10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM            TO            

Commission File Number 001-33169

Wireless Ronin Technologies, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	41-1967918
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

5929 Baker Road, Suite 475, Minnetonka MN 55345

(Address of principal executive offices, including zip code)

(952) 564-3500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 month (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 8, 2012, the registrant had 24,990,071 shares of common stock outstanding.

WIRELESS RONIN TECHNOLOGIES, INC.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS	3
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32
ITEM 4 CONTROLS AND PROCEDURES	33
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS	33
ITEM 1A RISK FACTORS	33
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	33
ITEM 3 DEFAULTS UPON SENIOR SECURITIES	33
ITEM 4 MINE SAFETY DISCLOSURES	33
ITEM 5 OTHER INFORMATION	33
ITEM 6 EXHIBITS	34
SIGNATURES	35
EXHIBIT INDEX	36

2

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

WIRELESS RONIN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	September 30, 2012			December 31, 2011
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	3,465		$	5,478
Accounts receivable, net of allowance of $49 and $50		1,154			1,347
Inventories		194			170
Prepaid expenses and other current assets		155			193
Total current assets		4,968			7,188
Property and equipment, net		464			651
Restricted cash		50			50
Other assets		21			40
TOTAL ASSETS	$	5,503		$	7,929
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of capital lease obligations	$	—		$	41
Accounts payable		840			870
Deferred revenue		603			687
Accrued liabilities		677			569
Total current liabilities		2,120			2,167
COMMITMENTS AND CONTINGENCIES		—			—
SHAREHOLDERS’ EQUITY
Capital stock, $0.01 par value, 66,667 shares authorized Preferred stock, 16,667 shares authorized, no shares issued and outstanding		—			—
Common stock, 50,000 shares authorized; 24,977 and 22,969 shares issued and outstanding		250			230
Additional paid-in capital		96,863			95,047
Accumulated deficit		(93,231	)		(89,016	)
Accumulated other comprehensive loss		(499	)		(499	)
Total shareholders’ equity		3,383			5,762
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,503		$	7,929

See accompanying Notes to the Condensed Consolidated Financial Statements.

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WIRELESS RONIN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Sales
Hardware	$	512		$	942		$	1,146		$	3,487
Software		113			184			295			1,062
Services and other		1,144			1,175			3,658			3,203
Total sales		1,769			2,301			5,099			7,752
Cost of sales
Hardware		339			575			707			2,364
Software		21			29			65			124
Services and other		513			562			1,537			1,644
Total cost of sales (exclusive of depreciation and amortization shown separately below)		873			1,166			2,309			4,132
Gross profit		896			1,135			2,790			3,620
Operating expenses:
Sales and marketing expenses		339			431			1,197			1,708
Research and development expenses		462			555			1,417			1,748
General and administrative expenses		1,206			1,412			4,162			4,850
Depreciation and amortization expense		68			111			223			377
Total operating expenses		2,075			2,509			6,999			8,683
Operating loss		(1,179	)		(1,374	)		(4,209	)		(5,063	)
Other income (expenses):
Interest expense		(1	)		(6	)		(7	)		(24	)
Interest income		—			—			1			3
Total other expense		(1	)		(6	)		(6	)		(21	)
Net loss	$	(1,180	)	$	(1,380	)	$	(4,215	)	$	(5,084	)
Basic and diluted loss per common share	$	(0.05	)	$	(0.07	)	$	(0.18	)	$	(0.26	)
Basic and diluted weighted average shares outstanding		23,426			19,495			23,211			19,389

See accompanying Notes to the Condensed Consolidated Financial Statements.

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WIRELESS RONIN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net loss		$(1,180	)	$	(1,380	)	$	(4,215	)	$	(5,084	)
Foreign currency translation gain		—			24			—			23
Total comprehensive loss	$	(1,180	)	$	(1,356	)	$	(4,215	)	$	(5,061	)

See accompanying Notes to the Condensed Consolidated Financial Statements.

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WIRELESS RONIN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine Months Ended September 30,
	2012			2011
Operating Activities:
Net loss	$	(4,215	)	$	(5,084	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		223			377
Stock-based compensation expense		377			692
Issuance of common stock for services		152			—
Issuance of warrants for services		71			—
Amortization of warrants issued for debt issuance costs		3			14
Provision for doubtful accounts		—			15
Change in operating assets and liabilities:
Accounts receivable		201			785
Inventories		(24	)		(19	)
Prepaid expenses and other current assets		38			99
Other assets		20			—
Accounts payable		(31	)		(613	)
Deferred revenue		(85	)		136
Accrued liabilities		107			213
Net cash used in operating activities		(3,163	)		(3,385	)
Investing activities
Purchases of property and equipment		(36	)		(123	)
Net cash used in investing activities		(36	)		(123	)
Financing activities
Payments on capital lease obligations		(41	)		(26	)
Advance on line of credit - bank		—			500
Proceeds from the issuance of common stock		1,198			—
Exercise of options and warrants		51			200
Net cash provided by financing activites		1,208			674
Effect of Exchange Rate Changes on Cash		(22	)		26
Decrease in Cash and Cash Equivalents		(2,013	)		(2,808	)
Cash and Cash Equivalents, beginning of period		5,478			7,064
Cash and Cash Equivalents, end of period	$	3,465		$	4,256

See accompanying Notes to the Condensed Consolidated Financial Statements.

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WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Wireless Ronin Technologies, Inc. (the “Company”) has prepared the condensed consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the Company’s one wholly-owned subsidiary. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The Company believes that all necessary adjustments, which consist only of normal recurring items, have been included in the accompanying condensed consolidated financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the year ending December 31, 2012.

Nature of Business and Operations

The Company is a Minnesota corporation that provides marketing technology solutions targeting specific food service, automotive and retail markets. The Company provides leading expertise in content and emerging digital media solutions, including dynamic digital signage, interactive kiosk, mobile, social media and web, that enable its customers to transform how they engage with their customers. The Company is able to provide an array of marketing technology solutions through its proprietary suite of software applications marketed as RoninCast^®. RoninCast software and associated applications provide an enterprise, web-based or hosted content delivery system that manages, schedules and delivers digital content over wireless or wired networks. Additionally, RoninCast^® software’s flexibility allows the Company to develop custom solutions for specific customer applications.

The Company’s wholly-owned subsidiary, Wireless Ronin Technologies (Canada), Inc., an Ontario, Canada provincial corporation located in Windsor, Ontario, maintains a vertical-specific focus in the automotive industry and houses the Company’s content engineering operation. RNIN Canada develops digital content and sales support systems to help retailers train their sales staff and educate their customers at the point of sale. Today, the capabilities of this operation are integrated with the Company’s historical business to provide content solutions to all of its clients.

The Company and its subsidiary sell products and services primarily throughout North America.

Summary of Significant Accounting Policies

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

1. Principles of Consolidation

The consolidated financial statements include the accounts of Wireless Ronin Technologies, Inc. and its wholly owned subsidiary. All inter-company balances and transactions have been eliminated in consolidation.

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WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

2. Foreign Currency

During the first quarter of 2012, the Company reevaluated the reporting currency and determined that the functional currency for its operations in Canada is the U.S. Dollar. As a result, the Company is no longer recording translation adjustments related to assets and liabilities or income and expense items that are transacted in the local currency as a component of accumulated other comprehensive loss in shareholders’ equity. Foreign exchange transaction gains and losses attributable to exchange rate movements related to transactions made in the local currency and on intercompany receivables and payables not deemed to be of a long-term investment nature are recorded in other income (expense).

3. Revenue Recognition

The Company recognizes revenue primarily from these sources:

• Software and software license sales

• System hardware sales

• Professional service revenue

• Software design and development services

• Implementation services

• Maintenance and hosting support contracts

The Company applies the provisions of Accounting Standards Codification subtopic 605-985, Revenue Recognition: Software (or ASC 605-35) to all transactions involving the sale of software licenses. In the event of a multiple element arrangement, the Company evaluates if each element represents a separate unit of accounting, taking into account all factors following the guidelines set forth in “FASB ASC 605-985-25-5.”

The Company recognizes revenue when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred, which is when product title transfers to the customer, or services have been rendered; (iii) customer payment is deemed fixed or determinable and free of contingencies and significant uncertainties; and (iv) collection is probable. The Company assesses collectability based on a number of factors, including the customer’s past payment history and its current creditworthiness. If it is determined that collection of a fee is not reasonably assured, the Company defers the revenue and recognizes it at the time collection becomes reasonably assured, which is generally upon receipt of cash payment. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period. Sales and use taxes are reported on a net basis, excluding them from revenue and cost of revenue.

Multiple-Element Arrangements — The Company enters into arrangements with customers that include a combination of software products, system hardware, maintenance and support, or installation and training services. The Company allocates the total arrangement fee among the various elements of the arrangement based on the relative fair value of each of the undelivered elements determined by vendor-specific objective evidence (VSOE). In software arrangements for which the Company does not have VSOE of fair value for all elements, revenue is deferred until the earlier of when VSOE is determined for the undelivered elements (residual method) or when all elements for which the Company does not have VSOE of fair value have been delivered. The Company has determined VSOE of fair value for each of its products and services.

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WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The VSOE for maintenance and support services is based upon the renewal rate for continued service arrangements. The VSOE for installation and training services is established based upon pricing for the services. The VSOE for software and licenses is based on the normal pricing and discounting for the product when sold separately.

Each element of the Company’s multiple element arrangements qualifies for separate accounting. However, when a sale includes both software and maintenance, the Company defers revenue under the residual method of accounting. Under this method, the undelivered maintenance and support fees included in the price of software is amortized ratably over the period the services are provided. The Company defers maintenance and support fees based upon the customer’s renewal rate for these services.

Software and software license sales

The Company recognizes revenue when a fixed fee order has been received and delivery has occurred to the customer. The Company assesses whether the fee is fixed or determinable and free of contingencies based upon signed agreements received from the customer confirming terms of the transaction. Software is delivered to customers electronically or on a CD-ROM, and license files are delivered electronically.

System hardware sales

The Company recognizes revenue on system hardware sales generally upon shipment of the product or customer acceptance depending upon contractual arrangements with the customer. Shipping charges billed to customers are included in sales and the related shipping costs are included in cost of sales.

Professional service revenue

Included in services and other revenues is revenue derived from implementation, maintenance and support contracts, content development, software development and training. The majority of consulting and implementation services and accompanying agreements qualify for separate accounting. Implementation and content development services are bid either on a fixed-fee basis or on a time-and-materials basis. For time-and-materials contracts, the Company recognizes revenue as services are performed. For fixed-fee contracts, the Company recognizes revenue upon completion of specific contractual milestones or by using the percentage-of-completion method.

Software design and development services

Revenue from contracts for technology integration consulting services where the Company designs/redesigns, builds and implements new or enhanced systems applications and related processes for clients are recognized on the percentage-of-completion method in accordance with “FASB ASC 605-985-25-88 through 107.” Percentage-of-completion accounting involves calculating the percentage of services provided during the reporting period compared to the total estimated services to be provided over the duration of the contract. Estimated revenues from applying the percentage-of-completion method include estimated incentives for which achievement of defined goals is deemed probable. This method is followed where reasonably dependable estimates of revenues and costs can be made. The Company measures its progress for completion based on either the hours worked as a percentage of the total number of hours of the project or by delivery and customer acceptance of specific milestones as outlined per the terms of the agreement with the customer. Estimates of total contract revenue and costs are continuously monitored during the term of the contract, and recorded revenue and costs are subject to revision as the contract progresses. Such revisions may result in increases or decreases to revenue and income and are reflected in the financial statements in the periods in which they are first identified. If estimates indicate that a contract loss will occur, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated direct and indirect costs of the contract exceed the estimated total revenue that will be generated by the contract and are included in cost of sales and classified in accrued expenses in the balance sheet. The Company’s presentation of revenue recognized on a contract completion basis has been consistently applied for all periods presented.

9

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The Company classifies the revenue and associated cost on the “Services and Other” line within the “Sales” and “Cost of Sales” sections of the Consolidated Statement of Operations. In all cases where the Company applies the contract method of accounting, the Company’s only deliverable is professional services, thus, the Company believes presenting the revenue on a single line is appropriate.

Costs and estimated earnings recognized in excess of billings on uncompleted contracts are recorded as unbilled services and are included in accounts receivable on the balance sheet. Billings in excess of costs and estimated earnings on uncompleted contracts are recorded as deferred revenue until revenue recognition criteria are met.

Uncompleted contracts at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012			December 31, 2011
Cost incurred on uncompleted contracts	$	25		$	112
Estimated earnings		145			286
Revenue recognized		170			398
Less: billings to date		(141	)		(482	)
	$	29		$	(84	)

The above information is presented in the balance sheet as follows:

	September 30, 2012			December 31, 2011
Costs and estimated earnings in excess of billings on uncompleted contracts	$	49		$	15
Billings in excess of costs and estimated earnings on uncompleted contracts		(20	)		(99	)
	$	29		$	(84	)

Implementation services

Implementation services revenue is recognized when installation is completed.

Maintenance and hosting support contracts

Maintenance and hosting support consists of software updates and support. Software updates provide customers with rights to unspecified software product upgrades and maintenance releases and patches released during the term of the support period. Support includes access to technical support personnel for software and hardware issues. The Company also offers a hosting service through its network operations center, or NOC, allowing the ability to monitor and support its customers’ networks 7 days a week, 24 hours a day.

Maintenance and hosting support revenue is recognized ratably over the term of the maintenance contract, which is typically one to three years. Maintenance and support is renewable by the customer. Rates for maintenance and support, including subsequent renewal rates, are typically established based upon a specified percentage of net license fees as set forth in the arrangement. The Company’s hosting support agreement fees are based on the level of service provided to its customers, which can range from monitoring the health of a customer’s network to supporting a sophisticated web-portal.

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WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

4. Cash and Cash Equivalents

Cash equivalents consist of commercial paper and all other liquid investments with original maturities of three months or less when purchased. As of September 30, 2012 and December 31, 2011, the Company had substantially all cash invested in a commercial paper sweep account. The Company maintains the majority of its cash balances in one financial institution located in Chicago.

5. Restricted Cash

In connection with the Company’s bank’s credit card program, the Company is required to maintain a cash balance of $50 at September 30, 2012 and December 31, 2011, respectively.

6. Accounts Receivable

Accounts receivable are usually unsecured and stated at net realizable value and bad debts are accounted for using the allowance method. The Company performs credit evaluations of its customers’ financial condition on an as-needed basis and generally requires no collateral. Payment is generally due 90 days or less from the invoice date and accounts past due more than 90 days are individually analyzed for collectability. In addition, an allowance is provided for other accounts when a significant pattern of uncollectability has occurred based on historical experience and management’s evaluation of accounts receivable. If all collection efforts have been exhausted, the account is written off against the related allowance. No interest is charged on past due accounts. The allowance for doubtful accounts was $49 and $50 at September 30, 2012 and December 31, 2011, respectively.

7. Inventories

The Company records inventories using the lower of cost or market on a first-in, first-out (FIFO) method. Inventories consist principally of finished goods, product components and software licenses. Inventory reserves are established to reflect slow-moving or obsolete products. The Company had an inventory reserve of $108 and $65 at September 30, 2012 and December 31, 2011, respectively.

8. Impairment of Long-Lived Assets

The Company reviews the carrying value of all long-lived assets, including property and equipment as well as intangible assets with definite lives, for impairment in accordance with “FASB ASC 360-10-05-4,” Accounting for the Impairment or Disposal of Long-Lived Assets. Under FASB ASC 360-10-05-4, impairment losses are recorded whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

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 by 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. There were no impairment losses for long-lived assets recorded for the three and nine months ended September 30, 2012 and 2011.

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WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

9. Depreciation and Amortization

Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leased equipment is depreciated over the term of the capital lease. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method.

The estimated useful lives used to compute depreciation and amortization are as follows:

Equipment	3 - 5 years
Demonstration equipment	3 - 5 years
Furniture and fixtures	7 years
Purchased software	3 years
Leased equipment	3 years
Leasehold improvements	Shorter of 5 years or term of lease

Depreciation and amortization expense was $68 and $223 for the three and nine months ended September 30, 2012, respectively, compared to $111 and $377 for the same periods in the prior year.

10. Comprehensive Loss

Comprehensive loss includes revenues, expenses, gains and losses that are excluded from net loss. Items of comprehensive loss are foreign currency translation adjustments which are added to net income or loss to compute comprehensive income or loss. Total unrealized foreign currency translation losses on the translation of the financial statements of the Company’s foreign subsidiary from its functional currency to the U.S. dollar of $0 were included in comprehensive losses during the three and nine months ended September 30, 2012, respectively, compared to $24 and $23 for the same periods in the prior year.

11. Research and Development and Software Development Costs

Research and development expenses consist primarily of development personnel and non-employee contractor costs related to the development of new products and services, enhancement of existing products and services, quality assurance and testing. “FASB ASC 985-20-25,” Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software and hardware technologies. Software development costs incurred beyond the establishment of technological feasibility have not been significant. No software development costs were capitalized during the nine months ended September 30, 2012 and 2011. Software development costs have been recorded as research and development expense. The Company incurred research and development expenses of $462 and $1,417 during the three and nine months ended September 30, 2012, respectively, compared to $555 and $1,748 for the same periods in the prior year.

12. Basic and Diluted Loss per Common Share

Basic and diluted loss per common share for all periods presented is computed using the weighted average number of common shares outstanding. Basic weighted average shares outstanding include only outstanding common shares. Diluted net loss per common share is computed by dividing net loss by the weighted average common and potential dilutive common shares outstanding computed in accordance with the treasury stock method. Shares reserved for outstanding stock warrants and options totaling 2,717 and 3,108, respectively, were excluded from the computation of loss per share as their effect was antidilutive due to the Company’s net loss for the three and nine months ended September 30, 2012 and 2011.

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WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

13. Deferred 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, 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.

14. Accounting for Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718-10, which requires the measurements and recognition of compensation expense for all stock-based payments including warrants, stock options, restricted stock grants and stock bonuses based on estimated fair value. For purposes of determining estimated fair value under FASB ASC 718-10-30, the Company computes the estimated fair values of stock options using the Black-Scholes option pricing model. The fair value of restricted stock and stock award grants are determined based on the number of shares granted and the closing price of the Company’s common stock on the date of grant. Compensation expense for all share-based payment awards is recognized using the straight-line amortization method over the vesting period. Stock-based compensation expense of $99 and $377, or a basic and diluted loss per share of $0.00 and $0.02, was charged to expense during the three and nine months ended September 30, 2012, respectively, compared to stock-based compensation expense of $169 and $692, or a basic and diluted loss per share of $0.01 and $0.04, for the same periods in the prior year. No tax benefit has been recorded due to the full valuation allowance on deferred tax assets that the Company has recorded.

The Company applies the guidance of FASB 718-10-S99-1 for purposes of determining the expected term for stock options. The Company calculates the estimated expected life based upon historical exercise data. The Company uses historical closing stock price volatility for a period equal to the period its common stock has been trading publicly. The dividend yield assumption is based on the Company’s history and expectation of no future dividend payouts.

Stock-based compensation expense is based on awards ultimately expected to vest and is reduced for estimated forfeitures. FASB 718-10-55 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company applied a pre-vesting forfeiture rate of 18.3% to 24.4% based on upon actual historical experience for all employee option awards. The Company continues to apply a zero forfeiture rate to those options granted to members of its Board of Directors.

The Company accounts for equity instruments issued for services and goods to non-employees under “FASB ASC 505-50-1” Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services and “FASB ASC 505-50-25” Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees. Generally, the equity instruments issued for services and goods are shares of the Company’s common stock, or warrants or options to purchase shares of the Company’s common stock. These shares, warrants or options are either fully-vested and exercisable at the date of grant or vest over a certain period during which services are provided. The Company expenses the fair market value of these securities over the period in which the related services are received. During the three and nine months ended September 30, 2012, the Company recognized $14 and $214, or a basic and diluted loss per share of $0.00 and $0.01, of stock-based compensation expense related to the fair market value of stock and a warrant that were issued to outside vendors for professional services and for the stock issued to the Company’s non-employee directors as part of their compensation. The Company did not issue equity instruments to non-employees during the three or nine months ended September 30, 2011.

See Note 5 for further information regarding stock-based compensation and the assumptions used to calculate the fair value of stock-based compensation.

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WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

15. Fair Value of Financial Instruments

“FASB ASC 820-10,” Fair Value Measurements and Disclosures, requires disclosure of the estimated fair value of an entity’s financial instruments. Such disclosures, which pertain to the Company’s financial instruments, do not purport to represent the aggregate net fair value of the Company. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the short maturity of those instruments. The fair value of capital lease obligations approximates carrying value based on the interest rate in the lease compared to current market interest rates.

16. Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Significant estimates of the Company are the allowance for doubtful accounts, recognition of revenue under fixed price contracts, deferred tax assets, deferred revenue, depreciable lives and methods of property and equipment, valuation of warrants and other stock-based compensation. Actual results could differ from those estimates.

17. Deferred Financing Costs

Amortization expense related to deferred financing costs was $0 and $3 for the three and nine months ended September 30, 2012, respectively, compared to $4 and $14 for the same periods in the prior year. The amortization expense was recorded as a component of interest expense. The balance of deferred financing costs at September 30, 2012 and December 31, 2011 was $0 and $3, respectively.

NOTE 2: OTHER FINANCIAL STATEMENT INFORMATION

The following tables provide details of selected financial statement items:

ALLOWANCE FOR DOUBTFUL RECEIVABLES

	Nine Months Ended			Year Ended
	September 30, 2012			December 31, 2011
Balance at beginning of period	$	50		$	35
Provision for doubtful receivables		—			57
Write-offs		(1	)		(42	)
Balance at end of period	$	49		$	50

14

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

INVENTORIES

	September 30,		December 31,
	2012		2011
Finished goods	$	172	$	125
Work-in-process		22		45
Total inventories	$	194	$	170

PROPERTY AND EQUIPMENT

	September 30,			December 31,
	2012			2011
Leased equipment	$	89		$	89
Equipment		1,191			1,195
Leasehold improvements		381			381
Demonstration equipment		4			6
Purchased software		376			361
Furniture and fixtures		573			569
Total property and equipment	$	2,614		$	2,601
Less: accumulated depreciation and amortization		(2,150	)		(1,950	)
Net property and equipment	$	464		$	651

OTHER ASSETS

Other assets consist of long-term deposits on operating leases.

DEFERRED REVENUE

	September 30,		December 31,
	2012		2011
Deferred software maintenance	$	550	$	459
Customer deposits and deferred project revenue		53		228
Total deferred revenue	$	603	$	687

15

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

ACCRUED LIABILITIES

	September 30,		December 31,
	2012		2011
Compensation	$	380	$	214
Accrued rent		215		232
Sales tax and other		82		123
Total accrued liabilities	$	677	$	569

See Note 4 for additional information on accrued remaining lease obligations.

SUPPLEMENTAL CASH FLOW INFORMATION

	Nine Months Ended September 30,
	2012		2011
Cash paid for:
Interest	$	4	$	5
Non-cash financing activity:
Warrants issued for debt issuance costs	$	—	$	8

16

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

NOTE 3: FAIR VALUE MEASUREMENT

As of September 30, 2012 and December 31, 2011, cash equivalents consisted of the following:

	September 30, 2012
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		(Losses)		Value
Commercial paper	$	3,024	$	—	$	—	$	3,024
Total included in cash and cash equivalents	$	3,024	$	—	$	—	$	3,024
	December 31, 2011
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		(Losses)		Value
Commercial paper	$	5,316	$	—	$	—	$	5,316
Total included in cash and cash equivalents	$	5,316	$	—	$	—	$	5,316

The Company measures certain financial assets, including cash equivalents, at fair value on a recurring basis. In accordance with FASB 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, FASB ASC 820-10-35 establishes a three-level hierarchy which 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. The Level 1 category at September 30, 2012 and December 31, 2011 primarily represents funds held in a commercial paper sweep account totaling $3,024 and $5,316, respectively, which are included in cash and cash equivalents in the consolidated balance sheet.

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. At September 30, 2012 and December 31, 2011, the Company had no Level 2 financial assets on its consolidated balance sheet.

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. At September 30, 2012 and December 31, 2011, the Company had no Level 3 financial assets on its consolidated balance sheet.

The hierarchy level assigned to each security in the Company’s cash equivalents is based on its assessment of the transparency and reliability of the inputs used in the valuation of such instruments at the measurement date. The Company did not have any financial liabilities that were covered by FASB ASC 820-10-30 as of September 30, 2012 and December 31, 2011.

NOTE 4: COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases approximately 19 square feet of office and warehouse space located at 5929 Baker Road, Minnetonka, Minnesota. In July 2010, the Company entered into an amendment that extended the term of the lease through January 31, 2018. In consideration for this extension, the landlord provided the Company with a leasehold improvement allowance totaling $191 and a reduction in base rent per square foot. The leasehold allowance was recorded as an addition to deferred rent. The Company is recognizing the leasehold improvement allowance on a straight-line basis as a benefit to rent expense over the life of the lease, along

17

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

with the existing deferred rent credit balance of $60 as of the date of the amendment. In addition, the amendment contains a rent escalation provision, which also is being recognized on a straight-line basis over the term of the lease. The Company had drawn upon the entire amount of leasehold improvement allowances during the fourth quarter of 2010. The lease requires the Company to maintain a letter of credit in the amount of $240 as collateral which can, in the discretion of the landlord, be reduced or released. The amount of the letter of credit as of September 30, 2012 and December 31, 2011 was $240 and $300, respectively. In addition, the Company leases office space of approximately 10 square feet to support its Canadian operations at a facility located at 4510 Rhodes Drive, Suite 800, Windsor, Ontario under a lease that, as amended, extends through June 30, 2014.

Rent expense under the operating leases was $90 and $279 for the three and nine months ended September 30, 2012, respectively, compared to $92 and $296 for the same periods in the prior year.

Future minimum lease payments for operating leases are as follows:

At September 30, 2012	Lease Obligations
Three months ended December 31, 2012	$	64
2013		259
2014		234
2015		207
2016		199
Thereafter		197
Total future minimum obligations	$	1,160

Litigation

The Company was not party to any material legal proceedings as of November 8, 2012, and there were no such proceedings pending during the period covered by this report.

Revolving Line-of-Credit

In March 2010, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (the “Loan and Security Agreement”), which was most recently amended effective September 30, 2012. The Loan and Security Agreement provides the Company with a revolving line-of-credit at an annual interest rate of prime plus 1.5%. The availability of which is the lesser of (a) $2,500, or (b) the amount available under the Company’s borrowing base (75% of the Company’s eligible accounts receivable plus 50% of the Company’s eligible inventory) minus (1) the dollar equivalent amount of all outstanding letters of credit, (2) 10% of each outstanding foreign exchange contract, (3) any amounts used for cash management services, and (4) the outstanding principal balance of any advances. In connection with the July 2010 lease amendment for the Company’s corporate offices, Silicon Valley Bank issued a letter of credit which as of September 30, 2012 was in the amount of $240, which effectively reduced the capacity amount under the Loan and Security Agreement to $2,260, subject to the borrowing base availability and continued compliance with restrictive covenants. As of September 30, 2012, the amount available to the Company under the loan and security agreement was $686. There was no outstanding balance as of September 30, 2012.

The amendment which became effective September 30, 2012 adjusted the minimum tangible net worth requirement to $3,000 for the month ending September 30, 2012, to $2,500 for the months ending October 31, 2012, November 30, 2012 and December 31, 2012, and to $1,400 for the months ending January 31, 2013, February 28, 2013, and through the maturity date of March 13, 2013. It

18

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

further established that the minimum tangible net worth requirement increases (a) by 75% of the Company’s net income for each month starting with the month ending September 30, 2012 and (b) by 75% of the gross proceeds received from the Company’s issuances of equity during such month and/or the principal amount of subordinated debt incurred by the Company during such month, but excluding the gross proceeds from the Company’s September 2012 registered direct offering of equity securities. The Company must comply with this tangible net worth minimum in order to draw on such line of credit and also while there are outstanding credit extensions (other than the Company’s existing lease letter of credit). The maximum permitted amount of outstanding letters of credit is $300.

Under the Loan and Security Agreement, the Company is generally required to obtain the prior written consent of Silicon Valley Bank to, among other things, (a) dispose of assets, (b) change its business, (c) liquidate or dissolve, (d) change CEO or COO (replacements must be satisfactory to the lender), (e) enter into any transaction in which the Company’s shareholders who were not shareholders immediately prior to such transaction own more than 40% of the Company’s voting stock (subject to limited exceptions) after the transaction, (f) merge or consolidate with any other person, (g) acquire all or substantially all of the capital stock or property of another person, or (h) become liable for any indebtedness (other than permitted indebtedness). The line of credit is secured by all assets of the Company. The Loan and Security Agreement matures on March 13, 2013.

NOTE 5: STOCK-BASED COMPENSATION AND BENEFIT PLANS

Stock Compensation Expense Information

FASB ASC 718-10 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. The number of shares reserved under the Amended and Restated 2006 Equity Incentive Plan and the Amended and Restated 2006 Non-Employee Director Stock Option Plan as of September 30, 2012 was 3,600 and 1,000, respectively. Compensation expense recognized for the issuance of warrants, stock options, restricted stock grants and stock bonuses for the three and nine months ended September 30, 2012 and 2011 was as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Stock-based compensation costs included in:
Cost of sales	$	2	$	5	$	6	$	14
Sales and marketing expenses		20		19		61		97
Research and development expenses		7		12		46		36
General and administrative expenses		70		133		264		545
Total stock-based compensation expenses	$	99	$	169	$	377	$	692

At September 30, 2012, there was approximately $507 of total unrecognized compensation expense related to unvested share-based awards. Generally, this expense will be recognized over the next two and half years and will be adjusted for any future changes in estimated forfeitures.

19

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Valuation Information for Stock-Based Compensation

For purposes of determining estimated fair value under FASB ASC 718-10, the Company computed the estimated fair values of stock options using the Black-Scholes model. The Company did not issue any stock options during the three months ended September 30, 2012. The weighted average estimated fair value of stock options granted during the first nine months of 2012 was $0.71 per share compared to $0.77 and $0.75 for the three and nine months ended September 30, 2011. The values set forth above were calculated using the following weighted average assumptions:

	Three Months Ended September 30,					Nine Months  Ended September 30,
	2012		2011			2012			2011
Expected life		n/a		4.07 years			4.18 years			3.82 to 4.07 years
Dividend yield		n/a		0	%		0	%		0	%
Expected volatility		n/a		88.5	%		87.4	%		88.5 to 90.6	%
Risk-free interest rate		n/a		0.7	%		0.5 to 0.8	%		0.7 to 1.8	%

The Company calculates the estimated expected life based upon historical exercise data. The risk-free interest rate assumption is based on observed interest rates appropriate for the term of the Company’s stock options. The Company uses historical closing stock price volatility for a period equal to the expected life of the respective award. The dividend yield assumption is based on the Company’s history and expectation of no future dividend payouts.

Stock-based compensation expense is based on awards ultimately expected to vest and is reduced for estimated forfeitures. FASB 718-10-55 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company applied a pre-vesting forfeiture rate of 18.3% to 24.4% based on upon actual historical experience for all employee option awards. The Company continues to apply a zero forfeiture rate to those options granted to members of its Board of Directors.

In February 2012 and March 2011, the Company granted stock options for the purchase of an aggregate of 305 and 250 shares to two executive officers and certain key employees, respectively. In addition, each of the Company’s six non-employee board members received stock options to purchase 33 and 20 shares of the Company’s stock in February 2012 and March 2011. In June 2011, the Company granted stock options for the purchase of an aggregate of 45 shares to two key employees.

The Company issued 30 shares of restricted stock awards to a key employee in February 2012. The shares require both continued employment and achievement of certain performance targets by June 30, 2012. As of June 30, 2012, the performance targets had been achieved and the shares were issued to the employee. The weighted average fair value of the shares was based on the closing market price on the date of grant of $1.07. The fair market value of the grants totaled $32 and was recognized as stock compensation expense on a straight-line basis through June 30, 2012.

In February 2012, the Company issued 106 unregistered shares of its common stock to a vendor in exchange for executive search services. The fair value of the shares was based on the closing price on the date issued, which totaled $114 and was recognized as compensation expense during the three months ended March 31, 2012. In addition, the Company issued a three-year warrant for the purchase of 150 shares of common stock at an exercise price of $1.75 to another vendor in exchange for public relation services. The fair value of the warrants was $0.47 per share based on the Black-Scholes model using an expected term of three years, a risk-free interest rate of 0.51% and a volatility rate of 87.4%. The total fair value of $71 was recognized as compensation expense during the three months ended June 30, 2012 as the warrant was 100% exercisable upon issuance.

In April 2012, July 2012 and October 2012, the Company issued an aggregate of 15, 15 and 12 shares of common stock, respectively, to its six non-employee board members. The Company also issued an aggregate of 30 and 14 shares of common stock to

20

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

two key sales employees in June 2012 and August 2012, respectively. The shares were issued to the six non-employee board members as part of their compensation for board service for the nine month period ended September 30, 2012. The shares were issued to the two key sales employees as a result of their achievement of certain performance goals outlined within the annual sales compensation plan. The weighted average fair value of the shares was based on the closing market price on the date of grant of $0.81 and $0.76 for the three and nine months ended September 30, 2012. The fair value of the stock awards was recognized as compensation expense and totaled $22 and $69 for the three and nine months ended September 30, 2012.

Stock options and warrants for the purchase of 308 shares were cancelled or expired during the nine months ended September 30, 2012.

2007 Associate Stock Purchase Plan

In November 2007, the Company’s shareholders approved the 2007 Associate Stock Purchase Plan, under which 300 shares were originally reserved for purchase by the Company’s associates (employees). In June 2010, the Company’s shareholders approved an amendment to increase the number of shares reserved for issuance to 400. In June 2011, the Company’s shareholders approved an amendment to increase the number of shares reserved for issuance from 400 to 600. The purchase price of the shares under the plan is the lesser of 85% of the fair market value on the first or last day of the offering period. Offering periods are every six months ending on June 30 and December 31. Associates may designate up to ten percent of their compensation for the purchase of shares under the plan. Total shares purchased by associates under the plan were 384, leaving 216 remaining shares available to be issued under the plan, as of September 30, 2012.

Registered Direct Offering

In September 2012, the Company sold a total of 1,738 shares of its common stock at $0.81 per share pursuant to a registration statement on Form S-3 which was declared effective by the Securities and Exchange Commission in September 2009. The Company obtained approximately $1,198 in net proceeds as a result of this registered direct offering.

Employee Benefit Plan

In 2007, the Company began to offer a defined contribution 401(k) retirement plan for eligible associates. Associates may contribute up to 15% of their pretax compensation to the plan. There is currently no plan for an employer contribution match.

NOTE 6: SEGMENT INFORMATION AND MAJOR CUSTOMERS

The Company views its operations and manages its business as one reportable segment, providing marketing technology solutions to a variety of companies, primarily in its targeted vertical markets. Factors used to identify the Company’s single operating segment include the financial information available for evaluation by the chief operating decision maker in making decisions about how to allocate resources and assess performance. The Company markets its products and services through its headquarters in the United States and its wholly-owned subsidiary operating in Canada.

21

WIRELESS RONIN TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Net sales per geographic region, based on the billing location of the end customer, are summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
United States	$	1,687	$	2,144	$	4,770	$	7,029
Canada		65		145		287		670
Other International		17		12		42		53
Total Sales	$	1,769	$	2,301	$	5,099	$	7,752

Geographic segments of property and equipment are as follows:

	September 30,		December 31,
	2012		2011
Property and equipment, net:
United States	$	422	$	596
Canada		42		55
Total	$	464	$	651

A significant portion of the Company’s revenue is derived from a few major customers. Customers with greater than 10% of total sales are represented on the following table:

	Three Months Ended September 30,						Nine Months Ended September 30,
Customer	2012			2011			2012			2011
Chrysler		30.2	%		28.3	%		39.6	%		40.6	%
ARAMARK		28.3	%		29.0	%		17.1	%		18.1	%
		58.5%			57.3%			56.7%			58.7%

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. As of September 30, 2012 and December 31, 2011, a significant portion of the Company’s accounts receivable was concentrated with the following customers:

Customer	September 30, 2012			December 31, 2011
Chrysler		31.8	%		44.7	%
ARAMARK		32.4	%		12.5	%
		64.2	%		57.2	%

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains various forward-looking statements within the meaning of Section 21E of the Exchange Act. Although we believe that, in making any such statement, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. When used in the following discussion, the words “anticipates,” “believes,” “expects,” “intends,” “plans,” “estimates” and similar expressions, as they relate to us or our management, are intended to identify such forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ materially from those anticipated, certain of which are beyond our control, are set forth in Item 1A under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking statements. Accordingly, we cannot be certain that any of the events anticipated by forward-looking statements will occur or, if any of them do occur, what impact they will have on us. We caution you to keep in mind the cautions and risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and to refrain from attributing undue certainty to any forward-looking statements, which speak only as of the date of the document in which they appear. We do not undertake to update any forward-looking statement.

Overview

We provide marketing technology solutions, which include digital signage, interactive kiosks, mobile messaging, social networking and web development solutions, to customers who use our products and services in certain retail and service markets. Through our proprietary RoninCast^®X software, we provide enterprise, web-based and hosted content delivery systems that manage, schedule and deliver digital content over wireless and wired networks. We also provide custom interactive software solutions, content engineering and creative services to our customers.

While our marketing technology solutions have application in a wide variety of industries, we focus on three primary markets: (1) automotive, (2) food service (including quick serve restaurants (QSR), fast casual and managed food services markets), and (3) retail. The industries in which we sell goods and services are not new but their application of marketing technology solutions is relatively new (within the last five years) and these industries have not widely accepted or adopted these types of technologies as part of their marketing strategies. As a result, we remain an early stage company without an established history of profitability, or substantial or steady revenue. We believe this characterization applies to our competitors as well, which are working to promote broader adoption of marketing technology solutions and to develop profitable, substantial and steady sources of revenue.

We believe that the adoption of marketing technology solutions will increase substantially in years to come both in industries on which we currently focus and in other industries. We also believe that adoption of our marketing technology solutions, which includes digital signage, depends not only upon the software and services that we provide but upon the cost of hardware used to process and display content in digital signage systems. Digital media players and flat panel displays constitute a large portion of the expenditure customers make relative to the entire cost of digital signage systems. Costs of these digital media players and flat panel displays have historically decreased and we believe will continue to do so, though we do not manufacture either product and do not substantially affect the overall markets for these products. If prices continue to decline for this hardware, we believe that adoption of digital signage and other marketing technology solutions are likely to increase, though we cannot predict a precise rate at which adoption will occur.

Management focuses on a wide variety of financial measurements to assess our financial health and prospects but principally upon (1) sales, to measure the adoption of our marketing technology solutions by our customers, (2) cost of sales and gross profit, particularly expressed as gross profit percentage, to determine if sales have been made at levels of profit necessary to cover operating expenses on a long-term basis (based upon assumptions regarding adoption), (3) sales of hardware relative to software and services, understanding that hardware typically provides a lower gross profit margin than do software license fees and services, (4) operating expenses so that management can appropriately match those expenses with sales, and (5) current assets, especially cash and cash equivalents used to fund operating losses thus far incurred.

23

Our wholly-owned subsidiary, Wireless Ronin Technologies (Canada), Inc. (“RNIN Canada”), an Ontario, Canada provincial corporation located in Windsor, Ontario, maintains a vertical-specific focus in the automotive industry and houses our content engineering operation. RNIN Canada develops digital content and sales support systems to help retailers train their sales staff and educate their customers at the point of sale. Today, the capabilities of this operation are integrated with our historical business to provide content solutions to all of our clients.

Our company and our subsidiary sell products and services primarily throughout North America.

Our Sources of Revenue

We generate revenue through system sales, license fees and separate service fees, including consulting, content development and implementation services, as well as ongoing customer support and maintenance, including product upgrades. We currently market and sell our software and service solutions primarily through our direct sales force, but we also utilize strategic partnerships and business alliances.

Our Expenses

Our expenses are primarily comprised of three categories: sales and marketing, research and development and general and administrative. Sales and marketing expenses include salaries and benefits for our sales associates and commissions paid on sales. This category also includes amounts spent on the hardware and software we use to prospect new customers, including those expenses incurred in trade shows and product demonstrations. Our research and development expenses represent the salaries and benefits of those individuals who develop and maintain our software products including RoninCast^® and other software applications we design and sell to our customers. Our general and administrative expenses consist of corporate overhead, including administrative salaries, real property lease payments, salaries and benefits for our corporate officers and other expenses such as legal and accounting fees.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies was provided in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2011. There were no significant changes to these accounting policies during the nine month period ended September 30, 2012.

24

Results of Operations

All dollar amounts reported in Item 2 are in thousands, except per share information.

Three and Nine Months Ended September 30, 2012 Compared to Three and Nine Months Ended September 30, 2011

The following table sets forth, for the periods indicated, certain unaudited consolidated statements of operations information:

	Three Months Ended
	September 30,			% of total			September 30,			% of total			$ Increase			% Increase
	2012			sales			2011			sales			(Decrease)			(Decrease)
Sales	$	1,769			100.0	%	$	2,301			100.0	%	$	(532	)		(23.1	%)
Cost of sales		873			49.3	%		1,166			50.7	%		(293	)		(25.1	%)
Gross profit (exclusive of depreciation and amortization shown separately below)		896			50.7	%		1,135			49.3	%		(239	)		(21.1	%)
Sales and marketing expenses		339			19.2	%		431			18.7	%		(92	)		(21.3	%)
Research and development expenses		462			26.1	%		555			24.1	%		(93	)		(16.8	%)
General and administrative expenses		1,206			68.2	%		1,412			61.4	%		(206	)		(14.6	%)
Depreciation and amortization expense		68			3.8	%		111			4.8	%		(43	)		(38.7	%)
Total operating expenses		2,075			117.3	%		2,509			109.0	%		(434	)		(17.3	%)
Operating loss		(1,179	)		(66.6	%)		(1,374	)		(59.7	%)		195			(14.2	%)
Other income (expenses):
Interest expense		(1	)		(0.1	%)		(6	)		(0.3	%)		(5	)		83.3	%
Interest income		—			—			—			—			—			—
Total other expense		(1	)		(0.1	%)		(6	)		(0.3	%)		5			(83.3	%)
Net loss	$	(1,180	)		(66.7	%)	$	(1,380	)		(60.0	%)	$	200			(14.5	%)
	Three Months Ended
	September 30,			% of total			September 30,			% of total			$ Increase			% Increase
	2012			sales			2011			sales			(Decrease)			(Decrease)
United States	$	1,687			95.4	%	$	2,144			93.2	%	$	(457	)		(21.3	%)
Canada		65			3.7	%		145			6.3	%		(80	)		(55.2	%)
Other International		17			1.0	%		12			0.5	%		5			41.7	%
Total Sales	$	1,769			100.0	%	$	2,301			100.0	%	$	(532	)		(23.1	%)

25

	Nine Months Ended
	September 30,			% of total			September 30,			% of total			$ Increase			% Increase
	2012			sales			2011			sales			(Decrease)			(Decrease)
Sales	$	5,099			100.0	%	$	7,752			100.0	%	$	(2,653	)		(34.2	%)
Cost of sales		2,309			45.3	%		4,132			53.3	%		(1,823	)		(44.1	%)
Gross profit (exclusive of depreciation and amortization shown separately below)		2,790			54.7	%		3,620			46.7	%		(830	)		(22.9	%)
Sales and marketing expenses		1,197			23.5	%		1,708			22.0	%		(511	)		(29.9	%)
Research and development expenses		1,417			27.8	%		1,748			22.5	%		(331	)		(18.9	%)
General and administrative expenses		4,162			81.6	%		4,850			62.6	%		(688	)		(14.2	%)
Depreciation and amortization expense		223			4.4	%		377			4.9	%		(154	)		(40.8	%)
Total operating expenses		6,999			137.3	%		8,683			112.0	%		(1,684	)		(19.4	%)
Operating loss		(4,209	)		(82.5	%)		(5,063	)		(65.3	%)		854			(16.9	%)
Other income (expenses):
Interest expense		(7	)		(0.1	%)		(24	)		(0.3	%)		(17	)		70.8	%
Interest income		1			—			3			—			(2	)		(66.7	%)
Total other expense		(6	)		(0.1	%)		(21	)		(0.3	%)		15			(71.4	%)
Net loss	$	(4,215	)		(82.7	%)	$	(5,084	)		(65.6	%)	$	869			(17.1	%)
	Nine Months Ended
	September 30,			% of total			September 30,			% of total			$ Increase			% Increase
	2012			sales			2011			sales			(Decrease)			(Decrease)
United States	$	4,770			93.5	%	$	7,029			90.7	%	$	(2,259	)		(32.1	%)
Canada		287			5.7	%		670			8.6	%		(383	)		(57.2	%)
Other International		42			0.8	%		53			0.7	%		(11	)		(20.8	%)
Total Sales	$	5,099			100.0	%	$	7,752			100.0	%	$	(2,653	)		(34.2	%)

Sales

Our sales during the three months ended September 30, 2012 decreased 23% or $532 to $1,769, compared to the same period in the prior year. The majority of this decrease was attributable to lower orders received for our marketing technology solutions in the food services and retail industries. During the third quarter of 2011, we received an order for approximately $200 from The Mall of America to provide a digital signage solution. In addition, we also received an order for approximately $150 during the third quarter of 2011 from a food service provider for a marketing technology solution we deployed at a store located in Times Square in New York City. Lastly, our overall sales to ARAMARK were also lower when comparing the third quarter of 2012 to the same period in the prior year by approximately $170. This was the result of fewer deployments of our digital menu board solutions within ARAMARK’s food service locations. The total number of locations we manage for ARAMARK through our network operations center was 273 as of September 30, 2012.

Chrysler LLC continues to be a significant customer for us and accounted for 30% of our revenue for the third quarter of 2012. We continue to receive orders for supporting Chrysler’s iShowroom interactive application, which include content creation services and software development related projects to further enhance the platform. Additionally, we received a purchase order in October 2012 totaling $648 from Chrysler to renew its annual hosting and support services arrangement for the web version of iShowroom for the period of October 1, 2012 to December 31, 2013. We believe this order shows Chrysler’s continued commitment to the iShowroom program. Although we have not received any additional iShowroom branded towers orders since the second quarter of 2011, we believe Chrysler will further expand the program with further dealership adoption once the inventory we’ve already delivered and recognized as revenue is deployed from the purchase made in May 2011. In addition, during the third quarter of 2012, we received a total of 17 individual Fiat dealership orders compared to 26 for the same period in the prior year. Chrysler has required that all Fiat Dealerships adopt the iShowroom interactive application, which is being featured in the Fiat Style Center of the new Fiat Studio Facilities. However, since we do not have a contract with Chrysler requiring it to source all the various components of these solutions through us, and the purchase of the iShowroom branded towers remains within the discretion of the individual dealerships, we are unable to predict or forecast the timing or value of any future orders. As of September 30, 2012, we had received purchase orders for 400 dealers from Chrysler for the Branded Tower Salons and 242 Fiat orders from individual dealerships and we had recognized all of such purchases as revenue.

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Our revenue for the nine month period ended September 30, 2012 totaled $5,099 compared to $7,752 for the same period in the prior year, a decrease of $2,653 or 34%. The decrease in revenue when comparing the nine month period ended September 30, 2012 to the same period in 2011 was due primarily to the approximately $1,800 purchase order we received in May 2011 from Chrysler for the iShowroom branded towers representing 400 dealerships. During the nine months ended September 30, 2012, we generated $2,012 from this customer, compared to $3,146 for the same period in the prior year. Additionally, revenue decreased $789 due to fewer orders from individual Fiat dealerships for the interactive kiosks featuring iShowroom when comparing the nine month period ended September 30, 2012 to the same period in the prior. Our revenue from ARAMARK for the nine months ended September 30, 2012 was also lower by $526 when compared to the same period in the prior year with fewer deployments of digital menu boards and interactive ordering kiosks to colleges and universities located throughout the U.S. Partially offsetting these decreases was an increase in revenue generated during the nine month period ended September 30, 2012 with a new customer, Buffalo Wild Wings, for an initial five store deployment of our marketing technology solutions. This particular solution has an emphasis on creating a new guest experience through the interaction of a touchscreen photo booth application, which displays both consumer generated and client branded content. Additionally, the solution uses unique QR codes and email to allow customers to share their photos with their social networks, extending the content beyond the restaurant’s locations to further promote its brand. In September 2012, we received new orders from Buffalo Wild Wings totaling $246, which include the development of customer engagement applications and the deployment of our RoninCast software to 50 stores. We anticipate we will recognize the revenue associated with these orders during the fourth quarter of 2012. We believe this implementation validates our capabilities beyond traditional digital menu boards and has the ability to generate additional revenue for us in the future.

We also generated additional revenue related to our recurring hosting revenue, which totaled approximately $1,478 during the nine month period ended September 30, 2012, a 24% increase from $1,191 recognized during the same period in the prior year, as our installation base continues to grow. In September 2012, ARAMARK renewed its annual hosting and support services arrangement totaling, $270, which covers the period from October 1, 2012 to September 30, 2013. Also, as mentioned above Chrysler renewed its annual hosting and maintenance services agreement with us for a total of $648, including support for the web version of iShowroom from October 1, 2012 through December 31, 2013, which is part of our recurring hosting revenue. Due to the current economic environment and the lengthy sales cycle associated with deploying large scale marketing technology solutions, we are not able to predict or forecast our future revenue with any degree of precision at this time.

Cost of Sales

Our cost of sales declined 25% or $293 to $873 for the third quarter of 2012 compared to the same period in the prior year. For the nine months ended September 30, 2012, our cost of sales declined 44% or $1,823 to $2,309 when compared to the nine months ended September 30, 2011. Both decreases were due primarily to the decline in hardware sales to Chrysler and fewer orders received from individual Fiat dealerships for the interactive kiosks featuring iShowroom. On a percentage basis, our overall gross margin improved to 51% for the third quarter of 2012, compared to 49% for the same period in 2011. Our gross margin on a percentage basis for the nine months ended September 30, 2012 was 55% compared to 47% for the same period in the prior year. The year-over-year improvements in our gross margin on a percentage basis for the periods presented were primarily due to a higher percentage of our revenue coming from development and professional service fees related to the sale of our new marketing technology offerings, compared to the higher level of hardware sales in 2011. Also, we continue to see an improvement to our gross margin on a dollar and percentage basis related to our recurring hosting revenue as our installed base continues to grow. Our ability to maintain these levels of gross margin on a percentage basis can be impacted in any given quarter by shifts in our sales mix. However, we believe that, over the long-term, our gross margin on a percentage basis will continue to increase as our recurring revenue grows.

Operating Expenses

Our operating expenses decreased 17% or $434 to $2,075 for the three months ended September 30, 2012 compared to the same period in the prior year. Total operating costs for the nine months ended September 30, 2012 totaled $6,999 compared to $8,683 for the same period in the prior year.

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Sales and marketing expenses include the salaries, employee benefits, commissions, stock-based compensation expense, travel and overhead costs of our sales and marketing personnel, as well as tradeshow activities and other marketing costs. Total sales and marketing expenses decreased 21% or $92 to $339 for the three months ended September 30, 2012 compared to the same period in the prior year. Total sales and marketing costs for the nine month period ended September 30, 2012 totaled $1,197 compared to $1,708 for the same period in the prior year. The decrease in sales and marketing expense when comparing the third quarter of 2012 to 2011 was primarily due to a decrease in tradeshow expenses. The decrease for the nine months ended September 30, 2012 when compared to the same period in 2011 was due to lower levels of compensation and employee-related expenses of $229 attributable to the lower level of sales and personnel changes made during first quarter of 2012. We also reduced our tradeshow costs and related advertising expenses by $194 during the nine month period ended September 30, 2012 compared to the same period in 2011 as a result of concentrating our marketing dollars on more forums and user groups instead of the larger national tradeshows such as Digital Signage Expo. Lastly, our stock-based compensation expense was lower by $36 when comparing the nine month period ended September 30, 2012, to the same period in 2011. Total stock-based compensation expense included in sales and marketing was $20 and $61 during the third quarter and nine months ended September 30, 2012, compared to $19 and $97 for the same periods in the prior year, respectively. We continue to focus our efforts to maximize the return on investment by attending select industry digital signage tradeshows, as we believe our presence is necessary to attract and retain new customers. We traditionally incur higher levels of tradeshow expenditures in the first quarter of our fiscal year compared to the remaining three quarters. Any significant increase in our sales and marketing expenses for the full year 2012 relative to 2011 would be the result of higher levels of commission expense resulting from an increase in our revenue, as we do not anticipate higher costs associated with tradeshows or marketing initiatives.

Research and development expenses include salaries, employee benefits, stock-based compensation expense, related overhead costs and consulting fees associated with product development, enhancements, upgrades, testing, quality assurance and documentation. Total research and development expenses for the third quarter of 2012 decreased 17% or approximately $93 to $462 when compared to the same period in the prior year. Total research and development expense during the nine month period ended September 30, 2012 totaled $1,417 compared to $1,748 for the same period in the prior year. The decrease when comparing the third quarter of 2012 to the same period in 2011 was primarily related to lower employee compensation costs due to personnel changes made during the first quarter of 2012. Although we experienced lower employee-related expenses for the nine month period ended September 30, 2012 compared to the same period in 2011, the decrease was primarily attributable to a higher level of research and development costs being allocated to cost of goods sold related to billable development work performed for our customers and lower outside consultant expense. We currently believe the level of expenditure in research and development for the fourth quarter of 2012 will be at a similar level to that experienced during the third quarter of 2012. It continues to be critical for our success that we are able to further enhance our RoninCast^®X software as the need for a more sophisticated dynamic digital signage platform continues to evolve. Included in research and development expense was stock-based compensation expense of $7 and $46 during the third quarter and nine month period ended September 30, 2012 compared to $12 and $36 for the same periods in the prior year, respectively.

General and administrative expenses include the salaries, employee benefits, stock-based compensation expense and related overhead cost of our finance, information technology, human resources and administrative employees, as well as legal and accounting expenses, consulting and contractor fees and bad debt expense. Total general and administrative expenses decreased 15% or $206 and 14% or $688 for the third quarter and nine months ended September 30, 2012, respectively, when compared to the same periods in the prior year. The decline in general and administrative expenses when comparing the third quarter of 2012 to 2011 was primarily attributable to lower professional fees of $44, a reduction in employee compensation and related costs of $34 and also $22 less in public company related expenses. The decrease when comparing the nine month period ended September 30, 2012 to 2011 was the result of lower employee-related stock-based compensation expense of $281, a reduction in employee compensation and related travel expenses of $191 and a decline in fees paid for professional services and other public company related expenses of $199 and $73, respectively. Partially offsetting these declines was a $214 increase in stock-based compensation expense attributable to the stock and warrants issued to outside vendors for professional services and for common stock issued to our six non-employee board members as part of their compensation for board service during the nine month period ended September 30, 2012. Total stock compensation expense for the third quarter and nine months ended September 30, 2012 totaled $70 and $264 compared to $133 and $545 for the same periods in the prior year. Included in general and administrative expenses was $12 and $212 of stock compensation expense for common stock and warrants issued to outside vendors for professional services and common stock issued to our six non-employee board members during the third quarter and the nine month period ended September 30, 2012. We currently believe our general and administrative costs will remain at a similar level to that experienced during the third quarter of 2012 for the fourth quarter of 2012.

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Depreciation and amortization expense, which consists primarily of depreciation of computer equipment and office furniture and the amortization of purchased software and leasehold improvements made to our leased facilities, was lower by $43 and $154 when comparing the third quarter and the nine month period ended September 30, 2012 to the prior year periods. These decreases were primarily the result of minimal capital expenditures being made during the past twelve months.

Interest Expense

Interest expense during the nine month period ended September 30, 2012 totaled $7 compared to $24 for the same period in 2011. Included in interest expense for the nine months ended September 30, 2012 was $3 and $8, respectively, associated with the capital lease that we entered into in July 2010 and paid off in June 2012. The remaining amount was the result of the expense recognized related to the fair value of the warrant issued to Silicon Valley Bank as additional consideration for the $2,500 loan and security agreement we entered into in March 2010 and most recently modified effective June 30, 2012. The warrant vested 100% on date of grant and we recognized the fair value, as determined using the Black-Scholes model, of $66 over the one-year life of the agreement on a straight-line basis. The loan and security agreement modification in January 2011 included a provision to reduce the exercise price associated with the warrant resulting in an incremental increase in fair value of $0.20 per share. The fair value remaining as of the date of the modification totaled $19 and was amortized on a straight-line basis through March 2012.

Interest Income

Interest income was lower by $2 during the nine month period ended September 30, 2012 when compared to the same period in the prior year. The decrease in interest income was primarily due to a lower average cash balance during the nine month period ended September 30, 2012 compared to the same period in the prior year.

Liquidity and Capital Resources

As of September 30, 2012, we had $3,515 of cash and cash equivalents, including restricted cash, and working capital of $2,848. As of September 30, 2012, we did not have any debt. We plan to use our available cash and available line of credit to fund operations, including the continued development of our products and attraction of new customers through sales and marketing initiatives.

In March 2010, we entered into a Loan and Security Agreement with Silicon Valley Bank, which was most recently amended effective September 30, 2012 (as amended, the “Loan and Security Agreement”). The Loan and Security Agreement provides us with a revolving line-of-credit at an annual interest rate of prime plus 1.5%. The availability of which is the lesser of (a) $2,500, or (b) the amount available under our borrowing base (75% of our eligible accounts receivable plus 50% of our eligible inventory) minus (1) the dollar equivalent amount of all outstanding letters of credit, (2) 10% of each outstanding foreign exchange contract, (3) any amounts used for cash management services, and (4) the outstanding principal balance of any advances. In connection with the July 2010 lease amendment for our corporate offices, Silicon Valley Bank issued a letter of credit which as of September 30, 2012 was in the amount of $240, which effectively reduced the capacity amount under the Loan and Security Agreement to $2,260, subject to the borrowing base availability and continued compliance with restrictive covenants. As of September 30, 2012, the amount available to us under the loan and security agreement was $686. There was no outstanding balance as of September 30, 2012.

The amendment which became effective September 30, 2012 adjusted the minimum tangible net worth requirement to $3,000 for the month ending September 30, 2012, to $2,500 for the months ending October 31, 2012, November 30, 2012 and December 31, 2012, and to $1,400 for the months ending January 31, 2013, February 28, 2013, and through the maturity date of March 13, 2013. It further established that the minimum tangible net worth requirement increases (a) by 75% of our net income for each month starting with the month ending September 30, 2012 and (b) by 75% of the gross proceeds received from our issuances of equity during such month and/or the principal amount of subordinated debt we incur during such month, but excluding the gross proceeds from our September 2012 registered direct offering of equity securities. We must comply with this tangible net worth minimum in order to draw on such line of credit and while there are outstanding credit extensions (other than our existing lease letter of credit). The maximum permitted amount of outstanding letters of credit is $300.

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Under the Loan and Security Agreement, we are generally required to obtain the prior written consent of Silicon Valley Bank to, among other things, (a) dispose of assets, (b) change our business, (c) liquidate or dissolve, (d) change CEO or COO (replacements must be satisfactory to the lender), (e) enter into any transaction in which our shareholders who were not shareholders immediately prior to such transaction own more than 40% of our voting stock (subject to limited exceptions) after the transaction, (f) merge or consolidate with any other person, (g) acquire all or substantially all of the capital stock or property of another person, or (h) become liable for any indebtedness (other than permitted indebtedness). The line of credit is secured by all assets of our company. The Loan and Security Agreement matures on March 13, 2013.

Operating Activities

We do not currently generate positive cash flow. Our investments in infrastructure have been greater than sales generated to date. As of September 30, 2012, we had an accumulated deficit of $93,231. The cash flow used in operating activities was $3,163 and $3,385 for the nine months ended September 30, 2012 and 2011, respectively. The majority of the cash consumed from operations for both periods was attributed to our net losses of $4,215 and $5,084 for the nine months ended September 30, 2012 and 2011, respectively. Included in our net losses were non-cash charges consisting of depreciation, stock compensation expense and amortization of warrants issued for debt issuance costs totaling $815 and $1,083 for the nine months ended September 30, 2012 and 2011, respectively. Additionally, cash provided by changes in our working capital accounts for both periods totaled $226 and $616 for the nine months ended September 30, 2012 and 2011, respectively. The related fluctuations in our working capital accounts for the nine months ended September 30, 2012, resulting in a decrease in receivables, was primarily due to Chrysler allowing us to submit progressive billings on the majority of the development and content projects at the end of each month, instead of at the time we complete the project. We believe we will be able to continue to submit progressive billings to Chrysler for all current and future related projects.

The primary reason for the decrease in our working capital accounts for the nine months ended September 30, 2011 was due to the timing and collection of the large orders we received from Chrysler during the second quarter of 2011 and the fourth quarter of 2010. During the fourth quarter of 2010, we received an approximately $1,100 purchase order from Chrysler for 100 iShowroom branded tower applications, which we were able to bill and collect prior to December 31, 2010. During the second quarter of 2011, we received and billed a similar order from Chrysler for 400 dealerships totaling approximately $1,800 which payment was received in third quarter of 2011. Additionally, our quarterly revenues were lower when comparing the third quarter of 2011 to the fourth quarter of 2010, which all resulted in a significant decrease in accounts receivable when comparing the same period balances.

Our accrued liabilities increased $107 and $213 at September 30, 2012 and 2011, respectively, when compared to the prior year end balances as a result of an accrual for payroll to our employees and also a general increase in other employee compensation related account balances. Partially offsetting these declines in our working capital was a decline in accounts payable balances of $31 and $613 at the end of the third quarter of 2012 and 2011, respectively, when compared to the prior year end balances. The decrease in accounts payable for the nine month period ended September 30, 2012 was the result of a higher percentage of our revenue being delivered through internal resources for content and development projects versus orders received for hardware sales fulfilled through third party vendors. The primary reason for the $613 decline in accounts payable during the nine month period ended September 30, 2011 was the result of a larger percentage of vendor purchases being made earlier in the third quarter of 2011, when compared to the fourth quarter of 2010, as the timing controlled when we processed our customer orders. The decrease in deferred revenue for the nine month period ended September 30, 2012 was primarily due to lower levels of content and software development related projects for Chrysler when comparing the September 30, 2012 balance to the balance at the end of December 2011. The increase in deferred revenue for the nine months ended September 30, 2011 was attributable to an increase in deferred work for Chrysler and also an increase in our annual hosting and support services. Based on our current expense levels, we anticipate that our cash and cash equivalents, and the availability of our line of credit, will be adequate to fund our operations through June 30, 2013.

Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2012 was $36 compared to $123 during the same period in the prior year. The decrease in cash used in investing activities was entirely due to fewer equipment purchases made during the nine month period ended September 30, 2012 when compared to the same period of 2011. Our capital expenditures during the nine months ended September 30, 2011 were primarily related to information technology software for managing our backup and recovery capabilities. We believe further capital equipment investments for the remainder of 2012 will not be significant as our current infrastructure has the capacity to service additional deployments based on our current forecast.

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Financing Activities

Net cash provided by financing activities during the nine month period ended September 30, 2012 and 2011 was $1,208 and $674, respectively. In September 2012, we sold 1,738 shares of our common stock at $0.81 per share pursuant to a registration statement on Form S-3 which was declared effective by the SEC in September 2009. We obtained approximately $1,198 in net proceeds as a result of this registered direct offering. During the nine month period ended September 30, 2012, we received proceeds totaling $51 from the issuance of shares under our associate stock purchase plan, compared to $67 during the same period in 2011. Additionally, we received $133 of proceeds from stock option exercises during the nine months ended September 30, 2011. Cash provided by financing activities also included a $500 draw on our line of credit with Silicon Valley Bank during the nine months ended September 30, 2011, which was repaid in October 2011. The cash inflows from financing activities during the nine months ended September 30, 2012 and 2011 were partially offset by $41 and $26 of principal payments made on a capital lease we entered into in July 2010, for the nine month periods ended September 30, 2012 and 2011, respectively.

Disruptions in the economy and constraints in the credit markets have caused companies to reduce or delay capital investment. Some of our prospective customers may cancel or delay spending on the development or roll-out of capital and technology projects with us due to continuing economic uncertainty. Difficult economic conditions have adversely affected certain industries in particular, including the automotive and restaurant industries, in which we have major customers. We could also experience lower than anticipated order levels from current customers, cancellations of existing but unfulfilled orders, and extended payment or delivery terms. Economic conditions could also materially impact us through insolvency of our suppliers or current customers. While we have down-sized our operations to reflect the decrease in demand, we may not be successful in mirroring current demand. If customer demand were to decline further, we might be unable to adjust expense levels rapidly enough in response to falling demand or without changing the way in which we operate. If revenue were to decrease further and we are unable to adequately reduce expense levels, we might incur significant losses that could adversely affect our overall financial performance and the market price of our common stock.

As of September 30, 2012, ARAMARK and Chrysler accounted for 32.4% and 31.8%, respectively, of our total receivables. In the case of insolvency by one of our significant customers, accounts receivable with respect to that customer might not be collectible, might not be fully collectible, or might be collectible over longer than normal terms, each of which could adversely affect our financial position.

We have historically financed our operations primarily through sales of common stock, exercise of warrants, and the issuance of notes payable to vendors, shareholders and investors. Based on our current and anticipated expense levels and our existing capital resources, we anticipate that our cash balance, including the net proceeds of the registered direct common stock offering we completed in September 2012, and the availability of our line of credit, will be adequate to fund our operations through June 30, 2013.

To assist us as we assess how to improve our liquidity, increase our capital resources, and consider strategic options, we have engaged Roth Capital Partners, LLC to render financial advisory and investment banking services to our company in connection with our general financial strategy and planning, including an evaluation of strategic and financial alternatives.

Our long-range capital requirements will depend on many factors, including our ability to successfully address our short-term liquidity and capital resource needs, market and sell our products and services, develop new products and services and establish and leverage our strategic partnerships and business alliance relationships. In order to meet our future needs should we not become cash flow positive or should we be unable to sustain positive cash flow, we may be required to raise additional funding through public or private financings, including equity financings. Any additional equity financings may be dilutive to shareholders and may be completed at a discount to market price. Debt financing, if available, would likely involve restrictive covenants similar to or more restrictive than those contained in the security and loan agreement we currently have with Silicon Valley Bank. Those covenants include maintaining minimum tangible net worth. There can be no assurance we will successfully complete any future equity or debt financing.

Adequate funds for our operations, whether from financial markets, collaborative or other arrangements, may not be available when needed or on terms attractive to us, especially from markets which continue to be risk averse. If adequate funds are not available, our plans to operate our business may be adversely affected and we could be required to curtail our activities significantly and/or cease operating.

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Contractual Obligations

Although we have no material commitments for capital expenditures, we anticipate levels of capital expenditures consistent with our levels of operations, infrastructure and personnel for the remainder of 2012.

Operating and Capital Leases

At September 30, 2012, our principal commitments consisted of long-term obligations under operating leases. We conduct our U.S. operations from a leased facility located at 5929 Baker Road in Minnetonka, Minnesota. We lease approximately 19,000 square feet of office and warehouse space under a lease that extends through January 31, 2018. In addition, we lease office space of approximately 10,000 square feet to support our Canadian operations at a facility located at 4510 Rhodes Drive, Suite 800, Windsor, Ontario, Canada under a lease, as amended, that extends through June 30, 2014.

The following table summarizes our obligations under contractual agreements as of September 30, 2012 and the time frame within which payments on such obligations are due (in thousands):

	Payment Due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Operating Lease Obligations	$	1,160	$	235	$	455	$	470	$	—

Our internal source of liquidity solely consists of our cash balance, which as of September 30, 2012 was $3,465. Of this amount, $3,024 is invested in a daily sweep commercial paper account with Silicon Valley Bank. We continuously monitor the credit rating of this financial institution and have determined there is a low level of risk of the funds not settling on a daily basis. Additionally, we have no limits or restrictions on our ability to use or access these funds for operating our business. Our external sources of liquidity include a line of credit with Silicon Valley Bank. As of September 30, 2012, the amount available to us under this line of credit was $686.

Based on our working capital position at September 30, 2012, we believe we have sufficient working capital to meet our current obligations through June  30, 2013.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, and accounts receivables. We maintain our accounts for cash and cash equivalents principally at one major bank. As of September 30, 2012, our cash was primarily invested in a commercial paper sweep account as the interest rate yield was more favorable than those of United States government securities and money market funds. We have not experienced any significant losses on our deposits of our cash and cash equivalents.

We do not believe our operations are currently subject to significant market risks for interest rates or other relevant market price risks of a material nature.

Foreign exchange rate fluctuations may adversely impact our consolidated financial position as well as our consolidated results of operations. Foreign exchange rate fluctuations may adversely impact our financial position as the assets and liabilities of our Canadian operations are translated into U.S. dollars in preparing our consolidated balance sheet. The impact of foreign exchange rate fluctuations on our condensed consolidated statement of operations was immaterial during the nine month periods ended September 30, 2012 and 2011.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of September 30, 2012, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We were not party to any material legal proceedings as of November 8, 2012, and there were no such proceedings pending during the period covered by this report.

Item 1A. Risk Factors

The discussion of our business and operations should be read together with the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Such risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flow, strategies or prospects in a material and adverse manner.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The following information is reported pursuant to Item 1.01 of Form 8-K:

Silicon Valley Bank. On November 5, 2012, we entered into a fifth amendment to our Loan and Security Agreement with Silicon Valley Bank, which became effective September 30, 2012. The amendment adjusted the minimum tangible net worth requirement to $3,000 for the month ending September 30, 2012, to $2,500 for the months ending October 31, 2012, November 30, 2012 and December 31, 2012, and to $1,400 for the months ending January 31, 2013, February 28, 2013, and through the maturity

33

date of March 13, 2013. It further established that the minimum tangible net worth requirement increases (a) by 75% of our net income for each month starting with the month ending September 30, 2012 and (b) by 75% of the gross proceeds received from our issuances of equity during such month and/or the principal amount of subordinated debt we incur during such month, but excluding the gross proceeds from our September 2012 registered direct offering of equity securities. The foregoing description is qualified in its entirety by reference to the fifth amendment to our Loan and Security Agreement with Silicon Valley Bank, which is attached hereto as Exhibit 10.2 and incorporated by reference herein.

The following information is reported pursuant to Item 2.03 of Form 8-K:

The information set forth in response to Item 1.01 of Form 8-K above regarding Silicon Valley Bank is incorporated by reference in response to this Item 2.03.

Item 6. Exhibits

See “Exhibit Index.”

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WIRELESS RONIN TECHNOLOGIES, INC.
Date: November 9, 2012	By:	/s/ Darin P. McAreavey
		Darin P. McAreavey
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer and Chief Accounting Officer) and Duly Authorized Officer of Wireless Ronin Technologies, Inc.

35

EXHIBIT INDEX

Exhibit Number	Description
3.1	Articles of Incorporation of the Registrant, as amended (incorporated by reference to our Pre-Effective Amendment No. 1 to our Form SB-2 filed on October 12, 2006 (File No. 333-136972)).
3.2	Bylaws of the Registrant, as amended (incorporated by reference to our Current Report on Form 8-K filed on November 2, 2011 (File No. 001-33169)).
4.1	See exhibits 3.1 and 3.2.
4.2	Specimen common stock certificate of the Registrant (incorporated by reference to our Pre-Effective Amendment No. 1 to our Form SB-2 filed on October 12, 2006 (File No. 333-136972)).
10.1	Fourth Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank, dated August 9, 2012 (incorporated by reference to our Quarterly Report on Form 10-Q filed August 10, 2012 (File No. 001-33169)).
10.2	Fifth Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank, dated November 5, 2012.
10.3	Placement Agency Agreeement between the Registrant and Roth Capital Partners, LLC dated September 12, 2012 (incorporated by reference to our Current Report on Form 8-K filed on September 18, 2012 (File No. 001-33169)).
10.4	Form of Subscription Agreement (incorporated by reference to our Current Report on Form 8-K filed on September 18, 2012 (File No. 001-33169)).
31.1	Chief Executive Officer Certification pursuant to Exchange Act Rule 13a-14(a).
31.2	Chief Financial Officer Certification pursuant to Exchange Act Rule 13a-14(a).
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350.
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350.
101	Financials in XBRL format.

36

[SEC CORRESPONDENCE]

Wireless Ronin Technologies, Inc.

5929 Baker Road, Suite 475

Minnetonka, Minnesota 55345

November 9, 2012

Writer’s Direct Dial:

(952) 564-3525

VIA EDGAR

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re: Wireless Ronin Technologies, Inc.

Quarterly Report on Form 10-Q

(File No. 001-33169)

Ladies and Gentlemen:

On behalf of Wireless Ronin Technologies, Inc. (the “Company”), attached please find an EDGAR transmission of the Company’s Quarterly Report on Form 10-Q pursuant to the Securities Exchange Act of 1934, as amended.

If you have any questions, please contact the undersigned at (952) 564-3525 or Brett D. Anderson of Briggs and Morgan, P.A., our legal counsel, at (612) 977-8417.

Very truly yours,
	/s/ Darin P. McAreavey
	Darin P. McAreavey
	Senior Vice President and Chief Financial Officer

cc: Scott W. Koller

Brett D. Anderson, Esq.

EX-10.2

EXHIBIT 10.2

FIFTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT

THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into this 5th day of November 2012 (“Closing Date”), but effective as of September 30, 2012, by and between SILICON VALLEY BANK (“Bank”) and WIRELESS RONIN TECHNOLOGIES, INC., a Minnesota corporation (“Borrower”).

RECITALS

A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of March 18, 2010 (as the same has and may from time to time be amended, modified, supplemented or restated, the “Loan Agreement”).

B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

C. Borrower has requested that Bank amend the Tangible Net Worth covenant and make certain other revisions to the Loan Agreement as more fully set forth herein.

D. Although Bank is under no obligation to do so, Bank is willing to amend the Tangible Net Worth covenant and make certain other revisions to the Loan Agreement, all on the terms and conditions set forth in this Amendment, so long as Borrower complies with the terms, covenants and conditions set forth in this Amendment in a timely manner.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

1. Definitions. Capitalized terms used but not defined in this Amendment, including its preamble and recitals, shall have the meanings given to them in the Loan Agreement.

2. Amendments to Loan Agreement.

2.1 Section 2.4 (Fees). Section 2.4(d) of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

(d) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line Facility Fee”), payable monthly, in arrears, on a calendar year basis, in an amount equal to one quarter of one percent (0.25%) per annum of the average unused portion of the Revolving Line; provided, however, that for any calendar month in which the outstanding balance of the Revolving Line is greater than Five Hundred Thousand Dollars ($500,000) on each day in such calendar month, as determined by Bank, in it

reasonable discretion, the Unused Revolving Line Facility Fee shall be Zero Dollars ($0) for such calendar month. The unused portion of the Revolving Line, for purposes of this calculation, shall equal the difference between (x) the Revolving Line amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balance of the Revolving Line outstanding, plus the sum of the aggregate amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter if Credit of Reserve. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section notwithstanding any termination of the Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder, including during any Streamline Period;

2.2 Section 6.9 (Financial Covenants). Section 6.9(a) of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

(a) Tangible Net Worth. A Tangible Net Worth of not less than the following amounts at the following times, which amounts shall be increased by the sum of (i) commencing with the quarter ending September 30, 2012 and each quarter thereafter, seventy-five percent (75%) of Borrower’s quarterly Net Income (without reduction for any losses) for such quarter, plus (ii) seventy-five percent (75%) of all proceeds received from the issuance of equity during such quarter and/or the principal amount of all Subordinated Debt incurred during such quarter; provided, however, the foregoing adjustment shall exclude gross proceeds of One Million Four Hundred Eight Thousand One Hundred Forty-Six Dollars ($1,408,146) received by Borrower from the issuance of equity raised on September 18, 2012.

Month Ending	Tangible Net Worth
September 30, 2012	$	3,000,000
October 31, 2012	$	2,500,000
November 30, 2012	$	2,500,000
December 31, 2012	$	2,500,000
January 31, 2013	$	1,400,000
February 28, 2013	$	1,400,000

Provided there are no outstanding Credit Extensions under the Revolving Line, the failure of Borrower to maintain the minimum Tangible Net Worth set forth above shall not constitute an Event of Default hereunder; provided that no Credit Extensions (other than the Lease Letter of Credit) shall be made until Borrower maintains the minimum Tangible Net Worth set forth above, as determined by Bank, in its sole discretion.

3. Compliance Certificate. From and after the Closing Date, Exhibit B of the Loan Agreement is replaced in its entirety with Exhibit B attached hereto and all references in the Loan Agreement to the Compliance Certificate shall be deemed to refer to Exhibit B attached hereto.

4. Limitation of Amendments.

4.1 The amendments set forth in Sections 2 and 3 above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

4.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

4.3 In addition to those Events of Default specifically enumerated in the Loan Documents, the failure to comply with the terms of any covenant or agreement contained herein shall constitute an Event of Default and shall entitle the Bank to exercise all rights and remedies provided to the Bank under the terms of any of the other Loan Documents as a result of the occurrence of the same.

5. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

5.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct in all material respects as of such date), and (b) no Event of Default, has occurred and is continuing;

5.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

5.3 The organizational documents of Borrower delivered to Bank on the Effective Date and the First Loan Modification Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect except to the extent that the Borrower amended its bylaws effective October 27, 2011, such bylaws having been filed with the SEC at http://www.sec.gov/Archives/edgar/data/1356093/000095012311094400/c24019exv3.htm;

5.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

5.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

5.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and

5.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

6. Prior Agreement. The Loan Documents are hereby ratified and reaffirmed and shall remain in full force and effect. This Amendment is not a novation and the terms and conditions of this Amendment shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents. In the event of any conflict or inconsistency between this Amendment and the terms of such documents, the terms of this Amendment shall be controlling, but such document shall not otherwise be affected or the rights therein impaired.

7. Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

8. Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto and (b) payment of all Bank’s legal fees and expenses in connection with the preparation and negotiation of this Amendment and the other Loan Documents.

[Signature Page Follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

BANK
SILICON VALLEY BANK
By: Name: Title:	/s/ Kimberly A. Stover Kimberly A. Stover Regional Manager
BORROWER
WIRELESS RONIN TECHNOLOGIES, INC.
By:	/s/ Darin P. McAreavey Darin P. McAreavey Senior Vice President and Chief Financial Officer

EXHIBIT B

COMPLIANCE CERTIFICATE

TO: SILICON VALLEY BANK Date:                                 

FROM: WIRELESS RONIN TECHNOLOGIES, INC.

The undersigned authorized officer of Wireless Ronin Technologies, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries, if any, relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

Reporting Covenant	Required	Complies
Monthly financial statements with Compliance Certificate	Monthly within 30 days		Yes    No
Annual financial statement (CPA Audited)	FYE within 120 days		Yes    No
10-Q, 10-K, and 8-K	Within 5 days after filing with SEC
A/R & A/P Agings, Inventory reports, Deferred revenue reports and general ledger	Weekly (Monthly within 15 days during a Streamline Period)		Yes    No
Transaction Reports	Weekly (Monthly within 15 days during a Streamline Period) and with each request for a Credit Extension		Yes    No
Board Projections	30 days prior to FYE and as amended		Yes    No

The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”)

Financial Covenants	Required		Actual		Complies
Maintain at all times (certified monthly):
A Tangible Net Worth of not less than the following amounts at the following times, which amounts shall be increased by the sum of (i) commencing with the quarter ending September 30, 2012 and each quarter thereafter, seventy-five percent (75%) of Borrower’s quarterly Net Income (without reduction for any losses) for such quarter, plus (ii) seventy-five percent (75%) of all proceeds received from the issuance of equity during such quarter and/or the principal amount of all Subordinated Debt incurred during such quarter; provided, however, the foregoing adjustment shall exclude gross proceeds of One Million Four Hundred Eight Thousand One Hundred Forty-Six Dollars ($1,408,146) received by Borrower from the issuance of equity raised on September 18, 2012.
September 30, 2012	$	3,000,000	$	______		Yes    No
October 31, 2012	$	2,500,000	$	______		Yes    No
November 30, 2012	$	2,500,000	$	______		Yes    No
December 31, 2012	$	2,500,000	$	______		Yes    No
January 31, 2013	$	1,400,000	$	______		Yes    No
February 28, 2013	$	1,400,000	$	______		Yes    No

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

WIRELESS RONIN TECHNOLOGIES, INC		BANK USE ONLY
By		Received by:
	Darin P. McAreavey, Chief Financial Officer	AUTHORIZED SIGNER
		Date:
		Verified:
		AUTHORIZED SIGNER
		Date:
		Compliance Status:    Yes    No

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:                                              

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

I. Tangible Net Worth (Section 6.9(a))

Required: A Tangible Net Worth of not less than the following amounts at the following times, which amounts shall be increased by the sum of (i) commencing with the quarter ending September 30, 2012 and each quarter thereafter, seventy-five percent (75%) of Borrower’s quarterly Net Income (without reduction for any losses) for such quarter, plus (ii) seventy-five percent (75%) of all proceeds received from the issuance of equity during such quarter and/or the principal amount of all Subordinated Debt incurred during such quarter; provided, however, the foregoing adjustment shall exclude gross proceeds of One Million Four Hundred Eight Thousand One Hundred Forty-Six Dollars ($1,408,146) received by Borrower from the issuance of equity raised on September 18, 2012.

Month Ending	Tangible Net Worth
September 30, 2012	$	3,000,000
October 31, 2012	$	2,500,000
November 30, 2012	$	2,500,000
December 31, 2012	$	2,500,000
January 31, 2013	$	1,400,000
February 28, 2013	$	1,400,000

Actual:

A.	Aggregate value of total assets of Borrower and its Subsidiaries	$	______
B.	Aggregate value of goodwill of Borrower and its Subsidiaries	$	______
C.	Aggregate value of intangible assets of Borrower and its Subsidiaries	$	______
D.	Aggregate value of notes, accounts receivable and other obligations owing to Borrower from its officers or other Affiliates of Borrower and its Subsidiaries	$	______
E.	Aggregate value of any reserves not already deducted from assets	$	______

F.	Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness but excluding all other Subordinated Debt	$	______
G.	Value of line A, minus line B, minus line C, minus line D, minus line E, minus line F)	$	______

Is line G equal to or greater than the required amount set forth above?

                 No, not in compliance                  Yes, in compliance

Provided there are no outstanding Credit Extensions under the Revolving Line, the failure of Borrower to maintain the minimum Tangible Net Worth set forth above shall not constitute an Event of Default hereunder; provided that no Credit Extensions (other than the Lease Letter of Credit) shall be made until Borrower maintains the minimum Tangible Net Worth set forth above, as determined by Bank, in its sole discretion.

EX-31.1

EXHIBIT 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Scott W. Koller, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2012, of Wireless Ronin Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2012

By:	/s/ Scott W. Koller
	Scott W. Koller
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Darin P. McAreavey, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2012, of Wireless Ronin Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2012	By:	/s/ Darin P. McAreavey
		Darin P. McAreavey
		Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Wireless Ronin Technologies, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott W. Koller, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: November 9, 2012

By:	/s/ Scott W. Koller
	Scott W. Koller
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Wireless Ronin Technologies, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Darin P. McAreavey, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: November 9, 2012

By:	/s/ Darin P. McAreavey
	Darin P. McAreavey
	Senior Vice President and Chief Financial Officer

XML

Segment Information and Major Customers (Details 2)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Significant portion of Company's revenue is derived from few major customers
Entity-Wide Revenue, Major Customer, Percentage	58.50%	57.30%	56.70%	58.70%
Chrysler [Member]
Significant portion of Company's revenue is derived from few major customers
Entity-Wide Revenue, Major Customer, Percentage	30.20%	28.30%	39.60%	40.60%
ARAMARK [Member]
Significant portion of Company's revenue is derived from few major customers
Entity-Wide Revenue, Major Customer, Percentage	28.30%	29.00%	17.10%	18.10%

XML

Commitments and Contingencies (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended										9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 sqft	Sep. 30, 2011	Oct. 01, 2012	Mar. 31, 2012	Sep. 30, 2012 Revolving Credit Facility [Member]	Sep. 30, 2012 Lease Agreements [Member] sqft	Jun. 30, 2012 Silicon Valley Bank [Member]	Sep. 30, 2012 Silicon Valley Bank [Member] Revolving Credit Facility [Member]	Sep. 30, 2012 Letter of Credit [Member]	Dec. 31, 2011 Letter of Credit [Member]	Sep. 30, 2012 Loan and Security Agreement [Member]
Commitments and Contingencies (Additional Textual) [Abstract]
Lease space for office and warehouse approximately								19
Letter of credit	$ 686		$ 686						$ 240	$ 0	$ 240	$ 300
Revolving line-of-credit up to						300	2,500
Loan and Security Agreement maturity date													Mar. 13, 2013
Commitments and Contingencies (Textual) [Abstract]
Leasehold improvement allowance	191		191
Deferred rent credit balance	60		60
Leases office space for canadian operations approximate			10
Rent expense under operating leases	90	92	279	296
Interest rate prime plus			1.50%
Percentage of borrowing base on eligible accounts receivable			75.00%
Percentage of borrowing base on eligible inventory			50.00%
Percentage of borrowing base on outstanding foreign exchange contract			10.00%
Reduced capacity amount under Loan and Security Agreement	2,260		2,260
Minimum amount of tangible net worth	3,000		3,000		2,500
Percentage of increase in tangible net worth on base of net income			75.00%
Percentage of increase in tangible net worth on base of proceeds from future issuances of equity			75.00%
Proceeds from issuance of equity			2,000
Maximum permitted amount of outstanding letters of credit						$ 300	$ 2,500
Percentage of ownership interest by outsider	40.00%		40.00%

XML

Other Financial Statement Information (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
INVENTORIES
Finished goods	$ 172	$ 125
Work-in-process	22	45
Total inventories	$ 194	$ 170

XML

Segment Information and Major Customers (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net sales per geographic region, based on billing location of end customer were summarized
Total Sales	$ 1,769	$ 2,301	$ 5,099	$ 7,752
United States [Member]
Net sales per geographic region, based on billing location of end customer were summarized
Total Sales	1,687	2,144	4,770	7,029
Canada [Member]
Net sales per geographic region, based on billing location of end customer were summarized
Total Sales	65	145	287	670
Other International [Member]
Net sales per geographic region, based on billing location of end customer were summarized
Total Sales	$ 17	$ 12	$ 42	$ 53

XML

Fair Value Measurement

9 Months Ended

Sep. 30, 2012

Fair Value Measurement [Abstract]

FAIR VALUE MEASUREMENT

NOTE 3: FAIR VALUE MEASUREMENT

As of September 30, 2012 and December 31, 2011, cash equivalents consisted of the following:

	September 30, 2012
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		(Losses)		Value
Commercial paper	$	3,024	$	—	$	—	$	3,024
Total included in cash and cash equivalents	$	3,024	$	—	$	—	$	3,024
	December 31, 2011
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		(Losses)		Value
Commercial paper	$	5,316	$	—	$	—	$	5,316
Total included in cash and cash equivalents	$	5,316	$	—	$	—	$	5,316

The Company measures certain financial assets, including cash equivalents, at fair value on a recurring basis. In accordance with FASB 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, FASB ASC 820-10-35 establishes a three-level hierarchy which 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. The Level 1 category at September 30, 2012 and December 31, 2011 primarily represents funds held in a commercial paper sweep account totaling $3,024 and $5,316, respectively, which are included in cash and cash equivalents in the consolidated balance sheet.

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. At September 30, 2012 and December 31, 2011, the Company had no Level 2 financial assets on its consolidated balance sheet.

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. At September 30, 2012 and December 31, 2011, the Company had no Level 3 financial assets on its consolidated balance sheet.

The hierarchy level assigned to each security in the Company’s cash equivalents is based on its assessment of the transparency and reliability of the inputs used in the valuation of such instruments at the measurement date. The Company did not have any financial liabilities that were covered by FASB ASC 820-10-30 as of September 30, 2012 and December 31, 2011.

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Other Financial Statement Information (Details 5) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash paid for:
Interest	$ 4	$ 5
Non-cash financing activity:
Warrants issued for debt issuance costs		$ 8

XML

Other Financial Statement Information (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ACCRUED LIABILITIES
Compensation	$ 380	$ 214
Accrued rent	215	232
Sales tax and other	82	123
Total accrued liabilities	$ 677	$ 569

XML

Fair Value Measurement (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value Measurement, Cash Equivalent
Gross Amortized Cost	$ 3,024	$ 5,316
Gross Unrealized Gains
Gross Unrealized (Losses)
Estimated Fair Value	3,024	5,316
Commercial paper [Member]
Fair Value Measurement, Cash Equivalent
Gross Amortized Cost	3,024	5,316
Gross Unrealized Gains
Gross Unrealized (Losses)
Estimated Fair Value	$ 3,024	$ 5,316

XML

Fair Value Measurement (Details Textual) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Level 2 [Member]
Fair Value Measurement (Textual) [Abstract]
Financial Asset on its consolidated balance sheet	$ 0	$ 0
Level 3 [Member]
Fair Value Measurement (Textual) [Abstract]
Financial Asset on its consolidated balance sheet	0	0
Commercial paper [Member] | Level 1 [Member]
Fair Value Measurement (Textual) [Abstract]
Total included in cash and cash equivalents	$ 3,024	$ 5,316

XML

Other Financial Statement Information

9 Months Ended

Sep. 30, 2012

Other Financial Statement Information [Abstract]

OTHER FINANCIAL STATEMENT INFORMATION

NOTE 2: OTHER FINANCIAL STATEMENT INFORMATION

The following tables provide details of selected financial statement items:

ALLOWANCE FOR DOUBTFUL RECEIVABLES

	Nine Months Ended			Year Ended
	September 30, 2012			December 31, 2011
Balance at beginning of period	$	50		$	35
Provision for doubtful receivables		—			57
Write-offs		(1	)		(42	)
Balance at end of period	$	49		$	50

INVENTORIES

	September 30,		December 31,
	2012		2011
Finished goods	$	172	$	125
Work-in-process		22		45
Total inventories	$	194	$	170

PROPERTY AND EQUIPMENT

	September 30,			December 31,
	2012			2011
Leased equipment	$	89		$	89
Equipment		1,191			1,195
Leasehold improvements		381			381
Demonstration equipment		4			6
Purchased software		376			361
Furniture and fixtures		573			569
Total property and equipment	$	2,614		$	2,601
Less: accumulated depreciation and amortization		(2,150	)		(1,950	)
Net property and equipment	$	464		$	651

OTHER ASSETS

Other assets consist of long-term deposits on operating leases.

DEFERRED REVENUE

	September 30,		December 31,
	2012		2011
Deferred software maintenance	$	550	$	459
Customer deposits and deferred project revenue		53		228
Total deferred revenue	$	603	$	687

ACCRUED LIABILITIES

	September 30,		December 31,
	2012		2011
Compensation	$	380	$	214
Accrued rent		215		232
Sales tax and other		82		123
Total accrued liabilities	$	677	$	569

See Note 4 for additional information on accrued remaining lease obligations.

SUPPLEMENTAL CASH FLOW INFORMATION

	Nine Months Ended September 30,
	2012		2011
Cash paid for:
Interest	$	4	$	5
Non-cash financing activity:
Warrants issued for debt issuance costs	$	—	$	8

XML

Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Future minimum lease payments for operating leases
Three months ended December 31, 2012	$ 64
2013	259
2014	234
2015	207
2016	199
Thereafter	197
Total future minimum obligations	$ 1,160

XML

Segment Information and Major Customers (Details 3)	Sep. 30, 2012	Dec. 31, 2011
Financial instruments of subject Company to concentrations of credit risk consist principally of accounts receivable
Concentrations of Credit Risk Accounts Receivable	64.20%	57.20%
Chrysler [Member]
Financial instruments of subject Company to concentrations of credit risk consist principally of accounts receivable
Concentrations of Credit Risk Accounts Receivable	31.80%	44.70%
ARAMARK [Member]
Financial instruments of subject Company to concentrations of credit risk consist principally of accounts receivable
Concentrations of Credit Risk Accounts Receivable	32.40%	12.50%

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 3,465	$ 5,478
Accounts receivable, net of allowance of $49 and $50	1,154	1,347
Inventories	194	170
Prepaid expenses and other current assets	155	193
Total current assets	4,968	7,188
Property and equipment, net	464	651
Restricted cash	50	50
Other assets	21	40
TOTAL ASSETS	5,503	7,929
CURRENT LIABILITIES
Current maturities of capital lease obligations		41
Accounts payable	840	870
Deferred revenue	603	687
Accrued liabilities	677	569
Total current liabilities	2,120	2,167
COMMITMENTS AND CONTINGENCIES
Capital stock, $0.01 par value, 66,667 shares authorized
Preferred stock, 16,667 shares authorized, no shares issued and outstanding
Common stock, 50,000 shares authorized; 24,977 and 22,969 shares issued and outstanding	250	230
Additional paid-in capital	96,863	95,047
Accumulated deficit	(93,231)	(89,016)
Accumulated other comprehensive loss	(499)	(499)
Total shareholders' equity	3,383	5,762
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 5,503	$ 7,929

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating Activities:
Net loss	$ (4,215)	$ (5,084)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	223	377
Stock-based compensation expense	377	692
Issuance of common stock for services	152
Issuance of warrants for services	71
Amortization of warrants issued for debt issuance costs	3	14
Provision for doubtful accounts		15
Change in operating assets and liabilities:
Accounts receivable	201	785
Inventories	(24)	(19)
Prepaid expenses and other current assets	38	99
Other assets	20
Accounts payable	(31)	(613)
Deferred revenue	(85)	136
Accrued liabilities	107	213
Net cash used in operating activities	(3,163)	(3,385)
Investing activities
Purchases of property and equipment	(36)	(123)
Net cash used in investing activities	(36)	(123)
Financing activities
Payments on capital leases	(41)	(26)
Advance on line of credit- bank		500
Proceeds from the issuance of common stock	1,198
Exercise of options and warrants	51	200
Net cash provided by financing activities	1,208	674
Effect of Exchange Rate Changes on Cash	(22)	26
Decrease in Cash and Cash Equivalents	(2,013)	(2,808)
Cash and Cash Equivalents, beginning of period	5,478	7,064
Cash and Cash Equivalents, end of period	$ 3,465	$ 4,256

XML

Stock Based Compensation and Benefit Plans (Details 1)	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Values set forth calculated using weighted average assumptions
Expected life	4 years 26 days	4 years 2 months 5 days
Dividend yield	0.00%	0.00%	0.00%
Expected volatility	88.50%	87.40%
Risk-free interest rate	0.70%
Maximum [Member]
Values set forth calculated using weighted average assumptions
Expected life			4 years 26 days
Expected volatility			90.60%
Risk-free interest rate		0.80%	1.80%
Minimum [Member]
Values set forth calculated using weighted average assumptions
Expected life			3 years 9 months 26 days
Expected volatility			88.50%
Risk-free interest rate		0.50%	0.70%

XML

Nature of Operations and Summary of Significant Accounting Policies (Details 2)	9 Months Ended
	Sep. 30, 2012
Equipment [Member] | Maximum [Member]
Estimated useful lives used to compute depreciation and amortization
Estimated useful lives used to compute depreciation and amortization	5 years
Equipment [Member] | Minimum [Member]
Estimated useful lives used to compute depreciation and amortization
Estimated useful lives used to compute depreciation and amortization	3 years
Demonstration equipment [Member] | Maximum [Member]
Estimated useful lives used to compute depreciation and amortization
Estimated useful lives used to compute depreciation and amortization	5 years
Demonstration equipment [Member] | Minimum [Member]
Estimated useful lives used to compute depreciation and amortization
Estimated useful lives used to compute depreciation and amortization	3 years
Furniture and fixtures [Member] | Maximum [Member]
Estimated useful lives used to compute depreciation and amortization
Estimated useful lives used to compute depreciation and amortization	7 years
Purchased software [Member] | Maximum [Member]
Estimated useful lives used to compute depreciation and amortization
Estimated useful lives used to compute depreciation and amortization	3 years
Leased equipment [Member] | Maximum [Member]
Estimated useful lives used to compute depreciation and amortization
Estimated useful lives used to compute depreciation and amortization	3 years
Leasehold improvements [Member] | Maximum [Member]
Estimated useful lives used to compute depreciation and amortization
Leasehold improvements, Estimated useful lives	Shorter of 5 years or term of lease

XML

Stock Based Compensation and Benefit Plans (Details Textual) (USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended			3 Months Ended		9 Months Ended			1 Months Ended			3 Months Ended			1 Months Ended						3 Months Ended	9 Months Ended	1 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2012	Feb. 29, 2012	Dec. 31, 2007	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Jun. 30, 2012	Feb. 29, 2012 Key Employee [Member]	Jun. 30, 2011 Key Employee [Member]	Jun. 30, 2012 Restricted Stock [Member]	Mar. 31, 2012 Unregistered Shares [Member]	Sep. 30, 2012 Director [Member]	Sep. 30, 2012 Equity [Member]	Feb. 29, 2012 Executive Officer [Member]	Mar. 31, 2011 Executive Officer [Member]	Jul. 31, 2012 Non Employee Board Members [Member]	Apr. 30, 2012 Non Employee Board Members [Member]	Feb. 29, 2012 Non Employee Board Members [Member]	Mar. 31, 2011 Non Employee Board Members [Member]	Sep. 30, 2012 Non Employee Board Members [Member]	Sep. 30, 2012 Non Employee Board Members [Member]	Aug. 31, 2012 Key Sales Employee [Member]	Jun. 30, 2012 Key Sales Employee [Member]	Sep. 30, 2012 Warrant [Member]	Sep. 30, 2012 Warrant [Member]	Sep. 30, 2012 2007 Associate Stock Purchase Plan [Member]	Jun. 30, 2011 2007 Associate Stock Purchase Plan [Member]	Jun. 30, 2010 2007 Associate Stock Purchase Plan [Member]	Sep. 30, 2012 Maximum [Member]	Sep. 30, 2012 Minimum [Member]
Stock-Based Compensation and Benefit Plans (Textual) [Abstract]
Prevesting Forfeiture Rate													0.00%																	24.40%	18.30%
Received Stock Options to Purchase				0											305	250			33	20
Restricted stock awards to a key employee									30
Company granted stock options for the purchase to two key employees										45
Fair market value of grants totaled											$ 32
Weighted average fair value of the shares											$ 1.07
Fair value of shares was based on closing price on date issued				99	169	377	692					114									12	13			71
Warrant						3 years																				3 years
Common Stock, Capital Shares Reserved for Future Issuance								300																				600	400
Number of shares reserved under plan													1,000	3,600
Deferred Compensation Arrangement with Individual, Shares Issued																	15	15					14	30
Fair market value on first or last day of the offering period																											85.00%
Stock-Based Compensation and Benefit Plans (Additional Textual) [Abstract]
Unrecognized compensation expense related to unvested share-based awards	507			507		507
Weighted average estimated fair value of stock options granted				$ 0.00	$ 0.77	$ 0.71	$ 0.75
Common stock to a vendor in exchange for executive search services		106
Warrant purchase	150			150		150
Common Stock Exercise Price	$ 1.75			$ 1.75		$ 1.75
Fair value of warrants	$ 0.47			$ 0.47		$ 0.47
Expected term						3 years																				3 years
Risk-free interest rate		0.51%
Volatility rate		87.40%
Warrant exercisable issuance	100.00%			100.00%		100.00%
Stock options and warrants were cancelled or expired	308			308		308
Fair market value on first or last day of offering period					0.00%	0.00%	0.00%
Associates may contribute up to 15% of pretax compensation to plan			Associates may contribute up to 15% of their pretax compensation to the plan
Shares purchased by associates						384
Remaining shares available to be issued	216			216		216
Weighted average fair value of the shares was based on the closing market price				$ 0.81		$ 0.76
Common stock sold in Registered Direct Offering	1,738
Price per share in direct offering	$ 0.81			$ 0.81		$ 0.81
Net proceeds in the registered direct offering	$ 1,198					$ 1,198

XML

Other Financial Statement Information (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
ALLOWANCE FOR DOUBTFUL RECEIVABLES
Balance at beginning of period	$ 50	$ 35	$ 35
Provision for doubtful receivables		15	57
Write-offs	(1)		(42)
Balance at end of period	$ 49		$ 50

XML

Nature of Operations and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Nature of Operations and Summary of Significant Accounting Policies [Abstract]

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Wireless Ronin Technologies, Inc. (the “Company”) has prepared the condensed consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the Company’s one wholly-owned subsidiary. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The Company believes that all necessary adjustments, which consist only of normal recurring items, have been included in the accompanying condensed consolidated financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the year ending December 31, 2012.

Nature of Business and Operations

The Company is a Minnesota corporation that provides marketing technology solutions targeting specific food service, automotive and retail markets. The Company provides leading expertise in content and emerging digital media solutions, including dynamic digital signage, interactive kiosk, mobile, social media and web, that enable its customers to transform how they engage with their customers. The Company is able to provide an array of marketing technology solutions through its proprietary suite of software applications marketed as RoninCast^®. RoninCast software and associated applications provide an enterprise, web-based or hosted content delivery system that manages, schedules and delivers digital content over wireless or wired networks. Additionally, RoninCast ^® software’s flexibility allows the Company to develop custom solutions for specific customer applications.

The Company’s wholly-owned subsidiary, Wireless Ronin Technologies (Canada), Inc., an Ontario, Canada provincial corporation located in Windsor, Ontario, maintains a vertical-specific focus in the automotive industry and houses the Company’s content engineering operation. RNIN Canada develops digital content and sales support systems to help retailers train their sales staff and educate their customers at the point of sale. Today, the capabilities of this operation are integrated with the Company’s historical business to provide content solutions to all of its clients.

The Company and its subsidiary sell products and services primarily throughout North America.

Summary of Significant Accounting Policies

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

1. Principles of Consolidation

The consolidated financial statements include the accounts of Wireless Ronin Technologies, Inc. and its wholly owned subsidiary. All inter-company balances and transactions have been eliminated in consolidation.

2. Foreign Currency

During the first quarter of 2012, the Company reevaluated the reporting currency and determined that the functional currency for its operations in Canada is the U.S. Dollar. As a result, the Company is no longer recording translation adjustments related to assets and liabilities or income and expense items that are transacted in the local currency as a component of accumulated other comprehensive loss in shareholders’ equity. Foreign exchange transaction gains and losses attributable to exchange rate movements related to transactions made in the local currency and on intercompany receivables and payables not deemed to be of a long-term investment nature are recorded in other income (expense).

3. Revenue Recognition

The Company recognizes revenue primarily from these sources:

• Software and software license sales

• System hardware sales

• Professional service revenue

• Software design and development services

• Implementation services

• Maintenance and hosting support contracts

The Company applies the provisions of Accounting Standards Codification subtopic 605-985, Revenue Recognition: Software (or ASC 605-35) to all transactions involving the sale of software licenses. In the event of a multiple element arrangement, the Company evaluates if each element represents a separate unit of accounting, taking into account all factors following the guidelines set forth in “FASB ASC 605-985-25-5.”

The Company recognizes revenue when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred, which is when product title transfers to the customer, or services have been rendered; (iii) customer payment is deemed fixed or determinable and free of contingencies and significant uncertainties; and (iv) collection is probable. The Company assesses collectability based on a number of factors, including the customer’s past payment history and its current creditworthiness. If it is determined that collection of a fee is not reasonably assured, the Company defers the revenue and recognizes it at the time collection becomes reasonably assured, which is generally upon receipt of cash payment. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period. Sales and use taxes are reported on a net basis, excluding them from revenue and cost of revenue.

Multiple-Element Arrangements — The Company enters into arrangements with customers that include a combination of software products, system hardware, maintenance and support, or installation and training services. The Company allocates the total arrangement fee among the various elements of the arrangement based on the relative fair value of each of the undelivered elements determined by vendor-specific objective evidence (VSOE). In software arrangements for which the Company does not have VSOE of fair value for all elements, revenue is deferred until the earlier of when VSOE is determined for the undelivered elements (residual method) or when all elements for which the Company does not have VSOE of fair value have been delivered. The Company has determined VSOE of fair value for each of its products and services.

The VSOE for maintenance and support services is based upon the renewal rate for continued service arrangements. The VSOE for installation and training services is established based upon pricing for the services. The VSOE for software and licenses is based on the normal pricing and discounting for the product when sold separately.

Each element of the Company’s multiple element arrangements qualifies for separate accounting. However, when a sale includes both software and maintenance, the Company defers revenue under the residual method of accounting. Under this method, the undelivered maintenance and support fees included in the price of software is amortized ratably over the period the services are provided. The Company defers maintenance and support fees based upon the customer’s renewal rate for these services.

Software and software license sales

The Company recognizes revenue when a fixed fee order has been received and delivery has occurred to the customer. The Company assesses whether the fee is fixed or determinable and free of contingencies based upon signed agreements received from the customer confirming terms of the transaction. Software is delivered to customers electronically or on a CD-ROM, and license files are delivered electronically.

System hardware sales

The Company recognizes revenue on system hardware sales generally upon shipment of the product or customer acceptance depending upon contractual arrangements with the customer. Shipping charges billed to customers are included in sales and the related shipping costs are included in cost of sales.

Professional service revenue

Included in services and other revenues is revenue derived from implementation, maintenance and support contracts, content development, software development and training. The majority of consulting and implementation services and accompanying agreements qualify for separate accounting. Implementation and content development services are bid either on a fixed-fee basis or on a time-and-materials basis. For time-and-materials contracts, the Company recognizes revenue as services are performed. For fixed-fee contracts, the Company recognizes revenue upon completion of specific contractual milestones or by using the percentage-of-completion method.

Software design and development services

Revenue from contracts for technology integration consulting services where the Company designs/redesigns, builds and implements new or enhanced systems applications and related processes for clients are recognized on the percentage-of-completion method in accordance with “FASB ASC 605-985-25-88 through 107.” Percentage-of-completion accounting involves calculating the percentage of services provided during the reporting period compared to the total estimated services to be provided over the duration of the contract. Estimated revenues from applying the percentage-of-completion method include estimated incentives for which achievement of defined goals is deemed probable. This method is followed where reasonably dependable estimates of revenues and costs can be made. The Company measures its progress for completion based on either the hours worked as a percentage of the total number of hours of the project or by delivery and customer acceptance of specific milestones as outlined per the terms of the agreement with the customer. Estimates of total contract revenue and costs are continuously monitored during the term of the contract, and recorded revenue and costs are subject to revision as the contract progresses. Such revisions may result in increases or decreases to revenue and income and are reflected in the financial statements in the periods in which they are first identified. If estimates indicate that a contract loss will occur, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated direct and indirect costs of the contract exceed the estimated total revenue that will be generated by the contract and are included in cost of sales and classified in accrued expenses in the balance sheet. The Company’s presentation of revenue recognized on a contract completion basis has been consistently applied for all periods presented.

The Company classifies the revenue and associated cost on the “Services and Other” line within the “Sales” and “Cost of Sales” sections of the Consolidated Statement of Operations. In all cases where the Company applies the contract method of accounting, the Company’s only deliverable is professional services, thus, the Company believes presenting the revenue on a single line is appropriate.

Costs and estimated earnings recognized in excess of billings on uncompleted contracts are recorded as unbilled services and are included in accounts receivable on the balance sheet. Billings in excess of costs and estimated earnings on uncompleted contracts are recorded as deferred revenue until revenue recognition criteria are met.

Uncompleted contracts at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012			December 31, 2011
Cost incurred on uncompleted contracts	$	25		$	112
Estimated earnings		145			286
Revenue recognized		170			398
Less: billings to date		(141	)		(482	)
	$	29		$	(84	)

The above information is presented in the balance sheet as follows:

	September 30, 2012			December 31, 2011
Costs and estimated earnings in excess of billings on uncompleted contracts	$	49		$	15
Billings in excess of costs and estimated earnings on uncompleted contracts		(20	)		(99	)
	$	29		$	(84	)

Implementation services

Implementation services revenue is recognized when installation is completed.

Maintenance and hosting support contracts

Maintenance and hosting support consists of software updates and support. Software updates provide customers with rights to unspecified software product upgrades and maintenance releases and patches released during the term of the support period. Support includes access to technical support personnel for software and hardware issues. The Company also offers a hosting service through its network operations center, or NOC, allowing the ability to monitor and support its customers’ networks 7 days a week, 24 hours a day.

Maintenance and hosting support revenue is recognized ratably over the term of the maintenance contract, which is typically one to three years. Maintenance and support is renewable by the customer. Rates for maintenance and support, including subsequent renewal rates, are typically established based upon a specified percentage of net license fees as set forth in the arrangement. The Company’s hosting support agreement fees are based on the level of service provided to its customers, which can range from monitoring the health of a customer’s network to supporting a sophisticated web-portal.

4. Cash and Cash Equivalents

Cash equivalents consist of commercial paper and all other liquid investments with original maturities of three months or less when purchased. As of September 30, 2012 and December 31, 2011, the Company had substantially all cash invested in a commercial paper sweep account. The Company maintains the majority of its cash balances in one financial institution located in Chicago.

5. Restricted Cash

In connection with the Company’s bank’s credit card program, the Company is required to maintain a cash balance of $50 at September 30, 2012 and December 31, 2011, respectively.

6. Accounts Receivable

Accounts receivable are usually unsecured and stated at net realizable value and bad debts are accounted for using the allowance method. The Company performs credit evaluations of its customers’ financial condition on an as-needed basis and generally requires no collateral. Payment is generally due 90 days or less from the invoice date and accounts past due more than 90 days are individually analyzed for collectability. In addition, an allowance is provided for other accounts when a significant pattern of uncollectability has occurred based on historical experience and management’s evaluation of accounts receivable. If all collection efforts have been exhausted, the account is written off against the related allowance. No interest is charged on past due accounts. The allowance for doubtful accounts was $49 and $50 at September 30, 2012 and December 31, 2011, respectively.

7. Inventories

The Company records inventories using the lower of cost or market on a first-in, first-out (FIFO) method. Inventories consist principally of finished goods, product components and software licenses. Inventory reserves are established to reflect slow-moving or obsolete products. The Company had an inventory reserve of $108 and $65 at September 30, 2012 and December 31, 2011, respectively.

8. Impairment of Long-Lived Assets

The Company reviews the carrying value of all long-lived assets, including property and equipment as well as intangible assets with definite lives, for impairment in accordance with “FASB ASC 360-10-05-4,” Accounting for the Impairment or Disposal of Long-Lived Assets. Under FASB ASC 360-10-05-4, impairment losses are recorded whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

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 by 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. There were no impairment losses for long-lived assets recorded for the three and nine months ended September 30, 2012 and 2011.

9. Depreciation and Amortization

Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leased equipment is depreciated over the term of the capital lease. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method.

The estimated useful lives used to compute depreciation and amortization are as follows:

Equipment	3 - 5 years
Demonstration equipment	3 - 5 years
Furniture and fixtures	7 years
Purchased software	3 years
Leased equipment	3 years
Leasehold improvements	Shorter of 5 years or term of lease

Depreciation and amortization expense was $68 and $223 for the three and nine months ended September 30, 2012, respectively, compared to $111 and $377 for the same periods in the prior year.

10. Comprehensive Loss

Comprehensive loss includes revenues, expenses, gains and losses that are excluded from net loss. Items of comprehensive loss are foreign currency translation adjustments which are added to net income or loss to compute comprehensive income or loss. Total unrealized foreign currency translation losses on the translation of the financial statements of the Company’s foreign subsidiary from its functional currency to the U.S. dollar of $0 were included in comprehensive losses during the three and nine months ended September 30, 2012, respectively, compared to $24 and $23 for the same periods in the prior year.

11. Research and Development and Software Development Costs

Research and development expenses consist primarily of development personnel and non-employee contractor costs related to the development of new products and services, enhancement of existing products and services, quality assurance and testing. “FASB ASC 985-20-25,” Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software and hardware technologies. Software development costs incurred beyond the establishment of technological feasibility have not been significant. No software development costs were capitalized during the nine months ended September 30, 2012 and 2011. Software development costs have been recorded as research and development expense. The Company incurred research and development expenses of $462 and $1,417 during the three and nine months ended September 30, 2012, respectively, compared to $555 and $1,748 for the same periods in the prior year.

12. Basic and Diluted Loss per Common Share

Basic and diluted loss per common share for all periods presented is computed using the weighted average number of common shares outstanding. Basic weighted average shares outstanding include only outstanding common shares. Diluted net loss per common share is computed by dividing net loss by the weighted average common and potential dilutive common shares outstanding computed in accordance with the treasury stock method. Shares reserved for outstanding stock warrants and options totaling 2,717 and 3,108, respectively, were excluded from the computation of loss per share as their effect was antidilutive due to the Company’s net loss for the three and nine months ended September 30, 2012 and 2011.

13. Deferred 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, 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.

14. Accounting for Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718-10, which requires the measurements and recognition of compensation expense for all stock-based payments including warrants, stock options, restricted stock grants and stock bonuses based on estimated fair value. For purposes of determining estimated fair value under FASB ASC 718-10-30, the Company computes the estimated fair values of stock options using the Black-Scholes option pricing model. The fair value of restricted stock and stock award grants are determined based on the number of shares granted and the closing price of the Company’s common stock on the date of grant. Compensation expense for all share-based payment awards is recognized using the straight-line amortization method over the vesting period. Stock-based compensation expense of $99 and $377, or a basic and diluted loss per share of $0.00 and $0.02, was charged to expense during the three and nine months ended September 30, 2012, respectively, compared to stock-based compensation expense of $169 and $692, or a basic and diluted loss per share of $0.01 and $0.04, for the same periods in the prior year. No tax benefit has been recorded due to the full valuation allowance on deferred tax assets that the Company has recorded.

The Company applies the guidance of FASB 718-10-S99-1 for purposes of determining the expected term for stock options. The Company calculates the estimated expected life based upon historical exercise data. The Company uses historical closing stock price volatility for a period equal to the period its common stock has been trading publicly. The dividend yield assumption is based on the Company’s history and expectation of no future dividend payouts.

Stock-based compensation expense is based on awards ultimately expected to vest and is reduced for estimated forfeitures. FASB 718-10-55 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company applied a pre-vesting forfeiture rate of 18.3% to 24.4% based on upon actual historical experience for all employee option awards. The Company continues to apply a zero forfeiture rate to those options granted to members of its Board of Directors.

The Company accounts for equity instruments issued for services and goods to non-employees under “FASB ASC 505-50-1” Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services and “FASB ASC 505-50-25” Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees. Generally, the equity instruments issued for services and goods are shares of the Company’s common stock, or warrants or options to purchase shares of the Company’s common stock. These shares, warrants or options are either fully-vested and exercisable at the date of grant or vest over a certain period during which services are provided. The Company expenses the fair market value of these securities over the period in which the related services are received. During the three and nine months ended September 30, 2012, the Company recognized $14 and $214, or a basic and diluted loss per share of $0.00 and $0.01, of stock-based compensation expense related to the fair market value of stock and a warrant that were issued to outside vendors for professional services and for the stock issued to the Company’s non-employee directors as part of their compensation. The Company did not issue equity instruments to non-employees during the three or nine months ended September 30, 2011.

See Note 5 for further information regarding stock-based compensation and the assumptions used to calculate the fair value of stock-based compensation.

15. Fair Value of Financial Instruments

“FASB ASC 820-10,” Fair Value Measurements and Disclosures, requires disclosure of the estimated fair value of an entity’s financial instruments. Such disclosures, which pertain to the Company’s financial instruments, do not purport to represent the aggregate net fair value of the Company. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the short maturity of those instruments. The fair value of capital lease obligations approximates carrying value based on the interest rate in the lease compared to current market interest rates.

16. Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Significant estimates of the Company are the allowance for doubtful accounts, recognition of revenue under fixed price contracts, deferred tax assets, deferred revenue, depreciable lives and methods of property and equipment, valuation of warrants and other stock-based compensation. Actual results could differ from those estimates.

17. Deferred Financing Costs

Amortization expense related to deferred financing costs was $0 and $3 for the three and nine months ended September 30, 2012, respectively, compared to $4 and $14 for the same periods in the prior year. The amortization expense was recorded as a component of interest expense. The balance of deferred financing costs at September 30, 2012 and December 31, 2011 was $0 and $3, respectively.

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Allowance for doubtful accounts receivable	$ 49	$ 50
Capital stock, par value	$ 0.01	$ 0.01
Capital stock, shares authorized	66,667	66,667
Preferred stock, shares authorized	16,667	16,667
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	50,000	50,000
Common stock, shares issued	24,977	22,969
Common stock, shares outstanding	24,977	22,969

XML

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Future minimum lease payments for operating leases

Future minimum lease payments for operating leases are as follows:

At September 30, 2012	Lease Obligations
Three months ended December 31, 2012	$	64
2013		259
2014		234
2015		207
2016		199
Thereafter		197
Total future minimum obligations	$	1,160

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 08, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	WIRELESS RONIN TECHNOLOGIES INC
Entity Central Index Key	0001356093
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		24,990,071

XML

Stock Based Compensation and Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation and Benefit Plans [Abstract]

Compensation expense recognized for issuance of warrants, stock options, restricted stock grants and stock bonuses

Compensation expense recognized for the issuance of warrants, stock options, restricted stock grants and stock bonuses for the three and nine months ended September 30, 2012 and 2011 was as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Stock-based compensation costs included in:
Cost of sales	$	2	$	5	$	6	$	14
Sales and marketing expenses		20		19		61		97
Research and development expenses		7		12		46		36
General and administrative expenses		70		133		264		545
Total stock-based compensation expenses	$	99	$	169	$	377	$	692

Values set forth calculated using weighted average assumptions

The values set forth above were calculated using the following weighted average assumptions:

	Three Months Ended September 30,					Nine Months  Ended September 30,
	2012		2011			2012			2011
Expected life		n/a		4.07 years			4.18 years			3.82 to 4.07 years
Dividend yield		n/a		0	%		0	%		0	%
Expected volatility		n/a		88.5	%		87.4	%		88.5 to 90.6	%
Risk-free interest rate		n/a		0.7	%		0.5 to 0.8	%		0.7 to 1.8	%

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Sales
Hardware	$ 512	$ 942	$ 1,146	$ 3,487
Software	113	184	295	1,062
Services and other	1,144	1,175	3,658	3,203
Total Sales	1,769	2,301	5,099	7,752
Cost of sales
Hardware	339	575	707	2,364
Software	21	29	65	124
Services and other	513	562	1,537	1,644
Total cost of sales (exclusive of depreciation and amortization shown separately below)	873	1,166	2,309	4,132
Gross profit	896	1,135	2,790	3,620
Operating expenses:
Sales and marketing expenses	339	431	1,197	1,708
Research and development expenses	462	555	1,417	1,748
General and administrative expenses	1,206	1,412	4,162	4,850
Depreciation and amortization expense	68	111	223	377
Total operating expenses	2,075	2,509	6,999	8,683
Operating loss	(1,179)	(1,374)	(4,209)	(5,063)
Other income (expenses):
Interest expense	(1)	(6)	(7)	(24)
Interest income			1	3
Total other expense	(1)	(6)	(6)	(21)
Net loss	$ (1,180)	$ (1,380)	$ (4,215)	$ (5,084)
Basic and diluted loss per common share	$ (0.05)	$ (0.07)	$ (0.18)	$ (0.26)
Basic and diluted weighted average shares outstanding	23,426	19,495	23,211	19,389

XML

Segment Information and Major Customers

9 Months Ended

Sep. 30, 2012

Segment Information and Major Customers [Abstract]

SEGMENT INFORMATION AND MAJOR CUSTOMERS

NOTE 6: SEGMENT INFORMATION AND MAJOR CUSTOMERS

The Company views its operations and manages its business as one reportable segment, providing marketing technology solutions to a variety of companies, primarily in its targeted vertical markets. Factors used to identify the Company’s single operating segment include the financial information available for evaluation by the chief operating decision maker in making decisions about how to allocate resources and assess performance. The Company markets its products and services through its headquarters in the United States and its wholly-owned subsidiary operating in Canada.

Net sales per geographic region, based on the billing location of the end customer, are summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
United States	$	1,687	$	2,144	$	4,770	$	7,029
Canada		65		145		287		670
Other International		17		12		42		53
Total Sales	$	1,769	$	2,301	$	5,099	$	7,752

Geographic segments of property and equipment are as follows:

	September 30,		December 31,
	2012		2011
Property and equipment, net:
United States	$	422	$	596
Canada		42		55
Total	$	464	$	651

A significant portion of the Company’s revenue is derived from a few major customers. Customers with greater than 10% of total sales are represented on the following table:

	Three Months Ended September 30,						Nine Months Ended September 30,
Customer	2012			2011			2012			2011
Chrysler		30.2	%		28.3	%		39.6	%		40.6	%
ARAMARK		28.3	%		29.0	%		17.1	%		18.1	%
		58.5%			57.3%			56.7%			58.7%

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. As of September 30, 2012 and December 31, 2011, a significant portion of the Company’s accounts receivable was concentrated with the following customers:

Customer	September 30, 2012			December 31, 2011
Chrysler		31.8	%		44.7	%
ARAMARK		32.4	%		12.5	%
		64.2	%		57.2	%

XML

Stock-Based Compensation and Benefit Plans

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation and Benefit Plans [Abstract]

STOCK-BASED COMPENSATION AND BENEFIT PLANS

NOTE 5: STOCK-BASED COMPENSATION AND BENEFIT PLANS

Stock Compensation Expense Information

FASB ASC 718-10 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. The number of shares reserved under the Amended and Restated 2006 Equity Incentive Plan and the Amended and Restated 2006 Non-Employee Director Stock Option Plan as of September 30, 2012 was 3,600 and 1,000, respectively. Compensation expense recognized for the issuance of warrants, stock options, restricted stock grants and stock bonuses for the three and nine months ended September 30, 2012 and 2011 was as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Stock-based compensation costs included in:
Cost of sales	$	2	$	5	$	6	$	14
Sales and marketing expenses		20		19		61		97
Research and development expenses		7		12		46		36
General and administrative expenses		70		133		264		545
Total stock-based compensation expenses	$	99	$	169	$	377	$	692

At September 30, 2012, there was approximately $507 of total unrecognized compensation expense related to unvested share-based awards. Generally, this expense will be recognized over the next two and half years and will be adjusted for any future changes in estimated forfeitures.

Valuation Information for Stock-Based Compensation

For purposes of determining estimated fair value under FASB ASC 718-10, the Company computed the estimated fair values of stock options using the Black-Scholes model. The Company did not issue any stock options during the three months ended September 30, 2012. The weighted average estimated fair value of stock options granted during the first nine months of 2012 was $0.71 per share compared to $0.77 and $0.75 for the three and nine months ended September 30, 2011. The values set forth above were calculated using the following weighted average assumptions:

	Three Months Ended September 30,					Nine Months  Ended September 30,
	2012		2011			2012			2011
Expected life		n/a		4.07 years			4.18 years			3.82 to 4.07 years
Dividend yield		n/a		0	%		0	%		0	%
Expected volatility		n/a		88.5	%		87.4	%		88.5 to 90.6	%
Risk-free interest rate		n/a		0.7	%		0.5 to 0.8	%		0.7 to 1.8	%

The Company calculates the estimated expected life based upon historical exercise data. The risk-free interest rate assumption is based on observed interest rates appropriate for the term of the Company’s stock options. The Company uses historical closing stock price volatility for a period equal to the expected life of the respective award. The dividend yield assumption is based on the Company’s history and expectation of no future dividend payouts.

Stock-based compensation expense is based on awards ultimately expected to vest and is reduced for estimated forfeitures. FASB 718-10-55 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company applied a pre-vesting forfeiture rate of 18.3% to 24.4% based on upon actual historical experience for all employee option awards. The Company continues to apply a zero forfeiture rate to those options granted to members of its Board of Directors.

In February 2012 and March 2011, the Company granted stock options for the purchase of an aggregate of 305 and 250 shares to two executive officers and certain key employees, respectively. In addition, each of the Company’s six non-employee board members received stock options to purchase 33 and 20 shares of the Company’s stock in February 2012 and March 2011. In June 2011, the Company granted stock options for the purchase of an aggregate of 45 shares to two key employees.

The Company issued 30 shares of restricted stock awards to a key employee in February 2012. The shares require both continued employment and achievement of certain performance targets by June 30, 2012. As of June 30, 2012, the performance targets had been achieved and the shares were issued to the employee. The weighted average fair value of the shares was based on the closing market price on the date of grant of $1.07. The fair market value of the grants totaled $32 and was recognized as stock compensation expense on a straight-line basis through June 30, 2012.

In February 2012, the Company issued 106 unregistered shares of its common stock to a vendor in exchange for executive search services. The fair value of the shares was based on the closing price on the date issued, which totaled $114 and was recognized as compensation expense during the three months ended March 31, 2012. In addition, the Company issued a three-year warrant for the purchase of 150 shares of common stock at an exercise price of $1.75 to another vendor in exchange for public relation services. The fair value of the warrants was $0.47 per share based on the Black-Scholes model using an expected term of three years, a risk-free interest rate of 0.51% and a volatility rate of 87.4%. The total fair value of $71 was recognized as compensation expense during the three months ended June 30, 2012 as the warrant was 100% exercisable upon issuance.

In April 2012, July 2012 and October 2012, the Company issued an aggregate of 15, 15 and 12 shares of common stock, respectively, to its six non-employee board members. The Company also issued an aggregate of 30 and 14 shares of common stock to two key sales employees in June 2012 and August 2012, respectively. The shares were issued to the six non-employee board members as part of their compensation for board service for the nine month period ended September 30, 2012. The shares were issued to the two key sales employees as a result of their achievement of certain performance goals outlined within the annual sales compensation plan. The weighted average fair value of the shares was based on the closing market price on the date of grant of $0.81 and $0.76 for the three and nine months ended September 30, 2012. The fair value of the stock awards was recognized as compensation expense and totaled $22 and $69 for the three and nine months ended September 30, 2012.

Stock options and warrants for the purchase of 308 shares were cancelled or expired during the nine months ended September 30, 2012.

2007 Associate Stock Purchase Plan

In November 2007, the Company’s shareholders approved the 2007 Associate Stock Purchase Plan, under which 300 shares were originally reserved for purchase by the Company’s associates (employees). In June 2010, the Company’s shareholders approved an amendment to increase the number of shares reserved for issuance to 400. In June 2011, the Company’s shareholders approved an amendment to increase the number of shares reserved for issuance from 400 to 600. The purchase price of the shares under the plan is the lesser of 85% of the fair market value on the first or last day of the offering period. Offering periods are every six months ending on June 30 and December 31. Associates may designate up to ten percent of their compensation for the purchase of shares under the plan. Total shares purchased by associates under the plan were 384, leaving 216 remaining shares available to be issued under the plan, as of September 30, 2012.

Registered Direct Offering

In September 2012, the Company sold a total of 1,738 shares of its common stock at $0.81 per share pursuant to a registration statement on Form S-3 which was declared effective by the Securities and Exchange Commission in September 2009. The Company obtained approximately $1,198 in net proceeds as a result of this registered direct offering.

Employee Benefit Plan

In 2007, the Company began to offer a defined contribution 401(k) retirement plan for eligible associates. Associates may contribute up to 15% of their pretax compensation to the plan. There is currently no plan for an employer contribution match.

XML

Nature of Operations and Summary of Significant Accounting Policies (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Nature of Operations and Summary of Significant Accounting Policies (Textual) [Abstract]
Cash balance	$ 50		$ 50		$ 50
Payment due 90 days or less			90 days
Interest charged on past due accounts			0
Allowance for doubtful accounts	49		49		50
Inventory reserve	108		108		65
Impairment losses for long-lived assets	0	0	0	0
Depreciation and amortization expense	68	111	223	377
Total unrealized foreign currency translation losses on translation included in comprehensive losses	0	24	0	23
Research and development expenses	462	555	1,417	1,748
Shares reserved for outstanding stock warrants and options	2,717,000	2,717,000	3,108,000	3,108,000
Fair value of shares was based on closing price on date issued	99	169	377	692
Tax benefit recorded due to full valuation allowance on deferred tax assets			0
Forfeiture rate to options granted to members of Board of Directors			0.00%
Issued equity instruments	24,977		24,977		22,969
Amortization expense related to deferred financing costs	0	4	3	14
Balance of deferred finance costs	0		0		3
Capitalized software development costs	0	0	0	0
Goods and Services Exchanged for Equity Instrument [Member]
Nature of Operations and Summary of Significant Accounting Policies (Textual) [Abstract]
Fair value of shares was based on closing price on date issued	14		214
Basic and diluted loss per share	$ 0.00		$ 0.01
Issued equity instruments		0		0
Stock Compensation Plan [Member]
Nature of Operations and Summary of Significant Accounting Policies (Textual) [Abstract]
Fair value of shares was based on closing price on date issued	$ 99	$ 169	$ 377	$ 692
Basic and diluted loss per share	$ 0.00	$ 0.01	$ 0.02	$ 0.04
Maximum [Member]
Nature of Operations and Summary of Significant Accounting Policies (Textual) [Abstract]
Pre-vesting forfeiture rate based on upon actual historical experience for all employee option awards			24.40%
Minimum [Member]
Nature of Operations and Summary of Significant Accounting Policies (Textual) [Abstract]
Pre-vesting forfeiture rate based on upon actual historical experience for all employee option awards			18.30%

XML

Segment Information and Major Customers (Tables)

9 Months Ended

Sep. 30, 2012

Segment Information and Major Customers [Abstract]

Net sales per geographic region, based on billing location of end customer were summarized

Net sales per geographic region, based on the billing location of the end customer, are summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
United States	$	1,687	$	2,144	$	4,770	$	7,029
Canada		65		145		287		670
Other International		17		12		42		53
Total Sales	$	1,769	$	2,301	$	5,099	$	7,752

Geographic segments of property and equipment

Geographic segments of property and equipment are as follows:

	September 30,		December 31,
	2012		2011
Property and equipment, net:
United States	$	422	$	596
Canada		42		55
Total	$	464	$	651

Significant portion of Company's revenue is derived from few major customers

A significant portion of the Company’s revenue is derived from a few major customers. Customers with greater than 10% of total sales are represented on the following table:

	Three Months Ended September 30,						Nine Months Ended September 30,
Customer	2012			2011			2012			2011
Chrysler		30.2	%		28.3	%		39.6	%		40.6	%
ARAMARK		28.3	%		29.0	%		17.1	%		18.1	%
		58.5%			57.3%			56.7%			58.7%

Financial instruments of subject Company to concentrations of credit risk consist principally of accounts receivable

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. As of September 30, 2012 and December 31, 2011, a significant portion of the Company’s accounts receivable was concentrated with the following customers:

Customer	September 30, 2012			December 31, 2011
Chrysler		31.8	%		44.7	%
ARAMARK		32.4	%		12.5	%
		64.2	%		57.2	%

XML

Other Financial Statement Information (Tables)

9 Months Ended

Sep. 30, 2012

Other Financial Statement Information [Abstract]

ALLOWANCE FOR DOUBTFUL RECEIVABLES

ALLOWANCE FOR DOUBTFUL RECEIVABLES

	Nine Months Ended			Year Ended
	September 30, 2012			December 31, 2011
Balance at beginning of period	$	50		$	35
Provision for doubtful receivables		—			57
Write-offs		(1	)		(42	)
Balance at end of period	$	49		$	50

INVENTORIES

INVENTORIES

	September 30,		December 31,
	2012		2011
Finished goods	$	172	$	125
Work-in-process		22		45
Total inventories	$	194	$	170

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

	September 30,			December 31,
	2012			2011
Leased equipment	$	89		$	89
Equipment		1,191			1,195
Leasehold improvements		381			381
Demonstration equipment		4			6
Purchased software		376			361
Furniture and fixtures		573			569
Total property and equipment	$	2,614		$	2,601
Less: accumulated depreciation and amortization		(2,150	)		(1,950	)
Net property and equipment	$	464		$	651

DEFERRED REVENUE

DEFERRED REVENUE

	September 30,		December 31,
	2012		2011
Deferred software maintenance	$	550	$	459
Customer deposits and deferred project revenue		53		228
Total deferred revenue	$	603	$	687

ACCRUED LIABILITIES

ACCRUED LIABILITIES

	September 30,		December 31,
	2012		2011
Compensation	$	380	$	214
Accrued rent		215		232
Sales tax and other		82		123
Total accrued liabilities	$	677	$	569

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

	Nine Months Ended September 30,
	2012		2011
Cash paid for:
Interest	$	4	$	5
Non-cash financing activity:
Warrants issued for debt issuance costs	$	—	$	8

XML

Nature of Operations and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Nature of Operations and Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

1. Principles of Consolidation

The consolidated financial statements include the accounts of Wireless Ronin Technologies, Inc. and its wholly owned subsidiary. All inter-company balances and transactions have been eliminated in consolidation.

Foreign Currency

2. Foreign Currency

During the first quarter of 2012, the Company reevaluated the reporting currency and determined that the functional currency for its operations in Canada is the U.S. Dollar. As a result, the Company is no longer recording translation adjustments related to assets and liabilities or income and expense items that are transacted in the local currency as a component of accumulated other comprehensive loss in shareholders’ equity. Foreign exchange transaction gains and losses attributable to exchange rate movements related to transactions made in the local currency and on intercompany receivables and payables not deemed to be of a long-term investment nature are recorded in other income (expense).

Revenue Recognition

3. Revenue Recognition

The Company recognizes revenue primarily from these sources:

• Software and software license sales

• System hardware sales

• Professional service revenue

• Software design and development services

• Implementation services

• Maintenance and hosting support contracts

The Company applies the provisions of Accounting Standards Codification subtopic 605-985, Revenue Recognition: Software (or ASC 605-35) to all transactions involving the sale of software licenses. In the event of a multiple element arrangement, the Company evaluates if each element represents a separate unit of accounting, taking into account all factors following the guidelines set forth in “FASB ASC 605-985-25-5.”

The Company recognizes revenue when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred, which is when product title transfers to the customer, or services have been rendered; (iii) customer payment is deemed fixed or determinable and free of contingencies and significant uncertainties; and (iv) collection is probable. The Company assesses collectability based on a number of factors, including the customer’s past payment history and its current creditworthiness. If it is determined that collection of a fee is not reasonably assured, the Company defers the revenue and recognizes it at the time collection becomes reasonably assured, which is generally upon receipt of cash payment. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period. Sales and use taxes are reported on a net basis, excluding them from revenue and cost of revenue.

Multiple-Element Arrangements — The Company enters into arrangements with customers that include a combination of software products, system hardware, maintenance and support, or installation and training services. The Company allocates the total arrangement fee among the various elements of the arrangement based on the relative fair value of each of the undelivered elements determined by vendor-specific objective evidence (VSOE). In software arrangements for which the Company does not have VSOE of fair value for all elements, revenue is deferred until the earlier of when VSOE is determined for the undelivered elements (residual method) or when all elements for which the Company does not have VSOE of fair value have been delivered. The Company has determined VSOE of fair value for each of its products and services.

The VSOE for maintenance and support services is based upon the renewal rate for continued service arrangements. The VSOE for installation and training services is established based upon pricing for the services. The VSOE for software and licenses is based on the normal pricing and discounting for the product when sold separately.

Each element of the Company’s multiple element arrangements qualifies for separate accounting. However, when a sale includes both software and maintenance, the Company defers revenue under the residual method of accounting. Under this method, the undelivered maintenance and support fees included in the price of software is amortized ratably over the period the services are provided. The Company defers maintenance and support fees based upon the customer’s renewal rate for these services.

Software and software license sales

The Company recognizes revenue when a fixed fee order has been received and delivery has occurred to the customer. The Company assesses whether the fee is fixed or determinable and free of contingencies based upon signed agreements received from the customer confirming terms of the transaction. Software is delivered to customers electronically or on a CD-ROM, and license files are delivered electronically.

System hardware sales

The Company recognizes revenue on system hardware sales generally upon shipment of the product or customer acceptance depending upon contractual arrangements with the customer. Shipping charges billed to customers are included in sales and the related shipping costs are included in cost of sales.

Professional service revenue

Included in services and other revenues is revenue derived from implementation, maintenance and support contracts, content development, software development and training. The majority of consulting and implementation services and accompanying agreements qualify for separate accounting. Implementation and content development services are bid either on a fixed-fee basis or on a time-and-materials basis. For time-and-materials contracts, the Company recognizes revenue as services are performed. For fixed-fee contracts, the Company recognizes revenue upon completion of specific contractual milestones or by using the percentage-of-completion method.

Software design and development services

Revenue from contracts for technology integration consulting services where the Company designs/redesigns, builds and implements new or enhanced systems applications and related processes for clients are recognized on the percentage-of-completion method in accordance with “FASB ASC 605-985-25-88 through 107.” Percentage-of-completion accounting involves calculating the percentage of services provided during the reporting period compared to the total estimated services to be provided over the duration of the contract. Estimated revenues from applying the percentage-of-completion method include estimated incentives for which achievement of defined goals is deemed probable. This method is followed where reasonably dependable estimates of revenues and costs can be made. The Company measures its progress for completion based on either the hours worked as a percentage of the total number of hours of the project or by delivery and customer acceptance of specific milestones as outlined per the terms of the agreement with the customer. Estimates of total contract revenue and costs are continuously monitored during the term of the contract, and recorded revenue and costs are subject to revision as the contract progresses. Such revisions may result in increases or decreases to revenue and income and are reflected in the financial statements in the periods in which they are first identified. If estimates indicate that a contract loss will occur, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated direct and indirect costs of the contract exceed the estimated total revenue that will be generated by the contract and are included in cost of sales and classified in accrued expenses in the balance sheet. The Company’s presentation of revenue recognized on a contract completion basis has been consistently applied for all periods presented.

The Company classifies the revenue and associated cost on the “Services and Other” line within the “Sales” and “Cost of Sales” sections of the Consolidated Statement of Operations. In all cases where the Company applies the contract method of accounting, the Company’s only deliverable is professional services, thus, the Company believes presenting the revenue on a single line is appropriate.

Costs and estimated earnings recognized in excess of billings on uncompleted contracts are recorded as unbilled services and are included in accounts receivable on the balance sheet. Billings in excess of costs and estimated earnings on uncompleted contracts are recorded as deferred revenue until revenue recognition criteria are met.

Uncompleted contracts at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012			December 31, 2011
Cost incurred on uncompleted contracts	$	25		$	112
Estimated earnings		145			286
Revenue recognized		170			398
Less: billings to date		(141	)		(482	)
	$	29		$	(84	)

The above information is presented in the balance sheet as follows:

	September 30, 2012			December 31, 2011
Costs and estimated earnings in excess of billings on uncompleted contracts	$	49		$	15
Billings in excess of costs and estimated earnings on uncompleted contracts		(20	)		(99	)
	$	29		$	(84	)

Implementation services

Implementation services revenue is recognized when installation is completed.

Maintenance and hosting support contracts

Maintenance and hosting support consists of software updates and support. Software updates provide customers with rights to unspecified software product upgrades and maintenance releases and patches released during the term of the support period. Support includes access to technical support personnel for software and hardware issues. The Company also offers a hosting service through its network operations center, or NOC, allowing the ability to monitor and support its customers’ networks 7 days a week, 24 hours a day.

Maintenance and hosting support revenue is recognized ratably over the term of the maintenance contract, which is typically one to three years. Maintenance and support is renewable by the customer. Rates for maintenance and support, including subsequent renewal rates, are typically established based upon a specified percentage of net license fees as set forth in the arrangement. The Company’s hosting support agreement fees are based on the level of service provided to its customers, which can range from monitoring the health of a customer’s network to supporting a sophisticated web-portal.

Cash and Cash Equivalents

4. Cash and Cash Equivalents

Cash equivalents consist of commercial paper and all other liquid investments with original maturities of three months or less when purchased. As of September 30, 2012 and December 31, 2011, the Company had substantially all cash invested in a commercial paper sweep account. The Company maintains the majority of its cash balances in one financial institution located in Chicago.

Restricted Cash

5. Restricted Cash

In connection with the Company’s bank’s credit card program, the Company is required to maintain a cash balance of $50 at September 30, 2012 and December 31, 2011, respectively.

Accounts Receivable

6. Accounts Receivable

Accounts receivable are usually unsecured and stated at net realizable value and bad debts are accounted for using the allowance method. The Company performs credit evaluations of its customers’ financial condition on an as-needed basis and generally requires no collateral. Payment is generally due 90 days or less from the invoice date and accounts past due more than 90 days are individually analyzed for collectability. In addition, an allowance is provided for other accounts when a significant pattern of uncollectability has occurred based on historical experience and management’s evaluation of accounts receivable. If all collection efforts have been exhausted, the account is written off against the related allowance. No interest is charged on past due accounts. The allowance for doubtful accounts was $49 and $50 at September 30, 2012 and December 31, 2011, respectively.

Inventories

7. Inventories

The Company records inventories using the lower of cost or market on a first-in, first-out (FIFO) method. Inventories consist principally of finished goods, product components and software licenses. Inventory reserves are established to reflect slow-moving or obsolete products. The Company had an inventory reserve of $108 and $65 at September 30, 2012 and December 31, 2011, respectively.

Impairment of Long-Lived Assets

8. Impairment of Long-Lived Assets

The Company reviews the carrying value of all long-lived assets, including property and equipment as well as intangible assets with definite lives, for impairment in accordance with “FASB ASC 360-10-05-4,” Accounting for the Impairment or Disposal of Long-Lived Assets. Under FASB ASC 360-10-05-4, impairment losses are recorded whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

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 by 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. There were no impairment losses for long-lived assets recorded for the three and nine months ended September 30, 2012 and 2011.

Depreciation and Amortization

9. Depreciation and Amortization

Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leased equipment is depreciated over the term of the capital lease. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method.

The estimated useful lives used to compute depreciation and amortization are as follows:

Equipment	3 - 5 years
Demonstration equipment	3 - 5 years
Furniture and fixtures	7 years
Purchased software	3 years
Leased equipment	3 years
Leasehold improvements	Shorter of 5 years or term of lease

Depreciation and amortization expense was $68 and $223 for the three and nine months ended September 30, 2012, respectively, compared to $111 and $377 for the same periods in the prior year.

Comprehensive Loss

10. Comprehensive Loss

Comprehensive loss includes revenues, expenses, gains and losses that are excluded from net loss. Items of comprehensive loss are foreign currency translation adjustments which are added to net income or loss to compute comprehensive income or loss. Total unrealized foreign currency translation losses on the translation of the financial statements of the Company’s foreign subsidiary from its functional currency to the U.S. dollar of $0 were included in comprehensive losses during the three and nine months ended September 30, 2012, respectively, compared to $24 and $23 for the same periods in the prior year.

Research and Development and Software Development Costs

11. Research and Development and Software Development Costs

Research and development expenses consist primarily of development personnel and non-employee contractor costs related to the development of new products and services, enhancement of existing products and services, quality assurance and testing. “FASB ASC 985-20-25,” Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software and hardware technologies. Software development costs incurred beyond the establishment of technological feasibility have not been significant. No software development costs were capitalized during the nine months ended September 30, 2012 and 2011. Software development costs have been recorded as research and development expense. The Company incurred research and development expenses of $462 and $1,417 during the three and nine months ended September 30, 2012, respectively, compared to $555 and $1,748 for the same periods in the prior year.

Basic and Diluted Loss per Common Share

12. Basic and Diluted Loss per Common Share

Basic and diluted loss per common share for all periods presented is computed using the weighted average number of common shares outstanding. Basic weighted average shares outstanding include only outstanding common shares. Diluted net loss per common share is computed by dividing net loss by the weighted average common and potential dilutive common shares outstanding computed in accordance with the treasury stock method. Shares reserved for outstanding stock warrants and options totaling 2,717 and 3,108, respectively, were excluded from the computation of loss per share as their effect was antidilutive due to the Company’s net loss for the three and nine months ended September 30, 2012 and 2011.

Deferred Income Taxes

13. Deferred 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, 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.

Accounting for Stock-Based Compensation

14. Accounting for Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718-10, which requires the measurements and recognition of compensation expense for all stock-based payments including warrants, stock options, restricted stock grants and stock bonuses based on estimated fair value. For purposes of determining estimated fair value under FASB ASC 718-10-30, the Company computes the estimated fair values of stock options using the Black-Scholes option pricing model. The fair value of restricted stock and stock award grants are determined based on the number of shares granted and the closing price of the Company’s common stock on the date of grant. Compensation expense for all share-based payment awards is recognized using the straight-line amortization method over the vesting period. Stock-based compensation expense of $99 and $377, or a basic and diluted loss per share of $0.00 and $0.02, was charged to expense during the three and nine months ended September 30, 2012, respectively, compared to stock-based compensation expense of $169 and $692, or a basic and diluted loss per share of $0.01 and $0.04, for the same periods in the prior year. No tax benefit has been recorded due to the full valuation allowance on deferred tax assets that the Company has recorded.

The Company applies the guidance of FASB 718-10-S99-1 for purposes of determining the expected term for stock options. The Company calculates the estimated expected life based upon historical exercise data. The Company uses historical closing stock price volatility for a period equal to the period its common stock has been trading publicly. The dividend yield assumption is based on the Company’s history and expectation of no future dividend payouts.

Stock-based compensation expense is based on awards ultimately expected to vest and is reduced for estimated forfeitures. FASB 718-10-55 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company applied a pre-vesting forfeiture rate of 18.3% to 24.4% based on upon actual historical experience for all employee option awards. The Company continues to apply a zero forfeiture rate to those options granted to members of its Board of Directors.

The Company accounts for equity instruments issued for services and goods to non-employees under “FASB ASC 505-50-1” Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services and “FASB ASC 505-50-25” Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees. Generally, the equity instruments issued for services and goods are shares of the Company’s common stock, or warrants or options to purchase shares of the Company’s common stock. These shares, warrants or options are either fully-vested and exercisable at the date of grant or vest over a certain period during which services are provided. The Company expenses the fair market value of these securities over the period in which the related services are received. During the three and nine months ended September 30, 2012, the Company recognized $14 and $214, or a basic and diluted loss per share of $0.00 and $0.01, of stock-based compensation expense related to the fair market value of stock and a warrant that were issued to outside vendors for professional services and for the stock issued to the Company’s non-employee directors as part of their compensation. The Company did not issue equity instruments to non-employees during the three or nine months ended September 30, 2011.

See Note 5 for further information regarding stock-based compensation and the assumptions used to calculate the fair value of stock-based compensation.

Fair Value of Financial Instruments

15. Fair Value of Financial Instruments

“FASB ASC 820-10,” Fair Value Measurements and Disclosures, requires disclosure of the estimated fair value of an entity’s financial instruments. Such disclosures, which pertain to the Company’s financial instruments, do not purport to represent the aggregate net fair value of the Company. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the short maturity of those instruments. The fair value of capital lease obligations approximates carrying value based on the interest rate in the lease compared to current market interest rates.

Use of Estimates

16. Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Significant estimates of the Company are the allowance for doubtful accounts, recognition of revenue under fixed price contracts, deferred tax assets, deferred revenue, depreciable lives and methods of property and equipment, valuation of warrants and other stock-based compensation. Actual results could differ from those estimates.

Deferred Financing Costs

17. Deferred Financing Costs

Amortization expense related to deferred financing costs was $0 and $3 for the three and nine months ended September 30, 2012, respectively, compared to $4 and $14 for the same periods in the prior year. The amortization expense was recorded as a component of interest expense. The balance of deferred financing costs at September 30, 2012 and December 31, 2011 was $0 and $3, respectively.

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Nature of Operations and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Nature of Operations and Summary of Significant Accounting Policies [Abstract]

Summary of Uncompleted Contracts

Uncompleted contracts at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012			December 31, 2011
Cost incurred on uncompleted contracts	$	25		$	112
Estimated earnings		145			286
Revenue recognized		170			398
Less: billings to date		(141	)		(482	)
	$	29		$	(84	)

Financial Statement Presentation on Uncompleted Information

The above information is presented in the balance sheet as follows:

	September 30, 2012			December 31, 2011
Costs and estimated earnings in excess of billings on uncompleted contracts	$	49		$	15
Billings in excess of costs and estimated earnings on uncompleted contracts		(20	)		(99	)
	$	29		$	(84	)

Estimated useful lives used to compute depreciation and amortization

The estimated useful lives used to compute depreciation and amortization are as follows:

Equipment	3 - 5 years
Demonstration equipment	3 - 5 years
Furniture and fixtures	7 years
Purchased software	3 years
Leased equipment	3 years
Leasehold improvements	Shorter of 5 years or term of lease

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurement [Abstract]

Fair Value Measurement, Cash Equivalent

As of September 30, 2012 and December 31, 2011, cash equivalents consisted of the following:

	September 30, 2012
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		(Losses)		Value
Commercial paper	$	3,024	$	—	$	—	$	3,024
Total included in cash and cash equivalents	$	3,024	$	—	$	—	$	3,024
	December 31, 2011
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		(Losses)		Value
Commercial paper	$	5,316	$	—	$	—	$	5,316
Total included in cash and cash equivalents	$	5,316	$	—	$	—	$	5,316

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Stock Based Compensation and Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Compensation expense recognized for issuance of warrants, stock options, restricted stock grants and stock bonuses
Total stock-based compensation expenses	$ 99	$ 169	$ 377	$ 692
Cost of sales [Member]
Compensation expense recognized for issuance of warrants, stock options, restricted stock grants and stock bonuses
Total stock-based compensation expenses	2	5	6	14
Sales and marketing expense [Member]
Compensation expense recognized for issuance of warrants, stock options, restricted stock grants and stock bonuses
Total stock-based compensation expenses	20	19	61	97
Research and development expense [Member]
Compensation expense recognized for issuance of warrants, stock options, restricted stock grants and stock bonuses
Total stock-based compensation expenses	7	12	46	36
General and administrative expense [Member]
Compensation expense recognized for issuance of warrants, stock options, restricted stock grants and stock bonuses
Total stock-based compensation expenses	$ 70	$ 133	$ 264	$ 545

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Nature of Operations and Summary of Significant Accounting Policies (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial Statement Presentation on Uncompleted Information
Costs and estimated earnings in excess of billings on uncompleted contracts	$ 49	$ 15
Billings in excess of costs and estimated earnings on uncompleted contracts	(20)	(99)
Total Unbilled Revenue	$ 29	$ (84)

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Other Financial Statement Information (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
PROPERTY AND EQUIPMENT
Total property and equipment	$ 2,614	$ 2,601
Less: accumulated depreciation and amortization	(2,150)	(1,950)
Net property and equipment	464	651
Leased equipment [Member]
PROPERTY AND EQUIPMENT
Total property and equipment	89	89
Equipment [Member]
PROPERTY AND EQUIPMENT
Total property and equipment	1,191	1,195
Leasehold improvements [Member]
PROPERTY AND EQUIPMENT
Total property and equipment	381	381
Demonstration equipment [Member]
PROPERTY AND EQUIPMENT
Total property and equipment	4	6
Purchased software [Member]
PROPERTY AND EQUIPMENT
Total property and equipment	376	361
Furniture and fixtures [Member]
PROPERTY AND EQUIPMENT
Total property and equipment	$ 573	$ 569

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Segment Information and Major Customers (Details Textual)	Sep. 30, 2012
Maximum [Member]
Segment Information and Major Customers (Textual) [Abstract]
Concentrations of Credit Risk Accounts Receivable	10.00%
Minimum [Member]
Segment Information and Major Customers (Textual) [Abstract]
Concentrations of Credit Risk Accounts Receivable	10.00%

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidated Statements of Comprehensive Loss [Abstract]
Net loss	$ (1,180)	$ (1,380)	$ (4,215)	$ (5,084)
Foreign currency translation gain	0	24	0	23
Total comprehensive loss	$ (1,180)	$ (1,356)	$ (4,215)	$ (5,061)

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 4: COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases approximately 19 square feet of office and warehouse space located at 5929 Baker Road, Minnetonka, Minnesota. In July 2010, the Company entered into an amendment that extended the term of the lease through January 31, 2018. In consideration for this extension, the landlord provided the Company with a leasehold improvement allowance totaling $191 and a reduction in base rent per square foot. The leasehold allowance was recorded as an addition to deferred rent. The Company is recognizing the leasehold improvement allowance on a straight-line basis as a benefit to rent expense over the life of the lease, along with the existing deferred rent credit balance of $60 as of the date of the amendment. In addition, the amendment contains a rent escalation provision, which also is being recognized on a straight-line basis over the term of the lease. The Company had drawn upon the entire amount of leasehold improvement allowances during the fourth quarter of 2010. The lease requires the Company to maintain a letter of credit in the amount of $240 as collateral which can, in the discretion of the landlord, be reduced or released. The amount of the letter of credit as of September 30, 2012 and December 31, 2011 was $240 and $300, respectively. In addition, the Company leases office space of approximately 10 square feet to support its Canadian operations at a facility located at 4510 Rhodes Drive, Suite 800, Windsor, Ontario under a lease that, as amended, extends through June 30, 2014.

Rent expense under the operating leases was $90 and $279 for the three and nine months ended September 30, 2012, respectively, compared to $92 and $296 for the same periods in the prior year.

Future minimum lease payments for operating leases are as follows:

At September 30, 2012	Lease Obligations
Three months ended December 31, 2012	$	64
2013		259
2014		234
2015		207
2016		199
Thereafter		197
Total future minimum obligations	$	1,160

Litigation

The Company was not party to any material legal proceedings as of November 8, 2012, and there were no such proceedings pending during the period covered by this report.

Revolving Line-of-Credit

In March 2010, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (the “Loan and Security Agreement”), which was most recently amended effective September 30, 2012. The Loan and Security Agreement provides the Company with a revolving line-of-credit at an annual interest rate of prime plus 1.5%. The availability of which is the lesser of (a) $2,500, or (b) the amount available under the Company’s borrowing base (75% of the Company’s eligible accounts receivable plus 50% of the Company’s eligible inventory) minus (1) the dollar equivalent amount of all outstanding letters of credit, (2) 10% of each outstanding foreign exchange contract, (3) any amounts used for cash management services, and (4) the outstanding principal balance of any advances. In connection with the July 2010 lease amendment for the Company’s corporate offices, Silicon Valley Bank issued a letter of credit which as of September 30, 2012 was in the amount of $240, which effectively reduced the capacity amount under the Loan and Security Agreement to $2,260, subject to the borrowing base availability and continued compliance with restrictive covenants. As of September 30, 2012, the amount available to the Company under the loan and security agreement was $686. There was no outstanding balance as of September 30, 2012.

The amendment which became effective September 30, 2012 adjusted the minimum tangible net worth requirement to $3,000 for the month ending September 30, 2012, to $2,500 for the months ending October 31, 2012, November 30, 2012 and December 31, 2012, and to $1,400 for the months ending January 31, 2013, February 28, 2013, and through the maturity date of March 13, 2013. It further established that the minimum tangible net worth requirement increases (a) by 75% of the Company’s net income for each month starting with the month ending September 30, 2012 and (b) by 75% of the gross proceeds received from the Company’s issuances of equity during such month and/or the principal amount of subordinated debt incurred by the Company during such month, but excluding the gross proceeds from the Company’s September 2012 registered direct offering of equity securities. The Company must comply with this tangible net worth minimum in order to draw on such line of credit and also while there are outstanding credit extensions (other than the Company’s existing lease letter of credit). The maximum permitted amount of outstanding letters of credit is $300.

Under the Loan and Security Agreement, the Company is generally required to obtain the prior written consent of Silicon Valley Bank to, among other things, (a) dispose of assets, (b) change its business, (c) liquidate or dissolve, (d) change CEO or COO (replacements must be satisfactory to the lender), (e) enter into any transaction in which the Company’s shareholders who were not shareholders immediately prior to such transaction own more than 40% of the Company’s voting stock (subject to limited exceptions) after the transaction, (f) merge or consolidate with any other person, (g) acquire all or substantially all of the capital stock or property of another person, or (h) become liable for any indebtedness (other than permitted indebtedness). The line of credit is secured by all assets of the Company. The Loan and Security Agreement matures on March 13, 2013.

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Other Financial Statement Information (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
DEFERRED REVENUE
Deferred software maintenance	$ 550	$ 459
Customer deposits and deferred project revenue	53	228
Deferred Revenue, Total	$ 603	$ 687

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Segment Information and Major Customers (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Geographic segments of property and equipment
Total	$ 464	$ 651
United States [Member]
Geographic segments of property and equipment
Total	422	596
Canada [Member]
Geographic segments of property and equipment
Total	$ 42	$ 55

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Nature of Operations and Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of Uncompleted contracts
Cost incurred on uncompleted contracts	$ 25	$ 112
Estimated earnings	145	286
Revenue recognized	170	398
Less: billings to date	(141)	(482)
Total Unbilled Revenue	$ 29	$ (84)