Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 07, 2021 | Jun. 30, 2020 | |
Document Information Line Items | |||
Entity Registrant Name | CREATIVE REALITIES, INC. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 11,743,667 | ||
Entity Public Float | $ 24,538,011 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001356093 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity File Number | 001-33169 | ||
Entity Incorporation, State or Country Code | MN | ||
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,826 | $ 2,534 |
Accounts receivable, net of allowance for doubtful accounts of $1,230 and $617, respectively | 2,302 | 4,663 |
Unbilled receivables | 41 | 86 |
Work-in-process and inventories, net | 2,351 | 379 |
Prepaids and other current assets | 507 | 320 |
Total current assets | 7,027 | 7,982 |
Operating lease right-of-use assets | 931 | 1,728 |
Property and equipment, net | 1,340 | 1,553 |
Intangibles, net | 3,790 | 4,407 |
Goodwill | 7,525 | 18,171 |
Other assets | 5 | 135 |
TOTAL ASSETS | 20,618 | 33,976 |
CURRENT LIABILITIES | ||
Short-term seller note payable | 1,637 | 1,637 |
Short-term related party convertible loans payable, at fair value | 2,000 | |
Accounts payable | 1,661 | 1,849 |
Accrued expenses | 2,142 | 2,751 |
Deferred revenues | 764 | 772 |
Customer deposits | 770 | 755 |
Current maturities of operating leases | 355 | 646 |
Current maturities of financing leases | 4 | 21 |
Total current liabilities | 7,333 | 10,431 |
Long-term Payroll Protection Program note payable | 1,552 | |
Long-term related party loans payable, net of $168 and $507 discount, respectively | 4,436 | 3,757 |
Long-term related party convertible loans payable, at fair value | 2,270 | |
Long-term obligations under operating leases | 584 | 1,100 |
Long-term obligations under financing leases | 5 | |
Long-term accrued expenses | 108 | |
Deferred tax liabilities | 175 | |
TOTAL LIABILITIES | 16,283 | 15,648 |
SHAREHOLDERS’ EQUITY | ||
Common stock, $0.01 par value, 200,000 shares authorized; 10,924 and 9,775 shares issued and outstanding, respectively | 109 | 98 |
Additional paid-in capital | 56,712 | 54,052 |
Accumulated deficit | (52,486) | (35,642) |
Total shareholders’ equity | 4,335 | 18,508 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 20,618 | $ 33,976 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance receivable, net (in Dollars) | $ 1,230 | $ 617 |
Loans payable, net (in Dollars) | $ 168 | $ 507 |
Common stock par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 10,924 | 9,775 |
Common stock, shares outstanding | 10,924 | 9,775 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Sales | ||
Hardware | $ 8,991 | $ 8,229 |
Services and other | 8,466 | 23,369 |
Total sales | 17,457 | 31,598 |
Cost of sales | ||
Hardware | 6,251 | 6,245 |
Services and other | 3,085 | 11,614 |
Total cost of sales | 9,336 | 17,859 |
Gross profit | 8,121 | 13,739 |
Operating expenses: | ||
Sales and marketing | 1,676 | 2,344 |
Research and development | 1,083 | 1,413 |
General and administrative | 9,293 | 9,092 |
Depreciation and amortization | 1,474 | 1,250 |
Lease termination expense | 18 | |
Goodwill impairment | 10,646 | |
Loss on disposal of fixed assets | 13 | |
Gain on reversal of earnout liability | (250) | |
Total operating expenses | 24,203 | 13,849 |
Operating loss | (16,082) | (110) |
Interest expense, including amortization of debt discount | (1,023) | (831) |
Change in fair value of warrant liability | 21 | |
Gain on settlement of obligations | 209 | 2,046 |
Loss on fair value of debt | (93) | |
Other income/(expense), net | (13) | 5 |
Total other income/(expense) | (920) | 1,241 |
Net income/(loss) before income taxes | (17,002) | 1,131 |
Income tax benefit/(expense) | 158 | (93) |
Net income/(loss) | $ (16,844) | $ 1,038 |
Net income/(loss) per common share - basic (in Dollars per share) | $ (1.65) | $ 0.11 |
Net income/(loss) per common share - diluted (in Dollars per share) | $ (1.65) | $ 0.11 |
Weighted average shares outstanding - basic (in Shares) | 10,195 | 9,748 |
Weighted average shares outstanding - diluted (in Shares) | 10,195 | 9,759 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders’ Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional paid in capital | Accumulated (Deficit) | Total |
Balance at Dec. 31, 2018 | $ 97 | $ 53,575 | $ (36,851) | $ 16,821 |
Balance (in Shares) at Dec. 31, 2018 | 9,724,826 | |||
Adjustment due to adoption of ASU 2016-02 | 171 | 171 | ||
Vesting of performance shares previously granted to CEO | 250 | 250 | ||
Shares issued for services | 30 | 30 | ||
Shares issued for services (in Shares) | 17,960 | |||
Shares issued to directors as compensation | $ 1 | 62 | 63 | |
Shares issued to directors as compensation (in Shares) | 31,760 | |||
Stock-based compensation | 135 | 135 | ||
Net income loss | 1,038 | 1,038 | ||
Balance at Dec. 31, 2019 | $ 98 | 54,052 | (35,642) | 18,508 |
Balance (in Shares) at Dec. 31, 2019 | 9,774,546 | |||
Shares issued to directors as compensation | $ 1 | 99 | 100 | |
Shares issued to directors as compensation (in Shares) | 88,073 | |||
Stock-based compensation | 620 | 620 | ||
Shares issued via at-the-market offering | $ 10 | 1,821 | 1,831 | |
Shares issued via at-the-market offering (in Shares) | 1,034,068 | |||
Exercise of warrants | 120 | 120 | ||
Exercise of warrants (in Shares) | 27,600 | |||
Net income loss | (16,844) | (16,844) | ||
Balance at Dec. 31, 2020 | $ 109 | $ 56,712 | $ (52,486) | $ 4,335 |
Balance (in Shares) at Dec. 31, 2020 | 10,924,287 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Activities: | ||
Net (loss)/income | $ (16,844) | $ 1,038 |
Adjustments to reconcile net income/(loss) to be used in operating activities: | ||
Depreciation and amortization | 1,474 | 1,217 |
Amortization of debt discount | 339 | 524 |
Stock-based compensation | 719 | 448 |
Shares issued for services | 30 | |
Change in warrant liability | (21) | |
Allowance for doubtful accounts | 613 | 253 |
Non-cash interest expense on related party loans | 517 | |
Deferred tax (benefit)/expense | (175) | 47 |
Gain on obligation settlement | (209) | (2,046) |
Loss on disposal of assets | 13 | |
Loss on fair value of debt | 93 | |
Goodwill impairment | 10,646 | |
Gain on reversal of earnout liability | (250) | |
Changes to operating assets and liabilities: | ||
Accounts receivable and unbilled receivables | 1,793 | 2,319 |
Inventories | (1,972) | |
Prepaid expenses and other current assets | (187) | 1,260 |
Other assets | 130 | 44 |
Operating lease right of use asset, net | 149 | 535 |
Accounts payable and other current payables | 3 | 284 |
Deferred revenue | (8) | (5,682) |
Accrued expenses, net | (502) | 1,474 |
Customer deposits | 15 | (1,924) |
Operating lease liabilities, net | (139) | (517) |
Other, net | 2 | (3) |
Net cash used in operating activities | (3,530) | (970) |
Investing activities | ||
Proceeds from net working capital settlement | 210 | |
Purchases/additions of property and equipment and software development | (657) | (897) |
Net cash used in investing activities | (657) | (687) |
Financing activities | ||
Proceeds from common stock issuance, net of issuance costs | 1,831 | |
Proceeds from related party loans | 2,000 | |
Proceeds from Payroll Protection Program loan | 1,552 | |
Principal payments on finance leases | (24) | (31) |
Repayment of seller note | (498) | |
Proceeds from warrant exercise into common stock | 120 | |
Other financing activities, net | 2 | |
Net cash provided by financing activities | 3,479 | 1,473 |
Decrease in Cash and Cash Equivalents | (708) | (184) |
Cash and Cash Equivalents, beginning of year | 2,534 | 2,718 |
Cash and Cash Equivalents, end of year | $ 1,826 | $ 2,534 |
Nature of Organization and Oper
Nature of Organization and Operations | 12 Months Ended |
Dec. 31, 2020 | |
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. Our main operations are conducted directly through Creative Realities, Inc., and under our wholly owned subsidiaries Allure Global Solutions, Inc., a Georgia corporation, and Creative Realities Canada, Inc., a Canadian corporation. Our other wholly owned subsidiaries, Creative Realities, LLC, a Delaware limited liability company, and ConeXus World Global, LLC, a Kentucky limited liability company, are effectively dormant. 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, 2020 and have negative cash flows from operating activities for both periods. As of December 31, 2020, we had cash and cash equivalents of $1,826 and a working capital deficit of $306. On January 11, 2021, Creative Realities, Inc. received a notice from Old National Bank regarding forgiveness of the loan in the principal amount of $1,552 (the “PPP Loan”) that was made pursuant to the Small Business Administration Paycheck Protection Program under the Coronavirus Air, Relief and Economic Security Act of 2020. According to such notice, the full principal amount of the PPP Loan and the accrued interest have been forgiven. Accounting for the forgiveness will be recognized in the first quarter of 2021. On February 18, 2021, the Company entered into a securities purchase agreement with an institutional investor which provided for the issuance and sale by the Company of 800,000 shares of the Company’s common stock (the “Shares”), in a registered direct offering (the “Offering”) at a purchase price of $2.50 per Share, for gross proceeds of $2,000. The net proceeds from the Offering after paying estimated offering expenses were approximately $1,835, which the Company intends to use for general corporate purposes. The closing of the Offering occurred on February 22, 2021. On March 7, 2021, the Company and Slipstream entered into an agreement to refinance the Company’s Loan and Security Agreement, including (1) the extension of all maturity dates therein to March 31, 2023, (2) the conversion of the Disbursed Escrow Promissory Note into equity, (3) access to an additional $1,000 via a multi-advance line of credit facility, and (4) the removal of the three times liquidation preference with respect to the Company’s Secured Convertible Special Loan Promissory Note. Management believes that, based on (i) the forgiveness of our PPP Loan, (ii) the execution of a registered direct offering and remaining availability for incremental offerings under our previously registered Form S-3, (iii) the refinancing of our debt, including extension of the maturity date on our term and convertible loans, as well as access to incremental borrowings under the new multi-advance line of credit, and (iv) our operational forecast through 2021, we can continue as a going concern through at least March 31, 2022. However, given our net losses, cash used in operating activities and working capital deficit, we obtained a continued support letter from Slipstream through March 31, 2022. 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 8 Loans Payable |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
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 8 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 intercompany 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 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 client 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. 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, typically ranging between thirty and ninety days. 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 clients. 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. The Company uses the practical expedient for recording an immediate expense for 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. 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, 2020 2019 Raw materials, net of reserve of $104 and $134, respectively $ 1,920 $ 200 Inventory on consignment with distributors 208 - Work-in-process 223 179 Total inventories $ 2,351 $ 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, including stock options with performance restricted vesting, and warrants totaling approximately 7,040,709 and 5,046,888 at December 31, 2020 and 2019, respectively were excluded from the computation of income/(loss) per share as all options and warrants were anti-dilutive due to the net loss in 2020 and no options or warrants were in the money for 2019. In calculating diluted earnings per share for the years ended December 31, 2020 and 2019, in accordance with ASC 260 Earnings per share 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, 2020 and December 31, 2019. 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 an annual measurement date of September 30 (see Note 7 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, valuation allowances related to deferred taxes, the fair value of acquired assets and liabilities, the fair value of liabilities reliant upon the appraised fair value of the Company, 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. 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, 2020 and 2019: December 31, 2020 2019 Equipment $ 81 $ 83 Leasehold improvements 135 136 Purchased and developed software 3,167 2,563 Furniture and fixtures 119 102 Other depreciable assets 56 65 Total property and equipment 3,558 2,949 Less: accumulated depreciation and amortization (2,218 ) (1,396 ) Net property and equipment $ 1,340 $ 1,553 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 $837 and $564 for the years ended December 31, 2020 and 2019, 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 $603 and $805 for the years ended December 31, 2020 and 2019, 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 We account for leases in accordance with ASU No. 2016-02, Leases We determine if an arrangement is a lease at inception. Right of use (“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, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE 3: RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Recently adopted On January 1, 2020, we adopted ASU 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract On January 1, 2020, we adopted ASU No. 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820) Not yet adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06) |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2020 | |
Revenue Recognition [Abstract] | |
REVENUE RECOGNITION | NOTE 4: REVENUE RECOGNITION The Company applies ASC 606 for revenue recognition. The following table disaggregates the Company’s revenue by major source for the years ended December 31, 2020 and 2019: (in thousands) Year Year Hardware $ 8,991 $ 8,229 Services: Installation Services 2,537 7,500 Software Development Services 549 9,303 Managed Services 5,380 6,566 Total Services 8,466 23,369 Total Hardware and Services $ 17,457 $ 31,598 System hardware sales System hardware 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. System hardware revenues are classified as “Hardware” within our disaggregated revenue. Installation services The Company performs outsourced installation services for customers and recognizes revenue upon completion of the installations. Installation services also includes engineering services performed as part of an installation project. 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. Installation services revenues are classified as “Installation Services” within our disaggregated revenue. 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 design and development revenues are classified as “Software Development Services” within our disaggregated revenue. 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. Contracts for these services are generally 12-36 months in length. We account for revenue from these services in accordance with ASC 985-20-15-5 and recognize revenue ratably over the performance period. Software as a service revenue are classified as “Managed Services” within our disaggregated revenue. 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 revenues are classified as “Managed Services” within our disaggregated revenue. 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. 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. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | NOTE 5: FAIR VALUE MEASUREMENT We measure certain financial assets, including cash equivalents, at fair value on a recurring basis. In accordance with ASC 820-10-30, 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 820-10-35 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. All of the Company’s outstanding warrants classified as liabilities expired during 2019. As part of the Allure Acquisition, the Purchase Agreement contemplated additional consideration of $2,000 to be paid by us to Christie Digital Systems, USA (“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 in November 2019, we recorded an adjustment to reflect the earnout liability to $0. The liability was deemed to be Level 3 as the valuation is based on revenue projections and estimates developed by management as informed by historical results. The liability was confirmed to be $0 at December 31, 2020 as metrics were not achieved for additional consideration through the year-end date. As discussed in Note 7 Intangible Assets, Including Goodwill As discussed in Note 8 Loans Payable |
Supplemental Cash Flow Statemen
Supplemental Cash Flow Statement Information | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Statement Information [Abstract] | |
SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION | NOTE 6: SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION Year Ended December 31, 2020 2019 Supplemental disclosure information for cash flow Cash paid during the period for: Interest $ 140 $ 403 Income taxes, net $ 19 $ 25 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | NOTE 7: INTANGIBLE ASSETS AND GOODWILL Intangible Assets Intangible assets consisted of the following at December 31, 2020 and December 31, 2019: December 31, December 31, 2020 2019 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Technology platform $ 4,635 3,400 $ 4,635 3,147 Customer relationships 5,330 2,870 5,330 2,679 Trademarks and trade names 1,020 925 1,020 752 10,985 7,195 10,985 6,578 Accumulated amortization 7,195 6,578 Net book value of amortizable intangible assets $ 3,790 $ 4,407 For the years ended December 31, 2020 and 2019, amortization of intangible assets charged to operations was $617 and $654, respectively. Estimated amortization is as follows: Year ending December 31, Estimated Future Amortization 2021 $ 544 2022 444 2023 444 2024 444 Thereafter 1,914 Intangible assets include the following and are being amortized over their estimated useful lives as follows: Acquired Intangible Asset: Amortization Technology platform and patents 7 Trademark 3 Customer relationships 15 Goodwill The following is a rollforward of the Company’s goodwill since December 31, 2019: Total Balance as of January 1, 2020 $ 18,171 Goodwill impairment (10,646 ) Balance as of December 31, 2020 $ 7,525 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. Interim Impairment Assessment – March 31, 2020 Despite the excess fair value identified in our 2019 annual impairment assessment, we determined that the reduced cash flow projections and the significant decline in our market capitalization as a result of the COVID-19 pandemic during the three months ended March 31, 2020 indicated that an impairment loss may have been incurred during the first quarter. Therefore, we qualitatively assessed whether it was more likely than not that the goodwill was impaired as of March 31, 2020. We reviewed our previous forecasts and assumptions based on our current projections that are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the duration and extent of impact to our business and our alliance partners from the COVID-19 pandemic, (2) current discount rates, (3) the reduction in our market capitalization, (5) changes to the regulatory environment and (6) the nature and amount of government support that will be provided. As a result of this qualitative assessment, we concluded that indicators of impairment were present and that a quantitative interim impairment assessment of our goodwill was necessary as of March 31, 2020. As a result of the adoption of ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment The fair value of the reporting unit was estimated via the income approach. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for our industry. Actual results may differ from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and by analyzing published rates relevant to our business to estimate the cost of equity financing. We use discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in our internally developed forecasts. We utilized a discount rate of 14.5% in our valuation completed as of March 31, 2020. While our outlook for the digital signage industry over the long term remains strong, we have experienced rapid and immediate deterioration in our short term business as a result of the COVID-19 pandemic, generating increased uncertainty across our customer base in many of our key vertical markets. The elective and forced closures of businesses across the United States has resulted in reduced demand for our services, which primarily assist business in engaging with their end customers in a physical space through digital technology. The elimination and minimization of public gatherings has materially impacted demand for products and services in our movie theater, sports arena and large entertainment markets. These conditions resulted in downward revisions of our internal forecasts on current and future projected earnings and cash flows, leading to an implied fair value of goodwill substantially below the carrying value. Therefore, during the three months ended March 31, 2020, we recorded a non-cash impairment loss of $10,646. We recorded the estimated impairment losses in the caption “Goodwill impairment” in our Consolidated Statement of Operations. Annual Impairment Assessment – September 30, 2020 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, 2020. Given the proximity in time to the most recent goodwill impairment, which marked the Company’s goodwill balance down to fair value, the Company anticipated its analysis would result in a thin margin in the percentage of excess fair value over carrying value as of the assessment date. Through the analysis performed as of September 30, 2020, the excess fair value over carrying value was approximately 7%. 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, 2020. The Company recognizes that any changes in our projected 2021 and future 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 further 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, 2020 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE | NOTE 8: LOANS PAYABLE The outstanding debt with detachable warrants, as applicable, are shown in the table below. Further discussion of the notes follows. As of December 31, 2020 Debt Type Issuance Principal Maturity Warrants Interest Rate Information A 6/30/2018 $ 264 N/A - 0.0% interest B 1/16/2018 1,085 3/31/2023 61,729 10.0% interest (1) C 8/17/2016 3,255 3/31/2023 588,236 10.0% interest (1) D 11/19/2018 1,637 2/15/2020 - 3.5% interest E 12/30/2019 2,177 3/31/2023 - 10.0% interest (2) F 4/27/2020 1,552 4/27/2022 (3) - 1.0% interest (3) Total debt, gross 9,970 649,965 Fair value (E) 93 Total debt, gross 10,063 Debt discount (168 ) Total debt, net $ 9,895 Less current maturities (1,637 ) Long term debt 8,258 As of December 31, 2019 Debt Type Issuance Principal Maturity Warrants Interest Rate Information A 6/30/2018 $ 264 6/30/2021 - 0.0% interest B 1/16/2018 1,000 6/30/2021 61,729 8.0% interest C 8/17/2016 3,000 6/30/2021 588,236 8.0% interest D 11/19/2018 1,637 2/15/2020 - 3.5% interest E 12/30/2019 2,000 6/30/2021 - 8.0% interest $ 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 – Secured Revolving Promissory Note 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 F – Paycheck Protection Program Loan from Small Business Administration (1) 8.0% cash interest per annum through March 31, 2020. 10.0% paid-in-kind interest (“PIK”) interest per annum from April 1, 2020 through December 31, 2020. 8.0% cash interest per annum January 1, 2021 through the maturity date. (2) 8.0% cash interest per annum, comprised of 6.0% cash, 2.0% PIK through March 31, 2020. 10.0% PIK interest per annum through September 30, 2020. In an event of default, the interest rate increases by 6.0% to 16.0%. Debt is automatically convertible to a new class of senior preferred stock of the Company at the earlier of an event of default or November 30, 2020. The principal, including PIK interest, as of December 31, 2020 is $2,177; however, fair value accounting for the convertible debt instrument results in an additional $93 of debt recorded on the Consolidated Balance Sheet as of December 31, 2020 related to this instrument. (3) 1,0% cash interest per annum. Payments are deferred for six months from the date of the Promissory Note and the Company can apply for forgiveness of the Promissory Note after 60 days. SBA Paycheck Protection Program Loan On April 27, 2020, the Company entered into a Promissory Note with Old National Bank (the “Promissory Note”), which provided for an unsecured loan of $1,552 pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”). The Promissory Note has a term of two years with a 1% per annum interest rate. While the Promissory Note currently has a two-year term, the amended law permits the Company to request a five-year maturity from Old National Bank. Payments are deferred for six months from the date of the Promissory Note and the Company can apply for forgiveness of the Promissory Note after 60 days. On January 11, 2021, Creative Realities, Inc. received a notice from Old National Bank regarding forgiveness of the loan in the principal amount of $1,552 (the “PPP Loan”) that was made pursuant to the Small Business Administration Paycheck Protection Program under the Coronavirus Air, Relief and Economic Security Act of 2020. According to such notice, the full principal amount of the PPP Loan and the accrued interest have been forgiven. Accounting for the forgiveness will be recognized in the first quarter of 2021. Amended and Restated Loan and Security Agreement On March 7, 2021, the Company and its subsidiaries (collectively, the “Borrowers”) refinanced their current debt facilities with Slipstream Communications, LLC (“Slipstream”), pursuant to an Amended and Restated Credit and Security Agreement (the “Credit Agreement”). The debt facilities continue to be fully secured by all assets of the Borrowers. The maturity date (“Maturity Date”) on the outstanding debt and new debt is extended to March 31, 2023. The Credit Agreement (i) provides a $1,000 of availability under a line of credit (the “Line of Credit”), (ii) consolidates our existing term and revolving line of credit facilities into a new term loan (the “New Term Loan”) having an aggregate principal balance of approximately $4,550 (including a 3.0% issuance fee capitalized into the principal balance), (iii) increases the outstanding special convertible term loan (the “Convertible Loan”) to approximately $2,280 (including a 3.0% issuance fee capitalized into the principal balance), and (iv) extinguishes the outstanding obligations owed with respect to a $264 existing disbursed escrow loan in exchange for shares of the Company’s common stock (the “Disbursed Escrow Conversion Shares”), valued at $2.718 per share (the trailing 10-day VWAP as reported on the Nasdaq Capital Market as of the date of execution of the Credit Agreement). The Line of Credit and Convertible Loan accrue interest at 10% per year, and the New Term Loan accrues interest at 8% per year. The New Term Loan requires no principal payments until the Maturity Date, and interest payments are payable on the first day of each month until the Maturity Date. All interest payments owed prior to October 1, 2021 are payable as PIK payments, or increases to the principal balance only. The Line of Credit and Convertible Loan require payments of accrued interest payable on the first day of each month through April 1, 2022. All such interest payments made prior to October 1, 2021 are payable as PIK payments, or increases to the principal balances under the Line of Credit and Convertible Loan only. No principal payments are owed under the Line of Credit or Convertible Loan until April 1, 2022, at which time all principal and interest on each of the Line of Credit and Convertible Loan will be paid in monthly installments until the Maturity Date to fully amortize outstanding principal by the Maturity Date. All payments of interest (other than PIK payments) and principal on the Line of Credit and Convertible Loan may be paid, in the Borrowers’ sole discretion, in shares of the Company’s Common Stock (the “Payment Shares,” and together with the Disbursed Escrow Conversion Shares, the “Shares”). The Payment Shares will be valued on a per-Share basis at 70% of the VWAP of the Company’s shares of common stock as reported on the Nasdaq Capital Market for the 10 trading days immediately prior to the date such payment is due; provided that the Payment Shares shall not be valued below $0.50 per Share (the “Share Price”). The Credit Agreement limits the Company’s ability to issue Shares as follows (the “Exchange Limitations”): (1) The total number of Shares that may be issued under the Credit Agreement will be limited to 19.99% of the Company’s outstanding shares of common stock on the date the Credit Agreement is signed (the “Exchange Cap”), unless stockholder approval is obtained to issue shares in excess of the Exchange Cap; (2) if Slipstream and its affiliates (the “Slipstream Group”) beneficially own the largest ownership position of shares of Company common stock immediately prior to the proposed issuance of Payment Shares and such shares are less than 19.99% of the then-issued and outstanding shares of Company common stock, the issuance of such Payment Shares will not cause the Slipstream Group to beneficially own in excess of 19.99% of the issued and outstanding shares of Company common stock after such issuance unless stockholder approval is obtained for ownership in excess of 19.99%; and (3) if the Slipstream Group does not beneficially own the largest ownership position of shares of Company common stock immediately prior to the proposed issuance of Payment Shares, the Company may not issue Payment Shares to the extent that such issuance would result in Slipstream Group beneficially owning more than 19.99% of the then issued and outstanding shares of Company common stock unless (A) such ownership would not be the largest ownership position in the Company, or (B) stockholder approval is obtained for ownership in excess of 19.99%. Accounting for the Credit Agreement is anticipated to be accounted for as a debt extinguishment in the first quarter of 2021. Entry into the Credit Agreement prior to the filing of this report resulted in the reclassification of approximately $6,706, net of debt discount, from current maturities to long term debt. Loan and Security Agreement History On August 17, 2016, the Company entered into a Loan and Security Agreement with Slipstream (“Loan and Security Agreement”). Since the initial entry into the Loan and Security Agreement in 2016, the Company has entered into several financing arrangements with varying interest rates, maturity dates, and number of associated detachable warrants, each entered within the structure of the Loan and Security Agreement. The debt instruments outstanding under the Loan and Security Agreement as of December 31, 2020 include the Term Loan, Secured Revolving Promissory Note, Secured Disbursed Escrow Promissory Note, and the Special Loan. The Loan and Security Agreement 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. Obligations under the loan and security agreement are secured by a grant of collateral security in all of the tangible assets of Creative Realities, Inc. and each of its wholly owned subsidiaries. Ninth, Tenth, Eleventh, Twelfth, and Thirteenth Amendment; Modification of Conversion Date of Special Loan under Loan and Security Agreement On February 28, 2021, January 31, 2021, December 31, 2020, November 30, 2020, and September 29, 2020, the Company entered into several amendments to Loan and Security Agreement with its subsidiaries and Slipstream to amend the automatic conversion date of the Special Loan. Each amendment extended the automatic conversion date of the Special Loan, which was ultimately Amended and Restated in full on March 7, 2021 as discussed further above. The Company paid no fees in exchange for these extensions. Eighth Amendment; Modification of Interest Rates under Loan and Security Agreement On April 1, 2020, the Company entered into an Eighth Amendment to Loan and Security Agreement (the “Eighth Amendment”) with its subsidiaries and Slipstream to amend the terms of the payments and interest accruing on the Company’s Term Loan, Secured Revolving Promissory Note, and Special Loan. The Eighth Amendment increased the interest rates of these loans from 8% to 10%, effective April 1, 2020. Until January 1, 2021, rather than cash payments of accrued interest under the term and revolving loans, interest will be paid by the issuance of and treated as additional principal thereunder. Commencing January 2, 2021, such interest will be payable in cash. Interest on the special loan will no longer be paid in cash, but by the issuance of and treated as additional principal thereunder. Upon entry into the Eighth Amendment, the Company completed an analysis of the changes in the Loan and Security Agreement within ASC 470 Debt Seventh Amendment; Entry into Secured Convertible Special Loan 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 the Company (“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 the Company and Slipstream, the New Preferred shall: ● be the most senior equity security of the Company, including with respect to the payment of dividends and other distributions; ● be on substantially the same terms and conditions as the Company’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 the Company and the Slipstream 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 the Company’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 Sixth Amendment; Extension of Maturity Dates 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 Secured Revolving Promissory Note with the Secured Disbursed Escrow Promissory Note. Secured Disbursed Escrow Promissory Note 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 bears no interest. Upon entry into the Restated Agreement on March 7, 2021, this note was converted into Company common stock, which will be recorded during the first quarter of 2021. 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 matured and all remaining amounts owing thereunder became 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 Allure 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. The Company continues to accrue interest on the Amended and Restated Seller Note and have included $67 in accrued expenses in the Consolidated Financial Statements as of December 31, 2020. See Note 9 Commitments and Contingencies |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9: COMMITMENTS AND CONTINGENCIES Litigation 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 remains in the early stages of litigation, in part due to delays resulting from the COVID-19 pandemic, 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 Allure 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. In December 2020, the parties entered a pre-arbitration mediation process in an effort to settle the litigation, which remains ongoing as of the date of this report. We continue to assert the offset right under the Purchase Agreement and Amended and Reseller Note. Except as noted above, the Company is not party to any other material legal proceedings, other than ordinary routine litigation incidental to the business, and there were no other such proceedings pending during the period covered by this Report. Settlement of obligations During the year ended December 31, 2020, the Company settled and/or wrote off obligations of $348 for aggregate cash payments of $139 and recognized a gain of $209 related to legacy accounts payable deemed to no longer be legal obligations to vendors. 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. Employee-related Expenses We implemented cost-control measures in light of the effect of the COVID-19 pandemic on our business, including employment compensation reductions designed to achieve preliminary cost savings. On March 19, 2020, the Company’s Board of Directors approved a six-month reduction of the salaries of our Chief Executive Officer and Chief Financial Officer by twenty percent (20%), thereby reducing the salaries payable to such officers in 2020 to $297,000 and $224,100, respectively. The reduction of the salaries of our Chief Executive Officer and Chief Financial Officer remain active as of the date of this report. On March 20, 2020, we completed a reduction-in-force and accrued one-time termination benefits related to severance to the affected employees of $135, the total of which was paid during the three months ended June 30, 2020. Pursuant to certain employee-related actions taken in 2018, the Company made cash payments of approximately $555 during the year ended December 31, 2019 that were previously accrued. Lease termination On December 31, 2020, we exited our office facilities located in Dallas, TX. In ceasing use of these facilities, we recorded a one-time non-cash charge of $18. There were no such lease terminations during 2019. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10: RELATED PARTY TRANSACTIONS In addition to the financing transactions with Slipstream, a related party, discussed in Note 8 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. Following repayment of the note, 33 Degrees has continued to purchase additional hardware and services from the Company under normal payment terms. For the years ended December 31, 2020 and 2019, we had sales of $1,058 (6.1% of consolidated sales) and $1,103 (3.5% of consolidated sales), respectively, with 33 Degrees. Accounts receivable due from 33 Degrees was $40, or 1.2%, and $1, or 0% of consolidated accounts receivable at December 31, 2020 and December 31, 2019, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11: INCOME TAXES Income tax benefit/(expense) consisted of the following: Year ended December 31, 2020 2019 Tax provision summary: State income tax $ (17 ) $ (46 ) Deferred tax benefit/(expense) - federal 150 (17 ) Deferred tax benefit/(expense) – state 25 (30 ) Tax benefit/(expense) $ 158 $ (93 ) The income tax 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. 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: 2020 2019 Federal statutory rate 21.00 % 21.00 % State taxes, net of federal benefit 1.53 % 9.85 % Foreign rate differential 0.51 % -9.69 % Discrete items, Transaction items, and Other -7.00 % 44.85 % Changes in valuation allowance -15.11 % -57.76 % Effective tax rate 0.93 % 8.25 % 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, 2020 2019 Deferred tax assets (liabilities): Reserves $ 318 $ 175 Property and equipment (40 ) (83 ) Accrued expenses 326 265 Right-of-use Asset (147 ) (414 ) Right-of-use Liability 149 419 IRC 163(j) Interest Deduction 18 17 Non-qualified stock options 675 528 R&D credits 1,801 1,801 Net foreign carryforwards 3,106 2,768 US net operating loss and credit carryforwards 35,566 34,754 Intangibles (13 ) (1,128 ) Total deferred tax assets, net 41,759 39,102 Valuation allowance (41,759 ) (39,277 ) Net deferred tax liabilities $ - $ (175 ) As of December 31, 2020, the Corporation had no reserves recorded as a liability for unrecognized tax benefits for U.S. federal and state tax jurisdictions. There were no unrecognized tax benefits as of December 31, 2020 that, if recognized, would affect the tax rate. It is the Corporation’s policy to accrue interest and penalties related to liabilities for income tax contingencies in the provision for income taxes. As of December 31, 2020, the Corporation had no accrued interest or penalties related to uncertain tax positions. Our deferred tax assets are primarily related to net federal and state operating loss carryforwards (NOLs). As of December 31, 2020, the Company has federal and state net operating loss carryforwards expiring between 2020 and 2039, $7,924 of which has an indefinite carryforward period. The federal statute of limitations remains open for tax years 2017 through 2019 and state tax jurisdictions generally have statutes of limitations open for tax years 2016 through 2019. We have substantial NOLs that are limited in 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. The goodwill impairment recorded March 31, 2020 altered the deferred tax impact associated with indefinite lived goodwill from a deferred tax liability to a deferred tax asset. As the indefinite-lived intangibles can no longer provide a source of income, a full valuation allowance was placed against the deferred tax assets. We have performed a preliminary analysis of the annual NOL carryforwards and limitations that are available to be used against taxable income. 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. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2020 | |
Warrant Disclosure [Abstract] | |
WARRANTS | NOTE 12: WARRANTS A summary of outstanding warrants for the years ended December 31, 2020 and 2019 is included below: Year Ended December 31, 2020 Warrants (Equity) Amount Weighted Average Exercise Price Weighted Average Remaining Contractual Life Balance January 1, 2020 4,733,028 $ 4.83 3.41 Warrants issued - - - Warrants exercised (27,600 ) 4.38 - Warrants expired (278,528 ) 7.08 - Balance December 31, 2020 4,426,900 $ 4.62 2.83 Year Ended December 31, 2019 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, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 13: STOCK-BASED COMPENSATION A summary of outstanding options is included below: Time Vesting Options Weighted Average Weighted Weighted Remaining Average Average Range of Exercise Number Contractual Exercise Options Exercise Prices between Outstanding Life Price Exercisable Price $0.01 - $3.00 1,525,000 9.41 $ 2.52 8,333 $ 1.88 $3.01 - $7.50 184,830 5.34 $ 6.72 168,163 $ 6.64 $7.51+ 103,979 4.44 11.74 99,187 $ 11.89 1,813,809 8.71 $ 3.48 275,683 Performance Vesting Options Weighted Average Weighted Weighted Remaining Average Average Range of Exercise Number Contractual Exercise Options Exercise Prices between Outstanding Life Price Exercisable Price $0.01 - $3.00 800,000 9.42 $ 2.53 - $ - 800,000 9.42 $ 2.53 - Time Vesting Options Performance Vesting Options Weighted Weighted Average Average Options Exercise Options Exercise Date/Activity Outstanding Price Outstanding Price Balance, December 31, 2019 313,860 $ 8.06 - $ - Granted 1,580,000 2.53 800,000 2.53 Exercised - - - - Forfeited or expired (80,051 ) 2.76 - - Balance, December 31, 2020 1,813,809 3.48 800,000 $ 2.53 The weighted average remaining contractual life for options exercisable is 5.2 years as of December 31, 2020. Valuation Information for Stock-Based Compensation For purposes of determining estimated fair value under FASB ASC 718-10, Stock Compensation On June 1, 2020 the Board of Directors of the Company granted 10-year options to purchase an aggregate of 2,380,000 shares of its common stock to employees of the Company subject to shareholder approval of an increase in the reserve of shares authorized for issuance under the Company’s 2014 Stock Incentive Plan (the “Plan”). On July 10, 2020, the Company held a special meeting of the Company’s shareholders at which the shareholders approved the amendment to the Plan, which increased the reserve of shares authorized for issuance thereunder to 6,000,000 shares. Of the 2,380,000 options awarded, 1,580,000 vest over 3 years and have an exercise price of $2.53, the market value of the Company’s common stock on the grant date. The fair value of the options on the grant date was $1.87 and was determined using the Black-Scholes model. These values were calculated using the following weighted average assumptions: Risk-free interest rate 0.66 % Expected term 6.25 years Expected price volatility 89.18 % Dividend yield 0 % The remaining 800,000 options awarded vest in equal installments over a three-year period subject to satisfying the Company revenue target and earnings before interest, taxes, depreciation and amortization (“EBITDA”) target for the applicable year. In each of calendar years 2020, 2021 and 2022, one-third of the total shares may vest (if the revenue and EBITDA targets are met), and the shares that are subject to vesting each year are allocated equally to each of the revenue and EBITDA targets for such year. These performance options include a catch-up provision, where any options that did not vest during a prior year due to the Company’s failure to meet a prior revenue or EBITDA target may vest in a subsequent vesting year if the revenue or EBITDA target, as applicable, is met in the future year. The revenue and EBITDA targets for the following three years are as follows: Calendar Year Revenue Target EBITDA Target 2020 $32 million $2.2 million 2021 $35 million $3.1 million 2022 $38 million $3.5 million The exercise price of the foregoing options is $2.53 per share, the closing price of the Company’s common stock on the date of issuance. The options were issued from the Company’s 2014 Stock Incentive Plan. The fair value of the options on the grant date was $1.87 and was determined using the Black-Scholes model. These values were calculated using the same weighted average assumptions as the time vesting options issued. Performance against the identified revenue and EBITDA targets will be assessed quarterly by the Company in order to determine whether any compensation expense should be recorded. As of December 31, 2020, the Company had recorded no compensation expense in the Consolidated Statement of Operations with respect to these awards. 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. Following a 1-for-30 reverse stock split, the shares authorized for issuance under the Company’s 2014 Stock Incentive Plan was reduced to 600,000. On July 10, 2020, the Company’s shareholders approved an amendment to the Company’s 2014 Stock Incentive Plan to increase the reserve of authorized for issuance thereunder to 6,000,000. There are 2,601,674 options outstanding under the 2014 Stock Incentive Plan. Compensation expense recognized for the issuance of stock options, including those options awarded to our Chairman of the Board, for the years ended December 31, 2020 and 2019 of $718 and $448, respectively, was included in general and administrative expense in the Consolidated Financial Statements. Amounts recorded include stock compensation expense for awards granted to directors of the Company in exchange for services at fair value, including $100 and $63, respectively, for the years ended December 31, 2020 and December 31, 2019, respectively. At December 31, 2020, there was approximately $2,365 and $1,499 of total unrecognized compensation expense related to unvested share-based awards with time vesting and performance vesting criteria, respectively. Generally, expense related to the time vesting options will be recognized over the next two- and one-half years and will be adjusted for any future forfeitures as they occur. Compensation expense related to performance vesting options will be recognized if it becomes probable that the Company will achieve the identified performance metrics. At December 31, 2019, there was approximately $174 of total unrecognized compensation expense related to unvested share-based awards with time vesting. 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. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block [Abstract] | |
LEASES | NOTE 14: LEASES We adopted ASU No. 2016-02, 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 2021 and 2025. 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 Year Ended Finance lease cost Amortization of right-of-use assets $ 20 $ 32 Interest 2 5 Operating lease cost 626 736 Total lease cost $ 648 $ 773 Weighted Average Remaining Lease Term Operating leases 3.8 years 3.4 years Finance leases 0.9 years 1.2 years Weighted Average Discount Rate Operating leases 10.0 % 10.0 % Finance leases 14.0 % 13.6 % The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2020: (in thousands) Operating Finance 2021 $ 377 $ 4 2022 294 - 2023 291 - 2024 81 - Thereafter 74 - Total undiscounted cash flows 1,117 4 Less imputed interest (178 ) - Present value of lease liabilities 939 4 Lease liabilities, current 355 4 Lease liabilities, non-current 584 - Present value of lease liabilities $ 939 $ 4 Supplemental cash flow information related to leases are as follows: (in thousands) Year Ended Year Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 627 $ 719 Operating cash flows from finance leases 2 1 Financing cash flows from finance leases 24 31 |
Profit-Sharing Plan
Profit-Sharing Plan | 12 Months Ended |
Dec. 31, 2020 | |
Profit-Sharing Plan [Abstract] | |
PROFIT-SHARING PLAN | NOTE 15: 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 indefinitely suspended the employer match at the end of March 2020 in response to the uncertainty of the COVID-19 pandemic. 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%. The Company indefinitely suspended the employer match at the end of March 2020 in response to the uncertainty of the COVID-19 pandemic. The Company contributed $35 and $155 to employee retirement plans for the year-ended December 31, 2020 and 2019, respectively. |
Segment Information and Signifi
Segment Information and Significant Customers/Vendors | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION AND SIGNIFICANT CUSTOMERS/VENDORS | NOTE 16: 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, 2020 and 2019 were in the United States and Canada. Significant Customers We had two (2) and one (1) customer(s) that accounted for 27.8% and 18.5% of revenue for the years ended December 31, 2020 and 2019, respectively. For the years ended December 31, 2020 and 2019, we had sales of $1,058 (6.1% of consolidated sales) and $1,103 (3.5% 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 two (2) and one (1) customer(s) that in the aggregate accounted for 42.6% and 14.4% of accounts receivable as of December 31, 2020 and December 31, 2019, respectively. Accounts receivable due from 33 Degrees was $40 and $1 at December 31, 2020 and 2019, respectively. Significant Vendors We had two (2) and one (1) vendor(s) that accounted for 46.8% and 50% of outstanding accounts payable at December 31, 2020 and December 31, 2019, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17: SUBSEQUENT EVENTS Payroll Protection Program Loan On January 11, 2021, Creative Realities, Inc. received a notice from Old National Bank regarding forgiveness of the loan in the principal amount of $1,552 (the “PPP Loan”) that was made pursuant to the Small Business Administration Paycheck Protection Program under the Coronavirus Air, Relief and Economic Security Act of 2020. According to such notice, the full principal amount of the PPP Loan and the accrued interest have been forgiven. Accounting for the forgiveness will be recognized in the first quarter of 2021. Registered Direct Offering On February 18, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor which provided for the issuance and sale by the Company of 800,000 shares of the Company’s common stock (the “Shares”), in a registered direct offering (the “Offering”) at a purchase price of $2.50 per Share, for gross proceeds of $2,000. The net proceeds from the Offering after paying estimated offering expenses were approximately $1,835, which the Company intends to use for general corporate purposes. The closing of the Offering occurred on February 22, 2021. Debt Refinancing On March 7, 2021, the Company and its subsidiaries (collectively, the “Borrowers”) refinanced their current debt facilities with Slipstream Communications, LLC (“Slipstream”), pursuant to an Amended and Restated Credit and Security Agreement (the “Credit Agreement”). The debt facilities continue to be fully secured by all assets of the Borrowers. The maturity date (“Maturity Date”) on the outstanding debt and new debt is extended to March 31, 2023. The Credit Agreement (i) provides a $1,000 of availability under a line of credit (the “Line of Credit”), (ii) consolidates our existing term and revolving line of credit facilities into a new term loan (the “New Term Loan”) having an aggregate principal balance of approximately $4,550 (including a 3.0% issuance fee capitalized into the principal balance), (iii) increases the outstanding special convertible term loan (the “Convertible Loan”) to approximately $2,280 (including a 3.0% issuance fee capitalized into the principal balance), and (iv) extinguishes the outstanding obligations owed with respect to a $264 existing disbursed escrow loan in exchange for shares of the Company’s common stock (the “Disbursed Escrow Conversion Shares”), valued at $2.718 per share (the trailing 10-day VWAP as reported on the Nasdaq Capital Market as of the date of execution of the Credit Agreement). The Line of Credit and Convertible Loan accrue interest at 10% per year, and the New Term Loan accrues interest at 8% per year. See Note 8 Loans Payable |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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 8 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 intercompany 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 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 client 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. 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, typically ranging between thirty and ninety days. 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 clients. 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. The Company uses the practical expedient for recording an immediate expense for 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. |
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, 2020 2019 Raw materials, net of reserve of $104 and $134, respectively $ 1,920 $ 200 Inventory on consignment with distributors 208 - Work-in-process 223 179 Total inventories $ 2,351 $ 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, including stock options with performance restricted vesting, and warrants totaling approximately 7,040,709 and 5,046,888 at December 31, 2020 and 2019, respectively were excluded from the computation of income/(loss) per share as all options and warrants were anti-dilutive due to the net loss in 2020 and no options or warrants were in the money for 2019. In calculating diluted earnings per share for the years ended December 31, 2020 and 2019, in accordance with ASC 260 Earnings per share |
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, 2020 and December 31, 2019. |
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 an annual measurement date of September 30 (see Note 7 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, valuation allowances related to deferred taxes, the fair value of acquired assets and liabilities, the fair value of liabilities reliant upon the appraised fair value of the Company, 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. |
Property and Equipment | 9. 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, 2020 and 2019: December 31, 2020 2019 Equipment $ 81 $ 83 Leasehold improvements 135 136 Purchased and developed software 3,167 2,563 Furniture and fixtures 119 102 Other depreciable assets 56 65 Total property and equipment 3,558 2,949 Less: accumulated depreciation and amortization (2,218 ) (1,396 ) Net property and equipment $ 1,340 $ 1,553 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 $837 and $564 for the years ended December 31, 2020 and 2019, 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 $603 and $805 for the years ended December 31, 2020 and 2019, 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 We account for leases in accordance with ASU No. 2016-02, Leases We determine if an arrangement is a lease at inception. Right of use (“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_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of inventories | December 31, December 31, 2020 2019 Raw materials, net of reserve of $104 and $134, respectively $ 1,920 $ 200 Inventory on consignment with distributors 208 - Work-in-process 223 179 Total inventories $ 2,351 $ 379 |
Schedule of property and equipment | December 31, 2020 2019 Equipment $ 81 $ 83 Leasehold improvements 135 136 Purchased and developed software 3,167 2,563 Furniture and fixtures 119 102 Other depreciable assets 56 65 Total property and equipment 3,558 2,949 Less: accumulated depreciation and amortization (2,218 ) (1,396 ) Net property and equipment $ 1,340 $ 1,553 |
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, 2020 | |
Revenue Recognition [Abstract] | |
Schedule of revenue by major source | (in thousands) Year Year Hardware $ 8,991 $ 8,229 Services: Installation Services 2,537 7,500 Software Development Services 549 9,303 Managed Services 5,380 6,566 Total Services 8,466 23,369 Total Hardware and Services $ 17,457 $ 31,598 |
Supplemental Cash Flow Statem_2
Supplemental Cash Flow Statement Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Statement Information [Abstract] | |
Schedule of supplemental cash flow information | Year Ended December 31, 2020 2019 Supplemental disclosure information for cash flow Cash paid during the period for: Interest $ 140 $ 403 Income taxes, net $ 19 $ 25 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | December 31, December 31, 2020 2019 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Technology platform $ 4,635 3,400 $ 4,635 3,147 Customer relationships 5,330 2,870 5,330 2,679 Trademarks and trade names 1,020 925 1,020 752 10,985 7,195 10,985 6,578 Accumulated amortization 7,195 6,578 Net book value of amortizable intangible assets $ 3,790 $ 4,407 |
Schedule of estimated amortization | Year ending December 31, Estimated Future Amortization 2021 $ 544 2022 444 2023 444 2024 444 Thereafter 1,914 |
Schedule of estimated useful lives | Acquired Intangible Asset: Amortization Technology platform and patents 7 Trademark 3 Customer relationships 15 |
Schedule of goodwill | Total Balance as of January 1, 2020 $ 18,171 Goodwill impairment (10,646 ) Balance as of December 31, 2020 $ 7,525 |
Loans Payable (Tables)
Loans Payable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt with detachable warrants | As of December 31, 2020 Debt Type Issuance Principal Maturity Warrants Interest Rate Information A 6/30/2018 $ 264 N/A - 0.0% interest B 1/16/2018 1,085 3/31/2023 61,729 10.0% interest (1) C 8/17/2016 3,255 3/31/2023 588,236 10.0% interest (1) D 11/19/2018 1,637 2/15/2020 - 3.5% interest E 12/30/2019 2,177 3/31/2023 - 10.0% interest (2) F 4/27/2020 1,552 4/27/2022 (3) - 1.0% interest (3) Total debt, gross 9,970 649,965 Fair value (E) 93 Total debt, gross 10,063 Debt discount (168 ) Total debt, net $ 9,895 Less current maturities (1,637 ) Long term debt 8,258 As of December 31, 2019 Debt Type Issuance Principal Maturity Warrants Interest Rate Information A 6/30/2018 $ 264 6/30/2021 - 0.0% interest B 1/16/2018 1,000 6/30/2021 61,729 8.0% interest C 8/17/2016 3,000 6/30/2021 588,236 8.0% interest D 11/19/2018 1,637 2/15/2020 - 3.5% interest E 12/30/2019 2,000 6/30/2021 - 8.0% interest $ 7,901 649,965 Debt discount (507 ) Total debt $ 7,394 Less current maturities (3,637 ) Long term debt 3,757 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax provision | Year ended December 31, 2020 2019 Tax provision summary: State income tax $ (17 ) $ (46 ) Deferred tax benefit/(expense) - federal 150 (17 ) Deferred tax benefit/(expense) – state 25 (30 ) Tax benefit/(expense) $ 158 $ (93 ) |
Schedule of reconciliation statutory income tax | 2020 2019 Federal statutory rate 21.00 % 21.00 % State taxes, net of federal benefit 1.53 % 9.85 % Foreign rate differential 0.51 % -9.69 % Discrete items, Transaction items, and Other -7.00 % 44.85 % Changes in valuation allowance -15.11 % -57.76 % Effective tax rate 0.93 % 8.25 % |
Schedule of the deferred tax assets and liabilities | December 31, 2020 2019 Deferred tax assets (liabilities): Reserves $ 318 $ 175 Property and equipment (40 ) (83 ) Accrued expenses 326 265 Right-of-use Asset (147 ) (414 ) Right-of-use Liability 149 419 IRC 163(j) Interest Deduction 18 17 Non-qualified stock options 675 528 R&D credits 1,801 1,801 Net foreign carryforwards 3,106 2,768 US net operating loss and credit carryforwards 35,566 34,754 Intangibles (13 ) (1,128 ) Total deferred tax assets, net 41,759 39,102 Valuation allowance (41,759 ) (39,277 ) Net deferred tax liabilities $ - $ (175 ) |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Warrant Disclosure [Abstract] | |
Schedule of outstanding equity warrants | Year Ended December 31, 2020 Warrants (Equity) Amount Weighted Average Exercise Price Weighted Average Remaining Contractual Life Balance January 1, 2020 4,733,028 $ 4.83 3.41 Warrants issued - - - Warrants exercised (27,600 ) 4.38 - Warrants expired (278,528 ) 7.08 - Balance December 31, 2020 4,426,900 $ 4.62 2.83 Year Ended December 31, 2019 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, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock options outstanding | Time Vesting Options Weighted Average Weighted Weighted Remaining Average Average Range of Exercise Number Contractual Exercise Options Exercise Prices between Outstanding Life Price Exercisable Price $0.01 - $3.00 1,525,000 9.41 $ 2.52 8,333 $ 1.88 $3.01 - $7.50 184,830 5.34 $ 6.72 168,163 $ 6.64 $7.51+ 103,979 4.44 11.74 99,187 $ 11.89 1,813,809 8.71 $ 3.48 275,683 Performance Vesting Options Weighted Average Weighted Weighted Remaining Average Average Range of Exercise Number Contractual Exercise Options Exercise Prices between Outstanding Life Price Exercisable Price $0.01 - $3.00 800,000 9.42 $ 2.53 - $ - 800,000 9.42 $ 2.53 - |
Schedule of stock option activity | Time Vesting Options Performance Vesting Options Weighted Weighted Average Average Options Exercise Options Exercise Date/Activity Outstanding Price Outstanding Price Balance, December 31, 2019 313,860 $ 8.06 - $ - Granted 1,580,000 2.53 800,000 2.53 Exercised - - - - Forfeited or expired (80,051 ) 2.76 - - Balance, December 31, 2020 1,813,809 3.48 800,000 $ 2.53 |
Schedule of fair value of the options | Risk-free interest rate 0.66 % Expected term 6.25 years Expected price volatility 89.18 % Dividend yield 0 % |
Schedule of revenue and EBITDA targets | Calendar Year Revenue Target EBITDA Target 2020 $32 million $2.2 million 2021 $35 million $3.1 million 2022 $38 million $3.5 million |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Schedule of components of lease costs, lease term and discount rate | (in thousands) Year Ended Year Ended Finance lease cost Amortization of right-of-use assets $ 20 $ 32 Interest 2 5 Operating lease cost 626 736 Total lease cost $ 648 $ 773 Weighted Average Remaining Lease Term Operating leases 3.8 years 3.4 years Finance leases 0.9 years 1.2 years Weighted Average Discount Rate Operating leases 10.0 % 10.0 % Finance leases 14.0 % 13.6 % |
Schedule of maturities of lease liabilities | (in thousands) Operating Finance 2021 $ 377 $ 4 2022 294 - 2023 291 - 2024 81 - Thereafter 74 - Total undiscounted cash flows 1,117 4 Less imputed interest (178 ) - Present value of lease liabilities 939 4 Lease liabilities, current 355 4 Lease liabilities, non-current 584 - Present value of lease liabilities $ 939 $ 4 |
Schedule of cash flow information related to leases | (in thousands) Year Ended Year Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 627 $ 719 Operating cash flows from finance leases 2 1 Financing cash flows from finance leases 24 31 |
Nature of Organization and Op_2
Nature of Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 07, 2021 | Feb. 18, 2021 | Jan. 11, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Nature of Organization and Operations (Details) [Line Items] | ||||||
Cash and cash equivalents | $ 1,826 | $ 2,534 | $ 2,718 | |||
Working capital deficit | $ 306 | |||||
Loan and security agreement, description | the Company and Slipstream entered into an agreement to refinance the Company’s Loan and Security Agreement, including (1) the extension of all maturity dates therein to March 31, 2023, (2) the conversion of the Disbursed Escrow Promissory Note into equity, (3) access to an additional $1,000 via a multi-advance line of credit facility, and (4) the removal of the three times liquidation preference with respect to the Company’s Secured Convertible Special Loan Promissory Note. | |||||
Subsequent Event [Member] | ||||||
Nature of Organization and Operations (Details) [Line Items] | ||||||
Principal amount | $ 1,552 | |||||
Issuance and sale of shares (in Shares) | 800,000 | |||||
Purchase price (in Dollars per share) | $ 2.50 | |||||
Gross proceeds | $ 2,000 | |||||
Deferred offering costs | $ 1,835 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Depreciation | $ 837 | $ 564 |
Capitalized Computer Software, Gross | $ 603 | $ 805 |
Stock options and warrants [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Outstanding stock options and warrants (in Shares) | 7,040,709 | 5,046,888 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of inventories - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of inventories [Abstract] | ||
Raw materials, net of reserve of $104 and $134, respectively | $ 1,920 | $ 200 |
Inventory on consignment with distributors | 208 | |
Work-in-process | 223 | 179 |
Total inventories | $ 2,351 | $ 379 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 3,558 | $ 2,949 |
Less: accumulated depreciation and amortization | (2,218) | (1,396) |
Net property and equipment | 1,340 | 1,553 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 81 | 83 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 135 | 136 |
Purchased and developed software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 3,167 | 2,563 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 119 | 102 |
Other depreciable assets [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 56 | $ 65 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives used to compute depreciation and amortization | 12 Months Ended |
Dec. 31, 2020 | |
Equipment [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives used to compute depreciation and amortization [Line Items] | |
Property and equipment estimated useful lives | 3 years |
Equipment [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives used to compute depreciation and amortization [Line Items] | |
Property and equipment estimated useful lives | 5 years |
Furniture and fixtures [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives used to compute depreciation and amortization [Line Items] | |
Property and equipment estimated useful lives | 5 years |
Purchased and developed software [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives used to compute depreciation and amortization [Line Items] | |
Property and equipment estimated useful lives | 3 years |
Leasehold improvements [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives used to compute depreciation and amortization [Line Items] | |
Property and equipment estimated useful lives, description | 5 |
Revenue Recognition (Details) -
Revenue Recognition (Details) - Schedule of revenue by major source - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||
Hardware | $ 8,991 | $ 8,229 |
Total Services | 8,466 | 23,369 |
Total Hardware and Services | 17,457 | 31,598 |
Installation Services [Member] | ||
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||
Total Services | 2,537 | 7,500 |
Software Development Services [Member] | ||
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||
Total Services | 549 | 9,303 |
Managed Services [Member] | ||
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||
Total Services | $ 5,380 | $ 6,566 |
Fair Value Measurement (Details
Fair Value Measurement (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Fair Value Measurement (Details) [Line Items] | |
Stock purchase agreement, description | the Purchase Agreement contemplated additional consideration of $2,000 to be paid by us to Christie Digital Systems, USA (“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 in November 2019, we recorded an adjustment to reflect the earnout liability to $0. |
Fair Value, Inputs, Level 3 [Member] | |
Fair Value Measurement (Details) [Line Items] | |
Warrant liabilities | $ 0 |
Fair value estimate | $ 93 |
Supplemental Cash Flow Statem_3
Supplemental Cash Flow Statement Information (Details) - Schedule of supplemental cash flow information - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid during the period for: | ||
Interest | $ 140 | $ 403 |
Income taxes, net | $ 19 | $ 25 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Intangible Assets and Goodwill (Details) [Line Items] | ||||
Amortization of intangible assets | $ 617 | $ 654 | ||
Discount rate | 14.50% | |||
Excess fair value over carrying value | 7.00% | |||
Goodwill impairment [Member] | ||||
Intangible Assets and Goodwill (Details) [Line Items] | ||||
Non-cash impairment loss | $ 10,646 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill (Details) - Schedule of intangible assets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 10,985 | $ 10,985 |
Accumulated Amortization | 7,195 | 6,578 |
Accumulated amortization | 7,195 | 6,578 |
Net book value of amortizable intangible assets | 3,790 | 4,407 |
Technology platform [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,635 | 4,635 |
Accumulated Amortization | 3,400 | 3,147 |
Accumulated amortization | 3,400 | 3,147 |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,330 | 5,330 |
Accumulated Amortization | 2,870 | 2,679 |
Accumulated amortization | 2,870 | 2,679 |
Trademarks and trade names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,020 | 1,020 |
Accumulated Amortization | 925 | 752 |
Accumulated amortization | $ 925 | $ 752 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill (Details) - Schedule of estimated amortization $ in Thousands | Dec. 31, 2020USD ($) |
Schedule of estimated amortization [Abstract] | |
2021 | $ 544 |
2022 | 444 |
2023 | 444 |
2024 | 444 |
Thereafter | $ 1,914 |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill (Details) - Schedule of estimated useful lives | 12 Months Ended |
Dec. 31, 2020 | |
Technology platform and patents [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization period | 7 years |
Trademark [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization period | 3 years |
Customer relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization period | 15 years |
Intangible Assets and Goodwil_6
Intangible Assets and Goodwill (Details) - Schedule of goodwill $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Schedule of goodwill [Abstract] | |
Balance as of January 1, 2020 | $ 18,171 |
Goodwill impairment | (10,646) |
Balance as of December 31, 2020 | $ 7,525 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Mar. 07, 2021 | Dec. 30, 2019 | Nov. 06, 2019 | Jun. 30, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 01, 2020 |
Loans Payable (Details) [Line Items] | |||||||
Convertible promissory note, description | (1) 8.0% cash interest per annum through March 31, 2020. 10.0% paid-in-kind interest (“PIK”) interest per annum from April 1, 2020 through December 31, 2020. 8.0% cash interest per annum January 1, 2021 through the maturity date. (2) 8.0% cash interest per annum, comprised of 6.0% cash, 2.0% PIK through March 31, 2020. 10.0% PIK interest per annum through September 30, 2020. In an event of default, the interest rate increases by 6.0% to 16.0%. Debt is automatically convertible to a new class of senior preferred stock of the Company at the earlier of an event of default or November 30, 2020. The principal, including PIK interest, as of December 31, 2020 is $2,177; however, fair value accounting for the convertible debt instrument results in an additional $93 of debt recorded on the Consolidated Balance Sheet as of December 31, 2020 related to this instrument. (3) 1,0% cash interest per annum. Payments are deferred for six months from the date of the Promissory Note and the Company can apply for forgiveness of the Promissory Note after 60 days. SBA Paycheck Protection Program Loan On April 27, 2020, the Company entered into a Promissory Note with Old National Bank (the “Promissory Note”), which provided for an unsecured loan of $1,552 pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”). The Promissory Note has a term of two years with a 1% per annum interest rate. While the Promissory Note currently has a two-year term, the amended law permits the Company to request a five-year maturity from Old National Bank. Payments are deferred for six months from the date of the Promissory Note and the Company can apply for forgiveness of the Promissory Note after 60 days. On January 11, 2021, Creative Realities, Inc. received a notice from Old National Bank regarding forgiveness of the loan in the principal amount of $1,552 (the “PPP Loan”) that was made pursuant to the Small Business Administration Paycheck Protection Program under the Coronavirus Air, Relief and Economic Security Act of 2020. According to such notice, the full principal amount of the PPP Loan and the accrued interest have been forgiven. Accounting for the forgiveness will be recognized in the first quarter of 2021. | ||||||
Payment share percentage | 70.00% | ||||||
Share Price (in Dollars per share) | $ 0.50 | ||||||
Share conversion price, description | The Credit Agreement limits the Company’s ability to issue Shares as follows (the “Exchange Limitations”): (1) The total number of Shares that may be issued under the Credit Agreement will be limited to 19.99% of the Company’s outstanding shares of common stock on the date the Credit Agreement is signed (the “Exchange Cap”), unless stockholder approval is obtained to issue shares in excess of the Exchange Cap; (2) if Slipstream and its affiliates (the “Slipstream Group”) beneficially own the largest ownership position of shares of Company common stock immediately prior to the proposed issuance of Payment Shares and such shares are less than 19.99% of the then-issued and outstanding shares of Company common stock, the issuance of such Payment Shares will not cause the Slipstream Group to beneficially own in excess of 19.99% of the issued and outstanding shares of Company common stock after such issuance unless stockholder approval is obtained for ownership in excess of 19.99%; and (3) if the Slipstream Group does not beneficially own the largest ownership position of shares of Company common stock immediately prior to the proposed issuance of Payment Shares, the Company may not issue Payment Shares to the extent that such issuance would result in Slipstream Group beneficially owning more than 19.99% of the then issued and outstanding shares of Company common stock unless (A) such ownership would not be the largest ownership position in the Company, or (B) stockholder approval is obtained for ownership in excess of 19.99%. | ||||||
Long-term Debt, Current Maturities | $ 6,706,000 | ||||||
Convertible special loan, description | ● be the most senior equity security of the Company, including with respect to the payment of dividends and other distributions; ● be on substantially the same terms and conditions as the Company’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 the Company and the Slipstream 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 the Company’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. | ||||||
Vesting of performance shares previously granted to CEO | $ 250,000 | ||||||
Long term seller note payable | $ 4,436,000 | $ 3,757,000 | |||||
Accrued expenses | 67,000 | ||||||
Loss from special loan | 93 | ||||||
Minimum [Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Loan interest rate | 8.00% | ||||||
Maximum [Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Loan interest rate | 10.00% | ||||||
Allure Global Solutions, Inc. [Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Estimated net working capital deficit | 801,000 | ||||||
Accounts payable to seller for outsourced services | $ 1,403,000 | ||||||
Promissory note accruing interest percent | 3.50% | ||||||
Initial conversion price (in Dollars per share) | $ 8.40 | ||||||
Common stock trading price percentage | 200.00% | ||||||
Stock Purchase Agreement [Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Cost of reduced | $ 900 | ||||||
Stock Purchase Agreement [Member] | Allure Global Solutions, Inc. [Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Accounts payable to seller for outsourced services | 2,204,000 | ||||||
Long term seller note payable | $ 2,303,000 | ||||||
Slipstream Communications, LLC [Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Convertible promissory note, description | (i) provides a $1,000 of availability under a line of credit (the “Line of Credit”), (ii) consolidates our existing term and revolving line of credit facilities into a new term loan (the “New Term Loan”) having an aggregate principal balance of approximately $4,550 (including a 3.0% issuance fee capitalized into the principal balance), (iii) increases the outstanding special convertible term loan (the “Convertible Loan”) to approximately $2,280 (including a 3.0% issuance fee capitalized into the principal balance), and (iv) extinguishes the outstanding obligations owed with respect to a $264 existing disbursed escrow loan in exchange for shares of the Company’s common stock (the “Disbursed Escrow Conversion Shares”), valued at $2.718 per share (the trailing 10-day VWAP as reported on the Nasdaq Capital Market as of the date of execution of the Credit Agreement). The Line of Credit and Convertible Loan accrue interest at 10% per year, and the New Term Loan accrues interest at 8% per year. | ||||||
Vesting of performance shares previously granted to CEO | $ 264,000 | ||||||
Slipstream Communications, LLC [Member] | Seventh Amendment Loan and Security Agreement[Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Convertible special loan, description | 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 $4,100 then the Loan Rate shall be 10%, of which eight percent 8% shall be payable in cash and 2% shall be paid by the issuance of and treated as additional PIK | ||||||
Slipstream Communications, LLC [Member] | Seventh Amendment Loan and Security Agreement[Member] | |||||||
Loans Payable (Details) [Line Items] | |||||||
Convertible special loan, description | On November 6, 2019, Slipstream extended the maturity date of our term loan and revolver loan to June 30, 2021 through the Sixth Amendment to the Loan and Security Agreement, aligning the maturity date of our Term Loan and Secured Revolving Promissory Note with the Secured Disbursed Escrow Promissory Note. |
Loans Payable (Details) - Sched
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | |||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | ||||
Principal | $ 9,970 | $ 7,901 | ||
Warrants | 649,965 | 649,965 | ||
Fair value | $ 93 | |||
Total debt, gross | 10,063 | |||
Debt discount | (168) | $ (507) | ||
Total debt, net | 9,895 | 7,394 | ||
Less current maturities | (1,637) | (3,637) | ||
Long term debt | $ 8,258 | $ 3,757 | ||
6/30/2018 [Member] | ||||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | ||||
Debt Type | [1] | A | A | |
Issuance Date | Jun. 30, 2018 | Jun. 30, 2018 | ||
Principal | $ 264 | $ 264 | ||
Maturity Date | Jun. 30, 2021 | |||
Warrants | ||||
Interest Rate Information | 0.00% | 0.00% | ||
1/16/2018 [Member] | ||||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | ||||
Debt Type | [2] | B | B | |
Issuance Date | Jan. 16, 2018 | Jan. 16, 2018 | ||
Principal | $ 1,085 | $ 1,000 | ||
Maturity Date | Mar. 31, 2023 | Jun. 30, 2021 | ||
Warrants | 61,729 | 61,729 | ||
Interest Rate Information | 10.00% | [3] | 8.00% | |
8/17/2016 [Member] | ||||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | ||||
Debt Type | [4] | C | C | |
Issuance Date | Aug. 17, 2016 | Aug. 17, 2016 | ||
Principal | $ 3,255 | $ 3,000 | ||
Maturity Date | Mar. 31, 2023 | Jun. 30, 2021 | ||
Warrants | 588,236 | 588,236 | ||
Interest Rate Information | 10.00% | [3] | 8.00% | |
11/19/2018 [Member] | ||||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | ||||
Debt Type | [5] | D | D | |
Issuance Date | Nov. 19, 2018 | Nov. 19, 2018 | ||
Principal | $ 1,637 | $ 1,637 | ||
Maturity Date | Feb. 15, 2020 | Feb. 15, 2020 | ||
Warrants | ||||
Interest Rate Information | 3.50% | 3.50% | ||
12/30/2019 [Member] | ||||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | ||||
Debt Type | [6] | E | E | |
Issuance Date | Dec. 30, 2019 | Dec. 30, 2019 | ||
Principal | $ 2,177 | $ 2,000 | ||
Maturity Date | Mar. 31, 2023 | Jun. 30, 2021 | ||
Warrants | ||||
Interest Rate Information | 10.00% | [7] | 8.00% | |
4/27/2020 [Member] | ||||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | ||||
Debt Type | [8] | F | ||
Issuance Date | Apr. 27, 2020 | |||
Principal | $ 1,552 | |||
Maturity Date | [9] | Apr. 27, 2022 | ||
Warrants | ||||
Interest Rate Information | [9] | 1.00% | ||
[1] | Secured Disbursed Escrow Promissory Note with related party | |||
[2] | Secured Revolving Promissory Note with related party | |||
[3] | 8.0% cash interest per annum through March 31, 2020. 10.0% paid-in-kind interest (“PIK”) interest per annum from April 1, 2020 through December 31, 2020. 8.0% cash interest per annum January 1, 2021 through the maturity date. | |||
[4] | Term Loan with related party | |||
[5] | Amended and Restated Seller Note from acquisition of Allure | |||
[6] | Secured Convertible Special Loan Promissory Note, at fair value | |||
[7] | 8.0% cash interest per annum, comprised of 6.0% cash, 2.0% PIK through March 31, 2020. 10.0% PIK interest per annum through September 30, 2020. In an event of default, the interest rate increases by 6.0% to 16.0%. Debt is automatically convertible to a new class of senior preferred stock of the Company at the earlier of an event of default or November 30, 2020. The principal, including PIK interest, as of December 31, 2020 is $2,177; however, fair value accounting for the convertible debt instrument results in an additional $93 of debt recorded on the Consolidated Balance Sheet as of December 31, 2020 related to this instrument. | |||
[8] | Paycheck Protection Program Loan from Small Business Administration | |||
[9] | 1,0% cash interest per annum. Payments are deferred for six months from the date of the Promissory Note and the Company can apply for forgiveness of the Promissory Note after 60 days. |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Mar. 20, 2020 | Mar. 19, 2020 | Oct. 10, 2019 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies (Details) [Line Items] | ||||||
Settled and/or wrote off debt | $ 348 | $ 3,178 | ||||
Cash payments | $ 1,100 | 139 | 1,132 | |||
Recognized a gain on settlement | $ 209 | 2,046 | ||||
Sales Commissions and Fees | 1,619 | |||||
Termination benefits, description | On March 19, 2020, the Company’s Board of Directors approved a six-month reduction of the salaries of our Chief Executive Officer and Chief Financial Officer by twenty percent (20%), thereby reducing the salaries payable to such officers in 2020 to $297,000 and $224,100, respectively. | |||||
Severance expense | $ 135 | |||||
Non-cash charges of lease | 18 | |||||
Termination Benefits [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Cash payments | $ 555 | |||||
Allure [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Settlement for an alleged breach of contract | $ 3,200 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Aug. 14, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions (Details) [Line Items] | |||
Related party entity owned percentage | 17.50% | ||
Repayment of related party | $ 2,567 | ||
Accounts receivable | $ 2,302 | $ 4,663 | |
33 Degrees [Member] | |||
Related Party Transactions (Details) [Line Items] | |||
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. As of December 31, 2019, 33 Degrees paid the note in full. | For the years ended December 31, 2020 and 2019, we had sales of $1,058 (6.1% of consolidated sales) and $1,103 (3.5% of consolidated sales), respectively, with 33 Degrees. Accounts receivable due from 33 Degrees was $40, or 1.2%, and $1, or 0% of consolidated accounts receivable at December 31, 2020 and December 31, 2019, respectively. | |
Accounts receivable | $ 40 | $ 1 | |
Concentration credit risk percentage | 1.20% | 0.00% |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforward, description | the Company has federal and state net operating loss carryforwards expiring between 2020 and 2039, $7,924 of which has an indefinite carryforward period. The federal statute of limitations remains open for tax years 2017 through 2019 and state tax jurisdictions generally have statutes of limitations open for tax years 2016 through 2019. |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of income tax provision - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of income tax provision [Abstract] | ||
State income tax | $ (17) | $ (46) |
Deferred tax benefit/(expense) - federal | 150 | (17) |
Deferred tax benefit/(expense) – state | 25 | (30) |
Tax benefit/(expense) | $ 158 | $ (93) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of reconciliation statutory income tax | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of reconciliation statutory income tax [Abstract] | ||
Federal statutory rate | 21.00% | 21.00% |
State taxes, net of federal benefit | 1.53% | 9.85% |
Foreign rate differential | 0.51% | (9.69%) |
Discrete items, Transaction items, and Other | (7.00%) | 44.85% |
Changes in valuation allowance | (15.11%) | (57.76%) |
Effective tax rate | 0.93% | 8.25% |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of the deferred tax assets and liabilities - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of the deferred tax assets and liabilities [Abstract] | ||
Reserves | $ 318 | $ 175 |
Property and equipment | (40) | (83) |
Accrued expenses | 326 | 265 |
Right-of-use Asset | (147) | (414) |
Right-of-use Liability | 149 | 419 |
IRC 163(j) Interest Deduction | 18 | 17 |
Non-qualified stock options | 675 | 528 |
R&D credits | 1,801 | 1,801 |
Net foreign carryforwards | 3,106 | 2,768 |
US net operating loss and credit carryforwards | 35,566 | 34,754 |
Intangibles | (13) | (1,128) |
Total deferred tax assets, net | 41,759 | 39,102 |
Valuation allowance | (41,759) | (39,277) |
Net deferred tax liabilities | $ (175) |
Warrants (Details) - Schedule
Warrants (Details) - Schedule of outstanding equity warrants - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Warrants (Equity) [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of Shares, Warrants, Beginning Balance | 4,733,028 | 4,815,047 |
Weighted Average Exercise Price, Beginning Balance (in Dollars per share) | $ 4.83 | $ 4.90 |
Weighted Average Remaining Contractual Life, Beginning Balance | 3 years 149 days | 4 years 124 days |
Number of Shares, Warrants issued | ||
Number of Shares, Warrants exercised (in Dollars per share) | $ (27,600) | |
Weighted Average Exercise Price, Warrants exercised (in Dollars per share) | $ 4.38 | |
Number of Shares, Warrants expired | (278,528) | (82,019) |
Weighted Average Exercise Price, Warrants expired (in Dollars per share) | $ 7.08 | $ 8.25 |
Number of Shares, Warrants, Ending Balance | 4,426,900 | 4,733,028 |
Weighted Average Exercise Price, Ending Balance (in Dollars per share) | $ 4.62 | $ 4.83 |
Weighted Average Remaining Contractual Life, Ending Balance | 2 years 302 days | 3 years 149 days |
Warrants (Liability) [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of Shares, Warrants, Beginning Balance | 216,255 | |
Weighted Average Exercise Price, Beginning Balance (in Dollars per share) | $ 7.34 | |
Weighted Average Remaining Contractual Life, Beginning Balance | 233 days | |
Number of Shares, Warrants issued | ||
Number of Shares, Warrants expired | (216,255) | |
Weighted Average Exercise Price, Warrants expired (in Dollars per share) | $ 7.34 | |
Number of Shares, Warrants, Ending Balance | ||
Weighted Average Exercise Price, Ending Balance (in Dollars per share) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 10, 2020 | Jun. 01, 2020 | Sep. 20, 2018 | Jul. 10, 2020 | Aug. 31, 2018 | Oct. 14, 2014 | Dec. 31, 2020 | Dec. 31, 2019 |
Stock-Based Compensation (Details) [Line Items] | ||||||||
Weighted average remaining contractual life | 5 years 73 days | |||||||
Options | 2,380,000 | |||||||
Option awarded vest over | 1,580,000 | |||||||
Options vesting period | 3 years | |||||||
Exercise price (in Dollars per share) | $ 2.53 | |||||||
Fair value of options on grant date (in Dollars per share) | $ 1.87 | |||||||
Remaining options awarded vest | 800,000 | |||||||
Issuance of shares authorized | 600,000 | |||||||
Unrecognized compensation expense (in Dollars) | $ 718 | $ 448 | ||||||
Stock compensation expense for awards granted to directors (in Dollars) | 100 | 63 | ||||||
Minimum [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Unrecognized compensation expense (in Dollars) | 1,499 | |||||||
Maximum [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Unrecognized compensation expense (in Dollars) | $ 2,365 | |||||||
Share-based Payment Arrangement, Option [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Years of granted option | 10 years | |||||||
Shares authorized for issuance | 2,380,000 | |||||||
2014 Stock Incentive Plan [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Exercise price (in Dollars per share) | $ 2.53 | |||||||
Fair value of options on grant date (in Dollars per share) | $ 1.87 | |||||||
Shares reserved for company's employees | 7,390,355 | |||||||
Options outstanding | 2,601,674 | 2,601,674 | ||||||
Issuance of shares authorized | 6,000,000 | |||||||
2014 Stock Incentive Plan [Member] | Minimum [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Issuance of shares authorized | 7,390,355 | |||||||
2014 Stock Incentive Plan [Member] | Maximum [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Issuance of shares authorized | 18,000,000 | |||||||
2006 Equity Incentive Plan [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Shares reserved for company's employees | 1,720,000 | |||||||
Options outstanding | 12,135 | |||||||
2006 Non-Employee Director Stock Option Plan [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Shares reserved for company's employees | 700,000 | |||||||
Share-based Payment Arrangement [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Unrecognized compensation expense (in Dollars) | $ 174 | |||||||
Aggregate award, description | 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 $7.50. | |||||||
2014 Stock Incentive Plan [Member] | ||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||
Shares authorized for issuance | 6,000,000 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - Schedule of stock options outstanding shares in Thousands | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Time Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Number Outstanding (in Shares) | shares | 1,813,809 |
Weighted Average Remaining Contractual Life | 8 years 259 days |
Weighted Average Exercise Price | $ 3.48 |
Options Exercisable (in Shares) | shares | 275,683 |
Performance Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Number Outstanding (in Shares) | shares | 800,000 |
Weighted Average Remaining Contractual Life | 9 years 153 days |
Weighted Average Exercise Price | $ 2.53 |
Range One [Member] | Time Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Number Outstanding (in Shares) | shares | 1,525,000 |
Weighted Average Remaining Contractual Life | 9 years 149 days |
Weighted Average Exercise Price | $ 2.52 |
Options Exercisable (in Shares) | shares | 8,333 |
Weighted Average Exercise Price | $ 1.88 |
Range One [Member] | Time Vesting Options [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Range of Exercise Prices Between, Lower Limit | 0.01 |
Range of Exercise Prices Between, Upper Limit | 0.01 |
Range One [Member] | Time Vesting Options [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Range of Exercise Prices Between, Lower Limit | 3 |
Range of Exercise Prices Between, Upper Limit | $ 3 |
Range One [Member] | Performance Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Number Outstanding (in Shares) | shares | 800,000 |
Weighted Average Remaining Contractual Life | 9 years 153 days |
Weighted Average Exercise Price | $ 2.53 |
Range One [Member] | Performance Vesting Options [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Range of Exercise Prices Between, Lower Limit | 0.01 |
Range of Exercise Prices Between, Upper Limit | 0.01 |
Range One [Member] | Performance Vesting Options [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Range of Exercise Prices Between, Lower Limit | 3 |
Range of Exercise Prices Between, Upper Limit | $ 3 |
Range Two [Member] | Time Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Number Outstanding (in Shares) | shares | 184,830 |
Weighted Average Remaining Contractual Life | 5 years 124 days |
Weighted Average Exercise Price | $ 6.72 |
Options Exercisable (in Shares) | shares | 168,163 |
Weighted Average Exercise Price | $ 6.64 |
Range Two [Member] | Time Vesting Options [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Range of Exercise Prices Between, Lower Limit | 3.01 |
Range of Exercise Prices Between, Upper Limit | 3.01 |
Range Two [Member] | Time Vesting Options [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Range of Exercise Prices Between, Lower Limit | 7.50 |
Range of Exercise Prices Between, Upper Limit | 7.50 |
Range Three [Member] | Time Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock options outstanding [Line Items] | |
Range of Exercise Prices | $ 7.51 |
Number Outstanding (in Shares) | shares | 103,979 |
Weighted Average Remaining Contractual Life | 4 years 160 days |
Weighted Average Exercise Price | $ 11.74 |
Options Exercisable (in Shares) | shares | 99,187 |
Weighted Average Exercise Price | $ 11.89 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details) - Schedule of stock option activity | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Time Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock option activity [Line Items] | |
Options Outstanding, opening balance | shares | 313,860 |
Weighted Average Exercise Price, opening balance | $ / shares | $ 8.06 |
Options Outstanding, Granted | shares | 1,580,000 |
Weighted Average Exercise Price, Granted | $ / shares | $ 2.53 |
Options Outstanding, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Options Outstanding, Forfeited or expired | shares | (80,051) |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | $ 2.76 |
Options Outstanding, Ending balance | shares | 1,813,809 |
Weighted Average Exercise Price, Ending balance | $ / shares | $ 3.48 |
Performance Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock option activity [Line Items] | |
Options Outstanding, opening balance | shares | |
Weighted Average Exercise Price, opening balance | $ / shares | |
Options Outstanding, Granted | shares | 800,000 |
Weighted Average Exercise Price, Granted | $ / shares | $ 2.53 |
Options Outstanding, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Options Outstanding, Forfeited or expired | shares | |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | |
Options Outstanding, Ending balance | shares | 800,000 |
Weighted Average Exercise Price, Ending balance | $ / shares | $ 2.53 |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details) - Schedule of fair value of options | 12 Months Ended |
Dec. 31, 2020 | |
Schedule of fair value of options [Abstract] | |
Risk-free interest rate | 0.66% |
Expected term | 6 years 3 months |
Expected price volatility | 89.18% |
Dividend yield | 0.00% |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details) - Schedule of revenue and EBITDA targets | Dec. 31, 2020USD ($) |
Revenue Target [Member] | |
Stock-Based Compensation (Details) - Schedule of revenue and EBITDA targets [Line Items] | |
2020 | $ 32,000,000,000 |
2021 | 35,000,000,000 |
2022 | 38,000,000,000 |
EBITDA Target [Member] | |
Stock-Based Compensation (Details) - Schedule of revenue and EBITDA targets [Line Items] | |
2020 | 2,200,000,000 |
2021 | 3,100,000,000 |
2022 | $ 3,500,000,000 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure Text Block [Abstract] | ||
Right of use asset value | $ 2,319 | |
Right of use asset liability | 2,319 | |
Finance Lease, Right-of-Use Asset, after Accumulated Amortization | $ 54 | |
Cumulative effect adjustment to retained earnings | $ 171 | |
Lease expiration period, description | Our leases have original lease periods expiring between 2021 and 2025. |
Leases (Details) - Schedule of
Leases (Details) - Schedule of components of lease costs, lease term and discount rate - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Finance lease cost | ||
Amortization of right-of-use assets | $ 20 | $ 32 |
Interest | 2 | 5 |
Operating lease cost | 626 | 736 |
Total lease cost | $ 648 | $ 773 |
Weighted Average Remaining Lease Term | ||
Weighted Average Remaining Lease Term, Operating leases | 3 years 292 days | 3 years 146 days |
Weighted Average Remaining Lease Term, Finance leases | 328 days | 1 year 73 days |
Weighted Average Discount Rate | ||
Weighted Average Discount Rate, Operating leases | 10.00% | 10.00% |
Weighted Average Discount Rate, Finance leases | 14.00% | 13.60% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of maturities of lease liabilities $ in Thousands | Dec. 31, 2020USD ($) |
Operating Leases [Member] | |
Leases (Details) - Schedule of maturities of lease liabilities [Line Items] | |
Operating Leases, 2021 | $ 377 |
Operating Leases, 2022 | 294 |
Operating Leases, 2023 | 291 |
Operating Leases, 2024 | 81 |
Operating Leases, Thereafter | 74 |
Operating Leases, Total undiscounted cash flows | 1,117 |
Operating Leases, Less imputed interest | (178) |
Operating Leases, Present value of lease liabilities | 939 |
Operating Leases, Lease liabilities, current | 355 |
Operating Leases, Lease liabilities, non-current | 584 |
Operating Leases, Present value of lease liabilities | 939 |
Finance Leases [Member] | |
Leases (Details) - Schedule of maturities of lease liabilities [Line Items] | |
Finance Leases, 2021 | 4 |
Finance Leases, 2023 | |
Finance Leases, 2024 | |
Finance Leases, Thereafter | |
Finance Leases, Total undiscounted cash flows | 4 |
Finance Leases, Less imputed interest | |
Finance Leases, Present value of lease liabilities | 4 |
Finance Leases, Lease liabilities, current | 4 |
Finance Leases, Lease liabilities, non-current | |
Finance Leases, Present value of lease liabilities | $ 4 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of cash flow information related to leases - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 627 | $ 719 |
Operating cash flows from finance leases | 2 | 1 |
Financing cash flows from finance leases | $ 24 | $ 31 |
Profit-Sharing Plan (Details)
Profit-Sharing Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
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%. | |
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%. | |
Employee retirement amount | $ 35 | $ 155 |
Segment Information and Signi_2
Segment Information and Significant Customers/Vendors (Details) | 12 Months Ended | |
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Segment Information and Significant Customers/Vendors (Details) [Line Items] | ||
Number of reportable segments | 1 | |
Related party entity owned percentage | 17.50% | |
Revenue [Member] | ||
Segment Information and Significant Customers/Vendors (Details) [Line Items] | ||
Number of major customers | 2 | 1 |
Percent from major customers | 27.80% | 18.50% |
Sales [Member] | ||
Segment Information and Significant Customers/Vendors (Details) [Line Items] | ||
Percent from major customers | 6.10% | 3.50% |
Sales due from the related party (in Dollars) | $ 1,058 | $ 1,103 |
Accounts Receivable [Member] | ||
Segment Information and Significant Customers/Vendors (Details) [Line Items] | ||
Number of major customers | 2 | 1 |
Percent from major customers | 42.60% | 14.40% |
Accounts receivable due from the related party (in Dollars) | $ 40 | $ 1 |
Accounts Payable [Member] | ||
Segment Information and Significant Customers/Vendors (Details) [Line Items] | ||
Percent from major customers | 46.80% | 50.00% |
Number of major Vendor | 2 | 1 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Feb. 18, 2021 | Dec. 31, 2020 | Jan. 11, 2021 | |
Subsequent Events (Details) [Line Items] | |||
Agreement exchange limitations, description | On February 18, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor which provided for the issuance and sale by the Company of 800,000 shares of the Company’s common stock (the “Shares”), in a registered direct offering (the “Offering”) at a purchase price of $2.50 per Share, for gross proceeds of $2,000. | ||
Security agreement, description | On March 7, 2021, the Company and its subsidiaries (collectively, the “Borrowers”) refinanced their current debt facilities with Slipstream Communications, LLC (“Slipstream”), pursuant to an Amended and Restated Credit and Security Agreement (the “Credit Agreement”). The debt facilities continue to be fully secured by all assets of the Borrowers. The maturity date (“Maturity Date”) on the outstanding debt and new debt is extended to March 31, 2023. The Credit Agreement (i) provides a $1,000 of availability under a line of credit (the “Line of Credit”), (ii) consolidates our existing term and revolving line of credit facilities into a new term loan (the “New Term Loan”) having an aggregate principal balance of approximately $4,550 (including a 3.0% issuance fee capitalized into the principal balance), (iii) increases the outstanding special convertible term loan (the “Convertible Loan”) to approximately $2,280 (including a 3.0% issuance fee capitalized into the principal balance), and (iv) extinguishes the outstanding obligations owed with respect to a $264 existing disbursed escrow loan in exchange for shares of the Company’s common stock (the “Disbursed Escrow Conversion Shares”), valued at $2.718 per share (the trailing 10-day VWAP as reported on the Nasdaq Capital Market as of the date of execution of the Credit Agreement). The Line of Credit and Convertible Loan accrue interest at 10% per year, and the New Term Loan accrues interest at 8% per year. | ||
Subsequent Event [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Principal amount | $ 1,552 | ||
Issuance and sale of shares (in Shares) | 800,000 | ||
Purchase price (in Dollars per share) | $ 2.50 | ||
Gross proceeds | $ 2,000 | ||
Deferred Offering Costs | $ 1,835 |