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Loans Payable | 6 Months Ended
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Jun. 30, 2015
Loans Payable [Abstract] |
LOANS PAYABLE | NOTE 5: LOANS PAYABLE Mill City Note Payable On February 18, 2015, the Company entered into a Securities Purchase Agreement with Mill City Ventures III, Ltd. (“Mill City”), pursuant to which it offered and sold a secured convertible promissory note in the principal amount of $1.0 million and a five-year warrant, immediately exercisable to purchase up to 1,515,152 shares of the Company’s common stock at a per-share price of $0.38, in a private placement exempt from registration under the Securities Act of 1933. Creative Realities, LLC, Wireless Ronin Technologies Canada, Inc., and Broadcast International, Inc., the Company’s principal subsidiaries, are co-makers with the Company of the secured convertible promissory note. Obligations under the secured convertible promissory note are secured by a grant of collateral security in the accounts receivable and related proceeds of all co-makers pursuant to the terms of a security agreement. The secured convertible promissory note bears interest at the annual rate of 12%, and matures on August 18, 2016. At any time prior to the maturity date, Mill City may convert the outstanding principal and accrued and unpaid interest at a conversion rate of $0.33 per share, as adjusted for stock splits and similar adjustments. Upon the consummation of a change in control transaction of the Company or of an offering of securities of the Company in which the gross proceeds to be received by the Company equal, when aggregated with all prior financings involving the sale of securities of the Company from and after February 18, 2015 (but exclusive of the amounts borrowed under the Mill City secured convertible promissory note), at least $3.5 million, Mill City may elect to convert the secured convertible promissory note into shares of common stock of the Company or elect repayment. The Company may prepay the secured convertible promissory note at any time, provided any principal amount prepaid must be accompanied by the payment of minimum amount of interest that, when aggregated with earlier payments of interest, equals at least 365 days of interest thereon. The secured convertible promissory note contains other customary terms. The Company is also required to maintain the covenant of cash and accounts receivable must be at least two times the principal balance of the loan outstanding. The Company has maintained their compliance with this covenant. The fair value of the warrants granted was calculated at $0.25 using the Black-Scholes model. The following inputs were used in the Black-Scholes Valuation: Expected term: 4 years, Exercise Price: $0.36, Stock Price: $0.38, Risk-Free Rate: 1.26%, Volatility: 100%. The Company reduced the carrying value of the notes and is amortizing the relative fair value of the warrants granted in connection with the notes payable over the original term of the notes as additional interest expense. The unamortized balance of the fair value allocated to the warrants totaled $272 at issuance. In addition, the Company determined that there was a beneficial conversion feature of $363 at the date of issuance which was recorded as debt discount and is also amortized into interest expense over the original term of the notes. In addition the Company recorded $34 of debt issuance costs as a reduction to the carrying amount of the note which is being amortized over the term of the note. The unamortized balance of the beneficial conversion feature and warrants was $508, including debt issue costs as of June 30, 2015. For the three and six months ended June 30, 2015, the Company recorded interest expense of $111 and $162 related to the amortization of the warrants, beneficial conversion feature and debt issue costs. The effective interest rate of the convertible notes payable was computed at 54.63% subsequent to the allocation of proceeds to the warrants and beneficial conversion feature. May 20, 2015 Promissory Note On May 20, 2015, we entered into a subordinated secured promissory note in the principal amount of $465 and a five-year immediately exercisable warrant to purchase 762,295 shares of common shares at a price of $0.31 per share, in a private placement exempt from registration under the Securities Act of 1933. The subordinated secured promissory note had an annual interest rate of 12%, 6% in cash and 6% added to the principal, and matured on May 20, 2016, see Note 11: Convertible Preferred Stock and Warrants, above for a discussion of the Series 6% Convertible Preferred Stock. The Company recognized the fair value of the warrant liability of $167, a beneficial conversion feature of $39, and the debt discount on the debt of $205. The debt discount will be amortized over the life of the debt as interest expense. The warrant liability will be marked to market quarterly with the change recognized in income. On June 23, 2015, the subordinated secured promissory note together with accrued but unpaid interest and a 25% conversion premium was converted into a $585 - 14% convertible promissory note, with new five-year warrants to purchase up to 935,210 shares of common stock at a price of $0.30 per share, in a private placement exempt from registration under the Securities Act of 1933. The conversion of the $465 Convertible Promissory Note to the $585 Convertible Promissory Note was accounted for as a debt modification as prescribed by ASC 470-50-40, Debt Modifications and Extinguishments. The difference in net cash flows of the original and new debt instruments were less than 10% thus it was determined that they are not substantially different. The new effective interest rate for the convertible notes was computed to be 59.36% subsequent to the allocation of the proceeds to the warrants and the beneficial conversion feature. The fair value of the 935,210 warrants granted was calculated at $0.15 using the Black-Scholes model. The following inputs were used in the Black-Scholes Valuation: Expected term: 4 years, Exercise Price: $0.30, Stock Price: $0.22, Risk-Free Rate: 1.39%, Volatility: 108.87%. The Company reduced the carrying value of the notes and is amortizing the relative fair value of the warrants granted in connection with the notes payable over the original term of the notes as additional interest expense. The unamortized balance of the fair value allocated to the 935,210 warrants totaled $114 at issuance. For the three and six months ended June 30, 2015, the Company recorded interest expense of $22 related to the amortization of the warrants, the beneficial conversion feature, and the conversion premium. June 23, 2015 Promissory Note On June 23, 2015, we entered into a 14% secured convertible promissory note in the principal amount of $400 and a five-year immediately exercisable warrant to purchase 640,000 shares of common shares at a price of $0.30 per share, in a private placement exempt from registration under the Securities Act of 1933. This note is secured by Slipstream’s investment in one of its subsidiaries. The promissory note bears interest at the annual rate of 14% and is payable monthly in arrears with 12% in cash and 2% as additional principal and matures on September 23, 2016. This note is convertible into common stock at a conversion price of $0.28 per share, provided conversion of the note does not provide the holder with in excess of 9.99% of the then-issued and outstanding common stock. The unpaid principal and any accrued interest may at any time be converted at the option of the outside party into shares of the Company’s common stock. The fair value of the warrants granted was calculated at $0.15 using the Black-Scholes model. The following inputs were used in the Black-Scholes Valuation: Expected term: 4 years, Exercise Price: $0.30, Stock Price: $0.22, Risk-Free Rate: 1.39%, Volatility: 108.87%. The fair value of the warrant on issuance date was $77. The Company reduced the carrying value of the notes by the relative fair value of the warrant and is amortizing it in connection with the notes payable over the original term of the notes as additional interest expense. The effective interest rate of the convertible notes payable was computed at 30.85% subsequent to the allocation of proceeds to the warrants. The unamortized balance of the warrants was $77 as of June 30, 2015. For the three and six months ended June 30, 2015, the Company recorded interest expense of $1 related to the amortization of the warrants.

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- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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