Document_And_Entity_Informatio
Document And Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 10, 2014 | |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Registrant Name | 'Inventergy Global, Inc. | ' |
Entity Central Index Key | '0001084752 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Trading Symbol | 'INVT | ' |
Entity Common Stock, Shares Outstanding | ' | 26,782,833 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets | ' | ' |
Cash and cash equivalents | $232,448 | $1,518,684 |
Restricted cash | 3,500,000 | 0 |
Accounts receivable | 245,558 | 0 |
Inventories | 267,652 | 0 |
Prepaid expenses and other current assets | 254,519 | 73,207 |
Deferred expenses, current | 3,000,000 | 0 |
Total current assets | 7,500,177 | 1,591,891 |
Property and equipment, net | 46,518 | 0 |
Deferred expenses | 11,695,104 | 13,510,178 |
Patents, net | 10,802,988 | 9,162,409 |
Intangible assets, net | 1,252,533 | 0 |
Goodwill | 8,858,504 | 0 |
Deposits and other assets | 37,883 | 20,399 |
Total assets | 40,193,707 | 24,284,877 |
Current liabilities | ' | ' |
Accounts payable | 1,981,216 | 602,564 |
Accrued expenses and other current liabilities | 549,294 | 0 |
Accrued interest on notes payable | 80,000 | 6,935 |
Short-term notes payable | 500,000 | 0 |
Short-term notes payable, related party | 0 | 3,100,000 |
Guaranteed payments, current | 4,704,397 | 0 |
Convertible notes payable, net of discount, current | 4,684,396 | 0 |
Warranty reserve | 38,143 | 0 |
Total current liabilities | 12,537,446 | 3,709,499 |
Deferred rent | 0 | ' |
Guaranteed payments | 12,757,651 | 13,510,178 |
Derivative liabilities | 462,158 | 591,901 |
Convertible notes payable, net of discount | 3,065,533 | 2,327,217 |
Total liabilities | 28,822,788 | 20,138,795 |
Redeemable convertible preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 and 6,176,748 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively (aggregate liquidation preference of $0 at September 30, 2014 and $19,827,361 at December 31, 2013) | 0 | 3,392,950 |
Stockholders' equity | ' | ' |
Preferred stock, $0.001 par value, 10,000,000 shares authorized Series A convertible preferred stock: 6,176,748 shares designated, 3,826,990 shares issued and outstanding at September 30, 2014. Series B convertible preferred stock: 2,750 shares designated, 1,102 shares issued and outstanding at September 30, 2014. | 21,779,693 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized, 23,937,559 and 11,505,039 shares issued and outstanding at September 30, 2014 and December 31, 2013 | 23,938 | 1,150 |
Additional paid-in capital | 24,576,308 | 5,483,054 |
Deficit accumulated | -35,009,020 | -4,731,072 |
Total stockholders' equity | 11,370,919 | 753,132 |
Total liabilities, redeemable convertible preferred stock and stockholders' equity | $40,193,707 | $24,284,877 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 23,937,559 | 11,505,039 |
Common stock, shares outstanding | 23,937,559 | 11,505,039 |
Redeemable Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 6,176,748 |
Preferred stock, shares outstanding | 0 | 6,176,748 |
Temporary equity, liquidation preference | $0 | $19,827,361 |
Series A Convertible Preferred Stock [Member] | ' | ' |
Preferred stock shares designated | 6,176,748 | ' |
Preferred stock, shares issued | 3,826,990 | ' |
Preferred stock, shares outstanding | 3,826,990 | ' |
Series B Convertible Preferred Stock [Member] | ' | ' |
Preferred stock shares designated | 2,750 | ' |
Preferred stock, shares issued | 1,102 | ' |
Preferred stock, shares outstanding | 1,102 | ' |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | $306,603 | $0 | $353,646 | $0 |
Cost of revenues | 339,795 | 0 | 418,000 | 0 |
Gross loss | -33,192 | 0 | -64,354 | 0 |
Operating Expenses | ' | ' | ' | ' |
General and administrative | 2,559,474 | 1,807,204 | 8,996,860 | 2,600,350 |
Patent amortization expense | 387,585 | 104,731 | 1,012,956 | 157,097 |
Total operating expenses | 2,947,059 | 1,911,935 | 10,009,816 | 2,757,447 |
Loss from operations | -2,980,251 | -1,911,935 | -10,074,170 | -2,757,447 |
Other income (expense) | ' | ' | ' | ' |
Loss on extinguishment of notes payable | 0 | 0 | -2,403,193 | 0 |
Decrease (increase) in fair value of derivative liabilities | 271,804 | 536,544 | 667,448 | 536,544 |
Interest expense, net | -229,231 | -206,472 | -525,391 | -209,208 |
Total other (expense), net | 42,573 | 330,072 | -2,261,136 | 327,336 |
Loss before provision for income taxes | -2,937,678 | -1,581,863 | -12,335,306 | -2,430,111 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net loss | ($2,937,678) | ($1,581,863) | ($12,335,306) | ($2,430,111) |
Basic and diluted loss per share | ($0.15) | ($0.19) | ($0.79) | ($0.30) |
Weighted average shares outstanding basic and diluted | 19,852,019 | 8,408,589 | 15,698,206 | 7,979,782 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities | ' | ' |
Net loss | ($12,335,306) | ($2,430,111) |
Adjustments to reconcile net loss to net cash used in operating activities | ' | ' |
Depreciation expense | 5,668 | 0 |
Loss on extinguishment of notes payable | 2,403,193 | 0 |
Decrease in fair value of derivative liabilities | -667,448 | -536,544 |
Amortization of discount on notes payable | 298,885 | 201,719 |
Amortization of patents and acquired contracts | 1,102,423 | 157,097 |
Stock-based compensation | 2,238,184 | 1,166,931 |
Changes in operating assets and liabilities | ' | ' |
Accounts receivable | -245,558 | 0 |
Inventories | 47,294 | 0 |
Prepaid expenses and other current assets | -155,523 | -22,757 |
Deposits and other assets | -17,484 | -17,549 |
Accounts payable | 1,386,113 | 133,283 |
Accrued expenses and other current liabilities | 549,294 | 0 |
Accrued interest on notes payable | 73,065 | 3,667 |
Net cash used in operating activities | -5,317,200 | -1,344,264 |
Cash flows from investing activities | ' | ' |
Restricted cash | -3,500,000 | 0 |
Purchases of property and equipment | -52,186 | 0 |
Issuance of short-term note receivable, related party | -3,000,000 | 0 |
Purchases of patents | 0 | -4,189,255 |
Cash and other assets received in acquisition | 790,172 | 0 |
Net cash used in investing activities | -5,762,014 | -4,189,255 |
Cash flows from financing activities | ' | ' |
Proceeds from issuance of common stock, net of issuance costs | 6,487,850 | 3,548,343 |
Proceeds from issuance of convertible notes payable, net of issuance costs | 2,905,128 | 4,950,000 |
Proceeds from issuance of notes payable | 500,000 | 0 |
Payments on short-term notes payable, related party | -100,000 | 0 |
Net cash provided by financing activities | 9,792,978 | 10,046,869 |
Net increase in cash and cash equivalents | -1,286,236 | 4,513,350 |
Cash and cash equivalents, beginning of period | 1,518,684 | 0 |
Cash and cash equivalents, end of period | 232,448 | 4,513,350 |
Supplemental disclosures of cash flow information | ' | ' |
Cash paid for interest | 159,822 | 0 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosures of non-cash investing and financing activities | ' | ' |
Convert outstanding LLC accrued liabilities to member contribution, January 2013 | 0 | 12,783 |
Allocation of fair value from Series A-2 redeemable convertible preferred stock to Series A-1 redeemable convertible preferred stock (See Note 7) | 0 | 865,985 |
Allocation of fair value from notes payable to Series A-1 redeemable convertible preferred stock (See Note 6) | 0 | 2,392,889 |
Fair value of notes payable redemption derivative liability | 0 | 582,903 |
Fair value of Series A-1 redeemable convertible preferred stock anti-dilution derivative liability | 0 | 548,465 |
Accrued guaranteed payments and deferred expenses associated with purchased patent assets | 3,951,870 | 0 |
Offset of short-term related party notes payable and receivable | 3,000,000 | 3,000,000 |
Fair value of convertible notes payable redemption derivative liability | 316,200 | 518,013 |
Fair value of common stock warrants | 145,958 | 0 |
Acquisition of patents | 2,653,533 | 0 |
Transfer of Series A redeemable convertible preferred stock to preferred stock | 3,392,950 | 0 |
Series A-1 Redeemable Convertible Preferred Stock [Member] | ' | ' |
Cash flows from financing activities | ' | ' |
Proceeds from issuance of redeemable convertible preferred stock | 0 | 50,000 |
Series A-2 Redeemable Convertible Preferred Stock [Member] | ' | ' |
Cash flows from financing activities | ' | ' |
Proceeds from issuance of redeemable convertible preferred stock | $0 | $1,498,526 |
Organization
Organization | 9 Months Ended | ||
Sep. 30, 2014 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||
Organization | ' | ||
1 | Organization | ||
Inventergy Global, Inc. (“Inventergy” or “Company”) is an intellectual property (IP) investment and licensing company that helps technology-leading corporations attain greater value from their IP assets in support of their business objectives and corporate brands. Inventergy, Inc. was initially organized as a Delaware limited liability company under the name Silicon Turbine Systems, LLC in January 2012. It subsequently changed its name to Inventergy, LLC in March 2012 and it was converted from a limited liability company into a Delaware corporation in February 2013. On June 6, 2014, a subsidiary (“Merger Sub”) of eOn Communications Corporation (“eOn”) merged with and into Inventergy, Inc. (the “Merger”). As a result of the Merger, eOn changed its name to “Inventergy Global, Inc.” The Company is headquartered in Campbell, California. | |||
The Company operates in a single industry segment. | |||
In June of 2014, in conjunction with the Merger, the Company underwent a one-for-two reverse stock split. All shares disclosed in this quarterly report are reflected post-split. | |||
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||
Sep. 30, 2014 | |||
Accounting Policies [Abstract] | ' | ||
Summary of Significant Accounting Policies | ' | ||
2 | Summary of Significant Accounting Policies | ||
Basis of presentation | |||
The financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). | |||
Liquidity | |||
The Company’s financial statements have been prepared on a going-concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company’s liquidity and capital needs relate primarily to working capital and other general corporate requirements. The Company’s operations do not currently provide cash flow. To date, the Company has funded its operations with the issuance of notes and convertible notes, by the sale of preferred and common stock and through private placement offerings. The business will require significant amounts of capital in the near term to sustain operations and make the investments it needs to continue operations and execute its longer term business plan. The Company had cash and cash equivalents of $232,448 and net working capital of $(5,037,267) as of September 30, 2014. The total current assets included restricted cash of $3,500,000 in a segregated account which was pledged to collateralize the Secured Convertible Notes (as defined below, and which were paid back in full on October 2, 2014 as described in Note 11 below) and could not be used in support of on-going operations. The Company’s net loss for the nine months ended September 30, 2014 was $12,335,306 and the accumulated deficit amount was $35,009,020 as of September 30, 2014. Given the subsequent financing more fully described in Note 11 below, the Company will be able to conduct its planned operations using currently available capital resources for less than twelve months. The Company's ability to sustain its operations is dependent upon its ability to generate future revenue from operations and/or to obtain the necessary financing to meet the Company's obligations and repay our liabilities arising from normal business operations when they come due. | |||
In order to implement its business plan and become cash flow positive, management’s plan includes raising capital by equity and/or debt financing as needed. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. Management also cannot provide any assurance that unforeseen circumstances will not increase the need for the Company to raise additional capital on an immediate basis. There can be no assurance that the Company will be able to continue to raise funds if at all when needed, or on terms acceptable to the Company in which case the Company may be unable to continue its operations or to meet its obligations at such time. | |||
On October 1, 2014, the Company entered into a Revenue Sharing and Note Purchase Agreement with affiliates of Fortress Investment Group, LLC. Pursuant to the agreement, the Company issued an aggregate of $11,000,000 in original principal amount of senior secured notes. As a result of the issuance of the Fortress Notes (as defined below) and the sale of 500,000 shares of the Company’s common stock (the “Fortress Shares”), after the payment of all purchaser-related fees and expenses relating to the issuance of the Fortress Notes and Fortress Shares, the Company received net proceeds of $10,415,121. See Note 11 for a detailed description of the transaction. | |||
Management estimates and related risks | |||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Although these estimates reflect management's best estimates, it is at least reasonably possible that a material change to these estimates could occur in the near term. | |||
Cash and cash equivalents | |||
The Company considers all highly liquid financial instruments with original maturities of three months or less at the time of purchase to be cash equivalents. | |||
Restricted cash | |||
At September 30, 2014, the Company held restricted cash of $3,500,000 pledged to collateralize the Secured Convertible Notes (as defined below). The Secured Convertible Notes were paid back in full on October 2, 2014, as described in further detail in Note 11. | |||
Accounts Receivable | |||
Accounts receivable are stated net of allowances for doubtful accounts. The Company typically grants standard credit terms to customers in good credit standing. The Company generally reserves for estimated uncollectible accounts on a customer-by-customer basis, which requires judgment about each individual customer’s ability and intention to fully pay account balances. The Company makes these judgments based on knowledge of and relationships with customers and current economic trends, and updates estimates on a monthly basis. Any changes in estimate, which can be significant, are included in earnings in the period in which the change in estimate occurs. As of September 30, 2014, the Company has not establish any reserves for uncollectable accounts. | |||
Inventories | |||
Inventories consist of finished goods and some component and spare parts. Inventory is valued at the lower of cost or market with cost determined utilizing standard cost which approximates the first-in, first-out (FIFO) method. The Company performs an analysis of slow-moving or obsolete inventory on a regular basis and any changes in valuation reserves, which could potentially be significant, are included in earnings in the period in which the evaluations are completed. | |||
Property and equipment | |||
Property and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets (or the term of the lease, if shorter), which range from three to five years. Routine maintenance and repair costs are expensed as incurred. The costs of major additions, replacements and improvements are capitalized. Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation is removed and any resulting gain or loss is credited or charged to operations. | |||
Patents | |||
Patents, including acquisition costs, are stated at cost, less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally 7 – 10 years. Upon retirement or sale, the cost of assets disposed and the related accumulated amortization are removed from the accounts and any resulting gain or loss is credited or charged to operations. Patents are utilized for the purpose of generating licensing revenue. | |||
Intangible Assets | |||
Intangible assets consist of certain contract rights acquired in the Merger. Intangible assets are amortized on a straight-line basis over their estimated useful life of five years. | |||
Goodwill | |||
Goodwill represents the excess of the aggregate purchase price over the fair value of the net tangible and identifiable intangible assets acquired by the Company. The carrying amount of goodwill will be tested for impairment annually or more frequently if facts and circumstances warrant a review. The Company determined that it is a single reporting unit for the purpose of goodwill impairment tests. For purposes of assessing the impairment of goodwill, the Company estimates the value of the reporting unit using its market capitalization as the best evidence of fair value. This fair value is then compared to the carrying value of the reporting unit. | |||
Impairment of long-lived assets | |||
The Company evaluates the carrying value of long-lived assets on an annual basis, or more frequently whenever circumstances indicate a long-lived asset may be impaired. When indicators of impairment exist, the Company estimates future undiscounted cash flows attributable to such assets. In the event cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair value. There were no asset impairments for the three months and nine months ended September 30, 2014. | |||
Concentration of credit risk | |||
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. Cash and cash equivalents are deposited with high quality financial institutions. Periodically, such balances are from time to time in excess of federally insured limits. | |||
Stock-based compensation | |||
The Company has a stock option plan under which incentive and non-qualified stock options and restricted stock awards (“RSAs”) are granted primarily to employees. All share-based payments to employees, including grants of employee stock options and RSAs, are recognized in the financial statements based on their respective grant date fair values. The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow. | |||
The Company estimates the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods in the Company's statements of comprehensive income or loss. The Company has estimated the fair value of each award as of the date of grant using the Black-Scholes option pricing model. The fair value of RSAs is calculated as the fair value of the underlying stock multiplied by the number of shares awarded. The awards issued consist of fully-vested stock awards, performance-based restricted shares, and service-based restricted shares. | |||
Expenses related to stock-based awards issued to non-employees are recognized at fair value on a recurring basis in the periods those awards are expected to vest. The Company estimates the fair value of the awards using the Black-Scholes option pricing model. | |||
Income taxes | |||
The Company accounts for income taxes using the asset and liability method whereby deferred tax asset and liability account balances are determined based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when it is more likely than not that deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon future pretax earnings, the reversal of temporary differences between book and tax income, and the expected tax rates in future periods. | |||
The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount that is initially recognized. | |||
It is the Company’s practice to recognize interest and penalties related to income tax matters in income tax expense. As of September 30, 2014 and 2013, the Company had no interest and penalties related to income taxes. | |||
Fair value measurements | |||
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs within the fair value hierarchy. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. | |||
The following methods and assumptions were used to estimate the fair value of financial instruments: | |||
· | Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets. | ||
· | Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | ||
· | Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. | ||
The category within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | |||
Recently Adopted Accounting Standards | |||
In June 2014, the FASB issued Accounting Standards Update ("ASU") ASU 2014-10 Development Stage Entities. The amendments in ASU 2014-10 remove the definition of a development stage entity from Topic 915 Development Stage Entities, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of operations, cash flows, and shareholder's equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company could early adopt ASU 2014-10 for any annual reporting period or interim period for which the entity's financial statements have not yet been issued. The Company elected to adopt this ASU beginning with the June 30, 2014 Quarterly Report on Form 10-Q and its adoption resulted in the removal of inception-to-date information in the Company's statements of operations and cash flows. | |||
Business_Combination
Business Combination | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Business Combinations [Abstract] | ' | |||||||||||||
Business Combination | ' | |||||||||||||
3 | Business Combination | |||||||||||||
The Merger was consummated on June 6, 2014, as a result of which Inventergy, Inc. merged with and into Merger Sub and holders of Inventergy, Inc. securities were issued securities of the Company. Upon the consummation of the Merger, the Company changed its name from “eOn Communications Corporation” to “Inventergy Global, Inc.” and effected a one-for-two reverse stock split of the Company’s common stock (the “Reverse Split”). | ||||||||||||||
In connection with the consummation of the Merger: | ||||||||||||||
(i) each share of the pre-Merger Inventergy, Inc. common stock was exchanged for 1.4139 shares of Company common stock on a post-Reverse Split basis (the “Exchange Ratio”); | ||||||||||||||
(ii) the pre-Merger Inventergy, Inc. Series A Preferred Stock was exchanged for a like number of newly-created Company Series A Preferred Stock; | ||||||||||||||
(iii) options and restricted shares of pre-Merger Inventergy, Inc. common stock awarded pursuant to the Inventergy 2014 Stock Plan (such stock plan being adopted by the stockholders of the Company in connection with the Merger) and outstanding immediately prior to the consummation of the Merger were converted into awards of options to purchase Company common stock and restricted shares of Company common stock with terms and conditions identical to the terms and conditions of the corresponding options to purchase Inventergy, Inc. common stock and awards of restricted shares of Inventergy, Inc. common stock (as adjusted for the Exchange Ratio); and | ||||||||||||||
(iv) outstanding warrants to purchase pre-Merger Inventergy, Inc. common stock were exchanged for warrants to acquire Company common stock with terms and conditions identical to the terms and conditions of the corresponding warrants to purchase Inventergy, Inc. common stock (as adjusted for the Exchange Ratio). | ||||||||||||||
Immediately following the consummation of the Merger, the Company had 20,018,028 shares of common stock, 6,176,748 shares of Series A Preferred Stock and 2,231 shares of Series B Preferred Stock issued and outstanding. In addition, it had warrants to purchase 700,937 shares of common stock outstanding and placement agent warrants to purchase 238,412 shares of common stock outstanding. | ||||||||||||||
The Transition Transactions | ||||||||||||||
In connection with the Merger, on December 17, 2013, eOn, Cortelco Systems Holding Corp., a Delaware corporation and wholly-owned subsidiary of eOn (“Cortelco Holding”), eOn Communications Systems, Inc., a Delaware corporation and wholly-owned subsidiary of eOn (“eOn Subsidiary”), and Cortelco, Inc., a Delaware corporation and wholly-owned subsidiary of Cortelco Holding (“Cortelco”) entered into a transition agreement (the “Transition Agreement”). The Transition Agreement provided for several transactions among eOn and its subsidiaries in connection with, and subject to the completion of, the Merger. Each of these transactions were consummated at the time the Merger became effective (the “Effective Time”), including the following (collectively, the “Transition Transactions”): | ||||||||||||||
(1) eOn and Cortelco each transferred certain contracts and other assets to eOn Subsidiary, and eOn Subsidiary assumed the liabilities associated with such contracts on and after the date of assumption; | ||||||||||||||
(2) eOn Subsidiary purchased from Cortelco certain inventory for a purchase price equal to Cortelco’s book value of such inventory; | ||||||||||||||
(3) eOn and Cortelco Holding redeemed in full those certain contingent notes in the maximum initial amount of $11 million (collectively, the “Contingent Note”) in consideration of paying the holders of the Contingent Note either cash in the aggregate amount of $300,000 or shares of Cortelco Holding owned by eOn; | ||||||||||||||
(4) Cortelco entered into a fulfillment services agreement with eOn Subsidiary providing for certain services to be conducted on behalf of eOn Subsidiary after the Merger; | ||||||||||||||
(5) the Company transferred to Cortelco Holding (i) all of its ownership in Cortelco Systems Puerto Rico, Inc., and Symbio Investment Corp., and (ii) eOn’s right to require David S. Lee, former Chairman of eOn, to purchase its investment in Symbio Investment Corp.; and | ||||||||||||||
(6) the Company and Cortelco Holding entered into an indemnity agreement providing that Cortelco will indemnify the Company from and against any future losses arising from the Contingent Note and certain other matters. | ||||||||||||||
Upon completion of the Merger and the Transition Transactions, the Company owns all of the outstanding stock of Inventergy, Inc. and eOn Subsidiary and has transferred certain assets held prior to the Merger and no longer owns an interest in Cortelco Holding, Cortelco, Cortelco Systems Puerto Rico, Inc., or Symbio Investment Corp. | ||||||||||||||
As of September 30, 2014, the total purchase consideration and the purchase price allocation were as follows: | ||||||||||||||
Fair value of assumed equity allocated to purchase consideration | $ | 10,985,867 | ||||||||||||
Total purchase consideration | $ | 10,985,867 | ||||||||||||
Goodwill | $ | 8,858,504 | ||||||||||||
Intangible asset contract rights | 1,342,000 | |||||||||||||
Other assets acquired | 816,045 | |||||||||||||
Liabilities assumed | -30,682 | |||||||||||||
Total purchase allocation | $ | 10,985,867 | ||||||||||||
Goodwill of $8,858,504, which is not deductible for tax purposes, was recognized as a result of the Merger. Intangible assets of $1,342,000, consist of certain contract rights acquired in the Merger. Intangible assets are amortized on a straight-line basis over their estimated useful life of five years. | ||||||||||||||
Acquisition-related costs directly attributable to the business combination totaling $1,237,641 for the nine months ended September 30, 2014 were expensed as incurred in the consolidated statements of operations. | ||||||||||||||
The consideration in the Merger was based on fair value of equity retained by eOn shareholders on June 6, 2014, the date of the Merger close. The historical financial information is that of Inventergy, Inc. | ||||||||||||||
Supplemental Pro Forma Information. The financial information in the table below summarizes the results of operations of the Company following the consummation of the Merger, on a pro forma basis, as though the companies had been combined as of the beginning of fiscal 2013. The pro forma financial information is presented for informational purposes only for the purpose of comparing the nine months ended September 30, 2014 with the nine months ended September 30, 2013 and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2013 or of results that may occur in the future. | ||||||||||||||
For the three months ended September 30, | For the nine months ended | |||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue (1) | $ | 306,603 | $ | 177,000 | $ | 756,613 | $ | 549,000 | ||||||
Net loss (2) | $ | 2,870,467 | $ | 1,864,853 | $ | 11,668,286 | $ | 3,498,300 | ||||||
-1 | Revenue for the three months ended September 30, 2014 and 2013 is from the Company’s access control security product lines acquired in the Merger. | |||||||||||||
-2 | Pro forma net loss was adjusted to exclude Merger related expenses of $0 and $1,250,000 for the three months ended September 30, 2014 and 2013, respectively, and $1,237,641 and $1,250,000 for the nine months ended September 30, 2014 and 2013, respectively. Additional expense for the amortization of acquired intangible assets of $0 and $67,100 for the three months ended September 30, 2014 and 2013, respectively, and $111,833 and $201,300 for the nine months ended September 30, 2014 and 2013, respectively, was included in the net loss. | |||||||||||||
Patents
Patents | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||
Patents | ' | |||||||||||||
4. Patents | ||||||||||||||
Patent intangible assets consist of the following at September 30, 2014: | ||||||||||||||
Weighted Average Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||
Amortizable intangible assets: | ||||||||||||||
Patents | 8 | $ | 12,109,118 | $ | -1,306,130 | $ | 10,802,988 | |||||||
Total patent intangible assets | $ | 12,109,118 | $ | -1,306,130 | $ | 10,802,988 | ||||||||
The Company expects amortization expense to be approximately $1,550,334 per year for each of the next seven years and a pro rata portion in the eighth year. | ||||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||
Fair Value Measurements | ' | |||||||||||||
5 | Fair Value Measurements | |||||||||||||
The following table summarizes the Company's assets and liabilities measured at fair value on a recurring basis at September 30, 2014: | ||||||||||||||
Fair Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Convertible promissory notes payable derivative liability | $ | 316,200 | $ | - | $ | - | $ | 316,200 | ||||||
Common stock warrants | 145,958 | - | - | 145,958 | ||||||||||
Total | $ | 462,158 | $ | - | $ | - | $ | 462,158 | ||||||
As discussed in Note 6, prior to the Merger, the Company issued secured promissory notes (the “Senior Secured Notes”) which were redeemable upon an event of default. The Senior Secured Notes were later exchanged in favor of new convertible notes (the “Amended Secured Convertible Notes”), resulting in an extinguishment of the related derivative liability for the prior Senior Secured Notes. Also discussed in Note 6, the Company also then issued certain additional new convertible notes (the “New Secured Convertible Notes”) which may be redeemed upon an event of default (together with the Amended Secured Convertible Notes, the “Secured Convertible Notes”). Since the Secured Convertible Notes were issued at a substantial discount and the event of default clause may require accelerated repayment, the Secured Convertible Notes include an embedded derivative that is not clearly and closely related to the host contract. Accordingly, the Company bifurcated the embedded derivative from the host contract and recognized a derivative liability at fair value upon issuance of the Secured Convertible Notes. The Company estimated the fair value of the derivative liability using a valuation model which included the weighted probability of the amount of redemption and the time until redemption occurs over the note term. | ||||||||||||||
In May 2013, the Company sold Series A-1 redeemable convertible preferred stock (“Series A-1 Preferred Stock”) which contained provisions for anti-dilution protection in the event the Company issues common stock at a price below a price per share formula, as defined. At September 30, 2014, the threshold price was $1.14 per share. The anti-dilution protection requires the Company to issue the holders of Series A-1 Preferred Stock shares of common stock or in the event of unavailable authorized shares of common stock, cash. The anti-dilution provision represents an embedded derivative as it is not clearly and closely related to the host contract. Accordingly, the Company bifurcated the embedded derivative from the host contract and recognized a derivative liability at fair value upon issuance of the Series A-1 Preferred Stock. The Company estimated the fair value of the derivative liability using the Monte Carlo option pricing valuation model which included a probability weighted present value calculation. Post Merger, the Series A-1 Preferred Stock are no longer redeemable. Therefore, these were transferred to Series A Preferred Stock within the Stockholders' equity. | ||||||||||||||
As discussed in Note 7, in January 2014, the Company issued warrants to purchase 238,412 shares common stock at an exercise price of $3.04 to a placement agent. The exercise price is subject to adjustment and the warrants may be exercised without cash consideration in lieu of forfeiting a portion of shares. Accordingly, the Company recognized a derivative liability at fair value upon issuance of the warrants. The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model. The fair value of the derivative liability as of September 30, 2014 was estimated using the following assumptions: | ||||||||||||||
Expected volatility | 60 | % | ||||||||||||
Risk free rate | 1.51 | % | ||||||||||||
Dividend yield | 0 | % | ||||||||||||
Expected term (in years) | 4.3253 | |||||||||||||
The assumptions utilized were derived in a similar manner as discussed in Note 7 related to the fair value of stock options. | ||||||||||||||
The Company revalues the derivative liabilities at the end of each reporting period using the same models as at issuance, updated for new facts and circumstances, and recognizes the change in the fair value in the statements of operations as other income (expense). The following sets forth a summary of changes in fair value of the Company’s level 3 liabilities measured on a recurring basis for the nine months ended September 30, 2014: | ||||||||||||||
Series A-1 | ||||||||||||||
Convertible | Preferred | Common | ||||||||||||
Notes Payable | Stock | Stock | ||||||||||||
Derivative Liability | Derivative Liability | Warrants | ||||||||||||
Balance at December 31, 2013 | $ | 534,975 | $ | 56,926 | $ | - | ||||||||
Extinguishment | -118,300 | - | - | |||||||||||
Fair value at issuance | 189,300 | - | 466,706 | |||||||||||
Change in fair value | -289,775 | -56,926 | -320,748 | |||||||||||
Balance at September 30, 2014 | $ | 316,200 | $ | - | $ | 145,958 | ||||||||
Borrowing_Arrangements
Borrowing Arrangements | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Debt Disclosure [Abstract] | ' | ||||
Borrowing Arrangements | ' | ||||
6. Borrowing Arrangements | |||||
On May 10, 2013, the Company issued senior secured promissory notes (the “Senior Secured Notes”) with an aggregate principal of $5,000,000 for proceeds of $4,950,000. In conjunction with the issuance of the Senior Secured Notes, proceeds of $50,000 were received in exchange for 5,000,000 shares of Series A-1 Preferred Stock. Also, on May 17, 2013, proceeds of $1,498,526 were received in exchange for shares of Series A-2 redeemable convertible preferred stock (“Series A-2 Preferred Stock”, and together with Series A-1 Preferred Stock, “Series A Preferred Stock”) to substantially the same investors. Total proceeds from the Senior Secured Notes, Series A-1 Preferred Stock, and Series A-2 Preferred Stock were allocated to each instrument using the relative fair value method. The fair value allocated to the Senior Secured Notes was $2,557,111. Further discussion regarding the allocation of proceeds is included in Note 7. On March 26, 2014, the Senior Secured Notes were amended and restated to allow for conversion to common stock and to amend the interest rate (“Amended Secured Convertible Notes”). In conjunction with the amendment, the Company recorded a loss on extinguishment of the Senior Secured Notes of $2,403,193 in the accompanying statements of operations. | |||||
On March 26, 2014, the Company issued additional convertible promissory notes (the “New Secured Convertible Notes”) with an aggregate principal of $3,000,000 with similar terms and conditions as the Amended Secured Convertible Notes. | |||||
The Amended Secured Convertible Notes and New Secured Convertible Notes (collectively, the “Secured Convertible Notes”) would have been payable in quarterly installments beginning in October 2014 through July 2018 and bore interest at 4% per annum. Had the Secured Convertible Notes been fully collateralized by the restricted cash amount equaling the remaining balance of the principal and any interest due, the interest rate would have been reduced to 2%. The Secured Convertible Notes were secured by certain patents and other assets of the Company and all principal and accrued but unpaid interest was due upon maturity. The Secured Convertible Notes could have been converted to a number of shares of common stock at the option of the holder by dividing the principal amount the holder desires to convert by $5.30. The maturity date of the Secured Convertible Notes could have been accelerated upon certain events of default or change in control. Upon such events, the Secured Convertible Notes could have been redeemed for 125% of the principal to be redeemed plus accrued but unpaid interest and late charges, if any. Further discussion regarding the fair value measurement of the redemption provision is included in Note 5. The outstanding principal and accrued interest on the Secured Convertible Notes as of September 30, 2014 was $7,749,929, net of an unamortized discount of $250,071. The Secured Convertible Notes were paid back in full on October 2, 2014 as described in further detail in Note 11. | |||||
On December 19, 2013 and December 31, 2013, the Company issued promissory notes (the “December 2013 Notes”) to the Company’s Chief Executive Officer, a related party, for $3,000,000 and $100,000 totaling an aggregate principal of $3,100,000. The Company also incurred a loan origination fee of $60,000 upon issuance of the December 2013 Notes. The December 2013 Notes, originally scheduled to mature in February 2014, were extended to August 31, 2014 and bore interest at 2% per annum. The Company fully repaid the $100,000 unsecured related party note as part of the December 2013 Notes. The $3,000,000 note was secured by certain patent assets of the Company and all principal and accrued but unpaid interest on the December 2013 Notes were due upon maturity. | |||||
On February 10, 2014, the Company obtained an unsecured promissory note receivable (the “Note Receivable”) from the Company’s Chief Executive Officer, a related party, with an aggregate principal of $3,000,000. The Note Receivable which matured on August 31, 2014 bore interest at 2% per annum. All principal and accrued but unpaid interest was receivable upon maturity. The Note Receivable included a full right of offset with the December 2013 Notes. The Company’s board of directors, excluding the Chief Executive Officer’s vote, approved the Note Receivable prior to issuance. Effective February 11, 2014, the December 2013 Notes and Note Receivable were fully offset and deemed paid. | |||||
On August 1, 2014, the Company obtained an unsecured promissory note payable (the “FRB Note”) from First Republic Bank with an aggregate principal of $500,000. The FRB Note, which was to mature on November 1, 2014, bore interest at 1.3% per annum. All principal and accrued, but unpaid interest, was payable upon maturity. The FRB Note was collateralized by a deposit account of the Company’s Chief Executive Officer, a related party. The FRB Note was repaid in full on October 3, 2014 as described in Note 11. | |||||
Total Secured Convertible Notes payable at September 30, 2014 was comprised of the following: | |||||
Total Secured Convertible Notes payable outstanding | $ | 8,000,000 | |||
Less: unamortized discount | -250,071 | ||||
Convertible notes payable, net of discount | $ | 7,749,929 | |||
Amortization of the discount on Secured Convertible Notes payable is computed using the straight line method over the note term and is included in interest expense in the accompanying statements of operations. The straight line method of amortization is not materially different than the effective interest method. Amortization of the discount was $17,050 for the three months ended September 30, 2014 and $185,474 for the nine months ended September 30, 2014. | |||||
Stockholders_Equity
Stockholders' Equity | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Stockholders Equity Note [Abstract] | ' | ||||||||||||||||
Stockholders' Equity | ' | ||||||||||||||||
7. Stockholders' Equity | |||||||||||||||||
Conversion from LLC | |||||||||||||||||
In January 2013, Inventegy, Inc.’s sole member converted all then outstanding liabilities, to the member, to member contributions. In February 2013, a plan of conversion was entered into, pursuant to which the membership interest in the former LLC held by the sole member was exchanged for 5,000,000 shares of the Company’s common stock, par value $0.0001. | |||||||||||||||||
Common stock | |||||||||||||||||
The Company is authorized to issue up to 110,000,000 shares, of which 100,000,000 shares have been designated as common stock and 10,000,000 shares as preferred stock. Holders of the Company's common stock are entitled to dividends if and when declared by the Board of Directors. The holders of each share of common stock shall have the right to one vote for each share and are entitled, as a share class, to elect two directors of the Company. | |||||||||||||||||
Shares of common stock reserved for future issuance were as follows as of September 30, 2014: | |||||||||||||||||
Series A convertible preferred stock | 5,410,982 | ||||||||||||||||
Series B convertible preferred stock | 514,819 | ||||||||||||||||
Convertible notes payable | 1,508,162 | ||||||||||||||||
Options to purchase common stock | 2,267,918 | ||||||||||||||||
Shares reserved for issuance pursuant to 2014 Stock Plan | 1,000,311 | ||||||||||||||||
Warrants | 887,150 | ||||||||||||||||
Total | 11,589,342 | ||||||||||||||||
Convertible preferred stock | |||||||||||||||||
Convertible preferred stock as of September 30, 2014 consisted of the following: | |||||||||||||||||
Convertible | Original | Shares | Shares | Shares | Liquidation | ||||||||||||
Preferred Stock | Issue Price | Designated | Issued | Outstanding | Preference | ||||||||||||
Series A-1 | $ | 0.01 | 5,000,000 | 3,498,390 | 3,498,390 | $ | 8,804,537 | ||||||||||
Series A-2 | $ | 1.6996 | 1,176,748 | 328,600 | 328,600 | $ | 827,008 | ||||||||||
Series B | $ | 1,000.00 | 2,750 | 1,102 | 1,102 | $ | 1,102,000 | ||||||||||
As discussed in Note 5, in conjunction with the issuance of Series A-1 and Series A-2 Preferred Stock, proceeds of $4,950,000 were received in exchange for the issuance of promissory notes payable. Total proceeds from this transaction were allocated to each instrument using the relative fair value method. Proceeds allocated to Series A-1 and Series A-2 Preferred Stock were $3,308,874 and $1,134,016, respectively. Following the allocation of fair value, the effective conversion prices per share upon issuance of Series A-1 and Series A-2 Preferred Stock were $0.55 and $0.96, respectively. | |||||||||||||||||
On December 17, 2013, in contemplation of the Merger, the Company issued 2,750 shares of its Series B Preferred Stock (the “Series B Preferred Stock”) at a price of $1,000 per share, subject to the terms of its Certificate of Designations for the Series B Preferred Stock (the “Certificate of Designations”), and warrants to purchase an aggregate of 700,935 shares of the Company’s common stock (the “warrants”) to certain accredited investors in a private offering transaction for proceeds of $2,750,000. The warrants have an exercise price of $2.66 per common share. | |||||||||||||||||
The Series B Preferred Stock was fair valued in conjunction with the Merger. Consequently, the revaluation did not impact earnings per share. | |||||||||||||||||
A complete description of the rights, preferences, privileges and restrictions of the Series B Preferred Stock are included in the Amended Articles of Incorporation. The following is a summary of certain rights, privileges, preferences and restrictions: | |||||||||||||||||
Liquidation preference | |||||||||||||||||
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Series A Preferred Stock are entitled to receive an amount equal to the sum of (i) the greater of (x) the product of (I) $0.01 in the event of Series A-1 or $1.6996 in the event of Series A-2 and (II) the number of shares of Preferred stock then held by each holder and (y) the product of (I) the fair market value of one share of common stock, as mutually determined by the Company and the Preferred Stock holders and (II) the number of shares of common stock issuable upon conversion of such Preferred Stock, and (ii) any declared accrued and unpaid dividends, prior and in preference to any distributions made to the holders of Common Stock. | |||||||||||||||||
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Series B Preferred Stock are entitled to receive an amount equal to $1,000 per share. After full payment to the holders of Series A Preferred Stock and Series B Preferred Stock preferences, holders of Series B Preferred Stock shall be entitled to participate in the distribution of any remaining assets of the Company on an as converted basis pari passu with the holders of common stock. | |||||||||||||||||
If the assets and funds distributed among the holders of the Preferred Stock are insufficient to permit payment to such holders of the full preferential amount, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock and Series B Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive. | |||||||||||||||||
Conversion | |||||||||||||||||
All shares of Series A Preferred Stock are convertible, into common stock at the option of the holder, at any time after the date of issuance, by dividing the stated value of such preferred shares $0.007073 (reflecting the one-for-two reverse stock split) in the event of Series A-1 or $1.202065 (reflecting the one-for-two reverse stock split) in the event of Series A-2 by the conversion amount, each subject to adjustment (including the 1:2 reverse split). All Series B Preferred Stock are convertible, into common stock at the option of the holder, at any time after the date of issuance, by multiplying the conversion amount by the quotient of (x) $1,000 divided by (y) 2.14, each subject to similar adjustment. Each share of the Series A Preferred Stock and Series B Preferred Stock will automatically be converted into common stock, at the then-effective applicable conversion price, upon the occurrence of both i) the full collateralization of the Secured Convertible Notes, and ii) upon the closing of the sale of the Company’s common stock in a firm-commitment, underwritten public offering registered under the Securities Act of 1933 (as amended), which results in aggregate proceeds to the Company of at least $20,000,000 at a price per share exceeding such threshold as defined in the Company’s certificate of designation (currently $1.14). | |||||||||||||||||
Anti-dilution | |||||||||||||||||
Holders of Series A-1 Preferred Stock are entitled to receive certain shares of common stock if and when the Company issues or sells any shares of common stock for a consideration per share less than a certain threshold price (currently $1.14). | |||||||||||||||||
As a result of the issuance of the Fortress Shares pursuant to a subscription agreement dated October 1, 2014 (as described in Note 11 below), the conversion price for the Series B Preferred Stock was reduced from $2.14 to $2.00. The conversion price will be further reduced (and the holders of Series B Preferred Stock will be entitled to receive additional shares of common stock upon conversion) if and when the Company issues or sells any shares of common stock for a consideration per share less than the current threshold price (currently $2.00). | |||||||||||||||||
Voting rights | |||||||||||||||||
Holders of the Series A Preferred Stock and Series B Preferred Stock are entitled to one vote for each share of common stock into which their shares can be converted. | |||||||||||||||||
Restriction on Sale of Securities | |||||||||||||||||
On June 9, 2014, the Company’s shareholders representing approximately 78% of issued common stock and Preferred Stock (the “Restricted Securities”) agreed to limitations on sale of those securities through November 30, 2014. Each such stockholder agreed (a) to sell no Restricted Securities until July 1, 2014 unless the Company’s common stock price was above $6.00 per share; (b) from July 1 to August 31, to only sell a maximum of approximately 6% per month of that shareholder's beneficially held Restricted Securities if the Successor Company’s stock price was above $4.00 per share; (c) from September 1 through November 30, to only sell a maximum of approximately 6% per month of that shareholder's beneficially held Restricted Securities; and (d) remain able to sell any number of Restricted Securities if the Company’s stock price is above $6.00 per share. In addition, these shareholders have agreed to not engage in any short selling during the restriction period. | |||||||||||||||||
Warrants | |||||||||||||||||
In January 2014, the Company issued warrants to purchase 238,412 shares common stock at an exercise price of $3.04 to a placement agent. The warrants expire in January 2019. The exercise price is subject to adjustment and the warrants may be exercised without cash consideration in lieu of forfeiting a portion of shares. The fair value of the warrants at issuance was $348,963, estimated using the Black-Scholes option pricing model. The fair value of the warrants was revalued at September 30, 2014 as discussed in Note 5. | |||||||||||||||||
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Workers Compensation Discount [Abstract] | ' | |||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||||
8 | Stock-Based Compensation | |||||||||||||||||
Stock Plan | ||||||||||||||||||
In November 2013, the Board of Directors authorized the 2013 Stock Plan (such plan has since been adopted by the stockholders of the Company in connection with the Merger and renamed the "Inventergy Global, Inc. 2014 Stock Plan”, the “Plan” or the “2014 Plan”). Under the Plan, the Board of Directors may grant incentive stock awards to employees and directors, and non-statutory stock options to employees, directors and consultants as well as restricted stock. The Plan provides for the grant of stock options, restricted stock, and other stock-related and performance awards that may be settled in cash, stock, or other property. The Board of Directors has reserved 3,605,445 shares of common stock for issuance over the term of the Plan. The exercise price of an option cannot be less than the fair value of one share of common stock on the date of grant for incentive stock options or non-statutory stock options. The exercise price of an incentive stock option cannot be less than 110% of the fair value of one share of common stock on the date of grant for stockholders owning more than 10% of all classes of stock. Options are exercisable over periods not to exceed ten years (five years for incentive stock options granted to holders of 10% or more of the voting stock) from the grant date. Options may be granted with vesting terms as determined by the Board of Directors which generally include a one to five year period or performance conditions or both. The pre-existing options were subsumed under the new plan. | ||||||||||||||||||
Common stock option and restricted stock award activity under the Plan was as follows: | ||||||||||||||||||
Options and RSAs Outstanding | ||||||||||||||||||
Shares Available For | Number of Shares | Weighted Average | ||||||||||||||||
Grant | Exercise Price Per Share | |||||||||||||||||
Balance at December 31, 2013 | 1,286,647 | 1,611,848 | ||||||||||||||||
Authorized | 706,950 | - | $ | - | ||||||||||||||
Options Granted | -959,198 | 959,198 | $ | 3.12 | ||||||||||||||
Options assumed in Merger | -15,000 | 15,000 | $ | 14.3 | ||||||||||||||
Restricted Stock Granted | -19,088 | 19,088 | $ | 3.04 | ||||||||||||||
Restricted Stock Vested | - | -337,216 | $ | 2.31 | ||||||||||||||
Balance at September 30, 2014 | 1,000,311 | 2,267,918 | $ | 2.71 | ||||||||||||||
Total vested and expected to vest shares (options) | 2,267,918 | $ | 2.71 | |||||||||||||||
As of September 30, 2014, all of the restricted stock granted under the plan has vested. The aggregate intrinsic value of stock options and RSAs outstanding, stock options vested and expected to vest, and exercisable at September 30, 2014 was zero, since all of the options are currently out-of-the-money. | ||||||||||||||||||
Prior to the plan being established, the Company granted the equivalent of 7,167,585 RSAs to employees and non-employees in exchange for services with vesting specific to each individual award. As of September 30, 2014, 2,730,198 shares were vested, and 424,170 shares were cancelled or forfeited (unvested). | ||||||||||||||||||
The following table summarizes information with respect to stock options outstanding at September 30, 2014: | ||||||||||||||||||
Options Outstanding | Options Vested | |||||||||||||||||
Weighted- | ||||||||||||||||||
Average | Weighted- | Weighted- | ||||||||||||||||
Remaining | Average | Average | ||||||||||||||||
Exercise | Contractual | Exercise | Exercise | |||||||||||||||
Price Per Share | Shares Outstanding | Life (Years) | Price | Shares Exercisable | Price Per Share | |||||||||||||
$ | 2.05 | 56,900 | 9.84 | $ | 2.05 | - | $ | - | ||||||||||
$ | 2.27 | 1,293,720 | 9.2 | $ | 2.27 | 241,960 | $ | 2.27 | ||||||||||
$ | 3.04 | 742,298 | 9.58 | $ | 3.04 | 53,022 | $ | 3.04 | ||||||||||
$ | 3.85 | 160,000 | 9.7 | $ | 3.85 | - | $ | - | ||||||||||
$ | 14.3 | 15,000 | 1.71 | $ | 14.3 | 15,000 | $ | 14.3 | ||||||||||
2,267,918 | 9.32 | $ | 2.71 | 309,982 | $ | 2.98 | ||||||||||||
Stock-based compensation expense | ||||||||||||||||||
The fair value of employee stock options granted was estimated using the following weighted-average assumptions for the three and nine months ended September 30, 2014: | ||||||||||||||||||
For the three months ended | For the nine months | |||||||||||||||||
September 30, 2014 | ended September 30, 2014 | |||||||||||||||||
Expected volatility | 65 | % | 70 | % | ||||||||||||||
Risk free rate | 1.85 | % | 1.8 | % | ||||||||||||||
Dividend yield | 0 | % | 0 | % | ||||||||||||||
Expected term (in years) | 5.5 | 5.77 | ||||||||||||||||
The expected term of the options is based on the average period the stock options are expected to remain outstanding based on the option’s vesting term and contractual terms. The expected stock price volatility assumptions for the Company's stock options were determined by examining the historical volatilities for industry peers, as the Company did not have any trading history for the Company's common stock. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company's stock options. The expected dividend assumption is based on the Company's history and expectation of dividend payouts. Forfeitures were estimated based on the Company’s estimate of future cancellations. | ||||||||||||||||||
Stock-based compensation for employees and non-employees related to options and RSAs recognized for the three and nine months ended September 30, 2014: | ||||||||||||||||||
For the three months ended | For the nine months ended | |||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||
Operating expenses | ||||||||||||||||||
Selling, general and administrative | $ | 376,530 | $ | 2,238,184 | ||||||||||||||
No income tax benefit has been recognized related to stock-based compensation expense and no tax benefits have been realized from exercised stock awards. As of September 30, 2014, there were total unrecognized compensation costs of $3,915,031 related to these stock awards. These costs are expected to be recognized over a period of approximately 1.47 years. | ||||||||||||||||||
Non-employee stock-based compensation expense | ||||||||||||||||||
For the three and nine months ended September 30, 2014, the Company issued options and restricted stock awards to non-employees in exchange for services with vesting specific to each individual award. Non-employee stock-based compensation expense is recognized as the awards vest and totaled $(67,910) and $1,312,993 for the three and nine months ended September 30, 2014, respectively. The fair value of RSAs is calculated as the fair value of the underlying stock multiplied by the number of shares awarded. | ||||||||||||||||||
Income_Taxes
Income Taxes | 9 Months Ended | ||
Sep. 30, 2014 | |||
Income Tax Disclosure [Abstract] | ' | ||
Income Taxes | ' | ||
9 | Income Taxes | ||
On a quarterly basis, the Company records income tax expense or benefit based on year-to-date results and expected results for the remainder of the year. The Company recorded no provision for income taxes for the nine months ended September 30, 2014 and 2013. | |||
Deferred income taxes reflect the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Based on the Company’s historical net losses during its development stage, the Company has provided a full valuation allowance against its deferred tax assets as of September 30, 2014 and 2013. | |||
The use of the Company's net operating loss carryforwards is subject to certain annual limitations and may be subject to further limitations as a result of changes in ownership as defined by the Internal Revenue Code and similar state provisions. Such limitations could result in the expiration of net operating loss carryforwards prior to utilization. | |||
The Company files U.S. Federal and state tax returns. As of September 30, 2014 and 2013, all tax years remain open in most jurisdictions. The Company is not currently under examination by income tax authorities in federal or state jurisdictions. | |||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Commitments and Contingencies | ' | ||||
10 | Commitments and Contingencies | ||||
Operating lease | |||||
The Company previously leased offices in Cupertino, California under a cancelable month-to-month operating lease. The Company sublet an office on a month-to-month basis to a related party entity for approximately $551 per month during 2013. The majority stockholder of the related party is a stockholder of the Company. The Company terminated its sublease agreement effective December 31, 2013. | |||||
In March 2014, the Company entered into a non-cancelable thirty-eight month lease agreement for offices in Campbell, California commencing June 1, 2014 with escalating rent payments ranging from approximately $9,200 to $9,800 per month and one option to extend the lease term for an additional three years. Included in the lease agreement was a full rent abatement period of two months. Rent expense is recognized on a straight line basis. The Company paid a security deposit of $18,993 during the nine months ended September 30, 2014. The future minimum payments related to this lease are as follows for the years ending December 31: | |||||
Remainder of Year Ended 2014 | $ | 27,742 | |||
2015 | 112,895 | ||||
2016 | 116,201 | ||||
2017 | 68,587 | ||||
Total | $ | 325,425 | |||
Rent expense was approximately $36,202, and $19,211 for the three months ended September 30, 2014 and 2013, respectively, and approximately $81,221, and $50,750 for the nine months ended September 30, 2014 and 2013, respectively. | |||||
Guaranteed payments | |||||
The Company has entered into agreements to purchase certain patent assets. The agreements include future unconditional guaranteed payments of $21,000,000 representing purchase of patents and minimum revenue sharing from the Company’s ability to license the purchased patents to other parties. The guaranteed payments are accrued on the Company’s accompanying balance sheet as of September 30, 2014 at net present value using a discount rate of 12%. The associated discount is being amortized using the effective interest method. Expenses related to minimum revenue sharing payments are deferred as of September 30, 2014 and will be amortized in correlation with the future payment schedule. Minimum revenue sharing payments are generally due sixty days after fully earned. Future guaranteed payments associated with these agreements are payable as follows: | |||||
Years ending December 31: | |||||
2014 | $ | 1,000,000 | |||
2015 | 4,000,000 | ||||
2016 | 6,000,000 | ||||
2017 | 10,000,000 | ||||
Less: discount to present value | -3,537,951 | ||||
Guaranteed payments, net of discount | $ | 17,462,049 | |||
Subsequent_Events
Subsequent Events | 9 Months Ended | ||
Sep. 30, 2014 | |||
Subsequent Events [Abstract] | ' | ||
Subsequent Events | ' | ||
11 | Subsequent Events | ||
On October 1, 2014 the Company entered into a Revenue Sharing and Note Purchase Agreement (the “Fortress Agreement”) with affiliates of Fortress Investment Group, LLC (“Fortress”), including a Note Purchaser (as defined below) who also serves as collateral agent (the “Collateral Agent”) and a Revenue Participant (as defined below). Pursuant to the Fortress Agreement, the Company issued an aggregate of $11,000,000 in original principal amount of senior secured notes (the “Fortress Notes”) to the purchasers identified in the Fortress Agreement (the “Note Purchasers”). As a result of the issuance of the Fortress Notes and the sale of the Fortress Shares (as defined below), after the payment of all purchaser-related fees and expenses relating to the issuance of the Fortress Notes and Fortress Shares, the Company received net proceeds of $10,415,121. The Company used the net proceeds to pay off the Secured Convertible Notes and the FRB Note and for general working capital purposes. The unpaid principal amount of the Fortress Notes bears cash interest equal to LIBOR plus 7%. In addition, a 3% per annum paid-in-kind (“PIK”) interest will be paid by increasing the principal amount of the Fortress Notes by the amount of such interest. The PIK interest shall be treated as principal of the Fortress Note for all purposes of interest accrual or calculation of any premium payment. | |||
The principal of the Fortress Notes and all unpaid interest thereon or other amounts owing hereunder shall be paid in full in cash by the Company on September 30, 2017 (the “Maturity Date”). The Company may prepay the Fortress Notes in whole or in part, generally without penalty or premium, except that any optional prepayments of the Fortress Notes prior to October 1, 2015 will be accompanied by a prepayment premium equal to 5% of the principal amount prepaid. | |||
Upon receipt of any revenues generated from the monetization of the Patents (the “Monetization Revenue”) from the patents identified in the Fortress Agreement (the “Patents”), the Company is required to apply, towards its obligations pursuant to the Fortress Notes, 86% of the difference between (a) any revenues generated from the Monetization Revenue less (b) any litigation or licensing related third party expenses (including fees paid to the original patent owners) reasonably incurred by the Company to earn Monetization Revenue, subject to certain limits (such difference defined as “Monetization Net Revenues”). If Monetization Net Revenue is applied to outstanding principal of the Fortress Notes (defined as “Mandatory Prepayments”), such Mandatory Prepayments are not subject to the prepayment premium described above. To the extent that any obligations under the Fortress Notes are past due, including if such payments are past due as a result of an Acceleration of the Fortress Notes or certain conditions of breach or alleged breach have occurred, the percentage will increase from 86% to 100%. | |||
In addition to the Mandatory Prepayments, beginning on the last business day of October 2015, the Company shall make monthly amortization payments (the “Amortization Payments”) in an amount equal to (x) the then outstanding principal amount divided by (y) the number of months left until the Maturity Date. | |||
In connection with the execution of the Fortress Agreement, on October 1, 2014, the Company paid to the Note Purchasers a structuring fee equal to $385,000. Upon the earlier of the date on which the all obligations of the Fortress Notes are paid in full, or become due the Company will pay to the Note Purchasers a termination fee equal to $770,000. | |||
Pursuant to the Fortress Agreement, the Company granted to the purchasers identified in the Fortress Agreement (“Revenue Participants”) a right to receive a portion of the Company’s Monetization Revenues totaling $5,500,000 (unless the Revenue Participants have not received $5,500,000 by the Maturity Date, in which case the Revenue Participants have a right to receive a portion of Monetization Revenues totaling $8,250,000) (the “Revenue Stream”). The Revenue Participants will not receive any portion of the Revenue Stream until all obligations under the Fortress Notes are paid in full. Following payment in full of the Fortress Notes, the Company will pay to the Revenue Participants their proportionate share of the Monetization Net Revenues. The Revenue Participant’s proportionate share is equal to (a) 46% of Monetization Net Revenues until $2,750,000 has been paid to the Revenue Participants, (b) 31% of Monetization Net Revenues until the next $2,750,000 has been paid to the Revenue Participants and (c) 6% of Monetization Net Revenues until the next $2,750,000 has been paid to the Revenue Participants if (a) and (b) have not been fully paid by the Maturity Date. All Revenue Stream Payments will be payable on a monthly basis in arrears. The rights of the Revenue Participants to the Revenue Stream are secured by all of the Company’s current patent assets and the Cash Collateral Account, in each case junior in priority to the rights of the Note Purchasers. | |||
The Fortress Agreement contemplates the issuance of up to an additional $5,000,000 in Fortress Notes and additional rights to receive Revenue Stream Payments (collectively, the “Additional Advances”). If the Company makes an offer to issue Additional Advances, and if the Purchasers agree, in their sole discretion, to acquire such Additional Advances, the Fortress Agreement will be amended to reflect the economic and other terms and conditions of such Additional Advances. In particular, it is contemplated that to the extent that such Additional Advances occur, the additional Fortress Notes and participation in the Monetization Revenues will have substantially the same economic terms as those issued as of October 1, 2014. | |||
As part of the Fortress Agreement, the Company and the Collateral Agent entered into a Patent License Agreement (the “Patent License Agreement”), under which the Company agreed to grant to the Collateral Agent a non-exclusive, royalty-free, and worldwide license to certain of its Patents (the “Licensed Patents”), which can only be used by the Collateral Agent following an occurrence and during the continuance of an event of default of the Fortress Agreement. When the Fortress Notes and Revenue Stream are paid in full, the Patent License Agreement will terminate. | |||
As part of the transaction, the Company granted the Note Purchaser and Revenue Participant a first priority security interest in all of the Company’s currently owned patent assets and all proceeds thereof, as well as a general security interest in all of the assets of the Company and its subsidiaries. The Note Purchaser and Revenue Participant do not have a security interest in any future patent purchases by the Company. | |||
Unregistered Sales of Equity Securities. | |||
In connection with the execution of the Fortress Agreement, the Company issued 500,000 shares of its common stock at $2.00 per share to the Revenue Participant for an aggregate purchase price of $1,000,000. The Fortress Shares were issued pursuant to a subscription agreement dated October 1, 2014. | |||
In addition, on October 1, 2014, the Company issued an aggregate of 1,804,030 shares of its common stock to the holders of its Secured Convertible Notes, who otherwise had the right to convert the existing notes into common stock of the Company until July 2018, as consideration for a waiver from such Secured Convertible Note holders in order for the Company to prepay the remaining outstanding principal and interest on the Secured Convertible Notes. Immediately following the issuance of the shares and the prepayment of the Secured Convertible Notes, the Secured Convertible Notes were deemed paid in full. As a result of the termination of the Secured Convertible Notes, the Company eliminated the option of the Secured Convertible Notes holders to convert their debt into 1,508,162 new shares of Company common stock. Further, as a result of this prepayment to the Secured Convertible Notes holders and the termination of the Existing Notes, $3,500,000 previously held in a cash collateral account in connection with the Existing Notes will be released to the Company. | |||
In connection with the closing of the transactions contemplated by the Fortress Agreement, the Company paid a closing fee of $330,000 and issued a 5 year warrant for the purchase of 247,500 shares of the Company’s common stock at $2.00 per share to National Securities Corporation, who acted as advisor to the Company with respect to the transaction. | |||
Other Items | |||
As a result of the Fortress Agreement and pursuant to the terms of a Share Purchase Agreement, dated September 23, 2014, by and among the Company and Joseph W. Beyers, the Company’s Chief Executive Officer and Chairman, the Company is required to return $300,000 in cash previously prepaid by Mr. Beyers in connection with Mr. Beyers’ contingent purchase of up to 233,640 shares of the Company’s common stock. As a result of the Company concluding the Fortress Agreement within the specified time limit, the Company will not issue any securities as a result of the Share Purchase Agreement. | |||
As a result of the issuance of the Fortress Shares, the conversion price for the Series B Preferred Stock was reduced from $2.14 to $2.00. The conversion price will be further reduced (and the holders of Series B Preferred Stock will be entitled to receive additional shares of common stock upon conversion) if and when the Company issues or sells any shares of common stock for a consideration per share less than the current threshold price (currently $2.00). | |||
On October 3, 2014, the Company repaid the $500,000 FRB Note in full. The FRB Note, would have matured on November 1, 2014. The note was included in short-term notes payable as of September 30, 2014. | |||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||
Sep. 30, 2014 | |||
Accounting Policies [Abstract] | ' | ||
Basis of presentation | ' | ||
Basis of presentation | |||
The financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). | |||
Liquidity | ' | ||
Liquidity | |||
The Company’s financial statements have been prepared on a going-concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company’s liquidity and capital needs relate primarily to working capital and other general corporate requirements. The Company’s operations do not currently provide cash flow. To date, the Company has funded its operations with the issuance of notes and convertible notes, by the sale of preferred and common stock and through private placement offerings. The business will require significant amounts of capital in the near term to sustain operations and make the investments it needs to continue operations and execute its longer term business plan. The Company had cash and cash equivalents of $232,448 and net working capital of $(5,037,267) as of September 30, 2014. The total current assets included restricted cash of $3,500,000 in a segregated account which was pledged to collateralize the Secured Convertible Notes (as defined below, and which were paid back in full on October 2, 2014 as described in Note 11 below) and could not be used in support of on-going operations. The Company’s net loss for the nine months ended September 30, 2014 was $12,335,306 and the accumulated deficit amount was $35,009,020 as of September 30, 2014. Given the subsequent financing more fully described in Note 11 below, the Company will be able to conduct its planned operations using currently available capital resources for less than twelve months. The Company's ability to sustain its operations is dependent upon its ability to generate future revenue from operations and/or to obtain the necessary financing to meet the Company's obligations and repay our liabilities arising from normal business operations when they come due. | |||
In order to implement its business plan and become cash flow positive, management’s plan includes raising capital by equity and/or debt financing as needed. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. Management also cannot provide any assurance that unforeseen circumstances will not increase the need for the Company to raise additional capital on an immediate basis. There can be no assurance that the Company will be able to continue to raise funds if at all when needed, or on terms acceptable to the Company in which case the Company may be unable to continue its operations or to meet its obligations at such time. | |||
On October 1, 2014, the Company entered into a Revenue Sharing and Note Purchase Agreement with affiliates of Fortress Investment Group, LLC. Pursuant to the agreement, the Company issued an aggregate of $11,000,000 in original principal amount of senior secured notes. As a result of the issuance of the Fortress Notes (as defined below) and the sale of 500,000 shares of the Company’s common stock (the “Fortress Shares”), after the payment of all purchaser-related fees and expenses relating to the issuance of the Fortress Notes and Fortress Shares, the Company received net proceeds of $10,415,121. See Note 11 for a detailed description of the transaction. | |||
Management estimates and related risks | ' | ||
Management estimates and related risks | |||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Although these estimates reflect management's best estimates, it is at least reasonably possible that a material change to these estimates could occur in the near term. | |||
Cash and cash equivalents | ' | ||
Cash and cash equivalents | |||
The Company considers all highly liquid financial instruments with original maturities of three months or less at the time of purchase to be cash equivalents. | |||
Restricted cash | ' | ||
Restricted cash | |||
At September 30, 2014, the Company held restricted cash of $3,500,000 pledged to collateralize the Secured Convertible Notes (as defined below). The Secured Convertible Notes were paid back in full on October 2, 2014, as described in further detail in Note 11. | |||
Accounts Receivable | ' | ||
Accounts Receivable | |||
Accounts receivable are stated net of allowances for doubtful accounts. The Company typically grants standard credit terms to customers in good credit standing. The Company generally reserves for estimated uncollectible accounts on a customer-by-customer basis, which requires judgment about each individual customer’s ability and intention to fully pay account balances. The Company makes these judgments based on knowledge of and relationships with customers and current economic trends, and updates estimates on a monthly basis. Any changes in estimate, which can be significant, are included in earnings in the period in which the change in estimate occurs. As of September 30, 2014, the Company has not establish any reserves for uncollectable accounts. | |||
Inventories | ' | ||
Inventories | |||
Inventories consist of finished goods and some component and spare parts. Inventory is valued at the lower of cost or market with cost determined utilizing standard cost which approximates the first-in, first-out (FIFO) method. The Company performs an analysis of slow-moving or obsolete inventory on a regular basis and any changes in valuation reserves, which could potentially be significant, are included in earnings in the period in which the evaluations are completed. | |||
Property and equipment | ' | ||
Property and equipment | |||
Property and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets (or the term of the lease, if shorter), which range from three to five years. Routine maintenance and repair costs are expensed as incurred. The costs of major additions, replacements and improvements are capitalized. Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation is removed and any resulting gain or loss is credited or charged to operations. | |||
Patents | ' | ||
Patents | |||
Patents, including acquisition costs, are stated at cost, less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally 7 – 10 years. Upon retirement or sale, the cost of assets disposed and the related accumulated amortization are removed from the accounts and any resulting gain or loss is credited or charged to operations. Patents are utilized for the purpose of generating licensing revenue. | |||
Intangible Assets | ' | ||
Intangible Assets | |||
Intangible assets consist of certain contract rights acquired in the Merger. Intangible assets are amortized on a straight-line basis over their estimated useful life of five years. | |||
Goodwill | ' | ||
Goodwill | |||
Goodwill represents the excess of the aggregate purchase price over the fair value of the net tangible and identifiable intangible assets acquired by the Company. The carrying amount of goodwill will be tested for impairment annually or more frequently if facts and circumstances warrant a review. The Company determined that it is a single reporting unit for the purpose of goodwill impairment tests. For purposes of assessing the impairment of goodwill, the Company estimates the value of the reporting unit using its market capitalization as the best evidence of fair value. This fair value is then compared to the carrying value of the reporting unit. | |||
Impairment of long-lived assets | ' | ||
Impairment of long-lived assets | |||
The Company evaluates the carrying value of long-lived assets on an annual basis, or more frequently whenever circumstances indicate a long-lived asset may be impaired. When indicators of impairment exist, the Company estimates future undiscounted cash flows attributable to such assets. In the event cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair value. There were no asset impairments for the three months and nine months ended September 30, 2014. | |||
Concentration of credit risk | ' | ||
Concentration of credit risk | |||
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. Cash and cash equivalents are deposited with high quality financial institutions. Periodically, such balances are from time to time in excess of federally insured limits. | |||
Stock-based compensation | ' | ||
Stock-based compensation | |||
The Company has a stock option plan under which incentive and non-qualified stock options and restricted stock awards (“RSAs”) are granted primarily to employees. All share-based payments to employees, including grants of employee stock options and RSAs, are recognized in the financial statements based on their respective grant date fair values. The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow. | |||
The Company estimates the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods in the Company's statements of comprehensive income or loss. The Company has estimated the fair value of each award as of the date of grant using the Black-Scholes option pricing model. The fair value of RSAs is calculated as the fair value of the underlying stock multiplied by the number of shares awarded. The awards issued consist of fully-vested stock awards, performance-based restricted shares, and service-based restricted shares. | |||
Expenses related to stock-based awards issued to non-employees are recognized at fair value on a recurring basis in the periods those awards are expected to vest. The Company estimates the fair value of the awards using the Black-Scholes option pricing model. | |||
Income taxes | ' | ||
Income taxes | |||
The Company accounts for income taxes using the asset and liability method whereby deferred tax asset and liability account balances are determined based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when it is more likely than not that deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon future pretax earnings, the reversal of temporary differences between book and tax income, and the expected tax rates in future periods. | |||
The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount that is initially recognized. | |||
It is the Company’s practice to recognize interest and penalties related to income tax matters in income tax expense. As of September 30, 2014 and 2013, the Company had no interest and penalties related to income taxes. | |||
Fair value measurements | ' | ||
Fair value measurements | |||
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs within the fair value hierarchy. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. | |||
The following methods and assumptions were used to estimate the fair value of financial instruments: | |||
· | Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets. | ||
· | Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | ||
· | Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. | ||
The category within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | |||
Recently Adopted Accounting Standards | ' | ||
Recently Adopted Accounting Standards | |||
In June 2014, the FASB issued Accounting Standards Update ("ASU") ASU 2014-10 Development Stage Entities. The amendments in ASU 2014-10 remove the definition of a development stage entity from Topic 915 Development Stage Entities, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of operations, cash flows, and shareholder's equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company could early adopt ASU 2014-10 for any annual reporting period or interim period for which the entity's financial statements have not yet been issued. The Company elected to adopt this ASU beginning with the June 30, 2014 Quarterly Report on Form 10-Q and its adoption resulted in the removal of inception-to-date information in the Company's statements of operations and cash flows. | |||
Business_Combination_Tables
Business Combination (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Business Combinations [Abstract] | ' | |||||||||||||
Purchase price allocation | ' | |||||||||||||
As of September 30, 2014, the total purchase consideration and the purchase price allocation were as follows: | ||||||||||||||
Fair value of assumed equity allocated to purchase consideration | $ | 10,985,867 | ||||||||||||
Total purchase consideration | $ | 10,985,867 | ||||||||||||
Goodwill | $ | 8,858,504 | ||||||||||||
Intangible asset contract rights | 1,342,000 | |||||||||||||
Other assets acquired | 816,045 | |||||||||||||
Liabilities assumed | -30,682 | |||||||||||||
Total purchase allocation | $ | 10,985,867 | ||||||||||||
Supplemental Pro Forma Information | ' | |||||||||||||
The pro forma financial information is presented for informational purposes only for the purpose of comparing the nine months ended September 30, 2014 with the nine months ended September 30, 2013 and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2013 or of results that may occur in the future. | ||||||||||||||
For the three months ended September 30, | For the nine months ended | |||||||||||||
September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue (1) | $ | 306,603 | $ | 177,000 | $ | 756,613 | $ | 549,000 | ||||||
Net loss (2) | $ | 2,870,467 | $ | 1,864,853 | $ | 11,668,286 | $ | 3,498,300 | ||||||
-1 | Revenue for the three months ended September 30, 2014 and 2013 is from the Company’s access control security product lines acquired in the Merger. | |||||||||||||
-2 | Pro forma net loss was adjusted to exclude Merger related expenses of $0 and $1,250,000 for the three months ended September 30, 2014 and 2013, respectively, and $1,237,641 and $1,250,000 for the nine months ended September 30, 2014 and 2013, respectively. Additional expense for the amortization of acquired intangible assets of $0 and $67,100 for the three months ended September 30, 2014 and 2013, respectively, and $111,833 and $201,300 for the nine months ended September 30, 2014 and 2013, respectively, was included in the net loss. | |||||||||||||
Patents_Tables
Patents (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||
Schedule of Finite-Lived Intangible Assets | ' | |||||||||||||
Patent intangible assets consist of the following at September 30, 2014: | ||||||||||||||
Weighted Average Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||
Amortizable intangible assets: | ||||||||||||||
Patents | 8 | $ | 12,109,118 | $ | -1,306,130 | $ | 10,802,988 | |||||||
Total patent intangible assets | $ | 12,109,118 | $ | -1,306,130 | $ | 10,802,988 | ||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | |||||||||||||
The following table summarizes the Company's assets and liabilities measured at fair value on a recurring basis at September 30, 2014: | ||||||||||||||
Fair Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Convertible promissory notes payable derivative liability | $ | 316,200 | $ | - | $ | - | $ | 316,200 | ||||||
Common stock warrants | 145,958 | - | - | 145,958 | ||||||||||
Total | $ | 462,158 | $ | - | $ | - | $ | 462,158 | ||||||
Schedule Of Changes In Fair Value Derivative Liability | ' | |||||||||||||
The fair value of the derivative liability as of September 30, 2014 was estimated using the following assumptions: | ||||||||||||||
Expected volatility | 60 | % | ||||||||||||
Risk free rate | 1.51 | % | ||||||||||||
Dividend yield | 0 | % | ||||||||||||
Expected term (in years) | 4.3253 | |||||||||||||
Schedule of Changes in Fair Value of Company's Level 3 Liabilities | ' | |||||||||||||
The following sets forth a summary of changes in fair value of the Company’s level 3 liabilities measured on a recurring basis for the nine months ended September 30, 2014: | ||||||||||||||
Series A-1 | ||||||||||||||
Convertible | Preferred | Common | ||||||||||||
Notes Payable | Stock | Stock | ||||||||||||
Derivative Liability | Derivative Liability | Warrants | ||||||||||||
Balance at December 31, 2013 | $ | 534,975 | $ | 56,926 | $ | - | ||||||||
Extinguishment | -118,300 | - | - | |||||||||||
Fair value at issuance | 189,300 | - | 466,706 | |||||||||||
Change in fair value | -289,775 | -56,926 | -320,748 | |||||||||||
Balance at September 30, 2014 | $ | 316,200 | $ | - | $ | 145,958 | ||||||||
Borrowing_Arrangements_Tables
Borrowing Arrangements (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Debt Disclosure [Abstract] | ' | ||||
Total promissory notes | ' | ||||
Total Secured Convertible Notes payable at September 30, 2014 was comprised of the following: | |||||
Total Secured Convertible Notes payable outstanding | $ | 8,000,000 | |||
Less: unamortized discount | -250,071 | ||||
Convertible notes payable, net of discount | $ | 7,749,929 | |||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Stockholders Equity Note [Abstract] | ' | ||||||||||||||||
Shares of common stock reserved for future issuance | ' | ||||||||||||||||
Shares of common stock reserved for future issuance were as follows as of September 30, 2014: | |||||||||||||||||
Series A convertible preferred stock | 5,410,982 | ||||||||||||||||
Series B convertible preferred stock | 514,819 | ||||||||||||||||
Convertible notes payable | 1,508,162 | ||||||||||||||||
Options to purchase common stock | 2,267,918 | ||||||||||||||||
Shares reserved for issuance pursuant to 2014 Stock Plan | 1,000,311 | ||||||||||||||||
Warrants | 887,150 | ||||||||||||||||
Total | 11,589,342 | ||||||||||||||||
Redeemable Convertible preferred stock | ' | ||||||||||||||||
Convertible preferred stock as of September 30, 2014 consisted of the following: | |||||||||||||||||
Convertible | Original | Shares | Shares | Shares | Liquidation | ||||||||||||
Preferred Stock | Issue Price | Designated | Issued | Outstanding | Preference | ||||||||||||
Series A-1 | $ | 0.01 | 5,000,000 | 3,498,390 | 3,498,390 | $ | 8,804,537 | ||||||||||
Series A-2 | $ | 1.6996 | 1,176,748 | 328,600 | 328,600 | $ | 827,008 | ||||||||||
Series B | $ | 1,000.00 | 2,750 | 1,102 | 1,102 | $ | 1,102,000 | ||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Workers Compensation Discount [Abstract] | ' | |||||||||||||||||
Summary of share-based compensation activity | ' | |||||||||||||||||
Common stock option and restricted stock award activity under the Plan was as follows: | ||||||||||||||||||
Options and RSAs Outstanding | ||||||||||||||||||
Shares Available For | Number of Shares | Weighted Average | ||||||||||||||||
Grant | Exercise Price Per Share | |||||||||||||||||
Balance at December 31, 2013 | 1,286,647 | 1,611,848 | ||||||||||||||||
Authorized | 706,950 | - | $ | - | ||||||||||||||
Options Granted | -959,198 | 959,198 | $ | 3.12 | ||||||||||||||
Options assumed in Merger | -15,000 | 15,000 | $ | 14.3 | ||||||||||||||
Restricted Stock Granted | -19,088 | 19,088 | $ | 3.04 | ||||||||||||||
Restricted Stock Vested | - | -337,216 | $ | 2.31 | ||||||||||||||
Balance at September 30, 2014 | 1,000,311 | 2,267,918 | $ | 2.71 | ||||||||||||||
Total vested and expected to vest shares (options) | 2,267,918 | $ | 2.71 | |||||||||||||||
Outstanding options | ' | |||||||||||||||||
The following table summarizes information with respect to stock options outstanding at September 30, 2014: | ||||||||||||||||||
Options Outstanding | Options Vested | |||||||||||||||||
Weighted- | ||||||||||||||||||
Average | Weighted- | Weighted- | ||||||||||||||||
Remaining | Average | Average | ||||||||||||||||
Exercise | Contractual | Exercise | Exercise | |||||||||||||||
Price Per Share | Shares Outstanding | Life (Years) | Price | Shares Exercisable | Price Per Share | |||||||||||||
$ | 2.05 | 56,900 | 9.84 | $ | 2.05 | - | $ | - | ||||||||||
$ | 2.27 | 1,293,720 | 9.2 | $ | 2.27 | 241,960 | $ | 2.27 | ||||||||||
$ | 3.04 | 742,298 | 9.58 | $ | 3.04 | 53,022 | $ | 3.04 | ||||||||||
$ | 3.85 | 160,000 | 9.7 | $ | 3.85 | - | $ | - | ||||||||||
$ | 14.3 | 15,000 | 1.71 | $ | 14.3 | 15,000 | $ | 14.3 | ||||||||||
2,267,918 | 9.32 | $ | 2.71 | 309,982 | $ | 2.98 | ||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | |||||||||||||||||
The fair value of employee stock options granted was estimated using the following weighted-average assumptions for the three and nine months ended September 30, 2014: | ||||||||||||||||||
For the three months ended | For the nine months | |||||||||||||||||
September 30, 2014 | ended September 30, 2014 | |||||||||||||||||
Expected volatility | 65 | % | 70 | % | ||||||||||||||
Risk free rate | 1.85 | % | 1.8 | % | ||||||||||||||
Dividend yield | 0 | % | 0 | % | ||||||||||||||
Expected term (in years) | 5.5 | 5.77 | ||||||||||||||||
Schedule Of Stock Based Compensation Of Employees And Non Employees | ' | |||||||||||||||||
Stock-based compensation for employees and non-employees related to options and RSAs recognized for the three and nine months ended September 30, 2014: | ||||||||||||||||||
For the three months ended | For the nine months ended | |||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||
Operating expenses | ||||||||||||||||||
Selling, general and administrative | $ | 376,530 | $ | 2,238,184 | ||||||||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Future minimum annual lease payments | ' | ||||
The future minimum payments related to this lease are as follows for the years ending December 31: | |||||
Remainder of Year Ended 2014 | $ | 27,742 | |||
2015 | 112,895 | ||||
2016 | 116,201 | ||||
2017 | 68,587 | ||||
Total | $ | 325,425 | |||
Future guaranteed payments | ' | ||||
Future guaranteed payments associated with these agreements are payable as follows: | |||||
Years ending December 31: | |||||
2014 | $ | 1,000,000 | |||
2015 | 4,000,000 | ||||
2016 | 6,000,000 | ||||
2017 | 10,000,000 | ||||
Less: discount to present value | -3,537,951 | ||||
Guaranteed payments, net of discount | $ | 17,462,049 | |||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 06, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 01, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
Subsequent Event [Member] | Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | ||||||||
Patents [Member] | Patents [Member] | |||||||||||
Summary of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property plant and equipments estimated useful lives of assets | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | '7 years | '5 years | '10 years |
Restricted cash | $3,500,000 | ' | $3,500,000 | ' | ' | $0 | ' | ' | ' | ' | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 232,448 | 4,513,350 | 232,448 | 4,513,350 | ' | 1,518,684 | 0 | ' | ' | ' | ' | ' |
Working Capital Net Amount | -5,037,267 | ' | -5,037,267 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net Income (Loss) Attributable to Parent, Total | -2,937,678 | -1,581,863 | -12,335,306 | -2,430,111 | ' | ' | ' | ' | ' | ' | ' | ' |
Retained Earnings (Accumulated Deficit), Total | -35,009,020 | ' | -35,009,020 | ' | ' | -4,731,072 | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | ' | ' | ' | 300,000 | ' | ' | 11,000,000 | ' | ' | ' | ' |
Proceeds from Issuance of Secured Debt | ' | ' | ' | ' | ' | ' | ' | $10,415,121 | ' | ' | ' | ' |
Sale of Stock, Number of Shares Issued in Transaction | ' | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | ' |
Purchase_Consideration_And_Pur
Purchase Consideration And Purchase Price Allocation (Detail) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Purchase Price Allocation [Line Items] | ' |
Fair value of assumed equity allocated to purchase consideration | $10,985,867 |
Total purchase consideration | 10,985,867 |
Goodwill | 8,858,504 |
Intangible asset contract rights | 1,342,000 |
Other assets acquired | 816,045 |
Liabilities assumed | -30,682 |
Total purchase allocation | $10,985,867 |
Business_Acquisition_Pro_Forma
Business Acquisition Pro Forma Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |||||
Business Acquisition ProForma Information [Line Items] | ' | ' | ' | ' | ||||
Revenue | $306,603 | [1] | $177,000 | [1] | $756,613 | [1] | $549,000 | [1] |
Net loss | $2,870,467 | [2] | $1,864,853 | [2] | $11,668,286 | [2] | $3,498,300 | [2] |
[1] | Revenue for the three months ended September 30, 2014 and 2013 is from our access control security product lines acquired in the Merger. | |||||||
[2] | Pro forma net loss was adjusted to exclude Merger related expenses of $0 and $1,250,000 for the three months ended September 30, 2014 and 2013, respectively, and $1,237,641 and $1,250,000 for the nine months ended September 30, 2014 and 2013, respectively. Additional expense for the amortization of acquired intangible assets of $0 and $67,100 for the three months ended September 30, 2014 and 2013, respectively, and $111,833 and $201,300 for the nine months ended September 30, 2014 and 2013, respectively, was included in the net loss. |
Business_Combination_Additiona
Business Combination - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jun. 06, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ||||
Stockholders' equity note, stock split, conversion ratio | 1.4139 | ' | ' | ' | ' | ' | ||||
Common Stock, Shares, Issued | 20,018,028 | 23,937,559 | ' | 23,937,559 | ' | 11,505,039 | ||||
Common Stock, Shares, Outstanding | 20,018,028 | 23,937,559 | ' | 23,937,559 | ' | 11,505,039 | ||||
Class of Warrant or Right, Outstanding | 700,937 | ' | ' | ' | ' | ' | ||||
Initial Amount Of Contingent Note | $11,000,000 | ' | ' | ' | ' | ' | ||||
Debt Instrument, Face Amount | 300,000 | ' | ' | ' | ' | ' | ||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | ' | 8,858,504 | ' | 8,858,504 | ' | ' | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | ' | 1,342,000 | ' | 1,342,000 | ' | ' | ||||
Finite-Lived Intangible Asset, Useful Life | ' | ' | ' | '5 years | ' | ' | ||||
Business Combination, Acquisition Related Costs | ' | ' | ' | 1,237,641 | ' | ' | ||||
Business Acquisition, Pro Forma Net Income (Loss) | ' | 2,870,467 | [1] | 1,864,853 | [1] | 11,668,286 | [1] | 3,498,300 | [1] | ' |
Amortization of Intangible Assets | ' | ' | ' | 1,102,423 | 157,097 | ' | ||||
Merger Related Expenses [Member] | ' | ' | ' | ' | ' | ' | ||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ||||
Business Acquisition, Pro Forma Net Income (Loss) | ' | 0 | 1,250,000 | 1,237,641 | 1,250,000 | ' | ||||
Amortization of Intangible Assets | ' | $0 | $67,100 | $111,833 | $201,300 | ' | ||||
Series A Preferred Stock [Member] | ' | ' | ' | ' | ' | ' | ||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ||||
Preferred Stock, Shares Issued | 6,176,748 | ' | ' | ' | ' | ' | ||||
Preferred Stock, Shares Outstanding | 6,176,748 | ' | ' | ' | ' | ' | ||||
Preferred Class B [Member] | ' | ' | ' | ' | ' | ' | ||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ||||
Preferred Stock, Shares Issued | 2,231 | ' | ' | ' | ' | ' | ||||
Preferred Stock, Shares Outstanding | 2,231 | ' | ' | ' | ' | ' | ||||
Placement Agents [Member] | ' | ' | ' | ' | ' | ' | ||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ||||
Class of Warrant or Right, Outstanding | 238,412 | ' | ' | ' | ' | ' | ||||
[1] | Pro forma net loss was adjusted to exclude Merger related expenses of $0 and $1,250,000 for the three months ended September 30, 2014 and 2013, respectively, and $1,237,641 and $1,250,000 for the nine months ended September 30, 2014 and 2013, respectively. Additional expense for the amortization of acquired intangible assets of $0 and $67,100 for the three months ended September 30, 2014 and 2013, respectively, and $111,833 and $201,300 for the nine months ended September 30, 2014 and 2013, respectively, was included in the net loss. |
Patent_Intangible_Assets_Detai
Patent Intangible Assets (Detail) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Weighted Average Useful Life | '5 years | ' |
Gross Carrying Amount | $12,109,118 | ' |
Accumulated Amortization | -1,306,130 | ' |
Net Carrying Amount | 10,802,988 | 9,162,409 |
Patents [Member] | ' | ' |
Weighted Average Useful Life | '8 years | ' |
Gross Carrying Amount | 12,109,118 | ' |
Accumulated Amortization | -1,306,130 | ' |
Net Carrying Amount | $10,802,988 | ' |
Patents_Additional_Information
Patents - Additional Information (Detail) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Expected Amortization Expense of Intangible Assets for Each of Next Seven Years | $1,550,334 |
Fair_Value_Assets_And_Liabilit
Fair Value Assets And Liabilities Measured On Recurring Basis (Detail) (USD $) | Sep. 30, 2014 |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | $462,158 |
Convertible Notes Payable [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 316,200 |
Common stock warrants [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 145,958 |
Fair Value, Inputs, Level 1 [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 0 |
Fair Value, Inputs, Level 1 [Member] | Convertible Notes Payable [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 0 |
Fair Value, Inputs, Level 1 [Member] | Common stock warrants [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 0 |
Fair Value, Inputs, Level 2 [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 0 |
Fair Value, Inputs, Level 2 [Member] | Convertible Notes Payable [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 0 |
Fair Value, Inputs, Level 2 [Member] | Common stock warrants [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 0 |
Fair Value, Inputs, Level 3 [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 462,158 |
Fair Value, Inputs, Level 3 [Member] | Convertible Notes Payable [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | 316,200 |
Fair Value, Inputs, Level 3 [Member] | Common stock warrants [Member] | ' |
Liabilities Measured on Recurring Basis [Line Items] | ' |
Financial Liabilities Fair Value Disclosure, Total | $145,958 |
Estimated_Fair_Value_Of_Deriva
Estimated Fair Value Of Derivative Liability (Detail) | 9 Months Ended |
Sep. 30, 2014 | |
Fair Value Of Derivative Liability [Line Items] | ' |
Expected volatility | 60.00% |
Risk free rate | 1.51% |
Dividend yield | 0.00% |
Expected term (in years) | '4 years 3 months 27 days |
Summary_of_Changes_in_Fair_Val
Summary of Changes in Fair Value of Company's Level 3 Liabilities Measured on Recurring Basis (Detail) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Common stock warrants [Member] | ' |
Fair Value Disclosure [Line Items] | ' |
Balance beginning | $0 |
Extinguishment | 0 |
Fair value at issuance | 466,706 |
Change in fair value | -320,748 |
Balance ending | 145,958 |
Series A Preferred Stock [Member] | ' |
Fair Value Disclosure [Line Items] | ' |
Balance beginning | 56,926 |
Extinguishment | 0 |
Fair value at issuance | 0 |
Change in fair value | -56,926 |
Balance ending | 0 |
Convertible Notes Payable [Member] | ' |
Fair Value Disclosure [Line Items] | ' |
Balance beginning | 534,975 |
Extinguishment | -118,300 |
Fair value at issuance | 189,300 |
Change in fair value | -289,775 |
Balance ending | $316,200 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | Sep. 30, 2014 | Dec. 17, 2013 |
Fair Value Disclosure [Line Items] | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $2 | $2.66 |
Series A Preferred Stock [Member] | ' | ' |
Fair Value Disclosure [Line Items] | ' | ' |
Debt instrument convertible threshold stock price | $1.14 | ' |
Purchase of warrants to common stock | $238,412 | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.04 | ' |
Borrowing_Arrangements_Detail
Borrowing Arrangements (Detail) (USD $) | Sep. 30, 2014 |
Debt Instrument [Line Items] | ' |
Total Secured Convertible Notes payable outstanding | $8,000,000 |
Less: unamortized discount | -250,071 |
Convertible notes payable, net of discount | $7,749,929 |
Borrowing_Arrangements_Additio
Borrowing Arrangements - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | |||||||||
Oct. 03, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jun. 06, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Mar. 26, 2014 | 17-May-13 | 10-May-13 | 10-May-13 | Feb. 10, 2014 | Dec. 19, 2013 | Dec. 31, 2013 | Aug. 01, 2014 | |
Patents [Member] | Chief Executive Officer [Member] | March 2014 Notes [Member] | Series A Preferred Stock Two [Member] | Series A Preferred Stock [Member] | Promissory Note Payable [Member] | Promissory Note Payable [Member] | Promissory Note Payable [Member] | Promissory Note Payable [Member] | Promissory Note Payable [Member] | ||||||||
Chief Executive Officer [Member] | Chief Executive Officer [Member] | Chief Executive Officer [Member] | First Republic Bank [Member] | ||||||||||||||
Borrowing Arrangements [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | ' | ' | ' | ' | ' | $300,000 | ' | ' | $3,000,000 | ' | ' | $5,000,000 | $3,000,000 | ' | $3,100,000 | $500,000 |
Proceeds from Issuance of Senior Long-term Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,498,526 | 50,000 | 4,950,000 | ' | 3,000,000 | 100,000 | ' |
Stock Issued During Period, Shares, Conversion of Convertible Securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | ' | ' | ' | ' | ' |
Long-term Debt, Fair Value | ' | 2,557,111 | ' | 2,557,111 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gains (Losses) on Extinguishment of Debt, Total | ' | 0 | 0 | -2,403,193 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Maturity Date | 1-Nov-14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31-Aug-14 | ' | ' | 1-Nov-14 |
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum | ' | ' | ' | 4.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum | ' | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Redemption Price, Percentage | ' | ' | ' | 125.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Conversion Price | ' | $5.30 | ' | $5.30 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Increase, Accrued Interest | ' | ' | ' | 7,749,929 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Unamortized Discount | ' | 250,071 | ' | 250,071 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loan Processing Fee | ' | ' | ' | ' | ' | ' | ' | ' | 60,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Secured Debt | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | ' | ' | ' | ' | 2.00% | ' | ' | 1.30% |
Amortization of Debt Discount (Premium) | ' | 17,050 | ' | 185,474 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repayments of Unsecured Debt | ' | ' | ' | ' | ' | $100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares_of_Common_Stock_Reserve
Shares of Common Stock Reserved for Future Issuance (Detail) | Sep. 30, 2014 |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | ' |
Convertible notes payable | 1,508,162 |
Options to purchase common stock | 2,267,918 |
Warrants | 887,150 |
Shares reserved for issuance pursuant to 2014 Stock Plan | 11,589,342 |
2014 Stock Plan | ' |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | ' |
Shares reserved for issuance pursuant to 2014 Stock Plan | 1,000,311 |
Series A Convertible Preferred Stock [Member] | ' |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | ' |
Convertible preferred stock | 5,410,982 |
Series B Convertible Preferred Stock [Member] | ' |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | ' |
Convertible preferred stock | 514,819 |
Redeemable_convertible_preferr
Redeemable convertible preferred stock (Detail) (USD $) | Sep. 30, 2014 |
Redeemable Convertible Preferred Stock Series A-1 [Member] | ' |
Temporary Equity [Line Items] | ' |
Original Issue Price | $0.01 |
Shares Designated | 5,000,000 |
Shares Issued | 3,498,390 |
Shares Outstanding | 3,498,390 |
Liquidation Preference | $8,804,537 |
Redeemable Convertible Preferred Stock Series A-2 [Member] | ' |
Temporary Equity [Line Items] | ' |
Original Issue Price | $1.70 |
Shares Designated | 1,176,748 |
Shares Issued | 328,600 |
Shares Outstanding | 328,600 |
Liquidation Preference | 827,008 |
Series B Convertible Preferred Share [Member] | ' |
Temporary Equity [Line Items] | ' |
Original Issue Price | $1,000 |
Shares Designated | 2,750 |
Shares Issued | 1,102 |
Shares Outstanding | 1,102 |
Liquidation Preference | $1,102,000 |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 1 Months Ended | 1 Months Ended | 9 Months Ended | |||||||||||||||
Dec. 17, 2013 | Feb. 28, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Jan. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Oct. 01, 2014 | Sep. 30, 2014 | Dec. 17, 2013 | Oct. 01, 2014 | Sep. 30, 2014 | Oct. 01, 2014 | Oct. 01, 2014 | |
Warrant [Member] | Preferred Stock [Member] | Common Stock [Member] | Preferred Stock Series A-1 [Member] | Preferred Stock Series A-2 [Member] | Redeemable Convertible Preferred Stock [Member] | Redeemable Convertible Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Maximum [Member] | Maximum [Member] | Minimum [Member] | |||||
Subsequent Event [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | ||||||||||||||||
Subsequent Event [Member] | Subsequent Event [Member] | |||||||||||||||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion, converted instrument, shares issued | ' | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value | ' | $0.00 | $0.00 | $0.00 | ' | ' | ' | $0.01 | $1.20 | ' | ' | ' | $1,000 | ' | ' | ' | ' | ' |
Common Stock, Shares Authorized | ' | ' | 100,000,000 | 100,000,000 | ' | ' | 100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 110,000,000 | ' | ' |
Preferred Stock, Shares Authorized | ' | ' | 10,000,000 | 10,000,000 | ' | 10,000,000 | ' | ' | ' | 10,000,000 | 10,000,000 | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Issuance of Convertible Preferred Stock | ' | ' | ' | ' | ' | ' | ' | $3,308,874 | $1,134,016 | $4,950,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Temporary Equity, Redemption Price Per Share | ' | ' | ' | ' | ' | ' | ' | $0.55 | $0.96 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Temporary Equity, Liquidation Preference Per Share | ' | ' | ' | ' | ' | ' | ' | $0.01 | $1.70 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | 247,500 | ' | 238,412 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair Value Adjustment of Warrants | ' | ' | ' | ' | 348,963 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock, Voting Rights | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Holders of convertible preferred stock are entitled to one vote for each share of common stock into which their shares can be converted. Holders of Series A redeemable convertible preferred stock together are entitled to appoint one director of the Company. | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $2.66 | ' | $2 | ' | $3.04 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Date from which Warrants or Rights Exercisable | ' | ' | ' | ' | 31-Jan-19 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sale of Stock, Price Per Share | ' | ' | $4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants To Purchase Shares Of Common Stock | 700,935 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 6,176,748 | ' | ' | 2,750 | ' | ' | ' | ' |
Preferred Stock, Par or Stated Value Per Share | ' | ' | $0.00 | $0.00 | ' | ' | ' | ' | ' | $0.00 | $0.00 | ' | ' | $1,000 | ' | ' | ' | ' |
Proceeds from Issuance of Private Placement | $2,750,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Conversion Price | ' | ' | $5.30 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2.14 | $2 |
Debt Instrument Convertible Threshold Stock Price | ' | ' | ' | ' | ' | ' | ' | $1.14 | ' | ' | ' | $2 | ' | ' | $2 | ' | ' | ' |
Stockholders' Equity, Reverse Stock Split | ' | ' | ' | ' | ' | ' | ' | 'the 1:2 reverse split | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 1 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Nov. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Nov. 30, 2013 | Nov. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Nov. 30, 2013 | |
Restricted Stock [Member] | Employee Stock Option [Member] | Board of Directors [Member] | Board of Directors [Member] | 2013 Stock Plan [Member] | 2013 Stock Plan [Member] | 2013 Stock Plan [Member] | |||
Maximum [Member] | Minimum [Member] | Board of Directors [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, capital shares reserved for future issuance | ' | 11,589,342 | ' | ' | ' | ' | ' | ' | 3,605,445 |
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | ' | ' | ' | ' | ' | ' | ' | 7,167,585 | ' |
Share-based compensation arrangement by share-based payment award, options, forfeitures in period | ' | ' | ' | ' | ' | ' | ' | 424,170 | ' |
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options | ' | ' | ' | ' | ' | ' | $3,915,031 | $3,915,031 | ' |
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | ' | ' | ' | ' | ' | ' | ' | '1 year 5 months 19 days | ' |
Non-employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options | ' | ' | ' | ' | ' | ' | -67,910 | ' | ' |
Non employee service share based compensation nonvested awards total compensation cost not yet recognized period for recognition1 | ' | ' | ' | ' | ' | ' | 1,312,993 | 1,312,993 | ' |
Share-based compensation arrangement by share-based payment award, options, vested, number of shares | ' | ' | ' | ' | ' | ' | ' | 2,730,198 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | ' | ' | $0 | $0 | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent | 110.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Share based Compensation Arrangement By Sharebased Payment Award Common Stock Percent | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | ' | ' | ' | ' | '5 years | '1 year | ' | ' | ' |
StockBased_Compensation_Common
Stock-Based Compensation - Common Stock Option and Restricted Stock Award Activity (Detail) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Weighted Average Exercise Price Per share, End of year | $2.71 | ' |
Restricted Stock | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares Available For Grant, Authorized | 706,950 | ' |
Shares Available For Grant, Options Granted | -959,198 | ' |
Shares Available For Grant, Options assumed in Merger | -15,000 | ' |
Shares Available For Grant, Restricted Stock Granted | -19,088 | ' |
Shares Available For Grant, Restricted Stock Vested | 0 | ' |
Shares Available for Grant, End of year | 1,000,311 | 1,286,647 |
Number of Shares, Authorized | 0 | ' |
Number of Shares, Options Granted | 959,198 | ' |
Number of Shares, Options assumed in Merger | 15,000 | ' |
Number of Shares, Restricted Stock Granted | 19,088 | ' |
Number of Shares, Restricted Stock Vested | -337,216 | ' |
Number of Shares, End of Year | 2,267,918 | 1,611,848 |
Number of Shares, Total vested and expected to vest shares (options) | 2,267,918 | ' |
Weighted Average Exercise Price Per Share, Authorized | $0 | ' |
Weighted Average Exercise Price Per Share, Options Granted | $3.12 | ' |
Weighted Average Exercise Price Per Share, Options assumed in Merger | $14.30 | ' |
Weighted Average Exercise Price Per Share, Restricted Stock Granted | $3.04 | ' |
Weighted Average Exercise Price Per Share, Restricted Stock Vested | $2.31 | ' |
Weighted Average Exercise Price Per share, End of year | $2.71 | ' |
Weighted Average Exercise Price Per Share, Total vested and expected to vest shares (options) | $2.71 | ' |
StockBased_Compensation_Summar
Stock-Based Compensation - Summarizes Information with Respect to Stock Options Outstanding (Detail) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 17, 2013 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' |
Exercise Price Per Share | $2 | $2.66 |
Outstanding Options, Shares | 2,267,918 | ' |
Outstanding Options, Weighted- Average Remaining Contractual Term | '9 years 3 months 25 days | ' |
Weighted Average- Exercise Price | $2.71 | ' |
Exercisable Options, Shares | 309,982 | ' |
Exercisable Options, Weighted- Average Exercise Price | $2.98 | ' |
Range of Exercise Prices - Range 1 [Member] | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' |
Exercise Price Per Share | $2.05 | ' |
Outstanding Options, Shares | 56,900 | ' |
Outstanding Options, Weighted- Average Remaining Contractual Term | '9 years 10 months 2 days | ' |
Weighted Average- Exercise Price | $2.05 | ' |
Exercisable Options, Shares | 0 | ' |
Exercisable Options, Weighted- Average Exercise Price | $0 | ' |
Range of Exercise Prices - Range 2 [Member] | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' |
Exercise Price Per Share | $2.27 | ' |
Outstanding Options, Shares | 1,293,720 | ' |
Outstanding Options, Weighted- Average Remaining Contractual Term | '9 years 2 months 12 days | ' |
Weighted Average- Exercise Price | $2.27 | ' |
Exercisable Options, Shares | 241,960 | ' |
Exercisable Options, Weighted- Average Exercise Price | $2.27 | ' |
Range of Exercise Prices - Range 3 [Member] | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' |
Exercise Price Per Share | $3.04 | ' |
Outstanding Options, Shares | 742,298 | ' |
Outstanding Options, Weighted- Average Remaining Contractual Term | '9 years 6 months 29 days | ' |
Weighted Average- Exercise Price | $3.04 | ' |
Exercisable Options, Shares | 53,022 | ' |
Exercisable Options, Weighted- Average Exercise Price | $3.04 | ' |
Range of Exercise Prices - Range 4 [Member] | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' |
Exercise Price Per Share | $3.85 | ' |
Outstanding Options, Shares | 160,000 | ' |
Outstanding Options, Weighted- Average Remaining Contractual Term | '9 years 8 months 12 days | ' |
Weighted Average- Exercise Price | $3.85 | ' |
Exercisable Options, Shares | 0 | ' |
Exercisable Options, Weighted- Average Exercise Price | $0 | ' |
Range of Exercise Prices - Range 5 [Member] | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' |
Exercise Price Per Share | $14.30 | ' |
Outstanding Options, Shares | 15,000 | ' |
Outstanding Options, Weighted- Average Remaining Contractual Term | '1 year 8 months 16 days | ' |
Weighted Average- Exercise Price | $14.30 | ' |
Exercisable Options, Shares | 15,000 | ' |
Exercisable Options, Weighted- Average Exercise Price | $14.30 | ' |
StockBased_Compensation_Fair_V
Stock-Based Compensation - Fair Value of Employee Stock Options Granted was Estimated Using Weighted Average Assumptions (Detail) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Expected volatility | 65.00% | 70.00% |
Risk free rate | 1.85% | 1.80% |
Dividend yield | 0.00% | 0.00% |
Expected term (in years) | '5 years 6 months | '5 years 9 months 7 days |
StockBased_Compensation_Employ
Stock-Based Compensation - Employees and Non-Employees Related to Options and RSAs Recognized (Detail) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | |
Selling, General and Administrative Expenses [Member] | Selling, General and Administrative Expenses [Member] | |||
Operating expenses | ' | ' | ' | ' |
Selling, general and administrative | $2,238,184 | $1,166,931 | $376,530 | $2,238,184 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Future Minimum Annual Lease Payments (Detail) (USD $) | Sep. 30, 2014 |
Commitments and Contingencies [Line Items] | ' |
Remainder of Year Ended 2014 | $27,742 |
2015 | 112,895 |
2016 | 116,201 |
2017 | 68,587 |
Total | $325,425 |
Schedule_of_Future_Guaranteed_
Schedule of Future Guaranteed Payments (Detail) (USD $) | Sep. 30, 2014 |
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ' |
2014 | $1,000,000 |
2015 | 4,000,000 |
2016 | 6,000,000 |
2017 | 10,000,000 |
Less: discount to present value | -3,537,951 |
Guaranteed payments, net of discount | $17,462,049 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | |
Minimum [Member] | Maximum [Member] | ||||||
Commitments and Contingencies [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Security Deposit | $18,993 | ' | $18,993 | ' | ' | ' | ' |
Operating Leases, Rent Expense | 36,202 | 19,211 | 81,221 | 50,750 | ' | ' | ' |
Future unconditional guarantee paid | ' | ' | 21,000,000 | ' | ' | ' | ' |
Discount Rate | ' | ' | 12.00% | ' | ' | ' | ' |
Operating lease rent | ' | ' | ' | ' | ' | 9,200 | 9,800 |
Monthly rent | ' | ' | ' | ' | $551 | ' | ' |
Subsequent_Events_Additional_I
Subsequent Events - Additional Information (Detail) (USD $) | 0 Months Ended | 9 Months Ended | 9 Months Ended | 1 Months Ended | |||||||||
Oct. 03, 2014 | Sep. 30, 2014 | Jun. 06, 2014 | Dec. 17, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Oct. 01, 2014 | Sep. 30, 2014 | Oct. 01, 2014 | Oct. 01, 2014 | Oct. 01, 2014 | Oct. 01, 2014 | Oct. 01, 2014 | |
Maximum [Member] | Minimum [Member] | Series B Preferred Stock [Member] | Chief Executive Officer and Chairman | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | |||||
Secured Convertible Notes | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | ||||||||||
Maximum [Member] | Minimum [Member] | ||||||||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | ' | $300,000 | ' | ' | ' | ' | ' | $11,000,000 | ' | ' | ' | ' |
Proceeds from Issuance of Secured Debt | ' | ' | ' | ' | ' | ' | ' | ' | 10,415,121 | ' | ' | ' | ' |
Debt Instrument, Description of Variable Rate Basis | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR plus 7%. In addition, a 3% per annum | ' | ' | ' | ' |
Debt Instrument Structuring Fee | ' | 385,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument Termination Fee | ' | 770,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Description For Revenue Participants | ' | 'a right to receive a portion of the Companys Monetization Revenues totaling $5,500,000 (unless the Revenue Participants have not received $5,500,000 by the Maturity Date, in which case the Revenue Participants have a right to receive a portion of Monetization Revenues totaling $8,250,000) (the Revenue Stream). | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Description For Payment To Revenue Participants One | ' | '46% of Monetization Net Revenues until $2,750,000 has been paid to the Revenue Participants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Description For Payment To Revenue Participants Two | ' | '31% of Monetization Net Revenues until the next $2,750,000 has been paid to the Revenue Participants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Description For Payment To Revenue Participants Three | ' | '6% of Monetization Net Revenues until the next $2,750,000 has been paid to the Revenue Participants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period Shares For Revenue Participant | ' | ' | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | ' |
Aggregate Purchase Price For Revenue Participant | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' |
Stock Issued During Period, Shares, Other | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,804,030 | ' | ' | ' |
Debt Instrument, Convertible Debt In To Common Stock Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,508,162 | ' | ' | ' |
Debt Instrument, Fee Amount | ' | 330,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class Of Warrant Or Right Warrant term | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | 247,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | $2 | ' | $2.66 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prepaid Cash Received | ' | ' | ' | ' | ' | ' | ' | 300,000 | ' | ' | ' | ' | ' |
Maximum Purchase Of Common Stock Shares | ' | 233,640 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Conversion Price | ' | $5.30 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2.14 | $2 |
Debt Instrument Convertible Threshold Stock Price | ' | ' | ' | ' | ' | ' | $2 | ' | ' | ' | $2 | ' | ' |
Repayments of Debt | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Maturity Date | 1-Nov-14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument Percentage for Fortress Notes | ' | ' | ' | ' | 100.00% | 86.00% | ' | ' | ' | ' | ' | ' | ' |
Unrestricted cash, result of prepayment/termination of the existing convertible note/debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3,500,000 | ' | ' | ' |