Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 15, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | Creative Realities, Inc. | |
Trading Symbol | CREX | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 21,751,539 | |
Amendment Flag | false | |
Entity Central Index Key | 0001356093 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-33169 | |
Entity Incorporation, State or Country Code | MN | |
Entity Tax Identification Number | 41-1967918 | |
Entity Address, Address Line One | 13100 Magisterial Drive | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Louisville | |
Entity Address, State or Province | KY | |
Entity Address, Postal Zip Code | 40223 | |
City Area Code | (502) | |
Local Phone Number | 791-8800 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 2,840 | $ 2,883 |
Accounts receivable, net of allowance of $806 and $620, respectively | 8,194 | 3,006 |
Unbilled receivables | 410 | 369 |
Work-in-process and inventories, net | 2,638 | 1,880 |
Prepaid expenses and other current assets | 3,111 | 1,634 |
Total current assets | 17,193 | 9,772 |
Operating lease right-of-use assets | 1,846 | 654 |
Property and equipment, net | 140 | 75 |
Intangibles, net | 23,227 | 4,850 |
Goodwill | 26,094 | 7,525 |
Other assets | 17 | 5 |
TOTAL ASSETS | 68,517 | 22,881 |
CURRENT LIABILITIES | ||
Short-term seller note payable | 2,089 | |
Accounts payable | 5,047 | 2,517 |
Accrued expenses | 2,672 | 2,110 |
Deferred revenues | 2,863 | 426 |
Customer deposits | 3,177 | 1,525 |
Current maturities of operating leases | 696 | 281 |
Total current liabilities | 16,544 | 6,859 |
Long-term Related Party Acquisition Term Loan, net of $1,836 and $0 discount, respectively | 8,164 | |
Long-term Related Party Consolidation Term Loan, net of $1,960 and $143 discount, respectively | 5,225 | 4,624 |
Long-term related party convertible loans payable, at fair value | 2,251 | |
Contingent acquisition consideration, at fair value | 10,936 | |
Long-term obligations under operating leases | 1,169 | 373 |
Other liabilities | 42 | 45 |
TOTAL LIABILITIES | 42,080 | 14,152 |
SHAREHOLDERS’ EQUITY | ||
Common stock, $0.01 par value, 200,000 shares authorized; 21,744 and 12,009 shares issued and outstanding, respectively | 217 | 120 |
Additional paid-in capital | 74,741 | 60,863 |
Accumulated deficit | (48,521) | (52,254) |
Total shareholders’ equity | 26,437 | 8,729 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 68,517 | $ 22,881 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance receivable, net | $ 806 | $ 620 |
Long-term Related Party Acquisition Term Loan, net discount | 1,836 | 0 |
Long-term Related Party Consolidation Term Loan, net discount | $ 1,960 | $ 143 |
Common stock par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 21,744 | 12,009 |
Common stock, shares outstanding | 21,744 | 12,009 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Sales | ||||
Hardware | $ 5,667 | $ 1,296 | $ 12,126 | $ 4,112 |
Services and other | 5,256 | 1,981 | 9,554 | 4,169 |
Total sales | 10,923 | 3,277 | 21,680 | 8,281 |
Cost of sales | ||||
Hardware | 4,610 | 870 | 9,992 | 2,784 |
Services and other | 1,651 | 532 | 3,134 | 1,388 |
Total cost of sales | 6,261 | 1,402 | 13,126 | 4,172 |
Gross profit | 4,662 | 1,875 | 8,554 | 4,109 |
Operating expenses: | ||||
Sales and marketing expenses | 1,147 | 169 | 1,854 | 504 |
Research and development expenses | 418 | 58 | 659 | 229 |
General and administrative expenses | 2,562 | 1,666 | 5,316 | 3,775 |
Bad debt (recovery) / expense | 49 | 106 | (463) | |
Depreciation and amortization expense | 468 | 344 | 1,175 | 688 |
Deal and transaction expense | 37 | 428 | ||
Total operating expenses | 4,632 | 2,286 | 9,538 | 4,733 |
Operating income/(loss) | 30 | (411) | (984) | (624) |
Other income (expenses): | ||||
Interest expense | (750) | (182) | (1,199) | (431) |
Change in fair value of Warrant Liability | 2,433 | 7,902 | ||
Change in fair value of Equity Guarantee | (73) | (73) | ||
(Loss) on debt waiver consent | (1,212) | |||
(Loss) on warrant amendment | (345) | (345) | ||
Gain/(loss) on settlement of obligations | 21 | 1,628 | (274) | 3,193 |
Change in fair value of Convertible Loan | 166 | |||
Other expense | (1) | (3) | 5 | 1 |
Total other income | 1,285 | 1,443 | 4,804 | 2,929 |
Income/(loss) before income taxes | 1,315 | 1,032 | 3,820 | 2,305 |
Benefit/(provision) for income taxes | (53) | (7) | (56) | (8) |
Net income | $ 1,262 | $ 1,025 | $ 3,764 | $ 2,297 |
Basic earnings per common share (in Dollars per share) | $ 0.06 | $ 0.09 | $ 0.21 | $ 0.2 |
Diluted earnings/(loss) per common share (in Dollars per share) | $ 0.06 | $ 0.09 | $ 0.21 | $ 0.2 |
Weighted average shares outstanding - basic (in Shares) | 21,702 | 11,854 | 18,180 | 11,588 |
Weighted average shares outstanding - diluted (in Shares) | 21,702 | 11,862 | 18,180 | 11,596 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Operating Activities: | ||
Net income | $ 3,764 | $ 2,297 |
Adjustments to reconcile net income to net cash used in operating activities | ||
Depreciation and amortization | 1,175 | 688 |
Amortization of debt discount | 541 | 101 |
Stock-based compensation | 949 | 895 |
Shares issued for services | 65 | 40 |
Gain on forgiveness of Paycheck Protection Program | (1,552) | |
Gain on settlement of Seller Note | (1,538) | |
Change in fair value of Convertible Loan | (166) | |
Deferred tax provision | ||
Allowance for doubtful accounts | 106 | (30) |
Increase in notes due to in-kind interest | 310 | |
Loss on debt waiver consent | 1,212 | |
Loss on warrant amendment | 345 | |
Loss on change in fair value of contingent consideration | 73 | |
Gain on change in fair value of warrants | (7,902) | |
(Gain)/loss on settlement of obligations | 274 | (103) |
Changes to operating assets and liabilities: | ||
Accounts receivable and unbilled receivables | (4,035) | 443 |
Inventories | (562) | 283 |
Prepaid expenses and other current assets | 184 | (1,128) |
Vendor deposits | (995) | |
Operating lease right-of-use assets, net | (699) | 176 |
Other operating assets and liabilities, net | 21 | (7) |
Accounts payable | 2,487 | (742) |
Deferred revenue | 1,178 | 247 |
Accrued expenses | 229 | (220) |
Deposits | 809 | (173) |
Operating lease liabilities, non-current | 718 | (184) |
Net cash used in operating activities | (63) | (363) |
Investing activities | ||
Purchases of property and equipment | (32) | (10) |
Capitalization of internal and third-party labor for software development | (2,328) | (194) |
Acquisition of business, net of cash acquired | (17,186) | |
Net cash used in investing activities | (19,546) | (204) |
Financing activities | ||
Principal payments on finance leases | (4) | |
Proceeds from sale of common stock in PIPE, net of offering expenses | 1,814 | |
Proceeds from sale & exercise of pre-funded warrants in PIPE, net of offering expenses | 8,295 | |
Proceeds from Acquisition Loan, net of offering expenses | 9,868 | |
Repayment of Seller Note | (411) | (100) |
Proceeds from sale of shares via registered direct offering, net | 1,849 | |
Net cash provided by financing activities | 19,566 | 1,745 |
Increase/(decrease) in Cash and Cash Equivalents | (43) | 1,178 |
Cash and Cash Equivalents, beginning of period | 2,883 | 1,826 |
Cash and Cash Equivalents, end of period | $ 2,840 | $ 3,004 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital | Accumulated (Deficit) | Total |
Balance at Dec. 31, 2020 | $ 109 | $ 56,712 | $ (52,486) | $ 4,335 |
Balance (in Shares) at Dec. 31, 2020 | 10,924,287 | |||
Shares issued for services | 40 | 40 | ||
Shares issued for services (in Shares) | 22,204 | |||
Shares issued to directors as compensation | 50 | 50 | ||
Shares issued to directors as compensation (in Shares) | 33,044 | |||
Stock-based compensation | 845 | 845 | ||
Conversion of Disbursed Escrow Loan | $ 1 | 263 | 264 | |
Conversion of Disbursed Escrow Loan (in Shares) | 97,144 | |||
Gain on Extinguishment of Special Loan | 26 | 26 | ||
Sales of Shares via registered direct offering, net of offering cost | $ 8 | 1,841 | 1,849 | |
Sales of Shares via registered direct offering, net of offering cost (in Shares) | 800,000 | |||
Net income | 2,297 | 2,297 | ||
Balance at Jun. 30, 2021 | $ 118 | 59,777 | (50,189) | 9,706 |
Balance (in Shares) at Jun. 30, 2021 | 11,876,679 | |||
Balance at Mar. 31, 2021 | $ 118 | 59,381 | (51,214) | 8,285 |
Balance (in Shares) at Mar. 31, 2021 | 11,840,811 | |||
Shares issued for services | 40 | 40 | ||
Shares issued for services (in Shares) | 22,204 | |||
Shares issued to directors as compensation | 25 | 25 | ||
Shares issued to directors as compensation (in Shares) | 13,664 | |||
Stock-based compensation | 331 | 331 | ||
Net income | 1,025 | 1,025 | ||
Balance at Jun. 30, 2021 | $ 118 | 59,777 | (50,189) | 9,706 |
Balance (in Shares) at Jun. 30, 2021 | 11,876,679 | |||
Balance at Dec. 31, 2021 | $ 120 | 60,863 | (52,254) | 8,729 |
Balance (in Shares) at Dec. 31, 2021 | 12,008,519 | |||
Stock-based compensation | 892 | 892 | ||
Stock-based compensation issued to vendors | 65 | 65 | ||
Stock-based compensation issued to vendors (in Shares) | 68,827 | |||
Shares issued and warrants exercised in private investment in public entity (“PIPE”) | $ 72 | 2,206 | 2,278 | |
Shares issued and warrants exercised in private investment in public entity (“PIPE”) (in Shares) | 7,166,505 | |||
Shares issued in Reflect Systems, Inc. Merger | $ 25 | 4,975 | 5,000 | |
Shares issued in Reflect Systems, Inc. Merger (in Shares) | 2,500,001 | |||
Warrant repricing events | 31 | (31) | ||
Warrant amendment | 5,709 | 5,709 | ||
Net income | 3,764 | 3,764 | ||
Balance at Jun. 30, 2022 | $ 217 | 74,741 | (48,521) | 26,437 |
Balance (in Shares) at Jun. 30, 2022 | 21,743,852 | |||
Balance at Mar. 31, 2022 | $ 217 | 68,626 | (49,783) | 19,060 |
Balance (in Shares) at Mar. 31, 2022 | 21,675,025 | |||
Stock-based compensation | 341 | 341 | ||
Stock-based compensation issued to vendors | 65 | 65 | ||
Stock-based compensation issued to vendors (in Shares) | 68,827 | |||
Warrant amendment | 5,709 | 5,709 | ||
Net income | 1,262 | 1,262 | ||
Balance at Jun. 30, 2022 | $ 217 | $ 74,741 | $ (48,521) | $ 26,437 |
Balance (in Shares) at Jun. 30, 2022 | 21,743,852 |
Nature of Organization and Oper
Nature of Organization and Operations | 6 Months Ended |
Jun. 30, 2022 | |
Nature of Organization and Operations [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, Creative Realities Canada, Inc., a Canadian corporation, and Reflect Systems, Inc., a Delaware corporation. Acquisition of Reflect On November 12, 2021, the Company and Reflect Systems, Inc., or “Reflect,” entered into an Agreement and Plan of Merger (as amended on as amended on February 8, 2022, the “Merger Agreement”) pursuant to which a direct, wholly owned subsidiary of Creative Realities, CRI Acquisition Corporation, or “Merger Sub,” would merge with and into Reflect, with Reflect surviving as a wholly owned subsidiary of Creative Realities, and the surviving company of the merger, which transaction is referred to herein as the “Merger.” On February 17, 2022, the parties consummated the Merger. Reflect provides digital signage solutions, including software, strategic and media services to a wide range of companies across the retail, financial, hospitality and entertainment, healthcare, and employee communications industries in North America. Reflect offers digital signage platforms, including ReflectView, a platform used by companies to power hundreds of thousands of active digital displays. Through its strategic services, Reflect assists its customers with designing, deploying and optimizing their digital signage networks, and through its media services, Reflect assists customers with monetizing their digital advertising networks. Subject to the terms and conditions of the Merger Agreement, upon the closing of the Merger, Reflect stockholders as of the effective time of the Merger collectively received from the Company, in the aggregate, the following Merger consideration: (i) $16,166 in cash, (ii) 2,333,334 shares of common stock of Creative Realities (valued based on an issuance price of $2 per share) (the “CREX Shares”), (iii) the Secured Promissory Note (as described below), and (iv) supplemental cash payments (the “Guaranteed Consideration”), if any, payable on or after the three-year anniversary of the effective time of the Merger (subject to the Extension Option described below, the “Guarantee Date”), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per share (such applicable amount, the “Guaranteed Price”), multiplied by the amount of CREX Shares held by the Reflect stockholders on the Guarantee Date (subject to the Extension Option described below), subject to the terms of the Merger Agreement. Creative Realities may exercise an extension option (the “Extension Option”) to extend the Guarantee Date from the three-year anniversary of the Closing Date to six (6) months thereafter if (i) the Extension Threshold Price is greater than or equal to 70% of the Guaranteed Price described above, and (ii) Creative Realities provides written notice of its election to exercise the Extension Option at least ten (10) days prior to the three-year anniversary of the Closing. The “Extension Threshold Price” means the average closing price per share of Creative Realities Shares as reported on the Nasdaq Capital Market (or NYSE) in the fifteen (15) consecutive trading day period ending fifteen (15) calendar days prior to the three-year anniversary of the Closing Date. If the Extension Threshold Price is less than 80% of the Guaranteed Price, then the Guaranteed Price will be increased by $1.00 per share. In connection with the Merger, the Company adopted a Retention Bonus Plan and raised capital to, among other things, pay the cash portion of the Merger consideration. The Retention Bonus Plan and financings are described below. Retention Bonus Plan On February 17, 2022, in connection with the closing of the Merger (the “Closing”), the Company adopted a Retention Bonus Plan, pursuant to which the Company is required to pay to key members of Reflect’s management team an aggregate of $1,333 in cash, which was paid 50% at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% on the one-year anniversary of Closing and 25% on the two-year anniversary of the Closing. The future cash payments due on the one-year and two-year anniversaries of the Closing have been deposited into an escrow agreement. The Retention Bonus Plan also requires the Company to issue Common Stock having an aggregate value of $667 to the plan participants as follows: 50% of the value of such shares were issued at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% of the value of such shares will be issued on the one-year anniversary of Closing and the remaining 25% of the value of such shares will be issued on the two-year anniversary of the Closing. The shares issued on the Closing were valued at $2.00 per share, and the shares to be issued after the Closing will be determined based on dividing the value of shares issuable on such date divided by the trailing 10-day volume weighted average price (VWAP) of the shares as of such date as reported on the Nasdaq Capital Market. Upon the resignation of a participant’s employment for “good reason,” or termination of the employment of a participant without “cause,” each as defined in the Retention Bonus Plan, the participant will be fully vested and will receive all cash and shares allocated to such participant under the Retention Bonus Plan. Any amounts unpaid by reason of a lapse in continuous employment or otherwise will be reallocated among the remaining Retention Bonus Plan participants. Equity Financing On February 3, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with a purchaser (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser, in a private placement priced at-the-market under Nasdaq rules, (i) 1,315,000 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”) and accompanying warrants to purchase an aggregate of 1,315,000 shares of Common Stock, and (ii) pre-funded warrants to purchase up to an aggregate of 5,851,505 shares of Common Stock (the “Pre-Funded Warrants”) and accompanying warrants to purchase an aggregate of 5,851,505 shares of Common Stock (collectively, the “Private Placement”). The accompanying warrants to purchase Common Stock are referred to herein collectively as the “Common Stock Warrants.” Under the Securities Purchase Agreement, each Share and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.535, and each Pre-Funded Warrant and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.5349, for gross proceeds of approximately $11,000 before deducting placement agent fees and offering expenses payable by the Company. Net proceeds to the Company were $10,160. The remaining exercise price for the Pre-Funded Warrant was $0.0001. Collectively, we refer to this transaction throughout this filing as the “Equity Financing”. The net proceeds from the Private Placement were used to fund, in part, payment of the closing cash consideration in the Merger. Effective June 30, 2022, the Company amended the terms of Common Stock Warrants to remove the holder’s option to exercise such warrants on a cashless basis utilizing the volume weighted average price (“VWAP”) of the Company’s common stock on the trading day immediately preceding the date of a notice of cashless exercise in certain circumstances, and removes the condition to exercising such warrants that the Company’s shareholders approve the exercise thereof (which has already been obtained). The amendments to the Common Stock Warrants also extend the term of such warrants for an additional one year, The foregoing amendments to the warrants are intended to cause such warrants to be accounted for as equity instruments on the Company’s financial statements. Debt Financing On February 17, 2022, the Company and its subsidiaries (collectively, the “Borrowers”) refinanced their current debt facilities with Slipstream Communications, LLC (“Slipstream”), pursuant to a Second Amended and Restated Credit and Security Agreement (the “Credit Agreement”), and raised $10,000 in gross proceeds with a maturity date of February 1, 2025. The Credit Agreement also provides that the Company’s outstanding loans from Slipstream, consisting of its pre-existing $4,767 senior secured term loan and $2,418 secured convertible loan, with an aggregate of $7,185 in outstanding principal and accrued and unpaid interest under such loans, were consolidated into a Consolidation Term Loan with a maturity date of February 1, 2025. Collectively, we refer to this transaction throughout this filing as the “Debt Financing”. The net proceeds from the Credit Agreement were used to fund, in part, payment of the closing cash consideration in the Merger, and the cash payable under the terms of the Retention Bonus Plan at the Closing. On February 17, 2022, in connection with the closing of the acquisition of Reflect, the Company issued to the representative of Reflect stockholders, RSI Exit Corporation (“Stockholders’ Representative”), a $2,500 Note and Security Agreement (the “Secured Promissory Note”). The Secured Promissory Note accrues interest at 0.59% (the applicable federal rate) and requires the Company and Reflect to pay equal monthly principal installments of $104 on the fifteenth (15th) day of each month, commencing on March 15, 2022, Any remaining or unpaid principal is due and payable on February 17, 2023. The Secured Promissory Note represents consideration in the Merger and is included as part of the purchase price. See Note 9 Loans Payable Liquidity and Financial Condition The accompanying Condensed 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. For the three months ended June 30, 2022 and 2021 we have recognized net income of $1,262 and $1,025, respectively. For the six months ended June 30, 2022 and 2021, we recognized net income of $3,764 and $2,297, respectively. As of June 30, 2022, we had cash and cash equivalents of $2,840 and a working capital surplus of $649. Management believes that, based on (i) the refinancing of our debt as part of the Debt Financing, including extension of the maturity date on our term loans, and (ii) our operational forecast through 2022 and 2023 following completion of the Merger, that we can continue as a going concern through at least August 15, 2023. However, given our historical net losses and cash used in operating activities, we obtained a continued support letter from Slipstream through August 15, 2023. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
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 Condensed Consolidated Financial Statements follows: 1. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the applicable instructions to Form 10-Q and 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 interim financial reporting. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 22, 2022. The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. Management believes the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair statement of results for the interim periods presented. 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. See Note 4 Revenue Recognition 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, 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. 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 net realizable value, determined by the first-in, first-out (FIFO) method, and consist of the following: June 30, December 31, 2022 2021 Raw materials, including those on consignment, net of reserve of $770 and $502, respectively $ 2,135 $ 1,583 Work-in-process 503 297 Total inventories $ 2,638 $ 1,880 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 22,472,886 at June 30, 2022 were excluded from the computation of income per share as the strike price on the options and warrants were higher than the Company’s market price and therefore anti-dilutive. Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling approximately 6,964,517 at June 30, 2021 were excluded from the computation of income per share as the strike price on the options and warrants were higher than the Company’s market price and therefore anti-dilutive. Diluted weighted average shares outstanding for the three and six-months ended June 30, 2021 included 8,333 options which were both exercisable and in-the-money as of June 30, 2021. Those options were included in the calculation of diluted earnings per share as of the beginning of the calculation period. In calculating diluted earnings per share for the three and six months ended June 30, 2021, 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 June 30, 2022 and December 31, 2021. 7. Goodwill 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 Definite-lived intangible assets are amortized straight-line in accordance with their identified useful lives. Pursuant to ASC 350, these intangible assets are evaluated for impairment at least annually, or as indicators of impairment are identified. 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: warrant liability valuation, contingent purchase consideration valuation, 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. 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 condensed consolidated balance sheets. 10. Business Combinations Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. Refer to Note 5, Business Combination 11. Contingent Consideration The Company has contingent consideration arrangements related to certain acquisitions to potentially pay additional cash amounts in future periods based on the lack of achievement of certain share price performance goals of our common stock. Such contingent consideration arrangements are recorded at fair value and are classified as liabilities on the acquisition date and are remeasured at each reporting period in accordance with ASC 805-30-35-1 using a Monte Carlo simulation model. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2022 | |
Recently Issued Accounting Pronouncements [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE 3: RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Recently adopted On January 1, 2022, we adopted early Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Revenue from Contracts with Customers (Topic 606) Not yet adopted In August 2020, the FASB issued Accounting Standards Update 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) In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2022 | |
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 three and six months ended June 30, 2022 and 2021: (in thousands) Three Months Three Months Six Months Six Months Hardware $ 5,667 $ 1,296 $ 12,126 $ 4,112 Services: Installation Services 903 497 2,242 1,072 Software Development Services 109 93 300 367 Media Services 412 - 477 - Managed Services 3,832 1,391 6,535 2,730 Total Services 5,256 1,981 9,554 4,169 Total Hardware and Services $ 10,923 $ 3,277 $ 21,680 $ 8,281 The italicized headers within this footnote represent separate performance obligations the Company may sell. When a contract includes more than one such element, the Company bifurcates these performance obligations according to our accounting policy and separately accounts for each. System hardware sales System hardware revenue is recognized generally upon shipment of the product or customer acceptance depending upon contractual arrangements with the customer. When hardware revenue is an element in a multiple-element performance obligation, including those sales in which the Company has bundled installation services, the recognition of system hardware revenue is recognized at completion of the installation services. 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. The aggregate amount of the transaction price allocated to installation service performance obligations that are partially unsatisfied as of June 30, 2022 and 2021 were $0 and $0, respectively. Software design and development services Software and software license sales are recognized as 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 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 revenues are classified as “Managed Services” within our disaggregated revenue. Maintenance and support services The Company sells maintenance and support services, which include access to technical support personnel for software and hardware troubleshooting and monitoring of the health of a customer’s network, access to a sophisticated web-portal for managing the end-to-end hardware and software digital ecosystem, and hosting support services through our network operations center, or NOC. These services provide either physical or automated remote monitoring which support customer networks 7 days a week, 24 hours a day. These contracts are generally 12-36 months in length and generally automatically renew for additional 12-month periods unless cancelled by the customer. Rates for maintenance and support contracts are typically established based upon a fee per location or fee per device structure, with total fees subject to the number of services selected. Revenue is recognized ratably and evenly over the term of the agreement. Maintenance and Support revenues are classified as “Managed Services” within our disaggregated revenue. 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. Media Sales Through the Company’s acquisition of Reflect as a result of the Merger, the Company has the capability to assist its customers with designing, deploying and monetizing, through media services their digital advertising networks. This is executed through both subscription agreements to programmatic advertising content and through direct sales media agreements in which the Company sells ads on behalf of its clients to be deployed on those client networks. The Company and its clients operate these agreements on a revenue share basis. Media sales activities are classified as Services revenues. |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2022 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | NOTE 5: BUSINESS COMBINATION On November 12, 2021, the Company and Reflect entered into an Agreement and Plan of Merger (as amended on as amended on February 8, 2022, the “Merger Agreement”) pursuant to which a direct, wholly owned subsidiary of Creative Realities, CRI Acquisition Corporation, or “Merger Sub,” would merge with and into Reflect, with Reflect surviving as a wholly owned subsidiary of Creative Realities, and the surviving company of the merger, which transaction is referred to herein as the “Merger.” On February 17, 2022, the parties consummated the Merger. Reflect provides digital signage solutions, including software, strategic and media services to a wide range of companies across the retail, financial, hospitality and entertainment, healthcare, and employee communications industries in North America. Reflect offers digital signage platforms, including ReflectView, a platform used by companies to power hundreds of thousands of active digital displays. Through its strategic services, Reflect assists its customers with designing, deploying and optimizing their digital signage networks, and through its media services, Reflect assists customers with monetizing their digital advertising networks. Subject to the terms and conditions of the Merger Agreement, upon the closing of the Merger, Reflect stockholders as of the effective time of the Merger collectively received from the Company, in the aggregate, the following Merger consideration: (i) $16,166 payable in cash, (ii) 2,333,334 shares of common stock of Creative Realities (valued based on an issuance price of $2 per share) (the “CREX Shares”), (iii) the Secured Promissory Note (as described below), and (iv) supplemental cash payments (the “Guaranteed Consideration”), if any, payable on or after the three-year anniversary of the effective time of the Merger (subject to the Extension Option described below, the “Guarantee Date”), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per share (such applicable amount, the “Guaranteed Price”), multiplied by the amount of CREX Shares held by the Reflect stockholders on the Guarantee Date (subject to the Extension Option described below), subject to the terms of the Merger Agreement. Creative Realities may exercise an extension option (the “Extension Option”) to extend the Guarantee Date from the three-year anniversary of the Closing Date to six (6) months thereafter if (i) the Extension Threshold Price is greater than or equal to 70% of the Guaranteed Price described above, and (ii) Creative Realities provides written notice of its election to exercise the Extension Option at least ten (10) days prior to the three-year anniversary of the Closing. The “Extension Threshold Price” means the average closing price per share of Creative Realities Shares as reported on the Nasdaq Capital Market (or NYSE) in the fifteen (15) consecutive trading day period ending fifteen (15) days prior to the three-year anniversary of the Closing Date. If the Extension Threshold Price is less than 80% of the Guaranteed Price, then the Guaranteed Price will be increased by $1.00 per share. Retention Bonus Plan On February 17, 2022, in connection with the closing of the Merger, the Company adopted a Retention Bonus Plan, pursuant to which the Company is required to pay to key members of Reflect’s management team an aggregate of $1,333 in cash, which was paid 50% at the closing of the Merger (the “Closing”), and subject to continuous employment with Reflect or Creative Realities, 25% on the one-year anniversary of Closing and 25% on the two-year anniversary of the Closing. The future cash payments due on the one-year and two-year anniversaries of the Closing have been deposited into an escrow agreement. The Retention Bonus Plan also requires the Company to issue Common Stock having an aggregate value of $667 to the plan participants as follows: 50% of the value of such shares were issued at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% of the value of such shares will be issued on the one-year anniversary of Closing and the remaining 25% of the value of such shares will be issued on the two-year anniversary of the Closing. The shares issued on the Closing were valued at $2.00 per share, and the shares to be issued after the Closing will be determined based on dividing the value of shares issuable on such date divided by the trailing 10-day volume weighted average price (VWAP) of the shares as of such date as reported on the Nasdaq Capital Market. Upon the resignation of a participant’s employment for “good reason,” or termination of the employment of a participant without “cause,” each as defined in the Retention Bonus Plan, the participant will be fully vested and will receive all cash and shares allocated to such participant under the Retention Bonus Plan. Any amounts unpaid by reason of a lapse in continuous employment or otherwise will be reallocated among the remaining Retention Bonus Plan participants. Secured Promissory Note On February 17, 2022, pursuant to the terms of the Merger, the Company issued to Stockholders’ Representative a $2,500 Note and Security Agreement (the “Secured Promissory Note”). The Secured Promissory Note accrues interest at 0.59% (the applicable federal rate) and requires the Company and Reflect to pay equal monthly principal installments of $104 on the fifteenth (15th) day of each month, commencing on March 15, 2022. Any remaining or unpaid principal shall be due and payable on February 17, 2023. All payments under the Secured Promissory Note will be paid to the escrow agent in the Merger Agreement to be placed into the escrow account to secure the Reflect stockholders’ indemnification obligations until released on the one-year anniversary of the closing of the Merger, at which time any remaining proceeds not subject to a pending indemnification claim will be paid to the exchange agent for payment to the Reflect Stockholders. The obligations of the Company and Reflect set forth in the Secured Promissory Note are secured by a first-lien security interest in various contracts of Reflect, together with all accounts arising under such contracts, supporting obligations related to the accounts arising under such contracts, all related books and records, and products and proceeds of the foregoing. Slipstream subordinated its security interest in such collateral, and the recourse for any breach of the Secured Promissory Note by the Company or Reflect will be against such collateral. The preliminary purchase price of Reflect consisted of the following items: (in thousands) Consideration Cash consideration for Reflect stock $ 16,664 (1) Cash consideration for Retention Bonus Plan 1,334 (2) Common stock issued to Reflect shareholders 4,667 (3) Common stock issued to Retention Bonus Plan 333 (4) Secured Promissory Note 2,500 (5) Earnout liability 10,862 (6) Total consideration 36,360 Vendor deposit with the Company (818 ) (7) Cash acquired (812 ) (8) Net consideration transferred $ 34,730 (1) Cash consideration for outstanding shares of Reflect capital stock per Merger Agreement. (2) Cash consideration utilized to fund the Retention Bonus Plan per Merger Agreement. (3) Company common stock issued in exchange for outstanding shares of Reflect capital stock per Merger Agreement. (4) Company common stock issued to fund the Retention Bonus Plan per Merger Agreement. (5) The Secured Promissory Note accrues interest at 0.59% (the applicable federal rate) and requires the Company and Reflect to pay equal monthly principal installments of $104 on the fifteenth (15th) day of each month, commencing on March 15, 2022. Any remaining or unpaid principal shall be due and payable on February 17, 2023. (6) Represents an estimate of the fair value of the Guaranteed Consideration as of the Merger, which, if any, is payable on or after the three-year anniversary of the effective time of the Merger (subject to the Extension Option), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per share (such applicable amount, the “Guaranteed Price”), multiplied by the amount of CREX Shares held by the Reflect stockholders on the Guarantee Date (subject to the Extension Option), subject to the terms of the Merger Agreement. During the three months ended June 30, 2022, the Company’s third party specialist completed valuation of this contingent liability as of the opening balance sheet date, resulting in a measurement period adjustment recorded to increase goodwill and the contingent liability as of February 17, 2022 by $5,262. (7) Prior to the Merger, Reflect had engaged the Company on a project and paid the Company a deposit of $818. These amounts reduced consideration paid by the Company in accordance with ASC 805. (8) Represents the Reflect cash balance acquired at Closing. The Company incurred $37 and $428 of direct transaction costs for the three and six months ended June 30, 2022, respectively. These costs are included in deal and transaction expense in the accompanying Condensed Consolidated Statement of Operations. The Company accounted for the Merger using the acquisition method of accounting. The preliminary allocation of the purchase price is based on estimates of the fair value of assets acquired and liabilities assumed as of February 17, 2022. The Company is continuing to obtain information to determine the acquired assets and liabilities, including tax assets, liabilities and other attributes. The components of the preliminary purchase price allocation, inclusive of measurement period adjustments recorded by the Company during the six months ended June 30, 2022, are as follows: (in thousands) Total Accounts receivable $ 1,300 Inventory 196 Prepaid expenses & other current assets 666 Property and equipment 96 Operating right of use assets 493 Deferred tax assets, net of valuation allowance - Other assets 36 Identified intangible assets: Definite-lived trade names 960 Definite-lived Developed technology 5,130 Definite-lived Customer relationships 11,040 Definite-lived Noncompete agreements 30 Goodwill 18,569 Accounts payable (96 ) Accrued expenses (277 ) Customer deposits (1,661 ) Deferred revenues (1,259 ) Current maturities of operating leases (277 ) Long-term obligations under operating leases (216 ) Net consideration transferred $ 34,730 The Company engaged a third party valuation specialist to assist in the identification and calculation of the fair value of those separately identifiable intangible assets. Based on an initial draft valuation report, a measurement period adjustment reducing the value of these intangible assets by $4,340 as of the opening balance sheet date, with a corresponding increase in goodwill, was recorded in the three months ended June 30, 2022. A related adjustment to reduce amortization expense by $180 for the three months ended March 31, 2022 was recorded as a period expense in the three months ended June 30, 2022. The Company remains in process of reviewing the valuation report and finalizing its opening balance sheet accounting. The Company completed its valuation procedures by asset utilizing the following approaches: ● Customer relationship asset was estimated using the income approach through a discounted cash flow analysis wherein the cash flows will be based on estimates used to price the Merger. Discount rates were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital. ● Trade name asset represents the “Reflect” brand name as marketed primarily as a full services digital software solution, marketed in numerous verticals with the exception of food service. The Company applied the income approach through an excess earnings analysis to determine the fair value of the trade name asset. The Company applied the income approach through a relief-from-royalty analysis to determine the fair value of this asset. ● The developed technology assets are primarily comprised of know-how and functionality embedded in Reflect’s proprietary content management applications, which drive currently marketed products and services. The Company applied the income approach through a relief-from-royalty analysis to determine the preliminary fair value of this asset. The Company is amortizing the identifiable intangible assets on a straight-line basis over the weighted average lives ranging from 2 to 10 years as outlined below. The table below sets forth the preliminary valuation and amortization period of identifiable intangible assets: (in thousands) Preliminary Valuation Amortization Period Identifiable definite-lived intangible assets: Trade names $ 960 5 years Developed technology 5,130 10 years Noncompete 30 2 years Customer relationships 11,040 10 years Total $ 17,160 The Company estimated the preliminary fair value of the acquired property, plant and equipment using a combination of the cost and market approaches, depending on the component. The preliminary fair value of such property, plant and equipment is $96. The excess of the purchase price over the preliminary estimated fair value of the tangible net assets and identifiable intangible assets acquired was recorded as goodwill and is subject to change upon final valuation. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Merger. These benefits include a comprehensive portfolio of iconic customer brands, complementary product offerings, enhanced national footprint, and attractive synergy opportunities and value creation. None of the goodwill is expected to be deductible for income tax purposes. The following unaudited pro forma information presents the combined financial results for the Company and Reflect as if the Merger had been completed at the beginning of the Company’s prior year, January 1, 2021. (in thousands, except earnings per common share) 2021 Net sales $ 30,680 Net income/(loss) $ 799 Earnings per common share $ 0.06 (in thousands) Three Months Six Months Net sales 6,266 13,707 Net income/(loss) 1,141 2,175 The information above does not include the pro forma adjustments that would be required under Regulation S-X for pro forma financial information and does not reflect future events that may occur after December 31, 2021 or any operating efficiencies or inefficiencies that may result from the Merger and related financings. Therefore, the information is not necessarily indicative of results that would have been achieved had the businesses been combined during the periods presented or the results that the Company will experience going forward. We have not included disaggregated information for Reflect on a standalone basis in the current year for either revenue or net income as the integration activities undertaken by the Company have prevented this information from being useful to financial statement readers. |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Measurement [Abstract] | |
FAIR VALUE MEASUREMENT | NOTE 6: FAIR VALUE MEASUREMENT We measure certain financial assets, including cash equivalents, at fair value on a recurring basis. In accordance with ASC 820-10-30, 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. As discussed in Note 5 Business Combinations As discussed in Note 8 Intangible Assets, Including Goodwill As discussed in Note 9 Loans Payable As discussed in Note 12 Warrants |
Supplemental Cash Flow Statemen
Supplemental Cash Flow Statement Information | 6 Months Ended |
Jun. 30, 2022 | |
Supplemental Cash Flow Statement Information [Abstract] | |
SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION | NOTE 7: SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION Six Months Ended June 30, 2022 2021 Supplemental Cash Flow Information Cash paid during the period for: Interest $ 656 $ - Income taxes, net $ 44 $ 20 Supplemental disclosure of non-cash financing activities: Conversion of liability warrants to equity warrants $ 5,709 $ - |
Intangible Assets, Including Go
Intangible Assets, Including Goodwill | 6 Months Ended |
Jun. 30, 2022 | |
Intangible Assets, Including Goodwill [Abstract] | |
INTANGIBLE ASSETS, INCLUDING GOODWILL | NOTE 8: INTANGIBLE ASSETS, INCLUDING GOODWILL Intangible Assets Intangible assets consisted of the following at June 30, 2022 and December 31, 2021: June 30, December 31, Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Technology platform $ 9,765 3,908 $ 4,635 3,652 Purchased and developed software 4,108 3,029 3,488 2,713 In-Process internally developed software platform 2,532 - 824 - Customer relationships 15,000 2,153 3,960 1,692 Non-compete 30 6 - - Trademarks and trade names 1,600 712 640 640 33,035 9,808 13,547 8,697 Accumulated amortization 9,808 8,697 Net book value of amortizable intangible assets $ 23,227 $ 4,850 On February 17, 2022, the Company added intangible assets as a result of accounting for the Merger in accordance with ASC 805 Business Combinations Business Combinations For the three months ended June 30, 2022 and 2021, amortization of intangible assets charged to operations was $431 and $139, respectively. For the six months ended June 30, 2022 and 2021 amortization of intangible assets charged to operations was $1,111 and $279, respectively. Goodwill 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. Following the Merger, the Company evaluated its reporting units in accordance with ASC 280 Segment Reporting While the Company completes its annual assessment of impairment as of September 30, we evaluate qualitative indicators during other interim periods that may be indicative of impairment and require further quantitative assessments. During the three and six months ended June 30, 2022, the Company experienced a significant decline in its common share price and overall market capitalization, which is below book value as of June 30, 2022. We deemed this decline in market capitalization to be an indicator of a potential impairment of the Company’s recorded investment in its intangible assets and goodwill. We evaluated certain facts and circumstances which management believes are responsible for the disparity between our market capitalization and the book value of our equity as of June 30, 2022. While our overall business performance has been consistent with our expectations both before and after the acquisition of Reflect, we believe a significant portion of the decline in our market price relates primarily to several macroeconomic factors including: (1) market wide recessionary fears, (2) rapid inflation fears, which often have an outsized, direct negative impact on the share price of high-growth companies with limited or negative cash flow from operations, (3) a lack of comprehension by the markets of the recent Merger with Reflect and related financing transaction, and (4) the sale of over 7,000,000 shares of our common stock into the market by a new investor, resulting in significant negative volume and price pressure on the stock unrelated to the Company fundamentals. We do not believe these factors are consistent with or reflective of the underlying value of the business, and there were no other indicators of potential impairment as of June 30, 2022. Should our market price remain at this level for an extended period of time, there could be potential future impairment. Based on the relatively recent decline in our share price and market capitalization, along with improving Company fundamentals following our Merger with Reflect and a share price that was substantially higher upon announcing that Merger mere months ago, we believe our implied fair value continues to exceed our total carrying value. There were no other indications of impairment as of June 30, 2022. |
Loans Payable
Loans Payable | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE | NOTE 9: LOANS PAYABLE The outstanding debt with detachable warrants, as applicable, are shown in the table below. Further discussion of the debt follows. As of June 30, 2022 Debt Type Issuance Principal Maturity Warrants Interest Rate Information A 2/17/2022 $ 10,000 2/15/2025 2,500,000 8.0% interest (1) B 2/17/2022 2,089 2/17/2023 - 0.59% interest (2) C 2/17/2022 7,185 2/15/2025 2,694,495 10.0% interest (3) Total debt, gross 19,274 5,194,495 Debt discount (3,796 ) Total debt, net $ 15,478 Less current maturities (2,089 ) Long term debt $ 13,389 As of December 31, 2021 Debt Type Issuance Principal Maturity Warrants Interest Rate Information D 8/17/2016 $ 4,767 2/17/2025 588,236 8.0% interest (4) E 12/30/2019 2,418 2/17/2025 - 10.0% interest (4) Total debt, gross 7,185 588,236 Fair value (B) (166 ) Total debt, gross 7,019 Debt discount (144 ) Total debt, net $ 6,875 Less current maturities - Long term debt $ 6,875 A – Acquisition Loan B – Reflect Seller Secured Promissory Note C – Consolidation Term Loan D – Term Loan with related party E – Secured Convertible Special Loan Promissory Note, at fair value (1) 8.0% cash interest per annum through maturity at February 15, 2025. (2) 0.59% cash interest per annum (the applicable federal rate) through maturity at February 17, 2023. (3) 10.0% cash interest per annum through maturity at February 15, 2025. (4) Interest was paid-in-kind (“PIK”) through October 2021, at which point interest became payable in cash at the stated interest rates through maturity. 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 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”). The Promissory Note had a term of two years with a 1% per annum interest rate. On January 11, 2021, the Company received a notice from Old National Bank that the full principal amount of the PPP Loan and the accrued interest have been forgiven, resulting in a gain of $1,552 during the six months ended June 30, 2021. Secured Promissory Note On February 17, 2022, in connection with the closing of the Merger, the Company issued to RSI Exit Corporation (“Stockholders’ Representative”), the representative of Reflect stockholders, a $2,500 Note and Security Agreement (the “Secured Promissory Note”). The Secured Promissory Note accrues interest at 0.59% per annum (the applicable federal rate) and requires the Company and Reflect to pay equal monthly principal installments of $104 on the fifteenth (15th) day of each month, commencing on March 15, 2022. Any remaining or unpaid principal shall be due and payable on February 17, 2023. All payments under the Secured Promissory Note will be paid to the escrow agent in the Merger Agreement to be placed into the escrow account to secure the Reflect stockholders’ indemnification obligations until released on the one-year anniversary of the closing of the Merger, at which time any remaining proceeds not subject to a pending indemnification claim will be paid to the exchange agent for payment to the Reflect Stockholders. The Secured Promissory Note is secured by a first-lien security interest in certain contracts of Reflect, including obligations arising out of those certain contracts.. The Company has the right to offset amounts payable under the Secured Promissory Note upon a final, non-appealable decision of a court that entitles the Company or its affiliates to any damages for indemnification under the Merger Agreement, or the Stockholders’ Representative’s agreement in writing to such damages. Second Amended and Restated Loan and Security Agreement On February 17, 2022, Creative Realities, Inc. (the “Company”) and its subsidiaries (collectively, the “Borrowers”) refinanced their current debt facilities with Slipstream Communications, LLC (“Slipstream”), pursuant to a Second Amended and Restated Credit and Security Agreement (the “Credit Agreement”). The Borrowers include Reflect Systems, Inc. (“Reflect”), which became a wholly owned subsidiary of the Company as a result of the closing of the Merger on February 17, 2022. The debt facilities continue to be fully secured by all assets of the Borrowers. The Credit Agreement also provides that the Company’s outstanding loans from Slipstream at December 31, 2021, consisting of its pre-existing $4,767 senior secured term loan and $2,418 secured convertible loan, with an aggregate of $7,185 in outstanding principal and accrued and unpaid interest under such loans, were consolidated into a term loan (the “Consolidation Term Loan”). The Consolidation Term Loan has an interest rate of 10.0%, with 75.0% warrant coverage (or 2,694,495 warrants). On the first day of each month, commencing March 1, 2022 through February 1, 2025, the Borrowers will make interest-only payments on the Consolidation Term Loan (estimated to be $60 per monthly payment). Commencing on September 1, 2023, and on the first day of each month thereafter until the Maturity Date, the Borrowers will make a payment on the Consolidation Term Loan, in an equal monthly installment of principal sufficient to fully amortize the Consolidation Term Loan in eighteen equal installments (estimated to be $399 per monthly installment). The Company assessed the combination of the pre-existing senior secured term loan and secured convertible loan in accordance with ASC 470 Debt In addition to refinancing the existing debt with Slipstream, the Company issued to Slipstream a $10,000, 36-month senior secured term loan (the “Acquisition Loan”) resulting in $10,000 in gross proceeds, or $9,950 in net proceeds. The Acquisition Loan matures on February 17, 2025 (the “Maturity Date”) and has an interest rate of 8.0%, with 50.0% warrant coverage (or 2,500,000 warrants). On the first day of each month, commencing March 1, 2022 through February 1, 2025, the Borrowers will make interest-only payments on the Acquisition Loan (estimated to be $67 per monthly payment). No principal payments on the Acquisition Loan are payable until the Maturity Date. In connection with the Acquisition Loan and Consolidation Term Loan warrant coverage, the Company issued to Slipstream a warrant to purchase an aggregate of 5,194,495 shares of Company common stock (the “Lender Warrant”). The Lender Warrant has a five-year term, an initial exercise price of $2.00 per share, subject to adjustments in the Lender Warrant, and is not exercisable until August 17, 2022. The warrants were assessed in accordance with ASC 470 and ASC 815 Derivatives In certain circumstances, upon a fundamental transaction of the Company (e.g., a disposal or sale of all or the greater part of the assets or undertaking of the Company, an amalgamation or merger with another company, or implementation of a scheme of arrangement), the holder of the Lender Warrant will have the right to require the Company to repurchase the Lender Warrant at its fair value using a Black Scholes option pricing formula; provided that such holder may not require the Company or its successor entity to repurchase the Lender Warrant for the Black Scholes value in connection with a fundamental transaction that is not approved by the Company’s Board of Directors, and therefore not within the Company’s control. Effective June 30, 2022, the Company amended the terms of the Lender Warrant to remove the holder’s option to exercise such warrant on a cashless basis utilizing the volume weighted average price (“VWAP”) of the Company’s common stock on the trading day immediately preceding the date of a notice of cashless exercise in certain circumstances, and remove the condition to exercising such warrant that the Company’s shareholders approve the exercise thereof (which has already been obtained). The amendments to the Lender Warrant also extend the term of such warrants for an additional one year, such that the Lender Warrant will expire on February 17, 2028. The foregoing amendments to the Lender Warrant were intended to cause such warrants to be accounted for as equity instruments on the Company’s financial statements. Loan and Security Agreement History Ninth, Tenth, Eleventh, Twelfth, and Thirteenth Amendment; Modification of Conversion Date of Special Loan under Loan and Security Agreement Prior to the execution of the Credit Agreement, Borrower and Slipstream were parties to a Loan and Security Agreement. On March 7, 2021, On February 28, 2021, January 31, 2021, December 31, 2020, November 30, 2020, and September 29, 2020, the parties entered into several amendments to the Loan and Security Agreement to amend the automatic conversion date of the Special Loan and, later, to eliminate the conversion feature. Each amendment extended the automatic conversion date of the Special Loan. The Company paid no fees in exchange for these extensions, with the exception of the March 7, 2021 extension which resulted in the Company recording of $133 of incremental debt discount, a net gain of $26 via the extinguishment of the Special Loan, and expense of $69 of costs incurred with third parties as a result of extinguishment of the Special Loan, modification of the New Term Loan, and extinguishment of the Disbursed Escrow Loan. 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 bore no interest. Upon entry into an amendment to the Loan and Security Agreement on March 7, 2021, this note was converted into Disbursed Escrow Conversion Shares, with elimination of the debt recorded as an equity issuance with the Statement of Shareholders Equity during the three months ended March 31, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10: 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. As a result of court delays as a result of the COVID-19 pandemic, this suit remains in the early stages of litigation with discovery requests ongoing, and, as a result, the outcome of the suit and the allocation of liability, if any, remain unclear. The Company is unable to reasonably estimate the possible liability, recovery, or range of magnitude for either the liability or recovery, 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. 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 There were no individually material settlements during the six months ended June 30, 2022. During the six months ended June 30, 2021, (i) the full principal amount of the PPP Loan and the accrued interest of $1,552 were forgiven and recorded as a gain on settlement, and (ii) the Company settled the Amended and Restated Seller Note and related accrued interest for $100, recording a gain on settlement of $1,624, representing $1,538 related to the Amended and Restated Seller Note and $86 of related interest thereon, during the three months ended June 30, 2021. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Taxes [Abstract] | |
INCOME TAXES | NOTE 11: INCOME TAXES Our deferred tax assets are primarily related to net federal and state operating loss carryforwards (NOLs). 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. 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 with a definite life. As of June 30, 2022, we reported tax liability of $0. As of June 30, 2022, the net deferred tax assets totaled $0 after valuation allowance, consistent with December 31, 2021. |
Warrants
Warrants | 6 Months Ended |
Jun. 30, 2022 | |
Warrants [Abstract] | |
WARRANTS | NOTE 12: WARRANTS A summary of outstanding warrants is included below: Warrants (Equity) Amount Weighted Weighted Balance December 31, 2021 4,103,211 $ 4.48 1.73 Warrants issued 5,851,505 1.535 5.00 Warrants exercised (5,851,505 ) 1.535 4.86 Warrants reclassified 13,761,000 1.63 4.61 Balance June 30, 2022 17,864,211 $ 2.21 3.83 Warrants (Liability) Amount Weighted Weighted Balance December 31, 2021 - $ - - Warrants issued 13,761,000 1.63 5.00 Warrants expired - - - Warrants reclassified (13,761,000 ) 1.63 (5.00 ) Balance June 30, 2022 - $ - - On February 3, 2022, the Company entered into a Securities Purchase Agreement with a purchaser (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser, in a private placement priced at-the-market under Nasdaq rules, (i) 1,315,000 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”) and accompanying warrants to purchase an aggregate of 1,315,000 shares of Common Stock, and (ii) pre-funded warrants to purchase up to an aggregate of 5,851,505 shares of Common Stock (the “Pre-Funded Warrants”) and accompanying warrants to purchase an aggregate of 5,851,505 shares of Common Stock (collectively, the “Private Placement”). The accompanying warrants to purchase Common Stock are referred to herein collectively as the “Common Stock Warrants.” Under the Securities Purchase Agreement, each Share and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.535, and each Pre-Funded Warrant and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.5349, for gross proceeds of approximately $11,000, before deducting placement agent fees and estimated offering expenses payable by the Company. During the three months ended March 31, 2022, each of the Pre-Funded Warrants were exercised. The Common Stock Warrants expired five years from the date of issuance. The Company evaluated the Pre-Funded Warrants and concluded that they met the criteria to be classified within stockholders’ equity, with proceeds recorded as common stock and additional paid-in-capital. The Company evaluated the Common Stock Warrant and concluded they did not meet the criteria to be classified within stockholders’ equity. The Common Stock Warrant included provisions which could result in a different settlement value for the Common Stock Warrant depending on the registration status of the underlying shares. Because these conditions were not an input into the pricing of a fixed-for-fixed option on the Company’s ordinary shares, the Common Stock Warrant was not considered to be indexed to the Company’s own stock. The Company recorded these warrants as liabilities on the consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of operations at each reporting date. At the date of issuance, the Company performed a Black-Scholes valuation of the warrants, resulting in a fair value of $1.0927 per warrant. At June 30, 2022, the Company reassessed the fair value of these warrants via Black Scholes valuation methodology and determined that the fair value of these warrants was $0.4019 per warrant, resulting in the Company recording a gain on the fair value of these warrants of $1,287 and $4,951 in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022, respectively. On February 17, 2022, in connection with the restructured Credit Agreement with Slipstream, the Company issued 5,194,495 warrants with an exercise price of $2.00 per share which expire five years from the date of issuance (the “Lender Warrant”). These warrants are not exercisable until 180 days after the issuance date. The common shares underlying these warrants have not yet been registered for resale under the Securities Act of 1933, which provides Slipstream with an option for cashless exercise once the warrant becomes exercisable until such time as such registration occurs. The Lender Warrant expired five years from the date of issuance. The Company evaluated the Lender Warrant and concluded that it did not meet the criteria to be classified within stockholders’ equity. The Lender Warrant included provisions that could result in a different settlement value for the Lender Warrant depending on the registration status of the underlying shares. Because these conditions were not an input into the pricing of a fixed-for-fixed option on the Company’s ordinary shares, the Lender Warrant was not considered to be indexed to the Company’s own stock. The Company recorded these warrants as liabilities on the consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of operations at each reporting date. At the date of issuance, the Company performed a Black-Scholes valuation of the warrants, resulting in a fair value of $0.8129 per warrant. In recording the warrant liability, the Company recorded an increase in debt discount in the Condensed Consolidated Balance Sheet associated with the issuance of the warrants of $4,223, which is being amortized through interest expense in the Condensed Consolidated Statement of Operations over the life of the Acquisition and Consolidation Term Loans. At June 30, 2022, the Company reassessed the fair value of these warrants via Black Scholes valuation methodology and determined that the fair value of these warrants was $0.3699 per warrant, resulting in the Company recording a gain on the fair value of these warrants of $894 and $2,302 in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022, respectively. On February 17, 2022, in connection with obtaining a waiver of certain restrictions in investment documents between an investor and the Company in order to consummate the financing contemplated by the Credit Agreement, the Company paid consideration to such investor in the form of a warrant (the “Purchaser Warrant”) to purchase 1,400,000 shares of Company common stock in an at-the-market offering under Nasdaq rules. The number of shares of Company common stock subject to the Purchaser Warrant is equal to the waiver fee ($175) divided by $0.125 per share. The exercise price of the Purchaser Warrant is $1.41 per share, and the Purchaser Warrant is not exercisable until August 17, 2022. The Purchaser Warrant expired five years from the date of issuance. The Company evaluated the Purchaser Warrant and concluded that it did not meet the criteria to be classified within stockholders’ equity. The Purchaser Warrant included provisions which could result in a different settlement value for the Purchaser Warrant depending on the registration status of the underlying shares. Because these conditions were not an input into the pricing of a fixed-for-fixed option on the Company’s ordinary shares, the Purchaser Warrant was not considered to be indexed to the Company’s own stock. The Company recorded these warrants as liabilities on the consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of operations at each reporting date. At the date of issuance, the Company performed a Black-Scholes valuation of the Purchaser Warrant, resulting in a fair value of $0.8656 per warrant. In recording the warrant liability, the Company recorded an expense in the Condensed Consolidated Statement of Operations associated with the issuance of the Purchaser Warrant of $1,211. At June 30, 2022, the Company reassessed the fair value of the Purchase Warrant via Black Scholes valuation methodology and determined that the fair value of the Purchaser Warrant was $0.4017 per warrant, resulting in the Company recording a gain on the fair value of the Purchaser Warrant of $252 and $650 in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022, respectively. Effective June 30, 2022, the Company amended the terms of the Common Stock Warrant (7,166,505 warrants), Lender Warrant (5,194,495 warrants) and Purchaser Warrant (1,400,000 warrants). The amendments to such warrants removes the holder’s option to determine the value of such warrants utilizing the volume weighted average price (“VWAP”) of the Company’s common stock on the trading day immediately preceding the date of a notice in a cashless exercise, and removes the condition to exercising such warrants that the Company’s shareholders approve the exercise thereof (which has already been obtained). The amendments to the warrants also extend the term of such warrants for an additional one year, such that the Common Stock Warrant will expire on February 3, 2028, and the Lender Warrant and Purchaser Warrant will expire on February 17, 2028. As a result of the extension in term provided in exchange for the amendment, the Company reassessed the fair value of each of the Common Stock, Lender and Purchaser Warrants, resulting in the Company recording a loss on the fair value of these warrants of $345 in the Condensed Consolidated Statement of Operations for the three months ended June 30, 2022. The foregoing amendments to the warrants resulted in such warrants to be accounted for as equity instruments on the Company’s financial statements as of June 30, 2022. As such, following recording the gains and losses with respect to these warrant amendments, the Company reclassified the warrant liability of $5,709 from noncurrent liabilities to additional paid-in-capital as of June 30, 2022. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2022 | |
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 - $1.00 - - $ - - $ - $1.01 - $2.00 25,000 7.36 $ 1.88 16,667 $ 1.88 $2.01+ 1,963,675 7.47 4.29 1,312,008 $ 3.78 1,988,675 7.47 $ 3.34 1,328,675 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 - $1.00 - - $ - - $ - $1.01 - $2.00 - - $ - - $ - $2.01+ 720,000 7.93 2.53 240,000 $ 2.53 720,000 7.93 $ 2.53 240,000 Market 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 - $1.00 1,900,000 2.64 $ 1.00 - $ - $1.01 - $2.00 - - $ - - $ - $2.01+ - - - - $ - 1,900,000 2.64 $ 1.00 - Market Vesting Options Time Vesting Options Performance Vesting Options Weighted Weighted Weighted Average Average Average Options Exercise Options Exercise Options Exercise Date/Activity Outstanding Price Outstanding Price Outstanding Price Balance, December 31, 2021 - - 2,068,809 $ 3.48 800,000 $ 2.53 Granted 1,900,000 1.00 - - - - Exercised - - - - - - Forfeited or expired - - (80,134 ) 2.79 (80,000 ) 2.53 Balance, June 30, 2022 1,900,000 1.00 1,988,675 3.34 720,000 $ 2.53 The weighted average remaining contractual life for options exercisable is 7.25 years as of June 30, 2022. Valuation Information for Stock-Based Compensation For purposes of determining estimated fair value under FASB ASC 718-10, Stock Compensation Amendment to Performance Options On June 1, 2020, Rick Mills, CEO, and Will Logan, CFO, were issued ten-year options to purchase 480,000 and 240,000 shares of common stock (the “Performance Options”), respectively, which vest in equal installments over a three-year period (2020-2022), subject to satisfying the Company revenue target and EBITDA (earnings before interest, taxes, depreciation and amortization) targets 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. The Performance Options includes 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. On June 15, 2022, the Board approved of an amendment to the Performance Options to provide that the revenue target for the calendar year 2022 set forth therein ($38,000) is eliminated, and the remaining shares that are available for vesting under the Performance Options (320,000 unvested shares for Mr. Mills and 160,000 for Mr. Logan) (including the unvested portions of shares based on the satisfaction of the revenue targets for 2020 and 2021 by virtue of the catch-up provisions in the Performance Options) will fully vest upon the achievement of an updated EBITDA target for calendar year 2022 of $3,600. The Performance Options state that the calculation of EBITDA set forth in the Performance Options shall be calculated in a form consistent with the Company’s 2022 approved budget, which (i) excludes any impact on EBITDA of: (a) the accounting treatment (including any “mark-to-market accounting”) of the Company’s warrants or the “Guaranteed Consideration” (as defined in the Merger Agreement), (b) non-recurring transaction expenses associated with the Merger and the capital raising financing activities of the Company to effectuate the Merger, and (c) any write-down or write-off of any Company inventory of Safe Space Solutions products. (iii) includes deductions related to any cash or stock bonuses paid or payable to any employees of the Company for services provided in calendar year 2022 (even if such bonuses are actually paid after calendar year 2022), including bonuses paid pursuant to the terms of the 2022 Cash Bonus Plan (as described below) (collectively, the “EBITDA Calculations”). 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 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 EBITDA target is assessed quarterly by the Company in order to determine whether any compensation expense should be recorded. During the three and six months ended June 30, 2022, the Company deemed it probable that the Company would achieve the EBITDA target for calendar year 2022 and recorded compensation expense in the Consolidated Statement of Operations with respect to these awards of $175 and $400, respectively, net of a benefit of $50 recorded for forfeiture of awards. The remaining awards have not yet vested and are subject to actual results for the full calendar year 2022. Should this target not be achieved, amounts recorded as expense in the Condensed Consolidated Statement of Operations would be reversed. Issuance of New Options On June 15, 2022, Messrs. Mills and Logan received ten-year options to purchase 1,000,000 and 600,000 shares of common stock, respectively (the “New Options”). The New Options are eligible to vest at any time on or prior to February 17, 2025 if the trailing 10-trading day volume-weighted average price (“VWAP”) of the Company’s common stock, as reported on the Nasdaq Capital Market, exceeds the share price targets below, subject to such executive serving the Company as a director, officer, employee or consultant at such time: Share Price Targets Executive $2.00 $3.00 $4.00 $5.00 $6.00 Guaranteed Price Total Shares Mills Shares Vested 50,000 100,000 150,000 200,000 250,000 250,000 1,000,000 Logan Shares Vested 30,000 60,000 90,000 120,000 150,000 150,000 600,000 Percentage of Shares Vested 5 % 10 % 15 % 20 % 25 % 25 % The “Guaranteed Price” has the meaning ascribed to such term in the Merger Agreement, which means $6.40 per share, or $7.20 per share if, and only if, certain customers set forth in the Merger Agreement collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022. The exercise price of the New Options is $1.00 per share, which exceeds the closing price of the Company’s common stock on the date of issuance. The New Options are issued from the Company’s 2014 Stock Incentive Plan, as amended. An additional 300,000 options with identical market vesting restrictions were issued to non-executives during the three months ended June 30, 2022. The fair value of the options on the grant date varied between $0.21 and $0.37 per award as determined using the Monte Carlo model. These values were calculated using the following weighted average assumptions: Risk-free interest rate 3.30 % Expected term 2.68 years Expected price volatility 123.53 % Dividend yield 0 % At June 30, 2022, the Company evaluated the probability of achieving the share price targets in each tranche based, in part, on work performed by the Company’s third party valuation specialist in conjunction with evaluating the equity guarantee contingent liability. As a result of that evaluation of probability, during the three months ended June 30, 2022 the Company recorded $1 of compensation expense. These awards have not yet vested and are subject to actual share price performance through February 2025. Should any target not be achieved, any amounts recorded as expense in the Condensed Consolidated Statement of Operations related to that tranche would be reversed. 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. Employee Awards Compensation expense recognized for the issuance of stock options, inclusive of performance-restricted stock options, for the three and six months ended June 30, 2022 of $398 and $948, respectively, was included in general and administrative expense in the Condensed Consolidated Financial Statements. Compensation expense recognized for the issuance of stock options, inclusive of performance-restricted stock options, for the three and six months ended June 30, 2021 of $356 and $895, respectively, was included in general and administrative expense in the Condensed Consolidated Financial Statements. Amounts recorded include stock compensation expense for awards granted to directors of the Company in exchange for services at fair value. As of June 30, 2022, there was approximately $971 and $930 of total unrecognized compensation expense related to unvested share-based employee awards with time vesting and performance vesting criteria, respectively. As of June 30, 2021, there was approximately $1,861 and $1,157 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. Non-Employee Awards The Company engages certain consultants to perform services in exchange for Company common stock. Shares issued for services were calculated based on the ten (10) day volume weighted average price (“VWAP”) for the last ten (10) days during the month of service provided. During the three and six months ended June 30, 2022, the Company issued or accrued shares issuable in exchange for services in the amount of $45 and $70, respectively. During the three and six months ended June 30, 2021, the Company issued or accrued shares issuable in exchange for services in the amount of $40 and $40, respectively. |
Significant Customers_Vendors
Significant Customers/Vendors | 6 Months Ended |
Jun. 30, 2022 | |
Significant Customersvendors [Abstract] | |
SIGNIFICANT CUSTOMERS/VENDORS | NOTE 14: SIGNIFICANT CUSTOMERS/VENDORS Significant Customers We had one (1) and two (2) customers that in the aggregate accounted for 25.7% and 41.1% of accounts receivable as of June 30, 2022 and December 31, 2021, respectively. We had two (2) and three (3) customers that accounted for 37.5% and 44.0% of revenue for the three months ended June 30, 2022 and 2021, respectively. We had three (3) and two (2) customers that accounted for 54.3% and 37.4% of revenue for the six months ended June 30, 2022 and 2021, respectively. Significant Vendors We had two (2) and three (3) vendors that accounted for 48.3% and 69.1% of outstanding accounts payable at June 30, 2022 and December 31, 2021, respectively. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 15: 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 2027. 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) Six Months Ended Six Months Ended Finance lease cost Amortization of right-of-use assets $ - $ 4 Interest - - Operating lease cost 256 179 Total lease cost $ 256 $ 183 Weighted Average Remaining Lease Term Operating leases 3.45 years 3.3 years Weighted Average Discount Rate Operating leases 10.0 % 10.0 % The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2022: (in thousands) Operating The remainder of 2022 $ 342 2023 756 2024 459 2025 456 Thereafter 198 Total undiscounted cash flows 2,211 Less imputed interest $ (346 ) Present value of lease liabilities $ 1,865 Supplemental cash flow information related to leases are as follows: (in thousands) Six Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 256 $ 176 Operating cash flows from finance leases - 4 Financing cash flows from finance leases - (4 ) |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the applicable instructions to Form 10-Q and 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 interim financial reporting. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 22, 2022. The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. Management believes the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair statement of results for the interim periods presented. |
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. See Note 4 Revenue Recognition 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, 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. 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 net realizable value, determined by the first-in, first-out (FIFO) method, and consist of the following: June 30, December 31, 2022 2021 Raw materials, including those on consignment, net of reserve of $770 and $502, respectively $ 2,135 $ 1,583 Work-in-process 503 297 Total inventories $ 2,638 $ 1,880 |
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 Earnings/(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 22,472,886 at June 30, 2022 were excluded from the computation of income per share as the strike price on the options and warrants were higher than the Company’s market price and therefore anti-dilutive. Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling approximately 6,964,517 at June 30, 2021 were excluded from the computation of income per share as the strike price on the options and warrants were higher than the Company’s market price and therefore anti-dilutive. Diluted weighted average shares outstanding for the three and six-months ended June 30, 2021 included 8,333 options which were both exercisable and in-the-money as of June 30, 2021. Those options were included in the calculation of diluted earnings per share as of the beginning of the calculation period. In calculating diluted earnings per share for the three and six months ended June 30, 2021, 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 June 30, 2022 and December 31, 2021. |
Goodwill and Definite-Lived Intangible Assets | 7. Goodwill 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 Definite-lived intangible assets are amortized straight-line in accordance with their identified useful lives. Pursuant to ASC 350, these intangible assets are evaluated for impairment at least annually, or as indicators of impairment are identified. |
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: warrant liability valuation, contingent purchase consideration valuation, 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. |
Leases | 9. 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 condensed consolidated balance sheets. |
Business Combinations | 10. Business Combinations Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. Refer to Note 5, Business Combination |
Contingent Consideration | 11. Contingent Consideration The Company has contingent consideration arrangements related to certain acquisitions to potentially pay additional cash amounts in future periods based on the lack of achievement of certain share price performance goals of our common stock. Such contingent consideration arrangements are recorded at fair value and are classified as liabilities on the acquisition date and are remeasured at each reporting period in accordance with ASC 805-30-35-1 using a Monte Carlo simulation model. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of inventories | June 30, December 31, 2022 2021 Raw materials, including those on consignment, net of reserve of $770 and $502, respectively $ 2,135 $ 1,583 Work-in-process 503 297 Total inventories $ 2,638 $ 1,880 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue Recognition [Abstract] | |
Schedule of revenue by major source | (in thousands) Three Months Three Months Six Months Six Months Hardware $ 5,667 $ 1,296 $ 12,126 $ 4,112 Services: Installation Services 903 497 2,242 1,072 Software Development Services 109 93 300 367 Media Services 412 - 477 - Managed Services 3,832 1,391 6,535 2,730 Total Services 5,256 1,981 9,554 4,169 Total Hardware and Services $ 10,923 $ 3,277 $ 21,680 $ 8,281 |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Business Combinations [Abstract] | |
Schedule of preliminary purchase price of reflect | (in thousands) Consideration Cash consideration for Reflect stock $ 16,664 (1) Cash consideration for Retention Bonus Plan 1,334 (2) Common stock issued to Reflect shareholders 4,667 (3) Common stock issued to Retention Bonus Plan 333 (4) Secured Promissory Note 2,500 (5) Earnout liability 10,862 (6) Total consideration 36,360 Vendor deposit with the Company (818 ) (7) Cash acquired (812 ) (8) Net consideration transferred $ 34,730 |
Schedule of preliminary purchase price allocation | (in thousands) Total Accounts receivable $ 1,300 Inventory 196 Prepaid expenses & other current assets 666 Property and equipment 96 Operating right of use assets 493 Deferred tax assets, net of valuation allowance - Other assets 36 Identified intangible assets: Definite-lived trade names 960 Definite-lived Developed technology 5,130 Definite-lived Customer relationships 11,040 Definite-lived Noncompete agreements 30 Goodwill 18,569 Accounts payable (96 ) Accrued expenses (277 ) Customer deposits (1,661 ) Deferred revenues (1,259 ) Current maturities of operating leases (277 ) Long-term obligations under operating leases (216 ) Net consideration transferred $ 34,730 |
Schedule of preliminary valuation and amortization period of identifiable intangible assets | (in thousands) Preliminary Valuation Amortization Period Identifiable definite-lived intangible assets: Trade names $ 960 5 years Developed technology 5,130 10 years Noncompete 30 2 years Customer relationships 11,040 10 years Total $ 17,160 |
Schedule of unaudited pro forma | (in thousands, except earnings per common share) 2021 Net sales $ 30,680 Net income/(loss) $ 799 Earnings per common share $ 0.06 (in thousands) Three Months Six Months Net sales 6,266 13,707 Net income/(loss) 1,141 2,175 |
Supplemental Cash Flow Statem_2
Supplemental Cash Flow Statement Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Supplemental Cash Flow Statement Information [Abstract] | |
Schedule of supplemental cash flow statement information | Six Months Ended June 30, 2022 2021 Supplemental Cash Flow Information Cash paid during the period for: Interest $ 656 $ - Income taxes, net $ 44 $ 20 Supplemental disclosure of non-cash financing activities: Conversion of liability warrants to equity warrants $ 5,709 $ - |
Intangible Assets, Including _2
Intangible Assets, Including Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Intangible Assets, Including Goodwill [Abstract] | |
Schedule of intangible assets | June 30, December 31, Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Technology platform $ 9,765 3,908 $ 4,635 3,652 Purchased and developed software 4,108 3,029 3,488 2,713 In-Process internally developed software platform 2,532 - 824 - Customer relationships 15,000 2,153 3,960 1,692 Non-compete 30 6 - - Trademarks and trade names 1,600 712 640 640 33,035 9,808 13,547 8,697 Accumulated amortization 9,808 8,697 Net book value of amortizable intangible assets $ 23,227 $ 4,850 |
Loans Payable (Tables)
Loans Payable (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt with detachable warrants | As of June 30, 2022 Debt Type Issuance Principal Maturity Warrants Interest Rate Information A 2/17/2022 $ 10,000 2/15/2025 2,500,000 8.0% interest (1) B 2/17/2022 2,089 2/17/2023 - 0.59% interest (2) C 2/17/2022 7,185 2/15/2025 2,694,495 10.0% interest (3) Total debt, gross 19,274 5,194,495 Debt discount (3,796 ) Total debt, net $ 15,478 Less current maturities (2,089 ) Long term debt $ 13,389 As of December 31, 2021 Debt Type Issuance Principal Maturity Warrants Interest Rate Information D 8/17/2016 $ 4,767 2/17/2025 588,236 8.0% interest (4) E 12/30/2019 2,418 2/17/2025 - 10.0% interest (4) Total debt, gross 7,185 588,236 Fair value (B) (166 ) Total debt, gross 7,019 Debt discount (144 ) Total debt, net $ 6,875 Less current maturities - Long term debt $ 6,875 |
Warrants (Tables)
Warrants (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Warrants [Abstract] | |
Schedule of outstanding warrants | Warrants (Equity) Amount Weighted Weighted Balance December 31, 2021 4,103,211 $ 4.48 1.73 Warrants issued 5,851,505 1.535 5.00 Warrants exercised (5,851,505 ) 1.535 4.86 Warrants reclassified 13,761,000 1.63 4.61 Balance June 30, 2022 17,864,211 $ 2.21 3.83 Warrants (Liability) Amount Weighted Weighted Balance December 31, 2021 - $ - - Warrants issued 13,761,000 1.63 5.00 Warrants expired - - - Warrants reclassified (13,761,000 ) 1.63 (5.00 ) Balance June 30, 2022 - $ - - |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of outstanding options | 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 - $1.00 - - $ - - $ - $1.01 - $2.00 25,000 7.36 $ 1.88 16,667 $ 1.88 $2.01+ 1,963,675 7.47 4.29 1,312,008 $ 3.78 1,988,675 7.47 $ 3.34 1,328,675 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 - $1.00 - - $ - - $ - $1.01 - $2.00 - - $ - - $ - $2.01+ 720,000 7.93 2.53 240,000 $ 2.53 720,000 7.93 $ 2.53 240,000 Market 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 - $1.00 1,900,000 2.64 $ 1.00 - $ - $1.01 - $2.00 - - $ - - $ - $2.01+ - - - - $ - 1,900,000 2.64 $ 1.00 - |
Schedule of stock option activity | Market Vesting Options Time Vesting Options Performance Vesting Options Weighted Weighted Weighted Average Average Average Options Exercise Options Exercise Options Exercise Date/Activity Outstanding Price Outstanding Price Outstanding Price Balance, December 31, 2021 - - 2,068,809 $ 3.48 800,000 $ 2.53 Granted 1,900,000 1.00 - - - - Exercised - - - - - - Forfeited or expired - - (80,134 ) 2.79 (80,000 ) 2.53 Balance, June 30, 2022 1,900,000 1.00 1,988,675 3.34 720,000 $ 2.53 |
Schedule of subject to such executive serving the company as a director, officer, employee or consultant | Share Price Targets Executive $2.00 $3.00 $4.00 $5.00 $6.00 Guaranteed Price Total Shares Mills Shares Vested 50,000 100,000 150,000 200,000 250,000 250,000 1,000,000 Logan Shares Vested 30,000 60,000 90,000 120,000 150,000 150,000 600,000 Percentage of Shares Vested 5 % 10 % 15 % 20 % 25 % 25 % |
Schedule of fair value of the options on the grant date | Risk-free interest rate 3.30 % Expected term 2.68 years Expected price volatility 123.53 % Dividend yield 0 % |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Schedule of components of lease costs, lease term and discount rate | (in thousands) Six Months Ended Six Months Ended Finance lease cost Amortization of right-of-use assets $ - $ 4 Interest - - Operating lease cost 256 179 Total lease cost $ 256 $ 183 Weighted Average Remaining Lease Term Operating leases 3.45 years 3.3 years Weighted Average Discount Rate Operating leases 10.0 % 10.0 % |
Schedule of maturities of lease liabilities | (in thousands) Operating The remainder of 2022 $ 342 2023 756 2024 459 2025 456 Thereafter 198 Total undiscounted cash flows 2,211 Less imputed interest $ (346 ) Present value of lease liabilities $ 1,865 |
Schedule of cash flow information related to leases | (in thousands) Six Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 256 $ 176 Operating cash flows from finance leases - 4 Financing cash flows from finance leases - (4 ) |
Nature of Organization and Op_2
Nature of Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 03, 2022 | Feb. 17, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Nature of Organization and Operations (Details) [Line Items] | ||||||
Merger agreement description | Subject to the terms and conditions of the Merger Agreement, upon the closing of the Merger, Reflect stockholders as of the effective time of the Merger collectively received from the Company, in the aggregate, the following Merger consideration: (i) $16,166 in cash, (ii) 2,333,334 shares of common stock of Creative Realities (valued based on an issuance price of $2 per share) (the “CREX Shares”), (iii) the Secured Promissory Note (as described below), and (iv) supplemental cash payments (the “Guaranteed Consideration”), if any, payable on or after the three-year anniversary of the effective time of the Merger (subject to the Extension Option described below, the “Guarantee Date”), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per share (such applicable amount, the “Guaranteed Price”), multiplied by the amount of CREX Shares held by the Reflect stockholders on the Guarantee Date (subject to the Extension Option described below), subject to the terms of the Merger Agreement. | |||||
Guaranteed price percentage | 80% | |||||
Guaranteed price per share (in Dollars per share) | $ 1 | |||||
Retention bonus plan, description | the Company is required to pay to key members of Reflect’s management team an aggregate of $1,333 in cash, which was paid 50% at the closing of the Merger (the “Closing”), and subject to continuous employment with Reflect or Creative Realities, 25% on the one-year anniversary of Closing and 25% on the two-year anniversary of the Closing. The future cash payments due on the one-year and two-year anniversaries of the Closing have been deposited into an escrow agreement. The Retention Bonus Plan also requires the Company to issue Common Stock having an aggregate value of $667 to the plan participants as follows: 50% of the value of such shares were issued at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% of the value of such shares will be issued on the one-year anniversary of Closing and the remaining 25% of the value of such shares will be issued on the two-year anniversary of the Closing. The shares issued on the Closing were valued at $2.00 per share, and the shares to be issued after the Closing will be determined based on dividing the value of shares issuable on such date divided by the trailing 10-day volume weighted average price (VWAP) of the shares as of such date as reported on the Nasdaq Capital Market. | |||||
Securities purchase agreement description | the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with a purchaser (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser, in a private placement priced at-the-market under Nasdaq rules, (i) 1,315,000 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”) and accompanying warrants to purchase an aggregate of 1,315,000 shares of Common Stock, and (ii) pre-funded warrants to purchase up to an aggregate of 5,851,505 shares of Common Stock (the “Pre-Funded Warrants”) and accompanying warrants to purchase an aggregate of 5,851,505 shares of Common Stock (collectively, the “Private Placement”). The accompanying warrants to purchase Common Stock are referred to herein collectively as the “Common Stock Warrants.” Under the Securities Purchase Agreement, each Share and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.535, and each Pre-Funded Warrant and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.5349, for gross proceeds of approximately $11,000 before deducting placement agent fees and offering expenses payable by the Company. Net proceeds to the Company were $10,160. The remaining exercise price for the Pre-Funded Warrant was $0.0001. Collectively, we refer to this transaction throughout this filing as the “Equity Financing”. The net proceeds from the Private Placement were used to fund, in part, payment of the closing cash consideration in the Merger. | |||||
2022-02-01 | $ 10,000 | |||||
Security agreement | $ 2,500 | |||||
Promissory note accrues interest | 0.59% | |||||
Principal installments | $ 104 | |||||
Recognized net income | $ 1,262 | $ 1,025 | 3,764 | $ 2,297 | ||
Cash and cash equivalents | 2,840 | 2,840 | ||||
Working capital surplus | $ 649 | $ 649 | ||||
Retention Bonus Plan [Member] | ||||||
Nature of Organization and Operations (Details) [Line Items] | ||||||
Retention bonus plan, description | the Company adopted a Retention Bonus Plan, pursuant to which the Company is required to pay to key members of Reflect’s management team an aggregate of $1,333 in cash, which was paid 50% at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% on the one-year anniversary of Closing and 25% on the two-year anniversary of the Closing. The future cash payments due on the one-year and two-year anniversaries of the Closing have been deposited into an escrow agreement. The Retention Bonus Plan also requires the Company to issue Common Stock having an aggregate value of $667 to the plan participants as follows: 50% of the value of such shares were issued at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% of the value of such shares will be issued on the one-year anniversary of Closing and the remaining 25% of the value of such shares will be issued on the two-year anniversary of the Closing. The shares issued on the Closing were valued at $2.00 per share, and the shares to be issued after the Closing will be determined based on dividing the value of shares issuable on such date divided by the trailing 10-day volume weighted average price (VWAP) of the shares as of such date as reported on the Nasdaq Capital Market. | |||||
Extension Option [Member] | ||||||
Nature of Organization and Operations (Details) [Line Items] | ||||||
Guaranteed price percentage | 70% | |||||
Debt Financing [Member] | ||||||
Nature of Organization and Operations (Details) [Line Items] | ||||||
Maturity date | Feb. 01, 2025 | |||||
2022-02-01 | $ 10,000 | |||||
Senior secured term loan | 4,767 | |||||
Secured convertible loan | 2,418 | |||||
Outstanding principal | $ 7,185 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - shares | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2022 | |
Accounting Policies [Abstract] | ||
Outstanding stock options and warrants | 6,964,517 | 22,472,886 |
Diluted weighted average shares outstanding | 8,333 | 8,333 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of inventories - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Schedule of inventories [Abstract] | ||
Raw materials, including those on consignment, net of reserve of $770 and $502, respectively | $ 2,135 | $ 1,583 |
Work-in-process | 503 | 297 |
Total inventories | $ 2,638 | $ 1,880 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of inventories (Parentheticals) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Schedule of inventories [Abstract] | ||
Raw materials, net of reserve | $ 770 | $ 502 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue Recognition [Abstract] | ||
Aggregate amounI | $ 0 | $ 0 |
Revenue Recognition (Details) -
Revenue Recognition (Details) - Schedule of revenue by major source - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||||
Hardware | $ 5,667 | $ 1,296 | $ 12,126 | $ 4,112 |
Total Services | 5,256 | 1,981 | 9,554 | 4,169 |
Total Hardware and Services | 10,923 | 3,277 | 21,680 | 8,281 |
Installation Services [Member] | ||||
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||||
Total Services | 903 | 497 | 2,242 | 1,072 |
Software Development Services [Member] | ||||
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||||
Total Services | 109 | 93 | 300 | 367 |
Media Sales [Member] | ||||
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||||
Total Services | 412 | 477 | ||
Managed Services [Member] | ||||
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items] | ||||
Total Services | $ 3,832 | $ 1,391 | $ 6,535 | $ 2,730 |
Business Combination (Details)
Business Combination (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Mar. 15, 2022 | Feb. 17, 2022 | Jun. 30, 2022 | Jun. 30, 2022 | |
Business Combination (Details) [Line Items] | ||||
Merger agreement description | Subject to the terms and conditions of the Merger Agreement, upon the closing of the Merger, Reflect stockholders as of the effective time of the Merger collectively received from the Company, in the aggregate, the following Merger consideration: (i) $16,166 payable in cash, (ii) 2,333,334 shares of common stock of Creative Realities (valued based on an issuance price of $2 per share) (the “CREX Shares”), (iii) the Secured Promissory Note (as described below), and (iv) supplemental cash payments (the “Guaranteed Consideration”), if any, payable on or after the three-year anniversary of the effective time of the Merger (subject to the Extension Option described below, the “Guarantee Date”), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per share (such applicable amount, the “Guaranteed Price”), multiplied by the amount of CREX Shares held by the Reflect stockholders on the Guarantee Date (subject to the Extension Option described below), subject to the terms of the Merger Agreement. | |||
Extend the guarantee date description | Creative Realities may exercise an extension option (the “Extension Option”) to extend the Guarantee Date from the three-year anniversary of the Closing Date to six (6) months thereafter if (i) the Extension Threshold Price is greater than or equal to 70% of the Guaranteed Price described above, and (ii) Creative Realities provides written notice of its election to exercise the Extension Option at least ten (10) days prior to the three-year anniversary of the Closing. The “Extension Threshold Price” means the average closing price per share of Creative Realities Shares as reported on the Nasdaq Capital Market (or NYSE) in the fifteen (15) consecutive trading day period ending fifteen (15) days prior to the three-year anniversary of the Closing Date. If the Extension Threshold Price is less than 80% of the Guaranteed Price, then the Guaranteed Price will be increased by $1.00 per share. | |||
Retention bonus plan description | the Company is required to pay to key members of Reflect’s management team an aggregate of $1,333 in cash, which was paid 50% at the closing of the Merger (the “Closing”), and subject to continuous employment with Reflect or Creative Realities, 25% on the one-year anniversary of Closing and 25% on the two-year anniversary of the Closing. The future cash payments due on the one-year and two-year anniversaries of the Closing have been deposited into an escrow agreement. The Retention Bonus Plan also requires the Company to issue Common Stock having an aggregate value of $667 to the plan participants as follows: 50% of the value of such shares were issued at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% of the value of such shares will be issued on the one-year anniversary of Closing and the remaining 25% of the value of such shares will be issued on the two-year anniversary of the Closing. The shares issued on the Closing were valued at $2.00 per share, and the shares to be issued after the Closing will be determined based on dividing the value of shares issuable on such date divided by the trailing 10-day volume weighted average price (VWAP) of the shares as of such date as reported on the Nasdaq Capital Market. | |||
Security agreement amount | $ 2,500,000 | |||
Accrues interest percentage | 0.59% | |||
Principal installments amount | $ 104,000 | |||
Merger shares, per share (in Dollars per share) | $ 6.4 | $ 6.4 | ||
Billable devices (in Shares) | 85,000 | |||
Guarnteed price per share (in Dollars per share) | $ 7.2 | |||
Contingent liability | $ 5,262,000 | |||
Deposit assets | $ 818 | $ 818 | ||
Direct transaction costs | 37,000 | 428,000 | ||
Intangible assets | 4,340,000 | |||
Amortization expense | $ 180,000 | |||
Fair value of property, plant and equipment | $ 96,000 | |||
Minimum [Member] | ||||
Business Combination (Details) [Line Items] | ||||
Weighted average lives ranging | 2 years | |||
Maximum [Member] | ||||
Business Combination (Details) [Line Items] | ||||
Weighted average lives ranging | 10 years | |||
Secured Promissory Note [Member] | ||||
Business Combination (Details) [Line Items] | ||||
Accrues interest percentage | 0.59% | |||
Principal installments amount | $ 104,000 |
Business Combination (Details)
Business Combination (Details) - Schedule of preliminary purchase price of reflect $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 USD ($) | ||
Schedule of preliminary purchase price of reflect [Abstract] | ||
Cash consideration for Reflect stock | $ 16,664 | [1] |
Cash consideration for Retention Bonus Plan | 1,334 | [2] |
Common stock issued to Reflect shareholders | 4,667 | [3] |
Common stock issued to Retention Bonus Plan | 333 | [4] |
Secured Promissory Note | 2,500 | [5] |
Earnout liability | 10,862 | [6] |
Total consideration | 36,360 | |
Vendor deposit with the Company | (818) | [7] |
Cash acquired | (812) | [8] |
Net consideration transferred | $ 34,730 | |
[1]Cash consideration for outstanding shares of Reflect capital stock per Merger Agreement.[2]Cash consideration utilized to fund the Retention Bonus Plan per Merger Agreement.[3]Company common stock issued in exchange for outstanding shares of Reflect capital stock per Merger Agreement.[4]Company common stock issued to fund the Retention Bonus Plan per Merger Agreement.[5]The Secured Promissory Note accrues interest at 0.59% (the applicable federal rate) and requires the Company and Reflect to pay equal monthly principal installments of $104 on the fifteenth (15th) day of each month, commencing on March 15, 2022. Any remaining or unpaid principal shall be due and payable on February 17, 2023.[6]Represents an estimate of the fair value of the Guaranteed Consideration as of the Merger, which, if any, is payable on or after the three-year anniversary of the effective time of the Merger (subject to the Extension Option), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per share (such applicable amount, the “Guaranteed Price”), multiplied by the amount of CREX Shares held by the Reflect stockholders on the Guarantee Date (subject to the Extension Option), subject to the terms of the Merger Agreement. During the three months ended June 30, 2022, the Company’s third party specialist completed valuation of this contingent liability as of the opening balance sheet date, resulting in a measurement period adjustment recorded to increase goodwill and the contingent liability as of February 17, 2022 by $5,262.[7]Represents the Reflect cash balance acquired at Closing.[8]Prior to the Merger, Reflect had engaged the Company on a project and paid the Company a deposit of $818. These amounts reduced consideration paid by the Company in accordance with ASC 805. |
Business Combination (Details_2
Business Combination (Details) - Schedule of preliminary purchase price allocation $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Schedule of preliminary purchase price allocation [Abstract] | |
Accounts receivable | $ 1,300 |
Inventory | 196 |
Prepaid expenses & other current assets | 666 |
Property and equipment | 96 |
Operating right of use assets | 493 |
Deferred tax assets, net of valuation allowance | |
Other assets | 36 |
Definite-lived trade names | 960 |
Definite-lived Developed technology | 5,130 |
Definite-lived Customer relationships | 11,040 |
Definite-lived Noncompete agreements | 30 |
Goodwill | 18,569 |
Accounts payable | (96) |
Accrued expenses | (277) |
Customer deposits | (1,661) |
Deferred revenues | (1,259) |
Current maturities of operating leases | (277) |
Long-term obligations under operating leases | (216) |
Net consideration transferred | $ 34,730 |
Business Combination (Details_3
Business Combination (Details) - Schedule of preliminary valuation and amortization period of identifiable intangible assets $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Identifiable definite-lived intangible assets: | |
Preliminary Valuation | $ 17,160 |
Trade names [Member] | |
Identifiable definite-lived intangible assets: | |
Preliminary Valuation | $ 960 |
Amortization Period | 5 years |
Developed technology [Member] | |
Identifiable definite-lived intangible assets: | |
Preliminary Valuation | $ 5,130 |
Amortization Period | 10 years |
Noncompete [Member] | |
Identifiable definite-lived intangible assets: | |
Preliminary Valuation | $ 30 |
Amortization Period | 2 years |
Customer relationships [Member] | |
Identifiable definite-lived intangible assets: | |
Preliminary Valuation | $ 11,040 |
Amortization Period | 10 years |
Business Combination (Details_4
Business Combination (Details) - Schedule of unaudited pro forma - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Schedule of unaudited pro forma [Abstract] | |||||
Net sales | $ 6,266 | $ 13,707 | $ 30,680 | ||
Net income/(loss) | $ 1,141 | $ 2,175 | $ 799 | ||
Earnings per common share (in Dollars per share) | $ 0.06 | $ 0.09 | $ 0.21 | $ 0.2 | $ 0.06 |
Supplemental Cash Flow Statem_3
Supplemental Cash Flow Statement Information (Details) - Schedule of supplemental cash flow statement information - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash paid during the period for: | ||
Interest | $ 656 | |
Income taxes, net | 44 | $ 20 |
Supplemental disclosure of non-cash financing activities: | ||
Conversion of liability warrants to equity warrants | $ 5,709 |
Intangible Assets, Including _3
Intangible Assets, Including Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Intangible Assets, Including Goodwill [Abstract] | |||||
Amortization of intangible assets | $ 431 | $ 680 | $ 139 | $ 1,111 | $ 279 |
Excess of common stock (in Shares) | 7,000,000 | 7,000,000 |
Intangible Assets, Including _4
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | $ 33,035 | $ 13,547 |
Accumulated Amortization | 9,808 | 8,697 |
Gross Carrying Amount, Accumulated amortization | 9,808 | 8,697 |
Net book value of amortizable intangible assets | 23,227 | 4,850 |
Technology platform [Member] | ||
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 9,765 | 4,635 |
Accumulated Amortization | 3,908 | 3,652 |
Purchased and developed software [Member] | ||
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 4,108 | 3,488 |
Accumulated Amortization | 3,029 | 2,713 |
In-Process internally developed software platform [Member] | ||
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 2,532 | 824 |
Accumulated Amortization | ||
Customer relationships [Member] | ||
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 15,000 | 3,960 |
Accumulated Amortization | 2,153 | 1,692 |
Non-compete [Member] | ||
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 30 | |
Accumulated Amortization | 6 | |
Trademarks and trade names [Member] | ||
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 1,600 | 640 |
Accumulated Amortization | $ 712 | $ 640 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Feb. 17, 2022 | Apr. 27, 2020 | Jun. 30, 2018 | Jun. 30, 2022 | Jun. 30, 2022 | |
Loans Payable (Details) [Line Items] | |||||
Loans payable description | (1)8.0% cash interest per annum through maturity at February 15, 2025.(2)0.59% cash interest per annum (the applicable federal rate) through maturity at February 17, 2023.(3)10.0% cash interest per annum through maturity at February 15, 2025.(4)Interest was paid-in-kind (“PIK”) through October 2021, at which point interest became payable in cash at the stated interest rates through maturity. | ||||
Promissory note, description | the Company entered into a Promissory Note with Old National Bank (the “Promissory Note”), which provided for an unsecured loan of $1,552 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”). The Promissory Note had a term of two years with a 1% per annum interest rate. | ||||
Principal installments | $ 104 | ||||
Credit agreement description | The Credit Agreement also provides that the Company’s outstanding loans from Slipstream at December 31, 2021, consisting of its pre-existing $4,767 senior secured term loan and $2,418 secured convertible loan, with an aggregate of $7,185 in outstanding principal and accrued and unpaid interest under such loans, were consolidated into a term loan (the “Consolidation Term Loan”). The Consolidation Term Loan has an interest rate of 10.0%, with 75.0% warrant coverage (or 2,694,495 warrants). On the first day of each month, commencing March 1, 2022 through February 1, 2025, the Borrowers will make interest-only payments on the Consolidation Term Loan (estimated to be $60 per monthly payment). Commencing on September 1, 2023, and on the first day of each month thereafter until the Maturity Date, the Borrowers will make a payment on the Consolidation Term Loan, in an equal monthly installment of principal sufficient to fully amortize the Consolidation Term Loan in eighteen equal installments (estimated to be $399 per monthly installment). The Company assessed the combination of the pre-existing senior secured term loan and secured convertible loan in accordance with ASC 470 Debt and determined the transaction should be accounted for as an extinguishment, in part as the Consolidation Term Loan eliminated a substantive conversion feature. In aggregate the Company recorded a loss on extinguishment of $295, primarily associated with the write-off of pre-existing debt discounts. | ||||
Existing debt | $ 10,000 | ||||
Gross proceeds | 10,000 | ||||
Net proceeds | $ 9,950 | ||||
Maturity date | Feb. 17, 2025 | Feb. 17, 2025 | |||
Acquisition loan interest rate percentage | 8% | 8% | |||
Warrant coverage percentage | 50% | ||||
Warrant shares (in Shares) | 2,500,000 | 2,500,000 | |||
Payments on acquisition loan description | On the first day of each month, commencing March 1, 2022 through February 1, 2025, the Borrowers will make interest-only payments on the Acquisition Loan (estimated to be $67 per monthly payment). No principal payments on the Acquisition Loan are payable until the Maturity Date. | ||||
Shares purchase (in Shares) | 5,194,495 | ||||
Initial exercise price (in Dollars per share) | $ 2 | ||||
Fair value of per warrant (in Dollars per share) | $ 0.8129 | $ 0.8129 | |||
Incremental interest expense | $ 166 | $ 525 | |||
Loan and security agreement description | The Company paid no fees in exchange for these extensions, with the exception of the March 7, 2021 extension which resulted in the Company recording of $133 of incremental debt discount, a net gain of $26 via the extinguishment of the Special Loan, and expense of $69 of costs incurred with third parties as a result of extinguishment of the Special Loan, modification of the New Term Loan, and extinguishment of the Disbursed Escrow Loan. | ||||
Vesting of performance shares previously granted to CEO | $ 264 | ||||
Minimum [Member] | |||||
Loans Payable (Details) [Line Items] | |||||
Consolidation term loans | 2,032 | $ 2,032 | |||
Maximum [Member] | |||||
Loans Payable (Details) [Line Items] | |||||
Consolidation term loans | $ 2,190 | $ 2,190 | |||
Secured Promissory Note [Member] | |||||
Loans Payable (Details) [Line Items] | |||||
Agreement shares issued | $ 2,500 | ||||
Interest rate | 0.59% |
Loans Payable (Details) - Sched
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | ||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | |||
Issuance Date | Total debt, gross | Total debt, gross | |
Total debt, gross | $ 19,274 | $ 7,185 | |
Total debt, gross | 5,194,495 | 588,236 | |
Issuance Date | Fair value (B) | ||
Fair value | $ (166) | ||
Total debt, gross | $ 7,019 | ||
Issuance Date | Debt discount | Debt discount | |
Debt discount | $ (3,796) | $ (144) | |
Issuance Date | Total debt, net | Total debt, net | |
Total debt, net | $ 15,478 | $ 6,875 | |
Issuance Date | Less current maturities | Less current maturities | |
Less current maturities | $ (2,089) | ||
Issuance Date | Long term debt | Long term debt | |
Long term debt | $ 13,389 | $ 6,875 | |
2/17/2022 [Member] | |||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | |||
Debt Type | A | ||
Issuance Date | Feb. 17, 2022 | ||
Principal | $ 10,000 | ||
Maturity Date | Feb. 15, 2025 | ||
Warrants | 2,500,000 | ||
Interest Rate Information | [1] | 8.0% interest(1) | |
2/17/2022 [Member] | |||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | |||
Debt Type | B | ||
Issuance Date | Feb. 17, 2022 | ||
Principal | $ 2,089 | ||
Maturity Date | Feb. 17, 2023 | ||
Warrants | |||
Interest Rate Information | [2] | 0.59% interest (2) | |
2/17/2022 [Member] | |||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | |||
Debt Type | C | ||
Issuance Date | Feb. 17, 2022 | ||
Principal | $ 7,185 | ||
Maturity Date | Feb. 15, 2025 | ||
Warrants | 2,694,495 | ||
Interest Rate Information | [3] | 10.0% interest(3) | |
8/17/2016 [Member] | |||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | |||
Debt Type | D | ||
Issuance Date | Aug. 17, 2016 | ||
Principal | $ 4,767 | ||
Maturity Date | Feb. 17, 2025 | ||
Warrants | 588,236 | ||
Interest Rate Information | [4] | 8.0% interest(4) | |
12/30/2019 [Member] | |||
Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items] | |||
Debt Type | E | ||
Issuance Date | Dec. 30, 2019 | ||
Principal | $ 2,418 | ||
Maturity Date | Feb. 17, 2025 | ||
Warrants | |||
Interest Rate Information | [4] | 10.0% interest(4) | |
[1]8.0% cash interest per annum through maturity at February 15, 2025.[2]0.59% cash interest per annum (the applicable federal rate) through maturity at February 17, 2023.[3]10.0% cash interest per annum through maturity at February 15, 2025.[4]Interest was paid-in-kind (“PIK”) through October 2021, at which point interest became payable in cash at the stated interest rates through maturity. |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Oct. 10, 2019 | Jun. 30, 2021 | Jun. 30, 2021 | |
Commitments and Contingencies (Details) [Line Items] | |||
Accrued interests | $ 86 | $ 86 | |
Gain on settlement | 1,624 | ||
PPP Loan [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Accrued interests | 1,552 | 1,552 | |
Seller Note [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Accrued interests | 100 | $ 100 | |
Allure [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Settlement for an alleged breach of contract | $ 3,200 | ||
Seller Note [Member] | |||
Commitments and Contingencies (Details) [Line Items] | |||
Representing amount | $ 1,538 |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Income Taxes [Abstract] | |
Tax liability | $ 0 |
Deferred tax assets | $ 0 |
Warrants (Details)
Warrants (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Feb. 03, 2022 | Feb. 17, 2022 | Jun. 30, 2022 | Jun. 30, 2022 | Aug. 17, 2022 | |
Warrants (Details) [Line Items] | |||||
Securities purchase agreement, description | the Company entered into a Securities Purchase Agreement with a purchaser (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser, in a private placement priced at-the-market under Nasdaq rules, (i) 1,315,000 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”) and accompanying warrants to purchase an aggregate of 1,315,000 shares of Common Stock, and (ii) pre-funded warrants to purchase up to an aggregate of 5,851,505 shares of Common Stock (the “Pre-Funded Warrants”) and accompanying warrants to purchase an aggregate of 5,851,505 shares of Common Stock (collectively, the “Private Placement”). The accompanying warrants to purchase Common Stock are referred to herein collectively as the “Common Stock Warrants.” Under the Securities Purchase Agreement, each Share and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.535, and each Pre-Funded Warrant and accompanying warrants to purchase Common Stock were sold together at a combined price of $1.5349, for gross proceeds of approximately $11,000, before deducting placement agent fees and estimated offering expenses payable by the Company. | ||||
Warrant term | 1 year | ||||
Fair value price per share (in Dollars per share) | $ 0.8656 | $ 0.8656 | |||
Warrants issued (in Shares) | 5,194,495 | 7,166,505 | |||
Exercise price per share (in Dollars per share) | $ 2 | ||||
Date of issuance | 5 years | ||||
Purchase of common stock (in Shares) | 1,400,000 | ||||
Outstanding warrants (in Shares) | 175,000 | ||||
Repricing amount | $ 1,211,000 | ||||
Purchaser of warrant price per share (in Dollars per share) | $ 0.4017 | ||||
Purchaser warrant | $ 252,000 | $ 650,000 | |||
Terms of warrants | 5,194,495 | ||||
Fair value of warrants | 345,000 | ||||
Warrant liability | $ 5,709,000 | ||||
Warrant [Member] | |||||
Warrants (Details) [Line Items] | |||||
Warrant term | 5 years | ||||
Exercise price per share (in Dollars per share) | $ 0.125 | $ 0.125 | |||
Strike prices (in Dollars per share) | $ 5 | ||||
Purchaser warrant | $ 1,400,000 | ||||
Purchaser Warrant [Member] | |||||
Warrants (Details) [Line Items] | |||||
Exercise price per share (in Dollars per share) | $ 1.41 | ||||
Warrant [Member] | |||||
Warrants (Details) [Line Items] | |||||
Fair value price per share (in Dollars per share) | $ 0.8129 | 1,092.7000 | $ 1,092.7000 | ||
Issuance of warrants | $ 4,223,000 | ||||
Date of issuance | 5 years | ||||
Black Scholes One [Member] | |||||
Warrants (Details) [Line Items] | |||||
Fair value price per share (in Dollars per share) | $ 401.9000 | $ 401.9000 | |||
Issuance of warrants | $ 1,287,000 | $ 4,951,000 | |||
Black Scholes Two [Member] | |||||
Warrants (Details) [Line Items] | |||||
Fair value price per share (in Dollars per share) | $ 0.3699 | $ 0.3699 | |||
Issuance of warrants | $ 894,000 | $ 2,302,000 |
Warrants (Details) - Schedule o
Warrants (Details) - Schedule of outstanding warrants | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Warrants (Equity) [Member] | |
Class of Warrant or Right [Line Items] | |
Number of Shares, Warrants, Beginning Balance | shares | 4,103,211 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 4.48 |
Weighted Average Remaining Contractual Life, Beginning Balance | 1 year 8 months 23 days |
Number of Shares, Warrants, Warrants issued | shares | 5,851,505 |
Weighted Average Exercise Price, Warrants issued | $ / shares | $ 1.535 |
Weighted Average Remaining Contractual Life, Warrants issued | 5 years |
Number of Shares, Warrants exercised | shares | (5,851,505) |
Weighted Average Exercise Price, Warrants exercised | $ / shares | $ 1.535 |
Weighted Average Remaining Contractual Life, Warrants exercised | 4 years 10 months 9 days |
Number of Shares, Warrants exercised | shares | 13,761,000 |
Weighted Average Exercise Price, Warrants exercised | $ / shares | $ 1.63 |
Weighted Average Remaining Contractual Life, Warrants exercised | 4 years 7 months 9 days |
Number of Shares, Warrants, ending Balance | shares | 17,864,211 |
Weighted Average Exercise Price, ending Balance | $ / shares | $ 2.21 |
Weighted Average Remaining Contractual Life, ending Balance | 3 years 9 months 29 days |
Warrants (Liability) [Member] | |
Class of Warrant or Right [Line Items] | |
Number of Shares, Warrants, Beginning Balance | shares | |
Weighted Average Exercise Price, Beginning Balance | $ / shares | |
Weighted Average Remaining Contractual Life, Beginning Balance | |
Number of Shares, Warrants, Warrants issued | shares | 13,761,000 |
Weighted Average Exercise Price, Warrants issued | $ / shares | $ 1.63 |
Weighted Average Remaining Contractual Life, Warrants issued | 5 years |
Number of Shares, Warrants expired | shares | |
Weighted Average Exercise Price, Warrants expired | $ / shares | |
Weighted Average Remaining Contractual Life, Warrants expired | |
Number of Shares, Warrants exercised | shares | (13,761,000) |
Weighted Average Exercise Price, Warrants exercised | $ / shares | $ 1.63 |
Weighted Average Remaining Contractual Life, Warrants exercised | 5 years |
Number of Shares, Warrants, ending Balance | shares | |
Weighted Average Exercise Price, ending Balance | $ / shares | |
Weighted Average Remaining Contractual Life, ending Balance |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 15, 2022 | Jul. 10, 2020 | Aug. 31, 2018 | Oct. 31, 2014 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2022 | |
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Weighted average remaining contractual life | 7 years 3 months | |||||||||
Revenue target | $ (38,000) | |||||||||
EBITDA target | $ 3,600 | |||||||||
Exercise price (in Dollars per share) | $ 2.53 | |||||||||
Fair value of options on grant date (in Dollars per share) | $ 1.87 | |||||||||
Compensation expense | $ 175 | $ 400 | ||||||||
Net of a benefit | $ 50 | |||||||||
New options per share (in Dollars per share) | $ 1 | $ 1 | ||||||||
Additional options (in Shares) | 300,000 | |||||||||
Issuance of shares authorized (in Shares) | 600,000 | |||||||||
General and administrative expense | $ 398 | $ 356 | $ 948 | $ 895 | ||||||
Unrecognized compensation expense | 1,157 | 1,157 | ||||||||
Services cost | $ 45 | 40 | $ 70 | 40 | ||||||
Minimum [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Fair value options granted (in Dollars per share) | $ 0.21 | $ 0.21 | ||||||||
Unrecognized compensation expense | $ 971 | $ 971 | ||||||||
Maximum [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Fair value options granted (in Dollars per share) | $ 0.37 | $ 0.37 | ||||||||
Unrecognized compensation expense | $ 930 | $ 1,861 | $ 930 | $ 1,861 | ||||||
Forecast [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Merger agreement description | The “Guaranteed Price” has the meaning ascribed to such term in the Merger Agreement, which means $6.40 per share, or $7.20 per share if, and only if, certain customers set forth in the Merger Agreement collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022. | |||||||||
Stock Compensation Expense [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Compensation expense | $ 1 | |||||||||
2006 Equity Incentive Plan [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Shares reserved for company's employees (in Shares) | 1,720,000 | |||||||||
Options outstanding (in Shares) | 12,001 | 12,001 | ||||||||
2006 Non-Employee Director Stock Option Plan [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Shares reserved for company's employees (in Shares) | 700,000 | |||||||||
2014 Stock Incentive Plan [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Shares reserved for company's employees (in Shares) | 7,390,355 | |||||||||
Issuance of shares authorized (in Shares) | 6,000,000 | |||||||||
2014 Stock Incentive Plan [Member] | Minimum [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Issuance of shares authorized (in Shares) | 7,390,355 | |||||||||
2014 Stock Incentive Plan [Member] | Maximum [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Issuance of shares authorized (in Shares) | 18,000,000 | |||||||||
Messrs. Mills [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Purchase of common stock shares (in Shares) | 480,000 | |||||||||
Unvested shares (in Shares) | 320,000 | |||||||||
Purchase of shares (in Shares) | 1,000,000 | |||||||||
Logan [Member] | ||||||||||
Stock-Based Compensation (Details) [Line Items] | ||||||||||
Purchase of common stock shares (in Shares) | 240,000 | |||||||||
Unvested shares (in Shares) | 160,000 | |||||||||
Purchase of shares (in Shares) | 600,000 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - Schedule of outstanding options | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Time Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options , Number Outstanding (in Shares) | shares | 1,988,675 |
Time Vesting Options ,Weighted Average Remaining Contractual Life | 7 years 5 months 19 days |
Time Vesting Options ,Weighted Average Exercise Price | $ 3.34 |
Time Vesting Options ,Number Outstanding shares (in Shares) | shares | 1,328,675 |
Time Vesting Options [Member] | $0.01 - $1.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options , Number Outstanding (in Shares) | shares | |
Time Vesting Options ,Weighted Average Remaining Contractual Life | |
Time Vesting Options ,Weighted Average Exercise Price | |
Time Vesting Options ,Number Outstanding shares (in Shares) | shares | |
Time Vesting Options ,Weighted Average Exercise Price | |
Time Vesting Options [Member] | $0.01 - $1.00 [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options, Range of Exercise Prices Between | 0.01 |
Time Vesting Options [Member] | $0.01 - $1.00 [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options, Range of Exercise Prices Between | $ 1 |
Time Vesting Options [Member] | $1.01 - $2.00 [Member | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options , Number Outstanding (in Shares) | shares | 25,000 |
Time Vesting Options ,Weighted Average Remaining Contractual Life | 7 years 4 months 9 days |
Time Vesting Options ,Weighted Average Exercise Price | $ 1.88 |
Time Vesting Options ,Number Outstanding shares (in Shares) | shares | 16,667 |
Time Vesting Options ,Weighted Average Exercise Price | $ 1.88 |
Time Vesting Options [Member] | $1.01 - $2.00 [Member | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options, Range of Exercise Prices Between | 1.01 |
Time Vesting Options [Member] | $1.01 - $2.00 [Member | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options, Range of Exercise Prices Between | 2 |
Time Vesting Options [Member] | $2.01+ [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Time Vesting Options, Range of Exercise Prices Between | $ 2.01 |
Time Vesting Options , Number Outstanding (in Shares) | shares | 1,963,675 |
Time Vesting Options ,Weighted Average Remaining Contractual Life | 7 years 5 months 19 days |
Time Vesting Options ,Weighted Average Exercise Price | $ 4.29 |
Time Vesting Options ,Number Outstanding shares (in Shares) | shares | 1,312,008 |
Time Vesting Options ,Weighted Average Exercise Price | $ 3.78 |
Performance Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Number Outstanding (in Shares) | shares | 720,000 |
Performance Vesting Options ,Weighted Average Remaining Contractual Life | 7 years 11 months 4 days |
Performance Vesting Options ,Weighted Average Exercise Price | $ 2.53 |
Performance Vesting Options , Options Exercisable (in Shares) | shares | 240,000 |
Performance Vesting Options [Member] | $0.01 - $1.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Number Outstanding (in Shares) | shares | |
Performance Vesting Options ,Weighted Average Remaining Contractual Life | |
Performance Vesting Options ,Weighted Average Exercise Price | |
Performance Vesting Options , Options Exercisable (in Shares) | shares | |
Performance Vesting Options ,Weighted Average Exercise Price | |
Performance Vesting Options [Member] | $0.01 - $1.00 [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Exercise Price | 0.01 |
Performance Vesting Options [Member] | $0.01 - $1.00 [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Exercise Price | $ 1 |
Performance Vesting Options [Member] | $1.01 - $2.00 [Member | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Number Outstanding (in Shares) | shares | |
Performance Vesting Options ,Weighted Average Remaining Contractual Life | |
Performance Vesting Options , Options Exercisable (in Shares) | shares | |
Performance Vesting Options [Member] | $1.01 - $2.00 [Member | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Exercise Price | $ 1.01 |
Performance Vesting Options [Member] | $1.01 - $2.00 [Member | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Exercise Price | $ 2 |
Performance Vesting Options [Member] | $2.01+ [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Number Outstanding (in Shares) | shares | 720,000 |
Performance Vesting Options ,Weighted Average Remaining Contractual Life | 7 years 11 months 4 days |
Performance Vesting Options ,Weighted Average Exercise Price | $ 2.53 |
Performance Vesting Options , Options Exercisable (in Shares) | shares | 240,000 |
Performance Vesting Options ,Weighted Average Exercise Price | $ 2.53 |
Performance Vesting Options [Member] | $2.01+ [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Exercise Price | 2.01 |
Performance Vesting Options [Member] | $2.01+ [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Performance Vesting Options , Exercise Price | $ 2.01 |
Market Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Number Outstanding (in Shares) | shares | 1,900,000 |
Market Vesting Options, Weighted Average Remaining Contractual Life | 2 years 7 months 20 days |
Market Vesting Options, Weighted Average Exercise Price | $ 1 |
Market Vesting Options, Options Exercisable (in Shares) | shares | |
Market Vesting Options [Member] | $0.01 - $1.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Number Outstanding (in Shares) | shares | 1,900,000 |
Market Vesting Options, Weighted Average Remaining Contractual Life | 2 years 7 months 20 days |
Market Vesting Options, Weighted Average Exercise Price | $ 1 |
Market Vesting Options, Options Exercisable (in Shares) | shares | |
Market Vesting Options [Member] | $0.01 - $1.00 [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Range of Exercise Prices Between | $ 0.01 |
Market Vesting Options [Member] | $0.01 - $1.00 [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Range of Exercise Prices Between | $ 1 |
Market Vesting Options [Member] | $1.01 - $2.00 [Member | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Number Outstanding (in Shares) | shares | |
Market Vesting Options, Weighted Average Remaining Contractual Life | |
Market Vesting Options, Weighted Average Exercise Price | |
Market Vesting Options, Options Exercisable (in Shares) | shares | |
Market Vesting Options [Member] | $1.01 - $2.00 [Member | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Range of Exercise Prices Between | $ 1.01 |
Market Vesting Options [Member] | $1.01 - $2.00 [Member | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Range of Exercise Prices Between | $ 2 |
Market Vesting Options [Member] | $2.01+ [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Number Outstanding (in Shares) | shares | |
Market Vesting Options, Weighted Average Remaining Contractual Life | |
Market Vesting Options, Weighted Average Exercise Price | |
Market Vesting Options, Options Exercisable (in Shares) | shares | |
Market Vesting Options [Member] | $2.01+ [Member] | Minimum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Range of Exercise Prices Between | $ 2.01 |
Market Vesting Options [Member] | $2.01+ [Member] | Maximum [Member] | |
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items] | |
Market Vesting Options, Range of Exercise Prices Between | $ 2.01 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details) - Schedule of stock option activity | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Market Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock option activity [Line Items] | |
Options Outstanding, Beginning Balance | shares | |
Weighted Average Exercise Price, Beginning Balance | $ / shares | |
Options Outstanding, Granted | shares | 1,900,000 |
Weighted Average Exercise Price, Granted | $ / shares | $ 1 |
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 | 1,900,000 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 1 |
Time Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock option activity [Line Items] | |
Options Outstanding, Beginning Balance | shares | 2,068,809 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 3.48 |
Options Outstanding, Granted | shares | |
Weighted Average Exercise Price, Granted | $ / shares | |
Options Outstanding, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Options Outstanding, Forfeited or expired | shares | (80,134) |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | $ 2.79 |
Options Outstanding Ending Balance | shares | 1,988,675 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 3.34 |
Performance Vesting Options [Member] | |
Stock-Based Compensation (Details) - Schedule of stock option activity [Line Items] | |
Options Outstanding, Beginning Balance | shares | 800,000 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 2.53 |
Options Outstanding, Granted | shares | |
Weighted Average Exercise Price, Granted | $ / shares | |
Options Outstanding, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Options Outstanding, Forfeited or expired | shares | (80,000) |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | $ 2.53 |
Options Outstanding Ending Balance | shares | 720,000 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 2.53 |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant | 6 Months Ended |
Jun. 30, 2022 shares | |
Mills Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 1,000,000 |
Logan Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 600,000 |
Share Price Targets 2.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Percentage of Shares Vested | 5% |
Share Price Targets 2.00 [Member] | Mills Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 50,000 |
Share Price Targets 2.00 [Member] | Logan Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 30,000 |
Share Price Targets 3.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Percentage of Shares Vested | 10% |
Share Price Targets 3.00 [Member] | Mills Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 100,000 |
Share Price Targets 3.00 [Member] | Logan Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 60,000 |
Share Price Targets 4.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Percentage of Shares Vested | 15% |
Share Price Targets 4.00 [Member] | Mills Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 150,000 |
Share Price Targets 4.00 [Member] | Logan Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 90,000 |
Share Price Targets 5.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Percentage of Shares Vested | 20% |
Share Price Targets 5.00 [Member] | Mills Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 200,000 |
Share Price Targets 5.00 [Member] | Logan Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 120,000 |
Share Price Targets 6.00 [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Percentage of Shares Vested | 25% |
Share Price Targets 6.00 [Member] | Mills Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 250,000 |
Share Price Targets 6.00 [Member] | Logan Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 150,000 |
Share Price Targets Guaranteed Price [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Percentage of Shares Vested | 25% |
Share Price Targets Guaranteed Price [Member] | Mills Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 250,000 |
Share Price Targets Guaranteed Price [Member] | Logan Shares Vested [Member] | |
Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant [Line Items] | |
Vested | 150,000 |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details) - Schedule of fair value of the options on the grant date | 6 Months Ended |
Jun. 30, 2022 | |
Schedule of fair value of the options on the grant date [Abstract] | |
Risk-free interest rate | 3.30% |
Expected term | 2 years 8 months 4 days |
Expected price volatility | 123.53% |
Dividend yield | 0% |
Significant Customers_Vendors (
Significant Customers/Vendors (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Significant Customers/Vendors (Details) [Line Items] | |||||
Number of customers | (2) | ||||
Accounts Receivable [Member] | |||||
Significant Customers/Vendors (Details) [Line Items] | |||||
Number of customers | (1) | (2) | |||
Accounts receivable percentage | 25.70% | 41.10% | |||
Revenue[Member] | |||||
Significant Customers/Vendors (Details) [Line Items] | |||||
Number of customers | (2) | (3) | (3) | (2) | (3) |
Revenue percentage | 37.50% | 44% | 54.30% | 37.40% | |
Outstanding accounts payable percentage | 48.30% | 69.10% |
Leases (Details)
Leases (Details) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Lease expiration period, description | Our leases have original lease periods expiring between 2021 and 2027. |
Leases (Details) - Schedule of
Leases (Details) - Schedule of components of lease costs, lease term and discount rate - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Finance lease cost | ||
Amortization of right-of-use assets | $ 4 | |
Interest | ||
Operating lease cost | 256 | 179 |
Total lease cost | $ 256 | $ 183 |
Weighted Average Remaining Lease Term | ||
Operating leases | 3 years 5 months 12 days | 3 years 3 months 18 days |
Weighted Average Discount Rate | ||
Operating leases | 10% | 10% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of maturities of lease liabilities - Operating Leases [Member] $ in Thousands | Jun. 30, 2022 USD ($) |
Leases (Details) - Schedule of maturities of lease liabilities [Line Items] | |
The remainder of 2022 | $ 342 |
2023 | 756 |
2024 | 459 |
2025 | 456 |
Thereafter | 198 |
Total undiscounted cash flows | 2,211 |
Less imputed interest | (346) |
Present value of lease liabilities | $ 1,865 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of cash flow information related to leases - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 256 | $ 176 |
Operating cash flows from finance leases | 4 | |
Financing cash flows from finance leases | $ (4) |