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Stockholders' Equity
 6 Months Ended
Jun. 30, 2015
Stockholders' Equity [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 11: STOCKHOLDERS’ EQUITY

 

Under reverse acquisition accounting, the amount of common stock reflects the equity structure of the legal acquirer (the par value and the number of shares outstanding of WRT). Under purchase accounting, stockholders’ equity reflects the recognition of approximately 46.2 million shares of our common stock issued and outstanding upon completion of the merger. Amounts in additional paid-in capital represent that of Creative Realities, adjusted to reflect the additional fair value of our shares issued, less the par value of our shares outstanding after the combination, and includes $1.4 million to reflect the portion of the purchase price related to the total estimated fair value of WRT warrants and the vested stock options outstanding on the merger date. Accumulated deficit represents that of Creative Realities prior to the merger date.

 

Under reverse acquisition accounting, as the accounting acquirer, Creative Realities is deemed (for accounting purposes only) to have issued replacement options to the registrant’s option holders, replacement warrants to the registrant’s warrant holders, in addition to the other issuances of warrants described in this report and summarized in the table below. All of registrant’s stock options were deemed to have vested in connection with a change of control (contemplated as part of the original award) as of the effective date of the transaction on August 20, 2014, and were included as purchase price consideration.

 

A summary of outstanding options is included below:

 

     Weighted          
     Average  Weighted     Weighted 
     Remaining  Average     Average 
Range of Exercise Number  Contractual  Exercise  Options  Exercise 
Prices between Outstanding  Life  Price  Exercisable  Price 
$0.32 - $0.65  3,443,680   9.37  $0.41   1,288,537  $0.49 
$0.66 - $0.79  390,000   8.54   0.79   390,000  $0.79 
$0.80 - $12.25  370,897   6.19   5.51   370,897  $5.51 
   4,204,577   9.01  $0.90         

 

Balance, December 31, 2014  5,613,977 
Granted  1,449,432 
Forfeited or expired  (2,858,832)
Balance, June 30, 2015  4,204,577 

 

The weighted average remaining contractual life for options exercisable is 8.53 years as of June 30, 2015.

In January 2015, the Company granted 10 year options to purchase 1,449,432 shares of its common stock to the Chief Financial Officer. The options vest over 4 years and have an exercise price of $0.32. The fair value of the options on the grant date was $0.25 and was determined using the Black-Sholes model. The following inputs were used:

 

Risk-free interest rate 1.69%
Expected term 6.25 years
Expected price volatility 95.13%
Dividend yield -

 

In May 2015, we entered into a Separation Agreement with Paul Price, our former Chief Executive Officer and Director. Part of the agreement called for accelerated vesting of one fourth of his original option grant of 3,753,427 shares. As a result, he became fully vested in 938,357 shares of the original option grant. The Company accounted for the modification as a type III option modification in which the new fair value of the grant was determined to be $0.13 resulting in a new fair value of $122. We used the following Black-Scholes inputs to determine the new fair value: exercise price: $0.45; stock price: $0.21; expected term: 4.75 years; risk-free rate: 1.38%; volatility: 99.0%; and dividend yield: 0%. For the three and six months ended June 30, 2015, the previously recorded compensation expense of $126 was reversed for the unvested options and the $122 was recorded as stock based compensation for the modification.