Deltathree (DDDC) 10-Q 12 Nov 13 2013 Q3 Quarterly report Financial data

Document_And_Entity_Informatio

Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 06, 2013
Document Information [Line Items]	'	'
Entity Registrant Name	'DELTATHREE INC	'
Entity Central Index Key	'0001086740	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Smaller Reporting Company	'
Trading Symbol	'DDDC	'
Entity Common Stock, Shares Outstanding	'	72,273,525
Document Type	'10-Q	'
Amendment Flag	'false	'
Document Period End Date	30-Sep-13	'
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2013	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified
ASSETS	'	'
Cash and cash equivalents	$174	$362
Restricted cash and short-term investments	34	56
Accounts receivable, net	667	599
Prepaid expenses and other current assets	164	193
Inventory	37	47
Total current assets	1,076	1,257
Property and equipment, net	472	245
Deposits	85	80
Total assets	1,633	1,582
LIABILITIES AND STOCKHOLDERS' DEFICIENCY	'	'
Accounts payable	2,004	1,573
Deferred revenues	245	494
Current maturities of long-term loan from a related party	2,112	499
Other current liabilities	1,103	964
Total current liabilities	5,464	3,530
Long-term liabilities:	'	'
Severance pay obligations	90	97
Other long-term liabilities	383	0
Long-term loan from a related party, net of current maturities	2,546	3,602
Total long-term liabilities	3,019	3,699
Total liabilities	8,483	7,229
Stockholders' deficiency:	'	'
Common stock, par value $0.001 per share; authorized: 225,000,000 shares; issued and outstanding: 72,273,525 at September 30, 2013, and December 31, 2012	72	72
Additional paid-in capital	177,304	177,227
Accumulated deficit	-184,226	-182,946
Total stockholders’ deficiency	-6,850	-5,647
Total liabilities and stockholders’ deficiency	$1,633	$1,582

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS [parenthetical] (USD $)	Sep. 30, 2013	Dec. 31, 2012
Common stock, par value (in dollars per share)	$0.00	$0.00
Common stock, shares authorized	225,000,000	225,000,000
Common stock, shares issued	72,273,525	72,273,525
Common stock, shares outstanding	72,273,525	72,273,525

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues	$4,041	$3,522	$11,987	$9,773
Costs and operating expenses:	'	'	'	'
Cost of revenues	3,311	2,359	9,529	6,186
Research and development expenses	303	274	891	874
Selling and marketing expenses	291	467	1,003	1,520
General and administrative expenses	322	366	1,022	1,042
Depreciation and amortization	42	39	118	109
Total costs and operating expenses	4,269	3,505	12,563	9,731
(Loss) income from operations	-228	17	-576	42
Interest expense, net	-279	-416	-684	-1,332
Loss before income taxes	-507	-399	-1,260	-1,290
Income taxes	3	2	20	6
Net loss	($510)	($401)	($1,280)	($1,296)
Net loss per share - basic and diluted (in dollars per share)	($0.01)	($0.01)	($0.02)	($0.02)
Basic and diluted weighted average number of shares outstanding (in shares)	72,273,525	72,273,525	72,273,525	72,273,525

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:	'	'
Net loss for the period	($1,280)	($1,296)
Adjustments to reconcile loss for the period to net cash (used in) provided by operating activities:	'	'
Accumulated interest on long-term loan	433	269
Depreciation and amortization	118	109
Amortization related to convertible notes	124	782
Stock-based compensation	77	97
Decrease in liability for severance pay, net	-7	-13
Exchange rates differences on deposits, net	-5	1
Changes in operating assets and liabilities:	'	'
(Increase) in accounts receivable	-68	-205
Decrease (increase) in prepaid expenses and other current assets	29	-8
Decrease (increase) in inventory	10	-1
Increase in accounts payable	527	134
(Decrease) increase in deferred revenues	-249	154
Increase in other current liabilities	139	27
Adjustments to reconcile loss for the period to net cash (used in) provided by operating activities, Total	1,128	1,346
Net cash (used in) provided by operating activities	-152	50
Cash flows from investing activities:	'	'
Purchase of property and equipment	-58	-56
Release of restricted cash and short-term investment, net	22	80
Net cash (used in) provided by investing activities	-36	24
(Decrease) increase in cash and cash equivalents	-188	74
Cash and cash equivalents at beginning of period	362	214
Cash and cash equivalents at end of period	174	288
Supplemental schedule of cash flow information:	'	'
Taxes	110	245
Interest on short-term loan from a related party	0	140
Total	110	385
Supplemental schedule of non-cash investing and financing activities:	'	'
Purchase of software licenses provided by a related party included in accounts payable	$287	$0

Basis_of_Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Basis of Presentation and Significant Accounting Policies [Text Block]	'
	1.            Basis of Presentation
	Financial Statement Preparation
	The unaudited condensed consolidated financial statements of deltathree, Inc. and its subsidiaries (collectively referred to in this Quarterly Report on Form 10-Q as the “Company”, “we”, “us”, or “our”), of which these notes are a part, have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation of the financial information as of and for the periods presented have been included.
	The results for the interim periods presented are not necessarily indicative of the results that may be expected for any future period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2012, included in our Annual Report on Form 10-K filed with the SEC on March 25, 2013, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed with the SEC on May 14, 2013, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed with the SEC on August 8, 2013 and all of our other periodic filings, including Current Reports on Form 8-K, filed with the SEC after the end of our 2012 fiscal year and through the date of this Report.
	Going Concern
	The Company has sustained significant operating losses in recent periods, which has resulted in a significant reduction in its cash reserves.  The Company and its subsidiaries have entered into four loan agreements with D4 Holdings, LLC, its majority stockholder, pursuant to which D4 Holdings has agreed to provide the Company with loans in the aggregate principal amount of $4,100,000.  On March 1, 2010, the Company and its subsidiaries entered into a Loan and Security Agreement, or the “First Loan Agreement”, with D4 Holdings pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries a line of credit in a principal amount of $1,200,000.   On August 10, 2010, the Company and its subsidiaries entered into the Second Loan and Security Agreement, or the “Second Loan Agreement”, with D4 Holdings, pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries an additional line of credit in a principal amount of $1,000,000. In connection with the Second Loan Agreement, the Company issued D4 Holdings a warrant to purchase up to 4,000,000 shares of its common stock at an exercise price of $0.1312 per share. The Company has drawn down all amounts available to be borrowed under the two lines of credit.
	On March 2, 2011, the Company and its subsidiaries entered into the Third Loan and Security Agreement, or the “Third Loan Agreement”, with D4 Holdings, pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries an additional line of credit in a principal amount of $1,600,000.  Pursuant to the terms of the Convertible Promissory Note, or the “Convertible Note”, issued by the Company in connection with the Third Loan Agreement, D4 Holdings may elect to convert all or any portion of the outstanding principal amount under the Convertible Note into that number of shares of the Company's common stock determined by dividing such principal amount by $0.08 (as may be adjusted under the terms of the Convertible Note). Simultaneous with our entering into the Third Loan Agreement, D4 Holdings and the Company entered into an amendment of the First Loan Agreement, pursuant to which (among other things) the maturity date for repayment of principal under the First Loan Agreement was extended from March 1, 2011, to March 1, 2012, and subsequently extended by oral agreement of the parties to July 1, 2012, and then subsequently orally extended again to January 2, 2014, pending the parties finalizing and entering into a formal amendment. In connection with the Third Loan Agreement, the Company issued D4 Holdings a warrant to purchase up to 1,000,000 shares of its common stock at an exercise price of $0.096 per share.  The Company has drawn down the aggregate principal amount available under the Third Loan Agreement, the principal amount of which can be converted by D4 Holdings into an aggregate of 20,000,000 shares of the Company's common stock.
	On September 12, 2011, the Company and its subsidiaries entered into the Fourth Loan and Security Agreement, or the “Fourth Loan Agreement”, with D4 Holdings, pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries an additional line of credit in a principal amount of $300,000.  To date the Company has received advances in the aggregate amount of $200,000 from D4 Holdings pursuant to notices of borrowing under the Fourth Loan Agreement.
	On November 13, 2012, the Company and its subsidiaries entered into the Third Amendment to Loan and Security Agreements, or the "Third Amendment", and the Amendment to Warrant Agreements, or the "Warrants Amendment", with D4 Holdings. Pursuant to the Third Amendment and the Warrants Amendment:
		·	the maturity date for repayment of principal and interest under the First Loan Agreement was extended to January 2, 2014;
		·	the maturity date for repayment of principal and interest under the Second Loan Agreement was extended to January 2, 2015;
		·	the maturity date for repayment of principal and interest under each of the Third and Fourth Loan Agreements was extended to January 2, 2016;
		·	all interest outstanding under each of the loan agreements was added to the principal amount outstanding under the respective loan agreement and the promissory notes issued pursuant to each respective loan agreement was increased by such amount; and
		·	the exercise price under each of the Warrant Agreements entered into by us and D4 Holdings as of February 12, 2009, August 10, 2010, and March 2, 2011 was amended to $0.02 per share.
	In connection with the extension of the maturity dates under the Third Amendment, the Company issued to D4 Holdings a Warrant, exercisable for ten years, to purchase up to 10,000,000 shares of its common stock at an exercise price of $0.02 per share.
	As of September 30, 2013, the Company had negative working capital equal to approximately $4.4 million as well as negative stockholders’ equity equal to approximately $6.8 million. The Company believes it is probable that it will continue to experience losses and increased negative working capital and negative stockholders’ equity in the near future and will not be able to return to positive cash flow before it requires additional cash (in addition to any further amounts it may borrow from D4 Holdings under the Fourth Loan Agreement) in the immediate term. The Company may experience difficulties accessing the equity and debt markets and raising additional capital, and there can be no assurance that the Company will be able to raise such additional capital on favorable terms or at all.  If additional funds are raised through the issuance of equity securities, the Company’s existing stockholders will experience significant further dilution. Because of the Company’s significant losses to date and the Company’s limited tangible assets, the Company does not fit traditional credit lending criteria, which could make it difficult for the Company to obtain loans or to access the capital markets. If the Company issues additional equity or convertible debt securities to raise funds, the ownership percentage of the Company’s existing stockholders would be reduced and they may experience significant dilution. New investors may demand rights, preferences or privileges senior to those of existing holders of the Company’s common stock.
	Due to the limited availability of additional loan advances under the Fourth Loan Agreement, the Company believes that, its current cash and cash equivalents will not satisfy its current projected cash requirements beyond the  immediate future. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
	In addition, unless the Company is able to increase revenues and generate additional cash flows, based on currently projected cash flows the Company believes that it will be unable to pay future scheduled interest and/or principal payments under the various loan agreements with D4 Holdings as these obligations become due, and beginning January 2013 the Company suspended making scheduled interest payments with the oral consent of D4 Holdings.  If D4 Holdings is not willing to waive compliance or otherwise modify the Company’s obligations such that the Company is able to avoid defaulting on such obligations, D4 Holdings could accelerate the maturity of the Company’s debts due to it. Further, because D4 Holdings has a lien on all of the Company’s assets to secure the Company’s obligations under the loan agreements, D4 Holdings could take actions under the loan agreements and seek to take possession of or sell the Company’s assets to satisfy the Company’s obligations thereunder. Any of these actions would likely have an immediate material adverse effect on the Company’s business, financial condition or results of operations.
	Due to the Company’s ongoing losses and reduction in cash, the Company initiated restructuring activities beginning in the second quarter of 2011 in an effort to cut operating costs significantly and better align the Company’s operations with its current business model.  In accordance with the restructuring, the Company instituted a reduction in force and decreased the number of full time employees from approximately 53 to 32, reduced the salaries of all remaining employees by five percent, and decreased non-material expenses as well as payments to be made to vendors and other third parties. As of September 30, 2013, the Company had 22 full time employees.
	In view of the Company’s current cash resources, nondiscretionary expenses, debt and near term debt service obligations, the Company has begun exploring strategic alternatives available to it and may explore all such alternatives available to it, including, but not limited to, a sale or merger of the Company, a sale of its assets, recapitalization, partnership, debt or equity financing, voluntary deregistration of its securities, financial reorganization, liquidation and/or ceasing operations. In the event that the Company requires but is unable to secure additional funding, the Company may determine that it is in its best interests to voluntarily seek relief under Chapter 11 of the U.S. Bankruptcy Code. Seeking relief under the U.S. Bankruptcy Code, even if the Company is able to emerge quickly from Chapter 11 protection, could have a material adverse effect on the relationships between the Company and its existing and potential customers, employees, and others. Further, if the Company was unable to implement a successful plan of reorganization, the Company might be forced to liquidate under Chapter 7 of the U.S. Bankruptcy Code. There can be no assurance that exploration of strategic alternatives will result in the Company pursuing any particular transaction or, if the Company pursues any such transaction, that it will be completed.
	Use of Estimates
	Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates.
	Concentration of Credit and Business Risks
	Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history, age of the balance and the customer’s current credit worthiness, as determined by a review of the customer’s current credit information. The Company monitors collections and payments from its customers and maintains an allowance for doubtful accounts based upon historical experience and any specific customer collection issues that have been identified. A considerable amount of judgment is required in assessing the ultimate realization of these receivables. Customer receivables are generally unsecured.
	Gross revenues from sales to material customers for each of the three months ended September 30, 2013 and 2012, and accounts receivables as of September 30, 2013, and December 31, 2012, were as follows:
			Revenues				Accounts Receivable
			Three Months Ended September 30,				As of
	Customer		2013		2012		September 30, 2013		December 31, 2012
	Reseller A		71	%	44	%	55	%	38	%
	Reseller B		3	%	9	%	12	%	14	%
	Affiliate A		4	%	10	%	-		-
	Affiliate B		1	%	7	%	-		-
	Service Provider A		3	%	5	%	17	%	21	%
	Earnings per Common Share
	Basic earnings per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s stock option and stock incentive compensation plans, and the weighted-average number of shares of common stock outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money shares, which is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a share, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of estimated tax benefits that would be recorded in additional paid-in capital, if any, when the share is exercised are assumed to be used to repurchase shares in the current period.

Commitments_and_Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]	'
Commitments and Contingencies Disclosure [Text Block]	'
	2.           Commitments and Contingencies
	Pursuant to an Assignment and Assumption of Rights, Duties and Interests Agreement between the Company and ACN Digital Phone Services, Inc. ("ACN Digital"), a subsidiary of ACN, Inc. ("ACN"), ACN Digital assigned to the Company (the "Assignment") the licenses it acquired pursuant to that certain Software License and Distribution Agreement (the "CounterPath Agreement") between ACN Digital and CounterPath Corporation ("CounterPath") subject to the finalization of the terms of the Assignment. On August 27, 2013, the Company's Board of Directors resolved that the consideration (the "Consideration") to be paid by the Company to ACN Digital for the Assignment would be equal to $287,000, which ACN Digital has informed us is equal to ACN Digital's cost under the CounterPath Agreement, and finalized the terms of the Assignment.
	Each of Robert Stevanovski, Anthony Cassara and David Stevanovski, members of our Board of Directors, has an ownership interest in, and a director, officer and/or advisory position with, ACN.  As a result of their relationship with ACN, each of these individuals may be deemed to have a direct or indirect interest in the transactions contemplated by the Assignment. In accordance with the Company’s Audit Committee Charter, on October 28, 2013 the payment of the Consideration and the finalization of the terms of the Assignment were approved by the Audit Committee, which includes those directors who are not affiliated with ACN.
	The amount of the Consideration will be added to the outstanding amounts owed by the Company to ACN under, and will be paid in accordance with, the Sales Agency Agreement between (inter alia) the Company and ACN dated September 27, 2010, as amended by that certain Letter Amendment, dated as of April 1, 2012.
	Lease Commitments
	The Company leases its executive offices at 26 Avenue at Port Imperial, West New York, New Jersey, and storage and equipment space at 8301 River Road, North Bergen, New Jersey.   The Company leases each of these facilities on a month-to-month basis. The aggregate rent expense, net, for the two locations for the three months ended September 30, 2013, was $1,800.
	Delta Three Israel Ltd., a wholly-owned subsidiary of the Company (the "Subsidiary"), leases an office that houses the Company’s research and development facilities in Jerusalem, Israel. The term of the lease is until June 30, 2015. Rent expense, net for the Subsidiary for the three months ended September 30, 2013, was $36,200.
	Legal Proceedings
	On July 5, 2011, the Company received a notice from the New York City Department of Finance, or the Department of Finance, which claimed that the Company had not paid commercial rent tax required under the New York City Administrative Code from June 1998 through May 2008 for the two offices that the Company had leased during that time. The notice stated that the Company is obligated to pay the outstanding tax amounts, as well as significant interest and penalties that were assessed on the unpaid amounts as well as for the failure to file the applicable tax returns.  The Company engaged outside counsel, which began discussions with the Department of Finance, and contested the assessment and simultaneously attempted to negotiate a significant reduction in the amounts to be paid.  The Company’s appeal was rejected in July 2012 by an examiner in the Department of Finance, and the Company has subsequently engaged and begun discussions with a manager in the Department of Finance and submitted additional supporting materials. In June 2013 the Company submitted a settlement offer, which the Department of Finance did not accept, and discussions are continuing. The final outcome of this assessment and the Company's negotiations with the Department of Finance cannot be determined at this time. In the event that the Company is required to pay all or most of the amounts claimed by the Department of Finance this would have a material adverse effect on the Company’s financial condition. During 2011 the Company recorded $300,000 as a provision for commercial rent tax.
	In addition, from time to time the Company is a party to legal proceedings, much of which is ordinary routine litigation incidental to the business, and is regularly required to expend time and resources in connection with such proceedings.  Accordingly, the Company, in consultation with its legal advisors, accrues amounts that management believes it is probable the Company will be required to expend in connection with all legal proceedings to which it is a party.
	Regulatory Taxes, Fees and Surcharges
	Some state and local regulatory authorities believe they retain jurisdiction to regulate the provision of, and impose taxes, fees and surcharges on, intrastate Internet and VoIP telephony services, and have attempted to impose such taxes, fees and surcharges, such as a fee for providing E-911 service. Rulings by the state commissions on the regulatory considerations affecting Internet and IP telephony services could affect our operations and revenues, and we cannot predict whether state commissions will be permitted to regulate the services we offer in the future.
	The Company paid approximately $43,000 of state and local taxes and other fees during the three months ended September 30, 2013. To the extent the Company increases the cost of services to our customers to recoup some of the costs of compliance this will have the effect of decreasing any price advantage the Company may have over traditional telecommunications companies.
	In addition, it is possible that the Company will be required to collect and remit taxes, fees and surcharges in other states and local jurisdictions where it has not done so, and which such authorities may take the position that it should have collected. If so, they may seek to collect those past taxes, fees and surcharges from the Company and impose fines, penalties or interest charges on the Company. The Company’s payment of these past taxes, fees and surcharges, as well as penalties and interest charges, could have a material adverse effect on the Company.

Warrants_and_Convertible_Note

Warrants and Convertible Note	9 Months Ended
	Sep. 30, 2013
Warrants and Convertible Note [Abstract]	'
Warrants and Convertible Note [Text Block]	'
	3	Warrants and Convertible Note
	We accounted for the Second Loan Agreement and the Third Loan Agreement in accordance with "Debt with Conversion and Other Options" [ASC 470-20-25]. We accounted for the Second Loan Agreement as a debt instrument with stock warrants. Under ASC 470-20-25, issuers of certain debt instruments with stock warrants are required to separately account for the liability components and the equity components based on the relative fair value of the debt instrument without the warrants and of the warrants themselves at the time of issuance, which the Company did.
	We accounted for the Third Loan Agreement as a convertible debt instrument with stock warrants and a beneficial conversion features. As required under ASC 470-20-25, the Company separated the debt instruments and the warrants based on their relative fair value for the liability components and for the equity components. The Company concluded that the liability component includes beneficial conversion features.  Under ASC 470-20-25, issuers of certain debt instruments with beneficial conversion features need to allocate to an equity component an amount based on the amount that the feature is in-the-money at the commitment date, which the Company did.
	Pursuant to the Third Amendment and the Warrants Amendment, the Company considered the restructured long-term debt to D4 Holdings under the criteria of, and accounted for the restructured long-term debt as, a troubled debt restructuring in accordance with ASC Subtopic 470-60, “Debt-Troubled Debt Restructurings by Debtors”, which requires that the gross future cash flows of principal and interest be reflected in the balance sheet.
	The following is a summary of the long-term loans and equity components:
			As of,
			September 30, 2013			December 31, 2012
			($ in thousands)
	Face value of the long-term loans		$	4,551		$	4,551
	Unpaid accrued interest			433			-
	Unamortized discount			-326			-450
	Current portion of long-term loans			-2,112			-499
	Net carrying amount of debt component			2,546			3,602
	The interest expenses relating to both the contractual interest coupon and amortization of the discount on the liability component are as follows:
				For the nine months ended September 30,
				2013				2012
				($ in thousands)
	Contractual interest coupon				433				269
	Amortization of the discount on the liability components				122				782
	Total interest expense on short-term loans				555				1,051

Basis_of_Presentation_Policies

Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Basis of Accounting, Policy [Policy Text Block]	'
	Financial Statement Preparation
	The unaudited condensed consolidated financial statements of deltathree, Inc. and its subsidiaries (collectively referred to in this Quarterly Report on Form 10-Q as the “Company”, “we”, “us”, or “our”), of which these notes are a part, have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation of the financial information as of and for the periods presented have been included.
	The results for the interim periods presented are not necessarily indicative of the results that may be expected for any future period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2012, included in our Annual Report on Form 10-K filed with the SEC on March 25, 2013, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed with the SEC on May 14, 2013, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed with the SEC on August 8, 2013 and all of our other periodic filings, including Current Reports on Form 8-K, filed with the SEC after the end of our 2012 fiscal year and through the date of this Report.
Going Concern Policy [Policy Text Block]	'
	Going Concern
	The Company has sustained significant operating losses in recent periods, which has resulted in a significant reduction in its cash reserves.  The Company and its subsidiaries have entered into four loan agreements with D4 Holdings, LLC, its majority stockholder, pursuant to which D4 Holdings has agreed to provide the Company with loans in the aggregate principal amount of $4,100,000.  On March 1, 2010, the Company and its subsidiaries entered into a Loan and Security Agreement, or the “First Loan Agreement”, with D4 Holdings pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries a line of credit in a principal amount of $1,200,000.   On August 10, 2010, the Company and its subsidiaries entered into the Second Loan and Security Agreement, or the “Second Loan Agreement”, with D4 Holdings, pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries an additional line of credit in a principal amount of $1,000,000. In connection with the Second Loan Agreement, the Company issued D4 Holdings a warrant to purchase up to 4,000,000 shares of its common stock at an exercise price of $0.1312 per share. The Company has drawn down all amounts available to be borrowed under the two lines of credit.
	On March 2, 2011, the Company and its subsidiaries entered into the Third Loan and Security Agreement, or the “Third Loan Agreement”, with D4 Holdings, pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries an additional line of credit in a principal amount of $1,600,000.  Pursuant to the terms of the Convertible Promissory Note, or the “Convertible Note”, issued by the Company in connection with the Third Loan Agreement, D4 Holdings may elect to convert all or any portion of the outstanding principal amount under the Convertible Note into that number of shares of the Company's common stock determined by dividing such principal amount by $0.08 (as may be adjusted under the terms of the Convertible Note). Simultaneous with our entering into the Third Loan Agreement, D4 Holdings and the Company entered into an amendment of the First Loan Agreement, pursuant to which (among other things) the maturity date for repayment of principal under the First Loan Agreement was extended from March 1, 2011, to March 1, 2012, and subsequently extended by oral agreement of the parties to July 1, 2012, and then subsequently orally extended again to January 2, 2014, pending the parties finalizing and entering into a formal amendment. In connection with the Third Loan Agreement, the Company issued D4 Holdings a warrant to purchase up to 1,000,000 shares of its common stock at an exercise price of $0.096 per share.  The Company has drawn down the aggregate principal amount available under the Third Loan Agreement, the principal amount of which can be converted by D4 Holdings into an aggregate of 20,000,000 shares of the Company's common stock.
	On September 12, 2011, the Company and its subsidiaries entered into the Fourth Loan and Security Agreement, or the “Fourth Loan Agreement”, with D4 Holdings, pursuant to which D4 Holdings agreed to provide the Company and its subsidiaries an additional line of credit in a principal amount of $300,000.  To date the Company has received advances in the aggregate amount of $200,000 from D4 Holdings pursuant to notices of borrowing under the Fourth Loan Agreement.
	On November 13, 2012, the Company and its subsidiaries entered into the Third Amendment to Loan and Security Agreements, or the "Third Amendment", and the Amendment to Warrant Agreements, or the "Warrants Amendment", with D4 Holdings. Pursuant to the Third Amendment and the Warrants Amendment:
		⋅	the maturity date for repayment of principal and interest under the First Loan Agreement was extended to January 2, 2014;
		⋅	the maturity date for repayment of principal and interest under the Second Loan Agreement was extended to January 2, 2015;
		⋅	the maturity date for repayment of principal and interest under each of the Third and Fourth Loan Agreements was extended to January 2, 2016;
		⋅	all interest outstanding under each of the loan agreements was added to the principal amount outstanding under the respective loan agreement and the promissory notes issued pursuant to each respective loan agreement was increased by such amount; and
		⋅	the exercise price under each of the Warrant Agreements entered into by us and D4 Holdings as of February 12, 2009, August 10, 2010, and March 2, 2011 was amended to $0.02 per share.
	In connection with the extension of the maturity dates under the Third Amendment, the Company issued to D4 Holdings a Warrant, exercisable for ten years, to purchase up to 10,000,000 shares of its common stock at an exercise price of $0.02 per share.
	As of September 30, 2013, the Company had negative working capital equal to approximately $4.4 million as well as negative stockholders’ equity equal to approximately $6.8 million. The Company believes it is probable that it will continue to experience losses and increased negative working capital and negative stockholders’ equity in the near future and will not be able to return to positive cash flow before it requires additional cash (in addition to any further amounts it may borrow from D4 Holdings under the Fourth Loan Agreement) in the immediate term. The Company may experience difficulties accessing the equity and debt markets and raising additional capital, and there can be no assurance that the Company will be able to raise such additional capital on favorable terms or at all.  If additional funds are raised through the issuance of equity securities, the Company’s existing stockholders will experience significant further dilution. Because of the Company’s significant losses to date and the Company’s limited tangible assets, the Company does not fit traditional credit lending criteria, which could make it difficult for the Company to obtain loans or to access the capital markets. If the Company issues additional equity or convertible debt securities to raise funds, the ownership percentage of the Company’s existing stockholders would be reduced and they may experience significant dilution. New investors may demand rights, preferences or privileges senior to those of existing holders of the Company’s common stock.
	Due to the limited availability of additional loan advances under the Fourth Loan Agreement, the Company believes that, its current cash and cash equivalents will not satisfy its current projected cash requirements beyond the  immediate future. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
	In addition, unless the Company is able to increase revenues and generate additional cash flows, based on currently projected cash flows the Company believes that it will be unable to pay future scheduled interest and/or principal payments under the various loan agreements with D4 Holdings as these obligations become due, and beginning January 2013 the Company suspended making scheduled interest payments with the oral consent of D4 Holdings.  If D4 Holdings is not willing to waive compliance or otherwise modify the Company’s obligations such that the Company is able to avoid defaulting on such obligations, D4 Holdings could accelerate the maturity of the Company’s debts due to it. Further, because D4 Holdings has a lien on all of the Company’s assets to secure the Company’s obligations under the loan agreements, D4 Holdings could take actions under the loan agreements and seek to take possession of or sell the Company’s assets to satisfy the Company’s obligations thereunder. Any of these actions would likely have an immediate material adverse effect on the Company’s business, financial condition or results of operations.
	Due to the Company’s ongoing losses and reduction in cash, the Company initiated restructuring activities beginning in the second quarter of 2011 in an effort to cut operating costs significantly and better align the Company’s operations with its current business model.  In accordance with the restructuring, the Company instituted a reduction in force and decreased the number of full time employees from approximately 53 to 32, reduced the salaries of all remaining employees by five percent, and decreased non-material expenses as well as payments to be made to vendors and other third parties. As of September 30, 2013, the Company had 22 full time employees.
	In view of the Company’s current cash resources, nondiscretionary expenses, debt and near term debt service obligations, the Company has begun exploring strategic alternatives available to it and may explore all such alternatives available to it, including, but not limited to, a sale or merger of the Company, a sale of its assets, recapitalization, partnership, debt or equity financing, voluntary deregistration of its securities, financial reorganization, liquidation and/or ceasing operations. In the event that the Company requires but is unable to secure additional funding, the Company may determine that it is in its best interests to voluntarily seek relief under Chapter 11 of the U.S. Bankruptcy Code. Seeking relief under the U.S. Bankruptcy Code, even if the Company is able to emerge quickly from Chapter 11 protection, could have a material adverse effect on the relationships between the Company and its existing and potential customers, employees, and others. Further, if the Company was unable to implement a successful plan of reorganization, the Company might be forced to liquidate under Chapter 7 of the U.S. Bankruptcy Code. There can be no assurance that exploration of strategic alternatives will result in the Company pursuing any particular transaction or, if the Company pursues any such transaction, that it will be completed.
Use of Estimates, Policy [Policy Text Block]	'
	Use of Estimates
	Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates.
Concentration Risk, Credit Risk, Policy [Policy Text Block]	'
	Concentration of Credit and Business Risks
	Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history, age of the balance and the customer’s current credit worthiness, as determined by a review of the customer’s current credit information. The Company monitors collections and payments from its customers and maintains an allowance for doubtful accounts based upon historical experience and any specific customer collection issues that have been identified. A considerable amount of judgment is required in assessing the ultimate realization of these receivables. Customer receivables are generally unsecured.
	Gross revenues from sales to material customers for each of the three months ended September 30, 2013 and 2012, and accounts receivables as of September 30, 2013, and December 31, 2012, were as follows:
			Revenues				Accounts Receivable
			Three Months Ended September 30,				As of
	Customer		2013		2012		September 30, 2013		December 31, 2012
	Reseller A		71	%	44	%	55	%	38	%
	Reseller B		3	%	9	%	12	%	14	%
	Affiliate A		4	%	10	%
	Affiliate B		1	%	7	%
	Service Provider A		3	%	5	%	17	%	21	%
Earnings Per Share, Policy [Policy Text Block]	'
	Earnings per Common Share
	Basic earnings per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s stock option and stock incentive compensation plans, and the weighted-average number of shares of common stock outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money shares, which is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a share, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of estimated tax benefits that would be recorded in additional paid-in capital, if any, when the share is exercised are assumed to be used to repurchase shares in the current period

Basis_of_Presentation_Tables

Basis of Presentation (Tables)	9 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]	'
	Gross revenues from sales to material customers for each of the three months ended September 30, 2013 and 2012, and accounts receivables as of September 30, 2013, and December 31, 2012, were as follows:
		Revenues				Accounts Receivable
		Three Months Ended September 30,				As of
	Customer	2013		2012		September 30, 2013		December 31, 2012
	Reseller A	71	%	44	%	55	%	38	%
	Reseller B	3	%	9	%	12	%	14	%
	Affiliate A	4	%	10	%	-		-
	Affiliate B	1	%	7	%	-		-
	Service Provider A	3	%	5	%	17	%	21	%

Warrants_and_Convertible_Note_

Warrants and Convertible Note (Tables)	9 Months Ended
	Sep. 30, 2013
Warrants and Convertible Note [Abstract]	'
Schedule Of Long Term Debt [Table Text Block]	'
	The following is a summary of the long-term loans and equity components:
		As of,
		September 30, 2013			December 31, 2012
		($ in thousands)
	Face value of the long-term loans	$	4,551		$	4,551
	Unpaid accrued interest		433			-
	Unamortized discount		-326			-450
	Current portion of long-term loans		-2,112			-499
	Net carrying amount of debt component		2,546			3,602
Schedule Of Long Term Debt Interest Expense [Table Text Block]	'
	The interest expenses relating to both the contractual interest coupon and amortization of the discount on the liability component are as follows:
			For the nine months ended September 30,
			2013				2012
			($ in thousands)
	Contractual interest coupon			433				269
	Amortization of the discount on the liability components			122				782
	Total interest expense on short and long-term loans			555				1,051

Basis_of_Presentation_Details

Basis of Presentation (Details)	3 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Reseller A [Member]	'	'	'
Entity-Wide Revenue, Major Customer, Percentage	71.00%	44.00%	'
Entity-Wide Accounts Receivable, Major Customer, Percentage	55.00%	'	38.00%
Reseller B [Member]	'	'	'
Entity-Wide Revenue, Major Customer, Percentage	3.00%	9.00%	'
Entity-Wide Accounts Receivable, Major Customer, Percentage	12.00%	'	14.00%
Affiliate A [Member]	'	'	'
Entity-Wide Revenue, Major Customer, Percentage	4.00%	10.00%	'
Entity-Wide Accounts Receivable, Major Customer, Percentage	0.00%	'	0.00%
Affiliate B [Member]	'	'	'
Entity-Wide Revenue, Major Customer, Percentage	1.00%	7.00%	'
Entity-Wide Accounts Receivable, Major Customer, Percentage	0.00%	'	0.00%
Service Provider A [Member]	'	'	'
Entity-Wide Revenue, Major Customer, Percentage	3.00%	5.00%	'
Entity-Wide Accounts Receivable, Major Customer, Percentage	17.00%	'	21.00%

Basis_of_Presentation_Details_

Basis of Presentation (Details Textual) (USD $)

Sep. 30, 2013

Dec. 31, 2012

Mar. 02, 2011

Dec. 31, 2012

Dec. 31, 2010

Dec. 31, 2010

Dec. 31, 2011

Dec. 31, 2011

Dec. 31, 2011

Dec. 31, 2011

Aug. 10, 2010

Feb. 12, 2009

D4 Holdings Llc [Member]

First Loan Agreement [Member]

Second Loan Agreement [Member]

Third Loan Agreement [Member]

Fourth Loan Agreement [Member]

Line Of Credit [Member]

Line Of Credit [Member]

Warrant Agreement [Member]

Warrant Agreement [Member]

D4 Holdings Llc [Member]

D4 Holdings Llc [Member]

D4 Holdings Llc [Member]

D4 Holdings Llc [Member]

Third Loan Agreement [Member]

Fourth Loan Agreement [Member]

D4 Holdings Llc [Member]

D4 Holdings Llc [Member]

D4 Holdings Llc [Member]

D4 Holdings Llc [Member]

Debt Instrument, Face Amount

'

'

'

$4,100,000

$1,200,000

$1,000,000

'

'

$1,600,000

$300,000

'

'

Debt Conversion, Converted Instrument, Warrants or Options Issued (in share)

'

'

'

'

'

4,000,000

1,000,000

'

'

'

'

'

Debt Conversion Converted Instrument Warrants Or Options Issued Exercise Price (in dollar per share)

'

'

'

'

'

$0.13

$0.10

'

'

'

'

'

Debt Instrument, Convertible, Conversion Price (in dollar per share)

'

'

'

'

'

'

'

'

$0.08

'

'

'

Debt Instrument, Convertible, Number of Equity Instruments

'

'

'

'

'

'

20,000,000

'

'

'

'

'

Line of Credit Facility, Amount Outstanding

'

'

'

'

'

'

'

200,000

'

'

'

'

Amended Exercise Price Of Warrants (in dollar per share)

'

'

$0.02

$0.02

'

'

'

'

'

'

$0.02

$0.02

Working Capital Deficiency

4,400,000

'

'

'

'

'

'

'

'

'

'

'

Total stockholders' deficiency

($6,850,000)

($5,647,000)

'

'

'

'

'

'

'

'

'

'

Warrants To Purchase Common Stock

'

'

'

10,000,000

'

'

'

'

'

'

'

'

Commitments_and_Contingencies_

Commitments and Contingencies (Details Textual) (USD $)	3 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended
	Sep. 30, 2013	Dec. 31, 2011	Aug. 31, 2013	Sep. 30, 2013	Sep. 30, 2013
			ACN Digital [Member]	Delta Three Israel Ltd [Member]	Executive Officer [Member]
Operating Leases, Rent Expense, Net	'	'	'	$36,200	$1,800
Accrual for commercial rent tax	'	300,000	'	'	'
Income Taxes Paid	43,000	'	'	'	'
Business Combination, Consideration Transferred, Total	'	'	$287,000	'	'

Warrants_and_Convertible_Note_1

Warrants and Convertible Note (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified
Face value of the long-term loans	$4,551	$4,551
Unpaid accrued interest	433	0
Unamortized discount	-326	-450
Current portion of long-term loans	-2,112	-499
Net carrying amount of debt component	$2,546	$3,602

Warrants_and_Convertible_Note_2

Warrants and Convertible Note (Details 1) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Contractual interest coupon	$433	$269
Amortization of the discount on the liability components	122	782
Total interest expense on short and long-term loans	$555	$1,051