GSE SYSTEMS INC, 10-Q filed on 14 Nov 22
 | XBRL Documents
v3.22.2.2
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2022
Oct. 31, 2022
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2022  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q3  
Document Transition Report false  
Entity File Number 001-14785  
Entity Registrant Name GSE Systems, Inc.  
Entity Central Index Key 0000944480  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 52-1868008  
Entity Address, Address Line One 6940 Columbia Gateway Dr.  
Entity Address, Address Line Two Suite 470  
Entity Address, City or Town Columbia  
Entity Address, State or Province MD  
Entity Address, Postal Zip Code 21046  
City Area Code 410  
Local Phone Number 970-7800  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Title of 12(b) Security Common Stock, $0.01 Par Value  
Trading Symbol GVP  
Security Exchange Name NASDAQ  
Entity Common Stock, Shares Outstanding   21,720,661
v3.22.2.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Current assets:    
Cash and cash equivalents $ 3,660 $ 3,550
Restricted cash, current 651 0
Contract receivables, net 10,152 11,257
Prepaid expenses and other current assets 1,969 5,262
Total current assets 16,432 20,069
Equipment, software and leasehold improvements, net 796 839
Software development costs, net 554 532
Goodwill 6,299 13,339
Intangible assets, net 1,854 3,020
Restricted cash - long term 932 0
Operating lease right-of-use assets, net 777 1,200
Other assets 52 52
Total assets 27,696 39,051
Current liabilities:    
Line of credit 0 1,817
Current portion of long-term note 2,762 0
Accounts payable 713 1,179
Accrued expenses 2,119 1,358
Accrued compensation 1,655 1,452
Billings in excess of revenue earned 4,152 5,029
Accrued warranty 478 667
Income taxes payable 1,635 1,654
Derivative liabilities 653 0
Other current liabilities 988 1,883
Total current liabilities 15,155 15,039
Long-term note, less current portion 1,181 0
Operating lease liabilities noncurrent 209 790
Other noncurrent liabilities 171 179
Total liabilities 16,716 16,008
Commitments and contingencies (Note 16)
Stockholders' equity:    
Preferred stock $0.01 par value; 2,000,000 shares authorized; no shares issued and outstanding 0 0
Common stock $0.01 par value; 60,000,000 shares authorized, 23,319,572 and 22,533,005 shares issued, 21,720,661 and 20,934,094 shares outstanding, respectively 233 225
Additional paid-in capital 82,095 80,505
Accumulated deficit (68,411) (54,584)
Accumulated other comprehensive income (loss) 62 (104)
Treasury stock at cost, 1,598,911 shares (2,999) (2,999)
Total stockholders' equity 10,980 23,043
Total liabilities and stockholders' equity $ 27,696 $ 39,051
v3.22.2.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 30, 2022
Dec. 31, 2021
Stockholders' equity:    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 2,000,000 2,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 60,000,000 60,000,000
Common stock, shares issued (in shares) 23,319,572 22,533,005
Common stock, shares outstanding (in shares) 21,720,661 20,934,094
Treasury stock at cost (in shares) 1,598,911 1,598,911
v3.22.2.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]        
Revenue $ 11,898 $ 14,686 $ 36,918 $ 41,312
Cost of revenue 8,642 11,503 28,063 32,512
Gross profit 3,256 3,183 8,855 8,800
Operating expenses:        
Selling, general and administrative 4,336 3,265 13,253 10,521
Research and development 186 149 510 460
Restructuring (benefit) charges 0 (10) 0 798
Goodwill and intangible asset impairment charge 7,505 3 7,505 3
Depreciation 69 69 213 216
Amortization of intangible assets 209 286 700 929
Total operating expenses 12,305 3,762 22,181 12,927
Operating loss (9,049) (579) (13,326) (4,127)
Interest expense, net (422) (32) (928) (135)
Change in fair value of derivative instruments, net 263 0 377 0
Other (loss) income, net (2) 12,215 (58) 16,853
(Loss) income before income taxes (9,210) 11,604 (13,935) 12,591
(Benefit from) provision for income taxes (218) 166 (108) 127
Net (loss) income $ (8,992) $ 11,438 $ (13,827) $ 12,464
Net (loss) income per common share - basic (in dollars per share) $ (0.42) $ 0.55 $ (0.66) $ 0.6
Net (loss) income per common share - diluted (in dollars per share) $ (0.42) $ 0.55 $ (0.66) $ 0.6
Weighted average shares outstanding used to compute net (loss) income per share - basic (in shares) 21,288,883 20,863,479 21,101,942 20,714,068
Weighted average shares outstanding used to compute net (loss) income per share - diluted (in shares) 21,288,883 20,863,479 21,101,942 20,714,068
v3.22.2.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME [Abstract]        
Net (loss) income $ (8,992) $ 11,438 $ (13,827) $ 12,464
Cumulative translation adjustment 91 (23) 166 1,109
Comprehensive (loss) income $ (8,901) $ 11,415 $ (13,661) $ 13,573
v3.22.2.2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Accumulated Other Comprehensive Loss [Member]
Treasury Stock [Member]
Total
Balance at Dec. 31, 2020 $ 222 $ 79,687 $ (65,191) $ (1,214) $ (2,999) $ 10,505
Balance (in shares) at Dec. 31, 2020 22,193       (1,599)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation expense $ 0 784 0 0 $ 0 784
Common stock issued for RSUs vested $ 3 (3) 0 0 0 0
Common stock issued for RSUs vested (in shares) 306          
Shares withheld to pay taxes $ 0 (188) 0 0 0 (188)
Foreign currency translation adjustment 0 0 0 1,109 0 1,109
Net (loss) income 0 0 12,464 0 0 12,464
Balance at Sep. 30, 2021 $ 225 80,280 (52,727) (105) $ (2,999) 24,674
Balance (in shares) at Sep. 30, 2021 22,499       (1,599)  
Balance at Jun. 30, 2021 $ 225 80,024 (64,165) (82) $ (2,999) 13,003
Balance (in shares) at Jun. 30, 2021 22,461       (1,599)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation expense $ 0 283 0 0 $ 0 283
Common stock issued for RSUs vested $ 0 0 0 0 0 0
Common stock issued for RSUs vested (in shares) 38          
Shares withheld to pay taxes $ 0 (27) 0 0 0 (27)
Foreign currency translation adjustment 0 0 0 (23) 0 (23)
Net (loss) income 0 0 11,438 0 0 11,438
Balance at Sep. 30, 2021 $ 225 80,280 (52,727) (105) $ (2,999) 24,674
Balance (in shares) at Sep. 30, 2021 22,499       (1,599)  
Balance at Dec. 31, 2021 $ 225 80,505 (54,584) (104) $ (2,999) 23,043
Balance (in shares) at Dec. 31, 2021 22,533       (1,599)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation expense $ 0 1,504 0 0 $ 0 1,504
Common stock issued for RSUs vested $ 5 (5) 0 0 0 0
Common stock issued for RSUs vested (in shares) 443          
Shares withheld to pay taxes $ 0 (226) 0 0 0 (226)
Foreign currency translation adjustment 0 0 0 166 0 166
Repayment of convertible note in shares $ 3 317 0 0 0 320
Repayment of convertible note in shares (in shares) 344          
Net (loss) income $ 0 0 (13,827) 0 0 (13,827)
Balance at Sep. 30, 2022 $ 233 82,095 (68,411) 62 $ (2,999) 10,980
Balance (in shares) at Sep. 30, 2022 23,320       (1,599)  
Balance at Jun. 30, 2022 $ 228 81,324 (59,419) (29) $ (2,999) 19,105
Balance (in shares) at Jun. 30, 2022 22,850       (1,599)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation expense $ 0 479 0 0 $ 0 479
Common stock issued for RSUs vested $ 2 (2) 0 0 0 0
Common stock issued for RSUs vested (in shares) 126          
Shares withheld to pay taxes $ 0 (23) 0 0 0 (23)
Foreign currency translation adjustment 0 0 0 91 0 91
Repayment of convertible note in shares $ 3 317 0 0 0 320
Repayment of convertible note in shares (in shares) 344          
Net (loss) income $ 0 0 (8,992) 0 0 (8,992)
Balance at Sep. 30, 2022 $ 233 $ 82,095 $ (68,411) $ 62 $ (2,999) $ 10,980
Balance (in shares) at Sep. 30, 2022 23,320       (1,599)  
v3.22.2.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Cash flows from operating activities:        
Net (loss) income $ (8,992) $ 11,438 $ (13,827) $ 12,464
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:        
Goodwill and intangible asset impairment charge 7,505 3 7,505 3
Depreciation 69 69 213 216
Amortization of intangible assets 209 286 700 929
Amortization of capitalized software development costs     255 281
Amortization of deferred financing costs     11 8
Amortization of debt discount     925 0
Gain on PPP loan forgiveness     0 (10,127)
Stock-based compensation expense     1,592 784
Bad debt expense (recovery) 0 0 97 (133)
Change in fair value of derivative instruments, net     (377) 0
Deferred income taxes     (80) 0
Changes in assets and liabilities:        
Contract receivables, net     922 (1,888)
Prepaid expenses and other assets     3,638 (5,356)
Accounts payable, accrued compensation and accrued expenses     539 1,409
Billings in excess of revenue earned     (818) (831)
Accrued warranty     (163) (192)
Other liabilities     (382) 2,147
Net cash provided by (used in) operating activities     750 (286)
Cash flows from investing activities:        
Capital expenditures     (171) (392)
Capitalized software development costs     (276) (226)
Net cash used in investing activities     (447) (618)
Cash flows from financing activities:        
Proceeds from line of credit     0 800
Repayment of line of credit     (1,817) (1,739)
Repayment of insurance premium     (906) (609)
Proceeds from issuance of long-term note and warrants, net of debt issuance cost and original issue discount     4,782 0
Repayment of convertible note     (319) 0
Tax paid for shares withheld     (226) (188)
Net cash provided by (used in) financing activities     1,514 (1,736)
Effect of exchange rate changes on cash     (124) (19)
Net increase (decrease) in cash, cash equivalents and restricted cash     1,693 (2,659)
Cash, cash equivalents and restricted cash at beginning of the period     3,550 6,702
Cash, cash equivalents and restricted cash at the end of the period 5,243 4,043 5,243 4,043
Cash and cash equivalents 3,660 4,043 3,660 4,043
Restricted cash, current 651 0 651 0
Restricted cash included in other long-term assets 932 0 932 0
Total cash, cash equivalents and restricted cash 5,243 4,043 5,243 4,043
Non-cash financing activities        
Repayment of convertible note     320 0
Discount on issuance of convertible note $ 750 $ 0 $ 750 $ 0
v3.22.2.2
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2022
Summary of Significant Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
GSE Systems, Inc. is a leading provider of professional and technical engineering, staffing services and simulation software to clients in the power and process industries. References in this report to “GSE” or “we” or “our” or “the Company” are to GSE Systems, Inc. and our subsidiaries, collectively.
The consolidated interim financial statements included herein have been prepared by GSE and are unaudited. In the opinion of our management, all adjustments and reclassifications of a normal and recurring nature necessary to present fairly the financial position, results of operations and cash flows for the periods presented, have been made. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The accompanying balance sheet data for the year ended December 31, 2021 was derived from our audited financial statements, but it does not include all disclosures required by U.S. GAAP.
The results of operations for interim periods are not necessarily an indication of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission on March 31, 2022.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of revenues and expenses during the reporting period. Our most significant estimates relate to revenue recognition on contracts with customers, product warranties, valuation of goodwill and intangible assets acquired including the determination of fair value in impairment tests, valuation of long-lived assets to be disposed of, valuation of stock-based compensation awards, the recoverability of deferred tax assets, and valuation of warrants and derivative liability related to our convertible note. Actual results of these and other items not listed could differ from these estimates and those differences could be material.

COVID-19
As of September 30, 2022, most of our employees continue to work remotely except when required to be at the client site for essential project work. As an essential services provider, we maintain a modest office footprint in certain locations to allow for employees to work from those offices as project needs may arise. Throughout the pandemic GSE has complied with local, state and federal directives and regulations. Our Performance Improvement Solutions segment's (see Item 2) contracts, which generally are considered essential services, are permitted to and mostly continue without pause. However, we have experienced certain delays in certain new business opportunities. At the onset of the pandemic, many of our Workforce Solutions segment (see Item 2) customers paused or delayed contracts as they shrank their own on-premise workforces to the minimum operating levels in order to mitigate the effects of the pandemic. As a result, our Workforce Solutions segment has experienced a decline in its billable employee base during this time. Since the beginning of 2022, the Workforce Solutions segment began to receive an increase in opportunities as clients became more comfortable with employees returning to on-site work. Notably, the increase in opportunities shifted greatly to direct hire openings, rather than the normal hourly billable base. We cannot fully estimate the length or gravity of the impact of the COVID-19 pandemic to our business at this time and we have experienced delays in commencing new projects and resuming work on existing contracts. Therefore, our ability to deliver our services and recognize revenue has been delayed for some contracts. We experienced order reductions, cancellations, and other negative changes to orders due to the pandemic. We routinely monitor our operating expenses as a result of contract delays and order reductions; and we have made adjustments to maintain our gross profit at a sustainable level.
v3.22.2.2
Recent Accounting Pronouncements
 9 Months Ended
Sep. 30, 2022
Recent Accounting Pronouncements [Abstract]  
Recent Accounting Pronouncements
Note 2 - Recent Accounting Pronouncements
Accounting pronouncements recently adopted
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments to improve the information provided to users. This ASU is applicable for public companies starting with fiscal years beginning after December 15, 2021 and interim periods within those fiscal years. The Company adopted ASU 2020-06 on January 1, 2022, using the modified retrospective approach, and because the Company did not have outstanding financial instruments in scope of the ASU, the adoption did not have an impact to our consolidated financial statements.
Accounting pronouncements not yet adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which introduces new guidance for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including, but not limited to, trade and other receivables, held-to-maturity debt securities, loans and net investments in leases. The new guidance also modifies the impairment model for available-for-sale debt securities and requires the entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. The standard also indicates that entities may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. On October 16, 2019, the FASB voted to defer the deadlines for private companies and certain small public companies, including smaller reporting companies, to implement the new accounting standards on credit losses. The new effective date is January 1, 2023. As a smaller reporting company, we have elected to defer adoption in line with new deadlines and are currently evaluating the effects, if any, that the adoption of this guidance will have on our consolidated financial position, results of operations and cash flows.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.
v3.22.2.2
Basic and Diluted (Loss) Income per Share
 9 Months Ended
Sep. 30, 2022
Basic and Diluted (Loss) Income per Share [Abstract]  
Basic and Diluted (Loss) Income per Share
Note 3 - Basic and Diluted (Loss) Income per Share

Basic earnings per share is based on the weighted average number of outstanding common shares for the period. Diluted earnings per share adjusts the weighted average shares outstanding for the potential dilution that could occur if outstanding RSU's, stock options and warrants were exercised. Basic and diluted earnings per share are based on the weighted average number of outstanding shares for the period.

The number of common shares and common share equivalents used in the determination of basic and diluted (loss) income per common share were as follows:

(in thousands, except for share data)
  
Three months ended
    
Nine months ended
  
   
September 30, 2022
    
September 30, 2021
    
September 30, 2022
    
September 30, 2021
  
Numerator:
                        
     Net (loss) income attributed to common stockholders
  
$
(8,992
)
  
$
11,438
    
$
(13,827
)
  
$
12,464
  
                                 
Denominator:
                                
Weighted-average shares outstanding for basic earnings per share
    
21,288,883
      
20,863,479
      
21,101,942
      
20,714,068
  
                                 
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share
    
21,288,883
      
20,863,479
      
21,101,942
      
20,714,068
  
                                 
Shares related to potentially dilutive securities excluded because inclusion would be anti-dilutive
    
3,283,400
      
14,229
      
2,383,171
      
77,871
  
v3.22.2.2
Coronavirus Aid, Relief and Economic Security Act
 9 Months Ended
Sep. 30, 2022
Coronavirus Aid, Relief and Economic Security Act [Abstract]  
Coronavirus Aid, Relief and Economic Security Act
Note 4 - Coronavirus Aid, Relief and Economic Security Act
Paycheck Protection Program Loan (PPP Loan)

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) to extend liquidity to small businesses and assist in retaining employees during the COVID-19 pandemic. We applied for and, on April 23, 2020, received a payroll protection program loan in the amount of $10.0 million (the “PPP Loan”) under the CARES Act, as administered by the U.S. Small Business Administration (the “SBA”). The application for receipt of the PPP Loan required us to certify, in good faith, that the economic uncertainty made the loan necessary to support our ongoing operations. The PPP Loan was serviced by Citizens Bank, N.A. (the “Citizens”). The PPP Loan bore interest at a rate of 1% per annum and would mature on April 23, 2022, with the first payment deferred until September 2021. We used the proceeds of the PPP Loan for payroll and related costs, rent and utilities. Pursuant to the regulations promulgated by the SBA, in order to request forgiveness of the PPP Loan, we were required to submit an application to Citizens substantiating that we were entitled to the PPP Loan and used the proceeds of the PPP Loan as permitted under the CARES Act. Citizens reviewed our application for forgiveness and associated documentation, and on February 26, 2021 forwarded our application to the SBA with Citizens’ determination that the loan is fully forgivable. On August 5, 2021, we received notice that full principal amount and all accrued interest thereon of the PPP Loan was formally forgiven by the SBA. We recognized other income of $10.1 million related to this forgiveness during the third quarter of fiscal 2021.

Employee Retention Credits (ERC)

Employee  retention tax credits, made available under the CARES Act, allow eligible employers to claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees, initially from March 27, 2020 until June 30, 2021, and extended through September 30, 2021. In 2021, we applied for $5.0 million in refunds from the Internal Revenue Service with filing of our 941s and achieved $2.2 million in credits from unremitted payroll taxes as allowed. We recorded other income of $7.2 million related to the employee retention tax credits earned for the year ended December 31, 2021. During the three months ended September 30, 2022, we didn't receive any employee retention tax credit refunds from the Internal Revenue Service. As of September 30, 2022, we received cumulative employee retention tax credit refunds totaling $3.6 million of the $5.0 million in refunds sought, with remaining outstanding refunds receivable of $1.4 million which was included in the other current assets balance at September 30, 2022. Subsequently, in October 2022, we received a refund of $0.4 million.
v3.22.2.2
Contract Receivables
 9 Months Ended
Sep. 30, 2022
Contract Receivables [Abstract]  
Contract Receivables
Note 5 - Contract Receivables

Contract receivables represent our unconditional rights to consideration due from our domestic and international customers. We expect to collect all contract receivables within the next twelve months.
The components of contract receivables were as follows:
(in thousands)
  
September 30, 2022
   
December 31, 2021
 
             
Billed receivables
  
$
5,512
    
$
6,124
  
Unbilled receivables
    
5,648
      
6,143
  
Allowance for doubtful accounts
    
(1,008
)
    
(1,010
)
Total contract receivables, net
  
$
10,152
    
$
11,257
  

Management reviews collectability of receivables periodically and records an allowance for doubtful accounts to reduce the Company’s receivables to their net realizable value when management determines it is probable that we will not be able to collect all amounts due from customers. The allowance for doubtful accounts is based on historical trends of past due accounts, write-offs, specific identification and review of customer accounts.
There was no bad debt expense recorded during the three months ended September 30, 2022 and 2021. During the nine months ended September 30, 2022 and 2021, we recorded net bad debt expense (recovery) of $97 thousand and $(133) thousand, respectively.

During the month of October 2022, we invoiced $2.5 million of the unbilled receivables as of September 30, 2022.

Our foreign currency denominated contract receivables, billings in excess of revenue earned and subcontractor accruals that are related to the outstanding foreign exchange contracts are remeasured at the end of each reporting period into our functional currency, using the current exchange rate at the end of the period. The gain or loss resulting from such remeasurement is included in other income, net in the consolidated statements of operations. During the three months ended September 30, 2022 and 2021, we recognized a gain on remeasurement of these foreign exchange contracts of $4 thousand and $6 thousand, respectively. During the nine months ended September 30, 2022 and 2021, we recognized a (loss) gain on remeasurement of these foreign exchange contracts of $(51) thousand and $27 thousand, respectively.

As of September 30, 2022 and December 31, 2021, we had no customer concentrations in contract receivables that required disclosure.
v3.22.2.2
Goodwill and Intangible Assets
 9 Months Ended
Sep. 30, 2022
Goodwill and Intangible Assets [Abstract]  
Goodwill and Intangible Assets
Note 6 - Goodwill and Intangible Assets

The Company monitors operating results and events and circumstances that may indicate potential impairment of intangible assets.

During the three months ended September 30, 2022, we determined that the deterioration in sales, decline in revenues, delayed pipeline opportunities, and overall downward performance results and the forecast related to the Workforce Solutions business segment was material enough to be considered a triggering event that could result in impairment of our long-lived assets. As such, we performed an interim analysis to determine if an impairment existed at September 30, 2022 in accordance with ASC 350 & ASC 360.

ASC 350 Indefinite-Lived Asset Testing – Based on the triggering event indicated above we performed an interim analysis to determine if an impairment of the Workforce Solutions business unit existed at September 30, 2022. Our Goodwill impairment analysis, which includes the use of discounted cash flow models that requires management to make assumptions regarding estimates of revenue growth rates and operating margins used to calculate projected future cash flows, and risk-adjusted discount rates determined the carrying value of Workforce Solutions exceeded the Fair Value by $7.0 million. As such, impairment of the related goodwill was recorded in the three months ended September 30, 2022.

ASC 360 Long-Lived Asset Testing – Based on the triggering event indicated above we also performed an interim analysis to determine if an impairment existed at September 30, 2022 by its individual asset groupings, which we determined to be at the subsidiary level. We used a discounted cash flow analysis to test for impairment and concluded that the carrying value of the definite-lived intangible assets of Absolute, a business unit of the Workforce Solutions segment, exceeded its carrying value by $0.5 million, and we recorded a loss on impairment for this amount as of September 30, 2022. No impairment was identified related to any other asset groupings.

Goodwill

(in thousands)

 
  
Goodwill
    
Impairment
    
Net
  

                 
Performance Improvement Solutions
   $
8,278
     $
(3,370
)
   $
4,908
  
Workforce Solutions
    
8,431
      
(7,040
)
    
1,391
  
Net book value at September 30, 2022
  
$
16,709
    
$
(10,410
)
  
$
6,299
  

(in thousands)

 
  
Goodwill
    
Impairment
    
Net
  

                 
Performance Improvement Solutions
   $
8,278
     $
(3,370
)
   $
4,908
  
Workforce Solutions
    
8,431
      
-
      
8,431
  
Net book value at December 31, 2021
  
$
16,709
    
$
(3,370
)
  
$
13,339
  

The following table shows the gross carrying amount and accumulated amortization of definite-lived intangible assets:
(in thousands)
  
As of September 30, 2022
  
   
Gross
Carrying
Amount
    
Accumulated
Amortization
      Impairment    
Net
  
Amortized intangible assets:
                        
Customer relationships
  
$
8,628
    
$
(6,940
)
   $
(464 )  
$
1,224
  
Trade names
    
1,689
      
(1,174
)
     -      
515
  
Developed technology
    
471
      
(471
)
     -      
-
  
Non-contractual customer relationships
    
433
      
(433
)
     -      
-
  
Noncompete agreement
    
527
      
(477
)
     -      
50
  
Alliance agreement
    
527
      
(462
)
     -      
65
  
Others
    
167
      
(167
)
     -      
-
  
Total
  
$
12,442
    
$
(10,124
)
   $ (464 )  
$
1,854
  

(in thousands)
  
As of December 31, 2021
  
   
Gross
Carrying
Amount
    
Accumulated
Amortization
    
Net
  
Amortized intangible assets:
                  
Customer relationships
  
$
8,628
    
$
(6,432
)
  
$
2,196
  
Trade names
    
1,689
      
(1,108
)
    
581
  
Developed technology
    
471
      
(471
)
    
-
  
Non-contractual customer relationships
    
433
      
(433
)
    
-
  
Noncompete agreement
    
527
      
(429
)
    
98
  
Alliance agreement
    
527
      
(382
)
    
145
  
Others
    
167
      
(167
)
    
-
  
Total
  
$
12,442
    
$
(9,422
)
  
$
3,020
  

Amortization expense related to definite-lived intangible assets totaled $0.2 million and $0.3 million for the three months ended September 30, 2022 and 2021 and $0.7 million and $0.9 million for the nine months ended September 30, 2022 and 2021, respectively. The following table shows the estimated amortization expense of the definite-lived intangible assets for the next five years and thereafter:
 
(in thousands)
      
Years ended December 31:
      
2022 remainder
  
$
167
  
2023
    
508
  
2024
    
332
  
2025
    
255
  
2026
    
204
  
Thereafter
    
388
  
Total
  
$
1,854
  
v3.22.2.2
Equipment, Software and Leasehold Improvements
 9 Months Ended
Sep. 30, 2022
Equipment, Software and Leasehold Improvements [Abstract]  
Equipment, Software and Leasehold Improvements
Note 7 - Equipment, Software and Leasehold Improvements
Equipment, software and leasehold improvements, net consist of the following:
(in thousands)
            
   
September 30, 2022
    
December 31, 2021
  
Computer and equipment
  
$
2,323
    
$
2,270
  
Software
    
2,263
      
2,150
  
Leasehold improvements
    
659
      
659
  
Furniture and fixtures
    
838
      
839
  
     
6,083
      
5,918
  
Accumulated depreciation
    
(5,287
)
    
(5,079
)
Equipment, software and leasehold improvements, net
  
$
796
    
$
839
  

Depreciation expense was $69 thousand for both the three months ended September 30, 2022 and 2021. Depreciation expense was $213 thousand and $216 thousand for the nine months ended September 30, 2022 and 2021, respectively. Capitalization of internal-use software cost of $37 thousand and $50 thousand were recorded in software for the three months ended September 30, 2022 and 2021, respectively. Capitalization of internal-use software cost of $114 thousand and $365 thousand were recorded in software for the nine months ended September 30, 2022 and 2021, respectively.
v3.22.2.2
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2022
Fair Value of Financial Instruments [Abstract]  
Fair Value of Financial Instruments
Note 8 - Fair Value of Financial Instruments

ASC 820, Fair Value Measurement, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The levels of the fair value hierarchy established by ASC 820 are:
Level 1:  inputs are quoted prices, unadjusted, in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2:  inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3:  inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.
As of September 30, 2022 and December 31, 2021, we considered the recorded value of certain of our financial assets and liabilities, which consist primarily of cash and cash equivalents, contract receivable and accounts payable, to approximate fair value based upon their short-term nature.

Our convertible debt issued in February 2022 (See Note 10) includes certain embedded redemption features that are required to be bifurcated as embedded derivatives and measured at fair value on a recurring basis. We estimate the fair value using a Monte Carlo simulation based on estimates of our future stock price and assumptions about the possible redemption scenarios.

The Company used the Monte Carlo simulation model to determine the fair value of the Warrants and Cash-Settled PRSUs, which required the input of subjective assumptions. The fair value of the Warrants as of September 30, 2022 was estimated with the following assumptions.
 
Exercise Price
 $ 1.94  
       
Common Stock Price
 $ 0.90  
Risk Free Rate
   4.0 %
Volatility
   65.0 %
Term (in years)
4.4 yrs.  

The following table presents assets and liabilities measured at fair value at September 30, 2022:
(in thousands)
  
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
    
Significant
Other Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
                         
Derivative liability   $ -     $ -     $ 237     $ 237  
Warrant liability
     -       -       416       416  
Cash settled performance-vesting restricted stock units
     -       -       56       56  
 Total liabilities   $ -     $ -     $ 709     $ 709  

The following table summarizes changes in the fair value of our Level 3 liabilities during the nine months ended September 30, 2022.

(in thousands)
  
Embedded
Redemption Features
     Warrant    
Cash Settled
PRSUs
    Level 3 Total
 
Balance at December 31, 2021
  
$
-
     $ -     $ -     $ -  
Derivative liabilities at issuance date
    
306
       -       -       306  
Warrant liabilities at issuance date
     -       724       -       724  
Change in fair value included in gain on derivative instruments, net
    (69 )     (308 )     -       (377 )
Fair value of cash settled PRSUs vested
    -       -       87       87  
Cash paid on vested shares
    -       -       (31 )     (31 )
Balance at September 30, 2022
  
$
237
     $ 416     $ 56     $ 709  
v3.22.2.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2022
Stock-Based Compensation [Abstract]  
Stock-Based Compensation
Note 9 - Stock-Based Compensation
We recognize compensation expense on a pro rata straight-line basis over the requisite service period for stock-based compensation awards with both graded and cliff vesting terms. We recognize the cumulative effect of a change in the number of awards expected to vest in compensation expense in the period of change. We have not capitalized any portion of our stock-based compensation. Our forfeiture rate is based on actuals.


During the three months ended September 30, 2022 and 2021, we recognized $0.5 million and $0.3 million of stock-based compensation expense related to equity awards, respectively. We recognized $1.5 million and $0.8 million of stock-based compensation expense related to equity awards for the nine months ended September 30, 2022 and 2021, respectively, under the fair value method.



We granted no time-based restricted stock units (“RSUs”) during the three months ended September 30, 2022. During the  nine months ended September 30, 2022, we granted approximately 960,250 RSUs with an aggregate fair value of approximately $1.5 million. During the three and nine months ended September 30, 2021, we granted approximately 20,000 and 824,661 time-based RSUs with an aggregate fair value of approximately $30 thousand and $1.4 million, respectively. During the three and nine months ended September 30, 2022, we vested 112,985 and 492,805 RSUs compared to 55,788 and 421,740 RSUs vested during the three and nine months ended September 30, 2021. A portion of the time-based RSUs vest quarterly in equal amounts over the course of eight quarters, and the remainder vest annually in equal amounts over the course of one to three years.

GSE’s 1995 long-term incentive program (“LTIP”) provides for the issuance of performance-vesting and time-vesting restricted stock units to certain executives and employees. Vesting of the performance-vesting restricted stock units (“PRSU”) is contingent upon the employee’s continued employment and the Company’s achievement of certain performance goals during designated performance periods as established by the Compensation Committee of the Company’s Board of Directors. We recognize compensation expense, net of estimated forfeitures, for PRSUs on a straight-line basis over the performance period based on the probable outcome of achievement of the financial targets. At the end of each reporting period, we estimate the number of PRSUs that are expected to vest, based on the probability and extent to which the performance goals will be met, and take into account these estimates when calculating the expense for the period. If the number of shares expected to be earned changes during the performance period, we make a cumulative adjustment to compensation expense based on the revised number of shares expected to be earned.

During the nine months ended September 30, 2022, we granted 800,000 PRSUs including 200,000 cash-settled grants to employees. These grants are subject to multiple vesting criteria including reaching a 20-day VWAP of $1.94 prior to the expiration of the awards, and a time-vesting restriction, which will vest in equal portions over the next 15 quarters ending December 31, 2025. During the three and nine months ended September 30, 2022, we vested 50,000 and 150,000 PRSUs, of which, 12,500 and 37,500 PRSUs were cash-settled, respectively. No PRSUs were vested during the three and nine months ended September 30, 2021. The market vesting criteria was achieved in April 2022 for the 800,000 PRSUs which will fully vest over the next 13 quarters. During the three and nine months ended September 30, 2021, we did not grant any PRSUs to employees.

We did not grant any stock options for the three and nine months ended September 30, 2022 and 2021.
v3.22.2.2
Debt
 9 Months Ended
Sep. 30, 2022
Debt [Abstract]  
Debt
Note 10 - Debt

Convertible Note

On February 23, 2022, we entered into a Securities Purchase Agreement, as amended, with Lind Global Fund II LP (“Lind Global”), pursuant to which we issued to Lind Global a two-year, secured, interest-free convertible promissory note in the amount of $5.75 million (the “Convertible Note”) and a common stock purchase warrant to acquire 1,283,732 shares of our common stock (the “Warrant”). The Convertible Note does not bear interest but was issued at a $0.75 million discount (“OID”). We received proceeds of approximately $4.8 million net of the OID and expenses.

   
Amount
  
       
Convertible Note issued
  
$
5,750
  
Debt discount
    
(750
)
Issuance cost:
        
Commitment fee
    
(175
)
Balance of investor’s counsel fees
    
(43
)
Net proceeds of Convertible Note
  
$
4,782
  

       
Fair value of Warrant Liabilities on issuance
     (724 )
Fair value of Conversion Feature on issuance
     (306 )
Allocated OID costs to Convertible Note
     (96 )
Interest expense accrued on Convertible Note as of September 30, 2022
     926  
Principal and interest payments as of September 30, 2022     (639 )
         
Balance of Convertible Note as of September 30, 2022
   $ 3,943  

The Convertible Note provides for monthly principal repayments of $319 thousand beginning 180 days from issuance.  Payments can be made in the form of cash, shares, or a combination of both at the discretion of GSE.

The Convertible Note is convertible into our common stock at any time after the earlier of six months from issuance of the Convertible Note or the date of an effective registration statement filed with the SEC covering the underlying shares. The conversion price of the Convertible Note is initially equal to $1.94 per share, subject to customary adjustments. The Convertible Note matures in February of 2024, although we are permitted to prepay the Convertible Note, provided that Lind Global shall have the option to convert up to one third of the outstanding principal of the Convertible Note at a price per share equal to the lessor of the Repayment Share price or the conversion price (as described below). The Convertible Note is guaranteed by each of our subsidiaries and is secured by a first priority lien on all of our assets. The Convertible Note is not subject to any financial covenants and events of default under the Convertible Note are limited to events related to payment, certain events pertaining to the underlying shares of common stock and other customary events including, but not limited to, bankruptcy or insolvency. Upon the occurrence of an event of default, the Convertible Note will become immediately due and payable, subject to any cure periods described in the Convertible Note, and the customer may demand that all or a portion of the outstanding principal amount be converted into shares of common stock at the lower of the then current conversion price and 80% of the average of the three lowest daily volume-weighted average price (“VWAPs”) during the twenty days prior to delivery of the conversion notice. If there is a change of control of the Company, Lind Global has the right to require us to prepay the outstanding principal amount of the Convertible Note.

A portion of the proceeds of the Convertible Note were used to repay, in full, all outstanding indebtedness owed to Citizens Bank, N.A. (“Citizens”), and the Amended and Restated Credit and Security Agreement between us, our subsidiaries, and Citizens was terminated. We will continue to maintain a cash management account and certain letters of credit with Citizens and, accordingly, have entered into a certain Cash Management Agreement with Citizens, as well as certain Cash Pledge Agreements in amounts corresponding to the current outstanding letters of credits with customers.

The Warrant entitles Lind Global to purchase up to 1,283,732 shares of our common stock until February 23, 2027, at an exercise price of $1.94 per share, subject to customary adjustments described therein.  The Warrant is recorded at fair value upon issuance of $0.7 million and is classified as a current liability to be remeasured at each reporting period (see Note 8). The discount created by allocating proceeds to the Warrant results in a debt discount to be amortized as additional interest expense over the term of the Convertible Note.

The Company evaluated the Convertible Note and concluded that certain embedded redemption features are required to be accounted for as a derivative liability. Embedded redemption features were recorded at fair value upon issuance of $0.3 million and are classified as current liabilities to be remeasured at each reporting period (see Note 8). The discount created by allocating proceeds to the derivative liability results in a debt discount to be amortized as additional interest expense over the term of the Convertible Notes. The Warrant is accounted for as a derivative liability based on certain features included within the Convertible Note which caused the Company to not be able to assert that it would have sufficient shares in all cases to be able to settle the warrant. As such, the initial proceeds (approximately $4.8 million, net of original issue discounts and other payments to lender) were allocated first to the fair value of the Warrant with the residual allocated to the Convertible Note host instrument. The proceeds allocated to the Convertible Note were further allocated first to the bifurcated derivative liability based on its fair value with the residual being allocated to the Convertible Note host instrument.

The direct and incremental costs incurred are allocated to the Convertible Note and the Warrant based on a systematic and rational approach. The costs allocated to the Warrant have been expensed as incurred while those allocated to the Convertible Note have been capitalized and will be amortized as interest expense over the life of the Convertible Note based on the effective interest rate. The Company will record ongoing changes to the fair value of the derivative liabilities as other non-operating income (expense).

The Convertible Note was evaluated as a potentially dilutive security in both periods of loss and income for diluted earnings per share purposes. The Warrant is considered a participating security and was not included in the calculation of basic earnings per share for the period ended September 30, 2022 as Company reflected net loss for this period. The Warrant will be included in the calculation of basic earnings per share in periods of net income.

The issuance costs with respect to the Convertible Note, which are recorded as a debt discount, are deferred and amortized using effective interest method as additional interest expense over the terms of the Convertible Note.

The Company incurred total interest expense related to the Convertible Note, including the amortization of the various discounts, of $443 thousand and $926 thousand for the three and nine months ended September 30, 2022, respectively.

Revolving Line of Credit

On March 29, 2021, we signed the Ninth Amendment and Reaffirmation Agreement with an effective date of March 29, 2021. Pursuant to the Ninth Amendment and Reaffirmation Agreement, the Bank waived the fixed charge coverage ratio and leverage ratio for the quarters ended March 31 and June 30, 2021, and we agreed, for each quarter thereafter, that the fixed charge coverage ratio shall not be less than 1.10 to 1.00. In addition, we agreed to not exceed a maximum leverage ratio starting on September 30, 2021. We were also required to maintain a minimum of $2.5 million in aggregate USA liquidity. As part of the amendment, we agreed, at closing, (i) to make a $0.5 million pay down of RLOC; (ii) RLOC commitment to be reduced to $4.25 million; and (iii) $0.5 million of RLOC will only be available for issuance of Letters of Credit. We also agreed to pay $0.5 million to reduce RLOC to $3.75 million by June 30, 2021 and to $3.5 million by September 30, 2021. Commencing December 31, 2021 and on the last day of each quarter, we will pay $75 thousand to reduce the RLOC. We incurred $25 thousand fees related to this amendment during the year ended December 31, 2021.

On November 12, 2021, we signed the Tenth Amendment and Reaffirmation Agreement with our bank to waive the fixed charge coverage ratio and leverage ratio for the quarters ending September 30 and December 31, 2021, and we agreed, (i) interest on the outstanding principal amount of the RLOC shall accrue at the interest rate in effect for the RLOC from time to time, but the interest due and payable on the RLOC on each Interest Payment Date shall be determined by subtracting seventy-five (75) basis points from the Applicable Margin and (ii) the seventy-five (75) basis points of accrued interest on the RLOC not paid on any Interest Payment Date pursuant to clause (i) above shall be due and payable on the Termination Date or the date of payment in full of the RLOC. In addition, we agreed, by December 31, 2021, to pay the Bank $0.25 million to be applied to the principal amount outstanding under the RLOC. We incurred $15 thousand of amendment fee related to this amendment.

During the nine months ended September 30, 2022, using proceeds from the Convertible Note, we repaid in full, all outstanding indebtedness of $1.8 million owed to Citizens, and the Amended and Restated Credit and Security Agreement between us, our subsidiaries, and Citizens has been terminated. Certain letters of credit remain in place with Citizens. As of September 30, 2022, we had four letters of credit totaling $1.1 million outstanding to certain customers which were secured with restricted cash.
v3.22.2.2
Product Warranty
 9 Months Ended
Sep. 30, 2022
Product Warranty [Abstract]  
Product Warranty
Note 11 - Product Warranty
We accrue for estimated warranty costs at the time the related revenue is recognized and based on historical experience and projected claims. Our System Design and Build contracts generally include a one year base warranty on the systems. The portion of our warranty provision expected to be incurred within 12 months is classified as current within accrued warranty and totals $478 thousand, and the remaining $99 thousand is classified as long-term within other non-current liabilities.
The activity in the accrued warranty accounts during the current period is as follows:
(in thousands)
      
Balance at January 1, 2022
  
$
748
  
Current period recovery
    
(3
)
Current period claims
    
(158
)
Currency adjustment
    
(10
)
Balance at September 30, 2022
  
$
577
  
v3.22.2.2
Revenue
 9 Months Ended
Sep. 30, 2022
Revenue [Abstract]  
Revenue
Note 12 - Revenue

We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers. We primarily generate revenue through three distinct revenue streams: (1) System Design and Build (“SDB”), (2) Software and (3) Training and Consulting Services across our Performance and Workforce Solutions segments. We recognize revenue from SDB and software contracts mainly through our Performance segment. We recognize training and consulting service contracts through both segments.
The following table represents a disaggregation of revenue by type of goods or services for the three and nine months ended September 30, 2022 and 2021, along with the reporting segment for each category:

(in thousands)
  
Three months ended
    
Nine months ended
  
   
September 30,
2022
    
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
Performance Improvement Solutions segment
                        
System Design and Build
  
$
1,537
    
$
1,623
    
$
4,991
    
$
4,712
  
Over time
    
1,537
      
1,623
      
4,991
      
4,712
  
                                 
Software and Support
    
2,010
      
814
      
3,560
      
2,393
  
Point in time
    
530
      
52
      
662
      
274
  
Over time
    
1,480
      
762
      
2,898
      
2,119
  
                                 
Training and Consulting Services
    
4,505
      
4,937
      
13,851
      
14,212
  
Point in time
    
195
      
42
      
1,340
      
126
  
Over time
    
4,310
      
4,895
      
12,511
      
14,086
  
                                 
Workforce Solutions
                                
Training and Consulting Services
    
3,846
      
7,312
      
14,516
      
19,995
  
Point in time
    
52
      
126
      
52
      
375
  
Over time
    
3,794
      
7,186
      
14,464
      
19,620
  
                                 
Total revenue
  
$
11,898
    
$
14,686
    
$
36,918
    
$
41,312
  

The following table reflects revenue recognized in the reporting periods presented that was included in contract liabilities from contracts with customers as of the beginning of the periods presented:

(in thousands)
  
Three months ended
    
Nine months ended
  
   
September 30,
2022
    
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
Revenue recognized in the period from amounts included in billings in excess of revenue earned at the beginning of the period
  
$
174
    
$
835
    
$
2,666
    
$
4,139
  
v3.22.2.2
Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Taxes [Abstract]  
Income Taxes
Note 13 - Income Taxes

The following table presents the provision for income taxes and our effective tax rates:

(in thousands)
  
Three months ended
    
Nine months ended
  
   
September 30,
2022
    
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
(Loss) income before income taxes
  
$
(9,210
)
  
$
11,604
    
$
(13,935
)
  
$
12,591
  
(Benefit from) provision for income taxes
    
(218
)
    
166
      
(108
)
    
127
  
Effective tax rate
    
2.37
%
    
1.4
%
    
0.78
%
    
1.0
%


Our income tax expense for the interim periods presented is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. Total income tax expense for the three and nine months ended September 30, 2022 was comprised mainly of current foreign tax benefit, deferred federal and state tax benefit related to the portion of goodwill which cannot be offset by deferred tax assets and state tax expense. Total income tax expense for the three and nine months ended September 30, 2021 was comprised mainly of current state and foreign tax expense.



Our effective income tax rate was 2.37% and 0.78% for the three and nine months ended September 30, 2022, respectively. For the three and nine months ended September 30, 2022, the difference between our income tax benefit at an effective tax rate of 2.37% and 0.78% respectively, and the U.S. statutory federal income tax rate of 21% was primarily due to accruals related to uncertain tax positions for certain foreign tax contingencies, a change in valuation allowance in our U.S. entity, the permanent disallowance of interest expense related to disqualified debt, and discrete item adjustments for U.S. and foreign taxes. For the three and nine months ended September 30, 2021, the difference between our income tax expense at an effective rate of 1.4% and 1.0% respectively, and the U.S. statutory federal income tax rate of 21% was primarily due to accruals related to uncertain tax positions for certain foreign tax contingencies, a change in tax valuation allowance in our U.S. entity, and discrete item adjustments for U.S. and foreign taxes.



Because of our net operating loss carryforwards, we are subject to U.S. federal and state income tax examinations from the year 2000 and forward and are subject to foreign tax examinations by tax authorities for years 2016 and forward.


An uncertain tax position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Interest and penalties related to income taxes are accounted for as income tax expense.



We recognize deferred tax assets to the extent that it is believed that these assets are more likely than not to be realized. We have evaluated all positive and negative evidence and determined that we will continue to assess a full valuation allowance on our U.S., China, and Slovakia net deferred assets as of September 30, 2022. We have determined that it is not more likely than not that the Company will realize the benefits of its deferred taxes in the U.S. and foreign jurisdictions. The Company has a deferred tax liability in the amount of $13 thousand at September 30, 2022 related to the portion of Goodwill which cannot be offset by deferred tax assets.
v3.22.2.2
Leases
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Leases
Note 14 - Leases
We have lease agreements with lease and non-lease components, which are accounted for as a single lease. We apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.
Lease contracts are evaluated at inception to determine whether they contain a lease and whether we obtain the right to control an identified asset. The following table summarizes the classification of operating ROU assets and lease liabilities on the consolidated balance sheets:

(in thousands)
 
      
As of
  
Operating Leases
  
Classification
  
September 30, 2022
    
December 31, 2021
  
                 
Leased Assets
                
Operating lease - right of use assets
  
Long term assets
  
$
777
    
$
1,200
  
                     
Lease Liabilities
                    
Operating lease liabilities - Current
  
Other current liabilities
    
965
      
1,205
  
Operating lease liabilities
  
Long term liabilities
    
209
      
790
  
        
 $
1,174
    
$
1,995
  

We entered into a lease agreement to lease 2,200 square feet of office space on September 26, 2022, and the lease term will be end on November 30, 2024.

We executed a sublease agreement with a tenant to sublease 850 square feet from the Sykesville office space on September 13, 2021. This agreement is in addition to the previous sublease for 3,650 square feet entered into on May 1, 2019. The addition of the second sublease is for a portion of the space previously abandoned in December 2019. The sublease does not relieve us of our primary lease obligation. The lease agreements are all considered operating leases, maintaining the historical classification of the underlying lease. We do not recognize any underlying assets for the subleases as a lessor of operating leases. The net amount received from the sublease is recorded within selling, general and administrative expenses.
The table below summarizes lease income and expense recorded in the consolidated statements of operations incurred during the three and nine months ended September 30, 2022 and 2021, (in thousands):

        
Three months ended
    
Nine months ended
  
Lease Cost
  
Classification
  
  September 30,
2022
   
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
                             
Operating lease cost (1)
  
Selling, general and administrative expenses
  
$
174
    
$
179
    
$
534
    
$
548
  
Short-term leases costs (2)
  
Selling, general and administrative expenses
    
15
      
15
      
45
      
45
  
Sublease income (3)
  
Selling, general and administrative expenses
    
(18
)
    
(32
)
    
(55
)
    
(96
)
Net lease cost
      
$
171
    
$
162
    
$
524
    
$
497
  

(1) Includes variable lease costs which are immaterial.
(2) Includes leases maturing less than twelve months from the report date.
(3) Sublease portfolio consists of two tenants, which sublease parts of our principal executive office located at 1332 Londontown Blvd, Suite 200, Sykesville, MD.
The Company is obligated under certain noncancelable operating leases for office facilities and equipment. Future minimum lease payments under noncancelable operating leases as of September 30, 2022 are as follows:
(in thousands)
  
Gross Future
Minimum Lease
Payments
  
2022 remainder
  
$
347
  
2023
    
701
  
2024
    
151
  
2025
    
10
  
2026
    
3
  
Thereafter
     -  
Total lease payments
  
$
1,212
  
Less: Interest
    
38
  
Present value of lease payments
  
$
1,174
  

We calculated the weighted-average remaining lease term, presented in years below and the weighted-average discount rate for our operating leases, and we use the incremental borrowing rate as the lease discount rate.
Lease Term and Discount Rate
  
September 30, 2022
    
December 31, 2021
 
Weighted-average remaining lease term (years)
  
   
 
Operating leases
   
1.22
      
1.80
  
Weighted-average discount rate
                
Operating leases
     5.00 %     5.00 %

The table below sets out the classification of lease payments in the consolidated statement of cash flows.
(in thousands)
  
Nine months ended
  
Cash paid for amounts included in measurement of liabilities
  
September 30, 2022
    
September 30, 2021
 
Operating cash flows used in operating leases
  
$
934
    
$
958
  
v3.22.2.2
Segment Information
 9 Months Ended
Sep. 30, 2022
Segment Information [Abstract]  
Segment Information
Note 15 - Segment Information

We have two reportable business segments. The Performance Improvement Solutions segment provides simulation, training and engineering products and services delivered across the breadth of industries we serve. Solutions include simulation for both training and engineering applications. Example engineering services include, but are not limited to, plant design verification and validation, thermal performance evaluation and optimization programs, and engineering programs for plants for American Society of Mechanical Engineers ("ASME") code and ASME Section XI. The Company provides these services across all market segments through our Performance, True North consulting, and DP Engineering subsidiaries. Example training applications include turnkey and custom training services. Contract terms are typically less than two years.

Workforce Solutions segment provides specialized workforce solutions primarily to the nuclear industry, working at clients’ facilities. This business is managed through our Hyperspring and Absolute subsidiaries. The business model, management focus, margins and other factors clearly separate this business line from the rest of the GSE product and service portfolio.

The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income taxes. Inter-segment revenue is eliminated in consolidation and is not significant:

   
Three months ended
    
Nine months ended
  
(in thousands)
  
September 30, 2022
    
September 30, 2021
    
September 30, 2022
    
September 30, 2021
  
                         
Revenue:
                        
Performance Improvement Solutions
  
$
8,052
    
$
7,375
    
$
22,402
    
$
21,318
  
   Workforce Solutions
    
3,846
      
7,311
      
14,516
      
19,994
  
Total revenue
    
11,898
      
14,686
      
36,918
      
41,312
  
                                 
Gross Profit
                               
Performance Improvement Solutions
    2,654       2,252       7,037       6,204  
Workforce Solutions
    602       931       1,818       2,596  
Total gross profit
    3,256       3,183       8,855       8,800  
                                 
Operating loss
                                
   Performance Improvement Solutions
    
(1,403
)
    
(469
)
    
(5,511
)
    
(3,003
)
   Workforce Solutions
    
(7,646
)
    
(110
)
    
(7,815
)
    
(1,124
)
                                 
Operating loss
    
(9,049
)
    
(579
)
    
(13,326
)
    
(4,127
)
                                 
Interest expense, net
    
(422
)
    
(32
)
    
(928
)
    
(135
)
Change in fair value of derivative instruments, net    
263
      
-
      
377
      
-
  
Other (loss) income, net
    
(2
)
    
12,215
      
(58
)
    
16,853
  
(Loss) income before income taxes
  
$
(9,210
)
  
$
11,604
    
$
(13,935
)
  
$
12,591
  

The operating loss above for the three and nine months ended September 30, 2022 includes goodwill and intangible asset impairment charge of $7.5 million for Workforce Solutions. There was no impairment recognized for the same periods in 2021 for Workforce Solutions. The operating loss above for the three and nine months ended September 30, 2021 includes impairment of ROU assets of $3 thousand for Performance Improvement Solutions. There was no impairment recognized for the same periods in 2022 for Performance Improvement Solutions.

v3.22.2.2
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2022
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
Note 16 - Commitments and Contingencies
Per ASC 450 Accounting for Contingencies, the Company reviews potential items and areas where a loss contingency could arise. In the opinion of management, we are not a party to any legal proceeding, the outcome of which, in management’s opinion, individually or in the aggregate, would have a material effect on our consolidated results of operations, financial position or cash flows. We expense legal defense costs as incurred.
v3.22.2.2
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2022
Summary of Significant Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation
GSE Systems, Inc. is a leading provider of professional and technical engineering, staffing services and simulation software to clients in the power and process industries. References in this report to “GSE” or “we” or “our” or “the Company” are to GSE Systems, Inc. and our subsidiaries, collectively.
The consolidated interim financial statements included herein have been prepared by GSE and are unaudited. In the opinion of our management, all adjustments and reclassifications of a normal and recurring nature necessary to present fairly the financial position, results of operations and cash flows for the periods presented, have been made. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The accompanying balance sheet data for the year ended December 31, 2021 was derived from our audited financial statements, but it does not include all disclosures required by U.S. GAAP.
The results of operations for interim periods are not necessarily an indication of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission on March 31, 2022.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of revenues and expenses during the reporting period. Our most significant estimates relate to revenue recognition on contracts with customers, product warranties, valuation of goodwill and intangible assets acquired including the determination of fair value in impairment tests, valuation of long-lived assets to be disposed of, valuation of stock-based compensation awards, the recoverability of deferred tax assets, and valuation of warrants and derivative liability related to our convertible note. Actual results of these and other items not listed could differ from these estimates and those differences could be material.
v3.22.2.2
Recent Accounting Pronouncements (Policies)
 9 Months Ended
Sep. 30, 2022
Recent Accounting Pronouncements [Abstract]  
Accounting pronouncements recently adopted/not yet adopted
Accounting pronouncements recently adopted
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments to improve the information provided to users. This ASU is applicable for public companies starting with fiscal years beginning after December 15, 2021 and interim periods within those fiscal years. The Company adopted ASU 2020-06 on January 1, 2022, using the modified retrospective approach, and because the Company did not have outstanding financial instruments in scope of the ASU, the adoption did not have an impact to our consolidated financial statements.
Accounting pronouncements not yet adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which introduces new guidance for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including, but not limited to, trade and other receivables, held-to-maturity debt securities, loans and net investments in leases. The new guidance also modifies the impairment model for available-for-sale debt securities and requires the entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. The standard also indicates that entities may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. On October 16, 2019, the FASB voted to defer the deadlines for private companies and certain small public companies, including smaller reporting companies, to implement the new accounting standards on credit losses. The new effective date is January 1, 2023. As a smaller reporting company, we have elected to defer adoption in line with new deadlines and are currently evaluating the effects, if any, that the adoption of this guidance will have on our consolidated financial position, results of operations and cash flows.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.
v3.22.2.2
Basic and Diluted (Loss) Income per Share (Tables)
 9 Months Ended
Sep. 30, 2022
Basic and Diluted (Loss) Income per Share [Abstract]  
(Loss) Income Per Share, Basic and Diluted
The number of common shares and common share equivalents used in the determination of basic and diluted (loss) income per common share were as follows:

(in thousands, except for share data)
  
Three months ended
    
Nine months ended
  
   
September 30, 2022
    
September 30, 2021
    
September 30, 2022
    
September 30, 2021
  
Numerator:
                        
     Net (loss) income attributed to common stockholders
  
$
(8,992
)
  
$
11,438
    
$
(13,827
)
  
$
12,464
  
                                 
Denominator:
                                
Weighted-average shares outstanding for basic earnings per share
    
21,288,883
      
20,863,479
      
21,101,942
      
20,714,068
  
                                 
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share
    
21,288,883
      
20,863,479
      
21,101,942
      
20,714,068
  
                                 
Shares related to potentially dilutive securities excluded because inclusion would be anti-dilutive
    
3,283,400
      
14,229
      
2,383,171
      
77,871
  
v3.22.2.2
Contract Receivables (Tables)
 9 Months Ended
Sep. 30, 2022
Contract Receivables [Abstract]  
Contract Receivables
The components of contract receivables were as follows:
(in thousands)
  
September 30, 2022
   
December 31, 2021
 
             
Billed receivables
  
$
5,512
    
$
6,124
  
Unbilled receivables
    
5,648
      
6,143
  
Allowance for doubtful accounts
    
(1,008
)
    
(1,010
)
Total contract receivables, net
  
$
10,152
    
$
11,257
  
v3.22.2.2
Goodwill and Intangible Assets (Tables)
 9 Months Ended
Sep. 30, 2022
Goodwill and Intangible Assets [Abstract]  
Net Carrying Amount of Goodwill
Goodwill

(in thousands)

 
  
Goodwill
    
Impairment
    
Net
  

                 
Performance Improvement Solutions
   $
8,278
     $
(3,370
)
   $
4,908
  
Workforce Solutions
    
8,431
      
(7,040
)
    
1,391
  
Net book value at September 30, 2022
  
$
16,709
    
$
(10,410
)
  
$
6,299
  

(in thousands)

 
  
Goodwill
    
Impairment
    
Net
  

                 
Performance Improvement Solutions
   $
8,278
     $
(3,370
)
   $
4,908
  
Workforce Solutions
    
8,431
      
-
      
8,431
  
Net book value at December 31, 2021
  
$
16,709
    
$
(3,370
)
  
$
13,339
  
Schedule of Acquired Finite-Lived Intangible Assets by Major Class
The following table shows the gross carrying amount and accumulated amortization of definite-lived intangible assets:
(in thousands)
  
As of September 30, 2022
  
   
Gross
Carrying
Amount
    
Accumulated
Amortization
      Impairment    
Net
  
Amortized intangible assets:
                        
Customer relationships
  
$
8,628
    
$
(6,940
)
   $
(464 )  
$
1,224
  
Trade names
    
1,689
      
(1,174
)
     -      
515
  
Developed technology
    
471
      
(471
)
     -      
-
  
Non-contractual customer relationships
    
433
      
(433
)
     -      
-
  
Noncompete agreement
    
527
      
(477
)
     -      
50
  
Alliance agreement
    
527
      
(462
)
     -      
65
  
Others
    
167
      
(167
)
     -      
-
  
Total
  
$
12,442
    
$
(10,124
)
   $ (464 )  
$
1,854
  

(in thousands)
  
As of December 31, 2021
  
   
Gross
Carrying
Amount
    
Accumulated
Amortization
    
Net
  
Amortized intangible assets:
                  
Customer relationships
  
$
8,628
    
$
(6,432
)
  
$
2,196
  
Trade names
    
1,689
      
(1,108
)
    
581
  
Developed technology
    
471
      
(471
)
    
-
  
Non-contractual customer relationships
    
433
      
(433
)
    
-
  
Noncompete agreement
    
527
      
(429
)
    
98
  
Alliance agreement
    
527
      
(382
)
    
145
  
Others
    
167
      
(167
)
    
-
  
Total
  
$
12,442
    
$
(9,422
)
  
$
3,020
  
Finite-Lived Intangible Assets, Future Amortization Expense The following table shows the estimated amortization expense of the definite-lived intangible assets for the next five years and thereafter:
 
(in thousands)
      
Years ended December 31:
      
2022 remainder
  
$
167
  
2023
    
508
  
2024
    
332
  
2025
    
255
  
2026
    
204
  
Thereafter
    
388
  
Total
  
$
1,854
  
v3.22.2.2
Equipment, Software and Leasehold Improvements (Tables)
 9 Months Ended
Sep. 30, 2022
Equipment, Software and Leasehold Improvements [Abstract]  
Equipment, Software and Leasehold Improvements
Equipment, software and leasehold improvements, net consist of the following:
(in thousands)
            
   
September 30, 2022
    
December 31, 2021
  
Computer and equipment
  
$
2,323
    
$
2,270
  
Software
    
2,263
      
2,150
  
Leasehold improvements
    
659
      
659
  
Furniture and fixtures
    
838
      
839
  
     
6,083
      
5,918
  
Accumulated depreciation
    
(5,287
)
    
(5,079
)
Equipment, software and leasehold improvements, net
  
$
796
    
$
839
  
v3.22.2.2
Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2022
Fair Value of Financial Instruments [Abstract]  
Level 3 Fair Value Measurement Inputs
The Company used the Monte Carlo simulation model to determine the fair value of the Warrants and Cash-Settled PRSUs, which required the input of subjective assumptions. The fair value of the Warrants as of September 30, 2022 was estimated with the following assumptions.
 
Exercise Price
 $ 1.94  
       
Common Stock Price
 $ 0.90  
Risk Free Rate
   4.0 %
Volatility
   65.0 %
Term (in years)
4.4 yrs.  
Assets and Liabilities Measured at Fair Value
The following table presents assets and liabilities measured at fair value at September 30, 2022:
(in thousands)
  
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
    
Significant
Other Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
                         
Derivative liability   $ -     $ -     $ 237     $ 237  
Warrant liability
     -       -       416       416  
Cash settled performance-vesting restricted stock units
     -       -       56       56  
 Total liabilities   $ -     $ -     $ 709     $ 709  
Changes in Fair Value of Level 3 Liabilities
The following table summarizes changes in the fair value of our Level 3 liabilities during the nine months ended September 30, 2022.

(in thousands)
  
Embedded
Redemption Features
     Warrant    
Cash Settled
PRSUs
    Level 3 Total
 
Balance at December 31, 2021
  
$
-
     $ -     $ -     $ -  
Derivative liabilities at issuance date
    
306
       -       -       306  
Warrant liabilities at issuance date
     -       724       -       724  
Change in fair value included in gain on derivative instruments, net
    (69 )     (308 )     -       (377 )
Fair value of cash settled PRSUs vested
    -       -       87       87  
Cash paid on vested shares
    -       -       (31 )     (31 )
Balance at September 30, 2022
  
$
237
     $ 416     $ 56     $ 709  
v3.22.2.2
Debt (Tables)
 9 Months Ended
Sep. 30, 2022
Debt [Abstract]  
Convertible Note
On February 23, 2022, we entered into a Securities Purchase Agreement, as amended, with Lind Global Fund II LP (“Lind Global”), pursuant to which we issued to Lind Global a two-year, secured, interest-free convertible promissory note in the amount of $5.75 million (the “Convertible Note”) and a common stock purchase warrant to acquire 1,283,732 shares of our common stock (the “Warrant”). The Convertible Note does not bear interest but was issued at a $0.75 million discount (“OID”). We received proceeds of approximately $4.8 million net of the OID and expenses.

   
Amount
  
       
Convertible Note issued
  
$
5,750
  
Debt discount
    
(750
)
Issuance cost:
        
Commitment fee
    
(175
)
Balance of investor’s counsel fees
    
(43
)
Net proceeds of Convertible Note
  
$
4,782
  

       
Fair value of Warrant Liabilities on issuance
     (724 )
Fair value of Conversion Feature on issuance
     (306 )
Allocated OID costs to Convertible Note
     (96 )
Interest expense accrued on Convertible Note as of September 30, 2022
     926  
Principal and interest payments as of September 30, 2022     (639 )
         
Balance of Convertible Note as of September 30, 2022
   $ 3,943  
v3.22.2.2
Product Warranty (Tables)
 9 Months Ended
Sep. 30, 2022
Product Warranty [Abstract]  
Activities in the Accrued Warranty Accounts
The activity in the accrued warranty accounts during the current period is as follows:
(in thousands)
      
Balance at January 1, 2022
  
$
748
  
Current period recovery
    
(3
)
Current period claims
    
(158
)
Currency adjustment
    
(10
)
Balance at September 30, 2022
  
$
577
  
v3.22.2.2
Revenue (Tables)
 9 Months Ended
Sep. 30, 2022
Revenue [Abstract]  
Disaggregation of Revenue
The following table represents a disaggregation of revenue by type of goods or services for the three and nine months ended September 30, 2022 and 2021, along with the reporting segment for each category:

(in thousands)
  
Three months ended
    
Nine months ended
  
   
September 30,
2022
    
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
Performance Improvement Solutions segment
                        
System Design and Build
  
$
1,537
    
$
1,623
    
$
4,991
    
$
4,712
  
Over time
    
1,537
      
1,623
      
4,991
      
4,712
  
                                 
Software and Support
    
2,010
      
814
      
3,560
      
2,393
  
Point in time
    
530
      
52
      
662
      
274
  
Over time
    
1,480
      
762
      
2,898
      
2,119
  
                                 
Training and Consulting Services
    
4,505
      
4,937
      
13,851
      
14,212
  
Point in time
    
195
      
42
      
1,340
      
126
  
Over time
    
4,310
      
4,895
      
12,511
      
14,086
  
                                 
Workforce Solutions
                                
Training and Consulting Services
    
3,846
      
7,312
      
14,516
      
19,995
  
Point in time
    
52
      
126
      
52
      
375
  
Over time
    
3,794
      
7,186
      
14,464
      
19,620
  
                                 
Total revenue
  
$
11,898
    
$
14,686
    
$
36,918
    
$
41,312
  
Balance of Contract Liabilities and Revenue Recognized in Reporting Period
The following table reflects revenue recognized in the reporting periods presented that was included in contract liabilities from contracts with customers as of the beginning of the periods presented:

(in thousands)
  
Three months ended
    
Nine months ended
  
   
September 30,
2022
    
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
Revenue recognized in the period from amounts included in billings in excess of revenue earned at the beginning of the period
  
$
174
    
$
835
    
$
2,666
    
$
4,139
  
v3.22.2.2
Income Taxes (Tables)
 9 Months Ended
Sep. 30, 2022
Income Taxes [Abstract]  
Provision for (Benefit from) Income Taxes
The following table presents the provision for income taxes and our effective tax rates:

(in thousands)
  
Three months ended
    
Nine months ended
  
   
September 30,
2022
    
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
(Loss) income before income taxes
  
$
(9,210
)
  
$
11,604
    
$
(13,935
)
  
$
12,591
  
(Benefit from) provision for income taxes
    
(218
)
    
166
      
(108
)
    
127
  
Effective tax rate
    
2.37
%
    
1.4
%
    
0.78
%
    
1.0
%
v3.22.2.2
Leases (Tables)
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Classification of Operating ROU Assets and Lease Liabilities on the Balance Sheet
Lease contracts are evaluated at inception to determine whether they contain a lease and whether we obtain the right to control an identified asset. The following table summarizes the classification of operating ROU assets and lease liabilities on the consolidated balance sheets:

(in thousands)
 
      
As of
  
Operating Leases
  
Classification
  
September 30, 2022
    
December 31, 2021
  
                 
Leased Assets
                
Operating lease - right of use assets
  
Long term assets
  
$
777
    
$
1,200
  
                     
Lease Liabilities
                    
Operating lease liabilities - Current
  
Other current liabilities
    
965
      
1,205
  
Operating lease liabilities
  
Long term liabilities
    
209
      
790
  
        
 $
1,174
    
$
1,995
  
Lease Income and Expenses
The table below summarizes lease income and expense recorded in the consolidated statements of operations incurred during the three and nine months ended September 30, 2022 and 2021, (in thousands):

        
Three months ended
    
Nine months ended
  
Lease Cost
  
Classification
  
  September 30,
2022
   
September 30,
2021
    
September 30,
2022
    
September 30,
2021
  
                             
Operating lease cost (1)
  
Selling, general and administrative expenses
  
$
174
    
$
179
    
$
534
    
$
548
  
Short-term leases costs (2)
  
Selling, general and administrative expenses
    
15
      
15
      
45
      
45
  
Sublease income (3)
  
Selling, general and administrative expenses
    
(18
)
    
(32
)
    
(55
)
    
(96
)
Net lease cost
      
$
171
    
$
162
    
$
524
    
$
497
  

(1) Includes variable lease costs which are immaterial.
(2) Includes leases maturing less than twelve months from the report date.
(3) Sublease portfolio consists of two tenants, which sublease parts of our principal executive office located at 1332 Londontown Blvd, Suite 200, Sykesville, MD.
Future Minimum Lease Payments
The Company is obligated under certain noncancelable operating leases for office facilities and equipment. Future minimum lease payments under noncancelable operating leases as of September 30, 2022 are as follows:
(in thousands)
  
Gross Future
Minimum Lease
Payments
  
2022 remainder
  
$
347
  
2023
    
701
  
2024
    
151
  
2025
    
10
  
2026
    
3
  
Thereafter
     -  
Total lease payments
  
$
1,212
  
Less: Interest
    
38
  
Present value of lease payments
  
$
1,174
  
Operating Lease Weighted Average Remaining Lease Term And Discount Rate
We calculated the weighted-average remaining lease term, presented in years below and the weighted-average discount rate for our operating leases, and we use the incremental borrowing rate as the lease discount rate.
Lease Term and Discount Rate
  
September 30, 2022
    
December 31, 2021
 
Weighted-average remaining lease term (years)
  
   
 
Operating leases
   
1.22
      
1.80
  
Weighted-average discount rate
                
Operating leases
     5.00 %     5.00 %
Classification of Lease Payments in the Statement of Cash Flows
The table below sets out the classification of lease payments in the consolidated statement of cash flows.
(in thousands)
  
Nine months ended
  
Cash paid for amounts included in measurement of liabilities
  
September 30, 2022
    
September 30, 2021
 
Operating cash flows used in operating leases
  
$
934
    
$
958
  
v3.22.2.2
Segment Information (Tables)
 9 Months Ended
Sep. 30, 2022
Segment Information [Abstract]  
Reconciliation of Segment Revenue to Consolidated Revenue and Operating Results to Consolidated Income Before Income Taxes
The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income taxes. Inter-segment revenue is eliminated in consolidation and is not significant:

   
Three months ended
    
Nine months ended
  
(in thousands)
  
September 30, 2022
    
September 30, 2021
    
September 30, 2022
    
September 30, 2021
  
                         
Revenue:
                        
Performance Improvement Solutions
  
$
8,052
    
$
7,375
    
$
22,402
    
$
21,318
  
   Workforce Solutions
    
3,846
      
7,311
      
14,516
      
19,994
  
Total revenue
    
11,898
      
14,686
      
36,918
      
41,312
  
                                 
Gross Profit
                               
Performance Improvement Solutions
    2,654       2,252       7,037       6,204  
Workforce Solutions
    602       931       1,818       2,596  
Total gross profit
    3,256       3,183       8,855       8,800  
                                 
Operating loss
                                
   Performance Improvement Solutions
    
(1,403
)
    
(469
)
    
(5,511
)
    
(3,003
)
   Workforce Solutions
    
(7,646
)
    
(110
)
    
(7,815
)
    
(1,124
)
                                 
Operating loss
    
(9,049
)
    
(579
)
    
(13,326
)
    
(4,127
)
                                 
Interest expense, net
    
(422
)
    
(32
)
    
(928
)
    
(135
)
Change in fair value of derivative instruments, net    
263
      
-
      
377
      
-
  
Other (loss) income, net
    
(2
)
    
12,215
      
(58
)
    
16,853
  
(Loss) income before income taxes
  
$
(9,210
)
  
$
11,604
    
$
(13,935
)
  
$
12,591
  
v3.22.2.2
Basic and Diluted (Loss) Income per Share (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Numerator [Abstract]        
Net (loss) income attributed to common stockholders $ (8,992) $ 11,438 $ (13,827) $ 12,464
Denominator [Abstract]        
Weighted-average shares outstanding for basic earnings per share (in shares) 21,288,883 20,863,479 21,101,942 20,714,068
Effect of dilutive securities [Abstract]        
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share (in shares) 21,288,883 20,863,479 21,101,942 20,714,068
Shares related to potentially dilutive securities excluded because inclusion would be anti-dilutive (in shares) 3,283,400 14,229 2,383,171 77,871
v3.22.2.2
Coronavirus Aid, Relief and Economic Security Act (Details) - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Oct. 31, 2022
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Employee Retention Credits [Abstract]            
Tax benefit recognized   $ (218) $ 166 $ (108) $ 127  
Paycheck Protection Program [Member]            
Debt Instruments [Abstract]            
Other income     $ 10,100      
Paycheck Protection Program Loan [Abstract]            
Amount received from Paycheck Protection Program   $ 10,000   $ 10,000    
Interest rate   1.00%   1.00%    
Employee Retention Credits [Member]            
Debt Instruments [Abstract]            
Other income           $ 7,200
Employee Retention Credits [Abstract]            
Refund of employee retention credit           5,000
Tax benefit recognized           $ 2,200
Tax credit refunds received   $ 0        
Employee retention credits received   3,600   $ 3,600    
Refund of employee retention credit receivable   $ 1,400   $ 1,400    
Employee Retention Credits [Member] | Subsequent Event [Member]            
Employee Retention Credits [Abstract]            
Tax credit refunds received $ 400          
v3.22.2.2
Contract Receivables (Details)
$ in Thousands
 3 Months Ended 9 Months Ended
Oct. 31, 2022
USD ($)
Sep. 30, 2022
USD ($)
Customer
Sep. 30, 2021
USD ($)
Sep. 30, 2022
USD ($)
Customer
Sep. 30, 2021
USD ($)
Dec. 31, 2021
USD ($)
Customer
Components of contract receivables [Abstract]            
Billed receivables   $ 5,512   $ 5,512   $ 6,124
Unbilled receivables   5,648   5,648   6,143
Allowance for doubtful accounts   (1,008)   (1,008)   (1,010)
Total contract receivables, net   10,152   10,152   $ 11,257
Bad debt expense (recovery)   0 $ 0 97 $ (133)  
Gain (loss) on foreign exchange contracts   $ 4 $ 6 $ (51) $ 27  
Subsequent Event [Member]            
Unbilled Contract Receivables [Abstract]            
Subsequent billing $ 2,500          
Contract Receivable [Member]            
Concentration Risk [Abstract]            
Number of customers accounting for contract receivables | Customer   0   0   0
v3.22.2.2
Goodwill and Intangible Assets (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Goodwill, Impaired [Abstract]          
Goodwill $ 16,709   $ 16,709   $ 16,709
Impairment (10,410)   (10,410)   (3,370)
Net 6,299   6,299   13,339
Amortized Intangible Assets [Abstract]          
Gross carrying amount 12,442   12,442   12,442
Accumulated amortization (10,124)   (10,124)   (9,422)
Impairment     (464)    
Net 1,854   1,854   3,020
Amortization of intangible assets 209 $ 286 700 $ 929  
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
2022 remainder 167   167    
2023 508   508    
2024 332   332    
2025 255   255    
2026 204   204    
Thereafter 388   388    
Total 1,854   1,854   3,020
Customer Relationships [Member]          
Amortized Intangible Assets [Abstract]          
Gross carrying amount 8,628   8,628   8,628
Accumulated amortization (6,940)   (6,940)   (6,432)
Impairment     (464)    
Net 1,224   1,224   2,196
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Total 1,224   1,224   2,196
Trade Names [Member]          
Amortized Intangible Assets [Abstract]          
Gross carrying amount 1,689   1,689   1,689
Accumulated amortization (1,174)   (1,174)   (1,108)
Impairment     0    
Net 515   515   581
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Total 515   515   581
Developed Technology [Member]          
Amortized Intangible Assets [Abstract]          
Gross carrying amount 471   471   471
Accumulated amortization (471)   (471)   (471)
Impairment     0    
Net 0   0   0
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Total 0   0   0
Non-Contractual Customer Relationships [Member]          
Amortized Intangible Assets [Abstract]          
Gross carrying amount 433   433   433
Accumulated amortization (433)   (433)   (433)
Impairment     0    
Net 0   0   0
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Total 0   0   0
Noncompete Agreement [Member]          
Amortized Intangible Assets [Abstract]          
Gross carrying amount 527   527   527
Accumulated amortization (477)   (477)   (429)
Impairment     0    
Net 50   50   98
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Total 50   50   98
Alliance Agreement [Member]          
Amortized Intangible Assets [Abstract]          
Gross carrying amount 527   527   527
Accumulated amortization (462)   (462)   (382)
Impairment     0    
Net 65   65   145
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Total 65   65   145
Others [Member]          
Amortized Intangible Assets [Abstract]          
Gross carrying amount 167   167   167
Accumulated amortization (167)   (167)   (167)
Impairment     0    
Net 0   0   0
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Total 0   0   0
Performance Improvement Solutions [Member]          
Goodwill, Impaired [Abstract]          
Goodwill 8,278   8,278   8,278
Impairment (3,370)   (3,370)   (3,370)
Net 4,908   4,908   4,908
Workforce Solutions [Member]          
Goodwill, Impaired [Abstract]          
Goodwill 8,431   8,431   8,431
Impairment (7,040)   (7,040)   0
Net $ 1,391   $ 1,391   $ 8,431
v3.22.2.2
Equipment, Software and Leasehold Improvements (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Equipment, Software and Leasehold Improvements, Net [Abstract]          
Equipment, software and leasehold improvements $ 6,083   $ 6,083   $ 5,918
Accumulated depreciation (5,287)   (5,287)   (5,079)
Equipment, software and leasehold improvements, net 796   796   839
Depreciation expense 69 $ 69 213 $ 216  
Computer and Equipment [Member]          
Equipment, Software and Leasehold Improvements, Net [Abstract]          
Equipment, software and leasehold improvements 2,323   2,323   2,270
Software [Member]          
Equipment, Software and Leasehold Improvements, Net [Abstract]          
Equipment, software and leasehold improvements 2,263   2,263   2,150
Capitalization of internal-use software cost 37 $ 50 114 $ 365  
Leasehold Improvements [Member]          
Equipment, Software and Leasehold Improvements, Net [Abstract]          
Equipment, software and leasehold improvements 659   659   659
Furniture and Fixtures [Member]          
Equipment, Software and Leasehold Improvements, Net [Abstract]          
Equipment, software and leasehold improvements $ 838   $ 838   $ 839
v3.22.2.2
Fair Value of Financial Instruments (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
USD ($)
$ / shares
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities $ 709
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Significant Other Observable Inputs (Level 2) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Significant Unobservable Inputs (Level 3) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 709
Changes in Fair Value of Level 3 Liabilities [Abstract]  
Balance, Beginning Period 0
Derivative liabilities at issuance date 306
Warrant liabilities at issuance date 724
Change in fair value included in gain on derivative instruments, net (377)
Fair value of cash settled PRSUs vested 87
Cash paid on vested shares (31)
Balance, Ending Period 709
Embedded Redemption Features [Member]  
Changes in Fair Value of Level 3 Liabilities [Abstract]  
Warrant liabilities at issuance date 306
Embedded Redemption Features [Member] | Significant Unobservable Inputs (Level 3) [Member]  
Changes in Fair Value of Level 3 Liabilities [Abstract]  
Balance, Beginning Period 0
Derivative liabilities at issuance date 306
Warrant liabilities at issuance date 0
Change in fair value included in gain on derivative instruments, net (69)
Fair value of cash settled PRSUs vested 0
Cash paid on vested shares 0
Balance, Ending Period 237
Cash Settled Performance-Vesting Restricted Stock Units [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 56
Cash Settled Performance-Vesting Restricted Stock Units [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Cash Settled Performance-Vesting Restricted Stock Units [Member] | Significant Other Observable Inputs (Level 2) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Cash Settled Performance-Vesting Restricted Stock Units [Member] | Significant Unobservable Inputs (Level 3) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 56
Changes in Fair Value of Level 3 Liabilities [Abstract]  
Balance, Beginning Period 0
Derivative liabilities at issuance date 0
Warrant liabilities at issuance date 0
Change in fair value included in gain on derivative instruments, net 0
Fair value of cash settled PRSUs vested 87
Cash paid on vested shares (31)
Balance, Ending Period 56
Derivative Liability [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 237
Derivative Liability [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Derivative Liability [Member] | Significant Other Observable Inputs (Level 2) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Derivative Liability [Member] | Significant Unobservable Inputs (Level 3) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 237
Warrant Liability [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities $ 416
Fair Value Measurements [Abstract]  
Term (in years) 4 years 4 months 24 days
Changes in Fair Value of Level 3 Liabilities [Abstract]  
Derivative liabilities at issuance date $ 724
Warrant Liability [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Warrant Liability [Member] | Significant Other Observable Inputs (Level 2) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 0
Warrant Liability [Member] | Significant Unobservable Inputs (Level 3) [Member]  
Assets and Liabilities Measured at Fair Value [Abstract]  
Total liabilities 416
Changes in Fair Value of Level 3 Liabilities [Abstract]  
Balance, Beginning Period 0
Derivative liabilities at issuance date 0
Warrant liabilities at issuance date 724
Change in fair value included in gain on derivative instruments, net (308)
Fair value of cash settled PRSUs vested 0
Cash paid on vested shares 0
Balance, Ending Period $ 416
Warrant Liability [Member] | Exercise Price [Member]  
Fair Value Measurements [Abstract]  
Measurement input | $ / shares 1.94
Warrant Liability [Member] | Common Stock Price [Member]  
Fair Value Measurements [Abstract]  
Measurement input | $ / shares 0.9
Warrant Liability [Member] | Risk Free Rate [Member]  
Fair Value Measurements [Abstract]  
Measurement input 0.04
Warrant Liability [Member] | Volatility [Member]  
Fair Value Measurements [Abstract]  
Measurement input 0.65
v3.22.2.2
Stock-Based Compensation (Details)
$ / shares in Units, $ in Thousands
 1 Months Ended 3 Months Ended 9 Months Ended
Feb. 23, 2022
d
$ / shares
Apr. 30, 2022
qtr
shares
Sep. 30, 2022
USD ($)
$ / shares
shares
Sep. 30, 2021
USD ($)
shares
Sep. 30, 2022
USD ($)
d
qtr
$ / shares
shares
Sep. 30, 2021
USD ($)
shares
Share-based Compensation [Abstract]            
Stock options granted (in shares)     0 0 0 0
Convertible Note [Member]            
Share-based Compensation [Abstract]            
Number of trading days | d 20       20  
Exercise price (in dollars per share) | $ / shares $ 1.94   $ 1.94   $ 1.94  
Stock Option [Member]            
Share-based Compensation [Abstract]            
Stock-based compensation expense | $     $ 500 $ 300 $ 1,500 $ 800
Restricted Stock Units [Member]            
Share-based Compensation [Abstract]            
Stock-based compensation expense | $         $ 200,000  
Granted time-based RSUs (in shares)     0 20,000 960,250 824,661
Aggregate fair value for time-based RSUs | $       $ 30 $ 1,500 $ 1,400
Number of quarters time-based RSU's will vest quarterly | qtr         8  
Granted performance-based RSUs (in shares)   800,000   0 800,000 0
RSUs vested (in shares)     112,985 55,788 492,805 421,740
Period to fully vest performance RSUs | qtr   13     15  
Restricted Stock Units [Member] | Minimum [Member]            
Share-based Compensation [Abstract]            
Period in which time-based RSU's will vest annually in equal amounts         1 year  
Restricted Stock Units [Member] | Maximum [Member]            
Share-based Compensation [Abstract]            
Period in which time-based RSU's will vest annually in equal amounts         3 years  
PRSUs [Member]            
Share-based Compensation [Abstract]            
RSUs vested (in shares)     50,000 0 150,000 0
Cash Settled PRSUs [Member]            
Share-based Compensation [Abstract]            
RSUs vested (in shares)     12,500   37,500  
v3.22.2.2
Debt, Convertible Note (Details)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended
Feb. 23, 2022
USD ($)
d
$ / shares
shares
Sep. 30, 2022
USD ($)
$ / shares
Sep. 30, 2022
USD ($)
d
$ / shares
Embedded Redemption Features [Member]      
Convertible Debt [Abstract]      
Fair value of Conversion Feature on issuance   $ (306) $ (306)
Warrant Liability [Member]      
Convertible Debt [Abstract]      
Fair value of Warrant Liabilities on issuance   (724) $ (724)
Convertible Note [Member]      
Convertible Debt [Abstract]      
Debt instrument term     2 years
Purchase of warrant to acquire shares of common stock (in shares) | shares 1,283,732    
Convertible Note issued $ 5,750    
Debt discount (750)    
Net proceeds of Convertible Note 4,782    
Allocated OID costs to Convertible Note   (96) $ (96)
Interest expense accrued on Convertible Note   443 926
Principal and interest payments   (639) (639)
Balance of Convertible Note   $ 3,943 $ 3,943
Frequency of periodic payment     monthly
Monthly principal repayments $ 319    
Period for repayment of convertible note from issuance 180 days    
Period for conversion 6 months    
Conversion price (in dollars per share) | $ / shares $ 1.94    
Maturity date     Feb. 29, 2024
Conversion ratio 0.33    
Percentage of volume-weighted average price 80.00%    
Average of trading days | d 3    
Number of trading days | d 20   20
Exercise price (in dollars per share) | $ / shares $ 1.94 $ 1.94 $ 1.94
Fair value $ 700    
Net proceeds from issuance of convertible note 4,800    
Convertible Note [Member] | Commitment Fee [Member]      
Convertible Debt [Abstract]      
Issuance cost (175)    
Convertible Note [Member] | Investor's Counsel Fees [Member]      
Convertible Debt [Abstract]      
Issuance cost $ (43)    
v3.22.2.2
Debt, Revolving Line of Credit (Details)
$ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Nov. 12, 2021
USD ($)
Mar. 29, 2021
USD ($)
Sep. 30, 2022
USD ($)
Letter
Sep. 30, 2021
USD ($)
Dec. 31, 2021
USD ($)
Jun. 30, 2021
USD ($)
Mar. 31, 2021
USD ($)
Line of Credit Facility [Abstract]              
Repayment on line of credit     $ 1,817 $ 1,739      
Ninth Amendment and Reaffirmation Agreement [Member]              
Line of Credit Facility [Abstract]              
Fixed charge coverage ratio           1.1 1.1
Amendment fee amount         $ 25    
Revolving Credit Facility [Member]              
Line of Credit Facility [Abstract]              
Repayment on line of credit     $ 1,800        
Number of letters of credit | Letter     4        
Outstanding letter of credit balance     $ 1,100        
Revolving Credit Facility [Member] | Ninth Amendment and Reaffirmation Agreement [Member]              
Line of Credit Facility [Abstract]              
Repayment on line of credit   $ 500          
Liquidity   2,500          
Line of credit       $ 3,500   $ 3,750 $ 4,250
Amount available at the reporting date   500     75    
Periodic payment   $ 500          
Revolving Credit Facility [Member] | Tenth Amendment and Reaffirmation Agreement [Member]              
Line of Credit Facility [Abstract]              
Periodic payment         $ 250    
Amendment fee amount $ 15            
Basis points 0.75%            
v3.22.2.2
Product Warranty (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
USD ($)
Product warranty provision [Abstract]  
Warranty terms for SDB contracts 1 year
Accrued warranty, current $ 478
Accrued warranty, noncurrent 99
Activities in product warranty account [Abstract]  
Balance at beginning of period 748
Current period recovery (3)
Current period claims (158)
Currency adjustment (10)
Balance at end of period $ 577
v3.22.2.2
Revenue (Details)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
USD ($)
Sep. 30, 2021
USD ($)
Sep. 30, 2022
USD ($)
Stream
Sep. 30, 2021
USD ($)
Disaggregation of Revenue [Abstract]        
Revenue $ 11,898 $ 14,686 $ 36,918 $ 41,312
Number of distinct revenue streams | Stream     3  
Contract with Customer, Asset and Liability [Abstract]        
Revenue recognized in the period from amounts included in billings in excess of revenue earned at the beginning of the period 174 835 $ 2,666 4,139
Performance Improvement Solutions [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 8,052 7,375 22,402 21,318
Performance Improvement Solutions [Member] | System Design and Build [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 1,537 1,623 4,991 4,712
Performance Improvement Solutions [Member] | System Design and Build [Member] | Over Time [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 1,537 1,623 4,991 4,712
Performance Improvement Solutions [Member] | Software and Support [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 2,010 814 3,560 2,393
Performance Improvement Solutions [Member] | Software and Support [Member] | Point in Time [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 530 52 662 274
Performance Improvement Solutions [Member] | Software and Support [Member] | Over Time [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 1,480 762 2,898 2,119
Performance Improvement Solutions [Member] | Training and Consulting [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 4,505 4,937 13,851 14,212
Performance Improvement Solutions [Member] | Training and Consulting [Member] | Point in Time [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 195 42 1,340 126
Performance Improvement Solutions [Member] | Training and Consulting [Member] | Over Time [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 4,310 4,895 12,511 14,086
Workforce Solutions [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 3,846 7,311 14,516 19,994
Workforce Solutions [Member] | Training and Consulting [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 3,846 7,312 14,516 19,995
Workforce Solutions [Member] | Training and Consulting [Member] | Point in Time [Member]        
Disaggregation of Revenue [Abstract]        
Revenue 52 126 52 375
Workforce Solutions [Member] | Training and Consulting [Member] | Over Time [Member]        
Disaggregation of Revenue [Abstract]        
Revenue $ 3,794 $ 7,186 $ 14,464 $ 19,620
v3.22.2.2
Income Taxes (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Income Taxes [Abstract]        
(Loss) income before income taxes $ (9,210) $ 11,604 $ (13,935) $ 12,591
(Benefit from) provision for income taxes $ (218) $ 166 $ (108) $ 127
Effective tax rate 2.37% 1.40% 0.78% 1.00%
Statutory federal income tax rate 21.00% 21.00% 21.00% 21.00%
Income Tax Examination [Abstract]        
Probability of uncertain tax position to be recognized     50.00%  
Percentage of tax position realized upon ultimate settlement     50.00%  
Deferred tax liability $ 13   $ 13  
Federal [Member]        
Income Tax Examination [Abstract]        
Income tax examination, year under examination     2000  
State [Member]        
Income Tax Examination [Abstract]        
Income tax examination, year under examination     2000  
Foreign [Member]        
Income Tax Examination [Abstract]        
Income tax examination, year under examination     2016  
v3.22.2.2
Leases (Details)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
USD ($)
Sep. 30, 2021
USD ($)
Sep. 30, 2022
USD ($)
ft²
Tenant
Sep. 30, 2021
USD ($)
Dec. 31, 2021
USD ($)
Leased Assets [Abstract]          
Operating lease - right of use assets $ 777   $ 777   $ 1,200
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Operating lease - right of use assets   Operating lease - right of use assets   Operating lease - right of use assets
Lease Liabilities [Abstract]          
Operating lease liabilities - current $ 965   $ 965   $ 1,205
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Other current liabilities   Other current liabilities   Other current liabilities
Operating lease liabilities $ 209   $ 209   $ 790
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] Operating lease liabilities   Operating lease liabilities   Operating lease liabilities
Lease liabilities $ 1,174   $ 1,174   $ 1,995
Area of office space leased | ft²     2,200    
Lease agreement date     Sep. 26, 2022    
Lease expiration date     Nov. 30, 2024    
Sublease Agreement [Abstract]          
Sublease square feet | ft²     850    
Sublease date     Sep. 13, 2021    
Previously subleased square feet, one | ft²     3,650    
Previous sublease date, one     May 01, 2019    
Consolidated Statement of Operations Information [Abstract]          
Operating lease cost [1] 174 $ 179 $ 534 $ 548  
Short-term leases costs [2] 15 15 45 45  
Sublease income [3] (18) (32) (55) (96)  
Net lease cost 171 $ 162 $ 524 497  
Number of tenants | Tenant     2    
Minimum Lease Payments [Abstract]          
2022 remainder 347   $ 347    
2023 701   701    
2024 151   151    
2025 10   10    
2026 3   3    
Thereafter 0   0    
Total lease payments 1,212   1,212    
Less: Interest 38   38    
Present value of lease payments $ 1,174   $ 1,174   $ 1,995
Lease Term and Discount Rate [Abstract]          
Weighted-average remaining lease term (in years) 1 year 2 months 19 days   1 year 2 months 19 days   1 year 9 months 18 days
Weighted-average discount rate 5.00%   5.00%   5.00%
Cash paid for amounts included in measurement of liabilities [Abstract]          
Operating cash flows used in operating leases     $ 934 $ 958  
[1] Includes variable lease costs which are immaterial.
[2] Includes leases maturing less than twelve months from the report date.
[3] Sublease portfolio consists of two tenants, which sublease parts of our principal executive office located at 1332 Londontown Blvd, Suite 200, Sykesville, MD.
v3.22.2.2
Segment Information (Details)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
USD ($)
Sep. 30, 2021
USD ($)
Sep. 30, 2022
USD ($)
Segment
Sep. 30, 2021
USD ($)
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]        
Number of reportable business segments | Segment     2  
Contract term     2 years  
Goodwill and intangible asset impairment charge $ 7,505 $ 3 $ 7,505 $ 3
Segment Reporting Information, Profit (Loss) [Abstract]        
Revenue 11,898 14,686 36,918 41,312
Gross profit 3,256 3,183 8,855 8,800
Operating loss (9,049) (579) (13,326) (4,127)
Interest expense, net (422) (32) (928) (135)
Change in fair value of derivative instruments, net 263 0 377 0
Other (loss) income, net (2) 12,215 (58) 16,853
(Loss) income before income taxes (9,210) 11,604 (13,935) 12,591
Performance Improvement Solutions [Member]        
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]        
Impairment of ROU assets 0 3 0 3
Segment Reporting Information, Profit (Loss) [Abstract]        
Revenue 8,052 7,375 22,402 21,318
Gross profit 2,654 2,252 7,037 6,204
Operating loss (1,403) (469) (5,511) (3,003)
Workforce Solutions [Member]        
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]        
Goodwill and intangible asset impairment charge 7,500 0 7,500 0
Segment Reporting Information, Profit (Loss) [Abstract]        
Revenue 3,846 7,311 14,516 19,994
Gross profit 602 931 1,818 2,596
Operating loss $ (7,646) $ (110) $ (7,815) $ (1,124)