0001213900-22-072337 | 10-Q | XBRL Viewer

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Intangible Assets, Including Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Intangible Assets, Including Goodwill [Abstract]
Amortization of intangible assets	$ 848	$ 139	$ 1,959	$ 418
Excess of common stock (in Shares)	7,000,000		7,000,000

Loans Payable (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended				3 Months Ended	9 Months Ended
	Oct. 31, 2022	Feb. 17, 2022	Apr. 27, 2020	Jun. 30, 2018	Sep. 30, 2022	Sep. 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			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.
Principal installments		$ 104
Credit agreement, description						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					8.00%	8.00%
Warrant coverage percentage						50.00%
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					$ 363	$ 904
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
Term loan, description						The term loan has an annual interest rate of 12.5% and matures on September 1, 2023. Commencing on February 1, 2023, the Borrowers will make monthly installment payments of approximately $270 until the maturity date, consisting of principal and interest sufficient to fully amortize the term loan through the maturity date.
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
Subsequent Event [Member]
Loans Payable (Details) [Line Items]
Net proceeds	$ 2,000
Secured Promissory Note [Member]
Loans Payable (Details) [Line Items]
Agreement shares issued		$ 2,500
Interest rate		0.59%

Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	6 Months Ended	9 Months Ended
	Feb. 03, 2022	Feb. 17, 2022	Jun. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Aug. 17, 2022
Warrants (Details) [Line Items]
Securities purchase agreement, description	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.
Warrant term			1 year
Fair value price per share				$ 0.8656
Warrants issued (in Shares)		5,194,495	7,166,505
Exercise price 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 (in Dollars)				$ 1,211
Purchaser of warrant price per share			$ 0.4017
Purchaser warrant (in Dollars)					$ 650
Terms of warrant (in Shares)			5,194,495
Fair value of warrants (in Dollars)				$ 345
Warrant liability (in Dollars)			$ 5,709
Warrant [Member]
Warrants (Details) [Line Items]
Warrant term				5 years
Fair value price per share		$ 0.8129		$ 1,092.7000
Issuance of warrants (in Dollars)		$ 4,223
Date of issuance		5 years
Exercise price per share				0.125
Strike prices				5
Purchaser warrants (in Shares)			1,400,000
Purchaser Warrant [Member]
Warrants (Details) [Line Items]
Exercise price per share						$ 1.41
Black Scholes One [Member]
Warrants (Details) [Line Items]
Fair value price per share				$ 401.9000
Issuance of warrants (in Dollars)					4,951
Black Scholes Two [Member]
Warrants (Details) [Line Items]
Fair value price per share			$ 0.3699
Issuance of warrants (in Dollars)					$ 2,302

Supplemental Cash Flow Statement Information (Details) - Schedule of supplemental cash flow statement information - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Investing activities not yet paid in cash:
Capitalized software in accounts payable	$ 998
Cash paid during the period for:
Interest	835
Income taxes, net	$ 19	$ 23

Commitments and Contingencies (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Oct. 10, 2019	Sep. 30, 2022
Commitments and Contingencies (Details) [Line Items]
Accrued interests		$ 86
Gain on settlement		1,624
PPP Loan [Member]
Commitments and Contingencies (Details) [Line Items]
Accrued interests		1,552
Seller Note [Member]
Commitments and Contingencies (Details) [Line Items]
Accrued interests		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

Warrants (Tables)

9 Months Ended

Sep. 30, 2022

Warrants [Abstract]

Schedule of outstanding warrants

	Warrants (Equity)
	Amount			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
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 expired		(196,079	)		3.48		-
Warrants reclassified		13,761,000			1.63		4.36
Balance September 30, 2022		17,668,132		$	2.20		3.62

	Warrants (Liability)
	Amount			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
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 September 30, 2022		-		$	-		-

Business Combination (Details) - Schedule of preliminary valuation and amortization period of identifiable intangible assets $ in Thousands	9 Months Ended
	Sep. 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

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance receivable, net	$ 809	$ 620
Long-term Related Party Acquisition Term Loan, net discount	1,660	0
Long-term Related Party Consolidation Term Loan, net discount	$ 1,773	$ 143
Common stock par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	21,751	12,009
Common stock, shares outstanding	21,751	12,009

Leases

9 Months Ended

Sep. 30, 2022

Leases (Textual)

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 2022 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)	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
Finance lease cost
Amortization of right-of-use assets	$	-		$	4
Interest		-			-
Operating lease cost		256			236
Total lease cost	$	256		$	240

Weighted Average Remaining Lease Term
Operating leases		3.3 years			3.1 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 September 30, 2022:

(in thousands)	Operating Leases
The remainder of 2022	$	184
2023		756
2024		459
2025		456
Thereafter		198
Total undiscounted cash flows		2,053
Less imputed interest	$	(217	)
Present value of lease liabilities	$	1,836

Supplemental cash flow information related to leases are as follows:

(in thousands)	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases, net	$	256	$	184
Operating cash flows from finance leases		-		4
Financing cash flows from finance leases		-		(4	)

Business Combination (Details) - Schedule of preliminary purchase price of reflect
$ in Thousands

12 Months Ended

Dec. 31, 2023

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 stockholders

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 at the time of issuance of the Secured Promissory Note) and requires the Company and Reflect to collectively 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 February 17, 2025 (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 nine months ended September 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.

Summary of Significant Accounting Policies (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Accounting Policies [Abstract]
Outstanding stock options and warrants	6,776,771	6,776,771	22,276,807
Diluted weighted average shares outstanding	8,333	8,333

Significant Customers/Vendors (Details)	3 Months Ended		9 Months Ended		12 Months Ended
Significant Customers/Vendors (Details)	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Customers One [Member]
Significant Customers/Vendors (Details) [Line Items]
Accounts receivable percentage			27.50%
Customers Two [Member]
Significant Customers/Vendors (Details) [Line Items]
Accounts receivable percentage					41.10%
Revenue percentage	45.90%	36.10%		40.10%
Outstanding accounts payable percentage			69.10%
Customers Three [Member]
Significant Customers/Vendors (Details) [Line Items]
Revenue percentage			49.20%
Outstanding accounts payable percentage					46.20%

Commitments and Contingencies

9 Months Ended

Sep. 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 the Company’s wholly owned subsidiary, Allure Global Solutions, Inc. (“Allure”) for breach of contract, breach of warranty, and negligence with respect to equipment installations performed by such supplier for an Allure customer. Due to delays on account of the COVID-19 pandemic, this case remains in the early stages of litigation, and, as a result, the outcome of each case is unclear, so the Company is unable to reasonably estimate the possible recovery, or range of recovery, if any.

On October 10, 2019, the Allure customer that is the basis of our claim above sent a demand to the Company for payment of $3,200 as settlement for an alleged breach of contract related to hardware failures of equipment installations performed by Allure between November 2017 and August 2018. The suits filed by and against Allure have been adjoined in the Jefferson Circuit Court, Kentucky in January 2020. An attempt to mediate the litigation is in process as of the filing date of this Report.

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 nine months ended September 30, 2022.

During the nine months ended September 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, (ii) the Company settled repayment obligations tied to an Amended and Restated Seller Note (the “Seller Note”) and related accrued interest for $100, recording a gain on settlement of $1,624, representing $1,538 related to the Seller Note and $86 of related interest thereon, and (iii) the statute of limitations passed related to the remaining liability on a lease abandoned by the Company in 2015, resulting in a gain of $256.

Nature of Organization and Operations

9 Months Ended

Sep. 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 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 the merger and becoming our wholly owned subsidiary, 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 February 17, 2025 (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).

The Company may exercise an extension option (the “Extension Option”) to extend the Guarantee Date by six (6) months, from February 17, 2025 to August 17, 2025, if (i) the Extension Threshold Price is greater than or equal to 70% of the Guaranteed Price described above, and (ii) the Company provides written notice of its election to exercise the Extension Option no later than February 7, 2022. The “Extension Threshold Price” means the average closing price per share of Creative Realities common stock as reported on the Nasdaq Capital Market (or NYSE) in the fifteen (15) consecutive trading day period ending February 2, 2025. 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 $1,334 in cash, which was paid 50% at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% will be paid on February 17, 2023 (the one-year anniversary of Closing) and 25% will be paid on February 17, 2024 (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 February 17, 2023 (the one-year anniversary of Closing) and the remaining 25% of the value of such shares will be issued on February 17, 2024 (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 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 caused 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 Debt Financing 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 Merger, 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 on the date of issuance of the Secured Promissory Note) and requires the Company and Reflect to collectively 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 to the Condensed Consolidated Financial Statements for an additional discussion of the Company’s debt obligations and further discussion of the Company’s refinancing activities subsequent to December 31, 2021.

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 September 30, 2022 and 2021, we incurred net losses of $(554) and $(343), respectively. For the nine months ended September 30, 2022 and 2021, we recognized net income of $3,210 and $1,954, respectively. As of September 30, 2022, we had cash and cash equivalents of $819 and a working capital deficit of $487.

Management believes that, based on (i) securing incremental debt of $2,000 on October 31, 2022 (see Note 9 Loans Payable, Term Loan (2022) to the Condensed Consolidated Financial Statements for a description of such transaction), and (ii) our operational forecast through 2023, that we can continue as a going concern through at least November 14, 2023. However, given our history of net losses and cash used in operating activities, we obtained a continued support letter from Slipstream through November 14, 2023.

Loans Payable

9 Months Ended

Sep. 30, 2022

Loans Payable [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 September 30, 2022
Debt Type	Issuance Date	Principal			Maturity Date	Warrants		Interest Rate Information
A	2/17/2022	$	10,000		2/15/2025		2,500,000	8.0% interest⁽¹⁾
B	2/17/2022		1,777		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		18,962				5,194,495
	Debt discount		(3,433	)
	Total debt, net	$	15,529
	Less current maturities		(2,176	)
	Long term debt	$	13,353

As of December 31, 2021
Debt Type	Issuance Date	Principal			Maturity Date	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 nine months ended September 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 on the date of issuance of the Secured Promissory Note) and requires the Company and Reflect to collectively 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 February 17, 2023 (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, the Company and its subsidiaries (collectively, the “Borrowers”) refinanced their 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 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.

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 and were deemed to represent bifurcated derivative instruments that should be recorded as liabilities in the Condensed Consolidated Balance Sheets. The Company performed a Black-Scholes valuation of the warrants as of the issuance date, resulting in a fair value of $0.8129 per warrant. In recording the warrant liability, the Company recorded a debt discount associated with each of the Acquisition and Consolidation Term Loans in an amount of $2,032 and $2,190, respectively. These amounts are being amortized straight-line through interest expense over the life of the loans, resulting in incremental interest expense of $363 and $904 during the three and nine months ended September 30, 2022, respectively. The Company has deemed straight-line amortization to be materially consistent with the effective interest method.

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 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 within the Statement of Shareholders Equity during the nine months ended September 30, 2021.

Term Loan (2022)

On October 31, 2022, the Borrowers and Slipstream amended the Credit Agreement to provide the Borrowers with a $2,000 term loan, the net proceeds of which are being used by the Company to accelerate an active software development project with potential to expand SaaS revenues associated with an existing customer.

The term loan has an annual interest rate of 12.5% and matures on September 1, 2023. Commencing on February 1, 2023, the Borrowers will make monthly installment payments of approximately $270 until the maturity date, consisting of principal and interest sufficient to fully amortize the term loan through the maturity date.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Intangible Assets, Including Goodwill (Tables)

9 Months Ended

Sep. 30, 2022

Intangible Assets, Including Goodwill [Abstract]

Schedule of intangible assets

	September 30, 2022				December 31, 2021
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Technology platform	$	9,765	$	4,162	$	4,635	$	3,652
Purchased and developed software		4,415		3,199		3,488		2,713
In-Process internally developed software platform		3,600		-		824		-
Customer relationships		15,000		2,525		3,960		1,692
Non-compete		30		10		-		-
Trademarks and trade names		1,600		760		640		640
		34,410		10,656		13,547		8,697
Accumulated amortization		10,656				8,697
Net book value of amortizable intangible assets	$	23,754			$	4,850

Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases (Textual)

Schedule of components of lease costs, lease term and discount rate

(in thousands)	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
Finance lease cost
Amortization of right-of-use assets	$	-		$	4
Interest		-			-
Operating lease cost		256			236
Total lease cost	$	256		$	240

Weighted Average Remaining Lease Term
Operating leases		3.3 years			3.1 years

Weighted Average Discount Rate
Operating leases		10.0	%		10.0	%

Schedule of maturities of lease liabilities

(in thousands)	Operating Leases
The remainder of 2022	$	184
2023		756
2024		459
2025		456
Thereafter		198
Total undiscounted cash flows		2,053
Less imputed interest	$	(217	)
Present value of lease liabilities	$	1,836

Schedule of cash flow information related to leases

(in thousands)	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases, net	$	256	$	184
Operating cash flows from finance leases		-		4
Financing cash flows from finance leases		-		(4	)

Income Taxes (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Income Taxes [Abstract]
Tax liability	$ 0
Net deferred tax assets	$ 0

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 15, 2022	Jul. 10, 2020	Jun. 30, 2020	Aug. 31, 2018	Oct. 31, 2014	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2022
Stock-Based Compensation (Details) [Line Items]
Weighted average remaining contractual life								7 years
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						$ 225		$ 624
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						$ 538	$ 331	$ 1,487	$ 1,177
Unrecognized compensation expense, vesting						685		685
Unrecognized compensation expense, market						477		477
Unrecognized compensation expense, performance						225		225
Unrecognized compensation expense							1,078		1,078
Services cost						$ 30	30	$ 100	70
Minimum [Member]
Stock-Based Compensation (Details) [Line Items]
Fair value options granted (in Dollars per share)						$ 0.21		$ 0.21
Maximum [Member]
Stock-Based Compensation (Details) [Line Items]
Fair value options granted (in Dollars per share)						$ 0.37		$ 0.37
Unrecognized compensation expense							$ 1,609		$ 1,609
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.
Share-Based Payment Arrangement, Option [Member]
Stock-Based Compensation (Details) [Line Items]
Compensation expense						$ 3		$ 4
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 (Details) - Schedule of outstanding options	9 Months Ended
	Sep. 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 2 months 19 days
Time Vesting Options ,Weighted Average Exercise Price	$ 3.34
Time Vesting Options ,Number Outstanding shares (in Shares) \| shares	1,337,009
Time Vesting Options [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] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Time Vesting Options, Range of Exercise Prices Between	$ 1
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 8 months 1 day
Performance Vesting Options ,Weighted Average Exercise Price	$ 2.53
Performance Vesting Options , Options Exercisable (in Shares) \| shares	240,000
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 4 months 20 days
Market Vesting Options, Weighted Average Exercise Price	$ 1
Market Vesting Options, Options Exercisable (in Shares) \| shares
$1.01 - $2.00 [Member] \| Time Vesting Options [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 1 month 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
$1.01 - $2.00 [Member] \| Time Vesting Options [Member] \| Minimum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Time Vesting Options, Range of Exercise Prices Between	1.01
$1.01 - $2.00 [Member] \| Time Vesting Options [Member] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Time Vesting Options, Range of Exercise Prices Between	2
$1.01 - $2.00 [Member] \| Performance Vesting Options [Member] \| Minimum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Performance Vesting Options , Exercise Price	1.01
$1.01 - $2.00 [Member] \| Performance Vesting Options [Member] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Performance Vesting Options , Exercise Price	2
$1.01 - $2.00 [Member] \| Market Vesting Options [Member] \| Minimum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Market Vesting Options, Range of Exercise Prices Between	1.01
$1.01 - $2.00 [Member] \| Market Vesting Options [Member] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Market Vesting Options, Range of Exercise Prices Between	2
$2.01+ [Member] \| Time Vesting Options [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 2 months 19 days
Time Vesting Options ,Weighted Average Exercise Price	$ 4.29
Time Vesting Options ,Number Outstanding shares (in Shares) \| shares	1,320,342
Time Vesting Options ,Weighted Average Exercise Price	$ 3.81
$2.01+ [Member] \| 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 8 months 1 day
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
$2.01+ [Member] \| Performance Vesting Options [Member] \| Minimum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Performance Vesting Options , Exercise Price	2.01
$2.01+ [Member] \| Performance Vesting Options [Member] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Performance Vesting Options , Exercise Price	2.01
$2.01+ [Member] \| Market Vesting Options [Member] \| Minimum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Market Vesting Options, Range of Exercise Prices Between	2.01
$2.01+ [Member] \| Market Vesting Options [Member] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Market Vesting Options, Range of Exercise Prices Between	2.01
$0.01 - $1.00 [Member] \| Performance Vesting Options [Member] \| Minimum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Performance Vesting Options , Exercise Price	0.01
$0.01 - $1.00 [Member] \| Performance Vesting Options [Member] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Performance Vesting Options , Exercise Price	$ 1
$0.01 - $1.00 [Member] \| 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 4 months 20 days
Market Vesting Options, Weighted Average Exercise Price	$ 1
Market Vesting Options, Options Exercisable (in Shares) \| shares
$0.01 - $1.00 [Member] \| Market Vesting Options [Member] \| Minimum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Market Vesting Options, Range of Exercise Prices Between	$ 0.01
$0.01 - $1.00 [Member] \| Market Vesting Options [Member] \| Maximum [Member]
Stock-Based Compensation (Details) - Schedule of outstanding options [Line Items]
Market Vesting Options, Range of Exercise Prices Between	$ 1

Leases (Details) - Schedule of maturities of lease liabilities - Operating Leases [Member] $ in Thousands	Sep. 30, 2022 USD ($)
Leases (Details) - Schedule of maturities of lease liabilities [Line Items]
The remainder of 2022	$ 184
2023	756
2024	459
2025	456
Thereafter	198
Total undiscounted cash flows	2,053
Less imputed interest	(217)
Present value of lease liabilities	$ 1,836

Revenue Recognition (Details) - USD ($) $ in Thousands	9 Months Ended
Revenue Recognition (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Revenue Recognition [Abstract] [Standard Label]
Aggregate amounI	$ 0	$ 35

Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items]
Gross Carrying Amount	$ 34,410	$ 13,547
Accumulated Amortization	10,656	8,697
Gross Carrying Amount, Accumulated amortization	10,656	8,697
Net book value of amortizable intangible assets	23,754	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	4,162	3,652
Purchased and developed software [Member]
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items]
Gross Carrying Amount	4,415	3,488
Accumulated Amortization	3,199	2,713
In-Process internally developed software platform [Member]
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items]
Gross Carrying Amount	3,600	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	2,525	1,692
Non-compete [Member]
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items]
Gross Carrying Amount	30
Accumulated Amortization	10
Trademarks and trade names [Member]
Intangible Assets, Including Goodwill (Details) - Schedule of intangible assets [Line Items]
Gross Carrying Amount	1,600	640
Accumulated Amortization	$ 760	$ 640

Business Combination (Details) - Schedule of unaudited pro forma - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2021
Schedule Of Unaudited Pro Forma Abstract
Net sales	$ 2,966	$ 8,392	$ 30,680
Net income/(loss)	$ 947	$ 825	$ 799
Earnings per common share (in Dollars per share)			$ 0.06

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

Business Combination (Tables)

9 Months Ended

Sep. 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 stockholders		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
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	$	799
Earnings per common share	$	0.06

Reflect Systems, Inc. (in thousands)	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Net sales	$	2,966	$	8,392
Net income/(loss)	$	947	$	825

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 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		7.11	$	1.88		16,667	$	1.88
$2.01+		1,963,675		7.22		4.29		1,320,342	$	3.81
		1,988,675		7.22	$	3.34		1,337,009

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		7.67		2.53		240,000	$	2.53
		720,000		7.67	$	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		2.39	$	1.00		-	$	-
$1.01 - $2.00		-		-	$	-		-	$	-
$2.01+		-		-		-		-	$	-
		1,900,000		2.39	$	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, September 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	%

Significant Customers/Vendors

9 Months Ended

Sep. 30, 2022

Significant Customers/Vendors [Abstract]

SIGNIFICANT CUSTOMERS/VENDORS

NOTE 14: SIGNIFICANT CUSTOMERS/VENDORS

Significant Customers

We had two (2) and two (2) customers that in the aggregate accounted for 27.5% and 41.1% of accounts receivable as of September 30, 2022 and December 31, 2021, respectively.

We had two (2) and two (2) customer that accounted for 36.1% and 45.9% of revenue for the three months ended September 30, 2022, and 2021, respectively. We had three (3) and two (2) customer that accounted for 49.2% and 40.1% of revenue for the nine months ended September 30, 2022 and 2021, respectively.

Significant Vendors

We had two (2) and three (3) vendors that accounted for 46.2% and 69.1% of outstanding accounts payable at September 30, 2022 and December 31, 2021, respectively.

Fair Value Measurement

9 Months Ended

Sep. 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, the calculation of the fair value of the Guaranteed Consideration contains inputs which are unobservable and involve management judgment and are considered Level 3 estimates. Additionally, the separately identifiable intangible assets rely on a discounted cash flow model which utilizes inputs including the calculation of the weighted average cost of capital and management’s forecast of future financial performance which are unobservable and involve management judgment and are considered Level 3 estimates.

As discussed in Note 8 Intangible Assets, Including Goodwill, the calculation of the weighted average cost of capital and management’s forecast of future financial performance utilized within our discounted cash flow model for the impairment of goodwill contains inputs which are unobservable and involve management judgment and are considered Level 3 estimates.

As discussed in Note 9 Loans Payable, the Convertible Loan was reported at fair value. This liability is deemed to be a Level 3 valuation. Certain unobservable inputs into the calculation of the fair value of this liability include an estimate of the fair value of the Company at a future date using a discounted cash flow model, discount rate assumptions, and an estimation of the likelihood of conversion of the Convertible Loan. The Convertible Loan was refinanced into the Consolidation Term Loan in February 2022.

As discussed in Note 12 Warrants, the calculation of the fair value of the warranty liability contains valuation inputs which are based on observable inputs (other than Level 1 prices) and are considered Level 2 estimates. The liability warrants were converted to equity warrants effective June 30, 2022.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Summary of Significant Accounting Policies (Details) - Schedule of inventories - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Schedule Of Inventories Abstract
Raw materials, including those on consignment, net of reserve of $883 and $502, respectively	$ 2,757	$ 1,583
Work-in-process	351	297
Total inventories	$ 3,108	$ 1,880

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2022

Revenue Recognition [Abstract]

Schedule of revenue by major source

(in thousands)	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Hardware	$	5,015	$	2,215	$	17,141	$	6,327

Services:
Installation Services		1,472		985		3,714		2,057
Software Development Services		105		109		405		476
Media		688		-		1,165		-
Managed Services		3,900		1,444		10,435		4,174
Total Services		6,165		2,538		15,719		6,707

Total Hardware and Services	$	11,180	$	4,753	$	32,860	$	13,034

Supplemental Cash Flow Statement Information (Tables)

9 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Statement Information [Abstract]

Schedule of supplemental cash flow statement information

	Nine Months Ended
	September 30,
	2022		2021
Supplemental Cash Flow Information
Investing activities not yet paid in cash:
Capitalized software in accounts payable	$	998	$	-
Cash paid during the period for:
Interest	$	835	$	-
Income taxes, net	$	19	$	23

Stock-Based Compensation (Details) - Schedule of fair value of the options on the grant date	9 Months Ended
	Sep. 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	0.00%

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Schedule of inventories

	September 30,		December 31,
	2022		2021
Raw materials, including those on consignment, net of reserve of $883 and $502, respectively	$	2,757	$	1,583
Work-in-process		351		297
Total inventories	$	3,108	$	1,880

Stock-Based Compensation

9 Months Ended

Sep. 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		7.11	$	1.88		16,667	$	1.88
$2.01+		1,963,675		7.22		4.29		1,320,342	$	3.81
		1,988,675		7.22	$	3.34		1,337,009

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		7.67		2.53		240,000	$	2.53
		720,000		7.67	$	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		2.39	$	1.00		-	$	-
$1.01 - $2.00		-		-	$	-		-	$	-
$2.01+		-		-		-		-	$	-
		1,900,000		2.39	$	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, September 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 7.0 years as of September 30, 2022.

Valuation Information for Stock-Based Compensation

For purposes of determining estimated fair value under FASB ASC 718-10, Stock Compensation, the Company computed the estimated fair values of stock options using the Black-Scholes model.

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

(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 nine months ended September 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 Condensed Consolidated Statement of Operations with respect to these awards of $225 and $624, respectively, net of a benefit of $50 recorded for forfeiture of awards for the nine months ended September 30, 2022. 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 nine months ended September 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 September 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 and nine months ended September 30, 2022 the Company recorded $3 and $4 of compensation expense, respectively. 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, requires measurement and recognition of compensation expense for all stock-based payments including warrants, stock options, restricted stock grants and stock bonuses based on estimated fair values. Under the Amended and Restated 2006 Equity Incentive Plan, the Company reserved 1,720,000 shares for purchase by the Company’s employees and under the Amended and Restated 2006 Non-Employee Director Stock Option Plan the Company reserved 700,000 shares for purchase by the Company’s employees. There are 12,001 options outstanding under the 2006 Equity Incentive Plan.

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 stock options subject to both performance and market conditions for vesting, for the three and nine months ended September 30, 2022 of $538 and $1,487, 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 stock options subject to both performance and market conditions for vesting, for the three and nine months ended September 30, 2021 of $331 and $1,177, 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 September 30, 2022, there was approximately $685, $477, and $225 of total unrecognized compensation expense related to unvested share-based employee awards with time vesting, market, and performance vesting criteria, respectively. As of September 30, 2021, there was approximately $1,609 and $1,078 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 nine months ended September 30, 2022, the Company issued or accrued shares issuable in exchange for services in the amount of $30 and $100, respectively. During the three and nine months ended September 30, 2021, the Company issued or accrued shares issuable in exchange for services in the amount of $30 and $70, respectively.

Warrants (Details) - Schedule of outstanding warrants	9 Months Ended
Warrants (Details) - Schedule of outstanding warrants	Sep. 30, 2022 $ / shares shares
Class of Warrant or Right [Line Items]
Number of Shares, Warrants expired	(196,079)
Weighted Average Exercise Price, Warrants expired \| $ / shares	$ 3.48
Weighted Average Remaining Contractual Life, Warrants expired
Number of Shares, Warrants, ending Balance	22,276,807
Warrants (Equity) [Member]
Class of Warrant or Right [Line Items]
Number of Shares, Warrants, Beginning Balance	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	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	(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	13,761,000
Weighted Average Exercise Price, Warrants exercised \| $ / shares	$ 1.63
Weighted Average Remaining Contractual Life, Warrants exercised	4 years 4 months 9 days
Number of Shares, Warrants, ending Balance	17,668,132
Weighted Average Exercise Price, ending Balance \| $ / shares	$ 2.2
Weighted Average Remaining Contractual Life, ending Balance	3 years 7 months 13 days
Warrants (Liability) [Member]
Class of Warrant or Right [Line Items]
Number of Shares, Warrants, Beginning Balance
Weighted Average Exercise Price, Beginning Balance \| $ / shares
Weighted Average Remaining Contractual Life, Beginning Balance
Number of Shares, Warrants, Warrants issued	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
Weighted Average Exercise Price, Warrants expired \| $ / shares
Weighted Average Remaining Contractual Life, Warrants expired
Number of Shares, Warrants exercised	(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
Weighted Average Exercise Price, ending Balance \| $ / shares
Weighted Average Remaining Contractual Life, ending Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
CURRENT ASSETS
Cash and cash equivalents	$ 819	$ 2,883
Accounts receivable, net of allowance of $809 and $620, respectively	7,186	3,006
Unbilled receivables	219	369
Work-in-process and inventories, net	3,108	1,880
Prepaid expenses and other current assets	1,618	1,634
Total current assets	12,950	9,772
Operating lease right-of-use assets	1,703	654
Property and equipment, net	193	75
Intangibles, net	23,754	4,850
Goodwill	26,094	7,525
Other assets	19	5
TOTAL ASSETS	64,713	22,881
CURRENT LIABILITIES
Short-term seller note payable	1,777
Short-term portion of Related Party Consolidation Term Loan	399
Accounts payable	3,040	2,517
Accrued expenses	3,029	2,110
Deferred revenues	2,704	426
Customer deposits	1,783	1,525
Current maturities of operating leases	705	281
Total current liabilities	13,437	6,859
Long-term Related Party Acquisition Term Loan, net of $1,660 and $0 discount, respectively	8,340
Long-term Related Party Consolidation Term Loan, net of $1,773 and $143 discount, respectively	5,013	4,624
Long-term related party convertible loans payable, at fair value		2,251
Contingent acquisition consideration, at fair value	10,494
Long-term obligations under operating leases	1,018	373
Other liabilities	9	45
TOTAL LIABILITIES	38,311	14,152
SHAREHOLDERS’ EQUITY
Common stock, $0.01 par value, 200,000 shares authorized; 21,751 and 12,009 shares issued and outstanding, respectively	217	120
Additional paid-in capital	75,260	60,863
Accumulated deficit	(49,075)	(52,254)
Total shareholders’ equity	26,402	8,729
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 64,713	$ 22,881

Intangible Assets, Including Goodwill

9 Months Ended

Sep. 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 September 30, 2022 and December 31, 2021:

	September 30, 2022				December 31, 2021
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Technology platform	$	9,765	$	4,162	$	4,635	$	3,652
Purchased and developed software		4,415		3,199		3,488		2,713
In-Process internally developed software platform		3,600		-		824		-
Customer relationships		15,000		2,525		3,960		1,692
Non-compete		30		10		-		-
Trademarks and trade names		1,600		760		640		640
		34,410		10,656		13,547		8,697
Accumulated amortization		10,656				8,697
Net book value of amortizable intangible assets	$	23,754			$	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, as outlined in Note 5 Business Combinations.

For the three months ended September 30, 2022 and 2021, amortization of intangible assets charged to operations was $848 and $139, respectively. For the nine months ended September 30, 2022 and 2021 amortization of intangible assets charged to operations was $1,959 and $418, 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 and concluded that the Company has only one reporting unit. Therefore, the entire goodwill is allocated to that reporting unit.

The Company assessed the carrying value of goodwill at the reporting unit level based on an estimate of the fair value of its reporting unit. Fair value of the reporting unit was estimated using both (1) a market approach, leveraging recent industry merger and acquisition activity as well as comparable public company information, and (2) a discounted cash flow analyses consisting of various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis of business prospects and economic or market trends that may occur, specifically, the Company gave significant consideration to actual historic financial results, including revenue growth rates in the current and preceding three years, further informed by known backlog and customer acquisitions. Based on the Company’s assessment, we determined that the fair value of our reporting unit exceeds its carrying value, and accordingly, the goodwill associated with the reporting unit is not considered to be impaired at September 30, 2022.

The Company recognizes that any changes in our actual fourth quarter 2022 or projected 2023 results could potentially have a material impact on our assessment of goodwill impairment. The Company will continue to monitor the actual performance of its operations against expectations and assess indicators of possible impairment. The valuation of goodwill and intangible assets is subject to a high degree of judgment, uncertainty and complexity. Should any indicators of impairment occur in subsequent periods, the Company will be required to perform an analysis in order to determine whether goodwill is impaired.

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 September 30, 2022. Should our market price remain at this level for an extended period of time, however 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 September 30, 2022.

Leases (Details) - Schedule of components of lease costs, lease term and discount rate - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Finance lease cost
Amortization of right-of-use assets		$ 4
Interest
Operating lease cost	256	236
Total lease cost	$ 256	$ 240
Weighted Average Remaining Lease Term
Operating leases	3 years 3 months 18 days	3 years 1 month 6 days
Weighted Average Discount Rate
Operating leases	10.00%	10.00%

Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 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, applying the five-step model.

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 for additional detail and discussion of the Company’s performance obligations.

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:

	September 30,		December 31,
	2022		2021
Raw materials, including those on consignment, net of reserve of $883 and $502, respectively	$	2,757	$	1,583
Work-in-process		351		297
Total inventories	$	3,108	$	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 annually as of September 30 in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets. Under ASC 360, impairment losses are recorded whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We evaluated whether there was any impairment of long-lived assets as of September 30, 2022 and concluded there was none.

If the impairment tests indicate that the carrying value of the asset is greater than the expected undiscounted cash flows to be generated by such asset, an impairment loss would be recognized. The impairment loss is determined as the amount by which the carrying value of such asset exceeds its fair value. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such assets using an appropriate discount rate. Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell. Considerable management judgment is necessary to estimate the fair value of assets, and accordingly, actual results could vary significantly from such estimates.

Basic and Diluted Income/(Loss) per Common Share

5. Basic and Diluted Income/(Loss) per Common Share

Basic and diluted income/(loss) per common share for all periods presented is computed using the weighted average number of common shares outstanding. Basic weighted average shares outstanding includes only outstanding common shares. Diluted weighted average shares outstanding includes outstanding common shares and potential dilutive common shares outstanding in accordance with the treasury stock method.

Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling approximately 22,276,807 at September 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 6,776,771 at September 30, 2021 were excluded from the computation of income/(loss) 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 nine-months ended September 30, 2021 included 8,333 options which were both exercisable and in-the-money as of September 30, 2021. Those options were included in the calculation of diluted earnings per share as of the beginning of the calculation period.

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 September 30, 2022 and December 31, 2021.

Goodwill and Intangible Assets

7. Goodwill and Intangible Assets

We follow the provisions of ASC 350, Goodwill and Other Intangible Assets. Pursuant to ASC 350, goodwill acquired in a business combination is not amortized, but instead tested for impairment at least annually. The Company uses an annual measurement date of September 30 to assess impairment of goodwill and any indefinite-lived intangible assets, or as indicators of impairment are identified (see Note 8 Intangible Assets and Goodwill).

Definite-lived intangible assets are amortized straight-line in accordance with their identified useful lives.

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 Accountings Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as amended.

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 and corresponding market rates at the time of lease inception. 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 for a discussion of the accounting for the Merger.

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.

Leases (Details)	9 Months Ended
Leases (Details)	Sep. 30, 2022
Leases (Textual)
Lease expiration period, description	Our leases have original lease periods expiring between 2022 and 2027.

Stock-Based Compensation (Details) - Schedule of stock option activity	9 Months Ended
	Sep. 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

Loans Payable (Tables)

9 Months Ended

Sep. 30, 2022

Loans Payable [Abstract]

Schedule of outstanding debt with detachable warrants

As of September 30, 2022
Debt Type	Issuance Date	Principal			Maturity Date	Warrants		Interest Rate Information
A	2/17/2022	$	10,000		2/15/2025		2,500,000	8.0% interest⁽¹⁾
B	2/17/2022		1,777		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		18,962				5,194,495
	Debt discount		(3,433	)
	Total debt, net	$	15,529
	Less current maturities		(2,176	)
	Long term debt	$	13,353

As of December 31, 2021
Debt Type	Issuance Date	Principal			Maturity Date	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

Revenue Recognition (Details) - Schedule of revenue by major source - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items]
Hardware	$ 5,015	$ 2,215	$ 17,141	$ 6,327
Total Services	6,165	2,538	15,719	6,707
Total Hardware and Services	11,180	4,753	32,860	13,034
Installation Services [Member]
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items]
Total Services	1,472	985	3,714	2,057
Software Development Services [Member]
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items]
Total Services	105	109	405	476
Media Sales [Member]
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items]
Total Services	688		1,165
Managed Services [Member]
Revenue Recognition (Details) - Schedule of revenue by major source [Line Items]
Total Services	$ 3,900	$ 1,444	$ 10,435	$ 4,174

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2022	Nov. 14, 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		21,799,126
Amendment Flag	false
Entity Central Index Key	0001356093
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Sep. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
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 Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Sales
Hardware	$ 5,015	$ 2,215	$ 17,141	$ 6,327
Services and other	6,165	2,538	15,719	6,707
Total sales	11,180	4,753	32,860	13,034
Cost of sales
Hardware	3,811	1,588	13,803	4,372
Services and other	2,855	818	5,989	2,206
Total cost of sales	6,666	2,406	19,792	6,578
Gross profit	4,514	2,347	13,068	6,456
Operating expenses:
Sales and marketing expenses	718	330	2,572	834
Research and development expenses	238	226	897	455
General and administrative expenses	2,789	1,848	8,105	5,623
Bad debt (recovery)/expense	58		164	(463)
Depreciation and amortization expense	885	347	2,060	1,035
Deal and transaction expenses	110		538
Total operating expenses	4,798	2,751	14,336	7,484
Operating loss	(284)	(404)	(1,268)	(1,028)
Other income/(expenses):
Interest expense	(757)	(186)	(1,956)	(617)
Change in fair value of warrant liability			7,902
Change in fair value of equity guarantee	442		369
Gain/(loss) on settlement of obligations	37	256	(237)	3,449
Loss on debt waiver consent			(1,212)
Loss on warrant amendment			(345)
Change in fair value of Convertible Loan				166
Other expense	(2)	(8)	3	(7)
Total other income/(expense)	(280)	62	4,524	2,991
Income/(loss) before income taxes	(564)	(342)	3,256	1,963
Benefit/(provision) for income taxes	10	(1)	(46)	(9)
Net income/(loss)	$ (554)	$ (343)	$ 3,210	$ 1,954
Basic earnings/(loss) per common share (in Dollars per share)	$ (0.03)	$ (0.03)	$ 0.17	$ 0.17
Diluted earnings/(loss) per common share (in Dollars per share)	$ (0.03)	$ (0.03)	$ 0.17	$ 0.17
Weighted average shares outstanding - basic (in Shares)	21,750	11,897	19,383	11,692
Weighted average shares outstanding - diluted (in Shares)	21,750	11,897	19,383	11,692

Business Combination (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
	Mar. 15, 2022	Feb. 17, 2022	Sep. 30, 2022	Sep. 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 February 17, 2025 (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).
Extend the guarantee date, description				if (i) the Extension Threshold Price is greater than or equal to 70% of the Guaranteed Price described above, and (ii) the Company provides written notice of its election to exercise the Extension Option no later than February 7, 2025. 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 February 2, 2025. 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 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 February 17, 2023 (the one-year anniversary of Closing) and the remaining 25% of the value of such shares will be issued on February 17, 2024 (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
Accrues interest percentage	0.59%
Principal installments amount	$ 104
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
Deposit assets			$ 818	$ 818
Direct transaction costs			$ 16	444
Fair value of property, plant and equipment				$ 96
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

Revenue Recognition

9 Months Ended

Sep. 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 nine months ended September 30, 2022 and 2021:

(in thousands)	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Hardware	$	5,015	$	2,215	$	17,141	$	6,327

Services:
Installation Services		1,472		985		3,714		2,057
Software Development Services		105		109		405		476
Media		688		-		1,165		-
Managed Services		3,900		1,444		10,435		4,174
Total Services		6,165		2,538		15,719		6,707

Total Hardware and Services	$	11,180	$	4,753	$	32,860	$	13,034

System hardware sales

System hardware revenue is recognized generally upon shipment of the product or customer acceptance, depending upon contractual arrangements with the customer in instances in which the sale of hardware is the sole performance obligation. Shipping charges billed to customers are included in hardware sales and the related shipping costs are included in hardware cost of sales. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. System hardware revenues are classified as “Hardware” within our disaggregated revenue.

Installation services

The Company performs outsourced installation services for customers and recognizes revenue upon completion of the installations. Installation services also includes engineering services performed as part of an installation project.

When system hardware sales include installation services to be performed by the Company, the goods and services in the contract are not distinct, so the arrangement is accounted for as a single performance obligation. Our customers control the work-in-process and can make changes to the design specifications over the contract term. Revenues are recognized over time as the installation services are completed based on the relative portion of labor hours completed as a percentage of the budgeted hours for the installation. Installation services revenues are classified as “Installation Services” within our disaggregated revenue.

The aggregate amount of the transaction price allocated to installation service performance obligations that are partially unsatisfied as of September 30, 2022 and 2021 were $0 and $35.

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 generally 12-36 months in length. We account for revenue from these services in accordance with ASC 985-20-15-5 and recognize revenue ratably over the performance period. Software as a service 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.

Recently Issued Accounting Pronouncements

9 Months Ended

Sep. 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 (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606). The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.

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), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. This guidance will be effective for us in the first quarter of 2024 on a full or modified retrospective basis, with early adoption permitted. We do not intend to early adopt this standard, nor do we expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses. The main objective is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables and loans, entities will be required to estimate lifetime expected credit losses. The amendments are effective for public business entities that qualify as smaller reporting companies for fiscal years and interim periods beginning after December 15, 2022. We are currently evaluating the disclosure requirements related to adopting this guidance.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

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-Subparagraph (f)(1)
-URI https://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(2)
-URI https://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 29: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 926
-SubTopic 20
-Section 65
-Paragraph 2
-Subparagraph (f)(3)
-URI https://asc.fasb.org/extlink&oid=120154821&loc=SL120154904-197079

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 65
-Paragraph 6
-Subparagraph (e)(3)
-URI https://asc.fasb.org/extlink&oid=126983955&loc=SL121967933-165497

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 848
-SubTopic 10
-Section 65
-Paragraph 2
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=125980421&loc=SL125981372-237846

Reference 32: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (c)(1)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(1)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (e)(3)
-URI https://asc.fasb.org/extlink&oid=126983759&loc=SL121830611-158277

+ Details

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

$ 18,962

$ 7,185

Total debt, gross

5,194,495

588,236

Fair value (B)

$ (166)

$ 7,019

Debt discount

$ (3,433)

$ (144)

Issuance Date

Total debt, net

$ 15,529

$ 6,875

Issuance Date

Less current maturities

$ (2,176)

Issuance Date

Long term debt

$ 13,353

$ 6,875

2/17/2022 [Member]

Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items]

^[1]

Feb. 17, 2022

$ 10,000

Feb. 15, 2025

2,500,000

Interest Rate Information

^[2]

8.0% interest(1)

2/17/2022 [Member]

Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items]

^[3]

Feb. 17, 2022

$ 1,777

Feb. 17, 2023

Interest Rate Information

^[4]

0.59% interest(2)

2/17/2022 [Member]

Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items]

^[5]

Feb. 17, 2022

$ 7,185

Feb. 15, 2025

2,694,495

Interest Rate Information

^[6]

10.0% interest(3)

8/17/2016 [Member]

Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items]

^[7]

Aug. 17, 2016

$ 4,767

Feb. 17, 2025

588,236

Interest Rate Information

^[8]

8.0% interest(4)

12/30/2019 [Member]

Loans Payable (Details) - Schedule of outstanding debt with detachable warrants [Line Items]

^[9]

Dec. 30, 2019

$ 2,418

Feb. 17, 2025

Interest Rate Information

^[8]

10.0% interest(4)

[1]	Acquisition Loan
[2]	8.0% cash interest per annum through maturity at February 15, 2025.
[3]	Reflect Seller Secured Promissory Note
[4]	0.59% cash interest per annum (the applicable federal rate) through maturity at February 17, 2023.
[5]	Consolidation Term Loan
[6]	10.0% cash interest per annum through maturity at February 15, 2025.
[7]	Term Loan with related party
[8]	Interest was paid-in-kind (“PIK”) through October 2021, at which point interest became payable in cash at the stated interest rates through maturity.
[9]	Secured Convertible Special Loan Promissory Note, at fair value

Warrants

9 Months Ended

Sep. 30, 2022

Warrants [Abstract]

WARRANTS

NOTE 12: WARRANTS

A summary of outstanding warrants is included below:

	Warrants (Equity)
	Amount			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
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 expired		(196,079	)		3.48		-
Warrants reclassified		13,761,000			1.63		4.36
Balance September 30, 2022		17,668,132		$	2.20		3.62

	Warrants (Liability)
	Amount			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
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 September 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 $4,951 in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2022, respectively.

On February 17, 2022, in connection with the Credit Agreement with Slipstream, the Company issued to Slipstream 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 $2,302 in the Condensed Consolidated Statement of Operations for the nine months ended September 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 $650 in the Condensed Consolidated Statement of Operations for the nine months ended September 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 nine months ended September 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. These amounts are reflected as additional paid-in-capital in the Condensed Consolidated Balance Sheet as of September 30, 2022.

Business Combination (Details) - Schedule of preliminary purchase price allocation $ in Thousands	9 Months Ended
	Sep. 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
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

Supplemental Cash Flow Statement Information

9 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Statement Information [Abstract]

SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION

NOTE 7: SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION

	Nine Months Ended
	September 30,
	2022		2021
Supplemental Cash Flow Information
Investing activities not yet paid in cash:
Capitalized software in accounts payable	$	998	$	-
Cash paid during the period for:
Interest	$	835	$	-
Income taxes, net	$	19	$	23

Summary of Significant Accounting Policies

9 Months Ended

Sep. 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

2. Revenue Recognition

3. Inventories

Inventories are stated at the net realizable value, determined by the first-in, first-out (FIFO) method, and consist of the following:

	September 30,		December 31,
	2022		2021
Raw materials, including those on consignment, net of reserve of $883 and $502, respectively	$	2,757	$	1,583
Work-in-process		351		297
Total inventories	$	3,108	$	1,880

4. Impairment of Long-Lived Assets

5. Basic and Diluted Income/(Loss) per Common Share

6. Income Taxes

7. Goodwill and Intangible Assets

Definite-lived intangible assets are amortized straight-line in accordance with their identified useful lives.

8. Use of Estimates

9. Leases

We account for leases in accordance with Accountings Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as amended.

10. Business Combinations

11. Contingent Consideration

Consolidated Statements of Shareholders' Equity (Unaudited) - 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
Stock-based compensation		1,177		1,177
Stock-based compensation issued to vendors	$ 1	84		85
Stock-based compensation issued to vendors (in Shares)	53,461
Shares issued to directors as compensation		75		75
Shares issued to directors as compensation (in Shares)	44,568
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 / (loss)			1,954	1,954
Balance at Sep. 30, 2021	$ 119	60,178	(50,532)	9,765
Balance (in Shares) at Sep. 30, 2021	11,919,460
Balance at Jun. 30, 2021	$ 118	59,777	(50,189)	9,706
Balance (in Shares) at Jun. 30, 2021	11,876,679
Stock-based compensation		331		331
Stock-based compensation issued to vendors		45		45
Stock-based compensation issued to vendors (in Shares)	31,257
Shares issued to directors as compensation	$ 1	25		26
Shares issued to directors as compensation (in Shares)	11,524
Net income / (loss)			(343)	(343)
Balance at Sep. 30, 2021	$ 119	60,178	(50,532)	9,765
Balance (in Shares) at Sep. 30, 2021	11,919,460
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		1,406		1,406
Stock-based compensation issued to vendors		70		70
Stock-based compensation issued to vendors (in Shares)	76,514
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 / (loss)			3,210	3,210
Balance at Sep. 30, 2022	$ 217	75,260	(49,075)	26,402
Balance (in Shares) at Sep. 30, 2022	21,751,539
Balance at Jun. 30, 2022	$ 217	74,741	(48,521)	26,437
Balance (in Shares) at Jun. 30, 2022	21,743,852
Stock-based compensation		514		514
Stock-based compensation issued to vendors		5		5
Stock-based compensation issued to vendors (in Shares)	7,687
Net income / (loss)			(554)	(554)
Balance at Sep. 30, 2022	$ 217	$ 75,260	$ (49,075)	$ 26,402
Balance (in Shares) at Sep. 30, 2022	21,751,539

Business Combination

9 Months Ended

Sep. 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 the Company, CRI Acquisition Corporation, or “Merger Sub,” would merge with and into Reflect, with Reflect becoming our wholly owned subsidiary, which transaction is referred to herein as the “Merger.” On February 17, 2022, the parties consummated the Merger.

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 February 17, 2025 (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).

The Company may exercise an extension option (the “Extension Option”) to extend the Guarantee Date by six (6) months, from February 17, 2025 to August 17, 2025 if (i) the Extension Threshold Price is greater than or equal to 70% of the Guaranteed Price described above, and (ii) the Company provides written notice of its election to exercise the Extension Option no later than February 7, 2025. 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 February 2, 2025. 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 “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, will be paid 25% on February 17, 2023 (the one-year anniversary of Closing) and 25% on February 17, 2024 (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 February 17, 2023 (the one-year anniversary of Closing) and the remaining 25% of the value of such shares will be issued on February 17, 2024 (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.

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 at the time of issuance of the Secured Promissory Note) and requires the Company and Reflect to collectively 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 former Reflect stockholders’ indemnification obligations until released on February 17, 2023 (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 former 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 stockholders		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)

(6)

Represents an estimate of the fair value of the Guaranteed Consideration as of the Merger, which, if any, is payable on or after February 17, 2025 (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 nine months ended September 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 $16 and $444 of direct transaction costs related to the Reflect Merger for the three and nine months ended September 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 nine months ended September 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
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 and recorded those assets based on an initial draft valuation report. 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	$	799
Earnings per common share	$	0.06

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.

Reflect Systems, Inc. (in thousands)	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Net sales	$	2,966	$	8,392
Net income/(loss)	$	947	$	825

Income Taxes

9 Months Ended

Sep. 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 September 30, 2022, we reported tax liability of $0. As of September 30, 2022, the net deferred tax assets totaled $0 after valuation allowance, consistent with December 31, 2021.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Leases (Details) - Schedule of cash flow information related to leases - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 256	$ 184
Operating cash flows from finance leases		4
Financing cash flows from finance leases		$ (4)

Nature of Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 03, 2022	Feb. 17, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 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 February 17, 2025 (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).
Guaranteed price percentage					80.00%
Guaranteed price per share (in Dollars per share)					$ 1
Retention bonus plan, description		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 February 17, 2023 (the one-year anniversary of Closing) and the remaining 25% of the value of such shares will be issued on February 17, 2024 (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	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.
Gross proceeds					$ 10,000
Maturity date		Feb. 01, 2025
Security agreement		$ 2,500
Promissory note accrues interest		0.59%
Principal installments		$ 104
Net losses			$ (554)	$ (343)
Recognized net income					3,210	$ 1,954
Cash and cash equivalents			$ 819		819
Working capital deficit					487
Securing incremental debt					$ 2,000
Extension Option [Member]
Nature of Organization and Operations (Details) [Line Items]
Guaranteed price percentage					70.00%
Debt Financing [Member]
Nature of Organization and Operations (Details) [Line Items]
Gross proceeds		10,000
Senior secured term loan		4,767
Secured convertible loan		2,418
Outstanding principal amount		$ 7,185

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Operating Activities:
Net income	$ 3,210	$ 1,954
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization	2,060	1,035
Amortization of debt discount	904	130
Stock-based compensation	1,487	1,252
Shares issued for services	100	85
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)
Allowance for doubtful accounts	105	(274)
Increase in notes due to in-kind interest		467
Loss on debt waiver consent	1,212
Loss on warrant amendment	345
Loss/(Gain) on settlement of obligations	237	(359)
Gain on change in fair value of contingent consideration	(369)
Gain on change in fair value of warrants	(7,902)
Changes to operating assets and liabilities:
Accounts receivable and unbilled receivables	(2,835)	(154)
Inventories	(1,032)	399
Prepaid expenses and other current assets	682	(1,010)
Operating lease right-of-use assets, net	(556)	219
Other assets	22
Accounts payable	(227)	(94)
Deferred revenue	1,019	6
Accrued expenses	533	(181)
Deposits	(585)	(402)
Operating liabilities, net	(36)
Operating lease liabilities, non-current	576	(184)
Net cash used in operating activities	(1,050)	(367)
Investing activities
Acquisition of business, net of cash acquired	(17,186)
Purchases of property and equipment	(123)	(10)
Capitalization of labor for software development	(2,959)	(422)
Net cash used in investing activities	(20,268)	(432)
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	(723)	(100)
Proceeds from sale of shares via registered direct offering, net		1,849
Net cash provided by financing activities	19,254	1,745
Increase/(decrease) in Cash and Cash Equivalents	(2,064)	946
Cash and Cash Equivalents, beginning of period	2,883	1,826
Cash and Cash Equivalents, end of period	$ 819	$ 2,772

Summary of Significant Accounting Policies (Details) - Schedule of inventories (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Schedule Of Inventories Abstract
Raw materials, net of reserve	$ 883	$ 502

Stock-Based Compensation (Details) - Schedule of subject to such executive serving the company as a director, officer, employee or consultant	9 Months Ended
	Sep. 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	5.00%
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	10.00%
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	15.00%
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	20.00%
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	25.00%
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	25.00%
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 (Details) - Schedule of stock option activity	9 Months Ended
	Sep. 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