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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022


			Estimated Useful Lives (years)
Software			3
Computers and equipment			3 - 7
Right of use assets - finance leases			3
Leasehold improvements			5

Property and equipment consisted of the following (in thousands):


	December 31,
	2022		2021
Software	$	6,882	$	4,051
Computers and equipment	466		456
ROU assets - finance lease	375		375
Leasehold improvements	17		17
Software development in progress	—		1,514
Subtotal	7,740		6,413
Less: Accumulated depreciation and amortization	(5,242)		(2,628)
Property and equipment, net	$	2,498	$	3,785

Schedule of fair value measurements by level

The following tables summarize fair value measurements by level at December 31, 2022 and 2021, respectively, for assets and liabilities measured at fair value on a recurring basis (in thousands):


	Balance at December 31, 2022
	Level I		Level II		Level III		Total
Letter of credit (1)	$	204	$	—	$	—	$	204
Total assets	$	204	$	—	$	—	$	204


Contingent consideration (2)	$	—	$	—	$	64	$	64
Warrant liabilities (3)	—		—		43		43
Total liabilities	$	—	$	—	$	107	$	107


	Balance at December 31, 2021
	Level I		Level II		Level III		Total
Letter of credit (1)	$	306	$	—	$	—	$	306
Total assets	$	306	$	—	$	—	$	306


Contingent consideration (2)	$	—	$	—	$	357	$	357
Total liabilities	$	—	$	—	$	357	$	357

___________________

(1) Amounts relating to letter of credit were included in "Restricted cash - long term" on our consolidated balance sheets as of December 31, 2022 and 2021.

(2) Contingent consideration was included in "Other accrued liabilities" on our consolidated balance sheets as of December 31, 2022 and 2021.

(3) Relates to Ticking Warrants issued as of December 31, 2022 in connection with the Eight Amendment executed on March 8, 2022, as discussed in Note 9 below, and included in "Other accrued liabilities" on our consolidated balance sheet as of December 31, 2022.

Schedule of fair value measurements using significant Level III inputs

The fair value measurements using significant Level III inputs, and changes therein, was as follows (in thousands):


	Level III Contingent Consideration



Balance as of December 31, 2020	$	485
Change in fair value	1,315
Settlement of contingent consideration	(1,443)
Balance as of December 31, 2021	357
Settlement of contingent consideration	(293)
Balance as of December 31, 2022	$	64


	Level III Warrant Liabilities
Balance as of December 31, 2021	$	—
Warrants issued - Ticking Warrants	176
Gain on change in fair value of warrant liabilities	(133)

Balance as of December 31, 2022	$	43

Schedule of warranty liability assumptions

The assumptions used in the Black-Scholes option-pricing model were determined as follows:


	December 31, 2022
Volatility	100.00	%
Risk-free interest rate	4.22	%
Weighted average expected life (in years)	3.79
Dividend yield	0	%

Schedule of VIEs

The Company's consolidated balance sheets included the following assets and liabilities from its VIEs (in thousands):


	December 31,
	2022		2021
Cash and cash equivalents	$	686	$	1,356
Accounts receivable	381		—
Unbilled accounts receivable	90		80
Prepaid and other current assets	116		48
Total assets	$	1,273	$	1,484

Accounts payable	$	—	$	10
Accrued liabilities	119		11
Deferred revenue	52		40
Payables to Ontrak	1,602		1,841
Total liabilities	$	1,773	$	1,902

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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