Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 23, 2015 | Jun. 30, 2014 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Inventergy Global, Inc. | ||
Entity Central Index Key | 1084752 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $34,669,970 | ||
Trading Symbol | INVT | ||
Entity Common Stock, Shares Outstanding | 30,996,750 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets | ||
Cash and cash equivalents | $1,443,349 | $1,518,684 |
Accounts receivable | 259,049 | 0 |
Inventories | 302,739 | 0 |
Prepaid expenses and other current assets | 212,280 | 73,207 |
Deferred expenses, current | 3,000,000 | 0 |
Total current assets | 5,217,417 | 1,591,891 |
Property and equipment, net | 42,267 | 0 |
Deferred expenses, patents | 12,094,420 | 13,510,178 |
Patents, net | 10,415,404 | 9,162,409 |
Intangible assets, net | 499,083 | 0 |
Goodwill | 8,858,504 | 0 |
Debt issuance costs | 729,498 | 0 |
Deposits and other assets | 18,993 | 20,399 |
Total assets | 37,875,586 | 24,284,877 |
Current liabilities | ||
Accounts payable | 1,501,938 | 602,564 |
Accrued expenses and other current liabilities | 301,132 | 0 |
Accrued interest on notes payable | 0 | 6,935 |
Short-term notes payable, related party | 300,000 | 3,100,000 |
Guaranteed payments, current | 3,807,084 | 0 |
Fortress notes payable, current | 1,421,196 | 0 |
Total current liabilities | 7,331,350 | 3,709,499 |
Guaranteed payments | 13,105,857 | 13,510,178 |
Derivative liabilities | 30,278 | 591,901 |
Fortress notes payable, net of discount | 6,259,321 | 0 |
Fortress revenue share, net of discount | 2,478,057 | 0 |
Convertible notes payable, net of discount | 0 | 2,327,217 |
Total liabilities | 29,204,863 | 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 December 31, 2014 and December 31, 2013, respectively (aggregate liquidation preference of $0 at December 31, 2014 and $19,827,361 at December 31, 2013) | 0 | 3,392,950 |
Stockholders' equity | ||
Common stock, $0.001 par value; 100,000,000 shares authorized, 27,997,128 and 16,267,038 shares issued and outstanding at December 31, 2014 and December 31, 2013 | 27,997 | 16,267 |
Additional paid-in capital | 51,713,228 | 5,467,937 |
Accumulated other comprehensive loss | ||
Deficit accumulated | -43,073,213 | -4,731,072 |
Total stockholders' equity | 8,670,723 | 753,132 |
Total liabilities, redeemable convertible preferred stock and stockholders' equity | 37,875,586 | 24,284,877 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized | 2,710 | 0 |
Series B Convertible Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized | $1 | $0 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 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 | 27,997,128 | 16,267,038 |
Common stock, shares outstanding | 27,997,128 | 16,267,038 |
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 | 2,709,690 | |
Preferred stock, shares outstanding | 2,709,690 | |
Temporary equity, liquidation preference | 2,915,122 | |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock shares designated | 2,750 | |
Preferred stock, shares issued | 1,102 | |
Preferred stock, shares outstanding | 1,102 | |
Temporary equity, liquidation preference | $1,102,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues | $719,267 | $0 |
Cost of revenues | 732,213 | 0 |
Gross loss | -12,946 | 0 |
Operating Expenses | ||
General and administrative | 11,688,140 | 4,550,339 |
Patent amortization expense | 1,400,540 | 293,176 |
Impairment of acquired contract | 686,350 | 0 |
Total operating expenses | 13,775,030 | 4,843,515 |
Loss from operations | -13,787,976 | -4,843,515 |
Other income (expense) | ||
Loss on extinguishment of notes payable | -5,643,607 | 0 |
Loss on sale of accounts receivable | -40,833 | |
Decrease (increase) in fair value of derivative liabilities | 783,129 | 539,467 |
Other income | 242 | 0 |
Interest expense, net | -1,393,109 | -427,024 |
Total other (expense), net | -6,294,178 | 112,443 |
Loss before provision for income taxes | -20,082,154 | -4,731,072 |
Provision for income taxes | 2,400 | 0 |
Net loss | -20,084,554 | -4,731,072 |
Deemed dividend on preferred stock | 436,916 | 0 |
Net income available to common shareholders | ($20,521,470) | ($4,731,072) |
Basic and diluted loss per share | ($1.15) | ($0.56) |
Weighted average shares outstanding basic and diluted | 17,813,074 | 8,435,197 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Total | Restricted Stock [Member] | Notes Payable, Other Payables [Member] | Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Series A One Redeemable Convertible Preferred Stock [Member] | Series A One Redeemable Convertible Preferred Stock [Member] | Series A One Redeemable Convertible Preferred Stock [Member] | Series A One Redeemable Convertible Preferred Stock [Member] | Series A One Redeemable Convertible Preferred Stock [Member] | Series A Two Redeemable Convertible Preferred Stock [Member] | Series A Two Redeemable Convertible Preferred Stock [Member] | Series A Two Redeemable Convertible Preferred Stock [Member] | Series A Two Redeemable Convertible Preferred Stock [Member] | Series A Two Redeemable Convertible Preferred Stock [Member] | Series B Preferred Stock [Member] | Senior Convertible Noteholders [Member] | Senior Convertible Noteholders [Member] | Senior Convertible Noteholders [Member] |
Restricted Stock [Member] | Notes Payable, Other Payables [Member] | Restricted Stock [Member] | Notes Payable, Other Payables [Member] | Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | ||||||||||||
Balance at Dec. 31, 2012 | ($12,783) | $0 | $0 | $0 | ($12,783) | $0 | $0 | $0 | |||||||||||||||||
Balance (in shares) at Dec. 31, 2012 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
LLC member contribution | 12,783 | 0 | 0 | 12,783 | 0 | ||||||||||||||||||||
LLC interest in recapitalization | 0 | 0 | 7,070 | -19,853 | 12,783 | ||||||||||||||||||||
LLC interest in recapitalization (in shares) | 0 | 7,069,500 | |||||||||||||||||||||||
Equity-based compensation | 1,872,104 | 0 | 0 | 1,872,104 | 0 | ||||||||||||||||||||
Employee stock option exercise | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Employee stock option exercise (in shares) | 0 | 0 | |||||||||||||||||||||||
Restricted stock forfeited from shares issued in exchange for LLC interest in recapitalization (in shares) | 0 | -70,695 | |||||||||||||||||||||||
Restricted stock forfeited from shares issued in exchange for LLC interest in recapitalization | 0 | 0 | -71 | 71 | 0 | ||||||||||||||||||||
Issuance of restricted stock for compensation | 0 | 0 | 7,486 | -7,486 | 0 | ||||||||||||||||||||
Issuance of restricted stock for compensation (in shares) | 0 | 7,485,776 | |||||||||||||||||||||||
Issuance of stock for cash | 3,612,100 | 0 | 1,782 | 3,610,318 | 0 | 0 | 2,760,409 | 0 | 0 | 0 | 0 | 632,541 | 0 | 0 | 0 | ||||||||||
Issuance of stock for cash (in shares) | 0 | 1,782,457 | 5,000,000 | 0 | 1,176,748 | 0 | |||||||||||||||||||
Common stock repurchases | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Common stock repurchases (in shares) | 0 | 0 | |||||||||||||||||||||||
Other comprehensive income | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Net loss | -4,731,072 | 0 | 0 | 0 | -4,731,072 | 0 | 0 | 0 | |||||||||||||||||
Balance at Dec. 31, 2013 | 753,132 | 3,392,950 | 16,267 | 5,467,937 | -4,731,072 | 0 | 0 | 0 | |||||||||||||||||
Balance (in shares) at Dec. 31, 2013 | 6,176,748 | 16,267,038 | 0 | 0 | 0 | ||||||||||||||||||||
Equity-based compensation | 2,873,396 | 2,873,396 | |||||||||||||||||||||||
Restricted stock forfeited | 0 | -424 | 424 | ||||||||||||||||||||||
Restricted stock forfeited (in shares) | -424,170 | ||||||||||||||||||||||||
Issuance of stock for cash | 6,021,144 | 2,398 | 6,018,746 | ||||||||||||||||||||||
Issuance of stock for cash (in shares) | 2,398,065 | ||||||||||||||||||||||||
issuance of common stock | 225,001 | 835,000 | 176 | 500 | 224,825 | 834,500 | 3,012,730 | 1,804 | 3,010,926 | ||||||||||||||||
issuance of common stock (in shares) | 175,782 | 500,000 | 1,804,030 | ||||||||||||||||||||||
issuance of common stock warrants | 153,759 | 153,759 | |||||||||||||||||||||||
Record merger with eOn | 14,881,045 | -3,392,950 | 7,206 | 32,691,799 | -17,820,671 | 2,381 | 329 | 1 | |||||||||||||||||
Record merger with eOn (in shares) | -6,176,748 | 7,206,841 | 2,381,090 | 328,600 | 1,102 | ||||||||||||||||||||
Record beneficial conversion feature for Series B | 0 | 436,916 | -436,916 | ||||||||||||||||||||||
Treasury shares (in shares) | 69,542 | ||||||||||||||||||||||||
Treasury shares | 70 | 70 | |||||||||||||||||||||||
Net loss | -20,084,554 | 0 | 0 | 0 | -20,084,554 | 0 | 0 | 0 | |||||||||||||||||
Balance at Dec. 31, 2014 | $8,670,723 | $0 | $27,997 | $51,713,228 | ($43,073,213) | $2,381 | $329 | $1 | |||||||||||||||||
Balance (in shares) at Dec. 31, 2014 | 0 | 27,997,128 | 2,381,090 | 328,600 | 1,102 |
CONSOLIDATED_STATEMENTS_OF_STO1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $) | 1 Months Ended | |
Oct. 31, 2013 | 31-May-13 | |
Payments of Stock Issuance Costs | $434,641 | |
Sale of Stock, Price Per Share | $3.21 | |
Series A One Redeemable Convertible Preferred Stock [Member] | ||
Sale of Stock, Price Per Share | $0.01 | |
Series A Two Redeemable Convertible Preferred Stock [Member] | ||
Payments of Stock Issuance Costs | $501,475 | |
Sale of Stock, Price Per Share | $1.70 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities | ||
Net loss | ($20,084,554) | ($4,731,072) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation expense | 9,919 | 0 |
Loss on extinguishment of notes payable | 5,643,607 | 0 |
Decrease in fair value of derivative liabilities | -783,129 | -539,467 |
Amortization of discount on notes payable | 883,125 | 353,009 |
Impairment of acquired contracts | 686,350 | 0 |
Amortization of patents and acquired contracts | 1,557,107 | 293,176 |
Stock-based compensation | 2,873,396 | 1,872,104 |
Issuance of new stock in conjunction with the restricted stock granted | 225,001 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable | -259,049 | 0 |
Inventories | 12,207 | 0 |
Prepaid expenses and other current assets | -113,282 | -73,207 |
Deposits and other assets | 1,406 | -20,399 |
Accounts payable | 906,835 | 602,564 |
Accrued expenses and other current liabilities | 114,971 | 0 |
Accrued interest on notes payable | -6,935 | 6,935 |
Warranty reserve | -38,143 | 0 |
Net cash used in operating activities | -8,371,167 | -2,236,357 |
Cash flows from investing activities | ||
Purchases of property and equipment | -52,186 | 0 |
Issuance of short-term note receivable, related party | -3,000,000 | 0 |
Purchases of patents | 0 | -9,455,585 |
Cash received in acquisition | 790,172 | 0 |
Net cash used in investing activities | -2,262,014 | -9,455,585 |
Cash flows from financing activities | ||
Proceeds from issuance of common stock, net of issuance costs | 6,021,144 | 3,612,100 |
Proceeds from issuance of convertible notes payable, net of issuance costs | 3,371,834 | 4,950,000 |
Proceeds from issuance of notes payable | 9,964,868 | 3,100,000 |
Proceeds from related party note payable | 300,000 | 0 |
Payments on short-term notes payable, related party | -100,000 | 0 |
Payments on convertible notes | -8,000,000 | 0 |
Payments on guaranteed payment liability | -1,000,000 | 0 |
Net cash provided by financing activities | 10,557,846 | 13,210,626 |
Net increase in cash and cash equivalents | -75,335 | 1,518,684 |
Cash and cash equivalents, beginning of year | 1,518,684 | 0 |
Cash and cash equivalents, end of year | 1,443,349 | 1,518,684 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 516,919 | 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 | 5,056,296 | 13,510,178 |
Offset of short-term related party notes payable and receivable | 3,000,000 | 0 |
Fair value of convertible notes payable redemption derivative liability | 0 | 534,975 |
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 operating activities | ||
Net loss | 0 | 0 |
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 operating activities | ||
Net loss | 0 | 0 |
Cash flows from financing activities | ||
Proceeds from issuance of redeemable convertible preferred stock | $0 | $1,498,526 |
Organization
Organization | 12 Months Ended |
Dec. 31, 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 annual report are reflected post-split. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |
Dec. 31, 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”). The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. | ||
Liquidity and Capital Resources | ||
At December 31, 2014, the Company has an accumulated deficit since inception of $43,073,213 and had a negative working capital of $2,113,933. As of March 20, 2015, we had remaining cash of approximately $1.6 million (which includes $1,000,000 of minimum cash reserves (see discussion, Note 6), which is intended to serve as additional collateral for the Fortress agreement). These factors raise substantial doubt about our ability to continue as a going concern. While the Company entered into its first license agreement in February 2015 and received an additional drawdown from the Fortress Agreement of $1,199,500 as a result, our continuation as a going concern is dependent both on achieving additional licensing revenue from our patent portfolios and obtaining additional financing on terms acceptable to us. We are seeking additional capital through loans, subject to the restrictions of the Fortress Agreement, and the sale of securities but we cannot assure you that we will be able to obtain additional capital on terms acceptable to us or at all. | ||
The business will require significant amounts of capital over the next twelve months to sustain operations and make the investments it needs to continue operations and execute its longer term business plan. We believe our working capital expenses will be approximately $7.8 million for the next twelve months, which amount consists of approximately $3.7 million in employee related costs, $1.3 million in patent maintenance and prosecution fees, $1.8 million in other operational costs and $1 million of payments relating to the acquisition of our patent portfolios and additionally our Fortress debt servicing fees will be approximately $0.5 million. Based on the foregoing and our existing cash balances and proactive measures to reduce expenses and defer obligations where possible, our management believes we have funds sufficient to meet our anticipated needs for less than three months. | ||
To date, the Company has acquired an aggregate of approximately 755 currently active patents and patent applications for aggregate purchase payments of $12,109,118. We will be required to pay unconditional guaranteed payments to the sellers of the patents of an aggregate of $20 million ($18 million of which to be paid out of net revenues from patent licensing receipts) for the next three years through December 31, 2017 (with a net present value of $16.9 million,). See Note 10 herein for further information on these guaranteed payments. | ||
The Company had cash and cash equivalents of $1,443,349 (which includes $1,000,000 of minimum cash reserves (see discussion, Note 6), which is intended to serve as additional collateral for the Fortress agreement) and negative working capital of $2,113,933 as of December 31, 2014. The Company’s net loss for the twelve months ended December 31, 2014 was $20,084,554 and our accumulated deficit amount was $43,073,213 as of December 31, 2014. As of December 31, 2014, our cash and cash equivalents consisted of the net proceeds of $9,964,868 (less issuance costs of $450,253) received from the original Fortress Notes and Fortress Shares (after the payment of all purchaser-related fees and expenses relating to such issuances) and $3,500,000 that was previously held in a cash collateral account being released to the Company as a result of the termination of the Secured Convertible Notes, which offset with payment of $8,000,000 plus interest of $187,351 to the holders of Secured Convertible Notes, $1,000,000 payment to a seller of patents, and various other payments for general working capital purposes. On February 11, 2015, we entered into our first license agreement, for which we expect to receive an aggregate of $2,000,000 of proceeds over the course of the license. Additionally, on February 25, 2015, the Company amended and restated its revenue sharing and note purchase agreement with Fortress pursuant to which Fortress will make available to the Company an additional $3,000,000 (the “Additional Available Credit”) based on revenue the Company generates from certain near-term existing and future license agreements between February 25, 2015 and December 31, 2015 which will be drawn down by the Company in the form of senior secured notes (the “Additional Notes”) with the same characteristics as the Fortress Notes. On February 25, 2015, the Company drew down $1,199,500 from the Additional Available Credit and issued Additional Notes in that principal amount to Fortress. After the payment of all purchaser-related fees and expenses relating to such issuances, the Company received net proceeds of $1,172,885. A detailed description of the amended Fortress agreement is set forth in Note 11 herein. | ||
The Company will also require additional financing for the purchase of additional patent portfolios and to fund their monetization efforts if new attractive opportunities are found. If the Company acquires additional large patent portfolios, in addition to the cost of the upfront purchase fee (if any) it is likely that additional resources (business, technical or legal) may need to be hired to effectively monetize the portfolio. Resources to analyze new portfolios are already part of the current staffing of the Company. Litigation costs are based primarily on a contingent fee structure (expected to average less than 20% of license revenue for a portfolio) and as such do not scale significantly with the acquisition of new portfolios. Acquisitions or investments may be consummated through the use of cash, equity, seller financing, third party debt, earn-out obligations, revenue sharing, profit sharing, or some combination of two or more of these types of consideration. Due to the current state of the credit markets, the Company is not able to predict with any certainty whether it could obtain debt or equity financing to provide additional sources of liquidity, should the need arise, at favorable rates. | ||
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. | ||
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 December 31, 2014, the Company has not established 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 less accumulated depreciation and amortization. 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. On December 31, 2014, the Company recorded an impairment charge of $686,350 as a result of terminating an acquired contract in the first quarter of 2015 that provided distribution services of facility security and access control products that the Company inherited as part of the Merger. | ||
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 option 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 has a full valuation allowance on all deferred tax assets. | ||
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. | ||
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 minimize 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 Issued Accounting Standards | ||
In May 2014, the FASB issued a new financial accounting standard which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. ASU 2014-09 Revenue from Contracts with Customers is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. We are currently evaluating the impact of this accounting standard. | ||
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. | ||
In August 2014, the FASB issued a new accounting standard which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period and to provide related footnote disclosures in certain circumstances. ASU 2014-15 Presentation of Financial Statements - Going Concern is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact of this accounting standard. | ||
Business_Combination
Business Combination | 12 Months Ended | |||||||
Dec. 31, 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”). The primary reason for the Merger is to allow the Company access to the public equity market for financing. | ||||||||
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 December 31, 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. Goodwill was based on fair value of eOn stock on the date of purchase less the net assets that were acquired. 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. There was an impairment of $686,350 on one of the acquired contracts for the twelve months ended December 31, 2014. | ||||||||
Acquisition-related costs directly attributable to the Merger totaling $1,237,641 for the twelve months ended December 31, 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 twelve months ended December 31, 2014 with the twelve months ended December 31, 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 twelve months ended | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Revenue | $ | 1,122,234 | $ | 744,000 | ||||
Net loss | $ | 24,711,553 | $ | 4,495,400 | ||||
Pro forma net loss was adjusted to exclude Merger related expenses of $1,237,641 and $1,250,000 for the twelve months ended December 31, 2014 and 2013, respectively. Additional expense for the amortization of acquired intangible assets of $111,833 and $268,400 for the twelve months ended December 31, 2014 and 2013, respectively, was included in the net loss. | ||||||||
Patents
Patents | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||
Patents | 4. Patents | ||||||||||||
Patent intangible assets consist of the following at December 31, 2014: | |||||||||||||
Weighted | Gross Carrying | Accumulated | Net Carrying | ||||||||||
Average | Amount | Amortization | Amount | ||||||||||
Useful Life | |||||||||||||
Amortizable intangible assets: | |||||||||||||
Patents | 8 | $ | 12,109,118 | $ | -1,693,714 | $ | 10,415,404 | ||||||
Total patent intangible assets | $ | 12,109,118 | $ | -1,693,714 | $ | 10,415,404 | |||||||
The Company expects amortization expense to be approximately $1,550,334 per year for each of the next six years and a pro rata portion in the last year. | |||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
Fair Value Measurements | 5. Fair Value Measurements | |||||||||||||
The following tables summarize the Company's assets and liabilities measured at fair value on a recurring basis at December 31, 2014 and December 31, 2013: | ||||||||||||||
31-Dec-14 | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Common stock warrants | $ | 30,278 | $ | - | $ | - | $ | 30,278 | ||||||
Total | $ | 30,278 | $ | - | $ | - | $ | 30,278 | ||||||
December 31, 2013 | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Convertible notes payable redemption derivative liability | $ | 534,975 | $ | - | $ | - | $ | 534,975 | ||||||
Series A-1 preferred stock derivative liability | $ | 56,926 | $ | - | $ | - | $ | 56,926 | ||||||
Total | $ | 591,901 | $ | - | $ | - | $ | 591,901 | ||||||
As discussed in Note 6, prior to the Merger, the Company issued Senior Secured Notes (defined below) which were redeemable upon an event of default. The Senior Secured Notes were later exchanged in favor of the Amended Secured Convertible Notes (defined below), resulting in an extinguishment of the related derivative liability for the prior Senior Secured Notes. Also discussed in Note 6, the Company then issued the New Secured Convertible Notes, which may be redeemed upon an event of default. 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. The Secured Convertible Notes were paid in full on October 2, 2014, resulting in an extinguishment of the related derivative liability, see Note 6 below. | ||||||||||||||
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 December 31, 2014, the threshold price was $0.289 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 December 31, 2014 was estimated using the following assumptions: | ||||||||||||||
Expected volatility | 60 | % | ||||||||||||
Risk free rate | 1.35 | % | ||||||||||||
Dividend yield | 0 | % | ||||||||||||
Expected term (in years) | 4.0726 | |||||||||||||
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 twelve months ended December 31, 2014 and December 31, 2013: | ||||||||||||||
Series A-1 | ||||||||||||||
Convertible | Preferred | Common | ||||||||||||
Notes Payable | Stock | Stock | ||||||||||||
Derivative Liability | Derivative Liability | Warrants | ||||||||||||
Balance at December 31, 2012 | $ | - | $ | - | $ | - | ||||||||
Fair value at issuance | 582,903 | 548,465 | - | |||||||||||
Change in fair value | -47,928 | -491,539 | - | |||||||||||
Balance at December 31, 2013 | $ | 534,975 | $ | 56,926 | $ | - | ||||||||
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 | -434,500 | - | - | |||||||||||
Fair value at issuance | 189,300 | - | 466,706 | |||||||||||
Change in fair value | -289,775 | -56,926 | -436,428 | |||||||||||
Balance at December 31, 2014 | $ | - | $ | - | $ | 30,278 | ||||||||
Borrowing_Arrangements
Borrowing Arrangements | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Debt Disclosure [Abstract] | |||||
Borrowing Arrangements | 6. Borrowing Arrangements | ||||
On May 10, 2013, the Company issued senior secured promissory notes (the “Senior Secured Notes” and as amended on March 26, 2014, the “Amended Secured Convertible 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. 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 certain secured convertible notes (the "New Secured Convertible Notes” and together with the Amended Secured Convertible Notes, the “Secured Convertible Notes”) with an aggregate principal of $3,000,000 with similar terms and conditions as the Amended Secured Convertible Notes. | |||||
On October 1, 2014, the Company paid the holders of the Amended Secured Convertible Notes and the New Secured Convertible Notes $8,000,000, plus interest of $187,351. In addition, the Company issued an aggregate of 1,804,030 shares of common stock to the note holders, who otherwise had the right to convert the existing notes into 1,508,162 shares of 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. As a result of the issuance of shares, the Company recorded a loss on extinguishment of $3,240,414. Immediately following the prepayment of the Secured Convertible Notes and the issuance of the shares, the Secured Convertible Notes were deemed paid in full. | |||||
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 $185,474 for the twelve months ended December 31, 2014. | |||||
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. On January 14, 2014, 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. | |||||
On September 23, 2014, the Company entered into a Share Purchase Agreement with Joseph W. Beyers, the Company’s Chairman and Chief Executive Officer, pursuant to which the Company agreed to issue to Mr. Beyers up to 233,640 shares of our common stock, at a purchase price of $2.14 per share for aggregate consideration to us of up to $500,000. Pursuant to the terms of such agreement and concurrently with the execution of the agreement, Mr. Beyers made an initial payment of $300,000 to the Company towards the aggregate purchase price. The shares were only to be issued if we did not obtain $6 million or more in debt financing within ten business days of the execution of the agreement. As a result of the Fortress Agreement the Company is required to return the $300,000 in cash previously prepaid by Mr. Beyers and the Company will not issue any securities as a result of the Share Purchase Agreement. As of December 31, 2014, Mr. Beyers has deferred repayment, accordingly the $300,000 has been recorded as a related party loan payable. | |||||
On October 1, 2014 the Company entered into the original Fortress Agreement with 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 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 $9,964,868 (less issuance costs of $450,253). The Company used the net proceeds to payoff 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. In addition, 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. This was accounted for as a discount on notes payable. | |||||
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. This was accounted for as a discount on notes payable. | |||||
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. In connection with the Revenue Participants right to receive a portion of the Company’s Monetization Revenues, the Company has recorded a net liability of $2,478,057, which represents the fair value of the expected Monetization Revenues, discounted 20% over the expected life of the revenue share agreement. | |||||
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”), $3,000,000 of which was committed in March 2015 against future license receivables. 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. | |||||
As part of the transaction, the Company is required to maintain a minimum $1,000,000 in cash reserves. Failure to maintain that minimum cash balance can constitute an event of default under the Fortress Agreement. If we were to default under the Fortress Agreement and were unable to obtain a waiver for such a default, interest on the obligations would accrue at an increased rate. In the case of a default, Fortress could accelerate our obligations under the Fortress Agreement. See further, Risk Factors. | |||||
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. The shares were issued by the Company under the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder, as they were issued to accredited investors, without a view to distribution, and were not issued through any general solicitation or advertisement. | |||||
On October 1, 2014, the Company paid the holders of the Amended Secured Convertible Notes and the New Secured Convertible Notes $8,000,000, plus interest of $187,351. In addition, the Company issued an aggregate of 1,804,030 shares of common stock to the note holders, who otherwise had the right to convert the existing notes into 1,508,162 shares of 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 prepayment of the Secured Convertible Notes and the issuance of the shares, the Secured Convertible Notes were deemed paid in full. Further, as a result of the termination of the Existing Notes, $3,500,000 previously held in a cash collateral account in connection with the Existing Notes were 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. As discussed in Note 7, the Company also issued a 5 year warrant to purchase 247,500 shares common stock at an exercise price of $2.00 to National Securities Corporation, who acted as advisor to the Company with respect to the transaction. The warrant meets the requirements to be accounted for as an equity warrant. The Company estimated the fair value of the warrant to be $153,759, using the Black-Scholes option pricing model. The fair value of the warrant as of November 1, 2014 was estimated using the following assumptions: | |||||
Expected volatility | 60 | % | |||
Risk free rate | 1.62 | % | |||
Dividend yield | 0 | % | |||
Expected term (in years) | 5 | ||||
The assumptions utilized were derived in a similar manner as discussed in Note 7 related to the fair value of stock options. | |||||
See also the Amended and Restated Revenue Sharing and Note Purchase Agreement entered into with Fortress, effective February 25, 2015 (“Amended Fortress Agreement”). A detailed description of the Amended Fortress Agreement is set forth in Note 11 herein. | |||||
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Stockholders Equity Note [Abstract] | ||||||||||||||
Stockholders' Equity | 7. Stockholders’ Equity | |||||||||||||
Conversion from LLC | ||||||||||||||
In January 2013, Inventergy, Inc.’s sole member converted all then outstanding liabilities owed 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 December 31, 2014: | ||||||||||||||
Series A convertible preferred stock | 3,831,229 | |||||||||||||
Series B convertible preferred stock | 550,858 | |||||||||||||
Convertible notes payable | - | |||||||||||||
Options to purchase common stock | 2,417,918 | |||||||||||||
Shares reserved for issuance pursuant to 2014 Stock Plan | 689,529 | |||||||||||||
Warrants | 1,164,648 | |||||||||||||
Total | 8,654,182 | |||||||||||||
Convertible preferred stock | ||||||||||||||
Convertible preferred stock as of December 31, 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 | 5,000,000 | 2,381,090 | $ | 2,356,633 | |||||||
Series A-2 | $ | 1.6996 | 1,176,748 | 1,176,748 | 328,600 | $ | 558,489 | |||||||
Series B | $ | 1,000.00 | 2,750 | 2,750 | 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) 2.00, 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 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 $0.289). Since the only Substantial Holder as defined in the Certificate of Designations for the Series A Preferred Stock (“COD”) no longer has 20% or greater of their original stock purchase (as of March 23, 2015, their percentage is approximately 4%) , the Series A Preferred Stock Protective Provisions as provided in the COD are no longer in effect. | ||||||||||||||
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 $0.289). | ||||||||||||||
As a result of the issuance of the Fortress Shares pursuant to a subscription agreement dated October 1, 2014 (as described in Note 6 below), the conversion price for the Series B Preferred Stock was reduced from $2.14 to $2.00. | ||||||||||||||
As a result of the issuance of the Fortress warrants as discussed above, the conversion price for the Series B Preferred Stock was reduced from $2.00 to $1.14. 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 warrants to purchase shares of common stock at an exercise price per share or any shares of common stock for a consideration per share less than the current $1.14 conversion price. | ||||||||||||||
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 was reduced to its floor of $2.27 as a result of the sale of the Fortress Shares. 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 December 31, 2014 as discussed in Note 5. | ||||||||||||||
On November 1, 2014 the Company issued 277,500 warrants to purchase common stock with a weighted average exercise price of $2.07. The fair value of the warrants at issuance was $164,196. | ||||||||||||||
Common stock warrants outstanding as of December 31, 2014 are listed as follows: | ||||||||||||||
Warrants | Remaining | |||||||||||||
Outstanding | Contractual Life (years) | Weighted Average Exercise | ||||||||||||
247,500 | 4.84 | $ | 2 | |||||||||||
30,000 | 2.84 | $ | 2.66 | |||||||||||
238,412 | 4.08 | $ | 2.27 | |||||||||||
515,912 | 4.37 | $ | 2.16 | |||||||||||
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Workers Compensation Discount [Abstract] | |||||||||||||||
Stock-Based Compensation | 8. Stock-Based Compensation | ||||||||||||||
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 Grant | Number of Shares | Weighted Average Exercise Price Per Share | |||||||||||||
Balance at December 31, 2013 | 1,286,647 | 1,611,848 | $ | 2.27 | |||||||||||
Authorized | 706,950 | - | $ | - | |||||||||||
Options Granted | -1,109,198 | 1,109,198 | $ | 2.8 | |||||||||||
Options assumed in merger | - | 15,000 | $ | 14.3 | |||||||||||
Restricted Stock Granted | -194,870 | 194,870 | $ | 1.45 | |||||||||||
Restricted Stock Vested | - | -512,998 | $ | 1.96 | |||||||||||
Balance at December 31, 2014 | 689,529 | 2,417,918 | $ | 2.59 | |||||||||||
Total vested and expected to vest shares (options) | 2,417,918 | $ | 2.59 | ||||||||||||
Total vested shares (options) | 676,275 | $ | 2.77 | ||||||||||||
As of December 31, 2014, all of the restricted stock granted under the plan had vested. The aggregate intrinsic value of stock options outstanding, stock options vested and expected to vest, and exercisable at December 31, 2014 was zero, since all of the options were out-of-the-money at December 31, 2014. | |||||||||||||||
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 December 31, 2014, 4,509,238 shares were vested, and 424,170 shares were cancelled or forfeited (unvested). | |||||||||||||||
As part of the merger, 15,000 fully vested options with an exercise price of $14.30, were assumed by Inventergy Global, Inc., and remained outstanding as of December 31, 2014. | |||||||||||||||
The following table summarizes information with respect to stock options outstanding at December 31, 2014: | |||||||||||||||
Options Outstanding | Options Vested | ||||||||||||||
Exercise | Shares | Weighted- | Weighted- | Shares | Weighted- | ||||||||||
Price Per | Outstanding | Average | Average | Exercisable | Average | ||||||||||
Share | Remaining | Exercise | Exercise | ||||||||||||
Contractual | Price | Price Per | |||||||||||||
Life (Years) | Share | ||||||||||||||
$ | 0.77 | 150,000 | 9.92 | $ | 0.77 | - | $ | - | |||||||
$ | 2.05 | 56,900 | 9.58 | $ | 2.05 | - | $ | - | |||||||
$ | 2.27 | 1,293,720 | 8.94 | $ | 2.27 | 497,558 | $ | 2.27 | |||||||
$ | 3.04 | 742,298 | 9.33 | $ | 3.04 | 123,717 | $ | 3.04 | |||||||
$ | 3.85 | 160,000 | 9.45 | $ | 3.85 | 40,000 | 3.85 | ||||||||
$ | 14.3 | 15,000 | 1.45 | $ | 14.3 | 15,000 | $ | 14.3 | |||||||
2,417,918 | 9.12 | $ | 2.59 | 676,275 | $ | 2.77 | |||||||||
Stock-based compensation expense | |||||||||||||||
The fair value of employee stock options granted was estimated using the following weighted-average assumptions for the twelve months ended December 31: | |||||||||||||||
2014 | 2013 | ||||||||||||||
Expected volatility | 75 | % | 80 | % | |||||||||||
Risk free rate | 1.77 | % | 1.77 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||
Expected term (in years) | 5.78 | 5.93 | |||||||||||||
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 twelve months ended | For the twelve months ended | ||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||
General and administrative | $ | 2,873,396 | $ | 1,872,104 | |||||||||||
In November 2014, the Company modified the terms to an option granted to a former director. The Company determined that there was no incremental compensation expense associated with the modification. | |||||||||||||||
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 December 31, 2014, there were total unrecognized compensation costs of $3,152,985 related to these stock awards. These costs are expected to be recognized over a period of approximately 1.58 years. | |||||||||||||||
Non-employee stock-based compensation expense | |||||||||||||||
For the twelve months ended December 31, 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 $1,316,036 and $779,380 for the twelve months ended December 31, 2014 and December 31, 2013, 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 | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Income Tax Disclosure [Abstract] | ||||||||
Income Taxes | 9. Income Taxes | |||||||
The Company recorded $2,400 and $0 provision for income taxes for the years ended December 31, 2014 and 2013, respectively. | ||||||||
Income tax expense was comprised of the following: | ||||||||
2014 | 2013 | |||||||
Current | ||||||||
Federal | $ | - | $ | - | ||||
State | 2,400 | - | ||||||
$ | 2,400 | $ | - | |||||
Deferred | ||||||||
Federal | $ | - | $ | - | ||||
State | - | - | ||||||
$ | - | $ | - | |||||
Expense | $ | 2,400 | $ | - | ||||
A reconciliation of the statutory federal income tax rate to the effective tax rate for the years ended December 31 was as follows: | ||||||||
2014 | 2013 | |||||||
Statutory federal income tax rate | 34 | % | 34 | % | ||||
State income taxes (net of federal benefit) | 5.83 | 5.83 | % | |||||
Loss on extinguishment of notes | -12.44 | 0 | ||||||
Stock compensation | -0.31 | -14.22 | ||||||
Other permanent differences | 0.11 | 4.3 | ||||||
True ups | 12.3 | 0 | ||||||
Change in valuation allowance | -39.5 | -29.91 | ||||||
Total | -0.01 | % | 0 | % | ||||
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, the Company has provided a full valuation allowance against its deferred tax assets as of December 31, 2014 and 2013. | ||||||||
The components of the net deferred tax assets and liabilities are as follows: | ||||||||
2014 | 2013 | |||||||
Deferred Tax Assets: | ||||||||
Accrued Liabilities | $ | 722,899 | $ | 73,082 | ||||
Intangibles | 3,115,849 | 1,171,673 | ||||||
Fixed Assets | 2,988 | - | ||||||
NOL Carryforwards | 7,773,560 | 170,103 | ||||||
Inventory Reserve | 3,705 | - | ||||||
Allowance for Doubtful Accounts | 16,281 | - | ||||||
Gross Deferred Tax Asset | 11,635,282 | 1,414,858 | ||||||
Valuation Allowance | -11,436,475 | -1,414,858 | ||||||
Net Deferred Tax Assets | $ | 198,807 | $ | - | ||||
Deferred Tax Liabilities: | ||||||||
Acquired Contracts Intangibles | -198,807 | - | ||||||
Gross Deferred Liabilities | $ | -198,807 | $ | - | ||||
Net Deferred Tax Assets (Liabilities) | $ | 0 | $ | - | ||||
At December 31, 2014, the Company had federal and California net operating loss carryforwards of approximately $39.3 million and $11.4 million, respectively, expiring beginning in 2021 for federal and 2015 for California. 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. An ownership change date did occur in June 2014 at the merger with eOn so that an annual limitation was estimated to reduce the federal net operating loss carryforward to approximately $20.9 million with no further limitation to the CA net operating loss carryforward . Notwithstanding, these federal and state net operating loss carryforwards could be further reduced if there are further ownership changes either prior to or after the merger. | ||||||||
At December 31, 2014, the gross liability for uncertain tax positions was $0. The Company does not anticipate a significant change to unrecognized tax benefits for uncertain income tax positions within the next 12 months. | ||||||||
It is the Company’s practice to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2014 and 2013, the Company had no interest and penalties related to income taxes. | ||||||||
The Company conducts business with the US, files income tax returns in the U.S. federal jurisdiction and California. In the normal course of business, the Company is subject to examination by taxing authorities including the United States and California. The Company is not currently under audit or examination by either of these jurisdictions. The federal and California statute of limitations remains open back to 2011 for federal and 2010 for California. However, due to the fact that the Company has net operating losses carried forward dating back to 2001, certain items attributable to technically closed years are still subject to adjustment by the relevant taxing authority through an adjustment to the tax attributes carried forward to open years. | ||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 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 twelve months ended December 31, 2014. The future minimum payments related to this lease are as follows: | |||||
Years ending December 31 | |||||
2015 | 112,895 | ||||
2016 | 116,201 | ||||
2017 | 68,587 | ||||
Total | $ | 297,683 | |||
Rent expense was approximately $108,372, and $74,334 for the twelve months ended December 31, 2014 and 2013, respectively. | |||||
Guaranteed payments | |||||
The Company has entered into agreements to purchase certain patent assets. The Company will be required to pay the remaining future unconditional guaranteed payments of $20,000,000 ($18 million of which to be paid out of net revenues from patent licensing receipts) for the next three years through December 31, 2017 representing purchase of patents and minimum revenue sharing from the Company’s licensing and/or similar transactions regarding the purchased patents to other parties. The guaranteed payments are accrued on the Company’s accompanying balance sheet as of December 31, 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 December 31, 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: | |||||
2015 | 4,000,000 | ||||
2016 | 6,000,000 | ||||
2017 | 10,000,000 | ||||
Less: discount to present value | -3,087,058 | ||||
Guaranteed payments, net of discount | $ | 16,912,942 | |||
Pursuant to the patent purchase agreement with Panasonic, a significant portion of the above guaranteed payments are owed to Panasonic. If the Company’s market capitalization falls below the aggregate dollar amount that the Company owes at that relevant point in time to Panasonic (but only prior to full payment), Panasonic may exercise a limited right to repurchase the Panasonic patent portfolio assets at a purchase price at least equal to the amount the Company paid to purchase the Panasonic patent portfolio. During the year ended December 31, 2014, the Company was in compliance with the terms of the agreement. | |||||
Fortress notes payable | |||||
Pursuant to the Fortress agreement (as described in Note 6), future debt payments are as follows: | |||||
Years ending December 31: | |||||
2015 | 1,421,196 | ||||
2016 | 5,800,606 | ||||
2017 | 4,483,818 | ||||
Total | $ | 11,705,620 | |||
Net_Loss_Per_Share
Net Loss Per Share | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Net Loss Per Share | 11. Net Loss Per Share | |||||||
Basic and diluted net loss per share is calculated using the weighted average number of shares outstanding as follows (in thousands, except per share amounts): | ||||||||
Year Ended December 31, | ||||||||
2014 | 2013 | |||||||
Net loss attributable to common shareholders | $ | -20,521,470 | $ | -4,731,072 | ||||
Basic and diluted: | ||||||||
Weighted average shares outstanding | 22,036,773 | 8,435,197 | ||||||
Less weighted average restricted shares outstanding | -4,223,699 | - | ||||||
Shares used in calculation of basic and diluted net loss per common share | 17,813,074 | 8,435,197 | ||||||
Net loss per common share: Basic and diluted | $ | -1.15 | $ | -0.56 | ||||
Equity awards, unvested share rights, and common stock equivalent of warrants and preferred stock, aggregating 13.9 million shares, and 11.8 million shares for the year ended December 31, 2014, and 2013, respectively, prior to the application of the treasury stock method, are excluded from the calculation of diluted net loss per share because they are anti-dilutive. | ||||||||
Subsequent_Events
Subsequent Events | 12 Months Ended | ||
Dec. 31, 2014 | |||
Subsequent Events [Abstract] | |||
Subsequent Events | 12. Subsequent Events | ||
On January 23, 2015, Sonus Networks, Inc., filed a declaratory judgment complaint in the Northern District of California (the “California Action”) naming the Company and Inventergy as defendants and alleging non-infringement of seven patents from Inventergy’s IMS/VOIP patent portfolio. On January 26, 2015, Inventergy filed and served Sonus with a complaint in the District of Massachusetts (the “Massachusetts Action”), where Sonus is headquartered, alleging infringement of the same seven patents at issue in the California Action. On January 27, 2015, Sonus served Inventergy with its declaratory judgment complaint relating to the California Action. On February 17, 2015, Inventergy filed a motion to dismiss the California Action, or in the alternative to transfer the case to the District of Massachusetts. On the same day, Sonus filed a motion to dismiss the Massachusetts Action, or in the alternative to transfer the case to the Northern District of California. On March 10, 2015, Sonus filed an amended declaratory judgment complaint in the Northern District of California relating to the California Action, alleging non-infringement of the same seven patents, unfair competition, breach of contract and a RICO claim under 18 USC 1961. This amended complaint mooted the Company’s original motion to dismiss. On March 24, 2014, the Company filed a new motion to dismiss Sonus’ amended complaint in the California Action, for lack of demonstrated subject matter jurisdiction for Sonus’ declaratory judgment claims of non-infringement and also for failure to state any claim for its other causes of action. Both the California Action and Massachusetts Action are pending. | |||
On February 11, 2015, the Company entered into a five year patent license agreement for a total of $2 million with a mid-tier telecommunications technology company providing IP Multimedia Subsystems (IMS) solutions. The signed agreement provides a five-year license to two of Inventergy’s portfolios purchased from Nokia and Huawei. These assets include 56 patent families comprised of over 250 patents and patent applications including standards-essential patents pertaining to IMS technology. | |||
Effective February 25, 2015, the Company entered into an Amended and Restated Revenue Sharing and Note Purchase Agreement (the “Amended Agreement”) with Fortress. The Amended Agreement amends the Original Fortress Agreement. Pursuant to the Amended Agreement, Fortress agreed to make available to the Company up to an additional $3,000,000 between February 25, 2015 and December 31, 2015 (the “Additional Available Credit”). The Additional Available Credit would be drawn down in the form of senior secured notes (the “Additional Notes” and, together with the Original Notes, the “Fortress Notes”) and the additional amount loaned would be based on revenue the Company generates from certain near-term existing and future license agreements (“Draw Down Licenses”). On February 25, 2015, the Company drew down $1,199,500 from the Additional Available Credit and issued Additional Notes in that principal amount to Fortress. In connection with the issuance of the Additional Available Credit, the Company issued 500,000 warrants to purchase shares of the Company’s common stock. After the payment of all purchaser-related fees and expenses relating to such issuances, the Company received net proceeds of $1,172,885. The Company will use these net proceeds for general working capital purposes. | |||
In addition to the issuance of the Additional Notes, the Amended Agreement amended the Original Agreement as follows: | |||
· | The structuring fee equal to 3.5% of the original principal amount of any such Additional Notes is waived. | ||
· | The new Additional Notes will be repaid from the future licensing payments on the Draw Down Licenses received from those specific Draw Down licensee(s), while the requirements otherwise to pay 86% of the Monetization Net Revenues towards the original Notes for (i) the upfront payment of the initial Draw Down License and (ii) the remaining future payments of Draw Down Licenses are waived in general. | ||
· | The Revenue Participants are entitled to receive $7,700,000 (adjusted from the terms of the Original Notes) plus 70% of the Additional Notes as a portion of the Revenue Stream Basis (as defined below) if the Notes and Revenue Stream payments are paid in full by the Maturity Date or $9,350,000 (adjusted from the terms of the Original Notes) plus 85% of the Additional Notes as a portion of the Revenue Stream Basis if the Notes and Revenue Stream payments are not paid in full by the Maturity Date. The Revenue Stream payments will begin after all obligations on the Notes are paid in full. The Company is required to apply specified decreasing percentages (46% to 31% to 6%) of its net revenues (net of monetization costs) from monetizing its intellectual property assets on an ongoing basis to meet the Revenue Stream payment obligations. Payment of the full Revenue Stream payments in addition to the Note obligations by the Maturity Date would ordinarily occur after the Company receives approximately $60,000,000 in gross licensing revenues, assuming an average monetization cost of 33%. | ||
· | The Company shall not be required to apply the initial installment payment under the first Draw Down License to the Company’s note obligations or the revenue stream under the Amended Agreement. | ||
The Agreement also contemplates the issuance of up to an additional $2,000,000 in notes beyond the Additional Available Credit. | |||
Except as described above, the terms of the New Notes are identical to the terms of the Original Notes issued pursuant to the Original Fortress Agreement. Except as described above, the terms of the Original Agreement, and the Original Notes and Warrants issued thereunder, remain in full force in effect, including the existing Monetization Revenue payments for the Original Notes and the calculation of the termination fee based on the principal of the Notes. | |||
Unregistered Sales of Equity Securities. | |||
In connection with the execution of the original Fortress Agreement, at closing of the transactions with Fortress, the Company issued 500,000 seven-year warrants to purchase shares of the Company’s common stock at an exercise price of $1.14 per share to Fortress for an aggregate purchase price of $40,000. The warrant was issued by the Company under the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder, as they were issued to accredited investors, without a view to distribution, and were not issued through any general solicitation or advertisement. | |||
In connection with the closing of the transactions contemplated by the Fortress Agreement, the Company paid a closing fee of $35,985 and issued a 5-year warrant for the purchase of 26,989 shares of the Company’s common stock at $2.00 per share to National Securities Corporation, a wholly-owned subsidiary of National Holdings, Inc. (“National”). National acted as advisor to the Company with respect to the transaction. | |||
As a result of the issuance of the Fortress warrants as discussed above, the conversion price for the Series B Preferred Stock was reduced from $2.00 to $1.14. 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 warrants to purchase shares of common stock at an exercise price per share or any shares of common stock for a consideration per share less than the current $1.14 conversion price. | |||
Cancellation of Options | |||
On March 25, 2015, the Company cancelled certain unvested options (totaling 1,432,661) granted to employees and directors under the Company’s 2014 Stock Plan , which had exercise prices ranging from $2.05 to $3.85, 10 year terms and 1 to 4 year vesting terms. In addition, on March 25, 2015, the Company issued new options to the same employees and directors under the 2014 Stock Plan . The Company granted an aggregate of 1,269,845 options to its employees, the vesting schedules of which were increased by 12 months as compared to the cancelled options – an increase from an average vesting schedule spanning 2.1 years to 3.1 years. The Company also granted an aggregate of 162,816 options to its directors, the vesting schedules of which were left substantially unchanged as compared to the cancelled options which had been set to align with the service time of each board member. The new options have an exercise price of $1.14 per share, which is a 48% premium to the closing price of the Company’s common stock as of March 25, 2015. | |||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |
Dec. 31, 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”). The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. | ||
Liquidity and Capital Resources | Liquidity and Capital Resources | |
At December 31, 2014, the Company has an accumulated deficit since inception of $43,073,213 and had a negative working capital of $2,113,933. As of March 20, 2015, we had remaining cash of approximately $1.6 million (which includes $1,000,000 of minimum cash reserves (see discussion, Note 6), which is intended to serve as additional collateral for the Fortress agreement). These factors raise substantial doubt about our ability to continue as a going concern. While the Company entered into its first license agreement in February 2015 and received an additional drawdown from the Fortress Agreement of $1,199,500 as a result, our continuation as a going concern is dependent both on achieving additional licensing revenue from our patent portfolios and obtaining additional financing on terms acceptable to us. We are seeking additional capital through loans, subject to the restrictions of the Fortress Agreement, and the sale of securities but we cannot assure you that we will be able to obtain additional capital on terms acceptable to us or at all. | ||
The business will require significant amounts of capital over the next twelve months to sustain operations and make the investments it needs to continue operations and execute its longer term business plan. We believe our working capital expenses will be approximately $7.8 million for the next twelve months, which amount consists of approximately $3.7 million in employee related costs, $1.3 million in patent maintenance and prosecution fees, $1.8 million in other operational costs and $1 million of payments relating to the acquisition of our patent portfolios and additionally our Fortress debt servicing fees will be approximately $0.5 million. Based on the foregoing and our existing cash balances and proactive measures to reduce expenses and defer obligations where possible, our management believes we have funds sufficient to meet our anticipated needs for less than three months. | ||
To date, the Company has acquired an aggregate of approximately 755 currently active patents and patent applications for aggregate purchase payments of $12,109,118. We will be required to pay unconditional guaranteed payments to the sellers of the patents of an aggregate of $20 million ($18 million of which to be paid out of net revenues from patent licensing receipts) for the next three years through December 31, 2017 (with a net present value of $16.9 million,). See Note 10 herein for further information on these guaranteed payments. | ||
The Company had cash and cash equivalents of $1,443,349 (which includes $1,000,000 of minimum cash reserves (see discussion, Note 6), which is intended to serve as additional collateral for the Fortress agreement) and negative working capital of $2,113,933 as of December 31, 2014. The Company’s net loss for the twelve months ended December 31, 2014 was $20,084,554 and our accumulated deficit amount was $43,073,213 as of December 31, 2014. As of December 31, 2014, our cash and cash equivalents consisted of the net proceeds of $9,964,868 (less issuance costs of $450,253) received from the original Fortress Notes and Fortress Shares (after the payment of all purchaser-related fees and expenses relating to such issuances) and $3,500,000 that was previously held in a cash collateral account being released to the Company as a result of the termination of the Secured Convertible Notes, which offset with payment of $8,000,000 plus interest of $187,351 to the holders of Secured Convertible Notes, $1,000,000 payment to a seller of patents, and various other payments for general working capital purposes. On February 11, 2015, we entered into our first license agreement, for which we expect to receive an aggregate of $2,000,000 of proceeds over the course of the license. Additionally, on February 25, 2015, the Company amended and restated its revenue sharing and note purchase agreement with Fortress pursuant to which Fortress will make available to the Company an additional $3,000,000 (the “Additional Available Credit”) based on revenue the Company generates from certain near-term existing and future license agreements between February 25, 2015 and December 31, 2015 which will be drawn down by the Company in the form of senior secured notes (the “Additional Notes”) with the same characteristics as the Fortress Notes. On February 25, 2015, the Company drew down $1,199,500 from the Additional Available Credit and issued Additional Notes in that principal amount to Fortress. After the payment of all purchaser-related fees and expenses relating to such issuances, the Company received net proceeds of $1,172,885. A detailed description of the amended Fortress agreement is set forth in Note 11 herein. | ||
The Company will also require additional financing for the purchase of additional patent portfolios and to fund their monetization efforts if new attractive opportunities are found. If the Company acquires additional large patent portfolios, in addition to the cost of the upfront purchase fee (if any) it is likely that additional resources (business, technical or legal) may need to be hired to effectively monetize the portfolio. Resources to analyze new portfolios are already part of the current staffing of the Company. Litigation costs are based primarily on a contingent fee structure (expected to average less than 20% of license revenue for a portfolio) and as such do not scale significantly with the acquisition of new portfolios. Acquisitions or investments may be consummated through the use of cash, equity, seller financing, third party debt, earn-out obligations, revenue sharing, profit sharing, or some combination of two or more of these types of consideration. Due to the current state of the credit markets, the Company is not able to predict with any certainty whether it could obtain debt or equity financing to provide additional sources of liquidity, should the need arise, at favorable rates. | ||
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. | ||
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 December 31, 2014, the Company has not established 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 less accumulated depreciation and amortization. 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. On December 31, 2014, the Company recorded an impairment charge of $686,350 as a result of terminating an acquired contract in the first quarter of 2015 that provided distribution services of facility security and access control products that the Company inherited as part of the Merger. | ||
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 option 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 has a full valuation allowance on all deferred tax assets. | ||
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. | ||
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 minimize 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 Issued Accounting Standards | Recently Issued Accounting Standards | |
In May 2014, the FASB issued a new financial accounting standard which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. ASU 2014-09 Revenue from Contracts with Customers is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. We are currently evaluating the impact of this accounting standard. | ||
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. | ||
In August 2014, the FASB issued a new accounting standard which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period and to provide related footnote disclosures in certain circumstances. ASU 2014-15 Presentation of Financial Statements - Going Concern is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact of this accounting standard. | ||
Business_Combination_Tables
Business Combination (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Business Combinations [Abstract] | ||||||||
Purchase price allocation | As of December 31, 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 | 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 twelve months ended December 31, 2014 with the twelve months ended December 31, 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 twelve months ended | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Revenue | $ | 1,122,234 | $ | 744,000 | ||||
Net loss | $ | 24,711,553 | $ | 4,495,400 | ||||
Patents_Tables
Patents (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||
Schedule of Finite-Lived Intangible Assets | Patent intangible assets consist of the following at December 31, 2014: | ||||||||||||
Weighted | Gross Carrying | Accumulated | Net Carrying | ||||||||||
Average | Amount | Amortization | Amount | ||||||||||
Useful Life | |||||||||||||
Amortizable intangible assets: | |||||||||||||
Patents | 8 | $ | 12,109,118 | $ | -1,693,714 | $ | 10,415,404 | ||||||
Total patent intangible assets | $ | 12,109,118 | $ | -1,693,714 | $ | 10,415,404 | |||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables summarize the Company's assets and liabilities measured at fair value on a recurring basis at December 31, 2014 and December 31, 2013: | |||||||||||||
31-Dec-14 | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Common stock warrants | $ | 30,278 | $ | - | $ | - | $ | 30,278 | ||||||
Total | $ | 30,278 | $ | - | $ | - | $ | 30,278 | ||||||
December 31, 2013 | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Convertible notes payable redemption derivative liability | $ | 534,975 | $ | - | $ | - | $ | 534,975 | ||||||
Series A-1 preferred stock derivative liability | $ | 56,926 | $ | - | $ | - | $ | 56,926 | ||||||
Total | $ | 591,901 | $ | - | $ | - | $ | 591,901 | ||||||
Schedule Of Changes In Fair Value Derivative Liability | The fair value of the derivative liability as of December 31, 2014 was estimated using the following assumptions: | |||||||||||||
Expected volatility | 60 | % | ||||||||||||
Risk free rate | 1.35 | % | ||||||||||||
Dividend yield | 0 | % | ||||||||||||
Expected term (in years) | 4.0726 | |||||||||||||
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 twelve months ended December 31, 2014 and December 31, 2013: | |||||||||||||
Series A-1 | ||||||||||||||
Convertible | Preferred | Common | ||||||||||||
Notes Payable | Stock | Stock | ||||||||||||
Derivative Liability | Derivative Liability | Warrants | ||||||||||||
Balance at December 31, 2012 | $ | - | $ | - | $ | - | ||||||||
Fair value at issuance | 582,903 | 548,465 | - | |||||||||||
Change in fair value | -47,928 | -491,539 | - | |||||||||||
Balance at December 31, 2013 | $ | 534,975 | $ | 56,926 | $ | - | ||||||||
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 | -434,500 | - | - | |||||||||||
Fair value at issuance | 189,300 | - | 466,706 | |||||||||||
Change in fair value | -289,775 | -56,926 | -436,428 | |||||||||||
Balance at December 31, 2014 | $ | - | $ | - | $ | 30,278 | ||||||||
Borrowing_Arrangements_Tables
Borrowing Arrangements (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Debt Disclosure [Abstract] | |||||
Schedule of warrant fair value assumptions | The fair value of the warrant as of November 1, 2014 was estimated using the following assumptions: | ||||
Expected volatility | 60 | % | |||
Risk free rate | 1.62 | % | |||
Dividend yield | 0 | % | |||
Expected term (in years) | 5 | ||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 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 December 31, 2014: | |||||||||||||
Series A convertible preferred stock | 3,831,229 | |||||||||||||
Series B convertible preferred stock | 550,858 | |||||||||||||
Convertible notes payable | - | |||||||||||||
Options to purchase common stock | 2,417,918 | |||||||||||||
Shares reserved for issuance pursuant to 2014 Stock Plan | 689,529 | |||||||||||||
Warrants | 1,164,648 | |||||||||||||
Total | 8,654,182 | |||||||||||||
Redeemable Convertible preferred stock | Convertible preferred stock as of December 31, 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 | 5,000,000 | 2,381,090 | $ | 2,356,633 | |||||||
Series A-2 | $ | 1.6996 | 1,176,748 | 1,176,748 | 328,600 | $ | 558,489 | |||||||
Series B | $ | 1,000.00 | 2,750 | 2,750 | 1,102 | $ | 1,102,000 | |||||||
Common stock warrants | Common stock warrants outstanding as of December 31, 2014 are listed as follows: | |||||||||||||
Warrants | Remaining | |||||||||||||
Outstanding | Contractual Life (years) | Weighted Average Exercise | ||||||||||||
247,500 | 4.84 | $ | 2 | |||||||||||
30,000 | 2.84 | $ | 2.66 | |||||||||||
238,412 | 4.08 | $ | 2.27 | |||||||||||
515,912 | 4.37 | $ | 2.16 | |||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 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 Grant | Number of Shares | Weighted Average Exercise Price Per Share | |||||||||||||
Balance at December 31, 2013 | 1,286,647 | 1,611,848 | $ | 2.27 | |||||||||||
Authorized | 706,950 | - | $ | - | |||||||||||
Options Granted | -1,109,198 | 1,109,198 | $ | 2.8 | |||||||||||
Options assumed in merger | - | 15,000 | $ | 14.3 | |||||||||||
Restricted Stock Granted | -194,870 | 194,870 | $ | 1.45 | |||||||||||
Restricted Stock Vested | - | -512,998 | $ | 1.96 | |||||||||||
Balance at December 31, 2014 | 689,529 | 2,417,918 | $ | 2.59 | |||||||||||
Total vested and expected to vest shares (options) | 2,417,918 | $ | 2.59 | ||||||||||||
Total vested shares (options) | 676,275 | $ | 2.77 | ||||||||||||
Outstanding options | The following table summarizes information with respect to stock options outstanding at December 31, 2014: | ||||||||||||||
Options Outstanding | Options Vested | ||||||||||||||
Exercise | Shares | Weighted- | Weighted- | Shares | Weighted- | ||||||||||
Price Per | Outstanding | Average | Average | Exercisable | Average | ||||||||||
Share | Remaining | Exercise | Exercise | ||||||||||||
Contractual | Price | Price Per | |||||||||||||
Life (Years) | Share | ||||||||||||||
$ | 0.77 | 150,000 | 9.92 | $ | 0.77 | - | $ | - | |||||||
$ | 2.05 | 56,900 | 9.58 | $ | 2.05 | - | $ | - | |||||||
$ | 2.27 | 1,293,720 | 8.94 | $ | 2.27 | 497,558 | $ | 2.27 | |||||||
$ | 3.04 | 742,298 | 9.33 | $ | 3.04 | 123,717 | $ | 3.04 | |||||||
$ | 3.85 | 160,000 | 9.45 | $ | 3.85 | 40,000 | 3.85 | ||||||||
$ | 14.3 | 15,000 | 1.45 | $ | 14.3 | 15,000 | $ | 14.3 | |||||||
2,417,918 | 9.12 | $ | 2.59 | 676,275 | $ | 2.77 | |||||||||
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 twelve months ended December 31: | ||||||||||||||
2014 | 2013 | ||||||||||||||
Expected volatility | 75 | % | 80 | % | |||||||||||
Risk free rate | 1.77 | % | 1.77 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||
Expected term (in years) | 5.78 | 5.93 | |||||||||||||
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 twelve months ended | For the twelve months ended | ||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||
General and administrative | $ | 2,873,396 | $ | 1,872,104 | |||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Income Tax Disclosure [Abstract] | ||||||||
Income tax expense (benefit) | Income tax expense was comprised of the following: | |||||||
2014 | 2013 | |||||||
Current | ||||||||
Federal | $ | - | $ | - | ||||
State | 2,400 | - | ||||||
$ | 2,400 | $ | - | |||||
Deferred | ||||||||
Federal | $ | - | $ | - | ||||
State | - | - | ||||||
$ | - | $ | - | |||||
Expense | $ | 2,400 | $ | - | ||||
Reconciliation | A reconciliation of the statutory federal income tax rate to the effective tax rate for the years ended December 31 was as follows: | |||||||
2014 | 2013 | |||||||
Statutory federal income tax rate | 34 | % | 34 | % | ||||
State income taxes (net of federal benefit) | 5.83 | 5.83 | % | |||||
Loss on extinguishment of notes | -12.44 | 0 | ||||||
Stock compensation | -0.31 | -14.22 | ||||||
Other permanent differences | 0.11 | 4.3 | ||||||
True ups | 12.3 | 0 | ||||||
Change in valuation allowance | -39.5 | -29.91 | ||||||
Total | -0.01 | % | 0 | % | ||||
Deferred tax effects | The components of the net deferred tax assets and liabilities are as follows: | |||||||
2014 | 2013 | |||||||
Deferred Tax Assets: | ||||||||
Accrued Liabilities | $ | 722,899 | $ | 73,082 | ||||
Intangibles | 3,115,849 | 1,171,673 | ||||||
Fixed Assets | 2,988 | - | ||||||
NOL Carryforwards | 7,773,560 | 170,103 | ||||||
Inventory Reserve | 3,705 | - | ||||||
Allowance for Doubtful Accounts | 16,281 | - | ||||||
Gross Deferred Tax Asset | 11,635,282 | 1,414,858 | ||||||
Valuation Allowance | -11,436,475 | -1,414,858 | ||||||
Net Deferred Tax Assets | $ | 198,807 | $ | - | ||||
Deferred Tax Liabilities: | ||||||||
Acquired Contracts Intangibles | -198,807 | - | ||||||
Gross Deferred Liabilities | $ | -198,807 | $ | - | ||||
Net Deferred Tax Assets (Liabilities) | $ | 0 | $ | - | ||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Future minimum annual lease payments | The future minimum payments related to this lease are as follows: | ||||
Years ending December 31 | |||||
2015 | 112,895 | ||||
2016 | 116,201 | ||||
2017 | 68,587 | ||||
Total | $ | 297,683 | |||
Future guaranteed payments | Future guaranteed payments associated with these agreements are payable as follows: | ||||
Years ending December 31: | |||||
2015 | 4,000,000 | ||||
2016 | 6,000,000 | ||||
2017 | 10,000,000 | ||||
Less: discount to present value | -3,087,058 | ||||
Guaranteed payments, net of discount | $ | 16,912,942 | |||
Notes payable future debt payments | Pursuant to the Fortress agreement (as described in Note 6), future debt payments are as follows: | ||||
Years ending December 31: | |||||
2015 | 1,421,196 | ||||
2016 | 5,800,606 | ||||
2017 | 4,483,818 | ||||
Total | $ | 11,705,620 | |||
Net_Loss_Per_Share_Tables
Net Loss Per Share (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted net loss per share is calculated using the weighted average number of shares outstanding as follows (in thousands, except per share amounts): | |||||||
Year Ended December 31, | ||||||||
2014 | 2013 | |||||||
Net loss attributable to common shareholders | $ | -20,521,470 | $ | -4,731,072 | ||||
Basic and diluted: | ||||||||
Weighted average shares outstanding | 22,036,773 | 8,435,197 | ||||||
Less weighted average restricted shares outstanding | -4,223,699 | - | ||||||
Shares used in calculation of basic and diluted net loss per common share | 17,813,074 | 8,435,197 | ||||||
Net loss per common share: Basic and diluted | $ | -1.15 | $ | -0.56 | ||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 36 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Oct. 01, 2014 | Feb. 25, 2015 | Dec. 31, 2017 | Dec. 31, 2012 | Feb. 11, 2015 | Mar. 20, 2015 | |
Summary of Significant Accounting Policies [Line Items] | ||||||||
Cash and Cash Equivalents, at Carrying Value, Total | $1,443,349 | $1,518,684 | $0 | |||||
Working Capital Net Amount | 2,113,933 | |||||||
Net Income (Loss) Attributable to Parent, Total | -20,084,554 | -4,731,072 | ||||||
Retained Earnings (Accumulated Deficit), Total | -43,073,213 | -4,731,072 | ||||||
Proceeds from Issuance of Secured Debt | 9,964,868 | |||||||
Asset Impairment Charges | 686,350 | |||||||
Secured Debt | 1,000,000 | |||||||
Finite-Lived Intangible Assets, Gross | 12,109,118 | |||||||
Guaranteed Benefit Liability, Net | 16,912,942 | |||||||
Debt Instrument, Description of Variable Rate Basis | LIBOR plus 7%. In addition, a 3% PIK interest will be paid-in-kind by increasing the principal amount of the Fortress Notes by the amount of such interest (the PIK Interest). | |||||||
Future Unconditional Guarantee Paid | 20,000,000 | |||||||
Security Owned and Pledged as Collateral, Fair Value | 3,500,000 | |||||||
Repayments of Convertible Debt | 8,000,000 | 0 | ||||||
Interest Paid, Total | 516,919 | 0 | ||||||
Payments On Guaranteed Payment Liability | 1,000,000 | 0 | ||||||
Additional Working Capital | 7,800,000 | |||||||
Employee-related Liabilities, Current | 3,700,000 | |||||||
Other Cost and Expense, Operating | 1,800,000 | |||||||
Contingent Fee Description | Litigation costs are based primarily on a contingent fee structure (expected to average less than 20% of license revenue for a portfolio) and as such do not scale significantly with the acquisition of new portfolios. | |||||||
Notes Payable | 11,705,620 | |||||||
Proceeds from Issuance of Debt | 450,253 | |||||||
Fortress Agreement [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Secured Debt | 500,000 | |||||||
Debt Instrument, Description of Variable Rate Basis | LIBOR plus 7%. | |||||||
Security Owned and Pledged as Collateral, Fair Value | 3,500,000 | |||||||
Repayments of Convertible Debt | 8,000,000 | 8,000,000 | ||||||
Interest Paid, Total | 187,351 | 187,351 | ||||||
Payments for Fees | 385,000 | |||||||
Cash Reserves | 1,000,000 | |||||||
Proceeds from Issuance of Debt | 450,253 | |||||||
Subsequent Event [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 3,000,000 | |||||||
Proceeds from Lines of Credit | 1,199,500 | |||||||
Proceeds from Issuance of Warrants | 1,172,885 | |||||||
Notes Payable | 2,000,000 | |||||||
Subsequent Event [Member] | Fortress Agreement [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Proceeds from Issuance of Warrants | 40,000 | |||||||
Cash Reserves | 1,000,000 | |||||||
Cash | 1,600,000 | |||||||
Subsequent Event [Member] | Fortress Investment Group, LLC [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 3,000,000 | |||||||
Proceeds from Lines of Credit | 1,199,500 | |||||||
Proceeds from Issuance of Warrants | 1,172,885 | |||||||
Notes Payable | 2,000,000 | |||||||
Patents [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Secured Debt | 3,000,000 | |||||||
Finite-Lived Intangible Assets, Gross | 12,109,118 | |||||||
Maintenance Costs | 1,300,000 | |||||||
Patents [Member] | Subsequent Event [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Payments for Fees | $18,000,000 | |||||||
Minimum [Member] | Patents [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Property plant and equipments estimated useful lives of assets | 7 years | |||||||
Maximum [Member] | Patents [Member] | ||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||
Property plant and equipments estimated useful lives of assets | 10 years |
Business_Combination_Additiona
Business Combination - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | ||
Jun. 06, 2014 | Jun. 06, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Business Acquisition [Line Items] | ||||
Stockholders' equity note, stock split, conversion ratio | 1.4139 | |||
Common Stock, Shares, Issued | 20,018,028 | 20,018,028 | 27,997,128 | 16,267,038 |
Common Stock, Shares, Outstanding | 20,018,028 | 20,018,028 | 27,997,128 | 16,267,038 |
Class of Warrant or Right, Outstanding | 700,937 | 700,937 | ||
Initial Amount Of Contingent Note | $11,000,000 | |||
Debt Instrument, Face Amount | 300,000 | 300,000 | ||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 8,858,504 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 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) | 24,711,553 | 4,495,400 | ||
Amortization of Intangible Assets | 1,557,107 | 293,176 | ||
Asset Impairment Charges | 686,350 | |||
Merger Related Expenses [Member] | ||||
Business Acquisition [Line Items] | ||||
Business Acquisition, Pro Forma Net Income (Loss) | 1,237,641 | 1,250,000 | ||
Amortization of Intangible Assets | $111,833 | $268,400 | ||
Series A Preferred Stock [Member] | ||||
Business Acquisition [Line Items] | ||||
Preferred Stock, Shares Issued | 6,176,748 | 6,176,748 | ||
Preferred Stock, Shares Outstanding | 6,176,748 | 6,176,748 | ||
Preferred Class B [Member] | ||||
Business Acquisition [Line Items] | ||||
Preferred Stock, Shares Issued | 2,231 | 2,231 | ||
Preferred Stock, Shares Outstanding | 2,231 | 2,231 | ||
Placement Agents [Member] | ||||
Business Acquisition [Line Items] | ||||
Class of Warrant or Right, Outstanding | 238,412 | 238,412 |
Purchase_Consideration_And_Pur
Purchase Consideration And Purchase Price Allocation (Detail) (USD $) | 12 Months Ended |
Dec. 31, 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 $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Business Acquisition ProForma Information [Line Items] | ||
Revenue | $1,122,234 | $744,000 |
Net loss | $24,711,553 | $4,495,400 |
Patents_Additional_Information
Patents - Additional Information (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Expected Amortization Expense of Intangible Assets for Each of Next Six Years | $1,550,334 |
Patent_Intangible_Assets_Detai
Patent Intangible Assets (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Weighted Average Useful Life | 5 years | |
Gross Carrying Amount | $12,109,118 | |
Accumulated Amortization | -1,693,714 | |
Net Carrying Amount | 10,415,404 | 9,162,409 |
Patents [Member] | ||
Weighted Average Useful Life | 8 years | |
Gross Carrying Amount | 12,109,118 | |
Accumulated Amortization | -1,693,714 | |
Net Carrying Amount | $10,415,404 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | Dec. 31, 2014 | Dec. 17, 2013 |
Fair Value Disclosure [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $14.30 | $2.66 |
Series A Preferred Stock [Member] | ||
Fair Value Disclosure [Line Items] | ||
Debt instrument convertible threshold stock price | $0.29 | |
Purchase of warrants to common stock | $238,412 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.04 |
Fair_Value_Assets_And_Liabilit
Fair Value Assets And Liabilities Measured On Recurring Basis (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | $30,278 | $591,901 |
Convertible Notes Payable [Member] | ||
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | 534,975 | |
Common stock warrants [Member] | ||
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | 30,278 | |
Series A Preferred Stock [Member] | ||
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | 56,926 | |
Fair Value, Inputs, Level 1 [Member] | ||
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | 0 | 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 1 [Member] | Series A Preferred Stock [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 | 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 2 [Member] | Series A Preferred Stock [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 | 30,278 | 591,901 |
Fair Value, Inputs, Level 3 [Member] | Convertible Notes Payable [Member] | ||
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | 534,975 | |
Fair Value, Inputs, Level 3 [Member] | Common stock warrants [Member] | ||
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | 30,278 | |
Fair Value, Inputs, Level 3 [Member] | Series A Preferred Stock [Member] | ||
Liabilities Measured on Recurring Basis [Line Items] | ||
Financial Liabilities Fair Value Disclosure, Total | $56,926 |
Estimated_Fair_Value_Of_Deriva
Estimated Fair Value Of Derivative Liability (Detail) | 12 Months Ended |
Dec. 31, 2014 | |
Fair Value Of Derivative Liability [Line Items] | |
Expected volatility | 60.00% |
Risk free rate | 1.35% |
Dividend yield | 0.00% |
Expected term (in years) | 4 years 26 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 $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Convertible Notes Payable [Member] | ||
Fair Value Disclosure [Line Items] | ||
Balance beginning | $534,975 | $0 |
Extinguishment | -434,500 | |
Fair value at issuance | 189,300 | 582,903 |
Change in fair value | -289,775 | -47,928 |
Balance ending | 0 | 534,975 |
Series A Preferred Stock [Member] | ||
Fair Value Disclosure [Line Items] | ||
Balance beginning | 56,926 | 0 |
Extinguishment | 0 | |
Fair value at issuance | 0 | 548,465 |
Change in fair value | -56,926 | -491,539 |
Balance ending | 0 | 56,926 |
Common stock warrants [Member] | ||
Fair Value Disclosure [Line Items] | ||
Balance beginning | 0 | 0 |
Extinguishment | 0 | |
Fair value at issuance | 466,706 | 0 |
Change in fair value | -436,428 | 0 |
Balance ending | $30,278 | $0 |
Borrowing_Arrangements_Additio
Borrowing Arrangements - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||||||||||||
Jan. 14, 2014 | Feb. 28, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 01, 2014 | Sep. 23, 2014 | 17-May-13 | 10-May-13 | Feb. 10, 2014 | Dec. 19, 2013 | Aug. 01, 2014 | Jun. 06, 2014 | Dec. 17, 2013 | Nov. 01, 2014 | Jan. 31, 2014 | Mar. 26, 2014 | |
Borrowing Arrangements [Line Items] | ||||||||||||||||
Debt Instrument, Face Amount | $300,000 | |||||||||||||||
Long-term Debt, Fair Value | 2,557,111 | |||||||||||||||
Gains (Losses) on Extinguishment of Debt, Total | -5,643,607 | 0 | ||||||||||||||
Secured Debt | 1,000,000 | |||||||||||||||
Repayments of Unsecured Debt | 100,000 | |||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 5,000,000 | |||||||||||||||
Repayments of Convertible Debt | 8,000,000 | 0 | ||||||||||||||
Interest Paid, Total | 516,919 | 0 | ||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $14.30 | $2.66 | ||||||||||||||
Security Owned and Pledged as Collateral, Fair Value | 3,500,000 | |||||||||||||||
Proceeds from Related Party Debt | 300,000 | 0 | ||||||||||||||
Debt Instrument, Description of Variable Rate Basis | LIBOR plus 7%. In addition, a 3% PIK interest will be paid-in-kind by increasing the principal amount of the Fortress Notes by the amount of such interest (the PIK Interest). | |||||||||||||||
Proceeds from Issuance of Debt | 450,253 | |||||||||||||||
Revenue Share Net of Discount | 2,478,057 | 0 | ||||||||||||||
Warrant [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $2.07 | $3.04 | ||||||||||||||
Fortress Agreement [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Proceeds from Issuance of Senior Long-term Debt | 9,964,868 | |||||||||||||||
Gains (Losses) on Extinguishment of Debt, Total | 3,240,414 | |||||||||||||||
Debt Instrument, Maturity Date | 30-Sep-17 | |||||||||||||||
Debt Instrument, Redemption Price, Percentage | 5.00% | |||||||||||||||
Secured Debt | 500,000 | |||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | 1,804,030 | |||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 1,508,162 | 1,804,030 | ||||||||||||||
Debt Conversion, Converted Instrument, Warrants or Options Issued | 1,508,162 | |||||||||||||||
Repayments of Convertible Debt | 8,000,000 | 8,000,000 | ||||||||||||||
Interest Paid, Total | 187,351 | 187,351 | ||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 500,000 | |||||||||||||||
Stock Issued During Period, Value, Issued for Services | 1,000,000 | |||||||||||||||
Security Owned and Pledged as Collateral, Fair Value | 3,500,000 | |||||||||||||||
Share Price | $2 | |||||||||||||||
Debt Instrument, Description of Variable Rate Basis | LIBOR plus 7%. | |||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.00% | |||||||||||||||
Termination Fee Payable | 770,000 | |||||||||||||||
Gross Proceeds From Senior Long Term Debt | 11,000,000 | |||||||||||||||
Contract Claims Description | 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%. | |||||||||||||||
Payments for Fees | 385,000 | |||||||||||||||
Revenue Recognition Under Agreement Description | 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”). | |||||||||||||||
Revenue Recognition of Participants Under Proportionate Share Agreement Description | 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. In connection with the Revenue Participants right to receive a portion of the Company’s Monetization Revenues, the Company has recorded a net liability of $3,441,300, which represents the net present value of the expected Monetization Revenues, discounted 20% over the expected life of the revenue share agreement. In addition, the Company recorded Deferred Cost of $3,441,300, which will be amortized as a cost of revenue as the Revenue Stream is paid to the Revenue Participants. | |||||||||||||||
Line of Credit Facility, Remaining Borrowing Capacity | 5,000,000 | |||||||||||||||
Cash Reserves | 1,000,000 | |||||||||||||||
Proceeds from Issuance of Debt | 450,253 | |||||||||||||||
Fortress Agreement [Member] | Warrant [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Closing Fee | 330,000 | |||||||||||||||
Class Of Warrant Or Rights Expiration Period | 5 years | |||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 247,500 | |||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $2 | $2.27 | ||||||||||||||
Stock Issued During Period, Value, Issued for Services | 153,759 | |||||||||||||||
Patents [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Secured Debt | 3,000,000 | |||||||||||||||
Chief Executive Officer [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Loan Processing Fee | 60,000 | |||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.00% | |||||||||||||||
Joseph W. Beyers [Member] | Share Purchase Agreement [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Share Price | $2.14 | |||||||||||||||
Stock Issued During Period, Shares, Other | 233,640 | |||||||||||||||
Stock Issued During Period, Value, Other | 500,000 | |||||||||||||||
Proceeds from Related Party Debt | 300,000 | |||||||||||||||
Shares To Be Issued Under Agreement Description | The shares were only to be issued if we did not obtain $6 million or more in debt financing within ten business days of the execution of the agreement. | |||||||||||||||
Due to Related Parties | 300,000 | |||||||||||||||
March 2014 Notes [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Debt Instrument, Face Amount | 3,000,000 | |||||||||||||||
License Receivables [Member] | Fortress Agreement [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Line of Credit Facility, Remaining Borrowing Capacity | 3,000,000 | |||||||||||||||
Series A Preferred Stock Two [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Proceeds from Issuance of Senior Long-term Debt | 1,498,526 | |||||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Proceeds from Issuance of Senior Long-term Debt | 50,000 | |||||||||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 5,000,000 | |||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.04 | |||||||||||||||
Promissory Note Payable [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Debt Instrument, Face Amount | 5,000,000 | |||||||||||||||
Proceeds from Issuance of Senior Long-term Debt | 4,950,000 | |||||||||||||||
Promissory Note Payable [Member] | Chief Executive Officer [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Debt Instrument, Face Amount | 3,100,000 | 3,000,000 | ||||||||||||||
Proceeds from Issuance of Senior Long-term Debt | 100,000 | 3,000,000 | ||||||||||||||
Debt Instrument, Maturity Date | 31-Aug-14 | |||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.00% | |||||||||||||||
Promissory Note Payable [Member] | First Republic Bank [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Debt Instrument, Face Amount | 500,000 | |||||||||||||||
Debt Instrument, Maturity Date | 1-Nov-14 | |||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.30% | |||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||
Borrowing Arrangements [Line Items] | ||||||||||||||||
Gain (Loss) on Repurchase of Debt Instrument | $185,474 |
Borrowing_Arrangements_Detail
Borrowing Arrangements (Detail) (Warrant [Member], Fortress Agreement [Member]) | 12 Months Ended |
Dec. 31, 2014 | |
Warrant [Member] | Fortress Agreement [Member] | |
Share-based Goods and Nonemployee Services Transaction [Line Items] | |
Expected volatility | 60.00% |
Risk free rate | 1.62% |
Dividend yield | 0.00% |
Expected term (in years) | 5 years |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | ||||||
Dec. 17, 2013 | Feb. 28, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 01, 2014 | Nov. 01, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Mar. 25, 2015 | Feb. 25, 2015 | Jun. 06, 2014 | |
Class of Stock [Line Items] | |||||||||||
Debt conversion, converted instrument, shares issued | 5,000,000 | ||||||||||
Common stock, par value | $0.00 | $0.00 | $0.00 | ||||||||
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | |||||||||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | |||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $2.66 | $14.30 | |||||||||
Sale of Stock, Price Per Share | $3.21 | ||||||||||
Warrants To Purchase Shares Of Common Stock | 700,935 | ||||||||||
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 | |||||||||
Proceeds from Issuance of Private Placement | $2,750,000 | ||||||||||
Proceeds from Issuance of Common Stock | 6,021,144 | 3,612,100 | |||||||||
Substantial Holder Description | Certificate of Designations for the Series A Preferred Stock (“COD”) no longer has 20% or greater of their original stock purchase (as of March 23, 2015, their percentage is approximately 4%). | ||||||||||
Fortress Agreement [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Debt conversion, converted instrument, shares issued | 1,508,162 | 1,804,030 | |||||||||
Subsequent Event [Member] | Fortress Agreement [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $1.14 | ||||||||||
Debt Instrument Convertible Threshold Stock Price | $1.14 | ||||||||||
Warrant [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 238,412 | ||||||||||
Fair Value Adjustment of Warrants | 164,196 | 348,963 | |||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $2.07 | $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 | 277,500 | ||||||||||
Warrant [Member] | Fortress Agreement [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | 2 | $2.27 | |||||||||
Preferred Stock Series A-1 [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, par value | $0.01 | ||||||||||
Proceeds from Issuance of Convertible Preferred Stock | 3,308,874 | ||||||||||
Temporary Equity, Redemption Price Per Share | $0.55 | ||||||||||
Temporary Equity, Liquidation Preference Per Share | $0.01 | ||||||||||
Debt Instrument Convertible Threshold Stock Price | $0.29 | ||||||||||
Preferred Stock Series A-2 [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, par value | $1.20 | ||||||||||
Proceeds from Issuance of Convertible Preferred Stock | 1,134,016 | ||||||||||
Temporary Equity, Redemption Price Per Share | $0.96 | ||||||||||
Temporary Equity, Liquidation Preference Per Share | $1.70 | ||||||||||
Stockholders' Equity, Reverse Stock Split | the 1:2 reverse split | ||||||||||
Redeemable Convertible Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | |||||||||
Proceeds from Issuance of Convertible Preferred Stock | 4,950,000 | ||||||||||
Preferred Stock, Shares Issued | 0 | 6,176,748 | |||||||||
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 | |||||||||
Series B Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, par value | $1,000 | ||||||||||
Preferred Stock, Shares Issued | 2,750 | ||||||||||
Preferred Stock, Par or Stated Value Per Share | $1,000 | ||||||||||
Debt Instrument Convertible Threshold Stock Price | $1.14 | ||||||||||
Series A Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.04 | ||||||||||
Preferred Stock, Shares Issued | 6,176,748 | ||||||||||
Debt Instrument Convertible Threshold Stock Price | $0.29 | ||||||||||
Proceeds from Issuance of Common Stock | $20,000,000 | ||||||||||
Maximum [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common Stock, Shares Authorized | 110,000,000 | ||||||||||
Maximum [Member] | Series B Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Debt Instrument, Convertible, Conversion Price | $2 | 2.14 | |||||||||
Maximum [Member] | Series B Preferred Stock [Member] | Subsequent Event [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Debt Instrument, Convertible, Conversion Price | $2 | ||||||||||
Minimum [Member] | Series B Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Debt Instrument, Convertible, Conversion Price | $1.14 | 2 | |||||||||
Minimum [Member] | Series B Preferred Stock [Member] | Subsequent Event [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Debt Instrument, Convertible, Conversion Price | $1.14 |
Shares_of_Common_Stock_Reserve
Shares of Common Stock Reserved for Future Issuance (Detail) | Dec. 31, 2014 |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | |
Convertible notes payable | 0 |
Options to purchase common stock | 2,417,918 |
Shares reserved for issuance | 8,654,182 |
Warrants | |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | |
Shares reserved for issuance | 1,164,648 |
2014 Stock Plan | |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | |
Shares reserved for issuance | 689,529 |
Series A Convertible Preferred Stock [Member] | |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | |
Convertible preferred stock | 3,831,229 |
Series B Convertible Preferred Stock [Member] | |
Shares Of Common Stock Reserved For Future Issuance [Line Items] | |
Convertible preferred stock | 550,858 |
Redeemable_convertible_preferr
Redeemable convertible preferred stock (Detail) (USD $) | Dec. 31, 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 | 5,000,000 |
Shares Outstanding | 2,381,090 |
Liquidation Preference | $2,356,633 |
Redeemable Convertible Preferred Stock Series A-2 [Member] | |
Temporary Equity [Line Items] | |
Original Issue Price | $1.70 |
Shares Designated | 1,176,748 |
Shares Issued | 1,176,748 |
Shares Outstanding | 328,600 |
Liquidation Preference | 558,489 |
Series B Convertible Preferred Share [Member] | |
Temporary Equity [Line Items] | |
Original Issue Price | $1,000 |
Shares Designated | 2,750 |
Shares Issued | 2,750 |
Shares Outstanding | 1,102 |
Liquidation Preference | $1,102,000 |
Common_stock_warrants_outstand
Common stock warrants outstanding (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Warrant One [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Warrants Outstanding | 247,500 |
Remaining Contractual Life (years) | 4 years 10 months 2 days |
Weighted Average Exercise | $2 |
Warrant Two [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Warrants Outstanding | 30,000 |
Remaining Contractual Life (years) | 2 years 10 months 2 days |
Weighted Average Exercise | $2.66 |
Warrant Three [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Warrants Outstanding | 238,412 |
Remaining Contractual Life (years) | 4 years 29 days |
Weighted Average Exercise | $2.27 |
Warrant Total [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Warrants Outstanding | 515,912 |
Remaining Contractual Life (years) | 4 years 4 months 13 days |
Weighted Average Exercise | $2.16 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock, capital shares reserved for future issuance | 8,654,182 | ||
Share-based compensation arrangement by share-based payment award, options, forfeitures in period | 424,170 | ||
Share-based compensation arrangement by share-based payment award, options, vested, number of shares | 4,509,238 | ||
Share Based Compensation Arrangements By Share Based Payment Award Options Assumed In Merger Weighted Average Exercise Price | $14.30 | ||
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Assumed In Merger | 15,000 | ||
2013 Stock Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 7,167,585 | ||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 1 year 6 months 29 days | ||
Non-employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options | $1,316,036 | ||
Non employee service share based compensation nonvested awards total compensation cost not yet recognized period for recognition1 | $3,152,985 | $779,380 | |
2013 Stock Plan [Member] | Board of Directors [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock, capital shares reserved for future issuance | 3,605,445 |
Common_Stock_Option_and_Restri
Common Stock Option and Restricted Stock Award Activity (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Shares, Options assumed in Merger | 15,000 | |
Number of Shares, Total vested shares (options) | 4,509,238 | |
Weighted Average Exercise Price Per Share, Options assumed in Merger | $14.30 | |
Weighted Average Exercise Price Per share, End of year | $2.59 | |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares Available for Grant, Beginning of year | 1,286,647 | |
Shares Available For Grant, Authorized | 706,950 | |
Shares Available For Grant, Options Granted | -1,109,198 | |
Shares Available For Grant, Options assumed in Merger | 0 | |
Shares Available For Grant, Restricted Stock Granted | -194,870 | |
Shares Available For Grant, Restricted Stock Vested | 0 | |
Shares Available for Grant, End of year | 689,529 | 1,286,647 |
Number of Shares, Beginning of Year | 1,611,848 | |
Number of Shares, Authorized | 0 | |
Number of Shares, Options Granted | 1,109,198 | |
Number of Shares, Options assumed in Merger | 15,000 | |
Number of Shares, Restricted Stock Granted | 194,870 | |
Number of Shares, Restricted Stock Vested | -512,998 | |
Number of Shares, End of Year | 2,417,918 | 1,611,848 |
Number of Shares, Total vested and expected to vest shares (options) | 2,417,918 | |
Number of Shares, Total vested shares (options) | 676,275 | |
Weighted Average Exercise Price Per share, Beginning of year | $2.27 | |
Weighted Average Exercise Price Per Share, Authorized | $0 | |
Weighted Average Exercise Price Per Share, Options Granted | $2.80 | |
Weighted Average Exercise Price Per Share, Restricted Stock Granted | $1.45 | |
Weighted Average Exercise Price Per Share, Restricted Stock Vested | $1.96 | |
Weighted Average Exercise Price Per share, End of year | $2.59 | $2.27 |
Weighted Average Exercise Price Per Share, Total vested and expected to vest shares (options) | $2.59 | |
Weighted Average Exercise Price Per Share, Total vested shares (options) | $2.77 |
Summarizes_Information_with_Re
Summarizes Information with Respect to Stock Options Outstanding (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 17, 2013 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Exercise Price Per Share | $14.30 | $2.66 |
Outstanding Options, Shares | 2,417,918 | |
Outstanding Options, Weighted- Average Remaining Contractual Term | 9 years 1 month 13 days | |
Weighted Average- Exercise Price | $2.59 | |
Exercisable Options, Shares | 676,275 | |
Exercisable Options, Weighted- Average Exercise Price | $2.77 | |
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 | $0.77 | |
Outstanding Options, Shares | 150,000 | |
Outstanding Options, Weighted- Average Remaining Contractual Term | 9 years 11 months 1 day | |
Weighted Average- Exercise Price | $0.77 | |
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 | $2.05 | |
Outstanding Options, Shares | 56,900 | |
Outstanding Options, Weighted- Average Remaining Contractual Term | 9 years 6 months 29 days | |
Weighted Average- Exercise Price | $2.05 | |
Exercisable Options, Shares | 0 | |
Exercisable Options, Weighted- Average Exercise Price | $0 | |
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 | $2.27 | |
Outstanding Options, Shares | 1,293,720 | |
Outstanding Options, Weighted- Average Remaining Contractual Term | 8 years 11 months 8 days | |
Weighted Average- Exercise Price | $2.27 | |
Exercisable Options, Shares | 497,558 | |
Exercisable Options, Weighted- Average Exercise Price | $2.27 | |
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 | $3.04 | |
Outstanding Options, Shares | 742,298 | |
Outstanding Options, Weighted- Average Remaining Contractual Term | 9 years 3 months 29 days | |
Weighted Average- Exercise Price | $3.04 | |
Exercisable Options, Shares | 123,717 | |
Exercisable Options, Weighted- Average Exercise Price | $3.04 | |
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 | $3.85 | |
Outstanding Options, Shares | 160,000 | |
Outstanding Options, Weighted- Average Remaining Contractual Term | 9 years 5 months 12 days | |
Weighted Average- Exercise Price | $3.85 | |
Exercisable Options, Shares | 40,000 | |
Exercisable Options, Weighted- Average Exercise Price | $3.85 | |
Range Of Exercise Prices - Range 6 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Outstanding Options, Shares | 15,000 | |
Outstanding Options, Weighted- Average Remaining Contractual Term | 1 year 5 months 12 days | |
Weighted Average- Exercise Price | $14.30 | |
Exercisable Options, Shares | 15,000 | |
Exercisable Options, Weighted- Average Exercise Price | $14.30 |
Fair_Value_of_Employee_Stock_O
Fair Value of Employee Stock Options Granted was Estimated Using Weighted Average Assumptions (Detail) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 75.00% | 80.00% |
Risk free rate | 1.77% | 1.77% |
Dividend yield | 0.00% | 0.00% |
Expected term (in years) | 5 years 9 months 11 days | 5 years 11 months 5 days |
Employees_and_NonEmployees_Rel
Employees and Non-Employees Related to Options and RSAs Recognized (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Operating expenses | ||
General and administrative | $2,873,396 | $1,872,104 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Income Tax [Line Items] | |||
Income Tax Expense (Benefit) | $2,400 | $0 | |
Operating Loss Carryforwards | 39,300,000 | 11,400,000 | |
Operatng Loss Carry Forwords Expiration Description | expiring beginning in 2021 for federal and 2015 for California | ||
Deferred Tax Assets Net Operating Income Loss Carry Forwards | 20,900,000 | ||
Liability for Uncertain Tax Positions, Current | $0 |
Income_Tax_Expense_Benefit_Det
Income Tax Expense (Benefit) (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Current | ||
Federal | $0 | $0 |
State | 2,400 | 0 |
Current Total | 2,400 | 0 |
Deferred | ||
Federal | 0 | 0 |
State | 0 | 0 |
Deferred Total | 0 | 0 |
Expense | $2,400 | $0 |
Reconciliation_Of_Statutory_Fe
Reconciliation Of Statutory Federal Income Tax Rate To Effective Tax Rate (Detail) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax [Line Items] | ||
Statutory federal income tax rate | 34.00% | 34.00% |
State income taxes (net of federal benefit) | 5.83% | 5.83% |
Loss on extinguishment of notes | -12.44% | 0.00% |
Stock compensation | -0.31% | -14.22% |
Other permanent differences | 0.11% | 4.30% |
True ups | 12.30% | 0.00% |
Change in valuation allowance | -39.50% | -29.91% |
Total | -0.01% | 0.00% |
Deferred_Tax_Effects_Detail
Deferred Tax Effects (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred Tax Assets: | ||
Accrued Liabilities | $722,899 | $73,082 |
Intangibles | 3,115,849 | 1,171,673 |
Fixed Assets | 2,988 | 0 |
NOL Carryforwards | 7,773,560 | 170,103 |
Inventory Reserve | 3,705 | 0 |
Allowance for Doubtful Accounts | 16,281 | 0 |
Gross Deferred Tax Asset | 11,635,282 | 1,414,858 |
Valuation Allowance | -11,436,475 | -1,414,858 |
Net Deferred Tax Assets | 198,807 | 0 |
Deferred Tax Liabilities: | ||
Acquired Contracts Intangibles | -198,807 | 0 |
Gross Deferred Liabilities | -198,807 | 0 |
Net Deferred Tax Assets (Liabilities) | $0 | $0 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 12 Months Ended | 36 Months Ended | 1 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2017 | Mar. 31, 2014 | |
Commitments and Contingencies [Line Items] | ||||
Security Deposit | $18,993 | |||
Operating Leases, Rent Expense | 108,372 | 74,334 | ||
Future unconditional guarantee paid | 20,000,000 | |||
Discount Rate | 12.00% | |||
Monthly rent | 551 | |||
Subsequent Event [Member] | Patents [Member] | ||||
Commitments and Contingencies [Line Items] | ||||
Payments for Fees | 18,000,000 | |||
Minimum [Member] | ||||
Commitments and Contingencies [Line Items] | ||||
Operating lease rent | 9,200 | |||
Maximum [Member] | ||||
Commitments and Contingencies [Line Items] | ||||
Operating lease rent | $9,800 |
Future_Minimum_Annual_Lease_Pa
Future Minimum Annual Lease Payments (Detail) (USD $) | Dec. 31, 2014 |
Commitments and Contingencies [Line Items] | |
2015 | $112,895 |
2016 | 116,201 |
2017 | 68,587 |
Total | $297,683 |
Fortress_notes_payable_Detail
Fortress notes payable (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Commitments and Contingencies [Line Items] | ||
2015 | $1,421,196 | $0 |
2016 | 5,800,606 | |
2017 | 4,483,818 | |
Total | $11,705,620 |
Schedule_of_Future_Guaranteed_
Schedule of Future Guaranteed Payments (Detail) (USD $) | Dec. 31, 2014 |
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | |
2015 | $4,000,000 |
2016 | 6,000,000 |
2017 | 10,000,000 |
Less: discount to present value | -3,087,058 |
Guaranteed payments, net of discount | $16,912,942 |
Net_Loss_Per_Share_Additional_
Net Loss Per Share - Additional Information (Detail) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Net Loss Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 13.9 | 11.8 |
Basic_and_Diluted_Net_Loss_Per
Basic and Diluted Net Loss Per Share (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Net Loss Per Share [Line Items] | ||
Net loss attributable to common shareholders | ($20,521,470) | ($4,731,072) |
Basic and diluted: | ||
Weighted average shares outstanding | 22,036,773 | 8,435,197 |
Less weighted average restricted shares outstanding | -4,223,699 | 0 |
Shares used in calculation of basic and diluted net loss per common share | 17,813,074 | 8,435,197 |
Net loss per common share: Basic and diluted | ($1.15) | ($0.56) |
Subsequent_Events_Additional_I
Subsequent Events - Additional Information (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | ||
Dec. 31, 2014 | Oct. 01, 2014 | Mar. 25, 2015 | Feb. 11, 2015 | Feb. 25, 2015 | Dec. 17, 2013 | |
Subsequent Event [Line Items] | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $14.30 | $2.66 | ||||
Notes Payable | $11,705,620 | |||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 9 years 1 month 13 days | |||||
Fortress Agreement [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Contract Claims Description | 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%. | |||||
Revenue Recognition Under Agreement Description | 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”). | |||||
Share Price | $2 | |||||
Series B Preferred Stock [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt Instrument Convertible Threshold Stock Price | $1.14 | |||||
Series B Preferred Stock [Member] | Maximum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt Instrument, Convertible, Conversion Price | $2 | $2.14 | ||||
Series B Preferred Stock [Member] | Minimum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt Instrument, Convertible, Conversion Price | $1.14 | $2 | ||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Patent license agreement | 2,000,000 | |||||
Line of Credit Facility, Maximum Borrowing Capacity | 3,000,000 | |||||
Proceeds from Lines of Credit | 1,199,500 | |||||
Proceeds from Issuance of Warrants | 1,172,885 | |||||
Notes Payable | 2,000,000 | |||||
Share-based Compensation Arrangement By Share-based Payment Award, Options, Nonvested Options Grants In Period | 1,432,661 | |||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $2.05 | |||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $3.85 | |||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 10 years | |||||
Subsequent Event | Employee Stock Option [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,269,845 | |||||
Subsequent Event | Fortress Agreement [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $1.14 | |||||
Debt Instrument Convertible Threshold Stock Price | $1.14 | |||||
Proceeds from Issuance of Warrants | 40,000 | |||||
Warrants To Purchase Common Stock | 500,000 | |||||
Class Of Warrant Or Rights Expiration Period | 7 years | |||||
Exercise Price Premium Percentage To The Closing Price | 48.00% | |||||
Subsequent Event | Fortress Investment Group, LLC [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | 3,000,000 | |||||
Proceeds from Lines of Credit | 1,199,500 | |||||
Proceeds from Issuance of Warrants | 1,172,885 | |||||
Debt Instrument, Fee | The structuring fee equal to 3.5% of the original principal amount of any such Additional Notes is waived. | |||||
Contract Claims Description | The new Additional Notes will be repaid from the future licensing payments on the Draw Down Licenses received from those specific Draw Down licensee(s), while the requirements otherwise to pay 86% of the Monetization Net Revenues towards the original Notes for (i) the upfront payment of the initial Draw Down License and (ii) the remaining future payments of Draw Down Licenses are waived in general. | |||||
Revenue Recognition Under Agreement Description | The Revenue Participants are entitled to receive $7,700,000 (adjusted from the terms of the Original Notes) plus 70% of the Additional Notes as a portion of the Revenue Stream Basis (as defined below) if the Notes and Revenue Stream payments are paid in full by the Maturity Date or $9,350,000 (adjusted from the terms of the Original Notes) plus 85% of the Additional Notes as a portion of the Revenue Stream Basis if the Notes and Revenue Stream payments are not paid in full by the Maturity Date. The Revenue Stream payments will begin after all obligations on the Notes are paid in full. The Company is required to apply specified decreasing percentages (46% to 31% to 6%) of its net revenues (net of monetization costs) from monetizing its intellectual property assets on an ongoing basis to meet the Revenue Stream payment obligations. Payment of the full Revenue Stream payments in addition to the Note obligations by the Maturity Date would ordinarily occur after the Company receives approximately $60,000,000 in gross licensing revenues, assuming an average monetization cost of 33%. | |||||
Warrants To Purchase Common Stock | 500,000 | |||||
Notes Payable | 2,000,000 | |||||
Subsequent Event | National [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Warrants To Purchase Common Stock | 26,989 | |||||
Closing Fee | $35,985 | |||||
Class Of Warrant Or Rights Expiration Period | 5 years | |||||
Share Price | $2 | |||||
Subsequent Event | Maximum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 4 years | |||||
Subsequent Event | Maximum [Member] | Employee Stock Option [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 3 years 1 month 6 days | |||||
Subsequent Event | Minimum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 1 year | |||||
Subsequent Event | Minimum [Member] | Employee Stock Option [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 2 years 1 month 6 days | |||||
Subsequent Event | Series B Preferred Stock [Member] | Maximum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt Instrument, Convertible, Conversion Price | $2 | |||||
Subsequent Event | Series B Preferred Stock [Member] | Minimum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt Instrument, Convertible, Conversion Price | $1.14 | |||||
Subsequent Event | Directors [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 162,816 |