Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 15, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | AMERICAN VIRTUAL CLOUD TECHNOLOGIES, INC. | |
Trading Symbol | AVCT | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 140,340,478 | |
Amendment Flag | false | |
Entity Central Index Key | 0001704760 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-38167 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-2402421 | |
Entity Address, Address Line One | 1720 Peachtree Street | |
Entity Address, Address Line Two | Suite 629 | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30309 | |
City Area Code | (404) | |
Local Phone Number | 239-2863 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 13,106 | $ 31,119 |
Trade receivables, net (including related party amounts of $2,549 and $2,511, respectively) | 8,797 | 9,137 |
Prepaid expenses and other current assets | 5,625 | 2,124 |
Assets held for sale - current (See Note 5) | 27,775 | |
Total current assets | 27,528 | 70,155 |
Property and equipment, net | 5,773 | 4,753 |
Goodwill | 10,468 | |
Assets held for sale - noncurrent (See Note 5) | 31,258 | |
Other noncurrent assets | 290 | 1,269 |
TOTAL ASSETS | 33,591 | 117,903 |
Current liabilities | ||
Accounts payable and accrued expenses (including related party amounts of $3,335 and $2,285, respectively) | 12,460 | 17,014 |
Current portion of Convertible Note (See Note 8) | 7,115 | |
Series B Preferred Stock liability, $1,000 stated value per share, 12,094 shares | 3,924 | |
Deferred revenue (including related party amounts of $11 and $41, respectively) | 95 | 82 |
Current portion of notes payable and capital leases | 45 | 26,393 |
Subordinated promissory note - related party | 5,000 | |
Liabilities associated with assets held for sale - current (See Note 5) | 29,237 | |
Total current liabilities | 23,639 | 77,726 |
Long-term liabilities | ||
Notes payable and capital leases (net of current portion and deferred financing fees) | 11 | |
Warrant liabilities | 8,817 | 39,162 |
Convertible Note, net of current portion, discounts and deferred financing fees (See Note 8) | 2,250 | |
Liabilities associated with assets held for sale - noncurrent (See Note 5) | 102 | |
Derivative liabilities | 751 | |
Other liabilities | 57 | |
Total long-term liabilities | 11,875 | 39,275 |
Total liabilities | 35,514 | 117,001 |
Commitments and contingent liabilities (see note 15) | ||
Stockholders’ (deficit) equity: | ||
Preferred stock, $0.0001 par value; 5,000,000 authorized; none outstanding | ||
Common stock, $0.0001 par value; 500,000,000 shares authorized; 98,348,351 and 88,584,773 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 10 | 9 |
Additional paid-in capital | 207,424 | 204,721 |
Accumulated deficit | (209,357) | (203,828) |
Total stockholders’ (deficit) equity | (1,923) | 902 |
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | $ 33,591 | $ 117,903 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Preferred stock liability stated value (in Dollars) | $ 1,000 | $ 1,000 |
Preferred stock liability shares | 12,094 | 12,094 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 98,348,351 | 88,584,773 |
Common stock, shares outstanding | 98,348,351 | 88,584,773 |
Trade Receivables | ||
Related party amounts (in Dollars) | $ 2,549 | $ 2,511 |
Accounts Payable and Accrued Expenses | ||
Related party amounts (in Dollars) | 3,335 | 2,285 |
Deferred Revenue | ||
Related party amounts (in Dollars) | $ 11 | $ 41 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues: | ||||
Cloud subscription and software (including related party amounts of $0, $0, $24 and $0, respectively) | $ 3,617 | $ 4,057 | $ 7,420 | $ 7,195 |
Managed and professional services (including related party amounts of $38, $0, $76 and $0, respectively) | 66 | 898 | 357 | 1,273 |
Other | 41 | 41 | ||
Total revenues | 3,724 | 4,955 | 7,818 | 8,468 |
Cost of revenue (including related party amounts of $650, $353, $1,137 and $708, respectively) | 5,277 | 3,579 | 10,113 | 7,263 |
Gross (loss) profit | (1,553) | 1,376 | (2,295) | 1,205 |
Goodwill impairment | 10,468 | 10,468 | ||
Research and development (including related party amounts of $0, $116, $0 and $215, respectively) | 4,713 | 4,604 | 9,223 | 9,098 |
Selling, general and administrative (including related party amounts of $626, $732, $1,662 and $1,492, respectively) | 7,278 | 8,450 | 14,352 | 15,588 |
Loss from continuing operations | (24,012) | (11,678) | (36,338) | (23,481) |
Other income (expense) | ||||
Change in fair value of warrant liabilities | 33,577 | 3,535 | 40,488 | (23) |
Change in fair value of derivative liabilities | (29) | (29) | ||
Interest expense - related parties | (5,164) | (764) | (10,009) | |
Interest expense | (1,096) | (1,505) | (9,500) | (2,288) |
Other expense | (86) | (31) | (123) | (47) |
Total other income (expenses) | 32,366 | (3,165) | 30,072 | (12,367) |
Net income (loss) from continuing operations before income taxes | 8,354 | (14,843) | (6,266) | (35,848) |
Provision for income taxes | (5) | (29) | (11) | (32) |
Net income (loss) from continuing operations, net of tax | 8,349 | (14,872) | (6,277) | (35,880) |
Net income (loss) on discontinued operations, net of tax (Notes 1 and 5) | (1,034) | 748 | (2,653) | |
Net income (loss) | $ 8,349 | $ (15,906) | $ (5,529) | $ (38,533) |
Weighted average shares outstanding, basic (in Shares) | 94,498,674 | 20,299,030 | 91,734,355 | 20,151,562 |
Weighted average shares outstanding, diluted (in Shares) | 321,670,215 | 20,299,030 | 318,905,896 | 20,151,562 |
Net income (loss) per common share - basic | ||||
Continuing operations (in Dollars per share) | $ 0.09 | $ (0.73) | $ (0.07) | $ (1.78) |
Discontinued operations (in Dollars per share) | (0.05) | 0.01 | (0.13) | |
Net income (loss) per common share - basic (in Dollars per share) | 0.09 | (0.78) | (0.06) | (1.91) |
Net income (loss) per common share - diluted | ||||
Continuing operations (in Dollars per share) | (0.08) | (0.73) | (0.14) | (1.78) |
Discontinued operations (in Dollars per share) | (0.05) | 0 | (0.13) | |
Net loss per common share - diluted (in Dollars per share) | $ (0.08) | $ (0.78) | $ (0.14) | $ (1.91) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Cloud Subscription and Software | ||||
Related party amounts | $ 0 | $ 0 | $ 24 | $ 0 |
Managed and Professional Services | ||||
Related party amounts | 38 | 0 | 76 | 0 |
Cost of Revenue | ||||
Related party amounts | 650 | 353 | 1,137 | 708 |
Research and Development | ||||
Related party amounts | 0 | 116 | 0 | 215 |
Selling, General and Administrative | ||||
Related party amounts | $ 626 | $ 732 | $ 1,662 | $ 1,492 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (Unaudited) - USD ($) $ in Thousands | Successor Common Stock | Successor Additional Paid-In Capital | Successor Accumulated Deficit | Successor | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 2 | $ 90,828 | $ (43,661) | $ 47,169 | ||||
Balance (in Shares) at Dec. 31, 2020 | 19,753,061 | |||||||
Cumulative effect of accounting change related to adoption of Accounting Standard Update No. 2020-06 | (36,983) | 1,219 | (35,764) | |||||
Debenture discount relative to fair value of warrants | 9,223 | 9,223 | ||||||
Vested and delivered RSUs | ||||||||
Vested and delivered RSUs (in Shares) | 702,500 | |||||||
Shares repurchased for tax withholding | (1,142) | (1,142) | ||||||
Shares repurchased for tax withholding (in Shares) | (153,109) | |||||||
Share-based compensation | 3,801 | 3,801 | ||||||
Net income (loss) | (38,533) | (38,533) | ||||||
Balance at Jun. 30, 2021 | $ 2 | $ 65,727 | $ (80,975) | $ (15,246) | $ 2 | 65,727 | (80,975) | (15,246) |
Balance (in Shares) at Jun. 30, 2021 | 20,302,452 | 20,302,452 | ||||||
Balance at Mar. 31, 2021 | $ 2 | 60,671 | (65,069) | (4,396) | ||||
Balance (in Shares) at Mar. 31, 2021 | 19,968,390 | |||||||
Debenture discount relative to fair value of warrants | 3,560 | 3,560 | ||||||
Vested and delivered RSUs | ||||||||
Vested and delivered RSUs (in Shares) | 396,250 | |||||||
Shares repurchased for tax withholding | (365) | (365) | ||||||
Shares repurchased for tax withholding (in Shares) | (62,188) | |||||||
Share-based compensation | 1,861 | 1,861 | ||||||
Net income (loss) | (15,906) | (15,906) | (15,906) | |||||
Balance at Jun. 30, 2021 | $ 2 | 65,727 | (80,975) | (15,246) | $ 2 | 65,727 | (80,975) | (15,246) |
Balance (in Shares) at Jun. 30, 2021 | 20,302,452 | 20,302,452 | ||||||
Balance at Dec. 31, 2021 | $ 9 | 204,721 | (203,828) | 902 | ||||
Balance (in Shares) at Dec. 31, 2021 | 88,584,773 | |||||||
Common stock issued on redemption of Series B Preferred Stock | $ 1 | 1,495 | 1,496 | |||||
Common stock issued on redemption of Series B Preferred Stock (in Shares) | 8,370,457 | |||||||
Common stock issued on conversion of Penny Warrants | 4 | 4 | ||||||
Common stock issued on conversion of Penny Warrants (in Shares) | 425,000 | |||||||
Vested and delivered RSUs | ||||||||
Vested and delivered RSUs (in Shares) | 968,121 | |||||||
Shares repurchased for tax withholding | (47) | (47) | ||||||
Share-based compensation | 1,251 | 1,251 | ||||||
Net income (loss) | (5,529) | (5,529) | ||||||
Balance at Jun. 30, 2022 | $ 10 | 207,424 | (209,357) | (1,923) | $ 10 | 207,424 | (209,357) | (1,923) |
Balance (in Shares) at Jun. 30, 2022 | 98,348,351 | 98,348,351 | ||||||
Balance at Mar. 31, 2022 | $ 9 | 206,339 | (217,706) | (11,358) | ||||
Balance (in Shares) at Mar. 31, 2022 | 89,566,997 | |||||||
Common stock issued on redemption of Series B Preferred Stock | $ 1 | 1,495 | 1,496 | |||||
Common stock issued on redemption of Series B Preferred Stock (in Shares) | 8,370,457 | |||||||
Vested and delivered RSUs | ||||||||
Vested and delivered RSUs (in Shares) | 410,897 | |||||||
Shares repurchased for tax withholding | (15) | (15) | ||||||
Shares repurchased for tax withholding (in Shares) | ||||||||
Share-based compensation | (395) | (395) | ||||||
Net income (loss) | 8,349 | 8,349 | 8,349 | |||||
Balance at Jun. 30, 2022 | $ 10 | $ 207,424 | $ (209,357) | $ (1,923) | $ 10 | $ 207,424 | $ (209,357) | $ (1,923) |
Balance (in Shares) at Jun. 30, 2022 | 98,348,351 | 98,348,351 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flows from Continuing Operations | ||
Net loss from continuing operations | $ (6,277) | $ (35,880) |
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operating activities: | ||
Impairment of goodwill | 10,468 | |
Depreciation | 1,088 | 556 |
Amortization of intangible assets | 1,375 | |
Amortization of Convertible Debenture discount | 6,461 | |
Interest on convertible debt paid-in-kind | 5,739 | |
Share-based compensation | 981 | 3,801 |
Change in fair value of warrant liabilities | (40,488) | 23 |
Change in fair value of derivative liabilities | 29 | |
Deferred income taxes | ||
Amortization of deferred financing costs and discounts | 1,844 | 91 |
Noncash financing fees | 708 | |
Gain on disposal of property and equipment | (28) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 340 | (1,224) |
Prepaid expenses and other current assets | (3,501) | (1,616) |
Inventory | ||
Accounts payable and accrued expenses | (4,997) | (1,418) |
Other current liabilities | ||
Deferred revenue | 13 | 238 |
Other | 105 | (308) |
Net cash used in continuing operating activities | (39,687) | (22,190) |
Cash Flows from Continuing Investing Activities: | ||
Purchase of property and equipment | (259) | (775) |
Deferred development costs | (917) | (93) |
Net cash used in continuing investing activities | (1,176) | (868) |
Cash Flows from Continuing Financing Activities: | ||
Payment of taxes from withheld shares | (47) | (1,142) |
Debt repayments | (27,059) | (158) |
Repayment of promissory note - related party | (5,000) | |
Proceeds from issuance of Convertible Debentures (See Note 8) | 24,000 | |
Proceeds from issuance of securities (See Note 8) | 15,000 | |
Proceeds from issuance of Convertible Note (See Note 8) | 10,000 | |
Proceeds from exercise of warrants | 4 | |
Payment of deferred financing fees | (1,202) | (628) |
Net cash (used in) provided by continuing financing activities | (8,304) | 22,072 |
Cash Flows from Discontinued Operations | ||
Net cash (used in) provided by operating activities | (4,930) | 241 |
Net cash provided by (used in) investing activities | 31,948 | (618) |
Net cash provided by financing activities | 242 | |
Net cash provided by (used in) discontinued operations | 27,018 | (135) |
Net change in cash | (22,149) | (1,121) |
Cash, beginning of period | 35,255 | 10,505 |
Cash, end of period | 13,106 | 9,384 |
Supplemental Disclosures about Cash Flow Information | ||
Cash paid for interest | 7,858 | 380 |
Cash paid for income taxes | 151 | 214 |
Supplemental Schedule of Noncash Investing and Financing Activities | ||
Fair value of Penny Warrants related to the issuance of Convertible Debentures | 9,223 | |
Capital expenditures included in accounts payable and accrued expenses | 58 | |
Preferred stock converted to common stock | $ 1,496 |
Organization, Business Operatio
Organization, Business Operations and Certain Recent Developments | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Organization, Business Operations and Certain Recent Developments | 1. Organization, Business Operations and Certain Recent Developments Overview American Virtual Cloud Technologies, Inc. (“AVCT,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware on April 7, 2016. On April 7, 2020 (the “Computex Closing Date”), AVCT (formerly known as Pensare Acquisition Corp.) consummated a business combination transaction (the “Computex Business Combination”) in which it acquired Stratos Management Systems, Inc. (“Computex”), an operating company that does business as Computex Technology Solutions. In connection with the closing of the Computex Business Combination, the Company changed its name to American Virtual Cloud Technologies, Inc. On December 1, 2020 (the “Kandy Closing Date”), the Company acquired the Kandy Communications business (hereafter referred to as “Kandy”) from Ribbon Communications, Inc. and certain of its affiliates (“Ribbon”), by acquiring certain assets, assuming certain liabilities of Kandy from Ribbon and acquiring all of the outstanding interests of Kandy Communications LLC. For accounting purposes, both Computex and Kandy were considered the acquirees, and the Company was considered the acquirer. The acquisitions were accounted for using the acquisition method of accounting. On September 16, 2021, the Company announced that as a result of a decision by the Company’s Board of Directors to explore strategic alternatives previously announced on April 7, 2021, the Board had authorized the Company to focus its strategy on acquisitions and organic growth in its cloud technologies business as well as to explore strategic opportunities for its IT solutions business, including the divestiture of Computex. The Company believed that such changes would allow it to optimize resource allocation, focus on core competencies, and improve its ability to invest in areas of maximal growth potential. On January 27, 2022, the Company announced that it had executed a definitive agreement to sell Computex, which would complete the Company’s transition to a pure-play cloud communications and collaboration company, centered on its Kandy platform. On March 15, 2022, the sale of Computex was consummated. Net proceeds from the sale of Computex, after payment of closing and certain other obligations were used for working capital and general business purposes. Unless otherwise noted, the discussion in these Notes to our condensed consolidated financial statements refers to our continuing operations. Refer to Note 5, Assets held for sale and operations classified as discontinued operations, Nature of Continuing and Discontinued Operations The Kandy cloud communications platform is a cloud-based, real-time communications platform, offering proprietary unified communications as a service (“UCaaS”), communications platform as a service (“CPaaS”), Microsoft Teams Direct Routing as a Service (“DRaaS”), and SIP Trunking as a Service capabilities. Kandy is one of the largest pure-play providers of UCaaS, CPaaS and Direct Routing as a Service (DRaaS) for enterprise customers. As a provider of cloud-based enterprise services, Kandy deploys a global carrier grade cloud communications platform that supports the digital and cloud transformation of mid-market and enterprise customers across virtually any device, on virtually any network, in virtually any location. The Kandy platform is based on a powerful, proprietary multi-tenant, highly scalable, and secure cloud platform that includes pre-built customer engagement tools, based on web real-time communications technology (“WebRTC technology”) that enables frictionless communications. Further, Kandy supports rapid service creation and multiple go to market models including white labelling, multi-tier channel distribution, enterprise direct, and self-service via its SaaS (software as a service) web portals. Kandy’s cloud-based, real-time communications platform enables service providers, enterprises, software vendors, systems integrators, partners and developers to enrich their applications and their services with real-time contextual communications empowering the API (Application Programming Interface) economy. With Kandy’s platform, companies of various sizes and types can quickly embed real-time communications capabilities into their existing applications and business processes, providing a more engaging user experience. While the cloud communications business is focused on highly complex, medium and large enterprise deployments, the customer experience is augmented by our managed services capabilities. In addition, our strategic partnerships with companies such as AT&T, IBM, and Etisalat give us access to a marquee customer base and the ability to sell end to end solutions. Computex, classified within discontinued operations, is a leading multi-brand technology solutions provider to large global customers, providing a comprehensive and integrated set of technology solutions, through its extensive hardware, software and value-added service offerings. Recent Financing Transactions On December 2, 2021, the Company entered into the Credit Agreement with Monroe for a $27,000 Credit Facility (as such terms are defined in Note 7), part of which was used to pay off amounts owing under a prior credit agreement which was assumed as part of the acquisition of Computex. The remainder of the proceeds from the Credit Facility were scheduled to be used for working capital and general business purposes. However, on March 1, 2022, all amounts owing under the Credit Agreement were repaid from the proceeds of a securities sale executed on March 1, 2022 and cash on hand. Previously, proceeds from the sale of Computex along with some of the cash on hand were initially scheduled to be used to pay off the amounts owing under the Credit Agreement. However, since the Credit Agreement was repaid on March 1, 2022, which was prior to the sale of Computex, the net proceeds from the sale of Computex, after payment of closing and certain other obligations were used for working capital and general business purposes. In addition, as more fully discussed in Note 8, in November and December 2021, the Company completed the sale of certain securities, including the sale of common stock, Series A Preferred Stock and certain warrants. The Company also completed certain share registrations. Certain of the warrants were exercised soon after they were issued, thereby providing additional capital. Nasdaq Notices Our common stock and public warrants are currently listed on the Nasdaq. On May 20, 2022, we received a written notice from the Nasdaq indicating that we were not in compliance with the Nasdaq Listing Rule which requires us to maintain a minimum bid price of $1.00 per share and providing us with a period of 180 calendar days, or until November 16, 2022, to regain compliance by maintaining a minimum bid price of $1.00 per share for at least ten consecutive business days. We intend to continue to monitor the bid price of our common stock. We have received approval from our stockholders to carry out a reverse stock split, if deemed appropriate by our board of directors; however, a reverse stock split could have negative implications. Such a reverse stock split must be completed by September 30, 2022, or we would need to again seek stockholder approval. In addition, on July 27, 2022, we received a written notice from the Nasdaq notifying us that for the last 30 consecutive business days, the Company’s Minimum Value of Listed Securities (“MVLS”) was below the minimum of $35 million required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq listing rule 5550(b)(2), and providing us with a period of 180 calendar days, or until January 23, 2023, to regain compliance by having a closing MVLS of at least $35 million for at least ten consecutive business days (or such longer period of time as the Nasdaq staff may require in some circumstances, but generally not more than 20 consecutive business days). We intend to continue to monitor our MLVS. If our common stock does not trade at a level that is likely to regain compliance with the Nasdaq requirements, our board of directors may consider other options that may be available to achieve compliance. We cannot assure you that we will be able to demonstrate compliance with both of the listing rules described above by the applicable deadlines, in which case our common stock may then be subject to delisting. Covid-19 The novel strain of coronavirus (“COVID-19”) continues to significantly impact local, regional, and global economies, businesses, supply chains, production and sales across a range of industries. The extent of its impact on our operational and financial performance is uncertain and difficult to predict and we remain cautious about the global recovery. To protect the health and safety of our employees, our daily execution has evolved into a largely virtual model. However, we have found ways to continue to engage with and assist our customers and partners as they work to navigate the current environment. We will continue to monitor the current environment and may take further actions that may be required by federal, state or local authorities or that we determine to be in the interests of our employees, customers, and partners. |
Liquidity
Liquidity | 6 Months Ended |
Jun. 30, 2022 | |
Liquidity [Abstract] | |
Liquidity | 2. Liquidity Historically, the Company’s primary sources of liquidity have been cash and cash equivalents, cash flows from operations (when available) and cash flows from financing activities, including funding under credit agreements and the sale of equity securities. As of June 30, 2022, the Company had an aggregate cash balance of $13,106 in its operating bank accounts and net working capital of $3,889. As of August 12, 2022, aggregate cash in the Company’s operating bank accounts was $4,092. The Company currently projects that it will need additional capital to fund its current operations including research & development and capital investment requirements until the Company scales to a revenue level that permits cash self-sufficiency. As a result, the Company needs to raise additional capital or secure debt funding to support on-going operations until such time. This projection is based on the Company’s current expectations regarding product sales and service, cost structure, cash burn rate and other operating assumptions. The sources of this capital are anticipated to be from the sale of equity and/or debt. Alternatively, or in addition, the Company may seek to sell additional assets or portions of its business. Any of the foregoing may not be achievable on favorable terms, if at all, and may require the consent of current debt and/or equity holders to the modification of existing agreements, which may or may not be granted. Additionally, any debt or equity transactions may cause significant dilution to existing stockholders. If the Company is unable to raise additional capital moving forward, its ability to operate in the normal course and continue to invest in its product portfolio may be negatively impacted and the Company may be forced to scale back operations or divest some or all of its products. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Unless management is able to obtain additional financing, it is unlikely that the Company will be able to meet its funding requirements during the next 12 months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of presentation The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 15, 2022. The interim results for the period ended June 30, 2022 are not necessarily indicative of the results expected for the year ending December 31, 2022 or any future interim periods. The Company has reclassified certain prior period amounts, including the results of discontinued operations and reportable segment information, to conform to the current period presentation. Unless otherwise indicated, amounts provided in these Notes pertain to the Company’s continuing operations. See Note 5, Assets held for sale and operations classified as discontinued, Principles of consolidation The accompanying condensed consolidated financial statements include the accounts of AVCT and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales (or revenues) and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that estimates made as of the date of the financial statements could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from those estimates. Significant accounting estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, revenue recognition, allowance for doubtful accounts, accounting for warrants, recognition and measurement of income tax assets, valuation of share-based compensation, discount related to the fair value of warrants, and the valuation of net assets acquired. Significant accounting policies The significant accounting policies used in preparing these condensed consolidated financial statements were applied on a basis consistent with those reflected in our consolidated financial statements that are included in the annual report on Form 10-K for the year ended December 31, 2021 that was filed with the SEC on April 15, 2022. Series A, Series B, Series C, Series D and Monroe Warrants as well as the February 2022 Warrants As more fully discussed and defined in Note 8, in November and December 2021, the Company issued certain Series A, Series B, Series C, Series D and Monroe Warrants in a series of transactions. Also as discussed and defined in Note 8, during the first quarter of the current year, the Company issued the February 2022 Warrants. Such warrants were determined to qualify for treatment under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). Concentration of business and credit risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and trade receivables. Cash held by the Company in financial institutions regularly exceeds the federally insured limit of $250. At June 30, 2022, cash balances held with a financial institution exceeded the federally insured limit. However, management does not believe this poses a significant credit risk. Concentration of business risks are summarized in the following table: June 30, 2022 December 31, 2021 Number of customers or vendors Aggregate total Number of customers or vendors Aggregate total Customers that individually accounted for 10% or more of trade accounts receivable 3 $ 6,386 3 $ 6,104 Vendors that individually accounted for 10% or more of trade accounts payable 2 $ 2,753 2 $ 2,527 Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Number of customers that individually accounted for 10% or more of sales from continuing operations 3 3 4 3 Aggregate total sales of customers that individually accounted for 10% or more of sales from continuing operations $ 1,944 $ 2,951 $ 5,259 $ 4,594 Trade receivables, net Trade receivables on the accompanying condensed consolidated balance sheets are net of allowances of $583 and $147, as of June 30, 2022 and December 31, 2021, respectively. Fair value of financial instruments Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures ● Level 1 — inputs are based upon unadjusted quoted prices for identical assets or liabilities traded in active markets. ● Level 2 — inputs are based upon quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 — inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. Assets measured at fair value on a non-recurring basis include goodwill, and tangible and intangible assets. Such assets are reviewed annually for impairment indicators. If a triggering event has occurred, the assets are re-measured when the estimated fair value of the corresponding asset group is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3). The carrying amounts of the Company’s financial instruments, which include trade receivables, deposits, accounts payable and accrued expenses and debt at floating interest rates, approximate their fair values, principally due to their short-term nature, maturities or nature of interest rates. The fair values of warrant liabilities are reflected on the condensed consolidated balance sheets as “Warrant Liabilities.” The fair values of derivative liabilities assessed during the three months ended June 30, 2022 are reflected as derivative liabilities on the condensed consolidated balance sheet. The fair values of certain warrants issued in 2017 (the “2017 Private Placement Warrants”) were determined using the Black-Scholes model in which the following weighted average assumptions were used for the valuations performed as of June 30, 2022: o stock price volatility – 128% o exercise price – $11.50 o discount rate – 2.9439% o remaining useful life – 2.77 years o stock price – $0.25 For the valuation methodologies and significant assumptions used in the valuations of other warrants and the derivative liabilities, see Note 8. The warrant liabilities and the derivative liabilities are considered to be Level 2 valuations. Change in Segment reporting Effective January 1, 2021, the Company identified two operating segments, Computex and Kandy, pursuant to ASC 280, Segment Reporting Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in December, or more frequently if a triggering event occurs between impairment testing dates. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then we evaluate goodwill for impairment by reviewing the fair value of the reporting unit versus its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying value, then no further testing is required. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. Goodwill in the Kandy operating segment was recognized as a result of the Kandy Business Combination in December 2020, at which time approximately $24,144 of goodwill was attributed to the Kandy reporting unit. Subsequently, in the fourth quarter of 2021, as part of the Company’s annual impairment analysis, the Company recorded an impairment charge of approximately $13,676 to Kandy’s goodwill. During the three months ended June 30, 2022, the Company concluded that a triggering event had occurred in the Company’s sole reporting unit, comprised of Kandy, as a result of declining financial performance coupled with changes in market conditions. Therefore, the Company conducted both qualitative and quantitative assessments and determined that it was appropriate to write off the entire remaining goodwill of $10.5 million. Therefore, the Company recognized a non-cash impairment charge of Balance, January 1, 2022 $ 10,468 Goodwill impairment (10,468 ) Balance, June 30, 2022 $ - The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. Emerging growth company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. Private companies are those companies that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, it adopts the new or revised standard at the time private companies adopt the new or revised standard, unless it chooses to early-adopt the new or revised accounting standard. Therefore, the Company’s financial statements may not be comparable to certain public companies. |
Recently Issued and Adopted Acc
Recently Issued and Adopted Accounting Standards | 6 Months Ended |
Jun. 30, 2022 | |
Recently Issued and Adopted Accounting Standards [Abstract] | |
Recently Issued and Adopted Accounting Standards | 4. Recently Issued and Adopted Accounting Standards Recently issued accounting standards In February 2016, the FASB issued Accounting Standard Update (“ASU”) No. 2016-02, Leases (ASC 842) The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of changes in equity, statements of operations and statements of cash flows. Recently adopted accounting standards Effective July 1, 2021, the Company adopted ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment In May 2021, the FASB issued ASU No. 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options Entities were required to apply the amendments prospectively to modifications or exchanges that occur on or after the effective date. ASU No. 2021-04 was effective for the Company on January 1, 2022. The adoption had no significant impact on the Company’s financial statements. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes ASU No. 2019-12 allows companies to treat tax law changes as intraperiod items, rather than as discrete items within the interim period. The adoption of ASU No. 2019-12, which was effective for the Company during the first quarter of the current year, had no significant impact on the Company’s financial statements. |
Assets Held for Sale and Operat
Assets Held for Sale and Operations Classified as Discontinued Operations | 6 Months Ended |
Jun. 30, 2022 | |
Assets held for sale and operations classified as discontinued operations [Abstract] | |
Assets Held for Sale and Operations Classified as Discontinued Operations | 5. Assets held for sale and operations classified as discontinued operations On September 16, 2021, the Company issued a press release announcing that as a result of a decision by the Company’s Board of Directors to explore strategic alternatives previously announced on April 7, 2021, the Board had authorized the Company to focus its strategy on acquisitions and organic growth in its cloud technologies business as well as to explore strategic opportunities for its IT solutions business, including the divestiture of Computex. The Company believed that the change would allow the Company to optimize resource allocation, focus on core competencies, and improve its ability to invest in areas of maximal growth potential. On January 26, 2022, the Company entered into an asset purchase agreement to sell substantially all of the assets of its Computex business. Net sale proceeds received for the sale of substantially all of the assets and liabilities of Computex was $32,112. At December 31, 2021, the assets and liabilities of Computex were classified as held for sale, and the related revenues and expenses are classified as discontinued operations in the accompanying condensed consolidated statements of operations. During 2021, in connection with the planned sale of Computex, the Company compared the expected sales proceeds less costs to sell with the carrying value of the reporting unit and in connection therewith recorded a noncash goodwill impairment charge of $32,100 during the year ended December 31, 2021. The sale of Computex was consummated on March 15, 2022. Assets and liabilities classified as held for sale at December 31, 2021 consisted of the following: December 31, Current assets: Cash $ 4,136 Prepaid expenses 937 Trade receivables (net allowance of $146) 19,965 Inventory 2,737 Assets held for sale - current 27,775 Noncurrent assets: Property and equipment, net 4,489 Goodwill 6,579 Other intangible assets, net 20,105 Other noncurrent assets 85 Assets held for sale - noncurrent 31,258 Total assets held for sale $ 59,033 Current liabilities: Accounts payable and accrued expenses $ 26,023 Deferred revenue 3,214 Liabilities associated with assets held for sale - current 29,237 Long-term liabilities Other liabilities 102 Liabilities associated with assets held for sale - noncurrent 102 Total liabilities associated with assets held for sale $ 29,339 Revenues and expenses classified as discontinued operations consist of the following: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Revenues: Hardware $ - $ 12,309 $ 10,948 $ 26,219 Third party software and maintenance - 1,585 1,815 3,035 Managed and professional services - 8,321 7,214 16,447 Other - 392 165 560 Total revenues - 22,607 20,142 46,261 Cost of revenue - 15,499 14,176 32,608 Gross profit - 7,108 5,966 13,653 Selling, general and administrative - 7,824 9,520 15,614 Income (loss) from operations - (716 ) (3,554 ) (1,961 ) Other (expense) income Gain on sale of Computex - - 4,314 - Interest expense - (316 ) - (518 ) Other expense - 15 - (155 ) Total other (expenses) income - (301 ) 4,314 (673 ) Income (loss) from discontinued operations before income taxes - (1,017 ) 760 (2,634 ) Income tax provision on discontinued operations - (17 ) (12 ) (19 ) Net income (loss) from discontinued operations $ - $ (1,034 ) $ 748 $ (2,653 ) |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 6 Months Ended |
Jun. 30, 2022 | |
Accounts payable and accrued expenses [Abstract] | |
Accounts payable and accrued expenses | 6. Accounts payable and accrued expenses Accounts payable and accrued expenses were as follows as of June 30, 2022 and December 31, 2021: June 30, December 31, Accounts payable $ 3,501 $ 3,692 Accrued compensation, benefits and related accruals 3,146 6,412 Accrued professional fees 1,520 1,867 Due to related parties 3,352 2,285 Third party interest accrual - 2,180 Other 941 578 $ 12,460 $ 17,014 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2022 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | 7. Long-Term Debt Credit Agreement On December 2, 2021, the Company entered into a $27,000 term loan facility (the “Credit Facility”) under a Credit Agreement (the “Credit Agreement”) with Monroe Capital Management Advisors, LLC and certain affiliated entities (“Monroe”), proceeds of which were used, in part, to repay amounts owing under a prior credit agreement, which the Company had assumed when it acquired Computex. On March 1, 2022, all amounts owing under the Credit Agreement were repaid in full, including related accrued interest and other charges. The Credit Facility was scheduled to mature on the earlier of (i) December 2, 2022 and (ii) the date on which the Computex Sale was consummated. As part of the Credit Agreement, the Company was required to comply with certain sales milestone terms, conditions and timeframes in connection with the then-pending sale of Computex. In connection with such sales milestone requirements, the Company paid amendment fees of $920 on January 18, 2022 as it was apparent that certain of the milestone dates for the closing of the Computex sale were not going to be met. Loans under the Credit Facility previously bore interest at a rate equal to, at the Company’s option, either the Base Rate for the interest period in effect for such borrowing plus 10.00% per annum, or the LIBOR Rate for the interest period in effect for such borrowing plus 11.00% per annum. Notwithstanding such interest rates, Monroe was guaranteed a minimum return of $7,290, including a closing fee of $675 that was paid to the administrative agent on the closing date. Additional fees would have been payable if the Credit Facility was not repaid in full by certain dates. In connection with the closing of the Credit Facility and pursuant to a Subscription Agreement (the “Subscription Agreement”), the Company issued, to certain funds affiliated with Monroe, warrants to purchase, in the aggregate, up to initially 2,519,557 shares of the Company’s common stock at an exercise price of $0.0001 per share (the “Monroe Warrants”). The number of shares of the Company’s common stock issuable upon exercise of the Monroe Warrants is subject to, in addition to customary adjustments for stock dividends, stock splits, reclassifications and the like, adjustment for certain issuances (or deemed issuances) of the Company’s common stock at a price per share below $1.564 while the Monroe Warrants are outstanding, such that the Monroe Warrants will remain exercisable for, in the aggregate, approximately 2.5% of the total number of shares of the Company’s common stock outstanding, calculated on a fully-diluted basis. The Monroe Warrants, which are further discussed in Note 8, were exercisable starting on the date of issuance and will expire on January 31, 2029. The Monroe Warrants were exercisable for an aggregate of 4,646,850 shares of common stock as of June 30, 2022. Total long-term debt consisted of the following: June 30, December 31, Term Note payable to Monroe; guaranteed interest of $7,290 $ - $ 27,000 Capital lease obligations 45 104 Total long-term debt 45 27,104 Less: unamortized debt issuance costs $ - (700 ) Total notes payable and line of credit, net of unamortized debt issuance costs 45 26,404 Less: current maturities of notes payable and line of credit (45 ) (26,393 ) Long-term debt, net of current maturities and unamortized debt issuance costs $ - $ 11 Subordinated promissory note – related party On September 16, 2021, the Company entered into a promissory note in the principal amount of $5,000 (the “2021 Note”). The 2021 Note, which was secured by an affiliate of a shareholder that owns more than five percent of the Company’s shares, was originally scheduled to mature on the earliest of (a) September 16, 2022, (b) the Company’s consummation of a debt financing resulting in the receipt of gross proceeds of not less than $20,000, (c) the Company’s consummation of primary sales of registered equity securities resulting in the receipt of gross proceeds of not less than $20,000, (d) the Company’s consummation of the sale of Computex and (e) the date of any event of default. However, in connection with the closing of the Credit Facility, the 2021 Note was amended to, among other things, revise the definition of the maturity date so that the consummation of the Credit Agreement would not result in its maturity. In consideration of the amendment, the Company paid the lender an amendment fee in the amount of $1,250. The amended maturity date of the 2021 Note was scheduled to be the earliest of (a) September 16, 2022, (b) the Company’s consummation of primary sales of registered equity securities resulting in the receipt of gross proceeds of not less than $20,000 (c) the Maker’s consummation of the sale of its Computex business unit and (d) the date of any event of default, subject to extension if the Credit Agreement was not paid off as of such date. The 2021 Note became due on March 1, 2022 due to the Company’s sale of registered and equity securities and the early pay off of the Credit Agreement. However, for a waiver fee of $250, the lender extended the maturity date to May 1, 2022. On March 15, 2022, all amounts outstanding under the 2021 Note were paid. The 2021 Note had a minimum required return of 25.00%. Subordinated promissory note - other On April 7, 2020, the Company issued a subordinated promissory note of $500 (the “2020 Note”) in partial settlement of a deferred underwriting fee of $3,000. The remaining $2,500 was settled via the issuance of debentures. The 2020 Note, which previously bore interest at the rate of 12.00% per annum and had a maturity date of September 30, 2021, was repaid on November 5, 2021 along with interest accrued as of that date. |
Stockholders_ (Deficit) Equity,
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty | 8. Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty Preferred stock Common stock Recent sales of securities The November Purchase Agreement On November 2, 2021, the Company entered into a securities purchase agreement (the “November Purchase Agreement”) with a buyer for the purchase and sale of (i) a warrant to purchase up to 5,000,000 shares of the Company’s common stock, subject to increases as described below (the “Series A Warrants”), in a private placement; and (ii) an aggregate of 2,500,000 shares of the Company’s common stock, and a warrant to purchase up to 2,500,000 shares of the Company’s common stock (the “Series B Warrants” and, collectively with the Series A Warrants, the “A&B Warrants,” in a registered direct offering. The aggregate purchase price for the shares and the A&B Warrants was $5,000. At the date of issuance, the Series A Warrants had an exercise price of $2.00 per share, were exercisable commencing on the date of issuance, and were scheduled to expire five years from the date of issuance. The Series B Warrants had an exercise price of $2.00 per share, were also exercisable on the date of issuance and were scheduled to expire two years from the date of issuance. The Company had the right to force the holders of the Series B Warrants to exercise such warrants in the event that shares of the Company’s common stock traded at or above $2.40 per share for a period of five consecutive trading days, subject to certain conditions, including equity conditions. Initially, the Series A Warrants were only exercisable for 2,500,000 shares of the Company’s common stock, but upon any exercise of the Series B Warrant, the number of shares issuable upon exercise of the Series A Warrant increased by the number of shares of the Company’s common stock issued upon exercise of the Series B Warrant. Northland Securities, Inc. (the “Placement Agent”) received fees of 7% of the aggregate gross proceeds. As summarized in the table below, in connection with the Company’s consummation of the Credit Agreement, the exercise price of the A&B Warrants were subsequently reduced to $1.50 per share, the number of warrants were increased and the buyers received certain newly-issued warrants (the “Series C Warrants”). As of the date of the modification, the Company recognized a change in fair value of the warrant liabilities equal to the excess of the fair value of the modified instrument over the previous fair value. The fair value of the Series C Warrants as of the issuance date was considered to be analogous to a financing charge and was included in interest expense. The December 2021 securities sale On December 15, 2021, the Company consummated the sale of certain securities pursuant to a securities purchase agreement, dated as of December 13, 2021 between the Company and an investor (the “Buyer”). At the closing, the Company issued to the Buyer (i) a warrant (the “Series D Warrant”) to purchase up to 15,625,000 shares of the Company’s common stock, in a private placement; and (ii) an aggregate of 7,840,000 shares of the Company’s common stock, and 12,456 shares of Series A Preferred Stock (“Series A Preferred”) with a stated value of $1,000 per share, initially convertible into 7,785,000 shares of the Company’s common stock at a conversion price of $1.60 per share, in a registered direct offering. The aggregate purchase price paid at the closing for the common stock, the Series A Preferred and the Series D Warrants was $25,000. The Series D Warrants had an initial exercise price of $2.00 per share, subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of the Company’s common stock, or securities convertible, exercisable or exchangeable for, common stock at a price below the then-applicable exercise price (subject to certain exceptions). The Series D Warrants were exercisable starting on the issuance date and expire on December 15, 2026. The Company has the right to force the buyer to exercise the Series D Warrant in the event the volume weighted average closing price of its common stock is at or above $5.00 per share for a period of three consecutive trading days, subject to certain conditions, including equity conditions. The Series A Preferred shares were convertible into shares of the Company’s common stock at the election of the holders at any time at an initial conversion price of $1.60. The conversion price was subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and were subject to price-based adjustments, on a “full ratchet” basis, in the event of any issuances of the Company’s common stock, or securities convertible, exercisable or exchangeable for such common stock at a price below the then-applicable conversion price (subject to certain exceptions). No dividends were payable on the Series A Preferred, except that holders of the Series A Preferred shares would have been entitled to receive any dividends paid on account of the Company’s common stock, on an as-converted basis. The holders of the Series A Preferred had no voting rights on account of the Series A Preferred, other than with respect to certain matters affecting the rights of the Series A Preferred. In December 2021, the holders of the Series A Preferred exercised their conversion rights and the Series A Preferred Shares were converted to 7,785,000 shares of the Company’s common stock. February 2022 Purchase Agreement On February 28, 2022, the Company entered into a securities purchase agreement (the “February 2022 Purchase Agreement”) with a buyer for the purchase and sale of (i) an aggregate of up to 21,500 shares of Series B Preferred Stock with a stated value of $1,000 per share, initially convertible into up to 21,500,000 shares of the Company’s common stock at a conversion price of $1.00 per share, and (ii) warrants (the “February 2022 Warrants”) to purchase up to that number of shares of the Company’s common stock equal to the number of shares of the Company’s common stock into which the shares of Series B Preferred Stock actually sold pursuant to the purchase agreement are initially convertible, in a registered direct offering. Pursuant to the February 2022 Purchase Agreement, an aggregate of 16,125 shares of Series B Preferred Stock, initially convertible into 16,125,000 shares of the Company’s common stock, together with the February 2022 Warrants, initially exercisable for 16,125,000 shares of the Company’s common stock, were issued and sold at an initial closing on March 1, 2022 (the “Initial Closing”), and the remaining 5,375 Preferred Shares may be issued and sold in one or more subsequent closings (each, an “Additional Closing”), in each case subject to certain closing conditions. The aggregate purchase price paid for such Series B Preferred Stock and the February 2022 Warrants at the Initial Closing was $15,000. The Company had the right to require the buyer to purchase the remaining 5,375 Preferred Shares at an Additional Closing if the Company’s stockholders approve the issuance of all securities issuable pursuant to the February 2022 Purchase Agreement in compliance with the rules and regulations of the Nasdaq Capital Market within a specified period of time after the Initial Closing, subject to certain other closing conditions (including certain equity conditions), and the buyer can require the Company to sell the remaining 5,375 Preferred Shares at one or more Additional Closings, subject to certain conditions. The Company’s right to require the buyer to purchase additional Preferred Shares has subsequently expired. The purchase price for any Preferred Shares sold at an Additional Closing would be approximately $930 per share. On March 1, 2022, the Company consummated the Initial Closing in which the Company issued to the buyer (i) 16,125 Series B Preferred Stock with a stated value of $1,000 per share, initially convertible into up to 16,125,000 shares of the Company’s common stock at a conversion price of $1.00 per share, and (ii) the February 2022 Warrants that are initially exercisable for up to 16,125,000 shares of the Company’s common stock, in a registered direct offering. As a result of the issuance of the Series B Preferred Stock and February 2022 Warrants, the exercise price of the Series A Warrants, the Series B Warrants and the Series D Warrants previously issued by the Company to an affiliate of the buyer was automatically adjusted to $1.00 (with a proportional increase to the number of shares of the Company’s common stock issuable upon exercise of such warrants). Pursuant to the February 2022 Purchase Agreement, such affiliate of the buyer agreed to waive any further anti-dilution adjustment of such existing warrants below $1.00 as a result of the transactions contemplated by the February 2022 Purchase Agreement. The Series B Preferred Stock is convertible into shares of the Company’s common stock at the election of the holder at any time at an initial conversion price of $1.00 (the “Conversion Price”). The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of the Company’s common stock, or securities convertible, exercisable or exchangeable for, the Company’s common stock at a price below the then-applicable Conversion Price (subject to certain exceptions). The Company is required to redeem the Series B Preferred Stock in 12 equal monthly installments, commencing on April 1, 2022. Subject to certain conditions, including certain equity conditions, the Company may redeem the applicable number of Series B Preferred Stock on each monthly redemption date either in cash, shares of the Company’s common stock or a combination. The number of shares used to redeem any Series B Preferred Stock in such event would be calculated as 88% of the lowest daily volume weighted average price of the Company’s common stock during the eight trading days immediately prior to the payment date. No dividends will be payable on the Series B Preferred Stock, except that holders of the Series B Preferred Stock would be entitled to receive any dividends paid on account of the Company’s common stock, on an as-converted basis, and if a “Triggering Event” (as defined in the certificate of designation of the Series B Preferred Stock) occurs and is continuing, dividends will accrue on each Series B Preferred Stock at a rate of 15% per annum. The holders of the Series B Preferred Stock have no voting rights on account of the Series B Preferred Stock, other than with respect to certain matters affecting the rights of the Series B Preferred Stock. Based on an evaluation of ASC 480, the Company has classified the Series B Preferred Stock as stock settled debt and therefore recorded the instrument as a liability on the issuance date, as the instrument is mandatorily redeemable and thus (1) embodies an unconditional obligation (2) requires the Company to settle the unconditional obligation in cash or by issuing a variable number of its common shares and (3) is based on a monetary amount known at inception. The February 2022 Warrants have an exercise price of $1.00 per share, subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of the Company’s common stock, or securities convertible, exercisable or exchangeable for, the Company’s common stock at a price below the then-applicable exercise price (subject to certain exceptions). If additional shares of Series B Preferred Stock are sold at one or more Additional Closings, the February 2022 Warrants will automatically adjust such that they are exercisable for, in the aggregate, the total number of shares of the Company’s common stock into which all shares of Series B Preferred Stock sold pursuant to the applicable agreement are convertible. The February 2022 Warrants were exercisable on the issuance date and expire five years from the date of issuance. Pursuant to the requirement to redeem the Series B Preferred Stock in 12 equal instalments Conversion date Stated value Shares of April 1, 2022 $ 1,343,750 1,625,439 May 2, 2022 1,343,750 2,557,576 June 1, 2022 1,343,750 4,187,442 July 5, 2022 1,343,750 6,039,326 July 11, 2022 1,343,750 6,039,326 August 1, 2022 1,343,750 6,815,808 $ 8,062,500 27,264,917 The issuance on July 11, 2022 was based on an exercise of buyer’s acceleration right with respect to an installment payment. Pursuant to the February 2022 Purchase Agreement, the Company subsequently received the approval of its stockholders for the issuance of all securities to be issued pursuant to the February 2022 Purchase Agreement, in compliance with the rules of the Nasdaq Capital Market (the “Stockholder Approval”). The Series B Preferred Stock and February 2022 Warrants (and underlying shares of the Company’s common stock) were offered, and will be issued, pursuant to a Prospectus Supplement, dated February 28, 2022, to the Prospectus included in the Company’s Registration Statement on Form S-3 (Registration No. 333- 258136), originally filed with the SEC on July 23, 2021, as amended, which became effective on August 27, 2021. April 2022 Purchase Agreement On April 14, 2022, the Company entered into a securities purchase agreement (the “April 2022 Purchase Agreement”) with a buyer affiliated with a greater than 5% stockholder for the purchase and sale of a new series of senior secured convertible notes of the Company, in the aggregate original principal amount of $12,000 (the “Convertible Notes”). The transaction was funded on April 19, 2022. The Convertible Notes are convertible into shares of the Company’s common stock. The purchase price of the Convertible Notes was $10,000 and net proceeds received totaled $9,950. The Convertible Notes rank senior to all outstanding and future indebtedness of the Company and are secured by a first priority perfected security interest in all of the existing and future assets of the Company and its direct and indirect subsidiaries, including a pledge of all of the capital stock of certain subsidiaries. The maturity date of the Convertible Notes is October 1, 2023, and no interest shall accrue on the Convertible Notes, unless an event of default (as defined in the Convertible Notes) has occurred. From and after the occurrence and during the continuance of any such event of default, interest shall accrue at the rate of 15.00% per annum. The Company will be required to redeem $800 of the outstanding amounts under the Convertible Notes on a monthly basis, commencing on August 1, 2022, until the maturity date of October 1, 2023, on which date all amounts that remain outstanding will be due and payable in full. Subject to certain conditions, including certain equity conditions, the Company may pay the amount due on each monthly redemption date, and the final amount due at maturity, either in cash, shares of the Company’s common stock or a combination. The number of shares used to pay any portion of the Convertible Notes in such event would be calculated as 88% of the lowest daily volume weighted average price of the common stock during the eight trading days immediately prior to the payment date. The Convertible Notes may not be prepaid by the Company, other than as specifically permitted by the Convertible Notes. Based on ASC 815, Derivatives and Hedging As of issuance June 30, Event of default interest rate 15 % 15 % Stock price $ 0.78 $ 0.25 Discount rate 25 % 25 % Maturity date 10/1/2023 10/1/2023 Default redemption premium 130 % 130 % Change of control redemption premium 125 % 125 % The Convertible Note consisted of the following as of June 30, 2022: Principal $ 12,000 Original issue discount, net of amortization (1,507 ) Deferred financing fees, net of amortization (584 ) Discount relative to fair value of derivative (544 ) 9,365 Less current portion (7,115 ) $ 2,250 Warrant Summary The following table summarizes certain required and other disclosures and the status, as of June 30, 2022, of the warrants issued in November 2021, December 2021 and those issued during the first two quarters of 2022. Series A Series B Warrants Series C Monroe Series D February Date issued 11/5/2021 11/5/2021 12/2/2021 12/2/2021 12/15/2021 3/1/2022 Number of warrants issued at inception Between 2,500,000 and 5,000,000 2,500,000 1,500,000 2,519,557(3) 15,625,000 16,125,000 Issued in connection with Sale of 2,500,000 shares of common stock Sale of 2,500,000 shares of common stock Modification of Series A Warrants and Series B Warrants Monroe Credit Facility Sale of 7,840,000 shares of common stock and 12,456 units of Series A Preferred Stock Sale of 16,125 units of Series B Preferred Stock Exercise price on issuance date $2.00 $2.00 $0.0001 $0.0001 $2.00 $1.00 Exercise price modified after issue date? Yes Yes No No Yes No Date of most recent modification, if modified 3/1/2022(5) 12/2/2021 NA - not modified NA - not modified 3/1/2022(5) NA - not modified Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified 10,000,000(4) 3,333,334 NA - not modified NA - not modified 31,250,000(4) NA - not modified Most recent modified exercise price, if modified $1.00 $1.50 NA - not modified NA - not modified $1.00 NA - not modified Maturity date of warrant 11/5/2026 11/5/2023(1) 12/2/2026 1/31/2029 12/15/2026(2) 5/24/2027 Underlying shares registered? No, on the issuance date; Yes, as of 12/10/21 Yes, beginning on the issuance date Yes, beginning on the issuance date No, on the issuance date; Yes, as of 2/9/22 No, on the issuance date; Yes, as of 1/7/22 Yes Fair value per warrant as of issuance date $0.92 $0.35 $1.48 $1.48 $0.63 $0.63 Fair value per warrant as of most recent modification date, if modified $0.61 $0.45 NA - not modified NA - not modified $0.59 NA - not modified Amounts and dates of warrants exercised as of 6/30/22 NA 1,800,000 on 12/10/21 700,000 on 12/29/21 833,334 on 12/30/21 1,500,000 on 12/8/21 NA NA NA Fair value per warrant on exercise date(s) NA $0.91 on 12/10/21 $1.00 on 12/29/21 $1.00 on 12/30/21 $1.03 on 12/8/21 NA NA NA Warrants exercisable as of 6/30/22 10,000,000 - - 4,646,850 31,250,000 16,125,000 Valuation basis Black-Scholes Monte Carlo Simulation Stock price Stock price Monte Carlo Simulation Black-Scholes Fair value per warrant as of 6/30/22, if outstanding $0.124 NA NA $0.25 $0.123 $0.136 Assumptions used in estimating fair values as of 6/30/22: ◦ stock price volatility 100% NA NA NA 100% 100% ◦ exercise price $1.00 NA NA NA $1.00 $1.00 ◦ discount rate 3.00% NA NA NA 3.00% 3.01% ◦ remaining useful life (in years) 4.35 NA NA NA 4.46 4.90 ◦ stock price $0.25 NA NA $0.25 $0.25 $0.25 (1) The Company has the right to force the Buyer to exercise the Series B Warrant in the event shares of the Company’s common stock trade at or above $2.40 per share for a period of five consecutive trading days, subject to certain conditions, including equity conditions. (2) The Company has the right to force the Buyer to exercise the Series D Warrant in the event the volume weighted average closing price of the Company’s common stock is at or above $5.00 per share for a period of three consecutive trading days, subject to certain conditions, including equity conditions. (3) The number of shares of the Company’s common stock issuable upon exercise of the Monroe Warrants is subject to adjustment for certain issuances (or deemed issuances) of the Company’s common stock at a price per share below $1.564 while the Monroe Warrants are outstanding, such that the Monroe Warrants will remain exercisable for, in the aggregate, approximately 2.5% of the total number of shares of the Company’s common stock outstanding, calculated on a fully-diluted basis. (4) For each exercise of the Series B Warrant, the Series A warrants were increased. Accordingly, because 3,333,333 Series B warrants were exercised during 2021, the Series A Warrants increased from 3,333,333 Warrants to 6,666,666 Warrants in 2021. In connection with certain securities sold effective March 1, 2022, the Series A and Series D Warrants increased by 3,333,333 and 15,625,000, respectively, effective March 1, 2022. (5) In connection with the February 2022 Purchase Agreement, which was consummated on March 1, 2022 (and which includes the February 2022 Warrants), the holders of the Series A and Series D Warrants agreed to waive any further anti-dilution adjustment of such warrants below $1.00 as a result of any actions taken under the February 2022 Purchase Agreement. Registration rights agreements In connection with the November and December sales of securities and the Credit Agreement with Monroe, the Company entered into certain registration rights agreements with the investors to register the common stock underlying the warrants by specified dates and to use reasonable best efforts to cause such registration statements to be declared effective under the Securities Act of 1933, as amended (the “Securities Act”), as soon as practicable, thereafter, subject to certain fees if the shares were not registered by certain dates. As of February 9, 2022, all such shares were registered. In connection with the April 2022 sale of Convertible Notes, the Company entered into a substantially similar registration rights agreement with the purchaser of the Convertible Notes with respect to the registration for resale of the shares of common stock into which the Convertible Notes are convertible. As of June 1, 2022, all such shares were registered. On April 7, 2020, the Company, Pensare Sponsor Group, LLC (the “Sponsor”) and certain other initial stockholders of the Company, as well as Stratos Management Systems Holdings, LLC, (“Holdings”), and certain other Investors (as defined below), entered into a Registration Rights Agreement (the “2020 Registration Rights Agreement”). The 2020 Registration Rights Agreement amended, restated and replaced a previous registration rights agreement entered into among AVCT, the Sponsor and certain other initial stockholders of AVCT on July 27, 2017. Pursuant to the terms of the 2020 Registration Rights Agreement, the holders of certain of the Company’s securities, including holders of the Company’s founders’ shares, shares of common stock underlying the Company’s private warrants, shares of common stock underlying the securities issued in the 2020 Private Placement (as defined below) are entitled to certain registration rights under the Securities Act and applicable state securities laws with respect to such shares of common stock, including up to eight demand registrations in the aggregate and customary “piggy-back” registration rights. Convertible Debentures, related warrants and guaranty On April 7, 2020, the Company consummated the sale, in a private placement (the “2020 Private Placement”), of units of securities of the Company (“Units”) to certain investors (each, an “Investor”), as contemplated by the terms of the previously disclosed Securities Purchase Agreement, dated as of April 3, 2020 (the “Securities Purchase Agreement”). Each Unit consisted of (i) $1,000 in principal amount of the Company’s Series A convertible debentures (the “Convertible Debentures” or “Debentures”) and (ii) a warrant to purchase 100 shares of the Company’s common stock at an exercise price of $0.01 per whole share (the “Penny Warrants”). The issuances of such securities were not registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. In addition, in connection with the acquisition of Kandy on December 1, 2020 and pursuant to the terms of the Kandy purchase agreement, the Company, in December 2020, issued 43,778 Units to Ribbon as consideration for the Kandy purchase, sold 10,000 Units to SPAC Opportunity Partners, LLC, a significant shareholder of the Company, and 1,000 Units to a director of the Company. Also, the Company sold 24,000 additional Units between January 1, 2021 and May 27, 2021, including 9,540 Units that were sold to related parties. Debentures The Debentures issued on April 7, 2020 had an aggregate principal amount of approximately $43,169 (including $3,000 in aggregate principal amount issued as part of Units sold to MasTec, Inc. (“Mastec”), then a greater than five percent stockholder of the Company, and $20,000 in aggregate principal of which was part of Units issued to Holdings pursuant to the terms of the Computex Business Combination agreement and approximately $8,566 in aggregate principal amount of which was issued to the Sponsor as part of Units issued in exchange for the cancellation of indebtedness previously incurred by the Company to the Sponsor). The Debentures issued in connection with the acquisition of Kandy on December 1, 2020 and pursuant to the terms of the Kandy purchase agreement consisted of aggregate principal amounts of $43,778 issued to Ribbon, $10,000 sold to SPAC Opportunity Partners, LLC, a significant shareholder of the Company, and $1,000 sold to a director of the Company. In addition, between January 1, 2021 and May 27, 2021, $24,000 were sold to various investors (including $9,540 sold to related parties). The Debentures sold in December 2020 and those sold between January 1, 2021 and May 27, 2021 were in the same form as those issued in connection with the acquisition of Kandy. The Debentures previously bore interest at a rate of 10.0% per annum, previously payable quarterly on the last day of each calendar quarter in the form of additional Debentures. Until converted, the entire principal amount of each Debenture together with accrued and unpaid interest thereon, was due and payable on the earlier of (i) such date, that was thirty months after the issuance date, as the holder thereof, at its sole option, upon not less than 30 days’ prior written notice to the Company, demanded payment thereof and (ii) the occurrence of a Change in Control (as defined in the Debentures). Each Debenture was convertible, in whole or in part, at any time at the option of the holder thereof into that number of shares of common stock calculated by dividing the principal amount being converted, together with all accrued but unpaid interest thereon, by the applicable conversion price, initially $3.45. The conversion price was subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and was also subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for, common stock at a price below the then-applicable conversion price (subject to certain exceptions). The Debentures were subject to mandatory conversion if the closing price of the Company’s common stock exceeded $6.00 for any 40 trading days within a consecutive 60 trading day-period, subject to the satisfaction of certain other conditions. Pursuant to the terms of the Debentures, on September 8, 2021, the Debentures and related accrued interest were mandatorily converted to 38,811,223 shares of common stock. Penny Warrants The Penny Warrants issued on April 7, 2020 entitled the holders to purchase an aggregate of up to 4,316,936 shares of the Company’s common stock (including warrants to purchase up to 2,000,000 shares, 856,600 shares, and 300,000 shares issued to Holdings, the Sponsor and MasTec Inc., respectively, as part of the Units issued to them), at an exercise price of $0.01 per share. The Penny Warrants issued in December 2020, as part of the Units sold, entitled the holders to purchase an aggregate of up to 5,477,800 shares of the Company’s common stock at an exercise price of $0.01 per share. Such warrants consisted of 4,377,800 warrants issued to Ribbon, 1,000,000 warrants issued to SPAC Opportunity Partners, LLC and 100,000 warrants issued to a director of the Company. The Penny Warrants issued between January 1, 2021 and May 27, 2021, as part of the Units sold during that period, entitled the holders to purchase an aggregate of up to 2,400,000 warrants (including 954,000 warrants issued to related parties). The Penny Warrants are exercisable at any time through the fifth anniversary of the date of issuance. The number of shares issuable upon exercise of each Penny Warrant is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like. Starting in 2021 and pursuant to the terms of the Penny Warrant agreements, holders of 6,684,061 Penny Warrants exercised their right to convert such Penny Warrants to 6,668,308 shares of common stock. As of June 30, 2022, unexercised Penny Warrants totaled 5,510,675. Derivative consideration and other disclosures relating to the Debentures and Penny Warrants Based on ASC 815, the convertible feature of the Debentures issued on April 7, 2020 was not considered a derivative and therefore was not recorded in liabilities, as part of the Debentures, and was not bifurcated. However, an embedded beneficial conversion feature was previously assessed in relation to the Debentures issued in December 2020 and was previously recorded in equity at its intrinsic value with a corresponding debt discount recorded to the Debentures at December 31, 2020. The beneficial conversion feature on such Debentures, which was evaluated in accordance with ASC 470-20 “ Debt with Conversion and Other Options Both the Penny Warrants issued on April 7, 2020 as well as the Penny Warrants issued on and after the Kandy acquisition date had qualified as derivatives, but satisfied the criteria for classification as equity instruments, and were bifurcated from the host contract (the Convertible Debentures) and recorded in equity at their relative fair values with a corresponding debt discount recorded to the Debentures. Prior to the conversion of the Debentures to common stock, the discount (consisting of the relative fair value of the warrants) was being expensed as interest over the then term of the Debentures to increase the carrying value to face value. However, effective September 8, 2021, the remaining unamortized discount was transferred to additional paid in capital in connection with the conversion of the Debentures to shares of common stock. During the three and six months ended June 30, 2021, the Company recorded accretion of the discount of $3,507 and $6,461, respectively, and paid-in-kind interest of $3,082 and $5,739, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 9. Related Party Transactions Services provided by Navigation Capital Partners, Inc. Effective October 1, 2020, the Company and Navigation Capital Partners, Inc. (“Navigation”), an affiliate of a significant shareholder, entered into an agreement whereby, Navigation provided capital markets advisory and business consulting services to the Company for a fee of $50 per month. In addition, the Company’s then President, Kevin Keough, and Mr. Robert Willis, a Company director and Vice Chairman of Capital Markets, provided such services to the Company via Navigation. Accordingly, Mr. Keough and Mr. Willis did not receive any direct compensation from the Company between July 21, 2021 (the effective date of their appointment) and April 21, 2022. Instead, Mr. Keough and Mr. Willis were compensated by Navigation. In consideration for such services provided by Navigation to the Company, Navigation was granted 300,000 restricted stock units (“RSUs”) that were scheduled to vest over four years, similar to time-based RSUs granted to directors in lieu of director’s fees. On April 21, 2022, the agreement with Navigation was terminated and therefore, the RSUs were forfeited prior to any being vested. At the date of termination, the unpaid balance owing under the consulting agreement was $900, which is being paid at the rate of $100 per month. Selling, general and administrative expenses for the six months ended June 30, 2022 included $150 (none for the three months June 30, 2022) related to such agreement. The amounts for the three and six months ended June 30, 2021, related to such agreement was $150 and $300, respectively. Also accounts payable and accrued expenses as of June 30, 2022 and December 31, 2021 include $600 and $750, respectively, in connection therewith. With respect to the RSU’s issued to Navigation, selling, general and administrative expenses include stock compensation expenses of $180 during the six months ended June 30, 2022 (none for the three months ended June 30, 2022). Services provided by True North Advisory LLC On January 21, 2022, the Company entered into a Services Agreement (the “Services Agreement”) with True North Advisory LLC (“True North”), a company affiliated with Michael Tessler, the Chairman of the Company’s board of directors. Pursuant to the Services Agreement, among other things, True North provides strategic advice with respect to the Company’s business as requested by the Company from time to time, for a fee of $25 per month, plus reimbursement for out-of-pocket expenses. As a result, selling, general and administrative expenses for the three and six months ended June 30, 2022 include $75 and $109, related to such agreement. The Services Agreement has an initial term of three months, after which it will continue on a month-to-month basis until terminated by either party on 30 days’ prior notice. The Services Agreement contains customary mutual provisions regarding confidentiality and ownership of intellectual property. Transactions with Ribbon Pursuant to a transition services agreement entered into with Ribbon in connection with the acquisition of Kandy, Ribbon provides certain services to the Company. In addition, the Company purchases certain software support from Ribbon. Accordingly, accounts payable and accrued expenses include amounts due to Ribbon of $1,740 and $799 as of June 30, 2022 and December 31, 2021, respectively, in relation therewith. Also, as of June 30, 2022, accounts payable and accrued expenses include $994 due to Ribbon for reimbursable expenses in excess of collections. Prepaid expenses and other current assets as of December 31, 2021 include $190 due from Ribbon for collections in excess of reimbursable expenses. Included in the consolidated statement of operations are certain revenues for services provided to Ribbon, certain expenses for services provided by Ribbon and certain expenses for rental of office space from Ribbon. The expenses for services provided by Ribbon relate primarily to service fees for certain services provided as part of the transition services agreement and purchases of certain software support. The following summarizes such revenue and expenses: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Revenue earned from Ribbon $ 38 $ - $ 100 $ - Service fees charged by Ribbon: Cost of revenue $ - $ 353 $ - $ 708 Research and development - 116 - 215 Selling, general and administrative expenses 354 445 872 914 354 914 872 1,837 Rent and software purchased from Ribbon: Cost of revenue 650 - 1,137 708 Selling, general and administrative expenses 197 137 1,662 1,492 $ 847 $ 137 $ 2,799 $ 2,200 Services provided by Saw Holdings, LLC Effective April 1, 2022, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Saw Holdings, LLC (“Saw Holdings”), a company affiliated with Robert Willis, a member of the Company’s board of directors. Pursuant to the Consulting Agreement, Saw Holdings was providing consulting and capital markets advisory services to the Company for a fee of $25 per month, plus reimbursement for out-of-pocket expenses. The Consulting Agreement, which had an initial term of three months, was terminated in July 2022. Certain Debentures Certain Debenture interest is separately identified as related party amounts on the condensed consolidated statements of operations. As indicated in Note 8, the Debentures were converted to common stock on September 8, 2021. Accordingly, there were no Debentures outstanding as of June 30, 2022. The 2021 Note The 2021 Note, which was secured by a related party, is discussed in Note 7 and is separately identified on the condensed consolidated balance sheet at December 31, 2021. The related interest expense for the six months ended June 30, 2022 of $764 (none for the three months ended June 30, 2022) is included in “Interest expense – related parties” in the consolidated statement of operations. As of December 31, 2021, “Accounts payable and accrued expenses” includes related accrued interest of $736. In March 2022, all amounts owing under the 2021 Note were repaid in connection with the sale of Computex. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2022 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | 10. Revenue Recognition In the following tables, revenue is disaggregated by geographies and by verticals (or sector). Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Geography Domestic $ 2,614 $ 3,916 $ 5,372 $ 6,529 International 1,110 1,039 2,446 1,939 Total revenues $ 3,724 $ 4,955 $ 7,818 $ 8,468 Revenues by Verticals (or Sector) Finance $ 2 $ 1,190 $ 18 $ 1,409 Manufacturing and logistics 7 7 15 17 Public sector 314 337 641 675 Technology service providers 3,365 3,416 7,077 6,327 Other 36 5 67 40 Total revenues $ 3,724 $ 4,955 $ 7,818 $ 8,468 Revenues by geography, in the table above, is generally based on the “ship-to address,” with the exception of certain services that may be performed at, or on behalf of, multiple locations, which are categorized based on the “bill-to address.” Contract liabilities and remaining performance obligations The Company’s contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. At June 30, 2022 and December 31, 2021, the contract liability balance (deferred revenue) was $95 and $82, respectively. All of the performance obligations related to such deferred revenue as of June 30, 2022 are expected to be performed within 12 months and consist of payments received from customers, or such consideration that is contractually due, in advance of providing the product or performing the services. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Compensation [Abstract] | |
Share-Based Compensation | 11. Share-Based Compensation The American Virtual Cloud Technologies, Inc. 2020 Equity Incentive Plan (the “Plan”) provides for the issuance of stock options, stock appreciation rights, RSUs and other share-based awards. Stock options have a maximum term of ten years from the grant date. As of June 30, 2022, a total of 10,000,000 shares had been authorized for issuance under the Plan, of which 4,261,391 shares remained available for issuance. The RSUs were issued to certain directors, employees and, in one case, a contractor, and can only be settled in shares. RSUs awarded to directors are time-based. RSUs issued to non-directors are 50% time-based and 50% performance-based. Generally, the awards vest over 3 or 4 years. The time-based awards vest on each grant date anniversary, while the performance-based awards vests on December 31 st The following summarizes RSU activity between January 1, 2022 and June 30, 2022: Weighted Average Number of Grant Date RSUs Fair Value Outstanding at January 1, 2022 2,693,338 $ 4.52 Granted 2,925,213 $ 1.23 Vested and delivered (811,663 ) $ 2.58 Vested, not delivered (153,125 ) $ 3.00 Forfeited (555,000 ) $ 4.36 Cancelled (1,000,000 ) $ 2.14 Unvested RSUs at June 30, 2022 3,098,763 $ 2.26 Awards outstanding in the table above consist of 2,524,171 time-based awards and 574,953 performance-based awards and exclude 534,158 performance-based RSUs that have been awarded but deemed not granted as the performance targets have not yet been determined. Share-based compensation expenses recognized were as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Cost of revenue $ 53 $ 83 $ 107 $ 187 Research and development 141 167 293 382 Selling, general and administrative expenses (589 ) 1,611 581 3,232 $ (395 ) $ 1,861 $ 981 $ 3,801 Stock compensation expense for the three months ended June 30, 2022 was negative due to the forfeiture of certain RSUs previously granted to a senior member of the management team that departed the Company during the second quarter of 2022. Forfeited awards result in a full clawback of previously recognized stock compensation expense. As indicated in Note 9, selling, general and administrative expenses for the six months ended June 30, 2022, in the table above, include $180 (none for the three months ended June 30, 2022) of stock compensation expense for services rendered by a shareholder that owns more than five percent of the Company’s shares. |
Reconciliation of Net Income (L
Reconciliation of Net Income (Loss) per Common Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of Net Income (Loss) per Common Share | 12. Reconciliation of Net Income (Loss) per Common Share Basic and diluted net income (loss) per common share was calculated as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Income (loss) from continuing operations, net of tax - basic $ 8,349 $ (14,872 ) $ (6,277 ) $ (35,880 ) Adjustment to numerator for diluted income (loss) per share: Change in fair value of warrant liabilities (33,577 ) (40,488 ) Interest expense - Series B Preferred 210 281 Interest expense - Convertible Note 863 863 Loss from continuing operations, net of tax - diluted $ (24,155 ) $ (14,872 ) $ (45,621 ) $ (35,880 ) Income (loss) from discontinued operations, net of tax - (1,034 ) 748 (2,653 ) Weighted average shares outstanding, basic 94,498,674 20,299,030 91,734,355 20,151,562 Weighted average shares outstanding, diluted 321,670,215 20,299,030 318,905,896 20,151,562 Net income (loss) per common share - basic Continuing operations $ 0.09 $ (0.73 ) $ (0.07 ) $ (1.78 ) Discontinued operations - (0.05 ) 0.01 (0.13 ) Net income (loss) per common share - basic $ 0.09 $ (0.78 ) $ (0.06 ) $ (1.91 ) Net loss per common share - diluted Continuing operations $ (0.08 ) $ (0.73 ) $ (0.14 ) $ (1.78 ) Discontinued operations - (0.05 ) 0.00 (0.13 ) Net loss per common share - diluted $ (0.08 ) $ (0.78 ) $ (0.14 ) $ (1.91 ) Included in the diluted shares in the table above for the three and six months ended June 30, 2022 are the following, were they to be converted: Series A Warrants 10,000,000 Series D Warrants 31,250,000 February 2022 Warrants 16,125,000 Monroe Warrants 4,646,850 Public Warrants 15,525,000 2017 Private Placement and 2017 EBC Warrants 11,187,500 Penny Warrants 5,510,675 Shares underlying certain unit purchase options (issued in 2017) 1,485,000 Unvested RSUs 3,632,921 Vested, not delivered RSUs 153,125 Shares underlying Series B Preferred Stock 59,789,308 Shares underlying Convertible Note 67,866,162 227,171,541 Since their inclusion would have been antidilutive, excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2021 are the following, were they to be converted: Public Warrants 15,525,000 2017 Private Placement and 2017 EBC Warrants 11,187,500 Penny Warrants 12,194,736 Shares underlying certain unit purchase options (issued in 2017) 1,485,000 Unvested RSUs 4,202,500 Shares underlying Debentures 38,081,307 82,676,043 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 13. Income Taxes The Company’s effective tax rate for the three and six ended months ended June 30, 2022 was 0.05% and -0.16%, respectively. For the three and six months ended June 30, 2021, the effective tax rate was -0.20% and -0.09%, respectively. The effective tax rate for such periods differed from the federal statutory rate due to state taxes and the Company’s full valuation allowance. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Registration Rights See Note 8 for a discussion of certain registration rights. Contingencies The Company continues to explore strategic opportunities for its IT solutions business, including the rationalization of resource allocation and core competencies, while seeking to focus on areas with growth potential. As part of such strategy, the Company may terminate certain contracts that do not align with its strategic direction, or which are deemed unprofitable. Termination of any such contracts could result in breakage costs, which would negatively impact the Company’s results of operations, financial position and cash flows. From time to time, the Company may be involved in various legal proceedings and claims in the ordinary course of business. As of June 30, 2022, and through the filing date of this report, the Company does not believe the resolution of any legal proceedings or claims of which it is aware or any potential actions will have a material effect on its financial position, results of operations or cash flows. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements are issued. On August 15, 2022, the Company and the holders of the Series A Warrants, the Series D Warrant, the February 2022 Warrants, the Series B Preferred Stock and the Convertible Notes entered into a Waiver Agreement (the “Waiver Agreement”). Pursuant to the Waiver Agreement, the parties thereto agreed that, among other things, (i) for a period of 60 days following the date of the Waiver Agreement (the “Waiver Period”), up to $10 million of equity securities (excluding an equity line of credit) sold by the Company shall be deemed to be “Excluded Securities” for all purposes under the terms of the Series A Warrants, the Series D Warrant, the February 2022 Warrants, the Series B Preferred Stock, the Convertible Notes and the securities purchase agreements pursuant to which such securities were sold; (ii) during the Waiver Period, the definition of the term “Equity Conditions” in the certificate of designations of the Series B Preferred Stock (the “Series B Certificate”) and in the Convertible Notes is waived in part, such that no “Price Failure” will be deemed to have occurred thereunder and no “Volume Failure” will be deemed to have occurred thereunder if the Company satisfies the definition of Volume Failure with the reference to “$1,000,000” therein replaced with “$250,000.” In addition, the Company agreed that it will, pursuant to the terms of the Series B Certificate and the Convertible Notes, voluntarily reduce the Conversion Price of the Series B Preferred and the Convertible Notes on each of the first and fifteenth days of each calendar month to a price equal to the greater of 88% of the lowest volume weighted average price of the Company’s common stock on any of the eight trading days immediately prior to such date and an “Alternate Installment Floor Price” of $0.0383, and the holders of the Series B Preferred Stock and the Convertible Notes will be permitted to accelerate additional Installment Conversions at the applicable Conversion Price (effectively increasing the number of monthly Installment Periods under each of the Series B Certificate and the Convertible Notes from one to two and doubling the maximum amount of Series B Preferred Stock and Convertible Notes that can be converted during each Installment Period). Notwithstanding the foregoing, the incremental number of shares of common stock that may be issued pursuant to the terms described in the immediately preceding sentence at any Conversion Price below the applicable Floor Prices set forth in the Series B Certificate and the Convertible Notes shall in no event exceed, in the aggregate, 20% of the number of outstanding shares of common stock as of August 15, 2022, without the approval of the Company’s stockholders. The effectiveness of the operative provisions of the Waiver Agreement is subject to the Company’s receipt of approval of the Waiver Agreement from the Nasdaq. Other than as disclosed in this Note and as may be disclosed elsewhere in the Notes to the financial statements, there have been no subsequent events that require adjustment or disclosure in the condensed consolidated financial statements. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 15, 2022. The interim results for the period ended June 30, 2022 are not necessarily indicative of the results expected for the year ending December 31, 2022 or any future interim periods. The Company has reclassified certain prior period amounts, including the results of discontinued operations and reportable segment information, to conform to the current period presentation. Unless otherwise indicated, amounts provided in these Notes pertain to the Company’s continuing operations. See Note 5, Assets held for sale and operations classified as discontinued, |
Principles of consolidation | Principles of consolidation The accompanying condensed consolidated financial statements include the accounts of AVCT and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales (or revenues) and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that estimates made as of the date of the financial statements could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from those estimates. Significant accounting estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, revenue recognition, allowance for doubtful accounts, accounting for warrants, recognition and measurement of income tax assets, valuation of share-based compensation, discount related to the fair value of warrants, and the valuation of net assets acquired. |
Significant accounting policies | Significant accounting policies The significant accounting policies used in preparing these condensed consolidated financial statements were applied on a basis consistent with those reflected in our consolidated financial statements that are included in the annual report on Form 10-K for the year ended December 31, 2021 that was filed with the SEC on April 15, 2022. Series A, Series B, Series C, Series D and Monroe Warrants as well as the February 2022 Warrants As more fully discussed and defined in Note 8, in November and December 2021, the Company issued certain Series A, Series B, Series C, Series D and Monroe Warrants in a series of transactions. Also as discussed and defined in Note 8, during the first quarter of the current year, the Company issued the February 2022 Warrants. Such warrants were determined to qualify for treatment under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). |
Concentration of business and credit risk | Concentration of business and credit risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and trade receivables. Cash held by the Company in financial institutions regularly exceeds the federally insured limit of $250. At June 30, 2022, cash balances held with a financial institution exceeded the federally insured limit. However, management does not believe this poses a significant credit risk. Concentration of business risks are summarized in the following table: June 30, 2022 December 31, 2021 Number of customers or vendors Aggregate total Number of customers or vendors Aggregate total Customers that individually accounted for 10% or more of trade accounts receivable 3 $ 6,386 3 $ 6,104 Vendors that individually accounted for 10% or more of trade accounts payable 2 $ 2,753 2 $ 2,527 Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Number of customers that individually accounted for 10% or more of sales from continuing operations 3 3 4 3 Aggregate total sales of customers that individually accounted for 10% or more of sales from continuing operations $ 1,944 $ 2,951 $ 5,259 $ 4,594 |
Trade receivables, net | Trade receivables, net Trade receivables on the accompanying condensed consolidated balance sheets are net of allowances of $583 and $147, as of June 30, 2022 and December 31, 2021, respectively. |
Fair value of financial instruments | Fair value of financial instruments Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures ● Level 1 — inputs are based upon unadjusted quoted prices for identical assets or liabilities traded in active markets. ● Level 2 — inputs are based upon quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 — inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. Assets measured at fair value on a non-recurring basis include goodwill, and tangible and intangible assets. Such assets are reviewed annually for impairment indicators. If a triggering event has occurred, the assets are re-measured when the estimated fair value of the corresponding asset group is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3). The carrying amounts of the Company’s financial instruments, which include trade receivables, deposits, accounts payable and accrued expenses and debt at floating interest rates, approximate their fair values, principally due to their short-term nature, maturities or nature of interest rates. The fair values of warrant liabilities are reflected on the condensed consolidated balance sheets as “Warrant Liabilities.” The fair values of derivative liabilities assessed during the three months ended June 30, 2022 are reflected as derivative liabilities on the condensed consolidated balance sheet. The fair values of certain warrants issued in 2017 (the “2017 Private Placement Warrants”) were determined using the Black-Scholes model in which the following weighted average assumptions were used for the valuations performed as of June 30, 2022: o stock price volatility – 128% o exercise price – $11.50 o discount rate – 2.9439% o remaining useful life – 2.77 years o stock price – $0.25 For the valuation methodologies and significant assumptions used in the valuations of other warrants and the derivative liabilities, see Note 8. The warrant liabilities and the derivative liabilities are considered to be Level 2 valuations. |
Change in Segment reporting | Change in Segment reporting Effective January 1, 2021, the Company identified two operating segments, Computex and Kandy, pursuant to ASC 280, Segment Reporting |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in December, or more frequently if a triggering event occurs between impairment testing dates. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then we evaluate goodwill for impairment by reviewing the fair value of the reporting unit versus its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying value, then no further testing is required. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. Goodwill in the Kandy operating segment was recognized as a result of the Kandy Business Combination in December 2020, at which time approximately $24,144 of goodwill was attributed to the Kandy reporting unit. Subsequently, in the fourth quarter of 2021, as part of the Company’s annual impairment analysis, the Company recorded an impairment charge of approximately $13,676 to Kandy’s goodwill. During the three months ended June 30, 2022, the Company concluded that a triggering event had occurred in the Company’s sole reporting unit, comprised of Kandy, as a result of declining financial performance coupled with changes in market conditions. Therefore, the Company conducted both qualitative and quantitative assessments and determined that it was appropriate to write off the entire remaining goodwill of $10.5 million. Therefore, the Company recognized a non-cash impairment charge of Balance, January 1, 2022 $ 10,468 Goodwill impairment (10,468 ) Balance, June 30, 2022 $ - The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. |
Emerging growth company | Emerging growth company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. Private companies are those companies that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, it adopts the new or revised standard at the time private companies adopt the new or revised standard, unless it chooses to early-adopt the new or revised accounting standard. Therefore, the Company’s financial statements may not be comparable to certain public companies. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of concentration of business risks | June 30, 2022 December 31, 2021 Number of customers or vendors Aggregate total Number of customers or vendors Aggregate total Customers that individually accounted for 10% or more of trade accounts receivable 3 $ 6,386 3 $ 6,104 Vendors that individually accounted for 10% or more of trade accounts payable 2 $ 2,753 2 $ 2,527 |
Schedule of sales from continuing operations | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Number of customers that individually accounted for 10% or more of sales from continuing operations 3 3 4 3 Aggregate total sales of customers that individually accounted for 10% or more of sales from continuing operations $ 1,944 $ 2,951 $ 5,259 $ 4,594 |
Schedule of goodwill activity | Balance, January 1, 2022 $ 10,468 Goodwill impairment (10,468 ) Balance, June 30, 2022 $ - |
Assets Held for Sale and Oper_2
Assets Held for Sale and Operations Classified as Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Assets held for sale and operations classified as discontinued operations [Abstract] | |
Schedule of assets and liabilities held for sale | December 31, Current assets: Cash $ 4,136 Prepaid expenses 937 Trade receivables (net allowance of $146) 19,965 Inventory 2,737 Assets held for sale - current 27,775 Noncurrent assets: Property and equipment, net 4,489 Goodwill 6,579 Other intangible assets, net 20,105 Other noncurrent assets 85 Assets held for sale - noncurrent 31,258 Total assets held for sale $ 59,033 Current liabilities: Accounts payable and accrued expenses $ 26,023 Deferred revenue 3,214 Liabilities associated with assets held for sale - current 29,237 Long-term liabilities Other liabilities 102 Liabilities associated with assets held for sale - noncurrent 102 Total liabilities associated with assets held for sale $ 29,339 |
Schedule of revenues and expenses | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Revenues: Hardware $ - $ 12,309 $ 10,948 $ 26,219 Third party software and maintenance - 1,585 1,815 3,035 Managed and professional services - 8,321 7,214 16,447 Other - 392 165 560 Total revenues - 22,607 20,142 46,261 Cost of revenue - 15,499 14,176 32,608 Gross profit - 7,108 5,966 13,653 Selling, general and administrative - 7,824 9,520 15,614 Income (loss) from operations - (716 ) (3,554 ) (1,961 ) Other (expense) income Gain on sale of Computex - - 4,314 - Interest expense - (316 ) - (518 ) Other expense - 15 - (155 ) Total other (expenses) income - (301 ) 4,314 (673 ) Income (loss) from discontinued operations before income taxes - (1,017 ) 760 (2,634 ) Income tax provision on discontinued operations - (17 ) (12 ) (19 ) Net income (loss) from discontinued operations $ - $ (1,034 ) $ 748 $ (2,653 ) |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounts payable and accrued expenses [Abstract] | |
Schedule of accounts payable and accrued expenses | June 30, December 31, Accounts payable $ 3,501 $ 3,692 Accrued compensation, benefits and related accruals 3,146 6,412 Accrued professional fees 1,520 1,867 Due to related parties 3,352 2,285 Third party interest accrual - 2,180 Other 941 578 $ 12,460 $ 17,014 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Long-Term Debt [Abstract] | |
Schedule of total long-term debt | June 30, December 31, Term Note payable to Monroe; guaranteed interest of $7,290 $ - $ 27,000 Capital lease obligations 45 104 Total long-term debt 45 27,104 Less: unamortized debt issuance costs $ - (700 ) Total notes payable and line of credit, net of unamortized debt issuance costs 45 26,404 Less: current maturities of notes payable and line of credit (45 ) (26,393 ) Long-term debt, net of current maturities and unamortized debt issuance costs $ - $ 11 |
Stockholders_ (Deficit) Equit_2
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of series B preferred stock | Conversion date Stated value Shares of April 1, 2022 $ 1,343,750 1,625,439 May 2, 2022 1,343,750 2,557,576 June 1, 2022 1,343,750 4,187,442 July 5, 2022 1,343,750 6,039,326 July 11, 2022 1,343,750 6,039,326 August 1, 2022 1,343,750 6,815,808 $ 8,062,500 27,264,917 |
Schedule of other significant assumptions | As of issuance June 30, Event of default interest rate 15 % 15 % Stock price $ 0.78 $ 0.25 Discount rate 25 % 25 % Maturity date 10/1/2023 10/1/2023 Default redemption premium 130 % 130 % Change of control redemption premium 125 % 125 % |
Schedule of convertible note | Principal $ 12,000 Original issue discount, net of amortization (1,507 ) Deferred financing fees, net of amortization (584 ) Discount relative to fair value of derivative (544 ) 9,365 Less current portion (7,115 ) $ 2,250 |
Schedule of warrants issued in november and december 2021 | Series A Series B Warrants Series C Monroe Series D February Date issued 11/5/2021 11/5/2021 12/2/2021 12/2/2021 12/15/2021 3/1/2022 Number of warrants issued at inception Between 2,500,000 and 5,000,000 2,500,000 1,500,000 2,519,557(3) 15,625,000 16,125,000 Issued in connection with Sale of 2,500,000 shares of common stock Sale of 2,500,000 shares of common stock Modification of Series A Warrants and Series B Warrants Monroe Credit Facility Sale of 7,840,000 shares of common stock and 12,456 units of Series A Preferred Stock Sale of 16,125 units of Series B Preferred Stock Exercise price on issuance date $2.00 $2.00 $0.0001 $0.0001 $2.00 $1.00 Exercise price modified after issue date? Yes Yes No No Yes No Date of most recent modification, if modified 3/1/2022(5) 12/2/2021 NA - not modified NA - not modified 3/1/2022(5) NA - not modified Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified 10,000,000(4) 3,333,334 NA - not modified NA - not modified 31,250,000(4) NA - not modified Most recent modified exercise price, if modified $1.00 $1.50 NA - not modified NA - not modified $1.00 NA - not modified Maturity date of warrant 11/5/2026 11/5/2023(1) 12/2/2026 1/31/2029 12/15/2026(2) 5/24/2027 Underlying shares registered? No, on the issuance date; Yes, as of 12/10/21 Yes, beginning on the issuance date Yes, beginning on the issuance date No, on the issuance date; Yes, as of 2/9/22 No, on the issuance date; Yes, as of 1/7/22 Yes Fair value per warrant as of issuance date $0.92 $0.35 $1.48 $1.48 $0.63 $0.63 Fair value per warrant as of most recent modification date, if modified $0.61 $0.45 NA - not modified NA - not modified $0.59 NA - not modified Amounts and dates of warrants exercised as of 6/30/22 NA 1,800,000 on 12/10/21 700,000 on 12/29/21 833,334 on 12/30/21 1,500,000 on 12/8/21 NA NA NA Fair value per warrant on exercise date(s) NA $0.91 on 12/10/21 $1.00 on 12/29/21 $1.00 on 12/30/21 $1.03 on 12/8/21 NA NA NA Warrants exercisable as of 6/30/22 10,000,000 - - 4,646,850 31,250,000 16,125,000 Valuation basis Black-Scholes Monte Carlo Simulation Stock price Stock price Monte Carlo Simulation Black-Scholes Fair value per warrant as of 6/30/22, if outstanding $0.124 NA NA $0.25 $0.123 $0.136 Assumptions used in estimating fair values as of 6/30/22: ◦ stock price volatility 100% NA NA NA 100% 100% ◦ exercise price $1.00 NA NA NA $1.00 $1.00 ◦ discount rate 3.00% NA NA NA 3.00% 3.01% ◦ remaining useful life (in years) 4.35 NA NA NA 4.46 4.90 ◦ stock price $0.25 NA NA $0.25 $0.25 $0.25 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of revenue and expenses | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Revenue earned from Ribbon $ 38 $ - $ 100 $ - Service fees charged by Ribbon: Cost of revenue $ - $ 353 $ - $ 708 Research and development - 116 - 215 Selling, general and administrative expenses 354 445 872 914 354 914 872 1,837 Rent and software purchased from Ribbon: Cost of revenue 650 - 1,137 708 Selling, general and administrative expenses 197 137 1,662 1,492 $ 847 $ 137 $ 2,799 $ 2,200 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue Recognition [Abstract] | |
Schedule of revenue is disaggregated by geographies and by verticals | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Geography Domestic $ 2,614 $ 3,916 $ 5,372 $ 6,529 International 1,110 1,039 2,446 1,939 Total revenues $ 3,724 $ 4,955 $ 7,818 $ 8,468 Revenues by Verticals (or Sector) Finance $ 2 $ 1,190 $ 18 $ 1,409 Manufacturing and logistics 7 7 15 17 Public sector 314 337 641 675 Technology service providers 3,365 3,416 7,077 6,327 Other 36 5 67 40 Total revenues $ 3,724 $ 4,955 $ 7,818 $ 8,468 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Compensation [Abstract] | |
Schedule of RSU activity | Weighted Average Number of Grant Date RSUs Fair Value Outstanding at January 1, 2022 2,693,338 $ 4.52 Granted 2,925,213 $ 1.23 Vested and delivered (811,663 ) $ 2.58 Vested, not delivered (153,125 ) $ 3.00 Forfeited (555,000 ) $ 4.36 Cancelled (1,000,000 ) $ 2.14 Unvested RSUs at June 30, 2022 3,098,763 $ 2.26 |
Schedule of share-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Cost of revenue $ 53 $ 83 $ 107 $ 187 Research and development 141 167 293 382 Selling, general and administrative expenses (589 ) 1,611 581 3,232 $ (395 ) $ 1,861 $ 981 $ 3,801 |
Reconciliation of Net Income _2
Reconciliation of Net Income (Loss) per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted income (loss) per common share | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Income (loss) from continuing operations, net of tax - basic $ 8,349 $ (14,872 ) $ (6,277 ) $ (35,880 ) Adjustment to numerator for diluted income (loss) per share: Change in fair value of warrant liabilities (33,577 ) (40,488 ) Interest expense - Series B Preferred 210 281 Interest expense - Convertible Note 863 863 Loss from continuing operations, net of tax - diluted $ (24,155 ) $ (14,872 ) $ (45,621 ) $ (35,880 ) Income (loss) from discontinued operations, net of tax - (1,034 ) 748 (2,653 ) Weighted average shares outstanding, basic 94,498,674 20,299,030 91,734,355 20,151,562 Weighted average shares outstanding, diluted 321,670,215 20,299,030 318,905,896 20,151,562 Net income (loss) per common share - basic Continuing operations $ 0.09 $ (0.73 ) $ (0.07 ) $ (1.78 ) Discontinued operations - (0.05 ) 0.01 (0.13 ) Net income (loss) per common share - basic $ 0.09 $ (0.78 ) $ (0.06 ) $ (1.91 ) Net loss per common share - diluted Continuing operations $ (0.08 ) $ (0.73 ) $ (0.14 ) $ (1.78 ) Discontinued operations - (0.05 ) 0.00 (0.13 ) Net loss per common share - diluted $ (0.08 ) $ (0.78 ) $ (0.14 ) $ (1.91 ) |
Schedule of diluted shares | Series A Warrants 10,000,000 Series D Warrants 31,250,000 February 2022 Warrants 16,125,000 Monroe Warrants 4,646,850 Public Warrants 15,525,000 2017 Private Placement and 2017 EBC Warrants 11,187,500 Penny Warrants 5,510,675 Shares underlying certain unit purchase options (issued in 2017) 1,485,000 Unvested RSUs 3,632,921 Vested, not delivered RSUs 153,125 Shares underlying Series B Preferred Stock 59,789,308 Shares underlying Convertible Note 67,866,162 227,171,541 |
Schedule of excluded from the computation of diluted net loss per share | Public Warrants 15,525,000 2017 Private Placement and 2017 EBC Warrants 11,187,500 Penny Warrants 12,194,736 Shares underlying certain unit purchase options (issued in 2017) 1,485,000 Unvested RSUs 4,202,500 Shares underlying Debentures 38,081,307 82,676,043 |
Organization, Business Operat_2
Organization, Business Operations and Certain Recent Developments (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |||||
Apr. 14, 2022 | Dec. 02, 2021 | Jun. 30, 2022 | Nov. 16, 2022 | Jul. 27, 2022 | May 20, 2022 | |
Organization, Business Operations and Certain Recent Developments (Details) [Line Items] | ||||||
Credit agreement | $ 27,000 | |||||
Net cash proceeds | $ 13,850 | |||||
Common stock, Percentage | 5% | |||||
Provided additional proceeds | $ 9,950 | |||||
Price per share (in Dollars per share) | $ 1 | |||||
Minimum value of listed securities | $ 35,000 | $ 35,000 | ||||
Forecast [Member] | Common Stock [Member] | ||||||
Organization, Business Operations and Certain Recent Developments (Details) [Line Items] | ||||||
Price per share (in Dollars per share) | $ 1 |
Liquidity (Details)
Liquidity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Aug. 12, 2022 | |
Liquidity (Details) [Line Items] | ||
Aggregate cash balance | $ 13,106 | |
Working capital | $ 3,889 | |
Subsequent Event [Member] | ||
Liquidity (Details) [Line Items] | ||
Aggregate cash | $ 4,092 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 01, 2021 | Jun. 30, 2022 USD ($) $ / shares | Jun. 30, 2022 USD ($) $ / shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Trade receivables | $ 19,965 | ||||
Stock price volatility | 128% | ||||
Exercise price (in Dollars per share) | $ / shares | $ 11.5 | $ 11.5 | |||
Discount rate | 2.9439% | 2.9439% | |||
Remaining useful life | 2 years 9 months 7 days | 2 years 9 months 7 days | |||
stock price (in Dollars per share) | $ / shares | $ 0.25 | ||||
Number of operating segments | 2 | ||||
Number of reportable segment | 1 | ||||
Goodwill | 10,468 | ||||
Concentration of Business and Credit Risk [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Federally insured limit | 250 | 250 | |||
Trade receivables | 583 | 583 | 147 | ||
Kandy [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Goodwill | $ 13,676 | $ 24,144 | |||
Write off the entire remaining goodwill | 10,500 | ||||
Non-cash impairment charge | $ 10,468 | $ 10,468 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of concentration of business risks $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Schedule Of Concentration Of Business Risks Abstract | ||
Number of customers or vendors Customers that individually accounted for 10% or more of trade accounts receivable | 3 | 3 |
Aggregate total Customers that individually accounted for 10% or more of trade accounts receivable | $ 6,386 | $ 6,104 |
Number of customers or vendors Vendors that individually accounted for 10% or more of trade accounts payable | 2 | 2 |
Aggregate total Vendors that individually accounted for 10% or more of trade accounts payable | $ 2,753 | $ 2,527 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of concentration of business risks (Parentheticals) | 12 Months Ended |
Dec. 31, 2021 | |
Schedule Of Concentration Of Business Risks Abstract | |
Percentage of customers trade accounts receivable | 10% |
Percentage of vendors trade accounts payable | 10% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of sales from continuing operations $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
Schedule Of Sales From Continuing Operations Abstract | ||||
Number of customers that individually accounted for 10% or more of sales from continuing operations | 3 | 3 | 4 | 3 |
Aggregate total sales of customers that individually accounted for 10% or more of sales from continuing operations | $ 1,944 | $ 2,951 | $ 5,259 | $ 4,594 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details) - Schedule of sales from continuing operations (Parentheticals) | 6 Months Ended |
Jun. 30, 2021 | |
Schedule Of Sales From Continuing Operations Abstract | |
Percentage of customers sales from continuing operations | 10% |
Percentage of aggregate sales from continuing operations | 10% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details) - Schedule of goodwill activity - Goodwill [Member] $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Goodwill [Line Items] | |
Balance, January 1, 2022 | $ 10,468 |
Goodwill impairment | (10,468) |
Balance, June 30, 2022 |
Assets Held for Sale and Oper_3
Assets Held for Sale and Operations Classified as Discontinued Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 26, 2022 | Dec. 31, 2021 | |
Assets held for sale and operations classified as discontinued operations [Abstract] | ||
Net sale proceeds | $ 32,112 | |
Goodwill impairment charge | $ 32,100 |
Assets Held for Sale and Oper_4
Assets Held for Sale and Operations Classified as Discontinued Operations (Details) - Schedule of assets and liabilities held for sale - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 4,136 | |
Prepaid expenses | 937 | |
Trade receivables (net allowance of $146) | 19,965 | |
Inventory | 2,737 | |
Assets held for sale - current | 27,775 | |
Noncurrent assets: | ||
Property and equipment, net | 4,489 | |
Goodwill | 6,579 | |
Other intangible assets, net | 20,105 | |
Other noncurrent assets | 85 | |
Assets held for sale - noncurrent | 31,258 | |
Total assets held for sale | 59,033 | |
Current liabilities: | ||
Accounts payable and accrued expenses | 26,023 | |
Deferred revenue | 3,214 | |
Liabilities associated with assets held for sale - current | 29,237 | |
Long-term liabilities | ||
Other liabilities | 102 | |
Liabilities associated with assets held for sale - noncurrent | 102 | |
Total liabilities associated with assets held for sale | $ 29,339 |
Assets Held for Sale and Oper_5
Assets Held for Sale and Operations Classified as Discontinued Operations (Details) - Schedule of assets and liabilities held for sale (Parentheticals) $ in Thousands | Dec. 31, 2021 USD ($) |
Schedule Of Assets And Liabilities Held For Sale Abstract | |
Trade receivables, Net allowance | $ 146 |
Assets Held for Sale and Oper_6
Assets Held for Sale and Operations Classified as Discontinued Operations (Details) - Schedule of revenues and expenses - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues: | ||||
Hardware | $ 12,309 | $ 10,948 | $ 26,219 | |
Third party software and maintenance | 1,585 | 1,815 | 3,035 | |
Managed and professional services | 8,321 | 7,214 | 16,447 | |
Other | 392 | 165 | 560 | |
Total revenues | 22,607 | 20,142 | 46,261 | |
Cost of revenue | 15,499 | 14,176 | 32,608 | |
Gross profit | 7,108 | 5,966 | 13,653 | |
Selling, general and administrative | 7,824 | 9,520 | 15,614 | |
Income (loss) from operations | (716) | (3,554) | (1,961) | |
Gain on sale of Computex | 4,314 | |||
Interest expense | (316) | (518) | ||
Other expense | 15 | (155) | ||
Total other (expenses) income | (301) | 4,314 | (673) | |
Income (loss) from discontinued operations before income taxes | (1,017) | 760 | (2,634) | |
Income tax provision on discontinued operations | (17) | (12) | (19) | |
Net income (loss) from discontinued operations | $ (1,034) | $ 748 | $ (2,653) |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - Schedule of accounts payable and accrued expenses - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Schedule Of Accounts Payable And Accrued Expenses Abstract | ||
Accounts payable | $ 3,501 | $ 3,692 |
Accrued compensation, benefits and related accruals | 3,146 | 6,412 |
Accrued professional fees | 1,520 | 1,867 |
Due to related parties | 3,352 | 2,285 |
Third party interest accrual | 2,180 | |
Other | 941 | 578 |
Accounts payable and accrued expenses, total | $ 12,460 | $ 17,014 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||||
Jan. 18, 2022 | Dec. 02, 2021 | Sep. 16, 2021 | Apr. 07, 2020 | Jun. 30, 2022 | |
Long-Term Debt (Details) [Line Items] | |||||
Credit agreement terms, description | On December 2, 2021, the Company entered into a $27,000 term loan facility (the “Credit Facility”) under a Credit Agreement (the “Credit Agreement”) with Monroe Capital Management Advisors, LLC and certain affiliated entities (“Monroe”), proceeds of which were used, in part, to repay amounts owing under a prior credit agreement, which the Company had assumed when it acquired Computex. | ||||
Amendment fees | $ 920 | ||||
Interest rate | 10% | ||||
Guaranteed a minimum return amount | $ 7,290 | ||||
Administrative amount | $ 675 | ||||
Shares of common stock (in Shares) | 2,519,557 | ||||
Exercise price per share (in Dollars per share) | $ 0.0001 | ||||
Common stock outstanding percentage | 2.50% | ||||
Warrants exercisable (in Shares) | 4,646,850 | ||||
Promissory notes, description | the Company entered into a promissory note in the principal amount of $5,000 (the “2021 Note”). The 2021 Note, which was secured by an affiliate of a shareholder that owns more than five percent of the Company’s shares, was originally scheduled to mature on the earliest of (a) September 16, 2022, (b) the Company’s consummation of a debt financing resulting in the receipt of gross proceeds of not less than $20,000, (c) the Company’s consummation of primary sales of registered equity securities resulting in the receipt of gross proceeds of not less than $20,000, (d) the Company’s consummation of the sale of Computex and (e) the date of any event of default. However, in connection with the closing of the Credit Facility, the 2021 Note was amended to, among other things, revise the definition of the maturity date so that the consummation of the Credit Agreement would not result in its maturity. In consideration of the amendment, the Company paid the lender an amendment fee in the amount of $1,250. | ||||
Securities resulting in the receipt of gross proceeds | $ 20,000 | ||||
Waiver fee | $ 250 | ||||
Maturity date | May 01, 2022 | ||||
Minimum required return percentage | 25% | ||||
Other promissory notes, description | the Company issued a subordinated promissory note of $500 (the “2020 Note”) in partial settlement of a deferred underwriting fee of $3,000. The remaining $2,500 was settled via the issuance of debentures. The 2020 Note, which previously bore interest at the rate of 12.00% per annum and had a maturity date of September 30, 2021, was repaid on November 5, 2021 along with interest accrued as of that date. | ||||
Common Stock [Member] | |||||
Long-Term Debt (Details) [Line Items] | |||||
Price per share (in Dollars per share) | $ 1,564 | ||||
LIBOR Rate [Member] | |||||
Long-Term Debt (Details) [Line Items] | |||||
Interest rate | 11% |
Long-Term Debt (Details) - Sche
Long-Term Debt (Details) - Schedule of total long-term debt - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Schedule Of Total Long Term Debt Abstract | ||
Term Note payable to Monroe; guaranteed interest of $7,290 | $ 27,000 | |
Capital lease obligations | 45 | 104 |
Total long-term debt | 45 | 27,104 |
Less: unamortized debt issuance costs | (700) | |
Total notes payable and line of credit, net of unamortized debt issuance costs | 45 | 26,404 |
Less: current maturities of notes payable and line of credit | (45) | (26,393) |
Long-term debt, net of current maturities and unamortized debt issuance costs | $ 11 |
Long-Term Debt (Details) - Sc_2
Long-Term Debt (Details) - Schedule of total long-term debt (Parentheticals) $ in Thousands | Jun. 30, 2022 USD ($) |
Schedule Of Total Long Term Debt Abstract | |
Note payable, guaranteed interest | $ 7,290 |
Stockholders_ (Deficit) Equit_3
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Apr. 14, 2022 USD ($) | Mar. 01, 2022 shares | Feb. 28, 2022 USD ($) $ / shares shares | Nov. 02, 2021 | Dec. 31, 2020 $ / shares shares | Jun. 30, 2021 USD ($) | May 27, 2021 shares | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) $ / shares shares | Sep. 08, 2021 shares | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | |||||||||
Preferred stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||||||
Preferred stock, shares outstanding | |||||||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | |||||||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||||||
Number of vote for each share | 1 | ||||||||||
Common stock, shares issued | 98,348,351 | 88,584,773 | |||||||||
Common stock, shares outstanding | 98,348,351 | 88,584,773 | |||||||||
Warrant purchase description | (i) a warrant to purchase up to 5,000,000 shares of the Company’s common stock, subject to increases as described below (the “Series A Warrants”), in a private placement; and (ii) an aggregate of 2,500,000 shares of the Company’s common stock, and a warrant to purchase up to 2,500,000 shares of the Company’s common stock (the “Series B Warrants” and, collectively with the Series A Warrants, the “A&B Warrants,” in a registered direct offering. The aggregate purchase price for the shares and the A&B Warrants was $5,000 | ||||||||||
Gross proceeds | 7% | ||||||||||
Warrants issued purchase description | At the closing, the Company issued to the Buyer (i) a warrant (the “Series D Warrant”) to purchase up to 15,625,000 shares of the Company’s common stock, in a private placement; and (ii) an aggregate of 7,840,000 shares of the Company’s common stock, and 12,456 shares of Series A Preferred Stock (“Series A Preferred”) with a stated value of $1,000 per share, initially convertible into 7,785,000 shares of the Company’s common stock at a conversion price of $1.60 per share, in a registered direct offering. The aggregate purchase price paid at the closing for the common stock, the Series A Preferred and the Series D Warrants was $25,000. | ||||||||||
Convertible common stock | 21,500,000 | ||||||||||
Conversion price per share (in Dollars per share) | $ / shares | $ 1 | ||||||||||
Warrants exercisable shares | 16,125,000 | ||||||||||
Remaining preferred shares | 5,375 | ||||||||||
Preferred shares per share (in Dollars per share) | $ / shares | $ 930 | ||||||||||
Conversion, description | On March 1, 2022, the Company consummated the Initial Closing in which the Company issued to the buyer (i) 16,125 Series B Preferred Stock with a stated value of $1,000 per share, initially convertible into up to 16,125,000 shares of the Company’s common stock at a conversion price of $1.00 per share, and (ii) the February 2022 Warrants that are initially exercisable for up to 16,125,000 shares of the Company’s common stock, in a registered direct offering. | ||||||||||
Existing warrants (in Dollars per share) | $ / shares | $ 1 | ||||||||||
Weighted average price | 88% | ||||||||||
Preferred share rate per annum | 15% | ||||||||||
Exercise price per share (in Dollars per share) | $ / shares | $ 0.0001 | ||||||||||
Warrants exercisable | 5 years | ||||||||||
Purchase agreement percentage | 5% | ||||||||||
Aggregate principal amount (in Dollars) | $ | $ 12,000 | ||||||||||
Purchase price (in Dollars) | $ | 10,000 | ||||||||||
Net proceeds (in Dollars) | $ | $ 9,950 | ||||||||||
Maturity date | Oct. 01, 2023 | ||||||||||
Convertible note, description | From and after the occurrence and during the continuance of any such event of default, interest shall accrue at the rate of 15.00% per annum. The Company will be required to redeem $800 of the outstanding amounts under the Convertible Notes on a monthly basis, commencing on August 1, 2022, until the maturity date of October 1, 2023, on which date all amounts that remain outstanding will be due and payable in full. Subject to certain conditions, including certain equity conditions, the Company may pay the amount due on each monthly redemption date, and the final amount due at maturity, either in cash, shares of the Company’s common stock or a combination. The number of shares used to pay any portion of the Convertible Notes in such event would be calculated as 88% of the lowest daily volume weighted average price of the common stock during the eight trading days immediately prior to the payment date. The Convertible Notes may not be prepaid by the Company, other than as specifically permitted by the Convertible Notes. | ||||||||||
Estimated value of convertible note derivative (in Dollars) | $ | $ 721 | ||||||||||
Derivative Liability, Noncurrent (in Dollars) | $ | $ 751 | ||||||||||
Weighted average price per share (in Dollars per share) | $ / shares | $ 5 | ||||||||||
Warrants exercisable percentage | 2.50% | ||||||||||
Warrants exercised | 15,625,000 | ||||||||||
Warrants adjustment per share (in Dollars per share) | $ / shares | $ 1 | ||||||||||
Principle amount of debenture (in Dollars) | $ | $ 1,000 | ||||||||||
Warrants to purchase common stock | 100 | ||||||||||
Stock options exercise price (in Dollars per share) | $ / shares | $ 0.01 | ||||||||||
Purchase agreement units | 43,778 | ||||||||||
Sold unit | 10,000 | ||||||||||
Shareholder units | 1,000 | ||||||||||
Additional sold units | 24,000 | ||||||||||
Related party shares | 9,540 | ||||||||||
Debenture, description | The Debentures issued on April 7, 2020 had an aggregate principal amount of approximately $43,169 (including $3,000 in aggregate principal amount issued as part of Units sold to MasTec, Inc. (“Mastec”), then a greater than five percent stockholder of the Company, and $20,000 in aggregate principal of which was part of Units issued to Holdings pursuant to the terms of the Computex Business Combination agreement and approximately $8,566 in aggregate principal amount of which was issued to the Sponsor as part of Units issued in exchange for the cancellation of indebtedness previously incurred by the Company to the Sponsor). | ||||||||||
Debentures interest rate percentage | 10% | ||||||||||
Conversion price (in Dollars per share) | $ / shares | $ 3.45 | ||||||||||
Closing price exceeding price (in Dollars per share) | $ / shares | $ 6 | ||||||||||
Shares of common stock | 38,811,223 | ||||||||||
Warrants description | The Penny Warrants issued on April 7, 2020 entitled the holders to purchase an aggregate of up to 4,316,936 shares of the Company’s common stock (including warrants to purchase up to 2,000,000 shares, 856,600 shares, and 300,000 shares issued to Holdings, the Sponsor and MasTec Inc., respectively, as part of the Units issued to them), at an exercise price of $0.01 per share. | ||||||||||
Aggregate shares of warrants | 2,400,000 | ||||||||||
Warrants issued | 954,000 | ||||||||||
Warrant agreements | 6,668,308 | ||||||||||
Unexercised penny warrants | 5,510,675 | ||||||||||
Beneficial conversion feature (in Dollars) | $ | $ 36,983 | ||||||||||
Accretion of discount (in Dollars) | $ | $ 3,507 | $ 6,461 | |||||||||
Paid-in-kind interest amount (in Dollars) | $ | $ 3,082 | $ 5,739 | |||||||||
Common Stock [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Convertible common stock | 16,125,000 | ||||||||||
Price per share (in Dollars per share) | $ / shares | $ 1.564 | ||||||||||
Preferred Stock [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Remaining preferred shares | 5,375 | ||||||||||
Warrant [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Exercise price per share (in Dollars per share) | $ / shares | $ 0.01 | ||||||||||
Aggregate shares of warrants | 5,477,800 | ||||||||||
Series A [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrant exercise price (in Dollars per share) | $ / shares | $ 2 | ||||||||||
Expire of issuance | 5 years | ||||||||||
Common stock trade exercisable | 2,500,000 | ||||||||||
Series B [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrant exercise price (in Dollars per share) | $ / shares | $ 2 | ||||||||||
Expire of issuance | 2 years | ||||||||||
Series C [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrant exercise price (in Dollars per share) | $ / shares | $ 1.5 | ||||||||||
Series D [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrant exercise price (in Dollars per share) | $ / shares | 2 | ||||||||||
Stock price (in Dollars per share) | $ / shares | 5 | ||||||||||
Series A Preferred Stock [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Conversion price (in Dollars per share) | $ / shares | 1.6 | ||||||||||
Preferred shares | 7,785,000 | ||||||||||
Series B Warrant [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Common stock trade (in Dollars per share) | $ / shares | $ 2.4 | ||||||||||
Warrants exercised | 3,333,333 | ||||||||||
Series A warrants [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrants exercised | 3,333,333 | ||||||||||
Debentures [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Debenture, description | The Debentures issued in connection with the acquisition of Kandy on December 1, 2020 and pursuant to the terms of the Kandy purchase agreement consisted of aggregate principal amounts of $43,778 issued to Ribbon, $10,000 sold to SPAC Opportunity Partners, LLC, a significant shareholder of the Company, and $1,000 sold to a director of the Company. In addition, between January 1, 2021 and May 27, 2021, $24,000 were sold to various investors (including $9,540 sold to related parties). The Debentures sold in December 2020 and those sold between January 1, 2021 and May 27, 2021 were in the same form as those issued in connection with the acquisition of Kandy. | ||||||||||
Warrant [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Exercise price per share (in Dollars per share) | $ / shares | $ 1 | ||||||||||
Warrant agreements | 6,684,061 | ||||||||||
Warrant [Member] | Series B [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrant exercise price (in Dollars per share) | $ / shares | $ 2.4 | ||||||||||
Series A Warrants [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrants exercised | 6,666,666 | ||||||||||
Series A and Series D Warrants [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrants exercised | 3,333,333 | ||||||||||
Series B Preferred Stock [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Preferred stock, shares authorized | 21,500 | ||||||||||
Preferred stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||||||
Preferred stock, shares issued | 16,125 | ||||||||||
Preferred stock, shares outstanding | 12,094 | ||||||||||
Conversion price (in Dollars per share) | $ / shares | $ 1 | ||||||||||
Convertible preferred stock | 21,500 | ||||||||||
Convertible per share (in Dollars per share) | $ / shares | $ 1,000 | ||||||||||
Aggregate shares | 16,125 | ||||||||||
Remaining preferred shares | 5,375 | ||||||||||
Purchase price (in Dollars) | $ | $ 15,000 | ||||||||||
Total amount (in Dollars) | $ | $ 1,343,750 | ||||||||||
Series B Warrants and Series D Warrants [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Conversion price per share (in Dollars per share) | $ / shares | $ 1 | ||||||||||
Ribbon [Member] | Warrant [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrants issued | 4,377,800 | ||||||||||
SPAC Opportunity Partners, LLC [Member] | Warrant [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrants issued | 1,000,000 | ||||||||||
Director [Member] | |||||||||||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) [Line Items] | |||||||||||
Warrants issued | 100,000 |
Stockholders_ (Deficit) Equit_4
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock [Line Items] | |
Stated value converted | $ 8,062,500 |
Shares of common stock issued | 27,264,917 |
April 1, 2022 [Member] | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock [Line Items] | |
Stated value converted | 1,343,750 |
Shares of common stock issued | 1,625,439 |
May 2, 2022 [Member] | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock [Line Items] | |
Stated value converted | 1,343,750 |
Shares of common stock issued | 2,557,576 |
June 1, 2022 [Member] | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock [Line Items] | |
Stated value converted | 1,343,750 |
Shares of common stock issued | 4,187,442 |
July 5, 2022 [Member] | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock [Line Items] | |
Stated value converted | 1,343,750 |
Shares of common stock issued | 6,039,326 |
July 11, 2022 [Member] | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock [Line Items] | |
Stated value converted | 1,343,750 |
Shares of common stock issued | 6,039,326 |
August 1, 2022 [Member] | |
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of series B preferred stock [Line Items] | |
Stated value converted | 1,343,750 |
Shares of common stock issued | $ 6,815,808 |
Stockholders_ (Deficit) Equit_5
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of other significant assumptions | 6 Months Ended |
Jun. 30, 2022 $ / shares | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Event of default interest rate | 15% |
Stock price (in Dollars per share) | $ 0.25 |
Discount rate | 25% |
Maturity date | Oct. 01, 2023 |
Default redemption premium | 130% |
Change of control redemption premium | 125% |
Issuance date [Member] | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Event of default interest rate | 15% |
Stock price (in Dollars per share) | $ 0.78 |
Discount rate | 25% |
Maturity date | Oct. 01, 2023 |
Default redemption premium | 130% |
Change of control redemption premium | 125% |
Stockholders_ (Deficit) Equit_6
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of convertible note $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Schedule Of Convertible Note Abstract | |
Principal | $ 12,000 |
Original issue discount, net of amortization | (1,507) |
Deferred financing fees, net of amortization | (584) |
Discount relative to fair value of derivative | (544) |
Convertible note gross | 9,365 |
Less current portion | (7,115) |
Convertible note net | $ 2,250 |
Stockholders_ (Deficit) Equit_7
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of warrants issued in november and december 2021 - $ / shares | 6 Months Ended | ||
Feb. 28, 2022 | Jun. 30, 2022 | ||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of warrants issued in november and december 2021 [Line Items] | |||
Date issued | Mar. 01, 2022 | ||
Number of warrants issued at inception | 16,125,000 | ||
Issued in connection with | Sale of 16,125 units of Series B Preferred Stock | ||
Exercise price on issuance date | $ 1 | ||
Exercise price modified after issue date? | No | ||
Date of most recent modification, if modified | NA - not modified | ||
Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified | NA - not modified | ||
Most recent modified exercise price, if modified | NA - not modified | ||
Maturity date of warrant | 5/24/2027 | ||
Underlying shares registered? | Yes | ||
Fair value per warrant as of issuance date | $ 0.63 | ||
Fair value per warrant as of most recent modification date, if modified | NA - not modified | ||
Amounts and dates of warrants exercised as of 6/30/22 | NA | ||
Fair value per warrant on exercise date(s) | NA | ||
Warrants exercisable as of 6/30/22 | 16,125,000 | ||
Valuation basis | Black-Scholes | ||
Fair value per warrant as of 6/30/22, if outstanding | $0.136 | ||
Assumptions used in estimating fair values as of 6/30/22: | |||
◦ stock price volatility | 100% | ||
◦ exercise price | $1.00 | ||
◦ discount rate | 3.01% | ||
◦ remaining useful life (in years) | 4.90 | ||
◦ stock price | $0.25 | ||
Series A Warrants [Member] | |||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of warrants issued in november and december 2021 [Line Items] | |||
Date issued | Nov. 05, 2021 | ||
Number of warrants issued at inception | Between 2,500,000 and 5,000,000 | ||
Issued in connection with | Sale of 2,500,000 shares of common stock | ||
Exercise price on issuance date | $ 2 | ||
Exercise price modified after issue date? | Yes | ||
Date of most recent modification, if modified | [1] | 3/1/2022(5) | |
Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified | [2] | 10,000,000(4) | |
Most recent modified exercise price, if modified | $1.00 | ||
Maturity date of warrant | 11/5/2026 | ||
Underlying shares registered? | No, on the issuance date; Yes, as of 12/10/21 | ||
Fair value per warrant as of issuance date | $ 0.92 | ||
Fair value per warrant as of most recent modification date, if modified | $0.61 | ||
Amounts and dates of warrants exercised as of 6/30/22 | NA | ||
Fair value per warrant on exercise date(s) | NA | ||
Warrants exercisable as of 6/30/22 | 10,000,000 | ||
Valuation basis | Black-Scholes | ||
Fair value per warrant as of 6/30/22, if outstanding | $0.124 | ||
Assumptions used in estimating fair values as of 6/30/22: | |||
◦ stock price volatility | 100% | ||
◦ exercise price | $1.00 | ||
◦ discount rate | 3.00% | ||
◦ remaining useful life (in years) | 4.35 | ||
◦ stock price | $0.25 | ||
Series B Warrants [Member] | |||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of warrants issued in november and december 2021 [Line Items] | |||
Date issued | Nov. 05, 2021 | ||
Number of warrants issued at inception | 2,500,000 | ||
Issued in connection with | Sale of 2,500,000 shares of common stock | ||
Exercise price on issuance date | $ 2 | ||
Exercise price modified after issue date? | Yes | ||
Date of most recent modification, if modified | 12/2/2021 | ||
Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified | 3,333,334 | ||
Most recent modified exercise price, if modified | $1.50 | ||
Maturity date of warrant | [3] | 11/5/2023(1) | |
Underlying shares registered? | Yes, beginning on the issuance date | ||
Fair value per warrant as of issuance date | $ 0.35 | ||
Fair value per warrant as of most recent modification date, if modified | $0.45 | ||
Amounts and dates of warrants exercised as of 6/30/22 | 1,800,000 on 12/10/21 700,000 on 12/29/21 833,334 on 12/30/21 | ||
Fair value per warrant on exercise date(s) | $0.91 on 12/10/21 $1.00 on 12/29/21 $1.00 on 12/30/21 | ||
Warrants exercisable as of 6/30/22 | |||
Valuation basis | Monte Carlo Simulation | ||
Fair value per warrant as of 6/30/22, if outstanding | NA | ||
Assumptions used in estimating fair values as of 6/30/22: | |||
◦ stock price volatility | NA | ||
◦ exercise price | NA | ||
◦ discount rate | NA | ||
◦ remaining useful life (in years) | NA | ||
◦ stock price | NA | ||
Series C Warrants [Member] | |||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of warrants issued in november and december 2021 [Line Items] | |||
Date issued | Dec. 02, 2021 | ||
Number of warrants issued at inception | 1,500,000 | ||
Issued in connection with | Modification of Series A Warrants and Series B Warrants | ||
Exercise price on issuance date | $ 0.0001 | ||
Exercise price modified after issue date? | No | ||
Date of most recent modification, if modified | NA - not modified | ||
Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified | NA - not modified | ||
Most recent modified exercise price, if modified | NA - not modified | ||
Maturity date of warrant | 12/2/2026 | ||
Underlying shares registered? | Yes, beginning on the issuance date | ||
Fair value per warrant as of issuance date | $ 1.48 | ||
Fair value per warrant as of most recent modification date, if modified | NA - not modified | ||
Amounts and dates of warrants exercised as of 6/30/22 | 1,500,000 on 12/8/21 | ||
Fair value per warrant on exercise date(s) | $1.03 on 12/8/21 | ||
Warrants exercisable as of 6/30/22 | |||
Valuation basis | Stock price | ||
Fair value per warrant as of 6/30/22, if outstanding | NA | ||
Assumptions used in estimating fair values as of 6/30/22: | |||
◦ stock price volatility | NA | ||
◦ exercise price | NA | ||
◦ discount rate | NA | ||
◦ remaining useful life (in years) | NA | ||
◦ stock price | NA | ||
Monroe Warrants [Member] | |||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of warrants issued in november and december 2021 [Line Items] | |||
Date issued | Dec. 02, 2021 | ||
Number of warrants issued at inception | [4] | 2,519,557(3) | |
Issued in connection with | Monroe Credit Facility | ||
Exercise price on issuance date | $ 0.0001 | ||
Exercise price modified after issue date? | No | ||
Date of most recent modification, if modified | NA - not modified | ||
Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified | NA - not modified | ||
Most recent modified exercise price, if modified | NA - not modified | ||
Maturity date of warrant | 1/31/2029 | ||
Underlying shares registered? | No, on the issuance date; Yes, as of 2/9/22 | ||
Fair value per warrant as of issuance date | $ 1.48 | ||
Fair value per warrant as of most recent modification date, if modified | NA - not modified | ||
Amounts and dates of warrants exercised as of 6/30/22 | NA | ||
Fair value per warrant on exercise date(s) | NA | ||
Warrants exercisable as of 6/30/22 | 4,646,850 | ||
Valuation basis | Stock price | ||
Fair value per warrant as of 6/30/22, if outstanding | $0.25 | ||
Assumptions used in estimating fair values as of 6/30/22: | |||
◦ stock price volatility | NA | ||
◦ exercise price | NA | ||
◦ discount rate | NA | ||
◦ remaining useful life (in years) | NA | ||
◦ stock price | $0.25 | ||
Series D Warrants [Member] | |||
Stockholders’ (Deficit) Equity, Related Warrants, Securities, Debentures and Guaranty (Details) - Schedule of warrants issued in november and december 2021 [Line Items] | |||
Date issued | Dec. 15, 2021 | ||
Number of warrants issued at inception | 15,625,000 | ||
Issued in connection with | Sale of 7,840,000 shares of common stock and 12,456 units of Series A Preferred Stock | ||
Exercise price on issuance date | $ 2 | ||
Exercise price modified after issue date? | Yes | ||
Date of most recent modification, if modified | [1] | 3/1/2022(5) | |
Assuming no antidilution triggers occur, maximum number of warrants issuable as of the most recent modification date, if modified | [2] | 31,250,000(4) | |
Most recent modified exercise price, if modified | $1.00 | ||
Maturity date of warrant | [5] | 12/15/2026(2) | |
Underlying shares registered? | No, on the issuance date; Yes, as of 1/7/22 | ||
Fair value per warrant as of issuance date | $ 0.63 | ||
Fair value per warrant as of most recent modification date, if modified | $0.59 | ||
Amounts and dates of warrants exercised as of 6/30/22 | NA | ||
Fair value per warrant on exercise date(s) | NA | ||
Warrants exercisable as of 6/30/22 | 31,250,000 | ||
Valuation basis | Monte Carlo Simulation | ||
Fair value per warrant as of 6/30/22, if outstanding | $0.123 | ||
Assumptions used in estimating fair values as of 6/30/22: | |||
◦ stock price volatility | 100% | ||
◦ exercise price | $1.00 | ||
◦ discount rate | 3.00% | ||
◦ remaining useful life (in years) | 4.46 | ||
◦ stock price | $0.25 | ||
[1]In connection with the February 2022 Purchase Agreement, which was consummated on March 1, 2022 (and which includes the February 2022 Warrants), the holders of the Series A and Series D Warrants agreed to waive any further anti-dilution adjustment of such warrants below $1.00 as a result of any actions taken under the February 2022 Purchase Agreement.[2]For each exercise of the Series B Warrant, the Series A warrants were increased. Accordingly, because 3,333,333 Series B warrants were exercised during 2021, the Series A Warrants increased from 3,333,333 Warrants to 6,666,666 Warrants in 2021. In connection with certain securities sold effective March 1, 2022, the Series A and Series D Warrants increased by 3,333,333 and 15,625,000, respectively, effective March 1, 2022.[3]The Company has the right to force the Buyer to exercise the Series B Warrant in the event shares of the Company’s common stock trade at or above $2.40 per share for a period of five consecutive trading days, subject to certain conditions, including equity conditions.[4]The number of shares of the Company’s common stock issuable upon exercise of the Monroe Warrants is subject to adjustment for certain issuances (or deemed issuances) of the Company’s common stock at a price per share below $1.564 while the Monroe Warrants are outstanding, such that the Monroe Warrants will remain exercisable for, in the aggregate, approximately 2.5% of the total number of shares of the Company’s common stock outstanding, calculated on a fully-diluted basis.[5]The Company has the right to force the Buyer to exercise the Series D Warrant in the event the volume weighted average closing price of the Company’s common stock is at or above $5.00 per share for a period of three consecutive trading days, subject to certain conditions, including equity conditions. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Oct. 01, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Apr. 21, 2022 | |
Related Party Transactions (Details) [Line Items] | |||||||
Related party business consulting services | $ 50 | ||||||
Consulting agreement | $ 900 | ||||||
Paid at rate | $ 100 | ||||||
Selling, general and administrative expenses | $ 0 | $ 150 | $ 150 | $ 300 | |||
Accounts payable and accrued expenses | 600 | 600 | $ 750 | ||||
Stock compensation expenses | 0 | 180 | |||||
Reimbursement expenses | 25 | ||||||
Due to ribbon | 1,740 | 1,740 | 799 | ||||
Service fee | 25 | ||||||
Interest expense | 0 | 764 | |||||
Accrued expenses | 736 | ||||||
Accounts Payable and Accrued Liabilities [Member] | |||||||
Related Party Transactions (Details) [Line Items] | |||||||
Due to ribbon | 994 | $ 994 | |||||
Prepaid Expenses and Other Current Assets [Member] | |||||||
Related Party Transactions (Details) [Line Items] | |||||||
Prepaid expenses and other current assets | $ 190 | ||||||
Restricted Stock Units (RSUs) [Member] | |||||||
Related Party Transactions (Details) [Line Items] | |||||||
Restricted stock units (in Shares) | 300,000 | ||||||
Agreement [Member] | |||||||
Related Party Transactions (Details) [Line Items] | |||||||
Selling, general and administrative expenses | $ 75 | $ 109 |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of revenue and expenses - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenue earned from Ribbon | $ 38 | $ 100 | ||
Professional fees charged by Ribbon [Member] | ||||
Service fees charged by Ribbon: | ||||
Cost of revenue | 353 | $ 708 | ||
Research and development | 116 | 215 | ||
Selling, general and administrative expenses | 354 | 445 | 872 | 914 |
Total related party expenses | 354 | 914 | 872 | 1,837 |
Rent and software purchased from Ribbon [Member] | ||||
Service fees charged by Ribbon: | ||||
Cost of revenue | 650 | 1,137 | 708 | |
Selling, general and administrative expenses | 197 | 137 | 1,662 | 1,492 |
Total related party expenses | $ 847 | $ 137 | $ 2,799 | $ 2,200 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Revenue Recognition [Abstract] | ||
Contract liability | $ 95 | $ 82 |
Revenue Recognition (Details) -
Revenue Recognition (Details) - Schedule of revenue is disaggregated by geographies and by verticals - Revenue [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Geography | ||||
Domestic | $ 2,614 | $ 3,916 | $ 5,372 | $ 6,529 |
International | 1,110 | 1,039 | 2,446 | 1,939 |
Total revenues | 3,724 | 4,955 | 7,818 | 8,468 |
Revenues by Verticals (or Sector) | ||||
Finance | 2 | 1,190 | 18 | 1,409 |
Manufacturing and logistics | 7 | 7 | 15 | 17 |
Public sector | 314 | 337 | 641 | 675 |
Technology service providers | 3,365 | 3,416 | 7,077 | 6,327 |
Other | 36 | 5 | 67 | 40 |
Total revenues | $ 3,724 | $ 4,955 | $ 7,818 | $ 8,468 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) shares | |
Share-Based Compensation (Details) [Line Items] | |
Shares remained available for issuance | 4,261,391 |
RSUs issued vesting description | RSUs issued to non-directors are 50% time-based and 50% performance-based. Generally, the awards vest over 3 or 4 years. The time-based awards vest on each grant date anniversary, while the performance-based awards vests on December 31st of each year, if the market condition (stock price target) is met. If the market condition attached to the performance-based awards is not met in any year, the eligibility is delayed until the market condition is met, except that the market condition must be met by the second anniversary of the first target date, in the case of awards that vest over 3 years, and by the third anniversary of the first target date, for those awards that vest over 4 years. |
Awards outstanding, description | Awards outstanding in the table above consist of 2,524,171 time-based awards and 574,953 performance-based awards and exclude 534,158 performance-based RSUs that have been awarded but deemed not granted as the performance targets have not yet been determined. |
Stock compensation expense | $ | $ 180 |
Share holders percentage | 5% |
Equity Incentive Plan [Member] | |
Share-Based Compensation (Details) [Line Items] | |
Shares issued | 10,000,000 |
Share-Based Compensation (Det_2
Share-Based Compensation (Details) - Schedule of RSU activity | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Schedule Of Rsu Activity Abstract | |
Number of RSUs, Outstanding Beginning | shares | 2,693,338 |
Weighted Average Grant Date Fair Value, Outstanding Beginning | $ / shares | $ 4.52 |
Number of RSUs, Granted | shares | 2,925,213 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 1.23 |
Number of RSUs, Vested and delivered | shares | (811,663) |
Weighted Average Grant Date Fair Value, Vested and delivered | $ / shares | $ 2.58 |
Number of RSUs, Vested, not delivered | shares | (153,125) |
Weighted Average Grant Date Fair Value, Vested, not delivered | $ / shares | $ 3 |
Number of RSUs, Forfeited | shares | (555,000) |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | $ 4.36 |
Number of RSUs, Cancelled | shares | (1,000,000) |
Weighted Average Grant Date Fair Value, Cancelled | $ / shares | $ 2.14 |
Number of RSUs, Unvested RSUs Ending | shares | 3,098,763 |
Weighted Average Grant Date Fair Value, Unvested RSUs Ending | $ / shares | $ 2.26 |
Share-Based Compensation (Det_3
Share-Based Compensation (Details) - Schedule of share-based compensation expense - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-Based Compensation (Details) - Schedule of share-based compensation expense [Line Items] | ||||
Total expense | $ (395) | $ 1,861 | $ 981 | $ 3,801 |
Cost of revenue [Member] | ||||
Share-Based Compensation (Details) - Schedule of share-based compensation expense [Line Items] | ||||
Total expense | 53 | 83 | 107 | 187 |
Research and development [Member] | ||||
Share-Based Compensation (Details) - Schedule of share-based compensation expense [Line Items] | ||||
Total expense | 141 | 167 | 293 | 382 |
Selling, general and administrative expenses [Member] | ||||
Share-Based Compensation (Details) - Schedule of share-based compensation expense [Line Items] | ||||
Total expense | $ (589) | $ 1,611 | $ 581 | $ 3,232 |
Reconciliation of Net Income _3
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of basic and diluted income (loss) per common share - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule Of Basic And Diluted Income Loss Per Common Share Abstract | ||||
Income (loss) from continuing operations, net of tax - basic (in Dollars) | $ 8,349 | $ (14,872) | $ (6,277) | $ (35,880) |
Adjustment to numerator for diluted income (loss) per share: | ||||
Change in fair value of warrant liabilities (in Dollars) | (33,577) | (40,488) | ||
Interest expense - Series B Preferred (in Dollars) | 210 | 281 | ||
Interest expense - Convertible Note (in Dollars) | 863 | 863 | ||
Loss from continuing operations, net of tax - diluted (in Dollars) | (24,155) | (14,872) | (45,621) | (35,880) |
Income (loss) from discontinued operations, net of tax (in Dollars) | $ (1,034) | $ 748 | $ (2,653) | |
Weighted average shares outstanding, basic (in Shares) | 94,498,674 | 20,299,030 | 91,734,355 | 20,151,562 |
Weighted average shares outstanding, diluted (in Shares) | 321,670,215 | 20,299,030 | 318,905,896 | 20,151,562 |
Net income (loss) per common share - basic | ||||
Continuing operations | $ 0.09 | $ (0.73) | $ (0.07) | $ (1.78) |
Discontinued operations | (0.05) | 0.01 | (0.13) | |
Net income (loss) per common share - basic | 0.09 | (0.78) | (0.06) | (1.91) |
Net loss per common share - diluted | ||||
Continuing operations | (0.08) | (0.73) | (0.14) | (1.78) |
Discontinued operations | (0.05) | 0 | (0.13) | |
Net loss per common share - diluted | $ (0.08) | $ (0.78) | $ (0.14) | $ (1.91) |
Reconciliation of Net Income _4
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares | 6 Months Ended |
Jun. 30, 2022 shares | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 227,171,541 |
Series A Warrants [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 10,000,000 |
Series D Warrants [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 31,250,000 |
February 2022 Warrants [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 16,125,000 |
Monroe Warrants [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 4,646,850 |
Public Warrants [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 15,525,000 |
2017 Private Placement and 2017 EBC Warrants [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 11,187,500 |
Penny Warrants [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 5,510,675 |
Shares underlying certain unit purchase options (issued in 2017) [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 1,485,000 |
Unvested RSUs [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 3,632,921 |
Vested, not delivered RSUs [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 153,125 |
Shares underlying Series B Preferred Stock [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 59,789,308 |
Shares underlying Convertible Note [Member] | |
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of diluted shares [Line Items] | |
Diluted shares | 67,866,162 |
Reconciliation of Net Income _5
Reconciliation of Net Income (Loss) per Common Share (Details) - Schedule of excluded from the computation of diluted net loss per share | 6 Months Ended |
Jun. 30, 2021 shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive, excluded from the computation of diluted net loss per share | 82,676,043 |
Public Warrants [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive, excluded from the computation of diluted net loss per share | 15,525,000 |
2017 Private Placement and 2017 EBC Warrants [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive, excluded from the computation of diluted net loss per share | 11,187,500 |
Penny Warrants [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive, excluded from the computation of diluted net loss per share | 12,194,736 |
Shares underlying certain unit purchase options (issued in 2017) [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive, excluded from the computation of diluted net loss per share | 1,485,000 |
Unvested RSUs [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive, excluded from the computation of diluted net loss per share | 4,202,500 |
Shares underlying Debentures [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive, excluded from the computation of diluted net loss per share | 38,081,307 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 0.05% | 0.20% | 0.16% | 0.09% |
Subsequent Events (Details)
Subsequent Events (Details) | Aug. 15, 2022 |
Subsequent Event [Member] | |
Subsequent Events (Details) [Line Items] | |
Subsequent event, description | Pursuant to the Waiver Agreement, the parties thereto agreed that, among other things, (i) for a period of 60 days following the date of the Waiver Agreement (the “Waiver Period”), up to $10 million of equity securities (excluding an equity line of credit) sold by the Company shall be deemed to be “Excluded Securities” for all purposes under the terms of the Series A Warrants, the Series D Warrant, the February 2022 Warrants, the Series B Preferred Stock, the Convertible Notes and the securities purchase agreements pursuant to which such securities were sold; (ii) during the Waiver Period, the definition of the term “Equity Conditions” in the certificate of designations of the Series B Preferred Stock (the “Series B Certificate”) and in the Convertible Notes is waived in part, such that no “Price Failure” will be deemed to have occurred thereunder and no “Volume Failure” will be deemed to have occurred thereunder if the Company satisfies the definition of Volume Failure with the reference to “$1,000,000” therein replaced with “$250,000.” In addition, the Company agreed that it will, pursuant to the terms of the Series B Certificate and the Convertible Notes, voluntarily reduce the Conversion Price of the Series B Preferred and the Convertible Notes on each of the first and fifteenth days of each calendar month to a price equal to the greater of 88% of the lowest volume weighted average price of the Company’s common stock on any of the eight trading days immediately prior to such date and an “Alternate Installment Floor Price” of $0.0383, and the holders of the Series B Preferred Stock and the Convertible Notes will be permitted to accelerate additional Installment Conversions at the applicable Conversion Price (effectively increasing the number of monthly Installment Periods under each of the Series B Certificate and the Convertible Notes from one to two and doubling the maximum amount of Series B Preferred Stock and Convertible Notes that can be converted during each Installment Period). Notwithstanding the foregoing, the incremental number of shares of common stock that may be issued pursuant to the terms described in the immediately preceding sentence at any Conversion Price below the applicable Floor Prices set forth in the Series B Certificate and the Convertible Notes shall in no event exceed, in the aggregate, 20% of the number of outstanding shares of common stock as of August 15, 2022, without the approval of the Company’s stockholders. |