Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. BROADCAST INTERNATIONAL INC (740726) 10-Q published on May 15, 2014 at 2:02 pm
Reporting Period: Mar 30, 2014
On December 28, 2011 we entered into a Note and Warrant Purchase and Security Agreement with seven individuals for an aggregate of $1,300,000 (“Bridge Loan”) to be used as working capital. The note bore an annual interest rate of 18%, payable monthly in cash. Additionally, we granted to the holders of the Bridge Loan warrants with a five year term to purchase an aggregate of 357,500 shares of our common stock at an exercise price of $0.65 which has been subsequently reset to $0.50. The note was originally due on February 28, 2012, but was extended and satisfied as described below. In consideration of the extension of the maturity date of the Bridge Loan, we granted the holders of the Bridge Loan warrants with a six year term to purchase 247,500 shares of our common stock at an exercise price of $0.35 which has been subsequently reset to $0.25 per share. In connection with the Bridge Loan we issued warrants to purchase 65,000 shares of our common stock at an exercise price of $0.65 which has been subsequently reset to $0.50 per share, to our investment banker for services in completing the above transaction.
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, & Equipment (topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This Update changes the requirements for reporting discontinued operations in Subtopic 205-20. The Update improves the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. Under current U.S. GAAP, many disposals, some of which may be routine in nature and not a change in an entity’s strategy, are reported in discontinued operations. In addition, the definition of discontinued operations expanded to include business activities and nonprofit activities that, on acquisition, meet the criteria to be classified as held for sale. The Update requires expanded disclosures for discontinued operations, including more information about the assets, liabilities, revenues and expenses of discontinued operations. This Update is effective for all disposals of components of an entity that occur with annual periods beginning on or after December 15, 2014 for public companies. Since the Company has not disposed of significant components of its business or activities in 2014, the Company doesn’t expect this Update to have a significant impact on its financials.
In March 2014, the FASB issued ASU 2014-06, Technical Corrections and Improvements Related to Glossary Terms. The amendments in this Update represent changes to clarify the Master Glossary of the Codification, consolidate multiple instances of the same term into a single definition, or make minor improvements to the Master Glossary that are not expected to result in substantive changes to the application of existing guidance or create a significant administrative cost to most entities. Additionally, the amendments will make the Master Glossary easier to understand, as well as reduce the number of terms appearing in the Master Glossary. The amendments in this Update are effective immediately. The Company reviewed and noted the changes made in this Update, which can be categorized into four sections: 1) Deletion of Master Glossary Terms, 2) Addition of Master Glossary Term Links, 3) Duplicate Master Glossary Terms, and 4) Other Technical Corrections Related to Glossary Terms. The Company implemented the Update upon issuance, but the changes did not have a significant impact on our financial statements.
On July 31, 2009, we entered into a $10.1 million, three-year contract with a national banking institution, to provide technology and digital signage services to approximately 2,100 of its more than 6,000 retail and administrative locations throughout North America. The contract terminated on May 1, 2013. For the three months ended March 31, 2013, we realized approximately $1,346,644 from this contract, which constituted approximately 90% of our revenues for the period, but for the three months ended March 31, 2014, we received no revenues from this customer. Our revenues for the three months ended March 31, 2013 were $1,480,569 compared to revenues of $73,995 for the three months ended March 31, 2014. As a result, we have continued to deplete our available cash even after we significantly reduced our expenditures through reduction of staff and termination of all development activities and do not believe that we can continue as an independent entity. See Note 3 of the Notes to Consolidated Financial Statements appearing elsewhere herein.
General and Administrative expenses for the three months ended March 31, 2014 were $331,280 compared to $986,209 for the three months ended March 31, 2013. The decrease of $654,929 resulted primarily from a decrease in employee and related costs of $249,171 due to a reduction in staff and salary deductions, a reduction of $176,963 in consulting expenses, a reduction of $315,778 in legal and consulting services expenses, and a decrease in audit and accounting fees of $24,826. The overall decrease in legal and accounting expenses was a reflection of expenses incurred in 2013 for the proposed merger with Alldigital that weren’t repeated in 2014. Research and development in process decreased by $221,599 for the three months ended March 31, 2014 to $3,774 from $225,373 for the three months ended March 31, 2013 reflecting the shutdown of all further development efforts. Sale and marketing expenses decreased by $99,314 primarily due to a reduction of employee and related costs of $83,408. We have only one employee currently employed in sales and marketing who is attempting to secure a contract with a large potential customer.