabilities Related to Warrants Issued We recorded certain common stock warrants we issued at fair value and recognize the change in the fair value of such warrants as a gain or loss which we reported in the Other income (expense) section in our consolidated statement of operations. We estimated the fair value of the warrants using an option pricing model. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06 (“ASU 2020-06”), Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. With regard to our financial reporting, ASU 2020-06 will be effective January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. We are currently evaluating what effect(s) the adoption of ASU 2020-06 may have on our consolidated financial statements, but we do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) . The ASU requires entities to use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments, including trade receivables, which may result in the earlier recognition of allowances for losses. With regard to our financial reporting, ASU 2016-13 will be effective beginning January 1, 2023, and early adoption is permitted. We do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. We have reviewed all accounting pronouncements recently issued by the FASB and the SEC. The authoritative pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the authoritative pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table, reported in USD, disaggregates our cash balances by currency denomination (in thousands): December 31, 2021 2020 Cash denominated in: USD $ 13,278 $ 563 RMB 259 283 GBP 644 — HKD 6 8 Total cash $ 14,187 $ 854 |
Schedule of Exchange Rates | We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted: 2021 2020 Exchange rates at December 31st: GBP:USD 1.351 — RMB:USD 0.157 0.153 HKD:USD 0.128 0.129 Average exchange rate during the twelve months ended December 31st: RMB:USD 0.155 0.143 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents a reconciliation of the denominator of the basic net income (loss) per share calculation to that of the diluted net income (loss) per share calculation (in thousands): Year Ended December 31, 2021 2020 Weighted-average shares outstanding, basic 101,362 85,578 Incremental shares resulting from assumed exercises of in-the-money stock options 357 — Weighted-average shares outstanding, diluted 101,719 85,578 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Major Category | The following table presents a disaggregation of our revenue by category of products and services (in thousands): Year Ended December 31, 2021 2020 AI-based products and services, including $3.8 million from China Business Partner (See Note 17 ) $ 14,792 $ 9,597 Other 1,198 548 Revenue $ 15,990 $ 10,145 |
Schedule of Disaggregation of Revenue by Country | The following table presents a disaggregation of our revenue by country (in thousands): Year Ended December 31, 2021 2020 China $ 12,218 $ 7,901 United States 3,772 2,244 Revenue $ 15,990 $ 10,145 |
FAIR VALUE MEASUREMENTS OF CE_2
FAIR VALUE MEASUREMENTS OF CERTAIN LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Quantitative Inputs | The following table presents the quantitative inputs, which we classify in Level 3 of the fair value hierarchy, used in estimating the fair value of the liability associated with the warrants issued in connection with the CBG Acquisition as of the date noted: December 31, 2020 Expected volatility 85.00 % Risk-free interest rate 0.18 % Expected remaining term (years) 2.73 |
Schedule of Reconciliation of Liabilities of Warrants | The following table presents the change in the liability balance associated with our liability-classified warrants (in thousands): Year Ended December 31, 2021 2020 Balance at beginning of period $ 1,725 $ 115 Expiration of warrants — (115) Increase (decrease) in fair value of liability (123) 1,725 Fair value of warrants reclassified to equity (1,602) — Balance at end of period $ — $ 1,725 |
TRADE ACCOUNTS RECEIVABLE (Tabl
TRADE ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Schedule of Components of Prepaid Expense and Other Current Assets | December 31, 2021 2020 Gross accounts receivable balance $ 11,551 $ 5,988 Allowance for bad debt (1,284) (961) Accounts receivable, net $ 10,267 $ 5,027 |
INVESTMENT (Tables)
INVESTMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
Gain on Investments | We recorded a gain on the investment during the year ended December 31, 2021 as follows: 2021 Realized gain $ 2,322 Unrealized gain 41,320 Total gain $ 43,642 |
PREPAID EXPENSE AND OTHER CUR_2
PREPAID EXPENSE AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expense and Other Current Assets | The following table presents the components of prepaid expense and other current assets (in thousands): December 31, 2021 2020 Receivable from China Business Partner $ 3,980 $ — Other receivables 9 8 Prepaid expense 1,558 1,877 Deposits 221 50 Other current assets 595 108 Total $ 6,363 $ 2,043 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following (in thousands, except estimated lives): December 31, Estimated Life 2021 2020 Computers and equipment 3 1,133 1,097 Furniture and fixtures 3 42 42 Software 3 5,055 5,006 Leasehold improvements 3 196 174 Software development in progress 128 — Total property, equipment and software $ 6,554 $ 6,319 Less accumulated depreciation (6,197) (5,998) Total property, equipment and software, net $ 357 $ 321 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Schedule of Lease Expense, Net of Sublease Income | The following table presents the detail of our lease expense, which is reported in General and administrative expense (in thousands): Year Ended December 31, 2021 2020 Operating lease expense $ 304 $ 640 Short-term lease expense 982 291 Lease expense $ 1,286 $ 931 |
Schedule of Maturity of Lease Liabilities | The following table presents information regarding the maturities of undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented in our December 31, 2021 Consolidated Balance Sheet (in thousands): Operating lease liabilities maturing during the next: One year $ 201 Two years 25 Total undiscounted cash flows $ 226 Present value of cash flows $ 212 Lease liabilities on balance sheet: Short-term (included in accrued expenses $ 187 Long-term 25 Total lease liabilities $ 212 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Reconciliation Between Income Tax Benefit Computed by Applying Federal Statutory Rate and Actual Income Tax Expense | The following table presents a reconciliation between the income tax benefit computed by applying the federal statutory rate and our actual income tax expense: Year Ended December 31, 2021 2020 Income tax benefit at federal statutory rate $ 5,771 $ (2,874) Change in deferred tax asset valuation allowance (5,241) 1,670 Tax impact of warrants (26) 338 Tax effects of: Statutory differences 327 1,014 R&D expense (210) (202) Foreign tax rates different than U.S. federal statutory rate 68 (96) Other permanent items (331) 155 Deferred adjustments 99 86 Other (466) (91) Income tax provision (benefit) as reported $ (9) $ — |
Loss Before Income Tax Attributable to Domestic and Foreign Operations | The following table presents loss before income tax attributable to domestic and to foreign operations (in thousands): Year Ended December 31, 2021 2020 Domestic $ 28,036 $ (11,289) Foreign (555) (2,396) Loss before income taxes $ 27,481 $ (13,685) |
Components of Deferred Tax Assets and Liabilities | The following table presents the components of our DTAs and DTLs (in thousands): December 31, 2021 2020 Deferred Tax Assets Net operating loss carryforwards $ 43,375 $ 41,061 Amortization of intangibles 1,979 2,167 Share-based compensation expense 7,423 6,876 Other 3,503 3,000 Gross deferred tax assets $ 56,280 $ 53,104 Valuation allowance (47,857) (53,117) Deferred tax assets, net of valuation allowance $ 8,423 $ (13) Deferred Tax Liabilities Deferred gain (8,444) — Depreciation of fixed assets 21 13 Gross deferred tax liabilities (8,423) 13 Net deferred tax liability $ — $ — |
ACCRUED EXPENSE AND OTHER CUR_2
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Accrued Expense and Other Current Liabilities | The following table presents the components of Accrued expense and other current liabilities (in thousands): December 31, 2021 2020 Accrued compensation and benefit-related expense $ 821 $ 1,151 Accrued interest 385 485 Other accrued expense 1,673 721 Other payables 2,324 3,048 Operating lease liability - current 187 382 China Cash Bonuses 439 679 Other current liabilities 134 194 Total $ 5,963 $ 6,660 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | The following table presents our notes payable (in thousands) as of: December 31, 2021 2020 Note payable to private lender $ — $ 1,500 Mudrick Loans 30,000 — Principal balance of notes payable 30,000 1,500 Unamortized discount and debt issuance cost (2,189) — Notes payable, net of unamortized discount and debt issuance cost $ 27,811 $ 1,500 |
STOCKHOLDERS' EQUITY, SHARE-B_2
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Share-based Payment Arrangement, Activity | The following table summarizes information related to our equity-classified stock warrant issuances as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 40,000 $ 10.00 2.8 $ — Granted 1 10,074,408 3.99 Exercised — — Forfeited, cancelled or expired — — Outstanding at December 31, 2021 10,114,408 $ 4.01 4.7 $ — 1 Includes the 5.7 million warrants to purchase our common stock that we issued to CBG (see N ote 5 ). |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | We estimate the fair value of our stock option awards and China Cash Bonuses using the BSM Model. During the year ended December 31, 2021 (we did not grant any stock options during the year ended December 31, 2020), we applied the following weighted-average inputs, which we classify in Level 3 of the fair value hierarchy, to the BSM Model for our stock option awards: Expected term in years 6.0 Expected volatility 85 % Expected dividends — % Risk-free interest rate 0.40 % December 31, 2021 2020 Expected remaining term in years 4.71 4.99 Expected volatility 110.14 % 85.00 % Expected dividends — % — % Risk-free interest rate 1.06 % 0.44 % |
Schedule of Stock Option Activity Under Equity Incentive Plans | The following table summarizes activity under our equity incentive plans related to equity-classified stock option grants as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2019 10,359,079 $ 4.20 Granted — — Exercised (150,989) 0.87 Forfeited, cancelled or expired (265,749) 2.77 Outstanding at December 31, 2020 9,942,341 $ 4.29 5.7 $ 709 Granted 5,463,500 1.37 Exercised (547,945) 1.97 Forfeited, cancelled or expired (18,876) 1.55 Outstanding at December 31, 2021 14,839,020 $ 3.30 6.1 $ 159 Exercisable at December 31, 2020 9,781,466 4.35 5.7 $ 509 Exercisable at December 31, 2021 12,776,520 3.62 5.7 $ 957 The following table summarizes the status of non-vested stock options as of and for the dates and periods noted: Shares Weighted-Average Non-vested at December 31, 2019 610,187 $ 241 Exercised (399,188) 168 Forfeited, cancelled or expired (50,124) 53 Non-vested at December 31, 2020 160,875 68 Granted 5,463,500 4,972 Exercised (3,547,875) 3,512 Forfeited, cancelled or expired (14,000) 17 Non-vested at December 31, 2021 2,062,500 $ 2,063 The following table summarizes activity related to our liability-classified China Cash Bonuses as of and for the dates and periods noted: Shares Weighted Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2019 1,098,750 $ 5.20 Granted 300,000 1.37 Forfeited, cancelled or expired (343,750) 5.52 Outstanding at December 31, 2020 1,055,000 $ 4.01 5.7 $ 709 Forfeited, cancelled or expired (19,000) 6.31 Outstanding at December 31, 2021 1,036,000 $ 3.97 6.1 $ 159 Exercisable at December 31, 2020 775,000 4.97 5.3 $ 51 Exercisable at December 31, 2021 886,000 4.41 4.9 $ — |
Schedule of Change in Liability Balance Associated with China Cash Bonuses | The following table presents the change in the liability associated with our China Cash Bonuses included in Accrued expense and other current liabilities (in thousands): Year Ended December 31, 2021 2020 Balance at beginning of period $ 679 $ 43 Share-based compensation expense related to China Cash Bonuses (240) 636 Balance at end of period $ 439 $ 679 |
Share-based Payment Arrangement, Expensed and Capitalized, Amount | The following table presents a breakdown of share-based compensation cost included in operating expense (in thousands): Year Ended December 31, 2021 2020 Stock options $ 4,300 $ 160 China Cash Bonuses (240) 637 Total $ 4,060 $ 797 |
Summary of Unrecognized Share-based Compensation Cost | The following table presents information regarding unrecognized share-based compensation cost associated with stock options and China Cash Bonuses: December 31, 2021 Unrecognized share-based compensation cost for non-vested awards (in thousands): Stock options 2,062 China Cash Bonuses 103 Weighted-average years over which unrecognized share-based compensation expense will be recognized: Stock options 1.1 China Cash Bonuses 1.1 |
CONSOLIDATING FINANCIAL SCHED_2
CONSOLIDATING FINANCIAL SCHEDULES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidating Balance Sheets | Consolidating Balance Sheets (Unaudited) December 31, 2021 ($ in thousands) Corporate & Non-VIE Entities VIEs Eliminating Entries Consolidated Total Assets Cash $ 13,947 $ 240 $ — $ 14,187 Trade accounts receivable, net 33 10,234 — 10,267 Inventory, net 1,288 58 — 1,346 Investment in marketable securities 42,349 — — 42,349 Prepaid expense and other current assets 1,838 4,525 — 6,363 Total current assets 59,455 15,057 — 74,512 Property and equipment, net 357 — — 357 Operating lease assets 113 81 — 194 Investment in VIEs 7,182 — (7,182) — Investment in unconsolidated affiliate — — — — Other long-term assets 416 24 — 440 Total assets $ 67,523 $ 15,162 $ (7,182) $ 75,503 Liabilities Accounts payable $ 3,619 $ 6,475 $ — $ 10,094 Accrued expense and other current liabilities 3,380 2,583 — 5,963 Contract liability 411 165 — 576 Notes payable, net of unamortized discount and debt issuance cost 27,811 — — 27,811 Total current liabilities 35,221 9,223 — 44,444 Operating lease liabilities, long-term 25 — — 25 Total liabilities 35,246 9,223 — 44,469 Stockholders’ Equity (Deficit) Preferred stock — — — — Common stock 105 163 (163) 105 Additional paid-in-capital 364,239 28,310 (28,310) 364,239 Accumulated other comprehensive income 973 (1,268) 25 (270) Accumulated deficit (333,040) (21,266) 21,266 (333,040) Total stockholders’ equity (deficit) 32,277 5,939 (7,182) 31,034 Total liabilities and stockholders’ equity (deficit) $ 67,523 $ 15,162 $ (7,182) $ 75,503 |
Consolidating Statement of Operations and Comprehensive Loss | Consolidating Statement of Operations (Unaudited) Year Ended December 31, 2021 ($ in thousands) Corporate & Non-VIE Entities VIEs Eliminating Entries Consolidated Total Revenue $ 4,040 $ 11,950 $ — $ 15,990 Cost and expense Cost of revenue (excluding depreciation and amortization) 2,185 9,270 — 11,455 Sales and marketing 690 281 — 971 Recovery of marketing expense — (1,530) (1,530) Technology and development 2,918 1,774 — 4,692 General and administrative 13,323 797 — 14,120 Depreciation and amortization 143 48 — 191 Total cost and expense 19,259 10,640 — 29,899 Operating loss (15,219) 1,310 — (13,909) Other income (expense) Interest expense (2,298) (10) — (2,308) Other income (expense), net (598) 6 — (592) Change in fair value of warrant liability 123 — — 123 Gain on investment revaluation 43,642 — — 43,642 Gain on debt extinguishment 425 — — 425 Gain on lease termination — — — — Other gain (loss), net 90 10 — 100 Share in income (loss) of VIEs 1,307 — (1,307) — Total other income, net 42,691 6 (1,307) 41,390 Income (loss) from operations $ 27,472 $ 1,316 $ (1,307) $ 27,481 Provision for income taxes — (9) — (9) Net income (loss) $ 27,472 $ 1,307 $ (1,307) $ 27,472 |
Consolidating Statement of Cash Flows | Consolidating Statement of Cash Flows (Unaudited) Year Ended December 31, 2021 ($ in thousands) Corporate & Non-VIE Entities VIEs Eliminating Entries Consolidated Total Cash flows from operating activities: Net income (loss) $ 27,472 $ 1,307 $ (1,307) $ 27,472 Adjustments to reconcile net loss to net cash used in operating activities: Change in fair value of warrant liability (123) — — (123) Depreciation, amortization and impairments 143 48 — 191 Share-based compensation 4,060 — — 4,060 Amortization of debt issuance costs and discount 880 — — 880 Gain on investment revaluation (43,642) — — (43,642) Gain on debt extinguishment (425) — — (425) Share in net loss (income) of VIEs (1,307) — 1,307 — Financing cost of converting note payable to common stock 44 — — 44 Provision for doubtful accounts — 297 — 297 Other 314 (284) — 30 Changes in operating assets and liabilities: Accounts receivable 144 (5,877) — (5,733) Inventory (527) 54 — (473) Prepaid expenses and other assets 140 (4,260) — (4,120) Operating lease assets 98 195 — 293 Accounts payable, accrued expense and other liabilities (865) 1,832 — 967 Contract liability 256 21 — 277 Operating lease liabilities (90) (79) — (169) Net cash used in operating activities $ (13,428) $ (6,746) $ — $ (20,174) Cash flows from investing activities: Proceeds from investment 2,322 — — 2,322 Purchases of property, equipment and software (223) — — (223) Other cash outflows from VIEs, net (6,710) — 6,710 — Net cash provided by (used in) investing activities (4,611) — 6,710 2,099 Cash flows from financing activities: Proceeds from issuance of common stock, net 5,692 — — 5,692 Proceeds from debt issuance 32,216 — — 32,216 Repayments of debt (6,500) — — (6,500) Other cash inflows from non-VIEs, net — 6,710 (6,710) — Net cash provided by financing activities 31,408 6,710 (6,710) 31,408 Net change in cash 13,369 (36) — 13,333 Cash: Beginning of period 578 276 — 854 End of period $ 13,947 $ 240 $ — $ 14,187 |
ORGANIZATION AND BUSINESS (Deta
ORGANIZATION AND BUSINESS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 333,040 | $ 360,512 |
Net cash used in operating activities | 20,200 | |
Cash and cash equivalents | $ 14,187 | $ 854 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2021USD ($)shares | Dec. 31, 2020shares | Dec. 31, 2021USD ($)segmentshares | Dec. 31, 2020USD ($)shares | |
Disaggregation of Revenue [Line Items] | ||||
Cash in excess of FDIC-insured limit | $ 13 | $ 13 | ||
Term of contract | 1 year | |||
Reserve for inventory | $ 1 | $ 1 | ||
Advertising expense | $ 0.2 | |||
Number of reportable segments | segment | 1 | |||
Computers and equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Estimated Life (Years) | 3 years | |||
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Extended warranty period | 1 year | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Extended warranty period | 3 years | |||
Stock options | ||||
Disaggregation of Revenue [Line Items] | ||||
Anti-dilutive securities (in shares) | shares | 14,354,708 | 9,942,341 | ||
Warrant | ||||
Disaggregation of Revenue [Line Items] | ||||
Anti-dilutive securities (in shares) | shares | 10,114,408 | 40,000 | ||
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Performance period (or less) | 1 year |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and cash equivalents (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | $ 14,187 | $ 854 |
USD | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | 13,278 | 563 |
RMB | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | 259 | 283 |
GBP | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | 644 | 0 |
HKD | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Total cash | $ 6 | $ 8 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency Translation (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Weighted Average | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 0.155 | 0.143 |
GBP | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 1.351 | 0 |
RMB | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 0.157 | 0.153 |
HKD | ||
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Foreign currency exchange rate | 0.128 | 0.129 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation Of Denominator Of Basic Net Income (Loss) (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Weighted-average shares outstanding, basic (in shares) | 101,362 | 85,578 |
Incremental shares resulting from assumed exercises of in-the-money stock options (in shares) | 357 | 0 |
Weighted-average shares outstanding, diluted (in shares) | 101,719 | 85,578 |
CONCENTRATION OF RISK (Details)
CONCENTRATION OF RISK (Details) - Customer Concentration Risk | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Customer A | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 24.00% | 31.00% |
Customer A | Gross Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 25.00% | 38.00% |
Customer B | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 18.00% | 11.00% |
Customer B | Gross Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 24.00% | |
Customer C | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 12.00% | |
Customer C | Gross Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 10.00% |
REVENUE - Disaggregated by Majo
REVENUE - Disaggregated by Major Category (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue, including $3.8 million from China Business Partner (See Note 17) | $ 15,990 | $ 10,145 |
AI-based products and services, including $3.8 million from China Business Partner (See Note 17) | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue, including $3.8 million from China Business Partner (See Note 17) | 14,792 | 9,597 |
Other | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue, including $3.8 million from China Business Partner (See Note 17) | $ 1,198 | $ 548 |
REVENUE - Disaggregation by Cou
REVENUE - Disaggregation by Country (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenue, including $3.8 million from China Business Partner (See Note 17) | $ 15,990 | $ 10,145 |
China | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, including $3.8 million from China Business Partner (See Note 17) | 12,218 | 7,901 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, including $3.8 million from China Business Partner (See Note 17) | $ 3,772 | $ 2,244 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized on liability balances | $ 0 | $ 0 |
Revenue recognized from performance obligations satisfied in previous periods | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS OF CE_3
FAIR VALUE MEASUREMENTS OF CERTAIN LIABILITIES - Narrative (Details) $ / shares in Units, $ in Thousands | Aug. 31, 2021USD ($)day$ / sharesshares | Jun. 30, 2021shares | Feb. 21, 2018$ / shares |
Class of Warrant or Right [Line Items] | |||
Warrants issued (in shares) | shares | 40,000 | ||
Settlement Warrants | |||
Class of Warrant or Right [Line Items] | |||
Exercise price of warrants (in usd per share) | $ / shares | $ 10 | ||
Settlement Warrants | Fair Value, Inputs, Level 3 | Expected volatility | |||
Class of Warrant or Right [Line Items] | |||
Warrant liability, measurement input | 0.85 | ||
Settlement Warrants | Fair Value, Inputs, Level 3 | Risk-free interest rate | |||
Class of Warrant or Right [Line Items] | |||
Warrant liability, measurement input | 0.0077 | ||
Settlement Warrants | Fair Value, Inputs, Level 3 | Expected remaining term (years) | |||
Class of Warrant or Right [Line Items] | |||
Warrant liability, measurement input | 5 | ||
China Branding Group Limited | Settlement Warrants | |||
Class of Warrant or Right [Line Items] | |||
Warrants issued (in shares) | shares | 5,710,000 | 5,710,000 | |
Payments for legal settlements | $ | $ 375 | ||
Exercise price of warrants (in usd per share) | $ / shares | $ 6 | ||
Warrant exercise term | 5 years | ||
Threshold minimum stock price trigger for exercise of warrants (usd per share) | $ / shares | $ 8 | ||
Threshold non-consecutive trading day window | 5 days | ||
Consecutive trading day window | day | 30 | ||
Valuation Technique, Option Pricing Model | |||
Class of Warrant or Right [Line Items] | |||
Warrants outstanding (in shares) | shares | 5,750,000 |
FAIR VALUE MEASUREMENTS OF CE_4
FAIR VALUE MEASUREMENTS OF CERTAIN LIABILITIES - Quantitative Inputs (Details) - Warrant liabilities - Fair Value, Inputs, Level 3 | Dec. 31, 2020 |
Expected volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 0.8500 |
Risk-free interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 0.0018 |
Expected remaining term (years) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 2.73 |
FAIR VALUE MEASUREMENTS OF CE_5
FAIR VALUE MEASUREMENTS OF CERTAIN LIABILITIES - Change in Fair Value of Warrants Accounted for as Derivative Liabilities (Details) - Warrant liabilities - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Change in the Fair Value of Warrants | ||
Balance at beginning of period | $ 1,725 | $ 115 |
Expiration of warrants | 0 | (115) |
Increase (decrease) in fair value of liability | (123) | 1,725 |
Fair value of warrants reclassified to equity | (1,602) | 0 |
Balance at end of period | $ 0 | $ 1,725 |
TRADE ACCOUNTS RECEIVABLE (Deta
TRADE ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross accounts receivable balance | $ 11,551 | $ 5,988 |
Allowance for bad debt | (1,284) | (961) |
Accounts receivable, net | 10,267 | $ 5,027 |
VIEs | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | 10,234 | |
Trade receivables | $ 2,700 | |
AI-based products and services, including $3.8 million from China Business Partner (See Note 17) | Product Concentration Risk | Account Receivable Benchmark | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Percentage of gross trade receivables | 99.00% |
INVESTMENT - Narrative (Details
INVESTMENT - Narrative (Details) - USD ($) $ in Thousands, shares in Millions | Jul. 01, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Noncontrolling Interest [Line Items] | |||
Cash received upon conversion | $ 2,300 | ||
Common stock owned upon conversion (in shares) | 9.4 | ||
Investment in marketable securities | $ 42,349 | $ 0 | |
Sharecare | |||
Noncontrolling Interest [Line Items] | |||
Noncontrolling interest | $ 1,000 | ||
Investment in marketable securities | $ 42,300 |
INVESTMENT - Gain On Investment
INVESTMENT - Gain On Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Noncontrolling Interest [Abstract] | ||
Realized gain | $ 2,322 | |
Unrealized gain | 41,320 | |
Total gain | $ 43,642 | $ 0 |
PREPAID EXPENSE AND OTHER CUR_3
PREPAID EXPENSE AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Prepaid Expense and Other Current Assets | ||
Receivables collected from related parties | $ 3,980 | $ 0 |
Other receivables | 9 | 8 |
Prepaid expense | 1,558 | 1,877 |
Deposits | 221 | 50 |
Other current assets | 595 | 108 |
Total | $ 6,363 | $ 2,043 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | $ 6,554 | $ 6,319 |
Less accumulated depreciation | (6,197) | (5,998) |
Total property, equipment and software, net | 357 | 321 |
Depreciation (and amortization of software) expense | $ 200 | 200 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 1,133 | 1,097 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 42 | 42 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 5,055 | 5,006 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life (Years) | 3 years | |
Total property, equipment and software | $ 196 | 174 |
Software development in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | $ 128 | $ 0 |
LEASES - Lease Expense (Details
LEASES - Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Operating lease expense | $ 304 | $ 640 |
Short-term lease expense | 982 | 291 |
Lease expense | $ 1,286 | $ 931 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | Sep. 27, 2021 | Aug. 03, 2020 | Apr. 09, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Lessee, Lease, Description [Line Items] | ||||||||
Cash paid for operating lease liabilities | $ 200 | $ 600 | ||||||
Weighted-average remaining lease term | 12 months | |||||||
Weighted-average discount rate | 13.00% | |||||||
Gain on lease termination | $ 0 | 3,582 | ||||||
Monetary damages | $ 1,000 | $ 1,100 | ||||||
Hughes Center Lease Settlement | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Accrual for legal settlement | $ 2,600 | $ 2,300 | $ 300 | |||||
Payments for legal settlements | $ 600 | |||||||
Office Space | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Gain on lease termination | $ 2,000 | $ 1,500 | $ 3,600 |
LEASES - Maturity of Lease Liab
LEASES - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating lease liabilities maturing during the next: | ||
One year | $ 201 | |
Two years | 25 | |
Total undiscounted cash flows | 226 | |
Present value of cash flows | $ 212 | |
Lease liabilities on balance sheet: | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities, Current | Accrued Liabilities, Current |
Short-term (included in accrued expenses) | $ 187 | $ 382 |
Long-term | 25 | $ 194 |
Total lease liabilities | $ 212 |
INCOME TAX - Reconciliation Bet
INCOME TAX - Reconciliation Between Income Tax Benefit Computed by Applying Federal Statutory Rate and Actual Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at federal statutory rate | $ 5,771 | $ (2,874) |
Change in deferred tax asset valuation allowance | (5,241) | 1,670 |
Tax impact of warrants | (26) | 338 |
Tax effects of: | ||
Statutory differences | 327 | 1,014 |
R&D expense | (210) | (202) |
Foreign tax rates different than U.S. federal statutory rate | 68 | (96) |
Other permanent items | (331) | 155 |
Deferred adjustments | 99 | 86 |
Other | (466) | (91) |
Income tax provision (benefit) as reported | $ (9) | $ 0 |
INCOME TAXES-Loss Before Income
INCOME TAXES-Loss Before Income Tax Attributable to Domestic and Foreign Operations ( (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ 28,036 | $ (11,289) |
Foreign | (555) | (2,396) |
Income (loss) from before income taxes | $ 27,481 | $ (13,685) |
INCOME TAXES -Components of Def
INCOME TAXES -Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred Tax Assets | ||
Net operating loss carryforwards | $ 43,375 | $ 41,061 |
Amortization of intangibles | 1,979 | 2,167 |
Share-based compensation expense | 7,423 | 6,876 |
Other | 3,503 | 3,000 |
Gross deferred tax assets | 56,280 | 53,104 |
Valuation allowance | (47,857) | (53,117) |
Deferred tax assets, net of valuation allowance | 8,423 | (13) |
Deferred Tax Liabilities | ||
Deferred gain | (8,444) | 0 |
Depreciation of fixed assets | 21 | 13 |
Gross deferred tax liabilities | (8,423) | 13 |
Net deferred tax liability | $ 0 | $ 0 |
INCOME TAXES -Narrative (Detail
INCOME TAXES -Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | ||
Unrecognized tax benefits | $ 0 | $ 0 |
U.S. Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 181,100,000 | |
U.S. State | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 32,900,000 | |
Hong Kong | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 1,700,000 | |
Federal income tax rate (as a percent) | 16.50% | |
China | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 11,200,000 | |
Federal income tax rate (as a percent) | 25.00% | |
Carryover period (in years) | 5 years |
ACCRUED EXPENSE AND OTHER CUR_3
ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Accrued compensation and benefit-related expense | $ 821 | $ 1,151 |
Accrued interest | 385 | 485 |
Other accrued expense | 1,673 | 721 |
Other payables | 2,324 | 3,048 |
Operating lease liability - current | 187 | 382 |
China Cash Bonuses | 439 | 679 |
Other current liabilities | 134 | 194 |
Total | $ 5,963 | $ 6,660 |
DEBT - Notes Payable (Details)
DEBT - Notes Payable (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | ||
Unamortized discount and debt issuance cost | $ (2,189,000) | $ 0 |
Notes payable, net of unamortized discount and debt issuance cost | 27,811,000 | 1,500,000 |
Notes Payable | ||
Short-term Debt [Line Items] | ||
Note payable | 30,000,000 | 1,500,000 |
Note payable to private lender | Notes Payable | ||
Short-term Debt [Line Items] | ||
Note payable | 0 | 1,500,000 |
Mudrick Loans | Notes Payable | ||
Short-term Debt [Line Items] | ||
Note payable | $ 30,000,000 | $ 0 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) | Dec. 06, 2021 | Aug. 05, 2021 | Jul. 23, 2021 | Feb. 10, 2021 | Apr. 15, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 03, 2021 | Dec. 30, 2020 | Apr. 12, 2017 |
Debt Instrument [Line Items] | ||||||||||
Note payable | $ 27,811,000 | $ 1,500,000 | ||||||||
Amortization of debt issuance costs and discount | 880,000 | 0 | ||||||||
Common stock issuance upon note payable conversion | 1,105,000 | |||||||||
Jefferson Remark Funding LLC | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Accrued interest on loan | $ 600,000 | |||||||||
Note repayment of debt | 5,000,000 | |||||||||
Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Original principal amount | $ 5,000,000 | |||||||||
Term of debt | 1 year | |||||||||
Debt interest rate percentage | 15.00% | |||||||||
Unamortized original issue discount | $ 200,000 | |||||||||
Additional closing cost | $ 300,000 | |||||||||
Loans Payable | Note payable to private lender | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Original principal amount | $ 1,000,000 | |||||||||
Debt interest rate percentage | 10.00% | |||||||||
Principal amount and accrued interest converted | $ 100,000 | |||||||||
Conversion price (in usd per share) | $ 1.21 | |||||||||
Common stock issuance upon note payable conversion (in shares) | 876,493 | |||||||||
Common stock issuance upon note payable conversion | $ 1,100,000 | |||||||||
Additional interest expense | $ 100,000 | |||||||||
Loans Payable | Mudrick Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Original principal amount | $ 30,000,000 | |||||||||
Debt interest rate percentage | 16.50% | |||||||||
Unamortized original issue discount | $ 1,500,000 | |||||||||
Amortization of debt issuance costs and discount | 400,000 | |||||||||
Additional closing cost | $ 1,100,000 | |||||||||
Upfront fee (in percent) | 5.00% | |||||||||
Loans Payable | PPP Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Original principal amount | $ 400,000 | |||||||||
Term of debt | 2 years | |||||||||
Debt interest rate percentage | 1.00% | |||||||||
Debt instrument, decrease, forgiveness | $ 400,000 | |||||||||
Short-term note payable to private lender | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Note payable | $ 3,000,000 | |||||||||
Exit fee payable in relation to Loan | 115,000 | |||||||||
Daily interest accrued on unpaid balance after maturity | $ 500 | |||||||||
Original principal amount | 30,000,000 | 1,500,000 | ||||||||
Accrued interest on loan | 600,000 | 400,000 | ||||||||
Note repayment of debt | $ 1,500,000 | |||||||||
Short-term note payable to private lender | Note payable to private lender | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Original principal amount | 0 | 1,500,000 | ||||||||
Short-term note payable to private lender | Mudrick Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Original principal amount | $ 30,000,000 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ / shares in Units, $ in Millions | Sep. 27, 2021USD ($) | Apr. 09, 2020USD ($) | Jan. 15, 2019day$ / sharesshares | Jun. 30, 2021shares | Feb. 21, 2018$ / sharesshares |
Class of Warrant or Right [Line Items] | |||||
Warrants issued (in shares) | shares | 40,000 | ||||
Accrued penalty | $ | $ 0.6 | ||||
Monetary damages | $ | $ 1 | $ 1.1 | |||
Settlement Warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants that would have been issued to holders on as-exercised basis (in shares) | shares | 5,710,000 | ||||
Exercise price of warrants (in usd per share) | $ / shares | $ 10 | ||||
Adam Roseman | Settlement Warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Exercise price of warrants (in usd per share) | $ / shares | $ 6 | ||||
Warrants issued (in shares) | shares | 5,710,000 | ||||
Warrant exercise term | 5 years | ||||
Threshold minimum stock price trigger for exercise of warrants (usd per share) | $ / shares | $ 8 | ||||
Threshold non-consecutive trading day window | 5 days | ||||
Consecutive trading day window | day | 30 |
STOCKHOLDERS' EQUITY, SHARE-B_3
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 29, 2021 | Jul. 08, 2021 | Jul. 27, 2020 | Mar. 03, 2020 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Warrants issued (in shares) | 40,000 | ||||||
Proceeds from issuance of common stock, net | $ 5,692 | $ 32,135 | |||||
Exercises of stock options received proceeds | 1,100 | 100 | |||||
Intrinsic value of options exercised | $ 1,000 | $ 100 | |||||
Common stock, shares authorized (in shares) | 175,000,000 | 175,000,000 | 175,000,000 | ||||
Shares granted in period (in shares) | 6,300,000 | 5,463,500 | |||||
Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Option award expiration period | 10 years | ||||||
Shares granted in period (in shares) | 5,463,500 | 0 | |||||
Expected volatility | 85.00% | 85.00% | |||||
Risk-free interest rate | 0.34% | 0.40% | |||||
Expected term in years | 6 years | 6 years | |||||
China Cash Bonuses | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares granted in period (in shares) | 5,400,000 | 300,000 | |||||
Expected volatility | 110.14% | 85.00% | |||||
Risk-free interest rate | 1.06% | 0.44% | |||||
Expected term in years | 4 years 8 months 15 days | 4 years 11 months 26 days | |||||
Investor | Investor Warrant | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Warrants issued (in shares) | 4,237,290 | ||||||
Exercise price of warrants (in usd per share) | $ 1.35 | ||||||
Investor | Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares issued (in shares) | 4,237,290 | ||||||
Sale of stock, price per share (in dollars per share) | $ 1.18 | ||||||
Proceeds from issuance of common stock, net | $ 4,600 | ||||||
A.G.P. | Private Placement Warrants | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Warrants issued (in shares) | 127,118 | ||||||
Exercise price of warrants (in usd per share) | $ 1.35 | ||||||
Cash fee | $ 400 | ||||||
Aspire Capital Fund, LLC | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Consideration received | $ 32,000 | ||||||
Number of shares issued (in shares) | 48,238,893 | ||||||
Aspire Capital Fund, LLC | Private Placement | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized for purchase | $ 30,000 | ||||||
Number of shares issued as consideration (in shares) | 2,374,545 | ||||||
Number of shares issued (in shares) | 44,227,890 | ||||||
Aspire Capital Fund, LLC | Common Stock | Private Placement | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Period of purchase | 30 months |
STOCKHOLDERS' EQUITY, SHARE-B_4
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE -Equity Stock Warrant Issuances (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Settlement Warrants | ||
Aggregate Intrinsic Value (in thousands) | ||
Warrants to purchase our common stock | $ 5,700 | |
Warrant | ||
Shares | ||
Outstanding at beginning of period (in dollars per share) | 40,000 | |
Granted (in shares) | 10,074,408 | |
Exercised (in shares) | 0 | |
Forfeited, cancelled or expired (in shares) | 0 | |
Outstanding at end of period (in shares) | 10,114,408 | 40,000 |
Weighted Average Exercise Price Per Share | ||
Outstanding at beginning of period (in dollars per share) | $ 10 | |
Granted (in dollars per share) | 3.99 | |
Exercised (in dollars per share) | 0 | |
Forfeited, cancelled or expired (in dollars per share) | 0 | |
Outstanding at end of period (in dollars per share) | $ 4.01 | $ 10 |
Weighted-Average Remaining Contractual Term | ||
Outstanding (term) | 4 years 8 months 12 days | 2 years 9 months 18 days |
Aggregate Intrinsic Value (in thousands) | ||
Outstanding | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY, SHARE-B_5
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Valuation Assumptions (Details) | Jul. 08, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term in years | 6 years | 6 years | |
Expected volatility | 85.00% | 85.00% | |
Expected dividends | 0.00% | ||
Risk-free interest rate | 0.34% | 0.40% | |
China Cash Bonuses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term in years | 4 years 8 months 15 days | 4 years 11 months 26 days | |
Expected volatility | 110.14% | 85.00% | |
Expected dividends | 0.00% | 0.00% | |
Risk-free interest rate | 1.06% | 0.44% |
STOCKHOLDERS' EQUITY, SHARE-B_6
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 27, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Shares | |||
Granted (in shares) | 6,300,000 | 5,463,500 | |
Exercised (in shares) | (3,547,875) | (399,188) | |
Stock options | |||
Shares | |||
Outstanding at beginning of period (in shares) | 9,942,341 | 10,359,079 | |
Granted (in shares) | 5,463,500 | 0 | |
Exercised (in shares) | (547,945) | (150,989) | |
Forfeited, cancelled or expired (in shares) | (18,876) | (265,749) | |
Outstanding at end of period (in shares) | 14,839,020 | 9,942,341 | |
Options exercisable (in shares) | 12,776,520 | 9,781,466 | |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 4.29 | $ 4.20 | |
Granted (in dollars per share) | 1.37 | 0 | |
Exercised (in dollars per share) | 1.97 | 0.87 | |
Forfeited, cancelled or expired (in dollars per share) | 1.55 | 2.77 | |
Outstanding at end of period (in dollars per share) | 3.30 | 4.29 | |
Options exercisable (in dollars per share) | $ 3.62 | $ 4.35 | |
Weighted-Average Remaining Contractual Term | |||
Outstanding (term) | 6 years 1 month 6 days | 5 years 8 months 12 days | |
Options exercisable (term) | 5 years 8 months 12 days | 5 years 8 months 12 days | |
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 159 | $ 709 | |
Options exercisable | $ 957 | $ 509 | |
China Cash Bonuses | |||
Shares | |||
Outstanding at beginning of period (in shares) | 1,055,000 | 1,098,750 | |
Granted (in shares) | 5,400,000 | 300,000 | |
Forfeited, cancelled or expired (in shares) | (19,000) | (343,750) | |
Outstanding at end of period (in shares) | 1,036,000 | 1,055,000 | |
Options exercisable (in shares) | 886,000 | 775,000 | |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 4.01 | $ 5.20 | |
Granted (in dollars per share) | 1.37 | ||
Forfeited, cancelled or expired (in dollars per share) | 6.31 | 5.52 | |
Outstanding at end of period (in dollars per share) | 3.97 | 4.01 | |
Options exercisable (in dollars per share) | $ 4.41 | $ 4.97 | |
Weighted-Average Remaining Contractual Term | |||
Outstanding (term) | 6 years 1 month 6 days | 5 years 8 months 12 days | |
Options exercisable (term) | 4 years 10 months 24 days | 5 years 3 months 18 days | |
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 159 | $ 709 | |
Options exercisable | $ 0 | $ 51 |
STOCKHOLDERS' EQUITY, SHARE-B_7
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Nonvested Options Activity (Details) - USD ($) $ in Thousands | Jul. 27, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Shares | |||
Non-vested, beginning of period (in shares) | 160,875 | 610,187 | |
Exercised (in shares) | (3,547,875) | (399,188) | |
Granted (in shares) | 6,300,000 | 5,463,500 | |
Forfeited, cancelled or expired (in shares) | (14,000) | (50,124) | |
Non-vested, end of period (in shares) | 2,062,500 | 160,875 | |
Weighted-Average Grant-Date Fair Value | |||
Non-vested, beginning of period | $ 68 | $ 241 | |
Granted (in dollar per share) | 4,972 | ||
Exercised (in dollars per share) | 3,512 | 168 | |
Forfeited, cancelled or expired (in dollars per share) | 17 | 53 | |
Non-vested, end of period | $ 2,063 | $ 68 |
STOCKHOLDERS' EQUITY, SHARE-B_8
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Liability Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Payment Award Liability [Roll Forward] | |||
Balance at beginning of period | $ 679 | $ 679 | |
Share-based compensation expense related to China Cash Bonuses | 4,060 | $ 797 | |
Balance at end of period | 439 | 679 | |
China Cash Bonuses | |||
Share-based Payment Award Liability [Roll Forward] | |||
Balance at beginning of period | 679 | 679 | 43 |
Share-based compensation expense related to China Cash Bonuses | $ 636 | (240) | 637 |
Balance at end of period | $ 439 | $ 679 |
STOCKHOLDERS' EQUITY, SHARE-B_9
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 4,060 | $ 797 | |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 4,300 | 160 | |
China Cash Bonuses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 636 | $ (240) | $ 637 |
STOCKHOLDERS' EQUITY, SHARE-_10
STOCKHOLDERS' EQUITY, SHARE-BASED COMPENSATION AND NET LOSS PER SHARE - Unrecognized Compensation Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized share-based compensation cost for non-vested awards (in thousands): | $ 2,062 |
Weighted-average years over which unrecognized share-based compensation expense will be recognized: | 1 year 1 month 6 days |
China Cash Bonuses | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized share-based compensation cost for non-vested awards (in thousands): | $ 103 |
Weighted-average years over which unrecognized share-based compensation expense will be recognized: | 1 year 1 month 6 days |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 27, 2020 |
Related Party Transaction [Line Items] | |||
Receivables collected from related parties | $ 3,980 | $ 0 | |
Management | Advances To Senior Management | |||
Related Party Transaction [Line Items] | |||
Receivables collected from related parties | $ 500 |
CHINA BUSINESS PARTNER (Details
CHINA BUSINESS PARTNER (Details) - China Branding Group Limited - VIEs - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Inventory purchases | $ 1.3 | |
Loan to unrelated entity | 2.4 | $ 1.5 |
Aggregate potential loan amount | $ 5.1 | |
Loan receivable term | 5 years | |
Revenues | 3.8 | |
Prepayment of debt | 3.9 | |
Other receivables and in recovery of marketing costs | $ 2.4 | $ 1.5 |
CONSOLIDATING FINANCIAL SCHED_3
CONSOLIDATING FINANCIAL SCHEDULES -Consolidating Balance Sheets (Unaudited) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | |||
Cash | $ 14,187 | $ 854 | |
Trade accounts receivable, net | 10,267 | 5,027 | |
Inventory, net | 1,346 | 874 | |
Investment in marketable securities | 42,349 | 0 | |
Prepaid expense and other current assets | 6,363 | 2,043 | |
Total current assets | 74,512 | 8,798 | |
Property and equipment, net | 357 | 321 | |
Operating lease assets | 194 | 492 | |
Investment in VIEs | 0 | ||
Investment in unconsolidated affiliate | 0 | 1,030 | |
Other long-term assets | 440 | 670 | |
Total assets | 75,503 | 11,311 | |
Liabilities | |||
Accounts payable | 10,094 | 8,589 | |
Accrued expense and other current liabilities | 5,963 | 6,660 | |
Contract liability | 576 | 310 | |
Notes payable, net of unamortized discount and debt issuance cost of $2,189 and zero at December 31, 2021 and 2020, respectively | 27,811 | 1,500 | |
Total current liabilities | 44,444 | 17,059 | |
Operating lease liabilities, long-term | 25 | 194 | |
Total liabilities | 44,469 | 20,403 | |
Stockholders’ Equity (Deficit) | |||
Preferred stock | 0 | 0 | |
Common stock | 105 | 100 | |
Additional paid-in-capital | 364,239 | 351,546 | |
Accumulated other comprehensive income | (270) | (226) | |
Accumulated deficit | (333,040) | (360,512) | |
Total stockholders’ equity (deficit) | 31,034 | (9,092) | $ (27,728) |
Total liabilities and stockholders’ equity (deficit) | 75,503 | $ 11,311 | |
Eliminating Entries | |||
Assets | |||
Cash | 0 | ||
Trade accounts receivable, net | 0 | ||
Inventory, net | 0 | ||
Investment in marketable securities | 0 | ||
Prepaid expense and other current assets | 0 | ||
Total current assets | 0 | ||
Property and equipment, net | 0 | ||
Operating lease assets | 0 | ||
Investment in VIEs | (7,182) | ||
Investment in unconsolidated affiliate | 0 | ||
Other long-term assets | 0 | ||
Total assets | (7,182) | ||
Liabilities | |||
Accounts payable | 0 | ||
Accrued expense and other current liabilities | 0 | ||
Contract liability | 0 | ||
Notes payable, net of unamortized discount and debt issuance cost of $2,189 and zero at December 31, 2021 and 2020, respectively | 0 | ||
Total current liabilities | 0 | ||
Operating lease liabilities, long-term | 0 | ||
Total liabilities | 0 | ||
Stockholders’ Equity (Deficit) | |||
Preferred stock | 0 | ||
Common stock | (163) | ||
Additional paid-in-capital | (28,310) | ||
Accumulated other comprehensive income | 25 | ||
Accumulated deficit | 21,266 | ||
Total stockholders’ equity (deficit) | (7,182) | ||
Total liabilities and stockholders’ equity (deficit) | (7,182) | ||
Corporate & Non-VIE Entities | |||
Assets | |||
Cash | 13,947 | ||
Trade accounts receivable, net | 33 | ||
Inventory, net | 1,288 | ||
Investment in marketable securities | 42,349 | ||
Prepaid expense and other current assets | 1,838 | ||
Total current assets | 59,455 | ||
Property and equipment, net | 357 | ||
Operating lease assets | 113 | ||
Investment in VIEs | 7,182 | ||
Investment in unconsolidated affiliate | 0 | ||
Other long-term assets | 416 | ||
Total assets | 67,523 | ||
Liabilities | |||
Accounts payable | 3,619 | ||
Accrued expense and other current liabilities | 3,380 | ||
Contract liability | 411 | ||
Notes payable, net of unamortized discount and debt issuance cost of $2,189 and zero at December 31, 2021 and 2020, respectively | 27,811 | ||
Total current liabilities | 35,221 | ||
Operating lease liabilities, long-term | 25 | ||
Total liabilities | 35,246 | ||
Stockholders’ Equity (Deficit) | |||
Preferred stock | 0 | ||
Common stock | 105 | ||
Additional paid-in-capital | 364,239 | ||
Accumulated other comprehensive income | 973 | ||
Accumulated deficit | (333,040) | ||
Total stockholders’ equity (deficit) | 32,277 | ||
Total liabilities and stockholders’ equity (deficit) | 67,523 | ||
VIEs | |||
Assets | |||
Cash | 240 | ||
Trade accounts receivable, net | 10,234 | ||
Inventory, net | 58 | ||
Investment in marketable securities | 0 | ||
Prepaid expense and other current assets | 4,525 | ||
Total current assets | 15,057 | ||
Property and equipment, net | 0 | ||
Operating lease assets | 81 | ||
Investment in VIEs | 0 | ||
Investment in unconsolidated affiliate | 0 | ||
Other long-term assets | 24 | ||
Total assets | 15,162 | ||
Liabilities | |||
Accounts payable | 6,475 | ||
Accrued expense and other current liabilities | 2,583 | ||
Contract liability | 165 | ||
Notes payable, net of unamortized discount and debt issuance cost of $2,189 and zero at December 31, 2021 and 2020, respectively | 0 | ||
Total current liabilities | 9,223 | ||
Operating lease liabilities, long-term | 0 | ||
Total liabilities | 9,223 | ||
Stockholders’ Equity (Deficit) | |||
Preferred stock | 0 | ||
Common stock | 163 | ||
Additional paid-in-capital | 28,310 | ||
Accumulated other comprehensive income | (1,268) | ||
Accumulated deficit | (21,266) | ||
Total stockholders’ equity (deficit) | 5,939 | ||
Total liabilities and stockholders’ equity (deficit) | $ 15,162 |
CONSOLIDATING FINANCIAL SCHED_4
CONSOLIDATING FINANCIAL SCHEDULES-Consolidating Statement of Operations and Comprehensive Loss (Unaudited) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Income Statement [Abstract] | |||
Revenue | $ 15,990 | $ 10,145 | |
Cost and expense | |||
Cost of revenue (excluding depreciation and amortization) | 11,455 | 6,422 | |
Sales and marketing | [1] | 971 | 1,848 |
Marketing expense (recovery) - China Business Partner activity | (1,530) | 1,530 | |
Technology and development | 4,692 | 4,142 | |
General and administrative | 14,120 | 9,368 | |
Depreciation and amortization | 191 | 308 | |
Total cost and expense | 29,899 | 24,390 | |
Operating loss | (13,909) | (14,245) | |
Other income (expense) | |||
Interest expense | (2,308) | (1,342) | |
Other income (expense), net | (592) | 0 | |
Change in fair value of warrant liability | 123 | (1,610) | |
Gain on investment revaluation | 43,642 | 0 | |
Gain on debt extinguishment | 425 | 0 | |
Gain on lease termination | 0 | 3,582 | |
Other gain (loss), net | 100 | (70) | |
Share in income (loss) of VIEs | 0 | ||
Total other income, net | 41,390 | 560 | |
Income (loss) from before income taxes | 27,481 | (13,685) | |
Provision for income taxes | (9) | 0 | |
Net income (loss) | 27,472 | $ (13,685) | |
Eliminating Entries | |||
Income Statement [Abstract] | |||
Revenue | 0 | ||
Cost and expense | |||
Cost of revenue (excluding depreciation and amortization) | 0 | ||
Sales and marketing | 0 | ||
Marketing expense (recovery) - China Business Partner activity | |||
Technology and development | 0 | ||
General and administrative | 0 | ||
Depreciation and amortization | 0 | ||
Total cost and expense | 0 | ||
Operating loss | 0 | ||
Other income (expense) | |||
Interest expense | 0 | ||
Other income (expense), net | 0 | ||
Change in fair value of warrant liability | 0 | ||
Gain on investment revaluation | 0 | ||
Gain on debt extinguishment | 0 | ||
Gain on lease termination | 0 | ||
Other gain (loss), net | 0 | ||
Share in income (loss) of VIEs | (1,307) | ||
Total other income, net | (1,307) | ||
Income (loss) from before income taxes | (1,307) | ||
Provision for income taxes | 0 | ||
Net income (loss) | (1,307) | ||
Corporate & Non-VIE Entities | |||
Income Statement [Abstract] | |||
Revenue | 4,040 | ||
Cost and expense | |||
Cost of revenue (excluding depreciation and amortization) | 2,185 | ||
Sales and marketing | 690 | ||
Marketing expense (recovery) - China Business Partner activity | 0 | ||
Technology and development | 2,918 | ||
General and administrative | 13,323 | ||
Depreciation and amortization | 143 | ||
Total cost and expense | 19,259 | ||
Operating loss | (15,219) | ||
Other income (expense) | |||
Interest expense | (2,298) | ||
Other income (expense), net | (598) | ||
Change in fair value of warrant liability | 123 | ||
Gain on investment revaluation | 43,642 | ||
Gain on debt extinguishment | 425 | ||
Gain on lease termination | 0 | ||
Other gain (loss), net | 90 | ||
Share in income (loss) of VIEs | 1,307 | ||
Total other income, net | 42,691 | ||
Income (loss) from before income taxes | 27,472 | ||
Provision for income taxes | 0 | ||
Net income (loss) | 27,472 | ||
VIEs | |||
Income Statement [Abstract] | |||
Revenue | 11,950 | ||
Cost and expense | |||
Cost of revenue (excluding depreciation and amortization) | 9,270 | ||
Sales and marketing | 281 | ||
Marketing expense (recovery) - China Business Partner activity | (1,530) | ||
Technology and development | 1,774 | ||
General and administrative | 797 | ||
Depreciation and amortization | 48 | ||
Total cost and expense | 10,640 | ||
Operating loss | 1,310 | ||
Other income (expense) | |||
Interest expense | (10) | ||
Other income (expense), net | 6 | ||
Change in fair value of warrant liability | 0 | ||
Gain on investment revaluation | 0 | ||
Gain on debt extinguishment | 0 | ||
Gain on lease termination | 0 | ||
Other gain (loss), net | 10 | ||
Share in income (loss) of VIEs | 0 | ||
Total other income, net | 6 | ||
Income (loss) from before income taxes | 1,316 | ||
Provision for income taxes | (9) | ||
Net income (loss) | $ 1,307 | ||
[1] | 1 Includes share-based compensation as follows: Sales and marketing $ 147 $ 164 Technology and development 293 484 General and administrative 3,620 149 |
CONSOLIDATING FINANCIAL SCHED_5
CONSOLIDATING FINANCIAL SCHEDULES -Consolidating Statement of Cash Flows (Unaudited) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 27,472 | $ (13,685) |
Change in fair value of warrant liability | (123) | 1,610 |
Depreciation, amortization and impairments | 191 | 308 |
Share-based compensation | 4,060 | 797 |
Amortization of debt issuance costs and discount | 880 | 0 |
Gain on investment revaluation | (43,642) | 0 |
Gain on debt extinguishment | (425) | 0 |
Share in net loss (income) of VIEs | 0 | |
Financing cost of converting note payable to common stock | 44 | 0 |
Provision for doubtful accounts | 297 | 24 |
Other | 30 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,733) | (2,849) |
Inventory | (473) | (874) |
Prepaid expense and other assets | (4,120) | 95 |
Operating lease assets | 293 | 73 |
Accounts payable, accrued expense and other liabilities | 967 | (920) |
Contract liability | 277 | (27) |
Operating lease liabilities | (169) | (135) |
Net cash used in operating activities | (20,174) | (18,047) |
Cash flows from investing activities: | ||
Proceeds from investment | 2,322 | 0 |
Purchases of property, equipment and software | (223) | (290) |
Other cash outflows from VIEs, net | 0 | |
Net cash provided by (used in) investing activities | 2,099 | (290) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net | 5,692 | 32,135 |
Proceeds from debt issuance | 32,216 | 1,425 |
Repayments of debt | (6,500) | (13,781) |
Other cash inflows from non-VIEs, net | 0 | |
Net cash provided by financing activities | 31,408 | 18,919 |
Net change in cash | 13,333 | 582 |
Cash: | ||
Beginning of period | 854 | 272 |
End of period | 14,187 | 854 |
Eliminating Entries | ||
Cash flows from operating activities: | ||
Net income (loss) | (1,307) | |
Change in fair value of warrant liability | 0 | |
Depreciation, amortization and impairments | 0 | |
Share-based compensation | 0 | |
Amortization of debt issuance costs and discount | 0 | |
Gain on investment revaluation | 0 | |
Gain on debt extinguishment | 0 | |
Share in net loss (income) of VIEs | 1,307 | |
Financing cost of converting note payable to common stock | 0 | |
Provision for doubtful accounts | 0 | |
Other | 0 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 0 | |
Inventory | 0 | |
Prepaid expense and other assets | 0 | |
Operating lease assets | 0 | |
Accounts payable, accrued expense and other liabilities | 0 | |
Contract liability | 0 | |
Operating lease liabilities | 0 | |
Net cash used in operating activities | 0 | |
Cash flows from investing activities: | ||
Proceeds from investment | 0 | |
Purchases of property, equipment and software | 0 | |
Other cash outflows from VIEs, net | 6,710 | |
Net cash provided by (used in) investing activities | 6,710 | |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net | 0 | |
Proceeds from debt issuance | 0 | |
Repayments of debt | 0 | |
Other cash inflows from non-VIEs, net | (6,710) | |
Net cash provided by financing activities | (6,710) | |
Net change in cash | 0 | |
Cash: | ||
Beginning of period | 0 | |
End of period | 0 | 0 |
Corporate & Non-VIE Entities | ||
Cash flows from operating activities: | ||
Net income (loss) | 27,472 | |
Change in fair value of warrant liability | (123) | |
Depreciation, amortization and impairments | 143 | |
Share-based compensation | 4,060 | |
Amortization of debt issuance costs and discount | 880 | |
Gain on investment revaluation | (43,642) | |
Gain on debt extinguishment | (425) | |
Share in net loss (income) of VIEs | (1,307) | |
Financing cost of converting note payable to common stock | 44 | |
Provision for doubtful accounts | 0 | |
Other | 314 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 144 | |
Inventory | (527) | |
Prepaid expense and other assets | 140 | |
Operating lease assets | 98 | |
Accounts payable, accrued expense and other liabilities | (865) | |
Contract liability | 256 | |
Operating lease liabilities | (90) | |
Net cash used in operating activities | (13,428) | |
Cash flows from investing activities: | ||
Proceeds from investment | 2,322 | |
Purchases of property, equipment and software | (223) | |
Other cash outflows from VIEs, net | (6,710) | |
Net cash provided by (used in) investing activities | (4,611) | |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net | 5,692 | |
Proceeds from debt issuance | 32,216 | |
Repayments of debt | (6,500) | |
Other cash inflows from non-VIEs, net | 0 | |
Net cash provided by financing activities | 31,408 | |
Net change in cash | 13,369 | |
Cash: | ||
Beginning of period | 578 | |
End of period | 13,947 | 578 |
VIEs | ||
Cash flows from operating activities: | ||
Net income (loss) | 1,307 | |
Change in fair value of warrant liability | 0 | |
Depreciation, amortization and impairments | 48 | |
Share-based compensation | 0 | |
Amortization of debt issuance costs and discount | 0 | |
Gain on investment revaluation | 0 | |
Gain on debt extinguishment | 0 | |
Share in net loss (income) of VIEs | 0 | |
Financing cost of converting note payable to common stock | 0 | |
Provision for doubtful accounts | 297 | |
Other | (284) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,877) | |
Inventory | 54 | |
Prepaid expense and other assets | (4,260) | |
Operating lease assets | 195 | |
Accounts payable, accrued expense and other liabilities | 1,832 | |
Contract liability | 21 | |
Operating lease liabilities | (79) | |
Net cash used in operating activities | (6,746) | |
Cash flows from investing activities: | ||
Proceeds from investment | 0 | |
Purchases of property, equipment and software | 0 | |
Other cash outflows from VIEs, net | 0 | |
Net cash provided by (used in) investing activities | 0 | |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net | 0 | |
Proceeds from debt issuance | 0 | |
Repayments of debt | 0 | |
Other cash inflows from non-VIEs, net | 6,710 | |
Net cash provided by financing activities | 6,710 | |
Net change in cash | (36) | |
Cash: | ||
Beginning of period | 276 | |
End of period | $ 240 | $ 276 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ in Millions | Jan. 25, 2022 | Jan. 04, 2022 |
China Business Partner | ||
Subsequent Event [Line Items] | ||
Prepayment of debt | $ 3.9 | |
Mudrick Lenders | ||
Subsequent Event [Line Items] | ||
Prepayment of debt | $ 3.7 | |
Accrued interest on loan | $ 0.4 |