Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 11, 2020 | Jun. 30, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CREATIVE REALITIES, INC. | ||
Entity Central Index Key | 0001356093 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock Shares Outstanding | 9,794,971 | ||
Entity Public Float | $ 9,379,858 | ||
Entity File Number | 001-33169 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | MN |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 2,534 | $ 2,718 |
Accounts receivable, net of allowance for doubtful accounts of $617 and $583, respectively | 4,663 | 6,479 |
Unbilled receivables | 86 | 1,202 |
Work-in-process and inventories | 379 | 379 |
Prepaids and other current assets | 320 | 1,581 |
Total current assets | 7,982 | 12,359 |
Operating lease right-of-use assets | 1,728 | |
Property and equipment, net | 1,553 | 1,230 |
Intangibles, net | 4,407 | 5,060 |
Goodwill | 18,171 | 18,900 |
Other assets | 135 | 179 |
TOTAL ASSETS | 33,976 | 37,728 |
CURRENT LIABILITIES | ||
Short-term seller note payable | 1,637 | |
Short-term related party convertible loans payable, at fair value | 2,000 | |
Accounts payable | 1,849 | 1,995 |
Accrued expenses | 2,751 | 3,847 |
Deferred revenues | 772 | 6,454 |
Customer deposits | 755 | 2,687 |
Current maturities of operating leases | ||
Current maturities of financing leases | ||
Warrant liability | 21 | |
Total current liabilities | 10,431 | 15,004 |
Long-term related party loans payable, net of $507 and $1,031 discount, respectively | 3,757 | 3,233 |
Long-term seller note payable | 2,303 | |
Long-term obligations under operating leases | 1,100 | |
Long-term obligations under financing leases | 5 | |
Deferred tax liabilities | 175 | 128 |
Other liabilities | 239 | |
TOTAL LIABILITIES | 15,648 | 20,907 |
SHAREHOLDERS' EQUITY | ||
Common stock, $.01 per value, 200,000 shares authorized; 9,775 and 9,725 shares issued and outstanding, respectively | 98 | 97 |
Additional paid-in capital | 54,052 | 53,575 |
Accumulated deficit | (35,642) | (36,851) |
Total shareholders' equity | 18,508 | 16,821 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 33,976 | $ 37,728 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance receivable, net | $ 617 | $ 583 |
Loans payable, net | $ 507 | $ 1,031 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 9,775 | 9,725 |
Common stock, shares outstanding | 9,775 | 9,725 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Sales | ||
Hardware | $ 8,229 | $ 6,981 |
Services and other | 23,369 | 15,494 |
Total sales | 31,598 | 22,475 |
Cost of sales | ||
Hardware | 6,245 | 4,776 |
Services and other | 11,614 | 7,476 |
Total cost of sales | 17,859 | 12,252 |
Gross profit | 13,739 | 10,223 |
Operating expenses: | ||
Sales and marketing | 2,344 | 2,075 |
Research and development | 1,413 | 1,257 |
General and administrative | 9,092 | 9,714 |
Depreciation and amortization | 1,250 | 1,185 |
Lease termination expense | 474 | |
Gain on reversal of earnout liability | (250) | |
Total operating expenses | 13,849 | 14,705 |
Operating loss | (110) | (4,482) |
Other income/(expenses): | ||
Interest expense, including amortization of debt discount | (831) | (2,606) |
Change in fair value of warrant liability | 21 | 837 |
Gain on settlement of obligations | 2,046 | 294 |
Debt conversion expense | (5,055) | |
Other income/(expense), net | 5 | (6) |
Total other income/(expense) | 1,241 | (6,536) |
Net income/(loss) before income taxes | 1,131 | (11,018) |
Benefit from income taxes | (93) | 398 |
Net income/(loss) | 1,038 | (10,620) |
Dividends on preferred stock | 345 | |
Preferred stock conversion expense | 3,932 | |
Net income/(loss) attributable to common shareholders | $ 1,038 | $ (14,897) |
Net income/(loss) per common share - basic | $ 0.11 | $ (2.95) |
Net income/(loss) per common share - diluted | 0.11 | (2.95) |
Net income/(loss) per common share attributable to common shareholders | $ 0.11 | $ (4.14) |
Weighted average shares outstanding - basic | 9,748 | 3,602 |
Weighted average shares outstanding - diluted | 9,759 | 3,602 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Additional paid in capital | (Accumulated Deficit) | Total |
Balance at Dec. 31, 2017 | $ 28 | $ 30,555 | $ (26,231) | $ 4,352 |
Balance, Shares at Dec. 31, 2017 | 2,752,742 | |||
Common stock issued as dividend | ||||
Common stock issued as dividend, Shares | 45,856 | |||
Issuance of warrants with debt extension | 809 | 809 | ||
Shares issued upon conversion of preferred stock | 125 | 125 | ||
Shares issued upon conversion of preferred stock, Shares | 16,339 | |||
Shares issued upon conversion of preferred stock in public offering | $ 18 | 1,784 | 1,802 | |
Shares issued upon conversion of preferred stock in public offering, Share | 1,846,928 | |||
Shares issued upon conversion of promissory notes in public offering | $ 20 | 10,031 | 10,051 | |
Shares issued upon conversion of promissory notes in public offering, Shares | 2,039,152 | |||
Stock-based compensation | 383 | 383 | ||
Vesting of performance shares granted to CEO | $ 29 | 8,890 | 8,919 | |
Vesting of performance shares granted to CEO Shares | 2,857,142 | |||
Net income (loss) | (10,620) | (10,620) | ||
Balance at Dec. 31, 2018 | $ 97 | 53,575 | (36,851) | 16,821 |
Balance, Shares at Dec. 31, 2018 | 9,724,826 | |||
Adjustment due to adoption of ASU 2016-02 (Topic 842, Leases) | 171 | 171 | ||
Shares issued for services | 30 | 30 | ||
Shares issued for services, Shares | 17,960 | |||
Shares issued to directors as compensation | $ 1 | 62 | 63 | |
Shares issued to directors as compensation, Shares | 31,760 | |||
Stock-based compensation | 135 | 135 | ||
Vesting of performance shares granted to CEO | 250 | 250 | ||
Net income (loss) | 1,038 | 1,038 | ||
Balance at Dec. 31, 2019 | $ 98 | $ 54,052 | $ (35,642) | $ 18,508 |
Balance, Shares at Dec. 31, 2019 | 9,774,546 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating Activities: | ||
Net income/(loss) | $ 1,038 | $ (10,620) |
Adjustments to reconcile net income/(loss) to be used in operating activities: | ||
Depreciation and amortization | 1,217 | 1,186 |
Amortization of debt discount | 524 | 1,694 |
Stock-based compensation | 448 | 1,383 |
Shares issued for services | 30 | |
Change in warrant liability | (21) | (837) |
Allowance/(reversal) for doubtful accounts | 253 | (7) |
Non-cash interest expense on convertible notes | 78 | |
Non-cash interest expense on related party loans | 58 | |
Deferred tax benefit | 47 | (421) |
Loss on conversion of related party promissory notes | 5,055 | |
Gain on obligation settlement | (2,046) | (294) |
Gain on reversal of earnout liability | (250) | |
Changes to operating assets and liabilities, net of acquisition: | ||
Accounts receivable and unbilled receivables | 2,319 | 1,013 |
Inventories | 613 | |
Prepaid expenses and other current assets | 1,260 | (533) |
Other assets | 44 | |
Operating lease right of use asset, net | 535 | |
Accounts payable | 284 | (98) |
Deferred revenue | (5,682) | (543) |
Accrued expenses | 1,474 | (248) |
Customer deposits | (1,924) | 938 |
Operating lease liabilities | (517) | |
Other non-current liabilities | (3) | 19 |
Net cash used in operating activities | (970) | (1,564) |
Investing activities | ||
Proceeds from net working capital settlement | 210 | |
Purchases of property and equipment | (897) | (308) |
Acquisition of business, net of cash acquired | (6,274) | |
Net cash used in investing activities | (687) | (6,582) |
Financing activities | ||
Proceeds from common stock issuance, net of issuance costs | 8,919 | |
Proceeds from related party loans | 2,000 | 2,100 |
Payment of related party loans | (1,158) | |
Principal payments on finance leases | (31) | |
Repayment of seller note | (498) | |
Other financing activities, net | 2 | |
Net cash provided by financing activities | 1,473 | 9,861 |
(Decrease)/increase in Cash and Cash Equivalents | (184) | 1,715 |
Cash and Cash Equivalents, beginning of year | 2,718 | 1,003 |
Cash and Cash Equivalents, end of year | $ 2,534 | $ 2,718 |
Nature of Organization and Oper
Nature of Organization and Operations | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF ORGANIZATION AND OPERATIONS | NOTE 1: NATURE OF ORGANIZATION AND OPERATIONS Unless the context otherwise indicates, references in these Notes to the accompanying Consolidated Financial Statements to "we," "us," "our" and "the Company" refer to Creative Realities, Inc. and its subsidiaries. Nature of the Company's Business Creative Realities, Inc. is a Minnesota corporation that provides innovative digital marketing technology and solutions to retail companies, individual retail brands, enterprises and organizations throughout the United States and in certain international markets. The Company has expertise in a broad range of existing and emerging digital marketing technologies, as well as the related media management and distribution software platforms and networks, device management, product management, customized software service layers, systems, experiences, workflows, and integrated solutions. Our technology and solutions include: digital merchandising systems and omni-channel customer engagement systems, interactive digital shopping assistants, advisors and kiosks, and other interactive marketing technologies such as mobile, social media, point-of-sale transactions, beaconing and web-based media that enable our customers to transform how they engage with consumers. We have expertise in a broad range of existing and emerging digital marketing technologies, as well as the following related aspects of our business: content, network management, and connected device software and firmware platforms; customized software service layers; hardware platforms; digital media workflows; and proprietary processes and automation tools. We believe we are one of the world's leading interactive marketing technology companies that focuses on the retail shopper experience by helping retailers and brands use the latest technologies to create better shopping experiences. On November 20, 2018, we closed on our acquisition of Allure Global Solutions, Inc. (the "Allure Acquisition"). While the Allure Acquisition expanded our operations, geographical footprint and customer base and also enhanced our current product offerings, the core business of Allure is consistent with the operations of Creative Realties, Inc. and as a result of the Allure Acquisition we did not add different operating activities to our business. Our main operations are conducted directly through Creative Realities, Inc., and under our wholly owned subsidiaries Allure Global Solutions, Inc., a Georgia corporation, Creative Realities Canada, Inc., a Canadian corporation, and ConeXus World Global, LLC, a Kentucky limited liability company. Our other wholly owned subsidiary Creative Realities, LLC, a Delaware limited liability company, has been effectively dormant since October 2015, the date of the merger with ConeXus World Global, LLC. Liquidity and Financial Condition The accompanying Consolidated Financial Statements have been prepared on the basis of the realization of assets and the satisfaction of liabilities and commitments in the normal course of business and do not include any adjustments to the recoverability and classifications of recorded assets and liabilities as a result of uncertainties. We produced net income for the year ended December 31, 2019 but incurred a net loss for the year ended December 31, 2018 and have negative cash flows from operating activities as of December 31, 2019. As of December 31, 2019, we had cash and cash equivalents of $2,534 and a working capital deficit of $2,449. On November 6, 2019, Slipstream Communications, LLC ("Slipstream") extended the maturity date of our term loan and revolver loan to June 30, 2021 through the Sixth Amendment to the Loan and Security Agreement, aligning the maturity date of our term loan and revolver loan with the Secured Disbursed Escrow Promissory Note. On December 30, 2019, Slipstream into the Secured Convertible Special Loan Promissory Note ("Special Loan") as part of the Seventh Amendment of the Loan and Security Agreement with Slipstream, under which we obtained $2,000, with interest thereon at 8% per annum payable 6% in cash and 2% via the issuance of paid-in-kind ("SLPIK") interest, provided however that upon occurrence of an event of default the interest rate shall automatically be increased by 6% per annum payable in cash. The entry into the Seventh Amendment adjusted the interest rate on the Company's Term Loan and Revolving Loan to 8% per annum, provided, however, at all times when the aggregate outstanding principal amount of the Term Loan and the Revolving Loan exceeds $4,100 then the Loan Rate shall be 10%, of which eight percent 8% shall be payable in cash and 2% shall be paid by the issuance of and treated as additional PIK. Upon the earlier to occur of an Event of Default or October 1, 2020, if any of the principal amount of the Special Loan is then outstanding, the principal and accrued but unpaid interest of the Special Loan and the outstanding SLPIK shall be automatically converted into shares of a new series of Senior Convertible Preferred Stock of CRI ("New Preferred") having an Appraised Value equal to three times the then outstanding principal amount and accrued but unpaid interest of the Special Loan and the outstanding SLPIK and having the following terms and conditions, as reasonably determined by CRI and the Lender, the New Preferred shall: ● be the most senior equity security of CRI, including with respect to the payment of dividends and other distributions; ● be on substantially the same terms and conditions as CRI's Series A-1 6% Convertible Preferred Stock as set forth in its Certificate of Designation immediately before the same was cancelled pursuant to a Certificate of Cancellation dated as of March 13, 2019; ● not be subject to a right of redemption upon the part of a holder thereof; ● accrue and pay quarterly dividends at the rate of twelve percent (12%) per annum which shall be payable in cash; ● have a Stated Value that is an amount mutually agreed by CRI and the Lender at the time of issuance; ● Conversion Price shall be an amount equal to 80% of the average for the 30-day period ending two days prior to the required conversion date of the daily average of the range of CRI's common stock (calculated pursuant to information on The Wall Street Journal Online Edition), subject to appropriate adjustments; and ● neither section 6(e) of the Series A-1 Certificate of Designation nor any similar provision shall apply to the New Preferred. See Note 9 Loans Payable On November 9, 2018, Slipstream extended the maturity date of our term loan and revolving loan to August 16, 2020. In conjunction with the extension of the maturity date of our term loan, we agreed that the cash portion of the interest rate would increase from 8.0% per annum to 10.0% per annum effective July 1, 2019. Management believes that, based on (i) the extension of the maturity date on our term loan and revolving loans, and (ii) our operational forecast through 2021, we can continue as a going concern through at least March 31, 2021. However, given our history of net losses, cash used in operating activities and working capital deficit, we obtained a continued support letter from Slipstream through March 31, 2021. We can provide no assurance that our ongoing operational efforts will be successful which could have a material adverse effect on our results of operations and cash flows. See Note 9 Loans Payable Acquisitions Acquisition of Allure Global Solutions, Inc. On September 20, 2018, we entered into a Stock Purchase Agreement (the "Purchase Agreement") with Christie Digital Systems, Inc. ("Seller") to acquire the capital stock of Allure Global Solutions, Inc. ("Allure"), a wholly owned subsidiary of Seller (the "Allure Acquisition"). Allure is an enterprise software development company providing software solutions, a suite of complementary services, and ongoing support for an array of digital media and POS solutions. Allure provides a wide range of products for the theatre, restaurant, convenience store, theme park, and retail spaces and works to create, develop, deploy, and maintain enterprise software solutions including those designed specifically to integrate, manage, and power ambient client-owned networks. Those networks manage data and marketing content that has been designed and proven to influence consumer purchase behavior. The Allure Acquisition closed on November 20, 2018. Subject to the terms and conditions of the Purchase Agreement, upon the closing of the Allure Acquisition, we acquired ownership of all of Allure's issued and outstanding capital shares in consideration for a total purchase price of approximately $8,450, subject to a post-closing working capital adjustment. Of this purchase price amount, we paid $6,300 in cash. Of the remaining purchase price amount, approximately $1,250 was to be paid to former management of Allure, and approximately $900 is due from Allure to Seller, under an existing Seller note which was amended and restated for this reduced amount (as so amended and restated, the "Amended and Restated Seller Note"). The Amended and Restated Seller Note accrued interest at 3.5% per annum and required us to make quarterly payments of interest only through February 19, 2020, on which date the Amended and Restated Seller Note matured and all remaining amounts owing thereunder were due. On May 10, 2019, we reached a settlement agreement with Seller on, among other things, the final net working capital as of the acquisition date resulting in (i) a payment to us from Seller in the amount of $210, and (ii) a reduction of the amount due under the Amended and Restated Seller Note of $168 of cash collected by the Company which had been previously designated for payment on the Amended and Restated Seller Note but was not ultimately remitted to the Seller and (b) $20 of unpaid accrued interest. In addition to this net working capital settlement, Seller accepted collection risk for one acquired receivable in the amount of $666, which was net settled through the Amended and Restated Seller Note. Our consolidated balance sheet reflects a reduction in both accounts receivable and the Amended and Restated Seller Note of $666. The outstanding principal balance of the Amended and Restated Seller Note as of December 31, 2019 is $1,637. The Amended and Restated Seller Note is convertible into shares of our common stock at Seller's option on or after May 19, 2019, at an initial conversion price of $8.40 per share, subject to customary equitable adjustments. Conversion of all amounts owing under the Amended and Restated Seller Note will be mandatory if the 30-day volume-weighted average price of our common stock exceeds 200% of the common stock trading price at the closing of the Allure Acquisition. We will grant Seller customary registration rights for the shares of our common stock issuable upon conversion of the Amended and Restated Seller Note. The Purchase Agreement contemplates additional consideration of $2,000 to be paid by us to Seller in the event that Allure's revenue exceeds $13,000, provided that revenues from one specifically-named customer is capped at 70% of their gross revenue as part of the aggregate revenue calculation, for any of (i) the 12-month period ending December 31, 2019, or (ii) any of the next following trailing 12-month periods ending on each of March 31, June 30, September 30 and December 31, 2020. We currently do not expect to owe any amount of additional consideration to Seller and no liability has been recorded in the Consolidated Financial Statements for this contingent liability as of December 31, 2019. See Note 5 Business Combinations |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying Consolidated Financial Statements follows: 1. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-K and Article 3 of Regulation S-X and include all of the information and disclosures required by generally accepted accounting principles in the United States of America ("GAAP") for annual financial reporting. The Consolidated Financial Statements include the accounts of Creative Realities, Inc., our wholly owned subsidiaries Allure, ConeXus World Global LLC, Creative Realities (Canada), Inc., and Creative Realities, LLC. All inter-company balances and transactions have been eliminated in consolidation, as applicable. 2. Revenue Recognition We recognize revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers Revenue Recognition 3. Inventories Inventories are stated at the lower of cost or market (net realizable value), determined by the first-in, first-out (FIFO) method, and consist of the following: December 31, December 31, 2019 2018 Raw materials, net of reserve of $134 and $207, respectively $ 200 $ 220 Work-in-process 179 159 Total inventories $ 379 $ 379 4. Impairment of Long-Lived Assets We review the carrying value of all long-lived assets, including property and equipment, for impairment in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets If the impairment tests indicate that the carrying value of the asset is greater than the expected undiscounted cash flows to be generated by such asset, an impairment loss would be recognized. The impairment loss is determined as the amount by which the carrying value of such asset exceeds its fair value. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such assets using an appropriate discount rate. Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell. Considerable management judgment is necessary to estimate the fair value of assets, and accordingly, actual results could vary significantly from such estimates. 5. Basic and Diluted Income/(Loss) per Common Share Basic and diluted income/(loss) per common share for all periods presented is computed using the weighted average number of common shares outstanding. Basic weighted average shares outstanding includes only outstanding common shares. Diluted weighted average shares outstanding includes outstanding common shares and potential dilutive common shares outstanding in accordance with the treasury stock method. Shares reserved for outstanding stock options and warrants totaling approximately 5,046,888 and 5,320,162 at December 31, 2019 and 2018, respectively were excluded from the computation of income/(loss) per share as no options or warrants were in the money for 2019 and all options and warrants were anti-dilutive in 2018 due to the net loss. In calculating diluted earnings per share for 2019, in accordance with ASC 260 Earnings per share Convertible Preferred Stock 6. Income Taxes Deferred income taxes are recognized in the financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in basis of intangibles, stock-based compensation, reserves for uncollectible accounts receivable and inventory, differences in depreciation methods, and accrued expenses. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertain tax positions utilizing an established recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We had no uncertain tax positions as of December 31, 2019 and 2018. 7. Goodwill and Definite-Lived Intangible Assets We follow the provisions of ASC 350, Goodwill and Other Intangible Assets. Pursuant to ASC 350, goodwill acquired in a purchase business combination is not amortized, but instead tested for impairment at least annually. The Company uses a measurement date of September 30. There was no impairment loss recognized on goodwill or definite-lived intangible assets during the years ended December 31, 2019 and 2018 (see Note 8 Intangible Assets and Goodwill 8. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Our significant estimates include: the allowance for doubtful accounts, recognition of revenue, valuation allowances related to deferred taxes, deferred revenue, the fair value of acquired assets and liabilities, valuation of stock-based compensation awards and other assumptions and estimates used to evaluate the recoverability of long-lived assets, goodwill and other intangible assets and the related amortization methods and periods. Actual results could differ from those estimates. 9. Stock Split On October 17, 2018, the Company effectuated a l-for-30 reverse stock split of its outstanding common stock, which was approved by the Company's board of directors on October 17, 2018. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. The shares of common stock retained a par value of $0.01 per share. 10. Business Combinations Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. Refer to Note 5 Business Combination 11. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method. Property and equipment consist of the following at December 31, 2019 and 2018: December 31, 2019 2018 Equipment $ 83 $ 159 Leasehold improvements 136 58 Purchased and developed software 2,563 1,758 Furniture and fixtures 102 82 Other depreciable assets 65 57 Total property and equipment 2,949 2,114 Less: accumulated depreciation and amortization (1,396 ) (884 ) Net property and equipment $ 1,553 $ 1,230 During 2018, we wrote-off fully depreciated property and equipment and the related accumulated depreciation of $3,628. The estimated useful lives used to compute depreciation and amortization are as follows: Asset class Useful life assigned Equipment 3 – 5 years Furniture and fixtures 5 years Purchased and developed software 3 years Leasehold improvements Shorter of 5 years or term of lease Depreciation expense was $564 and $391 for the years ended December 31, 2019 and 2018, respectively. 12. Research and Development and Software Development Costs Research and development expenses consist primarily of development personnel and non-employee contractor costs related to the development of new products and services, enhancement of existing products and services, quality assurance and testing. The Company capitalizes its costs incurred for additional functionality to its internal software. We capitalized approximately $805 and $243 for the years ended December 31, 2019 and 2018, respectively. These software development costs include both enhancements and upgrades of our client-based systems including functionality of our internal information systems to aid in our productivity, profitability and customer relationship management. We are amortizing these costs over 3 years once the new projects are completed and placed in service. These costs are included in property and equipment, net on the consolidated balance sheets. 13. Leases On January 1, 2019, we adopted Accounting Standards Updates ("ASU") No. 2016-02, Leases Leases Lease accounting results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. We elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. We also elected to combine our lease and non-lease components. We have no leases with an initial term of 12 months or less. Upon adoption, we recognized total ROU assets of $2,319, with corresponding liabilities of $2,319 on the consolidated balance sheets. This included $54 of pre-existing finance lease ROU assets previously reported in computer equipment within property and equipment, net. The ROU assets include adjustments for prepayments and accrued lease payments. The effect of the adoption resulted in a $171 cumulative effect adjustment to retained earnings on January 1, 2019 but did not impact our prior year consolidated statements of income, statements of cash flows, or statements of shareholders' equity. Under Topic 842, we determine if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, we consider only payments that are fixed and determinable at the time of commencement. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is a hypothetical rate based on our understanding of what our credit rating would be. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating leases are included in operating lease right-of-use assets, current maturities of operating leases, and long-term obligations under operating leases on our consolidated balance sheets. Finance leases are included in property and equipment, net, current maturities of financing leases, and long-term obligations under financing leases on our consolidated balance sheets. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE 3: RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Recently adopted On January 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842), as amended. For information regarding the impact of Topic 842 adoption, see Note 2 Summary of Significant Accounting Policies Leases On January 1, 2019, we adopted ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting On January 1, 2019, we adopted ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Not yet adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In August 2018, the FASB issued ASU 2018-15 Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE RECOGNITION | NOTE 4: REVENUE RECOGNITION On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method for all contracts not completed as of the date of adoption. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. Under this method, we concluded that the cumulative effect of applying this guidance was not material to the financial statements and no adjustment to the opening balance of accumulated deficit was required on the adoption date. Under ASC 606, the Company accounts for revenue using the following steps: ● Identify the contract, or contracts, with a customer ● Identify the performance obligations in the contract ● Determine the transaction price ● Allocate the transaction price to the identified performance obligations ● Recognize revenue when, or as, the Company satisfies the performance obligations The Company combines contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost plus margin approach. The Company estimates the amount of total contract consideration it expects to receive for variable arrangements by determining the most likely amount it expects to earn from the arrangement based on the expected quantities of services it expects to provide and the contractual pricing based on those quantities. The Company only includes some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company considers the sensitivity of the estimate, its relationship and experience with the customer and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. The Company receives variable consideration in very few instances. As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company does not have any material extended payment terms as payment is due at or shortly after the time of the sale. Observable prices are used to determine the standalone selling price of separate performance obligations or a cost plus margin approach when one is not available. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue. The Company recognizes contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to the customers. Unbilled receivables are recorded as accounts receivable when the Company has an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when the Company invoices clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when the Company has satisfied the related performance obligation. Deferred contract acquisition costs were evaluated for inclusion in other assets; however, the Company elected to use the practical expedient for recording an immediate expense for those incremental costs of obtaining contracts, including certain design/engineering services, commissions, incentives and payroll taxes, as these incremental and recoverable costs have terms that do not exceed one year. The Company provides innovative digital marketing technology and solutions to retail companies, individual retail brands, enterprises and organizations throughout the United States and in certain international markets. The Company's technology and solutions include: digital merchandising systems and omni-channel customer engagement systems, interactive digital shopping assistants, advisors and kiosks, and other interactive marketing technologies such as mobile, social media, point-of-sale transactions, beaconing and web-based media that enable our customers to transform how they engage with consumers. We typically generate revenue through the following sources: ● Hardware: ○ System hardware sales – displays, computers and peripherals ● Services and Other: ○ Professional implementation and installation services ○ Software design and development services ○ Software as a service, including content management ○ Maintenance and support services, including technical help desk operations The following table disaggregates the Company's revenue by major source for the year-ended December 31, 2019: (in thousands) Year Ended Hardware $ 8,229 Services: Installation Services 7,500 Software Development Services 9,303 Managed Services 6,566 Total Services 23,369 Total Hardware and Services $ 31,598 System hardware sales Included in "hardware" are system hardware sales whereby revenue is recognized generally upon shipment of the product or customer acceptance depending upon contractual arrangements with the customer in instances in which the sale of hardware is the sole performance obligation. Shipping charges billed to customers are included in hardware sales and the related shipping costs are included in hardware cost of sales. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. The company generally provides a warranty on hardware sales in-line with the warranty provided by the original equipment manufacturer and therefore has not identified hardware warranties as a significant estimate or additional performance obligation at the date of sale. Installation services The Company performs outsourced installation services for customers and recognizes revenue upon completion of the installations. When system hardware sales include installation services to be performed by the Company, the goods and services in the contract are not distinct, so the arrangement is accounted for as a single performance obligation. Our customers control the work-in-process and can make changes to the design specifications over the contract term. Revenues are recognized over time as the installation services are completed based on the relative portion of labor hours completed as a percentage of the budgeted hours for the installation. The aggregate amount of the transaction price allocated to installation service performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2019 and 2018 were $0 and $52, respectively. Software design and development services Software and software license sales are revenue when a fixed fee order has been received and delivery has occurred to the customer. Revenue is recognized generally upon customer acceptance (point-in-time) of the software product and verification that it meets the required specifications. Software is delivered to customers electronically. Software as a service Software as a service includes revenue from software licensing and delivery in which software is licensed on a subscription basis and is centrally hosted. These services often include software updates which provide customers with rights to unspecified software product upgrades and maintenance releases and patches released during the term of the support period. We account for revenue from these services in accordance with ASC 985 Software Maintenance and support services The Company sells support services which include access to technical support personnel for software and hardware troubleshooting. The Company offers a hosting service through our network operations center, or NOC, allowing the ability to monitor and support its customers' networks 7 days a week, 24 hours a day. These contracts are generally 12-36 months in length. Revenue is recognized over the term of the agreement in proportion to the costs incurred in fulfilling performance obligations under the contract. Maintenance and support fees are based on the level of service provided to end customers, which can range from monitoring the health of a customer's network to supporting a sophisticated web-portal to managing the end-to-end hardware and software of a digital marketing system. These agreements are renewable by the customer. Rates for maintenance and support, including subsequent renewal rates, are typically established based upon a fee per location, per device, or a specified percentage of net software license fees as set forth in the arrangement. These contracts are generally 12-36 months in length. Revenue is recognized ratably and evenly over the service period. These services are classified as Managed Services. The Company also performs time and materials-based maintenance and repair work for customers. Revenue is recognized at a point in time when the performance obligation has been fully satisfied. Certain portions of these revenues are classified as Hardware, Installation Services and Managed Services, depending on the customer and related contractual terms. In addition to changes in the timing of when we record variable consideration, ASC 606 provided clarification about the classification of certain costs relating to revenue arrangements with customers. As a result of our analysis, we did not identify any components of our revenue transactions which required reclassification between principle and agent presentation. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | NOTE 5: BUSINESS COMBINATION On November 20, 2018, the Company completed the Allure Acquisition. Pursuant to the Stock Purchase Agreement, the total purchase price was $8,450, which was primarily funded using cash from the Company's public offering closed on November 19, 2018. The difference between the total purchase price and the net consideration transferred is driven by the cash acquired in the acquisition, including cash received by the Company as a result of a net working capital settlement with Seller. During the fourth quarter of 2019, the Company finalized the purchase price accounting of Allure. The final purchase price consisted of the following items: (in thousands) Consideration Cash consideration for stock $ 6,300 (1) Payable to former Allure management 1,021 (2) Seller note payable 900 (3) Earnout liability 250 (4) Total consideration 8,471 Cash acquired (424 ) (5) Net consideration transferred $ 8,047 (1) Cash consideration for outstanding shares of Allure common stock per Stock Purchase Agreement. (2) Represents a payable due to two former members of the Allure management team for a total of $1,250 as a result of the acquisition; 30% due in November 2018 and 70% due in November 2019. The fair value of the payable as of the acquisition date was deemed to be $1,021. During November 2019, the Company entered a payment plan with each former member of Allure management to spread the remaining payments due from the Company throughout 2020. As of December 31, 2019, the Company's consolidated balance sheet includes $535 related to this liability within accrued expenses. (3) Represents a note payable due from Allure to Seller, under a pre-existing Seller Note which was amended and restated for this amount through the Stock Purchase Agreement. At the closing date, the estimated net working capital deficit of Allure was $801 in excess of the target net working capital as defined in the stock purchase agreement. As of the acquisition date, Allure also had accounts payable to Seller for outsourced services of $2,204. We agreed with the Seller to settle the estimated net working capital deficit through a reduction in the accounts payable to Seller as of the acquisition date and to further amend the Seller Note to include the remaining $1,403 accounts payable due from Allure to Seller. The Seller Note thereby increased from $900 per the Stock Purchase Agreement to $2,303 at the opening balance sheet. That debt is represented by our issuance to the Seller of a promissory note accruing interest at 3.5% per annum. The promissory note required us to make quarterly payments of interest through February 19, 2020, on which date the promissory note matured and all remaining amounts owing thereunder were due. See Note 10 Commitments and Contingencies (4) The Stock Purchase Agreement contemplates additional consideration or $2,000 to be paid by us to Seller in the event that acquiree revenue exceeds $13,000, as defined in the underlying agreement. The fair value of the earnout liability was initially determined to be $250 at the time of acquisition but has since been adjusted to $0, resulting in a gain on reversal of earnout liability of $250 in the fourth quarter of 2019. We currently do not expect to owe any amount of additional consideration to Seller and no liability has been recorded in the Consolidated Financial Statements for this contingent liability as of December 31, 2019. We utilized a third-party valuation specialist to assist in evaluating this liability as of the opening balance sheet date. Should revenues from Allure customers exceed $13,000 during 2020, the $2,000 liability generated would be recorded through the Company's statement of operations. (5) Represents the Allure cash balance acquired at acquisition ($26) and the cash received from Seller in settlement of our net working capital claim ($398). On May 10, 2019, we reached a settlement agreement with Seller on, among other things, the final net working capital as of the acquisition date resulting in (i) a payment to us from Seller in the amount of $210, and (ii) a reduction of the amount due under the Amended and Restated Seller Note of $168 of cash collected by the Company which had been previously designated for payment on the Amended and Restated Seller Note but was not ultimately remitted to the Seller and (b) $20 of unpaid accrued interest. In addition to this net working capital settlement, Seller accepted collection risk for one acquired receivable in the amount of $666, which was net settled through the Amended and Restated Seller Note. As a result, our consolidated balance sheet reflects a reduction in both accounts receivable and the Amended and Restated Seller Note of $666. The outstanding principal balance of the Amended and Restated Seller Note as of December 31, 2019 is $1,637. The Company incurred $710 of direct transaction costs for the year ended December 31, 2018. These costs are included in general, administrative expense in the accompanying consolidated statement of operations. In addition, the Company incurred $9 of incremental interest expense for the year ended December 31, 2018, representing interest on the Allure Amended and Restated Note for the period from November 20, 2018 to December 31, 2018. The Company accounted for the Allure Acquisition using the acquisition method of accounting. The allocation of the purchase price, which was finalized in November 2019 in conjunction with the close of the one-year measurement period, is based on estimates of the fair value of assets acquired and liabilities assumed as of November 20, 2018. The components of the final purchase price allocation are as follows: (in thousands) Total Accounts receivable $ 1,452 Unbilled receivables 221 Inventory 142 Prepaid expenses & other current assets 17 Property and equipment 177 Other assets 7 Identified intangible assets: Definite-lived trade names 340 Developed technology 1,770 Customer relationships 2,870 Goodwill 3,812 Accounts payable (330 ) Accrued expenses (294 ) Customer deposits (494 ) Deferred revenues (276 ) Accounts payable converted into Seller Note (737 ) Net consideration transferred $ 8,047 The fair value of the customer relationship intangible asset has been estimated using the income approach through a discounted cash flow analysis with the cash flow projections discounted using a rate of 26.0%. The cash flows are based on estimates used to price the Allure Acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the Company's pricing model and the weighted average cost of capital. The definite-lived trade name represents the Allure brand name as marketed primarily in the sports & entertainment, large venue and quick service restaurant verticals of the digital signage industry. The Company applied the income approach through an excess earnings analysis to determine the preliminary fair value of the trade name asset. The Company identified this asset as definite-lived as opposed to indefinite-lived as the Company plans to utilize the Allure trade name as a product name as opposed to go-to-market company name. The Company applied the income approach through a relief-from-royalty analysis to determine the fair value of this asset. The developed technology assets are primarily comprised of know-how and functionality embedded in Allure's proprietary content management application which drives currently marketed products and services. The Company applied the income approach through a relief-from-royalty analysis to determine the fair value of this asset. The Company is amortizing the identifiable intangible assets on a straight-line basis over the weighted average lives ranging from 3 to 15 years. The table below sets forth the valuation and amortization period of identifiable intangible assets: (in thousands) Preliminary Amortization Identifiable intangible assets: Definite-lived trade names $ 340 3-5 years Developed technology 1,770 7 years Customer relationships 2,870 15 years Total $ 4,980 The Company estimated the fair value of the acquired property, plant and equipment using a combination of the cost and market approaches, depending on the component. The fair value of property, plant and equipment of $177. The excess of the purchase price over the estimated fair value of the tangible net assets and identifiable intangible assets acquired was recorded as goodwill and is subject to change upon final valuation. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Allure Acquisition. These benefits include a comprehensive portfolio of iconic customer brands, complementary product offerings, enhanced national footprint, and attractive synergy opportunities and value creation. None of the goodwill is expected to be deductible for income tax purposes. The following unaudited pro forma information for the year-ended December 31, 2018 presents the combined financial results for the Company and Allure, adjusted for Allure's fiscal year ended March 31, as if the Allure Acquisition had been completed January 1, 2017. Prior to the Allure Acquisition, Allure had a fiscal year reporting from April 1 to March 31 annually. The pro forma financial information set forth below for the year-ended December 31, 2018 includes Allure's pro forma information for the twelve-month period January 1, 2018 through December 31, 2018. The information set forth below for the year-ended December 31, 2019 represents the Company's consolidated results for that period. Year Ended December 31, (in thousands, except earnings per common share) 2019 2018 (unaudited) Net sales $ 31,598 $ 31,477 Net income/(loss) $ 1,038 $ (11,615 ) Earnings per common share $ 0.11 $ (3.22 ) The information above does not include the pro forma adjustments that would be required under Regulation S-X for pro forma financial information and does not reflect future events that may occur after December 31, 2018 or any operating efficiencies or inefficiencies that may result from the Allure Acquisition and related financing. Therefore, the information is not necessarily indicative of results that would have been achieved had the businesses been combined during the periods presented or the results that the Company will experience going forward. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | NOTE 6: FAIR VALUE MEASUREMENT We measure certain financial assets, including cash equivalents, at fair value on a recurring basis. In accordance with ASC 820, fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-level hierarchy that prioritizes the inputs used in measuring fair value. The three hierarchy levels are defined as follows: Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets. Level 2 — Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Level 3 — Valuations based on inputs that are unobservable and involve management judgment and the reporting entity's own assumptions about market participants and pricing. The Company previously recorded warrant liabilities that were measured at fair value on a recurring basis using a binomial option pricing model. The warrant liabilities were classified as Level 3 and were determined to have a fair value of $21 as of December 31, 2018. The warrant liabilities had been previously decreased to $0 as of June 30, 2019. All of the Company's outstanding warrants classified as liabilities expired during the three months ended September 30, 2019. As part of the Allure Acquisition, the Purchase Agreement contemplated additional consideration of $2,000 to be paid by us to Seller in the event that acquiree revenue exceeds $13,000, as defined in the underlying agreement, for any of the trailing twelve-month periods measured as of December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020. The fair value of the earnout liability was determined to be $250 at the time of acquisition. As part of our finalization of opening balance sheet accounting at the close of the measurement period, we recorded an adjustment to reflect the earnout liability to $0. The liability is deemed to be Level 3 as the valuation is based on revenue projections and estimates developed by management as informed by historical results. As discussed in Note 9 Loans Payable |
Supplemental Cash Flow Statemen
Supplemental Cash Flow Statement Information | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Statement Information [Abstract] | |
SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION | NOTE 7: SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION Year Ended December 31, 2019 2018 Supplemental non-cash Investing and Financing Activities Issuance of common stock upon conversion of preferred stock $ - $ 1,927 Issuance of warrants with term loan extensions / revolver draws $ - $ 809 Noncash preferred stock dividends $ - $ 345 Conversion of promissory notes $ - $ 10,031 Noncash preferred stock conversion expense $ - $ 3,932 Supplemental disclosure information for cash flow Cash paid during the period for: Interest $ 403 $ 630 Income taxes, net $ 25 $ 34 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | NOTE 8: INTANGIBLE ASSETS AND GOODWILL Intangible Assets Intangible assets consisted of the following at December 31, 2019 and December 31, 2018: December 31, December 31, 2019 2018 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Technology platform $ 4,635 3,147 $ 4,635 2,895 Customer relationships 5,330 2,679 5,330 2,477 Trademarks and trade names 1,020 752 1,020 553 10,985 6,578 10,985 5,925 Accumulated amortization 6,578 5,925 Net book value of amortizable intangible assets $ 4,407 $ 5,060 For the year ended December 31, 2018, the gross carrying amount of technology platform, customer relationships, and trademarks and trade names increased $1,770, $2,870, and $340, respectively, from the Allure acquisition completed on November 19, 2018. For the years ended December 31, 2019 and 2018, amortization of intangible assets charged to operations was $654 and $795, respectively, inclusive of amortization expense for the acquired intangible assets for the six-week period from November 19, 2018 to December 31, 2018. Estimated amortization is as follows: Year ending December 31, Estimated Future Amortization 2020 $ 616 2021 544 2022 444 2023 444 Thereafter 2,359 Intangible assets include the following and are being amortized over their estimated useful lives as follows: Acquired Intangible Asset: Amortization Technology platform and patents 4 - 7 Trademark 3-5 Customer relationships 15 Goodwill The following is a rollforward of the Company's goodwill since December 31, 2018: Total Balance as of January 1, 2019 $ 18,900 Adjustments due to finalization of purchase price allocation (Note 5) (729 ) Balance as of December 31, 2019 $ 18,171 Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is subject to an impairment review at a reporting unit level, on an annual basis as of the end of September of each fiscal year, or when an event occurs or circumstances change that would indicate potential impairment. The Company has only one reporting unit, and therefore the entire goodwill is allocated to that reporting unit. The Company assessed the carrying value of goodwill at the reporting unit level based on an estimate of the fair value of the respective reporting unit. Fair value of the reporting unit was estimated using a discounted cash flow analyses consisting of various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis of business prospects and economic or market trends that may occur, specifically, the Company gave significant consideration to actual historic financial results, including revenue growth rates in the preceding three years. Based on the Company's assessment, we determined that the fair value of our reporting unit exceeds its carrying value, and accordingly, the goodwill associated with the reporting unit is not considered to be impaired at September 30, 2019. The Company recognizes that any changes in our projected 2020 results could potentially have a material impact on our assessment of goodwill impairment. The Company will continue to monitor the actual performance of its operations against expectations and assess indicators of possible impairment. The valuation of goodwill and intangible assets is subject to a high degree of judgment, uncertainty and complexity. Should any indicators of impairment occur in subsequent periods, the Company will be required to perform an analysis in order to determine whether goodwill is impaired. |
Loans Payable
Loans Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE | NOTE 9: LOANS PAYABLE The outstanding debt with detachable warrants, as applicable, are shown in the table below. Further discussion of the notes follows. Debt Type Issuance Principal Maturity Warrants Interest Rate Information A 6/30/2018 $ 264 6/30/2021 - 0.0% interest (1) B 1/16/2018 1,000 6/30/2021 61,729 8.0% interest (2) C 8/17/2016 3,000 6/30/2021 588,236 8.0% interest (2) D 11/19/2018 1,637 2/15/2020 - 3.5% interest (3) E 12/30/2019 2,000 6/30/2021 (4) - 8.0% interest (4) $ 7,901 649,965 Debt discount (507 ) Total debt $ 7,394 Less current maturities (3,637 ) Long term debt 3,757 A – Secured Disbursed Escrow Promissory Note with related party B – Revolving Loan with related party C – Term Loan with related party D – Amended and Restated Seller Note from acquisition of Allure E – Secured Convertible Special Loan Promissory Note, at fair value (1) 0.0% interest per annum. (2) 8.0% cash interest per annum when total borrowings under the term and revolver loans, in aggregate, are below $4,100 in principal (disregarding PIK interest); 8.0% cash, 2.0% PIK when total borrowing under the term and revolver loans, in aggregate, exceed $4,100 in principal (disregarding PIK interest). (3) 3.5% simple cash interest per annum; interest payable quarterly with the first payment due on December 31, 2018 with payments of accrued interest continuing quarterly thereafter until the maturity date of February 20, 2020. (4) 8.0% cash interest per annum, comprised of 6.0% cash, 2.0% PIK. Interest payable monthly with the first payment due on February 1, 2020. In an event of default, the interest rate increases by 6.0% to 14.0%. Debt is convertible to preferred stock at the earlier of an event of default or October 1, 2020. While the stated maturity date of the Special Loan is June 30, 2021, the mandatory conversion feature into preferred stock as of October 1, 2020 results in the classification of this debt instrument as a current liability on the consolidated balance sheet. Term Note, Revolving Promissory Note, Secured Convertible Special Loan and Secured Disbursed Escrow Promissory Note On August 17, 2016, we entered into a Loan and Security Agreement with Slipstream, and obtained a $3,000 term loan, with interest thereon at 8% per annum. The term loan contains certain customary restrictions including, but not limited to, restrictions on mergers and consolidations with other entities, cancellation of any debt or incurring new debt (subject to certain exceptions), and other customary restrictions. On November 6, 2019, Slipstream extended the maturity date of our term loan and revolver loan to June 30, 2021 through the Sixth Amendment to the Loan and Security Agreement, aligning the maturity date of our term loan and revolver loan with the Secured Disbursed Escrow Promissory Note. On December 30, 2019, we entered into the Special Loan as part of the Seventh Amendment under which we obtained $2,000, with interest thereon at 8% per annum payable 6% in cash and 2% via the issuance of SLPIK interest, provided however that upon occurrence of an event of default the interest rate shall automatically be increased by 6% per annum payable in cash. The entry into the Seventh Amendment adjusted the interest rate on the Company's Term Loan and Revolving Loan to 8% per annum, provided, however, at all times when the aggregate outstanding principal amount of the Term Loan and the Revolving Loan exceeds $4,100 then the Loan Rate shall be 10%, of which eight percent 8% shall be payable in cash and 2% shall be paid by the issuance of and treated as additional PIK. Upon the earlier to occur of an Event of Default or October 1, 2020, if any of the principal amount of the Special Loan is then outstanding, the principal and accrued but unpaid interest of the Special Loan and the outstanding SLPIK shall be automatically converted into shares of a new series of Senior Convertible Preferred Stock of CRI ("New Preferred") having an Appraised Value equal to three times the then outstanding principal amount and accrued but unpaid interest of the Special Loan and the outstanding SLPIK and having the following terms and conditions, as reasonably determined by CRI and the Lender, the New Preferred shall: ● be the most senior equity security of CRI, including with respect to the payment of dividends and other distributions; ● be on substantially the same terms and conditions as CRI's Series A-1 6% Convertible Preferred Stock as set forth in its Certificate of Designation immediately before the same was cancelled pursuant to a Certificate of Cancellation dated as of March 13, 2019; ● not be subject to a right of redemption upon the part of a holder thereof; ● accrue and pay quarterly dividends at the rate of twelve percent (12%) per annum which shall be payable in cash; ● have a Stated Value that is an amount mutually agreed by CRI and the Lender at the time of issuance; ● Conversion Price shall be an amount equal to 80% of the average for the 30-day period ending two days prior to the required conversion date of the daily average of the range of CRI's common stock (calculated pursuant to information on The Wall Street Journal Online Edition), subject to appropriate adjustments; and ● neither section 6(e) of the Series A-1 Certificate of Designation nor any similar provision shall apply to the New Preferred. In entering the Seventh Amendment and Special Loan, pursuant to ASC 825-10-25-1, Fair Value Option On November 19, 2018, we used proceeds from our common stock offering to repay Slipstream $1,283, inclusive of $125 of accrued interest, to reduce borrowings under the Loan and Security Agreement to an aggregate of $4,264, comprised of $3,000 term loan, $1,000 revolving loan and $264 secured disbursed escrow promissory note. The consolidated balance sheet includes $27 of accrued interest as of December 31, 2018 representing one month's interest at 8.0% on the $4,000 outstanding balance. On November 9, 2018, Slipstream, extended the maturity date of our term loan and revolver loan to August 16, 2020 through the Fifth Amendment to the Loan and Security Agreement. In conjunction with the extension of the maturity date of our term loan, we agreed that the interest rate would increase from 8.0% per annum to 10.0% per annum effective July 1, 2019. On January 16, 2018, we entered into the Third Amendment to the Loan and Security Agreement with Slipstream and obtained a $1,000 revolving loan, with interest thereon at 8% per annum, maturing on January 16, 2019, which was amended to August 16, 2020 in conjunction with the Fifth Amendment to the Loan and Security Agreement. In connection with the loan, we issued Slipstream a five-year warrant to purchase up to 61,729 shares of Creative Realities' common stock at a per share price of $8.10 (subject to adjustment and subsequently adjusted to $8.09 in April 2018). The fair value of the warrants was $266, which was accounted for as an additional debt discount and amortized over the remaining life of the loan. On April 27, 2018, we entered into the Fourth Amendment to the Loan and Security Agreement with Slipstream, under which we obtained a $1,100 revolving loan, with interest thereon at 8% per annum, provided, however, at all times when the aggregate outstanding principal amount of the Term Loan and the Revolving Loan (excluding the additional principal added pursuant to this proviso) exceeds $4,000 then the Loan Rate shall be 10%, of which eight percent 8% shall be payable in cash and 2% shall be paid by the issuance of and treated as additional principal of the Term Loan ("PIK"); provided, further, however, that the Loan Rate with respect to the Disbursed Escrow Loan shall be 0%. The revolving loan was originally set to mature on January 16, 2019, which was amended to August 16, 2020 in conjunction with the Fifth Amendment to the Loan and Security Agreement. In connection with the loan, we issued the lender a five-year warrant to purchase up to 143,791 shares of Creative Realities' common stock at a per share price of $7.65 (subject to adjustment). The fair value of the warrants was $543, which is accounted for as an additional debt discount and amortized over the remaining life of the loan. The Fourth Amendment to the Loan and Security Agreement included entry into a Secured Disbursed Escrow Promissory Note between the Company and Slipstream, and, effective June 30, 2018 we drew $264 in conjunction with our exit from a previously leased operating facility. The principal amount of the Secured Disbursed Escrow Promissory Note will bear simple interest at the 8%; provided, further, however, that the Loan Rate with respect to the Secured Disbursed Escrow Promissory Note shall be 0% at all times when the aggregate outstanding principal amount of the Term Loan and the Revolving Loan (excluding the additional principal added pursuant to this proviso) is at or below $4,000. See Note 13 Convertible Preferred Stock Convertible Promissory Notes On October 29, 2018, Slipstream, the holder of convertible promissory notes, agreed to convert $4,955 of outstanding principal, including paid-in-kind interest and all accrued interest thereon into shares of our common stock and warrants at a conversion price equal to the lower of $7.65, or 80% of the price at which shares of common stock were sold in the Company's common stock offering completed on November 19, 2018 ("Public Offering"). The conversion was contingent upon (i) the conversion of the Company's Series A Preferred Stock, and (ii) the successful completion of a Public Offering of at least $10,000, each of which were successfully completed on November 19, 2018. In exchange for participation in the Public Offering, subject to a minimum participation requirement as agreed between the underwriters and the Company, and Slipstream's execution of a lock-up agreement, Slipstream received, as a one-time incentive, additional common stock and warrants in such number that decreased the effective conversion price of the convertible notes to 70% of the lowest of those scenarios outlined above. Upon completion of the Company's Public Offering on November 19, 2018, the convertible promissory notes were converted into shares of the Company's common stock. The Company issued 653,062 shares of common stock at the stated conversion rate and an additional 1,386,090 shares of common stock in exchange for conversion of the convertible promissory notes as a result of the one-time incentive. The lock-up agreement applied to all shares of common stock and warrants issued to Slipstream. Amended and Restated Seller Note from acquisition of Allure The Amended and Restated Seller Note represents a note payable due from Allure to Seller, under a pre-existing Seller Note which was amended and restated to a reduced amount of $900 through the Stock Purchase Agreement. At the closing date, the estimated net working capital deficit of Allure was $801 in excess of the target net working capital as defined in the Stock Purchase Agreement. As of the balance sheet date, Allure also had accounts payable to Seller for outsourced services of $2,204. We agreed with the Seller to settle the estimated net working capital deficit through a reduction in the accounts payable to Seller as of the acquisition date and to further amend the Seller Note to include the remaining $1,403 accounts payable due from Allure to Seller, resulting in a Seller Note of $2,303. That debt is represented by our issuance to the Seller of a promissory note accruing interest at 3.5% per annum. The promissory note requires us to make quarterly payments of interest only through February 19, 2020, on which date the promissory note will mature and all remaining amounts owing thereunder will be due. The promissory note is convertible into shares of Creative Realities common stock, at the seller's option on or after the 180th day after issuance, at an initial conversion price of $8.40 per share, subject to customary equitable adjustments. Conversion of all amounts owing under the promissory note will be mandatory if the 30-day volume-weighted average price of our common stock exceeds 200% of the common stock trading price at the closing of the acquisition. We granted the seller customary registration rights for the shares of our common stock issuable upon conversion of the promissory note. On February 20, 2020, the Company and Allure filed a demand for arbitration against Seller for (1) breach of contract, (2) indemnification, and (3) fraudulent misrepresentation under the Purchase Agreement. This demand included a claim for the right to offset the amounts owing under the Amended and Restated Seller Note due February 20, 2020. We have not paid, nor do we intend to pay, the Amended and Restated Seller Note, which is now past its maturity date, without resolution of our demand for arbitration. On February 27, 2020, Seller sent the Company a notice of breach for failure to pay the Amended and Restated Seller Note on the maturity date of February 20, 2020 and demanding immediate payment. See Note 10 Commitments and Contingencies |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10: COMMITMENTS AND CONTINGENCIES Lease termination On August 10, 2017, we announced the planned closure of our office facilities located at 22 Audrey Place, Fairfield, New Jersey 07004, which housed our previous operations center and ceased use of the facilities in February 2018. In ceasing use of these facilities, we recorded a one-time non-cash charge of $474 to accrue for the remaining rent under the lease term, net of anticipated subtenant rental income. Effective June 30, 2018, we entered into a settlement agreement to exit this lease agreement, resulting in the Company recording a gain on settlement of $39. There were no such lease terminations during 2019. Settlement of obligations During the year ended December 31, 2019, the Company settled and/or wrote off obligations of $3,178 for $1,132 cash payment and recognized a gain of $2,046. $1,619 of this gain related to settlement of legacy sales commissions due to a third party vendor which were settled with a cash payment of $1,100 during the three-months ended December 31, 2019. The remaining settlements related to legacy accounts payable deemed to no longer be legal obligations to vendors. In 2018, the Company settled and/or wrote off obligations of $313 for $58 cash payment and recognized a gain of $255. This obligation included $30 of accrued wage labor liabilities no longer anticipated to be pursued against the Company. Litigation (a) On August 2, 2019, the Company filed suit in Jefferson Circuit Court, Kentucky, against a supplier of Allure for breach of contract, breach of warranty, and negligence with respect to equipment installations performed by such supplier for an Allure customer. This case is in the early stages of litigation and, as a result, the outcome of each case is unclear, so the Company is unable to reasonably estimate the possible recovery, or range of recovery, if any. On October 10, 2019, the Allure customer that is the basis of our claim above sent a demand to the Company for payment of $3,200 as settlement for an alleged breach of contract related to hardware failures of equipment installations performed by Allure between November 2017 and August 2018. The suits filed by and against Allure have been adjoined in the Jefferson Circuit Court, Kentucky in January 2020. This suit remains in the early stages of litigation and, as a result, the outcome of the suit and the allocation of liability, if any, remain unclear, so the Company is unable to reasonably estimate the possible liability, recovery, or range of magnitude for either the liability or recover, if any, at the time of this filing. The Company has notified its insurance company on notice of potential claims and continues to evaluate both the claim made by the customer and potential avenues for recovery against third parties should the customer prevail. On February 20, 2020, the Company and Allure filed a demand for arbitration against Seller for breach of contract, indemnification, and fraudulent misrepresentation under the Purchase Agreement. This demand included a claim for the right to offset the amounts owing under the Amended and Restated Seller Note due February 20, 2020. We have not paid the Amended and Restated Seller Note which is now past its maturity date. On February 27, 2020, Seller sent the Company a notice of breach for failure to pay the Amended and Restated Seller Note on the maturity date of February 20, 2020 and demanding immediate payment. (b) The Company is not party to any other material legal proceedings, other than ordinary routine litigation incidental to the business, as of March 11, 2020, and there were no other such proceedings pending during the period covered by this Report. Termination benefits Effective December 31, 2018, the Company entered into a separation agreement with Mr. Walpuck, the Company's former Chief Operating Officer. Mr. Walpuck and the Company agreed to a transition of Mr. Walpuck's duties commencing January 31, 2019. Mr. Walpuck began consulting for the Company commencing February 1, 2019, and such services ended May 1, 2019. Mr. Walpuck was paid $100 per hour, with a maximum of 80 hours each month during the term of the consulting arrangement. Pursuant to the terms of Mr. Walpuck's employment agreement, Mr. Walpuck received a total of $220 in severance payments in even monthly installments through December 2019. The Company agreed to fully vest all stock options of Mr. Walpuck, such options do not terminate as a result of Mr. Walpuck's termination of employment and remain exercisable throughout the term of the options. On December 21, 2018, the Company announced certain restructuring activities following completion of its acquisition of Allure and accrued one-time termination benefits related to severance to the affected employees of $386. During the three-months ended December 31, 2018, cash payments for termination benefits were $31, with the remaining cash payments of $355 paid during the year-ended December 31, 2019. On August 10, 2017, the Company announced that it was closing its New Jersey and Minnesota locations and accrued one-time termination benefits related to severance to the affected employees of $75 in the third quarter of 2017 which were included in general and administrative expenses on the consolidated statement of operations. During the three-months ended June 30, 2018, the remaining cash payments for termination benefits were paid and no liability remains recorded on the consolidated balance sheet as of December 31, 2018. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11: RELATED PARTY TRANSACTIONS In addition to the financing transactions with Slipstream, a related party, discussed in Note 9 Loans Payable On August 14, 2018, we entered into a payment agreement with 33 Degrees Convenience Connect, Inc., a related party that is approximately 17.5% owned by a member of our senior management ("33 Degrees"), outlining terms for repayment of $2,567 of aged accounts receivable as of that date. The payment agreement stipulated a simple interest rate of 12% on aged accounts receivable to be paid on the tenth day of each month through the maturity date of December 31, 2019. As of December 31, 2019, 33 Degrees paid the note in full and had a remaining outstanding accounts receivable balance of $1 in the Consolidated Financial Statements. Interest income of $118 related to the agreement has been included in interest expense in the consolidated statement of operations for the year ended December 31, 2019. 33 Degrees has continued to purchase additional hardware and services from the Company on a prepaid basis. For the years ended December 31, 2019 and 2018, we had sales of $1,103 (3.5% of consolidated revenue) and $1,566 (6.9% of consolidated revenue), respectively, with 33 Degrees Convenience Connect, Inc., a related party that is approximately 17.5% owned by a member of our senior management ("33 Degrees"). Accounts receivable due from 33 Degrees was $1, or 0.0%, and $1,933, or 30.0% of consolidated accounts receivable at December 31, 2019 and December 31, 2018, respectively. On December 30, 2019, we entered into the Special Loan as part of the Seventh Amendment of the Loan and Security Agreement with Slipstream, under which we obtained $2,000, with interest thereon at 8% per annum payable 6% in cash and 2% via the issuance of SLPIK interest, provided however that upon occurrence of an event of default the interest rate shall automatically be increased by 6% per annum payable in cash. See Note 9 Loans Payable On November 6, 2019, Slipstream extended the maturity date of the Term Loan and Revolving Loan to June 30, 2021 through the Sixth Amendment to the Loan and Security Agreement, aligning the maturity date of such loans with the maturity date of the Disbursed Escrow Note. See Note 9 Loans Payable On September 20, 2018, the Compensation Committee of the Board of Directors (1) adjusted the salary of Mr. Mills, CEO, to $330,000 annually, retroactive to January 1, 2018 and (2) granted 166,667 shares of common stock to Mr. Mills, CEO as compensation for his performance and direction of the Company since taking over as CEO in October 2015. The chart above reflects the fair value of the unrestricted shares which vested and received by Mr. Mills on the date the shares were formally issued, December 19, 2018 (133,333) and January 11, 2019 (33,334). |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12: INCOME TAXES On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Act") was signed into law, making significant changes to U.S. tax law. Changes include, but are not limited to, a corporate income tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017. In accordance with the Act, the Company recorded an income tax benefit of $200 in the fourth quarter of 2017, the period in which the legislation was enacted. The income tax provision/(benefit) consisted of the following: Year ended December 31, 2019 2018 Tax provision summary: State income tax $ 46 $ 23 Deferred tax benefit - federal 17 (454 ) Deferred tax expense – state 30 33 Tax benefit $ 93 $ (398 ) The income tax provision/(benefit) includes federal and state income taxes currently payable and those deferred or prepaid because of temporary differences between financial statement and tax bases of assets and liabilities. The Company records income taxes under the liability method. Under this method, deferred income taxes are recognized for the estimated future tax effects of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws. The amount provided for deferred income taxes reflects that impact of the revaluation of the Company's deferred income tax assets and liabilities required as the result of the change in the U.S. federal and state income tax rates, as discussed above. A reconciliation of the statutory income tax rate to the effective income tax rates as a percentage of income before income taxes is as follows: 2019 2018 Federal statutory rate 21.00 % 21.00 % State taxes, net of federal benefit 9.85 % 1.36 % Foreign rate differential -9.69 % 0.58 % IRC 162(m) limitation 0 % -0.63 % Meals and entertainment 0.81 % 0 % Discrete items, Transaction items, and Other 44.05 % 239.77 % Changes in valuation allowance -57.76 % -258.44 % Effective tax rate 8.25 % 3.64 % The net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets, determined using the income tax rate applicable to each period, consist of the following: December 31, 2019 2018 Deferred tax assets (liabilities): Reserves $ 175 $ 233 Property and equipment (83 ) 462 Accrued expenses 265 822 Right-of-use Asset (414 ) - Right-of-use Liability 419 - Severance - 65 IRC 163(j) Interest Deduction 17 591 Non-qualified stock options 528 336 R&D credits 1,801 1,538 Net foreign carryforwards 2,768 2,214 Net operating loss and credit carryforwards 34,754 33,988 Intangibles (1,128 ) (672 ) Total deferred tax assets, net 39,102 39,577 Valuation allowance (39,277 ) (39,705 ) Net deferred tax liabilities $ (175 ) $ (128 ) Our deferred tax assets are primarily related to net federal and state operating loss carryforwards (NOLs). We have substantial NOLs that are limited in its usage by IRC Section 382. IRC Section 382 generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership within a statutory testing period. We have performed a preliminary analysis of the annual NOL carryforwards and limitations that are available to be used against taxable income. The estimated federal NOL carryforward after application of the IRC Section 382 limitation is $33,817 and foreign NOL carryforward is $2,768 as of December 31, 2019. Based on the history of losses of the Company, there continues to be a full valuation allowance against the net deferred tax assets of the Company with a definite life. |
Convertible Preferred Stock
Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
CONVERTIBLE PREFERRED STOCK | NOTE 13: CONVERTIBLE PREFERRED STOCK Our Series A Convertible Preferred Stock (the "preferred stock") entitled its holders to a 6% dividend, payable semi-annually in cash or in kind through the three-year anniversary of the original issue date, and from and after such three-year anniversary, payable in shares of common stock. The three-year anniversary of the initial investment date occurred during the second half of 2017 for $5,200 and the first quarter of 2018 for the remaining $300 originally issued preferred stock and therefore dividends on those investments will be paid via issuance of common shares at all future dividend dates. On November 5, 2018, the shareholders of preferred stock agreed to convert the entire class of preferred stock into common stock at an exchange ratio of $7.65 per share. The conversion was contingent upon a successful Public Offering of at least $10,000, which the Company completed on November 19, 2018. Holders of preferred stock received common stock at the stated conversion rate of $7.65 per share, or 723,561 shares of common stock. Those holders of preferred stock who executed a customary lock-up agreement for a period continuing for 90 days after the consummation of the public offering were issued, as a one-time incentive, additional common stock and warrants, in such number as defined in underlying agreements. The Company issued an additional 1,123,367 shares of common stock in exchange for execution of such lock-up agreements. The lock-up agreements applied to all shares of common stock issued to convert the holder's preferred stock, and the additional shares of common stock and warrants, and underlying warrant shares, issued by the Company in exchange for the holder's execution of the lock-up agreement and participation in the public offering. As a result of this conversion, there remained no Series A Preferred Stock outstanding as of December 31, 2018. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2019 | |
Warrants [Abstract] | |
WARRANTS | NOTE 14: WARRANTS On November 19, 2018, the Company announced the closing of its underwritten public offering of 2,857,142 shares of its common stock and warrants to purchase 1,428,571 shares of common stock at a combined public offering price of $3.50 per share and warrant. The gross proceeds to the Company from this the Public Offering were approximately $10,000, before deducting underwriting discounts and commissions and other estimated offering expenses. The proceeds were primarily used in the Allure Acquisition and in the repayment of approximately $1,283 of debt. On April 27, 2018, we entered into the Fourth Amendment to the Loan and Security Agreement with Slipstream, under which we obtained a $1,100 revolving loan, with interest thereon at 8% per annum, maturing on January 16, 2019. In connection with the loan, we issued the lender a five-year warrant to purchase up to 143,791 shares of Creative Realities' common stock at a per share price of $7.65 (subject to adjustment and subsequently adjusted to $6.25 in November 2018). The fair value of the warrants was $543, which is accounted for as an additional debt discount and amortized over the remaining life of the loan. On January 16, 2018, we entered into the Third Amendment to the Loan and Security Agreement with Slipstream, under which we obtained a $1,000 revolving loan, with interest thereon at 8% per annum, maturing on January 16, 2019. In connection with the loan, we issued the lender a five-year warrant to purchase up to 61,729 shares of Creative Realities' common stock at a per share price of $8.10 (subject to adjustment and subsequently adjusted to $6.09 in November 2018). The fair value of the warrants on the issuance date was $266, which is accounted for as an additional debt discount and amortized over the remaining life of the loan. Listed below are the range of inputs used for the probability weighted Black Scholes option pricing model valuations for when the warrants were issued and at December 31, 2019. Issuance Date Expected Term at Issuance Risk Free Interest Rate at Date of Issuance Volatility at Date of Issuance Stock Price at Date of Issuance 1/16/2018 5.00 2.36 % 65.07 % $ 7.80 4/27/2018 5.00 2.80 % 65.95 % $ 6.90 Remaining Expected Term Risk Free Interest Rate Volatility at Stock Price at 0.13 - 3.92 1.69 % 74.49 % $ 1.53 A summary of outstanding debt and equity warrants is included below: Warrants (Equity) Warrants (Liability) Amount Weighted Average Exercise Weighted Average Remaining Contractual Life Amount Weighted Average Exercise Weighted Average Remaining Contractual Life Balance January 1, 2019 4,815,047 $ 4.90 4.34 216,255 $ 7.34 0.64 Warrants issued - - - - - - Warrants expired (82,019 ) 8.25 - (216,255 ) 7.34 - Balance December 31, 2019 4,733,028 $ 4.83 3.41 - $ - - |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 15: STOCK-BASED COMPENSATION A summary of outstanding options, including non-employee directors, is included below: Weighted Average Weighted Weighted Remaining Average Average Range of Exercise Number Contractual Exercise Options Exercise Prices between Outstanding Life Price Exercisable Price $0.01 - $5.39 25,000 9.86 $ 1.88 - $ - $5.40 - $19.50 287,341 6.04 $ 8.35 250,257 $ 8.45 $19.51 - $23.70 1,000 4.04 23.70 1,000 $ 23.70 $23.71 - $367.50 519 2.58 112.30 519 $ 112.30 313,860 6.33 $ 8.06 251,776 Options Weighted Average Exercise Outstanding Price Balance, December 31, 2018 288,860 $ 8.59 Granted 25,000 1.88 Exercised - - Forfeited or expired - - Balance, December 31, 2019 313,860 $ 8.06 The weighted average remaining contractual life for options exercisable is 5.68 years as of December 31, 2019. Valuation Information for Stock-Based Compensation For purposes of determining estimated fair value under FASB ASC 718-10, Stock Compensation On November 7, 2019, the Company granted 10-year options to purchase an aggregate of 25,000 shares of its common stock to one non-employee director. The options vest over 3 years and have an exercise price of $1.88, the market value of the Company's common stock on the grant date. The fair value of the options on the grant date was $1.19 and was determined using the Black-Scholes model. These values were calculated using the following weighted average assumptions: Risk-free interest rate 1.92 % Expected term 6.25 years Expected price volatility 68.77 % Dividend yield 0 % On September 7 and September 20, 2018, the Company granted 10-year options to purchase an aggregate of 33,334 shares of its common stock to two employees, 16,667 of which were granted to an Officer. The options vest over 4 years and have an exercise price of $7.50. The fair value of the options on the grant date was $4.58 and was determined using the Black-Scholes model. These values were calculated using the following weighted average assumptions: Risk-free interest rate 2.82 – 2.96 % Expected term 6.25 years Expected price volatility 63.45 % Dividend yield 0 % Stock-based compensation expense is based on awards ultimately expected to vest. ASC 718-10-55 allows companies to either estimate forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates or elect to account for forfeitures as they occur by reversing compensation cost when the award is forfeited. Our accounting policy is to account for forfeitures as they occur by reversing compensation cost in the period in which forfeitures occur. Stock Compensation Expense Information ASC 718-10, Stock Compensation In October 2014, the Company's shareholders approved the 2014 Stock Incentive Plan, under which 7,390,355 shares were reserved for purchase by the Company's employees. In August 2018, a special meeting of shareholders was held in which the shareholders voted to amend the Company's 2014 Stock Incentive Plan to increase the reserve of shares authorized for issuance thereunder, from 7,390,355 shares to 18,000,000 shares. There are 301,674 options outstanding under the 2014 Stock Incentive Plan. Compensation expense recognized for the issuance of stock options for the years ended December 31, 2019 and 2018 of $447 and $1,383, respectively, was included in general and administrative expense in the Consolidated Financial Statements. At December 31, 2019, there was approximately $174 of total unrecognized compensation expense related to unvested share-based awards. Generally, this expense will be recognized over the next three years and will be adjusted for any future forfeitures as they occur. Stock-based compensation expense is based on awards ultimately expected to vest. ASC 718-10-55 allows companies to either estimate forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates or elect to account for forfeitures as they occur by reversing compensation cost when the award is forfeited. Our accounting policy is to account for forfeitures as they occur by reversing compensation cost in the period in which forfeitures occur. On September 20, 2018, the Compensation Committee of the Board of Directors proposed, and the Board of Directors approved, an aggregate award of 166,667 shares of common stock to our current CEO in light of performance and growth of certain key customer relationships. Of those shares granted, 133,334 were deemed to be awarded and fully vested as of such date, with the remaining 33,333 shares restricted to vest upon the Company's recognition in accordance with GAAP of approximately $6,200 of revenue which was deferred on the Company's balance sheet. During 2018, the Company recorded compensation expense for those vested awards based on the grant-date close price of the Company's common stock, or $7.50, resulting in a non-cash compensation expense in the period of $1,000. During 2019, the conditions were met for those remaining shares to vest and the Company recorded compensation expense of $250 based on the grant-date close price of the Company's common stock, or $7.50. On December 31, 2018, the Company recorded $35 in additional compensation expense for the accelerated vesting of outstanding, unvested stock options in conjunction with the separation agreement executed between the Chief Operating Officer and the Company during the year ended December 31, 2018. |
Share Repurchase Program
Share Repurchase Program | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
SHARE REPURCHASE PROGRAM | NOTE 16: SHARE REPURCHASE PROGRAM On August 9, 2017, our Board of Directors authorized a program to repurchase up to 166,667 shares of our outstanding common stock through August 9, 2019. The authorization allowed for the repurchases to be conducted through open market or privately negotiated transactions. Shares acquired under the stock repurchase program are expected to be retired and returned to the status of authorized but unissued shares of common stock. The stock repurchase program can be suspended, modified or discontinued at any time at our discretion. No shares were repurchased by the Company during 2019 or 2018 and the program terminated August 9, 2019. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
LEASES | NOTE 17: LEASES We have entered into various non-cancelable operating lease agreements for certain of our offices and office equipment. Our leases have original lease periods expiring between 2020 and 2023. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease costs, lease term and discount rate are as follows: (in thousands) Year Ended Finance lease cost Amortization of right-of-use assets $ 32 Interest 5 Operating lease cost 736 Total lease cost $ 773 Weighted Average Remaining Lease Term Operating leases 3.4 years Finance leases 1.2 years Weighted Average Discount Rate Operating leases 10.0 % Finance leases 13.64 % The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2019: (in thousands) Operating Finance 2020 681 23 2021 630 4 2022 377 1 2023 375 - 2024 - - Thereafter - - Total undiscounted cash flows 2,063 28 Less imputed interest (317 ) (2 ) Present value of lease liabilities 1,746 26 Lease liabilities, current 646 21 Lease liabilities, non-current 1,100 5 Present value of lease liabilities 1,746 26 Supplemental cash flow information related to leases are as follows: Year Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 719 Operating cash flows from finance leases $ 1 Financing cash flows from finance leases $ 31 Future minimum lease payments under leases with initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2018 were as follows in accordance with ASC 840: Year ending December 31, Lease Obligations 2019 $ 726 2020 613 2021 423 2022 374 Thereafter 375 Total future minimum obligations $ 2,511 Rent expense totaled $488 for the year ended December 31, 2018 and is included in General and Administrative expenses. |
Profit-Sharing Plan
Profit-Sharing Plan | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
PROFIT-SHARING PLAN | NOTE 18: PROFIT-SHARING PLAN We have a defined contribution 401(k) retirement plans for eligible associates in the United States. Associates may contribute up to 15% of their pretax compensation to the plan subject to IRS limitations. Beginning on April 1, 2018, the Company began contributing an employer contribution match of 50% of employee wages up to 6%, for an effective match of 3%. The Company contributed $155 and $101 to employee 401(k) retirement plans for the year-ended December 31, 2019 and 2018, respectively. During 2018, employees who joined the Company via acquisition of Allure participated in a defined contribution 401(k) retirement plans. Associates were able to contribute up to 15% of their pretax compensation to the plan subject to IRS limitations. There was no employer match on this plan during 2018. Allure personnel became eligible for the Creative Realities 401(k) retirement plan effective January 1, 2019 and the related employer match program. We have a Registered Retirement Savings Plan for eligible associates in Canada. Associates may contribute up to 18% of earned income reported on their tax return in the previous year, subject to legal contribution limits. Beginning on April 1, 2018, the Company began contributing an employer contribution match of 50% of employee wages up to 6%, for an effective match of 3%. |
Segment Information and Signifi
Segment Information and Significant Customers/Vendors | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION AND SIGNIFICANT CUSTOMERS/VENDORS | NOTE 19: SEGMENT INFORMATION AND SIGNIFICANT CUSTOMERS/VENDORS Segment Information We currently operate in one reportable segment, marketing technology solutions. Substantially all property and equipment is located at our offices in the United States, and a data center located in the United States. All material sales for the years ended December 31, 2019 and 2018 were in the United States and Canada. Significant Customers We had one (1) and two (2) customers that accounted for 18.5% and 48.3% of revenue for the years ended December 31, 2019 and 2018, respectively. For the years ended December 31, 2019 and 2018, we had sales of $1,103 (3.5% of consolidated sales) and $1,566 (6.9% of consolidated sales), respectively, with 33 Degrees Convenience Connect, Inc., a related party that is approximately 17.5% owned by a member of our senior management ("33 Degrees"). We had one (1) and two (2) customers that in the aggregate accounted for 14.4% and 40.0% of accounts receivable as of December 31, 2019 and December 31, 2018, respectively. Accounts receivable due from 33 Degrees was $1 and $1,933 at December 31, 2019 and 2018, respectively. Significant Vendors We had one (1) vendor that accounted for 50% of outstanding accounts payable at December 31, 2019. There were no vendors in excess of 10% of outstanding accounts payable at December 31, 2018. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-K and Article 3 of Regulation S-X and include all of the information and disclosures required by generally accepted accounting principles in the United States of America ("GAAP") for annual financial reporting. The Consolidated Financial Statements include the accounts of Creative Realities, Inc., our wholly owned subsidiaries Allure, ConeXus World Global LLC, Creative Realities (Canada), Inc., and Creative Realities, LLC. All inter-company balances and transactions have been eliminated in consolidation, as applicable. |
Revenue Recognition | 2. Revenue Recognition We recognize revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers Revenue Recognition |
Inventories | 3. Inventories Inventories are stated at the lower of cost or market (net realizable value), determined by the first-in, first-out (FIFO) method, and consist of the following: December 31, December 31, 2019 2018 Raw materials, net of reserve of $134 and $207, respectively $ 200 $ 220 Work-in-process 179 159 Total inventories $ 379 $ 379 |
Impairment of Long-Lived Assets | 4. Impairment of Long-Lived Assets We review the carrying value of all long-lived assets, including property and equipment, for impairment in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets If the impairment tests indicate that the carrying value of the asset is greater than the expected undiscounted cash flows to be generated by such asset, an impairment loss would be recognized. The impairment loss is determined as the amount by which the carrying value of such asset exceeds its fair value. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such assets using an appropriate discount rate. Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell. Considerable management judgment is necessary to estimate the fair value of assets, and accordingly, actual results could vary significantly from such estimates. |
Basic and Diluted Income/(Loss) per Common Share | 5. Basic and Diluted Income/(Loss) per Common Share Basic and diluted income/(loss) per common share for all periods presented is computed using the weighted average number of common shares outstanding. Basic weighted average shares outstanding includes only outstanding common shares. Diluted weighted average shares outstanding includes outstanding common shares and potential dilutive common shares outstanding in accordance with the treasury stock method. Shares reserved for outstanding stock options and warrants totaling approximately 5,046,888 and 5,320,162 at December 31, 2019 and 2018, respectively were excluded from the computation of income/(loss) per share as no options or warrants were in the money for 2019 and all options and warrants were anti-dilutive in 2018 due to the net loss. In calculating diluted earnings per share for 2019, in accordance with ASC 260 Earnings per share Convertible Preferred Stock |
Income Taxes | 6. Income Taxes Deferred income taxes are recognized in the financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in basis of intangibles, stock-based compensation, reserves for uncollectible accounts receivable and inventory, differences in depreciation methods, and accrued expenses. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertain tax positions utilizing an established recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We had no uncertain tax positions as of December 31, 2019 and 2018. |
Goodwill and Definite-Lived Intangible Assets | 7. Goodwill and Definite-Lived Intangible Assets We follow the provisions of ASC 350, Goodwill and Other Intangible Assets. Pursuant to ASC 350, goodwill acquired in a purchase business combination is not amortized, but instead tested for impairment at least annually. The Company uses a measurement date of September 30. There was no impairment loss recognized on goodwill or definite-lived intangible assets during the years ended December 31, 2019 and 2018 (see Note 8 Intangible Assets and Goodwill |
Use of Estimates | 8. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Our significant estimates include: the allowance for doubtful accounts, recognition of revenue, valuation allowances related to deferred taxes, deferred revenue, the fair value of acquired assets and liabilities, valuation of stock-based compensation awards and other assumptions and estimates used to evaluate the recoverability of long-lived assets, goodwill and other intangible assets and the related amortization methods and periods. Actual results could differ from those estimates. |
Stock Split | 9. Stock Split On October 17, 2018, the Company effectuated a l-for-30 reverse stock split of its outstanding common stock, which was approved by the Company's board of directors on October 17, 2018. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. The shares of common stock retained a par value of $0.01 per share. |
Business Combinations | 10. Business Combinations Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. Refer to Note 5 Business Combination |
Property and Equipment | 11. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method. Property and equipment consist of the following at December 31, 2019 and 2018: December 31, 2019 2018 Equipment $ 83 $ 159 Leasehold improvements 136 58 Purchased and developed software 2,563 1,758 Furniture and fixtures 102 82 Other depreciable assets 65 57 Total property and equipment 2,949 2,114 Less: accumulated depreciation and amortization (1,396 ) (884 ) Net property and equipment $ 1,553 $ 1,230 During 2018, we wrote-off fully depreciated property and equipment and the related accumulated depreciation of $3,628. The estimated useful lives used to compute depreciation and amortization are as follows: Asset class Useful life assigned Equipment 3 – 5 years Furniture and fixtures 5 years Purchased and developed software 3 years Leasehold improvements Shorter of 5 years or term of lease Depreciation expense was $564 and $391 for the years ended December 31, 2019 and 2018, respectively. |
Research and Development and Software Development Costs | 12. Research and Development and Software Development Costs Research and development expenses consist primarily of development personnel and non-employee contractor costs related to the development of new products and services, enhancement of existing products and services, quality assurance and testing. The Company capitalizes its costs incurred for additional functionality to its internal software. We capitalized approximately $805 and $243 for the years ended December 31, 2019 and 2018, respectively. These software development costs include both enhancements and upgrades of our client-based systems including functionality of our internal information systems to aid in our productivity, profitability and customer relationship management. We are amortizing these costs over 3 years once the new projects are completed and placed in service. These costs are included in property and equipment, net on the consolidated balance sheets. |
Leases | 13. Leases On January 1, 2019, we adopted Accounting Standards Updates ("ASU") No. 2016-02, Leases Leases Lease accounting results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. We elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. We also elected to combine our lease and non-lease components. We have no leases with an initial term of 12 months or less. Upon adoption, we recognized total ROU assets of $2,319, with corresponding liabilities of $2,319 on the consolidated balance sheets. This included $54 of pre-existing finance lease ROU assets previously reported in computer equipment within property and equipment, net. The ROU assets include adjustments for prepayments and accrued lease payments. The effect of the adoption resulted in a $171 cumulative effect adjustment to retained earnings on January 1, 2019 but did not impact our prior year consolidated statements of income, statements of cash flows, or statements of shareholders' equity. Under Topic 842, we determine if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, we consider only payments that are fixed and determinable at the time of commencement. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is a hypothetical rate based on our understanding of what our credit rating would be. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating leases are included in operating lease right-of-use assets, current maturities of operating leases, and long-term obligations under operating leases on our consolidated balance sheets. Finance leases are included in property and equipment, net, current maturities of financing leases, and long-term obligations under financing leases on our consolidated balance sheets. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of inventories | December 31, December 31, 2019 2018 Raw materials, net of reserve of $134 and $207, respectively $ 200 $ 220 Work-in-process 179 159 Total inventories $ 379 $ 379 |
Schedule of property and equipment | December 31, 2019 2018 Equipment $ 83 $ 159 Leasehold improvements 136 58 Purchased and developed software 2,563 1,758 Furniture and fixtures 102 82 Other depreciable assets 65 57 Total property and equipment 2,949 2,114 Less: accumulated depreciation and amortization (1,396 ) (884 ) Net property and equipment $ 1,553 $ 1,230 |
Schedule of estimated useful lives used to compute depreciation and amortization | Asset class Useful life assigned Equipment 3 – 5 years Furniture and fixtures 5 years Purchased and developed software 3 years Leasehold improvements Shorter of 5 years or term of lease |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of revenue by major source | (in thousands) Year Ended Hardware $ 8,229 Services: Installation Services 7,500 Software Development Services 9,303 Managed Services 6,566 Total Services 23,369 Total Hardware and Services $ 31,598 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of purchase price allocation | (in thousands) Total Accounts receivable $ 1,452 Unbilled receivables 221 Inventory 142 Prepaid expenses & other current assets 17 Property and equipment 177 Other assets 7 Identified intangible assets: Definite-lived trade names 340 Developed technology 1,770 Customer relationships 2,870 Goodwill 3,812 Accounts payable (330 ) Accrued expenses (294 ) Customer deposits (494 ) Deferred revenues (276 ) Accounts payable converted into Seller Note (737 ) Net consideration transferred $ 8,047 |
Schedule of amortization period of identifiable intangible assets | (in thousands) Preliminary Valuation Amortization Period Identifiable intangible assets: Definite-lived trade names $ 340 5 years Developed technology 1,770 7 years Customer relationships 2,870 15 years Total $ 4,980 |
Allure Acquisition [Member] | |
Schedule of purchase price allocation | (in thousands) Consideration Cash consideration for stock $ 6,300 (1) Payable to former Allure management 1,021 (2) Seller note payable 900 (3) Earnout liability 250 (4) Total consideration 8,471 Cash acquired (424 ) (5) Net consideration transferred $ 8,047 (1) Cash consideration for outstanding shares of Allure common stock per Stock Purchase Agreement. (2) Represents a payable due to two former members of the Allure management team for a total of $1,250 as a result of the acquisition; 30% due in November 2018 and 70% due in November 2019. The fair value of the payable as of the acquisition date was deemed to be $1,021. During November 2019, the Company entered a payment plan with each former member of Allure management to spread the remaining payments due from the Company throughout 2020. As of December 31, 2019, the Company's consolidated balance sheet includes $535 related to this liability within accrued expenses. (3) Represents a note payable due from Allure to Seller, under a pre-existing Seller Note which was amended and restated for this amount through the Stock Purchase Agreement. At the closing date, the estimated net working capital deficit of Allure was $801 in excess of the target net working capital as defined in the stock purchase agreement. As of the acquisition date, Allure also had accounts payable to Seller for outsourced services of $2,204. We agreed with the Seller to settle the estimated net working capital deficit through a reduction in the accounts payable to Seller as of the acquisition date and to further amend the Seller Note to include the remaining $1,403 accounts payable due from Allure to Seller. The Seller Note thereby increased from $900 per the Stock Purchase Agreement to $2,303 at the opening balance sheet. That debt is represented by our issuance to the Seller of a promissory note accruing interest at 3.5% per annum. The promissory note required us to make quarterly payments of interest through February 19, 2020, on which date the promissory note matured and all remaining amounts owing thereunder were due. See Note 10 Commitments and Contingencies (4) The Stock Purchase Agreement contemplates additional consideration or $2,000 to be paid by us to Seller in the event that acquiree revenue exceeds $13,000, as defined in the underlying agreement. The fair value of the earnout liability was initially determined to be $250 at the time of acquisition but has since been adjusted to $0, resulting in a gain on reversal of earnout liability of $250 in the fourth quarter of 2019. We currently do not expect to owe any amount of additional consideration to Seller and no liability has been recorded in the Consolidated Financial Statements for this contingent liability as of December 31, 2019. We utilized a third-party valuation specialist to assist in evaluating this liability as of the opening balance sheet date. Should revenues from Allure customers exceed $13,000 during 2020, the $2,000 liability generated would be recorded through the Company's statement of operations. (5) Represents the Allure cash balance acquired at acquisition ($26) and the cash received from Seller in settlement of our net working capital claim ($398). |
Schedule of amortization period of identifiable intangible assets | Year Ended December 31, (in thousands, except earnings per common share) 2019 2018 (unaudited) Net sales $ 31,598 $ 31,477 Net income/(loss) $ 1,038 $ (11,615 ) Earnings per common share $ 0.11 $ (3.22 ) |
Supplemental Cash Flow Statem_2
Supplemental Cash Flow Statement Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Statement Information [Abstract] | |
Schedule of supplemental cash flow information | Year Ended December 31, 2019 2018 Supplemental non-cash Investing and Financing Activities Issuance of common stock upon conversion of preferred stock $ - $ 1,927 Issuance of warrants with term loan extensions / revolver draws $ - $ 809 Noncash preferred stock dividends $ - $ 345 Conversion of promissory notes $ - $ 10,031 Noncash preferred stock conversion expense $ - $ 3,932 Supplemental disclosure information for cash flow Cash paid during the period for: Interest $ 403 $ 630 Income taxes, net $ 25 $ 34 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | December 31, December 31, 2019 2018 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Technology platform $ 4,635 3,147 $ 4,635 2,895 Customer relationships 5,330 2,679 5,330 2,477 Trademarks and trade names 1,020 752 1,020 553 10,985 6,578 10,985 5,925 Accumulated amortization 6,578 5,925 Net book value of amortizable intangible assets $ 4,407 $ 5,060 |
Schedule of estimated amortization | Year ending December 31, Estimated Future Amortization 2020 $ 616 2021 544 2022 444 2023 444 Thereafter 2,359 |
Schedule of estimated useful lives | Acquired Intangible Asset: Amortization Technology platform and patents 4 - 7 Trademark 3-5 Customer relationships 15 |
Schedule of goodwill | Total Balance as of January 1, 2019 $ 18,900 Adjustments due to finalization of purchase price allocation (Note 5) (729 ) Balance as of December 31, 2019 $ 18,171 |
Loans Payable (Tables)
Loans Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt with detachable warrants | Issuance Principal Maturity Warrants Interest Rate Information A 6/30/2018 $ 264 6/30/2021 - 0.0% interest (1) B 1/16/2018 1,000 6/30/2021 61,729 8.0% interest (2) C 8/17/2016 3,000 6/30/2021 588,236 8.0% interest (2) D 11/19/2018 1,637 2/15/2020 - 3.5% interest (3) E 12/30/2019 2,000 6/30/2021 (4) - 8.0% interest (4) $ 7,901 649,965 Debt discount (507 ) Total debt $ 7,394 Less current maturities (3,637 ) Long term debt 3,757 A – Secured Disbursed Escrow Promissory Note with related party B – Revolving Loan with related party C – Term Loan with related party D – Amended and Restated Seller Note from acquisition of Allure E – Secured Convertible Special Loan Promissory Note, at fair value (1) 0.0% interest per annum. (2) 8.0% cash interest per annum when total borrowings under the term and revolver loans, in aggregate, are below $4,100 in principal (disregarding PIK interest); 8.0% cash, 2.0% PIK when total borrowing under the term and revolver loans, in aggregate, exceed $4,100 in principal (disregarding PIK interest). (3) 3.5% simple cash interest per annum; interest payable quarterly with the first payment due on December 31, 2018 with payments of accrued interest continuing quarterly thereafter until the maturity date of February 20, 2020. (4) 8.0% cash interest per annum, comprised of 6.0% cash, 2.0% PIK. Interest payable monthly with the first payment due on February 1, 2020. In an event of default, the interest rate increases by 6.0% to 14.0%. Debt is convertible to preferred stock at the earlier of an event of default or October 1, 2020. While the stated maturity date of the Special Loan is June 30, 2021, the mandatory conversion feature into preferred stock as of October 1, 2020 results in the classification of this debt instrument as a current liability on the consolidated balance sheet. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax provision | Year ended December 31, 2019 2018 Tax provision summary: State income tax $ 46 $ 23 Deferred tax benefit - federal 17 (454 ) Deferred tax expense – state 30 33 Tax benefit $ 93 $ (398 ) |
Schedule of reconciliation statutory income tax | 2019 2018 Federal statutory rate 21.00 % 21.00 % State taxes, net of federal benefit 9.85 % 1.36 % Foreign rate differential -9.69 % 0.58 % IRC 162(m) limitation 0 % -0.63 % Meals and entertainment 0.81 % 0 % Discrete items, Transaction items, and Other 44.05 % 239.77 % Changes in valuation allowance -57.76 % -258.44 % Effective tax rate 8.25 % 3.64 % |
Schedule of the deferred tax assets and liabilities | December 31, 2019 2018 Deferred tax assets (liabilities): Reserves $ 175 $ 233 Property and equipment (83 ) 462 Accrued expenses 265 822 Right-of-use Asset (414 ) - Right-of-use Liability 419 - Severance - 65 IRC 163(j) Interest Deduction 17 591 Non-qualified stock options 528 336 R&D credits 1,801 1,538 Net foreign carryforwards 2,768 2,214 Net operating loss and credit carryforwards 34,754 33,988 Intangibles (1,128 ) (672 ) Total deferred tax assets, net 39,102 39,577 Valuation allowance (39,277 ) (39,705 ) Net deferred tax liabilities $ (175 ) $ (128 ) |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Warrants [Abstract] | |
Schedule of range of inputs used for the Black Scholes option pricing model valuations | Issuance Date Expected Term at Issuance Risk Free Interest Rate at Date of Issuance Volatility at Date of Issuance Stock Price at Date of Issuance 1/16/2018 5.00 2.36 % 65.07 % $ 7.80 4/27/2018 5.00 2.80 % 65.95 % $ 6.90 Remaining Expected Term Risk Free Interest Rate Volatility at Stock Price at 0.13 - 3.92 1.69 % 74.49 % $ 1.53 |
Schedule of outstanding liability and equity warrants | Warrants (Equity) Warrants (Liability) Amount Weighted Average Exercise Weighted Average Remaining Contractual Life Amount Weighted Average Exercise Weighted Average Remaining Contractual Life Balance January 1, 2019 4,815,047 $ 4.90 4.34 216,255 $ 7.34 0.64 Warrants issued - - - - - - Warrants expired (82,019 ) 8.25 - (216,255 ) 7.34 - Balance December 31, 2019 4,733,028 $ 4.83 3.41 - $ - - |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of stock options outstanding | Weighted Average Weighted Weighted Remaining Average Average Range of Exercise Number Contractual Exercise Options Exercise Prices between Outstanding Life Price Exercisable Price $0.01 - $5.39 25,000 9.86 $ 1.88 - $ - $5.40 - $19.50 287,341 6.04 $ 8.35 250,257 $ 8.45 $19.51 - $23.70 1,000 4.04 23.70 1,000 $ 23.70 $23.71 - $367.50 519 2.58 112.30 519 $ 112.30 313,860 6.33 $ 8.06 251,776 |
Schedule of stock option activity | Options Weighted Average Exercise Outstanding Price Balance, December 31, 2018 288,860 $ 8.59 Granted 25,000 1.88 Exercised - - Forfeited or expired - - Balance, December 31, 2019 313,860 $ 8.06 |
November 7, 2019 [Member] | |
Schedule of estimated fair values of stock options using black-scholes model | Risk-free interest rate 1.92 % Expected term 6.25 years Expected price volatility 68.77 % Dividend yield 0 % |
September 7 and September 20, 2018 [Member] | |
Schedule of estimated fair values of stock options using black-scholes model | Risk-free interest rate 2.82 – 2.96 % Expected term 6.25 years Expected price volatility 63.45 % Dividend yield 0 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of components of lease costs, lease term and discount rate | (in thousands) Year Ended Finance lease cost Amortization of right-of-use assets $ 32 Interest 5 Operating lease cost 736 Total lease cost $ 773 Weighted Average Remaining Lease Term Operating leases 3.4 years Finance leases 1.2 years Weighted Average Discount Rate Operating leases 10.0 % Finance leases 13.64 % |
Schedule of maturities of lease liabilities | (in thousands) Operating Finance 2020 681 23 2021 630 4 2022 377 1 2023 375 - 2024 - - Thereafter - - Total undiscounted cash flows 2,063 28 Less imputed interest (317 ) (2 ) Present value of lease liabilities 1,746 26 Lease liabilities, current 646 21 Lease liabilities, non-current 1,100 5 Present value of lease liabilities 1,746 26 |
Schedule of cash flow information related to leases | Year Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 719 Operating cash flows from finance leases $ 1 Financing cash flows from finance leases $ 31 |
Schedule of future minimum lease payments | Year ending December 31, Lease Obligations 2019 $ 726 2020 613 2021 423 2022 374 Thereafter 375 Total future minimum obligations $ 2,511 |
Nature of Organization and Op_2
Nature of Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Sep. 20, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Nature of Organization and Operations (Textual) | ||||
Cash and cash equivalents | $ 2,534 | $ 2,718 | $ 1,003 | |
Working capital deficit | $ 2,449 | |||
Dividend rate | 12.00% | |||
Conversion price percentage | 80.00% | |||
Series A Convertible Preferred Stock [Member] | ||||
Nature of Organization and Operations (Textual) | ||||
Convertible preferred stock percentage | 16.00% | |||
Allure Global Solutions, Inc. [Member] | ||||
Nature of Organization and Operations (Textual) | ||||
Maturity date, description | The Purchase Agreement contemplates additional consideration of $2,000 to be paid by us to Seller in the event that Allure's revenue exceeds $13,000, provided that revenues from one specifically-named customer is capped at 70% of their gross revenue as part of the aggregate revenue calculation, for any of (i) the 12-month period ending December 31, 2019, or (ii) any of the next following trailing 12-month periods ending on each of March 31, June 30, September 30 and December 31, 2020. | |||
Purchase agreement, description | Allure’s issued and outstanding capital shares in consideration for a total purchase price of approximately $8,450, subject to a post-closing working capital adjustment. Of this purchase price amount, we paid $6,300 in cash. Of the remaining purchase price amount, approximately $1,250 was to be paid to former management of Allure, and approximately $900 is due from Allure to Seller, under an existing Seller note which was amended and restated for this reduced amount (as so amended and restated, the “Amended and Restated Seller Note”). The Amended and Restated Seller Note accrued interest at 3.5% per annum. | |||
Maturity date | Feb. 19, 2020 | |||
Initial conversion price | $ 8.40 | |||
Description of conversion of all amounts | Conversion of all amounts owing under the Amended and Restated Seller Note will be mandatory if the 30-day volume-weighted average price of our common stock exceeds 200% of the common stock trading price at the closing of the Allure Acquisition. | |||
Business acquisition description | On May 10, 2019, we reached a settlement agreement with Seller on, among other things, the final net working capital as of the acquisition date resulting in (i) a payment to us from Seller in the amount of $210, and (ii) a reduction of the amount due under the Amended and Restated Seller Note of $168 of cash collected by the Company which had been previously designated for payment on the Amended and Restated Seller Note but was not ultimately remitted to the Seller and (b) $20 of unpaid accrued interest. In addition to this net working capital settlement, Seller accepted collection risk for one acquired receivable in the amount of $666, which was net settled through the Amended and Restated Seller Note. Our consolidated balance sheet reflects a reduction in both accounts receivable and the Amended and Restated Seller Note of $666. The outstanding principal balance of the Amended and Restated Seller Note as of December 31, 2019 is $1,637. | |||
Slipstream Communications, LLC [Member] | ||||
Nature of Organization and Operations (Textual) | ||||
Maturity date, description | On November 9, 2018, Slipstream extended the maturity date of our term loan and revolving loan to August 16, 2020. In conjunction with the extension of the maturity date of our term loan, we agreed that the cash portion of the interest rate would increase from 8.0% per annum to 10.0% per annum effective July 1, 2019. | |||
Slipstream Communications, LLC [Member] | Seventh Amendment of Loan and Security Agreement [Member] | ||||
Nature of Organization and Operations (Textual) | ||||
Description of special loan agreement | On December 30, 2019, Slipstream into the Secured Convertible Special Loan Promissory Note (“Special Loan”) as part of the Seventh Amendment of the Loan and Security Agreement with Slipstream, under which we obtained $2,000, with interest thereon at 8% per annum payable 6% in cash and 2% via the issuance of paid-in-kind (“SLPIK”) interest, provided however that upon occurrence of an event of default the interest rate shall automatically be increased by 6% per annum payable in cash. The entry into the Seventh Amendment adjusted the interest rate on the Company’s Term Loan and Revolving Loan to 8% per annum, provided, however, at all times when the aggregate outstanding principal amount of the Term Loan and the Revolving Loan exceeds $4,100 then the Loan Rate shall be 10%, of which eight percent 8% shall be payable in cash and 2% shall be paid by the issuance of and treated as additional PIK. | |||
Revolving loan | $ 4,100 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Raw materials, net of reserve of $134 and $207, respectively | $ 200 | $ 220 |
Work-in-process | 179 | 159 |
Total inventories | $ 379 | $ 379 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 2,949 | $ 2,114 |
Less: accumulated depreciation and amortization | (1,396) | (884) |
Net property and equipment | 1,553 | 1,230 |
Purchased and developed software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,563 | 1,758 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 83 | 159 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 136 | 58 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 102 | 82 |
Other depreciable assets [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 65 | $ 57 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2019 | |
Purchased and developed software [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment estimated useful lives | 3 years |
Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment estimated useful lives | 3 years |
Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment estimated useful lives | 5 years |
Furniture and fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment estimated useful lives | 5 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment estimated useful lives, description | Shorter of 5 years or term of lease |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Oct. 17, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies (Textual) | |||
Reverse stock split | On October 17, 2018, the Company effectuated a l-for-30 reverse stock split of its outstanding common stock, which was approved by the Company's board of directors on October 17, 2018. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. The shares of common stock retained a par value of $0.01 per share. | ||
Depreciation expense | $ 564 | $ 391 | |
Accumulated depreciation | 3,628 | ||
Internal software capitalized amount | $ 805 | 243 | |
Amortizing terms | 3 years | ||
Reserve net | $ 134 | 207 | |
Finance lease, description | Upon adoption, we recognized total ROU assets of $2,319, with corresponding liabilities of $2,319 on the consolidated balance sheets. This included $54 of pre-existing finance lease ROU assets previously reported in computer equipment within property and equipment, net. The ROU assets include adjustments for prepayments and accrued lease payments. The effect of the adoption resulted in a $171 cumulative effect adjustment to retained earnings on January 1, 2019 but did not impact our prior year consolidated statements of income, statements of cash flows, or statements of shareholders' equity. | ||
Series A Convertible Preferred Stock [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Dividends on convertible preferred stock | $ 345 | ||
preferred stock conversion expense | $ 3,932 | ||
Stock options and warrants [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Outstanding stock options and warrants | 5,046,888 | 5,320,162 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Hardware | $ 8,229 |
Total Services | 23,369 |
Total Hardware and Services | 31,598 |
Installation Services [Member] | |
Total Services | 7,500 |
Software Development Services [Member] | |
Total Services | 9,303 |
Managed Services [Member] | |
Total Services | $ 6,566 |
Revenue Recognition (Details Te
Revenue Recognition (Details Textual) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Installation service performance obligations, description | The aggregate amount of the transaction price allocated to installation service performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2019 and 2018 were $0 and $52, respectively. |
Business Combination (Details)
Business Combination (Details) - Allure Global Solutions, Inc. [Member] - USD ($) $ in Thousands | Dec. 31, 2019 | Nov. 20, 2018 | |
Cash consideration for stock | [1] | $ 6,300 | |
Payable to former Allure management | [2] | 1,021 | |
Seller note payable | [3] | 900 | |
Earnout liability | [4] | 250 | |
Total consideration | 8,471 | ||
Cash acquired | [5] | 424 | |
Net consideration transferred | $ 8,047 | $ 8,047 | |
[1] | Cash consideration for outstanding shares of Allure common stock per Stock Purchase Agreement. | ||
[2] | Represents a payable due to two former members of the Allure management team for a total of $1,250 as a result of the acquisition; 30% due in November 2018 and 70% due in November 2019. The fair value of the payable as of the acquisition date was deemed to be $1,021. During November 2019, the Company entered a payment plan with each former member of Allure management to spread the remaining payments due from the Company throughout 2020. As of December 31, 2019, the Company's consolidated balance sheet includes $535 related to this liability within accrued expenses. | ||
[3] | Represents a note payable due from Allure to Seller, under a pre-existing Seller Note which was amended and restated for this amount through the Stock Purchase Agreement. At the closing date, the estimated net working capital deficit of Allure was $801 in excess of the target net working capital as defined in the stock purchase agreement. As of the acquisition date, Allure also had accounts payable to Seller for outsourced services of $2,204. We agreed with the Seller to settle the estimated net working capital deficit through a reduction in the accounts payable to Seller as of the acquisition date and to further amend the Seller Note to include the remaining $1,403 accounts payable due from Allure to Seller. The Seller Note thereby increased from $900 per the Stock Purchase Agreement to $2,303 at the opening balance sheet. That debt is represented by our issuance to the Seller of a promissory note accruing interest at 3.5% per annum. The promissory note required us to make quarterly payments of interest through February 19, 2020, on which date the promissory note matured and all remaining amounts owing thereunder were due. See Note 10 Commitments and Contingencies in the consolidated financial statements for further discussion of this note, which is now past due. | ||
[4] | The Stock Purchase Agreement contemplates additional consideration or $2,000 to be paid by us to Seller in the event that acquiree revenue exceeds $13,000, as defined in the underlying agreement. The fair value of the earnout liability was initially determined to be $250 at the time of acquisition but has since been adjusted to $0, resulting in a gain on reversal of earnout liability of $250 in the fourth quarter of 2019. We currently do not expect to owe any amount of additional consideration to Seller and no liability has been recorded in the Consolidated Financial Statements for this contingent liability as of December 31, 2019. We utilized a third-party valuation specialist to assist in evaluating this liability as of the opening balance sheet date. Should revenues from Allure customers exceed $13,000 during 2020, the $2,000 liability generated would be recorded through the Company's statement of operations. | ||
[5] | Represents the Allure cash balance acquired at acquisition ($26) and the cash received from Seller in settlement of our net working capital claim ($398). |
Business Combination (Details 1
Business Combination (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 20, 2018 |
Identified intangible assets: | |||
Goodwill | $ 18,171 | $ 18,900 | |
Allure Global Solutions, Inc. [Member] | |||
Accounts receivable | $ 1,452 | ||
Unbilled receivables | 221 | ||
Inventory | 142 | ||
Prepaid expenses & other current assets | 17 | ||
Property and equipment | 177 | ||
Other assets | 7 | ||
Identified intangible assets: | |||
Definite-lived trade names | 340 | ||
Developed technology | 1,770 | ||
Customer relationships | 2,870 | ||
Goodwill | 3,812 | ||
Accounts payable | (330) | ||
Accrued expenses | (294) | ||
Customer deposits | (494) | ||
Deferred revenues | (276) | ||
Accounts payable converted into Seller Note | (737) | ||
Net consideration transferred | $ 8,047 | $ 8,047 |
Business Combination (Details 2
Business Combination (Details 2) $ in Thousands | 1 Months Ended |
Nov. 20, 2018USD ($) | |
Preliminary valuation of identifiable intangible assets | $ 4,980 |
Definite-lived trade names [Member] | |
Preliminary valuation of identifiable intangible assets | $ 340 |
Definite-lived trade names [Member] | Minimum [Member] | |
Amortization period for identifiable intangible assets | 3 years |
Definite-lived trade names [Member] | Maximum [Member] | |
Amortization period for identifiable intangible assets | 5 years |
Developed technology [Member] | |
Preliminary valuation of identifiable intangible assets | $ 1,770 |
Amortization period for identifiable intangible assets | 7 years |
Customer relationships [Member] | |
Preliminary valuation of identifiable intangible assets | $ 2,870 |
Amortization period for identifiable intangible assets | 15 years |
Business Combination (Details 3
Business Combination (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Net sales | $ 31,598 | $ 31,477 |
Net income/(loss) | $ 1,038 | $ (11,615) |
Earnings per common share | $ 0.11 | $ (3.22) |
Business Combination (Details T
Business Combination (Details Textual) $ in Thousands | May 10, 2019 | Feb. 20, 2020 | Nov. 20, 2018USD ($)Members | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Accrued expenses | $ 535 | |||||
Long term seller note payable | 3,757 | $ 3,233 | ||||
Direct transaction costs | 710 | |||||
Incremental interest expenses | $ 9 | |||||
Allure Global Solutions, Inc. [Member] | ||||||
Purchase agreement, description | Pursuant to the Stock Purchase Agreement, the total purchase price was $8,450, which was primarily funded using cash from the Company’s public offering closed on November 19, 2018. | |||||
Retention bonus due | $ 1,250 | |||||
Number of members | Members | 2 | |||||
Retention bonus due percentage, description | 30% due in November 2018 and 70% due in November 2019. The fair value of the payable as of the acquisition date was deemed to be $1,021. | |||||
Estimated net working capital deficit | 801 | |||||
Accounts payable to seller for outsourced services | 1,403 | |||||
Fair value of the earnout liability | [1] | $ 250 | ||||
Cash flow projections discounted percent | 26.00% | |||||
Fair value of property, plant and equipment | $ 177 | |||||
Promissory note accruing interest percent | 3.50% | 3.50% | ||||
Maturity date | Feb. 20, 2020 | |||||
Allure Global Solutions, Inc. [Member] | Minimum [Member] | ||||||
Identifiable intangible assets weighted average lives | 3 years | |||||
Allure Global Solutions, Inc. [Member] | Maximum [Member] | ||||||
Identifiable intangible assets weighted average lives | 15 years | |||||
Settlement agreement [Member] | ||||||
Purchase agreement, description | The fair value of the earnout liability was initially determined to be $250 at the time of acquisition but has since been adjusted to $0, resulting in a gain on reversal of earnout liability of $250 in the fourth quarter of 2019. We currently do not expect to owe any amount of additional consideration to Seller and no liability has been recorded in the Consolidated Financial Statements for this contingent liability as of December 31, 2019. We utilized a third-party valuation specialist to assist in evaluating this liability as of the opening balance sheet date. Should revenues from Allure customers exceed $13,000 during 2020, the $2,000 liability generated would be recorded through the Company's statement of operations. | |||||
Estimated net working capital deficit | $ 398 | |||||
Business combination settled via cash, description | We reached a settlement agreement with Seller on, among other things, the final net working capital as of the acquisition date resulting in (i) a payment to us from Seller in the amount of $210, and (ii) a reduction of the amount due under the Amended and Restated Seller Note of $168 of cash collected by the Company which had been previously designated for payment on the Amended and Restated Seller Note but was not ultimately remitted to the Seller and (b) $20 of unpaid accrued interest. In addition to this net working capital settlement, Seller accepted collection risk for one acquired receivable in the amount of $666, which was net settled through the Amended and Restated Seller Note. As a result, our consolidated balance sheet reflects a reduction in both accounts receivable and the Amended and Restated Seller Note of $666. The outstanding principal balance of the Amended and Restated Seller Note as of December 31, 2019 is $1,637. | |||||
Outstanding principal balance | 1,637 | |||||
Contemplates additional consideration | 2,000 | |||||
Acquiree revenue exceed | 13,000 | |||||
Fair value of earnout liability | $ 250 | |||||
Seller Agreement [Member] | ||||||
Business combination settled via cash, description | At the closing date, the estimated net working capital deficit of Allure was $801 in excess of the target net working capital as defined in the stock purchase agreement. As of the acquisition date, Allure also had accounts payable to Seller for outsourced services of $2,204. We agreed with the Seller to settle the estimated net working capital deficit through a reduction in the accounts payable to Seller as of the acquisition date and to further amend the Seller Note to include the remaining $1,403 accounts payable due from Allure to Seller. The Seller Note thereby increased from $900 per the Stock Purchase Agreement to $2,303 at the opening balance sheet. That debt is represented by our issuance to the Seller of a promissory note accruing interest at 3.5% per annum. | |||||
[1] | The Stock Purchase Agreement contemplates additional consideration or $2,000 to be paid by us to Seller in the event that acquiree revenue exceeds $13,000, as defined in the underlying agreement. The fair value of the earnout liability was initially determined to be $250 at the time of acquisition but has since been adjusted to $0, resulting in a gain on reversal of earnout liability of $250 in the fourth quarter of 2019. We currently do not expect to owe any amount of additional consideration to Seller and no liability has been recorded in the Consolidated Financial Statements for this contingent liability as of December 31, 2019. We utilized a third-party valuation specialist to assist in evaluating this liability as of the opening balance sheet date. Should revenues from Allure customers exceed $13,000 during 2020, the $2,000 liability generated would be recorded through the Company's statement of operations. |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Fair Value Measurement (Textual) | |||
Stock purchase agreement, description | The Purchase Agreement contemplated additional consideration of $2,000 to be paid by us to Seller in the event that acquiree revenue exceeds $13,000, as defined in the underlying agreement, for any of the trailing twelve-month periods measured as of December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020. The fair value of the earnout liability was determined to be $250 at the time of acquisition. As part of our finalization of opening balance sheet accounting at the close of the measurement period, we recorded an adjustment to reflect the earnout liability to $0. | ||
Fair value (Level 3) [Member] | |||
Fair Value Measurement (Textual) | |||
Warrant liabilities | $ 0 | $ 21 |
Supplemental Cash Flow Statem_3
Supplemental Cash Flow Statement Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental non-cash Investing and Financing Activities | ||
Issuance of common stock upon conversion of preferred stock | $ 1,927 | |
Issuance of warrants with term loan extensions / revolver draws | 809 | |
Noncash preferred stock dividends | 345 | |
Conversion of promissory notes | 10,031 | |
Noncash preferred stock conversion expense | 3,932 | |
Cash paid during the period for: | ||
Interest | 403 | 630 |
Income taxes, net | $ 25 | $ 34 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 10,985 | $ 10,985 |
Accumulated Amortization | 6,578 | 5,925 |
Net book value of amortizable intangible assets | 4,407 | 5,060 |
Technology platform [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,635 | 4,635 |
Accumulated Amortization | 3,147 | 2,895 |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,330 | 5,330 |
Accumulated Amortization | 2,679 | 2,477 |
Trademarks and trade names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,020 | 1,020 |
Accumulated Amortization | $ 752 | $ 553 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill (Details 1) $ in Thousands | Dec. 31, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 | $ 616 |
2021 | 544 |
2022 | 444 |
2023 | 444 |
Thereafter | $ 2,359 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill (Details 2) | 12 Months Ended |
Dec. 31, 2019 | |
Technology Platform and Patents [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization Period: (years) | 4 years |
Technology Platform and Patents [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization Period: (years) | 7 years |
Trademarks [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization Period: (years) | 3 years |
Trademarks [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization Period: (years) | 5 years |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization Period: (years) | 15 years |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill (Details 3) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Intangible Assets And Goodwill | |
Balance as of January 1, 2019 | $ 18,900 |
Adjustments due to finalization of purchase price allocation (Note 5) | (729) |
Balance as of September 30, 2019 | $ 18,171 |
Intangible Assets and Goodwil_6
Intangible Assets and Goodwill (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets (Textual) | ||
Amortization of intangible assets | $ 654 | $ 795 |
Gross carrying amount | 10,985 | 10,985 |
Technology-Based Intangible Assets [Member] | ||
Intangible Assets (Textual) | ||
Gross carrying amount | 4,635 | 4,635 |
Technology-Based Intangible Assets [Member] | Allure Global Solutions, Inc. [Member] | ||
Intangible Assets (Textual) | ||
Gross carrying amount | 1,770 | |
Customer Relationships [Member] | ||
Intangible Assets (Textual) | ||
Gross carrying amount | 5,330 | 5,330 |
Customer Relationships [Member] | Allure Global Solutions, Inc. [Member] | ||
Intangible Assets (Textual) | ||
Gross carrying amount | 2,870 | |
Trademarks and Trade Names [Member] | ||
Intangible Assets (Textual) | ||
Gross carrying amount | $ 1,020 | 1,020 |
Trademarks and Trade Names [Member] | Allure Global Solutions, Inc. [Member] | ||
Intangible Assets (Textual) | ||
Gross carrying amount | $ 340 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Schedule of outstanding debt with detachable warrants | |||
Principal | $ 7,901 | ||
Warrants | 649,965 | ||
Debt discount | $ (507) | ||
Total debt | 7,394 | ||
Less current maturities | 1,637 | ||
Long term debt | $ 3,757 | $ 3,233 | |
6/30/2018 [Member] | |||
Schedule of outstanding debt with detachable warrants | |||
Debt Type | Secured Disbursed Escrow Promissory Note with related party | ||
Issuance Date | Jun. 30, 2018 | ||
Principal | $ 264 | ||
Maturity Date | Jun. 30, 2021 | ||
Warrants | |||
Interest Rate Information | [1] | 0.0% interest | |
1/16/2018 [Member] | |||
Schedule of outstanding debt with detachable warrants | |||
Debt Type | Revolving Loan with related party | ||
Issuance Date | Jan. 16, 2018 | ||
Principal | $ 1,000 | ||
Maturity Date | Jun. 30, 2021 | ||
Warrants | 61,729 | ||
Interest Rate Information | [2] | 8.0% interest | |
8/17/2016 [Member] | |||
Schedule of outstanding debt with detachable warrants | |||
Debt Type | Term Loan with related party | ||
Issuance Date | Aug. 17, 2016 | ||
Principal | $ 3,000 | ||
Maturity Date | Jun. 30, 2021 | ||
Warrants | 588,236 | ||
Interest Rate Information | [2] | 8.0% interest | |
11/19/2018 [Member] | |||
Schedule of outstanding debt with detachable warrants | |||
Debt Type | Amended and Restated Seller Note from acquisition of Allure | ||
Issuance Date | Nov. 19, 2018 | ||
Principal | $ 1,637 | ||
Maturity Date | Feb. 15, 2020 | ||
Warrants | |||
Interest Rate Information | [3] | 3.5% interest | |
12/30/2019 [Member] | |||
Schedule of outstanding debt with detachable warrants | |||
Debt Type | Secured Convertible Special Loan Promissory Note, at fair value | ||
Issuance Date | Dec. 30, 2019 | ||
Principal | $ 2,000 | ||
Maturity Date | [4] | Jun. 30, 2021 | |
Warrants | |||
Interest Rate Information | [4] | 8.0% interest | |
[1] | 0.0% interest per annum. | ||
[2] | 8.0% cash interest per annum when total borrowings under the term and revolver loans, in aggregate, are below $4,100 in principal (disregarding PIK interest); 8.0% cash, 2.0% PIK when total borrowing under the term and revolver loans, in aggregate, exceed $4,100 in principal (disregarding PIK interest). | ||
[3] | 3.5% simple cash interest per annum; interest payable quarterly with the first payment due on December 31, 2018 with payments of accrued interest continuing quarterly thereafter until the maturity date of February 20, 2020. | ||
[4] | 8.0% cash interest per annum, comprised of 6.0% cash, 2.0% PIK. Interest payable monthly with the first payment due on February 1, 2020. In an event of default, the interest rate increases by 6.0% to 14.0%. Debt is convertible to preferred stock at the earlier of an event of default or October 1, 2020. While the stated maturity date of the Special Loan is June 30, 2021, the mandatory conversion feature into preferred stock as of October 1, 2020 results in the classification of this debt instrument as a current liability on the consolidated balance sheet. |
Loans Payable (Details Textual)
Loans Payable (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Nov. 09, 2018 | Jan. 16, 2018 | Feb. 20, 2020 | Nov. 19, 2018 | Oct. 29, 2018 | Apr. 30, 2018 | Apr. 27, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 20, 2018 | Aug. 17, 2016 | |
Short-term Debt [Line Items] | ||||||||||||
Convertible special loan, description | ● be the most senior equity security of CRI, including with respect to the payment of dividends and other distributions;● be on substantially the same terms and conditions as CRI's Series A-1 6% Convertible Preferred Stock as set forth in its Certificate of Designation immediately before the same was cancelled pursuant to a Certificate of Cancellation dated as of March 13, 2019; ● not be subject to a right of redemption upon the part of a holder thereof; ● accrue and pay quarterly dividends at the rate of twelve percent (12%) per annum which shall be payable in cash; ● have a Stated Value that is an amount mutually agreed by CRI and the Lender at the time of issuance; ● Conversion Price shall be an amount equal to 80% of the average for the 30-day period ending two days prior to the required conversion date of the daily average of the range of CRI's common stock (calculated pursuant to information on The Wall Street Journal Online Edition), subject to appropriate adjustments; and ● neither section 6(e) of the Series A-1 Certificate of Designation nor any similar provision shall apply to the New Preferred. | |||||||||||
Convertible promissory note, description | (1) 0.0% interest per annum. (2) 8.0% cash interest per annum when total borrowings under the term and revolver loans, in aggregate, are below $4,100 in principal (disregarding PIK interest); 8.0% cash, 2.0% PIK when total borrowing under the term and revolver loans, in aggregate, exceed $4,100 in principal (disregarding PIK interest). (3) 3.5% simple cash interest per annum; interest payable quarterly with the first payment due on December 31, 2018 with payments of accrued interest continuing quarterly thereafter until the maturity date of February 20, 2020. (4) 8.0% cash interest per annum, comprised of 6.0% cash, 2.0% PIK. Interest payable monthly with the first payment due on February 1, 2020. In an event of default, the interest rate increases by 6.0% to 14.0%. Debt is convertible to preferred stock at the earlier of an event of default or October 1, 2020. While the stated maturity date of the Special Loan is June 30, 2021, the mandatory conversion feature into preferred stock as of October 1, 2020 results in the classification of this debt instrument as a current liability on the consolidated balance sheet. | |||||||||||
Conversions of common stock | 1,386,090 | |||||||||||
Issuance of common stock shares | 653,062 | |||||||||||
Long term seller note payable | $ 3,757 | $ 3,233 | ||||||||||
Slipstream Communications, LLC [Member] | Secured Disbursed Escrow Promissory Note [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Interest rate, description | We drew $264 in conjunction with our exit from a previously leased operating facility. The principal amount of the Secured Disbursed Escrow Promissory Note will bear simple interest at the 8%; provided, further, however, that the Loan Rate with respect to the Secured Disbursed Escrow Promissory Note shall be 0% at all times when the aggregate outstanding principal amount of the Term Loan and the Revolving Loan (excluding the additional principal added pursuant to this proviso) is at or below $4,000. | |||||||||||
Loan and Security Agreement [Member] | Slipstream Communications, LLC [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Principal amount | $ 4,955 | |||||||||||
Borrowed loan | $ 1,000 | $ 1,100 | $ 3,000 | |||||||||
Convertible special loan, description | We entered into Special Loan as part of the Seventh Amendment under which we obtained $2,000, with interest thereon at 8% per annum payable 6% in cash and 2% via the issuance of SLPIK interest, provided however that upon occurrence of an event of default the interest rate shall automatically be increased by 6% per annum payable in cash. The entry into the Seventh Amendment adjusted the interest rate on the Company's Term Loan and Revolving Loan to 8% per annum, provided, however, at all times when the aggregate outstanding principal amount of the Term Loan and the Revolving Loan exceeds $4,100 then the Loan Rate shall be 10%, of which eight percent 8% shall be payable in cash and 2% shall be paid by the issuance of and treated as additional PIK. | |||||||||||
Term loan interest percentage | 8.00% | 8.00% | 8.00% | |||||||||
Terms of warrant | 5 years | 5 years | ||||||||||
Maturity date | Jan. 16, 2019 | Jan. 16, 2019 | ||||||||||
Warrants to purchase common stock | 61,729 | 143,791 | ||||||||||
Share price per share | $ 7.65 | $ 7.65 | ||||||||||
Fair value of warrants | $ 266 | $ 543 | ||||||||||
Interest rate, description | The aggregate outstanding principal amount of the Term Loan and the Revolving Loan (excluding the additional principal added pursuant to this proviso) exceeds $4,000 then the Loan Rate shall be 10%, of which eight percent 8% shall be payable in cash and 2% shall be paid by the issuance of and treated as additional principal of the Term Loan ("PIK"); provided, further, however, that the Loan Rate with respect to the Disbursed Escrow Loan shall be 0%. | |||||||||||
Convertible promissory note, description | Extended the maturity date of our term loan and revolver loan to August 16, 2020 through the Fifth Amendment to the Loan and Security Agreement. In conjunction with the extension of the maturity date of our term loan, we agreed that the interest rate would increase from 8.0% per annum to 10.0% per annum effective July 1, 2019. | We used proceeds from our common stock offering to repay Slipstream $1,283, inclusive of $125 of accrued interest, to reduce borrowings under the Loan and Security Agreement to an aggregate of $4,264, comprised of $3,000 term loan, $1,000 revolving loan and $264 secured disbursed escrow promissory note. The consolidated balance sheet includes $27 of accrued interest as of December 31, 2018 representing one month's interest at 8.0% on the $4,000 outstanding balance. | The conversion was contingent upon (i) the conversion of the Company's Series A Preferred Stock, and (ii) the successful completion of a Public Offering of at least $10,000, each of which were successfully completed on November 19, 2018. In exchange for participation in the Public Offering, subject to a minimum participation requirement as agreed between the underwriters and the Company, and Slipstream's execution of a lock-up agreement, Slipstream received, as a one-time incentive, additional common stock and warrants in such number that decreased the effective conversion price of the convertible notes to 70% of the lowest of those scenarios outlined above. | |||||||||
Adjusted per share price value | $ 8.10 | $ 8.09 | ||||||||||
Interest on convertible promissory note | 8.00% | 8.00% | ||||||||||
Share conversion price, description | Common stock and warrants at a conversion price equal to the lower of $7.65, or 80% of the price at which shares of common stock were sold in the Public Offering. | |||||||||||
Allure Global Solutions, Inc. [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Maturity date | Feb. 20, 2020 | |||||||||||
Seller note payable | [1] | $ 900 | ||||||||||
Estimated net working capital deficit | 801 | |||||||||||
Accounts payable to seller for outsourced services | $ 1,403 | |||||||||||
Promissory note accruing interest percent | 3.50% | 3.50% | ||||||||||
Initial conversion price | $ 8.40 | |||||||||||
Description of conversion of all amounts | Conversion of all amounts owing under the promissory note will be mandatory if the 30-day volume-weighted average price of our common stock exceeds 200% of the common stock trading price at the closing of the acquisition. | |||||||||||
Allure Global Solutions, Inc. [Member] | Stock Purchase Agreement [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Accounts payable to seller for outsourced services | $ 2,204 | |||||||||||
Long term seller note payable | $ 2,303 | |||||||||||
[1] | Represents a note payable due from Allure to Seller, under a pre-existing Seller Note which was amended and restated for this amount through the Stock Purchase Agreement. At the closing date, the estimated net working capital deficit of Allure was $801 in excess of the target net working capital as defined in the stock purchase agreement. As of the acquisition date, Allure also had accounts payable to Seller for outsourced services of $2,204. We agreed with the Seller to settle the estimated net working capital deficit through a reduction in the accounts payable to Seller as of the acquisition date and to further amend the Seller Note to include the remaining $1,403 accounts payable due from Allure to Seller. The Seller Note thereby increased from $900 per the Stock Purchase Agreement to $2,303 at the opening balance sheet. That debt is represented by our issuance to the Seller of a promissory note accruing interest at 3.5% per annum. The promissory note required us to make quarterly payments of interest through February 19, 2020, on which date the promissory note matured and all remaining amounts owing thereunder were due. See Note 10 Commitments and Contingencies in the consolidated financial statements for further discussion of this note, which is now past due. |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Oct. 10, 2019 | Aug. 10, 2017 | Aug. 10, 2017 | Dec. 21, 2018 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies (Textual) | |||||||
Accrue for the remaining rent under the lease term, net | $ 474 | ||||||
Recognized a gain on settlement | $ 39 | $ 2,046 | $ 294 | ||||
Sales commissions due to third party | 1,619 | ||||||
Settled and/or wrote off debt | 3,178 | 313 | |||||
Severance expense | $ 75 | $ 386 | |||||
Cash payments | $ 1,100 | 1,132 | 58 | ||||
Prior severance | $ 31 | ||||||
Accrued wage labor liabilities | $ 30 | ||||||
Mr. Walpuck’s Employment Agreement [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Severance expense | 220 | ||||||
Termination Benefits [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Cash payments | $ 355 | ||||||
Termination benefits, description | The Company entered into a separation agreement with Mr. Walpuck, the Company's former Chief Operating Officer. Mr. Walpuck and the Company agreed to a transition of Mr. Walpuck's duties commencing January 31, 2019. Mr. Walpuck began consulting for the Company commencing February 1, 2019, and such services ended May 1, 2019. Mr. Walpuck was paid $100 per hour, with a maximum of 80 hours each month during the term of the consulting arrangement. | ||||||
Allure [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Settlement for an alleged breach of contract | $ 3,200 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Aug. 14, 2018 | Sep. 20, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Related Party Transactions (Textual) | ||||
Related party entity owned percentage | 17.50% | |||
Related party entity, description | The payment agreement stipulated a simple interest rate of 12% on aged accounts receivable to be paid on the tenth day of each month through the maturity date of December 31, 2019. | We entered into the Special Loan as part of the Seventh Amendment of the Loan and Security Agreement with Slipstream, under which we obtained $2,000, with interest thereon at 8% per annum payable 6% in cash and 2% via the issuance of SLPIK interest, provided however that upon occurrence of an event of default the interest rate shall automatically be increased by 6% per annum payable in cash. See Note 9 Loans Payable for additional information regarding the loans. | ||
Accounts receivable | $ 4,663 | $ 6,479 | ||
Interest income | $ 118 | |||
33 Degrees Convenience Connect, Inc. [Member] | ||||
Related Party Transactions (Textual) | ||||
Related party entity owned percentage | 17.50% | |||
Repayment amount of related party transactions | $ 2,567 | |||
33 Degrees Menu Services, LLC [Member] | ||||
Related Party Transactions (Textual) | ||||
Related party entity, description | we had sales of $1,103 (3.5% of consolidated revenue) and $1,566 (6.9% of consolidated revenue), respectively, with 33 Degrees Convenience Connect, Inc., a related party that is approximately 17.5% owned by a member of our senior management ("33 Degrees"). | |||
Accounts receivable | $ 1 | $ 1 | $ 1,933 | |
Board of Directors [Member] | ||||
Related Party Transactions (Textual) | ||||
Related party entity, description | The Compensation Committee of the Board of Directors (1) adjusted the salary of Mr. Mills, CEO, to $330,000 annually, retroactive to January 1, 2018 and (2) granted 166,667 shares of common stock to Mr. Mills, CEO as compensation for his performance and direction of the Company since taking over as CEO in October 2015. The chart above reflects the fair value of the unrestricted shares which vested and received by Mr. Mills on the date the shares were formally issued, December 19, 2018 (133,333) and January 11, 2019 (33,334). |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Tax provision summary: | ||
State income tax | $ 46 | $ 23 |
Deferred tax benefit - federal | 17 | (454) |
Deferred tax expense – state | 30 | 33 |
Tax benefit | $ 93 | $ (398) |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | 21.00% | 21.00% |
State taxes, net of federal benefit | 9.85% | 1.36% |
Foreign rate differential | (9.69%) | 0.58% |
IRC 162(m) limitation | 0.00% | (0.63%) |
Meals and entertainment | 0.81% | 0.00% |
Discrete items, Transaction items, and Other | 44.05% | 239.77% |
Changes in valuation allowance | 57.76% | 258.44% |
Effective tax rate | 8.25% | 3.64% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets (liabilities): | ||
Reserves | $ 175 | $ 233 |
Property and equipment | (83) | 462 |
Accrued expenses | 265 | 822 |
Right-of-use Asset | (414) | |
Right-of-use Liability | 419 | |
Severance | 65 | |
IRC 163(j) Interest Deduction | 17 | 591 |
Non-qualified stock options | 528 | 336 |
R&D credits | 1,801 | 1,538 |
Net foreign carryforwards | 2,768 | 2,214 |
Net operating loss and credit carryforwards | 34,754 | 33,988 |
Intangibles | (1,128) | (672) |
Total deferred tax assets, net | 39,102 | 39,577 |
Valuation allowance | (39,277) | (39,705) |
Net deferred tax liabilities | $ (175) | $ (128) |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
U.S. statutory tax rates | 21.00% | 21.00% | ||
Income tax benefit | $ 200 | |||
Federal NOL carryforward for federal | $ 33,817 | |||
Foreign NOL carryforward | $ 2,768 | |||
Minimum [Member] | ||||
U.S. statutory tax rates | 35.00% | |||
Maximum [Member] | ||||
U.S. statutory tax rates | 21.00% |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 05, 2018 | Dec. 31, 2019 |
Preferred stock dividend entitles | 12.00% | |
Preferred stock dividend, payable semi-annually, description | The three-year anniversary of the initial investment date occurred during the second half of 2017 for $5,200 and the first quarter of 2018 for the remaining $300 originally issued preferred stock and therefore dividends on those investments will be paid via issuance of common shares at all future dividend dates. | |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock dividend entitles | 6.00% | |
Converted shares of stock conversion | 723,561 | |
Common stock at the conversion rate | $ 7.65 | |
Additional common stock and warrant, description | Those holders of preferred stock who executed a customary lock-up agreement for a period continuing for 90 days after the consummation of the public offering were issued, as a one-time incentive, additional common stock and warrants, in such number as defined in underlying agreements. The Company issued an additional 1,123,367 shares of common stock in exchange for execution of such lock-up agreements. | |
Common Stock [Member] | ||
Common stock at the conversion rate | $ 7.65 | |
Public offering cost | $ 10,000 |
Warrants (Details)
Warrants (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2019$ / shares | |
1/16/2018 [Member] | |
Schedule of warrant liabilities valuation is based on the Black-Scholes option pricing model | |
Expected Term at Issuance Date | 5 years |
Risk Free Interest Rate at Date of Issuance | 2.36% |
Volatility at Date of Issuance | 65.07% |
Stock Price at Date of Issuance | $ 7.80 |
4/27/2018 [Member] | |
Schedule of warrant liabilities valuation is based on the Black-Scholes option pricing model | |
Expected Term at Issuance Date | 5 years |
Risk Free Interest Rate at Date of Issuance | 2.80% |
Volatility at Date of Issuance | 65.95% |
Stock Price at Date of Issuance | $ 6.90 |
Warrants (Details 1)
Warrants (Details 1) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Minimum [Member] | |
Schedule of warrant liabilities valuation is based on the Black-Scholes option pricing model | |
Remaining Expected Term at Decemeber 31, 2019 | 1 month 16 days |
Maximum [Member] | |
Schedule of warrant liabilities valuation is based on the Black-Scholes option pricing model | |
Remaining Expected Term at Decemeber 31, 2019 | 3 years 11 months 1 day |
Issuance Date [Member] | |
Schedule of warrant liabilities valuation is based on the Black-Scholes option pricing model | |
Risk Free Interest Rate at Decemeber 31, 2019 | 1.69% |
Volatility at Decemeber 31, 2019 | 74.49% |
Stock Price at Decemeber 31, 2019 | $ 1.53 |
Warrants (Details 2)
Warrants (Details 2) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Warrants (Equity) [Member] | |
Class of Warrant or Right [Line Items] | |
Number of Shares, Warrants, Beginning Balance | shares | 4,815,047 |
Number of Shares, Warrants issued | shares | |
Number of Shares, Warrants expired | shares | (82,019) |
Number of Shares, Warrants, Ending Balance | shares | 4,733,028 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 4.90 |
Weighted Average Exercise Price, Warrants issued | $ / shares | |
Weighted Average Exercise Price, Warrants expired | $ / shares | 8.25 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 4.83 |
Weighted Average Remaining Contractual Life, Beginning Balance | 4 years 4 months 2 days |
Weighted Average Remaining Contractual Life, Ending Balance | 3 years 4 months 28 days |
Warrants (Liability) [Member] | |
Class of Warrant or Right [Line Items] | |
Number of Shares, Warrants, Beginning Balance | shares | 216,255 |
Number of Shares, Warrants issued | shares | |
Number of Shares, Warrants expired | shares | (216,255) |
Number of Shares, Warrants, Ending Balance | shares | |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 7.34 |
Weighted Average Exercise Price, Warrants issued | $ / shares | |
Weighted Average Exercise Price, Warrants expired | $ / shares | 7.34 |
Weighted Average Exercise Price, Ending Balance | $ / shares | |
Weighted Average Remaining Contractual Life, Beginning Balance | 7 months 21 days |
Warrants (Details Textual)
Warrants (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Jan. 16, 2018 | Nov. 19, 2018 | Oct. 29, 2018 | Apr. 27, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Warrants (Textual) | ||||||
Fair value of warrants on the issuance | $ (21) | $ (837) | ||||
Underwritten public offering shares | 653,062 | |||||
Slipstream Communications, Llc [Member] | Loan and Security Agreement [Member] | ||||||
Warrants (Textual) | ||||||
Revolving loan | $ 1,000 | $ 1,100 | ||||
Interest rate per annum | 8.00% | 8.00% | ||||
Maturity date | Jan. 16, 2019 | |||||
Warrant to purchase common stock | 61,729 | 143,791 | ||||
Price per share | $ 8.10 | $ 7.65 | ||||
Fair value of warrants on the issuance | $ 266 | $ 543 | ||||
Price per share subject to subsequent abjustment | $ 6.09 | $ 6.25 | ||||
IPO [Member] | ||||||
Warrants (Textual) | ||||||
Gross proceeds to public offering | $ 10,000 | |||||
Underwritten public offering shares | 2,857,142 | |||||
Common stock and warrants to purchase | 1,428,571 | |||||
Public offering price | $ 3.50 | |||||
Repayment of debt | $ 1,283 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Schedule of stock options outstanding and exercisable | |
Number Outstanding | shares | 313,860 |
Weighted Average Remaining Contractual Life | 6 years 3 months 29 days |
Weighted Average Exercise Price | $ 8.06 |
Options Exercisable | shares | 251,776 |
Range One [Member] | |
Schedule of stock options outstanding and exercisable | |
Range of Exercise Prices Between, Lower Limit | $ 0.01 |
Range of Exercise Prices between, Upper Limit | $ 5.39 |
Number Outstanding | shares | 25,000 |
Weighted Average Remaining Contractual Life | 9 years 10 months 10 days |
Weighted Average Exercise Price | $ 1.88 |
Options Exercisable | shares | |
Weighted Average Exercise Price | |
Range Two [Member] | |
Schedule of stock options outstanding and exercisable | |
Range of Exercise Prices Between, Lower Limit | 5.40 |
Range of Exercise Prices between, Upper Limit | $ 19.50 |
Number Outstanding | shares | 287,341 |
Weighted Average Remaining Contractual Life | 6 years 15 days |
Weighted Average Exercise Price | $ 8.35 |
Options Exercisable | shares | 250,257 |
Weighted Average Exercise Price | $ 8.45 |
Range Three [Member] | |
Schedule of stock options outstanding and exercisable | |
Range of Exercise Prices Between, Lower Limit | 19.51 |
Range of Exercise Prices between, Upper Limit | $ 23.70 |
Number Outstanding | shares | 1,000 |
Weighted Average Remaining Contractual Life | 4 years 15 days |
Weighted Average Exercise Price | $ 23.70 |
Options Exercisable | shares | 1,000 |
Weighted Average Exercise Price | $ 23.70 |
Range Four [Member] | |
Schedule of stock options outstanding and exercisable | |
Range of Exercise Prices Between, Lower Limit | 23.71 |
Range of Exercise Prices between, Upper Limit | $ 367.50 |
Number Outstanding | shares | 519 |
Weighted Average Remaining Contractual Life | 2 years 6 months 29 days |
Weighted Average Exercise Price | $ 112.30 |
Options Exercisable | shares | 519 |
Weighted Average Exercise Price | $ 112.30 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Schedule of stock option activity | |
Options Outstanding, Beginning balance | shares | 288,860 |
Options Outstanding, Granted | shares | 25,000 |
Options Outstanding, Exercised | shares | |
Options Outstanding, Forfeited or expired | shares | |
Options Outstanding, Ending balance | shares | 313,860 |
Weighted Average Exercise Price, Beginning balance | $ / shares | $ 8.59 |
Weighted Average Exercise Price, Granted | $ / shares | 1.88 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | |
Weighted Average Exercise Price, Ending balance | $ / shares | $ 8.06 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 2) | 12 Months Ended |
Dec. 31, 2019 | |
November 7, 2019 [Member] | |
Risk-free interest rate | 1.92% |
Expected term | 6 years 2 months 30 days |
Expected price volatility | 68.77% |
Dividend yield | 0.00% |
September 7 and September 20, 2018 [Member] | |
Risk-free interest rate, minimum | 2.82% |
Risk-free interest rate, maximum | 2.96% |
Expected term | 6 years 2 months 30 days |
Expected price volatility | 63.45% |
Dividend yield | 0.00% |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Nov. 07, 2019 | Sep. 07, 2018 | Sep. 20, 2018 | Oct. 31, 2014 | Dec. 31, 2019 | Dec. 31, 2018 |
Stock-Based Compensation (Textual) | ||||||
Weighted average remaining contractual life | 5 years 8 months 5 days | |||||
Options outstanding | 313,860 | 288,860 | ||||
Stock option expense recognize period | 3 years | |||||
Unrecognized compensation expense | $ 174 | |||||
Deferred revenue | $ 772 | $ 6,454 | ||||
Deemed granted shares | 25,000 | |||||
Recognized compensation expenses | $ 447 | 1,383 | ||||
Stock Compensation Plan [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Shares reserved for company's employees | 7,390,355 | |||||
Options outstanding | 301,674 | |||||
Stock Compensation Plan [Member] | Maximum [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Issuance of shares authorised | 18,000,000 | |||||
Stock Compensation Plan [Member] | Minimum [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Issuance of shares authorised | 7,390,355 | |||||
Two Thousand Six Equity Incentive Plan [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Shares reserved for company's employees | 1,720,000 | |||||
Options outstanding | 12,186 | |||||
Two Thousand Six Non Employee Director Stock Option Plan [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Shares reserved for company's employees | 700,000 | |||||
Chief Executive Officer [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Restricted Shares | 33,333 | |||||
Non-recurring compensation expense | $ 1,000 | |||||
Deemed granted shares | 133,334 | |||||
Recognized compensation expenses | $ 250 | |||||
Aggregate award shares of common stock | 166,667 | |||||
Exercise price | $ 7.50 | $ 7.50 | ||||
Recognition in accordance with GAAP | $ 6,200 | |||||
Officer [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Aggregate award shares of common stock | 33,334 | 16,667 | ||||
Options vesting period | 10 years | 10 years | ||||
Granted year of option | 4 years | 4 years | ||||
Exercise price | $ 7.50 | $ 7.50 | ||||
Fair value of options on grant date | $ 4.58 | $ 4.58 | ||||
Chief Operating Officer [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Unrecognized compensation expense | $ 35 | |||||
One Non-Employee Director [Member] | ||||||
Stock-Based Compensation (Textual) | ||||||
Aggregate award shares of common stock | 25,000 | |||||
Options vesting period | 10 years | |||||
Granted year of option | 3 years | |||||
Exercise price | $ 1.88 | |||||
Fair value of options on grant date | $ 1.19 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) | 1 Months Ended |
Aug. 09, 2017shares | |
Stockholders' Equity (Textual) | |
Repurchase shares of common stock | 166,667 |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Finance lease cost | |
Amortization of right-of-use assets | $ 32 |
Interest | 5 |
Operating lease cost | 736 |
Total lease cost | $ 773 |
Weighted Average Remaining Lease Term, Operating leases | 3 years 4 months 24 days |
Weighted Average Remaining Lease Term, Finance leases | 1 year 2 months 12 days |
Weighted Average Discount Rate, Operating leases | 10.00% |
Weighted Average Discount Rate, Finance leases | 13.64% |
Leases (Details 1)
Leases (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Maturities of lease liabilities | ||
Operating Leases, Lease liabilities, current | ||
Finance Leases, current | ||
Finance Leases [Member] | ||
Maturities of lease liabilities | ||
Finance Leases, 2020 | $ 23 | |
Finance Leases, 2021 | 4 | |
Finance Leases, 2022 | 1 | |
Finance Leases, 2023 | ||
Finance Leases, 2024 | ||
Finance Leases, Thereafter | ||
Total undiscounted cash flows | 28 | |
Finance Leases, Less imputed interest | (2) | |
Finance Leases, Present value of lease liabilities | 26 | |
Finance Leases, current | 21 | |
Finance Leases, non-current | 5 | |
Finance Leases, Present value of lease liabilities | 26 | |
Operating Leases [Member] | ||
Maturities of lease liabilities | ||
Operating Leases, 2020 | 681 | |
Operating Leases, 2021 | 630 | |
Operating Leases, 2022 | 377 | |
Operating Leases, 2023 | 375 | |
Operating Leases, 2024 | ||
Operating Leases, Thereafter | ||
Operating Leases, Total undiscounted cash flows | 2,063 | |
Operating Leases, Less imputed interest | (317) | |
Operating Leases, Present value of lease liabilities | 1,746 | |
Operating Leases, Lease liabilities, current | 646 | |
Operating Leases, Lease liabilities, non-current | 1,100 | |
Operating Leases, Present value of lease liabilities | $ 1,746 |
Leases (Details 2)
Leases (Details 2) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 719 |
Operating cash flows from finance leases | 1 |
Financing cash flows from finance leases | $ 31 |
Leases (Details 3)
Leases (Details 3) - Lease Obligations [Member] $ in Thousands | Dec. 31, 2018USD ($) |
2019 | $ 726 |
2020 | 613 |
2021 | 423 |
2022 | 374 |
Thereafter | 375 |
Total future minimum obligations | $ 2,511 |
Leases (Details Textual)
Leases (Details Textual) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Leases (Textual) | |
Rent expense | $ 488 |
Profit-Sharing Plan (Details)
Profit-Sharing Plan (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Profit Sharing Plan (Textual) | ||
Defined contribution retirement plans, description | Associates in the United States. Associates may contribute up to 15% of their pretax compensation to the plan subject to IRS limitations. Beginning on April 1, 2018, the Company began contributing an employer contribution match of 50% of employee wages up to 6%, for an effective match of 3%. The Company contributed $155 and $101 to employee 401(k) retirement plans for the year-ended December 31, 2019 and 2018, respectively. | |
Associates may contribute | 15.00% | |
Description of registered retirement savings plan | Associates in Canada. Associates may contribute up to 18% of earned income reported on their tax return in the previous year, subject to legal contribution limits. Beginning on April 1, 2018, the Company began contributing an employer contribution match of 50% of employee wages up to 6%, for an effective match of 3%. |
Segment Information and Signi_2
Segment Information and Significant Customers/Vendors (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)CustomersSegments | Dec. 31, 2018USD ($)Customers | |
Segment Information and Significant Customers/Vendors (Textual) | ||
Number of reportable segments | Segments | 1 | |
Related party entity owned percentage | 17.50% | |
Accounts Receivable [Member] | ||
Segment Information and Significant Customers/Vendors (Textual) | ||
Percent from major customers | 14.40% | 40.00% |
Accounts receivable due from the related party | $ | $ 1 | $ 1,933 |
Number of major customers | 1 | 2 |
Revenue [Member] | ||
Segment Information and Significant Customers/Vendors (Textual) | ||
Percent from major customers | 18.50% | 48.30% |
Number of major customers | 1 | 2 |
Accounts Payable [Member] | ||
Segment Information and Significant Customers/Vendors (Textual) | ||
Percent from major customers | 50.00% | 10.00% |
Number of major Vendor | 1 | |
Sales [Member] | ||
Segment Information and Significant Customers/Vendors (Textual) | ||
Percent from major customers | 3.50% | 6.90% |
Sales due from the related party | $ | $ 1,103 | $ 1,566 |